Filed Pursuant to Rule 424(b)(5)
Registration File No.: 333-108944
PROSPECTUS SUPPLEMENT
(TO ACCOMPANY PROSPECTUS DATED JUNE 17, 2004)
$873,646,000 (APPROXIMATE)
(OFFERED CERTIFICATES)
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2004-C12
WACHOVIA COMMERCIAL MORTGAGE SECURITIES, INC.
(DEPOSITOR)
- --------------------------------------------------------------------------------
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE S-41 OF THIS
PROSPECTUS SUPPLEMENT AND ON PAGE 14 OF THE ACCOMPANYING PROSPECTUS.
Neither the offered certificates nor the underlying mortgage loans are insured
or guaranteed by any government agency or instrumentality.
The offered certificates will represent interests in the trust fund only. They
will not represent obligations of any other party. The offered certificates
will not be listed on any national securities exchange or any automated
quotation system of any registered securities association.
This prospectus supplement may be used to offer and sell the offered
certificates only if it is accompanied by the prospectus dated June 17, 2004.
- --------------------------------------------------------------------------------
THE TRUST FUND:
o As of July 11, 2004, the mortgage loans included in the trust fund will
have an aggregate principal balance of approximately $1,063,096,509.
o The trust fund will consist of a pool of 96 fixed rate mortgage loans.
o The mortgage loans are secured by first liens on commercial and multifamily
properties.
o All of the mortgage loans were originated by Wachovia Bank, National
Association, Artesia Mortgage Capital Corporation, Citigroup Global Markets
Realty Corp. and Eurohypo AG, New York Branch.
THE CERTIFICATES:
o The trust fund will issue twenty-four classes of certificates.
o Only the eight classes of offered certificates described in the following
table are being offered by this prospectus supple ment and the accompanying
prospectus.
ORIGINAL PERCENTAGE OF ASSUMED FINAL EXPECTED
CERTIFICATE CUT-OFF DATE PASS-THROUGH DISTRIBUTION S&P/FITCH
CLASS BALANCE(1) POOL BALANCE RATE DATE(2) CUSIP NO. RATING(3)
- ------------------- --------------- --------------- ---------------- --------------- ------------ ----------
Class A-1 ......... $ 50,000,000 4.703% 3.404% June 15, 2009 929766 SC8 AAA/AAA
Class A-2 ......... $199,000,000 18.719% 5.001% May 15, 2011 929766 SD6 AAA/AAA
Class A-3 ......... $ 82,000,000 7.713% 5.230%(4) July 15, 2013 929766 TL7 AAA/AAA
Class A-4 ......... $474,876,000 44.669% 5.412%(5) June 15, 2014 929766 TM5 AAA/AAA
Class B ........... $ 25,248,000 2.375% 5.412%(5) June 15, 2014 929766 SE4 AA/AA
Class C ........... $ 9,302,000 0.875% 5.412%(5) June 15, 2014 929766 SF1 AA-/AA-
Class D ........... $ 22,590,000 2.125% 5.412%(5) June 15, 2014 929766 SG9 A/A
Class E ........... $ 10,630,000 1.000% 5.412%(5) June 15, 2014 929766 SH7 A-/A-
- --------------------------------------------------------------------------------
(Footnotes explaining the table are on page S-2)
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE OFFERED CERTIFICATES OR HAS
DETERMINED THAT THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
Wachovia Capital Markets, LLC and Citigroup Global Markets Inc. are acting as
co-lead managers for this offering. Citigroup Global Markets Inc. is acting as
sole bookrunner with respect to 29.42% of the Class A-4 certificates. Wachovia
Capital Markets, LLC is acting as sole bookrunner with respect to the remainder
of the Class A-4 certificates and all other classes of offered certificates.
J.P. Morgan Securities Inc. and Greenwich Capital Markets, Inc. are acting as
co-managers for the offering. Wachovia Capital Markets, LLC, Citigroup Global
Markets Inc., J.P. Morgan Securities Inc. and Greenwich Capital Markets, Inc.
are required to purchase the offered certificates from us, subject to certain
conditions. The underwriters will offer the offered certificates to the public
from time to time in negotiated transactions or otherwise at varying prices to
be determined at the time of sale. We expect to receive from this offering
approximately 99.35% of the initial certificate balance of the offered
certificates, plus accrued interest from July 1, 2004 before deducting
expenses.
We expect that delivery of the offered certificates will be made in book-entry
form on or about July 8, 2004.
WACHOVIA SECURITIES CITIGROUP
JPMORGAN RBS GREENWICH CAPITAL
June 29, 2004
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST
Commercial Mortgage Pass-Through Certificates, Series WBCMT 2004-C12
Geographic Overview of Mortgage Pool(1)
[MAP SHOWING LOCATION OF MORTGAGED PROPERTIES OMITTED]
IDAHO UTAH ILLINOIS WISCONSIN
1 property 1 property 1 property 1 property
$7,584,424 $2,520,000 $3,985,457 $6,393,451
0.7% of total 0.2% of total 0.4% of total 0.6% of total
INDIANA PENNSYLVANIA OHIO NEW YORK
1 property 2 properties 2 properties 5 properties
$1,999,000 $20,924,059 $22,615,069 $155,073,945
0.2% of total 2.0% of total 2.1% of total 14.6% of total
MASSACHUSETTS RHODE ISLAND NEW JERSEY DISTRICT OF COLUMBIA
2 properties 1 property 5 properties 1 property
$12,215,677 $17,430,000 $45,081,982 $58,500,000
1.1% of total 1.6% of total 4.2% of total 5.5% of total
MARYLAND VIRGINIA NORTH CAROLINA SOUTH CAROLINA
4 properties 6 properties 5 properties 2 properties
$25,883,983 $21,758,735 $70,799,856 $8,296,926
2.4% of total 2.0% of total 6.7% of total 0.8% of total
GEORGIA FLORIDA ALABAMA TENNESSEE
4 properties 9 properties 4 properties 1 property
$45,574,568 $84,674,052 $50,655,471 $2,753,000
4.3% of total 8.0% of total 4.8% of total 0.3% of total
TEXAS OKLAHOMA NEW MEXICO ARIZONA
5 properties 2 properties 2 properties 1 property
$30,148,180 $14,933,713 $19,059,000 $5,040,219
2.8% of total 1.4% of total 1.8% of total 0.5% of total
SOUTHERN CALIFORNIA(2) CALIFORNIA NORTHERN CALIFORNIA(2)
10 properties 18 properties 8 properties
$194,724,028 $250,576,367 $55,852,339
18.3% of total 23.6% of total 5.3% of total
NEVADA WASHINGTON
6 properties 5 properties
$42,918,900 $35,700,475
4.0% of total 3.4% of total
-----------------------------------------------------------
LEGEND OMITTED
[ ] Greater than 10.0% of Initial Pool Balance
[ ] Greater than 5.0 - 10.0% of Initial Pool Balance
[ ] Greater than 1.0 - 5.0% of Initial Pool Balance
[ ] Less than or equal to 1.0% of Initial Pool Balance
-----------------------------------------------------------
-----------------------------------------------------------
MORTGAGED PROPERTIES BY PROPERTY TYPE
Office 41.9%
Retail 27.7%
Multifamily 14.0%
Self Storage 6.8%
Industrial 5.5%
Hospitality 2.1%
Mobile Home Park 1.3%
Mixed Use 0.5%
Land 0.2%
-----------------------------------------------------------
GEOGRAPHIC OVERVIEW OF MORTGAGED PROPERTIES
(1) Because this table presents information relating to the Mortgaged Properties
and not the Mortgage Loans, the Information for Mortgage Loans secured by more
than one Mortgaged Property is based on allocated amounts (allocating the
Mortgage Loan principal balance to each of those properties by the appraised
values of the Mortgaged Properties or the allocated loan amount as detailed in
the related Mortgage Loan documents).
(2) For purposes of determining whether a Mortgaged Property is in Northern
California or Southern California, Mortgaged Properties north of San Luis Obispo
County, Kern County and San Bernardino County were included in Northern
California and Mortgaged Properties in or south of such counties were included
in Southern California.
[Ernst & Young Plaza (PICTURES OMITTED), Los Angeles, CA]
[11 Madison Avenue (PICTURE OMITTED), New York, NY]
[1130 Connecticue Avenue (PICTURE OMITTED), Washington, DC]
[Extra Space Self Storage Portfolio, (PICTURES OMITTED), Various, Various]
[24 WEST 57th STREET (Pictures Omitted), New York, NY]
[EASTDALE MALL, (Pictures Omitted), Montgomery, AL]
[ONE RIVERVIEW SQUARE (Picture Omitted), Miami, FL]
[CROSSROADS PLAZA (Picture Omitted), Cary, NC]
[HAMPTON BAYS TOWN CENTER (Pictures Omitted), Hampton Bays, NY]
[POINTE AT WELLINGTON (Picture Omitted), Wellington, FL]
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We provide information to you about the offered certificates in two
separate documents that progressively provide more detail: (a) the accompanying
prospectus, which provides general information, some of which may not apply to
the offered certificates and (b) this prospectus supplement, which describes
the specific terms of the offered certificates. You should read both this
prospectus supplement and the prospectus before investing in any of the offered
certificates.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO
PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. THE INFORMATION IN THIS
DOCUMENT MAY ONLY BE ACCURATE AS OF THE DATE OF THIS DOCUMENT. IF THE
DESCRIPTIONS OF THE OFFERED CERTIFICATES VARY BETWEEN THE ACCOMPANYING
PROSPECTUS AND THIS PROSPECTUS SUPPLEMENT, YOU SHOULD RELY ON THE INFORMATION
IN THIS PROSPECTUS SUPPLEMENT.
This prospectus supplement begins with several introductory sections
describing the offered certificates and the trust fund in abbreviated form:
o SUMMARY OF PROSPECTUS SUPPLEMENT, commencing on page S-5 of this
prospectus supplement, which gives a brief introduction of the key
features of the offered certificates and a description of the mortgage
loans included in the trust fund; and
o RISK FACTORS, commencing on page S-41 of this prospectus supplement,
which describes risks that apply to the offered certificates which are
in addition to those described in the prospectus.
This prospectus supplement and the accompanying prospectus include cross
references to sections in these materials where you can find further related
discussions. The Tables of Contents in this prospectus supplement and the
accompanying prospectus identify the pages where these sections are located.
You can find a listing of the pages where capitalized terms used in this
prospectus supplement are defined under the caption "INDEX OF DEFINED TERMS"
beginning on page S-266 in this prospectus supplement.
In this prospectus supplement, the terms "depositor," "we," "us" and "our"
refer to Wachovia Commercial Mortgage Securities, Inc.
WE DO NOT INTEND THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS TO BE AN OFFER OR SOLICITATION:
o if used in a jurisdiction in which such offer or solicitation is not
authorized;
o if the person making such offer or solicitation is not qualified to do
so; or
o if such offer or solicitation is made to anyone to whom it is unlawful
to make such offer or solicitation.
This prospectus supplement and the accompanying prospectus may be used by
us, Wachovia Capital Markets, LLC, our affiliate, and any other of our
affiliates when required under the federal securities laws in connection with
offers and sales of offered certificates in furtherance of market-making
activities in offered certificates. Wachovia Capital Markets, LLC or any such
other affiliate may act as principal or agent in these transactions. Sales will
be made at prices related to prevailing market prices at the time of sale or
otherwise.
S-1
(Footnotes to table on the front cover)
- ----------
(1) Subject to a permitted variance of plus or minus 5.0%.
(2) The Assumed Final Distribution Date has been determined on the basis of
the assumptions set forth in "DESCRIPTION OF THE CERTIFICATES--Assumed
Final Distribution Date; Rated Final Distribution Date" in this
prospectus supplement and a 0% CPR (as defined in "YIELD AND MATURITY
CONSIDERATIONS--Weighted Average Life" in this prospectus supplement).
The Rated Final Distribution Date is the distribution date to occur in
July 2041. See "DESCRIPTION OF THE CERTIFICATES--Assumed Final
Distribution Date; Rated Final Distribution Date" and "RATINGS" in this
prospectus supplement.
(3) By each of Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc. and Fitch, Inc. See "RATINGS" in this
prospectus supplement.
(4) The pass-through rate applicable to the Class A-3 certificates for any
distribution date will be subject to a maximum rate of the applicable
weighted average net mortgage rate (calculated as described herein) for
such date.
(5) The pass-through rate applicable to the Class A-4, Class B, Class C,
Class D and Class E certificates for any distribution date will be equal
to the applicable weighted average net mortgage rate (in each case, as
calculated as described herein and taking into account only the pooled
component of the 11 Madison Avenue mortgage loan) for such date.
S-2
TABLE OF CONTENTS
SUMMARY OF PROSPECTUS SUPPLEMENT ......................................... S-5
OVERVIEW OF THE CERTIFICATES ............................................. S-6
THE PARTIES .............................................................. S-8
IMPORTANT DATES AND PERIODS .............................................. S-11
THE CERTIFICATES ......................................................... S-11
THE MORTGAGE LOANS ....................................................... S-27
RISK FACTORS ............................................................. S-41
DESCRIPTION OF THE MORTGAGE POOL ......................................... S-90
General ................................................................. S-90
Mortgage Loan History ................................................... S-91
Certain Terms and Conditions of the Mortgage Loans ...................... S-92
Certain State-Specific Considerations ................................... S-97
Assessments of Property Condition ....................................... S-97
Co-Lender Loans ......................................................... S-98
Mezzanine Loans ......................................................... S-105
Additional Mortgage Loan Information .................................... S-105
Twenty Largest Mortgage Loans ........................................... S-146
The Mortgage Loan Sellers ............................................... S-192
Underwriting Standards .................................................. S-193
Assignment of the Mortgage Loans; Repurchases and Substitutions ......... S-194
Representations and Warranties; Repurchases and Substitutions ........... S-196
Repurchase or Substitution of Cross-Collateralized Mortgage Loans ....... S-199
Changes in Mortgage Pool Characteristics ................................ S-199
SERVICING OF THE MORTGAGE LOANS .......................................... S-200
General ................................................................. S-200
The Master Servicer and the Special Servicer ............................ S-201
Servicing of the 11 Madison Avenue Loan ................................. S-204
Servicing and Other Compensation and Payment of Expenses ................ S-205
Modifications, Waivers and Amendments ................................... S-208
The Controlling Class Representative .................................... S-209
Defaulted Mortgage Loans; REO Properties; Purchase Option ............... S-212
Inspections; Collection of Operating Information ........................ S-214
DESCRIPTION OF THE CERTIFICATES .......................................... S-216
General ................................................................. S-216
Registration and Denominations .......................................... S-216
Certificate Balances and Notional Amounts ............................... S-218
Pass-Through Rates ...................................................... S-220
Distributions ........................................................... S-221
Subordination; Allocation of Losses and Certain Expenses ................ S-236
P&I Advances ............................................................ S-239
Appraisal Reductions .................................................... S-243
Reports to Certificateholders; Available Information .................... S-244
Assumed Final Distribution Date; Rated Final Distribution Date .......... S-248
Voting Rights ........................................................... S-249
Termination ............................................................. S-249
The Trustee ............................................................. S-251
The Fiscal Agent ........................................................ S-251
S-3
YIELD AND MATURITY CONSIDERATIONS .................................................. S-252
Yield Considerations .............................................................. S-252
Weighted Average Life ............................................................. S-255
USE OF PROCEEDS .................................................................... S-259
MATERIAL FEDERAL INCOME TAX CONSEQUENCES ........................................... S-259
General ........................................................................... S-259
Taxation of the Offered Certificates .............................................. S-260
ERISA CONSIDERATIONS ............................................................... S-261
LEGAL INVESTMENT ................................................................... S-263
METHOD OF DISTRIBUTION ............................................................. S-264
LEGAL MATTERS ...................................................................... S-265
RATINGS ............................................................................ S-265
INDEX OF DEFINED TERMS ............................................................. S-266
ANNEX A-1 Certain Characteristics of the Mortgage Loans and Mortgaged Properties .. A-1
ANNEX A-1A Certain Characteristics of the Mortgage Loans and Mortgaged Properties
in Loan Group 1 ......................................................... A-1A
ANNEX A-1B Certain Characteristics of the Mortgage Loans and Mortgaged Properties
in Loan Group 2 ......................................................... A-1B
ANNEX A-2 Certain Information Regarding Multifamily Mortgaged Properties .......... A-2
ANNEX A-3 Reserve Account Information ............................................. A-3
ANNEX A-4 Commercial Tenant Schedule .............................................. A-4
ANNEX A-5 Certain Characteristics of the Mortgage Loans and Mortgaged Properties
(Crossed and Portfolios) ................................................ A-5
ANNEX B Form of Distribution Date Statement ..................................... B-1
S-4
SUMMARY OF PROSPECTUS SUPPLEMENT
o THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROSPECTUS
SUPPLEMENT AND DOES NOT CONTAIN ALL OF THE INFORMATION THAT YOU NEED TO
CONSIDER IN MAKING YOUR INVESTMENT DECISION. TO UNDERSTAND THE TERMS OF
THE OFFERED CERTIFICATES, YOU MUST CAREFULLY READ THIS ENTIRE PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS.
o THIS SUMMARY PROVIDES AN OVERVIEW OF CERTAIN CALCULATIONS, CASH FLOWS
AND OTHER INFORMATION TO AID YOUR UNDERSTANDING AND IS QUALIFIED BY THE
FULL DESCRIPTION OF THESE CALCULATIONS, CASH FLOWS AND OTHER INFORMATION
IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS.
o WE PROVIDE INFORMATION IN THIS PROSPECTUS SUPPLEMENT ON THE CERTIFICATES
THAT ARE NOT OFFERED BY THIS PROSPECTUS SUPPLEMENT ONLY TO ENHANCE YOUR
UNDERSTANDING OF THE OFFERED CERTIFICATES. WE ARE NOT OFFERING THE
NON-OFFERED CERTIFICATES PURSUANT TO THIS PROSPECTUS SUPPLEMENT.
o FOR PURPOSES OF MAKING DISTRIBUTIONS TO THE CLASS A-1, CLASS A-2, CLASS
A-3, CLASS A-4 AND CLASS A-1A CERTIFICATES, THE POOL OF MORTGAGE LOANS
WILL BE DEEMED TO CONSIST OF 2 DISTINCT LOAN GROUPS, LOAN GROUP 1 AND
LOAN GROUP 2.
o UNLESS OTHERWISE STATED, ALL PERCENTAGES OF THE MORTGAGE LOANS INCLUDED
IN THE TRUST FUND, OR OF ANY SPECIFIED GROUP OF MORTGAGE LOANS INCLUDED
IN THE TRUST FUND, REFERRED TO IN THIS PROSPECTUS SUPPLEMENT ARE
CALCULATED USING THE AGGREGATE PRINCIPAL BALANCE OF THE MORTGAGE LOANS
INCLUDED IN THE TRUST FUND AS OF THE CUT-OFF DATE (WHICH IS JULY 11,
2004, WITH RESPECT TO 94 MORTGAGE LOANS AND JULY 1, 2004, WITH RESPECT TO
2 MORTGAGE LOANS) AFTER GIVING EFFECT TO PAYMENTS DUE ON OR BEFORE SUCH
DATE WHETHER OR NOT RECEIVED. THE CUT-OFF DATE BALANCE OF EACH MORTGAGE
LOAN INCLUDED IN THE TRUST FUND AND EACH CUT-OFF DATE CERTIFICATE BALANCE
IN THIS PROSPECTUS SUPPLEMENT ASSUMES THE TIMELY RECEIPT OF PRINCIPAL
SCHEDULED TO BE PAID (IF ANY) ON EACH MORTGAGE LOAN AND NO DEFAULTS,
DELINQUENCIES OR PREPAYMENTS ON ANY MORTGAGE LOAN ON OR BEFORE THE
RELATED CUT-OFF DATE. PERCENTAGES OF MORTGAGED PROPERTIES ARE REFERENCES
TO THE PERCENTAGES OF THE AGGREGATE PRINCIPAL BALANCE OF ALL THE MORTGAGE
LOANS INCLUDED IN THE TRUST FUND, OR OF ANY SPECIFIED GROUP OF MORTGAGE
LOANS INCLUDED IN THE TRUST FUND, AS OF THE CUT-OFF DATE REPRESENTED BY
THE AGGREGATE PRINCIPAL BALANCE OF THE RELATED MORTGAGE LOANS AS OF THE
CUT-OFF DATE.
o ONE (1) MORTGAGE LOAN INCLUDED IN THE TRUST FUND, REFERRED TO AS THE 11
MADISON AVENUE MORTGAGE LOAN, IS PART OF A SPLIT LOAN STRUCTURE WHERE 3
COMPANION LOANS THAT ARE PART OF THE SPLIT LOAN STRUCTURE ARE PARI PASSU
IN RIGHT OF ENTITLEMENT TO PAYMENT WITH THE RELATED MORTGAGE LOAN AND THE
OTHER 3 COMPANION LOANS ARE JUNIOR TO THE 4 LOANS THAT ARE PARI PASSU IN
RIGHT OF ENTITLEMENT TO PAYMENT. THE 11 MADISON AVENUE MORTGAGE LOAN IS
FURTHER DIVIDED INTO A SENIOR POOLED COMPONENT AND A SUBORDINATE
NON-POOLED COMPONENT AND, UNLESS OTHERWISE STATED HEREIN, ALL REFERENCES
TO THE PRINCIPAL BALANCE OF THE MORTGAGE LOANS IN THE TRUST FUND AND
RELATED INFORMATION (INCLUDING LOAN BALANCE PER SQUARE FOOT AND DEBT
SERVICE COVERAGE AND LOAN-TO-VALUE RATIOS) ARE REFERENCES TO THE POOLED
COMPONENT ONLY OF THE 11 MADISON AVENUE MORTGAGE LOAN.
o ALL NUMERICAL OR STATISTICAL INFORMATION CONCERNING THE MORTGAGE LOANS
INCLUDED IN THE TRUST FUND IS PROVIDED ON AN APPROXIMATE BASIS.
S-5
OVERVIEW OF THE CERTIFICATES
The table below lists certain summary information concerning the Wachovia
Bank Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates,
Series 2004-C12, which we are offering pursuant to the accompanying prospectus
and this prospectus supplement. Each certificate represents an interest in the
mortgage loans included in the trust fund and the other assets of the trust
fund. The table also describes the certificates that are not offered by this
prospectus supplement (other than the Class Z, Class R-I and Class R-II) which
have not been registered under the Securities Act of 1933, as amended, and
which will be sold to investors in private transactions.
CLOSING DATE
CERTIFICATE PERCENTAGE
BALANCE OR OF CUT-OFF
NOTIONAL DATE POOL CREDIT
CLASS AMOUNT(1) BALANCE SUPPORT
- --------------- ------------------ ------------ ------------
Class A-1 ..... $ 50,000,000 4.703% 13.375%
Class A-2 ..... $ 199,000,000 18.719% 13.375%
Class A-3 ..... $ 82,000,000 7.713% 13.375%
Class A-4 ..... $ 474,876,000 44.669% 13.375%
Class B ....... $ 25,248,000 2.375% 11.000%
Class C ....... $ 9,302,000 0.875% 10.125%
Class D ....... $ 22,590,000 2.125% 8.000%
Class E ....... $ 10,630,000 1.000% 7.000%
Class A-1A ... $ 115,031,000 10.820% 13.375%
Class F ...... $ 11,959,000 1.125% 5.875%
Class G ...... $ 11,959,000 1.125% 4.750%
Class H ...... $ 13,288,000 1.250% 3.500%
Class J ...... $ 3,986,000 0.375% 3.126%
Class K ...... $ 2,657,000 0.250% 2.876%
Class L ...... $ 5,315,000 0.500% 2.376%
Class M ...... $ 3,986,000 0.375% 2.001%
Class N ...... $ 2,657,000 0.250% 1.751%
Class O ...... $ 2,657,000 0.250% 1.501%
Class P ...... $ 15,955,508 1.501% 0.000%
Class IO ..... $ 1,063,096,508 N/A N/A
Class MAD..... $ 13,555,555 N/A N/A
INITIAL WEIGHTED CASH FLOW
PASS-THROUGH PASS- AVERAGE OR PRINCIPAL EXPECTED
RATE THROUGH LIFE WINDOW S&P/FITCH
CLASS DESCRIPTION RATE (YEARS)(2) (MON./YR.)(2) RATING(3)
- --------------- -------------- ------------------ ------------ --------------- -----------
Class A-1 ..... Fixed 3.404% 2.80 08/04-06/09 AAA/AAA
Class A-2 ..... Fixed 5.001% 5.80 06/09-05/11 AAA/AAA
Class A-3 ..... Fixed (4) 5.230% 7.33 05/11-07/13 AAA/AAA
Class A-4 ..... WAC (5) 5.412% 9.74 07/13-06/14 AAA/AAA
Class B ....... WAC (5) 5.412% 9.94 06/14-06/14 AA/AA
Class C ....... WAC (5) 5.412% 9.94 06/14-06/14 AA-/AA-
Class D ....... WAC (5) 5.412% 9.94 06/14-06/14 A/A
Class E ....... WAC (5) 5.412% 9.94 06/14-06/14 A-/A-
Class A-1A .... Fixed (4) 5.230% (6) (6) AAA/AAA
Class F ....... WAC (5) 5.412% (6) (6) BBB+/BBB+
Class G ....... WAC (5) 5.412% (6) (6) BBB/BBB
Class H ....... WAC (5) 5.412% (6) (6) BBB-/BBB-
Class J ....... Fixed (4) 5.100% (6) (6) BB+/BB+
Class K ....... Fixed (4) 5.100% (6) (6) BB/BB
Class L ....... Fixed (4) 5.100% (6) (6) BB-/BB-
Class M ....... Fixed (4) 5.100% (6) (6) B+/B+
Class N ....... Fixed (4) 5.100% (6) (6) B/B
Class O ....... Fixed (4) 5.100% (6) (6) B-/B-
Class P ....... Fixed (4) 5.100% (6) (6) NR
Class IO ...... WAC-IO(7) 0.216% (7) (7) AAA/AAA
Class MAD...... Variable 5.4377%(8) (6) (6) BBB-/BBB-
- ----------
(1) Subject to a permitted variance of plus or minus 5.0%.
(2) Based on no prepayments and the other assumptions set forth under "YIELD
AND MATURITY CONSIDERATIONS--Weighted Average Life" in this prospectus
supplement.
(3) By each of Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc. and Fitch, Inc. See "RATINGS" in this
prospectus supplement.
(4) The pass-through rates applicable to the Class A-3, Class A-1A, Class J,
Class K, Class L, Class M, Class N, Class O and Class P certificates for
any distribution date will be subject to a maximum rate of the applicable
weighted average net mortgage rate (calculated as described herein) for
such date.
(5) The pass-through rates applicable to the Class A-4, Class B, Class C,
Class D, Class E, Class F, Class G and Class H certificates for any
distribution date will be equal to the applicable weighted average net
mortgage rate (calculated as described herein) for such date.
(6) Not offered by this prospectus supplement. Any information we provide
herein regarding the terms of these certificates is provided only to
enhance your understanding of the offered certificates.
S-6
(7) The Class IO certificates are not offered by this prospectus supplement.
Any information we provide herein regarding the terms of these
certificates is provided only to enhance your understanding of the
offered certificates. The Class IO certificates will not have certificate
balances and their holders will not receive distributions of principal,
but such holders are entitled to receive payments of the aggregate
interest accrued on the notional amount of the Class IO certificates, as
described in this prospectus supplement. The interest rate applicable to
the Class IO certificates for each distribution date will be as described
in this prospectus supplement. See "DESCRIPTION OF THE
CERTIFICATES--Pass-Through Rates" in this prospectus supplement.
(8) Because the 11 Madison Avenue mortgage loan accrues interest on an
"actual/360" basis but the Class MAD certificates accrue interest on a
"30/360" basis, the pass-through rate in certain months on such class may
be higher or lower than indicated.
- -------------
Offered certificates
- -------------
- -------------
Private certificates
- -------------
S-7
THE PARTIES
THE TRUST FUND................ The trust fund will be created on or about
the closing date pursuant to a pooling and
servicing agreement, dated as of July 1, 2004,
by and among the depositor, the master
servicer, the special servicer, the trustee and
the fiscal agent.
THE DEPOSITOR................. Wachovia Commercial Mortgage Securities, Inc.
We are a wholly owned subsidiary of Wachovia
Bank, National Association, which is one of the
mortgage loan sellers, the master servicer, the
special servicer of the 11 Madison Avenue loan
under the pooling and servicing agreement
entered into in connection with the issuance of
the Wachovia Bank Commercial Mortgage Trust,
Commercial Mortgage Pass-Through Certificates,
Series 2004-C10, and an affiliate of one of the
underwriters. Our principal executive office is
located at 301 South College Street, Charlotte,
North Carolina 28288-0166 and our telephone
number is (704) 374-6161. Neither we nor any of
our affiliates have insured or guaranteed the
offered certificates. For more detailed
information, see "THE DEPOSITOR" in the
accompanying prospectus.
On the closing date, we will sell the mortgage
loans and related assets to be included in the
trust fund to the trustee to create the trust
fund.
THE ISSUER.................... The trust fund to be established under the
pooling and servicing agreement. For more
detailed information, see "DESCRIPTION OF THE
CERTIFICATES" in this prospectus supplement and
the accompanying prospectus.
THE MORTGAGE LOAN SELLERS..... Wachovia Bank, National Association, Artesia
Mortgage Capital Corporation, Citigroup Global
Markets Realty Corp. and Eurohypo AG, New York
Branch. For more information, see "DESCRIPTION
OF THE MORTGAGE POOL--The Mortgage Loan
Sellers" in this prospectus supplement. The
mortgage loan sellers will sell and assign to
us on the closing date the mortgage loans to
be included in the trust fund. See
"DESCRIPTION OF THE MORTGAGE
POOL--Representations and Warranties;
Repurchases and Substitutions" in this
prospectus supplement.
Wachovia Bank, National Association originated
60 of the mortgage loans to be included in the
trust fund representing 60.2% of the mortgage
pool (52 mortgage loans in loan group 1 or
59.4% and 8 mortgage loans in loan group 2 or
67.0%). Artesia Mortgage Capital Corporation
originated 24 of the mortgage loans to be
included in the trust fund representing 14.2%
of the mortgage pool (17 mortgage loans in
loan group 1 or 11.9% and 7 mortgage loans in
loan group 2 or 33.0%). Citigroup Global
Markets Realty Corp. originated 10 of the
mortgage loans to be included in the trust
fund representing 13.1% of the mortgage pool
(14.7% of
S-8
loan group 1). Eurohypo AG, New York Branch
originated 2 of the mortgage loans to be
included in the trust fund representing 12.4%
of the mortgage pool (14.0% of loan group 1).
THE MASTER SERVICER........... Wachovia Bank, National Association. Wachovia
Bank, National Association is our affiliate,
one of the mortgage loan sellers, the special
servicer of the 11 Madison Avenue Loan under
the pooling and servicing agreement entered
into in connection with the issuance of the
Wachovia Bank Commercial Mortgage Trust,
Commercial Mortgage Pass-Through Certificates,
Series 2004-C10, and an affiliate of one of the
underwriters. The master servicer will be
primarily responsible for collecting payments
and gathering information with respect to the
mortgage loans included in the trust fund and
the companion loans which are not part of the
trust fund; provided, however, the 11 Madison
Avenue mortgage loan and the 11 Madison Avenue
companion loans will be serviced under the
pooling and servicing agreement entered into in
connection with the issuance of the Wachovia
Bank Commercial Mortgage Trust, Commercial
Mortgage Pass-Through Certificates, Series
2004-C10. The master servicer under the
2004-C10 pooling and servicing agreement is
Wachovia Bank, National Association.
See "SERVICING OF THE MORTGAGE LOANS--The
Master Servicer and the Special Servicer" and
"--Servicing of the 11 Madison Avenue Loan" in
this prospectus supplement.
THE SPECIAL SERVICER.......... Initially, Clarion Partners, LLC. The special
servicer will be responsible for performing
certain servicing functions with respect to the
mortgage loans included in the trust fund and 2
companion loans which are not part of the trust
fund that, in general, are in default or as to
which default is imminent; provided, however,
the 11 Madison Avenue mortgage loan and the 11
Madison Avenue companion loans will be
specially serviced under the pooling and
servicing agreement entered into in connection
with the issuance of the Wachovia Bank
Commercial Mortgage Trust, Commercial Mortgage
Pass-Through Certificates, Series 2004-C10. The
special servicer under the 2004-C10 pooling and
servicing agreement, with respect to the 11
Madison Avenue mortgage loan is Wachovia Bank,
National Association.
Some holders of certificates (initially the
holder of the Class P certificates with
respect to each mortgage loan other than the
11 Madison Avenue mortgage loan) will have the
right to replace the special servicer and to
select a representative who may advise and
direct the special servicer and whose approval
is required for certain actions by the special
servicer under certain circumstances. With
respect to the 11 Madison Avenue mortgage
loan, except during the continuance of a
S-9
control appraisal period under the related
intercreditor agreement, the holder of the
most subordinate existing companion loan
related to the 11 Madison Avenue mortgage loan
may appoint or remove the special servicer
with respect to the 11 Madison Avenue mortgage
loan. It is anticipated that ING Clarion
Commercial Mortgage Securitization Fund, L.P.,
an affiliate of Clarion Partners, LLC, will
purchase certain non-offered classes of
certificates (including the Class P
certificates).
THE TRUSTEE................... LaSalle Bank National Association. The
trustee will be responsible for distributing
payments to certificateholders and delivering
to certificateholders certain reports on the
mortgage loans included in the trust fund and
the certificates. See "DESCRIPTION OF THE
CERTIFICATES--The Trustee" in this prospectus
supplement.
THE FISCAL AGENT.............. ABN AMRO Bank N.V., a Netherlands banking
corporation and indirect corporate parent of
the trustee.
THE UNDERWRITERS.............. Wachovia Capital Markets, LLC, Citigroup
Global Markets Inc., J.P. Morgan Securities
Inc. and Greenwich Capital Markets, Inc.
Wachovia Capital Markets, LLC is our affiliate
and is an affiliate of Wachovia Bank, National
Association, which is the master servicer, the
special servicer of the 11 Madison Avenue
mortgage loan under the 2004-C10 pooling and
servicing agreement and one of the mortgage
loan sellers. Citigroup Global Markets Inc. is
an affiliate of Citigroup Global Markets Realty
Corp., which is one of the mortgage loan
sellers. Wachovia Capital Markets, LLC and
Citigroup Global Markets Inc. are acting as
co-lead managers for this offering. J.P. Morgan
Securities Inc. and Greenwich Capital Markets,
Inc. are acting as co-managers for this
offering. Citigroup Global Markets Inc. is
acting as sole bookrunner with respect to
29.42% of the Class A-4 certificates. Wachovia
Capital Markets, LLC is acting as sole
bookrunner with respect to the remainder of the
Class A-4 certificates and all other classes
of offered certificates.
S-10
IMPORTANT DATES AND PERIODS
CLOSING DATE.................. On or about July 8, 2004.
CUT-OFF DATE.................. For 94 mortgage loans, representing 87.6% of
the mortgage pool (79 mortgage loans in loan
group 1 or 86.0% and all of the mortgage loans
in loan group 2), July 11, 2004; and for 2 of
the mortgage loans, representing 12.4% of the
mortgage pool (14.0% of loan group 1), July 1,
2004. The cut-off date balance of each mortgage
loan included in the trust fund and each
cut-off date certificate balance in this
prospectus supplement assumes the timely
receipt of principal scheduled to be paid (if
any) on each mortgage loan and no defaults,
delinquencies or prepayments on any mortgage
loan as of the related cut-off date.
DISTRIBUTION DATE............. The fourth business day following the related
determination date.
DETERMINATION DATE............ The 11th day of each month, or if such 11th
day is not a business day, the next succeeding
business day, commencing in August 2004.
COLLECTION PERIOD............. For any distribution date, the period
beginning on the 12th day in the immediately
preceding month (or the day after the
applicable cut-off date in the case of the
first collection period) through and including
the 11th day of the month in which the
distribution date occurs. Notwithstanding the
foregoing, in the event that the last day of a
collection period is not a business day, any
payments with respect to the mortgage loans
which relate to such collection period and are
received on the business day immediately
following such last day will be deemed to have
been received during such collection period and
not during any other collection period.
THE CERTIFICATES
OFFERED CERTIFICATES.......... We are offering to you the following 8
classes of certificates of our Commercial
Mortgage Pass-Through Certificates, Series
2004-C12 pursuant to this prospectus
supplement:
Class A-1
Class A-2
Class A-3
Class A-4
Class B
Class C
Class D
Class E
PRIORITY OF DISTRIBUTIONS..... On each distribution date, the owners of the
certificates (other than the Class MAD
Certificates) will be entitled to
S-11
distributions of payments or other collections
on the mortgage loans (other than payments or
other collections allocable to the 11 Madison
Avenue non-pooled component) that the master
servicer collected or advanced during or with
respect to the related collection period after
deducting certain fees and expenses. For
purposes of making certain distributions to
the Class A-1, Class A-2, Class A-3, Class A-4
and Class A-1A certificates, the mortgage pool
will be deemed to consist of 2 loan groups.
o Loan group 1 will consist of all of the
mortgage loans that are not secured by
multifamily properties and 3 mortgage loans
that are secured by multifamily properties.
o Loan group 2 will consist of 15 mortgage
loans that are secured by multifamily
properties.
Annex A to this prospectus supplement sets
forth the loan group designation for each
mortgage loan. The trustee will distribute
amounts to the extent that the money is
available, in the following order of priority,
to pay:
-----------------------------------------------
Interest, concurrently (i) pro rata, on the
Class A-1, Class A-2, Class A-3 and Class A-4
certificates from the portion of money
available attributable to mortgage loans in
loan group 1, (ii) on the Class A-1A
certificates from the portion of money
available attributable to mortgage loans in
loan group 2, and (iii) on the Class IO
certificates from any and all money
attributable to the mortgage pool; provided,
however, if on any distribution date, the
money available on such distribution date is
insufficient to pay in full the total amount
of interest to be paid to any of the classes
as described above, money available with
respect to the entire mortgage pool will be
allocated among all those classes pro rata.
-----------------------------------------------
-----------------------------------------------
Principal of the Class A-1 certificates, up to
the principal distribution amount relating to
loan group 1 and, after the Class A-1A
certificate balance has been reduced to zero,
the principal distribution amount relating to
loan group 2 remaining after payments to the
Class A-1A certificates have been made, until
their certificate balance is reduced to zero.
-----------------------------------------------
S-12
-----------------------------------------------
Principal of the Class A-2 certificates, up to
the principal distribution amount relating to
loan group 1 and, after the Class A-1A
certificate balance has been reduced to zero,
the principal distribution amount relating to
loan group 2 remaining after payments to the
Class A-1A certificates have been made, until
their certificate balance is reduced to zero.
-----------------------------------------------
-----------------------------------------------
Principal of the Class A-3 certificates, up to
the principal distribution amount relating to
loan group 1 and, after the Class A-1A
certificate balance has been reduced to zero,
the principal distribution amount relating to
loan group 2 remaining after payments to the
Class A-1A certificates have been made, until
their certificate balance is reduced to zero.
-----------------------------------------------
-----------------------------------------------
Principal of the Class A-4 certificates, up to
the principal distribution amount relating to
loan group 1 and, after the Class A-1A
certificate balance has been reduced to zero,
the principal distribution amount relating to
loan group 2 remaining after payments to the
Class A-1A certificates have been made, until
their certificate balance is reduced to zero.
-----------------------------------------------
-----------------------------------------------
Principal of the Class A-1A certificates, up
to the principal distribution amount relating
to loan group 2 and, after the Class A-4
certificate balance has been reduced to zero,
the principal distribution amount relating to
loan group 1 remaining after payments to the
Class A-4 certificates have been made, until
their certificate balance is reduced to zero.
----------------------------------------------
-----------------------------------------------
Reimbursement to the Class A-1, Class A-2,
Class A-3, Class A-4 and Class A-1A
certificates, pro rata, for any realized loss
and trust fund expenses borne by such classes.
-----------------------------------------------
-----------------------------------------------
Interest on the Class B certificates.
----------------------------------------------
-----------------------------------------------
Principal of the Class B certificates, up to
the principal distribution amount, until their
certificate balance is reduced to zero.
-----------------------------------------------
S-13
-----------------------------------------------
Reimbursement to the Class B certificates for
any realized losses and trust fund expenses
borne by such class.
-----------------------------------------------
-----------------------------------------------
Interest on the Class C certificates.
----------------------------------------------
-----------------------------------------------
Principal of the Class C certificates, up to
the principal distribution amount, until their
certificate balance is reduced to zero.
----------------------------------------------
-----------------------------------------------
Reimbursement to the Class C certificates for
any realized losses and trust fund expenses
borne by such class.
----------------------------------------------
-----------------------------------------------
Interest on the Class D certificates.
----------------------------------------------
-----------------------------------------------
Principal of the Class D certificates, up to
the principal distribution amount, until their
certificate balance is reduced to zero.
-----------------------------------------------
-----------------------------------------------
Reimbursement to the Class D certificates for
any realized losses and trust fund expenses
borne by such class.
-----------------------------------------------
-----------------------------------------------
Interest on the Class E certificates.
----------------------------------------------
-----------------------------------------------
Principal of the Class E certificates, up to
the principal distribution amount, until their
certificate balance is reduced to zero.
-----------------------------------------------
-----------------------------------------------
Reimbursement to the Class E certificates for
any realized losses and trust fund expenses
borne by such class.
-----------------------------------------------
If, on any distribution date, the certificate
balances of the Class B through Class P
certificates have been reduced to zero, but
any two or more of the Class A-1, Class A-2,
Class A-3, Class A-4 and Class A-1A
certificates remain outstanding, distributions
of principal and interest will be made, pro
rata, to the outstanding Class A-1, Class A-2,
Class A-3, Class A-4 and Class A-1A
certificates. See "DESCRIPTION OF THE
CERTIFICATES--Distributions" in this
prospectus supplement.
S-14
On each Distribution Date amounts available in
respect of the 11 Madison Avenue non-pooled
component (net of administrative costs and
fees) will be distributed in respect of the
principal of, and interest on, the Class MAD
certificates.
The 11 Madison Avenue non-pooled component
will support only the Class MAD certificates
and amounts allocated to such component will
not be part of funds available for
distributions to holders of the other
certificates.
No companion loans will be part of the trust,
and amounts received with respect to such
companion loans will not be available for
distributions to holders of any certificates.
INTEREST...................... On each distribution date, each class of
certificates (other than the Class Z, Class R-I
and Class R-II certificates) will be entitled
to receive:
o for each such class of certificates, one
month's interest at the applicable
pass-through rate accrued during the
calendar month prior to the related
distribution date, on the certificate
balance or notional amount, as applicable,
of such class of certificates immediately
prior to such distribution date;
o plus any interest that such class of
certificates was entitled to receive on all
prior distribution dates to the extent not
received;
o minus (other than in the case of the Class
IO certificates) such class' share of any
shortfalls in interest collections due to
prepayments on mortgage loans included in
the trust fund (or, in the case of the
Class MAD certificates, the 11 Madison
Avenue non-pooled component) that are not
offset by certain payments made by the
master servicer; and
o minus (other than in the case of the Class
IO certificates) such class' allocable
share of any reduction in interest accrued
on any mortgage loan (or, in the case of
the Class MAD certificates, the 11 Madison
Avenue non-pooled component) as a result of
a modification that reduces the related
mortgage rate and allows the reduction in
accrued interest to be added to the stated
principal balance of the mortgage loan.
As reflected in the chart under "Priority of
Distributions" above, so long as funds are
sufficient on any distribution date to make
distributions of all interest on such
distribution date to the Class A-1, Class A-2,
Class A-3, Class A-4, Class A-1A and Class IO
certificates, interest distributions on the
Class A-1, Class A-2, Class A-3 and Class A-4
certificates will be based upon amounts
available relating to mortgage loans in loan
group 1 and interest distributions on the
Class A-1A
S-15
certificates will be based upon amounts
available relating to mortgage loans in loan
group 2.
See "DESCRIPTION OF THE CERTIFICATES--
Certificate Balances and Notional Amount" and
"--Distributions" in this prospectus
supplement.
The Class IO certificates have nineteen
interest-only components, with one
interest-only component corresponding to each
class of certificates entitled to receive
distributions of principal. Each interest-only
component will correspond to the class of
certificates that has the same alphabetical,
and if applicable, numerical designation. On
each distribution date, the notional amount of
the Class IO certificates will be equal to the
aggregate outstanding component balances of
the components on such date. On each
distribution date, each interest-only
component will have a component balance equal
to the certificate balance of the class of
certificates on such date that corresponds to
such interest-only component.
The Class IO certificates will accrue interest
at a rate as described under "Pass-Through
Rates" below.
The certificates (other than the Class Z,
Class R-I and Class R-II certificates) will
accrue interest on the basis of a 360-day year
consisting of twelve 30-day months.
The interest accrual period with respect to
any distribution date and any class of
certificates (other than the Class Z, Class
R-I and Class R-II certificates) is the
calendar month preceding the month in which
such distribution date occurs.
As reflected in the chart under "Priority of
Distributions" beginning on page S-11 above,
on each distribution date, the trustee will
distribute interest to the holders of the
offered certificates and the Class IO
certificates:
o first, pro rata, to the Class IO
certificates, Class A-1 certificates, Class
A-2 certificates, Class A-3 certificates,
Class A-4 certificates and Class A-1A
certificates as described above under
"Priority of Distributions", and then to
each other class of offered certificates in
alphabetical order; and
o only to the extent funds remain after the
trustee makes all distributions of interest
and principal required to be made on such
date to each class of certificates with a
higher priority of distribution.
You may, in certain circumstances, also
receive distributions of prepayment premiums
and yield maintenance charges collected on the
mortgage loans included in the trust fund.
Such distributions are in addition to the
distributions of principal and interest
described above. See "DESCRIPTION OF THE
CERTIFICATES--Distributions" in this
prospectus supplement.
S-16
PASS-THROUGH RATES............ The pass-through rate for each class of
certificates (other than the Class IO, Class Z,
Class R-I and Class R-II certificates) on each
distribution date is set forth under "OVERVIEW
OF THE CERTIFICATES" in this prospectus
supplement.
The pass-through rate applicable to the Class
IO certificates for the initial distribution
date will equal approximately 0.216% per
annum.
The pass-through rate applicable to the Class
IO certificates for each distribution date
will, in general, equal the weighted average
of the interest rates for the components for
such distribution date (weighted on the basis
of the respective component balances of such
components outstanding immediately prior to
such distribution date). The interest rate in
respect of any component for any distribution
date will, in general, equal the weighted
average net mortgage rate for such
distribution date, minus the pass-through rate
applicable to the corresponding class of
sequential pay certificates.
The weighted average net mortgage rate for
each distribution date is the weighted average
of the net mortgage rates for the mortgage
loans (excluding the interest rate and
principal balance of the 11 Madison Avenue
non-pooled component) included in the trust
fund as of the beginning of the related
collection period, weighted on the basis of
their respective stated principal balances
(excluding, with respect to the 11 Madison
Avenue mortgage loan, the component principal
balance of the non-pooled component of the 11
Madison Avenue mortgage loan) immediately
following the preceding distribution date;
provided that, for the purpose of determining
the weighted average net mortgage rate only,
if the mortgage rate for any mortgage loan
included in the trust fund has been modified
in connection with a bankruptcy or similar
proceeding involving the related borrower or a
modification, waiver or amendment granted or
agreed to by the special servicer, the
weighted average net mortgage rate for such
mortgage loan will be calculated without
regard to such event. The net mortgage rate
for each mortgage loan included in the trust
fund will generally equal:
o the mortgage interest rate in effect for
such mortgage loan as of the closing date;
minus
o the applicable administrative cost rate, as
described in this prospectus supplement.
For the purpose of calculating the weighted
average net mortgage rate, the mortgage rate
of each mortgage loan will be deemed adjusted
as described under "DESCRIPTION OF THE
CERTIFICATES--Pass-Through Rates" in this
prospectus supplement.
S-17
The stated principal balance of each mortgage
loan included in the trust fund will generally
equal the balance of that mortgage loan as of
the cut-off date, reduced as of any date of
determination (to not less than zero) by:
o the portion of the principal distribution
amount for the related distribution date
that is attributable to such mortgage loan;
and
o the principal portion of any realized loss
incurred in respect of such mortgage loan
during the related collection period.
The stated principal balance of any mortgage
loan as to which the mortgage rate is reduced
through a modification may be increased in
certain circumstances by the amount of the
resulting interest reduction. See "DESCRIPTION
OF THE CERTIFICATES--Pass-Through Rates" in
this prospectus supplement.
PRINCIPAL DISTRIBUTIONS....... On the closing date, each class of
certificates (other than the Class IO, Class Z,
Class R-I and Class R-II certificates) will
have the certificate balance set forth above
under "OVERVIEW OF THE CERTIFICATES". The
certificate balance for each class of
certificates entitled to receive principal may
be reduced by:
o distributions of principal; and
o allocations of realized losses and trust
fund expenses.
The certificate balance or notional amount of
a class of certificates may be increased in
certain circumstances by the allocation of any
increase in the stated principal balance of
any mortgage loan resulting from the reduction
of the related mortgage rate through
modification. See "DESCRIPTION OF THE
CERTIFICATES--Certificate Balances and
Notional Amount" in this prospectus
supplement.
The Class IO certificates do not have
principal balances and will not receive
distributions of principal.
As reflected in the chart under "Priority of
Distributions" above:
o generally, the Class A-1, Class A-2, Class
A-3 and Class A-4 certificates will only be
entitled to receive distributions of
principal collected or advanced in respect
of mortgage loans (or, with respect to the
11 Madison Avenue mortgage loan, only the
11 Madison Avenue pooled component) in loan
group 1 until the certificate balance of
the Class A-1A certificates has been
reduced to zero, and the Class A-1A
certificates will only be entitled to
receive distributions of principal
collected or advanced in respect of
mortgage loans in loan group 2 until the
certificate principal balance of the Class
A-4 certificates has been reduced to zero;
S-18
o principal is distributed to each class of
certificates entitled to receive
distributions of principal in alphabetical
and, if applicable, numerical designation;
o principal is only distributed on a class of
certificates to the extent funds remain
after the trustee makes all distributions
of principal and interest on each class of
certificates with an earlier alphabetical
and, if applicable, numerical designation;
o generally, no class of certificates is
entitled to distributions of principal
until the certificate balance of each class
of certificates with an earlier
alphabetical and, if applicable, numerical
designation has been reduced to zero; and
o in no event will holders of the Class B,
Class C, Class D and Class E certificates
or classes of non-offered certificates
(other than the Class A-1A certificates) be
entitled to receive any payments of
principal until the certificate balances of
the Class A-1, Class A-2, Class A-3, Class
A-4 and Class A-1A certificates have all
been reduced to zero.
The amount of principal to be distributed for
each distribution date generally will be an
amount equal to:
o the scheduled principal payments (other
than balloon payments) due on the mortgage
loans included in the trust fund during the
related collection period whether or not
such scheduled payments are actually
received;
o balloon payments actually received with
respect to mortgage loans included in the
trust fund during the related collection
period;
o prepayments received with respect to the
mortgage loans included in the trust fund
during the related collection period; and
o all liquidation proceeds, insurance
proceeds, condemnation awards and
repurchase and substitution amounts
received during the related collection
period that are allocable to principal.
For purposes of making distributions to the
Class A-1, Class A-2, Class A-3, Class A-4 and
Class A-1A certificates, the principal
distribution amount for each loan group on any
distribution date will be equal to the sum of
the collections specified above but only to
the extent such amounts relate to the mortgage
loans comprising the specified loan group.
However, if the master servicer, the trustee
or the fiscal agent reimburses itself out of
general collections on the mortgage pool for
any advance that it or the special servicer
has determined is not recoverable out of
collections on the
S-19
related mortgage loan and certain advances
that are determined not to be reimbursed
currently in connection with the work-out of a
mortgage loan, then such advances (together
with accrued interest thereon) will be deemed,
to the fullest extent permitted pursuant to
the terms of the pooling and servicing
agreement, to be reimbursed first out of
payments and other collections of principal
otherwise distributable on the principal
balance certificates (other than the Class MAD
certificates), prior to, in the case of
nonrecoverable advances only, being deemed
reimbursed out of payments and other
collections of interest otherwise
distributable on the offered certificates.
SUBORDINATION; ALLOCATION OF LOSSES
AND CERTAIN EXPENSES......... Credit support for any class of certificates
(other than the Class Z, Class R-I, Class R-II
and Class MAD certificates) is provided by the
subordination of payments and allocation of any
losses to such classes of certificates which
have a later alphabetical class designation
(other than the Class IO certificates) and,
with respect to the 11 Madison Avenue mortgage
loan, the Class MAD certificates. The
certificate balance of a class of certificates
(other than the Class IO, Class Z, Class R-I
and Class R-II certificates) will be reduced on
each distribution date by any losses on the
mortgage loans that have been realized and
certain additional trust fund expenses actually
allocated to such class of certificates on such
distribution date.
Losses on the mortgage loans that have been
realized and additional trust fund expenses
will be allocated without regard to loan group
and will first be allocated to the
certificates (other than the Class A-1A, Class
IO, Class Z, Class R-I and Class R-II
certificates) that are not offered by this
prospectus supplement and then to the
certificates that are offered certificates and
the Class A-1A certificates in reverse
alphabetical order as indicated on the
following table; provided, that losses and
additional trust fund expenses on the 11
Madison Avenue mortgage loan will first be
allocated to the non-pooled component of the
11 Madison Avenue mortgage loan (and therefore
to the Class MAD certificates); provided,
further, that losses and additional trust fund
expenses on the mortgage loans (other than
losses and trust fund expenses with respect to
the 11 Madison Avenue mortgage loan) will not
be allocated to the Class MAD certificates.
S-20
PERCENTAGE ORDER OF
ORIGINAL OF CUT-OFF APPLICATION
CERTIFICATE DATE POOL OF LOSSES
CLASS DESIGNATION BALANCE BALANCE AND EXPENSES
- -------------------------------- --------------- ------------ -------------
Class A-1 .................... $ 50,000,000 4.703% 6
Class A-2 .................... $199,000,000 18.719% 6
Class A-3 .................... $ 82,000,000 7.713% 6
Class A-4 .................... $474,876,000 44.669% 6
Class A-1A ................... $115,031,000 10.820% 6
Class B ...................... $ 25,248,000 2.375% 5
Class C ...................... $ 9,302,000 0.875% 4
Class D ...................... $ 22,590,000 2.125% 3
Class E ...................... $ 10,630,000 1.000% 2
Other non-offered certificates
(excluding the Class IO and
the Class MAD(1)
certificates) ................ $ 74,419,508 7.000% 1
----------
(1) The Class MAD certificates have been
excluded for purposes of the table;
mortgage loan losses and additional
trust fund expenses on the mortgage
loans will not be allocated to the Class
MAD certificates other than mortgage
loan losses and additional trust fund
expenses with respect to the 11 Madison
Avenue mortgage loan.
Any losses realized on the mortgage loans
included in the trust fund or additional trust
fund expenses allocated in reduction of the
certificate balance of any class of sequential
pay certificates will result in a
corresponding reduction in the notional amount
of the Class IO certificates.
Any losses and expenses that are associated
with each of the mortgage loans secured by the
11 Madison Avenue mortgaged property will be
allocated in accordance with the terms of the
related intercreditor agreement and the
pooling and servicing agreement first, to the
most subordinate companion loan secured by the
related mortgaged property, second, to the
second most subordinate companion loan secured
by the related mortgaged property, third, to
the third most subordinate companion loan
secured by the related mortgaged property and
fourth, pro rata, among the 4 pari passu
mortgage loans secured by the related
mortgaged property. The portion of any losses
and expenses that are allocated to the 11
Madison Avenue mortgage loan will be allocated
to the 11 Madison Avenue non-pooled component
(and therefore to the Class MAD certificates)
until the component principal balance of the
11 Madison Avenue non-pooled component has
been reduced to zero before being allocated
among the Series 2004-C12 certificates in the
manner described above.
See "DESCRIPTION OF THE CERTIFICATES--
Subordination; Allocation of Losses and
Certain Expenses" in this prospectus
supplement.
PREPAYMENT PREMIUMS; YIELD
MAINTENANCE CHARGES.......... On each distribution date, any prepayment
premium or yield maintenance charge actually
collected during the related
S-21
collection period on a mortgage loan included
in the trust fund (or, with respect to the 11
Madison Avenue mortgage loan, the portion
allocated to the 11 Madison Avenue pooled
component) will be distributed to the holders
of each class of offered certificates and the
Class A-1A, Class F, Class G and Class H
certificates then entitled to distributions as
follows:
The holders of each class of offered
certificates and the Class A-1A, Class F,
Class G and Class H certificates then entitled
to distributions of principal with respect to
the related loan group on such distribution
date will generally be entitled to a portion
of prepayment premiums or yield maintenance
charges equal to the product of:
o the amount of such prepayment premiums or
yield maintenance charges;
o a fraction (in no event greater than one),
the numerator of which is equal to the
excess, if any, of the pass-through rate of
such class of certificates over the
relevant discount rate, and the denominator
of which is equal to the excess, if any, of
the mortgage interest rate of the prepaid
mortgage loan over the relevant discount
rate; and
o a fraction, the numerator of which is equal
to the amount of principal distributable on
such class of certificates on such
distribution date, and the denominator of
which is the principal distribution amount
for such distribution date.
If there is more than one class of
certificates entitled to distributions of
principal with respect to the related loan
group on any particular distribution date on
which a prepayment premium or yield
maintenance charge is distributable, the
aggregate amount of such prepayment premium or
yield maintenance charge will be allocated
among all such classes up to, and on a pro
rata basis in accordance with, the foregoing
entitlements.
The portion, if any, of the prepayment
premiums or yield maintenance charges
remaining after any payments described above
will be distributed to the holders of the
Class IO certificates.
The "discount rate" applicable to any class of
offered certificates and the Class A-1A, Class
F, Class G and Class H certificates will equal
the yield (when compounded monthly) on the US
Treasury issue with a maturity date closest to
the maturity date for the prepaid mortgage
loan or mortgage loan for which title to the
related mortgaged property was acquired by the
trust fund.
o In the event that there are two or more
such US Treasury issues with the same
coupon, the issue with the lowest yield
will be utilized; and
S-22
o In the event that there are two or more
such US Treasury issues with maturity dates
equally close to the maturity date for the
prepaid mortgage loan, the issue with the
earliest maturity date will be utilized.
EXAMPLES OF ALLOCATION OF PREPAYMENT PREMIUMS OR
YIELD MAINTENANCE CHARGES
Mortgage interest rate ......................... 8%
Pass-through rate for applicable class ......... 6%
Discount rate .................................. 5%
ALLOCATION PERCENTAGE FOR ALLOCATION PERCENTAGE FOR
APPLICABLE CLASS CLASS IO
- ----------------------------------- --------------------------
6% - 5% 100% - 33 1/3% = 66 2/3%
-------------- = 33 1/3%
8% - 5%
Any yield maintenance charges allocable to the
non-pooled component of the 11 Madison Avenue
mortgage loan will be paid to the Class MAD
certificates.
See "DESCRIPTION OF THE CERTIFICATES--
Distributions--Allocation of Prepayment
Premiums and Yield Maintenance Charges" in
this prospectus supplement.
ALLOCATION OF
ADDITIONAL INTEREST........... On each distribution date, any additional
interest collected in respect of a mortgage
loan in the trust (and, with respect to the 11
Madison Avenue mortgage loan, only with respect
to amounts allocable to the pooled component of
the 11 Madison Avenue mortgage loan) with an
anticipated repayment date during the related
collection period will be distributed, to the
holders of the Class Z certificates and in the
case of amounts allocable to the non-pooled
component of the 11 Madison Avenue mortgage
loan, to the Class MAD certificates and, in
each case, will not be available to provide
credit support for other classes of
certificates or offset any interest shortfalls.
ADVANCING..................... In the event the master servicer fails to
receive one or more scheduled payments of
principal and interest (other than balloon
payments) on a mortgage loan included in the
trust fund by the last day of the related
collection period and the master servicer
determines that such scheduled payment of
principal and interest will be ultimately
recoverable from the related mortgage loan, the
master servicer, or if it fails to do so, the
trustee is required to make a principal and
interest cash advance of such scheduled payment
of principal and interest. If the trustee fails
to make a required advance, the fiscal agent
will be required to make the advance.
With respect to the 11 Madison Avenue mortgage
loan, in the event the master servicer under
the 2004-C10 pooling and servicing agreement
fails to receive one or more scheduled
payments of principal and interest (other than
balloon payments) on the 11 Madison Avenue
mortgage loan by the last day of the related
collection period and such master servicer
determines that such scheduled payment of
principal and
S-23
interest will be ultimately recoverable from
the 11 Madison Avenue mortgage loan, the
master servicer under the 2004-C10 pooling and
servicing agreement, or if it fails to do so,
the trustee under the 2004-C10 pooling and
servicing agreement, or if it fails to do so,
the master servicer under the pooling and
servicing agreement (so long as it has
received all information necessary to make a
recoverability determination), and if it fails
to do so, the trustee under the pooling and
servicing agreement, and if it fails to do so,
the fiscal agent under the pooling and
servicing agreement, is required to make a
principal or interest cash advance of such
scheduled payment of principal and interest to
the extent described in this prospectus
supplement.
These cash advances are only intended to
maintain a regular flow of scheduled principal
and interest payments on the certificates and
are not intended to guarantee or insure
against losses. In other words, the advances
are intended to provide liquidity (rather than
credit enhancement) to certificateholders. To
the extent described in this prospectus
supplement, the trust fund will pay interest
to the master servicer, the trustee or the
fiscal agent, as the case may be, on the
amount of any principal and interest cash
advance calculated at the prime rate (provided
that no principal and/or interest cash advance
shall accrue interest until after the
expiration of any applicable grace period for
the related scheduled payment) and will
reimburse the master servicer, the trustee or
the fiscal agent for any principal and
interest cash advances that are later
determined to be not recoverable. Neither the
master servicer, the trustee nor the fiscal
agent will be required to make an advance with
respect to any companion loan. See
"DESCRIPTION OF THE CERTIFICATES--P&I
Advances" in this prospectus supplement.
OPTIONAL TERMINATION OF THE
TRUST FUND................... The trust fund may be terminated when the
aggregate principal balance of the mortgage
loans included in the trust fund (including the
non-pooled component of the 11 Madison Avenue
mortgage loan) is less than 1.0% of the
aggregate principal balance of the pool of
mortgage loans and the 11 Madison Avenue
non-pooled component included in the trust fund
as of the cut-off date. See "DESCRIPTION OF THE
CERTIFICATES--Termination" in this prospectus
supplement and in the accompanying prospectus.
The trust fund may also be terminated when the
Class A-1, Class A-2, Class A-3, Class A-4,
Class A-1A, Class B, Class C, Class D and
Class E certificates have been paid in full
and all of the remaining certificates, other
than the Class MAD certificates and the REMIC
residual certificates are held by a single
certificateholder. See "DESCRIPTION OF THE
CERTIFICATES--Termination" in this prospectus
supplement.
S-24
REGISTRATION AND
DENOMINATION.................. The offered certificates will initially be
registered in the name of Cede & Co., as
nominee for The Depository Trust Company in the
United States, or in Europe through Clearstream
Banking societe anonyme or Euroclear Bank S.A./
N.V., as operator of the Euroclear System. You
will not receive a definitive certificate
representing your interest in the trust fund,
except in the limited circumstances described
in the accompanying prospectus. See
"DESCRIPTION OF THE CERTIFICATES--Book-Entry
Registration and Definitive Certificates" in
the accompanying prospectus.
Beneficial interests in the Class A-1, Class
A-2, Class A-3, Class A-4, Class B, Class C,
Class D and Class E certificates will be
offered in minimum denominations of $10,000
actual principal amount and in integral
multiples of $1 in excess of those amounts.
MATERIAL FEDERAL INCOME TAX
CONSEQUENCES................. Two separate real estate mortgage investment
conduit elections will be made with respect to
most of the trust fund ("REMIC I" and "REMIC
II"). In addition, a separate REMIC election
will also be made with respect to the 11
Madison Avenue Loan (the "11 Madison Avenue
Loan REMIC," and together with REMIC I and
REMIC II, each, a "REMIC"). The offered
certificates will evidence regular interests in
a REMIC and generally will be treated as debt
instruments of such REMIC. The Class R-I
certificates will represent the residual
interests in the 11 Madison Avenue Loan REMIC
and REMIC I, and the Class R-II certificates
will represent the residual interests in REMIC
II. The Class Z and Class MAD
certificateholders' entitlement to any
additional interest that has accrued on a
related mortgage loan that provides for the
accrual of such additional interest if the
unamortized principal amount of such mortgage
loan is not repaid on the anticipated repayment
date set forth in the related mortgage note
will be treated as a grantor trust (as
described in the related prospectus) for United
States federal income tax purposes.
The offered certificates will be treated as
newly originated debt instruments for federal
income tax purposes. You will be required to
report income with respect to the offered
certificates using the accrual method of
accounting, even if you otherwise use the cash
method of accounting. It is anticipated that
the Class A-2 and Class A-3 certificates will
be treated as having been issued at a premium,
that the Class A-4, Class B and Class C
certificates will be treated as having been
issued with a de minimis amount of original
issue discount, and that the Class A-1, Class
D and Class E certificates will be treated as
having been issued with original issue
discount for federal income tax reporting
purposes.
For further information regarding the federal
income tax consequences of investing in the
offered certificates, see
S-25
"MATERIAL FEDERAL INCOME TAX CONSEQUENCES" in
this prospectus supplement and in the
accompanying prospectus.
ERISA CONSIDERATIONS.......... Subject to important considerations described
under "ERISA CONSIDERATIONS" in this prospectus
supplement and the accompanying prospectus, the
following certificates may be eligible for
purchase by persons investing assets of
employee benefit plans, individual retirement
accounts, or other retirement plans and
accounts:
Class A-1
Class A-2
Class A-3
Class A-4
Class B
Class C
Class D
Class E
This is based on individual prohibited
transaction exemptions granted to each of
Wachovia Capital Markets, LLC, Citigroup
Global Markets Inc., J.P. Morgan Securities
Inc. and Greenwich Capital Markets, Inc. by
the US Department of Labor. See "ERISA
CONSIDERATIONS" in this prospectus supplement
and in the accompanying prospectus.
LEGAL INVESTMENT.............. The offered certificates will not constitute
"mortgage related securities" for purposes of
the Secondary Mortgage Market Enhancement Act
of 1984, as amended. If your investment
activities are subject to legal investment laws
and regulations, regulatory capital
requirements, or review by regulatory
authorities, then you may be subject to
restrictions on investment in the offered
certificates. You should consult your own legal
advisers for assistance in determining the
suitability of and consequences to you of the
purchase, ownership and sale of the offered
certificates. See "LEGAL INVESTMENT" in this
prospectus supplement and in the accompanying
prospectus.
RATINGS....................... The offered certificates will not be issued
unless they have received the following ratings
from Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc. and
Fitch, Inc.:
EXPECTED
RATING FROM
CLASS S&P/FITCH
------------------------------ -----------
Class A-1 .................... AAA/AAA
Class A-2 .................... AAA/AAA
Class A-3 .................... AAA/AAA
Class A-4 .................... AAA/AAA
Class B ...................... AA/AA
Class C ...................... AA-/AA-
Class D ...................... A/A
Class E ...................... A-/A-
S-26
The ratings on the offered certificates
address the likelihood of timely receipt of
interest and ultimate receipt of principal by
the rated final distribution date by the
holders of offered certificates. They do not
address the likely actual rate of prepayments.
Such rate of prepayments, if different than
originally anticipated, could adversely affect
the yield realized by holders of the offered
certificates. In addition, ratings adjustments
may result from a change in the financial
position of the trustee or the fiscal agent as
back-up liquidity providers. See "RATINGS" in
this prospectus supplement and in the
accompanying prospectus for a discussion of
the basis upon which ratings are given, the
limitations and restrictions on the ratings,
and conclusions that should not be drawn from
a rating.
THE MORTGAGE LOANS
GENERAL....................... It is expected that the mortgage loans to be
included in the trust fund will have the
following approximate characteristics as of the
cut-off date. All information presented herein
(including loan-to-value ratios and debt
service coverage ratios) with respect to the 3
mortgage loans with subordinate companion loans
is calculated without regard to the related
subordinate companion loans. With respect to
loan number 2 unless otherwise specified, the
calculations of loan balance per square foot,
loan-to-value ratios and debt service coverage
ratios were based on the aggregate indebtedness
of this mortgage loan and the related pari
passu companion loans (but not any subordinate
companion loan). All percentages of the
mortgage loans, or any specified group of
mortgage loans, referred to in this prospectus
supplement are approximate percentages.
NON-POOLED COMPONENT AND CLASS
MAD CERTIFICATES............. The 11 Madison Avenue mortgage loan will be
deemed to be split into a senior pooled
component, with a principal balance of
$82,000,000, representing 7.7% of the mortgage
pool (8.6% of loan group 1) that supports
distributions on the Certificates (other than
the Class MAD certificates) and a subordinate
non-pooled component, with a principal balance
of $13,555,556, that supports distributions
only on the Class MAD certificates, which are
not being offered hereby. The 11 Madison Avenue
mortgage loan is part of a split loan structure
where 3 companion loans that are part of this
split loan structure are pari passu in right of
entitlement to payment with the 11 Madison
Avenue mortgage loan and the other 3 companion
loans are junior to the 4 loans that are pari
passu in right of entitlement to payment. The
aggregate principal balance of the 11 Madison
Avenue mortgage loan (including the component
that is not pooled with the other mortgage
loans) as of the cut-off date will be
approximately $95,555,556. See "DESCRIPTION OF
THE MORTGAGE
S-27
POOL--Top Twenty Mortgage Loans--11 Madison Avenue
Loan" in this prospectus supplement. All principal
and interest collections on the 11 Madison Avenue
mortgage loan will be distributed as described in
this prospectus supplement and as more particularly
described in the pooling and servicing agreement.
See "DESCRIPTION OF THE MORTGAGE POOL--11 Madison
Avenue Mortgage Loan" in this prospectus supplement.
For purposes of the statistical information in this
prospectus supplement, unless otherwise noted, all
numbers and statistical information include only the
pooled component of the 11 Madison Avenue mortgage
loan. Generally, the subordination of the non-pooled
component of the 11 Madison Avenue mortgage loan
decreases the loan-to-value ratio and increases the
debt service coverage ratio of the pooled component
of the 11 Madison Avenue mortgage loan included as a
"mortgage loan" herein because those ratios are
based only on the pooled component of the 11 Madison
Avenue mortgage loan. All principal and interest
collections on the 11 Madison Avenue mortgage loan
will be allocated between the pooled component and
non-pooled component as described in "DESCRIPTION OF
THE CERTIFICATES--Distributions--the Class MAD
Certificates and the 11 Madison Avenue Non-Pooled
Component" in this prospectus supplement. Interest
on the pooled component and non-pooled component
will accrue on the balance of such component at a
per annum rate equal to the net mortgage rate in
effect for the 11 Madison Avenue mortgage loan as of
the beginning of the related collection period.
Although the non-pooled component of the 11 Madison
Avenue mortgage loan will be part of the trust, such
component supports only the Class MAD certificates,
which certificates are not being offered pursuant to
this prospectus supplement.
The totals in the following tables may not add up to
100% due to rounding.
S-28
ALL MORTGAGE LOAN LOAN
LOANS GROUP 1 GROUP 2
-------------------- -------------------- -----------------
Number of mortgage loans ................ 96 81 15
Number of crossed loan pools ............ 2 2 0
Number of mortgaged properties .......... 97 81 16
Aggregate balance of all mortgage
loans ................................. $1,063,096,509 $ 948,065,473 $115,031,036
Number of mortgage loans with balloon
payments(1) ........................... 39 30 9
Aggregate balance of mortgage loans
with balloon payments(1) .............. $ 471,069,311 $ 428,413,800 $ 42,655,511
Number of mortgage loans with
anticipated repayment dates(2) ........ 30 26 4
Aggregate balance of mortgage loans
with anticipated repayment dates(2) ... $ 441,413,766 $ 391,223,698 $ 50,190,069
Number of fully amortizing mortgage
loans(3) .............................. 8 7 1
Aggregate balance of fully amortizing
mortgage loans(3) ..................... $ 38,283,431 $ 34,297,974 $ 3,985,457
Number of non-amortizing mortgage
loans ................................. 19 18 1
Aggregate balance of non-amortizing
mortgage loans ........................ $ 112,330,000 $ 94,130,000 $ 18,200,000
Average mortgage loan balance ........... $ 11,073,922 $ 11,704,512 $ 7,668,736
Minimum mortgage loan balance ........... $ 1,527,164 $ 1,550,000 $ 1,527,164
Maximum mortgage loan balance ........... $ 119,298,859 $ 119,298,859 $ 18,200,000
Maximum balance for a group of
cross-collateralized and
cross-defaulted loans(4) .............. $ 61,770,000(4) $ 61,770,000(4) $ 0
Weighted average cut-off date
loan-to-value ratio(5) ................ 70.0% 70.0% 69.8%
Minimum cut-off date loan-to-value
ratio ................................. 21.8% 21.8% 57.9%
Maximum cut-off date loan-to-value
ratio ................................. 80.0% 80.0% 79.5%
Weighted average loan-to-value ratio at
stated maturity or anticipated
repayment date(5) ..................... 60.1% 59.9% 62.0%
Weighted average underwritten debt
service coverage ratio(6) ............. 1.63x 1.64x 1.49x
Minimum underwritten debt service
coverage ratio ........................ 1.16x 1.19x 1.16x
Maximum underwritten debt service
coverage ratio .......................... 3.02x 3.02x 2.63x
Weighted average mortgage interest
rate .................................. 5.280% 5.304% 5.077%
Minimum mortgage interest rate .......... 4.260% 4.300% 4.260%
Maximum mortgage interest rate .......... 6.760% 6.760% 5.960%
Weighted average remaining term to
maturity or anticipated repayment
date (months) ......................... 109 111 95
Minimum remaining term to maturity or
anticipated repayment date (months).... 52 59 52
Maximum remaining term to maturity
or anticipated repayment date
(months) .............................. 264 264 179
Weighted average occupancy rate(7) ...... 93.9% 94.0% 93.5%
----------
(1) Does not include mortgage loans with
anticipated repayment dates or
mortgage loans that are
interest-only for their entire term.
(2) Not including mortgage loans that
are interest-only for their entire
term or fully amortizing mortgage
loans.
(3) Includes 1 mortgage loan that
substantially amortizes prior to its
anticipated repayment date but may
enter a period of hyper-amortization
after such date with respect to any
remaining balance.
(4) Consists of a group of 11 individual
mortgage loans (loan numbers 24, 28,
45, 52, 61, 64, 66, 70, 74, 85 and
89).
(5) For purposes of determining the
loan-to-value ratio of 1 mortgage
loan (loan number 46), representing
0.6% of the mortgage pool
S-29
(5.7% of loan group 2), such ratio
was adjusted by taking into account
amounts available under certain cash
reserves.
(6) For purposes of determining the debt
service coverage ratio of 1 mortgage
loan (loan number 91), representing
0.2% of the mortgage pool (2.0% of
loan group 2), such ratio was
adjusted by taking into account
amounts available under certain cash
reserves.
(7) Excludes 3 mortgage loans secured by
hospitality properties, representing
2.1% of the mortgage pool (2.4% of
loan group 1).
SECURITY FOR THE MORTGAGE
LOANS IN THE TRUST FUND .... Generally, all of the mortgage loans included
in the trust fund are non-recourse obligations
of the related borrowers.
o No mortgage loan included in the trust fund
is insured or guaranteed by any government
agency or private insurer.
o All of the mortgage loans included in the
trust fund are secured by first lien fee
mortgages or leasehold mortgages on
commercial properties, multifamily
properties or mobile home properties.
PROPERTY TYPES................ The following table describes the mortgaged
properties securing the mortgage loans expected
to be included in the trust fund as of the
cut-off date:
MORTGAGED PROPERTIES BY PROPERTY TYPE
PERCENTAGE PERCENTAGE OF PERCENTAGE OF
NUMBER OF AGGREGATE OF CUT-OFF CUT-OFF DATE CUT-OFF DATE
MORTGAGED CUT-OFF DATE POOL GROUP 1 GROUP 2
PROPERTY TYPE PROPERTIES DATE BALANCE BALANCE BALANCE BALANCE
- ------------------------------------- ------------ ----------------- ------------ --------------- --------------
Office ............................ 19 $ 445,391,450 41.9% 47.0% 0.0%
Retail ............................ 33 294,722,903 27.7 31.1 0.0
Retail - Anchored ............... 25 243,491,970 22.9 25.7 0.0
Retail - Shadow Anchored(1) ..... 2 28,247,436 2.7 3.0 0.0
Retail - Unanchored ............. 6 22,983,498 2.2 2.4 0.0
Multifamily ....................... 19 148,825,460 14.0 3.6 100.0
Self Storage ...................... 13 72,707,832 6.8 7.7 0.0
Industrial ........................ 7 58,109,110 5.5 6.1 0.0
Hospitality ....................... 3 22,285,236 2.1 2.4 0.0
Mobile Home Park .................. 1 13,424,059 1.3 1.4 0.0
Mixed Use ......................... 1 5,040,219 0.5 0.5 0.0
Land(2) ........................... 1 2,590,240 0.2 0.3 0.0
-- -------------- ----- ----- -----
TOTAL ............................. 97 $1,063,096,509 100.0% 100.0% 100.0%
== ============== ===== ===== =====
----------
(1) A mortgaged property is considered
shadow anchored if it is in close
proximity to an anchored retail
property.
(2) Specifically, the mortgaged property is
the fee interest in land which the
ground tenant has improved and has
leased as an anchored retail building.
The retail building is not part of the
loan collateral, and the source of funds
for loan repayment is the ground rent
payments made to the borrower.
[PIE CHART REPRESENTING
MORTGAGED PROPERTIES
BY PROPERTY TYPE OMITTED]
[DATA FROM PIE CHART SHOWN
HERE IN TABULAR FORM]
Office 41.9%
Retail 27.7%
Multifamily 14.0%
Self Storage 6.8%
Industrial 5.5%
Hospitality 2.1%
Mobile Home Park 1.3%
Mixed Use 0.5%
Land 0.2%
S-30
GEOGRAPHIC CONCENTRATIONS..... The mortgaged properties are located
throughout 26 states and the District of
Columbia. The following table describes the
number and percentage of mortgaged properties
in states which have concentrations of
mortgaged properties above 5.0%:
MORTGAGED PROPERTIES BY GEOGRAPHIC CONCENTRATION(1)
NUMBER OF AGGREGATE PERCENTAGE OF
MORTGAGED CUT-OFF DATE CUT-OFF DATE
STATE PROPERTIES BALANCE POOL BALANCE
- ----------------------- ------------ ----------------- --------------
CA .................. 18 $ 250,576,367 23.6%
Southern(2) ....... 10 194,724,028 18.3
Northern(2) ....... 8 55,852,339 5.3
NY .................. 5 155,073,945 14.6
FL .................. 9 84,674,052 8.0
NC .................. 5 70,799,856 6.7
DC .................. 1 58,500,000 5.5
Other ............... 59 443,472,288 41.7
-- -------------- -----
TOTAL ............... 97 $1,063,096,509 100.0%
== ============== =====
----------
(1) Because this table presents information
relating to the mortgaged properties and
not the mortgage loans, the information
for mortgage loans secured by more than
one mortgaged property is based on
allocated loan amounts (allocating the
mortgage loan principal balance to each
of those properties by the appraised
values of the mortgaged properties) or
the allocated loan amount as detailed in
the related mortgage loan documents.
(2) For purposes of determining whether a
mortgaged property is in Northern
California or Southern California,
mortgaged properties located north of
San Luis Obispo County, Kern County and
San Bernardino County were included in
Northern California and mortgaged
properties located in or south of such
counties were included in Southern
California.
LOAN GROUP 1
MORTGAGED PROPERTIES BY GEOGRAPHIC CONCENTRATION(1)
NUMBER OF AGGREGATE PERCENTAGE OF
MORTGAGED CUT-OFF DATE CUT-OFF DATE
STATE PROPERTIES BALANCE GROUP 1 BALANCE
- ----------------------- ------------ -------------- ----------------
CA .................. 13 $190,865,949 20.1%
Southern(2) ....... 7 145,524,028 15.3
Northern(2) ....... 6 45,341,921 4.8
NY .................. 5 155,073,945 16.4
FL .................. 9 84,674,052 8.9
NC .................. 5 70,799,856 7.5
DC .................. 1 58,500,000 6.2
Other ............... 48 388,151,671 40.9
-- ------------ -----
TOTAL ............... 81 $948,065,473 100.0%
== ============ =====
----------
(1) Because this table presents information
relating to the mortgaged properties and
not the mortgage loans, the information
for mortgage loans secured by more than
one mortgaged property is based on
allocated loan amounts (allocating the
mortgage loan principal balance to each
of those properties by the appraised
values of the mortgaged properties) or
the allocated loan amount as detailed in
the related mortgage loan documents.
S-31
(2) For purposes of determining whether a
mortgaged property is in Northern
California or Southern California,
mortgaged properties located north of
San Luis Obispo County, Kern County and
San Bernardino County were included in
Northern California and mortgaged
properties located in or south of such
counties were included in Southern
California.
LOAN GROUP 2
MORTGAGED PROPERTIES BY GEOGRAPHIC CONCENTRATION(1)
NUMBER OF AGGREGATE PERCENTAGE OF
MORTGAGED CUT-OFF DATE CUT-OFF DATE
STATE PROPERTIES BALANCE GROUP 2 BALANCE
- ----------------------- ------------ -------------- ----------------
CA .................. 5 $ 59,710,418 51.9%
Southern(2) ....... 3 49,200,000 42.8
Northern(2) ....... 2 10,510,418 9.1
WA .................. 3 21,200,000 18.4
OH .................. 1 9,890,069 8.6
NV .................. 1 9,300,000 8.1
AL .................. 2 7,131,626 6.2
Other ............... 4 7,798,923 6.8
- ------------ -----
TOTAL ............... 16 $115,031,036 100.0%
== ============ =====
----------
(1) Because this table presents information
relating to the mortgaged properties and
not the mortgage loans, the information
for mortgage loans secured by more than
one mortgaged property is based on
allocated loan amounts (allocating the
mortgage loan principal balance to each
of those properties by the appraised
values of the mortgaged properties) or
the allocated loan amount as detailed in
the related mortgage loan documents.
(2) For purposes of determining whether a
mortgaged property is in Northern
California or Southern California,
mortgaged properties located north of
San Luis Obispo County, Kern County and
San Bernardino County were included in
Northern California and mortgaged
properties located in or south of such
counties were included in Southern
California.
PAYMENT TERMS................. All of the mortgage loans included in the
trust fund accrue interest at a fixed rate,
other than mortgage loans providing for an
anticipated repayment date, which provide for
an increase of fixed interest after a certain
date.
o Payments on the mortgage loans included in
the trust fund are due on the 11th day of
the month, except payments on 2 mortgage
loans, representing 12.4% of the mortgage
pool (14.0% of loan group 1), are due on
the first day of the month. No mortgage
loan has a grace period that extends
payment beyond the 11th day of any calendar
month.
o As of the cut-off date, all of the mortgage
loans accrue interest on an actual/360
basis. Nineteen (19) of the mortgage loans,
representing 40.5% of the mortgage pool (12
mortgage loans in loan group 1 or 38.4% and
7 mortgage loans in loan group 2 or 57.5%),
have periods during which only interest is
due and periods in which
S-32
principal and interest are due. Nineteen
(19) mortgage loans, representing 10.6% of
the mortgage pool (18 mortgage loans in
loan group 1 or 9.9% and 1 mortgage loan in
group 2 or 15.8%), provide that only
interest is due until maturity or the
anticipated repayment date.
The following tables set forth additional
characteristics of the mortgage loans that we
anticipate to be included in the trust fund as
of the cut-off date:
RANGE OF CUT-OFF DATE BALANCES
PERCENTAGE PERCENTAGE OF PERCENTAGE OF
AGGREGATE OF CUT-OFF CUT-OFF DATE CUT-OFF DATE
RANGE OF CUT-OFF DATE NUMBER OF CUT-OFF DATE DATE POOL GROUP 1 GROUP 2
BALANCES ($) LOANS BALANCE BALANCE BALANCE BALANCE
- ------------------------------- ----------- ----------------- ------------ --------------- --------------
(less than) 2,000,000 5 $ 8,934,056 0.8% 0.8% 1.3%
2,000,001 -- 3,000,000 11 28,594,083 2.7 2.2 6.5
3,000,001 -- 4,000,000 12 41,322,485 3.9 3.9 3.5
4,000,001 -- 5,000,000 11 51,754,949 4.9 5.0 4.1
5,000,001 -- 6,000,000 7 38,062,054 3.6 3.5 4.5
6,000,001 -- 7,000,000 6 38,288,808 3.6 3.3 5.7
7,000,001 -- 8,000,000 8 60,880,418 5.7 5.6 6.8
8,000,001 -- 9,000,000 4 35,122,275 3.3 3.7 0.0
9,000,001 -- 10,000,000 4 37,699,490 3.5 1.0 24.9
10,000,001 -- 15,000,000 13 163,438,803 15.4 15.8 12.2
15,000,001 -- 20,000,000 6 100,780,000 9.5 6.9 30.6
20,000,001 -- 25,000,000 2 43,356,383 4.1 4.6 0.0
25,000,001 -- 30,000,000 1 30,000,000 2.8 3.2 0.0
30,000,001 -- 35,000,000 2 67,563,845 6.4 7.1 0.0
55,000,001 -- 60,000,000 2 116,000,000 10.9 12.2 0.0
80,000,001 -- 119,298,859 2 201,298,859 18.9 21.2 0.0
-- -------------- ----- ----- -----
TOTAL ....................... 96 $1,063,096,509 100.0% 100.0% 100.0%
== ============== ===== ===== =====
RANGE OF MORTGAGE RATES
PERCENTAGE PERCENTAGE OF PERCENTAGE OF
AGGREGATE OF CUT-OFF CUT-OFF DATE CUT-OFF DATE
RANGE OF MORTGAGE NUMBER OF CUT-OFF DATE DATE POOL GROUP 1 GROUP 2
RATES % LOANS BALANCE BALANCE BALANCE BALANCE
- -------------------------- ----------- ----------------- ------------ --------------- --------------
4.260 -- 5.249 ......... 42 $ 460,396,940 43.3% 43.1% 44.9%
5.250 -- 5.499 ......... 19 270,663,831 25.5 24.7 31.8
5.500 -- 5.749 ......... 14 144,474,249 13.6 13.7 12.7
5.750 -- 5.999 ......... 8 110,374,823 10.4 10.4 10.6
6.000 -- 6.249 ......... 9 60,951,666 5.7 6.4 0.0
6.250 -- 6.499 ......... 3 14,685,001 1.4 1.5 0.0
6.750 -- 6.760 ......... 1 1,550,000 0.1 0.2 0.0
-- -------------- ----- ----- -----
TOTAL .................. 96 $1,063,096,509 100.0% 100.0% 100.0%
== ============== ===== ===== =====
S-33
RANGE OF UNDERWRITTEN DSC RATIOS
PERCENTAGE PERCENTAGE OF PERCENTAGE OF
AGGREGATE OF CUT-OFF CUT-OFF DATE CUT-OFF DATE
NUMBER OF CUT-OFF DATE DATE POOL GROUP 1 GROUP 2
RANGE OF DSCR (X) LOANS BALANCE BALANCE BALANCE BALANCE
- ------------------------ ----------- ----------------- ------------ --------------- --------------
1.15 -- 1.19 ......... 2 $ 5,535,457 0.5% 0.2% 3.5%
1.20 -- 1.24 ......... 10 168,578,474 15.9 13.2 37.9
1.25 -- 1.29 ......... 11 94,991,287 8.9 8.1 15.9
1.30 -- 1.34 ......... 9 66,832,946 6.3 5.5 12.7
1.35 -- 1.39 ......... 5 106,815,175 10.0 11.3 0.0
1.40 -- 1.44 ......... 4 16,466,253 1.5 1.1 5.4
1.45 -- 1.49 ......... 7 40,296,241 3.8 4.0 2.0
1.50 -- 1.54 ......... 8 53,356,895 5.0 4.8 6.8
1.55 -- 1.59 ......... 4 27,927,674 2.6 2.9 0.0
1.60 -- 1.64 ......... 2 14,656,892 1.4 1.5 0.0
1.65 -- 1.69 ......... 4 56,624,142 5.3 6.0 0.0
1.70 -- 1.74 ......... 4 47,800,446 4.5 5.0 0.0
1.75 -- 1.79 ......... 1 32,563,845 3.1 3.4 0.0
1.80 -- 1.84 ......... 2 89,690,000 8.4 9.5 0.0
1.85 -- 1.89 ......... 1 3,192,070 0.3 0.3 0.0
2.00 -- 2.04 ......... 3 16,904,630 1.6 1.8 0.0
2.05 -- 2.09 ......... 2 15,322,000 1.4 1.6 0.0
2.10 -- 2.14 ......... 1 119,298,859 11.2 12.6 0.0
2.15 -- 2.19 ......... 1 5,848,000 0.6 0.6 0.0
2.20 -- 2.24 ......... 4 14,060,000 1.3 1.5 0.0
2.25 -- 2.29 ......... 1 2,520,000 0.2 0.3 0.0
2.30 -- 3.02 ......... 10 63,815,222 6.0 4.8 15.8
-- -------------- ----- ----- -----
TOTAL ................ 96 $1,063,096,509 100.0% 100.0% 100.0%
== ============== ===== ===== =====
RANGE OF CUT-OFF DATE LTV RATIOS
PERCENTAGE PERCENTAGE OF PERCENTAGE OF
AGGREGATE OF CUT-OFF CUT-OFF DATE CUT-OFF DATE
RANGE OF CUT-OFF NUMBER OF CUT-OFF DATE DATE POOL GROUP 1 GROUP 2
DATE LTV RATIOS (%) LOANS BALANCE BALANCE BALANCE BALANCE
- -------------------------- ----------- ----------------- ------------ --------------- --------------
20.01 -- 25.00 ......... 1 $ 2,590,240 0.2% 0.3% 0.0%
30.01 -- 35.00 ......... 1 8,000,000 0.8 0.8 0.0
40.01 -- 50.00 ......... 2 15,168,776 1.4 1.6 0.0
50.01 -- 55.00 ......... 2 98,400,000 9.3 10.4 0.0
55.01 -- 60.00 ......... 5 43,851,122 4.1 2.3 19.3
60.01 -- 65.00 ......... 10 157,227,217 14.8 15.7 6.9
65.01 -- 70.00 ......... 20 135,404,812 12.7 12.3 16.3
70.01 -- 75.00 ......... 21 199,271,127 18.7 19.5 12.7
75.01 -- 80.00 ......... 34 403,183,213 37.9 37.1 44.9
-- -------------- ----- ----- -----
TOTAL .................. 96 $1,063,096,509 100.0% 100.0% 100.0%
== ============== ===== ===== =====
RANGE OF REMAINING TERMS TO MATURITY
OR ANTICIPATED REPAYMENT DATE*
PERCENTAGE PERCENTAGE OF PERCENTAGE OF
AGGREGATE OF CUT-OFF CUT-OFF DATE CUT-OFF DATE
RANGE OF REMAINING NUMBER OF CUT-OFF DATE DATE POOL GROUP 1 GROUP 2
TERMS (MONTHS) LOANS BALANCE BALANCE BALANCE BALANCE
- ---------------------- ----------- ----------------- ------------ --------------- --------------
0 -- 60 ......... 17 $ 143,887,233 13.5% 10.2% 41.0%
61 -- 84 ......... 11 134,251,626 12.6 13.9 2.1
109 -- 120 ......... 56 734,841,441 69.1 71.0 53.5
169 -- 180 ......... 7 26,408,474 2.5 2.4 3.5
229 -- 240 ......... 4 18,907,734 1.8 2.0 0.0
253 -- 264 ......... 1 4,800,000 0.5 0.5 0.0
-- -------------- ----- ----- -----
TOTAL .............. 96 $1,063,096,509 100.0% 100.0% 100.0%
== ============== ===== ===== =====
----------
* With respect to the mortgage loans
with anticipated repayment dates, the
remaining term to maturity was
calculated as of the related
anticipated repayment date.
S-34
AMORTIZATION TYPES
PERCENTAGE PERCENTAGE OF PERCENTAGE OF
AGGREGATE OF CUT-OFF CUT-OFF DATE CUT-OFF DATE
NUMBER OF CUT-OFF DATE DATE POOL GROUP 1 GROUP 2
AMORTIZATION TYPE LOANS BALANCE BALANCE BALANCE BALANCE
- ------------------------------- ----------- ----------------- ------------ --------------- --------------
Amortizing Balloon .......... 31 $ 321,209,311 30.2% 32.1% 14.6%
Interest-only, Amortizing
ARD(1) .................... 11 280,670,000 26.4 25.4 35.0
Amortizing ARD .............. 19 160,743,766 15.1 15.9 8.6
Interest-only, Amortizing
Balloon(1) ................ 8 149,860,000 14.1 13.1 22.5
Interest-only, ARD .......... 18 99,605,000 9.4 8.6 15.8
Fully Amortizing(2) ......... 8 38,283,431 3.6 3.6 3.5
Interest-only ............... 1 12,725,000 1.2 1.3 0.0
-- -------------- ----- ----- -----
TOTAL ....................... 96 $1,063,096,509 100.0% 100.0% 100.0%
== ============== ===== ===== =====
----------
(1) These mortgage loans require payments of
interest-only for a period of 12 to 60
months from origination prior to the
commencement of payments of principal
and interest with respect to the
mortgage pool and loan group 1, and a
period of 12 to 24 months for loan group
2.
(2) Includes 1 mortgage loan that
substantially amortizes prior to its
anticipated repayment date but may enter
a period of hyper-amortization after such
date with respect to any remaining
balance.
Balloon loans have amortization schedules
significantly longer than their terms to
maturity and have substantial principal
payments due on their maturity dates, unless
prepaid earlier.
Mortgage loans providing for anticipated
repayment dates generally fully or
substantially amortize through their terms to
maturity. However, if such a mortgage loan is
not prepaid by a date specified in its
mortgage note, interest will accrue at a
higher rate and the borrower will be required
to apply all cash flow generated by the
mortgaged property in excess of its regular
debt service payments and certain other
permitted expenses and reserves to repay
principal on the mortgage loan.
In addition, because the fixed periodic
payment on the mortgage loans is determined
assuming interest is calculated on a "30/360
basis," but interest actually accrues and is
applied on all of the mortgage loans on an
"actual/360 basis," there will be less
amortization, absent prepayments, of the
principal balance during the term of the
related mortgage loan, resulting in a higher
final payment on such mortgage loan. This will
occur even if a mortgage loan is a "fully
amortizing" mortgage loan.
See "DESCRIPTION OF THE MORTGAGE POOL--
Certain Terms and Conditions of the Mortgage
Loans" in this prospectus supplement.
PREPAYMENT RESTRICTIONS....... All of the mortgage loans included in the
trust fund restrict or prohibit voluntary
prepayments of principal in some manner for
some period of time.
S-35
TYPES OF PREPAYMENT RESTRICTIONS
PERCENTAGE PERCENTAGE OF PERCENTAGE OF
AGGREGATE OF CUT-OFF CUT-OFF DATE CUT-OFF DATE
PREPAYMENT RESTRICTION NUMBER OF CUT-OFF DATE DATE POOL GROUP 1 GROUP 2
TYPE LOANS BALANCE BALANCE BALANCE BALANCE
- ---------------------------- ----------- ----------------- ------------ --------------- --------------
Prohibit prepayment for
most of the term of
the mortgage loan; but
permit defeasance
after a date specified
in the related
mortgage note for
most or all of the
remaining term* .......... 84 $ 963,491,902 90.6% 91.5% 83.8%
Prohibit prepayment
until a date specified
in the related
mortgage note and
then impose a yield
maintenance charge
for most of the
remaining term* .......... 9 62,018,478 5.8 4.6 16.2
Prohibit prepayment
until a date specified
in the related
mortgage note, and
then, at the election of
the borrower, permit
defeasance or
prepayment with a
yield maintenance
charge ................... 1 16,500,000 1.6 1.7 0.0
Prohibit prepayment
until a date specified
in the related
mortgage note, then
permit defeasance
until a date specified
in the related
mortgage note, then
permit prepayment
with a prepayment
premium .................. 1 11,976,706 1.1 1.3 0.0
Impose a yield
maintenance charge
for most or all of the
loan term ................ 1 9,109,421 0.9 1.0 0.0
-- -------------- ----- ----- -----
TOTAL ...................... 96 $1,063,096,509 100.0% 100.0% 100.0%
== ============== ===== ===== =====
----------
* For the purposes hereof, "remaining
term" refers to either remaining
term to maturity or anticipated repayment
date, as applicable.
See "DESCRIPTION OF THE MORTGAGE POOL--
Additional Mortgage Loan Information" in this
prospectus supplement. The ability of the
master servicer or special servicer to waive
or modify the terms of any mortgage loan
relating to the payment of a prepayment
premium or yield maintenance charge will be
limited as described in this prospectus
supplement. See "SERVICING OF THE MORTGAGE
LOANS--Modifications, Waivers and Amendments"
in this prospectus supplement. We make no
representations as to the enforceability of
the provisions of any mortgage
S-36
notes requiring the payment of a prepayment
premium or yield maintenance charge or
limiting prepayments to defeasance or the
ability of the master servicer or special
servicer to collect any prepayment premium or
yield maintenance charge.
DEFEASANCE.................... Eighty-six (86) of the mortgage loans
included in the trust fund as of the cut-off
date, representing 93.3% of the mortgage pool
(74 mortgage loans in loan group 1 or 94.5% and
12 mortgage loans in loan group 2 or 83.8%),
permit the borrower, under certain conditions,
to substitute United States government
obligations as collateral for the related
mortgage loans (or a portion thereof) following
their respective lock-out periods. One (1) of
these mortgage loans, representing 1.6% of the
mortgage pool (1.7% of loan group 1) prohibits
prepayment until a date specified in the
related mortgage note, and then, at the
election of the borrower, permits defeasance or
prepayment with a yield maintenance charge. One
(1) of these mortgage loans, representing 1.1%
of the mortgage pool (1.3% of loan group 1)
prohibits prepayment until a date specified in
the loan documents, then permits defeasance
until a date specified in the loan documents,
and then permits prepayment with a prepayment
premium. Upon such substitution, the related
mortgaged property (or, in the case of a
mortgage loan secured by multiple mortgaged
properties, one or more of such mortgaged
properties) will no longer secure the related
mortgage loan. The payments on the defeasance
collateral are required to be at least equal to
an amount sufficient to make, when due, all
payments on the related mortgage loan or
allocated to the related mortgaged property
(provided that in the case of certain mortgage
loans, such defeasance payments may cease at
the beginning of the open prepayment period
with respect to such mortgage loan, and the
final payment on the defeasance collateral
would fully prepay the mortgage loan).
Defeasance may not occur prior to the second
anniversary of the issuance of the
certificates. See "DESCRIPTION OF THE MORTGAGE
POOL--Certain Terms and Conditions of the
Mortgage Loans--Prepayment Provisions" in this
prospectus supplement.
TWENTY LARGEST
MORTGAGE LOANS................ The following table describes certain
characteristics of the twenty largest mortgage
loans or groups of cross collateralized
mortgage loans, in the trust fund by aggregate
principal balance as of the cut-off date. With
respect to the loan referred to as the 11
Madison Avenue mortgage loan in the immediately
following table, the loan balance per square
foot, the debt service coverage ratio and the
loan-to-value ratio set forth in such table are
based on the aggregate combined principal
balance of the 11 Madison Avenue mortgage loan
(excluding the non-pooled component of the 11
Madison Avenue mortgage loan) and its related
pari passu
S-37
companion loans (but not any subordinate
companion loans) which are pari passu in the
right of entitlement to payment with the 11
Madison Avenue mortgage loan. The related
companion loans are not included in the trust
fund.
NUMBER OF % OF
MORTGAGE % OF APPLICABLE
LOANS/ CUT-OFF CUT-OFF
MORTGAGE NUMBER OF CUT-OFF DATE DATE LOAN
LOAN MORTGAGED LOAN DATE POOL GROUP
LOAN NAME SELLER PROPERTIES GROUP BALANCE* BALANCE BALANCE
- -------------------------- ----------- ------------ ------- --------------- --------- ------------
Ernst & Young Plaza....... Eurohypo 1/1 1 $119,298,859 11.2% 12.6%
11 Madison Avenue ........ Wachovia 1/1 1 82,000,000 7.7 8.6%
Extra Space Self
Storage Portfolio ....... Wachovia 11/11 1 61,770,000 5.8 6.5%
1130 Connecticut
Avenue .................. Wachovia 1/1 1 58,500,000 5.5 6.2%
Crossroads Plaza ......... Citigroup 1/1 1 57,500,000 5.4 6.1%
24 West 57th Street ...... Wachovia 1/1 1 35,000,000 3.3 3.7%
Eastdale Mall ............ Wachovia 1/1 1 32,563,845 3.1 3.4%
One Riverview
Square .................. Artesia 1/1 1 30,000,000 2.8 3.2%
Pointe at Wellington ..... Wachovia 1/1 1 22,856,383 2.1 2.4%
Hampton Bays Town
Center .................. Wachovia 1/1 1 20,500,000 1.9 2.2%
----- ------------ ----
SUBTOTAL/WTD. AVG ....... 20/20 $519,989,087 48.9%
===== ============ ====
Cole Company
Portfolio ............... Wachovia 6/6 1 $ 19,635,000 1.8% 2.1%
Highland Pinetree
Apartments .............. Wachovia 1/1 2 18,200,000 1.7 15.8%
Cowesset Corners ......... Wachovia 1/1 1 17,430,000 1.6 1.8%
Montelena
Apartments .............. Wachovia 1/1 2 17,000,000 1.6 14.8%
Glenridge Pointe
Office Buildings ........ Wachovia 1/1 1 16,500,000 1.6 1.7%
ConAgra Distribution
Facility ................ Wachovia 1/1 1 16,400,000 1.5 1.7%
Broadstone Heights
Apartments .............. Wachovia 1/1 1 15,250,000 1.4 1.6%
Greenpoint Industrial
Center .................. Wachovia 1/1 1 14,983,705 1.4 1.6%
Highridge Centre ......... Citigroup 1/1 1 14,466,761 1.4 1.5%
The Lake Apartments....... Wachovia 1/1 2 14,000,000 1.3 12.2%
----- ------------ ----
SUBTOTAL/WTD. AVG ....... 15/15 $163,865,466 15.4%
----- ------------ ----
TOTAL/WTD. AVG. ......... 35/35 $683,854,553 64.3%
===== ============ ====
WEIGHTED
WEIGHTED AVERAGE
AVERAGE LTV WEIGHTED
LOAN WEIGHTED CUT-OFF RATIO AT AVERAGE
PROPERTY BALANCE PER AVERAGE DATE LTV MATURITY MORTGAGE
LOAN NAME TYPE SF/ UNIT/ PAD DSCR RATIO OR ARD RATE
- -------------------------- ------------------------------- --------------- ---------- ---------- ---------- -----------
Ernst & Young Plaza....... Office - CBD $ 96 2.13x 63.8% 52.9% 5.068%
11 Madison Avenue ........ Office - CBD $ 164 1.81x 54.7% 50.6% 5.304%
Extra Space Self
Storage Portfolio ....... Self Storage $ 8,222 2.19x 80.0% 80.0% 4.300%
1130 Connecticut
Avenue .................. Office - CBD $ 267 1.22x 79.7% 73.8% 5.290%
Crossroads Plaza ......... Retail - Anchored $ 121 1.35x 79.3% 68.5% 4.920%
24 West 57th Street ...... Office - CBD $ 349 1.23x 79.6% 76.5% 5.660%
Eastdale Mall ............ Retail - Anchored $ 67 1.77x 71.6% 59.7% 5.430%
One Riverview
Square .................. Office - CBD $ 203 1.38x 77.9% 72.7% 5.805%
Pointe at Wellington ..... Retail - Shadow Anchored $ 172 1.67x 66.4% 57.1% 6.230%
Hampton Bays Town
Center .................. Retail - Anchored $ 199 1.71x 71.9% 62.3% 5.050%
SUBTOTAL/WTD. AVG ....... 1.73X 70.6% 63.5% 5.178%
Cole Company
Portfolio ............... Various $ 101 2.43x 66.2% 66.2% 4.460%
Highland Pinetree
Apartments .............. Multifamily - Conventional $ 56,875 2.63x 58.7% 58.7% 4.560%
Cowesset Corners ......... Retail - Anchored $ 121 1.20x 80.0% 73.3% 5.800%
Montelena
Apartments .............. Multifamily - Conventional $ 77,273 1.20x 75.6% 72.0% 4.610%
Glenridge Pointe
Office Buildings ........ Office - Suburban $ 89 1.57x 68.8% 62.0% 4.840%
ConAgra Distribution
Facility ................ Industrial - Warehouse $ 23 1.69x 50.3% 42.6% 5.920%
Broadstone Heights
Apartments .............. Multifamily - Conventional $ 70,602 1.25x 73.0% 68.1% 5.800%
Greenpoint Industrial
Center .................. Industrial - Light Industrial $ 35 1.30x 74.9% 62.7% 5.540%
Highridge Centre ......... Office - Suburban $ 75 1.52x 68.6% 56.4% 4.950%
The Lake Apartments....... Multifamily - Conventional $102,941 1.24x 79.1% 75.1% 4.260%
SUBTOTAL/WTD. AVG ....... 1.64X 69.2% 63.7% 5.063%
TOTAL/WTD. AVG. ......... 1.71X 70.3% 63.6% 5.151%
- ----------
* In the case of a concentration of cross-collateralized mortgage loans,
the aggregate principal balance.
For more information on the twenty largest
mortgage loans in the trust fund, see
"DESCRIPTION OF THE MORTGAGE POOL--Twenty
Largest Mortgage Loans" in this prospectus
supplement.
CO-LENDER LOANS............... Three (3) mortgage loans to be included in
the trust that were originated by Wachovia
Bank, National Association, representing
approximately 9.0% of the mortgage pool (2
mortgage loans in loan group 1 or 9.8% and 1
mortgage loan in loan group 2 or 2.1%), are, in
each case, evidenced by one of two or more
notes which are secured by a single mortgaged
real property. In each case, the related
companion loan(s) will not be part of the trust
fund. One (1) mortgage
S-38
loan, loan number 2 (the 11 Madison Avenue
mortgage loan), is part of a split loan
structure where 3 companion loans that are
part of this split loan structure are pari
passu in right of entitlement to payment with
the 11 Madison Avenue mortgage loan and the
other 3 companion loans are junior to the 4
loans that are pari passu in right of
entitlement to payment. The 11 Madison Avenue
mortgage loan is further divided into a pooled
component that is included as part of the
mortgage pool and available for payments on
the 2004-C12 certificates to the extent
described in this prospectus supplement and a
non-pooled component that is also included as
part of the mortgage pool, but is available
for payments on the Class MAD certificates
only.
The remaining 2 mortgage loans, loan numbers
27 and 90 (the Mountain View Apartments
mortgage loan and the Fox Valley Apartments
mortgage loan), are each part of a split loan
structure in which the related companion loan
is subordinate to the related mortgage loan.
Each of these mortgage loans and its related
companion loan(s) are subject to intercreditor
agreements.
The intercreditor agreement for the 11 Madison
Avenue mortgage loan and the pooling and
servicing agreement generally allocate
collections in respect of such mortgage loan
first, to the mortgage loan and the related
pari passu companion loans, on a pro rata
basis, and second, to amounts due on the
subordinate companion loans; provided, that
amounts allocated to the 11 Madison Avenue
mortgage loan will be allocated between the
related pooled component and non-pooled
component as described in "DESCRIPTION OF THE
CERTIFICATES--Class MAD Certificates and the
11 Madison Avenue Non-Pooled Component" in
this prospectus supplement. The related
intercreditor agreement with respect to each
of the 2 mortgage loans with a subordinate
companion loan only, among other things,
generally allocates collections in respect of
such loans first to amounts due on the
mortgage loan in the trust fund and second to
amounts due on the related junior companion
loan. The master servicer and special servicer
will service and administer these mortgage
loans and their related companion loans (other
than the 11 Madison Avenue mortgage loan and
its related companion loans) pursuant to the
pooling and servicing agreement and the
related intercreditor agreement for so long as
the related mortgage loan is part of the trust
fund. The 11 Madison Avenue mortgage loan and
its related companion loans will be serviced
under the pooling and servicing agreement
entered into in connection with the issuance
of the Wachovia Bank Commercial Mortgage
Trust, Commercial Mortgage Pass-Through
Certificates, Series 2004-C10. The master
servicer and, with respect to the 11 Madison
Avenue mortgage loan, the special servicer
under the 2004-C10 pooling and servicing
agreement is Wachovia Bank,
S-39
National Association and the special servicer,
except with respect to the 11 Madison Avenue
mortgage loan, under the 2004-C10 pooling and
servicing agreement is Lennar Partners, Inc.
The terms of the 2004-C10 pooling and
servicing agreement are generally similar to
the terms of the pooling and servicing
agreement for this transaction. See "SERVICING
OF THE MORTGAGE LOANS--Servicing of the 11
Madison Avenue Loan" in this prospectus
supplement. With respect to 2 mortgage loans
(loan numbers 27 and 90), the related
intercreditor agreement allows the trust fund
and the related companion loan to receive
separate collections of principal and interest
prior to any material defaults.
Amounts attributable to any companion loan
will not be assets of the trust fund, and will
be beneficially owned by the holder of such
companion loan. See "DESCRIPTION OF THE
MORTGAGE POOL--Co-Lender Loans" in this
prospectus supplement.
See "DESCRIPTION OF THE MORTGAGE
POOL--Co-Lender Loans" and "SERVICING OF THE
MORTGAGE LOANS" in this prospectus supplement
for a description of certain rights of the
holders of these companion loans to direct or
consent to the servicing of the related
mortgage loans.
In addition to the mortgage loans described
above, certain of the mortgaged properties or
the equity interests in the related borrowers
are subject to, or are permitted to become
subject to, additional debt. In certain cases,
this additional debt is secured by the related
mortgaged properties. See "RISK
FACTORS--Additional Debt on Some Mortgage
Loans Creates Additional Risks" in this
prospectus supplement.
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RISK FACTORS
o You should carefully consider, among other things, the following risk
factors (as well as the risk factors set forth under "RISK FACTORS" in
the accompanying prospectus) before making your investment decision.
Additional risks are described elsewhere in this prospectus supplement
under separate headings in connection with discussions regarding
particular aspects of the mortgage loans included in the trust fund or
the certificates.
o The risks and uncertainties described below are not the only ones
relating to your certificates. Additional risks and uncertainties not
presently known to us or that we currently deem immaterial may also
impair your investment.
o This prospectus supplement contains forward-looking statements that
involve risk and uncertainties. Actual results could differ materially
from those anticipated in these forward-looking statements as a result
of certain factors, including risks described below and elsewhere in
this prospectus supplement.
o If any of the following risks are realized, your investment could be
materially and adversely affected.
THE OFFERED CERTIFICATES
ONLY TRUST FUND ASSETS ARE
AVAILABLE TO PAY YOU......... Neither the offered certificates nor the
mortgage loans will be guaranteed or insured by
us or any of our affiliates, by any
governmental agency or instrumentality or by
any other person. If the assets of the trust
fund, primarily the mortgage loans, are
insufficient to make payments on the offered
certificates, no other assets will be available
for payment of the deficiency. See "RISK
FACTORS--The Assets of the Trust Fund May Not
Be Sufficient to Pay Your Certificates" in the
accompanying prospectus.
PREPAYMENTS WILL AFFECT
YOUR YIELD.................... Prepayments. The yield to maturity on the
offered certificates will depend on the rate
and timing of principal payments (including
both voluntary prepayments, in the case of
mortgage loans that permit voluntary
prepayment, and involuntary prepayments, such
as prepayments resulting from casualty or
condemnation, defaults, liquidations or
repurchases for breaches of representations or
warranties or other sales of defaulted mortgage
loans which in either case may not require any
accompanying prepayment premium or yield
maintenance charge) on the mortgage loans
included in the trust fund and how such
payments are allocated among the offered
certificates entitled to distributions of
In addition, upon the occurrence of certain
limited events, a party may be required or
permitted to repurchase or purchase a mortgage
loan from the trust fund and the money paid
would be passed through to the holders of the
certificates with the same effect as if such
mortgage loan had been prepaid in full (except
that no prepayment premium or yield
maintenance charge would be payable with
respect to any such purchase or repurchase).
In addition, certain mortgage loans may permit
prepayment without an accompanying prepayment
premium or yield maintenance charge if the
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mortgagee elects to apply casualty or
condemnation proceeds to the mortgage loan. We
cannot make any representation as to the
anticipated rate of prepayments (voluntary or
involuntary) on the mortgage loans or as to
the anticipated yield to maturity of any
certificate.
In addition, because the amount of principal
that will be distributed to the Class A-1,
Class A-2, Class A-3, Class A-4 and Class A-1A
certificates will generally be based upon the
particular loan group in which the related
mortgage loan is deemed to be a part, the
yield on the Class A-1, Class A-2, Class A-3
and Class A-4 certificates will be
particularly sensitive to prepayments on
mortgage loans in loan group 1 and the yield
on the Class A-1A certificates will be
particularly sensitive to prepayments on
mortgage loans in loan group 2.
See "YIELD AND MATURITY CONSIDERATIONS" in
this prospectus supplement and "YIELD
CONSIDERATIONS" in the accompanying
prospectus.
Yield. In general, if you purchase an offered
certificate at a premium and principal
distributions on that offered certificate
occur at a rate faster than you anticipated at
the time of purchase, and no prepayment
premiums or yield maintenance charges are
collected, your actual yield to maturity may
be lower than you had predicted at the time of
purchase. Conversely, if you purchase an
offered certificate at a discount and
principal distributions on that offered
certificate occur at a rate slower than you
anticipated at the time of purchase, your
actual yield to maturity may be lower than you
had predicted at the time of purchase.
The yield on the Class A-3, Class A-4, Class
B, Class C, Class D and Class E certificates
could be adversely affected if mortgage loans
with higher interest rates pay faster than
mortgage loans with lower interest rates,
since those classes bear interest at a rate
equal to, based upon or limited by the
weighted average net mortgage rate of the
mortgage loans.
Interest Rate Environment. Mortgagors
generally are less likely to prepay if
prevailing interest rates are at or above the
rates borne by their mortgage loans. On the
other hand, mortgagors are more likely to
prepay if prevailing interest rates fall
significantly below the mortgage interest
rates of their mortgage loans. Mortgagors are
less likely to prepay mortgage loans with a
lockout period, yield maintenance charge or
prepayment premium provision, to the extent
enforceable, than similar mortgage loans
without such provisions, with shorter lockout
periods or with lower yield maintenance
charges or prepayment premiums.
Performance Escrows. In connection with the
origination of some of the mortgage loans, the
related borrowers were required to escrow
funds or post a letter of credit related to
obtaining certain performance objectives. In
general, such funds will be released to the
related borrower upon the
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satisfaction of certain conditions. If the
conditions are not satisfied, although the
master servicer will be directed in the
pooling and servicing agreement (in accordance
with the servicing standard) to hold the
escrows, letters of credit or proceeds of such
letters of credit as additional collateral and
not use the funds to reduce the principal
balance of the related mortgage loan, in the
event such funds are required to be used to
reduce the principal balance of such mortgage
loans, such amounts will be passed through to
the holders of the certificates as principal
prepayments.
Premiums. Provisions requiring prepayment
premiums and yield maintenance charges may not
be enforceable in some states and under
federal bankruptcy law, and may constitute
interest for usury purposes. Accordingly, we
cannot provide assurance that the obligation
to pay such premium or charge will be
enforceable or, if enforceable, that the
foreclosure proceeds will be sufficient to pay
such prepayment premium or yield maintenance
charge. Additionally, although the collateral
substitution provisions related to defeasance
are not intended to be, and do not have the
same effect on the certificateholders as, a
prepayment, we cannot provide assurance that a
court would not interpret such provisions as
requiring a prepayment premium or yield
maintenance charge and possibly determine that
such provisions are unenforceable or usurious
under applicable law. Prepayment premiums and
yield maintenance charges are generally not
charged for prepayments resulting from
casualty or condemnation and would not be paid
in connection with repurchases of mortgage
loans for breaches of representations or
warranties. No prepayment premium or yield
maintenance charge will be required for
prepayments in connection with a casualty or
condemnation unless, in the case of certain of
the mortgage loans, an event of default has
occurred and is continuing.
Pool Concentrations. Principal payments
(including prepayments) on the mortgage loans
included in the trust fund or in a particular
group will occur at different rates. In
addition, mortgaged properties can be released
from the trust fund as a result of
prepayments, defeasance, repurchases,
casualties or condemnations. As a result, the
aggregate balance of the mortgage loans
concentrated in various property types in the
trust fund or in a particular loan group
changes over time. You therefore may be
exposed to varying concentration risks as the
mixture of property types and relative
principal balance of the mortgage loans
associated with certain property types
changes. See the table entitled "Range of
Remaining Terms to Maturity or Anticipated
Repayment Date for all Mortgage Loans as of
the Cut-Off Date" under "DESCRIPTION OF THE
MORTGAGE POOL--Additional Mortgage Loan
Information" in this prospectus supplement for
a description of the respective maturity dates
of the mortgage loans included in the trust
fund and in each loan group. Because principal
on the certificates (other than the Class IO,
Class Z, Class R-I and Class R-II
certificates) is
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payable in sequential order to the extent
described under "DESCRIPTION OF THE
CERTIFICATES--Distributions" in this
prospectus supplement, classes that have a
lower priority of distributions are more
likely to be exposed to the risk of changing
concentrations discussed under "--Special
Risks Associated With High Balance Mortgage
Loans" below than classes with a higher
sequential priority.
OPTIONAL EARLY TERMINATION OF
THE TRUST FUND MAY RESULT IN
AN ADVERSE IMPACT ON
YOUR YIELD OR MAY RESULT
IN A LOSS.................... The offered certificates will be subject to
optional early termination by means of the
purchase of the mortgage loans in the trust
fund. We cannot assure you that the proceeds
from a sale of the mortgage loans will be
sufficient to distribute the outstanding
certificate balance plus accrued interest and
any undistributed shortfalls in interest
accrued on the certificates that are subject to
the termination. Accordingly, the holders of
offered certificates affected by such a
termination may suffer an adverse impact on the
overall yield on their certificates, may
experience repayment of their investment at an
unpredictable and inopportune time or may even
incur a loss on their investment. See
"DESCRIPTION OF THE CERTIFICATES--Termination"
in this prospectus supplement.
BORROWER DEFAULTS MAY ADVERSELY
AFFECT YOUR YIELD............ The aggregate amount of distributions on the
offered certificates, the yield to maturity of
the offered certificates, the rate of principal
payments on the offered certificates and the
weighted average life of the offered
certificates will be affected by the rate and
timing of delinquencies and defaults on the
mortgage loans included in the trust fund.
Delinquencies on the mortgage loans included in
the trust fund, if the delinquent amounts are
not advanced, may result in shortfalls in
distributions of interest and/or principal to
the offered certificates for the current month.
Any late payments received on or in respect of
the mortgage loans will be distributed to the
certificates in the priorities described more
fully in this prospectus supplement, but no
interest will accrue on such shortfall during
the period of time such payment is delinquent.
If you calculate your anticipated yield based
on an assumed default rate and an assumed
amount of losses on the mortgage pool that are
lower than the default rate and the amount of
losses actually experienced, and if such
losses are allocated to your class of
certificates, your actual yield to maturity
will be lower than the yield so calculated and
could, under certain scenarios, be negative.
The timing of any loss on a liquidated
mortgage loan also will affect the actual
yield to maturity of the offered certificates
to which all or a portion of such loss is
allocable, even if the rate of defaults and
severity of losses
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are consistent with your expectations. In
general, the earlier you bear a loss, the
greater the effect on your yield to maturity.
See "YIELD AND MATURITY CONSIDERATIONS" in
this prospectus supplement and "YIELD
CONSIDERATIONS" in the accompanying
prospectus.
Even if losses on the mortgage loans included
in the trust fund are allocated to a
particular class of offered certificates, such
losses may affect the weighted average life
and yield to maturity of other certificates.
Losses on the mortgage loans, to the extent
not allocated to such class of offered
certificates, may result in a higher
percentage ownership interest evidenced by
such certificates than would otherwise have
resulted absent such loss. The consequent
effect on the weighted average life and yield
to maturity of the offered certificates will
depend upon the characteristics of the
remaining mortgage loans.
ADDITIONAL COMPENSATION AND
CERTAIN REIMBURSEMENTS TO
THE SERVICER WILL AFFECT
YOUR RIGHT TO RECEIVE
DISTRIBUTIONS................ To the extent described in this prospectus
supplement, the master servicer, the trustee or
the fiscal agent, as applicable, will be
entitled to receive interest on unreimbursed
advances and unreimbursed servicing expenses.
The right of the master servicer, the trustee
or the fiscal agent to receive such payments of
interest is senior to the rights of
certificateholders to receive distributions on
the offered certificates and, consequently, may
result in additional trust fund expenses being
allocated to the offered certificates that
would not have resulted absent the accrual of
such interest. In addition, the special
servicer will receive a fee with respect to
each specially serviced mortgage loan and any
collections thereon, including specially
serviced mortgage loans which have been
returned to performing status. This will result
in shortfalls which will be allocated to the
offered certificates.
Amounts in respect of the non-pooled component
of the 11 Madison Avenue mortgage loan are not
available for distributions on the
certificates (other than the Class MAD
certificates), nor are they available for the
reimbursement of nonrecoverable advances of
principal and interest on the certificates
(other than the Class MAD certificates) that
are unrelated to the 11 Madison Avenue
mortgage loan. Nevertheless, if an advance by
the 2004-C10 master servicer, the 2004-C10
trustee, the master servicer, trustee or the
fiscal agent, if applicable, on the non-pooled
component of the 11 Madison Avenue mortgage
loan becomes a nonrecoverable advance and such
party is unable to recover such amounts from
amounts available for distribution on the
Class MAD certificates, the 2004-C10 master
servicer, the 2004-C10 trustee, the master
servicer, trustee or the fiscal agent, if
applicable, will be permitted to recover a
nonrecoverable advance (including interest
thereon) from the assets of the trust
available for distribution on the
certificates. This may
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result in shortfalls which will be allocated
to the offered certificates.
SUBORDINATION OF SUBORDINATE
OFFERED CERTIFICATES......... As described in this prospectus supplement,
unless your certificates are Class A-1, Class
A-2, Class A-3, Class A-4, Class A-1A or Class
IO certificates, your rights to receive
distributions of amounts collected or advanced
on or in respect of the mortgage loans will be
subordinated to those of the holders of the
offered certificates with an earlier
alphabetical designation and the Class A-1A and
Class IO certificates.
See "DESCRIPTION OF THE CERTIFICATES--
Distributions--Application of the Available
Distribution Amount" and "DESCRIPTION OF THE
CERTIFICATES--Subordination; Allocation of
Losses and Certain Expenses" in this
prospectus supplement.
YOUR LACK OF CONTROL OVER THE
TRUST FUND CAN CREATE RISKS.. You and other certificateholders generally do
not have a right to vote and do not have the
right to make decisions with respect to the
administration of the trust. See "SERVICING OF
THE MORTGAGE LOANS--General" in this prospectus
supplement. Those decisions are generally made,
subject to the express terms of the pooling and
servicing agreement, by the master servicer,
the trustee, the fiscal agent or the special
servicer, as applicable. Any decision made by
one of those parties in respect of the trust,
even if that decision is determined to be in
your best interests by that party, may be
contrary to the decision that you or other
certificateholders would have made and may
negatively affect your interests.
Under certain circumstances, the consent or
approval of less than all certificateholders
will be required to take, and will bind all
certificateholders to, certain actions
relating to the trust fund. The interests of
those certificateholders may be in conflict
with those of the other certificateholders.
For example, certificateholders of certain
classes that are subordinate in right of
payment may direct the actions of the special
servicer with respect to troubled mortgage
loans and related mortgaged properties. In
certain circumstances, the holder of a
companion loan, mezzanine loan or subordinate
debt may direct the actions of the special
servicer with respect to the related mortgage
loan and the holder of a companion loan,
mezzanine loan or subordinate debt will have
certain consent rights relating to foreclosure
or modification of the related loans. The
interests of such holder of a companion loan,
mezzanine loan or subordinate debt may be in
conflict with those of the certificateholders.
One (1) of the mortgage loans, the 11 Madison
Avenue mortgage loan (loan number 2),
representing 7.7% of the mortgage pool (8.6%
of loan group 1), is evidenced by multiple
promissory notes. For such mortgage loan,
certain
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of the related promissory notes are pari passu
in right of payment. In addition, the mortgage
loan has promissory notes that are subordinate
in right of payment to the notes that are pari
passu in right of payment. Only one of the
promissory notes is included in the trust
fund. One of the related pari passu companion
notes is owned by the trust fund relating to
the Wachovia Bank Commercial Mortgage Trust,
Commercial Mortgage Pass-Through Certificates,
Series 2004-C10 and another of the related
pari passu companion notes is owned by the
trust fund relating to the Wachovia Bank
Commercial Mortgage Trust, Commercial Mortgage
Pass-Through Certificates, Series 2004-C11.
The 11 Madison Avenue mortgage loan, and its
related companion loans, will be serviced
pursuant to the 2004-C10 pooling and servicing
agreement. The 2004-C10 controlling class
representative may have certain control rights
with respect to each of these loans.
With respect to the 11 Madison Avenue mortgage
loan, the subordinate companion holder,
controlling class representative, 2004-C11
controlling class representative and/or the
2004-C10 controlling class representative will
have decision making authority regarding
consents and other determinations. The
interests of these parties may be in conflict
with those of the certificateholders. See
"SERVICING OF THE MORTGAGE LOANS--Servicing of
the Madison Avenue Loan" in this prospectus
supplement.
Additionally, less than all of the
certificateholders may amend the pooling and
servicing agreement in certain circumstances.
See "SERVICING OF THE MORTGAGE LOANS--The
Controlling Class Representative" in this
prospectus supplement and "DESCRIPTION OF THE
CERTIFICATES--Voting Rights" in this
prospectus supplement and the accompanying
prospectus.
LIQUIDITY FOR CERTIFICATES MAY
BE LIMITED................... There is currently no secondary market for
the offered certificates. While each
underwriter has advised us that it intends to
make a secondary market in one or more classes
of the offered certificates, none of them are
under any obligation to do so. No secondary
market for your certificates may develop. If a
secondary market does develop, there can be no
assurance that it will be available for the
offered certificates or, if it is available,
that it will provide holders of the offered
certificates with liquidity of investment or
continue for the life of your certificates.
Lack of liquidity could result in a substantial
decrease in the market value of your
certificates. Your certificates will not be
listed on any securities exchange or traded in
any automated quotation system of any
registered securities association such as
NASDAQ.
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BOOK-ENTRY REGISTRATION....... Your certificates will be initially
represented by one or more certificates
registered in the name of Cede & Co., as the
nominee for DTC, and will not be registered in
your name. As a result, you will not be
recognized as a certificateholder, or holder of
record of your certificates.
POTENTIAL CONFLICTS
OF INTEREST................... The master servicer is an affiliate of the
depositor and is one of the underwriters and
one of the mortgage loan sellers. Wachovia
Bank, National Association is also acting as
the initial special servicer for the 11 Madison
Avenue mortgage loan under the pooling and
servicing agreement entered into in connection
with the issuance of the Wachovia Bank
Commercial Mortgage Trust, Commercial Mortgage
Pass-Through Certificates, Series 2004-C10.
These affiliations could cause conflicts with
the master servicer's duties to the trust under
the pooling and servicing agreement. However,
the pooling and servicing agreement provides
that the mortgage loans shall be administered
in accordance with the servicing standard
described in this prospectus supplement without
regard to an affiliation with any other party
to the pooling and servicing agreement. See
"SERVICING OF THE MORTGAGE LOANS--General" in
this prospectus supplement.
In addition, SL Green Funding LLC will be
appointed by Wachovia Bank, National
Association as a sub-servicer with respect to
the 11 Madison Avenue mortgage loan under the
pooling and servicing agreement entered into
in connection with the issuance of the
Wachovia Bank Commercial Mortgage Trust,
Commercial Mortgage Pass-Through Certificates,
Series 2004-C10. An affiliate of SL Green
Funding LLC owns the most subordinate
companion loan in the 11 Madison Avenue
mortgage loan. This could cause a conflict
between SL Green Funding LLC's duty to the
trust as a sub-servicer and its interest in
the related 11 Madison Avenue subordinate
loan.
The special servicer (and any related
sub-servicer) will be involved in determining
whether to modify or foreclose a defaulted
mortgage loan. The special servicer or an
affiliate of the special servicer may purchase
certain other non-offered certificates
(including the controlling class and the Class
Z certificates). The special servicer or its
affiliate may serve as the initial controlling
class representative. The special servicer or
its affiliates may acquire non-performing
loans or interests in non-performing loans,
which may include REO properties that compete
with the mortgaged properties securing
mortgage loans in the trust. The special
servicer or its affiliates own and are in the
business of acquiring assets similar in type
to the assets of the trust fund. The special
servicer or its affiliates may also make loans
on properties that may compete with the
mortgaged properties and may also advise other
clients that own or are in the business of
owning properties that compete with the
mortgaged properties or that own loans like
the mortgage loans included in the trust.
Accordingly, the assets of the special
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servicer and its affiliates may, depending
upon the particular circumstances including
the nature and location of such assets,
compete with the mortgaged properties for
tenants, purchasers, financing and so forth.
See "SERVICING OF THE MORTGAGE
LOANS--Modifications, Waivers and Amendments"
in this prospectus supplement.
This could cause a conflict between the
special servicer's duties to the trust under
the pooling and servicing agreement and its
interest as a holder of a certificate.
However, the pooling and servicing agreement
provides that the mortgage loans shall be
administered in accordance with the servicing
standard without regard to ownership of any
certificate by the master servicer, the
special servicer or any affiliate of the
special servicer. See "SERVICING OF THE
MORTGAGE LOANS--General" in this prospectus
supplement.
In addition, the related property managers and
borrowers may experience conflicts of interest
in the management and/or ownership of the
mortgaged properties securing the mortgage
loans because:
o a substantial number of the mortgaged
properties are managed by property
managers affiliated with the respective
borrowers;
o these property managers also may manage
and/or franchise additional properties,
including properties that may compete
with the mortgaged properties;
o affiliates of the property manager
and/or the borrowers, or the property
managers and/or the borrowers
themselves also may own other
properties, including competing
properties; or
o the mortgaged property is self managed.
In addition, certain mortgage loans included
in the trust may have been refinancings of
debt previously held by an affiliate of one of
the mortgage loan sellers.
TERRORIST ATTACKS AND MILITARY
CONFLICTS MAY ADVERSELY AFFECT
YOUR INVESTMENT.............. On September 11, 2001, the United States was
subjected to multiple terrorist attacks which
resulted in considerable uncertainty in the
world financial markets. The full impact of
these events is not yet known, but could
include, among other things, increased
volatility in the price of securities including
your certificates. The terrorist attacks may
also adversely affect the revenues or costs of
operation of the mortgaged properties. The
terrorist attacks on the World Trade Center and
the Pentagon suggest an increased likelihood
that large public areas such as shopping malls
or large office buildings could become the
target of terrorist attacks in the future. The
possibility of such attacks could (i) lead to
damage to one or more of the mortgaged
properties if any such attacks occur, (ii)
result in higher costs for security and
S-49
insurance premiums, particularly for large
properties, which could adversely affect the
cash flow at those mortgaged properties, or
(iii) impact leasing patterns or shopping
patterns which could adversely impact leasing
revenue and mall traffic and percentage rent.
As a result, the ability of the mortgaged
properties to generate cash flow may be
adversely affected. See "--Insurance Coverage
on Mortgaged Properties May Not Cover Special
Hazard Losses" below.
Terrorist attacks in the United States,
incidents of terrorism occurring outside the
United States and military conflict in Iraq
and elsewhere may significantly reduce air
travel throughout the United States, and,
therefore, continue to have a negative effect
on revenues in areas heavily dependent on
tourism. Any decrease in air travel may have a
negative effect on certain of the mortgaged
properties, including hotel mortgaged
properties and those mortgaged properties
located in tourist areas, which could reduce
the ability of such mortgaged properties to
generate cash flow.
It is uncertain what continued effect armed
conflict involving the United States,
including the recent war between the United
States and Iraq or any future conflict with
any other country, will have on domestic and
world financial markets, economies, real
estate markets, insurance costs or business
segments. Foreign or domestic conflicts of any
kind could have an adverse effect on the
mortgaged properties.
Accordingly, these disruptions, uncertainties
and costs could materially and adversely
affect your investment in the certificates.
THE MORTGAGE LOANS
RISKS ASSOCIATED WITH COMMERCIAL
LENDING MAY BE DIFFERENT THAN
FOR RESIDENTIAL LENDING...... Commercial and multifamily lending is
generally viewed as exposing a lender (and your
investment in the trust fund) to a greater risk
of loss than lending which is secured by
single-family residences, in part because it
typically involves making larger loans to
single borrowers or groups of related
mortgagors. In addition, unlike loans which are
secured by single-family residences, repayment
of loans secured by commercial and multifamily
properties depends upon the ability of the
related real estate project:
o to generate income sufficient to pay
debt service, operating expenses and
leasing commissions and to make
necessary repairs, tenant improvements
and capital improvements; and
o in the case of loans that do not fully
amortize over their terms, to retain
sufficient value to permit the borrower
to pay off the loan at maturity through
a sale or refinancing of the mortgaged
property.
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FUTURE CASH FLOW AND PROPERTY
VALUES ARE NOT PREDICTABLE... A number of factors, many beyond the control
of the property owner, may affect the ability
of an income-producing real estate project to
generate sufficient net operating income to pay
debt service and/or to maintain its value.
Among these factors are:
o economic conditions generally and in
the area of the project;
o the age, quality, functionality and
design of the project;
o the degree to which the project
competes with other projects in the
area;
o changes or continued weakness in
specific industry segments;
o increases in operating costs;
o the willingness and ability of the
owner to provide capable property
management and maintenance;
o the degree to which the project's
revenue is dependent upon a single
tenant or user, a small group of
tenants, tenants concentrated in a
particular business or industry and the
competition to any such tenants;
o an increase in the capital expenditures
needed to maintain the properties or
make improvements;
o a decline in the financial condition of
a major tenant;
o the location of a mortgaged property;
o whether a mortgaged property can be
easily converted (or converted at all)
to alternative uses;
o an increase in vacancy rates;
o perceptions regarding the safety,
convenience and attractiveness of such
properties;
o vulnerability to litigation by tenants
and patrons; and
o environmental contamination.
Many of the mortgaged properties securing
mortgage loans included in the trust fund have
leases that expire or may be subject to tenant
termination rights prior to the maturity date
of the related mortgage loan. Certain of such
loans may be leased entirely to a single
tenant. If leases are not renewed or replaced,
if tenants default, if rental rates fall
and/or if operating expenses increase, the
borrower's ability to repay the loan may be
impaired and the resale value of the property,
which is substantially dependent upon the
property's ability to generate income, may
decline. With respect to 1 mortgage loan, the
Ernst & Young Plaza mortgage loan,
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representing 11.2% of the mortgage pool (12.6%
of loan group 1), the leases for the 2 largest
tenants, occupying approximately 147,485 and
124,069 square feet, respectively, or
approximately 11.9% and 10.0% of the net
rentable area, expire in 2014 and 2012,
respectively. In addition, with respect to 1
mortgage loan, the 11 Madison Avenue mortgage
loan, representing 7.7% of the mortgage pool
(8.6% of loan group 1), the largest tenant,
Credit Suisse First Boston LLC, has the right
to terminate a portion of its leased space.
Although 74.3% of Credit Suisse First Boston
LLC's 1,921,459 square feet of net rentable
area is leased through April 2017, Credit
Suisse First Boston LLC does have the option
to terminate up to 528,730 square feet (27.5%
of Credit Suisse First Boston LLC's space and
23.4% of the mortgaged property's total space)
after April 2007 in its sole discretion,
provided that they meet certain notice
requirements and pay a termination fee. See
"DESCRIPTION OF THE MORTGAGE POOL--Twenty
Largest Mortgage Loans--11 Madison Avenue" in
this prospectus supplement. There can be no
assurance that the related borrower will be
able to relet the terminated space or that
such space could be relet at the same rate
being paid by Credit Suisse First Boston
Corporation. In addition, with respect to 1
mortgage loan, the 1130 Connecticut Avenue
mortgage loan, representing 5.5% of the
mortgage pool (6.2% of loan group 1), the
lease for the largest tenant, occupying 44,693
square feet or approximately 20.4% of the net
rentable area, expires in December 2008. Even
if borrowers successfully renew leases or
relet vacated space, the costs associated with
reletting, including tenant improvements,
leasing commissions and free rent, can exceed
the amount of any reserves maintained for that
purpose and reduce cash from the mortgaged
properties. Although some of the mortgage
loans included in the trust fund require the
borrower to maintain escrows for leasing
expenses, there is no guarantee that these
reserves will be sufficient.
In addition, there are other factors,
including changes in zoning or tax laws,
restrictive covenants, tenant exclusives and
rights of first refusal to lease or purchase,
the availability of credit for refinancing and
changes in interest-rate levels that may
adversely affect the value of a project and/or
the borrower's ability to sell or refinance
without necessarily affecting the ability to
generate current income. In addition, certain
of the mortgaged properties may be leased in
whole or in part by government-sponsored
tenants who may have certain rights to cancel
their leases or reduce the rent payable with
respect to such leases at any time for, among
other reasons, lack of appropriations. With
respect to 1 mortgage loan, the One Riverview
Square mortgage loan, representing 2.8% of the
mortgage pool (3.2% of loan group 1), a
government entity is the sole tenant of the
mortgaged property and has certain express
rights with respect to rent adjustments and
offsets under certain circumstances.
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Other factors are more general in nature, such
as:
o national, regional or local economic
conditions (including plant and
military installation closings,
industry slowdowns and unemployment
rates);
o local real estate conditions (such as
an oversupply of retail space, office
space or multifamily housing);
o demographic factors;
o consumer confidence;
o consumer tastes and preferences; and
o changes in building codes and other
applicable laws.
The volatility of net operating income will be
influenced by many of the foregoing factors,
as well as by:
o the length of tenant leases;
o the creditworthiness of tenants;
o in the case of rental properties, the
rate at which new rentals occur;
o the property's "operating leverage"
(i.e., the percentage of total property
expenses in relation to revenue, the
ratio of fixed operating expenses to
those that vary with revenues and the
level of capital expenditures required
to maintain the property and to retain
or replace tenants); and
o a decline in the real estate market or
in the financial condition of a major
tenant will tend to have a more
immediate effect on the net operating
income of property with short-term
revenue sources, such as short-term or
month-to-month leases, and may lead to
higher rates of delinquency or
defaults.
SOME MORTGAGED PROPERTIES MAY
NOT BE READILY CONVERTIBLE TO
ALTERNATIVE USES............. Some of the mortgaged properties securing the
mortgage loans included in the trust fund may
not be readily convertible (or convertible at
all) to alternative uses if those properties
were to become unprofitable for any reason. For
example, a mortgaged property may not be
readily convertible (or convertible at all) due
to restrictive covenants related to such
mortgaged property including, in the case of
mortgaged properties which are part of a
condominium regime, the use and other
restrictions imposed by the condominium
declaration and other related documents,
especially in a situation where a mortgaged
property does not represent the entire
condominium regime. In addition, converting
commercial properties to alternate uses
generally requires substantial capital
expenditures. The liquidation value of any
mortgaged property, subject to limitations of
the kind described above
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or other limitations on convertibility of use,
may be substantially less than would be the
case if the property were readily adaptable to
other uses.
One (1) mortgage loan (loan number 44),
representing 0.7% of the mortgage pool (0.8%
of loan group 1) is limited under the terms of
its ground lease from assigning the borrower's
interest in the ground lease to certain
individuals and may adversely impact amounts
received in a work-out.
See "--Special Risks Associated with
Industrial and Mixed-Use Facilities" below.
LOANS NOT INSURED
OR GUARANTEED................. Generally, the mortgage loans included in the
trust fund will not be an obligation of, or be
insured or guaranteed by, any governmental
entity, by any private mortgage insurer, or by
the depositor, any mortgage loan seller, the
underwriters, the master servicer, the special
servicer, the trustee or any of their
respective affiliates.
We have not evaluated the significance of the
recourse provisions of mortgage loans that may
permit recourse against the related borrower
or another person in the event of a default.
Accordingly, you should assume all of the
mortgage loans included in the trust fund are
nonrecourse loans, and that recourse in the
case of default will be limited to the related
mortgaged property.
However, in certain circumstances a mortgage
loan seller will be obligated to repurchase or
substitute a mortgage loan sold by it if:
o there is a defect or omission with
respect to certain of the documents
relating to such mortgage loan and such
defect or omission materially and
adversely affects the value of a
mortgage loan or the interests of the
trust therein or the interests of any
certificateholder; or
o certain of their respective
representations or warranties
concerning such mortgage loan are
breached, and such breach materially
and adversely affects the value of such
mortgage loan, the interests of the
trust therein or the interests of any
certificateholder and is not cured as
required.
We cannot provide assurance that the
applicable mortgage loan seller will be in a
financial position to make such a repurchase
or substitution.
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RISKS RELATING TO CERTAIN PROPERTY
TYPES........................ Particular types of income properties are
exposed to particular risks. For instance:
SPECIAL RISKS ASSOCIATED WITH OFFICE
PROPERTIES................... Office properties may require their owners to
expend significant amounts of cash to pay for
general capital improvements, tenant
improvements and costs of re-leasing space.
Office properties that are not equipped to
accommodate the needs of modern businesses may
become functionally obsolete and thus
non-competitive.
In addition, a large number of factors may
adversely affect the value of office
properties, including:
o the quality of an office building's
tenants;
o the physical attributes of the building
in relation to competing buildings
(e.g., age, condition, design, access
to transportation and ability to offer
certain amenities, such as
sophisticated building systems);
o the physical attributes of the building
with respect to the technological needs
of the tenants, including the
adaptability of the building to changes
in the technological needs of the
tenants;
o the desirability of the area as a
business location;
o the presence of competing properties;
and
o the strength and nature of the local
economy (including labor costs and
quality, tax environment and quality of
life for employees).
Moreover, the cost of refitting office space
for a new tenant is often higher than the cost
of refitting other types of properties for new
tenants.
Office properties secure 19 of the mortgage
loans included in the trust fund as of the
cut-off date, representing 41.9% of the
mortgage pool (47.0% of loan group 1) (based
on the primary property type for combined
office/retail properties).
SPECIAL RISKS ASSOCIATED WITH
SHOPPING CENTERS AND OTHER
RETAIL PROPERTIES............ Shopping centers are affected by the health of
the retail industry, which is currently
undergoing a consolidation and is experiencing
changes due to the growing market share of
"off-price" retailing, including the popularity
of home shopping networks, shopping via
internet web sites and telemarketing. A
particular shopping center may be adversely
affected by the bankruptcy or decline in
drawing power of an anchor, shadow anchor or
major tenant, a shift in consumer demand due to
demographic changes (for example, population
decreases or changes in average age or income)
and/or changes in consumer preference (for
example, to discount retailers).
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In the case of retail properties, the failure
of an anchor, shadow anchor or major tenant to
renew its lease, the termination of an anchor,
shadow anchor or major tenant's lease, the
bankruptcy or economic decline of an anchor,
shadow anchor or major tenant, or the
cessation of the business of an anchor, shadow
anchor or major tenant at its store,
notwithstanding that such tenant may continue
payment of rent after "going dark," may have a
particularly negative effect on the economic
performance of a shopping center property
given the importance of anchor tenants, shadow
anchor tenants and major tenants in attracting
traffic to other stores within the same
shopping center. In addition, the failure of
one or more major tenants, such as an anchor
or shadow anchor tenant, to operate from its
premises may entitle other tenants to rent
reductions or the right to terminate their
leases.
In addition, 1 of the mortgage loans secured
by an anchored retail mortgaged property (loan
number 6), representing 3.1% of the mortgage
pool (3.4% of loan group 1), has a movie
theater as a tenant. These mortgaged
properties are exposed to certain unique
risks. In recent years, the theater industry
has experienced a high level of construction
of new theaters and an increase in competition
among theater operators. This new construction
has caused some operators to experience
financial difficulties, resulting in
downgrades in their credit ratings and, in
certain cases, bankruptcy filings. In
addition, because of the unique construction
requirements of theaters, any vacant theater
space would not easily be converted to other
uses.
Retail properties, including shopping centers,
secure 33 of the mortgage loans included in
the trust fund as of the cut-off date,
representing 27.7% of the mortgage pool (31.1%
of loan group 1) (based on the primary
property type for combined office/retail
properties).
SPECIAL RISKS ASSOCIATED WITH
MULTIFAMILY PROJECTS......... Multifamily projects are part of a market
that, in general, is characterized by low
barriers to entry. Thus, a particular apartment
market with historically low vacancies could
experience substantial new construction and a
resultant oversupply of units in a relatively
short period of time. Since multifamily
apartment units are typically leased on a
short-term basis, the tenants who reside in a
particular project within such a market may
easily move to alternative projects with more
desirable amenities or locations.
A large number of factors may adversely affect
the value and successful operation of a
multifamily property, including:
o the physical attributes of the
apartment building (for example, its
age, appearance and construction
quality);
o the location of the property (for
example, a change in the neighborhood
over time);
S-56
o the ability of management to provide
adequate maintenance and insurance;
o the types of services and amenities
that the property provides;
o the property's reputation;
o the level of mortgage interest rates
(which, if relatively low, may
encourage tenants to purchase rather
than lease housing);
o the tenant mix, such as the tenant
population being predominantly students
or being heavily dependent on workers
from a particular business or personnel
from a local military base;
o dependence upon governmental programs
that provide rent subsidies to tenants
pursuant to tenant voucher programs or
tax credits to developers to provide
certain types of development;
o the presence of competing properties;
o adverse local or national economic
conditions; and
o state and local regulations.
Furthermore, multifamily projects may be
subject to various tax credit, city, state and
federal housing subsidies, rent stabilization
or similar programs. The limitations and
restrictions imposed by these programs could
result in realized losses on the mortgage
loans. In addition, in the event that the
program is cancelled, it could result in less
income for the project. These programs may
include:
o rent limitations that could adversely
affect the ability of borrowers to
increase rents to maintain the
condition of their mortgaged properties
and satisfy operating expenses; and
o tenant income restrictions that may
reduce the number of eligible tenants
in those mortgaged properties and
result in a reduction in occupancy
rates.
The differences in rents between subsidized or
supported properties and other multifamily
rental properties in the same area may not be
a sufficient economic incentive for some
eligible tenants to reside at a subsidized or
supported property that may have fewer
amenities or be less attractive as a
residence. As a result, occupancy levels at a
subsidized or supported property may decline,
which may adversely affect the value and
successful operation of such property.
Multifamily properties secure 18 of the
mortgage loans included in the trust fund as
of the cut-off date, representing 14.0% of the
mortgage pool (3 mortgage loans in loan group
1 or 3.6% and all of the mortgage loans in
loan group 2).
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SPECIAL RISKS ASSOCIATED WITH
INDUSTRIAL AND MIXED-USE
FACILITIES................... Industrial and mixed-use facilities present
risks not associated with other properties.
Significant factors determining the value of
industrial properties include:
o the quality of tenants;
o building design and adaptability; and
o the location of the property.
Concerns about the quality of tenants,
particularly major tenants, are similar in
both office properties and industrial
properties, although industrial properties are
more frequently dependent on a single tenant.
In addition, properties used for many
industrial purposes are more prone to
environmental concerns than other property
types.
Aspects of building site design and
adaptability affect the value of an industrial
property. Site characteristics which are
valuable to an industrial property include
clear ceiling heights, column spacing, zoning
restrictions, number of bays and bay depths,
divisibility, truck turning radius and overall
functionality and accessibility. In addition,
because of the unique construction
requirements of many industrial properties,
any vacant industrial property may not be
easily converted to other uses. Location is
also important because an industrial property
requires the availability of labor sources,
proximity to supply sources and customers and
accessibility to rail lines, major roadways
and other distribution channels.
Industrial properties may be adversely
affected by reduced demand for industrial
space occasioned by a decline in a particular
industry segment (e.g., a decline in defense
spending), and a particular industrial
property that suited the needs of its original
tenant may be difficult to relet to another
tenant or may become functionally obsolete
relative to newer properties. In addition,
lease terms with respect to industrial
properties are generally for shorter periods
of time than with respect to other properties
and may result in a substantial percentage of
leases expiring in the same year at any
particular industrial property.
Industrial and mixed-use facilities secure 8
of the mortgage loans included in the trust
fund as of the cut-off date, representing 5.9%
of the mortgage pool (6.7% of loan group 1).
SPECIAL RISKS ASSOCIATED WITH
SELF STORAGE FACILITIES...... The self storage facilities market contains
low barriers to entry. In addition, due to the
short-term nature of self-storage leases, self
storage properties also may be subject to more
volatility in terms of supply and demand than
loans secured by other types of properties.
S-58
Because of the construction utilized in
connection with certain self storage
facilities, it might be difficult or costly to
convert such a facility to an alternative use.
Thus, liquidation value of self storage
properties may be substantially less than
would be the case if the same were readily
adaptable to other uses.
In addition, it is difficult to assess the
environmental risks posed by such facilities
due to tenant privacy, anonymity and
unsupervised access to such facilities.
Therefore, such facilities may pose additional
environmental risks to investors. The
environmental site assessments discussed in
this prospectus supplement did not include an
inspection of the contents of the self storage
units included in the self storage properties.
We therefore cannot provide assurance that all
of the units included in the self storage
properties are free from hazardous substances
or other pollutants or contaminants or will
remain so in the future. See "--Environmental
Laws May Adversely Affect the Value of and
Cash Flow from a Mortgaged Property" below.
Self storage properties secure 13 of the
mortgage loans included in the trust fund as
of the cut-off date, or approximately 6.8% of
the mortgage pool (7.7% of loan group 1).
SPECIAL RISKS ASSOCIATED WITH
HOSPITALITY PROPERTIES....... Hospitality properties are affected by
various factors, including:
o location;
o quality;
o management ability;
o amenities;
o franchise affiliation (or lack
thereof);
o continuing expenditures for
modernizing, refurbishing and
maintaining existing facilities prior
to the expiration of their anticipated
useful lives;
o a deterioration in the financial
strength or managerial capabilities of
the owner and operator of a hotel;
o changes in travel patterns caused by
changes in access, energy prices,
strikes, relocation of highways, the
construction of additional highways or
other factors;
o adverse economic conditions, either
local, regional or national, which may
limit the amount that may be charged
for a room and may result in a
reduction in occupancy levels; and
o construction of competing hotels or
motels, which may also limit the amount
that may be charged for
S-59
a room and may result in a reduction in
occupancy levels.
Because hotel rooms generally are rented for
short periods of time, hospitality properties
tend to be affected more quickly by adverse
economic conditions and competition than other
commercial properties. All of the mortgage
loans secured by hotel properties are
affiliated with a franchise or hotel
management company through a franchise or
management agreement. The performance of a
hotel property affiliated with a franchise or
hotel management company depends in part on:
o the continued existence and financial
strength of the franchisor or hotel
management company;
o the public perception of the franchise
or hotel chain service mark; and
o the duration of the franchise licensing
or management agreements.
Three (3) hospitality properties included in
the trust fund as of the cut-off date, or
approximately 2.1% of the mortgage pool (2.4%
of loan group 1) are associated with the
Marriott Hotels franchise or its affiliate
franchises.
Any provision in a franchise agreement or
management agreement providing for termination
because of a bankruptcy of a franchisor or
manager generally will not be enforceable.
Replacement franchises may require
significantly higher fees.
The transferability of franchise license
agreements is restricted. In the event of a
foreclosure, the lender or its agent would not
have the right to use the franchise license
without the franchisor's consent. Conversely,
in the case of certain mortgage loans, the
lender may be unable to remove a franchisor or
a hotel management company that it desires to
replace following a foreclosure.
Furthermore, the ability of a hotel to attract
customers, and some of such hotel's revenues,
may depend in large part on its having a
liquor license. Such a license may not be
transferable (for example, in connection with
a foreclosure).
Moreover, the hotel and lodging industry is
generally seasonal in nature; different
seasons affect different hotels depending on
type and location. This seasonality can be
expected to cause periodic fluctuations in a
hospitality property's room and restaurant
revenues, occupancy levels, room rates and
operating expenses. In addition, the events of
September 11, 2001, have had an adverse impact
on the tourism and convention industry. See
"RISK FACTORS--Recent Terrorist Attacks May
Adversely Affect Your Investment" in this
prospectus supplement.
S-60
Hospitality properties secure 3 of the
mortgage loans included in the trust fund as
of the cut-off date, representing 2.1% of the
mortgage pool (2.4% of loan group 1).
ENVIRONMENTAL LAWS MAY ADVERSELY
AFFECT THE VALUE OF AND CASH FLOW
FROM A MORTGAGED PROPERTY.... If an adverse environmental condition exists
with respect to a mortgaged property securing a
mortgage loan included in the trust fund, the
trust fund may be subject to certain risks
including the following:
o a reduction in the value of such
mortgaged property which may make it
impractical or imprudent to foreclose
against such mortgaged property;
o the potential that the related borrower
may default on the related mortgage
loan due to such borrower's inability
to pay high remediation costs or costs
of defending lawsuits due to an
environmental impairment or difficulty
in bringing its operations into
compliance with environmental laws;
o liability for clean-up costs or other
remedial actions, which could exceed
the value of such mortgaged property or
the unpaid balance of the related
mortgage loan; and
o the inability to sell the related
mortgage loan in the secondary market
or to lease such mortgaged property to
potential tenants.
Under certain federal, state and local laws,
federal, state and local agencies may impose a
statutory lien over affected property to
secure the reimbursement of remedial costs
incurred by these agencies to correct adverse
environmental conditions. This lien may be
superior to the lien of an existing mortgage.
Any such lien arising with respect to a
mortgaged property securing a mortgage loan
included in the trust fund would adversely
affect the value of such mortgaged property
and could make impracticable the foreclosure
by the special servicer on such mortgaged
property in the event of a default by the
related borrower.
Under various federal, state and local laws,
ordinances and regulations, a current or
previous owner or operator of real property,
as well as certain other types of parties, may
be liable for the costs of investigation,
removal or remediation of hazardous or toxic
substances on, under, adjacent to or in such
property. The cost of any required
investigation, delineation and/or remediation
and the owner's liability therefor is
generally not limited under applicable laws.
Such liability could exceed the value of the
property and/or the aggregate assets of the
owner. Under some environmental laws, a
secured lender (such as the trust fund) may be
found to be an "owner" or "operator" of the
related mortgaged property if it is determined
that the lender actually participated in the
hazardous waste management of the borrower,
regardless of
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whether the borrower actually caused the
environmental damage. In such cases, a secured
lender may be liable for the costs of any
required investigation, removal or remediation
of hazardous substances. The trust fund's
potential exposure to liability for
environmental costs will increase if the trust
fund, or an agent of the trust fund, actually
takes possession of a mortgaged property or
control of its day-to-day operations. See
"CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS AND
LEASES--Environmental Considerations" in the
accompanying prospectus, and "DESCRIPTION OF
THE MORTGAGE POOL--Assessments of Property
Condition--Environmental Assessments" in this
prospectus supplement.
A third-party environmental consultant
conducted an environmental site assessment (or
updated a previously conducted environmental
site assessment) with respect to each
mortgaged property securing a mortgage loan
included in the trust fund. Such assessments
do not generally include invasive
environmental testing. In each case where the
environmental site assessment or update
revealed a material adverse environmental
condition or circumstance at any mortgaged
property, then (depending on the nature of the
condition or circumstance) one or more of the
following actions has been or is expected to
be taken:
o an environmental consultant
investigated those conditions and
recommended no further investigations
or remediation;
o an environmental insurance policy,
having the characteristics described
below, was obtained from a third-party
insurer;
o either (i) an operations and
maintenance program, including, in
several cases, with respect to
asbestos-containing materials,
lead-based paint, microbial matter
and/or radon, or periodic monitoring of
nearby properties, has been or is
expected to be implemented in the
manner and within the time frames
specified in the related loan
documents, or (ii) remediation in
accordance with applicable law or
regulations has been performed, is
currently being performed or is
expected to be performed either by the
borrower or by the party responsible
for the contamination;
o an escrow or reserve was established to
cover the estimated cost of
remediation, with each remediation
required to be completed within a
reasonable time frame in accordance
with the related loan documents; or
o the related borrower or other
responsible party having financial
resources reasonably estimated to be
adequate to address the related
condition or circumstance is required
to take (or is liable for the
S-62
failure to take) actions, if any, with
respect to those circumstances or
conditions that have been required by
the applicable governmental regulatory
authority or any environmental law or
regulation.
We cannot provide assurance, however, that the
environmental assessments identified all
environmental conditions and risks, that the
related borrowers will implement all
recommended operations and maintenance plans,
that such plans will adequately remediate the
environmental condition, or that any
environmental indemnity, insurance or escrow
will fully cover all potential environmental
conditions and risks. In addition, the
environmental condition of the underlying real
properties could be adversely affected by
tenants or by the condition of land or
operations in the vicinity of the properties,
such as underground storage tanks.
With respect to 1 mortgage loan (loan number
11), representing 1.6% of the mortgage pool
(1.8% of loan group 1), the related borrower
was required to obtain a real estate
environmental liability policy in lieu of or
in addition to environmental escrows
established, or in certain cases, in lieu of a
guarantee of a sponsor. The premium for each
policy was paid in full at origination of the
loan and at issuance, the issuer has a claims
paying ability of not less than "A+" by S&P,
and each policy has a limit of liability in an
amount greater than or equal to the full
principal amount of the applicable loan with
no deductible.
We cannot provide assurance, however, that
should such coverage be needed, coverage would
be available or uncontested, that the terms
and conditions of such coverage would be met,
that coverage would be sufficient for the
claims at issue or that coverage would not be
subject to certain deductibles.
The pooling and servicing agreement will
require that the special servicer obtain an
environmental site assessment of a mortgaged
property securing a mortgage loan included in
the trust fund prior to taking possession of
the property through foreclosure or otherwise
or assuming control of its operation. Such
requirement effectively precludes enforcement
of the security for the related mortgage note
until a satisfactory environmental site
assessment is obtained (or until any required
remedial action is thereafter taken), but will
decrease the likelihood that the trust fund
will become liable for a material adverse
environmental condition at the mortgaged
property. However, we cannot give assurance
that the requirements of the pooling and
servicing agreement will effectively insulate
the trust fund from potential liability for a
materially adverse environmental condition at
any mortgaged property. See "DESCRIPTION OF
THE POOLING AND SERVICING
AGREEMENTS--Realization Upon Defaulted
Mortgage Loans," "RISK FACTORS--Environmental
Liability May Affect the Lien on a Mortgaged
Property and Expose the Lender to Costs" and
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"CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS AND
LEASES--Environmental Considerations" in the
accompanying prospectus.
SPECIAL RISKS ASSOCIATED WITH
BALLOON LOANS AND ANTICIPATED
REPAYMENT DATE LOANS......... Eighty-eight (88) of the mortgage loans,
representing 96.4% of the mortgage pool (74
mortgage loans in loan group 1 or 96.4% and 14
mortgage loans in loan group 2 or 96.5%),
provide for scheduled payments of principal
and/or interest based on amortization schedules
significantly longer than their respective
remaining terms to maturity or provide for
payments of interest only until the respective
maturity date and, in each case, a balloon
payment on the respective maturity date.
Forty-eight (48) of these mortgage loans,
representing 50.9% of the mortgage pool (43
mortgage loans in loan group 1 or 49.9% and 5
mortgage loans in loan group 2 or 59.5%), are
anticipated repayment date loans, which provide
that if the principal balance of the loan is
not repaid on a date specified in the related
mortgage note, the loan will accrue interest at
an increased rate.
o A borrower's ability to make a balloon
payment or repay its anticipated
repayment date loan on the anticipated
repayment date typically will depend
upon its ability either to refinance
fully the loan or to sell the related
mortgaged property at a price
sufficient to permit the borrower to
make such payment.
o Whether or not losses are ultimately
sustained, any delay in the collection
of a balloon payment on the maturity
date or repayment on the anticipated
repayment date that would otherwise be
distributable on your certificates will
likely extend the weighted average life
of your certificates.
o The ability of a borrower to effect a
refinancing or sale will be affected by
a number of factors, including (but not
limited to) the value of the related
mortgaged property, the level of
available mortgage rates at the time of
sale or refinancing, the borrower's
equity in the mortgaged property, the
financial condition and operating
history of the borrower and the
mortgaged property, rent rolling
status, rent control laws with respect
to certain residential properties, tax
laws, prevailing general and regional
economic conditions and the
availability of credit for loans
secured by multifamily or commercial
properties, as the case may be.
We cannot assure you that each borrower under
a balloon loan or an anticipated repayment
date loan will have the ability to repay the
principal balance of such mortgage loan on the
related maturity date or anticipated repayment
date, as applicable. In addition, fully
amortizing mortgage loans
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which pay interest on an "actual/360" basis
but have fixed monthly payments may, in fact,
have a small balloon payment due at maturity.
For additional description of risks associated
with balloon loans, see "RISK FACTORS--Balloon
Payments on Mortgage Loans Result in
Heightened Risk of Borrower Default" in the
accompanying prospectus.
In order to maximize recoveries on defaulted
mortgage loans, the pooling and servicing
agreement permits the special servicer to
extend and modify mortgage loans that are in
material default or as to which a payment
default (including the failure to make a
balloon payment) is imminent; subject,
however, to the limitations described under
"SERVICING OF THE MORTGAGE
LOANS--Modifications, Waivers and Amendments"
in this prospectus supplement. We cannot
provide assurance, however, that any such
extension or modification will increase the
present value of recoveries in a given case.
Any delay in collection of a balloon payment
that would otherwise be distributable on your
certificates, whether such delay is due to
borrower default or to modification of the
related mortgage loan, will likely extend the
weighted average life of your certificates.
See "YIELD AND MATURITY CONSIDERATIONS" in
this prospectus supplement and "YIELD
CONSIDERATIONS" in the accompanying
prospectus.
ADVERSE CONSEQUENCES ASSOCIATED
WITH BORROWER CONCENTRATION,
BORROWERS UNDER COMMON CONTROL
AND RELATED BORROWERS........ Certain borrowers under the mortgage loans
included in the trust fund are affiliated or
under common control with one another. In such
circumstances, any adverse circumstances
relating to a borrower or an affiliate thereof
and affecting one of the related mortgage loans
or mortgaged properties could also affect other
mortgage loans or mortgaged properties of the
related borrower. In particular, the bankruptcy
or insolvency of any such borrower or affiliate
could have an adverse effect on the operation
of all of the mortgaged properties of that
borrower and its affiliates and on the ability
of such related mortgaged properties to produce
sufficient cash flow to make required payments
on the mortgage loans. For example, if a person
that owns or directly or indirectly controls
several mortgaged properties experiences
financial difficulty at one mortgaged property,
they could defer maintenance at one or more
other mortgaged properties in order to satisfy
current expenses with respect to the mortgaged
property experiencing financial difficulty, or
they could attempt to avert foreclosure by
filing a bankruptcy petition that might have
the effect of interrupting payments for an
indefinite period on all the related mortgage
loans. In particular, such person experiencing
financial difficulty or becoming subject to a
bankruptcy proceeding may have an adverse
effect on the funds available to make
distributions on the certificates and may lead
to a
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downgrade, withdrawal or qualification (if
applicable) of the ratings of the
certificates.
Mortgaged properties owned by related
borrowers are likely to:
o have common management, increasing the
risk that financial or other
difficulties experienced by the
property manager could have a greater
impact on the pool of mortgage loans
included in the trust fund; and
o have common general partners or
managing members which would increase
the risk that a financial failure or
bankruptcy filing would have a greater
impact on the pool of mortgage loans
included in the trust fund.
The Cole concentration consists of 6 mortgage
loans (loan numbers 49, 71, 79, 82, 92 and
94), which collectively represent 1.8% of the
mortgage pool (2.1% of loan group 1). Each of
these mortgage loans is cross-defaulted and
cross-collateralized. The sponsor of each
mortgage loan in the Cole concentration is
Cole Credit Property Fund II Limited
Partnership.
The Extra Space concentration consists of 11
mortgage loans (loan numbers 24, 28, 45, 52,
61, 64, 66, 70, 74, 85 and 89), which
collectively represent 5.8% of the mortgage
pool (6.5% of loan group 1). Each of these
mortgage loans is cross-defaulted and
cross-collateralized. The sponsor of each
mortgage loan in the Extra Space concentration
is Kenneth M. Woolley.
The Sunrise Center Apartments/Town and Country
Apartments concentration consists of 2
mortgage loans (loan numbers 39 and 83), which
collectively represent 1.0% of the mortgage
pool (9.1% of loan group 2). These mortgage
loans are not cross-collateralized or
cross-defaulted with each other, but have a
common sponsor. The sponsors of each mortgage
loan in the Sunrise Center Apartments/Town and
Country Apartments concentration are Daisy
Afrooz and Peter E. Taylor.
The Metropolitan Place/Burnett Station
concentration consists of 2 mortgage loans
(loan numbers 30 and 56), which collectively
represent 1.4% of the mortgage pool (12.7% of
loan group 2). These mortgage loans are not
cross-collateralized or cross-defaulted with
each other, but have a common sponsor. The
sponsor of each mortgage loan in the
Metropolitan Place/Burnett Station
concentration is Donald F. Dally.
No group, individual borrower, or borrower
concentration represents more than 11.2% of
the mortgage pool (12.6% of loan group 1).
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THE GEOGRAPHIC CONCENTRATION OF
MORTGAGED PROPERTIES SUBJECTS
THE TRUST FUND TO A GREATER
EXTENT TO STATE AND
REGIONAL CONDITIONS........... Except as indicated in the following table,
less than 5.0% of the mortgage loans, by
cut-off date pool or loan group balance, are
secured by mortgaged properties in any one
state.
MORTGAGED PROPERTIES BY GEOGRAPHIC CONCENTRATION(1)
NUMBER OF AGGREGATE PERCENTAGE OF
MORTGAGED CUT-OFF DATE CUT-OFF DATE
STATE PROPERTIES BALANCE POOL BALANCE
- ----------------------- ------------ ----------------- --------------
CA .................. 18 $ 250,576,367 23.6%
Southern(2) ....... 10 194,724,028 18.3
Northern(2) ....... 8 55,852,339 5.3
NY .................. 5 155,073,945 14.6
FL .................. 9 84,674,052 8.0
NC .................. 5 70,799,856 6.7
DC .................. 1 58,500,000 5.5
Other ............... 59 443,472,288 41.7
-- -------------- -----
TOTAL ............... 97 $1,063,096,509 100.0%
== ============== =====
----------
(1) Because this table presents information
relating to the mortgaged properties and
not the mortgage loans, the information
for mortgage loans secured by more than
one mortgaged property is based on
allocated loan amounts (allocating the
mortgage loan principal balance to each
of those properties by the appraised
values of the mortgaged properties or
the allocated loan amount as detailed in
the related mortgage loan documents).
(2) For purposes of determining whether a
mortgaged property is in Northern
California or Southern California,
mortgaged properties located north of
San Luis Obispo County, Kern County and
San Bernardino County were included in
Northern California and mortgaged
properties located in or south of such
counties were included in Southern
California.
LOAN GROUP 1
MORTGAGED PROPERTIES BY GEOGRAPHIC CONCENTRATION(1)
NUMBER OF AGGREGATE PERCENTAGE OF
MORTGAGED CUT-OFF DATE CUT-OFF DATE
STATE PROPERTIES BALANCE GROUP 1 BALANCE
- ----------------------- ------------ -------------- ----------------
CA .................. 13 $190,865,949 20.1%
Southern(2) ....... 7 145,524,028 15.3
Northern(2) ....... 6 45,341,921 4.8
NY .................. 5 155,073,945 16.4
FL .................. 9 84,674,052 8.9
NC .................. 5 70,799,856 7.5
DC .................. 1 58,500,000 6.2
Other ............... 48 388,151,671 40.9
-- ------------ -----
TOTAL ............... 81 $948,065,473 100.0%
== ============ =====
----------
(1) Because this table presents information
relating to the mortgaged properties and
not the mortgage loans, the information
for mortgage loans secured by more than
one mortgaged property is based on
allocated loan amounts (allocating the
mortgage loan principal balance to each
of those properties by
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the appraised values of the mortgaged
properties or the allocated loan amount
as detailed in the related mortgage loan
documents).
(2) For purposes of determining whether a
mortgaged property is in Northern
California or Southern California,
mortgaged properties located north of
San Luis Obispo County, Kern County and
San Bernardino County were included in
Northern California and mortgaged
properties located in or south of such
counties were included in Southern
California.
LOAN GROUP 2
MORTGAGED PROPERTIES BY GEOGRAPHIC CONCENTRATION(1)
NUMBER OF AGGREGATE PERCENTAGE OF
MORTGAGED CUT-OFF DATE CUT-OFF DATE
STATE PROPERTIES BALANCE GROUP 2 BALANCE
- ----------------------- ------------ -------------- ----------------
CA .................. 5 $ 59,710,418 51.9%
Southern(2) ....... 3 49,200,000 42.8
Northern(2) ....... 2 10,510,418 9.1
WA .................. 3 21,200,000 18.4
OH .................. 1 9,890,069 8.6
NV .................. 1 9,300,000 8.1
AL .................. 2 7,131,626 6.2
Other ............... 4 7,798,923 6.8
- ------------ -----
TOTAL ............... 16 $115,031,036 100.0%
== ============ =====
----------
(1) Because this table presents information
relating to the mortgaged properties and
not the mortgage loans, the information
for mortgage loans secured by more than
one mortgaged property is based on
allocated loan amounts (allocating the
mortgage loan principal balance to each
of those properties by the appraised
values of the mortgaged properties or
the allocated loan amount as detailed in
the related mortgage loan documents).
(2) For purposes of determining whether a
mortgaged property is in Northern
California or Southern California,
mortgaged properties located north of
San Luis Obispo County, Kern County and
San Bernardino County were included in
Northern California and mortgaged
properties located in or south of such
counties were included in Southern
California.
The concentration of mortgaged properties in a
specific state or region will make the
performance of the trust fund as a whole more
sensitive to the following in the state or
region where the mortgagors and the mortgaged
properties are located:
o economic conditions;
o conditions in the real estate market;
o changes in governmental rules and
fiscal policies;
o acts of God or terrorism (which may
result in uninsured losses); and
o other factors which are beyond the
control of the mortgagors.
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SPECIAL RISKS ASSOCIATED WITH
HIGH BALANCE MORTGAGE LOANS.. Several of the mortgage loans included in the
trust fund, individually or together with other
such mortgage loans with which they are
cross-collateralized, have principal balances
as of the cut-off date that are substantially
higher than the average principal balance of
the mortgage loans in the trust fund as of the
cut-off date.
In general, concentrations in a mortgage pool
of loans with larger-than-average balances can
result in losses that are more severe,
relative to the size of the pool, than would
be the case if the aggregate balance of the
pool were more evenly distributed.
o The largest single mortgage loan
included in the trust fund as of the
cut-off date represents 11.2% of the
mortgage pool (12.6% of loan group 1).
o The largest group of
cross-collateralized mortgage loans
included in the trust fund as of the
cut-off date represents in the
aggregate 5.8% of the mortgage pool
(6.5% of loan group 1).
o The 5 largest mortgage loans or groups
of cross-collateralized mortgage loans
included in the trust fund as of the
cut-off date represent, in the
aggregate, 35.7% of the mortgage pool
(40.0% of loan group 1).
o The 10 largest mortgage loans or groups
of cross-collateralized mortgage loans
included in the trust fund as of the
cut-off date represent, in the
aggregate, 48.9% of the mortgage pool
(54.8% of loan group 1).
CONCENTRATION OF MORTGAGED
PROPERTY TYPES SUBJECT THE
TRUST FUND TO INCREASED
RISK OF DECLINE IN A
PARTICULAR INDUSTRY.......... A concentration of mortgaged property types
can increase the risk that a decline in a
particular industry or business would have a
disproportionately large impact on a pool of
mortgage loans. For example, if there is a
decline in tourism, the hotel industry might be
adversely affected, leading to increased losses
on loans secured by hospitality properties as
compared to the mortgage loans secured by other
property types.
In that regard:
o mortgage loans included in the trust
fund and secured by office properties
represent as of the cut-off date 41.9%
of the mortgage pool (47.0% of loan
group 1) based on the primary property
type for combined office/retail
properties);
o mortgage loans included in the trust
fund and secured by retail properties
represent as of the cut-off date 27.7%
of the mortgage pool (31.1% of
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loan group 1) (based on the primary
property type for combined
office/retail properties);
o mortgage loans included in the trust
fund and secured by multifamily
properties represent as of the cut-off
date 14.0% of the mortgage pool (3
mortgage loans in loan group 1 or 3.6%
and all of the mortgage loans in loan
group 2);
o mortgage loans included in the trust
fund and secured by self storage
facilities represent as of the cut-off
date 6.8% of the mortgage pool (7.7% of
loan group 1);
o mortgage loans included in the trust
fund and secured by industrial and
mixed use properties represent as of
the cut-off date 5.9% of the mortgage
pool (6.7% of loan group 1);
o mortgage loans included in the trust
fund and secured by hospitality
properties represent as of the cut-off
date 2.1% of the mortgage pool (2.4% of
loan group 1); and
o mortgage loans included in the trust
fund and secured by mobile home park
properties represent as of the cut-off
date 1.3% of the mortgage pool (1.4% of
loan group 1).
WE HAVE NOT REUNDERWRITTEN ANY
OF THE MORTGAGE LOANS........ We have not reunderwritten the mortgage loans
included in the trust fund. Instead, we have
relied on the representations and warranties
made by the mortgage loan sellers, and the
mortgage loan sellers' respective obligations
to repurchase, cure or substitute a mortgage
loan in the event that a representation or
warranty was not true when made and such breach
materially and adversely affects the value of
the mortgage loan, the interest of the trust or
the interests of any certificateholder. These
representations and warranties do not cover all
of the matters that we would review in
underwriting a mortgage loan and you should not
view them as a substitute for reunderwriting
the mortgage loans. If we had reunderwritten
the mortgage loans included in the trust fund,
it is possible that the reunderwriting process
may have revealed problems with a mortgage loan
not covered by representations or warranties
given by the mortgage loan sellers. In
addition, we cannot provide assurance that the
mortgage loan sellers will be able to
repurchase or substitute a mortgage loan if a
representation or warranty has been breached.
See "DESCRIPTION OF THE MORTGAGE
POOL--Representations and Warranties;
Repurchases and Substitutions" in this
prospectus supplement.
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FORECLOSURE ON MORTGAGED
PROPERTIES MAY RESULT IN
ADVERSE TAX CONSEQUENCES...... Two of the REMICs relating to the assets of
the trust fund might become subject to federal
(and possibly state or local) tax on certain of
its net income from the operation and
management of a mortgaged property subsequent
to the trust fund's acquisition of a mortgaged
property pursuant to a foreclosure or
deed-in-lieu of foreclosure. Any such tax would
substantially reduce net proceeds available for
distribution to you. See "MATERIAL FEDERAL
INCOME TAX CONSEQUENCES--Taxation of Owners of
REMIC Regular Certificates," and "--Taxation of
Owners of REMIC Residual Certificates" in the
accompanying prospectus. In addition, if the
trust fund were to acquire one or more
mortgaged properties pursuant to a foreclosure
or deed in lieu of foreclosure, upon
acquisition of those mortgaged properties, the
trust fund may in certain jurisdictions,
particularly in New York, be required to pay
state or local transfer or excise taxes upon
liquidation of such properties. Such state or
local taxes may reduce net proceeds available
for distribution to the certificateholders.
INSURANCE COVERAGE ON MORTGAGED
PROPERTIES MAY NOT COVER SPECIAL
HAZARD LOSSES................ The master servicer (with respect to mortgage
loans that are not specially serviced mortgage
loans) and/or special servicer (with respect to
specially serviced mortgage loans) will
generally be required to cause the borrower on
each mortgage loan included in the trust fund
and serviced by it to maintain such insurance
coverage on the related mortgaged property as
is required under the related mortgage,
including hazard insurance; provided that each
of the master servicer and/or the special
servicer may satisfy its obligation to cause
hazard insurance to be maintained with respect
to any mortgaged property by acquiring a
blanket or master single interest insurance
policy. In general, the standard form of fire
and extended coverage policy covers physical
damage to or destruction of the improvements on
the related mortgaged property by fire,
lightning, explosion, smoke, windstorm and
hail, and riot, strike and civil commotion,
subject to the conditions and exclusions
specified in each policy. The mortgage loans
generally do not require earthquake insurance.
