PROSPECTUS SUPPLEMENT
TO PROSPECTUS DATED JULY 29, 2004.
$2,435,116,000
(APPROXIMATE)
GS MORTGAGE SECURITIES CORPORATION II
AS DEPOSITOR
GOLDMAN SACHS MORTGAGE COMPANY
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
COMMERZBANK AG, NEW YORK BRANCH
AS LOAN SELLERS
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2004-GG2
The Commercial Mortgage Pass-Through Certificates, Series 2004-GG2 will
include 11 classes of certificates that we are offering pursuant to this
prospectus supplement. The Series 2004-GG2 certificates represent the beneficial
ownership interests in a trust. The trust's main assets will be a pool of 141
fixed rate mortgage loans with original terms to maturity of not more than 180
months, secured by first liens on various types of commercial and multifamily
properties.
EXPECTED
INITIAL CERTIFICATE PASS-THROUGH RATINGS RATED FINAL
PRINCIPAL AMOUNT(1) RATE DESCRIPTION (S&P/MOODY'S) DISTRIBUTION DATE
--------------------- -------------- ------------- --------------- ------------------
Class A-1 $ 45,000,000 3.109% Fixed AAA/Aaa August 10, 2038
Class A-2 $ 100,000,000 4.293% Fixed AAA/Aaa August 10, 2038
Class A-3 $ 256,000,000 4.602% Fixed AAA/Aaa August 10, 2038
Class A-4 $ 208,000,000 4.964% Fixed AAA/Aaa August 10, 2038
Class A-5 $ 173,000,000 5.279% Fixed(2) AAA/Aaa August 10, 2038
Class A-6 $1,299,650,000 5.396% Fixed(2) AAA/Aaa August 10, 2038
Class A-1A $ 177,669,000 5.002% Fixed(2) AAA/Aaa August 10, 2038
Class B $ 65,110,000 5.490% Fixed(2) AA/Aa2 August 10, 2038
Class C $ 29,299,000 5.532% Fixed(2) AA-/Aa3 August 10, 2038
Class D $ 52,088,000 5.664% Variable(3) A/A2 August 10, 2038
Class E $ 29,300,000 5.762% Variable(3) A-/A3 August 10, 2038
(Footnotes to table on page S-6)
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YOU SHOULD CAREFULLY CON SIDER THE RISK FACTORS BEGIN NING ON PAGE S-26 OF THIS
PROSPECTUS SUPPLEMENT AND PAGE 3 OF THE PROSPECTUS.
Neither the certificates nor the underlying mortgage loans are insured or
guaranteed by any governmental agency or instrumentality or any other person or
entity.
The certificates will represent interests in the trust fund only. They will not
represent interests in or obligations of the depositor, any of its affiliates or
any other entity.
- --------------------------------------------------------------------------------
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE
NOT APPROVED OR DISAPPROVED OF THE OFFERED CERTIFICATES OR DETERMINED IF THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS ARE TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. GS MORTGAGE SECURITIES
CORPORATION II WILL NOT LIST THE OFFERED CERTIFICATES ON ANY SECURITIES EXCHANGE
OR ON ANY AUTOMATED QUOTATION SYSTEM OF ANY SECURITIES ASSOCIATION.
THE UNDERWRITERS, GREENWICH CAPITAL MARKETS, INC., GOLDMAN, SACHS & CO.,
CREDIT SUISSE FIRST BOSTON LLC, BANC OF AMERICA SECURITIES LLC, WACHOVIA CAPITAL
MARKETS, LLC AND MORGAN STANLEY & CO. INCORPORATED WILL PURCHASE THE OFFERED
CERTIFICATES FROM GS MORTGAGE SECURITIES CORPORATION II AND WILL OFFER THEM TO
THE PUBLIC AT NEGOTIATED PRICES, PLUS, IN CERTAIN CASES, ACCRUED INTEREST,
DETERMINED AT THE TIME OF SALE. GREENWICH CAPITAL MARKETS, INC. AND GOLDMAN,
SACHS & CO. ARE ACTING AS CO-LEAD BOOKRUNNING MANAGERS AND BANC OF AMERICA
SECURITIES LLC, CREDIT SUISSE FIRST BOSTON LLC, MORGAN STANLEY & CO.
INCORPORATED AND WACHOVIA CAPITAL MARKETS, LLC ARE ACTING AS CO-MANAGERS FOR
THIS OFFERING.
The underwriters expect to deliver the offered certificates to purchasers
in book-entry form only through the facilities of The Depository Trust Company
in the United States and Clearstream Banking, societe anonyme and Euroclear
Bank, as operator of the Euroclear System in Europe against payment in New York,
New York on or about August 12, 2004. We expect to receive from this offering
approximately $2,447,097,675, plus accrued interest from August 1, 2004, before
deducting expenses payable by us.
[RBS GREENWICH CAPITAL] GOLDMAN, SACHS & CO.
BANC OF AMERICA SECURITIES LLC CREDIT SUISSE FIRST BOSTON
MORGAN STANLEY WACHOVIA SECURITIES
July 29, 2004
- --------------------------------------------------------------------------------
GS MORTGAGE SECURITIES CORPORATION II
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2004-GG2
GEOGRAPHIC OVERVIEW OF MORTGAGE POOL
- --------------------------------------------------------------------------------
[MAP OMITTED]
NEW YORK 8 PROPERTIES $ 567,465,832 21.8% of total
CALIFORNIA 31 PROPERTIES 434,434,914 16.7% of total
NEVADA 7 PROPERTIES 218,292,368 8.4% of total
VIRGINIA 3 PROPERTIES 165,750,118 6.4% of total
FLORIDA 9 PROPERTIES 136,588,047 5.2% of total
NEW JERSEY 1 PROPERTY 130,000,000 5.0% of total
GEORGIA 10 PROPERTIES 123,632,269 4.7% of total
TEXAS 16 PROPERTIES 107,857,915 4.1% of total
MICHIGAN 5 PROPERTIES 103,244,495 4.0% of total
ILLINOIS 5 PROPERTIES 90,096,221 3.5% of total
MARYLAND 3 PROPERTIES 75,733,587 2.9% of total
COLORADO 5 PROPERTIES 68,520,297 2.6% of total
MISSISSIPPI 1 PROPERTY 68,000,000 2.6% of total
HAWAII 1 PROPERTY 61,000,000 2.3% of total
PENNSYLVANIA 7 PROPERTIES 49,446,811 1.9% of total
NORTH CAROLINA 3 PROPERTIES 42,570,267 1.6% of total
OREGON 2 PROPERTIES 24,925,201 1.0% of total
ARIZONA 6 PROPERTIES 22,779,838 0.9% of total
ALABAMA 2 PROPERTIES 19,696,280 0.8% of total
WISCONSIN 3 PROPERTIES 18,593,067 0.7% of total
UTAH 1 PROPERTY 18,500,000 0.7% of total
WASHINGTON 3 PROPERTIES 17,260,000 0.7% of total
MISSOURI 3 PROPERTIES 17,156,399 0.7% of total
LOUISIANA 1 PROPERTY 6,170,549 0.2% of total
SOUTH CAROLINA 1 PROPERTY 5,540,000 0.2% of total
DISTRICT OF COLUMBIA 1 PROPERTY 3,044,845 0.1% of total
CONNECTICUT 1 PROPERTY 3,000,000 0.1% of total
IDAHO 1 PROPERTY 2,555,500 0.1% of total
TENNESSEE 1 PROPERTY 2,547,867 0.1% of total
[ ] (less than) 1.0% of Cut-Off Date Balance
[ ] 1.0% - 5.0% of Cut-Off Date Balance
[ ] 5.1% - 10.0% of Cut-Off Date Balance
[ ] (greater than) 10.0% of Cut-Off Date Balance
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GRAND CANAL SHOPPES AT THE VENETIAN LAS VEGAS, NEVADA
[PICTURE OMITTED] [PICTURE OMITTED]
DAILY NEWS BUILDING 1441 BROADWAY
New York, New York New York, New York
[PICTURE OMITTED] [PICTURE OMITTED]
STONY POINT FASHION PARK GARDEN STATE PLAZA
Richmond, Virginia Paramus, New Jersey
[PICTURE OMITTED] [PICTURE OMITTED]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1410 BROADWAY 111 EIGHTH AVENUE
New York, New York New York, New York
[PICTURE OMITTED] [PICTURE OMITTED]
DESTIN COMMONS
Destin, Florida
[PICTURE OMITTED]
TOWN & COUNTRY RESORT
San Diego, California
MALL AT BARNES CROSSING
Tupelo, Mississippi
[PICTURE OMITTED]
[PICTURE OMITTED]
- --------------------------------------------------------------------------------
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS
Information about the offered certificates is contained in two separate
documents that progressively provide more detail: (a) the accompanying
prospectus, which provides general information, some of which may not apply to
the offered certificates; and (b) this prospectus supplement, which describes
the specific terms of the offered certificates. IF THE TERMS OF THE OFFERED
CERTIFICATES VARY BETWEEN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS, YOU SHOULD RELY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS
SUPPLEMENT.
You should rely only on the information contained in this prospectus
supplement and the prospectus. We have not authorized anyone to provide you with
information that is different from that contained in this prospectus supplement
and the prospectus. The information contained in this prospectus supplement is
accurate only as of the date of this prospectus supplement.
This prospectus supplement begins with several introductory sections
describing the Series 2004-GG2 certificates and the trust in abbreviated form:
Certificate Summary, commencing on page S-6 of this prospectus
supplement, which sets forth important statistical information relating to
the Series 2004-GG2 certificates;
Summary of Prospectus Supplement, commencing on page S-8 which gives a
brief introduction to the key features of the Series 2004-GG2 certificates
and a description of the underlying mortgage loans; and
Risk Factors, commencing on page S-26 of this prospectus supplement,
which describes risks that apply to the Series 2004-GG2 certificates which
are in addition to those described in the prospectus with respect to the
securities issued by the trust generally.
This prospectus supplement and the accompanying prospectus include cross
references to sections in these materials where you can find further related
discussions. The Tables of Contents in this prospectus supplement and the
prospectus identify the pages where these sections are located.
Certain capitalized terms are defined and used in this prospectus
supplement and the prospectus to assist you in understanding the terms of the
offered certificates and this offering. The capitalized terms used in this
prospectus supplement are defined on the pages indicated under the caption
"Index of Significant Definitions" commencing on page S-166 of this prospectus
supplement. The capitalized terms used in the prospectus are defined on the
pages indicated under the caption "Index of Defined Terms" commencing on page 81
of the prospectus.
In this prospectus supplement, the terms "Depositor," "we," "us" and "our"
refer to GS Mortgage Securities Corporation II.
FORWARD-LOOKING STATEMENTS
In this prospectus supplement and the prospectus, we use certain
forward-looking statements. Such forward-looking statements are found in the
material, including each of the tables, set forth under "Risk Factors" and
"Yield, Prepayment and Maturity Considerations." Forward-looking statements are
also found elsewhere in this prospectus supplement and prospectus and include
words like "expects," "intends," "anticipates," "estimates" and other similar
words. Such statements are intended to convey our projections or expectations as
of the date of this prospectus supplement. Such statements are inherently
subject to a variety of risks and uncertainties. Actual results could differ
materially from those we anticipate due to changes in, among other things:
o economic conditions and industry competition,
o political and/or social conditions, and
o the law and government regulatory initiatives.
We will not update or revise any forward-looking statement to reflect
changes in our expectations or changes in the conditions or circumstances on
which such statements were originally based.
S-3
TABLE OF CONTENTS
PAGE
----
SUMMARY OF PROSPECTUS SUPPLEMENT ............................................S-8
RISK FACTORS ...............................................................S-26
Special Yield Considerations ..........................................S-26
Risks Relating to Enforceability of Prepayment Premiums or
Defeasance Periods .................................................S-27
Commercial and Multifamily Lending is Dependent Upon Net Operating
Income .............................................................S-27
Increases in Real Estate Taxes May Reduce Available Funds .............S-29
Limitations of Appraisals .............................................S-29
Tenant Concentration Entails Risk .....................................S-29
Mortgaged Properties Leased to Multiple Tenants Also Have Risks .......S-30
Mortgaged Properties Leased to Borrowers or Borrower Affiliated
Entities Also Have Risks ...........................................S-30
Tenant Bankruptcy Entails Risks .......................................S-30
Certain Additional Risks Relating to Tenants ..........................S-30
Terrorist Attacks and Military Conflicts May Adversely Affect Your
Investment .........................................................S-32
Risks Relating to Loan Concentrations .................................S-32
Risks Relating to Enforceability of Cross-Collateralization ...........S-34
The Borrower's Form of Entity May Cause Special Risks .................S-35
Tenancies in Common May Hinder Recovery ...............................S-36
Condominium Ownership May Limit Use and Improvements ..................S-36
Retail Properties Have Special Risks ..................................S-37
Office Properties Have Special Risks ..................................S-38
Multifamily Properties Have Special Risks .............................S-39
Hotel Properties Have Special Risks ...................................S-40
Industrial Properties Have Special Risks ..............................S-40
Lack of Skillful Property Management Entails Risks ....................S-41
Risks Relating to Prepayments and Repurchases .........................S-42
Mortgage Loans Are Nonrecourse and Are Not Insured or Guaranteed ......S-44
Risks of Different Timing of Mortgage Loan Amortization ...............S-44
Bankruptcy Proceedings Entail Certain Risks ...........................S-44
Geographic Concentration ..............................................S-46
Environmental Risks ...................................................S-47
Costs of Compliance with Applicable Laws and Regulations ..............S-48
No Reunderwriting of the Mortgage Loans ...............................S-48
Litigation and Other Matters Affecting the Mortgaged Properties or
Borrowers ..........................................................S-48
Other Financings ......................................................S-49
Risks Relating to Borrower Default ....................................S-51
Risks Relating to Interest on Advances and Special Servicing
Compensation .......................................................S-51
Balloon Payments ......................................................S-51
Ground Leases and Other Leasehold Interests ...........................S-52
Risks Associated with One Action Rules ................................S-53
Tax Considerations Relating to Foreclosure ............................S-54
Some Mortgaged Properties May Not Be Readily Convertible to
Alternative Uses ...................................................S-54
Zoning Compliance and Use Restrictions ................................S-55
Risks of Inspections Relating to Properties ...........................S-55
Property Insurance ....................................................S-56
Risks Associated with Blanket Insurance Policies ......................S-57
Potential Conflicts of Interest .......................................S-58
You Will Not Have any Control Over the Servicing of The Non-Serviced
Loans ..............................................................S-59
Conflicts of Interest May Occur as a Result of the Rights of Third
Parties to Terminate the Special Servicer of The Whole Loans .......S-59
Special Servicer May Be Directed to Take Actions ......................S-59
Your Lack of Control Over Trust Fund Can Create Risks .................S-60
Loan Sellers May Not Be Able to Make a Required Repurchase of a
Defective Mortgage Loan ............................................S-60
Subordination of Subordinate Offered Certificates .....................S-60
S-4
Risks of Limited Liquidity and Market Value ...........................S-60
Book-Entry Registration ...............................................S-61
Other Risks ...........................................................S-61
DESCRIPTION OF THE MORTGAGE POOL ...........................................S-62
General ...............................................................S-62
Certain Characteristics of the Mortgage Loans .........................S-63
The Whole Loans .......................................................S-71
Representations and Warranties ........................................S-89
Cures and Repurchases .................................................S-91
The Loan Sellers and Originators ......................................S-92
Underwriting Guidelines ...............................................S-93
Additional Information ................................................S-95
DESCRIPTION OF THE OFFERED CERTIFICATES ....................................S-95
General ...............................................................S-95
Distributions .........................................................S-96
Subordination ........................................................S-109
Appraisal Reductions .................................................S-111
Delivery, Form and Denomination ......................................S-113
Book-Entry Registration ..............................................S-113
Definitive Certificates ..............................................S-115
YIELD, PREPAYMENT AND MATURITY CONSIDERATIONS .............................S-115
Yield ................................................................S-115
Weighted Average Life of the Offered Certificates ....................S-117
Price/Yield Tables ...................................................S-123
Effect of Loan Groups ................................................S-129
THE POOLING AGREEMENT .....................................................S-130
General ..............................................................S-130
Servicing of the Whole Loans .........................................S-130
Assignment of the Mortgage Loans .....................................S-130
Servicing of the Mortgage Loans ......................................S-130
Advances .............................................................S-135
Accounts .............................................................S-138
Withdrawals from the Collection Account ..............................S-139
Enforcement of "Due-On-Sale" and "Due-On-Encumbrance" Clauses ........S-140
Inspections ..........................................................S-141
Evidence as to Compliance ............................................S-141
Certain Matters Regarding the Depositor, the Fiscal Agent, the
Master Servicer and the Special Servicer .........................S-141
Events of Default ....................................................S-143
Rights Upon Event of Default .........................................S-144
Amendment ............................................................S-145
Realization Upon Mortgage Loans ......................................S-147
The Controlling Class Representative .................................S-151
Limitation on Liability of Controlling Class Representative ..........S-153
Optional Termination; Optional Mortgage Loan Purchase ................S-153
The Trustee ..........................................................S-154
The Fiscal Agent .....................................................S-155
The Master Servicer; Master Servicer Servicing Compensation and
Payment of Expenses ...............................................S-156
The Special Servicer; Special Servicer Servicing Compensation and
Payment of Expenses ...............................................S-157
Reports to Certificateholders; Available Information .................S-159
USE OF PROCEEDS ...........................................................S-161
FEDERAL INCOME TAX CONSEQUENCES ...........................................S-161
STATE TAX CONSIDERATIONS ..................................................S-162
ERISA CONSIDERATIONS ......................................................S-163
LEGAL INVESTMENT ..........................................................S-164
PLAN OF DISTRIBUTION ......................................................S-165
LEGAL MATTERS .............................................................S-166
RATINGS ...................................................................S-166
INDEX OF SIGNIFICANT DEFINITIONS ..........................................S-168
ANNEX A--MORTGAGE POOL INFORMATION ..........................................A-1
ANNEX B--TEN LARGEST MORTGAGE LOANS .........................................B-1
ANNEX C--CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS ......................C-1
ANNEX D--STRUCTURAL AND COLLATERAL TERM SHEET ...............................D-1
S-5
CERTIFICATE SUMMARY
INITIAL
CERTIFICATE APPROXIMATE PASS-THROUGH PASS-THROUGH
RATINGS PRINCIPAL OR CREDIT RATE RATE AS OF WEIGHTED AVG. PRINCIPAL
CLASS S&P/MOODY'S NOTIONAL AMOUNT(1) SUPPORT(5) DESCRIPTION CLOSING DATE LIFE(6) (YRS.) WINDOW(6)
----- ----------- ------------------ ---------- ----------- ------------ -------------- ---------
Offered Certificates
A-1(7) AAA/Aaa $ 45,000,000 13.250% Fixed 3.109% 1.213 09/04-11/06
A-2(7) AAA/Aaa $ 100,000,000 13.250% Fixed 4.293% 3.726 11/06-05/09
A-3(7) AAA/Aaa $ 256,000,000 13.250% Fixed 4.602% 4.819 05/09-09/09
A-4(7) AAA/Aaa $ 208,000,000 13.250% Fixed 4.964% 6.468 09/09-10/11
A-5(7) AAA/Aaa $ 173,000,000 13.250% Fixed(2) 5.279% 8.622 10/11-11/13
A-6(7) AAA/Aaa $ 1,299,650,000 13.250% Fixed(2) 5.396% 9.728 11/13-07/14
A-1A(7) AAA/Aaa $ 177,669,000 13.250% Fixed(2) 5.002% 6.716 09/04-07/14
B AA/Aa2 $ 65,110,000 10.750% Fixed(2) 5.490% 9.977 07/14-08/14
C AA-/Aa3 $ 29,299,000 9.625% Fixed(2) 5.532% 9.994 08/14-08/14
D A/A2 $ 52,088,000 7.625% Variable(3) 5.664% 9.994 08/14-08/14
E A-/A3 $ 29,300,000 6.500% Variable(3) 5.762% 9.994 08/14-08/14
Non-Offered Certificates
X-P AAA/Aaa $ 2,474,498,000(8) N/A WAC/IO(9) 0.522% N/A N/A
X-C AAA/Aaa $ 2,604,402,686(8) N/A WAC/IO(9) 0.103% N/A N/A
F BBB+/Baa1 $ 26,044,000 5.500% Variable(4) 5.780% 9.994 08/14-08/14
G BBB/Baa2 $ 22,789,000 4.625% Variable(4) 5.780% 9.994 08/14-08/14
H BBB-/Baa3 $ 29,299,000 3.500% Variable(4) 5.780% 10.070 08/14-09/14
J BB+/Ba1 $ 6,511,000 3.250% Fixed(2) 5.067% 10.078 09/14-09/14
K BB/Ba2 $ 13,022,000 2.750% Fixed(2) 5.067% 10.078 09/14-09/14
L BB-/Ba3 $ 13,022,000 2.250% Fixed(2) 5.067% 10.078 09/14-09/14
M B+/B1 $ 9,767,000 1.875% Fixed(2) 5.067% 10.175 09/14-05/15
N B/B2 $ 6,511,000 1.625% Fixed(2) 5.067% 10.750 05/15-07/15
O B-/B3 $ 9,766,000 1.250% Fixed(2) 5.067% 11.810 07/15-07/16
P NR/NR $ 32,555,686 0.000% Fixed(2) 5.067% 12.203 07/16-08/19
- ------------------
(1) Approximate, subject to a variance of plus or minus 5%.
(2) For any distribution date, if the weighted average of the net interest
rates on the mortgage loans (in each case, adjusted if necessary to accrue
on the basis of a 360-day year consisting of twelve 30-day months) as of
their respective due dates in the month preceding the month in which the
related distribution date occurs is less than the rate specified for the
Class A-5, Class A-6, Class A-1A, Class B, Class C, Class J, Class K, Class
L, Class M, Class N, Class O and Class P certificates for that distribution
date, then the pass-through rate for the Class A-5, Class A-6, Class A-1A,
Class B, Class C, Class J, Class K, Class L, Class M, Class N, Class O and
Class P certificates on that distribution date will equal the weighted
average of the net interest rates on the mortgage loans.
(3) For any distribution date the pass-through rates on the Class D
certificates and the Class E certificates will be a per annum rate equal to
the weighted average of the net interest rates on the mortgage loans (in
each case, adjusted if necessary to accrue on the basis of a 360-day year
consisting of twelve 30-day months) minus 0.116% and 0.018%, respectively.
(4) For any distribution date the pass-through rates on the Class F, Class G
and Class H certificates will be a per annum rate equal to the weighted
average of the net interest rates on the mortgage loans (in each case,
adjusted if necessary to accrue on the basis of a 360-day year consisting
of twelve 30-day months).
(5) The credit support percentages set forth for the Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5, Class A-6 and Class A-1A certificates are
represented in the aggregate.
(6) Assuming no prepayments and according to the modeling assumptions described
under "Yield, Prepayment and Maturity Considerations" in this prospectus
supplement.
(7) For purposes of making distributions on the Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5, Class A-6 and Class A-1A certificates, the pool
of mortgage loans will be deemed to consist of two distinct loan groups,
loan group 1 and loan group 2. Loan group 1 will consist of 119 mortgage
loans, representing approximately 93.2% of the aggregate principal balance
of the pool of mortgage loans as of the cut-off date and includes all
mortgage loans other than the mortgage loans secured by multifamily
properties. Loan group 2 will consist of 22 mortgage loans, representing
approximately 6.8% of the aggregate principal balance of the pool of
mortgage loans as of the cut-off date and includes all mortgage loans that
are secured by multifamily properties.
(8) The Class X certificates collectively consist of the Class X-P and Class
X-C certificates, neither of which is offered by this prospectus
supplement. The Class X certificates will not have a principal amount and
will not be entitled to receive distributions of principal. Interest will
accrue on the Class X certificates at their respective pass-through rates
based upon their notional
S-6
amounts. The notional amount of the Class X certificates in the aggregate
will be initially $2,604,402,686, which will be equal to the aggregate
initial principal amounts of the Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5, Class A-6, Class A-1A, Class B, Class C, Class D, Class E,
Class F, Class G, Class H, Class J, Class K, Class L, Class M, Class N,
Class O and Class P certificates.
(9) The pass-through rate on the Class X certificates in the aggregate will be
equal to the excess, if any, of (i) the weighted average of the net
interest rates on the mortgage loans (in each case, adjusted if necessary
to accrue on the basis of a 360-day year consisting of twelve 30-day
months), over (ii) the weighted average of the pass-through rates of the
certificates (other than the Class R and Class LR certificates) as
described in this prospectus supplement.
S-7
SUMMARY OF PROSPECTUS SUPPLEMENT
The following is only a summary. Detailed information appears elsewhere in
this prospectus supplement and in the accompanying prospectus. That information
includes, among other things, detailed mortgage loan information and
calculations of cash flows on the offered certificates. To understand all of the
terms of the offered certificates, read carefully this entire document and the
accompanying prospectus. See "Index of Significant Definitions" in this
prospectus supplement and "Index of Defined Terms" in the prospectus for
definitions of capitalized terms.
TITLE, REGISTRATION AND DENOMINATION OF CERTIFICATES
The certificates to be issued are known as the GS Mortgage Securities
Corporation II, Commercial Mortgage Pass-Through Certificates, Series 2004-GG2.
The offered certificates will be issued in book-entry form through The
Depository Trust Company, or DTC, and its participants. You may hold your
certificates through: (i) DTC in the United States; or (ii) Clearstream Banking,
societe anonyme or Euroclear Bank, as operator of the Euroclear System in
Europe. Transfers within DTC, Clearstream Banking, societe anonyme or Euroclear
Bank, as operator of the Euroclear System will be made in accordance with the
usual rules and operating procedures of those systems. See "Description of the
Offered Certificates--Book-Entry Registration" in this prospectus supplement and
"Description of the Certificates--General" in the prospectus. We will issue the
offered certificates in denominations of $10,000 and integral multiples of $1
above $10,000.
PARTIES AND DATES
Depositor....................... GS Mortgage Securities Corporation II a
Delaware corporation. The depositor's address
is 85 Broad Street, New York, New York 10004
and its telephone number is (212) 902-1000.
See "The Seller" in the prospectus. All
references to the depositor in this prospectus
supplement are references to the Seller in the
prospectus.
Loan Sellers.................... The mortgage loans will be sold to the
depositor by:
o Goldman Sachs Mortgage Company, a New York
limited partnership (50.6%);
o Greenwich Capital Financial Products,
Inc., a Delaware corporation (45.5%); and
o Commerzbank AG, New York Branch (3.9%)
(representing its portion of the mortgage
loan jointly originated with Archon
Financial, L.P. as described under
"--Originators" below and its portion of
the mortgage loan purchased from Goldman
Sachs Mortgage Company and jointly held
with Goldman Sachs Mortgage Company).
Goldman Sachs Mortgage Company is an affiliate
of the depositor and one of the underwriters.
Greenwich Capital Financial Products, Inc. is
an affiliate of one of the underwriters. See
"Description of the Mortgage Pool--The Loan
Sellers and Originators" in this prospectus
supplement.
S-8
Originators..................... The mortgage loans were originated by:
o Archon Financial, L.P., a Delaware limited
partnership (42.8%);
o Greenwich Capital Financial Products,
Inc., a Delaware corporation (45.5%); and
o Washington Mutual Bank, FA, a federal
savings bank (5.6%);
o With respect to 1 mortgage loan, Archon
Financial, L.P. and Commerzbank AG, New
York Branch, on a joint basis (4.4%); and
o Bank of America, N.A., a national banking
association (1.8%).
Master Servicer................. Wells Fargo Bank, National Association. The
master servicer will initially service all of
the mortgage loans (other than the
non-serviced mortgage loans) either directly
or through a subservicer. See "The Pooling
Agreement--Servicing of the Mortgage Loans"
and "--The Master Servicer; Master Servicer
Servicing Compensation and Payment of
Expenses" in this prospectus supplement.
Special Servicer................ Lennar Partners, Inc., a Florida corporation
(other than with respect to the non-serviced
mortgage loans). See "The Pooling
Agreement--The Special Servicer; Special
Servicer Servicing Compensation and Payment of
Expenses" in this prospectus supplement.
Additionally, Lennar Partners Inc., is the
special servicer with respect to each
non-serviced loan under the related other
pooling and servicing agreement.
Trustee......................... LaSalle Bank National Association, a national
banking association. See "The Pooling
Agreement--The Trustee" in this prospectus
supplement.
Fiscal Agent.................... ABN AMRO Bank N.V., a Netherlands banking
corporation, will act as the fiscal agent with
respect to the trustee. See "The Pooling
Agreement--The Fiscal Agent" in this
prospectus supplement.
Cut-Off Date.................... With respect to each mortgage loan, the later
of August 1, 2004 and the date of origination
of such mortgage loan.
Closing Date.................... On or about August 12, 2004.
Distribution Date............... The trustee will make distributions on the
certificates, to the extent of available
funds, on the 10th day of each month or, if
any such 10th day is not a business day, on
the next business day, provided that the
distribution date will be at least 4 business
days following the determination date
beginning in September 2004, to the holders of
record at the end of the previous month.
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Determination Date.............. The sixth day of the calendar month of the
related distribution date or, if the sixth day
is not a business day, the next business day.
Collection Period............... For any mortgage loan and any distribution
date, the period commencing on the day
immediately following the due date (without
regard to grace periods) for that mortgage
loan in the month preceding the month in which
the related distribution date occurs and
ending on and including the due date (without
regard to grace periods) for that mortgage
loan in the month in which that distribution
date occurs.
THE MORTGAGE LOANS
The Mortgage Pool............... The trust's primary assets will be 141 fixed
rate mortgage loans secured by first liens on
141 commercial and multifamily properties
located in 28 states and the District of
Columbia. See "Risk Factors--Commercial and
Multifamily Lending is Dependent Upon Net
Operating Income" in this prospectus
supplement.
The Grand Canal Shoppes at the Venetian loan
(identified as loan no. 1 on Annex C to this
prospectus supplement), with a principal
balance as of the cut-off date of $189,548,779
and representing approximately 7.3% of the
aggregate principal balance of the pool of
mortgage loans as of the cut-off date, is
comprised of 2 of 6 mortgage loans that are
part of a split loan structure, each of which
is secured by the same mortgage instrument on
the related mortgaged property. The other 4
mortgage loans, the Grand Canal Shoppes at the
Venetian pari passu companion loans, which are
part of the split loan structure but are not
included in the trust, are pari passu in right
of payment with the Grand Canal Shoppes at the
Venetian loan and have an aggregate
outstanding principal balance as of the
cut-off date of $236,437,161.
The Garden State Plaza loan (identified as
loan no. 4 on Annex C to this prospectus
supplement), with a principal balance as of
the cut-off date of $130,000,000 and
representing approximately 5.0% of the
aggregate principal balance of the pool of
mortgage loans as of the cut-off date, is 1 of
4 mortgage loans that are part of a split loan
structure, each of which is secured by the
same mortgage instrument on the related
mortgaged property. The other 3 mortgage
loans, the Garden State Plaza pari passu
companion loans, which are part of the split
loan structure but are not included in the
trust, are pari passu in right of payment with
the Garden State Plaza loan and have an
aggregate outstanding principal balance as of
the cut-off date of $390,000,000.
The Daily News Building loan (identified as
loan no. 2 on Annex C to this prospectus
supplement), with a principal balance as of
the cut-off date of $154,000,000 and
representing approximately 5.9% of the
aggregate principal balance of the pool of
mortgage loans as of the cut-off date, is 1 of
2 mortgage loans that are part of a split loan
structure, each of which is secured by the
same mortgage instrument on the related
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mortgaged property. The other loan, the Daily
News Building subordinate loan, which is part
of the split loan structure but is not
included in the trust, is generally pari passu
in right of payment with the Daily News
Building loan prior to certain defaults (i.e.,
the Daily News Building loan and the Daily
News Building subordinate loan are each
entitled to their respective pro rata share of
payments of principal and interest), and
subordinate in right of payment to the Daily
News Building loan subsequent to those
defaults and has an aggregate outstanding
principal balance as of the cut-off date of
$56,000,000.
The 111 Eighth Avenue loan (identified as loan
no. 8 on Annex C to this prospectus
supplement), with a principal balance as of
the cut-off date of $80,000,000 and
representing approximately 3.1% of the
aggregate principal balance of the pool of
mortgage loans as of the cut-off date, is 1 of
9 mortgage loans that are part of a split loan
structure, each of which is secured by the
same mortgage instrument on the related
mortgaged property. Six (6) of the other
mortgage loans, the 111 Eighth Avenue pari
passu companion loans, which are part of the
split loan structure but are not included in
the trust, are pari passu in right of payment
with the 111 Eighth Avenue loan and have an
aggregate outstanding principal balance as of
the cut-off date of $370,000,000. The
mortgaged property is also secured by 2
subordinate mortgage loans, the 111 Eighth
Avenue subordinate companion loans, which are
generally pari passu in right of payment with
the 111 Eighth Avenue loan and the 111 Eighth
Avenue pari passu companion loans prior to
certain defaults (i.e., the 111 Eighth Avenue
loan, each 111 Eighth Avenue pari passu
companion loan and each of the 111 Eighth
Avenue subordinate loans are entitled to their
respective pro rata share of all payments of
principal and interest, although holders of
the 111 Eighth Avenue loan and the 111 Eighth
Avenue pari passu companion loans will be paid
their share prior to the holders of the 111
Eighth Avenue subordinate companion loans),
and subordinate in right of payment to the 111
Eighth Avenue loan and the 111 Eighth Avenue
pari passu companion loans subsequent to those
defaults. The 2 subordinate loans each have an
outstanding principal balance as of the
cut-off date of $25,000,000.
The 237 Park Avenue loan (identified as loan
no. 11 on Annex C to this prospectus
supplement), with a principal balance as of
the cut-off date of $67,333,333 and
representing approximately 2.6% of the
aggregate principal balance of the pool of
mortgage loans as of the cut-off date, is 1 of
4 mortgage loans that are part of a split loan
structure, each of which is secured by the
same mortgage instrument on the related
mortgaged property. The other 3 mortgage
loans, the 237 Park Avenue pari passu
companion loans, which are part of the split
loan structure but are not included in the
trust, are pari passu in right of payment with
the 237 Park Avenue loan and have an aggregate
outstanding principal balance as of the
cut-off date of $230,666,667.
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The 1441 Broadway loan (identified as loan no.
3 on Annex C to this prospectus supplement),
with a principal balance as of the cut-off
date of $132,647,486 and representing
approximately 5.1% of the aggregate principal
balance of the pool of mortgage loans as of
the cut-off date, is one of 2 mortgage loans
that are part of a split loan structure, each
of which is secured by the same mortgage
instrument on the related mortgaged property.
The other mortgage loan, the 1441 Broadway
subordinate companion loan, which is part of
the split loan structure but is not included
in the trust, is generally pari passu in right
of payment with the 1441 Broadway loan prior
to certain defaults (i.e., the 1441 Broadway
loan and the 1441 Broadway subordinate
companion loan are entitled to their
respective pro rata share of all payments of
principal and interest, although holders of
the 1441 Broadway loan will be paid their
share prior to holders of the 1441 Broadway
subordinate companion loan) and subordinate in
right of payment to the 1441 Broadway loan
subsequent to those defaults. The 1441
Broadway subordinate companion loan has an
aggregate outstanding principal balance as of
the cut-off date of $6,981,447.
The Waterfront Plaza loan (identified as loan
no. 12 on Annex C to this prospectus
supplement), with a principal balance as of
the cut-off date of $61,000,000 and
representing approximately 2.3% of the
aggregate principal balance of the pool of
mortgage loans as of the cut-off date, is one
of 2 mortgage loans that are part of a split
loan structure, each of which is secured by
the same mortgage instrument on the related
mortgaged property. The other mortgage loan,
the Waterfront Plaza subordinate companion
loan, which is part of the split loan
structure but is not included in the trust, is
generally pari passu in right of payment with
the Waterfront Plaza loan prior to certain
defaults (i.e., the Waterfront Plaza loan and
the Waterfront Plaza subordinate companion
loan are entitled to their respective pro rata
share of all payments of principal and
interest, although holders of Waterfront Plaza
loan will be paid their share prior to holders
of the Waterfront Plaza subordinate companion
loan), and subordinate in right of payment to
the Waterfront Plaza loan subsequent to those
defaults. The Waterfront Plaza subordinate
companion loan has an aggregate outstanding
principal balance as of the cut-off date of
$6,600,000.
Each of the 700 Westpark Office Building loan,
the Mercado Santa Clara loan and the Hazel
Gardens Apartments loan (identified as loan
nos. 53, 19 and 87 on Annex C to this
prospectus supplement), with a principal
balance as of the cut-off date of $9,800,000,
$32,800,000 and $5,950,000, respectively, and
representing approximately 0.4%, 1.3% and
0.2%. respectively, of the aggregate principal
balance of the pool of mortgage loans as of
the cut-off date are part of a split loan
structure. In each case the mortgage loan and
the related companion loan, are secured by the
same mortgage instrument on the related
mortgaged property. In each case the companion
loan, which is part of the split loan
structure, is not included in the trust, and
is generally pari passu in right of payment
with the mortgage loan prior to certain
defaults (i.e., the mortgage loans
S-12
and their respective subordinate companion
loan are entitled to their respective pro rata
share of all payments or principal and
interest), and subordinate in right of payment
to the mortgage loan subsequent to those
defaults. The companion loans related to the
700 Westpark Office Building loan, the Mercado
Santa Clara loan and the Hazel Gardens
Apartments loan have an aggregate outstanding
principal balance as of the cut-off date of
$650,000, $2,000,000 and $250,000,
respectively.
Each of the Grand Canal Shoppes at the
Venetian loan, the 1441 Broadway loan, the
Daily News Building Loan, the Waterfront Plaza
loan, the 700 Westpark Office Building loan,
the Mercado Santa Clara loan and the Hazel
Gardens Apartments loan (which are included in
the trust) and its related companion loan(s)
(which are not included in the trust) are
being serviced under the pooling and servicing
agreement under which your securities are
issued. Each of the Garden State Plaza loan,
the 111 Eighth Avenue loan and the 237 Park
Avenue loan (which are included in the trust)
and each related companion loan (which are not
included in the trust) are referred to in this
prospectus supplement as a non-serviced loan.
The non-serviced loans are being serviced in
accordance with pooling and servicing
agreements separate from the pooling and
servicing agreement under which your
certificates are issued, by the master
servicer and special servicer that are parties
to the related pooling and servicing
agreement, and according to the servicing
standards provided for in the related separate
pooling and servicing agreement as follows:
o the Garden State Plaza loan and the
related companion loans are serviced under
the pooling and servicing agreement
related to the LB-UBS Commercial Mortgage
Pass-Through Certificates, Series 2004-C4,
among Structured Asset Securities
Corporation II, as depositor, Wachovia
Bank, National Association, as master
servicer, Lennar Partners, Inc., as
special servicer and Wells Fargo Bank,
National Association, as trustee;
o the 111 Eighth Avenue loan and the related
companion loans are serviced under the
pooling and servicing agreement related to
the Greenwich Capital Commercial Funding
Corp., Commercial Mortgage Pass-Through
Certificates, Series 2004-GG1, among
Greenwich Capital Commercial Funding
Corp., as depositor, Wachovia Bank,
National Association, as master servicer,
Lennar Partners, Inc., as special
servicer; LaSalle Bank, National
Association, as trustee and ABN AMRO N.V.,
as fiscal agent; and
o the 237 Park Avenue loan and the related
pari passu companion loans are serviced
under the pooling and servicing agreement
related to the Greenwich Capital
Commercial Funding Corp., as depositor,
Commercial Mortgage Trust 2003-C2,
Commercial Mortgage Pass-Through
Certificates, Series 2003-C2, among
Greenwich Capital Commercial Funding
Corp., as depositor, Wachovia Bank,
National Association, as master servicer,
S-13
Lennar Partners, Inc., as special
servicer, LaSalle Bank National
Association, as trustee and ABN AMRO Bank
N.V., as fiscal agent.
For more information regarding the split loan
structure loans, see "Description of the
Mortgage Pool--The Whole Loans" in this
prospectus supplement.
Monthly payments of principal and/or interest
on each mortgage loan are due on the first day
of each month except with respect to 2
mortgage loans which require monthly payments
to be made on the 6th day of each month with
no grace period. Each mortgage loan that
requires monthly payments to be made on the
first day of the month provides for no more
than 5 days grace in each case, except with
respect to 11 mortgage loans which have a 10
day grace period. All but 1 of the mortgage
loans provide for monthly payments of
principal based on an amortization schedule
that is significantly longer than the
remaining term of the mortgage loan. One (1)
mortgage loan, representing approximately 0.6%
of the aggregate principal balance of the pool
of mortgage loans as of the cut-off date, is
fully amortizing over its term. These mortgage
loans will have substantial principal payments
due on their maturity dates, unless prepaid
earlier, subject to the terms and conditions
of the prepayment provisions in each mortgage
loan.
General characteristics of the mortgage loans
as of the cut-off date:
ALL MORTGAGE LOANS LOAN GROUP 1 LOAN GROUP 2
------------------ ------------ ------------
Initial Pool $2,604,402,687 $2,426,733,156 $177,669,531
Balance(1).........
Number of Mortgage 141 119 22
Loans..............
Number of Mortgaged 141 119 22
Properties.........
Average Cut-off Date $18,470,941 $20,392,716 $8,075,888
Mortgage Loan
Balance............
Weighted Average 5.624% 5.646% 5.326%
Mortgage Rate......
Range of Mortgage
Rates.............. 4.280% - 7.100% 4.400% - 7.100% 4.280% - 5.910%
Weighted Average 68.30% 68.12% 70.82%
Cut-off Date
Loan-to-Value
Ratio(2)...........
Weighted Average 107.0 108.1 91.9
Cut-off Date
Remaining Term to
Maturity (months)..
Weighted Average 1.57x 1.57x 1.48x
Cut-off Date
DSCR(2)............
Balloon Mortgage 56.8% 58.5% 33.7%
Loans(3)...........
Interest-Only 7.4% 6.9% 13.4%
Mortgage Loans.....
Partial Interest-Only 35.3% 34.6% 44.5%
Mortgage Loans.....
Fully Amortizing 0.6% 0% 8.4%
----------
(1) Subject to a permitted variance of plus or
minus 5%.
S-14
(2) The loan amount used for purposes of
calculating the loan-to-value ratio and
debt service coverage ratio for each of
the mortgage loans with pari passu
companion notes is the aggregate principal
balance of the mortgage loan and the
related pari passu companion loans. The
subordinate companion loans, if any, are
not included in these calculations.
Additional adjustments for the
cross-collateralized mortgage loan group
and the mortgage loans with earnout
provisions are described on Annex A to
this prospectus supplement. See
"Description of the Mortgage Pool--Certain
Characteristics of the Mortgage Loans" in
this prospectus supplement for a
description of the calculation of the debt
service coverage ratio and loan-to-value
ratio.
(3) Excludes the mortgage loans that pay
interest-only until maturity or for a
partial interest-only period.
One hundred thirty-nine (139) mortgage loans,
representing approximately 99.5% of the
aggregate principal balance of the pool of
mortgage loans as of the cut-off date, accrue
interest on the basis of the actual number of
days in a month, assuming a 360-day year. The
remaining 2 mortgage loans, representing
approximately 0.5% of the aggregate principal
balance of the pool of mortgage loans as of
the cut-off date, accrue interest on the basis
of twelve 30-day months, assuming a 360-day
year.
The terms of each of the mortgage loans
restrict the ability of the borrower to prepay
the mortgage loan. One hundred and twenty-four
(124) mortgage loans, representing
approximately 95.2% of the aggregate principal
balance of the pool of mortgage loans as of
the cut-off date, permit the related borrower
to substitute U.S. government securities as
collateral and obtain a release of the
mortgaged property instead of prepaying the
mortgage loan.
One (1) of the mortgage loans representing
approximately 0.2% of the aggregate principal
balance of the pool of mortgage loans as of
the cut-off date, provides for defeasance as
described above and additionally provides that
commencing 35 months after origination (April
3, 2007), the mortgage loan is also prepayable
together with an amount equal to the lesser of
a yield maintenance charge or, prepayment
premium equal to a percentage of the principal
amount prepaid which is initially 5% and
declines 1% annually for 3 years and is 1%
thereafter.
The remaining 16 mortgage loans, representing
4.6% of the aggregate principal balance of the
pool of mortgage loans as of the cut-off date,
permit prepayment after a lockout period with
the payment of a yield maintenance charge or a
prepayment premium. See "Description of the
Mortgage Pool--Certain Characteristics of the
Mortgage Loans--Defeasance; Collateral
Substitution" and Annex C to this prospectus
supplement.
All of the mortgage loans permit voluntary
prepayment without the payment of a yield
maintenance charge within a limited period
prior to their stated maturity date. For 133
of the mortgage loans, representing
approximately 79.4% of the pool of mortgage
loans as of the cut-off date, this period is
approximately 3 months or less prior to the
stated maturity date. For 3 of the mortgage
loans, representing approximately 11.8%
S-15
of the aggregate principal balance of the pool
of mortgage loans as of the cut-off date, this
period is approximately 4 months prior to the
stated maturity date. For 5 of the mortgage
loans, representing approximately 8.8% of the
aggregate principal balance of the pool of
mortgage loans as of the cut-off date, this
period is approximately 6 months prior to the
stated maturity date.
The descriptions in this prospectus supplement
of the mortgage loans and the mortgaged
properties are based upon the mortgage pool as
it is expected to be constituted as of the
close of business on the closing date,
assuming that (i) all scheduled principal and
interest payments due on or before the cut-off
date will be made and (ii) no defaults,
delinquencies or prepayments on any mortgage
loan on or prior to the cut-off date. The sum
of the numerical data in any column in a table
may not equal the indicated total due to
rounding. Unless otherwise indicated, all
figures presented in this "Summary of
Prospectus Supplement" are calculated as
described under "Description of the Mortgage
Pool--Additional Information" in this
prospectus supplement and all percentages
represent the indicated percentage of the
aggregate principal balance of the entire pool
of mortgage loans, the mortgage loans in loan
group 1 or the mortgage loans in loan group 2,
as applicable, in each case, as of the cut-off
date.
All information presented in this prospectus
supplement with respect to a mortgage loan
with a pari passu companion loan or
subordinate companion loan is calculated
without regard to the related companion loan,
unless otherwise indicated. The loan amount
used in this prospectus supplement for
purposes of calculating the loan-to-value
ratio and debt service coverage ratio for each
mortgage loan with a pari passu companion loan
is the aggregate principal balance of the
mortgage loans and the related pari passu
companion loans, unless otherwise indicated.
Subordinate companion loans, if any, are not
included in these calculations. See
"Description of the Mortgage Pool--The Whole
Loans" in this prospectus supplement.
THE SECURITIES
The Certificates................ We are offering the following classes of
Commercial Mortgage Pass-Through Certificates
from the Series 2004-GG2:
o Class A-1
o Class A-2
o Class A-3
o Class A-4
o Class A-5
o Class A-6
o Class A-1A
S-16
o Class B
o Class C
o Class D
o Class E
Series 2004-GG2 will consist of the above
classes and the following classes that are not
being offered through this prospectus
supplement and the prospectus: Class X, Class
F, Class G, Class H, Class J, Class K, Class
L, Class M, Class N, Class O, Class P, Class R
and Class LR. The Class X certificates will
consist of the XP certificates and the XC
certificates.
Certificate Principal Amounts... Your certificates will have the approximate
aggregate initial principal amount set forth
below, subject to a variance of plus or minus
5%:
o Class A-1 $ 45,000,000
o Class A-2 $ 100,000,000
o Class A-3 $ 256,000,000
o Class A-4 $ 208,000,000
o Class A-5 $ 173,000,000
o Class A-6 $1,299,650,000
o Class A-1A $ 177,669,000
o Class B $ 65,110,000
o Class C $ 29,299,000
o Class D $ 52,088,000
o Class E $ 29,300,000
See "Description of the Offered
Certificates--General" in this prospectus
supplement.
PASS-THROUGH RATES
A. Offered Certificates....... Your certificates will accrue interest at an
annual rate called a pass-through rate which
is set forth below for each class.
o Class A-1 3.109%
o Class A-2 4.293%
o Class A-3 4.602%
o Class A-4 4.964%
S-17
o Class A-5 5.279%(1)
o Class A-6 5.396%(1)
o Class A-1A 5.002%(1)
o Class B 5.490%(1)
o Class C 5.532%(1)
o Class D 5.664%(2)
o Class E 5.762%(2)
(1) Subject to a maximum pass-through rate
equal to the weighted average of the net
interest rates on the mortgage loans (in
each case adjusted, if necessary, to
accrue on the basis of a 360-day year
consisting of twelve 30-day months).
(2) The pass through rates applicable to the
Class D and Class E certificates on each
distribution date will be a per annum rate
equal to the weighted average of the
mortgage rates on the mortgage loans (in
each case adjusted, if necessary, to
accrue on the basis of a 360-day year
consisting of twelve 30-day months) minus
0.116% and 0.018%, respectively.
B. Interest Rate Calculation
Convention................. Interest on your certificates will be
calculated based on a 360-day year consisting
of twelve 30-day months, or a "30/360" basis.
For purposes of calculating the pass-through
rates on the Class X certificates and any
other class of certificates that has a
pass-through rate limited by, equal to, or
based on, the weighted average net mortgage
interest rate, the mortgage loan interest
rates will not reflect any default interest
rate, any loan term modifications agreed to by
the special servicer or any modifications
resulting from a borrower's bankruptcy or
insolvency.
In addition, if a mortgage loan does not
accrue interest on a 30/360 basis, its
interest rate for any month that is not a
30-day month will be recalculated so that the
amount of interest that would accrue at that
rate in that month, calculated on a 30/360
basis, will equal the amount of interest that
actually accrues on that loan in that month,
adjusted for any withheld amounts as described
under "The Pooling Agreement--Accounts" in
this prospectus supplement.
See "Description of the Offered
Certificates--Distributions--Payment
Priorities" in this prospectus supplement.
DISTRIBUTIONS
A. Amount and Order of
Distributions.............. On each distribution date, funds available for
distribution from the mortgage loans, net of
specified trust expenses, will be distributed
in the following amounts and order of
priority:
First: Class A and Class X: To interest on
Class A (which includes Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5, Class A-6 and
Class A-1A) and Class X, concurrently, (i) to
S-18
Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5 and Class A-6, pro rata, from the
portion of the funds available for
distribution attributable to the mortgage
loans in loan group 1, (ii) to Class A-1A from
the portion of the funds available for
distribution attributable to the mortgage
loans in loan group 2 and (iii) to Class X
from the funds available for distribution
attributable to all mortgage loans, without
regard to loan groups, in each case in
accordance with their interest entitlements.
However, if on any distribution date, the
funds available for distribution are
insufficient to pay in full the total amount
of interest to be paid to any of the classes
described above, the funds available for
distribution will be allocated among all these
classes pro rata in accordance with their
interest entitlements, without regard to loan
groups.
Second: Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5, Class A-6 and Class A-1A
certificates: To the extent of funds allocated
to principal, (i) to principal on the Class
A-1, Class A-2, Class A-3, Class A-4, Class
A-5 and Class A-6 certificates, in sequential
order until reduced to zero, in an amount
equal to the funds attributable to mortgage
loans in loan group 1 and, after the Class
A-1A certificates have been reduced to zero,
the remaining funds attributable to mortgage
loans in loan group 2, and (ii) to the Class
A-1A certificates until reduced to zero, in an
amount equal to the funds attributable to
mortgage loans in loan group 2 and, after the
Class A-6 certificates have been reduced to
zero, the remaining funds attributable to
mortgage loans in loan group 1. If the
certificate balance of each and every class of
certificates other than Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5, Class A-6 and
Class A-1A certificates has been reduced to
zero, funds available for distributions of
principal will be distributed to the Class
A-1, Class A-2, Class A-3, Class A-4, Class
A-5, Class A-6 and Class A-1A certificates,
pro rata, rather than sequentially, without
regard to loan groups.
Third: Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5, Class A-6 and Class A-1A
certificates: To reimburse Class A-1, Class
A-2, Class A-3, Class A-4, Class A-5, Class
A-6, and Class A-1A certificates, pro rata,
for any previously unreimbursed losses on the
mortgage loans allocable to principal that
were previously borne by those classes without
regard to loan groups, together with interest.
Fourth: Class B certificates: To Class B
certificates as follows: (a) to interest on
Class B certificates in the amount of its
interest entitlement; (b) to the extent of
funds allocated to principal remaining after
distributions in respect of principal to each
class with a higher priority (in this case,
the Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5, Class A-6 and Class A-1A
certificates), to principal on Class B
certificates until reduced to zero; and (c) to
reimburse Class B certificates for any
previously unreimbursed losses on the mortgage
loans allocable to principal that were
previously borne by that class, together with
interest.
S-19
Fifth: Class C certificates: To the Class C
certificates in a manner analogous to the
Class B certificates allocations of priority
Fourth above.
Sixth: Class D certificates: To the Class D
certificates in a manner analogous to the
Class B certificates allocations of priority
Fourth above.
Seventh: Class E certificates: To the Class E
certificates in a manner analogous to the
Class B certificates allocations of priority
Fourth above.
Eighth: Non-offered certificates (other than
the Class X certificates): In the amounts and
order of priority described in "Description of
the Offered Certificates--Distributions--
Payment Priorities" in this prospectus
supplement.
For purposes of making distributions to the
Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6 and Class A-1A
certificates, the pool of mortgage loans will
be deemed to consist of two distinct groups,
loan group 1 and loan group 2. Loan group 1
will consist of 119 mortgage loans,
representing approximately 93.2% of the
aggregate principal balance of the pool of
mortgage loans as of the cut off date and loan
group 2 will consist of 22 mortgage loans,
representing approximately 6.8% of the
aggregate principal balance of the pool of
mortgage loans as of the cut off date. Loan
group 1 will include all mortgage loans other
than mortgage loans secured by multifamily
properties. Loan group 2 will include 100% of
the mortgage loans secured by multifamily
properties. Annex C to this prospectus
supplement will set forth the loan group
designation with respect to each mortgage
loan.
See "Description of the Offered
Certificates--Distributions--Payment
Priorities" in this prospectus supplement.
B. Interest and Principal
Entitlements............... A description of each class's interest
entitlement can be found in "Description of
the Offered Certificates--Distributions--
Method, Timing and Amount" and "--Payment
Priorities" in this prospectus supplement. As
described in that section, there are
circumstances in which your interest
entitlement for a distribution date could be
less than one full month's interest at the
pass-through rate on your certificate's
principal amount or notional amount.
A description of the amount of principal
required to be distributed to the classes
entitled to principal on a particular
distribution date also can be found in
"Description of the Offered Certificates--
Distributions--Method, Timing and Amount" and
"--Payment Priorities" in this prospectus
supplement.
C. Prepayment Premiums........ The manner in which any prepayment premiums
and yield maintenance charges received prior
to the related determination date will be
allocated on each distribution date to the
Class X certificates, on the one hand, and
certain of the classes of certificates
entitled to principal, on the other hand, is
described in
S-20
"Description of the Offered
Certificates--Distributions--Prepayment
Premiums" in this prospectus supplement.
ADVANCES
A. Principal and Interest
Advances................. The master servicer is required to advance
delinquent monthly mortgage loan payments with
respect to each mortgage loan (other than as
described below under "--Advances on The
Non-Serviced Loans" with respect to the
non-serviced loans secured by the 237 Park
Avenue property and the 111 Eighth Avenue
property), if it determines that the advance
will be recoverable. The master servicer will
not be required to advance balloon payments
due at maturity or interest in excess of a
mortgage loan's regular interest rate (without
considering any default rate). The master
servicer also is not required to advance
amounts deemed non-recoverable, prepayment
premiums or yield maintenance charges. In the
event that the master servicer fails to make
any required advance, the trustee will be
required to make that advance. If the trustee
fails to make a required advance the fiscal
agent will be required to make the advance.
See "The Pooling Agreement--Advances" in this
prospectus supplement. If an advance is made,
the master servicer will not advance its
servicing fee, but will advance the trustee's
fee.
B. Property Protection
Advances................. The master servicer also is required to make
advances to pay delinquent real estate taxes,
assessments and hazard insurance premiums and
similar expenses necessary to protect and
maintain the mortgaged property, to maintain
the lien on the mortgaged property or enforce
the related mortgage loan documents with
respect to all mortgage loans other than
non-serviced mortgage loans. In the event that
the master servicer fails to make a required
advance of this type, the trustee will be
required to make that advance. If the trustee
fails to make a required advance the fiscal
agent will be required to make the advance.
The master servicer is not required, but in
certain circumstances is permitted, to advance
amounts deemed non-recoverable. In addition,
the special servicer may elect to make certain
property protection advances on an emergency
basis. See "The Pooling Agreement--Advances"
in this prospectus supplement.
C. Interest on Advances....... The master servicer, the special servicer, the
trustee and the fiscal agent, as applicable,
will be entitled to interest as described in
this prospectus supplement on these advances.
Interest accrued on outstanding advances may
result in reductions in amounts otherwise
payable on the certificates. None of the
master servicer, the trustee or the fiscal
agent will be entitled to interest on advances
made with respect to principal or interest due
on a mortgage loan until any grace period
applicable to the mortgage loan has expired.
See "Description of the Offered
Certificates--Distributions--Realized Losses"
and "The Pooling Agreement--Advances" in this
prospectus supplement.
S-21
D. Advances on the
Non-Serviced Loans........ The master servicer under the related pooling
and servicing agreement that controls
servicing for each of the non-serviced loans
is required to make property protection
advances with respect to the mortgaged
property related to the applicable
non-serviced loan, unless that master servicer
determines that those advances would not be
recoverable from collections on the related
non-serviced loan. If that master servicer is
required to but fails to make a required
property protection advance, then the trustee
under the related pooling and servicing
agreement that controls servicing for each of
the non-serviced loans will be required to
make that property protection advance.
The master servicer under the pooling and
servicing agreement that controls the
servicing for each of the 111 Eighth Avenue
loan and the 237 Park Avenue loan is required
to make advances of delinquent monthly
mortgage loan payments with respect to the 111
Eighth Avenue loan and the 237 Park Avenue
loan and if that master servicer fails to make
that advance, the master servicer under the
pooling and servicing agreement under which
your securities are issued will make these
advances of delinquent monthly mortgage loan
payments, subject to any applicable
non-recoverability determination. See "The
Pooling Agreement--Servicing of the Whole
Loans" in this prospectus supplement.
Subordination................... The amount available for distribution will be
applied in the order described in
"--Distributions--Amount and Order of
Distributions" above.
The chart below describes the manner in which
the payment rights of certain classes will be
senior or subordinate, as the case may be, to
the payment rights of other classes. The chart
shows entitlement to receive principal and
interest on any distribution date in
descending order (beginning with the Class A
and Class X certificates). It also shows the
manner in which mortgage loan losses are
allocated in ascending order (beginning with
other Series 2004-GG2 certificates that are
not being offered by this prospectus
supplement). (However, no principal payments
or loan losses will be allocated to the Class
X certificates, although loan losses will
reduce the notional amount of the Class X
certificates and, therefore, the amount of
interest they accrue.)
S-22
--------------------------------
Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6,
Class A-1A, Class X*
--------------------------------
--------------
Class B
--------------
--------------
Class C
--------------
--------------
Class D
--------------
--------------
Class E
--------------
--------------
Non-Offered
Certificates**
--------------
--------------
* Interest only.
** Other than the Class X certificates.
NO OTHER FORM OF CREDIT ENHANCEMENT WILL BE
AVAILABLE FOR THE BENEFIT OF THE HOLDERS OF
THE OFFERED CERTIFICATES.
See "Description of the Offered
Certificates--Subordination" in this
prospectus supplement.
Principal losses on the mortgage loans
allocated to a class of certificates will
reduce the related certificate principal
amount of that class.
In addition to losses caused by mortgage loan
defaults, shortfalls in payments to holders of
certificates may occur as a result of the
master servicer's, special servicer's,
trustee's and fiscal agent's right to receive
payments of interest on unreimbursed advances
(to the extent not covered by default interest
or late charges paid by the related borrower),
the special servicer's right to compensation
with respect to mortgage loans which are or
have been serviced by the special servicer, a
modification of a mortgage loan's interest
rate or principal balance or as a result of
other unanticipated trust expenses. These
shortfalls, if they occur, would reduce
distributions to the classes of certificates
with the lowest payment priorities. In
addition, prepayment interest shortfalls that
are not covered by certain compensating
interest payments made by the master servicer
are required to be allocated to the
certificates, on a pro rata basis, to reduce
the amount of interest payment on the
certificates. To the extent funds are
available on a subsequent distribution date
for distribution on your certificates, you
will be reimbursed for any shortfall allocated
to your certificates with interest at the
pass-through rate on your certificates.
Information Available to
Certificateholders........... Please see "The Pooling Agreement--Reports to
Certificateholders; Available Information" in
this prospectus
S-23
supplement for a description of the periodic
reports that you will receive.
Optional Termination............ On any distribution date on which the
aggregate unpaid principal balance of the
mortgage loans remaining in the trust is less
than 1% of the aggregate principal balance of
the pool of mortgage loans as of the cut-off
date, certain specified persons will have the
option to purchase all of the remaining
mortgage loans at the price specified in this
prospectus supplement (and all property
acquired through exercise of remedies in
respect of any mortgage loan). Exercise of
this option will terminate the trust and
retire the then-outstanding certificates.
If the aggregate principal balances of the
Class A, Class B, Class C, Class D and Class E
certificates have been reduced to zero, the
trust could also be terminated in connection
with an exchange of all the then outstanding
certificates, including the Class X
certificates, for the mortgage loans remaining
in the trust, but all of the holders of those
classes of outstanding certificates would have
to voluntarily participate in the exchange and
the master servicer would have to consent.
OTHER INVESTMENT CONSIDERATIONS
Federal Income Tax Consequences. Elections will be made to treat parts of the
trust as two separate REMICs (the "Lower-Tier
REMIC" and the "Upper-Tier REMIC"). The
offered certificates will represent ownership
of "regular interests" in the Upper-Tier
REMIC. Pertinent federal income tax
consequences of an investment in the offered
certificates include:
o Each class of offered certificates will
constitute REMIC "regular interests."
o The regular interests will be treated as
newly originated debt instruments for
federal income tax purposes.
o You will be required to report income on
your certificates in accordance with the
accrual method of accounting.
o It is anticipated that the offered
certificates will be issued at a premium
for federal income tax purposes.
For information regarding the federal income
tax consequences of investing in the offered
certificates, see "Federal Income Tax
Consequences" in this prospectus supplement
and in the prospectus.
Yield Considerations............ You should carefully consider the matters
described under "Risk Factors--Special Yield
Considerations" and "--Risks Relating to
Prepayments and Repurchases" in this
prospectus supplement, which may affect
significantly the yields on your investment.
ERISA Considerations............ Subject to important considerations described
under "ERISA Considerations" in this
prospectus supplement and "ERISA
Considerations" in the prospectus, the offered
certificates are
S-24
eligible for purchase by persons investing
assets of employee benefit plans or individual
retirement accounts.
Ratings......................... On the closing date, the offered certificates
must have the minimum ratings from Standard &
Poor's Rating Services, a division of the
McGraw Hill Companies, Inc., and Moody's
Investors Service, Inc. set forth below:
S&P MOODY'S
--- -------
Class A-1................. AAA Aaa
Class A-2................. AAA Aaa
Class A-3................. AAA Aaa
Class A-4................. AAA Aaa
Class A-5................. AAA Aaa
Class A-6................. AAA Aaa
Class A-1A................ AAA Aaa
Class B................... AA Aa2
Class C................... AA- Aa3
Class D................... A A2
Class E................... A- A3
A rating agency may downgrade, qualify or
withdraw a rating at any time. A rating agency
not requested to rate the offered certificates
may nonetheless issue a rating and, if one
does, it may be lower than those stated above.
The security ratings do not address the
frequency of prepayments (whether voluntary or
involuntary) of mortgage loans, or the degree
to which the prepayments might differ from
those originally anticipated, or the
likelihood of collection of default interest,
prepayment premiums or yield maintenance
charges, or the tax treatment of the
certificates.
See "Yield, Prepayment and Maturity
Considerations" in this prospectus supplement,
"Risk Factors" in this prospectus supplement
and in the prospectus, and "Description of the
Certificates" and "Yield Considerations" in
the prospectus.
Legal Investment................ The Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5, Class A-6, Class A-1A, Class B
and Class C certificates will constitute
"mortgage related securities" for purposes of
the Secondary Mortgage Market Enhancement Act
of 1984, as amended, commonly known as SMMEA,
so long as they are rated in one of the two
highest rating categories by S&P, Moody's or
another nationally recognized statistical
rating organization. The Class D and Class E
certificates will not constitute "mortgage
related securities" for purposes of SMMEA. 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" in this prospectus
supplement and in the prospectus.
S-25
RISK FACTORS
You should carefully consider the following risks before making an
investment decision. In particular, distributions on your certificates will
depend on payments received on, and other recoveries with respect to the
mortgage loans. Therefore, you should carefully consider the risk factors
relating to the mortgage loans and the mortgaged properties.
The risks and uncertainties described below are not the only ones relating
to your certificates. Additional risks and uncertainties not presently known to
us or that we currently deem immaterial may also impair your investment.
If any of the following events or circumstances identified as risks
actually occur or materialize, your investment could be materially and adversely
affected.
This prospectus supplement also contains forward-looking statements that
involve risks and uncertainties. Actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including the risks described below and elsewhere in this prospectus
supplement.
SPECIAL YIELD CONSIDERATIONS
The yield to maturity on each class of the offered certificates will depend
in part on the following:
o the purchase price for the certificates;
o the rate and timing of principal payments on the mortgage loans (or in
the case of the Class A certificates, the mortgage loans in the related
loan group);
o the receipt and allocation of prepayment premiums and/or yield
maintenance charges;
o the allocation of principal payments to pay down classes of
certificates;
o interest shortfalls on the mortgage loans, such as interest shortfalls
resulting from prepayments; and
o the purchase of a mortgage loan whether by (i) a mortgage loan seller as
a result of a material breach of a representation or warranty made by
that mortgage loan seller, (ii) the holder of a related companion loan,
(iii) a holder of the fair value purchase option, (iv) a mezzanine
lender or (v) any other party with a purchase option.
In general, if you buy a certificate at a premium, and principal
distributions occur faster than expected, your actual yield to maturity will be
lower than expected. If principal distributions are very high, holders of
certificates purchased at a premium might not fully recover their initial
investment. Conversely, if you buy a certificate at a discount and principal
distributions occur more slowly than expected, your actual yield to maturity
will be lower than expected. See "Yield, Prepayment and Maturity Considerations"
in this prospectus supplement and "Yield Considerations" in the prospectus.
Any changes in the weighted average lives of your certificates may
adversely affect your yield. Prepayments resulting in a shortening of weighted
average lives of your certificates may be made at a time of low interest rates
when you may be unable to reinvest the resulting payments of principal on your
certificates at a rate comparable to the effective yield anticipated by you in
making your investment in the certificates, while delays and extensions
resulting in a lengthening of such weighted average lives may occur at a time of
high interest rates when you may have been able to reinvest principal payments
that would otherwise have been received by you at higher rates.
S-26
In addition, the rate and timing of delinquencies, defaults, losses and
other shortfalls on mortgage loans (or in the case of the Class A certificates,
the mortgage loans in the related loan group) will affect distributions on the
certificates and their timing. See "--Risks Relating to Borrower Default" below.
In general, these factors may be influenced by economic and other factors
that cannot be predicted with any certainty. Accordingly, you may find it
difficult to predict the effect that these factors might have on the yield to
maturity of your offered certificates. Additionally, certain of the mortgage
loans require prepayment in connection with earnout amounts if the related
borrower does not satisfy performance or other criteria set forth in the related
loan documents. See "Description of the Mortgaged Pool--Certain Characteristics
of the Mortgage Loans" in this prospectus supplement.
In addition, if the master servicer, the special servicer, the trustee or
the fiscal agent reimburses itself out of general collections on the mortgage
loans included in the trust for any advance that it has determined is not
recoverable out of collections on the related mortgage loan, then to the extent
that such reimbursement is made from collections of principal on the mortgage
loans in the trust, that reimbursement will reduce the amount of principal
available to be distributed on the certificates and will result in a reduction
of the certificate principal amount of the certificates. See "Description of the
Offered Certificates--Distributions" in this prospectus supplement. Likewise, if
the master servicer, the special servicer, the trustee or the fiscal agent
reimburses itself out of principal collections on the mortgage loans for any
workout delayed reimbursement amounts, that reimbursement will reduce the amount
of principal available to be distributed on the certificates on that
distribution date. Such reimbursement would have the effect of reducing current
payments of principal on the offered certificates and extending the weighted
average life of the offered certificates. See "Description of the Offered
Certificates--Distributions" in this prospectus supplement.
We make no representation as to the anticipated rate of prepayments or
losses on the mortgage loans or as to the anticipated yield to maturity of any
class of certificates. See "Yield, Prepayment and Maturity Considerations" in
this prospectus supplement.
RISKS RELATING TO ENFORCEABILITY OF PREPAYMENT PREMIUMS OR DEFEASANCE PERIODS
Provisions requiring yield maintenance charges, prepayment premiums or
lockout periods may not be enforceable in some states and under federal
bankruptcy law. Provisions requiring prepayment premiums or yield maintenance
charges also may be interpreted as constituting the collection of interest for
usury purposes. Accordingly, we cannot assure you that the obligation to pay a
yield maintenance charge or prepayment premium will be enforceable. Also, we
cannot assure you that foreclosure proceeds will be sufficient to pay an
enforceable yield maintenance charge or prepayment premium.
Additionally, although the collateral substitution provisions related to
defeasance do not have the same effect on the certificateholders as prepayment,
we cannot assure you that a court would not interpret those provisions as the
equivalent of a yield maintenance charge or prepayment premium. In certain
jurisdictions those collateral substitution provisions might therefore be deemed
unenforceable or usurious under applicable law or public policy.
COMMERCIAL AND MULTIFAMILY LENDING IS DEPENDENT UPON NET OPERATING INCOME
The mortgage loans are secured by various income-producing commercial and
multifamily properties. Commercial and multifamily lending are generally thought
to expose a lender to greater risk than residential one-to-four family lending
because they typically involve larger loans to a single borrower or groups of
related borrowers.
The repayment of a commercial or multifamily loan is typically dependent
upon the ability of the related mortgaged property to produce cash flow through
the collection of rents. Even the liquidation value of a commercial property is
determined, in substantial part, by the capitalization of the property's cash
flow. However, net operating income can be volatile and may be insufficient to
cover debt service on the loan at any given time.
S-27
The net operating incomes and property values of the mortgaged properties
may be adversely affected by a large number of factors. Some of these factors
relate to the properties themselves, such as:
o the age, design and construction quality of the properties;
o perceptions regarding the safety, convenience and attractiveness of the
properties;
o the proximity and attractiveness of competing properties;
o the adequacy of the property's management and maintenance;
o increases in operating expenses;
o an increase in the capital expenditures needed to maintain the
properties or make improvements;
o dependence upon a single tenant, or a concentration of tenants in a
particular business or industry;
o a decline in the financial condition of a major tenant;
o an increase in vacancy rates; and
o a decline in rental rates as leases are renewed or entered into with new
tenants.
Other factors are more general in nature, such as:
o national, regional or local economic conditions, including plant
closings, military base closings, industry slowdowns and unemployment
rates;
o local real estate conditions, such as an oversupply of retail space,
office space, multifamily housing or hotel capacity;
o demographic factors;
o consumer confidence;
o changes or continued weakness in specific industry segments;
o the public perception of safety for customers and clients;
o consumer tastes and preferences; and
o retroactive changes in building codes.
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 (including that in certain cases, 100% of
the tenant leases may expire during the term of the loan);
o the creditworthiness of tenants;
o in the case of rental properties, the rate at which new rentals occur;
and
o the property's "operating leverage" which is generally 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.
S-28
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 properties with short-term revenue sources, such as short-term or
month-to-month leases, and may lead to higher rates of delinquency or defaults.
INCREASES IN REAL ESTATE TAXES MAY REDUCE AVAILABLE FUNDS
Certain of the mortgaged properties securing the mortgage loans have or may
in the future have the benefit of reduced real estate taxes in connection with a
local government program of "payment in lieu of taxes" programs or other tax
abatement arrangements. Upon expiration of such program or if such programs were
otherwise terminated, the related borrower would be required to pay higher, and
in some cases substantially higher, real estate taxes. An increase in real
estate taxes may impact the ability of the borrower to pay debt service on the
mortgage loan.
LIMITATIONS OF APPRAISALS
Appraisals were obtained with respect to each of the mortgaged properties
at or about the time of origination of the applicable mortgage loan. See Annex C
to this prospectus supplement for dates of the latest appraisals for the
mortgaged properties.
In general, appraisals represent the analysis and opinion of qualified
appraisers and are not guarantees of present or future value. One appraiser may
reach a different conclusion than that of a different appraiser with respect to
the same property. Moreover, appraisals seek to establish the amount a typically
motivated buyer would pay a typically motivated seller and, in certain cases,
may have taken into consideration the purchase price paid by the borrower. The
amount could be significantly higher than the amount obtained from the sale of a
mortgaged property in a distress or liquidation sale. Information regarding the
appraised values of the mortgaged properties (including loan-to-value ratios)
presented in this prospectus supplement is not intended to be a representation
as to the past, present or future market values of the mortgaged properties.
Historical operating results of the mortgaged properties used in these
appraisals may not be comparable to future operating results. In addition, other
factors may impair the mortgaged properties' value without affecting their
current net operating income, including:
o changes in governmental regulations, zoning or tax laws;
o potential environmental or other legal liabilities;
o the availability of refinancing; and
o changes in interest rate levels.
TENANT CONCENTRATION ENTAILS RISK
A deterioration in the financial condition of a tenant or the failure of a
tenant to renew its lease can be particularly significant if a mortgaged
property is owner-occupied, leased to a single tenant, or if any tenant makes up
a significant portion of the rental income at the mortgaged property. In the
event of a default by that tenant, there would likely be an interruption of
rental payments under the lease and, accordingly, insufficient funds available
to the borrower to pay the debt service on the loan. Mortgaged properties that
are owner-occupied or leased to a single tenant, or a tenant that makes up a
significant portion of the rental, also are more susceptible to interruptions of
cash flow if that tenant's business operations are negatively impacted or if
such tenant fails to renew its lease. This is so because:
o the financial effect of the absence of rental income may be severe;
o more time may be required to re-lease the space; and
o substantial capital costs may be incurred to make the space appropriate
for replacement tenants.
S-29
Fourteen (14) of the mortgaged properties securing mortgage loans,
representing in the aggregate approximately 4.1% of the aggregate principal
balance of the pool of mortgage loans as of the cut-off date, is secured by a
mortgaged property leased to a single tenant. No mortgaged property leased to a
single tenant secures a mortgage loan representing more than approximately 0.9%
of the aggregate principal balance of the pool of mortgage loans as of the
cut-off date. If the current tenant does not renew its lease on comparable
economic terms to the expired lease, or if a suitable replacement tenant does
not enter into a new lease on similar economic terms, there could be a negative
impact on the payments on the related mortgage loans.
Concentrations of particular tenants among the mortgaged properties or
within a particular business or industry at one or multiple mortgaged properties
increase the possibility that financial problems with such tenants or such
business or industry sectors could affect the mortgage loans. See "--Tenant
Bankruptcy Entails Risk" below.
For example, with respect to one (1) mortgage loan (identified as loan no.
8 on Annex C to this prospectus supplement), representing approximately 3.1% of
the aggregate principal balance of the pool of mortgage loans as of the cut-off
date, tenants leasing approximately 40% of the net rentable square footage at
the mortgaged property are engaged in the telecommunications industry.
MORTGAGED PROPERTIES LEASED TO MULTIPLE TENANTS ALSO HAVE RISKS
If a mortgaged property has multiple tenants, re-leasing expenditures may
be more frequent than in the case of mortgaged properties with fewer tenants,
thereby reducing the cash flow available for payments on the related mortgage
loan. Multi-tenant mortgaged properties also may experience higher continuing
vacancy rates and greater volatility in rental income and expenses. In certain
cases, the lease of a major or anchor tenant at a multi-tenanted mortgaged
property expires prior to the maturity date of the related mortgage loan.
MORTGAGED PROPERTIES LEASED TO BORROWERS OR BORROWER AFFILIATED ENTITIES ALSO
HAVE RISKS
If a mortgaged property is leased in whole or substantial part to the
borrower under the mortgage loan or to an affiliate of the borrower, a
deterioration in the financial condition of the borrower or its affiliates can
be particularly significant to the borrower's ability to perform under the
mortgage loan as it can directly interrupt the cash flow from the mortgaged
property if the borrower's or its affiliate's financial condition worsens, which
risk may be mitigated when mortgaged properties are leased to unrelated third
parties.
TENANT BANKRUPTCY ENTAILS RISKS
The bankruptcy or insolvency of a major tenant (such as an anchor tenant),
or a number of smaller tenants, may adversely affect the income produced by a
mortgaged property. Under the federal bankruptcy code, a tenant has the option
of assuming or rejecting any unexpired lease. If the tenant rejects the lease,
the landlord's claim for breach of the lease would be a general unsecured claim
against the tenant (absent collateral securing the claim). The claim would be
limited to the unpaid rent reserved under the lease for the periods prior to the
bankruptcy petition (or earlier surrender of the leased premises) which are
unrelated to the rejection, plus the greater of one year's rent or 15% of the
remaining reserved rent (but not more than three years' rent). At any given
time, including as of the cut-off date, certain of the tenants at any mortgaged
properties may be in bankruptcy. For significant tenants currently in
bankruptcy, see Annex C to this prospectus supplement.
CERTAIN ADDITIONAL RISKS RELATING TO TENANTS
The income from, and market value of, the mortgaged properties leased to
various tenants would be adversely affected if:
o space in the mortgaged properties could not be leased or re-leased;
S-30
o tenants were unable to meet their lease obligations;
o a significant tenant were to become a debtor in a bankruptcy case; or
o rental payments could not be collected for any other reason.
Repayment of the mortgage loans secured by retail, office and industrial
properties will be affected by the expiration of leases and the ability of the
respective borrowers to renew the leases or relet the space on comparable terms.
Certain of the mortgaged properties may be leased in whole or in part by
government-sponsored tenants who have the right to cancel their leases at any
time or for lack of appropriations. Additionally, mortgaged properties may have
concentrations of leases expiring at varying rates in varying percentages.
Even if vacated space is successfully relet, the costs associated with
reletting, including tenant improvements and leasing commissions, could be
substantial and could reduce cash flow from the mortgaged properties. Moreover,
if a tenant defaults in its obligations to a borrower, the borrower may incur
substantial costs and experience significant delays associated with enforcing
its rights and protecting its investment, including costs incurred in renovating
and reletting the related mortgaged property.
Additionally, in certain jurisdictions, if tenant leases are subordinated
to the liens created by the mortgage but do not contain attornment provisions
(provisions requiring the tenant to recognize as landlord under the lease a
successor owner following foreclosure), the tenants may terminate their leases
upon the transfer of the property to a foreclosing lender or purchaser at
foreclosure. Not all leases were reviewed to ascertain the existence of
attornment or subordination provisions. Accordingly, if a mortgaged property is
located in such a jurisdiction and is leased to one or more desirable tenants
under leases that are subordinate to the mortgage and do not contain attornment
provisions, such mortgaged property could experience a further decline in value
if such tenants' leases were terminated.
If a lease is not subordinate to a mortgage, the trust will not possess the
right to dispossess the tenant upon foreclosure of the mortgaged property
(unless otherwise agreed to with the tenant). If the lease contains provisions
inconsistent with the mortgage (e.g., provisions relating to application of
insurance proceeds or condemnation awards) or which could affect the enforcement
of the lender's rights (e.g., a right of first refusal to purchase the
property), the provisions of the lease will take precedence over the provisions
of the mortgage.
Certain examples of tenant-related issues are as follows:
o With respect to the pooled mortgage loan (identified as loan no. 11 on
Annex C to this prospectus supplement) representing 2.6% of the initial
mortgage pool balance, the largest tenant, J. Walter Thompson, has
asserted a claim against the borrower for using an improper methodology
in computing the tenant's share of real estate tax escalations. The
lease does not permit the tenant to offset against rent any amounts in
connection with any tenant claim, and the tenant has agreed in writing
that it will not offset against rent in connection with this dispute
pending resolution. There can be no assurance, however, that the tenant
will not in the future attempt to offset against rent in breach of this
agreement, which, if done, might have an impact on the cash flow of the
subject property.
o One (1) mortgage loan (identified as loan no. 59 on Annex C to this
prospectus supplement), representing approximately 0.3% of the aggregate
principal balance of the pool of mortgage loans as of the cut-off date,
is secured by a mortgaged property that is leased to two tenants, Ann
Taylor Loft and French Connection UK (occupying 50.0% and 40.0% of the
net rentable area, respectively) under leases that expire 2 years and 2
1/2 years, respectively, prior to the maturity date of the mortgage
loan. The remaining 10% of the net rentable area at the mortgaged
property is vacant. The mortgage loan provides for an upfront reserve of
$1,500,000 (or in lieu of such reserve, delivery by the borrower of an
annually renewing irrevocable letter of credit in the same amount) which
may be released to the borrower upon the delivery of a five-year lease
for
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such space, with an initial term of at least five years, at a rental
rate of at least $75 per square foot on a triple net basis. The borrower
has delivered a letter of credit to the lender. We cannot assure you
that these tenants will renew their leases or that the space will be
successfully re-let. Additionally, we cannot assure that the letter of
credit will provide sufficient amounts to off-set any adverse effect the
failure of a tenant to renew may have.
o The loan documents with respect to 1 mortgage loan (identified as loan
no. 1 on Annex C to this prospectus supplement), representing
approximately 7.3% of the aggregate principal balance of the pool of
mortgage loans as of the cut-off date, have certain restrictions placed
upon transfers of the related mortgaged property pursuant to a
reciprocal easement, use and operating agreement. If the borrower
desires to transfer or sell the related mortgaged property or to lease
all or substantially all of the property, the owner of the adjoining
casino has a right of first offer to purchase the related mortgaged
property on substantially the same terms as a prospective purchaser.
There are also certain restrictions regarding to whom the borrower may
transfer or lease the property. For example, the transferee may not be a
competitor of the adjoining casino owner, nor may the transferee in any
way jeopardize the gaming licenses of the adjoining casino owner. In
addition, the owner of the adjoining casino has been granted certain
cure rights with respect to any defaults or accelerations under the
related mortgage documents. This may impede the ability of the special
servicer to sell the related mortgaged property after foreclosure or
sell the related mortgage loan if it becomes a defaulted mortgage loan.
See "Top 10 Loan Summaries--The Grand Canal at the Venetian Mortgage
Loan" on Annex B to this prospectus supplement.
TERRORIST ATTACKS AND MILITARY CONFLICTS MAY ADVERSELY AFFECT YOUR INVESTMENT
The terrorist attacks on the World Trade Center and the Pentagon on
September 11, 2001 suggest the possibility that large public areas such as
shopping malls or large office buildings could become the target of terrorist
attacks in the future. The occurrence or the possibility of such attacks could
(i) lead to damage to one or more of the mortgaged properties if any terrorist
attacks occur, (ii) result in higher costs for security and insurance premiums
or diminish the availability of insurance coverage for losses related to
terrorist attacks, 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,
mall traffic and percentage rent. As a result, the ability of the mortgaged
properties to generate cash flow may be adversely affected. See "--Property
Insurance" below.
Terrorist attacks in the United States, incidents of terrorism occurring
outside the United States and the military conflicts in Iraq and elsewhere may
continue to significantly reduce air travel throughout the United States, and,
therefore, continue to have a negative effect on revenues in areas heavily
dependent on tourism. The decrease in air travel may have a negative effect on
certain of the mortgaged properties located in areas heavily dependent on
tourism, which could reduce the ability of the affected mortgaged properties to
generate cash flow.
The United States continues to maintain a military presence in Iraq and
Afghanistan. It is uncertain what effect the activities of the United States in
Iraq, Afghanistan 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 conflict of any kind could have
an adverse effect on the performance of the mortgaged properties.
Accordingly, these disruptions, uncertainties and costs could materially
and adversely affect your investment in the certificates.
RISKS RELATING TO LOAN CONCENTRATIONS
The effect of mortgage pool loan losses will be more severe if the losses
relate to mortgage loans that account for a disproportionately large percentage
of the pool's aggregate principal balance. The table below presents information
regarding mortgage loans and related mortgage loan concentrations:
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POOL OF MORTGAGE LOANS
AGGREGATE CUT-OFF % OF INITIAL
DATE BALANCE POOL BALANCE
------------ ------------
Largest Single Mortgage Loan.................... $ 189,548,779 7.3%
Largest 5 Mortgage Loans........................ $ 721,106,871 27.7%
Largest 10 Mortgage Loans....................... $ 1,123,206,579 43.1%
Largest Related-Borrower Concentration(1)....... $ 230,487,451 8.8%
Next Largest Related-Borrower Concentration(1).. $ 64,850,743 2.5%
- ------------------
(1) Excluding single mortgage loans.
LOAN GROUP 1
% OF INITIAL
AGGREGATE CUT-OFF LOAN GROUP 1
DATE BALANCE BALANCE
------------ -------
Largest Loan.................................... $ 189,548,779 7.8%
Largest 5 Loans................................. $ 721,106,871 29.7%
Largest 10 Loans................................ $ 1,123,206,579 46.3%
Largest Group of Crossed Loans.................. NAP NAP
Largest Related-Borrower Concentrations......... $ 230,487,451 9.5%
Next Largest Related Borrower Concentrations.... $ 63,411,944 2.6%
LOAN GROUP 2
% OF INITIAL
AGGREGATE CUT-OFF LOAN GROUP 2
DATE BALANCE BALANCE
------------ -------
Largest Loan .................................... $ 28,738,243 16.2%
Largest 5 Loans ................................. $ 95,200,743 53.6%
Largest 10 Loans ................................ $ 131,819,443 74.2%
Largest Group of Crossed Loans .................. $ 8,465,500 4.8%
Largest Related-Borrower Concentrations ......... $ 64,850,743 36.5%
Next Largest Related Borrower Concentrations .... $ 18,350,000 10.3%
Other than with respect to the largest 10 mortgage loans, each of the other
mortgage loans represents no more than 2.6% of the aggregate principal balance
of the pool of mortgage loans as of the cut-off date. See "Ten Largest Mortgage
Loans" on Annex B to this prospectus supplement for more information on the
largest 10 mortgage loans.
Other than with respect to the two largest related borrower concentrations,
each of the other groups of mortgage loans with related borrowers represents no
more than 2.4% of the aggregate principal balance of the pool of mortgage loans
as of the cut-off date.
Each of the other mortgage loans with related borrowers in loan group 1
represents no more than 2.4% of the aggregate principal balance of the mortgage
loans in loan group 1 as of the cut-off date. Each of the other mortgage loans
with related borrowers in loan group 2 represents no more than 8.9% of the
aggregate principal balance of the mortgage loans in loan group 2 as of the
cut-off date.
One (1) group of mortgage loans, comprised of 2 mortgage loans,
representing approximately 0.2% and 0.1%, respectively, of the aggregate
principal balance of the pool of mortgage loans, as of the cut off date, are
cross-collateralized and cross-defaulted.
A concentration of mortgage loans with the same borrower or related
borrowers also can pose increased risks. For example, if a borrower that owns or
controls several mortgaged properties (whether or not all of them secure
mortgage loans in the mortgage pool) experiences financial difficulty at one
mortgaged property, it could defer maintenance at another mortgaged property in
order to satisfy current expenses with respect to the first mortgaged property.
The borrower could also attempt to avert foreclosure by filing a bankruptcy
petition that might have the effect of interrupting debt service payments
S-33
on the mortgage loans in the mortgage pool (subject to the master servicer's,
the trustee's and the fiscal agent's obligation to make advances for monthly
payments) for an indefinite period. In addition, mortgaged properties owned by
the same borrower or related borrowers are likely to have common management,
common general partners and/or managing members increasing the risk that
financial or other difficulties experienced by such related parties could have a
greater impact on the pool of mortgage loans.
The terms of certain of the mortgage loans require that the borrowers be
single-purpose entities and, in most cases, such borrowers' organizational
documents or the terms of the mortgage loans limit their activities to the
ownership of only the related mortgaged property or properties and limit the
borrowers' ability to incur additional indebtedness. Such provisions are
designed to mitigate the possibility that the borrower's financial condition
would be adversely impacted by factors unrelated to the mortgaged property and
the mortgage loan in the pool. However, we cannot assure you that such borrowers
will comply with such requirements. Furthermore, in many cases such borrowers
are not required to observe all covenants and conditions which typically are
required in order for such borrowers to be viewed under standard rating agency
criteria as "special purpose entities." See "Certain Legal Aspects of the
Mortgage Loans--Anti-Deficiency Legislation; Bankruptcy Laws" in the prospectus.
A concentration of mortgaged property types can pose increased risks. A
concentration of mortgage loans secured by the same mortgaged property types can
increase the risk that a decline in a particular industry or business would have
a disproportionately large impact on the pool of mortgage loans. In that regard,
the following table lists the property type concentrations in excess of 5% of
the aggregate principal balance of the pool of mortgage loans as of the cut-off
date:
PROPERTY TYPE CONCENTRATIONS GREATER THAN 5%
POOL OF MORTGAGE LOANS
NUMBER OF AGGREGATE
MORTGAGED CUT-OFF DATE % OF INITIAL
PROPERTY TYPE PROPERTIES BALANCE POOL BALANCE
------------- ---------- ------- ------------
Retail................................ 58 $1,173,372,600 45.1%
Office................................ 46 1,037,654,717 39.8
Multifamily........................... 19(1) 166,807,031 6.4
--- -------------- ----
Total................................. 123 $2,377,834,348 91.3%
=== ============== ====
LOAN GROUP 1
NUMBER OF AGGREGATE % OF INITIAL
MORTGAGED CUT-OFF DATE LOAN GROUP 1
PROPERTY TYPE PROPERTIES BALANCE BALANCE
------------- ---------- ------- -------
Retail................................ 58 $1,173,372,600 48.4%
Office................................ 46 1,037,654,717 42.8
--- -------------- ----
Total................................. 104 $2,211,027,317 91.1%
=== ============== ====
- ------------------
(1) Does not include 3 mobile home parks representing approximately 0.4% of
the aggregate principal balance of the pool of mortgage loans as of the cut-off
date.
None of the mortgage loans in loan group 1 are secured by multifamily
properties and 100% of the mortgage loans in loan group 2 are secured by
multifamily properties.
RISKS RELATING TO ENFORCEABILITY OF CROSS-COLLATERALIZATION
As described above and on Annex C to this prospectus supplement, 1 group
comprised of 2 mortgage loans, representing approximately 0.2% and 0.1%,
respectively, of the aggregate principal balance of the pool of mortgage loans
as of the cut-off date, are cross-collateralized and cross-defaulted.
S-34
Cross-collateralization arrangements may be terminated with respect to some
mortgage loan groups in certain circumstances under the terms of the related
mortgage loan documents.
A lien granted by such a borrower entity could be avoided if a court were
to determine that:
(i) such borrower was insolvent when it granted the lien, was rendered
insolvent by the granting of the lien, was left with inadequate capital
when it allowed its mortgaged property or properties to be encumbered by a
lien securing the entire indebtedness or was not able to pay its debts as
they matured after the lien was granted; and
(ii) such borrower did not receive fair consideration or reasonably
equivalent value when it allowed its mortgaged property or properties to be
encumbered by a lien securing the entire indebtedness.
Among other things, a legal challenge to the granting of the liens may
focus on the benefits realized by such borrower from the respective mortgage
loan proceeds, as well as the overall cross-collateralization. If a court were
to conclude that the granting of the liens was an avoidable fraudulent
conveyance, that court could:
(i) subordinate all or part of the pertinent mortgage loan to existing
or future indebtedness of that borrower;
(ii) recover payments made under that mortgage loan; or
(iii)take other actions detrimental to the holders of the
certificates, including, under certain circumstances, invalidating the
mortgage loan or the mortgages securing such cross-collateralization.
THE BORROWER'S FORM OF ENTITY MAY CAUSE SPECIAL RISKS
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 terms of the mortgage loans generally require
that the borrowers covenant to be single-purpose entities, although in many
cases the borrowers are not required to observe all covenants and conditions
which typically are required in order for them to be viewed under standard
rating agency criteria as "special purpose entities." In general, borrowers'
organizational documents or the terms of the mortgage loans limit their
activities to the ownership of only the related mortgaged property or properties
and limit the borrowers' ability to incur additional indebtedness. These
provisions are designed to mitigate the possibility that the borrowers'
financial condition would be adversely impacted by factors unrelated to the
mortgaged property and the mortgage loan in the pool. However, we cannot assure
you that the related borrowers will comply with these requirements. 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. Borrowers that are not special purpose entities structured
to limit the possibility of becoming insolvent or bankrupt, 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 business 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 assure you 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.
S-35
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 the Mortgage
Loans--Anti-Deficiency Legislation; Bankruptcy Laws" in the prospectus.
TENANCIES IN COMMON MAY HINDER RECOVERY
Certain mortgage loans have borrowers that own the related mortgaged
properties as tenants in common. In general, with respect to a tenant in common
ownership structure, each tenant in common owns an undivided share in the
property and if such tenant in common desires to sell its interest in the
property (and is unable to find a buyer or otherwise needs to force a partition)
the tenant in common has the ability to request that a court order a sale of the
property and distribute the proceeds to each tenant in common proportionally. As
a result, if a tenant in common exercises its right of partition, the related
mortgage loan may be subject to prepayment. In addition, the tenant in common
structure may cause delays in the enforcement of remedies because each time a
tenant in common borrower files for bankruptcy, the bankruptcy court stay will
be reinstated. Each related tenant in common borrower waived its right to
partition, reducing the risk of partition. However, there can be no assurance
that, if challenged, this waiver would be enforceable. In addition, in some
cases, the related mortgage loan documents provide for full recourse (or in an
amount equal to its pro rata share of the debt) to the related tenant in common
borrower or the guarantor if a tenant in common files for partition.
CONDOMINIUM OWNERSHIP MAY LIMIT USE AND IMPROVEMENTS.
With respect to certain of the mortgage loans, the related mortgaged
property consists of the borrower's interest in commercial condominium interests
in buildings and/or other improvements, and related interests in the common
areas and the related voting rights in the condominium association.
In this respect, one (1) mortgage loan (identified as loan no. 33 on Annex
C to this prospectus supplement), representing approximately 0.7% of the
aggregate principal balance of the pool of mortgage loans as of the cut-off
date, is secured by the borrower's interest in a commercial condominium unit (in
a condominium regime comprised of one commercial unit and one residential unit),
and the borrower's co-tenancy interest in a leasehold estate under a ground
lease, subject to the rights and obligations of each of the co-tenants under the
reciprocal co-tenancy agreement between the borrower and the residential unit
owner. The condominium board is comprised of six members, three chosen by each
unit owner; decisions of the board require the vote of at least four members. In
the event either co-tenant fails to pay any amounts owed by it pursuant to the
co-tenancy agreement, the other co-tenant is permitted to advance the required
funds on behalf of the defaulting co-tenant. Such advanced funds will bear
interest at 1 1/2% per month and the advancing co-tenant will have a lien
against the condominium unit owned by the defaulting co-tenant. Such lien will
be subordinate to the mortgage loan. Additionally, with respect to one (1)
mortgage loan (identified as loan no. 11 on Annex C to this prospectus
supplement), representing approximately 2.6% of the aggregate principal balance
of the pool of mortgage loans as of the cut-off date, the borrower has the right
to convert the borrower's interest in the mortgaged property to a condominium
form of ownership in connection with the release of air rights above such
mortgaged property.
In the case of condominiums, a board of managers generally has discretion
to make decisions affecting the condominium and there may be no assurance that
the related borrower will have any control over decisions made by the related
board of managers. Decisions made by that board of managers, including regarding
assessments to be paid by the unit owners, insurance to be maintained on the
condominium and many other decisions affecting the maintenance of that
condominium, may have an adverse impact on the mortgage loans that are secured
by condominium interests. We cannot assure you that the related board of
managers will always act in the best interests of the borrower under those
mortgage loans. Further, due to the nature of condominiums, a default on the
part of the borrower will not allow the applicable special servicer the same
flexibility in realizing on the collateral as is generally
S-36
available with respect to commercial properties that are not condominiums. The
rights of other unit owners, the documents governing the management of the
condominium units and the state and local laws applicable to condominium units
must be considered. In addition, in the event of a casualty with respect to a
mortgaged property which consists of a condominium interest, due to the possible
existence of multiple loss payees on any insurance policy covering the mortgaged
property, there could be a delay in the allocation of related insurance
proceeds, if any. Consequently, servicing and realizing upon a condominium
property could subject you to a greater delay, expense and risk than with
respect to a mortgage loan secured by a commercial property that is not a
condominium.
RETAIL PROPERTIES HAVE SPECIAL RISKS
Retail properties secure fifty-eight (58) of the mortgage loans
representing approximately 45.1% of the aggregate principal balance of the pool
of mortgage loans as of the cut-off date.
The quality and success of a retail property's tenants significantly affect
the property's value and the related borrower's ability to refinance such
property. For example, if the sales revenues of retail tenants were to decline,
rents tied to a percentage of gross sales revenues may decline and those tenants
may be unable to pay their rent or other occupancy costs. In the case of the
mortgaged property securing the Grand Canal Shoppes at the Venetian loan, the
success of the mall is highly dependent upon the success of the adjoining
casino.
The presence or absence of an "anchor tenant" or a "shadow anchor" in or
near a shopping center also can be important because anchors play a key role in
generating customer traffic and making a center desirable for other tenants. An
"anchor tenant" is located on the related mortgaged property, usually
proportionately larger in size than most other tenants in the mortgaged property
and is vital in attracting customers to a retail property. A "shadow anchor" is
usually proportionally larger in size than most tenants in the mortgaged
property, is important in attracting customers to a retail property and is
located sufficiently close and convenient to the mortgaged property, but not on
the mortgaged property, so as to influence and attract potential customers.
Forty-one (41) of the mortgage loans secured by retail properties, representing
approximately 41.2% of the aggregate principal balance of the pool of mortgage
loans as of the cut-off date, are considered by the applicable loan seller to be
"anchored" or "shadow anchored."
If anchor stores in a mortgaged property were to close, the related
borrower may be unable to replace those anchors in a timely manner or without
suffering adverse economic consequences. Certain of the tenants or anchor stores
of the retail properties may have co-tenancy clauses and/or operating covenants
in their leases or operating agreements which permit those tenants or anchor
stores to cease operating under certain conditions including without limitation
certain other stores not being open for business at the mortgaged property or a
subject store not meeting the minimum sales requirement under its lease. In
addition, in the event that a "shadow anchor" fails to renew its lease,
terminates its lease or otherwise ceases to conduct business within a close
proximity to the mortgaged property, customer traffic at the mortgaged property
may be substantially reduced. We cannot assure you the tenant will not terminate
its lease or that a replacement tenant will be found. We cannot assure you that
such space will be occupied or that the related mortgaged property will not
suffer adverse economic consequences.
Retail properties also face competition from sources outside a given real
estate market. For example, all of the following compete with more traditional
retail properties for consumer dollars: factory outlet centers; discount
shopping centers and clubs; catalogue retailers; home shopping networks;
internet websites; and telemarketing. Continued growth of these alternative
retail outlets (which often have lower operating costs) could adversely affect
the rents collectible at the retail properties included in the pool of mortgage
loans, as well as the income from, and market value of, the mortgaged properties
and the related borrower's ability to refinance such property.
Moreover, additional competing retail properties may be built in the areas
where the retail properties are located.
S-37
With respect to the mortgage loan identified on Annex C to this prospectus
supplement as the Grand Canal Shoppes at the Venetian loan, the owners of the
adjoining casino are developing a hotel, casino and retail complex adjacent to
the casino, which is currently scheduled to be completed in the fourth quarter
of 2006. An affiliate of the borrower has entered into a forward commitment to
purchase the retail complex (which will be contiguous with the mortgaged
property securing the Grand Canal Shoppes at the Venetian loan), subject to
satisfaction of certain conditions. This project may compete with the Grand
Canal Shoppes at the Venetian mortgaged property and have an adverse effect on
the performance of the related mortgage loan.
Certain tenants at certain of the mortgaged properties are paying rent but
not physically occupying the leased space. Certain of the retail mortgaged
properties, including the mortgage loans (identified as loan nos. 7, 10, 14, 17,
19, 22, 44, 76 and 125 on Annex C to this prospectus supplement), representing
approximately 12.5% of the aggregate principal balance of the pool of mortgage
loans as of the cut-off date, have theaters as part of the mortgaged property.
These 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 has caused some
operators to experience financial difficulties, resulting in downgrades in their
credit ratings and, in certain cases, bankruptcy filings. See "--Tenant
Bankruptcy Entails Risks" above. In addition, because of unique construction
requirements of theaters, any vacant theater space would not easily be converted
to other uses.
OFFICE PROPERTIES HAVE SPECIAL RISKS
Office properties secure 46 of the mortgage loans representing
approximately 39.8% of the aggregate principal balance of the pool of mortgage
loans as of the cut-off date.
A large number of factors may adversely affect the value of office
properties, including:
o the quality of an office building's tenants;
o an economic decline in the business operated by the tenant;
o the physical attributes of the building in relation to competing
buildings (e.g., age, condition, design, appearance, access to
transportation and ability to offer certain amenities, such as
sophisticated building systems and/or business wiring requirements);
o the diversity of an office building's tenants (or reliance on a single
or dominant tenant);
o an adverse change in population, patterns of telecommuting or sharing of
office space, and employment growth (which creates demand for office
space);
o the desirability of the area as a business location; 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. See
"--Risks Relating to Loan Concentrations" above.
Included among the office properties are 16 medical office properties
(identified on Annex C to this prospectus supplement), representing 4.5% of the
aggregate principal balance of the pool of mortgage loans as of the cut-off
date. The performance of a medical office property may depend on (i) the
proximity of the property to a hospital or other health care establishment and
(ii) reimbursement for patient fees from private or government-sponsored
insurers. Issues related to reimbursement (ranging from non-payment to delays in
payment) from the insurers could adversely impact cash flow at the related
mortgaged property.
S-38
MULTIFAMILY PROPERTIES HAVE SPECIAL RISKS
Multifamily properties secure 19 of the mortgage loans representing
approximately 6.4% of the aggregate principal balance of the pool of mortgage
loans as of the cut-off date. All of the mortgaged properties that are
multifamily properties are in loan group 2. 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 such as its age,
condition, design, appearance, access to transportation and construction
quality;
o the location of the property, for example, a change in the neighborhood
over time;
o the ability of management to provide adequate maintenance and insurance;
o the types of services or amenities that the property provides;
o the property's reputation;
o the level of mortgage interest rates, which may encourage tenants to
purchase rather than lease housing;
o the presence of competing properties;
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, which vouchers may be used
at other properties and influence tenant mobility; and
o adverse local or national economic conditions, which may limit the
amount of rent that may be charged and may result in a reduction of
timely rent payments or a reduction in occupancy levels; and state and
local regulations, which may affect the building owner's ability to
increase rent to market rent for an equivalent apartment.
Certain states regulate the relationship of an owner and its tenants.
Commonly, these laws require a written lease, good cause for eviction,
disclosure of fees, and notification to residents of changed land use, while
prohibiting unreasonable rules, retaliatory evictions, and restrictions on a
resident's choice of unit vendors. Apartment building owners have been the
subject of suits under state "Unfair and Deceptive Practices Acts" and other
general consumer protection statutes for coercive, abusive or unconscionable
leasing and sales practices. A few states offer more significant protection. For
example, there are provisions that limit the bases on which a landlord may
terminate a tenancy or increase its rent or prohibit a landlord from terminating
a tenancy solely by reason of the sale of the owner's building.
In addition to state regulation of the landlord-tenant relationship,
numerous counties and municipalities impose rent control on apartment buildings.
These ordinances may limit rent increases to fixed percentages, to percentages
of increases in the consumer price index, to increases set or approved by a
governmental agency, or to increases determined through mediation or binding
arbitration. Any limitations on a borrower's ability to raise property rents may
impair such borrower's ability to repay its multifamily loan from its net
operating income or the proceeds of a sale or refinancing of the related
multifamily property.
Certain of the mortgage loans are secured or may be secured in the future
by mortgaged properties that are subject to certain affordable housing covenants
and other covenants and restrictions with respect to various tax credit, city,
state and federal housing subsidies, rent stabilization or similar programs, in
respect of various units within the mortgaged properties. The limitations and
restrictions imposed by these
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programs could result in 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, among others:
o rent limitations that would adversely affect the ability of borrower to
increase rents to maintain the condition of their mortgaged properties
and satisfy operating expense; 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 difference 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.
HOTEL PROPERTIES HAVE SPECIAL RISKS
Hotel properties secure 1 of the mortgage loans representing approximately
2.7% of the aggregate principal balance of the pool of mortgage loans as of the
cut-off date.
Various factors may adversely affect the economic performance of a hotel,
including:
o adverse economic and social conditions, either local, regional or
national (which may limit the amount that can be charged for a room and
reduce occupancy levels);
o the presence or construction of competing hotels or resorts;
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 or operator of a hotel; and
o changes in travel patterns caused by changes in access, energy prices,
strikes, relocation of highways, the construction of additional
highways, concerns about travel safety and other factors.
Because hotel rooms are generally rented for short periods of time, the
financial performance of hotels tends to be affected by adverse economic
conditions and competition more quickly than other commercial properties.
Additionally, as a result of high operating costs, relatively small decreases in
revenue can cause significant stress on a property's cash flow. Furthermore, the
terrorist attacks in the United States in September 2001 and the potential for
future terrorist attacks may have adversely affected the occupancy rates and,
accordingly, the financial performance of hotel properties. See "--Terrorist
Attacks and Military Conflicts May Adversely Affect Your Investment" above.
Moreover, the hotel and lodging industry is generally seasonal in nature
and different seasons affect different hotels differently depending on type and
location. This seasonality can be expected to cause periodic fluctuations in a
hotel property's room and restaurant revenues, occupancy levels, room rates and
operating expenses.
INDUSTRIAL PROPERTIES HAVE SPECIAL RISKS
Industrial properties secure 10 of the mortgage loans representing
approximately 3.0% of the aggregate principal balance of the pool of mortgage
loans as of the cut-off date. Significant factors determining the value of
industrial properties are:
o the quality of tenants;
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o reduced demand for industrial space because of a decline in a particular
industry segment;
o property becoming functionally obsolete;
o unavailability of labor sources;
o changes in access, energy prices, strikers, relocation of highways, the
construction of additional highways or other factors;
o changes in proximity of supply sources;
o the expenses of converting a previously adapted space to general use;
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 or a few tenants.
Industrial properties may be adversely affected by reduced demand for
industrial space occasioned by a decline in a particular industry segment (for
example, a decline in defense spending), and a particular industrial or
warehouse 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 and may result in a substantial percentage
of leases expiring in the same year at any particular industrial property. In
addition, mortgaged properties used for many industrial purposes are more prone
to environmental concerns than other properties.
Aspects of building site design and adaptability affect the value of an
industrial property. Site characteristics which are generally desirable to a
warehouse/industrial property include high clear ceiling heights, wide column
spacing, a large number of bays (loading docks) and large bay depths,
divisibility, large minimum truck turning radii and overall functionality and
accessibility.
In addition, because of unique construction requirements of many industrial
properties, any vacant industrial property space may not be easily converted to
other uses. Thus, if the operation of any of the industrial properties becomes
unprofitable due to competition, age of the improvements or other factors such
that the borrower becomes unable to meet its obligations on the related mortgage
loan, the liquidation value of that industrial property may be substantially
less, relative to the amount owing on the related mortgage loan, than would be
the case if the industrial property were readily adaptable 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.
LACK OF SKILLFUL PROPERTY MANAGEMENT ENTAILS RISKS
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;
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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 or month-to-month leases, are generally more management intensive
than properties leased to creditworthy tenants under long-term leases.
We make no representation or warranty as to the skills of any present or
future managers. In many cases, the property manager is an affiliate of the
borrower and may not manage properties for non-affiliates. Additionally, we
cannot assure you that the property managers will be in a financial condition to
fulfill their management responsibilities throughout the terms of their
respective management agreements.
RISKS RELATING TO PREPAYMENTS AND REPURCHASES
The yield to maturity on your certificates will depend, in significant
part, upon the rate and timing of principal payments on the mortgage loans. For
this purpose, principal payments include both voluntary prepayments, if
permitted, and involuntary prepayments, such as prepayments resulting from
casualty or condemnation, defaults and liquidations or repurchases upon breaches
of representations and warranties or purchases of a companion holder or
mezzanine holder pursuant to a purchase option or purchases relating to a fair
value purchase option. See "The Pooling Agreement--Servicing of the Whole Loans"
and "--Servicing of the Mortgage Loans" in this prospectus supplement.
In addition, because the amount of principal that will be distributed to
the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6 and Class
A-1A certificates will generally be based upon the particular loan group in
which the related mortgage loan is deemed to be a part, the yield on the Class
A-1, Class A-2, Class A-3, Class A-4, Class A-5 and Class A-6 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.
Additionally, a certain party has an option to purchase the Grand Canal
Shoppes at the Venetian whole loan pursuant to the REA with respect to the
related mortgaged property. See "Ten Largest Mortgage Loans--The Grand Canal
Shoppes at the Venetian" on Annex B to this prospectus supplement.
The yield on each of the Class A-5, Class A-6, Class A-1A, Class B, Class
C, Class D and Class E certificates could be adversely affected if mortgage
loans with higher interest rates pay faster than the mortgage loans with lower
interest rates, since those classes bear interest at a rate based upon, or
limited by, the weighted average of the net interest rates on the mortgage
loans. The pass-through rates on those classes of certificates may be limited by
the weighted average of the net interest rates on the mortgage loans even if
principal prepayments do not occur.
The investment performance of your certificates may vary materially and
adversely from your expectations if the actual rate of prepayment on the
mortgage loans is higher or lower than you anticipate.
Any changes in the weighted average lives of your certificates may
adversely affect your yield. Prepayments resulting in a shortening of weighted
average lives of your certificates may be made at a time of low interest rates
when you may be unable to reinvest the resulting payment of principal on your
certificates at a rate comparable to the effective yield anticipated by you in
making your investment in the certificates, while delays and extensions
resulting in a lengthening of those weighted average lives may occur at a time
of high interest rates when you may have been able to reinvest principal
payments that would otherwise have been received by you at higher rates.
Although all of the mortgage loans have prepayment protection in the form
of defeasance provisions or yield maintenance provisions, we cannot assure you
that the related borrowers will refrain from prepaying their mortgage loans due
to the existence of yield maintenance charges or that involuntary prepayments
will not occur.
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Voluntary prepayments, if permitted, generally require the payment of a
yield maintenance charge unless the loan is a specified period (ranging from
approximately 2 to 6 months) from the stated maturity date. See "Description of
the Mortgage Pool" in this prospectus supplement. In addition, certain of the
mortgage loans may not require the payment of a yield maintenance premium or
prepayment charge in connection with a prepayment as a result of a casualty or
condemnation. In any case, we cannot assure you that the related borrowers will
refrain from prepaying their mortgage loans due to the existence of yield
maintenance charges or that involuntary prepayments will not occur.
With respect to three (3) mortgage loans (identified as loan nos. 15, 18
and 37 on Annex C to this prospectus supplement), representing approximately
1.8%, 1.4% and 0.6%, respectively, of the aggregate principal balance of the
pool of mortgage loans as of the cut-off date, each have earnout escrows that
were established at origination in amounts equal to $6,800,000, $8,263,000 and
$4,450,000, respectively. If certain conditions are not met pursuant to the
respective loan documentation then all or part of the earnout escrow amounts may
be used to prepay the related mortgage loan. For more detail on these earnout
escrows, see Annex A to this prospectus supplement.
With respect to 7 mortgage loans (identified as loan nos. 34, 52, 77, 105,
115, 118 and 136 on Annex C to this prospectus supplement), representing
approximately 0.6%, 0.4%, 0.3%, 0.2%, 0.1%, 0.1% and 0.1%, respectively, of the
aggregate principal balance of the pool of mortgage loans as of the cut-off
date, each are secured by a medical office building located near a hospital
campus. The hospital owner has the right to purchase property at fair market
value at any time in the event of a major disagreement between the hospital
owner and the related borrower over the management of the related mortgaged
property. In the event this purchase option is exercised during the lockout
period (which ends May 1, 2006), the borrower and the hospital owner will enter
into a master lease pursuant to which the hospital owner will lease the entire
mortgaged property to the borrower. Upon the end of the lockout period the
hospital owner would consummate the purchase either by assuming the related
mortgage loan or prepaying the related mortgage loan in full with all applicable
prepayment penalties and fees. This purchase option will terminate in the event
of a transfer of the mortgaged property to a third party.
Additionally, certain mortgage loans provide that in the event of the
exercise of a purchase option by a tenant, that the related mortgage loans may
be prepaid in part prior to the expiration of a defeasance lock-out provision.
See "Description of the Mortgage Pool--Certain Characteristics of the Mortgage
Loans--Partial Releases" in this prospectus supplement.
The rate at which voluntary prepayments occur on the mortgage loans will be
affected by a variety of factors, including:
o the terms of the mortgage loans;
o the length of any prepayment lockout period;
o the level of prevailing interest rates;
o the availability of mortgage credit;
o the applicable yield maintenance charges;
o the master servicer's or special servicer's ability to enforce those
charges or premiums;
o the failure to meet certain requirements for the release of escrows;
o the occurrence of casualties or natural disasters; and
o economic, demographic, tax, legal or other factors.
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Generally, no yield maintenance charge will be required for prepayments in
connection with a casualty or condemnation unless, in the case of most of the
mortgage loans, an event of default has occurred and is continuing.
The yield on the offered certificates that bear interest at a rate based
on, limited by or equal to, the weighted average of the net interest rates on
the mortgage loans could also be adversely affected if mortgage loans with
higher interest rates pay faster than the mortgage loans with lower interest
rates. The pass-through rates on those classes of certificates may be limited by
the weighted average of the net interest rates on the mortgage loans even if
principal prepayments do not occur.