Although the policies covering the mortgaged
properties are underwritten by different
insurers under different state laws in
accordance with different applicable state
forms, and therefore do not contain identical
terms and conditions, most such policies
typically may not cover any physical damage
resulting from:
o war;
o terrorism;
o revolution;
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o governmental actions;
o floods, and other water-related causes;
o earth movement (including earthquakes,
landslides and mud flows);
o wet or dry rot;
o vermin;
o domestic animals;
o sink holes or similarly occurring soil
conditions; and
o other kinds of risks not specified in
the preceding paragraph.
In light of the September 11, 2001 terrorist
attacks in New York City and the Washington,
D.C. area, many reinsurance companies (which
assume some of the risk of policies sold by
primary insurers) indicated that they intended
to eliminate coverage for acts of terrorism
from their reinsurance policies. Without that
reinsurance coverage, primary insurance
companies would have to assume that risk
themselves, which may cause them to eliminate
such coverage in their policies, increase the
amount of the deductible for acts of terrorism
or charge higher premiums for such coverage.
In order to offset this risk, Congress passed
the Terrorism Risk Insurance Act of 2002,
which established the Terrorism Insurance
Program. The Terrorism Insurance Program is
administered by the Secretary of the Treasury
and was established to provide financial
assistance from the United States government
to insurers in the event of another terrorist
attack that is the subject of an insurance
claim. The Terrorism Risk Insurance Act of
2002 requires the Treasury Department to
establish procedures for the Terrorism
Insurance Program under which the federal
share of compensation will be equal to 90% of
that portion of insured losses that exceeds an
applicable insurer deductible required to be
paid during each program year. The federal
share in the aggregate in any program year may
not exceed $100 billion. An insurer that has
paid its deductible is not liable for the
payment of any portion of total annual United
States-wide losses that exceed $100 billion,
regardless of the terms of the individual
insurance contracts.
The Terrorism Insurance Program required that
each insurer for policies in place prior to
November 26, 2002, provide its insureds with a
statement of the proposed premiums for
terrorism coverage, identifying the portion of
the risk that the federal government will
cover, within 90 days after November 26, 2002.
Insureds had 30 days to accept the continued
coverage and pay the premium. If an insured
does not pay the premium or authorizes the
exclusion, insurance for acts of terrorism may
be excluded from the policy. All policies for
insurance issued after November 26, 2002, must
make similar disclosure and provide a similar
opportunity for
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the insured to purchase coverage. The
Terrorism Risk Insurance Act of 2002 does not
require insureds to purchase the coverage nor
does it stipulate the pricing of the coverage.
Through December 2004, insurance carriers are
required under the program to provide
terrorism coverage in their basic "all-risk"
policies. By September 1, 2004, the Secretary
of the Treasury is required to determine
whether mandatory participation should be
extended through December 2005. Any commercial
property and casualty terrorism insurance
exclusion that was in force on November 26,
2002, is automatically voided to the extent
that it excludes losses that would otherwise
be insured losses, subject to the immediately
preceding paragraph. Any state approval of
such types of exclusions in force on November
26, 2002, is also voided.
However, the Terrorism Insurance Program
applies to United States risks only and to
acts that are committed by an individual or
individuals acting on behalf of a foreign
person or foreign interest as an effort to
influence or coerce United States civilians or
the United States government. Further, the act
must be certified as an "act of terrorism" by
the federal government, which decision is not
subject to judicial review. It remains unclear
what acts will fall under the purview of the
Terrorism Insurance Program.
Furthermore, because the Terrorism Insurance
Program has only been recently passed into
law, there can be no assurance that it or
state legislation will substantially lower the
cost of obtaining terrorism insurance.
Finally, the Terrorism Insurance Program
terminates on December 31, 2004 (with a
potential to extend to December 31, 2005).
There can be no assurance that such temporary
program will create any long-term changes in
the availability and cost of such insurance.
Moreover, there can be no assurance that such
program will be renewed or subsequent
terrorism insurance legislation will be passed
upon its expiration.
No assurance can be given that the mortgaged
properties will continue to have the benefit
of insurance against terrorist acts. In
addition, no assurance can be given that the
coverage for such acts, if obtained or
maintained, will be broad enough to cover the
particular act of terrorism that may be
committed or that the amount of coverage will
be sufficient to repair and restore the
mortgaged property or to repay the mortgage
loan in full. The insufficiency of insurance
coverage in any respect could have a material
and adverse affect on your certificates.
Pursuant to the terms of the pooling and
servicing agreement, the master servicer or
the special servicer may not be required to
maintain insurance covering terrorist or
similar acts, nor will it be required to call
a default under a mortgage loan, if the
related borrower fails to maintain such
insurance (even if required to do so under the
related loan documents)
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if the special servicer has determined, in
consultation with the controlling class
representative, in accordance with the
servicing standard that either:
o such insurance is not available at
commercially reasonable rates and that
such hazards are not at the time
commonly insured against for properties
similar to the mortgaged property and
located in or around the region in
which such mortgaged property is
located; or
o such insurance is not available at any
rate.
In addition, with respect to certain mortgage
loans, the mortgagee may have waived the right
to require terrorism insurance or may have
limited the circumstances under which
terrorism insurance is required.
Any losses incurred with respect to mortgage
loans included in the trust fund due to
uninsured risks or insufficient hazard
insurance proceeds could adversely affect
distributions on your certificates.
ADDITIONAL DEBT ON SOME
MORTGAGE LOANS CREATES
ADDITIONAL RISKS............. In general, the borrowers are:
o required to satisfy any existing
indebtedness encumbering the related
mortgaged property as of the closing of
the related mortgage loan; and
o prohibited from encumbering the related
mortgaged property with additional
secured debt without the lender's prior
approval.
Except as provided below, none of the mortgage
loans included in the trust fund, other than
the mortgage loans with companion loans, are
secured by mortgaged properties that secure
other loans outside the trust fund.
Two (2) mortgage loans (loan numbers 6 and
14), representing 4.6% of the mortgage pool
(5.2% of loan group 1), provide that under
certain circumstances (a) the related borrower
may encumber the related mortgaged property
with subordinate debt in the future and/or (b)
the entities with a controlling ownership
interest in the related borrower may pledge
their interest in the borrower as security for
mezzanine debt in the future, subject to the
terms of a subordination and standstill
agreement to be entered into in favor of the
lender.
One (1) mortgage loan (loan number 36),
representing 0.8% of the mortgage pool (0.9%
of loan group 1), provides that the related
borrower, under certain circumstances, may
incur additional unsecured indebtedness other
than in the ordinary course of business and
without the consent of the mortgagee. With
respect to 1 mortgage loan (loan number 3),
representing 5.5% of the mortgage pool (6.2%
of loan group 1), there is existing
subordinated debt secured by the mortgaged
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property, subject to the terms of a
subordination and standstill agreement in
favor of the mortgagee. In addition, the
subordinate lender has taken a security
interest in the equity interest in the
borrower.
With respect to 4 mortgage loans (loan numbers
1, 11, 42 and 78), representing 13.9% of the
mortgage pool (15.5% of loan group 1), the
related mortgage loan documents provide that,
under certain circumstances, ownership
interests in the related borrowers may be
pledged as security for mezzanine debt in the
future, subject to the terms of a
subordination and standstill agreement to be
entered into in favor of the lender and the
satisfaction of certain financial conditions.
One (1) mortgage loan (loan number 19),
representing 1.3% of the mortgage pool (1.4%
of loan group 1), does not prohibit the
related borrower from incurring additional
unsecured debt or an owner of an interest in
the related borrower from pledging its
ownership interest in the related borrower as
security for mezzanine debt because the
related borrower is not required by either the
mortgage loan documents or related
organizational documents to be a special
purpose entity. Further, certain of the
mortgage loans included in the trust fund do
not prohibit limited partners or other owners
of non-controlling interests in the related
borrower from pledging their interests in the
borrower as security for mezzanine debt.
Secured subordinated debt encumbering any
mortgaged property may increase the difficulty
of refinancing the related mortgage loan at
maturity and the possibility that reduced cash
flow could result in deferred maintenance.
Also, in the event that the holder of the
subordinated debt has filed for bankruptcy or
been placed in involuntary receivership,
foreclosure by any senior lienholder
(including the trust fund) on the mortgaged
property could be delayed. In addition,
substantially all of the mortgage loans permit
the related borrower to incur limited
indebtedness in the ordinary course of
business or for capital improvements that is
not secured by the related mortgaged property
which is generally limited to a specified
percentage of the outstanding principal
balance of the related mortgage loan. Further,
certain of the mortgage loans included in the
trust fund do not prohibit limited partners or
other owners of non-controlling interests in
the related borrower from pledging their
interests in the borrower as security for
mezzanine debt.
In addition, certain mortgage loans, which may
include the mortgage loans previously
described in this risk factor, permit the
related borrower to incur, or do not prohibit
the related borrower from incurring, unsecured
debt to an affiliate of, or owner of an
interest in, the borrower or to an affiliate
of such an owner, subject to certain
conditions under the related mortgage loan
documents. Further, certain of the mortgage
loans permit additional liens on the related
mortgaged properties for (1) assessments,
taxes or other similar
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charges or (2) liens which in the aggregate
constitute an immaterial and insignificant
monetary amount with respect to the net value
of the related borrower's assets. A default by
the borrower on such additional indebtedness
could impair the borrower's financial
condition and result in the bankruptcy or
receivership of the borrower which would cause
a delay in the foreclosure by the trust fund
on the mortgaged property. It may not be
evident that a borrower has incurred any such
future subordinate second lien debt until the
related mortgage loan otherwise defaults. In
cases in which one or more subordinate liens
are imposed on a mortgaged property or the
borrower incurs other indebtedness, the trust
fund is subject to additional risks,
including, without limitation, the following:
o the risk that the necessary maintenance
of the mortgaged property could be
deferred to allow the borrower to pay
the required debt service on the
subordinate financing and that the
value of the mortgaged property may
fall as a result;
o the risk that the borrower may have a
greater incentive to repay the
subordinate or unsecured indebtedness
first;
o the risk that it may be more difficult
for the borrower to refinance the
mortgage loan or to sell the mortgaged
property for purposes of making any
balloon payment upon the maturity of
the mortgage loan;
o the existence of subordinated debt
encumbering any mortgaged property may
increase the difficulty of refinancing
the related mortgage loan at maturity
and the possibility that reduced cash
flow could result in deferred
maintenance; and
o the risk that, in the event that the
holder of the subordinated debt has
filed for bankruptcy or been placed in
involuntary receivership, foreclosing
on the mortgaged property could be
delayed and the trust may be subjected
to the costs and administrative burdens
of involvement in foreclosure or
bankruptcy proceedings or related
litigation.
See "CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
AND LEASES--Subordinate Financing" and "--
Due-on-Sale and Due-on-Encumbrance" in the
accompanying prospectus and "DESCRIPTION OF
THE MORTGAGE POOL--Certain Terms and
Conditions of the Mortgage Loans--Other
Financing" and "--Due-on-Sale and
Due-on-Encumbrance Provisions" in this
prospectus supplement.
Mezzanine debt is debt that is incurred by the
owner of equity in one or more borrowers and
is secured by a pledge of the equity ownership
interests in such borrowers. Because
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mezzanine debt is secured by the obligor's
equity interest in the related borrowers, such
financing effectively reduces the obligor's
economic stake in the related mortgaged
property. The existence of mezzanine debt may
reduce cash flow on the borrower's mortgaged
property after the payment of debt service and
may increase the likelihood that the owner of
a borrower will permit the value or income
producing potential of a mortgaged property to
fall and may create a greater risk that a
borrower will default on the mortgage loan
secured by a mortgaged property whose value or
income is relatively weak.
Generally, upon a default under mezzanine
debt, the holder of such mezzanine debt would
be entitled to foreclose upon the equity in
the related mortgagor, which has been pledged
to secure payment of such mezzanine debt.
Although such transfer of equity may not
trigger the due on sale clause under the
related mortgage loan, it could cause the
obligor under such mezzanine debt to file for
bankruptcy, which could negatively affect the
operation of the related mortgaged property
and such borrower's ability to make payments
on the related mortgage loan in a timely
manner.
Additionally, some intercreditor agreements
with respect to certain mezzanine debt may
give the holder of the mezzanine debt the
right to cure certain defaults and, upon a
default, to purchase the related mortgage loan
for an amount equal to the then current
outstanding balance of such loan. Some
intercreditor agreements relating to mezzanine
debt may also limit the special servicer's
ability to enter into certain modifications of
the mortgage loan without the consent of the
related mezzanine lender.
See "CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
AND LEASES--Due-on-Sale and
Due-on-Encumbrance" in the accompanying
prospectus and "DESCRIPTION OF THE MORTGAGE
POOL--Certain Terms and Conditions of the
Mortgage Loans--Other Financing" and
"--Due-on-Sale and Due-on-Encumbrance
Provisions" in this prospectus supplement.
Although the assets of the trust do not
include the companion loans related to the
mortgage loans which have companion loans, the
related borrower is still obligated to make
interest and principal payments on those
additional obligations. As a result, the trust
fund is subject to additional risks,
including:
o the risk that the necessary maintenance
of the related mortgaged property could
be deferred to allow the borrower to
pay the required debt service on the
subordinate or pari passu obligations
and that the value of the mortgaged
property may fall as a result; and
o the risk that it may be more difficult
for the borrower to refinance the
mortgage loan or to sell the mortgaged
property for purposes of making any
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balloon payment on the entire balance
of both the loans contained in the loan
pair upon the maturity of the mortgage
loans.
In addition, although 3 of the mortgage loans
have companion loans that are subordinate to
the related mortgage loan, the 11 Madison
Avenue mortgage loan, representing 7.7% of the
mortgage pool (8.6% of loan group 1), also has
companion loans that are pari passu with such
mortgage loan. See "DESCRIPTION OF THE
MORTGAGE POOL--Twenty Largest Mortgage Loans"
in this prospectus supplement.
THE BORROWER'S FORM OF ENTITY
MAY CAUSE SPECIAL RISKS...... Most of the borrowers are legal entities
rather than individuals. Mortgage loans made to
legal entities may entail risks of loss greater
than those of mortgage loans made to
individuals. For example, a legal entity, as
opposed to an individual, may be more inclined
to seek legal protection from its creditors
under the bankruptcy laws. Unlike individuals
involved in bankruptcies, most of the entities
generally do not have personal assets and
creditworthiness at stake. The bankruptcy of a
borrower, or a general partner or managing
member of a borrower, may impair the ability of
the lender to enforce its rights and remedies
under the related mortgage.
Many of the borrowers are not special purpose
entities structured to limit the possibility
of becoming insolvent or bankrupt, and
therefore may be more likely to become
insolvent or the subject of a voluntary or
involuntary bankruptcy proceeding because such
borrowers may be:
o operating entities with businesses
distinct from the operation of the
property with the associated
liabilities and risks of operating an
ongoing business; or
o individuals that have personal
liabilities unrelated to the property.
However, any borrower, even a special purpose
entity structured to be bankruptcy-remote, as
an owner of real estate will be subject to
certain potential liabilities and risks. We
cannot provide assurances that any borrower
will not file for bankruptcy protection or
that creditors of a borrower or a corporate or
individual general partner or managing member
of a borrower will not initiate a bankruptcy
or similar proceeding against such borrower or
corporate or individual general partner or
managing member.
Furthermore, with respect to any related
borrowers, creditors of a common parent in
bankruptcy may seek to consolidate the assets
of such borrowers with those of the parent.
Consolidation of the assets of such borrowers
would likely have an adverse effect on the
funds available to make distributions on your
certificates, and may lead to a downgrade,
withdrawal or qualification of the ratings of
your certificates. See "CERTAIN LEGAL ASPECTS
OF MORT-
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GAGE LOANS AND LEASES--Bankruptcy Laws" in the
accompanying prospectus.
In addition, with respect to 7 mortgage loans
(loan numbers 15, 22, 31, 38, 47, 57 and 63),
representing 5.8% of the mortgage pool (5
mortgage loans in loan group 1 or 5.0% and 2
mortgage loans in loan group 2 or 12.2%), the
borrowers own the related mortgaged property
as tenants-in-common. As a result, the related
mortgage loans may be subject to prepayment,
including during periods when prepayment might
otherwise be prohibited, as a result of
partition. Although some of the related
borrowers have purported to waive any right of
partition, we cannot assure you that any such
waiver would be enforced by a court of
competent jurisdiction. In addition,
enforcement of remedies against
tenant-in-common borrowers may be prolonged if
the tenant-in-common borrowers become
insolvent or bankrupt at different times
because each time a tenant-in-common borrower
files for bankruptcy, the bankruptcy court
stay is reinstated.
BANKRUPTCY PROCEEDINGS ENTAIL
CERTAIN RISKS................ Under federal bankruptcy law, the filing of a
petition in bankruptcy by or against a borrower
will stay the sale of the mortgaged property
owned by that borrower, as well as the
commencement or continuation of a foreclosure
action. In addition, even if a court determines
that the value of the mortgaged property is
less than the principal balance of the mortgage
loan it secures, the court may prevent a lender
from foreclosing on the mortgaged property
(subject to certain protections available to
the lender). As part of a restructuring plan, a
court also may reduce the amount of secured
indebtedness to the then current value of the
mortgaged property, which would make the lender
a general unsecured creditor for the difference
between the then current value and the amount
of its outstanding mortgage indebtedness. A
bankruptcy court also may: (1) grant a debtor a
reasonable time to cure a payment default on a
mortgage loan; (2) reduce periodic payments due
under a mortgage loan; (3) change the rate of
interest due on a mortgage loan; or (4)
otherwise alter the mortgage loan's repayment
schedule.
Moreover, the filing of a petition in
bankruptcy by, or on behalf of, a junior
lienholder may stay the senior lienholder from
taking action to foreclose on the junior lien.
Additionally, the borrower's trustee or the
borrower, as debtor-in-possession, has certain
special powers to avoid, subordinate or
disallow debts. In certain circumstances, the
claims of the trustee may be subordinated to
financing obtained by a debtor-in-possession
subsequent to its bankruptcy.
Under federal bankruptcy law, the lender will
be stayed from enforcing a borrower's
assignment of rents and leases. Federal
bankruptcy law also may interfere with the
master
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servicer's or special servicer's ability to
enforce lockbox requirements. The legal
proceedings necessary to resolve these issues
can be time consuming and costly and may
significantly delay or diminish the receipt of
rents. Rents also may escape an assignment to
the extent they are used by the borrower to
maintain the mortgaged property or for other
court authorized expenses.
Additionally, pursuant to subordination
agreements for certain of the mortgage loans,
the subordinate lenders may have agreed that
they will not take any direct actions with
respect to the related subordinated debt,
including any actions relating to the
bankruptcy of the borrower, and that the
holder of the mortgage loan will have all
rights to direct all such actions. There can
be no assurance that in the event of the
borrower's bankruptcy, a court will enforce
such restrictions against a subordinated
lender.
In its decision in In re 203 North LaSalle
Street Partnership, 246 B.R. 325 (Bankr. N.D.
Ill. March 10, 2000), the United States
Bankruptcy Court for the Northern District of
Illinois refused to enforce a provision of a
subordination agreement that allowed a first
mortgagee to vote a second mortgagee's claim
with respect to a Chapter 11 reorganization
plan on the grounds that pre-bankruptcy
contracts cannot override rights expressly
provided by the Bankruptcy Code. This holding,
which one court has already followed,
potentially limits the ability of a senior
lender to accept or reject a reorganization
plan or to control the enforcement of remedies
against a common borrower over a subordinated
lender's objections.
As a result of the foregoing, the trustee's
recovery with respect to borrowers in
bankruptcy proceedings may be significantly
delayed, and the aggregate amount ultimately
collected may be substantially less than the
amount owed.
Certain of the mortgage loans may have a
sponsor that has previously filed bankruptcy.
In each case, the related entity or person has
emerged from bankruptcy. However, we cannot
assure you that such sponsors will not be more
likely than other sponsors to utilize their
rights in bankruptcy in the event of any
threatened action by the mortgagee to enforce
its rights under the related loan documents.
INSPECTIONS AND APPRAISALS MAY
NOT ACCURATELY REFLECT VALUE
OR CONDITION OF MORTGAGED
PROPERTY..................... In general, appraisals represent only the
analysis and opinion of qualified experts and
are not guaranties of present or future value,
and may determine a value of a property that is
significantly higher than the amount that can
be obtained from the sale of a mortgaged
property under a distress or liquidation sale.
Information regarding the values of the
mortgaged properties at the date of such report
is presented under "DESCRIPTION OF THE MORTGAGE
Additional Mortgage Loan Information" in this
prospectus supplement for illustrative purposes
only. Any engineering reports or site
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inspections obtained in connection with this
offering represent only the analysis of the
individual engineers or site inspectors
preparing such reports at the time of such
report, and may not reveal all necessary or
desirable repairs, maintenance or capital
improvement items.
THE MORTGAGED PROPERTIES MAY NOT
BE IN COMPLIANCE WITH CURRENT
ZONING LAWS.................. The mortgaged properties securing the
mortgage loans included in the trust fund are
typically subject to building and zoning
ordinances and codes affecting the construction
and use of real property. Since the zoning laws
applicable to a mortgaged property (including,
without limitation, density, use, parking and
set-back requirements) are usually subject to
change by the applicable regulatory authority
at any time, the improvements upon the
mortgaged properties may not, currently or in
the future, comply fully with all applicable
current and future zoning laws. Such changes
may limit the ability of the related borrower
to rehabilitate, renovate and update the
premises, and to rebuild or utilize the
premises "as is" in the event of a casualty
loss with respect thereto. Such limitations may
adversely affect the cash flow of the mortgaged
property following such loss. Insurance
proceeds may not be sufficient to pay off such
mortgage loan in full. In addition, if the
mortgaged property were to be repaired or
restored in conformity with then current law,
its value could be less than the remaining
balance on the mortgage loan and it may produce
less revenue than before such repair or
restoration.
RESTRICTIONS ON CERTAIN OF THE
MORTGAGED PROPERTIES MAY LIMIT
THEIR USE.................... Certain of the mortgaged properties securing
mortgage loans included in the trust fund which
are non-conforming may not be "legal
non-conforming" uses. The failure of a
mortgaged property to comply with zoning laws
or to be a "legal non-conforming" use may
adversely affect the market value of the
mortgaged property or the borrower's ability to
continue to use it in the manner it is
currently being used.
In addition, certain of the mortgaged
properties are subject to certain use
restrictions imposed pursuant to restrictive
covenants, governmental requirements,
reciprocal easement agreements or operating
agreements or, in the case of those mortgaged
properties that are condominiums, condominium
declarations or other condominium use
restrictions or regulations, especially in a
situation where the mortgaged property does
not represent the entire condominium building.
Such use restrictions include, for example,
limitations on the character of the
improvements or the properties, limitations
affecting noise and parking requirements,
among other things, and limitations on the
borrowers' right to operate certain
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types of facilities within a prescribed
radius. These limitations could adversely
affect the ability of the related borrower to
lease the mortgaged property on favorable
terms, thus adversely affecting the borrower's
ability to fulfill its obligations under the
related mortgage loan.
COMPLIANCE WITH APPLICABLE LAWS
AND REGULATIONS MAY RESULT
IN LOSSES.................... A borrower may be required to incur costs to
comply with various existing and future
federal, state or local laws and regulations
applicable to the related mortgaged property
securing a mortgage loan included in the trust
fund. Examples of these laws and regulations
include zoning laws and the Americans with
Disabilities Act of 1990, which requires all
public accommodations to meet certain federal
requirements related to access and use by
disabled persons. See "CERTAIN LEGAL ASPECTS OF
MORTGAGE LOANS AND LEASES--Americans with
Disabilities Act" in the accompanying
prospectus. The expenditure of such costs or
the imposition of injunctive relief, penalties
or fines in connection with the borrower's
noncompliance could negatively impact the
borrower's cash flow and, consequently, its
ability to pay its mortgage loan.
ENFORCEABILITY OF DUE-ON-SALE
CLAUSES AND ASSIGNMENTS OF
LEASES AND RENTS IS LIMITED... The mortgages securing the mortgage loans
included in the trust fund generally contain
due-on-sale clauses, which permit the
acceleration of the maturity of the related
mortgage loan if the borrower sells, transfers
or conveys the related mortgaged property or
its interest in the mortgaged property without
the consent of the lender. There also may be
limitations on the enforceability of such
clauses. The mortgages also generally include a
debt-acceleration clause, which permits the
acceleration of the related mortgage loan upon
a monetary or non-monetary default by the
borrower. The courts of all states will
generally enforce clauses providing for
acceleration in the event of a material payment
default, but may refuse the foreclosure of a
mortgaged property when acceleration of the
indebtedness would be inequitable or unjust or
the circumstances would render acceleration
unconscionable. However, certain of the
mortgage loans included in the trust fund
permit one or more transfers of the related
mortgaged property to pre-approved borrowers or
pursuant to pre-approved conditions set forth
in the related mortgage loan documents without
the lender's approval. In addition, certain of
the mortgage loans do not restrict the transfer
of limited partnership interests or
non-managing member interests in the related
borrower.
See "CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
AND LEASES--Due-on-Sale and
Due-on-Encumbrance" in the accompanying
prospectus.
The mortgage loans included in the trust fund
may also be secured by an assignment of leases
and rents pursuant to
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which the borrower typically assigns its
right, title and interest as landlord under
the leases on the related mortgaged property
and the income derived therefrom to the lender
as further security for the related mortgage
loan, while retaining a license to collect
rents for so long as there is no default. In
the event the borrower defaults, the license
terminates and the lender is entitled to
collect the rents. Such assignments are
typically not perfected as security interests
prior to the lender's taking possession of the
related mortgaged property and/or appointment
of a receiver. Some state laws may require
that the lender take possession of the
mortgaged property and obtain a judicial
appointment of a receiver before becoming
entitled to collect the rents. In addition, if
bankruptcy or similar proceedings are
commenced by or in respect of the borrower,
the lender's ability to collect the rents may
be adversely affected. See "CERTAIN LEGAL
ASPECTS OF MORTGAGE LOANS AND LEASES--Leases
and Rents" in the accompanying prospectus.
LIMITATIONS ON THE BENEFITS OF
CROSS-COLLATERALIZED AND CROSS-
DEFAULTED PROPERTIES......... Two (2) groups of mortgage loans, the Cole
concentration and Extra Space concentration
(loan numbers 49, 71, 79, 82, 92 and 94 and
loan numbers 24, 28, 45, 52, 61, 64, 66, 70,
74, 85 and 89), representing in the aggregate
7.7% of the mortgage pool (17 mortgage loans in
loan group 1 or 8.6%), are groups of mortgage
loans that are cross-collateralized and
cross-defaulted with each of the other mortgage
loans in their respective groups. In addition,
some mortgage loans are secured by first lien
deeds of trust or mortgages, as applicable, on
multiple properties securing the joint and
several obligations of multiple borrowers. Such
arrangements could be challenged as fraudulent
conveyances by creditors of any of the related
borrowers or by the representative of the
bankruptcy estate of any related borrower if
one or more of such borrowers becomes a debtor
in a bankruptcy case. Generally, under federal
and most state fraudulent conveyance statutes,
a lien granted by any such borrower could be
voided if a court determines that:
o such borrower was insolvent at the time
of granting the lien, was rendered
insolvent by the granting of the lien,
was left with inadequate capital or was
not able to pay its debts as they
matured; and
o such borrower did not, when it allowed
its mortgaged property to be encumbered
by the liens securing the indebtedness
represented by the other
cross-collateralized loans, receive
"fair consideration" or "reasonably
equivalent value" for pledging such
mortgaged property for the equal
benefit of the other related borrowers.
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We cannot provide assurances that a lien
granted by a borrower on a
cross-collateralized loan to secure the
mortgage loan of another borrower, or any
payment thereon, would not be avoided as a
fraudulent conveyance. See "DESCRIPTION OF THE
MORTGAGE POOL--Certain Terms and Conditions of
the Mortgage Loans--Cross-Default and
Cross-Collateralization of Certain Mortgage
Loans; Certain Multi-Property Mortgage Loans"
in this prospectus supplement and Annex A-5 to
this prospectus supplement for more
information regarding the cross-collateralized
loans. No mortgage loan included in the trust
fund (other than the mortgage loans with
companion loans) is cross-collateralized with
a mortgage loan not included in the trust
fund.
SINGLE TENANTS AND CONCENTRATION
OF TENANTS SUBJECT THE TRUST FUND
TO INCREASED RISK............ Nineteen (19) of the mortgaged properties
securing mortgage loans included in the trust
fund, representing 9.5% of the mortgage pool
(10.6% of loan group 1), are leased wholly to a
single tenant or are wholly owner occupied.
Certain other of the mortgaged properties are
leased in large part to a single tenant or are
in large part owner occupied. Any default by a
major tenant could adversely affect the related
borrower's ability to make payments on the
related mortgage loan. We cannot provide
assurances that any major tenant will continue
to perform its obligations under its lease (or,
in the case of an owner-occupied mortgaged
property, under the related mortgage loan
documents).
With respect to certain of the mortgage loans,
the related borrower has given to certain
tenants a right of first refusal in the event
a sale is contemplated or an option to
purchase all or a portion of the mortgaged
property and this provision, if not waived,
may impede the mortgagee's ability to sell the
related mortgaged property at foreclosure or
adversely affect the foreclosure proceeds.
In addition, certain of the mortgaged
properties that are leased to single tenants
or a major tenant may have leases that
terminate or grant the tenant early
termination rights prior to the maturity date
of the related mortgage loan. Mortgaged
properties leased to a single tenant, or a
small number of tenants, are more likely to
experience interruptions of cash flow if a
tenant fails to renew its lease because there
may be less or no rental income until new
tenants are found and it may be necessary to
expend substantial amounts of capital to make
the space acceptable to new tenants.
With respect to the mortgaged property
securing the 11 Madison Avenue mortgage loan,
representing 7.7% of the mortgage pool (8.6%
of loan group 1), the largest tenant, Credit
Suisse First Boston LLC, has the right to
terminate a portion of its leased space.
Although 74.3% of Credit Suisse First Boston
LLC's 1,921,459 square feet of net rentable
area is
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leased through April 2017, Credit Suisse First
Boston LLC does have the option to terminate
up to 528,730 square feet (27.5% of Credit
Suisse First Boston LLC's space and 23.4% of
the mortgaged property's total space) after
April 2007 in its sole discretion, provided
that they meet certain notice requirements and
pay a termination fee. See "DESCRIPTION OF THE
MORTGAGE POOL--Twenty Largest Mortgage
Loans--11 Madison Avenue" in this prospectus
supplement. There can be no assurance that the
related borrower will be able to relet the
terminated space or that such space could be
relet at the same rate being paid by Credit
Suisse First Boston LLC.
With respect to 1 mortgage loan, the One
Riverview Square mortgage loan, representing
2.8% of the mortgage pool (3.2% of loan group
1), a government entity is the sole tenant of
the mortgaged property and has certain express
rights with respect to rent adjustments and
offsets under certain circumstances. See
"--Future Cash Flow and Property Values Are
Not Predictable" above.
With respect to 1 mortgage loan, the ConAgra
Distribution Facility mortgage loan,
representing 1.5% of the mortgage pool (1.7%
of loan group 1), the related mortgaged
property is occupied by a single tenant.
Retail and office properties also may be
adversely affected if there is a concentration
of particular tenants among the mortgaged
properties or of tenants in a particular
business or industry. For further information
regarding certain significant tenants at the
mortgaged properties, see Annex A-4 to this
prospectus supplement.
THE FAILURE OF A TENANT WILL
HAVE A NEGATIVE IMPACT ON
SINGLE TENANT AND TENANT
CONCENTRATION PROPERTIES..... The bankruptcy or insolvency of a major tenant
or sole tenant, or a number of smaller tenants,
in retail, industrial and office properties may
adversely affect the income produced by a
mortgaged property. Under the Bankruptcy Code,
a tenant has the option of assuming or
rejecting any unexpired lease. If the tenant
rejects the lease, the landlord's claim for
breach of the lease would be a general
unsecured claim against the tenant (absent
collateral securing the claim) and the amounts
the landlord could claim would be limited.
LITIGATION MAY HAVE ADVERSE
EFFECT ON BORROWERS.......... From time to time, there may be legal
proceedings pending, threatened or ongoing
against the borrowers, managers, sponsors and
their respective affiliates relating to the
business of, or arising out of the ordinary
course of business of, the borrowers, managers,
sponsors and their respective affiliates, and
certain of the borrowers, managers, sponsors
and their respective affiliates are subject to
legal proceedings relating to the business of,
or arising out of the ordinary course of
business of, the borrowers, managers, sponsors
or
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their respective affiliates. It is possible
that such proceedings may have a material
adverse effect on any borrower's ability to
meet its obligations under the related
mortgage loan and, thus, on distributions on
your certificates.
POOR PROPERTY MANAGEMENT WILL
LOWER THE PERFORMANCE OF THE
RELATED MORTGAGED PROPERTY... The successful operation of a real estate
project depends upon the property manager's
performance and viability. The property manager
is responsible for:
o responding to changes in the local
market;
o planning and implementing the rental
structure;
o operating the property and providing
building services;
o managing operating expenses; and
o assuring that maintenance and capital
improvements are carried out in a
timely fashion.
Properties deriving revenues primarily from
short-term sources, such as short-term leases,
are generally more management intensive than
properties leased to creditworthy tenants
under long-term leases.
PPC Property Management, Inc., an affiliate of
the related borrower, is managing the
mortgaged properties for 2 mortgage loans
(loan numbers 39 and 83), which collectively
represent 1.0% of the mortgage pool (9.1% of
loan group 2).
CONAM Management Corporation is managing the
mortgaged properties for 2 mortgage loans
(loan numbers 30 and 56), which collectively
represent 1.4% of the mortgage pool (12.7% of
loan group 2).
The failure of a property manager that manages
a number of mortgaged properties as described
above to properly manage the related
properties or any financial difficulties with
respect to this property manager could have a
significant negative impact on the continued
income generation from these mortgaged
properties and therefore the performance of
the related mortgage loans. See "--Adverse
Consequences Associated with Borrower
Concentration, Borrowers Under Common Control
and Related Borrowers" and "DESCRIPTION OF THE
MORTGAGE POOL--Twenty Largest Mortgage Loans"
in this prospectus supplement.
We cannot provide assurance regarding the
performance of any operators, leasing agents
and/or property managers or persons who may
become operators and/or property managers upon
the expiration or termination of management
agreements or following any default or
foreclosure under a mortgage loan. In
addition, the property managers are usually
operating companies and unlike limited purpose
entities, may not be restricted from incurring
debt and other liabilities in the ordinary
course of business or otherwise.
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We make no representation or warranty as to
the skills of any present or future managers.
Additionally, we cannot provide assurance that
the property managers will be in a financial
condition to fulfill their management
responsibilities throughout the terms of their
respective management agreements.
CONDEMNATIONS OF MORTGAGED
PROPERTIES MAY RESULT
IN LOSSES.................... From time to time, there may be condemnations
pending or threatened against one or more of
the mortgaged properties securing mortgage
loans included in the trust fund. The proceeds
payable in connection with a total condemnation
may not be sufficient to restore the related
mortgaged property or to satisfy the remaining
indebtedness of the related mortgage loan. The
occurrence of a partial condemnation may have a
material adverse effect on the continued use
of, or income generation from, the affected
mortgaged property. Therefore, we cannot give
assurances that the occurrence of any
condemnation will not have a negative impact
upon distributions on your certificates.
THE STATUS OF A GROUND LEASE MAY
BE UNCERTAIN IN A BANKRUPTCY
PROCEEDING................... Three (3) mortgage loans, representing 1.9%
of the mortgage pool (2.1% of loan group 1),
are secured in whole or in part by leasehold
interests. Pursuant to Section 365(h) of the
Bankruptcy Code, ground lessees in possession
under a ground lease that has commenced have
the right to continue in a ground lease even
though the representative of their bankrupt
ground lessor rejects the lease. The leasehold
mortgages generally provide that the borrower
may not elect to treat the ground lease as
terminated on account of any such rejection by
the ground lessor without the prior approval of
the holder of the mortgage note or otherwise
prohibit the borrower from terminating the
ground lease. In a bankruptcy of a ground
lessee/borrower, the ground lessee/ borrower
under the protection of the Bankruptcy Code
has the right to assume (continue) or reject
(breach and/or terminate) any or all of its
ground leases. If the ground lessor and the
ground lessee/borrower are concurrently
involved in bankruptcy proceedings, the
trustee may be unable to enforce the bankrupt
ground lessee/borrower's right to continue in
a ground lease rejected by a bankrupt ground
lessor. In such circumstances, a ground lease
could be terminated notwithstanding lender
protection provisions contained therein or in
the related mortgage. Further, in a recent
decision by the United States Court of Appeals
for the Seventh Circuit (Precision Indus. v.
Qualitech Steel SBQ, LLC, 327 F.3d 537 (7th
Cir. 2003), the court ruled with respect to an
unrecorded lease of real property that where a
statutory sale of the fee interest in leased
property occurs under Section 363(f) of the
Bankruptcy Code (11 U.S.C. Section 363(f))
upon the bankruptcy of a landlord, such sale
terminates a lessee's possessory interest in
the property, and the purchaser assumes title
free and clear of any interest,
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including any leasehold estates. Pursuant to
Section 363(e) of the Bankruptcy Code (11
U.S.C. Section 363(a)), a lessee may request
the bankruptcy court to prohibit or condition
the statutory sale of the property so as to
provide adequate protection of the leasehold
interest; however, the court ruled that this
provision does not ensure continued possession
of the property, but rather entitles the
lessee to compensation for the value of its
leasehold interest, typically from the sale
proceeds. While there are certain
circumstances under which a "free and clear"
sale under Section 363(f) of the Bankruptcy
Code would not be authorized (including that
the lessee could not be compelled in a legal
or equitable proceeding to accept a monetary
satisfaction of his possessory interest, and
that none of the other conditions of Section
363(f)(1)-(4) of the Bankruptcy Code otherwise
permits the sale), we cannot provide
assurances that those circumstances would be
present in any proposed sale of a leased
premises. As a result, we cannot provide
assurances that, in the event of a statutory
sale of leased property pursuant to Section
363(f) of the Bankruptcy Code, the lessee may
be able to maintain possession of the property
under the ground lease. In addition, we cannot
provide assurances that the lessee and/or the
lender will be able to recuperate the full
value of the leasehold interest in bankruptcy
court.
In addition, certain of the mortgaged
properties securing the mortgage loans are
subject to operating leases. The operating
lessee then sublets space in the mortgaged
property to sub-tenants. Therefore, the cash
flow from the rented mortgaged property will
be subject to the bankruptcy risks with
respect to the operating lessee.
MORTGAGE LOAN SELLERS MAY NOT BE
ABLE TO MAKE A REQUIRED REPURCHASE
OR SUBSTITUTION OF A DEFECTIVE
MORTGAGE LOAN................ Each mortgage loan seller is the sole
warranting party in respect of the mortgage
loans sold by such mortgage loan seller to us.
Neither we nor any of our affiliates (except,
in certain circumstances, for Wachovia Bank,
National Association in its capacity as a
mortgage loan seller) are obligated to
repurchase or substitute any mortgage loan in
connection with either a breach of any mortgage
loan seller's representations and warranties or
any document defects, if such mortgage loan
seller defaults on its obligation to do so. We
cannot provide assurances that the mortgage
loan sellers will have the financial ability to
effect such repurchases or substitutions.
In addition, one or more of the mortgage loan
sellers has acquired a portion of the mortgage
loans included in the trust fund in one or
more secondary market purchases. Such
purchases may be challenged as fraudulent
conveyances. Such a challenge if successful,
may have a negative impact on the
distributions on your certificates. See
"DESCRIPTION
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OF THE MORTGAGE POOL--Assignment of the
Mortgage Loans; Repurchases and Substitutions"
and "--Representations and Warranties;
Repurchases and Substitutions" in this
prospectus supplement and "DESCRIPTION OF THE
POOLING AND SERVICING AGREEMENTS--
Representations and Warranties; Repurchases"
in the accompanying prospectus.
ONE ACTION JURISDICTION MAY LIMIT
THE ABILITY OF THE SPECIAL
SERVICER TO FORECLOSE ON THE
MORTGAGED PROPERTY........... Some states (including California) have laws
that prohibit more than one judicial action to
enforce a mortgage obligation, and some courts
have construed the term judicial action
broadly. Accordingly, the special servicer is
required to obtain advice of counsel prior to
enforcing any of the trust fund's rights under
any of the mortgage loans that include
mortgaged properties where this rule could be
applicable. In the case of either a
cross-collateralized and cross-defaulted
mortgage loan or a multi-property mortgage loan
which is secured by mortgaged properties
located in multiple states, the special
servicer may be required to foreclose first on
properties located in states where such "one
action" rules apply (and where non-judicial
foreclosure is permitted) before foreclosing on
properties located in the states where judicial
foreclosure is the only permitted method of
foreclosure. As a result, the special servicer
may incur delay and expense in foreclosing on
mortgaged properties located in states affected
by one action rules. See "CERTAIN LEGAL ASPECTS
OF MORTGAGE LOANS AND LEASES-- Foreclosure" in
the accompanying prospectus.
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DESCRIPTION OF THE MORTGAGE POOL
GENERAL
The pool of mortgage loans (each, a "Mortgage Loan") included in the Trust
Fund (the "Mortgage Pool") is expected to consist of 96 fixed rate mortgage
loans (the "Mortgage Loans"), with an aggregate principal balance (the "Cut-Off
Date Pool Balance") of $1,063,096,509. The "Cut-Off Date" for (i) 94 of the
Mortgage Loans is July 11, 2004 and (ii) 2 of the Mortgage Loans is July 1,
2004. The "Cut-Off Date Balance" of each Mortgage Loan will equal the unpaid
principal balance thereof as of the related Cut-Off Date, after reduction for
all payments of principal due on or before such date, whether or not received.
The Mortgage Pool will be deemed to consist of 2 loan groups ("Loan Group 1"
and "Loan Group 2" and, collectively, the "Loan Groups"). Loan Group 1 will
consist of all of the Mortgage Loans that are not secured by multifamily
properties and 3 Mortgage Loans that are secured by multifamily properties.
Loan Group 1 is expected to consist of 81 Mortgage Loans, with an aggregate
Cut-Off Date Balance of $948,065,473 (the "Cut-Off Date Group 1 Balance"). Loan
Group 2 will consist of 15 Mortgage Loans that are secured by Mortgaged
Properties that are multifamily properties. Loan Group 2 is expected to consist
of 15 Mortgage Loans, with an aggregate Cut-Off Date Balance of $115,031,036
(the "Cut-Off Date Group 2 Balance" and, together with the Cut-Off Date Group 1
Balance the "Cut-Off Date Group Balances"). Annex A-1 to this prospectus
supplement sets forth the Loan Group designation with respect to each Mortgage
Loan. The Cut-Off Date Balances of all of the Mortgage Loans in the Mortgage
Pool range from $1,527,164 to $119,298,859. The Mortgage Loans in the Mortgage
Pool have an average Cut-Off Date Balance of $11,073,922. The Cut-Off Date
Balances of the Mortgage Loans in Loan Group 1 range from $1,550,000 to
$119,298,859. The Mortgage Loans in Loan Group 1 have an average Cut-Off Date
Balance of $11,704,512. The Cut-Off Date Balances of the Mortgage Loans in Loan
Group 2 range from $1,527,164 to $18,200,000. The Mortgage Loans in Loan Group
2 have an average Cut-Off Date Balance of $7,668,736. References to percentages
of Mortgaged Properties referred to in this prospectus supplement without
further description are references to the percentages of the Cut-Off Date Pool
Balance represented by the aggregate Cut-Off Date Balance of the related
Mortgage Loans and references to percentages of Mortgage Loans in a particular
Loan Group without further description are references to the related Cut-Off
Date Group Balance. The descriptions in this prospectus supplement of the
Mortgage Loans and the Mortgaged Properties are based upon the pool of Mortgage
Loans as it is expected to be constituted as of the close of business on the
Closing Date, assuming that (1) all scheduled principal and/or interest
payments due on or before the Cut-Off Date will be made, and (2) there will be
no principal prepayments on or before the Cut-Off Date. All percentages of the
Mortgage Loans or any specified group of Mortgage Loans referred to in this
prospectus supplement are approximate percentages. All numerical and
statistical information presented herein (including Cut-Off Date Balances,
loan-to-value ratios and debt service coverage ratios) with respect to the
Co-Lender Loans are calculated without regard to the related Subordinate
Companion Loan.
The 11 Madison Avenue Loan will be deemed to be split into two components
(the "11 Madison Avenue Pooled Component" and the "11 Madison Avenue Non-Pooled
Component"). The 11 Madison Avenue Pooled Component has a component principal
balance of $82,000,000 and will represent 7.7% of the Cut-Off Date Pool
Balance (8.6% of the Cut-Off Date Group 1 Balance). The Certificates (other
than the Class MAD Certificates) will be entitled to distributions from the 11
Madison Avenue Pooled Component. Although the 11 Madison Avenue Non-Pooled
Component is included in the trust, for the purpose of numerical and
statistical information presented herein (including the annexes) such
information includes the Pari Passu Companion Loans, but not the 11 Madison
Avenue Non-Pooled Component or the related Subordinate Companion Loans. The
component principal balance of the 11 Madison Avenue Non-Pooled Component as of
the Cut-Off Date will be $13,555,556.
All of the Mortgage Loans are evidenced by a promissory note (each a
"Mortgage Note") and are secured by a mortgage, deed of trust or other similar
security instrument (each, a "Mortgage") that creates a first mortgage lien on
a fee simple estate (or, with respect to 3 Mortgage Loans, representing 1.9% of
the Cut-Off Date Pool Balance and 2.1% of the Cut-Off Date Group 1 Balance, on
the related borrower's leasehold estate in an income-producing real property)
(each, a "Mortgaged Property"). In addition, the security for the 11 Madison
Avenue Loan consists of the borrower's interest in the portion
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of the related Mortgaged Property leased to Credit Suisse First Boston LLC (the
"IDA Premises") under the IDA lease as well as the borrower's fee interest in
the remainder of the Mortgaged Property. The fee interest in the IDA Premises
is owned by the New York City Industrial Development Agency (the "IDA") but
will revert to the borrower upon the termination of the IDA lease. See
"DESCRIPTION OF THE MORTGAGE POOL--Twenty Largest Mortgage Loans--11 Madison
Avenue" in this prospectus supplement.
Set forth below are the number of Mortgage Loans, and the approximate
percentage of the Cut-Off Date Pool Balance represented by such Mortgage Loans
that are secured by Mortgaged Properties operated for each indicated purpose:
MORTGAGED PROPERTIES BY PROPERTY TYPE
PERCENTAGE OF PERCENTAGE OF
NUMBER OF AGGREGATE PERCENTAGE OF CUT-OFF DATE CUT-OFF DATE
MORTGAGED CUT-OFF DATE CUT-OFF DATE GROUP 1 GROUP 2
PROPERTY TYPE PROPERTIES BALANCE POOL BALANCE BALANCE BALANCE
- -------------------------------------- ------------ ----------------- --------------- --------------- --------------
Office ............................... 19 $ 445,391,450 41.9% 47.0% 0.0%
Retail ............................... 33 294,722,903 27.7 31.1 0.0
Retail - Anchored ................... 25 243,491,970 22.9 25.7 0.0
Retail - Shadow Anchored(1) ......... 2 28,247,436 2.7 3.0 0.0
Retail - Unanchored ................. 6 22,983,498 2.2 2.4 0.0
Multifamily .......................... 19 148,825,460 14.0 3.6 100.0
Self Storage ......................... 13 72,707,832 6.8 7.7 0.0
Industrial ........................... 7 58,109,110 5.5 6.1 0.0
Hospitality .......................... 3 22,285,236 2.1 2.4 0.0
Mobile Home Park ..................... 1 13,424,059 1.3 1.4 0.0
Mixed Use ............................ 1 5,040,219 0.5 0.5 0.0
Land(2) .............................. 1 2,590,240 0.2 0.3 0.0
-- -------------- ----- ----- -----
TOTAL ................................ 97 $1,063,096,509 100.0% 100.0% 100.0%
== ============== ===== ===== =====
- ----------
(1) A mortgaged property is classified as shadow anchored if it is in close
proximity to an anchored retail property.
(2) Specifically, the mortgaged property is the fee interest in land which the
ground tenant has improved and has leased as an anchored retail building.
The retail building is not part of the loan collateral, and the source of
funds for loan repayment is the ground rent payments made to the borrower.
[PIE CHART REPRESENTING
MORTGAGED PROPERTIES
BY PROPERTY TYPE OMITTED]
[DATA FROM PIE CHART SHOWN
HERE IN TABULAR FORM]
Office 41.9%
Retail 27.7%
Multifamily 14.0%
Self Storage 6.8%
Industrial 5.5%
Hospitality 2.1%
Mobile Home Park 1.3%
Mixed Use 0.5%
Land 0.2%
MORTGAGE LOAN HISTORY
All of the Mortgage Loans will be acquired on the Closing Date by the
Depositor from the Mortgage Loan Sellers. Wachovia Bank, National Association
("Wachovia"), in its capacity as a Mortgage Loan Seller, originated 60 of the
Mortgage Loans to be included in the Trust Fund representing 60.2% of the
Cut-Off Date Pool Balance (52 Mortgage Loans in Loan Group 1 or 59.4% of the
Cut-Off Date Group 1 Balance and 8 Mortgage Loans in Loan Group 2 or 67.0% of
the Cut-Off Date Group 2 Balance). Artesia
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Mortgage Capital Corporation ("Artesia") originated 24 of the Mortgage Loans to
be included in the Trust Fund representing 14.2% of the Cut-Off Date Pool
Balance (17 Mortgage Loans in Loan Group 1 or 11.9% of the Cut-Off Date Group 1
Balance and 7 Mortgage Loans in Loan Group 2 or 33.0% of the Cut-Off Date Group
2 Balance). Citigroup Global Markets Realty Corp. ("Citigroup") originated 10
of the Mortgage Loans to be included in the Trust Fund representing 13.1% of
the Cut-Off Date Pool Balance (14.7% of the Cut-Off Date Group 1 Balance).
Eurohypo AG, New York Branch ("Eurohypo") originated 2 of the Mortgage Loans to
be included in the Trust Fund representing 12.4% of the Cut-Off Date Pool
Balance (14.0% of the Cut-Off Date Group 1 Balance). None of the Mortgage Loans
were 30 days or more delinquent as of the Cut-Off Date, and no Mortgage Loan
has been 30 days or more delinquent during the 12 months preceding the Cut-Off
Date (or since the date of origination if such Mortgage Loan has been
originated within the past 12 months).
CERTAIN TERMS AND CONDITIONS OF THE MORTGAGE LOANS
Mortgage Rates; Calculations of Interest. All of the Mortgage Loans bear
interest at rates (each a "Mortgage Rate") that will remain fixed for their
remaining terms, provided, however, that after the applicable Anticipated
Repayment Date, the interest rate on the related ARD Loans will increase as
described in this prospectus supplement. See "--Amortization" below. All of the
Mortgage Loans accrue interest on the basis (an "Actual/360 basis") of the
actual number of days elapsed over a 360-day year. Nineteen (19) of the
Mortgage Loans, representing 40.5% of the Cut-Off Date Pool Balance (12
Mortgage Loans in Loan Group 1 or 38.4% of the Cut-Off Date Group 1 Balance and
7 Mortgage Loans in Loan Group 2 or 57.5% of the Cut-Off Date Group 2 Balance),
have periods during which only interest is due and periods in which principal
and interest are due. Nineteen (19) of the Mortgage Loans, representing 10.6%
of the Cut-Off Date Pool Balance (18 Mortgage Loans in Loan Group 1 or 9.9% of
the Cut-Off Date Group 1 Balance and 1 Mortgage Loan in Loan Group 2 or 15.8%
of the Cut-Off Date Group 2 Balance), are interest-only for their entire term.
Mortgage Loan Payments. Scheduled payments of principal and/or interest
other than Balloon Payments (the "Periodic Payments") on all of the Mortgage
Loans are due monthly.
Due Dates. Generally, the Periodic Payment for each Mortgage Loan is due
on the date (each such date, a "Due Date") occurring on the 11th day of the
month (or in the case of 2 Mortgage Loans, the first day of the month). None of
the Mortgage Loans has a grace period that extends payment beyond the 11th day
of any calendar month.
Amortization. Eighty-eight (88) of the Mortgage Loans (the "Balloon
Loans"), representing 96.4% of the Cut-Off Date Pool Balance (74 Mortgage Loans
in Loan Group 1 or 96.4% of the Cut-Off Date Group 1 Balance and 14 Mortgage
Loans in Loan Group 2 or 96.5% of the Cut-Off Date Group 2 Balance), provide
for Periodic Payments based on amortization schedules significantly longer than
their respective terms to maturity, in each case with payments on their
respective scheduled maturity dates of principal amounts outstanding (each such
amount, together with the corresponding payment of interest, a "Balloon
Payment"). Nineteen (19) of the Mortgage Loans, representing 10.6% of the
Cut-Off Date Pool Balance (18 Mortgage Loans in Loan Group 1 or 9.9% of the
Cut-Off Date Group 1 Balance and 1 Mortgage Loan in Loan Group 2 or 15.8% of
the Cut-Off Date Group 2 Balance), provide for interest-only Periodic Payments
for the entire term and do not amortize. Eight (8) of the Mortgage Loans (the
"Fully Amortizing Loan"), representing 3.6% of the Cut-Off Date Pool Balance (7
Mortgage Loans in Loan Group 1 or 3.6% of the Cut-Off Date Group 1 Balance and
1 Mortgage Loan in Loan Group 2 or 3.5% of the Cut-Off Date Group 2 Balance),
fully or substantially amortize through their respective remaining terms to
maturity. One (1) such Mortgage Loan, representing 0.3% of the Cut-Off Date
Pool Balance (0.3% of the Cut-Off Date Group 1 Balance) substantially amortizes
prior to its anticipated repayment date but may enter a period of
hyper-amortization after such date with respect to any remaining balance. In
addition, because the fixed periodic payments on the Fully Amortizing Loan is
determined assuming interest is calculated on a 30/360 basis, but interest
actually accrues and is applied on the Fully Amortizing Loan on an Actual/360
basis, there will be less amortization, absent prepayments, of the related
principal balances during the term of the Fully Amortizing Loans, resulting in
a higher final payment on the Fully Amortizing Loan.
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Forty-Eight (48) of the Balloon Loans (the "ARD Loans"), representing
50.9% of the Cut-Off Date Pool Balance (43 Mortgage Loans in Loan Group 1 or
49.9% of the Cut-Off Date Group 1 Balance and 5 Mortgage Loans in Loan Group 2
or 59.5% of the Cut-Off Date Group 2 Balance), provide that if the unamortized
principal amount thereof is not repaid on a date set forth in the related
Mortgage Note (the "Anticipated Repayment Date"), the Mortgage Loan will accrue
additional interest (the "Additional Interest") at the rate set forth therein
and the borrower will be required to apply excess monthly cash flow (the
"Excess Cash Flow") generated by the Mortgaged Property (as determined in the
related loan documents) to the repayment of principal outstanding on the
Mortgage Loan. On or before the Anticipated Repayment Date, the ARD Loans
generally require the related borrower to enter into a cash management
agreement whereby all Excess Cash Flow will be deposited directly into a
lockbox account. Eighteen (18) of the ARD Loans, representing 9.4% of the
Cut-Off Date Pool Balance (17 Mortgage Loans in Loan Group 1 or 8.6% of the
Cut-Off Date Group 1 Balance and 1 Mortgage Loan in Loan Group 2 or 15.8% of
the Cut-Off Date Group 2 Balance), provide for monthly payments of interest
only until the related Anticipated Repayment Date and do not provide for any
amortization of principal before the related Anticipated Repayment Date. Any
amount received in respect of Additional Interest (other than such amounts
allocable to the 11 Madison Avenue Non-Pooled Component) will be distributed to
the holders of the Class Z Certificates and with respect to Additional Interest
allocable to the 11 Madison Avenue Non-Pooled Component, to the holders of the
Class MAD Certificates. Generally, Additional Interest will not be included in
the calculation of the Mortgage Rate for a Mortgage Loan, and will only be paid
after the outstanding principal balance of the Mortgage Loan together with all
interest thereon at the Mortgage Rate has been paid. With respect to such
Mortgage Loans, no Prepayment Premiums or Yield Maintenance Charges will be due
in connection with any principal prepayment after the Anticipated Repayment
Date.
Nineteen (19) of the Balloon Loans and ARD Loans, representing 40.5% of
the Cut-Off Date Pool Balance (12 Mortgage Loans in Loan Group 1 or 38.4% of
the Cut-Off Date Group 1 Balance and 7 Mortgage Loans in Loan Group 2 or 57.5%
of the Cut-Off Date Group 2 Balance), provide for monthly payments of interest
only for the first 12 to 60 months in the case of Loan Group 1 and in the case
of Loan Group 2 the first 12 to 24 months of their respective terms followed by
payments which amortize a portion of the principal balance of the Mortgage
Loans by their related maturity dates or Anticipated Repayment Dates, as
applicable, but not the entire principal balance of the Mortgage Loans.
Nineteen (19) of the Balloon Loans and ARD Loans, representing 10.6% of the
Cut-Off Date Pool Balance (18 Mortgage Loans in Loan Group 1 or 9.9% of the
Cut-Off Date Group 1 Balance and 1 Mortgage Loan in Loan Group 2 or 15.8% of
the Cut-Off Date Group 2 Balance), provide for monthly payments of interest
only until maturity or ARD and do not provide for any amortization of
principal.
Prepayment Provisions. As of the Cut-Off Date, all of the Mortgage Loans
restrict or prohibit voluntary principal prepayment. In general, the Mortgage
Loans either (i) prohibit voluntary prepayment of principal until a date
specified in the related Mortgage Note, but permit defeasance after a date
specified in the related Mortgage Note for most or all of the remaining term
(84 Mortgage Loans, or 90.6% of the Cut-Off Date Pool Balance (72 Mortgage
Loans in Loan Group 1 or 91.5% of the Cut-Off Date Group 1 Balance and 12
Mortgage Loans in Loan Group 2 or 83.8% of the Cut-Off Date Group 2 Balance));
(ii) prohibit voluntary prepayment of principal for a period ending on a date
specified in the related Mortgage Note, and thereafter impose a Yield
Maintenance Charge for most of the remaining term (9 Mortgage Loans, or 5.8% of
the Cut-Off Date Pool Balance (6 Mortgage Loans in Loan Group 1 or 4.6% of the
Cut-Off Date Group 1 Balance and 3 Mortgage Loans in Loan Group 2 or 16.2% of
the Cut-Off Date Group 2 Balance)); (iii) prohibit prepayment until a date
specified in the related Mortgage Note, and then, at the election of the
borrower, permits defeasance or prepayment with a Yield Maintenance Charge (1
Mortgage Loan, or 1.6% of the Cut-Off Date Pool Balance (1.7% of the Cut-Off
Date Group 1 Balance)); (iv) prohibit prepayment until a date specified in the
loan documents, then permit defeasance until a date specified in the
loan documents, and then permit prepayment with a prepayment premium (1
Mortgage Loan, or 1.1% of the Cut-Off Date Pool Balance (1.3% of the
Cut-Off Date Group 1 Balance)); or (v) impose a Yield Maintenance Charge for
most or all of the loan term (1 Mortgage Loan, or 0.9% of the Cut-Off Date Pool
Balance (1.0% of the Cut-Off Date Group 1 Balance)); provided that, for
purposes of each of the foregoing, "remaining term" refers to either the
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remaining term to maturity or the Anticipated Repayment Date, as applicable, of
the related Mortgage Loan. See "--Additional Mortgage Loan Information" in this
prospectus supplement. Prepayment Premiums and Yield Maintenance Charges, if
and to the extent collected, will be distributed as described under
"DESCRIPTION OF THE CERTIFICATES--Distributions--Allocation of Prepayment
Premiums and Yield Maintenance Charges" in this prospectus supplement. The
Depositor makes no representation as to the enforceability of the provisions of
any Mortgage Note requiring the payment of a Prepayment Premium or Yield
Maintenance Charge, or of the collectability of any Prepayment Premium or Yield
Maintenance Charge.
Certain state laws limit the amounts that a lender may collect from a
borrower as an additional charge in connection with the prepayment of a
mortgage loan. The Mortgage Loans generally do not require the payment of
Prepayment Premiums or Yield Maintenance Charges in connection with a
prepayment, in whole or in part, of the related Mortgage Loan as a result of or
in connection with a total casualty or condemnation. Furthermore, the
enforceability, under the laws of a number of states, of provisions providing
for payments comparable to the Prepayment Premiums and/or Yield Maintenance
Charges upon an involuntary prepayment is unclear. No assurance can be given
that, at the time a Prepayment Premium or Yield Maintenance Charge is required
to be made on a Mortgage Loan in connection with an involuntary prepayment, any
obligation to pay such Prepayment Premium or Yield Maintenance Charge will be
enforceable under applicable state law.
The Mortgage Loans included in the Trust Fund (other than certain of the
Artesia Mortgage Loans) provide that, in the event of a partial prepayment of
such Mortgage Loan due to the receipt of insurance proceeds or a condemnation
award in connection with a casualty or condemnation, the monthly debt service
payment of such Mortgage Loan will remain unchanged. See "RISK
FACTORS--Prepayments Will Affect Your Yield" in this prospectus supplement.
Eighty-four (84) of the Mortgage Loans, or 90.6% of the Cut-Off Date Pool
Balance (72 Mortgage Loans in Loan Group 1 or 91.5% of the Cut-Off Date Group 1
Balance and 12 Mortgage Loans in Loan Group 2 or 83.8% of the Cut-Off Date
Group 2 Balance), provide that, in general, under certain conditions, the
related borrower will have the right, no earlier than two years following the
Closing Date, to substitute a pledge of Defeasance Collateral in exchange for a
release of the related Mortgaged Property (or a portion thereof) from the lien
of the related Mortgage without the prepayment of the Mortgage Loan or the
payment of the applicable Prepayment Premium or Yield Maintenance Charge. One
(1) Mortgage Loan, representing 1.6% of the Cut-Off Date Pool Balance (1.7% of
the Cut-Off Date Group 1 Balance), provides that, in addition to the option to
defease the Mortgage Loan as described in the preceding sentence, the related
borrower may prepay the Mortgage Loan upon payment of a Yield Maintenance
Charge. One (1) Mortgage Loan, representing 1.1% of the Cut-Off Date Pool
Balance (1.3% of the Cut-Off Date Group 1 Balance), after a date specified in
the loan documents, permits defeasance and, after a date specified in the loan
documents, permits prepayment with a prepayment premium. Mortgage Loans secured
by more than one Mortgaged Property which provide for partial defeasance
generally require that, among other things, (i) prior to the release of a
related Mortgaged Property (or a portion thereof), a specified percentage
(generally 125%) of the allocated loan amount for such Mortgaged Property be
defeased and (ii) that certain debt service coverage ratios and loan-to-value
ratio tests be satisfied with respect to the remaining Mortgaged Properties
after the defeasance. In general, "Defeasance Collateral" is required to
consist of United States government obligations that provide for payments on or
prior, but as close as possible, to all successive Due Dates and the scheduled
maturity date (or the Anticipated Repayment Date in the case of the ARD Loans)
(provided that in the case of certain Mortgage Loans, such defeasance payments
may cease at the beginning of the open prepayment period with respect to such
Mortgage Loan, and the final payment on the Defeasance Collateral may be
sufficient to fully prepay the Mortgage Loan), with each such payment being
equal to or greater than (with any excess to be returned to the borrower (in
some cases, after the related Mortgage Loan is paid in full)) the Periodic
Payment due on such date or (i) in the case of a Balloon Loan on the scheduled
maturity date, the Balloon Payment, or (ii) in the case of an ARD Loan, the
principal balance on its Anticipated Repayment Date. The Pooling and Servicing
Agreement requires the Master Servicer or the Special Servicer to require each
borrower that proposes to prepay its Mortgage Loan to pledge Defeasance
Collateral in lieu of making a prepayment, to the extent the related Mortgage
Loan documents enable the
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Master Servicer or the Special Servicer, as applicable, to make such
requirement, but in each case subject to certain conditions, including that the
defeasance would not have an adverse effect on REMIC status of any of the
REMICs (accordingly, no defeasance would be required or permitted prior to the
second anniversary of the Closing Date). The cash amount a borrower must expend
to purchase, or deliver to the Master Servicer in order for the Master Servicer
to purchase, such Defeasance Collateral may be in excess of the principal
balance of the related Mortgage Loan. There can be no assurances that a court
would not interpret such portion of the cash amount that exceeds the principal
balance as a form of prepayment consideration and would not take it into
account for usury purposes. In some states some forms of prepayment
consideration are unenforceable.
Neither the Master Servicer nor the Special Servicer is permitted to waive
or modify the terms of any Mortgage Loan prohibiting voluntary prepayments
during a Lockout Period or requiring the payment of a Prepayment Premium or
Yield Maintenance Charge except under the circumstances described in "SERVICING
OF THE MORTGAGE LOANS--Modifications, Waivers and Amendments" in this
prospectus supplement.
Other Financing. With limited exceptions, all of the Mortgage Loans
prohibit the related borrower from encumbering the Mortgaged Property with
additional secured debt without the lender's prior consent. Two (2) Mortgage
Loans (loan numbers 6 and 14), representing 4.6% of the Cut-Off Date Pool
Balance (5.2% of the Cut-Off Date Group 1 Balance), provide that under certain
circumstances (a) the related borrower may encumber the related Mortgaged
Property with subordinate debt in the future and/or (b) the entities with a
controlling ownership interest in the related borrower may pledge their
interests in the borrower as security for mezzanine debt in the future, subject
to the terms of a subordination and standstill agreement to be entered into in
favor of the lender.
One (1) of the Mortgage Loans (loan number 36), representing 0.8% of the
Cut-Off Date Pool Balance (1 Mortgage Loan in Loan Group 1 or 0.9% of the
Cut-Off Date Group 1 Balance), provides that the related borrower, under
certain circumstances, may incur additional unsecured indebtedness other than
in the ordinary course of business and without the consent of the mortgagee.
With respect to 1 Mortgage Loan (loan number 3), representing 5.5% of the
Cut-Off Date Pool Balance (6.2% of the Cut-Off Date Group 1 Balance), there is
existing subordinated debt secured by the mortgaged property, subject to the
terms of a subordination and standstill agreement in favor of the lender. In
addition, the related lender has taken a security interest in the equity
interest in the borrower. With respect to 4 Mortgage Loans (loan numbers 1, 11,
42 and 78), representing 13.9% of the Cut-Off Date Pool Balance (15.5% of the
Cut-Off Date Group 1 Balance), the related Mortgage Loan documents provide
that, under certain circumstances, ownership interests in the related borrowers
may be pledged as security for debt financing, generally referred to as
mezzanine debt, in the future, subject to the terms of a subordination and
standstill agreement to be entered into in favor of the lender and the
satisfaction of certain financial conditions. See "RISK FACTORS--Additional
Debt on Some Mortgage Loans Creates Additional Risks" in this prospectus
supplement. Further, certain of the Mortgage Loans included in the Trust Fund
do not prohibit limited partners or other owners of non-controlling interests
in the related borrower from pledging their interests in the borrower as
security for mezzanine debt. See "RISK FACTORS--Additional Debt on Some
Mortgage Loans Creates Additional Risks" in this prospectus supplement. In
addition, 1 Mortgage Loan included in the trust fund as of the Cut-Off Date
(loan number 19), representing 1.3% of the Cut-Off Date Pool Balance (1.4% of
the Cut-Off-Date Group 1 Balance), does not prohibit the related borrower from
incurring additional unsecured debt or an owner of an interest in the related
borrower from pledging its ownership interest in the related borrower as
security for mezzanine debt because the related borrower is not required by
either the mortgage loan documents or related organizational documents to be a
special purpose entity.
In addition, with respect to the Co-Lender Loans, the related Mortgaged
Property also secures one or more Companion Loans. See "--Co-Lender Loans" in
this prospectus supplement.
Nonrecourse Obligations. The Mortgage Loans are generally nonrecourse
obligations of the related borrowers and, upon any such borrower's default in
the payment of any amount due under the related Mortgage Loan, the holder
thereof may look only to the related Mortgaged Property for satisfaction of the
borrower's obligations. In addition, in those cases where recourse to a
borrower or guarantor is
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purportedly permitted, the Depositor has not undertaken an evaluation of the
financial condition of any such person, and prospective investors should
therefore consider all of the Mortgage Loans to be nonrecourse.
Due-On-Sale and Due-On-Encumbrance Provisions. Substantially all of the
Mortgages contain "due-on-sale" and "due-on-encumbrance" clauses that, in
general, permit the holder of the Mortgage to accelerate the maturity of the
related Mortgage Loan if the borrower sells or otherwise transfers or encumbers
the related Mortgaged Property or prohibit the borrower from doing so without
the consent of the holder of the Mortgage. However, certain of the Mortgage
Loans may permit one or more transfers of the related Mortgaged Property to
pre-approved borrowers or pursuant to pre-approved conditions without the
approval of the mortgagee and certain Mortgage Loans do not prohibit transfers
of limited partnership interests or non-managing member interests in the
related borrowers. As provided in, and subject to, the Pooling and Servicing
Agreement, the Special Servicer will determine, in a manner consistent with the
servicing standard described under "SERVICING OF THE MORTGAGE LOANS--General"
in this prospectus supplement whether to exercise any right the holder of any
Mortgage may have under any such clause to accelerate payment of the related
Mortgage Loan upon, or to withhold its consent to, any transfer or further
encumbrance of the related Mortgaged Property.
Cross-Default and Cross-Collateralization of Certain Mortgage Loans;
Certain Multi-Property Mortgage Loans. Two (2) groups of Mortgage Loans (loan
numbers 24, 28, 45, 52, 61, 64, 66, 70, 74, 85 and 89 and loan numbers 49, 71,
79, 82, 92 and 94), representing 7.7% of the Cut-Off Date Pool Balance (17
Mortgage Loans in Loan Group 1 or 8.6% of the Cut-Off Date Group 1 Balance),
are groups of Mortgage Loans that are cross-collateralized and cross-defaulted
with the other Mortgage Loans in such group as indicated in Annex A-5. Although
the Mortgage Loans within each group are cross-collateralized and
cross-defaulted with the other mortgage loans in such group, the Mortgage Loans
in one group are not cross-collateralized or cross-defaulted with the Mortgage
Loans in the other group. The cross-default and cross-collateralization
provisions for each group of Mortgage Loans may be terminated in the event one
of the Mortgage Loans is defeased without a simultaneous defeasance of the
other Mortgage Loans, provided that the rating agencies confirm that such
release would not result in a downgrading of any of the current ratings of any
Class of Certificates. As of the Closing Date, no Mortgage Loan, except the
Co-Lender Loans, will be cross-collateralized or cross-defaulted with any loan
that is not included in the Mortgage Pool. The Master Servicer or the Special
Servicer, as the case may be, will determine whether to enforce the
cross-default and cross-collateralization rights upon a mortgage loan default
with respect to any of these Mortgage Loans. The Certificateholders will not
have any right to participate in or control any such determination. No other
Mortgage Loans are subject to cross-collateralization or cross-default
provisions.
One (1) of the Mortgage Loans (loan number 96), representing 0.1% of the
Cut-Off Date Pool Balance (1.3% of the Cut-Off Date Group 2 Balance), provides
that one of the related Mortgaged Properties may be released from the lien of
the mortgage in the event the Mortgaged Property is defeased or assumed without
a simultaneous defeasance or assumption of the other, provided that a
no-downgrade letter is received from the applicable rating agencies, certain
loan-to-value ratio and debt service coverage ratio tests are satisfied, and
funds equal to 25% of the appraised value of the released Mortgaged Property
are deposited as additional security for the Mortgage Loan.
Partial Releases. Certain of the Mortgage Loans permit a partial release
of a portion of the related Mortgaged Property not material to the underwriting
of the Mortgage Loan at the time of origination, without any prepayment or
defeasance of the Mortgage Loan.
One (1) of the Mortgage Loans (loan number 4), representing 5.4 % of the
Cut-Off Date Pool Balance (6.1% of the Cut-Off Date Group 1 Balance) permits a
partial release of a portion of the related Mortgaged Property in connection
with the exercise of an option to purchase granted to a tenant under the
related lease, provided that, among other things, the purchaser of the release
parcel deposits the option purchase price as set out in its lease into an
option proceeds reserve account, which funds shall be held in trust as security
for other obligations under the loan documents. Notwithstanding the foregoing,
the borrower may elect to, in lieu of depositing the option purchase price into
an option proceeds reserve account, partially defease such amount upon
satisfaction of certain conditions under the loan documents,
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including among other things, the delivery of a confirmation in writing from
the applicable rating agency to the effect that the partial defeasance and the
substitution of the partial defeasance collateral will not result in a
downgrading, withdrawal or qualification of the respective ratings in effect
immediately prior to such defeasance.
One (1) of the Mortgage Loans (loan number 6), representing 3.1% of the
Cut-Off Date Pool Balance (3.4% of the Cut-Off Date Group 1 Balance), permits a
partial release of an anchor tenant parcel (and a portion of the adjoining
parking) upon the satisfaction of certain conditions, including, without
limitation: (i) the payment of a release price (through partial defeasance)
equal to the amount set forth in the mortgage (approximately 125% of the value
of the anchor tenant parcel), (ii) delivery of rating agency confirmations that
the release will not result in a downgrade, withdrawal or qualification of the
then current rating assigned to the Certificates and (iii) no event of default
has occurred and is continuing with respect to such Mortgage Loan.
CERTAIN STATE-SPECIFIC CONSIDERATIONS
Eighteen (18) of the Mortgaged Properties, representing 23.6% of the
Cut-Off Date Pool Balance (13 Mortgaged Properties in Loan Group 1 or 20.1% of
the Cut-Off Date Group 1 Balance and 5 Mortgaged Properties in Loan Group 2 or
51.9% of the Cut-Off Date Group 2 Balance) are located in California. Mortgage
loans in California are generally secured by deeds of trust on the related real
estate. Foreclosure of a deed of trust in California may be accomplished by a
non-judicial trustee's sale under a specific provision in the deed of trust or
by judicial foreclosure. Public notice of either the trustee's sale or the
judgment of foreclosure is given for a statutory period of time after which the
mortgaged real estate may be sold by the trustee, if foreclosed pursuant to the
trustee's power of sale, or by court appointed sheriff under a judicial
foreclosure. Following a judicial foreclosure sale, the borrower or its
successor in interest may, for a period of up to one year, redeem the property.
California's "one action rule" requires the lender to exhaust the security
afforded under the deed of trust by foreclosure in an attempt to satisfy the
full debt before bringing a personal action (if otherwise permitted) against
the borrower for recovery of the debt, except in certain cases involving
environmentally impaired real property. California case law has held that acts
such as an offset of an unpledged account constitute violations of such
statutes. Violations of such statutes may result in the loss of some or all of
the security under the mortgage loan. Other statutory provisions in California
limit any deficiency judgment (if otherwise permitted) against the borrower
following a foreclosure to the amount by which the indebtedness exceeds the
fair value at the time of the public sale and in no event greater than the
difference between the foreclosure sale price and the amount of the
indebtedness. Further, under California law, once a property has been sold
pursuant to a power of sale clause contained in a deed of trust, the lender is
precluded from seeking a deficiency judgment from the borrower or, under
certain circumstances, guarantors. California statutory provisions regarding
assignments of rents and leases require that a lender whose loan is secured by
such an assignment must exercise a remedy with respect to rents as authorized
by statute in order to establish its right to receive the rents after an event
of default. Among the remedies authorized by statute is the lender's right to
have a receiver appointed under certain circumstances.
ASSESSMENTS OF PROPERTY CONDITION
Property Inspections. Generally, the Mortgaged Properties were inspected
by or on behalf of the Mortgage Loan Sellers in connection with the origination
or acquisition of the related Mortgage Loans to assess their general condition.
No inspection revealed any patent structural deficiency or any deferred
maintenance considered material and adverse to the value of the Mortgaged
Property as security for the related Mortgage Loan, except in such cases where
adequate reserves have been established.
Appraisals. All of the Mortgaged Properties were appraised by a
state-certified appraiser or an appraiser belonging to the Appraisal Institute
in accordance with the Federal Institutions Reform, Recovery and Enforcement
Act of 1989. The primary purpose of each appraisal was to provide an opinion as
to the market value of the related Mortgaged Property. There can be no
assurance that another appraiser would have arrived at the same opinion of
market value.
Environmental Assessments. A "Phase I" environmental site assessment was
performed by independent environmental consultants with respect to each
Mortgaged Property in connection with the
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origination of the related Mortgage Loans. "Phase I" environmental site
assessments generally do not include environmental testing. In certain cases,
environmental testing, including in some cases a "Phase II" environmental site
assessment as recommended by such "Phase I" assessment, was performed.
Generally, in each case where environmental assessments recommended corrective
action, the originator of the Mortgage Loan determined that the necessary
corrective action had been undertaken in a satisfactory manner, was being
undertaken in a satisfactory manner or that such corrective action would be
adequately addressed post-closing. In some instances, the originator required
that reserves be established to cover the estimated cost of such remediation or
an environmental insurance policy was obtained from a third party.
Engineering Assessments. In connection with the origination of all of the
Mortgage Loans, except for 1 Mortgage Loan (loan number 87) representing 0.2%
of the Cut-Off Date Pool Balance (0.3% of the Cut-Off Date Group 1 Balance), a
licensed engineer or architect inspected the related Mortgaged Property to
assess the condition of the structure, exterior walls, roofing, interior
structure and mechanical and electrical systems. The resulting reports
indicated deferred maintenance items and/or recommended capital improvements on
the Mortgaged Properties. Generally, with respect to a majority of Mortgaged
Properties, the related borrowers were required to deposit with the lender an
amount equal to at least 100% of the licensed engineer's estimated cost of the
recommended repairs, corrections or replacements to assure their completion;
provided, however, with respect to Mortgage Loans originated by Artesia
Mortgage Capital Corporation, such reserves are generally not required for
repairs when the estimated cost is less than $10,000.
Earthquake Analyses. An architectural and/or engineering consultant
performed an analysis on certain Mortgaged Properties located in areas
considered to be an earthquake risk, which includes California, in order to
evaluate the structural and seismic condition of the property and to assess,
based primarily on statistical information, the maximum probable loss for the
property in an earthquake scenario. The resulting reports concluded that in the
event of an earthquake, none of the Mortgaged Properties are likely to suffer a
probable maximum loss in excess of 20% of the amount of the estimated
replacement cost of the improvements located on the related Mortgaged Property.
There is earthquake insurance in place with respect to the Mortgaged Properties
securing 2 Mortgage Loans (loan numbers 4 and 34), representing 6.2% of the
Cut-Off Date Pool Balance (7.0% of the Cut-Off Date Group 1 Balance).
CO-LENDER LOANS
General. One (1) Mortgage Loan (loan number 2, the "11 Madison Avenue
Loan") will be deemed to be split into a pooled component (the "11 Madison
Avenue Pooled Component"), with a principal balance of $82,000,000,
representing 7.7% of the Cut-Off Date Pool Balance (8.6% of the Cut-Off Date
Group 1 Balance), that supports distributions on the Certificates (other than
the Class MAD Certificates) and a non-pooled component (the "11 Madison Avenue
Non-Pooled Component"), with a component principal balance of $13,555,556, that
supports only the Class MAD Certificates, which are not being offered hereby.
The 11 Madison Avenue Loan was originated by Wachovia Bank, National
Association and is evidenced by one of seven notes each secured by a single
mortgage and a single assignment of leases and rents. The 11 Madison Avenue
Loan is part of a split loan structure where three (3) companion loans that are
part of this split loan structure are pari passu in right of entitlement to
payment with the 11 Madison Avenue Loan (the "11 Madison Avenue Pari Passu
Loans") and three companion loans that are part of this split loan structure
are subordinate in their right of entitlement to payment with the 11 Madison
Avenue Loan and the 11 Madison Avenue Pari Passu Loans (the "11 Madison Avenue
Subordinate Loans" and, together with the 11 Madison Avenue Pari Passu Loans,
the "11 Madison Avenue Companion Loans"). The 11 Madison Avenue Loan and the 11
Madison Avenue Pari Passu Loans are referred to collectively herein as the "11
Madison Avenue Senior Loans". The 11 Madison Avenue Companion Loans and the 11
Madison Avenue Loan are referred to collectively herein as the "11 Madison
Avenue Whole Loan". None of the 11 Madison Avenue Companion Loans are included
in the trust.
Two (2) Mortgage Loans (loan number 27, the "Mountain View Apartments
Loan" and loan number 90, the "Fox Valley Apartments Loan" and, together with
the 11 Madison Avenue Loan, the "Co-Lender
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Loans") are each represented by the senior note of two notes. With respect to
the Mountain View Apartments Loan, the related subordinate companion loan (the
"Mountain View Apartments Subordinate Loan") is not part of the Trust Fund. The
Mountain View Apartments Subordinate Loan and the Mountain View Apartments Loan
are referred to collectively herein as the "Mountain View Apartments Whole
Loan". The Mountain View Apartments Loan has a Cut-Off Date Balance of
$10,960,000, representing 1.0% of the Cut-Off Date Pool Balance (1.2% of the
Cut-Off Date Group 1 Balance). With respect to the Fox Valley Apartments Loan,
the related subordinate companion loan (the "Fox Valley Apartments Subordinate
Loan") is not part of the Trust Fund. The 11 Madison Avenue Companion Loans,
the Mountain View Apartments Subordinate Loan and the Fox Valley Apartments
Subordinate Loan are referred to hereunder as the "Companion Loans". The 11
Madison Avenue Subordinate Loans, the Mountain View Apartments Subordinate Loan
and the Fox Valley Apartments Subordinate Loan are collectively referred to
herein as the "Subordinate Companion Loans". The Fox Valley Apartments
Subordinate Loan and the Fox Valley Apartments Loan are referred to
collectively herein as the "Fox Valley Apartments Whole Loan". The Fox Valley
Apartments Loan has a Cut-Off Date Balance of $2,431,626, representing 0.2% of
the Cut-Off Date Pool Balance (2.1% of the Cut-Off Date Group 2 Balance).
The trust created pursuant to the 2004-C10 Pooling and Servicing Agreement
is the holder of one of the 11 Madison Avenue Pari Passu Loans and the trust
created pursuant to the 2004-C11 Pooling and Servicing Agreement is also the
holder of one of the 11 Madison Avenue Pari Passu Loans. Wachovia Bank,
National Association will initially be the holder of the remaining 11 Madison
Avenue Pari Passu Loan. The remaining Companion Loans are held by unaffiliated
entities. The holders of the Companion Loans may only sell each such Companion
Loan with the prior written consent of the Master Servicer or the Special
Servicer (or with respect to the 11 Madison Avenue Loan, the 2004-C10 Master
Servicer or the applicable 2004-C10 Special Servicer) or, without such consent,
to certain institutional lenders or other parties named in the related
Intercreditor Agreement, in each case after receiving prior confirmation from
each Rating Agency that such sale will not result in the withdrawal, downgrade
or qualification of the ratings assigned by the Rating Agency to any Class of
Certificates then rated by the Rating Agency.
With respect to the 11 Madison Avenue Loan, the terms of an intercreditor
agreement (the "11 Madison Avenue Intercreditor Agreement") provide that the 11
Madison Avenue Loan and the 11 Madison Avenue Pari Passu Loans are of equal
priority with each other and no portion of any of these loans will have
priority or preference over the other and that the 11 Madison Avenue
Subordinate Loans are subordinate in certain respects to the 11 Madison Avenue
Loan and the 11 Madison Avenue Pari Passu Loans. With respect to the Fox Valley
Loan, under the terms of an intercreditor and servicing agreement among
noteholders (the "Fox Valley Intercreditor Agreement"), the holder of the Fox
Valley Subordinate Loan has agreed to subordinate its interest in certain
respects to the Fox Valley Loan. With respect to the Mountain View Loan, under
the terms of the related intercreditor and servicing agreements among
noteholders (the "Mountain View Intercreditor Agreement" and, collectively with
the 11 Madison Avenue Intercreditor Agreement and the Fox Valley Intercreditor
Agreement, the "Intercreditor Agreements"), the holder of the Mountain View
Subordinate Loan has agreed to subordinate its interest in certain respects to
the Mountain View Loan. Except with respect to the 11 Madison Avenue Loan and
its related Companion Loans (which will be serviced under the 2004-C10 Pooling
and Servicing Agreement), the Master Servicer and the Special Servicer will
undertake to perform the obligations of the holder of the Co-Lender Loans under
the related Intercreditor Agreements.
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The following table presents certain information with respect to the
Co-Lender Loans:
CO-LENDER LOANS
CUT-OFF
DATE
PRINCIPAL CUT-OFF DATE WHOLE LOAN
BALANCE PRINCIPAL BALANCE CUT-OFF DATE WHOLE LOAN CUT-OFF
OF MORTGAGE OF SENIOR PRINCIPAL BALANCE UNDERWRITTEN DATE
MORTGAGE LOAN LOAN COMPONENTS OF WHOLE LOAN DSCR LTV
- ------------------------------- ------------- ------------------- ------------------- -------------- -----------
11 Madison Avenue ............. $82,000,000 $430,000,000 $515,000,000 1.20x 76.3%
Mountain View
Apartments ................... $10,960,000 $ 10,960,000 $ 11,645,000 1.11x 85.0%
Fox Valley Apartments ......... $ 2,431,626 $ 2,431,626 $ 2,584,074 1.11x 83.4%
11 Madison Avenue Loan
11 Madison Avenue Loan Components. The ownership interest in the 11
Madison Avenue Loan will be split into a senior pooled interest (the "11
Madison Avenue Pooled Component") and a subordinate interest (the "11 Madison
Avenue Non-Pooled Component"). The 11 Madison Avenue Pooled Component will
represent approximately 7.7% of the Cut-Off Date Pool Balance. All
distributions of principal and interest with respect to the 11 Madison Avenue
Loan will be distributed to the Certificates as described herein. The holders
of the Offered Certificates will only be entitled to collections with respect
to the 11 Madison Avenue Loan to the extent allocated to the 11 Madison Avenue
Pooled Component and the holders of the Class MAD Certificates will only be
entitled to distributions of principal or interest allocable to the 11 Madison
Avenue Loan to the extent allocated to the 11 Madison Avenue Non-Pooled
Component. See "DESCRIPTION OF THE CERTIFICATES--Distributions" in this
prospectus supplement. The Class MAD Certificates are not being offered hereby.
The following table describes certain information regarding the 11 Madison
Avenue Mortgage Loan, the 11 Madison Avenue Pooled Component and the 11 Madison
Avenue Non-Pooled Component:
COMBINED POOLED NON-POOLED
CUT-OFF COMPONENT COMPONENT COMBINED COMBINED
LOAN DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE UNDERWRITTEN
MORTGAGE LOAN NO. BALANCE BALANCE BALANCE LTV DSCR
- ------------------- ------ -------------- -------------- -------------- -------------- -------------
11 Madison Avenue 2 $95,555,556 $82,000,000 $13,555,556 63.7% 1.55x
Servicing Provisions of the 11 Madison Avenue Intercreditor Agreement. The
11 Madison Avenue Loan and its related Companion Loans will be serviced under
the pooling and servicing agreement (the "2004-C10 Pooling and Servicing
Agreement") entered into in connection with the issuance of the Wachovia Bank
Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates,
Series 2004-C10. The master servicer under the 2004-C10 Pooling and Servicing
Agreement is Wachovia Bank, National Association (the "2004-C10 Master
Servicer"), the special servicer under the 2004-C10 Pooling and Servicing
Agreement is Wachovia Bank, National Association with respect to the 11 Madison
Avenue mortgage loan, and Lennar Partners, Inc. with respect to each other
mortgage loan (together, the "2004-C10 Special Servicer"), and the trustee
under the 2004-C10 Pooling and Servicing Agreement is Wells Fargo Bank, N.A.
(the "2004-C10 Trustee"). The terms of the 2004-C10 Pooling and Servicing
Agreement provide for servicing arrangements that are generally similar to
those under the Pooling and Servicing Agreement. Subject to the exceptions
described herein under "SERVICING OF THE MORTGAGE LOANS--The Controlling Class
Representative", the Controlling Class Representative will generally share with
both the controlling class representative under the 2004-C10 Pooling and
Servicing Agreement (the "2004-C10 Controlling Class Representative") and the
controlling class representative under the pooling and servicing agreement (the
"2004-C11 Pooling and Servicing Agreement") entered into in connection with the
issuance of the Wachovia Bank Commercial Mortgage Trust, Commercial Mortgage
Pass-Through Certificates, Series 2004-C11 (the "2004-C11 Controlling Class
Representative") the rights given to the 2004-C10 Controlling Class
Representative under the 2004-C10 Pooling and Servicing Agreement to direct the
servicing of the 11 Madison Avenue Loan. See "SERVICING OF THE MORTGAGE
LOANS--The Controlling Class Representative" and "--
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Servicing of the 11 Madison Avenue Loan" in this prospectus supplement. The 11
Madison Avenue Intercreditor Agreement provides that expenses, losses and
shortfalls relating to the 11 Madison Avenue Whole Loan will be allocated
first, to the holders of the 11 Madison Avenue Subordinate Loans and
thereafter, pro rata and pari passu, to the 11 Madison Avenue Senior Loans;
provided, that, pursuant to the Pooling and Servicing Agreement, expenses,
losses and shortfalls allocated to the 11 Madison Avenue Loan will be allocated
first to the 11 Madison Avenue Non-Pooled Component and then to the 11 Madison
Avenue Pooled Component.
With respect to the 11 Madison Avenue Loan, the 2004-C10 Master Servicer
and 2004-C10 Special Servicer will service and administer the 11 Madison Avenue
Loan and each of the 11 Madison Avenue Companion Loans pursuant to the 2004-C10
Pooling and Servicing Agreement and the 11 Madison Avenue Intercreditor
Agreement for so long as the 11 Madison Avenue Loan is part of the 2004-C10
Trust. If the principal amount of any 11 Madison Avenue Subordinate Loan, less
any existing related Appraisal Reduction Amount, is at least equal to 25% of
the original principal amount of such 11 Madison Avenue Subordinate Loan, the
holder of such 11 Madison Avenue Companion Loan, or an advisor on its behalf,
will be entitled to advise and direct the 2004-C10 Master Servicer and/or
2004-C10 Special Servicer with respect to certain matters, including, among
other things, foreclosure or material modifications of the 11 Madison Avenue
Loan. However, no advice or direction may require or cause the 2004-C10 Master
Servicer or the 2004-C10 Special Servicer to violate any provision of the
2004-C10 Pooling and Servicing Agreement, including the 2004-C10 Master
Servicer's and the 2004-C10 Special Servicer's obligation to act in accordance
with the Servicing Standard (as set forth in the 2004-C10 Pooling and Servicing
Agreement). See "SERVICING OF THE MORTGAGE LOANS--The Controlling Class
Representative" and "--Servicing of the 11 Madison Avenue Loan" in this
prospectus supplement.
In the event of certain defaults under the 11 Madison Avenue Loan or any
of the 11 Madison Avenue Companion Loans, the holders of the 11 Madison Avenue
Subordinate Loans will be entitled to (i) cure such default within five (5)
business days of receipt of notice from the 2004-C10 Master Servicer with
respect to monetary defaults and within twenty (20) days (which twenty-day
period may be extended by up to two (2) additional five-day periods) of receipt
of notice from the 2004-C10 Master Servicer with respect to non-monetary
defaults and/or (ii) purchase the 11 Madison Avenue Loan from the trust after
the expiration of the cure period subject to the conditions contained in the 11
Madison Avenue Intercreditor Agreement. Upon exercising its right to purchase
the 11 Madison Avenue Loan, such purchasing holder of an 11 Madison Avenue
Subordinate Loan will also be required to purchase all of the 11 Madison Avenue
Companion Loans senior to the 11 Madison Avenue Subordinate Loan held by such
holder. The purchase price will generally equal the unpaid aggregate principal
balance of the 11 Madison Avenue Companion Loans being purchased, together with
all unpaid interest thereon (other than default interest) at the related
mortgage rate and any unreimbursed servicing expenses, advances and interest on
advances for which the borrower under the 11 Madison Avenue Loan is
responsible; provided, however, that the purchase price shall not be reduced by
any outstanding P&I Advance, include any Prepayment Premium, late payment
charge, default interest or exit fees or include any Liquidation Fee or Workout
Fee payable to the 2004-C10 Special Servicer pursuant to the 2004-C10 Pooling
and Servicing Agreement but shall include, in the event the purchase price is
being calculated in connection with the purchase of an REO Property, any and
all costs and expenses incurred by the trust during the time it owned the
Mortgaged Property, net of all cash receipts from the Mortgaged Property
actually received by the trust during such period, and any and all costs and
expenses incurred by the trust in connection with the transfer of the Mortgaged
Property to such purchasing holder, including, without limitation, reasonable
attorneys fees and expenses, and any transfer or gains or similar taxes and
fees paid in connection with such transfer. No prepayment consideration will be
payable in connection with such a purchase of the 11 Madison Avenue Whole Loan.
Application of Payments. Pursuant to the 11 Madison Avenue Intercreditor
Agreement, to the extent described below: (a) the right of the holders of the
11 Madison Avenue Pari Passu Loans to receive payments with respect to the
applicable Companion Loans are pari passu to the rights of the trust to receive
payments with respect to the 11 Madison Avenue Loan; and (b) the right of the
holders of the 11 Madison Avenue Subordinate Loans to receive payments with
respect to the applicable Companion Loans are subordinated to the rights of the
trust to receive payments with respect to the 11 Madison
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Avenue Loan. Prior to the occurrence of an event of default with respect to the
11 Madison Avenue Loan or prior to a servicing transfer event under the
2004-C10 Pooling and Servicing Agreement related to the 11 Madison Avenue Loan,
after payment or reimbursement of any advances, advance interest or other
costs, fees or expenses related to or allocable to the 11 Madison Avenue Loan
or the 11 Madison Avenue Companion Loans (including payments or reimbursements
to the 2004-C10 Master Servicer, the 2004-C10 Special Servicer and/or the
2004-C10 Trustee pursuant to the 2004-C10 Pooling and Servicing Agreement), all
payments and proceeds (of whatever nature) received with respect to the 11
Madison Avenue Loan and the 11 Madison Avenue Companion Loans will be paid
first, pro rata, among the trust and the holders of the 11 Madison Avenue Pari
Passu Loans, in an amount equal to interest due with respect to the 11 Madison
Avenue Loan and 11 Madison Avenue Pari Passu Loans; second, pro rata, among the
trust and the holders of the 11 Madison Avenue Pari Passu Loans, in an amount
equal to the principal payments received, if any, with respect to the 11
Madison Avenue Loan and the 11 Madison Avenue Pari Passu Loans; third, pro
rata, among the trust and the holders of the 11 Madison Avenue Pari Passu
Loans, in an amount equal to any unreimbursed realized losses, if any, with
respect to the 11 Madison Avenue Loan and the 11 Madison Avenue Pari Passu
Loans; fourth, to the holders of the 11 Madison Avenue Subordinate Loans, in
order of seniority, in an amount equal to any unreimbursed cure payments
previously paid by the holder of such 11 Madison Avenue Subordinate Loan in
respect of the 11 Madison Avenue Senior Loans; fifth, to certain holders of the
11 Madison Avenue Subordinate Loans, in an amount equal to (i) interest due
with respect to such 11 Madison Avenue Subordinate Loan, (ii) the principal
payments received with respect to such 11 Madison Avenue Subordinate Loan, if
any, and (iii) any unreimbursed realized losses, if any, with respect to such
11 Madison Avenue Subordinate Loan; sixth, to certain holders of the 11 Madison
Avenue Subordinate Loans, in order of seniority, in an amount equal to any
unreimbursed cure payments previously paid by the holder of such 11 Madison
Avenue Subordinate Loan in respect of certain other 11 Madison Avenue
Subordinate Loans; seventh, to certain holders of the 11 Madison Avenue
Subordinate Loans (other than the holders receiving payments pursuant to clause
fifth above), in an amount equal to (i) interest due with respect to such 11
Madison Avenue Subordinate Loan (ii) the principal payments received with
respect to such 11 Madison Avenue Subordinate Loan, if any, and (iii) any
unreimbursed realized losses, if any, with respect to such 11 Madison Avenue
Subordinate Loan; eighth, to certain holders of the 11 Madison Avenue
Subordinate Loans, in an amount equal to any unreimbursed cure payments
previously paid by the holder of such 11 Madison Avenue Subordinate Loan in
respect of certain other 11 Madison Avenue Subordinate Loans; ninth, to certain
holders of the 11 Madison Avenue Subordinate Loans (other than the holders
receiving payments pursuant to clauses fifth and seventh above), in an amount
equal to (i) interest due with respect to such 11 Madison Avenue Subordinate
Loan, (ii) the principal payments received with respect to such 11 Madison
Avenue Subordinate Loan, if any, and (iii) any unreimbursed realized losses, if
any, with respect to such 11 Madison Avenue Subordinate Loan; tenth, pro rata,
among the trust and the holders of the 11 Madison Avenue Pari Passu Loans, in
an amount equal to default interest, if any, with respect to the 11 Madison
Avenue Loan and the 11 Madison Avenue Pari Passu Loans; eleventh, to certain
holders of the 11 Madison Avenue Subordinate Loans, in order of seniority, in
an amount equal to default interest, if any, with respect to such 11 Madison
Avenue Subordinate Loan; twelfth, pro rata, among the trust, the holders of the
11 Madison Avenue Pari Passu Loans and the holders of the 11 Madison Avenue
Subordinate Loans, in an amount equal to any prepayment premiums; thirteenth,
to the holders of the 11 Madison Avenue Subordinate Loans, in order of
seniority, in an amount equal to unreimbursed costs and expenses, if any, with
respect to the 11 Madison Avenue Whole Loan; and fourteenth, pro rata, among
the trust, the holders of the 11 Madison Avenue Pari Passu Loans and the
holders of the 11 Madison Avenue Subordinate Loans, any excess.
Following the occurrence and during the continuance of an event of default
with respect to the 11 Madison Avenue Loan or such mortgage loan becoming a
specially serviced mortgage loan pursuant to the 11 Madison Avenue
Intercreditor Agreement, and subject to the right to purchase the 11 Madison
Avenue Loan from the trust by the holders of the 11 Madison Avenue Subordinate
Loans, after payment or reimbursement of any advances, advance interest or
other costs, fees or expenses related to or allocable to the 11 Madison Avenue
Loan and each of the 11 Madison Avenue Companion Loans (including payments or
reimbursements to the 2004-C10 Master Servicer, the 2004-C10 Special Servicer
and/or the 2004-C10 Trustee pursuant to the 2004-C10 Pooling and Servicing
Agreement), all payments and proceeds
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(of whatever nature) on the 11 Madison Avenue Loan and the 11 Madison Avenue
Companion Loans will be paid first, pro rata, among the trust and the holders
of the 11 Madison Avenue Pari Passu Loans, in an amount equal to interest due
with respect to the 11 Madison Avenue Loan and 11 Madison Avenue Pari Passu
Loans; second, pro rata, among the trust and the holders of the 11 Madison
Avenue Pari Passu Loans, in an amount equal to the principal balance of such
loans until paid in full; third, pro rata, among the trust and the holders of
the 11 Madison Avenue Pari Passu Loans, in an amount equal to any unreimbursed
realized losses, if any, with respect to the 11 Madison Avenue Loan and the 11
Madison Avenue Pari Passu Loans; fourth, to the holders of the 11 Madison
Avenue Subordinate Loans, in order of seniority, in an amount equal to any
unreimbursed cure payments previously paid by the holder of such 11 Madison
Avenue Subordinate Loan; fifth, to certain holders of the 11 Madison Avenue
Subordinate Loans, in an amount equal to (i) interest due with respect to such
11 Madison Avenue Subordinate Loan, (ii) the principal balance until paid in
full, and (iii) any unreimbursed realized losses, if any, with respect to such
11 Madison Avenue Subordinate Loan; sixth, to certain holders of the 11 Madison
Avenue Subordinate Loans, in order of seniority, in an amount equal to any
unreimbursed cure payments previously paid by the holder of such 11 Madison
Avenue Subordinate Loan in respect of certain other 11 Madison Avenue
Subordinate Loans; seventh, to certain holders of the 11 Madison Avenue
Subordinate Loans (other than the holders receiving payments pursuant to clause
fifth above), in an amount equal to (i) interest due with respect to such 11
Madison Avenue Subordinate Loan, (ii) the principal balance until paid in full,
and (iii) any unreimbursed realized losses, if any, with respect to such 11
Madison Avenue Subordinate Loan; eighth, to certain holders of the 11 Madison
Avenue Subordinate Loans, in an amount equal to any unreimbursed cure payments
previously paid by the holder of such 11 Madison Avenue Subordinate Loan in
respect of certain other 11 Madison Avenue Subordinate Loans; ninth, to certain
holders of the 11 Madison Avenue Subordinate Loans (other than the holders
receiving payments pursuant to clauses fifth and seventh above), in an amount
equal to (i) interest due with respect to such 11 Madison Avenue Subordinate
Loan, (ii) the principal balance until paid in full, and (iii) any unreimbursed
realized losses, if any, with respect to such 11 Madison Avenue Subordinate
Loan; tenth, pro rata, among the trust and the holders of the 11 Madison Avenue
Pari Passu Loans, in an amount equal to default interest, if any, with respect
to the 11 Madison Avenue Loan and the 11 Madison Avenue Pari Passu Loans;
eleventh, to certain holders of the 11 Madison Avenue Subordinate Loans, in
order of seniority, in an amount equal to default interest, if any, with
respect to such 11 Madison Avenue Subordinate Loan; twelfth, pro rata, among
the trust and the holders of the 11 Madison Avenue Pari Passu Loans in an
amount equal to any prepayment premiums payable with respect to the 11 Madison
Avenue Senior Loans; thirteenth, to certain holders of the 11 Madison Avenue
Subordinate Loans, in order of seniority, in an amount equal to any prepayment
premiums payable with respect to such 11 Madison Avenue Subordinate Loans;
fourteenth, to the holders of the 11 Madison Avenue Subordinate Loans, in order
of seniority, in an amount equal to unreimbursed costs and expenses, if any,
with respect to the 11 Madison Avenue Whole Loan; and fifteenth, pro rata,
among the trust, the holders of the 11 Madison Avenue Pari Passu Loans and the
holders of the 11 Madison Avenue Subordinate Loans, any excess.
Amounts allocable to the 11 Madison Avenue Loan will be further allocated
between (i) the 11 Madison Avenue Pooled Component and available for
distributions on the Certificates, other than the Class MAD Certificates, and
(ii) the 11 Madison Avenue Non-Pooled Component and available for distributions
on the Class MAD Certificates, in accordance with the priority of payments
described in "DESCRIPTION OF THE CERTIFICATES--Distributions" in this
prospectus supplement.
Mountain View Apartments Loan and Fox Valley Apartments Loan
Servicing Provisions of the Mountain View Apartments Intercreditor
Agreement and the Fox Valley Apartments Intercreditor Agreement. With respect
to the Mountain View Apartments Loan and the Fox Valley Apartments Loan, the
Master Servicer and Special Servicer will service and administer such Mortgage
Loans and the related Subordinate Companion Loans pursuant to the Pooling and
Servicing Agreement and the related Intercreditor Agreement for so long as the
related Mortgage Loan is part of the trust. The Master Servicer and/or Special
Servicer may not enter into amendments, modifications or extensions of the
Mountain View Apartments Loan, the Mountain View Apartments Subordinate Loan,
the Fox Valley Apartments Loan or the Fox Valley Apartments Subordinate Loan
without the consent of the holder of the related Subordinate Companion Loan if
the proposed amendment, modification or
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extension adversely affects the holder of the related Subordinate Companion
Loan in a material manner; provided, however, that such consent right will
expire when the repurchase period described in the next paragraph expires. See
"SERVICING OF THE MORTGAGE LOANS--The Controlling Class Representative" in this
prospectus supplement.
In the event that (i) any payment of principal or interest on the Mountain
View Apartments Loan, the Mountain View Apartments Subordinate Loan, the Fox
Valley Apartments Loan or the Fox Valley Apartments Subordinate Loan becomes 90
or more days delinquent, (ii) the principal balance of such Mountain View
Apartments Loan, the Mountain View Apartments Subordinate Loan, the Fox Valley
Apartments Loan or the Fox Valley Apartments Subordinate Loan has been
accelerated, (iii) the principal balance of such Mountain View Apartments Loan,
the Mountain View Apartments Subordinate Loan, the Fox Valley Apartments Loan
or the Fox Valley Apartments Subordinate Loan is not paid at maturity, (iv) the
related borrower declares bankruptcy or (v) any other event where the cash flow
payment under the Mountain View Apartments Subordinate Loan or the Fox Valley
Apartments Subordinate Loan has been interrupted and payments are made pursuant
to the event of default waterfall, the holder of the applicable Subordinate
Companion Loan will be entitled to purchase the related 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 related Intercreditor Agreement.
The purchase price will generally equal the unpaid principal balance of the
related Mortgage Loan, together with all unpaid interest on the related
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 related Mortgage Loan is responsible. Unless the related
borrower or an affiliate is purchasing the Mountain View Apartments Loan or the
Fox Valley Apartments Loan, no prepayment consideration will be payable in
connection with the purchase of the Mountain View Apartments Loan or the Fox
Valley Apartments Loan, as applicable.
Application of Payments. Pursuant to the related Intercreditor Agreement
and prior to the occurrence of (i) the acceleration of the Mountain View
Apartments Loan, the Mountain View Apartments Subordinate Loan, the Fox Valley
Apartments Loan or the Fox Valley Apartments Subordinate Loan, (ii) a monetary
event of default or (iii) an event of default triggered by the bankruptcy of
the borrower, the related borrower will make separate monthly payments of
principal and interest to the Master Servicer and the holder of the related
Subordinate Companion Loan. Any escrow and reserve payments required in respect
of the Mountain View Apartments Loan, the Mountain View Apartments Subordinate
Loan, the Fox Valley Apartments Loan or the Fox Valley Apartments Subordinate
Loan will be paid to the Master Servicer.
Following the occurrence and during the continuance of (i) the
acceleration of the Mountain View Apartments Loan, the Mountain View Apartments
Subordinate Loan, the Fox Valley Apartments Loan or the Fox Valley Apartments
Subordinate Loan, (ii) a monetary event of default or (iii) an event of default
triggered by the bankruptcy of the borrower, and subject to certain rights of
the holder of the Mountain View Apartments Subordinate Loan or the Fox Valley
Apartments Subordinate Loan to purchase the Mountain View Apartments Loan or
the Fox Valley Apartments Loan, as applicable, from the trust, all payments and
proceeds (of whatever nature) on the Mountain View Apartments Subordinate Loan
or the Fox Valley Apartments Subordinate Loan, as applicable, will be
subordinated to all payments due on the related Mortgage Loan and the amounts
with respect to such Loan Pair will be paid first, to the Master Servicer,
Special Servicer, Trustee or 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 such entity;
third, to the trust, in an amount equal to interest due with respect to the
Mountain View Apartments Loan or the Fox Valley Apartments Loan, as applicable;
fourth, to the trust, in an amount equal to the principal balance of the
Mountain View Apartments Loan or the Fox Valley Apartments Loan, as applicable,
until paid in full; fifth, to the trust, in an amount equal to any prepayment
premium, to the extent actually paid, allocable to the Mountain View Apartments
Loan or the Fox Valley Apartments Loan, as applicable; sixth, to the holder of
the Mountain View Apartments Subordinate Loan or the Fox Valley Apartments
Subordinate Loan, as applicable, up to the amount of any unreimbursed costs and
expenses paid by the holder of the such Subordinate Companion Loan; seventh, to
the holder
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of the Mountain View Apartments Subordinate Loan or the Fox Valley Apartments
Subordinate Loan, as applicable, in an amount equal to interest due with
respect to such Subordinate Companion Loan; eighth, to the holder of the
Mountain View Apartments Subordinate Loan or the Fox Valley Apartments
Subordinate Loan, as applicable, in an amount equal to the principal balance of
such Subordinate Companion Loan until paid in full; ninth, to the holder of the
Mountain View Apartments Subordinate Loan or the Fox Valley Apartments
Subordinate Loan, as applicable, in an amount equal to any prepayment premium,
to the extent actually paid, allocable to such 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
Mountain View Apartments Loan or the Fox Valley Apartments Loan, as applicable,
and the related Subordinate Companion Loan, respectively; and eleventh, any
excess, to the trust and to the holder of the Mountain View Apartments
Subordinate Loan or the Fox Valley Apartments Subordinate Loan, as applicable,
pro rata, based upon the outstanding principal balances; provided that if the
principal balance of the Subordinate Companion Loan is equal to zero, then
based upon the initial principal balances.
Application of Amounts Paid to Trust. On or before each distribution date,
amounts payable to the trust as holder of any Co-Lender Loan pursuant to the
Intercreditor Agreements will be included in the Available Distribution Amount
for such Distribution Date to the extent described in this prospectus
supplement and amounts payable to the holder of the related Companion Loan will
be distributed to the holder net of fees and expenses on such Companion Loan,
and, in the case of the 11 Madison Avenue Loan, will be applied and distributed
in accordance with the 2004-C10 Pooling and Servicing Agreement.
MEZZANINE LOANS
With respect to the Mortgage Loans with existing mezzanine debt, the
holder of each mezzanine loan generally has the right to purchase the related
Mortgage Loan from the trust if certain defaults on the related Mortgage Loan
occur and, in some cases, may have the right to cure certain defaults occurring
on the related Mortgage Loan. The purchase price required to be paid in
connection with such a purchase is generally equal to the outstanding principal
balance of the related Mortgage Loan, together with accrued and unpaid interest
on, and all unpaid servicing expenses, advances and interest on advances
relating to, such Mortgage Loan. The lenders for this mezzanine debt are
generally not affiliates of the related Mortgage Loan borrower. Upon a default
under the mezzanine debt, the holder of the mezzanine debt may foreclose upon
the ownership interests in the related borrower.
ADDITIONAL MORTGAGE LOAN INFORMATION
The Mortgage Pool. For a detailed presentation of certain of the
characteristics of the Mortgage Loans and the Mortgaged Properties, on an
individual basis, see Annexes A-1, A-1A, A-1B, A-2, A-3, A-4 and A-5 to this
prospectus supplement. For purposes of numerical and statistical information
set forth in this prospectus supplement and Annexes A-1, A-1A, A-1B, A-2, A-3,
A-4 and A-5, such numerical and statistical information excludes the Mountain
View Apartments Subordinate Loan and the Fox Valley Apartments Subordinate Loan
relating to the Mountain View Apartments Loan and the Fox Valley Apartments
Loan, respectively. For purposes of the calculation of loan balance per square
foot, DSC Ratios and LTV Ratios with respect to the 11 Madison Avenue Loan,
such information includes the Pari Passu Companion Loans, but not the 11
Madison Avenue Non-Pooled Component or the related Subordinate Companion Loans.
Certain additional information regarding the Mortgage Loans is contained under
"--Assignment of the Mortgage Loans; Repurchases and Substitutions" and "--
Representations and Warranties; Repurchases and Substitutions," in this
prospectus supplement and under "DESCRIPTION OF THE TRUST FUNDS" and "CERTAIN
LEGAL ASPECTS OF MORTGAGE LOANS AND LEASES" in the accompanying prospectus.
In the schedule and tables set forth in Annexes A-1, A-1A, A-1B, A-2, A-3,
A-4 and A-5 to this prospectus supplement, cross-collateralized Mortgage Loans
are not grouped together; instead, references are made under the heading "Cross
Collateralized and Cross Defaulted Loan Flag" with respect to the other
Mortgage Loans with which they are cross-collateralized.
Each of the following tables sets forth certain characteristics of the
Mortgage Pool presented, where applicable, as of the Cut-Off Date. For purposes
of the tables and Annexes A-1, A-1A, A-1B, A-2, A-3, A-4 and A-5:
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(i) References to "DSC Ratio" and "DSCR" are references to debt
service coverage ratios. Debt service coverage ratios are used by income
property lenders to measure the ratio of (a) cash currently generated by a
property that is available for debt service (that is, cash that remains
after average cost of non-capital expenses of operation, tenant
improvements, leasing commissions and replacement reserves during the term
of the Mortgage Loan) to (b) required debt service payments. However, debt
service coverage ratios only measure the current, or recent, ability of a
property to service mortgage debt. The DSC Ratio for any Mortgage Loan is
the ratio of "Net Cash Flow" produced by the related Mortgaged Property to
the annualized amount of debt service that will be payable under that
Mortgage Loan commencing after the origination date. The Net Cash Flow for
a Mortgaged Property is the "net cash flow" of such Mortgaged Property as
set forth in, or determined by the applicable Mortgage Loan Seller on the
basis of, Mortgaged Property operating statements, generally unaudited, and
certified rent rolls (as applicable) supplied by the related borrower in
the case of multifamily, mixed use, retail, mobile home park, industrial,
residential health care, self-storage and office properties (each a "Rental
Property"); provided, however, for purposes of calculating the DSC Ratios
and DSCR provided herein (i) with respect to 19 Mortgage Loans (loan
numbers 2, 3, 4, 5, 7, 9, 11, 12, 13, 15, 18, 21, 27, 30, 31, 40, 46, 56
and 63), representing 40.5% of the Cut-Off Date Pool Balance (12 Mortgage
Loans in Loan Group 1 or 38.4% of the Cut-Off Date Group 1 Balance and 7
Mortgage Loans in Loan Group 2 or 57.5% of the Cut-Off Date Group 2
Balance), where Periodic Payments are interest-only for a certain amount of
time after origination after which date the Mortgage Loan amortizes
principal for the remaining term of the loan the debt service used is the
annualized amount of debt service that will be payable under the Mortgage
Loan commencing after the amortization period begins and (ii) with respect
to 1 Mortgage Loan (loan number 91), representing 0.2% of the Cut-Off Date
Pool Balance (2.0% of the Cut-Off Date Group 2 Balance), for purposes of
determining the debt service coverage ratio, such ratio was adjusted by
taking into account amounts available under certain cash reserves. In
general, the Mortgage Loan Sellers relied on either full-year operating
statements, rolling 12-month operating statements and/or applicable
year-to-date financial statements, if available, and on rent rolls for all
Rental Properties that were current as of a date not earlier than six
months prior to the respective date of origination in determining Net Cash
Flow for the Mortgaged Properties.
In general, "net cash flow" is the revenue derived from the use and
operation of a Mortgaged Property less operating expenses (such as utilities,
administrative expenses, repairs and maintenance, tenant improvement costs,
leasing commissions, management fees and advertising), fixed expenses (such as
insurance, real estate taxes and, if applicable, ground lease payments) and
replacement reserves and an allowance for vacancies and credit losses. Net Cash
Flow does not reflect interest expenses and non-cash items such as depreciation
and amortization, and generally does not reflect capital expenditures, but does
reflect reserves for replacements and an allowance for vacancies and credit
losses.
In determining the "revenue" component of Net Cash Flow for each Rental
Property, the applicable Mortgage Loan Seller generally relied on the most
recent rent roll and/or other known, signed tenant leases, executed extension
options supplied, or other indications of anticipated income (generally
supported by cash reserves or letters of credit) and, where the actual vacancy
shown thereon and the market vacancy was less than 5.0%, assumed a 5.0% vacancy
in determining revenue from rents, except that in the case of certain
non-multifamily properties, space occupied by such anchor or single tenants or
other large creditworthy tenants may have been disregarded in performing the
vacancy adjustment due to the length of the related leases or creditworthiness
of such tenants, in accordance with the respective Mortgage Loan Seller's
underwriting standards. Where the actual or market vacancy was not less than
5.0%, the applicable Mortgage Loan Seller determined revenue from rents by
generally relying on the most recent rent roll and/or other known, signed
leases, executed lease extension options, or other indications of anticipated
income (generally supported by cash reserves or letters of credit) supplied and
the greater of (a) actual historical vacancy at the related Mortgaged Property,
(b) historical vacancy at comparable properties in the same market as the
related Mortgaged Property, and (c) 5.0%. In determining rental revenue for
multifamily, self storage and mobile home park properties, the Mortgage Loan
Sellers generally either reviewed rental revenue shown on the certified rolling
12-month operating statements, the rolling 3-month operating statements for
multifamily properties or annualized the rental
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revenue and reimbursement of expenses shown on rent rolls or operating
statements with respect to the prior one-to-twelve month periods. For the other
Rental Properties, the Mortgage Loan Sellers generally annualized rental
revenue shown on the most recent certified rent roll (as applicable), after
applying the vacancy factor, without further regard to the terms (including
expiration dates) of the leases shown thereon. In the case of hospitality
properties, gross receipts were generally determined based upon the average
occupancy not to exceed 75.0% and daily rates achieved during the prior
two-to-three year annual reporting period. In the case of residential health
care facilities, receipts were based on historical occupancy levels, historical
operating revenues and the then current occupancy rates. Occupancy rates for
the private health care facilities were generally within the then current
market ranges, and vacancy levels were generally a minimum of 5.0%. In general,
any non-recurring items and non-property related revenue were eliminated from
the calculation except in the case of residential health care facilities.
In determining the "expense" component of Net Cash Flow for each Mortgaged
Property, the Mortgage Loan Sellers generally relied on rolling 12-month
operating statements and/or full-year or year-to-date financial statements
supplied by the related borrower, except that (a) if tax or insurance expense
information more current than that reflected in the financial statements was
available, the newer information was used, (b) property management fees were
generally assumed to be 3.0% to 7.0% of effective gross revenue (except with
respect to full service hospitality properties, where a minimum of 3.5% of
gross receipts was assumed, with respect to limited service hospitality
properties, where a minimum of 4.0% of gross receipts was assumed, and with
respect to single tenant properties, where fees as low as 3.0% of effective
gross receipts were assumed), (c) assumptions were made with respect to
reserves for leasing commissions, tenant improvement expenses and capital
expenditures and (d) expenses were assumed to include annual replacement
reserves. See "--Underwriting Standards--Escrow Requirements--Replacement
Reserves" in this prospectus supplement. In addition, in some instances, the
Mortgage Loan Sellers recharacterized as capital expenditures those items
reported by borrowers as operating expenses (thus increasing "net cash flow")
where the Mortgage Loan Sellers determined appropriate.
The borrowers' financial information used to determine Net Cash Flow was
in most cases borrower certified, but unaudited, and neither the Mortgage Loan
Sellers nor the Depositor verified their accuracy.
(i) References to "Cut-Off Date LTV" and "Cut-Off Date LTV Ratio" are
references to the ratio, expressed as a percentage, of the Cut-Off Date
Balance of a Mortgage Loan to the appraised value of the related Mortgaged
Property as shown on the most recent third-party appraisal thereof
available to the Mortgage Loan Sellers; provided, however, that with
respect to one Mortgage Loan (loan number 46), representing 0.6% of the
Cut-Off Date Pool Balance (5.7% of the Cut-Off Date Group 2 Balance), the
related LTV ratio was reduced by taking into account amounts available
under certain cash reserves.
(ii) References to "Maturity Date LTV Ratio" and "LTV at ARD or
Maturity" are references to the ratio, expressed as a percentage, of the
expected balance of a Balloon Loan on its scheduled maturity date (or ARD
Loan on its Anticipated Repayment Date) (prior to the payment of any
Balloon Payment or principal prepayments) to the appraised value of the
related Mortgaged Property as shown on the most recent third-party
appraisal thereof available to the Mortgage Loan Sellers; provided,
however, that with respect to one Mortgage Loan (loan number 46),
representing 0.6% of the Cut-Off Date Pool Balance (5.7% of the Cut-Off
Date Group 2 Balance), the related LTV ratio was reduced by taking into
account amounts available under certain cash reserves.
(iii) References to "Loan per Sq. Ft., Unit, Pad or Room" are, for
each Mortgage Loan secured by a lien on a multifamily property (including a
mobile home park property), hospitality property or assisted living
facility or other healthcare property, respectively, references to the
Cut-Off Date Balance of such Mortgage Loan divided by the number of
dwelling units, pads, guest rooms, respectively, that the related Mortgaged
Property comprises, and, for each Mortgage Loan secured by a lien on a
retail, industrial/warehouse, self-storage or office property, references
to the Cut-Off Date Balance of such Mortgage Loan divided by the net
rentable square foot area of the related Mortgaged Property.
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(iv) References to "Year Built" are references to the year that a
Mortgaged Property was originally constructed or substantially renovated.
With respect to any Mortgaged Property which was constructed in phases, the
"Year Built" refers to the year that the first phase was originally
constructed.
(v) References to "weighted averages" are references to averages
weighted on the basis of the Cut-Off Date Balances of the related Mortgage
Loans.
(vi) References to "Underwritten Replacement Reserves" represent
estimated annual capital costs, as used by the Mortgage Loan Sellers in
determining Net Cash Flow.
(vii) References to "Administrative Cost Rate" for each Mortgage Loan
represent the sum of (a) the Master Servicing Fee Rate for such Mortgage
Loan, and (b) 0.002%, which percentage represents the trustee fee rate with
respect to each Mortgage Loan. The Administrative Cost Rate for each
Mortgage Loan is set forth on Annex A-1 hereto.
(viii) References to "Remaining Term to Maturity" represent, with
respect to each Mortgage Loan, the number of months remaining from the
Cut-Off Date to the stated maturity date of such Mortgage Loan (or the
remaining number of months to the Anticipated Repayment Date with respect
to each ARD Loan).
(ix) References to "Remaining Amortization Term" represent, with
respect to each Mortgage Loan, the number of months remaining from the
later of the Cut-Off Date and the end of any interest-only period, if any,
to the month in which such Mortgage Loan would fully or substantially
amortize in accordance with such loan's amortization schedule without
regard to any Balloon Payment, if any, due on such Mortgage Loan.
(x) References to "L ( )" or "Lockout" or "Lockout Period" represent,
with respect to each Mortgage Loan, the period during which prepayments of
principal are prohibited and no substitution of Defeasance Collateral is
permitted. The number indicated in the parentheses indicates the number of
monthly payments of such period (calculated for each Mortgage Loan from the
date of its origination). References to "O ( )" represent the number of
monthly payments for which (a) no Prepayment Premium or Yield Maintenance
Charge is assessed and (b) defeasance is no longer required. References to
"YM ( )" represent the period for which the Yield Maintenance Charge is
assessed. "3% ( )", "2% ( )" and "1% ( )" each represents the period for
which a Prepayment Premium is assessed and the respective percentage used
in the calculation thereof. The periods, if any, between consecutive Due
Dates occurring prior to the maturity date or Anticipated Repayment Date,
as applicable, of a Mortgage Loan during which the related borrower will
have the right to prepay such Mortgage Loan without being required to pay a
Prepayment Premium or a Yield Maintenance Charge (each such period, an
"Open Period") with respect to all of the Mortgage Loans have been
calculated as those Open Periods occurring immediately prior to the
maturity date or Anticipated Repayment Date, as applicable, of such
Mortgage Loan as set forth in the related Mortgage Loan documents.
(xi) References to "D ( )" or "Defeasance" represent, with respect to
each Mortgage Loan, the period (in months) during which the related holder
of the Mortgage has the right to require the related borrower, in lieu of a
principal prepayment, to pledge to such holder Defeasance Collateral.
(xii) References to "Occupancy Percentage" are, with respect to any
Mortgaged Property, references as of the most recently available rent rolls
to (a) in the case of multifamily properties, mobile home park properties
and assisted living facilities, the percentage of units or pads rented, (b)
in the case of office and retail properties, the percentage of the net
rentable square footage rented and is exclusive of hospitality properties,
and (c) in the case of self-storage facilities, either the percentage of
the net rentable square footage rented or the percentage of units rented
(depending on borrower reporting), and is exclusive of hospitality
properties.
(xiii) References to "Original Term to Maturity" are references to the
term from origination to maturity for each Mortgage Loan (or the term from
origination to the Anticipated Repayment Date with respect to each ARD
Loan).
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(xiv) References to "NA" indicate that, with respect to a particular
category of data, such data is not applicable.
(xv) References to "NAV" indicate that, with respect to a particular
category of data, such data is not available.
(xvi) References to "Capital Imp. Reserve" are references to funded
reserves escrowed for repairs, replacements and corrections of issues
outlined in the engineering reports.
(xvii) References to "Replacement Reserve" are references to funded
reserves escrowed for ongoing items such as repairs and replacements,
including, in the case of hospitality properties, reserves for furniture,
fixtures and equipment. In certain cases, however, the subject reserve will
be subject to a maximum amount, and once such maximum amount is reached,
such reserve will not thereafter be funded, except, in some such cases, to
the extent it is drawn upon.
(xviii) References to "TI/LC Reserve" are references to funded
reserves escrowed for tenant improvement allowances and leasing
commissions. In certain cases, however, the subject reserve will be subject
to a maximum amount, and once such maximum amount is reached, such reserve
will not thereafter be funded, except, in some such cases, to the extent it
is drawn upon.
(xix) The sum in any column of any of the following tables may not
equal the indicated total due to rounding.
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MORTGAGED PROPERTIES BY PROPERTY TYPE FOR ALL MORTGAGE LOANS(1)
NUMBER OF AGGREGATE % OF AVERAGE HIGHEST
MORTGAGED CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
PROPERTY TYPE PROPERTIES BALANCE POOL BALANCE BALANCE BALANCE
- ------------------------ ------------ ----------------- -------------- -------------- --------------
Office ................. 19 $ 445,391,450 41.9% $23,441,655 $119,298,859
Retail ................. 33 294,722,903 27.7 $ 8,930,997 $ 57,500,000
Retail - Anchored ..... 25 243,491,970 22.9 $ 9,739,679 $ 57,500,000
Retail - Shadow
Anchored(4) .......... 2 28,247,436 2.7 $14,123,718 $ 22,856,383
Retail -
Unanchored ........... 6 22,983,498 2.2 $ 3,830,583 $ 4,988,845
Multifamily ............ 19 148,825,460 14.0 $ 7,832,919 $ 18,200,000
Self Storage ........... 13 72,707,832 6.8 $ 5,592,910 $ 11,946,000
Industrial ............. 7 58,109,110 5.5 $ 8,301,301 $ 16,400,000
Hospitality ............ 3 22,285,236 2.1 $ 7,428,412 $ 8,985,982
Mobile Home Park ....... 1 13,424,059 1.3 $13,424,059 $ 13,424,059
Mixed Use .............. 1 5,040,219 0.5 $ 5,040,219 $ 5,040,219
Land(5) ................ 1 2,590,240 0.2 $ 2,590,240 $ 2,590,240
-- -------------- -----
97 $1,063,096,509 100.0% $10,959,758 $119,298,859
== ============== =====
WTD. AVG.
STATED
REMAINING WTD.
WTD. AVG. WTD. AVG. TERM TO WTD. MINIMUM WTD. AVG. AVG.
CUT-OFF DATE LTV RATIO AT MATURITY AVG. DSC DSC MAXIMUM OCCUPANCY MORTGAGE
PROPERTY TYPE LTV RATIO MATURITY(2) (MOS.)(2) RATIO RATIO DSC RATIO RATE(3) RATE
- ------------------------ -------------- -------------- ----------- ---------- --------- ----------- ----------- -----------
Office ................. 67.8% 60.2% 104 1.66x 1.22x 2.13x 92.4% 5.341%
Retail ................. 71.7% 56.0% 131 1.52x 1.19x 2.56x 97.1% 5.393%
Retail - Anchored ..... 72.7% 57.2% 130 1.51x 1.19x 2.56x 97.3% 5.271%
Retail - Shadow
Anchored(4) .......... 64.3% 54.1% 114 1.67x 1.66x 1.67x 95.5% 6.012%
Retail -
Unanchored ........... 70.3% 44.8% 157 1.42x 1.21x 1.64x 96.3% 5.918%
Multifamily ............ 71.2% 63.6% 97 1.44x 1.16x 2.63x 94.2% 5.215%
Self Storage ........... 79.2% 77.3% 68 2.10x 1.49x 2.38x 86.2% 4.469%
Industrial ............. 65.8% 56.3% 115 1.64x 1.30x 2.45x 98.1% 5.351%
Hospitality ............ 60.5% 46.1% 119 2.09x 1.58x 2.49x N/A 5.500%
Mobile Home Park ....... 79.9% 65.9% 119 1.38x 1.38x 1.38x 100.0% 5.070%
Mixed Use .............. 77.5% 65.4% 118 1.25x 1.25x 1.25x 80.6% 5.740%
Land(5) ................ 21.8% 0.2% 179 3.02x 3.02x 3.02x 100.0% 4.960%
70.0% 60.1% 109 1.63X 1.16X 3.02X 93.9% 5.280%
- -------
(1) Because this table presents information relating to the Mortgaged
Properties and not the Mortgage Loans, the information for Mortgage Loans
secured by more than one Mortgaged Property is based on allocated amounts
(allocating the Mortgage Loan principal balance to each of those
properties by the appraised values of the Mortgaged Properties or the
allocated loan amount as detailed in the related Mortgage Loan
documents).
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
(3) Occupancy Rates were calculated based upon rent rolls made available to
the applicable Mortgage Loan Seller by the related borrowers as of the
rent roll date set forth on Annex A-1 to this prospectus supplement but
excludes 3 Mortgage Loans secured by hospitality properties representing
2.1% of the Cut-Off Date Pool Balance.
(4) A Mortgaged Property is considered "shadow anchored" if it is in close
proximity to an anchored property.
(5) Specifically, the fee interest in land, which the ground tenant has
improved and leased as an anchored retail building. The retail building
is not part of the loan collateral, and the source of funds for loan
repayment is the ground rent payments made to the borrower.
S-110
MORTGAGED PROPERTIES BY PROPERTY TYPE FOR LOAN GROUP 1 MORTGAGE LOANS(1)
% OF
NUMBER OF AGGREGATE CUT-OFF DATE AVERAGE HIGHEST
MORTGAGED CUT-OFF DATE GROUP 1 CUT-OFF DATE CUT-OFF DATE
PROPERTY TYPE PROPERTIES BALANCE BALANCE BALANCE BALANCE
- ------------------ ------------ -------------- -------------- -------------- --------------
Office ........... 19 $445,391,450 47.0% $23,441,655 $119,298,859
Retail ........... 33 294,722,903 31.1 $ 8,930,997 $ 57,500,000
Retail -
Anchored ....... 25 243,491,970 25.7 $ 9,739,679 $ 57,500,000
Retail - Shadow
Anchored(4) .... 2 28,247,436 3.0 $14,123,718 $ 22,856,383
Retail -
Unanchored ..... 6 22,983,498 2.4 $ 3,830,583 $ 4,988,845
Self Storage ..... 13 72,707,832 7.7 $ 5,592,910 $ 11,946,000
Industrial ....... 7 58,109,110 6.1 $ 8,301,301 $ 16,400,000
Multifamily ...... 3 33,794,424 3.6 $11,264,808 $ 15,250,000
Hospitality ...... 3 22,285,236 2.4 $ 7,428,412 $ 8,985,982
Mobile Home
Park ............ 1 13,424,059 1.4 $13,424,059 $ 13,424,059
Mixed Use ........ 1 5,040,219 0.5 $ 5,040,219 $ 5,040,219
Land(5) .......... 1 2,590,240 0.3 $ 2,590,240 $ 2,590,240
-- ------------ -----
81 $948,065,473 100.0% $11,704,512 $119,298,859
== ============ =====
WTD. AVG.
STATED
REMAINING WTD.
WTD. AVG. WTD. AVG. TERM TO WTD. MINIMUM WTD. AVG. AVG.
CUT-OFF DATE LTV RATIO AT MATURITY AVG. DSC DSC MAXIMUM OCCUPANCY MORTGAGE
PROPERTY TYPE LTV RATIO MATURITY(2) (MOS.)(2) RATIO RATIO DSC RATIO RATE(3) RATE
- ------------------ -------------- -------------- ----------- ---------- --------- ----------- ----------- -----------
Office ........... 67.8% 60.2% 104 1.66x 1.22x 2.13x 92.4% 5.341%
Retail ........... 71.7% 56.0% 131 1.52x 1.19x 2.56x 97.1% 5.393%
Retail -
Anchored ....... 72.7% 57.2% 130 1.51x 1.19x 2.56x 97.3% 5.271%
Retail - Shadow
Anchored(4) .... 64.3% 54.1% 114 1.67x 1.66x 1.67x 95.5% 6.012%
Retail -
Unanchored ..... 70.3% 44.8% 157 1.42x 1.21x 1.64x 96.3% 5.918%
Self Storage ..... 79.2% 77.3% 68 2.10x 1.49x 2.38x 86.2% 4.469%
Industrial ....... 65.8% 56.3% 115 1.64x 1.30x 2.45x 98.1% 5.351%
Multifamily ...... 75.9% 68.7% 107 1.25x 1.24x 1.25x 96.1% 5.686%
Hospitality ...... 60.5% 46.1% 119 2.09x 1.58x 2.49x 0.0% 5.500%
Mobile Home
Park ............ 79.9% 65.9% 119 1.38x 1.38x 1.38x 100.0% 5.070%
Mixed Use ........ 77.5% 65.4% 118 1.25x 1.25x 1.25x 80.6% 5.740%
Land(5) .......... 21.8% 0.2% 179 3.02x 3.02x 3.02x 100.0% 4.960%
70.0% 59.9% 111 1.64X 1.19X 3.02X 94.0% 5.304%
- -------
(1) Because this table presents information relating to the Mortgaged
Properties and not the Mortgage Loans, the information for Mortgage Loans
secured by more than one Mortgaged Property is based on allocated amounts
(allocating the Mortgage Loan principal balance to each of those
properties by the appraised values of the Mortgaged Properties or the
allocated loan amount as detailed in the related Mortgage Loan
documents).
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
(3) Occupancy Rates were calculated based upon rent rolls made available to
the applicable Mortgage Loan Seller by the related borrowers as of the
rent roll date set forth on Annex A-1 to this prospectus supplement, but
excludes 3 Mortgage Loans secured by hospitality properties representing
2.4% of the Cut-Off Date Group 1 Balance.
(4) A Mortgaged Property is considered "shadow anchored" if it is in close
proximity to an anchored property.
(5) Specifically, the fee interest in land, which the ground tenant has
improved and leased as an anchored retail building. The retail building
is not part of the loan collateral, and the source of funds for loan
repayment is the ground rent payments made to the borrower.
S-111
MORTGAGED PROPERTIES BY PROPERTY TYPE FOR LOAN GROUP 2 MORTGAGE LOANS(1)
% OF
AGGREGATE CUT-OFF AVERAGE
NUMBER OF CUT-OFF DATE CUT-OFF HIGHEST
MORTGAGED DATE GROUP 2 DATE CUT-OFF DATE
PROPERTY TYPE PROPERTIES BALANCE BALANCE BALANCE BALANCE
- --------------------- ------------ --------------- ----------- ------------- --------------
Multifamily ......... 16 $115,031,036 100.0% $7,189,440 $18,200,000
-- ------------ -----
16 $115,031,036 100.0% $7,189,440 $18,200,000
== ============ =====
WTD. AVG.
STATED
REMAINING WTD.
WTD. AVG. WTD. AVG. TERM TO WTD. MINIMUM WTD. AVG. AVG.
CUT-OFF DATE LTV RATIO AT MATURITY AVG. DSC DSC MAXIMUM OCCUPANCY MORTGAGE
PROPERTY TYPE LTV RATIO MATURITY(2) (MOS.)(2) RATIO RATIO DSC RATIO RATE(3) RATE
- --------------------- -------------- -------------- ----------- ---------- --------- ----------- ----------- -----------
Multifamily ......... 69.8% 62.0% 95 1.49x 1.16x 2.63x 93.6% 5.077%
69.8% 62.0% 95 1.49X 1.16X 2.63X 93.6% 5.077%
- -------
(1) Because this table presents information relating to the Mortgaged
Properties and not the Mortgage Loans, the information for Mortgage Loans
secured by more than one Mortgaged Property is based on allocated amounts
(allocating the Mortgage Loan principal balance to each of those
properties by the appraised values of the Mortgaged Properties or the
allocated loan amount as detailed in the related Mortgage Loan
documents).
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
(3) Occupancy Rates were calculated based upon rent rolls made available to
the applicable Mortgage Loan Seller by the related borrowers as of the
rent roll date set forth on Annex A-1 to this prospectus supplement.
S-112
RANGE OF CUT-OFF DATE BALANCES FOR ALL MORTGAGE LOANS
AGGREGATE % OF
RANGE OF CUT-OFF NUMBER OF CUT-OFF DATE CUT-OFF DATE AVERAGE CUT-OFF
DATE BALANCES ($) LOANS BALANCE POOL BALANCE DATE BALANCE
- -------------------------------- ----------- ----------------- -------------- -----------------
(less than) 2,000,000 . ....... 5 $ 8,934,056 0.8% $ 1,786,811
2,000,001 - 3,000,000 .......... 11 28,594,083 2.7 $ 2,599,462
3,000,001 - 4,000,000 .......... 12 41,322,485 3.9 $ 3,443,540
4,000,001 - 5,000,000 .......... 11 51,754,949 4.9 $ 4,704,995
5,000,001 - 6,000,000 .......... 7 38,062,054 3.6 $ 5,437,436
6,000,001 - 7,000,000 .......... 6 38,288,808 3.6 $ 6,381,468
7,000,001 - 8,000,000 .......... 8 60,880,418 5.7 $ 7,610,052
8,000,001 - 9,000,000 .......... 4 35,122,275 3.3 $ 8,780,569
9,000,001 - 10,000,000 ......... 4 37,699,490 3.5 $ 9,424,873
10,000,001 - 15,000,000 ........ 13 163,438,803 15.4 $ 12,572,216
15,000,001 - 20,000,000 ........ 6 100,780,000 9.5 $ 16,796,667
20,000,001 - 25,000,000 ........ 2 43,356,383 4.1 $ 21,678,191
25,000,001 - 30,000,000 ........ 1 30,000,000 2.8 $ 30,000,000
30,000,001 - 35,000,000 ........ 2 67,563,845 6.4 $ 33,781,923
55,000,001 - 60,000,000 ........ 2 116,000,000 10.9 $ 58,000,000
80,000,001 - 119,298,859 ....... 2 201,298,859 18.9 $100,649,430
-- -------------- -----
96 $1,063,096,509 100.0% $ 11,073,922
== ============== =====
WTD. AVG.
STATED
REMAINING
WTD. AVG. WTD. AVG. TERM TO WTD. AVG.
RANGE OF CUT-OFF HIGHEST CUT-OFF CUT-OFF DATE LTV RATIO MATURITY WTD. AVG. MORTGAGE
DATE BALANCES ($) DATE BALANCE LTV RATIO AT MATURITY* (MOS.)* DSC RATIO RATE
- -------------------------------- ----------------- -------------- -------------- ---------- ----------- ----------
(less than) 2,000,000 . ....... $ 1,999,000 66.0% 50.4% 112 1.92x 5.375%
2,000,001 - 3,000,000 .......... $ 2,796,598 67.6% 54.5% 117 1.80x 5.037%
3,000,001 - 4,000,000 .......... $ 3,985,457 68.2% 47.6% 136 1.67x 5.227%
4,000,001 - 5,000,000 .......... $ 4,994,092 74.6% 61.5% 110 1.62x 5.168%
5,000,001 - 6,000,000 .......... $ 5,900,000 71.5% 61.6% 110 1.53x 5.359%
6,000,001 - 7,000,000 .......... $ 6,960,000 75.0% 66.3% 102 1.78x 5.121%
7,000,001 - 8,000,000 .......... $ 8,000,000 62.4% 48.2% 127 1.54x 5.642%
8,000,001 - 9,000,000 .......... $ 8,985,982 71.0% 58.0% 119 1.71x 5.337%
9,000,001 - 10,000,000 ......... $ 9,890,069 71.1% 62.5% 103 1.31x 5.529%
10,000,001 - 15,000,000 ........ $ 14,983,705 73.6% 61.8% 108 1.52x 5.157%
15,000,001 - 20,000,000 ........ $ 18,200,000 67.7% 62.8% 108 1.61x 5.238%
20,000,001 - 25,000,000 ........ $ 22,856,383 69.0% 59.6% 116 1.69x 5.672%
25,000,001 - 30,000,000 ........ $ 30,000,000 77.9% 72.7% 82 1.38x 5.805%
30,000,001 - 35,000,000 ........ $ 35,000,000 75.7% 68.4% 88 1.49x 5.549%
55,000,001 - 60,000,000 ........ $ 58,500,000 79.5% 71.2% 100 1.28x 5.107%
80,000,001 - 119,298,859 ....... $119,298,859 60.1% 52.0% 115 2.00x 5.164%
$119,298,859 70.0% 60.1% 109 1.63X 5.280%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-113
RANGE OF CUT-OFF DATE BALANCES FOR LOAN GROUP 1 MORTGAGE LOANS
% OF
AGGREGATE CUT-OFF DATE
RANGE OF CUT-OFF NUMBER OF CUT-OFF DATE GROUP 1 AVERAGE CUT-OFF
DATE BALANCES ($) LOANS BALANCE BALANCE DATE BALANCE
- ------------------------------- ----------- -------------- -------------- -----------------
(less than) 2,000,000 . ...... 4 $ 7,406,892 0.8% $ 1,851,723
2,000,001 - 3,000,000 ....... 8 21,140,231 2.2 $ 2,642,529
3,000,001 - 4,000,000 ....... 11 37,337,029 3.9 $ 3,394,275
4,000,001 - 5,000,000 ....... 10 47,054,949 5.0 $ 4,705,495
5,000,001 - 6,000,000 ....... 6 32,862,054 3.5 $ 5,477,009
6,000,001 - 7,000,000 ....... 5 31,688,808 3.3 $ 6,337,762
7,000,001 - 8,000,000 ....... 7 53,105,923 5.6 $ 7,586,560
8,000,001 - 9,000,000 ....... 4 35,122,275 3.7 $ 8,780,569
9,000,001 - 10,000,000 ....... 1 9,109,421 1.0 $ 9,109,421
10,000,001 - 15,000,000 ....... 12 149,438,803 15.8 $ 12,453,234
15,000,001 - 20,000,000 ....... 4 65,580,000 6.9 $ 16,395,000
20,000,001 - 25,000,000 ....... 2 43,356,383 4.6 $ 21,678,191
25,000,001 - 30,000,000 ....... 1 30,000,000 3.2 $ 30,000,000
30,000,001 - 35,000,000 ....... 2 67,563,845 7.1 $ 33,781,923
55,000,001 - 60,000,000 ....... 2 116,000,000 12.2 $ 58,000,000
80,000,001 - 119,298,859 ...... 2 201,298,859 21.2 $100,649,430
-- ------------ -----
81 $948,065,473 100.0% $ 11,704,512
== ============ =====
WTD. AVG.
STATED
REMAINING
WTD. AVG. WTD. AVG. TERM TO WTD. AVG.
RANGE OF CUT-OFF HIGHEST CUT-OFF CUT-OFF DATE LTV RATIO MATURITY WTD. AVG. MORTGAGE
DATE BALANCES ($) DATE BALANCE LTV RATIO AT MATURITY* (MOS.)* DSC RATIO RATE
- ------------------------------- ----------------- -------------- -------------- ---------- ----------- ----------
(less than) 2,000,000 . ...... $ 1,999,000 65.3% 47.7% 124 2.03x 5.393%
2,000,001 - 3,000,000 ....... $ 2,796,598 65.8% 53.2% 122 1.98x 4.916%
3,000,001 - 4,000,000 ....... $ 3,840,000 69.3% 52.7% 132 1.73x 5.200%
4,000,001 - 5,000,000 ....... $ 4,994,092 74.7% 60.7% 116 1.65x 5.149%
5,000,001 - 6,000,000 ....... $ 5,900,000 73.0% 62.8% 108 1.56x 5.312%
6,000,001 - 7,000,000 ....... $ 6,960,000 74.9% 66.7% 99 1.88x 5.055%
7,000,001 - 8,000,000 ....... $ 8,000,000 62.0% 47.3% 128 1.55x 5.691%
8,000,001 - 9,000,000 ....... $ 8,985,982 71.0% 58.0% 119 1.71x 5.337%
9,000,001 - 10,000,000 ....... $ 9,109,421 72.6% 60.2% 119 1.49x 5.190%
10,000,001 - 15,000,000 ....... $ 14,983,705 73.1% 60.6% 113 1.55x 5.241%
15,000,001 - 20,000,000 ....... $ 17,430,000 68.1% 61.6% 119 1.43x 5.588%
20,000,001 - 25,000,000 ....... $ 22,856,383 69.0% 59.6% 116 1.69x 5.672%
25,000,001 - 30,000,000 ....... $ 30,000,000 77.9% 72.7% 82 1.38x 5.805%
30,000,001 - 35,000,000 ....... $ 35,000,000 75.7% 68.4% 88 1.49x 5.549%
55,000,001 - 60,000,000 ....... $ 58,500,000 79.5% 71.2% 100 1.28x 5.107%
80,000,001 - 119,298,859 ...... $119,298,859 60.1% 52.0% 115 2.00x 5.164%
$119,298,859 70.0% 59.9% 111 1.64X 5.304%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-114
RANGE OF CUT-OFF DATE BALANCES FOR LOAN GROUP 2 MORTGAGE LOANS
% OF
AGGREGATE CUT-OFF DATE
RANGE OF CUT-OFF NUMBER OF CUT-OFF DATE GROUP 2 AVERAGE CUT-OFF
DATE BALANCES ($) LOANS BALANCE BALANCE DATE BALANCE
- ------------------------------- ----------- -------------- -------------- -----------------
(less than) 2,000,000 ....... 1 $ 1,527,164 1.3% $ 1,527,164
2,000,001 - 3,000,000 ....... 3 7,453,852 6.5 $ 2,484,617
3,000,001 - 4,000,000 ....... 1 3,985,457 3.5 $ 3,985,457
4,000,001 - 5,000,000 ....... 1 4,700,000 4.1 $ 4,700,000
5,000,001 - 6,000,000 ....... 1 5,200,000 4.5 $ 5,200,000
6,000,001 - 7,000,000 ....... 1 6,600,000 5.7 $ 6,600,000
7,000,001 - 8,000,000 ....... 1 7,774,495 6.8 $ 7,774,495
9,000,001 - 10,000,000 ....... 3 28,590,069 24.9 $ 9,530,023
10,000,001 - 15,000,000 ....... 1 14,000,000 12.2 $14,000,000
15,000,001 - 18,200,000 ....... 2 35,200,000 30.6 $17,600,000
- ------------ -----
15 $115,031,036 100.0% $ 7,668,736
== ============ =====
WTD. AVG.
STATED
REMAINING
WTD. AVG. WTD. AVG. TERM TO WTD. AVG.
RANGE OF CUT-OFF HIGHEST CUT-OFF CUT-OFF DATE LTV RATIO MATURITY WTD. AVG. MORTGAGE
DATE BALANCES ($) DATE BALANCE LTV RATIO AT MATURITY* (MOS.)* DSC RATIO RATE
- ------------------------------- ----------------- -------------- -------------- ---------- ----------- ----------
(less than) 2,000,000 ....... $ 1,527,164 69.4% 63.1% 52 1.43x 5.290%
2,000,001 - 3,000,000 ....... $ 2,735,923 72.8% 58.1% 104 1.30x 5.382%
3,000,001 - 4,000,000 ....... $ 3,985,457 57.9% 0.0% 179 1.16x 5.480%
4,000,001 - 5,000,000 ....... $ 4,700,000 72.9% 69.3% 59 1.41x 5.360%
5,000,001 - 6,000,000 ....... $ 5,200,000 61.9% 54.4% 119 1.32x 5.660%
6,000,001 - 7,000,000 ....... $ 6,600,000 75.6% 64.4% 118 1.26x 5.440%
7,000,001 - 8,000,000 ....... $ 7,774,495 65.3% 54.4% 117 1.52x 5.310%
9,000,001 - 10,000,000 ....... $ 9,890,069 70.6% 63.2% 98 1.26x 5.637%
10,000,001 - 15,000,000 ....... $14,000,000 79.1% 75.1% 59 1.24x 4.260%
15,000,001 - 18,200,000 ....... $18,200,000 66.8% 65.1% 89 1.94x 4.584%
$18,200,000 69.8% 62.0% 95 1.49X 5.077%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-115
MORTGAGED PROPERTIES BY STATE FOR ALL MORTGAGE LOANS(1)
NUMBER OF AGGREGATE % OF CUT-OFF AVERAGE
MORTGAGED CUT-OFF DATE POOL CUT-OFF
STATE PROPERTIES DATE BALANCE BALANCE DATE BALANCE
- ----------------------- ------------ ----------------- -------------- --------------
CA .................... 18 $ 250,576,367 23.6% $13,920,909
Southern (3) ......... 10 194,724,028 18.3 $19,472,403
Northern (3) ......... 8 55,852,339 5.3 $ 6,981,542
NY .................... 5 155,073,945 14.6 $31,014,789
FL .................... 9 84,674,052 8.0 $ 9,408,228
NC .................... 5 70,799,856 6.7 $14,159,971
DC .................... 1 58,500,000 5.5 $58,500,000
AL .................... 4 50,655,471 4.8 $12,663,868
GA .................... 4 45,574,568 4.3 $11,393,642
NJ .................... 5 45,081,982 4.2 $ 9,016,396
NV .................... 6 42,918,900 4.0 $ 7,153,150
WA .................... 5 35,700,475 3.4 $ 7,140,095
TX .................... 5 30,148,180 2.8 $ 6,029,636
MD .................... 4 25,883,983 2.4 $ 6,470,996
OH .................... 2 22,615,069 2.1 $11,307,534
VA .................... 6 21,758,735 2.0 $ 3,626,456
PA .................... 2 20,924,059 2.0 $10,462,030
NM .................... 2 19,059,000 1.8 $ 9,529,500
RI .................... 1 17,430,000 1.6 $17,430,000
OK .................... 2 14,933,713 1.4 $ 7,466,856
MA .................... 2 12,215,677 1.1 $ 6,107,838
SC .................... 2 8,296,926 0.8 $ 4,148,463
ID .................... 1 7,584,424 0.7 $ 7,584,424
WI .................... 1 6,393,451 0.6 $ 6,393,451
AZ .................... 1 5,040,219 0.5 $ 5,040,219
IL .................... 1 3,985,457 0.4 $ 3,985,457
TN .................... 1 2,753,000 0.3 $ 2,753,000
UT .................... 1 2,520,000 0.2 $ 2,520,000
IN .................... 1 1,999,000 0.2 $ 1,999,000
-- -------------- -----
97 $1,063,096,509 100.0% $10,959,758
== ============== =====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG.
CUT-OFF CUT-OFF DATE LTV RATIO AT MATURITY WTD. AVG. MORTGAGE
STATE DATE BALANCE LTV RATIO MATURITY(2) (MOS.)(2) DSC RATIO RATE
- ----------------------- -------------- -------------- -------------- ----------- ----------- ----------
CA .................... $119,298,859 65.7% 57.4% 103 1.97x 4.947%
Southern (3) ......... $119,298,859 67.3% 59.8% 100 2.03x 4.865%
Northern (3) ......... $ 16,400,000 60.2% 49.2% 113 1.76x 5.233%
NY .................... $ 82,000,000 64.0% 58.3% 104 1.64x 5.368%
FL .................... $ 30,000,000 72.5% 62.5% 106 1.56x 5.833%
NC .................... $ 57,500,000 77.2% 62.6% 128 1.37x 5.097%
DC .................... $ 58,500,000 79.7% 73.8% 82 1.22x 5.290%
AL .................... $ 32,563,845 73.8% 64.0% 104 1.60x 5.458%
GA .................... $ 16,500,000 67.7% 55.4% 126 1.51x 4.995%
NJ .................... $ 11,946,000 70.3% 65.1% 89 2.07x 4.851%
NV .................... $ 13,000,000 74.2% 65.1% 119 1.32x 5.602%
WA .................... $ 9,400,000 67.1% 56.6% 119 1.40x 5.413%
TX .................... $ 10,973,122 73.2% 33.9% 175 1.33x 5.370%
MD .................... $ 11,976,706 63.7% 52.4% 119 1.65x 5.387%
OH .................... $ 12,725,000 68.6% 66.6% 73 1.43x 5.926%
VA .................... $ 8,481,194 74.4% 61.2% 117 1.56x 5.294%
PA .................... $ 13,424,059 73.7% 59.7% 119 1.41x 5.428%
NM .................... $ 15,250,000 71.4% 67.5% 111 1.47x 5.532%
RI .................... $ 17,430,000 80.0% 73.3% 119 1.20x 5.800%
OK .................... $ 13,007,713 73.7% 62.9% 112 1.83x 5.239%
MA .................... $ 8,864,356 73.6% 58.4% 135 1.42x 5.142%
SC .................... $ 6,010,624 72.5% 57.2% 118 1.54x 5.583%
ID .................... $ 7,584,424 75.8% 63.5% 118 1.24x 5.480%
WI .................... $ 6,393,451 79.9% 67.6% 119 1.25x 5.856%
AZ .................... $ 5,040,219 77.5% 65.4% 118 1.25x 5.740%
IL .................... $ 3,985,457 57.9% 0.0% 179 1.16x 5.480%
TN .................... $ 2,753,000 64.0% 64.0% 82 2.55x 4.460%
UT .................... $ 2,520,000 80.0% 80.0% 59 2.26x 4.300%
IN .................... $ 1,999,000 66.6% 66.6% 82 2.53x 4.460%
$119,298,859 70.0% 60.1% 109 1.63X 5.280%
- -------
(1) Because this table presents information relating to the Mortgaged
Properties and not the Mortgage Loans, the information for Mortgage Loans
secured by more than one Mortgaged Property is based on allocated amounts
(allocating the Mortgage Loan principal balance to each of those
properties by the appraised values of the Mortgaged Properties or the
allocated loan amount as detailed in the related Mortgage Loan
documents).
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
(3) For purposes of determining whether a Mortgaged Property is in Northern
California or Southern California, Mortgaged Properties north of San Luis
Obispo County, Kern County and San Bernardino County were included in
Northern California and Mortgaged Properties in or south of such counties
were included in Southern California.
S-116
MORTGAGED PROPERTIES BY STATE FOR LOAN GROUP 1 MORTGAGE LOANS(1)
NUMBER OF AGGREGATE % OF CUT-OFF AVERAGE
MORTGAGED CUT-OFF DATE GROUP 1 CUT-OFF
STATE PROPERTIES DATE BALANCE BALANCE DATE BALANCE
- ---------------------- ------------ -------------- -------------- --------------
CA ................... 13 $190,865,949 20.1% $14,681,996
Southern(3) ......... 7 145,524,028 15.3 $20,789,147
Northern(3) ......... 6 45,341,921 4.8 $ 7,556,987
NY ................... 5 155,073,945 16.4 $31,014,789
FL ................... 9 84,674,052 8.9 $ 9,408,228
NC ................... 5 70,799,856 7.5 $14,159,971
DC ................... 1 58,500,000 6.2 $58,500,000
GA ................... 4 45,574,568 4.8 $11,393,642
NJ ................... 5 45,081,982 4.8 $ 9,016,396
AL ................... 2 43,523,845 4.6 $21,761,923
NV ................... 5 33,618,900 3.5 $ 6,723,780
TX ................... 5 30,148,180 3.2 $ 6,029,636
MD ................... 4 25,883,983 2.7 $ 6,470,996
PA ................... 2 20,924,059 2.2 $10,462,030
VA ................... 4 20,231,571 2.1 $ 5,057,893
NM ................... 2 19,059,000 2.0 $ 9,529,500
RI ................... 1 17,430,000 1.8 $17,430,000
OK ................... 2 14,933,713 1.6 $ 7,466,856
WA ................... 2 14,500,475 1.5 $ 7,250,237
OH ................... 1 12,725,000 1.3 $12,725,000
MA ................... 2 12,215,677 1.3 $ 6,107,838
ID ................... 1 7,584,424 0.8 $ 7,584,424
WI ................... 1 6,393,451 0.7 $ 6,393,451
SC ................... 1 6,010,624 0.6 $ 6,010,624
AZ ................... 1 5,040,219 0.5 $ 5,040,219
TN ................... 1 2,753,000 0.3 $ 2,753,000
UT ................... 1 2,520,000 0.3 $ 2,520,000
IN ................... 1 1,999,000 0.2 $ 1,999,000
-- ------------ -----
81 $948,065,473 100.0% $11,704,512
== ============ =====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO
CUT-OFF CUT-OFF DATE LTV RATIO AT MATURITY WTD. AVG. WTD. AVG.
STATE DATE BALANCE LTV RATIO MATURITY(2) (MOS.)(2) DSC RATIO MORTGAGE RATE
- ---------------------- -------------- -------------- -------------- ----------- ----------- --------------
CA ................... $119,298,859 64.6% 55.1% 108 2.05x 5.044%
Southern(3) ......... $119,298,859 66.3% 57.0% 107 2.12x 4.991%
Northern(3) ......... $ 16,400,000 59.2% 48.9% 112 1.83x 5.216%
NY ................... $ 82,000,000 64.0% 58.3% 104 1.64x 5.368%
FL ................... $ 30,000,000 72.5% 62.5% 106 1.56x 5.833%
NC ................... $ 57,500,000 77.2% 62.6% 128 1.37x 5.097%
DC ................... $ 58,500,000 79.7% 73.8% 82 1.22x 5.290%
GA ................... $ 16,500,000 67.7% 55.4% 126 1.51x 4.995%
NJ ................... $ 11,946,000 70.3% 65.1% 89 2.07x 4.851%
AL ................... $ 32,563,845 73.7% 63.1% 110 1.64x 5.490%
NV ................... $ 13,000,000 73.7% 64.8% 119 1.34x 5.694%
TX ................... $ 10,973,122 73.2% 33.9% 175 1.33x 5.370%
MD ................... $ 11,976,706 63.7% 52.4% 119 1.65x 5.387%
PA ................... $ 13,424,059 73.7% 59.7% 119 1.41x 5.428%
VA ................... $ 8,481,194 74.8% 61.0% 122 1.57x 5.294%
NM ................... $ 15,250,000 71.4% 67.5% 111 1.47x 5.532%
RI ................... $ 17,430,000 80.0% 73.3% 119 1.20x 5.800%
OK ................... $ 13,007,713 73.7% 62.9% 112 1.83x 5.239%
WA ................... $ 9,109,421 66.2% 53.2% 119 1.55x 5.153%
OH ................... $ 12,725,000 67.2% 67.2% 83 1.60x 5.900%
MA ................... $ 8,864,356 73.6% 58.4% 135 1.42x 5.142%
ID ................... $ 7,584,424 75.8% 63.5% 118 1.24x 5.480%
WI ................... $ 6,393,451 79.9% 67.6% 119 1.25x 5.856%
SC ................... $ 6,010,624 69.9% 53.3% 119 1.58x 5.500%
AZ ................... $ 5,040,219 77.5% 65.4% 118 1.25x 5.740%
TN ................... $ 2,753,000 64.0% 64.0% 82 2.55x 4.460%
UT ................... $ 2,520,000 80.0% 80.0% 59 2.26x 4.300%
IN ................... $ 1,999,000 66.6% 66.6% 82 2.53x 4.460%
$119,298,859 70.0% 59.9% 111 1.64X 5.304%
- -------
(1) Because this table presents information relating to the Mortgaged
Properties and not the Mortgage Loans, the information for Mortgage Loans
secured by more than one Mortgaged Property is based on allocated amounts
(allocating the Mortgage Loan principal balance to each of those
properties by the appraised values of the Mortgaged Properties or the
allocated loan amount as detailed in the related Mortgage Loan
documents).
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
(3) For purposes of determining whether a Mortgaged Property is in Northern
California or Southern California, Mortgaged Properties north of San Luis
Obispo County, Kern County and San Bernardino County were included in
Northern California and Mortgaged Properties in or south of such counties
were included in Southern California.
S-117
MORTGAGED PROPERTIES BY STATE FOR LOAN GROUP 2 MORTGAGE LOANS(1)
% OF
NUMBER OF AGGREGATE CUT-OFF DATE AVERAGE
MORTGAGED CUT-OFF GROUP 2 CUT-OFF
STATE PROPERTIES DATE BALANCE BALANCE DATE BALANCE
- ---------------------- ------------ -------------- -------------- --------------
CA ................... 5 $ 59,710,418 51.9% $11,942,084
Southern(3) ......... 3 49,200,000 42.8 $16,400,000
Northern(3) ......... 2 10,510,418 9.1 $ 5,255,209
WA ................... 3 21,200,000 18.4 $ 7,066,667
OH ................... 1 9,890,069 8.6 $ 9,890,069
NV ................... 1 9,300,000 8.1 $ 9,300,000
AL ................... 2 7,131,626 6.2 $ 3,565,813
IL ................... 1 3,985,457 3.5 $ 3,985,457
SC ................... 1 2,286,303 2.0 $ 2,286,303
VA ................... 2 1,527,164 1.3 $ 763,582
- ------------ -----
16 $115,031,036 100.0% $ 7,189,440
== ============ =====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG.
CUT-OFF CUT-OFF DATE LTV RATIO AT MATURITY WTD. AVG. MORTGAGE
STATE DATE BALANCE LTV RATIO MATURITY(2) (MOS.)(2) DSC RATIO RATE
- ---------------------- -------------- -------------- -------------- ----------- ----------- ----------
CA ................... $18,200,000 69.3% 64.9% 87 1.69x 4.636%
Southern(3) ......... $18,200,000 70.3% 67.9% 80 1.74x 4.492%
Northern(3) ......... $ 7,774,495 64.5% 50.6% 117 1.44x 5.310%
WA ................... $ 9,400,000 67.7% 58.9% 119 1.30x 5.592%
OH ................... $ 9,890,069 70.5% 66.0% 59 1.21x 5.960%
NV ................... $ 9,300,000 75.9% 66.1% 118 1.25x 5.270%
AL ................... $ 4,700,000 74.8% 69.5% 67 1.36x 5.261%
IL ................... $ 3,985,457 57.9% 0.0% 179 1.16x 5.480%
SC ................... $ 2,286,303 79.5% 67.5% 114 1.45x 5.800%
VA ................... $ 1,129,043 69.4% 63.1% 52 1.43x 5.290%
$18,200,000 69.8% 62.0% 95 1.49X 5.077%
- -------
(1) Because this table presents information relating to the Mortgaged
Properties and not the Mortgage Loans, the information for Mortgage Loans
secured by more than one Mortgaged Property is based on allocated amounts
(allocating the Mortgage Loan principal balance to each of those
properties by the appraised values of the Mortgaged Properties or the
allocated loan amount as detailed in the related Mortgage Loan
documents).
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
(3) For purposes of determining whether a Mortgaged Property is in Northern
California or Southern California, Mortgaged Properties north of San Luis
Obispo County, Kern County and San Bernardino County were included in
Northern California and Mortgaged Properties in or south of such counties
were included in Southern California.
S-118
RANGE OF UNDERWRITTEN DSC RATIOS FOR ALL MORTGAGE LOANS
AGGREGATE % OF AVERAGE
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF DSC RATIOS (X) OF LOANS BALANCE POOL BALANCE BALANCE
- ------------------------- ---------- ----------------- -------------- --------------
1.15 - 1.19 ............. 2 $ 5,535,457 0.5% $ 2,767,728
1.20 - 1.24 ............. 10 168,578,474 15.9 $ 16,857,847
1.25 - 1.29 ............. 11 94,991,287 8.9 $ 8,635,572
1.30 - 1.34 ............. 9 66,832,946 6.3 $ 7,425,883
1.35 - 1.39 ............. 5 106,815,175 10.0 $ 21,363,035
1.40 -1.44 .............. 4 16,466,253 1.5 $ 4,116,563
1.45 - 1.49 ............. 7 40,296,241 3.8 $ 5,756,606
1.50 - 1.54 ............. 8 53,356,895 5.0 $ 6,669,612
1.55 - 1.59 ............. 4 27,927,674 2.6 $ 6,981,918
1.60 - 1.64 ............. 2 14,656,892 1.4 $ 7,328,446
1.65 - 1.69 ............. 4 56,624,142 5.3 $ 14,156,036
1.70 - 1.74 ............. 4 47,800,446 4.5 $ 11,950,111
1.75 - 1.79 ............. 1 32,563,845 3.1 $ 32,563,845
1.80 - 1.84 ............. 2 89,690,000 8.4 $ 44,845,000
1.85 - 1.89 ............. 1 3,192,070 0.3 $ 3,192,070
2.00 - 2.04 ............. 3 16,904,630 1.6 $ 5,634,877
2.05 - 2.09 ............. 2 15,322,000 1.4 $ 7,661,000
2.10 - 2.14 ............. 1 119,298,859 11.2 $119,298,859
2.15 - 2.19 ............. 1 5,848,000 0.6 $ 5,848,000
2.20 - 2.24 ............. 4 14,060,000 1.3 $ 3,515,000
2.25 - 2.29 ............. 1 2,520,000 0.2 $ 2,520,000
2.30 - 3.02 ............. 10 63,815,222 6.0 $ 6,381,522
-- -------------- -----
96 $1,063,096,509 100.0% $ 11,073,922
== ============== =====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE LTV RATIO MATURITY DSC MORTGAGE
RANGE OF DSC RATIOS (X) BALANCE LTV RATIO AT MATURITY* (MOS.)* RATIO RATE
- ------------------------- -------------- -------------- -------------- ---------- ----------- ----------
1.15 - 1.19 ............. $ 3,985,457 60.5% 0.0% 196 1.17x 5.838%
1.20 - 1.24 ............. $ 58,500,000 77.9% 70.9% 82 1.22x 5.338%
1.25 - 1.29 ............. $ 15,250,000 75.7% 60.0% 128 1.26x 5.652%
1.30 - 1.34 ............. $ 14,983,705 71.2% 55.7% 132 1.32x 5.701%
1.35 - 1.39 ............. $ 57,500,000 78.5% 68.3% 111 1.36x 5.219%
1.40 -1.44 .............. $ 5,293,921 72.2% 63.4% 96 1.41x 5.541%
1.45 - 1.49 ............. $ 9,109,421 71.8% 59.0% 119 1.47x 5.434%
1.50 - 1.54 ............. $ 14,466,761 72.1% 59.8% 118 1.51x 5.187%
1.55 - 1.59 ............. $ 16,500,000 69.0% 58.6% 118 1.57x 4.987%
1.60 - 1.64 ............. $ 12,725,000 66.4% 64.6% 88 1.61x 5.938%
1.65 - 1.69 ............. $ 22,856,383 57.2% 48.2% 117 1.68x 5.926%
1.70 - 1.74 ............. $ 20,500,000 66.7% 51.9% 129 1.72x 5.217%
1.75 - 1.79 ............. $ 32,563,845 71.6% 59.7% 119 1.77x 5.430%
1.80 - 1.84 ............. $ 82,000,000 55.1% 50.8% 114 1.81x 5.258%
1.85 - 1.89 ............. $ 3,192,070 44.0% 0.7% 239 1.88x 4.840%
2.00 - 2.04 ............. $ 7,288,630 71.1% 65.0% 85 2.03x 4.817%
2.05 - 2.09 ............. $ 11,946,000 79.9% 79.9% 59 2.07x 4.300%
2.10 - 2.14 ............. $119,298,859 63.8% 52.9% 115 2.13x 5.068%
2.15 - 2.19 ............. $ 5,848,000 80.0% 80.0% 59 2.18x 4.300%
2.20 - 2.24 ............. $ 4,480,000 76.7% 76.7% 64 2.23x 4.335%
2.25 - 2.29 ............. $ 2,520,000 80.0% 80.0% 59 2.26x 4.300%
2.30 - 3.02 ............. $ 18,200,000 64.6% 61.8% 95 2.51x 4.611%
$119,298,859 70.0% 60.1% 109 1.63X 5.280%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-119
RANGE OF UNDERWRITTEN DSC RATIOS FOR LOAN GROUP 1 MORTGAGE LOANS
AGGREGATE % OF AVERAGE
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF DSC RATIOS (X) OF LOANS BALANCE GROUP 1 BALANCE BALANCE
- ------------------------- ---------- -------------- ----------------- --------------
1.15 - 1.19 ............. 1 $ 1,550,000 0.2% $ 1,550,000
1.20 - 1.24 ............. 6 124,952,482 13.2 $ 20,825,414
1.25 - 1.29 ............. 8 76,659,661 8.1 $ 9,582,458
1.30 - 1.34 ............. 7 52,232,946 5.5 $ 7,461,849
1.35 - 1.39 ............. 5 106,815,175 11.3 $ 21,363,035
1.40 - 1.44 ............. 2 10,239,089 1.1 $ 5,119,545
1.45 - 1.49 ............. 6 38,009,938 4.0 $ 6,334,990
1.50 - 1.54 ............. 7 45,582,400 4.8 $ 6,511,771
1.55 - 1.59 ............. 4 27,927,674 2.9 $ 6,981,918
1.60 - 1.64 ............. 2 14,656,892 1.5 $ 7,328,446
1.65 - 1.69 ............. 4 56,624,142 6.0 $ 14,156,036
1.70 - 1.74 ............. 4 47,800,446 5.0 $ 11,950,111
1.75 - 1.79 ............. 1 32,563,845 3.4 $ 32,563,845
1.80 - 1.84 ............. 2 89,690,000 9.5 $ 44,845,000
1.85 - 1.89 ............. 1 3,192,070 0.3 $ 3,192,070
2.00 - 2.04 ............. 3 16,904,630 1.8 $ 5,634,877
2.05 - 2.09 ............. 2 15,322,000 1.6 $ 7,661,000
2.10 - 2.14 ............. 1 119,298,859 12.6 $119,298,859
2.15 - 2.19 ............. 1 5,848,000 0.6 $ 5,848,000
2.20 - 2.24 ............. 4 14,060,000 1.5 $ 3,515,000
2.25 - 2.29 ............. 1 2,520,000 0.3 $ 2,520,000
2.30 - 3.02 ............. 9 45,615,222 4.8 $ 5,068,358
- ------------ -----
81 $948,065,473 100.0% $ 11,704,512
== ============ =====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE LTV RATIO MATURITY DSC MORTGAGE
RANGE OF DSC RATIOS (X) BALANCE LTV RATIO AT MATURITY* (MOS.)* RATIO RATE
- ------------------------- -------------- -------------- -------------- ---------- ----------- ----------
1.15 - 1.19 ............. $ 1,550,000 67.1% 0.0% 240 1.19x 6.760%
1.20 - 1.24 ............. $ 58,500,000 79.0% 71.3% 89 1.22x 5.509%
1.25 - 1.29 ............. $ 15,250,000 75.6% 58.5% 131 1.26x 5.735%
1.30 - 1.34 ............. $ 14,983,705 73.2% 55.5% 135 1.32x 5.712%
1.35 - 1.39 ............. $ 57,500,000 78.5% 68.3% 111 1.36x 5.219%
1.40 - 1.44 ............. $ 5,293,921 72.4% 60.8% 119 1.40x 5.662%
1.45 - 1.49 ............. $ 9,109,421 71.3% 58.5% 119 1.47x 5.412%
1.50 - 1.54 ............. $ 14,466,761 73.3% 60.7% 118 1.51x 5.166%
1.55 - 1.59 ............. $ 16,500,000 69.0% 58.6% 118 1.57x 4.987%
1.60 - 1.64 ............. $ 12,725,000 66.4% 64.6% 88 1.61x 5.938%
1.65 - 1.69 ............. $ 22,856,383 57.2% 48.2% 117 1.68x 5.926%
1.70 - 1.74 ............. $ 20,500,000 66.7% 51.9% 129 1.72x 5.217%
1.75 - 1.79 ............. $ 32,563,845 71.6% 59.7% 119 1.77x 5.430%
1.80 - 1.84 ............. $ 82,000,000 55.1% 50.8% 114 1.81x 5.258%
1.85 - 1.89 ............. $ 3,192,070 44.0% 0.7% 239 1.88x 4.840%
2.00 - 2.04 ............. $ 7,288,630 71.1% 65.0% 85 2.03x 4.817%
2.05 - 2.09 ............. $ 11,946,000 79.9% 79.9% 59 2.07x 4.300%
2.10 - 2.14 ............. $119,298,859 63.8% 52.9% 115 2.13x 5.068%
2.15 - 2.19 ............. $ 5,848,000 80.0% 80.0% 59 2.18x 4.300%
2.20 - 2.24 ............. $ 4,480,000 76.7% 76.7% 64 2.23x 4.335%
2.25 - 2.29 ............. $ 2,520,000 80.0% 80.0% 59 2.26x 4.300%
2.30 - 3.02 ............. $ 10,560,000 66.9% 63.1% 86 2.46x 4.632%
$119,298,859 70.0% 59.9% 111 1.64X 5.304%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-120
RANGE OF UNDERWRITTEN DSC RATIOS FOR LOAN GROUP 2 MORTGAGE LOANS
AGGREGATE % OF AVERAGE
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF DSC RATIOS (X) OF LOANS BALANCE GROUP 2 BALANCE BALANCE
- ------------------------- ---------- -------------- ----------------- --------------
1.15 - 1.19 ............. 1 $ 3,985,457 3.5% $ 3,985,457
1.20 - 1.24 ............. 4 43,625,992 37.9 $10,906,498
1.25 - 1.29 ............. 3 18,331,626 15.9 $ 6,110,542
1.30 - 1.34 ............. 2 14,600,000 12.7 $ 7,300,000
1.40 - 1.44 ............. 2 6,227,164 5.4 $ 3,113,582
1.45 - 1.49 ............. 1 2,286,303 2.0 $ 2,286,303
1.50 - 1.54 ............. 1 7,774,495 6.8 $ 7,774,495
2.30 - 2.63 ............. 1 18,200,000 15.8 $18,200,000
- ------------ -----
15 $115,031,036 100.0% $ 7,668,736
== ============ =====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE LTV RATIO MATURITY DSC MORTGAGE
RANGE OF DSC RATIOS (X) BALANCE LTV RATIO AT MATURITY* (MOS.)* RATIO RATE
- ------------------------- -------------- -------------- -------------- ---------- ----------- ----------
1.15 - 1.19 ............. $ 3,985,457 57.9% 0.0% 179 1.16x 5.480%
1.20 - 1.24 ............. $17,000,000 74.7% 69.6% 62 1.22x 4.848%
1.25 - 1.29 ............. $ 9,300,000 76.1% 66.0% 113 1.25x 5.305%
1.30 - 1.34 ............. $ 9,400,000 64.1% 56.3% 119 1.31x 5.660%
1.40 - 1.44 ............. $ 4,700,000 72.0% 67.8% 57 1.41x 5.343%
1.45 - 1.49 ............. $ 2,286,303 79.5% 67.5% 114 1.45x 5.800%
1.50 - 1.54 ............. $ 7,774,495 65.3% 54.4% 117 1.52x 5.310%
2.30 - 2.63 ............. $18,200,000 58.7% 58.7% 118 2.63x 4.560%
$18,200,000 69.8% 62.0% 95 1.49X 5.077%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-121
RANGE OF LTV RATIOS FOR ALL MORTGAGE LOANS AS OF THE CUT-OFF DATE
AGGREGATE % OF AVERAGE
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF LTV RATIOS (%) OF LOANS BALANCE POOL BALANCE BALANCE
- ------------------------- ---------- ----------------- -------------- --------------
20.01 - 25.00 ........... 1 $ 2,590,240 0.2% $ 2,590,240
30.01 - 35.00 ........... 1 8,000,000 0.8 $ 8,000,000
40.01 - 50.00 ........... 2 15,168,776 1.4 $ 7,584,388
50.01 - 55.00 ........... 2 98,400,000 9.3 $49,200,000
55.01 - 60.00 ........... 5 43,851,122 4.1 $ 8,770,224
60.01 - 65.00 ........... 10 157,227,217 14.8 $15,722,722
65.01 - 70.00 ........... 20 135,404,812 12.7 $ 6,770,241
70.01 - 75.00 ........... 21 199,271,127 18.7 $ 9,489,101
75.01 - 80.00 ........... 34 403,183,213 37.9 $11,858,330
-- -------------- -----
96 $1,063,096,509 100.0% $11,073,922
== ============== =====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE LTV RATIO MATURITY DSC MORTGAGE
RANGE OF LTV RATIOS (%) BALANCE LTV RATIO AT MATURITY* (MOS.)* RATIO RATE
- ------------------------- -------------- -------------- -------------- ---------- ----------- ----------
20.01 - 25.00 ........... $ 2,590,240 21.8% 0.2% 179 3.02x 4.960%
30.01 - 35.00 ........... $ 8,000,000 33.8% 0.0% 180 1.72x 5.420%
40.01 - 50.00 ........... $ 11,976,706 48.7% 33.4% 143 1.73x 5.543%
50.01 - 55.00 ........... $ 82,000,000 53.9% 49.3% 115 1.79x 5.407%
55.01 - 60.00 ........... $ 18,200,000 57.6% 45.6% 124 2.25x 5.058%
60.01 - 65.00 ........... $119,298,859 63.5% 52.1% 116 2.03x 5.110%
65.01 - 70.00 ........... $ 22,856,383 67.6% 56.3% 118 1.58x 5.541%
70.01 - 75.00 ........... $ 32,563,845 72.8% 58.4% 123 1.50x 5.406%
75.01 - 80.00 ........... $ 58,500,000 79.0% 72.1% 91 1.42x 5.178%
$119,298,859 70.0% 60.1% 109 1.63X 5.280%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-122
RANGE OF LTV RATIOS FOR LOAN GROUP 1 MORTGAGE LOANS AS OF THE CUT-OFF DATE
AGGREGATE % OF AVERAGE
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF LTV RATIOS (%) OF LOANS BALANCE GROUP 1 BALANCE BALANCE
- ------------------------- ---------- -------------- ----------------- --------------
20.01 - 25.00 ........... 1 $ 2,590,240 0.3% $ 2,590,240
30.01 - 35.00 ........... 1 8,000,000 0.8 $ 8,000,000
40.01 - 50.00 ........... 2 15,168,776 1.6 $ 7,584,388
50.01 - 55.00 ........... 2 98,400,000 10.4 $49,200,000
55.01 - 60.00 ........... 3 21,665,665 2.3 $ 7,221,888
60.01 - 65.00 ........... 8 149,291,294 15.7 $18,661,412
65.01 - 70.00 ........... 17 116,703,153 12.3 $ 6,864,891
70.01 - 75.00 ........... 19 184,681,059 19.5 $ 9,720,056
75.01 - 80.00 ........... 28 351,565,285 37.1 $12,555,903
-- ------------ -----
81 $948,065,473 100.0% $11,704,512
== ============ =====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE LTV RATIO MATURITY DSC MORTGAGE
RANGE OF LTV RATIOS (%) BALANCE LTV RATIO AT MATURITY* (MOS.)* RATIO RATE
- ------------------------- -------------- -------------- -------------- ---------- ----------- ----------
20.01 - 25.00 ........... $ 2,590,240 21.8% 0.2% 179 3.02x 4.960%
30.01 - 35.00 ........... $ 8,000,000 33.8% 0.0% 180 1.72x 5.420%
40.01 - 50.00 ........... $ 11,976,706 48.7% 33.4% 143 1.73x 5.543%
50.01 - 55.00 ........... $ 82,000,000 53.9% 49.3% 115 1.79x 5.407%
55.01 - 60.00 ........... $ 8,985,982 56.6% 43.0% 119 2.13x 5.398%
60.01 - 65.00 ........... $119,298,859 63.5% 52.2% 116 2.07x 5.088%
65.01 - 70.00 ........... $ 22,856,383 67.9% 56.3% 119 1.61x 5.550%
70.01 - 75.00 ........... $ 32,563,845 73.0% 57.7% 128 1.52x 5.378%
75.01 - 80.00 ........... $ 58,500,000 79.3% 72.4% 92 1.45x 5.231%
$119,298,859 70.0% 59.9% 111 1.64X 5.304%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-123
RANGE OF LTV RATIOS FOR LOAN GROUP 2 MORTGAGE LOANS AS OF THE CUT-OFF DATE
AGGREGATE % OF AVERAGE
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF LTV RATIOS (%) OF LOANS BALANCE GROUP 2 BALANCE BALANCE
- ------------------------- ---------- -------------- ----------------- --------------
55.01 - 60.00 ........... 2 $ 22,185,457 19.3% $11,092,728
60.01 - 65.00 ........... 2 7,935,923 6.9 $ 3,967,962
65.01 - 70.00 ........... 3 18,701,659 16.3 $ 6,233,886
70.01 - 75.00 ........... 2 14,590,069 12.7 $ 7,295,034
75.01 - 79.52 ........... 6 51,617,929 44.9 $ 8,602,988
- ------------ -----
15 $115,031,036 100.0% $ 7,668,736
== ============ =====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE LTV RATIO MATURITY DSC MORTGAGE
RANGE OF LTV RATIOS (%) BALANCE LTV RATIO AT MATURITY* (MOS.)* RATIO RATE
- ------------------------- -------------- -------------- -------------- ---------- ----------- ----------
55.01 - 60.00 ........... $18,200,000 58.6% 48.2% 129 2.37x 4.725%
60.01 - 65.00 ........... $ 5,200,000 61.9% 49.4% 118 1.29x 5.539%
65.01 - 70.00 ........... $ 9,400,000 65.6% 56.6% 113 1.41x 5.484%
70.01 - 75.00 ........... $ 9,890,069 71.3% 67.1% 59 1.27x 5.767%
75.01 - 79.52 ........... $17,000,000 76.9% 70.5% 80 1.24x 4.814%
$18,200,000 69.8% 62.0% 95 1.49X 5.077%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-124
RANGE OF LTV RATIOS FOR ALL MORTGAGE LOANS AS OF THE MATURITY DATE
AGGREGATE % OF AVERAGE
RANGE OF MATURITY DATE LTV NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RATIOS (%)* OF LOANS BALANCE POOL BALANCE BALANCE
- ---------------------------- ---------- ----------------- -------------- --------------
0.00 - 5.00 .............. 8 $ 38,283,431 3.6% $ 4,785,429
30.01 - 40.00 .............. 1 2,735,923 0.3 $ 2,735,923
40.01 - 50.00 .............. 10 67,955,721 6.4 $ 6,795,572
50.01 - 55.00 .............. 8 233,945,751 22.0 $29,243,219
55.01 - 60.00 .............. 13 142,468,709 13.4 $10,959,131
60.01 - 65.00 .............. 19 144,725,552 13.6 $ 7,617,134
65.01 - 70.00 .............. 18 175,321,422 16.5 $ 9,740,079
70.01 - 75.00 .............. 6 146,890,000 13.8 $24,481,667
75.01 - 80.00 .............. 13 110,770,000 10.4 $ 8,520,769
-- -------------- -----
96 $1,063,096,509 100.0% $11,073,922
== ============== =====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
RANGE OF MATURITY DATE LTV CUT-OFF DATE CUT-OFF DATE LTV RATIO MATURITY DSC MORTGAGE
RATIOS (%)* BALANCE LTV RATIO AT MATURITY* (MOS.)* RATIO RATE
- ---------------------------- -------------- -------------- -------------- ---------- ----------- ----------
0.00 - 5.00 .............. $ 10,973,122 54.9% 0.1% 220 1.52x 5.399%
30.01 - 40.00 .............. $ 2,735,923 62.0% 39.9% 117 1.22x 5.310%
40.01 - 50.00 .............. $ 16,400,000 56.9% 44.0% 127 1.75x 5.752%
50.01 - 55.00 .............. $119,298,859 60.8% 52.1% 116 1.94x 5.176%
55.01 - 60.00 .............. $ 32,563,845 67.9% 58.4% 118 1.68x 5.505%
60.01 - 65.00 .............. $ 20,500,000 72.9% 62.5% 115 1.57x 5.192%
65.01 - 70.00 .............. $ 57,500,000 76.2% 67.4% 108 1.41x 5.327%
70.01 - 75.00 .............. $ 58,500,000 78.9% 73.2% 87 1.25x 5.424%
75.01 - 80.00 .............. $ 35,000,000 79.7% 78.2% 59 1.77x 4.725%
$119,298,859 70.0% 60.1% 109 1.63X 5.280%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-125
RANGE OF LTV RATIOS FOR LOAN GROUP 1 MORTGAGE LOANS AS OF THE MATURITY DATE
AGGREGATE % OF AVERAGE
RANGE OF MATURITY DATE LTV NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RATIOS (%)* OF LOANS BALANCE GROUP 1 BALANCE BALANCE
- ---------------------------- ---------- -------------- ----------------- --------------
0.00 - 5.00 .............. 7 $ 34,297,974 3.6% $ 4,899,711
40.01 - 50.00 .............. 10 67,955,721 7.2 $ 6,795,572
50.01 - 55.00 .............. 6 220,971,256 23.3 $36,828,543
55.01 - 60.00 .............. 11 114,868,709 12.1 $10,442,610
60.01 - 65.00 .............. 17 136,598,388 14.4 $ 8,035,199
65.01 - 70.00 .............. 13 146,713,424 15.5 $11,285,648
70.01 - 75.00 .............. 5 129,890,000 13.7 $25,978,000
75.01 - 80.00 .............. 12 96,770,000 10.2 $ 8,064,167
-- ------------ -----
81 $948,065,473 100.0% $11,704,512
== ============ =====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
RANGE OF MATURITY DATE LTV CUT-OFF DATE CUT-OFF DATE LTV RATIO MATURITY DSC MORTGAGE
RATIOS (%)* BALANCE LTV RATIO AT MATURITY* (MOS.)* RATIO RATE
- ---------------------------- -------------- -------------- -------------- ---------- ----------- ----------
0.00 - 5.00 .............. $ 10,973,122 54.6% 0.1% 224 1.56x 5.389%
40.01 - 50.00 .............. $ 16,400,000 56.9% 44.0% 127 1.75x 5.752%
50.01 - 55.00 .............. $119,298,859 60.6% 52.0% 116 1.97x 5.160%
55.01 - 60.00 .............. $ 32,563,845 69.6% 58.5% 118 1.56x 5.642%
60.01 - 65.00 .............. $ 20,500,000 72.9% 62.4% 116 1.59x 5.179%
65.01 - 70.00 .............. $ 57,500,000 76.7% 67.4% 113 1.44x 5.283%
70.01 - 75.00 .............. $ 58,500,000 79.3% 73.4% 91 1.26x 5.530%
75.01 - 80.00 .............. $ 35,000,000 79.8% 78.7% 59 1.84x 4.792%
$119,298,859 70.0% 59.9% 111 1.64X 5.304%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-126
RANGE OF LTV RATIOS FOR LOAN GROUP 2 MORTGAGE LOANS AS OF THE MATURITY DATE
AGGREGATE % OF AVERAGE
RANGE OF MATURITY DATE LTV NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RATIOS (%)* OF LOANS BALANCE GROUP 2 BALANCE BALANCE
- ---------------------------- ---------- -------------- ----------------- --------------
0.00 - 5.00 .............. 1 $ 3,985,457 3.5% $ 3,985,457
30.01 - 40.00 .............. 1 2,735,923 2.4 $ 2,735,923
50.01 - 55.00 .............. 2 12,974,495 11.3 $ 6,487,248
55.01 - 60.00 .............. 2 27,600,000 24.0 $13,800,000
60.01 - 65.00 .............. 2 8,127,164 7.1 $ 4,063,582
65.01 - 70.00 .............. 5 28,607,997 24.9 $ 5,721,599
70.01 - 75.00 .............. 1 17,000,000 14.8 $17,000,000
75.01 - 75.08 .............. 1 14,000,000 12.2 $14,000,000
- ------------ -----
15 $115,031,036 100.0% $ 7,668,736
== ============ =====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
RANGE OF MATURITY DATE LTV CUT-OFF DATE CUT-OFF DATE LTV RATIO MATURITY DSC MORTGAGE
RATIOS (%)* BALANCE LTV RATIO AT MATURITY* (MOS.)* RATIO RATE
- ---------------------------- -------------- -------------- -------------- ---------- ----------- ----------
0.00 - 5.00 .............. $ 3,985,457 57.9% 0.0% 179 1.16x 5.480%
30.01 - 40.00 .............. $ 2,735,923 62.0% 39.9% 117 1.22x 5.310%
50.01 - 55.00 .............. $ 7,774,495 64.0% 54.4% 118 1.44x 5.450%
55.01 - 60.00 .............. $18,200,000 60.9% 58.3% 118 2.18x 4.935%
60.01 - 65.00 .............. $ 6,600,000 74.4% 64.2% 106 1.29x 5.412%
65.01 - 70.00 .............. $ 9,890,069 74.1% 67.0% 84 1.28x 5.549%
70.01 - 75.00 .............. $17,000,000 75.6% 72.0% 57 1.20x 4.610%
75.01 - 75.08 .............. $14,000,000 79.1% 75.1% 59 1.24x 4.260%
$18,200,000 69.8% 62.0% 95 1.49X 5.077%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-127
RANGE OF MORTGAGE RATES FOR ALL MORTGAGE LOANS AS OF THE CUT-OFF DATE
AGGREGATE % OF AVERAGE
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF MORTGAGE RATES (%) OF LOANS BALANCE POOL BALANCE BALANCE
- ------------------------------ ---------- ----------------- -------------- --------------
4.260 - 5.249 ................ 42 $ 460,396,940 43.3% $10,961,832
5.250 - 5.499 ................ 19 270,663,831 25.5 $14,245,465
5.500 - 5.749 ................ 14 144,474,249 13.6 $10,319,589
5.750 - 5.999 ................ 8 110,374,823 10.4 $13,796,853
6.000 - 6.249 ................ 9 60,951,666 5.7 $ 6,772,407
6.250 - 6.499 ................ 3 14,685,001 1.4 $ 4,895,000
6.750 - 6.760 ................ 1 1,550,000 0.1 $ 1,550,000
-- -------------- -----
96 $1,063,096,509 100.0% $11,073,922
== ============== =====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
RANGE OF MORTGAGE RATES (%) BALANCE LTV RATIO MATURITY* (MOS.)* RATIO RATE
- ------------------------------ -------------- -------------- -------------- ---------- ----------- ----------
4.260 - 5.249 ................ $119,298,859 70.8% 60.8% 108 1.82x 4.843%
5.250 - 5.499 ................ $ 82,000,000 67.4% 57.8% 112 1.54x 5.342%
5.500 - 5.749 ................ $ 35,000,000 71.5% 61.9% 104 1.44x 5.620%
5.750 - 5.999 ................ $ 30,000,000 71.7% 66.0% 99 1.38x 5.848%
6.000 - 6.249 ................ $ 22,856,383 68.1% 52.3% 131 1.49x 6.157%
6.250 - 6.499 ................ $ 7,792,869 70.8% 56.4% 132 1.28x 6.391%
6.750 - 6.760 ................ $ 1,550,000 67.1% 0.0% 240 1.19x 6.760%
$119,298,859 70.0% 60.1% 109 1.63X 5.280%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-128
RANGE OF MORTGAGE RATES FOR LOAN GROUP 1 MORTGAGE LOANS AS OF THE CUT-OFF DATE
AGGREGATE % OF AVERAGE
NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF MORTGAGE RATES (%) LOANS BALANCE GROUP 1 BALANCE BALANCE
- ----------------------------- ----------- -------------- ----------------- --------------
4.300 - 5.249 ............... 38 $408,765,314 43.1% $10,756,982
5.250 - 5.499 ............... 12 234,040,792 24.7 $19,503,399
5.500 - 5.749 ............... 12 129,874,249 13.7 $10,822,854
5.750 - 5.999 ............... 6 98,198,451 10.4 $16,366,409
6.000 - 6.249 ............... 9 60,951,666 6.4 $ 6,772,407
6.250 - 6.499 ............... 3 14,685,001 1.5 $ 4,895,000
6.750 - 6.760 ............... 1 1,550,000 0.2 $ 1,550,000
-- ------------ -----
81 $948,065,473 100.0% $11,704,512
== ============ =====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
RANGE OF MORTGAGE RATES (%) BALANCE LTV RATIO MATURITY* (MOS.)* RATIO RATE
- ----------------------------- -------------- -------------- -------------- ---------- ----------- ----------
4.300 - 5.249 ............... $119,298,859 70.8% 59.9% 111 1.84x 4.884%
5.250 - 5.499 ............... $ 82,000,000 67.0% 58.3% 111 1.57x 5.342%
5.500 - 5.749 ............... $ 35,000,000 72.4% 62.5% 103 1.45x 5.615%
5.750 - 5.999 ............... $ 30,000,000 71.6% 66.0% 103 1.40x 5.838%
6.000 - 6.249 ............... $ 22,856,383 68.1% 52.3% 131 1.49x 6.157%
6.250 - 6.499 ............... $ 7,792,869 70.8% 56.4% 132 1.28x 6.391%
6.750 - 6.760 ............... $ 1,550,000 67.1% 0.0% 240 1.19x 6.760%
$119,298,859 70.0% 59.9% 111 1.64X 5.304%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-129
RANGE OF MORTGAGE RATES FOR LOAN GROUP 2 MORTGAGE LOANS AS OF THE CUT-OFF DATE
AGGREGATE % OF AVERAGE
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF MORTGAGE RATES (%) OF LOANS BALANCE GROUP 2 BALANCE BALANCE
- ----------------------------- ---------- -------------- ----------------- --------------
4.260 - 5.249 ............... 4 $ 51,631,626 44.9% $12,907,906
5.250 - 5.499 ............... 7 36,623,039 31.8 $ 5,231,863
5.500 - 5.749 ............... 2 14,600,000 12.7 $ 7,300,000
5.750 - 5.960 ............... 2 12,176,372 10.6 $ 6,088,186
- ------------ -----
15 $115,031,036 100.0% $ 7,668,736
== ============ =====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
RANGE OF MORTGAGE RATES (%) BALANCE LTV RATIO MATURITY* (MOS.)* RATIO RATE
- ----------------------------- -------------- -------------- -------------- ---------- ----------- ----------
4.260 - 5.249 ............... $18,200,000 70.7% 68.0% 80 1.72x 4.519%
5.250 - 5.499 ............... $ 9,300,000 70.0% 54.5% 114 1.33x 5.347%
5.500 - 5.749 ............... $ 9,400,000 64.1% 56.3% 119 1.31x 5.660%
5.750 - 5.960 ............... $ 9,890,069 72.2% 66.3% 69 1.26x 5.930%
$18,200,000 69.8% 62.0% 95 1.49X 5.077%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-130
RANGE OF ORIGINAL TERMS TO MATURITY OR ANTICIPATED REPAYMENT DATE
FOR ALL MORTGAGE LOANS AS OF THE CUT-OFF DATE
RANGE OF ORIGINAL TERMS TO AGGREGATE % OF AVERAGE
MATURITY OR ANTICIPATED NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
REPAYMENT DATE (MONTHS) OF LOANS BALANCE POOL BALANCE BALANCE
- ---------------------------- ---------- ----------------- -------------- --------------
0 - 60 .................. 17 $ 143,887,233 13.5% $ 8,463,955
61 - 84 .................. 11 134,251,626 12.6 $12,204,693
109 - 120 .................. 56 734,841,441 69.1 $13,122,169
169 - 180 .................. 7 26,408,474 2.5 $ 3,772,639
229 - 240 .................. 4 18,907,734 1.8 $ 4,726,934
253 - 264 .................. 1 4,800,000 0.5 $ 4,800,000
-- -------------- -----
96 $1,063,096,509 100.0% $11,073,922
== ============== =====
WTD. AVG.
STATED
REMAINING
RANGE OF ORIGINAL TERMS TO HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
MATURITY OR ANTICIPATED CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
REPAYMENT DATE (MONTHS) BALANCE LTV RATIO MATURITY* (MOS.)* RATIO RATE
- ---------------------------- -------------- -------------- -------------- ---------- ----------- ----------
0 - 60 .................. $ 35,000,000 78.3% 76.2% 59 1.65x 4.823%
61 - 84 .................. $ 58,500,000 76.1% 71.7% 82 1.47x 5.369%
109 - 120 .................. $119,298,859 67.9% 58.2% 117 1.66x 5.337%
169 - 180 .................. $ 8,000,000 54.0% 21.6% 179 1.58x 5.573%
229 - 240 .................. $ 10,973,122 65.1% 0.1% 239 1.35x 5.272%
253 - 264 .................. $ 4,800,000 65.3% 0.0% 264 1.33x 6.030%
$119,298,859 70.0% 60.1% 109 1.63X 5.280%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-131
RANGE OF ORIGINAL TERMS TO MATURITY OR ANTICIPATED REPAYMENT DATE
FOR LOAN GROUP 1 MORTGAGE LOANS AS OF THE CUT-OFF DATE
RANGE OF ORIGINAL TERMS TO AGGREGATE % OF AVERAGE
MATURITY OR ANTICIPATED NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
REPAYMENT DATE (MONTHS) OF LOANS BALANCE GROUP 1 BALANCE BALANCE
- ---------------------------- ---------- -------------- ----------------- --------------
0 - 60 ..................... 12 $ 96,770,000 10.2% $ 8,064,167
61 - 84 .................... 10 131,820,000 13.9 $13,182,000
109 - 120 .................. 48 673,344,720 71.0 $14,028,015
169 - 180 .................. 6 22,423,018 2.4 $ 3,737,170
229 - 240 .................. 4 18,907,734 2.0 $ 4,726,934
253 - 264 .................. 1 4,800,000 0.5 $ 4,800,000
-- ------------ -----
81 $948,065,473 100.0% $11,704,512
== ============ =====
WTD. AVG.
STATED
REMAINING
RANGE OF ORIGINAL TERMS TO HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
MATURITY OR ANTICIPATED CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
REPAYMENT DATE (MONTHS) BALANCE LTV RATIO MATURITY* (MOS.)* RATIO RATE
- ---------------------------- -------------- -------------- -------------- ---------- ----------- ----------
0 - 60 ..................... $ 35,000,000 79.8% 78.7% 59 1.84x 4.792%
61 - 84 .................... $ 58,500,000 76.1% 71.7% 82 1.48x 5.374%
109 - 120 .................. $119,298,859 68.1% 58.1% 117 1.66x 5.350%
169 - 180 .................. $ 8,000,000 53.3% 25.5% 179 1.65x 5.589%
229 - 240 .................. $ 10,973,122 65.1% 0.1% 239 1.35x 5.272%
253 - 264 .................. $ 4,800,000 65.3% 0.0% 264 1.33x 6.030%
$119,298,859 70.0% 59.9% 111 1.64X 5.304%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-132
RANGE OF ORIGINAL TERMS TO MATURITY OR ANTICIPATED REPAYMENT DATE
FOR LOAN GROUP 2 MORTGAGE LOANS AS OF THE CUT-OFF DATE
% OF
RANGE OF ORIGINAL TERMS TO AGGREGATE CUT-OFF DATE AVERAGE
MATURITY OR ANTICIPATED NUMBER CUT-OFF DATE GROUP 2 CUT-OFF DATE
REPAYMENT DATE (MONTHS) OF LOANS BALANCE BALANCE BALANCE
- ---------------------------- ---------- -------------- -------------- --------------
0 - 60 ..................... 5 $ 47,117,233 41.0% $9,423,447
61 - 84 .................... 1 2,431,626 2.1 $2,431,626
109 - 120 .................. 8 61,496,721 53.5 $7,687,090
169 - 180 .................. 1 3,985,457 3.5 $3,985,457
- ------------ -----
15 $115,031,036 100.0% $7,668,736
== ============ =====
WTD. AVG.
STATED
REMAINING
RANGE OF ORIGINAL TERMS TO HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
MATURITY OR ANTICIPATED CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
REPAYMENT DATE (MONTHS) BALANCE LTV RATIO MATURITY* (MOS.)* RATIO RATE
- ---------------------------- -------------- -------------- -------------- ---------- ----------- ----------
0 - 60 ..................... $17,000,000 75.1% 71.1% 58 1.24x 4.886%
61 - 84 .................... $ 2,431,626 78.4% 69.8% 81 1.25x 5.070%
109 - 120 .................. $18,200,000 66.2% 58.8% 118 1.71x 5.197%
169 - 180 .................. $ 3,985,457 57.9% 0.0% 179 1.16x 5.480%
$18,200,000 69.8% 62.0% 95 1.49X 5.077%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
RANGE OF REMAINING TERMS TO MATURITY OR ANTICIPATED REPAYMENT DATE
FOR ALL MORTGAGE LOANS AS OF THE CUT-OFF DATE
RANGE OF REMAINING TERMS TO AGGREGATE % OF AVERAGE
MATURITY OR ANTICIPATED NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
REPAYMENT DATE (MONTHS) OF LOANS BALANCE POOL BALANCE BALANCE
- ----------------------------- ---------- ----------------- -------------- --------------
0 - 60 ................... 17 $ 143,887,233 13.5% $ 8,463,955
61 - 84 ................... 11 134,251,626 12.6 $12,204,693
109 - 120 ................... 56 734,841,441 69.1 $13,122,169
169 - 180 ................... 7 26,408,474 2.5 $ 3,772,639
229 - 240 ................... 4 18,907,734 1.8 $ 4,726,934
253 - 264 ................... 1 4,800,000 0.5 $ 4,800,000
-- -------------- -----
96 $1,063,096,509 100.0% $11,073,922
== ============== =====
WTD. AVG.
STATED
REMAINING
RANGE OF REMAINING TERMS TO HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
MATURITY OR ANTICIPATED CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
REPAYMENT DATE (MONTHS) BALANCE LTV RATIO MATURITY* (MOS.)* RATIO RATE
- ----------------------------- -------------- -------------- -------------- ---------- ----------- ----------
0 - 60 ................... $ 35,000,000 78.3% 76.2% 59 1.65x 4.823%
61 - 84 ................... $ 58,500,000 76.1% 71.7% 82 1.47x 5.369%
109 - 120 ................... $119,298,859 67.9% 58.2% 117 1.66x 5.337%
169 - 180 ................... $ 8,000,000 54.0% 21.6% 179 1.58x 5.573%
229 - 240 ................... $ 10,973,122 65.1% 0.1% 239 1.35x 5.272%
253 - 264 ................... $ 4,800,000 65.3% 0.0% 264 1.33x 6.030%
$119,298,859 70.0% 60.1% 109 1.63X 5.280%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-133
RANGE OF REMAINING TERMS TO MATURITY OR ANTICIPATED REPAYMENT DATE
FOR LOAN GROUP 1 MORTGAGE LOANS AS OF THE CUT-OFF DATE
% OF
RANGE OF REMAINING TERMS TO AGGREGATE CUT-OFF DATE AVERAGE
MATURITY OR ANTICIPATED NUMBER OF CUT-OFF DATE GROUP 1 CUT-OFF DATE
REPAYMENT DATE (MONTHS) LOANS BALANCE BALANCE BALANCE
- ----------------------------- ----------- -------------- -------------- --------------
0 - 60 ...................... 12 $ 96,770,000 10.2% $ 8,064,167
61 - 84 ..................... 10 131,820,000 13.9 $13,182,000
109 - 120 ................... 48 673,344,720 71.0 $14,028,015
169 - 180 ................... 6 22,423,018 2.4 $ 3,737,170
229 - 240 ................... 4 18,907,734 2.0 $ 4,726,934
253 - 264 ................... 1 4,800,000 0.5 $ 4,800,000
-- ------------ -----
81 $948,065,473 100.0% $11,704,512
== ============ =====
WTD. AVG.
STATED
REMAINING
RANGE OF REMAINING TERMS TO HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
MATURITY OR ANTICIPATED CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
REPAYMENT DATE (MONTHS) BALANCE LTV RATIO MATURITY* (MOS.)* RATIO RATE
- ----------------------------- -------------- -------------- -------------- ---------- ----------- ----------
0 - 60 ...................... $ 35,000,000 79.8% 78.7% 59 1.84x 4.792%
61 - 84 ..................... $ 58,500,000 76.1% 71.7% 82 1.48x 5.374%
109 - 120 ................... $119,298,859 68.1% 58.1% 117 1.66x 5.350%
169 - 180 ................... $ 8,000,000 53.3% 25.5% 179 1.65x 5.589%
229 - 240 ................... $ 10,973,122 65.1% 0.1% 239 1.35x 5.272%
253 - 264 ................... $ 4,800,000 65.3% 0.0% 264 1.33x 6.030%
$119,298,859 70.0% 59.9% 111 1.64X 5.304%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
RANGE OF REMAINING TERMS TO MATURITY OR ANTICIPATED REPAYMENT DATE
FOR LOAN GROUP 2 MORTGAGE LOANS AS OF THE CUT-OFF DATE
% OF
RANGE OF REMAINING TERMS TO AGGREGATE CUT-OFF DATE AVERAGE
MATURITY OR ANTICIPATED NUMBER OF CUT-OFF DATE GROUP 2 CUT-OFF DATE
REPAYMENT DATE (MONTHS) LOANS BALANCE BALANCE BALANCE
- ----------------------------- ----------- -------------- -------------- --------------
0 - 60 ...................... 5 $ 47,117,233 41.0% $9,423,447
61 - 84 ..................... 1 2,431,626 2.1 $2,431,626
109 - 120 ................... 8 61,496,721 53.5 $7,687,090
169 - 180 ................... 1 3,985,457 3.5 $3,985,457
- ------------ -----
15 $115,031,036 100.0% $7,668,736
== ============ =====
WTD. AVG.
STATED
REMAINING
RANGE OF REMAINING TERMS TO HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
MATURITY OR ANTICIPATED CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
REPAYMENT DATE (MONTHS) BALANCE LTV RATIO MATURITY* (MOS.)* RATIO RATE
- ----------------------------- -------------- -------------- -------------- ---------- ----------- ----------
0 - 60 ...................... $17,000,000 75.1% 71.1% 58 1.24x 4.886%
61 - 84 ..................... $ 2,431,626 78.4% 69.8% 81 1.25x 5.070%
109 - 120 ................... $18,200,000 66.2% 58.8% 118 1.71x 5.197%
169 - 180 ................... $ 3,985,457 57.9% 0.0% 179 1.16x 5.480%
$18,200,000 69.8% 62.0% 95 1.49X 5.077%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-134
RANGE OF REMAINING AMORTIZATION TERMS FOR ALL MORTGAGE LOANS
AS OF THE CUT-OFF DATE
RANGE OF AGGREGATE % OF AVERAGE
REMAINING AMORTIZATION NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
TERMS (MONTHS)(1) LOANS BALANCE POOL BALANCE BALANCE
- ------------------------ ----------- ----------------- -------------- --------------
145 - 180 .............. 3 $ 14,575,697 1.4% $ 4,858,566
229 - 264 .............. 6 26,443,658 2.5 $ 4,407,276
265 - 300 .............. 10 47,197,458 4.4 $ 4,719,746
349 - 360 .............. 58 862,549,696 81.1 $14,871,546
Interest Only .......... 19 112,330,000 10.6 $ 5,912,105
-- -------------- -----
96 $1,063,096,509 100.0% $11,073,922
== ============== =====
WTD. AVG.
STATED
REMAINING
RANGE OF HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
REMAINING AMORTIZATION CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
TERMS (MONTHS)(1) BALANCE LTV RATIO MATURITY(2) (MOS.)(2) RATIO RATE
- ------------------------ -------------- -------------- -------------- ----------- ----------- ----------
145 - 180 .............. $ 8,000,000 38.2% 0.0% 180 1.80x 5.355%
229 - 264 .............. $ 10,973,122 64.8% 4.2% 231 1.33x 5.414%
265 - 300 .............. $ 8,985,982 63.1% 47.0% 125 1.77x 5.613%
349 - 360 .............. $119,298,859 70.7% 61.9% 108 1.54x 5.351%
Interest Only .......... $ 18,200,000 72.7% 72.7% 75 2.24x 4.551%
$119,298,859 70.0% 60.1% 109 1.63X 5.280%
The weighted average remaining amortization term for all Mortgage Loans
(excluding non-amortizing loans) is 350 months.
- -------
(1) The remaining amortization term shown for any Mortgage Loan that is
interest-only for part of its term does not include the number of months
during which it is interest-only, but rather is the number of months
remaining at the end of such interest-only period.
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-135
RANGE OF REMAINING AMORTIZATION TERMS FOR LOAN GROUP 1 MORTGAGE LOANS
AS OF THE CUT-OFF DATE
% OF
RANGE OF AGGREGATE CUT-OFF DATE AVERAGE
REMAINING AMORTIZATION NUMBER CUT-OFF DATE GROUP 1 CUT-OFF DATE
TERMS (MONTHS)(1) OF LOANS BALANCE BALANCE BALANCE
- -------------------------- ---------- -------------- -------------- --------------
145 - 180 ................ 2 $ 10,590,240 1.1% $ 5,295,120
229 - 264 ................ 5 23,707,734 2.5 $ 4,741,547
265 - 300 ................ 9 45,670,295 4.8 $ 5,074,477
349 - 360 ................ 47 773,967,203 81.6 $16,467,387
Interest Only ............ 18 94,130,000 9.9 $ 5,229,444
-- ------------ -----
81 $948,065,473 100.0% $11,704,512
== ============ =====
WTD. AVG.
STATED
REMAINING
RANGE OF HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
REMAINING AMORTIZATION CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
TERMS (MONTHS)(1) BALANCE LTV RATIO MATURITY(2) (MOS.)(2) RATIO RATE
- -------------------------- -------------- -------------- -------------- ----------- ----------- ----------
145 - 180 ................ $ 8,000,000 30.8% 0.1% 180 2.04x 5.307%
229 - 264 ................ $ 10,973,122 65.1% 0.1% 244 1.34x 5.426%
265 - 300 ................ $ 8,985,982 62.9% 46.4% 127 1.78x 5.623%
349 - 360 ................ $119,298,859 70.4% 61.4% 110 1.57x 5.373%
Interest Only ............ $ 12,725,000 75.4% 75.4% 67 2.16x 4.550%
$119,298,859 70.0% 59.9% 111 1.64X 5.304%
The weighted average remaining amortization term for all Loan Group 1
Mortgage Loans (excluding non-amortizing loans) is 350 months.
- -------
(1) The remaining amortization term shown for any Mortgage Loan that is
interest-only for part of its term does not include the number of months
during which it is interest-only, but rather is the number of months
remaining at the end of such interest-only period.
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
RANGE OF REMAINING AMORTIZATION TERMS FOR LOAN GROUP 2 MORTGAGE LOANS
AS OF THE CUT-OFF DATE
% OF
RANGE OF AGGREGATE CUT-OFF DATE AVERAGE
REMAINING AMORTIZATION NUMBER CUT-OFF DATE GROUP 2 CUT-OFF DATE
TERMS (MONTHS)(1) OF LOANS BALANCE BALANCE BALANCE
- -------------------------- ---------- -------------- -------------- --------------
145 - 180 ................ 1 $ 3,985,457 3.5% $ 3,985,457
229 - 264 ................ 1 2,735,923 2.4 $ 2,735,923
265 - 300 ................ 1 1,527,164 1.3 $ 1,527,164
349 - 360 ................ 11 88,582,492 77.0 $ 8,052,954
Interest Only ............ 1 18,200,000 15.8 $18,200,000
-- ------------ -----
15 $115,031,036 100.0% $ 7,668,736
== ============ =====
WTD. AVG.
STATED
REMAINING
RANGE OF HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
REMAINING AMORTIZATION CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
TERMS (MONTHS)(1) BALANCE LTV RATIO MATURITY(2) (MOS.)(2) RATIO RATE
- -------------------------- -------------- -------------- -------------- ----------- ----------- ----------
145 - 180 ................ $ 3,985,457 57.9% 0.0% 179 1.16x 5.480%
229 - 264 ................ $ 2,735,923 62.0% 39.9% 117 1.22x 5.310%
265 - 300 ................ $ 1,527,164 69.4% 63.1% 52 1.43x 5.290%
349 - 360 ................ $17,000,000 72.8% 66.2% 86 1.28x 5.154%
Interest Only ............ $18,200,000 58.7% 58.7% 118 2.63x 4.560%
$18,200,000 69.8% 62.0% 95 1.49X 5.077%
The weighted average remaining amortization term for all Loan Group 2
Mortgage Loans (excluding non-amortizing loans) is 348 months.
- -------
(1) The remaining amortization term shown for any Mortgage Loan that is
interest-only for part of its term does not include the number of months
during which it is interest-only, but rather is the number of months
remaining at the end of such interest-only period.
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-136
AMORTIZATION TYPES FOR ALL MORTGAGE LOANS
AGGREGATE % OF AVERAGE
NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
AMORTIZATION TYPES LOANS BALANCE POOL BALANCE BALANCE
- ----------------------------- ----------- ----------------- -------------- --------------
Amortizing Balloon .......... 31 $ 321,209,311 30.2% $10,361,591
Interest-only, Amortizing
ARD(2) ..................... 11 280,670,000 26.4 $25,515,455
Amortizing ARD .............. 19 160,743,766 15.1 $ 8,460,198
Interest-only, Amortizing
Balloon(2) ................. 8 149,860,000 14.1 $18,732,500
Interest-only, ARD .......... 18 99,605,000 9.4 $ 5,533,611
Fully Amortizing(3) ......... 8 38,283,431 3.6 $ 4,785,429
Interest-only ............... 1 12,725,000 1.2 $12,725,000
-- -------------- -----
96 $1,063,096,509 100.0% $11,073,922
== ============== =====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
AMORTIZATION TYPES BALANCE LTV RATIO MATURITY(1) (MOS.)(1) RATIO RATE
- ----------------------------- -------------- -------------- -------------- ----------- ----------- ----------
Amortizing Balloon .......... $119,298,859 67.2% 55.3% 117 1.74x 5.359%
Interest-only, Amortizing
ARD(2) ..................... $ 82,000,000 70.2% 65.0% 99 1.45x 5.284%
Amortizing ARD .............. $ 32,563,845 70.7% 58.8% 118 1.55x 5.597%
Interest-only, Amortizing
Balloon(2) ................. $ 57,500,000 76.6% 68.5% 100 1.36x 5.274%
Interest-only, ARD .......... $ 18,200,000 73.4% 73.4% 74 2.32x 4.379%
Fully Amortizing(3) ......... $ 10,973,122 54.9% 0.1% 220 1.52x 5.399%
Interest-only ............... $ 12,725,000 67.2% 67.2% 83 1.60x 5.900%
$119,298,859 70.0% 60.1% 109 1.63X 5.280%
- -------
(1) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
(2) These Mortgage Loans require payments of interest only for a period of 12
to 60 months from origination prior to the commencement of payments of
principal and interest.
(3) Includes 1 Mortgage Loan that substantially amortizes prior to its
anticipated repayment date but may enter a period of hyper-amortization
after such date with respect to any remaining balance.
S-137
AMORTIZATION TYPES FOR LOAN GROUP 1 MORTGAGE LOANS
AGGREGATE % OF AVERAGE
NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
AMORTIZATION TYPES LOANS BALANCE GROUP 1 BALANCE BALANCE
- ----------------------------- ----------- -------------- ----------------- --------------
Amortizing Balloon .......... 26 $304,453,800 32.1% $11,709,762
Interest-only, Amortizing
ARD (2) .................... 8 240,370,000 25.4 $30,046,250
Amortizing ARD .............. 18 150,853,698 15.9 $ 8,380,761
Interest-only, Amortizing
Balloon (2) ................ 4 123,960,000 13.1 $30,990,000
Interest-only, ARD .......... 17 81,405,000 8.6 $ 4,788,529
Fully Amortizing (3) ........ 7 34,297,974 3.6 $ 4,899,711
Interest-only, Balloon ...... 1 12,725,000 1.3 $12,725,000
-- ------------ -----
81 $948,065,473 100.0% $11,704,512
== ============ =====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
AMORTIZATION TYPES BALANCE LTV RATIO MATURITY(1) (MOS.)(1) RATIO RATE
- ----------------------------- -------------- -------------- -------------- ----------- ----------- ----------
Amortizing Balloon .......... $119,298,859 67.0% 55.3% 118 1.76x 5.360%
Interest-only, Amortizing
ARD (2) .................... $ 82,000,000 69.1% 63.9% 104 1.49x 5.392%
Amortizing ARD .............. $ 32,563,845 70.7% 58.3% 122 1.57x 5.574%
Interest-only, Amortizing
Balloon (2) ................ $ 57,500,000 78.2% 70.1% 98 1.37x 5.217%
Interest-only, ARD .......... $ 11,946,000 76.7% 76.7% 65 2.25x 4.339%
Fully Amortizing (3) ........ $ 10,973,122 54.6% 0.1% 224 1.56x 5.389%
Interest-only, Balloon ...... $ 12,725,000 67.2% 67.2% 83 1.60x 5.900%
$119,298,859 70.0% 59.9% 111 1.64X 5.304%
- -------
(1) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
(2) These Mortgage Loans require payments of interest only for a period of 12
to 60 months from origination prior to the commencement of payments of
principal and interest.
(3) Includes 1 Mortgage Loan that substantially amortizes prior to its
anticipated repayment date but may enter a period of hyper-amortization
after such date with respect to any remaining balance.
S-138
AMORTIZATION TYPES FOR LOAN GROUP 2 MORTGAGE LOANS
AGGREGATE % OF AVERAGE
NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
AMORTIZATION TYPES LOANS BALANCE GROUP 2 BALANCE BALANCE
- ---------------------------- ----------- -------------- ----------------- --------------
Interest-only, Amortizing
ARD (2) ................... 3 $ 40,300,000 35.0% $13,433,333
Interest-only, Amortizing
Balloon (2) ............... 4 25,900,000 22.5 $ 6,475,000
Interest-only, ARD ......... 1 18,200,000 15.8 $18,200,000
Amortizing Balloon ......... 5 16,755,511 14.6 $ 3,351,102
Amortizing ARD ............. 1 9,890,069 8.6 $ 9,890,069
Fully Amortizing ........... 1 3,985,457 3.5 $ 3,985,457
- ------------ -----
15 $115,031,036 100.0% $ 7,668,736
== ============ =====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
AMORTIZATION TYPES BALANCE LTV RATIO MATURITY(1) (MOS.)(1) RATIO RATE
- ---------------------------- -------------- -------------- -------------- ----------- ----------- ----------
Interest-only, Amortizing
ARD (2) ................... $17,000,000 76.9% 71.7% 72 1.23x 4.641%
Interest-only, Amortizing
Balloon (2) ............... $ 9,400,000 68.6% 60.8% 108 1.32x 5.549%
Interest-only, ARD ......... $18,200,000 58.7% 58.7% 118 2.63x 4.560%
Amortizing Balloon ......... $ 7,774,495 69.0% 56.8% 105 1.41x 5.340%
Amortizing ARD ............. $ 9,890,069 70.5% 66.0% 59 1.21x 5.960%
Fully Amortizing ........... $ 3,985,457 57.9% 0.0% 179 1.16x 5.480%
$18,200,000 69.8% 62.0% 95 1.49X 5.077%
- -------
(1) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
(2) These Mortgage Loans require payments of interest only for a period of 12
to 24 months from origination prior to the commencement of payments of
principal and interest.
S-139
RANGE OF OCCUPANCY RATES FOR ALL MORTGAGE LOANS
AGGREGATE % OF AVERAGE
NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF OCCUPANCY RATES (%)(1) LOANS BALANCE POOL BALANCE BALANCE
- ----------------------------------- ----------- ----------------- -------------- --------------
65.00 -- 69.99 .................. 1 $ 3,192,070 0.3% $ 3,192,070
70.00 -- 74.99 .................. 1 11,946,000 1.1 $11,946,000
75.00 -- 79.99 .................. 2 11,683,786 1.1 $ 5,841,893
80.00 -- 84.99 .................. 3 11,263,382 1.1 $ 3,754,461
85.00 -- 89.99 .................. 14 274,117,659 25.8 $19,579,833
90.00 -- 94.99 .................. 21 164,350,217 15.5 $ 7,826,201
95.00 -- 99.99 .................. 18 346,338,459 32.6 $19,241,025
100.00 -- 100.00 .................. 33 217,919,699 20.5 $ 6,603,627
-- -------------- ----
93 $1,040,811,273 97.9% $11,191,519
== ============== ====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
RANGE OF OCCUPANCY RATES (%)(1) BALANCE LTV RATIO MATURITY(2) (MOS.) (2) RATIO RATE
- ----------------------------------- -------------- -------------- -------------- ------------ ----------- ----------
65.00 -- 69.99 .................. $ 3,192,070 44.0% 0.7% 239 1.88x 4.840%
70.00 -- 74.99 .................. $ 11,946,000 79.9% 79.9% 59 2.06x 4.300%
75.00 -- 79.99 .................. $ 6,292,733 65.9% 52.6% 119 1.69x 5.160%
80.00 -- 84.99 .................. $ 5,040,219 77.5% 71.2% 84 1.60x 5.079%
85.00 -- 89.99 .................. $119,298,859 71.8% 62.6% 101 1.78x 5.169%
90.00 -- 94.99 .................. $ 17,000,000 72.3% 64.4% 99 1.43x 5.345%
95.00 -- 99.99 .................. $ 82,000,000 68.9% 58.3% 115 1.58x 5.218%
100.00 -- 100.00 .................. $ 22,856,383 68.3% 57.7% 119 1.58x 5.522%
$119,298,859 70.2% 60.4% 109 1.62X 5.275%
- -------
(1) Occupancy rates were calculated based upon rent rolls made available to
the applicable Mortgage Loan Seller by the related borrowers as of the
rent roll date set forth on Annex A-1 to this prospectus supplement, but
excludes 3 Mortgage Loans secured by hospitality properties representing
2.1% of the Cut-Off Date Pool Balance.
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-140
RANGE OF OCCUPANCY RATES FOR LOAN GROUP 1 MORTGAGE LOANS
% OF
AGGREGATE CUT-OFF DATE AVERAGE
NUMBER OF CUT-OFF DATE GROUP 1 CUT-OFF DATE
RANGE OF OCCUPANCY RATES (%) (1) LOANS BALANCE BALANCE BALANCE
- ------------------------------------- ----------- -------------- -------------- --------------
65.00 - 69.99 ..................... 1 $ 3,192,070 0.3% $ 3,192,070
70.00 - 74.99 ..................... 1 11,946,000 1.3 $11,946,000
75.00 - 79.99 ..................... 2 11,683,786 1.2 $ 5,841,893
80.00 - 84.99 ..................... 2 9,736,219 1.0 $ 4,868,109
85.00 - 89.99 ..................... 11 259,795,433 27.4 $23,617,767
90.00 - 94.99 ..................... 14 103,785,654 10.9 $ 7,413,261
95.00 - 99.99 ..................... 14 307,721,376 32.5 $21,980,098
100.00 - 100.00 ..................... 33 217,919,699 23.0 $ 6,603,627
-- ------------ ----
78 $925,780,237 97.6% $11,868,977
== ============ ====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
RANGE OF OCCUPANCY RATES (%) (1) BALANCE LTV RATIO MATURITY(2) (MOS.) (2) RATIO RATE
- ------------------------------------- -------------- -------------- -------------- ------------ ----------- ----------
65.00 - 69.99 ..................... $ 3,192,070 44.0% 0.7% 239 1.88x 4.840%
70.00 - 74.99 ..................... $ 11,946,000 79.9% 79.9% 59 2.06x 4.300%
75.00 - 79.99 ..................... $ 6,292,733 65.9% 52.6% 119 1.69x 5.160%
80.00 - 84.99 ..................... $ 5,040,219 78.7% 72.4% 90 1.63x 5.045%
85.00 - 89.99 ..................... $119,298,859 71.7% 62.6% 100 1.81x 5.158%
90.00 - 94.99 ..................... $ 16,500,000 73.3% 64.7% 106 1.51x 5.359%
95.00 - 99.99 ..................... $ 82,000,000 69.1% 58.2% 116 1.54x 5.298%
100.00 - 100.00 ..................... $ 22,856,383 68.3% 57.7% 119 1.58x 5.522%
$119,298,859 70.2% 60.2% 111 1.63X 5.299%
- -------
(1) Occupancy rates were calculated based upon rent rolls made available to
the applicable Mortgage Loan Seller by the related borrowers as of the
rent roll date set forth on Annex A-1 to this prospectus supplement, but
excludes 3 Mortgage Loans secured by hospitality properties representing
2.4% of the Cut-Off Date Group 1 Balance.
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-141
RANGE OF OCCUPANCY RATES FOR LOAN GROUP 2 MORTGAGE LOANS
% OF
AGGREGATE CUT-OFF DATE AVERAGE
NUMBER OF CUT-OFF DATE GROUP 2 CUT-OFF DATE
RANGE OF OCCUPANCY RATES (%)(1) LOANS BALANCE BALANCE BALANCE
- --------------------------------- ----------- -------------- -------------- --------------
80.00 - 89.99 ................... 4 $ 15,849,390 13.8% $3,962,347
90.00 - 94.99 ................... 7 60,564,564 52.7 $8,652,081
95.00 - 99.17 ................... 4 38,617,082 33.6 $9,654,271
- ------------ -----
15 $115,031,036 100.0% $7,668,736
== ============ =====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
RANGE OF OCCUPANCY RATES (%)(1) BALANCE LTV RATIO MATURITY(2) (MOS.) (2) RATIO RATE
- --------------------------------- -------------- -------------- -------------- ------------ ----------- ----------
80.00 - 89.99 ................... $ 9,300,000 73.4% 61.5% 111 1.29x 5.355%
90.00 - 94.99 ................... $17,000,000 70.4% 63.9% 87 1.29x 5.322%
95.00 - 99.17 ................... $18,200,000 67.3% 59.3% 101 1.89x 4.578%
$18,200,000 69.8% 62.0% 95 1.49X 5.077%
- -------
(1) Occupancy rates were calculated based upon rent rolls made available to
the applicable Mortgage Loan Seller by the related borrowers as of the
rent roll date set forth on Annex A-1 to this prospectus supplement.
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-142
PERCENTAGE OF MORTGAGE POOL BY PREPAYMENT RESTRICTION(1)(2)(3)
PREPAYMENT RESTRICTION JUL-2004 JUL-2005 JUL-2006 JUL-2007 JUL-2008
- --------------------------------------------------------------------------------------------------------------------------
Lockout ..................................... 99.14% 99.15% 41.17% 28.86% 2.33%
Defeasance .................................. 0.00 0.00 56.18 67.45 88.64
Yield Maintenance ........................... 0.86 0.85 2.65 3.69 5.68
Prepayment Premium .......................... 0.00 0.00 0.00 0.00 0.00
Open ........................................ 0.00 0.00 0.00 0.00 3.34
- --------------------------------------------------------------------------------------------------------------------------
Total ....................................... 100.00% 100.00% 100.00% 100.00% 100.00%
- --------------------------------------------------------------------------------------------------------------------------
Total Beginning Balance as of the Cut-Off
Date (in millions) ......................... $ 1,063.10 $ 1,055.16 $ 1,046.06 $ 1,033.43 $ 1,020.07
- --------------------------------------------------------------------------------------------------------------------------
Percent of Cut-Off Date Pool Balance ........ 100.00% 99.25% 98.40% 97.21% 95.95%
- --------------------------------------------------------------------------------------------------------------------------
PREPAYMENT RESTRICTION JUL-2009 JUL-2010 JUL-2011 JUL-2012 JUL-2013 JUL-2014
- ------------------------------------------------------------------------------------------------------------------------------
Lockout ..................................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Defeasance .................................. 90.78 90.86 89.32 85.51 85.60 68.94
Yield Maintenance ........................... 9.22 9.14 10.68 10.58 10.47 31.06
Prepayment Premium .......................... 0.00 0.00 0.00 1.52 1.53 0.00
Open ........................................ 0.00 0.00 0.00 2.39 2.41 0.00
- ------------------------------------------------------------------------------------------------------------------------------
Total ....................................... 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ------------------------------------------------------------------------------------------------------------------------------
Total Beginning Balance as of the Cut-Off
Date (in millions) ......................... $ 865.06 $ 849.52 $ 706.66 $ 691.18 $ 674.75 $ 31.00
- ------------------------------------------------------------------------------------------------------------------------------
Percent of Cut-Off Date Pool Balance ........ 81.37% 79.91% 66.47% 65.02% 63.47% 2.92%
- ------------------------------------------------------------------------------------------------------------------------------
(1) Prepayment provisions in effect as a percentage of outstanding loan
balances as of the indicated date assuming no prepayments on the Mortgage
Loans (and assuming that an ARD Loan will be repaid in full on its
Anticipated Repayment Date), if any.
(2) Based upon the assumptions set forth in footnote (1) above, after July
2014, the outstanding loan balances represent less than 2.92% of the
Cut-Off Date Pool Balance.
(3) Assumes yield maintenance for 1 Mortgage Loan which has the option to
defease or pay yield maintenance.
S-143
PERCENTAGE OF LOAN GROUP 1 BY PREPAYMENT RESTRICTION(1)(2)(3)
PREPAYMENT RESTRICTION JUL-2004 JUL-2005 JUL-2006 JUL-2007 JUL-2008
- ----------------------------------------------------------------------------------------------------------
Lockout ............................ 99.04% 99.04% 35.82% 25.93% 1.05%
Defeasance ......................... 0.00 0.00 61.21 70.30 89.18
Yield Maintenance .................. 0.96 0.96 2.97 3.77 6.02
Prepayment Premium ................. 0.00 0.00 0.00 0.00 0.00
Open ............................... 0.00 0.00 0.00 0.00 3.75
- ----------------------------------------------------------------------------------------------------------
Total .............................. 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
Total Beginning Balance as of
the Cut-Off Date (in millions)..... $ 948.07 $ 940.71 $ 932.44 $ 921.39 $ 909.69
- ----------------------------------------------------------------------------------------------------------
Percent of Cut-Off Date Group 1
Balance ........................... 100.00% 99.22% 98.35% 97.19% 95.95%
- ----------------------------------------------------------------------------------------------------------
PREPAYMENT RESTRICTION JUL-2009 JUL-2010 JUL-2011 JUL-2012 JUL-2013 JUL-2014
- -----------------------------------------------------------------------------------------------------------------------
Lockout ............................ 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Defeasance ......................... 92.16 92.23 90.82 86.63 86.69 72.92
Yield Maintenance .................. 7.84 7.77 9.18 9.10 9.01 27.08
Prepayment Premium ................. 0.00 0.00 0.00 1.67 1.67 0.00
Open ............................... 0.00 0.00 0.00 2.61 2.63 0.00
- -----------------------------------------------------------------------------------------------------------------------
Total .............................. 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- -----------------------------------------------------------------------------------------------------------------------
Total Beginning Balance as of
the Cut-Off Date (in millions)..... $ 800.89 $ 786.37 $ 646.74 $ 632.35 $ 617.06 $ 29.31
- -----------------------------------------------------------------------------------------------------------------------
Percent of Cut-Off Date Group 1
Balance ........................... 84.48% 82.94% 68.22% 66.70% 65.09% 3.09%
- -----------------------------------------------------------------------------------------------------------------------
(1) Prepayment provisions in effect as a percentage of outstanding loan
balances as of the indicated date assuming no prepayments on the Mortgage
Loans (and assuming that an ARD Loan will be repaid in full on its
Anticipated Repayment Date), if any.
(2) Based upon the assumptions set forth in footnote (1) above, after July
2014, the outstanding loan balances represent less than 3.09% of the
Cut-Off Date Group 1 Balance.
(3) Assumes yield maintenance for 1 Mortgage Loan which has the option to
defease or pay yield maintenance.
S-144
PERCENTAGE OF LOAN GROUP 2 BY PREPAYMENT RESTRICTION(1)(2)
PREPAYMENT RESTRICTION JUL-2004 JUL-2005 JUL-2006 JUL-2007 JUL-2008
- ------------------------------------------------------------------------------------------------------
Lockout .......................... 100.00% 100.00% 85.09% 52.90% 12.88%
Defeasance ....................... 0.00 0.00 14.91 44.04 84.21
Yield Maintenance ................ 0.00 0.00 0.00 3.06 2.91
Prepayment Premium ............... 0.00 0.00 0.00 0.00 0.00
Open ............................. 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------
Total ............................ 100.00% 100.00% 100.00% 100.00% 100.00%
- ------------------------------------------------------------------------------------------------------
Total Beginning Balance as of
the Cut-Off Date (in millions)... $ 115.03 $ 114.45 $ 113.61 $ 112.03 $ 110.38
- ------------------------------------------------------------------------------------------------------
Percent of Cut-Off Date Group 2
Balance ......................... 100.00% 99.50% 98.77% 97.39% 95.96%
- ------------------------------------------------------------------------------------------------------
PREPAYMENT RESTRICTION JUL-2009 JUL-2010 JUL-2011 JUL-2012 JUL-2013 JUL-2014
- ----------------------------------------------------------------------------------------------------------------------
Lockout .......................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Defeasance ....................... 73.49 73.77 73.15 73.50 73.89 0.00
Yield Maintenance ................ 26.51 26.23 26.85 26.50 26.11 100.00
Prepayment Premium ............... 0.00 0.00 0.00 0.00 0.00 0.00
Open ............................. 0.00 0.00 0.00 0.00 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------
Total ............................ 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------------------
Total Beginning Balance as of
the Cut-Off Date (in millions)... $ 64.17 $ 63.15 $ 59.92 $ 58.84 $ 57.69 $ 1.69
- ----------------------------------------------------------------------------------------------------------------------
Percent of Cut-Off Date Group 2
Balance ......................... 55.79% 54.90% 52.09% 51.15% 50.15% 1.47%
- ----------------------------------------------------------------------------------------------------------------------
(1) Prepayment provisions in effect as a percentage of outstanding loan
balances as of the indicated date assuming no prepayments on the Mortgage
Loans (and assuming that an ARD Loan will be repaid in full on its
Anticipated Repayment Date), if any.
(2) Based upon the assumptions set forth in footnote (1) above, after July
2014, the outstanding loan balances represent less than 1.47% of the
Cut-Off Date Group 2 Balance.
S-145
TWENTY LARGEST MORTGAGE LOANS
The following table and summaries describe the twenty largest Mortgage
Loans or groups of cross-collateralized mortgage loans in the Mortgage Pool by
Cut-Off Date Balance:
NUMBER OF % OF
MORTGAGE APPLICABLE
LOANS/ % OF CUT-OFF
NUMBER OF CUT-OFF INITIAL DATE LOAN
MORTGAGE MORTGAGED LOAN DATE POOL GROUP
LOAN NAME LOAN SELLER PROPERTIES GROUP BALANCE(1) BALANCE BALANCE
- ----------------------------- ------------- ------------ ------- --------------- --------- ------------
Ernst & Young Plaza ......... Eurohypo 1/1 1 $119,298,859 11.2% 12.6%
11 Madison Avenue ........... Wachovia 1/1 1 82,000,000 7.7 8.6%
Extra Space Self Storage
Portfolio .................. Wachovia 11/11 1 61,770,000 5.8 6.5%
1130 Connecticut Avenue ..... Wachovia 1/1 1 58,500,000 5.5 6.2%
Crossroads Plaza ............ Citigroup 1/1 1 57,500,000 5.4 6.1%
24 West 57th Street ......... Wachovia 1/1 1 35,000,000 3.3 3.7%
Eastdale Mall ............... Wachovia 1/1 1 32,563,845 3.1 3.4%
One Riverview Square ........ Artesia 1/1 1 30,000,000 2.8 3.2%
Pointe at Wellington ........ Wachovia 1/1 1 22,856,383 2.1 2.4%
Hampton Bays Town
Center ..................... Wachovia 1/1 1 20,500,000 1.9 2.2%
----- ------------ ----
SUBTOTAL/WTD. AVG .......... 20/20 $519,989,087 48.9%
===== ============ ====
Cole Company Portfolio ...... Wachovia 6/6 1 $ 19,635,000 1.8% 2.1%
Highland Pinetree
Apartments ................. Wachovia 1/1 2 18,200,000 1.7 15.8%
Cowesset Corners ............ Wachovia 1/1 1 17,430,000 1.6 1.8%
Montelena Apartments ........ Wachovia 1/1 2 17,000,000 1.6 14.8%
Glenridge Pointe Office
Buildings .................. Wachovia 1/1 1 16,500,000 1.6 1.7%
ConAgra Distribution
Facility ................... Wachovia 1/1 1 16,400,000 1.5 1.7%
Broadstone Heights
Apartments ................. Wachovia 1/1 1 15,250,000 1.4 1.6%
Greenpoint Industrial
Center ..................... Wachovia 1/1 1 14,983,705 1.4 1.6%
Highridge Centre ............ Citigroup 1/1 1 14,466,761 1.4 1.5%
The Lake Apartments ......... Wachovia 1/1 2 14,000,000 1.3 12.2%
----- ------------ ----
SUBTOTAL/WTD. AVG .......... 15/15 $163,865,466 15.4%
----- ------------ ----
TOTAL/WTD. AVG. ............ 35/35 $683,854,553 64.3%
===== ============ ====
WEIGHTED
AVERAGE
WEIGHTED LTV WEIGHTED
LOAN AVERAGE RATIO AT AVERAGE
BALANCE WEIGHTED CUT-OFF MATURITY NET
PROPERTY PER SF/ AVERAGE DATE OR MORTGAGE
LOAN NAME TYPE UNIT DSCR LTV RATIO ARD RATE
- ----------------------------- ------------------------------- ----------- ---------- ----------- ---------- -----------
Ernst & Young Plaza ......... Office - CBD $ 96 2.13x 63.8% 52.9% 5.068%
11 Madison Avenue ........... Office - CBD $ 164 1.81x 54.7% 50.6% 5.304%
Extra Space Self Storage
Portfolio .................. Self Storage $ 8,222 2.19x 80.0% 80.0% 4.300%
1130 Connecticut Avenue ..... Office - CBD $ 267 1.22x 79.7% 73.8% 5.290%
Crossroads Plaza ............ Retail - Anchored $ 121 1.35x 79.3% 68.5% 4.920%
24 West 57th Street ......... Office - CBD $ 349 1.23x 79.6% 76.5% 5.660%
Eastdale Mall ............... Retail - Anchored $ 67 1.77x 71.6% 59.7% 5.430%
One Riverview Square ........ Office - CBD $ 203 1.38x 77.9% 72.7% 5.805%
Pointe at Wellington ........ Retail - Shadow Anchored $ 172 1.67x 66.4% 57.1% 6.230%
Hampton Bays Town
Center ..................... Retail - Anchored $ 199 1.71x 71.9% 62.3% 5.050%
SUBTOTAL/WTD. AVG .......... 1.73X 70.6% 63.5% 5.178%
Cole Company Portfolio ...... Various $ 101 2.43x 66.2% 66.2% 4.460%
Highland Pinetree
Apartments ................. Multifamily - Conventional $ 56,875 2.63x 58.7% 58.7% 4.560%
Cowesset Corners ............ Retail - Anchored $ 121 1.20x 80.0% 73.3% 5.800%
Montelena Apartments ........ Multifamily - Conventional $ 77,273 1.20x 75.6% 72.0% 4.610%
Glenridge Pointe Office
Buildings .................. Office - Suburban $ 89 1.57x 68.8% 62.0% 4.840%
ConAgra Distribution
Facility ................... Industrial - Warehouse $ 23 1.69x 50.3% 42.6% 5.920%
Broadstone Heights
Apartments ................. Multifamily - Conventional $ 70,602 1.25x 73.0% 68.1% 5.800%
Greenpoint Industrial
Center ..................... Industrial - Light Industrial $ 35 1.30x 74.9% 62.7% 5.540%
Highridge Centre ............ Office - Suburban $ 75 1.52x 68.6% 56.4% 4.950%
The Lake Apartments ......... Multifamily - Conventional $102,941 1.24x 79.1% 75.1% 4.260%
SUBTOTAL/WTD. AVG .......... 1.64X 69.2% 63.7% 5.063%
TOTAL/WTD. AVG. ............ 1.71X 70.3% 63.6% 5.151%
- ----------
(1) In the case of a concentration of cross-collateralized mortgage loans,
the aggregate principal balance.
S-146
Ernst & Young Plaza
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Eurohypo
CUT-OFF DATE BALANCE $119,298,859
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 11.2%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
SPONSOR Trizec Holdings, Inc.
TYPE OF SECURITY Fee
MORTGAGE RATE 5.068%
MATURITY DATE February 1, 2014
AMORTIZATION TYPE Balloon
ORIGINAL TERM / AMORTIZATION 120 / 360
REMAINING TERM / AMORTIZATION 115 / 355
LOCKBOX Yes
SHADOW RATING A-/A
(S&P/FITCH)(1)
UP-FRONT RESERVES
TAX/INSURANCE No
ROBINSON-MAY TENANT $3,611,111
IMPROVEMENTS
ONGOING MONTHLY RESERVES
TAX/INSURANCE(2) Springing
TI/LC(3) Springing
REPLACEMENT(4) Springing
ERNST & YOUNG LEASE
RESERVE(5) Yes
ADDITIONAL FINANCING(6) None
CUT-OFF DATE BALANCE $119,298,859
CUT-OFF DATE BALANCE/SF $96
CUT-OFF DATE LTV 63.8%
MATURITY DATE LTV 52.9%
UW DSCR ON NCF 2.13x
- --------------------------------------------------------------------------------
(1) S&P and Fitch have confirmed that the Ernst & Young Plaza Loan, in the
context of its inclusion in the trust, has credit characteristics
consistent with an investment-grade rated obligation.
(2) Monthly reserves for taxes and insurance are required if (i) an event of
default occurs and is continuing or (ii) the debt service coverage ratio,
as computed by the mortgagee, for any preceding two calendar quarters is
less than 1.25x.
(3) Monthly reserves for tenant improvements and leasing commissions are
required in the amount of $105,000 if (i) an event of default occurs and
is continuing or (ii) the debt service coverage ratio, as computed by the
mortgagee, for any preceding two calendar quarters is less than 1.25x.
(4) Monthly reserves for capital expenditures are required in the amount of
$20,743 (subject to reduction upon a partial release of one or more
parcels of the Mortgaged Property) if (i) an event of default occurs and
is continuing or (ii) the debt service coverage ratio, as computed by the
mortgagee, for any preceding two calendar quarters is less than 1.25x.
(5) The borrower is required to deposit $250,000 into a reserve account on
each of the monthly payment dates occurring in August, September and
October 2005, which aggregate amount equals the "refurbishment allowance"
required to be paid by the borrower with respect to the lease with Ernst
& Young U.S. LLP at the Mortgaged Property.
(6) Although no mezzanine debt is currently outstanding, the Ernst & Young
Plaza Loan permits, upon satisfaction of certain conditions set forth in
the loan documents, the incurrence of debt secured by pledges of the
indirect equity interests in the borrower to a permitted mezzanine
lender.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Los Angeles, CA
PROPERTY TYPE Office -- CBD
SIZE (SF) 1,241,440
OCCUPANCY AS OF MAY 1, 2004 86.7%
YEAR BUILT / YEAR RENOVATED 1985 / 2000
APPRAISED VALUE $187,000,000
EYP REALTY, LLC
PROPERTY MANAGEMENT
UW ECONOMIC OCCUPANCY 86.0%
UW REVENUES $ 30,664,896
UW TOTAL EXPENSES $ 12,737,947
UW NET OPERATING INCOME (NOI) $ 17,926,949
UW NET CASH FLOW (NCF) $ 16,608,246
- --------------------------------------------------------------------------------
S-147
- --------------------------------------------------------------------------------
TENANT SUMMARY
- --------------------------------------------------------------------------------
NET
RATINGS(2) RENTABLE % OF NET
TENANT(1) MOODY'S/S&P/FITCH AREA (SF) RENTABLE AREA
- -------------------------------- ------------------- ----------- ---------------
Ernst & Young ................. NR/NR/NR 148,713 12.0%
GSA ........................... Aaa/AAA/AAA 124,069 10.0
Pillsbury Madison ............. NR/NR/NR 70,777 5.7
Great American Insurance ...... A3/A/A+ 47,982 3.9
Merrill Lynch ................. Aa3/A+/AA- 47,713 3.8
NON-MAJOR TENANTS ............. 637,411 51.3
VACANT ........................ 164,775 13.3
------- -----
TOTAL ......................... 1,241,440 100.0%
========= =====
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
ACTUAL % OF ACTUAL DATE OF LEASE
TENANT(1) RENT PSF ACTUAL RENT RENT EXPIRATION
- ----------------------------------- ---------- ------------- ------------- -------------------
Ernst & Young .................... $ 16.02 $ 2,383,028 13.3% Multiple Spaces(3)
GSA .............................. $ 28.99 3,596,280 20.1 Multiple Spaces(4)
Pillsbury Madison ................ $ 16.01 1,133,352 6.3 December 2010
Great American Insurance ......... $ 15.00 719,730 4.0 June 2014
Merrill Lynch .................... $ 18.88 901,050 5.0 September 2008
NON-MAJOR TENANTS ................ $ 14.40 9,181,575 51.3
VACANT ........................... 0 0.0
----------- -----
TOTAL ............................ $17,915,015 100.0%
=========== =====
- -----------------------------------------------------------------------------------------------
(1) The Mortgaged Property is primarily an office property. Consequently, no
retail tenants (which tenants account for less than 15% of the actual
rent derived from the Mortgaged Property, in the aggregate) are listed as
major tenants in this tenant summary.
(2) Certain ratings are those of the parent company whether or not the parent
guarantees the lease.
(3) Under the terms of multiple leases, 1,228 square feet expire in August
2004 and 147,485 square feet expire in February 2014.
(4) Under the terms of multiple leases, 94,176 square feet expire in June
2012 and 29,893 square feet expire in July 2012.
- ---------------------------------------------------------------------------------------------------------------------
LEASE EXPIRATION SCHEDULE
- ---------------------------------------------------------------------------------------------------------------------
WA BASE % OF TOTAL CUMULATIVE % OF ACTUAL CUMULATIVE % OF
# OF LEASES RENT/SF TOTAL SF SF % OF SF RENT ACTUAL RENT
YEAR ROLLING ROLLING ROLLING ROLLING* ROLLING* ROLLING* ROLLING*
- ---------------------------------------------------------------------------------------------------------------------
2004 25 $ 14.98 47,163 3.8% 3.8% 3.9% 3.9%
2005 29 $ 15.06 76,608 6.2% 10.0% 6.4% 10.4%
2006 28 $ 17.78 86,283 7.0% 16.9% 8.6% 18.9%
2007 13 $ 15.17 61,888 5.0% 21.9% 5.2% 24.2%
2008 19 $ 19.46 95,747 7.7% 29.6% 10.4% 34.6%
2009 7 $ 20.46 10,332 0.8% 30.5% 1.2% 35.8%
2010 2 $ 16.01 70,777 5.7% 36.2% 6.3% 42.1%
2011 5 $ 5.13 178,654 14.4% 50.5% 5.1% 47.2%
2012 15 $ 26.99 153,443 12.4% 62.9% 23.1% 70.3%
2013 6 $ 21.21 45,601 3.7% 66.6% 5.4% 75.7%
2014 12 $ 15.81 201,933 16.3% 82.8% 17.8% 93.5%
- ---------------------------------------------------------------------------------------------------------------------
* Calculated based on approximate square footage occupied by each
tenant.
S-148
THE LOAN. The Mortgage Loan (the "Ernst & Young Plaza Loan") is secured by
a first priority deed of trust encumbering the borrower's fee interest in an
office building and retail center known as Ernst & Young Plaza located in Los
Angeles, California. The Ernst & Young Plaza Loan represents approximately
11.2% of the Cut Off Date Pool Balance. The Ernst & Young Plaza Loan was
originated on January 28, 2004, and has a principal balance as of the Cut Off
Date of $119,298,859.
The Ernst & Young Plaza Loan has a remaining term of 115 months and matures on
February 1, 2014. The Ernst & Young Plaza Loan may be prepaid on or after
November 1, 2013, and permits defeasance with United States government
obligations beginning two years after the Closing Date.
THE BORROWER. The borrower is EYP Realty, LLC, a special purpose entity.
Legal counsel to the borrower delivered a non-consolidation opinion in
connection with the origination of the Ernst & Young Plaza Loan. The borrower
is 100% owned by Trizec Holdings, Inc., which is the operating partnership for
Trizec Properties, Inc, a public real estate investment trust ("Trizec").
Trizec is a self-managed real estate investment trust based in Chicago,
Illinois and one of the largest owners and managers of commercial office
properties in North America.
THE PROPERTY. The Mortgaged Property consists of an approximately
1,241,440 square foot office building and retail center, and a portion of an
adjacent parking garage, situated on approximately 4.8 acres. The Mortgaged
Property is a part of a larger development that includes the 53-story 777
Tower, containing 1,004,522 square feet (which is not part of the collateral)
and the adjacent 2,400 space parking garage (of which approximately 1,500 are
allocated to the subject building). The Mortgaged Property was constructed in
1985 (as to the office portion) and 1986 (as to the retail portion), and the
retail portion was renovated in 2000. The Mortgaged Property is located in Los
Angeles, California, within the Los Angeles, California metropolitan
statistical area. As of May 1, 2004, the occupancy rate (which includes space
for which executed leases are in place but with respect to which the tenants
have not yet taken occupancy) for the Mortgaged Property securing the Ernst &
Young Plaza Loan was approximately 86.7%.
The Mortgaged Property is encumbered by a Retail Operation and Reciprocal
Easement Agreement dated July 12, 1985 (the "Ernst & Young Plaza OREA"),
however, the operating and name covenants made therein by the anchor
departments stores that are party thereto have expired.
GUARANTY. Although Robinson-May has been in occupancy and paying rent
pursuant to its lease at the Mortgaged Property for approximately seven years,
Trizec Holdings, Inc. has delivered a guaranty pursuant to which it guaranteed
the payment of up to $1,000,000 of the unamortized cost of tenant improvements
that may be required to be paid by the borrower pursuant to the Robinson-May
lease at the Mortgaged Property if such lease is terminated pursuant to its
terms. Provided no event of default exists, the guaranty provides that Trizec
Holdings, Inc. will be released from its obligations under the guaranty at such
time as the maximum amount of such unamortized tenant improvement costs is
reduced to $3,611,111.
In addition, Trizec Holdings, Inc. has delivered a guaranty pursuant to which
it guaranteed the payment of any losses, costs or expenses the mortgagee may
incur as a result of certain acts of the borrower.
INSURANCE. The borrower, at its sole cost and expense, is required to keep
the Mortgaged Property insured against loss or damage by fire and other risks
under a comprehensive all risk insurance policy (the "Ernst & Young Plaza
Casualty Insurance Policy"), in each case: (1) in an amount equal to at least
100% of the then "full replacement cost" of the Mortgaged Property, with a
waiver of depreciation, but the amount will not be less than the outstanding
principal balance of the Ernst & Young Plaza Loan; (2) containing an agreed
amount endorsement waiving all co-insurance provisions; and (3) providing that
such policy will contain an "Ordinance or Law Coverage" or "Enforcement"
endorsement if any of the improvements or the use of the Mortgaged Property at
any time constitute legal nonconforming structures or uses. In addition, the
borrower, at its sole cost and expense, is required to obtain and maintain
earthquake insurance with respect to the Mortgaged Property.
All policies of insurance are required to be issued by one or more
financially sound and responsible insurance companies meeting the Rating Agency
and financial requirements set forth in the loan documents.
CASUALTY AND CONDEMNATION. The loan documents provide that if the
Mortgaged Property is damaged or destroyed, in whole or in part, by casualty,
or if any portion of the Mortgaged Property is
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taken by any governmental authority through eminent domain or otherwise, the
borrower is required to promptly proceed with the repair or rebuilding of the
improvements as nearly as possible to the condition the Mortgaged Property was
in immediately prior to such casualty or taking (an "Ernst & Young Plaza
Restoration"). If the net proceeds or the costs of completing the Ernst & Young
Plaza Restoration are equal to or greater than $2,400,000, the insurance
proceeds or condemnation award are required to be disbursed to the borrower to
be used for the Ernst & Young Plaza Restoration provided certain conditions are
satisfied, including, without limitation, (i) no event of default has occurred
or is continuing with respect to the Ernst & Young Plaza Loan, (ii) if the net
proceeds are insurance proceeds, less than 30% of the total floor area of the
improvements have been damaged or rendered unusable or, if net proceeds are
condemnation proceeds, less than 10% of the land is taken and the land which is
taken is located along the perimeter or periphery of the Mortgaged Property and
no portion of the improvements are located on such land; (iii) leases requiring
payment of annual rent equal to at least 75% of the gross income from
operations received by the borrower during the preceding 12 month period from
the Mortgaged Property and all major leases (as defined in the loan documents)
at the Mortgaged Property as of the date of such casualty or condemnation
remain in full force and effect during and after the Ernst & Young Plaza
Restoration; and (iv) the borrower commences the Ernst & Young Plaza
Restoration no later than 60 days after the casualty or taking. In certain
circumstances, the borrower may be required to restore all or a portion of the
Mortgaged Property pursuant to the Ernst & Young Plaza OREA. If any of the
conditions under the loan documents are not satisfied, insurance proceeds and
any condemnation award may be applied by the mortgagee to the repayment of the
Ernst & Young Plaza Loan. To the extent not required to be disbursed by the
mortgagee for the restoration of the Mortgaged Property, any award or payment
may be applied to the repayment of the Ernst & Young Plaza Loan whether or not
then due and payable. Notwithstanding the foregoing, the Ernst & Young Plaza
OREA requires that any of the borrower's insurance proceeds not required to
rebuild or raze and clear or rebuild common areas of the Mortgaged Property,
will be paid to the borrower and credited against common area maintenance costs
at the Mortgaged Property.
TRANSFER OF THE PROPERTY AND INTERESTS IN THE BORROWER. The loan documents
provide that the borrower will not permit any sale, assignment, conveyance,
transfer or other disposition of, or any mortgage, lien or other encumbrance
on, all or any part of the Mortgaged Property or any interest in such property
or any interest in the borrower, without the consent of the mortgagee. The
borrower, however, is permitted to sell the Mortgaged Property provided the
borrower satisfies certain conditions, including: (i) the transferee is a
special purpose, bankruptcy remote entity that satisfies the requirement of the
loan documents, and the organizational documents of such transferee are
reasonably satisfactory to the Rating Agencies; (ii) the transferee is an Ernst
& Young Plaza Permitted Owner; (iii) the property manager following such sale
or conveyance is an Ernst & Young Plaza Qualifying Manager; (iv) the mortgagee
has received a nonconsolidation opinion with respect to the sale or conveyance;
and (v) mortgagee has received written confirmation by the Rating Agencies that
the transfer to such person or entity will not cause a downgrade, withdrawal or
qualification of the then current ratings of the Certificates.
In addition, a transfer or sale (but not a pledge, hypothecation, security
interest or other encumbrance) of any direct or indirect interest in the
borrower is permitted provided certain conditions are satisfied, including: (i)
after such transfer or sale the borrower is controlled (subject to customary
approval by a Ernst & Young Plaza Permitted Owner if the transfer is being made
to a Ernst & Young Plaza Permitted Owner) by, and no less than 50.1% of the
equity interests in the borrower are owned, directly or indirectly by, Trizec,
Trizec Holdings, Inc. or any successor thereto; and (ii) if more than 49% of
the direct or indirect interests in the borrower is transferred to a person or
entity not owning at least 49% of the direct or indirect interests in the
borrower on the date of closing of the Ernst & Young Plaza Loan, the borrower
delivers to the mortgagee a nonconsolidation opinion with respect to the
proposed transfer or sale.
In addition, a transfer or sale (but not a pledge, hypothecation, security
interest or other encumbrance) to any affiliate of Trizec, Trizec Holdings,
Inc. or any successor thereto by merger, conversion, consolidation,
reorganization or other form of business combinations of any direct or indirect
interest in the borrower is permitted provided certain conditions are
satisfied, including: (i) after such transfer or sale the borrower is
controlled by Trizec, Trizec Holdings, Inc. or any successor thereto; and
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(ii) if more than 49% of the direct or indirect interests in the borrower is
transferred to a person or entity not owning at least 49% of the direct or
indirect interests in the borrower on the date of closing of the Ernst & Young
Plaza Loan, the borrower delivers to the mortgagee a nonconsolidation opinion
with respect to the proposed transfer or sale.
"Ernst & Young Plaza Permitted Owner" shall mean a corporation,
partnership or limited liability company (i) which, or the parent entity of
which, (a) owns a minimum of eight first class real estate office buildings
with an aggregate of at least 6,000,000 square feet and which have an aggregate
current market value of not less than $1,000,000,000 and (b) has a net worth of
not less than $500,000,000, (ii) which is not, and the principals of which are
not, (a) in default on any indebtedness or loan from the mortgagee, (b) the
subject of any bankruptcy action, (c) the subject of any criminal charges or
proceedings, (d) involved, or whose parent or affiliates are involved, in
litigation which is deemed significant by the mortgagee, (e) on any list
maintained by the Office of Foreign Assets Control or (f) in violation of the
Patriot Act, (iii) that qualifies as a single purpose, bankruptcy remote entity
under criteria established by the Rating Agencies; and (iv) whose counsel has
delivered to mortgagee a nonconsolidation opinion acceptable to mortgagee and
the Rating Agencies in their sole discretion. "Ernst & Young Plaza Qualifying
Manager" shall mean (a) with respect to the Mortgaged Property (exclusive of
the parking facilities) any of the following: (i) any affiliate of Trizec or
(ii) a reputable and experienced professional management organization which
manages, together with its affiliates, at least eight first class office
buildings with an aggregate of at least 6,000,000 square feet of gross leasable
area, exclusive of the Mortgaged Property; and (b) with respect to the parking
facilities, any of the following (provided such person is not the subject of
any bankruptcy action): (i) the current manager of such facilities or (ii) a
reputable and experienced professional management organization which manages,
together with its affiliates, parking facilities similar to the parking
facilities in other first class office buildings, provided, that, borrower has
delivered to mortgagee (x) in the case of (a)(ii) and (b)(ii) above, written
confirmation by the Rating Agencies that the transfer to such person or entity
will not cause a downgrade, withdrawal or qualification of the then current
ratings of the Certificates and (y) if required by mortgagee, if such manager
is an affiliate of borrower, a new nonconsolidation opinion with respect to
such affiliate manager; provided, however, in each case such Person is not the
subject of any bankruptcy action.
In addition, the loan documents do not restrict the right of (i) any owner
of the direct or indirect interests in Trizec, Trizec Holdings, Inc. or any
successor thereto by merger, conversion, consolidation, reorganization or other
form of business combinations to transfer its interest in such entity;
provided, that, either the property manager following such sale or conveyance
continues to be an Ernst & Young Plaza Qualifying Manager or the mortgagee has
received written confirmation by the Rating Agencies that the transfer to such
person or entity will not cause a downgrade, withdrawal or qualification of the
then current ratings of the Certificates; (ii) Trizec or Trizec Holdings, Inc.
to convert into a limited liability company; (iii) a permitted mezzanine
borrower to pledge its ownership interests in the borrower to an Ernst & Young
Plaza Permitted Mezzanine Lender as collateral for a permitted mezzanine loan
or (iv) a Ernst & Young Plaza Permitted Mezzanine Lender to enforce its rights
in respect of such collateral for the permitted mezzanine loan, provided, that,
such enforcement is permitted pursuant to the terms and provisions of an
intercreditor agreement entered into by and between mortgagee and the Ernst &
Young Plaza Permitted Mezzanine Lender.
RELEASE OF PARCEL. The borrower may obtain the release of one or both of
the following parcels: (a) a portion of the Mortgaged Property consisting of
approximately 87,588 square feet having been formerly demised by the tenant
doing business as "Bullock's" and (b) the retail component of the Mortgaged
Property, excluding the parcel described in the immediately preceding clause
(a), the description of which is more particularly described in the loan
documents. The foregoing releases are permitted upon the satisfaction of
certain conditions, including, without limitation: (i) the borrower provides
evidence that the released property is not necessary for the borrower's
operation or its then current use of the Mortgaged Property (or appropriate
easements being retained by borrower for the benefit of the Mortgaged Property)
and may be legally separated from the remaining Mortgaged Property; (ii) no
event of default has occurred and is continuing; (iii) the borrower delivers
evidence that the actual debt service coverage ratio for the Ernst & Young
Plaza Loan will not be reduced as a result of such release and with respect to
the release described in clause (b), the actual debt service coverage ratio
remains at least 1.30x; (iv) the
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borrower delivers an opinion of counsel that the REMICs in the Trust Fund will
not fail to maintain its status as a "real estate mortgage investment conduit"
within the meaning of Section 860D of the Code as a result of the partial
release and (v) with respect to the release described in clause (b), the
conditions for a partial defeasance set forth in the loan documents have been
satisfied.
LOCK BOX ACCOUNT. All tenant payments due under the applicable tenant
leases are required to be deposited into a lock box account (the "Ernst & Young
Plaza Lockbox") maintained with Bank of America, N.A. (the "Ernst & Young Plaza
Lockbox Bank") in the name of the borrower for the benefit of the mortgagee.
Other than during a Ernst & Young Plaza Lockbox Period, all funds on deposit in
the Ernst & Young Plaza Lockbox are required to be transferred on every
business day to the borrower's account. At any time during the term of the
Ernst & Young Plaza Loan, (i) if the actual debt service coverage ratio, as
computed by the mortgagee, for any immediately preceding two calendar quarters
is less than 1.25x or (ii) upon the occurrence of an event of default under the
loan documents (an "Ernst & Young Plaza Lockbox Period"), the Ernst & Young
Plaza Lockbox Bank is required to transfer funds on every business day to a
cash collateral account (the "Ernst & Young Plaza Cash Collateral Account")
maintained by LaSalle Bank, National Association (together with any permitted
successor thereto, the "Ernst & Young Plaza Cash Management Bank") in the name
of the mortgagee as secured party for the benefit of the borrower. The Ernst &
Young Plaza Cash Management Bank is required to apply such funds from the Ernst
& Young Plaza Cash Collateral Account as set forth in the loan documents to
pay, in order, the following: a reserve for taxes and insurance, the monthly
debt service payment, a reserve for replacement costs, tenant improvements and
leasing commissions and other amounts due and payable under the loan documents.
Any excess funds are required to be retained for future application unless an
event of default does not exist, at which time the excess funds are required to
be disbursed to the borrower. Upon termination of an Ernst & Young Plaza
Lockbox Period, all amounts on deposit in the tax, insurance, replacements and
tenant improvements and leasing commission reserve accounts are required to be
disbursed to the borrower.
ESCROWS. The loan documents provide that during any Ernst & Young Plaza
Lockbox Period the borrower is required to make monthly deposits of real estate
taxes and insurance premiums to a taxes and insurance reserve; however, the
requirement to make deposits for insurance premiums is waived if the borrower
pays the premiums for such insurance under blanket insurance policies. In
addition, during any Ernst & Young Plaza Lockbox Period the borrower is
required to make monthly deposits in the amount of $105,000 into a reserve for
tenant improvements and leasing commissions and monthly deposits in the amount
of $20,743 (subject to specified reductions in connection with a partial
release) into a reserve for replacement costs.
In addition, the borrower made an upfront deposit of $3,611,111 which, as
of the date of origination of the Ernst & Young Plaza Loan, equaled 150% of the
unamortized cost of the tenant improvements to the portion of the Mortgaged
Property demised by Robinson-May. Such amount on deposit automatically reduces
on a monthly basis after the termination of the $1,000,000 guaranty executed by
Trizec Holdings, Inc. in connection with the potential required payment by
borrower of such unamortized costs if Robinson-May terminates its lease.
In addition, the borrower will be required to deposit $250,000 into a
reserve account on each of the payment dates occurring in August, September and
October 2005, which aggregate amount equals the amount required to be funded as
a "refurbishment allowance" pursuant to the terms of the borrower's lease with
Ernst & Young U.S. LLP.
MEZZANINE DEBT. Although no mezzanine debt is currently outstanding, the
Ernst & Young Plaza Loan permits, upon the satisfaction of certain conditions
set forth in the loan documents, the incurrence of debt secured by pledges of
the indirect equity interests in the borrower to an Ernst & Young Plaza
Permitted Mezzanine Lender. Conditions for incurring mezzanine debt include,
without limitation, (i) an actual debt service coverage ratio (calculated based
on the aggregate outstanding principal amount of the Ernst & Young Plaza Loan
plus the mezzanine debt) equal to or greater than 1.30x; (ii) an intercreditor
agreement in form and substance satisfactory to the Rating Agencies; and (iii)
written confirmation by the Rating Agencies that the transfer to such person or
entity will not cause a downgrade, withdrawal or qualification of the then
current ratings of the Certificates. "Ernst & Young Plaza Permitted Mezzanine
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Lender" shall mean an entity reasonably acceptable to the mortgagee in all
respects that is either (a) a real estate investment trust, bank, saving and
loan association, investment bank, insurance company, trust company, commercial
credit corporation, pension plan, pension fund or pension advisory firm, mutual
fund, government entity or plan or (b) an investment company, money management
firm or "qualified institutional buyer" within the meaning of Rule 144A under
the Securities Act of 1933, as amended, which is regularly engaged in the
business of making or owning mezzanine loans which in each case (i) has total
assets (in name or under management) in excess of $650,000,000 and (except with
respect to a pension advisory firm or similar fiduciary) capital/statutory
surplus or shareholder's equity of $250,000,000, and (ii) is regularly engaged
in the business of making or owning commercial loans.
ADDITIONAL DEBT. The loan documents prohibit the borrower from incurring
any additional debt, secured or unsecured, except for (1) trade and operational
debt not incurred in the ordinary course of business, and (2) indebtedness
incurred in the financing of equipment and other personal property used on the
Mortgaged Property, so long as the sum of all outstanding trade and operational
debt and equipment and personal property financing does not exceed $1,200,000.
MANAGEMENT. The Mortgaged Property (other than the parking garage) is
self-managed. The parking garage is managed by Ampco System Parking. The loan
documents permit the Mortgaged Property to be managed by (a) an Ernst & Young
Plaza Qualifying Manager, or (b) a reputable and experienced management company
approved by the Rating Agencies.
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11 Madison Avenue
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LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE BALANCE(1) $ 82,000,000
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 7.7%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Acquisition
SPONSOR Tamir Sapir
TYPE OF SECURITY(2) Fee
MORTGAGE RATE 5.304%
MATURITY DATE January 11, 2014
AMORTIZATION TYPE ARD
INTEREST ONLY PERIOD 60
ORIGINAL TERM / AMORTIZATION 120 / 360
REMAINING TERM / AMORTIZATION 114 / 360
LOCKBOX Yes
SHADOW RATING (S&P/FITCH)(3) AAA/AAA
UP-FRONT RESERVES
TAX/INSURANCE Yes
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes
TI/LC(4) Yes
REPLACEMENT $18,805
ADDITIONAL FINANCING A-3 Subordinate
Non-Pooled
Component $ 13,555,556
Pari Passu $334,444,444
Subordinate
Debt $ 85,000,000
WHOLE
A-3 POOLED PARI PASSU MORTGAGE
COMPONENT NOTES LOAN
------------ ------------ ----------
CUT-OFF DATE BALANCE $82,000,000 $430,000,000 $515,000,000
CUT-OFF DATE BALANCE/SF $164 $191 $228
CUT-OFF DATE LTV 54.7% 63.7% 76.3%
MATURITY DATE LTV 50.6% 59.0% 71.2%
UW DSCR ON NCF 1.81x 1.55x 1.20x
- --------------------------------------------------------------------------------
(1) Represents the pooled component of the A-3 note in a total senior note of
$430,000,000 and aggregate mortgage debt of $515,000,000. The A-1 note of
$143,333,333 and the A-2 and A-4 notes each of $95,555,556 are not
included in the trust, but are pari passu with the A-3 note that is in
the trust; however, while the non-pooled component of the A-3 note is
included in the trust, payments allocable to such non-pooled component
are not available for distributions to the Offered Certificates. In
addition to the pari passu notes there are three subordinate notes,
aggregating to $85,000,000 which are also not included in the trust. All
Balance/SF, LTV and DSC ratios are based upon the aggregate indebtedness
of A-3 note (excluding the non-pooled component) and the other senior
notes but exclude the subordinate companion loans.
(2) For purposes of the table above and similar breakdowns by category
elsewhere in the prospectus supplement, the borrower's interest in the
Mortgaged Property has been classified as a fee interest. The security
for the 11 Madison Avenue Loan consists of the borrower's interest in the
IDA Premises under the IDA lease as well as the borrower's fee interest
in the remainder of the Mortgaged Property. The fee interest in the IDA
Premises is owned by the IDA but will revert to the borrower upon the
termination of the IDA lease.
(3) S&P and Fitch have confirmed that the 11 Madison Avenue Loan, has in the
context of its inclusion in the trust, the credit characteristics
consistent with that of an investment-grade rated obligation.
(4) For months 1-36 of the loan term, $47,011.50/month will be escrowed,
increasing to $141,034.50/month during months 37-72 and decreasing to
$94,023/month for the remainder of the loan term.
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PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION New York, NY
PROPERTY TYPE Office - CBD
SIZE (SF) 2,256,552
OCCUPANCY AS OF APRIL 1, 2004 98.6%
YEAR BUILT / YEAR RENOVATED 1932 / 1997
APPRAISED VALUE $675,000,000
PROPERTY MANAGEMENT Cushman & Wakefield, Inc.
UW ECONOMIC OCCUPANCY 98.0%
UW REVENUES $ 63,438,713
UW TOTAL EXPENSES $ 18,543,090
UW NET OPERATING INCOME (NOI) $ 44,895,623
UW NET CASH FLOW (NCF) $ 44,558,893
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TENANT SUMMARY
- -------------------------------------------------------------------------------------------------------------------------------
NET
RENTABLE % OF NET % OF
RATINGS* AREA RENTABLE ACTUAL ACTUAL DATE OF LEASE
TENANT MOODY'S/S&P/FITCH (SF) AREA RENT PSF ACTUAL RENT RENT EXPIRATION
- -------------------------------------------------------------------------------------------------------------------------------
Credit Suisse First
Boston ..................... Aa3/A+/AA- 1,921,459 85.2% $ 20.90 $ 40,154,365 83.1% Multiple Spaces
Aon (sublet to IBM) ........ Baa2/A-/A- 138,072 6.1 $ 28.75 3,969,570 8.2 April 2013
Omnicom .................... Baa1/A-/A- 95,557 4.2 $ 28.25 2,699,485 5.6 September 2008
Gould Paper Corp. .......... NR/NR/NR 46,318 2.1 $ 21.50 995,837 2.1 October 2013
Eleven Madison Park ........ NR/NR/NR 11,500 0.5 $ 18.39 211,485 0.4 December 2017
NON-MAJOR TENANTS .......... 12,018 0.5 $ 22.01 264,567 0.5
VACANT ..................... 31,628 1.4 0 0.0
--------- ----- ------------ -----
TOTAL ...................... 2,256,552 100.0% $ 48,295,309 100.0%
========= ===== ============ =====
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* Certain ratings are those of the parent whether or not the parent guarantees
the lease.
- -------------------------------------------------------------------------------------------------------------------
LEASE EXPIRATION SCHEDULE
- -------------------------------------------------------------------------------------------------------------------
CUMULATIVE %
WA BASE CUMULATIVE % OF ACTUAL OF
# OF LEASES RENT/SF TOTAL SF % OF TOTAL % OF SF RENT ACTUAL RENT
YEAR ROLLING ROLLING ROLLING SF ROLLING* ROLLING* ROLLING* ROLLING*
- -------- ------------- ----------- ---------- ------------- ------------ ------------- -------------
2004 0 $ 0.00 0 0.0% 0.0% 0.0% 0.0%
2005 0 $ 0.00 0 0.0% 0.0% 0.0% 0.0%
2006 0 $ 0.00 0 0.0% 0.0% 0.0% 0.0%
2007 3 $ 25.88 390,386 17.3% 17.3% 20.9% 20.9%
2008 1 $ 28.25 95,557 4.2% 21.5% 5.6% 26.5%
2009 0 $ 0.00 0 0.0% 21.5% 0.0% 26.5%
2010 1 $ 176.87 420 0.0% 21.6% 0.2% 26.7%
2011 0 $ 0.00 0 0.0% 21.6% 0.0% 26.7%
2012 0 $ 0.00 0 0.0% 21.6% 0.0% 26.7%
2013 4 $ 26.50 288,404 12.8% 34.3% 15.8% 42.5%
2014 0 $ 0.00 0 0.0% 34.3% 0.0% 42.5%
- -------------------------------------------------------------------------------------------------------------------
* Calculated based on approximate square footage occupied by each tenant.
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THE LOAN. The Mortgage Loan (the "11 Madison Avenue Loan") is split into a
pooled component (the "11 Madison Avenue Pooled Component"), with a principal
balance of $82,000,000, representing 7.7% of the Cut-Off Date Pool Balance that
supports distributions on the Certificates (other than the Class MAD
Certificates) and a non-pooled component (the "11 Madison Avenue Non-Pooled
Component"), with a principal balance of $13,555,556, that supports only the
Class MAD Certificates, which are not being offered hereby. The 11 Madison
Avenue Loan is secured by a first mortgage encumbering an office building
located in New York, New York. The 11 Madison Avenue Loan, which is evidenced
by a pari passu note dated December 23, 2003, is a portion of a whole loan with
an original principal balance of $515,000,000. The other loans related to the
11 Madison Avenue Loan are evidenced by six separate notes, each dated December
23, 2003, the "11 Madison Avenue Pari Passu I Loan" with an original principal
balance of $143,333,333, the "11 Madison Avenue Pari Passu II Loan", with an
original principal balance of $95,555,556, the "11 Madison Avenue Pari Passu IV
Loan", with an original principal balance of $95,555,556, and 3 subordinate
notes (the "11 Madison Avenue Subordinate Loans") with an aggregate original
principal balance of $85,000,000. The 11 Madison Avenue Pari Passu I Loan, the
11 Madison Avenue Pari Passu II Loan, the 11 Madison Avenue Pari Passu IV Loan
and the 11 Madison Avenue Subordinate Loans will not be assets of the trust.
The 11 Madison Avenue Loan, the 11 Madison Avenue Pari Passu I Loan, the 11
Madison Avenue Pari Passu II Loan, the 11 Madison Avenue Pari Passu IV Loan and
the 11 Madison Avenue Subordinate Loans will be governed by an intercreditor
agreement and will be serviced pursuant to the terms of the pooling and
servicing agreement entered into in connection with the issuance of the
Wachovia Bank Commercial Mortgage Trust, Commercial Mortgage Pass-Through
Certificates, Series 2004-C10, as described in the prospectus supplement under
"DESCRIPTION OF THE MORTGAGE POOL--Co-Lender Loans". The 11 Madison Avenue Loan
provides for interest-only payments for the first 60 months of its term, and
thereafter, fixed monthly payments of principal and interest.
The 11 Madison Avenue Loan has a remaining term of 114 months to its
anticipated repayment date of January 11, 2014. The 11 Madison Avenue Loan may
be prepaid on or after November 11, 2013, and permits defeasance with United
States government obligations beginning the earlier of four years after
origination or two years from the date of the last securitization of any
portion of the 11 Madison Avenue Loan and its related Companion Loans.
THE BORROWER. The borrower is 11 Madison Avenue LLC, a special purpose
entity. Legal counsel to the borrower delivered a non-consolidation opinion in
connection with the origination of the 11 Madison Avenue Loan. The sponsor is
Tamir Sapir. Through his various entities, Mr. Sapir owns and operates an
extensive citywide office property portfolio totaling approximately 7.25
million square feet.
THE PROPERTY. The Mortgaged Property is an approximately 2,256,552 square
foot office building situated on approximately 1.9 acres. The Mortgaged
Property was constructed in 1932 and renovated in 1997. The Mortgaged Property
is located in New York, New York. As of April 1, 2004, the occupancy rate for
the Mortgaged Property securing the 11 Madison Avenue Loan was approximately
98.6%.
The largest tenant is Credit Suisse First Boston LLC ("CSFB"), occupying
1,921,459 square feet, or approximately 85.2% of the net rentable area. The
Mortgaged Property serves as the world headquarters of CSFB, a leading global
investment banking firm. As of June 11, 2004, CSFB was rated "Aa3" (Moody's),
"A+" (S&P) and "AA-" (Fitch). The majority of the CSFB space expires in April
2017. There is a 389,344 square foot portion of one of the CSFB leases that
expires in April 2007. Notwithstanding the foregoing, although 74.3% of CSFB's
1,921,459 square feet of net rentable area is leased through April 30, 2017,
CSFB does have the option to terminate up to 528,730 square feet (27.5% of
CSFB's space and 23.4% of the Mortgaged Property total space) after April 30,
2007 in its sole discretion. However, CSFB must give at least 24 months notice
of such termination (such notice is irrevocable) and must pay a variable
termination fee which is adjusted depending upon the space as to which such
termination applies. Pursuant to the terms of the 11 Madison Avenue Loan
documents, the lease termination payments are required to be paid into a
reserve controlled by the mortgagee to be used for future tenant improvement
and leasing commission expenses and otherwise will be additional collateral for
the 11 Madison Avenue Loan. In addition, the 11 Madison Avenue Loan documents
require that in the event CSFB exercises this termination option, the mortgagee
will trap 100% of cash flow generated by the Mortgaged Property until such
space is relet. The second largest tenant is Aon Corporation ("Aon"), occupying
138,072 square feet, or approximately 6.1% of the net rentable area. Aon is the
second largest insurance brokerage and consulting company in the world
operating in commercial brokerage, consulting services and consumer insurance
underwriting. As of June 7, 2004, Aon was rated "Baa2" (Moody's), "A-" (S&P)
and "A-" (Fitch). Aon subleases this entire space to International Business
Machines Corporation ("IBM"). IBM
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is one of the world's top manufacturers of computer hardware, including desktop
and notebook PCs, mainframes, servers, storage systems and peripherals. As of
June 8, 2004, IBM was rated "A1" (Moody's), "A+" (S&P) and "AA-" (Fitch). The
Aon lease expires in April 2013. The third largest tenant is Omnicom Group,
Inc., ("Omnicom"), occupying approximately 95,557 square feet, or approximately
4.2% of the net rentable area. Omnicom is one of the world's largest
advertising, marketing and corporate communication companies. As of June 7,
2004, Omnicom was rated "Baa1" (Moody's), "A-" (S&P) and "A-" (Fitch). The
Omnicom lease expires in September 2008.
LOCK BOX ACCOUNT. All tenant payments due under the applicable tenant
leases are deposited into a mortgagee-designated lock box account.
HYPER-AMORTIZATION. Commencing on the anticipated repayment date of
January 11, 2014, if the 11 Madison Avenue Loan is not repaid in full, the 11
Madison Avenue Loan enters a hyper-amortization period through January 11,
2039. The interest rate applicable to the 11 Madison Avenue Loan during such
hyper-amortization period will increase to the greater of 2.0% over the
mortgage rate or 2.0% over the treasury rate, as specified in the loan
documents.
MANAGEMENT. Cushman & Wakefield, Inc. is the property manager for the
Mortgaged Property securing the 11 Madison Avenue Loan.
S-157
Extra Space Self Storage Portfolio
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE BALANCE $61,770,000
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 5.8%
NUMBER OF MORTGAGE LOANS 11
LOAN PURPOSE Refinance
SPONSOR Extra Space Storage LLC,
Kenneth M. Woolley
TYPE OF SECURITY Fee, Leasehold(1)
MORTGAGE RATE 4.300%
MATURITY DATE June 11, 2009
INTEREST ONLY PERIOD 60
Interest Only
AMORTIZATION TYPE ARD
ORIGINAL TERM / AMORTIZATION 60 / IO
REMAINING TERM / AMORTIZATION 59 / IO
LOCKBOX Springing
UP-FRONT RESERVES
TAX/INSURANCE Yes
ENGINEERING $95,375
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes
REPLACEMENT $12,239
ADDITIONAL FINANCING None
CUT-OFF DATE BALANCE $61,770,000
CUT-OFF DATE BALANCE/UNIT $8,222
WA CUT-OFF DATE LTV 80.0%
WA MATURITY DATE LTV 80.0%
WA UW DSCR ON NCF 2.19x
- --------------------------------------------------------------------------------
(1) Fee interest in each of the Mortgaged Properties, with the exception of
the Mortgaged Property in Glendale, California, which is leasehold.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 11
LOCATION Various
PROPERTY TYPE Self Storage
SIZE (UNITS) 7,513
OCCUPANCY AS OF MAY 2004 87.4%
YEAR BUILT / YEAR RENOVATED Various / NA
APPRAISED VALUE $77,240,000
PROPERTY MANAGEMENT Extra Space
Management LLC
UW ECONOMIC OCCUPANCY 86.4%
UW REVENUES $9,496,351
UW TOTAL EXPENSES $3,529,384
UW NET OPERATING INCOME (NOI) $5,966,966
UW NET CASH FLOW (NCF) $5,820,090
- --------------------------------------------------------------------------------
S-158
- --------------------------------------------------------------------------------
EXTRA SPACE SELF STORAGE PORTFOLIO SUMMARY
- --------------------------------------------------------------------------------
CUT-OFF
PROPERTY NAME DATE BALANCE YEAR BUILT UNITS SQUARE FEET
- --------------------------------------------------------------------------------
Extra Space Self Storage -
Lawrenceville, NJ ........... $11,946,000 1998 924 105,858
Extra Space Self Storage -
Hazlet, NJ .................. 10,560,000 1987 1,147 114,025
Extra Space Self Storage -
Torrance, CA ................ 6,960,000 1976 737 80,051
Extra Space Self Storage -
North Miami, FL ............. 5,848,000 1995 796 73,747
Extra Space Self Storage -
Livermore, CA ............... 4,920,000 2000 672 76,823
Extra Space Self Storage -
Richmond, CA ................ 4,696,000 1984 773 62,215
Extra Space Self Storage -
Glendale, CA ................ 4,480,000 1976 429 42,200
Extra Space Self Storage -
Hawthorne, CA ............... 3,840,000 1992 583 47,915
Extra Space Self Storage -
San Bernardino, CA .......... 3,376,000 1985 497 61,585
Extra Space Self Storage -
Claremont, CA ............... 2,624,000 1983 404 47,760
Extra Space Self Storage -
Kearns, UT .................. 2,520,000 1993 551 72,750
----------- ----- -------
$61,770,000 7,513 784,929
=========== ===== =======
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
CUT-OFF DATE
BALANCE UNDERWRITTEN APPRAISED APPRAISED
PROPERTY NAME PER UNIT OCCUPANCY* NET CASH FLOW VALUE VALUE PER UNIT
- ----------------------------------------------------------------------------------------------------------
Extra Space Self Storage -
Lawrenceville, NJ ........... $12,929 72.7% $1,060,276 $14,960,000 $16,190
Extra Space Self Storage -
Hazlet, NJ .................. $ 9,207 89.8% 1,061,829 13,200,000 $11,508
Extra Space Self Storage -
Torrance, CA ................ $ 9,444 90.0% 713,534 8,700,000 $11,805
Extra Space Self Storage -
North Miami, FL ............. $ 7,347 90.7% 547,836 7,310,000 $ 9,183
Extra Space Self Storage -
Livermore, CA ............... $ 7,321 88.5% 424,853 6,150,000 $ 9,152
Extra Space Self Storage -
Richmond, CA ................ $ 6,075 84.5% 412,631 5,870,000 $ 7,594
Extra Space Self Storage -
Glendale, CA ................ $10,443 94.9% 432,115 5,600,000 $13,054
Extra Space Self Storage -
Hawthorne, CA ............... $ 6,587 88.5% 370,178 4,800,000 $ 8,233
Extra Space Self Storage -
San Bernardino, CA .......... $ 6,793 91.2% 303,361 4,220,000 $ 8,491
Extra Space Self Storage -
Claremont, CA ............... $ 6,495 93.6% 248,496 3,280,000 $ 8,119
Extra Space Self Storage -
Kearns, UT .................. $ 4,574 87.1% 244,981 3,150,000 $ 5,717
---------- -----------
$ 8,222 87.4% $5,820,090 $77,240,000 $10,281
========== ===========
- ----------------------------------------------------------------------------------------------------------
* Occupancy as of May 25, 2004 for each Mortgaged Property, with the exception
of Lawrenceville, which is as of May 13, 2004.
S-159
THE LOAN. The 11 Mortgage Loans (the "Extra Space Self Storage Portfolio
Mortgage Loans") are secured by 9 first deeds of trust and 2 first mortgages
encumbering 11 self storage properties located in California (7 properties),
Florida (1 property), New Jersey (2 properties) and Utah (1 property). The
Extra Space Self Storage Portfolio Mortgage Loans represent approximately 5.8%
of the Cut-Off Date Pool Balance. The Extra Space Self Storage Portfolio
Mortgage Loans were originated on June 1, 2004, and have a principal balance as
of the Cut-Off Date of $61,770,000. Each Extra Space Self Storage Portfolio
Mortgage Loan is cross-collateralized and cross-defaulted with each of the
other Extra Space Self Storage Portfolio Mortgage Loans. The Extra Space Self
Storage Portfolio Mortgage Loans provide for interest-only payments for the
entire loan term.
The Extra Space Self Storage Portfolio Mortgage Loans have a remaining
term of 59 months to their anticipated repayment dates of June 11, 2009. The
Extra Space Self Storage Portfolio Mortgage Loans may be prepaid on or after
April 11, 2009, and permit defeasance with United States government obligations
beginning four years after each first payment date.
THE BORROWER. The borrower for 9 of the Extra Space Self Storage Portfolio
Mortgage Loans is Extra Space Properties Twelve LLC. The borrowers for the
remaining 2 Extra Space Self Storage Portfolio Mortgage Loans are Extra Space
of Lawrenceville LLC and Extra Space of Hazlet LLC. Legal counsel to each of
the borrowers delivered a non-consolidation opinion in connection with the
origination of the Extra Space Self Storage Portfolio Mortgage Loans. The
sponsor of each of the borrowers is Extra Space Storage, LLC ("Extra Space")
and Kenneth M. Woolley. Extra Space is a privately held self storage operator
with a geographically diverse portfolio of approximately 110 facilities in 15
states.
THE PROPERTIES. The Mortgaged Properties consist of 11 self storage
facilities containing, in the aggregate, 7,513 storage units. Each Mortgaged
Property contains regular storage and/or climate controlled units. As of May
25, 2004 (or, with respect to 1 of the Extra Space Self Storage Portfolio
Mortgage Loans, May 13, 2004), the aggregate occupancy rate for the Mortgaged
Properties securing the Extra Space Self Storage Portfolio Mortgage Loans was
approximately 87.4%.
LOCK BOX ACCOUNT. If the Extra Space Self Storage Portfolio Mortgage Loans
are not repaid in full on or prior to April 11, 2009, or upon an event of
default, the borrower must notify the tenants that any and all tenant payments
due under the applicable tenant leases shall be directly deposited into a
mortgagee-designated lock box account.
HYPER-AMORTIZATION. Commencing on the anticipated repayment date of June
11, 2009, if the Extra Space Self Storage Portfolio Mortgage Loans are not paid
in full, the Extra Space Self Storage Portfolio Mortgage Loans enter into a
hyper-amortization period through June 11, 2014. The interest rate applicable
to the Extra Space Self Storage Portfolio Mortgage Loans during such
hyper-amortization period will increase to the greater of 3.0% over the
mortgage rate or 3.0% over the treasury rate, as specified in the loan
documents.
MANAGEMENT. Extra Space Management LLC, an affiliate of the sponsor, is
the property manager for the Mortgaged Properties securing the Extra Space Self
Storage Portfolio Mortgage Loans.
S-160
1130 Connecticut Avenue
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE BALANCE $58,500,000
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 5.5%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Acquisition
SPONSOR Victor K. Tolkan
and Julia S. Tolkan
TYPE OF SECURITY Fee
MORTGAGE RATE 5.290%
MATURITY DATE May 11, 2011
AMORTIZATION TYPE ARD
INTEREST ONLY PERIOD 24
ORIGINAL TERM / AMORTIZATION 84 / 360
REMAINING TERM / AMORTIZATION 82 / 360
LOCKBOX Springing
UP-FRONT RESERVES
TAX/INSURANCE Yes
ENGINEERING/REPLACEMENT(1) $250,000
TI/LC(2) $3,373,018
OCCUPANCY(3) $7,000,000
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes
REPLACEMENT $3,000
ADDITIONAL FINANCING Mezzanine/Secured Debt $7,000,000
TRUST TOTAL
ASSET DEBT
----------- -----------
CUT-OFF DATE BALANCE $58,500,000 $65,500,000
CUT-OFF DATE BALANCE/SF $267 $299
CUT-OFF DATE LTV 79.7% 89.2%
MATURITY DATE LTV 73.8% 83.4%
UW DSCR ON NCF 1.22x 1.00x
- --------------------------------------------------------------------------------
(1) Includes $17,000 for immediate repairs identified by the engineer as well
as $233,000 as pre-funded replacement reserves.
(2) Borrower deposited $3,373,018, with $1,173,018 relating to specific
tenants and $2,200,000 serving as a general reserve for renewals and
future tenants.
(3) To be released upon the following conditions: (a) $3,000,000 may be
released when a lease is executed for at least 8,030 square feet with
rental payments of no less than $56/SF and a term of at least 10 years;
(b) $1,000,000 may be released when the tenant on this new lease takes
occupancy and commences paying full, unabated rent; and (c) $3,000,000
may be released when Global Industries, Inc. takes occupancy and
commences paying full, unabated rent. The entire escrow will be released
if the annual rent collected from the Mortgaged Property equals or
exceeds $7.2 million. Any disbursement from the occupancy reserve will be
remitted to the holder of the subordinate debt described under
"Subordinate Debt" below.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Washington, DC
PROPERTY TYPE Office - CBD
SIZE (SF) 218,738
OCCUPANCY AS OF MARCH 31, 2004 86.1%
YEAR BUILT / YEAR RENOVATED 1986 / 1996
APPRAISED VALUE $73,400,000
PROPERTY MANAGEMENT Penzance Management LLC
UW ECONOMIC OCCUPANCY 90.3%
UW REVENUES $8,113,421
UW TOTAL EXPENSES $3,144,785
UW NET OPERATING INCOME (NOI) $4,968,637
UW NET CASH FLOW (NCF) $4,740,528
- --------------------------------------------------------------------------------
S-161
- ----------------------------------------------------------------------------------------
TENANT SUMMARY
- ----------------------------------------------------------------------------------------
NET % OF
RENTABLE NET
RATINGS(1) AREA RENTABLE
TENANT MOODY'S/S&P/FITCH (SF) AREA
- ----------------------------------------------------------------------------------------
American Insurance Association, Inc. ..... NR/NR/NR 44,693 20.4%
Starpower Communications ................. Baa2/BBB+/BBB 12,100 5.5
Nichols-Dezenhall Communications ......... NR/NR/NR 11,414 5.2
Foundation For Health Sciences
Research ................................. NR/NR/NR 10,681 4.9
The Ferguson Company ..................... NR/NR/NR 10,482 4.8
NON-MAJOR TENANTS ........................ 98,947 45.2
VACANT ................................... 30,421 13.9
------ -----
TOTAL .................................... 218,738 100.0%
======= =====
- ----------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
ACTUAL % OF
RENT ACTUAL DATE OF LEASE
TENANT PSF ACTUAL RENT RENT EXPIRATION
- ---------------------------------------------------------------------------------------------------
American Insurance Association, Inc. ..... $ 34.00 $1,519,562 21.1% December 2008(2)
Starpower Communications ................. $ 42.16 510,079 7.1 May 2007
Nichols-Dezenhall Communications ......... $ 37.00 422,272 5.9 July 2005
Foundation For Health Sciences
Research ................................. $ 33.24 355,036 4.9 December 2004
The Ferguson Company ..................... $ 34.84 365,188 5.1 October 2007
NON-MAJOR TENANTS ........................ $ 40.85 4,042,433 56.0
VACANT ................................... 0 0.0
---------- -----
TOTAL .................................... $7,214,569 100.0%
========== =====
- ---------------------------------------------------------------------------------------------------
(1) Certain ratings are those of the parent whether or not the parent
guarantees the lease.
(2) The tenant leases basement storage space for an additional $1,933 in
annual rent. The lease for the storage space expires in August 2005.
- ----------------------------------------------------------------------------------------------------------------------
LEASE EXPIRATION SCHEDULE
- ----------------------------------------------------------------------------------------------------------------------
WA BASE CUMULATIVE % OF ACTUAL CUMULATIVE % OF
# OF LEASES RENT/SF TOTAL SF % OF TOTAL % OF SF RENT ACTUAL RENT
YEAR ROLLING ROLLING ROLLING SF ROLLING* ROLLING* ROLLING* ROLLING*
- ----------------------------------------------------------------------------------------------------------------------
2004 3 $ 31.81 16,753 7.7% 7.7% 7.4% 7.4%
2005 5 $ 36.36 17,842 8.2% 15.8% 9.0% 16.4%
2006 3 $ 40.78 10,131 4.6% 20.4% 5.7% 22.1%
2007 8 $ 37.27 37,517 17.2% 37.6% 19.4% 41.5%
2008 2 $ 34.22 49,173 22.5% 60.1% 23.3% 64.8%
2009 1 $ 39.00 1,875 0.9% 60.9% 1.0% 65.8%
2010 1 $ 31.30 3,991 1.8% 62.8% 1.7% 67.6%
2011 1 $ 34.00 7,432 3.4% 66.2% 3.5% 71.1%
2012 3 $ 37.24 16,262 7.4% 73.6% 8.4% 79.4%
2013 2 $ 37.41 12,791 5.8% 79.4% 6.6% 86.1%
2014 3 $ 38.11 14,550 6.7% 86.1% 7.7% 93.8%
- ----------------------------------------------------------------------------------------------------------------------
* Calculated based on approximate square footage occupied by each
tenant.
S-162
THE LOAN. The Mortgage Loan (the "1130 Connecticut Avenue Loan") is
secured by a first deed of trust encumbering an office building located in
Washington, D.C. The 1130 Connecticut Avenue Loan represents approximately 5.5%
of the Cut-Off Date Pool Balance. The 1130 Connecticut Avenue Loan was
originated on April 21, 2004, and has a principal balance as of the Cut-Off
Date of $58,500,000. The 1130 Connecticut Avenue Loan provides for
interest-only payments for the first 24 months of its term, and thereafter,
fixed monthly payments of principal and interest.
The 1130 Connecticut Avenue Loan has a remaining term of 82 months to its
anticipated repayment date of May 11, 2011. The 1130 Connecticut Avenue Loan
may be prepaid on or after March 11, 2011, and permits defeasance with United
States government obligations beginning two years after the Closing Date.
THE BORROWER. The borrower is Penzance 1130 Property Owner, LLC, a special
purpose entity. Legal counsel to the borrower delivered a non-consolidation
opinion in connection with the origination of the 1130 Connecticut Avenue Loan.
The sponsors are Julia S. Tolkan and Victor K. Tolkan, founders of Penzance
Properties, a District of Columbia based real estate firm, which owns, develops
and/or manages office, industrial and retail properties in the District of
Columbia area.
THE PROPERTY. The Mortgaged Property is an approximately 218,738 square
foot office building situated on approximately 0.5 acres. The Mortgaged
Property was constructed in 1986 and renovated in 1996. The Mortgaged Property
is located in Washington, D.C. As of March 31, 2004, the occupancy rate for the
Mortgaged Property securing the 1130 Connecticut Avenue Loan was approximately
86.1%.
The largest tenant is American Insurance Association, Inc. ("American
Insurance"), occupying approximately 44,693 square feet, or approximately 20.4%
of the net rentable area. The American Insurance Association is a leading
property casualty insurance trade organization, representing approximately 400
insurers. The American Insurance lease expires in December 2008. In addition,
American Insurance also leases some basement storage space for which the lease
expires in August 2005. The second largest tenant is Starpower Communications
("Starpower Communications"), occupying approximately 12,100 square feet, or
approximately 5.5% of the net rentable area. Starpower Communications is a
joint venture between Pepco Communications and RCN Corporation and provides
bundled telecommunications services in the Washington, DC area. The Starpower
Communications lease expires in May 2007. The third largest tenant is
Nichols-Dezenhall Communications, now known as Dezenhall Resources ("Dezenhall
Resources"), occupying approximately 11,414 square feet, or approximately 5.2%
of the net rentable area. Dezenhall Resources provides public relations
services to clients facing commercial crisis, conflict and controversy. The
Dezenhall Resources lease expires in July 2005.
LOCK BOX ACCOUNT. If the 1130 Connecticut Avenue Loan is not repaid in
full on or prior to March 11, 2011, or upon an event of default, the borrower
must notify the tenants that any and all tenant payments due under the
applicable tenant leases shall be directly deposited into a
mortgagee-designated lock box account.
HYPER-AMORTIZATION. Commencing on the anticipated repayment date of May
11, 2011, if the 1130 Connecticut Avenue Loan is not paid in full, the 1130
Connecticut Avenue Loan enters into a hyper-amortization period through May 11,
2024. The interest rate applicable to the 1130 Connecticut Avenue Loan during
such hyper-amortization period will increase to the greater of 3.0% over the
mortgage rate or 3.0% over the treasury rate, as specified in the loan
documents.
SUBORDINATE DEBT. A mezzanine loan in the amount of $7,000,000 was
originated on April 21, 2004. The mezzanine loan is not an asset of the trust
and is secured by a pledge of the equity interests of the borrower and a
subordinate lien on the Mortgaged Property.
MANAGEMENT. Penzance Management LLC, an affiliate of the sponsor, is the
property manager for the Mortgaged Property securing the 1130 Connecticut
Avenue Loan.
S-163
Crossroads Plaza
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Citigroup
CUT-OFF DATE BALANCE $57,500,000
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 5.4%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
SPONSOR Ronus, Inc.
TYPE OF SECURITY Fee
MORTGAGE RATE 4.920%
MATURITY DATE May 11, 2014
AMORTIZATION TYPE Balloon
INTEREST ONLY PERIOD 24
ORIGINAL TERM / AMORTIZATION 120 / 360
REMAINING TERM / AMORTIZATION 118 / 360
LOCKBOX Yes
UP-FRONT RESERVES
TAX/INSURANCE Yes
ENGINEERING $536,000
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes
ADDITIONAL FINANCING None
CUT-OFF DATE BALANCE $57,500,000
CUT-OFF DATE BALANCE/SF $121
CUT-OFF DATE LTV 79.3%
MATURITY DATE LTV 68.5%
UW DSCR ON NCF 1.35x
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Cary, NC
PROPERTY TYPE Retail - Anchored
SIZE (SF) 476,164
OCCUPANCY AS OF MARCH 31, 2004 99.4%
YEAR BUILT / YEAR RENOVATED 1991 / NA
APPRAISED VALUE $72,500,000
PROPERTY MANAGEMENT Ronus Properties LLC
UW ECONOMIC OCCUPANCY 95.0%
UW REVENUES $7,255,701
UW TOTAL EXPENSES $1,739,860
UW NET OPERATING INCOME (NOI) $5,515,841
UW NET CASH FLOW (NCF) $4,955,652
- --------------------------------------------------------------------------------
S-164
- ---------------------------------------------------------------------------------------------------------------------
TENANT SUMMARY
- ---------------------------------------------------------------------------------------------------------------------
NET % OF NET % OF
RATINGS* RENTABLE RENTABLE ACTUAL ACTUAL DATE OF LEASE
TENANT MOODY'S/S&P/FITCH AREA (SF) AREA RENT PSF ACTUAL RENT RENT EXPIRATION
- ---------------------------------------------------------------------------------------------------------------------
Best Buy ........... Baa3/BBB-/BBB 51,259 10.8% $ 7.00 $ 358,813 5.8% October 2006
Stein Mart ......... NR/NR/NR 36,000 7.6 $ 6.20 223,200 3.6 October 2006
OfficeMax .......... Ba2/BB/NR 27,891 5.9 $ 9.01 251,298 4.1 January 2007
Marshalls .......... A3/A/NR 26,920 5.7 $ 7.50 201,900 3.3 January 2008
Michael's .......... Ba1/BB+/NR 26,751 5.6 $ 13.25 354,451 5.7 February 2010
NON-MAJOR TENANTS 304,357 63.9 $ 15.81 4,810,925 77.6
VACANT 2,986 0.6 0 0.0
------- ----- ---------- -----
TOTAL 476,164 100.0% $6,200,587 100.0%
======= ===== ========== =====
- ---------------------------------------------------------------------------------------------------------------------
* Certain ratings are those of the parent whether or not the parent
guarantees the lease.
- -----------------------------------------------------------------------------------------------------------------------
LEASE EXPIRATION SCHEDULE
- -----------------------------------------------------------------------------------------------------------------------
WA BASE CUMULATIVE % OF ACTUAL CUMULATIVE % OF
# OF LEASES RENT/SF TOTAL SF % OF TOTAL % OF SF RENT ACTUAL RENT
YEAR ROLLING ROLLING ROLLING SF ROLLING* ROLLING* ROLLING* ROLLING*
- -----------------------------------------------------------------------------------------------------------------------
2004 3 $ 21.52 5,100 1.1% 1.1% 1.8% 1.8%
2005 7 $ 16.98 30,493 6.4% 7.5% 8.4% 10.1%
2006 17 $ 10.67 141,002 29.6% 37.1% 24.3% 34.4%
2007 18 $ 12.68 116,776 24.5% 61.6% 23.9% 58.3%
2008 6 $ 12.21 51,953 10.9% 72.5% 10.2% 68.5%
2009 4 $ 21.29 11,000 2.3% 74.8% 3.8% 72.3%
2010 4 $ 11.49 54,391 11.4% 86.3% 10.1% 82.4%
2011 1 $ 18.00 4,500 0.9% 87.2% 1.3% 83.7%
2012 2 $ 18.22 14,364 3.0% 90.2% 4.2% 87.9%
2013 4 $ 17.23 43,599 9.2% 99.4% 12.1% 100.0%
2014 0 $ 0.00 0 0.0% 99.4% 0.0% 100.0%
- -----------------------------------------------------------------------------------------------------------------------
* Calculated based on the approximate square footage occupied by each
tenant.
S-165
THE LOAN. The Mortgage Loan (the "Crossroads Plaza Loan") is secured by a
first mortgage encumbering an anchored retail center located in Cary, North
Carolina. The Crossroads Plaza Loan represents approximately 5.4% of the
Cut-Off Date Pool Balance. The Crossroads Plaza Loan was originated on May 5,
2004, and has a principal balance as of the Cut-Off Date of $57,500,000. The
Crossroads Plaza Loan provides for interest-only payments for the first 24
months of its term, and thereafter, fixed monthly payments of principal and
interest.
The Crossroads Plaza Loan has a remaining term of 118 months and matures
on May 11, 2014. The Crossroads Plaza Loan may be prepaid on or after January
11, 2014, and permits defeasance with United States government obligations
beginning two years after the Closing Date.
THE BORROWER. The borrower is Cary Crossroads LLC, a special purpose
entity. Legal counsel to the borrower delivered a non-consolidation opinion in
connection with the origination of the Crossroads Plaza Loan. The sponsor of
the borrower is Ronus, Inc. Ronus, Inc., with a $177.5 million net worth, is
the US real estate investment company for Ronald de Waal. Mr. de Waal serves as
a board member for Post Properties Inc. and The Body Shop International Plc,
Vice Chairman for Saks, Inc., and Chairman for WE International BV.
THE PROPERTY. The Mortgaged Property is an approximately 476,164 square
foot anchored retail center situated on approximately 52.0 acres. The Mortgaged
Property was constructed in 1991. The Mortgaged Property is located in Cary,
North Carolina, within the Raleigh-Chapel Hill-Durham metropolitan statistical
area. As of March 31, 2004, the occupancy rate for the Mortgaged Property
securing the Crossroads Plaza Loan was approximately 99.4%.
The largest tenant is Best Buy, occupying approximately 51,259 square
feet, or approximately 10.8% of the net rentable area. Best Buy is a national
retailer of consumer electronics, personal computers, entertainment software,
and appliances. As of June 16, 2004, Best Buy was rated "Baa3" (Moody's) and
"BBB-" (S&P). The Best Buy lease expires in October 2006. The second largest
tenant is Stein Mart, occupying approximately 36,000 square feet, or
approximately 7.6% of the net rentable area. Stein Mart sells moderate to
brand-name apparel for women, men, and children as well as accessories, gifts,
linens, and shoes. The Stein Mart lease expires in October 2006. The third
largest tenant is OfficeMax, occupying approximately 27,891 square feet, or
approximately 5.9% of the net rentable area. OfficeMax offers office products
at high-volume and deep discounts in the United States and Puerto Rico. As of
June 16, 2004, OfficeMax was rated "Ba2" (Moody's) and "BB" (S&P). The
OfficeMax lease expires in January 2007.
LOCK BOX ACCOUNT. All tenant payments due under the applicable tenant
leases are required to be deposited into a mortgagee-designated lock box
account. As long as no default exists and the debt service coverage ratio for
the Mortgaged Property does not fall below 1.10x, funds deposited into the lock
box account are transferred daily to the borrower's operating account. If the
debt service coverage ratio falls below 1.10x, cash flow deposited into the
lockbox account will be used to pay debt service and fund monthly reserves and
operating expenses, with the remainder held as additional collateral until the
ratio increases to 1.15x, at which point funds in the lockbox account will
again be disbursed on a daily basis to the borrower, and any prior cash flow
deposits held as additional collateral will be released to the borrower; unless
in each case the same is required to be placed in the replacement reserve
escrow. In addition, excess cash flow must be deposited into the replacement
reserve escrow for roof repairs if the trigger event has not occurred, but from
and after the second year through the sixth year after loan origination on an
annual basis if the borrower fails to expend certain threshold amounts on roof
work.
PARTIAL RELEASE. REI may have the right, subject to certain conditions, to
complete a purchase of its leased premises, comprising approximately 21,000
square feet, for a purchase price of $1,700,000, in which event the REI parcel
shall be released from the lender's deed of trust and the proceeds of the
purchase placed in an escrow to be held as additional collateral for the
remainder of the loan term, or disbursed to the borrower if the borrower
partially defeases the loan in the amount of the purchase price proceeds.
MANAGEMENT. Ronus Properties LLC is the property manager for the Mortgaged
Property securing the Crossroads Plaza Loan. The property manager is affiliated
with the borrower.
S-166
24 West 57th Street
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE BALANCE $35,000,000
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 3.3%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Acquisition
SPONSOR Marilyn Sitt and Sharon Sutton
TYPE OF SECURITY Fee
MORTGAGE RATE 5.660%
MATURITY DATE June 11, 2009
AMORTIZATION TYPE Balloon
INTEREST ONLY PERIOD 24
ORIGINAL TERM / AMORTIZATION 60 / 360
REMAINING TERM / AMORTIZATION 59 / 360
LOCKBOX Yes
UP-FRONT RESERVES
TAX/INSURANCE Yes
ENGINEERING $126,250
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes
REPLACEMENT $1,254
ADDITIONAL FINANCING None
CUT-OFF DATE BALANCE $35,000,000
CUT-OFF DATE BALANCE/SF $349
CUT-OFF DATE LTV 79.6%
MATURITY DATE LTV 76.5%
UW DSCR ON NCF 1.23x
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION New York, NY
PROPERTY TYPE Office - CBD
SIZE (SF) 100,334
OCCUPANCY AS OF JUNE 1, 2004 97.5%
YEAR BUILT / YEAR RENOVATED 1920 / 2002
APPRAISED VALUE $44,000,000
PROPERTY MANAGEMENT Sitt Asset Management LLC
UW ECONOMIC OCCUPANCY 95.0%
UW REVENUES $4,686,282
UW TOTAL EXPENSES $1,557,697
UW NET OPERATING INCOME (NOI) $3,128,585
UW NET CASH FLOW (NCF) $2,978,148
- --------------------------------------------------------------------------------
S-167
- -----------------------------------------------------------------------------------
TENANT SUMMARY
- -----------------------------------------------------------------------------------
NET % OF NET
RATINGS* RENTABLE RENTABLE
TENANT MOODY'S/S&P/FITCH AREA (SF) AREA
- -----------------------------------------------------------------------------------
B.E. West 56th Street, LLC (Beacon
Restaurant) ......................... NR/NR/NR 13,540 13.5%
The Timberland Company ............... NR/NR/NR 11,486 11.4
Multiples, Inc. (Marian Goodman
Gallery) . .......................... NR/NR/NR 9,872 9.8
Radu Physical Culture, Inc. .......... NR/NR/NR 4,604 4.6
Patrick Fratellone, MD ............... NR/NR/NR 4,570 4.6
NON-MAJOR TENANTS .................... 53,737 53.6
VACANT ............................... 2,525 2.5
------ -----
TOTAL ................................ 100,334 100.0%
======= =====
- -----------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
% OF
ACTUAL ACTUAL DATE OF LEASE
TENANT RENT PSF ACTUAL RENT RENT EXPIRATION
- --------------------------------------------------------------------------------------------
B.E. West 56th Street, LLC (Beacon
Restaurant) ......................... $ 21.60 $ 292,516 7.1% November 2018
The Timberland Company ............... $ 39.00 447,954 10.9 June 2011
Multiples, Inc. (Marian Goodman
Gallery) . .......................... $ 36.84 363,684 8.8 June 2008
Radu Physical Culture, Inc. .......... $ 34.65 159,529 3.9 April 2008
Patrick Fratellone, MD ............... $ 49.38 225,667 5.5 November 2012
NON-MAJOR TENANTS .................... $ 49.08 2,637,585 63.9
VACANT ............................... 0 0.0
---------- -----
TOTAL ................................ $4,126,935 100.0%
========== =====
- --------------------------------------------------------------------------------------------
* Certain ratings are those of the parent whether or not the parent
guarantees the lease.
- -----------------------------------------------------------------------------------------------------------------------
LEASE EXPIRATION SCHEDULE
- -----------------------------------------------------------------------------------------------------------------------
WA BASE CUMULATIVE % OF ACTUAL CUMULATIVE % OF
# OF LEASES RENT/SF TOTAL SF % OF TOTAL % OF SF RENT ACTUAL RENT
YEAR ROLLING ROLLING ROLLING SF ROLLING* ROLLING* ROLLING* ROLLING*
- -----------------------------------------------------------------------------------------------------------------------
2004 6 $ 40.97 9,648 9.6% 9.6% 9.6% 9.6%
2005 7 $ 46.27 7,536 7.5% 17.1% 8.4% 18.0%
2006 2 $ 49.57 3,341 3.3% 20.5% 4.0% 22.0%
2007 10 $ 60.39 12,278 12.2% 32.7% 18.0% 40.0%
2008 4 $ 39.00 18,999 18.9% 51.6% 18.0% 58.0%
2009 2 $ 42.36 5,669 5.7% 57.3% 5.8% 63.8%
2010 0 $ 0.00 0 0.0% 57.3% 0.0% 63.8%
2011 3 $ 43.60 19,078 19.0% 76.3% 20.2% 83.9%
2012 1 $ 49.38 4,570 4.6% 80.8% 5.5% 89.4%
2013 0 $ 0.00 0 0.0% 80.8% 0.0% 89.4%
2014 1 $ 46.00 3,150 3.1% 84.0% 3.5% 92.9%
- -----------------------------------------------------------------------------------------------------------------------
* Calculated based on approximate square footage occupied by each
tenant.
S-168
THE LOAN. The Mortgage Loan (the "24 West 57th Street Loan") is secured by
a first mortgage encumbering an office building located in New York, New York.
The 24 West 57th Street Loan represents approximately 3.3% of the Cut-Off Date
Pool Balance. The 24 West 57th Street Loan was originated on May 21, 2004, and
has a principal balance as of the Cut-Off Date of $35,000,000. The 24 West 57th
Street Loan provides for interest-only payments for the first 24 months of its
term, and thereafter, fixed monthly payments of principal and interest.
The 24 West 57th Street Loan has a remaining term of 59 months and matures
on June 11, 2009. The 24 West 57th Street Loan may be prepaid on or after June
11, 2008, and permits defeasance with United States government obligations
beginning two years after the Closing Date.
THE BORROWER. The borrower is 24 West 57th Realty LLC, a special purpose
entity. Legal counsel to the borrower delivered a non-consolidation opinion in
connection with the origination of the 24 West 57th Street Loan. The sponsors
are Marilyn Sitt and Sharon Sutton. The Sitt Family and associated partners own
and manage approximately 1.5 million square feet of commercial space throughout
the United States.
THE PROPERTY. The Mortgaged Property is an approximately 100,334 square
foot office building situated on approximately 0.2 acres. The Mortgaged
Property was constructed in 1920 and renovated in 2002. The Mortgaged Property
is located in New York, New York. As of June 1, 2004, the occupancy rate for
the Mortgaged Property securing the 24 West 57th Street Loan was approximately
97.5%.
The largest tenant is B.E. West 56th Street, LLC (the "Beacon
Restaurant"), occupying approximately 13,540 square feet, or approximately
13.5% of the net rentable area. Established in 1996, the Beacon Restaurant is
operated by Waldy Malouf and offers a sophisticated menu of grilled foods. The
Beacon Restaurant lease expires in November 2018. The second largest tenant is
The Timberland Company ("Timberland"), occupying approximately 11,486 square
feet, or approximately 11.4% of the net rentable area. Timberland, founded in
1918, is one of the global leaders in designing, manufacturing and marketing
outdoor footwear with products offered in leading department and specialty
stores throughout North America, Europe, Asia and Latin America. The Timberland
lease expires in June 2011. The third largest tenant is Multiples, Inc. (the
"Marian Goodman Gallery"), occupying approximately 9,872 square feet, or
approximately 9.8% of the net rentable area. Marian Goodman established the
Marion Goodman Gallery at the Mortgaged Property in 1977 and primarily
showcases European artists. The Marian Goodman Gallery lease expires in June
2008.
LOCK BOX ACCOUNT. All tenant payments due under the applicable tenant
leases are deposited into a mortgagor-designated lock box account. At any time
during the term of the 24 West 57th Street Loan, (i) if the debt service
coverage ratio, as computed by the mortgagee, is less than 1.15x for a 12
consecutive month period or (ii) 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 shall be directly
deposited into a mortgagee-designated lock box account.
MANAGEMENT. Sitt Asset Management LLC, an affiliate of the sponsor, is the
property manager for the Mortgaged Property securing the 24 West 57th Street
Loan.
S-169
Eastdale Mall
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE BALANCE $32,563,845
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 3.1%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
SPONSOR Eastdale Investments, L.L.C.
TYPE OF SECURITY Fee
MORTGAGE RATE 5.430%
MATURITY DATE June 11, 2014
AMORTIZATION TYPE ARD
ORIGINAL TERM / AMORTIZATION 120 / 360
REMAINING TERM / AMORTIZATION 119 / 359
LOCKBOX Springing
SHADOW RATING (S&P/FITCH)(1) BBB/BBB
UP-FRONT RESERVES
TAX/INSURANCE Yes
ENGINEERING(2) $906,839
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes
REPLACEMENT $6,072
ADDITIONAL FINANCING(3) None
CUT-OFF DATE BALANCE $32,563,845
CUT-OFF DATE BALANCE/SF $67
CUT-OFF DATE LTV 71.6%
MATURITY DATE LTV 59.7%
UW DSCR ON NCF 1.77x
- --------------------------------------------------------------------------------
(1) S&P and Fitch have confirmed that the Eastdale Mall Loan has, in the
context of its inclusion in the trust, the credit characteristics
consistent with that of an investment-grade rated obligation.
(2) Escrowed for roof replacement and re-paving of the parking lot, which is
expected to be completed in the next 18 months.
(3) Although no mezzanine debt or secured subordinate debt is currently
outstanding, the Eastdale Mall Loan permits, upon satisfaction of certain
conditions set forth in the loan documents, the incurrence of debt
secured by (i) pledges of equity interests in the borrower to a permitted
mezzanine lender and/or (ii) a lien on the Mortgaged Property that is
subordinate to the lien securing the Eastdale Mall Loan.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Montgomery, AL
PROPERTY TYPE Retail - Anchored
SIZE (SF) 485,772
OCCUPANCY AS OF MAY 7, 2004 96.5%
YEAR BUILT / YEAR RENOVATED 1977 / 2001
APPRAISED VALUE $45,500,000
PROPERTY MANAGEMENT Aronov Realty Management, Inc.
UW ECONOMIC OCCUPANCY 95.0%
UW REVENUES $7,580,558
UW TOTAL EXPENSES $3,332,408
UW NET OPERATING INCOME
(NOI) $4,248,149
UW NET CASH FLOW (NCF) $3,905,114
- --------------------------------------------------------------------------------
S-170
- ----------------------------------------------------------------------------------------------
TENANT SUMMARY
- ----------------------------------------------------------------------------------------------
NET % OF NET
RATINGS RENTABLE RENTABLE
TENANT MOODY'S/S&P/FITCH* AREA (SF) AREA
- ----------------------------------------------------------------------------------------------
Anchor Tenants - Anchor Owned
Dillard's .......................... B2/BB/BB- 177,427 ANCHOR OWNED -
------- NOT PART OF COLLATERAL
TOTAL ANCHOR OWNED ................ 177,427
Anchor Tenants - Collateral
Sears .............................. Baa1/BBB/BBB+ 143,504 29.5%
Parisian ........................... Ba3/BB/BB- 127,938 26.3
------- --------
TOTAL ANCHOR TENANTS .............. 271,442 55.9%
TOP 5 TENANTS
Eastdale Cinemas 8 ................. B3/B/NR 28,945 6.0%
Gap-Gap Kids ....................... Ba2/BB+/BB+ 9,004 1.9
Casual / Petite / August Max ....... NR/NR/NR 8,300 1.7
Lenscrafters ....................... Caa1/NR/NR 7,263 1.5
Lerner New York .................... Baa1/BBB+/NR 7,246 1.5
------- --------
TOTAL TOP 5 TENANTS ............... 60,758 12.5%
NON-MAJOR TENANTS .................. 136,452 28.1
------- --------
OCCUPIED COLLATERAL TOTAL .......... 468,652 96.5%
VACANT ............................. 17,120 3.5
COLLATERAL TOTAL ................... 485,772 100.0%
PROPERTY TOTAL ..................... 663,199
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
% OF
ACTUAL ACTUAL DATE OF LEASE
TENANT RENT PSF ACTUAL RENT RENT EXPIRATION
- ----------------------------------------------------------------------------------------------
Anchor Tenants - Anchor Owned
Dillard's ..........................
TOTAL ANCHOR OWNED ................
Anchor Tenants - Collateral
Sears .............................. $ 3.23 $ 463,100 10.6% September 2009
Parisian ........................... $ 2.42 309,570 7.1 January 2015
---------- -----
TOTAL ANCHOR TENANTS .............. $ 2.85 $ 772,670 17.7%
TOP 5 TENANTS
Eastdale Cinemas 8 ................. $ 2.49 $ 72,001 1.7% August 2007
Gap-Gap Kids ....................... $ 11.84 106,607 2.4 January 2005
Casual / Petite / August Max ....... $ 18.00 149,400 3.4 September 2012
Lenscrafters ....................... $ 16.00 116,208 2.7 September 2007
Lerner New York .................... $ 10.00 72,460 1.7 January 2005
---------- -----
TOTAL TOP 5 TENANTS ............... $ 8.50 $ 516,676 11.9%
NON-MAJOR TENANTS .................. $ 22.48 3,067,818 70.4
---------- -----
OCCUPIED COLLATERAL TOTAL .......... $ 9.30 $4,357,164 100.0%
VACANT .............................
COLLATERAL TOTAL ...................
PROPERTY TOTAL .....................
- ----------------------------------------------------------------------------------------------
* Certain ratings are those of the parent whether or not the parent
guarantees the lease.
- -----------------------------------------------------------------------------------------------------------------------
LEASE EXPIRATION SCHEDULE
- -----------------------------------------------------------------------------------------------------------------------
WA BASE CUMULATIVE % OF ACTUAL CUMULATIVE % OF
# OF LEASES RENT/SF TOTAL SF % OF TOTAL % OF SF RENT ACTUAL RENT
YEAR ROLLING ROLLING ROLLING SF ROLLING* ROLLING* ROLLING* ROLLING*
- -----------------------------------------------------------------------------------------------------------------------
2004 10 $ 22.79 17,853 3.7% 3.7% 9.3% 9.3%
2005 18 $ 15.89 52,968 10.9% 14.6% 19.3% 28.7%
2006 9 $ 25.87 11,493 2.4% 16.9% 6.8% 35.5%
2007 6 $ 8.58 44,039 9.1% 26.0% 8.7% 44.2%
2008 6 $ 25.39 11,425 2.4% 28.4% 6.7% 50.8%
2009 9 $ 5.24 157,896 32.5% 60.9% 19.0% 69.8%
2010 6 $ 20.19 21,186 4.4% 65.2% 9.8% 79.6%
2011 1 $ 38.50 1,368 0.3% 65.5% 1.2% 80.8%
2012 3 $ 23.88 11,704 2.4% 67.9% 6.4% 87.2%
2013 3 $ 25.05 4,061 0.8% 68.8% 2.3% 89.6%
2014 3 $ 21.56 6,721 1.4% 70.1% 3.3% 92.9%
- -----------------------------------------------------------------------------------------------------------------------
* Calculated based upon approximate square footage occupied by each
tenant.
S-171
THE LOAN. The Mortgage Loan (the "Eastdale Mall Loan") is secured by a
first mortgage encumbering a regional mall located in Montgomery, Alabama. The
Eastdale Mall Loan represents approximately 3.1% of the Cut-Off Date Pool
Balance. The Eastdale Mall Loan was originated on May 28, 2004, and has a
principal balance as of the Cut-Off Date of $32,563,845.
The Eastdale Mall Loan has a remaining term of 119 months to its
anticipated repayment date of June 11, 2014. The Eastdale Mall Loan may be
prepaid on or after December 11, 2013, and permits defeasance with United
States government obligations beginning two years after the Closing Date.
THE BORROWER. The borrower is Eastdale Mall, L.L.C, a special purpose
entity. Legal counsel to the borrower delivered a non-consolidation opinion in
connection with the origination of the Eastdale Mall Loan. The sponsor of the
borrower is Eastdale Investments, L.L.C. Based in Montgomery, Alabama, Aronov
Inc. owns, manages and has developed over 100 properties in 14 states,
including 13 malls.
THE PROPERTY. The Mortgaged Property is approximately 485,772 square feet
of an approximately 663,199 square foot regional mall situated on approximately
48.3 acres. The Mortgaged Property was constructed in 1977 and renovated in
2001. The Mortgaged Property is located in Montgomery, Alabama, within the
Montgomery, Alabama metropolitan statistical area. As of May 7, 2004, the
occupancy rate for the Mortgaged Property securing the Eastdale Mall Loan was
approximately 96.5%.
The anchor tenants at the Mortgaged Property are Dillard's Inc., Sears,
Roebuck & Co., and Parisian, a subsidiary of Saks Incorporated. Dillard's Inc.
owns its premises and land and is not part of the collateral. The largest
tenant that is part of the Mortgaged Property is Sears, Roebuck & Co.
("Sears"), occupying 143,504 square feet, or approximately 29.5% of the net
rentable area. Sears is a national retailer of apparel, home decor, and
automotive products. As of June 7, 2004, Sears was rated "Baa1" (Moody's),
"BBB" (S&P) and "BBB+" (Fitch). The Sears lease expires in September 2009. The
second largest tenant that is part of the Mortgaged Property is Parisian
("Parisian"), occupying 127,938 square feet, or approximately 26.3% of the net
rentable area. Parisian, a subsidiary of Saks Incorporated, is an upscale
apparel and accessories department store retailer. As of June 7, 2004, Saks
Incorporated was rated "Ba3" (Moody's), "BB" (S&P) and "BB-" (Fitch). The
Parisian lease expires in January 2015. The third largest tenant that is part
of the Mortgaged Property is Eastdale Cinemas 8 ("Eastdale Cinemas 8"),
occupying 28,945 square feet, or 6.0% of the net rentable area. Eastdale
Cinemas 8 is an eight screen movie theater operated by Carmike Cinemas, which
operates approximately 300 theatres in 35 states. As of June 10, 2004, Carmike
Cinemas was rated "B3" (Moody's) and "B" (S&P). The Eastdale Cinemas 8 lease
expires in August 2007.
LOCK BOX ACCOUNT. If the Eastdale Mall Loan is not repaid in full on or
prior to the anticipated repayment date of June 11, 2014, the borrower must
notify the tenants that any and all tenant payments due under the applicable
tenant leases shall be directly deposited into a mortgagee-designated lock box
account.
HYPER-AMORTIZATION. Commencing on the anticipated repayment date of June
11, 2014, if the Eastdale Mall Loan is not repaid in full, the Eastdale Mall
Loan enters into a hyper-amortization period through June 11, 2034. The
interest rate applicable to the Eastdale Mall Loan during such
hyper-amortization period will increase to the greater of 3.0% over the
mortgage rate or 3.0% over the treasury rate, as specified in the loan
documents.
RELEASE OF PARCELS. The borrower may obtain the release of certain
unimproved, non-income producing parcels upon the satisfaction of certain
conditions, including, without limitation: (i) the borrower provides evidence
that the proposed use of the release parcel is consistent with the use of the
remaining Mortgaged Property, (ii) the borrower provides evidence that the
remaining Mortgaged Property will be in compliance with all applicable laws and
(iii) no event of default has occurred and is continuing. In addition, the
borrower may obtain the release of an anchor tenant parcel (and a portion of
the adjoining parking) upon the satisfaction of certain conditions, including,
without limitation: (i) the payment of a release price (through partial
defeasance) equal to the amount set forth in the mortgage (approximately 125%
of the value of the anchor tenant parcel), (ii) delivery of rating agency
confirmation that the release will not result in a downgrade, withdrawal or
qualification of the then current rating assigned to the Certificates and (iii)
no event of default has occurred and is continuing.
MANAGEMENT. Aronov Realty Management, Inc., an affiliate of the sponsor,
is the property manager for the Mortgaged Property securing the Eastdale Mall
Loan.
S-172
One Riverview Square
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Artesia
CUT-OFF DATE BALANCE $30,000,000
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 2.8%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
SPONSOR NGP Capital Partners III LLC
TYPE OF SECURITY Fee
MORTGAGE RATE 5.805%
MATURITY DATE May 11, 2011
AMORTIZATION TYPE ARD
INTEREST ONLY PERIOD 24
ORIGINAL TERM / AMORTIZATION 84 / 360
REMAINING TERM / AMORTIZATION 82 / 360
LOCKBOX Yes
UP-FRONT RESERVES
TAX/INSURANCE Yes
TI/LC(1) $5,200,000
DEBT SERVICE(2) $1,850,000
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes
REPLACEMENT $2,553
ADDITIONAL FINANCING None
CUT-OFF DATE BALANCE $30,000,000
CUT-OFF DATE BALANCE/SF $203
CUT-OFF DATE LTV 77.9%
MATURITY DATE LTV 72.7%
UW DSCR ON NCF 1.38x
- --------------------------------------------------------------------------------
(1) Reserve held until leasing, occupancy and rent commencement of the
remaining vacant premises for a minimum term of 10 years, with minimum
rents of $32 per square foot.
(2) Reserve held until such time as the tax abatements requested from the
city and county have been approved. Such reserve was taken into account
in determining net cash flow.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Miami, FL
PROPERTY TYPE Office - CBD
SIZE (SF) 147,917
OCCUPANCY AS OF APRIL 29, 2004 86.0%
YEAR BUILT / YEAR RENOVATED 2004 / NA
APPRAISED VALUE $38,500,000
PROPERTY MANAGEMENT Panther Management Services, Inc.
UW ECONOMIC OCCUPANCY 90.0%
UW REVENUES $4,297,438
UW TOTAL EXPENSES $1,354,582
UW NET OPERATING INCOME (NOI) $2,942,856
UW NET CASH FLOW (NCF) $2,912,218
- --------------------------------------------------------------------------------
S-173
- ---------------------------------------------------------------------------------------------------------------------------------
TENANT SUMMARY
- ---------------------------------------------------------------------------------------------------------------------------------
NET % OF NET ACTUAL % OF DATE OF
RATINGS* RENTABLE RENTABLE RENT ACTUAL LEASE
TENANT MOODY'S/S&P/FITCH AREA (SF) AREA PSF ACTUAL RENT RENT EXPIRATION
- ---------------------------------------------------------------------------------------------------------------------------------
United States Government ....... Aaa/AAA/AAA 127,210 86.0% $ 29.89 $3,802,211 100.0% December 2018
Vacant ......................... 20,707 14.0 0 0.0
------- ----- ---------- -----
TOTAL .......................... 147,917 100.0% $3,802,211 100.0%
======= ===== ========== =====
- ---------------------------------------------------------------------------------------------------------------------------------
* Certain ratings are more of the parent whether or not the parent
guarantees the lease.
- ----------------------------------------------------------------------------------------------------------------------
LEASE EXPIRATION SCHEDULE
- ----------------------------------------------------------------------------------------------------------------------
WA BASE CUMULATIVE % OF ACTUAL CUMULATIVE % OF
# OF LEASES RENT/SF TOTAL SF % OF TOTAL % OF SF RENT ACTUAL RENT
YEAR ROLLING ROLLING ROLLING SF ROLLING* ROLLING* ROLLING* ROLLING*
- ----------------------------------------------------------------------------------------------------------------------
2018 2 $ 29.89 127,210 86.0% 86.0% 100.0% 100.0%
- ----------------------------------------------------------------------------------------------------------------------
* Calculated based on the approximate square footage occupied by each
tenant.
S-174
THE LOAN. The Mortgage Loan (the "One Riverview Square Loan") is secured
by a first deed of trust encumbering an office building located in Miami,
Florida. The One Riverview Square Loan represents approximately 2.8% of the
Cut-Off Date Pool Balance. The One Riverview Square Loan was originated on May
7, 2004, and has a principal balance as of the Cut-Off Date of $30,000,000. The
One Riverview Square Loan provides for interest-only payments for the first 24
months of its term, and thereafter, fixed monthly payments of principal and
interest.
The One Riverview Square Loan has a remaining term of 82 months to its
anticipated repayment date of May 11, 2011. The One Riverview Square Loan may
be prepaid on or after March 11, 2011, and permits defeasance with United
States government obligations beginning three years after its first payment
date.
THE BORROWER. The Borrower is NGP Miami River Associates LLC, a special
purpose entity. Legal counsel to the borrower delivered a non-consolidation
opinion in connection with the origination of the One Riverview Square Loan.
The sponsor and indirect owner of the borrower is NGP Capital Partners III LLC
("NGP"). NGP's business focus is the acquisition of commercial properties
leased to the General Services Administration (GSA) and other investment grade
tenants. In the aggregate, current members of NGP's management team, headed by
Al Iudicello, a former executive level GSA employee, have acquired, financed,
managed and sold more than $1 billion in government occupied properties and
over $1 billion in investment grade commercial properties. One of NGP's
management team members, Alexander Vahabzadeh, has over 15 years experience in
the acquisition, development and disposition of diversified real estate assets
and another, Kamal Bahamdan, has over 10 years experience investing in direct
real estate investments and real estate funds.
THE PROPERTY. The Mortgaged Property is an approximately 147,917 square
foot office building situated on approximately 1.6 acres. The Mortgaged
Property was constructed in 2004. The Mortgaged Property is located in Miami,
Florida. As of April 29, 2004, the occupancy rate for the Mortgaged Property
securing the One Riverview Square Loan was approximately 86.0%. The single
tenant is the United States Government occupying approximately 127,210 square
feet, or approximately 86.0% of the net rentable area. The United States
Government lease expires in December 2018. The lease is executed by the General
Services Administration (GSA) and the individual suites are occupied by the
U.S. Equal Employment Opportunity Commission (EEOC) and the Department of
Homeland Security's (DHS) U.S. Citizenship and Immigration Services (USCIS),
formerly known as the Immigration and Naturalization Services (INS). As of the
closing of the One Riverview Square Loan a tenant improvement and leasing
commission reserve of $5,200,000 is in place for the vacant eighth floor. These
funds will be released upon leasing, occupancy and rent commencement of the
vacant premises for a minimum term of 10 years, with minimum rents of $32 per
square foot. In addition, an upfront reserve in the amount of $1,850,000 is
held by the lender until such time as the tax abatements requested from the
city and county have been approved.
LOCK BOX ACCOUNT. All tenant payments due under the applicable tenant
leases are deposited into a mortgagee-designated lock box account.
HYPER-AMORTIZATION. Commencing on the anticipated repayment date of May
11, 2011, if the One Riverview Square Loan is not paid in full, the One
Riverview Square Loan enters into a hyper-amortization period through May 11,
2034. The interest rate applicable to the One Riverview Square Loan during such
hyper-amortization period will increase to the greater of 4% over the mortgage
rate or 4.1% over the treasury rate, as specified in the loan documents.
MANAGEMENT. Panther Management Services, Inc. is the property manager for
the Mortgaged Property securing the One Riverview Square Loan. Panther
Management Services, Inc. is a division of Panther Real Estate Partners, a
diversified, opportunistic real estate organization headquartered in Miami,
Florida. Through its affiliated corporations and partnerships Panther Real
Estate Partners provides expertise in property acquisitions, asset and property
management, construction management, leasing, financing, and dispositions. In
the aggregate, Dan Sirlin and Jeff Krinsky, the principals of Panther Real
Estate Partners, have acquired, developed, restructured, and managed real
estate assets and partnerships valued in excess of $750,000,000 including over
400,000 square feet of office buildings, 2,000 apartment units, and more than
1,000,000 square feet of mixed use developments.
S-175
Pointe at Wellington
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE BALANCE $22,856,383
PERCENTAGE OF CUT-OFF DATE POOL
BALANCE 2.1%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
SPONSOR Joseph Cogen
TYPE OF SECURITY Fee
MORTGAGE RATE 6.230%
MATURITY DATE December 11, 2013
AMORTIZATION TYPE ARD
ORIGINAL TERM / AMORTIZATION 120 / 360
REMAINING TERM / AMORTIZATION 113 / 353
LOCKBOX Springing
UP-FRONT RESERVES
TAX/INSURANCE Yes
OCCUPANCY(1) $7,811,000
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes
TI/LC(2) $3,750
REPLACEMENT $1,109
ADDITIONAL FINANCING None
CUT-OFF DATE BALANCE $22,856,383
CUT-OFF DATE BALANCE/SF $172
CUT-OFF DATE LTV 66.4%
MATURITY DATE LTV 57.1%
UW DSCR ON NCF 1.67x
- --------------------------------------------------------------------------------
(1) Letters of credit to be released upon the achievement of certain
occupancy and/or rental income thresholds at the Mortgaged Property. The
borrower provided the letters of credit as additional security during
final construction and lease-up. It is anticipated that all thresholds
will be achieved by the end of 2004.
(2) Capped at $225,000.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Wellington, FL
PROPERTY TYPE Retail - Shadow Anchored
SIZE (SF) 133,089
OCCUPANCY AS OF APRIL 28, 2004 100.0%
YEAR BUILT / YEAR RENOVATED 2003 / NA
APPRAISED VALUE $34,400,000
PROPERTY MANAGEMENT Merin Hunter Codman, Inc.
UW ECONOMIC OCCUPANCY 95.0%
UW REVENUES $4,120,160
UW TOTAL EXPENSES $1,232,918
UW NET OPERATING INCOME (NOI) $2,887,242
UW NET CASH FLOW (NCF) $2,826,685
- --------------------------------------------------------------------------------
S-176
- ----------------------------------------------------------------------------------
TENANT SUMMARY
- ----------------------------------------------------------------------------------
NET % OF NET
RATINGS* RENTABLE RENTABLE
TENANT MOODY'S/S&P/FITCH AREA (SF) AREA
- ----------------------------------------------------------------------------------
LA Fitness ......................... NR/NR/NR 41,000 30.8%
Thomasville Furniture .............. NR/BBB/NR 12,000 9.0
Olive Garden (Ground Lease) ........ Baa1/BBB+/BBB+ 7,405 5.6
Blackwelder's Furniture ............ NR/NR/NR 7,015 5.3
Smokey Bones (Ground Lease) ........ Baa1/BBB+/BBB+ 6,887 5.2
NON-MAJOR TENANTS .................. 58,782 44.2
VACANT ............................. 0 0.0
------ -----
TOTAL . ............................ 133,089 100.0%
======= =====
- ----------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
% OF
ACTUAL ACTUAL DATE OF LEASE
TENANT RENT PSF ACTUAL RENT RENT EXPIRATION
- ------------------------------------------------------------------------------------------
LA Fitness ......................... $ 21.00 $ 861,000 26.7% October 2018
Thomasville Furniture .............. $ 22.00 264,000 8.2 March 2014
Olive Garden (Ground Lease) ........ $ 16.88 124,996 3.9 October 2013
Blackwelder's Furniture ............ $ 26.00 182,390 5.6 February 2009
Smokey Bones (Ground Lease) ........ $ 14.52 99,999 3.1 October 2013
NON-MAJOR TENANTS .................. $ 28.85 1,696,125 52.5
VACANT ............................. 0 0.0
---------- -----
TOTAL . ............................ $3,228,511 100.0%
========== =====
- ------------------------------------------------------------------------------------------
* Certain ratings are those of the parent whether or not the parent
guarantees the lease.
- ---------------------------------------------------------------------------------------------------------------------
LEASE EXPIRATION SCHEDULE
- ---------------------------------------------------------------------------------------------------------------------
WA BASE CUMULATIVE % OF ACTUAL CUMULATIVE % OF
# OF LEASES RENT/SF TOTAL SF % OF TOTAL % OF SF RENT ACTUAL RENT
YEAR ROLLING ROLLING ROLLING SF ROLLING* ROLLING* ROLLING* ROLLING*
- ---------------------------------------------------------------------------------------------------------------------
2004 0 $ 0.00 0 0.0% 0.0% 0.0% 0.0%
2005 0 $ 0.00 0 0.0% 0.0% 0.0% 0.0%
2006 0 $ 0.00 0 0.0% 0.0% 0.0% 0.0%
2007 0 $ 0.00 0 0.0% 0.0% 0.0% 0.0%
2008 9 $ 29.31 17,130 12.9% 12.9% 15.6% 15.6%
2009 5 $ 28.34 12,752 9.6% 22.5% 11.2% 26.7%
2010 0 $ 0.00 0 0.0% 22.5% 0.0% 26.7%
2011 0 $ 0.00 0 0.0% 22.5% 0.0% 26.7%
2012 0 $ 0.00 0 0.0% 22.5% 0.0% 26.7%
2013 11 $ 22.58 32,468 24.4% 46.8% 22.7% 49.4%
2014 6 $ 26.15 23,979 18.0% 64.9% 19.4% 68.9%
- ---------------------------------------------------------------------------------------------------------------------
* Calculated based on approximate square footage occupied by each
tenant.
S-177
THE LOAN. The Mortgage Loan (the "Pointe at Wellington Loan") is secured
by a first mortgage encumbering a shadow anchored retail center located in
Wellington, Florida. The Pointe at Wellington Loan represents approximately
2.1% of the Cut-Off Date Pool Balance. The Pointe at Wellington Loan was
originated on December 11, 2003, and has a principal balance as of the Cut-Off
Date of $22,856,383.
The Pointe at Wellington Loan has a remaining term of 113 months to its
anticipated repayment date of December 11, 2013. The Pointe at Wellington Loan
may be prepaid on or after September 11, 2013, and permits defeasance with
United States government obligations beginning four years after its first
payment date.
THE BORROWER. The borrower is The Centre at Wellington Green, Ltd., a
special purpose entity. Legal counsel to the borrower delivered a
non-consolidation opinion in connection with the origination of the Pointe at
Wellington Loan. The sponsor of the borrower is Joseph Cogen, a member of Gertz
Builders and Developers, Inc., a third generation, family-owned real estate
development firm based in Florida's Palm Beach and Broward counties.
THE PROPERTY. The Mortgaged Property is an approximately 133,089 square
foot shadow anchored retail center situated on approximately 21.3 acres. The
Mortgaged Property was constructed in 2003. The Mortgaged Property is located
in Wellington, Florida, within the Miami-Fort Lauderdale-Miami Beach, Florida
metropolitan statistical area. As of April 28, 2004, the occupancy rate for the
Mortgaged Property securing the Pointe at Wellington Loan was approximately
100.0%. The Mortgaged Property is shadowed by the Mall at Wellington Green, a
1.3 million square foot regional mall owned and operated by Taubman Centers,
Inc.
The largest tenant is LA Fitness ("LA Fitness"), occupying approximately
41,000 square feet, or approximately 30.8% of the net rentable area. LA Fitness
owns and operates athletic clubs in California, Arizona, Florida, Pennsylvania,
New Jersey, New York, Connecticut and Georgia. The LA Fitness lease expires in
October 2018. The second largest tenant is Thomasville Furniture Industries,
Inc. ("Thomasville Furniture"), occupying approximately 12,000 square feet, or
approximately 9.0% of the net rentable area. Thomasville Furniture is a
subsidiary of Furniture Brands International, Inc. ("FBN"), one of the largest
residential furniture manufacturers in the United States. As of June 7, 2004,
FBN was rated "BBB" (S&P). The Thomasville Furniture lease expires in March
2014. The third largest tenant is Olive Garden ("Olive Garden"), occupying
approximately 7,405 square feet on a ground lease, or approximately 5.6% of the
net rentable area. Olive Garden, a subsidiary of Darden Restaurants, Inc.
("Darden"), is an international operator of casual-dining restaurants. As of
June 7, 2004, Darden was rated "Baa1" (Moody's), "BBB+" (S&P) and "BBB+"
(Fitch). The Olive Garden lease expires in October 2013.
LOCK BOX ACCOUNT. If the Pointe at Wellington Loan is not repaid in full
on or prior to October 11, 2013, the borrower must notify the tenants that any
and all tenant payments due under the applicable tenant leases shall be
directly deposited into a mortgagee-designated lock box account.
HYPER-AMORTIZATION. Commencing on the anticipated repayment date of
December 11, 2013, if the Pointe at Wellington Loan is not paid in full, the
Pointe at Wellington Loan enters into a hyper-amortization period through
December 11, 2033. The interest rate applicable to the Pointe at Wellington
Loan during such hyper-amortization period will increase to the greater of 3.0%
over the mortgage rate or 3.0% over the treasury rate, as specified in the loan
documents.
MANAGEMENT. Merin Hunter Codman, Inc. is the property manager for the
Mortgaged Property securing the Pointe at Wellington Loan. Merin Hunter Codman,
Inc. is a full service commercial real estate investment advisory and brokerage
firm based in Palm Beach County, Florida.
S-178
Hampton Bays Town Center
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE BALANCE $20,500,000
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 1.9%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
SPONSOR Robert Morrow and Richard
Goldberg
TYPE OF SECURITY Fee
MORTGAGE RATE 5.050%
MATURITY DATE June 11, 2014
AMORTIZATION TYPE Balloon
INTEREST ONLY PERIOD 24
ORIGINAL TERM / AMORTIZATION 120 / 360
REMAINING TERM / 119 / 360
AMORTIZATION
LOCKBOX None
UP-FRONT RESERVES
TAX Yes
ESTOPPEL* $2,500,000
ONGOING MONTHLY RESERVES
TAX Yes
REPLACEMENT $933
ADDITIONAL FINANCING None
CUT-OFF DATE BALANCE $20,500,000
CUT-OFF DATE BALANCE/SF $199
CUT-OFF DATE LTV 71.9%
MATURITY DATE LTV 62.3%
UW DSCR ON NCF 1.71x
- --------------------------------------------------------------------------------
* Reserve held pending the receipt of clean estoppels certifying mandatory
criteria to be satisfied by both the Town of Southampton and Eckerd Drug
tenants.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Hampton Bays, NY
PROPERTY TYPE Retail - Anchored
SIZE (SF)* 102,956
OCCUPANCY AS OF MAY 17, 2004* 95.5%
YEAR BUILT / YEAR RENOVATED 2004 / NA
APPRAISED VALUE $28,500,000
PROPERTY MANAGEMENT Kenilworth Equities, LTD.
UW ECONOMIC OCCUPANCY 95.0%
UW REVENUES $2,811,284
UW TOTAL EXPENSES $506,426
UW NET OPERATING INCOME $2,304,858
(NOI)
UW NET CASH FLOW (NCF) $2,264,818
- --------------------------------------------------------------------------------
* Does not include 8 multifamily units, containing in the aggregate 10,000
square feet.
S-179
- -----------------------------------------------------------------------------------------------------------------------------
TENANT SUMMARY
- -----------------------------------------------------------------------------------------------------------------------------
NET
RENTABLE % OF NET % OF
RATINGS(1) AREA RENTABLE ACTUAL ACTUAL DATE OF LEASE
TENANT MOODY'S/S&P/FITCH (SF) AREA RENT PSF ACTUAL RENT RENT EXPIRATION
- -----------------------------------------------------------------------------------------------------------------------------
King Kullen Grocery Co. ...... NR/NR/NR 40,000 38.9% $ 20.00 $ 800,000 34.2% June 2027
Eckerd Drug .................. NR/NR/NR 9,665 9.4 $ 20.07 193,977 8.3 June 2024
Town of Southampton .......... NR/NR/NR 9,200 8.9 $ 30.00 276,000 11.8 May 2019
Hudson City Savings Bank ..... NR/NR/NR 4,500 4.4 $ 26.00 117,000 5.0 August 2019
Washington Mutual Bank ....... A3/A-/A 4,000 3.9 $ 31.25 125,000 5.4 November 2013
NON-MAJOR TENANTS ............ 30,991 30.1 $ 26.60 824,400 35.3
VACANT ....................... 4,600 4.5 0 0.0
------ ----- ---------- -----
TOTAL(2) ..................... 102,956 100.0% $2,336,377 100.0%
======= ===== ========== =====
- -----------------------------------------------------------------------------------------------------------------------------
(1) Certain ratings are those of the parent whether or not the parent
guarantees the lease.
(2) In addition, the collateral contains 8 multifamily units containing
approximately 10,000 square feet.
- --------------------------------------------------------------------------------------------------------------------
LEASE EXPIRATION SCHEDULE
- --------------------------------------------------------------------------------------------------------------------
WA BASE CUMULATIVE % OF ACTUAL CUMULATIVE % OF
# OF LEASES RENT/SF TOTAL SF % OF TOTAL % OF SF RENT ACTUAL RENT
YEAR ROLLING ROLLING ROLLING SF ROLLING* ROLLING* ROLLING* ROLLING*
- --------------------------------------------------------------------------------------------------------------------
2004 0 $ 0.00 0 0.0% 0.0% 0.0% 0.0%
2005 0 $ 0.00 0 0.0% 0.0% 0.0% 0.0%
2006 0 $ 0.00 0 0.0% 0.0% 0.0% 0.0%
2007 1 $ 31.88 1,167 1.1% 1.1% 1.6% 1.6%
2008 2 $ 24.44 4,126 4.0% 5.1% 4.3% 5.9%
2009 0 $ 0.00 0 0.0% 5.1% 0.0% 5.9%
2010 1 $ 25.00 2,110 2.0% 7.2% 2.3% 8.2%
2011 0 $ 0.00 0 0.0% 7.2% 0.0% 8.2%
2012 4 $ 28.02 9,165 8.9% 16.1% 11.0% 19.2%
2013 8 $ 27,24 18,423 17.9% 34.0% 21.5% 40.6%
2014 0 $ 0.00 0 0.0% 34.0% 0.0% 40.6%
- --------------------------------------------------------------------------------------------------------------------
* Calculated based on approximate square footage occupied by each
tenant.
S-180
THE LOAN. The Mortgage Loan (the "Hampton Bays Town Center Loan") is
secured by a first mortgage encumbering an anchored retail center located in
Hampton Bays, New York. The Hampton Bays Town Center Loan represents
approximately 1.9% of the Cut-Off Date Pool Balance. The Hampton Bays Town
Center Loan was originated on May 21, 2004, and has a principal balance as of
the Cut-Off Date of $20,500,000. The Hampton Bays Town Center Loan provides for
interest-only payments for the first 24 months of its term, and thereafter,
fixed monthly payments of principal and interest.
The Hampton Bays Town Center Loan has a remaining term of 119 months and
matures June 11, 2014. The Hampton Bays Town Center Loan may be prepaid on or
after April 11, 2014, and permits defeasance with United States government
obligations beginning two years after the Closing Date.
THE BORROWER. The borrower is Hamptons Ponquogue LLC, a special purpose
entity. Legal counsel to the borrower delivered a non-consolidation opinion in
connection with the origination of the Hampton Bays Town Center Loan. The
sponsors of the borrower are Robert Morrow and Richard Goldberg. Robert Morrow
owns and manages approximately 30 commercial and/or multifamily properties in
the eastern United States. Richard Goldberg is an experienced real estate
investor with numerous investments in retail and multifamily properties.
THE PROPERTY. The Mortgaged Property is an approximately 102,956 square
foot anchored retail center situated on approximately 8.5 acres. The Mortgaged
Property was constructed in 2004. The Mortgaged Property is located in Hampton
Bays, New York, within the New York-Northern New Jersey-Long Island, New
York-New Jersey-Pennsylvania metropolitan statistical area. As of May 17, 2004,
the occupancy rate for the Mortgaged Property securing the Hampton Bays Town
Center Loan was approximately 95.5%.
The largest tenant is King Kullen Grocery Co. ("King Kullen"), occupying
40,000 square feet, or approximately 38.9% of the net rentable area. King
Kullen operates approximately 50 supermarkets, mainly on Long Island, New York.
The King Kullen lease expires in June 2027. The second largest tenant is Eckerd
Drug ("Eckerd"), occupying 9,665 square feet, or approximately 9.4% of the net
rentable area. Eckerd is a national drug store operator offering prescription
medications and health and beauty products. The Eckerd lease expires in June
2024. The third largest tenant is the Town of Southampton ("Town of
Southampton"), occupying 9,200 square feet, or 8.9% of the net rentable area.
The Town of Southampton is approximately 80 miles east of New York City and
encompasses approximately 128 square miles on the South Fork of Long Island,
New York. The Town of Southampton lease expires in May 2019.
LOCK BOX ACCOUNT. The loan documents do not require a lock box account.
MANAGEMENT. Kenilworth Equities, LTD., an affiliate of one of the
sponsors, is the property manager for the Mortgaged Property securing the
Hampton Bays Town Center Loan.
S-181
Cole Company Portfolio
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE BALANCE $19,635,000
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 1.8%
NUMBER OF MORTGAGE LOANS 6
LOAN PURPOSE Acquisition
SPONSOR Cole Credit Property Fund II Limited Partnership
TYPE OF SECURITY Fee
MORTGAGE RATE 4.460%
MATURITY DATE May 11, 2011
AMORTIZATION TYPE Interest Only ARD
INTEREST ONLY PERIOD 84
ORIGINAL TERM / AMORTIZATION 84 / IO
REMAINING TERM / AMORTIZATION 82 / IO
LOCKBOX Springing
UP-FRONT RESERVES None
ONGOING MONTHLY RESERVES None
ADDITIONAL FINANCING None
CUT-OFF DATE BALANCE $19,635,000
CUT-OFF DATE BALANCE/SF $101
WA CUT-OFF DATE LTV 66.2%
WA MATURITY DATE LTV 66.2%
WA UW DSCR ON NCF 2.43x
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 6
LOCATION Various
PROPERTY TYPE Various
SIZE (SF) 194,699
OCCUPANCY AS OF VARIOUS DATES 100.0%
YEAR BUILT / YEAR RENOVATED Various / Various
APPRAISED VALUE $29,670,000
PROPERTY MANAGEMENT Fund Realty Advisors, Inc.
UW ECONOMIC OCCUPANCY 97.8%
UW REVENUES $2,378,504
UW TOTAL EXPENSES $138,865
UW NET OPERATING INCOME (NOI) $2,239,639
UW NET CASH FLOW (NCF) $2,127,910
- --------------------------------------------------------------------------------
S-182
Highland Pinetree Apartments
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE BALANCE $18,200,000
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 1.7%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
SPONSOR Dell G.
Dohrman
TYPE OF SECURITY Fee
MORTGAGE RATE 4.560%
MATURITY DATE May 11, 2014
AMORTIZATION TYPE Interest Only ARD
INTEREST ONLY PERIOD 120
ORIGINAL TERM / AMORTIZATION 120 / IO
REMAINING TERM / AMORTIZATION 118 / IO
LOCKBOX Springing
SHADOW RATING (S&P/FITCH)(*) BBB/BBB
P-FRONT RESERVES
ENGINEERING $253,125
NGOING MONTHLY RESERVES
REPLACEMENT $6,819
ADDITIONAL FINANCING None
CUT-OFF DATE BALANCE $18,200,000
CUT-OFF DATE BALANCE/UNIT $56,875
CUT-OFF DATE LTV 58.7%
MATURITY DATE LTV 58.7%
UW DSCR ON NCF 2.63x
- --------------------------------------------------------------------------------
(*) S&P and Fitch have confirmed that the Highland Pinetree Apartments Loan
has, in the context of its inclusion in the trust, the credit
characteristics consistent with that of an investment-grade rated
obligation.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Fullerton, CA
PROPERTY TYPE Multifamily - Conventional
SIZE (UNITS) 320
OCCUPANCY AS OF APRIL 19, 2004 97.8%
YEAR BUILT / YEAR RENOVATED 1972 / 2004
APPRAISED VALUE $31,000,000
PROPERTY MANAGEMENT Advanced Real Estate
Services, Inc.
UW ECONOMIC OCCUPANCY 95.0%
UW REVENUES $3,582,510
UW TOTAL EXPENSES $1,314,080
UW NET OPERATING INCOME (NOI) $2,268,430
UW NET CASH FLOW (NCF) $2,186,600
- --------------------------------------------------------------------------------
S-183
Cowesset Corners
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE BALANCE $17,430,000
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 1.6%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Acquisition
SPONSOR Jay Kaiser
TYPE OF SECURITY Fee
MORTGAGE RATE 5.800%
MATURITY DATE June 11, 2014
AMORTIZATION TYPE ARD
INTEREST ONLY PERIOD 48
ORIGINAL TERM / AMORTIZATION 120 / 360
REMAINING TERM / AMORTIZATION 119 / 360
LOCKBOX Yes
UP-FRONT RESERVES
TAX Yes
ENGINEERING $28,981
OCCUPANCY(1) $500,000
ONGOING MONTHLY RESERVES
TAX Yes
REPLACEMENT $1,322
TI/LC(2) $4,809
ADDITIONAL FINANCING(3) None
CUT-OFF DATE BALANCE $17,430,000
CUT-OFF DATE BALANCE/SF $121
CUT-OFF DATE LTV 80.0%
MATURITY DATE LTV 73.3%
UW DSCR ON NCF 1.20x
- --------------------------------------------------------------------------------
(1) Borrower deposited $500,000 into a reserve to be used for re-leasing the
Candle Corporation space. In addition, the borrower has assigned the
payment of any rents by the Candle Corporation to this reserve account.