Certain shortfalls in interest as a result of involuntary prepayments may
reduce the available distribution amount. In addition, if a loan seller
repurchases any mortgage loan from the trust due to breaches of representations
or warranties or document defects, the repurchase price paid will be passed
through to the holders of the certificates with the same effect as if the
mortgage loan had been prepaid in part or in full, and no yield maintenance
charge would be payable. A repurchase or the exercise of a purchase option may
adversely affect the yield to maturity on your certificates. In addition, if the
breach or defect relates to a mortgage loan jointly sold by Commerzbank AG, New
York Branch, and Goldman Sachs Mortgage Company, each of Commerzbank AG, New
York Branch, and Goldman Sachs Mortgage Company will be obligated to take those
remedial actions only with respect to its interest in the mortgage loan jointly
sold by it. Therefore, it is possible that under certain circumstances only one
of Commerzbank AG, New York Branch, and Goldman Sachs Mortgage Company will
repurchase or otherwise comply with any repurchase obligations. In this respect,
see "Description of the Mortgage Pool--Representations and Warranties" and "The
Pooling Agreement--Realization Upon Mortgage Loans" in this prospectus
supplement.
MORTGAGE LOANS ARE NONRECOURSE AND ARE NOT INSURED OR GUARANTEED
The mortgage loans are not insured or guaranteed by any person or entity,
governmental or otherwise.
Investors should treat each mortgage loan as a nonrecourse loan. If a
default occurs, recourse generally may be had only against the specific
properties and other assets that have been pledged to secure the loan.
Consequently, payment prior to maturity is dependent primarily on the
sufficiency of the net operating income of the mortgaged property. Payment at
maturity is primarily dependent upon the market value of the mortgaged property
or the borrower's ability to refinance the mortgaged property.
RISKS OF DIFFERENT TIMING OF MORTGAGE LOAN AMORTIZATION
As mortgage loans pay down or properties are released, the remaining
mortgage loans may face a higher risk with respect to the diversity of property
types and property characteristics and with respect to the number of borrowers.
See the tables entitled "Distribution of Remaining Term to Maturity" in
Annex A to this prospectus supplement for a description of the maturity dates of
the mortgage loans. Because principal on the offered certificates is payable in
sequential order, and a class receives principal only after the preceding class
or classes have been paid in full, classes that have a lower sequential priority
are more likely to face the risk of concentration discussed under "--Risks
Relating to Loan Concentrations" above than classes with a higher sequential
priority.
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 protection available to lender. As part of a restructuring plan, a court
may reduce the amount of secured indebtedness to the
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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 monthly 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
out the junior lien. Certain of the borrowers or their affiliates have
subordinate debt secured by the related mortgaged properties. See "--Other
Financings" below. 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, a lender will be stayed from enforcing a
borrower's assignment of rents and leases. Federal bankruptcy law also may
interfere with the master servicer's or special servicer's ability to enforce
lockbox requirements. The legal proceedings necessary to resolve these issues
can be time consuming and costly and may 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 or intercreditor 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 trust's recovery with respect to
borrowers in bankruptcy proceedings may be significantly delayed, and the
aggregate amount ultimately collected may be substantially less than the amount
owed.
Certain of the mortgage loans have sponsors that have previously filed
bankruptcy, which in some cases may have involved the same property which
currently secures the mortgage loan. 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.
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GEOGRAPHIC CONCENTRATION
This table shows the states with the concentrations of mortgaged properties
of over 5%:
GEOGRAPHIC DISTRIBUTION - ALL MORTGAGED PROPERTIES
NUMBER OF MORTGAGED AGGREGATE CUT-OFF DATE % OF INITIAL
STATE PROPERTIES BALANCE POOL BALANCE
----- ---------- ------- ------------
New York............................ 8 $567,465,832 21.8%
California.......................... 31 $434,434,914 16.7%
Nevada.............................. 7 $218,292,368 8.4%
Virginia............................ 3 $165,750,118 6.4%
Florida............................. 9 $136,588,047 5.2%
GEOGRAPHIC DISTRIBUTION--LOAN GROUP 1
NUMBER OF MORTGAGED AGGREGATE CUT-OFF DATE % OF INITIAL
STATE PROPERTIES BALANCE GROUP 1 BALANCE
----- ---------- ------- ---------------
New York............................ 8 $567,465,832 23.4%
California.......................... 30 $419,434,914 17.3%
Nevada 6 $215,895,368 8.9%
Virginia............................ 3 $165,750,118 6.8%
Florida............................. 9 $136,588,047 5.6%
New Jersey.......................... 1 $130,000,000 5.4%
GEOGRAPHIC DISTRIBUTION--LOAN GROUP 2
NUMBER OF MORTGAGED AGGREGATE CUT-OFF DATE % OF INITIAL
STATE PROPERTIES BALANCE GROUP 2 BALANCE
----- ---------- ------- ---------------
Georgia............................. 4 $69,110,510 38.9%
Texas............................... 5 $29,332,604 16.5%
Washington.......................... 3 $17,260,000 9.7%
Pennsylvania........................ 4 $15,863,917 8.9%
Alabama............................. 1 $15,350,000 8.6%
California.......................... 1 $15,000,000 8.4%
Wisconsin........................... 2 $10,800,000 6.1%
Concentrations of mortgaged properties in geographic areas may increase the
risk that adverse economic or other developments or natural disasters affecting
a particular region of the country could increase the frequency and severity of
losses on mortgage loans secured by those properties. In recent periods, several
regions of the United States have experienced significant real estate downturns.
The following geographic factors could adversely affect the income from, and
market value of, the mortgaged property and/or impair the borrowers' ability to
repay the mortgage loans:
o economic conditions in regions where the borrowers and the mortgaged
properties are located;
o conditions in the real estate market where the mortgaged properties are
located;
o changes in local governmental rules and fiscal policies; and
o acts of nature (including earthquakes, floods, forest fires or
hurricanes, which may result in uninsured losses).
For example, mortgaged properties located in California, Texas or Florida
may be more susceptible to certain hazards (such as earthquakes) than mortgaged
properties in other states.
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ENVIRONMENTAL RISKS
The trust could become liable for a material adverse environmental
condition at an underlying mortgaged property. Any such potential liability
could reduce or delay payments on the offered certificates.
An environmental report was prepared for each mortgaged property securing a
mortgage loan no more than 19 months prior to the cut-off date. The
environmental reports were prepared pursuant to the American Society for Testing
and Materials standard for a Phase I environmental assessment. In addition to
the Phase I standards, many of the environmental reports included additional
research, such as limited sampling for asbestos-containing material, lead-based
paint, and radon, depending upon the property use and/or age. Additionally, as
needed pursuant to American Society for Testing and Materials standards,
supplemental Phase II site investigations were completed for some mortgaged
properties to resolve certain environmental issues. Phase II investigation
consists of sampling and/or testing.
None of the environmental assessments revealed any material adverse
condition or circumstance at any mortgaged property except for those:
o in which the adverse conditions were remediated or abated before the
closing date;
o in which an operations and maintenance plan or periodic monitoring of
the mortgaged property or nearby properties was in place or recommended;
o for which an escrow for the remediation was established;
o for which an environmental insurance policy was obtained from a
third-party insurer;
o for which the principal of the borrower or another financially
responsible party has provided an indemnity or is required to take, or
is liable for the failure to take, such actions, if any, with respect to
such matters as have been required by the applicable governmental
authority or recommended by the environmental assessments;
o for which such conditions or circumstances were investigated further and
the environmental consultant recommended no further action or
remediation;
o as to which the borrower or other responsible party obtained a "no
further action" letter or other evidence that governmental authorities
are not requiring further action or remediation;
o that would not require substantial cleanup, remedial action or other
extraordinary response under environmental laws;
o involving radon; or
o in which the related borrower has agreed to seek a "case closed" or
similar status for the issue from the applicable governmental agency.
In certain cases, the identified condition was related to the presence of
asbestos-containing materials, lead-based paint and/or radon. Where these
substances were present, the environmental consultant generally recommended, and
the borrower was generally required to establish an operation and maintenance
plan to address the issue or, in the case of asbestos-containing materials and
lead-based paint, an abatement or removal program. Other identified conditions
could, for example, include leaks from storage tanks and on-site spills.
Corrective action, as required by the regulatory agencies, has been or is
currently being undertaken and, in some cases, the related borrowers have made
deposits into environmental reserve accounts. However, we cannot assure you that
any environmental indemnity, insurance or reserve amounts will be sufficient to
remediate the environmental conditions or that all environmental conditions have
been identified or that operation and maintenance plans will be put in place
and/or followed.
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It is possible that the environmental reports and/or Phase II sampling did
not reveal all environmental liabilities, or that there are material
environmental liabilities of which we are not aware. Also, the environmental
condition of the mortgaged properties in the future could be affected by the
activities of tenants and occupants or by third parties unrelated to the
borrowers. For a more detailed description of environmental matters that may
affect the mortgaged properties, see "Risk Factors--Environmental Risks" and
"Certain Legal Aspects of the Mortgage Loans--Environmental Risks" in the
prospectus.
Problems associated with mold may pose risks to the real property and may
also be the basis for personal injury claims against a borrower. Although the
mortgaged properties are required to be inspected periodically, there is no set
of generally accepted standards for the assessment of mold currently in place.
If left unchecked, the growth of mold could result in the interruption of cash
flow, litigation and remediation expenses which could adversely impact
collections from a mortgaged property.
COSTS OF COMPLIANCE WITH APPLICABLE LAWS AND REGULATIONS
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, for example, zoning laws and the Americans with
Disabilities Act of 1990, as amended, which requires all public accommodations
to meet certain federal requirements related to access and use by persons with
disabilities. See "Certain Legal Aspects of the Mortgage Loans--Americans With
Disabilities Act" in the prospectus. The expenditure of these 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.
NO REUNDERWRITING OF THE MORTGAGE LOANS
We have not reunderwritten the mortgage loans. Instead, we have relied on
the representations and warranties made by the loan sellers, and the applicable
loan seller's obligation to repurchase or cure 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 or the interests of the
certificateholders. 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, it is possible that the reunderwriting
process may have revealed problems with a mortgage loan not covered by a
representation or warranty. In addition, we can give no assurance that the
applicable loan seller will be able to repurchase a mortgage loan if a
representation or warranty has been breached. Further, if a representation or
warranty has been breached with respect to a mortgage loan jointly sold by
Commerzbank AG, New York Branch, and Goldman Sachs Mortgage Company, each of
Commerzbank AG, New York Branch, and Goldman Sachs Mortgage Company will be
obligated to take those remedial actions only with respect to its interest in
the mortgage loan jointly sold by it. Therefore, it is possible that under
certain circumstances only one of Commerzbank AG, New York Branch, and Goldman
Sachs Mortgage Company will repurchase a mortgage loan that it has jointly
originated if a representation or warranty has been breached. See "Description
of the Mortgage Pool--Representations and Warranties;" and "--Cures and
Repurchases" in this prospectus supplement.
LITIGATION AND OTHER MATTERS AFFECTING THE MORTGAGED PROPERTIES OR BORROWERS
There may be pending or threatened legal proceedings against the borrowers
and the managers of the mortgaged properties and their respective affiliates
arising out of their ordinary business. Any such litigation may materially
impair distributions to certificateholders if borrowers must use property income
to pay judgments or litigation costs. We cannot assure you that any litigation
will not have a material adverse effect on your investment.
With respect to one (1) mortgage loan (identified as loan no. 31 on Annex C
to this prospectus supplement), representing approximately 0.7% of the aggregate
principal balance of the pool of mortgage loans as of the cut-off-date, the
related borrower is involved in litigation with a former partner of the
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predecessor partnership to the borrower. The plaintiff is alleging breach of
contract by the borrower with respect to a proposed buy-out of the plaintiff's
former partnership interest. The plaintiff is seeking damages of approximately
$675,000 and the borrower is counter suing the plaintiff for fraud. If the
borrower fails to pay any amounts it is required to pay under a final judgment,
the lender will have recourse against the borrower and the borrower's principal
under the loan documents. In addition, upon a failure by the borrower to pay a
final judgment, all rental payments and other payments to be made with respect
to the mortgaged property will be required to be paid into a lock box account
controlled by the lender. The borrower's principal is also required to maintain
at all times during the loan term $1,000,000 in cash or other relatively liquid
form. We cannot assure you that the borrower or the borrower's principal will
have adequate resources to pay any judgment amounts if any such amounts are
required to be paid by them. The lender is the beneficiary of a title
endorsement under a title policy that insures against losses incurred by the
lender in connection with the related mortgaged property as a result of any
judgment against the borrower, subject to terms and conditions contained in such
title policy.
In addition, in the event the owner of a borrower experiences financial
problems, we cannot assure you that such owner would not attempt to take actions
with respect to the mortgaged property that may adversely affect the borrower's
ability to fulfill its obligations under the related mortgage loan.
OTHER FINANCINGS
When a mortgage loan borrower (or its constituent members) also has one or
more other outstanding loans (even if they are subordinated loans), the trust is
subjected to additional risk.
The borrower may have difficulty servicing and repaying multiple loans. The
existence of another loan will generally also make it more difficult for the
borrower to obtain refinancing of the related mortgage loan and may thereby
jeopardize repayment of the mortgage loan. Moreover, the need to service
additional debt may reduce the cash flow available to the borrower to operate
and maintain the mortgaged property.
Additionally, if the borrower (or its constituent members) defaults on its
mortgage loan and/or any other loan, actions taken by other lenders such as a
foreclosure or an involuntary petition for bankruptcy against the borrower could
impair the security available to the trust, including the mortgaged property, or
stay the trust's ability to foreclose during the course of the bankruptcy case.
The bankruptcy of another lender also may operate to stay foreclosure by the
trust. The trust may also be subject to the costs and administrative burdens of
involvement in foreclosure or bankruptcy proceedings or related litigation.
In this regard, the mortgage loans generally prohibit borrowers from
incurring any additional debt secured by their mortgaged property without the
consent of the lender. However, the applicable loan sellers have informed us
that they are aware of certain permitted existing secured debt on certain
mortgage loans. In addition, substantially all of the mortgage loans permit the
related borrower to incur limited indebtedness in the ordinary course of
business that is not secured by the related mortgaged property. In addition, the
borrowers under certain of the mortgage loans have incurred and/or may incur in
the future unsecured debt other than in the ordinary course of business.
Moreover, in general, any borrower that does not meet single-purpose entity
criteria may not be restricted from incurring unsecured debt. See "Description
of the Mortgage Pool--General" in this prospectus supplement. For more
information see "The Pooling Agreement--Servicing of the Whole Loans" in this
prospectus supplement.
The applicable loan sellers have informed us that with respect to ten (10)
of the mortgage loans, representing approximately 33.1% of the aggregate
principal balance of the pool of mortgage loans as of the cut-off date, the
borrower has incurred additional debt secured by the related mortgaged property
(not including any mortgage loan that is cross-collateralized and
cross-defaulted with another mortgage loan in the pool). See "Description of the
Mortgage Pool--Certain Characteristics of the Mortgage Loans" in this prospectus
supplement. Ten (10) of the mortgage loans, with other debt secured by the
mortgaged property, representing approximately 33.1% of the aggregate principal
balance of the pool of mortgage loans as of the cut-of date, are part of a whole
loan structure. See "Description of the Mortgage Pool--The Whole Loans" in this
prospectus supplement.
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Additionally, the terms of certain mortgage loans permit or require the
borrowers to post letters of credit and/or surety bonds for the benefit of the
related mortgage loan, which may constitute a contingent reimbursement
obligation of the related borrower or an affiliate. The issuing bank or surety
will not typically agree to subordination and standstill protection benefiting
the mortgagee.
The mortgage loans generally place certain restrictions on the transfer
and/or pledging of general partnership and managing member equity interests in a
borrower such as specific percentage or control limitations. The terms of the
mortgages generally permit, subject to certain limitations, the transfer or
pledge of less than a controlling portion of the limited partnership or
non-managing member equity interests in a borrower. Certain of the mortgage
loans do not restrict the pledging of ownership interests in the related
borrower, but do restrict the transfer of ownership interests in the related
borrower by imposing a specific percentage, a control limitation or requiring
the consent of the mortgagee to any such transfer. Moreover, in general,
mortgage loans with borrowers that do not meet single-purpose entity criteria
may not restrict in any way the incurrence by the relevant borrower of mezzanine
debt.
Mezzanine debt is debt that is incurred by the owner of equity in one or
more borrowers and is secured by a pledge of the equity ownership interests in
such borrowers. Because mezzanine debt is secured by the obligor's equity
interest in the related borrowers, such financing effectively reduces the
obligor's economic stake in the related mortgaged property. The existence of
mezzanine debt may reduce cash flow on the borrower's mortgaged property after
the payment of debt service and may increase the likelihood that the owner of a
borrower will permit the value or income producing potential of a mortgaged
property to fall and may create a slightly 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 a mezzanine loan, the holder of the
mezzanine loan would be entitled to foreclose upon the equity in the related
borrower, which has been pledged to secure payment of such mezzanine debt.
Although this transfer of equity may not trigger the due on sale clause under
the related mortgage loan, it could cause the obligor under the mezzanine debt
to file for bankruptcy, which could negatively affect the operation of the
related mortgaged property and the related borrower's ability to make payments
on the related mortgage loan in a timely manner. Additionally, certain of the
mezzanine intercreditor agreements, including the agreements related to the 5
mortgage loans with mezzanine debt referred to below, provide that upon a
default under the mortgage loan, the mezzanine lender may purchase the defaulted
mortgage loan or cure the default.
The applicable loan sellers have informed us that as of the cut-off date
seventeen (17) of the mortgage loans, representing approximately 14.2% of the
aggregate principal balance of the pool of mortgage loans as of the cut-off
date, either have or permit future mezzanine debt as described under
"Description of the Mortgage Pool--Certain Characteristics of the Mortgage
Loans" in this prospectus supplement.
Although the pari passu companion loans or subordinate companion loans
related to the serviced and non-serviced loans are not assets of the trust fund,
the related borrower is still obligated to make interest and principal payments
on the companion loans. As a result, the trust fund is subject to additional
risks, including:
o the risk that the necessary maintenance of the related mortgaged
property could be deferred to allow the borrower to pay the required
debt service on these other obligations and that the value of the
mortgaged property may fall as a result; and
o the risk that it may be more difficult for the borrower to refinance the
mortgage loan or to sell the mortgaged property for purposes of making
any balloon payment on the entire balance of the pari passu companion
loan and/or the subordinate companion loan and the non-serviced loan
upon the maturity of the mortgage loan.
See "Description of the Mortgage Pool--General" in this prospectus
supplement.
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RISKS RELATING TO BORROWER DEFAULT
The rate and timing of mortgage loan delinquencies and defaults will
affect:
o the aggregate amount of distributions on the offered certificates;
o their yield to maturity;
o their rate of principal payments; and
o their weighted average lives.
If losses on the mortgage loans exceed the aggregate certificate balance of
the classes of certificates subordinated to a particular class, that class will
suffer a loss equal to the full amount of the excess (up to the outstanding
certificate balance of that class).
If you calculate your anticipated yield based on assumed rates of defaults
and losses that are lower than the default rate and losses actually experienced,
and those losses are allocated to your certificates, your actual yield to
maturity will be lower than the assumed yield. Under certain extreme scenarios,
that yield could be negative. In general, the earlier a loss borne by you on
your certificates occurs, the greater the effect on your yield to maturity.
Even if losses on the mortgage loans are not borne by your certificates,
those losses may affect the weighted average life and yield to maturity of your
certificates. This may be so, because those losses lead to your certificates
having a higher percentage ownership interest in the trust and related
distributions of principal payments on the mortgage loans than would otherwise
have been the case and the related prepayment may affect the pass-through rate
on your certificates. The effect on the weighted average life and yield to
maturity of your certificates will depend upon the characteristics of the
remaining mortgage loans.
Delinquencies and defaults on the mortgage loans may significantly delay
the receipt of distributions by you on your certificates, unless advances are
made to cover delinquent payments or the subordination of another class of
certificates fully offsets the effects of any delinquency or default.
Additionally, the courts of any state 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 action
unconscionable. See "Certain Legal Aspects of the Mortgage Loans--Foreclosure"
in the prospectus.
RISKS RELATING TO INTEREST ON ADVANCES AND SPECIAL SERVICING COMPENSATION
To the extent described in this prospectus supplement, the master servicer,
the special servicer, the trustee or the fiscal agent, as applicable, will be
entitled to receive interest on unreimbursed advances at the "Prime Rate" as
published in The Wall Street Journal. This interest will generally accrue from
the date on which the related advance is made or the related expense is incurred
to the date of reimbursement. In addition, under certain circumstances,
including delinquencies in the payment of principal and/or interest, a mortgage
loan will be specially serviced and the special servicer is entitled to
compensation for special servicing activities. The right to receive interest on
advances or special servicing compensation is senior to the rights of
certificateholders to receive distributions on the offered certificates. The
payment of interest on advances and the payment of compensation to the special
servicer may lead to shortfalls in amounts otherwise distributable on your
certificates.
BALLOON PAYMENTS
Mortgage loans with substantial remaining principal balances at their
stated maturity, also known as balloon loans, involve greater risk than fully
amortizing loans. This is because the borrower may be unable to repay the loan
at that time. In addition, fully amortizing mortgage loans which may pay
interest
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on an "actual/360" basis but have fixed monthly payments may, in effect, have a
small payment due at maturity.
A borrower's ability to repay a mortgage loan on its stated maturity date
typically will depend upon its ability either to refinance the mortgage loan or
to sell the mortgaged property at a price sufficient to permit repayment. A
borrower's ability to achieve either of these goals will be affected by a number
of factors, including:
o the availability of, and competition for, credit for commercial or
multifamily real estate projects, which fluctuate over time;
o the prevailing interest rates;
o the fair market value of the related mortgaged properties;
o the borrower's equity in the related mortgaged properties;
o the borrower's financial condition;
o the operating history and occupancy level of the mortgaged property; o
reductions in government assistance/rent subsidy programs;
o the tax laws; and
o prevailing general and regional economic conditions.
Except with respect to one (1) mortgage loan (representing 0.6% of the
aggregate principal balance of the pool of mortgage loans as of the cut-off
date), all of the mortgage loans are expected to have substantial remaining
principal balances as of their respective stated maturity dates. This includes
41 mortgage loans, representing approximately 35.3% of the aggregate principal
balance of the pool of mortgage loans as of the cut-off date, which pay interest
only for the first 11, 12, 24, 35, 36 or 60 months of their respective terms and
nine (9) mortgage loans, representing approximately 7.4% of the aggregate
principal balance of the pool of mortgage loans as of the cut-off date, which
pay interest only for their entire term.
We cannot assure you that each borrower will have the ability to repay the
remaining principal balances on its stated maturity date.
GROUND LEASES AND OTHER LEASEHOLD INTERESTS
A leasehold interest under a ground lease secures 13 of the mortgage loans,
representing approximately 14.7% of the aggregate principal balance of the pool
of mortgage loans as of the cut-off date. With respect to 2 of those mortgage
loans (identified as loan nos. 1 and 33, respectively, on Annex C to this
prospectus supplement), representing approximately 7.3% and 0.7%, respectively,
of the aggregate principal balance of the pool of mortgage loans as of the
cut-off date, the borrower has a leasehold interest in a portion of the
mortgaged property and a fee interest in the remaining portion of the mortgaged
property.
For purposes of this prospectus supplement, the encumbered interest will be
characterized as a "fee interest" if (i) the borrower has a fee interest in all
or substantially all of the mortgaged property (provided that if the borrower
has a leasehold interest in any portion of the mortgaged property, such portion
is not, individually or in the aggregate, material to the use or operation of
the mortgaged property), or (ii) the mortgage loan is secured by the borrower's
leasehold interest in the mortgaged property as well as the borrower's (or an
affiliate of the borrower's) overlapping fee interest in the related mortgaged
property.
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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 related borrower's leasehold were to
be terminated upon a lease default, the lender would lose its security.
Generally, each related ground lease requires the lessor to give the lender
notice of the borrower's defaults under the ground lease and an opportunity to
cure them, permits the leasehold interest to be assigned to the lender or the
purchaser at a foreclosure sale, in some cases only upon the consent of the
lessor, and contains certain other protective provisions typically included in a
"mortgageable" ground lease.
Upon the bankruptcy of a lessor or a lessee under a ground lease, the
debtor has the right to assume or reject the lease. If a debtor lessor rejects
the lease, the lessee has the right to remain in possession of its leased
premises for the rent otherwise payable under the lease for the term of the
ground lease (including renewals). If a debtor lessee/borrower rejects any or
all of the lease, the leasehold lender could succeed to the lessee/borrower's
position under the lease only if the lessor specifically grants the lender such
right. If both the lessor and the lessee/borrowers are involved in bankruptcy
proceedings, the trust may be unable to enforce the bankrupt lessee/borrower's
right to refuse to treat a ground lease rejected by a bankrupt lessor as
terminated. In such circumstances, a ground lease could be terminated
notwithstanding lender protection provisions contained in the ground lease or in
the mortgage.
Further, in a recent decision by the United States Court of Appeals for the
Seventh Circuit (Precision Indus. v. Qualitech Steel SBQ, LLC, 327 F.3d 537 (7th
Cir. 2003)) the court ruled with respect to an unrecorded lease of real property
that where a statutory sale of the fee interest in leased property occurs under
Section 363(f) of the Bankruptcy Code (11 U.S.C. Section 363(f)) upon the
bankruptcy of a landlord, such sale terminates a lessee's possessory interest in
the property, and the purchaser assumes title free and clear of any interest,
including any leasehold estates. Pursuant to Section 363(e) of the Bankruptcy
Code (11 U.S.C. Section 363(a)), a lessee may request the bankruptcy court to
prohibit or condition the statutory sale of the property so as to provide
adequate protection of the leasehold interest; however, the court ruled that
this provision does not ensure continued possession of the property, but rather
entitles the lessee to compensation for the value of its leasehold interest,
typically from the sale proceeds. While there are certain circumstances under
which a "free and clear" sale under Section 363(f) of the Bankruptcy Code would
not be authorized (including that the lessee could not be compelled in a legal
or equitable proceeding to accept a monetary satisfaction of his possessory
interest, and that none of the other conditions of Section 363(f)(1)-(4) of the
Bankruptcy Code otherwise permits the sale), we cannot provide assurances that
those circumstances would be present in any proposed sale of a leased premises.
As a result, we cannot provide assurances that, in the event of a statutory sale
of leased property pursuant to Section 363(f) of the Bankruptcy Code, the lessee
may be able to maintain possession of the property under the ground lease. In
addition, we cannot provide assurances that the lessee and/or the lender will be
able to recuperate the full value of the leasehold interest in bankruptcy court.
With respect to one (1) mortgage loan (identified as loan no. 1 on Annex C
to this prospectus supplement) representing approximately 7.3% of the aggregate
principal balance of the pool of mortgage loans as of the cut-off date, a
portion of the mortgaged property is secured by a ground lease. The ground lease
imposes certain restrictions upon the use and operation of the related mortgaged
property. For more information see "Ten Largest Mortgage Loans--The Grand Canal
Shoppes at the Venetian Mortgage Loan" on Annex B to this prospectus supplement.
With respect to certain of the mortgage loans, the related borrower has
given to certain lessors under the related ground lease 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 these provisions, if not waived, may impede the
mortgagee's ability to sell the related mortgaged property at foreclosure or
adversely affect the foreclosure process.
RISKS ASSOCIATED WITH ONE ACTION RULES
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. Accordingly,
S-53
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 a "one action" rule could be applicable. In the case
of 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 "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. See "Certain Legal Aspects of the Mortgage Loans--Foreclosure" in
the prospectus.
TAX CONSIDERATIONS RELATING TO FORECLOSURE
If the trust fund acquires a mortgaged property pursuant to a foreclosure
or deed in lieu of foreclosure, the special servicer must retain an independent
contractor to operate the property. Among other items, the independent
contractor generally will not be able to perform construction work other than
repair, maintenance or certain types of tenant build-outs, unless the
construction was at least 10% completed when defaulted or the default of the
mortgage loan becomes imminent. Any net income from such operation (other than
qualifying "rents from real property"), or any rental income based on the net
profits of a tenant or sub-tenant or allocable to a non-customary service, will
subject the lower-tier REMIC to federal tax (and possibly state or local tax) on
such income at the highest marginal corporate tax rate (currently 35%). In such
event, the net proceeds available for distribution to certificateholders will be
reduced. The special servicer may permit the lower-tier REMIC to earn "net
income from foreclosure property" that is subject to tax if it determines that
the net after-tax benefit to holders of certificates is greater than under
another method of operating or leasing the mortgaged property. In addition, if
the trust were to acquire one or more mortgaged properties pursuant to a
foreclosure or deed in lieu of foreclosure, upon acquisition of those mortgaged
properties, the trust 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.
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 due to
restrictive covenants related to such mortgaged property, including in the case
of mortgaged properties that 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. Additionally, any vacant theater space would not
easily be converted to other uses due to the unique construction requirements of
theaters. In addition, converting commercial properties to alternate uses
generally requires substantial capital expenditures and could result in a
significant adverse effect on, or interruption of, the revenues generated by
such properties. The liquidation value of any mortgaged property, subject to
limitations of the kind described above or other limitations on convertibility
of use, may be substantially less than would be the case if the property were
readily adaptable to other uses.
Furthermore, certain properties may be subject to certain low income
housing restrictions in order to remain eligible for low-income housing credits
or grant subsidized rental payments. The liquidation value of any mortgaged
property, subject to limitations of the kind described above or other
limitations on convertibility of use, may be substantially less than would be
the case if the property were readily adaptable to other uses.
Zoning or other restrictions also may prevent alternative uses. See
"--Zoning Compliance and Use Restrictions" below.
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ZONING COMPLIANCE AND USE RESTRICTIONS
Certain of the mortgaged properties may not comply with current zoning
laws, including density, use, parking, height and set back requirements, due to
changes in zoning requirements after such mortgaged properties were constructed.
These properties, as well as those for which variances or special permits were
issued, are considered to be a "legal non-conforming use" and/or the
improvements are considered to be "legal non-conforming structures." This means
that the borrower is not required to alter its structure to comply with the
existing or new law; however, the borrower may not be able to rebuild the
premises "as is" in the event of a substantial casualty loss. This may adversely
affect the cash flow of the property following the loss. If a substantial
casualty were to occur, we cannot assure you that insurance proceeds would be
available to pay the mortgage loan in full. In addition, if the property were
repaired or restored in conformity with the current law, the value of the
property or the revenue-producing potential of the property may not be equal to
that before the casualty.
The failure of a mortgaged property to comply with zoning laws or to be a
"legal non-conforming use" or "legal non-conforming structure" may adversely
affect market value of the mortgaged property or the borrower's ability to
continue to use it in the manner it is currently being used.
In addition, certain of the mortgaged properties may be subject to certain
use restrictions imposed pursuant to reciprocal easement agreements or operating
agreements or historical landmark designations or, in the case of those
mortgaged properties that are condominiums 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 could include, for example, limitations on the character of the
improvements or the properties, limitations affecting noise and parking
requirements, among other things, and limitations on the borrowers' right to
operate certain types of facilities within a prescribed radius. For example, the
mortgaged property securing 1 mortgage loan (identified as loan no. 82 on Annex
C to this prospectus supplement), representing approximately 0.2% of the
aggregate principal balance of the pool of mortgage loans as of the cut-off
date, is located in an officially designated historic district of the City of
San Francisco, and may be subject to restrictions on use or renovation. These
limitations impose upon the borrower stricter requirements with respect to
repairs and alterations, including following a casualty loss. 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.
Additionally, certain of the loan documents contain restrictions relating
to the use of the mortgaged property. For example, the mortgaged property
securing 7 of the mortgage loans (identified as loan nos. 56, 57, 58, 67, 71, 78
and 81, respectively, representing approximately 0.4%, 0.4%, 0.4%, 0.3%, 0.3%,
0.3% and 0.3%, respectively, the related loan documentation requires that the
related mortgaged property must be primarily used for the operation of a medical
office building on such related and incidental uses thereto and for no other
purpose.
In addition, certain of the mortgaged properties are subject to various
restrictions on ownership imposed by the related ground lease, and these
limitations could adversely affect the ability of the related borrower to lease
or sell the mortgaged property on favorable terms, thus adversely affecting the
borrower's ability to fulfill its obligations under the related mortgage loan.
For more information, see "Ten Largest Mortgage Loans--The Grand Canal Shoppes
at the Venetian" on Annex B to this prospectus supplement.
RISKS OF INSPECTIONS RELATING TO PROPERTIES
Licensed engineers or consultants inspected the mortgaged properties at or
about the time of the origination of the mortgage loans to assess items such as
structural integrity of the buildings and other improvements on the mortgaged
property, including exterior walls, roofing, interior construction, mechanical
and electrical systems and general condition of the site, buildings and other
improvements. However, we cannot assure you that all conditions requiring repair
or replacement were identified. No additional property inspections were
conducted in connection with the closing of the offered certificates.
S-55
PROPERTY INSURANCE
All of the mortgage loans require the related borrower to maintain, or
cause to be maintained, property insurance. However, the mortgaged properties
may suffer casualty losses due to risks which were not covered by insurance or
for which insurance coverage is inadequate. In addition, approximately 16.7%,
5.2% and 4.1% of the mortgaged properties, by aggregate principal balance of the
pool of mortgage loans as of the cut-off date, are located in California,
Florida and Texas, respectively, states that have historically been at greater
risk regarding acts of nature (such as earthquakes, floods and hurricanes) than
other states. We cannot assure you that borrowers will be able to maintain
adequate insurance. Moreover, if reconstruction or any major repairs are
required, changes in laws may materially affect the borrower's ability to effect
any reconstruction or major repairs or may materially increase the costs of the
reconstruction or repairs.
Certain mortgage loans are secured by improvements for which coverage for
acts of terrorism have been waived or are required only if certain conditions
(such as availability at reasonable rates or maximum cost limits) are satisfied.
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) had eliminated 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
will provide financial assistance from the United States government to insurers
in the event of another terrorist attack that results in an insurance claim. The
Treasury Department will 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 requires 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 will have 30 days to accept the continued coverage and pay the premium.
If an insured does not pay the premium, insurance for acts of terrorism may be
excluded from the policy. All policies for insurance issued after November 26,
2002 must make similar disclosure. The Terrorism Risk Insurance Act of 2002 does
not require insureds to purchase the coverage nor does it stipulate the pricing
of the coverage. In addition, there can be no assurance that all of the
borrowers under the mortgage loans have accepted the continued coverage or, if
any have, that they will continue to maintain the coverage.
Through December 2005, insurance carriers are required under the program to
provide terrorism coverage in their basic "all-risk" policies. 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 foreign person or foreign interest as an effort to influence or coerce
United States civilians or the United States government. 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.
S-56
Finally, the Terrorism Insurance Program terminates on 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 extended, or that subsequent
terrorism insurance legislation will be passed upon its expiration.
The various forms of insurance maintained with respect to any of the
mortgaged properties, including casualty insurance, environmental insurance and
earthquake insurance, may be provided under a blanket insurance policy. That
blanket insurance policy will also cover other real properties, some of which
may not secure mortgage loans in the trust. As a result of total limits under
any of those blanket policies, losses at other properties covered by the blanket
insurance policy may reduce the amount of insurance coverage with respect to a
property securing one of the loans in the trust.
With respect to certain of the mortgage loans, the "all-risk" policy
specifically excludes terrorism insurance from its coverage. In some such cases,
the related borrower obtained supplemental insurance to cover terrorism risk. In
other cases, the lender waived the requirement that such insurance be
maintained.
With respect to certain of the mortgage loans, the related mortgage loan
documents generally provide that the borrowers are required to maintain
comprehensive all-risk casualty insurance but may not specify the nature of the
specific risks required to be covered by such insurance policies.
Even if the mortgage loan documents specify that the related borrower must
maintain all-risk casualty insurance or other insurance that covers acts of
terrorism, the borrower may fail to maintain such insurance and the master
servicer or special servicer may not enforce such default or cause the borrower
to obtain such insurance (and neither the master servicer nor the special
servicer will be required to obtain this insurance) if the special servicer has
determined, in its reasonable judgment (which determination, with respect to
terrorism insurance, will be subject to the consent in the case of the Grand
Canal Shoppes at the Venetian loan, the majority holder of the Grand Canal
Shoppes at the Venetian notes and in the case of the 111 Eighth Avenue loan, the
1441 Broadway loan and the Waterfront Plaza loan, the directing holder of such
loans as described under "Description of the Mortgage Pool--The Whole Loans"),
that (i) this insurance is not available at commercially reasonable rates and
the subject hazards are not commonly insured against by prudent owners of
similar real properties in similar locales (but only by reference to such
insurance that has been obtained by such owners at current market rates), or
(ii) this insurance is not available at any rate. In making this determination,
the special servicer, to the extent consistent with its servicing standards, is
entitled to rely on the opinion of an insurance consultant.
Furthermore, at the time existing insurance policies are subject to
renewal, there is no assurance that terrorism insurance coverage will be
available and covered under the new policies or, if covered, whether such
coverage will be adequate. Most insurance policies covering commercial real
properties such as the mortgaged properties are subject to renewal on an annual
basis. If such coverage is not currently in effect, is not adequate or is
ultimately not continued with respect to some of the mortgaged properties and
one of those properties suffers a casualty loss as a result of a terrorist act,
then the resulting casualty loss could reduce the amount available to make
distributions on your certificate.
We cannot assure you that all of the mortgaged properties will be insured
against the risks of terrorism and similar acts. As a result of any of the
foregoing, the amount available to make distributions on your certificates could
be reduced.
RISKS ASSOCIATED WITH BLANKET INSURANCE POLICIES
Certain of the mortgaged properties are covered by blanket insurance
policies, which also cover other properties of the related borrower or its
affiliates (or, in the case of the Grand Canal Shoppes at the Venetian loan, the
owner of the adjoining hotel) (including certain properties in close proximity
to the mortgaged properties). In the event that such policies are drawn on to
cover losses on such other properties, the amount of insurance coverage
available under such policies would thereby be reduced and could be insufficient
to cover each mortgaged property's insurable risks.
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Two (2) of the mortgage loans (identified as loan nos. 3 and 6,
respectively, on Annex C to this prospectus supplement), representing
approximately 5.1% and 3.8%, respectively, of the aggregate principal balance of
the pool of mortgage loans as of the cut-off date, were made to affiliated
borrowers. The insurance coverage for these mortgage loans is pursuant to
blanket insurance policies that cover these two mortgaged properties as well as
other properties owned by affiliates of such borrowers, all of which properties
are located in New York City.
POTENTIAL CONFLICTS OF INTEREST
The pooling and servicing agreement will provide that the mortgage loans
are required to be administered in accordance with the servicing standards
without regard to ownership of any certificate by a servicer or any of their
affiliates. See "The Pooling Agreement--General" in this prospectus supplement.
In addition, the master servicer, a subservicer, the special servicer or
any of their respective affiliates may have interests when dealing with the
mortgage loans that are in conflict with those of holders of the offered
certificates, especially if the master servicer, a subservicer, the special
servicer or any of their respective affiliates holds Series 2004-GG2 non-offered
certificates or companion loans, or has financial interests in or other
financial dealings with a borrower under any of the mortgage loans. For
instance, a special servicer that holds Series 2004-GG2 non-offered certificates
could seek to reduce the potential for losses allocable to those certificates
from a troubled mortgage loan by deferring acceleration in hope of maximizing
future proceeds. However, that action could result in less proceeds to the trust
than would be realized if earlier action had been taken. In general, no servicer
is required to act in a manner more favorable to the offered certificates or any
particular class of offered certificates than to Series 2004-GG2 non-offered
certificates or the related companion loans.
Each servicer services and will, in the future, service existing and new
loans for third parties in the ordinary course of its servicing business,
including portfolios of loans similar to the mortgage loans that will be
included in the trust. The real properties securing these other loans may be in
the same markets as, and compete with, certain of the mortgaged properties
securing the mortgage loans that will be included in the trust. Consequently,
personnel of any of the servicers may perform services, on behalf of the trust,
with respect to the mortgage loans at the same time as they are performing
services, on behalf of other persons, with respect to other mortgage loans
secured by properties that compete with the mortgaged properties securing the
mortgage loans. This may pose inherent conflicts for the master servicer or the
special servicer.
In addition, certain of the mortgage loans included in the trust may have
been refinancings of debt previously held by a loan seller or an affiliate of a
loan seller and the loan sellers or their affiliates may have or have had equity
investments in the borrowers or mortgaged properties under certain of the
mortgage loans included in the trust. Each of the loan sellers and its
affiliates have made and/or may make loans to, or equity investments in,
affiliates of the borrowers under the mortgage loans.
The managers of the mortgaged properties and the borrowers may experience
conflicts of interest in the management and/or ownership of the mortgaged
properties 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; and
o affiliates of the managers and/or the borrowers, or the managers and/or
the borrowers themselves, also may own other properties, including
competing properties.
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YOU WILL NOT HAVE ANY CONTROL OVER THE SERVICING OF THE NON-SERVICED LOANS
Each of the Garden State Plaza loan, the 111 Eighth Avenue loan and the 237
Park Avenue loan is secured by a mortgaged property that also secures one or
more companion loans that are not assets of the trust and is serviced under
pooling and servicing agreements separate from the pooling and servicing
agreement under which your certificates are issued, by the master servicer and
special servicer that are parties to the related pooling and servicing
agreement, and according to the servicing standards provided for in the related
separate pooling and servicing agreement. As a result, you will have less
control over the servicing of these non-serviced loans than you would if these
non-serviced loans were being serviced by the master servicer and the special
server under the pooling and servicing agreement for your certificates. See "The
Pooling Agreement--Servicing of The Whole Loans" in this prospectus supplement.
CONFLICTS OF INTEREST MAY OCCUR AS A RESULT OF THE RIGHTS OF THIRD PARTIES TO
TERMINATE THE SPECIAL SERVICER OF THE WHOLE LOANS
With respect to each of the whole loans, the holders of the applicable
companion loans may have the right to, under certain circumstances, remove the
special servicer under the applicable pooling and servicing agreement that
controls the servicing of that whole loan and appoint a special servicer for one
or more mortgage loans acting alone or, in some circumstances, jointly with the
majority certificateholder of the controlling class. The parties with this
appointment power may have special relationships or interests that conflict with
those of the holders of one or more classes of certificates. In addition, they
do not have any duties to the holders of any class of certificates, may act
solely in their own interests, and will have no liability to any
certificateholders for having done so. No certificateholder may take any action
against the majority certificateholder of the controlling class, the holders of
companion loans or other parties for having acted solely in their respective
interests. See "Description of the Mortgage Pool--The Whole Loans" in this
prospectus supplement for a description of these rights to terminate a special
servicer.
SPECIAL SERVICER MAY BE DIRECTED TO TAKE ACTIONS
In connection with the servicing of the specially serviced mortgage loans,
the special servicer may, at the direction of the controlling class
representative, take actions with respect to the specially serviced mortgage
loans that could adversely affect the holders of some or all of the classes of
offered certificates and the holder of the controlling class will have no duty
or liability to any other certificateholder. Similarly, the special servicer
may, at the direction of the majority of the holders of the Grand Canal Shoppes
at the Venetian notes, take actions with respect to the Grand Canal Shoppes at
the Venetian loan that could adversely affect the holders of some or all of the
classes of offered certificates. In addition, the special servicer may, at the
direction of the Daily News Building subordinate companion loan holder, the 1441
Broadway subordinate companion loan holder and the Waterfront Plaza subordinate
companion loan holder take actions with respect to the Daily News Building
subordinate companion loan, the 1441 Broadway loan or the Waterfront Plaza loan,
as applicable, that could adversely affect the holders of some or all the
classes of offered certificates to the extent described under "Description of
the Mortgage Loans--the Whole Loans". See "The Pooling Agreement--The
Controlling Class Representative" in this prospectus supplement. The controlling
class representative will be controlled by the controlling class
certificateholders. Each of the (i) controlling class representative, (ii) in
the case of the Grand Canal Shoppes at the Venetian loan, the majority holder of
the Grand Canal Shoppes at the Venetian notes or (iii) in the case of the Daily
News Building loan, 1441 Broadway loan and the Waterfront Plaza loan, the
related subordinate companion loan holder, may have interests in conflict with
those of the certificateholders of the classes of offered certificates. As a
result, it is possible that the controlling class representative or, in the case
of the Grand Canal Shoppes at the Venetian loan, the majority holder of the
Grand Canal Shoppes at the Venetian notes or, in the case of the Daily News
Building loan, 1441 Broadway loan and the Waterfront Plaza loan the related
subordinate companion loan holder, may direct the special servicer to take
actions which conflict with the interests of certain classes of the offered
certificates. However, the special servicer is not permitted to take actions
which are prohibited by law or violate the servicing standards or the terms of
the mortgage loan documents.
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With respect to certain mortgage loans with companion loans, similar rights
under a pooling and servicing agreement that controls the servicing of the loans
may be exercisable by the holders of pari passu companion loans, the subordinate
companion loans, and the related controlling class of certificateholders of any
related trust or operating advisors appointed by them, in certain cases acting
jointly with the controlling class of the offered certificates. The interests of
any of these holders or controlling class of certificateholders or operating
advisors may also conflict with those of the holders of the controlling class or
the interests of the holders of the offered certificates. As a result, approvals
to proposed servicer actions may not be granted in all instances thereby
potentially adversely affecting some or all of the classes of offered
certificates. No certificateholder may take any action against any of the
parties with these approval or consent rights for having acted solely in their
respective interests. See "Description of the Mortgage Pool--The Whole Loans" in
this prospectus supplement.
YOUR LACK OF CONTROL OVER 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 "The Pooling Agreement--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 special servicer,
the trustee or the fiscal agent, 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.
LOAN SELLERS MAY NOT BE ABLE TO MAKE A REQUIRED REPURCHASE OF A DEFECTIVE
MORTGAGE LOAN
Each loan seller is the sole warranting party in respect of the mortgage
loans sold by such loan seller to us. Neither we nor any of our affiliates
(except Goldman Sachs Mortgage Company in its capacity as a loan seller) are
obligated to repurchase or substitute any mortgage loan in connection with
either a breach of any loan seller's representations and warranties or any
document defects, if such loan seller defaults on its obligation to do so. We
cannot provide assurances that the loan sellers will have the financial ability
to effect such repurchases or substitutions. In addition, if the breach or
defect relates to a mortgage loan jointly sold by Commerzbank AG, New York
Branch, and Goldman Sachs Mortgage Company, each of Commerzbank AG, New York
Branch, and Goldman Sachs Mortgage Company will be obligated to take those
remedial actions only with respect to its interest in the mortgage loan jointly
sold by it. Therefore, it is possible that under certain circumstances only one
of Commerzbank AG, New York Branch, and Goldman Sachs Mortgage Company will
repurchase or otherwise comply with any repurchase obligations. Any mortgage
loan that is not repurchased or substituted and that is not a "qualified
mortgage" for a REMIC may cause the trust fund to fail to qualify as one or more
REMICs or cause the trust fund to incur a tax. See "Description of the Mortgage
Pool--Representations and Warranties;" and "--Cures and Repurchases" in this
prospectus supplement for a summary of certain representations and warranties.
SUBORDINATION OF SUBORDINATE OFFERED CERTIFICATES
As described in this prospectus supplement, unless your certificates are
Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6 or Class A-1A
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 to the Class X certificates.
See "Description of the Offered Certificates--Subordination" in this
prospectus supplement.
RISKS OF LIMITED LIQUIDITY AND MARKET VALUE
Your certificates will not be listed on any national securities exchange or
traded on any automated quotation systems of any registered securities
association, and there is currently no secondary market for
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your certificates. While the underwriters currently intend to make a secondary
market in the offered certificates, they are not obligated to do so.
Additionally, one or more purchasers may purchase substantial portions of one or
more classes of offered certificates. Accordingly, you may not have an active or
liquid secondary market for your certificates. Lack of liquidity could result in
a substantial decrease in the market value of your certificates. The market
value of your certificates also may be affected by many other factors, including
the then-prevailing interest rates and market perceptions of risks associated
with commercial mortgage lending.
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. See "Description of
the Offered Certificates--Book-Entry Registration" in this prospectus supplement
and "Description of the Offered Certificates--General" in the prospectus for a
discussion of important considerations relating to not being a certificateholder
of record.
OTHER RISKS
See "Risk Factors" in the prospectus for a description of certain other
risks and special considerations that may be applicable to your certificates.
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DESCRIPTION OF THE MORTGAGE POOL
GENERAL
The assets of the trust created pursuant to the Pooling Agreement (the
"Trust Fund") will consist of a pool of fixed rate mortgage loans (the "Mortgage
Loans" or the "Mortgage Pool") with an aggregate principal balance as of August
1, 2004 (the "Cut-Off Date"), after deducting payments of principal due on such
date, of approximately $2,604,402,687 (with respect to each Mortgage Loan, the
"Cut-Off Date Balance" and, in the aggregate, the "Initial Pool Balance"). Each
Mortgage Loan is evidenced by a promissory note (a "Mortgage Note") and secured
by a mortgage, deed of trust or other similar security instrument (a "Mortgage")
creating a first lien on a fee simple or leasehold interest in a retail, office,
multifamily, industrial, hotel or self-storage property (each, a "Mortgaged
Property"). The Mortgage Loans are generally non-recourse loans. In the event of
a borrower default on a non-recourse mortgage loan, recourse may be had only
against the specific mortgaged property and the other limited assets securing
the mortgage loan, and not against the borrower's other assets.
The pool of Mortgage Loans will be deemed to consist of two loan groups
("Loan Group 1" and "Loan Group 2" and collectively, the "Loan Groups"). Loan
Group 1 will consist of 119 Mortgage Loans, representing approximately 93.2% of
the Initial Pool Balance (the "Initial Loan Group 1 Balance"). Loan Group 2 will
consist of 22 Mortgage Loans (representing 100% of the aggregate principal
balance of the Mortgage Loans secured by multifamily properties), representing
approximately 6.8% of the Initial Pool Balance (the "Initial Loan Group 2
Balance"). Annex C to this prospectus supplement sets forth the loan group
designation with respect to each Mortgage Loan.
The descriptions in this prospectus supplement of the Mortgage Loans and
the Mortgaged Properties are based upon the Mortgage Pool as it is expected to
be constituted as of the close of business on the Closing Date, assuming that
(i) all scheduled principal and interest payments due on or before the Cut-Off
Date will be made and (ii) no defaults, delinquencies or prepayments on any
Mortgage Loan on or prior to the Cut-Off Date. The sum of the numerical data in
any column in a table may not equal the indicated total due to rounding. Unless
otherwise indicated, all figures presented in this prospectus supplement are
calculated as described under "Description of the Mortgage Pool--Additional
Information" in this prospectus supplement and all percentages represent the
indicated percentage of the Initial Pool Balance, the Initial Loan Group 1
Balance or the Initial Loan Group 2 Balance, as applicable.
All information presented in this prospectus supplement with respect to a
Mortgage Loan with a Pari Passu Companion Loan or Subordinate Companion Loan is
calculated without regard to the related Pari Passu Companion Loan or
Subordinate Companion Loan, unless otherwise indicated. The loan amount used in
this prospectus supplement for purposes of calculating the LTV's and DSCR's for
each of the Mortgage Loans with a Pari Passu Companion Loan is the aggregate
principal balance of the Mortgage Loan and the related Pari Passu Companion
Loan.
For all numerical information in this prospectus supplement, the Cut-Off
Date Balance of the Borders Retail Center Loan (loan no. 85) on Annex C to this
prospectus supplement) includes $1,990,975 to be deposited by GCFP into a
pre-funding account related to a future advance expected to be made to the
borrower on or about August 13, 2004.
Of the Mortgage Loans to be included in the Trust Fund:
o Fifty-five (55) Mortgage Loans (the "Archon Loans"), representing
approximately 42.8% of the Initial Pool Balance, were originated by
Archon Financial, L.P. ("Archon") (including the Grand Canal Shoppes at
the Venetian of which was subsequently sold to GSMC; GSMC then sold a
portion to Commerzbank);
o Sixty (60) Mortgage Loans (the "Greenwich Loans"), representing
approximately 45.5% of the Initial Pool Balance, was originated by
Greenwich Capital Financial Products, Inc. ("GCFP");
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o Eighteen (18) Mortgage Loans (the "WAMU Loans"), representing
approximately 5.6% of the Initial Pool Balance, were originated by
Washington Mutual Bank, FA ("WAMU");
o Seven (7) Mortgage Loans (the "Bank of America Loans"), representing
approximately 1.8% of the Initial Pool Balance, were originated by Bank
of America, N.A. ("BOA"); and
o One (1) Mortgage Loan (the "Commerzbank/Archon Loan"), representing
approximately 4.4% of the Initial Pool Balance, was originated jointly
by Archon and Commerzbank AG, New York Branch ("Commerzbank").
The originators of the Mortgage Loans are referred to in this prospectus
supplement as the "Originators". The Archon Loans were originated for sale to
Goldman Sachs Mortgage Company ("GSMC"). GSMC will acquire the Archon Loans, the
WAMU Loans and the Bank of America Loans prior to the Closing Date. GS Mortgage
Securities Corporation II (the "Depositor") will acquire the Mortgage Loans from
GSMC, GCFP and Commerzbank (collectively, the "Loan Sellers") on or about August
12, 2004 (the "Closing Date"). The Depositor will cause the Mortgage Loans in
the Mortgage Pool to be assigned to the Trustee pursuant to the Pooling
Agreement.
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
GENERAL MORTGAGE LOAN CHARACTERISTICS
(AS OF THE CUT-OFF DATE, UNLESS OTHERWISE INDICATED)
ALL MORTGAGE LOAN GROUP LOAN GROUP
LOANS 1 2
----- ---------- ----------
Initial Cut-Off Date Balance(1) .......................... $2,604,402,687 $2,426,733,156 $177,669,531
Number of Mortgage Loans ................................. 141 119 22
Number of Mortgaged Properties ........................... 141 119 22
Average Cut-Off Date Mortgage Loan Balance ............... 18,470,941 20,392,716 8,075,888
Weighted Average Mortgage Rate ........................... 5.624% 5.646% 5.326%
Range of Mortgage Rates .................................. 4.280% to 7.100% 4.400% to 7.100% 4.280% to 5.910%
Weighted Average Cut-Off Date Remaining Term to
Maturity (months) ..................................... 107.0 108.1 91.9
Range of Cut-Off Date Remaining Terms to
Maturity (months) ..................................... 43 to 180 43 to 149 57 to 180
Weighted Average Cut-Off Date DSCR(2) .................... 1.57x 157x 1.48x
Range of Cut-Off Date DSCRs(2) ........................... 1.17x to 3.49x 1.17x to 3.49x 1.22x to 2.27x
Weighted Average Cut-Off Date LTV(3) ..................... 68.30% 68.12% 70.82%
Range of Cut-Off Date LTVs(3) ............................ 35.70% to 82.91% 35.70% to 82.91% 40.27% to 82.66%
Weighted Average LTV at Maturity(4) ...................... 60.22% 60.12% 61.61%
Balloon Mortgage Loans ................................... 99.4% 100% 91.6%
Defeasance Loans ......................................... 95.2% 94.9% 100%
- ------------------
(1) Subject to a permitted variance of plus or minus 5%.
(2) "DSCR" for any Mortgage Loan is equal to the Net Cash Flow from the related
Mortgaged Property divided by the annual debt service for such Mortgage
Loan. The annual debt service used for purposes of calculating the DSCR for
each of the Whole Loans with a Pari Passu Companion Loan is the aggregate
annual debt service of the Mortgage Loan and the related Pari Passu
Companion Loan. Additional adjustments for the cross-collateralized
mortgage loan group and the Mortgage Loans with earnout provisions are
described on Annex A to this prospectus supplement.
(3) "LTV" or "Loan-to-Value Ratio" means, with respect to any Mortgage Loan,
the principal balance of such Mortgage Loan as of the Cut-Off Date divided
by the appraised value of the Mortgaged Property or Properties securing
such Mortgage Loan as of the date of the original appraisal (or, in certain
cases, as updated in contemplation of this transaction). The principal
balance used for purposes of calculating the LTV for each of the Whole
Loans with a Pari Passu Companion Loan is the aggregate principal balance
of the Mortgage Loans and the related Pari Passu Companion Loan. Additional
adjustments for the cross-collateralized mortgage loan group
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and the Mortgage Loans with earnout provisions or other provisions are
described on Annex A to this prospectus supplement.
(4) "LTV at Maturity" for any Mortgage Loan is calculated in the same manner as
LTV as of the Cut-Off Date, except that the Cut-Off Date Balance used to
calculate the LTV as of the Cut-Off Date has been adjusted to give effect
to the amortization of the applicable Mortgage Loan up to its maturity
date. Such calculation thus assumes that the appraised value of the
Mortgaged Property or Properties securing a Mortgage Loan on the maturity
date is the same as the appraised value as of the date of the original
appraisal. Additional adjustments for the cross-collateralized mortgage
loan group and the Mortgage Loans with earnout provisions or other
provisions are described on Annex A to this prospectus supplement. There
can be no assurance that the value of any particular Mortgaged Property is
now, will be at maturity equal to or greater than its original appraised
value.
The terms of certain Mortgage Loans permit the borrowers to post letters of
credit and/or surety bonds for the benefit of the mortgagee under the Mortgage
Loans, which may constitute a contingent reimbursement obligation of the related
borrower or an affiliate. The issuing bank or surety will not typically agree to
subordination and standstill protection benefiting the mortgagee.
Substantially all of the Mortgage Loans permit the related borrower to
incur limited indebtedness in the ordinary course of business that is not
secured by the related Mortgaged Property. Moreover, in general, any borrower
that does not meet single-purpose entity criteria may not be restricted from
incurring unsecured debt.
Additionally, although the Mortgage Loans generally place certain
restrictions on incurring mezzanine debt by the pledging of general partnership
and managing member equity interests in a borrower, such as specific percentage
or control limitations, the terms of the mortgages generally permit, subject to
certain limitations, the pledge of less than a controlling portion of the
limited partnership or non-managing membership equity interests in a borrower.
However, certain of the Mortgage Loans do not restrict the pledging of ownership
interests in the borrower, but do restrict the transfer of ownership interests
in a borrower by imposing limitations on transfer of control or a specific
percentage of ownership interests. In addition, in general, Mortgage Loans with
a borrower that does not meet single-purpose entity criteria may not be
restricted in any way from incurring mezzanine debt. As of the Cut-Off Date,
each Loan Seller has informed us that it is aware of the following mezzanine
indebtedness with respect to the Mortgage Loans it is selling to the Depositor:
MEZZANINE DEBT
(AS OF THE CUT-OFF DATE, UNLESS OTHERWISE INDICATED)
- ----------------------------------------------------------------------------------------------------------------------
AGGREGATE INITIAL PRINCIPAL
CUT-OFF DATE % OF INITIAL AMOUNT OF
LOAN NO. LOAN GROUP MORTGAGED PROPERTY NAME BALANCE POOL BALANCE MEZZANINE DEBT
- ----------------------------------------------------------------------------------------------------------------------
11............ 1 237 Park Avenue $67,333,333 2.6% $30,000,000
- ----------------------------------------------------------------------------------------------------------------------
12............ 1 Waterfront Plaza $61,000,000 2.3% $ 4,000,000
- ----------------------------------------------------------------------------------------------------------------------
40............ 1 College Greens Shopping Center(1) $15,250,000 0.6% $ 1,500,000
- ----------------------------------------------------------------------------------------------------------------------
44............ 1 Shops at Central Park $13,905,513 0.5% $ 2,080,000
- ----------------------------------------------------------------------------------------------------------------------
60............ 1 Puritan Mill(1) $9,000,000 0.3% $ 1,800,000
- ----------------------------------------------------------------------------------------------------------------------
(1) The related mezzanine loan is an obligation of the related borrower under
the related mortgage loan, which obligation is secured by pledges of equity
interest in such borrower.
The applicable loan sellers have informed us that certain Mortgage Loans
specifically permit future mezzanine debt as follows:
o With respect to one (1) Mortgage Loan, identified as loan no. 1 on Annex
C to this prospectus supplement, representing approximately 7.3% of
Initial Pool Balance, the related loan documents permit, among other
things, (a) the pledge of indirect interests in the borrower to secure
certain inter-affiliate debt and (b) the pledge of direct interests in
borrower, or issuance by borrower of preferred equity, or debt granting
similar rights as preferred equity, so long as confirmation is
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received from each Rating Agency that the debt would not result in the
downgrade, withdrawal or qualification of the then-current ratings on
the Certificates.
o With respect to one (1) Mortgage Loan, identified as loan no. 9 on Annex
C to this prospectus supplement, representing approximately 2.7% of the
Initial Pool Balance, the direct and indirect equity owners of the
borrower are permitted to incur mezzanine debt, subject to the
satisfaction of certain conditions contained in the related loan
documents including that the combined (1) LTV is not more than 65% and
(2) DSCR is at least 1.35x.
o With respect to one (1) Mortgage Loan, identified as loan no. 16 on
Annex C to this prospectus supplement, representing approximately 1.7%
of the Initial Pool Balance, equity owners of the borrower may incur
mezzanine debt, subject to the satisfaction of certain conditions
contained in the related loan documents, including that the (1) combined
LTV is not more than 80% and (2) combined DSCR does not exceed 1.10x.
o With respect to one (1) Mortgage Loan, identified as loan no. 26 on
Annex C to this prospectus supplement, representing approximately 0.9%
of the Initial Pool Balance, upon a sale of the Mortgaged Property and
assumption of the Mortgage Loan, an affiliate of the borrower may
provide mezzanine debt to the transferee borrower subject to the
satisfaction of certain conditions, including that: (1) at the time of
the transfer and assumption, the DSCR is at least 0.95x and (2) the
combined LTV is not in excess of 80%.
o With respect to one (1) Mortgage Loan, identified as loan no. 47 on
Annex C to this prospectus supplement, representing approximately 0.4%
of the Initial Pool Balance, in connection with the transfer of the
mortgaged property to a transferee borrower, the direct or indirect
equity owners of the transferee borrower may incur mezzanine debt,
subject to the satisfaction of certain conditions contained in the
related loan documents including that (1) at the time of the transfer
and assumption, the DSCR is at least 0.94x and (2) the combined LTV is
not more than 75%.
o Seven (7) of the Mortgage Loans, identified as loan nos. 34, 52, 77,
105, 115, 118 and 136 on Annex C to this prospectus supplement,
representing approximately 1.8% of the Initial Pool Balance, permit
mezzanine financing in the future subject to, among other things, lender
approval, the maximum loan-to-value ratio of the mortgage loan and
mezzanine indebtedness is 70% and the debt-service coverage ratio of the
mortgage loan and mezzanine indebtedness is at least 1.15x.
o With respect to one (1) Mortgage Loan, identified as loan no. 132 on
Annex C to this prospectus supplement, representing approximately 0.1%
of the Initial Pool Balance, upon a sale of the Mortgaged Property and
assumption of the Mortgage Loan, the borrower may provide mezzanine debt
to the transferee borrower, subject to the satisfaction of certain
conditions, including that the combined LTV does not exceed 80%.
In the case of each of the Mortgage Loans with existing mezzanine debt, the
holder of the mezzanine loan has the right to cure certain defaults occurring on
the Mortgage Loan and the right to purchase the Mortgage Loan from the trust if
certain defaults on the Mortgage Loan occur. The purchase price required to be
paid in connection with such a purchase is generally equal to the outstanding
principal balance of the Mortgage Loan, together with accrued and unpaid
interest on, and all unpaid servicing expenses and advances relating to, the
mortgage loan. The specific rights of the related mezzanine lender with respect
to any future mezzanine debt will be specified in the related intercreditor
agreement and may include rights substantially similar to the cure and
repurchase rights described in the preceding sentence.
As of the Cut-Off Date, each Loan Seller has informed us that it is aware
of the following subordinate indebtedness and permitted subordinate indebtedness
with respect to borrowers under their respective Mortgage Loans:
o With respect to one (1) Mortgage Loan, identified as loan no. 7 on Annex
C to this prospectus supplement, representing approximately 3.3% of the
Initial Pool Balance, the consideration paid
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by related borrower in connection with its 2002 acquisition of the
related Mortgaged Property included an unsecured debt obligation
evidenced by a promissory note in favor of an entity who is now a
constituent member of related borrower. This unsecured debt (i) has an
aggregate outstanding principal balance of $8,191,627 as of origination,
(ii) by its terms does not accrue any interest earlier than August 14,
2010, and thereafter accrues simple interest at the rate of 8% per
annum, (iii) by its terms provides for payments on such note prior to
maturity if and only to the extent that net cash flow generated from the
related Mortgaged Property is available, and (iv) by its terms does not
require the repayment of any of the outstanding principal balance
earlier than February 14, 2032.
o With respect to one (1) Mortgage Loan, identified as loan no. 77 on
Annex C to this prospectus supplement, representing approximately 0.3%
of the Initial Pool Balance, the related borrower or the fee owner of
the related Mortgaged Property is permitted to obtain subordinate
financing solely to pay for the expansion of a certain parcel of the
premises, provided that the maximum aggregate loan-to-value ratio of the
mortgage loan and subordinate loan is 85%, the minimum actual combined
debt service coverage ratio of the mortgage loan and subordinate loan is
at least 1.10x and the amount of the subordinate financing does not
exceed the actual cost of the expansion.
o With respect to one (1) Mortgage Loan, identified as loan no. 19 on
Annex C to this prospectus supplement, representing approximately 1.3%
of the Initial Pool Balance, the related Mortgaged Property is part of
land that was developed with the assistance of the City of Santa Clara.
The related Mortgaged Property is subject to the lien of certain bonds
issued by the city of Santa Clara to raise money for the development.
The related borrower is currently responsible for monthly payments equal
to $32,805. The average annual payment over the remaining term of the
bond is $367,134, and the bond is expected to fully amortize on
September 2, 2011.
o With respect to one (1) Mortgage Loan, identified as loan no. 40 on
Annex C to this prospectus supplement, representing approximately 0.6%
of the Initial Pool Balance, in connection with the construction and
expansion of portions of the shopping center, the borrower incurred debt
in the amount of $1,500,000 from the seller of the related Mortgaged
Property, secured by pledges of equity interests in the borrower.
o With respect to one (1) Mortgage Loan, identified as loan no. 60 on
Annex C to this prospectus supplement, representing approximately 0.3%
of the Initial Pool Balance, the borrower incurred debt in the amount of
$1,800,000 secured by a pledge of 100% of the related managing member's
interest in the borrower.
Furthermore, the respective Mortgaged Properties that secure each Whole
Loan also secure the related Pari Passu Companion Loans and/or the related
Subordinate Companion Loan on a pari passu and/or subordinate basis, as
described in "--The Whole Loans" below.
Certain risks relating to additional debt are described in "Risk
Factors--Other Financings" in this prospectus supplement.
DUE DATES; MORTGAGE RATES; CALCULATIONS OF INTEREST. All of the Mortgage
Loans have payment dates upon which interest and/or principal payments are due
under the related Mortgage Note (each such date, a "Due Date") that occur on the
first day of each month, except with respect to 2 Mortgage Loans, representing
approximately 5.7% of the Initial Pool Balance, which require payments to be
made on the 6th day of each month with no grace period. No Mortgage Loans have a
grace period in excess of 5 days, except with respect to 11 mortgage loans which
have a 10 day grace period. All of the Mortgage Loans are secured by first liens
on fee simple and/or leasehold interests in the related Mortgaged Properties,
subject to the permitted exceptions reflected in the related title insurance
policy. All of the Mortgage Loans bear fixed interest rates. One hundred
thirty-nine (139) Mortgage Loans, representing approximately 99.5% of the
Initial Pool Balance, accrue interest on the basis of the actual number of days
in a month, assuming a 360-day year ("Actual/360 Basis"). The remaining 2
Mortgage Loans, representing approximately 0.5% of the Initial Pool Balance,
accrues interest on the basis of twelve
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30-day months, assuming a 360-day year. Forty-one (41) of the Mortgage Loans,
representing approximately 35.3% of the Initial Pool Balance, provide for
monthly payments of interest only over a fixed period of time after origination.
Nine (9) of the Mortgage Loans, representing approximately 7.4% of the Initial
Pool Balance provide for monthly payments of interest only until their stated
maturity dates. Ninety (90) of the Mortgage Loans, representing approximately
56.8% of the Mortgage Loans (of the Initial Pool Balance), provide for monthly
payments of principal based on amortization schedules significantly longer than
the remaining terms of such Mortgage Loans (each, a "Balloon Mortgage Loan").
These Mortgage Loans will have balloon payments due at their stated maturity
dates, unless prepaid prior thereto.
One (1) of the Mortgage Loans representing approximately 0.6% of the
Initial Pool Balance is fully amortizing.
"DUE-ON-SALE" AND "DUE-ON-ENCUMBRANCE" PROVISIONS. The Mortgage Loans
generally contain "due-on-sale" and "due-on-encumbrance" clauses, which in each
case permit the holder of the Mortgage Loan to accelerate the maturity of the
Mortgage Loan if the borrower sells or otherwise transfers or encumbers (subject
to certain exceptions set forth in the loan documents) the related Mortgaged
Property without the consent of the mortgagee. Certain of the Mortgage Loans
provide that such transfers are permitted if certain conditions are satisfied,
which may include one or more of the following:
(i) no event of default has occurred,
(ii) the proposed transferee is creditworthy and has sufficient
experience in the ownership and management of properties similar to the
Mortgaged Property,
(iii)the Rating Agencies have confirmed in writing that such transfer
will not result in a qualification, downgrade or withdrawal of the then
current rating of the Certificates,
(iv) the transferee has executed and delivered an assumption agreement
evidencing its agreement to abide by the terms of the Mortgage Loan
together with legal opinions and title insurance endorsements, and
(v) the assumption fee has been received (which assumption fee will be
paid to the Master Servicer and the Special Servicer, as described in this
prospectus supplement and as provided in the Pooling Agreement, and will
not be paid to the Certificateholders); however, certain of the Mortgage
Loans allow the borrower to sell or otherwise transfer the related
Mortgaged Property a limited number of times without paying an assumption
fee.
In addition, certain of the Mortgage Loans permit certain limited transfers such
as transfers to affiliates, transfers for estate planning purposes, transfers
that result from changes in ownership interests in the borrower and transfers of
non-controlling interests so long as no change of control results.
The Special Servicer will determine, in a manner consistent with the Servicing
Standards, whether to exercise any right the mortgagee may have under any such
clause to accelerate payment of the related Mortgage Loan upon, or to withhold
its consent to, any transfer or further encumbrance of the related Mortgaged
Property, subject to the approval of the Controlling Class Representative. See
"Certain Legal Aspects of the Mortgage Loans--Enforceability of Certain
Provisions--Due-on-Sale Provisions" in the prospectus. The Depositor makes no
representation as to the enforceability of any due-on-sale or due-on-encumbrance
provision in any Mortgage Loan.
Additionally, certain of the Mortgage Loans may permit the transfer of
interests subject to a specified percentage limit, generally 50% or less, and
the current direct or indirect owners retaining control. See "Ten Largest
Mortgage Loans" on Annex B to this prospectus supplement for more information
with respect to the transfer provisions for the largest 10 Mortgage Loans.
DEFEASANCE; COLLATERAL SUBSTITUTION. The terms of all but 17 of the
Mortgage Loans, including 1 Mortgage Loan, representing approximately 0.2% of
the Initial Pool Balance, which also permits
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prepayment with defeasance or penalties as described below (the "Defeasance
Loans"), representing approximately 95.2% of the Initial Pool Balance, permit
the applicable borrower at any time (provided no event of default exists) after
a specified period (the "Defeasance Lock-Out Period") to obtain a release of a
Mortgaged Property from the lien of the related Mortgage (a "Defeasance
Option"). With respect to all of the Mortgage Loans, the Defeasance Lock-Out
Period ends at least two years after the Closing Date.
The Defeasance Option is also generally conditioned on, among other things,
(a) the borrower providing the mortgagee with at least 30 days prior written
notice of the date of such defeasance and (b) the borrower (A) paying on any Due
Date (the "Release Date") (i) all interest accrued and unpaid on the principal
balance of the Mortgage Note to the Release Date, (ii) all other sums, excluding
scheduled interest or principal payments, due under the Mortgage Loan and all
other loan documents executed in connection with the Defeasance Option, (iii) an
amount (the "Defeasance Deposit") that will be sufficient to (x) purchase
non-callable obligations backed by the full faith and credit of the United
States of America or, in certain cases, other U.S. government securities
providing payments (1) on or prior to, but as close as possible to, all
successive scheduled payment dates from the Release Date to the related maturity
date or the first date on which voluntary prepayments of the Mortgage Loan is
permitted, and (2) in amounts equal to the scheduled payments due on such dates
under the Mortgage Loan, or the defeased portion of the Mortgage Loan in the
case of a partial defeasance, and (y) pay any costs and expenses incurred in
connection with the purchase of such U.S. government securities and (B)
delivering a security agreement granting the Trust Fund a first priority lien on
the Defeasance Deposit and, in certain cases, the U.S. government obligations
purchased with the Defeasance Deposit and an opinion of counsel to such effect.
One (1) of the Mortgage Loans, representing approximately 0.2% of the
Initial Pool Balance, provides for defeasance as described above and also
permits the borrower to prepay the related Mortgage Loan commencing 35 months
after origination (April 3, 2007). In connection with such prepayment, the
Mortgage Loan requires payment in full (but not in part) of the outstanding
principal balance of the Mortgage Loan plus an amount equal to the lesser of a
yield maintenance charge or prepayment premium equal to a percentage of the
prepayment in connection with a prepayment. The specified percentage is
initially 5% and decreases annually by 1% for 3 years and is 1% thereafter.
Pursuant to the terms of the Pooling Agreement, the Master Servicer will be
responsible for purchasing the government securities on behalf of the borrower
at the borrower's expense to the extent consistent with the related loan
documents. Pursuant to the terms of the Pooling Agreement, any amount in excess
of the amount necessary to purchase such government securities will be returned
to the borrower. Simultaneously with such actions, the related Mortgaged
Property will be released from the lien of the Mortgage Loan and the pledged
government securities (together with any Mortgaged Property not released, in the
case of a partial defeasance) will be substituted as the collateral securing the
Mortgage Loan.
In general, if consistent with the related loan documents, a successor
borrower established or designated by the Master Servicer will assume the
obligations of the related borrower exercising a Defeasance Option and the
borrower will be relieved of its obligations under the Mortgage Loan. If a
Mortgage Loan is partially defeased, if consistent with the related loan
documents, generally the related promissory note will be split and only the
defeased portion of the borrower's obligations will be transferred to the
successor borrower.
PARTIAL RELEASES. With respect to 1 Mortgage Loan, identified as loan no.
14 on Annex C to this prospectus supplement, representing approximately 1.8% of
the Initial Pool Balance, one of the tenants has the option to purchase its
parcel pursuant to its lease provisions. If the purchase option is exercised,
the related mortgage documents provide for the release of that separate parcel
upon the payment of $15,750,000 plus a prepayment penalty equal to the greater
of yield maintenance or 1%. Otherwise, any release of collateral is subject to
standard defeasance provisions.
With respect to one (1) Mortgage Loan, identified as loan no. 10 on Annex C
to this prospectus supplement, representing approximately 2.6% of the Initial
Pool Balance, the borrower may obtain a release of the parcel containing the
building currently leased to one of the anchor tenants (Parisian) from
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the lien of the mortgage upon the delivery of $3,500,000 in eligible defeasance
collateral and subject to the satisfaction of certain conditions set forth in
the loan documents, in connection with the repositioning of the Parisian
premises with a replacement anchor, a combination of junior anchors, or one or
more junior anchors and additional in-line space or an in-line development that
satisfies the conditions of the loan documents. In addition, the borrower has an
option to purchase an anchor store parcel (not collateral for the Mortgage Loan)
in the event this anchor discontinues a retail department store business at this
location after its operating covenant terminates in August 2006. In the event
the borrower purchases this parcel, it will become additional collateral for the
Mortgage Loan; however, in the event the borrower were to sell this parcel to an
affiliate of the borrower, a substitute anchor, or a third party that would
lease the space to a substitute anchor, the borrower will be permitted to
release this parcel from the lien of the mortgage without payment of any release
price. See "Ten Largest Mortgage Loans--Barnes Crossing Mall Loan" in Annex B to
this prospectus supplement.
With respect one (1) Mortgage Loan, identified as loan no. 11 on Annex C to
this prospectus supplement, representing approximately 2.6% of the Initial Pool
Balance, the borrower may obtain a release of the air rights above the subject
property, along with various easements for construction, support and access,
from the lien of the mortgage in connection with the future development of a
residential tower above the subject property, subject to the satisfaction of
certain conditions, including, among other things: (i) no event of default, (ii)
conveyance of the air rights property to a third-party entity, (iii) lender's
approval of the plans for the construction, design and sales of the air rights
property, (iv) the creation of a separate legally subdivided parcel and a
separate tax parcel for the air rights property, and (v) confirmation from the
rating agencies that the release will not result in a downgrade or withdrawal of
the ratings for the certificates.
With respect one (1) Mortgage Loan, identified as loan no. 17 on Annex C to
this prospectus supplement, representing approximately 1.5% of the Initial Pool
Balance, one of the anchor tenants has the right under its lease to purchase the
improvements and related parcel, subject to certain conditions specified in the
related lease, including payment of a purchase price. In the event the tenant
exercises its purchase option, the loan documents permit the lender to release
the parcel from the lien of the Mortgage, provided the borrower satisfies
certain release conditions specified in the loan documents, including delivery
of the tenant purchase option price to the lender. The loan documents provide
that the purchase option price paid by the tenant will be held by the lender as
additional collateral for the Mortgage Loan. In the event the partial release
occurs after the date that is 2 years after the securitization closing date, the
borrower will be required (or if such release occurs before such date, the
borrower will be required on or shortly after such date) to use the tenant
purchase option price to purchase defeasance eligible collateral and satisfy the
conditions to partial defeasance set forth in the related loan documents.
With respect one (1) Mortgage Loan, identified as loan no. 40 on Annex C to
this prospectus supplement, representing approximately 0.6% of the Initial Pool
Balance, in the event the borrower fails to complete construction of certain
in-line space and an outparcel on or before August 1, 2006, the borrower is
required to (i) cause the sale of such in-line space and outparcel within 180
days following August 1, 2006 and (ii) use the net proceeds received in
connection with the sale to purchase defeasance eligible collateral and
partially defease the Mortgage Loan. Upon satisfaction of the release and
defeasance conditions specified in the loan documents, the borrower will obtain
a release of such parcel from the lien of the related Mortgage.
With respect to two (2) Mortgage Loans, identified as loan no. 88 and loan
no. 130 on Annex C to this prospectus supplement, which Mortgage Loans are
cross-collateralized and cross-defaulted and represent, in the aggregate,
approximately 0.3% of the Initial Pool Balance, either Mortgaged Property may be
released from the lien of the related Mortgage (and the cross terminated) upon
the sale of the Mortgaged Property to a third party or a refinancing of such
Mortgage Loan, provided, among other things, that (i) the related borrower
deliver to lender defeasance collateral equal to the greater of (A) 120% of the
then current outstanding principal balance of the related Mortgage Loan and (B)
the net proceeds received by such borrower in connection with a sale or
refinance of the property, (ii) the DSCR on the remaining Mortgaged Property is
at least equal to the greater of (A) the DSCR on the Mortgage
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Loan origination date and (B) the DSCR for the 12-month period immediately
preceding the release. In the event that each Mortgaged Property has maintained
at least 90% occupancy for the four calendar quarters preceding the sale or
refinance, the release price in connection with a defeasance will be equal to
100% of the then current outstanding principal balance of the related Mortgage
Loan, or, in the event of a sale, the Mortgage Loan on the Mortgaged Property
being sold may be assumed by the purchaser, subject to standard lender
approvals, with the cross-collateralization and cross-defaulted provisions
terminated.
In addition, certain Mortgage Loans provide for the release of outparcels
or other portion of the Mortgaged Property which were given no value or minimal
value in the underwriting process.
See "Risk Factors--Risks Relating to Enforceability of Prepayment Premiums
or Defeasance Periods" in this prospectus supplement.
ESCROWS. One hundred-seven (107) of the Mortgage Loans, representing
approximately 67.0% of the Initial Pool Balance, provide for monthly or upfront
escrows (or the related borrower has posted a letter of credit) to cover
property taxes on the Mortgaged Properties.
Ninety-seven (97) of the Mortgage Loans, representing approximately 65.2%
of the Initial Pool Balance, provide for monthly or upfront escrows (or the
related borrower has posted a letter of credit) to cover insurance premiums on
the Mortgaged Properties.
One hundred (100) of the Mortgage Loans, representing approximately 59.3%
of the Initial Pool Balance, provide for monthly or upfront escrows (or the
related borrower has posted a letter of credit) to cover ongoing replacements
and capital repairs.
Sixty-four (64) of the Mortgage Loans, representing approximately 54.1% of
the Initial Pool Balance, that are secured by office, retail and industrial
properties, provide for up-front or monthly escrows (or the related borrower has
posted a letter of credit) for the full term or a portion of the term of the
related Mortgage Loan to cover anticipated re-leasing costs, including tenant
improvements and leasing commissions. Such escrows are typically considered for
office, retail and industrial properties only.
One (1) Mortgage Loan, identified as loan no. 40 on Annex C to this
prospectus supplement, representing approximately 0.6% of the Initial Pool
Balance, which has a principal balance as of the cut-off date of $15,250,000,
has an upfront reserve of $2,500,000, which amount is being held by lender in
connection with the construction and expansion of in-line space and an out
parcel at the shopping center. This amount will be released to the borrower upon
the satisfaction of the conditions including: (i) the expansion construction is
complete and such space is occupied with tenants in occupancy paying rent (or
with respect to the parcel, the borrowers entered into an acceptable lease
agreement regarding such parcel), and (ii) the mortgaged property achieves a
1.15x DSCR on fully released proceeds. In the event the escrow is not released
to the borrower on or before August 1, 2006, the reserve amount will be used to
purchase treasuries which will be pledged to lender and the proceeds thereof
used to make monthly partial payments under the mortgage loan on each payment
date until the date on which the loan is paid in full.
One (1) Mortgage Loan, identified as loan no. 85 on Annex C to this
prospectus supplement (the "Borders Retail Center Loan"), representing
approximately 0.2% of the Initial Pool Balance, has a principal balance as of
the cut-off date of $6,170,549, which balance includes an additional future
advance to be made to the borrower in the amount of $1,990,975 on or about
August 13, 2004. On the Closing Date, GCFP will deposit into a pre-funding
account established with the Master Servicer in the name of the Trustee for the
benefit of the Certificateholders, the sum of (i) the release amount, for
release to the borrower on the date of the advance, and (ii) an amount equal to
the amount of interest that would have been paid by the borrower on the release
amount from the Cut-Off Date to the date of the advance to be included in
Available Funds for the first Distribution Date. All numerical information
regarding the Borders Retail Center Loan as presented and used in calculations
in this prospectus supplement includes the amount of the future advance.
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One (1) Mortgage Loan, identified as loan no. 12 on Annex C to this
prospectus supplement, representing approximately 2.3% of the Initial Pool
Balance, the environmental consultant recommended mold remediation at the
Mortgaged Property and the borrower entered into a fixed price contract with a
contractor in the amount of $548,950, which amount was escrowed by the borrower.
This amount will not be released until the lender is in receipt of satisfactory
evidence that the remediation has been completed to the satisfaction of the
contractor and in compliance with applicable laws and that no further corrective
action is recommended or required.
One (1) Mortgage Loan, identified as loan no. 26 on Annex C to this
prospectus supplement, representing approximately 0.9% of the Initial Pool
Balance, has an $800,000 environmental reserve in connection with the potential
cleanup of groundwater contamination caused by a dry cleaning business at the
Mortgaged Property. Although the environmental reports found contamination
levels below the levels requiring remedial action by the San Francisco Bay
Regional Water Quality Control Board, additional monitoring and testing was
required. The environmental consultant estimated that such costs would not be
more than $70,000 to $140,000. The consultant indicated that should the
additional testing reveal significantly higher levels than initially found and
should any other governmental authority require a full remediation, such costs
could be as high as $700,000.
ADDITIONAL MORTGAGE LOAN INFORMATION. Each of the tables presented in Annex
A sets forth selected characteristics of the pool of Mortgage Loans as of the
Cut-Off Date, if applicable. For a detailed presentation of certain
characteristics of the Mortgage Loans and the Mortgaged Properties on an
individual basis, see Annex C to this prospectus supplement. For a brief summary
of the 10 largest Mortgage Loans in the pool of Mortgage Loans, see Annex B to
this prospectus supplement.
THE WHOLE LOANS
GENERAL. Ten (10) of the Mortgage Loans (each a "Whole Loan), representing
approximately 33.1% of the Initial Pool Balance, are part of a split loan
structure, where the related Mortgage Loan and one or more other companion loans
that are pari passu in right of payment with the related Mortgage Loan (each a
"Pari Passu Companion Loan") or are subordinate in right of payment with the
related Mortgage Loan (each a "Subordinate Companion Loan", and together with
the Pari Passu Companion Loans, the "Companion Loans") are secured by the same
mortgage instrument on the related Mortgaged Property. In each case, the
Mortgage Loan and its related Pari Passu Companion Loan(s) have the same
interest rate, maturity date and amortization term.
Three (3) of the Whole Loans, identified as loan nos. 4, 8 and 11 on Annex
C to this prospectus supplement (the "Non-Serviced Loans"), with a principal
balance as of the cut-off date of $130,000,000, $80,000,000 and $67,333,333,
respectively, and representing approximately 5.0%, 3.1% and 2.6%, respectively,
of the Initial Pool Balance as applicable, are being serviced in accordance with
pooling and servicing agreements separate from the Pooling Agreement under which
your Certificates are issued as described below (each a "Pari Passu PSA"), by
the master servicer and special servicer that are parties to the Pari Passu PSA,
and subject to the servicing standards provided for in the related separate Pari
Passu PSA.
Seven (7) of the Whole Loans, identified as loan nos. 1, 2, 3, 12, 19, 53
and 87 on Annex C to this prospectus supplement, the Grand Canal Shoppes at the
Venetian Whole Loan, the Daily New Building Whole Loan, the 1441 Broadway Whole
Loan, the Waterfront Plaza Whole Loan, the Mercado Santa Clara Whole Loan, 700
Westpark Office Building Whole Loan and the Hazel Gardens Apartments Whole Loan
(the "Serviced Whole Loans"), with a principal balance as of the cut-off date of
$189,548,779, $154,000,000, $132,647,486, $61,000,000, $32,800,000, $9,800,000
and $5,950,000, respectively and representing approximately 7.3%, 5.9%, 5.1%,
2.3%, 1.3%, 0.4% and 0.2%, respectively, of the Initial Pool Balance, will be
serviced pursuant to the Pooling Agreement. Any Companion Loan that is part of a
Serviced Whole Loan is referred to in this prospectus supplement as a "Serviced
Companion Loan").
The table below identifies each of the pooled mortgage loans and its
corresponding Companion Loan.
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ORIGINAL AGGREGATE SUBORDINATE
PRINCIPAL LOAN % OF INITIAL COMPANION COMPANION
MORTGAGE LOAN BALANCE POOL BALANCE LOAN BALANCE BALANCE
------------- ------- ------------ ------------ -------
Grand Canal Shoppes at the Venetian......... $190,000,000 7.3% $237,000,000(1) NA
Daily News Building......................... $154,000,000 5.9% $ 56,000,000 $56,000,000(3)
1441 Broadway............................... $133,000,000 5.1% $ 6,981,447 $ 6,981,447(4)
Garden State Plaza.......................... $130,000,000 5.0% $390,000,000(1) NA
111 Eighth Avenue........................... $ 80,000,000 3.1% $420,000,000(2) $50,000,000(2)
237 Park Avenue............................. $ 67,333,333 2.6% $230,666,667(1) NA
Waterfront Plaza............................ $ 61,000,000 2.3% $ 6,600,000 $ 6,600,000(5)
Mercado Santa Clara......................... $ 32,800,000 1.3% $ 2,000,000 $ 2,000,000(6)
700 Westpark Office......................... $ 9,800,000 0.4% $ 650,000 $ 650,000(7)
Hazel Gardens Apartments.................... $ 5,950,000 0.2% $ 250,000 $ 250,000(8)
PARI PASSU CONTROLLING POOLING & INITIAL INITIAL
COMPANION LOAN SERVICING MASTER SPECIAL
MORTGAGE LOAN BALANCE AGREEMENT(9) SERVICER(10) SERVICER(11)
------------- ------- ------------ ------------ ------------
Grand Canal Shoppes at the Venetian......... $237,000,000 2004-GG2 Wells Fargo Lennar
Daily News Building......................... NA 2004-GG2 Wells Fargo Lennar
1441 Broadway............................... NA 2004-GG2 Wells Fargo Lennar
Garden State Plaza.......................... $390,000,000 LB-UBS 2004-C4 Wachovia(12) Lennar
111 Eighth Avenue........................... $370,000,000 2004-GG1 Wachovia Lennar
237 Park Avenue............................. $230,666,667 GCCFC C2 Wachovia Lennar
Waterfront Plaza............................ NA 2004-GG2 Wells Fargo Lennar
Mercado Santa Clara......................... NA 2004-GG2 Wells Fargo Lennar
700 Westpark Office......................... NA 2004-GG2 Wells Fargo Lennar
Hazel Gardens Apartments.................... NA 2004-GG2 Wells Fargo Lennar
- ------------------
(1) Comprised of multiple pari passu mortgage notes.
(2) This figure represents multiple pari passu mortgage loans in the aggregate
original principal amount of $370,000,000 and two subordinate mortgage
loans in the aggregate original principal amount of $50,000,000 that are
not part of the mortgage pool. For additional information on the
subordinate mortgage loans, see "Ten Largest Mortgage Loans--111 Eighth
Avenue" on Annex B to this prospectus supplement.
(3) For additional information on the subordinate mortgage loan, see "Ten
Largest Mortgage Loans--Daily News Building" on Annex B to this prospectus
supplement.
(4) For additional information on the subordinate mortgage loan, see "Ten
Largest Mortgage Loans--1441 Broadway" on Annex B to this prospectus
supplement.
(5) The Waterfront Plaza subordinate companion loan has an interest rate of
6.0%.
(6) The Mercado Santa Clara subordinate companion loan has an interest rate of
12.75%.
(7) The 700 Westpark Office subordinate companion loan has an interest rate of
12.75%.
(8) The Hazel Garden Apartments subordinate companion loan has an interest rate
of 13.5%.
(9) 2004-GG2 refers to the pooling and servicing agreement for this
transaction. LB-UBS 2004-C4 refers to the pooling and servicing agreement
entered into in connection with the LB-UBS Commercial Mortgage Trust Series
2004-C4. GCCFC C2 refers to the pooling and servicing agreement entered
into in connection with the Greenwich Capital Commercial Funding Corp., as
depositor, Commercial Mortgage Pass-Through Certificates, Series 2003-C2.
2004-GG1 refers to the pooling and servicing agreement entered into in
connection with the Greenwich Capital Commercial Funding Corp., as
depositor, Commercial Mortgage Pass-Through Certificates, Series 2004-GG1.
(10) Wells Fargo refers to Wells Fargo Bank, National Association and Wachovia
refers to Wachovia Bank, National Association.
(11) Lennar refers to Lennar Partners, Inc.
(12) Midland Loan Services, Inc. is the primary servicer for this Mortgage Loan
pursuant to a sub-servicing agreement.
THE GRAND CANAL SHOPPES AT THE VENETIAN WHOLE LOAN. The Mortgage Loan
identified as loan no. 1 on Annex C to this prospectus supplement (the "Grand
Canal Shoppes at the Venetian Loan"), which has an outstanding principal balance
as of the Cut-Off Date of $189,548,779, representing approximately 7.3% of the
Initial Pool Balance, is secured by the same Mortgaged Property on a pari passu
basis with four Pari Passu Companion Loans (the "Grand Canal Pari Passu
Companion Loans" and together with the Grand Canal Shoppes at the Venetian Loan
the "Grand Canal Shoppes at the Venetian Whole Loan") that are not included in
the trust and that have an aggregate original principal balance of $237,000,000.
An intercreditor agreement (the "Grand Canal Intercreditor Agreement")
governs the respective rights and powers of the noteholders of the Grand Canal
Shoppes at the Venetian Whole Loan. The Grand Canal Intercreditor Agreement
provides, in general, that:
o the Grand Canal Shoppes at the Venetian Loan and the Grand Canal Pari
Passu Companion Loans are of equal priority with each other and no
portion of either of them will have priority or preference over any of
the others; and
o the Pooling Agreement will govern the servicing and administration of
the Grand Canal Shoppes at the Venetian Loan and the Grand Canal Pari
Passu Companion Loans.
All decisions, consents, waivers, approvals and other actions on the part
of the holder of the Grand Canal Shoppes at the Venetian Loan and the Grand
Canal Pari Passu Companion Loans will be effected in accordance with the Pooling
Agreement. However, certain decisions are to be approved by the holder or
holders of the largest percentage of the outstanding principal balance of the
Grand Canal Shoppes at the Venetian Whole Loan (which may consist of two or more
holders acting together as a majority) (the "Grand Canal Majority Holder").
Additionally, notwithstanding any consent provisions in the Pooling Agreement,
the Grand Canal Majority Holder will have the right to approve the following:
o any foreclosure upon or comparable conversion (which may include
acquisition of REO property) of the ownership of the Mortgaged Property
securing the Grand Canal Shoppes at the Venetian Whole Loan if it comes
into and continues in default;
o any modification, amendment or waiver of a monetary term (including a
change in the timing of payments) or any material non monetary term of
the Grand Canal Shoppes at the Venetian Whole Loan;
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o any proposed sale of REO property (other than in connection with the
termination of the trust fund) for less than the purchase price
specified in the applicable pooling and servicing agreement;
o any acceptance of a discounted payoff with respect to the Grand Canal
Shoppes at the Venetian Whole Loan;
o any determination to bring REO property into compliance with applicable
environmental laws or to otherwise address hazardous materials located
at the REO property;
o any release of real property collateral for the Grand Canal Shoppes at
the Venetian Whole Loan (other than in accordance with the terms of, or
upon satisfaction of, the Grand Canal Shoppes at the Venetian Whole
Loan);
o any acceptance of substitute or additional collateral for the Grand
Canal Shoppes at the Venetian Whole Loan (other than in accordance with
the terms of the Grand Canal Shoppes at the Venetian Whole Loan);
o any waiver of a "due-on-sale" or "due-on-encumbrance" clause in the
Grand Canal Shoppes at the Venetian Whole Loan;
o any release of earn-out reserve funds or related letters of credit with
respect to the property (other than in accordance with the terms of, or
upon satisfaction of, the Grand Canal Shoppes at the Venetian Whole
Loan);
o any property manager change that requires lender approval; and
o a determination not to maintain or cause borrower to maintain all-risk
property insurance providing coverage for terrorist attacks, despite the
fact that insurance may be required under the loan.
provided that, no advice, direction or objection from or by the Grand Canal
Shoppes Majority holder may require or cause the Master Servicer or the Special
Servicer, as applicable, to violate the terms of the related loan documents,
applicable law (including the REMIC provisions of the Code) or any provision of
the intercreditor agreement or the Pooling Agreement.
If the Grand Canal Majority Holder has not approved or proposed a course of
action that satisfies the Servicing Standard within 30 days (or such shorter
period as may be required under the related loan documents) after receipt of a
request for consent to any action by the Master Servicer or the Special
Servicer, as applicable, the Grand Canal Majority Holder will be deemed to have
approved the proposed course of action and the Master Servicer or Special
Servicer will implement that proposed course of action.
All payments, proceeds and other recoveries on or in respect of the Grand
Canal Shoppes at the Venetian Loan and/or the Grand Canal Pari Passu Companion
Loans will be applied to the Grand Canal Shoppes at the Venetian Loan and the
Grand Canal Pari Passu Companion Loans on a pari passu basis according to their
respective outstanding principal balances. The transfer of the ownership of the
Grand Canal Pari Passu Companion Loans to any person or entity other than
institutional lenders, investment funds exceeding a minimum net worth
requirement, their affiliates or to trusts or other entities established to
acquire mortgage loans and issue securities backed by and payable from the
proceeds of such loans is generally prohibited.
In addition, under the Pooling Agreement, if the Grand Canal Shoppes at the
Venetian Loan is subject to a fair value purchase option, then the holders of
that option will be required to purchase the Grand Canal Pari Passu Companion
Loans from any other trust in connection with the exercise of that option. See
also "The Pooling Agreement--Servicing of the Whole Loans" in this prospectus
supplement.
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The special servicer of the Grand Canal Shoppes at the Venetian Whole Loan
may only be terminated for cause.
THE GARDEN STATE PLAZA WHOLE LOAN. The Mortgage Loan identified as loan no.
4 on Annex C to this prospectus supplement (the "Garden State Plaza Loan"),
which has an outstanding principal balance as of the Cut-Off Date of
$130,000,000, representing approximately 5.0% of the Initial Pool Balance, is
secured by the same Mortgaged Property on a pari passu basis with two Pari Passu
Companion Loans (the "Garden State Plaza Pari Passu Companion Loans" and
together with the Garden State Plaza Loan the "Garden State Plaza Whole Loan")
that are not included in the trust and that have an aggregate original principal
balance of $390,000,000. One (1) of the Garden State Plaza Pari Passu Companion
Loans is owned by the trust fund (the "LB-UBS 2004-C4 Trust") established
pursuant to the pooling and servicing agreement (the "LB-UBS 2004-C4 PSA")
related to the LB-UBS Commercial Mortgage Trust 2004-04, Commercial Mortgage
Pass Through Certificates, Series 2004-C4, among Greenwich Capital Commercial
Funding Corp., as depositor, Wachovia Bank, National Association, as master
servicer (the "LB-UBS 2004-C4 Master Servicer"), Lennar Partners, Inc., as
special servicer (the "LB-UBS 2004-C4 Special Servicer") and Wells Fargo Bank,
N.A., as trustee (the "LB-UBS 2004-C4 Trustee"). The Garden State Plaza Pari
Passu Companion Loans are not assets of the trust.
The Garden State Plaza Pari Passu Companion Loans and the Garden State
Plaza Loan will be serviced pursuant to the LB-UBS 2004-C4 PSA, and, therefore,
the LB-UBS 2004-C4 Master Servicer will remit collections on the Garden State
Plaza Loan to or on behalf of the Trust Fund and will make Property Advances in
respect of the Mortgaged Property securing the Garden State Plaza Whole Loan.
A co-lender agreement (the "Garden State Plaza Co-Lender Agreement")
governs the respective rights and powers of the noteholders of the Garden State
Plaza Whole Loan. The Garden State Plaza Co-Lender Agreement provides, in
general, that:
o the Garden State Plaza Loan and the Garden State Plaza Pari Passu
Companion Loans are of equal priority with each other and no portion of
either of them will have priority or preference over any of the others;
and
o the LB-UBS 2004-C4 PSA will govern the servicing and administration of
the Garden State Plaza Loan and the Garden State Plaza Pari Passu
Companion Loans.
All decisions, consents, waivers, approvals and other actions on the part
of the holder of the Garden State Plaza Loan and the Garden State Plaza Pari
Passu Companion Loans will be effected in accordance with the LB-UBS 2004-C4
PSA. However, certain decisions are to be approved by the holder or holders of a
majority interest in the Garden State Plaza Whole Loan (which may consist of two
or more holders acting together as a majority). The holder of the majority
interest in the Garden State Plaza Whole Loan is the holder or the holders of
the Garden State Plaza Loan and/or the Garden State Plaza Pari Passu Companion
Loan(s) representing more than 50% of the outstanding principal balance of the
Garden State Plaza Whole Loan (the "Garden State Plaza Majority Holder").
Additionally, notwithstanding any consent provisions in the LB-UBS 2004-C4 PSA,
the Garden State Plaza Majority Holder will have the right to approve the
following:
o any foreclosure upon or comparable conversion (which may include
acquisition of REO property) of the ownership of the Mortgaged Property
securing the Garden State Plaza Whole Loan (the "Garden State Plaza
Mortgaged Property") if it comes into and continues in default;
o any modification, amendment or waiver of the Garden State Plaza Whole
Loan;
o any proposed sale of REO property related to the Garden State Plaza
Mortgaged Property (other than in connection with the termination of the
trust fund) for less than the unpaid principal balance, plus accrued
interest plus any related unreimbursed property protection advance;
o any acceptance of a discounted payoff with respect to the Garden State
Plaza Whole Loan;
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o any determination to bring REO property related to the Garden State
Plaza Mortgaged Property into compliance with applicable environmental
laws or to otherwise address hazardous materials located at the REO
property;
o any release of real property collateral for the Garden State Plaza Whole
Loan (other than in accordance with the terms of, or upon satisfaction
of, the Garden State Plaza Loan);
o any acceptance of substitute or additional collateral for the Garden
State Plaza Whole Loan (other than in accordance with the terms of the
Garden State Plaza Whole Loan);
o any waiver of a "due-on-sale" or "due-on-encumbrance" clause in the
Garden State Plaza Whole Loan; and
o any acceptance of an assumption agreement releasing a borrower or
guarantor from liability under the Garden State Plaza Whole Loan;
provided that, no advice, direction or objection from or by the Garden
State Plaza Majority Holder may require or cause the LB-UBS 2004-C4 Master
Servicer or the LB-UBS 2004-C4 Special Servicer, as applicable, to violate the
terms of the related loan documents, applicable law (including the REMIC
provisions of the Code) or any provision of the intercreditor agreement or the
LB-UBS 2004-C4 PSA.
All payments, proceeds and other recoveries on or in respect of the Garden
State Plaza Loan and/or the Garden State Plaza Pari Passu Companion Loans will
be applied to the Garden State Plaza Loan and the Garden State Plaza Pari Passu
Companion Loans on a pari passu basis according to their respective outstanding
principal balances. The transfer of the ownership of the Garden State Plaza Pari
Passu Companion Loans to any person or entity other than institutional lenders,
investment funds exceeding a minimum net worth requirement, their affiliates or
to trusts or other entities established to acquire mortgage loans and issue
securities backed by and payable from the proceeds of such loans is generally
prohibited.
Under the LB-UBS 2004-C4 PSA, if the Garden State Plaza Companion Loan is
subject to a fair value purchase option, then the holders of that option are not
required to purchase the Garden State Plaza Pari Passu Loan from any other trust
in connection with the exercise of that option. No holder of the Garden State
Plaza Whole Loan may replace the special servicer under the LB-UBS 2004-C4 PSA
with respect to this loan other than for cause. See also "The Pooling
Agreement--Servicing of the Whole Loans" in this prospectus supplement.
The special servicer of the Garden State Plaza Whole Loan may only be
terminated for cause by the majority holder of the controlling class of the
LB-UBS 2004-C4 certificates.
THE 1441 BROADWAY WHOLE LOAN. The Mortgage Loan identified as loan no. 3 on
Annex C to this prospectus supplement (the "1441 Broadway Loan"), which has an
outstanding principal balance as of the Cut-Off Date of $132,647,486,
representing approximately 5.1% of the Initial Pool Balance, is secured by the
same Mortgaged Property securing the related Subordinate Companion Loan (the
"1441 Broadway Subordinate Companion Loans" and, together with the 1441 Broadway
Loan, the "1441 Broadway Whole Loan") that is not included in the trust and that
has an aggregate original principal balance of $6,981,447.
The 1441 Broadway Loan and the 1441 Broadway Subordinate Companion Loan
will be serviced by the Master Servicer and the Special Servicer, as applicable,
according to the Servicing Standards. A co-lender agreement (the "1441 Broadway
Co-Lender Agreement") governs the respective rights and powers of the holder of
the 1441 Broadway Loan and the holder of the 1441 Broadway Subordinate Companion
Loan. The 1441 Broadway Co-Lender Agreement provides, in general, that:
o the 1441 Broadway Subordinate Companion Loan is subordinate to the 1441
Broadway Loan;
o so long as neither (i) a monetary event of default with respect to the
1441 Broadway Whole Loan nor (ii) a material non-monetary event of
default with respect to the 1441 Broadway Whole Loan
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has occurred and is continuing, the 1441 Broadway Loan and the 1441
Broadway Subordinate Companion Loan are generally pari passu in right of
payment (i.e., the 1441 Broadway Loan and the 1441 Broadway Subordinate
Companion Loan are entitled to their respective pro rata share of all
payments of principal and interest, although holders of the 1441
Broadway Loan will be paid their share prior to holders of the 1441
Broadway Subordinate Companion Loan) and following the occurrence and
during the continuance of the events described in clauses (i) or (ii)
above, the 1441 Broadway Loan will be senior in right of payment to the
1441 Broadway Subordinate Companion Loan, such that all amounts received
in respect of the 1441 Broadway Whole Loan will be used to pay interest
on the 1441 Broadway Loan, then to pay principal of the 1441 Broadway
Loan until its principal balance is reduced to zero, then to pay
interest on the 1441 Broadway Subordinate Companion Loan, then to pay
principal of the 1441 Broadway Subordinate Companion Loan until its
principal balance is reduced to zero.
o the Pooling Agreement will govern the servicing and administration of
the 1441 Broadway Whole Loan.
All decisions, consents, waivers, approvals and other actions on behalf of
holders of the 1441 Broadway Whole Loan will be effected in accordance with the
Pooling Agreement. However, certain decisions are to be approved by the
directing holder of the 1441 Broadway Whole Loan (the "1441 Broadway Directing
Holder"), which for so long as a control appraisal event does not exist, will be
the holder of the 1441 Broadway Subordinate Companion Loan, and after a control
appraisal event has occurred, will be the holder of a majority interest in the
Controlling Class. A control appraisal event with respect to the 1441 Broadway
Whole Loan will exist if and for so long as the initial principal balance of the
1441 Broadway Subordinate Companion Loan minus principal payments, appraisal
reduction amounts and realized losses allocated to the 1441 Broadway Subordinate
Companion Loan is less than 25% of an amount equal to the initial principal
balance of the 1441 Broadway Subordinate Companion Loan minus any principal
payments allocated to the 1441 Broadway Subordinate Companion Loan. The 1441
Broadway Directing Holder will have the right to approve the following:
o any proposed or actual foreclosure upon or comparable conversion (which
may include acquisition of REO Property) of the ownership of the
Mortgaged Property securing the 1441 Broadway Whole Loan if it comes
into and continues in default or other enforcement action under the
related loan documents;
o any modification, extension, amendment or waiver of a monetary term
(including a change in the timing of payments) or any material non
monetary term of the 1441 Broadway Whole Loan;
o any proposed or actual sale of related Mortgaged Property (other than in
connection with the termination of the trust fund) for less than the
purchase price specified in the Pooling Agreement;
o any acceptance of a discounted payoff with respect to the 1441 Broadway
Whole Loan;
o any determination to bring the Mortgaged Property or REO Property into
compliance with applicable environmental laws or to otherwise address
hazardous materials located at the Mortgaged Property or REO Property;
o any release of collateral for the 1441 Broadway Whole Loan or any
release of the borrower or any guarantor or indemnitor under the 1441
Broadway Whole Loan (other than as required by the terms of, or upon
satisfaction of, the 1441 Broadway Whole Loan);
o any acceptance of substitute or additional collateral for the 1441
Broadway Whole Loan (other than as required by the terms of the 1441
Broadway Whole Loan);
o any waiver of a "due-on-sale" or "due-on-encumbrance" clause;
o any acceptance of an assumption agreement releasing a borrower from
liability under the 1441 Broadway Whole Loan;
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o any approval of any replacement Special Servicer for the 1441 Broadway
Whole Loan (other than in connection with the Trustee becoming the
successor thereto pursuant to the terms of the Pooling Agreement);
o any acceptance of a change in the property management company (provided
that the unpaid principal balance of the 1441 Broadway Whole Loan is
greater than $5,000,000);
o any determination by the Master Servicer (i) that the 1441 Broadway
Whole Loan has become a specially serviced loan solely by reason of the
borrower's failure to maintain insurance against damages from acts of
terrorism or (ii) to force place any insurance against damages from acts
of terrorism that is failed to be maintained by the borrower (subject to
certain limitations); and
o any extension of the maturity date of the 1441 Broadway Whole Loan.
In addition, the 1441 Broadway Directing Holder may direct the Special
Servicer to take, or to refrain from taking, any actions with respect to the
servicing and/or administration of the 1441 Broadway Whole Loan as the 1441
Broadway Directing Holder may deem advisable.
No advice, direction or objection from or by the 1441 Broadway Directing
Holder may require or cause the Master Servicer or the Special Servicer, as
applicable, to violate the terms of the related loan documents, applicable law
(including the REMIC provisions of the Code) or any provision of the co-lender
agreement or the Pooling Agreement.
The transfer of more than 49% of the ownership of any 1441 Broadway
Subordinate Companion Loan to any person or entity other than (i) institutional
lenders or investment funds exceeding a minimum net worth requirement and their
affiliates, (ii) trusts or other entities established to acquire mortgage loans
and issue securities backed by and payable from the proceeds of such loans or
(iii) other entities as to which a ratings confirmation has been received with
respect to the Certificates, is generally prohibited. See also "The Pooling
Agreement--Servicing of the Whole Loans" in this prospectus supplement.
The 1441 Broadway Co-Lender Agreement provides that in the event that (a)
any payment of principal or interest on the 1441 Broadway Whole Loan is 90 days
delinquent, (b) the 1441 Broadway Whole Loan has been accelerated, (c) the
principal balance of the 1441 Broadway Whole Loan is not paid at maturity, (d)
the borrower files a petition for bankruptcy or (e) the 1441 Broadway Whole Loan
becomes a specially serviced loan (and the 1441 Broadway Whole Loan is either in
default or a default with respect thereto is reasonably foreseeable), the holder
of the 1441 Broadway Subordinate Companion Loan will have the right to purchase
the 1441 Broadway Loan at a price generally equal to the unpaid principal
balance of such loan, plus accrued and unpaid interest thereon, all related
unreimbursed advances, accrued and unpaid interest on all advances, all
unreimbursed fees payable to the master servicer and the special servicer and
any other amounts payable to the Master Servicer or the Special Servicer under
the Pooling Agreement relating to the 1441 Broadway Whole Loan.
The 1441 Broadway Co-Lender Agreement also provides that in the event the
borrower fails to make any payment of principal or interest or the borrower
otherwise defaults, the holder of the 1441 Broadway Subordinate Companion Loan
will have the right to cure such default, (a) in the case of a monetary default
within 10 days after the expiration of the grace period and (b) in the case of a
default, other than a monetary default or a bankruptcy of the borrower, within
30 days after the expiration of the applicable grace period (or within 90 days
if the Master Servicer determines to grant an extension of such cure periods) as
long as such party is diligently proceeding with such cure. There are no limits
and the number of cures that may be made.
1441 Broadway Co-Lender Agreement also provides that prior to a control
appraisal event, the holder of the 1441 Broadway Subordinate Companion Loan will
have the right to replace the special servicer for the 1441 Broadway Whole Loan
with or without cause.
THE 111 EIGHTH AVENUE WHOLE LOAN. The Mortgage Loan identified as loan no.
8 on Annex C to this prospectus supplement (the "111 Eighth Avenue Loan"), which
has an outstanding principal balance as of
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the Cut-Off Date of $80,000,000, representing approximately 3.1% of the Initial
Pool Balance, is secured by the same Mortgaged Property on a pari passu basis
with 6 Pari Passu Companion Loans (the "111 Eighth Avenue Pari Passu Companion
Loans") that are not included in the trust and that have an aggregate original
principal balance of $370,000,000. The Mortgaged Property also secures two
subordinate mortgage loans (the "111 Eighth Avenue Subordinate Companion Loans",
and together with the 111 Eighth Avenue Loan and the 111 Eighth Avenue Pari
Passu Companion Loans, the "111 Eighth Avenue Whole Loan) that have an aggregate
original principal balance of $50,000,000. One (1) of the 111 Eighth Avenue Pari
Passu Companion Loans and one (1) of the 111 Eighth Avenue Subordinate Companion
Loans is owned by the trust fund (the "GG1 Trust") established pursuant to the
pooling and servicing agreement (the "GG1 PSA") related to the Greenwich Capital
Commercial Funding Corp., Commercial Mortgage Pass-Through Certificates, Series
2004-GG1, among Greenwich Capital Commercial Funding Corp., as depositor,
Wachovia Bank, National Association, as master servicer (the "GG1 Master
Servicer"), Lennar Partners, Inc., as special servicer (the "GG1 Special
Servicer"), LaSalle Bank, National Association, as trustee (the "GG1 Trustee")
and ABN AMRO Bank N.V., as fiscal agent. Certain of the other 111 Eighth Avenue
Pari Passu Companion Loans are owned by various other trust funds. The 111
Eighth Avenue Pari Passu Companion Loans are not assets of the trust.
The 111 Eighth Avenue Pari Passu Companion Loans and the 111 Eighth Avenue
Loan will be serviced pursuant to the GG1 PSA, and, therefore, the GG1 Master
Servicer will remit collections on the 111 Eighth Avenue Loan to or on behalf of
the Trust Fund and will make Property Advances in respect of the Mortgaged
Property securing the 111 Eighth Avenue Whole Loan. The GG1 Master Servicer will
be required to make P&I Advances in respect of the 111 Eighth Avenue Loan,
unless the GG1 Master Servicer or the GG1 Special Servicer determines that such
an Advance would not be recoverable from collections on the 111 Eighth Avenue
Loan.