(2) Capped at $100,000; however, if Stop and Shop gives notice that it does
not intend to renew its lease then the monthly escrow for the payment
dates in June 2007 through November 2007 is adjusted to reach a cap of
$200,000, or if Stop and Shop renews, the cap is reduced to $50,000.
(3) Although no mezzanine debt is currently outstanding, the Cowesset Corners
Loan permits, upon satisfaction of certain conditions set forth in the
loan documents, the incurrence of debt secured by pledges of the indirect
equity interests in the borrower to a permitted mezzanine lender.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Warwick, RI
PROPERTY TYPE Retail - Anchored
SIZE (SF) 144,265
OCCUPANCY AS OF APRIL 1, 2004* 100.0%
YEAR BUILT / YEAR RENOVATED 1987 / 1999
APPRAISED VALUE $21,800,000
PROPERTY MANAGEMENT AmCap, Incorporated
UW ECONOMIC OCCUPANCY 96.0%
UW REVENUES $2,245,545
UW TOTAL EXPENSES $724,974
UW NET OPERATING INCOME (NOI) $1,520,571
UW NET CASH FLOW (NCF) $1,477,797
- --------------------------------------------------------------------------------
* Includes the Candle Corporation which has vacated the Mortgaged Property.
S-184
Montelena Apartments
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE BALANCE $17,000,000
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 1.6%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Acquisition
SPONSOR Myron Lieberman
TYPE OF SECURITY Fee
MORTGAGE RATE 4.610%
MATURITY DATE April 11, 2009
AMORTIZATION TYPE ARD
INTEREST ONLY PERIOD 24
ORIGINAL TERM / AMORTIZATION 60 / 360
REMAINING TERM / AMORTIZATION 57 / 360
LOCKBOX Springing
UP-FRONT RESERVES
TAX Yes
ENGINEERING $47,438
ONGOING MONTHLY RESERVES
TAX Yes
REPLACEMENT $4,583
ADDITIONAL FINANCING None
CUT-OFF DATE BALANCE $17,000,000
CUT-OFF DATE BALANCE/UNIT $77,273
CUT-OFF DATE LTV 75.6%
MATURITY DATE LTV 72.0%
UW DSCR ON NCF 1.20x
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Pomona, CA
PROPERTY TYPE Multifamily - Conventional
SIZE (UNITS) 220
OCCUPANCY AS OF MARCH 22, 2004 90.9%
YEAR BUILT / YEAR RENOVATED 1971 / NA
APPRAISED VALUE $22,500,000
PROPERTY MANAGEMENT Self-managed
UW ECONOMIC OCCUPANCY 88.0%
UW REVENUES $2,202,371
UW TOTAL EXPENSES $889,981
UW NET OPERATING INCOME (NOI) $1,312,390
UW NET CASH FLOW (NCF) $1,257,390
- --------------------------------------------------------------------------------
S-185
Glenridge Pointe Office Buildings
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE BALANCE $16,500,000
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 1.6%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Acquisition
SPONSOR Highwoods Realty Limited
Partnership
TYPE OF SECURITY Fee
MORTGAGE RATE 4.840%
MATURITY DATE May 11, 2014
AMORTIZATION TYPE ARD
INTEREST ONLY PERIOD 48
ORIGINAL TERM / AMORTIZATION 120 / 360
REMAINING TERM / AMORTIZATION 118 / 360
LOCKBOX Springing
UP-FRONT RESERVES None
ONGOING MONTHLY RESERVES None
ADDITIONAL FINANCING None
CUT-OFF DATE BALANCE $16,500,000
CUT-OFF DATE BALANCE/SF $89
CUT-OFF DATE LTV 68.8%
MATURITY DATE LTV 62.0%
UW DSCR ON NCF 1.57x
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Atlanta, GA
PROPERTY TYPE Office - Suburban
SIZE (SF) 185,141
OCCUPANCY AS OF APRIL 6, 2004 91.1%
YEAR BUILT / YEAR RENOVATED 1972 / 1999
APPRAISED VALUE $24,000,000
PROPERTY MANAGEMENT Highwoods Realty Limited
Partnership
UW ECONOMIC OCCUPANCY 85.0%
UW REVENUES $3,297,981
UW TOTAL EXPENSES $1,397,500
UW NET OPERATING INCOME (NOI) $1,900,481
UW NET CASH FLOW (NCF) $1,635,157
- --------------------------------------------------------------------------------
S-186
ConAgra Distribution Facility
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE BALANCE $16,400,000
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 1.5%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Acquisition
SPONSOR Haleakala Ranch Company
TYPE OF SECURITY Fee
MORTGAGE RATE 5.920%
MATURITY DATE July 11, 2014
AMORTIZATION TYPE ARD
ORIGINAL TERM / AMORTIZATION 120 / 360
REMAINING TERM / AMORTIZATION 120 / 360
LOCKBOX Springing
UP-FRONT RESERVES None
ONGOING MONTHLY RESERVES None
ADDITIONAL FINANCING(*) None
CUT-OFF DATE BALANCE $16,400,000
CUT-OFF DATE BALANCE/SF $23
CUT-OFF DATE LTV 50.3%
MATURITY DATE LTV 42.6%
UW DSCR ON NCF 1.69x
- --------------------------------------------------------------------------------
(*) Although no secured subordinated debt is currently outstanding, the ConAgra
Distribution Facility Loan permits, upon satisfaction of certain
conditions set forth in the loan documents, the incurrence of debt (a)
secured by a lien on the Mortgaged Property that is subordinate to the
lien securing the ConAgra Distribution Facility and/or (b) secured by
pledges of the indirect equity interests in the borrower to a permitted
mezzanine lender.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Modesto , CA
PROPERTY TYPE Industrial - Warehouse
SIZE (SF) 726,299
OCCUPANCY AS OF JUNE 10, 2004 100.0%
YEAR BUILT / YEAR RENOVATED 2002 / NA
APPRAISED VALUE $32,600,000
PROPERTY MANAGEMENT Self-managed
UW ECONOMIC OCCUPANCY 100.0%
UW REVENUES $2,186,160
UW TOTAL EXPENSES $43,723
UW NET OPERATING INCOME (NOI) $2,142,437
UW NET CASH FLOW (NCF) $1,971,180
- --------------------------------------------------------------------------------
S-187
Broadstone Heights Apartments
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE BALANCE $15,250,000
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 1.4%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Acquisition
SPONSOR Robert A. Robotti, Marc J.
Paul, Secured California
Investments, Inc.
TYPE OF SECURITY Fee
MORTGAGE RATE 5.800%
MATURITY DATE May 11, 2014
AMORTIZATION TYPE ARD
INTEREST ONLY PERIOD 60
ORIGINAL TERM / AMORTIZATION 120 / 360
REMAINING TERM / AMORTIZATION 118 / 360
LOCKBOX Yes
UP-FRONT RESERVES
TAX/INSURANCE Yes
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes
REPLACEMENT $2,411
ADDITIONAL FINANCING None
CUT-OFF DATE BALANCE $15,250,000
CUT-OFF DATE BALANCE/UNIT $70,602
CUT-OFF DATE LTV 73.0%
MATURITY DATE LTV 68.1%
UW DSCR ON NCF 1.25x
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PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Albuquerque, NM
PROPERTY TYPE Multifamily - Conventional
SIZE (UNITS) 216
OCCUPANCY AS OF APRIL 20, 2004 98.2%
YEAR BUILT / YEAR RENOVATED 2003 / NA
APPRAISED VALUE $20,900,000
PROPERTY MANAGEMENT Alliance Residential, LLC
UW ECONOMIC OCCUPANCY 87.8%
UW REVENUES $2,168,834
UW TOTAL EXPENSES $776,131
UW NET OPERATING INCOME (NOI) $1,392,702
UW NET CASH FLOW (NCF) $1,338,702
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S-188
Greenpoint Industrial Center
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE BALANCE $14,983,705
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 1.4%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
SPONSOR Morty J. Yashar and
Michael Morgenstern
TYPE OF SECURITY Fee
MORTGAGE RATE 5.540%
MATURITY DATE June 11, 2014
AMORTIZATION TYPE Balloon
ORIGINAL TERM / AMORTIZATION 120 / 360
REMAINING TERM / AMORTIZATION 119 / 359
LOCKBOX Springing
UP-FRONT RESERVES
TAX/INSURANCE Yes
ENGINEERING $59,375
ENVIRONMENTAL $1,000
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes
TI/LC $ 8,856
REPLACEMENT $ 3,542
ADDITIONAL FINANCING None
CUT-OFF DATE BALANCE $14,983,705
CUT-OFF DATE BALANCE/SF $35
CUT-OFF DATE LTV 74.9%
MATURITY DATE LTV 62.7%
UW DSCR ON NCF 1.30x
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- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Brooklyn, NY
PROPERTY TYPE Industrial - Light Industrial
SIZE (SF) 425,080
OCCUPANCY AS OF MAY 21, 2004 97.6%
YEAR BUILT / YEAR RENOVATED 1931 / 1995
APPRAISED VALUE $20,000,000
PROPERTY MANAGEMENT Self-managed
UW ECONOMIC OCCUPANCY 95.0%
UW REVENUES $2,350,068
UW TOTAL EXPENSES $873,592
UW NET OPERATING INCOME (NOI) $1,476,475
UW NET CASH FLOW (NCF) $1,329,849
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S-189
Highridge Centre
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LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Citigroup
CUT-OFF DATE BALANCE $14,466,761
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 1.4%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
SPONSOR Kevin D. Cogan
TYPE OF SECURITY Fee
MORTGAGE RATE 4.950%
MATURITY DATE May 11, 2014
AMORTIZATION TYPE Balloon
ORIGINAL TERM / AMORTIZATION 120 / 360
REMAINING TERM / AMORTIZATION 118 / 358
LOCKBOX Springing
UP-FRONT RESERVES
TAX/INSURANCE Yes
ENGINEERING $1,250
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes
REPLACEMENT $3,209
ADDITIONAL FINANCING None
CUT-OFF DATE BALANCE $14,466,761
CUT-OFF DATE BALANCE/SF $75
CUT-OFF DATE LTV 68.6%
MATURITY DATE LTV 56.4%
UW DSCR ON NCF 1.52x
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PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Macon, GA
PROPERTY TYPE Office - Suburban
SIZE (SF) 192,545
OCCUPANCY AS OF MARCH 31, 2004 100.0%
YEAR BUILT / YEAR RENOVATED 1988 / NA
APPRAISED VALUE $21,100,000
PROPERTY MANAGEMENT Grubb & Ellis Management Services, Inc.
UW ECONOMIC OCCUPANCY 93.0%
UW REVENUES $3,076,016
UW TOTAL EXPENSES $1,384,303
UW NET OPERATING INCOME (NOI) $1,691,713
UW NET CASH FLOW (NCF) $1,411,267
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S-190
The Lake Apartments
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE BALANCE $14,000,000
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 1.3%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
Theodore G. Habing and
SPONSOR James R. White
TYPE OF SECURITY Fee
MORTGAGE RATE 4.260%
MATURITY DATE June 11, 2009
AMORTIZATION TYPE ARD
INTEREST ONLY PERIOD 24
ORIGINAL TERM / AMORTIZATION 60 / 360
REMAINING TERM / AMORTIZATION 59 / 360
LOCKBOX Springing
UP-FRONT RESERVES
TAX/INSURANCE Yes
ENGINEERING $13,294
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes
REPLACEMENT $3,753
ADDITIONAL FINANCING None
CUT-OFF DATE BALANCE $14,000,000
CUT-OFF DATE BALANCE/UNIT $102,941
CUT-OFF DATE LTV 79.1%
MATURITY DATE LTV 75.1%
UW DSCR ON NCF 1.24x
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- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Fullerton, CA
PROPERTY TYPE Multifamily - Conventional
SIZE (UNITS) 136
OCCUPANCY AS OF APRIL 30, 2004 96.3%
YEAR BUILT / YEAR RENOVATED 1972 / 2004
APPRAISED VALUE $17,700,000
PROPERTY MANAGEMENT Preferred Realty Advisors, Inc.
UW ECONOMIC OCCUPANCY 90.9%
UW REVENUES $1,854,157
UW TOTAL EXPENSES $785,889
UW NET OPERATING INCOME (NOI) $1,068,268
UW NET CASH FLOW (NCF) $1,023,237
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S-191
THE MORTGAGE LOAN SELLERS
The Depositor will acquire the Mortgage Loans from the Mortgage Loan
Sellers on or prior to the Closing Date pursuant to separate mortgage loan
purchase agreements (each, a "Mortgage Loan Purchase Agreement" and together,
the "Mortgage Loan Purchase Agreements"). The Mortgage Loan Sellers originated
the Mortgage Loans as described above under "--Mortgage Loan History".
Sixty (60) of the Mortgage Loans (the "Wachovia Mortgage Loans"),
representing 60.2% of the Cut-Off Date Pool Balance (52 Mortgage Loans in Loan
Group 1 or 59.4% of the Cut-Off Date Group 1 Balance and 8 Mortgage Loans in
Loan Group 2 or 67.0% of the Cut-Off Date Group 2 Balance), were originated by
Wachovia Bank, National Association. Wachovia is a national banking association
whose principal offices are located in Charlotte, North Carolina. Wachovia's
business is subject to examination and regulation by federal banking
authorities and its primary federal bank regulatory authority is the Office of
the Comptroller of the Currency. Wachovia is a wholly-owned subsidiary of
Wachovia Corporation, which, as of December 31, 2003, had total assets of $401
billion. Wachovia is acting as the Master Servicer. Wachovia Capital Markets,
LLC is acting as an Underwriter for this transaction and is an affiliate of
Wachovia.
Twenty-Four (24) of the Mortgage Loans (the "Artesia Mortgage Loans"),
representing 14.2% of the Cut-Off Date Pool Balance (17 Mortgage Loans in Loan
Group 1 or 11.9% of the Cut-Off Date Group 1 Balance and 7 Mortgage Loans in
Loan Group 2 or 33.0% of the Cut-Off Date Group 2 Balance), were originated by
Artesia Mortgage Capital Corporation ("Artesia"). Artesia is a Delaware
corporation engaged in the business of originating and securitizing US
commercial mortgage loans. Its principal offices are located in the Seattle
suburb of Issaquah, Washington. It is a wholly-owned subsidiary of Dexia Bank
which is rated "AA+" by Fitch, "AA" by S&P and "Aa2" by Moody's. Dexia Bank is
part of Dexia Group, a diversified financial services firm located in Brussels,
Belgium with a balance sheet of 350 billion EUR ($441 billion) and a stock
market capitalization of approximately 16 billion EUR ($20 billion) as of
December 2003.
Ten (10) of the Mortgage Loans (the "Citigroup Mortgage Loans"),
representing 13.1% of the Cut-Off Date Pool Balance (14.7% of the Cut-Off Date
Group 1 Balance), were originated by Citigroup Global Markets Realty Corp., a
New York corporation whose principal offices are located in New York, New York,
that is primarily engaged in the business of purchasing and originating
commercial mortgage loans. Citigroup is a subsidiary of Citigroup Financial
Products, Inc. An affiliate of Citigroup, Citigroup Global Markets Inc., is
acting as an Underwriter for this transaction.
Two (2) of the Mortgage Loans (the "Eurohypo Mortgage Loans"),
representing 12.4% of the Cut-Off Date Pool Balance (14.0% of the Cut-Off Date
Group 1 Balance), were originated by Eurohypo AG, New York Branch. Eurohypo AG,
New York Branch is the New York branch of a German banking corporation that
focuses on real estate and public finance banking. Eurohypo AG, New York Branch
has total commitments of approximately 2.73 billion EUR ($3.27 billion) of
which approximately 1.5 billion EUR ($1.8 billion) are first lien real estate
loans. Eurohypo AG, New York Branch has three offices in the United States
located in New York, Chicago and Los Angeles with over 70 professionals
concentrating on real estate investment banking. Eurohypo AG originates its
loans in the United States through its New York branch.
Wachovia Bank, National Association has no obligation to repurchase or
substitute any of the Artesia Mortgage Loans, the Eurohypo Mortgage Loans or
the Citigroup Mortgage Loans; Artesia Mortgage Capital Corporation has no
obligation to repurchase the Wachovia Mortgage Loans, the Eurohypo Mortgage
Loans or the Citigroup Mortgage Loans; Eurohypo AG, New York Branch has no
obligation to repurchase the Wachovia Mortgage Loans, the Artesia Mortgage
Loans or the Citigroup Mortgage Loans; and Citigroup Global Markets Realty
Corp. has no obligation to repurchase or substitute any of the Wachovia
Mortgage Loans, the Artesia Mortgage Loans or the Eurohypo Mortgage Loans.
All information concerning the Wachovia Mortgage Loans contained herein or
used in the preparation of this prospectus supplement is as underwritten by
Wachovia Bank, National Association. All information concerning the Artesia
Mortgage Loans contained herein or used in the preparation of
S-192
this prospectus supplement is as underwritten by Artesia Mortgage Capital
Corporation. All information concerning the Eurohypo Mortgage Loans contained
herein or used in the preparation of this prospectus supplement is as
underwritten by Eurohypo AG, New York Branch. All information concerning the
Citigroup Mortgage Loans contained herein or used in the preparation of this
prospectus supplement is as underwritten by Citigroup Global Markets Realty
Corp.
UNDERWRITING STANDARDS
General. Each Mortgage Loan Seller's commercial real estate finance or
commercial mortgage banking group has the authority, with the approval from the
appropriate credit committee, to originate fixed-rate, first lien mortgage
loans for securitization. Each Mortgage Loan Seller's commercial real estate
finance or commercial mortgage banking operation is staffed by real estate
professionals. Each Mortgage Loan Seller's loan underwriting group is an
integral component of the commercial real estate finance or commercial mortgage
banking group which also includes groups responsible for loan origination and
closing mortgage loans.
Upon receipt of a loan application, the respective Mortgage Loan Seller's
loan underwriters commence an extensive review of the borrower's financial
condition and creditworthiness and the real estate which will secure the loan.
Loan Analysis. Generally, each Mortgage Loan Seller performs both a credit
analysis and collateral analysis with respect to a loan applicant and the real
estate that will secure the loan. In general, credit analysis of the borrower
and the real estate includes a review of historical financial statements,
including rent rolls (generally unaudited), third party credit reports,
judgment, lien, bankruptcy and pending litigation searches and, if applicable,
the loan payment history of the borrower. Each Mortgage Loan Seller typically
performs a qualitative analysis which incorporates independent credit checks
and published debt and equity information with respect to certain principals of
the borrower as well as the borrower itself. Borrowers are generally required
to be single-purpose entities although they are generally not required to be
structured to limit the possibility of becoming insolvent or bankrupt. The
collateral analysis typically includes an analysis of the historical property
operating statements, rent rolls, operating budgets, a projection of future
performance, if applicable, and a review of tenant leases. Each Mortgage Loan
Seller generally requires third party appraisals, as well as environmental and
building condition reports. Each report is reviewed for acceptability by a
staff member of the applicable Mortgage Loan Seller or a third-party consultant
for compliance with program standards. Generally, the results of these reviews
are incorporated into the underwriting report. The related Mortgage Loan Seller
re-underwrote such Mortgage Loan to the related Mortgage Loan Seller's
underwriting guidelines. In some instances, one or more provisions of the
guidelines were waived or modified by the related Mortgage Loan Seller where it
was determined not to adversely affect the Mortgage Loans originated by it in
any material respect.
Loan Approval. Prior to commitment, all mortgage loans must be approved by
the applicable Mortgage Loan Seller's credit committee in accordance with its
credit policies.
Debt Service Coverage Ratio and LTV Ratio. Each Mortgage Loan Seller's
underwriting standards generally mandate minimum debt service coverage ratios
and maximum loan-to-value ratios. The debt service coverage ratio guidelines
are generally calculated based on net cash flow at the time of origination. In
addition, each Mortgage Loan Seller's underwriting guidelines generally permit
a maximum amortization period of 30 years. However, notwithstanding such
guidelines, in certain circumstances the actual debt service coverage ratios,
loan-to-value ratios and amortization periods for the mortgage loans originated
by such Mortgage Loan Seller may vary from these guidelines.
Escrow Requirements. Generally, each Mortgage Loan Seller requires most
borrowers to fund various escrows for taxes and insurance, capital expenses and
replacement reserves. Generally, the required escrows for mortgage loans
originated by each Mortgage Loan Seller are as follows:
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. Each Mortgage Loan Seller may waive this escrow requirement
under certain circumstances.
S-193
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. Each Mortgage
Loan Seller may waive this escrow requirement under certain
circumstances.
o Replacement Reserves--Replacement reserves are generally calculated in
accordance with the expected useful life of the components of the
property during the term of the mortgage loan.
o Completion Repair/Environmental Remediation--Typically, a completion
repair or remediation reserve is required where an environmental or
engineering report suggests that such reserve is necessary. Upon funding
of the applicable Mortgage Loan, the Mortgage Loan Seller generally
requires that at least 110% of the estimated costs of repairs or
replacements be reserved and generally requires that repairs or
replacements be completed within a year after the funding of the
applicable Mortgage Loan.
o Tenant Improvement/Lease Commissions--In some cases, major tenants have
lease expirations within the Mortgage Loan term. To mitigate this risk,
special reserves may be required to be funded either at closing of the
Mortgage Loan and/or during the Mortgage Loan term to cover certain
anticipated leasing commissions or tenant improvement costs which might
be associated with re-leasing the space occupied by such tenants.
ASSIGNMENT OF THE MORTGAGE LOANS; REPURCHASES AND SUBSTITUTIONS
On the Closing Date, the Depositor will transfer the Mortgage Loans,
without recourse, to the Trustee for the benefit of the Certificateholders. In
connection with such transfer, the Depositor will require each Mortgage Loan
Seller to deliver to the Trustee or to a document custodian appointed by the
Trustee (a "Custodian"), among other things, the following documents with
respect to each Mortgage Loan originated by the applicable Mortgage Loan Seller
(the "Mortgage File"): (i) the original Mortgage Note, endorsed on its face or
by allonge attached thereto, without recourse, to the order of the Trustee or
in blank (or, if the original Mortgage Note has been lost, an affidavit to such
effect from the applicable Mortgage Loan Seller or another prior holder,
together with a copy of the Mortgage Note); (ii) the original or a copy of the
Mortgage, together with an original or copy of any intervening assignments of
the Mortgage, in each case (unless not yet returned by the applicable recording
office) with evidence of recording indicated thereon or certified by the
applicable recorder's office; (iii) the original or a copy of any related
assignment of leases and of any intervening assignments thereof (if such item
is a document separate from the Mortgage), in each case (unless not yet
returned by the applicable recording office) with evidence of recording
indicated thereon or certified by the applicable recorder's office; (iv) an
original assignment of the Mortgage in favor of the Trustee or in blank and
(subject to the completion of certain missing recording information) in
recordable form; (v) an original assignment of any related assignment of leases
(if such item is a document separate from the Mortgage) in favor of the Trustee
or in blank and (subject to the completion of certain missing recording
information) in recordable form; (vi) the original assignment of all unrecorded
documents relating to the Mortgage Loan, if not already assigned pursuant to
items (iv) or (v) above; (vii) originals or copies of all modification,
consolidation, assumption and substitution agreements in those instances in
which the terms or provisions of the Mortgage or Mortgage Note have been
modified or the Mortgage Loan has been assumed or consolidated; (viii) the
original or a copy of the policy or certificate of lender's title insurance
issued on the date of the origination of such Mortgage Loan, or, if such policy
has not been issued or located, an irrevocable, binding commitment (which may
be a marked version of the policy that has been executed by an authorized
representative of the title company or an agreement to provide the same
pursuant to binding escrow instructions executed by an authorized
representative of the title company) to issue such title insurance policy; (ix)
any filed copies (bearing evidence of filing) or other evidence of filing
satisfactory to the Trustee of any UCC financing statements, related amendments
and continuation statements in the possession of the applicable Mortgage Loan
Seller; (x) an original assignment in favor of the Trustee of any financing
statement executed and filed in favor of the applicable Mortgage Loan Seller in
the relevant jurisdiction; (xi) the original or copy of any ground lease,
ground lessor estoppel, environmental insurance policy or guaranty relating to
such Mortgage Loan; (xii) any intercreditor agreement relating to permitted
debt (including
S-194
mezzanine debt) of the mortgagor; (xiii) copies of any loan agreement, escrow
agreement, or security agreement relating to such Mortgage Loan; and (xiv) a
copy of any letter of credit and related transfer documents related to such
Mortgage Loan. Notwithstanding the foregoing, with respect to the 11 Madison
Avenue Loan, the 2004-C10 Trustee will hold the original documents related to
the 11 Madison Avenue Loan for the benefit of the trust fund formed by the
2004-C10 Pooling and Servicing Agreement, the trust fund formed by the 2004-C11
Pooling and Servicing Agreement and the Trust Fund formed by the Pooling and
Servicing Agreement, other than the related Mortgage Notes that are not assets
of the trust fund formed by the 2004-C10 Pooling and Servicing Agreement, which
will be held (i) in the case of the Mortgage Note related to the 11 Madison
Avenue Pari Passu Loan not included in any of the trust fund formed by the
2004-C10 Pooling and Servicing Agreement, the trust fund formed by the 2004-C11
Pooling and Servicing Agreement or the Trust Fund, by the holder of that 11
Madison Avenue Senior Loan, (ii) in the case of the Mortgage Note related to
the 11 Madison Avenue Pari Passu Loan included in the trust fund formed by the
2004-C11 Pooling and Servicing Agreement, by the trustee under the 2004-C11
Pooling and Servicing Agreement and (iii) in the case of the Mortgage Note
related to the 11 Madison Avenue Loan, by the Trustee under the Pooling and
Servicing Agreement.
As provided in the Pooling and Servicing Agreement, the Trustee or a
Custodian on its behalf is required to review each Mortgage File within a
specified period following its receipt thereof. If any of the documents
described in the preceding paragraph is found during the course of such review
to be missing from any Mortgage File or defective, and in either case such
omission or defect materially and adversely affects the value of the applicable
Mortgage Loan, the interest of the trust or the interests of any
Certificateholder, the applicable Mortgage Loan Seller, if it does not deliver
the document or cure the defect (other than omissions solely due to a document
not having been returned by the related recording office) within a period of 90
days following such Mortgage Loan Seller's receipt of notice thereof, will be
obligated pursuant to the applicable Mortgage Loan Purchase Agreement (the
relevant rights under which will be assigned by the Depositor to the Trustee)
to (1) repurchase the affected Mortgage Loan within such 90-day period at a
price (the "Purchase Price") generally equal to the sum of (i) the unpaid
principal balance of such Mortgage Loan (including, with respect to the 11
Madison Avenue Loan, the 11 Madison Avenue Non-Pooled Component), (ii) the
unpaid accrued interest on such Mortgage Loan (calculated at the applicable
Mortgage Rate) to but not including the Due Date in the Collection Period in
which the purchase is to occur and (iii) certain Additional Trust Fund Expenses
in respect of such Mortgage Loan, including but not limited to, servicing
expenses that are reimbursable to the Master Servicer, the Special Servicer or
the Trustee plus any interest thereon and on any related P&I Advances or (2)
other than with respect to the 11 Madison Avenue Loan, substitute a Qualified
Substitute Mortgage Loan for such Mortgage Loan and pay the Master Servicer for
deposit into the Certificate Account a shortfall amount equal to the difference
between the Purchase Price of the deleted Mortgage Loan calculated as of the
date of substitution and the Stated Principal Balance of such Qualified
Substitute Mortgage Loan as of the date of substitution (the "Substitution
Shortfall Amount"); provided that, unless the breach would cause the Mortgage
Loan not to be a qualified mortgage within the meaning of Section 860G(a)(3) of
the Code, the applicable Mortgage Loan Seller will generally have an additional
90-day period to deliver the document or cure the defect, as the case may be,
if it is diligently proceeding to effect such delivery or cure and provided
further, no such document omission or defect (other than with respect to the
Mortgage Note, the Mortgage, the title insurance policy, the ground lease or
any letter of credit) will be considered to materially and adversely affect the
interests of the Certificateholders in, or the value of, the affected Mortgage
Loans unless the document with respect to which the document omission or defect
exists is required in connection with an imminent enforcement of the
mortgagee's rights or remedies under the related Mortgage Loan, defending any
claim asserted by any borrower or third party with respect to the Mortgage
Loan, establishing the validity or priority of any lien or any collateral
securing the Mortgage Loan or for any immediate significant servicing
obligation.
The foregoing repurchase or substitution obligation constitutes the sole
remedy available to the Certificateholders and the Trustee for any uncured
failure to deliver, or any uncured defect in, a constituent Mortgage Loan
document. Each Mortgage Loan Seller is solely responsible for its repurchase or
substitution obligation, and such obligations will not be the responsibility of
the Depositor.
S-195
The Pooling and Servicing Agreement requires the Trustee promptly to cause
each of the assignments described in clauses (iv), (v) and (x) of the second
preceding paragraph to be submitted for recording or filing, as applicable, in
the appropriate public records. See "DESCRIPTION OF THE POOLING AND SERVICING
AGREEMENTS--Assignment of Mortgage Assets; Repurchases" in the prospectus.
A "Qualified Substitute Mortgage Loan" is a mortgage loan which must, on
the date of substitution: (i) have an outstanding Stated Principal Balance,
after application of all scheduled payments of principal and interest due
during or prior to the month of substitution, not in excess of the Stated
Principal Balance of the deleted Mortgage Loan as of the Due Date in the
calendar month during which the substitution occurs; (ii) have a Mortgage Rate
not less than the Mortgage Rate of the deleted Mortgage Loan; (iii) have the
same Due Date as the deleted Mortgage Loan; (iv) accrue interest on the same
basis as the deleted Mortgage Loan (for example, on the basis of a 360-day year
consisting of twelve 30-day months); (v) have a remaining term to stated
maturity not greater than, and not more than two years less than, the remaining
term to stated maturity of the deleted Mortgage Loan; (vi) have an original
loan-to-value ratio not higher than that of the deleted Mortgage Loan and a
current loan-to-value ratio not higher than the then current loan-to-value
ratio of the deleted Mortgage Loan; (vii) comply as of the date of substitution
with all of the representations and warranties set forth in the applicable
Mortgage Loan Purchase Agreement; (viii) have an environmental report with
respect to the related Mortgaged Property which will be delivered as a part of
the related servicing file; (ix) have an original debt service coverage ratio
not less than the original debt service coverage ratio of the deleted Mortgage
Loan; (x) be determined by an opinion of counsel to be a "qualified replacement
mortgage" within the meaning of Section 860G(a)(4) of the Code; (xi) not have a
maturity date after the date two years prior to the Rated Final Distribution
Date; (xii) not be substituted for a deleted Mortgage Loan unless the Trustee
has received prior confirmation in writing by each Rating Agency that such
substitution will not result in the withdrawal, downgrade or qualification of
the rating assigned by the Rating Agency to any Class of Certificates then
rated by the Rating Agency (the cost, if any, of obtaining such confirmation to
be paid by the applicable Mortgage Loan Seller); (xiii) have a date of
origination that is not more than 12 months prior to the date of substitution;
(xiv) have been approved by the Controlling Class Representative, which
approval may not be unreasonably withheld or delayed; (xv) not be substituted
for a deleted Mortgage Loan if it would result in the termination of the REMIC
status of any of the REMICs or the imposition of tax on any of the REMICs other
than a tax on income expressly permitted or contemplated to be received by the
terms of the Pooling and Servicing Agreement; and (xvi) become a part of the
same Loan Group as the deleted Mortgage Loan. In the event that one or more
mortgage loans are substituted for one or more deleted Mortgage Loans, then the
amounts described in clause (i) shall be determined on the basis of aggregate
principal balances and the rates described in clause (ii) above and the
remaining term to stated maturity referred to in clause (v) above shall be
determined on a weighted average basis; provided that no individual Mortgage
Loan shall have a Mortgage Rate, net of the related Administrative Cost Rate,
that is less than the highest Pass-Through Rate of any Class of Sequential Pay
Certificates then outstanding bearing a fixed rate. When a Qualified Substitute
Mortgage Loan is substituted for a deleted Mortgage Loan, the applicable
Mortgage Loan Seller will be required to certify that such Mortgage Loan meets
all of the requirements of the above definition and shall send such
certification to the Trustee. Notwithstanding the foregoing, no substitutions
will be permitted for the 11 Madison Avenue Loan.
REPRESENTATIONS AND WARRANTIES; REPURCHASES AND SUBSTITUTIONS
In each Mortgage Loan Purchase Agreement, the applicable Mortgage Loan
Seller has represented and warranted with respect to each Mortgage Loan
(subject to certain exceptions specified in each Mortgage Loan Purchase
Agreement), as of the Closing Date, or as of such other date specifically
provided in the representation and warranty, among other things, generally
that:
(i) the information set forth in the schedule of Mortgage Loans
attached to the applicable Mortgage Loan Purchase Agreement (which contains
certain of the information set forth in Annex A-1 to this prospectus
supplement) was true and correct in all material respects as of the Cut-Off
Date;
S-196
(ii) as of the date of its origination, such Mortgage Loan complied in
all material respects with, or was exempt from, all requirements of
federal, state or local law relating to the origination of such Mortgage
Loan;
(iii) immediately prior to the sale, transfer and assignment to the
Depositor, the applicable Mortgage Loan Seller had good and marketable
title to, and was the sole owner of, each Mortgage Loan, and is
transferring the Mortgage Loan free and clear of any and all liens,
pledges, charges, security interests or any other ownership interests of
any nature encumbering such Mortgage Loan;
(iv) the proceeds of such Mortgage Loan have been fully disbursed and
there is no requirement for future advances thereunder by the mortgagee;
(v) each related Mortgage Note, Mortgage, assignment of leases, if
any, and other agreements executed in connection with such Mortgage Loan is
the legal, valid and binding obligation of the related mortgagor (subject
to any nonrecourse provisions therein and any state anti-deficiency or
market value limit deficiency legislation), enforceable in accordance with
its terms, except (a) that certain provisions contained in such Mortgage
Loan documents are or may be unenforceable in whole or in part under
applicable state or federal laws, but neither the application of any such
laws to any such provision nor the inclusion of any such provision renders
any of the Mortgage Loan documents invalid as a whole and such Mortgage
Loan documents taken as a whole are enforceable to the extent necessary and
customary for the practical realization of the rights and benefits afforded
thereby, and (b) as such enforcement may be limited by bankruptcy,
insolvency, receivership, reorganization, moratorium, redemption,
liquidation or other laws affecting the enforcement of creditors' rights
generally, and by general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at law);
(vi) as of the date of its origination, there was no valid offset,
defense, counterclaim, abatement or right to rescission with respect to any
of the related Mortgage Notes, Mortgage(s) or other agreements executed in
connection therewith, and, as of the Cut-Off Date, there was no valid
offset, defense, counterclaim or right to rescission with respect to such
Mortgage Note, Mortgage(s) or other agreements, except in each case, with
respect to the enforceability of any provisions requiring the payment of
default interest, late fees, additional interest, prepayment premiums or
yield maintenance charges;
(vii) each related assignment of Mortgage and assignment of assignment
of leases from the applicable Mortgage Loan Seller to the Trustee
constitutes the legal, valid and binding first priority assignment from
such Mortgage Loan Seller (subject to the customary limitations set forth
in (v) above);
(viii) the related Mortgage is a valid and enforceable first lien on
the related Mortgaged Property except for the exceptions set forth in
paragraph (v) above and (a) the lien of current real property taxes, ground
rents, water charges, sewer rents and assessments not yet due and payable,
(b) covenants, conditions and restrictions, rights of way, easements and
other matters of public record, none of which, individually or in the
aggregate, materially and adversely interferes with the current use of the
Mortgaged Property or the security intended to be provided by such Mortgage
or with the mortgagor's ability to pay its obligations under the Mortgage
Loan when they become due or materially and adversely affects the value of
the Mortgaged Property, (c) the exceptions (general and specific) and
exclusions set forth in the related title insurance policy or appearing of
record, none of which, individually or in the aggregate, materially and
adversely interferes with the current use of the Mortgaged Property or the
security intended to be provided by such Mortgage or with the mortgagor's
ability to pay its obligations under the Mortgage Loan when they become due
or materially and adversely affects the value of the Mortgaged Property,
(d) other matters to which like properties are commonly subject, none of
which, individually or in the aggregate, materially and adversely
interferes with the current use of the Mortgaged Property or the security
intended to be provided by such Mortgage or with the mortgagor's ability to
pay its obligations under the Mortgage Loan when they become due or
materially and adversely affects the value of the Mortgaged Property, (e)
the right of tenants (whether under ground leases, space leases or
operating leases) at the Mortgaged Property to remain following a
foreclosure or similar proceeding (provided that such
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tenants are performing under such leases) and (f) if such Mortgage Loan is
cross-collateralized with any other Mortgage Loan, the lien of the Mortgage
for such other Mortgage Loan, none of which, individually or in the
aggregate, materially and adversely interferes with the current use of the
Mortgaged Property or the security intended to be provided by such Mortgage
or with the mortgagor's ability to pay its obligations under the Mortgage
Loan when they become due or materially and adversely affects the value of
the Mortgaged Property;
(ix) all real estate taxes and governmental assessments, or
installments thereof, which would be a lien on the Mortgaged Property and
that prior to the Cut-Off Date have become delinquent in respect of the
related Mortgaged Property have been paid, or an escrow of funds in an
amount sufficient to cover such payments has been established;
(x) as of the Cut-Off Date, and to the applicable Mortgage Loan
Seller's actual knowledge based solely upon due diligence customarily
performed with the origination of comparable mortgage loans by the Mortgage
Loan Seller, each related Mortgaged Property was free and clear of any
material damage (other than deferred maintenance for which escrows were
established at origination) that would materially and adversely affect the
value of such Mortgaged Property as security for the Mortgage Loan and to
the applicable Mortgage Loan Seller's actual knowledge as of the Cut-Off
Date there was no proceeding pending for the total or partial condemnation
of such Mortgaged Property;
(xi) as of the date of its origination, all insurance coverage
required under each related Mortgage, which insurance covered such risks as
were customarily acceptable to prudent commercial and multifamily mortgage
lending institutions lending on the security of property comparable to the
related Mortgaged Property in the jurisdiction in which such Mortgaged
Property is located, and with respect to a fire and extended perils
insurance policy, was in an amount (subject to a customary deductible) at
least equal to the lesser of (a) the replacement cost of improvements
located on such Mortgaged Property, or (b) the initial principal balance of
the Mortgage Loan, and in any event, the amount necessary to prevent
operation of any co-insurance provisions, and was in full force and effect
with respect to each related Mortgaged Property;
(xii) as of the Closing Date, each Mortgage Loan was not, and in the
prior 12 months (or since the date of origination if such Mortgage Loan has
been originated within the past 12 months), has not been, 30 days or more
past due in respect of any Scheduled Payment; and
(xiii) one or more environmental site assessments or updates thereof
were performed by an environmental consulting firm independent of the
applicable Mortgage Loan Seller and the applicable Mortgage Loan Seller's
affiliates with respect to each related Mortgaged Property during the
18-month period preceding the origination of the related Mortgage Loan, and
the applicable Mortgage Loan Seller, having made no independent inquiry
other than to review the report(s) prepared in connection with the
assessment(s) referenced herein, has no actual knowledge and has received
no notice of any material and adverse environmental condition or
circumstance affecting such Mortgaged Property that was not disclosed in
such report(s).
In the case of a breach of any of the representations and warranties in
any Mortgage Loan Purchase Agreement that materially and adversely affects the
value of a Mortgage Loan, the interests of the trust therein or the interests
of any Certificateholder, the applicable Mortgage Loan Seller, if it does not
cure such breach within a period of 90 days following its receipt of notice
thereof, is obligated pursuant to the applicable Mortgage Loan Purchase
Agreement (the relevant rights under which have been assigned by the Depositor
to the Trustee) to either substitute a Qualified Substitute Mortgage Loan and
pay any Substitution Shortfall Amount or to repurchase the affected Mortgage
Loan within such 90-day period at the applicable Purchase Price; provided that,
unless the breach would cause the Mortgage Loan not to be a qualified mortgage
within the meaning of Section 860G(a)(3) of the Code, the applicable Mortgage
Loan Seller generally has an additional 90-day period to cure such breach if it
is diligently proceeding with such cure. Each Mortgage Loan Seller is solely
responsible for its repurchase or substitution obligation, and such obligations
will not be the responsibility of the Depositor.
The foregoing substitution or repurchase obligation constitutes the sole
remedy available to the Certificateholders and the Trustee for any uncured
breach of any Mortgage Loan Seller's representations
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and warranties regarding its Mortgage Loans. There can be no assurance that the
applicable Mortgage Loan Seller will have the financial resources to repurchase
any Mortgage Loan at any particular time. Each Mortgage Loan Seller is the sole
warranting party in respect of the Mortgage Loans sold by such Mortgage Loan
Seller to the Depositor, and none of the Depositor nor any of such party's
affiliates (except with respect to Wachovia Bank, National Association in its
capacity as a Mortgage Loan Seller) will be obligated to substitute or
repurchase any such affected Mortgage Loan in connection with a breach of a
Mortgage Loan Seller's representations and warranties if such Mortgage Loan
Seller defaults on its obligation to do so.
REPURCHASE OR SUBSTITUTION OF CROSS-COLLATERALIZED MORTGAGE LOANS
If (i) any Mortgage Loan is required to be repurchased or substituted for
in the manner described above in "--Assignment of the Mortgage Loans;
Repurchases and Substitutions" or "--Representations and Warranties;
Repurchases and Substitutions", (ii) such Mortgage Loan is cross-collateralized
and cross-defaulted with one or more other Mortgage Loans (each a "Crossed
Loan" and, collectively, a "Crossed Group"), and (iii) the applicable document
omission or defect (a "Defect") or breach of a representation and warranty (a
"Breach") does not constitute a Defect or Breach, as the case may be, as to
each other Crossed Loan in such Crossed Group (without regard to this
paragraph), then the applicable Defect or Breach, as the case may be, will be
deemed to constitute a Defect or Breach, as the case may be, as to any other
Crossed Loan in the Crossed Group for purposes of this paragraph, and the
related Mortgage Loan Seller will be required to repurchase or substitute for
such other Crossed Loan(s) in the related Crossed Group as provided above in
"--Assignment of the Mortgage Loans; Repurchases and Substitutions" or
"--Representations and Warranties; Repurchases and Substitutions" unless: (i)
the debt service coverage ratio for all of the remaining Crossed Loans for the
four calendar quarters immediately preceding the repurchase or substitution is
not less than the debt service coverage ratio for all such related Crossed
Loans, including the affected Crossed Loan, for the four calendar quarters
immediately preceding the repurchase or substitution, (ii) the loan-to-value
ratio for any of the remaining related Crossed Loans, determined at the time of
repurchase or substitution, is not greater than the loan-to-value ratio for all
such related Crossed Loans, including the affected Crossed Loan, determined at
the time of repurchase or substitution, and (iii) the Trustee receives an
opinion of counsel to the effect that such repurchase or substitution is
permitted by the REMIC provisions. In the event that the remaining Crossed
Loans satisfy the aforementioned criteria, the Mortgage Loan Seller may elect
either to repurchase or substitute for only the affected Crossed Loan as to
which the related Breach or Defect exists or to repurchase or substitute for
all of the Crossed Loans in the related Crossed Group.
To the extent that the related Mortgage Loan Seller repurchases or
substitutes for an affected Crossed Loan as described in the immediately
preceding paragraph while the Trustee continues to hold any related Crossed
Loans, the related Mortgage Loan Seller and the Depositor have agreed in the
related Mortgage Loan Purchase Agreement to forbear from enforcing any remedies
against the other's Primary Collateral (as defined below), but each is
permitted to exercise remedies against the Primary Collateral securing its
respective affected Crossed Loans, including, with respect to the Trustee, the
Primary Collateral securing Mortgage Loans still held by the Trustee, so long
as such exercise does not materially impair the ability of the other party to
exercise its remedies against its Primary Collateral. If the exercise of
remedies by one party would materially impair the ability of the other party to
exercise its remedies with respect to the Primary Collateral securing the
Crossed Loans held by such party, then both parties have agreed in the related
Mortgage Loan Purchase Agreement to forbear from exercising such remedies until
the loan documents evidencing and securing the relevant Mortgage Loans can be
modified in a manner that complies with the Mortgage Loan Purchase Agreement to
remove the threat of material impairment as a result of the exercise of
remedies or some other accommodation can be reached. "Primary Collateral" means
the Mortgaged Property directly securing a Crossed Loan and excluding any
property as to which the related lien may only be foreclosed upon by virtue of
the cross collateralization features of such loans.
CHANGES IN MORTGAGE POOL CHARACTERISTICS
The descriptions in this prospectus supplement of the Mortgage Loans and
the Mortgaged Properties are based upon the Mortgage Pool as it is expected to
be constituted as of the close of business on the
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Closing Date, assuming that (i) all scheduled principal and interest payments
due on or before the Cut-Off Date will be made, and (ii) there will be no
principal prepayments on or before the Cut-Off Date. Prior to the issuance of
the Certificates, Mortgage Loans may be removed from the Mortgage Pool as a
result of prepayments, delinquencies, incomplete documentation or otherwise, if
the Depositor or the applicable Mortgage Loan Seller deems such removal
necessary, appropriate or desirable. A limited number of other mortgage loans
may be included in the Mortgage Pool prior to the issuance of the Certificates,
unless including such mortgage loans would materially alter the characteristics
of the Mortgage Pool as described in this prospectus supplement. The Depositor
believes that the information set forth in this prospectus supplement will be
representative of the characteristics of the Mortgage Pool as it will be
constituted at the time the Certificates are issued, although the range of
Mortgage Rates and maturities as well as other characteristics of the Mortgage
Loans described in this prospectus supplement may vary.
A Current Report on Form 8-K (the "Form 8-K") will be available to
purchasers of the Offered Certificates on or shortly after the Closing Date and
will be filed, together with the Pooling and Servicing Agreement, with the
Securities and Exchange Commission within fifteen days after the initial
issuance of the Offered Certificates.
SERVICING OF THE MORTGAGE LOANS
GENERAL
The Master Servicer and the Special Servicer, either directly or through
sub-servicers, are required to service and administer the Mortgage Loans (other
than the 11 Madison Avenue Loan) for the benefit of the Certificateholders, and
the Companion Loans (other than the 11 Madison Avenue Companion Loans) for the
holder of such Companion Loans, in accordance with applicable law, the terms of
the Pooling and Servicing Agreement, the terms of the related Intercreditor
Agreement, if applicable, and the terms of the respective Mortgage Loans and,
if applicable, the Companion Loans, to the extent consistent with the
foregoing, (a) in the same manner in which, and with the same care, skill,
prudence and diligence with which, the Master Servicer or the Special Servicer,
as the case may be, generally services and administers similar mortgage loans
with similar borrowers (i) for other third parties, giving due consideration to
customary and usual standards of practice of prudent institutional commercial
mortgage lenders servicing their own loans, or (ii) held in its own portfolio,
whichever standard is higher, (b) with a view to the maximization of the
recovery on such Mortgage Loans on a net present value basis and the best
interests of the Certificateholders and the trust or, if a Co-Lender Loan
(other than the 11 Madison Avenue Loan) and its related Companion Loan (a "Loan
Pair") are involved, with a view towards the maximization of recovery on such
Loan Pair to the Certificateholders, the holder of the related Companion Loan
and the Trust Fund (as a collective whole, taking into account that the
Mountain View Apartments Subordinate Loan is subordinate to the Mountain View
Apartments Loan and that the Fox Valley Apartments Subordinate Loan is
subordinate to the Fox Valley Apartments Loan, to the extent set forth in the
related Intercreditor Agreement), and (c) without regard to (i) any
relationship that the Master Servicer or the Special Servicer, as the case may
be, or any affiliate thereof, may have with the related borrower, the Mortgage
Loan Sellers or any other party to the Pooling and Servicing Agreement or any
affiliate thereof; (ii) the ownership of any Certificate or Companion Loan by
the Master Servicer or the Special Servicer, as the case may be, or by any
affiliate thereof; (iii) the right of the Master Servicer or the Special
Servicer, as the case may be, to receive compensation or other fees for its
services rendered pursuant to the Pooling and Servicing Agreement; (iv) the
obligation of the Master Servicer to make Advances (as defined in this
prospectus supplement); (v) the ownership, servicing or management by the
Master Servicer or the Special Servicer or any affiliate thereof for others of
any other mortgage loans or real property; (vi) any obligation of the Master
Servicer, or any affiliate thereof, to repurchase or substitute a Mortgage Loan
as a Mortgage Loan Seller; (vii) any obligation of the Master Servicer or any
affiliate thereof to cure a breach of a representation and warranty with
respect to a Mortgage Loan; and (viii) any debt the Master Servicer or Special
Servicer or any affiliate of either has extended to any obligor or any
affiliate thereof on a Mortgage Note (the foregoing referred to as the
"Servicing Standard"). See "--Servicing of the 11 Madison Avenue Loan" below
for a description of the servicing of the 11 Madison Avenue Loan.
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The Master Servicer and the Special Servicer may appoint sub-servicers
with respect to the Mortgage Loans; provided that the Master Servicer and the
Special Servicer will remain obligated under the Pooling and Servicing
Agreement for the servicing of the Mortgage Loans (other than the 11 Madison
Avenue Loan). SL Green Funding LLC will be appointed as a sub-servicer for the
2004-C10 special servicer with respect to the 11 Madison Avenue Loan. The Trust
Fund will not be responsible for any fees owed to any sub-servicer retained by
the Master Servicer or the Special Servicer. Each sub-servicer retained thereby
will be reimbursed by the Master Servicer or the Special Servicer, as the case
may be, for certain expenditures which it makes, generally to the same extent
the Master Servicer or the Special Servicer would be reimbursed under the
Pooling and Servicing Agreement.
Set forth below, following the subsection captioned "--The Master Servicer
and the Special Servicer," is a description of certain pertinent provisions of
the Pooling and Servicing Agreement relating to the servicing of the Mortgage
Loans and the Companion Loans (but excluding the 11 Madison Avenue Loan and the
related Companion Loans). Reference is also made to the prospectus, in
particular to the section captioned "DESCRIPTION OF THE POOLING AND SERVICING
AGREEMENTS", for important information in addition to that set forth in this
prospectus supplement regarding the terms and conditions of the Pooling and
Servicing Agreement as they relate to the rights and obligations of the Master
Servicer and the Special Servicer thereunder. The Special Servicer generally
has all of the rights to indemnity and reimbursement, and limitations on
liability, that the Master Servicer is described as having in the accompanying
prospectus and certain additional rights to indemnity as provided in the
Pooling and Servicing Agreement relating to actions taken at the direction of
the Controlling Class Representative (and, in certain circumstances, the holder
of a Subordinate Companion Loan), and the Special Servicer rather than the
Master Servicer will perform the servicing duties described in the prospectus
with respect to Specially Serviced Mortgage Loans and REO Properties (each as
described in this prospectus supplement). In addition to the circumstances for
resignation of the Master Servicer set forth in the accompanying prospectus,
the Master Servicer and the Special Servicer each has the right to resign at
any other time provided that (i) a willing successor thereto has been found,
(ii) each of the Rating Agencies confirms in writing that the successor's
appointment will not result in a withdrawal, qualification or downgrade of any
rating or ratings assigned to any class of Certificates, (iii) the resigning
party pays all costs and expenses in connection with such transfer, and (iv)
the successor accepts appointment prior to the effectiveness of such
resignation. See "DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS--Certain
Matters Regarding the Master Servicer and the Depositor" in the accompanying
prospectus.
THE MASTER SERVICER AND THE SPECIAL SERVICER
Wachovia Bank, National Association, in its capacity as Master Servicer
under the Pooling and Servicing Agreement (in such capacity, the "Master
Servicer"), will be responsible for servicing the Mortgage Loans (other than
Specially Serviced Mortgage Loans, REO Properties and the 11 Madison Avenue
Loan). Although the Master Servicer will be authorized to employ agents,
including sub-servicers, to directly service the Mortgage Loans for which it
will be responsible, the Master Servicer will remain liable for its servicing
obligations under the Pooling and Servicing Agreement.
Wachovia Bank, National Association is a wholly owned subsidiary of
Wachovia Corporation, is our affiliate, one of the Mortgage Loan Sellers and an
affiliate of one of the Underwriters. Wachovia Bank, National Association is
also acting as the master servicer and initial special servicer for the 11
Madison Avenue Loan under the 2004-C10 Pooling and Servicing Agreement. In
addition, it is anticipated that Wachovia Bank, National Association (or an
affiliated entity) will be the holder of one of the 11 Madison Avenue Pari
Passu Loans and one of the 11 Madison Avenue Subordinate Loans. Wachovia Bank,
National Association's principal servicing offices are located at NC 1075, 8739
Research Drive URP4, Charlotte, North Carolina 28262.
As of April 30, 2004, Wachovia Bank, National Association 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.
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The information set forth in this prospectus supplement concerning
Wachovia Bank, National Association has been provided by Wachovia Bank,
National Association, and neither the Depositor nor the Underwriters make any
representation or warranty as to the accuracy or completeness of such
information. Wachovia Bank, National Association (apart from its obligations as
a Mortgage Loan Seller and except for the information in the first three
paragraphs under this heading) will make no representations as to the validity
or sufficiency of the Pooling and Servicing Agreement, the Certificates, the
Mortgage Loans, this prospectus supplement or related documents.
Clarion Partners, LLC, a New York limited liability company, will
initially be appointed as special servicer under the Pooling and Servicing
Agreement (the "Special Servicer"), and will be responsible for servicing the
Specially Serviced Mortgage Loans and REO Properties. The principal servicing
offices of the Special Servicer are located 230 Park Avenue, 12th Floor, New
York, New York 10169, and its telephone number is (212) 883-2500. As of June
15, 2004, the Special Servicer was actively servicing, as special servicer, 5
commercial and multifamily loans and REO properties with a principal balance of
approximately $170 million. The Special Servicer is named as special servicer
on 11 commercial mortgage-backed securitization transactions totaling
approximately $10 billion in aggregate outstanding principal amount
representing approximately 940 assets. The Special Servicer and its affiliates
own and are in the business of acquiring assets similar in type to the assets
of the Trust Fund. Accordingly, the assets of the Special Servicer and its
affiliates may, depending upon the particular circumstances including the
nature and location of such assets, compete with the Mortgaged Properties for
tenants, purchasers, financing and so forth.
The information set forth herein regarding the Special Servicer has been
provided by Clarion Partners, LLC and neither the Depositor nor any Underwriter
makes any representation or warranty as to the accuracy or completeness of such
information.
With respect to the Mortgage Loans, other than the 11 Madison Avenue Loan,
the Pooling and Servicing Agreement permits the holder (or holders) of the
majority of the Voting Rights allocated to the Controlling Class to replace the
Special Servicer and to select a representative who may advise the Special
Servicer and whose approval is required for certain actions by the Special
Servicer under certain circumstances. With respect to the 11 Madison Avenue
Loan, the Pooling and Servicing Agreement permits the appointment of a
representative to advise the 2004-C10 Special Servicer with respect to certain
actions related to the 11 Madison Avenue Whole Loan. Each advisor referred to
above is referred to herein as the "Controlling Class Representative." The
Controlling Class Representative with respect to the Mortgage Loans, other than
the 11 Madison Avenue Loan, is selected by holders of Certificates representing
more than 50% of the Certificate Balance of the Controlling Class. The
Controlling Class Representative with respect to the 11 Madison Avenue Loan is
appointed first by the holder of a majority of the Class MAD Certificates until
the Component Principal Balance of the 11 Madison Avenue Non-Pooled Component
minus the portion of any Appraisal Reduction Amount allocable to the 11 Madison
Avenue Non-Pooled Component is less than 25% of its original Component
Principal Balance, and then by the holders of Certificates representing more
than 50% of the Certificate Balance of the Controlling Class; provided that the
Controlling Class Representative with respect to the 11 Madison Avenue Loan may
not be an affiliate of the related borrower. See "--The Controlling Class
Representative" in this prospectus supplement. Such holder (or holders) will be
required to pay all out-of-pocket costs related to the transfer of servicing if
the Special Servicer is replaced other than due to an event of default,
including without limitation, any costs relating to Rating Agency confirmation
and legal fees associated with the transfer. The "Controlling Class" is the
Class of Sequential Pay Certificates, (i) which bears the latest alphabetical
Class designation and (ii) the Certificate Balance of which is greater than 25%
of its original Certificate Balance; provided, however, that if no Class of
Sequential Pay Certificates satisfies clause (ii) above, the Controlling Class
shall be the outstanding Class of Certificates (other than the Class Z
Certificates, the Class MAD Certificates, the REMIC Residual Certificates or
the Class IO Certificates) bearing the latest alphabetical Class designation.
The Class A-1, Class A-2, Class A-3 and Class A-4 Certificates will be treated
as one Class for determining the Controlling Class.
The 2004-C10 Pooling and Servicing Agreement permits, so long as no 11
Madison Avenue Control Appraisal Period exists, the holder of the most
subordinate 11 Madison Avenue Subordinate Loan for which no control appraisal
period exists, to replace the 2004-C10 Special Servicer with respect to the
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11 Madison Avenue Whole Loan. Such holder will be required to pay all
out-of-pocket costs related to the transfer of servicing if the 2004-C10
Special Servicer is replaced other than due to an event of default, including
without limitation, any costs relating to Rating Agency confirmation and legal
fees associated with the transfer. Following the occurrence and during the
continuance of an 11 Madison Avenue Control Appraisal Period, the 2004-C10
Controlling Class Representative shall have the power to replace the 2004-C10
Special Servicer with respect to the 11 Madison Avenue Loan. See "--The
Controlling Class Representative" in the prospectus supplement. Any replacement
of the 2004-C10 Special Servicer will be subject to, among other things, (i)
the delivery of notice of the proposed replacement to the Rating Agencies and
receipt of written confirmation from the Rating Agencies that the replacement
will not result in a qualification, downgrade or withdrawal of any of the then
current ratings assigned to the Certificates, and (ii) the written agreement of
the successor 2004-C10 special servicer to be bound by the terms and conditions
of the 2004-C10 Pooling and Servicing Agreement. See "DESCRIPTION OF THE
CERTIFICATES--Voting Rights" in this prospectus supplement and the accompanying
prospectus.
The Special Servicer is responsible for servicing and administering any
Mortgage Loan (other than the 11 Madison Avenue Loan) or Companion Loan (other
than the 11 Madison Avenue Companion Loans) as to which (a) the related
mortgagor has (i) failed to make when due any Balloon Payment unless the Master
Servicer has, on or prior to the due date of such Balloon Payment, received
written evidence from an institutional lender of such lender's binding
commitment to refinance such Mortgage Loan or Companion Loan within 120 days
after the due date of such Balloon Payment (provided that if such refinancing
does not occur during such time specified in the commitment, a Servicing
Transfer Event will be deemed to have occurred), or (ii) failed to make when
due any Periodic Payment (other than a Balloon Payment), and such failure has
continued unremedied for 60 days; (b) the Master Servicer or the Special
Servicer (in the case of the Special Servicer, with the consent of the
Controlling Class Representative) has determined, in its good faith reasonable
judgment and in accordance with the Servicing Standard, based on communications
with the related mortgagor, that a default in making a Periodic Payment
(including a Balloon Payment) is likely to occur and is likely to remain
unremedied for at least 60 days; (c) there shall have occurred a default (other
than as described in clause (a) above and, in certain circumstances, the
failure to maintain insurance for terrorist or similar attacks or for other
risks required by the mortgage loan documents to be insured against pursuant to
the terms of the Pooling and Servicing Agreement) that the Master Servicer or
the Special Servicer (in the case of the Special Servicer, with the consent of
the Controlling Class Representative) shall have determined, in its good faith
and reasonable judgment and in accordance with the Servicing Standard,
materially impairs the value of the Mortgaged Property as security for the
Mortgage Loan and, if applicable, Companion Loan or otherwise materially
adversely affects the interests of Certificateholders and that continues
unremedied beyond the applicable grace period under the terms of the Mortgage
Loan (or, if no grace period is specified, for 60 days and provided that a
default that gives rise to an acceleration right without any grace period shall
be deemed to have a grace period equal to zero); (d) a decree or order under
any bankruptcy, insolvency or similar law shall have been entered against the
related borrower and such decree or order shall have remained in force,
undischarged, undismissed or unstayed for a period of 60 days; (e) the related
borrower shall consent to the appointment of a conservator or receiver or
liquidator in any insolvency or similar proceedings of or relating to such
related borrower or of or relating to all or substantially all of its property;
(f) the related borrower shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or
(g) the Master Servicer shall have received notice of the commencement of
foreclosure or similar proceedings with respect to the related Mortgaged
Property (each event described in clauses (a) through (g) above, a "Servicing
Transfer Event").
In general, as long as the related Co-Lender Loan (other than the 11
Madison Avenue Loan) is owned by the trust, each Companion Loan (other than the
11 Madison Avenue Companion Loans) will be serviced and administered under the
Pooling and Servicing Agreement as if it were a Mortgage Loan and the holder of
the related promissory note were a Certificateholder. If a Companion Loan
(other than the 11 Madison Avenue Companion Loans) becomes specially serviced,
then the Co-Lender Loan will become a Specially Serviced Mortgage Loan. If a
Co-Lender Loan (other than the 11 Madison Avenue
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Loan) becomes a Specially Serviced Mortgage Loan, then the related Companion
Loan will become a Specially Serviced Mortgage Loan. If the 11 Madison Avenue
Pari Passu Loan becomes a specially serviced mortgage loan under the 2004-C10
Pooling and Servicing Agreement, the 11 Madison Avenue Loan will become a
specially serviced mortgage loan under the 2004-C10 Pooling and Servicing
Agreement.
If any amounts due under a Co-Lender Loan or the related Subordinate
Companion Loans are accelerated after an event of default under the applicable
Mortgage Loan documents, the holder of the related Subordinate Companion Loan
will be entitled to purchase the related Mortgage Loan at the price described
under "DESCRIPTION OF THE MORTGAGE POOL--Co-Lender Loans" in this prospectus
supplement.
If a Servicing Transfer Event occurs with respect to any Mortgage Loan
(other than the 11 Madison Avenue Loan) or a related Companion Loan, the Master
Servicer is in general required to transfer its servicing responsibilities with
respect to such Mortgage Loan and Companion Loan to the Special Servicer.
Notwithstanding such transfer, the Master Servicer will continue to receive
payments on such Mortgage Loan and/or Companion Loan (including amounts
collected by the Special Servicer), to make certain calculations with respect
to such Mortgage Loan and Companion Loan, and to make remittances (including,
if necessary, P&I Advances) and prepare certain reports to the Trustee with
respect to such Mortgage Loan. If title to the related Mortgaged Property is
acquired by the Trust Fund (upon acquisition, an "REO Property"), whether
through foreclosure, deed in lieu of foreclosure or otherwise, the Special
Servicer will continue to be responsible for the management thereof.
Mortgage Loans and Companion Loans serviced by the Special Servicer are
referred to in this prospectus supplement as "Specially Serviced Mortgage
Loans" and, together with any REO Properties, constitute "Specially Serviced
Trust Fund Assets". The Master Servicer has no responsibility for the Special
Servicer's performance of its duties under the Pooling and Servicing Agreement.
A Mortgage Loan (other than the 11 Madison Avenue Loan) or Companion Loan
(other than the 11 Madison Avenue Companion Loans) will cease to be a Specially
Serviced Mortgage Loan (and will become a "Corrected Mortgage Loan" as to which
the Master Servicer will re-assume servicing responsibilities):
(a) with respect to the circumstances described in clause (a) of the
definition of Servicing Transfer Event, when the related borrower has made
three consecutive full and timely Periodic Payments under the terms of such
Mortgage Loan (as such terms may be changed or modified in connection with
a bankruptcy or similar proceeding involving the related borrower or by
reason of a modification, waiver or amendment granted or agreed to by the
Special Servicer);
(b) with respect to any of the circumstances described in clauses (b),
(d), (e) and (f) of the definition of Servicing Transfer Event, when such
circumstances cease to exist in the good faith, reasonable judgment of the
Special Servicer, but, with respect to any bankruptcy or insolvency
proceedings described in clauses (d), (e) and (f) no later than the entry
of an order or decree dismissing such proceeding;
(c) with respect to the circumstances described in clause (c) of the
definition of Servicing Transfer Event, when such default is cured; and
(d) with respect to the circumstances described in clause (h) of the
definition of Servicing Transfer Event, when such proceedings are
terminated;
so long as at that time no other Servicing Transfer Event then exists and
provided no additional default is foreseeable in the reasonable good faith
judgment of the Special Servicer.
SERVICING OF THE 11 MADISON AVENUE LOAN
The 11 Madison Avenue Loan, and any related REO Property, is being
serviced under the 2004-C10 Pooling and Servicing Agreement and therefore the
2004-C10 Master Servicer and/or the 2004-C10 Trustee will generally make
advances and remit collections on the 11 Madison Avenue Loan to or on behalf of
the Trust Fund. The servicing arrangements under the 2004-C10 Pooling and
Servicing Agreement are generally similar to the servicing arrangements under
the Pooling and Servicing Agreement.
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In that regard:
o Wachovia Bank, National Association is the 2004-C10 Master Servicer
and, with respect to the 11 Madison Avenue mortgage loan, the 2004-C10
Special Servicer and the 2004-C10 Special Servicer is Lennar Partners,
Inc., with respect to each mortgage loan other than the 11 Madison
Avenue mortgage loan.
o The 2004-C10 Trustee is Wells Fargo Bank, N.A., who will be the
mortgagee of record for the 11 Madison Avenue Loan.
o The Master Servicer, the Special Servicer, the Trustee or the Fiscal
Agent under the Pooling and Servicing Agreement will have no
obligation or authority to (a) supervise the 2004-C10 Master Servicer,
the 2004-C10 Special Servicer or 2004-C10 Trustee or (b) make
servicing advances with respect to the 11 Madison Avenue Loan. The
obligation of the Master Servicer to provide information and
collections to the Trustee and the Certificateholders with respect to
the 11 Madison Avenue Loan is dependent on its receipt of the
corresponding information and collection from the 2004-C10 Master
Servicer or the 2004-C10 Special Servicer.
o In accordance with the terms of the related Intercreditor Agreement
and the 2004-C10 Pooling and Servicing Agreement, after an 11 Madison
Avenue Control Appraisal Period has occurred and is continuing,
subject to the exceptions described herein under "SERVICING OF THE
MORTGAGE LOANS--The Controlling Class Representative", the Controlling
Class Representative will generally share with both the 2004-C11
Controlling Class Representative and the 2004-C10 Controlling Class
Representative the rights given to the 2004-C10 Controlling Class
Representative under the 2004-C10 Pooling and Servicing Agreement to
direct the servicing of the 11 Madison Avenue Loan. Prior to the
occurrence of an 11 Madison Avenue Control Appraisal Period, the
2004-C10 Controlling Class Representative will not be entitled to
exercise any of the rights and powers described in the 2004-C10
Pooling and Servicing Agreement with respect to the 11 Madison Avenue
Loan, and, instead, the holders of the 11 Madison Avenue Subordinate
Companion Loans or their designees will have the right to direct the
servicing of the 11 Madison Avenue Loan. See "--The Controlling Class
Representative" below.
o Pursuant to the 2004-C10 Pooling and Servicing Agreement, the workout
fee and liquidation fee with respect to the 11 Madison Avenue Loan
will be generally the same as under the Pooling and Servicing
Agreement.
o The Master Servicer will be required to make P&I Advances with respect
to the 11 Madison Avenue Loan that the 2004-C10 Master Servicer and
the 2004-C10 Trustee is required but fails to make, unless the
2004-C10 Master Servicer or the Master Servicer, after receiving the
necessary information from the 2004-C10 Master Servicer, has
determined that such advance would not be recoverable from collections
on the 11 Madison Avenue Loan.
o If the 2004-C10 Master Servicer determines that a servicing advance it
made with respect to the 11 Madison Avenue Loan or the related
Mortgaged Property is nonrecoverable, it will be entitled to be
reimbursed from general collections on all Mortgage Loans.
SERVICING AND OTHER COMPENSATION AND PAYMENT OF EXPENSES
The principal compensation to be paid to the Master Servicer in respect of
its servicing activities is the Master Servicing Fee. The "Master Servicing
Fee" is payable monthly on a loan-by-loan basis from amounts received in
respect of interest on each Mortgage Loan (including each Specially Serviced
Mortgage Loan, and from REO Revenue with respect to each REO Mortgage Loan), is
calculated on the basis of a 360-day year consisting of twelve 30-day months,
accrues at the related Master Servicing Fee Rate and is computed on the basis
of the same principal amount respecting which any related interest payment due
on the Mortgage Loan is computed. The "Master Servicing Fee Rate" is a per
annum rate ranging from 0.0400% to 0.1100%. As of the Cut-Off Date the weighted
average Master Servicing Fee Rate will be approximately 0.0418% per annum. The
Master Servicer will not be entitled to receive a separate fee with respect to
a Companion Loan unless such fee is expressly set forth in the related
Intercreditor Agreement. Otherwise, all references in this section to "Mortgage
Loans" will include the
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Companion Loans. In addition, with respect to the 11 Madison Avenue Loan, all
references in this section to "Mortgage Loans" include the 11 Madison Avenue
Non-Pooled Component.
The 11 Madison Avenue Loan will be serviced by the 2004-C10 Master
Servicer. Notwithstanding the foregoing, the Master Servicer shall receive a
Master Servicing Fee with respect to the 11 Madison Avenue Loan at a Master
Servicing Fee Rate of 0.02%.
If a borrower prepays a Mortgage Loan on a date that is prior to its Due
Date in any Collection Period, the amount of interest (net of related Master
Servicing Fees and, if applicable, Additional Interest) that accrues on the
Mortgage Loan during such Collection Period will be less (such shortfall, a
"Prepayment Interest Shortfall") than the amount of interest (net of related
Master Servicing Fees and, if applicable, Additional Interest and without
regard to any Prepayment Premium or Yield Maintenance Charge actually
collected) that would have accrued on the Mortgage Loan through its Due Date.
If such a principal prepayment occurs during any Collection Period after the
Due Date for such Mortgage Loan in such Collection Period, the amount of
interest (net of related Master Servicing Fees) that accrues and is collected
on the Mortgage Loans during such Collection Period will exceed (such excess, a
"Prepayment Interest Excess") the amount of interest (net of related Master
Servicing Fees, and without regard to any Prepayment Premium or Yield
Maintenance Charge actually collected) that would have been collected on the
Mortgage Loan during such Collection Period if the borrower had not prepaid.
Any Prepayment Interest Excesses collected will be paid to the Master Servicer
as additional servicing compensation. However, with respect to each
Distribution Date, the Master Servicer is required to deposit into the
Certificate Account (such deposit, a "Compensating Interest Payment"), without
any right of reimbursement therefor, with respect to each Mortgage Loan (other
than a Specially Serviced Mortgage Loan and other than any Mortgage Loan on
which the Special Servicer has waived a prepayment restriction) that was
subject to a voluntary Principal Prepayment during the most recently ended
Collection Period creating a Prepayment Interest Shortfall, an amount equal to
the lesser of (i) the sum of (a) the Master Servicing Fee (up to a Master
Servicing Fee Rate of 0.02% per annum) received by the Master Servicer during
such Collection Period on such Mortgage Loan and (b) investment income earned
by the Master Servicer on the related Principal Prepayment during the most
recently ended Collection Period, and (ii) the amount of the related Prepayment
Interest Shortfall; provided, however, to the extent any such Prepayment
Interest Shortfall is the result of the Master Servicer's failure to enforce
the applicable Mortgage Loan documents, the amount in clause (a) shall include
the entire Master Servicing Fee on the applicable Mortgage Loan for such
Collection Period. Compensating Interest Payments will not cover shortfalls in
Mortgage Loan interest accruals that result from any liquidation of a defaulted
Mortgage Loan, or of any REO Property acquired in respect thereof, that occurs
during a Collection Period prior to the related Due Date therein or involuntary
prepayments.
The principal compensation to be paid to the Special Servicer in respect
of its special servicing activities is the Special Servicing Fee (together with
the Master Servicing Fee, the "Servicing Fees") and, under the circumstances
described in this prospectus supplement, Liquidation Fees and Workout Fees. The
"Special Servicing Fee" is calculated on the basis of a 360-day year consisting
of twelve 30-day months, accrues at a rate (the "Special Servicing Fee Rate")
equal to 0.35% per annum and is computed on the basis of the same principal
amount respecting which any related interest payment due on such Specially
Serviced Mortgage Loan or REO Mortgage Loan, as the case may be. However,
earned Special Servicing Fees are payable out of general collections on the
Mortgage Loans then on deposit in the Certificate Account. The Special
Servicing Fee with respect to any Specially Serviced Mortgage Loan (or REO
Mortgage Loan) will cease to accrue if such loan (or the related REO Property)
is liquidated or if such loan becomes a Corrected Mortgage Loan. The Special
Servicer is entitled to a "Liquidation Fee" with respect to each Specially
Serviced Trust Fund Asset, which Liquidation Fee generally will be in an amount
equal to 1.00% of all amounts received in respect of such Mortgage Loan or the
related REO Property, as applicable, payable by withdrawal from such amounts on
deposit in the Certificate Account. However, no Liquidation Fee will be payable
in connection with, or out of, insurance proceeds or liquidation proceeds
resulting from the purchase of any Specially Serviced Trust Fund Asset (i) by a
Mortgage Loan Seller (as described under "DESCRIPTION OF THE MORTGAGE POOL--
Assignment of the Mortgage Loans; Repurchases and Substitutions" and
"--Representations and Warranties; Repurchases and Substitutions" in this
prospectus supplement) if purchased within the
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required time period set forth in the related Mortgage Loan Purchase Agreement,
(ii) by the Master Servicer, the Special Servicer, the Majority Subordinate
Certificateholder or the purchasing Certificateholder as described under
"DESCRIPTION OF THE CERTIFICATES--Termination" in this prospectus supplement or
(iii) in certain other limited circumstances, including in connection with the
purchase of the Co-Lender Loans as described under "DESCRIPTION OF THE MORTGAGE
POOL--Co-Lender Loans" in this prospectus supplement. The Special Servicer also
is entitled to a "Workout Fee" with respect to each Corrected Mortgage Loan,
which is generally equal to 1.00% of all payments of interest and principal
received on such Mortgage Loan for so long as it remains a Corrected Mortgage
Loan, payable by withdrawal from such amounts on deposit in the Certificate
Account. If the Special Servicer is terminated or resigns, it will retain the
right to receive any and all Workout Fees payable with respect to any Mortgage
Loan that became a Corrected Mortgage Loan during the period that it acted as
Special Servicer and remained a Corrected Mortgage Loan at the time of its
termination or resignation or if the Special Servicer resolved the
circumstances and/or conditions (including by way of a modification of the
related Mortgage Loan documents) causing the Mortgage Loan to be a Specially
Serviced Mortgage Loan, but the Mortgage Loan had not as of the time the
Special Servicer is terminated or resigns become a Corrected Mortgage Loan
because the related borrower had not made three consecutive monthly debt
service payments and subsequently becomes a Corrected Mortgage Loan as a result
of making such three consecutive payments. The successor Special Servicer will
not be entitled to any portion of those Workout Fees.
As additional servicing compensation, the Master Servicer or the Special
Servicer is entitled to retain all modification fees, assumption fees,
defeasance fees, assumption application fees, late payment charges and default
interest (to the extent not used to offset interest on Advances, Additional
Trust Fund Expenses (other than Special Servicing Fees, Workout Fees and/or
Liquidation Fees) and the cost of property inspections as provided in the
Pooling and Servicing Agreement) and Prepayment Interest Excesses collected
from borrowers on Mortgage Loans. In addition, to the extent the Master
Servicer or the Special Servicer receives late payment charges or default
interest on a Mortgage Loan for which interest on Advances or Additional Trust
Fund Expenses (other than Special Servicing Fees, Workout Fees and/or
Liquidation Fees) related to such Mortgage Loan has been paid and not
previously reimbursed to the Trust Fund, such late payment charges or default
interest will be used to reimburse the Trust Fund for such payment of interest
or Additional Trust Fund Expenses. In addition, each of the Master Servicer and
the Special Servicer is authorized to invest or direct the investment of funds
held in those accounts maintained by it that relate to the Mortgage Loans or
REO Properties, as the case may be, in certain short-term United States
government securities and certain other permitted investment grade obligations,
and the Master Servicer and the Special Servicer each will be entitled to
retain any interest or other income earned on such funds held in those accounts
maintained by it, but shall be required to cover any losses on investments of
funds held in those accounts maintained by it, from its own funds without any
right to reimbursement, except in certain limited circumstances described in
the Pooling and Servicing Agreement.
Each of the Master Servicer and Special Servicer is, in general, required
to pay all ordinary expenses incurred by it in connection with its servicing
activities under the Pooling and Servicing Agreement, including the fees of any
sub-servicers retained by it, and is not entitled to reimbursement therefor
except as expressly provided in the Pooling and Servicing Agreement. However,
each of the Master Servicer and Special Servicer is permitted to pay certain of
such expenses (including certain expenses incurred as a result of a Mortgage
Loan default) directly out of the Certificate Account and at times without
regard to the Mortgage Loan with respect to which such expenses were incurred.
See "DESCRIPTION OF THE CERTIFICATES--Distributions" in this prospectus
supplement and "DESCRIPTION OF THE POOLING AND SERVICING
AGREEMENTS--Certificate Account" and "--Servicing Compensation and Payment of
Expenses" in the prospectus.
As and to the extent described in this prospectus supplement under
"DESCRIPTION OF THE CERTIFICATES--P&I Advances," each of the Master Servicer,
the Trustee and the Fiscal Agent is entitled to receive interest, at the
Reimbursement Rate, on any reimbursable servicing expenses incurred by it. Such
interest will compound annually and will be paid, contemporaneously with the
reimbursement of the related servicing expense, first out of late payment
charges and default interest received on the
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related Mortgage Loan during the Collection Period in which such reimbursement
is made and then from general collections on the Mortgage Loans then on deposit
in the Certificate Account. In addition, to the extent the Master Servicer
receives late payment charges or default interest on a Mortgage Loan for which
interest on servicing expenses related to such Mortgage Loan has been paid from
general collections on deposit in the Certificate Account and not previously
reimbursed, such late payment charges or default interest will be used to
reimburse the Trust Fund for such payment of interest.
MODIFICATIONS, WAIVERS AND AMENDMENTS
The Pooling and Servicing Agreement permits the Special Servicer (subject,
with respect to the Co-Lender Loans, to certain rights of the holder of any
related Companion Loan) to modify, waive or amend any term of any Mortgage Loan
(other than the 11 Madison Avenue Loan) if (a) it determines, in accordance
with the Servicing Standard, that it is appropriate to do so and the Special
Servicer determines that such modification, waiver or amendment is not
"significant" within the meaning of Treasury Regulations Section 1.860G-2(b),
and (b) except as described in the following paragraph, such modification,
waiver or amendment, will not (i) affect the amount or timing of any related
payments of principal, interest or other amount (including Prepayment Premiums
and Yield Maintenance Charges) payable under the Mortgage Loan, (ii) affect the
obligation of the related borrower to pay a Prepayment Premium or Yield
Maintenance Charge or permit a principal prepayment during the applicable
Lockout Period, (iii) except as expressly provided by the related Mortgage or
in connection with a material adverse environmental condition at the related
Mortgaged Property, result in a release of the lien of the related Mortgage on
any material portion of such Mortgaged Property without a corresponding
principal prepayment in an amount not less than the fair market value of the
property released, (iv) if such Mortgage Loan is equal to or in excess of 5% of
the then aggregate current principal balances of all Mortgage Loans or
$35,000,000, or is one of the ten largest Mortgage Loans by Stated Principal
Balance as of such date, permit the transfer of (A) the related Mortgaged
Property or any interest therein or (B) equity interests in the related
borrower or an equity owner of the borrower that would result, in the aggregate
during the term of the related Mortgage Loan, in a transfer greater than 49% of
the total interest in the borrower and/or any equity owner of the borrower or a
transfer of voting control in the borrower or an equity owner of the borrower
without the prior written confirmation from each Rating Agency (as applicable)
that such change will not result in the qualification, downgrade or withdrawal
of the ratings then assigned to the Certificates, (v) allow any additional lien
on the related Mortgaged Property if such Mortgage Loan is equal to or in
excess of 2% of the then aggregate current principal balances of the Mortgage
Loans or $20,000,000, is one of the ten largest Mortgage Loans by Stated
Principal Balance as of such date, or with respect to S&P only, has an
aggregate LTV that is equal to or greater than 85% or has an aggregate DSCR
that is less than 1.20x, without the prior written confirmation from each
Rating Agency (as applicable) that such change will not result in the
qualification, downgrade or withdrawal of the ratings then assigned to the
Certificates, or (vi) in the good faith, reasonable judgment of the Special
Servicer, materially impair the security for the Mortgage Loan or reduce the
likelihood of timely payment of amounts due thereon.
Notwithstanding clause (b) of the preceding paragraph and, with respect to
the Co-Lender Loans (other than the 11 Madison Avenue Loan), subject to certain
rights of the holders of any related Companion Loan, the Special Servicer may
(i) reduce the amounts owing under any Specially Serviced Mortgage Loan by
forgiving principal, accrued interest and/or any Prepayment Premium or Yield
Maintenance Charge, (ii) reduce the amount of the Periodic Payment on any
Specially Serviced Mortgage Loan, including by way of a reduction in the
related Mortgage Rate, (iii) forbear in the enforcement of any right granted
under any Mortgage Note or Mortgage relating to a Specially Serviced Mortgage
Loan, (iv) extend the maturity date of any Specially Serviced Mortgage Loan,
and/or (v) accept a principal prepayment during any Lockout Period; provided
that (x) the related borrower is in default with respect to the Specially
Serviced Mortgage Loan or, in the reasonable, good faith judgment of the
Special Servicer, such default by the borrower is reasonably foreseeable, (y)
in the reasonable, good faith judgment of the Special Servicer, such
modification, would increase the recovery to Certificateholders on a net
present value basis determined in accordance with the Servicing Standard and
(z) such modification, waiver or amendment does not result in a tax being
imposed on the Trust Fund or cause any REMIC relating to the assets of the
Trust Fund to fail to qualify as a REMIC at any time the Certificates are
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outstanding. In no event, however, is the Special Servicer permitted to (i)
extend the maturity date of a Mortgage Loan beyond a date that is two years
prior to the Rated Final Distribution Date, (ii) reduce the Mortgage Rate of a
Mortgage Loan to less than the lesser of (a) the original Mortgage Rate of such
Mortgage Loan, (b) the highest Pass-Through Rate of any Class of Certificates
(other than any Class IO Certificates) then outstanding, or (c) a rate below
the then prevailing interest rate for comparable loans, as determined by the
Special Servicer, (iii) if the Mortgage Loan is secured by a ground lease (and
not also by the corresponding fee simple interest), extend the maturity date of
such Mortgage Loan beyond a date which is 20 years prior to the expiration of
the term of such ground lease or (iv) defer interest due on any Mortgage Loan
in excess of 10% of the Stated Principal Balance of such Mortgage Loan or defer
the collection of interest on any Mortgage Loan without accruing interest on
such deferred interest at a rate at least equal to the Mortgage Rate of such
Mortgage Loan. The Special Servicer will have the ability, subject to the
Servicing Standard described under "--General" above, to modify Mortgage Loans
with respect to which default is reasonably foreseeable, but which are not yet
in default.
The Special Servicer is required to notify the Trustee, the Master
Servicer, the Controlling Class Representative and the Rating Agencies and,
with respect to the Co-Lender Loans (other than the 11 Madison Avenue Loan),
subject to certain rights of the holders of the related Companion Loan, of any
material modification, waiver or amendment of any term of any Specially
Serviced Mortgage Loan, and to deliver to the Trustee or the related Custodian
(with a copy to the Master Servicer), for deposit in the related Mortgage File,
an original counterpart of the agreement related to such modification, waiver
or amendment, promptly (and in any event within ten business days) following
the execution thereof. Copies of each agreement whereby any such modification,
waiver or amendment of any term of any Specially Serviced Mortgage Loan is
effected are required to be available for review during normal business hours
at the offices of the Special Servicer. See "DESCRIPTION OF THE
CERTIFICATES--Reports to Certificateholders; Available Information" in this
prospectus supplement.
For any Mortgage Loan other than a Specially Serviced Mortgage Loan and
other than the 11 Madison Avenue Loan and subject to the rights of the Special
Servicer, the Master Servicer is responsible for any request by a borrower for
the consent to modify, waive or amend certain terms as specified in the Pooling
and Servicing Agreement, including, without limitation, (i) approving certain
leasing activity, (ii) approving certain substitute property managers, (iii)
approving certain waivers regarding the timing or need to audit certain
financial statements, (iv) approving certain modifications in connection with a
defeasance permitted by the terms of the applicable mortgage loan documents and
(v) approving certain consents with respect to right-of-ways and easements and
consents to subordination of the related Mortgage Loan to such easements or
right-of-ways.
THE CONTROLLING CLASS REPRESENTATIVE
Subject to the succeeding paragraphs, and other than with respect to the
11 Madison Avenue Loan, the Controlling Class Representative is entitled to
advise the Special Servicer with respect to the following actions of the
Special Servicer, and the Special Servicer is not permitted to take any of the
following actions as to which the Controlling Class Representative has objected
in writing within ten business days of being notified thereof (provided that if
such written objection has not been received by the Special Servicer within
such ten business day period, then the Controlling Class Representative's
approval will be deemed to have been given):
(i) any actual or proposed foreclosure upon or comparable conversion
(which may include acquisitions of an REO Property) of the ownership of
properties securing such of the Specially Serviced Mortgage Loans as come
into and continue in default;
(ii) any modification or waiver of any term of the related Mortgage
Loan Documents of a Mortgage Loan that relates to the Maturity Date,
Mortgage Rate, principal balance, amortization term, payment frequency or
any provision requiring the payment of a Prepayment Premium or Yield
Maintenance Charge (other than a modification consisting of the extension
of the maturity date of a Mortgage Loan for one year or less) or a material
non-monetary term;
(iii) any actual or proposed sale of an REO Property (other than in
connection with the termination of the Trust Fund as described under
"DESCRIPTION OF THE CERTIFICATES--
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Termination" in this prospectus supplement or pursuant to a Purchase Option
as described below under "--Defaulted Mortgage Loans; REO Properties;
Purchase Option");
(iv) any determination to bring an REO Property into compliance with
applicable environmental laws or to otherwise address hazardous materials
located at an REO Property;
(v) any acceptance of substitute or additional collateral or release
of material collateral for a Mortgage Loan unless required by the
underlying loan documents;
(vi) any waiver of a "due-on-sale" or "due-on-encumbrance" clause;
(vii) any release of any performance or "earn-out" reserves, escrows
or letters of credit; and
(viii) any acceptance of an assumption agreement releasing a borrower
from liability under a Mortgage Loan.
In addition, the Controlling Class Representative may direct the Special
Servicer to take, or to refrain from taking, such other actions as the
Controlling Class Representative may deem advisable or as to which provision is
otherwise made in the Pooling and Servicing Agreement; provided that no such
direction and no objection contemplated by the prior paragraph may (i) require
or cause the Special Servicer to violate any REMIC provisions, any provision of
the Pooling and Servicing Agreement or applicable law, including the Special
Servicer's obligation to act in accordance with the Servicing Standard, or (ii)
expose the Master Servicer, the Special Servicer, the Trust Fund or the Trustee
to liability, or materially expand the scope of the Special Servicer or its
responsibilities under the Pooling and Servicing Agreement or cause the Special
Servicer to act or fail to act in a manner which, in the reasonable judgment of
the Special Servicer, is not in the best interests of the Certificateholders.
Clarion Capital LLC, which is an affiliate of the Special Servicer, will be the
initial Controlling Class Representative with respect to each Mortgage Loan
other than the 11 Madison Avenue Loan.
Notwithstanding the foregoing, the holders of the 11 Madison Avenue
Subordinate Loans will have the right to direct and/or consent to certain
actions of the 2004-C10 Master Servicer and the 2004-C10 Special Servicer with
respect to the 11 Madison Avenue Whole Loan and the Controlling Class and the
Controlling Class Representative will not have the consent and advice rights
described herein. Generally, the holder of the most subordinate 11 Madison
Avenue Subordinate Loan then outstanding will be entitled to such rights, but
only so long as the unpaid principal amount of such 11 Madison Avenue
Subordinate Loan, net of any existing related Appraisal Reduction Amount with
respect to (i) the 11 Madison Avenue Senior Loans; (ii) any 11 Madison Avenue
Subordinate Loans that are senior in right of payment to such 11 Madison Avenue
Subordinate Loan; and (iii) such 11 Madison Avenue Subordinate Loan (calculated
as if the loans were a single mortgage loan), is greater than 25% of the
original unpaid principal amount of such 11 Madison Avenue Subordinate Loan (an
"11 Madison Avenue Control Appraisal Period"). Such rights include (i) the
2004-C10 Special Servicer and/or the 2004-C10 Master Servicer will be required
to consult with the holder of the 11 Madison Avenue Subordinate Loan or its
designee in connection with (A) any adoption or implementation of a business
plan submitted by the borrower with respect to the Mortgaged Property; (B) the
execution or renewal of any lease; (C) the release of any escrow held in
conjunction with the 11 Madison Avenue Whole Loan to the borrower not expressly
required by the terms of the loan documents or under applicable law; (D)
alterations on the Mortgaged Property; (E) material changes in any ancillary
loan documents; or (F) the waiver of any notice provisions related to
prepayment; (ii) the 2004-C10 Special Servicer and/or the 2004-C10 Master
Servicer will be required to consult with the holder of such 11 Madison Avenue
Subordinate Loan or its designee (A) upon the occurrence of any event of
default under the 11 Madison Avenue Whole Loan and to consider alternative
actions recommended by the holder of such 11 Madison Avenue Subordinate Loan or
its designee, (B) with respect to any determination that a sweep period exists
under the related cash management agreement, and (C) at any time (whether or
not an event of default has occurred) with respect to proposals to take any
significant action with respect to the 11 Madison Avenue Whole Loan or the
Mortgaged Property and to consider alternative actions recommended by such 11
Madison Avenue Subordinate Loan or its designee; and (iii) such holder of the
11 Madison Avenue Subordinate Loan or its designee will be entitled to exercise
rights and powers with respect to the 11 Madison Avenue Whole Loan that are the
same as or similar to those of the Controlling Class Representative described
above with
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respect to the actions described in clauses (i) through (vii) above and the
following additional actions: (A) any modification or waiver of a monetary term
of the loan and any modification of, or waiver with respect to, the loan that
would result in the extension of the maturity date or extended maturity date
thereof, a reduction in the interest rate borne thereby or the monthly debt
service payment or extension fee payable thereon or a deferral or a forgiveness
of interest on or principal of the loan or a modification or waiver of any
other monetary term of the loan relating to the timing or amount of any payment
of principal or interest (other than default interest) or any other material
sums due and payable under the loan documents or a modification or waiver of
any provision of the loan which restricts the borrower or its equity owners
from incurring additional indebtedness, any consent to the placement of
additional liens encumbering the Mortgaged Property or the ownership interests
in borrower or to the incurring of additional indebtedness at any level or tier
of ownership, or any modification or waiver with respect to the obligation to
deposit or maintain reserves or escrows or to the amounts required to be
deposited therein or any establishment of additional material reserves not
expressly provided for in the loan documents, (B) any modification of, or
waiver with respect to, the loan that would result in a discounted pay-off of
the loan, (C) commencement or termination of any foreclosure upon or comparable
conversion of the ownership of the Mortgaged Property or any acquisition of the
Mortgaged Property by deed-in-lieu of foreclosure or otherwise, (D) any sale of
the Mortgaged Property or any material portion thereof (other than pursuant to
a purchase option contained in the loan documents or in the Pooling and
Servicing Agreement) or, except, as specifically permitted in the loan
documents, the transfer of any direct or indirect interest in borrower or any
sale of the loan (other than pursuant to a purchase option contained in the
loan documents or in the 2004-C10 Pooling and Servicing Agreement), (E) any
action to bring the Mortgaged Property or REO Property into compliance with any
laws relating to hazardous materials, (F) any substitution or release of
collateral for the loan (other than in accordance with the terms of, or upon
satisfaction of, the loan), (G) any release of the borrower or any guarantor
from liability with respect to the loan, (H) any substitution of the bank
holding the central account, unless such bank agrees in writing (x) to comply
with certain terms related to reports of weekly reconciliation of the central
account and escrow accounts and (y) to provide to holders of the 11 Madison
Avenue Subordinate Loans copies of the weekly reconciliation required to be
prepared as described in immediately preceding clause (x), (I) any
determination (x) not to enforce a "due-on-sale" or "due-on-encumbrance" clause
(unless such clause is not exercisable under applicable law or such exercise is
reasonably likely to result in successful legal action by the borrower) or (y)
to permit an assumption of the loan, (J) any material changes to or waivers of
any of the insurance requirements, (K) any release of funds from the
curtailment reserve escrow account or the designated lease reserve escrow
account for the application of same to the repayment of the debt; provided,
however, that (x) the operating advisor shall not have the right to consent to
any such release after the occurrence of an event of default (unless such
co-lender is continuously curing in accordance with Section 7 of the 11 Madison
Avenue Intercreditor Agreement) and during the continuance thereof, and (y) the
operating advisor shall be required to consent to the release of such funds and
the application of same to the repayment of the debt, if lead lender delivers
to the operating advisor a letter from any single Rating Agency stating that
the failure to release funds from the curtailment reserve sub-account and to
apply same to the repayment of the debt will result in the downgrading,
withdrawal or qualification of any Class of Certificates, (L) any determination
to apply loss proceeds to the payment of the debt and with respect to the
approval of any architects, contractors, plans and specifications or other
material approvals which lender may give or withhold, (M) any incurrence of
additional debt by the borrower or any mezzanine financing by any beneficial
owner of the borrower, and (N) the voting on any plan of reorganization,
restructuring or similar plan in the bankruptcy of the borrower. However, to
the extent no 11 Madison Avenue Subordinate Loan is greater than the threshold
described above, the holders of a majority (by then outstanding principal
balance) of the 11 Madison Avenue Senior Loans, will be entitled to exercise
rights and powers of the Controlling Class Representative and the Controlling
Class with respect to the 11 Madison Avenue Whole Loan. In the event that the
Controlling Class Representative and the holders of the 11 Madison Avenue Pari
Passu Loans (including the 2004-C10 Controlling Class Representative) give
conflicting consents or directions to the 2004-C10 Master Servicer or the
2004-C10 Special Servicer, as applicable, no such consent or direction is
agreed to by the holders of a majority (by then outstanding principal balance)
of the 11 Madison Avenue Senior Loans, and the directions given by the 2004-C10
Controlling Class Representative satisfy the
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Servicing Standard, the 2004-C10 Master Servicer or the 2004-C10 Special
Servicer, as applicable, will be required to follow the directions of the
2004-C10 Controlling Class Representative. See "DESCRIPTION OF THE MORTGAGE
POOL--Co-Lender Loans--11 Madison Avenue Loan--Servicing Provisions of the 11
Madison Avenue Intercreditor Agreement" in this prospectus supplement.
Notwithstanding the foregoing, the holder of the Mountain View Apartments
Subordinate Loan or the Fox Valley Apartments Subordinate 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 related repurchase
period. Furthermore, the holder of the Mountain View Apartments Subordinate
Loan or the Fox Valley Apartments Subordinate Loan may exercise certain
approval rights relating to a modification of the Mountain View Apartments Loan
or the Fox Valley Apartments Loan, as applicable, or the related Subordinate
Companion Loan that materially and adversely affects the holder of such
Subordinate Companion Loan. See "DESCRIPTION OF THE MORTGAGE POOL--Co-Lender
Loans--Mountain View Apartments Loan and Fox Valley Apartments Loan--Servicing
Provisions of the Mountain View Apartments Intercreditor Agreement and the Fox
Valley Apartments Intercreditor Agreement" in this prospectus supplement.
Limitation on Liability of the Controlling Class Representative. The
Controlling Class Representative will not have any liability to the
Certificateholders for any action taken, or for refraining from the taking of
any action, or for errors in judgment; provided, however, that the Controlling
Class Representative will not be protected against any liability to a
Controlling Class Certificateholder which would otherwise be imposed by reason
of willful misfeasance, bad faith or negligence in the performance of duties or
by reason of reckless disregard of obligations or duties. By its acceptance of
a Certificate, each Certificateholder confirms its understanding that the
Controlling Class Representative may take actions that favor the interests of
one or more Classes of the Certificates over other Classes of the Certificates,
and that the Controlling Class Representative may have special relationships
and interests that conflict with those of holders of some Classes of the
Certificates; and each Certificateholder agrees to take no action against the
Controlling Class Representative or any of its respective officers, directors,
employees, principals or agents as a result of such a special relationship or
conflict. The holder of an 11 Madison Avenue Subordinate Loan or its designees,
in connection with exercising the rights and powers described above with
respect to the 11 Madison Avenue Whole Loan will be entitled to substantially
the same limitations to which the Controlling Class Representative is entitled.
DEFAULTED MORTGAGE LOANS; REO PROPERTIES; PURCHASE OPTION
The Pooling and Servicing Agreement contains provisions requiring, within
60 days after a Mortgage Loan (other than the 11 Madison Avenue Loan) becomes a
Defaulted Mortgage Loan, the Special Servicer to determine the fair value of
the Mortgage Loan in accordance with the Servicing Standard. A "Defaulted
Mortgage Loan" is a Mortgage Loan (i) that is delinquent sixty days or more
with respect to a Periodic Payment (not including the Balloon Payment) or (ii)
that is delinquent in respect of its Balloon Payment unless the Master Servicer
has, on or prior to the due date of such Balloon Payment, received written
evidence from an institutional lender of such lender's binding commitment to
refinance such Mortgage Loan within 60 days after the due date of such Balloon
Payment (provided that if such refinancing does not occur during such time
specified in the commitment, the related Mortgage Loan will immediately become
a Defaulted Mortgage Loan), in either case such delinquency to be determined
without giving effect to any grace period permitted by the related Mortgage
Loan documents and without regard to any acceleration of payments under the
related Mortgage and Mortgage Note or (iii) as to which the Master Servicer or
Special Servicer has, by written notice to the related mortgagor, accelerated
the maturity of the indebtedness evidenced by the related Mortgage Note. The
Special Servicer will be permitted to change, from time to time, its
determination of the fair value of a Defaulted Mortgage Loan based upon changed
circumstances, new information or otherwise, in accordance with the Servicing
Standard; provided, however, that the Special Servicer will update its
determination of the fair value of a Defaulted Mortgage Loan at least once
every 90 days.
In the event a Mortgage Loan becomes a Defaulted Mortgage Loan, the
Majority Subordinate Certificateholder will have an assignable option to
purchase (subject to, in certain instances, the rights of
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subordinated secured creditors or mezzanine lenders to purchase the related
Mortgage Loan) (the "Purchase Option") the Defaulted Mortgage Loan from the
Trust Fund at a price (the "Option Price") equal to (i) the outstanding
principal balance of the Defaulted Mortgage Loan as of the date of purchase,
plus all accrued and unpaid interest on such balance plus all related fees and
expenses, if the Special Servicer has not yet determined the fair value of the
Defaulted Mortgage Loan, or (ii) the fair value of the Defaulted Mortgage Loan
as determined by the Special Servicer, if the Special Servicer has made such
fair value determination. If the Purchase Option is not exercised by the
Majority Subordinate Certificateholder or any assignee thereof within 60 days
of a Mortgage Loan becoming a Defaulted Mortgage Loan, then the Majority
Subordinate Certificateholder shall assign the Purchase Option to the Special
Servicer for fifteen days. If the Purchase Option is not exercised by the
Special Servicer or its assignee within such fifteen day period, then the
Purchase Option shall revert to the Majority Subordinate Certificateholder.
Unless and until the Purchase Option with respect to a Defaulted Mortgage
Loan is exercised, the Special Servicer will be required to pursue such other
resolution strategies available under the Pooling and Servicing Agreement,
including workout and foreclosure, consistent with the Servicing Standard, but
the Special Servicer generally will not be permitted to sell the Defaulted
Mortgage Loan other than pursuant to the exercise of the Purchase Option.
If not exercised sooner, the Purchase Option with respect to any Defaulted
Mortgage Loan will automatically terminate upon (i) the related mortgagor's
cure of all defaults on the Defaulted Mortgage Loan, (ii) the acquisition on
behalf of the Trust Fund of title to the related Mortgaged Property by
foreclosure or deed in lieu of foreclosure or (iii) the modification or pay-off
(full or discounted) of the Defaulted Mortgage Loan in connection with a
workout. In addition, the Purchase Option with respect to a Defaulted Mortgage
Loan held by any person will terminate upon the exercise of the Purchase Option
by any other holder of the Purchase Option.
If (a) the Purchase Option is exercised with respect to a Defaulted
Mortgage Loan and the person expected to acquire the Defaulted Mortgage Loan
pursuant to such exercise is the Majority Subordinate Certificateholder, the
Special Servicer, or any affiliate of any of them (in other words, the Purchase
Option has not been assigned to another unaffiliated person) and (b) the Option
Price is based on the Special Servicer's determination of the fair value of the
Defaulted Mortgage Loan, the Trustee will be required to determine if the
Option Price represents a fair price for the Defaulted Mortgage Loan. In making
such determination, the Trustee will be entitled to rely on the most recent
appraisal of the related Mortgaged Property that was prepared in accordance
with the terms of the Pooling and Servicing Agreement and may rely upon the
opinion and report of an independent third party in making such determination,
the cost of which will be advanced by the Master Servicer.
If title to any Mortgaged Property is acquired by the Trustee on behalf of
the Certificateholders pursuant to foreclosure proceedings instituted by the
Special Servicer or otherwise, the Special Servicer, after notice to the
Controlling Class Representative, shall use its reasonable best efforts to sell
any REO Property as soon as practicable in accordance with the Servicing
Standard but prior to the end of the third calendar year following the year of
acquisition, unless (i) the Internal Revenue Service grants an extension of
time to sell such property (an "REO Extension") or (ii) it obtains an opinion
of counsel generally to the effect that the holding of the property for more
than three years after the end of the calendar year in which it was acquired
will not result in the imposition of a tax on the Trust Fund or cause any REMIC
relating to the assets of the Trust Fund to fail to qualify as a REMIC under
the Code. If the Special Servicer on behalf of the Trustee has not received an
Extension or such opinion of counsel and the Special Servicer is not able to
sell such REO Property within the period specified above, or if an REO
Extension has been granted and the Special Servicer is unable to sell such REO
Property within the extended time period, the Special Servicer shall auction
the property pursuant to the auction procedure set forth below.
The Special Servicer shall give the Controlling Class Representative, the
Master Servicer and the Trustee not less than five days' prior written notice
of its intention to sell any such REO Property, and shall auction the REO
Property to the highest bidder (which may be the Special Servicer) in
accordance with the Servicing Standard; provided, however, that the Master
Servicer, Special Servicer, Majority
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Subordinate Certificateholder, any independent contractor engaged by the Master
Servicer or the Special Servicer pursuant to the Pooling and Servicing
Agreement (or any officer or affiliate thereof) shall not be permitted to
purchase the REO Property at a price less than the outstanding principal
balance of such Mortgage Loan as of the date of purchase, plus all accrued but
unpaid interest and related fees and expenses, except in limited circumstances
set forth in the Pooling and Servicing Agreement; and provided, further, that
if the Special Servicer intends to bid on any REO Property, (i) the Special
Servicer shall notify the Trustee of such intent, (ii) the Trustee shall
promptly obtain, at the expense of the trust an appraisal of such REO Property
(or internal valuation in accordance with the procedures specified in the
Pooling and Servicing Agreement) and (iii) the Special Servicer shall not bid
less than the greater of (x) the fair market value set forth in such appraisal
(or internal valuation) or (y) the outstanding principal balance of such
Mortgage Loan, plus all accrued but unpaid interest and related fees and
expenses.
Subject to the REMIC provisions, the Special Servicer shall act on behalf
of the trust in negotiating and taking any other action necessary or
appropriate in connection with the sale of any REO Property or the exercise of
the Purchase Option, including the collection of all amounts payable in
connection therewith. Notwithstanding anything to the contrary herein, neither
the Trustee, in its individual capacity, nor any of its affiliates may bid for
any REO Property or purchase any Defaulted Mortgage Loan. Any sale of a
Defaulted Mortgage Loan (pursuant to the Purchase Option) or REO Property shall
be without recourse to, or representation or warranty by, the Trustee, the
Depositor, any Mortgage Loan Seller, the Special Servicer, the Master Servicer
or the trust. Notwithstanding the foregoing, nothing herein shall limit the
liability of the Master Servicer, the Special Servicer or the Trustee to the
trust and the Certificateholders for failure to perform its duties in
accordance with the Pooling and Servicing Agreement. None of the Special
Servicer, the Master Servicer, the Depositor or the Trustee shall have any
liability to the trust or any Certificateholder with respect to the price at
which a Defaulted Mortgage Loan is sold if the sale is consummated in
accordance with the terms of the Pooling and Servicing Agreement. The proceeds
of any sale after deduction of the expenses of such sale incurred in connection
therewith shall be deposited within one business day in the Certificate
Account.
INSPECTIONS; COLLECTION OF OPERATING INFORMATION
The Special Servicer or the Master Servicer is required to perform or
cause to be performed a physical inspection of a Mortgaged Property (other than
the Mortgaged Property related to the 11 Madison Avenue Loan) as soon as
practicable after the related Mortgage Loan becomes a Specially Serviced
Mortgage Loan or the related debt service coverage ratio is below 1.00x; the
expense of which will be payable first, out of penalty interest and late
payment charges otherwise payable to the Special Servicer or the Master
Servicer, as the case may be, and received in the Collection Period during
which such inspection related expenses were incurred, then at the Trust Fund's
expense. In addition, beginning in 2005, with respect to each Mortgaged
Property securing a Mortgage Loan (other than the Mortgaged Property related to
the 11 Madison Avenue Loan) with a principal balance (or allocated loan amount)
at the time of such inspection of more than or equal to $2,000,000, the Master
Servicer (with respect to each such Mortgaged Property securing a Mortgage Loan
other than a Specially Serviced Mortgage Loan) and the Special Servicer (with
respect to each Mortgaged Property securing a Specially Serviced Mortgage Loan)
is required at its expense to inspect or cause to be inspected the Mortgaged
Property every calendar year and with respect to each Mortgaged Property
securing a Mortgage Loan with a principal balance (or allocated loan amount) at
the time of such inspection of less than $2,000,000 once every other calendar
year; provided that the Master Servicer is not obligated to inspect any
Mortgaged Property that has been inspected by the Special Servicer in the
previous 6 months. The Special Servicer and the Master Servicer each will be
required to prepare a written report of each such inspection performed by it
that describes the condition of the Mortgaged Property and that specifies the
existence with respect thereto of any sale, transfer or abandonment or any
material change in its condition or value.
The Special Servicer or the Master Servicer is also required consistent
with the Servicing Standard to collect from the related borrower and review the
quarterly and annual operating statements of each Mortgaged Property (other
than the Mortgaged Property related to the 11 Madison Avenue Loan) and to cause
annual operating statements to be prepared for each REO Property. Generally,
the Mortgage Loans require the related borrower to deliver an annual property
operating statement. However, there
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can be no assurance that any operating statements required to be delivered will
in fact be delivered, nor is the Master Servicer or Special Servicer likely to
have any practical means of compelling such delivery in the case of an
otherwise performing Mortgage Loan.
Copies of the inspection reports and operating statements referred to
above are required to be available for review by Certificateholders during
normal business hours at the offices of the Special Servicer or the Master
Servicer, as applicable. See "DESCRIPTION OF THE CERTIFICATES--Reports to
Certificateholders; Available Information" in this prospectus supplement.
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DESCRIPTION OF THE CERTIFICATES
GENERAL
The Wachovia Bank Commercial Mortgage Trust, Commercial Mortgage
Pass-Through Certificates, Series 2004-C12 (the "Certificates") will be issued
pursuant to a Pooling and Servicing Agreement, dated as of July 1, 2004, among
the Depositor, the Master Servicer, the Special Servicer, the Trustee and the
Fiscal Agent (the "Pooling and Servicing Agreement"). The Certificates
represent in the aggregate the entire beneficial ownership interest in a trust
fund (the "Trust Fund") consisting primarily of: (i) the Mortgage Loans and all
payments and other collections in respect of such loans received or applicable
to periods after the applicable Cut-Off Date (exclusive of payments of
principal and interest due, and principal prepayments received, on or before
the Cut-Off Date); (ii) any REO Property acquired on behalf of the Trust Fund;
(iii) such funds or assets as from time to time are deposited in the
Certificate Account, the Distribution Account, the REO Accounts, the Additional
Interest Account, the Gain on Sale Reserve Account and the Interest Reserve
Account (see "DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS--Certificate
Account" in the prospectus); and (iv) certain rights of the Depositor under
each Mortgage Loan Purchase Agreement relating to Mortgage Loan document
delivery requirements and the representations and warranties of the Mortgage
Loan Sellers regarding the Mortgage Loans.
The Certificates consist of the following classes (each, a "Class")
designated as: (i) the Class A-1, Class A-2, Class A-3, Class A-4 and Class
A-1A Certificates (collectively, the "Class A Certificates"); (ii) the Class B,
Class C, Class D, Class E, Class F, Class G, Class H, Class J, Class K, Class
L, Class M, Class N, Class O and Class P Certificates (collectively, the
"Subordinate Certificates" and, together with the Class A Certificates, the
"Sequential Pay Certificates"); (iii) the Class IO Certificates (the "Class IO
Certificates"); (iv) the Class R-I and Class R-II Certificates (collectively,
the "REMIC Residual Certificates"); (v) the Class MAD Certificates (the "Class
MAD Certificates" and, collectively, with the Sequential Pay Certificates and
the Class IO Certificates, the "REMIC Regular Certificates"); and (vi) the
Class Z Certificates. The Class MAD Certificates will be entitled to receive
distributions only from collections on the 11 Madison Avenue Subordinate
Component in accordance with the Pooling and Servicing Agreement and will not
be supported by the 11 Madison Avenue Pooled Component or any other Mortgage
Loan.
Only the Class A-1, Class A-2, Class A-3, Class A-4, Class B, Class C,
Class D and Class E Certificates (collectively, the "Offered Certificates") are
offered hereby. The Class A-1A, Class F, Class G, Class H, Class J, Class K,
Class L, Class M, Class N, Class O, Class P, Class MAD and Class IO
Certificates (collectively, the "Non-Offered Certificates"), the Class Z
Certificates and the REMIC Residual Certificates have not been registered under
the Securities Act and are not offered hereby. Accordingly, information in this
prospectus supplement regarding the terms of the Non-Offered Certificates, the
Class Z Certificates and the REMIC Residual Certificates is provided solely
because of its potential relevance to a prospective purchaser of an Offered
Certificate.
REGISTRATION AND DENOMINATIONS
The Offered Certificates will be made available in book-entry format
through the facilities of The Depository Trust Company ("DTC"). The Class A-1,
Class A-2, Class A-3, Class A-4, Class B, Class C, Class D and the Class E
Certificates will be offered in denominations of not less than $10,000 actual
principal amount and in integral multiples of $1 in excess thereof.
The holders of Offered Certificates may hold their Certificates through
DTC (in the United States) or Clearstream Banking, societe anonyme
("Clearstream") or Euroclear Bank S.A./N.V., as operator (the "Euroclear
Operator") of the Euroclear System (the "Euroclear System") (in Europe) if they
are participants of such respective system ("Participants"), or indirectly
through organizations that are Participants in such systems. Clearstream and
Euroclear will hold omnibus positions on behalf of the Clearstream Participants
and the Euroclear Participants, respectively, through customers' securities
accounts in Clearstream and Euroclear's names on the books of their respective
depositaries (collectively, the "Depositaries") which in turn will hold such
positions in customers' securities accounts in the
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Depositaries' names on the books of DTC. DTC is a limited-purpose trust company
organized under the New York Banking Law, a "banking organization" within the
meaning of the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code and a "clearing agency" registered pursuant to Section 17A of the
Securities Exchange Act of 1934, as amended. DTC was created to hold securities
for its Participants and to facilitate the clearance and settlement of
securities transactions between Participants through electronic computerized
book-entries, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers, banks, trust
companies and clearing corporations. Indirect access to the DTC system also is
available to others such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a Participant, either
directly or indirectly ("Indirect Participants").
Transfers between DTC Participants will occur in accordance with DTC
rules. Transfers between Clearstream Participants and Euroclear Participants
will occur in accordance with their applicable rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly through Clearstream Participants or
Euroclear Participants, on the other, will be effected in DTC in accordance
with DTC rules on behalf of the relevant European international clearing system
by its Depositary; however, such cross-market transactions will require
delivery of instructions to the relevant European international clearing system
by the counterparty in such system in accordance with its rules and procedures.
If the transaction complies with all relevant requirements, the Euroclear
Operator or Clearstream, as the case may be, will then deliver instructions to
the Depositary to take action to effect final settlement on its behalf.
Because of time-zone differences, it is possible that credits of
securities in Clearstream or the Euroclear Operator as a result of a
transaction with a DTC Participant will be made during the subsequent
securities settlement processing, dated the business day following the DTC
settlement date, and such credits or any transactions in such securities
settled during such processing will be reported to the relevant Clearstream
Participant or Euroclear Participant on such business day. Cash received in
Clearstream or the Euroclear Operator as a result of sales of securities by or
through a Clearstream Participant or a Euroclear Participant to a DTC
Participant will be received with value on the DTC settlement date, due to time
zone differences may be available in the relevant Clearstream or the Euroclear
Operator cash account only as of the business day following settlement in DTC.
The holders of Offered Certificates that are not Participants or Indirect
Participants but desire to purchase, sell or otherwise transfer ownership of,
or other interests in, Offered Certificates may do so only through Participants
and Indirect Participants. In addition, holders of Offered Certificates will
receive all distributions of principal and interest from the Trustee through
the Participants who in turn will receive them from DTC. Similarly, reports
distributed to Certificateholders pursuant to the Pooling and Servicing
Agreement and requests for the consent of Certificateholders will be delivered
to beneficial owners only through DTC, the Euroclear Operator, Clearstream and
their respective Participants. Under a book-entry format, holders of Offered
Certificates may experience some delay in their receipt of payments, reports
and notices, since such payments, reports and notices will be forwarded by the
Trustee to Cede & Co., as nominee for DTC. DTC will forward such payments,
reports and notices to its Participants, which thereafter will forward them to
Indirect Participants, Clearstream, the Euroclear Operator or holders of
Offered Certificates, as applicable.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
Offered Certificates among Participants on whose behalf it acts with respect to
the Offered Certificates and to receive and transmit distributions of principal
of, and interest on, the Offered Certificates. Participants and Indirect
Participants with which the holders of Offered Certificates have accounts with
respect to the Offered Certificates similarly are required to make book-entry
transfers and receive and transmit such payments on behalf of their respective
holders of Offered Certificates. Accordingly, although the holders of Offered
Certificates will not possess the Offered Certificates, the Rules provide a
mechanism by which Participants will receive payments on Offered Certificates
and will be able to transfer their interest.
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Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a holder of
Offered Certificates to pledge such Certificates to persons or entities that do
not participate in the DTC system, or to otherwise act with respect to such
Certificates, may be limited due to the lack of a physical certificate for such
Certificates.
DTC has advised the Depositor that it will take any action permitted to be
taken by a holder of an Offered Certificate under the Pooling and Servicing
Agreement only at the direction of one or more Participants to whose accounts
with DTC the Offered Certificates are credited. DTC may take conflicting
actions with respect to other undivided interests to the extent that such
actions are taken on behalf of Participants whose holdings include such
undivided interests.
Except as required by law, none of the Depositor, the Underwriters, the
Master Servicer, the Trustee nor the Fiscal Agent will have any liability for
any aspect of the records relating to or payments made on account of beneficial
ownership interests in the Offered Certificates held by Cede & Co., as nominee
for DTC, or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
Clearstream is a limited liability company (a societe anonyme) organized
under the laws of Luxembourg. Clearstream holds securities for its
participating organizations ("Clearstream Participants") and facilitates the
clearance and settlement of securities transactions between Clearstream
Participants through electronic book-entry changes in accounts of Clearstream
Participants, thereby eliminating the need for physical movement of
certificates.
The Euroclear System was created in 1968 to hold securities for
participants of Euroclear ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment. The Euroclear System is owned by
Euroclear.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear
and the related Operating Procedures of the Euroclear System and applicable
Belgian law (collectively, the "Terms and Conditions"). The Terms and
Conditions govern transfers of securities and cash within the Euroclear system,
withdrawal of securities and cash from the Euroclear System, and receipts of
payments with respect to securities in the Euroclear System.
The information in this prospectus supplement concerning DTC, Clearstream
or the Euroclear Operator and their book-entry systems has been obtained from
sources believed to be reliable, but neither the Depositor nor any of the
Underwriters takes any responsibility for the accuracy or completeness thereof.
CERTIFICATE BALANCES AND NOTIONAL AMOUNTS
Subject to a permitted variance of plus or minus 5.0%, the respective
Classes of Sequential Pay Certificates will have the Certificate Balances
representing the approximate percentage of the Cut-Off Date Pool Balance as set
forth in the following table:
PERCENTAGE OF
CLOSING DATE CUT-OFF DATE
CLASS OF CERTIFICATES CERTIFICATE BALANCE POOL BALANCE
- --------------------------------------------------------------------- --------------------- --------------
Class A-1 Certificates .............................................. $ 50,000,000 4.703%
Class A-2 Certificates .............................................. $199,000,000 18.719%
Class A-3 Certificates .............................................. $ 82,000,000 7.713%
Class A-4 Certificates .............................................. $474,876,000 44.669%
Class B Certificates ................................................ $ 25,248,000 2.375%
Class C Certificates ................................................ $ 9,302,000 0.875%
Class D Certificates ................................................ $ 22,590,000 2.125%
Class E Certificates ................................................ $ 10,630,000 1.000%
Non-Offered Certificates (other than Class IO Certificates) ......... $189,450,508 17.821%
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The "Certificate Balance" of any Class of Sequential Pay Certificates and
the Class MAD Certificates outstanding at any time represents the maximum
amount that the holders thereof are entitled to receive as distributions
allocable to principal from the cash flow on the Mortgage Loans and the other
assets in the Trust Fund. The Certificate Balance of each Class of Sequential
Pay Certificates and the Class MAD Certificates will, in each case, be reduced
on each Distribution Date by any distributions of principal actually made on
such Class of Certificates on such Distribution Date, and further by any
Realized Losses and Additional Trust Fund Expenses actually allocated to such
Class of Certificates on such Distribution Date.
The Class IO Certificates do not have a Certificate Balance, but represent
the right to receive the distributions of interest in an amount equal to the
aggregate interest accrued on its notional amount (the "Notional Amount"). The
Class IO Certificates have 19 separate components (each, a "Component"), each
corresponding to a different Class of Sequential Pay Certificates. Each such
Component has the same letter and/or numerical designation as its related Class
of Sequential Pay Certificates. The component balance (the "Component Balance")
of each Component will equal the Certificate Balance of the corresponding Class
of Sequential Pay Certificates outstanding from time to time. On each
Distribution Date, the Notional Amount of the Class IO Certificates will be
equal to the aggregate outstanding Component Balances of the Components on such
date. The initial Notional Amount of the Class IO Certificates will equal
approximately $1,063,096,508 (subject to a permitted variance of plus or minus
5.0%).
The Certificate Balance of any Class of Sequential Pay Certificates may be
increased by the amount, if any, of Certificate Deferred Interest added to such
Class Certificate Balance. With respect to any Mortgage Loan as to which the
Mortgage Rate has been reduced through a modification on any Distribution Date,
"Mortgage Deferred Interest" is the amount by which (a) interest accrued at
such reduced rate is less than (b) the amount of interest that would have
accrued on such Mortgage Loan at the Mortgage Rate before such reduction, to
the extent such amount has been added to the outstanding principal balance of
such Mortgage Loan. On each Distribution Date the amount of interest
distributable to a Class of Sequential Pay Certificates will be reduced by the
amount of Mortgage Deferred Interest allocable to such Class (any such amount,
"Certificate Deferred Interest"), such allocation being in reverse alphabetical
order (except with respect to the Class A-1, Class A-2, Class A-3, Class A-4
and Class A-1A Certificates, which amounts shall be applied pro rata (based on
remaining Class Certificate Balances) to such Classes). Mortgage Deferred
Interest with respect to the 11 Madison Avenue Loan will be allocated first, to
the 11 Madison Avenue Non-Pooled Component and then, to the 11 Madison Avenue
Pooled Component. Only Certificate Deferred Interest relating to the 11 Madison
Avenue Pooled Component will be allocated to the Sequential Pay Certificates
and Certificate Deferred Interest on the Class MAD Certificates will be equal
to the 11 Madison Avenue Non-Pooled Component's share of Mortgage Deferred
Interest on the 11 Madison Avenue Loan. The Certificate Balance of each Class
of Sequential Pay Certificates to which Certificate Deferred Interest has been
so allocated on a Distribution Date will be increased by the amount of
Certificate Deferred Interest. Any increase in the Certificate Balance of a
Class of Sequential Pay Certificates will result in an increase in the Notional
Amount of the Class IO Certificates.
The REMIC Residual Certificates do not have Certificate Balances or
Notional Amounts, but represent the right to receive on each Distribution Date
any portion of the Available Distribution Amount and Class MAD Available
Distribution Amount (each as defined below) for such date that remains after
the required distributions have been made on all the REMIC Regular
Certificates. It is not anticipated that any such portion of the Available
Distribution Amount will result in more than a de minimis distribution to the
REMIC Residual Certificates.
The Class Z Certificates do not have Certificate Balances or Notional
Amounts, but represent the right to receive on each Distribution Date any
amounts of Additional Interest received in the related Collection Period with
respect to each Mortgage Loan other than amounts allocable in respect of the 11
Madison Avenue Non-Pooled Component.
For purposes of calculating the allocation of collections on the 11
Madison Avenue Loan between the 11 Madison Avenue Pooled Component, on the one
hand, and the 11 Madison Avenue Non-Pooled
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Component on the other, the 11 Madison Avenue Pooled Component and the 11
Madison Avenue Non-Pooled Component will each be deemed to have a principal
balance (a "Component Principal Balance") that is initially equal to
$82,000,000 in the case of the 11 Madison Avenue Pooled Component, and
$13,555,556 in the case of the 11 Madison Avenue Non-Pooled Component, and each
such component will accrue interest during each Interest Accrual Period on the
amount of the Component Principal Balance thereof outstanding immediately prior
to the related Distribution Date at a per annum rate equal to the Net Mortgage
Rate in effect for the 11 Madison Avenue Loan as of the commencement of such
Interest Accrual Period. The Component Principal Balance of the 11 Madison
Avenue Pooled Component will be reduced on each Distribution Date by all
distributions of principal made in respect thereof on such Distribution Date
and the Component Principal Balance of the 11 Madison Avenue Non-Pooled
Component will be reduced on each Distribution Date by all distributions of
principal made in respect thereof on such Distribution Date, in each case as
described under "DESCRIPTION OF THE CERTIFICATES--Distributions."
PASS-THROUGH RATES
The Pass-Through Rate applicable to the Class A-1, Class A-2, Class A-3,
Class A-4, Class B, Class C, Class D and Class E Certificates for each
Distribution Date will equal the respective rate per annum set forth on the
front cover of this prospectus supplement. Each Component will be deemed to
have a Pass-Through Rate equal to the Pass-Through Rate of the related Class of
Certificates.
The Pass-Through Rate applicable to the Class IO Certificates for the
initial Distribution Date will equal approximately 0.216% per annum.
The Pass-Through Rate applicable to the Class IO Certificates for each
subsequent Distribution Date will, in general, equal the weighted average of
the Strip Rates for the Components for such Distribution Date (weighted on the
basis of the respective Component Balances of such Components outstanding
immediately prior to such Distribution Date). The "Strip Rate" in respect of
any Class of Components for any Distribution Date will, in general, equal the
Weighted Average Net Mortgage Rate for such Distribution Date, minus the
Pass-Through Rate for the Class of Sequential Pay Certificates corresponding to
such Component (but in no event will any Strip Rate be less than zero).
In the case of each Class of REMIC Regular Certificates, interest at the
applicable Pass-Through Rate will be payable monthly on each Distribution Date
and will accrue during each Interest Accrual Period on the Certificate Balance
(or, in the case of the Class IO Certificates, the Notional Amount) of such
Class of Certificates immediately following the Distribution Date in such
Interest Accrual Period (after giving effect to all distributions of principal
made on such Distribution Date). Interest on each Class of REMIC Regular
Certificates will be calculated on the basis of a 360-day year consisting of
twelve 30-day months. With respect to any Class of REMIC Regular Certificates
and any Distribution Date, the "Interest Accrual Period" will be the preceding
calendar month which will be deemed to consist of 30 days.
The Class Z Certificates will not have a Pass-Through Rate or be entitled
to distributions in respect of interest other than Additional Interest with
respect to the Mortgage Loans other than the 11 Madison Avenue Subordinate
Component.
The "Weighted Average Net Mortgage Rate" for each Distribution Date is the
weighted average of the Net Mortgage Rates for the Mortgage Loans (excluding
the Net Mortgage Rate and Component Principal Balance of the 11 Madison Avenue
Subordinate Component) as of the commencement of the related Collection Period,
weighted on the basis of their respective Stated Principal Balances (excluding,
with respect to the 11 Madison Avenue Loan, the Component Principal Balance of
the 11 Madison Avenue Non-Pooled Component) immediately following the preceding
Distribution Date; provided that, for the purpose of determining the Weighted
Average Net Mortgage Rate only, if the Mortgage Rate for any Mortgage Loan has
been modified in connection with a bankruptcy or similar proceeding involving
the related borrower or a modification, waiver or amendment granted or agreed
to by the Special Servicer, the Weighted Average Net Mortgage Rate for such
Mortgage Loan will be calculated without regard to such event. The "Net
Mortgage Rate" for each Mortgage Loan and the 11 Madison Avenue Pooled
Component and 11 Madison Avenue Non-Pooled Component will generally equal (x)
the Mortgage Rate
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in effect for such Mortgage Loan, or, with respect to the components related to
the 11 Madison Avenue Loan, such 11 Madison Avenue Loan as of the Cut-Off Date,
minus (y) the applicable Administrative Cost Rate for such Mortgage Loan.
Notwithstanding the foregoing, because no Mortgage Loan accrues interest on the
basis of a 360-day year consisting of twelve 30-day months (which is the basis
on which interest accrues in respect of the REMIC Regular Certificates), then,
solely for purposes of calculating the Weighted Average Net Mortgage Rate for
each Distribution Date, the Mortgage Rate of each Mortgage Loan in effect
during any calendar month will be deemed to be the annualized rate at which
interest would have to accrue in respect of such loan on a 30/360 basis in
order to derive the aggregate amount of interest (other than default interest)
actually accrued in respect of such loan during such calendar month; provided,
however, that, the Mortgage Rate in effect during (a) December of each year
that does not immediately precede a leap year, and January of each year will be
the per annum rate stated in the related Mortgage Note unless the final
Distribution Date occurs in January or February immediately following such
December or January and (b) in February of each year will be determined
inclusive of the one day of interest retained from the immediately preceding
January and, if applicable, December. The "Stated Principal Balance" of each
Mortgage Loan outstanding at any time will generally be an amount equal to the
principal balance thereof as of the Cut-Off Date, (a) reduced on each
Distribution Date (to not less than zero) by (i) the portion of the Principal
Distribution Amount for that date which is attributable to such Mortgage Loan
and (ii) the principal portion of any Realized Loss incurred in respect of such
Mortgage Loan during the related Collection Period and (b) increased on each
Distribution Date by any Mortgage Deferred Interest added to the principal
balance of such Mortgage Loan on such Distribution Date. The Stated Principal
Balance of a Mortgage Loan may also be reduced in connection with any forced
reduction of the actual unpaid principal balance thereof imposed by a court
presiding over a bankruptcy proceeding in which the related borrower is a
debtor. In addition, to the extent that principal from general collections is
used to reimburse nonrecoverable Advances or Workout-Delayed Reimbursement
Amounts, and such amount has not been included as part of the Principal
Distribution Amount, such amount shall not reduce the Stated Principal Balance
(other than for purposes of computing the Weighted Average Net Mortgage Rate).
Notwithstanding the foregoing, if any Mortgage Loan is paid in full, liquidated
or otherwise removed from the Trust Fund, commencing as of the first
Distribution Date following the Collection Period during which such event
occurred, the Stated Principal Balance of such Mortgage Loan will be zero. With
respect to any Companion Loan on any date of determination, the Stated
Principal Balance shall equal the unpaid principal balance of such Companion
Loan.
The "Collection Period" for each Distribution Date is the period that
begins on the 12th day in the month immediately preceding the month in which
such Distribution Date occurs (or the day after the applicable Cut-Off Date in
the case of the first Collection Period) and ends on and includes the 11th day
in the same month as such Distribution Date. Notwithstanding the foregoing, in
the event that the last day of a Collection Period is not a business day, any
payments received with respect to the Mortgage Loans relating to such
Collection Period on the business day immediately following such day will be
deemed to have been received during such Collection Period and not during any
other Collection Period. The "Determination Date" will be, for any Distribution
Date, the 11th day of each month, or if such 11th day is not a business day,
the next succeeding business day, commencing in August 2004.
DISTRIBUTIONS
General. Except as described below with respect to the Class MAD
Certificates, distributions on the Certificates are made by the Trustee, to the
extent of the Available Distribution Amount, on the fourth business day
following the related Determination Date (each, a "Distribution Date"). Except
as described below, all such distributions will be made to the persons in whose
names the Certificates are registered (the "Certificateholders") at the close
of business on the last business day of the month preceding the month in which
the related Distribution Date occurs and shall be made by wire transfer of
immediately available funds, if such Certificateholder shall have provided
wiring instructions no less than five business days prior to such record date,
or otherwise by check mailed to the address of such Certificateholder as it
appears in the Certificate register. The final distribution on any Certificate
(determined without regard to any possible future reimbursement of any Realized
Loss or Additional Trust Fund Expense previously allocated to such Certificate)
will be made only upon presentation and surrender of such Certificate at the
location that will be specified in a notice of the pendency of such final
distribution. All distributions made
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with respect to a Class of Certificates will be allocated pro rata among the
outstanding Certificates of such Class based on their respective percentage
interests in such Class. The first Distribution Date on which investors in the
Offered Certificates may receive distributions will be the Distribution Date
occurring in August 2004.
The Available Distribution Amount. The aggregate amount available for
distributions of interest and principal to Certificateholders (other than Class
MAD Certificateholders) on each Distribution Date (the "Available Distribution
Amount") will, in general, equal the sum of the following amounts:
(a) the total amount of all cash received on or in respect of the
Mortgage Loans and any REO Properties (with respect to the 11 Madison
Avenue Loan, to the extent allocable to the 11 Madison Avenue Pooled
Component) by the Master Servicer as of the close of business on the last
day of the related Collection Period and not previously distributed with
respect to the Certificates or applied for any other permitted purpose,
exclusive of any portion thereof that represents one or more of the
following:
(i) any Periodic Payments collected but due on a Due Date after
the related Collection Period;
(ii) any Prepayment Premiums and Yield Maintenance Charges;
(iii) all amounts in the Certificate Account that are payable or
reimbursable to any person other than the Certificateholders,
including any Servicing Fees and Trustee Fees on the Mortgage Loans;
(iv) any amounts deposited in the Certificate Account in error;
(v) any Additional Interest on the ARD Loans (which is separately
distributed to the Class Z Certificates);
(vi) if such Distribution Date occurs during February of any year
or during January of any year that is not a leap year, the Interest
Reserve Amounts with respect to the Mortgage Loans to be deposited in
the Interest Reserve Account and held for future distribution; and
(vii) any amounts distributable to the Class MAD Certificates in
respect of the 11 Madison Avenue Non-Pooled Component as described
below under "--Application of Class MAD Available Distribution
Amount".
(b) all P&I Advances made by the Master Servicer or the Trustee with
respect to such Distribution Date (other than any P&I Advance allocable to
the 11 Madison Avenue Non-Pooled Component);
(c) any Compensating Interest Payment (with respect to the 11 Madison
Avenue Loan, to the extent allocable to the 11 Madison Avenue Pooled
Component) made by the Master Servicer to cover the aggregate of any
Prepayment Interest Shortfalls experienced during the related Collection
Period; and
(d) if such Distribution Date occurs during March of any year or if
such Distribution Date is the final Distribution Date and occurs in
February or, if such year is not a leap year, in January, the aggregate of
the Interest Reserve Amounts (with respect to the 11 Madison Avenue Loan,
to the extent allocable to the 11 Madison Avenue Pooled Component) then on
deposit in the Interest Reserve Account in respect of each Mortgage Loan.
See "SERVICING OF THE MORTGAGE LOANS--Servicing and Other Compensation and
Payment of Expenses" and "--P&I Advances" in this prospectus supplement and
"DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS--Certificate Account" in
the accompanying prospectus.
Any Prepayment Premiums or Yield Maintenance Charges actually collected
will be distributed separately from the Available Distribution Amount. See
"--Distributions--Allocation of Prepayment Premiums and Yield Maintenance
Charges" in this prospectus supplement.
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The Class MAD Available Distribution Amount. The aggregate amount
available for distributions of interest and principal to the holders of the
Class MAD Certificates on each Distribution Date (the "Class MAD Available
Distribution Amount") will, in general, equal the sum of the following amounts:
(a) the total amount of all cash received in respect of the 11 Madison
Avenue Loan and any REO Property related to the 11 Madison Avenue Loan to
the extent allocable to the 11 Madison Avenue Non-Pooled Component in
accordance with the terms of the Pooling and Servicing Agreement and not
previously distributed with respect to the Class MAD Certificates or
applied for any other permitted purpose, exclusive of any portion thereof
that represents one or more of the following:
(i) any Periodic Payments on the 11 Madison Avenue Loan allocable
to the 11 Madison Avenue Non-Pooled Component collected but due on a
Due Date after the related Collection Period;
(ii) all amounts in the Certificate Account that are payable or
reimbursable to any person other than the holders of the Class MAD
Certificates, including any Servicing Fees and Trustee Fees on the 11
Madison Avenue Non-Pooled Component;
(iii) any amounts deposited in the Certificate Account in error;
and
(iv) if such Distribution Date occurs during February of any year
or during January of any year that is not a leap year, the Interest
Reserve Amounts with respect to the 11 Madison Avenue Loan and
allocable to the 11 Madison Avenue Non-Pooled Component to be
deposited in the Interest Reserve Account and held for future
distribution;
(b) all P&I Advances of interest made by the Master Servicer, the
Trustee or the Fiscal Agent with respect to such Distribution Date made on
the 11 Madison Avenue Loan and allocable to the 11 Madison Avenue
Non-Pooled Component;
(c) any Compensating Interest Payment made by the Master Servicer to
cover the aggregate of any Prepayment Interest Shortfalls experienced
during the related Collection Period made on the 11 Madison Avenue Loan and
allocable to the 11 Madison Avenue Non-Pooled Component; and
(d) if such Distribution Date occurs during March of any year or if
such Distribution Date is the final Distribution Date and occurs in
February or, if such year is not a leap year, in January, the aggregate of
the Interest Reserve Amounts then on deposit in the Interest Reserve
Account in respect of the 11 Madison Avenue Non-Pooled Component.
Interest Reserve Account. The Trustee will establish and maintain an
"Interest Reserve Account" in the name of the Trustee for the benefit of the
holders of the Certificates. With respect to each Distribution Date occurring
in February and each Distribution Date occurring in any January which occurs in
a year that is not a leap year, there will be withdrawn from the Certificate
Account and deposited to the Interest Reserve Account in respect of each
Mortgage Loan (including the 11 Madison Avenue Non-Pooled Component) (the
"Interest Reserve Loans") which accrues interest on an Actual/360 basis an
amount equal to one day's interest at the related Mortgage Rate on its Stated
Principal Balance, as of the Due Date in the month in which such Distribution
Date occurs, to the extent a Periodic Payment or P&I Advance is timely made in
respect thereof for such Due Date (all amounts so deposited in any consecutive
January (if applicable) and February in respect of each Interest Reserve Loan,
the "Interest Reserve Amount"). With respect to each Distribution Date
occurring in March, or in the event the final Distribution Date occurs in
February or, if such year is not a leap year, in January, there will be
withdrawn from the Interest Reserve Account the amounts deposited from the
immediately preceding February and, if applicable, January, and such withdrawn
amount is to be included as part of the Available Distribution Amount for such
Distribution Date.
Distribution Account. The Trustee will establish and will maintain a
"Distribution Account" in the name of the Trustee for the benefit of the
Certificateholders and will maintain the Distribution Account as an eligible
account pursuant to the terms of the Pooling and Servicing Agreement. Funds on
deposit in the Distribution Account, to the extent of the Available
Distribution Amount (and, with respect to the Class MAD Certificates, to the
extent of the Class MAD Available Distribution Amount), will be used to make
distributions on the Certificates.
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Gain on Sale Reserve Account. The Trustee will establish and will maintain
a "Gain on Sale Reserve Account" in the name of the Trustee for the benefit of
the Certificateholders. To the extent that gains realized on sales of Mortgaged
Properties, if any, are not used to offset Realized Losses previously allocated
to the Certificates, such gains will be held and applied to offset future
Realized Losses, if any.
Additional Interest Account. The Trustee will establish and will maintain
an "Additional Interest Account" in the name of the Trustee for the benefit of
the holders of the Class Z and Class MAD Certificates. Prior to the applicable
Distribution Date, an amount equal to the Additional Interest received in
respect of the Mortgage Loans during the related Collection Period will be
deposited into the Additional Interest Account.
Application of the Available Distribution Amount. On each Distribution
Date, the Trustee will (except as otherwise described under "--Termination"
below) apply amounts on deposit in the Distribution Account (other than amounts
payable on such date in respect of the Class MAD Certificates), to the extent
of the Available Distribution Amount, in the following order of priority:
(1) concurrently, to distributions of interest (i) from the portion of the
Available Distribution Amount for such Distribution Date attributable
to Mortgage Loans in Loan Group 1, to the holders of the Class A-1
Certificates, Class A-2 Certificates, Class A-3 Certificates and Class
A-4 Certificates, pro rata, in accordance with the respective amounts
of Distributable Certificate Interest in respect of such classes of
Certificates on such Distribution Date, in an amount equal to all
Distributable Certificate Interest in respect of such Classes of
Certificates for such Distribution Date and, to the extent not
previously paid, for all prior Distribution Dates, (ii) from the
portion of the Available Distribution Amount for such Distribution
Date attributable to Mortgage Loans in Loan Group 2, to the holders of
the Class A-1A Certificates in an amount equal to all Distributable
Certificate Interest in respect of such Class of Certificates on such
Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates, and (iii) from the entire Available
Distribution Amount for such Distribution Date relating to the entire
Mortgage Pool, to the holders of the Class IO Certificates, in
accordance with the amounts of Distributable Certificate Interest in
respect of such Classes of Certificates on such Distribution Date, in
an amount equal to all Distributable Certificate Interest in respect
of such Class of Certificates for such Distribution Date and, to the
extent not previously paid, for all prior Distribution Dates;
provided, however, on any Distribution Date where the Available
Distribution Amount (or applicable portion thereof) is not sufficient
to make distributions in full to the related Classes of Certificates
as described above, the Available Distribution Amount will be
allocated among the above Classes of Certificates without regard to
Loan Group, pro rata, in accordance with the respective amounts of
Distributable Certificate Interest in respect of such Classes of
Certificates on such Distribution Date, in an amount equal to all
Distributable Certificate Interest in respect of each such Class of
Certificates for such Distribution Date and, to the extent not
previously paid, for all prior Distribution Dates;
(2) to distributions of principal to the holders of the Class A-1
Certificates in an amount (not to exceed the then outstanding
Certificate Balance of the Class A-1 Certificates) equal to the Loan
Group 1 Principal Distribution Amount for such Distribution Date and,
after the Class A-1A Certificates have been retired, the Loan Group 2
Principal Distribution Amount remaining after payments to the Class
A-1A Certificates have been made on such Distribution Date;
(3) after the Class A-1 Certificates have been retired, to distributions
of principal to the holders of the Class A-2 Certificates in an amount
(not to exceed the then outstanding Certificate Balance of the Class
A-2 Certificates) equal to the Loan Group 1 Principal Distribution
Amount for such Distribution Date and, after the Class A-1A
Certificates have been retired, the Loan Group 2 Principal
Distribution Amount remaining after payments to the Class A-1A
Certificates have been made on such Distribution Date, in each case,
less any portion thereof distributed in respect of the Class A-1
Certificates on such Distribution Date;
(4) after the Class A-2 Certificates have been retired, to distributions
of principal to the holders of the Class A-3 Certificates in an amount
(not to exceed the then outstanding Certificate Balance of the Class
A-3 Certificates) equal to the Loan Group 1 Principal Distribution
Amount for such
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Distribution Date and, after the Class A-1A Certificates have been
retired, the Loan Group 2 Principal Distribution Amount remaining
after payments to the Class A-1A Certificates have been made on such
Distribution Date, in each case, less any portion thereof distributed
in respect of the Class A-2 Certificates on such Distribution Date;
(5) after the Class A-3 Certificates have been retired, to distributions
of principal to the holders of the Class A-4 Certificates in an amount
(not to exceed the then outstanding Certificate Balance of the Class
A-4 Certificates) equal to the Loan Group 1 Principal Distribution
Amount for such Distribution Date and, after the Class A-1A
Certificates have been retired, the Loan Group 2 Principal
Distribution Amount remaining after payments to the Class A-1A
Certificates have been made on such Distribution Date, in each case,
less any portion thereof distributed in respect of the Class A-3
Certificates on such Distribution Date;
(6) to distributions of principal to the holders of the Class A-1A
Certificates in an amount (not to exceed the then outstanding
Certificate Balance of the Class A-1A Certificate) equal to the Loan
Group 2 Principal Distribution Amount for such Distribution and, after
the Class A-4 Certificates have been retired, the Loan Group 1
Principal Distribution Amount remaining after payments to the Class
A-4 Certificates have been made on such Distribution Date;
(7) to distributions to the holders of the Class A-1 Certificates, Class
A-2 Certificates, Class A-3 Certificates, Class A-4 Certificates and
Class A-1A Certificates, pro rata, in accordance with the respective
amounts of Realized Losses and Additional Trust Fund Expenses, if any,
previously allocated to such Classes of Certificates and for which no
reimbursement has previously been received, to reimburse such holders
for all such Realized Losses and Additional Trust Fund Expenses, if
any;
(8) to distributions of interest to the holders of the Class B
Certificates in an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates;
(9) after the Class A-1 Certificates, Class A-2 Certificates, Class A-3
Certificates, Class A-4 Certificates and Class A-1A Certificates have
been retired, to distributions of principal to the holders of the
Class B Certificates in an amount (not to exceed the then outstanding
Certificate Balance of the Class B Certificates) equal to the
Principal Distribution Amount for such Distribution Date, less any
portion thereof distributed in respect of the Class A-1 Certificates,
Class A-2 Certificates, Class A-3 Certificates, Class A-4 Certificates
and/or Class A-1A Certificates on such Distribution Date;
(10) to distributions to the holders of the Class B Certificates to
reimburse such holders for all Realized Losses and Additional Trust
Fund Expenses, if any, previously allocated to such Class of
Certificates and for which no reimbursement has previously been
received;
(11) to distributions of interest to the holders of the Class C
Certificates in an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates;
(12) after all Classes of Certificates with an earlier alphabetical and
numerical designation have been retired, to distributions of principal
to the holders of the Class C Certificates in an amount (not to exceed
the then outstanding Certificate Balance of the Class C Certificates)
equal to the Principal Distribution Amount for such Distribution Date,
less any portion thereof distributed in respect of all Classes of
Certificates with an earlier alphabetical and numerical designation on
such Distribution Date;
(13) to distributions to the holders of the Class C Certificates to
reimburse such holders for all Realized Losses and Additional Trust
Fund Expenses, if any, previously allocated to such Class of
Certificates and for which no reimbursement has previously been
received;
(14) to distributions of interest to the holders of the Class D
Certificates in an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates;
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(15) after all Classes of Certificates with an earlier alphabetical and
numerical designation have been retired, to distributions of principal
to the holders of the Class D Certificates in an amount (not to exceed
the then outstanding Certificate Balance of the Class D Certificates)
equal to the Principal Distribution Amount for such Distribution Date,
less any portion thereof distributed in respect of all Classes of
Certificates with an earlier alphabetical and numerical designation on
such Distribution Date;
(16) to distributions to the holders of the Class D Certificates to
reimburse such holders for all Realized Losses and Additional Trust
Fund Expenses, if any, previously allocated to such Class of
Certificates and for which no reimbursement has previously been
received;
(17) to distributions of interest to the holders of the Class E
Certificates in an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates;
(18) after all Classes of Certificates with an earlier alphabetical and
numerical designation have been retired, to distributions of principal
to the holders of the Class E Certificates in an amount (not to exceed
the then outstanding Certificate Balance of the Class E Certificates)
equal to the Principal Distribution Amount for such Distribution Date,
less any portion thereof distributed in respect of all Classes of
Certificates with an earlier alphabetical and numerical designation on
such Distribution Date;
(19) to distributions to the holders of the Class E Certificates to
reimburse such holders for all Realized Losses and Additional Trust
Fund Expenses, if any, previously allocated to such Class of
Certificates and for which no reimbursement has previously been
received;
(20) to distributions of interest to the holders of the Class F
Certificates in an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates;
(21) after all Classes of Certificates with an earlier alphabetical and
numerical designation have been retired, to distributions of principal
to the holders of the Class F Certificates in an amount (not to exceed
the then outstanding Certificate Balance of the Class F Certificates)
equal to the Principal Distribution Amount for such Distribution Date,
less any portion thereof distributed in respect of all Classes of
Certificates with an earlier alphabetical and numerical designation on
such Distribution Date;
(22) to distributions to the holders of the Class F Certificates to
reimburse such holders for all Realized Losses and Additional Trust
Fund Expenses, if any, previously allocated to such Class of
Certificates and for which no reimbursement has previously been
received;
(23) to distributions of interest to the holders of the Class G
Certificates in an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates;
(24) after all Classes of Certificates with an earlier alphabetical and
numerical designation have been retired, to distributions of principal
to the holders of the Class G Certificates in an amount (not to exceed
the then outstanding Certificate Balance of the Class G Certificates)
equal to the Principal Distribution Amount for such Distribution Date,
less any portion thereof distributed in respect of all Classes of
Certificates with an earlier alphabetical and numerical designation on
such Distribution Date;
(25) to distributions to the holders of the Class G Certificates to
reimburse such holders for all Realized Losses and Additional Trust
Fund Expenses, if any, previously allocated to such Class of
Certificates and for which no reimbursement has previously been
received;
(26) to distributions of interest to the holders of the Class H
Certificates in an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates;
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(27) after all Classes of Certificates with an earlier alphabetical and
numerical designation have been retired, to distributions of principal
to the holders of the Class H Certificates in an amount (not to exceed
the then outstanding Certificate Balance of the Class H Certificates)
equal to the Principal Distribution Amount for such Distribution Date,
less any portion thereof distributed in respect of all Classes of
Certificates with an earlier alphabetical and numerical designation on
such Distribution Date;
(28) to distributions to the holders of the Class H Certificates to
reimburse such holders for all Realized Losses and Additional Trust
Fund Expenses, if any, previously allocated to such Class of
Certificates and for which no reimbursement has previously been
received;
(29) to distributions of interest to the holders of the Class J
Certificates in an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates;
(30) after all Classes of Certificates with an earlier alphabetical and
numerical designation have been retired, to distributions of principal
to the holders of the Class J Certificates in an amount (not to exceed
the then outstanding Certificate Balance of the Class J Certificates)
equal to the Principal Distribution Amount for such Distribution Date,
less any portion thereof distributed in respect of all Classes of
Certificates with an earlier alphabetical and numerical designation on
such Distribution Date;
(31) to distributions to the holders of the Class J Certificates to
reimburse such holders for all Realized Losses and Additional Trust
Fund Expenses, if any, previously allocated to such Class of
Certificates and for which no reimbursement has previously been
received;
(32) to distributions of interest to the holders of the Class K
Certificates in an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates;
(33) after all Classes of Certificates with an earlier alphabetical and
numerical designation have been retired, to distributions of principal
to the holders of the Class K Certificates in an amount (not to exceed
the then outstanding Certificate Balance of the Class K Certificates)
equal to the Principal Distribution Amount for such Distribution Date,
less any portion thereof distributed in respect of all Classes of
Certificates with an earlier alphabetical and numerical designation on
such Distribution Date;
(34) to distributions to the holders of the Class K Certificates to
reimburse such holders for all Realized Losses and Additional Trust
Fund Expenses, if any, previously allocated to such Class of
Certificates and for which no reimbursement has previously been
received;
(35) to distributions of interest to the holders of the Class L
Certificates in an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates;
(36) after all Classes of Certificates with an earlier alphabetical and
numerical designation have been retired, to distributions of principal
to the holders of the Class L Certificates in an amount (not to exceed
the then outstanding Certificate Balance of the Class L Certificates)
equal to the Principal Distribution Amount for such Distribution Date,
less any portion thereof distributed in respect of all Classes of
Certificates with an earlier alphabetical and numerical designation on
such Distribution Date;
(37) to distributions to the holders of the Class L Certificates to
reimburse such holders for all Realized Losses and Additional Trust
Fund Expenses, if any, previously allocated to such Class of
Certificates and for which no reimbursement has previously been
received;
(38) to distributions of interest to the holders of the Class M
Certificates in an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates;
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(39) after all Classes of Certificates with an earlier alphabetical and
numerical designation have been retired, to distributions of principal
to the holders of the Class M Certificates in an amount (not to exceed
the then outstanding Certificate Balance of the Class M Certificates)
equal to the Principal Distribution Amount for such Distribution Date,
less any portion thereof distributed in respect of all Classes of
Certificates with an earlier alphabetical and numerical designation on
such Distribution Date;
(40) to distributions to the holders of the Class M Certificates to
reimburse such holders for all Realized Losses and Additional Trust
Fund Expenses, if any, previously allocated to such Class of
Certificates and for which no reimbursement has previously been
received;
(41) to distributions of interest to the holders of the Class N
Certificates in an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates;
(42) after all Classes of Certificates with an earlier alphabetical and
numerical designation have been retired, to distributions of principal
to the holders of the Class N Certificates in an amount (not to exceed
the then outstanding Certificate Balance of the Class N Certificates)
equal to the Principal Distribution Amount for such Distribution Date,
less any portion thereof distributed in respect of all Classes of
Certificates with an earlier alphabetical and numerical designation on
such Distribution Date;
(43) to distributions to the holders of the Class N Certificates to
reimburse such holders for all Realized Losses and Additional Trust
Fund Expenses, if any, previously allocated to such Class of
Certificates and for which no reimbursement has previously been
received;
(44) to distributions of interest to the holders of the Class O
Certificates in an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates;
(45) after all Classes of Certificates with an earlier alphabetical and
numerical designation have been retired, to distributions of principal
to the holders of the Class O Certificates in an amount (not to exceed
the then outstanding Certificate Balance of the Class O Certificates)
equal to the Principal Distribution Amount for such Distribution Date,
less any portion thereof distributed in respect of all Classes of
Certificates with an earlier alphabetical and numerical designation on
such Distribution Date;
(46) to distributions to the holders of the Class O Certificates to
reimburse such holders for all Realized Losses and Additional Trust
Fund Expenses, if any, previously allocated to such Class of
Certificates and for which no reimbursement has previously been
received;
(47) to distributions of interest to the holders of the Class P
Certificates in an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates;
(48) after all Classes of Certificates with an earlier alphabetical and
numerical designation have been retired, to distributions of principal
to the holders of the Class P Certificates in an amount (not to exceed
the then outstanding Certificate Balance of the Class P Certificates)
equal to the Principal Distribution Amount for such Distribution Date,
less any portion thereof distributed in respect of all Classes of
Certificates with an earlier alphabetical and numerical designation on
such Distribution Date;
(49) to distributions to the holders of the Class P Certificates to
reimburse such holders for all Realized Losses and Additional Trust
Fund Expenses, if any, previously allocated to such Class of
Certificates and for which no reimbursement has previously been
received; and
(50) to distributions to the holders of the REMIC Residual Certificates in
an amount equal to the balance, if any, of the Available Distribution
Amount remaining after the distributions to be made on such
Distribution Date as described in clauses (1) through (49) above;
provided that, on each Distribution Date, if any, after the aggregate of the
Certificate Balances of the Subordinate Certificates has been reduced to zero
as a result of the allocations of Realized Losses and
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Additional Trust Fund Expenses, and in any event on the final Distribution Date
in connection with a termination of the Trust Fund (see "--Termination" below),
the payments of principal to be made as contemplated by clauses (2), (3), (4),
(5) and (6) above with respect to the Class A-1 Certificates, the Class A-2
Certificates, the Class A-3 Certificates, the Class A-4 Certificates and the
Class A-1A Certificates will be so made to the holders of the respective
Classes of such Certificates which remain outstanding up to an amount equal to,
and pro rata as between such Classes in accordance with, the respective then
outstanding Certificate Balances of such Classes of Certificates and without
regard to the Principal Distribution Amount for such date.
Application of Class MAD Available Distribution Amount. The Class MAD
Certificates will only be entitled to distributions from amounts collected on
the 11 Madison Avenue Non-Pooled Component. On each Distribution Date, the
Trustee will apply amounts on deposit in the Distribution Account in the
following order of priority to the extent of the Class MAD Available
Distribution Amount:
(1) to distributions of interest to the holders of the Class MAD
Certificates in accordance with the amount of Distributable
Certificate Interest in respect of such Class, in an amount equal to
all Distributable Certificate Interest allocable to the Class MAD
Certificates for such Distribution Date and, to the extent not
previously paid, for all prior Distribution Dates;
(2) to distributions of principal to the holders of the Class MAD
Certificates in an amount equal to the Class MAD Principal
Distribution Amount for such Distribution Date;
(3) to distributions to the holders of the Class MAD Certificates to
reimburse such holders for all Realized Losses and Additional Trust
Fund Expenses, if any, previously allocated to such Class of
Certificates and for which no reimbursement has previously been
received; and
(4) to distributions to the holders of the Class R-I Certificates in an
amount equal to the balance, if any, of the Class MAD Available
Distribution Amount remaining after the distributions to be made on
such Distribution Date as described in clauses (1) through (3) above.
Amounts payable on any Distribution Date which are part of the Class MAD
Available Distribution Amount will not be available to make distributions on
other Certificates (other than the Class R-I Certificates).
The Class MAD Certificates and the 11 Madison Avenue Non-Pooled
Component. The Class MAD Certificates will only be entitled to distributions
from amounts collected on the 11 Madison Avenue Loan allocable to the 11
Madison Avenue Non-Pooled Component. Prior to the occurrence and continuance of
a monetary event of default, all collections of principal and interest in
respect of the 11 Madison Avenue Loan received during any Collection Period
(net of any portion allocable to reimburse any outstanding P&I Advances, or pay
any Servicing Fees, Trustee Fees, Workout Fees, Liquidation Fees, interest on
Advances and any other Additional Trust Fund Expenses, in respect of such
Mortgage Loan) will be applied on the related Distribution Date for the
purposes and in the following order of priority:
(i) to the Certificateholders (other than the Class MAD Certificates)
as part of the Available Distribution Amount for such Distribution Date, up
to an amount equal to accrued and unpaid interest in respect of the 11
Madison Avenue Pooled Component through the end of the related Interest
Accrual Period;
(ii) to the Certificateholders (other than the Class MAD Certificates)
as part of the Available Distribution Amount for such Distribution Date, up
to an amount equal to its pro rata share of any principal payments until
the Component Principal Balance of the 11 Madison Avenue Pooled Component
is reduced to zero;
(iii) to the Certificateholders (other than the Class MAD
Certificates) as part of the Available Distribution Amount for such
Distribution Date, to reimburse the 11 Madison Avenue Pooled Component for
all Realized Losses and Additional Trust Fund Expenses, if any, previously
allocated to the 11 Madison Avenue Pooled Component and for which no
reimbursement has previously been received;
(iv) to the holders of the Class MAD Certificates, as part of the
Class MAD Available Distribution Amount, up to an amount equal to all
accrued and unpaid interest in respect of the 11 Madison Avenue Non-Pooled
Component through the end of the related Interest Accrual Period;
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(v) to the holders of the Class MAD Certificates, as part of the Class
MAD Available Amount, up to its pro rata share of any principal payments
until the Component Principal Balance of the 11 Madison Avenue Non-Pooled
Component is reduced to zero;
(vi) to the holders of the Class MAD Certificates, as part of the
Class MAD Available Distribution Amount to reimburse the Class MAD
Certificates for all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to the 11 Madison Avenue Non-Pooled Component and
for which no reimbursement has been previously received;
(vii) to the Certificateholders (other than the Class MAD
Certificates) for allocation as described below in "--Allocation of
Prepayment Premiums and Yield Maintenance Charges", an amount equal to a
pro rata share, based on the outstanding Component Principal Balance, of
Yield Maintenance Charges received in respect of the 11 Madison Avenue Loan
and allocable to the 11 Madison Avenue Pooled Component;
(viii) to the holders of the Class MAD Certificates, for allocation as
described below in "--Allocation of Prepayment Premiums and Yield
Maintenance Charges", an amount equal to a pro rata share, based on the
outstanding Component Principal Balance, of Yield Maintenance Charges
received in respect of the 11 Madison Avenue Loan and allocable to the 11
Madison Avenue Non-Pooled Component;
(ix) to the Class Z Certificates allocated as described in
"--Distributions of Additional Interest" below, an amount equal to a pro
rata share, based on the outstanding Component Principal Balance, of
Additional Interest Amounts received in respect of the 11 Madison Avenue
Loan and allocable to the 11 Madison Avenue Pooled Component;
(x) to the holders of the Class MAD Certificates allocated as
described in "--Distributions of Additional Interest" below, an amount
equal to a pro rata share, based on the outstanding Component Principal
Balance, of Additional Interest Amounts received in respect of the 11
Madison Avenue Loan and allocable to the 11 Madison Avenue Non-Pooled
Component; and
(xi) to the Trust Fund, an amount equal to any Penalty Interest and
other amounts remaining that are received in respect of the 11 Madison
Avenue Loan.
The amounts to be applied pursuant to clauses (i), (ii) and (iii) above
will be included as part of the Available Distribution Amount for the subject
Distribution Date and will be applied as described above to make distributions
on the Certificates (other than the Class MAD Certificates).
Under certain circumstances, the holders of the Certificates will be
entitled to certain Advances to the extent described in "--P&I Advances" below.
Amounts payable on any Distribution Date which are part of the Class MAD
Available Distribution Amount will not be available to make distributions on
the other classes of Regular Certificates.
Upon the occurrence and continuance of a monetary event of default in
respect of the 11 Madison Avenue Loan all collections of principal and interest
in respect of the 11 Madison Avenue Loan received during any Collection Period
(net of any portion allocated to reimburse any outstanding P&I Advances, or pay
any Servicing Fees, Trustee Fees, Workout Fees, Liquidation Fees, interest on
Advances and other Additional Trust Fund Expenses, in respect of such Mortgage
Loan) will be applied on the related Distribution Date for the purposes and in
the following order of priority:
(i) to the Certificateholders (other than the Class MAD Certificates)
as part of the Available Distribution Amount for such Distribution Date, up
to an amount equal to accrued and unpaid interest in respect of the 11
Madison Avenue Pooled Component through the end of the related Interest
Accrual Period;
(ii) to the Certificateholders (other than the Class MAD Certificates)
as part of the Available Distribution Amount for such Distribution Date,
until the Component Principal Balance of the 11 Madison Avenue Pooled
Component is reduced to zero;
(iii) to the Certificateholders (other than the Class MAD
Certificates) as part of the Available Distribution Amount for such
Distribution Date, to reimburse the 11 Madison Avenue Pooled
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Component for all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to the 11 Madison Avenue Pooled Component and for
which no reimbursement has previously been received;
(iv) to the holders of the Class MAD Certificates, as part of the
Class MAD Available Distribution Amount, up to an amount equal to all
accrued and unpaid interest in respect of the 11 Madison Avenue Non-Pooled
Component through the end of the related Interest Accrual Period;
(v) to the holders of the Class MAD Certificates, as part of the Class
MAD Available Distribution Amount, until the Component Principal Balance of
the 11 Madison Avenue Non-Pooled Component is reduced to zero;
(vi) to the holders of the Class MAD Certificates, as part of the
Class MAD Available Distribution Amount, to reimburse the Class MAD
Certificates for all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to the 11 Madison Avenue Non-Pooled Component and
for which no reimbursement has been previously received;
(vii) to the Certificateholders (other than the Class MAD
Certificates) for allocation as described below in "--Allocation of
Prepayment Premiums and Yield Maintenance Charges", an amount equal to a
pro rata share, based on the outstanding Component Principal Balance, of
Yield Maintenance Charges received in respect of the 11 Madison Avenue Loan
and allocable to the 11 Madison Avenue Pooled Component;
(viii) to the holders of the Class MAD Certificates, for allocation as
described below in "--Allocation of Prepayment Premiums and Yield
Maintenance Charges", an amount equal to a pro rata share, based on the
outstanding Component Principal Balance, of Yield Maintenance Charges
received in respect of the 11 Madison Avenue Loan and allocable to the 11
Madison Avenue Non-Pooled Component;
(ix) to the Class Z Certificates allocated as described in
"--Distributions of Additional Interest" below, an amount equal to a pro
rata share, based on the outstanding Component Principal Balance, of
Additional Interest Amounts received in respect of the 11 Madison Avenue
Loan and allocable to the 11 Madison Avenue Pooled Component;
(x) to the holders of the Class MAD Certificates allocated as
described in "--Distributions of Additional Interest" below, an amount
equal to a pro rata share, based on the outstanding Component Principal
Balance, of Additional Interest Amounts received in respect of the 11
Madison Avenue Loan and allocable to the 11 Madison Avenue Non-Pooled
Component; and
(xi) to the Trust Fund, an amount equal to any Penalty Interest and
other amounts remaining that are received in respect of the 11 Madison
Avenue Loan.
The amounts to be applied pursuant to clause (i), (ii) and (iii) above
will be included as part of the Available Distribution Amount for the subject
Distribution Date and will be applied as described above to make distributions
on the Certificates (other than the Class MAD Certificates).
Under certain circumstances, the holders of the Certificates will be
entitled to certain Advances to the extent described in "--P&I Advances" below.
Amounts payable on any Distribution Date which are part of the Class MAD
Available Distribution Amount will not be available to make distributions on
the other classes of Regular Certificates.
Distributable Certificate Interest. The "Distributable Certificate
Interest" in respect of each Class of REMIC Regular Certificates for each
Distribution Date equals the Accrued Certificate Interest in respect of such
Class of Certificates for such Distribution Date, reduced (other than in the
case of the Class IO Certificates) (to not less than zero) by (i) such Class's
allocable share (calculated as described below) of the aggregate of any
Prepayment Interest Shortfalls resulting from principal prepayments made on the
Mortgage Loans during the related Collection Period that are not covered by the
Master Servicer's Compensating Interest Payment for such Distribution Date (the
aggregate of such Prepayment Interest Shortfalls that are not so covered, as to
such Distribution Date, the "Net Aggregate Prepayment Interest Shortfall") and
(ii) any Certificate Deferred Interest allocated to such Class of REMIC Regular
Certificates.
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The "Accrued Certificate Interest" in respect of each Class of Sequential
Pay Certificates and the Class MAD Certificates for each Distribution Date will
equal one month's interest at the Pass-Through Rate applicable to such Class of
Certificates for such Distribution Date accrued for the related Interest
Accrual Period on the related Certificate Balance or Component Principal
Balance, as applicable, outstanding immediately prior to such Distribution
Date. The "Accrued Certificate Interest" in respect of the Class IO
Certificates for any Distribution Date will equal the amount of one month's
interest at the related Pass-Through Rate on the Notional Amount of the Class
IO Certificates outstanding immediately prior to such Distribution Date.
Accrued Certificate Interest will be calculated on a 30/360 basis.
The portion of the Net Aggregate Prepayment Interest Shortfall for any
Distribution Date that is allocable to each Class of REMIC Regular Certificates
(other than the Class IO and Class MAD Certificates) will equal the product of
(a) such Net Aggregate Prepayment Interest Shortfall, multiplied by (b) a
fraction, the numerator of which is equal to the Accrued Certificate Interest
in respect of such Class of Certificates for such Distribution Date, and the
denominator of which is equal to the aggregate Accrued Certificate Interest in
respect of all Classes of REMIC Regular Certificates (other than the Class IO
Certificates) and the Class MAD Certificates for such Distribution Date.
Any such Prepayment Interest Shortfalls allocated to the Certificates, to
the extent not covered by the Master Servicer's related Compensating Interest
Payment for such Distribution Date, will reduce the applicable Distributable
Certificate Interest as described above.
With respect to the 11 Madison Avenue Loan, prepayment interest shortfalls
will be allocated first to the promissory note related to the most subordinate
of the 11 Madison Avenue Subordinate Loans, second to the promissory note
related to the second most subordinate of the 11 Madison Avenue Subordinate
Loans, third to the promissory note related to the senior most of the 11
Madison Avenue Subordinate Loans and fourth, pro rata, between the promissory
notes related to the 11 Madison Avenue Loan and the 11 Madison Avenue Pari
Passu Loans. The portion of such prepayment interest shortfall allocated to the
11 Madison Avenue Loan will be allocated between the 11 Madison Avenue Pooled
Component and the 11 Madison Avenue Non-Pooled Component pro rata, based on the
amount of interest each such component is otherwise entitled to receive on the
related Distribution Date (without giving effect to any capitalization of
interest). Compensating Interest Payments made by the Master Servicer with
respect to the 11 Madison Avenue Loan for any Distribution Date will be used
first, to cover the Prepayment Interest Shortfalls incurred during the related
Collection Period allocated to the 11 Madison Avenue Pooled Component, and
second, to cover any Prepayment Interest Shortfalls incurred during the related
Collection Period allocated to the 11 Madison Avenue Non-Pooled Component. Any
such Prepayment Interest Shortfalls allocated to the 11 Madison Avenue
Non-Pooled Component, to the extent not covered by the Master Servicer's
Compensating Interest Payment for such Distribution Date, will reduce the 11
Madison Avenue Non-Pooled Component's interest entitlement for the related
Distribution Date (without giving effect to any capitalization of interest).
Any such Prepayment Interest Shortfalls allocated to the 11 Madison Avenue
Pooled Component, to the extent not covered by the Master Servicer's
Compensating Interest Payment for such Distribution Date, will reduce its
Distributable Certificate Interest as described above.
With respect to the Fox Valley Loan and the Mountain View Loan, prepayment
interest shortfalls will be allocated first to the promissory note related to
the Fox Valley Subordinate Loan and the Mountain View Subordinate Loan,
respectively, and second to the promissory note related to the Fox Valley Loan
and Mountain View Loan, respectively. The portion of such shortfall allocated
to the Fox Valley Loan or Mountain View Loan, as applicable, net of amounts
payable by the Master Servicer, will be included in the Net Aggregate
Prepayment Interest Shortfall.
Principal Distribution Amount. So long as both the Class A-4 and Class
A-1A Certificates remain outstanding, the Principal Distribution Amount for
each Distribution Date will be calculated on a Loan Group by Loan Group basis
(the "Loan Group 1 Principal Distribution Amount" and "Loan Group 2 Principal
Distribution Amount", respectively). On each Distribution Date after the
Certificate Balances of either the Class A-4 or Class A-1A Certificates have
been reduced to zero, a single Principal Distribution Amount will be calculated
in the aggregate for both Loan Groups. The "Principal Distribution Amount" for
each Distribution Date with respect to a Loan Group or the Mortgage Pool will
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generally equal the aggregate of the following (without duplication) to the
extent paid by the related borrower during the related Collection Period or
advanced by the Master Servicer, the Trustee, the Fiscal Agent, the 2004-C10
Master Servicer or the 2004-C10 Trustee, as applicable, but, in each case,
exclusive of amounts allocable to principal of the 11 Madison Avenue Non-Pooled
Component:
(a) the aggregate of the principal portions of all Scheduled Payments
(other than Balloon Payments) and of any Assumed Scheduled Payments due or
deemed due, on or in respect of the Mortgage Loans (with respect to the 11
Madison Avenue Loan, to the extent allocable to the 11 Madison Avenue
Pooled Component) in such Loan Group or the Mortgage Pool, as applicable,
for their respective Due Dates occurring during the related Collection
Period, to the extent not previously paid by the related borrower or
advanced by the Master Servicer or Trustee, as applicable, prior to such
Collection Period;
(b) the aggregate of all principal prepayments received on the
Mortgage Loans in such Loan Group or the Mortgage Pool, as applicable,
during the related Collection Period;
(c) with respect to any Mortgage Loan (with respect to the 11 Madison
Avenue Loan, to the extent allocable to the 11 Madison Avenue Pooled
Component) in such Loan Group or the Mortgage Pool, as applicable, as to
which the related stated maturity date occurred during or prior to the
related Collection Period, any payment of principal made by or on behalf of
the related borrower during the related Collection Period (including any
Balloon Payment), net of any portion of such payment that represents a
recovery of the principal portion of any Scheduled Payment (other than a
Balloon Payment) due, or the principal portion of any Assumed Scheduled
Payment deemed due, in respect of such Mortgage Loan (with respect to the
11 Madison Avenue Loan, to the extent allocable to the 11 Madison Avenue
Pooled Component) on a Due Date during or prior to the related Collection
Period and not previously recovered;
(d) the aggregate of the principal portion of all liquidation
proceeds, insurance proceeds, condemnation awards and proceeds of
repurchases of Mortgage Loans (with respect to the 11 Madison Avenue Loan,
to the extent allocable to the 11 Madison Avenue Pooled Component) in such
Loan Group or the Mortgage Pool, as applicable, and Substitution Shortfall
Amounts with respect to Mortgage Loans in such Loan Group or the Mortgage
Pool, as applicable, and, to the extent not otherwise included in clause
(a), (b) or (c) above, payments and other amounts that were received on or
in respect of Mortgage Loans (with respect to the 11 Madison Avenue Loan,
to the extent allocable to the 11 Madison Avenue Pooled Component) in such
Loan Group or the Mortgage Pool, as applicable, during the related
Collection Period and that were identified and applied by the Master
Servicer as recoveries of principal, in each case net of any portion of
such amounts that represents a recovery of the principal portion of any
Scheduled Payment (other than a Balloon Payment) due, or of the principal
portion of any Assumed Scheduled Payment deemed due, in respect of the
related Mortgage Loan on a Due Date during or prior to the related
Collection Period and not previously recovered; and
(e) if such Distribution Date is subsequent to the initial
Distribution Date, the excess, if any, of the Loan Group 1 Principal
Distribution Amount, the Loan Group 2 Principal Distribution Amount and the
Principal Distribution Amount, as the case may be, for the immediately
preceding Distribution Date, over the aggregate distributions of principal
made on the Certificates on such immediately preceding Distribution Date;
provided that the Principal Distribution Amount for any Distribution Date shall
be reduced by the amount of any reimbursements of (i) nonrecoverable Advances
plus interest on such nonrecoverable Advances that are paid or reimbursed from
principal collections on the Mortgage Loans in a period during which such
principal collections would have otherwise been included in the Principal
Distribution Amount for such Distribution Date and (ii) Workout-Delayed
Reimbursement Amounts plus interest on such amount that are paid or reimbursed
from principal collections on the mortgage loans in a period during which such
principal collections would have otherwise been included in the Principal
Distribution Amount for such Distribution Date; provided, further, that in the
case of clauses (i) and (ii) above, if any of the amounts that were reimbursed
from principal collections on the Mortgage Loans are subsequently
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recovered on the related Mortgage Loan, such recovery will increase the
Principal Distribution Amount for the Distribution Date related to the period
in which such recovery occurs.
Notwithstanding the foregoing, unless otherwise noted, where Principal
Distribution Amount is used in this prospectus supplement without specific
reference to any Loan Group, it refers to the Principal Distribution Amount
with respect to the entire Mortgage Pool.
Class MAD Principal Distribution Amount. The "Class MAD Principal
Distribution Amount" for each Distribution Date will generally equal the
aggregate of the following (without duplication) to the extent paid by the
borrower under the 11 Madison Avenue Loan or advanced by the Master Servicer,
Trustee or Fiscal Agent and allocable to the 11 Madison Avenue Non-Pooled
Component during the related Collection Period:
(a) the aggregate of the principal portions of all Scheduled Payments
(other than Balloon Payments) and of any Assumed Scheduled Payments due or
deemed due, on or in respect of the 11 Madison Avenue Non-Pooled Component
for its Due Date occurring during the related Collection Period, to the
extent not previously paid by the related borrower or advanced by the
Master Servicer, the Trustee or the Fiscal Agent, as applicable, prior to
such Collection Period;
(b) the aggregate of all principal prepayments received on or in
respect of the 11 Madison Avenue Non-Pooled Component during the related
Collection Period;
(c) if the stated maturity date of the 11 Madison Avenue Loan occurred
during or prior to the related Collection Period, any payment of principal
made by or on behalf of the borrower during the related Collection Period
(including any Balloon Payment), net of any portion of such payment that
represents a recovery of the principal portion of any Scheduled Payment
(other than a Balloon Payment) due, or the principal portion of any Assumed
Scheduled Payment deemed due, in respect of the 11 Madison Avenue Loan to
the extent allocable to the 11 Madison Avenue Non-Pooled Component on a Due
Date during or prior to the related Collection Period and not previously
recovered;
(d) the aggregate of the principal portion of all liquidation
proceeds, insurance proceeds, condemnation awards and proceeds of
repurchases, with respect to the 11 Madison Avenue Loan, to the extent
allocable to the 11 Madison Avenue Non-Pooled Component and, to the extent
not otherwise included in clause (a), (b) or (c) above, payments and other
amounts that were received on or in respect of the 11 Madison Avenue Loan,
to the extent allocable to the 11 Madison Avenue Non-Pooled Component
during the related Collection Period that were identified and applied by
the Master Servicer as recoveries of principal, in each case net of any
portion of such amounts that represents a recovery of the principal portion
of any Scheduled Payment (other than a Balloon Payment) due, or of the
principal portion of any Assumed Scheduled Payment deemed due, in respect
of the 11 Madison Avenue Loan, to the extent allocable to the 11 Madison
Avenue Non-Pooled Component, on a Due Date during or prior to the related
Collection Period and not previously recovered; and
(e) if such Distribution Date is subsequent to the initial
Distribution Date, the excess, if any, of the Class MAD Principal
Distribution Amount for the immediately preceding Distribution Date, over
the aggregate distributions of principal made on the Class MAD Certificates
on such immediately preceding Distribution Date;
provided, that the Class MAD Principal Distribution Amount for any Distribution
Date shall be reduced by the amount of any reimbursements of (i) nonrecoverable
Advances plus interest on such nonrecoverable Advances that are paid or
reimbursed from principal collections allocable to the 11 Madison Avenue
Non-Pooled Component in a period during which such principal collections would
have otherwise been included in the Class MAD Principal Distribution Amount for
such Distribution Date and (ii) Workout-Delayed Reimbursement Amounts plus
interest on such amount that are paid or reimbursed from principal collections
allocable to the 11 Madison Avenue Non-Pooled Component in a period during
which such principal collection would have otherwise been included in the Class
MAD Principal Distribution Amount for such Distribution Date; provided,
further, if any of the amounts that were reimbursed from principal collections
allocable to the 11 Madison Avenue Non-Pooled Component are
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subsequently recovered, such recovery will increase the Class MAD Principal
Distribution Amount for the Distribution Date related to the period in which
such recovery occurs.
The "Scheduled Payment" due on any Mortgage Loan on any related Due Date
is the amount of the Periodic Payment (including Balloon Payments) that is or
would have been, as the case may be, due thereon on such date, without regard
to any waiver, modification or amendment of such Mortgage Loan granted or
agreed to by the Special Servicer or otherwise resulting from a bankruptcy or
similar proceeding involving the related borrower, without regard to the
accrual of Additional Interest on or the application of any Excess Cash Flow to
pay principal on an ARD Loan, without regard to any acceleration of principal
by reason of default, and with the assumption that each prior Scheduled Payment
has been made in a timely manner. The "Assumed Scheduled Payment" is an amount
deemed due (i) on any Balloon Loan that is delinquent in respect of its Balloon
Payment beyond the first Determination Date that follows its stated maturity
date and (ii) on an REO Mortgage Loan. The Assumed Scheduled Payment deemed due
on any such Balloon Loan on its stated maturity date and on each successive
related Due Date that it remains or is deemed to remain outstanding will equal
the Scheduled Payment that would have been due thereon on such date if the
related Balloon Payment had not come due but rather such Mortgage Loan had
continued to amortize in accordance with such loan's amortization schedule, if
any, and to accrue interest at the Mortgage Rate in effect as of the Closing
Date. The Assumed Scheduled Payment deemed due on any REO Mortgage Loan on each
Due Date that the related REO Property remains part of the Trust Fund will
equal the Scheduled Payment that would have been due in respect of such
Mortgage Loan on such Due Date had it remained outstanding (or, if such
Mortgage Loan was a Balloon Loan and such Due Date coincides with or follows
what had been its stated maturity date, the Assumed Scheduled Payment that
would have been deemed due in respect of such Mortgage Loan on such Due Date
had it remained outstanding).
Distributions of the Principal Distribution Amount (or the Class MAD
Principal Distribution Amount with respect to the Class MAD Certificates) will
constitute the only distributions of principal on the Certificates.
Reimbursements of previously allocated Realized Losses and Additional Trust
Fund Expenses will not constitute distributions of principal for any purpose
and will not result in an additional reduction in the Certificate Balance of
the Class of Certificates in respect of which any such reimbursement is made.
Treatment of REO Properties. Notwithstanding that any Mortgaged Property
(other than the 11 Madison Avenue Loan) may be acquired as part of the Trust
Fund through foreclosure, deed in lieu of foreclosure or otherwise, the related
Mortgage Loan will be treated, for purposes of determining (i) distributions on
the Certificates, (ii) allocations of Realized Losses and Additional Trust Fund
Expenses to the Certificates, and (iii) the amount of Trustee Fees and
Servicing Fees payable under the Pooling and Servicing Agreement, as having
remained outstanding until such REO Property is liquidated. In connection
therewith, operating revenues and other proceeds derived from such REO Property
(net of related operating costs) will be "applied" by the Master Servicer as
principal, interest and other amounts that would have been "due" on such
Mortgage Loan, and the Master Servicer will be required to make P&I Advances in
respect of such Mortgage Loan, in all cases as if such Mortgage Loan had
remained outstanding. References to "Mortgage Loan" or "Mortgage Loans" in the
definitions of "Principal Distribution Amount" and "Weighted Average Net
Mortgage Rate" are intended to include any Mortgage Loan as to which the
related Mortgaged Property has become an REO Property (an "REO Mortgage Loan").
Allocation of Prepayment Premiums and Yield Maintenance Charges. In the
event a borrower is required to pay any Prepayment Premium or Yield Maintenance
Charge, the amount of such payments actually collected (and, in the case of a
Co-Lender Loan, payable with respect to the related Mortgage Loan pursuant to
the related Intercreditor Agreement) will be distributed in respect of the
Offered Certificates and the Class A-1A, Class F, Class G and Class H
Certificates as set forth below. "Yield Maintenance Charges" are fees paid or
payable, as the context requires, as a result of a prepayment of principal on a
Mortgage Loan, which fees have been calculated (based on Scheduled Payments on
such Mortgage Loan) to compensate the holder of the Mortgage for reinvestment
losses based on the value of a discount rate at or near the time of prepayment.
Any other fees paid or payable, as the context requires,
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as a result of a prepayment of principal on a Mortgage Loan, which are
calculated based upon a specified percentage (which may decline over time) of
the amount prepaid are considered "Prepayment Premiums".
Any Prepayment Premiums or Yield Maintenance Charges collected on a
Mortgage Loan during the related Collection Period will be distributed as
follows: on each Distribution Date and with respect to the collection of any
Prepayment Premiums or Yield Maintenance Charges on the Mortgage Loans, the
holders of each Class of Offered Certificates and the Class A-1A, Class F,
Class G and Class H Certificates then entitled to distributions of principal
with respect to the related Loan Group on such Distribution Date will be
entitled to an amount of Prepayment Premiums or Yield Maintenance Charges equal
to the product of (a) the amount of such Prepayment Premiums or Yield
Maintenance Charges; (b) a fraction (which in no event may be greater than
one), the numerator of which is equal to the excess, if any, of the
Pass-Through Rate of such Class of Certificates over the relevant Discount Rate
(as defined below), and the denominator of which is equal to the excess, if
any, of the Mortgage Rate of the prepaid Mortgage Loan over the relevant
Discount Rate; and (c) a fraction, the numerator of which is equal to the
amount of principal distributable on such Class of Certificates on such
Distribution Date, and the denominator of which is the Principal Distribution
Amount for such Distribution Date. If there is more than one such Class of
Certificates entitled to distributions of principal with respect to the related
Loan Group on any particular Distribution Date on which a Prepayment Premium or
Yield Maintenance Charge is distributable, the aggregate amount of such
Prepayment Premium or Yield Maintenance Charge will be allocated among all such
Classes up to, and on a pro rata basis in accordance with, their respective
entitlements thereto in accordance with, the first sentence of this paragraph.
The portion, if any, of the Prepayment Premiums or Yield Maintenance Charges
remaining after any such payments described above will be distributed to the
holders of the Class IO Certificates. Any Yield Maintenance Charges payable in
respect of the 11 Madison Avenue Loan will be allocated on a pro rata basis
between the 11 Madison Avenue Pooled Component and the 11 Madison Avenue
Non-Pooled Component and, with respect to such amounts allocable to the 11
Madison Avenue Non-Pooled Component, will be distributed to the holders of the
Class MAD Certificates.
The "Discount Rate" applicable to any Class of Offered Certificates and
the Class A-1A, Class F, Class G and Class H Certificates will equal the yield
(when compounded monthly) on the US Treasury issue with a maturity date closest
to the maturity date for the prepaid Mortgage Loan or REO Mortgage Loan. In the
event that there are two or more such US Treasury issues (a) with the same
coupon, the issue with the lowest yield will be utilized, and (b) with maturity
dates equally close to the maturity date for the prepaid Mortgage Loan or REO
Mortgage Loan, the issue with the earliest maturity date will be utilized.
For an example of the foregoing allocation of Prepayment Premiums and
Yield Maintenance Charges, see "SUMMARY OF PROSPECTUS SUPPLEMENT" in this
prospectus supplement. The Depositor makes no representation as to the
enforceability of the provision of any Mortgage Note requiring the payment of a
Prepayment Premium or Yield Maintenance Charge, or of the collectability of any
Prepayment Premium or Yield Maintenance Charge. See "DESCRIPTION OF THE
MORTGAGE POOL--Certain Terms and Conditions of the Mortgage Loans--Prepayment
Provisions" in this prospectus supplement.
Distributions of Additional Interest. On each Distribution Date, any
Additional Interest collected on an ARD Loan, other than Additional Interest
allocable to the 11 Madison Avenue Non-Pooled Component, (and, with respect to
any Co-Lender Loan, payable on the related Mortgage Loan pursuant to the terms
of the related Intercreditor Agreement) during the related Collection Period
will be distributed to the holders of the Class Z Certificates. Additional
Interest collected with respect to the 11 Madison Avenue Loan will be allocated
to the 11 Madison Avenue Pooled Component and the 11 Madison Avenue Non-Pooled
Component on a pro rata basis and, with respect to Additional Interest
allocable to the 11 Madison Avenue Non-Pooled Component, will be distributed to
the Class MAD Certificates. There can be no assurance that any Additional
Interest will be collected on the ARD Loans.
SUBORDINATION; ALLOCATION OF LOSSES AND CERTAIN EXPENSES
The rights of holders of the Subordinate Certificates to receive
distributions of amounts collected or advanced on the Mortgage Loans will be
subordinated, to the extent described in this prospectus
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supplement, to the rights of holders of the Class A and Class IO Certificates
and each other such Class of Subordinate Certificates, if any, with an earlier
alphabetical Class designation. The Class MAD Certificates will represent
interests in, and will be payable only out of payments, advances and other
amounts allocable to the 11 Madison Avenue Non-Pooled Component. The rights of
the holders of the Class MAD Certificates to receive distributions of amounts
collected or advanced in respect of the 11 Madison Avenue Non-Pooled Component
will be subordinated, to the extent provided in the Pooling and Servicing
Agreement, to the rights of the holder of the 11 Madison Avenue Pooled
Component, and therefore the holders of the Class A Certificates, Class IO
Certificates and the Subordinate Certificates. This subordination provided by
the Subordinate Certificates and, to the extent provided herein, the Class MAD
Certificates, is intended to enhance the likelihood of timely receipt by the
holders of the Class A and Class IO Certificates of the full amount of
Distributable Certificate Interest payable in respect of such Classes of
Certificates on each Distribution Date, and the ultimate receipt by the holders
of each Class of the Class A Certificates of principal in an amount equal to
the entire related Certificate Balance. Similarly, but to decreasing degrees,
this subordination is also intended to enhance the likelihood of timely receipt
by the holders of the Class B, Class C, Class D and Class E Certificates of the
full amount of Distributable Certificate Interest payable in respect of such
Classes of Certificates on each Distribution Date, and the ultimate receipt by
the holders of such Certificates of, in the case of each such Class thereof,
principal equal to the entire related Certificate Balance. The protection
afforded (a) to the holders of the Class E Certificates by means of the
subordination of the Non-Offered Certificates (other than the Class A-1A and
Class IO Certificates), (b) to the holders of the Class D Certificates by means
of the subordination of the Class E and the Non-Offered Certificates (other
than the Class A-1A and Class IO Certificates), (c) to the holders of the Class
C Certificates by means of the subordination of the Class D, the Class E and
the Non-Offered Certificates (other than the Class A-1A and Class IO
Certificates), (d) to the holders of the Class B Certificates by means of the
subordination of the Class C, Class D, Class E and the Non-Offered Certificates
(other than the Class A-1A and Class IO Certificates), and (e) to the holders
of the Class A and Class IO Certificates by means of the subordination of the
Subordinate Certificates, will be accomplished by (i) the application of the
Available Distribution Amount on each Distribution Date in accordance with the
order of priority described under "--Distributions--Application of the
Available Distribution Amount" above and (ii) by the allocation of Realized
Losses and Additional Trust Fund Expenses as described below. Until the first
Distribution Date after the aggregate of the Certificate Balances of the
Subordinate Certificates has been reduced to zero, the Class A-4 Certificates
will receive principal payments only after the Certificate Balance of each of
the Class A-1, Class A-2 and Class A-3 Certificates have been reduced to zero,
the Class A-3 Certificates will receive principal payments only after the
Certificate Balance of each of the Class A-1 and A-2 Certificates have been
reduced to zero, and the Class A-2 Certificates will receive principal payments
only after the Certificate Balance of the Class A-1 Certificates has been
reduced to zero. However, after the Distribution Date on which the Certificate
Balances of the Subordinate Certificates have been reduced to zero, the Class
A-1, Class A-2, Class A-3, Class A-4 and Class A-1A Certificates, to the extent
such Certificates remain outstanding, will bear shortfalls in collections and
losses incurred in respect of the Mortgage Loans pro rata in respect of
distributions of principal and then the Class A-1, Class A-2, Class A-3, Class
A-4, Class A-1A and Class IO Certificates, to the extent such Certificates
remain outstanding, will bear such shortfalls pro rata in respect of
distributions of interest. No other form of credit support will be available
for the benefit of the holders of the Offered Certificates.
Allocation to the Class A-1, Class A-2, Class A-3 and Class A-4
Certificates (unless the aggregate Certificate Balance of each Class of
Subordinate Certificates has been reduced to zero, first to the Class A-1
Certificates until the Certificate Balance thereof has been reduced to zero,
then to the Class A-2 Certificates until the Certificate Balance thereof has
been reduced to zero, then to the Class A-3 Certificates until the Certificate
Balance thereof has been reduced to zero, then to the Class A-4 Certificates
until the Certificate Balance thereof has been reduced to zero, and then to the
Class A-1A Certificates until the Certificate Balance thereof has been reduced
to zero), for so long as they are outstanding, of the entire Principal
Distribution Amount with respect to the related Loan Group for each
Distribution Date will have the effect of reducing the aggregate Certificate
Balance of the Class A-1, Class A-2, Class A-3, Class A-4 and Class A-1A
Certificates at a proportionately faster rate than the rate at which the
aggregate Stated Principal Balance of the Mortgage Pool will reduce. Thus, as
principal is
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distributed to the holders of such Class A-1, Class A-2, Class A-3, Class A-4
and Class A-1A Certificates, the percentage interest in the Trust Fund
evidenced by such Class A-1, Class A-2, Class A-3, Class A-4 and Class A-1A
Certificates will be decreased (with a corresponding increase in the percentage
interest in the Trust Fund evidenced by the Subordinate Certificates), thereby
increasing, relative to their respective Certificate Balances, the
subordination afforded such Class A-1, Class A-2, Class A-3, Class A-4 and
Class A-1A Certificates by the Subordinate Certificates.
On each Distribution Date, following all distributions on the Certificates
to be made on such date, the aggregate of all Realized Losses and Additional
Trust Fund Expenses related to all Mortgage Loans (without regard to Loan
Groups) that have been incurred since the Cut-Off Date through the end of the
related Collection Period and that have not previously been allocated as
described below will be allocated among the respective Classes of Sequential
Pay Certificates, and to the extent applicable, the Class MAD Certificates (in
each case, in reduction of their respective Certificate Balances) as follows,
but, with respect to the Classes of Sequential Pay Certificates, in the
aggregate only to the extent the aggregate Certificate Balance of all Classes
of Sequential Pay Certificates remaining outstanding after giving effect to the
distributions on such Distribution Date exceeds the aggregate Stated Principal
Balance of the Mortgage Pool (excluding the 11 Madison Avenue Non-Pooled
Component) that will be outstanding immediately following such Distribution
Date: first, to the Class P Certificates, until the remaining Certificate
Balance of such Class of Certificates is reduced to zero; second, to the Class
O Certificates, until the remaining Certificate Balance of such Class of
Certificates is reduced to zero; third, to the Class N Certificates, until the
remaining Certificate Balance of such Class of Certificates is reduced to zero;
fourth, to the Class M Certificates, until the remaining Certificate Balance of
such Class of Certificates is reduced to zero; fifth, to the Class L
Certificates, until the remaining Certificate Balance of such Class of
Certificates is reduced to zero; sixth, to the Class K Certificates, until the
remaining Certificate Balance of such Class of Certificates is reduced to zero;
seventh, to the Class J Certificates, until the remaining Certificate Balance
of such Class of Certificates is reduced to zero; eighth, to the Class H
Certificates, until the remaining Certificate Balance of such Class of
Certificates is reduced to zero; ninth, to the Class G Certificates, until the
remaining Certificate Balance of such Class of Certificates is reduced to zero;
tenth, to the Class F Certificates, until the remaining Certificate Balance of
such Class of Certificates is reduced to zero; eleventh, to the Class E
Certificates, until the remaining Certificate Balance of such Class of
Certificates is reduced to zero; twelfth, to the Class D Certificates, until
the remaining Certificate Balance of such Class of Certificates is reduced to
zero; thirteenth, to the Class C Certificates, until the remaining Certificate
Balance of such Class of Certificates is reduced to zero; fourteenth, to the
Class B Certificates, until the remaining Certificate Balance of such Class of
Certificates is reduced to zero; and, last, to the Class A-1 Certificates, the
Class A-2 Certificates, the Class A-3 Certificates, the Class A-4 Certificates
and the Class A-1A Certificates, pro rata, in proportion to their respective
outstanding Certificate Balances, until the remaining Certificate Balances of
such Classes of Certificates are reduced to zero.
Any losses and expenses that are associated with each of the 11 Madison
Avenue Loan and the 11 Madison Avenue Companion Loans will be allocated in
accordance with the terms of the 11 Madison Avenue Intercreditor Agreement
first, to the most subordinate 11 Madison Avenue Subordinate Loan, second, to
the second most subordinate 11 Madison Avenue Subordinate Loan, third, to the
third most subordinate 11 Madison Avenue Subordinate Loan and fourth, pro rata,
between the 11 Madison Avenue Loan and the 11 Madison Avenue Pari Passu Loans.
After making the preceding allocations, such losses and expenses allocated to
the 11 Madison Avenue Loan will be allocated first, to the 11 Madison Avenue
Non-Pooled Component (and therefore, to the Class MAD Certificates) and second,
to the 11 Madison Avenue Pooled Component (and therefore, to the Classes of
Sequential Pay Certificates) in the manner described above.
Any losses and expenses that are associated with each of the Fox Valley
Loan, the Fox Valley Subordinate Loan, the Mountain View Loan and the Mountain
View Subordinate Loan will be allocated in accordance with the terms of the
related Intercreditor Agreement first, to the related Subordinate Companion
Loan and second, to the related Mortgage Loan. The portion of those losses and
expenses allocated to each of the related Mortgage Loans will be allocated
among the Certificates in the manner described above.
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"Realized Losses" are losses arising from the inability to collect all
amounts due and owing under any defaulted Mortgage Loan, including by reason of
the fraud or bankruptcy of the borrower or a casualty of any nature at the
related Mortgaged Property, to the extent not covered by insurance. The
Realized Loss in respect of a liquidated Mortgage Loan (or related REO
Property) is an amount generally equal to the excess, if any, of (a) the
outstanding principal balance of such Mortgage Loan as of the date of
liquidation, together with (i) all accrued and unpaid interest thereon to but
not including the Due Date in the Collection Period in which the liquidation
occurred (exclusive of any related default interest in excess of the Mortgage
Rate, Additional Interest, Prepayment Premium or Yield Maintenance Charges) and
(ii) certain related unreimbursed servicing expenses (including any
unreimbursed interest on any Advances), over (b) the aggregate amount of
liquidation proceeds, if any, recovered in connection with such liquidation. If
any portion of the debt due under a Mortgage Loan (other than Additional
Interest and default interest in excess of the Mortgage Rate) is forgiven,
whether in connection with a modification, waiver or amendment granted or
agreed to by the Special Servicer or in connection with the bankruptcy or
similar proceeding involving the related borrower, the amount so forgiven also
will be treated as a Realized Loss. The Realized Loss in respect of a Mortgage
Loan for which a Final Recovery Determination has been made includes
nonrecoverable Advances (in each case, including interest thereon) to the
extent amounts have been paid from the applicable principal distribution amount
pursuant to the Pooling and Servicing Agreement.
"Additional Trust Fund Expenses" include, among other things, (i) any
Special Servicing Fees, Liquidation Fees or Workout Fees paid to the Special
Servicer, (ii) any interest paid to the Master Servicer, the Trustee and/or the
Fiscal Agent in respect of unreimbursed Advances (to the extent not otherwise
offset by penalty interest and late payment charges) and amounts payable to the
Special Servicer in connection with certain inspections of Mortgaged Properties
required pursuant to the Pooling and Servicing Agreement (to the extent not
otherwise offset by penalty interest and late payment charges otherwise payable
to the Special Servicer and received in the Collection Period during which such
inspection related expenses were incurred) and (iii) any of certain
unanticipated expenses of the Trust Fund, including certain indemnities and
reimbursements to the Trustee and/or the Fiscal Agent of the type described
under "DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS--Certain Matters
Regarding the Trustee" in the prospectus, certain indemnities and
reimbursements to the Master Servicer, the Special Servicer and the Depositor
of the type described under "DESCRIPTION OF THE POOLING AND SERVICING
AGREEMENTS--Certain Matters Regarding the Master Servicer and the Depositor" in
the prospectus (the Special Servicer having the same rights to indemnity and
reimbursement as described thereunder with respect to the Master Servicer),
certain Rating Agency fees to the extent such fees are not paid by any other
party and certain federal, state and local taxes and certain tax related
expenses, payable from the assets of the Trust Fund and described under
"MATERIAL FEDERAL INCOME TAX CONSEQUENCES--Taxation of Owners of REMIC Residual
Certificates--Prohibited Transactions Tax and Other Taxes" in the prospectus
and "SERVICING OF THE MORTGAGE LOANS--Defaulted Mortgage Loans; REO Properties;
Purchase Option" in this prospectus supplement. Additional Trust Fund Expenses
will reduce amounts payable to Certificateholders and, subject to the
distribution priorities described above, may result in a loss on one or more
Classes of Offered Certificates.
P&I ADVANCES
On or about each Distribution Date, the Master Servicer is obligated,
subject to the recoverability determination described in the second succeeding
paragraph, to make advances (each, a "P&I Advance") out of its own funds or,
subject to the replacement thereof as provided in the Pooling and Servicing
Agreement, from funds held in the Certificate Account that are not required to
be distributed to Certificateholders (or paid to any other Person pursuant to
the Pooling and Servicing Agreement) on such Distribution Date, in an amount
that is generally equal to the aggregate of all Periodic Payments (other than
Balloon Payments) and any Assumed Scheduled Payments, net of related Master
Servicing Fees, in respect of the Mortgage Loans (other than the 11 Madison
Avenue Loan, as provided below) and any REO Loans during the related Collection
Period, in each case to the extent such amount was not paid by or on behalf of
the related borrower or otherwise collected (or previously advanced by the
Master Servicer) as of the close of business on the last day of the Collection
Period. P&I Advances are intended
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to maintain a regular flow of scheduled interest and principal payments to the
holders of the Class or Classes of Certificates entitled thereto, rather than
to insure against losses. The Master Servicer's obligations to make P&I
Advances in respect of any Mortgage Loan, subject to the recoverability
determination, will continue until liquidation of such Mortgage Loan or
disposition of any REO Property acquired in respect thereof. However, if the
Periodic Payment on any Mortgage Loan has been reduced in connection with a
bankruptcy or similar proceeding or a modification, waiver or amendment granted
or agreed to by the Special Servicer, the Master Servicer will be required to
advance only the amount of the reduced Periodic Payment (net of related
Servicing Fees) in respect of subsequent delinquencies. In addition, if it is
determined that an Appraisal Reduction Amount exists with respect to any
Required Appraisal Loan (as defined below), then, with respect to the
Distribution Date immediately following the date of such determination and with
respect to each subsequent Distribution Date for so long as such Appraisal
Reduction Amount exists, the Master Servicer will be required in the event of
subsequent delinquencies to advance in respect of such Mortgage Loan only an
amount equal to the sum of (i) the amount of the interest portion of the P&I
Advance that would otherwise be required without regard to this sentence, minus
the product of (a) such Appraisal Reduction Amount and (b) the per annum
Pass-Through Rate (i.e., for any month, one twelfth of the Pass-Through Rate)
applicable to the Class of Certificates, to which such Appraisal Reduction
Amount is allocated as described in "--Appraisal Reductions" below and (ii) the
amount of the principal portion of the P&I Advance that would otherwise be
required without regard to this sentence. Pursuant to the terms of the Pooling
and Servicing Agreement, if the Master Servicer fails to make a P&I Advance
required to be made, the Trustee shall then be required to make such P&I
Advance, in such case, subject to the recoverability standard described below.
Pursuant to the terms of the Pooling and Servicing Agreement, if the Trustee
fails to make a P&I Advance required to be made, the Fiscal Agent shall then be
required to make such P&I Advance, subject to the recoverability standard
described below. Neither the Master Servicer, the Trustee nor the Fiscal Agent
will be required to make a P&I Advance or any other advance for any Balloon
Payments, default interest, late payment charges, Prepayment Premiums, Yield
Maintenance Charges or Additional Interest.
Neither the Master Servicer, the Trustee nor the Fiscal Agent will be
required to make any P&I Advances with respect to any Subordinate Companion
Loan or any 11 Madison Avenue Companion Loan. In general, neither the Master
Servicer, the Trustee nor the Fiscal Agent will be required to make any P&I
Advances with respect to the 11 Madison Avenue Loan under the Pooling and
Servicing Agreement. Those advances will be made by the 2004-C10 Master
Servicer in accordance with the 2004-C10 Pooling and Servicing Agreement on
generally the same terms and conditions as are applicable under the Pooling and
Servicing Agreement. Furthermore, the amount of principal and interest advances
to be made with respect to the 11 Madison Avenue Loan may be reduced by an
appraisal reduction amount as calculated under the 2004-C10 Pooling and
Servicing Agreement, which amount will be calculated in a manner generally the
same as an Appraisal Reduction Amount. If the 2004-C10 Master Servicer and the
2004-C10 Trustee fails to make a required principal and interest advance on the
11 Madison Avenue Loan pursuant to the 2004-C10 Pooling and Servicing Agreement
(other than based on a determination that such advance will not be recoverable
out of collections on the 11 Madison Avenue Loan), the Master Servicer will be
required, subject to the nonrecoverability determination described in the next
paragraph, to make the P&I Advances (net of Master Servicing Fees and any
master servicing fee payable to the 2004-C10 Master Servicer) on the 11 Madison
Avenue Loan, so long as it has received all information necessary to make a
recoverability determination. If the Master Servicer fails to make the required
P&I Advance, the Trustee is required to make such P&I Advance, subject to the
same limitations, and with the same rights, as described above for the Master
Servicer. If the Trustee fails to make the required P&I Advance, the Fiscal
Agent is required to make such P&I Advance, subject to the same limitations and
with the same rights as described above for the Master Servicer. The Master
Servicer, the Trustee and the Fiscal Agent may conclusively rely on the
non-recoverability determination of the 2004-C10 Master Servicer. If any
principal and interest advances are made with respect to the 11 Madison Avenue
Loan under the 2004-C10 Pooling and Servicing Agreement, or under the Pooling
and Servicing Agreement, the party making that advance will be entitled to be
reimbursed with interest thereon as set forth in the 2004-C10 Pooling and
Servicing Agreement, or the Pooling and Servicing Agreement, as applicable,
including in the event that the 2004-C10 Master Servicer has made a principal
and interest
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advance or servicing advance on the 11 Madison Avenue Loan that it or the
Special Servicer subsequently determines is not recoverable from expected
collections on the 11 Madison Avenue Loan, from general collections on all
Mortgage Loans in this trust. Notwithstanding anything to the contrary, amounts
advanced in respect of the 11 Madison Avenue Non-Pooled Component will not be
available for distributions on the Certificates (except for the Class MAD
Certificates).
The Master Servicer (or the Trustee or the Fiscal Agent) is entitled to
recover any P&I Advance made out of its own funds from any amounts collected in
respect of the Mortgage Loan (including, with respect to the 11 Madison Avenue
Loan, the 11 Madison Avenue Non-Pooled Component) (net of related Master
Servicing Fees with respect to collections of interest and net of related
Liquidation Fees and Workout Fees with respect to collections of principal) as
to which such P&I Advance was made whether such amounts are collected in the
form of late payments, insurance and condemnation proceeds or liquidation
proceeds, or any other recovery of the related Mortgage Loan or REO Property
("Related Proceeds"). Neither the Master Servicer, the Trustee nor the Fiscal
Agent is obligated to make any P&I Advance that it or the Special Servicer
determines, in accordance with the Servicing Standard (in the case of the
Master Servicer and Special Servicer) or its good faith business judgment (in
the case of the Trustee or the Fiscal Agent), would, if made, not be
recoverable from Related Proceeds (a "Nonrecoverable P&I Advance"), and the
Master Servicer (or the Trustee or the Fiscal Agent) is entitled to recover,
from general funds on deposit in the Certificate Account, any P&I Advance made
that it determines to be a Nonrecoverable P&I Advance plus interest at the
Reimbursement Rate. In addition, each of the Master Servicer, the Trustee and
the Fiscal Agent will be entitled to recover any Advance (together with
interest thereon) that is outstanding at the time that the related Mortgage
Loan is modified in connection with such Mortgage Loan becoming a Corrected
Mortgage Loan and is not repaid in full in connection with such modification
but instead becomes an obligation of the borrower to pay such amounts in the
future (such Advance, a "Workout-Delayed Reimbursement Amount") out of
principal collections in the Certificate Account. Any amount that constitutes
all or a portion of any Workout-Delayed Reimbursement Amount may at any time be
determined to constitute a nonrecoverable Advance and thereafter shall be
recoverable as any other nonrecoverable Advance. A Workout-Delayed
Reimbursement Amount will constitute a nonrecoverable Advance when the person
making such determination, and taking into account factors such as all other
outstanding Advances, either (a) has determined in accordance with the
Servicing Standard (in the case of the Master Servicer or the Special Servicer)
or its good faith business judgment (in the case of the Trustee or the Fiscal
Agent) that such Workout-Delayed Reimbursement Amount would not ultimately be
recoverable from Related Proceeds, or (b) has determined in accordance with the
Servicing Standard (in the case of the Master Servicer or the Special Servicer)
or its good faith business judgment (in the case of the Trustee or the Fiscal
Agent) that such Workout-Delayed Reimbursement Amount, along with any other
Workout-Delayed Reimbursement Amounts and nonrecoverable Advances, would not
ultimately be recoverable out of principal collections in the Certificate
Account. In addition, any such person may update or change its recoverability
determinations (but not reverse any other person's determination that an
Advance is nonrecoverable) at any time and may obtain at the expense of the
trust any analysis, appraisals or market value estimates or other information
for such purposes. Absent bad faith, any such determination that an Advance is
nonrecoverable will be conclusive and binding on the Certificateholders, the
Master Servicer, the Trustee and the Fiscal Agent. Any requirement of the
Master Servicer, the Trustee or the Fiscal Agent to make an Advance in the
Pooling and Servicing Agreement is intended solely to provide liquidity for the
benefit of the Certificateholders and not as credit support or otherwise to
impose on any such person the risk of loss with respect to one or more Mortgage
Loans. See "DESCRIPTION OF THE CERTIFICATES--Advances in Respect of
Delinquencies" and "DESCRIPTION OF THE POOLING AND SERVICING
AGREEMENTS--Certificate Account" in the prospectus.
In connection with the recovery by the Master Servicer, the Trustee or the
Fiscal Agent of any P&I Advance made by it or the recovery by the Master
Servicer, the Trustee or the Fiscal Agent of any reimbursable servicing expense
(which may include non-recoverable advances to the extent deemed to be in the
best interest of the Certificateholders) incurred by it (each such P&I Advance
or expense, an "Advance"), the Master Servicer, the Trustee or the Fiscal
Agent, as applicable, is entitled to be paid interest compounded annually at a
per annum rate equal to the Reimbursement Rate. Such interest will
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be paid contemporaneously with the reimbursement of the related Advance first
out of late payment charges and default interest received on the related
Mortgage Loan in the Collection Period in which such reimbursement is made and
then from general collections on the Mortgage Loans then on deposit in the
Certificate Account; provided, however, no P&I Advance shall accrue interest
until after the expiration of any applicable grace period for the related
Periodic Payment. In addition, to the extent the Master Servicer receives late
payment charges or default interest on a Mortgage Loan for which interest on
Advances related to such Mortgage Loan has been paid from general collections
on deposit in the Certificate Account and not previously reimbursed to the
Trust Fund, such late payment charges or default interest will be used to
reimburse the Trust Fund for such payment of interest. The "Reimbursement Rate"
is equal to the "prime rate" published in the "Money Rates" Section of the Wall
Street Journal, as such "prime rate" may change from time to time, accrued on
the amount of such Advance from the date made to but not including the date of
reimbursement. To the extent not offset or covered by amounts otherwise payable
on the Non-Offered Certificates, interest accrued on outstanding Advances will
result in a reduction in amounts payable on the Offered Certificates, subject
to the distribution priorities described in this prospectus supplement.
Upon a determination that a previously made Advance is not recoverable,
instead of obtaining reimbursement out of general collections immediately, the
Master Servicer, the Trustee or the Fiscal Agent, as applicable, may, in its
sole discretion, elect to obtain reimbursement for such nonrecoverable Advance
over time (not to exceed 6 months or such longer period of time as agreed to by
the Master Servicer and the Controlling Class Representative, each in its sole
discretion) and the unreimbursed portion of such Advance will accrue interest
at the prime rate. At any time after such a determination to obtain
reimbursement over time, the Master Servicer, the Special Servicer, the Trustee
or the Fiscal Agent, as applicable, may, in its sole discretion, decide to
obtain reimbursement immediately. The fact that a decision to recover such
nonrecoverable Advances over time, or not to do so, benefits some Classes of
Certificateholders to the detriment of other Classes shall not, with respect to
the Master Servicer or the Special Servicer, constitute a violation of the
Servicing Standard or contractual duty under the Pooling and Servicing
Agreement and/or with respect to the Trustee or the Fiscal Agent, constitute a
violation of any fiduciary duty to Certificateholders or contractual duty under
the Pooling and Servicing Agreement. In the event that the Master Servicer, the
Trustee or the Fiscal Agent, as applicable, elects not to recover such
non-recoverable Advances over time, the Master Servicer, the Trustee or the
Fiscal Agent, as applicable, will be required to give S&P and Fitch 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 notice in accordance with the terms of the Pooling and Servicing
Agreement.
If the Master Servicer, the Trustee or the Fiscal Agent, as applicable,
reimburses itself out of general collections on the Mortgage Pool for any
Advance that it has determined is not recoverable out of collections on the
related Mortgage Loan (including, with respect to the 11 Madison Avenue Loan,
the 11 Madison Avenue Non-Pooled Component, if applicable) or reimburses itself
out of general collections, related to principal only, on the Mortgage Pool for
any Workout-Delayed Reimbursement Amount, then that Advance or Workout-Delayed
Reimbursement Amount (together, in each case, with accrued interest thereon)
will be deemed, to the fullest extent permitted pursuant to the terms of the
Pooling and Servicing Agreement, to be reimbursed first out of the Principal
Distribution Amount otherwise distributable on the applicable Certificates
(prior to, in the case of non-recoverable Advances only, being deemed
reimbursed out of payments and other collections of interest on the underlying
Mortgage Loans otherwise distributable on the applicable Certificates), thereby
reducing the Principal Distribution Amount of such Certificates. To the extent
any Advance is determined to be nonrecoverable and to the extent of each
Workout-Delayed Reimbursement Amount, if the Advance or Workout-Delayed
Reimbursement Amount is reimbursed out of the Principal Distribution Amount as
described above and the item for which the Advance or Workout-Delayed
Reimbursement Amount was originally made is subsequently collected from
payments or other collections on the related Mortgage Loan, then the Principal
Distribution Amount for the Distribution Date corresponding to the Collection
Period in which this item was recovered will be increased by the lesser of (a)
the amount of the item and (b) any previous reduction in the Principal
Distribution Amount for a prior Distribution Date pursuant to this paragraph.
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APPRAISAL REDUCTIONS
Other than with respect to the 11 Madison Avenue Loan, upon the earliest
of the date (each such date, a "Required Appraisal Date") that (1) any Mortgage
Loan is 60 days delinquent in respect of any Periodic Payments, (2) any REO
Property is acquired on behalf of the Trust Fund in respect of any Mortgage
Loan, (3) any Mortgage Loan has been modified by the Special Servicer to reduce
the amount of any Periodic Payment, other than a Balloon Payment, (4) a
receiver is appointed and continues in such capacity in respect of the
Mortgaged Property securing any Mortgage Loan, (5) a borrower with respect to
any Mortgage Loan becomes subject to any bankruptcy proceeding or (6) a Balloon
Payment with respect to any Mortgage Loan has not been paid on its scheduled
maturity date, unless the Master Servicer has, on or prior to 60 days following
the scheduled maturity date of such Balloon Payment, received written evidence
from an institutional lender of such lender's binding commitment to refinance
such Mortgage Loan within 60 days after the Due Date of such Balloon Payment
(provided that if such refinancing does not occur during such time specified in
the commitment, the related Mortgage Loan will immediately become a Required
Appraisal Loan) or (7) any Mortgage Loan is outstanding 60 days after the third
anniversary of an extension of its scheduled maturity date (each such Mortgage
Loan, including an REO Mortgage Loan, a "Required Appraisal Loan"), the Special
Servicer is required to obtain (within 60 days of the applicable Required
Appraisal Date) an appraisal of the related Mortgaged Property prepared in
accordance with 12 CFR Section 225.62 and conducted in accordance with the
standards of the Appraisal Institute by a Qualified Appraiser (or with respect
to any Mortgage Loan with an outstanding principal balance less than $2
million, an internal valuation performed by the Special Servicer), unless such
an appraisal had previously been obtained within the prior twelve months. A
"Qualified Appraiser" is an independent appraiser, selected by the Special
Servicer or the Master Servicer, that is a member in good standing of the
Appraisal Institute, and that, if the state in which the subject Mortgaged
Property is located certifies or licenses appraisers, is certified or licensed
in such state, and in each such case, who has a minimum of five years
experience in the subject property type and market. The cost of such appraisal
will be advanced by the Master Servicer, subject to the Master Servicer's right
to be reimbursed therefor out of Related Proceeds or, if not reimbursable
therefrom, out of general funds on deposit in the Certificate Account. As a
result of any such appraisal, it may be determined that an "Appraisal Reduction
Amount" exists with respect to the related Required Appraisal Loan, such
determination to be made by the Master Servicer as described below. The
Appraisal Reduction Amount for any Required Appraisal Loan will equal the
excess, if any, of (a) the sum (without duplication), as of the first
Determination Date immediately succeeding the Master Servicer's obtaining
knowledge of the occurrence of the Required Appraisal Date if no new appraisal
is required or the date on which the appraisal or internal valuation, if
applicable, is obtained and each Determination Date thereafter so long as the
related Mortgage Loan remains a Required Appraisal Loan, of (i) the Stated
Principal Balance of such Required Appraisal Loan (including, with respect to
the 11 Madison Avenue Loan, the 11 Madison Avenue Non-Pooled Component), (ii)
to the extent not previously advanced by or on behalf of the Master Servicer,
the Trustee or the Fiscal Agent, all unpaid interest on the Required Appraisal
Loan through the most recent Due Date prior to such Determination Date at a per
annum rate equal to the related Net Mortgage Rate (exclusive of any portion
thereof that constitutes Additional Interest), (iii) all accrued but unpaid
Servicing Fees and all accrued but unpaid Additional Trust Fund Expenses in
respect of such Required Appraisal Loan, (iv) all related unreimbursed Advances
(plus accrued interest thereon) made by or on behalf of the Master Servicer,
the Special Servicer, the Trustee or the Fiscal Agent with respect to such
Required Appraisal Loan and (v) all currently due and unpaid real estate taxes
and reserves owed for improvements and assessments, insurance premiums, and, if
applicable, ground rents in respect of the related Mortgaged Property, over (b)
an amount equal to the sum of (i) all escrows, reserves and letters of credit
held for the purposes of reserves (provided such letters of credit may be drawn
upon for reserve purposes under the related Mortgage Loan documents) held with
respect to such Required Appraisal Loan, plus (ii) 90% of the appraised value
(net of any prior liens and estimated liquidation expenses) of the related
Mortgaged Property (or, in the case of the 11 Madison Avenue Loan, such
Mortgage Loan's allocable portion of the appraised value of the related
Mortgaged Property) as determined by such appraisal less any downward
adjustments made by the Special Servicer (without implying any obligation to do
so) based upon its review of the Appraisal and such other information as the
Special Servicer deems appropriate. If the Special Servicer has not obtained a
new
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appraisal (or performed an internal valuation, if applicable) within the time
limit described above, the Appraisal Reduction Amount for the related Mortgage
Loan will equal 25% of the principal balance of such Mortgage Loan (including,
with respect to the 11 Madison Avenue Loan, the 11 Madison Avenue Non-Pooled
Component), to be adjusted upon receipt of the new appraisal (or internal
valuation, if applicable).
As a result of calculating an Appraisal Reduction Amount with respect to a
Mortgage Loan, the P&I Advance for such Mortgage Loan for the related
Distribution Date will be reduced, which will have the effect of reducing the
amount of interest available for distribution to the Subordinate Certificates
in reverse alphabetical order of the Classes; provided that with respect to any
Appraisal Reduction Amount related to the 11 Madison Avenue Loan, such amounts
will be allocated first to the Class MAD Certificates prior to any application
of such amounts to the 11 Madison Avenue Pooled Component (and as a result to
the Offered Certificates). See "--P&I Advances" above. With respect to the 11
Madison Avenue Loan, the appraisal reduction amount will be calculated under
the 2004-C10 Pooling and Servicing Agreement in a manner generally the same as
an Appraisal Reduction Amount as described above. See "SERVICING OF THE
MORTGAGE LOANS--Servicing of the 11 Madison Avenue Loan" in this prospectus
supplement. For the purpose of calculating P&I Advances only, the aggregate
Appraisal Reduction Amounts will be allocated to the Certificate Balance of
each Class of Sequential Pay Certificates in reverse alphabetical order.
REPORTS TO CERTIFICATEHOLDERS; AVAILABLE INFORMATION
Trustee Reports. Based solely on information provided in monthly reports
prepared by the Master Servicer and the Special Servicer (and subject to the
limitations with respect thereto) and delivered to the Trustee, the Trustee is
required to provide or make available either electronically (on the Trustee's
internet website initially located at "www.etrustee.net") or by first class
mail on each Distribution Date to each Certificateholder:
(a) A statement (a "Distribution Date Statement"), substantially in
the form of Annex B to this prospectus supplement, setting forth, among
other things, for each Distribution Date:
(i) the amount of the distribution to the holders of each Class
of REMIC Regular Certificates in reduction of the Certificate Balance
thereof;
(ii) the amount of the distribution to the holders of each Class
of REMIC Regular Certificates allocable to Distributable Certificate
Interest;
(iii) the amount of the distribution to the holders of each Class
of REMIC Regular Certificates allocable to Prepayment Premiums and
Yield Maintenance Charges;
(iv) the amount of the distribution to the holders of each Class
of REMIC Regular Certificates in reimbursement of previously allocated
Realized Losses and Additional Trust Fund Expenses;
(v) the Available Distribution Amount and the Class MAD Available
Distribution Amount for such Distribution Date;
(vi) (a) the aggregate amount of P&I Advances (including any such
advances made on the 11 Madison Avenue Loan under the 2004-C10 Pooling
and Servicing Agreement) made in respect of such Distribution Date
with respect to the Mortgage Pool and each Loan Group; and (b) the
aggregate amount of servicing advances with respect to each Loan Group
as of the close of business on the related Determination Date;
(vii) the aggregate unpaid principal balance of the Mortgage Pool
and each Loan Group outstanding as of the close of business on the
related Determination Date;
(viii) the aggregate Stated Principal Balance of the Mortgage
Pool and each Loan Group outstanding immediately before and
immediately after such Distribution Date;
(ix) the number, aggregate unpaid principal balance, weighted
average remaining term to maturity or Anticipated Repayment Date and
weighted average Mortgage Rate of the Mortgage Loans in the Mortgage
Pool and each Loan Group as of the close of business on the related
Determination Date;
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(x) the number and aggregate Stated Principal Balance
(immediately after such Distribution Date) (and with respect to each
delinquent Mortgage Loan, a brief description of the reason for
delinquency, if known by the Master Servicer or Special Servicer, as
applicable) of Mortgage Loans (a) delinquent 30-59 days, (b)
delinquent 60-89 days, (c) delinquent 90 days or more, and (d) as to
which foreclosure proceedings have been commenced;
(xi) as to each Mortgage Loan referred to in the preceding clause
(x) above: (a) the loan number thereof, (b) the Stated Principal
Balance thereof immediately following such Distribution Date and (c) a
brief description of any loan modification;
(xii) with respect to any Mortgage Loan as to which a liquidation
event occurred during the related Collection Period (other than a
payment in full), (a) the loan number thereof, (b) the aggregate of
all liquidation proceeds and other amounts received in connection with
such liquidation event (separately identifying the portion thereof
allocable to distributions on the Certificates), and (c) the amount of
any Realized Loss in connection with such liquidation event;
(xiii) with respect to any REO Property included in the Trust
Fund as to which the Special Servicer has determined, in accordance
with accepted servicing standards, that all payments or recoveries
with respect to such property have been ultimately recovered (a "Final
Recovery Determination") was made during the related Collection
Period, (a) the loan number of the related Mortgage Loan, (b) the
aggregate of all liquidation proceeds and other amounts received in
connection with such Final Recovery Determination (separately
identifying the portion thereof allocable to distributions on the
Certificates), and (c) the amount of any Realized Loss in respect of
the related REO Property in connection with such Final Recovery
Determination;
(xiv) the Accrued Certificate Interest in respect of each Class
of REMIC Regular Certificates for such Distribution Date;
(xv) any unpaid Distributable Certificate Interest (or Class MAD
Distributable Certificate Interest) in respect of each Class of REMIC
Regular Certificates after giving effect to the distributions made on
such Distribution Date;
(xvi) the Pass-Through Rate for each Class of REMIC Regular
Certificates for such Distribution Date;
(xvii) the Principal Distribution Amount, the Loan Group 1
Principal Distribution Amount and the Loan Group 2 Principal
Distribution Amount for such Distribution Date (and, in the case of
any principal prepayment or other unscheduled collection of principal
received during the related Collection Period, the loan number for the
related Mortgage Loan and the amount of such prepayment or other
collection of principal);
(xviii) the aggregate of all Realized Losses incurred during the
related Collection Period and all Additional Trust Fund Expenses
incurred during the related Collection Period;
(xix) the aggregate of all Realized Losses and Additional Trust
Fund Expenses that were allocated to each Class on such Distribution
Date;
(xx) the Certificate Balance of each Class of REMIC Regular
Certificates (other than the Class IO Certificates) and the Notional
Amount of the Class IO Certificates immediately before and immediately
after such Distribution Date, separately identifying any reduction
therein due to the allocation of Realized Losses and Additional Trust
Fund Expenses on such Distribution Date;
(xxi) the certificate factor for each Class of REMIC Regular
Certificates immediately following such Distribution Date;
(xxii) the aggregate amount of interest on P&I Advances
(including any such advances made on the 11 Madison Avenue Loan under
the 2004-C10 Pooling and Servicing Agreement) paid to the Master
Servicer, the Trustee or the Fiscal Agent (or the 2004-C10 Master
Servicer or 2004-C10 Trustee, as applicable) with respect to the
Mortgage Pool and each Loan Group during the related Collection
Period;
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(xxiii) the aggregate amount of interest on servicing advances
paid to the Master Servicer, the Special Servicer, the Trustee and the
Fiscal Agent with respect to the Mortgage Pool and each Loan Group
during the related Collection Period;
(xxiv) the aggregate amount of servicing fees and Trustee Fees
paid to the Master Servicer, the Special Servicer and the Trustee, as
applicable, during the related Collection Period;
(xxv) the loan number for each Required Appraisal Loan and any
related Appraisal Reduction Amount as of the related Determination
Date;
(xxvi) the original and then current credit support levels for
each Class of REMIC Regular Certificates;
(xxvii) the original and then current ratings for each Class of
REMIC Regular Certificates;
(xxviii) the aggregate amount of Prepayment Premiums and Yield
Maintenance Charges with respect to the Mortgage Pool and each Loan
Group collected during the related Collection Period;
(xxix) the amounts, if any, actually distributed with respect to
the Class R-I Certificates, Class R-II Certificates, Class Z
Certificates on such Distribution Date; and
(xxx) the value of any REO Property included in the Trust Fund at
the end of the Collection Period, based on the most recent appraisal
or valuation.
(b) A "CMSA Loan Periodic Update File" and a "CMSA Property File" (in
electronic form and substance as provided by the Master Servicer and/or the
Special Servicer) setting forth certain information (with respect to CMSA
Loan Periodic Update File, as of the related Determination Date) with
respect to the Mortgage Loans and the Mortgaged Properties, respectively.
(c) A "CMSA Collateral Summary File" and a "CMSA Bond File" setting
forth certain information with respect to the Mortgage Loans and the
Certificates, respectively.
(d) A "CMSA Reconciliation of Funds Report" setting forth certain
information with respect to the Mortgage Loans and the Certificates.
The Master Servicer and/or the Special Servicer is required to deliver (in
electronic format acceptable to the Trustee and Master Servicer) to the Trustee
prior to each Distribution Date, and the Trustee is required to provide or make
available electronically or by first class mail to each Certificateholder, the
Depositor, the Underwriters and each Rating Agency on each Distribution Date,
the following reports:
(a) CMSA Delinquent Loan Status Report;
(b) CMSA Historical Loan Modification and Corrected Mortgage Loan Report;
(c) CMSA Historical Liquidation Report;
(d) CMSA REO Status Report;
(e) CMSA Servicer Watch List/Portfolio Review Guidelines;
(f) CMSA Operating Statement Analysis Report;
(g) CMSA NOI Adjustment Worksheet;
(h) CMSA Comparative Financial Status Report; and
(i) CMSA Loan Level Reserve/LOC Report.
Each of the reports referenced as CMSA reports will be in the form
prescribed in the standard Commercial Mortgage Securities Association ("CMSA")
investor reporting package. Forms of these reports are available at the CMSA's
website located at www.cmbs.org.
The reports identified in clauses (a), (b), (c), (d) and (i) above are
referred to in this prospectus supplement as the "Unrestricted Servicer
Reports", and the reports identified in clauses (e), (f), (g) and (h) above are
referred to in this prospectus supplement as the "Restricted Servicer Reports".
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In addition, within a reasonable period of time after the end of each
calendar year, the Trustee is required to send to each person who at any time
during the calendar year was a Certificateholder of record, a report
summarizing on an annual basis (if appropriate) certain items provided to
Certificateholders in the monthly Distribution Date Statements and such other
information as may be required to enable such Certificateholders to prepare
their federal income tax returns. Such information is required to include the
amount of original issue discount accrued on each Class of Certificates and
information regarding the expenses of the Trust Fund. Such requirements shall
be deemed to be satisfied to the extent such information is provided pursuant
to applicable requirements of the Code in force from time to time.
The information that pertains to Specially Serviced Trust Fund Assets
reflected in reports will be based solely upon the reports delivered by the
Special Servicer or the Master Servicer to the Trustee prior to the related
Distribution Date. Absent manifest error, none of the Master Servicer, the
Special Servicer, the Trustee or the Fiscal Agent will be responsible for the
accuracy or completeness of any information supplied to it by a mortgagor or
third party that is included in any reports, statements, materials or
information prepared or provided by the Master Servicer, the Special Servicer
or the Trustee, as applicable.
Book-Entry Certificates. Until such time as definitive Offered
Certificates are issued in respect of the Book-Entry Certificates, the
foregoing information will be available to the holders of the Book-Entry
Certificates only to the extent it is forwarded by or otherwise available
through DTC and its Participants. Any beneficial owner of a Book-Entry
Certificate who does not receive information through DTC or its Participants
may request that the Trustee reports be mailed directly to it by written
request to the Trustee (accompanied by evidence of such beneficial ownership)
at the Corporate Trust Office of the Trustee. The manner in which notices and
other communications are conveyed by DTC to its Participants, and by its
Participants to the holders of the Book-Entry Certificates, will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time. The Master Servicer, the Special Servicer,
the Trustee, the Fiscal Agent and the Depositor are required to recognize as
Certificateholders only those persons in whose names the Certificates are
registered on the books and records of the Certificate Registrar.
Information Available Electronically. On or prior to each Distribution
Date, the Trustee will make available to the general public via its internet
website initially located at "www.etrustee.net", (i) the related Distribution
Date Statement, (ii) the CMSA Loan Periodic Update File, CMSA Loan Setup File,
CMSA Bond File and CMSA Collateral Summary File, (iii) the Unrestricted
Servicer Reports, (iv) as a convenience for the general public (and not in
furtherance of the distribution thereof under the securities laws), the
prospectus supplement, the accompanying prospectus and the Pooling and
Servicing Agreement, and (v) any other items at the request of the Depositor.
In addition, on each Distribution Date, the Trustee will make available
via its internet website, on a restricted basis, (i) the Restricted Servicer
Reports and (ii) the CMSA Property File. The Trustee shall provide access to
such restricted reports, upon receipt of a certification in the form attached
to the Pooling and Servicing Agreement, to Certificate Owners and prospective
transferees, and upon request to any other Privileged Person and to any other
person upon the direction of the Depositor.
The Trustee and Master Servicer make no representations or warranties as
to the accuracy or completeness of any report, document or other information
made available on its internet website and assumes no responsibility therefor.
In addition, the Trustee and the Master Servicer may disclaim responsibility
for any information distributed by the Trustee or the Master Servicer, as the
case may be, for which it is not the original source.
The Master Servicer may make available each month via the Master
Servicer's internet website, initially located at "www.wachovia.com" (i) to any
interested party, the Unrestricted Servicer Reports, the CMSA Loan Setup File
and the CMSA Loan Periodic Update File, and (ii) to any Privileged Person, with
the use of a password provided by the Master Servicer to such Privileged
Person, the Restricted Servicer Reports and the CMSA Property File. For
assistance with the Master Servicer's internet website, investors may call
(800) 326-1334.
"Privileged Person" means any Certificateholder or any person identified
to the Trustee or the Master Servicer, as applicable, as a prospective
transferee of an Offered Certificate or any interests
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therein (that, with respect to any such holder or Certificate Owner or
prospective transferee, has provided to the Trustee or the Master Servicer, as
applicable, a certification in the form attached to the Pooling and Servicing
Agreement), any Rating Agency, the Mortgage Loan Sellers, any holder of a
Companion Loan, the Depositor and its designees, the Underwriters or any party
to the Pooling and Servicing Agreement.
In connection with providing access to the Trustee's internet website or
the Master Servicer's internet website, the Trustee or the Master Servicer, as
applicable, may require registration and the acceptance of a disclaimer.
Neither the Trustee nor the Master Servicer shall be liable for the
dissemination of information in accordance with the Pooling and Servicing
Agreement.
Other Information. The Pooling and Servicing Agreement requires that the
Master Servicer or the Special Servicer make available at its offices primarily
responsible for administration of the Trust Fund, during normal business hours,
or send the requesting party at the expense of such requesting party, for
review by any holder or Certificate Owner owning an Offered Certificate or an
interest therein or any person identified by the Trustee to the Master Servicer
or Special Servicer, as the case may be, as a prospective transferee of an
Offered Certificate or an interest therein, originals or copies of, among other
things, the following items: (a) the Pooling and Servicing Agreement and any
amendments thereto, (b) all Distribution Date Statements delivered to holders
of the relevant Class of Offered Certificates since the Closing Date, (c) all
officer's certificates delivered by the Master Servicer since the Closing Date
as described under "DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS--
Evidence as to Compliance" in the prospectus, (d) all accountants' reports
delivered with respect to the Master Servicer since the Closing Date as
described under "DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS--Evidence
as to Compliance" in the prospectus, (e) the most recent property inspection
report prepared by or on behalf of the Master Servicer in respect of each
Mortgaged Property, (f) the most recent Mortgaged Property annual operating
statements and rent roll, if any, collected by or on behalf of the Master
Servicer, (g) any and all modifications, waivers and amendments of the terms of
a Mortgage Loan entered into by the Special Servicer, (h) the Mortgage File
relating to each Mortgage Loan, and (i) any and all officers' certificates and
other evidence prepared by the Master Servicer or the Special Servicer to
support its determination that any Advance was or, if made, would not be
recoverable from Related Proceeds. Copies of any and all of the foregoing items
will be available from the Master Servicer or Special Servicer, as the case may
be, upon request; however, the Master Servicer or Special Servicer, as the case
may be, will be permitted to require (other than from the Rating Agencies) a
certification from the person seeking such information (covering among other
matters, confidentiality) and payment of a sum sufficient to cover the
reasonable costs and expenses of providing such information to
Certificateholders, Certificate Owners and their prospective transferees,
including, without limitation, copy charges and reasonable fees for employee
time and for space.
ASSUMED FINAL DISTRIBUTION DATE; RATED FINAL DISTRIBUTION DATE
The "Assumed Final Distribution Date" with respect to any Class of REMIC
Regular Certificates is the Distribution Date on which the Certificate Balance
of such Class of Certificates would be reduced to zero based on the assumption
that no Mortgage Loan is voluntarily prepaid prior to its stated maturity date
(except for the ARD Loans which are assumed to be paid in full on their
respective Anticipated Repayment Dates) and otherwise based on the "Table
Assumptions" set forth under "YIELD AND MATURITY CONSIDERATIONS--Weighted
Average Life" in this prospectus supplement, which Distribution Date shall in
each case be as follows:
ASSUMED FINAL
CLASS DESIGNATION DISTRIBUTION DATE
- -------------------------------------------------------- ------------------
Class A-1 ........................................... June 15, 2009
Class A-2 ........................................... May 15, 2011
Class A-3 ........................................... July 15, 2013
Class A-4 ........................................... June 15, 2014
Class B ............................................. June 15, 2014
Class C ............................................. June 15, 2014
Class D ............................................. June 15, 2014
Class E ............................................. June 15, 2014
The Assumed Final Distribution Dates set forth above were calculated
without regard to any delays in the collection of Balloon Payments and without
regard to a reasonable liquidation time with respect to
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any Mortgage Loans that may be delinquent. Accordingly, in the event of
defaults on the Mortgage Loans, the actual final Distribution Date for one or
more Classes of the Offered Certificates may be later, and could be
substantially later, than the related Assumed Final Distribution Date(s).
In addition, the Assumed Final Distribution Dates set forth above were
calculated on the basis of a 0% CPR (as defined in this prospectus supplement)
(except that it is assumed that the ARD Loans pay their respective principal
balances on their related Anticipated Repayment Dates) and no losses on the
Mortgage Loans. Because the rate of principal payments (including prepayments)
on the Mortgage Loans can be expected to exceed the scheduled rate of principal
payments, and could exceed such scheduled rate by a substantial amount, and
because losses may occur in respect of the Mortgage Loans, the actual final
Distribution Date for one or more Classes of the Offered Certificates may be
earlier, and could be substantially earlier, than the related Assumed Final
Distribution Date(s). The rate of principal payments (including prepayments) on
the Mortgage Loans will depend on the characteristics of the Mortgage Loans, as
well as on the prevailing level of interest rates and other economic factors,
and no assurance can be given as to actual principal payment experience.
Finally, the Assumed Final Distribution Dates were calculated assuming there
would not be an early termination of the Trust Fund. See "YIELD AND MATURITY
CONSIDERATIONS" and "DESCRIPTION OF THE MORTGAGE POOL" in this prospectus
supplement and "YIELD CONSIDERATIONS" and "DESCRIPTION OF THE TRUST FUNDS" in
the accompanying prospectus.
The "Rated Final Distribution Date" with respect to each Class of Offered
Certificates is the Distribution Date in July 2041, the first Distribution Date
that follows the second anniversary of the end of the amortization term for the
Mortgage Loan that, as of the Cut-Off Date, has the longest remaining
amortization term. The rating assigned by a Rating Agency to any Class of
Offered Certificates entitled to receive distributions in respect of principal
reflects an assessment of the likelihood that Certificateholders of such Class
will receive, on or before the Rated Final Distribution Date, all principal
distributions to which they are entitled. See "RATINGS" in this prospectus
supplement.
VOTING RIGHTS
At all times during the term of the Pooling and Servicing Agreement, 100%
of the voting rights for the Certificates (the "Voting Rights") will be
allocated among the respective Classes of Certificates as follows: (i) 4% in
the aggregate in the case of the Class IO Certificates (allocated, pro rata,
between the Classes of Class IO Certificates based on Notional Amount) and (ii)
in the case of any other Class of Certificates, a percentage equal to the
product of 96% and a fraction, the numerator of which is equal to the aggregate
Certificate Balance of such Class of Certificates (as adjusted by treating any
Appraisal Reduction Amount as a Realized Loss solely for the purposes of
adjusting Voting Rights) and the denominator of which is equal to the aggregate
Certificate Balances of all Classes of Certificates, determined as of the
Distribution Date immediately preceding such time; provided, however, that the
treatment of any Appraisal Reduction Amount as a Realized Loss shall not reduce
the Certificate Balances of any Class for the purpose of determining the
Controlling Class, the Controlling Class Representative or the Majority
Subordinate Certificateholder. The holders of the Class R-I, Class R-II, Class
Z and Class MAD Certificates will not be entitled to any Voting Rights. Voting
Rights allocated to a Class of Certificates will be allocated among the related
Certificateholders in proportion to the percentage interests in such Class
evidenced by their respective Certificates. The Class A-1, Class A-2, Class
A-3, Class A-4 and Class A-1A Certificates will be treated as one Class for
determining the Controlling Class. In addition, if either the Master Servicer
or the Special Servicer is the holder of any Sequential Pay Certificate,
neither of the Master Servicer or Special Servicer, in its capacity as a
Certificateholder, will have Voting Rights with respect to matters concerning
compensation affecting the Master Servicer or the Special Servicer. See
"DESCRIPTION OF THE CERTIFICATES--Voting Rights" in the prospectus.
TERMINATION
The obligations created by the Pooling and Servicing Agreement will
terminate following the earlier of (i) the final payment (or advance in respect
thereof) or other liquidation of the last Mortgage Loan or REO Property subject
thereto, and (ii) the purchase of all of the Mortgage Loans (including the 11
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Madison Avenue Non-Pooled Component) and all of the REO Properties, if any,
remaining in the Trust Fund by the Master Servicer, the Special Servicer or any
single Certificateholder (so long as such Certificateholder is not an affiliate
of the Depositor or a Mortgage Loan Seller) that is entitled to greater than
50% of the Voting Rights allocated to the Class of Sequential Pay Certificates
with the latest alphabetical Class designation then outstanding (or if no
Certificateholder is entitled to greater than 50% of the Voting Rights of such
Class, the Certificateholder with the largest percentage of Voting Rights
allocated to such Class) (the "Majority Subordinate Certificateholder") and
distribution or provision for distribution thereof to the Certificateholders.
Written notice of termination of the Pooling and Servicing Agreement will be
given to each Certificateholder, and the final distribution will be made only
upon surrender and cancellation of the Certificates at the office of the
Trustee or other registrar for the Certificates or at such other location as
may be specified in such notice of termination.
Any such purchase by the Master Servicer, the Special Servicer or the
Majority Subordinate Certificateholder of all the Mortgage Loans and all of the
REO Properties, if any, remaining in the Trust Fund is required to be made at a
price equal to (i) the aggregate Purchase Price of all the Mortgage Loans
(other than REO Mortgage Loans) then included in the Trust Fund, plus (ii) the
fair market value of all REO Properties then included in the Trust Fund, as
determined by an independent appraiser selected by the Master Servicer and
approved by the Trustee (which may be less than the Purchase Price for the
corresponding REO Loan), minus (iii) if the purchaser is the Master Servicer,
the aggregate of amounts payable or reimbursable to the Master Servicer under
the Pooling and Servicing Agreement. Such purchase will effect early retirement
of the then outstanding Offered Certificates, but the right of the Master
Servicer, the Special Servicer or the Majority Subordinate Certificateholder to
effect such purchase is subject to the requirement that the aggregate principal
balance of the Mortgage Loans (including, with the respect to the 11 Madison
Avenue Loan, the 11 Madison Avenue Non-Pooled Component) is less than 1% of the
Cut-Off Date Pool Balance.
The purchase price paid in connection with the purchase of all Mortgage
Loans and REO Properties remaining in the Trust Fund, exclusive of any portion
thereof payable or reimbursable to any person other than the
Certificateholders, will constitute part of the Available Distribution Amount
for the final Distribution Date. The Available Distribution Amount for the
final Distribution Date will be distributed by the Trustee generally as
described under "--Distributions--Application of the Available Distribution
Amount" in this prospectus supplement except that the distributions of
principal on any Class of Sequential Pay Certificates described thereunder will
be made, subject to available funds and the distribution priorities described
thereunder, in an amount equal to the entire Certificate Balance of such Class
remaining outstanding.
An exchange by any Certificateholder of all of the then outstanding
Certificates (other than the Class MAD Certificates and the REMIC Residual
Certificates) for all of the Mortgage Loans and each REO Property remaining in
the Trust Fund may be made: (i) if the then outstanding Certificates (other
than the Class MAD Certificates) are held by a single Certificateholder, (ii)
after the Class A-1, Class A-2, Class A-3, Class A-4, Class A-1A, Class B,
Class C, Class D and Class E Certificates have been paid in full, and (iii) by
giving written notice to each of the parties to the Pooling and Servicing
Agreement no later than 30 days prior to the anticipated date of exchange;
provided, however that with respect to the 11 Madison Avenue Loan,
contemporaneously with such exchange for the Mortgage Loans, the holder of the
Class MAD Certificates and such Certificateholder shall be required to enter
into a participation and servicing agreement that provides the holder of the
Class MAD Certificates substantially the same rights as provided to the 11
Madison Avenue Non-Pooled Component under the Pooling and Servicing Agreement
in consideration for the Class MAD Certificates. In the event that such
Certificateholder elects to exchange its Certificates for all of the Mortgage
Loans and each REO Property remaining in the Trust Fund, such Certificateholder
must deposit in the Certificate Account in immediately available funds in an
amount equal to all amounts then due and owing to the Master Servicer, the
Special Servicer, the Trustee, the Certificate Registrar, the REMIC
Administrator and their respective agents under the Pooling and Servicing
Agreement.
For purposes of the foregoing provisions relating to termination of the
trust, with respect to the 11 Madison Avenue Loan, the term REO Property refers
to the trust's beneficial interest in the related REO Property under the
2004-C10 Pooling and Servicing Agreement.
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THE TRUSTEE
LaSalle Bank National Association (the "Trustee") is acting as trustee
pursuant to the Pooling and Servicing Agreement. See "DESCRIPTION OF THE
POOLING AND SERVICING AGREEMENTS --The Trustee," "--Duties of the Trustee,"
"--Certain Matters Regarding the Trustee" and "--Resignation and Removal of the
Trustee" in the accompanying prospectus. As compensation for its services, the
Trustee will be entitled to receive monthly, from general funds on deposit in
the Distribution Account, the Trustee Fee. The "Trustee Fee" for each Mortgage
Loan and REO Loan for any Distribution Date equals one month's interest for the
most recently ended calendar month (calculated on the basis of a 360-day year
consisting of twelve 30-day months), accrued at the Trustee Fee rate on the
Stated Principal Balance of such Mortgage Loan or REO Loan, as the case may be,
outstanding immediately following the prior Distribution Date (or, in the case
of the initial Distribution Date, as of the Closing Date). The Trustee Fee rate
is a per annum rate set forth in the Pooling and Servicing Agreement. In
addition, the Trustee will be entitled to recover from the Trust Fund all
reasonable unanticipated expenses and disbursements incurred or made by the
Trustee in accordance with any of the provisions of the Pooling and Servicing
Agreement, but not including expenses incurred in the ordinary course of
performing its duties as Trustee under the Pooling and Servicing Agreement, and
not including any such expense, disbursement or advance as may arise from its
willful misconduct, negligence or bad faith. The Trustee will not be entitled
to any fee with respect to any Companion Loan. The Trustee also has certain
duties with respect to REMIC Administration (in such capacity, the "REMIC
Administrator"). See "MATERIAL FEDERAL INCOME TAX CONSEQUENCES--Taxation of
Owners of REMIC Residual Certificates--Reporting and Other Administrative
Matters" in the prospectus.
The Trustee is also authorized to invest or direct the investment of funds
held in the Distribution Account, the Additional Interest Account and the Gain
on Sale Reserve Account maintained by it that relate to the Mortgage Loans or
REO Properties, as the case may be, in certain short-term United States
government securities and certain other permitted investment grade obligations,
and the Trustee will be entitled to retain any interest or other income earned
on such funds held in those accounts maintained by it, but shall be required to
cover any losses on investments of funds held in those accounts maintained by
it, from its own funds without any right to reimbursement, except in certain
limited circumstances described in the Pooling and Servicing Agreement.
THE FISCAL AGENT
ABN AMRO Bank N.V. (the "Fiscal Agent"), a banking corporation organized
under the laws of The Netherlands, will act as Fiscal Agent pursuant to the
Pooling and Servicing Agreement. 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 determines to be nonrecoverable. 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 nonrecoverable.
The Fiscal Agent will be entitled to reimbursement for each advance made by it
in the same manner and to the same extent as, but prior to, the Trustee and the
Master Servicer. The Fiscal Agent will make no representation as to the
validity or sufficiency of the Pooling and Servicing Agreement, the
Certificates, the Mortgage Loans or related documents or the sufficiency of
this prospectus supplement. The duties and obligations of the Fiscal Agent will
consist only of making advances as described in "-- P&I Advances" in this
prospectus supplement. The Fiscal Agent will not be liable except for the
performance of such duties and obligations.
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YIELD AND MATURITY CONSIDERATIONS
YIELD CONSIDERATIONS
General. The yield on any Offered Certificate will depend on, among other
things, (a) the price at which such Certificate is purchased by an investor and
(b) the rate, timing and amount of distributions on such Certificate. The rate,
timing and amount of distributions on any Offered Certificate will in turn
depend on, among other things, (i) the Pass-Through Rate for such Certificate,
(ii) the rate and timing of principal payments (including principal
prepayments) and other principal collections on the Mortgage Loans and the
extent to which such amounts are to be applied in reduction of the Certificate
Balance, (iii) the rate, timing and severity of Realized Losses and Additional
Trust Fund Expenses and the extent to which such losses and expenses are
allocable in reduction of the Certificate Balance, and (iv) the timing and
severity of any Net Aggregate Prepayment Interest Shortfalls and the extent to
which such shortfalls allocable are in reduction of the Distributable
Certificate Interest payable on the related Class.
Rate and Timing of Principal Payment. The yield to holders of any Offered
Certificates purchased at a discount or premium will be affected by the rate
and timing of principal payments made in reduction of the Certificate Balance
of any Class of Sequential Pay Certificates. As described in this prospectus
supplement, the Loan Group 1 Principal Distribution Amount (and, after the
Class A-1A Certificates have been retired, any remaining Loan Group 2 Principal
Distribution Amount) for each Distribution Date will generally be distributable
first to the Class A-1 Certificates until the Certificate Balance thereof is
reduced to zero, then, to the Class A-2 Certificates until the Certificate
Balance thereof is reduced to zero, then, to the Class A-3 Certificates until
the Certificate Balance thereof is reduced to zero, and then, to the Class A-4
Certificates until the Certificate Balance thereof is reduced to zero. The Loan
Group 2 Principal Distribution Amount (and, after the Class A-4 Certificates
have been retired, any remaining Loan Group 1 Principal Distribution Amount)
for each Distribution Date will generally be distributable first to the Class
A-1A Certificates. After those distributions, the remaining Principal
Distribution Amount with respect to the Mortgage Pool will generally be
distributable entirely in respect of the Class B Certificates, the Class C
Certificates, the Class D Certificates, the Class E Certificates and then the
Non-Offered Certificates (other than the Class A-1A, Class IO and Class MAD
Certificates), in that order, in each case until the Certificate Balance of
such Class of Certificates is reduced to zero. Consequently, the rate and
timing of principal payments that are distributed or otherwise result in
reduction of the Certificate Balance of any Class of Offered Certificates, will
be directly related to the rate and timing of principal payments on or in
respect of the Mortgage Loans, which will in turn be affected by the
amortization schedules thereof, the dates on which Balloon Payments are due,
any extension of maturity dates by the Master Servicer or the Special Servicer,
and the rate and timing of principal prepayments and other unscheduled
collections thereon (including for this purpose, collections made in connection
with liquidations of Mortgage Loans due to defaults, casualties or
condemnations affecting the Mortgaged Properties, or purchases of Mortgage
Loans out of the Trust Fund). Furthermore, because the amount of principal that
will be distributed to the Class A-1, Class A-2, Class A-3, Class A-4 and Class
A-1A Certificates will generally be based upon the particular Loan Group that
the related Mortgage Loan is deemed to be in, the yield on the Class A-1, Class
A-2, Class A-3 and Class A-4 Certificates will be particularly sensitive to
prepayments on Mortgage Loans in Loan Group 1 and the yield on the Class A-1A
Certificates will be particularly sensitive to prepayments on Mortgage Loans in
Loan Group 2. In addition, although the borrowers under ARD Loans may have
certain incentives to repay ARD Loans on their Anticipated Repayment Dates,
there can be no assurance that the related borrowers will be able to repay the
ARD Loans on their Anticipated Repayment Date. The failure of a borrower to
repay the ARD Loans on their Anticipated Repayment Dates will not be an event
of default under the terms of the ARD Loans, and pursuant to the terms of the
Pooling and Servicing Agreement, neither the Master Servicer nor the Special
Servicer will be permitted to take any enforcement action with respect to a
borrower's failure to pay Additional Interest or principal in excess of the
principal component of the constant Periodic Payment, other than requests for
collection, until the scheduled maturity of the ARD Loans; provided that the
Master Servicer or the Special Servicer, as the case may be, may take action to
enforce the Trust Fund's right to apply Excess Cash Flow to principal in
accordance with the terms of the ARD Loans' documents.
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In addition, if the Master Servicer or the Trustee, as applicable,
reimburses itself out of general collections on the Mortgage Pool for any
Advance that it or the Special Servicer has determined is not recoverable out
of collections on the related Mortgage Loan, then that Advance (together with
accrued interest thereon) will be deemed, to the fullest extent permitted, to
be reimbursed first out of the Principal Distribution Amount otherwise
distributable on the Certificates (prior to being deemed reimbursed out of
payments and other collections of interest on the underlying Mortgage Loans
otherwise distributable on the Certificates), thereby reducing the Principal
Distribution Amount of the Offered Certificates. Any such reduction in the
amount distributed as principal of the Certificates may adversely affect the
weighted average lives and yields to maturity of one or more Classes of
Certificates and, after a Final Recovery Determination has been made, will
create Realized Losses.
Prepayments and, assuming the respective stated maturity dates therefor
have not occurred, liquidations and purchases of the Mortgage Loans, will
result in distributions on the Certificates of amounts that would otherwise be
distributed over the remaining terms of the Mortgage Loans. Defaults on the
Mortgage Loans, particularly at or near their stated maturity dates, may result
in significant delays in payments of principal on such Mortgage Loans (and,
accordingly, on the Offered Certificates that are Sequential Pay Certificates)
while work-outs are negotiated or foreclosures are completed. See "SERVICING OF
THE MORTGAGE LOANS--Modifications, Waivers and Amendments" in this prospectus
supplement and "DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS--Realization
Upon Defaulted Mortgage Loans" and "CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS AND
LEASES--Foreclosure" in the prospectus.
The extent to which the yield to maturity of any Class of Offered
Certificates may vary from the anticipated yield will depend upon the degree to
which such Certificates are purchased at a discount or premium and when, and to
what degree, payments of principal on the Mortgage Loans (and which of the Loan
Groups such Mortgage Loan is deemed to be in) with respect to the Class A-1,
Class A-2, Class A-3, Class A-4 and Class A-1A Certificates in turn are
distributed or otherwise result in reduction of the Certificate Balance of such
Certificates. An investor should consider, in the case of any Offered
Certificate purchased at a discount, the risk that a slower than anticipated
rate of principal payments on the Mortgage Loans could result in an actual
yield to such investor that is lower than the anticipated yield and, in the
case of any Offered Certificate purchased at a premium, the risk that a faster
than anticipated rate of principal payments could result in an actual yield to
such investor that is lower than the anticipated yield. In general, the earlier
a payment of principal on the Mortgage Loans is distributed to or otherwise
results in reduction of the principal balance of an Offered Certificate
purchased at a discount or premium, the greater will be the effect on an
investor's yield to maturity. As a result, the effect on an investor's yield of
principal payments on the Mortgage Loans occurring at a rate higher (or lower)
than the rate anticipated by the investor during any particular period would
not be fully offset by a subsequent like reduction (or increase) in the rate of
such principal payments. Because the rate of principal payments on the Mortgage
Loans will depend on future events and a variety of factors (as described more
fully below), no assurance can be given as to such rate or the rate of
principal prepayments in particular. The Depositor is not aware of any relevant
publicly available or authoritative statistics with respect to the historical
prepayment experience of a large group of mortgage loans comparable to the
Mortgage Loans.
Losses and Shortfalls. The yield to holders of the Offered Certificates
will also depend on the extent to which such holders are required to bear the
effects of any losses or shortfalls on the Mortgage Loans. Losses and other
shortfalls on the Mortgage Loans will, with the exception of any Net Aggregate
Prepayment Interest Shortfalls, generally be borne by the holders of the 11
Madison Avenue Non-Pooled Component, with respect to the 11 Madison Avenue
Loan, and with respect to all other Mortgage Loans and the 11 Madison Avenue
Pooled Component by the respective Classes of Sequential Pay Certificates to
the extent of amounts otherwise distributable in respect of such Certificates,
in reverse alphabetical order of their Class designations. Realized Losses and
Additional Trust Fund Expenses will be allocated, as and to the extent
described in this prospectus supplement, to the holders of the 11 Madison
Avenue Non-Pooled Component, with respect to the 11 Madison Avenue Loan, and
with respect to all other Mortgage Loans and the 11 Madison Avenue Pooled
Component, to the holders of the respective Classes of Sequential Pay
Certificates other than the Class A-1, Class A-2, Class A-3, Class A-4 and
Class A-1A Certificates (in reduction of the Certificate Balance of each such
Class), in reverse alphabetical order of
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their Class designations. In the event of a reduction of the Certificate
Balances of all such Classes of Certificates, such losses and shortfalls will
then be borne, pro rata, by the Class A-1 Certificates, Class A-2 Certificates,
Class A-3 Certificates, Class A-4 Certificates and Class A-1A Certificates (and
the Class IO Certificates with respect to shortfalls of interest). As more
fully described under "DESCRIPTION OF THE CERTIFICATES--Distributions--
Distributable Certificate Interest" in this prospectus supplement, Net Aggregate
Prepayment Interest Shortfalls will generally be borne by the respective Classes
of REMIC Regular Certificates (other than the Class IO and Class MAD
Certificates) on a pro rata basis.
Pass-Through Rate. The yield on the Class A-3, Class A-4, Class B, Class
C, Class D and Class E Certificates could be adversely affected if Mortgage
Loans with higher interest rates pay faster than Mortgage Loans with lower
interest rates since those Classes bear interest at a rate limited by, based
upon, or equal to, the Weighted Average Net Mortgage Rate of the Mortgage
Loans.
Certain Relevant Factors. The rate and timing of principal payments and
defaults and the severity of losses on the Mortgage Loans may be affected by a
number of factors, including, without limitation, prevailing interest rates,
the terms of the Mortgage Loans (for example, due-on-sale clauses, Lockout
Periods, provisions requiring the payment of Prepayment Premiums, Yield
Maintenance Charges and amortization terms that require Balloon Payments), the
demographics and relative economic vitality of the areas in which the Mortgaged
Properties are located and the general supply and demand for rental units,
hotel/motel guest rooms, health care facility beds, mobile home park pads or
comparable commercial space, as applicable, in such areas, the quality of
management of the Mortgaged Properties, the servicing of the Mortgage Loans,
possible changes in tax laws and other opportunities for investment. See "RISK
FACTORS--The Mortgage Loans" and "DESCRIPTION OF THE MORTGAGE POOL" in this
prospectus supplement and "YIELD CONSIDERATIONS--Prepayment Considerations" in
the accompanying prospectus.
The rate of prepayment on the Mortgage Pool is likely to be affected by
prevailing market interest rates for mortgage loans of a comparable type, term
and risk level. When the prevailing market interest rate is below a mortgage
interest rate, the related borrower may have an incentive to refinance its
mortgage loan. As of the Cut-Off Date, all of the Mortgage Loans may be prepaid
at any time after the expiration of any applicable Lockout Period, subject, in
some cases, to the payment of a Prepayment Premium or a Yield Maintenance
Charge. A requirement that a prepayment be accompanied by a Prepayment Premium
or Yield Maintenance Charge may not provide a sufficient economic disincentive
to deter a borrower from refinancing at a more favorable interest rate.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell or
refinance Mortgaged Properties in order to realize their equity therein, to
meet cash flow needs or to make other investments. In addition, some borrowers
may be motivated by federal and state tax laws (which are subject to change) to
sell Mortgaged Properties prior to the exhaustion of tax depreciation benefits.
The Depositor makes no representation as to the particular factors that
will affect the rate and timing of prepayments and defaults on the Mortgage
Loans, as to the relative importance of such factors, as to the percentage of
the principal balance of the Mortgage Loans that will be prepaid or as to
whether a default will have occurred as of any date or as to the overall rate
of prepayment or default on the Mortgage Loans.
Delay in Payment of Distributions. Because monthly distributions will not
be made to Certificateholders until a date that is scheduled to be up to 15
days following the Due Dates for the Mortgage Loans during the related
Collection Period, the effective yield to the holders of the Offered
Certificates will be lower than the yield that would otherwise be produced by
the applicable Pass-Through Rates and purchase prices (assuming such prices did
not account for such delay).
Unpaid Distributable Certificate Interest. As described under "DESCRIPTION
OF THE CERTIFICATES--Distributions--Application of the Available Distribution
Amount" in this prospectus supplement, if the portion of the Available
Distribution Amount distributable in respect of interest on any Class of
Offered Certificates on any Distribution Date is less than the Distributable
Certificate Interest then payable for such Class, the shortfall will be
distributable to holders of such Class of Certificates on
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subsequent Distribution Dates, to the extent of available funds. Any such
shortfall will not bear interest, however, and will therefore negatively affect
the yield to maturity of such Class of Certificates for so long as it is
outstanding.
Optional Termination. Any optional termination of the Trust Fund would
have an effect similar to a prepayment in full of the Mortgage Loans (without,
however, the payment of any Prepayment Premiums or Yield Maintenance Charges)
and, as a result, investors in any Certificates purchased at a premium might
not fully recoup their initial investment. See "DESCRIPTION OF THE
CERTIFICATES--Termination" in this prospectus supplement.
WEIGHTED AVERAGE LIFE
The weighted average life of any Class A-1, Class A-2, Class A-3, Class
A-4, Class B, Class C, Class D and Class E Certificate refers to the average
amount of time that will elapse from the assumed Closing Date until each dollar
allocable to principal of such Certificate is distributed to the investor. The
weighted average life of any such Offered Certificate will be influenced by,
among other things, the rate at which principal on the Mortgage Loans is paid
or otherwise collected or advanced and applied to pay principal of such Offered
Certificate, which may be in the form of scheduled amortization, voluntary
prepayments, insurance and condemnation proceeds and liquidation proceeds. As
described in this prospectus supplement, the Loan Group 1 Principal
Distribution Amount (and, after the Class A-1A Certificates have been retired,
any remaining Loan Group 2 Principal Distribution Amount) for each Distribution
Date will generally be distributable first in respect of the Class A-1
Certificates until the Certificate Balance thereof is reduced to zero, then, to
the Class A-2 Certificates until the Certificate Balance thereof is reduced to
zero, then, to the Class A-3 Certificates until the Certificate Balance thereof
is reduced to zero, and then, to the Class A-4 Certificates until the
Certificate Balance thereof is reduced to zero. The Loan Group 2 Principal
Distribution Amount (and, after the Class A-4 Certificates have been retired,
any remaining Loan Group 1 Principal Distribution Amount) for each Distribution
Date will generally be distributable first to the Class A-1A Certificates.
After those distributions, the remaining Principal Distribution Amount with
respect to the Mortgage Pool will generally be distributable entirely in
respect of the Class B Certificates, the Class C Certificates, the Class D
Certificates and the Class E Certificates in that order, in each case until the
Certificate Balance of such Class of Certificates is reduced to zero.
The tables below indicate the percentage of the initial Certificate
Balance of each Class of Offered Certificates that would be outstanding after
each of the dates shown and the corresponding weighted average life of each
such Class of Offered Certificates. To the extent that the Mortgage Loans or
the Certificates have characteristics that differ from those assumed in
preparing the tables, the Class A-1, Class A-2, Class A-3, Class A-4, Class B,
Class C, Class D and Class E Certificates may mature earlier or later than
indicated by the tables. Accordingly, the Mortgage Loans will not prepay at any
constant rate nor will the Mortgage Loans prepay at the same rate, and it is
highly unlikely that the Mortgage Loans will prepay in a manner consistent with
the assumptions described above. In addition, variations in the actual
prepayment experience and in the balance of the Mortgage Loans that actually
prepay may increase or decrease the percentages of initial Certificate Balances
(and shorten or extend the weighted average lives) shown in the following
tables. Investors are urged to conduct their own analyses of the rates at which
the Mortgage Loans may be expected to prepay.
Prepayments on mortgage loans may be measured by a prepayment standard or
model. The model used in this prospectus supplement is the "Constant Prepayment
Rate" or "CPR" model. The CPR model represents an assumed constant annual rate
of prepayment each month, expressed as a per annum percentage of the then
scheduled principal balance of the pool of mortgage loans. As used in the
tables set forth below, the column headed "0% CPR" assumes that none of the
Mortgage Loans is prepaid in whole or in part before maturity or the
Anticipated Repayment Date, as the case may be. The columns headed "25% CPR",
"50% CPR", "75% CPR" and "100% CPR", respectively, assume that prepayments are
made each month at those levels of CPR on the Mortgage Loans that are eligible
for prepayment under the Table Assumptions set forth in the next paragraph
(each such scenario, a "Scenario"). There is no assurance, however, that
prepayments on the Mortgage Loans will conform to any level of CPR, and no
representation is made that the Mortgage Loans will prepay at the levels of CPR
shown or at any other prepayment rate.
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The tables below were derived from calculations based on the following
assumptions (the "Table Assumptions"): (i) no Mortgage Loan prepays during any
applicable Lockout Period or any period during which Defeasance Collateral is
permitted or required to be pledged or any period during which a yield
maintenance charge is required (otherwise, in the case of each table, each
Mortgage Loan is assumed to prepay at the indicated level of CPR, with each
prepayment being applied on the first day of the applicable month in which it
is assumed to be received), (ii) the Pass-Through Rates and initial Certificate
Balances of the respective Classes of Sequential Pay Certificates are as
described in this prospectus supplement, (iii) there are no delinquencies or
defaults with respect to, and no modifications, waivers or amendments of the
terms of, the Mortgage Loans, (iv) there are no Realized Losses, Additional
Trust Fund Expenses or Appraisal Reduction Amounts with respect to the Mortgage
Loans or the Trust Fund, (v) scheduled interest and principal payments on the
Mortgage Loans are timely received, (vi) ARD Loans pay in full on their
Anticipated Repayment Dates, (vii) all Mortgage Loans have Due Dates on the
first day of each month and accrue interest on the respective basis described
in this prospectus supplement (i.e., a 30/360 basis or an actual/360 basis),
(viii) all prepayments are accompanied by a full month's interest and there are
no Prepayment Interest Shortfalls, (ix) there are no breaches of the Mortgage
Loan Sellers' representations and warranties regarding its Mortgage Loans, (x)
all applicable Prepayment Premiums and Yield Maintenance Charges are collected,
(xi) no party entitled thereto exercises its right of optional termination of
the Trust Fund described in this prospectus supplement, (xii) the borrowers
under any Mortgage Loans which permit the borrower to choose between defeasance
or a yield maintenance charge choose to be subject to a yield maintenance
charge, (xiii) distributions on the Certificates are made on the 15th day (each
assumed to be a business day) of each month, commencing in August 2004, and
(xiv) the Closing Date for the sale of the Offered Certificates is July 8,
2004.
The tables set forth below indicate the resulting weighted average lives
of each Class of Offered Certificates and set forth the percentages of the
initial Certificate Balance of such Class of Offered Certificates that would be
outstanding after each of the dates shown in each case assuming the indicated
level of CPR. For purposes of the following tables, the weighted average life
of an Offered Certificate is determined by (i) multiplying the amount of each
principal distribution thereon by the number of years from the assumed Closing
Date of such Certificate to the related Distribution Date, (ii) summing the
results and (iii) dividing the sum by the aggregate amount of the reductions in
the principal balance of such Certificate.
PERCENTAGES OF THE CLOSING DATE CERTIFICATE BALANCE
OF THE CLASS A-1 CERTIFICATES
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE
OTHERWISE AT INDICATED CPR
--------------------------------------------------------
DISTRIBUTION DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ------------------------------------------ -------- --------- --------- --------- ---------
Initial Date ............................. 100 100 100 100 100
7/15/05 .................................. 85 85 85 85 85
7/15/06 .................................. 69 69 69 69 69
7/15/07 .................................. 47 47 47 47 47
7/15/08 .................................. 23 20 16 9 0
7/15/09 .................................. 0 0 0 0 0
---- ---- ---- ---- ----
Weighted average life (in years) ......... 2.80 2.74 2.71 2.69 2.67
==== ==== ==== ==== ====
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PERCENTAGES OF THE CLOSING DATE CERTIFICATE BALANCE
OF THE CLASS A-2 CERTIFICATES
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE
OTHERWISE AT INDICATED CPR
--------------------------------------------------------
DISTRIBUTION DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ------------------------------------------ -------- --------- --------- --------- ---------
Initial Date ............................. 100 100 100 100 100
7/15/05 .................................. 100 100 100 100 100
7/15/06 .................................. 100 100 100 100 100
7/15/07 .................................. 100 100 100 100 100
7/15/08 .................................. 100 100 100 100 89
7/15/09 .................................. 51 51 51 51 51
7/15/10 .................................. 44 44 44 44 44
7/15/11 .................................. 0 0 0 0 0
---- ---- ---- ---- ----
Weighted average life (in years) ......... 5.80 5.79 5.76 5.72 5.54
==== ==== ==== ==== ====
PERCENTAGES OF THE CLOSING DATE CERTIFICATE BALANCE
OF THE CLASS A-3 CERTIFICATES
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE
OTHERWISE AT INDICATED CPR
--------------------------------------------------------
DISTRIBUTION DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ------------------------------------------ -------- --------- --------- --------- ---------
Initial Date ............................. 100 100 100 100 100
7/15/05 .................................. 100 100 100 100 100
7/15/06 .................................. 100 100 100 100 100
7/15/07 .................................. 100 100 100 100 100
7/15/08 .................................. 100 100 100 100 100
7/15/09 .................................. 100 100 100 100 100
7/15/10 .................................. 100 100 100 100 100
7/15/11 .................................. 36 36 36 36 36
7/15/12 .................................. 19 17 14 11 0
7/15/13 .................................. 0 0 0 0 0
---- ---- ---- ---- ----
Weighted average life (in years) ......... 7.33 7.28 7.25 7.23 7.10
==== ==== ==== ==== ====
PERCENTAGES OF THE CLOSING DATE CERTIFICATE BALANCE
OF THE CLASS A-4 CERTIFICATES
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE
OTHERWISE AT INDICATED CPR
--------------------------------------------------------
DISTRIBUTION DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ------------------------------------------ -------- --------- --------- --------- ---------
Initial Date ............................. 100 100 100 100 100
7/15/05 .................................. 100 100 100 100 100
7/15/06 .................................. 100 100 100 100 100
7/15/07 .................................. 100 100 100 100 100
7/15/08 .................................. 100 100 100 100 100
7/15/09 .................................. 100 100 100 100 100
7/15/10 .................................. 100 100 100 100 100
7/15/11 .................................. 100 100 100 100 100
7/15/12 .................................. 100 100 100 100 98
7/15/13 .................................. 100 98 97 95 94
7/15/14 .................................. 0 0 0 0 0
---- ---- ---- ---- ----
Weighted average life (in years) ......... 9.74 9.70 9.67 9.62 9.42
==== ==== ==== ==== ====
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PERCENTAGES OF THE CLOSING DATE CERTIFICATE BALANCE
OF THE CLASS B CERTIFICATES
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE
OTHERWISE AT INDICATED CPR
--------------------------------------------------------
DISTRIBUTION DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ------------------------------------------ -------- --------- --------- --------- ---------
Initial Date ............................. 100 100 100 100 100
7/15/05 .................................. 100 100 100 100 100
7/15/06 .................................. 100 100 100 100 100
7/15/07 .................................. 100 100 100 100 100
7/15/08 .................................. 100 100 100 100 100
7/15/09 .................................. 100 100 100 100 100
7/15/10 .................................. 100 100 100 100 100
7/15/11 .................................. 100 100 100 100 100
7/15/12 .................................. 100 100 100 100 100
7/15/13 .................................. 100 100 100 100 100
7/15/14 .................................. 0 0 0 0 0
---- ---- ---- ---- ----
Weighted average life (in years) ......... 9.94 9.94 9.94 9.94 9.77
==== ==== ==== ==== ====
PERCENTAGES OF THE CLOSING DATE CERTIFICATE BALANCE
OF THE CLASS C CERTIFICATES
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE
OTHERWISE AT INDICATED CPR
--------------------------------------------------------
DISTRIBUTION DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ------------------------------------------ -------- --------- --------- --------- ---------
Initial Date ............................. 100 100 100 100 100
7/15/05 .................................. 100 100 100 100 100
7/15/06 .................................. 100 100 100 100 100
7/15/07 .................................. 100 100 100 100 100
7/15/08 .................................. 100 100 100 100 100
7/15/09 .................................. 100 100 100 100 100
7/15/10 .................................. 100 100 100 100 100
7/15/11 .................................. 100 100 100 100 100
7/15/12 .................................. 100 100 100 100 100
7/15/13 .................................. 100 100 100 100 100
7/15/14 .................................. 0 0 0 0 0
---- ---- ---- ---- ----
Weighted average life (in years) ......... 9.94 9.94 9.94 9.94 9.77
==== ==== ==== ==== ====
PERCENTAGES OF THE CLOSING DATE CERTIFICATE BALANCE
OF THE CLASS D CERTIFICATES
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE
OTHERWISE AT INDICATED CPR
--------------------------------------------------------
DISTRIBUTION DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ------------------------------------------ -------- --------- --------- --------- ---------
Initial Date ............................. 100 100 100 100 100
7/15/05 .................................. 100 100 100 100 100
7/15/06 .................................. 100 100 100 100 100
7/15/07 .................................. 100 100 100 100 100
7/15/08 .................................. 100 100 100 100 100
7/15/09 .................................. 100 100 100 100 100
7/15/10 .................................. 100 100 100 100 100
7/15/11 .................................. 100 100 100 100 100
7/15/12 .................................. 100 100 100 100 100
7/15/13 .................................. 100 100 100 100 100
7/15/14 .................................. 0 0 0 0 0
---- ---- ---- ---- ----
Weighted average life (in years) ......... 9.94 9.94 9.94 9.94 9.77
==== ==== ==== ==== ====
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PERCENTAGES OF THE CLOSING DATE CERTIFICATE BALANCE
OF THE CLASS E CERTIFICATES
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE
OTHERWISE AT INDICATED CPR
--------------------------------------------------------
DISTRIBUTION DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ------------------------------------------ -------- --------- --------- --------- ---------
Initial Date ............................. 100 100 100 100 100
7/15/05 .................................. 100 100 100 100 100
7/15/06 .................................. 100 100 100 100 100
7/15/07 .................................. 100 100 100 100 100
7/15/08 .................................. 100 100 100 100 100
7/15/09 .................................. 100 100 100 100 100
7/15/10 .................................. 100 100 100 100 100
7/15/11 .................................. 100 100 100 100 100
7/15/12 .................................. 100 100 100 100 100
7/15/13 .................................. 100 100 100 100 100
7/15/14 .................................. 0 0 0 0 0
---- ---- ---- ---- ----
Weighted average life (in years) ......... 9.94 9.94 9.94 9.94 9.77
==== ==== ==== ==== ====
USE OF PROCEEDS
Substantially all of the proceeds from the sale of the Offered
Certificates will be used by the Depositor to purchase the Mortgage Loans and
to pay certain expenses in connection with the issuance of the Certificates.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following summary of the anticipated material federal income tax
consequences of the purchase, ownership and disposition of Offered Certificates
is based on the advice of Cadwalader, Wickersham & Taft LLP, counsel to the
Depositor. This summary is based on laws, regulations, including the REMIC
regulations promulgated by the Treasury Department (the "REMIC Regulations"),
rulings and decisions now in effect or (with respect to the regulations)
proposed, all of which are subject to change either prospectively or
retroactively. This summary does not address the federal income tax
consequences of an investment in Offered Certificates applicable to all
categories of investors, some of which (for example, banks and insurance
companies) may be subject to special rules. Prospective investors should
consult their tax advisors regarding the federal, state, local and other tax
consequences to them of the purchase, ownership and disposition of Offered
Certificates.
For federal income tax purposes, two separate REMIC elections will be made
with respect to segregated asset pools that make up the trust, other than the
11 Madison Avenue Loan and any Additional Interest on the ARD Loans. In
addition, a separate REMIC election will be made with respect to the 11 Madison
Avenue Loan (other than any related Additional Interest). Upon the issuance of
the Offered Certificates, Cadwalader, Wickersham & Taft LLP will deliver its
opinion generally to the effect that, assuming (1) the making of appropriate
elections, (2) compliance with all provisions of the Pooling and Servicing
Agreement, (3) compliance with the 2004-C10 Pooling and Servicing Agreement and
related documents and any amendments thereto and the continued qualification of
the REMICs formed thereunder, and (4) compliance with applicable changes in the
Code, for federal income tax purposes, each such REMIC will qualify as a REMIC
under the Code. For federal income tax purposes, the REMIC Regular Certificates
will represent ownership of the "regular interests" in one of such REMICs and
generally will be treated as newly originated debt instruments of such REMIC.
See "MATERIAL FEDERAL INCOME TAX CONSEQUENCES--REMICs" in the accompanying
prospectus. The portion of the Trust Fund consisting of Additional Interest and
the Additional Interest Account will be treated as a grantor trust for federal
income tax purposes, and the Class Z and Class MAD Certificates will represent
undivided beneficial interests in the related assets. See "MATERIAL FEDERAL
INCOME TAX CONSEQUENCES--REMICs" and "--Grantor Trust Funds" in the
accompanying prospectus.
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TAXATION OF THE OFFERED CERTIFICATES
Based on expected issue prices, it is anticipated that the Class A-2 and
Class A-3 Certificates will be treated as having been issued at a premium, that
the Class A-4, Class B and Class C Certificates will be treated as having been
issued with a de minimis amount of the original issue discount, and that the
Class A-1, Class D and Class E Certificates will be treated as having been
issued with original issue discount for federal income tax reporting purposes.
The prepayment assumption that will be used in determining the rate of accrual
of original issue discount, if any, or amortization of amortizable bond premium
for federal income tax purposes will be based on the assumption that subsequent
to the date of any determination the Mortgage Loans will pay at a rate equal to
a CPR of 0%, except that it is assumed that the ARD Loans will pay their
respective outstanding principal balances on their related Anticipated
Repayment Dates. No representation is made that the Mortgage Loans will pay at
that rate or at any other rate. See "MATERIAL FEDERAL INCOME TAX
CONSEQUENCES--REMICs" and "--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount" in the accompanying prospectus.
The Internal Revenue Service (the "IRS") has issued regulations (the "OID
Regulations") under Sections 1271 to 1275 of the Code generally addressing the
treatment of debt instruments issued with original issue discount. Purchasers
of the Offered Certificates should be aware that the OID Regulations and
Section 1272(a)(6) of the Code do not adequately address certain issues
relevant to, or are not applicable to, securities such as the Offered
Certificates. The OID Regulations in some circumstances permit the holder of a
debt instrument to recognize original issue discount under a method that
differs from that used by the issuer. Accordingly, it is possible that the
holder of an Offered Certificate if such Offered Certificate were treated as
issued with original issue discount may be able to select a method for
recognizing original issue discount that differs from that used by the Trustee
in preparing reports to the Certificateholders and the IRS. Prospective
purchasers of Offered Certificates are advised to consult their tax advisors
concerning the tax treatment of such Certificates.
Whether any holder of a Class of Offered Certificates will be treated as
holding a Certificate with amortizable bond premium will depend on such
Certificateholder's purchase price and the distributions remaining to be made
on such Certificate at the time of its acquisition by such Certificateholder.
Holders of each such Class of Certificates should consult their own tax
advisors regarding the possibility of making an election to amortize such
premium. See "MATERIAL FEDERAL INCOME TAX CONSEQUENCES--Taxation of Owners of
REMIC Regular Certificates--Premium" in the accompanying prospectus.
The Offered Certificates will be treated as "real estate assets" within
the meaning of Section 856(c)(5)(B) of the Code for a "real estate investment
trust" ("REIT"). In addition, interest (including original issue discount) on
the Offered Certificates will be interest described in Section 856(c)(3)(B) of
the Code for a REIT. However, the Offered Certificates will generally only be
considered assets described in Section 7701(a)(19)(C) of the Code for a
domestic building and loan association to the extent that the Mortgage Loans
are secured by multifamily and mobile home park properties (approximately 15.3%
by initial Cut-Off Date Pool Balance) and, accordingly, investment in the
Offered Certificates may not be suitable for certain thrift institutions. The
Offered Certificates will not qualify under the foregoing sections to the
extent of any Mortgage Loan that has been defeased with US government
obligations.
Prepayment Premiums and Yield Maintenance Charges actually collected will
be distributed to the holders of the Offered Certificates as described in this
prospectus supplement. It is not entirely clear under the Code when the amount
of a Yield Maintenance Charge or Prepayment Premium should be taxed to the
holder of an Offered Certificate, but it is not expected, for federal income
tax reporting purposes, that Yield Maintenance Charges or Prepayment Premiums
will be treated as giving rise to any income to the holders of the Offered
Certificates prior to the Master Servicer's actual receipt of a Yield
Maintenance Charge or Prepayment Premium, as the case may be. It is not
entirely clear whether Yield Maintenance Charges or Prepayment Premiums give
rise to ordinary income or capital gains and Certificateholders should consult
their own tax advisors concerning this character issue and the treatment of
Yield Maintenance Charges and Prepayment Premiums in general.
S-260
The Treasury Department has issued final regulations that make certain
modifications to the withholding, backup withholding, and information reporting
rules. Prospective non-United States investors are urged to consult their tax
advisors regarding these regulations.
For further information regarding the federal income tax consequences of
investing in the Offered Certificates, see "MATERIAL FEDERAL INCOME TAX
CONSEQUENCES--REMICs" in the accompanying prospectus.
ERISA CONSIDERATIONS
The following description is general in nature, is not intended to be
all-inclusive, is based on the law and practice in force at the date of this
document and is subject to any subsequent changes therein. In view of the
individual nature of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and Code consequences, each potential investor that is a
Plan (as described below) is advised to consult its own legal advisor with
respect to the specific ERISA and Code consequences of investing in the Offered
Certificates and to make its own independent decision. The following is merely
a summary and should not be construed as legal advice.
A fiduciary of any employee benefit plan or other retirement plan or
arrangement, including individual retirement accounts and annuities, Keogh
plans and collective investment funds, separate accounts and general accounts
in which such plans, accounts or arrangements are invested, that is subject to
ERISA or Section 4975 of the Code (a "Plan") should carefully review with its
legal advisors whether the purchase or holding of Offered Certificates could
give rise to a transaction that is prohibited or is not otherwise permitted
either under ERISA or Section 4975 of the Code or whether there exists any
statutory or administrative exemption applicable thereto. Other employee
benefit plans, including governmental plans (as defined in Section 3(32) of
ERISA) and church plans (as defined in Section 3(33) of ERISA and provided no
election has been made under Section 410(d) of the Code), while not subject to
the foregoing provisions of ERISA or the Code, may be subject to materially
similar provisions of applicable federal, state or local law ("Similar Law").
The US Department of Labor has issued individual exemptions to each of the
Underwriters (Prohibited Transaction Exemption ("PTE") 96-22 (April 3, 1996) to
Wachovia Corporation, and its subsidiaries and its affiliates, which include
Wachovia Capital Markets, LLC ("Wachovia Securities"), PTE 89-89 (October 17,
1989) to Citigroup Global Markets Inc. ("Citigroup Securities"), PTE 2002-19
(March 28, 2002) to J.P. Morgan Securities Inc. ("JPMorgan Securities"), and
PTE 90-59 (September 6, 1990) to Greenwich Capital Markets, Inc. ("Greenwich
Capital") (each, an "Exemption" and collectively, the "Exemptions"), each of
which generally exempts from the application of the prohibited transaction
provisions of Sections 406(a) and (b) and 407(a) of ERISA, and the excise taxes
imposed on such prohibited transactions pursuant to Sections 4975(a) and (b) of
the Code, the purchase, sale and holding of mortgage pass-through certificates
underwritten by an Underwriter, as hereinafter defined, provided that certain
conditions set forth in the Exemptions are satisfied. For purposes of this
discussion, the term "Underwriter" shall include (a) Wachovia Securities, (b)
Citigroup Securities, (c) JPMorgan Securities, (d) Greenwich Capital, (e) any
person directly or indirectly, through one or more intermediaries, controlling,
controlled by or under common control with Wachovia Securities, Citigroup
Securities, JPMorgan Securities or Greenwich Capital and (f) any member of the
underwriting syndicate or selling group of which Wachovia Securities, Citigroup
Securities, JPMorgan Securities, Greenwich Capital or a person described in (e)
is a manager or co-manager with respect to the Offered Certificates.
The obligations covered by the Exemptions include mortgage loans such as
the Mortgage Loans. The Exemptions would apply to the acquisition, holding and
resale of the Offered Certificates by a Plan only if specific conditions
(certain of which are described below) are met. It is not clear whether the
Exemptions apply to participant directed Plans as described in Section 404(c)
of ERISA or Plans that are subject to Section 4975 of the Code but that are not
subject to Title I of ERISA, such as certain Keogh plans and certain individual
retirement accounts. The Exemptions would not apply to governmental plans,
certain church plans and other employee benefit plans that are not subject to
the prohibited transaction provisions of ERISA or the Code but that may be
subject to Similar Law.
The Exemptions set forth five general conditions that, among others, must
be satisfied for a transaction involving the purchase, sale and holding of the
Offered Certificates by a Plan to be eligible for
S-261
exemptive relief thereunder. First, the acquisition of the Offered Certificates
by a Plan must be on terms, including the price paid for the Certificates, that
are at least as favorable to the Plan as they would be in an arm's-length
transaction with an unrelated party. Second, the Offered Certificates at the
time of acquisition by the Plan must be rated in one of the four highest
generic rating categories by Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc. ("S&P"), Moody's Investors Service, Inc.
("Moody's") or Fitch, Inc. ("Fitch") or any successor thereto (each, an
"NRSRO"). Third, the Trustee cannot be an affiliate of any other member of the
Restricted Group, other than an Underwriter. The "Restricted Group" consists of
each of the Underwriters, the Depositor, the Master Servicer, the Special
Servicer, the Trustee, any sub-servicer and any obligor with respect to
Mortgage Loans constituting more than 5.0% of the aggregate unamortized
principal balance of the Mortgage Loans as of the date of initial issuance of
the Offered Certificates, and any of their affiliates. Fourth, the sum of all
payments made to and retained by any Underwriter in connection with the
distribution or placement of the Offered Certificates must represent not more
than reasonable compensation for underwriting such Certificates; the sum of all
payments made to and retained by the Depositor pursuant to the assignment of
the Mortgage Loans to the Trust Fund must represent not more than the fair
market value of such obligations; and the sum of all payments made to and
retained by the Master Servicer, the Special Servicer or any sub-servicer must
represent not more than reasonable compensation for such person's services
under the Pooling and Servicing Agreement and reimbursement of such person's
reasonable expenses in connection therewith. Fifth, the investing Plan must be
an accredited investor as defined in Rule 501(a)(1) of Regulation D of the
Securities and Exchange Commission under the Securities Act.
A fiduciary of a Plan contemplating purchasing any Class of the Offered
Certificates must make its own determination that, at the time of such
purchase, such Certificates satisfy the general conditions set forth above.
The Exemptions also require that the Trust Fund meet the following
requirements: (i) the Trust Fund must consist solely of assets of the type that
have been included in other investment pools; (ii) certificates in such other
investment pools must have been rated in one of the four highest generic rating
categories by S&P, Moody's or Fitch for at least one year prior to the Plan's
acquisition of the Offered Certificates; and (iii) certificates in such other
investment pools must have been purchased by investors other than Plans for at
least one year prior to any Plan's acquisition of the Offered Certificates.
If the general conditions of the Exemptions are satisfied, the Exemptions
may provide an exemption from the restrictions imposed by Sections 406(a) and
407(a) of ERISA (as well as the excise taxes imposed by Sections 4975(a) and
(b) of the Code by reason of Sections 4975(c)(1)(A) through (D) of the Code) in
connection with (i) the direct or indirect sale, exchange or transfer of the
Offered Certificates in the initial issuance of Certificates between the
Depositor or an Underwriter and a Plan when the Depositor, an Underwriter, the
Trustee, the Master Servicer, the Special Servicer, a sub-servicer or an
obligor with respect to Mortgage Loans is a "Party in Interest," as defined in
the accompanying prospectus, with respect to the investing Plan, (ii) the
direct or indirect acquisition or disposition in the secondary market of the
Offered Certificates by a Plan and (iii) the holding of Offered Certificates by
a Plan. However, no exemption is provided from the restrictions of Sections
406(a)(1)(E), 406(a)(2) and 407 of ERISA for the acquisition or holding of the
Offered Certificate on behalf of an "Excluded Plan" by any person who has
discretionary authority or renders investment advice with respect to the assets
of such Excluded Plan. For purposes hereof, an Excluded Plan is a Plan
sponsored by any member of the Restricted Group.
If certain specific conditions of the Exemptions are also satisfied, each
such Exemption may provide relief from the restrictions imposed by reason of
Sections 406(b)(1) and (b)(2) of ERISA and the taxes imposed by Section
4975(c)(1)(E) of the Code to an obligor with respect to Mortgage Loans acting
as a fiduciary with respect to the investment of a Plan's assets in the Offered
Certificates (or such obligor's affiliate) only if, among other requirements
(i) such obligor is an obligor with respect to 5% or less of the fair market
value of the obligations or receivables contained in the trust, (ii) the
investing Plan is not an Excluded Plan, (iii) a Plan's investment in each Class
of the Offered Certificates does not exceed 25% of all of the Certificates of
that Class outstanding at the time of the acquisition, (iv) immediately after
the acquisition, no more than 25% of the assets of the Plan are invested in
certificates representing an interest in trusts (including the Trust Fund)
containing assets sold or serviced by the Depositor or the Master Servicer and
(v) in the case of the acquisition of the Offered Certificates in connection
with their initial
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issuance, at least 50% of each Class of Offered Certificates in which Plans
have invested and at least 50% of the aggregate interest in the Trust Fund is
acquired by persons independent of the Restricted Group.
The Exemptions also apply to transactions in connection with the
servicing, management and operation of the Trust Fund, provided that, in
addition to the general requirements described above, (a) such transactions are
carried out in accordance with the terms of a binding pooling and servicing
agreement, (b) the pooling and servicing agreement is provided to, or described
in all material respects in the prospectus or private placement memorandum
provided to, investing Plans before their purchase of Certificates issued by
the Trust Fund and (c) the terms and conditions for the defeasance of a
mortgage obligation and substitution of a new mortgage obligation, as so
described, have been approved by an NRSRO and do not result in any Offered
Certificates receiving a lower credit rating from the NRSRO than the current
rating. The Pooling and Servicing Agreement is a pooling and servicing
agreement as defined in the Exemptions. The Pooling and Servicing Agreement
provides that all transactions relating to the servicing, management and
operations of the Trust Fund must be carried out in accordance with the Pooling
and Servicing Agreement.
Before purchasing any Class of Offered Certificate, a fiduciary of a Plan
should itself confirm that the specific and general conditions of the
Exemptions and the other requirements set forth in the Exemptions would be
satisfied.
Any Plan fiduciary considering the purchase of Offered Certificates should
consult with its counsel with respect to the applicability of the Exemptions
and other issues and determine on its own whether all conditions have been
satisfied and whether the Offered Certificates are an appropriate investment
for a Plan under ERISA and the Code (or, in the case of governmental plans and
certain church plans, under Similar Law) with regard to ERISA's general
fiduciary requirements, including investment prudence and diversification and
the exclusive benefit rule. Each purchaser of the Offered Certificates with the
assets of one or more Plans shall be deemed to represent that each such Plan
qualifies as an "accredited investor" as defined in Rule 501(a)(1) of
Regulation D under the Securities Act. No Plan may purchase or hold an interest
in any Class of Offered Certificates unless (a) such Certificates are rated in
one of the top four generic rating categories by at least one NRSRO at the time
of such purchase or (b) such Plan is an insurance company general account that
represents and warrants that it is eligible for, and meets all of the
requirements of, Sections I and III of Prohibited Transaction Class Exemption
95-60.
THE SALE OF OFFERED CERTIFICATES TO A PLAN IS IN NO RESPECT A
REPRESENTATION OR WARRANTY BY THE DEPOSITOR, THE UNDERWRITERS OR ANY OTHER
PERSON THAT THIS INVESTMENT MEETS ALL RELEVANT LEGAL REQUIREMENTS WITH RESPECT
TO INVESTMENTS BY PLANS GENERALLY OR ANY PARTICULAR PLAN, THAT THE EXEMPTIONS
WOULD APPLY TO THE ACQUISITION OF THIS INVESTMENT BY PLANS IN GENERAL OR ANY
PARTICULAR PLAN, OR THAT THIS INVESTMENT IS APPROPRIATE FOR PLANS GENERALLY OR
ANY PARTICULAR PLAN.
LEGAL INVESTMENT
The Offered Certificates will not constitute "mortgage related securities"
for the purposes of the Secondary Mortgage Market Enhancement Act of 1984, as
amended. The appropriate characterization of the Offered Certificates under
various legal investment restrictions, and thus the ability of investors
subject to these restrictions to purchase the Offered Certificates, is subject
to significant interpretive uncertainties. No representations are made as to
the proper characterization of the Offered Certificates for legal investment,
financial institution regulatory, or other purposes, or as to the ability of
particular investors to purchase the Offered Certificates under applicable
legal investment restrictions. The uncertainties described above (and any
future determinations concerning the legal investment or financial institution
regulatory characteristics of the Offered Certificates) may adversely affect
the liquidity of the Offered Certificates. Accordingly, all investors whose
investment activities are subject to legal investment laws and regulations,
regulatory capital requirements or review by regulatory authorities should
consult with their own legal advisors in determining whether and to what extent
the Offered Certificates constitute legal investments for them or are subject
to investment, capital or other restrictions. See "LEGAL INVESTMENT" in the
accompanying prospectus.
S-263
METHOD OF DISTRIBUTION
Subject to the terms and conditions set forth in the underwriting
agreement (the "Underwriting Agreement") among the Depositor and Wachovia
Securities, Citigroup Securities, JPMorgan Securities and Greenwich Capital
(collectively, the "Underwriters"), the Depositor has agreed to sell to each of
Wachovia Securities, Citigroup Securities, JPMorgan Securities and Greenwich,
and each of Wachovia Securities, Citigroup Securities, JPMorgan Securities and
Greenwich has agreed to purchase, severally but not jointly, the respective
Certificate Balances as applicable, of each Class of the Offered Certificates
as set forth below, subject in each case to a variance of 5%:
CLASS WACHOVIA SECURITIES CITIGROUP SECURITIES JPMORGAN SECURITIES GREENWICH CAPITAL
- -------------------- --------------------- ---------------------- --------------------- ------------------
Class A-1 .......... $ 43,428,317 $ 6,571,683
Class A-2 .......... $172,844,702 $26,155,298
Class A-3 .......... $ 71,222,440 $10,777,560
Class A-4 .......... $369,032,992 $55,843,008 $25,000,000 $25,000,000
Class B ............ $ 21,929,563 $ 3,318,437
Class C ............ $ 8,079,404 $ 1,222,596
Class D ............ $ 19,620,914 $ 2,969,086
Class E ............ $ 9,232,860 $ 1,397,140
Wachovia Securities and Citigroup Securities are acting as co-lead
managers for this offering and JPMorgan Securities and Greenwich Capital are
acting as co-managers for this offering. Citigroup Securities is acting as sole
bookrunner with respect to 29.42% of the Class A-4 Certificates. Wachovia
Securities is acting as sole bookrunner with respect to the remainder of the
Class A-4 Certificates and all other Classes of the Offered Certificates.
Proceeds to the Depositor from the sale of the Offered Certificates,
before deducting expenses payable by the Depositor, will be approximately
$868,814,090, which includes accrued interest.
Distribution of the Offered Certificates will be made by each Underwriter
from time to time in negotiated transactions or otherwise at varying prices to
be determined at the time of sale. Wachovia Securities or one of its affiliates
may purchase a portion of certain Classes of the Offered Certificates, purchase
certain Offered Certificates for its own account or sell certain Offered
Certificates to one of its affiliates. Sales of the Offered Certificates may
also occur on the Closing Date and other dates after the Closing Date, as
agreed upon in negotiated transactions with various purchasers. Each
Underwriter may effect such transactions by selling the Offered Certificates to
or through dealers, and such dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from such Underwriter. In
connection with the purchase and sale of the Offered Certificates, Wachovia
Securities, Citigroup Securities, JPMorgan Securities and Greenwich Capital may
be deemed to have received compensation from the Depositor in the form of
underwriting discounts. Each Underwriter and any dealers that participate with
any Underwriter in the distribution of the Offered Certificates may be deemed
to be underwriters and any profit on the resale of the Offered Certificates
positioned by them may be deemed to be underwriting discounts and commissions
under the Securities Act.
Purchasers of the Offered Certificates, including dealers, may, depending
on the facts and circumstances of such purchases, be deemed to be
"underwriters" within the meaning of the Securities Act in connection with
reoffers and sales by them of Offered Certificates. Certificateholders should
consult with their legal advisors in this regard prior to any such reoffer or
sale.
The Depositor also has been advised by the Underwriters that each of them,
through one or more of its affiliates, currently intends to make a market in
the Offered Certificates; however, none of the Underwriters has any obligation
to do so, any market making may be discontinued at any time and there can be no
assurance that an active secondary market for the Offered Certificates will
develop. See "RISK FACTORS--Liquidity for Certificates May Be Limited" in this
prospectus supplement and "RISK FACTORS--Your Ability to Resell Certificates
May Be Limited Because of Their Characteristics" in the accompanying
prospectus.
This prospectus supplement and the accompanying prospectus may be used by
the Depositor, Wachovia Securities, an affiliate of the Depositor, and any
other affiliate of the Depositor when required
S-264
under the federal securities laws in connection with offers and sales of
Offered Certificates in furtherance of market-making activities in Offered
Certificates. Wachovia Securities or any such other affiliate may act as
principal or agent in such transactions. Such sales will be made at prices
related to prevailing market prices at the time of sale or otherwise.
The Depositor has agreed to indemnify each Underwriter and each person, if
any, who controls any Underwriter within the meaning of Section 15 of the
Securities Act against, or make contributions to each Underwriter and each such
controlling person with respect to, certain liabilities, including liabilities
under the Securities Act.
Wachovia Securities, one of the Underwriters, is an affiliate of the
Depositor and Wachovia Bank, National Association, which is one of the Mortgage
Loan Sellers and the Master Servicer. Citigroup Securities, one of the
Underwriters, is an affiliate of Citigroup Global Markets Realty Corp., a
Mortgage Loan Seller.
LEGAL MATTERS
Certain legal matters will be passed upon for the Depositor by Cadwalader,
Wickersham & Taft LLP, Charlotte, North Carolina. Certain legal matters will be
passed upon for the Underwriters by Dechert LLP, Charlotte, North Carolina.
RATINGS
The Offered Certificates are required as a condition of their issuance to
have received the following ratings from S&P and Fitch (the "Rating Agencies"):
EXPECTED
RATINGS FROM
CLASS S&P/FITCH
- -------------------------------------------------------- -------------------
Class A-1 ......................................... AAA/AAA
Class A-2 ......................................... AAA/AAA
Class A-3 ......................................... AAA/AAA
Class A-4 ......................................... AAA/AAA
Class B ........................................... AA/AA
Class C ........................................... AA-/AA-
Class D ........................................... A/A
Class E ........................................... A-/A-
The ratings on the Offered Certificates address the likelihood of timely
receipt by holders thereof of all distributions of interest to which they are
entitled and distributions of principal by the Rated Final Distribution Date
set forth on the cover page of this prospectus supplement. The ratings take
into consideration the credit quality of the Mortgage Pool, structural and
legal aspects associated with the Offered Certificates, and the extent to which
the payment stream from the Mortgage Pool is adequate to make payments required
under the Offered Certificates. In addition, rating adjustments may result from
a change in the financial position of the Trustee or the Fiscal Agent as
back-up liquidity providers. A security rating does not represent any
assessment of the yield to maturity that investors may experience. In addition,
a rating does not address (i) the likelihood or frequency of voluntary or
mandatory prepayments of Mortgage Loans, (ii) the degree to which such
prepayments might differ from those originally anticipated, (iii) payment of
Additional Interest or net default interest, (iv) whether and to what extent
payments of Prepayment Premiums or Yield Maintenance Charges will be received
or the corresponding effect on yield to investors or (v) whether and to what
extent Net Aggregate Prepayment Interest Shortfalls will be realized or
allocated to Certificateholders.
There can be no assurance that any rating agency not requested to rate the
Offered Certificates will not nonetheless issue a rating to any or all Classes
thereof and, if so, what such rating or ratings would be. A rating assigned to
any Class of Offered Certificates by a rating agency that has not been
requested by the Depositor to do so may be lower than the rating assigned
thereto by any of the Rating Agencies.
The ratings on the Offered Certificates should be evaluated independently
from similar ratings on other types of securities. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision
or withdrawal at any time by the assigning rating agency. See "RISK FACTORS--
Ratings Do Not Guarantee Payment and Do Not Address Prepayment Risks" in the
accompanying prospectus.
S-265
INDEX OF DEFINED TERMS
PAGE
11 Madison Avenue Companion Loans .........................................S-98
11 Madison Avenue Control Appraisal Period ...............................S-210
11 Madison Avenue Intercreditor Agreement .................................S-99
11 Madison Avenue Loan .............................................S-98, S-156
11 Madison Avenue Loan REMIC ..............................................S-25
11 Madison Avenue Non-Pooled
Component ...................................................S-90, S-98, S-100
11 Madison Avenue Pari Passu I Loan ......................................S-156
11 Madison Avenue Pari Passu II Loan .....................................S-156
11 Madison Avenue Pari Passu IV Loan .....................................S-156
11 Madison Avenue Pari Passu Loans ........................................S-98
11 Madison Avenue Pooled Component............................S-90, S-98, S-100
11 Madison Avenue Senior Loans ............................................S-98
11 Madison Avenue Subordinate Loans ................................S-98, S-156
11 Madison Avenue Whole Loan ..............................................S-98
1130 Connecticut Avenue Loan .............................................S-163
1% ( ) ...................................................................S-108
2004-C10 Controlling Class Representative ................................S-100
2004-C10 Master Servicer .................................................S-100
2004-C10 Pooling and Servicing Agreement .................................S-100
2004-C10 Pooling and Servicing Agreement .................................S-100
2004-C10 Special Servicer ................................................S-100
2004-C10 Trustee .........................................................S-100
2004-C11 Controlling Class Representative ................................S-100
2004-C11 Pooling and Servicing Agreement .................................S-100
24 West 57th Street Loan .................................................S-169
2% ( ) ...................................................................S-108
3% ( ) ...................................................................S-108
Accrued Certificate Interest .............................................S-231
Actual/360 basis ..........................................................S-92
Additional Interest Account ..............................................S-224
Additional Interest .......................................................S-93
Additional Trust Fund Expenses ...........................................S-239
Administrative Cost Rate .................................................S-108
Advance ..................................................................S-241
American Insurance .......................................................S-163
Anticipated Repayment Date ................................................S-93
Aon ......................................................................S-156
Appraisal Reduction Amount ...............................................S-243
ARD Loans .................................................................S-93
Artesia Mortgage Loans ...................................................S-192
Artesia ............................................................S-92, S-192
Assumed Final Distribution Date ..........................................S-248
Assumed Scheduled Payment ................................................S-234
Available Distribution Amount ............................................S-222
Balloon Loans .............................................................S-92
Balloon Payment ...........................................................S-92
Beacon Restaurant ........................................................S-169
Breach ...................................................................S-199
Capital Imp. Reserve .....................................................S-109
PAGE
Certificate Balance ......................................................S-219
Certificate Deferred Interest ............................................S-219
Certificateholders .......................................................S-221
Certificates .............................................................S-216
Citigroup Mortgage Loans .................................................S-192
Citigroup Securities .....................................................S-261
Citigroup .................................................................S-92
Class A Certificates .....................................................S-216
Class MAD Available Distribution Amount ..................................S-223
Class MAD Certificates ...................................................S-216
Class MAD Principal Distribution Amount ..................................S-233
Class ....................................................................S-216
Class IO Certificates ....................................................S-216
Clearstream Participants .................................................S-218
Clearstream ..............................................................S-216
CMSA Bond File ...........................................................S-246
CMSA Collateral Summary File .............................................S-246
CMSA Loan Periodic Update File ...........................................S-246
CMSA Property File .......................................................S-246
CMSA Reconciliation of Funds Report ......................................S-246
CMSA .....................................................................S-246
Co-Lender Loans ...........................................................S-98
Collection Period ........................................................S-221
Companion Loans ...........................................................S-99
Compensating Interest Payment ............................................S-206
Component Balance ........................................................S-219
Component Principal Balance ..............................................S-220
Component ................................................................S-219
Constant Prepayment Rate .................................................S-255
Controlling Class ........................................................S-202
Corrected Mortgage Loan ..................................................S-204
CPR ......................................................................S-255
Crossed Group ............................................................S-199
Crossed Loan .............................................................S-199
Crossroads Plaza Loan ....................................................S-166
CSFB .....................................................................S-156
Custodian ................................................................S-194
Cut-Off Date Balance ......................................................S-90
Cut-Off Date Group Balances ...............................................S-90
Cut-Off Date Group 1 Balance ..............................................S-90
Cut-Off Date Group 2 Balance ..............................................S-90
Cut-Off Date LTV Ratio ...................................................S-107
Cut-Off Date LTV .........................................................S-107
Cut-Off Date Pool Balance .................................................S-90
Cut-Off Date ..............................................................S-90
D ( ) ....................................................................S-108
Darden ...................................................................S-178
Defaulted Mortgage Loan ..................................................S-212
Defeasance Collateral .................................................... S-94
S-266
PAGE
Defeasance ...............................................................S-108
Defect ...................................................................S-199
Depositaries .............................................................S-216
Determination Date .......................................................S-221
Dezenhall Resources ......................................................S-163
Discount Rate ............................................................S-236
Distributable Certificate Interest .......................................S-231
Distribution Account .....................................................S-223
Distribution Date Statement ..............................................S-244
Distribution Date ........................................................S-221
DSC Ratio ................................................................S-106
DSCR .....................................................................S-106
DTC ......................................................................S-216
Due Date ..................................................................S-92
Eastdale Cinemas 8 .......................................................S-172
Eastdale Mall Loan .......................................................S-172
Eckerd ...................................................................S-181
ERISA ....................................................................S-261
Ernst & Young Plaza Cash Collateral Account ..............................S-152
Ernst & Young Plaza Cash Management Bank .................................S-152
Ernst & Young Plaza Casualty Insurance Policy ............................S-149
Ernst & Young Plaza Loan .................................................S-149
Ernst & Young Plaza Lockbox Bank .........................................S-152
Ernst & Young Plaza Lockbox Period .......................................S-152
Ernst & Young Plaza Lockbox ..............................................S-152
Ernst & Young Plaza OREA .................................................S-149
Ernst & Young Plaza Permitted Mezzanine Lender............................S-152
Ernst & Young Plaza Permitted Owner ......................................S-151
Ernst & Young Plaza Qualifying Manager ...................................S-151
Ernst & Young Plaza Restoration ..........................................S-150
Euroclear Operator .......................................................S-216
Euroclear Participants ...................................................S-218
Euroclear System .........................................................S-216
Eurohypo Mortgage Loans ..................................................S-192
Eurohypo ..................................................................S-92
Excess Cash Flow ..........................................................S-93
Excluded Plan ............................................................S-262
Exemption ................................................................S-261
Exemptions ...............................................................S-261
Extra Space Self Storage Portfolio Mortgage Loans.........................S-160
Extra Space ..............................................................S-160
FBN ......................................................................S-178
Final Recovery Determination .............................................S-245
Fiscal Agent .............................................................S-251
Fitch ....................................................................S-262
Form 8-K .................................................................S-200
Fox Valley Apartments Loan ................................................S-98
Fox Valley Apartments Subordinate Loan ....................................S-99
Fox Valley Apartments Whole Loan ..........................................S-99
Fox Valley Intercreditor Agreement ........................................S-99
PAGE
Fully Amortizing Loan .....................................................S-92
Gain on Sale Reserve Account .............................................S-224
Greenwich Capital ........................................................S-261
Hampton Bays Town Center Loan ............................................S-181
IBM ......................................................................S-156
IDA Premises ..............................................................S-91
IDA .......................................................................S-91
Indirect Participants ....................................................S-217
Intercreditor Agreements ..................................................S-99
Interest Accrual Period ..................................................S-220
Interest Reserve Account .................................................S-223
Interest Reserve Amount ..................................................S-223
Interest Reserve Loans ...................................................S-223
IRS ......................................................................S-260
JPMorgan Securities ......................................................S-261
King Kullen ..............................................................S-181
L ( ) ....................................................................S-108
LA Fitness ...............................................................S-178
Liquidation Fee ..........................................................S-206
Loan Group 1 Principal Distribution Amount ...............................S-232
Loan Group 1 ..............................................................S-90
Loan Group 2 Principal Distribution Amount ...............................S-232
Loan Group 2 ..............................................................S-90
Loan Groups ...............................................................S-90
Loan Pair ................................................................S-200
Loan per Sq. Ft., Unit, Pad or Room ......................................S-107
Lockout Period ...........................................................S-108
Lockout ..................................................................S-108
LTV at ARD or Maturity ...................................................S-107
Majority Subordinate Certificateholder ...................................S-249
Marian Goodman Gallery ...................................................S-169
Master Servicer ..........................................................S-201
Master Servicing Fee Rate ................................................S-205
Master Servicing Fee .....................................................S-205
Maturity Date LTV Ratio ..................................................S-107
Moody's ..................................................................S-262
Mortgage Deferred Interest ...............................................S-219
Mortgage File ............................................................S-194
Mortgage Loan Purchase Agreement .........................................S-192
Mortgage Loan Purchase Agreements ........................................S-192
Mortgage Loan .............................................................S-90
Mortgage Loans .....................................................S-90, S-205
Mortgage Note .............................................................S-90
Mortgage Pool .............................................................S-90
Mortgage Rate .............................................................S-92
Mortgage ..................................................................S-90
Mortgaged Property ........................................................S-90
Mountain View Apartments Loan .............................................S-98
Mountain View Apartments Subordinate Loan .................................S-99
Mountain View Apartments Whole Loan .......................................S-99
S-267
PAGE
Mountain View Intercreditor Agreement .....................................S-99
NA .......................................................................S-109
NAV ......................................................................S-109
Net Aggregate Prepayment Interest Shortfall ..............................S-231
Net Mortgage Rate ........................................................S-220
NGP ......................................................................S-175
Non-Offered Certificates .................................................S-216
Nonrecoverable P&I Advance ...............................................S-241
Notional Amount ..........................................................S-219
NRSRO ....................................................................S-262
O ( ) ....................................................................S-108
Occupancy Percentage .....................................................S-108
Offered Certificates .....................................................S-216
OID Regulations ..........................................................S-260
Olive Garden .............................................................S-178
Omnicom ..................................................................S-157
One Riverview Square Loan ................................................S-175
Open Period ..............................................................S-108
Option Price .............................................................S-213
Original Term to Maturity ................................................S-108
P&I Advance ..............................................................S-239
Parisian .................................................................S-172
Participants .............................................................S-216
Party in Interest ........................................................S-262
Periodic Payments .........................................................S-92
Plan .....................................................................S-261
Pointe at Wellington Loan ................................................S-178
Pooling and Servicing Agreement ..........................................S-216
Prepayment Interest Excess ...............................................S-206
Prepayment Interest Shortfall ............................................S-206
Prepayment Premiums ......................................................S-235
Primary Collateral .......................................................S-199
Principal Distribution Amount ............................................S-232
Privileged Person ........................................................S-247
PTE ......................................................................S-261
Purchase Option ..........................................................S-213
Purchase Price ...........................................................S-195
Qualified Appraiser ......................................................S-243
Qualified Substitute Mortgage Loan .......................................S-196
Rated Final Distribution Date ............................................S-249
Rating Agencies ..........................................................S-265
Realized Losses ..........................................................S-238
Reimbursement Rate .......................................................S-241
REIT .....................................................................S-260
Related Proceeds .........................................................S-240
Remaining Amortization Term ..............................................S-108
Remaining Term to Maturity ...............................................S-108
REMIC Administrator ......................................................S-251
REMIC Regular Certificates ...............................................S-216
REMIC Regulations ........................................................S-259
PAGE
REMIC Residual Certificates ..............................................S-216
REMIC .....................................................................S-25
REMIC I ...................................................................S-25
REMIC II ..................................................................S-25
Rental Property ..........................................................S-106
REO Extension ............................................................S-213
REO Mortgage Loan ........................................................S-235
REO Property .............................................................S-204
Replacement Reserve ......................................................S-109
Required Appraisal Date ..................................................S-242
Required Appraisal Loan ..................................................S-242
Restricted Group .........................................................S-262
Restricted Servicer Reports ..............................................S-246
Rules ....................................................................S-217
S&P ......................................................................S-262
Scenario .................................................................S-255
Scheduled Payment ........................................................S-234
Sears ....................................................................S-172
Sequential Pay Certificates ..............................................S-216
Servicing Fees ...........................................................S-206
Servicing Standard .......................................................S-200
Servicing Transfer Event .................................................S-203
Similar Law ..............................................................S-261
Special Servicer .........................................................S-202
Special Servicing Fee Rate ...............................................S-206
Special Servicing Fee ....................................................S-206
Specially Serviced Mortgage Loans ........................................S-204
Specially Serviced Trust Fund Assets .....................................S-204
Starpower Communications .................................................S-163
Stated Principal Balance .................................................S-221
Strip Rate ...............................................................S-220
Subordinate Certificates .................................................S-216
Subordinate Companion Loans ...............................................S-99
Substitution Shortfall Amount ............................................S-195
Table Assumptions .................................................S-248, S-256
Terms and Conditions .....................................................S-218
Thomasville Furniture ....................................................S-178
TI/LC Reserve ............................................................S-109
Timberland ...............................................................S-169
Town of Southampton ......................................................S-181
Trizec ...................................................................S-149
Trust Fund ...............................................................S-216
Trustee Fee ..............................................................S-250
Trustee ..................................................................S-250
Underwriter ..............................................................S-261
Underwriters .............................................................S-264
Underwriting Agreement ...................................................S-263
Underwritten Replacement Reserves ........................................S-108
Unrestricted Servicer Reports ............................................S-246
Voting Rights ............................................................S-249
S-268
PAGE
Wachovia Mortgage Loans ..................................................S-192
Wachovia Securities ......................................................S-261
Wachovia ..................................................................S-91
Weighted Average Net Mortgage Rate .......................................S-220
weighted averages ........................................................S-108
Workout Fee ..............................................................S-207
PAGE
Workout-Delayed Reimbursement Amount .....................................S-241
Year Built ...............................................................S-108
Yield Maintenance Charges ................................................S-235
YM ( ) ...................................................................S-108
S-269
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WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2004-C12
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS AND MORTGAGED PROPERTIES
ANNEX A-1
- ---------
MORTGAGE
LOAN LOAN GROUP
NUMBER NUMBER PROPERTY NAME ADDRESS
- ------------------------------------------------------------------------------------------------------------------------------------
1 1 Ernst & Young Plaza 725 & 735 South Figueroa Street
2 1 11 Madison Avenue(1) 11 Madison Avenue
3 1 1130 Connecticut Avenue 1130 Connecticut Avenue, NW
4 1 Crossroads Plaza 213 Crossroads Boulevard
5 1 24 West 57th Street 24 West 57th Street
6 1 Eastdale Mall 1031 - 1240 Eastdale Circle
7 1 One Riverview Square 333 South Miami Avenue
8 1 Pointe at Wellington 10200 Forest Hill Boulevard
9 1 Hampton Bays Town Center 52 East Montauk Highway
10 2 Highland Pinetree Apartments 1501 South Highland
11 1 Cowesset Corners 300 Quaker Lane
12 2 Montelena Apartments 2261 West Valley Boulevard
13 1 Glenridge Pointe Office Buildings 100 and 200 Glenridge Parkway
14 1 ConAgra Distribution Facility 1000 Oates Court
15 1 Broadstone Heights Apartments 8100 Barstow Street N.E.
16 1 Greenpoint Industrial Center 236-276 Greenpoint Avenue
17 1 Highridge Centre 3920 Arkwright Road
18 2 The Lake Apartments 2800-2842 East Madison Avenue
19 1 Country Manor Mobile Home Park 2 Apple Alley
20 1 Washington Park Mall 2350 SE Washington Boulevard
21 1 Flamingo Promenade 10120 Flamingo Road
22 1 570 Polaris Parkway 570 Polaris Parkway
23 1 255 Rockville Pike 255 Rockville Pike
24 1 Extra Space Self Storage - Lawrenceville, NJ 2870 Brunswick Pike
25 1 The Mall at Waycross 2215 Memorial Drive
26 1 Ridgewood Village Shopping Center 2940 South First Street
27 1 Mountain View Apartments 3708 Lodge Drive
28 1 Extra Space Self Storage - Hazlet, NJ 1110 Route 36
29 2 Erie Shore Landing Apartments 5115 Lake Road
30 2 Metropolitan Place Apartments 232 Burnett Avenue South
31 2 The Lighthouse Apartments 2851 South Decatur Boulevard
32 1 Meadow Creek Office Park 22510, 22516, 22525, 22526, 22530 and 22619 SE 64th Place
33 1 Marriott Courtyard Hotel - Cranbury, NJ 420 Forsgate Drive
34 1 830 Boylston Street 830 Boylston Street
35 1 Eastgate Center 9801 Gateway West Boulevard
36 1 The McLean Commercial Center 6849 Old Dominion Drive
37 1 4th Street Retail 1700,1710,1738 5th Street & 1717,1731,1785,1789,1791,1793,1795,
1799 4th Street and 723 Delaware Street
38 1 Somerset Park 7710, 7720 and 7730 West Sahara Avenue
39 2 Sunrise Center Apartments 5849 Sunrise Vista Drive
40 1 Linens 'n Things Distribution Center 1109 Commerce Boulevard
41 1 Logger Creek Apartments 298, 320, 332, 344, 356, 378, and 390 West Hale Street
42 1 Regency Mall 1570 Oakland Avenue
43 1 Spring Hill Suites Hotel - Tampa, FL 4835 Cypress Street
44 1 Northside Medical Plaza NWC of 58th Avenue & 49th Street
45 1 Extra Space Self Storage - Torrance, CA 17575 South Western Avenue
46 2 Promenade Apartments 3215 NE 143rd Street
47 1 Barnes & Noble Center 4935 South 76th Street
48 1 Ballenger Creek Mini-Storage 4971 New Design Road
49 1 AT&T Wireless - Santa Clara, CA 3205 Bassett Street
50 1 Marriott Courtyard Hotel - Myrtle Beach, SC 1000 Commons Boulevard
51 1 Watchung Hills Office Center 76 Stirling Road
52 1 Extra Space Self Storage - North Miami, FL 13050 & 13101 Northeast 16th Avenue
53 1 Monroe Plaza Shopping Center 19813-19999 State Route 2
54 1 Crescent Business Center 10404 & 10408 Lakeridge Center Parkway
55 1 Koll-Lyon Plaza Office Building 1641 North First Street
56 2 Burnett Station Apartments 339 Burnett Avenue South
57 1 Clearview Commons at Superstition Springs 7205 & 7211 East Southern Avenue
58 1 Ballenger Commerce Center 4640 & 4650 Wedgewood Boulevard
59 1 Great American Plaza Retail Center 8320 & 8380 West Sahara Boulevard
60 1 Plaza Del Centro 501-569 East Palmdale Boulevard
61 1 Extra Space Self Storage - Livermore, CA 5888 Northfront Road
62 1 Callabridge Commons 3605-3635 Mt. Holly-Huntersville Road
63 2 Alpine Village Apartments 2071 Alpine Village
64 1 Extra Space Self Storage - Richmond, CA 4031 Lakeside Drive
65 1 Shurgard Colonialtown - Orlando, FL 1023 North Mills Avenue
66 1 Extra Space Self Storage - Glendale, CA 5120 San Fernando Road
67 1 7904 N. Sam Houston Parkway West 7904 North Sam Houston Parkway West
68 1 Great American Plaza Building A 8350 West Sahara Boulevard
69 2 1025 West Hollywood Apartments 1025 West Hollywood Avenue
70 1 Extra Space Self Storage - Hawthorne, CA 12830 Roselle Avenue
71 1 Best Buy - Las Cruces, NM 2280 East Lohman Avenue
72 1 8475 S Eastern Avenue 8475 South Eastern Avenue
73 1 Walgreens - Huntersville, NC 16711 Birkdale Commons Parkway
74 1 Extra Space Self Storage - San Bernardino, C 155 West Club Center Drive
75 1 Walgreens - Boston, MA 130 Bowdoin Street
76 1 Alverser Plaza 1200 Alverser Drive
77 1 Walgreens - Katy, TX 6802 South Fry Road
78 1 Crossroads Shopping Center 2100 East Victory Drive
79 1 T.J. Maxx - Staunton, VA 81 Orchard Hill Circle
80 1 Phoenix Crossing Shopping Center 810, 826 and 908 Fayetteville Street
81 1 Walgreens - Wichita Falls, TX 4600 Kell Boulevard
82 1 Walgreens - Crossville, TN 82 Elmore Road
83 2 Town and Country Apartments 2927 Marconi Avenue
84 1 Walgreens - Port Charlotte, FL 1930 Kings Highway
85 1 Extra Space Self Storage - Claremont, CA 775 South Mills Avenue
86 1 Airborne Express Warehouse 6101 Fallard Drive
87 1 Wal-Mart - Port Jefferson, NY 3990 Nesconset Highway (Rt. 347)
88 1 Walgreens - Pensacola, FL 700 North Pace Boulevard
89 1 Extra Space Self Storage - Kearns, UT 5520 S 3915 W
90 2 Fox Valley Apartments 601 Valley Avenue
91 2 Treehaven Apartments 400 Pinewood Drive
92 1 Staples - Angola, IN 1211 North Wayne Street
93 1 Eckerd - Charlotte, NC 5200 Albemarle Road
94 1 Walgreens - Tulsa, OK 4971 South Memorial Drive
95 1 Food Lion - Ormond Beach, FL 101 East Granada Boulevard
96 2 Henry Whipple Apartments Various
96.1 Whipple Drive Apartments 1711 Whipple Drive
96.2 The Henry 10 Broad Street
MORTGAGE
LOAN CROSS COLLATERALIZED AND CROSS LOAN GENERAL PROPERTY
NUMBER CITY STATE ZIP CODE DEFAULTED LOAN FLAG ORIGINATOR TYPE
- ---------------------------------------------------------------------------------------------------------------------------------
1 Los Angeles CA 90017 Eurohypo Office
2 New York NY 10010 Wachovia Office
3 Washington DC 20036 Wachovia Office
4 Cary NC 27511 Citigroup Retail
5 New York NY 10019 Wachovia Office
6 Montgomery AL 36117 Wachovia Retail
7 Miami FL 33130 Artesia Office
8 Wellington FL 33041 Wachovia Retail
9 Hampton Bays NY 11946 Wachovia Retail
10 Fullerton CA 92832 Wachovia Multifamily
11 Warwick RI 02886 Wachovia Retail
12 Pomona CA 91768 Wachovia Multifamily
13 Atlanta GA 30342 Wachovia Office
14 Modesto CA 95358 Wachovia Industrial
15 Albuquerque NM 87113 Wachovia Multifamily
16 Brooklyn NY 11222 Wachovia Industrial
17 Macon GA 31210 Citigroup Office
18 Fullerton CA 92831 Wachovia Multifamily
19 Middlesex Township PA 17013 Wachovia Mobile Home Park
20 Bartlesville OK 74006 Eurohypo Retail
21 Las Vegas NV 89147 Wachovia Retail
22 Westerville OH 43082 Citigroup Office
23 Rockville MD 20850 Citigroup Office
24 Lawrenceville NJ 08648 Extra Space Self Storage Portfolio Wachovia Self Storage
25 Waycross GA 31501 Citigroup Retail
26 Garland TX 75041 Artesia Retail
27 Hoover AL 35216 Wachovia Multifamily
28 Hazlet NJ 07730 Extra Space Self Storage Portfolio Wachovia Self Storage
29 Sheffield Lake OH 44054 Wachovia Multifamily
30 Renton WA 98055 Artesia Multifamily
31 Las Vegas NV 89102 Wachovia Multifamily
32 Issaquah WA 98027 Artesia Office
33 Cranbury NJ 08512 Wachovia Hospitality
34 Brookline MA 02467 Citigroup Office
35 El Paso TX 79225 Wachovia Retail
36 McLean VA 22101 Wachovia Office
37 Berkeley CA 94710 Artesia Retail
38 Las Vegas NV 89117 Citigroup Office
39 Citrus Heights CA 95610 Artesia Multifamily
40 Logan Township NJ 08085 Wachovia Industrial
41 Boise ID 83706 Artesia Multifamily
42 Indiana PA 15701 Artesia Retail
43 Tampa FL 33635 Wachovia Hospitality
44 St Petersburg FL 33709 Wachovia Office
45 Torrance CA 90248 Extra Space Self Storage Portfolio Wachovia Self Storage
46 Seattle WA 98125 Artesia Multifamily
47 Greenfield WI 53220 Citigroup Retail
48 Frederick MD 21703 Wachovia Self Storage
49 Santa Clara CA 95054 Cole Company Portfolio Wachovia Industrial
50 Myrtle Beach SC 29572 Wachovia Hospitality
51 Warren NJ 07059 Artesia Office
52 North Miami FL 33181 Extra Space Self Storage Portfolio Wachovia Self Storage
53 Monroe WA 98272 Artesia Retail
54 Ashland VA 23005 Wachovia Industrial
55 San Jose CA 95112 Wachovia Office
56 Renton WA 98055 Artesia Multifamily
57 Mesa AZ 85208 Wachovia Mixed Use
58 Frederick MD 21703 Wachovia Industrial
59 Las Vegas NV 89117 Wachovia Retail
60 Palmdale CA 93550 Citigroup Retail
61 Livermore CA 94551 Extra Space Self Storage Portfolio Wachovia Self Storage
62 Charlotte NC 28216 Artesia Retail
63 Hoover AL 35216 Wachovia Multifamily
64 Richmond CA 94806 Extra Space Self Storage Portfolio Wachovia Self Storage
65 Orlando FL 32803 Wachovia Self Storage
66 Glendale CA 91204 Extra Space Self Storage Portfolio Wachovia Self Storage
67 Houston TX 77064 Artesia Office
68 Las Vegas NV 89117 Wachovia Office
69 Chicago IL 60660 Artesia Multifamily
70 Hawthorne CA 90250 Extra Space Self Storage Portfolio Wachovia Self Storage
71 Las Cruces NM 88001 Cole Company Portfolio Wachovia Retail
72 Las Vegas NV 89123 Citigroup Office
73 Huntersville NC 28078 Wachovia Retail
74 San Bernardino CA 92408 Extra Space Self Storage Portfolio Wachovia Self Storage
75 Boston MA 02108 Artesia Retail
76 Midlothian VA 23113 Wachovia Retail
77 Katy TX 77494 Artesia Retail
78 Savannah GA 31404 Wachovia Retail
79 Staunton VA 24401 Cole Company Portfolio Wachovia Retail
80 Durham NC 27701 Artesia Retail
81 Wichita Falls TX 76310 Artesia Retail
82 Crossville TN 38555 Cole Company Portfolio Wachovia Retail
83 Sacramento CA 95821 Artesia Multifamily
84 Port Charlotte FL 33980 Artesia Retail
85 Claremont CA 91711 Extra Space Self Storage Portfolio Wachovia Self Storage
86 Upper Marlboro MD 20772 Wachovia Industrial
87 South Setauket NY 11733 Wachovia Land
88 Pensacola FL 32505 Artesia Retail
89 Kearns UT 84118 Extra Space Self Storage Portfolio Wachovia Self Storage
90 Birmingham AL 35209 Wachovia Multifamily
91 Summerville SC 29483 Artesia Multifamily
92 Angola IN 46703 Cole Company Portfolio Wachovia Retail
93 Charlotte NC 28212 Wachovia Retail
94 Tulsa OK 74145 Cole Company Portfolio Wachovia Retail
95 Ormond Beach FL 32176 Artesia Retail
96 Various VA Various Wachovia Multifamily
96.1 Blacksburg VA 24060 Multifamily
96.2 Martinsville VA 24112 Multifamily
MORTGAGE CUT-OFF DATE % OF AGGREGATE % OF LOAN % OF LOAN
LOAN SPECIFIC ORIGINAL LOAN LOAN BALANCE CUT-OFF DATE GROUP 1 GROUP 2 ORIGINATION
NUMBER PROPERTY TYPE BALANCE ($) ($) BALANCE BALANCE BALANCE DATE
- ----------------------------------------------------------------------------------------------------------------------------------
1 CBD 120,000,000.00 119,298,859.34 11.22% 12.58% 01/28/04
2 CBD 82,000,000.00 82,000,000.00 7.71% 8.65% 12/23/03
3 CBD 58,500,000.00 58,500,000.00 5.50% 6.17% 04/21/04
4 Anchored 57,500,000.00 57,500,000.00 5.41% 6.06% 05/05/04
5 CBD 35,000,000.00 35,000,000.00 3.29% 3.69% 05/21/04
6 Anchored 32,600,000.00 32,563,845.00 3.06% 3.43% 05/28/04
7 CBD 30,000,000.00 30,000,000.00 2.82% 3.16% 05/07/04
8 Shadow Anchored 23,000,000.00 22,856,382.58 2.15% 2.41% 12/11/03
9 Anchored 20,500,000.00 20,500,000.00 1.93% 2.16% 05/21/04
10 Conventional 18,200,000.00 18,200,000.00 1.71% 15.82% 04/29/04
11 Anchored 17,430,000.00 17,430,000.00 1.64% 1.84% 05/18/04
12 Conventional 17,000,000.00 17,000,000.00 1.60% 14.78% 03/29/04
13 Suburban 16,500,000.00 16,500,000.00 1.55% 1.74% 05/06/04
14 Warehouse 16,400,000.00 16,400,000.00 1.54% 1.73% 06/15/04
15 Conventional 15,250,000.00 15,250,000.00 1.43% 1.61% 04/22/04
16 Light Industrial 15,000,000.00 14,983,704.82 1.41% 1.58% 05/21/04
17 Suburban 14,500,000.00 14,466,761.14 1.36% 1.53% 04/22/04
18 Conventional 14,000,000.00 14,000,000.00 1.32% 12.17% 05/12/04
19 Mobile Home Park 13,440,000.00 13,424,059.10 1.26% 1.42% 05/12/04
20 Anchored 13,050,000.00 13,007,712.59 1.22% 1.37% 03/01/04
21 Anchored 13,000,000.00 13,000,000.00 1.22% 1.37% 06/14/04
22 Suburban 12,725,000.00 12,725,000.00 1.20% 1.34% 05/20/04
23 Suburban 12,000,000.00 11,976,706.37 1.13% 1.26% 04/29/04
24 Self Storage 11,946,000.00 11,946,000.00 1.12% 1.26% 06/01/04
25 Anchored 11,440,000.00 11,415,737.30 1.07% 1.20% 04/30/04
26 Anchored 11,000,000.00 10,973,121.93 1.03% 1.16% 05/12/04
27 Conventional 10,960,000.00 10,960,000.00 1.03% 1.16% 05/28/04
28 Self Storage 10,560,000.00 10,560,000.00 0.99% 1.11% 06/01/04
29 Conventional 9,900,000.00 9,890,068.85 0.93% 8.60% 05/21/04
30 Conventional/Parking 9,400,000.00 9,400,000.00 0.88% 8.17% 05/26/04
31 Conventional 9,300,000.00 9,300,000.00 0.87% 8.08% 05/05/04
32 Suburban 9,120,000.00 9,109,421.41 0.86% 0.96% 06/01/04
33 Limited Service 9,000,000.00 8,985,982.13 0.85% 0.95% 05/26/04
34 Medical 8,875,000.00 8,864,355.96 0.83% 0.93% 05/24/04
35 Anchored 8,800,000.00 8,790,742.31 0.83% 0.93% 05/25/04
36 Suburban 8,500,000.00 8,481,194.26 0.80% 0.89% 05/04/04
37 Anchored 8,000,000.00 8,000,000.00 0.75% 0.84% 06/09/04
38 Medical 7,800,000.00 7,792,868.84 0.73% 0.82% 05/12/04
39 Conventional 7,800,000.00 7,774,495.03 0.73% 6.76% 03/22/04
40 Warehouse 7,690,000.00 7,690,000.00 0.72% 0.81% 04/09/04
41 Conventional 7,600,000.00 7,584,424.08 0.71% 0.80% 04/26/04
42 Anchored 7,500,000.00 7,500,000.00 0.71% 0.79% 06/17/04
43 Limited Service 7,300,000.00 7,288,629.94 0.69% 0.77% 05/26/04
44 Medical 7,250,000.00 7,250,000.00 0.68% 0.76% 06/15/04
45 Self Storage 6,960,000.00 6,960,000.00 0.65% 0.73% 06/01/04
46 Conventional 6,600,000.00 6,600,000.00 0.62% 5.74% 04/12/04
47 Anchored 6,400,000.00 6,393,451.26 0.60% 0.67% 05/21/04
48 Self Storage 6,300,000.00 6,292,733.14 0.59% 0.66% 05/14/04
49 Light Industrial 6,032,000.00 6,032,000.00 0.57% 0.64% 05/05/04
50 Limited Service 6,020,000.00 6,010,623.60 0.57% 0.63% 05/26/04
51 Suburban 5,900,000.00 5,900,000.00 0.55% 0.62% 06/15/04
52 Self Storage 5,848,000.00 5,848,000.00 0.55% 0.62% 06/01/04
53 Shadow Anchored 5,400,000.00 5,391,053.34 0.51% 0.57% 05/20/04
54 Flex/Warehouse 5,400,000.00 5,388,861.28 0.51% 0.57% 04/27/04
55 Suburban 5,300,000.00 5,293,920.70 0.50% 0.56% 05/12/04
56 Conventional 5,200,000.00 5,200,000.00 0.49% 4.52% 05/26/04
57 Office/Retail/Warehouse 5,050,000.00 5,040,218.72 0.47% 0.53% 04/30/04
58 Warehouse/Flex 5,000,000.00 4,994,091.56 0.47% 0.53% 05/14/04
59 Unanchored 5,000,000.00 4,988,844.68 0.47% 0.53% 05/07/04
60 Unanchored 4,950,000.00 4,945,168.55 0.47% 0.52% 06/02/04
61 Self Storage 4,920,000.00 4,920,000.00 0.46% 0.52% 06/01/04
62 Unanchored 4,800,000.00 4,800,000.00 0.45% 0.51% 06/23/04
63 Conventional 4,700,000.00 4,700,000.00 0.44% 4.09% 05/28/04
64 Self Storage 4,696,000.00 4,696,000.00 0.44% 0.50% 06/01/04
65 Self Storage 4,650,000.00 4,645,098.88 0.44% 0.49% 05/26/04
66 Self Storage 4,480,000.00 4,480,000.00 0.42% 0.47% 06/01/04
67 Suburban 4,400,000.00 4,395,174.88 0.41% 0.46% 06/01/04
68 Suburban 4,200,000.00 4,190,570.54 0.39% 0.44% 05/07/04
69 Conventional 4,000,000.00 3,985,456.61 0.37% 3.46% 06/08/04
70 Self Storage 3,840,000.00 3,840,000.00 0.36% 0.41% 06/01/04
71 Anchored 3,809,000.00 3,809,000.00 0.36% 0.40% 05/05/04
72 Suburban 3,650,000.00 3,646,616.10 0.34% 0.38% 05/17/04
73 Anchored 3,500,000.00 3,495,887.05 0.33% 0.37% 05/28/04
74 Self Storage 3,376,000.00 3,376,000.00 0.32% 0.36% 06/01/04
75 Anchored 3,355,000.00 3,351,320.85 0.32% 0.35% 05/17/04
76 Unanchored 3,250,000.00 3,245,515.74 0.31% 0.34% 05/27/04
77 Anchored 3,200,000.00 3,192,542.48 0.30% 0.34% 05/28/04
78 Anchored 3,200,000.00 3,192,069.90 0.30% 0.34% 05/21/04
79 Anchored 3,116,000.00 3,116,000.00 0.29% 0.33% 05/05/04
80 Unanchored 3,075,000.00 3,072,076.69 0.29% 0.32% 05/27/04
81 Anchored 2,800,000.00 2,796,598.17 0.26% 0.29% 05/12/04
82 Anchored 2,753,000.00 2,753,000.00 0.26% 0.29% 05/05/04
83 Conventional 2,755,000.00 2,735,923.26 0.26% 2.38% 03/22/04
84 Anchored 2,700,000.00 2,696,145.65 0.25% 0.28% 05/12/04
85 Self Storage 2,624,000.00 2,624,000.00 0.25% 0.28% 06/01/04
86 Warehouse 2,625,000.00 2,620,452.09 0.25% 0.28% 05/17/04
87 Retail 2,600,000.00 2,590,240.17 0.24% 0.27% 06/07/04
88 Anchored 2,545,000.00 2,539,795.33 0.24% 0.27% 04/27/04
89 Self Storage 2,520,000.00 2,520,000.00 0.24% 0.27% 06/01/04
90 Conventional 2,440,000.00 2,431,625.85 0.23% 2.11% 03/31/04
91 Conventional 2,300,000.00 2,286,302.70 0.22% 1.99% 12/19/03
92 Anchored 1,999,000.00 1,999,000.00 0.19% 0.21% 05/05/04
93 Unanchored 1,937,000.00 1,931,892.06 0.18% 0.20% 04/23/04
94 Anchored 1,926,000.00 1,926,000.00 0.18% 0.20% 05/05/04
95 Anchored 1,550,000.00 1,550,000.00 0.15% 0.16% 06/21/04
96 Various 1,534,371.03 1,527,163.72 0.14% 1.33% 04/01/04
96.1 Student Housing
96.2 Conventional
LOAN INTEREST ORIGINAL REMAINING
MORTGAGE ADMINISTRATIVE INTEREST ACCURAL TERM TO TERM TO
LOAN FIRST PAY MATURITY RATE MORTGAGE COST RATE ACCRUAL METHOD MATURITY OR MATURITY OR
NUMBER DATE OR ARD RATE (%) (%) METHOD DURING IO ARD (MOS.) ARD (MOS.)
- -----------------------------------------------------------------------------------------------------------------------------------
1 03/01/04 02/01/14 5.0680% 0.04200% Actual/360 120 115
2 02/11/04 01/11/14 5.3043% 0.04200% Actual/360 Actual/360 120 114
3 06/11/04 05/11/11 5.2900% 0.04200% Actual/360 Actual/360 84 82
4 06/11/04 05/11/14 4.9200% 0.05200% Actual/360 Actual/360 120 118
5 07/11/04 06/11/09 5.6600% 0.04200% Actual/360 Actual/360 60 59
6 07/11/04 06/11/14 5.4300% 0.04200% Actual/360 120 119
7 06/11/04 05/11/11 5.8050% 0.04200% Actual/360 Actual/360 84 82
8 01/11/04 12/11/13 6.2300% 0.04200% Actual/360 120 113
9 07/11/04 06/11/14 5.0500% 0.04200% Actual/360 Actual/360 120 119
10 06/11/04 05/11/14 4.5600% 0.06200% Actual/360 Actual/360 120 118
11 07/11/04 06/11/14 5.8000% 0.04200% Actual/360 Actual/360 120 119
12 05/11/04 04/11/09 4.6100% 0.04200% Actual/360 Actual/360 60 57
13 06/11/04 05/11/14 4.8400% 0.04200% Actual/360 Actual/360 120 118
14 08/11/04 07/11/14 5.9200% 0.04200% Actual/360 120 120
15 06/11/04 05/11/14 5.8000% 0.04200% Actual/360 Actual/360 120 118
16 07/11/04 06/11/14 5.5400% 0.04200% Actual/360 120 119
17 06/11/04 05/11/14 4.9500% 0.04200% Actual/360 120 118
18 07/11/04 06/11/09 4.2600% 0.04200% Actual/360 Actual/360 60 59
19 07/11/04 06/11/14 5.0700% 0.04200% Actual/360 120 119
20 05/01/04 04/01/14 5.3545% 0.04200% Actual/360 120 117
21 08/11/04 07/11/14 5.5000% 0.04200% Actual/360 Actual/360 120 120
22 07/11/04 06/11/11 5.9000% 0.07200% Actual/360 Actual/360 84 83
23 06/11/04 05/11/14 5.7300% 0.04200% Actual/360 120 118
24 07/11/04 06/11/09 4.3000% 0.04200% Actual/360 Actual/360 60 59
25 06/11/04 05/11/14 5.3200% 0.04200% Actual/360 120 118
26 07/11/04 06/11/24 5.1100% 0.04200% Actual/360 240 239
27 07/11/04 06/11/11 5.6700% 0.04200% Actual/360 Actual/360 84 83
28 07/11/04 06/11/09 4.3000% 0.04200% Actual/360 Actual/360 60 59
29 07/11/04 06/11/09 5.9600% 0.04200% Actual/360 60 59
30 07/11/04 06/11/14 5.6600% 0.04200% Actual/360 Actual/360 120 119
31 06/11/04 05/11/14 5.2700% 0.04200% Actual/360 Actual/360 120 118
32 07/11/04 06/11/14 5.1900% 0.04200% Actual/360 120 119
33 07/11/04 06/11/14 5.5000% 0.04200% Actual/360 120 119
34 07/11/04 06/11/14 5.0100% 0.04200% Actual/360 120 119
35 07/11/04 06/11/14 5.7100% 0.04200% Actual/360 120 119
36 06/11/04 05/11/14 5.1200% 0.04200% Actual/360 120 118
37 08/11/04 07/11/19 5.4200% 0.04200% Actual/360 180 180
38 07/11/04 06/11/14 6.4420% 0.10200% Actual/360 120 119
39 05/11/04 04/11/14 5.3100% 0.04200% Actual/360 120 117
40 05/11/04 04/11/14 4.7600% 0.04200% Actual/360 Actual/360 120 117
41 06/11/04 05/11/14 5.4800% 0.04200% Actual/360 120 118
42 08/11/04 07/11/14 6.0700% 0.04200% Actual/360 120 120
43 07/11/04 06/11/14 5.5000% 0.04200% Actual/360 120 119
44 08/11/04 07/11/14 6.1900% 0.04200% Actual/360 120 120
45 07/11/04 06/11/09 4.3000% 0.04200% Actual/360 Actual/360 60 59
46 06/11/04 05/11/14 5.4400% 0.04200% Actual/360 Actual/360 120 118
47 07/11/04 06/11/14 5.8560% 0.04200% Actual/360 120 119
48 07/11/04 06/11/14 5.2200% 0.04200% Actual/360 120 119
49 06/11/04 05/11/11 4.4600% 0.04200% Actual/360 Actual/360 84 82
50 07/11/04 06/11/14 5.5000% 0.04200% Actual/360 120 119
51 08/11/04 07/11/14 6.0800% 0.04200% Actual/360 120 120
52 07/11/04 06/11/09 4.3000% 0.04200% Actual/360 Actual/360 60 59
53 07/11/04 06/11/14 5.0900% 0.04200% Actual/360 120 119
54 06/11/04 05/11/14 5.4500% 0.04200% Actual/360 120 118
55 07/11/04 06/11/14 5.2500% 0.04200% Actual/360 120 119
56 07/11/04 06/11/14 5.6600% 0.04200% Actual/360 Actual/360 120 119
57 06/11/04 05/11/14 5.7400% 0.04200% Actual/360 120 118
58 07/11/04 06/11/14 5.0900% 0.04200% Actual/360 120 119
59 06/11/04 05/11/14 5.0800% 0.04200% Actual/360 120 118
60 07/11/04 06/11/14 6.1030% 0.04200% Actual/360 120 119
61 07/11/04 06/11/09 4.3000% 0.04200% Actual/360 Actual/360 60 59
62 08/11/04 07/11/26 6.0300% 0.04200% Actual/360 264 264
63 07/11/04 06/11/09 5.3600% 0.04200% Actual/360 Actual/360 60 59
64 07/11/04 06/11/09 4.3000% 0.04200% Actual/360 Actual/360 60 59
65 07/11/04 06/11/14 5.7000% 0.04200% Actual/360 120 119
66 07/11/04 06/11/09 4.3000% 0.04200% Actual/360 Actual/360 60 59
67 07/11/04 06/11/14 5.4900% 0.04200% Actual/360 120 119
68 06/11/04 05/11/14 5.0500% 0.04200% Actual/360 120 118
69 07/11/04 06/11/19 5.4800% 0.04200% Actual/360 180 179
70 07/11/04 06/11/09 4.3000% 0.04200% Actual/360 Actual/360 60 59
71 06/11/04 05/11/11 4.4600% 0.04200% Actual/360 Actual/360 84 82
72 07/11/04 06/11/14 6.3700% 0.04200% Actual/360 120 119
73 07/11/04 06/11/14 5.1200% 0.04200% Actual/360 120 119
74 07/11/04 06/11/09 4.3000% 0.04200% Actual/360 Actual/360 60 59
75 07/11/04 06/11/19 5.4900% 0.04200% Actual/360 180 179
76 07/11/04 06/11/19 6.2900% 0.04200% Actual/360 180 179
77 07/11/04 06/11/24 5.5400% 0.04200% Actual/360 240 239
78 07/11/04 06/11/24 4.8400% 0.04200% Actual/360 240 239
79 06/11/04 05/11/11 4.4600% 0.04200% Actual/360 Actual/360 84 82
80 07/11/04 06/11/14 6.2400% 0.04200% Actual/360 120 119
81 07/11/04 06/11/14 4.9400% 0.04200% Actual/360 120 119
82 06/11/04 05/11/11 4.4600% 0.04200% Actual/360 Actual/360 84 82
83 05/11/04 04/11/14 5.3100% 0.04200% Actual/360 120 117
84 07/11/04 06/11/19 6.0700% 0.04200% Actual/360 180 179
85 07/11/04 06/11/09 4.3000% 0.04200% Actual/360 Actual/360 60 59
86 07/11/04 06/11/14 4.7900% 0.04200% Actual/360 120 119
87 07/11/04 06/11/19 4.9600% 0.04200% Actual/360 180 179
88 06/11/04 05/11/19 5.4900% 0.04200% Actual/360 180 178
89 07/11/04 06/11/09 4.3000% 0.04200% Actual/360 Actual/360 60 59
90 05/11/04 04/11/11 5.0700% 0.04200% Actual/360 84 81
91 02/11/04 01/11/14 5.8000% 0.11200% Actual/360 120 114
92 06/11/04 05/11/11 4.4600% 0.04200% Actual/360 Actual/360 84 82
93 06/11/04 05/11/14 6.1900% 0.04200% Actual/360 120 118
94 06/11/04 05/11/11 4.4600% 0.04200% Actual/360 Actual/360 84 82
95 08/11/04 07/11/24 6.7600% 0.04200% Actual/360 240 240
96 05/11/04 11/11/08 5.2900% 0.04200% Actual/360 55 52
96.1
96.2
MORTGAGE REMAINING ORIGINAL REMAINING MATURITY DATE OR
LOAN IO PERIOD AMORT TERM AMORT TERM MONTHLY P&I ARD BALLOON ARD
NUMBER (MOS.) (MOS.) (MOS.) PAYMENTS ($) BALANCE ($) LOAN PREPAYMENT PROVISIONS
- -----------------------------------------------------------------------------------------------------------------------------------
1 360 355 649,182.20 98,873,179.03 N L(29),D(87),O(4)
2 54 360 360 455,568.81 75,961,366.74 Y L(30),D(87),O(3)
3 22 360 360 324,490.03 54,186,989.64 Y L(26),D(55),O(3)
4 22 360 360 305,867.24 49,656,345.66 N L(26),D(89),O(5)
5 23 360 360 202,253.83 33,639,540.61 N L(25),D(22),O(13)
6 360 359 183,670.00 27,170,952.89 Y L(25),D(88),O(7)
7 22 360 360 176,121.44 27,991,346.34 Y L(36),D(45),O(3)
8 360 353 141,315.92 19,639,802.06 Y L(48),D(68),O(4)
9 23 360 360 110,675.72 17,761,107.82 N L(25),D(92),O(3)
10 118 IO IO IO 18,200,000.00 Y L(48),D(69),O(3)
11 47 360 360 102,271.05 15,982,367.15 Y L(25),D(70),O(25)
12 21 360 360 87,251.17 16,191,156.60 Y L(27),D(30),O(3)
13 46 360 360 86,969.17 14,874,874.08 Y L(26),YM1%orD(91),O(3)
14 360 360 97,484.37 13,875,476.82 Y L(24),D(93),O(3)
15 58 360 360 89,479.84 14,227,758.04 Y L(26),D(91),O(3)
16 360 359 85,545.18 12,544,762.15 N L(48),D(69),O(3)
17 360 358 77,396.65 11,901,800.64 N L(26),D(90),O(4)
18 23 360 360 68,953.57 13,289,648.47 Y L(48),D(9),O(3)
19 360 359 72,724.90 11,074,143.54 Y L(48),D(69),O(3)
20 360 357 72,909.55 10,851,215.01 N L(27),D(89),O(4)
21 60 360 360 73,812.57 12,077,802.68 Y L(48),D(69),O(3)
22 83 IO IO IO 12,725,000.00 N L(25),D(56),O(3)
23 360 358 69,876.35 10,095,308.10 N L(26),D(69),2%(12),1%(11),O(2)
24 59 IO IO IO 11,946,000.00 Y L(48),D(9),O(3)
25 360 358 63,669.01 9,502,782.82 N L(26),D(91),O(3)
26 240 239 73,719.74 0.00 N L(60),YM1%(177),O(3)
27 11 360 360 63,403.68 10,027,880.28 N L(36),D(45),O(3)
28 59 IO IO IO 10,560,000.00 Y L(48),D(9),O(3)
29 360 359 59,101.15 9,255,920.60 Y L(36),D(19),O(5)
30 23 360 360 54,319.60 8,266,065.56 N L(60),YM1%(57),O(3)
31 22 360 360 51,470.21 8,102,238.68 Y L(48),D(69),O(3)
32 360 359 50,022.59 7,543,712.59 N YM1%(117),O(3)
33 300 299 55,267.87 6,850,060.08 N L(47),YM1%(69),O(4)
34 360 359 47,697.17 7,298,469.39 N L(25),D(92),O(3)
35 360 359 51,131.02 7,397,993.66 N L(48),D(68),O(4)
36 360 358 46,255.25 7,015,652.80 Y L(26),D(90),O(4)
37 180 180 65,365.70 0.00 N L(48),D(129),O(3)
38 360 359 49,004.16 6,699,013.60 N L(25),D(92),O(3)
39 360 357 43,362.21 6,476,680.16 N L(36),D(81),O(3)
40 33 360 360 40,161.05 6,772,062.44 Y L(48),D(68),O(4)
41 360 358 43,056.65 6,344,799.00 N L(36),YM1%(81),O(3)
42 300 300 48,644.04 5,821,652.32 N L(36),D(81),O(3)
43 300 299 44,828.39 5,556,158.79 N L(47),YM1%(69),O(4)
44 360 360 44,356.97 6,182,679.52 Y L(48),D(68),O(4)
45 59 IO IO IO 6,960,000.00 Y L(48),D(9),O(3)
46 10 360 360 37,226.00 5,642,198.85 N L(36),D(81),O(3)
47 360 359 37,780.74 5,404,064.37 N L(25),D(92),O(3)
48 360 359 34,671.86 5,216,119.21 Y L(25),D(92),O(3)
49 82 IO IO IO 6,032,000.00 Y L(48),D(32),O(4)
50 300 299 36,968.07 4,581,928.14 N L(47),YM1%(69),O(4)
51 360 360 35,677.51 5,015,372.19 N L(36),D(81),O(3)
52 59 IO IO IO 5,848,000.00 Y L(48),D(9),O(3)
53 300 299 31,851.66 4,050,435.64 N L(36),D(81),O(3)
54 360 358 30,491.42 4,503,935.37 Y L(48),D(68),O(4)
55 360 359 29,266.80 4,392,361.26 Y L(25),D(92),O(3)
56 23 360 360 30,049.14 4,572,717.15 N L(60),YM1%(57),O(3)
57 360 358 29,438.36 4,249,728.48 Y L(48),D(69),O(3)
58 360 359 27,116.77 4,122,515.65 Y L(25),D(92),O(3)
59 360 358 27,086.07 4,121,518.75 Y L(48),D(69),O(3)
60 360 359 30,006.33 4,210,272.55 N L(25),D(92),O(3)
61 59 IO IO IO 4,920,000.00 Y L(48),D(9),O(3)
62 264 264 33,124.73 0.00 N L(36),D(225),O(3)
63 17 360 360 26,274.71 4,470,098.15 N L(36),D(21),O(3)
64 59 IO IO IO 4,696,000.00 Y L(48),D(9),O(3)
65 360 359 26,988.62 3,907,980.73 N L(48),D(69),O(3)
66 59 IO IO IO 4,480,000.00 Y L(48),D(9),O(3)
67 360 359 24,955.12 3,674,103.52 N L(36),D(81),O(3)
68 360 358 22,675.03 3,458,703.85 Y L(48),D(69),O(3)
69 180 179 32,810.06 0.00 N L(36),YM1%(141),O(3)
70 59 IO IO IO 3,840,000.00 Y L(48),D(9),O(3)
71 82 IO IO IO 3,809,000.00 Y L(48),D(32),O(4)
72 360 359 22,759.32 3,128,434.90 N L(25),D(92),O(3)
73 360 359 19,046.28 2,888,558.56 N L(48),D(69),O(3)
74 59 IO IO IO 3,376,000.00 Y L(48),D(9),O(3)
75 360 359 19,028.28 2,385,759.14 Y L(36),D(141),O(3)
76 300 299 21,519.68 1,976,848.62 Y L(48),D(125),O(7)
77 240 239 22,230.85 0.00 N L(36),D(201),O(3)
78 240 239 20,836.77 50,326.32 Y L(48),D(189),O(3)
79 82 IO IO IO 3,116,000.00 Y L(48),D(32),O(4)
80 360 359 18,913.31 2,625,850.95 N L(36),D(81),O(3)
81 360 359 14,928.50 2,297,343.97 N L(36),D(81),O(3)
82 82 IO IO IO 2,753,000.00 Y L(48),D(32),O(4)
83 240 237 18,656.87 1,757,925.25 N L(36),D(81),O(3)
84 300 299 17,511.85 1,622,211.88 N L(36),D(141),O(3)
85 59 IO IO IO 2,624,000.00 Y L(48),D(9),O(3)
86 300 299 15,026.04 1,947,449.05 Y L(25),D(92),O(3)
87 180 179 20,506.50 26,157.94 N L(23),YM1%(153),O(4)
88 360 358 14,434.27 1,810,110.91 Y L(36),D(141),O(3)
89 59 IO IO IO 2,520,000.00 Y L(48),D(9),O(3)
90 360 357 13,203.03 2,163,056.16 N L(48),D(33),O(3)
91 360 354 13,495.32 1,939,077.00 N L(36),D(81),O(3)
92 82 IO IO IO 1,999,000.00 Y L(48),D(32),O(4)
93 300 298 12,706.05 1,509,625.07 Y L(48),D(69),O(3)
94 82 IO IO IO 1,926,000.00 Y L(48),D(32),O(4)
95 240 240 11,886.61 0.00 N L(24),D(213),O(3)
96 300 297 9,230.93 1,387,259.97 N L(43),D(9),O(3)
96.1
96.2
MORTGAGE LTV RATIO AT
LOAN APPRAISED APPRAISAL DSCR CUT-OFF DATE MATURITY OR YEAR YEAR NUMBER OF
NUMBER VALUE ($) DATE (X) (2) LTV RATIO (3) ARD (3) BUILT RENOVATED UNITS
- -------------------------------------------------------------------------------------------------------------------------------
1 187,000,000 11/13/03 2.13 63.80% 52.87% 1985 2000 1,241,440
2 675,000,000 12/02/03 1.81 54.67% 50.64% 1932 1997 2,256,552
3 73,400,000 04/01/04 1.22 79.70% 73.82% 1986 1996 218,738
4 72,500,000 04/08/04 1.35 79.31% 68.49% 1991 476,164
5 44,000,000 05/01/04 1.23 79.55% 76.45% 1920 2002 100,334
6 45,500,000 12/09/03 1.77 71.57% 59.72% 1977 2001 485,772
7 38,500,000 07/01/05 1.38 77.92% 72.70% 2004 147,917
8 34,400,000 04/10/04 1.67 66.44% 57.09% 2003 133,089
9 28,500,000 05/01/05 1.71 71.93% 62.32% 2004 102,956
10 31,000,000 03/17/04 2.63 58.71% 58.71% 1972 2004 320
11 21,800,000 04/16/04 1.20 79.95% 73.31% 1987 1999 144,265
12 22,500,000 03/10/04 1.20 75.56% 71.96% 1971 220
13 24,000,000 12/22/03 1.57 68.75% 61.98% 1972 1999 185,141
14 32,600,000 04/06/04 1.69 50.31% 42.56% 2002 726,299
15 20,900,000 03/11/04 1.25 72.97% 68.08% 2003 216
16 20,000,000 04/09/04 1.30 74.92% 62.72% 1931 1995 425,080
17 21,100,000 03/25/04 1.52 68.56% 56.41% 1988 192,545
18 17,700,000 04/02/04 1.24 79.10% 75.08% 1972 2004 136
19 16,800,000 04/08/04 1.38 79.91% 65.92% 1960 418
20 17,400,000 02/17/04 1.72 74.76% 62.36% 1984 285,723
21 16,450,000 04/15/04 1.25 79.03% 73.42% 2004 67,121
22 18,950,000 05/01/04 1.60 67.15% 67.15% 2002 140,006
23 24,000,000 02/09/04 1.69 49.90% 42.06% 1972 1999 145,238
24 14,960,000 05/11/04 2.06 79.85% 79.85% 1998 924
25 15,875,000 03/08/04 1.32 71.91% 59.86% 1974 2004 377,544
26 15,300,000 04/07/04 1.25 71.72% 0.00% 1973 2002 123,873
27 13,700,000 04/21/04 1.25 80.00% 73.20% 1971 2002 321
28 13,200,000 04/07/04 2.34 80.00% 80.00% 1987 1,147
29 14,025,000 04/01/04 1.21 70.52% 66.00% 1972 2003 238
30 14,400,000 04/28/04 1.31 65.28% 57.40% 2002 90
31 12,250,000 03/31/04 1.25 75.92% 66.14% 1980 2000 240
32 12,540,000 04/19/04 1.49 72.64% 60.16% 1987 66,748
33 16,300,000 04/07/04 2.49 55.13% 42.02% 2001 144
34 11,900,000 03/16/04 1.45 74.49% 61.33% 1958 1990 42,280
35 11,000,000 03/24/04 1.34 79.92% 67.25% 1970 1994 140,332
36 11,350,000 03/15/04 1.52 74.72% 61.81% 1974 1994 65,999
37 23,700,000 05/24/04 1.72 33.76% 0.00% 1946 2000 97,196
38 11,400,000 04/10/04 1.29 68.36% 58.76% 1998 51,651
39 11,900,000 01/21/04 1.52 65.33% 54.43% 1973 171
40 12,800,000 12/03/03 1.80 60.08% 52.91% 1998 262,644
41 10,000,000 04/02/04 1.24 75.84% 63.45% 2003 112
42 12,000,000 09/01/05 1.46 62.50% 48.51% 1968 2004 207,346
43 12,300,000 03/31/04 2.03 59.26% 45.17% 2001 149
44 9,500,000 04/29/04 1.28 76.32% 65.08% 2003 54,000
45 8,700,000 04/19/04 2.38 80.00% 80.00% 1976 737
46 8,600,000 03/08/04 1.26 75.58% 64.44% 2003 84
47 8,000,000 03/24/04 1.25 79.92% 67.55% 1980 1994 45,629
48 8,400,000 04/20/04 1.72 74.91% 62.10% 2000 872
49 8,810,000 02/27/04 2.45 68.47% 68.47% 2002 33,257
50 8,600,000 04/01/04 1.58 69.89% 53.28% 1999 157
51 8,400,000 06/01/05 1.30 70.24% 59.71% 2003 39,356
52 7,310,000 04/14/04 2.18 80.00% 80.00% 1995 796
53 9,750,000 04/16/04 1.66 55.29% 41.54% 1990 74,812
54 6,900,000 02/04/04 1.51 78.10% 65.27% 2002 108,940
55 6,900,000 03/24/04 1.40 76.72% 63.66% 1983 38,734
56 8,400,000 04/28/04 1.32 61.90% 54.44% 2001 58
57 6,500,000 03/16/04 1.25 77.54% 65.38% 2000 55,594
58 6,300,000 04/20/04 1.50 79.27% 65.44% 2000 68,401
59 6,900,000 03/30/04 1.50 72.30% 59.73% 2004 20,431
60 7,300,000 03/16/04 1.40 67.74% 57.68% 1988 70,897
61 6,150,000 04/20/04 2.01 80.00% 80.00% 2000 672
62 7,350,000 04/20/04 1.33 65.31% 0.00% 2002 41,000
63 6,450,000 04/21/04 1.41 72.87% 69.30% 1971 2004 160
64 5,870,000 04/20/04 2.04 80.00% 80.00% 1984 773
65 6,200,000 04/22/04 1.49 74.92% 63.03% 2001 546
66 5,600,000 04/28/04 2.24 80.00% 80.00% 1976 429
67 5,900,000 04/20/04 1.45 74.49% 62.27% 2004 42,200
68 5,700,000 03/30/04 1.51 73.52% 60.68% 2004 25,862
69 6,880,000 04/15/04 1.16 57.93% 0.00% 1972 1997 94
70 4,800,000 04/16/04 2.24 80.00% 80.00% 1992 583
71 5,860,000 10/28/03 2.37 65.00% 65.00% 2002 30,000
72 5,330,000 01/16/04 1.34 68.42% 58.69% 2001 25,901
73 5,000,000 04/12/04 1.45 69.92% 57.77% 2003 13,650
74 4,220,000 04/22/04 2.09 80.00% 80.00% 1985 497
75 4,710,000 04/13/04 1.35 71.15% 50.65% 2003 13,943
76 4,100,000 04/15/04 1.21 79.16% 48.22% 2003 15,000
77 5,110,000 03/03/04 1.23 62.48% 0.00% 2004 13,650
78 7,250,000 04/14/04 1.88 44.03% 0.69% 1953 2003 105,661
79 4,800,000 03/06/04 2.21 64.92% 64.92% 1988 1994 78,823
80 4,100,000 04/21/04 1.51 74.93% 64.05% 2000 2002 34,012
81 4,100,000 03/26/04 1.56 68.21% 56.03% 2001 14,490
82 4,300,000 02/26/04 2.55 64.02% 64.02% 2001 15,070
83 4,410,000 03/29/04 1.22 62.04% 39.86% 1957 92
84 3,650,000 04/20/04 1.30 73.87% 44.44% 1999 15,930
85 3,280,000 04/22/04 2.20 80.00% 80.00% 1983 404
86 3,750,000 04/05/04 1.57 69.88% 51.93% 2003 40,873
87 11,900,000 03/23/04 3.02 21.77% 0.22% NA 128,680
88 3,700,000 04/12/04 1.37 68.64% 48.92% 2003 13,650
89 3,150,000 04/24/04 2.26 80.00% 80.00% 1993 551
90 3,100,000 03/04/04 1.25 78.44% 69.78% 1974 120
91 2,875,000 08/19/03 1.45 79.52% 67.45% 1978 2003 88
92 3,000,000 11/21/03 2.53 66.63% 66.63% 2000 24,049
93 3,150,000 03/28/04 1.64 61.33% 47.92% 1997 10,908
94 2,900,000 01/13/04 2.56 66.41% 66.41% 1994 13,500
95 2,310,000 05/02/04 1.19 67.10% 0.00% 1983 1994 26,640
96 2,200,000 Various 1.43 69.42% 63.06% Various Various 57
96.1 1,500,000 07/07/03 1972 24
96.2 700,000 05/29/03 1921 1983 33
MOST
MORTGAGE CUT-OFF DATE RECENT
LOAN UNIT OF LOAN AMOUNT OCCUPANCY OCCUPANCY REVENUES MOST RECENT
NUMBER MEASURE PER (UNIT) ($) RATE (%) "AS OF" DATE MOST RECENT PERIOD ($) EXPENSES ($)
- ----------------------------------------------------------------------------------------------------------------------------------
1 Sq. Ft. 96 86.73% 05/01/04 TTM 3/31/04 30,337,905 14,850,190
2 Sq. Ft. 36 98.60% 04/01/04 TTM 11/15/03 62,279,306 17,608,014
3 Sq. Ft. 267 86.09% 03/31/04 Borrower Proforma 8,215,262 3,287,632
4 Sq. Ft. 121 99.37% 03/31/04 TTM 7,096,549 1,716,013
5 Sq. Ft. 349 97.48% 06/01/04
6 Sq. Ft. 67 96.48% 05/07/04 YE 2003 7,580,756 3,351,640
7 Sq. Ft. 203 86.00% 04/29/04
8 Sq. Ft. 172 100.00% 04/28/04
9 Sq. Ft. 199 95.53% 05/17/04
10 Units 56,875 97.81% 04/19/04 T-6 10/03-3/04 Annualized 3,568,418 1,167,861
11 Sq. Ft. 121 100.00% 04/01/04 YE 2003 2,296,542 675,527
12 Units 77,273 90.91% 03/22/04 YE 2003 2,020,279 845,611
13 Sq. Ft. 89 91.08% 04/06/04 Borrower Proforma 3,578,251 1,408,711
14 Sq. Ft. 23 100.00% 06/10/04
15 Units 70,602 98.15% 04/20/04 Borrower Proforma 2,174,136 742,558
16 Sq. Ft. 35 97.65% 05/21/04 YE 2003 2,354,109 760,899
17 Sq. Ft. 75 100.00% 03/31/04 YE Statement 3,050,766 1,320,608
18 Units 102,941 96.32% 04/30/04 T-6 10/03-3/04 Annualized 1,840,211 837,533
19 Pads 32,115 100.00% 05/04/04 YE 2003 1,715,271 425,866
20 Sq. Ft. 46 89.73% 01/12/04 YE 2003 2,919,217 1,215,242
21 Sq. Ft. 194 100.00% 05/15/04 Borrower Proforma 1,392,351 265,125
22 Sq. Ft. 91 100.00% 04/26/04 Annualized 2,238,977 614,491
23 Sq. Ft. 82 100.00% 01/01/04 YE Statement 3,242,531 1,325,834
24 Units 12,929 72.73% 05/13/04 In Place UW 1,446,276 562,150
25 Sq. Ft. 30 94.21% 03/31/04 YE Statement 2,123,088 455,991
26 Sq. Ft. 89 97.98% 03/01/04 TTM 3/31/04 1,468,427 521,734
27 Units 34,143 94.39% 05/17/04 2004 Budget 2,260,382 1,202,190
28 Units 9,207 89.80% 05/25/04 YE 2003 1,588,896 471,817
29 Units 41,555 92.86% 04/30/04 T-1 4/04 Annualized 1,983,060 952,346
30 Units 104,444 93.33% 05/10/04 T-3 1/04-3/04 Annualized 1,300,579 371,894
31 Units 38,750 89.58% 03/14/04 TTM 2/29/04 1,601,556 872,540
32 Sq. Ft. 136 98.69% 04/07/04 YE 2003 1,573,006 536,629
33 Rooms 62,403 62.61% 02/29/04 TTM 2/29/04 4,570,832 2,673,842
34 Sq. Ft. 210 94.75% 03/12/04 Annualized 1,492,148 443,040
35 Sq. Ft. 63 100.00% 04/15/04 YE 2003 1,398,724 362,709
36 Sq. Ft. 129 98.88% 03/12/04 Borrower Proforma 1,754,021 607,216
37 Sq. Ft. 82 97.19% 05/11/04 YE 2003 2,175,716 578,951
38 Sq. Ft. 151 90.64% 05/12/04 TTM 993,375 239,022
39 Units 45,465 91.81% 02/29/04 YE 2003 1,383,646 538,647
40 Sq. Ft. 29 100.00% 03/05/04 TTM 1,283,544 340,593
41 Units 67,718 94.64% 04/14/04 T-6 10/03-3/04 Annualized 900,994 416,206
42 Sq. Ft. 36 92.09% 05/14/04 YE 2003 1,112,004 447,945
43 Rooms 48,917 70.40% 02/28/04 TTM 2/29/04 3,654,258 2,267,351
44 Sq. Ft. 134 93.39% 06/09/04 2004 Budget - Expenses Only 373,680
45 Units 9,444 89.96% 05/25/04 YE 2003 1,045,514 271,313
46 Units 78,571 94.05% 04/01/04 T-3 1/04-3/04 Annualized 626,624 196,679
47 Sq. Ft. 140 100.00% 05/21/04 YE Statement 989,508 177,411
48 Units 7,216 78.56% 05/03/04 Borrower Proforma 1,113,916 320,887
49 Sq. Ft. 181 100.00% 04/20/04
50 Rooms 38,284 56.31% 05/25/04 TTM 4/30/04 2,360,644 1,575,670
51 Sq. Ft. 150 100.00% 05/06/04
52 Units 7,347 90.70% 05/25/04 YE 2003 1,035,519 429,500
53 Sq. Ft. 72 76.26% 05/20/04 YE 2003 909,366 290,096
54 Sq. Ft. 49 89.15% 05/10/04
55 Sq. Ft. 137 97.65% 06/01/04 YE 2003 1,059,442 421,350
56 Units 89,655 91.38% 05/10/04 YE 2003 663,179 296,026
57 Sq. Ft. 91 80.63% 03/30/04 Borrower Proforma 793,297 188,428
58 Sq. Ft. 73 97.08% 05/07/04 Borrower Proforma 767,127 165,111
59 Sq. Ft. 244 100.00% 05/06/04 2004 Budget 598,546 81,272
60 Sq. Ft. 70 94.77% 05/05/04 TTM 808,522 249,031
61 Units 7,321 88.54% 05/25/04 YE 2003 720,704 266,963
62 Sq. Ft. 117 88.29% 05/24/04 YE 2003 457,610 150,872
63 Units 29,375 94.38% 05/17/04 2004 Budget 1,048,490 607,093
64 Units 6,075 84.48% 05/25/04 YE 2003 751,169 303,288
65 Units 8,508 92.13% 04/30/04 T-6 Annualized 793,666 313,844
66 Units 10,443 94.87% 05/25/04 YE 2003 715,914 249,237
67 Sq. Ft. 104 100.00% 06/01/04
68 Sq. Ft. 162 100.00% 04/30/04 2004 Budget 568,383 98,350
69 Units 42,398 97.87% 04/01/04 TTM 3/31/04 756,387 312,017
70 Units 6,587 88.51% 05/25/04 YE 2003 673,672 246,544
71 Sq. Ft. 127 100.00% 04/27/04
72 Sq. Ft. 141 100.00% 04/30/04 Annualized 597,148 123,965
73 Sq. Ft. 256 100.00% 05/04/04
74 Units 6,793 91.15% 05/25/04 YE 2003 529,292 185,009
75 Sq. Ft. 240 100.00% 05/20/04
76 Sq. Ft. 216 100.00% 06/03/04
77 Sq. Ft. 234 100.00% 03/01/04
78 Sq. Ft. 30 66.04% 05/14/04
79 Sq. Ft. 40 100.00% 04/23/04 YE 2003 441,409 19,746
80 Sq. Ft. 90 98.75% 05/05/04 T-3 1/04-3/04 Annualized 110,202 25,855
81 Sq. Ft. 193 100.00% 03/31/04 YE 2003 325,726 11,638
82 Sq. Ft. 183 100.00% 04/15/04
83 Units 29,738 89.13% 04/30/04 YE 2003 573,125 318,544
84 Sq. Ft. 169 100.00% 04/01/04 T-3 1/04-3/04 Annualized 297,000 8,143
85 Units 6,495 93.56% 05/25/04 YE 2003 415,134 150,586
86 Sq. Ft. 64 100.00% 04/13/04
87 Sq. Ft. 20 100.00% 05/28/04
88 Sq. Ft. 186 100.00% 04/28/04
89 Units 4,574 87.11% 05/25/04 YE 2003 431,298 158,252
90 Units 20,264 99.17% 03/16/04 YE 2003 584,127 366,023
91 Units 25,981 86.36% 05/10/04 T-3 1/04-3/04 Annualized 534,388 257,674
92 Sq. Ft. 83 100.00% 04/28/04
93 Sq. Ft. 177 100.00% 04/08/04
94 Sq. Ft. 143 100.00% 04/13/04
95 Sq. Ft. 58 100.00% 04/01/04 YE 2003 206,937 15,600
96 Units 26,792 84.62% Various YE 2003 394,184 228,622
96.1 Units 89.00% 04/16/04
96.2 Units 100.00% 04/08/04
MORTGAGE MOST UW NET
LOAN MOST RECENT RECENT UW UW OPERATING UW NET CASH
NUMBER NOI ($) NCF ($) REVENUES ($) EXPENSES ($) INCOME ($) FLOW ($) LARGEST TENANT NAME
- ------------------------------------------------------------------------------------------------------------------------------------
1 15,487,715 15,337,337 30,664,896 12,737,947 17,926,949 16,608,246 Ernst & Young
2 44,671,292 44,445,637 63,438,713 18,543,090 44,895,623 44,558,893 Credit Suisse First Boston
3 4,927,630 4,891,630 8,113,421 3,144,785 4,968,637 4,740,528 American Insurance Association, Inc.