A co-lender agreement (the "111 Eighth Avenue Co-Lender Agreement") governs
the respective rights and powers of the noteholders of the 111 Eighth Avenue
Whole Loan. The 111 Eighth Avenue Co-Lender Agreement provides, in general,
that:
o the 111 Eighth Avenue Loan and the 111 Eighth Avenue Pari Passu
Companion Loans are of equal priority with each other and no portion of
either of them will have priority or preference over any of the others;
o the 111 Eighth Avenue Subordinate Companion Loans are subordinate to the
111 Eighth Avenue Loan and the 111 Eighth Avenue Pari Passu Companion
Loans;
o so long as neither (i) a monetary event of default with respect to the
111 Eighth Avenue Whole Loan nor (ii) a material non-monetary event of
default with respect to the 111 Eighth Avenue Whole Loan has occurred
and is continuing, each of 111 Eighth Avenue Loan, the 111 Eighth Avenue
Pari Passu Companion Loans and the 111 Eighth Avenue Subordinate
Companion Loans are generally pari passu in right of payment (i.e., each
of the 111 Eighth Avenue Loan, the 111 Eighth Avenue Pari Passu
Companion Loans and the 111 Eighth Avenue Subordinate Companion Loans
are entitled to their respective pro rata share of all payments of
principal and interest, although holders of the 111 Eighth Avenue Loan
and the 111 Eighth Avenue Pari Passu Companion Loans will be paid their
share prior to holders of the 111 Eighth Avenue Subordinate Companion
Loans) and following the occurrence and during the continuance of the
events described in clauses (i) or (ii) above, each of the 111 Eighth
Avenue Loan and the 111 Eighth Avenue Pari Passu Companion Loans will be
senior in right of payment to the 111 Eighth Avenue Subordinate
Companion Loans, such that all amounts received in respect of the 111
Eighth Avenue Whole Loan will be used to pay interest on the 111 Eighth
Avenue Loan and 111 Eighth Avenue Pari Passu Companion Loans, then to
pay principal of the 111 Eighth Avenue Loan and 111 Eighth Avenue Pari
Passu Companion Loans until their principal balance is reduced to zero,
then to pay interest on the 111 Eighth Avenue Subordinate Companion
Loans, then to pay principal of the 111 Eighth Avenue Subordinate
Companion Loans until their principal balance is reduced to zero;
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o the GG1 PSA will govern the servicing and administration of the 111
Eighth Avenue Whole Loan.
All decisions, consents, waivers, approvals and other actions on behalf of
the holders of the 111 Eighth Avenue Whole Loan will be effected in accordance
with the GG1 PSA. However, certain decisions are to be approved by the directing
holder of the 111 Eighth Avenue Whole Loan (the "111 Eighth Avenue Directing
Holder"), which for so long as a control appraisal event does not exist, will be
the holders of the 111 Eighth Avenue Subordinate Companion Loans (which, in the
case of the 111 Eighth Avenue Subordinate Companion Loan that is an asset of the
GG1 Trust, will be the holder or holders of a majority interest in the separate
class of certificates that represents the interests in such loan and after a
control appraisal event has occurred, will be the controlling class of the GG1
Trust. A control appraisal event with respect to the 111 Eighth Avenue Whole
Loan will exist if and for so long as the initial principal balance of the 111
Eighth Avenue Subordinate Companion Loan minus principal payments, appraisal
reduction amounts and realized losses allocated to the 111 Eighth Avenue
Subordinate Companion Loan is less than 25% of an amount equal to the initial
principal balance of the 111 Eighth Avenue Subordinate Companion Loan. The 111
Eighth Avenue Directing Holder will have the right to approve the following:
o any proposed or actual foreclosure upon or comparable conversion (which
may include acquisition of REO property) of the ownership of the
Mortgaged Property securing the 111 Eighth Avenue Whole Loan if it is a
specially serviced loan and has come into and continues in default;
o any modification, extension, amendment or waiver of a monetary term
(including a change in the timing of payments) or any material
non-monetary term of the 111 Eighth Avenue Whole Loan;
o any proposed or actual sale of REO property (other than in connection
with the termination of the trust fund) for less than the purchase price
specified in the applicable pooling and servicing agreement;
o any acceptance of a discounted payoff with respect to the 111 Eighth
Avenue Whole Loan;
o any determination to bring the Mortgaged Property or REO property into
compliance with applicable environmental laws or to otherwise address
hazardous materials located at the Mortgaged Property or REO property;
o any release of collateral for the 111 Eighth Avenue Whole Loan or any
release of the borrower (other than in accordance with the terms of, or
upon satisfaction of, the 111 Eighth Avenue Whole Loan);
o any acceptance of substitute or additional collateral for the 111 Eighth
Avenue Whole Loan (other than in accordance with the terms of the 111
Eighth Avenue Whole Loan);
o any waiver of a "due-on-sale" or "due on-encumbrance" clause with
respect to the 111 Eighth Avenue Whole Loan or consent to a transfer of
the Mortgaged Property or interests in the borrower;
o any acceptance of an assumption agreement releasing a borrower or
guarantor from liability under the 111 Eighth Avenue Whole Loan;
o any acceptance of a change in the property management company (provided
that the unpaid principal balance of the 111 Eighth Avenue Whole Loan is
greater than $5,000,000);
o any extension of the maturity date of the 111 Eighth Avenue Whole Loan,
which results in the remaining term of any related ground lease
(together with extensions at the sole option of the lender) being less
than 10 years beyond the amortization term of the 111 Eighth Avenue
Whole Loan;
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o any determination by the GG1 Special Servicer that the 111 Eighth Avenue
Whole Loan has become a specially serviced loan as a result of (1) a
likely monetary default, or (2) an actual or imminent material
non-monetary default, including, without limitation, by reason of the
borrower's failure to maintain insurance against damages from acts of
terrorism;
o certain extensions by the GG1 Special Servicer of the maturity date of
the 111 Eighth Avenue Whole Loan (if it is a performing loan);
o the adoption or approval of a plan of bankruptcy or reorganization with
respect to the borrower; and
o approval of any material capital expenditure that requires the approval
of the lender under the related loan documents.
In addition, the 111 Eighth Avenue Directing Holder may direct the GG1
Special Servicer to take, or to refrain from taking, any actions with respect to
the servicing and/or administration of the 111 Eighth Whole Loan that the 111
Eighth Avenue Directing Holder may consider advisable.
No advice, direction or objection from or by the 111 Eighth Avenue
Directing Holder may require or cause the GG1 Master Servicer or the GG1 Special
Servicer, as applicable, to violate the terms of the related loan documents,
applicable law (including the REMIC provisions of the Code) or any provision of
the intercreditor agreement or the GG1 PSA.
For so long as a control appraisal event has not occurred, if the holders
of the two 111 Eighth Avenue Subordinate Companion Loans are unable to agree
with respect to any course of action, a third party operating advisor will make
a final determination with respect to the proposed course of action (which could
result in a delay in the special servicer taking certain actions).
In addition to obtaining the consent of the 111 Eighth Avenue Directing
Holder in connection with the items listed above, the special servicer will be
required to consult, on a non-binding basis, with the holders of each of the 111
Eighth Avenue companion loans that are not the directing holder (or if any such
Companion Loan is included in a securitization, with the majority interests of
the designated controlling class of certificates of such securitization).
All payments, proceeds and other recoveries on or in respect of the 111
Eighth Avenue Loan and/or the 111 Eighth Avenue Pari Passu Companion Loans will
be applied to the 111 Eighth Avenue Loan and the 111 Eighth Avenue Pari Passu
Companion Loans on a pari passu basis according to their respective outstanding
principal balances.
The transfer of more than 49% of the ownership of any 111 Eighth Avenue
Pari Passu Companion Loan or 111 Eighth Avenue Subordinate Companion Loan to any
person or entity other than (i) institutional lenders or investment funds
exceeding a minimum net worth requirement and their affiliates, (ii) trusts or
other entities established to acquire mortgage loans and issue securities backed
by and payable from the proceeds of such loans, or (iii) other entities as to
which a ratings confirmation has been received with respect to the Certificates
and any securities backed by any of the 111 Eighth Avenue Pari Passu Companion
Loans or 111 Eighth Avenue Subordinate Companion Loans, is generally prohibited.
See also "The Pooling Agreement--Servicing of the Whole Loans" in this
prospectus supplement.
The intercreditor agreement for the 111 Eighth Avenue Whole Loan provides
that in the event that (a) any payment of principal or interest on the 111
Eighth Avenue Whole Loan is 90 days or more delinquent, (b) the 111 Eighth
Avenue Whole Loan has been accelerated, (c) the principal balance of the 111
Eighth Avenue Whole Loan is not paid at maturity, or (d) the borrower files a
petition for bankruptcy, the holders of the 111 Eighth Avenue Subordinate
Companion Loans will have the right to purchase the 111 Eighth Avenue Loan and
the 111 Eighth Avenue Pari Passu Companion Loan at a price generally equal to
the unpaid principal balance of such loans, plus accrued and unpaid interest
thereon, all related unreimbursed property advances, accrued and unpaid interest
on all advances, all unreimbursed fees
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payable to the master servicer and the special servicer and any other expenses
relating to the 111 Eighth Avenue Whole Loan.
The intercreditor agreement for the 111 Eighth Avenue Whole Loan also
provides that in the event the borrower fails to make any payment of principal
or interest or the borrower otherwise defaults, each of the holders of the 111
Eighth Avenue Subordinate Companion Loans will have the right to cure such
default, (a) in the case of a monetary default within 10 days after the
expiration of the grace period and (b) in the case of a default, other than a
monetary default or a bankruptcy of the borrower, within 30 days after the
expiration of the applicable grace period as long as such party is diligently
proceeding with such cure, but at no other times. No single cure event may last
longer than three months; there must be at least six months between cure events,
and there may be no more than six cure events over the life of the 111 Eighth
Avenue Whole Loan.
The intercreditor agreement also provides that the controlling class
representative for the GG1 Trust (as holder of one of the 111 Eighth Avenue Pari
Passu Companion Loans) will have the right to replace the special servicer for
the 111 Eighth Avenue Whole Loan under the GG1 PSA with or without cause;
provided however, if a control appraisal event has not occurred, such
replacement must be approved in writing by the holders of both of the 111 Eighth
Avenue Subordinate Companion Loans. In addition, if a control appraisal event
has not occurred, upon an event of default of the special servicer of the 111
Eighth Avenue Whole Loan under the GG1 PSA, if the special servicer is not
otherwise terminated, either holder of the 111 Eighth Avenue Subordinate
Companion Loans may terminate the special servicer and any replacement special
servicer will be subject to the approval of the holders of both of the 111
Eighth Avenue Subordinate Companion Loans.
The rights of the 111 Eighth Avenue Subordinate Companion Loan included in
the GG1 Trust will be exercised by the holders of the majority interest in the
specific class of certificates issued under the GG1 PSA that represents the
interest in that loan.
THE DAILY NEWS BUILDING WHOLE LOAN. The Mortgage Loan identified as Loan
No. 2 on Annex C to this prospectus supplement (the "Daily News Building Loan")
which has an outstanding principal balance as of the Cut-Off Date of
$154,000,000 representing approximately 5.9% of the Initial Pool Balance is
secured by the same Mortgaged Property that is securing the related Subordinate
Companion Loan (the "Daily News Building Subordinate Companion Loan" and,
together with the Daily News Building Loan, the "Daily News Building Whole
Loan") that is not included in the trust and that has a principal balance of
$56,000,000 as of the Cut-Off Date.
The Daily News Building Loan will be serviced by the Master Servicer and
the Special Servicer, as applicable, according to the Servicing Standards. The
holder of the Daily News Building Loan (the "Daily News Building Holder") and
the holder of the Daily News Building Subordinate Companion Loan (the "Daily
News Building Subordinate Companion Holder") have entered into an intercreditor
agreement that sets forth the respective rights of the Daily News Building
Holder and the Daily News Building Subordinate Companion Holder (the "Daily News
Building Intercreditor Agreement"). The Daily News Building Intercreditor
Agreement provides that expenses, losses and shortfalls relating to the Daily
News Building Whole Loan will be allocated first, to the holder of the Daily
News Building Subordinate Companion Loan and thereafter, to the Daily News
Building Loan.
The Daily News Building Controlling Holder will have the right to consult
with and advise the Special Servicer with respect to the Daily News Building
Whole Loan. The "Daily News Building Controlling Holder" will be the holder of
the Daily News Building Subordinate Companion Loan prior to the occurrence of a
Daily News Building Control Appraisal Event, and after the occurrence of and
during the continuation of a Daily News Building Control Appraisal Event, will
be the holder of the Daily News Building Loan. A "Daily News Building Control
Appraisal Event" will exist, if and for so long as, the initial principal
balance of the Daily News Building Subordinate Companion Loan (minus (i) the sum
of any principal allocated to, and received on, the Daily News Building
Subordinate Companion Loan after the cut-off date, (ii) any Appraisal Reduction
for the Daily News Building Subordinate Companion Loan and (iii) realized losses
with respect to the Daily News building Subordinate Companion Loan) is less than
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25% of its initial principal balance (minus the sum of any principal payment
received on, the Daily News Building Subordinate Companion Loan after the cut of
date).
The prior written consent of the Holder of the Daily News Building Loan and
the Daily News Building Controlling Holder will be required for any
modification, amendment, consolidation spreader, restatement or waiver that
would:
o change the aggregate principal amount evidenced by the Daily News
Building Loan or the Daily News Building Subordinate Companion Loan;
o provide for any discounted payoff of the Daily News Building Loan or the
Daily News Building Subordinate Companion Loan;
o modify the maturity date of the Daily News Building Whole Loan;
o provide for the payment of any additional interest, additional fees,
kicker or similar equity feature in respect of the Daily News Building
While Loan;
o change the amount of any payment required under the Daily News Building
Loan or the Daily News Building Subordinate Companion Loan or modify any
related amortization schedule;
o change any other monetary or material non-monetary term in the Daily
News Building Whole Loan in a manner that has an adverse effect on the
holder of the Daily News Building Subordinate Companion Loan;
o change the timing of payments under the Daily News Building Loan or the
Daily News Building Subordinate Companion Loan in a manner that has an
adverse effect on the holder of the Daily News Building Subordinate
Companion Loan;
o release and/or substitute any material collateral except in accordance
with the Daily News Building Whole Loan; or
o permit the transfer of the Daily News Building Property, except in
accordance with the Daily News Building Whole Loan.
No advice, direction or objection from or by the holder of a majority interest
in the Daily News Building Whole Loan may require or cause the Master Servicer
or the Special Servicer, as applicable, to violate the terms of the related loan
documents, applicable law (including the REMIC provisions of the Code) or any
provision of the intercreditor agreement or the Pooling Agreement.
Under the terms of the Daily News Building Intercreditor Agreement, prior
to the occurrence and continuance of a monetary event of default or a
non-monetary event of default which causes the Daily News Building Whole Loan to
become a Specially Serviced Mortgage Loan, the acceleration of the Daily News
Building Whole Loan, the Daily News Building While Loan becoming a Specially
Serviced Mortgage Loan or the occurrence of the maturity date for the Daily News
Building Whole Loan all payments and proceeds received with respect to the Daily
News Building Whole Loan will generally be paid in the following manner:
first, to the Daily News Building Loan, all accrued and unpaid interest on
its outstanding principal at its interest rate less the Daily News Building
Loan's pro rata share (based on the respective principal balances of the Daily
News Building Loan and the Daily News Building Subordinate Companion Loan) of
any Servicing fees and Trustee fees;
second, to the Daily News Building Loan, the amount of principal then
payable by the terms of the Daily News Building Loan.
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third, to the Daily News Building Subordinate Companion Loan, all accrued
and unpaid interest then payable in respect of the Daily News Building
Subordinate Companion Loan less the Daily News Building Subordinate Companion
Loan's pro rate share (based on the respective principal balances of the Daily
News Building Loan and the Daily News Building Subordinate Companion Loan) of
any Servicing Fees;
fourth, to the Daily News Building Subordinate Companion Loan, the amount
of principal then payable in respect of the Daily News Building Subordinate
Companion Loan;
fifth, to the Daily News Building Loan in an amount equal to any default
interest owed to the Daily News Building Loan;
sixth, to the Daily News Building Subordinate Companion Loan in an amount
equal to any default interest owed to the Daily News Building Subordinate
Companion Loan;
seventh, to the Daily News Building Subordinate Companion Loan up to the
amount of unreimbursed costs and expenses relating to the Daily News Building
Whole Loan incurred by the Daily News Building Subordinate Companion Loan
including any unreimbursed cure payments previously made by the Daily News
Building Subordinate Companion Loan; and
eighth, if any excess amount is paid by the borrower, and not otherwise
applied in accordance with the foregoing clauses first through seventh above,
such amount will be paid to each of the Daily News Building Noteholder and the
Daily News Building Subordinate Companion Noteholder pro rata based upon the
outstanding principal balances of the Daily News Building Loan and the Daily
News Building Subordinate Companion Loan.
Following the occurrence and during the continuance of a monetary event of
default or other non-monetary event of default which causes the Daily News
Building Whole Loan to become a Specially Serviced Mortgage Loan that remains
uncured after the expiration of any applicable cure period, the acceleration of
the Daily News Building Whole Loan, the Daily News Building Whole Loan becoming
a Specially Serviced Mortgage Loan, the occurrence of the maturity date for the
Daily News Building Whole Loan or a foreclosure (or deed in lieu of foreclosure)
on the Daily News Building Property, after payment of all amounts then payable
or reimbursable under the Pooling Agreement, the amounts received with respect
to the Daily News Building Whole Loan will generally be applied in the following
manner:
first, to the Daily News Building Loan in an amount equal to accrued and
unpaid interest on the Daily News Building Loan less any Trustee fees paid or
reimbursed and the Daily News Building Loan's pro rata share (based on the
principal balances of the Daily News Building Loan and the Daily News Building
Subordinate Companion Loan) of any Servicing fees;
second, to the Daily News Building Loan, in an amount equal to the
principal balance of the Daily News Building Loan until paid in full;
third, to the Daily News Building Subordinate Companion Loan, in any amount
equal to accrued and unpaid interest on the Daily News Building Companion Loan
less any Additional Trust Fund Expense and the Daily News Building Subordinate
Companion Loan's pro rata share (based on the principal balances of the Daily
News Building Loan and the Daily News Building Subordinate Companion Loan) of
any Servicing fees;
fourth, to the Daily News Building Loan, in an amount up to its principal
balance, until all principal has been paid in full;
fifth, if no event of default is continuing, or if an event of default is
continuing but is being cured by the Daily News Building Subordinate Companion
Loan, to the Daily News Building Loan in an amount equal to any involuntary
prepayment of the Daily News Building Whole Loan from casualty and/or
condemnation proceeds not applied to the restoration of the related Mortgaged
Property until the principal balance of the Daily News Building Loan is reduced
to zero, and then to the Daily News Building
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Subordinate Companion Loan in amount equal to any such involuntary prepayment
remaining, until the principal balance of the Daily News Building Subordinate
Companion Loan is reduced to zero;
sixth, to the Daily News Building Loan, in an amount equal to any yield
maintenance premium, to the extent actually paid, allocable to the Daily News
Building Loan.
seventh, to the Daily News Building Subordinate Companion Loan, in an
amount equal to any yield maintenance premium, to the extent actually paid,
allocable to the Daily News Building Subordinate Companion Loan;
eighth, to the Daily News Building Loan in an amount equally to any default
interest owed to it;
ninth, to the Daily News Building Subordinate Companion Loan in an amount
equal to any default interest owed to it;
tenth, to the Daily News Building Subordinate Companion Noteholder in an
amount of any unreimbursed costs and expenses relating to the Daily News
Building Subordinate Companion Loan; and
eleventh, any excess, pro rata, to the Daily News Building Noteholder and
the Daily News Building Subordinate Companion Noteholder based upon their
respective original principal balances.
In the event that the borrower fails to make any payment of principal or
interest on the Daily News Building Whole Loan, resulting in a monetary event of
default, the Daily News Building Subordinate Companion Noteholder shall have the
right to cure such default within five business days of receiving notice of the
default.
In the event that the Daily News Building Loan becomes a Specially Serviced
Loan, the Daily News Building Subordinate Companion Noteholder will have an
option (the "Daily News Building Purchase Option") to purchase the Daily News
Building Loan from the Trust Fund at a price (the "Daily News Building Loan
Option Price") generally equal to the unpaid principal balance of the Daily News
Building Loan, plus accrued and unpaid interest on such balance, all related
unreimbursed Servicing Advances, together with accrued and unpaid interest on
all Advances and all accrued Special Servicing Fees allocable to the Daily News
Building Loan whether paid or unpaid and any other expenses relating to the
Daily News Building Loan. If the Daily News Building Subordinate Companion
Noteholder fails to exercise this option within the time period set forth in the
Daily News Building Intercreditor Agreement, certain other parties may have the
right to exercise the related Daily News Building Loan Purchase Option as
described under "The Pooling Agreement--Realization upon Mortgage Loans--Sale of
Defaulted Mortgage Loans" in this prospectus supplement.
The Daily News Building Intercreditor Agreement provides that the Daily
News Building Controlling Holder may remove the special servicer for the Daily
News Building Whole Loan at any time for any reason or no reason.
THE 237 PARK AVENUE WHOLE LOAN. The Mortgage Loan identified as loan no. 11
on Annex C to this prospectus supplement (the "237 Park Avenue Loan"), which has
an outstanding principal balance as of the Cut-Off Date of $67,333,333,
representing approximately 2.6% of the Initial Pool Balance, is secured by the
same Mortgaged Property on a pari passu basis with three Pari Passu Companion
Loans (the "237 Park Avenue Pari Passu Companion Loans" and, together with the
237 Park Avenue Loan, the "237 Park Avenue Whole Loan") that are not included in
the trust and that have an aggregate original principal balance of $230,666,667.
One (1) of the 237 Park Avenue Pari Passu Companion Loans is owned by the trust
fund (the "GCCFC C2 Trust") established pursuant to the pooling and servicing
agreement (the "GCCFC C2 PSA") related to the Greenwich Capital Commercial
Funding Corp., Commercial Mortgage Pass-Through Certificates, Series 2003-C2,
among Greenwich Capital Commercial Funding Corp., as depositor, Wachovia Bank,
National Association, as master servicer (the "GCCFC C2 Master Servicer"),
Lennar Partners, Inc., as special servicer (the "GCCFC C2 Special Servicer"),
LaSalle Bank National Association, as trustee (the "GCCFC C2 Trustee") and ABN
AMRO Bank N.V., as fiscal agent. One (1) of the 237 Park Avenue Pari Passu
Companion Loans is owned by the GG1 Trust. One (1) of the 237 Park
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Avenue Pari Passu Companion Loans is owned by the trust formed in connection
with the issuance of the GS Mortgage Securities Corporation II, Commercial
Mortgage Pass-Through Certificates, Series 2004-C1. The 237 Park Avenue Pari
Passu Companion Loans are not assets of the trust.
The 237 Park Avenue Pari Passu Companion Loans and the 237 Park Avenue Loan
will be serviced pursuant to the GCCFC C2 PSA, and, therefore, the GCCFC C2
Master Servicer will remit collections on the 237 Park Avenue Loan to or on
behalf of the Trust Fund and will make Property Advances in respect of the
Mortgaged Property securing the 237 Park Avenue Whole Loan. The GCCFC C2 Master
Servicer will be required to make P&I Advances in respect of the 237 Park Avenue
Loan, unless the GCCFC C2 Master Servicer determines that such an Advance would
not be recoverable from collections on the 237 Park Avenue Loan.
A co-lender agreement (the "237 Park Avenue Co-Lender Agreement") governs
the respective rights and powers of the noteholders of the 237 Park Avenue Whole
Loan. The 237 Park Avenue Co-Lender Agreement provides, in general, that:
o the 237 Park Avenue Loan and the 237 Park Avenue Pari Passu Companion
Loans are of equal priority with each other and no portion of either of
them will have priority or preference over any of the others;
o the GCCFC C2 PSA will govern the servicing and administration of the 237
Park Avenue Loan and the 237 Park Avenue Pari Passu Companion Loans.
All decisions, consents, waivers, approvals and other actions on behalf of
the holder of the 237 Park Avenue Loan and the 237 Park Avenue Pari Passu
Companion Loans will be effected in accordance with the GCCFC C2 PSA. However,
certain decisions are to be approved by the holder or holders of a majority
interest in the 237 Park Avenue Whole Loan (which may consist of two or more
holders acting together as a majority). The holders of the individual loans that
comprise the 237 Park Avenue Whole Loan will be deemed to be the following: (1)
in the case of the 237 Park Avenue Loan, the majority Certificateholder of the
Controlling Class, and (2) in the case of each of the other 237 Park Avenue Pari
Passu Companion Loans, the holders of certificates representing a majority
interest in the controlling class of certificates issued by the related
securitization trust (the "237 Park Avenue Majority Holder"). Additionally,
notwithstanding any consent provisions in the GCCFC C2 PSA, the 237 Park Avenue
Majority Holder will have the right to approve the following:
o any foreclosure upon or comparable conversion (which may include
acquisition of REO property) of the ownership of the Mortgaged Property
securing the 237 Park Avenue Whole Loan if it comes into and continues
in default;
o any modification, amendment or waiver of a monetary term (including a
change in the timing of payments) or any material non-monetary term of
the 237 Park Avenue Whole Loan;
o any proposed sale of the Mortgaged Property (other than in connection
with the termination of the trust fund) for less than the purchase price
specified in the applicable pooling and servicing agreement;
o any acceptance of a discounted payoff with respect to the 237 Park
Avenue Whole Loan;
o any determination to bring the Mortgaged Property or REO property into
compliance with applicable environmental laws or to otherwise address
hazardous materials located at the Mortgaged Property or REO property;
o any release of collateral for the 237 Park Avenue Whole Loan or any
release of the borrower (other than in accordance with the terms of, or
upon satisfaction of, the 237 Park Avenue Whole Loan);
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o any acceptance of substitute or additional collateral for the 237 Park
Avenue Whole Loan (other than in accordance with the terms of the 237
Park Avenue Whole Loan);
o any waiver of a due-on-sale" or due-on-encumbrance" clause in the 237
Park Avenue Whole Loan;
o any acceptance of an assumption agreement releasing a borrower or
guarantor from liability under the 237 Park Avenue Whole Loan; and
o any action to enforce rights against the related mezzanine lender under
the related intercreditor agreement.
No advice, direction or objection from or by the 237 Park Avenue Majority Holder
may require or cause the GCCFC C2 Master Servicer or the GCCFC C2 Special
Servicer, as applicable, to violate the terms of the related loan documents,
applicable law (including the REMIC provisions of the Code) or any provision of
the intercreditor agreement or the GCCFC C2 PSA.
All payments, proceeds and other recoveries on or in respect of the 237
Park Avenue Loan and/or the 237 Park Avenue Pari Passu Companion Loans will be
applied to the 237 Park Avenue Loan and the 237 Park Avenue Pari Passu Companion
Loans on a pari passu basis according to their respective outstanding principal
balances. See also "The Pooling Agreement--Servicing of the Whole Loans" in this
prospectus supplement.
The GCCFC C2 PSA provides that the 237 Park Avenue Majority Holder may
remove the special servicer for the 237 Park Avenue Whole Loan under the GCCFC
C2 PSA for cause only.
THE WATERFRONT PLAZA WHOLE LOAN. The Mortgage Loan identified as loan no.
12 on Annex C to this prospectus supplement (the "Waterfront Plaza Loan"), which
has an outstanding principal balance as of the Cut-Off Date of $61,000,000,
representing approximately 2.3% of the Initial Pool Balance, is secured by the
same Mortgaged Property securing the related Subordinate Companion Loan (the
"Waterfront Plaza Subordinate Companion Loan" and together with the Waterfront
Plaza Loan, the "Waterfront Plaza Whole Loan") that is not included in the trust
and that has an aggregate original principal balance of $6,600,000.
The Waterfront Plaza Loan and the Waterfront Plaza Subordinate Companion
Loan will be serviced by the Master Servicer and the Special Servicer according
to the Servicing Standards. A co-lender agreement (the "Waterfront Plaza
Co-Lender Agreement") governs the respective rights and powers of the
noteholders of the Waterfront Plaza Loan and the Waterfront Plaza Subordinate
Companion Loan. The Waterfront Plaza Co-Lender Agreement provides, in general,
that:
o the Waterfront Plaza Subordinate Companion Loan is subordinate to the
Waterfront Plaza Loan;
o so long as neither (i) a monetary event of default with respect to the
Waterfront Plaza Whole Loan nor (ii) a material non-monetary event of
default with respect to the Waterfront Plaza Whole Loan has occurred and
is continuing, each of Waterfront Plaza Loan and the Waterfront Plaza
Subordinate Companion Loan are generally pari passu in right of payment
(i.e., each of the Waterfront Plaza Loan and the Waterfront Plaza
Subordinate Companion Loan are entitled to their respective pro rata
share of all payments of principal and interest, although the holder of
the Waterfront Plaza Loan will be paid its share prior to the holder of
the Waterfront Plaza Subordinate Companion Loan) and following the
occurrence and during the continuance of the events described in clauses
(i) or (ii) above, the Waterfront Plaza Loan will be senior in right of
payment to the Waterfront Plaza Subordinate Companion Loan, such that
all amounts received in respect of the Waterfront Plaza Whole Loan will
be used to pay interest on the Waterfront Plaza Loan, then to pay
principal of the Waterfront Plaza Loan until its principal balance is
reduced to zero, then to pay interest on the Waterfront Plaza
Subordinate Companion Loan, then to pay principal of the Waterfront
Plaza Subordinate Companion Loan until its principal balance is reduced
to zero; and
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o the Pooling Agreement will govern the servicing and administration of
the of the Waterfront Plaza Whole Loan
All decisions, consents, waivers, approvals and other actions on behalf of
the holders of the Waterfront Plaza Whole Loan will be effected in accordance
with the Pooling Agreement. However, certain decisions are to be approved by the
directing holder of the Waterfront Plaza Whole Loan (the "Waterfront Plaza
Directing Holder"), which, for so long as a control appraisal event does not
exist, will be the holder of the Waterfront Plaza Subordinate Companion Loan,
and after a control appraisal event has occurred, will be the holder of a
majority interest in the Controlling Class. A control appraisal event with
respect to the Waterfront Plaza Whole Loan will exist if and for so long as the
initial principal balance of the Waterfront Plaza Subordinate Companion Loan
minus principal payments, appraisal reduction amounts and realized losses
allocated to the Waterfront Plaza Subordinate Companion Loan is less than 25% of
an amount equal to the initial principal balance of the Waterfront Plaza
Subordinate Companion Loan minus any principal payments allocated to the
Waterfront Plaza Subordinate Companion Loan. The Waterfront Plaza Directing
Holder will have the right to approve the following:
o any proposed or actual foreclosure upon or comparable conversion (which
may include acquisition of REO property) of the ownership of the
Mortgaged Property securing the Waterfront Plaza Whole Loan if it is a
specially serviced loan and has come into and continues in default;
o any modification, extension, amendment or waiver of a monetary term
(including a change in the timing of payments) or any material non
monetary term of the Waterfront Plaza Whole Loan;
o any proposed or actual sale of the Mortgaged property (other than in
connection with the termination of the trust fund) for less than the
purchase price specified in the applicable pooling and servicing
agreement;
o any acceptance of a discounted payoff with respect to the Waterfront
Plaza Whole Loan;
o any determination to bring the mortgaged property or REO property into
compliance with applicable environmental laws or to otherwise address
hazardous materials located at the mortgaged property or REO property;
o any release of collateral for the Waterfront Plaza Whole Loan or any
release of the borrower (other than in accordance with the terms of, or
upon satisfaction of, the Waterfront Plaza Whole Loan);
o any acceptance of substitute or additional collateral for the Waterfront
Plaza Whole Loan (other than in accordance with the terms of the
Waterfront Plaza Whole Loan);
o any determination by the Master Servicer (i) that the Waterfront Plaza
Whole Loan has become a specially serviced loan solely by reason of the
borrower's failure to maintain insurance against damages from acts of
terrorism or (ii) to force place any insurance against damages from acts
of terrorism that is failed to be maintained by the borrower (subject to
certain limitations);
o any action to enforce rights with respect to the related mezzanine
lender under the related mezzanine intercreditor agreement;
o any determination by the Master Servicer (i) that the Waterfront Plaza
Whole Loan has become a specially serviced loan solely by reason of the
borrower's failure to maintain insurance against damages from acts of
terrorism or (ii) to force place any insurance against damages from acts
of terrorism that is failed to be maintained by the borrower (subject to
certain limitations);
o any action to enforce rights with respect to the related mezzanine
lender under the related mezzanine intercreditor agreement;
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o any waiver of a due on sale" or due on encumbrance" clause with respect
to the Waterfront Plaza Whole Loan or consent to a transfer of the
mortgaged property or interests in the borrower; and
o any acceptance of an assumption agreement releasing a borrower or
guarantor from liability under the Waterfront Plaza Whole Loan.
No advice, direction or objection from or by the Waterfront Plaza Directing
Holder may require or cause the Master Servicer or the Special Servicer, as
applicable, to violate the terms of the related loan documents, applicable law
(including the REMIC provisions of the Code) or any provision of the
intercreditor agreement or the Pooling Agreement.
The transfer of more than 49% of the ownership of the Waterfront Plaza
Subordinate Companion Loan to any person or entity other than (i) institutional
lenders or investment funds exceeding a minimum net worth requirement and their
affiliates, (ii) trusts or other entities established to acquire mortgage loans
and issue securities backed by and payable from the proceeds of such loans, or
(iii) other entities as to which a ratings confirmation has been received with
respect to the Certificates, is generally prohibited.
The intercreditor agreement for the Waterfront Plaza Whole Loan provides
that in the event that (a) any payment of principal or interest on the
Waterfront Plaza Whole Loan is 90 days delinquent, (b) the Waterfront Plaza
Whole Loan has been accelerated, (c) the principal balance of the Waterfront
Plaza Whole Loan is not paid at maturity, (d) the borrower files a petition for
bankruptcy, or (e) the Waterfront Plaza becomes a Specially Serviced Mortgage
Loan (and the Mortgage Loan is either in default or a default with respect
thereto is reasonably foreseeable) the holder of the Waterfront Plaza
Subordinate Companion Loan will have the right to purchase the Waterfront Plaza
Loan at a price generally equal to the unpaid principal balance of such loan,
plus accrued and unpaid interest thereon, all related unreimbursed property
protection advances, accrued and unpaid interest on all advances, all
unreimbursed fees payable to the master servicer and the special servicer and
any other expenses relating to the Waterfront Plaza Whole Loan.
The intercreditor agreement for the Waterfront Plaza Whole Loan also
provides that in the event the borrower fails to make any payment of principal
or interest or the borrower otherwise defaults, the holder of the Waterfront
Plaza Subordinate Companion Loan will have the right to cure such default, (a)
in the case of a monetary default within 10 days after the expiration of the
grace period and (b) in the case of a default, other than a monetary default or
a bankruptcy of the borrower, within 30 days after the expiration of the
applicable grace period as long as such party is diligently proceeding with such
cure, but at no other times. No single cure event may last longer than three
months; there must be at least six months between cure events, and there may be
no more than six cure events over the life of the Waterfront Plaza Whole Loan.
The holder of the Waterfront Plaza Subordinate Companion Loan will not have
any rights to terminate the Special Servicer with respect to the Waterfront
Plaza Whole Loan.
THE MERCADO SANTA CLARA WHOLE LOAN, THE 700 WESTPARK OFFICE BUILDING WHOLE
LOAN, AND THE HAZEL GARDENS APARTMENTS WHOLE LOAN. The Mortgage Loans identified
as loan nos. 19, 53 and 87, respectively, on Annex C to this prospectus
supplement which have outstanding principal balance as of the Cut-Off Date of
$32,800,000, $9,800,000 and $5,950,000, respectively, representing approximately
1.9% of the Initial Pool Balance, are each secured by the same Mortgaged
Property securing the related Subordinate Companion Loan. These Subordinated
Companion Loans are not included in the trust and have aggregate original
principal balances of $2,000,000, $650,000 and $250,000, respectively.
Each of these Mortgage Loans will be serviced by the Master Servicer and
the Special Servicer, as applicable, according to the Servicing Standards. At
origination, the holder of each Mortgage Loan and the holder of the related
Subordinate Companion Loan entered into an intercreditor agreement that sets
forth the respective rights of the holder of the related Mortgage Loan and the
holder of the related Subordinate Companion Loan.
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All payments in respect of the Subordinate Companion Loan will be made
directly to the servicer of the related Subordinate Companion Loan until the
occurrence of (i) either the Subordinate Companion Loan or the related mortgage
loan being accelerated, (ii) the occurrence and continuation of a monetary event
of default, under the related Whole Loan or (iii) an event of default under the
related Whole Loan caused by certain insolvency actions and prior to the
occurrence of any of these events.
Payments in respect of these Whole Loans are generally paid pari passu
between the Mortgage Loan and the related Subordinate Companion Loan, except for
casualty and condemnation payments which will be paid to the Mortgage Loan
first, and then to the related Subordinate Companion Loan. After the occurrence
and during the continuation of any of the events listed in the previous
sentence, the related servicer of the Subordinate Companion Loan is required to
forward all payments to the Master Servicer within 1 business day of receipt and
the servicer of the Subordinate Companion Loan is required to cooperate with the
related borrower and Master Servicer to require the borrower under the
Subordinate Companion Loan make all payments to the Master Servicer for
application pursuant to the related intercreditor agreement and the Mortgage
Loan will be senior in right of payment to its corresponding Subordinate
Companion Loan such that all amounts collected in respect of the Whole Loan will
first be used to pay interest and principal on the Mortgage Loan until its
principal balance has been reduced to zero and then to pay interest and
principal on the Subordinate Companion Loan.
With respect to each of these Whole Loans, the Master Servicer or Special
Servicer, as applicable, will be required to obtain the consent of the holder of
the related Companion Loan in connection with any modification or amendment that
would among other things (i) adversely effect the lien priority, (ii) increase
the interest rate or principal amount of the related mortgage, (iii) increase in
any material respect any other monetary obligation of the borrower under the
loan documents, (iv) decrease, waive or defer interest or the interest rate or
the principal amount of the related Companion Loan or release any portion of the
related Companion Loan, (v) change the related Companion Loan maturity date to a
date after the maturity date of the related mortgage loan, or shorten the
maturity date of the related mortgage loan, (vi) accept a grant of a security
interest in any other collateral for the related Whole Loan unless it also
secures the related Companion Loan, (vii) modify the cash management
arrangements, (viii) cross-default the related mortgage, (viii) obtain any
contingent interest or so called "kicker" measured on cash flow, (ix) release or
spread the lien of the related mortgage (other than in connection with repayment
or as provided in the loan documents, (x) extend the lockout period or impose
additional prepayment premiums or yield maintenance charges; provided that no
such consent will be required if the period set forth in the related
intercreditor agreement during which the holder of the related Companion Loan
may purchase the related Mortgage Loan has expired.
The intercreditor agreements with respect to these Whole Loans provide that
in the event that (a) any payment of principal or interest on the related Whole
Loan becomes 90 days or more delinquent, (b) the related Whole Loan is
accelerated, (c) the balloon payments are not made, or (d) any other event that
causes the Companion Loan to be paid on a Subordinated basis as described above,
the holder of the related Subordinate Companion Loan may at its option, within
30 days of notice of the foregoing events, elect to purchase the mortgage loan
at a price equal to the sum of (i) the outstanding principal balance of the
related Mortgage Loan, (ii) all accrued and unpaid interest thereon (other than
default interest), (iii) the amount of unreimbursed property protection advances
on the related Whole Loan, (iv) interest on any unreimbursed advances and (v)
other property protection expenses.
REPRESENTATIONS AND WARRANTIES
As of the Closing Date, each of the Loan Sellers will make with respect to
each Mortgage Loan sold by it that we include in the trust, representations and
warranties generally to the effect described below, together with any other
representations and warranties as may be required by the applicable rating
agencies as set forth and subject to the exceptions described in the related
Mortgage Loan purchase agreement:
o The information pertaining to the Mortgage Loan set forth in the loan
schedule attached to the pooling and servicing agreement is true and
accurate in all material respects as of the Cut-Off
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Date and contains all information required by the pooling and servicing
agreement to be contained therein.
o Prior to the sale of the Mortgage Loan to the Depositor, the Loan Seller
was the owner of such Mortgage Loan, had good title to it, had full
right, power and authority to sell, assign and transfer such Mortgage
Loan and has transferred such Mortgage Loan free and clear of any and
all liens, pledges and security interests of any nature encumbering such
Mortgage Loan other than with respect to Mortgage Loans in a split loan
structure, the applicable Pari Passu Companion Loans or Subordinate
Companion Loan.
o As of the date of its origination, the Mortgage Loan complied in all
material respects with, or was exempt from, all requirements of federal,
state or local law relating to the origination of the Mortgage Loan.
o The proceeds of the Mortgage Loan have been fully disbursed (except in
those cases where the full amount of the Mortgage Loan has been
disbursed but a portion thereof is being held in escrow or reserve
accounts pending the satisfaction of certain conditions relating to
leasing, repairs or other matters with respect to the Mortgaged
Property), and there is no requirement for future advances.
o The Mortgage Note, each Mortgage, and each assignment of leases and
rents, if any, with respect to the Mortgage Loan is the legal, valid and
binding obligation of the maker thereof, subject to any nonrecourse
provisions in the particular document and any state anti-deficiency
legislation, and is enforceable in accordance with its terms, except
that (1) such enforcement may be limited by (a) bankruptcy, insolvency,
receivership, reorganization, liquidation, redemption, moratorium and/or
other similar laws and (b) by general principles of equity, regardless
of whether that enforcement is considered in a proceeding in equity or
at law, and (2) certain provisions in the subject agreement or
instrument may be further limited or rendered unenforceable by
applicable law, but those limitations will not render the subject
agreement or instrument invalid as a whole and such documents taken as a
whole are enforceable to the extent necessary and customary for
practical realization of the rights and benefits afforded by the subject
agreement or instrument.
o Each related Mortgage is a valid and, subject to the exceptions and
limitations in the preceding bullet, enforceable first lien on the
related Mortgaged Property, except for permitted encumbrances and, with
respect to Mortgage Loans with a split loan structure, the applicable
companion loan. The permitted encumbrances do not, individually or in
the aggregate, materially and adversely interfere with the security
intended to be provided by the related Mortgage, the current principal
use of the related Mortgaged Property, the value of the mortgaged
property or the ability of the related mortgagor to pay its obligations
under the subject Mortgage Loan when they become due.
o Subject to the exceptions and limitations on enforceability in the
second preceding bullet, there is no valid offset, defense,
counterclaim, abatement or right of rescission with respect to the
Mortgage Note or other agreement executed by the related borrower in
connection with the Mortgage Loan.
o The assignment of each related Mortgage and assignment of leases in
favor of the Trustee (or in the case of a Non-Serviced Loan, the
assignment in favor of the current holder of the Mortgage) constitutes
the legal, valid, binding and, subject to the limitations and exceptions
in the third preceding bullet, enforceable assignment from the Seller.
o All real estate taxes and governmental assessments that prior to the
Cut-Off Date have become delinquent in respect of, or installments
thereof, which could be a lien on the related Mortgaged Property and
each related Mortgaged Property, have been paid or are not yet
delinquent, or an escrow of funds in an amount sufficient to cover those
payments has been established.
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o To the actual knowledge of the Loan Seller based solely upon due
diligence customarily performed in connection with the origination of
comparable mortgage loans, as of the Cut-off Date, there is no
proceeding pending for total or partial condemnation of each related
Mortgaged Property that materially affects its value, and each related
Mortgaged Property was free of material damage (other than deferred
maintenance for which escrows were established.
o To the actual knowledge of the Loan Seller, all insurance required under
the Mortgage Loan was in full force and effect with respect to each
related Mortgaged Property.
o As of the date of initial issuance of the offered certificates, the
Mortgage Loan is not 30 days or more past due in respect of any
scheduled payment of principal and/or interest.
o The related borrower is not a debtor in any bankruptcy, reorganization,
insolvency or comparable proceeding.
CURES AND REPURCHASES
If there exists a Material Breach of any of the representations and
warranties made by the applicable Loan Seller with respect to any of the
Mortgage Loans sold by it, as discussed under "--Representations and Warranties"
above, or if there exists a Material Document Defect with respect to any
Mortgage Loan sold by it, then the applicable Loan Seller, as applicable, will
be required either:
o to remedy that Material Breach or Material Document Defect, as the case
may be, in all material respects, or
o to repurchase the affected Mortgage Loan at a price ("Repurchase Price")
generally equal to the sum of--
1. the outstanding principal balance of that Mortgage Loan at the time
of purchase, plus
2. all outstanding interest, other than default interest, due with
respect to that Mortgage Loan pursuant to the related loan documents
through the due date in the collection period of purchase, plus
3. all unreimbursed property protection advances relating to that
Mortgage Loan, plus
4. all outstanding interest accrued on advances made by the Master
Servicer, the Special Servicer, the Trustee and/or the Fiscal Agent
with respect to that Mortgage Loan, plus
5. to the extent not otherwise covered by clause 4. of this bullet, all
outstanding Special Servicing Fees and other additional trust fund
expenses related to that Mortgage Loan, plus
6. if the affected Mortgage Loan is not repurchased by the Loan Seller
within 180 days after discovery by or notice to the applicable Loan
Seller of such Material Breach or Material Document Defect, a
Liquidation Fee in connection with such repurchase.
A "Material Breach" is a breach of a representation or warranty that
materially and adversely affects the interests of the Certificateholders in the
affected Mortgage Loan.
A "Material Document Defect" is a document defect that that materially and
adversely affects the interests of the Certificateholders in the affected
Mortgage Loan.
The time period within which the applicable Loan Seller must complete that
remedy or repurchase will generally be limited to 90 days following the earlier
of the responsible party's discovery or receipt of notice of the subject
Material Breach or Material Document Defect, as the case may be. However, if the
applicable Loan Seller is diligently attempting to correct the problem, then,
with limited exception (including if such breach or defect would cause the
mortgage loan not to be a "qualified mortgage" within
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the meaning of Section 860G(a)(3) of the Code), it will be entitled to an
additional 90 days (or more in the case of a Material Document defect resulting
from the failure of the responsible party to have received the recorded
documents) to complete that remedy or repurchase.
The cure/repurchase obligations described above will constitute the sole
remedy available to the series 2004-GG2 certificateholders in connection with a
Material Breach of any representations or warranties or a Material Document
Defect with respect to any Mortgage Loan in the Trust. None of the Depositor,
the Underwriters, the Master Servicer, the Special Servicer, the Trustee, the
Fiscal Agent, any other Loan Seller nor any other person will be obligated to
repurchase any affected Mortgage Loan in connection with a Material Breach of
any of the representations and warranties or a Material Document Defect if the
applicable Loan Seller defaults on its obligations to do so. There can be no
assurance that the applicable Loan Seller will have sufficient assets to
repurchase a Mortgage Loan if required to do so. If the breach or defect relates
to a Commerzbank/Archon Loan, each of GSMC and Commerzbank will be obligated to
take these remedial actions only with respect to the Seller Percentage Interest
of that Commerzbank/Archon Loan sold by it. Therefore, it is possible that under
certain circumstances only one of those two Loan Sellers will repurchase or
otherwise comply with the foregoing obligations.
The "Seller Percentage Interest" is as follows with respect to each
Commerzbank/Archon Loan:
GSMC COMMERZBANK
MORTGAGE LOAN PERCENTAGE INTEREST PERCENTAGE INTEREST
------------- ------------------- -------------------
Grand Canal Shoppes at the
Venetian..................... 76.6% 23.4%
Stony Point Fashion
Park......................... 50% 50%
Any Material Breach or Material Document Defect with respect to a Mortgage
Loan that is cross-collateralized with other Mortgage Loans will require the
repurchase of or substitution for such other Mortgage Loans.
THE LOAN SELLERS AND ORIGINATORS
The Loan Sellers are Goldman Sachs Mortgage Company, Greenwich Capital
Financial Products, Inc. and Commerzbank AG, New York Branch. Goldman Sachs
Mortgage Company is an affiliate of the Depositor and one of the Underwriters.
Greenwich Capital Financial Products, Inc. is an affiliate of one of the
Underwriters.
The information set forth in this prospectus supplement concerning the Loan
Sellers and their underwriting standards has been provided by the Loan Sellers,
and neither the Depositor nor the Underwriters make any representation or
warranty as to the accuracy or completeness of that information.
GOLDMAN SACHS MORTGAGE COMPANY. Goldman Sachs Mortgage Company, a New York
limited partnership, is an affiliate of Goldman, Sachs & Co., one of the
underwriters. GSMC engages primarily in the business of acquiring and depositing
mortgage assets in trusts in exchange for certificates evidencing interests in
such trusts and selling or otherwise distributing such certificates. All of the
mortgage loans (except for the WAMU Loans and the Bank of America Loans) sold by
GSMC to the depositor were originated by Archon Financial, L.P., an affiliate of
GSMC. The principal offices of GSMC are located at 85 Broad Street, New York,
New York 10004. Its telephone number is (212) 902-1000.
ARCHON FINANCIAL, L.P. Archon Financial, L.P., a Delaware limited
partnership, is an affiliate of GSMC, one of the loan sellers, and Goldman,
Sachs & Co., one of the underwriters. The Stony Point Fashion Park Loan was
jointly originated by Archon and Commerzbank AG, and Archon sold its portion to
GSMC. The Grand Canal Shoppes at the Venetian Whole Loan was originated by
Archon, and sold to GSMC. Commerzbank subsequently purchased a portion of the
Grand Canal Shoppes at the Venetian Whole Loan. Eighteen (18) Mortgage Loans
were originated by WAMU. Seven (7) Mortgage Loans were originated by BOA. The
mortgage loans originated by Archon, WAMU and BOA were sold to GSMC. The
principal offices of Archon are located at 600 East Las Colinas Boulevard, Suite
450, Irving, Texas 75039. Its telephone number is (972) 501-3900.
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GREENWICH CAPITAL FINANCIAL PRODUCTS, INC. Greenwich Capital Financial
Products, Inc., a Delaware corporation, is an affiliate of Greenwich Capital
Markets, Inc., one of the underwriters. Greenwich Capital Financial Products,
Inc. engages in the business of originating, financing and acquiring commercial
and residential mortgage loans and other receivables. The principal offices of
Greenwich Capital Financial Products, Inc. are located at 600 Steamboat Road,
Greenwich, Connecticut 06830. Its telephone number is (203) 625-2700.
COMMERZBANK AG, NEW YORK BRANCH. Commerzbank AG is the New York branch of
Commerzbank Aktiengesellschaft ("Commerzbank AG"). Commerzbank AG is a German
private-sector bank which conducts extensive banking business in the United
States, concentrating primarily in corporate lending, real estate finance,
letter of credit and banker's acceptance facilities, syndicated loan
transactions and treasury operations including foreign exchange transactions.
The Stony Point Fashion Park Loan was jointly originated by Commerzbank AG and
Archon. The Grand Canal Shoppes at the Venetian was originated by Archon, and
GSMC purchased the loan from Archon and subsequently sold a portion to
Commerzbank. The principal offices of Commerzbank AG are located at 2 World
Financial Center, 34th Floor, New York, New York 10281. Its telephone number is
(212) 266-7200.
WASHINGTON MUTUAL BANK, F.A. With a history dating back to 1889, Washington
Mutual Bank, FA is a retailer of financial services that provides a diversified
line of products and services to consumers and small businesses. At December 31,
2003, Washington Mutual, Inc. and it subsidiaries, including Washington Mutual
Bank, FA, had consolidated assets of $275.18 billion. Washington Mutual, Inc.
currently operates more than 2,400 consumer banking, mortgage lending,
commercial banking and financial services offices throughout the nation. The
commercial real estate division of Washington Mutual Bank, FA provides
construction, acquisition, rehabilitation and term financing for office, retail,
industrial and apartment properties. On July 28, 2004, Washington Mutual Bank,
FA announced a series of steps designed to alter the focus of its commercial
real estate division's lines of business. While Washington Mutual Bank's
commercial real estate division will continue to serve commercial customers
through lending to commercial real estate owners and investors, it will
discontinue its proprietary commercial mortgage-backed securitization platform,
through which it originated commercial loans for securitization.
UNDERWRITING GUIDELINES
GENERAL. Each Originator has established guidelines outlining certain
procedures with respect to underwriting mortgage loans originated by or on
behalf of the Loan Sellers or, in the case of WAMU, underwriting mortgage loans
that may be securitized, as described more fully below. The Mortgage Loans were
generally originated in accordance with such guidelines, however, in many
instances, one or more provisions of the guidelines were waived or modified.
PROPERTY ANALYSIS. Prior to origination of a loan, each Originator
typically performs, or causes to be performed, site inspections at each
property. Depending on the property type, such inspections generally include an
evaluation of one or more of the following: functionality, design,
attractiveness, visibility and accessibility of the property as well as
proximity to major thoroughfares, transportation centers, employment sources,
retail areas, educational facilities and recreational areas. Such inspections
generally assess the submarket in which the property is located, which may
include evaluating competitive or comparable properties.
CASH FLOW ANALYSIS. Each Originator typically reviews operating statements
provided by the borrower and make adjustments in order to determine the debt
service coverage ratio. See "--Certain Characteristics of the Mortgage Loans"
above.
APPRAISAL AND LOAN-TO-VALUE RATIO. Each Originator typically obtains an
appraisal that complies, or the appraiser certifies that it complies, with the
real estate appraisal regulations issued jointly by the federal bank regulatory
agencies under the Financial Institutions Reform, Recovery, and Enforcement Act
of 1989, as amended. The loan-to-value ratio of the mortgage loan is generally
based on the value set forth in the appraisal. In certain cases, an updated
appraisal is obtained.
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EVALUATION OF BORROWER. Prior to loan origination, each Originator
typically considers, with respect to the borrower and certain other individuals
and/or entities as determined by the related Originator, if any, their credit
history and prior experience as an owner and operator of commercial real estate
properties. The evaluation generally includes obtaining and reviewing a credit
report or other indication of the borrower's financial capacity; obtaining and
verifying credit references and/or business and trade references; and obtaining
and reviewing certifications provided by the borrower as to prior real estate
experience and current contingent liabilities.
ENVIRONMENTAL REPORT. Each Originator generally obtains a Phase I site
assessment or an update of a previously obtained site assessment for each
mortgaged property prepared by an environmental firm approved by the applicable
Originator. Each Originator or their designated agents typically review the
Phase I site assessment to verify the presence or absence of reported violations
of applicable laws and regulations relating to environmental protection and
hazardous waste. In cases in which the Phase I site assessment identifies
material violations and no third party is identified as responsible for such
violations, each Originator generally requires the borrower to conduct
remediation activities, or to establish an operations and maintenance plan or to
place funds in escrow to be used to address any required remediation.
PHYSICAL CONDITION REPORT. Each Originator generally obtains a current
physical condition report ("PCR") for each mortgaged property prepared by a
structural engineering firm approved by the Originators. Each Originator, or an
agent, typically reviews the PCR to determine the physical condition of the
property, and to determine the anticipated costs of necessary repair,
replacement and major maintenance or capital expenditure over the term of the
mortgage loan. In cases in which the PCR identifies an immediate need for
material repairs or replacements with an anticipated cost that is over a certain
minimum threshold or percentage of loan balance, each Originator often requires
that funds be put in escrow at the time of origination of the mortgage loan to
complete such repairs or replacements or obtains a guarantee from a sponsor of
the borrower in lieu of reserves.
TITLE INSURANCE POLICY. The borrower is required to provide, and each
Originator or its counsel typically will review, a title insurance policy for
each property. The title insurance policies provided typically must meet the
following requirements: (a) written by a title insurer licensed to do business
in the jurisdiction where the mortgaged property is located, (b) in an amount at
least equal to the original principal balance of the mortgage loan, (c)
protection and benefits run to the mortgagee and its successors and assigns, (d)
written on an American Land Title Association ("ALTA") form or equivalent policy
promulgated in the jurisdiction where the mortgaged property is located and (e)
if a survey was prepared, the legal description of the mortgaged property in the
title policy conforms to that shown on the survey.
PROPERTY INSURANCE. Each Originator typically require the borrower to
provide one or more of the following insurance policies: (1) commercial general
liability insurance for bodily injury or death and property damage; (2) an "All
Risk of Physical Loss" policy; (3) if applicable, boiler and machinery coverage;
and (4) if the mortgaged property is located in a special flood hazard area
where mandatory flood insurance purchase requirements apply, flood insurance.
ESCROW REQUIREMENTS. In connection with the origination of a mortgage loan,
each Originator may require the borrowers to fund one or more of the following
escrows: taxes and insurance, and replacement reserves; although in many
circumstances the collection of such reserves may be conditioned upon the
occurrence of an event such as an event of default under the mortgage loan or
the failure to meet a cash flow or debt service coverage ratio test.
UNDERWRITING OF THE MORTGAGE LOANS. In underwriting a mortgage loan, in
connection with the origination or acquisition of such loan, each Originator
generally reviews income information provided by the borrower and typically
consider operating history of the property, industry data regarding the local
real estate market and the appraiser's analysis. In some cases, net operating
income with respect to the related property (generally provided by the borrower)
may be adjusted by, among other things, adjustments in the calculation of the
components of net cash flow. In certain cases, the applicable Originator or the
borrower may have engaged independent accountants to review or perform certain
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procedures to verify such information, however, neither the Loan Sellers nor the
Depositor makes any representation as to the accuracy of such information.
ADDITIONAL INFORMATION
A Current Report on Form 8-K (the "Form 8-K") will be available to
purchasers of the offered Certificates and will be filed, together with the
Pooling Agreement, with the Securities and Exchange Commission within fifteen
days after the initial issuance of the Offered Certificates.
DESCRIPTION OF THE OFFERED CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the Pooling Agreement and will
consist of 25 classes (each, a "Class"), to be designated as the Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the Class
A-4 Certificates, the Class A-5 Certificates, the Class A-6 Certificates and the
Class A-1A Certificates (collectively, the "Class A Certificates"), the Class
X-P Certificates and Class X-C Certificates (together, the "Class X
Certificates"), the Class B Certificates, the Class C Certificates, the Class D
Certificates, the Class E Certificates, the Class F Certificates, the Class G
Certificates, the Class H Certificates, the Class J Certificates, the Class K
Certificates, the Class L Certificates, the Class M Certificates, the Class N
Certificates, the Class O Certificates, the Class P Certificates, the Class R
Certificates and the Class LR Certificates (collectively, the "Certificates").
Only the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class
A-1A, Class B, Class C, Class D and Class E Certificates (collectively, the
"Offered Certificates") are offered hereby. The Class X, Class F, Class G, Class
H, Class J, Class K, Class L, Class M, Class N, Class O, Class P, Class R and
Class LR Certificates (together with the Class R Certificates, the "Residual
Certificates") are not offered hereby. The Class X Certificates collectively
consist of the Class X-P and X-C Certificates.
The Certificates represent in the aggregate the entire beneficial ownership
interest in the Trust Fund consisting of: (i) the Mortgage Loans and all
payments under and proceeds of the Mortgage Loans due after the Cut-Off Date,
(ii) any Mortgaged Property acquired on behalf of the Trust Fund through
foreclosure or deed in lieu of foreclosure (upon acquisition, each, an "REO
Property"), but in the case of each Serviced Whole Loan, only to the extent of
the Trust Fund's interest therein, or a beneficial interest in a Mortgaged
Property acquired upon a foreclosure of a Non-Serviced Mortgage Loan under a
Pari Passu PSA, (iii) all of the Trustee's rights in any reserve account or
lock-box account and such funds or assets as from time to time are deposited in
the Collection Account, the Lower-Tier Distribution Account, the Upper-Tier
Distribution Account, the Interest Reserve Account, the Gain-on-Sale Reserve
Account, and any account established in connection with REO Properties (an "REO
Account"), (iv) any assignment of leases, rents and profits and any security
agreement, indemnity or guarantee given as additional security for the Mortgage
Loans, (v) the rights of the mortgagee under all insurance policies with respect
to the Mortgage Loans, and (vi) the rights under any environmental indemnity
agreements relating to the Mortgaged Properties. The Certificates do not
represent an interest in or obligation of the Depositor, the Loan Sellers, the
Originators, the Master Servicer, the Special Servicer, the Trustee, the Fiscal
Agent, the Underwriters, the borrowers, the property managers or any of their
respective affiliates.
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Upon initial issuance, the Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-1A, Class B, Class C, Class D, Class E, Class F,
Class G, Class H, Class J, Class K, Class L, Class M, Class N, Class O and Class
P Certificates (collectively, the "Sequential Pay Certificates") will have the
following Certificate Principal Amounts and the Class X Certificates will have
the Notional Amount shown below (in each case, subject to a variance of plus or
minus 5%):
INITIAL CERTIFICATE PRINCIPAL
CLASS AMOUNT OR NOTIONAL AMOUNT
----- -------------------------
Class A-1......................................... $ 45,000,000
Class A-2......................................... $ 100,000,000
Class A-3......................................... $ 256,000,000
Class A-4......................................... $ 208,000,000
Class A-5......................................... $ 173,000,000
Class A-6......................................... $1,299,650,000
Class A-1A........................................ $ 177,669,000
Class X-P......................................... $2,474,498,000
Class X-C......................................... $2,604,402,686
Class B........................................... $ 65,110,000
Class C........................................... $ 29,299,000
Class D........................................... $ 52,088,000
Class E........................................... $ 29,300,000
Class F........................................... $ 26,044,000
Class G........................................... $ 22,789,000
Class H........................................... $ 29,299,000
Class J........................................... $ 6,511,000
Class K........................................... $ 13,022,000
Class L........................................... $ 13,022,000
Class M........................................... $ 9,767,000
Class N........................................... $ 6,511,000
Class O........................................... $ 9,766,000
Class P........................................... $ 32,555,686
The "Certificate Principal Amount" of any Class of Sequential Pay
Certificates outstanding at any time represents the maximum amount to which its
holders 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, all as
described in this prospectus supplement. In the event that Realized Losses
previously allocated to a Class of Certificates in reduction of their
Certificate Principal Amounts are recovered subsequent to the reduction of the
Certificate Principal Amount of such Class to zero, such Class may receive
distributions in respect of such recoveries in accordance with the priorities
set forth below under "--Distributions--Payment Priorities" in this prospectus
supplement. The Certificate Principal Amount of each Class of Certificates
entitled to distributions of principal will in each case be reduced by amounts
actually distributed to that Class that are allocable to principal and by any
Realized Losses allocated to that Class and may be increased by recoveries of
such Realized Losses as described under "--Realized Loss" below.
The Class X Certificates will not have a Certificate Principal Amount.
Class X will represent in the aggregate the right to receive distributions of
interest accrued as described in this prospectus supplement on a notional
principal amount (a "Notional Amount"). The Notional Amount of the Class X
Certificates will be reduced to the extent of all reductions in the aggregate of
the Certificate Principal Amounts of the Sequential Pay Certificates. The
Notional Amount of the Class X Certificates will in the aggregate, for purposes
of distributions on each Distribution Date, equal the sum of the Certificate
Principal Amounts of the Sequential Pay Certificates as of the first day of the
related Interest Accrual Period.
DISTRIBUTIONS
METHOD, TIMING AND AMOUNT. Distributions on the Certificates are required
to be made on the 10th day of each month, or if that day is a Saturday, a Sunday
or a day on which banking institutions in the City of New York, New York, the
cities in which the principal servicing offices of the Master Servicer or the
Special Servicer are located, or in the city in which the corporate trust office
of the Trustee is located, are
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authorized or obligated by law, executive order or governmental decree to be
closed, on the next succeeding business day, commencing in September 2004,
provided that the distribution date will be at least 4 business days after the
related determination date (each, a "Distribution Date"). All distributions
(other than the final distribution on any Certificate) are required to be made
by the Trustee to the persons in whose names the Certificates are registered at
the close of business on the last day of the month immediately preceding the
month in which the related Distribution Date occurs or, if such day is not a
business day, the immediately preceding business day (that date, the "Record
Date"). Distributions are required to be made (a) by wire transfer in
immediately available funds to the account specified by the Certificateholder at
a bank or other entity having appropriate facilities for such payment, if the
Certificateholder provides the Trustee with wiring instructions no less than
five business days prior to the related Record Date, or otherwise (b) by check
mailed to the Certificateholder. The final distribution on any Offered
Certificates is required to be made in like manner, but only upon presentment or
surrender of the Certificate at the location specified in the notice to the
Certificateholder of such final distribution. All distributions made with
respect to a Class of Certificates on each Distribution Date will be allocated
pro rata among the outstanding Certificates of such Class based on their
respective Percentage Interests. The "Percentage Interest" evidenced by any
Offered Certificate is equal to its initial denomination as of the Closing Date
divided by the initial Certificate Principal Amount of the related Class.
The aggregate distribution to be made on the Certificates on any
Distribution Date will equal the Available Funds. The "Available Funds" for a
Distribution Date will, in general, equal the sum of the following amounts
(without duplication):
(x) the total amount of all cash received on the mortgage loans and any REO
Properties that are on deposit in the Collection Account, the Lower-Tier
Distribution Account and the REO Account, as of the business day preceding the
related Master Servicer Remittance Date (or, with respect to each Pari Passu
Loan, as of the related Master Servicer Remittance Date to the extent received
by the Master Servicer or the Trustee pursuant to the applicable Pari Passu PSA
and/or Intercreditor Agreement), exclusive of (without duplication):
(1) all scheduled Monthly Payments and balloon payments collected but
due on a Due Date (without regard to grace periods) that occurs after the
related Collection Period (without regard to grace periods);
(2) all unscheduled payments of principal (including prepayments),
unscheduled interest, net liquidation proceeds, net insurance and
condemnation proceeds and other unscheduled recoveries received after the
related Determination Date;
(3) all amounts in the Collection Account that are due or reimbursable
to any person other than the Certificateholders;
(4) with respect to each Withheld Loan and any Distribution Date
occurring in each February and in any January occurring in a year that is
not a leap year, the related Withheld Amount to the extent those funds are
on deposit in the Collection Account;
(5) all yield maintenance charges and prepayment premiums;
(6) all amounts deposited in the Collection Account in error; and
(7) any default interest received on any Mortgage Loan in excess of
interest calculated at the Mortgage Rate for the Mortgage Loan;
(y) all Compensating Interest Payments made by the Master Servicer with
respect to such Distribution Date and all P&I Advances made by the Master
Servicer, the Trustee or the Fiscal Agent, as applicable, with respect to the
Distribution Date (net of certain amounts that are due or reimbursable to
persons other than the Certificateholders); and
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(z) for the Distribution Date occurring in each March, the related Withheld
Amounts required to be deposited in the Lower-Tier Distribution Account pursuant
to the Pooling Agreement.
"Monthly Payment" with respect to any Mortgage Loan (other than any REO
Mortgage Loan) and any Due Date is the scheduled monthly payment of principal
(if any) and interest at the related Mortgage Rate which is payable by the
related borrower on such Due Date. The Monthly Payment with respect to any
Distribution Date and (i) an REO Mortgage Loan, or (ii) any Mortgage Loan which
is delinquent at its maturity date and with respect to which the Special
Servicer has not entered into an extension, is the monthly payment that would
otherwise have been payable on the related Due Date had the related Mortgage
Note not been discharged or the related maturity date had not been reached, as
the case may be, determined as set forth in the Pooling Agreement.
"Collection Period" with respect to a Distribution Date and each Mortgage
Loan is the period beginning on the day after the Due Date (without regard to
grace periods) in the month preceding the month in which such Distribution Date
occurs (or, in the case of the Distribution Date occurring in September 2004,
beginning on the day after the Cut-Off Date) and ending on the Due Date (without
regard to grace periods) in the month in which such Distribution Date occurs.
"Determination Date" with respect to any Distribution Date is the sixth day
of the calendar month of the related distribution date or, if the sixth day is
not business day, the next business day.
PAYMENT PRIORITIES. As used below in describing the priorities of
distribution of Available Funds for each Distribution Date, the terms set forth
below will have the following meanings:
The "Interest Accrual Amount" with respect to any Distribution Date and any
Class of Certificates is equal to interest for the related Interest Accrual
Period at the Pass-Through Rate for such Class on the related Certificate
Principal Amount or Notional Amount, as applicable, immediately prior to that
Distribution Date. Calculations of interest on the Certificates will be made on
the basis of a 360-day year consisting of twelve 30-day months.
The "Interest Accrual Period" with respect to any Distribution Date is the
calendar month preceding the month in which such Distribution Date occurs. Each
Interest Accrual Period with respect to each Class of Certificates is assumed to
consist of 30 days.
The "Interest Distribution Amount" with respect to any Distribution Date
and each Class of Regular Certificates will equal (A) the sum of (i) the
Interest Accrual Amount for such Distribution Date and (ii) the Interest
Shortfall, if any, for such Distribution Date, less (B) any Excess Prepayment
Interest Shortfall allocated to such Class on such Distribution Date.
An "Interest Shortfall" with respect to any Distribution Date for any Class
of Regular Certificates is the sum of (a) the portion of the Interest
Distribution Amount for such Class remaining unpaid as of the close of business
on the preceding Distribution Date, and (b) to the extent permitted by
applicable law, (i) other than in the case of the Class X Certificates, one
month's interest on that amount remaining unpaid at the Pass-Through Rate
applicable to such Class of Certificates for the current Distribution Date and
(ii) in the case of the Class X Certificates, one month's interest on that
amount remaining unpaid at the WAC Rate for such Distribution Date.
The "Pass-Through Rate" for any Class of Regular Certificates for any
Interest Accrual Period is the per annum rate at which interest accrues on the
Certificates of such Class during such Interest Accrual Period, as follows:
The Pass-Through Rate on the Class A-1 Certificates is a per annum
rate equal to 3.109%.
The Pass-Through Rate on the Class A-2 Certificates is a per annum
rate equal to 4.293%.
The Pass-Through Rate on the Class A-3 Certificates is a per annum
rate equal to 4.602%.
The Pass-Through Rate on the Class A-4 Certificates is a per annum
rate equal to 4.964%.
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The Pass-Through Rate on the Class A-5 Certificates is a per annum
rate equal to 5.279%, subject to a maximum rate equal to the WAC Rate.
The Pass-Through Rate on the Class A-6 Certificates is a per annum
rate equal to 5.396%, subject to a maximum rate equal to the WAC Rate.
The Pass-Through Rate on the Class A-1A Certificates is a per annum
rate equal to 5.002%, subject to a maximum rate equal to the WAC Rate.
The Pass-Through Rate on the Class B Certificates is a per annum rate
equal to 5.490%, subject to a maximum rate equal to the WAC Rate.
The Pass-Through Rate on the Class C Certificates is a per annum rate
equal to 5.532%, subject to a maximum rate equal to the WAC Rate.
The Pass-Through Rate on the Class D Certificates is a per annum rate
equal to the WAC Rate minus 0.1160%.
The Pass-Through Rate on the Class E Certificates is a per annum rate
equal to the WAC Rate minus 0.0180%.
The Pass-Through Rate on the Class F Certificates is a per annum rate
equal to the WAC Rate.
The Pass-Through Rate on the Class G Certificates is a per annum rate
equal to the WAC Rate.
The Pass-Through Rate on the Class H Certificates is a per annum rate
equal to the WAC Rate.
The Pass-Through Rate on the Class J Certificates is a per annum rate
equal to 5.067%, subject to a maximum rate equal to the WAC Rate.
The Pass-Through Rate on the Class K Certificates is a per annum rate
equal to 5.067%, subject to a maximum rate equal to the WAC Rate.
The Pass-Through Rate on the Class L Certificates is a per annum rate
equal to 5.067%, subject to a maximum rate equal to the WAC Rate.
The Pass-Through Rate on the Class M Certificates is a per annum rate
equal to 5.067%, subject to a maximum rate equal to the WAC Rate.
The Pass-Through Rate on the Class N Certificates is a per annum rate
equal to 5.067%, subject to a maximum rate equal to the WAC Rate.
The Pass-Through Rate on the Class O Certificates is a per annum rate
equal to 5.067%, subject to a maximum rate equal to the WAC Rate.
The Pass-Through Rate on the Class P Certificates is a per annum rate
equal to 5.067%, subject to a maximum rate equal to the WAC Rate.
The Pass-Through Rate on the Class X Certificates in the aggregate is
a per annum rate equal to the excess of (i) the WAC Rate over (ii) the
weighted average of the Pass-Through Rates on the Sequential Pay
Certificates, weighted on the basis of their respective Certificate
Principal Amounts.
The "WAC Rate" with respect to any Distribution Date is a per annum rate
equal to the product of the weighted average of the Net Mortgage Rates in effect
for the Mortgage Loans as of their respective Due Dates in the month preceding
the month in which such Distribution Date occurs weighted on the basis of the
respective Stated Principal Balances of the Mortgage Loans on such Due Dates.
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The "Regular Certificates" are the Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5, Class A-6, Class A-1A, Class B, Class C, Class D, Class E, Class
F, Class G, Class H, Class J, Class K, Class L, Class M, Class N, Class O, Class
P and Class X Certificates.
The "Net Mortgage Rate" with respect to any Mortgage Loan is a per annum
rate equal to the related Mortgage Rate in effect from time to time minus the
related Administrative Fee Rate. However, for purposes of calculating
Pass-Through Rates, the Net Mortgage Rate of such Mortgage Loan will be
determined without regard to any modification, waiver or amendment of the terms,
whether agreed to by the Special Servicer or resulting from a bankruptcy,
insolvency or similar proceeding involving the related borrower.
"Administrative Fee Rate" as of any date of determination will be equal to
the sum of the Servicing Fee Rate and the Trustee Fee Rate.
The "Mortgage Rate" with respect to any Mortgage Loan is the per annum rate
at which interest accrues on such Mortgage Loan as stated in the related
Mortgage Note in each case without giving effect to the Excess Rate or default
rate. Notwithstanding the foregoing, if any Mortgage Loan does not accrue
interest on the basis of a 360-day year consisting of twelve 30-day months,
then, for purposes of calculating Pass-Through Rates, the Mortgage Rate of such
Mortgage Loan for any one-month period preceding a related Due Date will be the
annualized rate at which interest would have to accrue in respect of such
Mortgage Loan on the basis of a 360-day year consisting of twelve 30-day months
in order to produce the aggregate amount of interest actually accrued in respect
of such Mortgage Loan during such one-month period at the related Mortgage Rate.
However, with respect to all Withheld Loans, (i) the Mortgage Rate for the one
month period preceding the Due Dates in January and February in any year which
is not a leap year or in February in any year which is a leap year will be
determined net of the Withheld Amount, and (ii) the Mortgage Rate for the
one-month period preceding the Due Date in March will be determined taking into
account the addition of any such Withheld Amounts.
The "Stated Principal Balance" of each Mortgage Loan will initially equal
its Cut-Off Date Balance and, on each Distribution Date, will be reduced by the
amount of principal payments received from the related borrower or advanced for
such Distribution Date. The Stated Principal Balance of a Mortgage Loan may also
be reduced in connection with any forced reduction of its actual unpaid
principal balance imposed by a court presiding over a bankruptcy proceeding in
which the related borrower is the debtor. See "Certain Legal Aspects of Mortgage
Loans--Anti-Deficiency Legislation; Bankruptcy Laws" in the prospectus. If any
Mortgage Loan is paid in full or the Mortgage Loan (or any Mortgaged Property
acquired in respect of the Mortgage Loan) is otherwise liquidated, then, as of
the first Distribution Date that follows the end of the Collection Period in
which that payment in full or liquidation occurred and notwithstanding that a
loss may have occurred in connection with any liquidation, the Stated Principal
Balance of the Mortgage Loan will be zero.
The "Principal Distribution Amount" for any Distribution Date will be
equal to (a) the sum, without duplication, of:
(i) the principal component of all scheduled Monthly Payments due on
the Due Date immediately preceding such Distribution Date (if received, or
advanced by the Master Servicer, Trustee or the Fiscal Agent, in respect of
such Distribution Date);
(ii) the principal component of any payment on any Mortgage Loan
received or applied on or after the date on which such payment was due
which is on deposit in the Collection Account as of the related
Determination Date, net of the principal portion of any unreimbursed P&I
Advances related to such Mortgage Loan (the amounts in clauses (i) and
(ii), the "Scheduled Principal Distribution Amount");
(iii) the portion of Unscheduled Payments allocable to principal of
any Mortgage Loan on deposit in the Collection Account as of the related
Determination Date, net of the principal portion of any unreimbursed P&I
Advances related to such Mortgage Loan; and
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(iv) the Principal Shortfall, if any, for such Distribution Date, less
(b) the sum, without duplication, of the amount of any reimbursements of:
(1) Non-Recoverable Advances, with interest on such Non-Recoverable
Advances, that are paid or reimbursed from principal collected or advanced
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
(2) Workout-Delayed Reimbursement Amounts that are paid or reimbursed
from principal collected or advanced 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, that, if any of the amounts that were previously allocated as a
Realized Loss to reduce the Certificate Principal Amount of any Class of
Certificates on any Distribution Date are subsequently recovered, such recovery
will be added to the Principal Distribution Amount for the Distribution Date
related to the period in which such recovery occurs.
So long as both the Class A-6 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. On each Distribution Date
after the Certificate Principal Amount of either the Class A-6 or Class A-1A
Certificates has been reduced to zero, a single Principal Distribution Amount
will be calculated in the aggregate for both loan groups.
The "Group 1 Principal Distribution Amount" for any Distribution Date is an
amount equal to the sum of (a) the Group 1 Principal Shortfall for that
Distribution Date, (b) the Scheduled Principal Distribution Amount for all
Mortgage Loans in Loan Group 1 for that Distribution Date and (c) the
Unscheduled Payments for all Mortgage Loans in Loan Group 1 for that
Distribution Date; provided, that the Group 1 Principal Distribution Amount for
any Distribution Date will be reduced by the amount of any reimbursements of (i)
Non-Recoverable Advances, plus interest on such Non-Recoverable Advances, that
are paid or reimbursed from principal collections on the Mortgage Loans in Loan
Group 1 in a period during which such principal collections would have otherwise
been included in the Group 1 Principal Distribution Amount for that Distribution
Date, (ii) Workout-Delayed Reimbursement Amounts that are paid or reimbursed
from principal collections on the Mortgage Loans in Loan Group 1 in a period
during which such principal collections would have otherwise been included in
the Group 1 Principal Distribution Amount for that Distribution Date and (iii)
following the reimbursements described in clauses (i) and (ii), the excess, if
any of (A) the total amount of Non-Recoverable Advances and Workout-Delayed
Reimbursement Amounts, plus interest on such Non-Recoverable Advances and
Workout-Delayed Reimbursement Amounts, that would have been paid or reimbursed
from principal collections on the Mortgage Loans in Loan Group 2 as described in
clauses (i) and (ii) of the definition of "Group 2 Principal Distribution
Amount" had the aggregate amount available for distribution of principal with
respect to Loan Group 2 been sufficient to make such reimbursements in full,
over (B) the aggregate amount available for distribution of principal with
respect to Loan Group 2 for that Distribution Date (provided, further, that, in
the case of clauses (i), (ii) and (iii) above, if any of such amounts reimbursed
from principal collections on the Mortgage Loans in Loan Group 1 are
subsequently recovered on the related Mortgage Loan, such recovery will be
applied to increase the Group 1 Principal Distribution Amount for the
Distribution Date related to the period in which such recovery occurs).
The "Group 2 Principal Distribution Amount" for any Distribution Date is an
amount equal to the sum of (a) the Group 2 Principal Shortfall for that
Distribution Date, (b) the Scheduled Principal Distribution Amount for all
Mortgage Loans in Loan Group 2 for that Distribution Date and (c) the
Unscheduled Payments for all Mortgage Loans in Loan Group 2 for that
Distribution Date; provided, that the Group 2 Principal Distribution Amount for
any Distribution Date will be reduced by the amount of any reimbursements of (i)
Non-Recoverable Advances, plus interest on such Non-Recoverable Advances, that
are paid or reimbursed from principal collections on the Mortgage Loans in Loan
Group 2 in a period during which such principal collections would have otherwise
been included in the Group 2 Principal Distribution Amount for that Distribution
Date, (ii) Workout-Delayed Reimbursement Amounts that are
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paid or reimbursed from principal collections on the Mortgage Loans in Loan
Group 2 in a period during which such principal collections would have otherwise
been included in the Group 2 Principal Distribution Amount for that Distribution
Date and (iii) following the reimbursements described in clauses (i) and (ii),
the excess, if any of (A) the total amount of Non-Recoverable Advances and
Workout-Delayed Reimbursement Amounts, plus interest on such Non-Recoverable
Advances and Workout-Delayed Reimbursement Amounts, that would have been paid or
reimbursed from principal collections on the Mortgage Loans in Loan Group 1 as
described in clauses (i) and (ii) of the definition of "Group 1 Principal
Distribution Amount" had the aggregate amount available for distribution of
principal with respect to Loan Group 1 been sufficient to make such
reimbursements in full, over (B) the aggregate amount available for distribution
of principal with respect to Loan Group 1 for that Distribution Date (provided,
further, that, in the case of clauses (i), (ii) and (iii) above, if any of such
amounts reimbursed from principal collections on the Mortgage Loans in Loan
Group 2 are subsequently recovered on the related Mortgage Loan, such recovery
will be applied to increase the Group 2 Principal Distribution Amount for the
Distribution Date related to the period in which such recovery occurs).
The "Principal Shortfall" for any Distribution Date means the amount, if
any, by which (i) the Principal Distribution Amount for the preceding
Distribution Date exceeds (ii) the aggregate amount actually distributed on such
preceding Distribution Date in respect of such Principal Distribution Amount.
For purposes of the foregoing definition of Group 1 Principal Distribution
Amount, the term "Group 1 Principal Shortfall" for any Distribution Date means
the amount, if any, by which (1) the lesser of (a) the Group 1 Principal
Distribution Amount for the prior Distribution Date and (b) the Certificate
Principal Amount of the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5
and Class A-6 Certificates, exceeds (2) the aggregate amount distributed in
respect of principal on the Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5 and Class A-6 Certificates on the preceding Distribution Date.
For purposes of the foregoing definition of Group 2 Principal Distribution
Amount, the term "Group 2 Principal Shortfall" for any Distribution Date means
the amount, if any, by which (1) the lesser of (a) the Group 2 Principal
Distribution Amount for the prior Distribution Date and (b) the Certificate
Principal Amount of the Class A-1A Certificates, exceeds (2) the aggregate
amount distributed in respect of principal on the Class A-1A Certificates on the
preceding Distribution Date.
The "Unscheduled Payments" for any Distribution Date will equal the
aggregate of: (a) all prepayments of principal received on the mortgage loans on
or prior to the related Determination Date; and (b) any other collections
(exclusive of payments by borrowers) received on the Mortgage Loans and any REO
Properties on or prior to the related Determination Date, whether in the form of
liquidation proceeds, insurance and condemnation proceeds, net income, rents,
and profits from REO Property or otherwise, that were identified and applied by
the Master Servicer as recoveries of previously unadvanced principal of the
related mortgage loan, and, in the case of liquidation proceeds and insurance
and condemnation proceeds, net of any Special Servicing Fees, Liquidation Fees,
accrued interest on Advances and other additional Trust Fund expenses incurred
in connection with the related Mortgage Loan.
An "REO Mortgage Loan" is any Mortgage Loan as to which the related
Mortgaged Property has become an REO Property or a beneficial interest in a
Mortgaged Property acquired upon a foreclosure of a Non-Serviced Mortgage Loan
under a Pari Passu PSA.
On each Distribution Date, the Available Funds are required to be
distributed in the following amounts and order of priority:
First, in respect of interest, concurrently, (i) to the Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5 and Class A-6 Certificates, pro
rata, from the portion of the Available Funds for such Distribution Date
attributable to Mortgage Loans in Loan Group 1 up to an amount equal to the
aggregate Interest Distribution Amount for those Classes, (ii) to the Class
A-1A Certificates from the portion of the Available Funds for such
Distribution Date attributable to Mortgage Loans in Loan Group 2 up to an
amount equal to the aggregate Interest Distribution Amount for such Class;
and (iii) to the Class X-P and Class X-C Certificates, pro rata, from the
Available Funds for such
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Distribution Date up to an amount equal to the aggregate Interest
Distribution Amount for those Classes, in each case based upon their
respective entitlements to interest for that Distribution Date; provided,
however, on any Distribution Date where the Available Funds (or applicable
portion thereof) is not sufficient to make distributions in full to the
related Classes of Certificates as described above, the Available Funds
will be allocated among the above Classes of Certificates without regard to
Loan Group, pro rata, in accordance with the respective amounts of Interest
Distribution Amount in respect of such Classes of Certificates on such
Distribution Date, in an amount equal to all Interest Distribution Amounts
in respect of each such Class of Certificates for such Distribution Date;
Second, to the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5,
Class A-6 and Class A-1A Certificates, in reduction of the Certificate
Principal Amount thereof: (i)(A) to the Class A-1 Certificates, in an
amount equal to the Group 1 Principal Distribution Amount and, after the
Class A-1A Certificates have been reduced to zero, the Group 2 Principal
Distribution Amount remaining after payments to the Class A-1A Certificates
have been made on such Distribution Date, until the Class A-1 Certificates
are reduced to zero, (B) to the Class A-2 Certificates, in an amount equal
to the Group 1 Principal Distribution Amount (or the portion of it
remaining after distributions on the Class A-1 Certificates) and, after the
Class A-1A and Class A-1 Certificates have been reduced to zero, the Group
2 Principal Distribution Amount remaining after payments to the Class A-1A
and Class A-1 Certificates have been made on such Distribution Date, until
the Class A-2 Certificates are reduced to zero, (C) to the Class A-3
Certificates, in an amount equal to the Group 1 Principal Distribution
Amount (or the portion of it remaining after distributions on the Class A-1
and Class A-2 Certificates) and, after the Class A-1A, Class A-1 and Class
A-2 Certificates have been reduced to zero, the Group 2 Principal
Distribution Amount remaining after payments to the Class A-1A, Class A-1
and Class A-2 Certificates have been made on such Distribution Date, until
the Class A-3 Certificates are reduced to zero, (D) to the Class A-4
Certificates, in an amount equal to the Group 1 Principal Distribution
Amount (or the portion of it remaining after distributions on the Class
A-1, Class A-2 and Class A-3 Certificates) and, after the Class A-1A, Class
A-1, Class A-2 and Class A-3 Certificates have been reduced to zero, the
Group 2 Principal Distribution Amount remaining after payments to the Class
A-1A, Class A-1, Class A-2 and Class A-3 Certificates have been made on
such Distribution Date, until the Class A-4 Certificates are reduced to
zero, (E) to the Class A-5 Certificates, in an amount equal to the Group 1
Principal Distribution Amount (or the portion of it remaining after
distributions on the Class A-1, Class A-2, Class A-3 and Class A-4
Certificates) and, after the Class A-1A, Class A-1, Class A-2, Class A-3
and Class A-4 Certificates have been reduced to zero, the Group 2 Principal
Distribution Amount remaining after payments to the Class A-1A, Class A-1,
Class A-2, Class A-3 and Class A-4 Certificates have been made on such
Distribution Date, until the Class A-5 Certificates are reduced to zero,
(F) to the Class A-6 Certificates, in an amount equal to the Group 1
Principal Distribution Amount (or the portion of it remaining after
distributions on the Class A-1, Class A-2, Class A-3, Class A-4 and Class
A-5 Certificates) and, after the Class A-1A, Class A-1, Class A-2, Class
A-3, Class A-4 and Class A-5 Certificates have been reduced to zero, the
Group 2 Principal Distribution Amount remaining after payments to the Class
A-1A, Class A-1, Class A-2, Class A-3, Class A-4 and Class A-5 Certificates
have been made on such Distribution Date, until the Class A-6 Certificates
are reduced to zero, and (ii) to the Class A-1A Certificates, in an amount
equal to the Group 2 Principal Distribution Amount and, after the Class A-6
Certificates have been reduced to zero, the Group 1 Principal Distribution
Amount remaining after payments to the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5 and Class A-6 Certificates have been made on such
Distribution Date, until the Class A-1A Certificates are reduced to zero;
Third, to the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5,
Class A-6 and Class A-1A Certificates, pro rata based upon the aggregate
unreimbursed Realized Losses previously allocated to such Class, plus
interest on that amount at the Pass-Through Rate for such Class compounded
monthly from the date the related Realized Loss was allocated to such
Class;
Fourth, to the Class B Certificates, in respect of interest, up to an
amount equal to the Interest Distribution Amount of such Class;
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Fifth, to the Class B Certificates, in reduction of their Certificate
Principal Amount, up to an amount equal to the Principal Distribution
Amount for such Distribution Date, less the portion of such Principal
Distribution Amount distributed pursuant to all prior clauses, until their
Certificate Principal Amount is reduced to zero;
Sixth, to the Class B Certificates, an amount equal to the aggregate
of unreimbursed Realized Losses previously allocated to such Class, plus
interest on that amount at the Pass-Through Rate for such Class compounded
monthly from the date the related Realized Loss was allocated to such
Class;
Seventh, to the Class C Certificates, in respect of interest, up to an
amount equal to the Interest Distribution Amount of such Class;
Eighth, to the Class C Certificates, in reduction of their Certificate
Principal Amount, up to an amount equal to the Principal Distribution
Amount for such Distribution Date, less the portion of such Principal
Distribution Amount distributed pursuant to all prior clauses, until their
Certificate Principal Amount is reduced to zero;
Ninth, to the Class C Certificates, an amount equal to the aggregate
of unreimbursed Realized Losses previously allocated to such Class, plus
interest on that amount at the Pass-Through Rate for such Class compounded
monthly from the date the related Realized Loss was allocated to such
Class;
Tenth, to the Class D Certificates, in respect of interest, up to an
amount equal to the Interest Distribution Amount of such Class;
Eleventh, to the Class D Certificates, in reduction of their
Certificate Principal Amount, up to an amount equal to the Principal
Distribution Amount for such Distribution Date, less the portion of such
Principal Distribution Amount distributed pursuant to all prior clauses,
until their Certificate Principal Amount is reduced to zero;
Twelfth, to the Class D Certificates, an amount equal to the aggregate
of unreimbursed Realized Losses previously allocated to such Class, plus
interest on that amount at the Pass-Through Rate for such Class compounded
monthly from the date the related Realized Loss was allocated to such
Class;
Thirteenth, to the Class E Certificates, in respect of interest, up to
an amount equal to the Interest Distribution Amount of such Class;
Fourteenth, to the Class E Certificates, in reduction of their
Certificate Principal Amount, up to an amount equal to the Principal
Distribution Amount for such Distribution Date, less the portion of such
Principal Distribution Amount distributed pursuant to all prior clauses,
until their Certificate Principal Amount is reduced to zero;
Fifteenth, to the Class E Certificates, an amount equal to the
aggregate of unreimbursed Realized Losses previously allocated to such
Class, plus interest on that amount at the Pass-Through Rate for such Class
compounded monthly from the date the related Realized Loss was allocated to
such Class;
Sixteenth, to the Class F Certificates, in respect of interest, up to
an amount equal to the Interest Distribution Amount of such Class;
Seventeenth, to the Class F Certificates, in reduction of their
Certificate Principal Amount, up to an amount equal to the Principal
Distribution Amount for such Distribution Date, less the portion of such
Principal Distribution Amount distributed pursuant to all prior clauses,
until their Certificate Principal Amount is reduced to zero;
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Eighteenth, to the Class F Certificates, an amount equal to the
aggregate of unreimbursed Realized Losses previously allocated to such
Class, plus interest on that amount at the Pass-Through Rate for such Class
compounded monthly from the date the related Realized Loss was allocated to
such Class;
Nineteenth, to the Class G Certificates, in respect of interest, up to
an amount equal to the Interest Distribution Amount of such Class;
Twentieth, to the Class G Certificates, in reduction of their
Certificate Principal Amount, up to an amount equal to the Principal
Distribution Amount for such Distribution Date, less the portion of such
Principal Distribution Amount distributed pursuant to all prior clauses,
until their Certificate Principal Amount is reduced to zero;
Twenty-first, to the Class G Certificates, an amount equal to the
aggregate of unreimbursed Realized Losses previously allocated to such
Class, plus interest on that amount at the Pass-Through Rate for such Class
compounded monthly from the date the related Realized Loss was allocated to
such Class;
Twenty-second, to the Class H Certificates, in respect of interest, up
to an amount equal to the Interest Distribution Amount of such Class;
Twenty-third, to the Class H Certificates, in reduction of their
Certificate Principal Amount, up to an amount equal to the Principal
Distribution Amount for such Distribution Date, less the portion of such
Principal Distribution Amount distributed pursuant to all prior clauses,
until their Certificate Principal Amount is reduced to zero;
Twenty-fourth, to the Class H Certificates, an amount equal to the
aggregate of unreimbursed Realized Losses previously allocated to such
Class, plus interest on that amount at the Pass-Through Rate for such Class
compounded monthly from the date the related Realized Loss was allocated to
such Class;
Twenty-fifth, to the Class J Certificates, in respect of interest, up
to an amount equal to the Interest Distribution Amount of such Class;
Twenty-sixth, to the Class J Certificates, in reduction of their
Certificate Principal Amount, up to an amount equal to the Principal
Distribution Amount for such Distribution Date, less the portion of such
Principal Distribution Amount distributed pursuant to all prior clauses,
until their Certificate Principal Amount is reduced to zero;
Twenty-seventh, to the Class J Certificates, an amount equal to the
aggregate of unreimbursed Realized Losses previously allocated to such
Class, plus interest on that amount at the Pass-Through Rate for such Class
compounded monthly from the date the related Realized Loss was allocated to
such Class;
Twenty-eighth, to the Class K Certificates, in respect of interest, up
to an amount equal to the Interest Distribution Amount of such Class;
Twenty-ninth, to the Class K Certificates, in reduction of their
Certificate Principal Amount, up to an amount equal to the Principal
Distribution Amount for such Distribution Date, less the portion of such
Principal Distribution Amount distributed pursuant to all prior clauses,
until their Certificate Principal Amount is reduced to zero;
Thirtieth, to the Class K Certificates, an amount equal to the
aggregate of unreimbursed Realized Losses previously allocated to such
Class, plus interest on that amount at the Pass-Through Rate for such Class
compounded monthly from the date the related Realized Loss was allocated to
such Class;
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Thirty-first, to the Class L Certificates, in respect of interest, up
to an amount equal to the Interest Distribution Amount of such Class;
Thirty-second, to the Class L Certificates, in reduction of their
Certificate Principal Amount, up to an amount equal to the Principal
Distribution Amount for such Distribution Date, less the portion of such
Principal Distribution Amount distributed pursuant to all prior clauses,
until their Certificate Principal Amount is reduced to zero;
Thirty-third, to the Class L Certificates, an amount equal to the
aggregate of unreimbursed Realized Losses previously allocated to such
Class, plus interest on that amount at the Pass-Through Rate for such Class
compounded monthly from the date the related Realized Loss was allocated to
such Class;
Thirty-fourth, to the Class M Certificates, in respect of interest, up
to an amount equal to the Interest Distribution Amount of such Class;
Thirty-fifth, to the Class M Certificates, in reduction of their
Certificate Principal Amount, up to an amount equal to the Principal
Distribution Amount for such Distribution Date, less the portion of such
Principal Distribution Amount distributed pursuant to all prior clauses,
until their Certificate Principal Amount is reduced to zero;
Thirty-sixth, to the Class M Certificates, an amount equal to the
aggregate of unreimbursed Realized Losses previously allocated to such
Class, plus interest on that amount at the Pass-Through Rate for such Class
compounded monthly from the date the related Realized Loss was allocated to
such Class;
Thirty-seventh, to the Class N Certificates, in respect of interest,
up to an amount equal to the Interest Distribution Amount of such Class;
Thirty-eighth, to the Class N Certificates, in reduction of their
Certificate Principal Amount, up to an amount equal to the Principal
Distribution Amount for such Distribution Date, less the portion of such
Principal Distribution Amount distributed pursuant to all prior clauses,
until their Certificate Principal Amount is reduced to zero;
Thirty-ninth, to the Class N Certificates, an amount equal to the
aggregate of unreimbursed Realized Losses previously allocated to such
Class, plus interest on that amount at the Pass-Through Rate for such Class
compounded monthly from the date the related Realized Loss was allocated to
such Class;
Fortieth, to the Class O Certificates, in respect of interest, up to
an amount equal to the Interest Distribution Amount of such Class;
Forty-first, to the Class O Certificates, in reduction of their
Certificate Principal Amount, up to an amount equal to the Principal
Distribution Amount for such Distribution Date, less the portion of such
Principal Distribution Amount distributed pursuant to all prior clauses,
until their Certificate Principal Amount is reduced to zero;
Forty-second, to the Class O Certificates, an amount equal to the
aggregate of unreimbursed Realized Losses previously allocated to such
Class, plus interest on that amount at the Pass-Through Rate for such Class
compounded monthly from the date the related Realized Loss was allocated to
such Class;
Forty-third, to the Class P Certificates, in respect of interest, up
to an amount equal to the Interest Distribution Amount of such Class;
Forty-fourth, to the Class P Certificates, in reduction of their
Certificate Principal Amount, up to an amount equal to the Principal
Distribution Amount for such
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Distribution Date, less the portion of such Principal Distribution Amount
distributed pursuant to all prior clauses, until their Certificate
Principal Amount is reduced to zero;
Forty-fifth, to the Class P Certificates, an amount equal to the
aggregate of unreimbursed Realized Losses previously allocated to such
Class, plus interest on that amount at the Pass-Through Rate for such Class
compounded monthly from the date the related Realized Loss was allocated to
such Class; and
Forty-sixth, to the Class R Certificates, any amounts remaining in the
Upper-Tier Distribution Account; and to the Class LR Certificates, any
amounts remaining in the Lower-Tier Distribution Account.
On each Distribution Date occurring on and after the date the Certificate
Principal Amount of all Sequential Pay Certificates (other than the Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5, Class A-6 and Class A-1A
Certificates) is reduced to zero (that date, the "Cross Over Date"), regardless
of the allocation of principal payments described in priority Second above, the
Principal Distribution Amount for such Distribution Date is required to be
distributed, pro rata (based on their respective Certificate Principal Amounts),
among the Classes of the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5,
Class A-6 and Class A-1A Certificates without regard to the priorities set forth
above.
All references to "pro rata" in the preceding clauses, unless otherwise
specified, mean pro rata based upon the amounts distributable pursuant to such
clause.
PREPAYMENT PREMIUMS. On any Distribution Date, prepayment premiums and
yield maintenance charges collected prior to the related Determination Date are
required to be distributed to the holders of the Classes of Certificates as
described below.
On each Distribution Date, yield maintenance charges collected on the
Mortgage Loans and on deposit in the Collection Account as of the related
Determination Date are required to be distributed to the following Classes of
Certificates: to the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5,
Class A-6, Class A-1A, Class B, Class C, Class D, Class E, Class F, Class G and
Class H Certificates, in an amount equal to the product of (a) a fraction whose
numerator is the amount distributed as principal to such Class in respect of the
applicable Loan Group on such Distribution Date, and whose denominator is the
total amount distributed in respect of the applicable Loan Group as principal to
the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class
A-1A, Class B, Class C, Class D, Class E, Class F, Class G, Class H, Class J,
Class K, Class L, Class M, Class N, Class O and Class P Certificates on such
Distribution Date, (b) the Base Interest Fraction for the related principal
prepayment and such Class of Certificates, and (c) the aggregate amount of such
yield maintenance charges. Any remaining yield maintenance charges with respect
to such Distribution Date will be distributed to the holders of the Class X-C
Certificates.
The "Base Interest Fraction" with respect to any principal prepayment on
any Mortgage Loan and with respect to any Class of Offered Certificates is a
fraction (a) whose numerator is the amount, if any, by which (i) the
Pass-Through Rate on such Class of Certificates exceeds (ii) the discount rate
used in accordance with the related Mortgage Loan documents in calculating the
yield maintenance charge with respect to such principal prepayment and (b) whose
denominator is the amount, if any, by which the (i) Mortgage Rate on such
Mortgage Loan exceeds (ii) the discount rate used in accordance with the related
Mortgage Loan documents in calculating the yield maintenance charge with respect
to such principal prepayment; provided, however, that under no circumstances
shall the Base Interest Fraction be greater than one. If such discount rate is
greater than or equal to the lesser of (x) the Mortgage Rate on such Mortgage
Loan and (y) the Pass-Through Rate described in the preceding sentence, then the
Base Interest Fraction shall equal zero.
If a prepayment premium is imposed in connection with a prepayment rather
than a yield maintenance charge, then the prepayment premium so collected will
be allocated as described above. For this purpose, the discount rate used to
calculate the Base Interest Fraction will be the discount rate used to determine
the yield maintenance charge for Mortgage Loans that require payment at the
greater
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of a yield maintenance charge or a minimum amount equal to a fixed percentage of
the principal balance of the Mortgage Loan and the latter is the greater amount,
or, for Mortgage Loans that only have a prepayment premium based on a fixed
percentage of the principal balance of the Mortgage Loan, such other discount
rate as may be specified in the related Mortgage Loan documents.
No prepayment premiums or yield maintenance charges will be distributed to
holders of the Class J, Class K, Class L, Class M, Class N, Class O, Class P,
Class X-P or Residual Certificates. Instead, after the Certificate Principal
Amount of the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6,
Class A-1A, Class B, Class C, Class D, Class E, Class F, Class G and Class H
Certificates have been reduced to zero, all prepayment premiums and yield
maintenance charges with respect to Mortgage Loans will be distributed to
holders of the Class X-C Certificates. For a description of prepayment premiums
and yield maintenance charges, see Annex C to this prospectus supplement. See
also "Certain Legal Aspects of the Mortgage Loans--Enforceability of Certain
Provisions--Prepayment Provisions" in the prospectus.
Prepayment premiums and yield maintenance charges will be distributed on
any Distribution Date only to the extent they are received in respect of the
Mortgage Loans as of the related Determination Date.
DISTRIBUTIONS OF EXCESS LIQUIDATION PROCEEDS. Except to the extent Realized
Losses have been allocated to Classes of Certificates that include the Offered
Certificates, excess liquidation proceeds will not be available for distribution
to the holders of the Offered Certificates. "Excess Liquidation Proceeds" are
the excess of:
o proceeds from the sale or liquidation of a Mortgage Loan or REO
Property, net of expenses and related Advances and interest on Advances,
over
o the amount that would have been received if a principal payment in full
had been made on the Due Date immediately following the date upon which
the proceeds were received.
REALIZED LOSSES. The Certificate Principal Amount of each Class of
Sequential Pay Certificates will be reduced without distribution on any
Distribution Date as a write-off to the extent of any Realized Loss allocated to
such Class on such Distribution Date. A "Realized Loss" with respect to any
Distribution Date is the amount, if any, by which the aggregate Certificate
Principal Amount of all such Classes of Certificates after giving effect to
distributions made on such Distribution Date exceeds the aggregate Stated
Principal Balance of the Mortgage Loans after giving effect to any payments of
principal received or advanced with respect to the Due Date occurring
immediately prior to such Distribution Date (for purposes of this calculation
only, the aggregate Stated Principal Balance will not be reduced by the amount
of principal payments received on the Mortgage Loans that were used to reimburse
the Master Servicer, the Special Servicer, the Trustee or the Fiscal Agent from
general collections of principal on the Mortgage Loans for Workout-Delayed
Reimbursement Amounts, to the extent those amounts are not otherwise determined
to be Nonrecoverable Advances). Any such write-offs will be applied to such
Classes of Certificates in the following order, until each is reduced to zero:
first, to the Class P Certificates; second, to the Class O Certificates; third,
to the Class N Certificates; fourth, to the Class M Certificates; fifth, to the
Class L Certificates; sixth, to the Class K Certificates; seventh, to the Class
J Certificates; eighth, to the Class H Certificates; ninth, to the Class G
Certificates; tenth, to the Class F Certificates; eleventh, to the Class E
Certificates; twelfth, to the Class D Certificates; thirteenth, to the Class C
Certificates; fourteenth, to the Class B Certificates and, finally, pro rata, to
the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6 and Class
A-1A Certificates, based on their respective Certificate Principal Amounts,
regardless of Loan Group. The Notional Amount of the Class X Certificates will
be reduced to reflect reductions in the Certificate Principal Amounts of the
Sequential Pay Certificates resulting from allocations of Realized Losses. Any
amounts recovered in respect of any amounts previously written off as Realized
Losses (with interest thereon) as a result of the reimbursement of
Nonrecoverable Advances to the Master Servicer, Special Servicer, Trustee or
Fiscal Agent (or a servicer under a Pari Passu PSA) from amounts otherwise
distributable as principal will (1) increase the Principal Distribution Amount
for the Distribution Date related to the period in which such recovery occurs
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and (2) will increase the Certificate Principal Amount of the Certificates
previously subject to a reduction as a result of the allocation of Realized
Losses in an amount equal to the amount recovered.
Shortfalls in Available Funds resulting from additional servicing
compensation other than the Servicing Fee, interest on Advances to the extent
not covered by default interest or late payment charges, extraordinary expenses
of the Trust Fund, a reduction of the interest rate of a Mortgage Loan by a
bankruptcy court pursuant to a plan of reorganization or pursuant to any of its
equitable powers or other unanticipated or default-related expenses (not
constituting Realized Losses) will reduce the amounts distributable on the
Classes of Regular Certificates in the same order as Realized Losses are applied
to reduce the Certificate Principal Amounts of such Classes.
PREPAYMENT INTEREST SHORTFALLS. If a borrower prepays a Mortgage Loan, in
whole or in part, after the Due Date but on or before the Determination Date in
any calendar month, the amount of interest (net of related Servicing Fees)
accrued on such prepayment from such Due Date to, but not including, the date of
prepayment (or any later date through which interest accrues) will, to the
extent actually collected, constitute a "Prepayment Interest Excess."
Conversely, if a borrower prepays a Mortgage Loan, in whole or in part, after
the Determination Date in any calendar month and does not pay interest on such
prepayment through the day prior to the next Due Date, then the shortfall in a
full month's interest (net of related Servicing Fees) on such prepayment will
constitute a "Prepayment Interest Shortfall." Prepayment Interest Excesses (to
the extent not offset by Prepayment Interest Shortfalls) collected on the
Mortgage Loans will be retained by the Master Servicer as additional servicing
compensation, as determined on a pool-wide aggregate basis. The aggregate of any
Prepayment Interest Shortfalls resulting from any principal prepayments made on
the mortgage loans to be included in the Available Funds for any Distribution
Date that are not covered by the Master Servicer's Compensating Interest Payment
for the related Distribution Date (the aggregate of the Prepayment Interest
Shortfalls that are not so covered, as to the related Distribution Date, the
"Excess Prepayment Interest Shortfall") will be allocated pro rata on that
Distribution Date among each Class of Certificates (other than the Class R and
Class LR Certificates), in accordance with their respective Interest Accrual
Amounts for that Distribution Date.
The Master Servicer will be required to deliver to the Trustee for deposit
in the Lower-Tier Distribution Account on each Master Servicer Remittance Date,
without any right of reimbursement thereafter, a cash payment (a "Compensating
Interest Payment") in an amount equal to the lesser of (1) the aggregate amount
of voluntary Prepayment Interest Shortfalls incurred in connection with
principal prepayments received in respect of the Mortgage Loans (other than a
Non-Serviced Loan and other than a Specially Serviced Mortgage Loan or defaulted
Mortgage Loan), other than prepayments received in connection with the receipt
of insurance proceeds or condemnation proceeds, for the related Distribution
Date, and (2) the aggregate of (a) its Servicing Fee up to a maximum of 0.01%
per annum for the related Distribution Date with respect to each and every
Mortgage Loan and REO Mortgage Loan for which such Servicing Fees are being paid
in such Collection Period and (b) all Prepayment Interest Excesses and net
investment earnings on the Prepayment Interest Excesses; provided that if any
Prepayment Interest Shortfall occurs as a result of the Master Servicer's
allowing the borrower to deviate from the terms of the related Mortgage Loan
documents, the Master Servicer will be required to pay an amount equal to the
entire Prepayment Interest Shortfall with respect to that Mortgage Loan. No
compensating interest payments will be made by the Master Servicer for any
Non-Serviced Loans and no Master Servicer under a Pari Passu PSA will be
required to make Compensating Interest Payments on any Non-Serviced Loan.
SUBORDINATION
As a means of providing a certain amount of protection to the holders of
the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-1A
and Class X Certificates against losses associated with delinquent and defaulted
Mortgage Loans, the rights of the holders of the Class B, Class C, Class D,
Class E, Class F, Class G, Class H, Class J, Class K, Class L, Class M, Class N,
Class O and Class P Certificates to receive distributions of interest and
principal, as applicable, will be subordinated to such rights of the holders of
the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-1A
and Class X Certificates. The Class B Certificates will likewise be protected by
the subordination of the Class C, Class D, Class E, Class F, Class G, Class H,
Class J, Class K, Class L,
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Class M, Class N, Class O and Class P Certificates. The Class C Certificates
will likewise be protected by the subordination of the Class D, Class E, Class
F, Class G, Class H, Class J, Class K, Class L, Class M, Class N, Class O and
Class P Certificates. The Class D Certificates will likewise be protected by the
subordination of the Class E, Class F, Class G, Class H, Class J, Class K, Class
L, Class M, Class N, Class O and Class P Certificates. The Class E Certificates
will likewise be protected by the subordination of Class F, Class G, Class H,
Class J, Class K, Class L, Class M, Class N, Class O and Class P Certificates.
On and after the Cross Over Date has occurred, allocation of principal will
be made to the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6
and Class A-1A Certificates, pro rata until their Certificate Principal Amounts
have been reduced to zero, regardless of Loan Groups. Prior to the Cross-Over
Date, allocation of principal will be made (i) with respect to Loan Group 1,
first to the Class A-1 Certificates until their Certificate Principal Amounts
have been reduced to zero, second to the Class A-2 Certificates until their
Certificate Principal Amounts have been reduced to zero, third to the Class A-3
Certificates until their Certificate Principal Amounts have been reduced to
zero, fourth to the Class A-4 Certificates until their Certificate Principal
Amounts have been reduced to zero, fifth to the Class A-5 Certificates until
their Certificate Principal Amounts have been reduced to zero and sixth to the
Class A-6 Certificates until their Certificate Principal Amounts have been
reduced to zero and then if the Class A-1A Certificates are still outstanding,
to the Class A-1A Certificates until their Certificate Principal Amounts have
been reduced to zero and (ii) with respect to Loan Group 2, to the Class A-1A
Certificates until their Certificate Principal Amounts have been reduced to zero
and if any of the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5 or Class
A-6 Certificates are still outstanding, to the Class A-1 Certificates until
their Certificate Principal Amounts have been reduced to zero, then to the Class
A-2 Certificates until their Certificate Principal Amounts have been reduced to
zero, then to the Class A-3 Certificates until their Certificate Principal
Amounts have been reduced to zero, then to the Class A-4 Certificates until
their Certificate Principal Amounts have been reduced to zero, then to the Class
A-5 Certificates until their Certificate Principal Amounts have been reduced to
zero, and then to the Class A-6 Certificates until their Certificate Principal
Amounts have been reduced to zero. Allocation to the Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5, Class A-6 and Class A-1A Certificates, for so long as
they are outstanding, of the entire Principal Distribution Amount with respect
to the related Loan Group for each Distribution Date will have the effect of
reducing the aggregate Certificate Principal Amount of the Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5, Class A-6 and Class A-1A Certificates at a
proportionately faster rate than the rate at which the aggregate Stated
Principal Balance of the pool of mortgage loans will decline. Therefore, as
principal is distributed to the holders of the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6 and Class A-1A Certificates, the percentage
interest in the trust fund evidenced by the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6 and Class A-1A Certificates will be decreased
(with a corresponding increase in the percentage interest in the trust fund
evidenced by the Sequential Pay Certificates other than the Class A
Certificates), thereby increasing, relative to their respective Certificate
Principal Amounts, the subordination afforded the Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5, Class A-6 and Class A-1A Certificates by the
Sequential Pay Certificates other than the Class A Certificates.
This subordination will be effected in two ways: (i) by the preferential
right of the holders of a Class of Certificates to receive on any Distribution
Date the amounts of interest and principal distributable on their Certificates
prior to any distribution being made on such Distribution Date in respect of any
Classes of Certificates subordinate to that other Class and (ii) by the
allocation of Realized Losses: first, to the Class P Certificates; second, to
the Class O Certificates; third, to the Class N Certificates; fourth, to the
Class M Certificates; fifth, to the Class L Certificates; sixth, to the Class K
Certificates; seventh, to the Class J Certificates; eighth, to the Class H
Certificates; ninth, to the Class G Certificates; tenth, to the Class F
Certificates; eleventh, to the Class E Certificates; twelfth, to the Class D
Certificates; thirteenth, to the Class C Certificates; fourteenth, to the Class
B Certificates and, finally, to the Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6 and Class A-1A Certificates, pro rata, based on their
respective Certificate Principal Amounts (regardless of Loan Groups). No other
form of credit enhancement will be available with respect to any Class of
Offered Certificates.
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APPRAISAL REDUCTIONS
After an Appraisal Reduction Event has occurred, an Appraisal Reduction is
required to be calculated. An "Appraisal Reduction Event" will occur on the
earliest of:
o the date on which a modification of the Mortgage Loan that, among other
things, reduces the amount of Monthly Payments on a Mortgage Loan, or
changes any other material economic term of the Mortgage Loan or impairs
the security of the Mortgage Loan, becomes effective as a result of a
modification of the related Mortgage Loan following the occurrence of a
Servicing Transfer Event,
o that date on which the Mortgage Loan is 60 days or more delinquent in
respect of any scheduled monthly debt service payment (other than a
balloon payment),
o that date on which the Mortgage Loan that is delinquent in respect of
its balloon payment has been (A) 20 days delinquent (except as described
in clause B below), or (B) if the related borrower has delivered a
refinancing commitment acceptable to the Special Servicer prior to the
date the balloon payment was due, 30 days delinquent,
o that date on which the related Mortgaged Property became an REO
Property,
o the 60th day after a receiver or similar official is appointed (and
continues in that capacity) in respect of the related Mortgaged
Property,
o the 60th day after the date the related borrower is subject to a
bankruptcy, insolvency or similar proceedings (if not dismissed within
those 60 days), or
o the date on which the Mortgage Loan remains outstanding five (5) years
following any extension of its maturity date pursuant to the Pooling
Agreement.
No Appraisal Reduction Event may occur at any time when the aggregate
Certificate Principal Amount of all classes of Certificates (other than the
Class A Certificates) has been reduced to zero.
Within 60 days of an Appraisal Reduction Event with respect to a Mortgage
Loan, the Special Servicer is required to obtain an appraisal of the related
Mortgaged Property from an independent MAI-designated appraiser, provided that
if the Mortgage Loan has a principal balance of less than $2,000,000 at that
time, a desktop estimation of value may be substituted for the required
appraisal. No appraisal will be required if an appraisal was obtained within the
prior twelve months unless the Special Servicer determines that such appraisal
is materially inaccurate. The cost of the appraisal will be advanced by the
Master Servicer and will be reimbursed to the Master Servicer as a Property
Advance.