4 5,380,536 5,380,536 7,255,701 1,739,860 5,515,841 4,955,652 Best Buy
5 4,686,282 1,557,697 3,128,585 2,978,148 B.E. West 56th Street, LLC
(Beacon Restaurant)
6 4,229,116 4,156,250 7,580,558 3,332,408 4,248,149 3,905,114 Sears, Roebuck & Co.
7 4,297,438 1,354,582 2,942,856 2,912,218 United States Government
8 4,120,160 1,232,918 2,887,242 2,826,685 LA Fitness
9 2,811,284 506,426 2,304,858 2,264,818 King Kullen Grocery Co., Inc.
10 2,400,557 2,318,727 3,582,510 1,314,080 2,268,430 2,186,600
11 1,621,015 1,605,146 2,245,545 724,974 1,520,571 1,477,797 Stop & Shop
12 1,174,668 1,119,668 2,202,371 889,981 1,312,390 1,257,390
13 2,169,540 2,134,363 3,297,981 1,397,500 1,900,481 1,635,157 Crawford and Company
14 2,186,160 43,723 2,142,437 1,971,180 ConAgra Foods, Inc
15 1,431,578 1,377,578 2,168,834 776,131 1,392,702 1,338,702
16 1,593,211 1,550,703 2,350,068 873,592 1,476,475 1,329,849 Product Development Corp.
17 1,730,158 1,730,158 3,076,016 1,384,303 1,691,713 1,411,267 Ikon Office Solutions
18 1,002,678 957,647 1,854,157 785,889 1,068,268 1,023,237
19 1,289,405 1,272,842 1,651,165 433,149 1,218,016 1,201,453
20 1,703,975 1,703,975 2,981,458 1,304,686 1,676,773 1,506,415 Sears, Roebuck & Co.
21 1,127,226 1,120,514 1,435,555 312,336 1,123,219 1,109,048 Albertsons
22 1,624,487 1,629,242 2,175,027 729,773 1,445,255 1,215,287 Exel, Inc.
23 1,916,697 1,916,697 3,059,631 1,431,760 1,627,870 1,413,491 Montgomery County
24 884,126 868,252 1,648,407 572,256 1,076,151 1,060,276
25 1,667,097 1,646,271 1,750,376 635,377 1,114,999 1,005,478 Sears, Roebuck & Co.
26 946,694 946,694 1,726,819 561,775 1,165,044 1,102,362 Fiesta Mart Inc.
27 1,058,192 977,942 2,180,725 1,152,902 1,027,823 947,573
28 1,117,079 1,099,977 1,570,291 491,361 1,078,931 1,061,829
29 1,030,714 971,214 1,944,240 1,028,376 915,864 856,364
30 928,685 928,685 1,288,612 418,314 870,297 852,297
31 729,016 669,016 1,674,233 839,612 834,622 774,622
32 1,036,377 993,977 1,548,856 538,749 1,010,108 891,679 OBCO, Inc.
33 1,896,991 1,714,158 4,540,655 2,706,807 1,833,849 1,652,223
34 1,049,108 1,045,360 1,526,127 582,791 943,336 828,402 New England Baptist Hospital
35 1,036,015 992,015 1,300,430 358,392 942,039 823,750 Toys "R" Us
36 1,146,805 1,136,905 1,615,430 673,375 942,054 842,707 Leo Tucker / Northwestern
37 1,596,765 1,566,272 2,089,159 647,527 1,441,631 1,350,122 Z Gallerie
38 754,353 388,682 1,111,588 269,762 841,826 756,931 NV Mortgage Co.
39 844,999 833,075 1,440,402 598,028 842,374 792,955
40 942,951 916,686 1,321,888 343,157 978,731 869,241 Linens 'n Things Warehouse
41 484,788 484,788 1,044,924 379,367 665,557 643,157
42 664,059 664,059 1,514,530 539,384 975,146 851,389 Giant Foods LLC
43 1,386,907 1,240,736 3,434,552 2,204,262 1,230,290 1,092,908
44 (373,680) (373,680) 1,286,996 544,950 742,046 679,588 Northside Hospital & Heart Institute
(Galencare)
45 774,201 762,195 1,050,153 324,613 725,540 713,534
46 429,945 429,489 837,454 256,283 581,171 564,171
47 812,097 782,642 814,711 199,282 615,429 568,366 Barnes & Noble
48 793,029 788,945 1,075,105 355,484 719,620 715,536
49 683,384 20,502 662,883 659,557 AT&T Wireless
50 784,974 688,188 2,379,587 1,580,006 799,581 702,018
51 835,439 238,050 597,390 554,512 The Horizon Group
52 606,019 572,539 1,037,495 456,179 581,316 547,836
53 619,270 597,559 1,054,569 358,739 695,830 633,769 Strands Home Furnishings
54 786,074 157,095 628,979 550,866 Aladdin Manufacturing
55 638,092 628,585 955,572 408,968 546,604 490,385 Santa Clara County
56 367,153 367,153 769,070 282,613 486,457 474,857
57 604,869 599,313 682,453 176,252 506,201 442,895 H&R Block Tax Services
58 602,016 595,176 687,050 170,847 516,204 487,253 Secur Data Systems, Inc.
59 517,274 515,222 599,200 88,454 510,746 488,986 Paymon's Mediterranean Cafe
60 559,491 517,111 795,299 234,940 560,359 503,234 Gonzales Meat Market
61 453,741 442,216 730,805 294,427 436,378 424,853
62 306,738 306,738 766,158 200,157 566,001 530,012 Midtown of Mtn Island Lake LLC
63 441,397 401,397 1,036,226 552,020 484,206 444,206
64 447,881 432,181 724,537 296,206 428,331 412,631
65 479,822 471,632 798,263 306,947 491,316 483,126
66 466,677 459,989 719,971 281,168 438,803 432,115
67 797,412 309,028 488,384 435,694 Caldwell Watson
68 470,033 464,860 555,098 99,778 455,320 410,160 Great American Homes
69 444,370 444,370 796,404 317,859 478,545 455,045
70 427,128 419,940 638,947 261,581 377,366 370,178
71 446,025 13,381 432,644 402,907 Best Buy
72 473,183 473,183 529,127 131,712 397,414 366,047 Max Health
73 342,000 10,260 331,740 330,375 Walgreens
74 344,283 335,043 531,786 219,186 312,600 303,361
75 323,400 9,702 313,698 309,369 Walgreens
76 402,582 76,999 325,583 312,696 Schwarzchild
77 342,510 10,275 332,235 328,354 Walgreens
78 848,118 321,596 526,522 471,075 Piggly Wiggly
79 421,663 398,016 461,625 81,359 380,266 306,862 T.J. Maxx
80 84,347 84,347 464,907 96,861 368,046 342,535 Clean Zone Laundromat
81 314,088 314,088 294,000 9,820 284,180 279,117 Walgreens
82 324,000 9,720 314,280 312,773 Walgreens
83 254,581 238,487 582,982 282,405 300,577 272,977
84 288,857 288,857 291,060 12,232 278,828 273,425 Walgreens
85 264,549 257,386 425,248 169,589 255,659 248,496
86 300,825 6,017 294,809 282,475 Airborne Express, Inc.
87 750,000 7,500 742,500 742,500 Wal-Mart Real Estate Business Trust
88 249,900 7,497 242,403 237,852 Walgreens
89 273,046 262,136 418,710 162,818 255,891 244,981
90 218,104 188,104 592,267 363,950 228,316 198,316
91 276,714 262,050 550,031 302,920 247,112 225,112
92 235,320 7,060 228,260 225,855 Staples
93 259,336 7,780 251,555 250,465 Eckerd Drug
94 228,150 6,845 221,306 219,956 Walgreens
95 191,337 191,337 196,590 10,088 186,502 169,262 Food Lion
96 165,562 137,662 409,023 223,145 185,878 157,978
96.1
96.2
2ND
MORTGAGE LARGEST LARGEST 2ND LARGEST LARGEST
LOAN TENANT SQ. TENANT LARGEST TENANT TENANT SQ. TENANT %
NUMBER FT. % OF NRA EXP. DATE 2ND LARGEST TENANT NAME FT. OF NRA (%)
- -----------------------------------------------------------------------------------------------------------------------------------
1 148,713 11.98% Multiple Spaces GSA 124,069 9.99%
2 1,921,459 85.15% Multiple Spaces Aon (sublet to IBM) 138,072 6.12%
3 44,693 20.43% Multiple Spaces Starpower Communications 12,100 5.53%
4 51,259 10.76% 10/31/06 Stein Mart 36,000 7.56%
5 13,540 13.49% 11/30/18 The Timberland Company 11,486 11.45%
6 143,504 29.54% 09/11/09 Parisian 127,938 26.34%
7 127,210 86.00% 12/31/18
8 41,000 30.81% 10/01/18 Thomasville Furniture 12,000 9.02%
9 40,000 38.85% 06/30/27 Eckerd Drug 9,665 9.39%
10
11 55,532 38.49% 10/31/07 The Fabric Place 25,030 17.35%
12
13 79,085 42.72% 09/30/08 AmTrust Mortgage Corporation 14,597 7.88%
14 726,299 100.00% 08/31/13
15
16 46,000 10.82% 12/31/06 US Furniture 26,000 6.12%
17 82,323 42.76% 10/31/09 Access Integrated Network 30,800 16.00%
18
19
20 72,350 25.32% 07/31/34 JCPenney 50,544 17.69%
21 55,859 83.22% 12/10/28 Bank of America 5,000 7.45%
22 90,203 64.43% 12/31/09 Central Ohio Primary Care Physicians, Inc. 18,607 13.29%
23 115,893 79.80% 05/31/12 Montgomery County - Treasury 13,152 9.06%
24
25 86,240 22.84% 03/07/20 JCPenney 80,929 21.44%
26 42,172 34.04% 04/30/22 Sam's $1.00 Store 11,990 9.68%
27
28
29
30
31
32 18,156 27.20% 11/24/08 Cascade Pediatrics 3,343 5.01%
33
34 11,956 28.28% 10/21/08 Brigham & Women's Hospital 7,426 17.56%
35 56,160 40.02% 01/31/13 PNS Stores, Inc. 23,241 16.56%
36 19,369 29.35% 07/14/14 Foxhall - Direct Response 10,115 15.33%
37 34,895 35.90% 02/01/12 Crate & Barrel 23,250 23.92%
38 10,348 20.03% 04/21/08 Preferred Dialysis Care 6,132 11.87%
39
40 262,644 100.00% 01/31/09
41
42 54,332 26.20% 06/30/21 Ollies Bargain Outlet 45,000 21.70%
43
44 21,311 39.46% Multiple Spaces Heart & Vascular Institute 12,696 23.51%
45
46
47 36,600 80.21% 07/31/14 Motophoto 3,020 6.62%
48
49 33,257 100.00% 05/08/18
50
51 23,819 60.52% 10/17/09 The Learning Experience 11,017 27.99%
52
53 12,294 16.43% 10/31/07 Kid's Country, Inc. 7,103 9.49%
54 36,000 33.05% 08/01/08 American Standard 22,000 20.19%
55 15,114 39.02% 10/01/09 Micor / Valley Gen. 4,623 11.94%
56
57 7,122 12.81% 03/04/09 Diamondback Gymnastics 7,039 12.66%
58 20,400 29.82% Multiple Spaces American Residential Serv LLC 10,600 15.50%
59 6,550 32.06% 03/12/14 Mosaic Salon 3,885 19.02%
60 13,450 18.97% 02/28/08 La Frontera 5,600 7.90%
61
62 8,000 19.51% 05/31/14 Allen Tate Company, Inc. 4,800 11.71%
63
64
65
66
67 13,692 32.45% 10/31/11 Eagle Energy 6,845 16.22%
68 9,030 34.92% 02/28/11 Power Realty, LLC 3,506 13.56%
69
70
71 30,000 100.00% 01/31/13
72 5,999 23.16% 09/14/10 Family Doctors: Dr.Ramanathan 4,335 16.74%
73 13,650 100.00% 01/31/79
74
75 13,943 100.00% 04/01/78
76 5,000 33.33% 10/31/13 Book Binders 4,000 26.67%
77 13,650 100.00% 04/30/79
78 33,191 31.41% 12/31/23 CVS 10,714 10.14%
79 78,823 100.00% 10/31/12
80 2,800 8.23% 11/30/12 Lillian's Retail Beauty Supply 2,625 7.72%
81 14,490 100.00% 02/28/77
82 15,070 100.00% 03/31/61
83
84 15,930 100.00% 08/31/59
85
86 40,873 100.00% 04/30/14
87 128,680 100.00% 01/22/28
88 13,650 100.00% 09/30/78
89
90
91
92 24,049 100.00% 02/28/15
93 10,908 100.00% 08/16/17
94 13,500 100.00% 08/31/44
95 26,640 100.00% 03/08/09
96
96.1
96.2
3rd 3rd
MORTGAGE 2ND LARGEST Largest Largest 3RD LARGEST Largest
LOAN TENANT EXP. Tenant Tenant % TENANT EXP. Affiliated Sponsor Flag
NUMBER DATE 3RD LARGEST TENANT NAME Sq. Ft of NRA DATE LOCKBOX (> than 4% of Pool)
- --------------------------------------------------------------------------------------------------------- --------------------------
1 Multiple Spaces Robinsons-May 123,503 9.95% 03/12/11 Day 1 Trizec Properties, Inc.
2 04/30/13 Omnicom 95,557 4.23% 09/30/08 Day 1 Tamir Sapir
3 05/31/07 Nichols-Dezenhall Communications 11,414 5.22% 07/31/05 Springing Victor K. Tolkan,
Julia Springer Tolken
4 10/31/06 OfficeMax Inc. 27,891 5.86% 01/31/07 Day 1 Richard Langhorne,
Richard Markham
5 06/30/11 Multiples, Inc.
(Marian Goodman Gallery) 9,872 9.84% 06/30/08 Day 1
6 01/31/15 Eastdale Cinemas 8 28,945 5.96% 08/31/07 Springing
7 Day 1
8 03/01/14 Olive Garden (Ground Lease) 7,405 5.56% 10/01/13 Springing
9 06/30/24 Town of Southampton 9,200 8.94% 05/31/19
10 Springing
11 02/28/08 Candle Corporation 17,059 11.82% 12/31/05 Day 1
12 Springing
13 12/31/11 Communicorp, Inc. 12,998 7.02% 12/31/07 Springing
14 Springing
15 Day 1
16 09/30/05 Walter P. Sauer 22,600 5.32% Multiple Spaces Springing
17 12/31/13 Secure Health Plans of Georgia 16,646 8.65% 01/31/10 Springing
18 Springing
19 Springing
20 11/12/06 Goody's 24,175 8.46% 08/31/14 Day 1
21 12/31/23 Port of Subs 1,462 2.18% 05/31/09 Springing
22 06/30/10 Centex Homes 14,679 10.48% 04/30/08 Day 1
23 01/31/09 Metro Fitness 13,133 9.04% 12/31/11 Springing
24 Springing Extra Space Storage, LLC
25 08/31/11 Belk, Inc. 61,230 16.22% 08/05/11 Springing
26 06/30/12 CVS (Ground Lease) 11,452 9.24% 01/31/25
27
28 Springing Extra Space Storage, LLC
29 Springing
30
31 Springing
32 Multiple Spaces Dr. Robert Tanner 2,719 4.07% 02/28/14
33
34 02/19/14 Longwood Orthopedic Associates 6,982 16.51% 10/21/13 Springing
35 12/31/09 OfficeMax Inc. 19,908 14.19% 04/30/09
36 09/16/05 Spexus, Inc. 5,268 7.98% 11/15/07 Springing
37 01/31/13 Restoration Hardware 11,523 11.86% 04/30/09
38 01/01/09 Old Republic Title 6,052 11.72% 09/13/06 Day 1
39 Day 1
40 Springing
41
42 05/31/09 Rex Appliances 16,000 7.72% 01/31/09
43
44 02/01/19 Cardiac Surgical Associates 6,907 12.79% 05/01/14 Springing
45 Springing Extra Space Storage, LLC
46
47 08/31/05 Verizon Wireless 3,010 6.60% 05/31/06 Springing
48 Springing
49 Springing
50
51 05/31/19 The Watchung Pediatric Group 3,920 9.96% 05/31/19
52 Springing Extra Space Storage, LLC
53 01/31/06 Video Factory 3,600 4.81% 03/31/09
54 08/01/12 USF Processors, Inc. 16,000 14.69% 06/01/07 Springing
55 11/01/06 Starbucks, Inc. 2,967 7.66% 11/01/07 Springing
56
57 12/31/07 The BBQ Store 4,543 8.17% 01/31/08 Springing
58 10/31/05 Pursuit Marketing Inc. 10,800 15.79% 07/31/05 Springing
59 03/08/14 Las Vegas Rugs, Inc. 3,095 15.15% 03/14/09 Springing
60 05/31/06 Mattress Shop 5,000 7.05% 05/31/07
61 Springing Extra Space Storage, LLC
62 12/31/08 KAZ Pizza, Inc. 4,500 10.98% 11/30/12
63
64 Springing Extra Space Storage, LLC
65
66 Springing Extra Space Storage, LLC
67 07/31/09 Mark West 5,826 13.81% 03/31/11
68 02/28/09 First American Title 3,300 12.76% 04/30/09 Springing
69
70 Springing Extra Space Storage, LLC
71 Springing
72 12/12/08 Design Center West 3,645 14.07% 05/08/07
73
74 Springing Extra Space Storage, LLC
75 Springing
76 11/30/13 Second Swing 3,000 20.00% 08/31/09 Springing
77
78 03/31/11 The Fitness Club 7,788 7.37% 09/30/13 Springing
79 Springing
80 05/30/06 Trin B'Ago Caribbean Restaurant 2,600 7.64% 02/28/06
81
82 Springing
83 Day 1
84
85 Springing Extra Space Storage, LLC
86 Springing
87 Day 1
88 Springing
89 Springing Extra Space Storage, LLC
90
91
92 Springing
93 Springing
94 Springing
95 Day 1
96
96.1
96.2
(1) This Mortgage Loan is part of a split loan structure and the related pari
passu companion loans are not included in the trust fund with respect to this
Mortgage Loan, unless otherwise specified, the calculation of Balance per SF,
LTV ratios and DSC ratios were based upon the aggregate indebtedness of this
Mortgage Loan and the related pari passu companion loans not including the
non-pooled sudordinate component.
(2) For purposes of determining the DSC Ratio of 1 Mortgage Loan (loan number
91), representing 0.2% of the Cut-Off Date Pool Balance (2.0% of the Cut-Off
Date Group 2 Balance), the debt service payments were reduced by taking into
account amounts available under a cash reserve.
(3) For purposes of determining the LTV Ratios of 1 Mortgage Loan (loan number
46), representing 0.6% of the Cut-Off Date Pool Balance (5.7% of the Cut-Off
Date Group 2 Balance), such ratios were reduced by taking into account amounts
available under a cash reserve.
See "DESCRIPTION OF THE MORTGAGED POOL - Additional Mortgage Loan Information"
in the prospectus supplement.
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2004-C12
ANNEX A-1A CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS AND MORTGAGED PROPERTIES IN LOAN GROUP 1
- ----------
MORTGAGE
LOAN LOAN GROUP
NUMBER NUMBER PROPERTY NAME
- ------------------------------------------------------------------------
1 1 Ernst & Young Plaza
2 1 11 Madison Avenue(1)
3 1 1130 Connecticut Avenue
4 1 Crossroads Plaza
5 1 24 West 57th Street
6 1 Eastdale Mall
7 1 One Riverview Square
8 1 Pointe at Wellington
9 1 Hampton Bays Town Center
11 1 Cowesset Corners
13 1 Glenridge Pointe Office Buildings
14 1 ConAgra Distribution Facility
15 1 Broadstone Heights Apartments
16 1 Greenpoint Industrial Center
17 1 Highridge Centre
19 1 Country Manor Mobile Home Park
20 1 Washington Park Mall
21 1 Flamingo Promenade
22 1 570 Polaris Parkway
23 1 255 Rockville Pike
24 1 Extra Space Self Storage - Lawrenceville, NJ
25 1 The Mall at Waycross
26 1 Ridgewood Village Shopping Center
27 1 Mountain View Apartments
28 1 Extra Space Self Storage - Hazlet, NJ
32 1 Meadow Creek Office Park
33 1 Marriott Courtyard Hotel - Cranbury, NJ
34 1 830 Boylston Street
35 1 Eastgate Center
36 1 The McLean Commercial Center
37 1 4th Street Retail
38 1 Somerset Park
40 1 Linens 'n Things Distribution Center
41 1 Logger Creek Apartments
42 1 Regency Mall
43 1 Spring Hill Suites Hotel - Tampa, FL
44 1 Northside Medical Plaza
45 1 Extra Space Self Storage - Torrance, CA
47 1 Barnes & Noble Center
48 1 Ballenger Creek Mini-Storage
49 1 AT&T Wireless - Santa Clara, CA
50 1 Marriott Courtyard Hotel - Myrtle Beach, SC
51 1 Watchung Hills Office Center
52 1 Extra Space Self Storage - North Miami, FL
53 1 Monroe Plaza Shopping Center
54 1 Crescent Business Center
55 1 Koll-Lyon Plaza Office Building
57 1 Clearview Commons at Superstition Springs
58 1 Ballenger Commerce Center
59 1 Great American Plaza Retail Center
60 1 Plaza Del Centro
61 1 Extra Space Self Storage - Livermore, CA
62 1 Callabridge Commons
64 1 Extra Space Self Storage - Richmond, CA
65 1 Shurgard Colonialtown - Orlando, FL
66 1 Extra Space Self Storage - Glendale, CA
67 1 7904 N. Sam Houston Parkway West
MORTGAGE
LOAN
NUMBER ADDRESS CITY
- ------------------------------------------------------------------------------------------------------------------------------------
1 725 & 735 South Figueroa Street Los Angeles
2 11 Madison Avenue New York
3 1130 Connecticut Avenue, NW Washington
4 213 Crossroads Boulevard Cary
5 24 West 57th Street New York
6 1031 - 1240 Eastdale Circle Montgomery
7 333 South Miami Avenue Miami
8 10200 Forest Hill Boulevard Wellington
9 52 East Montauk Highway Hampton Bays
11 300 Quaker Lane Warwick
13 100 and 200 Glenridge Parkway Atlanta
14 1000 Oates Court Modesto
15 8100 Barstow Street N.E. Albuquerque
16 236-276 Greenpoint Avenue Brooklyn
17 3920 Arkwright Road Macon
19 2 Apple Alley Middlesex Township
20 2350 SE Washington Boulevard Bartlesville
21 10120 Flamingo Road Las Vegas
22 570 Polaris Parkway Westerville
23 255 Rockville Pike Rockville
24 2870 Brunswick Pike Lawrenceville
25 2215 Memorial Drive Waycross
26 2940 South First Street Garland
27 3708 Lodge Drive Hoover
28 1110 Route 36 Hazlet
32 22510, 22516, 22525, 22526, 22530 and 22619 SE 64th Place Issaquah
33 420 Forsgate Drive Cranbury
34 830 Boylston Street Brookline
35 9801 Gateway West Boulevard El Paso
36 6849 Old Dominion Drive McLean
37 1700,1710,1738 5th Street & 1717,1731,1785,1789,1791,1793,1795,1799 4th Street and 723 Delaware Street Berkeley
38 7710, 7720 and 7730 West Sahara Avenue Las Vegas
40 1109 Commerce Boulevard Logan Township
41 298, 320, 332, 344, 356, 378, and 390 West Hale Street Boise
42 1570 Oakland Avenue Indiana
43 4835 Cypress Street Tampa
44 NWC of 58th Avenue & 49th Street St Petersburg
45 17575 South Western Avenue Torrance
47 4935 South 76th Street Greenfield
48 4971 New Design Road Frederick
49 3205 Bassett Street Santa Clara
50 1000 Commons Boulevard Myrtle Beach
51 76 Stirling Road Warren
52 13050 & 13101 Northeast 16th Avenue North Miami
53 19813-19999 State Route 2 Monroe
54 10404 & 10408 Lakeridge Center Parkway Ashland
55 1641 North First Street San Jose
57 7205 & 7211 East Southern Avenue Mesa
58 4640 & 4650 Wedgewood Boulevard Frederick
59 8320 & 8380 West Sahara Boulevard Las Vegas
60 501-569 East Palmdale Boulevard Palmdale
61 5888 Northfront Road Livermore
62 3605-3635 Mt. Holly-Huntersville Road Charlotte
64 4031 Lakeside Drive Richmond
65 1023 North Mills Avenue Orlando
66 5120 San Fernando Road Glendale
67 7904 North Sam Houston Parkway West Houston
MORTGAGE
LOAN CROSS COLLATERALIZED AND CROSS GENERAL PROPERTY
NUMBER STATE ZIP CODE DEFAULTED LOAN FLAG LOAN ORIGINATOR TYPE
- --------------------------------------------------------------------------------------------------------------------------
1 CA 90017 Eurohypo Office
2 NY 10010 Wachovia Office
3 DC 20036 Wachovia Office
4 NC 27511 Citigroup Retail
5 NY 10019 Wachovia Office
6 AL 36117 Wachovia Retail
7 FL 33130 Artesia Office
8 FL 33041 Wachovia Retail
9 NY 11946 Wachovia Retail
11 RI 02886 Wachovia Retail
13 GA 30342 Wachovia Office
14 CA 95358 Wachovia Industrial
15 NM 87113 Wachovia Multifamily
16 NY 11222 Wachovia Industrial
17 GA 31210 Citigroup Office
19 PA 17013 Wachovia Mobile Home Park
20 OK 74006 Eurohypo Retail
21 NV 89147 Wachovia Retail
22 OH 43082 Citigroup Office
23 MD 20850 Citigroup Office
24 NJ 08648 Extra Space Self Storage Portfolio Wachovia Self Storage
25 GA 31501 Citigroup Retail
26 TX 75041 Artesia Retail
27 AL 35216 Wachovia Multifamily
28 NJ 07730 Extra Space Self Storage Portfolio Wachovia Self Storage
32 WA 98027 Artesia Office
33 NJ 08512 Wachovia Hospitality
34 MA 02467 Citigroup Office
35 TX 79225 Wachovia Retail
36 VA 22101 Wachovia Office
37 CA 94710 Artesia Retail
38 NV 89117 Citigroup Office
40 NJ 08085 Wachovia Industrial
41 ID 83706 Artesia Multifamily
42 PA 15701 Artesia Retail
43 FL 33635 Wachovia Hospitality
44 FL 33709 Wachovia Office
45 CA 90248 Extra Space Self Storage Portfolio Wachovia Self Storage
47 WI 53220 Citigroup Retail
48 MD 21703 Wachovia Self Storage
49 CA 95054 Cole Company Portfolio Wachovia Industrial
50 SC 29572 Wachovia Hospitality
51 NJ 07059 Artesia Office
52 FL 33181 Extra Space Self Storage Portfolio Wachovia Self Storage
53 WA 98272 Artesia Retail
54 VA 23005 Wachovia Industrial
55 CA 95112 Wachovia Office
57 AZ 85208 Wachovia Mixed Use
58 MD 21703 Wachovia Industrial
59 NV 89117 Wachovia Retail
60 CA 93550 Citigroup Retail
61 CA 94551 Extra Space Self Storage Portfolio Wachovia Self Storage
62 NC 28216 Artesia Retail
64 CA 94806 Extra Space Self Storage Portfolio Wachovia Self Storage
65 FL 32803 Wachovia Self Storage
66 CA 91204 Extra Space Self Storage Portfolio Wachovia Self Storage
67 TX 77064 Artesia Office
MORTGAGE CUT-OFF % OF AGGREGATE % OF LOAN
LOAN ORIGINAL LOAN DATE LOAN CUT-OFF DATE GROUP 1 ORIGINATION FIRST PAY
NUMBER SPECIFIC PROPERTY TYPE BALANCE ($) BALANCE ($) BALANCE BALANCE DATE DATE
- ------------------------------------------------------------------------------------------------------------------------------------
1 CBD 120,000,000.00 119,298,859.34 11.22% 12.58% 01/28/04 03/01/04
2 CBD 82,000,000.00 82,000,000.00 7.71% 8.65% 12/23/03 02/11/04
3 CBD 58,500,000.00 58,500,000.00 5.50% 6.17% 04/21/04 06/11/04
4 Anchored 57,500,000.00 57,500,000.00 5.41% 6.06% 05/05/04 06/11/04
5 CBD 35,000,000.00 35,000,000.00 3.29% 3.69% 05/21/04 07/11/04
6 Anchored 32,600,000.00 32,563,845.00 3.06% 3.43% 05/28/04 07/11/04
7 CBD 30,000,000.00 30,000,000.00 2.82% 3.16% 05/07/04 06/11/04
8 Shadow Anchored 23,000,000.00 22,856,382.58 2.15% 2.41% 12/11/03 01/11/04
9 Anchored 20,500,000.00 20,500,000.00 1.93% 2.16% 05/21/04 07/11/04
11 Anchored 17,430,000.00 17,430,000.00 1.64% 1.84% 05/18/04 07/11/04
13 Suburban 16,500,000.00 16,500,000.00 1.55% 1.74% 05/06/04 06/11/04
14 Warehouse 16,400,000.00 16,400,000.00 1.54% 1.73% 06/15/04 08/11/04
15 Conventional 15,250,000.00 15,250,000.00 1.43% 1.61% 04/22/04 06/11/04
16 Light Industrial 15,000,000.00 14,983,704.82 1.41% 1.58% 05/21/04 07/11/04
17 Suburban 14,500,000.00 14,466,761.14 1.36% 1.53% 04/22/04 06/11/04
19 Mobile Home Park 13,440,000.00 13,424,059.10 1.26% 1.42% 05/12/04 07/11/04
20 Anchored 13,050,000.00 13,007,712.59 1.22% 1.37% 03/01/04 05/01/04
21 Anchored 13,000,000.00 13,000,000.00 1.22% 1.37% 06/14/04 08/11/04
22 Suburban 12,725,000.00 12,725,000.00 1.20% 1.34% 05/20/04 07/11/04
23 Suburban 12,000,000.00 11,976,706.37 1.13% 1.26% 04/29/04 06/11/04
24 Self Storage 11,946,000.00 11,946,000.00 1.12% 1.26% 06/01/04 07/11/04
25 Anchored 11,440,000.00 11,415,737.30 1.07% 1.20% 04/30/04 06/11/04
26 Anchored 11,000,000.00 10,973,121.93 1.03% 1.16% 05/12/04 07/11/04
27 Conventional 10,960,000.00 10,960,000.00 1.03% 1.16% 05/28/04 07/11/04
28 Self Storage 10,560,000.00 10,560,000.00 0.99% 1.11% 06/01/04 07/11/04
32 Suburban 9,120,000.00 9,109,421.41 0.86% 0.96% 06/01/04 07/11/04
33 Limited Service 9,000,000.00 8,985,982.13 0.85% 0.95% 05/26/04 07/11/04
34 Medical 8,875,000.00 8,864,355.96 0.83% 0.93% 05/24/04 07/11/04
35 Anchored 8,800,000.00 8,790,742.31 0.83% 0.93% 05/25/04 07/11/04
36 Suburban 8,500,000.00 8,481,194.26 0.80% 0.89% 05/04/04 06/11/04
37 Anchored 8,000,000.00 8,000,000.00 0.75% 0.84% 06/09/04 08/11/04
38 Medical 7,800,000.00 7,792,868.84 0.73% 0.82% 05/12/04 07/11/04
40 Warehouse 7,690,000.00 7,690,000.00 0.72% 0.81% 04/09/04 05/11/04
41 Conventional 7,600,000.00 7,584,424.08 0.71% 0.80% 04/26/04 06/11/04
42 Anchored 7,500,000.00 7,500,000.00 0.71% 0.79% 06/17/04 08/11/04
43 Limited Service 7,300,000.00 7,288,629.94 0.69% 0.77% 05/26/04 07/11/04
44 Medical 7,250,000.00 7,250,000.00 0.68% 0.76% 06/15/04 08/11/04
45 Self Storage 6,960,000.00 6,960,000.00 0.65% 0.73% 06/01/04 07/11/04
47 Anchored 6,400,000.00 6,393,451.26 0.60% 0.67% 05/21/04 07/11/04
48 Self Storage 6,300,000.00 6,292,733.14 0.59% 0.66% 05/14/04 07/11/04
49 Light Industrial 6,032,000.00 6,032,000.00 0.57% 0.64% 05/05/04 06/11/04
50 Limited Service 6,020,000.00 6,010,623.60 0.57% 0.63% 05/26/04 07/11/04
51 Suburban 5,900,000.00 5,900,000.00 0.55% 0.62% 06/15/04 08/11/04
52 Self Storage 5,848,000.00 5,848,000.00 0.55% 0.62% 06/01/04 07/11/04
53 Shadow Anchored 5,400,000.00 5,391,053.34 0.51% 0.57% 05/20/04 07/11/04
54 Flex/Warehouse 5,400,000.00 5,388,861.28 0.51% 0.57% 04/27/04 06/11/04
55 Suburban 5,300,000.00 5,293,920.70 0.50% 0.56% 05/12/04 07/11/04
57 Office/Retail/Warehouse 5,050,000.00 5,040,218.72 0.47% 0.53% 04/30/04 06/11/04
58 Warehouse/Flex 5,000,000.00 4,994,091.56 0.47% 0.53% 05/14/04 07/11/04
59 Unanchored 5,000,000.00 4,988,844.68 0.47% 0.53% 05/07/04 06/11/04
60 Unanchored 4,950,000.00 4,945,168.55 0.47% 0.52% 06/02/04 07/11/04
61 Self Storage 4,920,000.00 4,920,000.00 0.46% 0.52% 06/01/04 07/11/04
62 Unanchored 4,800,000.00 4,800,000.00 0.45% 0.51% 06/23/04 08/11/04
64 Self Storage 4,696,000.00 4,696,000.00 0.44% 0.50% 06/01/04 07/11/04
65 Self Storage 4,650,000.00 4,645,098.88 0.44% 0.49% 05/26/04 07/11/04
66 Self Storage 4,480,000.00 4,480,000.00 0.42% 0.47% 06/01/04 07/11/04
67 Suburban 4,400,000.00 4,395,174.88 0.41% 0.46% 06/01/04 07/11/04
LOAN INTEREST ORIGINAL REMAINING
MORTGAGE ADMINISTRATIVE INTEREST ACCURAL TERM TO TERM TO
LOAN MATURITY DATE MORTGAGE COST ACCRUAL METHOD MATURITY OR MATURITY OR
NUMBER OR ARD RATE (%) RATE (%) METHOD DURING IO ARD (MOS.) ARD (MOS.)
- -----------------------------------------------------------------------------------------------------------------------
1 02/01/14 5.0680% 0.04200% Actual/360 120 115
2 01/11/14 5.3043% 0.04200% Actual/360 Actual/360 120 114
3 05/11/11 5.2900% 0.04200% Actual/360 Actual/360 84 82
4 05/11/14 4.9200% 0.05200% Actual/360 Actual/360 120 118
5 06/11/09 5.6600% 0.04200% Actual/360 Actual/360 60 59
6 06/11/14 5.4300% 0.04200% Actual/360 120 119
7 05/11/11 5.8050% 0.04200% Actual/360 Actual/360 84 82
8 12/11/13 6.2300% 0.04200% Actual/360 120 113
9 06/11/14 5.0500% 0.04200% Actual/360 Actual/360 120 119
11 06/11/14 5.8000% 0.04200% Actual/360 Actual/360 120 119
13 05/11/14 4.8400% 0.04200% Actual/360 Actual/360 120 118
14 07/11/14 5.9200% 0.04200% Actual/360 120 120
15 05/11/14 5.8000% 0.04200% Actual/360 Actual/360 120 118
16 06/11/14 5.5400% 0.04200% Actual/360 120 119
17 05/11/14 4.9500% 0.04200% Actual/360 120 118
19 06/11/14 5.0700% 0.04200% Actual/360 120 119
20 04/01/14 5.3545% 0.04200% Actual/360 120 117
21 07/11/14 5.5000% 0.04200% Actual/360 Actual/360 120 120
22 06/11/11 5.9000% 0.07200% Actual/360 Actual/360 84 83
23 05/11/14 5.7300% 0.04200% Actual/360 120 118
24 06/11/09 4.3000% 0.04200% Actual/360 Actual/360 60 59
25 05/11/14 5.3200% 0.04200% Actual/360 120 118
26 06/11/24 5.1100% 0.04200% Actual/360 240 239
27 06/11/11 5.6700% 0.04200% Actual/360 Actual/360 84 83
28 06/11/09 4.3000% 0.04200% Actual/360 Actual/360 60 59
32 06/11/14 5.1900% 0.04200% Actual/360 120 119
33 06/11/14 5.5000% 0.04200% Actual/360 120 119
34 06/11/14 5.0100% 0.04200% Actual/360 120 119
35 06/11/14 5.7100% 0.04200% Actual/360 120 119
36 05/11/14 5.1200% 0.04200% Actual/360 120 118
37 07/11/19 5.4200% 0.04200% Actual/360 180 180
38 06/11/14 6.4420% 0.10200% Actual/360 120 119
40 04/11/14 4.7600% 0.04200% Actual/360 Actual/360 120 117
41 05/11/14 5.4800% 0.04200% Actual/360 120 118
42 07/11/14 6.0700% 0.04200% Actual/360 120 120
43 06/11/14 5.5000% 0.04200% Actual/360 120 119
44 07/11/14 6.1900% 0.04200% Actual/360 120 120
45 06/11/09 4.3000% 0.04200% Actual/360 Actual/360 60 59
47 06/11/14 5.8560% 0.04200% Actual/360 120 119
48 06/11/14 5.2200% 0.04200% Actual/360 120 119
49 05/11/11 4.4600% 0.04200% Actual/360 Actual/360 84 82
50 06/11/14 5.5000% 0.04200% Actual/360 120 119
51 07/11/14 6.0800% 0.04200% Actual/360 120 120
52 06/11/09 4.3000% 0.04200% Actual/360 Actual/360 60 59
53 06/11/14 5.0900% 0.04200% Actual/360 120 119
54 05/11/14 5.4500% 0.04200% Actual/360 120 118
55 06/11/14 5.2500% 0.04200% Actual/360 120 119
57 05/11/14 5.7400% 0.04200% Actual/360 120 118
58 06/11/14 5.0900% 0.04200% Actual/360 120 119
59 05/11/14 5.0800% 0.04200% Actual/360 120 118
60 06/11/14 6.1030% 0.04200% Actual/360 120 119
61 06/11/09 4.3000% 0.04200% Actual/360 Actual/360 60 59
62 07/11/26 6.0300% 0.04200% Actual/360 264 264
64 06/11/09 4.3000% 0.04200% Actual/360 Actual/360 60 59
65 06/11/14 5.7000% 0.04200% Actual/360 120 119
66 06/11/09 4.3000% 0.04200% Actual/360 Actual/360 60 59
67 06/11/14 5.4900% 0.04200% Actual/360 120 119
MORTGAGE ORIGINAL REMAINING MATURITY DATE OR MORTGAGE
LOAN REMAINING IO PERIOD AMORT TERM AMORT TERM MONTHLY P&I ARD BALLOON LOAN
NUMBER (MOS.) (MOS.) (MOS.) PAYMENTS ($) BALANCE ($) ARD LOAN PREPAYMENT PROVISIONS NUMBER
- ------------------------------------------------------------------------------------------------------------------------------------
1 360 355 649,182.20 98,873,179.03 N L(29),D(87),O(4) 1
2 54 360 360 455,568.81 75,961,366.74 Y L(30),D(87),O(3) 2
3 22 360 360 324,490.03 54,186,989.64 Y L(26),D(55),O(3) 3
4 22 360 360 305,867.24 49,656,345.66 N L(26),D(89),O(5) 4
5 23 360 360 202,253.83 33,639,540.61 N L(25),D(22),O(13) 5
6 360 359 183,670.00 27,170,952.89 Y L(25),D(88),O(7) 6
7 22 360 360 176,121.44 27,991,346.34 Y L(36),D(45),O(3) 7
8 360 353 141,315.92 19,639,802.06 Y L(48),D(68),O(4) 8
9 23 360 360 110,675.72 17,761,107.82 N L(25),D(92),O(3) 9
11 47 360 360 102,271.05 15,982,367.15 Y L(25),D(70),O(25) 11
13 46 360 360 86,969.17 14,874,874.08 Y L(26),YM1%orD(91),O(3) 13
14 360 360 97,484.37 13,875,476.82 Y L(24),D(93),O(3) 14
15 58 360 360 89,479.84 14,227,758.04 Y L(26),D(91),O(3) 15
16 360 359 85,545.18 12,544,762.15 N L(48),D(69),O(3) 16
17 360 358 77,396.65 11,901,800.64 N L(26),D(90),O(4) 17
19 360 359 72,724.90 11,074,143.54 Y L(48),D(69),O(3) 19
20 360 357 72,909.55 10,851,215.01 N L(27),D(89),O(4) 20
21 60 360 360 73,812.57 12,077,802.68 Y L(48),D(69),O(3) 21
22 83 IO IO IO 12,725,000.00 N L(25),D(56),O(3) 22
23 360 358 69,876.35 10,095,308.10 N L(26),D(69),2%(12),1%(11),O(2) 23
24 59 IO IO IO 11,946,000.00 Y L(48),D(9),O(3) 24
25 360 358 63,669.01 9,502,782.82 N L(26),D(91),O(3) 25
26 240 239 73,719.74 0.00 N L(60),YM1%(177),O(3) 26
27 11 360 360 63,403.68 10,027,880.28 N L(36),D(45),O(3) 27
28 59 IO IO IO 10,560,000.00 Y L(48),D(9),O(3) 28
32 360 359 50,022.59 7,543,712.59 N YM1%(117),O(3) 32
33 300 299 55,267.87 6,850,060.08 N L(47),YM1%(69),O(4) 33
34 360 359 47,697.17 7,298,469.39 N L(25),D(92),O(3) 34
35 360 359 51,131.02 7,397,993.66 N L(48),D(68),O(4) 35
36 360 358 46,255.25 7,015,652.80 Y L(26),D(90),O(4) 36
37 180 180 65,365.70 0.00 N L(48),D(129),O(3) 37
38 360 359 49,004.16 6,699,013.60 N L(25),D(92),O(3) 38
40 33 360 360 40,161.05 6,772,062.44 Y L(48),D(68),O(4) 40
41 360 358 43,056.65 6,344,799.00 N L(36),YM1%(81),O(3) 41
42 300 300 48,644.04 5,821,652.32 N L(36),D(81),O(3) 42
43 300 299 44,828.39 5,556,158.79 N L(47),YM1%(69),O(4) 43
44 360 360 44,356.97 6,182,679.52 Y L(48),D(68),O(4) 44
45 59 IO IO IO 6,960,000.00 Y L(48),D(9),O(3) 45
47 360 359 37,780.74 5,404,064.37 N L(25),D(92),O(3) 47
48 360 359 34,671.86 5,216,119.21 Y L(25),D(92),O(3) 48
49 82 IO IO IO 6,032,000.00 Y L(48),D(32),O(4) 49
50 300 299 36,968.07 4,581,928.14 N L(47),YM1%(69),O(4) 50
51 360 360 35,677.51 5,015,372.19 N L(36),D(81),O(3) 51
52 59 IO IO IO 5,848,000.00 Y L(48),D(9),O(3) 52
53 300 299 31,851.66 4,050,435.64 N L(36),D(81),O(3) 53
54 360 358 30,491.42 4,503,935.37 Y L(48),D(68),O(4) 54
55 360 359 29,266.80 4,392,361.26 Y L(25),D(92),O(3) 55
57 360 358 29,438.36 4,249,728.48 Y L(48),D(69),O(3) 57
58 360 359 27,116.77 4,122,515.65 Y L(25),D(92),O(3) 58
59 360 358 27,086.07 4,121,518.75 Y L(48),D(69),O(3) 59
60 360 359 30,006.33 4,210,272.55 N L(25),D(92),O(3) 60
61 59 IO IO IO 4,920,000.00 Y L(48),D(9),O(3) 61
62 264 264 33,124.73 0.00 N L(36),D(225),O(3) 62
64 59 IO IO IO 4,696,000.00 Y L(48),D(9),O(3) 64
65 360 359 26,988.62 3,907,980.73 N L(48),D(69),O(3) 65
66 59 IO IO IO 4,480,000.00 Y L(48),D(9),O(3) 66
67 360 359 24,955.12 3,674,103.52 N L(36),D(81),O(3) 67
MORTGAGE LTV RATIO
LOAN LOAN GROUP APPRAISED APPRAISAL CUT-OFF DATE AT MATURITY YEAR YEAR NUMBER OF
NUMBER NUMBER VALUE ($) DATE DSCR (X) LTV RATIO OR ARD BUILT RENOVATED UNITS
- -----------------------------------------------------------------------------------------------------------------------------------
1 1 187,000,000 11/13/03 2.13 63.80% 52.87% 1985 2000 1,241,440
2 1 675,000,000 12/02/03 1.81 54.67% 50.64% 1932 1997 2,256,552
3 1 73,400,000 04/01/04 1.22 79.70% 73.82% 1986 1996 218,738
4 1 72,500,000 04/08/04 1.35 79.31% 68.49% 1991 476,164
5 1 44,000,000 05/01/04 1.23 79.55% 76.45% 1920 2002 100,334
6 1 45,500,000 12/09/03 1.77 71.57% 59.72% 1977 2001 485,772
7 1 38,500,000 07/01/05 1.38 77.92% 72.70% 2004 147,917
8 1 34,400,000 04/10/04 1.67 66.44% 57.09% 2003 133,089
9 1 28,500,000 05/01/05 1.71 71.93% 62.32% 2004 102,956
11 1 21,800,000 04/16/04 1.20 79.95% 73.31% 1987 1999 144,265
13 1 24,000,000 12/22/03 1.57 68.75% 61.98% 1972 1999 185,141
14 1 32,600,000 04/06/04 1.69 50.31% 42.56% 2002 726,299
15 1 20,900,000 03/11/04 1.25 72.97% 68.08% 2003 216
16 1 20,000,000 04/09/04 1.30 74.92% 62.72% 1931 1995 425,080
17 1 21,100,000 03/25/04 1.52 68.56% 56.41% 1988 192,545
19 1 16,800,000 04/08/04 1.38 79.91% 65.92% 1960 418
20 1 17,400,000 02/17/04 1.72 74.76% 62.36% 1984 285,723
21 1 16,450,000 04/15/04 1.25 79.03% 73.42% 2004 67,121
22 1 18,950,000 05/01/04 1.60 67.15% 67.15% 2002 140,006
23 1 24,000,000 02/09/04 1.69 49.90% 42.06% 1972 1999 145,238
24 1 14,960,000 05/11/04 2.06 79.85% 79.85% 1998 924
25 1 15,875,000 03/08/04 1.32 71.91% 59.86% 1974 2004 377,544
26 1 15,300,000 04/07/04 1.25 71.72% 0.00% 1973 2002 123,873
27 1 13,700,000 04/21/04 1.25 80.00% 73.20% 1971 2002 321
28 1 13,200,000 04/07/04 2.34 80.00% 80.00% 1987 1,147
32 1 12,540,000 04/19/04 1.49 72.64% 60.16% 1987 66,748
33 1 16,300,000 04/07/04 2.49 55.13% 42.02% 2001 144
34 1 11,900,000 03/16/04 1.45 74.49% 61.33% 1958 1990 42,280
35 1 11,000,000 03/24/04 1.34 79.92% 67.25% 1970 1994 140,332
36 1 11,350,000 03/15/04 1.52 74.72% 61.81% 1974 1994 65,999
37 1 23,700,000 05/24/04 1.72 33.76% 0.00% 1946 2000 97,196
38 1 11,400,000 04/10/04 1.29 68.36% 58.76% 1998 51,651
40 1 12,800,000 12/03/03 1.80 60.08% 52.91% 1998 262,644
41 1 10,000,000 04/02/04 1.24 75.84% 63.45% 2003 112
42 1 12,000,000 09/01/05 1.46 62.50% 48.51% 1968 2004 207,346
43 1 12,300,000 03/31/04 2.03 59.26% 45.17% 2001 149
44 1 9,500,000 04/29/04 1.28 76.32% 65.08% 2003 54,000
45 1 8,700,000 04/19/04 2.38 80.00% 80.00% 1976 737
47 1 8,000,000 03/24/04 1.25 79.92% 67.55% 1980 1994 45,629
48 1 8,400,000 04/20/04 1.72 74.91% 62.10% 2000 872
49 1 8,810,000 02/27/04 2.45 68.47% 68.47% 2002 33,257
50 1 8,600,000 04/01/04 1.58 69.89% 53.28% 1999 157
51 1 8,400,000 06/01/05 1.30 70.24% 59.71% 2003 39,356
52 1 7,310,000 04/14/04 2.18 80.00% 80.00% 1995 796
53 1 9,750,000 04/16/04 1.66 55.29% 41.54% 1990 74,812
54 1 6,900,000 02/04/04 1.51 78.10% 65.27% 2002 108,940
55 1 6,900,000 03/24/04 1.40 76.72% 63.66% 1983 38,734
57 1 6,500,000 03/16/04 1.25 77.54% 65.38% 2000 55,594
58 1 6,300,000 04/20/04 1.50 79.27% 65.44% 2000 68,401
59 1 6,900,000 03/30/04 1.50 72.30% 59.73% 2004 20,431
60 1 7,300,000 03/16/04 1.40 67.74% 57.68% 1988 70,897
61 1 6,150,000 04/20/04 2.01 80.00% 80.00% 2000 672
62 1 7,350,000 04/20/04 1.33 65.31% 0.00% 2002 41,000
64 1 5,870,000 04/20/04 2.04 80.00% 80.00% 1984 773
65 1 6,200,000 04/22/04 1.49 74.92% 63.03% 2001 546
66 1 5,600,000 04/28/04 2.24 80.00% 80.00% 1976 429
67 1 5,900,000 04/20/04 1.45 74.49% 62.27% 2004 42,200
MOST
MORTGAGE CUT-OFF DATE RECENT
LOAN UNIT OF LOAN AMOUNT OCCUPANCY OCCUPANCY REVENUES MOST RECENT MOST RECENT
NUMBER MEASURE PER (UNIT) ($) RATE (%) "AS OF" DATE MOST RECENT PERIOD ($) EXPENSES ($) NOI ($)
- -------------------------------------------------------------------------------------------------------------------------------
1 Sq. Ft. 96 86.73% 05/01/04 TTM 3/31/04 30,337,905 14,850,190 15,487,715
2 Sq. Ft. 36 98.60% 04/01/04 TTM 11/15/03 62,279,306 17,608,014 44,671,292
3 Sq. Ft. 267 86.09% 03/31/04 Borrower Proforma 8,215,262 3,287,632 4,927,630
4 Sq. Ft. 121 99.37% 03/31/04 TTM 7,096,549 1,716,013 5,380,536
5 Sq. Ft. 349 97.48% 06/01/04
6 Sq. Ft. 67 96.48% 05/07/04 YE 2003 7,580,756 3,351,640 4,229,116
7 Sq. Ft. 203 86.00% 04/29/04
8 Sq. Ft. 172 100.00% 04/28/04
9 Sq. Ft. 199 95.53% 05/17/04
11 Sq. Ft. 121 100.00% 04/01/04 YE 2003 2,296,542 675,527 1,621,015
13 Sq. Ft. 89 91.08% 04/06/04 Borrower Proforma 3,578,251 1,408,711 2,169,540
14 Sq. Ft. 23 100.00% 06/10/04
15 Units 70,602 98.15% 04/20/04 Borrower Proforma 2,174,136 742,558 1,431,578
16 Sq. Ft. 35 97.65% 05/21/04 YE 2003 2,354,109 760,899 1,593,211
17 Sq. Ft. 75 100.00% 03/31/04 YE Statement 3,050,766 1,320,608 1,730,158
19 Pads 32,115 100.00% 05/04/04 YE 2003 1,715,271 425,866 1,289,405
20 Sq. Ft. 46 89.73% 01/12/04 YE 2003 2,919,217 1,215,242 1,703,975
21 Sq. Ft. 194 100.00% 05/15/04 Borrower Proforma 1,392,351 265,125 1,127,226
22 Sq. Ft. 91 100.00% 04/26/04 Annualized 2,238,977 614,491 1,624,487
23 Sq. Ft. 82 100.00% 01/01/04 YE Statement 3,242,531 1,325,834 1,916,697
24 Units 12,929 72.73% 05/13/04 In Place UW 1,446,276 562,150 884,126
25 Sq. Ft. 30 94.21% 03/31/04 YE Statement 2,123,088 455,991 1,667,097
26 Sq. Ft. 89 97.98% 03/01/04 TTM 3/31/04 1,468,427 521,734 946,694
27 Units 34,143 94.39% 05/17/04 2004 Budget 2,260,382 1,202,190 1,058,192
28 Units 9,207 89.80% 05/25/04 YE 2003 1,588,896 471,817 1,117,079
32 Sq. Ft. 136 98.69% 04/07/04 YE 2003 1,573,006 536,629 1,036,377
33 Rooms 62,403 62.61% 02/29/04 TTM 2/29/04 4,570,832 2,673,842 1,896,991
34 Sq. Ft. 210 94.75% 03/12/04 Annualized 1,492,148 443,040 1,049,108
35 Sq. Ft. 63 100.00% 04/15/04 YE 2003 1,398,724 362,709 1,036,015
36 Sq. Ft. 129 98.88% 03/12/04 Borrower Proforma 1,754,021 607,216 1,146,805
37 Sq. Ft. 82 97.19% 05/11/04 YE 2003 2,175,716 578,951 1,596,765
38 Sq. Ft. 151 90.64% 05/12/04 TTM 993,375 239,022 754,353
40 Sq. Ft. 29 100.00% 03/05/04 TTM 1,283,544 340,593 942,951
41 Units 67,718 94.64% 04/14/04 T-6 10/03-3/04 Annualized 900,994 416,206 484,788
42 Sq. Ft. 36 92.09% 05/14/04 YE 2003 1,112,004 447,945 664,059
43 Rooms 48,917 70.40% 02/28/04 TTM 2/29/04 3,654,258 2,267,351 1,386,907
44 Sq. Ft. 134 93.39% 06/09/04 2004 Budget - Expenses Only 373,680 (373,680)
45 Units 9,444 89.96% 05/25/04 YE 2003 1,045,514 271,313 774,201
47 Sq. Ft. 140 100.00% 05/21/04 YE Statement 989,508 177,411 812,097
48 Units 7,216 78.56% 05/03/04 Borrower Proforma 1,113,916 320,887 793,029
49 Sq. Ft. 181 100.00% 04/20/04
50 Rooms 38,284 56.31% 05/25/04 TTM 4/30/04 2,360,644 1,575,670 784,974
51 Sq. Ft. 150 100.00% 05/06/04
52 Units 7,347 90.70% 05/25/04 YE 2003 1,035,519 429,500 606,019
53 Sq. Ft. 72 76.26% 05/20/04 YE 2003 909,366 290,096 619,270
54 Sq. Ft. 49 89.15% 05/10/04
55 Sq. Ft. 137 97.65% 06/01/04 YE 2003 1,059,442 421,350 638,092
57 Sq. Ft. 91 80.63% 03/30/04 Borrower Proforma 793,297 188,428 604,869
58 Sq. Ft. 73 97.08% 05/07/04 Borrower Proforma 767,127 165,111 602,016
59 Sq. Ft. 244 100.00% 05/06/04 2004 Budget 598,546 81,272 517,274
60 Sq. Ft. 70 94.77% 05/05/04 TTM 808,522 249,031 559,491
61 Units 7,321 88.54% 05/25/04 YE 2003 720,704 266,963 453,741
62 Sq. Ft. 117 88.29% 05/24/04 YE 2003 457,610 150,872 306,738
64 Units 6,075 84.48% 05/25/04 YE 2003 751,169 303,288 447,881
65 Units 8,508 92.13% 04/30/04 T-6 Annualized 793,666 313,844 479,822
66 Units 10,443 94.87% 05/25/04 YE 2003 715,914 249,237 466,677
67 Sq. Ft. 104 100.00% 06/01/04
MORTGAGE MOST UW NET
LOAN RECENT UW UW OPERATING UW NET CASH
NUMBER NCF ($) REVENUES ($) EXPENSES ($) INCOME ($) FLOW ($) LARGEST TENANT NAME
- ------------------------------------------------------------------------------------------------------------------------------------
1 15,337,337 30,664,896 12,737,947 17,926,949 16,608,246 Ernst & Young
2 44,445,637 63,438,713 18,543,090 44,895,623 44,558,893 Credit Suisse First Boston
3 4,891,630 8,113,421 3,144,785 4,968,637 4,740,528 American Insurance Association, Inc.
4 5,380,536 7,255,701 1,739,860 5,515,841 4,955,652 Best Buy
5 4,686,282 1,557,697 3,128,585 2,978,148 B.E. West 56th Street, LLC (Beacon Restaurant)
6 4,156,250 7,580,558 3,332,408 4,248,149 3,905,114 Sears, Roebuck & Co.
7 4,297,438 1,354,582 2,942,856 2,912,218 United States Government
8 4,120,160 1,232,918 2,887,242 2,826,685 LA Fitness
9 2,811,284 506,426 2,304,858 2,264,818 King Kullen Grocery Co., Inc.
11 1,605,146 2,245,545 724,974 1,520,571 1,477,797 Stop & Shop
13 2,134,363 3,297,981 1,397,500 1,900,481 1,635,157 Crawford and Company
14 2,186,160 43,723 2,142,437 1,971,180 ConAgra Foods, Inc
15 1,377,578 2,168,834 776,131 1,392,702 1,338,702
16 1,550,703 2,350,068 873,592 1,476,475 1,329,849 Product Development Corp.
17 1,730,158 3,076,016 1,384,303 1,691,713 1,411,267 Ikon Office Solutions
19 1,272,842 1,651,165 433,149 1,218,016 1,201,453
20 1,703,975 2,981,458 1,304,686 1,676,773 1,506,415 Sears, Roebuck & Co.
21 1,120,514 1,435,555 312,336 1,123,219 1,109,048 Albertsons
22 1,629,242 2,175,027 729,773 1,445,255 1,215,287 Exel, Inc.
23 1,916,697 3,059,631 1,431,760 1,627,870 1,413,491 Montgomery County
24 868,252 1,648,407 572,256 1,076,151 1,060,276
25 1,646,271 1,750,376 635,377 1,114,999 1,005,478 Sears, Roebuck & Co.
26 946,694 1,726,819 561,775 1,165,044 1,102,362 Fiesta Mart Inc.
27 977,942 2,180,725 1,152,902 1,027,823 947,573
28 1,099,977 1,570,291 491,361 1,078,931 1,061,829
32 993,977 1,548,856 538,749 1,010,108 891,679 OBCO, Inc.
33 1,714,158 4,540,655 2,706,807 1,833,849 1,652,223
34 1,045,360 1,526,127 582,791 943,336 828,402 New England Baptist Hospital
35 992,015 1,300,430 358,392 942,039 823,750 Toys "R" Us
36 1,136,905 1,615,430 673,375 942,054 842,707 Leo Tucker / Northwestern
37 1,566,272 2,089,159 647,527 1,441,631 1,350,122 Z Gallerie
38 388,682 1,111,588 269,762 841,826 756,931 NV Mortgage Co.
40 916,686 1,321,888 343,157 978,731 869,241 Linens 'n Things Warehouse
41 484,788 1,044,924 379,367 665,557 643,157
42 664,059 1,514,530 539,384 975,146 851,389 Giant Foods LLC
43 1,240,736 3,434,552 2,204,262 1,230,290 1,092,908
44 (373,680) 1,286,996 544,950 742,046 679,588 Northside Hospital & Heart Institute (Galencare)
45 762,195 1,050,153 324,613 725,540 713,534
47 782,642 814,711 199,282 615,429 568,366 Barnes & Noble
48 788,945 1,075,105 355,484 719,620 715,536
49 683,384 20,502 662,883 659,557 AT&T Wireless
50 688,188 2,379,587 1,580,006 799,581 702,018
51 835,439 238,050 597,390 554,512 The Horizon Group
52 572,539 1,037,495 456,179 581,316 547,836
53 597,559 1,054,569 358,739 695,830 633,769 Strands Home Furnishings
54 786,074 157,095 628,979 550,866 Aladdin Manufacturing
55 628,585 955,572 408,968 546,604 490,385 Santa Clara County
57 599,313 682,453 176,252 506,201 442,895 H&R Block Tax Services
58 595,176 687,050 170,847 516,204 487,253 Secur Data Systems, Inc.
59 515,222 599,200 88,454 510,746 488,986 Paymon's Mediterranean Cafe
60 517,111 795,299 234,940 560,359 503,234 Gonzales Meat Market
61 442,216 730,805 294,427 436,378 424,853
62 306,738 766,158 200,157 566,001 530,012 Midtown of Mtn Island Lake LLC
64 432,181 724,537 296,206 428,331 412,631
65 471,632 798,263 306,947 491,316 483,126
66 459,989 719,971 281,168 438,803 432,115
67 797,412 309,028 488,384 435,694 Caldwell Watson
2ND
MORTGAGE LARGEST LARGEST 2ND LARGEST LARGEST
LOAN TENANT SQ. TENANT LARGEST TENANT TENANT SQ. TENANT %
NUMBER FT. % OF NRA EXP. DATE 2ND LARGEST TENANT NAME FT. OF NRA (%)
-----------------------------------------------------------------------------------------------------------------------------
1 148,713 11.98% Multiple Spaces GSA 124,069 9.99%
2 1,921,459 85.15% Multiple Spaces Aon (sublet to IBM) 138,072 6.12%
3 44,693 20.43% Multiple Spaces Starpower Communications 12,100 5.53%
4 51,259 10.76% 10/31/06 Stein Mart 36,000 7.56%
5 13,540 13.49% 11/30/18 The Timberland Company 11,486 11.45%
6 143,504 29.54% 09/11/09 Parisian 127,938 26.34%
7 127,210 86.00% 12/31/18
8 41,000 30.81% 10/01/18 Thomasville Furniture 12,000 9.02%
9 40,000 38.85% 06/30/27 Eckerd Drug 9,665 9.39%
11 55,532 38.49% 10/31/07 The Fabric Place 25,030 17.35%
13 79,085 42.72% 09/30/08 AmTrust Mortgage Corporation 14,597 7.88%
14 726,299 100.00% 08/31/13
15
16 46,000 10.82% 12/31/06 US Furniture 26,000 6.12%
17 82,323 42.76% 10/31/09 Access Integrated Network 30,800 16.00%
19
20 72,350 25.32% 07/31/34 JCPenney 50,544 17.69%
21 55,859 83.22% 12/10/28 Bank of America 5,000 7.45%
22 90,203 64.43% 12/31/09 Central Ohio Primary Care Physicians, Inc. 18,607 13.29%
23 115,893 79.80% 05/31/12 Montgomery County - Treasury 13,152 9.06%
24
25 86,240 22.84% 03/07/20 JCPenney 80,929 21.44%
26 42,172 34.04% 04/30/22 Sam's $1.00 Store 11,990 9.68%
27
28
32 18,156 27.20% 11/24/08 Cascade Pediatrics 3,343 5.01%
33
34 11,956 28.28% 10/21/08 Brigham & Women's Hospital 7,426 17.56%
35 56,160 40.02% 01/31/13 PNS Stores, Inc. 23,241 16.56%
36 19,369 29.35% 07/14/14 Foxhall - Direct Response 10,115 15.33%
37 34,895 35.90% 02/01/12 Crate & Barrel 23,250 23.92%
38 10,348 20.03% 04/21/08 Preferred Dialysis Care 6,132 11.87%
40 262,644 100.00% 01/31/09
41
42 54,332 26.20% 06/30/21 Ollies Bargain Outlet 45,000 21.70%
43
44 21,311 39.46% Multiple Spaces Heart & Vascular Institute 12,696 23.51%
45
47 36,600 80.21% 07/31/14 Motophoto 3,020 6.62%
48
49 33,257 100.00% 05/08/18
50
51 23,819 60.52% 10/17/09 The Learning Experience 11,017 27.99%
52
53 12,294 16.43% 10/31/07 Kid's Country, Inc. 7,103 9.49%
54 36,000 33.05% 08/01/08 American Standard 22,000 20.19%
55 15,114 39.02% 10/01/09 Micor / Valley Gen. 4,623 11.94%
57 7,122 12.81% 03/04/09 Diamondback Gymnastics 7,039 12.66%
58 20,400 29.82% Multiple Spaces American Residential Serv LLC 10,600 15.50%
59 6,550 32.06% 03/12/14 Mosaic Salon 3,885 19.02%
60 13,450 18.97% 02/28/08 La Frontera 5,600 7.90%
61
62 8,000 19.51% 05/31/14 Allen Tate Company, Inc. 4,800 11.71%
64
65
66
67 13,692 32.45% 10/31/11 Eagle Energy 6,845 16.22%
3RD 3RD
MORTGAGE 2ND LARGEST LARGEST LARGEST 3RD LARGEST
LOAN TENANT EXP. TENANT TENANT % TENANT EXP.
NUMBER DATE 3RD LARGEST TENANT NAME SQ. FT OF NRA DATE LOCKBOX
- -----------------------------------------------------------------------------------------------------------------------------
1 Multiple Spaces Robinsons-May 123,503 9.95% 03/12/11 Day 1
2 04/30/13 Omnicom 95,557 4.23% 09/30/08 Day 1
3 05/31/07 Nichols-Dezenhall Communications 11,414 5.22% 07/31/05 Springing
4 10/31/06 OfficeMax Inc. 27,891 5.86% 01/31/07 Day 1
5 06/30/11 Multiples, Inc. (Marian Goodman Gallery) 9,872 9.84% 06/30/08 Day 1
6 01/31/15 Eastdale Cinemas 8 28,945 5.96% 08/31/07 Springing
7 Day 1
8 03/01/14 Olive Garden (Ground Lease) 7,405 5.56% 10/01/13 Springing
9 06/30/24 Town of Southampton 9,200 8.94% 05/31/19
11 02/28/08 Candle Corporation 17,059 11.82% 12/31/05 Day 1
13 12/31/11 Communicorp, Inc. 12,998 7.02% 12/31/07 Springing
14 Springing
15 Day 1
16 09/30/05 Walter P. Sauer 22,600 5.32% Multiple Spaces Springing
17 12/31/13 Secure Health Plans of Georgia 16,646 8.65% 01/31/10 Springing
19 Springing
20 11/12/06 Goody's 24,175 8.46% 08/31/14 Day 1
21 12/31/23 Port of Subs 1,462 2.18% 05/31/09 Springing
22 06/30/10 Centex Homes 14,679 10.48% 04/30/08 Day 1
23 01/31/09 Metro Fitness 13,133 9.04% 12/31/11 Springing
24 Springing
25 08/31/11 Belk, Inc. 61,230 16.22% 08/05/11 Springing
26 06/30/12 CVS (Ground Lease) 11,452 9.24% 01/31/25
27
28 Springing
32 Multiple Spaces Dr. Robert Tanner 2,719 4.07% 02/28/14
33
34 02/19/14 Longwood Orthopedic Associates 6,982 16.51% 10/21/13 Springing
35 12/31/09 OfficeMax Inc. 19,908 14.19% 04/30/09
36 09/16/05 Spexus, Inc. 5,268 7.98% 11/15/07 Springing
37 01/31/13 Restoration Hardware 11,523 11.86% 04/30/09
38 01/01/09 Old Republic Title 6,052 11.72% 09/13/06 Day 1
40 Springing
41
42 05/31/09 Rex Appliances 16,000 7.72% 01/31/09
43
44 02/01/19 Cardiac Surgical Associates 6,907 12.79% 05/01/14 Springing
45 Springing
47 08/31/05 Verizon Wireless 3,010 6.60% 05/31/06 Springing
48 Springing
49 Springing
50
51 05/31/19 The Watchung Pediatric Group 3,920 9.96% 05/31/19
52 Springing
53 01/31/06 Video Factory 3,600 4.81% 03/31/09
54 08/01/12 USF Processors, Inc. 16,000 14.69% 06/01/07 Springing
55 11/01/06 Starbucks, Inc. 2,967 7.66% 11/01/07 Springing
57 12/31/07 The BBQ Store 4,543 8.17% 01/31/08 Springing
58 10/31/05 Pursuit Marketing Inc. 10,800 15.79% 07/31/05 Springing
59 03/08/14 Las Vegas Rugs, Inc. 3,095 15.15% 03/14/09 Springing
60 05/31/06 Mattress Shop 5,000 7.05% 05/31/07
61 Springing
62 12/31/08 KAZ Pizza, Inc. 4,500 10.98% 11/30/12
64 Springing
65
66 Springing
67 07/31/09 Mark West 5,826 13.81% 03/31/11
MORTGAGE MORTGAGE
LOAN LARGEST AFFILIATED SPONSOR FLAG LOAN
NUMBER (> THAN 4% OF POOL) NUMBER
----------------------------------------------------------------------------
1 Trizec Properties, Inc. 1
2 Tamir Sapir 2
3 Victor K. Tolkan, Julia Springer Tolken 3
4 Richard Langhorne, Richard Markham 4
5 5
6 6
7 7
8 8
9 9
11 11
13 13
14 14
15 15
16 16
17 17
19 19
20 20
21 21
22 22
23 23
24 Extra Space Storage, LLC 24
25 25
26 26
27 27
28 Extra Space Storage, LLC 28
32 32
33 33
34 34
35 35
36 36
37 37
38 38
40 40
41 41
42 42
43 43
44 44
45 Extra Space Storage, LLC 45
47 47
48 48
49 49
50 50
51 51
52 Extra Space Storage, LLC 52
53 53
54 54
55 55
57 57
58 58
59 59
60 60
61 Extra Space Storage, LLC 61
62 62
64 Extra Space Storage, LLC 64
65 65
66 Extra Space Storage, LLC 66
67 67
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2004-C12
ANNEX A-1A CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS AND MORTGAGED PROPERTIES IN LOAN GROUP 1
- ----------
MORTGAGE
LOAN LOAN GROUP
NUMBER NUMBER PROPERTY NAME
- ------------------------------------------------------------------------
68 1 Great American Plaza Building A
70 1 Extra Space Self Storage - Hawthorne, CA
71 1 Best Buy - Las Cruces, NM
72 1 8475 S Eastern Avenue
73 1 Walgreens - Huntersville, NC
74 1 Extra Space Self Storage - San Bernardino, CA
75 1 Walgreens - Boston, MA
76 1 Alverser Plaza
77 1 Walgreens - Katy, TX
78 1 Crossroads Shopping Center
79 1 T.J. Maxx - Staunton, VA
80 1 Phoenix Crossing Shopping Center
81 1 Walgreens - Wichita Falls, TX
82 1 Walgreens - Crossville, TN
84 1 Walgreens - Port Charlotte, FL
85 1 Extra Space Self Storage - Claremont, CA
86 1 Airborne Express Warehouse
87 1 Wal-Mart - Port Jefferson, NY
88 1 Walgreens - Pensacola, FL
89 1 Extra Space Self Storage - Kearns, UT
92 1 Staples - Angola, IN
93 1 Eckerd - Charlotte, NC
94 1 Walgreens - Tulsa, OK
95 1 Food Lion - Ormond Beach, FL
MORTGAGE
LOAN
NUMBER ADDRESS CITY
- ------------------------------------------------------------------------------------------------------------------------------------
68 8350 West Sahara Boulevard Las Vegas
70 12830 Roselle Avenue Hawthorne
71 2280 East Lohman Avenue Las Cruces
72 8475 South Eastern Avenue Las Vegas
73 16711 Birkdale Commons Parkway Huntersville
74 155 West Club Center Drive San Bernardino
75 130 Bowdoin Street Boston
76 1200 Alverser Drive Midlothian
77 6802 South Fry Road Katy
78 2100 East Victory Drive Savannah
79 81 Orchard Hill Circle Staunton
80 810, 826 and 908 Fayetteville Street Durham
81 4600 Kell Boulevard Wichita Falls
82 82 Elmore Road Crossville
84 1930 Kings Highway Port Charlotte
85 775 South Mills Avenue Claremont
86 6101 Fallard Drive Upper Marlboro
87 3990 Nesconset Highway (Rt. 347) South Setauket
88 700 North Pace Boulevard Pensacola
89 5520 S 3915 W Kearns
92 1211 North Wayne Street Angola
93 5200 Albemarle Road Charlotte
94 4971 South Memorial Drive Tulsa
95 101 East Granada Boulevard Ormond Beach
MORTGAGE
LOAN CROSS COLLATERALIZED AND CROSS GENERAL PROPERTY
NUMBER STATE ZIP CODE DEFAULTED LOAN FLAG LOAN ORIGINATOR TYPE
- --------------------------------------------------------------------------------------------------------------------------
68 NV 89117 Wachovia Office
70 CA 90250 Extra Space Self Storage Portfolio Wachovia Self Storage
71 NM 88001 Cole Company Portfolio Wachovia Retail
72 NV 89123 Citigroup Office
73 NC 28078 Wachovia Retail
74 CA 92408 Extra Space Self Storage Portfolio Wachovia Self Storage
75 MA 02108 Artesia Retail
76 VA 23113 Wachovia Retail
77 TX 77494 Artesia Retail
78 GA 31404 Wachovia Retail
79 VA 24401 Cole Company Portfolio Wachovia Retail
80 NC 27701 Artesia Retail
81 TX 76310 Artesia Retail
82 TN 38555 Cole Company Portfolio Wachovia Retail
84 FL 33980 Artesia Retail
85 CA 91711 Extra Space Self Storage Portfolio Wachovia Self Storage
86 MD 20772 Wachovia Industrial
87 NY 11733 Wachovia Land
88 FL 32505 Artesia Retail
89 UT 84118 Extra Space Self Storage Portfolio Wachovia Self Storage
92 IN 46703 Cole Company Portfolio Wachovia Retail
93 NC 28212 Wachovia Retail
94 OK 74145 Cole Company Portfolio Wachovia Retail
95 FL 32176 Artesia Retail
MORTGAGE CUT-OFF % OF AGGREGATE % OF LOAN
LOAN ORIGINAL LOAN DATE LOAN CUT-OFF DATE GROUP 1 ORIGINATION FIRST PAY
NUMBER SPECIFIC PROPERTY TYPE BALANCE ($) BALANCE ($) BALANCE BALANCE DATE DATE
- ------------------------------------------------------------------------------------------------------------------------------------
68 Suburban 4,200,000.00 4,190,570.54 0.39% 0.44% 05/07/04 06/11/04
70 Self Storage 3,840,000.00 3,840,000.00 0.36% 0.41% 06/01/04 07/11/04
71 Anchored 3,809,000.00 3,809,000.00 0.36% 0.40% 05/05/04 06/11/04
72 Suburban 3,650,000.00 3,646,616.10 0.34% 0.38% 05/17/04 07/11/04
73 Anchored 3,500,000.00 3,495,887.05 0.33% 0.37% 05/28/04 07/11/04
74 Self Storage 3,376,000.00 3,376,000.00 0.32% 0.36% 06/01/04 07/11/04
75 Anchored 3,355,000.00 3,351,320.85 0.32% 0.35% 05/17/04 07/11/04
76 Unanchored 3,250,000.00 3,245,515.74 0.31% 0.34% 05/27/04 07/11/04
77 Anchored 3,200,000.00 3,192,542.48 0.30% 0.34% 05/28/04 07/11/04
78 Anchored 3,200,000.00 3,192,069.90 0.30% 0.34% 05/21/04 07/11/04
79 Anchored 3,116,000.00 3,116,000.00 0.29% 0.33% 05/05/04 06/11/04
80 Unanchored 3,075,000.00 3,072,076.69 0.29% 0.32% 05/27/04 07/11/04
81 Anchored 2,800,000.00 2,796,598.17 0.26% 0.29% 05/12/04 07/11/04
82 Anchored 2,753,000.00 2,753,000.00 0.26% 0.29% 05/05/04 06/11/04
84 Anchored 2,700,000.00 2,696,145.65 0.25% 0.28% 05/12/04 07/11/04
85 Self Storage 2,624,000.00 2,624,000.00 0.25% 0.28% 06/01/04 07/11/04
86 Warehouse 2,625,000.00 2,620,452.09 0.25% 0.28% 05/17/04 07/11/04
87 Retail 2,600,000.00 2,590,240.17 0.24% 0.27% 06/07/04 07/11/04
88 Anchored 2,545,000.00 2,539,795.33 0.24% 0.27% 04/27/04 06/11/04
89 Self Storage 2,520,000.00 2,520,000.00 0.24% 0.27% 06/01/04 07/11/04
92 Anchored 1,999,000.00 1,999,000.00 0.19% 0.21% 05/05/04 06/11/04
93 Unanchored 1,937,000.00 1,931,892.06 0.18% 0.20% 04/23/04 06/11/04
94 Anchored 1,926,000.00 1,926,000.00 0.18% 0.20% 05/05/04 06/11/04
95 Anchored 1,550,000.00 1,550,000.00 0.15% 0.16% 06/21/04 08/11/04
LOAN INTEREST ORIGINAL REMAINING
MORTGAGE ADMINISTRATIVE INTEREST ACCURAL TERM TO TERM TO
LOAN MATURITY DATE MORTGAGE COST ACCRUAL METHOD MATURITY OR MATURITY OR
NUMBER OR ARD (%) RATE (%) RATE METHOD DURING IO ARD (MOS.) ARD (MOS.)
- -----------------------------------------------------------------------------------------------------------------------
68 05/11/14 5.0500% 0.04200% Actual/360 120 118
70 06/11/09 4.3000% 0.04200% Actual/360 Actual/360 60 59
71 05/11/11 4.4600% 0.04200% Actual/360 Actual/360 84 82
72 06/11/14 6.3700% 0.04200% Actual/360 120 119
73 06/11/14 5.1200% 0.04200% Actual/360 120 119
74 06/11/09 4.3000% 0.04200% Actual/360 Actual/360 60 59
75 06/11/19 5.4900% 0.04200% Actual/360 180 179
76 06/11/19 6.2900% 0.04200% Actual/360 180 179
77 06/11/24 5.5400% 0.04200% Actual/360 240 239
78 06/11/24 4.8400% 0.04200% Actual/360 240 239
79 05/11/11 4.4600% 0.04200% Actual/360 Actual/360 84 82
80 06/11/14 6.2400% 0.04200% Actual/360 120 119
81 06/11/14 4.9400% 0.04200% Actual/360 120 119
82 05/11/11 4.4600% 0.04200% Actual/360 Actual/360 84 82
84 06/11/19 6.0700% 0.04200% Actual/360 180 179
85 06/11/09 4.3000% 0.04200% Actual/360 Actual/360 60 59
86 06/11/14 4.7900% 0.04200% Actual/360 120 119
87 06/11/19 4.9600% 0.04200% Actual/360 180 179
88 05/11/19 5.4900% 0.04200% Actual/360 180 178
89 06/11/09 4.3000% 0.04200% Actual/360 Actual/360 60 59
92 05/11/11 4.4600% 0.04200% Actual/360 Actual/360 84 82
93 05/11/14 6.1900% 0.04200% Actual/360 120 118
94 05/11/11 4.4600% 0.04200% Actual/360 Actual/360 84 82
95 07/11/24 6.7600% 0.04200% Actual/360 240 240
MORTGAGE ORIGINAL REMAINING MATURITY DATE OR MORTGAGE
LOAN REMAINING IO PERIOD AMORT TERM AMORT TERM MONTHLY P&I ARD BALLOON LOAN
NUMBER (MOS.) (MOS.) (MOS.) PAYMENTS ($) BALANCE ($) ARD LOAN PREPAYMENT PROVISIONS NUMBER
- ------------------------------------------------------------------------------------------------------------------------------------
68 360 358 22,675.03 3,458,703.85 Y L(48),D(69),O(3) 68
70 59 IO IO IO 3,840,000.00 Y L(48),D(9),O(3) 70
71 82 IO IO IO 3,809,000.00 Y L(48),D(32),O(4) 71
72 360 359 22,759.32 3,128,434.90 N L(25),D(92),O(3) 72
73 360 359 19,046.28 2,888,558.56 N L(48),D(69),O(3) 73
74 59 IO IO IO 3,376,000.00 Y L(48),D(9),O(3) 74
75 360 359 19,028.28 2,385,759.14 Y L(36),D(141),O(3) 75
76 300 299 21,519.68 1,976,848.62 Y L(48),D(125),O(7) 76
77 240 239 22,230.85 0.00 N L(36),D(201),O(3) 77
78 240 239 20,836.77 50,326.32 Y L(48),D(189),O(3) 78
79 82 IO IO IO 3,116,000.00 Y L(48),D(32),O(4) 79
80 360 359 18,913.31 2,625,850.95 N L(36),D(81),O(3) 80
81 360 359 14,928.50 2,297,343.97 N L(36),D(81),O(3) 81
82 82 IO IO IO 2,753,000.00 Y L(48),D(32),O(4) 82
84 300 299 17,511.85 1,622,211.88 N L(36),D(141),O(3) 84
85 59 IO IO IO 2,624,000.00 Y L(48),D(9),O(3) 85
86 300 299 15,026.04 1,947,449.05 Y L(25),D(92),O(3) 86
87 180 179 20,506.50 26,157.94 N L(23),YM1%(153),O(4) 87
88 360 358 14,434.27 1,810,110.91 Y L(36),D(141),O(3) 88
89 59 IO IO IO 2,520,000.00 Y L(48),D(9),O(3) 89
92 82 IO IO IO 1,999,000.00 Y L(48),D(32),O(4) 92
93 300 298 12,706.05 1,509,625.07 Y L(48),D(69),O(3) 93
94 82 IO IO IO 1,926,000.00 Y L(48),D(32),O(4) 94
95 240 240 11,886.61 0.00 N L(24),D(213),O(3) 95
(1) This Mortgage Loan is part of a split loan structure and the related pari
passu companion loans are not included in the trust fund with respect to this
Mortgage Loan, unless otherwise specified, the calculation of Balance per SF,
LTV ratios and DSC ratios were based upon the aggregate indebtedness of this
Mortgage Loan and the related pari passu companion loans not including the
non-pooled sudordinate component.
See "DESCRIPTION OF THE MORTGAGED POOL - Additional Mortgage Loan Information"
in the prospectus supplement.
MORTGAGE LTV RATIO
LOAN LOAN GROUP APPRAISED APPRAISAL CUT-OFF DATE AT MATURITY YEAR YEAR NUMBER OF
NUMBER NUMBER VALUE ($) DATE DSCR (X) LTV RATIO OR ARD BUILT RENOVATED UNITS
- -----------------------------------------------------------------------------------------------------------------------------------
68 1 5,700,000 03/30/04 1.51 73.52% 60.68% 2004 25,862
70 1 4,800,000 04/16/04 2.24 80.00% 80.00% 1992 583
71 1 5,860,000 10/28/03 2.37 65.00% 65.00% 2002 30,000
72 1 5,330,000 01/16/04 1.34 68.42% 58.69% 2001 25,901
73 1 5,000,000 04/12/04 1.45 69.92% 57.77% 2003 13,650
74 1 4,220,000 04/22/04 2.09 80.00% 80.00% 1985 497
75 1 4,710,000 04/13/04 1.35 71.15% 50.65% 2003 13,943
76 1 4,100,000 04/15/04 1.21 79.16% 48.22% 2003 15,000
77 1 5,110,000 03/03/04 1.23 62.48% 0.00% 2004 13,650
78 1 7,250,000 04/14/04 1.88 44.03% 0.69% 1953 2003 105,661
79 1 4,800,000 03/06/04 2.21 64.92% 64.92% 1988 1994 78,823
80 1 4,100,000 04/21/04 1.51 74.93% 64.05% 2000 2002 34,012
81 1 4,100,000 03/26/04 1.56 68.21% 56.03% 2001 14,490
82 1 4,300,000 02/26/04 2.55 64.02% 64.02% 2001 15,070
84 1 3,650,000 04/20/04 1.30 73.87% 44.44% 1999 15,930
85 1 3,280,000 04/22/04 2.20 80.00% 80.00% 1983 404
86 1 3,750,000 04/05/04 1.57 69.88% 51.93% 2003 40,873
87 1 11,900,000 03/23/04 3.02 21.77% 0.22% NA 128,680
88 1 3,700,000 04/12/04 1.37 68.64% 48.92% 2003 13,650
89 1 3,150,000 04/24/04 2.26 80.00% 80.00% 1993 551
92 1 3,000,000 11/21/03 2.53 66.63% 66.63% 2000 24,049
93 1 3,150,000 03/28/04 1.64 61.33% 47.92% 1997 10,908
94 1 2,900,000 01/13/04 2.56 66.41% 66.41% 1994 13,500
95 1 2,310,000 05/02/04 1.19 67.10% 0.00% 1983 1994 26,640
MOST
MORTGAGE CUT-OFF DATE RECENT
LOAN UNIT OF LOAN AMOUNT OCCUPANCY OCCUPANCY REVENUES MOST RECENT MOST RECENT
NUMBER MEASURE PER (UNIT) ($) RATE (%) "AS OF" DATE MOST RECENT PERIOD ($) EXPENSES ($) NOI ($)
- -------------------------------------------------------------------------------------------------------------------------------
68 Sq. Ft. 162 100.00% 04/30/04 2004 Budget 568,383 98,350 470,033
70 Units 6,587 88.51% 05/25/04 YE 2003 673,672 246,544 427,128
71 Sq. Ft. 127 100.00% 04/27/04
72 Sq. Ft. 141 100.00% 04/30/04 Annualized 597,148 123,965 473,183
73 Sq. Ft. 256 100.00% 05/04/04
74 Units 6,793 91.15% 05/25/04 YE 2003 529,292 185,009 344,283
75 Sq. Ft. 240 100.00% 05/20/04
76 Sq. Ft. 216 100.00% 06/03/04
77 Sq. Ft. 234 100.00% 03/01/04
78 Sq. Ft. 30 66.04% 05/14/04
79 Sq. Ft. 40 100.00% 04/23/04 YE 2003 441,409 19,746 421,663
80 Sq. Ft. 90 98.75% 05/05/04 T-3 1/04-3/04 Annualized 110,202 25,855 84,347
81 Sq. Ft. 193 100.00% 03/31/04 YE 2003 325,726 11,638 314,088
82 Sq. Ft. 183 100.00% 04/15/04
84 Sq. Ft. 169 100.00% 04/01/04 T-3 1/04-3/04 Annualized 297,000 8,143 288,857
85 Units 6,495 93.56% 05/25/04 YE 2003 415,134 150,586 264,549
86 Sq. Ft. 64 100.00% 04/13/04
87 Sq. Ft. 20 100.00% 05/28/04
88 Sq. Ft. 186 100.00% 04/28/04
89 Units 4,574 87.11% 05/25/04 YE 2003 431,298 158,252 273,046
92 Sq. Ft. 83 100.00% 04/28/04
93 Sq. Ft. 177 100.00% 04/08/04
94 Sq. Ft. 143 100.00% 04/13/04
95 Sq. Ft. 58 100.00% 04/01/04 YE 2003 206,937 15,600 191,337
MORTGAGE MOST UW NET
LOAN RECENT UW UW OPERATING UW NET CASH
NUMBER NCF ($) REVENUES ($) EXPENSES ($) INCOME ($) FLOW ($) LARGEST TENANT NAME
- ------------------------------------------------------------------------------------------------------------------------------------
68 464,860 555,098 99,778 455,320 410,160 Great American Homes
70 419,940 638,947 261,581 377,366 370,178
71 446,025 13,381 432,644 402,907 Best Buy
72 473,183 529,127 131,712 397,414 366,047 Max Health
73 342,000 10,260 331,740 330,375 Walgreens
74 335,043 531,786 219,186 312,600 303,361
75 323,400 9,702 313,698 309,369 Walgreens
76 402,582 76,999 325,583 312,696 Schwarzchild
77 342,510 10,275 332,235 328,354 Walgreens
78 848,118 321,596 526,522 471,075 Piggly Wiggly
79 398,016 461,625 81,359 380,266 306,862 T.J. Maxx
80 84,347 464,907 96,861 368,046 342,535 Clean Zone Laundromat
81 314,088 294,000 9,820 284,180 279,117 Walgreens
82 324,000 9,720 314,280 312,773 Walgreens
84 288,857 291,060 12,232 278,828 273,425 Walgreens
85 257,386 425,248 169,589 255,659 248,496
86 300,825 6,017 294,809 282,475 Airborne Express, Inc.
87 750,000 7,500 742,500 742,500 Wal-Mart Real Estate Business Trust
88 249,900 7,497 242,403 237,852 Walgreens
89 262,136 418,710 162,818 255,891 244,981
92 235,320 7,060 228,260 225,855 Staples
93 259,336 7,780 251,555 250,465 Eckerd Drug
94 228,150 6,845 221,306 219,956 Walgreens
95 191,337 196,590 10,088 186,502 169,262 Food Lion
2ND
MORTGAGE LARGEST LARGEST 2ND LARGEST LARGEST
LOAN TENANT SQ. TENANT LARGEST TENANT TENANT SQ. TENANT %
NUMBER FT. % OF NRA EXP. DATE 2ND LARGEST TENANT NAME FT. OF NRA (%)
- -----------------------------------------------------------------------------------------------------------------------------
68 9,030 34.92% 02/28/11 Power Realty, LLC 3,506 13.56%
70
71 30,000 100.00% 01/31/13
72 5,999 23.16% 09/14/10 Family Doctors: Dr.Ramanathan 4,335 16.74%
73 13,650 100.00% 01/31/79
74
75 13,943 100.00% 04/01/78
76 5,000 33.33% 10/31/13 Book Binders 4,000 26.67%
77 13,650 100.00% 04/30/79
78 33,191 31.41% 12/31/23 CVS 10,714 10.14%
79 78,823 100.00% 10/31/12
80 2,800 8.23% 11/30/12 Lillian's Retail Beauty Supply 2,625 7.72%
81 14,490 100.00% 02/28/77
82 15,070 100.00% 03/31/61
84 15,930 100.00% 08/31/59
85
86 40,873 100.00% 04/30/14
87 128,680 100.00% 01/22/28
88 13,650 100.00% 09/30/78
89
92 24,049 100.00% 02/28/15
93 10,908 100.00% 08/16/17
94 13,500 100.00% 08/31/44
95 26,640 100.00% 03/08/09
3RD 3RD
MORTGAGE 2ND LARGEST LARGEST LARGEST 3RD LARGEST
LOAN TENANT EXP. TENANT TENANT % TENANT EXP.
NUMBER DATE 3RD LARGEST TENANT NAME SQ. FT OF NRA DATE LOCKBOX
- -----------------------------------------------------------------------------------------------------------------------------
68 02/28/09 First American Title 3,300 12.76% 04/30/09 Springing
70 Springing
71 Springing
72 12/12/08 Design Center West 3,645 14.07% 05/08/07
73
74 Springing
75 Springing
76 11/30/13 Second Swing 3,000 20.00% 08/31/09 Springing
77
78 03/31/11 The Fitness Club 7,788 7.37% 09/30/13 Springing
79 Springing
80 05/30/06 Trin B'Ago Caribbean Restaurant 2,600 7.64% 02/28/06
81
82 Springing
84
85 Springing
86 Springing
87 Day 1
88 Springing
89 Springing
92 Springing
93 Springing
94 Springing
95 Day 1
MORTGAGE MORTGAGE
LOAN LARGEST AFFILIATED SPONSOR FLAG LOAN
NUMBER (> THAN 4% OF POOL) NUMBER
- ----------------------------------------------------------------------------
68 68
70 Extra Space Storage, LLC 70
71 71
72 72
73 73
74 Extra Space Storage, LLC 74
75 75
76 76
77 77
78 78
79 79
80 80
81 81
82 82
84 84
85 Extra Space Storage, LLC 85
86 86
87 87
88 88
89 Extra Space Storage, LLC 89
92 92
93 93
94 94
95 95
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2004-C12
ANNEX A-1B CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS AND MORTGAGED PROPERTIES IN LOAN GROUP 2
----------
MORTGAGE LOAN
LOAN GROUP
NUMBER NUMBER PROPERTY NAME ADDRESS CITY STATE ZIP CODE
- -----------------------------------------------------------------------------------------------------------------------------------
10 2 Highland Pinetree Apartments 1501 South Highland Fullerton CA 92832
12 2 Montelena Apartments 2261 West Valley Boulevard Pomona CA 91768
18 2 The Lake Apartments 2800-2842 East Madison Avenue Fullerton CA 92831
29 2 Erie Shore Landing Apartments 5115 Lake Road Sheffield Lake OH 44054
30 2 Metropolitan Place Apartments 232 Burnett Avenue South Renton WA 98055
31 2 The Lighthouse Apartments 2851 South Decatur Boulevard Las Vegas NV 89102
39 2 Sunrise Center Apartments 5849 Sunrise Vista Drive Citrus Heights CA 95610
46 2 Promenade Apartments 3215 NE 143rd Street Seattle WA 98125
56 2 Burnett Station Apartments 339 Burnett Avenue South Renton WA 98055
63 2 Alpine Village Apartments 2071 Alpine Village Hoover AL 35216
69 2 1025 West Hollywood Apartments 1025 West Hollywood Avenue Chicago IL 60660
83 2 Town and Country Apartments 2927 Marconi Avenue Sacramento CA 95821
90 2 Fox Valley Apartments 601 Valley Avenue Birmingham AL 35209
91 2 Treehaven Apartments 400 Pinewood Drive Summerville SC 29483
96 2 Henry Whipple Apartments Various Various VA Various
96.1 Whipple Drive Apartments 1711 Whipple Drive Blacksburg VA 24060
96.2 The Henry 10 Broad Street Martinsville VA 24112
MORTGAGE ORIGINAL CUT-OFF DATE
LOAN CROSS COLLATERALIZED AND CROSS LOAN GENERAL SPECIFIC LOAN LOAN
NUMBER DEFAULTED LOAN FLAG ORIGINATOR PROPERTY TYPE PROPERTY TYPE BALANCE ($) BALANCE ($)
- -----------------------------------------------------------------------------------------------------------------------------
10 Wachovia Multifamily Conventional 18,200,000.00 18,200,000.00
12 Wachovia Multifamily Conventional 17,000,000.00 17,000,000.00
18 Wachovia Multifamily Conventional 14,000,000.00 14,000,000.00
29 Wachovia Multifamily Conventional 9,900,000.00 9,890,068.85
30 Artesia Multifamily Conventional/Parking 9,400,000.00 9,400,000.00
31 Wachovia Multifamily Conventional 9,300,000.00 9,300,000.00
39 Artesia Multifamily Conventional 7,800,000.00 7,774,495.03
46 Artesia Multifamily Conventional 6,600,000.00 6,600,000.00
56 Artesia Multifamily Conventional 5,200,000.00 5,200,000.00
63 Wachovia Multifamily Conventional 4,700,000.00 4,700,000.00
69 Artesia Multifamily Conventional 4,000,000.00 3,985,456.61
83 Artesia Multifamily Conventional 2,755,000.00 2,735,923.26
90 Wachovia Multifamily Conventional 2,440,000.00 2,431,625.85
91 Artesia Multifamily Conventional 2,300,000.00 2,286,302.70
96 Wachovia Multifamily Various 1,534,371.03 1,527,163.72
96.1 Multifamily Student Housing
96.2 Multifamily Conventional
% OF INTEREST
MORTGAGE AGGREGATE % OF LOAN LOAN INTEREST ACCURAL
LOAN CUT-OFF DATE GROUP 2 ORIGINATION FIRST PAY MATURITY DATE OR MORTGAGE ADMINISTRATIVE ACCRUAL METHOD DURING
NUMBER BALANCE BALANCE DATE DATE ARD RATE (%) COST RATE (%) METHOD IO
- ------------------------------------------------------------------------------------------------------------------------------------
10 1.71% 15.82% 04/29/04 06/11/04 05/11/14 4.5600% 0.06200% Actual/360 Actual/360
12 1.60% 14.78% 03/29/04 05/11/04 04/11/09 4.6100% 0.04200% Actual/360 Actual/360
18 1.32% 12.17% 05/12/04 07/11/04 06/11/09 4.2600% 0.04200% Actual/360 Actual/360
29 0.93% 8.60% 05/21/04 07/11/04 06/11/09 5.9600% 0.04200% Actual/360
30 0.88% 8.17% 05/26/04 07/11/04 06/11/14 5.6600% 0.04200% Actual/360 Actual/360
31 0.87% 8.08% 05/05/04 06/11/04 05/11/14 5.2700% 0.04200% Actual/360 Actual/360
39 0.73% 6.76% 03/22/04 05/11/04 04/11/14 5.3100% 0.04200% Actual/360
46 0.62% 5.74% 04/12/04 06/11/04 05/11/14 5.4400% 0.04200% Actual/360 Actual/360
56 0.49% 4.52% 05/26/04 07/11/04 06/11/14 5.6600% 0.04200% Actual/360 Actual/360
63 0.44% 4.09% 05/28/04 07/11/04 06/11/09 5.3600% 0.04200% Actual/360 Actual/360
69 0.37% 3.46% 06/08/04 07/11/04 06/11/19 5.4800% 0.04200% Actual/360
83 0.26% 2.38% 03/22/04 05/11/04 04/11/14 5.3100% 0.04200% Actual/360
90 0.23% 2.11% 03/31/04 05/11/04 04/11/11 5.0700% 0.04200% Actual/360
91 0.22% 1.99% 12/19/03 02/11/04 01/11/14 5.8000% 0.11200% Actual/360
96 0.14% 1.33% 04/01/04 05/11/04 11/11/08 5.2900% 0.04200% Actual/360
96.1
96.2
REMAINING
MORTGAGE ORIGINAL TERM TO TERM TO REMAINING REMAINING
LOAN MATURITY OR ARD MATURITY OR IO PERIOD ORIGINAL AMORT AMORT TERM MONTHLY P&I MATURITY DATE OR ARD ARD
NUMBER (MOS.) ARD (MOS.) (MOS.) TERM (MOS.) (MOS.) PAYMENTS ($) BALLOON BALANCE ($) LOAN
- ---------------------------------------------------------------------------------------------------------------------
10 120 118 118 IO IO IO 18,200,000.00 Y
12 60 57 21 360 360 87,251.17 16,191,156.60 Y
18 60 59 23 360 360 68,953.57 13,289,648.47 Y
29 60 59 360 359 59,101.15 9,255,920.60 Y
30 120 119 23 360 360 54,319.60 8,266,065.56 N
31 120 118 22 360 360 51,470.21 8,102,238.68 Y
39 120 117 360 357 43,362.21 6,476,680.16 N
46 120 118 10 360 360 37,226.00 5,642,198.85 N
56 120 119 23 360 360 30,049.14 4,572,717.15 N
63 60 59 17 360 360 26,274.71 4,470,098.15 N
69 180 179 180 179 32,810.06 0.00 N
83 120 117 240 237 18,656.87 1,757,925.25 N
90 84 81 360 357 13,203.03 2,163,056.16 N
91 120 114 360 354 13,495.32 1,939,077.00 N
96 55 52 300 297 9,230.93 1,387,259.97 N
96.1
96.2
MORTGAGE MORTGAGE
LOAN LOAN
NUMBER PREPAYMENT PROVISIONS NUMBER
- ------------------------------------------
10 L(48),D(69),O(3) 10
12 L(27),D(30),O(3) 12
18 L(48),D(9),O(3) 18
29 L(36),D(19),O(5) 29
30 L(60),YM1%(57),O(3) 30
31 L(48),D(69),O(3) 31
39 L(36),D(81),O(3) 39
46 L(36),D(81),O(3) 46
56 L(60),YM1%(57),O(3) 56
63 L(36),D(21),O(3) 63
69 L(36),YM1%(141),O(3) 69
83 L(36),D(81),O(3) 83
90 L(48),D(33),O(3) 90
91 L(36),D(81),O(3) 91
96 L(43),D(9),O(3) 96
96.1 96.1
96.2 96.2
MORTGAGE LTV RATIO AT
LOAN LOAN GROUP APPRAISED APPRAISAL CUT-OFF DATE MATURITY OR YEAR YEAR NUMBER OF UNIT OF
NUMBER NUMBER VALUE ($) DATE DSCR (X)(1) LTV RATIO(2) ARD(2) BUILT RENOVATED UNITS MEASURE
- -----------------------------------------------------------------------------------------------------------------------------------
10 2 31,000,000 03/17/04 2.63 58.71% 58.71% 1972 2004 320 Units
12 2 22,500,000 03/10/04 1.20 75.56% 71.96% 1971 220 Units
18 2 17,700,000 04/02/04 1.24 79.10% 75.08% 1972 2004 136 Units
29 2 14,025,000 04/01/04 1.21 70.52% 66.00% 1972 2003 238 Units
30 2 14,400,000 04/28/04 1.31 65.28% 57.40% 2002 90 Units
31 2 12,250,000 03/31/04 1.25 75.92% 66.14% 1980 2000 240 Units
39 2 11,900,000 01/21/04 1.52 65.33% 54.43% 1973 171 Units
46 2 8,600,000 03/08/04 1.26 75.58% 64.44% 2003 84 Units
56 2 8,400,000 04/28/04 1.32 61.90% 54.44% 2001 58 Units
63 2 6,450,000 04/21/04 1.41 72.87% 69.30% 1971 2004 160 Units
69 2 6,880,000 04/15/04 1.16 57.93% 0.00% 1972 1997 94 Units
83 2 4,410,000 03/29/04 1.22 62.04% 39.86% 1957 92 Units
90 2 3,100,000 03/04/04 1.25 78.44% 69.78% 1974 120 Units
91 2 2,875,000 08/19/03 1.45 79.52% 67.45% 1978 2003 88 Units
96 2 2,200,000 Various 1.43 69.42% 63.06% Various Various 57 Units
96.1 1,500,000 07/07/03 1972 24 Units
96.2 700,000 05/29/03 1921 1983 33 Units
MORTGAGE
LOAN CUT-OFF DATE LOAN OCCUPANCY OCCUPANCY MOST RECENT MOST RECENT
NUMBER AMOUNT PER (UNIT) ($) RATE (%) "AS OF" DATE MOST RECENT PERIOD REVENUES ($) EXPENSES ($)
- ---------------------------------------------------------------------------------------------------------------------------------
10 56,875 97.81% 04/19/04 T-6 10/03-3/04 Annualized 3,568,418 1,167,861
12 77,273 90.91% 03/22/04 YE 2003 2,020,279 845,611
18 102,941 96.32% 04/30/04 T-6 10/03-3/04 Annualized 1,840,211 837,533
29 41,555 92.86% 04/30/04 T-1 4/04 Annualized 1,983,060 952,346
30 104,444 93.33% 05/10/04 T-3 1/04-3/04 Annualized 1,300,579 371,894
31 38,750 89.58% 03/14/04 TTM 2/29/04 1,601,556 872,540
39 45,465 91.81% 02/29/04 YE 2003 1,383,646 538,647
46 78,571 94.05% 04/01/04 T-3 1/04-3/04 Annualized 626,624 196,679
56 89,655 91.38% 05/10/04 YE 2003 663,179 296,026
63 29,375 94.38% 05/17/04 2004 Budget 1,048,490 607,093
69 42,398 97.87% 04/01/04 TTM 3/31/04 756,387 312,017
83 29,738 89.13% 04/30/04 YE 2003 573,125 318,544
90 20,264 99.17% 03/16/04 YE 2003 584,127 366,023
91 25,981 86.36% 05/10/04 T-3 1/04-3/04 Annualized 534,388 257,674
96 26,792 84.62% Various YE 2003 394,184 228,622
96.1 89.00% 04/16/04
96.2 100.00% 04/08/04
UW NET
MORTGAGE MOST UW UW OPERATING
LOAN MOST RECENT RECENT REVENUES EXPENSES INCOME UW NET CASH
NUMBER NOI ($) NCF ($) ($) ($) ($) FLOW ($)
- ----------------------------------------------------------------------------------------
10 2,400,557 2,318,727 3,582,510 1,314,080 2,268,430 2,186,600
12 1,174,668 1,119,668 2,202,371 889,981 1,312,390 1,257,390
18 1,002,678 957,647 1,854,157 785,889 1,068,268 1,023,237
29 1,030,714 971,214 1,944,240 1,028,376 915,864 856,364
30 928,685 928,685 1,288,612 418,314 870,297 852,297
31 729,016 669,016 1,674,233 839,612 834,622 774,622
39 844,999 833,075 1,440,402 598,028 842,374 792,955
46 429,945 429,489 837,454 256,283 581,171 564,171
56 367,153 367,153 769,070 282,613 486,457 474,857
63 441,397 401,397 1,036,226 552,020 484,206 444,206
69 444,370 444,370 796,404 317,859 478,545 455,045
83 254,581 238,487 582,982 282,405 300,577 272,977
90 218,104 188,104 592,267 363,950 228,316 198,316
91 276,714 262,050 550,031 302,920 247,112 225,112
96 165,562 137,662 409,023 223,145 185,878 157,978
96.1
96.2
MORTGAGE LARGEST
LOAN LARGEST LARGEST TENANT TENANT
NUMBER LARGEST TENANT NAME TENANT SQ. FT. % OF NRA EXP. DATE 2ND LARGEST TENANT NAME
- ------------------------------------------------------------------------------------------------------------------------------------
10
12
18
29
30
31
39
46
56
63
69
83
90
91
96
96.1
96.2
3RD 3RD LARGEST
MORTGAGE 2ND LARGEST 2ND LARGEST 2ND LARGEST LARGEST TENANT % 3RD LARGEST
LOAN TENANT SQ. TENANT % TENANT EXP. TENANT SQ. OF TENANT EXP.
NUMBER FT. OF NRA (%) DATE 3RD LARGEST TENANT NAME FT. NRA DATE
- --------------------------------------------------------------------------------------------------------------------------
10
12
18
29
30
31
39
46
56
63
69
83
90
91
96
96.1
96.2
MORTGAGE MORTGAGE
LOAN LARGEST AFFILIATED SPONSOR FLAG LOAN
NUMBER LOCKBOX (> THAN 4% OF POOL) NUMBER
- --------------------------------------------------------------------------------
10 Springing 10
12 Springing 12
18 Springing 18
29 Springing 29
30 30
31 Springing 31
39 Day 1 39
46 46
56 56
63 63
69 69
83 Day 1 83
90 90
91 91
96 96
96.1 96.1
96.2 96.2
(1) For purposes of determining the DSC Ratio of 1 Mortgage Loan (loan number
91), representing 0.2% of the Cut-Off Date Pool Balance (2.0% of the Cut-Off
Date Group 2 Balance), the debt service payments were reduced by taking into
account amounts available under a cash reserve.
(2) For purposes of determining the LTV Ratios of 1 Mortgage Loan (loan number
46), representing 0.6% of the Cut-Off Date Pool Balance (5.7% of the Cut-Off
Date Group 2 Balance), such ratios were reduced by taking into account amounts
available under a cash reserve.
See "DESCRIPTION OF THE MORTGAGED POOL - Additional Mortgage Loan Information"
in the prospectus supplement.
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2004-C12
ANNEX A-2 CERTAIN INFORMATION REGARDING MULTIFAMILY MORTGAGED PROPERTIES
MORTGAGE LOAN NUMBER LOAN GROUP NUMBER PROPERTY NAME
- -------------------------------------------------------------------------------------------------------
10 2 Highland Pinetree Apartments
12 2 Montelena Apartments
15 1 Broadstone Heights Apartments
18 2 The Lake Apartments
27 1 Mountain View Apartments
29 2 Erie Shore Landing Apartments
30 2 Metropolitan Place Apartments
31 2 The Lighthouse Apartments
39 2 Sunrise Center Apartments
41 1 Logger Creek Apartments
46 2 Promenade Apartments
56 2 Burnett Station Apartments
63 2 Alpine Village Apartments
69 2 1025 West Hollywood Apartments
83 2 Town and Country Apartments
90 2 Fox Valley Apartments
91 2 Treehaven Apartments
96 2 Henry Whipple Apartments
96.1 Whipple Drive Apartments
96.2 The Henry
MORTGAGE LOAN NUMBER PROPERTY ADDRESS
- --------------------------------------------------------------------------------------------
10 1501 South Highland
12 2261 West Valley Boulevard
15 8100 Barstow Street N.E.
18 2800-2842 East Madison Avenue
27 3708 Lodge Drive
29 5115 Lake Road
30 232 Burnett Avenue South
31 2851 South Decatur Boulevard
39 5849 Sunrise Vista Drive
41 298, 320, 332, 344, 356, 378, and 390 West Hale Street
46 3215 NE 143rd Street
56 339 Burnett Avenue South
63 2071 Alpine Village
69 1025 West Hollywood Avenue
83 2927 Marconi Avenue
90 601 Valley Avenue
91 400 Pinewood Drive
96 Various
96.1 1711 Whipple Drive
96.2 10 Broad Street
MORTGAGE LOAN NUMBER PROPERTY CITY PROPERTY STATE
- ----------------------------------------------------------------------------------------------------
10 Fullerton CA
12 Pomona CA
15 Albuquerque NM
18 Fullerton CA
27 Hoover AL
29 Sheffield Lake OH
30 Renton WA
31 Las Vegas NV
39 Citrus Heights CA
41 Boise ID
46 Seattle WA
56 Renton WA
63 Hoover AL
69 Chicago IL
83 Sacramento CA
90 Birmingham AL
91 Summerville SC
96 Various VA
96.1 Blacksburg VA
96.2 Martinsville VA
MORTGAGE LOAN NUMBER PROPERTY ZIP CODE COUNTY
- ----------------------------------------------------------------------------------------------------------------------------------
10 92832 Orange
12 91768 Los Angeles
15 87113 Bernalillo
18 92831 Orange
27 35216 Jefferson
29 44054 Lorain
30 98055 King
31 89102 Clark
39 95610 Sacramento
41 83706 Ada
46 98125 King
56 98055 King
63 35216 Jefferson
69 60660 Cook
83 95821 Sacramento
90 35209 Jefferson
91 29483 Dorchester
96 Various Various
96.1 24060 Montgomery
96.2 24112 Henry
GENERAL SPECIFIC UTILITIES NUMBER
PROPERTY PROPERTY ELEVATOR TENANT OF STUDIO
MORTGAGE LOAN NUMBER TYPE TYPE BUILDINGS PAYS UNITS
- --------------------------------------------------------------------------------------------------------------------------
10 Multifamily Conventional N E 146
12 Multifamily Conventional N E,G 28
15 Multifamily Conventional N E,G,W,S
18 Multifamily Conventional N E 14
27 Multifamily Conventional N E
29 Multifamily Conventional Y 20
30 Multifamily Conventional/Parking Y W,E 14
31 Multifamily Conventional N E
39 Multifamily Conventional N E
41 Multifamily Conventional N W,E
46 Multifamily Conventional Y E 12
56 Multifamily Conventional Y W,E 6
63 Multifamily Conventional N E
69 Multifamily Conventional Y 40
83 Multifamily Conventional N E
90 Multifamily Conventional N E 12
91 Multifamily Conventional N E
96 Multifamily Various Various Various Various
96.1 Multifamily Student Housing N
96.2 E Conventional Y E 3
NUMBER NUMBER NUMBER NUMBER AVERAGE RENT;
OF 1 BR OF 2 BR OF 3 BR OF 4+ BR RENT RANGES -
MORTGAGE LOAN NUMBER UNITS UNITS UNITS UNITS STUDIO UNITS
- ------------------------------------------------------------------------------------------------------------------
10 42 132 825;825-825
12 152 40 775;775-775
15 72 112 32
18 98 24 874;849-899
27 142 123 56
29 160 55 3 570;570-570
30 57 19 734;699-870
31 116 124
39 51 119 1
41 50 60 2
46 52 20 615;575-625
56 32 20 861;770-905
63 58 82 20
69 54 580;550-610
83 88 4
90 60 40 8 390;390-390
91 40 40 8
96 Various Various Various Various
96.1 24
96.2 27 3 275;275-275
AVERAGE RENT; AVERAGE RENT; AVERAGE RENT; AVERAGE RENT;
RENT RANGES - RENT RANGES - RENT RANGES - RENT RANGES -
MORTGAGE LOAN NUMBER 1 BR UNITS 2 BR UNITS 3 BR UNITS 4+ BR UNITS
- ------------------------------------------------------------------------------------------------------------------------------------
10 940;940-940 1217;1150-1250
12 950;950-950 1110;1110-1110
15 780;780-780 920;920-920 1150;1150-1150
18 1211;1099-1379 1524;1499-1549
27 560;560-560 680;673-750 795;795-795
29 720;720-720 1117;1090-1200 1700;1700-1700
30 895;663-1050 1303;957-1500
31 588;566-593 680;621-740
39 696;600-700 799;700-800 900;900-900
41 692;650-750 904;875-965 1200;1200-1200
46 789;700-995 1096;995-1200
56 927;792-1210 1312;995-1595
63 492;481-501 580;571-601 701;701-701
69 726;680-760
83 581;570-595 725;725-725
90 410;410-410 510;510-510 650;650-650
91 514;510-525 583;550-600 709;700-730
96 Various Various Various Various
96.1 1058;800-1375
96.2 350;350-350 373;373-373
[THIS PAGE INTENTIONALLY LEFT BLANK]
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2004-C12
ANNEX A-3 RESERVE ACCOUNT INFORMATION
- ---------
MORTGAGE LOAN
LOAN GROUP
NUMBER NUMBER PROPERTY NAME GENERAL PROPERTY TYPE
- ---------------------------------------------------------------------------------------------------------------------
1 1 Ernst & Young Plaza Office
2 1 11 Madison Avenue Office
3 1 1130 Connecticut Avenue Office
4 1 Crossroads Plaza Retail
5 1 24 West 57th Street Office
6 1 Eastdale Mall Retail
7 1 One Riverview Square Office
8 1 Pointe at Wellington Retail
9 1 Hampton Bays Town Center Retail
10 2 Highland Pinetree Apartments Multifamily
11 1 Cowesset Corners Retail
12 2 Montelena Apartments Multifamily
13 1 Glenridge Pointe Office Buildings Office
14 1 ConAgra Distribution Facility Industrial
15 1 Broadstone Heights Apartments Multifamily
16 1 Greenpoint Industrial Center Industrial
17 1 Highridge Centre Office
18 2 The Lake Apartments Multifamily
19 1 Country Manor Mobile Home Park Mobile Home Park
20 1 Washington Park Mall(2) Retail
21 1 Flamingo Promenade Retail
22 1 570 Polaris Parkway Office
23 1 255 Rockville Pike Office
24 1 Extra Space Self Storage - Lawrenceville, NJ Self Storage
25 1 The Mall at Waycross Retail
26 1 Ridgewood Village Shopping Center Retail
27 1 Mountain View Apartments Multifamily
28 1 Extra Space Self Storage - Hazlet, NJ Self Storage
29 2 Erie Shore Landing Apartments Multifamily
30 2 Metropolitan Place Apartments Multifamily
31 2 The Lighthouse Apartments Multifamily
32 1 Meadow Creek Office Park Office
33 1 Marriott Courtyard Hotel - Cranbury, NJ Hospitality
34 1 830 Boylston Street Office
35 1 Eastgate Center Retail
36 1 The McLean Commercial Center Office
37 1 4th Street Retail Retail
38 1 Somerset Park Office
39 2 Sunrise Center Apartments Multifamily
40 1 Linens 'n Things Distribution Center Industrial
41 1 Logger Creek Apartments Multifamily
42 1 Regency Mall Retail
43 1 Spring Hill Suites Hotel - Tampa, FL Hospitality
44 1 Northside Medical Plaza Office
45 1 Extra Space Self Storage - Torrance, CA Self Storage
46 2 Promenade Apartments Multifamily
47 1 Barnes & Noble Center Retail
48 1 Ballenger Creek Mini-Storage Self Storage
49 1 AT&T Wireless - Santa Clara, CA Industrial
50 1 Marriott Courtyard Hotel - Myrtle Beach, SC Hospitality
51 1 Watchung Hills Office Center Office
52 1 Extra Space Self Storage - North Miami, FL Self Storage
53 1 Monroe Plaza Shopping Center Retail
54 1 Crescent Business Center Industrial
55 1 Koll-Lyon Plaza Office Building Office
56 2 Burnett Station Apartments Multifamily
57 1 Clearview Commons at Superstition Springs Mixed Use
58 1 Ballenger Commerce Center Industrial
59 1 Great American Plaza Retail Center Retail
60 1 Plaza Del Centro Retail
61 1 Extra Space Self Storage - Livermore, CA Self Storage
62 1 Callabridge Commons Retail
63 2 Alpine Village Apartments Multifamily
64 1 Extra Space Self Storage - Richmond, CA Self Storage
65 1 Shurgard Colonialtown - Orlando, FL Self Storage
66 1 Extra Space Self Storage - Glendale, CA Self Storage
67 1 7904 N. Sam Houston Parkway West Office
68 1 Great American Plaza Building A Office
69 2 1025 West Hollywood Apartments Multifamily
70 1 Extra Space Self Storage - Hawthorne, CA Self Storage
71 1 Best Buy - Las Cruces, NM Retail
72 1 8475 S Eastern Avenue Office
73 1 Walgreens - Huntersville, NC Retail
74 1 Extra Space Self Storage - San Bernardino, CA Self Storage
75 1 Walgreens - Boston, MA Retail
76 1 Alverser Plaza Retail
77 1 Walgreens - Katy, TX Retail
78 1 Crossroads Shopping Center Retail
79 1 T.J. Maxx - Staunton, VA Retail
80 1 Phoenix Crossing Shopping Center Retail
81 1 Walgreens - Wichita Falls, TX Retail
82 1 Walgreens - Crossville, TN Retail
83 2 Town and Country Apartments Multifamily
84 1 Walgreens - Port Charlotte, FL Retail
85 1 Extra Space Self Storage - Claremont, CA Self Storage
86 1 Airborne Express Warehouse Industrial
87 1 Wal-Mart - Port Jefferson, NY Land
88 1 Walgreens - Pensacola, FL Retail
89 1 Extra Space Self Storage - Kearns, UT Self Storage
90 2 Fox Valley Apartments Multifamily
91 2 Treehaven Apartments Multifamily
92 1 Staples - Angola, IN Retail
93 1 Eckerd - Charlotte, NC Retail
94 1 Walgreens - Tulsa, OK Retail
95 1 Food Lion - Ormond Beach, FL Retail
96 2 Henry Whipple Apartments Multifamily
96.1 Whipple Drive Apartments Multifamily
96.2 The Henry Multifamily
MORTGAGE MONTHLY ANNUAL DEPOSIT
LOAN MONTHLY TAX INSURANCE TO REPLACEMENT
NUMBER SPECIFIC PROPERTY TYPE ESCROW ESCROW RESERVES
- ---------------------------------------------------------------------------------------------------------------
1 CBD
2 CBD 222,900 108,333 225,655
3 CBD 98,306 7,855 36,000
4 Anchored 41,480 7,107
5 CBD 71,059 3,375 15,050
6 Anchored 20,153 18,199 72,866
7 CBD 53,087 10,542 30,638
8 Shadow Anchored 22,082 13,722 13,309
9 Anchored 11,026 11,200
10 Conventional 81,828
11 Anchored 21,334 15,869
12 Conventional 14,819 54,996
13 Suburban
14 Warehouse
15 Conventional 12,500 4,050 28,932
16 Light Industrial 18,044 12,250 42,508
17 Suburban 17,699 2,213 38,509
18 Conventional 13,137 7,760 45,036
19 Mobile Home Park 8,932 776 16,565
20 Anchored
21 Anchored 5,620 1,406 6,212
22 Suburban 3,018 2,366 28,001
23 Suburban 20,427 2,039 31,952
24 Self Storage 14,950 1,193 15,876
25 Anchored 11,950 6,046 43,696
26 Anchored 16,872 3,017
27 Conventional 12,253 6,676 80,250
28 Self Storage 13,687 1,007 17,100
29 Conventional 10,522 2,945 59,500
30 Conventional/Parking 6,490 18,000
31 Conventional 8,179 3,866 59,989
32 Suburban 8,751 4,048 13,350
33 Limited Service 21,491 181,626
34 Medical 9,771 6,342
35 Anchored 13,372 14,033
36 Suburban 9,158 983 7,920
37 Anchored 14,767 9,386
38 Medical 7,250 915 10,329
39 Conventional 5,335 3,852 49,419
40 Warehouse
41 Conventional 12,091 1,470 22,400
42 Anchored 34,935
43 Limited Service 11,092 137,382
44 Medical 9,000 2,165 1,620
45 Self Storage 4,457 396 12,012
46 Conventional 6,609 1,373 17,000
47 Anchored 8,052 926 11,407
48 Self Storage 2,400 1,441 4,085
49 Light Industrial
50 Limited Service 6,507 97,227
51 Suburban 7,744 1,233 7,868
52 Self Storage 10,500 2,826 33,480
53 Shadow Anchored 6,777 4,534 18,703
54 Flex/Warehouse 4,641 1,073 13,073
55 Suburban 7,990 1,386 9,507
56 Conventional 4,651 11,600
57 Office/Retail/Warehouse 5,283 1,525 5,556
58 Warehouse/Flex 4,119 1,065 3,420
59 Unanchored 2,229 294 2,052
60 Unanchored 5,073 3,118 21,978
61 Self Storage 5,232 428 11,520
62 Unanchored 5,500 900 6,150
63 Conventional 5,018 3,275 40,000
64 Self Storage 7,644 562 15,696
65 Self Storage
66 Self Storage 4,678 286 6,684
67 Suburban 6,975 2,957 8,440
68 Suburban 3,017 429 2,844
69 Conventional 9,832 1,477
70 Self Storage 3,522 493 7,188
71 Anchored
72 Suburban 3,422 764 5,178
73 Anchored
74 Self Storage 2,719 1,097 9,240
75 Anchored 2,091
76 Unanchored 2,194 444 1,500
77 Anchored
78 Anchored 4,523
79 Anchored
80 Unanchored 2,692 683 5,102
81 Anchored 2,174
82 Anchored
83 Conventional 3,903 1,465 27,600
84 Anchored 140 2,390
85 Self Storage 2,667 309 7,164
86 Warehouse
87 Retail
88 Anchored 2,048
89 Self Storage 3,137 370 10,908
90 Conventional 2,457 2,726 30,000
91 Conventional 3,434 1,588 21,996
92 Anchored
93 Unanchored
94 Anchored
95 Anchored 3,996
96 Various 1,553 643 27,900
96.1 Student Housing
96.2 Conventional
INITIAL DEPOSIT TO
MORTGAGE CAPITAL
LOAN IMPROVEMENTS INITIAL TI/LC ONGOING TI/LC
NUMBER RESERVE ESCROW FOOTNOTE
- -------------------------------------------------------------------------------
1
2 (1)
3 250,000 3,373,018
4 536,000
5 126,250
6 906,839
7 5,200,000 (1)
8 (1)
9
10 253,125
11 28,981 (1)
12 47,438
13
14
15
16 59,375 (1)
17 1,250
18 13,294
19 34,750
20
21
22 (1)
23 18,750
24 29,750
25
26
27
28 16,750
29
30
31
32
33
34 636,144 225,000 (1)
35 5,750 350,000 (1)
36 46,265 (1)
37
38 55,575 (1)
39 6,625
40
41
42 7,500
43
44 (1)
45 2,500
46
47 3,125 (1)
48
49
50
51 (1)
52 2,875
53
54 (1)
55 6,250 100,000 (1)
56
57 (1)
58 100,000 (1)
59 (1)
60 9,375 (1)
61 20,625
62 2,000 (1)
63
64 6,250
65
66 5,000
67 (1)
68 (1)
69
70 2,500
71
72 1,500 (1)
73
74 4,625
75
76 (1)
77
78 8,750
79
80 75,000 (1)
81
82
83
84
85
86
87
88
89 4,500
90 100,000
91 22,829
92
93
94
95 100,000 (1)
96 93,125
96.1
96.2
(1) In addition to any such escrows funded at loan closing for potential TI/LC,
these Mortgage Loans require funds to be escrowed during some or all of the loan
term for TI/LC expenses, which may be incurred during the loan term. In certain
instances, escrowed funds may be released to the borrower upon satisfaction of
certain leasing conditions.
(2) Escrows are collected for tax and insurance each month in the amount of
1/12th the annual tax and insurance escrows.
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2004-C12
ANNEX A-4 COMMERCIAL TENANT SCHEDULE
---------
MORTGAGE LOAN
LOAN GROUP GENERAL SPECIFIC
NUMBER NUMBER PROPERTY NAME PROPERTY TYPE PROPERTY TYPE
- --------------------------------------------------------------------------------------------------------------------------------
1 1 Ernst & Young Plaza Office CBD
2 1 11 Madison Avenue Office CBD
3 1 1130 Connecticut Avenue Office CBD
4 1 Crossroads Plaza Retail Anchored
5 1 24 West 57th Street Office CBD
6 1 Eastdale Mall Retail Anchored
7 1 One Riverview Square Office CBD
8 1 Pointe at Wellington Retail Shadow Anchored
9 1 Hampton Bays Town Center Retail Anchored
11 1 Cowesset Corners Retail Anchored
13 1 Glenridge Pointe Office Buildings Office Suburban
14 1 ConAgra Distribution Facility Industrial Warehouse
16 1 Greenpoint Industrial Center Industrial Light Industrial
17 1 Highridge Centre Office Suburban
20 1 Washington Park Mall Retail Anchored
21 1 Flamingo Promenade Retail Anchored
22 1 570 Polaris Parkway Office Suburban
23 1 255 Rockville Pike Office Suburban
25 1 The Mall at Waycross Retail Anchored
26 1 Ridgewood Village Shopping Center Retail Anchored
32 1 Meadow Creek Office Park Office Suburban
34 1 830 Boylston Street Office Medical
35 1 Eastgate Center Retail Anchored
36 1 The McLean Commercial Center Office Suburban
37 1 4th Street Retail Retail Anchored
38 1 Somerset Park Office Medical
40 1 Linens 'n Things Distribution Center Industrial Warehouse
42 1 Regency Mall Retail Anchored
44 1 Northside Medical Plaza Office Medical
47 1 Barnes & Noble Center Retail Anchored
49 1 AT&T Wireless - Santa Clara, CA Industrial Light Industrial
51 1 Watchung Hills Office Center Office Suburban
53 1 Monroe Plaza Shopping Center Retail Shadow Anchored
54 1 Crescent Business Center Industrial Flex/Warehouse
55 1 Koll-Lyon Plaza Office Building Office Suburban
57 1 Clearview Commons at Superstition Springs Mixed Use Office/Retail/Warehouse
58 1 Ballenger Commerce Center Industrial Warehouse/Flex
59 1 Great American Plaza Retail Center Retail Unanchored
60 1 Plaza Del Centro Retail Unanchored
62 1 Callabridge Commons Retail Unanchored
67 1 7904 N. Sam Houston Parkway West Office Suburban
68 1 Great American Plaza Building A Office Suburban
71 1 Best Buy - Las Cruces, NM Retail Anchored
72 1 8475 S Eastern Avenue Office Suburban
73 1 Walgreens - Huntersville, NC Retail Anchored
75 1 Walgreens - Boston, MA Retail Anchored
76 1 Alverser Plaza Retail Unanchored
77 1 Walgreens - Katy, TX Retail Anchored
78 1 Crossroads Shopping Center Retail Anchored
79 1 T.J. Maxx - Staunton, VA Retail Anchored
80 1 Phoenix Crossing Shopping Center Retail Unanchored
81 1 Walgreens - Wichita Falls, TX Retail Anchored
82 1 Walgreens - Crossville, TN Retail Anchored
84 1 Walgreens - Port Charlotte, FL Retail Anchored
86 1 Airborne Express Warehouse Industrial Warehouse
87 1 Wal-Mart - Port Jefferson, NY Land Retail
88 1 Walgreens - Pensacola, FL Retail Anchored
92 1 Staples - Angola, IN Retail Anchored
93 1 Eckerd - Charlotte, NC Retail Unanchored
94 1 Walgreens - Tulsa, OK Retail Anchored
95 1 Food Lion - Ormond Beach, FL Retail Anchored
MORTGAGE CUT-OFF NUMBER
LOAN DATE OF UNITS UNIT OF
NUMBER BALANCE ($) (UNITS) MEASURE LARGEST TENANT
- ----------------------------------------------------------------------------------------------------------------------------------
1 119,298,859.34 1,241,440 Sq. Ft. Ernst & Young
2 82,000,000.00 2,256,552 Sq. Ft. Credit Suisse First Boston
3 58,500,000.00 218,738 Sq. Ft. American Insurance Association, Inc.
4 57,500,000.00 476,164 Sq. Ft. Best Buy
5 35,000,000.00 100,334 Sq. Ft. B.E. West 56th Street, LLC (Beacon Restaurant)
6 32,563,845.00 485,772 Sq. Ft. Sears, Roebuck & Co.
7 30,000,000.00 147,917 Sq. Ft. United States Government
8 22,856,382.58 133,089 Sq. Ft. LA Fitness
9 20,500,000.00 102,956 Sq. Ft. King Kullen Grocery Co., Inc.
11 17,430,000.00 144,265 Sq. Ft. Stop & Shop
13 16,500,000.00 185,141 Sq. Ft. Crawford and Company
14 16,400,000.00 726,299 Sq. Ft. ConAgra Foods, Inc
16 14,983,704.82 425,080 Sq. Ft. Product Development Corp.
17 14,466,761.14 192,545 Sq. Ft. Ikon Office Solutions
20 13,007,712.59 285,723 Sq. Ft. Sears, Roebuck & Co.
21 13,000,000.00 67,121 Sq. Ft. Albertsons
22 12,725,000.00 140,006 Sq. Ft. Exel, Inc.
23 11,976,706.37 145,238 Sq. Ft. Montgomery County
25 11,415,737.30 377,544 Sq. Ft. Sears, Roebuck & Co.
26 10,973,121.93 123,873 Sq. Ft. Fiesta Mart Inc.
32 9,109,421.41 66,748 Sq. Ft. OBCO, Inc.
34 8,864,355.96 42,280 Sq. Ft. New England Baptist Hospital
35 8,790,742.31 140,332 Sq. Ft. Toys "R" Us
36 8,481,194.26 65,999 Sq. Ft. Leo Tucker / Northwestern
37 8,000,000.00 97,196 Sq. Ft. Z Gallerie
38 7,792,868.84 51,651 Sq. Ft. NV Mortgage Co.
40 7,690,000.00 262,644 Sq. Ft. Linens 'n Things Warehouse
42 7,500,000.00 207,346 Sq. Ft. Giant Foods LLC
44 7,250,000.00 54,000 Sq. Ft. Northside Hospital & Heart Institute (Galencare)
47 6,393,451.26 45,629 Sq. Ft. Barnes & Noble
49 6,032,000.00 33,257 Sq. Ft. AT&T Wireless
51 5,900,000.00 39,356 Sq. Ft. The Horizon Group
53 5,391,053.34 74,812 Sq. Ft. Strands Home Furnishings
54 5,388,861.28 108,940 Sq. Ft. Aladdin Manufacturing
55 5,293,920.70 38,734 Sq. Ft. Santa Clara County
57 5,040,218.72 55,594 Sq. Ft. H&R Block Tax Services
58 4,994,091.56 68,401 Sq. Ft. Secur Data Systems, Inc.
59 4,988,844.68 20,431 Sq. Ft. Paymon's Mediterranean Cafe
60 4,945,168.55 70,897 Sq. Ft. Gonzales Meat Market
62 4,800,000.00 41,000 Sq. Ft. Midtown of Mtn Island Lake LLC
67 4,395,174.88 42,200 Sq. Ft. Caldwell Watson
68 4,190,570.54 25,862 Sq. Ft. Great American Homes
71 3,809,000.00 30,000 Sq. Ft. Best Buy
72 3,646,616.10 25,901 Sq. Ft. Max Health
73 3,495,887.05 13,650 Sq. Ft. Walgreens
75 3,351,320.85 13,943 Sq. Ft. Walgreens
76 3,245,515.74 15,000 Sq. Ft. Schwarzchild
77 3,192,542.48 13,650 Sq. Ft. Walgreens
78 3,192,069.90 105,661 Sq. Ft. Piggly Wiggly
79 3,116,000.00 78,823 Sq. Ft. T.J. Maxx
80 3,072,076.69 34,012 Sq. Ft. Clean Zone Laundromat
81 2,796,598.17 14,490 Sq. Ft. Walgreens
82 2,753,000.00 15,070 Sq. Ft. Walgreens
84 2,696,145.65 15,930 Sq. Ft. Walgreens
86 2,620,452.09 40,873 Sq. Ft. Airborne Express, Inc.
87 2,590,240.17 128,680 Sq. Ft. Wal-Mart Real Estate Business Trust
88 2,539,795.33 13,650 Sq. Ft. Walgreens
92 1,999,000.00 24,049 Sq. Ft. Staples
93 1,931,892.06 10,908 Sq. Ft. Eckerd Drug
94 1,926,000.00 13,500 Sq. Ft. Walgreens
95 1,550,000.00 26,640 Sq. Ft. Food Lion
MORTGAGE LARGEST LARGEST 2ND LARGEST
LOAN TENANT TENANT TENANT %
NUMBER % OF NRA EXP. DATE 2ND LARGEST TENANT NAME OF NRA (%)
- ---------------------------------------------------------------------------------------------------------------------------------
1 11.98% Multiple Spaces GSA 9.99%
2 85.15% Multiple Spaces Aon (sublet to IBM) 6.12%
3 20.43% Multiple Spaces Starpower Communications 5.53%
4 10.76% 10/31/06 Stein Mart 7.56%
5 13.49% 11/30/18 The Timberland Company 11.45%
6 29.54% 09/11/09 Parisian 26.34%
7 86.00% 12/31/18
8 30.81% 10/01/18 Thomasville Furniture 9.02%
9 38.85% 06/30/27 Eckerd Drug 9.39%
11 38.49% 10/31/07 The Fabric Place 17.35%
13 42.72% 09/30/08 AmTrust Mortgage Corporation 7.88%
14 100.00% 08/31/13
16 10.82% 12/31/06 US Furniture 6.12%
17 42.76% 10/31/09 Access Integrated Network 16.00%
20 25.32% 07/31/34 JCPenney 17.69%
21 83.22% 12/10/28 Bank of America 7.45%
22 64.43% 12/31/09 Central Ohio Primary Care Physicians, Inc. 13.29%
23 79.80% 05/31/12 Montgomery County - Treasury 9.06%
25 22.84% 03/07/20 JCPenney 21.44%
26 34.04% 04/30/22 Sam's $1.00 Store 9.68%
32 27.20% 11/24/08 Cascade Pediatrics 5.01%
34 28.28% 10/21/08 Brigham & Women's Hospital 17.56%
35 40.02% 01/31/13 PNS Stores, Inc. 16.56%
36 29.35% 07/14/14 Foxhall - Direct Response 15.33%
37 35.90% 02/01/12 Crate & Barrel 23.92%
38 20.03% 04/21/08 Preferred Dialysis Care 11.87%
40 100.00% 01/31/09
42 26.20% 06/30/21 Ollies Bargain Outlet 21.70%
44 39.46% Multiple Spaces Heart & Vascular Institute 23.51%
47 80.21% 07/31/14 Motophoto 6.62%
49 100.00% 05/08/18
51 60.52% 10/17/09 The Learning Experience 27.99%
53 16.43% 10/31/07 Kid's Country, Inc. 9.49%
54 33.05% 08/01/08 American Standard 20.19%
55 39.02% 10/01/09 Micor / Valley Gen. 11.94%
57 12.81% 03/04/09 Diamondback Gymnastics 12.66%
58 29.82% Multiple Spaces American Residential Serv LLC 15.50%
59 32.06% 03/12/14 Mosaic Salon 19.02%
60 18.97% 02/28/08 La Frontera 7.90%
62 19.51% 05/31/14 Allen Tate Company, Inc. 11.71%
67 32.45% 10/31/11 Eagle Energy 16.22%
68 34.92% 02/28/11 Power Realty, LLC 13.56%
71 100.00% 01/31/13
72 23.16% 09/14/10 Family Doctors: Dr.Ramanathan 16.74%
73 100.00% 01/31/79
75 100.00% 04/01/78
76 33.33% 10/31/13 Book Binders 26.67%
77 100.00% 04/30/79
78 31.41% 12/31/23 CVS 10.14%
79 100.00% 10/31/12
80 8.23% 11/30/12 Lillian's Retail Beauty Supply 7.72%
81 100.00% 02/28/77
82 100.00% 03/31/61
84 100.00% 08/31/59
86 100.00% 04/30/14
87 100.00% 01/22/28
88 100.00% 09/30/78
92 100.00% 02/28/15
93 100.00% 08/16/17
94 100.00% 08/31/44
95 100.00% 03/08/09
MORTGAGE 2ND LARGEST 3RD LARGEST 3RD LARGEST MORTGAGE
LOAN TENANT EXP. TENANT % TENANT EXP. LOAN
NUMBER DATE 3RD LARGEST TENANT NAME OF NRA DATE NUMBER
- -----------------------------------------------------------------------------------------------------------------------------------
1 Multiple Spaces Robinsons-May 9.95% 03/12/11 1
2 04/30/13 Omnicom 4.23% 09/30/08 2
3 05/31/07 Nichols-Dezenhall Communications 5.22% 07/31/05 3
4 10/31/06 OfficeMax Inc. 5.86% 01/31/07 4
5 06/30/11 Multiples, Inc. (Marian Goodman Gallery) 9.84% 06/30/08 5
6 01/31/15 Eastdale Cinemas 8 5.96% 08/31/07 6
7 7
8 03/01/14 Olive Garden (Ground Lease) 5.56% 10/01/13 8
9 06/30/24 Town of Southampton 8.94% 05/31/19 9
11 02/28/08 Candle Corporation 11.82% 12/31/05 11
13 12/31/11 Communicorp, Inc. 7.02% 12/31/07 13
14 14
16 09/30/05 Walter P. Sauer 5.32% Multiple Spaces 16
17 12/31/13 Secure Health Plans of Georgia 8.65% 01/31/10 17
20 11/12/06 Goody's 8.46% 08/31/14 20
21 12/31/23 Port of Subs 2.18% 05/31/09 21
22 06/30/10 Centex Homes 10.48% 04/30/08 22
23 01/31/09 Metro Fitness 9.04% 12/31/11 23
25 08/31/11 Belk, Inc. 16.22% 08/05/11 25
26 06/30/12 CVS (Ground Lease) 9.24% 01/31/25 26
32 Multiple Spaces Dr. Robert Tanner 4.07% 02/28/14 32
34 02/19/14 Longwood Orthopedic Associates 16.51% 10/21/13 34
35 12/31/09 OfficeMax Inc. 14.19% 04/30/09 35
36 09/16/05 Spexus, Inc. 7.98% 11/15/07 36
37 01/31/13 Restoration Hardware 11.86% 04/30/09 37
38 01/01/09 Old Republic Title 11.72% 09/13/06 38
40 40
42 05/31/09 Rex Appliances 7.72% 01/31/09 42
44 02/01/19 Cardiac Surgical Associates 12.79% 05/01/14 44
47 08/31/05 Verizon Wireless 6.60% 05/31/06 47
49 49
51 05/31/19 The Watchung Pediatric Group 9.96% 05/31/19 51
53 01/31/06 Video Factory 4.81% 03/31/09 53
54 08/01/12 USF Processors, Inc. 14.69% 06/01/07 54
55 11/01/06 Starbucks, Inc. 7.66% 11/01/07 55
57 12/31/07 The BBQ Store 8.17% 01/31/08 57
58 10/31/05 Pursuit Marketing Inc. 15.79% 07/31/05 58
59 03/08/14 Las Vegas Rugs, Inc. 15.15% 03/14/09 59
60 05/31/06 Mattress Shop 7.05% 05/31/07 60
62 12/31/08 KAZ Pizza, Inc. 10.98% 11/30/12 62
67 07/31/09 Mark West 13.81% 03/31/11 67
68 02/28/09 First American Title 12.76% 04/30/09 68
71 71
72 12/12/08 Design Center West 14.07% 05/08/07 72
73 73
75 75
76 11/30/13 Second Swing 20.00% 08/31/09 76
77 77
78 03/31/11 The Fitness Club 7.37% 09/30/13 78
79 79
80 05/30/06 Trin B'Ago Caribbean Restaurant 7.64% 02/28/06 80
81 81
82 82
84 84
86 86
87 87
88 88
92 92
93 93
94 94
95 95
[THIS PAGE INTENTIONALLY LEFT BLANK]
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2004-C12
ANNEX A-5 CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS AND MORTGAGED PROPERTIES (CROSSED & PORTFOLIOS)
- ---------
MORTGAGE LOAN
LOAN GROUP
NUMBER NUMBER PROPERTY NAME CITY STATE
- --------------------------------------------------------------------------------------------------------------------
Various 1 Extra Space Self Storage Portfolio Various Various
- --------------------------------------------------------------------------------------------------------------------
24 1 Extra Space Self Storage - Lawrenceville, Lawrenceville NJ
28 1 Extra Space Self Storage - Hazlet, NJ Hazlet NJ
45 1 Extra Space Self Storage - Torrance, CA Torrance CA
52 1 Extra Space Self Storage - North Miami, FL North Miami FL
61 1 Extra Space Self Storage - Livermore, CA Livermore CA
64 1 Extra Space Self Storage - Richmond, CA Richmond CA
66 1 Extra Space Self Storage - Glendale, CA Glendale CA
70 1 Extra Space Self Storage - Hawthorne, CA Hawthorne CA
74 1 Extra Space Self Storage - San Bernardino, CA San Bernardino CA
85 1 Extra Space Self Storage - Claremont, CA Claremont CA
89 1 Extra Space Self Storage - Kearns, UT Kearns UT
Various 1 Cole Company Portfolio Various Various
- --------------------------------------------------------------------------------------------------------------------
49 1 AT&T Wireless - Santa Clara, CA Santa Clara CA
71 1 Best Buy - Las Cruces, NM Las Cruces NM
79 1 T.J. Maxx - Staunton, VA Staunton VA
82 1 Walgreens - Crossville, TN Crossville TN
92 1 Staples - Angola, IN Angola IN
94 1 Walgreens - Tulsa, OK Tulsa OK
96 2 Henry Whipple Apartments Various VA
- -----------------------------------------------------------------------------------------------------------------
96.1 Whipple Drive Apartments Blacksburg VA
96.2 The Henry Martinsville VA
% OF
MORTGAGE CUT-OFF AGGREGATE
LOAN CROSS COLLATERALIZED AND CROSS ORIGINAL LOAN DATE LOAN CUT-OFF DATE
NUMBER DEFAULTED LOAN FLAG BALANCE ($) BALANCE ($) BALANCE
- ------------------------------------------------------------------------------------------------------------------------------------
Various Extra Space Self Storage Portfolio 61,770,000.00 61,770,000.00 5.81%
- ------------------------------------------------------------------------------------------------------------------------------------
24 Extra Space Self Storage Portfolio 11,946,000.00 11,946,000.00 1.12%
28 Extra Space Self Storage Portfolio 10,560,000.00 10,560,000.00 0.99%
45 Extra Space Self Storage Portfolio 6,960,000.00 6,960,000.00 0.65%
52 Extra Space Self Storage Portfolio 5,848,000.00 5,848,000.00 0.55%
61 Extra Space Self Storage Portfolio 4,920,000.00 4,920,000.00 0.46%
64 Extra Space Self Storage Portfolio 4,696,000.00 4,696,000.00 0.44%
66 Extra Space Self Storage Portfolio 4,480,000.00 4,480,000.00 0.42%
70 Extra Space Self Storage Portfolio 3,840,000.00 3,840,000.00 0.36%
74 Extra Space Self Storage Portfolio 3,376,000.00 3,376,000.00 0.32%
85 Extra Space Self Storage Portfolio 2,624,000.00 2,624,000.00 0.25%
89 Extra Space Self Storage Portfolio 2,520,000.00 2,520,000.00 0.24%
Various Cole Company Portfolio 19,635,000.00 19,635,000.00 1.85%
- ------------------------------------------------------------------------------------------------------------------------------------
49 Cole Company Portfolio 6,032,000.00 6,032,000.00 0.57%
71 Cole Company Portfolio 3,809,000.00 3,809,000.00 0.36%
79 Cole Company Portfolio 3,116,000.00 3,116,000.00 0.29%
82 Cole Company Portfolio 2,753,000.00 2,753,000.00 0.26%
92 Cole Company Portfolio 1,999,000.00 1,999,000.00 0.19%
94 Cole Company Portfolio 1,926,000.00 1,926,000.00 0.18%
96 1,534,371.03 1,527,163.72 0.14%
- ------------------------------------------------------------------------------------------------------------------------------------
96.1
96.2
REMAINING ORIGINAL MONTHLY
MORTGAGE ORIGINAL TERM TERM TO REMAINING AMORT REMAINING P&I
LOAN TO MATURITY OR MATURITY OR IO PERIOD TERM AMORT TERM PAYMENTS
NUMBER ARD (MOS.) ARD (MOS.) (MOS.) (MOS.) (MOS.) ($)
- ---------------------------------------------------------------------------------------------------------------
Various 60 59 59 IO IO IO
- ---------------------------------------------------------------------------------------------------------------
24 60 59 59 IO IO IO
28 60 59 59 IO IO IO
45 60 59 59 IO IO IO
52 60 59 59 IO IO IO
61 60 59 59 IO IO IO
64 60 59 59 IO IO IO
66 60 59 59 IO IO IO
70 60 59 59 IO IO IO
74 60 59 59 IO IO IO
85 60 59 59 IO IO IO
89 60 59 59 IO IO IO
Various 84 82 82 IO IO IO
- ---------------------------------------------------------------------------------------------------------------
49 84 82 82 IO IO IO
71 84 82 82 IO IO IO
79 84 82 82 IO IO IO
82 84 82 82 IO IO IO
92 84 82 82 IO IO IO
94 84 82 82 IO IO IO
96 55 52 300 297 9,230.93
- ---------------------------------------------------------------------------------------------------------------
96.1
96.2
MORTGAGE MATURITY DATE CUT-OFF LTV RATIO
LOAN OR ARD BALLOON APPRAISED DSCR DATE LTV AT MATURITY
NUMBER BALANCE ($) VALUE ($) (X) RATIO OR ARD
- ------------------------------------------------------------------------------------------------------
Various 61,770,000.00 77,240,000.00 2.19 79.97% 79.97%
- -------------------------------------------------------------------------------------------------------
24 11,946,000.00 14,960,000.00 2.06 79.85% 79.85%
28 10,560,000.00 13,200,000.00 2.34 80.00% 80.00%
45 6,960,000.00 8,700,000.00 2.38 80.00% 80.00%
52 5,848,000.00 7,310,000.00 2.18 80.00% 80.00%
61 4,920,000.00 6,150,000.00 2.01 80.00% 80.00%
64 4,696,000.00 5,870,000.00 2.04 80.00% 80.00%
66 4,480,000.00 5,600,000.00 2.24 80.00% 80.00%
70 3,840,000.00 4,800,000.00 2.24 80.00% 80.00%
74 3,376,000.00 4,220,000.00 2.09 80.00% 80.00%
85 2,624,000.00 3,280,000.00 2.20 80.00% 80.00%
89 2,520,000.00 3,150,000.00 2.26 80.00% 80.00%
Various 19,635,000.00 29,670,000.00 2.43 66.18% 66.18%
- -------------------------------------------------------------------------------------------------------
49 6,032,000.00 8,810,000.00 2.45 68.47% 68.47%
71 3,809,000.00 5,860,000.00 2.37 65.00% 65.00%
79 3,116,000.00 4,800,000.00 2.21 64.92% 64.92%
82 2,753,000.00 4,300,000.00 2.55 64.02% 64.02%
92 1,999,000.00 3,000,000.00 2.53 66.63% 66.63%
94 1,926,000.00 2,900,000.00 2.56 66.41% 66.41%
96 1,387,259.97 2,200,000.00 1.43 69.42% 63.06%
- -------------------------------------------------------------------------------------------------------
96.1 1,500,000.00
96.2 700,000.00
CUT-OFF
DATE
LOAN
MORTGAGE NUMBER AMOUNT UW NET MORTGAGE
LOAN OF UNITS UNIT OF PER (UNIT) CASH FLOW LOAN
NUMBER (UNITS) MEASURE ($) ($) NUMBER
- -------------------------------------------------------------------------------------------
Various 7,513 Units 8,221.75 5,820,090.85 Various
- ------------------------------------------------------------------------------------------
24 924 Units 12,928.57 1,060,276.22 24
28 1,147 Units 9,206.63 1,061,829.10 28
45 737 Units 9,443.69 713,534.43 45
52 796 Units 7,346.73 547,836.01 52
61 672 Units 7,321.43 424,852.98 61
64 773 Units 6,075.03 412,631.11 64
66 429 Units 10,442.89 432,114.72 66
70 583 Units 6,586.62 370,177.85 70
74 497 Units 6,792.76 303,360.68 74
85 404 Units 6,495.05 248,496.31 85
89 551 Units 4,573.50 244,981.44 89
Various 194,699 Sq. Ft. 100.85 2,127,909.76 Various
- ------------------------------------------------------------------------------------------
49 33,257 Sq. Ft. 181.38 659,557.17 49
71 30,000 Sq. Ft. 126.97 402,906.75 71
79 78,823 Sq. Ft. 39.53 306,862.09 79
82 15,070 Sq. Ft. 182.68 312,773.00 82
92 24,049 Sq. Ft. 83.12 225,855.26 92
94 13,500 Sq. Ft. 142.67 219,955.50 94
96 57 Units 26,792.35 157,978.14 96
- ------------------------------------------------------------------------------------------
96.1 24 Units 96.1
96.2 33 Units 96.2
[THIS PAGE INTENTIONALLY LEFT BLANK]
ANNEX B
ABN AMRO WACHOVIA BANK COMMERCIAL MORTGAGE TRUST Statement Date: 8/17/2004
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 8/17/2004
135 S. LaSalle Street Suite 1625 SERIES 2004-C12 Prior Payment: N/A
Chicago, IL 60603 Next Payment: 9/17/2004
Record Date: 7/31/2004
ABN AMRO ACCT: XX-XXXX-XX-X
Administrator: Analyst:
REPORTING PACKAGE TABLE OF CONTENTS
====================================================================================================================================
================================ ==================================================== ======================================
Page(s)
Issue Id: WBCM4C12 REMIC Certificate Report ------- Closing Date: 07/08/2004
Monthly Data File Name: Bond Interest Reconciliation First Payment Date: 08/17/2004
WBCM4C12_YYYYMM_3.zip Cash Reconciliation Summary Assumed Final Payment Date: 08/17/2034
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: Wachovia Commercial Mortgage Securities, Inc.
UNDERWRITER: Wachovia Capital Markets, LLC/Citigroup Global Markets, Inc.
MASTER SERVICER: Wachovia Bank, National Association
SPECIAL SERVICER: Clarion Partners, Inc.
RATING AGENCY: Standard & Poor's Ratings Services/Fitch, Inc.
======================================================================================================
==========================================================================
INFORMATION IS AVAILABLE FOR THIS ISSUE FROM THE FOLLOWING SOURCES
--------------------------------------------------------------------------
LaSalle Web Site www.etrustee.net
Servicer Website
LaSalle Factor Line (800) 246-5761
==========================================================================
====================================================================================================================================
06/15/2004 - 18:54 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
B-1
ANNEX B
ABN AMRO WACHOVIA BANK COMMERCIAL MORTGAGE TRUST Statement Date: 8/17/2004
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 8/17/2004
SERIES 2004-C12 Prior Payment: N/A
WAC: Next Payment: 9/17/2004
WA Life Term: Record Date: 7/31/2004
Current Index: ABN AMRO ACCT: XX-XXXX-XX-X
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
06/15/2004 - 18:54 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
B-2
ANNEX B
ABN AMRO WACHOVIA BANK COMMERCIAL MORTGAGE TRUST Statement Date: 8/17/2004
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 8/17/2004
SERIES 2004-C12 Prior Payment: N/A
Next Payment: 9/17/2004
Record Date: 7/31/2004
ABN AMRO ACCT: XX-XXXX-XX-X
BOND INTEREST RECONCILIATION
====================================================================================================================================
Deductions Additions
--------------------------------- ----------------------------------------------------
Accrual Pass Accrued Deferred & Prior Int Accrual Prepay- Other
------------- 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).
06/15/2004 - 18:54 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
B-3
ANNEX B
ABN AMRO WACHOVIA BANK COMMERCIAL MORTGAGE TRUST Statement Date: 8/17/2004
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 8/17/2004
SERIES 2004-C12 Prior Payment: N/A
Next Payment: 9/17/2004
Record Date: 7/31/2004
ABN AMRO ACCT: XX-XXXX-XX-X
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
------------------------------------------
====================================================================================================================================
06/15/2004 - 18:54 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
B-4
ANNEX B
ABN AMRO WACHOVIA BANK COMMERCIAL MORTGAGE TRUST Statement Date: 8/17/2004
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 8/17/2004
SERIES 2004-C12 Prior Payment: N/A
Next Payment: 9/17/2004
Record Date: 7/31/2004
ABN AMRO ACCT: XX-XXXX-XX-X
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
============ ================================================================== ================================================
8/17/04
- ------------ ------------------------------------------------------------------ ------------------------------------------------
- ------------ ------------------------------------------------------------------ ------------------------------------------------
- ------------ ------------------------------------------------------------------ ------------------------------------------------
- ------------ ------------------------------------------------------------------ ------------------------------------------------
- ------------ ------------------------------------------------------------------ ------------------------------------------------
- ------------ ------------------------------------------------------------------ ------------------------------------------------
- ------------ ------------------------------------------------------------------ ------------------------------------------------
- ------------ ------------------------------------------------------------------ ------------------------------------------------
- ------------ ------------------------------------------------------------------ ------------------------------------------------
- ------------ ------------------------------------------------------------------ ------------------------------------------------
- ------------ ------------------------------------------------------------------ ------------------------------------------------
- ------------ ------------------------------------------------------------------ ------------------------------------------------
- ------------ ------------------------------------------------------------------ ------------------------------------------------
- ------------ ------------------------------------------------------------------ ------------------------------------------------
============ ================================================================== ================================================
(1) Modification, Specially Serviced & Bankruptcy Totals are Included in the Appropriate Delinquency Aging Category.
06/15/2004 - 18:54 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
B-5
ANNEX B
ABN AMRO WACHOVIA BANK COMMERCIAL MORTGAGE TRUST Statement Date: 8/17/2004
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 8/17/2004
SERIES 2004-C12 Prior Payment: N/A
Next Payment: 9/17/2004
Record Date: 7/31/2004
ABN AMRO ACCT: XX-XXXX-XX-X
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
============= ===================================================================================== ================================
8/17/04
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
(1) Percentage based on pool as of cutoff.
(2) Percentage based on pool as of beginning of period.
06/15/2004 - 18:54 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
B-6
ANNEX B
ABN AMRO WACHOVIA BANK COMMERCIAL MORTGAGE TRUST Statement Date: 8/17/2004
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 8/17/2004
SERIES 2004-C12 Prior Payment: N/A
Next Payment: 9/17/2004
Record Date: 7/31/2004
ABN AMRO ACCT: XX-XXXX-XX-X
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
06/15/2004 - 18:54 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
B-7
ANNEX B
ABN AMRO WACHOVIA BANK COMMERCIAL MORTGAGE TRUST Statement Date: 8/17/2004
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 8/17/2004
SERIES 2004-C12 Prior Payment: N/A
Next Payment: 9/17/2004
Record Date: 7/31/2004
ABN AMRO ACCT: XX-XXXX-XX-X
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
06/15/2004 - 18:54 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
B-8
ANNEX B
ABN AMRO WACHOVIA BANK COMMERCIAL MORTGAGE TRUST Statement Date: 8/17/2004
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 8/17/2004
SERIES 2004-C12 Prior Payment: N/A
Next Payment: 9/17/2004
Record Date: 7/31/2004
ABN AMRO ACCT: XX-XXXX-XX-X
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
06/15/2004 - 18:54 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
B-9
ANNEX B
ABN AMRO WACHOVIA BANK COMMERCIAL MORTGAGE TRUST Statement Date:
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date:
SERIES 2004-C12 Prior Payment:
Next Payment:
Record Date:
ABN AMRO ACCT: XX-XXXX-XX-X
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
06/15/2004 - 18:54 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
B-10
ANNEX B
ABN AMRO WACHOVIA BANK COMMERCIAL MORTGAGE TRUST Statement Date:
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date:
SERIES 2004-C12 Prior Payment:
Next Payment:
Record Date:
ABN AMRO ACCT: XX-XXXX-XX-X
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%
=========================================================== ===========================================================
06/15/2004 - 18:54 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
B-11
ANNEX B
ABN AMRO WACHOVIA BANK COMMERCIAL MORTGAGE TRUST Statement Date: 8/17/2004
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 8/17/2004
SERIES 2004-C12 Prior Payment: N/A
Next Payment: 9/17/2004
Record Date: 7/31/2004
ABN AMRO ACCT: XX-XXXX-XX-X
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
====================================================================================================================================
06/15/2004 - 18:54 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
B-12
ANNEX B
ABN AMRO WACHOVIA BANK COMMERCIAL MORTGAGE TRUST Statement Date: 8/17/2004
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 8/17/2004
SERIES 2004-C12 Prior Payment: N/A
Next Payment: 9/17/2004
Record Date: 7/31/2004
ABN AMRO ACCT: XX-XXXX-XX-X
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
====================================================================================================================================
06/15/2004 - 18:54 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
B-13
ANNEX B
ABN AMRO WACHOVIA BANK COMMERCIAL MORTGAGE TRUST Statement Date: 8/17/2004
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 8/17/2004
SERIES 2004-C12 Prior Payment: N/A
Next Payment: 9/17/2004
Record Date: 7/31/2004
ABN AMRO ACCT: XX-XXXX-XX-X
SPECIALLY SERVICED LOAN DETAIL (PART II) - SERVICER COMMENTS
====================================================================================================================================
Disclosure Resolution
Control # Strategy Comments
====================================================================================================================================
====================================================================================================================================
06/15/2004 - 18:54 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
B-14
ANNEX B
ABN AMRO WACHOVIA BANK COMMERCIAL MORTGAGE TRUST Statement Date: 8/17/2004
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 8/17/2004
SERIES 2004-C12 Prior Payment: N/A
Next Payment: 9/17/2004
Record Date: 7/31/2004
ABN AMRO ACCT: XX-XXXX-XX-X
MODIFIED LOAN DETAIL
====================================================================================================================================
Cutoff Modified
Disclosure Modification Maturity Maturity Modification
Control # Date Date Date Description
====================================================================================================================================
====================================================================================================================================
06/15/2004 - 18:54 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
B-15
ANNEX B
ABN AMRO WACHOVIA BANK COMMERCIAL MORTGAGE TRUST Statement Date: 8/17/2004
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 8/17/2004
SERIES 2004-C12 Prior Payment: N/A
Next Payment: 9/17/2004
Record Date: 7/31/2004
ABN AMRO ACCT: XX-XXXX-XX-X
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.
06/15/2004 - 18:54 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
B-16
ANNEX B
ABN AMRO WACHOVIA BANK COMMERCIAL MORTGAGE TRUST Statement Date: 8/17/2004
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 8/17/2004
SERIES 2004-C12 Prior Payment: N/A
Next Payment: 9/17/2004
Record Date: 7/31/2004
ABN AMRO ACCT: XX-XXXX-XX-X
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
====================== =================================== ================================================ ====== =================
====================================================================================================================================
06/15/2004 - 18:54 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
B-17
[THIS PAGE INTENTIONALLY LEFT BLANK]
PROSPECTUS
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
(ISSUABLE IN SERIES)
WACHOVIA COMMERCIAL MORTGAGE SECURITIES, INC.
DEPOSITOR
Wachovia Commercial Mortgage Securities, Inc. will periodically offer
certificates in one or more series. Each series of certificates will represent
the entire beneficial ownership interest in a trust fund. Distributions on the
certificates of any series will be made only from the assets of the related
trust fund.
Neither the certificates nor any assets in the related trust fund will be
obligations of, or be guaranteed by, the depositor, any servicer or any of their
respective affiliates. Neither the certificates nor any assets in the related
trust fund will be guaranteed or insured by any governmental agency or
instrumentality or by any person, unless otherwise provided in the prospectus
supplement.
The primary assets of the trust fund may include:
o multifamily and commercial mortgage loans, including participations
therein;
o mortgage-backed securities evidencing interests in or secured by
multifamily and commercial mortgage loans, including participations
therein, and other mortgage-backed securities;
o direct obligations of the United States or other government agencies;
or
o a combination of the assets described above.
INVESTING IN THE OFFERED CERTIFICATES INVOLVES RISKS. YOU SHOULD REVIEW THE
INFORMATION APPEARING UNDER THE CAPTION "RISK FACTORS" ON PAGE 14 AND IN THE
PROSPECTUS SUPPLEMENT BEFORE PURCHASING ANY OFFERED CERTIFICATE.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE OFFERED CERTIFICATES OR DETERMINED
THAT THIS PROSPECTUS OR THE ACCOMPANYING PROSPECTUS SUPPLEMENT IS ACCURATE OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
June 17, 2004
TABLE OF CONTENTS
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT ............................... 5
ADDITIONAL INFORMATION ..................................................... 6
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE .......................... 6
SUMMARY OF PROSPECTUS ...................................................... 7
RISK FACTORS ............................................................... 14
DESCRIPTION OF THE TRUST FUNDS ............................................. 34
General .................................................................. 34
Mortgage Loans--Leases ................................................... 34
CMBS ..................................................................... 38
Certificate Accounts ..................................................... 38
Credit Support ........................................................... 39
Cash Flow Agreements ..................................................... 39
Pre-Funding .............................................................. 39
YIELD CONSIDERATIONS ....................................................... 40
General .................................................................. 40
Pass-Through Rate ........................................................ 40
Payment Delays ........................................................... 40
Shortfalls in Collections of Interest Resulting from Prepayments ......... 40
Prepayment Considerations ................................................ 40
Weighted Average Life and Maturity ....................................... 42
Controlled Amortization Classes and Companion Classes .................... 43
Other Factors Affecting Yield, Weighted Average Life and Maturity ........ 43
THE DEPOSITOR .............................................................. 45
USE OF PROCEEDS ............................................................ 45
DESCRIPTION OF THE CERTIFICATES ............................................ 46
General .................................................................. 46
Distributions ............................................................ 46
Distributions of Interest on the Certificates ............................ 47
Distributions of Principal of the Certificates ........................... 48
Components ............................................................... 48
Distributions on the Certificates in Respect of Prepayment
Premiums or in Respect of Equity Participations ....................... 48
Allocation of Losses and Shortfalls ...................................... 48
Advances in Respect of Delinquencies ..................................... 49
Reports to Certificateholders ............................................ 49
Voting Rights ............................................................ 51
Termination .............................................................. 51
Book-Entry Registration and Definitive Certificates ...................... 52
DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS ........................ 53
General .................................................................. 53
Assignment of Mortgage Assets; Repurchases ............................... 53
Representations and Warranties; Repurchases .............................. 54
Certificate Account ...................................................... 55
Collection and Other Servicing Procedures ................................ 58
Realization upon Defaulted Mortgage Loans ................................ 59
Hazard Insurance Policies ................................................ 60
Due-on-Sale and Due-on-Encumbrance Provisions ............................ 61
Servicing Compensation and Payment of Expenses ........................... 61
2
Evidence as to Compliance ................................................ 62
Certain Matters Regarding the Master Servicer and the Depositor .......... 62
Events of Default ........................................................ 63
Rights upon Event of Default ............................................. 63
Amendment ................................................................ 64
List of Certificateholders ............................................... 65
The Trustee .............................................................. 65
Duties of the Trustee .................................................... 65
Certain Matters Regarding the Trustee .................................... 65
Resignation and Removal of the Trustee ................................... 65
DESCRIPTION OF CREDIT SUPPORT .............................................. 67
General .................................................................. 67
Subordinate Certificates ................................................. 67
Cross-Support Provisions ................................................. 67
Insurance or Guarantees with Respect to Mortgage Loans ................... 67
Letter of Credit ......................................................... 68
Certificate Insurance and Surety Bonds ................................... 68
Reserve Funds ............................................................ 68
Credit Support with Respect to CMBS ...................................... 68
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS AND LEASES ......................... 69
General .................................................................. 69
Types of Mortgage Instruments ............................................ 69
Leases and Rents ......................................................... 70
Personalty ............................................................... 70
Cooperative Loans ........................................................ 70
Junior Mortgages; Rights of Senior Lenders ............................... 71
Foreclosure .............................................................. 72
Bankruptcy Laws .......................................................... 76
Environmental Considerations ............................................. 78
Due-on-Sale and Due-on-Encumbrance ....................................... 80
Subordinate Financing .................................................... 80
Default Interest and Limitations on Prepayments .......................... 80
Certain Laws and Regulations; Types of Mortgaged Properties .............. 80
Applicability of Usury Laws .............................................. 81
Servicemembers Civil Relief Act .......................................... 81
Americans with Disabilities Act .......................................... 81
Forfeiture in Drug, RICO and Money Laundering Violations ................. 82
Federal Deposit Insurance Act; Commercial Mortgage Loan Servicing ........ 82
MATERIAL FEDERAL INCOME TAX CONSEQUENCES ................................... 84
General .................................................................. 84
REMICs ................................................................... 84
Taxation of Owners of REMIC Regular Certificates ......................... 86
Taxation of Owners of REMIC Residual Certificates ........................ 89
Grantor Trust Funds ...................................................... 100
Characterization of Investments in Grantor Trust Certificates ............ 101
Taxation of Owners of Grantor Trust Fractional Interest Certificates ..... 101
STATE AND OTHER TAX CONSEQUENCES ........................................... 108
ERISA CONSIDERATIONS ....................................................... 109
General .................................................................. 109
Prohibited Transaction Exemptions ........................................ 109
3
LEGAL INVESTMENT ........................................................... 112
METHOD OF DISTRIBUTION ..................................................... 114
LEGAL MATTERS .............................................................. 115
FINANCIAL INFORMATION ...................................................... 115
RATINGS .................................................................... 115
INDEX OF PRINCIPAL DEFINITIONS ............................................. 116
4
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT
We provide information to you about the offered certificates in two
separate documents that provide progressively more detail:
o this prospectus, which provides general information, some of which may
not apply to your series of certificates; and
o the accompanying prospectus supplement, which describes the specific
terms of your series of certificates.
If the description of your certificates in the accompanying prospectus
supplement differs from the related description in this prospectus, you should
rely on the information in that prospectus supplement.
This prospectus may not be used to consummate sales of the offered
certificates of any series unless accompanied by the prospectus supplement for
that series. This prospectus and the prospectus supplements also may be used by
us, Wachovia Capital Markets, LLC, our affiliate, and any other of our
affiliates when required under the federal securities laws in connection with
offers and sales of offered certificates in furtherance of market-making
activities in the offered certificates. Wachovia Capital Markets, LLC or any
such other affiliate may act as principal or agent in such transactions. Such
sales will be made at prices related to prevailing market prices at the time of
sale or otherwise.
Some capitalized terms used in this prospectus are defined under the
caption "Index of Principal Definitions" beginning on page 116 in this
prospectus.
In this prospectus, the terms "depositor", "we", "us" and "our" refer to
Wachovia Commercial Mortgage Securities, Inc.
---------------------
Until 90 days after the date of each prospectus supplement, all dealers
effecting transactions in the offered certificates covered by that prospectus
supplement, whether or not participating in the distribution thereof, may be
required to deliver such prospectus supplement and this prospectus. This is in
addition to the obligation of dealers to deliver a prospectus and prospectus
supplement when acting as underwriters and with respect to their unsold
allotments or subscriptions.
You should rely only on any information or representations contained or
incorporated by reference in this prospectus and the related prospectus
supplement. This prospectus and any prospectus supplement do not constitute an
offer to sell or a solicitation of an offer to buy any securities in any state
or other jurisdiction in which such offer would be unlawful.
5
ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement (of which this prospectus forms a part) under the Securities Act of
1933, as amended, with respect to the offered certificates. This prospectus and
the prospectus supplement do not contain all of the information set forth in the
registration statement. For further information, you should refer to the
registration statement and the exhibits attached thereto. Copies of the
Registration Statement may be obtained from the Public Reference Section of the
Securities and Exchange Commission, Washington, D.C. 20549, upon payment of the
prescribed charges, or may be examined free of charge at the Securities and
Exchange Commission's offices, 450 Fifth Street, N.W., Washington, D.C. 20549 or
at the regional offices of the Securities and Exchange Commission located at The
Woolworth Building, 233 Broadway, New York, New York 10279 and 175 W. Jackson
Boulevard, Suite 900, Chicago, Illinois 60604. The Securities and Exchange
Commission also maintains a site on the World Wide Web at "http://www.sec.gov"
at which you can view and download copies of reports, proxy and information
statements and other information filed electronically through the Electronic
Data Gathering, Analysis and Retrieval system.
We will file or cause to be filed with the Securities and Exchange
Commission such periodic reports with respect to each trust fund as are required
under the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Securities and Exchange Commission thereunder.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
We are incorporating in this prospectus by reference all documents and
reports filed by us with respect to a trust fund pursuant to Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended. You may
obtain, without charge, a copy of any or all documents or reports incorporated
in this prospectus by reference, to the extent such documents or reports relate
to an offered certificate. Exhibits to those documents will be provided to you
only if such exhibits were specifically incorporated by reference in those
documents. Requests to the depositor should be directed in writing to Wachovia
Commercial Mortgage Securities, Inc., 301 South College Street, Charlotte, North
Carolina 28288-0166, Attention: Secretary, or by telephone at 704-374-6161.
6
SUMMARY OF PROSPECTUS
The following summary is a brief description of the main terms of the
offered certificates. For this reason, the summary does not contain all the
information that may be important to you. You will find a detailed description
of the terms of the offered certificates following this summary and in the
accompanying prospectus supplement.
The Trust Assets.............. Each series of certificates will represent the
entire beneficial ownership interest in a trust
fund consisting primarily of any of the
following:
o mortgage assets;
o certificate accounts;
o forms of credit support;
o cash flow agreements; and
o amounts on deposit in a pre-funding account.
The Mortgage Assets........... The mortgage assets with respect to each series
of certificates may consist of any of the
following:
o multifamily and commercial mortgage loans,
including participations therein;
o commercial mortgage-backed securities,
including participations therein;
o direct obligations of the United States or
other government agencies; and
o a combination of the assets described above.
The mortgage loans will not be guaranteed or
insured by us or any of our affiliates or,
unless otherwise provided in the prospectus
supplement, by any governmental agency or
instrumentality or other person. The mortgage
loans will be primarily secured by first or
junior liens on, or security interests in fee
simple, leasehold or a similar interest in, any
of the following types of properties:
o residential properties consisting of five or
more rental or cooperatively owned dwelling
units;
o shopping centers;
o retail buildings or centers;
o hotels and motels;
o office buildings;
o nursing homes;
o hospitals or other health-care related
facilities;
o industrial properties;
o warehouse, mini-warehouse or self-storage
facilities;
o mobile home parks;
7
o mixed use properties; and
o other types of commercial properties.
Some or all of the mortgage loans may also be
secured by an assignment of one or more leases
of all or a portion of the related mortgaged
properties. A significant or the sole source of
payments on certain mortgage loans will be the
rental payments due under the related leases.
A mortgage loan may have an interest rate that
has any of the following features:
o is fixed over its term;
o adjusts from time to time;
o is partially fixed and partially floating;
o is floating based on one or more formulae or
indices;
o may be converted from a floating to a fixed
interest rate;
o may be converted from a fixed to a floating
interest rate; or
o interest is not paid currently but is
accrued and added to the principal balance.
A mortgage loan may provide for any of the
following:
o scheduled payments to maturity;
o payments that adjust from time to time;
o negative amortization or accelerated
amortization;
o full amortization or require a balloon
payment due on its stated maturity date;
o prohibitions on prepayment;
o releases or substitutions of collateral,
including defeasance thereof with direct
obligations of the United States; and
o payment of a premium or a yield maintenance
penalty in connection with a principal
prepayment.
Unless otherwise described in the prospectus
supplement for a series of certificates:
o the mortgaged properties may be located in
any one of the 50 states, the District of
Columbia or the Commonwealth of Puerto Rico;
o all mortgage loans will have original terms
to maturity of not more than 40 years;
o all mortgage loans will have individual
principal balances at origination of not
less than $100,000;
o all mortgage loans will have been originated
by persons
8
other than the depositor; and
o all mortgage assets will have been
purchased, either directly or indirectly, by
the depositor on or before the date of
initial issuance of the related series of
certificates.
Any commercial mortgage-backed securities
included in a trust fund will evidence
ownership interests in or be secured by
mortgage loans similar to those described above
and other mortgage-backed securities. Some
commercial mortgage-backed securities included
in a trust fund may be guaranteed or insured by
an affiliate of the depositor, Freddie Mac,
Fannie Mae, Ginnie Mae, Farmer Mac or any other
person specified in the prospectus supplement.
Certificate Accounts.......... Each trust fund will include one or more
accounts established and maintained on behalf
of the certificateholders. All payments and
collections received or advanced with respect
to the mortgage assets and other assets in the
trust fund will be deposited into those
accounts. A certificate account may be
maintained as an interest bearing or a
non-interest bearing account, and funds may be
held as cash or reinvested.
Credit Support................ The following types of credit support may be
used to enhance the likelihood of distributions
on certain classes of certificates:
o subordination of junior certificates;
o over collateralization;
o letters of credit;
o issurance policies;
o guarantees;
o reserve funds; and/or
o other types of credit support described in
the prospectus supplement and a combination
of any of the above.
Cash Flow Agreements.......... Cash flow agreements are used to reduce the
effects of interest rate or currency exchange
rate fluctuations on the underlying mortgage
assets or on one or more classes of
certificates and increase the likelihood of
timely distributions on the certificates or
such classes of certificates, as the case may
be. The trust fund may include any of the
following types of cash flow agreements:
o guaranteed investment contracts;
o interest rate swap or exchange contracts;
o interest rate cap or floor agreements;
o currency exchange agreements;
o yield supplement agreements; or
9
o other types of similar agreements described
in the prospectus supplement.
Pre-Funding Account;
Capitalized Interest
Account...................... A trust fund may use monies deposited into a
pre-funding account to acquire additional
mortgage assets following a closing date for
the related series of certificates. The amount
on deposit in a pre-funding account will not
exceed 25% of the pool balance of the trust
fund as of the cut-off date on which the
ownership of the mortgage loans and rights to
payment thereon are deemed transferred to the
trust fund, as specified in the related
prospectus supplement. The depositor will
select any additional mortgage assets using
criteria that is substantially similar to the
criteria used to select the mortgage assets
included in the trust fund on the closing date.
If provided in the prospectus supplement, a
trust fund also may include amounts on deposit
in a separate capitalized interest account. The
depositor may use amounts on deposit in a
capitalized interest account to supplement
investment earnings, if any, of amounts on
deposit in the pre-funding account, supplement
interest collections of the trust fund, or such
other purpose as specified in the prospectus
supplement.
Amounts on deposit in any pre-funding account
or any capitalized interest account will be
held in cash or invested in short-term
investment grade obligations. Amounts remaining
on deposit in any pre-funding account and any
capitalized interest account after the end of
the related pre-funding period will be
distributed to certificateholders as described
in the prospectus supplement.
Description of Certificates... Each series of certificates will include one or
more classes. Each series of certificates will
represent in the aggregate the entire
beneficial ownership interest in the related
trust fund. The offered certificates are the
classes of certificates being offered to you
pursuant to the prospectus supplement. The
non-offered certificates are the classes of
certificates not being offered to you pursuant
to the prospectus supplement. Information on
the non-offered certificates is being provided
solely to assist you in your understanding of
the offered certificates.
Distributions on
Certificates................. The certificates may provide for different
methods of distributions to specific classes.
Any class of certificates may:
o provide for the accrual of interest thereon
based on fixed, variable or floating rates;
o be senior or subordinate to one or more
other classes of certificates with respect
to interest or principal distribution and
the allocation of losses on the assets of
the trust fund;
10
o be entitled to principal distributions, with
disproportionately low, nominal or no
interest distributions;
o be entitled to interest distributions, with
disproportionately low, nominal or no
principal distributions;
o provide for distributions of principal or
accrued interest only after the occurrence
of certain events, such as the retirement of
one or more other classes of certificates;
o provide for distributions of principal to be
made at a rate that is faster or slower than
the rate at which payments are received on
the mortgage assets in the related trust
fund;
o provide for distributions of principal
sequentially, based on specified payment
schedules or other methodologies; and
o provide for distributions based on a
combination of any of the above features.
Interest on each class of offered certificates
of each series will accrue at the applicable
pass-through rate on the outstanding
certificate balance or notional amount.
Distributions of interest with respect to one
or more classes of certificates may be reduced
to the extent of certain delinquencies, losses
and other contingencies described in this
prospectus and the prospectus supplement.
The certificate balance of a certificate
outstanding from time to time represents the
maximum amount that the holder thereof is then
entitled to receive in respect of principal
from future cash flow on the assets in the
related trust fund. Unless otherwise specified
in the prospectus supplement, distributions of
principal will be made on each distribution
date to the class or classes of certificates
entitled thereto until the certificate balance
of such certificates is reduced to zero.
Distributions of principal to any class of
certificates will be made on a pro rata basis
among all of the certificates of such class.
Advances...................... A servicer may be obligated as part of its
servicing responsibilities to make certain
advances with respect to delinquent scheduled
payments and property related expenses which it
deems recoverable. The trust fund may be
charged interest for any advance. We will not
have any responsibility to make such advances.
One of our affiliates may have the
responsibility to make such advances, but only
if that affiliate is acting as a servicer or
master servicer for the related series of
certificates.
Termination................... A series of certificates may be subject to
optional early termination through the
repurchase of the mortgage assets in the
related trust fund.
11
Registration of Certificates... One or more classes of the offered certificates
may be initially represented by one or more
certificates registered in the name of Cede &
Co. as the nominee of The Depository Trust
Company. If your offered certificates are so
registered, you will not be entitled to receive
a definitive certificate representing your
interest except in the event that physical
certificates are issued under the limited
circumstances described in this prospectus and
the prospectus supplement.
Tax Status of
the Certificates............. The certificates of each series will constitute
either:
o "regular interests" or "ownership interests"
in a trust fund treated as a "real estate
mortgage investment conduit" under the
Internal Revenue Code of 1986, as amended;
o interests in a trust fund treated as a
grantor trust under applicable provisions of
the Internal Revenue Code of 1986, as
amended;
o "regular interests" or "residual interests"
in a trust fund treated as a "financial
assets securitization investment trust"
under the Internal Revenue Code of 1986, as
amended; or
o any combination of any of the above
features.
ERISA Considerations.......... If you are a fiduciary of an employee benefit
plan or other retirement plan or arrangement
that is subject to the Employee Retirement
Income Security Act of 1974, as amended, or
Section 4975 of the Internal Revenue Code of
1986, as amended, or any materially similar
federal, state or local law, or any person who
proposes to use "plan assets" of any of these
plans to acquire any offered certificates, you
should carefully review with your legal counsel
whether the purchase or holding of any offered
certificates could give rise to transactions
not permitted under these laws. The prospectus
supplement will specify if investment in some
certificates may require a representation that
the investor is not (or is not investing on
behalf of) a plan or similar arrangement or if
other restrictions apply.
Legal Investment.............. The prospectus supplement will specify whether
the offered certificates will constitute
"mortgage related securities" for purposes of
the Secondary Mortgage Market Enhancement Act
of 1984, as amended. If your investment
activities are subject to legal investment laws
and regulations, regulatory capital
requirements or review by regulatory
authorities, then you may be subject to
restrictions on investment in the offered
certificates. You should consult your own legal
advisors for assistance in determining the
suitability of and consequences to you of the
purchase, ownership and sale of the offered
certificates. See "Legal Investment" herein.
12
Rating........................ At the date of issuance, as to each series,
each class of offered certificates will not be
rated lower than investment grade by one or
more nationally recognized statistical rating
agencies. A security rating is not a
recommendation to buy, sell or hold securities
and may be subject to qualification, revision
or withdrawal at any time by the assigning
rating organization.
13
RISK FACTORS
You should consider the following risk factors, in addition to the risk
factors in the prospectus supplement, in deciding whether to purchase any of the
offered certificates. The risks and uncertainties described below, together with
those described in the prospectus supplement under "Risk Factors", summarize the
material risks relating to your certificates.
Your Ability to Resell
Certificates May Be
Limited Because of
Their Characteristics........ You may not be able to resell your certificates
and the value of your certificates may be less
than you anticipated for a variety of reasons
including:
o a secondary market for your certificates may
not develop;
o interest rate fluctuations;
o the absence of redemption rights; and
o the limited sources of information about the
certificates other than that provided in
this prospectus, the prospectus supplement
and the monthly report to
certificateholders.
The Assets of the Trust Fund
May Not Be Sufficient to
Pay Your Certificates........ Unless otherwise specified in the prospectus
supplement, neither the offered certificates of
any series nor the mortgage assets in the
related trust fund will be guaranteed or
insured by us or any of our affiliates, by any
governmental agency or instrumentality or by
any other person. No offered certificate of any
series will represent a claim against or
security interest in the trust fund for any
other series. Accordingly, if the related trust
fund has insufficient assets to make payments
on the certificates, there will be no other
assets available for payment of the deficiency.
Additionally, the trustee, master servicer,
special servicer or other specified person may
under certain circumstances withdraw some
amounts on deposit in certain funds or accounts
constituting part of a trust fund, including
the certificate account and any accounts
maintained as credit support, as described in
the prospectus supplement. The trustee, master
servicer, special servicer or other specified
person may have the authority to make these
withdrawals for purposes other than the payment
of principal of or interest on the related
series of certificates.
The prospectus supplement for a series of
certificates may provide for one or more
classes of certificates that are subordinate to
one or more other classes of certificates in
entitlement to certain distributions on the
certificates. On any distribution date in which
the related trust fund has incurred losses or
shortfalls in collections on the mortgage
assets, the subordinate certificates initially
will bear the amount of such losses or
shortfalls and, thereafter, the remaining
classes of certificates will bear the remaining
amount of such losses or shortfalls. The
priority, manner and
14
limitations on the allocation of losses and
shortfalls will be specified in the prospectus
supplement.
Prepayments and Repurchases of
the Mortgage Assets Will
Affect the Timing of
Your Cash Flow and May
Affect Your Yield........... Prepayments (including those caused by defaults
on the mortgage loans and repurchases for
breach of representation or warranty) on the
mortgage loans in a trust fund generally will
result in a faster rate of principal payments
on one or more classes of the related
certificates than if payments on such mortgage
assets were made as scheduled. Thus, the
prepayment experience on the mortgage assets
may affect the average life of each class of
related certificates. The rate of principal
payments on mortgage loans varies between pools
and from time to time is influenced by a
variety of economic, demographic, geographic,
social, tax, legal and other factors.
We cannot provide any assurance as to the rate
of prepayments on the mortgage loans in any
trust fund or that such rate will conform to
any model described in this prospectus or in
any prospectus supplement. As a result,
depending on the anticipated rate of prepayment
for the mortgage loans in any trust fund, the
retirement of any class of certificates could
occur significantly earlier or later than you
expected.
The rate of voluntary prepayments will also be
affected by:
o the voluntary prepayment terms of the
mortgage loan, including prepayment lock-out
periods and prepayment premiums;
o then-current interest rates being charged on
similar mortgage loans; and
o the availability of mortgage credit.
A series of certificates may include one or
more classes of certificates with entitlements
to payments prior to other classes of
certificates. As a result, yields on classes of
certificates with a lower priority of payment,
including classes of offered certificates, of
such series may be more sensitive to
prepayments on mortgage assets. A series of
certificates may include one or more classes
offered at a significant premium or discount.
Yields on such classes of certificates will be
sensitive, and in some cases extremely
sensitive, to prepayments on mortgage assets
and, where the amount of interest payable with
respect to a class is disproportionately high,
as compared to the amount of principal, a
holder might, in some prepayment scenarios,
fail to recoup its original investment.
If a mortgage loan is in default, it may not be
possible to collect a prepayment premium. No
person will be required to pay any premium if a
mortgage loan is repurchased for a breach of
representation or warranty.
15
The yield on your certificates may be less than
anticipated because:
o the prepayment premium or yield maintenance
required under certain prepayment scenarios
may not be enforceable in some states or
under federal bankruptcy laws; and
o some courts may consider the prepayment
premium to be usurious.
Optional Early Termination of
the Trust Fund May Result in
an Adverse Impact on Your
Yield or May Result in
a Loss....................... A series of certificates may be subject to
optional early termination by means of the
repurchase of the mortgage assets in the
related trust fund. We cannot assure you that
the proceeds from a sale of the mortgage assets
will be sufficient to distribute the
outstanding certificate balance plus accrued
interest and any undistributed shortfalls in
interest accrued on the certificates that are
subject to the termination. Accordingly, the
holders of such certificates may suffer an
adverse impact on the overall yield on their
certificates, may experience repayment of their
investment at an unpredictable and inopportune
time or may even incur a loss on their
investment.
Ratings Do Not Guarantee
Payment and Do Not Address
Prepayment Risks............. Any rating assigned by a rating agency to a
class of offered certificates will reflect only
its assessment of the likelihood that holders
of certificates of such class will receive
payments to which such certificateholders are
entitled under the related pooling and
servicing agreement. Ratings do not address:
o the likelihood that principal prepayments
(including those caused by defaults) on the
related mortgage loans will be made;
o the degree to which the rate of prepayments
on the related mortgage loans might differ
from that originally anticipated;
o the likelihood of early optional termination
of the related trust fund;
o the possibility that prepayments on the
related mortgage loans at a higher or lower
rate than anticipated by an investor may
cause such investor to experience a lower
than anticipated yield; or
o the possibility that an investor that
purchases an offered certificate at a
significant premium might fail to recoup its
initial investment under certain prepayment
scenarios.
The amount, type and nature of credit support,
if any, provided with respect to a series of
certificates will be determined on the basis of
criteria established by each rating
16
agency rating classes of certificates of such
series. Those criteria are sometimes based upon
an actuarial analysis of the behavior of
mortgage loans in a larger group. However, we
cannot provide assurance that the historical
data supporting any such actuarial analysis
will accurately reflect future experience, or
that the data derived from a large pool of
mortgage loans will accurately predict the
delinquency, foreclosure or loss experience of
any particular pool of mortgage loans. In other
cases, a rating agency may base their criteria
upon determinations of the values of the
mortgaged properties that provide security for
the mortgage loans. However, we cannot provide
assurance that those values will not decline in
the future.
Unused Amounts in Pre-Funding
Accounts May Be Returned to
You as a Prepayment.......... The prospectus supplement will disclose when we
are using a pre-funding account to purchase
additional mortgage assets in connection with
the issuance of certificates. Amounts on
deposit in a pre-funding account that are not
used to acquire additional mortgage assets by
the end of the pre-funding period for a series
of certificates may be distributed to holders
of those certificates as a prepayment of
principal, which may materially and adversely
affect the yield on those certificates.
Additional Mortgage Assets
Acquired in Connection with
the Use of a Pre-Funding
Account May Change the
Aggregate Characteristics of
a Trust Fund................. Any additional mortgage assets acquired by a
trust fund with funds in a pre-funding account
may possess substantially different
characteristics than the mortgage assets in the
trust fund on the closing date for a series of
certificates. Therefore, the aggregate
characteristics of a trust fund following the
pre-funding period may be substantially
different than the characteristics of a trust
fund on the closing date for that series of
certificates.
Net Operating Income Produced
by a Mortgaged Property May
Be Inadequate to Repay the
Mortgage Loans............... The value of a mortgage loan secured by a
multifamily or commercial property is directly
related to the net operating income derived
from that property because the ability of a
borrower to repay a loan secured by an
income-producing property typically depends
primarily upon the successful operation of that
property rather than upon the existence of
independent income or assets of the borrower.
The reduction in the net operating income of
the property may impair the borrower's ability
to repay the loan.
Many of the mortgage loans included in a trust
fund may be secured by liens on owner-occupied
mortgaged properties or
17
on mortgaged properties leased to a single
tenant. Accordingly, a decline in the financial
condition of the borrower or single tenant may
have a disproportionately greater affect on the
net operating income from such mortgaged
properties than would be the case with respect
to mortgaged properties with multiple tenants.
Future Value of a Mortgaged
Property and its Net
Operating Income and Cash
Flow Is Not Predictable...... Commercial and multifamily property values and
cash flows and net operating income from such
mortgaged properties are volatile and may be
insufficient to cover debt service on the
related mortgage loan at any given time.
Property value, cash flow and net operating
income depend upon a number of factors,
including:
o changes in general or local economic
conditions and/or specific industry
segments;
o declines in real estate values;
o an oversupply of commercial or multifamily
properties in the relevant market;
o declines in rental or occupancy rates;
o increases in interest rates, real estate tax
rates and other operating expenses;
o changes in governmental rules, regulations
and fiscal policies, including environmental
legislation;
o perceptions by prospective tenants and, if
applicable, their customers, of the safety,
convenience, services and attractiveness of
the property;
o the age, construction quality and design of
a particular property;
o whether the mortgaged properties are readily
convertible to alternative uses;
o acts of God; and
o other factors beyond our control or the
control of a servicer.
Nonrecourse Loans Limit the
Remedies Available Following
a Mortgagor Default.......... The mortgage loans will not be an obligation
of, or be insured or guaranteed by, any
governmental entity, by any private mortgage
insurer, or by the depositor, the originators,
the master servicer, the special servicer, the
trustee or any of their respective affiliates.
Each mortgage loan included in a trust fund
generally will be a nonrecourse loan. If there
is a default (other than a default resulting
from voluntary bankruptcy, fraud or willful
misconduct) there will generally only be
recourse against the specific mortgaged
properties and other assets that have been
pledged
18
to secure such mortgage loan. Even if a
mortgage loan provides for recourse to a
mortgagor or its affiliates, it is unlikely
the trust fund ultimately could recover any
amounts not covered by the mortgaged property.
Special Risks of Mortgage
Loans Secured by Multifamily
Properties................... Mortgage loans secured by multifamily
properties may constitute a material
concentration of the mortgage loans in a trust
fund. Adverse economic conditions, either
local, regional or national, may limit the
amount of rent that a borrower may charge for
rental units, and may result in a reduction in
timely rent payments or a reduction in
occupancy levels. Occupancy and rent levels may
also be affected by:
o construction of additional housing units;
o local military base closings;
o developments at local colleges and
universities;
o national, regional and local politics,
including, in the case of multifamily rental
properties, current or future rent
stabilization and rent control laws and
agreements;
o the level of mortgage interest rates, which
may encourage tenants in multifamily rental
properties to purchase housing;
o tax credit and city, state and federal
housing subsidy or similar programs which
may impose rent limitations and may
adversely affect the ability of the
applicable borrowers to increase rents to
maintain the mortgaged properties in proper
condition during periods of rapid inflation
or declining market value of the mortgaged
properties;
o tax credit and city, state and federal
housing subsidy or similar programs which
may impose income restrictions on tenants
and which may reduce the number of eligible
tenants in such mortgaged properties and
result in a reduction in occupancy rates
applicable thereto; and
o the possibility that some eligible tenants
may not find any differences in rents
between subsidized or supported properties
and other multifamily rental properties in
the same area to be a sufficient economic
incentive to reside at a subsidized or
supported property, which may have fewer
amenities or otherwise be less attractive as
a residence.
All of these conditions and events may increase
the possibility that a borrower may be unable
to meet its obligations under its mortgage
loan.
The multifamily projects market is
characterized generally by low barriers to
entry. Thus, a particular apartment market with
historically low vacancies could experience
substantial new construction, and a resultant
oversupply of units, in a
19
relatively short period of time. Because
multifamily apartment units are typically
leased on a short-term basis, the tenants who
reside in a particular project within such a
market may easily move to alternative projects
with more desirable amenities or locations.
Special Risks of Mortgage
Loans Secured by Retail
Properties................... Mortgage loans secured by retail properties may
constitute a material concentration of the
mortgage loans in a trust fund. Significant
factors determining the value of retail
properties are:
o the quality of the tenants; and
o the fundamental aspects of real estate such
as location and market demographics.
The correlation between the success of tenant
businesses and property value is more direct
with respect to retail properties than other
types of commercial property because a
significant component of the total rent paid by
retail tenants is often tied to a percentage of
gross sales. Significant tenants at a retail
property play an important part in generating
customer traffic and making a retail property a
desirable location for other tenants at that
property. Accordingly, retail properties may be
adversely affected if a significant tenant
ceases operations at those locations, which may
occur on account of a voluntary decision not to
renew a lease, bankruptcy or insolvency of the
tenant, the tenant's general cessation of
business activities or for other reasons. In
addition, some tenants at retail properties may
be entitled to terminate their leases or pay
reduced rent if an anchor tenant ceases
operations at the property. In those cases, we
cannot provide assurance that any anchor
tenants will continue to occupy space in the
related shopping centers.
Shopping centers, in general, are affected by
the health of the retail industry. In addition,
a shopping center may be adversely affected by
the bankruptcy or decline in drawing power of
an anchor tenant, the risk that an anchor
tenant may vacate notwithstanding that tenant's
continuing obligation to pay rent, a shift in
consumer demand due to demographic changes (for
example, population decreases or changes in
average age or income) and/or changes in
consumer preference (for example, to discount
retailers).
Unlike other income producing properties,
retail properties also face competition from
sources outside a given real estate market,
such as:
o catalogue retailers;
o home shopping networks;
o the internet;
o telemarketing; and
o outlet centers.
20
Continued growth of these alternative retail
outlets (which are often characterized by lower
operating costs) could adversely affect the
rents collectible at the retail properties
which secure mortgage loans in a trust fund.
Special Risks of Mortgage
Loans Secured by Hospitality
Properties................... Mortgage loans secured by hospitality
properties (e.g., a hotel or motel) may
constitute a material concentration of the
mortgage loans in a trust fund. Various factors
affect the economic viability of a hospitality
property, including:
o location, quality and franchise affiliation
(or lack thereof);
o adverse economic conditions, either local,
regional or national, which may limit the
amount that a consumer is willing to pay for
a room and may result in a reduction in
occupancy levels;
o the construction of competing hospitality
properties, which may result in a reduction
in occupancy levels;
o the increased sensitivity of hospitality
properties (relative to other commercial
properties) to adverse economic conditions
and competition, as hotel rooms generally
are rented for short periods of time;
o the financial strength and capabilities of
the owner and operator of a hospitality
property, which may have a substantial
impact on the property's quality of service
and economic performance; and
o the generally seasonal nature of the
hospitality industry, which can be expected
to cause periodic fluctuations in room and
other revenues, occupancy levels, room rates
and operating expenses.
In addition, the successful operation of a
hospitality property with a franchise
affiliation may depend in part upon the
strength of the franchisor, the public
perception of the franchise service mark and
the continued existence of any franchise
license agreement. The transferability of a
franchise license agreement may be restricted,
and a lender or other person that acquires
title to a hospitality property as a result of
foreclosure may be unable to succeed to the
borrower's rights under the franchise license
agreement. Moreover, the transferability of a
hospitality property's operating, liquor and
other licenses upon a transfer of the
hospitality property, whether through purchase
or foreclosure, is subject to local law
requirements and may not be transferable.
Special Risks of Mortgage
Loans Secured by Office
Buildings.................... Mortgage loans secured by office buildings may
constitute a material concentration of the
mortgage loans in a trust fund. Significant
factors determining the value of office
buildings include:
21
o the quality of the tenants in the building;
o the physical attributes of the building in
relation to competing buildings; and
o the strength and stability of the market
area as a desirable business location.
An economic decline in the business operated by
the tenants may adversely affect an office
building. That risk is increased if revenue is
dependent on a single tenant or if there is a
significant concentration of tenants in a
particular business or industry.
Office buildings are also subject to
competition with other office properties in the
same market. Competition is affected by a
property's:
o age;
o condition;
o design (e.g., floor sizes and layout);
o access to transportation; and
o ability or inability to offer certain
amenities to its tenants, including
sophisticated building systems (such as
fiber optic cables, satellite communications
or other base building technological
features).
The success of an office building also depends
on the local economy. A company's decision to
locate office headquarters in a given area, for
example, may be affected by such factors as
labor cost and quality, tax environment and
quality of life issues such as schools and
cultural amenities. A central business district
may have an economy which is markedly different
from that of a suburb. The local economy and
the financial condition of the owner will
impact on an office building's ability to
attract stable tenants on a consistent basis.
In addition, the cost of refitting office space
for a new tenant is often more costly than for
other property types.
Special Risks of Mortgage
Loans Secured by Warehouse
and Self Storage Facilities.. Mortgage loans secured by warehouse and storage
facilities may constitute a material
concentration of the mortgage loans in a trust
fund. The storage facilities market contains
low barriers to entry.
Increased competition among self storage
facilities may reduce income available to repay
mortgage loans secured by a self storage
facility. Furthermore, the inability of a
borrower to police what is stored in a self
storage facility due to privacy considerations
may increase environmental risks.
22
Special Risks of Mortgage
Loans Secured by Healthcare-
Related Properties........... The mortgaged properties may include health
care-related facilities, including senior
housing, assisted living facilities, skilled
nursing facilities and acute care facilities.
o Senior housing generally consists of
facilities with respect to which the
residents are ambulatory, handle their own
affairs and typically are couples whose
children have left the home and at which the
accommodations are usually apartment style;
o Assisted living facilities are typically
single or double room occupancy,
dormitory-style housing facilities which
provide food service, cleaning and some
personal care and with respect to which the
tenants are able to medicate themselves but
may require assistance with certain daily
routines;
o Skilled nursing facilities provide services
to post trauma and frail residents with
limited mobility who require extensive
medical treatment; and
o Acute care facilities generally consist of
hospital and other facilities providing
short-term, acute medical care services.
Certain types of health care-related
properties, particularly acute care facilities,
skilled nursing facilities and some assisted
living facilities, typically receive a
substantial portion of their revenues from
government reimbursement programs, primarily
Medicaid and Medicare. Medicaid and Medicare
are subject to statutory and regulatory
changes, retroactive rate adjustments,
administrative rulings, policy interpretations,
delays by fiscal intermediaries and government
funding restrictions. Moreover, governmental
payors have employed cost-containment measures
that limit payments to health care providers,
and there exist various proposals for national
health care reform that could further limit
those payments. Accordingly, we cannot provide
assurance that payments under government
reimbursement programs will, in the future, be
sufficient to fully reimburse the cost of
caring for program beneficiaries. If those
payments are insufficient, net operating income
of health care-related facilities that receive
revenues from those sources may decline, which
consequently could have an adverse affect on
the ability of the related borrowers to meet
their obligations under any mortgage loans
secured by health care-related facilities.
Moreover, health care-related facilities are
generally subject to federal and state laws
that relate to the adequacy of medical care,
distribution of pharmaceuticals, rate setting,
equipment, personnel, operating policies and
additions to facilities and services. In
addition, facilities where such care or other
medical services are provided are subject to
periodic
23
inspection by governmental authorities to
determine compliance with various standards
necessary to continued licensing under state
law and continued participation in the Medicaid
and Medicare reimbursement programs.
Furthermore, under applicable federal and state
laws and regulations, Medicare and Medicaid
reimbursements are generally not permitted to
be made to any person other than the provider
who actually furnished the related medical
goods and services. Accordingly, in the event
of foreclosure, the trustee, the master
servicer, the special servicer or a subsequent
lessee or operator of any health care-related
facility securing a defaulted mortgage loan
generally would not be entitled to obtain from
federal or state governments any outstanding
reimbursement payments relating to services
furnished at such property prior to
foreclosure. Any of the aforementioned events
may adversely affect the ability of the related
borrowers to meet their mortgage loan
obligations.
Providers of assisted living services are also
subject to state licensing requirements in
certain states. The failure of an operator to
maintain or renew any required license or
regulatory approval could prevent it from
continuing operations at a health care-related
facility or, if applicable, bar it from
participation in government reimbursement
programs. In the event of foreclosure, we
cannot provide assurance that the trustee or
any other purchaser at a foreclosure sale would
be entitled to the rights under the licenses,
and the trustee or other purchaser may have to
apply in its own right for the applicable
license. We cannot provide assurance that the
trustee or other purchaser could obtain the
applicable license or that the related
mortgaged property would be adaptable to other
uses.
Government regulation applying specifically to
acute care facilities, skilled nursing
facilities and certain types of assisted living
facilities includes health planning
legislation, enacted by most states, intended,
at least in part, to regulate the supply of
nursing beds. The most common method of control
is the requirement that a state authority first
make a determination of need, evidenced by its
issuance of a certificate of need, before a
long-term care provider can establish a new
facility, add beds to an existing facility or,
in some states, take certain other actions (for
example, acquire major medical equipment, make
major capital expenditures, add services,
refinance long-term debt, or transfer ownership
of a facility). States also regulate nursing
bed supply in other ways. For example, some
states have imposed moratoria on the licensing
of new beds, or on the certification of new
Medicaid beds, or have discouraged the
construction of new nursing facilities by
limiting Medicaid reimbursements allocable to
the cost of new construction and equipment. In
general, a certificate of need is site specific
and operator specific; it cannot be transferred
from one site to another, or to another
operator, without the approval of the
appropriate state agency. Accordingly, in the
case of foreclosure upon a mortgage loan
24
secured by a lien on a health care-related
mortgaged property, the purchaser at
foreclosure might be required to obtain a new
certificate of need or an appropriate
exemption. In addition, compliance by a
purchaser with applicable regulations may in
any case require the engagement of a new
operator and the issuance of a new operating
license. Upon a foreclosure, a state regulatory
agency may be willing to expedite any necessary
review and approval process to avoid
interruption of care to a facility's residents,
but we cannot provide assurance that any state
regulatory agency will do so or that the state
regulatory agency will issue any necessary
licenses or approvals.
Federal and state government "fraud and abuse"
laws also apply to health care-related
facilities. "Fraud and abuse" laws generally
prohibit payment or fee-splitting arrangements
between health care providers that are designed
to induce or encourage the referral of patients
to, or the recommendation of, a particular
provider for medical products or services.
Violation of these restrictions can result in
license revocation, civil and criminal
penalties, and exclusion from participation in
Medicare or Medicaid programs. The state law
restrictions in this area vary considerably
from state to state. Moreover, the federal
anti-kickback law includes broad language that
potentially could be applied to a wide range of
referral arrangements, and regulations designed
to create "safe harbors" under the law provide
only limited guidance. Accordingly, we cannot
provide assurance that such laws will be
interpreted in a manner consistent with the
practices of the owners or operators of the
health care-related mortgaged properties that
are subject to those laws.
The operators of health care-related facilities
are likely to compete on a local and regional
basis with others that operate similar
facilities, some of which competitors may be
better capitalized, may offer services not
offered by such operators, or may be owned by
non-profit organizations or government agencies
supported by endowments, charitable
contributions, tax revenues and other sources
not available to such operators. The successful
operation of a health care-related facility
will generally depend upon:
o the number of competing facilities in the
local market;
o the facility's age and appearance;
o the reputation and management of the
facility;
o the types of services the facility provides;
and
o where applicable, the quality of care and
the cost of that care.
The inability of a health care-related
mortgaged property to flourish in a competitive
market may increase the likelihood of
foreclosure on the related mortgage loan,
possibly affecting the yield on one or more
classes of the related series of offered
certificates.
25
Special Risks of Mortgage
Loans Secured by Industrial
and Mixed-Use Facilities..... Mortgage loans secured by industrial and
mixed-use facilities may constitute a material
concentration of the mortgage loans in a trust
fund. Significant factors determining the value
of industrial properties include:
o the quality of tenants;
o building design and adaptability; and
o the location of the property.
Concerns about the quality of tenants,
particularly major tenants, are similar in both
office properties and industrial properties,
although industrial properties are more
frequently dependent on a single tenant. In
addition, properties used for many industrial
purposes are more prone to environmental
concerns than other property types.
Aspects of building site design and
adaptability affect the value of an industrial
property. Site characteristics which are
valuable to an industrial property include
clear heights, column spacing, zoning
restrictions, number of bays and bay depths,
divisibility, truck turning radius and overall
functionality and accessibility. Location is
also important because an industrial property
requires the availability of labor sources,
proximity to supply sources and customers and
accessibility to rail lines, major roadways and
other distribution channels.
Industrial properties may be adversely affected
by reduced demand for industrial space
occasioned by a decline in a particular
industry segment (e.g. a decline in defense
spending), and a particular industrial property
that suited the needs of its original tenant
may be difficult to relet to another tenant or
may become functionally obsolete relative to
newer properties.
Poor Property Management Will
Adversely Affect the
Performance of the Related
Mortgaged Property........... Each mortgaged property securing a mortgage
loan which has been sold into a trust fund is
managed by a property manager (which generally
is an affiliate of the borrower) or by the
borrower itself. The successful operation of a
real estate project is largely dependent on the
performance and viability of the management of
such project. The property manager is
responsible for:
o operating the property;
o providing building services;
o responding to changes in the local market;
and
o planning and implementing the rental
structure, including establishing levels of
rent payments and advising the borrowers so
that maintenance and capital improvements
can be carried out in a timely fashion.
26
We cannot provide assurance regarding the
performance of any operators, leasing agents
and/or property managers or persons who may
become operators and/or property managers upon
the expiration or termination of management
agreements or following any default or
foreclosure under a mortgage loan. In addition,
the property managers are usually operating
companies and unlike limited purpose entities,
may not be restricted from incurring debt and
other liabilities in the ordinary course of
business or otherwise. There can be no
assurance that the property managers will at
all times be in a financial condition to
continue to fulfill their management
responsibilities under the related management
agreements throughout the terms of those
agreements.
Balloon Payments on Mortgage
Loans Result in Heightened
Risk of Borrower Default..... Some of the mortgage loans included in a trust
fund may not be fully amortizing (or may not
amortize at all) over their terms to maturity
and, thus, will require substantial principal
payments (that is, balloon payments) at their
stated maturity. Mortgage loans of this type
involve a greater degree of risk than
self-amortizing loans because the ability of a
borrower to make a balloon payment typically
will depend upon either:
o its ability to fully refinance the loan; or
o its ability to sell the related mortgaged
property at a price sufficient to permit the
borrower to make the balloon payment.
The ability of a borrower to accomplish either
of these goals will be affected by a number of
factors, including:
o the value of the related mortgaged property;
o the level of available mortgage interest
rates at the time of sale or refinancing;
o the borrower's equity in the related
mortgaged property;
o the financial condition and operating
history of the borrower and the related
mortgaged property;
o tax laws;
o rent control laws (with respect to certain
residential properties);
o Medicaid and Medicare reimbursement rates
(with respect to hospitals and nursing
homes);
o prevailing general economic conditions; and
o the availability of credit for loans secured
by commercial or multifamily, as the case
may be, real properties generally.
27
The Servicer Will Have
Discretion to Handle or
Avoid Obligor Defaults in a
Manner Which May Be Adverse
to Your Interests............ If and to the extent specified in the
prospectus supplement defaulted mortgage loans
exist or are imminent, in order to maximize
recoveries on defaulted mortgage loans, the
related pooling and servicing agreement will
permit (within prescribed limits) the master
servicer or a special servicer to extend and
modify mortgage loans that are in default or as
to which a payment default is imminent. While
the related pooling and servicing agreement
generally will require a master servicer to
determine that any such extension or
modification is reasonably likely to produce a
greater recovery on a present value basis than
liquidation, we cannot provide assurance that
any such extension or modification will in fact
increase the present value of receipts from or
proceeds of the affected mortgage loans.
In addition, a master servicer or a special
servicer may receive a workout fee based on
receipts from or proceeds of such mortgage
loans that would otherwise be payable to the
certificateholders.
Proceeds Received upon
Foreclosure of Mortgage
Loans Secured Primarily by
Junior Mortgages May Result
in Losses.................... To the extent specified in the prospectus
supplement, some of the mortgage loans included
in a trust fund may be secured primarily by
junior mortgages. When liquidated, mortgage
loans secured by junior mortgages are entitled
to satisfaction from proceeds that remain from
the sale of the related mortgaged property
after the mortgage loans senior to such
mortgage loans have been satisfied. If there
are insufficient funds to satisfy both the
junior mortgage loans and senior mortgage
loans, the junior mortgage loans would suffer a
loss and, accordingly, one or more classes of
certificates would bear such loss. Therefore,
any risks of deficiencies associated with first
mortgage loans will be greater with respect to
junior mortgage loans.
Credit Support May Not Cover
Losses or Risks Which Could
Adversely Affect Payment on
Your Certificates............ The prospectus supplement for the offered
certificates of each series will describe any
credit support provided with respect to those
certificates. Use of credit support will be
subject to the conditions and limitations
described in this prospectus and in the related
prospectus supplement. Moreover, credit support
may not cover all potential losses or risks;
for example, credit support may or may not
cover fraud or negligence by a mortgage loan
originator or other parties.
A series of certificates may include one or
more classes of subordinate certificates (which
may include offered certificates), if so
provided in the prospectus supplement. Although
subordination is intended to reduce the risk to
holders of
28
senior certificates of delinquent distributions
or ultimate losses, the amount of subordination
will be limited and may decline under certain
circumstances. In addition, if principal
payments on one or more classes of certificates
of a series are made in a specified order of
priority, any limits with respect to the
aggregate amount of claims under any related
credit support may be exhausted before the
principal of the lower priority classes of
certificates of such series has been fully
repaid. As a result, the impact of losses and
shortfalls experienced with respect to the
mortgage assets may fall primarily upon those
classes of certificates having a lower priority
of payment. Moreover, if a form of credit
support covers more than one series of
certificates, holders of certificates of one
series will be subject to the risk that such
credit support will be exhausted by the claims
of the holders of certificates of one or more
other series.
Regardless of the form of credit enhancement
provided, the amount of coverage will be
limited in amount and in most cases will be
subject to periodic reduction in accordance
with a schedule or formula. The master servicer
will generally be permitted to reduce,
terminate or substitute all or a portion of the
credit enhancement for any series of
certificates if the applicable rating agency
indicates that the then-current rating of those
certificates will not be adversely affected.
The rating of any series of certificates by any
applicable rating agency may be lowered
following the initial issuance of those
certificates as a result of the downgrading of
the obligations of any applicable credit
support provider, or as a result of losses on
the related mortgage assets substantially in
excess of the levels contemplated by that
rating agency at the time of its initial rating
analysis. None of the depositor, the master
servicer or any of our or the master servicer's
affiliates will have any obligation to replace
or supplement any credit enhancement, or to
take any other action to maintain any rating of
any series of certificates.
Mortgagors of Commercial
Mortgage Loans Are
Sophisticated and May
Take Actions Adverse to Your
Interests.................... Mortgage loans made to partnerships,
corporations or other entities may entail risks
of loss from delinquency and foreclosure that
are greater than those of mortgage loans made
to individuals. The mortgagor's sophistication
and form of organization may increase the
likelihood of protracted litigation or
bankruptcy in default situations.
Some Actions Allowed by the
Mortgage May Be Limited
by Law....................... Mortgages securing mortgage loans included in a
trust fund may contain a due-on-sale clause,
which permits the lender to accelerate the
maturity of the mortgage loan if the borrower
sells, transfers or conveys the related
mortgaged property or its interest in the
mortgaged property. Mortgages securing mortgage
loans included in a trust fund may also include
a
29
debt-acceleration clause, which permits the
lender to accelerate the debt upon a monetary
or non-monetary default of the borrower. Such
clauses are not always enforceable. The courts
of all states will enforce clauses providing
for acceleration in the event of a material
payment default. The equity courts of any
state, however, may refuse the foreclosure of a
mortgage or deed of trust when an acceleration
of the indebtedness would be inequitable or
unjust or the circumstances would render the
acceleration unconscionable.
Assignment of Leases and Rents
to Provide Further Security
for Mortgage Loans Poses
Special Risks................ The mortgage loans included in any trust fund
typically will be secured by an assignment of
leases and rents pursuant to which the borrower
assigns to the lender its right, title and
interest as landlord under the leases of the
related mortgaged property, and the income
derived therefrom, as further security for the
related mortgage loan, while retaining a
license to collect rents for so long as there
is no default. If the borrower defaults, the
license terminates and the lender is entitled
to collect rents. Some state laws may require
that the lender take possession of the
mortgaged property and obtain a judicial
appointment of a receiver before becoming
entitled to collect the rents. In addition,
bankruptcy or the commencement of similar
proceedings by or in respect of the borrower
may adversely affect the lender's ability to
collect the rents.
Inclusion in a Trust Fund of
Delinquent Mortgage Loans
May Adversely Affect Rate of
Defaults and Prepayments on
the Mortgage Loans........... If so provided in the prospectus supplement,
the trust fund for a series of certificates may
include mortgage loans that are delinquent as
of the date they are deposited in the trust
fund. A mortgage loan will be considered
"delinquent" if it is 30 days or more past its
most recently contractual scheduled payment
date in payment of all amounts due according to
its terms. In any event, at the time of its
creation, the trust fund will not include
delinquent loans which by principal amount are
more than 20% of the aggregate principal amount
of all mortgage loans in the trust fund. If so
specified in the prospectus supplement, the
servicing of such mortgage loans will be
performed by a special servicer.
Credit support provided with respect to a
series of certificates may not cover all losses
related to delinquent mortgage loans, and
investors should consider the risk that the
inclusion of such mortgage loans in the trust
fund may adversely affect the rate of defaults
and prepayments on the mortgage loans in the
trust fund and the yield on the offered
certificates of such series.
30
Environmental Liability May
Affect the Lien on a
Mortgaged Property and
Expose the Lender to Costs... Under certain laws, contamination of real
property may give rise to a lien on the
property to assure the costs of cleanup. In
several states, that lien has priority over an
existing mortgage lien on a property. In
addition, under the laws of some states and
under the federal Comprehensive Environmental
Response, Compensation, and Liability Act of
1980, a lender may be liable, as an "owner" or
"operator," for costs of addressing releases or
threatened releases of hazardous substances at
a property, if agents or employees of the
lender have become sufficiently involved in the
operations of the borrower, regardless of
whether or not the environmental damage or
threat was caused by the borrower. A lender
also risks such liability on foreclosure of the
mortgage. In addition, liabilities imposed upon
a borrower by CERCLA or other environmental
laws may adversely affect a borrower's ability
to repay a loan. If a trust fund includes
mortgage loans and the prospectus supplement
does not otherwise specify, the related pooling
and servicing agreement will contain provisions
generally to the effect that the master
servicer, acting on behalf of the trust fund,
may not acquire title to a mortgaged property
or assume control of its operation unless the
master servicer, based upon a report prepared
by a person who regularly conducts
environmental site assessments, has made the
determination that it is appropriate to do so.
These provisions are designed to reduce
substantially the risk of liability for costs
associated with remediation of hazardous
substances, but we cannot provide assurance in
a given case that those risks can be eliminated
entirely. In addition, it is likely that any
recourse against the person preparing the
environmental report, and such person's ability
to satisfy a judgment, will be limited.
One Action Jurisdiction May
Limit the Ability of the
Special Servicer to
Foreclose on a Mortgaged
Property..................... Several states (including California) have laws
that prohibit more than one "judicial action"
to enforce a mortgage obligation, and some
courts have construed the term "judicial
action" broadly. The special servicer may need
to obtain advice of counsel prior to enforcing
any of the trust fund's rights under any of the
mortgage loans that include mortgaged
properties where the rule could be applicable.
In the case of a mortgage loan secured by
mortgaged properties located in multiple
states, the special servicer may be required to
foreclose first on properties located in states
where "one action" rules apply (and where
non-judicial foreclosure is permitted) before
foreclosing on properties located in states
where judicial foreclosure is the only
permitted method of foreclosure.
31
Rights Against Tenants May Be
Limited if Leases Are Not
Subordinate to the Mortgage
or Do Not Contain Attornment
Provisions................... Some of the tenant leases contain provisions
that require the tenant to attorn to (that is,
recognize as landlord under the lease) a
successor owner of the property following
foreclosure. Some of the leases may be either
subordinate to the liens created by the
mortgage loans or else contain a provision that
requires the tenant to subordinate the lease if
the mortgagee agrees to enter into a
non-disturbance agreement.
In some states, if tenant leases are
subordinate to the liens created by the
mortgage loans and such leases do not contain
attornment provisions, such leases may
terminate upon the transfer of the property to
a foreclosing lender or purchaser at
foreclosure. Accordingly, in the case of the
foreclosure of a mortgaged property located in
such a state and leased to one or more
desirable tenants under leases that do not
contain attornment provisions, such mortgaged
property could experience a further decline in
value if such tenants' leases were terminated
(e.g., if such tenants were paying above-market
rents).
If a lease is senior to a mortgage, the lender
will not (unless it has otherwise agreed with
the tenant) possess the right to dispossess the
tenant upon foreclosure of the property, and if
the lease contains provisions inconsistent with
the mortgage (e.g., provisions relating to
application of insurance proceeds or
condemnation awards), the provisions of the
lease will take precedence over the provisions
of the mortgage.
If Mortgaged Properties Are
Not in Compliance With
Current Zoning Laws, You May
Not Be Able to Restore
Compliance Following a
Casualty Loss................ Due to changes in applicable building and
zoning ordinances and codes which have come
into effect after the construction of
improvements on certain of the mortgaged
properties, some improvements may not comply
fully with current zoning laws (including
density, use, parking and set-back
requirements) but may qualify as permitted
non-confirming uses. Such changes may limit the
ability of the related mortgagor to rebuild the
premises "as is" in the event of a substantial
casualty loss. Such limitations may adversely
affect the ability of the mortgagor to meet its
mortgage loan obligations from cash flow.
Insurance proceeds may not be sufficient to pay
off such mortgage loan in full. In addition, if
the mortgaged property were to be repaired or
restored in conformity with then current law,
its value could be less than the remaining
balance on the mortgage loan and it may produce
less revenue than before such repair or
restoration.
Inspections of the Mortgaged
Properties Were Limited...... The mortgaged properties were inspected by
licensed engineers in connection with the
origination of the mortgage
32
loans to assess the structure, exterior walls,
roofing interior construction, mechanical and
electrical systems and general condition of the
site, buildings and other improvements located
on the mortgaged properties. We cannot provide
assurance that all conditions requiring repair
or replacement have been identified in such
inspections.
Litigation Concerns........... There may be legal proceedings pending and,
from time to time, threatened against the
mortgagors or their affiliates relating to the
business, or arising out of the ordinary course
of business, of the mortgagors and their
affiliates. We cannot provide assurance that
such litigation will not have a material
adverse effect on the distributions to you on
your certificates.
33
DESCRIPTION OF THE TRUST FUNDS
GENERAL
The primary assets of each trust fund will consist of mortgage assets which
include (i) one or more multifamily and/or commercial mortgage loans and
participations therein, (ii) CMBS, (iii) direct obligations of the United States
or other government agencies, or (iv) a combination of the assets described in
clauses (i), (ii) and (iii). Each trust fund will be established by the
depositor. Each mortgage asset will be selected by the depositor for inclusion
in a trust fund from among those purchased, either directly or indirectly, from
a prior holder thereof, which may or may not be the originator of such mortgage
loan or the issuer of such CMBS and may be an affiliate of the depositor. The
mortgage assets will not be guaranteed or insured by the depositor or any of its
affiliates or, unless otherwise provided in the prospectus supplement, by any
governmental agency or instrumentality or by any other person. The discussion
below under the heading "--Mortgage Loans--Leases," unless otherwise noted,
applies equally to mortgage loans underlying any CMBS included in a particular
trust fund.
MORTGAGE LOANS--LEASES
General. The mortgage loans will be evidenced by mortgage notes secured by
mortgages or deeds of trust or similar security instruments that create first or
junior liens on, or installment contracts for the sale of, mortgaged properties
consisting of (i) multifamily properties, which are residential properties
consisting of five or more rental or cooperatively owned dwelling units in
high-rise, mid-rise or garden apartment buildings or other residential
structures, or (ii) commercial properties, which include office buildings,
retail stores, hotels or motels, nursing homes, hospitals or other health
care-related facilities, mobile home parks, warehouse facilities, mini-warehouse
facilities, self-storage facilities, industrial plants, mixed use or other types
of income-producing properties or unimproved land. The multifamily properties
may include mixed commercial and residential structures and may include
apartment buildings owned by private cooperative housing corporations. If so
specified in the prospectus supplement, each mortgage will create a first
priority mortgage lien on a mortgaged property. A mortgage may create a lien on
a borrower's leasehold estate in a property; however, the term of any such
leasehold will exceed the term of the mortgage note by at least ten years. Each
mortgage loan will have been originated by a person other than the depositor.
If so specified in the prospectus supplement, mortgage assets for a series
of certificates may include mortgage loans made on the security of real estate
projects under construction. In that case, the prospectus supplement will
describe the procedures and timing for making disbursements from construction
reserve funds as portions of the related real estate project are completed. In
addition, mortgage assets may include mortgage loans that are delinquent as of
the date of issuance of a series of certificates. In that case, the prospectus
supplement will set forth, as to each such mortgage loan, available information
as to the period of such delinquency, any forbearance arrangement then in
effect, the condition of the related mortgaged property and the ability of the
mortgaged property to generate income to service the mortgage debt.
Leases. To the extent specified in the prospectus supplement, the
commercial properties may be leased to lessees that occupy all or a portion of
such properties. Pursuant to a lease assignment, the borrower may assign its
right, title and interest as lessor under each lease and the income derived
therefrom to the mortgagee, while retaining a license to collect the rents for
so long as there is no default. If the borrower defaults, the license terminates
and the mortgagee or its agent is entitled to collect the rents from the lessee
for application to the monetary obligations of the borrower. State law may limit
or restrict the enforcement of the lease assignments by a mortgagee until it
takes possession of the mortgaged property and/or a receiver is appointed. See
"Certain Legal Aspects of the Mortgage Loans and Leases--Leases and Rents."
Alternatively, to the extent specified in the prospectus supplement, the
borrower and the mortgagee may agree that payments under leases are to be made
directly to a servicer.
To the extent described in the prospectus supplement, the leases, which may
include "bond-type" or "credit-type" leases, may require the lessees to pay rent
that is sufficient in the aggregate to cover all scheduled payments of principal
and interest on the mortgage loans and, in certain cases, their pro rata
34
share of the operating expenses, insurance premiums and real estate taxes
associated with the mortgaged properties. A "bond-type" lease is a lease between
a lessor and a lessee for a specified period of time with specified rent
payments that are at least sufficient to repay the related note(s). A bond-type
lease requires the lessee to perform and pay for all obligations related to the
leased premises and provides that, no matter what occurs with regard to the
leased premises, the lessee is obligated to continue to pay its rent. A
"credit-type" lease is a lease between a lessor and a lessee for a specified
period of time with specified rent payments at least sufficient to repay the
related note(s). A credit-type lease requires the lessee to perform and pay for
most of the obligations related to the leased premises, excluding only a few
landlord duties which remain the responsibility of the borrower/lessor. Leases
(other than bond-type leases) may require the borrower to bear costs associated
with structural repairs and/or the maintenance of the exterior or other portions
of the mortgaged property or provide for certain limits on the aggregate amount
of operating expenses, insurance premiums, taxes and other expenses that the
lessees are required to pay.
If so specified in the prospectus supplement, under certain circumstances
the lessees may be permitted to set off their rental obligations against the
obligations of the borrowers under the leases. In those cases where payments
under the leases (net of any operating expenses payable by the borrowers) are
insufficient to pay all of the scheduled principal and interest on the mortgage
loans, the borrowers must rely on other income or sources generated by the
mortgaged property to make payments on the mortgage loan. To the extent
specified in the prospectus supplement, some commercial properties may be leased
entirely to one lessee. This is generally the case in bond-type leases and
credit-type leases. In such cases, absent the availability of other funds, the
borrower must rely entirely on rent paid by such lessee in order for the
borrower to pay all of the scheduled principal and interest on the related
commercial loan. To the extent specified in the prospectus supplement, some
leases (not including bond-type leases) may expire prior to the stated maturity
of the mortgage loan. In such cases, upon expiration of the leases the borrowers
will have to look to alternative sources of income, including rent payment by
any new lessees or proceeds from the sale or refinancing of the mortgaged
property, to cover the payments of principal and interest due on the mortgage
loans unless the lease is renewed. As specified in the prospectus supplement,
some leases may provide that upon the occurrence of a casualty affecting a
mortgaged property, the lessee will have the right to terminate its lease,
unless the borrower, as lessor, is able to cause the mortgaged property to be
restored within a specified period of time. Some leases may provide that it is
the lessor's responsibility to restore the mortgaged property to its original
condition after a casualty. Some leases may provide that it is the lessee's
responsibility to restore the mortgaged property to its original condition after
a casualty. Some leases may provide a right of termination to the lessee if a
taking of a material or specified percentage of the leased space in the mortgage
property occurs, or if the ingress or egress to the leased space has been
materially impaired.
Default and Loss Considerations with Respect to the Mortgage Loans.
Mortgage loans secured by liens on income-producing properties are substantially
different from loans which are secured by owner-occupied single-family homes.
The repayment of a loan secured by a lien on an income producing property is
typically dependent upon the successful operation of such property (that is, its
ability to generate income). Moreover, some or all of the mortgage loans
included in a trust fund may be non-recourse loans, which means that, absent
special facts, recourse in the case of default will be limited to the mortgaged
property and such other assets, if any, that the borrower pledged to secure
repayment of the mortgage loan.
Lenders typically look to the Debt Service Coverage Ratio of a loan secured
by income-producing property as an important measure of the risk of default on
such a loan. As more fully set forth in the prospectus supplement, the Debt
Service Coverage Ratio of a mortgage loan at any given time is the ratio of (i)
the Net Operating Income of the mortgaged property for a twelve-month period to
(ii) the annualized scheduled payments on the mortgage loan and on any other
loan that is secured by a lien on the mortgaged property prior to the lien of
the mortgage. As more fully set forth in the prospectus supplement, Net
Operating Income means, for any given period, the total operating revenues
derived from a mortgaged property, minus the total operating expenses incurred
in respect of the mortgaged property other than (i) non-cash items such as
depreciation and amortization, (ii) capital expenditures and (iii) debt service
on loans (including the mortgage loan) secured by liens on the mortgaged
property. The Net Operating Income of a mortgaged property will fluctuate over
time and may not be sufficient to cover
35
debt service on the mortgage loan at any given time. An insufficiency of Net
Operating Income can be compounded or solely caused by an adjustable rate
mortgage loan. As the primary source of the operating revenues of a non-owner
occupied income-producing property, the condition of the applicable real estate
market and/or area economy may effect rental income (and maintenance payments
from tenant-stockholders of a private cooperative housing corporation). In
addition, properties typically leased, occupied or used on a short-term basis,
such as certain health-care-related facilities, hotels and motels, and mini
warehouse and self-storage facilities, tend to be affected more rapidly by
changes in market or business conditions than do properties typically leased,
occupied or used for longer periods, such as warehouses, retail stores, office
buildings and industrial plants. Commercial loans may be secured by
owner-occupied mortgaged properties or mortgaged properties leased to a single
tenant. Accordingly, a decline in the financial condition of the mortgagor or
single tenant, as applicable, may have a disproportionately greater effect on
the Net Operating Income from such mortgaged properties than the case of
mortgaged properties with multiple tenants.
The Debt Service Coverage Ratio should not be relied upon as the sole
measure of the risk of default of any loan, however, since other factors may
outweigh a high Debt Service Coverage Ratio. With respect to a balloon mortgage
loan, for example, the risk of default as a result of the unavailability of a
source of funds to finance the related balloon payment at maturity on terms
comparable to or better than those of the balloon mortgage loans could be
significant even though the related Debt Service Coverage Ratio is high.
Increases in operating expenses due to the general economic climate or
economic conditions in a locality or industry segment, such as increases in
interest rates, real estate tax rates, energy costs, labor costs and other
operating expenses, and/or changes in governmental rules, regulations and fiscal
policies may also affect the risk of default on a mortgage loan. As may be
further described in the prospectus supplement, in some cases leases of
mortgaged properties may provide that the lessee, rather than the
borrower/landlord, is responsible for payment of operating expenses. However,
the existence of such "net of expense" provisions will result in stable Net
Operating Income to the borrower/landlord only to the extent that the lessee is
able to absorb operating expense increases while continuing to make rent
payments. See "--Leases" above.
While the duration of leases and the existence of any "net of expense"
provisions are often viewed as the primary considerations in evaluating the
credit risk of mortgage loans secured by certain income-producing properties,
such risk may be affected equally or to a greater extent by changes in
government regulation of the operator of the property. Examples of the latter
include mortgage loans secured by health care-related facilities, the income
from which and the operating expenses of which are subject to state and/or
federal regulations, such as Medicare and Medicaid, and multifamily properties
and mobile home parks, which may be subject to state or local rent control
regulation and, in certain cases, restrictions on changes in use of the
property. Low- and moderate-income housing in particular may be subject to legal
limitations and regulations but, because of such regulations, may also be less
sensitive to fluctuations in market rents generally.
Lenders also look to the Loan-to-Value Ratio of a mortgage loan as a
measure of risk of loss if a property must be liquidated following a default.
The lower the Loan-to-Value Ratio, the greater the percentage of the borrower's
equity in a mortgaged property, and thus the greater the cushion provided to the
lender against loss on liquidation following a default.
Loan-to-Value Ratios will not necessarily constitute an accurate measure of
the risk of liquidation loss in a pool of mortgage loans. For example, the value
of a mortgaged property as of the date of initial issuance of the related series
of certificates may be less than the fair market value of the mortgaged property
determined in an appraisal determined at loan origination, and will likely
continue to fluctuate from time to time based upon changes in economic
conditions and the real estate market. Moreover, even when current, an appraisal
is not necessarily a reliable estimate of value. Appraised values of
income-producing properties are generally based on the market comparison method
(recent resale value of comparable properties at the date of the appraisal), the
cost replacement method (the cost of replacing the property at such date), the
income capitalization method (a projection of value based upon the property's
projected net cash flow), or upon a selection from or interpolation of the
values derived from
36
such methods. Each of these appraisal methods can present analytical
difficulties. It is often difficult to find truly comparable properties that
have recently been sold; the replacement cost of a property may have little to
do with its current market value; and income capitalization is inherently based
on inexact projections of income and expense and the selection of an appropriate
capitalization rate. Where more than one of these appraisal methods are used and
provide significantly different results, an accurate determination of value and,
correspondingly, a reliable analysis of default and loss risks, is even more
difficult.
While the depositor believes that the foregoing considerations are
important factors that generally distinguish loans secured by liens on
income-producing real estate from single-family mortgage loans, there is no
assurance that all of such factors will in fact have been prudently considered
by the originators of the mortgage loans, or that, for a particular mortgage
loan, they are complete or relevant. See "Risk Factors--Net Operating Income
Produced by a Mortgaged Property May Be Inadequate to Repay the Mortgage Loans"
and "--Balloon Payments on Mortgage Loans Result in Heightened Risk of Borrower
Default."
Payment Provisions of the Mortgage Loans. Unless otherwise specified in the
prospectus supplement, all of the mortgage loans will have original terms to
maturity of not more than 40 years and will provide for scheduled payments of
principal, interest or both, to be made on specified dates that occur monthly or
quarterly or at such other interval as is specified in the prospectus
supplement. A mortgage loan (i) may provide for no accrual of interest or for
accrual of interest thereon at an interest rate that is fixed over its term or
that adjusts from time to time, or that may be converted at the borrower's
election from an adjustable to a fixed interest rate, or from a fixed to an
adjustable interest rate, (ii) may provide for the formula, index or other
method by which the interest rate will be calculated, (iii) may provide for
level payments to maturity or for payments that adjust from time to time to
accommodate changes in the interest rate or to reflect the occurrence of certain
events, and may permit negative amortization or accelerated amortization, (iv)
may be fully amortizing over its term to maturity, or may provide for little or
no amortization over its term and thus require a balloon payment on its stated
maturity date, and (v) may contain a prohibition on prepayment for a specified
lockout period or require payment of a prepayment premium or a yield maintenance
penalty in connection with a prepayment, in each case as described in the
prospectus supplement. A mortgage loan may also contain an equity participation
provision that entitles the lender to a share of profits realized from the
operation or disposition of the mortgaged property, as described in the
prospectus supplement. If holders of any series or class of offered certificates
will be entitled to all or a portion of a prepayment premium or an equity
participation, the prospectus supplement will describe the prepayment premium
and/or equity participation and the method or methods by which any such amounts
will be allocated to holders.
Mortgage Loan Information in Prospectus Supplements. Each prospectus
supplement will contain certain information pertaining to the mortgage loans in
the related trust fund which will generally include the following: (i) the
aggregate outstanding principal balance and the largest, smallest and average
outstanding principal balance of the mortgage loans as of the applicable Cut-Off
Date, (ii) the type or types of property that provide security for repayment of
the mortgage loans, (iii) the original and remaining terms to maturity of the
mortgage loans and the seasoning of the mortgage loans, (iv) the earliest and
latest origination date and maturity date and weighted average original and
remaining terms to maturity (or for ARD loans, the anticipated repayment date)
of the mortgage loans, (v) the original Loan-to-Value Ratios of the mortgage
loans, (vi) the mortgage interest rates or range of mortgage interest rates and
the weighted average mortgage interest rate carried by the mortgage loans, (vii)
the geographic distribution of the mortgaged properties on a state-by-state
basis, (viii) information with respect to the prepayment provisions, if any, of
the mortgage loans, (ix) with respect to adjustable rate mortgage loans, the
index or indices upon which such adjustments are based, the adjustment dates,
the range of gross margins and the weighted average gross margin, and any limits
on mortgage interest rate adjustments at the time of any adjustment and over the
life of the adjustable rate mortgage loans, (x) Debt Service Coverage Ratios
either at origination or as of a more recent date (or both) and (xi) information
regarding the payment characteristics of the mortgage loans, including without
limitation balloon payment and other amortization provisions. In appropriate
cases, the prospectus supplement will also contain certain information available
to the depositor that pertains to the provisions of leases and the nature of
tenants
37
of the mortgaged properties. If specific information regarding the mortgage
loans is not known to the depositor at the time the certificates are initially
offered, the depositor will provide more general information of the nature
described above in the prospectus supplement, and the depositor will set forth
specific information of the nature described above in a report which will be
available to purchasers of the related certificates at or before the initial
issuance thereof and will be filed as part of a Current Report on Form 8-K with
the Securities and Exchange Commission within 15 days following such issuance.
CMBS
CMBS may include (i) private (that is, not guaranteed or insured by the
United States or any agency or instrumentality thereof) mortgage participations,
mortgage pass-through certificates or other mortgage-backed securities such as
mortgage-backed securities that are similar to a series of certificates or (ii)
certificates insured or guaranteed by Freddie Mac, Fannie Mae, Ginnie Mae or
Farmer Mac, provided that each CMBS will evidence an interest in, or will be
secured by a pledge of, mortgage loans that conform to the descriptions of the
mortgage loans contained in this prospectus.
The CMBS may have been issued in one or more classes with characteristics
similar to the classes of certificates described in this prospectus.
Distributions in respect of the CMBS will be made by the CMBS servicer or the
CMBS trustee on the dates specified in the prospectus supplement. The CMBS
issuer or the CMBS servicer or another person specified in the prospectus
supplement may have the right or obligation to repurchase or substitute assets
underlying the CMBS after a certain date or under other circumstances specified
in the prospectus supplement.
Reserve funds, subordination or other credit support similar to that
described for the certificates under "Description of Credit Support" may have
been provided with respect to the CMBS. The type, characteristics and amount of
such credit support, if any, will be a function of the characteristics of the
underlying mortgage loans and other factors and generally will have been
established on the basis of the requirements of any rating agency that may have
assigned a rating to the CMBS, or by the initial purchasers of the CMBS.
The prospectus supplement for certificates that evidence interests in CMBS
will specify, to the extent available and deemed material, (i) the aggregate
approximate initial and outstanding principal amount and type of the CMBS to be
included in the trust fund, (ii) the original and remaining term to stated
maturity of the CMBS, if applicable, (iii) the pass-through or bond rate of the
CMBS or the formula for determining such rates, (iv) the payment characteristics
of the CMBS, (v) the CMBS issuer, CMBS servicer and CMBS trustee, (vi) a
description of the credit support, if any, (vii) the circumstances under which
the related underlying mortgage loans, or the CMBS themselves, may be purchased
prior to their maturity, (viii) the terms on which mortgage loans may be
substituted for those originally underlying the CMBS, (ix) the servicing fees
payable under the CMBS agreement, (x) the type of information in respect of the
underlying mortgage loans described under "--Mortgage Loans--Leases--Mortgage
Loan Information in Prospectus Supplements" and (xi) the characteristics of any
cash flow agreements that relate to the CMBS.
To the extent required under the securities laws, CMBS included among the
assets of a trust fund will (i) either have been registered under the Securities
Act of 1933, as amended, or be eligible for resale under Rule 144(k) under the
Securities Act of 1933, as amended, and (ii) have been acquired in a bona fide
secondary market transaction and not from the issuer or an affiliate.
CERTIFICATE ACCOUNTS
Each trust fund will include one or more certificate accounts established
and maintained on behalf of the certificateholders into which the person or
persons designated in the prospectus supplement will, to the extent described in
this prospectus and in the prospectus supplement, deposit all payments and
collections received or advanced with respect to the mortgage assets and other
assets in the trust fund. A certificate account may be maintained as an interest
bearing or a non-interest bearing account, and funds held therein may be held as
cash or invested in certain short-term, investment grade obligations, in each
case as described in the prospectus supplement.
38
CREDIT SUPPORT
If so provided in the prospectus supplement, partial or full protection
against certain defaults and losses on the mortgage assets in the trust fund may
be provided to one or more classes of certificates in the form of subordination
of one or more other classes of certificates or by one or more other types of
credit support, such as over collateralization, a letter of credit, insurance
policy, guarantee or reserve fund, or by a combination thereof. The amount and
types of credit support, the identity of the entity providing it (if applicable)
and related information with respect to each type of credit support, if any,
will be set forth in the prospectus supplement for the certificates of each
series. The prospectus supplement for any series of certificates evidencing an
interest in a trust fund that includes CMBS will describe in the same fashion
any similar forms of credit support that are provided by or with respect to, or
are included as part of the trust fund evidenced by or providing security for,
such CMBS to the extent information is available and deemed material. The type,
characteristic and amount of credit support will be determined based on the
characteristics of the mortgage assets and other factors and will be
established, in part, on the basis of requirements of each rating agency rating
a series of certificates. If so specified in the prospectus supplement, any
credit support may apply only in the event of certain types of losses or
delinquencies and the protection against losses or delinquencies provided by
such credit support will be limited. See "Risk Factors--Credit Support May Not
Cover Losses or Risks Which Could Adversely Affect Payment on Your Certificates"
and "Description of Credit Support."
CASH FLOW AGREEMENTS
If so provided in the prospectus supplement, the trust fund may include
guaranteed investment contracts pursuant to which moneys held in the funds and
accounts established for the related series will be invested at a specified
rate. The trust fund may also include interest rate exchange agreements,
interest rate cap or floor agreements, currency exchange agreements or similar
agreements designed to reduce the effects of interest rate or currency exchange
rate fluctuations on the mortgage assets or on one or more classes of
certificates. The principal terms of any guaranteed investment contract or other
agreement, and the identity of the obligor under any guaranteed investment
contract or other agreement, will be described in the prospectus supplement.
PRE-FUNDING
If so provided in the prospectus supplement, a trust fund may include
amounts on deposit in a separate pre-funding account that may be used by the
trust fund to acquire additional mortgage assets. Amounts in a pre-funding
account will not exceed 25% of the pool balance of the trust fund as of the
Cut-Off Date. Additional mortgage assets will be selected using criteria that
are substantially similar to the criteria used to select the mortgage assets
included in the trust fund on the closing date. The trust fund may acquire such
additional mortgage assets for a period of time of not more than 120 days after
the closing date for the related series of certificates. Amounts on deposit in
the pre-funding account after the end of the pre-funding period will be
distributed to certificateholders or such other person as set forth in the
prospectus supplement.
In addition, a trust fund may include a separate capitalized interest
account. Amounts on deposit in the capitalized interest account may be used to
supplement investment earnings, if any, of amounts on deposit in the pre-funding
account, supplement interest collections of the trust fund, or such other
purpose as specified in the prospectus supplement. Amounts on deposit in the
capitalized interest account and pre-funding account generally will be held in
cash or invested in short-term investment grade obligations. Any amounts on
deposit in the capitalized interest account will be released after the end of
the pre-funding period as specified in the prospectus supplement. See "Risk
Factors--Unused Amounts in Pre-Funding Accounts May Be Returned to You as a
Prepayment."
39
YIELD CONSIDERATIONS
GENERAL
The yield on any offered certificate will depend on the price paid by the
certificateholder, the pass-through rate of the certificate and the amount and
timing of distributions on the certificate. See "Risk Factors--Prepayments and
Repurchases of the Mortgage Assets Will Affect the Timing of Your Cash Flow and
May Affect Your Yield." The following discussion contemplates a trust fund that
consists solely of mortgage loans. While you generally can expect the
characteristics and behavior of mortgage loans underlying CMBS to have the same
effect on the yield to maturity and/or weighted average life of a class of
certificates as will the characteristics and behavior of comparable mortgage
loans, the effect may differ due to the payment characteristics of the CMBS. If
a trust fund includes CMBS, the prospectus supplement will discuss the effect
that the CMBS payment characteristics may have on the yield to maturity and
weighted average lives of the offered certificates.
PASS-THROUGH RATE
The certificates of any class within a series may have a fixed, variable or
adjustable pass-through rate, which may or may not be based upon the interest
rates borne by the mortgage loans in the related trust fund. The prospectus
supplement will specify the pass-through rate for each class of certificates or,
in the case of a class of offered certificates with a variable or adjustable
pass-through rate, the method of determining the pass-through rate; the effect,
if any, of the prepayment of any mortgage loan on the pass-through rate of one
or more classes of offered certificates; and whether the distributions of
interest on the offered certificates of any class will be dependent, in whole or
in part, on the performance of any obligor under a cash flow agreement.
PAYMENT DELAYS
A period of time will elapse between the date upon which payments on the
mortgage loans in the related trust fund are due and the distribution date on
which such payments are passed through to certificateholders. That delay will
effectively reduce the yield that would otherwise be produced if payments on
such mortgage loans were distributed to certificateholders on or near the date
they were due.
SHORTFALLS IN COLLECTIONS OF INTEREST RESULTING FROM PREPAYMENTS
When a borrower makes a principal prepayment on a mortgage loan in full or
in part, the borrower is generally charged interest only for the period from the
date on which the preceding scheduled payment was due up to the date of such
prepayment, instead of for the full accrual period, that is, the period from the
due date of the preceding scheduled payment up to the due date for the next
scheduled payment. However, interest accrued on any series of certificates and
distributable thereon on any distribution date will generally correspond to
interest accrued on the principal balance of mortgage loans for their respective
full accrual periods. Consequently, if a prepayment on any mortgage loan is
distributable to certificateholders on a particular distribution date, but such
prepayment is not accompanied by interest thereon for the full accrual period,
the interest charged to the borrower (net of servicing and administrative fees)
may be less than the corresponding amount of interest accrued and otherwise
payable on the certificates of the related series. If and to the extent that any
prepayment interest shortfall is allocated to a class of offered certificates,
the yield on the offered certificates will be adversely affected. The prospectus
supplement will describe the manner in which any prepayment interest shortfalls
will be allocated among the classes of certificates. If so specified in the
prospectus supplement, the master servicer will be required to apply some or all
of its servicing compensation for the corresponding period to offset the amount
of any prepayment interest shortfalls. The prospectus supplement will also
describe any other amounts available to offset prepayment interest shortfalls.
See "Description of the Pooling and Servicing Agreements--Servicing Compensation
and Payment of Expenses."
PREPAYMENT CONSIDERATIONS
A certificate's yield to maturity will be affected by the rate of principal
payments on the mortgage loans in the related trust fund and the allocation of
those principal payments to reduce the principal
40
balance (or notional amount, if applicable) of the certificate. The rate of
principal payments on the mortgage loans will in turn be affected by the
amortization schedules of the mortgage loans (which, in the case of adjustable
rate mortgage loans, will change periodically to accommodate adjustments to
their mortgage interest rates), the dates on which any balloon payments are due,
and the rate of principal prepayments thereon (including for this purpose,
prepayments resulting from liquidations of mortgage loans due to defaults,
casualties or condemnations affecting the mortgaged properties, or purchases of
mortgage loans out of the trust fund). Because the rate of principal prepayments
on the mortgage loans in any trust fund will depend on future events and a
variety of factors (as discussed more fully below), it is impossible to predict
with assurance a certificate's yield to maturity.
The extent to which the yield to maturity of a class of offered
certificates of any series may vary from the anticipated yield will depend upon
the degree to which they are purchased at a discount or premium and when, and to
what degree, payments of principal on the mortgage loans in the related trust
fund are in turn distributed on such certificates (or, in the case of a class of
Stripped Interest Certificates, result in the reduction of the notional amount
of the Stripped Interest Certificate). Further, an investor should consider, in
the case of any offered certificate purchased at a discount, the risk that a
slower than anticipated rate of principal payments on the mortgage loans in the
trust fund could result in an actual yield to such investor that is lower than
the anticipated yield and, in the case of any offered certificate purchased at a
premium, the risk that a faster than anticipated rate of principal payments
could result in an actual yield to such investor that is lower than the
anticipated yield. In general, the earlier a prepayment of principal on the
mortgage loans is distributed on an offered certificate purchased at a discount
or premium (or, if applicable, is allocated in reduction of the notional amount
thereof), the greater will be the effect on the investor's yield to maturity. As
a result, the effect on an investor's yield of principal payments (to the extent
distributable in reduction of the principal balance or notional amount of the
investor's offered certificates) occurring at a rate higher (or lower) than the
rate anticipated by the investor during any particular period would not be fully
offset by a subsequent like reduction (or increase) in the rate of principal
payments.
A class of certificates, including a class of offered certificates, may
provide that on any distribution date the holders of certificates are entitled
to a pro rata share of the prepayments (including prepayments occasioned by
defaults) on the mortgage loans in the related trust fund that are distributable
on that date, to a disproportionately large share (which, in some cases, may be
all) of such prepayments, or to a disproportionately small share (which, in some
cases, may be none) of the prepayments. As and to the extent described in the
prospectus supplement, the entitlements of the various classes of
certificateholders of any series to receive payments (and, in particular,
prepayments) of principal of the mortgage loans in the related trust fund may
vary based on the occurrence of certain events (e.g., the retirement of one or
more classes of a series of certificates) or subject to certain contingencies
(e.g., prepayment and default rates with respect to the mortgage loans).
In general, the notional amount of a class of Stripped Interest
Certificates will either (i) be based on the principal balances of some or all
of the mortgage assets in the related trust fund or (ii) equal the certificate
balances of one or more of the other classes of certificates of the same series.
Accordingly, the yield on such Stripped Interest Certificates will be directly
related to the amortization of the mortgage assets or classes of certificates,
as the case may be. Thus, if a class of certificates of any series consists of
Stripped Interest Certificates or Stripped Principal Certificates, a lower than
anticipated rate of principal prepayments on the mortgage loans in the related
trust fund will negatively affect the yield to investors in Stripped Principal
Certificates, and a higher than anticipated rate of principal prepayments on the
mortgage loans will negatively affect the yield to investors in Stripped
Interest Certificates.
The depositor is not aware of any relevant publicly available or
authoritative statistics with respect to the historical prepayment experience of
a large group of multifamily or commercial mortgage loans. However, the extent
of prepayments of principal of the mortgage loans in any trust fund may be
affected by a number of factors, including, without limitation, the availability
of mortgage credit, the relative economic vitality of the area in which the
mortgaged properties are located, the quality of management of the mortgaged
properties, the servicing of the mortgage loans, possible changes in tax laws
and other opportunities for investment. In addition, the rate of principal
payments on the mortgage loans in any
41
trust fund may be affected by the existence of lockout periods and requirements
that principal prepayments be accompanied by prepayment premiums, and by the
extent to which such provisions may be practicably enforced.
The rate of prepayment on a pool of mortgage loans is also affected by
prevailing market interest rates for mortgage loans of a comparable type, term
and risk level. When the prevailing market interest rate is below a mortgage
coupon, a borrower may have an increased incentive to refinance its mortgage
loan. In addition, as prevailing market interest rates decline, even borrowers
with adjustable rate mortgage loans that have experienced a corresponding
interest rate decline may have an increased incentive to refinance for purposes
of either (i) converting to a fixed rate loan and thereby "locking in" such rate
or (ii) taking advantage of the initial "teaser rate" (a mortgage interest rate
below what it would otherwise be if the applicable index and gross margin were
applied) on another adjustable rate mortgage loan.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell
mortgaged properties in order to realize their equity therein, to meet cash flow
needs or to make other investments. In addition, some borrowers may be motivated
by federal and state tax laws (which are subject to change) to sell mortgaged
properties prior to the exhaustion of tax depreciation benefits. The depositor
will make no representation as to the particular factors that will affect the
prepayment of the mortgage loans in any trust fund, as to the relative
importance of such factors, as to the percentage of the principal balance of the
mortgage loans that will be paid as of any date or as to the overall rate of
prepayment on the mortgage loans.
WEIGHTED AVERAGE LIFE AND MATURITY
The rate at which principal payments are received on the mortgage loans in
a trust fund will affect the ultimate maturity and the weighted average life of
one or more classes of a series of certificates. Weighted average life refers to
the average amount of time that will elapse from the date of issuance of an
instrument until each dollar of the principal amount of such instrument is
repaid to the investor.
The weighted average life and maturity of a class of certificates of a
series will be influenced by the rate at which principal on the mortgage loans,
whether in the form of scheduled amortization or prepayments (for this purpose,
the term "prepayment" includes voluntary prepayments, liquidations due to
default and purchases of mortgage loans out of the trust fund), is paid to that
class of certificateholders. Prepayment rates on loans are commonly measured
relative to a prepayment standard or model, such as the CPR prepayment model or
the SPA prepayment model. CPR represents an assumed constant rate of prepayment
each month (expressed as an annual percentage) relative to the then outstanding
principal balance of a pool of loans for the life of those loans. SPA represents
an assumed variable rate of prepayment each month (expressed as an annual
percentage) relative to the then outstanding principal balance of a pool of
loans, with different prepayment assumptions often expressed as percentages of
SPA. For example, a prepayment assumption of 100% of SPA assumes prepayment
rates of 0.2% per annum of the then outstanding principal balance of loans in
the first month of the life of the loans and an additional 0.2% per annum in
each following month until the 30th month. Beginning in the 30th month, and in
each following month during the life of the loans, 100% of SPA assumes a
constant prepayment rate of 6% per annum each month.
Neither CPR nor SPA nor any other prepayment model or assumption purports
to be a historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of any particular pool of loans. Moreover, the
CPR and SPA models were developed based upon historical prepayment experience
for single-family loans. Thus, it is unlikely that the prepayment experience of
the mortgage loans included in any trust fund will conform to any particular
level of CPR or SPA.
The prospectus supplement for each series of certificates will contain
tables, if applicable, setting forth the projected weighted average life of each
class of offered certificates and the percentage of the initial certificate
balance of each class that would be outstanding on specified distribution dates
based on the assumptions stated in the prospectus supplement, including
assumptions that borrowers make prepayments on the mortgage loans at rates
corresponding to various percentages of CPR or SPA, or at such other rates
specified in the prospectus supplement. The tables and assumptions will
illustrate the
42
sensitivity of the weighted average lives of the certificates to various assumed
prepayment rates and will not be intended to predict, or to provide information
that will enable investors to predict, the actual weighted average lives of the
certificates.
CONTROLLED AMORTIZATION CLASSES AND COMPANION CLASSES
A series of certificates may include one or more controlled amortization
classes that are designed to provide increased protection against prepayment
risk by transferring that risk to one or more companion classes. Unless
otherwise specified in the prospectus supplement, each controlled amortization
class will either be a planned amortization class or a targeted amortization
class. In general, distributions of principal on a planned amortization class of
certificates are made in accordance with a specified amortization schedule so
long as prepayments on the underlying mortgage loans occur within a specified
range of constant prepayment rates and, as described below, so long as one or
more companion classes remain to absorb excess cash flows and make up for
shortfalls. For example, if the rate of prepayments is significantly higher than
expected, the excess prepayments will be applied to retire the companion classes
prior to reducing the principal balance of a planned amortization class. If the
rate of prepayments is significantly lower than expected, a disproportionately
large portion of prepayments may be applied to a planned amortization class.
Once the companion classes for a planned amortization class are retired, the
planned amortization class of certificates will have no further prepayment
protection. A targeted amortization class of certificates is similar to a
planned amortization class of certificates, but a targeted amortization class
structure generally does not draw on companion classes to make up cash flow
shortfalls, and will generally not provide protection to the targeted
amortization class against the risk that prepayments occur more slowly than
expected.
In general, the reduction of prepayment risk afforded to a controlled
amortization class comes at the expense of one or more companion classes of the
same series (any of which may also be a class of offered certificates) which
absorb a disproportionate share of the overall prepayment risk of a given
structure. As more particularly described in the prospectus supplement, the
holders of a companion class will receive a disproportionately large share of
prepayments when the rate of prepayment exceeds the rate assumed in structuring
the controlled amortization class, and (in the case of a companion class that
supports a planned amortization class of certificates) a disproportionately
small share of prepayments (or no prepayments) when the rate of prepayment falls
below that assumed rate. Thus, as and to the extent described in the prospectus
supplement, a companion class will absorb a disproportionate share of the risk
that a relatively fast rate of prepayments will result in the early retirement
of the investment, that is, "call risk," and, if applicable, the risk that a
relatively slow rate of prepayments will extend the average life of the
investment, that is, "extension risk", that would otherwise be allocated to the
related controlled amortization class. Accordingly, companion classes can
exhibit significant average life variability.
OTHER FACTORS AFFECTING YIELD, WEIGHTED AVERAGE LIFE AND MATURITY
Balloon Payments; Extensions of Maturity. Some or all of the mortgage loans
included in a trust fund may require that balloon payments be made at maturity.
Because the ability of a borrower to make a balloon payment typically will
depend upon its ability either to refinance the loan or to sell the mortgaged
property, there is a risk that mortgage loans that require balloon payments may
default at maturity, or that the maturity of such a mortgage loan may be
extended in connection with a workout. In the case of defaults, recovery of
proceeds may be delayed by, among other things, bankruptcy of the borrower or
adverse conditions in the market where the property is located. In order to
minimize losses on defaulted mortgage loans, the master servicer or a special
servicer, to the extent and under the circumstances set forth in this prospectus
and in the prospectus supplement, may be authorized to modify mortgage loans
that are in default or as to which a payment default is imminent. Any defaulted
balloon payment or modification that extends the maturity of a mortgage loan may
delay distributions of principal on a class of offered certificates and thereby
extend the weighted average life of the certificates and, if the certificates
were purchased at a discount, reduce the yield thereon.
Negative Amortization. Mortgage loans that permit negative amortization can
affect the weighted average life of a class of certificates. In general,
mortgage loans that permit negative amortization by their
43
terms limit the amount by which scheduled payments may adjust in response to
changes in mortgage interest rates and/or provide that scheduled payment amounts
will adjust less frequently than the mortgage interest rates. Accordingly,
during a period of rising interest rates, the scheduled payment on a mortgage
loan that permits negative amortization may be less than the amount necessary to
amortize the loan fully over its remaining amortization schedule and pay
interest at the then applicable mortgage interest rate. In that case, the
mortgage loan balance would amortize more slowly than necessary to repay it over
its schedule and, if the amount of scheduled payment were less than the amount
necessary to pay current interest at the applicable mortgage interest rate, the
loan balance would negatively amortize to the extent of the amount of the
interest shortfall. Conversely, during a period of declining interest rates, the
scheduled payment on a mortgage loan that permits negative amortization may
exceed the amount necessary to amortize the loan fully over its remaining
amortization schedule and pay interest at the then applicable mortgage interest
rate. In that case, the excess would be applied to principal, thereby resulting
in amortization at a rate faster than necessary to repay the mortgage loan
balance over its schedule.
A slower or negative rate of mortgage loan amortization would
correspondingly be reflected in a slower or negative rate of amortization for
one or more classes of certificates of the related series. Accordingly, the
weighted average lives of mortgage loans that permit negative amortization (and
that of the classes of certificates to which any such negative amortization
would be allocated or which would bear the effects of a slower rate of
amortization on the mortgage loans) may increase as a result of such feature. A
faster rate of mortgage loan amortization will shorten the weighted average life
of the mortgage loans and, correspondingly, the weighted average lives of those
classes of certificates then entitled to a portion of the principal payments on
those mortgage loans. The prospectus supplement will describe, if applicable,
the manner in which negative amortization in respect of the mortgage loans in
any trust fund is allocated among the respective classes of certificates of the
related series.
Foreclosures and Payment Plans. The number of foreclosures and the
principal amount of the mortgage loans that are foreclosed in relation to the
number and principal amount of mortgage loans that are repaid in accordance with
their terms will affect the weighted average lives of those mortgage loans and,
accordingly, the weighted average lives of and yields on the certificates of the
related series. Servicing decisions made with respect to the mortgage loans,
including the use of payment plans prior to a demand for acceleration and the
restructuring of mortgage loans in bankruptcy proceedings, may also have an
effect upon the payment patterns of particular mortgage loans and thus the
weighted average lives of and yields on the certificates of the related series.
Losses and Shortfalls on the Mortgage Assets. The yield to holders of the
offered certificates of any series will directly depend on the extent to which
such holders are required to bear the effects of any losses or shortfalls in
collections arising out of defaults on the mortgage assets in the related trust
fund and the timing of such losses and shortfalls. In general, the earlier that
any such loss or shortfall occurs, the greater will be the negative effect on
yield for any class of certificates that is required to bear the effects of the
loss or shortfall.
The amount of any losses or shortfalls in collections on the mortgage
assets in any trust fund (to the extent not covered or offset by draws on any
reserve fund or under any instrument of credit support) will be allocated among
the classes of certificates of the related series in the priority and manner,
and subject to the limitations, specified in the prospectus supplement. As
described in the prospectus supplement, such allocations may result in
reductions in the entitlements to interest and/or certificate balances of one or
more classes of certificates, or may be effected simply by a prioritization of
payments among the classes of certificates. The yield to maturity on a class of
subordinate certificates may be extremely sensitive to losses and shortfalls in
collections on the mortgage assets in the related trust fund.
Additional Certificate Amortization. In addition to entitling
certificateholders to a specified portion (which may range from none to all) of
the principal payments received on the mortgage assets in the related trust
fund, one or more classes of certificates of any series, including one or more
classes of offered certificates of a series, may provide for distributions of
principal from (i) amounts attributable to interest accrued but not currently
distributable on one or more classes of Accrual Certificates, (ii) excess funds
or (iii) any other amounts described in the prospectus supplement. As
specifically set forth in the prospectus supplement, "excess funds" generally
will represent that portion of the amounts distributable in respect
44
of the certificates of any series on any distribution date that represent (i)
interest received or advanced on the mortgage assets in the related trust fund
that is in excess of the interest currently distributable on that series of
certificates, as well as any interest accrued but not currently distributable on
any Accrual Certificates of that series or (ii) prepayment premiums, payments
from equity participations entitling the lender to a share of profits realized
from the operation or disposition of the mortgaged property, or any other
amounts received on the mortgage assets in the trust fund that do not constitute
interest thereon or principal thereof.
The amortization of any class of certificates out of the sources described
in the preceding paragraph would shorten the weighted average life of
certificates and, if those certificates were purchased at a premium, reduce the
yield on those certificates. The prospectus supplement will discuss the relevant
factors that you should consider in determining whether distributions of
principal of any class of certificates out of such sources would have any
material effect on the rate at which your certificates are amortized.
THE DEPOSITOR
Wachovia Commercial Mortgage Securities, Inc., the depositor, is a North
Carolina corporation organized on August 17, 1988 as a wholly-owned subsidiary
of Wachovia Bank, National Association (formerly known as First Union National
Bank), a national banking association with its main office located in Charlotte,
North Carolina. Wachovia Bank, National Association is a subsidiary of Wachovia
Corporation, a North Carolina corporation registered as a bank holding company
under the Bank Holding Company Act of 1956, as amended. Wachovia Corporation is
a financial holding company under the Gramm-Leach-Bliley Act. The depositor's
principal business is to acquire, hold and/or sell or otherwise dispose of cash
flow assets, usually in connection with the securitization of that asset. The
depositor maintains its principal office at 301 South College Street, Charlotte,
North Carolina 28288-0166. Its telephone number is 704-374-6161. There can be no
assurance that the depositor will have any significant assets.
USE OF PROCEEDS
The net proceeds to be received from the sale of certificates will be
applied by the depositor to the purchase of trust assets or will be used by the
depositor for general corporate purposes. The depositor expects to sell the
certificates from time to time, but the timing and amount of offerings of
certificates will depend on a number of factors, including the volume of
mortgage assets acquired by the depositor, prevailing interest rates,
availability of funds and general market conditions.
45
DESCRIPTION OF THE CERTIFICATES
GENERAL
In the aggregate, the certificates of each series of certificates will
represent the entire beneficial ownership interest in the trust fund created
pursuant to the related pooling and servicing agreement. Each series of
certificates may consist of one or more classes of certificates (including
classes of offered certificates), and such class or classes may (i) provide for
the accrual of interest thereon at a fixed, variable or adjustable rate; (ii) be
senior or subordinate to one or more other classes of certificates in
entitlement to certain distributions on the certificates; (iii) be entitled, as
Stripped Principal Certificates, to distributions of principal with
disproportionately small, nominal or no distributions of interest; (iv) be
entitled, as Stripped Interest Certificates, to distributions of interest with
disproportionately small, nominal or no distributions of principal; (v) provide
for distributions of principal and/or interest thereon that commence only after
the occurrence of certain events such as the retirement of one or more other
classes of certificates of such series; (vi) provide for distributions of
principal to be made, from time to time or for designated periods, at a rate
that is faster (and, in some cases, substantially faster) or slower (and, in
some cases, substantially slower) than the rate at which payments or other
collections of principal are received on the mortgage assets in the related
trust fund; (vii) provide for distributions of principal to be made, subject to
available funds, based on a specified principal payment schedule or other
methodology; and/or (viii) provide for distributions based on a combination of
two or more components thereof with one or more of the characteristics described
in this paragraph, including a Stripped Principal Certificate component and a
Stripped Interest Certificate component, to the extent of available funds, in
each case as described in the prospectus supplement. Any such classes may
include classes of offered certificates. With respect to certificates with two
or more components, references in this prospectus to certificate balance,
notional amount and pass-through rate refer to the principal balance, if any,
notional amount, if any, and the pass-through rate, if any, for that component.
Each class of offered certificates of a series will be issued in minimum
denominations corresponding to the certificate balances or, in the case of
Stripped Interest Certificates or REMIC residual certificates, notional amounts
or percentage interests specified in the prospectus supplement. As provided in
the prospectus supplement, one or more classes of offered certificates of any
series may be issued in fully registered, definitive form or may be offered in
book-entry format through the facilities of DTC. The offered certificates of
each series (if issued as definitive certificates) may be transferred or
exchanged, subject to any restrictions on transfer described in the prospectus
supplement, at the location specified in the prospectus supplement, without the
payment of any service charge, other than any tax or other governmental charge
payable in connection therewith. Interests in a class of book-entry certificates
will be transferred on the book-entry records of DTC and its participating
organizations. See "Risk Factors--Your Ability to Resell Certificates May Be
Limited Because of Their Characteristics," and "--The Assets of the Trust Fund
May Not Be Sufficient to Pay Your Certificates."
DISTRIBUTIONS
Distributions on the certificates of each series will be made by or on
behalf of the trustee or master servicer on each distribution date as specified
in the prospectus supplement from the Available Distribution Amount for such
series and such distribution date.
Except as otherwise specified in the prospectus supplement, distributions
on the certificates of each series (other than the final distribution in
retirement of any certificate) will be made to the persons in whose names those
certificates are registered on the record date, which is the close of business
on the last business day of the month preceding the month in which the
applicable distribution date occurs, and the amount of each distribution will be
determined as of the close of business on the determination date that is
specified in the prospectus supplement. All distributions with respect to each
class of certificates on each distribution date will be allocated pro rata among
the outstanding certificates in that class. The trustee will make payments
either by wire transfer in immediately available funds to the account of a
certificateholder at a bank or other entity having appropriate facilities
therefor, if such certificateholder has provided the trustee or other person
required to make such payments with wiring instructions (which may be provided
46
in the form of a standing order applicable to all subsequent distributions) no
later than the date specified in the prospectus supplement (and, if so provided
in the prospectus supplement, such certificateholder holds certificates in the
requisite amount or denomination specified in the prospectus supplement), or by
check mailed to the address of the certificateholder as it appears on the
certificate register; provided, however, that the trustee will make the final
distribution in retirement of any class of certificates (whether definitive
certificates or book-entry certificates) only upon presentation and surrender of
the certificates at the location specified in the notice to certificateholders
of such final distribution.
DISTRIBUTIONS OF INTEREST ON THE CERTIFICATES
Each class of certificates of each series (other than certain classes of
Stripped Principal Certificates and certain REMIC residual certificates that
have no pass-through rate) may have a different pass-through rate which may be
fixed, variable or adjustable. The prospectus supplement will specify the
pass-through rate or, in the case of a variable or adjustable pass-through rate,
the method for determining the pass-through rate, for each class. Unless
otherwise specified in the prospectus supplement, interest on the certificates
of each series will be calculated on the basis of a 360-day year consisting of
twelve 30-day months.
Distributions of interest in respect of the certificates of any class
(other than any class of Accrual Certificates that will be entitled to
distributions of accrued interest commencing only on the distribution date, or
under the circumstances, specified in the prospectus supplement, and other than
any class of Stripped Principal Certificates or REMIC residual certificates that
is not entitled to any distributions of interest) will be made on each
distribution date based on the Accrued Certificate Interest for such class and
such distribution date, subject to the sufficiency of the portion of the
Available Distribution Amount allocable to such class on such distribution date.
Prior to the time interest is distributable on any class of Accrual
Certificates, the amount of Accrued Certificate Interest otherwise distributable
on that class will be added to the certificate balance of that class on each
distribution date. With respect to each class of certificates (other than some
classes of Stripped Interest Certificates and REMIC residual certificates),
Accrued Certificate Interest for each distribution date will be equal to
interest at the applicable pass-through rate accrued for a specified period
(generally the period between distribution dates) on the outstanding certificate
balance thereof immediately prior to such distribution date. Unless otherwise
provided in the prospectus supplement, Accrued Certificate Interest for each
distribution date on Stripped Interest Certificates will be similarly calculated
except that it will accrue on a notional amount that is either (i) based on the
principal balances of some or all of the mortgage assets in the related trust
fund or (ii) equal to the certificate balances of one or more other classes of
certificates of the same series. Reference to a notional amount with respect to
a class of Stripped Interest Certificates is solely for convenience in making
certain calculations and does not represent the right to receive any
distributions of principal.
If so specified in the prospectus supplement, the amount of Accrued
Certificate Interest that is otherwise distributable on (or, in the case of
Accrual Certificates, that may otherwise be added to the certificate balance of)
one or more classes of the certificates of a series will be reduced to the
extent that any prepayment interest shortfalls, as described under "Yield
Considerations--Shortfalls in Collections of Interest Resulting from
Prepayments" exceed the amount of any sums (including, if and to the extent
specified in the prospectus supplement, the master servicer's servicing
compensation) that are applied to offset such shortfalls. The particular manner
in which prepayment interest shortfalls will be allocated among some or all of
the classes of certificates of that series will be specified in the prospectus
supplement. The prospectus supplement will also describe the extent to which the
amount of Accrued Certificate Interest that is otherwise distributable on (or,
in the case of Accrual Certificates, that may otherwise be added to the
certificate balance of) a class of offered certificates may be reduced as a
result of any other contingencies, including delinquencies, losses and deferred
interest on or in respect of the mortgage assets in the related trust fund.
Unless otherwise provided in the prospectus supplement, any reduction in the
amount of Accrued Certificate Interest otherwise distributable on a class of
certificates by reason of the allocation to such class of a portion of any
deferred interest on or in respect of the mortgage assets in the related trust
fund will result in a corresponding increase in the certificate balance of that
class. See "Risk Factors--Prepayment and Repurchases of the Mortgage Assets Will
Affect the Timing of Your Cash Flow and May Affect Your Yield" and "Yield
Considerations."
47
DISTRIBUTIONS OF PRINCIPAL OF THE CERTIFICATES
Each class of certificates of each series (other than certain classes of
Stripped Interest Certificates or REMIC residual certificates) will have a
certificate balance which, at any time, will equal the then maximum amount that
the holders of certificates of that class will be entitled to receive in respect
of principal out of the future cash flow on the mortgage assets and other assets
included in the related trust fund. The outstanding certificate balance of a
class of certificates will be reduced by distributions of principal made on
those certificates from time to time and, if so provided in the prospectus
supplement, further by any losses incurred in respect of the related mortgage
assets allocated to those certificates from time to time. In turn, the
outstanding certificate balance of a class of certificates may be increased as a
result of any deferred interest on or in respect of the related mortgage assets
that is allocated to those certificates from time to time, and will be
increased, in the case of a class of Accrual Certificates prior to the
distribution date on which distributions of interest on those Accrual
Certificates are required to commence, by the amount of any Accrued Certificate
Interest in respect thereof (reduced as described above). Unless otherwise
provided in the prospectus supplement, the initial aggregate certificate balance
of all classes of a series of certificates will not be greater than the
aggregate outstanding principal balance of the related mortgage assets as of the
applicable Cut-Off Date, after application of scheduled payments due on or
before such date, whether or not received.
As and to the extent described in the prospectus supplement, distributions
of principal with respect to a series of certificates will be made on each
distribution date to the holders of the class or classes of certificates of such
series entitled to distributions until the certificate balances of those
certificates have been reduced to zero. Distributions of principal with respect
to one or more classes of certificates may be made at a rate that is faster
(and, in some cases, substantially faster) than the rate at which payments or
other collections of principal are received on the mortgage assets in the
related trust fund, may not commence until the occurrence of certain events,
such as the retirement of one or more other classes of certificates of the same
series, or may be made at a rate that is slower (and, in some cases,
substantially slower) than the rate at which payments or other collections of
principal are received on such mortgage assets. In addition, distributions of
principal with respect to one or more classes of controlled amortization
certificates may be made, subject to available funds, based on a specified
principal payment schedule and, with respect to one or more classes of companion
classes of certificates, may be contingent on the specified principal payment
schedule for a controlled amortization class of certificates of the same series
and the rate at which payments and other collections of principal on the
mortgage assets in the related trust fund are received. Unless otherwise
specified in the prospectus supplement, distributions of principal of any class
of certificates will be made on a pro rata basis among all of the certificates
belonging to that class.
COMPONENTS
To the extent specified in the prospectus supplement, distribution on a
class of certificates may be based on a combination of two or more different
components as described under "--General" above. To that extent, the
descriptions set forth under "--Distributions of Interest on the Certificates"
and "--Distributions of Principal of the Certificates" above also relate to
components of such a class of certificates. In such case, reference in those
sections to certificate balance and pass-through rate refer to the principal
balance, if any, of any of the components and the pass-through rate, if any, on
any component, respectively.
DISTRIBUTIONS ON THE CERTIFICATES IN RESPECT OF PREPAYMENT PREMIUMS OR IN
RESPECT OF EQUITY PARTICIPATIONS
If so provided in the prospectus supplement, prepayment premiums or
payments in respect of equity participations entitling the lender to a share of
profits realized from the operation or disposition of the mortgaged property
received on or in connection with the mortgage assets in any trust fund will be
distributed on each distribution date to the holders of the class of
certificates of the related series entitled thereto in accordance with the
provisions described in such prospectus supplement.
ALLOCATION OF LOSSES AND SHORTFALLS
If so provided in the prospectus supplement for a series of certificates
consisting of one or more classes of subordinate certificates, on any
distribution date in respect of which losses or shortfalls in
48
collections on the mortgage assets have been incurred, the amount of such losses
or shortfalls will be borne first by a class of subordinate certificates in the
priority and manner and subject to the limitations specified in the prospectus
supplement. See "Description of Credit Support" for a description of the types
of protection that may be included in shortfalls on mortgage assets comprising
the trust fund.
ADVANCES IN RESPECT OF DELINQUENCIES
With respect to any series of certificates evidencing an interest in a
trust fund, unless otherwise provided in the prospectus supplement, a servicer
or another entity described therein will be required as part of its servicing
responsibilities to advance on or before each distribution date its own funds or
funds held in the related certificate account that are not included in the
Available Distribution Amount for such distribution date, in an amount equal to
the aggregate of payments of principal (other than any balloon payments) and
interest (net of related servicing fees) that were due on the mortgage loans in
the trust fund and were delinquent on the related determination date, subject to
the servicer's (or another entity's) good faith determination that such advances
will be reimbursable from the loan proceeds. In the case of a series of
certificates that includes one or more classes of subordinate certificates and
if so provided in the prospectus supplement, each servicer's (or another
entity's) advance obligation may be limited only to the portion of such
delinquencies necessary to make the required distributions on one or more
classes of senior certificates and/or may be subject to the servicer's (or
another entity's) good faith determination that such advances will be
reimbursable not only from the loan proceeds but also from collections on other
trust assets otherwise distributable on one or more classes of subordinate
certificates. See "Description of Credit Support".
Advances are intended to maintain a regular flow of scheduled interest and
principal payments to holders of the class or classes of certificates entitled
thereto, rather than to guarantee or insure against losses. Unless otherwise
provided in the prospectus supplement, advances of a servicer's (or another
entity's) funds will be reimbursable only out of recoveries on the mortgage
loans (including amounts received under any form of credit support) respecting
which advances were made and, if so provided in the prospectus supplement, out
of any amounts otherwise distributable on one or more classes of subordinate
certificates of such series; provided, however, that any advance will be
reimbursable from any amounts in the related certificate account prior to any
distributions being made on the certificates to the extent that a servicer (or
such other entity) shall determine in good faith that such advance is not
ultimately recoverable from related proceeds on the mortgage loans or, if
applicable, from collections on other trust assets otherwise distributable on
the subordinate certificates.
If advances have been made from excess funds in a certificate account, the
master servicer or other person that advanced such funds will be required to
replace such funds in the certificate account on any future distribution date to
the extent that funds then in the certificate account are insufficient to permit
full distributions to certificateholders on that date. If so specified in the
prospectus supplement, the obligation of a master servicer or other specified
person to make advances may be secured by a cash advance reserve fund or a
surety bond. If applicable, we will provide in the prospectus supplement
information regarding the characteristics of, and the identity of any obligor
on, any such surety bond.
If and to the extent so provided in the prospectus supplement, any entity
making advances will be entitled to receive interest on those advances for the
period that such advances are outstanding at the rate specified therein and will
be entitled to pay itself that interest periodically from general collections on
the mortgage assets prior to any payment to certificateholders as described in
the prospectus supplement.
The prospectus supplement for any series of certificates evidencing an
interest in a trust fund that includes CMBS will describe any comparable
advancing obligation of a party to the related pooling and servicing agreement
or of a party to the related CMBS agreement.
REPORTS TO CERTIFICATEHOLDERS
On each distribution date a master servicer or trustee will forward to the
holder of certificates of each class of a series a distribution date statement
accompanying the distribution of principal and/or interest to those holders. As
further provided in the prospectus supplement, the distribution date statement
for each class will set forth to the extent applicable and available:
49
(i) the amount of such distribution to holders of certificates of such
class applied to reduce the certificate balance thereof;
(ii) the amount of such distribution to holders of certificates of
such class allocable to Accrued Certificate Interest;
(iii) the amount, if any, of such distribution to holders of
certificates of such class allocable to prepayment premiums;
(iv) the amount of servicing compensation received by each servicer
and such other customary information as the master servicer or the trustee
deems necessary or desirable, or that a certificateholder reasonably
requests, to enable certificateholders to prepare their tax returns;
(v) the aggregate amount of advances included in such distribution and
the aggregate amount of unreimbursed advances at the close of business on,
or as of a specified date shortly prior to, such distribution date;
(vi) the aggregate principal balance of the related mortgage loans on,
or as of a specified date shortly prior to, such distribution date;
(vii) the number and aggregate principal balance of any mortgage loans
in respect of which (A) one scheduled payment is delinquent, (B) two
scheduled payments are delinquent, (C) three or more scheduled payments are
delinquent and (D) foreclosure proceedings have been commenced;
(viii) with respect to any mortgage loan liquidated during the related
prepayment period (as to the current distribution date, generally the
period extending from the prior distribution date to and including the
current distribution date) in connection with a default on that mortgage
loan or because the mortgage loan was purchased out of the trust fund
(other than a payment in full), (A) the loan number, (B) the aggregate
amount of liquidation proceeds received and (C) the amount of any loss to
certificateholders;
(ix) with respect to any REO Property sold during the related
collection period, (A) the loan number of the related mortgage loan, (B)
the aggregate amount of sales proceeds and (C) the amount of any loss to
certificateholders in respect of the related mortgage loan;
(x) the certificate balance or notional amount of each class of
certificates (including any class of certificates not offered hereby)
immediately before and immediately after such distribution date, separately
identifying any reduction in the certificate balance due to the allocation
of any losses in respect of the related mortgage loans;
(xi) the aggregate amount of principal prepayments made on the
mortgage loans during the related prepayment period;
(xii) the amount deposited in or withdrawn from any reserve fund on
such distribution date, and the amount remaining on deposit in the reserve
fund as of the close of business on such distribution date;
(xiii) the amount of any Accrued Certificate Interest due but not paid
on such class of offered certificates at the close of business on such
distribution date; and
(xiv) if such class of offered certificates has a variable
pass-through rate or an adjustable pass-through rate, the pass-through rate
applicable thereto for such distribution date.
In the case of information furnished pursuant to subclauses (i)-(iv) above,
the amounts will be expressed as a dollar amount per minimum denomination of the
relevant class of offered certificates or per a specified portion of such
minimum denomination. The prospectus supplement for each series of offered
certificates will describe any additional information to be included in reports
to the holders of such certificates.
Within a reasonable period of time after the end of each calendar year, the
related master servicer or trustee, as the case may be, will be required to
furnish to each person who at any time during the
50
calendar year was a holder of an offered certificate a statement containing the
information set forth in subclauses (i)-(iv) above, aggregated for such calendar
year or the applicable portion thereof during which such person was a
certificateholder. Such obligation will be deemed to have been satisfied to the
extent that substantially comparable information is provided pursuant to any
requirements of the Code as are from time to time in force. See, however,
"Description of the Certificates--Book-Entry Registration and Definitive
Certificates."
If the trust fund for a series of certificates includes CMBS, the ability
of the related master servicer or trustee, as the case may be, to include in any
distribution date statement information regarding the mortgage loans underlying
such CMBS will depend on the reports received with respect to such CMBS. In such
cases, the prospectus supplement will describe the loan-specific information to
be included in the distribution date statements that will be forwarded to the
holders of the offered certificates of that series in connection with
distributions made to them.
VOTING RIGHTS
The voting rights evidenced by each series of certificates will be
allocated among the respective classes of such series in the manner described in
the prospectus supplement.
Certificateholders will generally have a right to vote only with respect to
required consents to certain amendments to the related pooling and servicing
agreement and as otherwise specified in the prospectus supplement. See
"Description of the Pooling and Servicing Agreements--Amendment." The holders of
specified amounts of certificates of a particular series will have the
collective right to remove the related trustee and also to cause the removal of
the related master servicer in the case of an event of default under the related
pooling and servicing agreement on the part of the master servicer. See
"Description of the Pooling and Servicing Agreements--Events of Default,"
"--Rights upon Event of Default" and "--Resignation and Removal of the Trustee."
TERMINATION
The obligations created by the pooling and servicing agreement for each
series of certificates will terminate upon the payment (or provision for
payment) to certificateholders of that series of all amounts held in the related
certificate account, or otherwise by the related master servicer or trustee or
by a special servicer, and required to be paid to such certificateholders
pursuant to such pooling and servicing agreement following the earlier of (i)
the final payment or other liquidation of the last mortgage asset subject to the
pooling and servicing agreement or the disposition of all property acquired upon
foreclosure of any mortgage loan subject to the pooling and servicing agreement
and (ii) the purchase of all of the assets of the related trust fund by the
party entitled to effect such termination, under the circumstances and in the
manner that will be described in the prospectus supplement. Written notice of
termination of a pooling and servicing agreement will be given to each
certificateholder of the related series, and the final distribution will be made
only upon presentation and surrender of the certificates of such series at the
location to be specified in the notice of termination.
If so specified in the prospectus supplement, a series of certificates will
be subject to optional early termination through the repurchase of the assets in
the related trust fund by a party that will be specified in the prospectus
supplement, under the circumstances and in the manner set forth in the
prospectus supplement. If so provided in the prospectus supplement, upon the
reduction of the certificate balance of a specified class or classes of
certificates by a specified percentage or amount, a party identified in the
prospectus supplement will be authorized or required to solicit bids for the
purchase of all the assets of the related trust fund, or of a sufficient portion
of such assets to retire such class or classes, under the circumstances and in
the manner set forth in the prospectus supplement. In any event, unless
otherwise disclosed in the prospectus supplement, any such repurchase or
purchase shall be at a price or prices that are generally based upon the unpaid
principal balance of, plus accrued interest on, all mortgage loans (other than
mortgage loans secured by REO Properties) then included in a trust fund and the
fair market value of all REO Properties then included in the trust fund, which
may or may not result in full payment of the aggregate certificate balance plus
accrued interest and any undistributed shortfall in interest for the then
outstanding certificates. Any sale of trust fund assets will be without recourse
to the trust and/or
51
certificateholders, provided, however, that there can be no assurance that in
all events a court would accept such a contractual stipulation.
BOOK-ENTRY REGISTRATION AND DEFINITIVE CERTIFICATES
If so provided in the prospectus supplement, one or more classes of the
offered certificates of any series will be offered in book-entry format through
the facilities of DTC, and each such class will be represented by one or more
global certificates registered in the name of DTC or its nominee.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking corporation" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC holds securities that its participating organizations deposit
with DTC. DTC also facilitates the settlement among participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book entry changes in their accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
participants that maintain accounts with DTC include securities brokers and
dealers, banks, trust companies and clearing corporations and may include
certain other organizations. DTC is owned by a number of its direct participants
and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and
the National Association of Securities Dealers, Inc. Access to the DTC system
also is available to indirect participants in the DTC system such as securities
brokers and dealers, banks and trust companies that clear through or maintain a
custodial relationship with a direct participant in the DTC system, either
directly or indirectly. The rules applicable to DTC and its participants are on
file with the Securities and Exchange Commission.
Purchases of book-entry certificates under the DTC system must be made by
or through direct participants in the DTC system, which will receive a credit
for the book-entry certificates on DTC's records. A certificate owner's
ownership interest as an actual purchaser of a book-entry certificate will in
turn be recorded on the records of direct participants and indirect
participants. Certificate owners will not receive written confirmation from DTC
of their purchases, but certificate owners are expected to receive written
confirmations providing details of such transactions, as well as periodic
statements of their holdings, from the direct participant or indirect
participant through which each certificate owner entered into the transaction.
Transfers of ownership interest in the book-entry certificates will be
accomplished by entries made on the books of participants acting on behalf of
certificate owners. Certificate owners will not receive certificates
representing their ownership interests in the book-entry certificates, except in
the event that use of the book-entry system for the book-entry certificates of
any series is discontinued as described below.
DTC will not know the identity of actual certificate owners of the
book-entry certificates; DTC's records reflect only the identity of the direct
participants in the DTC system to whose accounts such certificates are credited.
The participants will remain responsible for keeping account of their holdings
on behalf of their customers. Notices and other communications conveyed by DTC
to direct participants in the DTC system, by direct participants to indirect
participants, and by direct participants and indirect participants to
certificate owners will be governed by arrangements among them, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Distributions on the book-entry certificates will be made to DTC. DTC's
practice is to credit direct participants' accounts on the related distribution
date in accordance with their respective holdings shown on DTC's records unless
DTC has reason to believe that it will not receive payment on such date.
Disbursement of such distributions by participants to certificate owners will be
governed by standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of each such participant (and not
of DTC, the depositor or any trustee or master servicer), subject to any
statutory or regulatory requirements as may be in effect from time to time.
Under a book-entry system, certificate owners may receive payments after the
related distribution date.
As may be provided in the prospectus supplement, the only
"certificateholder" (as such term is used in the related pooling and servicing
agreement) of a book-entry certificate will be the nominee of DTC,
52
and the certificate owners will not be recognized as certificateholders under
the pooling and servicing agreement. Certificate owners will be permitted to
exercise the rights of certificateholders under the related pooling and
servicing agreement only indirectly through the participants who in turn will
exercise their rights through DTC. The depositor is informed that DTC will take
action permitted to be taken by a certificateholder under a pooling and
servicing agreement only at the direction of one or more participants to whose
account with DTC interests in the book-entry certificates are credited.
Because DTC can act only on behalf of direct participants in the DTC
system, who in turn act on behalf of indirect participants and certain
certificate owners, the ability of a certificate owner to pledge its interest in
book-entry certificates to persons or entities that do not participate in the
DTC system, or otherwise take actions in respect of its interest in book-entry
certificates, may be limited due to the lack of a physical certificate
evidencing such interest.
As may be specified in the prospectus supplement, certificates initially
issued in book-entry form will be issued as definitive certificates to
certificate owners or their nominees, rather than to DTC or its nominee, only if
(i) the depositor advises the trustee in writing that DTC is no longer willing
or able to properly discharge its responsibilities as depository with respect to
such certificates and the depositor is unable to locate a qualified successor or
(ii) the depositor notifies DTC of its intent to terminate the book-entry system
through DTC with respect to such certificates and, upon receipt of notice of
such intent from DTC, the participants holding beneficial interests in the
certificates agree to initiate such termination. Upon the occurrence of either
of the events described in the preceding sentence, DTC will be required to
notify all participants of the availability through DTC of definitive
certificates. Upon surrender by DTC of the certificate or certificates
representing a class of book-entry certificates, together with instructions for
registration, the trustee or other designated party will be required to issue to
the certificate owners identified in such instructions the definitive
certificates to which they are entitled, and thereafter the holders of such
definitive certificates will be recognized as certificateholders under the
related pooling and servicing agreement.
DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS
GENERAL
The certificates of each series will be issued pursuant to a pooling and
servicing agreement or other agreement specified in the prospectus supplement.
In general, the parties to a pooling and servicing agreement will include the
depositor, the trustee, the master servicer and, in some cases, a special
servicer appointed as of the date of the pooling and servicing agreement.
However, a pooling and servicing agreement that relates to a trust fund that
consists solely of CMBS may not include a master servicer or other servicer as a
party. All parties to each pooling and servicing agreement under which
certificates of a series are issued will be identified in the prospectus
supplement.
A form of a pooling and servicing agreement has been filed as an exhibit to
the registration statement of which this prospectus is a part. However, the
provisions of each pooling and servicing agreement will vary depending upon the
nature of the certificates to be issued thereunder and the nature of the related
trust fund. The following summaries describe certain provisions that may appear
in a pooling and servicing agreement under which certificates that evidence
interests in mortgage loans will be issued. The prospectus supplement for a
series of certificates will describe any provision of the related pooling and
servicing agreement that materially differs from the description thereof
contained in this prospectus and, if the related trust fund includes CMBS, will
summarize all of the material provisions of the related pooling and servicing
agreement. The summaries in this prospectus do not purport to be complete and
are subject to, and are qualified in their entirety by reference to, all of the
provisions of the pooling and servicing agreement for each series of
certificates and the description of such provisions in the prospectus
supplement. As used in this prospectus with respect to any series, the term
"certificate" refers to all of the certificates of that series, whether or not
offered hereby and by the prospectus supplement, unless the context otherwise
requires.
ASSIGNMENT OF MORTGAGE ASSETS; REPURCHASES
As set forth in the prospectus supplement, generally at the time of
issuance of any series of certificates, the depositor will assign (or cause to
be assigned) to the designated trustee the mortgage loans
53
to be included in the related trust fund, together with, unless otherwise
specified in the prospectus supplement, all principal and interest to be
received on or with respect to such mortgage loans after the Cut-Off Date, other
than principal and interest due on or before the Cut-Off Date. The trustee will,
concurrently with such assignment, deliver the certificates to or at the
direction of the depositor in exchange for the mortgage loans and the other
assets to be included in the trust fund for such series. Each mortgage loan will
be identified in a schedule appearing as an exhibit to the related pooling and
servicing agreement. Such schedule generally will include detailed information
that pertains to each mortgage loan included in the related trust fund, which
information will typically include the address of the related mortgaged property
and type of such property; the mortgage interest rate and, if applicable, the
applicable index, gross margin, adjustment date and any rate cap information;
the original and remaining term to maturity; the original amortization term; the
original and outstanding principal balance; and the Loan-to-Value Ratio and Debt
Service Coverage Ratio as of the date indicated.
With respect to each mortgage loan to be included in a trust fund, the
depositor will deliver (or cause to be delivered) to the related trustee (or to
a custodian appointed by the trustee) certain loan documents which will include
the original mortgage note (or lost note affidavit) endorsed, without recourse,
to the order of the trustee, the original mortgage (or a certified copy thereof)
with evidence of recording indicated thereon and an assignment of the mortgage
to the trustee in recordable form. The related pooling and servicing agreement
will require that the depositor or other party thereto promptly cause each such
assignment of mortgage to be recorded in the appropriate public office for real
property records.
The related trustee (or the custodian appointed by the trustee) will be
required to review the mortgage loan documents within a specified period of days
after receipt thereof, and the trustee (or the custodian) will hold such
documents in trust for the benefit of the certificateholders of the related
series. Unless otherwise specified in the prospectus supplement, if any document
is found to be missing or defective, in either case such that interests of the
certificateholders are materially and adversely affected, the trustee (or such
custodian) will be required to notify the master servicer and the depositor, and
the master servicer will be required to notify the relevant seller of the
mortgage asset. In that case, and if the mortgage asset seller cannot deliver
the document or cure the defect within a specified number of days after receipt
of such notice, then unless otherwise specified in the prospectus supplement,
the mortgage asset seller will be obligated to replace the related mortgage loan
or repurchase it from the trustee at a price that will be specified in the
prospectus supplement.
If so provided in the prospectus supplement, the depositor will, as to some
or all of the mortgage loans, assign or cause to be assigned to the trustee the
related lease assignments. In certain cases, the trustee, or master servicer, as
applicable, may collect all moneys under the related leases and distribute
amounts, if any, required under the leases for the payment of maintenance,
insurance and taxes, to the extent specified in the related leases. The trustee,
or if so specified in the prospectus supplement, the master servicer, as agent
for the trustee, may hold the leases in trust for the benefit of the
certificateholders.
With respect to each CMBS in certificate form, the depositor will deliver
or cause to be delivered to the trustee (or the custodian) the original
certificate or other definitive evidence of such CMBS together with bond power
or other instruments, certifications or documents required to transfer fully
such CMBS to the trustee for the benefit of the certificateholders. With respect
to each CMBS in uncertificated or book-entry form or held through a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, the
depositor and the trustee will cause such CMBS to be registered directly or on
the books of such clearing corporation or of a financial intermediary in the
name of the trustee for the benefit of the certificateholders. Unless otherwise
provided in the prospectus supplement, the related pooling and servicing
agreement will require that either the depositor or the trustee promptly cause
any CMBS in certificated form not registered in the name of the trustee to be
reregistered, with the applicable persons, in the name of the trustee.
REPRESENTATIONS AND WARRANTIES; REPURCHASES
The depositor will, with respect to each mortgage loan in the related trust
fund, make or assign certain representations and warranties made by the
warranting party, covering, by way of example: (i) the
54
accuracy of the information set forth for such mortgage loan on the schedule of
mortgage loans appearing as an exhibit to the related pooling and servicing
agreement; (ii) the enforceability of the related mortgage note and mortgage and
the existence of title insurance insuring the lien priority of the related
mortgage; (iii) the warranting party's title to the mortgage loan and the
authority of the warranting party to sell the mortgage loan; and (iv) the
payment status of the mortgage loan. Each warranting party will be identified in
the prospectus supplement.
Unless otherwise provided in the prospectus supplement, each pooling and
servicing agreement will provide that the master servicer and/or trustee will be
required to notify promptly any warranting party of any breach of any
representation or warranty made by it in respect of a mortgage loan that
materially and adversely affects the interests of the related
certificateholders. If such warranting party cannot cure such breach within a
specified period following the date on which it was notified of such breach,
then, unless otherwise provided in the prospectus supplement, it will be
obligated to repurchase such mortgage loan from the trustee within a specified
period at a price that will be specified in the prospectus supplement. If so
provided in the prospectus supplement for a series of certificates, a warranting
party, in lieu of repurchasing a mortgage loan as to which a breach has
occurred, will have the option, exercisable upon certain conditions and/or
within a specified period after initial issuance of such series of certificates,
to replace such mortgage loan with one or more other mortgage loans, in
accordance with standards that will be described in the prospectus supplement.
This repurchase or substitution obligation may constitute the sole remedy
available to holders of certificates of any series for a breach of
representation and warranty by a warranting party. Moreover, neither the
depositor (unless it is the warranting party) nor any entity acting solely in
its capacity as the master servicer will be obligated to purchase or replace a
mortgage loan if a warranting party defaults on its obligation to do so.
The dates as of which representations and warranties have been made by a
warranting party will be specified in the prospectus supplement. In some cases,
such representations and warranties will have been made as of a date prior to
the date upon which the related series of certificates is issued, and thus may
not address events that may occur following the date as of which they were made.
However, the depositor will not include any mortgage loan in the trust fund for
any series of certificates if anything has come to the depositor's attention
that would cause it to believe that the representations and warranties made in
respect of such mortgage loan will not be accurate in all material respects as
of such date of issuance.
CERTIFICATE ACCOUNT
General. The master servicer and/or the trustee will, as to each trust
fund, establish and maintain or cause to be established and maintained
certificate accounts for the collection of payments on the related mortgage
loans, which will be established so as to comply with the standards of each
rating agency that has rated any one or more classes of certificates of the
related series. As described in the prospectus supplement, a certificate account
may be maintained either as an interest-bearing or a non-interest-bearing
account, and the funds held therein may be held as cash or invested in permitted
investments, such as United States government securities and other investment
grade obligations specified in the related pooling and servicing agreement. Any
interest or other income earned on funds in the certificate account will be paid
to the related master servicer or trustee as additional compensation. If
permitted by such rating agency or agencies and so specified in the prospectus
supplement, a certificate account may contain funds relating to more than one
series of mortgage pass-through certificates and may contain other funds
representing payments on mortgage loans owned by the related master servicer or
serviced by it on behalf of others.
Deposits. Unless otherwise provided in the related pooling and servicing
agreement and described in the prospectus supplement, the related master
servicer, trustee or special servicer will be required to deposit or cause to be
deposited in the certificate account for each trust fund within a certain period
following receipt (in the case of collections and payments), the following
payments and collections received, or advances made, by the master servicer, the
trustee or any special servicer subsequent to the Cut-Off Date (other than
payments due on or before the Cut-Off Date):
55
(i) all payments on account of principal, including principal
prepayments, on the mortgage loans;
(ii) all payments on account of interest on the mortgage loans,
including any default interest collected, in each case net of any portion
thereof retained by the master servicer, any special servicer or
sub-servicer as its servicing compensation or as compensation to the
trustee;
(iii) all insurance proceeds received under any hazard, title or other
insurance policy that provides coverage with respect to a mortgaged
property or the related mortgage loan (other than proceeds applied to the
restoration of the property or released to the related borrower in
accordance with the customary servicing practices of the master servicer
(or, if applicable, a special servicer) and/or the terms and conditions of
the related mortgage and all other liquidation proceeds received and
retained in connection with the liquidation of defaulted mortgage loans or
property acquired in respect thereof, by foreclosure or otherwise, together
with the Net Operating Income (less reasonable reserves for future
expenses) derived from the operation of any mortgaged properties acquired
by the trust fund through foreclosure or otherwise;
(iv) any amounts paid under any instrument or drawn from any fund that
constitutes credit support for the related series of certificates as
described under "Description of Credit Support;"
(v) any advances made as described under "Description of the
Certificate--Advances in Respect of Delinquencies;"
(vi) any amounts paid under any cash flow agreement, as described
under "Description of the Trust Funds--Cash Flow Agreements;"
(vii) all liquidation proceeds resulting from the purchase of any
mortgage loan, or property acquired in respect thereof, by the depositor,
any mortgage asset seller or any other specified person as described under
"--Assignment of Mortgage Assets; Repurchases" and "--Representations and
Warranties; Repurchases," all liquidation proceeds resulting from the
purchase of any defaulted mortgage loan as described under "--Realization
Upon Defaulted Mortgage Loans," and all liquidation proceeds resulting from
any mortgage asset purchased as described under "Description of the
Certificates--Termination;"
(viii) any amounts paid by the master servicer to cover prepayment
interest shortfalls arising out of the prepayment of mortgage loans as
described under "--Servicing Compensation and Payment of Expenses;"
(ix) to the extent that any such item does not constitute additional
servicing compensation to the master servicer or a special servicer, any
payments on account of modification or assumption fees, late payment
charges, prepayment premiums or lenders' equity participations on the
mortgage loans;
(x) all payments required to be deposited in the certificate account
with respect to any deductible clause in any blanket insurance policy
described under "--Hazard Insurance Policies;"
(xi) any amount required to be deposited by the master servicer or the
trustee in connection with losses realized on investments for the benefit
of the master servicer or the trustee, as the case may be, of funds held in
the certificate account; and
(xii) any other amounts required to be deposited in the certificate
account as provided in the related pooling and servicing agreement and
described in the prospectus supplement.
Withdrawals. Unless otherwise provided in the related pooling and servicing
agreement and described in the prospectus supplement, the master servicer,
trustee or special servicer may make withdrawals from the certificate account
for each trust fund for any of the following purposes:
(i) to make distributions to the certificateholders on each
distribution date;
(ii) to reimburse the master servicer or any other specified person
for unreimbursed amounts advanced by it as described under "Description of
the Certificates--Advances in Respect of Delinquencies," such reimbursement
to be made out of amounts received which were identified
56
and applied by the master servicer as late collections of interest (net of
related servicing fees) on and principal of the particular mortgage loans
with respect to which the advances were made or out of amounts drawn under
any form of credit support with respect to such mortgage loans;
(iii) to reimburse the master servicer or a special servicer for
unpaid servicing fees earned by it and certain unreimbursed servicing
expenses incurred by it with respect to mortgage loans in the trust fund
and properties acquired in respect thereof, such reimbursement to be made
out of amounts that represent liquidation proceeds and insurance proceeds
collected on the particular mortgage loans and properties, and net income
collected on the particular properties, with respect to which such fees
were earned or such expenses were incurred or out of amounts drawn under
any form of credit support with respect to such mortgage loans and
properties;
(iv) to reimburse the master servicer or any other specified person
for any advances described in clause (ii) above made by it, any servicing
expenses referred to in clause (iii) above incurred by it and any servicing
fees earned by it, which, in the good faith judgment of the master servicer
or such other person, will not be recoverable from the amounts described in
clauses (ii) and (iii), respectively, such reimbursement to be made from
amounts collected on other mortgage loans in the related trust fund or, if
and to the extent so provided by the related pooling and servicing
agreement and described in the prospectus supplement, only from that
portion of amounts collected on such other mortgage loans that is otherwise
distributable on one or more classes of subordinate certificates of the
related series;
(v) if and to the extent described in the prospectus supplement, to
pay the master servicer, a special servicer or another specified entity
(including a provider of credit support) interest accrued on the advances
described in clause (ii) above made by it and the servicing expenses
described in clause (iii) above incurred by it while such remain
outstanding and unreimbursed;
(vi) to pay for costs and expenses incurred by the trust fund for
environmental site assessments performed with respect to mortgaged
properties that constitute security for defaulted mortgage loans, and for
any containment, clean-up or remediation of hazardous wastes and materials
present on such mortgaged properties, as described under "--Realization
Upon Defaulted Mortgage Loans;"
(vii) to reimburse the master servicer, the depositor, or any of their
respective directors, officers, employees and agents, as the case may be,
for certain expenses, costs and liabilities incurred thereby, as and to the
extent described under "--Certain Matters Regarding the Master Servicer and
the Depositor;"
(viii) if and to the extent described in the prospectus supplement, to
pay the fees of the trustee;
(ix) to reimburse the trustee or any of its directors, officers,
employees and agents, as the case may be, for certain expenses, costs and
liabilities incurred thereby, as and to the extent described under
"--Certain Matters Regarding the Trustee;"
(x) to pay the master servicer or the trustee, as additional
compensation, interest and investment income earned in respect of amounts
held in the certificate account and, to the extent described in the
prospectus supplement, prepayment interest excesses collected from
borrowers in connection with prepayments of mortgage loans and late charges
and default interest collected from borrowers;
(xi) to pay (generally from related income) for costs incurred in
connection with the operation, management and maintenance of any mortgaged
property acquired by the trust fund by foreclosure or otherwise;
(xii) if one or more elections have been made to treat the trust fund
or designated portions thereof as a REMIC, to pay any federal, state or
local taxes imposed on the trust fund or its assets or transactions, as and
to the extent described under "Material Federal Income Tax Consequences--
Taxation of Owners of REMIC Residual Certificates--Prohibited Transactions
Tax and Other Taxes;"
57
(xiii) to pay for the cost of an independent appraiser or other expert
in real estate matters retained to determine a fair sale price for a
defaulted mortgage loan or a property acquired in respect thereof in
connection with the liquidation of such mortgage loan or property;
(xiv) to pay for the cost of various opinions of counsel obtained
pursuant to the related pooling and servicing agreement for the benefit of
certificateholders;
(xv) to pay for the cost of recording the pooling and servicing
agreement if recorded in accordance with the pooling and servicing
agreement;
(xvi) to make any other withdrawals permitted by the related pooling
and servicing agreement and described in the prospectus supplement; and
(xvii) to clear and terminate the certificate account upon the
termination of the trust fund.
COLLECTION AND OTHER SERVICING PROCEDURES
Master Servicer. The master servicer for any mortgage pool, directly or
through sub-servicers, will be required to make reasonable efforts to collect
all scheduled mortgage loan payments and will be required to follow such
collection procedures as it would follow with respect to mortgage loans that are
comparable to such mortgage loans and held for its own account, provided such
procedures are consistent with (i) the terms of the related pooling and
servicing agreement and any related instrument of credit support included in the
related trust fund, (ii) applicable law and (iii) the servicing standard
specified in the pooling and servicing agreement.
The master servicer will also be required to perform other customary
functions of a servicer of comparable loans, including maintaining escrow or
impound accounts for payment of taxes, insurance premiums and similar items, or
otherwise monitoring the timely payment of those items; attempting to collect
delinquent payments; supervising foreclosures; conducting property inspections
on a periodic or other basis; managing REO Properties; and maintaining servicing
records relating to the mortgage loans. Generally, the master servicer will be
responsible for filing and settling claims in respect of particular mortgage
loans under any applicable instrument of credit support. See "Description of
Credit Support."
A master servicer may agree to modify, waive or amend any term of any
mortgage loan serviced by it in a manner consistent with the servicing standard
specified in the pooling and servicing agreement; provided that the
modification, waiver or amendment will not (i) affect the amount or timing of
any scheduled payments of principal or interest on the mortgage loan or (ii) in
the judgment of the master servicer, materially impair the security for the
mortgage loan or reduce the likelihood of timely payment of amounts due thereon.
A master servicer also may agree to any other modification, waiver or amendment
if, in its judgment (x) a material default on the mortgage loan has occurred or
a payment default is imminent and (y) such modification, waiver or amendment is
reasonably likely to produce a greater recovery with respect to the mortgage
loan on a present value basis than would liquidation.
Sub-Servicers. A master servicer may delegate its servicing obligations in
respect of the mortgage loans serviced by it to one or more third-party
sub-servicers, but the master servicer will remain liable for such obligations
under the related pooling and servicing agreement unless otherwise provided in
the prospectus supplement. Unless otherwise provided in the prospectus
supplement, each sub-servicing agreement between a master servicer and a
sub-servicer must provide that, if for any reason the master servicer is no
longer acting in such capacity, the trustee or any successor master servicer may
assume the master servicer's rights and obligations under such sub-servicing
agreement.
Generally, the master servicer will be solely liable for all fees owed by
it to any sub-servicer, irrespective of whether the master servicer's
compensation pursuant to the related pooling and servicing agreement is
sufficient to pay such fees. Each sub-servicer will be reimbursed by the master
servicer for certain expenditures which it makes, generally to the same extent
the master servicer would be reimbursed under a pooling and servicing agreement.
See "--Certificate Account" and "--Servicing Compensation and Payment of
Expenses."
Special Servicers. If and to the extent specified in the prospectus
supplement, a special servicer may be a party to the related pooling and
servicing agreement or may be appointed by the master servicer or
58
another specified party to perform certain specified duties (for example, the
servicing of defaulted mortgage loans) in respect of the servicing of the
related mortgage loans. The special servicer under a pooling and servicing
agreement may be an affiliate of the depositor and may have other normal
business relationships with the depositor or the depositor's affiliates. The
master servicer will be liable for the performance of a special servicer only
if, and to the extent, set forth in the prospectus supplement.
Each pooling and servicing agreement may provide that neither the special
servicer nor any director, officer, employee or agent of the special servicer
will be under any liability to the related trust fund or certificateholders for
any action taken, or not taken, in good faith pursuant to the pooling and
servicing agreement or for errors in judgment; provided, however, that neither
the special servicer nor any such person will be protected against any breach of
a representation, warranty or covenant made in such pooling and servicing
agreement, or against any expense or liability that such person is specifically
required to bear pursuant to the terms of such pooling and servicing agreement,
or against any liability that would otherwise be imposed by reason of
misfeasance, bad faith or negligence in the performance of obligations or duties
thereunder.
REALIZATION UPON DEFAULTED MORTGAGE LOANS
A borrower's failure to make required mortgage loan payments may mean that
operating income is insufficient to service the mortgage debt, or may reflect
the diversion of that income from the servicing of the mortgage debt. In
addition, a borrower that is unable to make mortgage loan payments may also be
unable to make timely payment of taxes and to otherwise maintain and insure the
related mortgaged property. In general, the related master servicer will be
required to monitor any mortgage loan that is in default, evaluate whether the
causes of the default can be corrected over a reasonable period without
significant impairment of the value of the related mortgaged property, initiate
corrective action in cooperation with the borrower if cure is likely, inspect
the related mortgaged property and take such other actions as are consistent
with the servicing standard specified in the pooling and servicing agreement. A
significant period of time may elapse before the master servicer is able to
assess the success of any such corrective action or the need for additional
initiatives.
The time within which the master servicer can make the initial
determination of appropriate action, evaluate the success of corrective action,
develop additional initiatives, institute foreclosure proceedings and actually
foreclose (or accept a deed to a mortgaged property in lieu of foreclosure) on
behalf of the certificateholders may vary considerably depending on the
particular mortgage loan, the mortgaged property, the borrower, the presence of
an acceptable party to assume the mortgage loan and the laws of the jurisdiction
in which the mortgaged property is located. If a borrower files a bankruptcy
petition, the master servicer may not be permitted to accelerate the maturity of
the related mortgage loan or to foreclose on the mortgaged property for a
considerable period of time. See "Certain Legal Aspects of Mortgage Loans and
Leases."
A pooling and servicing agreement may grant to the master servicer, a
special servicer, a provider of credit support and/or the holder or holders of
certain classes of certificates of the related series a right of first refusal
to purchase from the trust fund, at a predetermined purchase price (which, if
insufficient to fully fund the entitlements of certificateholders to principal
and interest thereon, will be specified in the prospectus supplement), any
mortgage loan as to which a specified number of scheduled payments are
delinquent. In addition, the prospectus supplement may specify other methods for
the sale or disposal of defaulted mortgage loans pursuant to the terms of the
related pooling and servicing agreement.
If a default on a mortgage loan has occurred, the master servicer, on
behalf of the trustee, may at any time institute foreclosure proceedings,
exercise any power of sale contained in the related mortgage, obtain a deed in
lieu of foreclosure, or otherwise acquire title to the related mortgaged
property, by operation of law or otherwise, if such action is consistent with
the servicing standard specified in the pooling and servicing agreement. Unless
otherwise specified in the prospectus supplement, the master servicer may not,
however, acquire title to any mortgaged property or take any other action that
would cause the trustee, for the benefit of certificateholders of the related
series, or any other specified person to be considered to hold title to, to be a
"mortgagee-in-possession" of, or to be an "owner" or an "operator" of, such
mortgaged property within the meaning of certain federal environmental laws,
unless
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the master servicer has previously determined, based on a report prepared by a
person who regularly conducts environmental audits (which report will be an
expense of the trust fund), that:
(i) either the mortgaged property is in compliance with applicable
environmental laws and regulations or, if not, that taking such actions as
are necessary to bring the mortgaged property into compliance therewith is
reasonably likely to produce a greater recovery on a present value basis
than not taking such actions; and
(ii) either there are no circumstances or conditions present at the
mortgaged property relating to the use, management or disposal of hazardous
materials for which investigation, testing, monitoring, containment,
cleanup or remediation could be required under any applicable environmental
laws and regulations or, if such circumstances or conditions are present
for which any such action could reasonably be expected to be required,
taking such actions with respect to the mortgaged property is reasonably
likely to produce a greater recovery on a present value basis than not
taking such actions. See "Certain Legal Aspects of Mortgage Loans and
Leases--Environmental Considerations."
If title to any mortgaged property is acquired by a trust fund as to which
a REMIC election has been made, the master servicer, on behalf of the trust
fund, will be required to sell the mortgaged property by the end of the third
calendar year following the year of acquisition or unless (i) the Internal
Revenue Service grants an extension of time to sell such property or (ii) the
trustee receives an opinion of independent counsel to the effect that the
holding of the property by the trust fund for more than three years after the
end of the calendar year in which it was acquired will not result in the
imposition of a tax on the trust fund or cause the trust fund to fail to qualify
as a REMIC under the Code at any time that any certificate is outstanding.
Subject to the foregoing, the master servicer will generally be required to
solicit bids for any mortgaged property so acquired in such a manner as will be
reasonably likely to realize a fair price for such property. If the trust fund
acquires title to any mortgaged property, the master servicer, on behalf of the
trust fund, may retain an independent contractor to manage and operate such
property. The retention of an independent contractor, however, will not relieve
the master servicer of its obligation to manage such mortgaged property in a
manner consistent with the servicing standard specified in the pooling and
servicing agreement.
If liquidation proceeds collected with respect to a defaulted mortgage loan
are less than the outstanding principal balance of the defaulted mortgage loan
plus interest accrued thereon plus the aggregate amount of reimbursable expenses
incurred by the master servicer with respect to such mortgage loan, the trust
fund will realize a loss in the amount of such difference. The master servicer
will be entitled to reimburse itself from the liquidation proceeds recovered on
any defaulted mortgage loan (prior to the distribution of such liquidation
proceeds to certificateholders), amounts that represent unpaid servicing
compensation in respect of the mortgage loan, unreimbursed servicing expenses
incurred with respect to the mortgage loan and any unreimbursed advances of
delinquent payments made with respect to the mortgage loan.
HAZARD INSURANCE POLICIES
Each pooling and servicing agreement may require the related master
servicer to cause each mortgage loan borrower to maintain a hazard insurance
policy that provides for such coverage as is required under the related mortgage
or, if the mortgage permits the holder thereof to dictate to the borrower the
insurance coverage to be maintained on the related mortgaged property, such
coverage as is consistent with the requirements of the servicing standard
specified in the pooling and servicing agreement. Such coverage generally will
be in an amount equal to the lesser of the principal balance owing on such
mortgage loan and the replacement cost of the mortgaged property, but in either
case not less than the amount necessary to avoid the application of any
co-insurance clause contained in the hazard insurance policy. The ability of the
master servicer to assure that hazard insurance proceeds are appropriately
applied may be dependent upon its being named as an additional insured under any
hazard insurance policy and under any other insurance policy referred to below,
or upon the extent to which information concerning covered losses is furnished
by borrowers. All amounts collected by the master servicer under any such policy
(except for amounts to be applied to the restoration or repair of the
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mortgaged property or released to the borrower in accordance with the master
servicer's normal servicing procedures and/or to the terms and conditions of the
related mortgage and mortgage note) will be deposited in the related certificate
account. The pooling and servicing agreement may provide that the master
servicer may satisfy its obligation to cause each borrower to maintain such a
hazard insurance policy by maintaining a blanket policy insuring against hazard
losses on all of the mortgage loans in the related trust fund. If such blanket
policy contains a deductible clause, the master servicer will be required, in
the event of a casualty covered by such blanket policy, to deposit in the
related certificate account all sums that would have been deposited therein but
for such deductible clause.
In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements of the property by fire,
lightning, explosion, smoke, windstorm and hail, riot, strike and civil
commotion, subject to the conditions and exclusions specified in each policy.
Although the policies covering the mortgaged properties will be underwritten by
different insurers under different state laws in accordance with different
applicable state forms, and therefore will not contain identical terms and
conditions, most such policies typically do not cover any physical damage
resulting from war, revolution, governmental actions, terrorism, floods and
other water-related causes, earth movement (including earthquakes, landslides
and mudflows), wet or dry rot, vermin, domestic animals and certain other kinds
of risks.
The hazard insurance policies covering the mortgaged properties will
typically contain co-insurance clauses that in effect require an insured at all
times to carry insurance of a specified percentage (generally 80% to 90%) of the
full replacement value of the improvements on the property in order to recover
the full amount of any partial loss. If the insured's coverage falls below this
specified percentage, such clauses generally provide that the insurer's
liability in the event of partial loss does not exceed the lesser of (i) the
replacement cost of the improvements less physical depreciation and (ii) such
proportion of the loss as the amount of insurance carried bears to the specified
percentage of the full replacement cost of such improvements.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS
Certain of the mortgage loans may contain a due-on-sale clause that
entitles the lender to accelerate payment of the mortgage loan upon any sale or
other transfer of the related mortgaged property made without the lender's
consent. Certain of the mortgage loans may also contain a due-on-encumbrance
clause that entitles the lender to accelerate the maturity of the mortgage loan
upon the creation of any other lien or encumbrance upon the mortgaged property.
The master servicer will determine whether to exercise any right the trustee may
have under any such provision in a manner consistent with the servicing standard
specified in the pooling and servicing agreement. Unless otherwise specified in
the prospectus supplement, the master servicer will be entitled to retain as
additional servicing compensation any fee collected in connection with the
permitted transfer of a mortgaged property. See "Certain Legal Aspects of
Mortgage Loans and Leases--Due-on-Sale and Due-on-Encumbrance."
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Generally, a master servicer's primary servicing compensation with respect
to a series of certificates will come from the periodic payment to it of a
portion of the interest payments on each mortgage loan in the related trust
fund. Since that compensation is generally based on a percentage of the
principal balance of each such mortgage loan outstanding from time to time, it
will decrease in accordance with the amortization of the mortgage loans. The
prospectus supplement with respect to a series of certificates may provide that,
as additional compensation, the master servicer may retain all or a portion of
late payment charges, prepayment premiums, modification fees and other fees
collected from borrowers and any interest or other income that may be earned on
funds held in the certificate account. Any sub-servicer will receive a portion
of the master servicer's compensation as its sub-servicing compensation.
In addition to amounts payable to any sub-servicer, a master servicer may
be required, to the extent provided in the prospectus supplement, to pay from
amounts that represent its servicing compensation certain expenses incurred in
connection with the administration of the related trust fund, including, without
limitation, payment of the fees and disbursements of independent accountants and
payment of
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expenses incurred in connection with distributions and reports to
certificateholders. Certain other expenses, including certain expenses related
to mortgage loan defaults and liquidations and, to the extent so provided in the
prospectus supplement, interest on such expenses at the rate specified therein,
and the fees of the trustee and any special servicer, may be required to be
borne by the trust fund.
If and to the extent provided in the prospectus supplement, the master
servicer may be required to apply a portion of the servicing compensation
otherwise payable to it in respect of any period to prepayment interest
shortfalls.
See "Yield Considerations--Shortfalls in Collections of Interest Resulting
from Prepayments."
EVIDENCE AS TO COMPLIANCE
Each pooling and servicing agreement may require that, on or before a
specified date in each year, the master servicer cause a firm of independent
public accountants to furnish a statement to the trustee to the effect that,
based on an examination by such firm conducted substantially in compliance with
the Uniform Single Audit Program for Mortgage Bankers, the servicing by or on
behalf of the master servicer of mortgage loans under pooling and servicing
agreements substantially similar to each other (which may include the related
pooling and servicing agreement) was conducted through the preceding calendar
year or other specified twelve-month period in compliance with the terms of such
agreements except for any significant exceptions or errors in records that, in
the opinion of such firm, paragraph 4 of the Uniform Single Audit Program for
Mortgage Bankers requires it to report. Each pooling and servicing agreement
will also provide for delivery to the trustee, on or before a specified date in
each year, of a statement signed by one or more officers of the master servicer
to the effect that the master servicer has fulfilled its material obligations
under the pooling and servicing agreement throughout the preceding calendar year
or other specified twelve-month period.
Copies of the annual accountants' statement and the statement of officers
of a master servicer will be made available to certificateholders upon written
request to the master servicer.
CERTAIN MATTERS REGARDING THE MASTER SERVICER AND THE DEPOSITOR
The master servicer under a pooling and servicing agreement may be an
affiliate of the depositor and may have other normal business relationships with
the depositor or the depositor's affiliates. The related pooling and servicing
agreement may permit the master servicer to resign from its obligations
thereunder upon a determination that such obligations are no longer permissible
under applicable law or are in material conflict by reason of applicable law
with any other activities carried on by it at the date of the pooling and
servicing agreement. Unless applicable law requires the master servicer's
resignation to be effective immediately, no such resignation will become
effective until the trustee or a successor servicer has assumed the master
servicer's obligations and duties under the pooling and servicing agreement. The
related pooling and servicing agreement may also provide that the master
servicer may resign at any other time provided that (i) a willing successor
master servicer has been found, (ii) each of the rating agencies that has rated
any one or more classes of certificates of the related series confirms in
writing that the successor's appointment will not result in a withdrawal,
qualification or downgrade of any rating or ratings assigned to any such class
of certificates, (iii) the resigning party pays all costs and expenses in
connection with such transfer, and (iv) the successor accepts appointment prior
to the effectiveness of such resignation. Unless otherwise specified in the
prospectus supplement, the master servicer will also be required to maintain a
fidelity bond and errors and omissions policy that provides coverage against
losses that may be sustained as a result of an officer's or employee's
misappropriation of funds, errors and omissions or negligence, subject to
certain limitations as to amount of coverage, deductible amounts, conditions,
exclusions and exceptions.
Each pooling and servicing agreement may further provide that none of the
master servicer, the depositor and any director, officer, employee or agent of
either of them will be under any liability to the related trust fund or
certificateholders for any action taken, or not taken, in good faith pursuant to
the pooling and servicing agreement or for errors in judgment; provided,
however, that none of the master servicer, the depositor and any such person
will be protected against any breach of a representation,
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warranty or covenant made in such pooling and servicing agreement, or against
any expense or liability that such person is specifically required to bear
pursuant to the terms of such pooling and servicing agreement, or against any
liability that would otherwise be imposed by reason of misfeasance, bad faith or
negligence in the performance of obligations or duties thereunder. Unless
otherwise specified in the prospectus supplement, each pooling and servicing
agreement will further provide that the master servicer, the depositor and any
director, officer, employee or agent of either of them will be entitled to
indemnification by the related trust fund against any loss, liability or expense
incurred in connection with the pooling and servicing agreement or the related
series of certificates; provided, however, that such indemnification will not
extend to any loss, liability or expense (i) that such person is specifically
required to bear pursuant to the terms of such agreement, and is not
reimbursable pursuant to the pooling and servicing agreement; (ii) incurred in
connection with any breach of a representation, warranty or covenant made in the
pooling and servicing agreement; (iii) incurred by reason of misfeasance, bad
faith or negligence in the performance of obligations or duties under the
pooling and servicing agreement. In addition, each pooling and servicing
agreement will provide that neither the master servicer nor the depositor will
be under any obligation to appear in, prosecute or defend any legal action
unless such action is related to its respective duties under the pooling and
servicing agreement and, unless it has received sufficient assurance as to the
reimbursement of the costs and liabilities of such legal action or, in its
opinion such legal action does not involve it in any expense or liability.
However, each of the master servicer and the depositor will be permitted, in the
exercise of its discretion, to undertake any such action that it may deem
necessary or desirable with respect to the enforcement and/or protection of the
rights and duties of the parties to the pooling and servicing agreement and the
interests of the certificateholders thereunder. In such event, the legal
expenses and costs of such action, and any liability resulting therefrom, will
be expenses, costs and liabilities of the certificateholders, and the master
servicer or the depositor, as the case may be, will be entitled to charge the
related certificate account therefor.
Subject, in certain circumstances, to the satisfaction of certain
conditions that may be required in the related pooling and servicing agreement,
any person into which the master servicer or the depositor may be merged or
consolidated, or any person resulting from any merger or consolidation to which
the master servicer or the depositor is a party, or any person succeeding to the
business of the master servicer or the depositor, will be the successor of the
master servicer or the depositor, as the case may be, under the related pooling
and servicing agreement.
EVENTS OF DEFAULT
The events of default for a series of certificates under the related
pooling and servicing agreement generally will include (i) any failure by the
master servicer to distribute or cause to be distributed to certificateholders,
or to remit to the trustee for distribution to certificateholders in a timely
manner, any amount required to be so distributed or remitted, provided that such
failure is permitted so long as the failure is corrected by 10:00 a.m. on the
related distribution date, (ii) any failure by the master servicer or the
special servicer duly to observe or perform in any material respect any of its
other covenants or obligations under the pooling and servicing agreement which
continues unremedied for 30 days after written notice of such failure has been
given to the master servicer or the special servicer, as applicable, by any
party to the pooling and servicing agreement, or to the master servicer or the
special servicer, as applicable, by certificateholders entitled to not less than
25% (or such other percentage specified in the prospectus supplement) of the
voting rights for such series (subject to certain extensions provided in the
related pooling and servicing agreement); and (iii) certain events of
insolvency, readjustment of debt, marshaling of assets and liabilities or
similar proceedings in respect of or relating to the master servicer or the
special servicer and certain actions by or on behalf of the master servicer or
the special servicer indicating its insolvency or inability to pay its
obligations. Material variations to the foregoing events of default (other than
to add thereto or shorten cure periods or eliminate notice requirements) will be
specified in the prospectus supplement.
RIGHTS UPON EVENT OF DEFAULT
So long as an event of default under a pooling and servicing agreement
remains unremedied, the depositor or the trustee will be authorized, and at the
direction of certificateholders entitled to not less
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than 25% (or such other percentage specified in the prospectus supplement) of
the voting rights for such series, the trustee will be required, to terminate
all of the rights and obligations of the master servicer as master servicer
under the pooling and servicing agreement, whereupon the trustee will succeed to
all of the responsibilities, duties and liabilities of the master servicer under
the pooling and servicing agreement (except that if the master servicer is
required to make advances in respect of mortgage loan delinquencies, but the
trustee is prohibited by law from obligating itself to do so, or if the
prospectus supplement so specifies, the trustee will not be obligated to make
such advances) and will be entitled to similar compensation arrangements. If the
trustee is unwilling or unable so to act, it may (or, at the written request of
certificateholders entitled to at least 51% (or such other percentage specified
in the prospectus supplement) of the voting rights for such series, it will be
required to) appoint, or petition a court of competent jurisdiction to appoint,
a loan servicing institution that (unless otherwise provided in the prospectus
supplement) is acceptable to each rating agency that assigned ratings to the
offered certificates of such series to act as successor to the master servicer
under the pooling and servicing agreement. Pending such appointment, the trustee
will be obligated to act in such capacity.
No certificateholder will have the right under any pooling and servicing
agreement to institute any proceeding with respect thereto unless such holder
previously has given to the trustee written notice of default and unless
certificateholders entitled to at least 25% (or such other percentage specified
in the prospectus supplement) of the voting rights for the related series shall
have made written request upon the trustee to institute such proceeding in its
own name as trustee thereunder and shall have offered to the trustee reasonable
indemnity, and the trustee for 60 days (or such other period specified in the
prospectus supplement) shall have neglected or refused to institute any such
proceeding. The trustee, however, will be under no obligation to exercise any of
the trusts or powers vested in it by any pooling and servicing agreement or to
make any investigation of matters arising thereunder or to institute, conduct or
defend any litigation thereunder or in relation thereto at the request, order or
direction of any of the holders of certificates of the related series, unless
such certificateholders have offered to the trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby.
AMENDMENT
Each pooling and servicing agreement may be amended by the parties thereto,
without the consent of any of the holders of the related certificates, (i) to
cure any ambiguity, (ii) to correct, modify or supplement any provision in the
pooling and servicing agreement that may be inconsistent with any other
provision therein, (iii) to add any other provisions with respect to matters or
questions arising under the pooling and servicing agreement that are not
inconsistent with the provisions thereof, (iv) to comply with any requirements
imposed by the Code or (v) for any other purpose; provided that such amendment
(other than an amendment for the purpose specified in clause (iv) above) may not
(as evidenced by an opinion of counsel to such effect satisfactory to the
trustee) adversely affect in any material respect the interests of any such
holder. Each pooling and servicing agreement may also be amended for any purpose
by the parties, with the consent of certificateholders entitled to at least 51%
(or such other percentage specified in the prospectus supplement) of the voting
rights for the related series allocated to the affected classes; provided,
however, that no such amendment may (x) reduce in any manner the amount of, or
delay the timing of, payments received or advanced on mortgage loans that are
required to be distributed in respect of any certificate without the consent of
the holder of such certificate, (y) adversely affect in any material respect the
interests of the holders of any class of certificates, in a manner other than as
described in clause (x), without the consent of the holders of all certificates
of such class or (z) modify the provisions of the pooling and servicing
agreement described in this paragraph without the consent of the holders of all
certificates of the related series. However, unless otherwise specified in the
related pooling and servicing agreement, the trustee will be prohibited from
consenting to any amendment of a pooling and servicing agreement pursuant to
which a REMIC election is to be or has been made unless the trustee shall first
have received an opinion of counsel to the effect that such amendment will not
result in the imposition of a tax on the related trust fund or cause the related
trust fund to fail to qualify as a REMIC at any time that the related
certificates are outstanding.
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LIST OF CERTIFICATEHOLDERS
Upon written request of any certificateholder of record made for purposes
of communicating with other holders of certificates of the same series with
respect to their rights under the related pooling and servicing agreement, the
trustee or other specified person will afford such certificateholder access,
during normal business hours, to the most recent list of certificateholders of
that series then maintained by such person.
THE TRUSTEE
The trustee under each pooling and servicing agreement will be named in the
related prospectus supplement. The commercial bank, national banking
association, banking corporation or trust company that serves as trustee may
have typical banking relationships with the depositor and its affiliates and
with any master servicer and its affiliates.
DUTIES OF THE TRUSTEE
The trustee for a series of certificates will make no representation as to
the validity or sufficiency of the related pooling and servicing agreement, the
certificates or any mortgage loan or related document and will not be
accountable for the use or application by or on behalf of any master servicer of
any funds paid to the master servicer or any special servicer in respect of the
certificates or the mortgage loans, or any funds deposited into or withdrawn
from the certificate account or any other account by or on behalf of the master
servicer or any special servicer. If no event of default under a related pooling
and servicing agreement has occurred and is continuing, the trustee will be
required to perform only those duties specifically required under the related
pooling and servicing agreement. However, upon receipt of any of the various
certificates, reports or other instruments required to be furnished to it
pursuant to the pooling and servicing agreement, the trustee will be required to
examine such documents and to determine whether they conform to the requirements
of the pooling and servicing agreement.
CERTAIN MATTERS REGARDING THE TRUSTEE
The trustee for a series of certificates may be entitled to
indemnification, from amounts held in the related certificate account, for any
loss, liability or expense incurred by the trustee in connection with the
trustee's acceptance or administration of its trusts under the related pooling
and servicing agreement; provided, however, that such indemnification will not
extend to any loss, liability or expense that constitutes a specific liability
imposed on the trustee pursuant to the pooling and servicing agreement, or to
any loss, liability or expense incurred by reason of willful misfeasance, bad
faith or negligence on the part of the trustee in the performance of its
obligations and duties thereunder, or by reason of its reckless disregard of
such obligations or duties, or as may arise from a breach of any representation,
warranty or covenant of the trustee made in the pooling and servicing agreement.
As and to the extent described in the prospectus supplement, the fees and normal
disbursements of any trustee may be the expense of the related master servicer
or other specified person or may be required to be borne by the related trust
fund.
RESIGNATION AND REMOVAL OF THE TRUSTEE
The trustee for a series of certificates will be permitted at any time to
resign from its obligations and duties under the related pooling and servicing
agreement by giving written notice thereof to the depositor. Upon receiving such
notice of resignation, the master servicer (or such other person as may be
specified in the prospectus supplement) will be required to use reasonable
efforts to promptly appoint a successor trustee. If no successor trustee shall
have accepted an appointment within a specified period after the giving of such
notice of resignation, the resigning trustee may petition any court of competent
jurisdiction to appoint a successor trustee.
Unless otherwise provided in the prospectus supplement, if at any time the
trustee ceases to be eligible to continue as such under the related pooling and
servicing agreement, or if at any time the trustee becomes incapable of acting,
or if certain events of (or proceedings in respect of) bankruptcy or insolvency
occur with respect to the trustee, the depositor will be authorized to remove
the trustee and
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appoint a successor trustee. In addition, unless otherwise provided in the
prospectus supplement, holders of the certificates of any series entitled to at
least 51% (or such other percentage specified in the prospectus supplement) of
the voting rights for such series may at any time (with or without cause) remove
the trustee and appoint a successor trustee.
Any resignation or removal of the trustee and appointment of a successor
trustee will not become effective until acceptance of appointment by the
successor trustee.
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DESCRIPTION OF CREDIT SUPPORT
GENERAL
Credit support may be provided with respect to one or more classes of the
certificates of any series, or with respect to the related mortgage assets.
Credit support may be in the form of over-collateralization, a letter of credit,
the subordination of one or more classes of certificates, the use of a pool
insurance policy or guarantee insurance, the establishment of one or more
reserve funds or another method of credit support described in the prospectus
supplement, or any combination of the foregoing. If so provided in the
prospectus supplement, any form of credit support may provide credit enhancement
for more than one series of certificates to the extent described in the
prospectus supplement.
The credit support generally will not provide protection against all risks
of loss and will not guarantee payment to certificateholders of all amounts to
which they are entitled under the related pooling and servicing agreement. If
losses or shortfalls occur that exceed the amount covered by the credit support
or that are not covered by the credit support, certificateholders will bear
their allocable share of deficiencies. Moreover, if a form of credit support
covers more than one series of certificates, holders of certificates of one
series will be subject to the risk that such credit support will be exhausted by
the claims of the holders of certificates of one or more other series before the
former receive their intended share of such coverage.
If credit support is provided with respect to one or more classes of
certificates of a series, or with respect to the related mortgage assets, the
prospectus supplement will include a description of (i) the nature and amount of
coverage under such credit support, (ii) any conditions to payment thereunder
not otherwise described in this prospectus, (iii) the conditions (if any) under
which the amount of coverage under such credit support may be reduced and under
which such credit support may be terminated or replaced and (iv) the material
provisions relating to such credit support. Additionally, the prospectus
supplement will set forth certain information with respect to the obligor under
any instrument of credit support, generally including (w) a brief description of
its principal business activities, (x) its principal place of business, place of
incorporation and the jurisdiction under which it is chartered or licensed to do
business, (y) if applicable, the identity of the regulatory agencies that
exercise primary jurisdiction over the conduct of its business and (z) its total
assets, and its stockholders equity or policyholders' surplus, if applicable, as
of a date that will be specified in the prospectus supplement. See "Risk
Factors--Credit Support May Not Cover Losses or Risks Which Could Adversely
Affect Payment on Your Certificates."
SUBORDINATE CERTIFICATES
If so specified in the prospectus supplement, one or more classes of
certificates of a series may be subordinate certificates which are subordinated
in right of payment to one or more other classes of senior certificates. If so
provided in the prospectus supplement, the subordination of a class may apply
only in the event of (or may be limited to) certain types of losses or
shortfalls. The prospectus supplement will set forth information concerning the
amount of subordination provided by a class or classes of subordinate
certificates in a series, the circumstances under which such subordination will
be available and the manner in which the amount of subordination will be made
available.
CROSS-SUPPORT PROVISIONS
If the mortgage assets in any trust fund are divided into separate groups,
each supporting a separate class or classes of certificates of a series, credit
support may be provided by cross-support provisions requiring that distributions
be made on senior certificates evidencing interests in one group of mortgage
assets prior to distributions on subordinate certificates evidencing interests
in a different group of mortgage assets within the trust fund. The prospectus
supplement for a series that includes a cross-support provision will describe
the manner and conditions for applying such provisions.
INSURANCE OR GUARANTEES WITH RESPECT TO MORTGAGE LOANS
If so provided in the prospectus supplement for a series of certificates,
mortgage loans included in the related trust fund will be covered for certain
default risks by insurance policies or guarantees. To the extent material, a
copy of each such instrument will accompany the Current Report on Form 8-K to be
filed with the Securities and Exchange Commission within 15 days of issuance of
the certificates of the related series.
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LETTER OF CREDIT
If so provided in the prospectus supplement for a series of certificates,
deficiencies in amounts otherwise payable on such certificates or certain
classes thereof will be covered by one or more letters of credit, issued by a
bank or financial institution specified in such prospectus supplement. Under a
letter of credit, the bank or financial institution providing the letter of
credit will be obligated to honor draws thereunder in an aggregate fixed dollar
amount, net of unreimbursed payments thereunder, generally equal to a percentage
specified in the prospectus supplement of the aggregate principal balance of the
mortgage assets on the related Cut-Off Date or of the initial aggregate
certificate balance of one or more classes of certificates. If so specified in
the prospectus supplement, the letter of credit may permit draws only in the
event of certain types of losses and shortfalls. The amount available under the
letter of credit will, in all cases, be reduced to the extent of the
unreimbursed payments thereunder and may otherwise be reduced as described in
the prospectus supplement. The obligations of the bank or financial institution
providing the letter of credit for each series of certificates will expire at
the earlier of the date specified in the prospectus supplement or the
termination of the trust fund. A copy of any such letter of credit will
accompany the Current Report on Form 8-K to be filed with the Securities and
Exchange Commission within 15 days of issuance of the certificates of the
related series.
CERTIFICATE INSURANCE AND SURETY BONDS
If so provided in the prospectus supplement for a series of certificates,
deficiencies in amounts otherwise payable on such certificates or certain
classes thereof will be covered by insurance policies and/or surety bonds
provided by one or more insurance companies or sureties. Such instruments may
cover, with respect to one or more classes of certificates of the related
series, timely distributions of interest and/or full distributions of principal
on the basis of a schedule of principal distributions set forth in or determined
in the manner specified in the prospectus supplement. A copy of any such
instrument will accompany the Current Report on Form 8-K to be filed with the
Securities and Exchange Commission within 15 days of issuance of the
certificates of the related series.
RESERVE FUNDS
If so provided in the prospectus supplement for a series of certificates,
deficiencies in amounts otherwise payable on such certificates or certain
classes thereof will be covered (to the extent of available funds) by one or
more reserve funds in which cash, a letter of credit, permitted investments, a
demand note or a combination thereof will be deposited, in the amounts specified
in such prospectus supplement. If so specified in the prospectus supplement, the
reserve fund for a series may also be funded over time by a specified amount of
the collections received on the related mortgage assets.
Amounts on deposit in any reserve fund for a series, together with the
reinvestment income thereon, if any, will be applied for the purposes, in the
manner, and to the extent specified in the prospectus supplement. If so
specified in the prospectus supplement, reserve funds may be established to
provide protection only against certain types of losses and shortfalls.
Following each distribution date, amounts in a reserve fund in excess of any
amount required to be maintained in the reserve fund may be released from the
reserve fund under the conditions and to the extent specified in the prospectus
supplement.
If so specified in the prospectus supplement, amounts deposited in any
reserve fund will be invested in permitted investments, such as United States
government securities and other investment grade obligations specified in the
related pooling and servicing agreement. Unless otherwise specified in the
prospectus supplement, any reinvestment income or other gain from such
investments will be credited to the related reserve fund for such series, and
any loss resulting from such investments will be charged to such reserve fund.
However, such income may be payable to any related master servicer or another
service provider as additional compensation for its services. The reserve fund,
if any, for a series will not be a part of the trust fund unless otherwise
specified in the prospectus supplement.
CREDIT SUPPORT WITH RESPECT TO CMBS
If so provided in the prospectus supplement for a series of certificates,
any CMBS included in the related trust fund and/or the related underlying
mortgage loans may be covered by one or more of the
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types of credit support described in this prospectus. The prospectus supplement
for any series of certificates evidencing an interest in a trust fund that
includes CMBS will describe to the extent information is available and deemed
material, any similar forms of credit support that are provided by or with
respect to, or are included as part of the trust fund evidenced by or providing
security for, such CMBS. The type, characteristic and amount of credit support
will be determined based on the characteristics of the mortgage assets and other
factors and will be established, in part, on the basis of requirements of each
rating agency rating the certificates of such series. If so specified in the
prospectus supplement, any such credit support may apply only in the event of
certain types of losses or delinquencies and the protection against losses or
delinquencies provided by such credit support will be limited.
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS AND LEASES
The following discussion contains general summaries of certain legal
aspects of loans secured by commercial and multifamily residential properties.