On the first Determination Date occurring on or after the delivery of the
appraisal or the completion of the desktop estimation, the Special Servicer will
be required to calculate the Appraisal Reduction, if any, taking into account
the results of such appraisal or valuation. In the event that the Special
Servicer has not received any required appraisal within 120 days after the event
described in the definition of Appraisal Reduction Event (without regard to the
time period set forth in the definition), the amount of the Appraisal Reduction
will be deemed to be an amount, calculated as of the Determination Date
immediately succeeding the date on which the appraisal is obtained, to be an
amount equal to 25% of the current Stated Principal Balance of the related
Mortgage Loan until the appraisal is received.
The "Appraisal Reduction" for any Distribution Date and for any Mortgage
Loan (including a Serviced Whole Loan) as to which any Appraisal Reduction Event
has occurred and the Appraisal Reduction is required to be calculated will be
equal to the excess of (a) the Stated Principal Balance of that Mortgage Loan
(or Serviced Whole Loan) over (b) the excess of (1) the sum of (i) 90% of the
appraised value of the related Mortgaged Property as determined by the appraisal
or desktop estimation, minus such downward adjustments as the Special Servicer,
in accordance with the Servicing Standards, may make (without implying any
obligation to do so) based upon the Special Servicer's review of the appraisal
and such
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other information as the Special Servicer may deem appropriate and (ii) all
escrows, letters of credit and reserves in respect of such Mortgage Loan (or
Serviced Whole Loan) as of the date of calculation over (2) the sum as of the
Due Date occurring in the month of the date of determination of (A) to the
extent not previously advanced by the Master Servicer, the Trustee or the Fiscal
Agent, all unpaid interest on that Mortgage Loan (or Serviced Whole Loan) at a
per annum rate equal to the Mortgage Rate, (B) all unreimbursed Advances and
interest on those Advances at the Advance Rate in respect of that Mortgage Loan
(or Serviced Whole Loan) and (C) all currently due and unpaid real estate taxes
and assessments, insurance premiums and ground rents, unpaid Special Servicing
Fees and all other amounts due and unpaid under the Mortgage Loan (or Serviced
Whole Loan) (which tax, premiums, ground rents and other amounts have not been
the subject of an Advance by the Master Servicer, Trustee or the Fiscal Agent,
as applicable). The Master Servicer will be entitled to conclusively rely on the
Special Servicer's calculation or determination of any Appraisal Reduction
amount.
The Grand Canal Shoppes at the Venetian Whole Loan will be treated as a
single Mortgage Loan for purposes of calculating an Appraisal Reduction Amount
with respect to the loans that comprise such Whole Loan. Any Appraisal Reduction
calculated with respect to the Grand Canal Shoppes at the Venetian Whole Loan
will be applied pro rata among the Grand Canal Shoppes at the Venetian Loan and
the Grand Canal Shoppes at Venetian Companion Loans.
Pursuant to the LB-UBS 2004-C4 PSA, similar but not identical events to
those described in the definition of Appraisal Reduction Event will require the
calculation of a similar "appraisal reduction amount" under the LB-UBS 2004-C4
PSA, which will be applied pro rata among the Garden State Plaza Loan and the
Garden State Plaza Pari Passu Companion Loans.
Pursuant to the GCCFC C2 PSA, similar but not identical events to those
described in the definition of Appraisal Reduction Event will require the
calculation of a similar "appraisal reduction amount" under the GCCFC C2 PSA,
which will be applied pro rata among the 237 Park Avenue Loan and the 237 Park
Avenue Pari Passu Companion Loans.
Pursuant to the GG1 PSA, similar but not identical events to those
described in the definition of Appraisal Reduction Event will require the
calculation of a similar "appraisal reduction amount" under the GG1 PSA, which
will be applied first, pro rata among the 111 Eighth Avenue Subordinate
Companion Loans and then, pro rata among the 111 Eighth Avenue Loan and the 111
Eighth Avenue Pari Passu Companion Loans.
With respect to each Serviced Whole Loan with a Subordinate Companion Loan,
Appraisal Reductions will be calculated based on the outstanding principal
balance of the Mortgage Loan and the related Subordinate Companion Loans, and
all resulting Appraisal Reductions will be allocated first to the Subordinate
Companion Loan and then to the related Mortgage Loan (and Pari Passu Companion
Loans, if applicable).
As a result of calculating one or more Appraisal Reductions, the amount of
any required P&I Advance will be reduced, which will have the effect of reducing
the amount of interest available to the most subordinate Class of Certificates
then outstanding (i.e., first to the Class P Certificates, then to the Class O
Certificates, then to the Class N Certificates, then to the Class M
Certificates, then to the Class L Certificates, then to the Class K
Certificates, then to the Class J Certificates, then to the Class H
Certificates, then to the Class G Certificates, then to the Class F
Certificates, then to the Class E Certificates, then to the Class D
Certificates, then to the Class C Certificates and then to the Class B
Certificates. See "The Pooling Agreement--Advances" in this prospectus
supplement.
With respect to each Mortgage Loan or Serviced Whole Loan as to which an
Appraisal Reduction has occurred (unless the Mortgage Loan or Serviced Whole
Loan has become a Corrected Mortgage Loan (if a Servicing Transfer Event had
occurred with respect to the related Mortgage Loan or Serviced Whole Loan) and
remained current for three consecutive Monthly Payments, and no other Appraisal
Reduction Event has occurred with respect to the Mortgage Loan or Serviced Whole
Loan during the preceding three months), the Special Servicer is required,
within 30 days of each annual anniversary of the related Appraisal Reduction
Event to order an appraisal (which may be an update of a prior appraisal), the
cost of
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which will be a Property Advance, or to conduct a desktop estimation, as
applicable. Based upon the appraisal or desktop estimation, the Special Servicer
is required to redetermine the recalculation amount of the Appraisal Reduction
with respect to the Mortgage Loan or Serviced Whole Loan.
Any Mortgage Loan or Serviced Whole Loan previously subject to an Appraisal
Reduction which becomes current and remains current for three consecutive
Monthly Payments, and with respect to which no other Appraisal Reduction Event
has occurred and is continuing, will no longer be subject to an Appraisal
Reduction.
DELIVERY, FORM AND DENOMINATION
The Offered Certificates will be issued, maintained and transferred in the
book-entry form only in denominations of $10,000 initial Certificate Principal
Amount, and in multiples of $1 in excess of $10,000.
The Offered Certificates will initially be represented by one or more
global Certificates for each such Class registered in the name of the nominee of
The Depository Trust Company ("DTC"). The Depositor has been informed by DTC
that DTC's nominee will be Cede & Co. No holder of an Offered Certificate (a
"Certificateholder") will be entitled to receive a certificate issued in fully
registered, certificated form (each, a "Definitive Certificate") representing
its interest in such Class, except under the limited circumstances described
below under "--Definitive Certificates." Unless and until Definitive
Certificates are issued, all references to actions by holders of the Offered
Certificates will refer to actions taken by DTC upon instructions received from
holders of Offered Certificates through its participating organizations
(together with Clearstream Banking, societe anonyme ("Clearstream") and
Euroclear Bank, as operator of the Euroclear System ("Euroclear") participating
organizations, the "Participants"), and all references in this prospectus
supplement to payments, notices, reports, statements and other information to
holders of Offered Certificates will refer to payments, notices, reports and
statements to DTC or Cede & Co., as the registered holder of the Offered
Certificates, for distribution to holders of Offered Certificates through its
Participants in accordance with DTC procedures.
Until Definitive Certificates are issued in respect of the Offered
Certificates, interests in the Offered Certificates will be transferred on the
book-entry records of DTC and its Participants. The Trustee will initially serve
as certificate registrar (in such capacity, the "Certificate Registrar") for
purposes of recording and otherwise providing for the registration of the
Offered Certificates.
BOOK-ENTRY REGISTRATION
Holders of Offered Certificates may hold their Certificates through DTC (in
the United States) or Clearstream or Euroclear (in Europe) if they are
Participants of such system, or indirectly through organizations that are
participants in such systems. Clearstream and Euroclear will hold omnibus
positions on behalf of the Clearstream Participants and the Euroclear
Participants, respectively, through customers' securities accounts in
Clearstream's and Euroclear's names on the books of their respective
depositories (collectively, the "Depositories") which in turn will hold such
positions in customers' securities accounts in the Depositories' 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 is also 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.
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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 Depository; however, such cross-market transactions will require delivery of
instructions to the relevant European international clearing system by the
counterparty in such system in accordance with its rules and procedures. If the
transaction complies with all relevant requirements, Euroclear or Clearstream,
as the case may be, will then deliver instructions to the Depository to take
action to effect final settlement on its behalf.
Because of time-zone differences, it is possible that credits of securities
in Clearstream or Euroclear as a result of a transaction with a DTC Participant
will be made during the subsequent securities settlement processing, dated the
business day following the DTC settlement date, and such credits or any
transactions in such securities settled during such processing will be reported
to the relevant Clearstream Participant or Euroclear Participant on such
business day. Cash received in Clearstream or Euroclear as a result of sales of
securities by or through a Clearstream Participant or a Euroclear Participant to
a DTC Participant will be received with value on the DTC settlement date but,
due to time zone differences may be available in the relevant Clearstream or
Euroclear cash account only as of the business day following settlement in DTC.
The holders of Offered Certificates that are not Participants or Indirect
Participants but desire to purchase, sell or otherwise transfer ownership of, or
other interests in, Offered Certificates may do so only through Participants and
Indirect Participants. In addition, holders of Offered Certificates will receive
all distributions of principal and interest from the Trustee through the
Participants who in turn will receive them from DTC. Under a book-entry format,
holders of Offered Certificates may experience some delay in their receipt of
payments, since such payments will be forwarded by the Trustee to Cede & Co., as
nominee for DTC. DTC will forward such payments to its Participants, which
thereafter will forward them to Indirect Participants or beneficial owners of
Offered Certificates ("Certificate Owners"). Except as otherwise provided under
"The Pooling Agreement--Reports to Certificateholders; Available Information" in
this prospectus supplement, Certificate Owners will not be recognized by the
Trustee, the Fiscal Agent, the Special Servicer or the Master Servicer as
holders of record of Certificates and Certificate Owners will be permitted to
receive information furnished to Certificateholders and to exercise the rights
of Certificateholders only indirectly through DTC and its Participants and
Indirect Participants.
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 Certificate Owners 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 Certificate
Owners. Accordingly, although the Certificate Owners will not possess the
Offered Certificates, the Rules provide a mechanism by which Certificate Owners
will receive payments on Offered Certificates and will be able to transfer their
interest.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a holder of
Offered Certificates to pledge such Certificates to persons or entities that do
not participate in the DTC system, or to otherwise act with respect to such
Certificates, may be limited due to the lack of a physical certificate for such
Certificates.
DTC has advised the Depositor that it will take any action permitted to be
taken by a holder of an Offered Certificate under the Pooling 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.
Although DTC, Euroclear and Clearstream have implemented the foregoing
procedures in order to facilitate transfers of interests in book-entry
certificates among Participants of DTC, Euroclear and Clearstream, they are
under no obligation to perform or to continue to comply with such procedures,
and
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such procedures may be discontinued at any time. None of the Depositor, the
Trustee, the Fiscal Agent, the Master Servicer, the Special Servicer or the
Underwriters will have any responsibility for the performance by DTC, Euroclear
or Clearstream or their respective direct or Indirect Participants of their
respective obligations under the rules and procedures governing their
operations. The information in this prospectus supplement concerning DTC,
Clearstream and Euroclear and their book-entry systems has been obtained from
sources believed to be reliable, but the Depositor takes no responsibility for
the accuracy or completeness of this information.
DEFINITIVE CERTIFICATES
Definitive Certificates will be delivered to Certificate Owners or their
nominees, respectively, only if (i) DTC is no longer willing or able properly to
discharge its responsibilities as depository with respect to the Offered
Certificates, and the Depositor is unable to locate a qualified successor, (ii)
the Depositor notifies DTC of its intent to terminate the book-entry system
through DTC and, upon receipt of notice of such intent from DTC, the DTC
Participants holding beneficial interests in the Certificates agree to initiate
such termination, or (iii) after the occurrence of an Event of Default under the
Pooling Agreement, Certificate Owners representing a majority in principal
amount of the Offered Certificates of any Class then outstanding advise DTC
through DTC Participants in writing that the continuation of a book-entry system
through DTC (or a successor thereto) is no longer in the best interest of such
Certificate Owners. Upon the occurrence of any of these events, DTC is required
to notify all affected DTC Participants of the availability through DTC of
Definitive Certificates. Upon delivery of Definitive Certificates, the Trustee,
the Fiscal Agent, Certificate Registrar and Master Servicer will recognize the
holders of such Definitive Certificates as holders under the Pooling Agreement.
Distributions of principal of and interest on the Definitive Certificates will
be made by the Trustee directly to holders of Definitive Certificates in
accordance with the procedures set forth in the prospectus and the Pooling
Agreement.
YIELD, PREPAYMENT AND MATURITY CONSIDERATIONS
YIELD
The yield to maturity on the Offered Certificates will depend upon the
price paid by the Certificateholders, the rate and timing of the distributions
in reduction of Certificate Principal Amounts of the related Classes of
Certificates, the extent to which prepayment premiums and yield maintenance
charges allocated to a Class of Certificates are collected, and the rate, timing
and severity of losses on the Mortgage Loans and the extent to which such losses
are allocable in reduction of the Certificate Principal Amounts of such Classes
of Certificates, as well as prevailing interest rates at the time of payment or
loss realization.
The rate of distributions in reduction of the Certificate Principal Amount
of any Class of Offered Certificates, the aggregate amount of distributions on
any Class of Offered Certificates and the yield to maturity of any Class of
Offered Certificates will be directly related to the rate of payments of
principal (both scheduled and unscheduled) on the Mortgage Loans and the amount
and timing of borrower defaults and the severity of losses occurring upon a
default and, with respect to the Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6 and Class A-1A Certificates, on the Mortgage Loans in the
related Loan Group. While voluntary prepayments of Mortgage Loans are generally
prohibited during applicable prepayment lockout periods, effective prepayments
may occur if a sufficiently significant portion of the Mortgaged Property is
lost due to casualty or condemnation. In addition, such distributions in
reduction of Certificate Principal Amount may result from repurchases of
Mortgage Loans made by the Loan Sellers due to missing or defective
documentation or breaches of representations and warranties with respect to the
Mortgage Loans as described in this prospectus supplement under "Description of
the Mortgage Pool--Representations and Warranties" and "--Cures and
Repurchases", purchases of the Mortgage Loans in the manner described under "The
Pooling Agreement--Optional Termination; Optional Mortgage Loan Purchase" in
this prospectus supplement or the exercise of purchase options by the holder of
a Companion Loan, a mezzanine loan or, in the case of certain loans, other
parties as described in this prospectus supplement in "Description of the
Mortgage Pool--The Whole Loans" and "Top Ten Loan Summaries" on Annex B to this
prospectus supplement. To the extent a Mortgage Loan requires
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payment of a prepayment premium or yield maintenance charge in connection with a
voluntary prepayment, any such prepayment premium or yield maintenance charge
generally is not due in connection with a prepayment due to casualty or
condemnation, is not included in the purchase price of a Mortgage Loan purchased
or repurchased due to a breach of a representation or warranty, and may not be
enforceable or collectible upon a default.
The Certificate Principal Amount of any Class of Offered Certificates may
be reduced without distributions of principal as a result of the occurrence and
allocation of Realized Losses, reducing the maximum amount distributable in
respect of Certificate Principal Amount, if applicable, as well as the amount of
interest that would have accrued on such Certificates in the absence of such
reduction. In general, a Realized Loss occurs when the aggregate principal
balance of a Mortgage Loan is reduced without an equal distribution to
applicable Certificateholders in reduction of the Certificate Principal Amounts
of the Certificates. Realized Losses are likely to occur only in connection with
a default on a Mortgage Loan and the liquidation of the related Mortgaged
Properties, a reduction in the principal balance of a Mortgage Loan by a
bankruptcy court or a recovery by the Master Servicer, Trustee or the Fiscal
Agent of a Non-Recoverable Advance on a Distribution Date. Realized Losses will
be allocated to the Certificates (other than the Class X, Class R and Class LR
Certificates) in reverse alphabetical order.
Certificateholders are not entitled to receive distributions of Monthly
Payments when due except to the extent they are either covered by an Advance or
actually received. Consequently, any defaulted Monthly Payment for which no such
Advance is made will tend to extend the weighted average lives of the
Certificates, whether or not a permitted extension of the due date of the
related Mortgage Loan has been effected.
The rate of payments (including voluntary and involuntary prepayments) on
pools of mortgage loans is influenced by a variety of economic, geographic,
social and other factors, including the level of mortgage interest rates and the
rate at which borrowers default on their Mortgage Loans. The terms of the
Mortgage Loans (in particular, the term of any prepayment lock-out period, the
extent to which prepayment premiums or yield maintenance charges are due with
respect to any principal prepayments, the right of the mortgagee to apply
condemnation and casualty proceeds to prepay the Mortgage Loan, the availability
of certain rights to defease all or a portion of the Mortgage Loan) may affect
the rate of principal payments on Mortgage Loans, and consequently, the yield to
maturity of the Classes of Offered Certificates. See Annex C hereto for a
description of prepayment lock-out periods, prepayment premiums and yield
maintenance charges.
In addition, because the amount of principal that will be distributed to
the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6 and Class
A-1A Certificates will generally be based upon the particular Loan Group in
which the related Mortgage Loan is deemed to be a part, the yield on the Class
A-1, Class A-2, Class A-3, Class A-4, Class A-5 and Class A-6 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.
Principal prepayment on the mortgage loans would also affect the yield on
the Class A-5, Class A-6, Class A-1A, Class B, Class C, Class D and Class E
Certificates. This is because the Class A-5, Class A-6, Class A-1A, Class B and
Class C Certificates have a fixed Pass-Through Rate subject to the WAC Rate and
the Class D and Class E Certificates have a Pass-Through Rate that is based on
the WAC Rate. The Pass-Through Rates on those Classes of Certificates may be
limited by the WAC Rate even if principal prepayments do not occur.
The timing of changes in the rate of prepayment on the Mortgage Loans may
significantly affect the actual yield to maturity experienced by an investor
even if the average rate of principal payments experienced over time is
consistent with such investor's expectation. In general, the earlier a
prepayment of principal on the Mortgage Loans, the greater the effect on such
investor's yield to maturity. As a result, the effect on such investor's yield
of principal payments occurring at a rate higher (or lower) than the rate
anticipated by the investor during the period immediately following the issuance
of the Offered Certificates would not be fully offset by a subsequent like
reduction (or increase) in the rate of principal payments.
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No representation is made as to the rate of principal payments on the
Mortgage Loans or as to the yield to maturity of any Class of Offered
Certificates. An investor is urged to make an investment decision with respect
to any Class of Offered Certificates based on the anticipated yield to maturity
of such Class of Offered Certificates resulting from its purchase price and such
investor's own determination as to anticipated Mortgage Loan prepayment rates
under a variety of scenarios. The extent to which any Class of Offered
Certificates is purchased at a discount or a premium and the degree to which the
timing of payments on such Class of Offered Certificates is sensitive to
prepayments will determine the extent to which the yield to maturity of such
Class of Offered Certificates may vary from the anticipated yield. An investor
should carefully consider the associated risks, including, in the case of any
Offered Certificates 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 Certificates 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, with respect to any Class of Offered Certificates that is
purchased at a premium, if principal distributions occur at a rate faster than
anticipated at the time of purchase, the investor's actual yield to maturity
will be lower than that assumed at the time of purchase. Conversely, if a Class
of Offered Certificates is purchased at a discount and principal distributions
occur at a rate slower than that assumed at the time of purchase, the investor's
actual yield to maturity will be lower than that assumed at the time of
purchase.
An investor should consider the risk that rapid rates of prepayments on the
Mortgage Loans, and therefore of amounts distributable in reduction of the
Certificate Principal Amount of Offered Certificates entitled to distributions
of principal, may coincide with periods of low prevailing interest rates. During
such periods, the effective interest rates on securities in which an investor
may choose to reinvest such amounts distributed to it may be lower than the
applicable Pass-Through Rate. Conversely, slower rates of prepayments on the
Mortgage Loans, and therefore, of amounts distributable in reduction of
principal balance of the Offered Certificates entitled to distributions of
principal, may coincide with periods of high prevailing interest rates. During
such periods, the amount of principal distributions resulting from prepayments
available to an investor in such Certificates for reinvestment at such high
prevailing interest rates may be relatively small.
The effective yield to holders of Offered Certificates will be lower than
the yield otherwise produced by the applicable Pass-Through Rate and applicable
purchase prices because while interest will accrue during each Interest Accrual
Period, the distribution of such interest will not be made until the
Distribution Date immediately following such Interest Accrual Period, and
principal paid on any Distribution Date will not bear interest during the period
from the end of such Interest Accrual Period to the Distribution Date that
follows.
The "Rated Final Distribution Date" for each Class of Offered Certificates
will be August 10, 2038, the first Distribution Date after the 24th month
following the longest amortization period plus the Interest Only Period, with
the exception of any Interest Only terms longer than 24 months, for any Mortgage
Loan.
WEIGHTED AVERAGE LIFE OF THE OFFERED CERTIFICATES
Weighted average life refers to the average amount of time from the date of
issuance of a security until each dollar of principal of such security will be
repaid to the investor. The weighted average life of the Offered Certificates
will be influenced by the rate at which principal payments (including scheduled
payments, principal prepayments and payments made pursuant to any applicable
policies of insurance) on the Mortgage Loans are made. Principal payments on the
Mortgage Loans may be in the form of scheduled amortization or prepayments (for
this purpose, the term prepayment includes prepayments, partial prepayments and
liquidations due to a default or other dispositions of the Mortgage Loans).
As described in this prospectus supplement, the Group 1 Principal
Distribution Amount (and, after the Class A-1A Certificates have been reduced to
zero, any remaining Group 2 Principal Distribution Amount) for each Distribution
Date will generally be distributable first in respect of the Class A-1
Certificates until
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its Certificate Principal Amount is reduced to zero, then, in respect of the
Class A-2 Certificates until its Certificate Principal Amount is reduced to
zero, then, in respect of the Class A-3 Certificates until its Certificate
Principal Amount is reduced to zero, then, in respect of the Class A-4
Certificates until its Certificate Principal Amount is reduced to zero, then, in
respect of the Class A-5 Certificates until its Certificate Principal Amount is
reduced to zero, and then, in respect of the Class A-6 Certificates until its
Certificate Principal Amount is reduced to zero; and the Group 2 Principal
Distribution Amount (and, after the Class A-6 Certificates have been reduced to
zero, any remaining Group 1 Principal Distribution Amount) for each Distribution
Date will generally be distributable to the Class A-1A Certificates.
Calculations reflected in the following tables assume that the Mortgage
Loans have the characteristics shown on Annex C to this prospectus supplement,
and are based on the following additional assumptions ("Modeling Assumptions"):
(i) each Mortgage Loan is assumed to prepay at the indicated level of constant
prepayment rate ("CPR"), in accordance with a prepayment scenario in which
prepayments occur after expiration of any applicable lock-out period, defeasance
and yield maintenance options, (ii) there are no delinquencies, (iii) scheduled
interest and principal payments, including balloon payments, on the Mortgage
Loans are timely received on their respective Due Dates (assumed in all cases to
be the first day of each month) at the indicated levels of CPR in accordance
with the prepayment scenario set forth in the tables, (iv) no prepayment
premiums or yield maintenance charges are collected, (v) no party exercises its
right of optional termination of the Trust Fund described in this prospectus
supplement or any other purchase option with respect to a Mortgage Loan
described in this prospectus supplement, (vi) no Mortgage Loan is required to be
purchased from the Trust Fund, (vii) the Administrative Fee Rate for each
Mortgage Loan is the rate set forth on Annex C to this prospectus supplement
with respect to each Mortgage Loan, (viii) there are no Excess Prepayment
Interest Shortfalls, other shortfalls unrelated to defaults or Appraisal
Reduction allocated to any class of Offered Certificates, (ix) distributions on
the Certificates are made on the 10th day (each assumed to be a business day) of
each month, commencing in September 2004, (x) the Certificates will be issued on
August 12, 2004, (xi) partial payments on the Mortgage Loans are permitted, but
are assumed not to affect the amortization term, (xii) for purposes of the 1
Mortgage Loan that permits defeasance and prepayment with a yield maintenance or
prepayment premium, that the borrower elects to prepay and that the prepayment
premium is the applicable prepayment charge, (xiii) with respect to each
Mortgage Loan that has a first payment due in October 2004, the interest accrual
period in September 2004 was assumed to be interest-only and (xiv) the
Pass-Through Rate with respect to each Class of Certificates is as described on
page S-6 in this prospectus supplement (including any applicable footnotes).
The weighted average life of any Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5, Class A-6, Class A-1A, Class B, Class C, Class D or Class E
Certificate refers to the average amount of time that will elapse from the date
of its issuance until each dollar allocable to principal of such Certificates 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. The Principal Distribution
Amount for each Distribution Date will be distributable as described in
"Description of the Offered Certificates--Distributions--Payment Priorities" in
this prospectus supplement.
The following tables indicate the percentage of the initial Certificate
Principal Amount of each Class of Offered Certificates that would be outstanding
after each of the dates shown under each of the indicated prepayment assumptions
and the corresponding weighted average life of each such Class of Offered
Certificates. The tables have been prepared on the basis of, among others, the
Modeling Assumptions. To the extent that the Mortgage Loans or the Certificates
have characteristics that differ from those assumed in preparing the tables, the
Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-1A,
Class B, Class C, Class D and/or Class E Certificates may mature earlier or
later than indicated by the tables. Accordingly, the Mortgage Loans will not
prepay at any constant rate, and it is highly unlikely that the Mortgage Loans
will prepay in a manner consistent with the assumptions described in this
prospectus supplement. In addition, variations in the actual prepayment
experience and the balance of the Mortgage Loans that prepay may increase or
decrease the percentages of initial Certificate Principal Amount (and shorten or
extend the weighted average lives) shown in the following
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tables. Investors are urged to conduct their own analyses of the rates at which
the Mortgage Loans may be expected to prepay.
PERCENTAGES OF THE INITIAL CERTIFICATE PRINCIPAL AMOUNT OF
THE CLASS A-1 CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE --
OTHERWISE AT INDICATED CPR
PREPAYMENT ASSUMPTION (CPR)
---------------------------
DISTRIBUTION DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ----------------- ------ ------- ------- ------- --------
Closing Date............................ 100% 100% 100% 100% 100%
August 10, 2005......................... 59% 59% 59% 59% 59%
August 10, 2006......................... 12% 12% 12% 12% 12%
August 10, 2007 and thereafter.......... 0% 0% 0% 0% 0%
Weighted Average Life (in years)........ 1.21 1.21 1.21 1.21 1.21
First Principal Payment Date............ Sep 2004 Sep 2004 Sep 2004 Sep 2004 Sep 2004
Last Principal Payment Date............. Nov 2006 Nov 2006 Nov 2006 Nov 2006 Nov 2006
PERCENTAGES OF THE INITIAL CERTIFICATE PRINCIPAL AMOUNT OF
THE CLASS A-2 CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE --
OTHERWISE AT INDICATED CPR
PREPAYMENT ASSUMPTION (CPR)
---------------------------
DISTRIBUTION DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ----------------- ------ ------- ------- ------- --------
Closing Date............................ 100% 100% 100% 100% 100%
August 10, 2005......................... 100% 100% 100% 100% 100%
August 10, 2006......................... 100% 100% 100% 100% 100%
August 10, 2007......................... 76% 76% 75% 75% 71%
August 10, 2008......................... 41% 40% 39% 38% 37%
August 10, 2009 and thereafter.......... 0% 0% 0% 0% 0%
Weighted Average Life (in years)........ 3.73 3.68 3.64 3.62 3.58
First Principal Payment Date............ Nov 2006 Nov 2006 Nov 2006 Nov 2006 Nov 2006
Last Principal Payment Date............. May 2009 Apr 2009 Feb 2009 Feb 2009 Jan 2009
PERCENTAGES OF THE INITIAL CERTIFICATE PRINCIPAL AMOUNT OF
THE CLASS A-3 CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE --
OTHERWISE AT INDICATED CPR
PREPAYMENT ASSUMPTION (CPR)
---------------------------
DISTRIBUTION DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ----------------- ------ ------- ------- ------- --------
Closing Date............................ 100% 100% 100% 100% 100%
August 10, 2005......................... 100% 100% 100% 100% 100%
August 10, 2006......................... 100% 100% 100% 100% 100%
August 10, 2007......................... 100% 100% 100% 100% 100%
August 10, 2008......................... 100% 100% 100% 100% 100%
August 10, 2009......................... 1% 0% 0% 0% 0%
August 10, 2010 and thereafter.......... 0% 0% 0% 0% 0%
Weighted Average Life (in years)........ 4.82 4.81 4.80 4.77 4.55
First Principal Payment Date............ May 2009 Apr 2009 Feb 2009 Feb 2009 Jan 2009
Last Principal Payment Date............. Sep 2009 Aug 2009 Aug 2009 Aug 2009 Jul 2009
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PERCENTAGES OF THE INITIAL CERTIFICATE PRINCIPAL AMOUNT OF
THE CLASS A-4 CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE --
OTHERWISE AT INDICATED CPR
PREPAYMENT ASSUMPTION (CPR)
---------------------------
DISTRIBUTION DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ----------------- ------ ------- ------- ------- --------
Closing Date............................ 100% 100% 100% 100% 100%
August 10, 2005......................... 100% 100% 100% 100% 100%
August 10, 2006......................... 100% 100% 100% 100% 100%
August 10, 2007......................... 100% 100% 100% 100% 100%
August 10, 2008......................... 100% 100% 100% 100% 100%
August 10, 2009......................... 100% 100% 99% 99% 98%
August 10, 2010......................... 85% 83% 81% 80% 52%
August 10, 2011......................... 2% 0% 0% 0% 0%
August 10, 2012 and thereafter.......... 0% 0% 0% 0% 0%
Weighted Average Life (in years)........ 6.47 6.43 6.40 6.38 6.24
First Principal Payment Date............ Sep 2009 Aug 2009 Aug 2009 Aug 2009 Jul 2009
Last Principal Payment Date............. Oct 2011 Sep 2011 Aug 2011 Aug 2011 Aug 2011
PERCENTAGES OF THE INITIAL CERTIFICATE PRINCIPAL AMOUNT OF
THE CLASS A-5 CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE --
OTHERWISE AT INDICATED CPR
PREPAYMENT ASSUMPTION (CPR)
---------------------------
DISTRIBUTION DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ----------------- ------ ------- ------- ------- --------
Closing Date............................ 100% 100% 100% 100% 100%
August 10, 2005......................... 100% 100% 100% 100% 100%
August 10, 2006......................... 100% 100% 100% 100% 100%
August 10, 2007......................... 100% 100% 100% 100% 100%
August 10, 2008......................... 100% 100% 100% 100% 100%
August 10, 2009......................... 100% 100% 100% 100% 100%
August 10, 2010......................... 100% 100% 100% 100% 100%
August 10, 2011......................... 100% 100% 99% 99% 99%
August 10, 2012......................... 80% 80% 80% 80% 80%
August 10, 2013......................... 23% 21% 18% 13% 0%
August 10, 2014 and thereafter.......... 0% 0% 0% 0% 0%
Weighted Average Life (in years)........ 8.62 8.59 8.57 8.55 8.46
First Principal Payment Date............ Oct 2011 Sep 2011 Aug 2011 Aug 2011 Aug 2011
Last Principal Payment Date............. Nov 2013 Nov 2013 Nov 2013 Sep 2013 Aug 2013
S-120
PERCENTAGES OF THE INITIAL CERTIFICATE PRINCIPAL AMOUNT OF
THE CLASS A-6 CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE --
OTHERWISE AT INDICATED CPR
PREPAYMENT ASSUMPTION (CPR)
---------------------------
DISTRIBUTION DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ----------------- ------ ------- ------- ------- --------
Closing Date............................ 100% 100% 100% 100% 100%
August 10, 2005......................... 100% 100% 100% 100% 100%
August 10, 2006......................... 100% 100% 100% 100% 100%
August 10, 2007......................... 100% 100% 100% 100% 100%
August 10, 2008......................... 100% 100% 100% 100% 100%
August 10, 2009......................... 100% 100% 100% 100% 100%
August 10, 2010......................... 100% 100% 100% 100% 100%
August 10, 2011......................... 100% 100% 100% 100% 100%
August 10, 2012......................... 100% 100% 100% 100% 100%
August 10, 2013 ........................ 100% 100% 100% 100% 92%
August 10, 2014 and thereafter ......... 0% 0% 0% 0% 0%
Weighted Average Life (in years)........ 9.73 9.71 9.69 9.66 9.46
First Principal Payment Date............ Nov 2013 Nov 2013 Nov 2013 Sep 2013 Aug 2013
Last Principal Payment Date............. Jul 2014 Jul 2014 Jul 2014 Jul 2014 May 2014
PERCENTAGES OF THE INITIAL CERTIFICATE PRINCIPAL AMOUNT OF
THE CLASS A-1A CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE --
OTHERWISE AT INDICATED CPR
PREPAYMENT ASSUMPTION (CPR)
---------------------------
DISTRIBUTION DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ----------------- ------ ------- ------- ------- --------
Closing Date............................ 100% 100% 100% 100% 100%
August 10, 2005......................... 99% 99% 99% 99% 99%
August 10, 2006......................... 98% 98% 98% 98% 98%
August 10, 2007......................... 96% 96% 96% 96% 96%
August 10, 2008......................... 95% 95% 95% 95% 95%
August 10, 2009......................... 46% 46% 46% 46% 46%
August 10, 2010......................... 44% 44% 44% 44% 44%
August 10, 2011......................... 43% 43% 43% 43% 43%
August 10, 2012......................... 42% 42% 42% 42% 39%
August 10, 2013 ........................ 32% 32% 32% 32% 30%
August 10, 2014 and thereafter ......... 0% 0% 0% 0% 0%
Weighted Average Life (in years)........ 6.72 6.71 6.69 6.67 6.51
First Principal Payment Date............ Sep 2004 Sep 2004 Sep 2004 Sep 2004 Sep 2004
Last Principal Payment Date............. Jul 2014 Jul 2014 Jul 2014 Jul 2014 May 2014
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PERCENTAGES OF THE INITIAL CERTIFICATE PRINCIPAL AMOUNT OF
THE CLASS B CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE --
OTHERWISE AT INDICATED CPR
PREPAYMENT ASSUMPTION (CPR)
---------------------------
DISTRIBUTION DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ----------------- ------ ------- ------- ------- --------
Closing Date............................ 100% 100% 100% 100% 100%
August 10, 2005......................... 100% 100% 100% 100% 100%
August 10, 2006......................... 100% 100% 100% 100% 100%
August 10, 2007......................... 100% 100% 100% 100% 100%
August 10, 2008......................... 100% 100% 100% 100% 100%
August 10, 2009......................... 100% 100% 100% 100% 100%
August 10, 2010......................... 100% 100% 100% 100% 100%
August 10, 2011......................... 100% 100% 100% 100% 100%
August 10, 2012......................... 100% 100% 100% 100% 100%
August 10, 2013......................... 100% 100% 100% 100% 100%
August 10, 2014 and thereafter.......... 0% 0% 0% 0% 0%
Weighted Average Life (in years)........ 9.98 9.95 9.93 9.91 9.74
First Principal Payment Date............ Jul 2014 Jul 2014 Jul 2014 Jul 2014 May 2014
Last Principal Payment Date............. Aug 2014 Aug 2014 Aug 2014 Jul 2014 May 2014
PERCENTAGES OF THE INITIAL CERTIFICATE PRINCIPAL AMOUNT OF
THE CLASS C CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE --
OTHERWISE AT INDICATED CPR
PREPAYMENT ASSUMPTION (CPR)
---------------------------
DISTRIBUTION DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ----------------- ------ ------- ------- ------- --------
Closing Date............................ 100% 100% 100% 100% 100%
August 10, 2005......................... 100% 100% 100% 100% 100%
August 10, 2006......................... 100% 100% 100% 100% 100%
August 10, 2007......................... 100% 100% 100% 100% 100%
August 10, 2008......................... 100% 100% 100% 100% 100%
August 10, 2009......................... 100% 100% 100% 100% 100%
August 10, 2010......................... 100% 100% 100% 100% 100%
August 10, 2011......................... 100% 100% 100% 100% 100%
August 10, 2012......................... 100% 100% 100% 100% 100%
August 10, 2013......................... 100% 100% 100% 100% 100%
August 10, 2014 and thereafter.......... 0% 0% 0% 0% 0%
Weighted Average Life (in years)........ 9.99 9.99 9.99 9.93 9.74
First Principal Payment Date............ Aug 2014 Aug 2014 Aug 2014 Jul 2014 May 2014
Last Principal Payment Date............. Aug 2014 Aug 2014 Aug 2014 Aug 2014 May 2014
S-122
PERCENTAGES OF THE INITIAL CERTIFICATE PRINCIPAL AMOUNT OF
THE CLASS D CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE --
OTHERWISE AT INDICATED CPR
PREPAYMENT ASSUMPTION (CPR)
---------------------------
DISTRIBUTION DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ----------------- ------ ------- ------- ------- --------
Closing Date............................ 100% 100% 100% 100% 100%
August 10, 2005......................... 100% 100% 100% 100% 100%
August 10, 2006......................... 100% 100% 100% 100% 100%
August 10, 2007......................... 100% 100% 100% 100% 100%
August 10, 2008......................... 100% 100% 100% 100% 100%
August 10, 2009......................... 100% 100% 100% 100% 100%
August 10, 2010......................... 100% 100% 100% 100% 100%
August 10, 2011......................... 100% 100% 100% 100% 100%
August 10, 2012......................... 100% 100% 100% 100% 100%
August 10, 2013......................... 100% 100% 100% 100% 100%
August 10, 2014 and thereafter.......... 0% 0% 0% 0% 0%
Weighted Average Life (in years)........ 9.99 9.99 9.99 9.99 9.74
First Principal Payment Date............ Aug 2014 Aug 2014 Aug 2014 Aug 2014 May 2014
Last Principal Payment Date............. Aug 2014 Aug 2014 Aug 2014 Aug 2014 May 2014
PERCENTAGES OF THE INITIAL CERTIFICATE PRINCIPAL AMOUNT OF
THE CLASS E CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE --
OTHERWISE AT INDICATED CPR
PREPAYMENT ASSUMPTION (CPR)
---------------------------
DISTRIBUTION DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ----------------- ------ ------- ------- ------- --------
Closing Date............................ 100% 100% 100% 100% 100%
August 10, 2005......................... 100% 100% 100% 100% 100%
August 10, 2006......................... 100% 100% 100% 100% 100%
August 10, 2007......................... 100% 100% 100% 100% 100%
August 10, 2008......................... 100% 100% 100% 100% 100%
August 10, 2009......................... 100% 100% 100% 100% 100%
August 10, 2010......................... 100% 100% 100% 100% 100%
August 10, 2011......................... 100% 100% 100% 100% 100%
August 10, 2012......................... 100% 100% 100% 100% 100%
August 10, 2013......................... 100% 100% 100% 100% 100%
August 10, 2014......................... 0% 0% 0% 0% 0%
August 10, 2015 and thereafter.......... 0% 0% 0% 0% 0%
Weighted Average Life (in years)........ 9.99 9.99 9.99 9.99 9.74
First Principal Payment Date............ Aug 2014 Aug 2014 Aug 2014 Aug 2014 May 2014
Last Principal Payment Date............. Aug 2014 Aug 2014 Aug 2014 Aug 2014 May 2014
PRICE/YIELD TABLES
The tables set forth below show the corporate bond equivalent ("CBE")
yield, weighted average life (as described above under "--Weighted Average Life
of the Offered Certificates") and the period during which principal payments
would be received with respect to each Class of Offered Certificates under the
Modeling Assumptions. Purchase prices set forth below for each such Class of
Offered Certificates are expressed as a percentage of the initial Certificate
Principal Amount of such Class of Certificates, before adding accrued interest.
The yields set forth in the following tables were calculated by determining
the monthly discount rates which, when applied to the assumed stream of cash
flows to be paid on each Class of Offered Certificates, would cause the
discounted present value of such assumed stream of cash flows as of the Closing
Date to equal the assumed purchase prices, plus accrued interest at the
applicable
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Pass-Through Rate as described in the Modeling Assumptions, from and including
August 1, 2004 to but excluding the Closing Date, and converting such monthly
rates to semi-annual corporate bond equivalent rates. Such calculation does not
take into account variations that may occur in the interest rates at which
investors may be able to reinvest funds received by them as reductions of the
Certificate Principal Amounts of such Classes of Offered Certificates and
consequently does not purport to reflect the return on any investment in such
Classes of Offered Certificates when such reinvestment rates are considered.
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE,
FIRST PRINCIPAL PAYMENT DATE, LAST PRINCIPAL PAYMENT DATE FOR THE
CLASS A-1 CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE
-- OTHERWISE AT INDICATED CPR
-----------------------------
ASSUMED PRICE (32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- --------------------- ------ ------- ------- ------- --------
99-30................................... 3.116% 3.116% 3.116% 3.116% 3.116%
100-00.................................. 3.063% 3.063% 3.063% 3.063% 3.063%
100-02.................................. 3.009% 3.009% 3.009% 3.009% 3.009%
100-04.................................. 2.956% 2.956% 2.956% 2.956% 2.956%
100-06.................................. 2.903% 2.903% 2.903% 2.903% 2.903%
100-08.................................. 2.849% 2.849% 2.849% 2.849% 2.849%
100-10.................................. 2.796% 2.796% 2.796% 2.796% 2.796%
100-12.................................. 2.743% 2.743% 2.743% 2.743% 2.743%
100-14.................................. 2.690% 2.690% 2.690% 2.690% 2.690%
100-16.................................. 2.637% 2.637% 2.637% 2.637% 2.637%
100-18.................................. 2.584% 2.584% 2.584% 2.584% 2.584%
Weighted Average Life (yrs.)............ 1.21 1.21 1.21 1.21 1.21
First Principal Payment Date............ Sep 2004 Sep 2004 Sep 2004 Sep 2004 Sep 2004
Last Principal Payment Date............. Nov 2006 Nov 2006 Nov 2006 Nov 2006 Nov 2006
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE,
FIRST PRINCIPAL PAYMENT DATE, LAST PRINCIPAL PAYMENT DATE FOR THE
CLASS A-2 CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE
-- OTHERWISE AT INDICATED CPR
-----------------------------
ASSUMED PRICE (32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- --------------------- ------ ------- ------- ------- --------
100-06.................................. 4.244% 4.243% 4.242% 4.242% 4.241%
100-08.................................. 4.226% 4.224% 4.224% 4.223% 4.222%
100-10.................................. 4.207% 4.206% 4.205% 4.204% 4.203%
100-12.................................. 4.189% 4.187% 4.186% 4.185% 4.184%
100-14.................................. 4.170% 4.168% 4.167% 4.166% 4.164%
100-16.................................. 4.152% 4.150% 4.148% 4.147% 4.145%
100-18.................................. 4.133% 4.131% 4.129% 4.128% 4.126%
100-20.................................. 4.115% 4.112% 4.111% 4.109% 4.107%
100-22.................................. 4.097% 4.094% 4.092% 4.090% 4.088%
100-24.................................. 4.078% 4.075% 4.073% 4.071% 4.069%
100-26.................................. 4.060% 4.057% 4.054% 4.053% 4.050%
Weighted Average Life (yrs.)............ 3.73 3.68 3.64 3.62 3.58
First Principal Payment Date............ Nov 2006 Nov 2006 Nov 2006 Nov 2006 Nov 2006
Last Principal Payment Date............. May 2009 Apr 2009 Feb 2009 Feb 2009 Jan 2009
S-124
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE,
FIRST PRINCIPAL PAYMENT DATE, LAST PRINCIPAL PAYMENT DATE FOR THE
CLASS A-3 CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE
-- OTHERWISE AT INDICATED CPR
-----------------------------
ASSUMED PRICE (32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- --------------------- ------ ------- ------- ------- --------
100-06.................................. 4.575% 4.575% 4.575% 4.574% 4.571%
100-08.................................. 4.560% 4.560% 4.560% 4.559% 4.556%
100-10.................................. 4.546% 4.545% 4.545% 4.545% 4.540%
100-12.................................. 4.531% 4.531% 4.530% 4.530% 4.525%
100-14.................................. 4.516% 4.516% 4.516% 4.515% 4.509%
100-16.................................. 4.502% 4.501% 4.501% 4.500% 4.494%
100-18.................................. 4.487% 4.487% 4.486% 4.485% 4.478%
100-20.................................. 4.472% 4.472% 4.471% 4.471% 4.463%
100-22.................................. 4.458% 4.457% 4.457% 4.456% 4.448%
100-24.................................. 4.443% 4.443% 4.442% 4.441% 4.432%
100-26.................................. 4.428% 4.428% 4.427% 4.426% 4.417%
Weighted Average Life (yrs.)............ 4.82 4.81 4.80 4.77 4.55
First Principal Payment Date............ May 2009 Apr 2009 Feb 2009 Feb 2009 Jan 2009
Last Principal Payment Date............. Sep 2009 Aug 2009 Aug 2009 Aug 2009 Jul 2009
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE,
FIRST PRINCIPAL PAYMENT DATE, LAST PRINCIPAL PAYMENT DATE FOR THE
CLASS A-4 CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE
-- OTHERWISE AT INDICATED CPR
-----------------------------
ASSUMED PRICE (32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- --------------------- ------ ------- ------- ------- --------
100-06.................................. 4.958% 4.958% 4.958% 4.957% 4.956%
100-08.................................. 4.947% 4.946% 4.946% 4.946% 4.944%
100-10.................................. 4.935% 4.935% 4.934% 4.934% 4.933%
100-12.................................. 4.924% 4.923% 4.923% 4.922% 4.921%
100-14.................................. 4.912% 4.912% 4.911% 4.911% 4.909%
100-16.................................. 4.901% 4.900% 4.900% 4.899% 4.897%
100-18.................................. 4.889% 4.888% 4.888% 4.888% 4.885%
100-20.................................. 4.878% 4.877% 4.876% 4.876% 4.873%
100-22.................................. 4.866% 4.865% 4.865% 4.864% 4.861%
100-24.................................. 4.855% 4.854% 4.853% 4.853% 4.850%
100-26.................................. 4.843% 4.842% 4.842% 4.841% 4.838%
Weighted Average Life (yrs.)............ 6.47 6.43 6.40 6.38 6.24
First Principal Payment Date............ Sep 2009 Aug 2009 Aug 2009 Aug 2009 Jul 2009
Last Principal Payment Date............. Oct 2011 Sep 2011 Aug 2011 Aug 2011 Aug 2011
S-125
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE,
FIRST PRINCIPAL PAYMENT DATE, LAST PRINCIPAL PAYMENT DATE FOR THE
CLASS A-5 CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE
-- OTHERWISE AT INDICATED CPR
-----------------------------
ASSUMED PRICE (32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- --------------------- ------ ------- ------- ------- --------
100-06.................................. 5.290% 5.290% 5.290% 5.290% 5.290%
100-08.................................. 5.281% 5.281% 5.281% 5.281% 5.280%
100-10.................................. 5.272% 5.272% 5.271% 5.271% 5.271%
100-12.................................. 5.263% 5.262% 5.262% 5.262% 5.261%
100-14.................................. 5.253% 5.253% 5.253% 5.253% 5.252%
100-16.................................. 5.244% 5.244% 5.244% 5.244% 5.243%
100-18.................................. 5.235% 5.235% 5.235% 5.234% 5.234%
100-20.................................. 5.226% 5.226% 5.225% 5.225% 5.224%
100-22.................................. 5.217% 5.216% 5.216% 5.216% 5.215%
100-24.................................. 5.208% 5.207% 5.207% 5.207% 5.206%
100-26.................................. 5.198% 5.198% 5.198% 5.198% 5.196%
Weighted Average Life (yrs.)............ 8.62 8.59 8.57 8.55 8.46
First Principal Payment Date............ Oct 2011 Sep 2011 Aug 2011 Aug 2011 Aug 2011
Last Principal Payment Date............. Nov 2013 Nov 2013 Nov 2013 Sep 2013 Aug 2013
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE,
FIRST PRINCIPAL PAYMENT DATE, LAST PRINCIPAL PAYMENT DATE FOR THE
CLASS A-6 CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE
-- OTHERWISE AT INDICATED CPR
-----------------------------
ASSUMED PRICE (32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- --------------------- ------ ------- ------- ------- --------
100-06.................................. 5.413% 5.413% 5.413% 5.413% 5.413%
100-08.................................. 5.405% 5.405% 5.405% 5.405% 5.404%
100-10.................................. 5.397% 5.397% 5.396% 5.396% 5.395%
100-12.................................. 5.388% 5.388% 5.388% 5.388% 5.387%
100-14.................................. 5.380% 5.380% 5.380% 5.379% 5.378%
100-16.................................. 5.371% 5.371% 5.371% 5.371% 5.370%
100-18.................................. 5.363% 5.363% 5.363% 5.363% 5.361%
100-20.................................. 5.355% 5.355% 5.354% 5.354% 5.352%
100-22.................................. 5.346% 5.346% 5.346% 5.346% 5.344%
100-24.................................. 5.338% 5.338% 5.338% 5.337% 5.335%
100-26.................................. 5.330% 5.329% 5.329% 5.329% 5.327%
Weighted Average Life (yrs.)............ 9.73 9.71 9.69 9.66 9.46
First Principal Payment Date............ Nov 2013 Nov 2013 Nov 2013 Sep 2013 Aug 2013
Last Principal Payment Date............. Jul 2014 Jul 2014 Jul 2014 Jul 2014 May 2014
S-126
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE,
FIRST PRINCIPAL PAYMENT DATE, LAST PRINCIPAL PAYMENT DATE FOR THE
CLASS A-1A CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE
-- OTHERWISE AT INDICATED CPR
-----------------------------
ASSUMED PRICE (32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- --------------------- ------ ------- ------- ------- --------
100-06.................................. 4.997% 4.997% 4.997% 4.997% 4.996%
100-08.................................. 4.986% 4.986% 4.986% 4.986% 4.984%
100-10.................................. 4.975% 4.975% 4.974% 4.974% 4.972%
100-12.................................. 4.963% 4.963% 4.963% 4.963% 4.961%
100-14.................................. 4.952% 4.952% 4.952% 4.951% 4.949%
100-16.................................. 4.941% 4.940% 4.940% 4.940% 4.937%
100-18.................................. 4.929% 4.929% 4.929% 4.929% 4.926%
100-20.................................. 4.918% 4.918% 4.918% 4.917% 4.914%
100-22.................................. 4.907% 4.906% 4.906% 4.906% 4.902%
100-24.................................. 4.895% 4.895% 4.895% 4.894% 4.891%
100-26.................................. 4.884% 4.884% 4.884% 4.883% 4.879%
Weighted Average Life (yrs.)............ 6.72 6.71 6.69 6.67 6.51
First Principal Payment Date............ Sep 2004 Sep 2004 Sep 2004 Sep 2004 Sep 2004
Last Principal Payment Date............. Jul 2014 Jul 2014 Jul 2014 Jul 2014 May 2014
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE,
FIRST PRINCIPAL PAYMENT DATE, LAST PRINCIPAL PAYMENT DATE FOR THE
CLASS B CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE
-- OTHERWISE AT INDICATED CPR
-----------------------------
ASSUMED PRICE (32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- --------------------- ------ ------- ------- ------- --------
100-06.................................. 5.510% 5.510% 5.510% 5.510% 5.509%
100-08.................................. 5.502% 5.502% 5.501% 5.501% 5.501%
100-10.................................. 5.493% 5.493% 5.493% 5.493% 5.492%
100-12.................................. 5.485% 5.485% 5.485% 5.485% 5.484%
100-14.................................. 5.477% 5.477% 5.476% 5.476% 5.475%
100-16.................................. 5.468% 5.468% 5.468% 5.468% 5.467%
100-18.................................. 5.460% 5.460% 5.460% 5.460% 5.459%
100-20.................................. 5.452% 5.452% 5.452% 5.451% 5.450%
100-22.................................. 5.444% 5.444% 5.443% 5.443% 5.442%
100-24.................................. 5.435% 5.435% 5.435% 5.435% 5.433%
100-26.................................. 5.427% 5.427% 5.427% 5.427% 5.425%
Weighted Average Life (yrs.)............ 9.98 9.95 9.93 9.91 9.74
First Principal Payment Date............ Jul 2014 Jul 2014 Jul 2014 Jul 2014 May 2014
Last Principal Payment Date............. Aug 2014 Aug 2014 Aug 2014 Jul 2014 May 2014
S-127
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE,
FIRST PRINCIPAL PAYMENT DATE, LAST PRINCIPAL PAYMENT DATE FOR THE
CLASS C CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE
-- OTHERWISE AT INDICATED CPR
-----------------------------
ASSUMED PRICE (32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- --------------------- ------ ------- ------- ------- --------
100-06.................................. 5.553% 5.553% 5.553% 5.553% 5.552%
100-08.................................. 5.544% 5.544% 5.544% 5.544% 5.543%
100-10.................................. 5.536% 5.536% 5.536% 5.536% 5.535%
100-12.................................. 5.528% 5.528% 5.528% 5.527% 5.527%
100-14.................................. 5.520% 5.520% 5.520% 5.519% 5.518%
100-16.................................. 5.511% 5.511% 5.511% 5.511% 5.510%
100-18.................................. 5.503% 5.503% 5.503% 5.503% 5.501%
100-20.................................. 5.495% 5.495% 5.495% 5.494% 5.493%
100-22.................................. 5.486% 5.486% 5.486% 5.486% 5.484%
100-24.................................. 5.478% 5.478% 5.478% 5.478% 5.476%
100-26.................................. 5.470% 5.470% 5.470% 5.469% 5.468%
Weighted Average Life (yrs.)............ 9.99 9.99 9.99 9.93 9.74
First Principal Payment Date............ Aug 2014 Aug 2014 Aug 2014 Jul 2014 May 2014
Last Principal Payment Date............. Aug 2014 Aug 2014 Aug 2014 Aug 2014 May 2014
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE,
FIRST PRINCIPAL PAYMENT DATE, LAST PRINCIPAL PAYMENT DATE FOR THE
CLASS D CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE
-- OTHERWISE AT INDICATED CPR
-----------------------------
ASSUMED PRICE (32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- --------------------- ------ ------- ------- ------- --------
100-06.................................. 5.623% 5.623% 5.624% 5.625% 5.627%
100-08.................................. 5.614% 5.615% 5.615% 5.616% 5.618%
100-10.................................. 5.606% 5.606% 5.607% 5.608% 5.610%
100-12.................................. 5.598% 5.598% 5.599% 5.600% 5.601%
100-14.................................. 5.590% 5.590% 5.590% 5.591% 5.593%
100-16.................................. 5.581% 5.582% 5.582% 5.583% 5.584%
100-18.................................. 5.573% 5.573% 5.574% 5.575% 5.576%
100-20.................................. 5.565% 5.565% 5.566% 5.566% 5.567%
100-22.................................. 5.556% 5.557% 5.557% 5.558% 5.559%
100-24.................................. 5.548% 5.548% 5.549% 5.550% 5.550%
100-26.................................. 5.540% 5.540% 5.541% 5.542% 5.542%
Weighted Average Life (yrs.)............ 9.99 9.99 9.99 9.99 9.74
First Principal Payment Date............ Aug 2014 Aug 2014 Aug 2014 Aug 2014 May 2014
Last Principal Payment Date............. Aug 2014 Aug 2014 Aug 2014 Aug 2014 May 2014
S-128
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE,
FIRST PRINCIPAL PAYMENT DATE, LAST PRINCIPAL PAYMENT DATE
FOR THE CLASS E CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE
-- OTHERWISE AT INDICATED CPR
-----------------------------
ASSUMED PRICE (32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- --------------------- ------ ------- ------- ------- --------
100-06.................................. 5.722% 5.723% 5.723% 5.724% 5.726%
100-08.................................. 5.714% 5.714% 5.715% 5.716% 5.718%
100-10.................................. 5.706% 5.706% 5.707% 5.708% 5.709%
100-12.................................. 5.697% 5.698% 5.698% 5.699% 5.701%
100-14.................................. 5.689% 5.689% 5.690% 5.691% 5.692%
100-16.................................. 5.681% 5.681% 5.682% 5.683% 5.684%
100-18.................................. 5.672% 5.673% 5.673% 5.674% 5.675%
100-20.................................. 5.664% 5.664% 5.665% 5.666% 5.667%
100-22.................................. 5.656% 5.656% 5.657% 5.658% 5.658%
100-24.................................. 5.647% 5.648% 5.648% 5.649% 5.650%
100-26.................................. 5.639% 5.639% 5.640% 5.641% 5.641%
Weighted Average Life (yrs.)............ 9.99 9.99 9.99 9.99 9.74
First Principal Payment Date............ Aug 2014 Aug 2014 Aug 2014 Aug 2014 May 2014
Last Principal Payment Date............. Aug 2014 Aug 2014 Aug 2014 Aug 2014 May 2014
Notwithstanding the assumed prepayment rates reflected in the preceding
tables in this "Yield, Prepayment and Maturity Considerations" section, it is
highly unlikely that the Mortgage Loans will be prepaid according to one
particular pattern. For this reason and because the timing of principal payments
is critical to determining weighted average lives, the weighted average lives of
the Offered Certificates are likely to differ from those shown in the tables,
even if all of the Mortgage Loans prepay at the indicated percentages of CPR or
prepayment scenario over any given time period or over the entire life of the
Offered Certificates.
There can be no assurance that the Mortgage Loans will prepay at any
particular rate. Moreover, the various remaining terms to maturity of the
Mortgage Loans could produce slower or faster principal distributions than
indicated in the preceding tables at the various percentages of CPR specified,
even if the weighted average remaining term to maturity of the Mortgage Loans is
as assumed. Investors are urged to make their investment decisions based on
their determinations as to anticipated rates of prepayment under a variety of
scenarios.
For additional considerations relating to the yield on the Certificates,
see "Yield Considerations" in the prospectus.
EFFECT OF LOAN GROUPS
Generally, the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5 and
Class A-6 Certificates will only be entitled to receive distributions of
principal collected or advanced with respect to the Mortgage Loans in Loan Group
1 until the Certificate Principal Amount 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 Amount of the Class A-6
Certificates has been reduced to zero. Accordingly, holders of the Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5 and Class A-6 Certificates will be
greatly affected by the rate and timing of payments and other collections of
principal on the Mortgage Loans in Loan Group 1 and holders of the Class A-1A
Certificates will be greatly affected by the rate and timing of payments and
other collections of principal on the Mortgage Loans in Loan Group 2 and, in the
absence of losses, should be largely unaffected by the rate and timing of
payments and other collections of principal on the Mortgage Loans in Loan Group
1. Investors should take this into account when reviewing this "Yield,
Prepayment and Maturity Considerations" section.
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THE POOLING AGREEMENT
GENERAL
The Certificates will be issued pursuant to a Pooling and Servicing
Agreement to be dated as of August 1, 2004 (the "Pooling Agreement"), by and
among the Depositor, the Master Servicer, the Special Servicer, the Trustee and
the Fiscal Agent.
The servicing of the Mortgage Loans (including the Grand Canal Pari Passu
Companion Loans but not any Non-Serviced Loan) and any REO Properties will be
governed by the Pooling Agreement. The following summaries describe certain
provisions of the Pooling Agreement relating to the servicing and administration
of the Mortgage Loans (other than any Non-Serviced Loan) and any REO Properties.
The summaries do not purport to be complete and are subject, and qualified in
their entirety by reference, to the provisions of the Pooling Agreement.
Reference is made to the prospectus for additional information regarding the
terms of the Pooling Agreement relating to the servicing and administration of
the Mortgage Loans (other than any Non-Serviced Loan) and any REO Properties,
provided that the information in this prospectus supplement supersedes any
contrary information set forth in the prospectus.
SERVICING OF THE WHOLE LOANS
In general, the Serviced Whole Loans and their related Companion Loans will
be serviced and administered under the Pooling Agreement and the related
intercreditor or co-lender agreement, as applicable, as though the related
Companion Loans were a part of the Mortgage Pool. If any Companion Loan of a
Serviced Whole Loan becomes a Special Serviced Mortgage Loan, then the related
Serviced Whole Loan shall become a Specially Serviced Mortgage Loan. For more
detailed information, including any termination rights with respect to the
Special Servicer, please see "Description of the Mortgage Pool--The Whole Loans"
in this prospectus supplement.
In general, the Non-Serviced Loans and their related Companion Loans will
be serviced and administered under the related Pari Passu PSA. The Master
Servicer, the Special Servicer and the Trustee have no obligation or authority
to supervise the master servicer and/or special servicer under the related Pari
Passu PSA or to make property protection advances with respect to the related
Non-Serviced Loan. The obligation of the Master Servicer and the Special
Servicer to provide information or remit collections on the related Non-Serviced
Loans is dependent on its receipt of the same from the applicable party under
the related Pari Passu PSA. The related Pari Passu PSA provides for servicing in
a manner acceptable for rated transactions similar in nature to this
securitization. The servicing arrangement under the related Pari Passu PSA are
generally similar but not identical to the servicing arrangements under the
Pooling Agreement. For more detailed information please see "Description of the
Mortgage Pool--The Whole Loans"
ASSIGNMENT OF THE MORTGAGE LOANS
On the Closing Date, the Depositor will sell, transfer or otherwise convey,
assign or cause the assignment of the Mortgage Loans, without recourse, to the
Trustee for the benefit of the holders of Certificates. See "The Mortgage
Pools--Assignment of Mortgage Loans" in the prospectus.
SERVICING OF THE MORTGAGE LOANS
Each of the Master Servicer (directly or through one or more sub-servicers)
and the Special Servicer will be required to service and administer the Mortgage
Loans (including the Serviced Whole Loans, but excluding any Non-Serviced Loans)
for which it is responsible. The Master Servicer may delegate and/or assign some
or all of its servicing obligations and duties with respect to some or all of
the Mortgage Loans to one or more third-party subservicers. The Master Servicer
will be responsible for paying the servicing fees of any subservicer.
Notwithstanding any subservicing agreement, the Master Servicer will remain
primarily liable to the Trustee, Certificateholders and the holders of the
Serviced Companion
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Loans for the servicing and administering of the Mortgage Loans in accordance
with the provisions of the Pooling Agreement without diminution of such
obligation or liability by virtue of such subservicing agreement. Except in
certain limited circumstances set forth in the Pooling Agreement, the Special
Servicer will not be permitted to appoint sub-servicers with respect to any of
its servicing obligations and duties.
With respect to each Non-Serviced Loan, the Non-Serviced Loan and the
related Companion Loans are being serviced and administered in accordance with
the related Pari Passu PSA (and all decisions, consents, waivers, approvals and
other actions on the part of the holders of the Non-Serviced Loan and the
related Companion Loans will be effected in accordance with the related Pari
Passu PSA and intercreditor agreements). Consequently, the servicing provisions
set forth in this prospectus supplement and the administration of accounts will
generally not be applicable to any Non-Serviced Loan, but instead such servicing
and administration of the Non-Serviced Loan will be governed by the related Pari
Passu PSA.
The Master Servicer and the Special Servicer will be required to service
and administer the Mortgage Loans (including the Serviced Whole Loans, but not
any Non-Serviced Loan) and each REO Property for which it is responsible in
accordance with applicable law, the terms of the Pooling Agreement and the terms
of the respective Mortgage Loans and, if applicable, the related intercreditor
agreements and, to the extent consistent with the foregoing, in accordance with
the higher of the following standards of care:
1. with the same care, skill, prudence and diligence with which, the Master
Servicer or the Special Servicer, as the case may be, services and administers
comparable mortgage loans with similar borrowers and comparable REO Properties
for other third-party portfolios, giving due consideration to the customary and
usual standards of practice of prudent institutional commercial mortgage lenders
servicing their own mortgage loans and REO Properties, and
2. with the same care, skill, prudence and diligence with which, the Master
Servicer or Special Servicer, as the case may be, services and administers
comparable mortgage loans owned by the Master Servicer or Special Servicer, as
the case may be,
in either case exercising reasonable business judgment and acting in
accordance with applicable law, the terms of the pooling and servicing agreement
and the terms of the respective subject mortgage loans;
o with a view to--
1. the timely recovery of all payments of principal and interest, including
balloon payments, under those Mortgage Loans, or
2. in the case of the Special Servicer and (a) a Specially Serviced
Mortgage Loan or (b) a Mortgage Loan in the trust as to which the related
mortgaged property is an REO Property, the maximization of recovery on that
Mortgage Loan to the series 2004-GG2 certificateholders (as a collective whole)
(or, if a Whole Loan is involved, with a view to the maximization of recovery on
the Whole Loan to the series 2004-GG2 certificateholders and the holders of the
related Companion Loans (as a collective whole)) of principal and interest,
including balloon payments, on a present value basis; and
o without regard to--
1. any relationship, including as lender on any other debt, that the Master
Servicer or the Special Servicer, as the case may be, or any affiliate thereof,
may have with any of the underlying borrowers, or any affiliate thereof, or any
other party to the Pooling Agreement,
2. the ownership of any series 2004-GG2 Certificate (or any security backed
by a Companion Loan) by the Master Servicer or the Special Servicer, as the case
may be, or any affiliate thereof,
3. the obligation of the Master Servicer or the Special Servicer, as the
case may be, to make Advances,
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4. the right of the Master Servicer or the Special Servicer, as the case
may be, or any affiliate of either of them, to receive compensation or
reimbursement of costs under the Pooling Agreement generally or with respect to
any particular transaction, and
5. the ownership, servicing or management for others of any mortgage loan
or property not covered by the Pooling Agreement by the Master Servicer or the
Special Servicer, as the case may be, or any affiliate thereof (the "Servicing
Standards").
The Pooling Agreement provides, however, that none of the Master Servicer,
the Special Servicer, or any of their respective directors, officers, employees
or agents shall have any liability to the Trust Fund or the Certificateholders
for taking any action or refraining from taking any action in good faith, or for
errors in judgment. The foregoing provision would not protect the Master
Servicer or the Special Servicer for the breach of its representations or
warranties in the Pooling Agreement or any liability by reason of willful
misconduct, bad faith, fraud or negligence in the performance of its duties or
by reason of its reckless disregard of its obligations or duties under the
Pooling Agreement. The Trustee or any other successor Master Servicer assuming
the obligations of the Master Servicer under the Pooling Agreement will be
entitled to the compensation to which the Master Servicer would have been
entitled after the date of the assumption of the Master Servicer's obligations.
If no successor Master Servicer can be obtained to perform such obligations for
such compensation, additional amounts payable to such successor Master Servicer
will be treated as Realized Losses.
In general, the Master Servicer will be responsible for the servicing and
administration of each Mortgage Loan and the Companion Loans (other than the
Non-Serviced Loan Groups)--
o which is not a Specially Serviced Mortgage Loan, or
o that is a Corrected Mortgage Loan.
A "Specially Serviced Mortgage Loan" means any Mortgage Loan (including the
Serviced Whole Loans and including Mortgage Loans and Serviced Whole Loans that
have become REO Properties) being serviced under the Pooling Agreement, any of
the following events (a "Servicing Transfer Event"):
(a) the related borrower has failed to make when due any scheduled monthly
debt service payment or a balloon payment, which failure continues, or the
Master Servicer determines, in its reasonable, good faith judgment, will
continue, unremedied (without regard to any grace period)
o except in the case of a Mortgage Loan or Serviced Whole Loan delinquent
in respect of its balloon payment, for 60 days beyond the date that
payment was due, or
o solely in the case of a delinquent balloon payment, (A) for one business
day beyond the date on which that balloon payment was due (except as
described in clause B below) or (B) in the case of a Mortgage Loan or
Serviced Whole Loan delinquent with respect to the balloon payment as to
which the related borrower delivered a refinancing commitment acceptable
to the Special Servicer prior to the date the balloon payment was due,
for 30 days beyond the date on which that balloon payment was due (or
for such shorter period beyond the date on which that balloon payment
was due during which the refinancing is scheduled to occur);
(b) the Master Servicer or 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, based on communications with
the related borrower, that a default in the making of a scheduled monthly debt
service payment on the Mortgage Loan or Serviced Whole Loan or a balloon payment
is likely to occur and is likely to remain unremedied (without regard to any
grace period) for at least the applicable period contemplated by clause (a) of
this definition; or
(c) there has occurred a default (other than as described in clause (a)
above and other than an Acceptable Insurance Default) that
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o materially impairs the value of the related Mortgaged Property as
security for the Mortgage Loan or Serviced Whole Loan or otherwise
materially adversely affects the interests of Certificateholders (or, in
the case of any Companion Loan, the holder of the related Companion
Loan), and
o continues unremedied for the applicable grace period under the terms of
the Mortgage Loan (or, if no grace period is specified and the default
is capable of being cured, for 30 days); provided that any default that
results in acceleration of the related Mortgage Loan without the
application of any grace period under the related Mortgage Loan
documents will be deemed not to have a grace period; and provided,
further, that any default requiring a Property Advance will be deemed to
materially and adversely affect the interests of Certificateholders (or,
in the case of any Companion Loan, the holder of the related Companion
Loan); or
(d) a decree or order of a court or agency or supervisory authority having
jurisdiction in the premises in an involuntary case under any present or future
federal or state bankruptcy, insolvency or similar law or the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings, or for the winding
up or liquidation of its affairs, shall have been entered against the related
borrower and such decree or order shall have remained in force and not dismissed
for a period of 60 days; or
(e) the related borrower consents to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings of or relating to such borrower or
of or relating to all or substantially all of its property; or
(f) the related borrower admits 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 has received notice of the commencement of
foreclosure or similar proceedings with respect to the related Mortgaged
Property; or
(h) the Master Servicer or Special Servicer (in the case of the Special
Servicer, with the consent of the Controlling Class Representative) determines
that (i) a default (other than a payment default) under the Mortgage Loan or
Serviced Whole Loan is imminent, (ii) such default would materially impair the
value of the corresponding Mortgaged Property as security for the Mortgage Loan
or Serviced Whole Loan or otherwise materially adversely affect the interests of
Certificateholders or, in the case of Serviced Whole Loans, the interests of the
holder of the related Companion Loans, and (iii) the default is likely to
continue unremedied for the applicable cure period under the terms of the
Mortgage Loan or Serviced Whole Loan or, if no cure period is specified and the
default is capable of being cured, for 30 days, (provided that such 30-day grace
period does not apply to a default that gives rise to immediate acceleration
without application of a grace period under the terms of the Mortgage Loan or
Serviced Whole Loan); provided that any determination that a loan is a Specially
Serviced Loan pursuant to this bullet point with respect to any Mortgage Loan
solely by reason of the failure (or imminent failure) of the related borrower to
maintain or cause to be maintained insurance coverage against damages or losses
arising from acts of terrorism may only be made by the Special Servicer (with
the consent of the Controlling Class Representative or, in certain cases, the
related holder of the related Companion Loan) as described with respect to the
definition of Acceptable Insurance Default.
It shall be considered an "Acceptable Insurance Default" if the related
Mortgage Loan documents specify that the related borrower must maintain all-risk
casualty insurance or other insurance that covers damages or losses arising from
acts of terrorism or require the borrower to obtain this insurance (and neither
the Master Servicer nor the Special Servicer will be required to obtain this
insurance) and the special servicer has determined, in its reasonable judgment
(which determination, with respect to terrorism insurance, will be subject to
the consent of, in the case of the Grand Canal Shoppes at the Venetian Loan, the
Grand Canal Shoppes at the Venetian Majority Holder, and in the case of the 111
Eighth Avenue Loan, the 1441 Broadway Loan and the Waterfront Plaza Loan, the
directing holder of such loans as described under "Description of the Mortgage
Pool--The Whole Loans" in this prospectus
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supplement), that (i) this insurance is not available at commercially reasonable
rates and the subject hazards are not commonly insured against by prudent owners
of similar real properties in similar locales (but only by reference to such
insurance that has been obtained by such owners at current market rates), or
(ii) this insurance is not available at any rate. In making this determination,
the special servicer, to the extent consistent with its servicing standards, is
entitled to rely on the opinion of an insurance consultant.
A Mortgage Loan (including the Serviced Whole Loans) will become a
"Corrected Mortgage Loan" when:
o with respect to the circumstances described in clause (a) of the
definition of Specially Serviced Mortgage Loan, the related borrower has
made three consecutive full and timely scheduled monthly debt service
payments under the terms of the 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, extension, waiver or amendment granted or agreed to by the
Master Servicer or the Special Servicer pursuant to the Pooling
Agreement);
o with respect to the circumstances described in clauses (b), (d), (e),
(f) and (h) of the definition of Specially Serviced Mortgage Loan, the
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;
o with respect to the circumstances described in clause (c) of the
definition of Specially Serviced Mortgage Loan, the default is cured as
determined by the Special Servicer in its reasonable, good faith
judgment; and
o with respect to the circumstances described in clause (g) of the
definition of Specially Serviced Mortgage Loan, the proceedings are
terminated.
If a Servicing Transfer Event exists with respect to one loan in a Whole
Loan, it will be considered to exist for the entire Whole Loan.
The Special Servicer, on the other hand, will be responsible for the
servicing and administration of each Mortgage Loan (including the Serviced Whole
Loans but excluding the Non-Serviced Loans) as to which a Servicing Transfer
Event has occurred and which has not yet become a Corrected Loan. The Special
Servicer will also be responsible for the administration of each REO Property
acquired by the trust.
Despite the foregoing, the Pooling Agreement will require the Master
Servicer to continue to collect information and prepare all reports to the
trustee required to be collected or prepared with respect to any Specially
Serviced Mortgage Loans (based on, among other things, certain information
provided by the Special Servicer), receive payments on Specially Serviced
Mortgage Loans, maintain escrows and all reserve accounts on Specially Serviced
Mortgage Loans and, otherwise, to render other incidental services with respect
to any such specially serviced assets. In addition, the Special Servicer will
perform limited duties and have certain approval rights regarding servicing
actions with respect to non Specially Serviced Mortgage Loans.
Neither the Master Servicer nor the Special Servicer will have
responsibility for the performance by the other of its respective obligations
and duties under the Pooling Agreement.
The Master Servicer will transfer servicing of a Mortgage Loan (including
the Serviced Whole Loans but excluding the Non-Serviced Loan) to the Special
Servicer when that Mortgage Loan (or Serviced Whole Loan) becomes a Specially
Serviced Mortgage Loan. The Special Servicer will return the servicing of that
Mortgage Loan (or Serviced Whole Loan) to the Master Servicer when it becomes a
Corrected Mortgage Loan.
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The Special Servicer will be obligated to, among other things, oversee the
resolution of non-performing Mortgage Loans (including the Serviced Whole Loans)
and act as disposition manager of REO Properties.
Each Pari Passu PSA provides for servicing transfer events that are similar
but not identical to those set forth above. Upon the occurrence of a servicing
transfer event under the related Pari Passu PSA, servicing of the both the
related Non-Serviced Loan and its Pari Passu Companion Loan will be transferred
to the related special servicer under that Pari Passu PSA.
ADVANCES
The Master Servicer will be obligated (subject to the limitations described
below) to advance, on the business day immediately preceding a Distribution Date
(the "Master Servicer Remittance Date"), an amount (each such amount, a "P&I
Advance") equal to the total or any portion of the Monthly Payment (with
interest calculated at the Net Mortgage Rate plus the Trustee Fee Rate) on a
Mortgage Loan (other than the 237 Park Avenue Loan and the 111 Eighth Avenue
Loan) that was delinquent as of the close of business on the immediately
preceding Due Date (without regard to any grace period) (and which delinquent
payment has not been cured as of the business day immediately preceding the
Master Servicer Remittance Date). In the event the Monthly Payment has been
reduced pursuant to any modification, waiver or amendment of the terms of the
Mortgage Loan, whether agreed to by the Special Servicer or resulting from
bankruptcy, insolvency or any similar proceeding involving the related borrower,
the amount required to be advanced will be so reduced. The Master Servicer will
not be required or permitted to make an advance for balloon payments, default
interest or prepayment premiums or yield maintenance charges. The amount
required to be advanced by the Master Servicer with respect to any Distribution
Date in respect of payments on Mortgage Loans that have been subject to an
Appraisal Reduction Event will equal (i) the amount required to be advanced by
the Master Servicer without giving effect to such Appraisal Reduction less (ii)
an amount equal to the product of (x) the amount required to be advanced by the
Master Servicer in respect to delinquent payments of interest without giving
effect to such Appraisal Reduction, and (y) a fraction, the numerator of which
is the Appraisal Reduction with respect to such Mortgage Loan and the
denominator of which is the Stated Principal Balance of such Mortgage Loan as of
the last day of the related Collection Period.
With respect to the 111 Eighth Avenue Loan and the 237 Park Avenue Loan,
generally the applicable master servicer under the related Pari Passu PSA will
be required to make any applicable P&I Advance, subject to any
non-recoverability determination made in accordance with the related Pari Passu
PSA. If that master servicer fails to make any required advance, the Master
Servicer will be required to make the P&I Advance, subject to a determination
that the P&I Advance would be a Non-Recoverable Advance.
The Master Servicer will also be obligated (subject to the limitations
described below) with respect to each Mortgage Loan (including each Serviced
Whole Loan but not a Non-Serviced Loan) to make cash advances ("Property
Advances" and, together with P&I Advances, "Advances") to pay all customary,
reasonable and necessary "out of pocket" costs and expenses (including
attorneys' fees and fees and expenses of real estate brokers) incurred in
connection with the servicing and administration of a Mortgage Loan or Serviced
Whole Loan, if a default is imminent thereunder or a default, delinquency or
other unanticipated event has occurred, or in connection with the administration
of any REO Property, including, but not limited to, the cost of the
preservation, insurance, restoration, protection and management of a Mortgaged
Property, the cost of delinquent real estate taxes, ground lease rent payments,
assessments and hazard insurance premiums and to cover other similar costs and
expenses necessary to preserve the priority of or enforce the related Mortgage
or to maintain such Mortgaged Property.
The Pooling Agreement will obligate the Trustee to make any P&I Advance
that the Master Servicer was obligated, but failed to make. The Pooling
Agreement will obligate the Fiscal Agent to make any P&I Advance that the
Trustee was obligated, but failed to make.
The Special Servicer may request the Master Servicer to make Property
Advances with respect to a Specially Serviced Mortgage Loan or REO Property
under the Pooling Agreement, in lieu of the Special
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Servicer's making that advance itself. The Special Servicer must make the
request a specified number of days in advance of when the Property Advance is
required to be made under the Pooling Agreement. The Master Servicer, in turn,
must make the requested Property Advance within a specified number of days
following the Master Servicer's receipt of the request. If the request is timely
and properly made, the Special Servicer will be relieved of any obligations with
respect to a Property Advance that it requests the Master Servicer to make,
regardless of whether or not the Master Servicer actually makes that advance.
The Special Servicer may elect to make certain Property Advances on an emergency
basis.
If the Master Servicer is required under the Pooling Agreement to make a
Property Advance, but does not do so within 15 days after the Property Advance
is required to be made, then the Trustee will be required:
o if it has actual knowledge of the failure, to give the defaulting party
notice of its failure; and
o if the failure continues for three more business days, to make the
Property Advance.
The Pooling Agreement will obligate the Fiscal Agent to make any Advances
that the trustee was obligated, but failed, to make.
The Master Servicer, the Special Servicer, the Trustee or the Fiscal Agent
will each be entitled to receive interest on Advances at the Prime Rate (the
"Advance Rate"), compounded annually, as of each Master Servicer Remittance
Date. If the interest on such Advance is not recovered from default interest or
late payments on such Mortgage Loan, a shortfall will result which will have the
same effect as a Realized Loss. The "Prime Rate" is the rate, for any day, set
forth as such in The Wall Street Journal, New York edition.
The obligation of the Master Servicer, the Trustee or the Fiscal Agent, as
applicable, to make Advances (and right of the Special Servicer to elect to make
emergency Property Advances) with respect to any Mortgage Loan pursuant to the
Pooling Agreement continues through the foreclosure of such Mortgage Loan and
until the liquidation of such Mortgage Loan or the related Mortgaged Properties.
Advances are intended to provide a limited amount of liquidity, not to guarantee
or insure against losses.
None of the Master Servicer, the Special Servicer, the Trustee or the
Fiscal Agent will be required to make any Advance that the Master Servicer or
Special Servicer, in accordance with the Servicing Standards, or the Trustee or
the Fiscal Agent, in its respective good faith business judgment, determines
will not be ultimately recoverable (including interest accrued on the Advance)
by the Master Servicer, the Special Servicer, the Trustee or the Fiscal Agent,
as applicable, out of related late payments, net insurance proceeds, net
condemnation proceeds, net liquidation proceeds or other collections with
respect to the Mortgage Loan as to which such Advances were made. In addition,
if the Master Servicer or the Special Servicer, in accordance with the Servicing
Standards, or the Trustee or the Fiscal Agent, in its respective good faith
business judgment, as applicable, determines that any Advance (together with
accrued interest on the Advance) previously made by it (or in the case of the
Special Servicer, by any one of them) will not be ultimately recoverable from
the foregoing sources (any such Advance, a "Non-Recoverable Advance"), then the
Master Servicer, the Special Servicer, the Trustee or the Fiscal Agent, as
applicable, will be entitled to be reimbursed for such Advance, plus interest on
the Advance at the Advance Rate, out of amounts payable on or in respect of all
of the Mortgage Loans prior to distributions on the Certificates, which will be
deemed to have been reimbursed first out of amounts collected or advanced in
respect of principal and then out of all other amounts collected on the Mortgage
Loans. Any such judgment or determination with respect to the recoverability of
Advances must be evidenced by an officers' certificate delivered to the Trustee,
the Master Servicer or the Special Servicer (and in the case of the Trustee, the
Depositor) setting forth such judgment or determination of nonrecoverability and
the procedures and considerations of the Master Servicer, the Special Servicer,
the Trustee or the Fiscal Agent, as applicable, forming the basis of such
determination. In addition, the Special Servicer may, at its option, make a
determination in accordance with the Servicing Standards that any proposed
Advance, if made, would be a Non-Recoverable Advance and may deliver to the
Master Servicer, the Trustee and the Fiscal Agent notice of such determination,
which determination will be conclusive and binding on the Master Servicer, the
Trustee and the Fiscal Agent. Further, with respect to
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111 Eighth Avenue Loan and the 237 Park Avenue Loan, if any servicer in
connection with the applicable Pari Passu PSA or any servicer in connection with
a subsequent securitization, determines that any P&I Advance with respect to the
applicable Companion Loan, if made, would be non-recoverable, such determination
will be binding on the Master Servicer, the Special Servicer, the Trustee and
the Fiscal Agent as it relates to any proposed P&I Advance with respect to the
respective Whole Loan, as applicable.
Notwithstanding anything in this prospectus supplement to the contrary, the
Master Servicer may in accordance with the Servicing Standards elect (but is not
required) to make a payment (and in the case of a Specially Serviced Mortgage
Loan, at the direction of the Special Servicer will be required to make a
payment) from amounts on deposit in the Collection Account that would otherwise
be a Property Advance with respect to a Mortgage Loan notwithstanding that the
Master Servicer or the Special Servicer has determined that such a Property
Advance would be nonrecoverable if making the payment would prevent (i) the
related Mortgaged Property from being uninsured or being sold at a tax sale or
(ii) any event that would cause a loss of the priority of the lien of the
related Mortgage, or the loss of any security for the related Mortgage Loan or
remediates any adverse environmental condition or circumstance at any of the
Mortgaged Properties, if, in each instance, the Special Servicer determines in
accordance with the Servicing Standards that making the payment is in the best
interest of the Certificateholders.
The Master Servicer, the Special Servicer, the Trustee or the Fiscal Agent,
as applicable, will be entitled to reimbursement for any Advance made by it,
including all Advances made with respect to any Whole Loan, equal to the amount
of such Advance and interest accrued on the Advance at the Advance Rate from (i)
late payments on the Mortgage Loan by the borrower and any other collections on
the Mortgage Loan (ii) insurance proceeds, condemnation proceeds or liquidation
proceeds from the sale of the defaulted Mortgage Loan or the related Mortgaged
Property or (iii) upon determining in good faith that such Advance with interest
is not recoverable from amounts described in clauses (i) and (ii), from any
other amounts from time to time on deposit in the Collection Account.
Notwithstanding the foregoing, if the funds in the Collection Account
allocable to principal and available for distribution on the next Distribution
Date are insufficient to fully reimburse the Master Servicer, the Special
Servicer, the Trustee or the Fiscal Agent, as applicable, for a Non-Recoverable
Advance, then such party may elect, on a monthly basis, in its sole discretion,
to defer reimbursement of some or all of the portion that exceeds such amount
allocable to principal (in which case interest will continue to accrue on the
unreimbursed portion of the Advance) for a period not to exceed 12 months
without the consent of the Controlling Class Representative. In addition, the
Master Servicer, the Special Servicer, the Trustee or the Fiscal Agent, as
applicable, will be entitled to recover any Advance that is outstanding at the
time that a mortgage loan is modified but is not repaid in full by the borrower
in connection with such modification but becomes an obligation of the borrower
to pay such amounts in the future (such Advance, a "Workout-Delayed
Reimbursement Amount"); only out of principal collections in the Collection
Account (net of any amounts used to pay a Non-Recoverable Advance or interest
thereon). Upon a determination by the Master Servicer, the Special Servicer, the
Trustee or the Fiscal Agent, as applicable, that the Work-out Delayed
Reimbursement Amount is a Non-Recoverable Advance, such amounts will be
reimbursable as described above with respect to recoverability of
Non-Recoverable Advances.
Any requirement of the Master Servicer, the Trustee or the Fiscal Agent to
make an Advance in the Pooling 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. To the extent a Non-Recoverable Advance or a Workout-Delayed
Reimbursement Amount with respect to a Mortgage Loan is required to be
reimbursed from the principal portion of the general collections on the Mortgage
Loans as described in this paragraph, such reimbursement will be made first,
from the principal collections available on the Mortgage Loans included in the
same Loan Group as the Mortgage Loan and if the principal collections in such
Loan Group are not sufficient to make such reimbursement in full, then from the
principal collections available in the other Loan Group (after giving effect to
any reimbursement of Non-Recoverable Advances and Workout-Delayed Reimbursement
Amounts that are related to such other Loan Group). To the extent a
Non-Recoverable Advance with
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respect to a Mortgage Loan is required to be reimbursed from the interest
portion of the general collections on the Mortgage Loans as described above,
such reimbursement will be made first, from the interest collections available
on the Mortgage Loans included in the same Loan Group as such Mortgage loan and
if the interest collections in such Loan Group are not sufficient to make such
reimbursement in full, then from the interest collections available in the other
Loan Group (after giving effect to any reimbursement of any other
Non-Recoverable Advances that are related to such other Loan Group).
Any election described above by any party to refrain from reimbursing
itself for any Non-Recoverable Advance (together with interest for that
Non-Recoverable Advance) or portion thereof with respect to any Distribution
Date will not be construed to impose on any party any obligation to make the
above described election (or any entitlement in favor of any Certificateholder
or any other person to an election) with respect to any subsequent Collection
Period) or to constitute a waiver or limitation on the right of the person
making the election to otherwise be reimbursed for a Non-Recoverable Advance
(together with interest on that Non-Recoverable Advance). An election by the
Master Servicer, the Special Servicer, the Trustee or the Fiscal Agent will not
be construed to impose any duty on the other party to make an election (or any
entitlement in favor of any Certificateholder or any other person to such an
election). None of the Master Servicer, the Special Servicer, the Trustee or the
Fiscal Agent or the other parties to this Pooling Agreement will have any
liability to one another or to any of the Certificateholders for any such
election that such party makes to refrain or not to refrain from reimbursing
itself as contemplated by this paragraph or for any losses, damages or other
adverse economic or other effects that may arise from such an election nor will
such election constitute a violation of the Servicing Standards or any duty
under the Pooling Agreement.
ACCOUNTS
The Master Servicer will be required to deposit amounts collected in
respect of the Mortgage Loans into a segregated account (the "Collection
Account") established pursuant to the Pooling Agreement. The Master Servicer
will also be required to establish and maintain a segregated companion
collection account (the "Companion Collection Account") with respect to any
Serviced Whole Loan, which may be a sub-account of the Collection Account and
deposit amounts collected in respect of each Serviced Whole Loan therein. The
trust will only be entitled to amounts on deposit in the Companion Collection
Account to the extent these funds are not otherwise payable to a Companion Loan
holder.
The Trustee will be required to establish and maintain two accounts, one of
which may be a sub-account of the other (the "Lower-Tier Distribution Account"
and the "Upper-Tier Distribution Account" and, collectively, the "Distribution
Account"). With respect to each Distribution Date, the Master Servicer will be
required to disburse from the Collection Account and remit to the Trustee for
deposit into the Lower-Tier Distribution Account, to the extent of funds on
deposit in the Collection Account, on the Master Servicer Remittance Date the
sum of (i) the Available Funds and any prepayment premiums or yield maintenance
charges, and (ii) the Trustee Fee. In addition, the Master Servicer will be
required to deposit all P&I Advances into the Lower-Tier Distribution Account on
the related Master Servicer Remittance Date. To the extent the Master Servicer
fails to do so, the Trustee will deposit all P&I Advances into the Lower-Tier
Distribution Account as described in this prospectus supplement. On each
Distribution Date, the Trustee (i) will be required to withdraw amounts
distributable on such date on the Regular Certificates and on the Class R
Certificates (which are expected to be zero) from the Lower-Tier Distribution
Account and deposit such amounts in the Upper-Tier Distribution Account. See
"Description of the Offered Certificates--Distributions" in this prospectus
supplement.
The Trustee will also be required to establish and maintain an account (the
"Interest Reserve Account"), which may be a sub-account of the Distribution
Account. On each Master Servicer Remittance Date occurring in February and on
any Master Servicer Remittance Date occurring in any January which occurs in a
year that is not a leap year, the Master Servicer will be required to remit to
the Trustee for deposit, in respect of each Mortgage Loan which accrues interest
on the basis of a 360-day year and the actual number of days in the related
month (a "Withheld Loan"), an amount equal to one day's interest at the related
Net Mortgage Rate on the respective Stated Principal Balance, as of the Due Date
in the month preceding the month in which such Master Servicer Remittance Date
occurs, to the extent the
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applicable Monthly Payment or a P&I Advance is made in respect of the Monthly
Payment (all amounts so deposited in any consecutive January (if applicable) and
February, "Withheld Amounts"). On each Master Servicer Remittance Date occurring
in March, the Trustee will be required to withdraw from the Interest Reserve
Account an amount equal to the Withheld Amounts, if any, from the preceding
January (if applicable) and February, and deposit such amount into the
Lower-Tier Distribution Account.
The Trustee will also be required to establish and maintain an account (the
"Gain-On-Sale Reserve Account") which may be a sub-account of the Distribution
Account. 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.
Other accounts to be established pursuant to the Pooling Agreement are one
or more REO Accounts for collections from REO Properties.
The Collection Account, the Lower-Tier Distribution Account, the Upper-Tier
Distribution Account, the Interest Reserve Account and the Gain-On-Sale Reserve
Account will be held in the name of the Trustee (or the Master Servicer on
behalf of the Trustee) on behalf of the holders of Certificates. Each of the
Collection Account, the Companion Collection Account, any REO Account, the
Lower-Tier Distribution Account, the Upper-Tier Distribution Account, the
Interest Reserve Account, any escrow account and the Gain-On-Sale Reserve
Account will be held at a depository institution or trust company satisfactory
to the Rating Agencies.
Amounts on deposit in the Collection Account, the Companion Collection
Account, the Lower-Tier Distribution Account, the Upper-Tier Distribution
Account, the Gain-On-Sale Reserve Account, the Interest Reserve Account and any
REO Account may be invested in certain United States government securities and
other high-quality investments satisfactory to the Rating Agencies. Interest or
other income earned on funds in the Collection Account and the Companion
Collection Account, will be paid to the Master Servicer as additional servicing
compensation and interest or other income earned on funds in any REO Account
will be payable to the Special Servicer. Interest or other income earned on
funds in the Lower-Tier Distribution Account, the Upper-Tier Distribution
Account, the Gain-On-Sale Reserve Account and the Interest Reserve Account will
be payable to the Trustee.
WITHDRAWALS FROM THE COLLECTION ACCOUNT
The Master Servicer may make withdrawals from the Collection Account for
the following purposes, to the extent permitted and in the priorities provided
in the Pooling Agreement: (i) to remit on or before each Master Servicer
Remittance Date (A) to the Trustee for deposit into the Lower-Tier Distribution
Account an amount equal to the sum of (I) Available Funds and any prepayment
premiums or yield maintenance charges and (II) the Trustee Fee for the related
Distribution Date, (B) to the Trustee for deposit into the Gain-On-Sale Reserve
Account an amount equal to the Excess Liquidation Proceeds received in the
related Collection Period, if any, and (C) to the Trustee for deposit into the
Interest Reserve Account an amount required to be withheld as described above
under "--Accounts", (ii) to pay or reimburse the Master Servicer, the Special
Servicer, the Trustee and the Fiscal Agent, as applicable, pursuant to the terms
of the Pooling Agreement for Advances made by any of them and interest on
Advances (the Master Servicer's, the Special Servicer's, the Trustee's or the
Fiscal Agent's right, as applicable, to reimbursement for items described in
this clause (ii) being limited as described above under "--Advances"), (iii) to
pay on or before each Master Servicer Remittance Date to the Master Servicer and
the Special Servicer as compensation, the aggregate unpaid servicing
compensation in respect of the immediately preceding Collection Period, (iv) to
pay on or before each Distribution Date to any person with respect to each
Mortgage Loan or REO Property that has previously been purchased or repurchased
by such person pursuant to the Pooling Agreement, all amounts received on the
Mortgage Loan or REO Property during the related Collection Period and
subsequent to the date as of which the amount required to effect such purchase
or repurchase was determined, (v) to the extent not reimbursed or paid pursuant
to any of the above clauses, to reimburse or pay the Master Servicer, the
Special Servicer, the Trustee, the Fiscal Agent and/or the Depositor for unpaid
compensation (in the case of the Master Servicer, the Special Servicer, the
Trustee or the Fiscal Agent), and certain other unreimbursed expenses incurred
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by such person pursuant to and to the extent reimbursable under the Pooling
Agreement and to satisfy any indemnification obligations of the Trust Fund under
the Pooling Agreement, (vi) to pay to the Trustee amounts requested by it to pay
any taxes imposed on the Upper-Tier REMIC or the Lower-Tier REMIC, (vii) to
withdraw any amount deposited into the Collection Account that was not required
to be deposited in the Collection Account, and (viii) to clear and terminate the
Collection Account pursuant to a plan for termination and liquidation of the
Trust Fund. The Master Servicer will also be entitled to make withdrawals from
the Collection Account of amounts necessary for the payments or reimbursements
required to be paid to the parties to the applicable Pari Passu PSA pursuant to
the related intercreditor agreement.
ENFORCEMENT OF "DUE-ON-SALE" AND "DUE-ON-ENCUMBRANCE" CLAUSES
DUE-ON-SALE. Subject to the discussion under "--The Controlling Class
Representative" below, the Special Servicer will be required to determine, in a
manner consistent with the Servicing Standards, whether to waive any right the
lender under any Mortgage Loan (other than a Non-Serviced Loan) may have under a
due-on-sale clause (which shall include, without limitation, sale or transfers
of Mortgaged Properties, in full or in part, or the sale, transfer, pledge or
hypothecation of direct or indirect interests in the mortgagor or its owner, to
the extent prohibited under the related loan documents) to accelerate payment of
that Mortgage Loan. In some circumstances, however, the Master Servicer will be
required to review the proposed transaction and, it if determines that approval
of the transaction is favorable, make a recommendation to the Special Servicer,
which will be entitled (subject to the discussion under "--The Controlling Class
Representative" below) to approve or disapprove the transaction. The Special
Servicer may not waive its rights of the lender or grant its consent under any
due-on-sale clause, unless--
o the Master Servicer or the Special Servicer, as applicable, has received
written confirmation from each applicable rating agency that this action
would not result in the qualification, downgrade or withdrawal of any of
the then-current ratings then assigned by the rating agency to the
series 2004 GG2 certificates or any certificate issued pursuant to a
securitization of any Companion Loan, or
o such Mortgage Loan (A) represents less than 5% the principal balance of
all of the Mortgage Loans in the trust, (B) has a principal balance that
is $35 million or less, and (C) is not one of the 10 largest Mortgage
Loans in the pool based on principal balance.
DUE-ON-ENCUMBRANCE. Subject to the discussion under "--The Controlling
Class Representative" below, the Special Servicer will be required to determine,
in a manner consistent with the Servicing Standards, whether to waive any right
the lender under any Mortgage Loan (other than a Non-Serviced Loan) may have
under a due-on-encumbrance clause (which shall include, without limitation, any
mezzanine financing of the mortgagor or the mortgaged property or any sale or
transfer of preferred equity in the mortgagor or its owners, to the extent
prohibited under the related loan documents) to accelerate payment of that
Mortgage Loan. The Special Servicer may not waive its rights or grant its
consent under any due-on-encumbrance clause, unless--
o the Special Servicer has received written confirmation from each
applicable rating agency that this action would not result in the
qualification, downgrade or withdrawal of any of the then-current
ratings then assigned by the rating agency to the series 2004 GG2
certificates or any certificate issued pursuant to a securitization of
any Pari Passu Companion Loan,
o such Mortgage Loan (A) represents less than 2% the principal balance of
all of the Mortgage Loans in the trust, (B) has a principal balance that
is $20 million or less, (C) is not one of the 10 largest Mortgage Loans
in the pool based on principal balance, (D) does not have an aggregate
loan-to-value ratio (including existing and proposed additional debt)
that is equal to or greater than 85%, and (E) does not have an aggregate
debt service coverage ratio (including the debt service on the existing
and proposed additional debt) that is equal to or less than 1.2x, or
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o the encumbrance relates to the grant of an easement, right-of-way or
similar encumbrance that the Special Servicer determines will not have a
material adverse impact on the value, use or operation of the mortgaged
property or the ability of the borrower to perform its obligations under
the Mortgage Loan.
See "Certain Legal Aspects of the Mortgage Loans--Enforceability of Certain
Provisions" in the prospectus.
INSPECTIONS
The Master Servicer (or with respect to any Specially Serviced Mortgage
Loan, the Special Servicer) is required to inspect or cause to be inspected each
Mortgaged Property (other than a Mortgaged Property securing a Non-Serviced
Loan) at such times and in such manner as are consistent with the Servicing
Standards, but in any event at least once every calendar year with respect to
Mortgage Loans with an outstanding principal balance of $2,000,000 or more and
at least once every other calendar year with respect to Mortgage Loans with an
outstanding principal balance of less than $2,000,000, in each case commencing
in 2005; provided that the Master Servicer is not required to inspect any
Mortgaged Property that has been inspected by the Special Servicer during the
preceding 12 months. The Special Servicer is required to inspect each Mortgage
Loan that becomes a Specially Serviced Mortgage Loan as soon as practicable
after it becomes a Specially Serviced Mortgage Loan and thereafter at least
every twelve months until such condition ceases to exist. The cost of any such
inspection shall be borne by the Master Servicer unless the related Mortgage
Loan is a Specially Serviced Mortgage Loan, in which case such cost will be
borne by the Trust Fund.
EVIDENCE AS TO COMPLIANCE
The Pooling Agreement will require that each of the Master Servicer and the
Special Servicer cause a nationally recognized firm of independent public
accountants (which may render other services to the Master Servicer), which is a
member of the American Institute of Certified Public Accountants, to furnish to
the Trustee annually on a specified date, a report which expresses an opinion to
the effect that the assertion of management of the Master Servicer or the
Special Servicer that the Master Servicer or the Special Servicer has complied
with certain minimum mortgage loan servicing standards (to the extent applicable
to commercial and multifamily mortgage loans), identified in the Uniform Single
Attestation Program for Mortgage Bankers established by the Mortgage Bankers
Association of America, with respect to the servicing of commercial and
multifamily mortgage loans during the most recently completed calendar year, is
fairly stated, based on an examination, conducted in compliance with the Uniform
Single Attestation Program for Mortgage Bankers, except for such exceptions
stated in such report.
The Pooling Agreement also requires each of the Master Servicer and the
Special Servicer to deliver to the Trustee annually on specified date, an
officers' certificate of the Master Servicer or the Special Servicer, as the
case may be, stating that, to the best of each such officer's knowledge, the
Master Servicer, the Special Servicer or any subservicer, as the case may be,
has fulfilled its material obligations under the Pooling Agreement in all
material respects throughout the preceding calendar year or, if there has been a
default, specifying each default known to each such officer and the nature and
status of the default, and the Master Servicer or the Special Servicer, as the
case may be, has received no notice regarding qualification, or challenging the
status, of either of the Upper-Tier REMIC or Lower-Tier REMIC as a REMIC from
the Internal Revenue Service or any other governmental agency or body or, if it
has received any such notice, specifying the relevant details.
CERTAIN MATTERS REGARDING THE DEPOSITOR, THE FISCAL AGENT, THE MASTER SERVICER
AND THE SPECIAL SERVICER
Each of the Master Servicer and the Special Servicer may assign its rights
and delegate its duties and obligations under the Pooling Agreement, provided
that certain conditions are satisfied including obtaining the written
confirmation of each of the Rating Agencies that such assignment or delegation
will not cause a qualification, withdrawal or downgrading of the then current
ratings assigned to the
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Certificates. The Pooling Agreement provides that the Master Servicer or the
Special Servicer, as the case may be, may not otherwise resign from its
obligations and duties as Master Servicer or the Special Servicer, as the case
may be, except upon the determination that performance of its duties is no
longer permissible under applicable law and provided that such determination is
evidenced by an opinion of counsel delivered to the Trustee. No such resignation
may become effective until a successor Master Servicer or Special Servicer has
assumed the obligations of the Master Servicer or the Special Servicer under the
Pooling Agreement. The Trustee or any other successor Master Servicer or Special
Servicer assuming the obligations of the Master Servicer or the Special Servicer
under the Pooling Agreement will be entitled to the compensation to which the
Master Servicer or the Special Servicer would have been entitled after the date
of assumption of such obligations (other than certain Work-out Fees which the
prior Special Servicer will be entitled to retain). If no successor Master
Servicer or Special Servicer can be obtained to perform such obligations for
such compensation, additional amounts payable to such successor Master Servicer
or Special Servicer will be treated as Realized Losses.
The Pooling Agreement also provides that none of the Depositor, the Fiscal
Agent, the Master Servicer, the Special Servicer, nor any director, officer,
employee or agent of the Depositor, the Fiscal Agent, the Master Servicer or the
Special Servicer will be under any liability to the Trust Fund or the holders of
the Certificates for any action taken or for refraining from the taking of any
action in good faith pursuant to the Pooling Agreement, or for errors in
judgment. However, none of the Depositor, the Fiscal Agent, the Master Servicer,
the Special Servicer nor any such person will be protected against any liability
which would otherwise be imposed by reason of (i) any breach of warranty or
representation in the Pooling Agreement, or (ii) any willful misconduct, bad
faith, fraud or negligence in the performance of their duties under the Pooling
Agreement or by reason of reckless disregard of obligations or duties under the
Pooling Agreement. The Pooling Agreement further provides that the Depositor,
the Fiscal Agent, the Master Servicer, the Special Servicer and any director,
officer, employee or agent of the Depositor, the Fiscal Agent, the Master
Servicer or the Special Servicer will be entitled to indemnification by the
Trust Fund for any loss, liability or expense incurred in connection with any
legal action or claim relating to the Pooling Agreement or the Certificates
(including in connection with the dissemination of information and reports as
contemplated by the Pooling Agreement), other than any such loss, liability or
expense: (i) specifically required to be borne by the party seeking
indemnification, without right of reimbursement pursuant to the terms of the
Pooling Agreement; (ii) which constitutes a Property Advance that is otherwise
reimbursable under the Pooling Agreement; (iii) incurred in connection with any
legal action or claim against the party seeking indemnification, resulting from
any breach on the part of that party of a representation or warranty made in the
Pooling Agreement; or (iv) incurred in connection with any legal action or claim
against the party seeking indemnification, resulting from any willful
misfeasance, bad faith or negligence on the part of that party in the
performance of its obligations or duties under the Pooling Agreement or
negligent disregard of such obligations or duties.
In addition, the Pooling Agreement provides that none of the Depositor, the
Fiscal Agent, the Master Servicer, nor the Special Servicer will be under any
obligation to appear in, prosecute or defend any legal action unless such action
is related to its duties under the Pooling Agreement and which in its opinion
does not expose it to any expense or liability for which reimbursement is not
reasonably assured. The Depositor, the Fiscal Agent, the Master Servicer or the
Special Servicer may, however, in its discretion undertake any such action which
it may deem necessary or desirable with respect to the Pooling Agreement and the
rights and duties of the parties to the Pooling Agreement and the interests of
the holders of Certificates under the Pooling Agreement. In such event, the
legal expenses and costs of such action and any liability resulting from such
action will be expenses, costs and liabilities of the Trust Fund, and the
Depositor, the Fiscal Agent, the Master Servicer and the Special Servicer will
be entitled to be reimbursed for those amounts from the Collection Account. The
Special Servicer (whether or not a Mortgage Loan or Serviced Whole Loan is a
Specially Serviced Loan) will, for the benefit of the Certificateholders and the
Trustee, be responsible for directing, managing, prosecuting and/or defending
any and all claims and litigation relating to (a) the enforcement of the
obligations of each Mortgagor under the related Mortgage Loan or Serviced Whole
Loan documents and (b) any action brought by a Mortgagor against the Trust Fund.
This enforcement is required to be carried out in accordance with the terms of
the Pooling Agreement, including, without limitation, the Servicing Standard.
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The Depositor is not obligated to monitor or supervise the performance of
the Master Servicer, the Special Servicer or the Trustee under the Pooling
Agreement. The Depositor may, but is not obligated to, enforce the obligations
of the Master Servicer or the Special Servicer under the Pooling Agreement and
may, but is not obligated to, perform or cause a designee to perform any
defaulted obligation of the Master Servicer or the Special Servicer or exercise
any right of the Master Servicer or the Special Servicer under the Pooling
Agreement. In the event the Depositor undertakes any such action, it will be
reimbursed and indemnified by the Trust Fund in accordance with the standard set
forth in the paragraph above. Any such action by the Depositor will not relieve
the Master Servicer or the Special Servicer of its obligations under the Pooling
Agreement.
The Pooling Agreement will provide that each master servicer, special
servicer, depositor, trustee and the Fiscal Agent under any Pari Passu PSA, and
any of their respective directors, officers, employees or agents (each, a "Pari
Passu Indemnified Party"), shall be indemnified by the Trust Fund and held
harmless against the Trust Fund's pro rata share (subject to the related
Intercreditor Agreement) of any and all claims, losses, damages, penalties,
fines, forfeitures, reasonable legal fees and related costs, judgments, and any
other costs, liabilities, fees and expenses incurred in connection with any
legal action relating to the related Whole Loan under the applicable Pari Passu
PSA or the Pooling Agreement (but excluding any such losses allocable to the
related Pari Passu Companion Loans), reasonably requiring the use of counsel or
the incurring of expenses other than any losses incurred by reason of any Pari
Passu Indemnified Party's willful misfeasance, bad faith or negligence in the
performance of duties or by reason of negligent disregard of obligations and
duties under the related Pari Passu PSA.
EVENTS OF DEFAULT
"Events of Default" under the Pooling Agreement with respect to the Master
Servicer or the Special Servicer, as the case may be, will include, without
limitation:
(a) (i) any failure by the Master Servicer to make a required deposit
to the Collection Account or any failure by the master servicer to deposit
amounts to which any holder of a Companion Loan is entitled to the
applicable serviced companion loan account, on the day such deposit was
first required to be made, which failure is not remedied within one
business day, or (ii) any failure by the Master Servicer to deposit into,
or remit to the Trustee for deposit into, the Distribution Account any
amount required to be so deposited or remitted, which failure is not
remedied by 11:00 a.m. New York City time on the relevant Distribution
Date;
(b) any failure by the Special Servicer to deposit into any REO
Account within one business day after the day such deposit is required to
be made, or to remit to the Master Servicer for deposit in the Collection
Account or a Custodial Account established for Whole Loans any such
remittance required to be made by the Special Servicer within one business
day after such remittance is required to be made under the Pooling
Agreement;
(c) 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 Agreement, which failure continues unremedied
for thirty days after written notice of the failure has been given to the
Master Servicer or the Special Servicer, as the case may be, by any other
party to the Pooling Agreement, or to the Master Servicer or the Special
Servicer, as the case may be, with a copy to each other party to the
related Pooling Agreement, by Certificateholders of any Class, evidencing,
as to that Class, Percentage Interests aggregating not less than 25%;
provided, however, if that failure is capable of being cured and the Master
Servicer or Special Servicer, as applicable, is diligently pursuing that
cure, that 30-day period will be extended an additional 60 days; provided
that the Master Servicer, or Special Servicer, as applicable, has commenced
to cure such failure within the initial 30-day period and has certified
that it has diligently pursued, and is continuing to pursue, a full cure;
(d) the Master Servicer or the Special Servicer fails to timely make
any Property Advance required to be made by it under the Pooling Agreement,
and that failure continues unremedied for three business days following the
date on which notice of such failure has been given to the Master
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Servicer or the Special Servicer, as the case may be, by the Trustee or any
other parties to the Pooling Agreement;
(e) any breach on the part of the Master Servicer or the Special
Servicer of any representation or warranty in the Pooling Agreement, which
materially and adversely affects the interests of any Class of
Certificateholders, or the holder of a Companion Loan, as applicable, and
which continues unremedied for a period of 30 days after the date on which
notice of that breach, requiring the same to be remedied, has been given to
the Master Servicer or the Special Servicer, as the case may be, by the
Depositor or the Trustee, or to the Master Servicer, the Special Servicer,
the Depositor and the Trustee by the holders of Certificates entitled to
not less than 25% of the Voting Rights, or the holder of the related
Companion Loan if affected thereby, as applicable; provided, however, if
that breach is capable of being cured and the Master Servicer or Special
Servicer, as applicable, is diligently pursuing that cure, that 30-day
period will be extended an additional 60 days; provided that the Master
Servicer, or Special Servicer, as applicable, has commenced to cure such
failure within the initial 30-day period and has certified that it has
diligently pursued, and is continuing to pursue, a full cure;
(f) 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;
(g) a servicing officer of the Master Servicer or the Special
Servicer, as applicable, obtains actual knowledge that Moody's has (i)
qualified, downgraded or withdrawn its rating or ratings of one or more
Classes of Certificates, or (ii) has placed one or more Classes of
Certificates on "watch status" in contemplation of a ratings downgrade or
withdrawal (and such "watch status" placement shall not have been withdrawn
within 60 days of the date such servicing officer obtained such actual
knowledge) and, in the case of either of clause (i) or (ii), cited
servicing concerns with the Master Servicer or Special Servicer, as
applicable, as the sole or material factor in such rating action; and
(h) the Master Servicer or the Special Servicer is removed from S&P's
approved master servicer list or special servicer list, as the case may be,
and any of the ratings assigned by S&P to the series 2004-GG2 certificates
or any securities backed by a Pari Passu Companion Loan is qualified,
downgraded or withdrawn in connection with that removal.
RIGHTS UPON EVENT OF DEFAULT
If an Event of Default with respect to the Master Servicer or the Special
Servicer occurs, then the Trustee may and, at the direction of the holders of
Certificates evidencing at least 25% of the aggregate Voting Rights of all
Certificateholders, will be required to terminate all of the rights and
obligations of the Master Servicer or the Special Servicer as master servicer or
special servicer under the Pooling Agreement and in and to the Trust Fund
(except in its capacity as a Certificateholder). Notwithstanding the foregoing,
upon any termination of the Master Servicer or the Special Servicer under the
Pooling Agreement, the Master Servicer or the Special Servicer will continue to
be entitled to any rights that accrued prior to the date of such termination
(including the right to receive all accrued and unpaid servicing compensation
through the date of termination plus reimbursement for all Advances and interest
on such Advances as provided in the Pooling Agreement).
On and after the date of termination following an Event of Default by the
Master Servicer or the Special Servicer, the Trustee will succeed to all
authority and power of the Master Servicer or the Special Servicer, as the case
may be, under the Pooling Agreement and will be entitled to the compensation
arrangements to which the Master Servicer or the Special Servicer, as the case
may be, would have been entitled. If the Trustee is unwilling or unable so to
act, or if the holders of Certificates evidencing at least 25% of the aggregate
Voting Rights of all Certificateholders so request, or if the Rating Agencies do
not provide written confirmation that the succession of the Trustee as Master
Servicer or Special Servicer will not cause a qualification, withdrawal or
downgrading of the then current ratings assigned to the Certificates, the
Trustee must appoint, or petition a court of competent jurisdiction for the
appointment of,
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a mortgage loan servicing institution (the appointment of which will not result
in the downgrading, qualification or withdrawal of the then current ratings
assigned to any Class of Certificates as evidenced in writing by each Rating
Agency) to act as successor to the Master Servicer or Special Servicer, as
applicable, under the Pooling Agreement. Pending such appointment, the Trustee
is obligated to act in such capacity. The Trustee and any such successor may
agree upon the servicing compensation to be paid provided, however, that the
servicing compensation may not be in excess of that permitted to the terminated
Master Servicer or Special Servicer, as applicable, unless no successor can be
obtained to perform the obligations for that compensation, any compensation in
excess of that payable to the predecessor Master Servicer or the Special
Servicer will be allocated to the Certificates in the same manner as Realized
Losses.
Notwithstanding the foregoing, if an Event of Default on the part of the
Master Servicer affects a Companion Loan and the Master Servicer is not
otherwise terminated, the Trustee, at the direction of the holder(s) of the
Companion Loan will be required to direct the Master Servicer to appoint a
sub-servicer that will be responsible for servicing the related Whole Loan. If
an Event of Default on the part of the Master Servicer only affects a Companion
Loan, the Master Servicer may not be terminated, however, the Trustee, at the
direction of the holder of the affected Companion Loan, will be required to
direct the Master Servicer to appoint a sub-servicer that will be responsible
for servicing the related Whole Loan.
Notwithstanding the foregoing discussion in this "--Rights Upon Event of
Default" section, if the Master Servicer is terminated under the circumstances
described above because of the occurrence of any of the events of default
described in clauses (g) and (h) under "--Events of Default" above, the Master
Servicer will have the right for a period of 45 days (during which time it will
continue to serve as Master Servicer), at its expense, to sell its master
servicing rights with respect to the Mortgage Loans to a master servicer whose
appointment Moody's and S&P have confirmed will not result in a qualification,
downgrade or withdrawal of any of the then-current ratings of the Certificates.