Because such legal aspects are governed by applicable state law (which laws may
differ substantially), the summaries do not purport to be complete, to reflect
the laws of any particular state, or to encompass the laws of all states in
which the security for the mortgage loans (or mortgage loans underlying any
CMBS) is situated. Accordingly, the summaries are qualified in their entirety by
reference to the applicable laws of those states. See "Description of the Trust
Funds--Mortgage Loans--Leases." For purposes of the following discussion,
"mortgage loan" includes a mortgage loan underlying a CMBS.
GENERAL
Each mortgage loan will be evidenced by a note or bond and secured by an
instrument granting a security interest in real property, which may be a
mortgage, deed of trust or a deed to secure debt, depending upon the prevailing
practice and law in the state in which the related mortgaged property is
located. Mortgages, deeds of trust and deeds to secure debt are collectively
referred to as "mortgages" in this prospectus and, unless otherwise specified,
in any prospectus supplement. A mortgage creates a lien upon, or grants a title
interest in, the real property covered thereby, and represents the security for
the repayment of the indebtedness customarily evidenced by a promissory note.
The priority of the lien created or interest granted will depend on the terms of
the mortgage and, in some cases, on the terms of separate subordination
agreements or intercreditor agreements with others that hold interests in the
real property, the knowledge of the parties to the mortgage and, generally, the
order of recordation of the mortgage in the appropriate public recording office.
However, the lien of a recorded mortgage will generally be subordinate to
later-arising liens for real estate taxes and assessments and other charges
imposed under governmental police powers. Additionally, in some states,
mechanic's and materialman's liens have priority over mortgage liens.
The mortgagee's authority under a mortgage, the beneficiary's authority
under a deed of trust and the grantee's authority under a deed to secure debt
are governed by the express provisions of the related instrument, the law of the
state in which the real property is located, certain federal laws (including,
without limitation, the Servicemembers Civil Relief Act) and, in some deed of
trust transactions, the trustee's authority is further limited by the directions
of the beneficiary.
TYPES OF MORTGAGE INSTRUMENTS
There are two parties to a mortgage: a mortgagor (the borrower and usually
the owner of the subject property) and a mortgagee (the lender). In a mortgage,
the mortgagor grants a lien on the subject property in favor of the mortgagee. A
deed of trust is a three-party instrument, among a trustor (the equivalent of a
borrower), a trustee to whom the real property is conveyed, and a beneficiary
(the lender) for whose benefit the conveyance is made. Under a deed of trust,
the trustor grants the property to the trustee, in trust, irrevocably until the
debt is paid, and generally with a power of sale. A deed to secure debt
typically has two parties. The borrower, or grantor, conveys title to the real
property to the grantee, or lender, generally with a power of sale, until such
time as the debt is repaid. In a case where the borrower is a land trust, there
would be an additional party to a mortgage instrument because legal title to the
property is held by a land trustee under a land trust agreement for the benefit
of the borrower. At
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origination of a mortgage loan involving a land trust, the borrower generally
executes a separate undertaking to make payments on the mortgage note. The
mortgagee's authority under a mortgage, the trustee's authority under a deed of
trust and the grantee's authority under a deed to secure debt are governed by
the express provisions of the related instrument, the law of the state in which
the real property is located, certain federal laws and, in some deed of trust
transactions, the directions of the beneficiary.
LEASES AND RENTS
Mortgages that encumber income-producing property often contain an
assignment of rents and leases, pursuant to which the borrower assigns to the
lender the borrower's right, title and interest as landlord under each lease and
the income derived therefrom, while (unless rents are to be paid directly to the
lender) retaining a revocable license to collect the rents for so long as there
is no default. If the borrower defaults, the license terminates and the lender
is entitled to collect the rents. Local law may require that the lender take
possession of the property and/or obtain a court-appointed receiver before
becoming entitled to collect the rents. Lenders that actually take possession of
the property, however, may incur potentially substantial risks attendant to
being a mortgagee in possession. Such risks include liability for environmental
clean-up costs and other risks inherent in property ownership. See
"--Environmental Considerations." In most states, hotel and motel room
receipts/revenues are considered accounts receivable under the Uniform
Commercial Code; in cases where hotels or motels constitute loan security, the
receipts/revenues are generally pledged by the borrower as additional security
for the loan. In general, the lender must file financing statements in order to
perfect its security interest in the receipts/revenues and must file
continuation statements, generally every five years, to maintain perfection of
such security interest. Even if the lender's security interest in room
receipts/revenues is perfected under the Uniform Commercial Code, it will
generally be required to commence a foreclosure action or otherwise take
possession of the property in order to collect the room receipts/revenues
following a default. See "--Bankruptcy Laws."
PERSONALTY
In the case of certain types of mortgaged properties, such as hotels,
motels and nursing homes, personal property (to the extent owned by the borrower
and not previously pledged) may constitute a significant portion of the
property's value as security. The creation and enforcement of liens on personal
property are governed by the Uniform Commercial Code. Accordingly, if a borrower
pledges personal property as security for a mortgage loan, the lender generally
must file Uniform Commercial Code financing statements in order to perfect its
security interest therein, and must file continuation statements, generally
every five years, to maintain that perfection.
COOPERATIVE LOANS
If specified in the prospectus supplement, the mortgage loans may consist
of loans secured by "blanket mortgages" on the property owned by cooperative
housing corporations. If specified in the prospectus supplement, the mortgage
loans may consist of cooperative loans secured by security interests in shares
issued by private cooperative housing corporations and in the related
proprietary leases or occupancy agreements granting exclusive rights to occupy
specific dwelling units in the cooperatives' buildings. The security agreement
will create a lien upon, or grant a title interest in, the property which it
covers, the priority of which will depend on the terms of the particular
security agreement as well as the order of recordation of the agreement in the
appropriate recording office. Such a lien or title interest is not prior to the
lien for real estate taxes and assessments and other charges imposed under
governmental police powers.
A cooperative generally owns in fee or has a leasehold interest in land and
owns in fee or leases the building or buildings thereon and all separate
dwelling units in the buildings. The cooperative is owned by tenant-stockholders
who, through ownership of stock or shares in the corporation, receive
proprietary leases or occupancy agreements which confer exclusive rights to
occupy specific units. Generally, a tenant-stockholder of a cooperative must
make a monthly payment to the cooperative representing such
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tenant-stockholder's pro rata share of the cooperative's payments for its
blanket mortgage, real property taxes, maintenance expenses and other capital or
ordinary expenses. The cooperative is directly responsible for property
management and, in most cases, payment of real estate taxes, other governmental
impositions and hazard and liability insurance. If there is a blanket mortgage
or mortgages on the cooperative apartment building or underlying land, as is
generally the case, or an underlying lease of the land, as is the case in some
instances, the cooperative, as property mortgagor, or lessee, as the case may
be, is also responsible for meeting these mortgage or rental obligations. A
blanket mortgage is ordinarily incurred by the cooperative in connection with
either the construction or purchase of the cooperative's apartment building or
obtaining of capital by the cooperative. The interest of the occupant under
proprietary leases or occupancy agreements as to which that cooperative is the
landlord are generally subordinate to the interest of the holder of a blanket
mortgage and to the interest of the holder of a land lease. If the cooperative
is unable to meet the payment obligations (i) arising under a blanket mortgage,
the mortgagee holding a blanket mortgage could foreclose on that mortgage and
terminate all subordinate proprietary leases and occupancy agreements, or (ii)
arising under its land lease, the holder of the landlord's interest under the
land lease could terminate it and all subordinate proprietary leases and
occupancy agreements. Also, a blanket mortgage on a cooperative may provide
financing in the form of a mortgage that does not fully amortize, with a
significant portion of principal being due in one final payment at maturity. The
inability of the cooperative to refinance a mortgage and its consequent
inability to make such final payment could lead to foreclosure by the mortgagee
and termination of all proprietary leases and occupancy agreements. Similarly, a
land lease has an expiration date and the inability of the cooperative to extend
its term, or, in the alternative, to purchase the land, could lead to
termination of the cooperatives' interest in the property and termination of all
proprietary leases and occupancy agreements. Upon foreclosure of a blanket
mortgage on a cooperative, the lender would normally be required to take the
mortgaged property subject to state and local regulations that afford tenants
who are not shareholders various rent control and other protections. A
foreclosure by the holder of a blanket mortgage or the termination of the
underlying lease could eliminate or significantly diminish the value of any
collateral held by a party who financed the purchase of cooperative shares by an
individual tenant stockholder.
An ownership interest in a cooperative and accompanying occupancy rights
are financed through a cooperative share loan evidenced by a promissory note and
secured by an assignment of and a security interest in the occupancy agreement
or proprietary lease and a security interest in the related cooperative shares.
The lender generally takes possession of the share certificate and a counterpart
of the proprietary lease or occupancy agreement and financing statements
covering the proprietary lease or occupancy agreement and the cooperative shares
are filed in the appropriate state and local offices to perfect the lender's
interest in its collateral. Subject to the limitations discussed below, upon
default of the tenant-stockholder, the lender may sue for judgment on the
promissory note, dispose of the collateral at a public or private sale or
otherwise proceed against the collateral or tenant-stockholder as an individual
as provided in the security agreement covering the assignment of the proprietary
lease or occupancy agreement and the pledge of cooperative shares. See
"--Foreclosure--Cooperative Loans" below.
JUNIOR MORTGAGES; RIGHTS OF SENIOR LENDERS
Some of the mortgage loans included in a trust fund may be secured by
mortgage instruments that are subordinate to mortgage instruments held by other
lenders. The rights of the trust fund (and therefore the certificateholders), as
holder of a junior mortgage instrument, are subordinate to those of the senior
lender, including the prior rights of the senior lender to receive rents, hazard
insurance and condemnation proceeds and to cause the mortgaged property to be
sold upon borrower's default and thereby extinguish the trust fund's junior lien
unless the master servicer or special servicer satisfies the defaulted senior
loan, or, if permitted, asserts its subordinate interest in a property in
foreclosure litigation. As discussed more fully below, in many states a junior
lender may satisfy a defaulted senior loan in full, adding the amounts expended
to the balance due on the junior loan. Absent a provision in the senior mortgage
instrument, no notice of default is required to be given to the junior lender.
The form of the mortgage instrument used by many institutional lenders
confers on the lender the right both to receive all proceeds collected under any
hazard insurance policy and all awards made in connection with any condemnation
proceedings, and (subject to any limits imposed by applicable state
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law) to apply such proceeds and awards to any indebtedness secured by the
mortgage instrument in such order as the lender may determine. Thus, if
improvements on a property are damaged or destroyed by fire or other casualty,
or if the property is taken by condemnation, the holder of the senior mortgage
instrument will have the prior right to collect any insurance proceeds payable
under a hazard insurance policy and any award of damages in connection with the
condemnation and to apply the same to the senior indebtedness. Accordingly, only
the proceeds in excess of the amount of senior indebtedness will be available to
be applied to the indebtedness secured by a junior mortgage instrument.
The form of mortgage instrument used by many institutional lenders
typically contains a "future advance" clause, which provides, in general, that
additional amounts advanced to or on behalf of the mortgagor or trustor by the
mortgagee or beneficiary are to be secured by the mortgage instrument. While
such a clause is valid under the laws of most states, the priority of any
advance made under the clause depends, in some states, on whether the advance
was an "obligatory" or an "optional" advance. If the lender is obligated to
advance the additional amounts, the advance may be entitled to receive the same
priority as the amounts advanced at origination, notwithstanding that
intervening junior liens may have been recorded between the date of recording of
the senior mortgage instrument and the date of the future advance, and
notwithstanding that the senior lender had actual knowledge of such intervening
junior liens at the time of the advance. Where the senior lender is not
obligated to advance the additional amounts and has actual knowledge of the
intervening junior liens, the advance may be subordinate to such intervening
junior liens. Priority of advances under a "future advance" clause rests, in
many other states, on state law giving priority to all advances made under the
loan agreement up to a "credit limit" amount stated in the recorded mortgage.
Another provision typically found in the form of mortgage instrument used
by many institutional lenders permits the lender to itself perform certain
obligations of the borrower (for example, the obligations to pay when due all
taxes and assessments on the property and, when due, all encumbrances, charges
and liens on the property that are senior to the lien of the mortgage
instrument, to maintain hazard insurance on the property, and to maintain and
repair the property) upon a failure of the borrower to do so, with all sums so
expended by the lender becoming part of the indebtedness secured by the mortgage
instrument.
The form of mortgage instrument used by many institutional lenders
typically requires the borrower to obtain the consent of the lender in respect
of actions affecting the mortgaged property, including the execution of new
leases and the termination or modification of existing leases, the performance
of alterations to buildings forming a part of the mortgaged property and the
execution of management and leasing agreements for the mortgaged property.
Tenants will often refuse to execute leases unless the lender executes a written
agreement with the tenant not to disturb the tenant's possession of its premises
in the event of a foreclosure. A senior lender may refuse to consent to matters
approved by a junior lender, with the result that the value of the security for
the junior mortgage instrument is diminished.
FORECLOSURE
General. Foreclosure is a legal procedure that allows the lender to seek to
recover its mortgage debt by enforcing its rights and available legal remedies
under the mortgage in respect of the mortgaged property. If the borrower
defaults in payment or performance of its obligations under the note or
mortgage, the lender has the right to institute foreclosure proceedings to sell
the real property at public auction to satisfy the indebtedness.
Foreclosure Procedures Vary From State to State. Two primary methods of
foreclosing a mortgage are judicial foreclosure, involving court proceedings,
and non-judicial foreclosure pursuant to a power of sale usually granted in the
mortgage instrument. Other foreclosure procedures are available in some states,
but they are either infrequently used or available only in limited
circumstances.
A foreclosure action is subject to most of the delays and expenses of other
lawsuits if defenses are raised or counterclaims are interposed, and sometimes
requires years to complete. Moreover, the filing by or against the
borrower-mortgagor of a bankruptcy petition would impose an automatic stay on
such proceedings and could further delay a foreclosure sale.
Judicial Foreclosure. A judicial foreclosure proceeding is conducted in a
court having jurisdiction over the mortgaged property. Generally, the action is
initiated by the service of legal pleadings upon all
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parties having a subordinate interest of record in the real property and all
parties in possession of the property, under leases or otherwise, whose
interests are subordinate to the mortgage. Delays in completion of the
foreclosure may occasionally result from difficulties in locating proper
defendants. As stated above, if the lender's right to foreclose is contested by
any defendant, the legal proceedings may be time-consuming. In addition,
judicial foreclosure is a proceeding in equity and, therefore, equitable
defenses may be raised against the foreclosure. Upon successful completion of a
judicial foreclosure proceeding, the court generally issues a judgment of
foreclosure and appoints a referee or other officer to conduct a public sale of
the mortgaged property, the proceeds of which are used to satisfy the judgment.
Such sales are made in accordance with procedures that vary from state to state.
Non-Judicial Foreclosure/Power of Sale. Foreclosure of a deed of trust is
generally accomplished by a non-judicial trustee's sale pursuant to a power of
sale typically granted in the deed of trust. A power of sale may also be
contained in any other type of mortgage instrument if applicable law so permits.
A power of sale under a deed of trust or mortgage allows a non-judicial public
sale to be conducted generally following a request from the beneficiary/lender
to the trustee to sell the property upon default by the borrower and after
notice of sale is given in accordance with the terms of the mortgage and
applicable state law. In some states, prior to such sale, the trustee under the
deed of trust must record a notice of default and notice of sale and send a copy
to the borrower and to any other party which has recorded a request for a copy
of a notice of default and notice of sale. In addition, in some states the
trustee must provide notice to any other party having an interest of record in
the real property, including junior lienholders. A notice of sale must be posted
in a public place and, in most states, published for a specified period of time
in one or more newspapers. The borrower or a junior lienholder may then have the
right, during a reinstatement period required in some states, to cure the
default by paying the entire actual amount in arrears (without regard to the
acceleration of the indebtedness), plus the lender's expenses incurred in
enforcing the obligation. In other states, the borrower or the junior lienholder
is not provided a period to reinstate the loan, but has only the right to pay
off the entire debt to prevent the foreclosure sale. In addition to such cure
rights, in most jurisdictions, the borrower-mortgagor or a subordinate
lienholder can seek to enjoin the non-judicial foreclosure by commencing a court
proceeding. Generally, state law governs the procedure for public sale, the
parties entitled to notice, the method of giving notice and the applicable time
periods.
Both judicial and non-judicial foreclosures may result in the termination
of leases at the mortgaged property, which in turn could result in the reduction
in the income for such property. Some of the factors that will determine whether
or not a lease will be terminated by a foreclosure are: the provisions of
applicable state law, the priority of the mortgage vis-a-vis the lease in
question, the terms of the lease and the terms of any subordination,
non-disturbance and attornment agreement between the tenant under the lease and
the mortgagee.
Equitable Limitations on Enforceability of Certain Provisions. United
States courts have traditionally imposed general equitable principles to limit
the remedies available to lenders in foreclosure actions. These principles are
generally designed to relieve borrowers from the effects of mortgage defaults
perceived as harsh or unfair. Relying on such principles, a court may alter the
specific terms of a loan to the extent it considers necessary to prevent or
remedy an injustice, undue oppression or overreaching, or may require the lender
to undertake affirmative actions to determine the cause of the borrower's
default and the likelihood that the borrower will be able to reinstate the loan.
In some cases, courts have substituted their judgment for the lender's and have
required that lenders reinstate loans or recast payment schedules in order to
accommodate borrowers who are suffering from a temporary financial disability.
In other cases, courts have limited the right of the lender to foreclose in the
case of a non-monetary default, such as a failure to adequately maintain the
mortgaged property or placing a subordinate mortgage or other encumbrance upon
the mortgaged property. Finally, some courts have addressed the issue of whether
federal or state constitutional provisions reflecting due process concerns for
adequate notice require that a borrower receive notice in addition to
statutorily prescribed minimum notice. For the most part, these cases have
upheld the reasonableness of the notice provisions or have found that a public
sale under a mortgage providing for a power of sale does not involve sufficient
state action to trigger constitutional protections.
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Public Sale. A third party may be unwilling to purchase a mortgaged
property at a public sale for a number of reasons, including the difficulty in
determining the exact status of title to the property (due to, among other
things, redemption rights that may exist) and because of the possibility that
physical deterioration of the property may have occurred during the foreclosure
proceedings. For these reasons, it is common for the lender to purchase the
mortgaged property for an amount equal to the secured indebtedness and accrued
and unpaid interest plus the expenses of foreclosure, in which event the
borrower's debt will be extinguished. Thereafter, subject to the borrower's
right in some states to remain in possession during a redemption period, the
lender will become the owner of the property and have both the benefits and
burdens of ownership, including the obligation to pay debt service on any senior
mortgages, to pay taxes, to obtain casualty insurance and to make such repairs
as are necessary to render the property suitable for sale. The costs involved in
a foreclosure process can often be quite expensive; such costs may include,
depending on the jurisdiction involved, legal fees, court administration fees,
referee fees and transfer taxes or fees. The costs of operating and maintaining
a commercial or multifamily residential property may be significant and may be
greater than the income derived from that property. The lender also will
commonly obtain the services of a real estate broker and pay the broker's
commission in connection with the sale or lease of the property. Depending upon
market conditions, the ultimate proceeds of the sale of the property may not
equal the lender's investment in the property. Moreover, because of the expenses
associated with acquiring, owning and selling a mortgaged property, a lender
could realize an overall loss on a mortgage loan even if the mortgaged property
is sold at foreclosure, or resold after it is acquired through foreclosure, for
an amount equal to the full outstanding principal amount of the loan plus
accrued interest.
The holder of a junior mortgage that forecloses on a mortgaged property
does so subject to senior mortgages and any other prior liens, and may be
obliged to keep senior mortgage loans current in order to avoid foreclosure of
its interest in the property. In addition, if the foreclosure of a junior
mortgage triggers the enforcement of a "due-on-sale" clause contained in a
senior mortgage, the junior mortgagee could be required to pay the full amount
of the senior mortgage indebtedness, including penalty fees and court costs, or
face foreclosure.
Rights of Redemption. The purposes of a foreclosure action are to enable
the lender to realize upon its security and to bar the borrower, and all persons
who have interests in the property that are subordinate to that of the
foreclosing lender, from exercise of their "equity of redemption." The doctrine
of equity of redemption provides that, until the property encumbered by a
mortgage has been sold in accordance with a properly conducted foreclosure and
foreclosure sale, those having interests that are subordinate to that of the
foreclosing lender have an equity of redemption and may redeem the property by
paying the entire debt with interest. Those having an equity of redemption must
generally be made parties and joined in the foreclosure proceeding in order for
their equity of redemption to be terminated.
The equity of redemption is a common-law (non-statutory) right which should
be distinguished from post-sale statutory rights of redemption. In some states,
after sale pursuant to a deed of trust or foreclosure of a mortgage, the
borrower and foreclosed junior lienors are given a statutory period in which to
redeem the property. In some states, statutory redemption may occur only upon
payment of the foreclosure sale price. In other states, redemption may be
permitted if the former borrower pays only a portion of the sums due. The effect
of a statutory right of redemption is to diminish the ability of the lender to
sell the foreclosed property because the exercise of a right of redemption would
defeat the title of any purchaser through a foreclosure. Consequently, the
practical effect of the redemption right is to force the lender to maintain the
property and pay the expenses of ownership until the redemption period has
expired. In some states, a post-sale statutory right of redemption may exist
following a judicial foreclosure, but not following a trustee's sale under a
deed of trust.
Anti-Deficiency Legislation. Some or all of the mortgage loans may be
nonrecourse loans, as to which recourse in the case of default will be limited
to the mortgaged property and such other assets, if any, that were pledged to
secure the mortgage loan. However, even if a mortgage loan by its terms provides
for recourse to the borrower's other assets, a lender's ability to realize upon
those assets may be limited by state law. For example, in some states a lender
cannot obtain a deficiency judgment against the borrower following a
non-judicial foreclosure. A deficiency judgment is a personal judgment against
the former borrower equal to the difference between the net amount realized upon
the public sale of the real
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property and the amount due to the lender. Other statutes may require the lender
to exhaust the security afforded under a mortgage before bringing a personal
action against the borrower. In certain other states, the lender has the option
of bringing a personal action against the borrower on the debt without first
exhausting such security; however, in some of those states, the lender,
following judgment on such personal action, may be deemed to have elected a
remedy and thus may be precluded from foreclosing upon the security.
Consequently, lenders in those states where such an election of remedy provision
exists will usually proceed first against the security. Finally, other statutory
provisions, designed to protect borrowers from exposure to large deficiency
judgments that might result from bidding at below-market values at the
foreclosure sale, limit any deficiency judgment to the excess of the outstanding
debt over the judicially determined fair market value of the property at the
time of the sale.
Leasehold Risks. Mortgage loans may be secured by a mortgage on the
borrower's leasehold interest in a ground lease. Leasehold mortgage loans are
subject to certain risks not associated with mortgage loans secured by a lien on
the fee estate of the borrower. The most significant of these risks is that if
the borrower's leasehold were to be terminated upon a lease default or the
bankruptcy of the lessee or the lessor, the leasehold mortgagee would lose its
security. This risk may be substantially lessened if the ground lease contains
provisions protective of the leasehold mortgagee, such as a provision that
requires the ground lessor to give the leasehold mortgagee notices of lessee
defaults and an opportunity to cure them, a provision that permits the leasehold
estate to be assigned to and by the leasehold mortgagee or the purchaser at a
foreclosure sale, a provision that gives the leasehold mortgagee the right to
enter into a new ground lease with the ground lessor on the same terms and
conditions as the old ground lease or a provision that prohibits the ground
lessee/borrower from treating the ground lease as terminated in the event of the
ground lessor's bankruptcy and rejection of the ground lease by the trustee for
the debtor/ground lessor. Certain mortgage loans, however, may be secured by
liens on ground leases that do not contain all or some of these provisions.
Regulated Healthcare Facilities. A mortgage loan may be secured by a
mortgage on a nursing home or other regulated healthcare facility. In most
jurisdictions, a license (which is nontransferable and may not be assigned or
pledged) granted by the appropriate state regulatory authority is required to
operate a regulated healthcare facility. Accordingly, the ability of a person
acquiring this type of property upon a foreclosure sale to take possession of
and operate the same as a regulated healthcare facility may be prohibited by
applicable law. Notwithstanding the foregoing, however, in certain jurisdictions
the person acquiring this type of property at a foreclosure sale may have the
right to terminate the use of the same as a regulated health care facility and
convert it to another lawful purpose.
Cross-Collateralization. Certain of the mortgage loans may be secured by
more than one mortgage covering mortgaged properties located in more than one
state. Because of various state laws governing foreclosure or the exercise of a
power of sale and because, in general, foreclosure actions are brought in state
court and the courts of one state cannot exercise jurisdiction over property in
another state, it may be necessary upon a default under a cross-collateralized
mortgage loan to foreclose on the related mortgaged properties in a particular
order rather than simultaneously in order to ensure that the lien of the
mortgages is not impaired or released.
Cooperative Loans. The cooperative shares owned by the tenant-stockholder
and pledged to the lender are, in almost all cases, subject to restrictions on
transfer as set forth in the cooperative's certificate of incorporation and
by-laws, as well as the proprietary lease or occupancy agreement, and may be
cancelled by the cooperative for failure by the tenant-stockholder to pay rent
or other obligations or charges owed by such tenant-stockholder, including
mechanics' liens against the cooperative apartment building incurred by such
tenant-stockholder. The proprietary lease or occupancy agreement generally
permit the cooperative to terminate such lease or agreement in the event an
obligor fails to make payments or defaults in the performance of covenants
required thereunder. Typically, the lender and the cooperative enter into a
recognition agreement which establishes the rights and obligations of both
parties in the event of a default by the tenant-stockholder. A default under the
proprietary lease or occupancy agreement will usually constitute a default under
the security agreement between the lender and the tenant-stockholder.
The recognition agreement generally provides that, in the event that the
tenant-stockholder has defaulted under the proprietary lease or the occupancy
agreement is terminated, the cooperative will
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recognize the lender's lien against proceeds from the sale of the cooperative
apartment, subject, however, to the cooperative's right to sums due under such
proprietary lease or occupancy agreement. The total amount owed to the
cooperative by the tenant-stockholder, which the lender generally cannot
restrict and does not monitor, could reduce the value of the collateral below
the outstanding principal balance of the cooperative loan and accrued and unpaid
interest thereon.
Recognition agreements also provide that in the event of a foreclosure on a
cooperative loan, the lender must obtain the approval or consent of the
cooperative as required by the proprietary lease before transferring the
cooperative shares or assigning the proprietary lease. Generally, the lender is
not limited in any rights it may have to dispossess the tenant-stockholders.
In some states, foreclosure on the cooperative shares is accomplished by a
sale in accordance with the provisions of Article 9 of the Uniform Commercial
Code and the security agreement relating to those shares. Article 9 of the
Uniform Commercial Code requires that a sale be conducted in a "commercially
reasonable" manner. Whether a foreclosure sale has been conducted in a
"commercially reasonable" manner will depend on the facts in each case. In
determining commercial reasonableness, a court will look to the notice given the
debtor and the method, manner, time, place and terms of the foreclosure.
Generally, a sale conducted according to the usual practice of banks selling
similar collateral will be considered reasonably conducted.
Article 9 of the Uniform Commercial Code provides that the proceeds of the
sale will be applied first to pay the costs and expenses of the sale and then to
satisfy the indebtedness secured by the lender's security interest. The
recognition agreement, however, generally provides that the lender's right to
reimbursement is subject to the right of the cooperatives to receive sums due
under the proprietary lease or occupancy agreement. If there are proceeds
remaining, the lender must account to the tenant-stockholder for the surplus.
Conversely, if a portion of the indebtedness remains unpaid, the
tenant-stockholder is generally responsible for the deficiency.
BANKRUPTCY LAWS
Operation of the Bankruptcy Code and related state laws may interfere with
or affect the ability of a lender to realize upon collateral and/or to enforce a
deficiency judgment. For example, under the Bankruptcy Code, virtually all
actions (including foreclosure actions and deficiency judgment proceedings) to
collect a debt are automatically stayed upon the filing of the bankruptcy
petition and, often, no interest or principal payments are made during the
course of the bankruptcy case. The delay and the consequences thereof caused by
the automatic stay can be significant. Also, under the Bankruptcy Code, the
filing of a petition in bankruptcy by or on behalf of a junior lienholder would
stay the senior lender from proceeding with any foreclosure action.
Under the Bankruptcy Code, provided certain substantive and procedural
safeguards protective of the lender's secured claim are met, the amount and
terms of a mortgage loan secured by a lien on property of the debtor may be
modified under certain circumstances. For example, if the loan is undersecured,
the outstanding amount of the loan which would remain secured may be reduced to
the then-current value of the property (with a corresponding partial reduction
of the amount of lender's security interest) pursuant to a confirmed plan, thus
leaving the lender a general unsecured creditor for the difference between such
value and the outstanding balance of the loan. Other modifications may include
the reduction in the amount of each scheduled payment by means of a reduction in
the rate of interest and/or an alteration of the repayment schedule (with or
without affecting the unpaid principal balance of the loan), and/or by an
extension (or shortening) of the term to maturity. Some bankruptcy courts have
approved plans, based on the particular facts of the reorganization case, that
effected the cure of a mortgage loan default by paying arrearages over a number
of years. Also under federal bankruptcy law, a bankruptcy court may permit a
debtor through its rehabilitative plan to de-accelerate a secured loan and to
reinstate the loan even though the lender accelerated the mortgage loan and
final judgment of foreclosure had been entered in state court (provided no sale
of the property had yet occurred) prior to the filing of the debtor's petition.
This may be done even if the full amount due under the original loan is never
repaid.
Federal bankruptcy law provides generally that rights and obligations under
an unexpired lease of the debtor/lessee may not be terminated or modified at any
time after the commencement of a case under the
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Bankruptcy Code solely on the basis of a provision in the lease to such effect
or because of certain other similar events. This prohibition could limit the
ability of the trustee for a series of certificates to exercise certain
contractual remedies with respect to the leases. In addition, Section 362 of the
Bankruptcy Code operates as an automatic stay of, among other things, any act to
obtain possession of property from a debtor's estate. This may delay a trustee's
exercise of such remedies for a related series of certificates in the event that
a related lessee or a related mortgagor becomes the subject of a proceeding
under the Bankruptcy Code. For example, a mortgagee would be stayed from
enforcing a lease assignment by a mortgagor related to a mortgaged property if
the related mortgagor was in a bankruptcy proceeding. The legal proceedings
necessary to resolve the issues could be time-consuming and might result in
significant delays in the receipt of the assigned rents. Similarly, the filing
of a petition in a bankruptcy by or on behalf of a lessee of a mortgaged
property would result in a stay against the commencement or continuation of any
state court proceeding for past due rent, for accelerated rent, for damages or
for a summary eviction order with respect to a default under the lease that
occurred prior to the filing of the lessee's petition. Rents and other proceeds
of a mortgage loan may also escape an assignment thereof if the assignment is
not fully perfected under state law prior to commencement of the bankruptcy
proceeding. See "--Leases and Rents."
In addition, the Bankruptcy Code generally provides that a trustee or
debtor-in-possession may, subject to approval of the court, (a) assume the lease
and retain it or assign it to a third party or (b) reject the lease. If the
lease is assumed, the trustee in bankruptcy on behalf of the lessee, or the
lessee as debtor-in-possession, or the assignee, if applicable, must cure any
defaults under the lease, compensate the lessor for its losses and provide the
lessor with "adequate assurance" of future performance. Such remedies may be
insufficient, however, as the lessor may be forced to continue under the lease
with a lessee that is a poor credit risk or an unfamiliar tenant if the lease
was assigned, and any assurances provided to the lessor may, in fact, be
inadequate. If the lease is rejected, such rejection generally constitutes a
breach of the executory contract or unexpired lease immediately before the date
of filing the petition. As a consequence, the other party or parties to such
lease, such as the mortgagor, as lessor under a lease, would have only an
unsecured claim against the debtor for damages resulting from such breach which
could adversely affect the security for the related mortgage loan. In addition,
pursuant to Section 502(b)(6) of the Bankruptcy Code, a lessor's damages for
lease rejection in respect of future rent installments are limited to the rent
reserved by the lease, without acceleration, for the greater of one year or 15%
of the remaining term of the lease, but not more than three years.
If a trustee in bankruptcy on behalf of a lessor, or a lessor as
debtor-in-possession, rejects an unexpired lease of real property, the lessee
may treat such lease as terminated by such rejection or, in the alternative, the
lessee may remain in possession of the leasehold for the balance of such term,
and for any renewal or extension of such term that is enforceable by the lessee
under applicable nonbankruptcy law. The Bankruptcy Code provides that if a
lessee elects to remain in possession after such a rejection of a lease, the
lessee may offset any damages occurring after such date caused by the
nonperformance of any obligation of the lessor under the lease after such date
against rents reserved under the lease. To the extent provided in the related
prospectus supplement, the lessee will agree under certain leases to pay all
amounts owing thereunder to the master servicer without offset. To the extent
that such a contractual obligation remains enforceable against the lessee, the
lessee would not be able to avail itself of the rights of offset generally
afforded to lessees of real property under the Bankruptcy Code.
In a bankruptcy or similar proceeding of a mortgagor, action may be taken
seeking the recovery, as a preferential transfer or on other grounds, of any
payments made by the mortgagor, or made directly by the related lessee, under
the related mortgage loan to the trust fund. Payments on long-term debt may be
protected from recovery as preferences if they are payments in the ordinary
course of business made on debts incurred in the ordinary course of business.
Whether any particular payment would be protected depends upon the facts
specific to a particular transaction.
A trustee in bankruptcy, in some cases, may be entitled to collect its
costs and expenses in preserving or selling the mortgaged property ahead of
payment to the lender. In certain circumstances, a debtor in bankruptcy may have
the power to grant liens senior to the lien of a mortgage, and analogous state
statutes and general principles of equity may also provide a mortgagor with
means to halt a foreclosure proceeding or sale and to force a restructuring of a
mortgage loan on terms a lender would not otherwise
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accept. Moreover, the laws of certain states also give priority to certain tax
liens over the lien of a mortgage or deed of trust. Under the Bankruptcy Code,
if the court finds that actions of the mortgagee have been unreasonable, the
lien of the related mortgage may be subordinated to the claims of unsecured
creditors.
Certain of the mortgagors may be partnerships. The laws governing limited
partnerships in certain states provide that the commencement of a case under the
Bankruptcy Code with respect to a general partner will cause a person to cease
to be a general partner of the limited partnership, unless otherwise provided in
writing in the limited partnership agreement. This provision may be construed as
an "ipso facto" clause and, in the event of the general partner's bankruptcy,
may not be enforceable. Certain limited partnership agreements of the mortgagors
may provide that the commencement of a case under the Bankruptcy Code with
respect to the related general partner constitutes an event of withdrawal
(assuming the enforceability of the clause is not challenged in bankruptcy
proceedings or, if challenged, is upheld) that might trigger the dissolution of
the limited partnership, the winding up of its affairs and the distribution of
its assets, unless (i) at the time there was at least one other general partner
and the written provisions of the limited partnership agreement permit the
business of the limited partnership to be carried on by the remaining general
partner and that general partner does so or (ii) the written provisions of the
limited partnership agreement permit the limited partner to agree within a
specified time frame (often 60 days) after such withdrawal to continue the
business of the limited partnership and to the appointment of one or more
general partners and the limited partners do so. In addition, the laws governing
general partnerships in certain states provide that the commencement of a case
under the Bankruptcy Code or state bankruptcy laws with respect to a general
partner of such partnerships triggers the dissolution of such partnership, the
winding up of its affairs and the distribution of its assets. Such state laws,
however, may not be enforceable or effective in a bankruptcy case. The
dissolution of a mortgagor, the winding up of its affairs and the distribution
of its assets could result in an acceleration of its payment obligation under a
related mortgage loan, which may reduce the yield on the related series of
certificates in the same manner as a principal prepayment.
In addition, the bankruptcy of the general partner of a mortgagor that is a
partnership may provide the opportunity for a trustee in bankruptcy for such
general partner, such general partner as a debtor-in-possession, or a creditor
of such general partner to obtain an order from a court consolidating the assets
and liabilities of the general partner with those of the mortgagor pursuant to
the doctrines of substantive consolidation or piercing the corporate veil. In
such a case, the mortgaged property could become property of the estate of such
bankrupt general partner. Not only would the mortgaged property be available to
satisfy the claims of creditors of such general partner, but an automatic stay
would apply to any attempt by the trustee to exercise remedies with respect to
such mortgaged property. However, such an occurrence should not affect the
trustee's status as a secured creditor with respect to the mortgagor or its
security in the mortgaged property.
ENVIRONMENTAL CONSIDERATIONS
General. A lender may be subject to environmental risks when taking a
security interest in real property. Of particular concern may be properties that
are or have been used for industrial, manufacturing, military, disposal or
certain commercial activities. Such environmental risks include the possible
diminution of the value of a contaminated property or, as discussed below,
potential liability for clean-up costs or other remedial actions and natural
resource damages that could exceed the value of the property or the amount of
the lender's loan. In certain circumstances, a lender may decide to abandon a
contaminated mortgaged property as collateral for its loan rather than foreclose
and risk liability for such costs.
Superlien Laws. Under certain federal and state laws, contamination on a
property may give rise to a lien on the property for clean-up costs. In several
states, such a lien has priority over all existing liens, including those of
existing mortgages. In these states, the lien of a mortgage may lose its
priority to such a "superlien."
CERCLA. The federal Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended ("CERCLA"), imposes strict liability on
present and past "owners" and "operators"
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of contaminated real property for the costs of clean-up. Excluded from CERCLA's
definition of "owner" or "operator," however, is a lender that, "without
participating in the management" of a facility holds indicia of ownership
primarily to protect his security interest in the facility. This secured
creditor exemption is intended to provide a lender certain protections from
liability under CERCLA as an owner or operator of contaminated property.
However, a secured lender may be liable as an "owner" or "operator" of a
contaminated mortgaged property if agents or employees of the lender are deemed
to have actually participated in the management of such mortgaged property or
the operations of the borrower. Such liability may exist even if the lender did
not cause or contribute to the contamination and regardless of whether the
lender has actually taken possession of a mortgaged property through
foreclosure, deed in lieu of foreclosure or otherwise. Moreover, such liability,
if incurred, would not be limited to, and could substantially exceed, the
original or unamortized principal balance of a loan or to the value of the
property securing a loan.
In addition, lenders may face potential liability for remediation of
releases of petroleum or hazardous wastes from underground storage tanks under
the federal Resource Conservation and Recovery Act ("RCRA"), if they are deemed
to be the "owners" or "operators" of facilities in which they have a security
interest or upon which they have foreclosed.
The federal Asset Conservation, Lender Liability and Deposit Insurance
Protection Act of 1996 (the "Lender Liability Act") seeks to clarify the actions
a lender may take without incurring liability as an "owner" or "operator" of
contaminated property or underground petroleum storage tanks. The Lender
Liability Act amends CERCLA and RCRA to provide guidance on actions that do or
do not constitute "participation in management." However, the protections
afforded by these amendments are subject to terms and conditions that have not
been clarified by the courts. Moreover, the Lender Liability Act does not, among
other things: (1) eliminate potential liability to lenders under CERCLA or RCRA,
(2) necessarily reduce credit risks associated with lending to borrowers having
significant environmental liabilities or potential liabilities, (3) eliminate
environmental risks associated with taking possession of contaminated property
or underground storage tanks or assuming control of the operations thereof, or
(4) necessarily affect liabilities or potential liabilities under state
environmental laws which may impose liability on "owners or operators" but do
not incorporate the secured creditor exemption.
Certain Other State Laws. Many states have statutes similar to CERCLA and
RCRA, and not all of those statutes provide for a secured creditor exemption.
In a few states, transfers of some types of properties are conditioned upon
cleanup of contamination. In these cases, a lender that becomes the owner of a
property through foreclosure, deed in lieu of foreclosure or otherwise, may be
required to enter into an agreement with the state providing for the cleanup of
the contamination before selling or otherwise transferring the property.
Beyond statute-based environmental liability, there exist common law causes
of action (for example, actions based on nuisance or on toxic tort resulting in
death, personal injury, or damage to property) related to hazardous
environmental conditions on a property. While a party seeking to hold a lender
liable in such cases may face litigation difficulties, unanticipated or
uninsured liabilities of the borrower may jeopardize the borrower's ability to
meet its loan obligations.
Additional Considerations. The cost of remediating hazardous substance
contamination at a property can be substantial. If a lender becomes liable, it
can bring an action for contribution against other potentially liable parties,
but such parties may be bankrupt or otherwise judgment proof. Accordingly, it is
possible that such costs could become a liability of the trust fund and occasion
a loss to the certificateholders.
To reduce the likelihood of such a loss, unless otherwise specified in the
prospectus supplement, the pooling and servicing agreement will provide that the
master servicer, acting on behalf of the trustee, may not take possession of a
mortgaged property or take over its operation unless the master servicer, based
solely on a report (as to environmental matters) prepared by a person who
regularly conducts environmental site assessments, has made the determination
that it is appropriate to do so, as described under "Description of the Pooling
and Servicing Agreements--Realization upon Defaulted Mortgage Loans."
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If a lender forecloses on a mortgage secured by a property, the operations
of which are subject to environmental laws and regulations, the lender may be
required to operate the property in accordance with those laws and regulations.
Such compliance may entail substantial expense, especially in the case of
industrial or manufacturing properties.
In addition, a lender may be obligated to disclose environmental conditions
on a property to government entities and/or to prospective buyers (including
prospective buyers at a foreclosure sale or following foreclosure). Such
disclosure may result in the imposition of certain investigation or remediation
requirements and/or decrease the amount that prospective buyers are willing to
pay for the affected property, sometimes substantially, and thereby decrease the
ability of the lender to recoup its investment in a loan upon foreclosure.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE
Certain of the mortgage loans may contain "due-on-sale" and
"due-on-encumbrance" clauses that purport to permit the lender to accelerate the
maturity of the loan if the borrower transfers or encumbers the related
mortgaged property. In recent years, court decisions and legislative actions
placed substantial restrictions on the right of lenders to enforce such clauses
in many states. By virtue, however, of the Garn-St. Germain Depository
Institutions Act of 1982 (the "Garn Act"), effective October 15, 1982 (which
purports to preempt state laws that prohibit the enforcement of due-on-sale
clauses by providing, among other matters, that "due-on-sale" clauses in certain
loans made after the effective date of the Garn Act are enforceable, within
certain limitations as set forth in the Garn Act and the regulations promulgated
thereunder), a master servicer may nevertheless have the right to accelerate the
maturity of a mortgage loan that contains a "due-on-sale" provision upon
transfer of an interest in the property, regardless of the master servicer's
ability to demonstrate that a sale threatens its legitimate security interest.
SUBORDINATE FINANCING
Certain of the mortgage loans may not restrict the ability of the borrower
to use the mortgaged property as security for one or more additional loans.
Where a borrower encumbers a mortgaged property with one or more junior liens,
the senior lender is subjected to additional risk. First, the borrower may have
difficulty servicing and repaying multiple loans. Moreover, if the subordinate
financing permits recourse to the borrower (as is frequently the case) and the
senior loan does not, a borrower may have more incentive to repay sums due on
the subordinate loan. Second, acts of the senior lender that prejudice the
junior lender or impair the junior lender's security may create a superior
equity in favor of the junior lender. For example, if the borrower and the
senior lender agree to an increase in the principal amount of or the interest
rate payable on the senior loan, the senior lender may lose its priority to the
extent any existing junior lender is harmed or the borrower is additionally
burdened. Third, if the borrower defaults on the senior loan and/or any junior
loan or loans, the existence of junior loans and actions taken by junior lenders
can impair the security available to the senior lender and can interfere with or
delay the taking of action by the senior lender. Moreover, the bankruptcy of a
junior lender may operate to stay foreclosure or similar proceedings by the
senior lender.
DEFAULT INTEREST AND LIMITATIONS ON PREPAYMENTS
Notes and mortgages may contain provisions that obligate the borrower to
pay a late charge or additional interest if payments are not timely made, and in
some circumstances, may prohibit prepayments for a specified period and/or
condition prepayments upon the borrower's payment of prepayment fees or yield
maintenance penalties. In certain states, there are or may be specific
limitations upon the late charges which a lender may collect from a borrower for
delinquent payments. Certain states also limit the amounts that a lender may
collect from a borrower as an additional charge if the loan is prepaid. In
addition, the enforceability of provisions that provide for prepayment fees or
penalties upon an involuntary prepayment is unclear under the laws of many
states.
CERTAIN LAWS AND REGULATIONS; TYPES OF MORTGAGED PROPERTIES
The mortgaged properties will be subject to compliance with various
federal, state and local statutes and regulations. Failure to comply (together
with an inability to remedy any such failure) could result in
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material diminution in the value of a mortgaged property which could, together
with the possibility of limited alternative uses for a particular mortgaged
property (e.g., a nursing or convalescent home or hospital), result in a failure
to realize the full principal amount of the related mortgage loan. Mortgages on
properties which are owned by the mortgagor under a condominium form of
ownership are subject to the declaration, by-laws and other rules and
regulations of the condominium association. Mortgaged properties which are
hotels or motels may present additional risk in that hotels and motels are
typically operated pursuant to franchise, management and operating agreements
which may be limited by the operator. In addition, the transferability of the
hotel's liquor and other licenses to an entity acquiring the hotel either
through purchases or foreclosure is subject to the vagaries of local law
requirements. In addition, mortgaged properties which are multifamily
residential properties may be subject to rent control laws, which could impact
the future cash flows of such properties.
APPLICABILITY OF USURY LAWS
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980 ("Title V") provides that state usury limitations shall not apply to
certain types of residential (including multifamily) first mortgage loans
originated by certain lenders after March 31, 1980. Title V authorized any state
to reimpose interest rate limits by adopting, before April 1, 1983, a law or
constitutional provision that expressly rejects application of the federal law.
In addition, even where Title V is not so rejected, any state is authorized
by the law to adopt a provision limiting discount points or other charges on
mortgage loans covered by Title V. Certain states have taken action to reimpose
interest rate limits and/or to limit discount points or other charges.
No mortgage loan originated in any state in which application of Title V
has been expressly rejected or a provision limiting discount points or other
charges has been adopted will (if originated after that rejection or adoption)
be eligible for inclusion in a trust fund unless (i) such mortgage loan provides
for such interest rate, discount points and charges as are permitted in such
state or (ii) such mortgage loan provides that the terms thereof are to be
construed in accordance with the laws of another state under which such interest
rate, discount points and charges would not be usurious and the borrower's
counsel has rendered an opinion that such choice of law provision would be given
effect.
SERVICEMEMBERS CIVIL RELIEF ACT
Under the terms of the Servicemembers Civil Relief Act (the "Relief Act"),
a borrower who enters military service after the origination of such borrower's
mortgage loan (including a borrower who was in reserve status and is called to
active duty after origination of the mortgage loan), upon notification by such
borrower, may not be charged interest (including fees and charges) above an
annual rate of 6% during the period of such borrower's active duty status. In
addition to adjusting the interest, the lender must forgive any such interest in
excess of 6%, unless a court or administrative agency orders otherwise upon
application of the lender. The Relief Act applies to individuals who are members
of the Army, Navy, Air Force, Marines, National Guard, Reserves, Coast Guard and
officers of the U.S. Public Health Service or the National Oceanic and
Atmospheric Administration assigned to duty with the military. Because the
Relief Act applies to individuals who enter military service (including
reservists who are called to active duty) after origination of the related
mortgage loan, no information can be provided as to the number of loans with
individuals as borrowers that may be affected by the Relief Act. Application of
the Relief Act would adversely affect, for an indeterminate period of time, the
ability of any servicer to collect full amounts of interest on certain of the
mortgage loans. Any shortfalls in interest collections resulting from the
application of the Relief Act would result in a reduction of the amounts
distributable to the holders of the related series of certificates, and would
not be covered by advances or, unless otherwise specified in the prospectus
supplement, any form of credit support provided in connection with such
certificates. In addition, the Relief Act imposes limitations that would impair
the ability of the servicer to foreclose on an affected mortgage loan during the
borrower's period of active duty status and, under certain circumstances, during
an additional three-month period thereafter.
AMERICANS WITH DISABILITIES ACT
Under Title III of the Americans with Disabilities Act of 1990 and rules
promulgated thereunder (collectively, the "ADA"), in order to protect
individuals with disabilities, public accommodations (such
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as hotels, restaurants, shopping centers, hospitals, schools and social service
center establishments) must remove architectural and communication barriers that
are structural in nature from existing places of public accommodation to the
extent "readily achievable." In addition, under the ADA, alterations to a place
of public accommodation or a commercial facility are to be made so that, to the
maximum extent feasible, such altered portions are readily accessible to and
usable by disabled individuals. The "readily achievable" standard takes into
account, among other factors, the financial resources of the affected site,
owner, landlord or other applicable person. The requirements of the ADA may also
be imposed on a foreclosing lender who succeeds to the interest of the borrower
as owner or landlord. Since the "readily achievable" standard may vary depending
on the financial condition of the owner or landlord, a foreclosing lender who is
financially more capable than the borrower of complying with the requirements of
the ADA may be subject to more stringent requirements than those to which the
borrower is subject.
FORFEITURE IN DRUG, RICO AND MONEY LAUNDERING VIOLATIONS
Federal law provides that property purchased or improved with assets
derived from criminal activity or otherwise tainted, or used in the commission
of certain offenses, can be seized and ordered forfeited to the United States of
America. The offenses which can trigger such a seizure and forfeiture include,
among others, violations of the Racketeer Influenced and Corrupt Organizations
Act, the Bank Secrecy Act, the anti-money laundering laws and regulations,
including the USA Patriot Act of 2001 and the regulations issued pursuant to
that Act, as well as the narcotic drug laws. In many instances, the United
States may seize the property even before a conviction occurs.
In the event of a forfeiture proceeding, a lender may be able to establish
its interest in the property by proving that (1) its mortgage was executed and
recorded before the commission of the illegal conduct from which the assets used
to purchase or improve the property were derived or before the commission of any
other crime upon which the forfeiture is based, or (2) the lender, at the time
of the execution of the mortgage, "did not know or was reasonably without cause
to believe that the property was subject to forfeiture." However, there is no
assurance that such a defense will be successful.
FEDERAL DEPOSIT INSURANCE ACT; COMMERCIAL MORTGAGE LOAN SERVICING
Under the Federal Deposit Insurance Act, federal bank regulatory
authorities, including the Office of the Comptroller of the Currency (OCC), have
the power to determine if any activity or contractual obligation of a bank
constitutes an unsafe or unsound practice or violates a law, rule or regulation
applicable to such bank. If Wachovia Bank, National Association (Wachovia) or
another bank is a servicer and/or a mortgage loan seller for a series and the
OCC, which has primary regulatory authority over Wachovia and other banks, were
to find that any obligation of Wachovia or such other bank under the related
pooling and servicing agreement or other agreement or any activity of Wachovia
or such other bank constituted an unsafe or unsound practice or violated any
law, rule or regulation applicable to it, the OCC could order Wachovia or such
other bank, among other things, to rescind such contractual obligation or
terminate such activity.
In March 2003, the OCC issued a temporary cease and desist order against a
national bank (which was converted to a consent order in April 2003) asserting
that, contrary to safe and sound banking practices, the bank was receiving
inadequate servicing compensation in connection with several credit card
securitizations sponsored by its affiliates because of the size and
subordination of the contractual servicing fee, and ordered the bank, among
other things, to immediately resign as servicer, to cease all servicing activity
within 120 days and to immediately withhold funds from collections in an amount
sufficient to compensate it for its actual costs and expenses of servicing
(notwithstanding the priority of payments in the related securitization
agreements). Although, at the time the 2003 temporary cease and desist order was
issued, no conservator or receiver had been appointed with respect to the
national bank, the national bank was already under a consent cease and desist
order issued in May 2002 covering numerous matters, including a directive that
the bank develop and submit a plan of disposition providing for the sale or
liquidation of the bank, imposing general prohibitions on the acceptance of new
credit card accounts and deposits in general, and placing significant
restrictions on the bank's transactions with its affiliates.
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While the depositor does not believe that the OCC would consider, with
respect to any series, (i) provisions relating to Wachovia or another bank
acting as a servicer under the related pooling and servicing agreement, (ii) the
payment or amount of the servicing compensation payable to Wachovia or another
bank or (iii) any other obligation of Wachovia or another bank under the related
pooling and servicing agreement or other contractual agreement under which the
depositor may purchase mortgage loans from Wachovia or another bank, to be
unsafe or unsound or violative of any law, rule or regulation applicable to it,
there can be no assurance that the OCC in the future would not conclude
otherwise. If the OCC did reach such a conclusion, and ordered Wachovia or
another bank to rescind or amend any such agreement, payments on certificates
could be delayed or reduced.
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MATERIAL FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following is a general discussion of the anticipated material federal
income tax consequences of the purchase, ownership and disposition of offered
certificates. This discussion is directed solely to certificateholders that hold
the certificates as capital assets within the meaning of section 1221 of the
Code and it does not purport to discuss all federal income tax consequences that
may be applicable to particular categories of investors, some of which (e.g.,
banks, insurance companies and foreign investors) may be subject to special
rules. Further, the authorities on which this discussion, and the opinion
referred to below, are based are subject to change or differing interpretations,
which could apply retroactively. Taxpayers and preparers of tax returns
(including those filed by any REMIC or other issuer) should be aware that under
applicable Treasury regulations a provider of advice on specific issues of law
is not considered an income tax return preparer unless the advice is given with
respect to the consequences of contemplated actions and is directly relevant to
the determination of an entry on a tax return. Accordingly, taxpayers should
consult their own tax advisors and tax return preparers regarding the
preparation of any item on a tax return, even where the anticipated tax
treatment has been discussed herein. In addition to the federal income tax
consequences described herein, potential investors should consider the state and
local tax consequences, if any, of the purchase, ownership and disposition of
offered certificates. See "State and Other Tax Consequences." Certificateholders
are advised to consult their own tax advisors concerning the federal, state,
local or other tax consequences to them of the purchase, ownership and
disposition of offered certificates.
The following discussion addresses securities of two general types: (i)
REMIC Certificates representing interests in a trust, or a portion thereof, that
the master servicer or the trustee will elect to have treated as a real estate
mortgage investment conduit ("REMIC") under sections 860A through 860G (the
"REMIC Provisions") of the Code and (ii) grantor trust certificates representing
interests in a grantor trust fund as to which no such election will be made. If
no REMIC election is made, the trust fund may elect to be treated as a financial
assets securitization investment trust ("FASIT"). The prospectus supplement
relating to such an election will describe the requirements for the
classification of the trust as a FASIT and the consequences to a holder of
owning certificates in a FASIT. The prospectus supplement for each series of
certificates also will indicate whether a REMIC election (or elections) will be
made for the related trust or applicable portion thereof and, if such an
election is to be made, will identify all "regular interests" and "residual
interests" in each REMIC. For purposes of this tax discussion, references to a
"certificateholder" or a "holder" are to the beneficial owner of a certificate.
The following discussion is limited in applicability to offered
certificates. Moreover, this discussion applies only to the extent that mortgage
assets held by a trust fund consist solely of mortgage loans. To the extent that
other mortgage assets, including REMIC Certificates and mortgage pass-through
certificates, are to be held by a trust, the tax consequences associated with
the inclusion of such assets will be disclosed in the related prospectus
supplement. In addition, if cash flow agreements, other than guaranteed
investment contracts, are included in a trust, the tax consequences associated
with any cash flow agreements also will be disclosed in the related prospectus
supplement. See "Description of the Trust Funds--Cash Flow Agreements."
Furthermore, the following discussion is based in part upon the rules
governing original issue discount that are set forth in sections 1271-1273 and
1275 of the Code and in the Treasury regulations issued thereunder (the "OID
Regulations"), and in part upon the REMIC provisions and the Treasury
regulations issued thereunder (the "REMIC Regulations"). The OID regulations do
not adequately address certain issues relevant to, and in some instances provide
that they are not applicable to, securities such as the certificates.
REMICS
Classification of REMICs. It is the opinion of Cadwalader, Wickersham &
Taft LLP, counsel to the depositor, that upon the issuance of each series of
REMIC Certificates, assuming compliance with all provisions of the related
pooling and servicing agreement and based upon the law on the date thereof, for
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federal income tax purposes the related trust will qualify as one or more REMICs
and the REMIC Certificates offered will be considered to evidence ownership of
"regular interests" ("REMIC Regular Certificates") or "residual interests"
("REMIC Residual Certificates") under the REMIC provisions.
If an entity electing to be treated as a REMIC fails to comply with one or
more of the ongoing requirements of the Code for such status during any taxable
year, the Code provides that the entity will not be treated as a REMIC for such
year and thereafter. In that event, such entity may be taxable as a corporation
under Treasury regulations, and the related REMIC Certificates may not be
accorded the status or given the tax treatment described below. Although the
Code authorizes the Treasury Department to issue regulations providing relief in
the event of an inadvertent termination of REMIC status, no such regulations
have been issued. Any such relief, moreover, may be accompanied by sanctions,
such as the imposition of a corporate tax on all or a portion of the trust
fund's income for the period during which the requirements for such status are
not satisfied. The pooling and servicing agreement with respect to each REMIC
will include provisions designed to maintain the trust status as a REMIC under
the REMIC provisions. It is not anticipated that the status of any trust as a
REMIC will be terminated.
Characterization of Investments in REMIC Certificates. In general, with
respect to each series of certificates for which a REMIC election is made,
certificates held by a real estate investment trust will constitute "real estate
assets" within the meaning of section 856(c)(5)(B) of the Code, and each such
series of certificates will constitute assets described in section
7701(a)(19)(C) of the Code in the same proportion that the assets of the REMIC
underlying such certificates would be so treated. However, to the extent that
the REMIC assets constitute mortgages on property not used for residential or
certain other prescribed purposes, the REMIC Certificates will not be treated as
assets qualifying under section 7701(a)(19)(C)(v) of the Code. Moreover, if 95%
or more of the assets of the REMIC qualify for any of the foregoing treatments
at all times during a calendar year, the REMIC Certificates will qualify for the
corresponding status in their entirety for that calendar year. Interest on the
REMIC Regular Certificates and income allocated to the class of REMIC Residual
Certificates will be interest described in section 856(c)(3)(B) of the Code to
the extent that such certificates are treated as "real estate assets" within the
meaning of section 856(c)(5)(B) of the Code. In addition, generally the REMIC
Regular Certificates will be "qualified mortgages" within the meaning of section
860G(a)(3) of the Code. The determination as to the percentage of the REMIC's
assets that constitute assets described in the foregoing sections of the Code
will be made with respect to each calendar quarter based on the average adjusted
basis of each category of the assets held by the REMIC during such calendar
quarter. The servicer or the trustee will report those determinations to
certificateholders in the manner and at the times required by the applicable
Treasury regulations.
The assets of the REMIC will include, in addition to mortgage loans,
payments on mortgage loans held pending distribution on the REMIC Certificates
and property acquired by foreclosure held pending sale, and may include amounts
in reserve accounts. It is unclear whether property acquired by foreclosure held
pending sale and amounts in reserve accounts would be considered to be part of
the mortgage loans, or whether such assets otherwise would receive the same
treatment as the mortgage loans for purposes of all of the foregoing sections.
The related prospectus supplement will describe whether any mortgage loans
included in the trust fund will not be treated as assets described in the
foregoing sections. The REMIC regulations do provide that payments on mortgage
loans held pending distribution are considered part of the mortgage.
Tiered REMIC Structures. For certain series of REMIC Certificates, two or
more separate elections may be made to treat designated portions of the related
trust fund as separate or tiered REMICs for federal income tax purposes. Upon
the issuance of any such series of REMIC Certificates, counsel to the depositor
will deliver its opinion generally to the effect that, assuming compliance with
all provisions of the related pooling and servicing agreement, the tiered REMICs
will ach qualify as a REMIC and the REMIC Certificates issued by the tiered
REMICs, respectively, will be considered to evidence ownership of REMIC Regular
Certificates or REMIC Residual Certificates in the related REMIC within the
meaning of the REMIC provisions.
For purposes of determining whether the REMIC Certificates are "real estate
assets" within the meaning of section 856(c)(5)(B) of the Code, "loans secured
by an interest in real property" under
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section 7701(a)(19)(C) of the Code, and whether the income generated by these
certificates is interest described in section 856(c)(3)(B) of the Code, the
tiered REMICs will be treated as one REMIC.
TAXATION OF OWNERS OF REMIC REGULAR CERTIFICATES
General. Except as otherwise stated in this discussion, REMIC Regular
Certificates will be treated for federal income tax purposes as debt instruments
issued by the REMIC and not as ownership interests in the REMIC or its assets.
Moreover, holders of REMIC Regular Certificates that otherwise report income
under a cash method of accounting will be required to report income with respect
to REMIC Regular Certificates under an accrual method.
Original Issue Discount. Certain REMIC Regular Certificates may be issued
with "original issue discount" within the meaning of section 1273(a) of the
Code. Any holders of REMIC Regular Certificates issued with original issue
discount generally will be required to include original issue discount in income
as it accrues, in accordance with the method described below, in advance of the
receipt of the cash attributable to such income. In addition, section 1272(a)(6)
of the Code provides special rules applicable to REMIC Regular Certificates and
certain other debt instruments issued with original issue discount. Regulations
have not been issued under that section.
The Code requires that a prepayment assumption be used with respect to
mortgage loans held by a REMIC in computing the accrual of original issue
discount on REMIC Regular Certificates issued by that REMIC, and that
adjustments be made in the amount and rate of accrual of such discount to
reflect differences between the actual prepayment rate and the prepayment
assumption. The prepayment assumption is to be determined in a manner prescribed
in Treasury regulations; as noted above, those regulations have not been issued.
The conference committee report accompanying the Tax Reform Act of 1986
indicates that the regulations will provide that the prepayment assumption used
with respect to a REMIC Regular Certificate must be the same as that used in
pricing the initial offering. The prepayment assumption used in reporting
original issue discount for each series of REMIC Regular Certificates will be
consistent with this standard and will be disclosed in the related prospectus
supplement. However, neither the depositor nor any other person will make any
representation that the mortgage loans will in fact prepay at a rate conforming
to the prepayment assumption or at any other rate.
The original issue discount, if any, on a REMIC Regular Certificate will be
the excess of its stated redemption price at maturity over its issue price. The
issue price of a particular class of REMIC Regular Certificates will be the
first cash price at which a substantial amount of REMIC Regular Certificates of
that class is sold (excluding sales to bond houses, brokers and underwriters).
If less than a substantial amount of a particular class of REMIC Regular
Certificates is sold for cash on or prior to the date of their initial issuance,
the issue price will be the fair market value on the issuance date. Under the
OID regulations, the stated redemption price of a REMIC Regular Certificate is
equal to the total of all payments to be made on such certificate other than
"qualified stated interest." "Qualified stated interest" includes interest
payable unconditionally at least annually at a single fixed rate, at a
"qualified floating rate," or at an "objective rate," or a combination of a
single fixed rate and one or more "qualified floating rates," or one "qualified
inverse floating rates," or a combination of "qualified floating rates" that
does not operate in a manner that accelerates or defers interest payments on
such REMIC Regular Certificates.
It is not entirely clear under the Code that interest paid to the REMIC
Regular Certificates that are subject to early termination through prepayments
and that have limited enforcement rights should be considered "qualified stated
interest". However, unless disclosed otherwise in the prospectus supplement, the
trust fund intends to treat stated interest as "qualified stated interest" for
determining if, and to what extent, the REMIC Regular Certificates have been
issued with original issue discount. Nevertheless, holders of the REMIC Regular
Certificates should consult their own tax advisors with respect to whether
interest in the REMIC Regular Certificates qualifies as "qualified stated
interest" under the Code.
In the case of REMIC Regular Certificates bearing adjustable interest
rates, the determination of the total amount of original issue discount and the
timing of the inclusion thereof will vary according to the characteristics of
such REMIC Regular Certificates. If the original issue discount rules apply to
such certificates, the related prospectus supplement will describe the manner in
which these rules will be applied in preparing information returns to the
certificateholders and the Internal Revenue Service (the "IRS").
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In addition, if the accrued interest to be paid on the first distribution
date is computed with respect to a period that begins prior to the issuance of
the certificates, a portion of the purchase price paid for a REMIC Regular
Certificate will reflect accrued interest. The OID regulations state that all or
some portion of such accrued interest may be treated as a separate asset the
cost of which is recovered entirely out of interest paid on the first
distribution date. It is unclear how an election to do so would be made under
the OID regulations and whether such an election could be made unilaterally by a
certificateholder.
Notwithstanding the general definition of original issue discount, original
issue discount on a REMIC Regular Certificate will be considered to be de
minimis if it is less than 0.25% of the stated redemption price of the REMIC
Regular Certificate multiplied by its weighted average life. For this purpose,
the weighted average life of the REMIC Regular Certificate is computed as the
sum of the amounts determined, as to each payment included in the stated
redemption price of such REMIC Regular Certificate, by multiplying the number of
complete years, rounding down for partial years, from the issue date until any
payment is expected to be made (taking into account the prepayment assumption)
by a fraction, the numerator of which is the amount of the payment, and the
denominator of which is the stated redemption price at maturity. Under the OID
Regulations, original issue discount of only a de minimis amount will be
included in income as each payment of stated principal is made, based on the
product of the total amount of such de minimis original issue discount and a
fraction, the numerator of which is the amount of such principal payment and the
denominator of which is the outstanding stated principal amount of the REMIC
Regular Certificate. The OID regulations also would permit a certificateholder
to elect to accrue de minimis original issue discount into income currently
based on a constant yield method. See "--Taxation of Owners of REMIC Regular
Certificates--Market Discount" for a description of such election under the OID
Regulations.
If original issue discount on a REMIC Regular Certificate is in excess of a
de minimis amount, the holder of such certificate must include in ordinary gross
income the sum of the "daily portions" of original issue discount for each day
during its taxable year on which it held such REMIC Regular Certificate,
including the purchase date but excluding the disposition date. In the case of
an original holder of a REMIC Regular Certificate, the daily portions of
original issue discount will be determined as follows.
As to each "accrual period," that is, each period that ends on a date that
corresponds to a distribution date and begins on the first day following the
immediately preceding accrual period, a calculation will be made of the portion
of the original issue discount that accrued during such accrual period. The
portion of original issue discount that accrues in any accrual period will equal
the excess, if any, of (i) the sum of (a) the present value, as of the end of
the accrual period, of all of the distributions remaining to be made on the
REMIC Regular Certificate, if any, in future periods and (b) the distributions
made on such REMIC Regular Certificate during the accrual period of amounts
included in the stated redemption price, over (ii) the adjusted issue price of
the REMIC Regular Certificate at the beginning of the accrual period. The
present value of the remaining distributions referred to in the preceding
sentence will be calculated assuming that distributions on the REMIC Regular
Certificate will be received in future periods based on the mortgage loans being
prepaid at a rate equal to the prepayment assumption and using a discount rate
equal to the original yield to maturity of the certificate. For these purposes,
the original yield to maturity of the certificate will be calculated based on
its issue price and assuming that distributions on the certificate will be made
in all accrual periods based on the mortgage loans being prepaid at a rate equal
to the prepayment assumption. The adjusted issue price of a REMIC Regular
Certificate at the beginning of any accrual period will equal the issue price of
such certificate, increased by the aggregate amount of original issue discount
that accrued with respect to such certificate in prior accrual periods, and
reduced by the amount of any distributions made on such REMIC Regular
Certificate in prior accrual periods of amounts included in the stated
redemption price. The original issue discount accruing during any accrual
period, computed as described above, will be allocated ratably to each day
during the accrual period to determine the daily portion of original issue
discount for such day.
A subsequent purchaser of a REMIC Regular Certificate that purchases such
certificate at a cost (excluding any portion of such cost attributable to
accrued qualified stated interest) less than its remaining stated redemption
price will also be required to include in gross income the daily portions of any
original issue discount with respect to such certificate. However, each such
daily portion will be reduced, if such cost is in excess of its "adjusted issue
price," in proportion to the ratio such excess bears to the aggregate
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original issue discount remaining to be accrued on such REMIC Regular
Certificate. The adjusted issue price of a REMIC Regular Certificate on any
given day equals the sum of (i) the adjusted issue price (or, in the case of the
first accrual period, the issue price) of the certificate at the beginning of
the accrual period, including the first day and (ii) the daily portions of
original issue discount for all days during the related accrual period up to the
day of determination.
Market Discount. A Certificateholder that purchases a REMIC Regular
Certificate at a market discount, that is, in the case of a REMIC Regular
Certificate issued without original issue discount, at a purchase price less
than its remaining stated principal amount, or in the case of a REMIC Regular
Certificate issued with original issue discount, at a purchase price less than
its adjusted issue price, will recognize gain upon receipt of each distribution
representing stated redemption price. In particular, under section 1276 of the
Code such a certificateholder generally will be required to allocate the portion
of each such distribution representing stated redemption price first to accrued
market discount not previously included in income, and to recognize ordinary
income to that extent. A certificateholder may elect to include market discount
in income currently as it accrues rather than including it on a deferred basis
in accordance with the foregoing. If the election is made, it will apply to all
market discount bonds acquired by such certificateholder on or after the first
day of the taxable year to which the election applies. In addition, the OID
regulations permit a certificateholder to elect to accrue all interest, discount
and premium in income as interest, based on a constant yield method. If such an
election were made with respect to a REMIC Regular Certificate with market
discount, the certificateholder would be deemed to have made an election to
currently include market discount in income with respect to all other debt
instruments having market discount that such certificateholder acquires during
the taxable year of the election or thereafter, and possibly previously acquired
instruments. Similarly, a certificateholder that made this election for a
certificate that is acquired at a premium would be deemed to have made an
election to amortize bond premium with respect to all debt instruments having
amortizable bond premium that such certificateholder owns or acquires. See
"--Taxation of Owners of REMIC Regular Certificates--Premium." Each of these
elections to accrue interest, discount and premium with respect to a certificate
on a constant yield method or as interest would be irrevocable.
Market discount with respect to a REMIC Regular Certificate will be
considered to be de minimis for purposes of section 1276 of the Code if such
market discount is less than 0.25% of the remaining stated redemption price of
such REMIC Regular Certificate multiplied by the number of full years to
maturity remaining after the date of its purchase. In interpreting a similar
rule with respect to original issue discount on obligations payable in
installments, the OID Regulations refer to the weighted average maturity of
obligations, and it is likely that the same rule will be applied with respect to
market discount, presumably taking into account the prepayment assumption. If
market discount is treated as de minimis under this rule, it appears that the
actual discount would be treated in a manner similar to original issue discount
of a de minimis amount. See "--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount." Such treatment would result in discount
being included in income at a slower rate than discount would be required to be
included in income using the method described above.
Section 1276(b)(3) of the Code specifically authorizes the Treasury
Department to issue regulations providing for the method for accruing market
discount on debt instruments, the principal of which is payable in more than one
installment. Until regulations are issued, the rules described in the committee
report accompanying the Tax Reform Act of 1986 apply. That committee report
indicates that REMIC Regular Certificates should accrue market discount either:
o on the basis of a constant yield method;
o in the case of a REMIC Regular Certificate issued without original
issue discount, in an amount that bears the same ratio to the total
remaining market discount as the stated interest paid during the
accrual period bears to the total amount of stated interest remaining
to be paid as of the beginning of the accrual period; or
o in the case of a REMIC Regular Certificate issued with original issue
discount, in an amount that bears the same ratio to the total
remaining market discount as the original issue discount accrued in
the accrual period bears to the total original issue discount
remaining on the REMIC Regular Certificate at the beginning of the
accrual period.
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Furthermore, the prepayment assumption used in calculating the accrual of
original issue discount is also used in calculating the accrual of market
discount. Because the regulations referred to in this paragraph have not been
issued, it is not possible to predict what effect such regulations might have on
the tax treatment of a REMIC Regular Certificate purchased at a discount in the
secondary market.
To the extent that REMIC Regular Certificates provide for monthly or other
periodic distributions throughout their term, the effect of these rules may be
to require market discount to be includible in income at a rate that is not
significantly slower than the rate at which such discount would accrue if it
were original issue discount. Moreover, in any event a holder of a REMIC Regular
Certificate generally will be required to treat a portion of any gain on the
sale or exchange of such certificate as ordinary income to the extent of the
market discount accrued to the date of disposition under one of the foregoing
methods, less any accrued market discount previously reported as ordinary
income.
Further, under section 1277 of the Code a holder of a REMIC Regular
Certificate may be required to defer a portion of its interest deductions for
the taxable year attributable to any indebtedness incurred or continued to
purchase or carry a REMIC Regular Certificate purchased with market discount.
For these purposes, the de minimis rule referred to above applies. Any such
deferred interest expense would not exceed the market discount that accrues
during such taxable year and is, in general, allowed as a deduction not later
than the year in which such market discount is includible in income. If such
holder elects to include market discount in income currently as it accrues on
all market discount instruments acquired by such holder in that taxable year or
thereafter, the interest deferral rule described above will not apply.
Premium. A REMIC Regular Certificate purchased at a cost (excluding accrued
qualified stated interest) greater than its remaining stated redemption price
will be considered to be purchased at a premium. The holder of such a REMIC
Regular Certificate may elect under section 171 of the Code to amortize such
premium against qualified stated interest under the constant yield method over
the life of the certificate. If made, such an election will apply to all debt
instruments having amortizable bond premium that the holder owns or subsequently
acquires. Amortizable premium will be treated as an offset to interest income on
the related debt instrument, rather than as a separate interest deduction. The
OID regulations also permit certificateholders to elect to include all interest,
discount and premium in income based on a constant yield method, further
treating the certificateholder as having made the election to amortize premium
generally. See "--Taxation of Owners of REMIC Regular Certificates--Market
Discount." The committee report accompanying the Tax Reform Act of 1986 states
that the same rules that apply to accrual of market discount will also apply in
amortizing bond premium under section 171 of the Code.
Realized Losses. Under section 166 of the Code, both noncorporate holders
of the REMIC Regular Certificates that acquire such certificates in connection
with a trade or business and corporate holders of the REMIC Regular Certificates
should be allowed to deduct, as ordinary losses, any losses sustained during a
taxable year in which their certificates become wholly or partially worthless as
the result of one or more realized losses on the residential loans. However, it
appears that a noncorporate holder that does not acquire a REMIC Regular
Certificate in connection with a trade or business will not be entitled to
deduct a loss under section 166 of the Code until such holder's certificate
becomes wholly worthless and that the loss will be characterized as a short-term
capital loss. Losses sustained on the mortgage loans may be "events which have
occurred before the close of the accrued period" that can be taken into account
under Code section 1272(a)(6) for purposes of determining the amount of OID that
accrues on a certificate.
The holder of a REMIC Regular Certificate eventually will recognize a loss
or reduction in income attributable to previously accrued and included income
that as the result of a realized loss ultimately will not be realized, but the
law is unclear with respect to the timing and character of such loss or
reduction in income.
TAXATION OF OWNERS OF REMIC RESIDUAL CERTIFICATES
General. As residual interests, the REMIC Residual Certificates will be
subject to tax rules that differ significantly from those that would apply if
the REMIC Residual Certificates were treated for
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federal income tax purposes as direct ownership interests in the mortgage loans
included in a trust fund or as debt instruments issued by the REMIC.
An original holder of a REMIC Residual Certificate generally will be
required to report its daily portion of the taxable income or, subject to the
limitations noted in this discussion, the net loss of the REMIC for each day
during a calendar quarter that such holder owned such REMIC Residual
Certificate. For this purpose, the taxable income or net loss of the REMIC will
be allocated to each day in the calendar quarter ratably using a "30 days per
month/90 days per quarter/360 days per year" convention unless the related
prospectus supplement states otherwise. The daily amounts so allocated will then
be allocated among the REMIC Residual Certificateholders in proportion to their
respective ownership interests on such day. Any amount included in the gross
income or allowed as a loss of any REMIC Residual Certificateholder by virtue of
this paragraph will be treated as ordinary income or loss. The taxable income of
the REMIC will be determined under the rules described below in "--Taxable
Income of the REMIC" and will be taxable to the REMIC Residual
Certificateholders without regard to the timing or amount of cash distributions
by the REMIC. Ordinary income derived from REMIC Residual Certificates will be
"portfolio income" for purposes of the taxation of taxpayers subject to
limitations under section 469 of the Code on the deductibility of "passive
losses."
A holder of a REMIC Residual Certificate that purchased such certificate
from a prior holder of such certificate also will be required to report on its
federal income tax return amounts representing its daily share of the taxable
income or loss of the REMIC for each day that it holds such REMIC Residual
Certificate. Those daily amounts generally will equal the amounts of taxable
income or net loss determined as described above. The Committee Report indicates
that certain modifications of the general rules may be made, by regulations,
legislation or otherwise, to reduce or increase the income of a REMIC Residual
Certificateholder that purchased such REMIC Residual Certificate from a prior
holder of such certificate at a price greater than (or less than) the adjusted
basis, such REMIC Residual Certificate would have had in the hands of an
original holder of such certificate. The REMIC Regulations, however, do not
provide for any such modifications.
It is uncertain how payments received by a holder of a REMIC Residual
interest in connection with the acquisition of such REMIC Residual Certificate
should be treated and holders of REMIC Residual Certificates should consult
their tax advisors concerning the treatment of such payments for income tax
purposes.
The amount of income REMIC Residual Certificateholders will be required to
report (or the tax liability associated with such income) may exceed the amount
of cash distributions received from the REMIC for the corresponding period.
Consequently, REMIC Residual Certificateholders should have other sources of
funds sufficient to pay any federal income taxes due as a result of their
ownership of REMIC Residual Certificates or unrelated deductions against which
income may be offset, subject to the rules relating to "excess inclusions,"
residual interests without "significant value" and "noneconomic" residual
interests discussed below. The fact that the tax liability associated with the
income allocated to REMIC Residual Certificateholders may exceed the cash
distributions received by such REMIC Residual Certificateholders for the
corresponding period may significantly adversely affect such REMIC Residual
Certificateholders' after-tax rate of return.
Taxable Income of the REMIC. The taxable income of the REMIC will equal the
income from the mortgage loans and other assets of the REMIC plus any
cancellation of indebtedness income due to the allocation of realized losses to
REMIC Regular Certificates, less the deductions allowed to the REMIC for
interest on the REMIC Regular Certificates, amortization of any premium on the
mortgage loans, bad debt losses with respect to the mortgage loans and, except
as described below, for servicing, administrative and other expenses.
For purposes of determining its taxable income, the REMIC will have an
initial aggregate basis in its assets equal to the sum of the issue prices of
all REMIC Certificates (or, if a class of REMIC Certificates is not sold
initially, fair market value). Such aggregate basis will be allocated among the
mortgage loans and the other assets of the REMIC in proportion to their
respective fair market values. The issue price of any REMIC Certificates offered
by this prospectus and the related prospectus supplement will be determined in
the manner described above under "--Taxation of Owners of REMIC Regular
Certificates--
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Original Issue Discount." If one or more classes of REMIC Certificates are
retained initially rather than sold, the master servicer or the trustee may be
required to estimate the fair market value of the REMIC's interests in its
mortgage loans and other property in order to determine the basis to the REMIC
of the mortgage loans and other property held by such REMIC.
Subject to possible application of the de minimis rules, the method of
accrual by the REMIC of original issue discount income and market discount
income with respect to mortgage loans that it holds will be equivalent to the
method for accruing original issue discount income for holders of REMIC Regular
Certificates. However, a REMIC that acquires loans at a market discount must
include such market discount in income currently, as it accrues, on a constant
interest basis. See "--Taxation of Owners of REMIC Regular Certificates" above,
which describes a method for accruing such discount income that is analogous to
that required to be used by a REMIC as to mortgage loans with market discount
that it holds.
A mortgage loan will be deemed to have been acquired with discount (or
premium) if the REMIC's basis in that mortgage loan is less than (or greater
than) its stated redemption price. Any such discount will be includible in the
income of the REMIC as it accrues, under a method similar to the method
described above for accruing original issue discount on the REMIC Regular
Certificates. It is anticipated that each REMIC will elect under section 171 of
the Code to amortize any premium on the mortgage loans. Premium on any mortgage
loan to which such election applies may be amortized under a constant yield
method, presumably taking into account a prepayment assumption. However, this
election would not apply to any mortgage loan originated on or before September
27, 1985. Instead, premium on such a mortgage loan should be allocated among the
principal payments thereon and be deductible by the REMIC as those payments
become due or upon the prepayment of such mortgage loan.
A REMIC will be allowed deductions for interest on the REMIC Regular
Certificates equal to the deductions that would be allowed if the REMIC Regular
Certificates were indebtedness of the REMIC. Original issue discount will be
considered to accrue for this purpose as described above under "--Taxation of
Owners of REMIC Regular Certificate--Original Issue Discount," except that the
de minimis rule and the adjustments for subsequent holders of REMIC Regular
Certificates described therein will not apply.
If a class of REMIC Regular Certificates is issued at a price in excess of
the stated redemption price of such class, the net amount of interest deductions
that are allowed the REMIC in each taxable year with respect to the REMIC
Regular Certificates of such class will be reduced by an amount equal to the
portion of the premium that is considered to be amortized or repaid in that
year. Although the matter is not entirely certain, it is likely that Issue
Premium would be amortized under a constant yield method in a manner analogous
to the method of accruing original issue discount described above under
"--Taxation of Owners of REMIC Regular Certificates--Original Issue Discount."
As a general rule, the taxable income of a REMIC will be determined in the
same manner as if the REMIC were an individual having the calendar year as its
taxable year and using the accrual method of accounting. However, no item of
income, gain, loss or deduction allocable to a prohibited transaction will be
taken into account. See "--Prohibited Transactions Tax and Other Taxes" below.
The limitation on miscellaneous itemized deductions imposed on individuals by
section 67 of the Code will not be applied at the REMIC level so that the REMIC
will be allowed deductions for servicing, administrative and other non-interest
expenses in determining its taxable income. All such expenses will be allocated
as a separate item to the holders of REMIC Certificates, subject to the
limitation of section 67 of the Code. See "--Possible Pass-Through of
Miscellaneous Itemized Deductions." If the deductions allowed to the REMIC
exceed its gross income for a calendar quarter, such excess will be the net loss
for the REMIC for that calendar quarter.
Basis Rules, Net Losses and Distributions. The adjusted basis of a REMIC
Residual Certificate will be equal to the amount paid for such REMIC Residual
Certificate, increased by amounts included in the income of the REMIC Residual
Certificateholder and decreased (but not below zero) by distributions made, and
by net losses allocated, to such REMIC Residual Certificateholder.
A REMIC Residual Certificateholder is not allowed to take into account any
net loss for any calendar quarter to the extent such net loss exceeds such REMIC
Residual Certificateholder's adjusted
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basis in its REMIC Residual Certificate as of the close of such calendar
quarter. Any loss that is not currently deductible by reason of this limitation
may be carried forward indefinitely to future calendar quarters and, subject to
the same limitation, may be used only to offset income from the REMIC Residual
Certificate. The ability of REMIC Residual Certificateholders to deduct net
losses may be subject to additional limitations under the Code, as to which
REMIC Residual Certificateholders should consult their tax advisors.
Any distribution on a REMIC Residual Certificate will be treated as a
nontaxable return of capital to the extent it does not exceed the holder's
adjusted basis in such REMIC Residual Certificate. To the extent a distribution
on a REMIC Residual Certificate exceeds such adjusted basis, it will be treated
as gain from the sale of such REMIC Residual Certificate. Holders of certain
REMIC Residual Certificates may be entitled to distributions early in the term
of the related REMIC under circumstances in which their bases in such REMIC
Residual Certificates will not be sufficiently large that such distributions
will be treated as nontaxable returns of capital. Their bases in such REMIC
Residual Certificates will initially equal the amount paid for such REMIC
Residual Certificates and will be increased by their allocable shares of taxable
income of the trust fund. However, such bases increases may not occur until the
end of the calendar quarter, or perhaps the end of the calendar year, with
respect to which such REMIC taxable income is allocated to the REMIC Residual
Certificateholders. To the extent such REMIC Residual Certificateholders'
initial bases are less than the distributions to such REMIC Residual
Certificateholders, and increases in such initial bases either occur after such
distributions or are less than the amount of such distributions, gain will be
recognized to such REMIC Residual Certificateholders on such distributions and
will be treated as gain from the sale of their REMIC Residual Certificates.
The effect of these rules is that a REMIC Residual Certificateholder may
not amortize its basis in a REMIC Residual Certificate, but may only recover its
basis through distributions, through the deduction of any net losses of the
REMIC or upon the sale of its REMIC Residual Certificate. See "--Sales of REMIC
Certificates." For a discussion of possible modifications of these rules that
may require adjustments to income of a holder of a REMIC Residual Certificate
other than an original holder in order to reflect any difference between the
cost of such REMIC Residual Certificate to such REMIC Residual Certificateholder
and the adjusted basis such REMIC Residual Certificate would have in the hands
of an original holder, see "--Taxation of Owners of REMIC Residual
Certificates--General."
Excess Inclusions. Any "excess inclusions" with respect to a REMIC Residual
Certificate will be subject to federal income tax in all events.
In general, the "excess inclusions" with respect to a REMIC Residual
Certificate for any calendar quarter will be the excess, if any, of:
o the sum of the daily portions of REMIC taxable income allocable to
such REMIC Residual Certificate; over
o the sum of the "daily accruals" for each day during such quarter that
such REMIC Residual Certificate was held by such REMIC Residual
Certificateholder.
The daily accruals of a REMIC Residual Certificateholder will be determined
by allocating to each day during a calendar quarter its ratable portion of the
product of the "adjusted issue price" of the REMIC Residual Certificate at the
beginning of the calendar quarter and 120% of the "long-term Federal rate" in
effect on the date the certificates were issued. For this purpose, the adjusted
issue price of a REMIC Residual Certificate as of the beginning of any calendar
quarter will be equal to the issue price of the REMIC Residual Certificate,
increased by the sum of the daily accruals for all prior quarters and decreased
(but not below zero) by any distributions made with respect to such REMIC
Residual Certificate before the beginning of such quarter. The issue price of a
REMIC Residual Certificate is the initial offering price to the public
(excluding bond houses and brokers) at which a substantial amount of the REMIC
Residual Certificates were sold. The "long-term Federal rate" is an average of
current yields on Treasury securities with a remaining term of greater than nine
years, computed and published monthly by the IRS.
For REMIC Residual Certificateholders, an excess inclusion:
o will not be permitted to be offset by deductions, losses or loss
carryovers from other activities;
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o will be treated as "unrelated business taxable income" to an otherwise
tax-exempt organization; and
o will not be eligible for any rate reduction or exemption under any tax
treaty with respect to the 30% United States withholding tax imposed
on distributions to foreign investors. See, however, "--Foreign
Investors in REMIC Certificates" below.
In the case of any REMIC Residual Certificates held by a real estate
investment trust, the aggregate excess inclusions with respect to such REMIC
Residual Certificates, reduced (but not below zero) by the real estate
investment trust taxable income, excluding any net capital gain, will be
allocated among the shareholders of such trust in proportion to the dividends
received by such shareholders from such trust, and any amount so allocated will
be treated as an excess inclusion with respect to a REMIC Residual Certificate
as if held directly by such shareholder. The Treasury could issue regulations
which apply a similar rule to regulated investment companies, common trust funds
and certain cooperatives. The REMIC Regulations currently do not address this
subject.
In addition, there are three rules for determining the effect of excess
inclusions on the alternative minimum taxable income of a REMIC Residual
Certificateholder. First, alternative minimum taxable income for a REMIC
Residual Certificateholder is determined without regard to the special rule
discussed above, that taxable income cannot be less than excess inclusions.
Second, a REMIC Residual Certificateholder's alternative minimum taxable income
for a taxable year cannot be less than the excess inclusions for the year.
Third, the amount of any alternative minimum tax net operating loss deduction
must be computed without regard to any excess inclusions.
Noneconomic REMIC Residual Certificates. Under the REMIC regulations,
transfers of "noneconomic" REMIC Residual Certificates will be disregarded for
all federal income tax purposes if "a significant purpose of the transfer was to
enable the transferor to impede the assessment or collection of tax". If such
transfer is disregarded, the purported transferor will continue to remain liable
for any taxes due with respect to the income on such "noneconomic" REMIC
Residual Certificate. The REMIC regulations provide that a REMIC Residual
Certificate is noneconomic unless, based on the prepayment assumptions and on
any required or permitted cleanup calls, or required liquidation provisions, the
present value of the expected future distributions discounted at the "applicable
Federal rate" on the REMIC Residual Certificate equals at least the present
value of the expected tax on the anticipated excess inclusions and the
transferor reasonably expects that the transferee will receive distributions
with respect to the REMIC Residual Certificate at or after the time the taxes
accrue on the anticipated excess inclusions in an amount sufficient to satisfy
the accrued taxes. The REMIC regulations explain that a significant purpose to
impede the assessment or collection of tax exists if the transferor, at the time
of the transfer, either knew or should have known that the transferee would be
unwilling or unable to pay taxes due on its share of the taxable income of the
REMIC. Under the REMIC regulations, a safe harbor is provided if (1) the
transferor conducted, at the time of the transfer, a reasonable investigation of
the financial condition of the transferee and found that the transferee
historically had paid its debts as they came due in the future, (2) the
transferee represents to the transferor that it understands that, as the holder
of the noneconomic residual interest, the transferee may incur tax liabilities
in excess of cash flows generated by the interest and that the transferee
intends to pay taxes associated with holding the residual interest as they
become due and (3) the transferee represents to the transferor that it will not
cause income from the REMIC Residual Certificate to be attributable to a foreign
permanent establishment or fixed base (within the meaning of an applicable
income tax treaty) of the transferee or any other United States person.
Accordingly, all transfers of REMIC Residual Certificates that may constitute
noneconomic residual interests will be subject to certain restrictions under the
terms of the related pooling and servicing agreement that are intended to reduce
the possibility of any such transfer being disregarded. Such restrictions will
require each party to a transfer to provide an affidavit to certify to the
matters in the preceding sentence.
In addition to the three conditions set forth above, a fourth condition
must be satisfied in one of two alternative ways for the transferor to have a
"safe harbor" against ignoring the transfer. Either:
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(a) the present value of the anticipated tax liabilities associated
with holding the noneconomic residual interest not exceed the sum of:
(i) the present value of any consideration given the transferee
to acquire the interest;
(ii) the present value of the expected future distributions on
the interest; and
(iii) the present value of the anticipated tax savings associated
with holding the interest as the REMIC generates losses.
For purposes of the computations under this alternative, the transferee is
assumed to pay tax at the highest rate of tax specified in Section 11(b)(1) of
the Code (currently 35%) or, in certain circumstances, the alternative minimum
tax rate. Further, present values are generally computed using a discount rate
equal to the short-term Federal rate set forth in Section 1274(d) of the Code
for the month of the transfer and the compounding period used by the transferee;
or
(b) the following requirements are satisfied:
(i) the transferee is a domestic "C" corporation (other than a
corporation exempt from taxation of a regulated investment company or
real estate investment trust) that meets certain gross and net asset
tests (generally, $100 million of gross assets and $10 million of net
assets for the current year and the two preceding fiscal years);
(ii) the transferee agrees in writing that it will transfer the
residual interest only to a subsequent transferee that is an eligible
corporation and meets the requirements for a safe harbor transfer; and
(iii) the facts and circumstances known to the transferor on or
before the date of the transfer do not reasonably indicate that the
taxes associated with ownership of the residual interest will not be
paid by the transferee.
Prior to purchasing a REMIC Residual Certificate, prospective purchasers
should consider the possibility that a purported transfer of such REMIC Residual
Certificate by such a purchaser to another purchaser at some future date may be
disregarded in accordance with the above-described rules which would result in
the retention of tax liability by such purchaser. The related prospectus
supplement will disclose whether offered REMIC Residual Certificates may be
considered "noneconomic" residual interests under the REMIC Regulations;
provided, however, that any disclosure that a REMIC Residual Certificate will
not be considered "noneconomic" will be based upon certain assumptions, and the
depositor will make no representation that a REMIC Residual Certificate will not
be considered "noneconomic" for purposes of the above-described rules. See
"--Taxation of Owners of REMIC Residual Certificates--Foreign Investors in REMIC
Certificates" below for additional restrictions applicable to transfers of
certain REMIC Residual Certificates to foreign persons.
On May 11, 2004 the Internal Revenue Service published final Treasury
regulations (the "Inducement Fee Regulations") under Sections 446(b), 860C, and
863(a) of the Code relating to the proper method of accounting for, and source
of income from, fees ("inducement fees") received by taxpayers to induce the
acquisition of "noneconomic" REMIC residual interests. These regulations apply
to taxpayers who receive inducement fees in connection with becoming the holder
of a noneconomic REMIC residual interest for taxable years ending on or after
May 11, 2004.
Proposed Treasury Regulation section 1.863-1(e) provides that an inducement
fee is treated as U.S. source income. Proposed Treasury Regulation section
1.446-6(c) sets forth a general rule (the "General Rule") which provides that a
taxpayer must recognize in income an inducement fee received for acquiring a
noneconomic REMIC residual interest "over the remaining expected life of the
applicable REMIC in a manner that reasonably reflects the after-tax costs and
benefits of holding that noneconomic residual interest."
Under the Inducement Fee Regulations, a taxpayer is generally permitted to
adopt an accounting method for the recognition of inducement fees that meets the
General Rule described above. The Proposed Treasury Regulations state, however,
that the treatment of inducement fees received on noneconomic REMIC residual
interests constitutes a method of accounting for purposes of Internal
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Revenue Code sections 446 and 481. Thus, under the Inducement Fee Regulations,
once an accounting method is adopted it must be consistently applied to all
inducement fees received by the taxpayer in respect of noneconomic REMIC
residual interests, and may not be changed without the consent of the
Commissioner, pursuant to section 446(e) of the Code and the Treasury
Regulations and other procedures thereunder.
The Inducement Fee Regulations set forth two alternative safe harbor
methods of accounting for meeting the General Rule described above. The
Commissioner is authorized to provide additional safe harbor methods by revenue
ruling or revenue procedure.
Under one safe harbor method of accounting set forth in the Inducement Fee
Regulations (the "Book Method"), a taxpayer includes an inducement fee in income
in accordance with the same accounting method and time period used by the
taxpayer for financial reporting purposes, provided that the period over which
such inducement fee is included in income is not less than the period the
related REMIC is expected to generate taxable income.
Under the second safe harbor accounting method (the "Modified REMIC
Regulatory Method"), a taxpayer recognizes inducement fee income ratably over
the remaining anticipated weighted average life of the REMIC. For this purpose,
the REMIC's remaining anticipated weighted average life is determined as of the
date of acquisition of the noneconomic REMIC residual interest using the
methodology provided in current Treasury Regulation section 1.860E-1(a)(3)(iv).
The Inducement Fee Regulations also provide that upon a sale or other
disposition of a noneconomic REMIC residual interest (other than in a
transaction to which section 381(c)(4) of the Code applies) the holder must
include currently in income the balance of any previously unrecognized
inducement fee amounts attributable to such residual interest.
Mark-to-Market Rules. Section 475 provides a requirement that a securities
dealer mark-to-market securities held for sale to customers. Treasury
regulations provide that for purposes of this mark-to-market requirement, a
REMIC Residual Certificate is not treated as a security and thus cannot be
marked to market.
Possible Pass-Through of Miscellaneous Itemized Deductions. Fees and
expenses of a REMIC generally will be allocated to the holders of the related
REMIC Residual Certificates. The applicable Treasury regulations indicate,
however, that in the case of a REMIC that is similar to a single class grantor
trust, all or a portion of such fees and expenses should be allocated to the
holders of the related REMIC Regular Certificates. Unless otherwise stated in
the related prospectus supplement, such fees and expenses will be allocated to
holders of the related REMIC Residual Certificates in their entirety and not to
the holders of the related REMIC Regular Certificates.
With respect to REMIC Residual Certificates or REMIC Regular Certificates
which receive an allocation of fees and expenses in accordance with the
preceding discussion, if any holder thereof is an individual, estate or trust,
or a certain "pass-through entity," an amount equal to these fees and expenses
will be added to the certificateholder's gross income and the certificateholder
will treat such fees and expenses as a miscellaneous itemized deduction subject
to the limitation of section 67 of the Code to the extent they exceed in the
aggregate two percent of a taxpayer's adjusted gross income. In addition,
section 68 of the Code provides that the amount of itemized deductions otherwise
allowable for an individual whose adjusted gross income exceeds a specified
amount will be reduced by the lesser of:
o 3% of the excess of the individual's adjusted gross income over such
amount; and
o 80% of the amount of itemized deductions otherwise allowable for the
taxable year.
However the section 68 reduction of allowable itemized deductions will be
phased out beginning in 2006 and eliminated after 2009.
In determining the alternative minimum taxable income of such a holder of a
REMIC Certificate that is an individual, estate or trust, or a "pass-through
entity," beneficially owned by one or more individuals, estates or trusts, no
deduction will be allowed for such holder's allocable portion of servicing fees
and other miscellaneous itemized deductions of the REMIC, even though an amount
equal to the amount of
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such fees and other deductions will be included in such holder's gross income.
Accordingly, such REMIC Certificates may not be appropriate investments for
individuals, estates or trusts, or pass-through entities beneficially owned by
one or more individuals, estates or trusts. Such prospective investors should
carefully consult with their own tax advisors prior to making an investment in
such certificates.
Sales of REMIC Certificates. If a REMIC Certificate is sold, the selling
certificateholder will recognize gain or loss equal to the difference between
the amount realized on the sale and its adjusted basis in the REMIC Certificate.
The adjusted basis of a REMIC Regular Certificate generally will equal the cost
of such REMIC Regular Certificate to such certificateholder, increased by income
reported by such certificateholder with respect to such REMIC Regular
Certificate, including original issue discount and market discount income, and
reduced (but not below zero) by distributions on such REMIC Regular Certificate
received by such certificateholder and by any amortized premium. The adjusted
basis of a REMIC Residual Certificate will be determined as described under
"--Basis Rules, Net Losses and Distributions". Except as provided in the
following two paragraphs, any such gain or loss will be capital gain or loss,
provided such REMIC Certificate is held as a capital asset within the meaning of
section 1221 of the Code. Investors that recognize a loss on a sale or exchange
of the REMIC Regular Certificates for federal income tax purposes in excess of
certain threshold amounts should consult their tax advisors as to the need to
file IRS Form 8886 (disclosing certain potential tax shelters) on their federal
income tax returns.
Gain from the sale of a REMIC Regular Certificate that might otherwise be
capital gain will be treated as ordinary income to the extent such gain does not
exceed the excess, if any, of:
o the amount that would have been includible in the seller's income with
respect to such REMIC Regular Certificate assuming that income had
accrued thereon at a rate equal to 110% of the "applicable Federal
rate" determined as of the date of purchase of such REMIC Regular
Certificate, over
o the amount of ordinary income actually includible in the seller's
income prior to such sale.
In addition, gain recognized on the sale of a REMIC Regular Certificate by
a seller who purchased such REMIC Regular Certificate at a market discount will
be taxable as ordinary income in an amount not exceeding the portion of such
discount that accrued during the period such REMIC Certificate was held by such
holder, reduced by any market discount included in income under the rules
described above under "--Taxation of Owners of REMIC Regular
Certificates--Market Discount" and "--Premium."
REMIC Certificates will be "evidences of indebtedness" within the meaning
of section 582(c)(1) of the Code, so that gain or loss recognized from the sale
of a REMIC Certificate by a bank or thrift institution to which such section
applies will be ordinary income or loss.
A portion of any gain from the sale of a REMIC Regular Certificate that
might otherwise be capital gain may be treated as ordinary income to the extent
that such certificate is held as part of a "conversion transaction" within the
meaning of section 1258 of the Code. A conversion transaction generally is one
in which the taxpayer has taken two or more positions in the same or similar
property that reduce or eliminate market risk and substantially all of the
taxpayer's return is attributable to the time value of money. The amount of gain
so realized in a conversion transaction that is recharacterized as ordinary
income generally will not exceed the amount of interest that would have accrued
on the taxpayer's net investment at 120% of the appropriate "applicable Federal
rate" at the time the taxpayer enters into the conversion transaction, subject
to appropriate reduction for prior inclusion of interest and other ordinary
income items from the transaction.
Finally, a taxpayer may elect to have net capital gain taxed at ordinary
income rates rather than capital gains rates in order to include such net
capital gain in total net investment income for the taxable year, for purposes
of the rule that limits the deduction of interest on indebtedness incurred to
purchase or carry property held for investment to a taxpayer's net investment
income.
Except as may be provided in Treasury regulations yet to be issued, if the
seller of a REMIC Residual Certificate reacquires a REMIC Residual Certificate,
or acquires any other residual interest in a REMIC or any similar interest in a
"taxable mortgage pool" during the period beginning six months before, and
96
ending six months after, the date of such sale, such sale will be subject to the
"wash sale" rules of section 1091 of the Code. In that event, any loss realized
by the REMIC Residual Certificateholder on the sale will not be deductible, but
instead will be added to such REMIC Residual Certificateholder's adjusted basis
in the newly acquired asset.
Prohibited Transactions Tax and Other Taxes. The Code imposes a tax on
REMICs equal to 100% of the net income derived from "prohibited transactions".
In general, subject to certain specified exceptions, a prohibited transaction
means:
o the disposition of a mortgage loan;
o the receipt of income from a source other than a mortgage loan or
certain other permitted investments;
o the receipt of compensation for services; or
o gain from the disposition of an asset purchased with the payments on
the mortgage loans for temporary investment pending distribution on
the REMIC Certificates.
It is not anticipated that the REMIC will engage in any prohibited
transactions in which it would recognize a material amount of net income.
In addition, certain contributions to a REMIC made after the day on which
the REMIC issues all of its interests could result in the imposition of a tax on
the REMIC equal to 100% of the value of the contributed property. The pooling
and servicing agreement will include provisions designed to prevent the
acceptance of any contributions that would be subject to such tax.
REMICs also are subject to federal income tax at the highest corporate rate
on "net income from foreclosure property," determined by reference to the rules
applicable to real estate investment trusts. "Net income from foreclosure
property" generally means gain from the sale of a foreclosure property that is
inventory property and gross income from foreclosure property other than
qualifying rents and other qualifying income for a real estate investment trust.
A REMIC may recognize "net income from foreclosure property" subject to federal
income tax if the Trustee or applicable servicer determines that the recovery to
certificateholders is likely to be greater on an after tax basis than earning
qualifying income that is not subject to tax.
Unless otherwise disclosed in the related prospectus supplement, it is not
anticipated that any material state or local income or franchise tax will be
imposed on any REMIC.
Unless otherwise stated in the related prospectus supplement, and to the
extent permitted by then applicable laws, any tax on prohibited transactions,
contributions, "net income from foreclosure property" or state or local tax
imposed on the REMIC will be borne by the related servicer or trustee in any
case out of its own funds, if such tax arose out of a breach of such person's
obligations under the related pooling and servicing agreement and in respect of
compliance with applicable laws and regulations. Any such tax not borne by a
servicer or trustee will be charged against the related trust fund resulting in
a reduction in amounts payable to holders of the related REMIC Certificates.
Tax and Restrictions on Transfers of REMIC Residual Certificates to Certain
Organizations. If a REMIC Residual Certificate is transferred to a "disqualified
organization," a tax would be imposed in an amount equal to the product of:
o the present value discounted using the "applicable Federal rate" of
the total anticipated excess inclusions with respect to such REMIC
Residual Certificate for periods after the transfer; and
o the highest marginal federal income tax rate applicable to
corporations.
The anticipated excess inclusions must be determined as of the date that
the REMIC Residual Certificate is transferred and must be based on events that
have occurred up to the time of such transfer, the prepayment assumption,
required or permitted cleanup calls, or required liquidation provisions. Such a
tax generally would be imposed on the transferor of the REMIC Residual
Certificate, except that where such transfer is through an agent for a
disqualified organization, the tax would instead be imposed on such agent.
However, a transferor of a REMIC Residual Certificate would in no event be
liable for such tax
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with respect to a transfer if the transferee furnishes to the transferor an
affidavit that the transferee is not a disqualified organization and, as of the
time of the transfer, the transferor does not have actual knowledge that such
affidavit is false. Moreover, an entity will not qualify as a REMIC unless there
are reasonable arrangements designed to ensure that residual interests are not
held by disqualified organizations and information necessary for the application
of the tax are made available. Restrictions on the transfer of REMIC Residual
Certificates and certain other provisions that are intended to meet this
requirement will be included in each pooling and servicing agreement, and will
be discussed more fully in any prospectus supplement relating to the offering of
any REMIC Residual Certificate.
In addition, if a "pass-through entity" includes in income excess
inclusions with respect to a REMIC Residual Certificate, and disqualified
organization is the record holder of an interest in such entity, then a tax will
be imposed on such entity equal to the product of the amount of excess
inclusions allocable to the interest in the pass-through entity held by such
disqualified organization and the highest marginal federal income tax rate
imposed on corporations. A pass-through entity will not be subject to this tax
for any period, however, if each record holder of an interest in such
pass-through entity furnishes to such pass-through entity such holder's social
security number and a statement under penalty of perjury that such social
security number is that of the recordholder or a statement under penalty of
perjury that such record holder is not a disqualified organization.
For these purposes, a "disqualified organization" generally means:
o the United States, any State or political subdivision thereof, any
foreign government, any international organization, or any agency or
instrumentality of the foregoing (but would exclude as
instrumentalities entities not treated as instrumentalities under
section 168(h)(2)(D) of the Code or the Freddie Mac), or any
organization (other than a cooperative described in section 521 of the
Code);
o any organization that is exempt from federal income tax, unless it is
subject to the tax imposed by section 511 of the Code; or
o any organization described in section 1381(a)(2)(C) of the Code.
For these purposes, a "pass-through entity" means any regulated investment
company, real estate investment trust, trust, partnership or certain other
entities described in section 860E(e)(6) of the Code. In addition, a person
holding an interest in a pass-through entity as a nominee for another person
will, with respect to such interest, be treated as a pass-through entity.
Termination. A REMIC will terminate immediately after the distribution date
following receipt by the REMIC of the final payment in respect of the mortgage
loans or upon a sale of the REMIC's assets following the adoption by the REMIC
of a plan of complete liquidation. The last distribution on a REMIC Regular
Certificate will be treated as a payment in retirement of a debt instrument. In
the case of a REMIC Residual Certificate, if the last distribution on such REMIC
Residual Certificate is less than the REMIC Residual Certificateholder's
adjusted basis in such REMIC Residual Certificate, such REMIC Residual
Certificateholder should be treated as realizing a loss equal to the amount of
such difference. Such loss may be treated as a capital loss and may be subject
to the "wash sale" rules of section 1091 of the Code.
Reporting and Other Administrative Matters. Solely for purposes of the
administrative provisions of the Code, the REMIC will be treated as a
partnership and REMIC Residual Certificateholders will be treated as partners.
Unless otherwise stated in the related prospectus supplement, either the trustee
or the servicer generally will hold at least a nominal amount of REMIC Residual
Certificates, will file REMIC federal income tax returns on behalf of the
related REMIC, and will be designated as and will act as the "tax matters
person" with respect to the REMIC in all respects.
As the tax matters person, the trustee or the servicer, as the case may be,
will, subject to certain notice requirements and various restrictions and
limitations, generally have the authority to act on behalf of the REMIC and the
REMIC Residual Certificateholders in connection with the administrative and
judicial review of items of income, deduction, gain or loss of the REMIC, as
well as the REMIC's classification. REMIC Residual Certificateholders will
generally be required to report such REMIC items consistently
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with their treatment on the related REMIC's tax return and may in some
circumstances be bound by a settlement agreement between the trustee or the
servicer, as the case may be, as tax matters person, and the IRS concerning any
such REMIC item. Adjustments made to the REMIC tax return may require a REMIC
Residual Certificateholder to make corresponding adjustments on its return, and
an audit of the REMIC's tax return, or the adjustments resulting from such an
audit, could result in an audit of a REMIC Residual Certificateholder's return.
No REMIC will be registered as a tax shelter pursuant to section 6111 of the
Code because it is not anticipated that any REMIC will have a net loss for any
of the first five taxable years of its existence. Any person that holds a REMIC
Residual Certificate as a nominee for another person may be required to furnish
to the related REMIC, in a manner to be provided in Treasury regulations, the
name and address of such person and other information.
Reporting of interest income, including any original issue discount, with
respect to REMIC Regular Certificates is required annually, and may be required
more frequently under Treasury regulations. These information reports generally
are required to be sent to individual holders of REMIC Regular Interests and the
IRS; holders of REMIC Regular Certificates that are corporations, trusts,
securities dealers and certain other non-individuals will be provided interest
and original issue discount income information and the information set forth in
the following paragraph upon request in accordance with the requirements of the
applicable regulations. The information must be provided by the later of 30 days
after the end of the quarter for which the information was requested, or two
weeks after the receipt of the request. The REMIC must also comply with rules
requiring that information relating to be reported to the IRS. Reporting with
respect to the REMIC Residual Certificates, including income, excess,
inclusions, investment expenses and relevant information regarding qualification
of the REMIC's assets will be made as required under the Treasury regulations,
generally on a quarterly basis.
As applicable, the REMIC Regular Certificate information reports will
include a statement of the adjusted issue price of the REMIC Regular Certificate
at the beginning of each accrual period. In addition, the reports will include
information required by regulations with respect to computing the accrual of any
market discount. Because exact computation of the accrual of market discount on
a constant yield method would require information relating to the holder's
purchase price that the REMIC may not have, such regulations only require that
information pertaining to the appropriate proportionate method of accruing
market discount be provided. See "--Taxation of Owners of REMIC Regular
Certificates--Market Discount."
The responsibility for complying with the foregoing reporting rules will be
borne by either the trustee or the servicer, unless otherwise stated in the
related prospectus supplement.
Backup Withholding with Respect to REMIC Certificates. Payments of interest
and principal, and proceeds from the sale of REMIC Certificates, may be subject
to the "backup withholding tax" at a rate of 28% (increasing to 31% after 2010)
if recipients of such payments fail to furnish to the payor certain information,
including their taxpayer identification numbers, or otherwise fail to establish
an exemption from such tax. Any amounts deducted and withheld from a
distribution to a recipient would be allowed as a credit against such
recipient's federal income tax. Furthermore, certain penalties may be imposed by
the IRS on a recipient of payments that is required to supply information but
that does not do so in the proper manner.
Foreign Investors in REMIC Certificates. A REMIC Regular Certificateholder
that is not a "United States Person" and is not subject to federal income tax as
a result of any direct or indirect connection to the United States in addition
to its ownership of a REMIC Regular Certificate will not, unless otherwise
stated in the related prospectus supplement, be subject to United States federal
income or withholding tax in respect of a distribution on a REMIC Regular
Certificate, provided that the holder complies to the extent necessary with
certain identification requirements (including delivery of a statement, signed
under penalties of perjury, certifying that such certificateholder is not a
United States Person and providing the name and address of such
certificateholder. For these purposes, "United States Person" means:
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o a citizen or resident of the United States;
o a corporation or partnership (or other entity treated as a corporation
or a partnership for United States Federal income tax purposes created
or organized in, or under the laws of, the United States, any State
thereof or the District of Columbia (unless, in the case of a
partnership, Treasury regulations are enacted that provide otherwise);
o an estate whose income is includible in gross income for United States
federal income tax purposes regardless of its source; and
o a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust, and one or
more United States persons have the authority to control all
substantial decisions of the trust.
It is possible that the IRS may assert that the foregoing tax exemption
should not apply with respect to interest distributed on a REMIC Regular
Certificate that is held by:
o a REMIC Residual Certificateholder that owns directly or indirectly a
10% or greater interest in the REMIC Residual Certificates; or
o to the extent of the amount of interest paid by the related mortgagor
on a particular mortgage loan, a REMIC Regular Certificateholder that
owns a 10% or greater ownership interest in such mortgage or a
controlled foreign corporation of which such mortgagor is a "United
States shareholder" within the meaning of section 951(b) of the Code.
If the holder does not qualify for exemption, distributions of interest,
including distributions in respect of accrued original issue discount, to such
holder may be subject to a tax rate of 30%, subject to reduction under any
applicable tax treaty. In addition, the foregoing rules will not apply to exempt
a United States shareholder of a controlled foreign corporation from taxation on
such United States shareholder's allocable portion of the interest income
received by such controlled foreign corporation. Further, it appears that a
REMIC Regular Certificate would not be included in the estate of a nonresident
alien individual and would not be subject to United States estate taxes.
However, certificateholders who are non-resident alien individuals should
consult their tax advisors concerning this question. Transfers of REMIC Residual
Certificates to investors that are not United States persons will be prohibited
under the related pooling and servicing agreement.
The Treasury Department issued final regulations which make certain
modifications to the withholding, backup withholding and information reporting
rules described above. Prospective investors are urged to consult their own tax
advisors regarding these regulations.
GRANTOR TRUST FUNDS
Classification of Grantor Trust Funds. With respect to each series of
grantor trust certificates, counsel to the depositor will deliver its opinion to
the effect that, assuming compliance with the pooling and servicing agreement,
the grantor trust fund will be classified as a grantor trust under subpart E,
part I of subchapter J of the Code and not as a partnership or an association
taxable as a corporation. Accordingly, each holder of a grantor trust
certificate generally will be treated as the owner of an interest in the
mortgage loans included in the grantor trust fund.
For purposes of the following discussion, a grantor trust certificate
represents an undivided equitable ownership interest in the principal of the
mortgage loans constituting the related grantor trust fund, together with
interest thereon at a pass-through rate, will be referred to as a "grantor trust
fractional interest certificate." A grantor trust certificate representing
ownership of all or a portion of the difference between interest paid on the
mortgage loans constituting the related grantor trust fund less normal
administration fees and any spread and interest paid to the holders of grantor
trust fractional interest certificates issued with respect to a grantor trust
fund will be referred to as a "grantor trust strip certificate." A grantor trust
strip certificate may also evidence a nominal ownership interest in the
principal of the mortgage loans constituting the related grantor trust fund.
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CHARACTERIZATION OF INVESTMENTS IN GRANTOR TRUST CERTIFICATES
Grantor Trust Fractional Interest Certificates. Except as discussed in the
related prospectus supplement, in the case of grantor trust fractional interest
certificates, counsel to the depositor will deliver an opinion that, in general,
grantor trust fractional interest certificates will represent interests in:
o assets described in section 7701(a)(19)(C) of the Code;
o "obligation[s] which...[are] principally secured by an interest in
real property" within the meaning of section 860G(a)(3)(A) of the
Code; and
o "real estate assets" within the meaning of section 856(c)(5)(B) of the
Code.
In addition, counsel to the depositor will deliver an opinion that interest
on grantor trust fractional interest certificates will to the same extent be
considered "interest on obligations secured by mortgages on real property or on
interests in real property" within the meaning of section 856(c)(3)(B) of the
Code.
Grantor Trust Strip Certificates. Even if grantor trust strip certificates
evidence an interest in a grantor trust fund consisting of mortgage loans that
are assets described in section 7701(a)(19)(C) of the Code, "real estate assets"
within the meaning of section 856(c)(5)(B) of the Code, and the interest on
which is "interest on obligations secured by mortgages on real property" within
the meaning of section 856(c)(3)(B) of the Code, it is unclear whether the
grantor trust strip certificates, and the income they produce, will be so
characterized. Although the policies underlying such sections may suggest that
such characterization is appropriate, counsel to the depositor will not deliver
any opinion on the characterization of these certificates. Prospective
purchasers of grantor trust strip certificates should consult their tax advisors
regarding whether the grantor trust strip certificates, and the income they
produce, will be so characterized.
The grantor trust strip certificates will be "obligation[s] (including any
participation or certificate of beneficial ownership therein) which[are]
principally secured by an interest in real property" within the meaning of
section 860G(a)(3)(A) of the Code.
TAXATION OF OWNERS OF GRANTOR TRUST FRACTIONAL INTEREST CERTIFICATES
General. Holders of a particular series of grantor trust fractional
interest certificates generally will be required to report on their federal
income tax returns their shares of the entire income from the mortgage loans
(including reasonable servicing fees and other expenses) and will be entitled to
deduct their shares of any such reasonable servicing fees and other expenses. In
some situations, the taxpayer's deduction may be subject to itemized deduction
limitations and be limited if the taxpayer is subject to the corporate
alternative minimum tax. For a more detailed discussion of these limitations,
see "--Taxation of Owners of REMIC Residual Certificates--Possible Pass-Through
of Miscellaneous Itemized Deductions".
Although it is not entirely clear, it appears that in transactions in which
multiple classes of grantor trust certificates are issued, such fees and
expenses should be allocated among the classes of grantor trust certificates
using a method that recognizes that each such class benefits from the related
services. In the absence of further guidance, it is intended to base information
returns or reports on a method that allocates such expenses among classes of
grantor trust certificates with respect to each period based on the
distributions made to each such class during that period.
The federal income tax treatment of grantor trust fractional interest
certificates of any series will depend on whether they are subject to the
"stripped bond" rules of section 1286 of the Code. Grantor trust fractional
interest certificates may be subject to those rules if a class of grantor trust
strip certificates is issued as part of the same series of Certificates or the
depositor or any of its affiliates retains a right to receive a specified
portion of the interest payable on a mortgage asset. Further, the IRS has ruled
that an unreasonably high servicing fee retained by a seller or servicer will be
treated as a retained ownership interest in mortgages that constitutes a
stripped coupon. For purposes of determining what constitutes reasonable
servicing fees for various types of mortgages the IRS has established certain
"safe harbors." The servicing fees paid with respect to the mortgage loans for
certain series of grantor trust certificates may be higher than the "safe
harbors" and, accordingly, may not constitute reasonable servicing
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compensation. The related prospectus supplement will include information
regarding servicing fees paid to a servicer or their respective affiliates
necessary to determine whether the preceding "safe harbor" rules apply.
If Stripped Bond Rules Apply. If the stripped bond rules apply, each
grantor trust fractional interest certificate will be treated as having been
issued with "original issue discount" within the meaning of section 1273(a) of
the Code, subject, however, to the discussion below regarding the treatment of
certain stripped bonds as market discount bonds and de minimis market discount
discussion below. See "--Taxation of Owners of Grantor Trust Fractional Interest
Certificates--Market Discount." Under the stripped bond rules, the holder of a
grantor trust fractional interest certificate will be required to report
"qualified stated interest" from its grantor trust fractional interest
certificate for each month, as such amounts are received or accrued (based on
the holder's method of accounting) and will be required to report an amount
equal to the original issue discount income that accrues on such certificate in
that month calculated under a constant yield method, in accordance with the
rules of the Code relating to original issue discount.
The original issue discount on a grantor trust fractional interest
certificate will be the excess of such certificate's stated redemption price
over its issue price. The issue price of a grantor trust fractional interest
certificate as to any purchaser will be equal to the price paid by such
purchaser for the grantor trust fractional interest certificate. The stated
redemption price of a grantor trust fractional interest certificate will be the
sum of all payments to be made on such certificate, other than "qualified stated
interest," and the certificate's share of reasonable servicing and other
expenses. See "--Taxation of Owners of Grantor Trust Fractional Interest
Certificates--If Stripped Bond Rules Do Not Apply" for a definition of
"qualified stated interest." In general, the amount of such income that accrues
in any month would equal the product of such holder's adjusted basis in such
grantor trust fractional interest certificate at the beginning of such month
(see "--Sales of Grantor Trust Certificates") and the yield of such grantor
trust fractional interest certificate to such holder. Such yield would be
computed at the rate that, if used to discount the holder's share of future
payments on the mortgage loans, would cause the present value of those future
payments to equal the price at which the holder purchased such certificate. In
computing yield under the stripped bond rules, a certificateholder's share of
future payments on the mortgage loans will not include any payments made in
respect of any spread or any other ownership interest in the mortgage loans
retained by the depositor, a servicer, or their respective affiliates, but will
include such certificateholder's share of any reasonable servicing fees and
other expenses.
With respect to certain categories of debt instruments, section 1272(a)(6)
of the Code requires the use of a reasonable prepayment assumption and conforms
to the prepayment assumption used in pricing the instrument. Regulations could
be adopted applying those provisions to the grantor trust fractional interest
certificates. It is unclear whether those provisions would be applicable to the
grantor trust fractional interest certificates or whether use of a reasonable
prepayment assumption may be required or permitted without reliance on these
rules. It is also uncertain, if a prepayment assumption is used, whether the
assumed prepayment rate would be determined based on conditions at the time of
the first sale of the grantor trust fractional interest certificate or, with
respect to any holder, at the time of purchase of the grantor trust fractional
interest certificate by that holder. Certificateholders are advised to consult
their own tax advisors concerning reporting original issue discount in general
and, in particular, whether a prepayment assumption should be used in reporting
original issue discount with respect to grantor trust fractional interest
certificates.
In the case of a grantor trust fractional interest certificate acquired at
a price equal to the principal amount of the mortgage loans allocable to such
certificate, the use of a prepayment assumption generally would not have any
significant effect on the yield used in calculating accruals of interest income.
In the case, however, of a grantor trust fractional interest certificate
acquired at a discount or premium, the use of a reasonable prepayment assumption
would increase or decrease such yield, and thus accelerate or decelerate,
respectively, the reporting of income.
If a prepayment assumption is not used, then when a mortgage loan prepays
in full, the holder of a grantor trust fractional interest certificate acquired
at a discount or a premium generally will recognize income or loss, which under
amendments to the Code adopted in 1997 would be capital except to the
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extent of any accrued market discount equal to the difference between the
portion of the prepaid principal amount of the mortgage loan that is allocable
to such certificate and the portion of the adjusted basis of such certificate
that is allocable to such certificateholder's interest in the mortgage loan. If
a prepayment assumption is used, although there is no guidance, logically that
no separate item of income or loss should be recognized upon a prepayment.
Instead, a prepayment should be treated as a partial payment of the stated
redemption price of the grantor trust fractional interest certificate and
accounted for under a method similar to that described for taking account of
original issue discount on REMIC Regular Certificates. See "--Taxation of Owners
of REMIC Regular Certificates--Original Issue Discount." It is unclear whether
any other adjustments would be required to reflect differences between an
assumed prepayment rate and the actual rate of prepayments.
In the absence of statutory or administrative clarification, it is
currently intended to base information reports or returns to the IRS and
certificateholders in transactions subject to the stripped bond rules on a
prepayment assumption that will be disclosed in the related prospectus
supplement and on a constant yield computed using a representative initial
offering price for each class of certificates. However, neither the depositor
nor any other person will make any representation that the mortgage loans will
in fact prepay at a rate conforming to such stripped bond prepayment assumption
or any other rate and certificateholders should bear in mind that the use of a
representative initial offering price will mean that such information returns or
reports, even if otherwise accepted as accurate by the IRS, will in any event be
accurate only as to the initial certificateholders of each series who bought at
that price.
Under Treasury regulation section 1.1286-1(b), certain stripped bonds are
to be treated as market discount bonds and, accordingly, any purchaser of such a
bond is to account for any discount on the bond as market discount rather than
original issue discount. This treatment only applies, however, if immediately
after the most recent disposition of the bond by a person stripping one or more
coupons from the bond and disposing of the bond or coupon, there is less than a
de minimis amount of original issue discount or the annual stated rate of
interest payable on the original bond is no more than one percentage point lower
than the gross interest rate payable on the original mortgage loan before
subtracting any servicing fee or any stripped coupon. Original issue discount or
market discount on a grantor trust fractional interest certificate are de
minimis if less than 0.25% of the stated redemption price multiplied by the
weighted average maturity of the mortgage loans. Original issue discount or
market discount of only a de minimis amount will be included in income in the
same manner as de minimis original issue discount and market discount described
in "--If Stripped Bond Rules Do Not Apply" and "--Market Discount."
If Stripped Bond Rules Do Not Apply. Subject to the discussion below on
original issue discount, if the stripped bond rules do not apply to a grantor
trust fractional interest certificate, the certificateholder will be required to
report its share of the interest income on the mortgage loans in accordance with
such certificateholder's normal method of accounting. The original issue
discount rules will apply to a grantor trust fractional interest certificate to
the extent it evidences an interest in mortgage loans issued with original issue
discount.
The original issue discount, if any, on the mortgage loans will equal the
difference between the stated redemption price of such mortgage loans and their
issue price. Under the OID regulations, the stated redemption price is equal to
the total of all payments to be made on such mortgage loan other than "qualified
stated interest." "Qualified stated interest" generally includes interest that
is unconditionally payable at least annually at a single fixed rate, at a
"qualified floating rate" or at an "objective rate." In general, the issue price
of a mortgage loan will be the amount received by the borrower from the lender
under the terms of the mortgage loan, less any "points" paid by the borrower,
and the stated redemption price of a mortgage loan will equal its principal
amount, unless the mortgage loan provides for an initial below-market rate of
interest or the acceleration or the deferral of interest payments.
In the case of mortgage loans bearing adjustable or variable interest
rates, the related prospectus supplement will describe the manner in which such
rules will be applied with respect to those mortgage loans in preparing
information returns to the certificateholders and the IRS.
Notwithstanding the general definition of original issue discount, original
issue discount will be considered to be de minimis if such original issue
discount is less than 0.25% of the stated redemption price
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multiplied by the weighted average maturity of the mortgage loan. For this
purpose, the weighted average maturity of the mortgage loan will be computed by
multiplying the number of full years from the issue date until such payment is
expected to be made by a fraction, the numerator of which is the amount of the
payment and the denominator of which is the stated redemption price of the
mortgage loan. Under the OID regulations, original issue discount of only a de
minimis amount will generally be included in income as each payment of stated
principal price is made, based on the product of the total amount of such de
minimis original issue discount and a fraction, the numerator of which is the
amount of each such payment and the denominator of which is the outstanding
stated principal amount of the mortgage loan. The OID Regulations also permit a
certificateholder to elect to accrue de minimis original issue discount into
income currently based on a constant yield method. See "--Market Discount"
below.
If original issue discount is in excess of a de minimis amount, all
original issue discount with respect to a mortgage loan will be required to be
accrued and reported in income each month, based on a constant yield. The OID
regulations suggest that no prepayment assumption is appropriate in computing
the yield on prepayable obligations issued with original issue discount. In the
absence of statutory or administrative clarification, it currently is not
intended to base information reports or returns to the IRS and
certificateholders on the use of a prepayment assumption in transactions not
subject to the stripped bond rules. However, section 1272(a)(6) of the Code may
require that a prepayment assumption be made in computing yield with respect to
all mortgage-backed securities. Certificateholders are advised to consult their
own tax advisors concerning whether a prepayment assumption should be used in
reporting original issue discount with respect to grantor trust fractional
interest certificates. Certificateholders should refer to the related prospectus
supplement with respect to each series to determine whether and in what manner
the original issue discount rules will apply to mortgage loans in such series.
A purchaser of a grantor trust fractional interest certificate that
purchases such grantor trust fractional interest certificate at a cost less than
such certificate's allocable portion of the aggregate remaining stated
redemption price of the mortgage loans held in the related trust fund will also
be required to include in gross income such certificate's daily portions of any
original issue discount with respect to such mortgage loans. However, each such
daily portion will be reduced, if the cost of such grantor trust fractional
interest certificate to such purchaser is in excess of such certificate's
allocable portion of the aggregate "adjusted issue prices" of the mortgage loans
held in the related trust fund, approximately in proportion to the ratio such
excess bears to such certificate's allocable portion of the aggregate original
issue discount remaining to be accrued on such mortgage loans. The adjusted
issue price of a mortgage loan on any given day equals the sum of the adjusted
issue price of such mortgage loan at the beginning of the accrual period that
includes such day plus the daily portions of original issue discount for all
days during such accrual period prior to such day. The adjusted issue price of a
mortgage loan at the beginning of any accrual period will equal the issue price
of such mortgage loan, increased by the aggregate amount of original issue
discount with respect to such mortgage loan that accrued in prior accrual
periods, and reduced by the amount of any payments made on such mortgage loan in
prior accrual periods of amounts included in its stated redemption price.
The trustee or servicer, as applicable, will provide to any holder of a
grantor trust fractional interest certificate such information as such holder
may reasonably request from time to time with respect to original issue discount
accruing on grantor trust fractional interest certificates. See "--Grantor Trust
Reporting" below.
Market Discount. If the stripped bond rules do not apply to the grantor
trust fractional interest certificate, a certificateholder may be subject to the
market discount rules of sections 1276 through 1278 of the Code to the extent an
interest in a mortgage loan is considered to have been purchased at a "market
discount." If market discount is in excess of a de minimis amount, the holder
generally will be required to include in income in each month the amount of such
discount that has accrued through such month that has not previously been
included in income, but limited, in the case of the portion of such discount
that is allocable to any mortgage loan, to the payment of stated redemption
price on such mortgage loan that is received by or due to the trust fund in that
month. A certificateholder may elect to include market discount in income
currently as it accrues under a constant yield method rather than including it
on a deferred basis in accordance with the foregoing. If made, such election
will apply to all market discount bonds acquired by such certificateholder
during or after the first taxable year to which such election
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applies. In addition, the OID regulations would permit a certificateholder to
elect to accrue all interest, discount and premium in income as interest, based
on a constant yield method. If such an election were made with respect to a
mortgage loan with market discount, the certificateholder would be deemed to
have made an election to currently include market discount in income with
respect to all other debt instruments having market discount that such
certificateholder acquires during the taxable year of the election and
thereafter and, possibly, previously acquired instruments. Similarly, a
certificateholder that made this election for a certificate acquired at a
premium would be deemed to have made an election to amortize bond premium with
respect to all debt instruments having amortizable bond premium that such
certificateholder owns or acquires. See "--Taxation of Owners of REMIC Regular
Certificates-- Premium." Each of these elections to accrue interest, discount
and premium with respect to a certificate on a constant yield method or as
interest is irrevocable.
Section 1276(b)(3) of the Code authorized the Treasury Department to issue
regulations providing for the method for accruing market discount on debt
instruments where principal is payable in more than one installment. Until such
time as regulations are issued by the Treasury Department, certain rules
described in the Committee Report apply. For a more detailed discussion of the
treatment of market discount, see "Taxation of Owners of REMIC Regular
Certificates--Market Discount".
Because the mortgage loans will provide for periodic payments of stated
redemption price, such discount may be required to be included in income at a
rate that is not significantly lower than the rate at which such discount would
be included in income if it were original issue discount. Market discount with
respect to mortgage loans generally will be considered to be de minimis if it is
less than 0.25% of the stated redemption price of the mortgage loans multiplied
by the number of full years to maturity remaining after the date of its
purchase. In interpreting a similar rule with respect to original issue discount
on obligations payable in installments, the OID regulations refer to the
weighted average maturity of obligations, and it is likely that the same rule
will be applied with respect to market discount, presumably taking into account
the prepayment assumption used, if any. The effect of using a prepayment
assumption could be to accelerate the reporting of such discount income. If
market discount is treated as de minimis under the foregoing rule, it appears
that actual discount would be treated in a manner similar to original issue
discount of a de minimis amount. See "--If Stripped Bond Rules Do Not Apply."
Further, under the rules described in "--Taxation of Owners of REMIC Regular
Certificates--Market Discount," any discount that is not original issue discount
and exceeds a de minimis amount may require the deferral of interest expense
deductions attributable to accrued market discount not yet includible in income,
unless an election has been made to report market discount currently as it
accrues. This rule applies without regard to the origination dates of the
mortgage loans.
Premium. If a certificateholder is treated as acquiring the underlying
mortgage loans at a premium, that is, at a price in excess of their remaining
stated redemption price, such certificateholder may elect under section 171 of
the Code to amortize using a constant yield method. Amortizable premium is
treated as an offset to interest income on the related debt instrument, rather
than as a separate interest deduction.
It is unclear whether a prepayment assumption should be used in computing
amortization of premium allowable under section 171 of the Code. If premium is
not subject to amortization using a prepayment assumption and a mortgage loan
prepays in full, the holder of a grantor trust fractional interest certificate
acquired at a premium should recognize a loss, equal to the difference between
the portion of the prepaid principal amount of the mortgage loan that is
allocable to the certificate and the portion of the adjusted basis of the
certificate that is allocable to the mortgage loan. If a prepayment assumption
is used to amortize such premium, it appears that such a loss would be
unavailable. Instead, if a prepayment assumption is used, a prepayment should be
treated as a partial payment of the stated redemption price of the grantor trust
fractional interest certificate and accounted for under a method similar to that
described for taking account of original issue discount on REMIC Regular
Certificates. See "--Taxation of Owners of REMIC Regular Certificates--Original
Issue Discount." It is unclear whether any other adjustments would be required
to reflect differences between the prepayment assumption used, if any, and the
actual rate of prepayments.
Taxation of Owners of Grantor Trust Strip Certificates. The "stripped
coupon" rules of section 1286 of the Code will apply to the grantor trust strip
certificates. Except as described above in "--If Stripped
105
Bond Rules Apply," no regulations or published rulings under section 1286 of the
Code have been issued and some uncertainty exists as to how it will be applied
to securities such as the grantor trust strip certificates. Accordingly, holders
of grantor trust strip certificates should consult their own tax advisors
concerning the method to be used in reporting income or loss with respect to
such certificates.
The OID regulations insofar as they describe the application of the
constant yield method, do not apply to instruments to which section 1272(a)(6)
applies, which may include grantor trust strip certificates as well as grantor
trust fractional interest certificates, although they provide general guidance
as to how the original issue discount sections of the Code will be applied. In
addition, the discussion below is subject to the discussion under "--Possible
Application of Contingent Payment Rules" below and assumes that the holder of a
grantor trust strip certificate will not own any grantor trust fractional
interest certificates.
Under the stripped coupon rules, it appears that original issue discount
will be required to be accrued in each month on the grantor trust strip
certificates based on a constant yield method. In effect, each holder of grantor
trust strip certificates would include as interest income in each month an
amount equal to the product of such holder's adjusted basis in such grantor
trust strip certificate at the beginning of such month and the yield of such
grantor trust strip certificate to such holder. Such yield would be calculated
based on the price paid for that grantor trust strip certificate by its holder
and the payments remaining to be made thereon at the time of the purchase, plus
an allocable portion of the servicing fees and expenses to be paid with respect
to the mortgage loans. See "--If Stripped Bond Rules Apply" above.
As noted above, section 1272(a)(6) of the Code requires that a prepayment
assumption be used in computing the accrual of original issue discount with
respect to certain categories of debt instruments, and that adjustments be made
in the amount and rate of accrual of such discount when prepayments do not
conform to such prepayment assumption. Regulations could be adopted applying
those provisions to the grantor trust strip certificates. It is unclear whether
those provisions would be applicable to the grantor trust strip certificates or
whether use of a prepayment assumption may be required or permitted in the
absence of such regulations. It is also uncertain, if a prepayment assumption is
used, whether the assumed prepayment rate would be determined based on
conditions at the time of the first sale of the grantor trust strip certificate
or, with respect to any subsequent holder, at the time of purchase of the
grantor trust strip certificate by that holder.
The accrual of income on the grantor trust strip certificates will be
significantly slower if a prepayment assumption is permitted to be made than if
yield is computed assuming no prepayments. In the absence of statutory or
administrative guidance, it is intended to base information returns or reports
to the IRS and certificateholders on the stripped bond prepayment assumption
disclosed in the related prospectus supplement and on a constant yield computed
using a representative initial offering price for each class of certificates.
However, neither the depositor nor any other person will make any representation
that the mortgage loans will in fact prepay at a rate conforming to the stripped
bond prepayment assumption. Prospective purchasers of the grantor trust strip
certificates should consult their own tax advisors regarding the use of the
stripped bond prepayment assumption.
It is unclear under what circumstances, if any, the prepayment of a
mortgage loan will give rise to a loss to the holder of a grantor trust strip
certificate. If a grantor trust strip certificate is treated as a single
instrument and the effect of prepayments is taken into account in computing
yield with respect to such grantor trust strip certificate, it appears that no
loss may be available as a result of any particular prepayment unless
prepayments occur at a rate faster than the stripped bond prepayment assumption.
However, if a grantor trust strip certificate is treated as an interest in
discrete mortgage loans, or if the stripped bond prepayment assumption is not
used, then when a mortgage loan is prepaid, the holder of a grantor trust strip
certificate should be able to recognize a loss equal to the portion of the
adjusted issue price of the grantor trust strip certificate that is allocable to
such mortgage loan. In addition, any loss may be treated as a capital loss.
Possible Application of Contingent Payment Rules. The coupon stripping
rules' general treatment of stripped coupons is to regard them as newly issued
debt instruments in the hands of each purchaser. To the extent that payments on
the grantor trust strip certificates would cease if the mortgage loans were
prepaid in full, the grantor trust strip certificates could be considered to be
debt instruments providing for contingent payments. Under the OID regulations,
debt instruments providing for contingent payments
106
are not subject to the same rules as debt instruments providing for
non-contingent payments. Final regulations have been promulgated with respect to
contingent payment debt instruments. However, these regulations do not
specifically address the grantor trust strip certificates or other securities
subject to the stripped bond rules of section 1286 of the Code.
Certificateholders should consult their tax advisors concerning the possible
application of the contingent payment rules to the grantor trust strip
certificates.
Sales of Grantor Trust Certificates. Any gain or loss, equal to the
difference between the amount realized on the sale or exchange of a grantor
trust certificate and its adjusted basis, recognized on such sale or exchange of
a grantor trust certificate by an investor who holds such grantor trust
certificate as a capital asset, will be capital gain or loss, except to the
extent of accrued and unrecognized market discount, which will be treated as
ordinary income. The adjusted basis of a grantor trust certificate generally
will equal its cost, increased by any income reported by the seller and reduced
(but not below zero) by any previously reported losses, any amortized premium
and by any distributions with respect to such grantor.
Gain or loss from the sale of a grantor trust certificate may be partially
or wholly ordinary and not capital in certain circumstances. Gain attributable
to accrued and unrecognized market discount will be treated as ordinary income,
as will gain or loss recognized by banks and other financial institutions
subject to section 582(c) of the Code. Furthermore, a portion of any gain that
might otherwise be capital gain may be treated as ordinary income to the extent
that the grantor trust certificate is held as part of a "conversion transaction"
within the meaning of section 1258 of the Code. A conversion transaction
generally is one in which the taxpayer has taken two or more positions in the
same or similar property that reduce or eliminate market risk and the taxpayer's
return is substantially attributable to the time value of money. The amount of
gain realized in a conversion transaction that is recharacterized as ordinary
income generally will not exceed the amount of interest that would have accrued
on the taxpayer's net investment at 120% of the appropriate "applicable Federal
rate" at the time the taxpayer enters into the conversion transaction, subject
to appropriate reduction for prior inclusion of interest and other ordinary
income items from the transaction. Finally, a taxpayer may elect to have net
capital gain taxed at ordinary income rates rather than capital gains rates in
order to include such net capital gain in total net investment income for that
taxable year, for purposes of the rule that limits the deduction of interest on
indebtedness incurred to purchase or carry property held for investment to a
taxpayer's net investment income. Investors that recognize a loss on a sale or
exchange of the grantor trust certificates for federal income tax purposes in
excess of certain threshold amounts should consult their tax advisors as to the
need to file IRS Form 8886 (disclosing certain potential tax shelters) on their
federal income tax returns.
Grantor Trust Reporting. As may be provided in the related prospectus
supplement, the trustee or servicer, as applicable, will furnish to each holder
of a grantor trust certificate, with each distribution, a statement setting
forth the amount of such distribution allocable to principal on the underlying
mortgage loans and to interest thereon at the related pass-through interest
rate. In addition, within a reasonable time after the end of each calendar year,
the trustee or servicer will furnish to each certificateholder during such year
such customary factual information as the depositor or the reporting party deems
necessary or desirable to enable holders of grantor trust certificates to
prepare their tax returns and will furnish comparable information to the IRS as
and when required by law to do so. Because the rules for accruing discount and
amortizing premium with respect to the grantor trust certificates are uncertain
in various respects, there is no assurance the IRS will agree with the trustee's
or servicer's information reports. Moreover, such information reports, even if
otherwise accepted as accurate by the IRS, will in any event be accurate only as
to the initial certificateholders that bought their certificates at the
representative initial offering price used in preparing such reports.
Backup Withholding. In general, the rules described in "--Taxation of
Owners of REMIC Residual Certificates--Backup Withholding with Respect to REMIC
Certificates" will also apply to grantor trust certificates.
Foreign Investor. In general, the discussion with respect to REMIC Regular
Certificates in "--Taxation of Owners of REMIC Residual Certificates--Foreign
Investors in REMIC Certificates" applies to grantor trust certificates except
that grantor trust certificates will, unless otherwise disclosed in the related
prospectus supplement, be eligible for exemption from United States withholding
tax, subject to the conditions described in such discussion, only to the extent
the related mortgage loans were
107
originated after July 18, 1984. However, to the extent the grantor trust
certificate represents an interest in real property (e.g., because of
foreclosures), it would be treated as representing a United States real property
interest for United States federal income tax purposes. This could result in
withholding consequences to non-U.S. certificateholders and potential U.S.
taxation.
To the extent that interest on a grantor trust certificate would be exempt
under sections 871(h)(1) and 881(c) of the Code from United States withholding
tax, and the grantor trust certificate is not held in connection with a
certificateholder's trade or business in the United States, such grantor trust
certificate will not be subject to United States estate taxes in the estate of a
non-resident alien individual.
On June 20, 2002, the IRS published regulations which will, when effective,
and if finalized in their proposed form, establish a reporting framework for
interests in "widely held fixed investment trusts" that will place the
responsibility of reporting on the person in the ownership chain who holds an
interest for a beneficial owner. A widely-held fixed investment trust is defined
as an entity classified as a "trust" under Treasury Regulation Section
301.7701-4(c), in which any interest is held by a middleman, which includes, but
is not limited to (i) a custodian of a person's account, (ii) a nominee and
(iii) a broker holding an interest for a customer in street name. These
regulations were proposed to be effective beginning January 1, 2004, but such
date has passed and the regulations have not been finalized. It is unclear when,
or if, these regulations will become final.
STATE AND OTHER TAX CONSEQUENCES
In addition to the federal income tax consequences described in "Material
Federal Income Tax Consequences," potential investors should consider the state
and local tax consequences of the acquisition, ownership and disposition of the
offered certificates. State tax law may differ substantially from the
corresponding federal tax law, and the discussion above does not purport to
describe any aspect of the tax laws of any state or other jurisdiction.
Therefore, prospective investors should consult their own tax advisors with
respect to the various tax consequences of investments in the offered
certificates.
108
ERISA CONSIDERATIONS
GENERAL
ERISA and the Code impose certain requirements on retirement plans and
other employee benefit plans or arrangements, including individual retirement
accounts, individual retirement annuities, medical savings accounts, Keogh
plans, collective investment funds and separate and general accounts in which
such plans, accounts or arrangements are invested that are subject to the
fiduciary responsibility provisions of ERISA and Section 4975 of the Code (all
of which are referred to in this prospectus as "Plans"), and on persons who are
fiduciaries with respect to Plans, in connection with the investment of Plan
assets. Certain employee benefit plans, such as governmental plans (as defined
in ERISA Section 3(32)), and, if no election has been made under Section 410(d)
of the Code, church plans (as defined in Section 3(33) of ERISA) are not subject
to ERISA requirements. However, such plans may be subject to the provisions of
other applicable federal, state or local law (which may contain restrictions
substantially similar to those in ERISA and the Code).
ERISA generally imposes on Plan fiduciaries certain general fiduciary
requirements, including those of investment prudence and diversification and the
requirement that a Plan's investments be made in accordance with the documents
governing the Plan. In addition, ERISA and the Code prohibit a broad range of
transactions involving assets of a Plan and persons ("Parties-in-Interest") who
have certain specified relationships to the Plan, unless a statutory or
administrative exemption is available. Certain Parties-in-Interest that
participate in a prohibited transaction may be subject to an excise tax imposed
pursuant to Section 4975 of the Code, unless a statutory or administrative
exemption is available. These prohibited transactions generally are set forth in
Section 406 of ERISA and Section 4975 of the Code.
Plan Asset Regulations. A Plan's investment in offered certificates may
cause the trust assets to be deemed "plan assets" of a Plan. Section 2510.3-101
of the regulations of the United States Department of Labor (the "DOL") provides
that when a Plan acquires an equity interest in an entity, the Plan's assets
include both such equity interest and an undivided interest in each of the
underlying assets of the entity, unless certain exceptions not applicable to
this discussion apply, or unless the equity participation in the entity by
"benefit plan investors" (defined to include Plans and certain employee benefit
plans not subject to ERISA, including foreign and governmental plans) is not
"significant." For this purpose, in general, equity participation in a trust
fund will be "significant" on any date if, immediately after the most recent
acquisition of any certificate, 25% or more of any class of certificates is held
by benefit plan investors (excluding for this calculation any person, other than
a benefit plan investor, who has discretionary authority or control, or provides
investment advice (direct or indirect) for a fee with respect to the assets of
the trust fund).
Any person who has discretionary authority or control respecting the
management or disposition of plan assets of a Plan, and any person who provides
investment advice with respect to such assets for a fee, will generally be a
fiduciary of the investing plan. If the trust assets constitute plan assets,
then any party exercising management or discretionary control regarding those
assets, such as a master servicer, a special servicer or any sub-servicer, may
be deemed to be a Plan "fiduciary" with respect to the investing Plan, and thus
subject to the fiduciary responsibility provisions and prohibited transaction
provisions of ERISA and the Code. In addition, if the trust assets constitute
plan assets, the purchase of certificates by a Plan, as well as the operation of
the trust fund, may constitute or involve a prohibited transaction under ERISA
and the Code.
PROHIBITED TRANSACTION EXEMPTIONS
Wachovia Corporation ("Wachovia") has received from the DOL an individual
prohibited transaction exemption (the "Exemption"), which generally exempts from
the application of the prohibited transaction provisions of sections 406(a) and
(b) and 407(a) of ERISA, and the excise taxes imposed on such prohibited
transactions pursuant to Section 4975(a) and (b) of the Code, certain
transactions, among others, relating to the servicing and operation of mortgage
pools and the purchase, sale and holding of mortgage pass-through certificates
underwritten by an underwriter, provided that certain conditions set forth in
the Exemption application are satisfied. For purposes of this Section, "ERISA
Considerations,"
109
the term "underwriter" includes (i) Wachovia, (ii) any person directly or
indirectly, through one or more intermediaries, controlling, controlled by or
under common control with Wachovia, and (iii) any member of the underwriting
syndicate or selling group of which Wachovia or a person described in (ii) is a
manager or co-manager with respect to a class of certificates. See "Method of
Distribution."
The Exemption sets forth five general conditions which, among others, must
be satisfied for a transaction involving the purchase, sale and holding of
offered certificates by a Plan to be eligible for exemptive relief under the
Exemption:
First, the acquisition of offered certificates by a Plan must be on terms
that are at least as favorable to the Plan as they would be in an arm's-length
transaction with an unrelated party.
Second, the offered certificates at the time of acquisition by the Plan
must be rated in one of the four highest generic rating categories by Standard &
Poor's Rating Services, a division of The McGraw-Hill Companies, Inc. ("Standard
& Poor's"), Moody's Investors Service, Inc. ("Moody's"), or Fitch, Inc.
("Fitch").
Third, the trustee cannot be an affiliate of any other member of the
Restricted Group other than an underwriter. The "Restricted Group" consists of
any underwriter, the depositor, the trustee, the master servicer, the special
servicer, any sub-servicer, the provider of any credit support and any obligor
with respect to mortgage assets (including mortgage loans underlying a CMBS not
issued by Fannie Mae, Freddie Mac, Farmer Mac or Ginnie Mae) constituting more
than 5% of the aggregate unamortized principal balance of the mortgage assets in
the related trust fund as of the date of initial issuance of the certificates.
Fourth, the sum of all payments made to and retained by the underwriter(s)
in connection with the distribution or placement of certificates must represent
not more than reasonable compensation for underwriting or placing the
certificates; the sum of all payments made to and retained by the depositor
pursuant to the assignment of the mortgage assets to the related trust fund must
represent not more than the fair market value of such obligations; and the sum
of all payments made to and retained by the master servicer and any sub-servicer
must represent not more than reasonable compensation for such person's services
under the related pooling and servicing agreement and reimbursement of such
person's reasonable expenses in connection therewith.
Fifth, the investing Plan must be an accredited investor as defined in Rule
501(a)(1) of Regulation D of the Securities and Exchange Commission under the
Securities Act of 1933, as amended.
In the event the obligations used to fund the trust fund have not all been
transferred to the trust fund on the closing date, additional obligations
meeting certain requirements as specified in the Exemption may be transferred to
the trust fund in exchange for the amounts credited to the Pre-Funding Account
during a period required by the Exemption, commencing on the closing date and
ending no later than the earliest to occur of: (i) the date the amount on
deposit in the Pre-Funding Account (as defined in the Exemption) is less than
the minimum dollar amount specified in the pooling and servicing agreement; (ii)
the date on which an event of default occurs under the pooling and servicing
agreement; or (iii) the date which is the later of three months or 90 days after
the closing date. In addition, the amount in the Pre-Funding Account may not
exceed 25% of the aggregate principal amount of the offered certificates.
Certain other conditions of the Exemption relating to pre-funding accounts must
also be met, in order for the exemption to apply. The prospectus supplement will
discuss whether pre-funding accounts will be used.
The Exemption also requires that the trust fund meet the following
requirements: (i) the trust fund must consist solely of assets of the type that
have been included in other investment pools; (ii) certificates in such other
investment pools must have been rated in one of the four highest categories of
Standard & Poor's, Moody's, or Fitch for at least one year prior to the Plan's
acquisition of certificates; and (iii) certificates in such other investment
pools must have been purchased by investors other than Plans for at least one
year prior to any Plan's acquisition of certificates.
The Exemption generally applies to mortgage loans such as the mortgage
loans to be included in any trust fund. It is not clear whether the Exemption
applies to participant directed plans as described in
110
Section 404(c) of ERISA or plans that are subject to Section 4975 of the Code
but that are not subject to Title I of ERISA, such as certain Keogh plans and
certain individual retirement accounts. If mortgage loans are secured by
leasehold interests, each lease term must be at least 10 years longer than the
term of the relevant mortgage loan.
If the general conditions set forth in the Exemption are satisfied, the
Exemption may provide an exemption from the restrictions imposed by Sections
406(a) and 407(a) of ERISA (as well as the excise taxes imposed by Sections
4975(a) and (b) of the Code by reason of Sections 4975(c)(1)(A) through (D) of
the Code) in connection with (i) the direct or indirect sale, exchange or
transfer of offered certificates acquired by a Plan upon issuance from the
depositor or underwriter when the depositor, underwriter, master servicer,
special servicer, sub-servicer, trustee, provider of credit support, or obligor
with respect to mortgage assets is a "Party in Interest" under ERISA with
respect to the investing Plan, (ii) the direct or indirect acquisition or
disposition in the secondary market of offered certificates by a Plan and (iii)
the holding of offered certificates by a Plan. However, no exemption is provided
from the restrictions of Sections 406(a)(1)(E), 406(a)(2) and 407 of ERISA for
the acquisition or holding of a certificate on behalf of an "Excluded Plan" by
any person who has discretionary authority or renders investment advice with
respect to the assets of such Excluded Plan. For this purpose, an Excluded Plan
is a Plan sponsored by any member of the Restricted Group.
If certain specific conditions set forth in the Exemption are also
satisfied, the Exemption may provide relief from the restrictions imposed by
Sections 406(b)(1) and (b)(2) of ERISA and the taxes imposed by Sections 4975(a)
and (b) of the Code by reason of Section 4975(c)(1)(E) of the Code to an obligor
acting as a fiduciary with respect to the investment of a Plan's assets in the
certificates (or such obligor's affiliate) only if, among other requirements (i)
such obligor (or its affiliate) is an obligor with respect to 5% percent or less
of the fair market value of the assets contained in the trust fund and is
otherwise not a member of the Restricted Group, (ii) a Plan's investment in
certificates does not exceed 25% of all of the certificates outstanding at the
time of the acquisition, (iii) immediately after the acquisition, no more than
25% of the assets of the Plan are invested in certificates representing an
interest in trusts (including the trust fund) containing assets sold or serviced
by the depositor or a servicer and (iv) in the case of the acquisition of the
certificates in connection with their initial issuance, at least 50% of the
certificates are acquired by persons independent of the Restricted Group and at
least 50% of the aggregate interest in the trust fund is acquired by persons
independent of the Restricted Group.
The Exemption also applies to transactions in connection with the
servicing, management and operation of the trust fund, provided that, in
addition to the general requirements described above, (a) such transactions are
carried out in accordance with the terms of a binding pooling and servicing
agreement, (b) the pooling and servicing agreement is provided to, or described
in all material respects in the prospectus or private placement memorandum
provided to, investing Plans before their purchase of certificates issued by the
trust fund and (c) the terms and conditions for the defeasance of a mortgage
obligation and substitution of a new mortgage obligation, as so directed, have
been approved by an NRSRO and do not result in any certificates receiving a
lower credit rating from the NRSRO than the current rating. The pooling and
servicing agreements will each be a "Pooling and Servicing Agreement" as defined
in the Exemption. Each pooling and servicing agreement will provide that all
transactions relating to the servicing, management and operations of the trust
fund must be carried out in accordance with the pooling and servicing agreement.
The DOL has issued a Prohibited Transaction Class Exemption 95-60 (the
"Class Exemption"), which provides relief from the application of the prohibited
transaction provisions of Sections 406(a), 406(b) and 407(a) of ERISA and
Section 4975 of the Code for transactions in connection with the servicing,
management and operation of a trust in which an insurance company general
account has an interest as a result of its acquisition of certificates issued by
such trust, provided that certain conditions are satisfied. Insurance company
general accounts meeting the specified conditions may generally purchase, in
reliance on the Class Exemption, classes of certificates that do not meet the
requirements of the Exemption solely because they have not received a rating at
the time of the acquisition in one of the four highest rating categories from
Standard & Poor's, Moody's, or Fitch. In addition to the foregoing Class
Exemption, relief may be available to certain insurance company general
accounts, which support
111
policies issued by any insurer on or before December 31, 1998 to or for the
benefit of employee benefit plans, under regulations published by the DOL under
Section 401(c) of ERISA, that became applicable on July 5, 2001.
Any Plan fiduciary considering the purchase of certificates should consult
with its counsel with respect to the applicability of the Exemption and other
issues and determine on its own whether all conditions have been satisfied and
whether the certificates are an appropriate investment for a Plan under ERISA
and the Code (or, in the case of governmental plans or church plans, under
applicable federal, state or local law). The prospectus supplement will specify
the representations required by purchasers of certificates, but generally, each
purchaser using the assets of one or more Plans to purchase a certificate shall
be deemed to represent that each such Plan qualifies as an "accredited investor"
as defined in Rule 501(a)(1) of Regulation D under the Securities Act of 1933,
and no Plan will be permitted to purchase or hold such certificates unless such
certificates are rated in one of the top four rating categories by at least one
rating agency at the time of such purchase, unless such Plan is an insurance
company general account that represents and warrants that it is eligible for,
and meets all of the requirements of, Sections I and III of Prohibited
Transaction Class Exemption 95-60. Each purchaser of classes of certificates
that are not rated at the time of purchase in one of the top four rating
categories by at least one rating agency shall be deemed to represent that it is
eligible for, and meets all of the requirements of, Sections I and III of
Prohibited Transaction Class Exemption 95-60. The prospectus supplement with
respect to a series of certificates may contain additional information regarding
the application of the Exemption or any other exemption, with respect to the
certificates offered thereby.
LEGAL INVESTMENT
If so specified in the related prospectus supplement, certain classes of
the offered certificates will constitute "mortgage related securities" for
purposes of SMMEA. Generally, the only classes of offered certificates which
will qualify as "mortgage related securities" will be those that (1) are rated
in one of the two highest rating categories by at least one nationally
recognized statistical rating organization and (2) are part of a series
evidencing interests in a trust fund consisting of loans originated by certain
types of originators specified in SMMEA and secured by first liens on real
estate. The appropriate characterization of those offered certificates not
qualifying as "mortgage related securities" for purposes of SMMEA ("Non-SMMEA
Certificates") under various legal investment restrictions, and thus the ability
of investors subject to these restrictions to purchase such offered
certificates, may be subject to significant interpretive uncertainties.
Accordingly, investors whose investment activities are subject to investment
laws and regulations, regulatory capital requirements or review by regulatory
authorities should consult with their own legal advisors in determining whether
and to what extent the Non-SMMEA Certificates constitute legal investments for
them.
Those classes of offered certificates qualifying as "mortgage related
securities" will constitute legal investments for persons, trusts, corporations,
partnerships, associations, business trusts and business entities (including
depository institutions, insurance companies, trustees and pension funds)
created pursuant to or existing under the laws of the United States or of any
state, including the District of Columbia and Puerto Rico, whose authorized
investments are subject to state regulation, to the same extent that, under
applicable law, obligations issued by or guaranteed as to principal and interest
by the United States or any of its agencies or instrumentalities constitute
legal investments for such entities.
Under SMMEA, a number of states enacted legislation, on or before the
October 3, 1991 cutoff for such enactments, limiting to various extents the
ability of certain entities (in particular, insurance companies) to invest in
"mortgage related securities" secured by liens on residential, or mixed
residential and commercial properties, in most cases by requiring the affected
investors to rely solely upon existing state law, and not SMMEA. Pursuant to
Section 347 of the Riegle Community Development and Regulatory Improvement Act
of 1994, which amended the definition of "mortgage related security" to include,
in relevant part, offered certificates satisfying the rating and qualified
originator requirements for "mortgage related securities," but evidencing
interests in a trust fund consisting, in whole or in part, of first liens on one
or more parcels of real estate upon which are located one or more commercial
structures, states were authorized to enact legislation, on or before
September 23, 2001, specifically referring to Section 347 and prohibiting or
restricting the purchase, holding or investment by state-regulated entities
112
in such types of offered certificates. Accordingly, the investors affected by
any state legislation overriding the preemptive effect of SMMEA will be
authorized to invest in offered certificates qualifying as "mortgage related
securities" only to the extent provided in that legislation.
SMMEA also amended the legal investment authority of federally-chartered
depository institutions as follows: federal savings and loan associations and
federal savings banks may invest in, sell or otherwise deal in "mortgage related
securities" without limitation as to the percentage of their assets represented
thereby, federal credit unions may invest in those securities, and national
banks may purchase those securities for their own account without regard to the
limitations generally applicable to investment securities set forth in 12 U.S.C.
Section 24 (Seventh), subject in each case to those regulations as the
applicable federal regulatory authority may prescribe. In this connection, the
Office of the Comptroller of the Currency (the "OCC") has amended 12 C.F.R. Part
1 to authorize national banks to purchase and sell for their own account,
without limitation as to a percentage of the bank's capital and surplus (but
subject to compliance with certain general standards in 12 C.F.R. Section 1.5
concerning "safety and soundness" and retention of credit information), certain
"Type IV securities," defined in 12 C.F.R. Section 1.2(m) to include certain
"commercial mortgage-related securities" and "residential mortgage-related
securities." As so defined, "commercial mortgage-related security" and
"residential mortgage-related security" mean, in relevant part, "mortgage
related security" within the meaning of SMMEA, provided that, in the case of a
"commercial mortgage-related security," it "represents ownership of a promissory
note or certificate of interest or participation that is directly secured by a
first lien on one or more parcels of real estate upon which one or more
commercial structures are located and that is fully secured by interests in a
pool of loans to numerous obligors." In the absence of any rule or
administrative interpretation by the OCC defining the term "numerous obligors,"
no representation is made as to whether any of the offered certificates will
qualify as "commercial mortgage-related securities," and thus as "Type IV
securities," for investment by national banks. The National Credit Union
Administration (the "NCUA") has adopted rules, codified at 12 C.F.R. Part 703,
which permit federal credit unions to invest in "mortgage related securities,"
other than stripped mortgage related securities, residual interests in mortgage
related securities, and commercial mortgage related securities, subject to
compliance with general rules governing investment policies and practices;
however, credit unions approved for the NCUA's "investment pilot program" under
12 C.F.R. Section 703.19 may be able to invest in those prohibited forms of
securities, while "RegFlex credit unions" may invest in commercial mortgage
related securities under certain conditions pursuant to 12 C.F.R. Section
742.4(b)(2). The Office of Thrift Supervision (the "OTS") has issued Thrift
Bulletin 13a (December 1, 1998), "Management of Interest Rate Risk, Investment
Securities, and Derivatives Activities" and Thrift Bulletin 73a (December 18,
2001) "Investing in Complex Securities," which thrift institutions subject to
the jurisdiction of the OTS should consider before investing in any of the
offered certificates.
All depository institutions considering an investment in the offered
certificates should review the "Supervisory Policy Statement on Investment
Securities and End-User Derivatives Activities" (the "1998 Policy Statement") of
the Federal Financial Institutions Examination Council, which has been adopted
by the Board of Governors of the Federal Reserve System, the Federal Deposit
Insurance Corporation, the OCC and the OTS, effective May 26, 1998, and by the
NCUA effective October 1, 1998. The 1998 Policy Statement sets forth general
guidelines which depository institutions must follow in managing risks
(including market, credit, liquidity, operational (transaction), and legal
risks) applicable to all securities (including mortgage pass-through securities
and mortgage-derivative products) used for investment purposes.
Investors whose investment activities are subject to regulation by federal
and state authorities should review rules, policies and guidelines adopted from
time to time by those authorities before purchasing any offered certificates, as
certain classes may be deemed unsuitable investments, or may otherwise be
restricted, under those rules, policies or guidelines (in certain instances
irrespective of SMMEA).
The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not limited
to, "prudent investor" provisions, percentage-of-assets limits, provisions which
may restrict or prohibit investment in securities which are not
"interest-bearing" or "income-paying," and, with regard
113
to any offered certificates issued in book-entry form, provisions which may
restrict or prohibit investments in securities which are issued in book-entry
form.
Except as to the status of certain classes of offered certificates as
"mortgage related securities," no representations are made as to the proper
characterization of the offered certificates for legal investment purposes,
financial institution regulatory purposes, or other purposes, or as to the
ability of particular investors to purchase offered certificates under
applicable legal investment restrictions. The uncertainties described above (and
any unfavorable future determinations concerning legal investment or financial
institution regulatory characteristics of the offered certificates) may
adversely affect the liquidity of the offered certificates.
Accordingly, all investors whose investment activities are subject to legal
investment laws and regulations, regulatory capital requirements or review by
regulatory authorities should consult with their own legal advisors in
determining whether and to what extent the offered certificates constitute legal
investments or are subject to investment, capital or other restrictions and, if
applicable, whether SMMEA has been overridden in any jurisdiction relevant to
such investor.
METHOD OF DISTRIBUTION
The offered certificates offered by the prospectus and the related
prospectus supplements will be offered in series. The distribution of the
offered certificates may be effected from time to time in one or more
transactions, including negotiated transactions, at a fixed public offering
price or at varying prices to be determined at the time of sale or at the time
of commitment therefor. The prospectus supplement for the offered certificates
of each series will, as to each class of such certificates, set forth the method
of the offering, either the initial public offering price or the method by which
the price at which the certificates of such class will be sold to the public can
be determined, any class or classes of offered certificates, or portions
thereof, that will be sold to affiliates of the depositor, the amount of any
underwriting discounts, concessions and commissions to underwriters, any
discounts or commissions to be allowed to dealers and the proceeds of the
offering to the depositor. If so specified in the prospectus supplement, the
offered certificates of a series will be distributed in a firm commitment
underwriting, subject to the terms and conditions of the underwriting agreement,
by Wachovia Capital Markets, LLC, acting as underwriter with other underwriters,
if any, named in the prospectus supplement. Alternatively, the prospectus
supplement may specify that offered certificates will be distributed by Wachovia
Capital Markets, LLC acting as agent. If Wachovia Capital Markets, LLC acts as
agent in the sale of offered certificates, Wachovia Capital Markets, LLC will
receive a selling commission with respect to such offered certificates,
depending on market conditions, expressed as a percentage of the aggregate
certificate balance or notional amount of such offered certificates as of the
date of issuance. The exact percentage for each series of certificates will be
disclosed in the prospectus supplement. To the extent that Wachovia Capital
Markets, LLC elects to purchase offered certificates as principal, Wachovia
Capital Markets, LLC may realize losses or profits based upon the difference
between its purchase price and the sales price. The prospectus supplement with
respect to any series offered other than through underwriters will contain
information regarding the nature of such offering and any agreements to be
entered into between the depositor or any affiliate of the depositor and
purchasers of offered certificates of such series.
This prospectus and prospectus supplements also may be used by the
depositor, Wachovia Capital Markets, LLC, an affiliate of the depositor, and any
other affiliate of the depositor when required under the federal securities laws
in connection with offers and sales of offered certificates in furtherance of
market-making activities in offered certificates. Wachovia Capital Markets, LLC
or any such other affiliate may act as principal or agent in such transactions.
Such sales will be made at prices related to prevailing market prices at the
time of sale or otherwise.
If so specified in a prospectus supplement, all or a portion of one or more
classes of the offered certificates identified in the prospectus supplement may
be retained or sold by the depositor either directly or indirectly through an
underwriter, including Wachovia Capital Markets, LLC to one or more affiliates
of the depositor. This prospectus and prospectus supplements may be used by any
such affiliate to resell offered certificates publicly or privately to
affiliated or unaffiliated parties either directly or indirectly through an
underwriter, including Wachovia Capital Markets, LLC.
114
The depositor will agree to indemnify Wachovia Capital Markets, LLC and any
underwriters and their respective controlling persons against certain civil
liabilities, including liabilities under the Securities Act of 1933, as amended,
or will contribute to payments that any such person may be required to make in
respect thereof.
In the ordinary course of business, Wachovia Capital Markets, LLC and the
depositor may engage in various securities and financing transactions, including
repurchase agreements to provide interim financing of the depositor's mortgage
loans pending the sale of such mortgage loans or interests therein, including
the certificates.
The depositor anticipates that the offered certificates will be sold
primarily to institutional investors which may include affiliates of the
depositor. Purchasers of offered certificates, including dealers, may, depending
on the facts and circumstances of such purchases, be deemed to be "underwriters"
within the meaning of the Securities Act of 1933, as amended, in connection with
reoffers and sales by them of offered certificates. Certificateholders should
consult with their legal advisors in this regard prior to any such reoffer or
sale.
As to each series of certificates, only those classes rated in an
investment grade rating category by any rating agency will be offered hereby.
Any class of certificates not offered by this prospectus may be initially
retained by the depositor, and may be sold by the depositor at any time to one
or more institutional investors.
Underwriters or agents and their associates may be customers of (including
borrowers from), engage in transactions with, and/or perform services for the
depositor, its affiliates, and the trustee in the ordinary course of business.
LEGAL MATTERS
Unless otherwise specified in the prospectus supplement, certain legal
matters in connection with the certificates of each series, including certain
federal income tax consequences, will be passed upon for the depositor by
Cadwalader, Wickersham & Taft LLP, Charlotte, North Carolina.
FINANCIAL INFORMATION
A new trust fund will be formed with respect to each series of
certificates, and no trust fund will engage in any business activities or have
any assets or obligations prior to the issuance of the related series of
certificates. Accordingly, no financial statements with respect to any trust
fund will be included in this prospectus or in the prospectus supplement.
RATINGS
It is a condition to the issuance of any class of offered certificates that
they shall have been rated not lower than investment grade, that is, in one of
the four highest rating categories, by at least one rating agency.
Ratings on commercial mortgage pass-through certificates address the
likelihood of receipt by the holders thereof of all collections on the
underlying mortgage assets to which such holders are entitled. These ratings
address the structural, legal and issuer-related aspects associated with such
certificates, the nature of the underlying mortgage assets and the credit
quality of the guarantor, if any. Ratings on commercial mortgage pass-through
certificates do not represent any assessment of the likelihood of principal
prepayments by borrowers or of the degree by which such prepayments might differ
from those originally anticipated. As a result, certificateholders might suffer
a lower than anticipated yield, and, in addition, holders of Stripped Interest
Certificates in extreme cases might fail to recoup their initial investments.
There can be no assurance that any rating agency not requested to rate the
offered certificates will not nonetheless issue a rating to any or all classes
thereof and, if so, what such rating or ratings would be. A rating assigned to
any class of offered certificates by a rating agency that has not been requested
by the depositor to do so may be lower than the rating assigned to a class of
offered certificates by one or more of the rating agencies that has been
requested by the depositor to rate the offered certificates.
115
A security rating is not a recommendation to buy, sell or hold securities
and may be subject to qualification, revision or withdrawal at any time by the
assigning rating organization. Each security rating should be evaluated
independently of another security rating.
INDEX OF PRINCIPAL DEFINITIONS
"Accrual Certificates" means certificates which provide for distributions
of accrued interest thereon commencing only following the occurrence of certain
events, such as the retirement of one or more other classes of certificates of
such series.
"Accrued Certificate Interest" means, with respect to each class of
certificates and each distribution date, other than certain classes of Stripped
Interest Certificates and REMIC Residual certificates, the amount equal to the
interest accrued for a specified period (generally the period between
distribution dates) on the outstanding certificate balance of those certificates
immediately prior to such distribution date, at the applicable pass-through
rate, as described under "Distributions of Interest on the Certificates" in this
prospectus.
"Available Distribution Amount" means, for any series of certificates and
any distribution date, the total of all payments or other collections (or
advances in lieu thereof) on, under or in respect of the mortgage assets and any
other assets included in the related trust fund that are available for
distribution to the certificateholders of that series on that date. The
particular components of the Available Distribution Amount for any series on
each distribution date will be more specifically described in the prospectus
supplement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Constant Prepayment Rate" or "CPR" means a rate that represents an assumed
constant rate of prepayment each month (which is expressed on a per annum basis)
relative to the outstanding principal balance of a pool of mortgage loans for
the life of such mortgage loans.
"Cut-Off Date" means the date on which the ownership of the mortgage loans
of a related series of certificates and rights to payment thereon are deemed
transferred to the trust fund, as specified in the related prospectus
supplement.
"Debt Service Coverage Ratio" means, with respect to a mortgage loan at any
given time and as more fully set forth in the prospectus supplement, the ratio
of (i) the Net Operating Income of the mortgaged property for a twelve-month
period to (ii) the annualized scheduled payments on the mortgage loan and on any
other loan that is secured by a lien on the mortgaged property prior to the lien
of the mortgage.
"DTC" means The Depository Trust Company.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Farmer Mac" or "FAMC" means the Federal Agricultural Mortgage Corporation.
"Loan-to-Value Ratio" means, as more fully set forth in the prospectus
supplement, the ratio (expressed as a percentage) of (i) the then outstanding
principal balance of the mortgage loan and the outstanding principal balance of
any loan secured by a lien on the mortgaged property prior to the lien of the
mortgage, to (ii) the value of the mortgaged property, which is generally its
fair market value determined in an appraisal obtained by the originator at the
origination of such loan.
"Net Operating Income" means, as more fully set forth in the prospectus
supplement and for any given period, the total operating revenues derived from a
mortgaged property, minus the total operating expenses incurred in respect of
the mortgaged property other than (i) non-cash items such as depreciation and
amortization, (ii) capital expenditures and (iii) debt service on loans
(including the mortgage loan) secured by liens on the mortgaged property.
"REMIC" means a "real estate mortgage investment conduit" under the Code.
"REMIC Certificate" means a certificate issued by a trust fund relating to
a series of certificate where an election is made to treat the trust fund as a
REMIC.
"REO Property" means any mortgaged property acquired on behalf of the trust
fund in respect of a defaulted mortgage loan through foreclosure, deed in lieu
of foreclosure or otherwise.
116
"SMMEA" means the Secondary Mortgage Market Enhancement Act of 1984, as
amended.
"Standard Prepayment Assumption" or "SPA" means a rate that represents an
assumed variable rate of prepayment each month (which is expressed on a per
annum basis) relative to the then outstanding principal balance of a pool of
loans, with different prepayment assumptions often expressed as percentages of
SPA.
"Stripped Interest Certificates" means certificates which are entitled to
interest distributions with disproportionately small, nominal or no principal
distributions.
"Stripped Principal Certificates" means certificates which are entitled to
principal distributions with disproportionately small, nominal or no interest
distributions.
117
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The file "WBCMT 2004-C12 Prospectus Annexes A1-5.xls", which is a
Microsoft Excel*, Version 5.0 spreadsheet, provides in electronic format
certain information shown in Annexes A-1, A-1A, A-1B, A-2, A-3, A-4 and A-5. In
addition, the spreadsheet provides certain Mortgage Loan and Mortgaged Property
information contained in Annex A-1 and information detailing the changes in the
amount of monthly payments with regard to certain Mortgage Loans. As described
under "DESCRIPTION OF THE CERTIFICATES--Reports to Certificateholders;
Available Information" in the prospectus supplement, each month the Trustee
will make available through its internet website an electronic file in CMSA
format updating and supplementing the information contained in the "WBCMT
2004-C12 Prospectus Annexes A1-5.xls" file.
To open the file, insert the diskette into your floppy drive. Copy the
file "WBCMT 2004-C12 Prospectus Annexes A1-5.xls" to your hard drive or network
drive. Copy the file "WBCMT 2004-C12 Prospectus Annexes A1-5.xls" as you would
normally open any spreadsheet in Microsoft Excel. After the file is opened, a
securities law legend will be displayed. READ THE LEGEND CAREFULLY. To view the
data, see the worksheets labeled "Disclaimer", "A-1 Loan and Property Schedule"
or "A-1A Loan and Property Schedule", or "A-1B Loan and Property Schedule", or
"A-2 Multifamily Data" or "A-3 Reserve Accounts" or "A-4 Commercial Tenant
Schedule" or "A-5 Crossed Collateralized Pool", respectively.
*Microsoft Excel is a registered trademark of Microsoft Corporation.
================================================================================
UNTIL OCTOBER 6, 2004, ALL DEALERS THAT EFFECT TRANSACTIONS IN THE
OFFERED CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE
REQUIRED TO DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS. THIS IS IN ADDITION
TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS
WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
TABLE OF CONTENTS
PAGE
------
PROSPECTUS SUPPLEMENT
SUMMARY OF PROSPECTUS SUPPLEMENT .......... S-5
OVERVIEW OF THE CERTIFICATES .............. S-6
THE PARTIES ............................... S-8
IMPORTANT DATES AND PERIODS ............... S-11
THE CERTIFICATES .......................... S-11
THE MORTGAGE LOANS ........................ S-27
RISK FACTORS .............................. S-41
DESCRIPTION OF THE MORTGAGE POOL .......... S-90
SERVICING OF THE MORTGAGE LOANS ........... S-200
DESCRIPTION OF THE CERTIFICATES ........... S-216
YIELD AND MATURITY CONSIDERATIONS ......... S-252
USE OF PROCEEDS ........................... S-259
MATERIAL FEDERAL INCOME TAX
CONSEQUENCES ............................ S-259
ERISA CONSIDERATIONS ...................... S-261
LEGAL INVESTMENT .......................... S-263
METHOD OF DISTRIBUTION .................... S-264
LEGAL MATTERS ............................. S-265
RATINGS ................................... S-265
INDEX OF DEFINED TERMS .................... S-266
ANNEX A-1 ................................. A-1
ANNEX A-1A ................................ A-1A
ANNEX A-1B ................................ A-1B
ANNEX A-2 ................................. A-2
ANNEX A-3 ................................. A-3
ANNEX A-4 ................................. A-4
ANNEX A-5 ................................. A-5
ANNEX B ................................... B-1
PROSPECTUS
ADDITIONAL INFORMATION .................... 6
INCORPORATION OF CERTAIN
INFORMATION BY REFERENCE ................ 6
SUMMARY OF PROSPECTUS ..................... 7
RISK FACTORS .............................. 14
DESCRIPTION OF THE TRUST FUNDS ............ 34
YIELD CONSIDERATIONS ...................... 40
THE DEPOSITOR ............................. 45
USE OF PROCEEDS ........................... 45
DESCRIPTION OF THE CERTIFICATES ........... 46
DESCRIPTION OF THE POOLING AND
SERVICING AGREEMENTS .................... 53
DESCRIPTION OF CREDIT SUPPORT ............. 67
CERTAIN LEGAL ASPECTS OF MORTGAGE
LOANS AND LEASES ........................ 69
MATERIAL FEDERAL INCOME TAX
CONSEQUENCES ............................ 84
STATE AND OTHER TAX CONSEQUENCES .......... 108
ERISA CONSIDERATIONS ...................... 109
LEGAL INVESTMENT .......................... 112
METHOD OF DISTRIBUTION .................... 114
LEGAL MATTERS ............................. 115
FINANCIAL INFORMATION ..................... 115
RATINGS ................................... 115
INDEX OF PRINCIPAL DEFINITIONS ............ 116
===============================================================================
===============================================================================
$873,646,000
(APPROXIMATE)
WACHOVIA COMMERCIAL
MORTGAGE SECURITIES, INC.
(DEPOSITOR)
WACHOVIA BANK COMMERCIAL
MORTGAGE TRUST
COMMERCIAL MORTGAGE
PASS-THROUGH
CERTIFICATES SERIES 2004-C12
------------------------------------------------
PROSPECTUS SUPPLEMENT
------------------------------------------------
WACHOVIA SECURITIES
CITIGROUP
JPMORGAN
RBS GREENWICH CAPITAL
JUNE 29, 2004
================================================================================
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