No Certificateholder will have any right under the Pooling Agreement to
institute any proceeding with respect to the Pooling Agreement or the Mortgage
Loans, unless, with respect to the Pooling Agreement, such holder previously
shall have given to the Trustee a written notice of a default under the Pooling
Agreement, and of the continuance of the default, and unless also the holders of
Certificates of each Class affected thereby evidencing Percentage Interests of
at least 25% of such Class shall have made written request of the Trustee to
institute such proceeding in its own name as Trustee under the Pooling Agreement
and shall have offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses and liabilities to be incurred in connection
with such proceeding, and the Trustee, for 60 days after its receipt of such
notice, request and offer of indemnity, shall have neglected or refused to
institute such proceeding.
The Trustee will have no obligation to make any investigation of matters
arising under the Pooling Agreement or to institute, conduct or defend any
litigation under the Pooling Agreement or in relation to it at the request,
order or direction of any of the holders of Certificates, unless such holders of
Certificates shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred in connection
with such action.
AMENDMENT
The Pooling Agreement may be amended without the consent of any of the
holders of Certificates or, as applicable, the holders of the Serviced Companion
Loans:
(a) to cure any ambiguity to the extent that it does not adversely
affect any holders of Certificates or the holders of the Serviced Companion
Loans;
(b) to correct or supplement any of its provisions which may be
inconsistent with any other provisions of the Pooling Agreement, with the
description of the provisions in this prospectus supplement or the
prospectus or to correct any error;
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(c) to change the timing and/or nature of deposits in the Collection
Account, the Lower-Tier Distribution Account, the Upper-Tier Distribution
Account or any REO Account, provided that (A) the Master Servicer
Remittance Date shall in no event be later than the business day prior to
the related Distribution Date, (B) the change would not adversely affect in
any material respect the interests of any Certificateholder, as evidenced
by an opinion of counsel (at the expense of the party requesting the
amendment), or the holders of the Serviced Companion Loans and (C) the
change would not result in the downgrading, qualification or withdrawal of
the ratings assigned to any Class of Certificates by either Rating Agency,
as evidenced by a letter from each Rating Agency;
(d) to modify, eliminate or add to any of its provisions (i) to the
extent as will be necessary to maintain the qualification of either of the
Upper-Tier REMIC or the Lower-Tier REMIC as a REMIC or to avoid or minimize
the risk of imposition of any tax on the Trust Fund, provided that the
Trustee has received an opinion of counsel (at the expense of the party
requesting the amendment) to the effect that (1) the action is necessary or
desirable to maintain such qualification or to avoid or minimize such risk
and (2) the action will not adversely affect in any material respect the
interests of any holder of the Certificates or (ii) to restrict (or to
remove any existing restrictions with respect to) the transfer of the
Residual Certificates, provided that the Depositor has determined that the
amendment will not give rise to any tax with respect to the transfer of the
Residual Certificates to a non-permitted transferee (see "Federal Income
Tax Consequences for REMIC Certificates--Taxation of Residual
Certificates--Tax-Related Restrictions on Transfer of Residual
Certificates" in the prospectus);
(e) to make any other provisions with respect to matters or questions
arising under the Pooling Agreement or any other change, provided that the
amendment will not adversely affect in any material respect the interests
of any Certificateholder or the holders of the Serviced Companion Loans, as
evidenced by an opinion of counsel or written confirmation that the change
would not result in the downgrading, qualification or withdrawal of the
ratings assigned to any Class of Certificates by either Rating Agency; and
(f) to amend or supplement any provision of the Pooling Agreement to
the extent necessary to maintain the ratings assigned to each Class of
Certificates by each Rating Agency, as evidenced by written confirmation
that the change would not result in the downgrading, qualification or
withdrawal of the ratings assigned to any Class of Certificates by either
Rating Agency; provided, that such amendment will not adversely affect in
any material respect the interests of any Certificateholder or the holders
of the Serviced Companion Loans; provided, further, that no amendment may
be made that changes in any manner the obligations of any Loan Seller under
a mortgage loan purchase agreement without the consent of the applicable
Loan Seller or change the rights or obligations of a Companion Loan
Noteholder under the applicable intercreditor agreements without the
consent of any affected holder of a Companion Loan.
In addition, in the event that one but not both of the two promissory notes
evidencing the Stony Point Fashion Park Loan are repurchased by a Loan Seller,
the Pooling Agreement may be amended, without consent of any Certificateholder,
to add or modify provisions relating to Pari Passu Companion Loans for purposes
of the servicing and administration of the repurchased promissory note, provided
that the amendment will not adversely affect in any material respect the
interests of any Certificateholder, as evidenced by written confirmation that
the change would not result in the downgrading, qualification or withdrawal of
the ratings assigned to any Class of Certificates by either Rating Agency.
The Pooling Agreement may also be amended with the consent of the holders
of Certificates of each Class affected by the amendment evidencing, in each
case, not less than 66 2/3% of the aggregate Percentage Interests constituting
the Class for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of the Pooling Agreement or of modifying in
any manner the rights of the holders of the Certificates, except that the
amendment may not (1) reduce in any manner the amount of, or delay the timing
of, payments received on the Mortgage Loans which are required to be distributed
on a Certificate of any Class without the consent of the holder of that
Certificate, or that are required to be distributed to any holder of a Serviced
Companion Loan without the consent of the related holder, (2) reduce the
percentage of Certificates of any Class the holders of which are required to
consent to the amendment or remove the requirement to obtain the consent of any
holder of the Serviced
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Companion Loans without the consent of the holders of all Certificates of that
Class then outstanding or the holders of the Serviced Companion Loans, as
applicable, (3) adversely affect the Voting Rights of any Class of Certificates,
(4) change in any manner the obligations of any Loan Seller under a Mortgage
Loan sale agreement without the consent of the applicable Loan Seller, or (5)
without the consent of 100% of the holders of Certificates and the holders of
the Serviced Companion Loans or written confirmation that such amendment would
not result in the downgrading, qualification or withdrawal of the ratings
assigned to any Class of Certificates by either Rating Agency, amend the
Servicing Standards.
Notwithstanding the foregoing, no party to the Pooling Agreement will be
required to consent to any amendment to the Pooling Agreement without having
first received an opinion of counsel (at the expense of the person requesting
the amendment) to the effect that the amendment will not result in the
imposition of a tax on any portion of the Trust Fund or cause either of the
Upper-Tier REMIC or Lower-Tier REMIC to fail to qualify as a REMIC.
The "Voting Rights" assigned to each Class shall be (a) 0% in the case of
the Class R and Class LR Certificates; (b) 1% in the case of the Class X
Certificates, provided that the Voting Rights of the Class X Certificates will
be reduced to zero upon reduction of the Notional Amount of that Class to zero
and (c) in the case of the Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5, Class A-6, Class A-1A, Class B, Class C, Class D, Class E, Class F, Class
G, Class H, Class J, Class K, Class L, Class M, Class N, Class O and Class P
Certificates, a percentage equal to the product of (i) 99% multiplied by (ii) a
fraction, the numerator of which is equal to the aggregate outstanding
Certificate Principal Amount of any such Class and the denominator of which is
equal to the aggregate outstanding Certificate Principal Amounts of all Classes
of Certificates. For purposes of determining Voting Rights, the Certificate
Principal Amount of each Class will not be reduced by the amount allocated to
that Class of any Appraisal Reductions. The Voting Rights of any Class of
Certificates shall be allocated among holders of Certificates of such Class in
proportion to their respective Percentage Interests.
REALIZATION UPON MORTGAGE LOANS
SPECIALLY SERVICED MORTGAGE LOANS; APPRAISALS. Within 60 days following the
occurrence of an Appraisal Reduction Event, the Special Servicer will be
required (i) with respect to any Mortgage Loan (including the Serviced Whole
Loans but not including Non-Serviced Loans) with an outstanding principal
balance equal to or in excess of $2,000,000, to obtain an appraisal of the
Mortgaged Property or REO Property, as the case may be, from an independent
appraiser in accordance with MAI standards (an "Updated Appraisal"), or (ii)
with respect to any Mortgage Loan with an outstanding principal balance less
than $2,000,000, to perform an internal valuation of the Mortgaged Property.
However, the Special Servicer will not be required to obtain an Updated
Appraisal or perform an internal valuation of any Mortgaged Property with
respect to which there exists an appraisal or internal valuation, as applicable,
which is less than twelve months old, and the Special Servicer has no knowledge
of any change in circumstances which would materially affect the validity of
that appraisal or internal valuation. The cost of any Updated Appraisal shall be
a Property Advance to be paid by the Master Servicer.
STANDARDS FOR CONDUCT GENERALLY IN EFFECTING FORECLOSURE OR THE SALE OF
DEFAULTED LOANS. In connection with any foreclosure, enforcement of the loan
documents, or other acquisition, the cost and expenses of any such proceeding
will be paid by the Master Servicer as a Property Advance.
If the Special Servicer elects to proceed with a non-judicial foreclosure
in accordance with the laws of the state where the Mortgaged Property is
located, the Special Servicer shall not be required to pursue a deficiency
judgment against the related borrower, if available, or any other liable party
if the laws of the state do not permit such a deficiency judgment after a
non-judicial foreclosure or if the Special Servicer determines, in accordance
with the Servicing Standards, that the likely recovery if a deficiency judgment
is obtained will not be sufficient to warrant the cost, time, expense and/or
exposure of pursuing the deficiency judgment and such determination is evidenced
by an officers' certificate delivered to the Trustee.
Notwithstanding anything in this prospectus supplement to the contrary, the
Pooling Agreement will provide that the Special Servicer will not, on behalf of
the Trust Fund and, if applicable, the related
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Companion Loans, obtain title to a Mortgaged Property as a result of foreclosure
or by deed in lieu of foreclosure or otherwise, and will not otherwise acquire
possession of, or take any other action with respect to, any Mortgaged Property
if, as a result of any such action, the Trustee, or the Trust Fund or the
holders of Certificates, would be considered to hold title to, to be a
"mortgagee-in-possession" of, or to be an "owner" or "operator" of, such
Mortgaged Property within the meaning of the federal Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, or any comparable
law, unless the Special Servicer has previously determined, based on an
environmental assessment report prepared by an independent person who regularly
conducts environmental audits, that: (i) such Mortgaged Property is in
compliance with applicable environmental laws or, if not, after consultation
with an environmental consultant that it would be in the best economic interest
of the Trust Fund to take such actions as are necessary to bring such Mortgaged
Property in compliance with applicable environmental laws and (ii) there are no
circumstances present at such Mortgaged Property relating to the use, management
or disposal of any hazardous materials for which investigation, testing,
monitoring, containment, clean-up or remediation could be required under any
currently effective federal, state or local law or regulation, or that, if any
such hazardous materials are present for which such action could be required,
after consultation with an environmental consultant it would be in the best
economic interest of the Trust Fund to take such actions with respect to the
affected Mortgaged Property. If appropriate, the Special Servicer may establish
a single member limited liability company with the Trust Fund as the sole owner
to hold title to REO Property.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
is required to be issued to the Trustee, to a co-trustee or to its nominee, on
behalf of holders of Certificates or, if applicable, the holder of the related
Companion Loan. Notwithstanding any such acquisition of title and cancellation
of the related Mortgage Loan, such Mortgage Loan shall be considered to be an
REO Mortgage Loan held in the Trust Fund until such time as the related REO
Property shall be sold by the Trust Fund and shall be reduced only by
collections net of expenses.
If title to any Mortgaged Property is acquired by the Trust Fund (directly
or through a single member limited liability company established for that
purpose), the Special Servicer will be required to sell the Mortgaged Property
prior to the close of the third calendar year beginning after the year of
acquisition, unless (1) the Internal Revenue Service (the "IRS") grants an
extension of time to sell the property or (2) the Trustee receives an opinion of
independent counsel to the effect that the holding of the property by the Trust
Fund longer than the above-referenced three year period will not result in the
imposition of a tax on either of the Upper-Tier REMIC or the Lower-Tier REMIC or
cause the Trust Fund (or either of the Upper-Tier REMIC or the Lower-Tier REMIC)
to fail to qualify as a REMIC under the Code at any time that any Certificate is
outstanding. Subject to the foregoing and any other tax-related limitations,
pursuant to the Pooling Agreement, the Special Servicer will generally be
required to attempt to sell any Mortgaged Property so acquired in accordance
with the Servicing Standards. The Special Servicer will also be required to
ensure that any Mortgaged Property acquired by the Trust Fund is administered so
that it constitutes "foreclosure property" within the meaning of Code Section
860G(a)(8) at all times, that the sale of the property does not result in the
receipt by the Trust Fund of any income from nonpermitted assets as described in
Code Section 860F(a)(2)(B). If the Trust Fund acquires title to any Mortgaged
Property, the Special Servicer, on behalf of the Trust Fund, will retain, at the
expense of the Trust Fund, an independent contractor to manage and operate the
property. The independent contractor generally will be permitted to perform
construction (including renovation) on a foreclosed property only if the
construction was at least 10% completed at the time default on the related
Mortgage Loan became imminent. The retention of an independent contractor,
however, will not relieve the Special Servicer of its obligation to manage the
Mortgaged Property as required under the Pooling Agreement.
Generally, neither the Upper-Tier REMIC nor the Lower-Tier REMIC will be
taxable on income received with respect to a Mortgaged Property acquired by the
Trust Fund to the extent that it constitutes "rents from real property," within
the meaning of Code Section 856(c)(3)(A) and Treasury regulations under the
Code. Rents from real property include fixed rents and rents based on the gross
receipts or sales of a tenant but do not include the portion of any rental based
on the net income or profit of any tenant or sub-tenant. No determination has
been made whether rent on any of the Mortgaged Properties
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meets this requirement. Rents from real property include charges for services
customarily furnished or rendered in connection with the rental of real
property, whether or not the charges are separately stated. Services furnished
to the tenants of a particular building will be considered as customary if, in
the geographic market in which the building is located, tenants in buildings
which are of similar Class are customarily provided with the service. No
determination has been made whether the services furnished to the tenants of the
Mortgaged Properties are "customary" within the meaning of applicable
regulations. It is therefore possible that a portion of the rental income with
respect to a Mortgaged Property owned by the Trust Fund would not constitute
rents from real property, or that none of such income would qualify if a
separate charge is not stated for such non-customary services or they are not
performed by an independent contractor. Rents from real property also do not
include income from the operation of a trade or business on the Mortgaged
Property, such as a hotel. Any of the foregoing types of income may instead
constitute "net income from foreclosure property," which would be taxable to the
Lower-Tier REMIC at the highest marginal federal corporate rate (currently 35%)
and may also be subject to state or local taxes. The Pooling Agreement provides
that the Special Servicer will be permitted to cause the Lower-Tier REMIC to
earn "net income from foreclosure property" that is subject to tax if it
determines that the net after-tax benefit to Certificateholders is greater than
another method of operating or net leasing the Mortgaged Property. Because these
sources of income, if they exist, are already in place with respect to the
Mortgaged Properties, it is generally viewed as beneficial to Certificateholders
to permit the Trust Fund to continue to earn them if it acquires a Mortgaged
Property, even at the cost of this tax. These taxes would be chargeable against
the related income for purposes of determining the proceeds available for
distribution to holders of Certificates. See "Federal Income Tax Consequences
for REMIC Certificates--Taxes That May Be Imposed on the REMIC Pool--Prohibited
Transactions" in the prospectus.
To the extent that liquidation proceeds collected with respect to any
Mortgage Loan are less than the sum of: (1) the outstanding principal balance of
the Mortgage Loan, (2) interest accrued on the Mortgage Loan and (3) the
aggregate amount of outstanding reimbursable expenses (including any (i) unpaid
servicing compensation, (ii) unreimbursed Property Advances, (iii) accrued and
unpaid interest on all Advances and (iv) additional Trust Fund expenses)
incurred with respect to the Mortgage Loan, the Trust Fund will realize a loss
in the amount of the shortfall. The Trustee, the Fiscal Agent, the Master
Servicer and/or the Special Servicer will be entitled to reimbursement out of
the liquidation proceeds recovered on any Mortgage Loan, prior to the
distribution of those liquidation proceeds to Certificateholders, of any and all
amounts that represent unpaid servicing compensation in respect of the related
Mortgage Loan, certain unreimbursed expenses incurred with respect to the
Mortgage Loan and any unreimbursed Advances (including interest on Advances)
made with respect to the Mortgage Loan. In addition, amounts otherwise
distributable on the Certificates will be further reduced by interest payable to
the Master Servicer, the Special Servicer, Trustee or the Fiscal Agent on these
Advances.
SALE OF DEFAULTED MORTGAGE LOANS. The Pooling Agreement grants to the
majority Certificateholder of the Controlling Class and the Special Servicer an
option to purchase from the Trust Fund any defaulted Mortgage Loan (other than
the Garden State Plaza Loan) that is at least 60 days delinquent as to any
Monthly Payment (or is delinquent as to its balloon payments). Any purchase
option with respect to any Whole Loan is subject to the rights granted to any
other person under the related intercreditor agreement.
The option purchase price for a defaulted Mortgage Loan will equal the fair
value of such Mortgage Loan, as determined by the Special Servicer. The Special
Servicer is required to recalculate the fair value of such defaulted Mortgage
Loan if there has been a material change in circumstances or the Special
Servicer has received new information that has a material effect on value (or
otherwise if the time since the last valuation exceeds 60 days). To the extent
the Special Servicer or one of its affiliates is exercising the option to
purchase a defaulted Mortgage Loan, the Trustee will be required to verify the
fair value of the defaulted Mortgage Loan. In making such verification, the
Trustee, in accordance with the Pooling Agreement, will be entitled to rely on
an appraisal of the Mortgaged Property. Subject to certain conditions specified
in the Pooling Agreement, the option is assignable to a third party by its
holder, and upon such assignment, the third party assignee will have all the
rights granted to the original holder of the option. The option will
automatically terminate, and will no longer be exercisable, if the Mortgage Loan
to which it relates is no longer delinquent, because the defaulted Mortgage Loan
has (i) made all delinquent
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payments, (ii) been subject to a work-out arrangement, (iii) been foreclosed
upon or otherwise resolved (including by a full or discounted pay-off), (iv) has
been purchased by the holder of the related mezzanine loan.
Subject to the rights of a mezzanine lender under a mezzanine intercreditor
agreement, unless and until the above-described purchase option with respect to
a Mortgage Loan in default is exercised, the Special Servicer will be required
to pursue such other resolution strategies available under the Pooling
Agreement, including workout and foreclosure, consistent with the Servicing
Standards, but the Special Servicer will not be permitted to sell the Mortgage
Loan in default other than pursuant to the exercise of the purchase option.
With respect to the Grand Canal Shoppes at the Venetian Loan, the owner of
the hotel attached to the Mortgaged Property has a right to purchase the
Mortgaged Property subject to certain conditions in the loan documentation. Any
Purchase Option hereunder will be subject to this purchase option. For more
information see "Ten Largest Mortgage Loans--The Grand Canal Shoppes at the
Venetian" on Annex B to this prospectus supplement.
In addition, any person wishing to exercise their purchase option with
respect to the Grand Canal Shoppes at the Venetian Loan will have to purchase
the Grand Canal Shoppes at the Venetian Pari Passu Companion Loans.
The Pari Passu PSA under which each Non-Serviced Loan is serviced has
substantially similar provisions in respect of a purchase option after a
monetary default. With respect to the Garden State Plaza Loan, under the related
Pari Passu PSA if the holder of this type of purchase option chooses to exercise
the option with respect to the Pari Passu Companion Loan, it must purchase all
related Pari Passu Companion Loans and the Non-Serviced Loan. With respect to
the 237 Park Avenue Loan and the 111 Eighth Avenue Loan, the option of the
Controlling Class and the Special Servicer to purchase such loan when it becomes
a defaulted Mortgage Loan will be limited to that loan and such purchaser will
not have any rights to purchase any of the respective Companion Loans.
MODIFICATIONS, WAIVERS AND AMENDMENTS. The Pooling Agreement will permit
the Special Servicer to modify, waive or amend any term of any Mortgage Loan
(other than a Non-Serviced Loan) if (a) it determines, in accordance with the
Servicing Standards, that it is appropriate to do so and (b) except as described
in the following paragraph, such modification, waiver or amendment will not (i)
affect the amount or timing of any scheduled 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 prepayment lock-out 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 or (iv)
in the judgment of the Special Servicer, materially impair the security for the
Mortgage Loan or reduce the likelihood of timely payment of amounts due on the
Mortgage Loan. The Master Servicer may enter into waivers, consents or approvals
involving routine or immaterial matters without the consent of any person.
Notwithstanding clause (b) of the preceding paragraph, 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 Monthly 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, (v) permit the
substitution of collateral for any Specially Serviced Mortgage Loan, and/or (vi)
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 judgment of the Special Servicer, such default is reasonably
foreseeable and (y) in the sole, good faith judgment of the Special Servicer,
such modification, waiver or amendment would increase the recovery to
Certificateholders on a net present value basis. In no event, however, will the
Special Servicer be permitted to (i) extend the maturity
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date of a Mortgage Loan beyond a date that is two years prior to the Rated Final
Distribution Date, or (ii) if the Mortgage Loan is secured by a ground lease,
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, to the extent
consistent with the Servicing Standards 10 years if the Special Servicer gives
due consideration to the remaining term of the ground lease).
Any modification, waiver or amendment with respect to a Whole Loan may be
subject to the approval of one or more holders of a related Companion Loan as
described under "Description of the Mortgage Loans--The Whole Loans" in this
prospectus supplement.
Each of the Master Servicer and the Special Servicer will be required to
notify the Trustee, the Rating Agencies and the other servicer of any
modification, waiver or amendment of any term of any Mortgage Loan, and to
deliver to the Trustee or the related custodian, for deposit in the related
mortgage file, an original counterpart of the agreement related to the
modification, waiver or amendment, promptly (and in any event within 10 business
days) following the execution of the agreement. Copies of such modification,
waiver or amendment agreement are required to be available for review during
normal business hours at the offices of the Trustee.
In addition to the other provisions described in this prospectus
supplement, the Special Servicer will be permitted to modify, waive or amend any
term of a Mortgage Loan (other than a Non-Serviced Loan) that is not in default
or as to which default is not reasonably foreseeable if, and only if, such
modification, waiver or amendment (a) would not be "significant" as such term is
defined in Treasury Regulations Section 1.860G-2(b), which, in the judgment of
the Special Servicer, may be evidenced by an opinion of counsel and (b) would be
in accordance with the Servicing Standards. The Master Servicer or the Special
Servicer, as applicable, is required to provide copies of any modifications,
waiver or amendment to each Rating Agency.
THE CONTROLLING CLASS REPRESENTATIVE
The Controlling Class Representative will be entitled to advise the Special
Servicer with respect to the following actions and others more particularly
described in the Pooling Agreement and, except as otherwise described below, the
Special Servicer will not be permitted to take any of the following actions with
respect to any Mortgage Loan as to which the Controlling Class Representative
has objected in writing within ten business days of having been notified of the
proposed action (provided that if such written objection has not been delivered
to the Special Servicer within the ten business day period, the Controlling
Class Representative will be deemed to have approved such action):
o any foreclosure upon or comparable conversion (which may include
acquisitions of an REO Property) of the ownership of properties securing
the Specially Serviced Mortgage Loans as come into and continue in
default;
o any modification, extension, amendment or waiver of a monetary term
(including the timing of payments) or any material non monetary term of
a Mortgage Loan;
o any proposed sale of an REO Property for less than the Purchase Price
(other than in connection with the termination of the Trust Fund as
described below under "--Optional Termination; Optional Mortgage Loan
Purchase" or pursuant to a purchase option as described above under
"--Realization Upon Mortgage Loans--Sale of Defaulted Mortgage Loans");
o any acceptance of a discounted payoff of a Mortgage Loan (other than in
connection with the termination of the Trust Fund as described below
under "--Optional Termination; Optional Mortgage Loan Purchase" or
pursuant to a purchase option as described above under "--Realization
Upon Mortgage Loans--Sale of Defaulted Mortgage Loans");
o any determination to bring a Mortgaged Property or an REO Property into
compliance with applicable environmental laws or to otherwise address
Hazardous Materials located at a Mortgaged Property or an REO Property;
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o any release of collateral for a Mortgage Loan or any release of a
Mortgagor or guarantor or acceptance of any assumption agreement (other
than in accordance with the terms of, or upon satisfaction of, such
Mortgage Loan);
o any acceptance of substitute or additional collateral for a Mortgage
Loan (other than in accordance with the terms of such Mortgage Loan);
o any waiver of a "due on sale" or "due on encumbrance" clause with
respect to any Mortgage Loan;
o any acceptance of an assumption agreement releasing a Mortgagor or a
guarantor from liability under a Mortgage Loan; or
o any release of any performance or "earn-out" reserves.
In the event that the Special Servicer determines that immediate action is
necessary to protect the interests of the Certificateholders (as a collective
whole), the Special Servicer may take any such action without waiting for the
Controlling Class Representative's response.
The Controlling Class Representative may also direct the Special Servicer
to take, or to refrain from taking, other actions with respect to a Mortgage
Loan, as the Controlling Class Representative may reasonably deem advisable;
provided that the Special Servicer will not take or refrain from taking any
action pursuant to instructions from the Controlling Class Representative that
would cause it to violate applicable law, the Pooling Agreement, including the
Servicing Standards, or the REMIC provisions of the Code.
The Controlling Class Representative at its expense has the right to remove
and replace the Special Servicer with another Special Servicer acceptable to the
Rating Agencies.
The "Controlling Class Representative" will be the Controlling Class
Certificateholder selected by more than 50% of the Controlling Class
Certificateholders, by Certificate Principal Amount, as certified by the
Certificate Registrar from time to time; provided, however, that (1) absent that
selection, or (2) until a Controlling Class Representative is so selected or (3)
upon receipt of a notice from a majority of the Controlling Class
Certificateholders, by Certificate Principal Amount, that a Controlling Class
Representative is no longer designated, the Controlling Class Certificateholder
that owns the largest aggregate Certificate Principal Amount of the Controlling
Class will be the Controlling Class Representative.
A "Controlling Class Certificateholder" is each holder (or Certificate
Owner, if applicable) of a Certificate of the Controlling Class as certified to
the Certificate Registrar from time to time by the holder (or Certificate
Owner).
The "Controlling Class" will be as of any time of determination the most
subordinate Class of Certificates then outstanding that has a Certificate
Principal Amount at least equal to 25% of the initial Certificate Principal
Amount of that Class. For purposes of determining identity of the Controlling
Class, the Certificate Principal Amount of each Class will not be reduced by the
amount allocated to that Class of any Appraisal Reductions. The Controlling
Class as of the Closing Date will be the Class P Certificates.
With respect to the Daily News Building Loan, if any Certificate is held by
the related borrower or an affiliate of the related borrower, the borrower or
its affiliate will not be entitled to have any voting or veto rights with
respect to any matters as to which the Controlling Class has any approval or
voting rights regarding the Daily News Building Loan or the related Companion
Loan.
Notwithstanding the foregoing, with respect to each Serviced Whole Loan,
the Controlling Class Representative will not have any of the above described
approval rights unless permitted under the related intercreditor agreement or
will exercise them in conjunction with the holders of the related
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Companion Loans as described under "Description of the Mortgage Loans--The Whole
Loans" in this prospectus supplement.
With respect to each Non-Serviced Loan, any consent or approvals on actions
to be taken by the special servicer or master servicer under the related Pari
Passu PSA are governed by the terms of that Pari Passu PSA and the related
Intercreditor Agreement and described under "Description of the Mortgage Pool"
and "The Pooling Agreement--Servicing of the Whole Loans" in this prospectus
supplement.
LIMITATION ON LIABILITY OF CONTROLLING CLASS REPRESENTATIVE
The Controlling Class Representative will not be liable to the Trust Fund
or the Certificateholders for any action taken, or for refraining from the
taking of any action pursuant to the Pooling Agreement, or for errors in
judgment. However, the Controlling Class Representative will not be protected
against any liability to any 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.
Each Certificateholder acknowledges and agrees, by its acceptance of its
Certificates, that the Controlling Class Representative:
o may have special relationships and interests that conflict with those of
holders of one or more classes of certificates,
o may act solely in the interests of the holders of the Controlling Class,
o does not have any duties to the holders of any Class of certificates
other than the Controlling Class,
o may take actions that favor the interests of the holders of the
Controlling Class over the interests of the holders of one or more other
classes of certificates, and
o will have no liability whatsoever for having so acted and that no
Certificateholder may take any action whatsoever against the Controlling
Class Representative or any director, officer, employee, agent or
principal of the Controlling Class Representative for having so acted.
OPTIONAL TERMINATION; OPTIONAL MORTGAGE LOAN PURCHASE
The holders of the Controlling Class representing greater than a 50%
Percentage Interest of the Controlling Class, and if the Controlling Class does
not exercise its option, the Special Servicer and, if the Special Servicer does
not exercise its option, the Master Servicer and, if none of the Controlling
Class, the Special Servicer or the Master Servicer exercises its option, the
holders of the Class LR Certificates, representing greater than a 50% Percentage
Interest of the Class LR Certificates, will have the option to purchase all of
the Mortgage Loans (in the case of each of the Whole Loans, subject to certain
rights of the holders of Subordinate Companion Loans provided for in the related
Intercreditor Agreement) and all property acquired in respect of any Mortgage
Loan remaining in the Trust Fund, and thereby effect termination of the Trust
Fund and early retirement of the then outstanding Certificates, on any
Distribution Date on which the aggregate Stated Principal Balance of the
Mortgage Loans remaining in the Trust Fund is less than 1% of the aggregate
Stated Principal Balance of such Mortgage Loans as of the Cut-Off Date. The
purchase price payable upon the exercise of such option on such a Distribution
Date will be an amount equal to the greater of (i) the sum of (A) 100% of the
outstanding principal balance of each Mortgage Loan included in the Trust Fund
as of the last day of the month preceding such Distribution Date; (B) the fair
market value of all other property included in the Trust Fund as of the last day
of the month preceding such Distribution Date, as determined by an independent
appraiser as of a date not more than 30 days prior to the last day of the month
preceding such Distribution Date; (C) all unpaid interest accrued on the
outstanding principal balance of each such Mortgage Loan (including any Mortgage
Loans as to which title to the related Mortgaged Property has been acquired) at
the Mortgage
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Rate (plus the Excess Rate, to the extent applicable) to the last day of the
Interest Accrual Period preceding such Distribution Date, and (D) Property
Advances (to the extent not previously reimbursed by or on behalf of the related
borrower), and unpaid servicing compensation, special servicing compensation,
Trustee Fees and Trust Fund expenses, in each case to the extent permitted under
the Pooling Agreement with interest on all unreimbursed Advances at the Advance
Rate and (ii) the aggregate fair market value of the Mortgage Loans and all
other property acquired in respect of any Mortgage Loan in the Trust Fund, on
the last day of the month preceding such Distribution Date, as determined by an
independent appraiser acceptable to the Master Servicer, together with one
month's interest on the outstanding principal balance of each such Mortgage
Loan, and as to any REO Property, of each related REO loan at the related
Mortgage Rates. There can be no assurance that payment of the Certificate
Principal Amount, if any, of each outstanding Class of Certificates plus accrued
interest would be made in full in the event of such a termination of the Trust
Fund. See "Description of the Certificates--Termination" in the prospectus.
The Trust Fund may also be terminated upon the exchange of all then
outstanding Certificates, including the Class X Certificates, for the Mortgage
Loans remaining in the Trust Fund at any time the aggregate Certificate
Principal Amounts of the Class A, Class B, Class C, Class D and Class E
Certificates have been reduced to zero, but all the holders of such classes of
outstanding Certificates would have to voluntarily participate in such exchange
and the Master Servicer would have to consent.
THE TRUSTEE
LaSalle Bank National Association, a national banking association, will act
as trustee (the "Trustee" on behalf of the series 2004-GG2 Certificateholders.
As of the date of initial issuance of the offered certificates, the office of
the trustee primarily responsible for administration of the trust assets, its
corporate trust office, is located at 135 South LaSalle Street, Suite 1625,
Chicago, Illinois 60603, Attention: Asset Backed Securities Trust Services
Group--GS Mortgage Securities Corporation II, Commercial Mortgage Trust Series
2004 GG2.
The Trustee may resign at any time by giving written notice to the
Depositor, the Master Servicer, the Special Servicer and the Rating Agencies.
However, no such resignation shall be effective until a successor has been
appointed. Upon such notice, the Depositor will appoint a successor trustee
reasonably acceptable to the Master Servicer. If no successor trustee is
appointed within one month after the giving of such notice of resignation, the
resigning Trustee may petition the court for appointment of a successor trustee.
The Depositor may remove the Trustee if, among other things, the Trustee
ceases to be eligible to continue as such under the Pooling Agreement or if at
any time the Trustee becomes incapable of acting, or is adjudged bankrupt or
insolvent, or a receiver of the Trustee or its property is appointed or any
public officer takes charge or control of the Trustee or of its property. The
holders of Certificates evidencing aggregate Voting Rights of more than 50% of
all Certificateholders may remove the Trustee upon written notice to the
Depositor, the Master Servicer and the Trustee. Any resignation or removal of
the Trustee and appointment of a successor trustee and, if such trustee is not
rated at least "AA-" by each Rating Agency (or such other rating as the Rating
Agencies confirm will not result in the downgrade, qualification or withdrawal
of the then-current ratings assigned to the Certificates), fiscal agent, will
not become effective until acceptance of the appointment by the successor
trustee and, if necessary, fiscal agent. Notwithstanding the foregoing, upon any
termination of the Trustee under the Pooling Agreement, the Trustee will
continue to be entitled to receive all accrued and unpaid compensation through
the date of termination plus reimbursement for all Advances made by them and
interest on those Advances as provided in the Pooling Agreement. Any successor
trustee must have a combined capital and surplus of at least $50,000,000 and
such appointment must not result in the downgrade, qualification or withdrawal
of the then-current ratings assigned to the Certificates.
As compensation for the performance of its routine duties, the Trustee will
be paid a fee (the "Trustee Fee"). The Trustee Fee will be payable monthly from
amounts received in respect of the Mortgage Loans and will accrue at a per annum
rate (the "Trustee Fee Rate") which, together with the Servicing Fee Rate,
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is equal to the per annum rate set forth on Annex C to this prospectus
supplement as the "Administrative Fee Rate", with respect to each Mortgage Loan
and the Stated Principal Balance of the Mortgage Loans and will be calculated in
the same manner as interest is calculated on the related Mortgage Loan. Any
Trustee Fee Rate calculated on an Actual/360 Basis will be recomputed on a
30/360 basis for purposes of calculating the Net Mortgage Rate. The Trustee also
is authorized but not required to invest or direct the investment of funds held
in the Lower-Tier Distribution Account, the Upper-Tier Distribution Account, the
Gain-On-Sale Reserve Account and the Interest Reserve Account in investments
permitted under the Pooling Agreement, and the Trustee will be entitled to
retain any interest or other income earned on those funds and will bear any
losses resulting from the investment of these funds, except as set forth in the
Pooling Agreement.
The Trust Fund will indemnify the Trustee against any and all losses,
liabilities, damages, claims or unanticipated expenses (including reasonable
attorneys' fees) arising in respect of the Pooling Agreement or the Certificates
other than those resulting from the negligence, bad faith or willful misconduct
of the Trustee. The Trustee will not be required to expend or risk its own funds
or otherwise incur financial liability in the performance of any of its duties
under the Pooling Agreement, or in the exercise of any of its rights or powers,
if in the Trustee's opinion, the repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it.
At any time, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Trust Fund or property securing the same
is located, the Depositor and the Trustee acting jointly will have the power to
appoint one or more persons or entities approved by the Trustee to act (at the
expense of the Trustee) as co-trustee or co-trustees, jointly with the Trustee,
or separate trustee or separate trustees, of all or any part of the Trust Fund,
and to vest in such co-trustee or separate trustee such powers, duties,
obligations, rights and trusts as the Depositor and the Trustee may consider
necessary or desirable. Except as required by applicable law, the appointment of
a co-trustee or separate trustee will not relieve the Trustee of its
responsibilities, obligations and liabilities under the Pooling Agreement.
The Trustee (except for the information under the first paragraph of "--The
Trustee" above) will make no representation as to the validity or sufficiency of
the Pooling Agreement, the Certificates or the Mortgage Loans, this prospectus
supplement or related documents.
If no Event of Default has occurred, and after the curing of all Events of
Default which may have occurred, the Trustee is required to perform only those
duties specifically required under the Pooling Agreement. Upon receipt of the
various certificates, reports or other instruments required to be furnished to
it, the Trustee is required to examine such documents and to determine whether
they conform on their face to the requirements of the Pooling Agreement.
In addition, pursuant to the Pooling Agreement, the Trustee, at the cost
and expense of the Depositor, based upon reports, documents, and other
information provided to the Trustee, will be obligated to file with the
Securities and Exchange Commission (the "Commission"), in respect of the Trust
and the Certificates, copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the foregoing
as the Commission may from time to time by rules and regulations prescribe)
required to be filed with the Commission pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934, as amended, and any other Form 8-K reports
required to be filed pursuant to the Pooling Agreement.
THE FISCAL AGENT
ABN AMRO Bank N.V., a Netherlands banking corporation, will act as fiscal
agent (the "Fiscal Agent") pursuant to the pooling and servicing agreement. The
fiscal agent's office is located at 135 South LaSalle Street, Suite 1625,
Chicago, Illinois 60603, Attention: Asset Backed Securities Trust Services Group
- - GS Mortgage Securities Corporation II, Commercial Mortgage Trust 2004-GG2. The
duties and obligations of the fiscal agent consist only of making P&I Advances
and Property Advances as described under "--Advances" above. The fiscal agent
will not be liable except for the performance of those duties and obligations.
The fiscal agent will be entitled to reimbursement for each advance made by it,
with interest, in the same manner and to the same extent as the trustee and the
master servicer. The fiscal
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agent will be entitled to various rights, protections and indemnities similar to
those afforded to the trustee. The trustee will be responsible for payment of
the compensation of the fiscal agent.
The ratings of the long-term debt obligations of ABN AMRO Bank N.V. are
"AA-" by S&P and "Aa3" by Moody's.
THE MASTER SERVICER; MASTER SERVICER SERVICING COMPENSATION AND PAYMENT OF
EXPENSES
Wells Fargo Bank, National Association, a national banking association
("Wells Fargo"), will initially be appointed as Master Servicer (the "Master
Servicer"). Wells Fargo provides a full range of banking services to
individuals, agribusiness, real estate, commercial and small business customers.
The Master Servicer's principal servicing offices are located at 45 Fremont
Street, 2nd Floor, San Francisco, California 94105. As of June 30, 2004, Wells
Fargo's was responsible for servicing approximately 6,749 commercial and
multifamily mortgage loans, totaling approximately $45.15 billion in aggregate
outstanding principal amounts, including loans securitized in mortgage-backed
securitization transactions. Wells Fargo & Company is the holding company for
Wells Fargo. Wells Fargo & Company files reports with the Securities and
Exchange Commission that are required under the Securities Exchange Act of 1934.
Such reports include information regarding Wells Fargo and may be obtained at
the website maintained by the Securities and Exchange Commission at
http://www.sec.gov.
The information set forth in this prospectus supplement concerning Wells
Fargo has been provided by Wells Fargo Bank. None of the Depositor, the Trustee,
the Underwriters, or any of their respective affiliates takes any responsibility
for that information or makes any representation or warranty as to the accuracy
or completeness of the information. Wachovia Bank, National Association (except
for the information in the preceding paragraph 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.
The fee of the Master Servicer (the "Servicing Fee") will be payable
monthly from amounts received in respect of the Mortgage Loans, and will accrue
at a rate (the "Servicing Fee Rate"), which together with the Trustee Fee Rate
and, in the case of each Non-Serviced Loan, the aggregate rate per annum at
which all master servicing, primary servicing or other similar administrative
fees accrue under the related Pari Passu PSA, is equal to the per annum rate set
forth on Annex C to this prospectus supplement as the Administrative Fee Rate
with respect to each Mortgage Loan. Pursuant to the terms of the Pooling
Agreement, Wells Fargo Bank will be entitled to retain a portion of the
Servicing Fee with respect to each Mortgage Loan notwithstanding any termination
or resignation of Wells Fargo Bank as Master Servicer; provided, that Wells
Fargo Bank may not retain any portion of the Servicing Fee to the extent
required to appoint a successor Master Servicer. In addition, Wells Fargo Bank
will have the right to assign and transfer its right to receive such portion to
another party.
With respect to any Distribution Date, the Master Servicer will be entitled
to retain any Prepayment Interest Excesses to the extent not need to make
Compensating Interest Payments. In addition to the Servicing Fee, the Master
Servicer will be entitled to retain, as additional servicing compensation (1) a
specified percentage of application fees and defeasance fees, modification fees,
waiver fees, assumption fees, extension fees and similar fees (2) late payment
charges and default interest paid by the borrowers (other than on Specially
Serviced Mortgage Loans), but only to the extent such late payment charges and
default interest are not needed to pay interest on Advances or certain
additional Trust Fund expenses that are outstanding at the time of the
collection of the late payment charges or default interest or that were incurred
at any time during the prior 12 months with respect to the related Mortgage
Loan. The Master Servicer also is authorized but not required to invest or
direct the investment of funds held in the Collection Account in Permitted
Investments, and the Master Servicer will be entitled to retain any interest or
other income earned on those funds and will bear any losses resulting from the
investment of these funds, except as set forth in the Pooling Agreement. The
Master Servicer also is entitled to retain any interest earned on any servicing
escrow account to the extent the interest is not required to be paid to the
related borrowers.
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The Servicing Fee is calculated on the Stated Principal Balance of the
Mortgage Loans and in the same manner as interest is calculated on the Mortgage
Loans. Any Servicing Fee Rate calculated on an Actual/360 Basis will be
recomputed on a 30/360 basis for purposes of calculating the Net Mortgage Rate.
Although the Master Servicer is each required to service and administer the
pool of Mortgage Loans in accordance with the Servicing Standards above and,
accordingly, without regard to their rights to receive compensation under the
Pooling Agreement, additional servicing compensation in the nature of assumption
and modification fees may under certain circumstances provide the Master
Servicer with an economic disincentive to comply with this standard.
The Master Servicer will be required to pay all expenses incurred in
connection with its responsibilities under the Pooling Agreement (subject to
reimbursement as described in this prospectus supplement), including all fees of
any subservicers retained by it.
THE SPECIAL SERVICER; SPECIAL SERVICER SERVICING COMPENSATION AND PAYMENT OF
EXPENSES
Lennar Partners, Inc., a Florida corporation ("Lennar") and a subsidiary of
LNR Property Corporation ("LNR"), will initially be appointed as special
servicer (the "Special Servicer") of the Mortgage Loans. The principal executive
offices of the Special Servicer are located at 1601 Washington Avenue, Miami
Beach, Florida, 33139, and its telephone number is (305) 695-5600. LNR, its
subsidiaries and affiliates are involved in the real estate investment, finance
and management business and engage principally in (i) acquiring, developing,
repositioning, managing and selling commercial and multi-family residential real
estate properties, (ii) investing in high-yielding real estate loans, and (iii)
investing in, and managing as special servicer, unrated and non-investment grade
rated commercial mortgage-backed securities.
The Special Servicer and its affiliates have regional offices located
across the country in Florida, Georgia, Oregon, Texas, Massachusetts, North
Carolina and California and in Europe in London, England and Paris, France. As
of May 31, 2004, the Special Servicer and its affiliates were managing a
portfolio which included an original count of 16,700 assets in all 50 states and
in Europe with an original face value of over $125 billion, most of which are
commercial real estate assets. Included in this managed portfolio are $122
billion of commercial real estate assets representing 126 securitization
transactions, for which the Special Servicer acts as special servicer. The
Special Servicer and its affiliates own and are in the business of acquiring
assets similar in type to the assets of the trust. 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 in this prospectus supplement concerning Lennar
and LNR Property Corporation has been provided by them. Neither we nor any of
the underwriters makes any representation or warranty as to the accuracy or
completeness of this information.
The Pooling Agreement provides that the Controlling Class Representative,
at its expense, may remove and replace the Special Servicer with another Special
Servicer acceptable to the Rating Agencies except as described in this
prospectus supplement with respect to each Whole Loan under "The Pooling
Agreement--Servicing of the Whole Loans" in this prospectus supplement.
The principal compensation to be paid to the Special Servicer in respect of
its special servicing activities will be the Special Servicing Fee, the Workout
Fee and the Liquidation Fee.
The "Special Servicing Fee" will accrue with respect to each Specially
Serviced Mortgage Loan at a rate equal to 0.25% per annum (the "Special
Servicing Fee Rate") calculated on the basis of the Stated Principal Balance of
the related Specially Serviced Mortgage Loans and in the same manner as interest
is calculated on the Specially Serviced Mortgage Loans, and will be payable
monthly, first from liquidation proceeds and insurance and condemnation proceeds
and then from general collections on all the Mortgage Loans and any REO
Properties in the Trust Fund.
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The "Workout Fee" will generally be payable with respect to each Corrected
Mortgage Loan and will be calculated by application of a "Workout Fee Rate" of
1% to each collection of interest and principal (including scheduled payments,
prepayments, balloon payments, and payments at maturity) received on the
respective Mortgage Loan (or Serviced Whole Loan) for so long as it remains a
Corrected Mortgage Loan. The Workout Fee with respect to any Corrected Mortgage
Loan will cease to be payable if the Corrected Mortgage Loan again becomes a
Specially Serviced Mortgage Loan but will become payable again if and when the
Mortgage Loan again becomes a Corrected Mortgage Loan.
The successor Special Servicer will not be entitled to any portion of those
Workout Fees. If the Special Servicer resigns or is terminated other than for
cause, it will receive any Workout Fees payable on Specially Serviced Mortgage
Loans that were Corrected Mortgage Loans at the time of the termination or for
which the resigning or terminated Special Servicer had cured the event of
default through a modification, restructuring or workout negotiated by the
Special Servicer and evidenced by a signed writing, but which had not as of the
time the Special Servicer resigned or was terminated become a Corrected Mortgage
Loan solely because the borrower had not made three consecutive full and timely
Monthly Payments and which subsequently becomes a Corrected Mortgage Loan as a
result of the borrower making such three consecutive timely Monthly Payments but
such fee will cease to be payable in each case if the Corrected Mortgage Loan
again becomes a Specially Serviced Mortgage Loan.
A "Liquidation Fee" will be payable with respect to each Specially Serviced
Mortgage Loan as to which the Special Servicer obtains a full or discounted
payoff (or unscheduled partial payment to the extent such prepayment is required
by the Special Servicer as a condition to a workout) from the related borrower
and, except as otherwise described below, with respect to any Specially Serviced
Mortgage Loan or REO Property as to which the Special Servicer receives any
liquidation proceeds, insurance proceeds or condemnation proceeds. The
Liquidation Fee for each Specially Serviced Mortgage Loan will be payable from,
and will be calculated by application of a "Liquidation Fee Rate" of 1% to the
related payment or proceeds. Notwithstanding anything to the contrary described
above, no Liquidation Fee will be payable based upon, or out of, insurance
proceeds, condemnation proceeds or liquidation proceeds received in connection
with (i) the repurchase of any Mortgage Loan by the applicable Loan Seller for a
Material Document Defect or Material Breach, as applicable, within 180 days of
the discovery or receipt of notice by the Mortgage Loan Seller of Material
Document Defect or Material Breach, as applicable, that gave rise to the
particular repurchase obligation, (ii) the purchase of any Specially Serviced
Mortgage Loan by the majority holder of the Controlling Class, a mezzanine loan
holder, or if applicable under the related Intercreditor Agreement, the holder
of the related Companion Loan or (iii) the purchase of all of the Mortgage Loans
and REO Properties in connection with an optional termination of the Trust Fund.
The Special Servicer may not receive a Workout Fee and a Liquidation Fee with
respect to the same proceeds collected on a Mortgage Loan.
The Special Servicer will also be entitled to retain, as additional
servicing compensation (1) a specified percentage of application fees and
defeasance fees, modification fees, waiver fees, assumption fees, extension fees
and similar fees (2) late payment charges and default interest paid by the
borrowers on Specially Serviced Mortgage Loans, but only to the extent such late
payment charges and default interest are not needed to pay interest on Advances
or certain additional Trust Fund expenses that are outstanding at the time of
the collection of the later payment charges or default interest or that were
incurred at any time during the prior 12 months with respect to the Mortgage
Loans.
Although the Special Servicer is each required to service and administer
the pool of Mortgage Loans in accordance with the Servicing Standards above and,
accordingly, without regard to their rights to receive compensation under the
Pooling Agreement, additional servicing compensation in the nature of assumption
and modification fees may under certain circumstances provide the Special
Servicer with an economic disincentive to comply with this standard.
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REPORTS TO CERTIFICATEHOLDERS; AVAILABLE INFORMATION
Trustee Reports. On each Distribution Date, the Trustee will be required to
provide or make available to each Certificateholder of record a Distribution
Date statement providing information relating to distributions made on that date
for the relevant class and the recent status of the Mortgage Loans.
In addition, the Trustee will provide or make available, to the extent
received from the Master Servicer on each Distribution Date to each
Certificateholder and each holder of a Companion Loan, the following reports
prepared by the Master Servicer or the Special Servicer, as applicable,
substantially in the forms provided in the Pooling Agreement (which forms are
subject to change) and including substantially the following information:
(1) a report as of the close of business on the immediately preceding
Determination Date, containing some categories of information
regarding the Mortgage Loans provided in Annex A to this prospectus
supplement in the tables under the caption "Mortgage Pool
Information," calculated, where applicable, on the basis of the most
recent relevant information provided by the borrowers to the Master
Servicer and by the Master Servicer to the Trustee, and presented in a
loan-by-loan and tabular format substantially similar to the formats
utilized in Annex A to this prospectus supplement;
(2) a Commercial Mortgage Securities Association ("CMSA") delinquent loan
status report;
(3) a CMSA historical loan modification and corrected mortgage loan
report;
(4) a CMSA historical liquidation report;
(5) a CMSA REO status report;
(6) a CMSA servicer watch list; and
(7) a CMSA loan level reserve and LOC report.
The Master Servicer or the Special Servicer, as applicable, may omit any
information from these reports that the Master Servicer or the Special Servicer
regards as confidential. None of the Master Servicer, the Special Servicer or
the Trustee will be responsible for the accuracy or completeness of any
information supplied to it by a borrower, the Depositor, any Loan Seller, any
master servicer, special servicer or other similar party under any Pari Passu
PSA or other 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. Some information will be made available to
Certificateholders by electronic transmission as may be agreed upon between the
Depositor and the Trustee.
Before each Distribution Date, the Master Servicer will deliver to the
Trustee by electronic means:
o a CMSA comparative financial status report; and
o a CMSA loan periodic update file.
In addition, the Master Servicer or Special Servicer, as applicable, is
also required to perform the following for each Mortgaged Property and REO
Property:
o Within 30 days after receipt of a quarterly operating statement, if any,
beginning with the calendar quarter ended September 30, 2004, a CMSA
operating statement analysis report but only to the extent the related
borrower is required by the Mortgage Loan documents to deliver and does
deliver, or otherwise agrees to provide and does provide, that
information, for the Mortgaged Property or REO Property as of the end of
that calendar quarter. The Master Servicer or Special Servicer, as
applicable, will deliver to the Trustee by electronic means the
operating statement analysis upon request.
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o Within 30 days after receipt by the Special Servicer or the Master
Servicer of an annual operating statement, a CMSA NOI adjustment
worksheet, but only to the extent the related borrower is required by
the mortgage to deliver and does deliver, or otherwise agrees to provide
and does provide, that information, presenting the computation made in
accordance with the methodology described in the Pooling Agreement to
"normalize" the full year net operating income and debt service coverage
numbers used by the servicer to satisfy its reporting obligation
described in clause (1) above. The Special Servicer or the Master
Servicer will deliver to the Trustee by electronic means the CMSA NOI
adjustment worksheet upon request.
Certificate Owners and any holder of a Companion Loan who have certified to
the Trustee their beneficial ownership of any Offered Certificate or a Companion
Loan, as applicable, may also obtain access to any of the Trustee reports upon
request. Otherwise, until the time Definitive Certificates are issued to
evidence the Offered Certificates, the information described above will be
available to the related Certificate Owners only if DTC and its participants
provide the information to Certificate Owners. See "Risk Factors--Book Entry
Registration" in this prospectus supplement.
Information Available Electronically. The Trustee will make available each
month, to any interested party (including any holder of a Companion Loan), the
Distribution Date statement, the CMSA bond level file and the CMSA collateral
summary file via the Trustee's internet website. The Trustee's internet website
will initially be located at http://www.etrustee.net. In addition, the Trustee
will also make Mortgage Loan information, as presented in the CMSA loan setup
file and CMSA loan periodic update file format, available each month to any
interested party via the Trustee's internet website. The Trustee will also make
available, as a convenience for interested parties (and not in furtherance of
the distribution of the prospectus or the prospectus supplement under the
securities laws), the Pooling Agreement, the prospectus and the prospectus
supplement via the Trustee's internet website. The Trustee will make no
representations or warranties as to the accuracy or completeness of such
documents and will assume no responsibility for them. In addition, the Trustee
may disclaim responsibility for any information distributed by the Trustee for
which it is not the original source.
The Trustee will make available each month, on a restricted basis, the CMSA
delinquent loan status report, the CMSA historical loan modification report, the
CMSA historical liquidation report, the CMSA REO status report, the CMSA
servicer watch list, the CMSA NOI adjustment worksheet, the CMSA comparative
financial status report and the CMSA operating statement analysis report, in
each case to the extent received from the Master Servicer, to any holder or
Certificate Owner of an Offered Certificate and each holder of a Companion Loan
or any person identified to the Trustee by a holder or Certificate Owner as a
prospective transferee of an Offered Certificate or any interest in an Offered
Certificate, the Rating Agencies, designees of the Depositor and to any of the
parties to the Pooling Agreement via the Trustee's internet website. Access will
be provided by the Trustee to that person upon receipt by the Trustee from such
person of a certification in the form attached to the Pooling Agreement. The
Rating Agencies and the parties to the Pooling Agreement will not be required to
provide that certification.
In connection with providing access to the Trustee's internet website, the
Trustee may require registration and the acceptance of a disclaimer. The Trustee
will not be liable for the dissemination of information in accordance with the
terms of the Pooling Agreement.
Other Information. The Trustee will make available at its offices, during
normal business hours, for review by any holder, Certificate Owner or any holder
of a Companion Loan or prospective purchase of an Offered Certificate, originals
or copies of the following items to the extent they are held by the Trustee.
o the Pooling Agreement and any amendments;
o all Trustee reports made available to holders of each relevant class of
Offered Certificates since the Closing Date;
o all officers' certificates and accountants' reports delivered to the
Trustee since the Closing Date;
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o the most recent property inspection report prepared by or on behalf of
the Master Servicer or the Special Servicer, as applicable, and
delivered to the Trustee for each Mortgaged Property;
o the most recent operating statements, if any, collected by or on behalf
of the Master Servicer or the Special Servicer, as applicable, and
delivered to the Trustee for each Mortgaged Property; and
o the mortgage note, mortgage or other legal documents relating to each
Mortgage Loan, including any and all modifications, waivers, and
amendments of the terms of a mortgage loan entered into by the Master
Servicer or Special Servicer, as applicable, and delivered to the
Trustee.
The Trustee will provide copies of the items described above upon
reasonable written request. The Trustee may require payment for the reasonable
costs and expenses of providing the copies and may also require a confirmation
executed by the requesting person or entity, in a form reasonably acceptable to
the Trustee, to the effect that the person or entity making the request is a
beneficial owner or prospective purchaser of Offered Certificates, is requesting
the information solely for use in evaluating its investment in the Certificates
and will otherwise keep the information confidential. Certificateholders, by the
acceptance of their Certificates, will be deemed to have agreed to keep this
information confidential. The Master Servicer may, but is not required to, make
information available over the internet.
Pursuant to the Pooling Agreement, the Master Servicer and Special
Servicer, as the case may be, may make available from time to time, at their
sole option, either by telephone, electronically or otherwise, an employee to
answer questions from Certificate Owners or any holder of a Companion Loan
regarding the performance and servicing of the mortgage loans and/or REO
Properties for which the Master Servicer or Special Servicer, as the case may
be, is responsible. The Master Servicer and the Special Servicer each may
condition such disclosure upon such Certificate Owner entering into a
confidentiality agreement regarding such disclosure to it. Neither the Master
Servicer nor the Special Servicer will provide any information or disclosures in
violation of any applicable law, rule or regulation.
USE OF PROCEEDS
The net proceeds from the sale of the Certificates will be used by the
Depositor to pay the purchase price of the Mortgage Loans.
FEDERAL INCOME TAX CONSEQUENCES
Elections will be made to treat designated portions of the Trust Fund as
two separate real estate mortgage investment conduits (the "Upper-Tier REMIC"
and the "Lower-Tier REMIC", respectively, and each, a "REMIC" within the meaning
of Sections 860A through 860G of the Code (the "REMIC Provisions"). The
Lower-Tier REMIC will hold the Mortgage Loans, the proceeds of those Mortgage
Loans, and any property (including a beneficial interest in real property in the
case of the Garden State Plaza Loan, the 111 Eighth Avenue Loan and the 237 Park
Avenue Loan) that secured a Mortgage Loan that was acquired by foreclosure or
deed in lieu of foreclosure, and will issue several uncertificated classes of
regular interests (the "Lower-Tier Regular Interests") to the Upper-Tier REMIC
and the Class LR Certificates, which will represent the sole class of residual
interests in the Lower-Tier REMIC. The Upper-Tier REMIC will hold the Lower-Tier
Regular Interests, and will issue the Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5, Class A-6, Class A-1A, Class X-C, Class X-P, Class B, Class C,
Class D, Class E, Class F, Class G, Class H, Class J, Class K, Class L, Class M,
Class N, Class O and Class P Certificates (the "Regular Certificates") as
classes of regular interests and the Class R Certificates as the sole class of
residual interests in the Upper-Tier REMIC.
On the Closing Date, Cadwalader, Wickersham & Taft LLP, special counsel to
the Depositor, will deliver its opinion that, assuming (1) the making of
appropriate elections, (2) compliance with the provisions of the Pooling
Agreement and each Pari Passu PSA and (3) compliance with applicable changes in
the Internal Revenue Code of 1986, as amended (the "Code"), including the REMIC
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Provisions, for federal income tax purposes the Lower-Tier REMIC and the
Upper-Tier REMIC will each qualify as a REMIC and (1) the Regular Certificates
will evidence the "regular interests" in the Upper-Tier REMIC, (2) the Class R
Certificates will represent the sole classes of "residual interests" in the
Upper-Tier REMIC within the meaning of the REMIC Provisions and (3) the Class LR
Certificates will represent the sole classes of "residual interests" in each of
the Lower-Tier REMIC.
Because they represent regular interests, each Class of Offered
Certificates generally will be treated as newly originated debt instruments for
federal income tax purposes. Holders of the classes of Offered Certificates will
be required to include in income all interest on the regular interests
represented by their Certificates in accordance with the accrual method of
accounting, regardless of a Certificateholder's usual method of accounting. It
is anticipated that no Class of Offered Certificates will be issued with
original issue discount ("OID") for federal income tax purposes, but rather that
the Offered Certificates will be issued at a premium for federal income tax
purposes. The prepayment assumption that will be used in determining the rate of
accrual of OID and market discount, if any, or whether any such discount is de
minimis, and that may be used to amortize premium, if any, for federal income
tax purposes will be based on the assumption that subsequent to the date of any
determination the mortgage loans will prepay at a rate equal to a CPR of 0% (the
"Prepayment Assumption"). No representation is made that the mortgage loans will
prepay at that rate or at any other rate.
Prepayment premiums or yield maintenance charges actually collected will be
distributed among the holders of the respective classes of Certificates as
described under "Description of the Offered Certificates--Distributions--
Prepayment Premiums" in this prospectus supplement. It is not entirely clear
under the Code when the amount of prepayment premiums or yield maintenance
charges so allocated should be taxed to the holder of an Offered Certificate,
but it is not expected, for federal income tax reporting purposes, that
prepayment premiums and yield maintenance charges will be treated as giving rise
to any income to the holder of an Offered Certificate prior to the Master
Servicer's actual receipt of a prepayment premium or yield maintenance charge.
Prepayment premiums and yield maintenance charges, if any, may be treated as
ordinary income, although authority exists for treating such amounts as capital
gain if they are treated as paid upon the retirement or partial retirement of a
Certificate. Certificateholders should consult their own tax advisers concerning
the treatment of prepayment premiums and yield maintenance charges.
Except as provided below, the Offered Certificates will be treated as "real
estate assets" within the meaning of Section 856(c)(5)(B) of the Code, and
interest (including OID, if any) on the Offered Certificates will be interest
described in Section 856(c)(3)(B) of the Code, and the Offered Certificates will
be treated as "loans . . . secured by an interest in real property which is . .
.. residential real property" under Section 7701(a)(19)(C)(v) of the Code to the
extent the loans are secured by multifamily properties. Mortgage loans that have
been defeased with U.S. Treasury obligations will not qualify for the foregoing
treatments. Moreover, the Offered Certificates will be "qualified mortgages" for
another REMIC within the meaning of Section 860G(a)(3) of the Code and
"permitted assets" for a "financial asset securitization investment trust"
within the meaning of Section 860L(c) of the Code. See "Federal Income Tax
Consequences for REMIC Certificates" in the prospectus.
See "Federal Income Tax Consequences for REMIC Certificates--Taxation of
Regular Certificates" in the prospectus.
STATE TAX CONSIDERATIONS
In addition to the federal income tax consequences described in "Federal
Income Tax Consequences" in this prospectus supplement, potential investors
should consider the state income tax consequences of the acquisition, ownership,
and disposition of the Offered Certificates. State income tax law may differ
substantially from the corresponding federal law, and this discussion does not
purport to describe any aspect of the income tax laws of any state. Therefore,
potential investors should consult their own tax advisors with respect to the
various tax consequences of investments in the Offered Certificates.
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ERISA CONSIDERATIONS
A fiduciary of any retirement plan or other employee benefit plan or
arrangement, including individual retirement accounts and annuities, Keogh plans
and collective investment funds and separate accounts in which those plans,
annuities, accounts or arrangements are invested, including insurance company
general accounts, that is subject to the fiduciary responsibility rules of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
Section 4975 of the Code (an "ERISA Plan") or which is a governmental plan, as
defined in Section 3(32) of ERISA, or a church plan, as defined in Section 3(33)
of ERISA and for which no election has been made under Section 410(d) of the
Code, subject to any federal, state or local law ("Similar Law") which is, to a
material extent, similar to the foregoing provisions of ERISA or the Code
(collectively, with an ERISA Plan, a "Plan") should review with its legal
advisors whether the purchase or holding of Offered Certificates could give rise
to a transaction that is prohibited or is not otherwise permitted under ERISA,
the Code or Similar Law or whether there exists any statutory, regulatory or
administrative exemption applicable thereto. Moreover, each Plan fiduciary
should determine whether an investment in the Offered Certificates is
appropriate for the Plan, taking into account the overall investment policy of
the Plan and the composition of the Plan's investment portfolio.
The U.S. Department of Labor issued an individual exemption to Goldman,
Sachs & Co., Prohibited Transaction Exemption 89-88 (October 17, 1989), as
amended (the "Exemption"). The Exemption generally exempts from the application
of the prohibited transaction provisions of Sections 406 and 407 of ERISA, and
the excise taxes imposed on the prohibited transactions pursuant to Sections
4975(a) and (b) of the Code, certain transactions, among others, relating to the
servicing and operation of pools of mortgage loans, such as the pool of mortgage
loans, and the purchase, sale and holding of mortgage pass-through certificates,
such as the Offered Certificates, underwritten by Goldman, Sachs & Co., provided
that certain conditions set forth in the Exemption are satisfied.
The Exemption sets forth five general conditions which must be satisfied
for a transaction involving the purchase, sale and holding of the Offered
Certificates to be eligible for exemptive relief. First, the acquisition of the
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 Moody's,
Standard & Poor's Rating Services, a division of The McGraw-Hill Companies, Inc.
("S&P") or Fitch, Inc. 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, any entity that provides insurance or
other credit support to the Trust Fund and any borrower with respect to mortgage
loans constituting more than 5% of the aggregate unamortized principal balance
of the mortgage loans as of the date of initial issuance of the Offered
Certificates, and any affiliate of any of the foregoing entities. Fourth, the
sum of all payments made to and retained by the Underwriters must represent not
more than reasonable compensation for underwriting the Offered 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 the mortgage loans and the sum of all payments made to
and retained by the Master Servicer, the Special Servicer and any sub-servicer
must represent not more than reasonable compensation for that person's services
under the Pooling Agreement and reimbursement of the person's reasonable
expenses in connection with those services. 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.
It is a condition of the issuance of the Offered Certificates that they
have the ratings specified on the cover page. As of the Closing Date, the third
general condition set forth above will be satisfied with respect to the Offered
Certificates. A fiduciary of a Plan contemplating purchasing an Offered
Certificate in the secondary market must make its own determination that, at the
time of purchase, the Offered Certificates continue to satisfy the second and
third general conditions set forth above. A fiduciary of a Plan contemplating
purchasing an Offered Certificate, whether in the initial issuance of the
related Certificates or in the secondary market, must make its own determination
that the first, fourth and fifth general conditions set forth above will be
satisfied with respect to the related Offered Certificate.
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The Exemption also requires that the Trust Fund meet the following
requirements: (1) the Trust Fund must consist solely of assets of the type that
have been included in other investment pools; (2) certificates in those other
investment pools must have been rated in one of the four highest categories of
S&P, Moody's or Fitch, Inc. for at least one year prior to the Plan's
acquisition of Offered Certificates; and (3) certificates in those other
investment pools must have been purchased by investors other than Plans for at
least one year prior to any Plan's acquisition of Offered Certificates.
If the general conditions of the Exemption are satisfied, the Exemption may
provide an exemption from the restrictions imposed by Sections 406(a) and 407(a)
of ERISA (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 (1) the direct or indirect sale, exchange or transfer of Offered
Certificates in the initial issuance of Certificates between the Depositor or
the Underwriters and a Plan when the Depositor, any of the Underwriters, the
Trustee, the Master Servicer, the Special Servicer, a sub-servicer or a borrower
is a party in interest with respect to the investing Plan, (2) the direct or
indirect acquisition or disposition in the secondary market of the Offered
Certificates by a Plan and (3) 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 an
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 the Excluded Plan. For purposes of this prospectus supplement, an "Excluded
Plan" is a Plan sponsored by any member of the Restricted Group.
If certain specific conditions of the Exemption are also satisfied, the
Exemption may provide an exemption from the restrictions imposed by Sections
406(b)(1) and (b)(2) of ERISA and the taxes imposed by Section 4975(c)(1)(E) of
the Code in connection with (1) the direct or indirect sale, exchange or
transfer of Offered Certificates in the initial issuance of Certificates between
the Depositor or the Underwriters and a Plan when the person who has
discretionary authority or renders investment advice with respect to the
investment of Plan assets in those Certificates is (a) a borrower with respect
to 5% or less of the fair market value of the mortgage loans or (b) an affiliate
of that person, (2) the direct or indirect acquisition or disposition in the
secondary market of Offered Certificates by a Plan and (3) the holding of
Offered Certificates by a Plan.
Further, if certain specific conditions of the Exemption are satisfied, the
Exemption may provide an exemption from the restrictions imposed by Sections
406(a), 406(b) and 407(a) of ERISA, and the taxes imposed by Sections 4975(a)
and (b) of the Code by reason of Section 4975(c) of the Code for transactions in
connection with the servicing, management and operation of the pool of mortgage
loans.
Before purchasing an Offered Certificate, a fiduciary of a Plan should
itself confirm that (1) the Offered Certificates constitute "securities" for
purposes of the Exemption and (2) the specific and general conditions and the
other requirements set forth in the Exemption would be satisfied. In addition to
making its own determination as to the availability of the exemptive relief
provided in the Exemption, the Plan fiduciary should consider the availability
of any other prohibited transaction exemptions, including with respect to
governmental plans, any exemptive relief afforded under Similar Law. See "ERISA
Considerations" in the prospectus. A purchaser of an Offered Certificate should
be aware, however, that even if the conditions specified in one or more
exemptions are satisfied, the scope of relief provided by an exemption may not
cover all acts which might be construed as prohibited transactions.
THE SALE OF OFFERED CERTIFICATES TO A PLAN IS IN NO RESPECT A
REPRESENTATION BY THE DEPOSITOR OR ANY OF THE UNDERWRITERS THAT THIS INVESTMENT
MEETS ALL RELEVANT LEGAL REQUIREMENTS WITH RESPECT TO INVESTMENTS BY PLANS
GENERALLY OR ANY PARTICULAR PLAN, OR THAT THIS INVESTMENT IS APPROPRIATE FOR
PLANS GENERALLY OR ANY PARTICULAR PLAN.
LEGAL INVESTMENT
The Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class
A-1A, Class B and Class C Certificates will constitute "mortgage related
securities" for purposes of the Secondary Mortgage
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Market Enhancement Act of 1984, as amended ("SMMEA") so long as they are rated
in one of the two highest rating categories by S&P, Moody's or another
nationally recognized statistical rating organization. The Class D and Class E
Certificates will not constitute "mortgage related securities" for purposes of
SMMEA and as a result, the appropriate characterization of those classes of
Certificates under various legal investment restrictions, and the ability of
investors subject to those restrictions to purchase those classes of
Certificates, is subject to significant interpretive uncertainties. These
uncertainties (and any unfavorable future determination concerning the legal
investment or financial institutional regulatory characteristics of the Offered
Certificates) may adversely affect the liquidity of the Offered Certificates.
Except as to the status of certain classes of Certificates as "mortgage related
securities," 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. 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 will constitute legal investments for them or
are subject to investment, capital or other restrictions. See "Legal Investment"
in the accompanying prospectus.
PLAN OF DISTRIBUTION
The Depositor, Goldman, Sachs & Co., Greenwich Capital Markets, Inc.
("GCMI"), Banc of America Securities LLC ("BOA"), Credit Suisse First Boston LLC
("CSFB"), Morgan Stanley & Co. Incorporated ("Morgan Stanley"), Wachovia Capital
Markets ("Wachovia") and, collectively with Goldman, Sachs & Co., GCMI, CSFB,
BOA and Morgan Stanley, the "Underwriters") have entered into an underwriting
agreement with respect to the Offered Certificates pursuant to which, the
Depositor has agreed to sell to the Underwriters, and the Underwriters have
severally but not jointly agreed to purchase from the Depositor, the respective
Certificate Principal Amounts of each class of Offered Certificates set forth
below subject in each case to a variance of 10%.
- ------------------------------------------------------------------------------------------------------------------
GREENWICH
GOLDMAN, CAPITAL MORGAN
CLASS SACHS & CO. MARKETS, INC. BOA CSFB STANLEY WACHOVIA
- ------------------------------------------------------------------------------------------------------------------
Class A-1............... $ 22,500,000 $ 22,500,000 $ 0 $ 0 $ 0 $ 0
- ------------------------------------------------------------------------------------------------------------------
Class A-2............... $ 50,000,000 $ 50,000,000 $ 0 $ 0 $ 0 $ 0
- ------------------------------------------------------------------------------------------------------------------
Class A-3............... $128,000,000 $128,000,000 $ 0 $ 0 $ 0 $ 0
- ------------------------------------------------------------------------------------------------------------------
Class A-4............... $104,000,000 $104,000,000 $ 0 $ 0 $ 0 $ 0
- ------------------------------------------------------------------------------------------------------------------
Class A-5............... $ 86,500,000 $ 86,500,000 $ 0 $ 0 $ 0 $ 0
- ------------------------------------------------------------------------------------------------------------------
Class A-6............... $647,825,000 $647,825,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000
- ------------------------------------------------------------------------------------------------------------------
Class B................. $ 32,555,000 $ 32,555,000 $ 0 $ 0 $ 0 $ 0
- ------------------------------------------------------------------------------------------------------------------
Class C................. $ 14,649,500 $ 14,649,500 $ 0 $ 0 $ 0 $ 0
- ------------------------------------------------------------------------------------------------------------------
Class D................. $ 26,044,000 $ 26,044,000 $ 0 $ 0 $ 0 $ 0
- ------------------------------------------------------------------------------------------------------------------
Class E................. $ 14,650,000 $ 14,650,000 $ 0 $ 0 $ 0 $ 0
- ------------------------------------------------------------------------------------------------------------------
The Depositor estimates that its share of the total expenses of the
offering, excluding underwriting discounts and commissions, will be
approximately $5,000,000.
The Depositor has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
The Depositor has been advised by the Underwriters that they propose to
offer the Offered Certificates to the public from time to time in one or more
negotiated transactions, or otherwise, at varying prices to be determined at the
time of sale. The Underwriters may effect the transactions by selling the
Offered Certificates to or through dealers, and the dealers may receive
compensation in the form of underwriting discounts, concessions or commissions
from the Underwriters.
The Offered Certificates are a new issue of securities with no established
trading market. The Depositor has been advised by the Underwriters that they
intend to make a market in the Offered
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Certificates but are not obligated to do so and may discontinue market making at
any time without notice. No assurance can be given as to the liquidity of the
trading market for the Offered Certificates.
We cannot assure you that a secondary market for the Offered Certificates
will develop or, if it does develop, that it will continue. The primary source
of ongoing information available to investors concerning the Offered
Certificates will be the monthly statements discussed under "The Pooling
Agreement--Reports to Certificateholders; Available Information" in this
prospectus supplement which will include information as to the outstanding
principal balance of the Offered Certificates and the status of the applicable
form of credit enhancement. Except as described under "The Pooling
Agreement--Reports to Certificateholders; Available Information" in this
prospectus supplement we cannot assure you that any additional information
regarding the Offered Certificates will be available through any other source.
In addition, we are not aware of any source through which price information
about the Offered Certificates will be generally available on an ongoing basis.
The limited nature of that information regarding the Offered Certificates may
adversely affect the liquidity of the Offered Certificates, even if a secondary
market for the Offered Certificates becomes available.
Goldman, Sachs & Co. is an affiliate of the Depositor and GSMC, a Loan
Seller. GCMI is an affiliate of Greenwich Capital Financial Products, Inc., a
Loan Seller.
LEGAL MATTERS
The validity of the Offered Certificates and certain federal income tax
matters will be passed upon for the Depositor and the Underwriters by
Cadwalader, Wickersham & Taft LLP, New York, New York.
RATINGS
It is a condition to the issuance of each Class of Offered Certificates
that they be rated as follows by Standard & Poor's, a division of the McGraw
Hill Companies, Inc. ("S&P" and Moody's Investors Service, Inc. ("Moody's") and,
together with S&P, the "Rating Agencies"), respectively:
RATINGS
CLASS S&P/MOODY'S
----- -----------
Class A-1..................................................... AAA/Aaa
Class A-2..................................................... AAA/Aaa
Class A-3..................................................... AAA/Aaa
Class A-4..................................................... AAA/Aaa
Class A-5..................................................... AAA/Aaa
Class A-6..................................................... AAA/Aaa
Class A-1A.................................................... AAA/Aaa
Class B....................................................... AA/Aa2
Class C....................................................... AA-/Aa3
Class D....................................................... A/A2
Class E....................................................... A-/A3
A securities rating on mortgage pass-through certificates addresses the
likelihood of the timely receipt by their holders of interest and the ultimate
repayment of principal to which they are entitled by the Rated Final
Distribution Date. The rating takes into consideration the credit quality of the
pool of mortgage loans, structural and legal aspects associated with the
certificates, and the extent to which the payment stream from the pool of
mortgage loans is adequate to make payments required under the certificates. The
ratings on the Offered Certificates do not, however, constitute a statement
regarding the likelihood, timing or frequency of prepayments (whether voluntary
or involuntary) on the mortgage loans or the degree to which the payments might
differ from those originally contemplated. In addition, a rating does not
address the likelihood or frequency of voluntary or mandatory prepayments of
mortgage loans, the allocation of Prepayment Interest Shortfalls, yield
maintenance charges or net default interest. See "Risk Factors" in this
prospectus supplement.
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We cannot assure you as to whether any rating agency not requested to rate
the Offered Certificates will nonetheless issue a rating to any class of Offered
Certificates and, if so, what the rating would be. A rating assigned to any
class of Offered Certificates by a rating agency that has not been requested by
the Depositor to do so may be lower than the rating assigned thereto by S&P or
Moody's.
The ratings on the Offered Certificates should be evaluated independently
from similar ratings on other types of securities. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision or
withdrawal at any time by the assigning rating agency.
S-167
INDEX OF SIGNIFICANT DEFINITIONS
PAGE
----
111 Eighth Avenue Co-Lender Agreement ......................................S-78
111 Eighth Avenue Directing Holder .........................................S-79
111 Eighth Avenue Loan .....................................................S-77
111 Eighth Avenue Pari Passu Companion Loans ...............................S-78
111 Eighth Avenue Subordinate Companion Loans ..............................S-78
111 Eighth Avenue Whole Loan ...............................................S-78
1441 Broadway Co-Lender Agreement ..........................................S-75
1441 Broadway Directing Holder .............................................S-76
1441 Broadway Loan .........................................................S-75
1441 Broadway Subordinate Companion Loans ..................................S-75
1441 Broadway Whole Loan ...................................................S-75
237 Park Avenue Co-Lender Agreement ........................................S-85
237 Park Avenue Loan .......................................................S-84
237 Park Avenue Majority Holder ............................................S-85
237 Park Avenue Pari Passu Companion Loans .................................S-84
237 Park Avenue Whole Loan .................................................S-84
Acceptable Insurance Default ..............................................S-133
Actual/360 Basis ...........................................................S-66
Administrative Fee Rate ...................................................S-100
Advance Rate ..............................................................S-136
Advances ..................................................................S-135
ALTA .......................................................................S-94
Appraisal Reduction .......................................................S-111
Appraisal Reduction Event .................................................S-111
Archon .....................................................................S-62
Archon Loans ...............................................................S-62
Available Funds ............................................................S-97
Balloon Mortgage Loan ......................................................S-67
Bank of America Loans ......................................................S-63
Base Interest Fraction ....................................................S-107
BOA .................................................................S-63, S-165
Borders Retail Center Loan .................................................S-70
CBE .......................................................................S-123
Certificate Owners ........................................................S-114
Certificate Principal Amount ...............................................S-96
Certificate Registrar .....................................................S-113
Certificateholder .........................................................S-113
Certificates ...............................................................S-95
Class ......................................................................S-95
Class A Certificates .......................................................S-95
Class X Certificates .......................................................S-95
Clearstream ...............................................................S-113
Closing Date ...............................................................S-63
CMSA ......................................................................S-159
Code ......................................................................S-161
Collection Account ........................................................S-138
Collection Period ..........................................................S-98
Commerzbank ................................................................S-63
Commerzbank AG .............................................................S-93
Commerzbank/Archon Loans ...................................................S-63
Commission ................................................................S-155
Companion Collection Account ..............................................S-138
Companion Loans ............................................................S-71
Compensating Interest Payment .............................................S-109
Controlling Class .........................................................S-152
Controlling Class Certificateholder .......................................S-152
Controlling Class Representative ..........................................S-152
Corrected Mortgage Loan ...................................................S-134
CPR .......................................................................S-118
Cross Over Date ...........................................................S-107
CSFB ......................................................................S-165
Cut-Off Date ...............................................................S-62
Cut-Off Date Balance .......................................................S-62
Daily News Building Control Appraisal Event ................................S-81
Daily News Building Controlling Holder .....................................S-81
Daily News Building Holder .................................................S-81
Daily News Building Intercreditor Agreement ................................S-81
Daily News Building Loan ...................................................S-81
Daily News Building Loan Option Price ......................................S-84
Daily News Building Purchase Option ........................................S-84
Daily News Building Subordinate Companion Holder ...........................S-81
Daily News Building Subordinate Companion Loan .............................S-81
Daily News Building Whole Loan .............................................S-81
Defeasance Deposit .........................................................S-68
Defeasance Loans ...........................................................S-68
Defeasance Lock-Out Period .................................................S-68
Defeasance Option ..........................................................S-68
Definitive Certificate ....................................................S-113
Depositor ..................................................................S-63
Depositories ..............................................................S-113
Determination Date .........................................................S-98
Distribution Account ......................................................S-138
Distribution Date ..........................................................S-97
DSCR .......................................................................S-63
DTC .......................................................................S-113
Due Date ...................................................................S-66
ERISA .....................................................................S-163
ERISA Plan ................................................................S-163
Euroclear .................................................................S-113
Events of Default .........................................................S-143
Excess Liquidation Proceeds ...............................................S-108
Excess Prepayment Interest Shortfall ......................................S-109
Excluded Plan .............................................................S-164
Exemption .................................................................S-163
Fiscal Agent ..............................................................S-155
S-168
Form 8-K ...................................................................S-95
Gain-On-Sale Reserve Account ..............................................S-139
Garden State Plaza Co-Lender Agreement .....................................S-74
Garden State Plaza Loan ....................................................S-74
Garden State Plaza Majority Holder .........................................S-74
Garden State Plaza Mortgaged Property ......................................S-74
Garden State Plaza Pari Passu Companion Loans ..............................S-74
Garden State Plaza Whole Loan ..............................................S-74
GCCFC C2 Master Servicer ...................................................S-84
GCCFC C2 PSA ...............................................................S-84
GCCFC C2 Special Servicer ..................................................S-84
GCCFC C2 Trust .............................................................S-84
GCCFC C2 Trustee ...........................................................S-84
GCFP .......................................................................S-62
GCMI ......................................................................S-165
GG1 Master Servicer ........................................................S-78
GG1 PSA ....................................................................S-78
GG1 Special Servicer .......................................................S-78
GG1 Trust ..................................................................S-78
GG1 Trustee ................................................................S-78
Grand Canal Intercreditor Agreement ........................................S-72
Grand Canal Majority Holder ................................................S-72
Grand Canal Pari Passu Companion Loans .....................................S-72
Grand Canal Shoppes at the Venetian Loan ...................................S-72
Grand Canal Shoppes at the Venetian Whole Loan .............................S-72
Greenwich Loans ............................................................S-62
Group 1 Principal Distribution Amount .....................................S-101
Group 1 Principal Shortfall ...............................................S-102
Group 2 Principal Distribution Amount .....................................S-101
Group 2 Principal Shortfall ...............................................S-102
GSMC .......................................................................S-63
Indirect Participants .....................................................S-113
Initial Loan Group 1 Balance ...............................................S-62
Initial Loan Group 2 Balance ...............................................S-62
Initial Pool Balance .......................................................S-62
Interest Accrual Amount ....................................................S-98
Interest Accrual Period ....................................................S-98
Interest Distribution Amount ...............................................S-98
Interest Reserve Account ..................................................S-138
Interest Shortfall .........................................................S-98
IRS .......................................................................S-148
LB-UBS 2004-C4 Master Servicer .............................................S-74
LB-UBS 2004-C4 PSA .........................................................S-74
LB-UBS 2004-C4 Special Servicer ............................................S-74
LB-UBS 2004-C4 Trust .......................................................S-74
LB-UBS 2004-C4 Trustee .....................................................S-74
Lennar ....................................................................S-157
Liquidation Fee ...........................................................S-158
Liquidation Fee Rate ......................................................S-158
LNR .......................................................................S-157
Loan Group 1 ...............................................................S-62
Loan Group 2 ...............................................................S-62
Loan Groups ................................................................S-62
Loan Sellers ...............................................................S-63
Loan-to-Value Ratio ........................................................S-63
Lower-Tier Distribution Account ...........................................S-138
Lower-Tier Regular Interests ..............................................S-161
Lower-Tier REMIC ..........................................................S-161
LTV ........................................................................S-63
LTV at Maturity ............................................................S-64
Master Servicer ...........................................................S-156
Master Servicer Remittance Date ...........................................S-135
Material Breach ............................................................S-91
Material Document Defect ...................................................S-91
Modeling Assumptions ......................................................S-118
Monthly Payment ............................................................S-98
Moody's ...................................................................S-166
Morgan Stanley ............................................................S-165
Mortgage ...................................................................S-62
Mortgage Loans .............................................................S-62
Mortgage Note ..............................................................S-62
Mortgage Pool ..............................................................S-62
Mortgage Rate .............................................................S-100
Mortgaged Property .........................................................S-62
Net Mortgage Rate .........................................................S-100
Non-Recoverable Advance ...................................................S-136
Non-Serviced Loans .........................................................S-71
Notional Amount ............................................................S-96
Offered Certificates .......................................................S-95
OID .......................................................................S-162
Originators ................................................................S-63
P&I Advance ...............................................................S-135
Pari Passu Companion Loan ..................................................S-71
Pari Passu Indemnified Party ..............................................S-143
Pari Passu PSA .............................................................S-71
Participants ..............................................................S-113
Pass-Through Rate ..........................................................S-98
PCR ........................................................................S-94
Percentage Interest ........................................................S-97
Plan ......................................................................S-163
Pooling Agreement .........................................................S-130
Prepayment Assumption .....................................................S-162
Prepayment Interest Excess ................................................S-109
Prepayment Interest Shortfall .............................................S-109
Prime Rate ................................................................S-136
Principal Distribution Amount .............................................S-100
Principal Shortfall .......................................................S-102
Property Advances .........................................................S-135
Rated Final Distribution Date .............................................S-117
Rating Agencies ...........................................................S-166
Realized Loss .............................................................S-108
Record Date ................................................................S-97
Regular Certificates ...............................................S-100, S-161
Release Date ...............................................................S-68
REMIC .....................................................................S-161
REMIC Provisions ..........................................................S-161
REO Account ................................................................S-95
S-169
REO Mortgage Loan .........................................................S-102
REO Property ...............................................................S-95
Repurchase Price ...........................................................S-91
Residual Certificates ......................................................S-95
Restricted Group ..........................................................S-163
Rules .....................................................................S-114
S&P ................................................................S-163, S-166
Scheduled Principal Distribution Amount ...................................S-100
Seller Percentage Interest .................................................S-92
Sequential Pay Certificates ................................................S-96
Serviced Companion Loan ....................................................S-71
Serviced Whole Loans .......................................................S-71
Servicing Fee .............................................................S-156
Servicing Fee Rate ........................................................S-156
Servicing Standards .......................................................S-132
Servicing Transfer Event ..................................................S-132
Similar Law ...............................................................S-163
SMMEA .....................................................................S-165
Special Servicer ..........................................................S-157
Special Servicing Fee .....................................................S-157
Special Servicing Fee Rate ................................................S-157
Specially Serviced Mortgage Loan ..........................................S-132
Stated Principal Balance ..................................................S-100
Subordinate Companion Loan .................................................S-71
Trust Fund .................................................................S-62
Trustee ...................................................................S-154
Trustee Fee ...............................................................S-154
Trustee Fee Rate ..........................................................S-154
Underwriters ..............................................................S-165
Unscheduled Payments ......................................................S-102
Updated Appraisal .........................................................S-147
Upper-Tier Distribution Account ...........................................S-138
Upper-Tier REMIC ..........................................................S-161
Voting Rights .............................................................S-147
WAC Rate ...................................................................S-99
Wachovia ..................................................................S-165
WAMU .......................................................................S-63
WAMU Loans .................................................................S-63
Waterfront Plaza Co-Lender Agreement .......................................S-86
Waterfront Plaza Directing Holder ..........................................S-87
Waterfront Plaza Loan ......................................................S-86
Waterfront Plaza Subordinate Companion Loan ................................S-86
Waterfront Plaza Whole Loan ................................................S-86
Wells Fargo ...............................................................S-156
Whole Loan .................................................................S-71
Withheld Amounts ..........................................................S-139
Withheld Loan .............................................................S-138
Workout Fee ...............................................................S-158
Workout Fee Rate ..........................................................S-158
Workout-Delayed Reimbursement Amount ......................................S-137
S-170
ANNEX A
MORTGAGE POOL INFORMATION
Annex A, Annex B and Annex C set forth certain information with respect
to the Mortgage Loans and the Mortgaged Properties. The sum in any column of the
tables presented in this Annex A may not equal the indicated total due to
rounding. The information in Annex A, Annex B and Annex C with respect to the
Mortgage Loans and the Mortgaged Properties is based upon the Mortgage Pool as
it is expected to be constituted as of the close of business on the Closing
Date, assuming that (i) all scheduled principal and interest payments due on or
before the Cut-Off Date will be made, and (ii) there will be no principal
prepayments on or before the Closing Date. The loan amount used for purposes of
calculating the loan-to-value ratio and debt service coverage ratio for each of
the mortgage loans with pari passu companion notes is the aggregate principal
balance of the mortgage loan and the related pari passu companion notes. The
statistics in Annex A, Annex B and Annex C were primarily derived from
information provided to the Depositor by each Loan Seller, which information may
have been obtained from the borrowers without independent verification except as
noted.
(1) "Most Recent NOI" and "Trailing 12 NOI" (which is for the period
ending as of the date specified in Annex C) is the net operating income for a
Mortgaged Property as established by information provided by the borrowers,
except that in certain cases such net operating income has been adjusted by
removing certain non-recurring expenses and revenue or by certain other
normalizations. Most Recent NOI and Trailing 12 NOI do not necessarily reflect
accrual of certain costs such as taxes and capital expenditures and do not
reflect non-cash items such a depreciation or amortization. In some cases,
capital expenditures may have been treated by a borrower as an expense or
expenses treated as capital expenditures. The Depositor has not made any attempt
to verify the accuracy of any information provided by each borrower or to
reflect changes in net operating income that may have occurred since the date of
the information provided by each borrower for the related Mortgaged Property.
Most Recent NOI and Trailing 12 NOI were not necessarily determined in
accordance with generally accepted accounting principles. Moreover, Most Recent
NOI and Trailing 12 NOI are not a substitute for net income determined in
accordance with generally accepted accounting principles as a measure of the
results of a property's operations or a substitute for cash flows from operating
activities determined in accordance with generally accepted accounting
principles as a measure of liquidity and in certain cases may reflect
partial-year annualizations.
(2) "Annual Debt Service" means for any Mortgage Loan the current
annualized debt service payable as of August 1, 2004 on the related Mortgage
Loan.
(3) "Cut-Off Date LTV Ratio" means, with respect to any Mortgage Loan,
the principal balance of such Mortgage Loan as of the Cut-Off Date divided by
the Appraised Value of the Mortgaged Properties securing such Mortgage Loan. In
the case of the earnout loans identified in this Annex A by control numbers 15,
18, 37, the cut-off date LTV ratio is calculated net of the earnout. In the case
of the cross-collateralized mortgage loans identified in Annex C by control
numbers 88 and 130, the Cut-off Date LTV Ratio is shown on an aggregate basis
for the crossed group of Mortgage Loans. With respect to any Whole Loan, the
cut-off date LTV ratio reflects the aggregate indebtedness evidenced by the
Mortgage Loan and the Pari Passu Companion Loans, if any, excluding the
Subordinate Companion Loans, if any. With respect to the Grand Canal Shoppes at
the Venetian, the Cut-off date LTV ratio is based on the total $427,000,000
financing net of the $37,000,000 principal guarantee. With respect to the
Mortgage Loan identified as loan no. 40, Cut-off Date LTV ratio is calculated
net of the $2,500,000 reserve.
(4) "Cut-Off Date Principal Balance/Unit" means the principal balance
per unit of measure as of the Cut-Off Date.
(5) "DSCR," "Debt Service Coverage Ratio" or "Underwritten DSCR" means,
for any Mortgage Loan, the ratio of Underwritten Net Cash Flow produced by the
related Mortgaged Property or Mortgaged Properties to the aggregate amount of
the Annual Debt Service. In
A-1
the case of the earnout loans identified in this Annex A by control numbers 15,
18, 37, the Underwritten DSCR is calculated net of the earnout. In the case of
the cross-collateralized mortgage loans identified in Annex C by control numbers
88 and 130, the Underwritten DSCR is shown on an aggregate basis for the crossed
group of Mortgage Loans. With respect to any Whole Loan, the underwritten DSCR
reflects the aggregate indebtedness evidenced by the Mortgage Loan and the Pari
Passu Companion Loans, if any, excluding Subordinate Companion Loans, if any.
DSCR for the cross-collateralized loans was calculated on a loan-by-loan basis,
without regard to cross-collateralization. With respect to the Grand Canal
Shoppes at the Venetian Loan, the underwritten DSCR is based on the total
$427,000,000 financing net of the $37,000,000 principal guarantee.
(6) "Largest Tenant" means, with respect to any Mortgaged Property,
the tenant occupying the largest amount of net rentable square feet.
(7)"Largest Tenant Lease Expiration Date" means the date at which the
applicable Largest Tenant's lease is scheduled to expire.
(8) "Largest Tenant % of Total Net Square Feet" means the net rentable
square feet leased to the Largest Tenant as a percentage of the total square
feet of the Mortgaged Property.
(9) "LTV at Maturity" or "Maturity Date LTV" for any Mortgage Loan is
calculated in the same manner as the Cut-Off Date LTV Ratio, except that the
Mortgage Loan Cut-Off Date Principal Balance used to calculate the Cut-Off Date
LTV Ratio has been adjusted to give effect to the amortization of the applicable
Mortgage Loan as of its maturity date. Such calculation thus assumes that the
appraised value of the Mortgaged Property or Properties securing a Mortgage Loan
on the maturity date is the same as the Appraised Value. There can be no
assurance that the value of any particular Mortgaged Property will not have
declined from the Appraised Value. In the case of the earnout loans identified
in this Annex A by control numbers 15, 18, 37, the maturity date LTV is
calculated on the full loan balance divided by the stabilized appraised value.
In the case of the cross-collateralized mortgage loans identified in Annex C by
control numbers 88 and 130, the Maturity Date LTV is shown on an aggregate basis
for the crossed group of Mortgage Loans. With respect to the Grand Canal Shoppes
at the Venetian, the LTV at maturity reflects aggregate indebtedness evidenced
by the Grand Canal Whole Loan. With respect to the Garden State Plaza Loan, the
LTV at maturity reflects aggregate indebtedness evidenced by the Garden State
Plaza Whole Loan. With respect to the 111 Eighth Avenue Loan, the LTV at
maturity reflects aggregate indebtedness evidenced by the 111 Eighth Avenue
Whole Loan. With respect to the 237 Park Avenue Loan, the LTV at maturity
reflects aggregate indebtedness evidenced by the 237 Park Avenue Whole Loan.
With respect to the Mortgage Loan identified as loan no. 40, LTV at Maturity is
calculated net of the $2,500,000 reserve.
(10) "Net Cash Flow," "U/W NCF" or "Underwritten Net Cash Flow" with
respect to a given Mortgage Loan or Mortgaged Property means cash flow available
for debt service, as determined by the related Loan Seller based in part upon
borrower supplied information for a recent period which is generally the twelve
months prior to the origination of such Mortgage Loan, adjusted for
stabilization and, in the case of certain Mortgage Loans, may have been updated
to reflect a more recent operating period. Net Cash Flow does not reflect debt
service, non-cash items such as depreciation or amortization, and does not
reflect actual capital expenditures and may have been adjusted for other items
and assumptions determined by the Loan Seller.
(11) "Occupancy" means the percentage of net rentable square feet,
rooms, units, beds or sites of the Mortgaged Property that are leased (including
spaces that are leased to tenants that are not yet in occupancy). Occupancy
rates are calculated within a recent period and in certain cases reflect the
average occupancy rate over a period of time.
(12) "Original Balance" means the principal balance of the Mortgage
Loan as of the date of origination.
(13) "Underwritten NOI" or "U/W NOI" means Net Cash Flow before
deducting for replacement reserves and capital expenditures, tenant improvements
and leasing commissions.
A-2
(14) "Appraised Value" means for each of the Mortgaged Properties, the
most current appraised value of such property as determined by an appraisal of
the Mortgaged Property and in accordance with MAI standards made not more than
13 months prior to the origination date (or purchase date, as applicable) of the
related Mortgage Loan, as described under "Original Appraisal Date" on Annex C
attached hereto.
(15) "Weighted Average Mortgage Rate" means the weighted average of the
Mortgage Rates as of the Cut-Off Date.
(16) "Related Group" identifies Mortgage Loans in the Mortgage Pool
with sponsors affiliated with other sponsors in the Mortgage Pool. Each Related
Group is identified by a separate number.
(17) "Prepayment Penalty Description" means the number of payments
from the first payment date through and including the maturity date for which a
Mortgage Loan is locked out from prepayment, charges a prepayment premium or
yield maintenance charges, permits defeasance, or allows a prepayment without a
prepayment premium or yield maintenance charge.
(18) "Actual/360" means the related Mortgage Loan accrues interest on
the basis of a 360-day year and the actual number of days in the related month.
A-3
EARNOUT LOANS
"Earnout Loans" are Mortgage Loans that require the related borrower to
deposit a portion of the original loan amount in a reserve fund pending
satisfaction of certain conditions, including without limitation achievement of
certain DSCRs, LTVs or satisfaction of certain occupancy or other tests. All of
the earnout loans provide that in the event the conditions are not met by a
certain date, the Master Servicer may apply amounts held in the reserves to
prepay the related Mortgage Loan. For each of the Earnout Loans listed below,
the earliest date, if any, on which any amounts may be so applied is set forth
beneath the caption "Earliest Defeasance or Prepay Date." For all of the Earnout
Loans, the underwritten NCF DSCRs and LTVs shown in this prospectus supplement
and on the foldout pages in Annex C are calculated based on the principal
balance of those Mortgage Loans net of the related earnout amount or a portion
thereof which may be applied to prepay the Mortgage Loans. Those underwritten
DSCRs and LTVs are also shown beneath the caption "Net of Earnout NCF DSCR" and
"Net of Earnout LTV" in the table below. The amounts beneath the captions "Full
Loan Amount LTV" and "Full Loan Amount DSCR" are calculated based on a principal
balance of those Mortgage Loans that includes the related earnout amount
utilizing the stabilized appraised value and Underwritten Net Cash Flow figures.
The following table sets forth certain information regarding the Earnout Loans:
IF
FULL FULL EARLIEST PREPAY,
LOAN NET OF LOAN NET OF DEFEASANCE YIELD
EARNOUT EARNOUT CURRENT AMOUNT EARNOUT AMOUNT EARNOUT OR PREPAY DEFEASE/ MAINT.
LOAN NUMBER RESERVE AMOUNT BALANCE LTV LTV NCF DSCR NCF DSCR DATE PREPAY APPLICABLE
- ----------- ------- ------- ------- -------- ------- -------- -------- ---------- -------- ----------
15 $7,000,000 $ 6,800,000 $47,000,000 75.81% 69.31% 1.36x 1.37x 5/1/2006 Prepay Yes
18 $8,263,000 $ 8,263,000 $37,250,000 78.42% 65.14% 1.33x 1.20x 7/1/2006 Prepay Yes
37 $4,895,000 $ 4,450,000 $15,456,591 79.26% 79.47% 1.35x 1.35x 9/1/2005 Prepay Yes
- -----------------------------------------------------------------------------------------------------------------------------------
A-4
AGGREGATE POOL
DISTRIBUTION BY LOAN TYPE
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
LOAN TYPE LOANS BALANCE ($) BALANCE BALANCE ($) RATIO
--------- ----- ----------- ------- ----------- -----
Amortizing 90 $ 1,479,194,354 56.8% $ 16,435,493 1.45
Interest Only, Then Amortizing 41 918,543,333 35.3% 22,403,496 1.59
Interest Only 9 191,665,000 7.4% 21,296,111 2.32
Fully Amortizing 1 15,000,000 0.6% 15,000,000 1.50
--- --------------- -----
Total/Wtd. Avg. 141 $ 2,604,402,687 100.0% $ 18,470,941 1.57
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
LOAN TYPE MORTGAGE RATE MATURITY (MOS) LTV LTV
--------- ------------- -------------- --- ---
Amortizing 5.793% 107.7 70.79 60.86
Interest Only, Then Amortizing 5.515% 104.5 66.78 60.52
Interest Only 4.877% 108.1 58.59 58.59
Fully Amortizing 5.260% 180.0 40.27 0.44
Total/Wtd. Avg. 5.624% 107.0 68.30 60.22
AGGREGATE POOL
DISTRIBUTION OF CUT-OFF DATE PRINCIPAL BALANCES
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
RANGE OF CUT-OFF DATE MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
PRINCIPAL BALANCES ($) LOANS BALANCE ($) BALANCE BALANCE ($) RATIO
---------------------- ----- ----------- ------- ----------- -----
534,283 - 999,999 1 $ 534,283 0.0% $ 534,283 1.49
1,000,000 - 1,999,999 5 7,532,888 0.3% 1,506,578 1.67
2,000,000 - 2,999,999 12 31,654,438 1.2% 2,637,870 1.44
3,000,000 - 3,999,999 14 48,277,092 1.9% 3,448,364 1.54
4,000,000 - 5,999,999 24 122,417,213 4.7% 5,100,717 1.55
6,000,000 - 7,999,999 15 105,546,506 4.1% 7,036,434 1.59
8,000,000 - 9,999,999 19 169,076,053 6.5% 8,898,740 1.51
10,000,000 - 14,999,999 10 124,929,285 4.8% 12,492,929 1.57
15,000,000 - 19,999,999 11 179,927,227 6.9% 16,357,021 1.36
20,000,000 - 29,999,999 11 264,162,435 10.1% 24,014,767 1.49
30,000,000 - 39,999,999 2 70,050,000 2.7% 35,025,000 1.22
40,000,000 - 49,999,999 5 228,755,354 8.8% 45,751,071 1.41
50,000,000 - 99,999,999 7 530,433,042 20.4% 75,776,149 1.49
100,000,000 - 149,999,999 3 377,558,092 14.5% 125,852,697 1.69
150,000,000 - 189,548,779 2 343,548,779 13.2% 171,774,389 1.92
--- --------------- -----
Total/Wtd. Avg. 141 $ 2,604,402,687 100.0% $ 18,470,941 1.57
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
RANGE OF CUT-OFF DATE AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
PRINCIPAL BALANCES ($) MORTGAGE RATE MATURITY (MOS) LTV LTV
---------------------- ------------- -------------- --- ---
534,283 - 999,999 5.750% 119.0 57.20 43.98
1,000,000 - 1,999,999 5.889% 101.3 61.22 52.92
2,000,000 - 2,999,999 5.981% 109.2 73.63 61.13
3,000,000 - 3,999,999 5.662% 108.1 70.81 61.48
4,000,000 - 5,999,999 5.635% 109.5 70.82 61.09
6,000,000 - 7,999,999 5.531% 109.7 72.43 62.69
8,000,000 - 9,999,999 5.748% 113.6 69.30 59.02
10,000,000 - 14,999,999 5.642% 103.8 71.29 61.92
15,000,000 - 19,999,999 5.860% 119.1 73.23 60.24
20,000,000 - 29,999,999 5.767% 99.7 75.37 67.82
30,000,000 - 39,999,999 5.765% 131.8 72.10 68.12
40,000,000 - 49,999,999 5.570% 116.0 71.73 63.80
50,000,000 - 99,999,999 5.978% 105.9 71.87 62.62
100,000,000 - 149,999,999 5.731% 117.6 66.81 59.70
150,000,000 - 189,548,779 4.650% 81.2 48.94 46.11
Total/Wtd. Avg. 5.624% 107.0 68.30 60.22
MIN 534,283
MAX 189,548,779
AVERAGE 18,470,941
A-5
AGGREGATE POOL
DISTRIBUTION OF DEBT SERVICE COVERAGE RATIOS
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
RANGE OF DEBT SERVICE MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
COVERAGE RATIOS LOANS BALANCE ($) BALANCE BALANCE ($) RATIO
--------------- ----- ----------- ------- ----------- -----
1.17 - 1.19 2 $ 18,294,845 0.7% $ 9,147,423 1.18
1.20 - 1.29 23 479,121,301 18.4% 20,831,361 1.25
1.30 - 1.39 31 680,270,605 26.1% 21,944,213 1.34
1.40 - 1.49 30 335,370,778 12.9% 11,179,026 1.45
1.50 - 1.59 18 283,386,224 10.9% 15,743,679 1.52
1.60 - 1.69 13 262,978,303 10.1% 20,229,100 1.67
1.70 - 1.79 7 79,653,725 3.1% 11,379,104 1.72
1.80 - 1.89 4 15,584,496 0.6% 3,896,124 1.86
1.90 - 1.99 2 13,023,958 0.5% 6,511,979 1.94
2.00 - 2.29 6 256,037,831 9.8% 42,672,972 2.17
2.30 - 2.79 4 169,880,620 6.5% 42,470,155 2.38
2.80 - 3.49 1 10,800,000 0.4% 10,800,000 3.49
--- --------------- -----
Total/Wtd. Avg. 141 $ 2,604,402,687 100.0% $ 18,470,941 1.57
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
RANGE OF DEBT SERVICE AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
COVERAGE RATIOS MORTGAGE RATE MATURITY (MOS) LTV LTV
--------------- ------------- -------------- --- ---
1.17 - 1.19 6.975% 119.7 75.08 66.42
1.20 - 1.29 5.983% 107.8 76.53 68.33
1.30 - 1.39 5.876% 112.2 75.32 64.83
1.40 - 1.49 5.877% 115.0 73.69 62.91
1.50 - 1.59 5.881% 104.7 67.62 56.70
1.60 - 1.69 5.035% 73.2 56.94 54.40
1.70 - 1.79 5.115% 110.8 64.32 58.65
1.80 - 1.89 5.244% 96.2 67.74 62.71
1.90 - 1.99 4.939% 88.4 76.33 70.11
2.00 - 2.29 4.834% 110.6 50.62 43.98
2.30 - 2.79 4.975% 117.8 54.39 54.02
2.80 - 3.49 5.465% 120.0 35.70 29.79
Total/Wtd. Avg. 5.624% 107.0 68.30 60.22
MIN 1.17x
MAX 3.49x
WEIGHTED AVERAGE 1.57x
AGGREGATE POOL
DISTRIBUTION OF MORTGAGE INTEREST RATES
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
RANGE OF MORTGAGE MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
INTEREST RATES LOANS BALANCE ($) BALANCE BALANCE ($) RATIO
-------------- ----- ----------- ------- ----------- -----
4.280% - 4.500% 6 $ 181,559,000 7.0% $ 30,259,833 2.18
4.501% - 5.000% 8 425,525,356 16.3% 53,190,669 1.93
5.001% - 5.500% 29 350,930,307 13.5% 12,101,045 1.69
5.501% - 6.000% 62 941,985,289 36.2% 15,193,311 1.39
6.001% - 6.500% 27 622,424,168 23.9% 23,052,747 1.36
6.501% - 7.000% 8 66,728,567 2.6% 8,341,071 1.38
7.001% - 7.100% 1 15,250,000 0.6% 15,250,000 1.18
--- --------------- -----
Total/Wtd. Avg. 141 $ 2,604,402,687 100.0% $ 18,470,941 1.57
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
RANGE OF MORTGAGE AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
INTEREST RATES MORTGAGE RATE MATURITY (MOS) LTV LTV
-------------- ------------- -------------- --- ---
4.280% - 4.500% 4.479% 102.8 51.59 45.68
4.501% - 5.000% 4.859% 90.4 54.80 53.53
5.001% - 5.500% 5.388% 110.3 66.78 56.53
5.501% - 6.000% 5.787% 106.3 73.84 65.36
6.001% - 6.500% 6.223% 117.6 73.95 62.73
6.501% - 7.000% 6.661% 116.1 75.00 64.10
7.001% - 7.100% 7.100% 120.0 77.27 68.70
Total/Wtd. Avg. 5.624% 107.0 68.30 60.22
MIN 4.280%
MAX 7.100%
WEIGHTED AVERAGE 5.624%
A-6
AGGREGATE POOL
DISTRIBUTION OF CUT-OFF DATE LOAN TO VALUE RATIO
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
RANGE OF CUT-OFF DATE MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
LOAN-TO-VALUE RATIOS (%) LOANS BALANCE ($) BALANCE BALANCE ($) RATIO
------------------------ ----- ----------- ------- ----------- -----
35.70 - 49.99 6 $ 202,053,452 7.8% $33,675,575 2.24
50.00 - 54.99 7 337,889,335 13.0% 48,269,905 1.93
55.00 - 59.99 6 97,193,059 3.7% 16,198,843 1.99
60.00 - 64.99 12 256,620,922 9.9% 21,385,077 1.67
65.00 - 69.99 18 190,176,216 7.3% 10,565,345 1.39
70.00 - 74.99 28 327,534,334 12.6% 11,697,655 1.40
75.00 - 79.99 51 1,004,261,069 38.6% 19,691,394 1.37
80.00 - 82.91 13 188,674,301 7.2% 14,513,408 1.35
--- --------------- -----
Total/Wtd. Avg. 141 $ 2,604,402,687 100.0% $ 18,470,941 1.57
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
RANGE OF CUT-OFF DATE AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
LOAN-TO-VALUE RATIOS (%) MORTGAGE RATE MATURITY (MOS) LTV LTV
------------------------ ------------- -------------- --- ---
35.70 - 49.99 4.711% 117.1 45.08 35.90
50.00 - 54.99 4.902% 83.7 51.83 51.68
55.00 - 59.99 5.537% 115.9 56.71 48.55
60.00 - 64.99 5.650% 107.5 63.68 56.41
65.00 - 69.99 5.854% 119.7 67.39 60.93
70.00 - 74.99 5.934% 111.1 72.15 62.02
75.00 - 79.99 5.868% 106.8 77.41 67.45
80.00 - 82.91 5.841% 114.0 80.69 70.47
Total/Wtd. Avg. 5.624% 107.0 68.30 60.22
MIN 35.70
MAX 82.91
WEIGHTED AVERAGE 68.30
AGGREGATE POOL
DISTRIBUTION OF REMAINING TERM TO MATURITY
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
RANGE OF REMAINING MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
TERMS TO MATURITY (MOS) LOANS BALANCE ($) BALANCE BALANCE ($) RATIO
----------------------- ----- ----------- ------- ----------- -----
43 - 60 15 $ 371,471,352 14.3% $ 24,764,757 1.56
61 - 96 8 155,308,888 6.0% 19,413,611 1.45
97 - 108 6 88,261,944 3.4% 14,710,324 1.34
109 - 119 85 1,590,378,491 61.1% 18,710,335 1.61
120 - 120 23 332,892,500 12.8% 14,473,587 1.50
121 - 180 4 66,089,511 2.5% 16,522,378 1.32
--- --------------- -----
Total/Wtd. Avg. 141 $ 2,604,402,687 100.0% $ 18,470,941 1.57
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
RANGE OF REMAINING AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
TERMS TO MATURITY (MOS) MORTGAGE RATE MATURITY (MOS) LTV LTV
----------------------- ------------- -------------- --- ---
43 - 60 5.138% 57.7 63.45 62.21
61 - 96 5.742% 80.2 71.03 66.02
97 - 108 5.512% 105.9 76.53 65.94
109 - 119 5.635% 116.7 68.07 59.12
120 - 120 6.100% 120.0 73.01 61.31
121 - 180 5.586% 150.2 60.16 48.98
Total/Wtd. Avg. 5.624% 107.0 68.30 60.22
MIN 43 months
MAX 180 months
WEIGHTED AVERAGE 107 months
A-7
AGGREGATE POOL
DISTRIBUTION OF REMAINING AMORTIZATION TERM
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
RANGE OF REMAINING MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
AMORTIZATION TERMS (MOS) LOANS BALANCE ($) BALANCE BALANCE ($) RATIO
------------------------ ----- ----------- ------- ----------- -----
Interest Only 9 $ 191,665,000 7.4% $ 21,296,111 2.32
155 - 299 11 65,922,237 2.5% 5,992,931 1.43
300 - 349 11 315,484,546 12.1% 28,680,413 1.80
350 - 360 110 2,031,330,904 78.0% 18,466,645 1.46
--- --------------- -----
Total/Wtd. Avg. 141 $ 2,604,402,687 100.0% $ 18,470,941 1.57
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
RANGE OF REMAINING AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
AMORTIZATION TERMS (MOS) MORTGAGE RATE MATURITY (MOS) LTV LTV
------------------------ ------------- -------------- --- ---
Interest Only 4.877% 108.1 58.59 58.59
155 - 299 5.655% 132.0 63.17 40.21
300 - 349 5.392% 114.2 58.88 49.29
350 - 360 5.730% 105.0 70.85 62.72
Total/Wtd. Avg. 5.624% 107.0 68.30 60.22
MIN 155 months
MAX 360 months
WEIGHTED AVERAGE 351 months
AGGREGATE POOL
DISTRIBUTION OF ORIGINAL TERM TO MATURITY
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
RANGE OF ORIGINAL MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
TERMS TO MATURITY LOANS BALANCE ($) BALANCE BALANCE ($) RATIO
----------------- ----- ----------- ------- ----------- -----
59 - 60 15 $ 371,471,352 14.3% $ 24,764,757 1.56
61 - 96 8 155,308,888 6.0% 19,413,611 1.45
97 - 108 6 88,261,944 3.4% 14,710,324 1.34
109 - 119 2 268,910,606 10.3% 134,455,303 1.84
120 - 120 105 1,647,360,385 63.3% 15,689,147 1.55
121 - 180 5 73,089,511 2.8% 14,617,902 1.37
--- --------------- -----
Total/Wtd. Avg. 141 $ 2,604,402,687 100.0% $ 18,470,941 1.57
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
RANGE OF ORIGINAL AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
TERMS TO MATURITY MORTGAGE RATE MATURITY (MOS) LTV LTV
----------------- ------------- -------------- --- ---
59 - 60 5.138% 57.7 63.45 62.21
61 - 96 5.742% 80.2 71.03 66.02
97 - 108 5.512% 105.9 76.53 65.94
109 - 119 5.238% 114.0 57.42 49.02
120 - 120 5.793% 117.8 70.82 61.22
121 - 180 5.599% 147.3 60.61 49.75
Total/Wtd. Avg. 5.624% 107.0 68.30 60.22
MIN 59 months
MAX 180 months
WEIGHTED AVERAGE 109 months
A-8
AGGREGATE POOL
DISTRIBUTION OF PREPAYMENT PROVISIONS
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
PREPAYMENT TYPE LOANS BALANCE ($) BALANCE BALANCE ($) RATIO
--------------- ----- ----------- ------- ----------- -----
Defeasance 124 $ 2,479,602,609 95.2% $ 19,996,795 1.56
Greater of YM or 1% 16 120,100,077 4.6% 7,506,255 1.58
Defeasance / Declining Fee/YM 1 4,700,000 0.2% 4,700,000 1.40
--- --------------- ----- ------------ ----
Total/Wtd. Avg. 141 $ 2,604,402,687 100.0% $ 18,470,941 1.57
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
PREPAYMENT TYPE MORTGAGE RATE MATURITY (MOS) LTV LTV
--------------- ------------- -------------- --- ---
Defeasance 5.618% 107.1 68.31 60.26
Greater of YM or 1% 5.749% 105.6 67.91 59.12
Defeasance / Declining Fee/YM 6.010% 94.0 74.60 71.90
----- ----- ----- -----
Total/Wtd. Avg. 5.624% 107.0 68.30 60.22
AGGREGATE POOL
DISTRIBUTION OF LOCKBOX TYPES
PERCENTAGE OF
NUMBER OF AGGREGATE
MORTGAGE CUT-OFF DATE CUT-OFF DATE
LOCKBOXES LOANS BALANCE ($) BALANCE
--------- ----- ----------- -------
Hard 34 $ 1,384,552,935 53.2%
Soft 4 242,087,451 9.3%
AGGREGATE POOL
DISTRIBUTION OF ESCROWS
PERCENTAGE OF
NUMBER OF AGGREGATE
MORTGAGE CUT-OFF DATE CUT-OFF DATE
ESCROW TYPE LOANS BALANCE ($) BALANCE
----------- ----- ----------- -------
TILC 64 $ 1,271,769,686 54.1%(a)
Real Estate Tax 107 1,745,455,863 67.0%
Insurance 97 1,697,992,061 65.2%
Replacement Reserves 100 1,544,745,764 59.3%
(a) Percentage of total office, retail and industrial properties only.
A-9
AGGREGATE POOL
DISTRIBUTION OF PROPERTY TYPES
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
MORTGAGED CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
PROPERTY TYPES PROPERTIES BALANCE ($) BALANCE BALANCE ($) RATIO
-------------- ---------- ----------- ------- ----------- -----
Retail 58 $ 1,173,372,600 45.1% $ 20,230,562 1.57
Office 46 1,037,654,717 39.8% 22,557,711 1.58
Multifamily 19 166,807,031 6.4% 8,779,317 1.49
Industrial 10 78,380,438 3.0% 7,838,044 1.78
Hospitality 1 71,500,000 2.7% 71,500,000 1.51
Mixed Use 1 47,955,354 1.8% 47,955,354 1.26
Other 2 14,120,046 0.5% 7,060,023 1.22
Mobile Home Park 3 10,862,500 0.4% 3,620,833 1.31
Self-Storage 1 3,750,000 0.1% 3,750,000 1.52
--- --------------- -----
Total/Wtd. Avg. 141 $ 2,604,402,687 100.0% $ 18,470,941 1.57
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
PROPERTY TYPES MORTGAGE RATE MATURITY (MOS) LTV LTV
-------------- ------------- -------------- --- ---
Retail 5.632% 107.5 67.84 61.03
Office 5.617% 107.1 68.22 59.80
Multifamily 5.290% 90.0 70.13 60.94
Industrial 5.669% 118.4 66.61 55.01
Hospitality 6.360% 120.0 64.59 50.61
Mixed Use 5.550% 107.0 77.53 66.54
Other 5.350% 118.0 76.32 63.48
Mobile Home Park 5.880% 120.0 81.43 71.98
Self-Storage 6.455% 120.0 74.26 60.84
Total/Wtd. Avg. 5.624% 107.0 68.30 60.22
AGGREGATE POOL
GEOGRAPHIC DISTRIBUTION
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
MORTGAGED CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
PROPERTY STATE PROPERTIES BALANCE ($) BALANCE BALANCE ($) RATIO
-------------- ---------- ----------- ------- ----------- -----
New York 8 $ 567,465,832 21.8% $ 70,933,229 1.69
California 31 434,434,914 16.7% 14,014,029 1.51
Nevada 7 218,292,368 8.4% 31,184,624 1.66
Virginia 3 165,750,118 6.4% 55,250,039 1.33
Florida 9 136,588,047 5.2% 15,176,450 1.46
New Jersey 1 130,000,000 5.0% 130,000,000 2.36
Georgia 10 123,632,269 4.7% 12,363,227 1.61
Texas 16 107,857,915 4.1% 6,741,120 1.46
Michigan 5 103,244,495 4.0% 20,648,899 1.34
Illinois 5 90,096,221 3.5% 18,019,244 1.51
Maryland 3 75,733,587 2.9% 25,244,529 1.37
Colorado 5 68,520,297 2.6% 13,704,059 1.55
Mississippi 1 68,000,000 2.6% 68,000,000 1.30
Hawaii 1 61,000,000 2.3% 61,000,000 1.29
Pennsylvania 7 49,446,811 1.9% 7,063,830 1.45
North Carolina 3 42,570,267 1.6% 14,190,089 1.23
Oregon 2 24,925,201 1.0% 12,462,600 1.29
Arizona 6 22,779,838 0.9% 3,796,640 1.48
Alabama 2 19,696,280 0.8% 9,848,140 1.32
Wisconsin 3 18,593,067 0.7% 6,197,689 1.67
Utah 1 18,500,000 0.7% 18,500,000 1.45
Washington 3 17,260,000 0.7% 5,753,333 1.58
Missouri 3 17,156,399 0.7% 5,718,800 1.59
Louisiana 1 6,170,549 0.2% 6,170,549 1.78
South Carolina 1 5,540,000 0.2% 5,540,000 1.30
District of Columbia 1 3,044,845 0.1% 3,044,845 1.17
Connecticut 1 3,000,000 0.1% 3,000,000 1.38
Idaho 1 2,555,500 0.1% 2,555,500 1.31
Tennessee 1 2,547,867 0.1% 2,547,867 1.49
--- --------------- -----
Total/Wtd. Avg. 141 $ 2,604,402,687 100.0% $ 18,470,941 1.57
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
PROPERTY STATE MORTGAGE RATE MATURITY (MOS) LTV LTV
-------------- ------------- -------------- --- ---
New York 5.569% 110.4 63.64 55.31
California 5.826% 117.3 68.17 57.20
Nevada 4.924% 65.0 53.57 52.77
Virginia 6.020% 119.4 73.28 62.97
Florida 5.777% 117.6 77.10 65.32
New Jersey 4.980% 118.0 53.21 53.21
Georgia 5.338% 85.5 71.93 66.81
Texas 5.563% 96.4 73.96 65.83
Michigan 5.657% 111.2 78.94 66.85
Illinois 6.029% 117.0 73.76 63.16
Maryland 5.937% 117.9 72.86 66.37
Colorado 5.793% 92.2 73.86 66.61
Mississippi 5.850% 120.0 80.00 67.53
Hawaii 6.000% 60.0 78.21 75.37
Pennsylvania 5.896% 116.5 70.54 60.03
North Carolina 5.669% 140.0 66.17 65.34
Oregon 5.511% 115.2 76.12 64.44
Arizona 5.723% 95.4 73.27 64.97
Alabama 5.654% 117.4 77.25 66.09
Wisconsin 5.160% 110.9 72.44 61.92
Utah 6.187% 120.0 75.08 64.02
Washington 5.176% 93.1 78.71 72.09
Missouri 5.882% 118.4 74.18 57.11
Louisiana 5.785% 115.0 64.95 55.00
South Carolina 6.218% 120.0 78.03 60.86
District of Columbia 6.350% 118.0 64.10 55.00
Connecticut 6.100% 120.0 75.00 63.78
Idaho 5.880% 120.0 81.09 71.67
Tennessee 5.965% 119.0 77.21 65.47
Total/Wtd. Avg. 5.624% 107.0 68.30 60.22
A-10
LOAN GROUP 1
DISTRIBUTION BY LOAN TYPE
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
LOAN TYPE LOANS BALANCE ($) BALANCE BALANCE ($) RATIO
--------- ----- ----------- ------- ----------- -----
Amortizing 82 $ 1,419,349,823 58.5% $ 17,309,144 1.45
Interest Only, Then Amortizing 32 839,468,333 34.6% 26,233,385 1.61
Interest Only 5 167,915,000 6.9% 33,583,000 2.37
--- --------------- -----
Total/Wtd. Avg. 119 $ 2,426,733,156 100.0% $ 20,392,716 1.57
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
LOAN TYPE MORTGAGE RATE MATURITY (MOS) LTV LTV
--------- ------------- -------------- --- ---
Amortizing 5.804% 108.5 70.80 60.78
Interest Only, Then Amortizing 5.520% 106.1 66.07 59.89
Interest Only 4.942% 115.3 55.68 55.68
Total/Wtd. Avg. 5.646% 108.1 68.12 60.12
LOAN GROUP 1
DISTRIBUTION OF CUT-OFF DATE PRINCIPAL BALANCES
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
RANGE OF CUT-OFF DATE MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
PRINCIPAL BALANCES ($) LOANS BALANCE ($) BALANCE BALANCE ($) RATIO
---------------------- ----- ----------- ------- ----------- -----
534,283 - 999,999 1 $ 534,283 0.0% $ 534,283 1.49
1,000,000 - 1,999,999 3 4,738,392 0.2% 1,579,464 1.57
2,000,000 - 2,999,999 10 26,701,938 1.1% 2,670,194 1.46
3,000,000 - 3,999,999 12 41,679,930 1.7% 3,473,327 1.51
4,000,000 - 5,999,999 18 90,911,285 3.7% 5,050,627 1.53
6,000,000 - 7,999,999 11 77,801,065 3.2% 7,072,824 1.57
8,000,000 - 9,999,999 18 160,202,794 6.6% 8,900,155 1.52
10,000,000 - 14,999,999 9 110,004,285 4.5% 12,222,698 1.60
15,000,000 - 19,999,999 9 149,577,227 6.2% 16,619,692 1.35
20,000,000 - 29,999,999 9 214,236,691 8.8% 23,804,077 1.53
30,000,000 - 39,999,999 2 70,050,000 2.9% 35,025,000 1.22
40,000,000 - 49,999,999 5 228,755,354 9.4% 45,751,071 1.41
50,000,000 - 99,999,999 7 530,433,042 21.9% 75,776,149 1.49
100,000,000 - 149,999,999 3 377,558,092 15.6% 125,852,697 1.69
150,000,000 - 189,548,779 2 343,548,779 14.2% 171,774,389 1.92
--- --------------- -----
Total/Wtd. Avg. 119 $ 2,426,733,156 100.0% $ 20,392,716 1.57
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
RANGE OF CUT-OFF DATE AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
PRINCIPAL BALANCES ($) MORTGAGE RATE MATURITY (MOS) LTV LTV
---------------------- ------------- -------------- --- ---
534,283 - 999,999 5.750% 119.0 57.20 43.98
1,000,000 - 1,999,999 6.016% 91.4 65.86 57.65
2,000,000 - 2,999,999 6.000% 107.2 72.10 59.05
3,000,000 - 3,999,999 5.738% 107.5 70.95 61.71
4,000,000 - 5,999,999 5.803% 115.5 69.89 58.93
6,000,000 - 7,999,999 5.737% 117.9 71.81 60.56
8,000,000 - 9,999,999 5.741% 113.4 69.87 59.52
10,000,000 - 14,999,999 5.667% 109.9 70.79 60.71
15,000,000 - 19,999,999 5.947% 113.2 76.17 65.65
20,000,000 - 29,999,999 5.855% 109.3 75.35 67.18
30,000,000 - 39,999,999 5.765% 131.8 72.10 68.12
40,000,000 - 49,999,999 5.570% 116.0 71.73 63.80
50,000,000 - 99,999,999 5.978% 105.9 71.87 62.62
100,000,000 - 149,999,999 5.731% 117.6 66.81 59.70
150,000,000 - 189,548,779 4.650% 81.2 48.94 46.11
Total/Wtd. Avg. 5.646% 108.1 68.12 60.12
MIN 534,283
MAX 189,548,779
AVERAGE 20,392,716
A-11
LOAN GROUP 1
DISTRIBUTION OF DEBT SERVICE COVERAGE RATIOS
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
RANGE OF DEBT SERVICE MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
COVERAGE RATIOS LOANS BALANCE ($) BALANCE BALANCE ($) RATIO
--------------- ----- ----------- ------- ----------- -----
1.17 - 1.19 2 $ 18,294,845 0.8% $ 9,147,423 1.18
1.20 - 1.29 20 453,561,534 18.7% 22,678,077 1.25
1.30 - 1.39 24 608,499,758 25.1% 25,354,157 1.34
1.40 - 1.49 28 311,572,519 12.8% 11,127,590 1.45
1.50 - 1.59 17 268,386,224 11.1% 15,787,425 1.52
1.60 - 1.69 12 255,578,303 10.5% 21,298,192 1.67
1.70 - 1.79 5 69,217,564 2.9% 13,843,513 1.72
1.80 - 1.89 1 7,000,000 0.3% 7,000,000 1.85
1.90 - 1.99 1 6,703,958 0.3% 6,703,958 1.92
2.00 - 2.29 4 247,237,831 10.2% 61,809,458 2.17
2.30 - 2.79 4 169,880,620 7.0% 42,470,155 2.38
2.80 - 3.49 1 10,800,000 0.4% 10,800,000 3.49
--- -------------- -----
Total/Wtd. Avg. 119 $2,426,733,156 100.0% $ 20,392,716 1.57
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
RANGE OF DEBT SERVICE AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
COVERAGE RATIOS MORTGAGE RATE MATURITY (MOS) LTV LTV
--------------- ------------- -------------- --- ---
1.17 - 1.19 6.975% 119.7 75.08 66.42
1.20 - 1.29 6.009% 107.6 76.73 68.64
1.30 - 1.39 5.916% 116.3 75.25 64.30
1.40 - 1.49 5.897% 117.6 74.04 62.89
1.50 - 1.59 5.916% 100.5 69.15 59.84
1.60 - 1.69 5.042% 72.2 56.55 54.21
1.70 - 1.79 5.143% 115.1 62.89 56.99
1.80 - 1.89 5.720% 120.0 64.81 56.98
1.90 - 1.99 5.390% 118.0 72.87 60.78
2.00 - 2.29 4.848% 111.8 49.91 43.12
2.30 - 2.79 4.975% 117.8 54.39 54.02
2.80 - 3.49 5.465% 120.0 35.70 29.79
Total/Wtd. Avg. 5.646% 108.1 68.12 60.12
MIN 1.17x
MAX 3.49x
WEIGHTED AVERAGE 1.57x
LOAN GROUP 1
DISTRIBUTION OF MORTGAGE INTEREST RATES
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
RANGE OF MORTGAGE MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
INTEREST RATES LOANS BALANCE ($) BALANCE BALANCE ($) RATIO
-------------- ----- ----------- ------- ----------- -----
4.400% - 4.500% 2 $ 157,809,000 6.5% $ 78,904,500 2.21
4.501% - 5.000% 6 414,725,356 17.1% 69,120,893 1.93
5.001% - 5.500% 25 286,317,063 11.8% 11,452,683 1.76
5.501% - 6.000% 50 863,479,002 35.6% 17,269,580 1.40
6.001% - 6.500% 27 622,424,168 25.6% 23,052,747 1.36
6.501% - 7.000% 8 66,728,567 2.7% 8,341,071 1.38
7.001% - 7.100% 1 15,250,000 0.6% 15,250,000 1.18
--- --------------- -----
Total/Wtd. Avg. 119 $ 2,426,733,156 100.0% $ 20,392,716 1.57
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
RANGE OF MORTGAGE AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
INTEREST RATES MORTGAGE RATE MATURITY (MOS) LTV LTV
-------------- ------------- -------------- --- ---
4.400% - 4.500% 4.488% 109.7 47.44 40.64
4.501% - 5.000% 4.861% 90.0 54.49 53.42
5.001% - 5.500% 5.405% 114.8 66.40 56.90
5.501% - 6.000% 5.795% 106.7 74.12 65.64
6.001% - 6.500% 6.223% 117.6 73.95 62.73
6.501% - 7.000% 6.661% 116.1 75.00 64.10
7.001% - 7.100% 7.100% 120.0 77.27 68.70
Total/Wtd. Avg. 5.646% 108.1 68.12 60.12
MIN 4.400%
MAX 7.100%
WEIGHTED AVERAGE 5.646%
A-12
LOAN GROUP 1
DISTRIBUTION OF CUT-OFF DATE LOAN TO VALUE RATIO
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
RANGE OF CUT-OFF DATE MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
LOAN-TO-VALUE RATIOS (%) LOANS BALANCE ($) BALANCE BALANCE ($) RATIO
------------------------ ----- ----------- ------- ----------- -----
35.70 - 49.99 5 $ 187,053,452 7.7% $37,410,690 2.30
50.00 - 54.99 5 332,232,293 13.7% 66,446,459 1.94
55.00 - 59.99 3 83,522,579 3.4% 27,840,860 2.05
60.00 - 64.99 11 252,424,760 10.4% 22,947,705 1.67
65.00 - 69.99 17 182,390,775 7.5% 10,728,869 1.39
70.00 - 74.99 26 298,946,834 12.3% 11,497,955 1.40
75.00 - 79.99 45 928,107,825 38.2% 20,624,618 1.36
80.00 - 82.91 7 162,054,638 6.7% 23,150,663 1.31
--- --------------- -----
Total/Wtd. Avg. 119 $ 2,426,733,156 100.0% $ 20,392,716 1.57
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
RANGE OF CUT-OFF DATE AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
LOAN-TO-VALUE RATIOS (%) MORTGAGE RATE MATURITY (MOS) LTV LTV
------------------------ ------------- -------------- --- ---
35.70 - 49.99 4.667% 112.1 45.47 38.75
50.00 - 54.99 4.891% 83.2 51.80 51.79
55.00 - 59.99 5.536% 116.1 56.38 48.30
60.00 - 64.99 5.651% 107.3 63.67 56.45
65.00 - 69.99 5.852% 119.8 67.36 61.06
70.00 - 74.99 5.989% 114.9 72.22 61.64
75.00 - 79.99 5.919% 109.6 77.43 67.14
80.00 - 82.91 5.947% 117.9 80.66 69.65
Total/Wtd. Avg. 5.646% 108.1 68.12 60.12
MIN 35.70
MAX 82.91
WEIGHTED AVERAGE 68.12
LOAN GROUP 1
DISTRIBUTION OF REMAINING TERM TO MATURITY
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
RANGE OF REMAINING MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
TERMS TO MATURITY (MOS) LOANS BALANCE ($) BALANCE BALANCE ($) RATIO
----------------------- ----- ----------- ------- ----------- -----
43 - 60 8 $ 282,870,609 11.7% $ 35,358,826 1.58
61 - 96 8 155,308,888 6.4% 19,413,611 1.45
97 - 108 3 71,511,944 2.9% 23,837,315 1.28
109 - 119 77 1,543,922,204 63.6% 20,050,938 1.62
120 - 120 20 322,030,000 13.3% 16,101,500 1.50
121 - 149 3 51,089,511 2.1% 17,029,837 1.27
--- --------------- -----
Total/Wtd. Avg. 119 $ 2,426,733,156 100.0% $ 20,392,716 1.57
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
RANGE OF REMAINING AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
TERMS TO MATURITY (MOS) MORTGAGE RATE MATURITY (MOS) LTV LTV
----------------------- ------------- -------------- --- ---
43 - 60 5.137% 57.6 59.40 58.85
61 - 96 5.742% 80.2 71.03 66.02
97 - 108 5.646% 106.6 77.99 67.09
109 - 119 5.633% 116.7 68.07 59.16
120 - 120 6.108% 120.0 72.73 60.95
121 - 149 5.682% 141.5 66.00 63.24
Total/Wtd. Avg. 5.646% 108.1 68.12 60.12
MIN 43 months
MAX 149 months
WEIGHTED AVERAGE 108 months
A-13
LOAN GROUP 1
DISTRIBUTION OF REMAINING AMORTIZATION TERM
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
RANGE OF REMAINING MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
AMORTIZATION TERMS (MOS) LOANS BALANCE ($) BALANCE BALANCE ($) RATIO
------------------------ ----- ----------- ------- ----------- -----
Interest Only 5 $ 167,915,000 6.9% $ 33,583,000 2.37
155 - 299 10 50,922,237 2.1% 5,092,224 1.41
300 - 349 11 315,484,546 13.0% 28,680,413 1.80
350 - 360 93 1,892,411,373 78.0% 20,348,509 1.47
--- --------------- -----
Total/Wtd. Avg. 119 $ 2,426,733,156 100.0% $ 20,392,716 1.57
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
RANGE OF REMAINING AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
AMORTIZATION TERMS (MOS) MORTGAGE RATE MATURITY (MOS) LTV LTV
------------------------ ------------- -------------- --- ---
Interest Only 4.942% 115.3 55.68 55.68
155 - 299 5.771% 117.9 69.91 51.93
300 - 349 5.392% 114.2 58.88 49.29
350 - 360 5.748% 106.2 70.71 62.54
Total/Wtd. Avg. 5.646% 108.1 68.12 60.12
MIN 155 months
MAX 360 months
WEIGHTED AVERAGE 352 months
LOAN GROUP 1
DISTRIBUTION OF ORIGINAL TERM TO MATURITY
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
RANGE OF ORIGINAL MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
TERMS TO MATURITY LOANS BALANCE ($) BALANCE BALANCE ($) RATIO
----------------- ----- ----------- ------- ----------- -----
59 - 60 8 $ 282,870,609 11.7% $35,358,826 1.58
61 - 96 8 155,308,888 6.4% 19,413,611 1.45
97 - 108 3 71,511,944 2.9% 23,837,315 1.28
109 - 119 2 268,910,606 11.1% 134,455,303 1.84
120 - 120 94 1,590,041,598 65.5% 16,915,336 1.56
121 - 151 4 58,089,511 2.4% 14,522,378 1.34
--- --------------- -----
Total/Wtd. Avg. 119 $ 2,426,733,156 100.0% $20,392,716 1.57
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
RANGE OF ORIGINAL AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
TERMS TO MATURITY MORTGAGE RATE MATURITY (MOS) LTV LTV
----------------- ------------- -------------- --- ---
59 - 60 5.137% 57.6 59.40 58.85
61 - 96 5.742% 80.2 71.03 66.02
97 - 108 5.646% 106.6 77.99 67.09
109 - 119 5.238% 114.0 57.42 49.02
120 - 120 5.795% 117.8 70.83 61.25
121 - 151 5.687% 138.9 65.86 62.48
Total/Wtd. Avg. 5.646% 108.1 68.12 60.12
MIN 59 months
MAX 151 months
WEIGHTED AVERAGE 111 months
A-14
LOAN GROUP 1
DISTRIBUTION OF PREPAYMENT PROVISIONS
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
PREPAYMENT TYPE LOANS BALANCE ($) BALANCE BALANCE ($) RATIO
--------------- ----- ----------- ------- ----------- -----
Defeasance 102 $ 2,301,933,078 94.9% $ 22,567,971 1.57
Greater of YM or 1% 16 120,100,077 4.9% 7,506,255 1.58
Defeasance / Declining Fee/YM 1 4,700,000 0.2% 4,700,000 1.40
--- --------------- -----
Total/Wtd. Avg. 119 $ 2,426,733,156 100.0% $ 20,392,716 1.57
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
PREPAYMENT TYPE MORTGAGE RATE MATURITY (MOS) LTV LTV
--------------- ------------- -------------- --- ---
Defeasance 5.640% 108.3 68.12 60.15
Greater of YM or 1% 5.749% 105.6 67.91 59.12
Defeasance / Declining Fee/YM 6.010% 94.0 74.60 71.90
Total/Wtd. Avg. 5.646% 108.1 68.12 60.12
LOAN GROUP 1
DISTRIBUTION OF LOCKBOX TYPES
PERCENTAGE OF
NUMBER OF AGGREGATE
MORTGAGE CUT-OFF DATE CUT-OFF DATE
LOCKBOXES LOANS BALANCE ($) BALANCE
--------- ----- ----------- -------
Hard 34 $ 1,384,552,935 57.1%
Soft 4 242,087,451 10.0%
LOAN GROUP 1
DISTRIBUTION OF ESCROWS
PERCENTAGE OF
NUMBER OF AGGREGATE
MORTGAGE CUT-OFF DATE CUT-OFF DATE
ESCROW TYPE LOANS BALANCE ($) BALANCE
----------- ----- ----------- -------
TILC 64 $ 1,271,769,686 52.4%(a)
Real Estate Tax 88 1,593,586,332 65.7%
Insurance 82 1,561,986,446 64.4%
Replacement Reserves 81 1,392,876,233 57.4%
(a) Percentage of total office, retail and industrial properties only.
A-15
LOAN GROUP 1
DISTRIBUTION OF PROPERTY TYPES
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
MORTGAGED CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
PROPERTY TYPES PROPERTIES BALANCE ($) BALANCE BALANCE ($) RATIO
-------------- ---------- ----------- ------- ----------- -----
Retail 58 $1,173,372,600 48.4% $ 20,230,562 1.57
Office 46 1,037,654,717 42.8% 22,557,711 1.58
Industrial 10 78,380,438 3.2% 7,838,044 1.78
Hospitality 1 71,500,000 2.9% 71,500,000 1.51
Mixed Use 1 47,955,354 2.0% 47,955,354 1.26
Other 2 14,120,046 0.6% 7,060,023 1.22
Self-Storage 1 3,750,000 0.2% 3,750,000 1.52
--- -------------- -----
Total/Wtd. Avg. 119 $2,426,733,156 100.0% $ 20,392,716 1.57
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
PROPERTY TYPES MORTGAGE RATE MATURITY (MOS) LTV LTV
-------------- ------------- -------------- --- ---
Retail 5.632% 107.5 67.84 61.03
Office 5.617% 107.1 68.22 59.80
Industrial 5.669% 118.4 66.61 55.01
Hospitality 6.360% 120.0 64.59 50.61
Mixed Use 5.550% 107.0 77.53 66.54
Other 5.350% 118.0 76.32 63.48
Self-Storage 6.455% 120.0 74.26 60.84
Total/Wtd. Avg. 5.646% 108.1 68.12 60.12
LOAN GROUP 1
GEOGRAPHIC DISTRIBUTION
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
MORTGAGED CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
PROPERTY STATE PROPERTIES BALANCE ($) BALANCE BALANCE ($) RATIO
-------------- ---------- ----------- ------- ----------- -----
New York 8 567,465,832 23.4% $ 70,933,229 1.69
California 30 419,434,914 17.3% 13,981,164 1.51
Nevada 6 215,895,368 8.9% 35,982,561 1.67
Virginia 3 165,750,118 6.8% 55,250,039 1.33
Florida 9 136,588,047 5.6% 15,176,450 1.46
New Jersey 1 130,000,000 5.4% 130,000,000 2.36
Michigan 5 103,244,495 4.3% 20,648,899 1.34
Illinois 5 90,096,221 3.7% 18,019,244 1.51
Texas 11 78,525,311 3.2% 7,138,665 1.39
Maryland 3 75,733,587 3.1% 25,244,529 1.37
Colorado 5 68,520,297 2.8% 13,704,059 1.55
Mississippi 1 68,000,000 2.8% 68,000,000 1.30
Hawaii 1 61,000,000 2.5% 61,000,000 1.29
Georgia 6 54,521,759 2.2% 9,086,960 1.95
North Carolina 3 42,570,267 1.8% 14,190,089 1.23
Pennsylvania 3 33,582,894 1.4% 11,194,298 1.39
Oregon 2 24,925,201 1.0% 12,462,600 1.29
Arizona 6 22,779,838 0.9% 3,796,640 1.48
Utah 1 18,500,000 0.8% 18,500,000 1.45
Missouri 3 17,156,399 0.7% 5,718,800 1.59
Wisconsin 1 7,793,067 0.3% 7,793,067 1.49
Louisiana 1 6,170,549 0.3% 6,170,549 1.78
South Carolina 1 5,540,000 0.2% 5,540,000 1.30
Alabama 1 4,346,280 0.2% 4,346,280 1.41
District of Columbia 1 3,044,845 0.1% 3,044,845 1.17
Connecticut 1 3,000,000 0.1% 3,000,000 1.38
Tennessee 1 2,547,867 0.1% 2,547,867 1.49
--- --------------- -----
Total/Wtd. Avg. 119 $ 2,426,733,156 100.0% $ 20,392,716 1.57
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
PROPERTY STATE MORTGAGE RATE MATURITY (MOS) LTV LTV
-------------- ------------- -------------- --- ---
New York 5.569% 110.4 63.64 55.31
California 5.847% 115.1 69.17 59.23
Nevada 4.913% 64.4 53.24 52.54
Virginia 6.020% 119.4 73.28 62.97
Florida 5.777% 117.6 77.10 65.32
New Jersey 4.980% 118.0 53.21 53.21
Michigan 5.657% 111.2 78.94 66.85
Illinois 6.029% 117.0 73.76 63.16
Texas 5.780% 102.5 72.92 63.31
Maryland 5.937% 117.9 72.86 66.37
Colorado 5.793% 92.2 73.86 66.61
Mississippi 5.850% 120.0 80.00 67.53
Hawaii 6.000% 60.0 78.21 75.37
Georgia 5.242% 115.5 69.21 63.91
North Carolina 5.669% 140.0 66.17 65.34
Pennsylvania 5.956% 115.6 75.72 64.65
Oregon 5.511% 115.2 76.12 64.44
Arizona 5.723% 95.4 73.27 64.97
Utah 6.187% 120.0 75.08 64.02
Missouri 5.882% 118.4 74.18 57.11
Wisconsin 5.730% 119.0 80.34 67.65
Louisiana 5.785% 115.0 64.95 55.00
South Carolina 6.218% 120.0 78.03 60.86
Alabama 5.880% 119.0 79.02 66.84
District of Columbia 6.350% 118.0 64.10 55.00
Connecticut 6.100% 120.0 75.00 63.78
Tennessee 5.965% 119.0 77.21 65.47
Total/Wtd. Avg. 5.646% 108.1 68.12 60.12
A-16
LOAN GROUP 2
DISTRIBUTION BY LOAN TYPE
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
LOAN TYPE LOANS BALANCE ($) BALANCE BALANCE ($) RATIO
--------- ----- ----------- ------- ----------- -----
Interest Only, Then Amortizing 9 $ 79,075,000 44.5% $ 8,786,111 1.40
Amortizing 8 59,844,531 33.7% 7,480,566 1.38
Interest Only 4 23,750,000 13.4% 5,937,500 1.95
Fully Amortizing 1 15,000,000 8.4% 15,000,000 1.50
-- ------------ -----
Total/Wtd. Avg. 22 $177,669,531 100.0% $ 8,075,888 1.48
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
LOAN TYPE MORTGAGE RATE MATURITY (MOS) LTV LTV
--------- ------------- -------------- --- ---
Interest Only, Then Amortizing 5.457% 87.9 74.38 67.17
Amortizing 5.529% 88.8 70.47 62.64
Interest Only 4.419% 57.0 79.18 79.18
Fully Amortizing 5.260% 180.0 40.27 0.44
Total/Wtd. Avg. 5.326% 91.9 70.82 61.61
LOAN GROUP 2
DISTRIBUTION OF CUT-OFF DATE PRINCIPAL BALANCES
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
RANGE OF CUT-OFF DATE MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
PRINCIPAL BALANCES ($) LOANS BALANCE ($) BALANCE BALANCE ($) RATIO
---------------------- ----- ----------- ------- ----------- -----
1,397,221 - 1,999,999 2 $ 2,794,496 1.6% $ 1,397,248 1.85
2,000,000 - 2,999,999 2 4,952,500 2.8% 2,476,250 1.31
3,000,000 - 3,999,999 2 6,597,163 3.7% 3,298,581 1.72
4,000,000 - 5,999,999 6 31,505,928 17.7% 5,250,988 1.61
6,000,000 - 7,999,999 4 27,745,441 15.6% 6,936,360 1.66
8,000,000 - 9,999,999 1 8,873,259 5.0% 8,873,259 1.43
10,000,000 - 14,999,999 1 14,925,000 8.4% 14,925,000 1.41
15,000,000 - 19,999,999 2 30,350,000 17.1% 15,175,000 1.39
20,000,000 - 28,738,243 2 49,925,743 28.1% 24,962,872 1.33
-- ------------- -----
Total/Wtd. Avg. 22 $ 177,669,531 100.0% $ 8,075,888 1.48
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
RANGE OF CUT-OFF DATE AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
PRINCIPAL BALANCES ($) MORTGAGE RATE MATURITY (MOS) LTV LTV
---------------------- ------------- -------------- --- ---
1,397,221 - 1,999,999 5.675% 118.0 53.35 44.88
2,000,000 - 2,999,999 5.880% 120.0 81.85 72.34
3,000,000 - 3,999,999 5.183% 111.8 69.94 60.01
4,000,000 - 5,999,999 5.151% 92.3 73.48 67.32
6,000,000 - 7,999,999 4.955% 86.9 74.18 68.63
8,000,000 - 9,999,999 5.870% 118.0 59.16 50.06
10,000,000 - 14,999,999 5.460% 59.0 75.00 70.84
15,000,000 - 19,999,999 5.427% 148.1 58.72 33.54
20,000,000 - 28,738,243 5.389% 58.4 75.46 70.55
Total/Wtd. Avg. 5.326% 91.9 70.82 61.61
MIN 1,397,221
MAX 28,738,243
AVERAGE 8,075,888
A-17
LOAN GROUP 2
DISTRIBUTION OF DEBT SERVICE COVERAGE RATIOS
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
RANGE OF DEBT SERVICE MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
COVERAGE RATIOS LOANS BALANCE ($) BALANCE BALANCE ($) RATIO
--------------- ----- ----------- ------- ----------- -----
1.22 - 1.29 3 $ 25,559,767 14.4% $ 8,519,922 1.26
1.30 - 1.39 7 71,770,847 40.4% 10,252,978 1.33
1.40 - 1.49 2 23,798,259 13.4% 11,899,129 1.42
1.50 - 1.59 1 15,000,000 8.4% 15,000,000 1.50
1.60 - 1.69 1 7,400,000 4.2% 7,400,000 1.66
1.70 - 1.79 2 10,436,161 5.9% 5,218,081 1.76
1.80 - 1.89 3 8,584,496 4.8% 2,861,499 1.86
1.90 - 1.99 1 6,320,000 3.6% 6,320,000 1.96
2.00 - 2.27 2 8,800,000 5.0% 4,400,000 2.20
-- ------------- -----
Total/Wtd. Avg. 22 $ 177,669,531 100.0% $ 8,075,888 1.48
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
RANGE OF DEBT SERVICE AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
COVERAGE RATIOS MORTGAGE RATE MATURITY (MOS) LTV LTV
--------------- ------------- -------------- --- ---
1.22 - 1.29 5.510% 111.8 73.06 62.82
1.30 - 1.39 5.535% 76.9 75.88 69.33
1.40 - 1.49 5.613% 81.0 69.09 63.09
1.50 - 1.59 5.260% 180.0 40.27 0.44
1.60 - 1.69 4.790% 105.0 70.48 60.66
1.70 - 1.79 4.926% 81.9 73.79 69.62
1.80 - 1.89 4.856% 76.9 70.14 67.38
1.90 - 1.99 4.460% 57.0 80.00 80.00
2.00 - 2.27 4.427% 75.5 70.67 67.92
Total/Wtd. Avg. 5.326% 91.9 70.82 61.61
MIN 1.22x
MAX 2.27x
WEIGHTED AVERAGE 1.48x
LOAN GROUP 2
DISTRIBUTION OF MORTGAGE INTEREST RATES
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
RANGE OF MORTGAGE MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
INTEREST RATES LOANS BALANCE ($) BALANCE BALANCE ($) RATIO
-------------- ----- ----------- ------- ----------- -----
4.280% - 4.500% 4 $ 23,750,000 13.4% $ 5,937,500 1.95
4.501% - 5.000% 2 10,800,000 6.1% 5,400,000 1.79
5.001% - 5.500% 4 64,613,243 36.4% 16,153,311 1.37
5.501% - 5.910% 12 78,506,288 44.2% 6,542,191 1.38
-- ------------- -----
Total/Wtd. Avg. 22 $ 177,669,531 100.0% $ 8,075,888 1.48
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
RANGE OF MORTGAGE AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
INTEREST RATES MORTGAGE RATE MATURITY (MOS) LTV LTV
-------------- ------------- -------------- --- ---
4.280% - 4.500% 4.419% 57.0 79.18 79.18
4.501% - 5.000% 4.749% 105.0 66.75 57.78
5.001% - 5.500% 5.313% 90.3 68.50 54.88
5.501% - 5.910% 5.690% 101.9 70.77 62.37
Total/Wtd. Avg. 5.326% 91.9 70.82 61.61
MIN 4.280%
MAX 5.910%
WEIGHTED AVERAGE 5.326%
A-18
LOAN GROUP 2
DISTRIBUTION OF CUT-OFF DATE LOAN TO VALUE RATIO
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
RANGE OF CUT-OFF DATE MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
LOAN-TO-VALUE RATIOS (%) LOANS BALANCE ($) BALANCE BALANCE ($) RATIO
------------------------ ----- ----------- ------- ----------- -----
40.27 - 49.99 1 $ 15,000,000 8.4% $15,000,000 1.50
50.00 - 54.99 2 5,657,042 3.2% 2,828,521 1.38
55.00 - 59.99 3 13,670,480 7.7% 4,556,827 1.63
60.00 - 64.99 1 4,196,161 2.4% 4,196,161 1.78
65.00 - 69.99 1 7,785,441 4.4% 7,785,441 1.34
70.00 - 74.99 2 28,587,500 16.1% 14,293,750 1.45
75.00 - 79.99 6 76,153,243 42.9% 12,692,207 1.43
80.00 - 82.66 6 26,619,663 15.0% 4,436,610 1.57
-- ------------- -----
Total/Wtd. Avg. 22 $ 177,669,531 100.0% $ 8,075,888 1.48
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
RANGE OF CUT-OFF DATE AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
LOAN-TO-VALUE RATIOS (%) MORTGAGE RATE MATURITY (MOS) LTV LTV
------------------------ ------------- -------------- --- ---
40.27 - 49.99 5.260% 180.0 40.27 0.44
50.00 - 54.99 5.577% 112.7 53.67 45.29
55.00 - 59.99 5.545% 114.8 58.69 50.10
60.00 - 64.99 5.620% 119.0 64.56 54.18
65.00 - 69.99 5.910% 118.0 68.29 57.87
70.00 - 74.99 5.353% 70.9 71.47 66.03
75.00 - 79.99 5.242% 73.1 77.16 71.25
80.00 - 82.66 5.193% 90.2 80.82 75.41
Total/Wtd. Avg. 5.326% 91.9 70.82 61.61
MIN 40.27
MAX 82.66
WEIGHTED AVERAGE 70.82
LOAN GROUP 2
DISTRIBUTION OF REMAINING TERM TO MATURITY
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
RANGE OF REMAINING MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
TERMS TO MATURITY (MOS) LOANS BALANCE ($) BALANCE BALANCE ($) RATIO
----------------------- ----- ----------- ------- ----------- -----
57 - 60 7 $ 88,600,743 49.9% $ 12,657,249 1.51
97 - 108 3 16,750,000 9.4% 5,583,333 1.59
109 - 119 8 46,456,288 26.1% 5,807,036 1.40
120 - 120 3 10,862,500 6.1% 3,620,833 1.31
121 - 180 1 15,000,000 8.4% 15,000,000 1.50
-- ------------- -----
Total/Wtd. Avg. 22 $ 177,669,531 100.0% $ 8,075,888 1.48
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
RANGE OF REMAINING AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
TERMS TO MATURITY (MOS) MORTGAGE RATE MATURITY (MOS) LTV LTV
----------------------- ------------- -------------- --- ---
57 - 60 5.141% 58.1 76.38 72.91
97 - 108 4.941% 102.9 70.31 61.02
109 - 119 5.710% 117.2 67.79 57.60
120 - 120 5.880% 120.0 81.43 71.98
121 - 180 5.260% 180.0 40.27 0.44
Total/Wtd. Avg. 5.326% 91.9 70.82 61.61
MIN 57 months
MAX 180 months
WEIGHTED AVERAGE 92 months
A-19
LOAN GROUP 2
DISTRIBUTION OF REMAINING AMORTIZATION TERM
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
RANGE OF REMAINING MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
AMORTIZATION TERMS (MOS) LOANS BALANCE ($) BALANCE BALANCE ($) RATIO
------------------------ ----- ----------- ------- ----------- -----
Interest Only 4 $ 23,750,000 13.4% $ 5,937,500 1.95
180 - 299 1 15,000,000 8.4% 15,000,000 1.50
350 - 360 17 138,919,531 78.2% 8,171,737 1.39
-- ------------- -----
Total/Wtd. Avg. 22 $ 177,669,531 100.0% $ 8,075,888 1.48
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
RANGE OF REMAINING AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
AMORTIZATION TERMS (MOS) MORTGAGE RATE MATURITY (MOS) LTV LTV
------------------------ ------------- -------------- --- ---
Interest Only 4.419% 57.0 79.18 79.18
180 - 299 5.260% 180.0 40.27 0.44
350 - 360 5.488% 88.3 72.69 65.21
Total/Wtd. Avg. 5.326% 91.9 70.82 61.61
MIN 180 months
MAX 360 months
WEIGHTED AVERAGE 342 months
LOAN GROUP 2
DISTRIBUTION OF ORIGINAL TERM TO MATURITY
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
RANGE OF ORIGINAL MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
TERMS TO MATURITY LOANS BALANCE ($) BALANCE BALANCE ($) RATIO
----------------- ----- ----------- ------- ----------- -----
60 - 60 7 $ 88,600,743 49.9% $ 12,657,249 1.51
97 - 108 3 16,750,000 9.4% 5,583,333 1.59
120 - 120 11 57,318,788 32.3% 5,210,799 1.38
121 - 180 1 15,000,000 8.4% 15,000,000 1.50
-- ------------- -----
Total/Wtd. Avg. 22 $ 177,669,531 100.0% $ 8,075,888 1.48
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
RANGE OF ORIGINAL AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
TERMS TO MATURITY MORTGAGE RATE MATURITY (MOS) LTV LTV
----------------- ------------- -------------- --- ---
60 - 60 5.141% 58.1 76.38 72.91
97 - 108 4.941% 102.9 70.31 61.02
120 - 120 5.742% 117.7 70.38 60.32
121 - 180 5.260% 180.0 40.27 0.44
Total/Wtd. Avg. 5.326% 91.9 70.82 61.61
MIN 60 months
MAX 180 months
WEIGHTED AVERAGE 94 months
A-20
LOAN GROUP 2
DISTRIBUTION OF PREPAYMENT PROVISIONS
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
MORTGAGE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
PREPAYMENT TYPE LOANS BALANCE ($) BALANCE BALANCE ($) RATIO
--------------- ----- ----------- ------- ----------- -----
Defeasance 22 $ 177,669,531 100.0% $ 8,075,888 1.48
-- ------------- -----
Total/Wtd. Avg. 22 $ 177,669,531 100.0% $ 8,075,888 1.48
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
PREPAYMENT TYPE MORTGAGE RATE MATURITY (MOS) LTV LTV
--------------- ------------- -------------- --- ---
Defeasance 5.326% 91.9 70.82 61.61
Total/Wtd. Avg. 5.326% 91.9 70.82 61.61
LOAN GROUP 2
DISTRIBUTION OF ESCROWS
PERCENTAGE OF
NUMBER OF AGGREGATE
MORTGAGE CUT-OFF DATE CUT-OFF DATE
ESCROW TYPE LOANS BALANCE ($) BALANCE
----------- ----- ----------- -------
Real Estate Tax 19 $ 151,869,531 85.5%
Insurance 15 136,005,614 76.5%
Replacement Reserves 19 151,869,531 85.5%
A-21
LOAN GROUP 2
DISTRIBUTION OF PROPERTY TYPES
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
MORTGAGED CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
PROPERTY TYPES PROPERTIES BALANCE ($) BALANCE BALANCE ($) RATIO
-------------- ---------- ----------- ------- ----------- -----
Multifamily 19 $ 166,807,031 93.9% $ 8,779,317 1.49
Mobile Home Park 3 10,862,500 6.1% 3,620,833 1.31
-- ------------- -----
Total/Wtd. Avg. 22 $ 177,669,531 100.0% $8,075,888 1.48
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
PROPERTY TYPES MORTGAGE RATE MATURITY (MOS) LTV LTV
-------------- ------------- -------------- --- ---
Multifamily 5.290% 90.0 70.13 60.94
Mobile Home Park 5.880% 120.0 81.43 71.98
Total/Wtd. Avg. 5.326% 91.9 70.82 61.61
LOAN GROUP 2
GEOGRAPHIC DISTRIBUTION
WEIGHTED
PERCENTAGE OF AVERAGE DEBT
NUMBER OF AGGREGATE AVERAGE SERVICE
MORTGAGED CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE COVERAGE
PROPERTY STATE PROPERTIES BALANCE ($) BALANCE BALANCE ($) RATIO
-------------- ---------- ----------- ------- ----------- -----
Georgia 4 $ 69,110,510 38.9% $17,277,628 1.34
Texas 5 29,332,604 16.5% 5,866,521 1.66
Washington 3 17,260,000 9.7% 5,753,333 1.58
Pennsylvania 4 15,863,917 8.9% 3,965,979 1.60
Alabama 1 15,350,000 8.6% 15,350,000 1.29
California 1 15,000,000 8.4% 15,000,000 1.50
Wisconsin 2 10,800,000 6.1% 5,400,000 1.79
Idaho 1 2,555,500 1.4% 2,555,500 1.31
Nevada 1 2,397,000 1.3% 2,397,000 1.30
-- ------------- -----
Total/Wtd. Avg. 22 $ 177,669,531 100.0% $ 8,075,888 1.48
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
WEIGHTED REMAINING AVERAGE AVERAGE
AVERAGE TERM TO CUT-OFF DATE MATURITY DATE
PROPERTY STATE MORTGAGE RATE MATURITY (MOS) LTV LTV
-------------- ------------- -------------- --- ---
Georgia 5.413% 61.8 74.08 69.11
Texas 4.984% 79.9 76.76 72.59
Washington 5.176% 93.1 78.71 72.09
Pennsylvania 5.770% 118.3 59.56 50.24
Alabama 5.590% 117.0 76.75 65.88
California 5.260% 180.0 40.27 0.44
Wisconsin 4.749% 105.0 66.75 57.78
Idaho 5.880% 120.0 81.09 71.67
Nevada 5.880% 120.0 82.66 73.06
Total/Wtd. Avg. 5.326% 91.9 70.82 61.61
A-22
ANNEX B
GSMS 2004-GG2
- --------------------------------------------------------------------------------
TEN LARGEST MORTGAGE LOANS - GRAND CANAL SHOPPES AT THE VENETIAN
- --------------------------------------------------------------------------------
[PHOTO OMITTED] [PHOTO OMITTED]
[PHOTO OMITTED] [PHOTO OMITTED]
[PHOTO OMITTED] [PHOTO OMITTED]
B-1
GSMS 2004-GG2
- --------------------------------------------------------------------------------
TEN LARGEST MORTGAGE LOANS - GRAND CANAL SHOPPES AT THE VENETIAN
- --------------------------------------------------------------------------------
[MAP OMITTED]
B-2
GSMS 2004-GG2
- --------------------------------------------------------------------------------
TEN LARGEST MORTGAGE LOANS - GRAND CANAL SHOPPES AT THE VENETIAN
- --------------------------------------------------------------------------------
- --------------------------------------------------------
PROPERTY INFORMATION
Number of Mortgaged Real Properties 1
Location (City/State) Las Vegas, Nevada
Property Type Retail
Size (sf) 536,890
Percentage Occupancy as of May 17, 2004 98.1%
Year Built 1999
Appraisal Value $766,000,000
Underwritten Occupancy 95.0%
Underwritten Revenues $60,543,181
Underwritten Total Expenses $18,859,673
Underwritten Net Operating Income (NOI) $41,683,508
Underwritten Net Cash Flow (NCF) $41,156,000
- --------------------------------------------------------
- ----------------------------------------------------------
MORTGAGE LOAN INFORMATION
Originator Archon
Cut-off Date Principal Balance(1) $189,548,779
Cut-off Date Principal Balance PSF/Unit $793.43
Percentage of Initial Mortgage Pool 7.28%
Number of Mortgage Loans 1
Type of Security Fee & Leasehold
Mortgage Rate 4.78%
Original Term to Maturity (Months) 59
Original Amortization Term (Months) 360
Cut-off Date LTV Ratio 50.79
LTV Ratio at Maturity 51.32
Underwritten DSCR on NOI 1.70
Underwritten DSCR on NCF 1.68
Shadow Rating(2) "A"/"A3"
- ----------------------------------------------------------
(1) The $190,000,000 loan represents a 44.5% interest in a $427,000,000 loan.
The LTV, DSCR and debt service in this table are based on the total
$427,000,000 financing net of the $37,000,000 guarantee. The Cut-Off Date
LTV (including the $37,000,000 guarantee) is 55.61%. The DSCR inclusive of
the guarantee is 1.53x.
(2) S&P and Moody's have confirmed that the Grand Canal Shoppes at the
Venetian Loan has, in the context of its inclusion in the trust, credit
characteristics consistent with that of an obligation rated "A" by S&P,
and"A3" by Moody's.
o THE LOAN. The mortgage loan (the "GRAND CANAL SHOPPES AT THE VENETIAN
LOAN") is evidenced by two notes, each of which is secured by a first
mortgage encumbering the regional mall located at 3355 Las Vegas Blvd
S, Las Vegas, Nevada and a leasehold interest in certain property
located within the Venetian Hotel (the "GRAND CANAL SHOPPES AT THE
VENETIAN PROPERTY"). The Grand Canal Shoppes at the Venetian Loan
represents approximately 7.28% of the initial mortgage pool balance.
The Grand Canal Shoppes at the Venetian Loan was originated on May 17,
2004 by Archon Financial, L.P. and was subsequently purchased by
Goldman Sachs Mortgage Company, and is now jointly owned by Goldman
Sachs Mortgage Company and Commerzbank AG, New York Branch, each having
a 76.6% and 23.4% interest, respectively, in the Grand Canal Shoppes at
the Venetian Loan. The Grand Canal Shoppes at the Venetian Loan had an
original principal balance of $190,000,000 and a principal balance as
of the cut-off date of $189,548,779, and an interest rate of 4.78%. The
Grand Canal Shoppes at the Venetian Loan facilitated the acquisition of
the property for a purchase price of $766,000,000.
The Grand Canal Shoppes at the Venetian Loan consists of two of six
pari passu mortgage loans totaling $427,000,000. The other mortgage
loans secured by the Grand Canal Shoppes at the Venetian Property (the
"GRAND CANAL SHOPPES AT THE VENETIAN COMPANION LOANS" and together with
the Grand Canal Shoppes at the Venetian Loan, the "GRAND CANAL SHOPPES
AT THE VENETIAN WHOLE LOAN") are each pari passu in right of payment
with the Grand Canal Shoppes at the Venetian Loan. The Grand Canal
Shoppes at the Venetian Loan is represented by note A1 and note A2 with
an original principal balance of $145,503,512.88 and $44,496,487.12,
respectively. Note A3, note A4, note A5 and note A6 have an original
principal balance of $134,016,393.44, $40,983,606.56, $47,480,093.68
and $14,519,906.32, respectively. The Grand Canal Shoppes at the
Venetian Loan and each Grand Canal Shoppes at the Venetian Companion
Loan have the same interest rate, maturity date and amortization term.
The Grand Canal Shoppes at the Venetian Loan will be an asset of the
trust. The holders of the series 2004-GG2 certificates will be entitled
to receive all amounts received in respect of the Grand Canal Shoppes
at the Venetian Loan. The Grand Canal Shoppes at the Venetian Companion
Loans will not be assets of the trust.
The Grand Canal Shoppes at the Venetian Loan and the Grand Canal
Shoppes at the Venetian Companion Loans are governed by an
intercreditor agreement, as described in the prospectus supplement
under "Description of the Mortgage Pool--The Whole Loans Structure" and
will be serviced pursuant to the terms of the pooling and servicing
agreement.
The Grand Canal Shoppes at the Venetian Loan had an initial term of 59
months and has a remaining term of 57 months. The Grand Canal Shoppes
at the Venetian Loan requires payments of interest and principal based
on a 360-month schedule. The scheduled maturity date is May 1, 2009.
Voluntary prepayment of the Grand Canal Shoppes at the Venetian Loan is
prohibited until the due date in January 2009 and permitted thereafter
without penalty. Defeasance with United States government securities is
permitted on any date after the earlier of the third anniversary of the
origination date and the second anniversary of the securitization of
the Grand Canal Shoppes at the Venetian Whole Loan.
o THE PROPERTY. The Grand Canal Shoppes at the Venetian Property is a
high-end retail mall situated within The Venetian Casino Resort (the
"VENETIAN") on Las Vegas Boulevard in Las Vegas, Nevada. The Grand
Canal Shoppes at the Venetian Property has a Renaissance-Venice
streetscape motif. Decorative features include a painted vaulted
ceiling, cobblestone floor tiling, "piazza"-style retail store
groupings, and arched bridges over a winding quarter-mile long
Venetian-themed indoor water canal running the length of the main mall
corridor. The Grand Canal Shoppes at the Venetian Property contains a
total of 536,890 square feet of
B-3
GSMS 2004-GG2
- --------------------------------------------------------------------------------
TEN LARGEST MORTGAGE LOANS - GRAND CANAL SHOPPES AT THE VENETIAN
- --------------------------------------------------------------------------------
Gross Leasable Area (GLA) in components including: 407,103 square feet
located on the second and third floors of the Venetian (the "MAIN
MALL"), a 38,074 square foot, three-level retail annex (the "RETAIL
ANNEX") with direct frontage on Las Vegas Boulevard, and 91,713 square
feet of GLA located on the first floor of the Venetian around the
perimeter of the Venetian Casino (the "CASINO LEVEL SPACe").
Retail tenants (with less than 10,000 sf) report average sales of
$1,008 psf. Occupancy costs, based on underwritten rent and recoveries,
are approximately 13.9% for such retail space.
Tenants of the Main Mall include Banana Republic, New Balance,
Brookstone, Kenneth Cole and Ann Taylor as well as boutique offerings
such as Davidoff, Il Prato, Jimmy Choo, BCBG Max Azria, Mikimoto,
Burberry and Dooney & Bourke. The Main Mall also houses eight
restaurants including Wolfgang Puck's Postrio, Zefferino Restaurant and
Canaletto while the Casino Level Space includes nine restaurants such
as Lutece, Delmonico Steakhouse, Valentino and AquaKnox.
The following table presents certain information relating to the major
tenants at the Grand Canal Shoppes at the Venetian Property:
TEN TENANTS BASED ON ANNUALIZED UNDERWRITTEN TOTAL RENT(1)
- ---------------------------------------------------------------------------------------------------------------------------------
ANNUALIZED % OF TOTAL
CREDIT RATING ANNUALIZED UNDERWRITTEN ANNUALIZED
(FITCH/ MOODY'S/ TENANT % OF UNDERWRITTEN TOTAL RENT UNDERWRITTEN LEASE
TENANT NAME S&P) NRSF NRSF TOTAL RENT (PER NRSF) TOTAL RENT EXPIRATION
- ---------------------------------------------------------------------------------------------------------------------------------
Diamond Resorts BBB/Baa2/BBB+ 10,150 1.9% $ 4,000,000 $394.09 8.8% 12/31/2013
International(2)
Emporio D'Gondola(3)(4) NR/NR/NR 922 0.2% 3,500,000 3,796.10 7.7% 12/31/2028
VCR Showroom(4)(5) NR/NR/NR 38,920 7.2% 3,300,000 84.79 7.3% 12/31/2028
Tao Restaurant & Nightclub NR/NR/NR 43,679 8.1% 1,750,000 40.07 3.9% 12/31/2013
Sephora NR/NR/NR 10,074 1.9% 1,400,000 138.97 3.1% 12/31/2011
Grand Lux Cafe NR/NR/NR 19,100 3.6% 1,328,309 69.54 2.9% 12/31/2019
Delmonico Steakhouse NR/NR/NR 12,750 2.4% 1,018,336 79.87 2.2% 12/31/2009
Regis Galerie NR/NR/NR 10,711 2.0% 854,709 79.80 1.9% 12/31/2009
Zeffirino Restaurant NR/NR/NR 14,585 2.7% 816,760 56.00 1.8% 12/31/2009
Venetzia NR/NR/NR 731 0.1% 764,947 1,046.44 1.7% 12/31/2009
-----------------------------------------------------------------
TOTAL LARGEST TENANTS 161,622 30.1% 18,733,061 115.91 41.3%
Remaining Owned Tenants 365,160 68.0% 26,606,289 72.86 58.7%
Vacant Spaces (Owned Space) 10,108 1.9% 0 0.00 0.0%
-----------------------------------------------------------------
TOTAL ALL TENANTS 536,890 100.0% $46,339,350 $87.97 100.0%
- ---------------------------------------------------------------------------------------------------------------------------------
(1) Total Rent includes $35,662,028 of Base Rent and $9,677,322 of Percentage
Rent and $1,000,000 of Specialty Leasing Rent.
(2) Diamond Resorts International (whose parent company is Marriott
International and guarantees the lease) operates a business selling
time-share properties out of three small retail kiosks in the Main Mall.
(3) Emporio D' Gondola operates the gondola ride and related small retail shop
within the Main Mall.
(4) Emporio D'Gondola and the VCR Showroom are leased by the Venetian Casino
Resort, LLC which is owned by Las Vegas Sands, Inc. whose principal
shareholder is Sheldon G. Adelson.
(5) VCR Showroom is a 12,000 seat theater, a portion of which is owned by the
borrower and leased to the Venetian Casino's Resort, LLC.
The following table presents certain information relating to the lease
rollover schedule at the Grand Canal Shoppes at the Venetian Property:
B-4
GSMS 2004-GG2
- --------------------------------------------------------------------------------
TEN LARGEST MORTGAGE LOANS - GRAND CANAL SHOPPES AT THE VENETIAN
- --------------------------------------------------------------------------------
LEASE EXPIRATION SCHEDULE(1)
- ---------------------------------------------------------------------------------------------------------------------------------
% OF TOTAL ANNUALIZED
ANNUALIZED ANNUALIZED UNDERWRITTEN
EXPIRING % OF CUMULATIVE UNDERWRITTEN UNDERWRITTEN TOTAL RENT
YEAR ENDING DECEMBER 31, NRSF TOTAL NRSF OF TOTAL NRSF TOTAL RENT(2) TOTAL RENT (PER NRSF)
- ---------------------------------------------------------------------------------------------------------------------------------
2004 (includes MTM) 2,627 0.5% 0.5% $ 701,933 1.5% $267.20
2005 5,231 1.0% 1.5% 502,975 1.1% 96.15
2006 9,620 1.8% 3.3% 717,970 1.6% 74.63
2007 8,096 1.5% 4.8% 979,706 2.2% 121.01
2008 11,579 2.2% 6.9% 761,450 1.7% 65.76
2009 215,448 40.1% 47.0% 17,491,122 38.6% 81.18
2010 42,005 7.8% 54.9% 2,982,902 6.6% 71.01
2011 13,200 2.5% 57.3% 1,879,107 4.1% 142.36
2012 0 0.0% 57.3% 0 0.0% 0.00
2013 101,151 18.8% 76.2% 8,879,820 19.6% 87.79
2014 & Thereafter 117,825 21.9% 98.1% 10,442,366 23.0% 88.63
Vacant 10,108 1.9% 100.0% 0 0.0% 0.00
-----------------------------------------------------------------------------------------------------
TOTAL 536,890 100.0% $45,339,350 100.0% $ 84.45
- ---------------------------------------------------------------------------------------------------------------------------------
(1) Calculated based on approximate percentage square footage occupied by each
tenant.
(2) Total Rent includes $35,662,028 of Base Rent and $9,677,322 of Percentage
Rent.
o THE BORROWER. The borrower is Grand Canal Shops II, LLC, a
single-asset, special-purpose entity. Legal counsel to the borrower
delivered a non-consolidation opinion in connection with the
origination of the Grand Canal Shoppes at the Venetian Loan. The
borrower is indirectly wholly-owned by GGP Holding II, Inc., the common
stock of which is wholly-owned by GGP Holding, Inc., the common stock
of which is wholly-owned by GGP Limited Partnership, a subsidiary of
General Growth Properties, Inc. There is no guarantee of the
non-recourse carve-outs of the Grand Canal Shoppes at the Venetian
Loan.
o ESCROWS. The loan documents provide during a Grand Canal Shoppes at the
Venetian Cash Sweep Period for certain escrows of real estate taxes and
insurance, tenant improvements and leasing commissions and capital
expenditures. A "GRAND CANAL SHOPPES AT THE VENETIAN CASH SWEEP PERIOD"
means the period during the continuance of an event of default under
the Grand Canal Shoppes at the Venetian Loan and/or if, beginning on
June 30, 2005, the net-operating income at the end of any fiscal
quarter of the borrower of the Grand Canal Shoppes at the Venetian
Property for the prior twelve-month period is less than 80% of the net
operating income at origination (origination date NOI) until the
net-operating income as of the end of the fiscal quarter of the
borrower of the Grand Canal Shoppes at the Venetian Property for the
prior twelve-month period is at least equal to 80% of the net operating
income at origination. Notwithstanding the foregoing, the borrower is
not required to make deposits into the insurance reserve if the
insurance escrow account under the reciprocal easement agreement is
being maintained and each party thereto is making any required
deposits. Additionally, GGP Holding, Inc. has provided a guarantee of
certain unfunded obligations of the borrower relating to tenant leases.
o LOCK BOX AND CASH MANAGEMENT. The loan requires a hard lock box. The
loan documents require the borrower to direct the tenants to pay their
rents directly to a lender-controlled sweep account. The loan documents
also require that all cash revenue received by the borrower or the
property manager (other than security deposits) be deposited into the
lender-controlled sweep account within two business days after receipt.
Unless a Grand Canal Shoppes at the Venetian Cash Sweep Period is
continuing, on each business day any amounts in the lender-controlled
sweep account are swept to an account specified by the borrower. During
any Grand Canal Shoppes at the Venetian Cash Sweep Period, on each
business day any amounts in the lender-controlled sweep account are
swept to a lender-controlled cash management account. All amounts
remaining in the lender-controlled cash management account after
payment of the monthly debt service, all required reserves as described
above and any other amounts due under the Grand Canal Shoppes at the
Venetian Loan will be remitted to an account designated by the
borrower. After the occurrence and during the continuation of an event
of default, all amounts remaining in the lender-controlled cash
management account after payment of the monthly debt service, all
required reserves as described above and any other amounts due under
the Grand Canal Shoppes at the Venetian Loan are required to be
deposited into a reserve account and held as additional collateral for
the loan except that prior to an acceleration or monetary event of
default, the lender is required to disburse funds against invoices for
operating expenses pursuant to a budget approved by lender.
o PROPERTY MANAGEMENT. The Grand Canal Shoppes at the Venetian Property
may be self-managed or may be managed by certain affiliates of borrower
or a manager or any management company for whom each Rating Agency has
confirmed in writing will not cause the downgrade, withdrawal or
qualification of then current ratings of any class of the series
2004-GG2 certificates. The lender may require the borrower to cease
managing the property or replace the property manager if an event of
default under the Grand Canal Shoppes at the Venetian Loan has occurred
and is continuing. The fees of any successor manager during the
B-5
GSMS 2004-GG2
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TEN LARGEST MORTGAGE LOANS - GRAND CANAL SHOPPES AT THE VENETIAN
- --------------------------------------------------------------------------------
continuance of a Grand Canal Shoppes at the Venetian Cash Trap Period
may not exceed market rates for comparable properties in the applicable
geographic area.
o MASTER LEASE. The borrower net leases the Casino Level Space pursuant
to a master lease with Venetian Casino Resort, LLC. The master lease
has a remaining term of approximately 89 years and an annual rent of $1
per year. The borrower is responsible for paying all taxes and expenses
relating to the Casino Level Space, and at the expiration of the term
of the master lease has the option to purchase fee title to the Casino
Level Space for a nominal exercise price. Generally, the master lease
requires that any portion of the Casino Level Space that is currently
used as restaurant or retail venue continue to be used for such
purpose. Additionally, new restaurant tenants (other than tenants to be
located in the food court located in the casino level space) are
required to meet certain quality standards and may not be part of a
franchised chain.
o RECIPROCAL EASEMENT AGREEMENT. The borrower is a party to a reciprocal
easement agreement with respect to the Grand Canal Shoppes at the
Venetian Property which governs the interrelationship between the Grand
Canal Shoppes at the Venetian Property and the Venetian. Under the
reciprocal easement agreement, the borrower covenants to continuously
operate the Grand Canal Shoppes at the Venetian Property and has agreed
to maintain the quality standards of the tenant mix at the property. In
addition, the borrower is prohibited from leasing space to competitors
of the Venetian and other businesses inconsistent with such quality
standards. Casualty and business interruption insurance coverage for
the Grand Canal Shoppes at the Venetian Property is currently provided
by a blanket insurance policy covering the Venetian and meeting the
requirements under the reciprocal easement agreement. Proceeds of such
insurance, as well as condemnation proceeds, are required to be
administered in accordance with the provisions of the reciprocal
easement agreement. Under the reciprocal easement agreement, a transfer
of the Grand Canal Shoppes at the Venetian Property (other than to
lender (or a subsequent transferee) in connection with foreclosure of a
mortgage secured by the property) is subject to a right of first offer
in favor of the owner of the Venetian. Additionally, the owner of the
Venetian Casino Resort has the right to cure certain defaults of
borrower under the Grand Canal Shoppes at the Venetian Casino Whole
Loan and, in the case of an acceleration of the Grand Canal Shoppes at
the Venetian Whole Loan, has the right, subject to satisfaction of
certain conditions, to purchase the Grand Canal Shoppes at the Venetian
Whole Loan at a price equal to the sum of (1) the principal balance of
the Grand Canal Shoppes at the Venetian Whole Loan, (2) accrued and
unpaid interest on the Grand Canal Shoppes at the Venetian Whole Loan,
(3) all other amounts owed by the borrower under the loan documents as
of the date of the purchase and (4) all reasonable fees and expenses
incurred by the lender in connection with the purchase.
o NEW RETAIL FACILITY. The owners of the Venetian are developing a hotel,
casino and retail complex adjacent to the Venetian, which is currently
scheduled to be completed in the fourth quarter of 2006. An affiliate
of the borrower has entered into a forward commitment to purchase the
retail complex (which will be contiguous with the Grand Canal Shoppes
at the Venetian Property), subject to satisfaction of certain
conditions. Upon completion, the parties have agreed to operate the
Grand Canal Shoppes at the Venetian Property and the new retail complex
as an "integrated" mall, including, among other things, providing for
joint maintenance, leasing, marketing, management and operation. In the
event borrower's affiliate defaults in its obligation to purchase the
new retail complex, among other remedies, the owner of the Venetian may
purchase the equity interests in the borrower for a purchase price not
less than the then-outstanding principal amount of the Grand Canal
Shoppes at the Venetian Whole Loan.
o EARNOUT GUARANTEE. GGP Holdings, Inc. has provided a guarantee of the
Grand Canal Shoppes at the Venetian Whole Loan in the amount of
$37,000,000, which amount will be reduced without reinstatement on a
quarterly basis by an amount equal to (i) the product of (a) trailing
12-month actual net operating income for the most recently ended
quarter less $43,700,000 multiplied by (b) 9.0 less (ii) any reduction
amounts applied at a prior determination date.
o MEZZANINE OR SUBORDINATE INDEBTEDNESS. The Grand Canal Shoppes at
Venetian loan documents permit, among other things, (a) the pledge of
indirect interests in the borrower to secure certain inter-affiliate
debt and (b) the pledge of direct interests in borrower, or issuance by
borrower of preferred equity, or debt granting similar rights as
preferred equity, so long as confirmation is received from each rating
agency that the debt would not result in the downgrade, withdrawal or
qualification of then then-current ratings on the certificates.
o TERRORISM INSURANCE. The loan documents require the borrower to
maintain insurance coverage for terrorism, satisfactory to lender
(either through such policies not containing a terrorism exclusion, or
through separate policies from insurers with ratings reasonably
satisfactory to lender). The borrower is required to maintain the
terrorism insurance described in the preceding sentence for the year in
which the origination date occurs and thereafter is required to use
commercially reasonable efforts, consistent with those of prudent
owners of institutional quality commercial real estate, to maintain
such terrorism coverage at all times while the Grand Canal Shoppes at
the Venetian Whole Loan is outstanding, provided that such coverage is
available at commercially reasonable rates. See "Risk Factors--Property
Insurance" in the prospectus supplement. The terrorism coverage is
currently provided by a blanket insurance policy covering the Venetian
and meeting requirements under the reciprocal easement agreement.
Proceeds of such insurance are required to be administered in
accordance with the provisions of the reciprocal easement agreement,
with an amount of up to the first $120,000,000 being paid to lender,
with remaining proceeds then being distributed in accordance with the
reciprocal easement agreement.
B-6
GSMS 2004-GG2
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TEN LARGEST MORTGAGE LOANS - DAILY NEWS BUILDING
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[PHOTO OMITTED]
B-7
GSMS 2004-GG2
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TEN LARGEST MORTGAGE LOANS - DAILY NEWS BUILDING
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[MAP OMITTED]
B-8
GSMS 2004-GG2
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TEN LARGEST MORTGAGE LOANS - DAILY NEWS BUILDING
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- --------------------------------------------------------
PROPERTY INFORMATION
Number of Mortgaged Real Properties 1
Location (City/State) New York, New York
Property Type Office
Size (SF) 1,102,147
Percentage Occupancy as of July 1, 2004 99.1%
Year Built/Renovated 1930, 1958-
1960/1996, 1999
Appraisal Value $330,000,000
Underwritten Occupancy 96.0%
Underwritten Revenues $43,176,762
Underwritten Total Expenses $19,384,473
Underwritten Net Operating Income (NOI) $23,792,289
Underwritten Net Cash Flow (NCF) $21,759,296
- --------------------------------------------------------
- -------------------------------------------------------
MORTGAGE LOAN INFORMATION
Originator Archon
Cut-off Date Principal Balance $154,000,000
Cut-off Date Principal Balance PSF $139.73
Percentage of Initial Mortgage Pool 5.91%
Number of Mortgage Loans 1
Type of Security Fee Simple
Mortgage Rate 4.4901%
Original Term to Maturity (Months) 118
Original Amortization Term (Months) (1) 35 IO; 324
thereafter
Cut-off Date LTV Ratio 46.67%
LTV Ratio at Maturity 39.70%
Underwritten DSCR on NOI 2.41
Underwritten DSCR on NCF 2.21
Shadow Ratings (2) "BBB"/"Baa2"
- -------------------------------------------------------
(1) The loan includes an up-front IO period; however, the UW DSCR reflects the
future amortizing payment.
(2) S&P and Moody's have confirmed that the Daily News Building Loan has, in
the context of its inclusion in the trust, credit characteristics
consistent with that of an obligation rated "BBB" by S&P, and"Baa2" by
Moody's.
o THE LOAN. The mortgage loan (the "DAILY NEWS BUILDING LOAN") is
evidenced by a senior note and is secured by a first mortgage
encumbering the office building located at 220 E 42nd Street, New York,
New York (the "DAILY NEWS BUILDING PROPERTY"). The Daily News Building
Loan represents approximately 5.91% of the initial mortgage pool
balance. The Daily News Building Loan was originated on December 9,
2003, has an original principal balance and a principal balance as of
the cut-off date of $154,000,000, and an interest rate of 4.4901%.
The Daily News Building Loan is a senior interest of a whole mortgage loan
(the "DAILY NEWS BUILDING WHOLE LOAN") with an original principal balance
of $154,000,000. The junior companion loan to the Daily News Building Loan
is evidenced by a junior note (the "DAILY NEWS BUILDING SUBORDINATE
COMPANION LOAN"), with an original principal balance of $56,000,000 and an
interest rate of 7.29%, which loan is subordinate to the Daily News
Building Loan. The Daily News Building Subordinate Companion Loan is not an
asset of the trust.
The loans comprising the Daily News Building Whole Loan are governed by an
intercreditor agreement, as described in the prospectus supplement under
"Description of the Mortgage Pool--The Whole Loans" and will be serviced
pursuant to the terms of the pooling and servicing agreement. The DSCR and
LTV on the Daily News Building Loan are 2.21x and 46.67%, respectively,
while the DSCR and LTV on the Daily News Building Whole Loan are 1.49x and
63.64% respectively.
The Daily News Building Loan had an initial term of 118 months and has a
remaining term of 111 months. The Daily News Building Loan requires payment
of interest-only for the first 35 months and amortizes thereafter based on
a 324-month amortization schedule, with required principal and interest
payments of $821,048 beginning January 1, 2007. The scheduled maturity date
is November 1, 2013. Voluntary prepayment of the Daily News Building Loan
is prohibited until the due date in August 2013 and permitted thereafter
without penalty. Defeasance with United States government securities is
permitted on any date after the earlier of (i) the third anniversary of the
origination date and (ii) the first payment date after the second
anniversary of the closing date of the securitization of the Daily News
Building Whole Loan.
o THE PROPERTY. The Daily News Building Property is a 39-story, 1,102,147
sf building located in the Grand Central District of the Midtown Office
District. The property was built in 1930 and was renovated and expanded
in 1960, with periodic updates including in 1999. As of July 1, 2004,
the property was 99.1% leased to approximately 50 tenants. The three
largest leases in the building represent 57.7% of the space and include
leases to Omnicom Group, Inc. (38.0% or 419,111 sf), WPIX Inc./Tribune
NY Radio Inc. (11.4% or 126,042 sf) and United Nations Population Fund
(8.3% or 91,021 sf).
B-9
GSMS 2004-GG2
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TEN LARGEST MORTGAGE LOANS - DAILY NEWS BUILDING
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The following table presents certain information relating to the major
tenants at the Daily News Building Property:
TEN TENANTS BASED ON ANNUALIZED UNDERWRITTEN TOTAL RENT
- ------------------------------------------------------------------------------------------------------------------------------
ANNUALIZED % OF TOTAL
ANNUALIZED UNDERWRITTEN ANNUALIZED
CREDIT RATING TENANT % OF UNDERWRITTEN BASE RENT UNDERWRITTEN LEASE
TENANT NAME (FITCH/MOODY'S/S&P)(1) NRSF NRSF BASE RENT (PER NRSF) BASE RENT EXPIRATION
- ------------------------------------------------------------------------------------------------------------------------------
Omnicom Group, Inc. A-/ Baa1/ A- 419,111 38.0% $12,559,234 $29.97 34.8% 5/31/2008
-
4/30/2017
United Nations NR/ NR/ NR 91,021 8.3% 3,936,840 43.25 10.9% 12/31/2010
Population Fund
WPIX, Inc./Tribune NY A/ A3/ A 126,042 11.4% 3,916,839 31.08 10.9% 3/31/2010
Bell Atlantic NY A+/ NR/ A+ 71,610 6.5% 1,933,452 27.00 5.4% 8/31/2006
Directory Sales
Company
Value Line, Inc. NR/ NR/ NR 70,745 6.4% 1,787,976 25.27 5.0% 5/31/2008
Pfizer, Inc. AAA/ Aaa/ AAA 41,575 3.8% 1,288,825 31.00 3.6% 3/31/2013
The Witkoff Group, LLC NR/ NR/ NR 20,083 1.8% 1,104,564 55.00 3.1% 3/14/2013
Executive Monetary NR/ NR/ A 15,501 1.4% 916,308 59.11 2.5% 4/30/2013
Management, Inc.
Martin, Clearwater & Bell NR/ NR/ NR 33,613 3.0% 813,180 24.19 2.3% 12/31/2017
Neuberger Berman, Inc. A+/ A1/ A 15,731 1.4% 767,400 48.78 2.1% 4/30/2013
TOTAL LARGEST TENANTS 905,032 82.1% 29,024,618 32.07 80.4%
Remaining Tenants 186,947 17.0% 7,059,162 37.76 19.6%
Vacant Space 10,168 0.9%
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TOTAL ALL TENANTS 1,102,147 100.0% $36,083,780 $33.04 100.0%
- ------------------------------------------------------------------------------------------------------------------------------
(1) Certain ratings are those of the parent company whether or not it
guarantees the lease.
B-10
GSMS 2004-GG2
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TEN LARGEST MORTGAGE LOANS - DAILY NEWS BUILDING
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The following table presents certain information relating to the lease
rollover schedule at the Daily News Building Property:
LEASE EXPIRATION SCHEDULE(1)
- --------------------------------------------------------------------------------------------------------------------------------
% OF TOTAL ANNUALIZED
ANNUALIZED ANNUALIZED UNDERWRITTEN
YEAR ENDING EXPIRING % OF CUMULATIVE UNDERWRITTEN UNDERWRITTEN BASE RENT
DECEMBER 31, NRSF TOTAL NRSF OF TOTAL NRSF BASE RENT BASE RENT (PER NRSF)
- --------------------------------------------------------------------------------------------------------------------------------
2004 7,311 0.7% 0.7% $251,716 0.7% $34.43
2005 23,463 2.1% 2.8% 833,320 2.3% 35.52
2006 84,804 7.7% 10.5% 2,397,886 6.6% 28.28
2007 15,836 1.4% 11.9% 721,483 2.0% 45.56
2008 79,597 7.2% 19.1% 2,186,969 6.1% 27.48
2009 61,297 5.6% 24.7% 2,244,682 6.2% 36.62
2010 252,952 23.0% 47.7% 9,175,679 25.4% 36.27
2011 16,979 1.5% 49.2% 445,450 1.2% 26.24
2012 14,427 1.3% 50.5% 681,761 1.9% 47.26
2013 105,631 9.6% 60.1% 4,656,928 12.9% 44.09
2014 & Thereafter 429,682 39.0% 99.1% 12,487,906 34.6% 29.06
Vacant 10,168 0.9% 100.0% 0 0.0% 0.00
-----------------------------------------------------------------------------------------------------
TOTAL 1,102,147 100.0% $36,083,780 100.0% $33.04
- --------------------------------------------------------------------------------------------------------------------------------
(1) Calculated based on approximate square footage occupied by each tenant.
o THE BORROWER. The borrower is SLG 220 News Owner LLC, a single asset,
special purpose entity. Legal counsel to the borrower delivered a
non-consolidation opinion in connection with the origination of the
Daily News Building Loan. The borrower is owned by SL Green Realty
Corp. SL Green Realty Corp. is the guarantor of the non-recourse
carve-outs of the Daily News Building Loan.
o ESCROWS. The loan documents provide for certain escrows of real estate
taxes, insurance, tenant improvements and leasing commissions and
capital expenditures. In addition, on the closing date, the borrower
was required to either (i) deposit $2,696,000 into a deferred
maintenance and environmental escrow account or (ii) deliver to the
lender a letter of credit for such amount. Further, on the closing
date, the borrower was required to either (i) deposit $2,415,634 into
an unfunded obligations account or (ii) deliver to the lender a letter
of credit for such amount.
o LOCK BOX AND CASH MANAGEMENT. The loan requires a hard lock box, which
is already in place. The loan documents require the borrower to direct
tenants to pay their rents directly to a lender-controlled account. The
loan documents also require that all rents received by the borrower or
the property manager be deposited into the lender-controlled account
(as well as any other rents, receipts, security deposits or payments
related to lease termination or tenant default) within one business day
of receipt. On each business day, any amounts in the lender-controlled
account in excess of those required for the payment of the monthly debt
service and required reserves are swept to an account specified by the
borrower.
o PROPERTY MANAGEMENT. SL Green Management LLC, the property manager for
the Daily News Building Property (the "DAILY NEWS BUILDING PROPERTY
MANAGER"), is affiliated with the borrower. The lender may replace the
Daily News Building Property Manager (i) if an event of default is
continuing, (ii) if the manager is insolvent or in bankruptcy or
receivership, or (iii) upon the fraud or willful misconduct of the
manager. The Daily News Building Property Manager is entitled to
management fees equal to 4% of the gross amounts collected as rent and
additional rent and 10% of the cost of all tenant installations and
capital improvements that the Daily News Property Manager is
responsible for supervising.
o MEZZANINE OR SUBORDINATE INDEBTEDNESS. The Daily News Building Property
also secures the Daily News Building Subordinate Companion Loan, which
is subordinate to the Daily News Building Loan, as described in the
prospectus supplement under "Description of the Mortgage Pool--The
Whole Loans". In addition, the borrower is permitted to incur up to
$50,000,000 in mezzanine debt so long as (i) at least 51% of the
mezzanine debt is held by certain affiliates of the borrower or other
entity meeting certain financial requirements regularly engaged in the
business of originating and/or owning commercial mortgages and/or
mezzanine loans ("DAILY NEWS BUILDING QUALIFIED MEZZANINE LENDER"),
(ii) the sum of the outstanding principal balance of the Daily News
Building Whole Loan and the principal balance of the mezzanine loan is
not equal to more than 80% of the current market value of the Daily
News Building Property, based on appraisals not more than 6 months old
as of the date of origination of the mezzanine loan, (iii) the
resulting combined DSCR of the Daily News Building Whole Loan and the
mezzanine loan would not be less than 1.20x, (iv) no event of default
is continuing at the time of origination of the mezzanine loan, (v) the
Daily News Building Qualified Mezzanine Lender enters into an
intercreditor agreement with the lender in form and substance
reasonably
B-11
GSMS 2004-GG2
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TEN LARGEST MORTGAGE LOANS - DAILY NEWS BUILDING
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agreed by the lender and the borrower; (vi) the borrower receives
confirmation from each Rating Agency that the incurrence of the
mezzanine loan will not cause the downgrade, withdrawal or
qualification of then current ratings of any class of the series 2004
GG2 certificates, and (vii) the borrower received the consent of the
holder of the Daily News Building Subordinate Companion Loan.
o OTHER ENCUMBRANCES. None permitted.
o TERRORISM INSURANCE. The borrower is required to maintain TRIA format
coverage for terrorism (which may be part of the borrowers "all risks"
policy or as a separate policy), providing casualty, business
interruption and liability coverage in an amount no less than the
maximum insurable value of the Daily News Building Property, if and to
the extent that such coverage (i) is then being obtained by prudent
owners of real estate in the United States of a similar type and
quality and in a similar location to the Daily News Building Property
or (ii) is otherwise available for an annual premium that is less than
or equal to $375,000 (such annual premium to be computed after taking
into account the effect of any subsidies or credits that may be
provided to the borrower by or pursuant to any law, regulation, policy
or other initiative relating to the purchase and/or maintenance of
terrorism insurance enacted by any governmental authority). If neither
clause (i) nor clause (ii) of the preceding sentence is satisfied, then
the borrower is required to obtain terrorism coverage (at a premium,
computed as set forth in the previous sentence, that does not exceed
$375,000) from such insurers, and with such coverage, as shall be
acceptable to lender in its reasonable discretion; See "Risk
Factors--Property Insurance" in the prospectus supplement.
B-12
GSMS 2004-GG2
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TEN LARGEST MORTGAGE LOANS -1441 BROADWAY
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[PHOTO OMITTED]
B-13
GSMS 2004-GG2
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TEN LARGEST MORTGAGE LOANS -1441 BROADWAY
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[MAP OMITTED]
B-14
GSMS 2004-GG2
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TEN LARGEST MORTGAGE LOANS -1441 BROADWAY
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PROPERTY INFORMATION
Number of Mortgaged Real Properties 1
Location (City/State) New York, New York
Property Type Office
Size (sf) 460,356
Percentage Occupancy as of March 1, 2004 97.3%
Year Built / Renovated 1929 / 1976
Appraisal Value $175,000,000
Underwritten Occupancy 98.6%
Underwritten Revenues $22,740,106
Underwritten Total Expenses $9,193,777
Underwritten Net Operating Income (NOI) $13,546,329
Underwritten Net Cash Flow (NCF) $12,740,814
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- ----------------------------------------------------------
MORTGAGE LOAN INFORMATION
Originator GCFP
Cut-off Date Principal Balance $132,647,486
Cut-off Date Principal Balance PSF/Unit $288.14
Percentage of Initial Mortgage Pool 5.09%
Number of Mortgage Loans 1
Type of Security Fee Simple
Mortgage Rate 6.0260%
Original Term to Maturity (Months) 120
Original Amortization Term (Months) 360
Cut-off Date LTV Ratio 75.8%
LTV Ratio at Maturity 64.5%
Underwritten DSCR on NOI 1.41
Underwritten DSCR on NCF 1.33
- ----------------------------------------------------------
o THE LOAN. The mortgage loan (the "1441 BROADWAY LOAN") is evidenced by
a single note and is secured by a first mortgage encumbering an office
building located at 1441 Broadway, New York, New York (the "1441
BROADWAY PROPERTY"). The 1441 Broadway Loan represents approximately
5.09% of the initial mortgage pool balance. The 1441 Broadway Loan was
originated on April 22, 2004, had an original principal balance of
$133,000,000 and a principal balance as of the cut-off date of
$132,647,486, and an interest rate of 6.0260%. The proceeds of the 1441
Broadway Loan were used to refinance an existing loan.
The 1441 Broadway Loan is the senior portion of a whole mortgage loan
with an original principal balance of $140,000,000. The companion loan
to the 1441 Broadway Loan is evidenced by a separate note with an
original principal balance of $7,000,000 and a principal balance as of
the cut-off date of $6,981,447 and an interest rate of 6.0260% (the
"1441 BROADWAY SUBORDINATE COMPANION LOAN"). The 1441 Broadway
Subordinate Companion Loan is not an asset of the trust. The 1441
Broadway Loan and the 1441 Broadway Subordinate Companion Loan
(collectively, the "1441 BROADWAY WHOLE LOAN") are governed by a co
lender agreement, as described in the prospectus supplement under
"Description of the Mortgage Pool--The Whole Loans" and will be
serviced pursuant to the terms of the 2004 GG2 pooling and servicing
agreement. The DSCR and LTV on the 1441 Broadway Loan are 1.33x and
75.8%, respectively, and the DSCR and LTV on the 1441 Broadway Whole
Loan are 1.26x and 79.8%, respectively.
The 1441 Broadway Loan had an initial term of 120 months and has a
remaining term of 117 months. The 1441 Broadway Loan amortizes based on
a 360-month schedule, with required monthly payments of $799,626.77.
The scheduled maturity date is May 1, 2014. Voluntary prepayment of the
1441 Broadway Loan is prohibited until March 1, 2014 and permitted
thereafter without penalty. Defeasance with United States government
securities is permitted after the second anniversary of the
securitization closing date.
o THE PROPERTY. The 1441 Broadway Property is a 460,356 square foot
pre-war 34-story multi-tenant office building that is located on 41st
Street between Broadway and Seventh Avenue in New York City, New York.
The 1441 Broadway Property was built in 1929 and underwent a
substantial renovation in the mid-1970's, when the major tenant, Liz
Claiborne, Inc. first took occupancy. The building is located 1-block
south of Times Square with northern exposure along 41st Street and
maintains a wedding-cake setback design that begins to recede above the
17th floor. The average floor plates are between 17,000 and 18,000 sf
between floors 2 and 17 and between 4,000 sf and 8,500 sf on the
highest floors. The building houses eight passenger elevators and five
freight elevators. The floors have 15 foot column spacing and 270
degree views along Broadway, West 41st Street and 7th Avenue. The area
surrounding the 1441 Broadway Property has amenities including
restaurants, shows and entertainment. Additionally, the building has
access to public transportation via the west side subway lines, the
42nd Street subway shuttle, cross-town buses and is in walking distance
to both Penn Station and Grand Central Station.
As of March 1, 2004, the 1441 Broadway Property was 97.3% occupied and
was 100% leased as of July 15, 2004. The property has maintained
occupancy levels of greater than 95% over the past ten years. The
largest tenant, Liz Claiborne (75.6% of total rentable area) leases
floors 2 through 22, in which it maintains its corporate headquarters
and showroom spaces. Liz Claiborne has maintained a presence in the
building for almost 30 years and has maintained its corporate
headquarters in the building for more than 20 years. It has been
reported by the borrower that Liz Claiborne has invested over $45
million at the 1441 Broadway Property in both tenant improvements and
infrastructure, including, among other things, providing their own air
conditioning and electrical systems.
B-15
GSMS 2004-GG2
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TEN LARGEST MORTGAGE LOANS -1441 BROADWAY
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The following table presents certain information relating to the major
tenants at the 1441 Broadway Property:
- ------------------------------------------------------------------------------------------------------------------------------
% OF TOTAL ANNUALIZED
ANNUALIZED ANNUALIZED UNDERWRITTEN
TENANT UNDERWRITTEN UNDERWRITTEN BASE RENT
TENANT NAME NRSF % OF NRSF BASE RENT ($) BASE RENT ($ PER SF) LEASE EXPIRATION
- ------------------------------------------------------------------------------------------------------------------------------
Liz Claiborne, Inc. 347,938 75.6% $12,230,752 71.7% $35.15 1/31/2007 &
12/31/2012(1)
Office Depot 19,451 4.2% 1,100,000 6.5% 56.55 12/31/2014
Gloria Vanderbilt Apparel Co. 12,730 2.8% 522,845 3.1% 41.07 1/31/2007 & 7/31/2007
Tommy Hilfiger Handbags 11,328 2.5% 432,198 2.5% 38.15 3/31/2010
Belford Inc 10,001 2.2% 397,200 2.3% 39.72 2/28/2006 & 3/31/2006
Segret, Inc 10,762 2.3% 387,432 2.3% 36.00 6/30/2006
TOTAL LARGEST TENANTS 412,210 89.5% 15,070,427 88.4% 36.56
Remaining Tenants 35,557 7.7% 1,982,378 11.6% 55.75
Vacant Space 12,589 2.7%
------------------------------------------------------------------
TOTAL ALL TENANTS 460,356 100.0% $17,052,805 100.0% $37.04
- ------------------------------------------------------------------------------------------------------------------------------
(1) Liz Claiborne occupies 54,378 sf under a lease expiring in 2007 and 293,560
sf under a lease expiring in 2012.
The following table presents certain information relating to the lease
rollover schedule at the 1441 Broadway Property:
LEASE EXPIRATION SCHEDULE(1)
- ------------------------------------------------------------------------------------------------------------------------------
% OF TOTAL ANNUALIZED
ANNUALIZED ANNUALIZED UNDERWRITTEN
EXPIRING % OF CUMULATIVE UNDERWRITTEN UNDERWRITTEN BASE RENT
YEAR ENDING DECEMBER 31, NRSF TOTAL NRSF OF TOTAL NRSF BASE RENT ($) BASE RENT ($ PER SF)
- ------------------------------------------------------------------------------------------------------------------------------
2004 4,857 1.1% 1.1% $310,525 1.8% 63.93
2005 200 0.0% 1.1% 15,000 0.1% 75.00
2006 28,291 6.1% 7.2% 1,129,736 6.6% 39.93
2007 74,793 16.2% 23.5% 2,790,722 16.4% 37.31
2008 220 0.0% 23.5% 61,586 0.4% 279.94
2009 759 0.2% 23.7% 143,500 0.8% 189.06
2010 12,828 2.8% 26.5% 493,218 2.9% 38.45
2011 0 0.0% 26.5% 0 0.0% 0.00
2012 300,160 65.2% 91.7% 10,610,197 62.2% 35.35
2013 2,333 0.5% 92.2% 100,696 0.6% 43.16
2014 Thereafter 23,326 5.1% 97.3% 1,397,625 8.2% 48.57
Vacant 12,589 2.7% 100.0%
------------------------------------------------------------------------------------------------
TOTAL 460,356 100.0% $17,052,805 100.0% $37.04
- ------------------------------------------------------------------------------------------------------------------------------
(1) Calculated based on approximate square footage occupied by each tenant.
o THE BORROWER. The borrowers, Lechar Realty Corp. and Lechar Realty,
LLC, are each a single-asset, bankruptcy-remote entity with an
independent director. Legal counsel to the lender delivered a
non-consolidation opinion in connection with the origination of the
1441 Broadway Loan. Each borrower is directly and indirectly owned by
and controlled by Leon H. Charney. Mr. Charney guaranteed the
non-recourse carveouts of the 1441 Broadway Loan. In connection with
such guarantee, Mr. Charney is required to maintain $25,000,000 in net
worth and $5,000,000 in liquidity. Mr. Charney is a New York based
attorney and real estate investor who has invested in New York City
commercial real estate since 1980. The 1441 Broadway Property was
purchased from Jerome and Myron Minskoff in 1981. The majority of Mr.
Charney's buildings have been located within the Garment District in
New York and he has significant experience owning and managing
buildings in this area and has long-standing relationships with various
garment district tenants. The borrowers are affiliated with the
borrower under the mortgage loan identified herein and on Annex C to
the prospectus supplement as 1410 Broadway, which mortgage loan is also
an asset of the trust.
o ESCROWS. The loan documents provide for certain escrows of real estate
taxes and insurance premiums. Additionally, the loan documents require
the borrowers to make monthly payments totaling $115,089 per year for
replacement reserves. The borrowers are also required to deposit any
lease termination payments and security deposits applied or other
payments received on account of lease defaults or lease terminations
into a tenant improvement and leasing commission reserve. The loan
documents also provide for an additional springing tenant improvement
and leasing commission reserve (the "LIZ CLAIBORNE Reserve") in the
event that (i) the lease to Liz Claiborne (the "LIZ CLAIBORNE LEASE")
is cancelled or terminated prior to December 31, 2012, (ii) Liz
Claiborne (or any successor or assign) ceases to operate its business
at the 1441 Broadway Property, (iii) Liz Claiborne (or any successor or
assign) fails to make any regularly scheduled rental payments under the
Liz Claiborne Lease, or (iv) Liz Claiborne (or any successor or assign)
becomes the subject of an insolvency proceeding. The Liz Claiborne
Reserve will also be automatically
B-16
GSMS 2004-GG2
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TEN LARGEST MORTGAGE LOANS -1441 BROADWAY
- --------------------------------------------------------------------------------
triggered on August 31, 2010 irrespective of the events referred to
above. Upon a Liz Claiborne Reserve trigger, excess cash flow from the
1441 Broadway Property will be swept into the Liz Claiborne Reserve
until such time as Liz Claiborne renews or extends the Liz Claiborne
Lease, the space subject to the Liz Claiborne Lease has been re-leased
and/or lender has determined that sufficient funds exist in the Liz
Claiborne Reserve to pay for anticipated tenant improvement costs and
leasing commissions with respect to such space. If the Liz Claiborne
Reserve was triggered due to (a) clause (iii) above, excess cash flow
from the 1441 Broadway Property will be swept into the Liz Claiborne
Reserve until such time as the failure to pay rent has been cured and
has not occurred again for a period of 6 consecutive months, (b)
clause (iv) above, excess cash flow from the 1441 Broadway Property
will be swept into the Liz Claiborne Reserve until such time as such
insolvency proceeding has been terminated and the Liz Claiborne Lease
has been affirmed, assumed or assigned in a matter satisfactory to
lender.
o LOCK BOX AND CASH MANAGEMENT. The loan requires a soft lock box, which
is already in place. The loan documents require that all rents received
by the borrowers or the property manager be deposited into a
lender-controlled account (as well as any other rents, receipts,
security deposits or payments related to lease termination or default)
within one business day after receipt. Unless a 1441 Cash Trap Period
is in effect, any amounts in the lender controlled account are required
to be swept on a daily basis into the borrower's operating account. A
"1441 CASH TRAP PERIOD" means any period during which (i) an event of
default (as defined in the loan documents) is continuing, until the
event of default is cured, (ii) the DSCR (based on actual net cash
flow) as of the end of any calendar quarter, is less than 1.05x, until
the DSCR minimum threshold has been achieved for two consecutive
calendar quarters, and (iii) during any time that the Liz Claiborne
Reserve is triggered, as described under "Escrows" above.
o PROPERTY MANAGEMENT. An affiliate of the borrowers, L.H. Charney
Associates, Inc., is the property manager for the 1441 Broadway
Property. The lender may replace the property manager (i) if an event
of default under the loan agreement is continuing, (ii) if the manager
is in material default under the management agreement or (iii) upon the
gross negligence, malfeasance or willful misconduct of the manager. The
annual management fee is 5% of gross receipts, provided that during a
1441 Cash Trap Period, the annual management fee is capped at 2% of
gross receipts. Leasing commissions are payable separately based on a
fixed schedule.
o MEZZANINE OR SUBORDINATE INDEBTEDNESS. Other than the 1441 Broadway
Subordinate Companion Loan, mezzanine or subordinate indebtedness is
not permitted.
o TERRORISM INSURANCE. The 1441 Broadway Property is insured against acts
of terrorism as part of its "all-risk" property coverage. The loan
documents require the borrowers to maintain terrorism insurance in an
amount equal to 100% of the full replacement cost of the 1441 Broadway
Property, provided that such coverage is available. In the event
terrorism insurance is not included as part of the "all risk" property
policy, the borrower will be required to purchase terrorism insurance
at a cost up to the Terrorism Premium Cap (defined below). If the
insurance premiums for such policy exceed the Terrorism Premium Cap,
the lender may, at its option (1) purchase such stand-alone terrorism
insurance policy, and require that the borrowers pay the portion of the
premiums equal to the Terrorism Premium Cap or (2) modify the
deductible amounts, policy limits and other required policy terms to
reduce the insurance premiums payable with respect to such stand-alone
terrorism policy to the Terrorism Premium Cap. As used herein,
"TERRORISM PREMIUM CAP" means an amount which is equal to 150% of the
aggregate amount of insurance premiums paid for physical hazard
insurance for the last policy year in which coverage for terrorism was
included as part of the "all risk" property policy, adjusted annually
by a percentage equal to the increase in the Consumer Price Index. See
"Risk Factors--Property Insurance" in the prospectus supplement.
B-17
GSMS 2004-GG2
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TEN LARGEST MORTGAGE LOANS -GARDEN STATE PLAZA
- --------------------------------------------------------------------------------
[PHOTO OMITTED]
[PHOTO OMITTED]
B-18
GSMS 2004-GG2
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TEN LARGEST MORTGAGE LOANS -GARDEN STATE PLAZA
- --------------------------------------------------------------------------------
[MAP OMITTED]
B-19
GSMS 2004-GG2
- --------------------------------------------------------------------------------
TEN LARGEST MORTGAGE LOANS -GARDEN STATE PLAZA
- --------------------------------------------------------------------------------
- --------------------------------------------------------
PROPERTY INFORMATION
Number of Mortgaged Real Properties 1
Location (City/State) Paramus, New Jersey
Property Type Retail
Size (sf) 1,470,454(owned)
Percentage (Mall Shop) Occupancy as of 95.1%
March, 15, 2004
Year Built / Renovated 1957/1997
Appraisal Value $977,200,000
Underwritten Occupancy 95.1%
Underwritten Revenues $81,826,292
Underwritten Total Expenses $18,830,618
Underwritten Net Operating Income (NOI) $62,995,674
Underwritten Net Cash Flow (NCF) $62,006,522
- ------------------------------------- ------------------
-------------------------------------------------------
MORTGAGE LOAN INFORMATION
Originator Archon
Cut-off Date Principal Balance(1) $130,000,000
Cut-off Date Principal Balance PSF $353.63
Percentage of Initial Mortgage Pool Balance 4.99%
Number of Mortgage Loans 1
Type of Security Fee Simple
Mortgage Rate 4.9796%
Original Term to Maturity (Months) 120
Original Amortization Term (Months) N/A
Cut-off Date LTV Ratio 53.21%
LTV Ratio at Maturity 53.21%
Underwritten DSCR on NOI 2.40
Underwritten DSCR on NCF 2.36
Shadow Ratings (2) "AA"/ "A2"
---------------------------------- --------------------
(1) The $130,000,000 loan represents a 25% interest in a $520,000,000 loan. All
aggregate LTV, DSCR, debt service and loan PSF in this table are based on
the total $520,000,000 financing.
(2) S&P and Moody's have confirmed that the Garden State Plaza Loan has, in the
context of its inclusion in the trust, credit characteristics consistent
with that of an obligation rated "AA" by S&P, and"A2" by Moody's.
o THE LOAN. The mortgage loan (the "GARDEN STATE PLAZA LOAN") is
evidenced by a note that is secured by a first mortgage encumbering the
regional mall located at One Garden State Plaza (the "GARDEN STATE
PLAZA PROPERTY") in Paramus, New Jersey at the intersection of Route 4
and Route 17. The Garden State Plaza Loan represents approximately
4.99% of the initial mortgage pool balance. The Garden State Plaza Loan
was jointly originated on May 18, 2004 by German American Capital
Corporation, Lehman Brothers Bank FSB, UBS Real Estate Investments,
Inc. and Archon Financial, L.P. The Garden State Plaza Loan had an
original principal balance and a principal balance as of the cut-off
date of $130,000,000, and an interest rate of 4.9796%. The Garden State
Plaza Loan was used to refinance existing debt on the Garden State
Plaza Property.
The Garden State Plaza Loan is one of four pari passu mortgage loans
totaling $520,000,000. The other mortgage loans secured by the Garden State
Plaza Property (the "GARDEN STATE PLAZA COMPANION LOANS" and together with
the Garden State Plaza Loan, the "GARDEN STATE PLAZA WHOLE LOAN") are each
pari passu in right of payment with the Garden State Plaza Loan. The Garden
State Plaza Loan and each of Garden State Plaza Companion Loans have the
same interest rate, maturity date and amortization term. The Garden State
Plaza Loan is represented by note A-4. The Garden State Plaza Companion
Loans consist of the following three pari passu notes, with an aggregate
original principal balance of $390,000,000:
o Note A-1, in the original principal amount of $130,000,000, which was
deposited by UBS Real Estate Investments, Inc. into a prior
securitization (LB-UBS 2004 C4);
o Note A-2, in the original principal amount of $130,000,000, which was
deposited by Lehman Brothers Bank FSB into a prior securitization
(LB-UBS 2004 C4); and
o Note A-3, in the original principal amount of $130,000,000, which was
deposited by German American Capital Corporation into a prior
securitization (COMM 2004-LNB3);
The Garden State Plaza Loan will be an asset of the trust. The holders of
the series 2004-GG2 certificates will be entitled to receive all amounts
received in respect of the Garden State Plaza Loan. The Garden State Plaza
Companion Loans will not be assets of the trust.
The Garden State Plaza Loan and the Garden State Plaza Companion Loans are
governed by an intercreditor agreement, as described in the prospectus
supplement under "Description of the Mortgage Pool--Split Loan Structure"
and will be serviced pursuant to the terms of the LB-UBS 2004-C4 pooling
and servicing agreement. Midland Loan Services, Inc. is the primary
servicer of the Garden State Plaza Whole Loan.
The Garden State Plaza Loan had an initial term of 120 months and has a
remaining term of 118 months. The Garden State Plaza Loan requires payments
of interest-only for its entire term. The scheduled maturity date is June
6, 2014. Voluntary prepayment of the Garden State Plaza Whole Loan is
prohibited until the due date in December 2013 and permitted thereafter
without penalty. Defeasance with United States government securities is
permitted any date after the earlier of (i) May 18, 2007 and (ii) the
second anniversary of the last securitization of any mortgage loan secured
by the Garden State Plaza Property.
o THE PROPERTY. The Garden State Plaza Property is a super-regional
shopping mall with 5 anchors and approximately 268 stores with a total
gross leasable area of 1,986,941 sf, of which 1,470,454 sf is part of
the collateral. The Garden State Plaza Property is located in Paramus,
New Jersey at the intersection of Route 4 and Route 17. The Garden
State Plaza Property is anchored by a
B-20
GSMS 2004-GG2
- --------------------------------------------------------------------------------
TEN LARGEST MORTGAGE LOANS -GARDEN STATE PLAZA
- --------------------------------------------------------------------------------
439,632 sf Macy's, a 245,348 sf Nordstrom, a 176,713 sf JC Penney, a
141,139 sf Neiman Marcus, and a 130,000 sf Lord & Taylor. Each of
Nordstrom, Neiman Marcus and Lord & Taylor owns its respective
improvements and ground leases its respective pad from the borrowers;
therefore, those pads, but not the improvements, are part of the
collateral for the Garden State Plaza Whole Loan.
The following table presents certain information relating to the anchor
tenants at the Garden State Plaza Property:
- ---------------------------------------------------------------------------------------------------------------------------------
CREDIT RATING OF OPERATING
PARENT COMPANY COLLATERAL COVENANT
ANCHOR PARENT COMPANY (FITCH/MIS/S&P) GLA INTEREST EXPIRATION
- ---------------------------------------------------------------------------------------------------------------------------------
Macy's Federated Dept Stores, BBB+/Baa1/BBB+ 439,632 Yes 2010
Inc.
Nordstrom Nordstrom, Inc. NR/Baa1/A- 245,348 No 2006
JC Penney JC Penney Company, Inc. BB/Ba3/BB+ 176,713 Yes 2011
Neiman Marcus Neiman Marcus Group, Inc. NR/Baa2/BBB 141,139 No 2011
Lord & Taylor May Department Stores Co. BBB/Baa2/BBB 130,000 No 2011
-----------------
Total Anchor Tenants 1,132,832
- ---------------------------------------------------------------------------------------------------------------------------------
Originally built in 1957, the Garden State Plaza Property was last expanded
in 1997.
In-line tenants (with less than 10,000 sq. ft) reported average sales of
$540 psf for the year ending January 31, 2004. Occupancy costs, based on
underwritten rent and recoveries, are approximately 15.7% for such in-line
space. Garden State Plaza Property is a two-level enclosed mall located on
and directly visible from both Route 4 and Route 17. Nationally recognized
retail tenants include Abercrombie & Fitch, Aeropostale, American Eagle
Outfitters, Ann Taylor, Brooks Brothers, Bath and Body Works, Express, Foot
Locker, Gap, J. Crew, Kenneth Cole New York, Limited/Limited Too, Sephora
and Victoria's Secret. The property is located in the Bergen-Passaic PMSA,
where the 2003 Average Annual Household income was $88,306, and the
population is approximately 1.4 million. Residents of the Bergen-Passaic
PMSA are affluent, earning the 12th highest salaries in the nation.
The following table presents certain information relating to the major mall
shop tenants at the Garden State Plaza Property:
TEN LARGEST TENANTS BASED ON ANNUALIZED UNDERWRITTEN BASE RENT
- ---------------------------------------------------------------------------------------------------------------------------------
ANNUALIZED % OF TOTAL
ANNUALIZED UNDERWRITTEN ANNUALIZED
CREDIT RATING TENANT UNDERWRITTEN BASE RENT UNDERWRITTEN LEASE
TENANT NAME (FITCH/MOODY'S/S&P)(1) NRSF % OF NRSF BASE RENT (PER NRSF) BASE RENT EXPIRATION
- ---------------------------------------------------------------------------------------------------------------------------------
Best Buy(2) BBB/Baa3/BBB- 50,000 3.4% $ 1,725,000 $34.50 3.2% 11/30/2015
Old Navy BB+/Ba2/BB+ 52,420 3.6% 1,644,851 31.38 3.1% 1/31/2007
Banana Republic BB+/Ba2/BB+ 22,447 1.5% 1,454,893 64.81 2.7% 1/31/2011
Victoria's Secret(3) NR/Baa1/BBB+ 20,032 1.4% 1,388,400 69.31 2.6% 1/31/2015
Gap BB+/Ba2/BB+ 19,512 1.3% 1,219,500 62.50 2.3% 6/30/2011
Borders Books & Music NR/NR/NR 33,308 2.3% 1,024,000 30.74 1.9% 1/31/2008
Limited / Limited Too NR/Baa1/BBB+ 16,314 1.1% 789,272 48.38 1.5% 1/31/2010
Express NR/Baa1/BBB+ 11,750 0.8% 587,500 50.00 1.1% 1/31/2009
J. Crew NR/Ca/B- 9,792 0.7% 489,600 50.00 0.9% 1/31/2009
Sam Goody / Musicland NR/NR/NR 8,269 0.6% 482,579 58.36 0.9% 1/31/2012
-----------------------------------------------------------------
TOTAL LARGEST TENANTS 243,844 16.6% $10,805,595 $44.31 20.3%
Remaining Owned Tenants 1,188,350 80.8% 42,427,101 35.70 79.7%
Vacant Spaces (Owned
Spaces) 38,260 2.6%
-----------------------------------------------------------------
TOTAL ALL OWNED TENANTS 1,470,454 100.0% $53,232,696 $37.17 100.0%
- ---------------------------------------------------------------------------------------------------------------------------------
(1) Certain ratings are those of the parent company whether or not the parent
guarantees the lease.
(2) The Best Buy space is an outparcel.
(3) Victoria's Secret is not currently in occupancy but has executed a lease
and, according to information from the borrower, is expected to be in
occupancy in August 2004.
B-21
GSMS 2004-GG2
- --------------------------------------------------------------------------------
TEN LARGEST MORTGAGE LOANS -GARDEN STATE PLAZA
- --------------------------------------------------------------------------------
The following table presents certain information relating to the lease
rollover schedule at the Garden State Plaza Mall Property:
LEASE EXPIRATION SCHEDULE (1)
- ---------------------------------------------------------------------------------------------------------------------------------
% OF TOTAL ANNUALIZED
% OF CUMULATIVE ANNUALIZED ANNUALIZED UNDERWRITTEN
EXPIRING TOTAL OF UNDERWRITTEN UNDERWRITTEN BASE RENT
YEAR ENDING DECEMBER 31, NRSF NRSF TOTAL NRSF BASE RENT BASE RENT (PER NRSF)
- ---------------------------------------------------------------------------------------------------------------------------------
2004 (Includes MTM) 20,219 1.4% 1.4% $1,016,775 1.9% $50.29
2005 29,245 2.0% 3.4% 1,532,475 2.9% 52.40
2006 21,676 1.5% 4.8% 1,968,869 3.7% 90.83
2007 153,566 10.4% 15.3% 7,873,883 14.8% 51.27
2008 123,626 8.4% 23.7% 6,775,854 12.7% 54.81
2009 108,808 7.4% 31.1% 6,218,843 11.7% 57.15
2010 63,805 4.3% 35.4% 3,092,608 5.8% 48.47
2011 88,498 6.0% 41.4% 4,676,998 8.8% 52.85
2012 54,038 3.7% 45.1% 2,975,426 5.6% 55.06
2013 55,846 3.8% 48.9% 3,491,028 6.6% 62.51
2014 & Thereafter 712,867 48.5% 97.4% 13,609,937 25.6% 19.09
Vacant 38,260 2.6% 100.0%
-----------------------------------------------------------------------------------------
TOTAL 1,470,454 100.0% 100.0% $53,232,696 100.0% $37.17
- ---------------------------------------------------------------------------------------------------------------------------------
(1) Calculated based on approximate square footage occupied by each tenant.
o THE BORROWERS. The borrowers are Westland Garden State Plaza Limited
Partnership ("WESTLAND LP"), a limited partnership and GSP Holdings LLC
("GSP LLC"), a limited liability company (the "GARDEN STATE
BORROWERS"). In addition to owning the Garden State Plaza Property,
Westland LP owns three subsidiaries. Each of the Garden State Borrowers
are a single-purpose entity, sponsored and controlled by Westfield
America, Inc. and certain affiliates of Prudential Assurance Company
Limited (Aldwych, L.L.C. and Old Kingsway, L.P.) (collectively, the
"GARDEN STATE SPONSORS"). Legal counsel to the borrower delivered a
non-consolidation opinion in connection with the origination of the
Garden State Plaza Loan. Westfield America, Inc. owns a 46.59% indirect
interest in the Garden State Borrowers, Aldwych, L.L.C. and Old
Kingsway, L.P. own a 50% indirect interest in the Garden State
Borrowers and other investors own in the aggregate a 3.41% indirect
interest in the Garden State Borrowers. In April 2004, Westfield
announced a proposal to merge the three listed Westfield entities -
Westfield Trust, Westfield America Trust and Westfield Holdings - to
create the world's largest, listed retail property group. The new
entity, known as Westfield Group, began trading on the Australian Stock
Exchange on July 5, 2004.
o ESCROWS. The loan documents provide for certain escrows of real estate
taxes, insurance and replacements and rollovers. In lieu of making
deposits into the tax and insurance reserve account and the
replacements and rollover reserve, the Garden State Sponsors have
executed a joint but not several guarantee in favor of the lender of
(i) real estate taxes and insurance premiums and deductibles and (ii)
certain leasing expenses, maintenance or repair expenses and the
completion of certain specified improvements or other work to be
performed on the Garden State Plaza Property.
Notwithstanding the guarantee of the Garden State Sponsors, upon the
occurrence of a Garden State Cash Management Event, the Garden State
Borrowers are required to deposit amounts in the tax and insurance reserve
account and in the replacement and rollover reserve fund. Upon the
occurrence and during the continuance of a Garden State Cash Management
Event, the borrower is required to pay to a lender controlled account an
amount equal to the approved operating expenses for the Garden State Plaza
Property for the next month. Unless an event of default has occurred and is
continuing, the lender will release any excess funds in the
lender-controlled account to the borrower. A "GARDEN STATE CASH MANAGEMENT
EVENT" means the period of time from and after (i) an event of default
occurs or (ii) the DSCR at any time is less than 1.10x. A Garden State Cash
Management Event may be terminated no more than six (6) times during the
term of the loan upon, among other things, achieving a debt service
coverage ratio of 1.15x for one fiscal quarter (if the Garden State Plaza
Cash Management Event was due to the debt service coverage ratio falling
below 1.10x) or curing the event of default which caused the Garden State
Plaza Cash Management Event.
o LOCK BOX AND CASH MANAGEMENT. The loan requires a hard lock box, which
is already in place. The loan documents require the borrower to direct
tenants to pay their rents directly to a lender-controlled account. The
loan documents also require that all rents received by the borrower or
the property manager be deposited into the lender-controlled account
(as well as any other rents, receipts, security deposits or payments
related to lease termination or default) within one business day of
receipt. Prior to the occurrence of a Garden State Cash Management
Event, all funds from the lender-controlled account will be swept on a
daily basis into an account controlled by the borrower. After the
occurrence of a Garden State Cash Management Event, all funds from the
lender-controlled account will be swept on a daily basis to an account
controlled by the lender and applied to pay monthly debt service,
operating expenses, and any required reserves under the loan documents.
If on any payment date the amount in the lender-
B-22
GSMS 2004-GG2
- --------------------------------------------------------------------------------
TEN LARGEST MORTGAGE LOANS -GARDEN STATE PLAZA
- --------------------------------------------------------------------------------
controlled account is sufficient to pay the debt service, operating
expenses, and any required reserves under the loan documents, any
excess shall be remitted to the borrower unless an event of default
has occurred and is continuing.
o PROPERTY MANAGEMENT. Westfield Corporation, Inc., the property manager
for the Garden State Plaza Property (the "GARDEN STATE PLAZA PROPERTY
MANAGER"), is affiliated with the borrower. Upon the occurrence, and
during the continuance, of a Garden State Cash Management Event, lender
may require the Garden State Borrowers to retain a property management
firm to serve as a consultant. The lender may replace the Garden State
Plaza Property Manager upon, or any time after, the lender or any third
party acquires the Garden State Plaza Property by foreclosure,
deed-in-lieu of foreclosure or otherwise.
o MEZZANINE OR SUBORDINATE INDEBTEDNESS. None permitted.
o THEATER EXPANSION. Pursuant to the loan documents, upon the
satisfaction of certain conditions including (a) the lender's approval
of the plans and specifications, (b) the absence of an event of default
with respect to the Garden State Plaza Whole Loan, (c) the delivery of
an executed lease for the cinema complex, (d) the delivery of cash or a
letter of credit equal to 125% of the amount by which the estimated
costs of the proposed expansion exceed an amount equal to 7% of the
original principal balance of the Garden State Plaza Whole Loan or, for
so long as the Garden State Plaza Sponsors meet certain financial
requirements, the delivery of a completion guarantee by the Garden
State Plaza Sponsors, and (e) due to potential environmental conditions
which may exist with respect to the site, compliance with certain
environmental investigations and mitigants specified in the related
loan documents, the Garden State Plaza Borrowers may acquire an
approximately five-acre existing theatre site adjacent to the Garden
State Plaza Mortgaged Property and construct thereon (i) an
approximately 99,000 square-foot cinema complex, (ii) approximately
35,000 square feet of new in-line mall shop space, (iii) approximately
15,000 square feet of new restaurant space, (iv) an expansion to the
existing food court and (v) a grade parking lot and/or a decked parking
facility. Upon the acquisition of that parcel, it will become
additional collateral for the Garden State Plaza Whole Loan.
o TERRORISM INSURANCE. The Garden State Sponsors have executed a
guarantee in favor of the lender, which provides that, if the Garden
State Borrowers fail to maintain terrorism insurance coverage from a
qualified carrier in an amount (the "REQUIRED TERRORISM INSURANCE
AMOUNT") at least equal to the lesser of (i) the outstanding principal
balance of the Gardens State Plaza Loan and the Garden State Plaza
Companion Loans and (ii) the insurable value of the Garden State Plaza
Mortgage Loan, as determined pursuant to the related loan documents,
together with business interruption coverage as required under the
related loan documents, then the Garden State Sponsors guarantee to the
mortgagee the full and prompt payment (in accordance with the terms of
such terrorism guarantee, and subject to the limitations on liability
described below) of the amount of any loss or damage with respect to
the Garden State Mortgaged Property caused by an incident of terrorism
or a terrorist act that is not covered by any policies maintained by
the Garden State Borrowers or the Garden State Sponsors at the time of
the occurrence, which loss or damage would have otherwise been insured
if the Garden State Borrowers had maintained all insurance policies
required pursuant to the related loan documents without any terrorism
exclusion, up to the Required Terrorism Insurance Amount.
The Garden State Sponsors may on behalf of the Garden State Borrowers
obtain and maintain a policy insuring the Garden State Plaza Property
against terrorist acts that satisfies the requirements set forth above.
Garden State Sponsors are jointly and severally liable for 100% of the
guaranteed obligations under such terrorism guarantee, except that this
liability may be reduced with respect to the Garden State Sponsors to
reflect any insurance policy for terrorist acts maintained by them in
addition to insurance maintained by the Garden State Borrowers. In any
event, and in addition to such terrorism guarantee, the Garden State
Borrowers are required to maintain insurance coverage for terrorist acts in
an amount equal to the lesser of (a) the Required Terrorism Insurance
Amount and (b) the difference between the amount of insurance coverage that
is available for terrorist acts for an annual premium of $300,000 and the
amount of insurance maintained by the Garden State Borrowers under existing
policies for loss, damages or liabilities that do not contain an exclusion
for acts of terrorism. In the event that the combined net worth of the
Garden State Sponsors (determined in accordance with the related loan
documents) at any time falls below $2,000,000,000, the Garden State
Sponsors are required to provide a replacement guarantor or guarantors with
a combined net worth equal to or greater than $2,000,000,000. See "Risk
Factors--Property Insurance" in the prospectus supplement.
o ENVIRONMENTAL MATTERS. Certain environmental conditions have been
identified at a property adjacent to the Garden State Plaza Property.
An affiliate of the Garden State Plaza Borrowers has been designated
the responsible party with respect to those environmental conditions
and certain remedial work was performed with respect thereto. An
environmental assessment prepared in connection with the Garden State
Plaza Loan estimated ongoing monitoring costs to be approximately
$30,000. As such, no escrow or guarantee was required with respect to
this matter. However, there can be no assurance that additional
remedial work or monitoring will not be required with respect thereto.
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PROPERTY INFORMATION
Number of Mortgaged Real Properties 1
Location (City/State) Richmond, Virginia
Property Type Retail
Size (sf) 382,636 (owned)
Percentage (Mall Shop) Occupancy
as of March 10, 2004 96.4%
Year Built 2003
Appraisal Value $160,000,000
Underwritten Occupancy 96.0%
Underwritten Revenues $16,167,060
Underwritten Total Expenses $4,430,622
Underwritten Net Operating Income (NOI) $11,736,438
Underwritten Net Cash Flow (NCF) $11,363,039
- ----------------------------------------------------------
- --------------------------------------------------------
MORTGAGE LOAN INFORMATION
Originator Archon/Commerzbank
Cut-off Date Principal Balance $114,910,606
Cut-off Date Principal Balance PSF $300.31
Percentage of Initial Mortgage Pool 4.41%
Balance
Number of Mortgage Loans 1
Type of Security Fee
Mortgage Rate 6.24%
Original Term to Maturity (Months) 119
Original Amortization Term (Months) 360
Cut-off Date LTV Ratio 71.82%
LTV Ratio at Maturity 61.50%
Underwritten DSCR on NOI 1.38
Underwritten DSCR on NCF 1.34
- --------------------------------------------------------
o THE LOAN. The mortgage loan (the "STONY POINT FASHION PARK LOAN") is
evidenced by two notes and is secured by a first mortgage encumbering a
382,636 sf regional mall in Richmond, Virginia (the "STONY POINT
FASHION PARK PROPERTY"). The Stony Point Fashion Park Loan represents
approximately 4.41% of the initial mortgage pool balance. The Stony
Point Fashion Park Loan was co-originated on June 10, 2004, by
Commerzbank AG, New York Branch and Archon Financial, L.P., each having
a 50% interest in the Stony Point Fashion Park Loan. The Stony Point
Fashion Park Loan is represented by two notes each with an original
principal balance of $57,500,000 totaling $115,000,000. The Stony Point
Fashion Park Loan has a balance as of the cut-off date of $114,910,606,
and an interest rate of 6.24%. The DSCR and LTV on the Stony Point
Fashion Park Loan are 1.34x and 71.82%, respectively. The proceeds of
the Stony Point Fashion Park Loan were used to refinance the
construction debt on the Stony Point Fashion Park Property.
The Stony Point Fashion Park Loan had an initial term of 119 months and has
a remaining term of 118 months. The Stony Point Fashion Park Loan requires
payments of interest and principal based on a 360-month schedule. The
scheduled maturity date is June 1, 2014. Voluntary prepayment of the Stony
Point Fashion Park Loan is prohibited until February 1, 2014 and permitted
thereafter without penalty. Defeasance with United States government
securities is permitted at any time after the earlier of two years from
securitization or three years from June 10, 2004.
o THE PROPERTY. The Stony Point Fashion Park Property is a regional
shopping mall with three anchors and approximately 88 stores (79 mall
shops, six restaurants and three kiosks) with a total gross leasable
area of 665,131 sf, of which 382,636 sf is part of the collateral. The
Stony Point Fashion Park Property is located in Richmond, Virginia. The
Stony Point Fashion Park Property is anchored by a 202,495 sf
Dillard's, an 84,000 sf Galyan's and an 80,000 sf Saks Fifth Avenue.
With the exception of the 84,000 sf Galyan's, the anchors are not part
of the collateral securing the Stony Point Fashion Park Loan.
The following table presents certain information relating to the anchors at
the Stony Point Fashion Park Property:
- ---------------------------------------------------------------------------------------------------------------------------
CREDIT RATING OF OPERATING
PARENT COMPANY COLLATERAL COVENANT
ANCHOR PARENT COMPANY (FITCH/MIS/S&P) GLA INTEREST EXPIRATION
- ---------------------------------------------------------------------------------------------------------------------------
Dillard's Dillard's, Inc. BB-/B2/BB 202,495 No 9/18/2018
Galyan's Galyan's Trading Company, Inc.(1) NR/NR/NR 84,000 Yes 9/18/2018
Saks Fifth Avenue Saks Inc. BB-/Ba3/BB 80,000 No 9/18/2018
-----------
366,495
- ---------------------------------------------------------------------------------------------------------------------------
(1) On July 29, 2004, Dick's Sporting Goods, Inc. announced the successful
completion of its acquisition of Galyan's Trading Company, Inc.
The Stony Point Fashion Park Property was built and opened in September
2003.
Pursuant to ICSC's Retail Chain Store Sales Index, projected sales per
square foot for the mall tenants (with less than 10,000 square feet) is
$366 based upon annualizing partial year sales. Occupancy costs, based on
underwritten rent and recoveries at this sales level would be approximately
12.5% for such tenants.
The Stony Point Fashion Park Property is a single-story, open-air regional
mall located on and directly visible from State Route 150. The Stony Point
Fashion Park Property's in-line tenants include The Gap/Gap Kids,
Restoration Hardware, Anthropologie, Louis Vuitton and Brooks Brothers. The
Stony Point Fashion Park Property has six restaurants, including P.F.
Chang's China Bistro, Brio Tuscan Grille and Copeland's Cheesecake Bistro.
Residential uses generally surround the Stony Point Fashion Park Property
to the west, north and south, while several newer medical office buildings
are located to its south and east. The Stony Point Fashion Park Property is
located in the Richmond-Petersburg MSA. According to the appraisal, the
2003 median household income was $51,970, with 30.9% of households earning
more than $75,000 and the population was approximately 1.0 million.
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GSMS 2004-GG2
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TEN LARGEST MORTGAGE LOANS - STONY POINT FASHION PARK
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The following table presents certain information relating to major tenants
at the Stony Point Fashion Park Property:
TEN LARGEST TENANTS BASED ON ANNUALIZED UNDERWRITTEN BASE RENT
- ---------------------------------------------------------------------------------------------------------------------------------
ANNUALIZED % OF TOTAL
CREDIT RATING ANNUALIZED UNDERWRITTEN ANNUALIZED
(FITCH/ % OF UNDERWRITTEN BASE RENT UNDERWRITTEN LEASE
TENANT NAME MOODY'S/ S&P)(1) TENANT NRSF NRSF BASE RENT (PER NRSF) BASE RENT EXPIRATION
- ---------------------------------------------------------------------------------------------------------------------------------
Brooks Brothers NR/NR/NR 9,253 2.4% $ 370,120 $40.00 3.4% 1/31/2013
The Gap/Gap Kids BB+/Ba2/BB+ 9,379 2.5% 309,507 33.00 2.9% 9/30/2013
Adrienne Vittadini NR/NR/NR 5,465 1.4% 273,250 50.00 2.5% 1/31/2013
Copeland's Cheesecake NR/NR/NR 10,753 2.8% 268,825 25.00 2.5% 1/31/2018
Bistro
Banana Republic BB+/Ba2/BB+ 7,000 1.8% 252,000 36.00 2.3% 9/30/2013
Champps Restaurant NR/NR/NR 8,500 2.2% 242,570 28.54 2.3% 8/31/2018
Talbots/Talbots Petite NR/NR/NR 6,519 1.7% 228,165 35.00 2.1% 8/31/2013
Rio Grande Cafe NR/NR/NR 7,766 2.0% 221,400 28.51 2.1% 1/31/2023
Ann Taylor NR/NR/NR 5,200 1.4% 208,000 40.00 1.9% 1/31/2014
Brio Tuscan Grille NR/NR/NR 7,805 2.0% 195,125 25.00 1.8% 8/31/2018
---------------------------------------------------------------------
TOTAL LARGEST TENANTS 77,640 20.3% 2,568,962 33.09 23.9%
Remaining Owned Tenants 294,257 76.9% 8,190,164 27.83 76.1%
Vacant Spaces (Owned Space) 10,739 2.8%
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TOTAL ALL OWNED TENANTS 382,636 100.0% $ 10,759,126 $28.93 100.0%
- ---------------------------------------------------------------------------------------------------------------------------------
(1) Certain ratings are those of the parent company whether or not the parent
guarantees the lease.
The following table presents certain information relating to the lease
rollover schedule at the Stony Point Fashion Park Property:
LEASE EXPIRATION SCHEDULE(1)(2)
- -------------------------------------------------------------------------------------------------------------------------------
% OF TOTAL ANNUALIZED
CUMULATIVE ANNUALIZED ANNUALIZED UNDERWRITTEN
EXPIRING % OF OF TOTAL UNDERWRITTEN UNDERWRITTEN BASE RENT
YEAR ENDING DECEMBER 31, NRSF TOTAL NRSF NRSF BASE RENT BASE RENT (PER NRSF)
- -------------------------------------------------------------------------------------------------------------------------------
2004 (Includes MTM) 0 0.0% 0.0% $ 0 0.0% $0.00
2005 0 0.0% 0.0% 0 0.0% 0.00
2006 0 0.0% 0.0% 0 0.0% 0.00
2007 2,109 0.6% 0.6% 80,000 0.7% 37.93
2008 2,803 0.7% 1.3% 357,247 3.3% 127.45
2009 2,350 0.6% 1.9% 275,000 2.6% 117.02
2010 7,085 1.9% 3.7% 357,434 3.3% 50.45
2011 4,289 1.1% 4.9% 187,257 1.7% 43.66
2012 5,335 1.4% 6.3% 210,575 2.0% 39.47
2013 122,999 32.1% 38.4% 4,238,879 39.4% 34.46
2014 & Thereafter 224,927 58.8% 97.2% 5,052,734 47.0% 22.46
Vacant 10,739 2.8% 100.0% 0 0.0% 0.00
------------------------------------------------------------------------------------------------
TOTAL 382,636 100.0% 100.0% $10,759,126 100.0% $28.93
- -------------------------------------------------------------------------------------------------------------------------------
(1) Landlord owned only.
(2) Calculated based on approximate square footage occupied by each tenant.
o THE BORROWER. The borrower, Stony Point Fashion Park Associates,
L.L.C., is a single-asset, special purpose entity. Legal counsel to the
borrower delivered a non-consolidation opinion in connection with the
origination of the Stony Point Fashion Park Loan. The Taubman Realty
Group Limited Partnership guaranteed the non-recourse carve-outs of the
Stony Point Fashion Park Loan.
o ESCROWS. The loan documents provide during an event of default or a
Stony Point Escrow Period for certain escrows of real estate taxes,
insurance, leasing reserves and capital improvements. Additionally, at
origination the borrower deposited $4,668,988 into an
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unfunded obligations reserve in respect of certain future obligations
of the borrower under tenant leases. A "STONY POINT ESCROW Period"
means the period commencing on the date that the actual net operating
income of the Stony Point Fashion Park Property for the four calendar
quarters most recently ended of the Stony Point Fashion Park Property
for is less than 85% of the net operating income at origination, as
measured quarterly until the net operating income for the Stony Point
Fashion Park Property for the four calendar quarters most recently
ended is at least 85% of the net operating income at origination for
two consecutive quarters.
o LOCK BOX AND CASH MANAGEMENT. The loan requires a hard lock box. The
loan documents require the borrower to direct the tenants to pay their
rents directly to a lender-controlled sweep account. The loan documents
also require that all cash revenue received by the borrower or the
property manager be deposited into the lender-controlled sweep account
within one business day after receipt, other than certain amounts in
respect of kiosk rents. Unless an event of default or Stony Point
Escrow Period is continuing, on each business day any amounts in the
lender-controlled sweep account are swept to an account specified by
the borrower. During the continuance of an event of default or any
Stony Point Escrow Period, once each week any amounts in the
lender-controlled sweep account are swept to a lender-controlled cash
management account. During the continuance of an event of default or a
Stony Point Escrow Period, all amounts remaining in the
lender-controlled cash management account after payment of the monthly
debt service, all required reserves as described above and any other
amounts due under the Stony Point Fashion Park Loan will be remitted to
an account designated by the borrower, unless an event of default is
ongoing. After the occurrence and during the continuation of an event
of default, the borrower will have no rights to any money in the
lender-controlled sweep account or the lender-controlled cash
management account and the lender may apply any amounts on deposit in
such accounts to the amounts due under the Stony Point Fashion Park
Loan as it determines.
o PROPERTY MANAGEMENT. The Stony Point Fashion Park Property is managed
by the Taubman Company LLC, and affiliate of the borrower, pursuant to
a management agreement. The management agreement has an initial term of
five years (ending September 2008) with continuous automatic one-year
renewal terms. The lender may require the replacement of the property
manager (i) if an event of default has occurred and the lender has
accelerated the loan or (ii) if the manager becomes insolvent. The
management fee is 4%, based upon rent, common area charges and other
income.
o MEZZANINE OR SUBORDINATE INDEBTEDNESS. None permitted.
o TERRORISM INSURANCE. The borrower is required to maintain commercial
property and business income insurance for loss resulting from perils
and acts of terrorism on terms (including amounts) consistent with
those required under the loan documents for comprehensive all risk
insurance and business income insurance at all times during the term of
the Stony Point Fashion Park Loan; provided, however, (A) the borrower
may maintain such coverage through a blanket policy with a required
deductible not in excess of $500,000 (the "STONY POINT REQUIRED
TERRORISM DEDUCTIBLE") or such higher deductible if the borrower
provides the lender a letter of credit in an amount equal to the
difference between the actual deductible and the Stony Point Required
Terrorism Deductible, which letter of credit may be drawn upon by the
lender upon the occurrence of a casualty to pay such amounts that would
have been paid by the issuer of the policies if the Stony Point
Required Terrorism Deductible had been maintained and (B) the borrower
shall only be required to maintain such amount of coverage as may be
obtained at a cost equal to (1) for the first four (4) years after June
10, 2005, one hundred and fifty percent (150%) of the cost of the
coverage required as of the date of origination (i.e., $150,000) and
(2) commencing June 10, 2010, two hundred percent (200%) of the cost of
the coverage required as of the date of origination (i.e., $200,000).
See "Risk Factors--Property Insurance" in the prospectus supplement.
o ADDITIONAL COLLATERAL. The City of Richmond paid the borrower's
predecessor in interest $13,500,000 for title to certain parking areas
located near the Stony Point Fashion Park Property (the "STONY POINT
FASHION PARK PARKING AREA"). On the fifth anniversary of the opening of
the Stony Point Fashion Park Property, the borrower, or another
creditworthy entity, is required to post an irrevocable letter of
credit in favor of the City of Richmond in the amount that $15,269,650
exceeds the total amount of taxes collected by the City of Richmond
from the Stony Point Fashion Park Property. Each year thereafter, the
letter of credit shall be (i) reduced by the amount of taxes collected
by the City of Richmond in respect of the Stony Point Fashion Park
Property and (ii) increased by an amount equal to an interest rate
times the amount of the letter of credit. On the tenth anniversary of
the opening of the Stony Point Fashion Park Property, the borrower must
either (i) pay the amount of the letter of credit or (ii) the City of
Richmond shall have the right to draw on the letter of credit. After
the tenth anniversary of the opening of the Stony Point Fashion Park
Property, the borrower has an option to repurchase the Stony Point
Fashion Park Parking Area from the City of Richmond for an amount equal
to 50% of the increase in the fair market value of the Stony Point
Fashion Park Parking Area. Pursuant to a reciprocal easement agreement
Dillard's can require the borrower to exercise this repurchase option
and convey a portion of the Stony Point Fashion Park Parking Area to
Dillard's at no cost to Dillard's.
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PROPERTY INFORMATION
Number of Mortgaged Real Properties 1
Location (City/State) New York, New York
Property Type Office
Size (sf) 357,139
Percentage Occupancy as of May 18, 2004 98.3%
Year Built / Renovated 1930 / 2004
Appraisal Value $124,000,000
Underwritten Occupancy 94.0%
Underwritten Revenues $15,016,235
Underwritten Total Expenses $5,214,691
Underwritten Net Operating Income (NOI) $9,801,544
Underwritten Net Cash Flow (NCF) $9,217,097
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- ----------------------------------------------------------
MORTGAGE LOAN INFORMATION
Originator GCFP
Cut-off Date Principal Balance $97,839,965
Cut-off Date Principal Balance PSF/Unit $273.95
Percentage of Initial Mortgage Pool Balance 3.76%
Number of Mortgage Loans 1
Type of Security Fee Simple
Mortgage Rate 6.4988%
Original Term to Maturity (Months) 120
Original Amortization Term (Months) 360
Cut-off Date LTV Ratio 78.9%
LTV Ratio at Maturity 68.0%
Underwritten DSCR on NOI 1.32
Underwritten DSCR on NCF 1.24
- ----------------------------------------------------------
o THE LOAN. The mortgage loan (the "1410 BROADWAY LOAN") is evidenced by
a single note and is secured by a first mortgage encumbering the office
building located at 1410 Broadway, New York, New York (the "1410
BROADWAY PROPERTY"). The 1410 Broadway Loan represents approximately
3.76% of the initial mortgage pool balance. The 1410 Broadway Loan was
originated on May 25, 2004, had an original principal balance of
$98,000,000 and a principal balance as of the cut-off date of
$97,839,965, and an interest rate of 6.4988%. The DSCR and LTV on the
1410 Broadway Loan are 1.24x and 78.9%, respectively. The proceeds of
the 1410 Broadway Loan were used to refinance an existing loan.
The 1410 Broadway Loan had an initial term of 120 months and has a
remaining term of 118 months. The 1410 Broadway Loan amortizes based on
a 360-month schedule, with required monthly payments of $619,346.10.
The scheduled maturity date is June 1, 2014. Voluntary prepayment of
the 1410 Broadway Loan is prohibited until April 1, 2014 and permitted
thereafter without penalty. Defeasance with United States government
securities is permitted after the second anniversary of the
securitization closing date.
o THE PROPERTY. The 1410 Broadway Property is a pre-war 33-story
multi-tenant office building containing a total of 357,139 square feet
that is located on the southeast corner of Broadway and West 39th
Street in New York City, New York. The 1410 Broadway Property was built
in 1930 and has undergone significant renovation over the years. The
building is located three blocks south of Times Square with northern
exposure along 39th Street and maintains a wedding-cake setback design
that begins to recede above the 19th floor. The average floor plates
are between 12,000 and 13,000 sf between floors 2 and 20 and between
4,000 sf and 10,000 sf on the highest floors. The building has lobby
entrances on Broadway and 39th Street. The building houses seven
passenger elevators (two elevator banks) and four freight elevators.
The area surrounding the 1410 Broadway Property has amenities including
restaurants, hotels, shows and entertainment. Additionally, the
building has access to public transportation via the west side subway
lines, the 42nd Street subway shuttle, cross-town buses and is in
walking distance to both Penn Station and Grand Central Station.
As of May 18, 2004, the 1410 Broadway Property was 98.3% leased and has
maintained occupancy levels of greater than 95% over the past ten
years. Floor plates are easily divisible to accommodate whole floor
users or as many as six tenant spaces. Whole floor use is more
prominent on the upper, smaller floors. The building's corner location
offers lower floor tenants northern and western exposures with upper
floors benefiting from 270 degree views.
B-31
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TEN LARGEST MORTGAGE LOANS - 1410 BROADWAY
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The following table presents certain information relating to the major
tenants at the 1410 Broadway Property:
- ------------------------------------------------------------------------------------------------------------------------------
% OF TOTAL ANNUALIZED
ANNUALIZED ANNUALIZED UNDERWRITTEN
TENANT UNDERWRITTEN UNDERWRITTEN BASE RENT
TENANT NAME NRSF % OF NRSF BASE RENT ($) BASE RENT ($ PER SF) LEASE EXPIRATION
- ------------------------------------------------------------------------------------------------------------------------------
Golden Touch Imports, Inc. 26,488 7.4% $709,106 5.5% $26.77 9/30/2008
A.K.N.Y. Inc 15,750 4.4% 682,980 5.3% 43.36 7/31/2006 & 4/30/2008(1)
Cross Border Exchange 15,742 4.4% 613,939 4.8% 39.00 10/31/2010
Crystal Kobe, Ltd. 17,921 5.0% 563,998 4.4% 31.47 8/31/2007 & 8/31/2010(2)
The Men's Wearhouse 14,890 4.2% 557,080 4.3% 37.41 1/31/2011
Marisa Christina Apparel Inc. 13,581 3.8% 475,335 3.7% 35.00 10/31/2013
TOTAL LARGEST TENANTS 104,372 29.2% 3,602,438 28.0% 34.52
Remaining Tenants 246,718 69.1% 9,286,079 72.0% 37.64
Vacant Space 6,049 1.7%
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TOTAL ALL TENANTS 357,139 100.0% $12,888,517 100.0% $36.09
- ------------------------------------------------------------------------------------------------------------------------------
(1) A.K.N.Y. Inc. occupies 13,244 sf under a lease expiring in 2006 and 2,506
sf under a lease expiring in 2008.
(2) Crystal Kobe, Ltd. occupies 9,000 sf under a lease expiring in 2007 and
8,921 sf under a lease expiring in 2010.
The following table presents certain information relating to the lease
rollover schedule at the 1410 Broadway Property:
LEASE EXPIRATION SCHEDULE(1)
- ------------------------------------------------------------------------------------------------------------------------
% OF TOTAL ANNUALIZED
ANNUALIZED ANNUALIZED UNDERWRITTEN
EXPIRING % OF CUMULATIVE UNDERWRITTEN UNDERWRITTEN BASE RENT
YEAR ENDING DECEMBER 31, NRSF TOTAL NRSF OF TOTAL NRSF TOTAL RENT(1) TOTAL RENT (PER NRSF)
- ------------------------------------------------------------------------------------------------------------------------
2004 19,360 5.4% 5.4% 898,115 7.0% 46.39(2)
2005 27,552 7.7% 13.1% 933,814 7.2% 33.89
2006 42,232 11.8% 25.0% 1,593,094 12.4% 37.72
2007 32,445 9.1% 34.0% 1,176,375 9.1% 36.26
2008 61,941 17.3% 51.4% 2,077,367 16.1% 33.54
2009 13,400 3.8% 55.1% 478,880 3.7% 35.74
2010 47,368 13.3% 68.4% 1,605,706 12.5% 33.90
2011 64,051 17.9% 86.3% 2,538,630 19.7% 39.63
2012 13,554 3.8% 90.1% 487,925 3.8% 36.00
2013 27,057 7.6% 97.7% 1,078,810 8.4% 39.87
2014 Thereafter 2,130 0.6% 98.3% 19,801 0.2% 0.00
Vacant 6,049 1.7% 100.0%
---------------------------------------------------------------------------------------------
TOTAL 357,139 100.0% 12,888,517 100.0% $36.09
- ------------------------------------------------------------------------------------------------------------------------
(1) Calculated based on approximate square footage occupied by each tenant.
(2) Includes 1,265 sf retail space at $150 psf.
o THE BORROWER. The borrower is L. Charney 1410 Broadway, LLC, a
single-asset, bankruptcy-remote entity with an independent director.
Legal counsel to the lender delivered a non-consolidation opinion in
connection with the origination of the 1410 Broadway Loan. The borrower
is directly and indirectly owned by and controlled by Leon H. Charney.
Mr. Charney guaranteed the non-recourse carveouts of the 1410 Broadway
Loan. In connection with such guarantee, Mr. Charney is required to
maintain $25,000,000 in net worth and $5,000,000 in liquidity. Mr.
Charney is a New York based attorney and real estate investor who has
invested in New York City commercial real estate since 1980. The 1410
Broadway Property was purchased from Harry Helmsley in 1984. The
majority of Mr. Charney's buildings have been located within the
Garment District in New York and he has significant experience owning
and managing buildings in this area and has long-standing relationships
with various garment district tenants. The borrower is affiliated with
the borrowers under the mortgage loan identified herein and in Annex C
to the prospectus supplement as 1441 Broadway, which mortgage loan is
also an asset of the trust.
o ESCROWS. The loan documents provide for certain escrows for real estate
taxes and insurance premiums. The borrower deposited $390,579 into a
reserve for immediate repairs. Additionally, the loan documents require
the borrower to make monthly payments totaling $89,285 per year for
replacement reserves on each monthly payment date on which less than
$275,000 is then on deposit in the replacement reserve and $464,281 per
year for tenant improvements and leasing commissions on each monthly
payment date on
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which less than $1,800,000 is then on deposit in the tenant
improvements and leasing commission reserve. The borrower is also
required to deposit any lease termination payments and security
deposits applied or other payments received on account of lease
defaults or lease terminations into a rollover reserve.
o LOCK BOX AND CASH MANAGEMENT. The loan requires a soft lock box, which
is already in place. The loan documents require that all rents received
by the borrower or the property manager be deposited into a
lender-controlled account (as well as any other rents, receipts,
security deposits or payments related to lease termination or default)
within one business day after receipt. Unless a 1410 Broadway Cash Trap
Period is in effect, any amounts in the lender controlled account are
swept on daily basis into the borrower's operating account. A "1410
BROADWAY CASH TRAP PERIOD" means any period during which (i) an event
of default (as defined in the loan documents) is continuing, until such
event of default is cured or (ii) the DSCR (based on actual net cash
flow) as of the end of any calendar quarter is less than 1.05x, until
the DSCR minimum threshold has been achieved for two consecutive
calendar quarters. During a 1410 Broadway Cash Trap Period, all cash in
the lender controlled account (after payment of debt service, required
reserves and approved operating expenses) are to be deposited into a
lender controlled cash collateral account and held as additional
collateral for the 1410 Broadway Loan.
o PROPERTY MANAGEMENT. L.H. Charney Associates, Inc., an affiliate of the
borrower, is the property manager for the 1410 Broadway Property. The
lender may replace the property manager (i) if an event of default is
continuing under the 1410 Broadway Loan, (ii) if the manager is in
material default under the management agreement or (iii) upon the gross
negligence, malfeasance or willful misconduct of the manager. The
annual management fee is 4% of gross receipts, provided that during a
1410 Broadway Cash Trap Period, the annual management fee is capped at
2% of gross receipts. Leasing commissions are payable separately based
on a fixed schedule.
o MEZZANINE OR SUBORDINATE INDEBTEDNESS. Not permitted.
o TERRORISM INSURANCE. The 1410 Broadway Property is insured against acts
of terrorism as part of its "all-risk" property coverage. The loan
documents require the borrower to maintain terrorism insurance in an
amount equal to 100% of the full replacement cost of the 1410 Broadway
Property, provided that such coverage is available. In the event that
terrorism coverage is not included as part of the "all risk" property
policy, the borrower will be required to purchase terrorism insurance
at a cost up to the Terrorism Premium Cap (as defined below). If the
insurance premiums for such policy exceed the Terrorism Premium Cap,
the lender may, at its option (1) purchase such terrorism insurance
policy, and require that the borrower pay the portion of the premiums
equal to the Terrorism Premium Cap or (2) modify the deductible
amounts, policy limits and other required policy terms to reduce the
Insurance Premiums payable with respect to such policy to the Terrorism
Premium Cap. As used herein, "TERRORISM PREMIUM CAP" means an amount
which is equal to 150% of the aggregate amount insurance premiums paid
for physical hazard insurance for the last policy year in which
coverage for terrorism was included as part of the "all risk" property
policy, adjusted annually by a percentage equal to the increase in the
Consumer Price Index. See "Risk Factors--Property Insurance" in the
prospectus supplement.
B-33
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B-34
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- --------------------------------------------------------------------------------
- ------------------------------------------------------------
PROPERTY INFORMATION
Number of Mortgaged Real Properties 1
Location (City/State) Destin, Florida
Property Type Retail
Size (sf) 480,150
Percentage Mall Shop Occupancy as of 83.1%
Year Built 2003
Appraisal Value $107,000,000
Underwritten Occupancy 95.0%
Underwritten Revenues $12,034,824
Underwritten Total Expenses $2,995,569
Underwritten Net Operating Income (NOI) $9,039,255
Underwritten Net Cash Flow (NCF) $8,808,968
- ------------------------------------------------------------
- ---------------------------------------------------------
MORTGAGE LOAN INFORMATION
Originator Archon
Cut-off Date Principal Balance $84,759,743
Cut-off Date Principal Balance PSF $176.53
Percentage of Initial Mortgage Pool 3.25%
Number of Mortgage Loans 1
Type of Security Fee Simple
Mortgage Rate 5.750%
Original Term to Maturity (Months) 120
Original Amortization Term (Months) 360
Cut-off Date LTV Ratio 79.21%
LTV Ratio at Maturity 66.87%
Underwritten DSCR on NOI 1.52
Underwritten DSCR on NCF 1.48
- ---------------------------------------------------------
o THE LOAN. The mortgage loan (the "DESTIN COMMONS LOAN") is evidenced by
a promissory note and is secured by a first mortgage encumbering a
mixed-use lifestyle center located in Destin, Florida (the "DESTIN
COMMONS PROPERTY"). The Destin Commons Loan represents approximately
3.25% of the initial mortgage pool balance. The Destin Commons Loan was
originated on April 15, 2004 by Archon Financial, L.P., had an original
principal balance of $85,000,000 and a principal balance as of the
cut-off date of $84,759,743, and an interest rate of 5.750%. The Destin
Commons Loan was used to refinance the construction debt on the Destin
Commons Property.
The Destin Commons Loan had an initial term of 120 months and has a
remaining term of 117 months. The Destin Commons Loan requires monthly
payments of interest and principal based on a 360-month amortization
schedule. The scheduled maturity date is May 1, 2014. Voluntary prepayment
of the Destin Commons Loan is prohibited until the payment date in February
2014 and permitted thereafter without penalty. Defeasance with United
States government securities or certain other obligations backed by the
full faith and credit of the United States of America is permitted any date
after the earlier of the four years following the origination date of the
Destin Commons Loan and the second anniversary of the securitization
closing date.
o THE PROPERTY. The Destin Commons property (the "DESTIN COMMONS
PROPERTY") is a mixed-use lifestyle center with net leasable area of
approximately 480,150 square feet. It is located in Destin, Florida
(the Florida Panhandle) where the primary east/west thoroughfare for
the area, Emerald Coast Parkway (US 98), meets the Mid Bay Bridge Road
(SR 293), which provides a four-lane toll causeway back to the
mainland. The Destin Commons Property encompasses 195,195 square feet
of retail anchor space, 215,008 square feet of retail in-line space,
and 69,947 square feet of office space. The office component is located
on the second floors of the buildings that have two stories.
Destin Commons was built and opened in November 2003 by Turnberry
Associates, a group with experience in retail and other types of commercial
real estate development, established in 1967.
The top three anchor tenants are a 65,921 sf Belk's department store, a
50,000 sf Bass Pro Shop and a 64,725 sf, 14-screen stadium seating Rave
Motion Pictures theater with annualized sales of $220 psf, $374 psf, and
$489,431/screen, respectively.
The tenant mix for the in-line space features mostly national or regional
tenants such as Abercrombie and Fitch, Bombay Company, Brookstone, Finish
Line, Joseph A. Banks, Limited Too, Talbots, Sharper Image, Victoria's
Secret, Wet Seal and Yankee Candle. For in-line tenants with less than
10,000 square feet, annualized sales are $334 psf with occupancy costs,
based on underwritten rent and recoveries, of approximately 13.6%.
The Destin Commons Property is located in the Fort Walton Beach, FL MSA,
where the 2002 average household income within a five mile radius was
$73,510 and the population is approximately 13,221. The Destin/Ft. Walton
Beach area forms the nucleus of a region that has a population of 219,495
residents within a 30-mile radius, of which approximately 145,678 live
within 20 miles of the Destin Commons Property. In addition, Okaloosa
County, in which Destin is located, enjoys 5.4 million visitors annually
due to its close proximity to many metropolitan areas in the southeastern
United States.
B-36
GSMS 2004-GG2
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- --------------------------------------------------------------------------------
o MAJOR TENANT SUMMARY. The following table shows certain information
regarding the major tenants of the Destin Commons Property:
TEN LARGEST TENANTS BASED ON ANNUALIZED UNDERWRITTEN BASE RENT
- ------------------------------------------------------------------------------------------------------------------------------
ANNUALIZED % OF TOTAL ANNUALIZED
CREDIT RATING UNDERWRITTEN ANNUALIZED UNDERWRITTEN
(FITCH/MOODY'S/ TENANT % OF BASE RENT UNDERWRITTEN BASE RENT LEASE
TENANT NAME S&P) NRSF NRSF (1) RENT (PSF) EXPIRATION
- ------------------------------------------------------------------------------------------------------------------------------
Master Lease(2) NR/NR/NR 87,750 18.3% $2,307,815 22.9% $26.30 4/12/2009
Rave Motion Pictures NR/NR/NR 64,725 13.5% 1,220,066 12.1% 18.85 12/1/2023
Bass Pro Shops NR/NR/NR 50,000 10.5% 400,000 4.0% 8.00 8/1/2018
Belk Resort Store NR/NR/NR 65,921 13.7% 247,204 2.5% 3.75 11/1/2023
Books-a-Million NR/NR/NR 14,549 3.0% 210,961 2.1% 14.50 2/1/2014
Hard Rock Cafe NR/NR/NR 6,372 1.3% 210,021 2.1% 32.96 7/1/2014
Abercrombie and Fitch NR/NR/NR 8,014 1.7% 200,350 2.0% 25.00 11/1/2013
Bluepoint Oyster NR/NR/NR 6,021 1.3% 183,641 1.8% 30.50 3/1/2014
Hollister NR/NR/NR 6,563 1.4% 164,075 1.6% 25.00 11/1/2013
Bluegreen Resorts/2 kiosks NR/NR/NR 2,469 0.5% 162,415 1.6% 65.78 2/1/2014
------------------------------------------------------------------
TOTAL LARGEST TENANTS 312,384 65.1% 5,306,547 52.6% $16.99
Remaining Tenants 167,766 34.9% 4,775,812 47.4% $28.47
Vacant 0 0.0% 0 0.0%
------------------------------------------------------------------
TOTAL ALL TENANTS 480,150 100.0% $10,082,359 100.0%
- ------------------------------------------------------------------------------------------------------------------------------
(1) The Annualized U/W Base Rent shown for the Master Lease differs from the
actual Master Lease as it reflects actual signed leases as of June 2, 2004,
for tenants not yet in occupancy and anticipated market rental rates for
each tenant site.
(2) Master Lease comprised of 50,522 square feet for office space and 37,228
square feet of retail space. Master Lease has a blended U/W Base Rent (PSF)
of $26.30 with $21.00 for office space and $33.49 retail space. Annualized
U/W Base Rent for the Master Lease is $2,307,815 comprised of $1,060,962
for the office space and $1,246,853 for the retail space.
o LEASE EXPIRATION. The following table shows the lease expiration
schedule for the Destin Commons Property:
LEASE EXPIRATION SCHEDULE(1)
- ------------------------------------------------------------------------------------------------------------------------------
% OF TOTAL ANNUALIZED
ANNUALIZED ANNUALIZED UNDERWRITTEN
EXPIRING % OF CUMULATIVE UNDERWRITTEN UNDERWRITTEN BASE RENT (PER
YEAR ENDING DECEMBER 31, NRSF TOTAL NRSF OF TOTAL NRSF BASE RENT BASE RENT NRSF)
- ------------------------------------------------------------------------------------------------------------------------------
2004 0 0.0% 0.0% $ 0 0.0% $ 0.00
2005 0 0.0% 0.0% 0 0.0% 0.00
2006 0 0.0% 0.0% 0 0.0% 0.00
2007 9 0.0% 0.0% 30,000 0.3% 3,333.33
2008 4,956 1.0% 1.0% 155,265 1.5% 31.33
2009(2) 101,910 21.2% 22.3% 2,682,826 26.6% 26.33
2010 4,192 0.9% 23.1% 116,250 1.2% 27.73
2011 0 0.0% 23.1% 0 0.0% 0.00
2012 0 0.0% 23.1% 0 0.0% 0.00
2013 72,166 15.0% 38.2% 2,071,180 20.5% 28.70
2014 & Thereafter 296,917 61.8% 100.0% 5,026,838 49.9% 16.93
Vacant 0 0.0% 0.0% 0 0.0% 0.00
--------------------------------------------------------------------------------------------------
TOTAL 480,150 100.0% 100.0% $10,082,359 100.0% $ 21.00
- ------------------------------------------------------------------------------------------------------------------------------
(1) Calculated based on approximate square footage occupied by each tenant.
(2) Includes 87,750 SF of Master Lease comprised of 50,522 square feet for
office space and 37,228 square feet of retail space. Master Lease has a
blended U/W Base Rent (PSF) of $26.30 with $21.00 for office space and
$33.49 retail space. Annualized U/W Base Rent for the Master Lease is
$2,307,815 comprised of $1,060,962 for the office space and $1,246,853 for
the retail space.
B-37
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o THE BORROWER. The borrower is Destin Commons, Ltd., a single-purpose,
single-asset limited partnership with a general partner that has two
independent directors. Legal counsel to the borrower delivered a
non-consolidation opinion in connection with the origination of the
Destin Commons Loan. The general partner of the borrower is Emerald
Mall, LLC, which is indirectly controlled by Emerald Mall 2004, Inc.
Jeffery Soffer and Jacquelyn Soffer are the guarantors of the
non-recourse carve-outs of the Destin Commons Loan.
o ESCROWS. The borrower is required to deposit $4,007 monthly into a
replacement reserve account (unless and until such time as $80,000 is
on deposit therein) for replacements and repairs required to be made to
the Destin Commons Property. Additionally at origination the borrower
deposited $3,054,630 into a master lease reserve account in respect of
the master lease as described below under "Master Lease". In addition,
the borrower deposited $7,012,050 into a holdback escrow in respect of
certain holdbacks required by lender in respect of rental concessions
granted to certain tenants of the property and outstanding tenant
improvement liabilities of the borrower.
o LOCK BOX AND CASH MANAGEMENT. None.
o PROPERTY MANAGEMENT. Turnberry Development, LLC is the property manager
for the Destin Commons Property (the "DESTIN COMMONS PROPERTY MANAGER")
and is an affiliate of the borrower. The lender may replace the manager
of the Destin Commons Property if: (i) an event of default has occurred
and is continuing; (ii) a receiver is appointed with respect to the
Destin Commons Property; or (iii) the lender acquires title to the
Destin Commons Property through foreclosure, deed-in-lieu of
foreclosure or the exercise of any other remedy. The Destin Commons
Property Manager is entitled to management fees equal to 3% of the
gross receipts from the operation of the Destin Commons Property which
includes but is not limited to (i) all gross rents actually collected;
(ii) all gross amounts collected from licenses and concessionaires; and
(iii) receipts from the operations of any parking garages serving the
Destin Commons Property.
o MEZZANINE OR SUBORDINATE INDEBTEDNESS. The borrower has unsecured debt
in connection with the acquisition property evidenced by a promissory
note dated February 14, 2002, in favor of Emerald Coast Corner, Ltd,
who was the seller of the property and is an affiliate of the borrower.
At origination, the borrower represented that this unsecured debt (i)
had an aggregate outstanding principal balance of $8,191,627 as of
origination, (ii) by its terms does not accrue any interest earlier
than August 14, 2010, and thereafter accrues simple interest at the
rate of 8% per annum, (iii) by its terms provides for payments on such
note prior to maturity if and only to the extent that net cash flow
generated from the mortgaged property is available, and (iv) by its
terms does not require the repayment of any of the outstanding
principal balance earlier than February 14, 2032. There is a
subordination and standstill agreement in place between the borrower,
Archon Financial L.P. and Emerald Coast Corner, Ltd under which Emerald
Coast Corner, Ltd acknowledges and agrees that its loan is subordinate
to the Destin Commons Loan and further provides, among other things,
that it will not file or record any security interest in any part of
the Destin Commons Property, accelerate its loan, or take any action to
enforce its rights under its loan until the earlier of (i) ninety-one
(91) days following the satisfaction in full of the Destin Commons Loan
and (ii) ninety-one (91) days following the acquisition of the Destin
Commons Loan.
o MASTER LEASE. The borrower has entered into a master lease with respect
to 116,972 square feet (65,315 square feet of retail space and 51,657
square feet of office space) with Shopping Center Management d/b/a
Turnberry Associates. No more frequently than one time per month, the
borrower is entitled to disbursements from the master lease escrow fund
in an amount based on the square feet leased and the rent per square
foot for leases of the retail and office space covered by the master
lease; provided that the leases are for a term of at least 5 years, are
acceptable to the lender in its sole discretion and are for base rental
amounts of $30.16 per square foot for retail space and $21.00 per
square foot for office space. The master lease may be terminated in
respect of the retail space by the borrower in the event that the
borrower leases sufficient square feet of retail space to generate
aggregate annual rentals in excess of $1,969,833. The master lease may
be terminated in respect of the office space by the borrower in the
event that the borrower leases sufficient square feet of retail space
to generate aggregate annual rentals in excess of $1,084,797.
o TERRORISM INSURANCE. The loan documents require the borrower to
maintain terrorism insurance.
B-38
GSMS 2004-GG2
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B-39
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B-40
GSMS 2004-GG2
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PROPERTY INFORMATION
Number of Mortgaged Real Properties 1
Location (City/State) New York, New York
Property Type Office
Size (SF) 2,941,646
Percentage Occupancy as of
February 28, 2004 (1) 90.0%
Year Built/Renovated 1932/2004
Appraisal Value $800,000,000
Underwritten Occupancy 92.8%
Underwritten Revenues $109,419,139
Underwritten Total Expenses $45,240,912
Underwritten Net Operating Income (NOI) $64,178,227
Underwritten Net Cash Flow (NCF) $63,589,878
- --------------------------------------------------------
- ----------------------------------------------------------
MORTGAGE LOAN INFORMATION
Originator GCFP
Cut-off Date Principal Balance $80,000,000
Cut-off Date Principal Balance PSF $152.98
Percentage of Initial Mortgage Pool Balance 3.07%
Number of Mortgage Loans 1
Type of Security Fee Simple
Mortgage Rate 5.4967%
Original Term to Maturity (Months) 120
Original Amortization Term (Months) 24 IO; 360
thereafter
Cut-off Date LTV Ratio 56.3%
LTV Ratio at Maturity 49.4%
Underwritten DSCR on NOI(2) 2.10
Underwritten DSCR on NCF(2) 2.08
Shadow Ratings(3) "A+"/"Baa2"/"A"
- ----------------------------------------------------------
(1) In April, the City of New York vacated 148,615 sf as part of a citywide
agency consolidation to Brooklyn and lower Manhattan dropping the leased
rate to 85%. A new lease for 82,736 sf has been signed by Nike and a lease
for 94,559 sf to WebMD has been fully negotiated, received lender approval
and is out for final signature. The additional 177,295 sf will bring the
leased rate to approximately 91%.
(2) Calculations are based on the 111 Eighth Avenue Loan and the 111 Eighth
Avenue Pari Passu Companion Loans.
(3) S&P, Moody's and Fitch have confirmed that the 111 Eighth Avenue Trust Loan
has, in the context of its inclusion in the trust, credit characteristics
consistent with that of an obligation rated "A+" by S&P, "Baa2" by Moody's
and "A" by Fitch.
o THE LOAN. The mortgage loan (the "111 EIGHTH AVENUE LOAN") is evidenced
by a single note and is secured by a first mortgage encumbering the
Class B office building located at 111 Eighth Avenue, New York, New
York (the "111 EIGHTH AVENUE PROPERTY"). The 111 Eighth Avenue Loan
represents approximately 3.07% of the initial mortgage pool balance.
The 111 Eighth Avenue Loan was originated on March 4, 2004, has an
original principal balance and a principal balance as of the cut-off
date of $80,000,000, and an interest rate of 5.4967333333%.
The 111 Eighth Avenue Loan is a pari passu interest in the senior
portion of a whole mortgage loan (the "111 EIGHTH AVENUE WHOLE LOAN")
comprised of nine mortgage loans totaling $500,000,000. The other
mortgage loans secured by the 111 Eighth Avenue Property include (i)
six pari passu companion loans (the "111 EIGHTH AVENUE PARI PASSU
COMPANION LOANS"), with an aggregate principal balance as of the cut
off date of $370,000,000 and an interest rate of 5.4967333333%, which
loans are pari passu with the 111 Eighth Avenue Loan and (ii) two
subordinate companion loans (the "111 EIGHTH AVENUE SUBORDINATE
COMPANION LOANS"), with an aggregate principal balance as of the
cut-off date of $50,000,00 and an interest rate of 6.6434%, which loans
are subordinate to the 111 Eighth Avenue Loan and the 111 Eighth Avenue
Pari Passu Companion Loans. The 111 Eighth Avenue Subordinate Companion
Loans provide credit support for the 111 Eighth Avenue Loan and the 111
Eighth Avenue Pari Passu Companion Loans.
The 111 Eighth Avenue Loan is represented by Note A-1B. The 111 Eighth
Avenue Pari Passu Companion Loans consist of the following 6 pari passu
notes, with an aggregate original principal balance of $370,000,000:
o Note A-1A, in the original principal amount of $149,500,000,
which was deposited by GCFP into a prior securitization (GCCFC
2004 GG1).
o Note A-2A, in the original principal amount of $75,000,000, which
was assigned (together with four other 111 Eighth Avenue Pari
Passu Companion Loans) to Morgan Stanley Mortgage Capital, Inc.
("MSMC") at the time of the closing of the 111 Eighth Avenue
Whole Loan, is held currently held by MSMC. It is anticipated
that MSMC will deposit this loan into a future securitization;
o Note A-2B, in the original principal amount of $60,000,000, which
was deposited by MSMC into a prior securitization (MSC 2004 IQ7);
o Note A-2C, Note A-2D and Note A-2E, in the aggregate original
principal amount of $85,500,000, which are being deposited by
MSMC into a current securitization (GMAC 2004 C2);
The 111 Eighth Avenue Subordinate Companion Loans consist of the
following two notes, with an aggregate original principal balance of
$50,000,000:
B-41
GSMS 2004-GG2
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TEN LARGEST MORTGAGE LOANS - 111 EIGHTH AVENUE
- --------------------------------------------------------------------------------
o Note B1, in the original principal amount of $25,000,000, which
was deposited by GCFP into a prior securitization (GCCFC 2004
GG1); and
o Note B2, in the original principal amount of $25,000,000, which
was sold to Bayerische Landesbank.
None of the 111 Eighth Avenue Pari Passu Companion Loans or the 111
Eighth Avenue Subordinate Companion Loan are assets of the trust.
The loans comprising the 111 Eighth Avenue Whole Loan are governed by a
co-lender agreement, as described in the prospectus supplement under
"Description of the Mortgage Pool--The Whole Loans" and will be
serviced pursuant to the terms of the pooling and servicing agreement
for the Greenwich Capital Commercial Funding Corp., Commercial Mortgage
Pass-Through Certificates, Series 2004-GG1. The DSCR and LTV on the 111
Eighth Avenue Loan, together with the 111 Eighth Avenue Pari Passu
Companion Loans, are 2.08x and 56.25%, respectively, and the DSCR and
LTV on the 111 Eighth Avenue Whole Loan are 1.84x and 62.5%,
respectively.
The 111 Eighth Avenue Loan had an initial term of 120 months and has a
remaining term of 116 months. The 111 Eighth Avenue Loan requires
payment of interest-only for the first 24 months and amortizes
thereafter based on a 360-month amortization schedule, with required
payments of $452,193.99 beginning May 1, 2006. The scheduled maturity
date is April 1, 2014. Voluntary prepayment of the 111 Eighth Avenue
Whole Loan is prohibited until January 1, 2014 and permitted thereafter
without penalty. Defeasance with United States government securities is
permitted from the earlier of (i) March 1, 2007 and (ii) the date that
is two years after the closing date of the last securitization of any
portion of the 111 Eighth Avenue Whole Loan.
o THE PROPERTY. The 111 Eighth Avenue Property is a 17-story, 2,941,646
sf office building located in the Chelsea submarket of Manhattan, New
York. It is the third-largest building in New York City and occupies an
entire city block between 8th and 9th Avenues and 15th and 16th
Streets. Originally constructed in 1932 as the headquarters of the Port
Authority of New York, the building served as the Port Authority's
headquarters until 1972, when the Port Authority moved to the then
newly-completed World Trade Center. Upon its relocation, the Port
Authority sold the building to the Sylvan Lawrence Family, who sold the
property in 1998 to Taconic Investment Partners ("TACONIC"). Between
1998 and 2004, Taconic oversaw a $50 million renovation of the
building, which positioned the 111 Eighth Avenue Property as one of the
most "connected" building in New York City. The building is directly
above the 9th Avenue fiber loop, which connects directly to the
Trans-Atlantic cable. As such, it is home to 40 of the world's leading
telecommunications providers, including some of the "mission critical"
facilities that support the networks that these providers rely on for
revenue. On-site parking for the building is available in a 342-space,
basement level parking garage.
As of February 28, 2004, the 111 Eighth Avenue Property was 90.0%
leased to 60 tenants. In April, the City of New York vacated 148,615
square feet as part of a citywide agency consolidation to Brooklyn and
lower Manhattan dropping the leased rate to 85%. A new lease for 82,736
sf has been signed by Nike and a lease for 94,559 sf to WebMD has been
fully negotiated, received lender approval and are out for final
signature. The additional 177,295 sf will bring the leased rate to
approximately 91%. The three largest tenants based on net rentable
square footage in the building are Sprint Communications, Inc.
(occupies 251,287 sf), Wachovia/Prudential Securities (occupies 187,645
sf) and CT Corporation, a division of CCH Legal Information (occupies
165,635 sf). Sprint Corporation ("SPRINT") (rated "Baa3" by Moody's and
"BBB-" by S&P) is the holding company for Sprint FON (NYSE: FON) and
Sprint PCS (NYSE: PCS). During fiscal year ending December 2003, Sprint
reported consolidated revenues of $26.19 billion. Prudential
Securities, the original tenant, was acquired by Wachovia Securities
LLC, effective July 2003. Prudential Securities (rated "A3" by Moody's
and "A-" by S&P) has been in the building since 1994 and operates a
pamphlet and prospectus publishing business from this location. CT
Corporation provides statutory representation, business entity and UCC
legal services to businesses and law firms. The lease to CT Corporation
is guaranteed by Wolters Kluwer (rated "Baa1" by Moody's and "BBB+" by
S&P).
B-42
GSMS 2004-GG2
- --------------------------------------------------------------------------------
TEN LARGEST MORTGAGE LOANS - 111 EIGHTH AVENUE
- --------------------------------------------------------------------------------
The following table presents certain information relating to the major
tenants at the 111 Eighth Avenue Property:
- ------------------------------------------------------------------------------------------------------------------------------
% OF TOTAL ANNUALIZED
ANNUALIZED ANNUALIZED UNDERWRITTEN
TENANT UNDERWRITTEN UNDERWRITTEN BASE RENT
TENANT NAME NRSF % OF NRSF BASE RENT ($) BASE RENT ($ PER SF) LEASE EXPIRATION
- ------------------------------------------------------------------------------------------------------------------------------
Sprint Communications 251,287 8.5% 9,406,194 14.6% 37.43 1/1/2005 & 12/31/2014(1)
CCH Legal Information 165,635 5.6% 4,516,521 7.0% 27.27 8/31/2004 & 2/28/2019(2)
AboveNet 123,792 4.2% 4,080,761 6.3% 32.96 6/30/2014 & 9/30/2014
Bank of New York 75,260 2.6% 3,796,054 5.9% 50.44 9/30/2013
Deutsch Advertising 137,349 4.7% 3,670,735 5.7% 26.73 12/31/2013 &
Barnes & Noble.com 99,696 3.4% 2,781,282 4.3% 27.90 2/28/2015
TOTAL LARGEST TENANTS 853,019 29.0% 28,251,546 43.8% 33.12
Remaining Tenants 1,793,725 61.0% 36,290,076 56.2% 20.23
Vacant Space 294,902 10.0%
------------------------------------------------------------------
TOTAL ALL TENANTS 2,941,646 100.0% 64,541,622 100.0% 21.94
- ------------------------------------------------------------------------------------------------------------------------------
(1) Sprint Communications occupies 23,544 sf under a lease expiring in 2005 and
227,743 sf under a lease expiring in 2014.
(2) CCH Legal Information occupies 4,530 sf under a lease expiring in 2004 and
161,105 sf under a lease expiring in 2019.
(3) Deutsche Advertising occupies 17,995 sf under a lease expiring in 2013 and
119,354 sf under a lease expiring in 2014.
The following table presents certain information relating to the lease
rollover schedule at the 111 Eighth Avenue Property:
LEASE EXPIRATION SCHEDULE(1)
- ---------------------------------------------------------------------------------------------------------------------------------
% OF TOTAL ANNUALIZED
ANNUALIZED ANNUALIZED UNDERWRITTEN
EXPIRING % OF CUMULATIVE UNDERWRITTEN UNDERWRITTEN BASE RENT
YEAR ENDING DECEMBER 31, NRSF TOTAL NRSF OF TOTAL NRSF BASE RENT(1) BASE RENT ($) ($ PER SF)
- ---------------------------------------------------------------------------------------------------------------------------------
2004 266,981 9.1% 9.1% $5,914,189 9.2% 22.15
2005 52,870 1.8% 10.9% 1,119,381 1.7% 21.17
2006 197,242 6.7% 17.6% 2,355,008 3.6% 11.94
2007 25,064 0.9% 18.4% 304,400 0.5% 12.14
2008 79,268 2.7% 21.1% 1,936,358 3.0% 24.43
2009 183,631 6.2% 27.4% 4,703,295 7.3% 25.61
2010 2,308 0.1% 27.4% 87,418 0.1% 37.88
2011 123,343 4.2% 31.6% 2,316,929 3.6% 18.78
2012 12,322 0.4% 32.1% 486,855 0.8% 39.51
2013 254,626 8.7% 40.7% 7,603,922 11.8% 29.86
2014 and thereafter 1,449,089 49.3% 90.0% 37,713,865 58.4% 17.42
Vacant 294,902 10.0% 100.0%
---------------------------------------------------------------------------------------------------
TOTAL 2,941,646 100.0% $64,541,622 100.0% $21.94
- ---------------------------------------------------------------------------------------------------------------------------------
(1) Calculated based on approximate square footage occupied by each tenant.
The 111 Eighth Avenue Property benefits from an Industrial and Commercial
Incentive Program ("ICIP") tax exemption, valued at $18.9 million as of
2004, which the New York City Department of Finance granted in connection
with Taconic's renovation of the 111 Eighth Avenue Property. This exemption
continues through the 2007/2008 tax year and then will be gradually reduced
to $0 by 2011/2012.
o THE BORROWER. The borrower is 111 Chelsea Commerce LP, a single asset,
special purpose, bankruptcy remote entity, whose general partner,
Taconic GP Chelsea Holdings LLC, has two independent directors. Legal
counsel to the borrower delivered a non-consolidation opinion in
connection with the origination of the 111 Eighth Avenue Trust Loans.
The sponsors of the borrower are: (i) Taconic (owning a 9% interest in
the borrower), (ii) Jamestown, a Georgia general partnership
("JAMESTOWN") (owning a 70% interest in the borrower), and (iii) The
New York State Common Retirement Fund ("NY RETIREMENT FUND") (owning a
21% interest in the borrower). There is no guarantor of the
non-recourse carve-outs under the 111 Eighth Avenue Loan.
Taconic specializes in acquisition, finance, asset management, property
leasing, management, and real estate development. They have acquired and
developed over 8 million square feet of Class A and Class B office
properties in New York, Chicago, Washington, D.C.
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TEN LARGEST MORTGAGE LOANS - 111 EIGHTH AVENUE
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and Atlanta. The principals of Taconic, Paul Pariser and Charles Bendit,
founded the firm in 1997 after over twenty year careers in the New York
City brokerage community, most recently as co-heads of Jones Lang Wooton's
NY office.
Jamestown was formed in 1983 as a real estate investment and management
company specializing in high-quality commercial real estate. Jamestown
provides real estate investment services in the United States, principally
for German investors. Since its inception, Jamestown has formed or
participated in more than twenty-four commercial real estate funds and,
along with its partners, has acquired over $4 billion of assets with in
excess of $1.9 billion in equity. Stephen Zoukis and Christoph Kahl are the
principals of Jamestown.
The NY Retirement Fund is the second largest public pension fund in the
nation and represents almost one million member and beneficiaries. As of
June 30, 2003, funds under management of the NY Retirement Fund were valued
at approximately $105 billion, with approximately 3.1% ($3.3 billion)
invested in real estate assets.
o ESCROWS. The loan documents provide for certain escrows of real estate
taxes and insurance. At closing, the borrower deposited $500,000 in
escrow to pay for required repairs at the 111 Eighth Avenue Property
and $3,333,333 in escrow to pay for the final two payments to a former
tenant at the 111 Eighth Avenue Property, as part of a lease
termination agreement with the borrower. Additionally, the borrower is
required to make monthly payments of $49,029 to pay for ongoing capital
improvements to the 111 Eighth Avenue Property. At closing, the
borrower deposited $29,596,526 for tenant improvements and leasing
commissions ("GENERAL TI/LC"). In addition, the loan documents provide
for additional TI/LC reserves ("SPECIAL TI/LC") in an amount equal to
all excess cash after payment of debt service and monthly required
reserves. The Special TI/LC reserves will be funded only in the event
that (i) the DSCR (based on actual net cash flow and an assumed
constant of 9.5%) at the 111 Eighth Avenue Property is less than 1.00x
(and until the 111 Eighth Avenue Property has achieved a DSCR equal to
or greater than 1.00x for 2 consecutive calendar quarters) and (ii) the
amount on deposit in the General TI/LC reserve is less than $8,000,000.
No Special TI/LC reserves are required at any time that the amount on
deposit in the General TI/LC reserve is equal to or greater than
$8,000,000.
o LOCK BOX AND CASH MANAGEMENT. The loan requires a hard lock box, which
is already in place. The loan documents require the borrower to direct
tenants to pay their rents directly to a lender-controlled account. The
loan documents also require that all rents received by the borrower or
the property manager be deposited into the lender-controlled account
(as well as any other rents, receipts, security deposits or payments
related to lease termination or default) within one business day of
receipt. All funds from the lender-controlled account are transferred
to the borrower's operating account, unless an event of default is
continuing or deposits to the Special TI/LC are required. During the
continuance of an event of default or if deposits for the Special TI/LC
are required, funds in the lock box will be swept on a daily basis into
an account controlled by the lender and applied to pay debt service,
operating expenses, and any required reserves under the loan documents.
Upon the occurrence and during the continuance of an event of default,
lender may apply any sums then held pursuant to the cash management
agreement to the payment of the debt.
o PROPERTY MANAGEMENT. Taconic Management Company LLC (the "TACONIC
MANAGER"), an affiliate of the borrower, is the property manager for
the 111 Eighth Avenue Property. The lender may replace the property
manager upon the occurrence and during the continuance of an event of
default under the 111 Eighth Avenue Loan or in the event of the fraud
or willful misconduct of the property manager. Thereafter, borrower may
not enter into any agreement relating to the management of the 111
Eighth Avenue Property with any party without the express written
consent of lender. The Taconic Manager performs all property
management, construction management and leasing functions within the
company owned portfolio which includes 450 Park Avenue in New York, NY,
600 West Chicago Avenue in Chicago, IL, and AtlantaXchange in downtown
Atlanta, GA. The Taconic Manager's forty-person organization is
headquartered within 111 Eighth Avenue. The current management fee is
3%, provided that if there is an event of default, management fees in
excess of $1,000,000 will not be paid out of property revenues.
o MEZZANINE OR SUBORDINATE INDEBTEDNESS. Other than the 111 Eighth Avenue
Subordinate Companion Loans, mezzanine or subordinate indebtedness is
not permitted.
o OTHER ENCUMBRANCES. In connection with the syndication of limited
partnership interests and non-managing member interests in upper-tier
Jamestown entities, and as security for certain bridge loans made to
those upper-tier Jamestown entities, the loan documents permit liens to
be placed upon the right to receive subscription payments, capital
contributions and other distributions of such limited partnership
interests and non-managing member interests. The loan documents,
however, prohibit the creation of any lien that would affect the
control or management of the 111 Eighth Avenue borrower or its managing
member and the foreclosure of such liens and do not grant the lien
holder any intercreditor rights against the holders of the 111 Eighth
Avenue Whole Loan.
o TERRORISM INSURANCE. The loan documents require the borrower to
maintain terrorism insurance in an amount equal to 100% of the then
replacement cost of the 111 Eighth Avenue Property. The 111 Eighth
Avenue Property has terrorism coverage as part of its "all-risk"
property insurance policy. In the event that coverage for terrorism is
not included as part of the "all risk" property policy, the borrower
will, nevertheless be required to obtain coverage for terrorism (as
stand alone coverage) to the extent available, in an amount equal to
the lesser of (a) $500,000,000 and (b) the amount that may be purchased
for the Maximum Required Premium (hereinafter defined); provided,
however, if the insurance premiums payable with respect to such
insurance
B-44
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TEN LARGEST MORTGAGE LOANS - 111 EIGHTH AVENUE
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coverage, exceed the Maximum Required Premium, the lender may, at its
option (1) purchase the policy, with the borrower paying only the
portion of the insurance premiums that equals the Maximum Required
Premium and lender paying the excess or (2) modify the deductible
amounts, policy limits and other required policy terms to reduce the
insurance premiums payable with respect to the policy to the Maximum
Required Premium. As used herein, the "MAXIMUM REQUIRED PREMIUM" means
an amount equal to the greater of (x) 25% of the aggregate insurance
premiums payable with respect to all the property insurance coverage
for the prior policy year and (y) $1,150,000. See "Risk
Factors--Property Insurance" in the prospectus supplement.
B-45
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B-46
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- --------------------------------------------------------
PROPERTY INFORMATION
Number of Mortgaged Real Properties 1
Location (City/State) San Diego, California
Property Type Hospitality
Size (rooms) 966
Percentage Occupancy as of June 1, 2004 67.0%
Year Built / Year Renovated 1953 / 2003
Appraisal Value $110,700,000
Underwritten Occupancy 66.2%
Underwritten Revenues $42,822,296
Underwritten Total Expenses. $32,454,858
Underwritten Net Operating Income (NOI) $10,367,438
Underwritten Net Cash Flow (NCF) $8,654,546
- --------------------------------------------------------
- ----------------------------------------------------------
MORTGAGE LOAN INFORMATION
Cut-off Date Principal Balance $71,500,000
Cut-off Date Principal Balance PSF/Unit $74,016.56
Percentage of Initial Mortgage Pool Balance 2.75%
Number of Mortgage Loans 1
Type of Security Fee Simple
Mortgage Rate 6.36%
Original Term to Maturity / ARD (Months) 120
Original Amortization Term (Months) 300
Cut-off Date LTV Ratio 64.6%
LTV Ratio at Maturity or ARD 50.6%
Underwritten DSCR on NOI 1.81
Underwritten DSCR on NCF 1.51
- ----------------------------------------------------------
o THE LOAN. The mortgage loan (the "TOWN & COUNTRY LOAN") is evidenced by
a single note and is secured by a first mortgage encumbering the Town &
Country Resort and Convention Center located at 500 Hotel Circle North
in Mission Valley, San Diego, California (the "TOWN & COUNTRY RESORT
PROPERTY"). The Town & Country Loan represents approximately 2.75% of
the initial mortgage pool balance. The Town & Country Loan was
originated July 29, 2004, has an original principal balance of
$71,500,000 and principal balance of $71,500,000 as of the cut-off
date, and an interest rate of 6.36%. The DSCR and LTV on the Town &
Country Loan are 1.51x and 64.6%, respectively. The proceeds of the
Town & Country Loan were used to refinance an existing loan.
The Town & Country Loan had an initial term of 120 months and has a
remaining term of 120 months. The Town & Country Loan requires payments
of interest and principal based on a 300-month schedule, with required
monthly payments of $476,536.97. The scheduled maturity date is the
payment date in August 2014. Voluntary prepayment of the Town & Country
Loan is prohibited until May 1, 2014 and permitted thereafter without
penalty. Defeasance with United States government securities is
permitted after the second anniversary of the securitization closing
date.
o THE PROPERTY. The Town & Country Resort Property is a 966-room hotel
and convention center located at 500 Hotel Circle North in the Mission
Valley submarket of San Diego, CA. The Town & Country Resort Property
is the largest hotel in Mission Valley and is the second-largest
conference facility in the region after the San Diego Convention
Center. The conference facilities can accommodate up to 5,000 people
via two major ballroom complexes, which are 24,000 and 18,000 square
feet respectively, and an 80,000 square foot exhibit hall along with 50
separate break-out rooms. Set amongst a resort-style atmosphere, the
Town & Country Resort Property features indoor and outdoor dining, four
pool areas, a 14,000 square foot spa and is located adjacent to the
27-hole championship golf course known as Riverwalk and the 1.6 million
square foot Fashion Valley Mall, San Diego's largest shopping center
with over 200 shops, restaurants and a movie complex. Centrally
located, the Town & Country Resort Property is only ten minutes from
most major area destinations including the airport, Old Town, beaches
and bays, SeaWorld, the San Diego Zoo, Qualcomm Stadium, and downtown
San Diego. The Town & Country Resort Property's major emphasis is on
group meetings and conventions, with 85% of total revenue derived from
group bookings. Advanced group reservations as of June 30, 2004 stand
at 556,557 definite room nights booked, and another 534,425 room nights
tentatively booked through 2012 representing in excess of $140 million
of revenue.
The following table presents certain information relating to the historical
performance at the Town & Country Resort:
AVERAGE DAILY
YEAR RATE OCCUPANCY REVPAR
--------------- --------------- ----------- ----------
1998(1) $93.08 68.9% $64.13
1999(1) $94.58 70.4% $66.60
2000 $102.49 69.2% $70.97
2001 $107.85 69.2% $74.66
2002 $112.56 66.6% $74.94
2003 $114.60 63.7% $72.99
Trailing-12(2) $114.21 66.2% $75.60
- ------------------
(1) Reflects annual operating statements ending September.
(2) Based on trailing 12 months ended May 31, 2004.
o THE BORROWER. The borrower is a special-purpose, bankruptcy-remote
entity, with an independent director. Legal counsel to borrower
delivered a non-consolidation opinion in connection with the
origination of the Town & Country Loan. The sponsor of
B-48
GSMS 2004-GG2
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TEN LARGEST MORTGAGE LOANS - TOWN & COUNTRY
- --------------------------------------------------------------------------------
the borrower is Atlas Hotels, Inc. ("ATLAS HOTELS"), a privately owned
hotel operating and management company based in San Diego, California.
Atlas Hotels guaranteed the non-recourse carveouts of the Town &
Country Loan. Atlas Hotels is an independent operator that, in
addition to Town & Country Resort Property, owns and operates the
Carriage Inn, a full-service, 160 room hotel in Ridgecrest, CA. The
staff at the Town & Country Resort Property average over 21 years at
the property. Atlas Hotels constructed the property in phases between
1950 and 1970 and has owned and operated it ever since. Despite its
age, the property has been well maintained with over $17 million of
capital improvements invested in the property over the past five
years.
o ESCROWS. The loan documents provide for certain escrows of real estate
taxes and insurance and provide for collection of a minimum of 5% of
revenues received into a replacement reserve account. At closing, the
borrower funded a deferred-maintenance reserve of $567,625, which is
125% of the amount specified in the property condition report.
o CONTEMPLATED RENOVATIONS. The borrower has indicated it intends to
renovate the exhibit hall, the hotel lobby, the hotel central
core/pool/ patio area and add new hotel rooms. The loan documents
provide that the borrower may perform any or all of these renovations,
provided that (i) such renovations do not materially and adversely
affect the borrower's financial condition or the value of the Town &
Country Resort Property, (ii) if the cost of the renovations exceeds
$3,500,000, the borrower is required to post security with lender in an
amount equal to the difference between the cost of the renovation and
$3,500,000, (iii) if one or more of the renovations (at any one time)
will result in removing more than 85 hotel rooms (at any one time) from
service for a period of more than 90 days, the borrower is required to
first obtain lender's written consent (and the lender has agreed it
will not unreasonably withhold such consent).
o LOCK BOX AND CASH MANAGEMENT. The loan requires a hard lock box, which
is already in place. The loan documents require the borrower to direct
credit card receipts directly to a lender-controlled account. The
borrower and the manager are also required to cause all non-credit card
receipts to be transmitted into the lender-controlled account within
two business days of receipt. Unless a Town & Country Cash Trap Period
exists, any amounts in the lender-controlled account are swept on a
daily basis into the borrower's operating account. A "Town & Country
Cash Trap Period" means any period during which (i) an event of default
is continuing, until such event of default is cured or (ii) the DSCR
(based on calculation of net cash flow as defined in the loan
documents) at the end of any quarter is less than 1.10x, until the DSCR
minimum threshold has been achieved for two consecutive quarterly
reporting periods. During a Town & Country Cash Trap Period, all
remaining cash (after payment of debt service, required reserves and
approved operating expenses) is required to be deposited into a cash
collateral account and held by the lender as additional collateral for
the Town & Country Loan (and the lender has the right, during the
continuance of an event of default, to apply the cash collateral to the
debt). Additionally, if a mezzanine loan (as described below) is
outstanding and a Town & Country Cash Trap Period does not exist, all
amounts in the lender controlled account will be swept into another
lender controlled account and used by lender to cover debt service,
required reserve payments and approved operating expenses, with any
remaining funds being disbursed to the borrower.
o PROPERTY MANAGEMENT. Atlas Hotels, an affiliate of the borrower, is the
property manager of the Town & Country Resort Property. Atlas Hotels
has managed the Town & Country Resort Property since its original
construction and also manages the Carriage Inn, a full-service, 160
room hotel in Ridgecrest, CA. The property manager receives a
management fee equal to 3.0% of the gross revenues. The lender may
replace the property manager if (i) the borrower fails to maintain a
DSCR (based on calculation of net cash flow as defined in the loan
documents) of at least 1.10x for two consecutive calendar quarters,
(ii) an event of default is continuing under the Town & Country Loan,
(iii) the property manager is in default under the management
agreement, or (iv) the property manager exhibits gross negligence,
malfeasance or willful misconduct.
o MEZZANINE OR SUBORDINATE INDEBTEDNESS. The direct and indirect equity
owners of the borrower are permitted to incur mezzanine debt from an
Approved Mezzanine Lender (as defined below) secured by a pledge of
100% of their equity interests, provided that, among other things, (i)
the combined maximum loan to "as is" appraised value is not more than
65%, (ii) the combined debt service coverage ratio is at least 1.35x
(based upon the actual net cash flow for the preceding 12 month
period), (iii) the mezzanine loan is co-terminous with the term of the
Town & Country Loan; (iv) the Approved Mezzanine Lender enters into an
acceptable intercreditor agreement, and (v) the borrower delivers
Rating Agency confirmation that the mezzanine debt will not result in
the downgrade, withdrawal or qualification of the then current ratings
of the series 2004-GG2 certificates. With respect to the Town & Country
Loan, "Approved Mezzanine Lender" means (a) any bank, savings and loan
association, investment bank, insurance company, trust company,
commercial credit corporation, pension plan, pension fund, pension
advisory firm, mutual fund, government entity or plan, investment
company or institution substantially similar to any of the foregoing,
provided in each case that such institution (i) has total assets (in
name or under management) in excess of $600,000,000 and (except with
respect to a pension advisory firm or similar fiduciary)
capital/statutory surplus or shareholder's equity in excess of
$250,000,000 and (ii) is regularly engaged in the business of making or
owning commercial real estate loans or operating commercial mortgage
properties or (b) any other mezzanine lender that has been approved by
the Rating Agencies.
o TERRORISM INSURANCE. The loan documents require the borrower to
maintain terrorism insurance in an amount equal to 100% of the then
replacement cost of the Town & Country Resort Property. The Town &
Country Resort Property currently has terrorism coverage as part of its
"all-risk" property insurance policy. In the event that coverage for
terrorism is not included as part of the
B-49
GSMS 2004-GG2
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TEN LARGEST MORTGAGE LOANS - TOWN & COUNTRY
- --------------------------------------------------------------------------------
"all risk" property policy, the borrower will be required to purchase
terrorism insurance, to the extent available; provided that the
borrower will not be required to pay an insurance premium in excess of
25% of the aggregate insurance premiums paid with respect to all the
property insurance coverage for the prior policy year (as adjusted
annually by increases in CPI) (the "TERRORISM PREMIUM CAP"); provided
that if the insurance premiums payable with respect to such terrorism
insurance coverage exceed the Terrorism Premium Cap, the lender may,
at its option (1) purchase the insurance and require that the borrower
pay only the portion of the insurance premium that equals the
Terrorism Premium Cap (in which case, lender would pay the excess) or
(2) modify the deductible amounts, policy limits and other required
policy terms to reduce the insurance premiums payable with respect to
the policy to the Terrorism Premium Cap. See "Risk Factors--Property
Insurance" in the prospectus supplement.
B-50
GSMS 2004-GG2
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TEN LARGEST MORTGAGE LOANS - MALL AT BARNES CROSSING
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[PHOTOS OMITTED]
B-51
GSMS 2004-GG2
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TEN LARGEST MORTGAGE LOANS - MALL AT BARNES CROSSING
- --------------------------------------------------------------------------------
[MAP OMITTED]
B-52
GSMS 2004-GG2
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TEN LARGEST MORTGAGE LOANS - MALL AT BARNES CROSSING
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- --------------------------------------------------------
PROPERTY INFORMATION
Number of Mortgaged Real Properties 1
Location (City/State) Tupelo, Mississippi
Property Type Superregional Mall
Size (sf) 583,887
Percentage Occupancy as of June 17, 2004 95.6%
Year Built 1990
Appraisal Value $85,000,000
Underwritten Occupancy 95.6%
Underwritten Revenues $10,029,534
Underwritten Total Expenses $3,457,607
Underwritten Net Operating Income (NOI) $6,571,927
Underwritten Net Cash Flow (NCF) $6,236,221
- --------------------------------------------------------
- ----------------------------------------------------------
MORTGAGE LOAN INFORMATION
Originator GCFP
Cut-off Date Principal Balance $68,000,000
Cut-off Date Principal Balance PSF/Unit $116.46
Percentage of Initial Mortgage Pool Balance 2.61%
Number of Mortgage Loans 1
Type of Security Fee Simple
Mortgage Rate 5.85%
Original Term to Maturity (Months) 120
Original Amortization Term (Months) 360
Cut-off Date LTV Ratio 80.0%
LTV Ratio at Maturity 67.6%
Underwritten DSCR on NOI 1.37
Underwritten DSCR on NCF 1.30
- ----------------------------------------------------------
o THE LOAN. The mortgage loan (the "BARNES CROSSING LOAN") is evidenced
by a single note and is secured by a first mortgage encumbering a
regional shopping mall located in Tupelo, Mississippi (the "BARNES
CROSSING PROPERTY"). The Barnes Crossing Loan represents approximately
2.61% of the initial mortgage pool balance. The Barnes Crossing Loan
was originated in August, 2004, had an original principal balance of
$68,000,000 and a principal balance as of the cut-off date of
$68,000,000, and an interest rate of 5.85%. The DSCR and LTV on the
Barnes Crossing Loan are 1.30x and 80.0%, respectively. The proceeds of
the Barnes Crossing Loan were used to refinance existing debt on the
Barnes Crossing Property.
The Barnes Crossing Loan had an initial term of 120 months and has a
remaining term of 120 months. The Barnes Crossing Loan requires payments of
interest and principal based on a 360 month amortization schedule, with
required monthly payments of $401,159.84. The scheduled maturity date is
the payment date in September 2014. Voluntary prepayment of the Barnes
Crossing Loan is prohibited until the payment date in June 2014 and
permitted thereafter without penalty. Defeasance with United States
government securities or certain other obligations backed by the full faith
and credit of the United States of America is permitted after the second
anniversary of the securitization closing date.
o THE PROPERTY. The Barnes Crossing Property is a dominant regional
shopping mall with five anchors (four of which are part of the
collateral securing the Barnes Crossing Loan and one of which is not
part of the collateral) and approximately 80 stores with a total gross
leasable area of 728,789 sf, of which 583,887 sf is part of the
collateral. The Barnes Crossing Property, built in 1990, consists of
approximately 64 acres of land and certain improvements that constitute
The Mall at Barnes Crossing located in Tupelo, Lee County, Mississippi.
The Barnes Crossing Property is anchored by an 86,479 sf McRae's Home &
Men Store, an 86,222 sf J.C. Penney, an 84,062 sf Parisian, and a
78,264 sf Sears. Another anchor at The Mall at Barnes Crossing, the
100,954 sf McRae's Store, is not part of the collateral securing the
Barnes Crossing Loan.
The following table represents certain information relating to the anchor
at the Barnes Crossing Property:
- ----------------------------------------------------------------------------------------------------------------------
CREDIT RATING OF
TENANT OR PARENT OPERATING
PARENT COMPANY OR COMPANY COLLATERAL COVENANT
ANCHOR TENANT (FITCH/MIS/S&P) GLA INTEREST EXPIRATION
- ----------------------------------------------------------------------------------------------------------------------
McRae's(1) Saks Incorporated BB-/Ba3/ BB 100,954 No 8/31/2012
McRae's Home & Men(1) Saks Incorporated BB-/Ba3/ BB 86,479 Yes Expired(2)
J.C. Penney JC Penney, Incorporated BB/Ba3/BB+ 86,222 Yes Expired(2)
Parisian(1) Saks Incorporated BB-/Ba3/ BB 84,062 Yes 8/31/2012
Sears Sears Roebuck and Co. BBB/Baa1/BBB 78,264 Yes Expired(2)
TOTAL ANCHOR TENANTS 435,981
- ----------------------------------------------------------------------------------------------------------------------
(1) Saks Incorporated is the parent company for these tenants. Saks
Incorporated guaranteed the Parisian lease.
(2) Expired in 2000.
Comparable sales for in-line tenants from 2001 through 2003 were $285 psf,
$292 psf, and $301 psf, respectively. Average occupancy cost, based on
underwritten rent and recoveries, is approximately 12.9% for such in-line
space (based on tenants that have reported a full year of sales through
12/31/03).
The Mall at Barnes Crossing is a one-level enclosed mall located at the
southwest corner of US Highway 45 and Barnes Crossing Road in northern
Tupelo. The Barnes Crossing Property's in-line tenants include Gap/Gap
Kids, Abercrombie & Fitch, Ann Taylor Loft, American Eagle Outfitters, and
Victoria's Secret. The Barnes Crossing Property has a food court with
tenants such as Sweet Peppers, Chick-Fil-A, Sbarro, Steak Escape, and Magic
Wok. The Mall at Barnes Crossing is the only regional mall within
approximately 100 miles of Tupelo, Mississippi and draws customers from a
60 mile trade radius. The mall includes freestanding retail tenants which
are
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- --------------------------------------------------------------------------------
not owned but contribute to expense recoveries, including Pier 1 Imports,
Applebee's and Bancorpsouth. Immediately to the north and west of the
Barnes Crossing Property are additional retail developments with tenants
such as Super Wal-Mart, Sam's Club, Home Depot, Lowe's, TJ Maxx, Old Navy,
Office Max, Circuit City, Hobby Lobby, and Toys R Us. The population of the
trade area in 2003 was 610,223.
The following table presents certain information relating to the major mall
shop tenants at the Barnes Crossing Property:
- ------------------------------------------------------------------------------------------------------------------------------
% OF TOTAL ANNUALIZED
ANNUALIZED ANNUALIZED UNDERWRITTEN
TENANT UNDERWRITTEN UNDERWRITTEN BASE RENT
TENANT NAME NRSF % OF NRSF BASE RENT ($) BASE RENT ($ PER SF) LEASE EXPIRATION
- ------------------------------------------------------------------------------------------------------------------------------
Movies 8 (Cinemark) 24,548 4.2% 270,028 4.2% 11.00 8/31/2010
Limited Too and Express 11,268 1.9% 259,164 4.0% 23.00 1/31/2010 and MTM(1)
Lerner Stores, Inc. 8,267 1.4% 188,074 2.9% 22.75 1/31/2008
Shoe Department 8,995 1.5% 179,900 2.8% 20.00 9/30/2004
GAP and Gap Kids 9,855 1.7% 153,570 2.4% 15.58 4/30/2005
Footaction USA Inc 4,278 0.7% 145,452 2.3% 34.00 12/31/2008
TOTAL LARGEST TENANTS 67,211 11.5% 1,196,188 18.7% 17.80
Remaining Tenants 491,044 84.1% $5,203,851 81.3% 10.60
Vacant Space 25,632 4.4%
TOTAL ALL TENANTS 583,887 100.0% 6,400,039 100.0% 10.96
- ------------------------------------------------------------------------------------------------------------------------------
(1) Limited Too occupies 4,084 sf under a lease expiring in 2010; Express
occupies 7,184 sf under a month-to-month lease.
The following table presents certain information relating to the lease
rollover schedule at the Barnes Crossing Property:
LEASE EXPIRATION SCHEDULE(1)
- -------------------------------------------------------------------------------------------------------------------------------
% OF TOTAL ANNUALIZED
ANNUALIZED ANNUALIZED UNDERWRITTEN
EXPIRING % OF CUMULATIVE UNDERWRITTEN UNDERWRITTEN BASE RENT
YEAR ENDING DECEMBER 31, NRSF TOTAL NRSF OF TOTAL NRSF BASE RENT($) BASE RENT ($ PER SF)
- -------------------------------------------------------------------------------------------------------------------------------
2004 25,550 4.4% 4.4% 611,597 9.6% 23.94
2005 29,267 5.0% 9.4% 561,260 8.8% 19.18
2006 10,108 1.7% 11.1% 206,523 3.2% 20.43
2007 24,479 4.2% 15.3% 497,183 7.8% 20.31
2008 20,145 3.5% 18.8% 492,177 7.7% 24.43
2009 17,965 3.1% 21.8% 523,918 8.2% 29.16
2010 231,146 39.6% 61.4% 2,001,075 31.3% 8.66
2011 91,447 15.7% 77.1% 608,395 9.5% 6.65
2012 13,931 2.4% 79.5% 230,620 3.6% 16.55
2013 2,839 0.5% 80.0% 64,587 1.0% 22.75
2014 Thereafter 91,378 15.6% 95.6% 602,704 9.4% 1.23
Vacant 25,632 4.4% 100.0%
---------------------------------------------------------------------------------------------------
TOTAL 583,887 100.0% 6,400,039 100.0% $10.96
- -------------------------------------------------------------------------------------------------------------------------------
(1) Calculated based on approximate square footage occupied by each tenant.
o THE BORROWER. The borrower is TUP 130, LLC, a single asset
bankruptcy-remote single member limited liability company with an
independent director, sponsored by a joint venture between affiliates
(and their affiliated family members and trusts) of David Hocker &
Associates, Inc. ("DHA") and R.F. Coffin Enterprises, Inc. The
borrower's sole member is TUP 130 Company, Limited Partnership. Legal
counsel to the borrower delivered a non-consolidation opinion in
connection with the origination of the Barnes Crossing Loan. There is
no guarantor of the non-recourse carve-outs under the Barnes Crossing
Loan.
o ESCROWS. The loan documents provide for certain escrows of real estate
taxes and insurance and provide for collection of replacement reserves.
In addition, the loan documents call for an initial deposit of $600,000
into a reserve for tenant improvement and leasing commissions and
monthly deposits of $36,896, if and while any Anchor Condition, as
defined below, exists. If at any time the balance decreases to less
than $600,000, the borrower must replenish it via re-institution of
monthly deposits of $36,896 ($442,751 per year). Any payments received
for lease terminations and liquidations of security deposits from
defaulted tenants are also required to be deposited in the leasing
reserve. The borrower funded an initial deferred maintenance reserve of
$1,547,500 for replacement of the roof. The borrower is required to
establish a capital expenditure reserve to be funded with monthly
deposits of $9,838.92 ($118,067 per year). An "ANCHOR CONDITION" (A)
exists if, with respect to an anchor tenant at the mortgaged property,
B-54
GSMS 2004-GG2
- --------------------------------------------------------------------------------
TEN LARGEST MORTGAGE LOANS - MALL AT BARNES CROSSING
- --------------------------------------------------------------------------------
(i) such anchor tenant's lease is terminated, (ii) it files bankruptcy,
(iii) it ceases operations at the premises, (iv) it is in material
monetary default or (v) it fails to renew its lease at least twelve
months prior to its lease expiration, and (B) will end if and when any
condition listed above is remedied or when the borrower provides an
acceptable replacement anchor tenant. If and while an Anchor Condition
exists with respect to two anchor tenants, excess cash flow after debt
service, required reserve deposits and operating expenses (if not then
swept as additional loan collateral due to a CRC Event (as defined
below) will be deposited into the leasing reserve.
o LOCK BOX AND CASH MANAGEMENT. The loan requires a hard lock box, which
is already in place. The loan documents require the borrower to direct
the tenants to pay their rents directly to a lender-controlled account.
The loan documents also require that all rents received by the borrower
or the property manager be deposited into the hard lock box or deposit
account (as well as any other rents, receipts, security deposits or
payments related to lease termination or default) within one business
day after receipt. The loan documents require that funds in the deposit
account be used to pay debt service, reserves and, if a CRC Event
occurs or if an Anchor Condition exists with respect to two or more
anchor tenants, approved operating expenses. Any funds remaining in the
lock box after application of the amounts specified above, will be
returned to the borrower within one business day of the payment date
under the Barnes Crossing Loan. A "CRC EVENT" means (i) the occurrence
and continuation of an Event of Default (as defined in the loan
documents), until such time that the Event of Default is cured, or (ii)
the DSCR measured as of the end of any calendar quarter (based on
leases in place and operating expenses for the 12-month period ending
at the end of such quarter) is not at least 1.05x, until such time that
the DSCR is at least 1.05x measured at the end of any calendar quarter.
o PROPERTY MANAGEMENT. The Barnes Crossing Property is managed by DHA
(the "BARNES CROSSING MANAGER") and R.F. Coffin Enterprises, Inc. (the
"BARNES CROSSING ADDITIONAL MANAGER"). The Barnes Crossing Manager and
the Barnes Crossing Additional Manager are responsible for the
operation, management, maintenance, promotion and marketing of the
Barnes Crossing Property, with the Barnes Crossing Additional Manager
assisting the Barnes Crossing Manger to the extent such assistance is
reasonably required by the borrower. DHA, a retail real estate
development and management company, headquartered in Owensboro,
Kentucky, was founded in 1964. It opened its first shopping center,
Wesleyan Park Plaza, in Owensboro, Kentucky. Since its inception, DHA
has developed 40 shopping centers containing over 14 million square
feet of retail space in 13 southeastern states, valued at $800,000,000.
Currently, DHA's existing portfolio consists of eight retail
developments containing 4.3 million square feet in four states. DHA
provides real estate services including: retail property development
and leasing; acquisition and finance; property management and
operations; and design and construction. The lender may replace the
Barnes Crossing Manager or the Barnes Crossing Additional Manager (i)
upon a CRC Event, or (ii) upon the gross negligence, malfeasance or
willful misconduct of the Barnes Crossing Manager or the Barnes
Crossing Additional Manager.
o RELEASE OF COLLATERAL. The loan documents permit the borrower to obtain
a release of the Parisian parcel from the lien of the mortgage upon the
substitution of $3,500,000 in eligible defeasance collateral and
subject to the satisfaction of certain conditions set forth in the loan
documents, in connection with repositioning of the Parisian premises
with a replacement anchor, a combination of junior anchors, one or more
junior anchors and additional in-line space, or an in-line development
that satisfies the conditions of the loan documents. Additionally, the
borrower has an option to purchase the McRae's parcel (not collateral
for the Barnes Crossing Loan) under certain circumstances, in the event
McRae's discontinues a retail department store business at the parcel
after its operating covenant terminates in August 2006. If the borrower
purchases the McRae's parcel, this parcel would become additional
collateral for the Barnes Crossing Loan; provided however, that in the
event the borrower were to sell this parcel to an affiliate of the
borrower, a substitute anchor, or a third party that would lease space
to a substitute anchor, the borrower will be permitted to release this
pad from the lien of the mortgage without payment of any release price.
o MEZZANINE OR SUBORDINATE INDEBTEDNESS. Not Permitted.
o TERRORISM INSURANCE. The Barnes Crossing Property is insured against
acts of terrorism as part of its all-risk property insurance. The loan
documents require the borrower to maintain property insurance over the
term of the Barnes Crossing Loan. On future annual renewals, terrorism
insurance must be maintained, subject to a premium limit equal to the
greater of (i) 50% of the total property insurance premium without
terrorism coverage or (ii) 200% of the premium for such terrorism
coverage at loan closing, subject to certain adjustments set forth in
the loan documents. See "Risk Factors--Property Insurance" in the
prospectus supplement.
B-55
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GSMS 2004-GG2 ANNEX C
CONTROL LOAN LOAN MORTGAGE
NUMBER GROUP NUMBERS LOAN SELLER PROPERTY NAME
- ------------------------------------------------------------------------------------------------------------------------------------
1 Group 1 09-1001118 GSMC / Commerzbank Grand Canal Shoppes at the Venetian (2)
2 Group 1 09-1001112 GSMC Daily News Building (3)
3 Group 1 04-0471 GCFP 1441 Broadway
4 Group 1 LBUBS1 GSMC Garden State Plaza (4)
5 Group 1 09-1001119 GSMC / Commerzbank Stony Point Fashion Park
- ------------------------------------------------------------------------------------------------------------------------------------
6 Group 1 04-0722 GCFP 1410 Broadway
7 Group 1 09-0001873 GSMC Destin Commons (5)
8 Group 1 03-0768 GCFP 111 Eighth Avenue (4)(6)
9 Group 1 04-0705 GCFP Town & Country Resort
10 Group 1 04-0621 GCFP Mall at Barnes Crossing
- ------------------------------------------------------------------------------------------------------------------------------------
11 Group 1 03-0535 GCFP 237 Park Avenue (4)(7)
12 Group 1 04-0562 GCFP Waterfront Plaza (8)(9)
13 Group 1 04-0481 GCFP 3500 Olive
14 Group 1 09-0001927 GSMC Brighton Towne Square II
15 Group 1 09-0001902 GSMC Laurel Lakes Centre (10)(11)
- ------------------------------------------------------------------------------------------------------------------------------------
16 Group 1 04-0409 GCFP Quincy Tower
17 Group 1 04-0437 GCFP University Mall
18 Group 1 09-0001931 GSMC Renaissance Plaza (10)
19 Group 1 09-0001921 GSMC Mercado Santa Clara
20 Group 1 04-0440 GCFP Tamarac Plaza
- ------------------------------------------------------------------------------------------------------------------------------------
21 Group 2 09-0001905 GSMC Preston Park at Satellite (8)
22 Group 1 09-0001907 GSMC Conyers Crossroads Shopping Center
23 Group 1 09-0001939 GSMC Sunset Office Tower (8)
24 Group 1 04-0404 GCFP FedEx (San Francisco) (8)
25 Group 1 04-0200 GCFP Euclid Plaza (8)
- ------------------------------------------------------------------------------------------------------------------------------------
26 Group 1 03-0915 GCFP White Road Plaza
27 Group 1 04-0016 GCFP 1030 West North Ave
28 Group 2 09-0001937 GSMC Preston Pointe at Windermere (8)
29 Group 1 03-0495 GCFP Century Plaza
30 Group 1 03-0090 GCFP 500 North Dearborn
- ------------------------------------------------------------------------------------------------------------------------------------
31 Group 1 625023241 GSMC Lakeview Shopping Centre
32 Group 1 04-0589 GCFP Gateway Building I
33 Group 1 04-0588 GCFP 465 Park Avenue
34 Group 1 3171899 GSMC The Aspen Building at Sky Ridge
35 Group 1 09-0001935 GSMC Two Sugar Creek (8)
- ------------------------------------------------------------------------------------------------------------------------------------
36 Group 1 04-0216 GCFP Jefferson Village Shopping Center
37 Group 1 09-0001926 GSMC Brighton Towne Square I (10)
38 Group 1 09-0001934 GSMC Brassworks Office Building
39 Group 2 09-0001911 GSMC Stonecrest at Double Oak Mountain Apartments
40 Group 1 04-0199 GCFP College Greens Shopping Center (8)(12)(13)
- ------------------------------------------------------------------------------------------------------------------------------------
41 Group 2 09-0001933 GSMC Serrano Highlands Apartments
42 Group 2 09-0001938 GSMC Preston Landing at Sweetwater Creek (8)
43 Group 1 03-0889 GCFP Charleston Plaza (14)
44 Group 1 03-0675 GCFP Shops at Central Park (15)
45 Group 1 09-0001843 GSMC Shops at Old Mill
- ------------------------------------------------------------------------------------------------------------------------------------
46 Group 1 625022921 GSMC North Pointe Shopping Center
47 Group 1 04-0495 GCFP Fairfield Commons
48 Group 1 04-0283 GCFP Lowes-Portland
49 Group 1 03-0507 GCFP Raymour & Flanigan
50 Group 1 04-0498 GCFP Westlake Village Industrial Park
- ------------------------------------------------------------------------------------------------------------------------------------
51 Group 1 04-0304 GCFP Harrison Avenue Center
52 Group 1 3170941 GSMC Arlington Medical Office Building
53 Group 1 09-0001908 GSMC 700 Westpark Office Building
54 Group 1 625020911 GSMC 65 Bleecker Street
55 Group 1 23936 GCFP The Camp
- ------------------------------------------------------------------------------------------------------------------------------------
56 Group 1 625022941 GSMC Los Alamitos Medical Arts Pavilion
57 Group 1 625022991 GSMC Chula Vista Medical Plaza
58 Group 1 625022981 GSMC Glendale Medical Pavilion
59 Group 1 04-0335 GCFP Lincoln Road Retail
60 Group 1 04-0420 GCFP Puritan Mill (16)
- ------------------------------------------------------------------------------------------------------------------------------------
61 Group 2 09-0001881 GSMC Allendale Apartments
62 Group 1 03-0731 GCFP 620 North Brand Boulevard
63 Group 1 09-0001896 GSMC Gulf Breeze Shopping Center (8)
64 Group 1 09-0001923 GSMC Aurora City Square
65 Group 1 04-0142 GCFP JBD Troy Industrial
- ------------------------------------------------------------------------------------------------------------------------------------
66 Group 1 625022761 GSMC Rockville Centre Medical Building
67 Group 1 625022971 GSMC Des Peres Medical Arts Pavilion
68 Group 1 04-0332 GCFP Gateway Square
69 Group 1 09-0001929 GSMC Brookhollow One
70 Group 1 625024101 GSMC Concord Fry's Retail
- ------------------------------------------------------------------------------------------------------------------------------------
71 Group 1 625022931 GSMC Wellington Medical Pavilion I
72 Group 1 04-0269 GCFP Merrill Ridge Plaza
73 Group 2 625023201 GSMC Treymore at City Place
74 Group 1 09-0001943 GSMC Solomon's Towne Center
75 Group 2 09-0001917 GSMC Silverstone Apartments
- ------------------------------------------------------------------------------------------------------------------------------------
76 Group 1 04-0391 GCFP United Artists Theatres, Roseville
77 Group 1 3171907 GSMC Texas City Medical Center
78 Group 1 625022951 GSMC Wellington Medical Pavilion II
79 Group 1 09-0001932 GSMC Deerwood Village Mall
80 Group 1 625023411 GSMC Mission Oaks Building
- ------------------------------------------------------------------------------------------------------------------------------------
81 Group 1 625022961 GSMC Lake Mead Medical Office
82 Group 1 09-0001892 GSMC 840-848 Battery Office Building
83 Group 2 09-0001897 GSMC Wimbledon Apartment Homes
84 Group 2 09-0001898 GSMC Bayou Oaks Aparments
85 Group 1 03-0958 GCFP Borders Retail Center
- ------------------------------------------------------------------------------------------------------------------------------------
86 Group 1 625027781 GSMC Haven Commerce Center
87 Group 2 09-0001825 GSMC Hazel Gardens Apartments
88 Group 2 04-0534 GCFP Desert View Mobile Home Park
89 Group 1 09-0001890 GSMC Kempsville Marketplace
90 Group 2 09-0001899 GSMC Ashton Woods Apartment Homes
- ------------------------------------------------------------------------------------------------------------------------------------
91 Group 1 04-0688 GCFP Crossroads of Tempe (8)
92 Group 1 04-0605 GCFP Northwest Corporate Center II
93 Group 1 04-0494 GCFP Hartsville Crossing
94 Group 1 04-0686 GCFP Gilbert & Houston Plaza
95 Group 2 09-0001891 GSMC La Casa Apartments
- ------------------------------------------------------------------------------------------------------------------------------------
96 Group 1 09-0001919 GSMC Lyons Tech Center IV
97 Group 1 03-0390 GCFP Shadelands Executive Center
98 Group 1 04-0333 GCFP 3405 Wiley Post Road
99 Group 1 09-0001906 GSMC Camino Vida Roble Industrial
100 Group 1 09-0001930 GSMC Shady Hollow Village II (17)
- ------------------------------------------------------------------------------------------------------------------------------------
101 Group 1 09-0001918 GSMC Bottegas Cupertino (8)
102 Group 1 03-0971 GCFP The Stovall Building
103 Group 1 09-0001913 GSMC Kearny Park
104 Group 1 625024131 GSMC Acacia Creek Village
105 Group 1 3171063 GSMC Sugarland Medical Building
- ------------------------------------------------------------------------------------------------------------------------------------
106 Group 1 09-0001924 GSMC Calera Crossing Shopping Center
107 Group 1 04-0433 GCFP 1140 31st Street (18)
108 Group 2 09-0001823 GSMC Park on Clairmont
109 Group 2 09-0001884 GSMC Stevenson Terrace Apartments
110 Group 1 04-0548 GCFP Office Depot at Oceangate
- ------------------------------------------------------------------------------------------------------------------------------------
111 Group 1 04-0687 GCFP CVS, Carefree
112 Group 1 09-0001894 GSMC Bell Road Retail
113 Group 1 04-0289 GCFP 54/41 Self Storage
114 Group 1 09-0001893 GSMC Blue Bell IV
115 Group 1 3171758 GSMC Charles Clark Medical Building
- ------------------------------------------------------------------------------------------------------------------------------------
116 Group 2 09-0001900 GSMC Olbrich By the Lake
117 Group 1 09-0001946 GSMC Gold Coast Enterprises Medical Building
118 Group 1 3170982 GSMC Columbia Plaza One Medical Office Building
119 Group 1 09-0001925 GSMC Callaway Commons
120 Group 2 625023541 GSMC Willows of Woodhaven
- ------------------------------------------------------------------------------------------------------------------------------------
121 Group 1 09-0001920 GSMC Cochrane Plaza
122 Group 1 04-0350 GCFP Giant Ground Lease
123 Group 1 04-0664 GCFP 150 Boston Post Road
124 Group 1 09-0001910 GSMC Screenland Retail
125 Group 1 09-0001904 GSMC The Esquire Theater (19)
- ------------------------------------------------------------------------------------------------------------------------------------
126 Group 1 04-0264 GCFP Kleppe Business Park
127 Group 1 09-0001805 GSMC Parker Marketplace
128 Group 1 04-0397 GCFP CVS, Charlotte
129 Group 1 09-0001940 GSMC Spring Lake Shopping Center
130 Group 2 04-0299 GCFP Evergreen Mobile Home Park
- ------------------------------------------------------------------------------------------------------------------------------------
131 Group 1 09-0001701 GSMC Bell Park II
132 Group 1 04-0423 GCFP 237 West Northfield Boulevard
133 Group 1 04-0682 GCFP Cypress Mills Plaza
134 Group 2 04-0533 GCFP Country Terrace Mobile Home Park
135 Group 1 03-0970 GCFP 1075 Zonolite Road
- ------------------------------------------------------------------------------------------------------------------------------------
136 Group 1 3171501 GSMC Augusta Medical Plaza
137 Group 1 04-0325 GCFP NUA Properties
138 Group 2 09-0001883 GSMC Melrose Park Manor Apartments
139 Group 2 09-0001882 GSMC Birchwood Hills Apartments
140 Group 1 04-0172 GCFP Greg Street
- ------------------------------------------------------------------------------------------------------------------------------------
141 Group 1 625023341 GSMC Radio Shack Store in Tucson
CROSSED WITH AFFILIATED WITH
CONTROL OTHER LOANS OTHER LOANS GENERAL DETAILED
NUMBER (CROSSED GROUP) (RELATED GROUP) PROPERTY TYPE PROPERTY TYPE
- ---------------------------------------------------------------------------------------------------------------------------------
1 Retail Regional Mall
2 Office General Urban
3 Group 1 Office General Urban
4 Retail Regional Mall
5 Retail Anchored
- ---------------------------------------------------------------------------------------------------------------------------------
6 Group 1 Office General Urban
7 Retail Anchored
8 Office General Urban
9 Hospitality Full Service
10 Retail Superregional Mall
- ---------------------------------------------------------------------------------------------------------------------------------
11 Office General Urban
12 Office General Urban
13 Office General Urban
14 Group 3 Mixed Use Mixed Use
15 Retail Anchored
- ---------------------------------------------------------------------------------------------------------------------------------
16 Office General Suburban
17 Retail Regional Mall
18 Retail Anchored
19 Retail Anchored
20 Office General Suburban
- ---------------------------------------------------------------------------------------------------------------------------------
21 Group 2 Multifamily Garden
22 Retail Power Center/Big Box
23 Office General Suburban
24 Industrial Warehouse
25 Retail Anchored
- ---------------------------------------------------------------------------------------------------------------------------------
26 Retail Anchored
27 Retail Anchored
28 Group 2 Multifamily Garden
29 Office General Suburban
30 Office General Urban
- ---------------------------------------------------------------------------------------------------------------------------------
31 Retail Anchored
32 Office General Urban
33 Retail Unanchored
34 Group 5 Office Medical
35 Office General Urban
- ---------------------------------------------------------------------------------------------------------------------------------
36 Retail Anchored
37 Group 3 Retail Anchored
38 Office General Urban
39 Multifamily Garden
40 Retail Anchored
- ---------------------------------------------------------------------------------------------------------------------------------
41 Multifamily Garden
42 Group 2 Multifamily Garden
43 Retail Shadow Anchored
44 Retail Anchored
45 Retail Shadow Anchored
- ---------------------------------------------------------------------------------------------------------------------------------
46 Retail Shadow Anchored
47 Retail Anchored
48 Other Ground Lease/Land
49 Retail Unanchored
50 Industrial Warehouse
- ---------------------------------------------------------------------------------------------------------------------------------
51 Industrial Warehouse
52 Group 5 Office Medical
53 Office General Suburban
54 Office General Urban
55 Retail Anchored
- ---------------------------------------------------------------------------------------------------------------------------------
56 Group 4 Office Medical
57 Group 4 Office Medical
58 Group 4 Office Medical
59 Retail Unanchored
60 Office General Urban
- ---------------------------------------------------------------------------------------------------------------------------------
61 Group 7 Multifamily Garden
62 Office General Suburban
63 Retail Anchored
64 Retail Anchored
65 Industrial Industrial
- ---------------------------------------------------------------------------------------------------------------------------------
66 Office Medical
67 Group 4 Office Medical
68 Retail Unanchored
69 Office General Suburban
70 Retail Anchored
- ---------------------------------------------------------------------------------------------------------------------------------
71 Group 4 Office Medical
72 Retail Anchored
73 Multifamily Garden
74 Retail Anchored
75 Multifamily Garden
- ---------------------------------------------------------------------------------------------------------------------------------
76 Retail Single Tenant Retail
77 Group 5 Office Medical
78 Group 4 Office Medical
79 Retail Shadow Anchored
80 Office General Suburban
- ---------------------------------------------------------------------------------------------------------------------------------
81 Group 4 Office Medical
82 Office General Urban
83 Group 6 Multifamily Garden
84 Group 6 Multifamily Garden
85 Retail Unanchored
- ---------------------------------------------------------------------------------------------------------------------------------
86 Office General Suburban
87 Multifamily Garden
88 Group A Mobile Home Park Mobile Home Park
89 Retail Anchored
90 Group 6 Multifamily Garden
- ---------------------------------------------------------------------------------------------------------------------------------
91 Retail Unanchored
92 Office General Suburban
93 Retail Shadow Anchored
94 Retail Unanchored
95 Multifamily Garden
- ---------------------------------------------------------------------------------------------------------------------------------
96 Industrial Industrial/Warehouse, w/Office
97 Office General Suburban
98 Industrial Industrial
99 Industrial Industrial/Warehouse, w/Office
100 Retail Shadow Anchored
- ---------------------------------------------------------------------------------------------------------------------------------
101 Retail Anchored
102 Retail Unanchored
103 Industrial Industrial/Warehouse, w/Office
104 Retail Unanchored
105 Group 5 Office Medical
- ---------------------------------------------------------------------------------------------------------------------------------
106 Group 9 Retail Shadow Anchored
107 Office General Suburban
108 Multifamily Garden
109 Group 7 Multifamily Garden
110 Retail Power Center/Big Box
- ---------------------------------------------------------------------------------------------------------------------------------
111 Retail Single Tenant Retail
112 Retail Shadow Anchored
113 Self-Storage Self-Storage
114 Office General Suburban
115 Group 5 Office Medical
- ---------------------------------------------------------------------------------------------------------------------------------
116 Multifamily Garden
117 Office Medical
118 Group 5 Office Medical
119 Group 9 Retail Shadow Anchored
120 Multifamily Garden
- ---------------------------------------------------------------------------------------------------------------------------------
121 Retail Anchored
122 Other Ground Lease/Land
123 Retail Unanchored
124 Retail Shadow Anchored
125 Retail Unanchored
- ---------------------------------------------------------------------------------------------------------------------------------
126 Group 10 Industrial Industrial
127 Retail Shadow Anchored
128 Retail Single Tenant Retail
129 Retail Shadow Anchored
130 Group A Mobile Home Park Mobile Home Park
- ---------------------------------------------------------------------------------------------------------------------------------
131 Retail Shadow Anchored
132 Office General Suburban
133 Retail Unanchored
134 Mobile Home Park Mobile Home Park
135 Office General Urban
- ---------------------------------------------------------------------------------------------------------------------------------
136 Group 5 Office Medical
137 Office General Suburban
138 Group 7 Multifamily Garden
139 Group 7 Multifamily Garden
140 Group 10 Industrial Warehouse
- ---------------------------------------------------------------------------------------------------------------------------------
141 Retail Stand Alone
CONTROL
NUMBER ADDRESS CITY STATE ZIP CODE
- ------------------------------------------------------------------------------------------------------------------------------------
1 3355 Las Vegas Boulevard South Las Vegas Nevada 89109
2 220 East 42nd Street New York New York 10017
3 1441 Broadway New York New York 10018
4 1 Garden State Plaza Paramus New Jersey 07652
5 9200 Stony Point Parkway Richmond Virginia 23235
- ------------------------------------------------------------------------------------------------------------------------------------
6 1410 Broadway New York New York 10018
7 4102-4332 Legendary Drive Destin Florida 32541
8 111 Eighth Avenue New York New York 10011
9 500 Hotel Circle North San Diego California 92108
10 1001 Barnes Crossing Road Tupelo Mississippi 38801
- ------------------------------------------------------------------------------------------------------------------------------------
11 237 Park Avenue New York New York 10017
12 500 Ala Moana Boulevard Honolulu Hawaii 96813
13 3500 West Olive Avenue Burbank California 91505
14 7927 Nemco Way Brighton Michigan 48116
15 14050-14398 Baltimore Avenue Laurel Maryland 20707
- ------------------------------------------------------------------------------------------------------------------------------------
16 2900 South Quincy Street Arlington Virginia 22206
17 1237 East Main Street Carbondale Illinois 62901
18 6910 Fayetteville Road Durham North Carolina 27713
19 2155-3201 Mission College Boulevard Santa Clara California 95054
20 7535, 7555 East Hampden Ave, 7600 East Eastman Ave Denver Colorado 80231
- ------------------------------------------------------------------------------------------------------------------------------------
21 2110 Preston Park Drive Duluth Georgia 30096
22 1540-1630 Dogwood Drive Conyers Georgia 30013
23 6430 Sunset Boulevard Los Angeles California 90028
24 1875 Marin Street San Francisco California 94124
25 601-697 N. Euclid Street Anaheim California 92801
- ------------------------------------------------------------------------------------------------------------------------------------
26 White & Story Roads San Jose California 95127
27 1030 West North Avenue Chicago Illinois 60622
28 3100 Preston Pointe Way Cumming Georgia 30041
29 10630 & 10632 Little Patuxent Parkway Columbia Maryland 21044
30 500-510 North Dearborn Street, 520 Dearborn Street Chicago Illinois 60610
- ------------------------------------------------------------------------------------------------------------------------------------
31 947-991 South Township Line Road Royersford Pennsylvania 19468
32 90 S 400 West Salt Lake City Utah 84101
33 465 Park Avenue New York New York 10022
34 10103 Ridgegate Parkway Lone Tree Colorado 80124
35 77 Sugar Creek Center Boulevard Sugarland Texas 77478
- ------------------------------------------------------------------------------------------------------------------------------------
36 10920-11340 East Jefferson Avenue Detroit Michigan 48214
37 8101-8280 Movie Drive Brighton Michigan 48116
38 684 Monroe Avenue, NW Grand Rapids Michigan 49503
39 One Stonecrest Drive Birmingham Alabama 35242
40 8387-97 Folsom Boulevard Sacramento California 95826
- ------------------------------------------------------------------------------------------------------------------------------------
41 25421 Alta Loma Lake Forest California 92630
42 1100 Preston Landing Circle Lithia Springs Georgia 30122
43 1710-1861 East Charleston Boulevard Las Vegas Nevada 89109
44 2200-2400 Airport Freeway Bedford Texas 76022
45 425, 450, 475, 520, 545, 610, and 625 SW Powerhouse Drive Bend Oregon 97702
- ------------------------------------------------------------------------------------------------------------------------------------
46 3801 & 3919 Pelandale Avenue Modesto California 95356
47 98 Wadsworth Boulevard Lakewood Colorado 80214
48 13631 SE Johnson Road Milwaukie Oregon 97222
49 201 South Pottstown Pike Exton Pennsylvania 19341
50 31304-31348 Via Colinas Westlake Village California 91362
- ------------------------------------------------------------------------------------------------------------------------------------
51 19901-19977 Harrison Avenue City of Industry California 91789
52 515 West Mayfield Road Arlington Texas 76014
53 700 Westpark Drive Peachtree City Georgia 30269
54 65 Bleeker Street New York New York 10012
55 2937 Bristol Street Costa Mesa California 92626
- ------------------------------------------------------------------------------------------------------------------------------------
56 3771 Katella Avenue Los Alamitos California 95030
57 765 Medical Center Ct Chula Vista California 91910
58 222 Eulalia Street Glendale California 91204
59 1026-1036 Lincoln Road Miami Beach Florida 33139
60 916, 950 & 954 Lowery Boulevard Atlanta Georgia 30318
- ------------------------------------------------------------------------------------------------------------------------------------
61 535 North Cedar Hill Drive Allentown Pennsylvania 18109
62 620 North Brand Boulevard and 625 North Maryland Avenue Glendale California 91203
63 350 Gulf Breeze Parkway Gulf Breeze Florida 32561
64 13803-14197 East Exposition Avenue Aurora Colorado 80012
65 1628 & 1708 Northwood Drive; 1100-1104 & 1150 West Maple Ave Troy Michigan 48084
- ------------------------------------------------------------------------------------------------------------------------------------
66 165 North Village Ave Rockville Centre New York 11570
67 2325 Dougherty Road St Louis Missouri 63131
68 4801-4889 Hopyard Road Pleasanton California 94588
69 2301 E. Lamar Blvd. Arlington Texas 76006
70 1695 Willow Pass Road Concord California 94520
- ------------------------------------------------------------------------------------------------------------------------------------
71 10115 Forest Hill Blvd Wellington Florida 33414
72 3404 - 3500 Main Street Merrill Wisconsin 54452
73 2101 N. Haskell Ave. Dallas Texas 75204
74 13300-13410 HG Trueman Drive Solomons Maryland 20688
75 1004-1044 North High Point Road Madison Wisconsin 53717
- ------------------------------------------------------------------------------------------------------------------------------------
76 520 North Sunrise Avenue Roseville California 95661
77 6807 Emmett F. Lowry Expressway Texas City Texas 77591
78 1395 State Road 7 Wellington Florida 33414
79 9834-9980 Baymeadows Road Jacksonville Florida 32256
80 5141-5171 Verdugo Way Camarillo California 93012
- ------------------------------------------------------------------------------------------------------------------------------------
81 1815 East Lake Mead Blvd. North Las Vegas Nevada 89030
82 840-848 Battery Street San Francisco California 94111
83 16222 Stuebner Airline Houston Texas 77379
84 13800 Ella Boulevard Houston Texas 77014
85 3131 Veterans Memorial Boulevard Metairie Louisiana 70002
- ------------------------------------------------------------------------------------------------------------------------------------
86 9035-9065 Haven Avenue Rancho Cucamonga California 91730
87 10710 SE 256th Street Kent Washington 98030
88 6500 Desert View Drive West Richland Washington 99353
89 4872 Princess Anne Road Virginia Beach Virginia 23462
90 17033 Butte Creek Houston Texas 77090
- ------------------------------------------------------------------------------------------------------------------------------------
91 SEC Kyrene and Elliot Roads Tempe Arizona 85283
92 5757 Phantom Drive Hazelwood Missouri 63042
93 1150 South Fourth Street Hartsville South Carolina 29550
94 1130-1184 North Gilbert Road Gilbert Arizona 85233
95 121 E. Wedgewood Avenue Spokane Washington 99208
- ------------------------------------------------------------------------------------------------------------------------------------
96 4811 and 4911 Lyons Technology Parkway Coconut Creek Florida 33073
97 150 & 190 North Wiget Lane Walnut Creek California 94598
98 3405 Wiley Post Road Carrollton Texas 75006
99 2270 Camino Vida Roble Carlsbad California 92009
100 9911 Brodie Lane Austin Texas 78748
- ------------------------------------------------------------------------------------------------------------------------------------
101 20735 Stevens Creek Boulevard Cupertino California 95014
102 1198 Howell Mill Road Atlanta Georgia 30318
103 8252-8280 Clairemont Mesa Boulevard San Diego California 92111
104 10050 North Scottsdale Road Scottsdale Arizona 85253
105 15200 Southwest Freeway Sugarland Texas 77478
- ------------------------------------------------------------------------------------------------------------------------------------
106 209-297 Supercenter Drive Calera Alabama 35040
107 1140 31st Street Downers Grove Illinois 60515
108 3180 Clairmont Road Atlanta Georgia 30329
109 6201 North 10th Street Philadelphia Pennsylvania 19141
110 14501 Ocean Gate Avenue Hawthorne California 90250
- ------------------------------------------------------------------------------------------------------------------------------------
111 5400 East Carefree Highway Carefree Arizona 85331
112 14035-14065 South Bell Road Homer Glen Illinois 60491
113 21731 State Road 54 Lutz Florida 36439
114 790 Penllyn Blue Bell Pike Blue Bell Pennsylvania 19422
115 601 Texan Trail Drive Corpus Christi Texas 78411
- ------------------------------------------------------------------------------------------------------------------------------------
116 3528 Atwood Avenue Madison Wisconsin 53714
117 345 Saxony Road Encinitas California 92024
118 909 9th Avenue Fort Worth Texas 76104
119 801-835 N. Tyndall Pkwy. Callaway Florida 32401
120 5816 Boca Raton Fort Worth Texas 76112
- ------------------------------------------------------------------------------------------------------------------------------------
121 200 & 250 Cochrane Road Morgan Hill California 95037
122 1050 Brentwood Rd NE Washington District of Columbia 20018
123 150 Boston Post Road Orange Connecticut 06477
124 9290 and 9510-9516 Culver Boulevard Culver City California 90232
125 6706 Clayton Road Richmond Heights Missouri 63117
- ------------------------------------------------------------------------------------------------------------------------------------
126 1215 and 1275 Kleppe Lane and 1455 Deming Way Sparks Nevada 89431
127 9781-9845 South Parker Road Parker Colorado 80134
128 5100 Beatties Ford Road Charlotte North Carolina 28216
129 630 Lillington Highway Spring Lake North Carolina 28390
130 2819 Caldwell Boulevard Nampa Idaho 83651
- ------------------------------------------------------------------------------------------------------------------------------------
131 4232-4236 West Bell Road Phoenix Arizona 85308
132 237 West Northfield Boulevard Murfreesboro Tennessee 37129
133 17400 Spring Cypress Houston Texas 77429
134 11 Tuck Circle Reno Nevada 89506
135 1075 Zonolite Road Atlanta Georgia 30306
- ------------------------------------------------------------------------------------------------------------------------------------
136 3623 Dewey Gray Circle Augusta Georgia 30909
137 699 Sierra Rose Drive Reno Nevada 89511
138 210 West Cheltenham Avenue Philadelphia Pennsylvania 19126
139 5115 Wissahickon Avenue Philadelphia Pennsylvania 19144
140 745 and 755 East Greg Street Sparks Nevada 89431
- ------------------------------------------------------------------------------------------------------------------------------------
141 1840 West Valencia Road Tucson Arizona 85746
LOAN PER NET
CONTROL UNITS, BEDS UNIT RENTABLE AREA
NUMBER YEAR BUILT YEAR RENOVATED ROOMS, SQ FT DESCRIPTION SF / UNITS ($)
- ------------------------------------------------------------------------------------------------------------------------------
1 1999 NAP 536,890 Sq Ft 793.43
2 1930, 1958-1960 1996, 1999 1,102,147 Sq Ft 139.73
3 1929 1976 460,356 Sq Ft 288.14
4 1957 1985, 1989, 1990, 1996-1997 1,470,454 Sq Ft 353.63
5 2003 NAP 382,636 Sq Ft 300.31
- ------------------------------------------------------------------------------------------------------------------------------
6 1930 2004 357,139 Sq Ft 273.95
7 2003 NAP 480,150 Sq Ft 176.53
8 1932 2004 2,941,646 Sq Ft 152.98
9 1953 2003 966 Rooms 74,016.56
10 1990 NAP 583,887 Sq Ft 116.46
- ------------------------------------------------------------------------------------------------------------------------------
11 1935 1981 1,149,789 Sq Ft 259.18
12 1988 2004 515,250 Sq Ft 118.39
13 1984 NAP 249,643 Sq Ft 195.48
14 1997-2001 NAP 327,990 Sq Ft 146.21
15 1985 2004 390,986 Sq Ft 120.21
- ------------------------------------------------------------------------------------------------------------------------------
16 2001 NAP 233,741 Sq Ft 192.52
17 1972 1991 560,169 Sq Ft 71.41
18 2003 NAP 175,710 Sq Ft 212.00
19 1997, 2002 NAP 213,122 Sq Ft 153.90
20 1984 NAP 355,269 Sq Ft 82.47
- ------------------------------------------------------------------------------------------------------------------------------
21 2002 NAP 440 Units 65,314.19
22 2000 NAP 246,738 Sq Ft 109.65
23 1968 1991, 2001 200,792 Sq Ft 127.00
24 2003 NAP 108,793 Sq Ft 224.68
25 1961 2003 131,849 Sq Ft 172.93
- ------------------------------------------------------------------------------------------------------------------------------
26 1987 NAP 153,848 Sq Ft 144.37
27 1922 2003 120,000 Sq Ft 182.86
28 2001 NAP 346 Units 61,235.55
29 1973 2000 169,004 Sq Ft 124.16
30 1914 1998 166,174 Sq Ft 120.36
- ------------------------------------------------------------------------------------------------------------------------------
31 2002 NAP 194,658 Sq Ft 98.35
32 2002 NAP 161,650 Sq Ft 114.44
33 1926 1997 42,600 Sq Ft 416.67
34 2003 NAP 118,336 Sq Ft 136.94
35 1999 NAP 143,367 Sq Ft 111.60
- ------------------------------------------------------------------------------------------------------------------------------
36 2003 NAP 116,092 Sq Ft 136.96
37 2002-2003 NAP 83,764 Sq Ft 184.53
38 1906 1999-2000 154,191 Sq Ft 99.69
39 1997 NAP 315 Units 48,730.16
40 1972 1998 134,726 Sq Ft 113.19
- ------------------------------------------------------------------------------------------------------------------------------
41 1984-1985 2004 240 Units 62,500.00
42 2003 NAP 240 Units 62,187.50
43 1989 NAP 123,613 Sq Ft 113.26
44 1985 2002 192,524 Sq Ft 72.23
45 2000-2001 NAP 101,403 Sq Ft 136.58
- ------------------------------------------------------------------------------------------------------------------------------
46 2001-2003 NAP 65,250 Sq Ft 204.37
47 1986 NAP 133,322 Sq Ft 87.76
48 2004 NAP 459,994 Sq Ft 24.08
49 2003 NAP 72,000 Sq Ft 150.53
50 1979 NAP 241,907 Sq Ft 44.65
- ------------------------------------------------------------------------------------------------------------------------------
51 2003 NAP 154,068 Sq Ft 68.15
52 1995 NAP 105,177 Sq Ft 93.22
53 1998 2004 93,000 Sq Ft 105.38
54 1899 2004 111,690 Sq Ft 84.42
55 2001 NAP 41,522 Sq Ft 225.53
- ------------------------------------------------------------------------------------------------------------------------------
56 2003 NAP 57,007 Sq Ft 163.97
57 2001 NAP 49,305 Sq Ft 187.44
58 2000 NAP 57,600 Sq Ft 159.77
59 1936 2002 15,000 Sq Ft 600.00
60 1915 2000 88,088 Sq Ft 102.17
- ------------------------------------------------------------------------------------------------------------------------------
61 1972 NAP 240 Units 36,971.91
62 1971 2004 45,645 Sq Ft 193.89
63 1991 NAP 93,003 Sq Ft 93.47
64 1983 NAP 142,287 Sq Ft 60.44
65 1987 1990 153,580 Sq Ft 55.75
- ------------------------------------------------------------------------------------------------------------------------------
66 1957 NAP 95,851 Sq Ft 88.33
67 2001 NAP 50,155 Sq Ft 167.84
68 1989 NAP 87,484 Sq Ft 95.16
69 1983 NAP 98,980 Sq Ft 81.83
70 1979 2004 101,943 Sq Ft 78.48
- ------------------------------------------------------------------------------------------------------------------------------
71 2000 NAP 48,000 Sq Ft 163.01
72 1989 2002 122,966 Sq Ft 63.38
73 1997 NAP 180 Units 43,252.45
74 1997 NAP 79,042 Sq Ft 98.05
75 2001-2003 NAP 140 Units 52,857.14
- ------------------------------------------------------------------------------------------------------------------------------
76 1997 NAP 47,200 Sq Ft 154.49
77 2003 NAP 59,877 Sq Ft 119.69
78 2003 NAP 48,032 Sq Ft 146.12
79 1972 NAP 72,004 Sq Ft 97.22
80 1987 NAP 78,880 Sq Ft 85.50
- ------------------------------------------------------------------------------------------------------------------------------
81 2000 NAP 43,921 Sq Ft 152.64
82 1931 1989, 1998, 2002 39,922 Sq Ft 158.76
83 1979 1992, 1999, 2001 161 Units 39,254.66
84 1983 1994, 2001 210 Units 29,714.29
85 1997 NAP 29,736 Sq Ft 207.51
- ------------------------------------------------------------------------------------------------------------------------------
86 1987 NAP 77,584 Sq Ft 77.14
87 2002 NAP 76 Units 78,289.47
88 1975 1996 414 Pads 14,275.36
89 1988 NAP 71,460 Sq Ft 81.72
90 1979 1992, 2000 177 Units 32,711.86
- ------------------------------------------------------------------------------------------------------------------------------
91 2004 NAP 24,452 Sq Ft 235.77
92 1986 2002 87,673 Sq Ft 65.58
93 2001 NAP 71,120 Sq Ft 77.90
94 1989 1998 41,194 Sq Ft 134.00
95 1985 NAP 180 Units 30,000.00
- ------------------------------------------------------------------------------------------------------------------------------
96 2003 NAP 96,124 Sq Ft 55.09
97 1980 2003 53,750 Sq Ft 97.38
98 1971 1994 186,000 Sq Ft 27.88
99 1981 NAP 103,562 Sq Ft 48.28
100 2003 NAP 22,844 Sq Ft 205.74
- ------------------------------------------------------------------------------------------------------------------------------
101 1991 NAP 13,206 Sq Ft 347.30
102 1935 2000 29,596 Sq Ft 152.05
103 1974, 1979 NAP 106,580 Sq Ft 42.22
104 1995 NAP 29,071 Sq Ft 152.58
105 1981 NAP 62,056 Sq Ft 70.64
- ------------------------------------------------------------------------------------------------------------------------------
106 2001 NAP 37,650 Sq Ft 115.44
107 1980 1999 42,000 Sq Ft 103.44
108 1984, 1995 NAP 111 Units 38,376.28
109 1967 NAP 148 Units 28,352.44
110 1992 NAP 21,500 Sq Ft 185.89
- ------------------------------------------------------------------------------------------------------------------------------
111 2003 NAP 13,813 Sq Ft 287.77
112 2003 NAP 16,406 Sq Ft 232.17
113 2001 NAP 610 Units 6,147.54
114 1986 NAP 35,422 Sq Ft 101.63
115 1997 NAP 57,750 Sq Ft 59.23
- ------------------------------------------------------------------------------------------------------------------------------
116 1995 NAP 66 Units 51,515.15
117 1989 NAP 17,899 Sq Ft 189.95
118 1995 NAP 64,731 Sq Ft 51.59
119 2003 NAP 29,650 Sq Ft 109.52
120 1979 NAP 184 Units 17,375.89
- ------------------------------------------------------------------------------------------------------------------------------
121 2003 NAP 12,574 Sq Ft 246.30
122 2002 NAP 53,236 Sq Ft 57.20
123 1964 1999 31,500 Sq Ft 95.24
124 2003 NAP 14,335 Sq Ft 208.62
125 1939 1990 32,405 Sq Ft 92.22
- ------------------------------------------------------------------------------------------------------------------------------
126 1979 2003 80,675 Sq Ft 35.91
127 1995 NAP 20,673 Sq Ft 131.33
128 2003 NAP 10,880 Sq Ft 245.43
129 2004 NAP 29,761 Sq Ft 89.04
130 1977 NAP 142 Pads 17,996.48
- ------------------------------------------------------------------------------------------------------------------------------
131 2002 NAP 15,000 Sq Ft 170.00
132 1998 NAP 24,597 Sq Ft 103.58
133 2003 NAP 12,000 Sq Ft 210.00
134 1963 NAP 105 Pads 22,828.57
135 1959 2001 26,106 Sq Ft 83.25
- ------------------------------------------------------------------------------------------------------------------------------
136 1977 NAP 44,242 Sq Ft 45.03
137 2001 NAP 7,916 Sq Ft 195.68
138 1965 NAP 84 Units 16,634.23
139 1966 NAP 78 Units 17,913.09
140 1979 2003 44,160 Sq Ft 27.11
- ------------------------------------------------------------------------------------------------------------------------------
141 2001 NAP 3,000 Sq Ft 178.09
ALLOCATED CUT-OFF
CONTROL OWNERSHIP ORIGINAL CUT-OFF DATE DATE BALANCE % OF INITIAL
NUMBER INTEREST BALANCE ($) BALANCE ($) (MULTI-PROPERTY) POOL BALANCE
- -----------------------------------------------------------------------------------------------------------------------
1 Both Fee/Leasehold 190,000,000 189,548,779 189,548,779 7.28%
2 Fee Simple 154,000,000 154,000,000 154,000,000 5.91%
3 Fee Simple 133,000,000 132,647,486 132,647,486 5.09%
4 Fee Simple 130,000,000 130,000,000 130,000,000 4.99%
5 Fee Simple 115,000,000 114,910,606 114,910,606 4.41%
- -----------------------------------------------------------------------------------------------------------------------
6 Fee Simple 98,000,000 97,839,965 97,839,965 3.76%
7 Fee Simple 85,000,000 84,759,743 84,759,743 3.25%
8 Fee Simple 80,000,000 80,000,000 80,000,000 3.07%
9 Fee Simple 71,500,000 71,500,000 71,500,000 2.75%
10 Fee Simple 68,000,000 68,000,000 68,000,000 2.61%
- -----------------------------------------------------------------------------------------------------------------------
11 Fee Simple 67,333,333 67,333,333 67,333,333 2.59%
12 Leasehold 61,000,000 61,000,000 61,000,000 2.34%
13 Fee Simple 48,800,000 48,800,000 48,800,000 1.87%
14 Fee Simple 48,000,000 47,955,354 47,955,354 1.84%
15 Fee Simple 47,000,000 47,000,000 47,000,000 1.80%
- -----------------------------------------------------------------------------------------------------------------------
16 Fee Simple 45,000,000 45,000,000 45,000,000 1.73%
17 Fee Simple 40,000,000 40,000,000 40,000,000 1.54%
18 Fee Simple 37,250,000 37,250,000 37,250,000 1.43%
19 Leasehold 32,800,000 32,800,000 32,800,000 1.26%
20 Fee Simple 29,300,000 29,300,000 29,300,000 1.13%
- -----------------------------------------------------------------------------------------------------------------------
21 Fee Simple 28,800,000 28,738,243 28,738,243 1.10%
22 Fee Simple 27,056,000 27,056,000 27,056,000 1.04%
23 Fee Simple 25,500,000 25,500,000 25,500,000 0.98%
24 Fee Simple 24,500,000 24,443,834 24,443,834 0.94%
25 Fee Simple 22,800,000 22,800,000 22,800,000 0.88%
- -----------------------------------------------------------------------------------------------------------------------
26 Fee Simple 22,250,000 22,210,643 22,210,643 0.85%
27 Fee Simple 21,960,000 21,942,627 21,942,627 0.84%
28 Fee Simple 21,187,500 21,187,500 21,187,500 0.81%
29 Fee Simple 21,000,000 20,983,587 20,983,587 0.81%
30 Fee Simple 20,000,000 20,000,000 20,000,000 0.77%
- -----------------------------------------------------------------------------------------------------------------------
31 Fee Simple 19,200,000 19,144,725 19,144,725 0.74%
32 Fee Simple 18,500,000 18,500,000 18,500,000 0.71%
33 Leasehold 17,750,000 17,750,000 17,750,000 0.68%
34 Leasehold 16,303,601 16,205,297 16,205,297 0.62%
35 Fee Simple 16,000,000 16,000,000 16,000,000 0.61%
- -----------------------------------------------------------------------------------------------------------------------
36 Fee Simple 15,900,000 15,900,000 15,900,000 0.61%
37 Fee Simple 15,500,000 15,456,591 15,456,591 0.59%
38 Fee Simple 15,400,000 15,370,613 15,370,613 0.59%
39 Fee Simple 15,350,000 15,350,000 15,350,000 0.59%
40 Fee Simple 15,250,000 15,250,000 15,250,000 0.59%
- -----------------------------------------------------------------------------------------------------------------------
41 Fee Simple 15,000,000 15,000,000 15,000,000 0.58%
42 Fee Simple 14,925,000 14,925,000 14,925,000 0.57%
43 Fee Simple 14,000,000 14,000,000 14,000,000 0.54%
44 Fee Simple 14,000,000 13,905,513 13,905,513 0.53%
45 Fee Simple 14,400,000 13,850,000 13,850,000 0.53%
- -----------------------------------------------------------------------------------------------------------------------
46 Fee Simple 13,400,000 13,335,403 13,335,403 0.51%
47 Fee Simple 11,700,000 11,700,000 11,700,000 0.45%
48 Fee Simple 11,100,000 11,075,201 11,075,201 0.43%
49 Fee Simple 10,900,000 10,838,169 10,838,169 0.42%
50 Fee Simple 10,800,000 10,800,000 10,800,000 0.41%
- -----------------------------------------------------------------------------------------------------------------------
51 Fee Simple 10,500,000 10,500,000 10,500,000 0.40%
52 Fee Simple 9,863,596 9,804,123 9,804,123 0.38%
53 Fee Simple 9,800,000 9,800,000 9,800,000 0.38%
54 Fee Simple 9,500,000 9,428,831 9,428,831 0.36%
55 Fee Simple 9,450,000 9,364,496 9,364,496 0.36%
- -----------------------------------------------------------------------------------------------------------------------
56 Leasehold 9,376,000 9,347,246 9,347,246 0.36%
57 Leasehold 9,270,000 9,241,571 9,241,571 0.35%
58 Leasehold 9,231,000 9,202,690 9,202,690 0.35%
59 Fee Simple 9,000,000 9,000,000 9,000,000 0.35%
60 Fee Simple 9,000,000 9,000,000 9,000,000 0.35%
- -----------------------------------------------------------------------------------------------------------------------
61 Fee Simple 8,890,000 8,873,259 8,873,259 0.34%
62 Fee Simple 8,850,000 8,850,000 8,850,000 0.34%
63 Fee Simple 8,700,000 8,692,959 8,692,959 0.33%
64 Fee Simple 8,600,000 8,600,000 8,600,000 0.33%
65 Fee Simple 8,600,000 8,561,938 8,561,938 0.33%
- -----------------------------------------------------------------------------------------------------------------------
66 Fee Simple 8,500,000 8,466,216 8,466,216 0.33%
67 Leasehold 8,444,000 8,418,104 8,418,104 0.32%
68 Fee Simple 8,350,000 8,324,620 8,324,620 0.32%
69 Fee Simple 8,100,000 8,100,000 8,100,000 0.31%
70 Fee Simple 8,000,000 8,000,000 8,000,000 0.31%
- -----------------------------------------------------------------------------------------------------------------------
71 Leasehold 7,848,400 7,824,331 7,824,331 0.30%
72 Fee Simple 7,800,000 7,793,067 7,793,067 0.30%
73 Fee Simple 7,800,000 7,785,441 7,785,441 0.30%
74 Fee Simple 7,750,000 7,750,000 7,750,000 0.30%
75 Fee Simple 7,400,000 7,400,000 7,400,000 0.28%
- -----------------------------------------------------------------------------------------------------------------------
76 Fee Simple 7,300,000 7,291,978 7,291,978 0.28%
77 Leasehold 7,210,000 7,166,527 7,166,527 0.28%
78 Leasehold 7,040,000 7,018,410 7,018,410 0.27%
79 Fee Simple 7,000,000 7,000,000 7,000,000 0.27%
80 Fee Simple 6,750,000 6,744,391 6,744,391 0.26%
- -----------------------------------------------------------------------------------------------------------------------
81 Leasehold 6,718,000 6,703,958 6,703,958 0.26%
82 Fee Simple 6,350,000 6,337,856 6,337,856 0.24%
83 Fee Simple 6,320,000 6,320,000 6,320,000 0.24%
84 Fee Simple 6,240,000 6,240,000 6,240,000 0.24%
85 Fee Simple 6,200,000 6,170,549 6,170,549 0.24%
- -----------------------------------------------------------------------------------------------------------------------
86 Fee Simple 6,000,000 5,985,174 5,985,174 0.23%
87 Fee Simple 5,950,000 5,950,000 5,950,000 0.23%
88 Fee Simple 5,910,000 5,910,000 5,910,000 0.23%
89 Fee Simple 5,850,000 5,839,511 5,839,511 0.22%
90 Fee Simple 5,790,000 5,790,000 5,790,000 0.22%
- -----------------------------------------------------------------------------------------------------------------------
91 Fee Simple 5,765,000 5,765,000 5,765,000 0.22%
92 Fee Simple 5,750,000 5,750,000 5,750,000 0.22%
93 Fee Simple 5,540,000 5,540,000 5,540,000 0.21%
94 Fee Simple 5,520,000 5,520,000 5,520,000 0.21%
95 Fee Simple 5,400,000 5,400,000 5,400,000 0.21%
- -----------------------------------------------------------------------------------------------------------------------
96 Fee Simple 5,300,000 5,295,420 5,295,420 0.20%
97 Fee Simple 5,250,000 5,234,256 5,234,256 0.20%
98 Fee Simple 5,200,000 5,185,586 5,185,586 0.20%
99 Fee Simple 5,000,000 5,000,000 5,000,000 0.19%
100 Fee Simple 4,700,000 4,700,000 4,700,000 0.18%
- -----------------------------------------------------------------------------------------------------------------------
101 Fee Simple 4,600,000 4,586,500 4,586,500 0.18%
102 Fee Simple 4,500,000 4,500,000 4,500,000 0.17%
103 Fee Simple 4,500,000 4,500,000 4,500,000 0.17%
104 Fee Simple 4,440,000 4,435,554 4,435,554 0.17%
105 Fee Simple 4,410,000 4,383,410 4,383,410 0.17%
- -----------------------------------------------------------------------------------------------------------------------
106 Fee Simple 4,350,000 4,346,280 4,346,280 0.17%
107 Fee Simple 4,350,000 4,344,594 4,344,594 0.17%
108 Fee Simple 4,300,000 4,259,767 4,259,767 0.16%
109 Fee Simple 4,200,000 4,196,161 4,196,161 0.16%
110 Fee Simple 4,000,000 3,996,732 3,996,732 0.15%
- -----------------------------------------------------------------------------------------------------------------------
111 Fee Simple 3,975,000 3,975,000 3,975,000 0.15%
112 Fee Simple 3,809,000 3,809,000 3,809,000 0.15%
113 Fee Simple 3,750,000 3,750,000 3,750,000 0.14%
114 Fee Simple 3,600,000 3,600,000 3,600,000 0.14%
115 Fee Simple 3,444,000 3,420,412 3,420,412 0.13%
- -----------------------------------------------------------------------------------------------------------------------
116 Fee Simple 3,400,000 3,400,000 3,400,000 0.13%
117 Fee Simple 3,400,000 3,400,000 3,400,000 0.13%
118 Fee Simple 3,360,000 3,339,741 3,339,741 0.13%
119 Fee Simple 3,250,000 3,247,184 3,247,184 0.12%
120 Fee Simple 3,200,000 3,197,163 3,197,163 0.12%
- -----------------------------------------------------------------------------------------------------------------------
121 Fee Simple 3,100,000 3,097,015 3,097,015 0.12%
122 Fee Simple 3,050,000 3,044,845 3,044,845 0.12%
123 Fee Simple 3,000,000 3,000,000 3,000,000 0.12%
124 Fee Simple 3,000,000 2,990,509 2,990,509 0.11%
125 Fee Simple 3,000,000 2,988,295 2,988,295 0.11%
- -----------------------------------------------------------------------------------------------------------------------
126 Fee Simple 2,900,000 2,896,658 2,896,658 0.11%
127 Fee Simple 2,715,000 2,715,000 2,715,000 0.10%
128 Fee Simple 2,675,000 2,670,267 2,670,267 0.10%
129 Fee Simple 2,650,000 2,650,000 2,650,000 0.10%
130 Fee Simple 2,555,500 2,555,500 2,555,500 0.10%
- -----------------------------------------------------------------------------------------------------------------------
131 Fee Simple 2,550,000 2,550,000 2,550,000 0.10%
132 Fee Simple 2,550,000 2,547,867 2,547,867 0.10%
133 Fee Simple 2,520,000 2,520,000 2,520,000 0.10%
134 Fee Simple 2,397,000 2,397,000 2,397,000 0.09%
135 Fee Simple 2,175,000 2,173,341 2,173,341 0.08%
- -----------------------------------------------------------------------------------------------------------------------
136 Fee Simple 2,006,158 1,992,418 1,992,418 0.08%
137 Fee Simple 1,550,000 1,548,971 1,548,971 0.06%
138 Fee Simple 1,400,000 1,397,275 1,397,275 0.05%
139 Fee Simple 1,400,000 1,397,221 1,397,221 0.05%
140 Fee Simple 1,200,000 1,197,003 1,197,003 0.05%
- -----------------------------------------------------------------------------------------------------------------------
141 Fee Simple 535,000 534,283 534,283 0.02%
GROSS
CONTROL BALLOON INTEREST ADMINISTRATIVE NET INTEREST
NUMBER BALANCE RATE (%) FEE RATE (%) RATE (%) AMORTIZATION TYPE
- -----------------------------------------------------------------------------------------------------------------------------------
1 174,910,245 4.78000 0.02080 4.75920 Amortizing
2 130,996,043 4.49010 0.02080 4.46930 Interest Only, Then Amortizing
3 112,882,527 6.02600 0.02080 6.00520 Amortizing
4 130,000,000 4.97960 0.03080 4.94880 Interest Only
5 98,407,048 6.24000 0.02080 6.21920 Amortizing
- -----------------------------------------------------------------------------------------------------------------------------------
6 84,300,997 6.49875 0.02080 6.47795 Amortizing
7 71,551,737 5.75000 0.09080 5.65920 Amortizing
8 70,269,867 5.49673 0.02080 5.47593 Interest Only, Then Amortizing
9 56,028,438 6.36000 0.02080 6.33920 Amortizing
10 57,400,478 5.85000 0.02080 5.82920 Amortizing
- -----------------------------------------------------------------------------------------------------------------------------------
11 63,819,946 5.78600 0.02080 5.76520 Interest Only, Then Amortizing
12 58,786,324 6.00000 0.02080 5.97920 Interest Only, Then Amortizing
13 44,971,622 4.95000 0.02080 4.92920 Interest Only, Then Amortizing
14 41,156,351 5.55000 0.02080 5.52920 Amortizing
15 40,669,898 5.89000 0.02080 5.86920 Interest Only, Then Amortizing
- -----------------------------------------------------------------------------------------------------------------------------------
16 39,374,270 5.44800 0.02080 5.42720 Interest Only, Then Amortizing
17 34,028,445 6.11000 0.02080 6.08920 Amortizing
18 31,229,528 5.61000 0.02080 5.58920 Interest Only, Then Amortizing
19 29,032,757 5.94000 0.02080 5.91920 Interest Only, Then Amortizing
20 26,849,938 5.76300 0.02080 5.74220 Interest Only, Then Amortizing
- -----------------------------------------------------------------------------------------------------------------------------------
21 26,667,341 5.27000 0.02080 5.24920 Amortizing
22 27,056,000 4.66000 0.02080 4.63920 Interest Only
23 23,754,737 5.69000 0.07080 5.61920 Interest Only, Then Amortizing
24 19,932,448 5.66000 0.02080 5.63920 Amortizing
25 20,839,994 6.73000 0.02080 6.70920 Interest Only, Then Amortizing
- -----------------------------------------------------------------------------------------------------------------------------------
26 18,950,812 6.15000 0.02080 6.12920 Amortizing
27 18,719,008 6.17500 0.02080 6.15420 Amortizing
28 20,031,208 5.55000 0.02080 5.52920 Interest Only, Then Amortizing
29 17,923,951 6.22000 0.07080 6.14920 Amortizing
30 17,351,991 5.99500 0.02080 5.97420 Interest Only, Then Amortizing
- -----------------------------------------------------------------------------------------------------------------------------------
31 16,123,052 5.67000 0.06080 5.60920 Amortizing
32 15,773,304 6.18700 0.02080 6.16620 Amortizing
33 15,668,066 5.82000 0.02080 5.79920 Interest Only, Then Amortizing
34 13,720,320 5.74330 0.11080 5.63250 Amortizing
35 14,362,514 5.67000 0.09080 5.57920 Amortizing
- -----------------------------------------------------------------------------------------------------------------------------------
36 13,407,723 5.81200 0.02080 5.79120 Amortizing
37 13,376,535 5.79000 0.02080 5.76920 Amortizing
38 12,985,626 5.81000 0.02080 5.78920 Amortizing
39 13,176,453 5.59000 0.02080 5.56920 Interest Only, Then Amortizing
40 13,835,761 7.10000 0.02080 7.07920 Interest Only, Then Amortizing
- -----------------------------------------------------------------------------------------------------------------------------------
41 165,403 5.26000 0.02080 5.23920 Fully Amortizing
42 14,096,284 5.46000 0.02080 5.43920 Interest Only, Then Amortizing
43 12,606,435 5.81000 0.02080 5.78920 Interest Only, Then Amortizing
44 11,829,627 5.87500 0.02080 5.85420 Amortizing
45 11,971,879 5.86000 0.02080 5.83920 Interest Only, Then Amortizing
- -----------------------------------------------------------------------------------------------------------------------------------
46 10,000,938 4.95000 0.06080 4.88920 Amortizing
47 11,269,541 5.93000 0.02080 5.90920 Interest Only, Then Amortizing
48 9,147,539 5.07500 0.02080 5.05420 Amortizing
49 9,420,412 6.66300 0.02080 6.64220 Amortizing
50 9,010,216 5.46500 0.02080 5.44420 Amortizing
- -----------------------------------------------------------------------------------------------------------------------------------
51 8,958,131 5.37000 0.02080 5.34920 Interest Only, Then Amortizing
52 8,300,725 5.74330 0.11080 5.63250 Amortizing
53 8,289,199 5.14000 0.02080 5.11920 Interest Only, Then Amortizing
54 7,906,477 5.38000 0.06080 5.31920 Amortizing
55 8,158,023 6.62000 0.02080 6.59920 Amortizing
- -----------------------------------------------------------------------------------------------------------------------------------
56 7,805,494 5.39000 0.06080 5.32920 Amortizing
57 7,717,249 5.39000 0.06080 5.32920 Amortizing
58 7,684,781 5.39000 0.06080 5.32920 Amortizing
59 7,989,799 6.07000 0.02080 6.04920 Interest Only, Then Amortizing
60 7,747,371 6.52500 0.02080 6.50420 Amortizing
- -----------------------------------------------------------------------------------------------------------------------------------
61 7,509,722 5.87000 0.02080 5.84920 Amortizing
62 8,536,581 6.11800 0.02080 6.09720 Interest Only, Then Amortizing
63 7,397,710 6.09000 0.02080 6.06920 Amortizing
64 7,402,097 5.69000 0.08080 5.60920 Interest Only, Then Amortizing
65 6,534,841 5.45000 0.02080 5.42920 Amortizing
- -----------------------------------------------------------------------------------------------------------------------------------
66 7,112,014 5.91000 0.06080 5.84920 Amortizing
67 7,029,606 5.39000 0.06080 5.32920 Amortizing
68 6,960,069 5.43000 0.02080 5.40920 Amortizing
69 7,013,596 5.94000 0.02080 5.91920 Interest Only, Then Amortizing
70 6,844,941 5.72000 0.06080 5.65920 Interest Only, Then Amortizing
- -----------------------------------------------------------------------------------------------------------------------------------
71 6,533,771 5.39000 0.06080 5.32920 Amortizing
72 6,561,798 5.73000 0.02080 5.70920 Amortizing
73 6,596,811 5.91000 0.06080 5.84920 Amortizing
74 6,782,639 5.46000 0.07080 5.38920 Interest Only, Then Amortizing
75 6,369,032 4.79000 0.02080 4.76920 Interest Only, Then Amortizing
- -----------------------------------------------------------------------------------------------------------------------------------
76 5,791,898 6.74000 0.02080 6.71920 Amortizing
77 6,067,587 5.74330 0.11080 5.63250 Amortizing
78 5,860,780 5.39000 0.06080 5.32920 Amortizing
79 6,154,243 5.72000 0.02080 5.69920 Interest Only, Then Amortizing
80 5,722,789 5.99000 0.06080 5.92920 Amortizing
- -----------------------------------------------------------------------------------------------------------------------------------
81 5,592,210 5.39000 0.06080 5.32920 Amortizing
82 5,352,854 5.80000 0.08080 5.71920 Amortizing
83 6,320,000 4.46000 0.09080 4.36920 Interest Only
84 6,240,000 4.46000 0.09080 4.36920 Interest Only
85 5,224,708 5.78500 0.02080 5.76420 Amortizing
- -----------------------------------------------------------------------------------------------------------------------------------
86 4,859,803 4.86000 0.06080 4.79920 Amortizing
87 5,185,163 5.29000 0.02080 5.26920 Interest Only, Then Amortizing
88 5,223,634 5.88000 0.02080 5.85920 Interest Only, Then Amortizing
89 4,646,530 6.09000 0.07080 6.01920 Amortizing
90 5,790,000 4.46000 0.09080 4.36920 Interest Only
- -----------------------------------------------------------------------------------------------------------------------------------
91 4,884,271 5.97000 0.02080 5.94920 Amortizing
92 4,912,811 6.26000 0.02080 6.23920 Amortizing
93 4,320,959 6.21800 0.02080 6.19720 Amortizing
94 4,947,043 5.59000 0.02080 5.56920 Amortizing
95 5,400,000 4.28000 0.02080 4.25920 Interest Only
- -----------------------------------------------------------------------------------------------------------------------------------
96 4,473,458 5.84000 0.02080 5.81920 Amortizing
97 4,384,284 5.49000 0.02080 5.46920 Amortizing
98 4,013,525 5.90500 0.02080 5.88420 Amortizing
99 4,580,570 5.83000 0.02080 5.80920 Interest Only, Then Amortizing
100 4,529,748 6.01000 0.02080 5.98920 Interest Only, Then Amortizing
- -----------------------------------------------------------------------------------------------------------------------------------
101 3,509,721 5.57000 0.02080 5.54920 Amortizing
102 3,809,147 5.94000 0.02080 5.91920 Amortizing
103 4,500,000 5.90000 0.09080 5.80920 Interest Only
104 3,951,357 5.25000 0.06080 5.18920 Amortizing
105 3,711,242 5.74330 0.11080 5.63250 Amortizing
- -----------------------------------------------------------------------------------------------------------------------------------
106 3,676,005 5.88000 0.02080 5.85920 Amortizing
107 3,192,788 6.13500 0.02080 6.11420 Amortizing
108 3,595,569 5.53000 0.02080 5.50920 Amortizing
109 3,521,451 5.62000 0.02080 5.59920 Amortizing
110 3,397,767 6.05500 0.02080 6.03420 Amortizing
- -----------------------------------------------------------------------------------------------------------------------------------
111 3,415,643 6.46100 0.02080 6.44020 Amortizing
112 3,809,000 4.40000 0.02080 4.37920 Interest Only
113 3,072,500 6.45500 0.02080 6.43420 Amortizing
114 3,142,348 5.35000 0.07080 5.27920 Interest Only, Then Amortizing
115 3,182,020 5.11550 0.11080 5.00470 Amortizing
- -----------------------------------------------------------------------------------------------------------------------------------
116 2,987,429 4.66000 0.02080 4.63920 Interest Only, Then Amortizing
117 2,848,673 5.60000 0.02080 5.57920 Amortizing
118 2,827,613 5.74330 0.11080 5.63250 Amortizing
119 2,742,336 5.83000 0.02080 5.80920 Amortizing
120 2,692,835 5.74000 0.06080 5.67920 Amortizing
- -----------------------------------------------------------------------------------------------------------------------------------
121 2,582,307 5.41000 0.02080 5.38920 Amortizing
122 2,612,691 6.35000 0.02080 6.32920 Amortizing
123 2,551,391 6.10000 0.02080 6.07920 Amortizing
124 2,486,458 5.25000 0.02080 5.22920 Amortizing
125 962,426 6.54000 0.02080 6.51920 Amortizing
- -----------------------------------------------------------------------------------------------------------------------------------
126 2,283,951 6.51000 0.02080 6.48920 Amortizing
127 2,413,559 6.14000 0.08080 6.05920 Interest Only, Then Amortizing
128 2,278,290 6.14900 0.02080 6.12820 Amortizing
129 2,247,802 6.01000 0.02080 5.98920 Amortizing
130 2,258,713 5.88000 0.02080 5.85920 Interest Only, Then Amortizing
- -----------------------------------------------------------------------------------------------------------------------------------
131 2,550,000 5.12000 0.09080 5.02920 Interest Only
132 2,160,347 5.96500 0.02080 5.94420 Amortizing
133 2,302,078 6.00000 0.02080 5.97920 Interest Only, Then Amortizing
134 2,118,621 5.88000 0.02080 5.85920 Interest Only, Then Amortizing
135 1,861,202 6.31000 0.02080 6.28920 Amortizing
- -----------------------------------------------------------------------------------------------------------------------------------
136 1,853,552 5.11550 0.11080 5.00470 Amortizing
137 1,344,562 6.80000 0.02080 6.77920 Amortizing
138 1,177,310 5.72000 0.02080 5.69920 Amortizing
139 1,174,088 5.63000 0.02080 5.60920 Amortizing
140 944,669 6.50000 0.02080 6.47920 Amortizing
- -----------------------------------------------------------------------------------------------------------------------------------
141 410,786 5.75000 0.06080 5.68920 Amortizing
INTEREST ORIGINAL INTEREST REMAINING ORIGINAL TERM TO REMAINING
CONTROL ACCRUAL ONLY PERIOD INTEREST ONLY MATURITY TERM TO
NUMBER METHOD SEASONING (MOS.) PERIOD (MOS.) (MOS.) MATURITY (MOS.)
- ------------------------------------------------------------------------------------------------------------------------------------
1 Actual/360 2 0 0 59 57
2 Actual/360 7 35 28 118 111
3 Actual/360 3 0 0 120 117
4 Actual/360 2 120 118 120 118
5 Actual/360 1 0 0 119 118
- ------------------------------------------------------------------------------------------------------------------------------------
6 Actual/360 2 0 0 120 118
7 Actual/360 3 0 0 120 117
8 Actual/360 4 24 20 120 116
9 Actual/360 0 0 0 120 120
10 Actual/360 0 0 0 120 120
- ------------------------------------------------------------------------------------------------------------------------------------
11 Actual/360 9 36 27 84 75
12 Actual/360 0 24 24 60 60
13 Actual/360 2 60 58 120 118
14 Actual/360 1 0 0 108 107
15 Actual/360 3 12 9 120 117
- ------------------------------------------------------------------------------------------------------------------------------------
16 Actual/360 1 24 23 120 119
17 Actual/360 0 0 0 120 120
18 Actual/360 1 24 23 144 143
19 Actual/360 1 24 23 120 119
20 Actual/360 0 12 12 84 84
- ------------------------------------------------------------------------------------------------------------------------------------
21 Actual/360 2 0 0 60 58
22 Actual/360 3 120 117 120 117
23 Actual/360 1 24 23 84 83
24 Actual/360 2 0 0 120 118
25 Actual/360 3 60 57 120 117
- ------------------------------------------------------------------------------------------------------------------------------------
26 Actual/360 2 0 0 120 118
27 Actual/360 1 0 0 120 119
28 Actual/360 1 12 11 60 59
29 Actual/360 1 0 0 120 119
30 Actual/360 0 12 12 120 120
- ------------------------------------------------------------------------------------------------------------------------------------
31 Actual/360 3 0 0 120 117
32 Actual/360 0 0 0 120 120
33 Actual/360 1 24 23 120 119
34 Actual/360 6 0 0 120 114
35 Actual/360 0 0 0 84 84
- ------------------------------------------------------------------------------------------------------------------------------------
36 Actual/360 0 0 0 120 120
37 Actual/360 3 0 0 108 105
38 Actual/360 2 0 0 120 118
39 Actual/360 3 12 9 120 117
40 Actual/360 0 24 24 120 120
- ------------------------------------------------------------------------------------------------------------------------------------
41 Actual/360 0 0 0 180 180
42 Actual/360 1 12 11 60 59
43 Actual/360 3 36 33 120 117
44 Actual/360 7 0 0 120 113
45 Actual/360 7 12 5 120 113
- ------------------------------------------------------------------------------------------------------------------------------------
46 Actual/360 3 0 0 120 117
47 Actual/360 1 24 23 60 59
48 Actual/360 2 0 0 120 118
49 Actual/360 7 0 0 120 113
50 Actual/360 0 0 0 120 120
- ------------------------------------------------------------------------------------------------------------------------------------
51 Actual/360 2 12 10 120 118
52 Actual/360 6 0 0 120 114
53 Actual/360 3 11 8 120 117
54 Actual/360 7 0 0 120 113
55 Actual/360 11 0 0 120 109
- ------------------------------------------------------------------------------------------------------------------------------------
56 Actual/360 3 0 0 120 117
57 Actual/360 3 0 0 120 117
58 Actual/360 3 0 0 120 117
59 Actual/360 1 24 23 120 119
60 Actual/360 0 0 0 120 120
- ------------------------------------------------------------------------------------------------------------------------------------
61 Actual/360 2 0 0 120 118
62 Actual/360 2 24 22 60 58
63 Actual/360 1 0 0 120 119
64 Actual/360 1 12 11 120 119
65 Actual/360 3 0 0 120 117
- ------------------------------------------------------------------------------------------------------------------------------------
66 Actual/360 4 0 0 120 116
67 Actual/360 3 0 0 120 117
68 Actual/360 3 0 0 120 117
69 Actual/360 1 12 11 108 107
70 30 / 360 1 24 23 130 129
- ------------------------------------------------------------------------------------------------------------------------------------
71 Actual/360 3 0 0 120 117
72 Actual/360 1 0 0 120 119
73 Actual/360 2 0 0 120 118
74 Actual/360 0 24 24 120 120
75 Actual/360 3 12 9 108 105
- ------------------------------------------------------------------------------------------------------------------------------------
76 Actual/360 1 0 0 120 119
77 Actual/360 6 0 0 120 114
78 Actual/360 3 0 0 120 117
79 Actual/360 1 24 23 121 120
80 Actual/360 1 0 0 120 119
- ------------------------------------------------------------------------------------------------------------------------------------
81 Actual/360 2 0 0 120 118
82 Actual/360 2 0 0 120 118
83 Actual/360 3 60 57 60 57
84 Actual/360 3 60 57 60 57
85 Actual/360 5 0 0 120 115
- ------------------------------------------------------------------------------------------------------------------------------------
86 30 / 360 2 0 0 120 118
87 Actual/360 9 12 3 108 99
88 Actual/360 0 24 24 120 120
89 Actual/360 2 0 0 151 149
90 Actual/360 3 60 57 60 57
- ------------------------------------------------------------------------------------------------------------------------------------
91 Actual/360 0 0 0 120 120
92 Actual/360 0 0 0 120 120
93 Actual/360 0 0 0 120 120
94 Actual/360 0 0 0 84 84
95 Actual/360 3 60 57 60 57
- ------------------------------------------------------------------------------------------------------------------------------------
96 Actual/360 1 0 0 120 119
97 Actual/360 3 0 0 120 117
98 Actual/360 2 0 0 120 118
99 Actual/360 1 60 59 120 119
100 Actual/360 2 60 58 96 94
- ------------------------------------------------------------------------------------------------------------------------------------
101 Actual/360 2 0 0 120 118
102 Actual/360 0 0 0 120 120
103 Actual/360 1 120 119 120 119
104 Actual/360 1 0 0 84 83
105 Actual/360 6 0 0 120 114
- ------------------------------------------------------------------------------------------------------------------------------------
106 Actual/360 1 0 0 120 119
107 Actual/360 1 0 0 120 119
108 Actual/360 9 0 0 120 111
109 Actual/360 1 0 0 120 119
110 Actual/360 1 0 0 120 119
- ------------------------------------------------------------------------------------------------------------------------------------
111 Actual/360 0 0 0 120 120
112 Actual/360 4 60 56 60 56
113 Actual/360 0 0 0 120 120
114 Actual/360 4 24 20 120 116
115 Actual/360 6 0 0 60 54
- ------------------------------------------------------------------------------------------------------------------------------------
116 Actual/360 3 24 21 108 105
117 Actual/360 0 0 0 120 120
118 Actual/360 6 0 0 120 114
119 Actual/360 1 0 0 120 119
120 Actual/360 1 0 0 120 119
- ------------------------------------------------------------------------------------------------------------------------------------
121 Actual/360 1 0 0 120 119
122 Actual/360 2 0 0 120 118
123 Actual/360 0 0 0 120 120
124 Actual/360 3 0 0 120 117
125 Actual/360 1 0 0 120 119
- ------------------------------------------------------------------------------------------------------------------------------------
126 Actual/360 1 0 0 120 119
127 Actual/360 11 24 13 120 109
128 Actual/360 2 0 0 120 118
129 Actual/360 0 0 0 120 120
130 Actual/360 0 24 24 120 120
- ------------------------------------------------------------------------------------------------------------------------------------
131 Actual/360 17 60 43 60 43
132 Actual/360 1 0 0 120 119
133 Actual/360 0 12 12 84 84
134 Actual/360 0 24 24 120 120
135 Actual/360 1 0 0 120 119
- ------------------------------------------------------------------------------------------------------------------------------------
136 Actual/360 6 0 0 60 54
137 Actual/360 1 0 0 120 119
138 Actual/360 2 0 0 120 118
139 Actual/360 2 0 0 120 118
140 Actual/360 2 0 0 120 118
- ------------------------------------------------------------------------------------------------------------------------------------
141 Actual/360 1 0 0 120 119
ORIGINAL REMAINING
CONTROL AMORTIZATION TERM AMORTIZATION TERM FIRST
NUMBER (MOS.) (MOS.) NOTE DATE PAYMENT DATE MATURITY DATE
- -----------------------------------------------------------------------------------------------------------------------------
1 360 358 5/17/2004 7/1/2004 5/1/2009
2 324 324 12/9/2003 2/1/2004 11/1/2013
3 360 357 4/22/2004 6/1/2004 5/1/2014
4 5/18/2004 7/6/2004 6/6/2014
5 360 359 6/10/2004 8/1/2004 6/1/2014
- ---------------------------------------------------------------------------------------------------------------------------
6 360 358 5/25/2004 7/1/2004 6/1/2014
7 360 357 4/15/2004 6/1/2004 5/1/2014
8 360 360 3/4/2004 5/1/2004 4/1/2014
9 300 300 7/29/2004 9/1/2004 8/1/2014
10 360 360 8/9/2004 10/1/2004 9/1/2014
- ---------------------------------------------------------------------------------------------------------------------------
11 360 360 10/10/2003 12/1/2003 11/1/10
12 360 360 7/28/2004 9/1/2004 8/1/2009
13 360 360 5/13/2004 7/1/2004 6/1/2014
14 360 359 6/4/2004 8/1/2004 7/1/2013
15 360 360 4/29/2004 6/1/2004 5/1/2014
- ---------------------------------------------------------------------------------------------------------------------------
16 360 360 6/3/2004 8/1/2004 7/1/2014
17 360 360 7/23/2004 9/1/2004 8/1/2014
18 360 360 6/21/2004 8/1/2004 7/1/2016
19 360 360 6/23/2004 8/1/2004 7/1/2014
20 360 360 7/27/2004 9/1/2004 8/1/2011
- ---------------------------------------------------------------------------------------------------------------------------
21 360 358 5/3/2004 7/1/2004 6/1/2009
22 4/27/2004 6/1/2004 5/1/2014
23 360 360 6/18/2004 8/1/2004 7/1/2011
24 336 334 5/12/2004 7/1/2004 6/1/2014
25 300 300 4/30/2004 6/1/2004 5/1/2014
- ---------------------------------------------------------------------------------------------------------------------------
26 360 358 5/14/2004 7/1/2004 6/1/2014
27 360 359 6/10/2004 8/1/2004 7/1/2014
28 360 360 6/29/2004 8/1/2004 7/1/2009
29 360 359 6/8/2004 8/1/2004 7/1/2014
30 360 360 7/29/2004 9/1/2004 8/1/2014
- ---------------------------------------------------------------------------------------------------------------------------
31 360 357 4/30/2004 6/1/2004 5/1/2014
32 360 360 7/20/2004 9/6/2004 8/6/2014
33 360 360 6/4/2004 8/1/2004 7/1/2014
34 360 354 1/20/2004 3/1/2004 2/1/2014
35 360 360 7/9/2004 9/1/2004 8/1/2011
- ---------------------------------------------------------------------------------------------------------------------------
36 360 360 7/28/2004 9/1/2004 8/1/2014
37 360 357 4/28/2004 6/1/2004 5/1/2013
38 360 358 5/6/2004 7/1/2004 6/1/2014
39 360 360 4/16/2004 6/1/2004 5/1/2014
40 360 360 7/26/2004 9/1/2004 8/1/2014
- ---------------------------------------------------------------------------------------------------------------------------
41 180 180 7/1/2004 9/1/2004 8/1/2019
42 360 360 6/29/2004 8/1/2004 7/1/2009
43 360 360 4/19/2004 6/1/2004 5/1/2014
44 360 353 12/24/2003 2/1/2004 1/1/2014
45 360 360 12/11/2003 2/1/2004 1/1/2014
- ---------------------------------------------------------------------------------------------------------------------------
46 300 297 4/28/2004 6/1/2004 5/1/2014
47 360 360 6/16/2004 8/1/2004 7/1/2009
48 360 358 5/3/2004 7/1/2004 6/1/2014
49 360 353 12/24/2003 2/1/2004 1/1/2014
50 360 360 8/2/2004 10/1/2004 9/1/2014
- ---------------------------------------------------------------------------------------------------------------------------
51 360 360 5/4/2004 7/1/2004 6/1/2014
52 360 354 1/20/2004 3/1/2004 2/1/2014
53 360 360 4/5/2004 6/1/2004 5/1/2014
54 360 353 12/19/2003 2/1/2004 1/1/2014
55 360 349 8/11/2003 10/1/2003 9/1/2013
- ---------------------------------------------------------------------------------------------------------------------------
56 360 357 4/30/2004 6/1/2004 5/1/2014
57 360 357 4/30/2004 6/1/2004 5/1/2014
58 360 357 4/30/2004 6/1/2004 5/1/2014
59 360 360 6/10/2004 8/1/2004 7/1/2014
60 360 360 7/19/2004 9/1/2004 8/1/2014
- ---------------------------------------------------------------------------------------------------------------------------
61 360 358 5/27/2004 7/1/2004 6/1/2014
62 360 360 5/6/2004 7/1/2004 6/1/2009
63 360 359 6/30/2004 8/1/2004 7/1/2014
64 360 360 6/18/2004 8/1/2004 7/1/2014
65 300 297 4/8/2004 6/1/2004 5/1/2014
- ---------------------------------------------------------------------------------------------------------------------------
66 351 347 3/24/2004 5/1/2004 4/1/2014
67 360 357 4/30/2004 6/1/2004 5/1/2014
68 360 357 4/27/2004 6/1/2004 5/1/2014
69 336 336 6/30/2004 8/1/2004 7/1/2013
70 360 360 6/24/2004 8/1/2004 5/1/2015
- ---------------------------------------------------------------------------------------------------------------------------
71 360 357 4/30/2004 6/1/2004 5/1/2014
72 360 359 7/1/2004 8/1/2004 7/1/2014
73 360 358 5/28/2004 7/1/2004 6/1/2014
74 360 360 7/12/2004 9/1/2004 8/1/2014
75 360 360 4/29/2004 6/1/2004 5/1/2013
- ---------------------------------------------------------------------------------------------------------------------------
76 300 299 6/29/2004 8/1/2004 7/1/2014
77 360 354 1/20/2004 3/1/2004 2/1/2014
78 360 357 4/30/2004 6/1/2004 5/1/2014
79 360 360 6/25/2004 8/1/2004 8/1/2014
80 360 359 6/28/2004 8/1/2004 7/1/2014
- ---------------------------------------------------------------------------------------------------------------------------
81 360 358 5/14/2004 7/1/2004 6/1/2014
82 360 358 5/6/2004 7/1/2004 6/1/2014
83 4/8/2004 6/1/2004 5/1/2009
84 4/8/2004 6/1/2004 5/1/2009
85 360 355 2/11/2004 4/1/2004 3/1/2014
- ---------------------------------------------------------------------------------------------------------------------------
86 360 358 5/11/2004 7/1/2004 6/1/2014
87 360 360 10/8/2003 12/1/2003 11/1/2012
88 360 360 7/28/2004 9/1/2004 8/1/2014
89 360 358 5/14/2004 7/1/2004 1/1/2017
90 4/8/2004 6/1/2004 5/1/2009
- ---------------------------------------------------------------------------------------------------------------------------
91 360 360 7/27/2004 9/1/2004 8/1/2014
92 360 360 7/21/2004 9/1/2004 8/1/2014
93 300 300 7/27/2004 9/1/2004 8/1/2014
94 360 360 7/19/2004 9/1/2004 8/1/2011
95 4/21/2004 6/1/2004 5/1/2009
- ---------------------------------------------------------------------------------------------------------------------------
96 360 359 6/14/2004 8/1/2004 7/1/2014
97 360 357 4/19/2004 6/1/2004 5/1/2014
98 300 298 5/5/2004 7/1/2004 6/1/2014
99 324 324 6/9/2004 8/1/2004 7/1/2014
100 360 360 5/3/2004 7/1/2004 6/1/2012
- ---------------------------------------------------------------------------------------------------------------------------
101 300 298 5/27/2004 7/1/2004 6/1/2014
102 360 360 7/15/2004 9/1/2004 8/1/2014
103 6/1/2004 8/1/2004 7/1/2014
104 360 359 6/18/2004 8/1/2004 7/1/2011
105 360 354 1/20/2004 3/1/2004 2/1/2014
- ---------------------------------------------------------------------------------------------------------------------------
106 360 359 6/15/2004 8/1/2004 7/1/2014
107 300 299 6/23/2004 8/1/2004 7/1/2014
108 360 351 10/8/2003 12/1/2003 11/1/2013
109 360 359 6/30/2004 8/1/2004 7/1/2014
110 360 359 6/21/2004 8/1/2004 7/1/2014
- ---------------------------------------------------------------------------------------------------------------------------
111 360 360 7/22/2004 9/1/2004 8/1/2014
112 3/25/2004 5/1/2004 4/1/2009
113 324 324 7/2/2004 9/1/2004 8/1/2014
114 360 360 3/29/2004 5/1/2004 4/1/2014
115 360 354 1/20/2004 3/1/2004 2/1/2009
- ---------------------------------------------------------------------------------------------------------------------------
116 360 360 4/30/2004 6/1/2004 5/1/2013
117 360 360 7/20/2004 9/1/2004 8/1/2014
118 360 354 1/20/2004 3/1/2004 2/1/2014
119 360 359 6/14/2004 8/1/2004 7/1/2014
120 360 359 6/18/2004 8/1/2004 7/1/2014
- ---------------------------------------------------------------------------------------------------------------------------
121 360 359 6/29/2004 8/1/2004 7/1/2014
122 360 358 5/14/2004 7/1/2004 6/1/2014
123 360 360 7/8/2004 9/1/2004 8/1/2014
124 360 357 4/5/2004 6/1/2004 5/1/2014
125 156 155 6/10/2004 8/1/2004 7/1/2014
- ---------------------------------------------------------------------------------------------------------------------------
126 300 299 6/23/2004 8/1/2004 7/1/2014
127 360 360 8/29/2003 10/1/2003 9/1/2013
128 360 358 5/4/2004 7/1/2004 6/1/2014
129 360 360 7/14/2004 9/1/2004 8/1/2014
130 360 360 7/28/2004 9/1/2004 8/1/2014
- ---------------------------------------------------------------------------------------------------------------------------
131 2/19/2003 4/1/2003 3/1/2008
132 360 359 6/4/2004 8/1/2004 7/1/2014
133 348 348 7/2/2004 9/1/2004 8/1/2011
134 360 360 7/28/2004 9/1/2004 8/1/2014
135 360 359 6/29/2004 8/1/2004 7/1/2014
- ---------------------------------------------------------------------------------------------------------------------------
136 360 354 1/20/2004 3/1/2004 2/1/2009
137 360 359 6/16/2004 8/1/2004 7/1/2014
138 360 358 5/27/2004 7/1/2004 6/1/2014
139 360 358 5/28/2004 7/1/2004 6/1/2014
140 300 298 5/20/2004 7/1/2004 6/1/2014
- ---------------------------------------------------------------------------------------------------------------------------
141 300 299 6/8/2004 8/1/2004 7/1/2014
MONTHLY ANNUAL
CONTROL ARD DEBT DEBT GRACE PAYMENT
NUMBER (YES / NO) SERVICE ($) SERVICE ($) PERIOD DATE
- ----------------------------------------------------------------------------------------------------------
1 No 2,235,161.95 26,821,943.36 0 1
2 No 821,047.97 9,852,575.64 0 1
3 No 799,626.77 9,595,521.25 0 1
4 No 2,187,796.48 26,253,557.78 0 6
5 No 707,327.01 8,487,924.12 0 1
- ----------------------------------------------------------------------------------------------------------
6 No 619,346.10 7,432,153.24 0 1
7 No 496,036.97 5,952,443.64 5 1
8 No 2,543,235.51 30,518,826.11 0 1
9 No 476,536.97 5,718,443.64 0 1
10 No 401,159.84 4,813,918.02 0 1
- ----------------------------------------------------------------------------------------------------------
11 No 1,745,868.19 20,950,418.25 0 1
12 No 365,725.82 4,388,709.84 0 1
13 No 260,479.76 3,125,757.11 0 1
14 No 274,046.40 3,288,556.80 5 1
15 No 278,473.50 3,341,682.00 5 1
- ----------------------------------------------------------------------------------------------------------
16 No 254,038.84 3,048,466.04 0 1
17 No 242,656.35 2,911,876.14 0 1
18 No 214,079.36 2,568,952.32 5 1
19 No 195,389.11 2,344,669.32 5 1
20 No 171,228.90 2,054,746.74 0 1
- ----------------------------------------------------------------------------------------------------------
21 No 159,391.61 1,912,699.32 5 1
22 No 106,526.74 1,278,320.84 0 1
23 No 147,840.56 1,774,086.72 5 1
24 No 145,494.38 1,745,932.52 0 1
25 No 157,240.00 1,886,880.00 0 1
- ----------------------------------------------------------------------------------------------------------
26 No 135,553.27 1,626,639.19 0 1
27 No 134,142.14 1,609,705.70 0 1
28 No 120,965.79 1,451,589.48 5 1
29 No 128,891.15 1,546,693.80 0 1
30 No 119,845.82 1,438,149.85 0 1
- ----------------------------------------------------------------------------------------------------------
31 No 111,072.14 1,332,865.63 5 1
32 No 113,150.75 1,357,808.94 0 6
33 No 104,374.84 1,252,498.09 0 1
34 No 95,074.01 1,140,888.12 10 1
35 No 92,560.11 1,110,721.32 5 1
- ----------------------------------------------------------------------------------------------------------
36 No 93,415.27 1,120,983.26 0 1
37 No 90,848.04 1,090,176.48 5 1
38 No 90,458.06 1,085,496.72 5 1
39 No 88,024.34 1,056,292.08 5 1
40 No 102,484.87 1,229,818.49 0 1
- ----------------------------------------------------------------------------------------------------------
41 No 120,660.54 1,447,926.48 5 1
42 No 84,368.32 1,012,419.84 5 1
43 No 82,234.60 986,815.20 0 1
44 No 82,815.29 993,783.44 0 1
45 No 81,795.25 981,543.00 5 1
- ----------------------------------------------------------------------------------------------------------
46 No 77,945.20 935,342.43 5 1
47 No 69,621.73 835,460.76 0 1
48 No 60,097.02 721,164.29 0 1
49 No 70,067.99 840,815.89 0 1
50 No 61,084.26 733,011.12 0 1
- ----------------------------------------------------------------------------------------------------------
51 No 58,764.25 705,171.06 0 1
52 No 57,519.29 690,231.48 10 1
53 No 53,450.21 641,402.52 5 1
54 No 53,226.88 638,722.61 10 1
55 No 60,478.15 725,737.76 0 1
- ----------------------------------------------------------------------------------------------------------
56 No 52,590.61 631,087.32 5 1
57 No 51,996.05 623,952.65 5 1
58 No 51,777.30 621,327.60 5 1
59 No 54,365.25 652,383.02 0 1
60 No 57,034.17 684,410.09 0 1
- ----------------------------------------------------------------------------------------------------------
61 No 52,559.31 630,711.72 5 1
62 No 53,733.48 644,801.73 0 1
63 No 52,665.36 631,984.32 5 1
64 No 49,859.95 598,319.40 5 1
65 No 52,555.04 630,660.47 0 1
- ----------------------------------------------------------------------------------------------------------
66 No 50,940.96 611,291.52 10 1
67 No 47,362.96 568,355.57 5 1
68 No 47,044.31 564,531.71 0 1
69 No 49,518.99 594,227.88 5 1
70 No 46,533.48 558,401.73 5 1
- ----------------------------------------------------------------------------------------------------------
71 No 44,022.20 528,266.45 5 1
72 No 45,419.63 545,035.56 0 1
73 No 46,314.57 555,774.84 5 1
74 No 43,809.35 525,712.20 5 1
75 No 38,780.52 465,366.24 5 1
- ----------------------------------------------------------------------------------------------------------
76 No 50,390.45 604,685.45 0 1
77 No 42,044.92 504,539.04 10 1
78 No 39,487.83 473,854.01 5 1
79 No 40,716.80 488,601.60 5 1
80 No 40,426.27 485,115.24 5 1
- ----------------------------------------------------------------------------------------------------------
81 No 37,681.71 452,180.57 5 1
82 No 37,258.82 447,105.84 5 1
83 No 23,815.57 285,786.89 5 1
84 No 23,514.11 282,169.33 5 1
85 No 36,319.49 435,833.84 0 1
- ----------------------------------------------------------------------------------------------------------
86 No 31,697.89 380,374.66 5 1
87 No 33,003.69 396,044.28 5 1
88 No 34,978.77 419,745.24 0 1
89 No 35,412.92 424,955.04 5 1
90 No 21,818.38 261,820.58 5 1
- ----------------------------------------------------------------------------------------------------------
91 No 34,452.97 413,435.68 0 1
92 No 35,441.14 425,293.73 0 1
93 No 36,436.18 437,234.16 0 1
94 No 31,654.36 379,852.33 0 1
95 No 19,527.50 234,330.00 5 1
- ----------------------------------------------------------------------------------------------------------
96 No 31,233.05 374,796.60 5 1
97 No 29,775.99 357,311.90 0 1
98 No 33,202.35 398,428.22 0 1
99 No 30,670.72 368,048.64 5 1
100 No 28,209.10 338,509.20 5 1
- ----------------------------------------------------------------------------------------------------------
101 No 28,440.65 341,287.80 5 1
102 No 26,806.43 321,677.16 0 1
103 No 22,432.29 269,187.50 5 1
104 No 24,517.84 294,214.13 5 1
105 No 25,716.80 308,601.60 10 1
- ----------------------------------------------------------------------------------------------------------
106 No 25,745.80 308,949.60 5 1
107 No 28,387.18 340,646.14 0 1
108 No 24,495.92 293,951.04 5 1
109 No 24,164.31 289,971.72 5 1
110 No 24,123.65 289,483.75 0 1
- ----------------------------------------------------------------------------------------------------------
111 No 25,022.84 300,274.06 0 1
112 No 14,160.31 169,923.72 5 1
113 No 24,475.69 293,708.24 0 1
114 No 20,102.89 241,234.68 5 1
115 No 18,732.01 224,784.12 10 1
- ----------------------------------------------------------------------------------------------------------
116 No 17,552.03 210,624.36 5 1
117 No 19,518.69 234,224.28 5 1
118 No 19,593.75 235,125.00 10 1
119 No 19,131.61 229,579.32 5 1
120 No 18,654.01 223,848.10 10 1
- ----------------------------------------------------------------------------------------------------------
121 No 17,426.81 209,121.72 5 1
122 No 18,978.19 227,738.27 0 1
123 No 18,179.84 218,158.12 0 1
124 No 16,566.11 198,793.32 5 1
125 No 28,599.77 343,197.24 5 1
- ----------------------------------------------------------------------------------------------------------
126 No 19,599.13 235,189.59 0 1
127 No 16,522.97 198,275.64 5 1
128 No 16,295.12 195,541.46 0 1
129 No 15,905.13 190,861.56 5 1
130 No 15,124.91 181,498.98 0 1
- ----------------------------------------------------------------------------------------------------------
131 No 11,031.11 132,373.33 5 1
132 No 15,231.21 182,774.46 0 1
133 No 15,296.52 183,558.19 0 1
134 No 14,186.82 170,241.85 0 1
135 No 13,476.84 161,722.07 0 1
- ----------------------------------------------------------------------------------------------------------
136 No 10,911.55 130,938.60 10 1
137 No 10,104.84 121,258.08 0 1
138 No 8,143.36 97,720.32 5 1
139 No 8,063.61 96,763.32 5 1
140 No 8,102.49 97,229.83 0 1
- ----------------------------------------------------------------------------------------------------------
141 No 3,365.72 40,388.63 10 1
THIRD THIRD SECOND
CONTROL MOST RECENT MOST RECENT MOST RECENT
NUMBER PREPAYMENT PROVISION (1) NOI ($) NOI DATE NOI ($)
- ----------------------------------------------------------------------------------------------------------------------
1 Lockout/26_Defeasance/28_0%/5 N/A N/A N/A
2 Lockout/31_Defeasance/83_0%/4 14,992,055 12/31/2002 20,474,126
3 Lockout/27_Defeasance/90_0%/3 12,263,926 12/31/2002 12,668,010
4 Lockout/26_Defeasance/87_0%/7 59,669,734 12/31/2002 60,913,274
5 Lockout/25_Defeasance/89_0%/5 N/A N/A 3,221,504
- ----------------------------------------------------------------------------------------------------------------------
6 Lockout/26_Defeasance/91_0%/3 9,518,235 12/31/2002 8,587,965
7 Lockout/27_Defeasance/89_0%/4 N/A N/A N/A
8 Lockout/28_Defeasance/88_0%/4 60,997,121 12/31/2002 52,974,076
9 Lockout/24_Defeasance/92_0%/4 13,390,347 12/31/2002 11,043,426
10 Lockout/23_Defeasance/93_0%/4 6,300,924 12/31/2002 6,408,157
- ----------------------------------------------------------------------------------------------------------------------
11 Lockout/33_Defeasance/47_0%/4 30,159,684 12/31/2002 33,783,821
12 Lockout/24_Defeasance/33_0%/3 6,714,491 12/31/2002 5,924,554
13 Lockout/26_Defeasance/90_0%/4 5,642,063 12/31/2002 5,444,279
14 Lockout/25_Defeasance_79_0%/4 N/A N/A 4,275,838
15 Lockout/27_Defeasance/89_0%/4 3,171,754 12/31/2002 2,639,756
- ----------------------------------------------------------------------------------------------------------------------
16 Lockout/25_Defeasance/92_0%/3 1,219,105 12/31/2002 2,922,237
17 Lockout/24_Defeasance/92_0%/4 N/A N/A 2,803,784
18 Lockout/25_Defeasance/115_0%/4 N/A N/A N/A
19 Lockout/25_Defeasance/91_0%/4 2,073,123 12/31/2002 2,609,311
20 Lockout/35_>YM or 1%/46_0%/3 4,066,812 12/31/2002 3,422,533
- ----------------------------------------------------------------------------------------------------------------------
21 Lockout/26_Defeasance/30_0%/4 N/A N/A 1,957,135
22 Lockout/27_Defeasance/86_0%/7 3,473,206 12/31/2002 3,433,526
23 Lockout/25_Defeasance/52_0%/7 1,843,896 12/31/2002 1,978,803
24 Lockout/26_Defeasance/87_0%/7 N/A N/A N/A
25 Lockout/27_Defeasance/89_0%/4 1,211,225 12/31/2002 1,431,417
- ----------------------------------------------------------------------------------------------------------------------
26 Lockout/26_Defeasance/90_0%/4 2,182,963 12/31/2002 1,963,786
27 Lockout/25_Defeasance/91_0%/4 N/A N/A N/A
28 Lockout/25_Defeasance/31_0%/4 N/A N/A N/A
29 Lockout/25_Defeasance/88_0%/7 2,092,858 12/31/2002 2,213,821
30 Lockout/24_Defeasance/92_0%/4 2,427,195 12/31/2002 2,711,276
- ----------------------------------------------------------------------------------------------------------------------
31 Lockout/35_Defeasance/81_0%/4 N/A N/A 1,742,718
32 Lockout/24_Defeasance/93_0%/3 508,591 12/31/2002 1,610,237
33 Lockout/25_Defeasance/91_0%/4 1,071,603 12/31/2002 1,265,201
34 Lockout/27_>YM or 1%/92_0%/1 N/A N/A N/A
35 Lockout/24_Defeasance/56_0%/4 N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------------
36 Lockout/24_Defeasance/92_0%/4 N/A N/A N/A
37 Lockout/27_Defeasance/77_0%/4 N/A N/A N/A
38 Lockout/26_Defeasance/90_0%/4 N/A N/A 1,788,078
39 Lockout/27_Defeasance/89_0%/4 1,282,698 12/31/2002 1,413,477
40 Lockout/24_Defeasance/92_0%/4 947,226 12/31/2002 1,068,416
- ----------------------------------------------------------------------------------------------------------------------
41 Lockout/24_Defeasance/152_0%/4 N/A N/A 2,326,606
42 Lockout/25_Defeasance/31_0%/4 N/A N/A N/A
43 Lockout/27_Defeasance/89_0%/4 1,491,741 12/31/2002 1,177,457
44 Lockout/31_Defeasance/85_0%/4 1,148,603 12/31/2002 N/A
45 Lockout/31_>YM or 1%/85_0%/4 N/A N/A 1,752,834
- ----------------------------------------------------------------------------------------------------------------------
46 Lockout/35_Defeasance/81_0%/4 N/A N/A 859,456
47 Lockout/25_Defeasance/32_0%/3 1,240,979 12/31/2002 1,381,166
48 Lockout/26_Defeasance/90_0%/4 N/A N/A N/A
49 Lockout/31_Defeasance/85_0%/4 N/A N/A N/A
50 Lockout/23_Defeasance/94_0%/3 2,776,718 12/31/2002 2,857,244
- ----------------------------------------------------------------------------------------------------------------------
51 Lockout/26_Defeasance/90_0%/4 N/A N/A N/A
52 Lockout/27_>YM or 1%/92_0%/1 1,171,795 12/31/2002 1,297,341
53 Lockout/27_Defeasance/89_0%/4 N/A N/A N/A
54 Lockout/35_Defeasance/81_0%/4 1,316,505 12/31/2002 1,220,276
55 Lockout/35_Defeasance/81_0%/4 532,185 12/31/2002 915,688
- ----------------------------------------------------------------------------------------------------------------------
56 Lockout/29_Defeasance/87_0%/4 N/A N/A 319,136
57 Lockout/29_Defeasance/87_0%/4 831,863 12/31/2002 1,016,302
58 Lockout/29_Defeasance/87_0%/4 53,764 12/31/2002 883,693
59 Lockout/25_Defeasance/91_0%/4 338,869 12/31/2002 723,271
60 Lockout/24_Defeasance/92_0%/4 N/A N/A 252,573
- ----------------------------------------------------------------------------------------------------------------------
61 Lockout/26_Defeasance/90_0%/4 1,061,263 12/31/2002 1,109,760
62 Lockout/26_Defeasance/31_0%/3 642,161 12/31/2002 721,087
63 Lockout/25_Defeasance/91_0%/4 784,909 12/31/2002 779,655
64 Lockout/25_Defeasance/91_0%/4 1,207,898 12/31/2002 1,466,767
65 Lockout/27_Defeasance/89_0%/4 887,268 12/31/2002 1,077,044
- ----------------------------------------------------------------------------------------------------------------------
66 Lockout/35_Defeasance/81_0%/4 1,035,367 12/31/2002 N/A
67 Lockout/29_Defeasance/87_0%/4 N/A N/A N/A
68 Lockout/59_>YM or 1%/57_0%/4 1,222,501 12/31/2002 1,138,268
69 Lockout/25_Defeasance/79_0%/4 N/A N/A N/A
70 Lockout/25_>YM or 1%/101_0%/4 N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------------
71 Lockout/29_Defeasance/87_0%/4 837,796 12/31/2002 859,914
72 Lockout/25_Defeasance/91_0%/4 779,930 12/31/2002 846,717
73 Lockout/35_Defeasance/81_0%/4 836,581 12/31/2002 781,072
74 Lockout/24_Defeasance/92_0%/4 779,013 12/31/2002 878,912
75 Lockout/27_Defeasance/77_0%/4 N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------------
76 Lockout/25_Defeasance/91_0%/4 N/A N/A N/A
77 Lockout/27_>YM or 1%/92_0%/1 N/A N/A N/A
78 Lockout/29_Defeasance/87_0%/4 N/A N/A N/A
79 Lockout/25_Defeasance/92_0%/4 909,277 12/31/2002 946,504
80 Lockout/35_Defeasance/81_0%/4 604,135 12/31/2002 670,040
- ----------------------------------------------------------------------------------------------------------------------
81 Lockout/29_Defeasance/87_0%/4 N/A N/A N/A
82 Lockout/26_Defeasance/90_0%/4 379,247 12/31/2002 789,725
83 Lockout/27_Defeasance/29_0%/4 741,881 12/31/2002 660,096
84 Lockout/27_Defeasance/29_0%/4 819,675 12/31/2002 659,372
85 Lockout/29_Defeasance/87_0%/4 916,443 12/31/2002 859,351
- ----------------------------------------------------------------------------------------------------------------------
86 Lockout/35_Defeasance/81_0%/4 617,497 12/31/2002 485,764
87 Lockout/33_Defeasance/71_0%/4 N/A N/A 509,629
88 Lockout/24_Defeasance/92_0%/4 462,827 12/31/2002 591,387
89 Lockout/26_Defeasance/121_0%/4 N/A N/A 659,595
90 Lockout/27_Defeasance/29_0%/4 630,190 12/31/2002 586,934
- ----------------------------------------------------------------------------------------------------------------------
91 Lockout/24_Defeasance/92_0%/4 N/A N/A N/A
92 Lockout/24_Defeasance/92_0%/4 663,778 12/31/2002 502,156
93 Lockout/24_Defeasance/92_0%/4 N/A N/A N/A
94 Lockout/24_Defeasance/56_0%/4 461,544 12/31/2002 464,102
95 Lockout/27_Defeasance/29_0%/4 554,412 12/31/2002 600,207
- ----------------------------------------------------------------------------------------------------------------------
96 Lockout/25_Defeasance/91_0%/4 N/A N/A N/A
97 Lockout/27_Defeasance/89_0%/4 145,159 12/31/2002 479,509
98 Lockout/59_>YM or 1%/57_0%/4 N/A N/A N/A
99 Lockout/25_Defeasance/91_0%/4 522,130 12/31/2002 626,386
100 Lockout/26_Defeasance/9_Lesser of N/A N/A N/A
Prepayment Premium/YM or 1%/57_0%/4
- ----------------------------------------------------------------------------------------------------------------------
101 Lockout/26_Defeasance/90_0%/4 560,606 12/31/2002 570,768
102 Lockout/24_Defeasance/92_0%/4 N/A N/A 675,097
103 Lockout/25_>YM or 1%/91_0%/4 705,627 12/31/2002 781,656
104 Lockout/35_Defeasance/45_0%/4 514,948 12/31/2002 541,287
105 Lockout/27_>YM or 1%/92_0%/1 536,763 12/31/2002 375,167
- ----------------------------------------------------------------------------------------------------------------------
106 Lockout/25_Defeasance/91_0%/4 455,374 12/31/2002 468,401
107 Lockout/25_Defeasance/91_0%/4 445,744 12/31/2002 456,541
108 Lockout/33_Defeasance/83_0%/4 569,525 12/31/2002 399,599
109 Lockout/25_Defeasance/91_0%/4 594,617 12/31/2002 560,102
110 Lockout/25_Defeasance/90_0%/5 N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------------
111 Lockout/24_Defeasance/92_0%/4 N/A N/A N/A
112 Lockout/28_Defeasance/28_0%/4 N/A N/A N/A
113 Lockout/24_Defeasance/92_0%/4 214,318 12/31/2002 346,112
114 Lockout/28_Defeasance/88_0%/4 473,638 12/31/2002 495,184
115 Lockout/27_>YM or 1%/32_0%/1 345,881 12/31/2002 365,621
- ----------------------------------------------------------------------------------------------------------------------
116 Lockout/27_Defeasance/77_0%/4 447,248 12/31/2002 456,569
117 Lockout/24_Defeasance/92_0%/4 168,204 12/31/2002 296,725
118 Lockout/27_>YM or 1%/92_0%/1 492,248 12/31/2002 404,830
119 Lockout/25_Defeasance/91_0%/4 N/A N/A N/A
120 Lockout/35_Defeasance/81_0%/4 258,756 12/31/2002 316,355
- ----------------------------------------------------------------------------------------------------------------------
121 Lockout/25_Defeasance/91_0%/4 N/A N/A N/A
122 Lockout/26_Defeasance/90_0%/4 N/A N/A 237,348
123 Lockout/24_Defeasance/92_0%/4 131,988 12/31/2002 236,730
124 Lockout/27_Defeasance/89_0%/4 N/A N/A N/A
125 Lockout/25_Defeasance/91_0%/4 523,651 12/31/2002 481,607
- ----------------------------------------------------------------------------------------------------------------------
126 Lockout/59_>YM or 1%/57_0%/4 329,716 12/31/2002 343,236
127 Lockout/35_Defeasance/81_0%/4 287,697 12/31/2002 298,055
128 Lockout/26_Defeasance/90_0%/4 N/A N/A N/A
129 Lockout/24_Defeasance/92_0%/4 N/A N/A N/A
130 Lockout/24_Defeasance/92_0%/4 240,922 12/31/2002 264,505
- ----------------------------------------------------------------------------------------------------------------------
131 Lockout/41_Defeasance/15_0%/4 N/A N/A 232,773
132 Lockout/25_Defeasance/91_0%/4 329,277 12/31/2002 270,891
133 Lockout/24_Defeasance/56_0%/4 N/A N/A N/A
134 Lockout/24_Defeasance/92_0%/4 213,260 12/31/2002 243,529
135 Lockout/25_Defeasance/91_0%/4 122,336 12/31/2002 196,468
- ----------------------------------------------------------------------------------------------------------------------
136 Lockout/27_>YM or 1%/32_0%/1 180,519 12/31/2002 262,145
137 Lockout/25_Defeasance/91_0%/4 178,529 12/31/2002 186,973
138 Lockout/26_Defeasance/90_0%/4 235,396 12/31/2002 218,498
139 Lockout/26_Defeasance/90_0%/4 227,815 12/31/2002 217,002
140 Lockout/59_>YM or 1%/57_0%/4 185,994 12/31/2002 168,896
- ----------------------------------------------------------------------------------------------------------------------
141 Lockout/23_>YM or 1%/93_0%/4 75,180 12/31/2002 77,310
SECOND UNDERWRITTEN
CONTROL MOST RECENT MOST RECENT MOST RECENT UNDERWRITTEN UNDERWRITTEN NET OPERATING
NUMBER NOI DATE NOI ($) NOI DATE EGI ($) EXPENSES ($) INCOME ($)
- -----------------------------------------------------------------------------------------------------------------------------------
1 N/A N/A N/A 60,543,180 18,859,673 41,683,507
2 12/31/2003 20,901,672 6/30/2004 43,176,763 19,384,473 23,792,290
3 12/31/2003 N/A N/A 22,740,106 9,193,777 13,546,329
4 12/31/2003 N/A N/A 81,826,292 18,830,618 62,995,674
5 12/31/2003 11,309,590 4/30/2004 16,167,060 4,430,622 11,736,438
- -----------------------------------------------------------------------------------------------------------------------------------
6 12/31/2003 8,792,719 4/30/2004 15,016,235 5,214,691 9,801,544
7 N/A N/A N/A 12,034,824 2,995,569 9,039,255
8 12/31/2003 N/A N/A 109,419,139 45,240,912 64,178,227
9 12/31/2003 11,741,866 5/31/2004 42,822,296 32,454,858 10,367,438
10 12/31/2003 6,949,871 4/30/2004 10,029,534 3,457,607 6,571,927
- -----------------------------------------------------------------------------------------------------------------------------------
11 12/31/2003 29,158,434 7/31/2003 55,134,042 23,076,861 32,057,181
12 12/31/2003 N/A N/A 14,235,470 7,931,519 6,303,951
13 12/31/2003 5,503,505 3/31/2004 8,577,853 2,618,349 5,959,504
14 12/31/2003 4,361,425 4/30/2004 5,948,022 1,681,893 4,266,129
15 12/31/2003 2,648,935 2/29/2004 5,474,431 1,423,190 4,051,241
- -----------------------------------------------------------------------------------------------------------------------------------
16 12/31/2003 N/A N/A 6,106,792 1,798,730 4,308,062
17 12/31/2003 2,548,767 3/31/2004 6,588,664 2,275,712 4,312,952
18 N/A N/A N/A 3,572,159 1,075,972 2,496,187
19 12/31/2003 2,879,223 3/31/2004 6,076,945 3,009,341 3,067,604
20 12/31/2003 3,105,071 4/30/2004 6,020,677 2,587,247 3,433,430
- -----------------------------------------------------------------------------------------------------------------------------------
21 12/31/2003 2,140,707 2/29/2004 4,251,911 1,677,367 2,574,544
22 12/31/2003 N/A N/A 4,175,713 870,104 3,305,609
23 12/31/2003 N/A N/A 4,469,220 1,967,546 2,501,674
24 N/A N/A N/A 2,456,681 24,567 2,432,114
25 12/31/2003 N/A N/A 3,118,566 640,377 2,478,189
- -----------------------------------------------------------------------------------------------------------------------------------
26 12/31/2003 1,926,995 3/31/2004 3,039,707 795,637 2,244,070
27 N/A N/A N/A 3,808,016 1,271,720 2,536,296
28 N/A 1,837,485 4/30/2004 3,043,636 990,220 2,053,416
29 12/31/2003 2,272,067 4/30/2004 3,259,024 1,101,388 2,157,636
30 12/31/2003 N/A N/A 3,624,079 1,076,611 2,547,468
- -----------------------------------------------------------------------------------------------------------------------------------
31 12/31/2003 N/A N/A 2,225,096 531,922 1,693,175
32 12/31/2003 1,904,167 4/30/2004 3,066,674 923,994 2,142,680
33 12/31/2003 N/A N/A 3,236,292 1,697,125 1,539,167
34 N/A N/A N/A 2,924,470 973,809 1,950,661
35 N/A N/A N/A 2,767,977 1,066,209 1,701,768
- -----------------------------------------------------------------------------------------------------------------------------------
36 N/A N/A N/A 2,335,022 727,904 1,607,118
37 N/A N/A N/A 1,441,482 343,399 1,098,083
38 12/31/2003 1,761,221 3/31/2004 2,417,729 731,416 1,686,313
39 12/31/2003 1,492,274 3/31/2004 2,540,866 1,119,710 1,421,156
40 12/31/2003 N/A N/A 2,099,981 582,881 1,517,100
- -----------------------------------------------------------------------------------------------------------------------------------
41 12/31/2003 2,593,908 4/30/2004 3,358,145 1,109,009 2,249,136
42 N/A 1,189,731 4/30/2004 2,387,213 914,532 1,472,681
43 12/31/2003 N/A N/A 2,102,913 602,352 1,500,561
44 N/A 947,858 9/30/2003 2,477,527 974,597 1,502,930
45 12/31/2003 N/A N/A 2,055,925 660,595 1,395,330
- -----------------------------------------------------------------------------------------------------------------------------------
46 12/31/2003 N/A N/A 1,710,393 430,844 1,279,549
47 12/31/2003 1,429,762 3/31/2004 1,972,106 630,658 1,341,448
48 N/A N/A N/A 913,500 27,405 886,095
49 N/A N/A N/A 1,559,304 192,457 1,366,847
50 12/31/2003 2,817,529 4/30/2004 3,441,487 642,064 2,799,423
- -----------------------------------------------------------------------------------------------------------------------------------
51 N/A 273,596 12/31/2003 1,444,966 408,447 1,036,519
52 12/31/2003 N/A N/A 1,951,530 806,930 1,144,600
53 N/A N/A N/A 1,597,895 573,426 1,024,469
54 12/31/2003 1,319,457 3/31/2004 2,573,281 1,066,263 1,507,018
55 12/31/2003 793,748 3/31/2003 1,488,369 396,887 1,091,482
- -----------------------------------------------------------------------------------------------------------------------------------
56 12/31/2003 807,215 3/31/2004 1,663,539 658,703 1,004,836
57 12/31/2003 1,037,106 3/31/2004 1,424,087 493,129 930,958
58 12/31/2003 936,302 4/30/2004 1,566,102 573,165 992,937
59 12/31/2003 N/A N/A 1,000,774 191,273 809,501
60 12/31/2003 N/A N/A 1,296,716 312,208 984,508
- -----------------------------------------------------------------------------------------------------------------------------------
61 12/31/2003 907,492 4/30/2004 2,023,220 1,059,001 964,219
62 12/31/2003 N/A N/A 1,329,951 447,024 882,927
63 12/31/2003 N/A N/A 1,051,928 226,811 825,117
64 12/31/2003 1,059,784 3/31/2004 1,608,391 446,017 1,162,374
65 12/31/2003 N/A N/A 1,380,239 363,496 1,016,743
- -----------------------------------------------------------------------------------------------------------------------------------
66 N/A 1,041,606 11/30/2003 2,336,890 1,362,767 974,123
67 N/A 897,133 3/31/2004 1,420,743 422,456 998,286
68 12/31/2003 N/A N/A 2,199,565 732,707 1,466,858
69 N/A 707,550 4/30/2004 1,681,876 816,996 864,880
70 N/A N/A N/A 1,058,767 153,174 905,593
- -----------------------------------------------------------------------------------------------------------------------------------
71 12/31/2003 876,643 3/31/2004 1,135,401 283,332 852,069
72 12/31/2003 N/A N/A 1,038,190 190,183 848,007
73 12/31/2003 794,915 4/30/2004 1,611,203 820,677 790,526
74 12/31/2003 N/A N/A 1,162,856 280,958 881,898
75 N/A 720,898 2/29/2004 1,246,511 448,222 798,289
- -----------------------------------------------------------------------------------------------------------------------------------
76 N/A N/A N/A 864,987 0 864,987
77 N/A N/A N/A 1,188,898 496,097 692,801
78 N/A 468,173 3/31/2004 989,075 246,557 742,518
79 12/31/2003 1,054,337 4/30/2004 1,351,669 373,613 978,056
80 12/31/2003 N/A N/A 1,034,720 280,059 754,661
- -----------------------------------------------------------------------------------------------------------------------------------
81 N/A 874,503 3/31/2004 1,291,509 377,626 913,883
82 12/31/2003 729,926 5/31/2004 1,008,528 203,300 805,228
83 12/31/2003 N/A N/A 1,315,218 706,960 608,258
84 12/31/2003 N/A N/A 1,300,820 750,080 550,740
85 12/31/2003 N/A N/A 1,034,566 222,639 811,927
- -----------------------------------------------------------------------------------------------------------------------------------
86 12/31/2003 N/A N/A 1,127,571 438,262 689,309
87 12/31/2003 479,347 4/30/2004 776,709 275,104 501,605
88 12/31/2003 569,749 2/29/2004 1,157,200 621,705 535,495
89 12/31/2003 745,509 5/31/2004 856,797 206,722 650,075
90 12/31/2003 N/A N/A 1,260,273 720,799 539,474
- -----------------------------------------------------------------------------------------------------------------------------------
91 N/A N/A N/A 738,062 145,669 592,393
92 12/31/2003 503,145 3/31/2004 1,349,313 582,353 766,960
93 N/A N/A N/A 776,473 165,534 610,939
94 12/31/2003 N/A N/A 698,788 137,847 560,941
95 12/31/2003 574,108 3/31/2004 974,099 392,601 581,498
- -----------------------------------------------------------------------------------------------------------------------------------
96 N/A N/A N/A 907,073 344,473 562,600
97 12/31/2003 N/A N/A 1,024,970 369,619 655,351
98 N/A N/A N/A 633,101 18,993 614,108
99 12/31/2003 N/A N/A 866,181 259,409 606,772
100 N/A 603,672 3/31/2004 763,136 263,937 499,199
- -----------------------------------------------------------------------------------------------------------------------------------
101 12/31/2003 601,558 3/1/2004 700,335 192,312 508,023
102 12/31/2003 N/A N/A 718,986 172,087 546,899
103 12/31/2003 783,832 3/31/2004 1,035,426 247,251 788,175
104 12/31/2003 N/A N/A 694,490 189,922 504,568
105 12/31/2003 N/A N/A 1,131,241 520,148 611,093
- -----------------------------------------------------------------------------------------------------------------------------------
106 12/31/2003 476,537 4/30/2004 558,069 98,938 459,131
107 12/31/2003 N/A N/A 553,162 103,953 449,209
108 12/31/2003 331,563 4/30/2004 930,459 548,603 381,856
109 12/31/2003 553,944 4/30/2004 1,274,055 719,711 554,344
110 N/A N/A N/A 514,221 133,778 380,443
- -----------------------------------------------------------------------------------------------------------------------------------
111 N/A N/A N/A 431,027 0 431,027
112 N/A 252,465 4/30/2004 502,627 104,741 397,886
113 12/31/2003 365,479 4/30/2004 622,871 169,548 453,323
114 12/31/2003 529,501 3/31/2004 679,229 238,632 440,597
115 12/31/2003 N/A N/A 834,994 445,090 389,904
- -----------------------------------------------------------------------------------------------------------------------------------
116 12/31/2003 455,547 5/31/2004 687,877 234,182 453,695
117 12/31/2003 326,929 4/30/2004 523,428 160,644 362,784
118 12/31/2003 N/A N/A 1,025,458 618,831 406,627
119 N/A 383,870 5/31/2004 442,215 98,622 343,593
120 12/31/2003 N/A N/A 894,182 550,490 343,692
- -----------------------------------------------------------------------------------------------------------------------------------
121 N/A N/A N/A 492,905 110,938 381,967
122 12/31/2003 237,548 3/31/2004 268,092 2,681 265,411
123 12/31/2003 266,609 4/30/2004 478,843 142,860 335,983
124 N/A N/A N/A 375,815 81,831 293,984
125 12/31/2003 538,583 2/29/2004 602,125 108,849 493,276
- -----------------------------------------------------------------------------------------------------------------------------------
126 12/31/2003 N/A N/A 513,480 112,264 401,216
127 12/31/2003 314,331 4/30/2004 437,566 132,421 305,145
128 N/A N/A N/A 284,608 33,658 250,950
129 N/A N/A N/A 404,327 88,797 315,530
130 12/31/2003 264,737 2/29/2004 455,258 174,402 280,856
- -----------------------------------------------------------------------------------------------------------------------------------
131 12/31/2003 221,414 4/30/2004 326,748 81,819 244,929
132 12/31/2003 N/A N/A 422,984 129,445 293,539
133 N/A N/A N/A 311,368 79,570 231,798
134 12/31/2003 246,167 2/29/2004 453,332 226,913 226,419
135 12/31/2003 N/A N/A 417,283 116,792 300,491
- -----------------------------------------------------------------------------------------------------------------------------------
136 12/31/2003 N/A N/A 649,478 381,718 267,760
137 12/31/2003 N/A N/A 223,365 32,863 190,502
138 12/31/2003 186,294 4/30/2004 617,503 412,906 204,597
139 12/31/2003 177,675 4/30/2004 613,688 418,824 194,864
140 12/31/2003 N/A N/A 243,793 61,428 182,365
- -----------------------------------------------------------------------------------------------------------------------------------
141 12/31/2003 N/A N/A 85,288 22,143 63,145
UNDERWRITTEN
CONTROL REPLACEMENT / UNDERWRITTEN UNDERWRITTEN NET UNDERWRITTEN NCF ORIGINAL
NUMBER FFE RESERVE ($) TI / LC CASH FLOW ($) DSCR (x) APPRAISAL VALUE ($)
- -----------------------------------------------------------------------------------------------------------------------------------
1 68,458 459,050 41,156,000 1.68 766,000,000
2 273,587 1,759,406 21,759,297 2.21 330,000,000
3 90,698 714,817 12,740,814 1.33 175,000,000
4 206,164 782,988 62,006,522 2.36 977,200,000
5 57,395 316,003 11,363,039 1.34 160,000,000
- -----------------------------------------------------------------------------------------------------------------------------------
6 69,419 515,028 9,217,097 1.24 124,000,000
7 48,015 182,272 8,808,968 1.48 107,000,000
8 588,349 0 63,589,878 2.08 800,000,000
9 1,712,892 0 8,654,546 1.51 110,700,000
10 87,583 248,123 6,236,221 1.30 85,000,000
- -----------------------------------------------------------------------------------------------------------------------------------
11 229,957 1,434,730 31,867,494 1.52 460,000,000
12 95,866 626,221 5,681,864 1.29 78,000,000
13 49,929 589,868 5,319,707 1.70 80,000,000
14 49,199 58,851 4,158,079 1.26 61,850,000
15 43,008 84,635 3,923,596 1.37 58,000,000
- -----------------------------------------------------------------------------------------------------------------------------------
16 46,747 292,780 3,968,535 1.30 59,000,000
17 84,025 154,261 4,174,666 1.43 52,900,000
18 17,571 79,642 2,398,974 1.20 44,500,000
19 44,756 101,715 2,921,133 1.25 41,000,000
20 71,054 369,036 3,099,840 1.51 37,500,000
- -----------------------------------------------------------------------------------------------------------------------------------
21 88,000 0 2,486,544 1.30 36,775,000
22 33,332 137,759 3,134,518 2.45 42,000,000
23 20,079 283,169 2,198,426 1.24 34,000,000
24 10,879 0 2,421,235 1.39 32,000,000
25 22,414 68,499 2,387,276 1.27 27,500,000
- -----------------------------------------------------------------------------------------------------------------------------------
26 23,302 54,115 2,166,653 1.33 28,000,000
27 21,000 151,930 2,363,366 1.47 32,900,000
28 69,200 0 1,984,216 1.37 29,500,000
29 35,082 132,899 1,989,655 1.29 26,250,000
30 33,137 151,112 2,363,219 1.64 26,000,000
- -----------------------------------------------------------------------------------------------------------------------------------
31 6,242 25,365 1,661,568 1.25 24,600,000
32 32,330 145,914 1,964,436 1.45 24,640,000
33 6,390 28,884 1,503,893 1.20 23,500,000
34 11,834 166,758 1,772,069 1.55 24,800,000
35 21,505 136,784 1,543,479 1.39 21,850,000
- -----------------------------------------------------------------------------------------------------------------------------------
36 17,414 67,934 1,521,770 1.36 19,300,000
37 12,565 35,520 1,049,998 1.35 13,850,000
38 15,419 139,823 1,531,071 1.41 19,250,000
39 57,330 0 1,363,826 1.29 20,000,000
40 20,209 48,917 1,447,974 1.18 16,500,000
- -----------------------------------------------------------------------------------------------------------------------------------
41 71,520 0 2,177,616 1.50 37,250,000
42 48,000 0 1,424,681 1.41 19,900,000
43 23,487 75,775 1,401,299 1.42 19,600,000
44 28,878 98,035 1,376,017 1.38 17,700,000
45 10,140 73,277 1,311,913 1.34 18,900,000
- -----------------------------------------------------------------------------------------------------------------------------------
46 9,788 39,417 1,230,345 1.32 18,450,000
47 19,998 70,315 1,266,135 1.52 15,600,000
48 0 0 886,095 1.23 13,900,000
49 10,800 50,285 1,305,762 1.55 15,000,000
50 62,896 176,029 2,560,498 3.49 30,250,000
- -----------------------------------------------------------------------------------------------------------------------------------
51 15,406 58,559 972,554 1.38 14,000,000
52 21,035 120,953 1,002,612 1.45 14,600,000
53 7,440 82,265 934,764 1.46 13,150,000
54 25,689 101,505 1,379,824 2.16 25,200,000
55 5,523 41,159 1,044,800 1.44 14,100,000
- -----------------------------------------------------------------------------------------------------------------------------------
56 11,401 43,095 950,339 1.51 12,450,000
57 9,861 52,925 868,172 1.39 11,540,000
58 11,520 50,084 931,333 1.50 11,800,000
59 2,250 7,500 799,751 1.23 12,600,000
60 17,618 68,541 898,349 1.31 11,500,000
- -----------------------------------------------------------------------------------------------------------------------------------
61 65,280 0 898,939 1.43 15,000,000
62 8,789 55,459 818,679 1.27 11,800,000
63 16,741 39,786 768,590 1.22 11,975,000
64 22,766 84,549 1,055,059 1.76 11,900,000
65 15,358 48,627 977,758 1.55 11,000,000
- -----------------------------------------------------------------------------------------------------------------------------------
66 28,755 159,173 786,194 1.29 12,000,000
67 10,031 38,300 949,955 1.67 11,000,000
68 17,497 74,738 1,374,623 2.43 18,120,000
69 14,847 103,929 746,104 1.26 10,400,000
70 15,291 79,804 810,498 1.45 13,200,000
- -----------------------------------------------------------------------------------------------------------------------------------
71 9,600 37,447 805,022 1.52 9,800,000
72 18,445 17,300 812,262 1.49 9,700,000
73 45,000 0 745,526 1.34 11,400,000
74 11,856 40,706 829,336 1.58 10,300,000
75 28,000 0 770,289 1.66 10,500,000
- -----------------------------------------------------------------------------------------------------------------------------------
76 7,080 0 857,907 1.42 10,180,000
77 5,988 43,829 642,984 1.27 10,300,000
78 9,606 36,754 696,158 1.47 9,700,000
79 14,401 58,957 904,698 1.85 10,800,000
80 18,931 73,255 662,475 1.37 9,300,000
- -----------------------------------------------------------------------------------------------------------------------------------
81 8,784 38,118 866,980 1.92 9,200,000
82 5,988 44,457 754,783 1.69 10,250,000
83 48,783 0 559,475 1.96 7,900,000
84 56,280 0 494,460 1.75 7,800,000
85 4,461 32,067 775,399 1.78 9,500,000
- -----------------------------------------------------------------------------------------------------------------------------------
86 20,172 76,529 592,609 1.56 9,700,000
87 12,920 0 488,685 1.23 7,750,000
88 20,700 0 514,795 1.31 7,520,000
89 12,863 23,950 613,262 1.44 7,400,000
90 50,976 0 488,498 1.87 7,400,000
- -----------------------------------------------------------------------------------------------------------------------------------
91 3,526 24,042 564,825 1.37 8,140,000
92 14,896 57,710 694,354 1.63 7,350,000
93 14,224 26,137 570,578 1.30 7,100,000
94 6,179 20,843 533,919 1.41 6,900,000
95 50,220 0 531,278 2.27 6,900,000
- -----------------------------------------------------------------------------------------------------------------------------------
96 9,612 47,459 505,529 1.35 6,650,000
97 10,750 43,778 600,823 1.68 7,350,000
98 18,600 38,730 556,778 1.40 7,500,000
99 21,748 63,044 521,980 1.42 9,550,000
100 2,513 23,529 473,157 1.40 6,300,000
- -----------------------------------------------------------------------------------------------------------------------------------
101 2,641 25,115 480,267 1.41 8,600,000
102 6,511 18,348 522,040 1.62 6,700,000
103 18,119 62,883 707,173 2.63 10,300,000
104 4,361 28,285 471,923 1.60 6,250,000
105 10,550 79,784 520,759 1.69 6,300,000
- -----------------------------------------------------------------------------------------------------------------------------------
106 1,506 20,809 436,816 1.41 5,500,000
107 6,300 0 442,909 1.30 5,900,000
108 22,200 0 359,656 1.22 7,800,000
109 37,000 0 517,344 1.78 6,500,000
110 3,225 14,271 362,947 1.25 5,400,000
- -----------------------------------------------------------------------------------------------------------------------------------
111 2,072 0 428,955 1.43 5,650,000
112 1,641 16,438 379,807 2.24 4,850,000
113 5,935 0 447,388 1.52 5,050,000
114 11,335 41,444 387,818 1.61 4,800,000
115 8,663 68,346 312,895 1.39 4,920,000
- -----------------------------------------------------------------------------------------------------------------------------------
116 16,500 0 437,195 2.08 5,800,000
117 3,580 27,206 331,998 1.42 5,100,000
118 12,550 44,564 349,513 1.49 4,800,000
119 1,779 15,106 326,708 1.42 4,100,000
120 46,000 0 297,692 1.33 3,900,000
- -----------------------------------------------------------------------------------------------------------------------------------
121 1,886 13,976 366,105 1.75 6,000,000
122 0 0 265,411 1.17 4,750,000
123 4,725 29,924 301,334 1.38 4,000,000
124 1,434 8,033 284,517 1.43 4,450,000
125 9,397 37,668 446,211 1.30 5,000,000
- -----------------------------------------------------------------------------------------------------------------------------------
126 16,942 21,233 365,858 1.56 4,200,000
127 3,514 17,466 284,165 1.43 3,450,000
128 1,632 0 249,318 1.28 3,600,000
129 2,976 14,061 298,493 1.56 3,650,000
130 7,100 0 273,756 1.31 2,920,000
- -----------------------------------------------------------------------------------------------------------------------------------
131 2,250 12,032 230,647 1.74 3,350,000
132 4,919 15,441 273,179 1.49 3,300,000
133 1,560 6,011 224,227 1.22 3,350,000
134 5,250 0 221,169 1.30 2,900,000
135 4,699 22,362 273,430 1.69 2,925,000
- -----------------------------------------------------------------------------------------------------------------------------------
136 8,848 53,090 205,822 1.57 3,000,000
137 1,583 7,469 181,450 1.50 2,300,000
138 21,000 0 183,597 1.88 2,750,000
139 19,656 0 175,208 1.81 2,500,000
140 6,624 15,154 160,587 1.65 1,900,000
- -----------------------------------------------------------------------------------------------------------------------------------
141 540 2,458 60,147 1.49 934,000
CONTROL ORIGINAL CUT-OFF DATE BALLOON
NUMBER APPRAISAL DATE LTV (%) LTV (%) OCCUPANCY (%) OCCUPANCY DATE
- ----------------------------------------------------------------------------------------------------------------------------
1 5/10/2004 50.79 51.32 98.10 5/17/2004
2 10/23/2003 46.67 39.70 99.08 7/1/2004
3 5/1/2004 75.80 64.50 97.30 3/1/2004
4 3/31/2004 53.21 53.21 95.10 3/15/2004
5 4/16/2004 71.82 61.50 96.40 3/10/2004
- ----------------------------------------------------------------------------------------------------------------------------
6 5/21/2004 78.90 67.98 98.30 5/18/2004
7 4/30/2004 79.21 66.87 83.10 6/2/2004
8 2/1/2004 56.25 49.41 90.00 2/28/2004
9 6/16/2004 64.59 50.61 67.00 6/1/2004
10 6/10/2004 80.00 67.53 95.60 6/17/2004
- ----------------------------------------------------------------------------------------------------------------------------
11 9/9/2003 64.78 61.40 99.90 3/1/2004
12 6/21/2004 78.21 75.37 92.40 6/1/2004
13 4/6/2004 61.00 56.21 90.20 4/8/2004
14 3/5/2004 & 4/2/2004 77.53 66.54 95.00 6/1/2004
15 2/11/2004 69.31 65.60 88.09 4/5/2004
- ----------------------------------------------------------------------------------------------------------------------------
16 4/20/2004 76.27 66.74 98.00 4/1/2004
17 8/1/2004 75.61 64.33 88.60 4/30/2004
18 5/5/2004 65.14 65.75 77.00 5/1/2004
19 4/23/2004 80.00 70.81 100.00 5/4/2004
20 5/24/2004 78.13 71.60 87.90 5/31/2004
- ----------------------------------------------------------------------------------------------------------------------------
21 4/6/2004 78.15 72.51 90.23 4/8/2004
22 3/31/2004 64.42 64.42 98.48 5/31/2004
23 5/11/2004 75.00 69.87 85.40 4/12/2004
24 1/20/2004 76.39 62.29 100.00 3/16/2004
25 6/15/2004 82.91 75.78 99.00 1/1/10
- ----------------------------------------------------------------------------------------------------------------------------
26 4/15/2004 79.32 67.68 92.60 2/3/2004
27 3/16/2004 66.69 56.90 95.70 6/8/2004
28 5/18/2004 71.82 67.90 87.28 6/10/2004
29 5/7/2004 79.94 68.28 88.90 4/5/2004
30 6/18/2004 76.92 66.74 98.90 6/1/2004
- ----------------------------------------------------------------------------------------------------------------------------
31 3/17/2004 77.82 65.54 99.60 4/7/2004
32 5/25/2004 75.08 64.02 96.60 6/30/2004
33 6/1/2004 75.53 66.67 100.00 4/1/2004
34 1/1/2004 65.34 55.32 100.00 4/1/2004
35 6/1/2004 73.23 65.73 91.00 4/5/2004
- ----------------------------------------------------------------------------------------------------------------------------
36 5/26/2004 82.38 69.47 81.50 6/15/2004
37 2/9/2004 79.47 68.60 100.00 6/4/2004
38 4/3/2004 79.85 67.46 93.89 4/20/2004
39 3/4/2004 76.75 65.88 96.19 3/30/2004
40 4/13/2004 77.27 68.70 92.90 5/1/2004
- ----------------------------------------------------------------------------------------------------------------------------
41 5/5/2004 40.27 0.44 94.58 5/6/2004
42 5/25/2004 75.00 70.84 93.33 6/10/2004
43 2/10/2004 71.43 64.32 95.70 2/6/2004
44 11/3/2003 78.56 66.83 86.20 4/1/2004
45 10/20/2003 73.28 63.34 86.40 6/4/2004
- ----------------------------------------------------------------------------------------------------------------------------
46 3/5/2004 72.28 54.21 100.00 4/19/2004
47 5/7/2004 75.00 72.24 84.50 4/26/2004
48 2/20/2004 79.68 65.81 100.00 5/1/2004
49 11/24/2003 72.25 62.80 100.00 5/1/2004
50 6/9/2004 35.70 29.79 96.00 6/8/2004
- ----------------------------------------------------------------------------------------------------------------------------
51 3/22/2004 75.00 63.99 79.20 4/2/2004
52 12/3/2003 67.15 56.85 85.74 4/1/2004
53 1/5/2004 74.52 63.04 81.80 5/26/2004
54 10/1/2004 37.42 31.37 83.71 3/1/2004
55 6/9/2003 66.41 57.86 94.60 3/1/2004
- ----------------------------------------------------------------------------------------------------------------------------
56 3/30/2004 75.08 62.69 95.06 4/21/2004
57 3/30/2004 80.08 66.87 100.00 2/1/2004
58 3/17/2004 77.99 65.13 100.00 2/1/2004
59 4/9/2004 71.43 63.41 90.00 4/14/2004
60 5/11/2004 78.26 67.37 96.70 5/1/2004
- ----------------------------------------------------------------------------------------------------------------------------
61 1/21/2004 59.16 50.06 88.30 5/31/2004
62 3/1/2004 75.00 72.34 95.10 3/1/2004
63 4/6/2004 72.59 61.78 95.87 5/20/2004
64 4/27/2004 72.27 62.20 90.00 5/1/2004
65 2/24/2004 77.84 59.41 100.00 2/12/2004
- ----------------------------------------------------------------------------------------------------------------------------
66 2/4/2004 70.55 59.27 94.75 2/1/2003
67 4/8/2004 76.53 63.91 100.00 2/1/2004
68 3/23/2004 45.94 38.41 95.20 4/1/2004
69 3/24/2004 77.88 67.44 85.50 6/28/2004
70 5/17/2004 60.61 51.86 100.00 6/1/2004
- ----------------------------------------------------------------------------------------------------------------------------
71 4/1/2004 79.84 66.67 100.00 4/21/2004
72 2/15/2004 80.34 67.65 100.00 3/3/2004
73 4/7/2004 68.29 57.87 95.56 4/30/2004
74 5/23/2004 75.24 65.85 98.36 6/1/2004
75 6/17/2003 70.48 60.66 96.43 4/22/2004
- ----------------------------------------------------------------------------------------------------------------------------
76 4/27/2004 71.63 56.89 100.00 4/19/2004
77 12/15/2003 69.58 58.91 76.50 4/1/2004
78 4/1/2004 72.35 60.42 100.00 4/21/2004
79 5/1/2004 64.81 56.98 100.00 4/15/2004
80 4/5/2004 72.52 61.54 100.00 3/17/2004
- ----------------------------------------------------------------------------------------------------------------------------
81 4/22/2004 72.87 60.78 100.00 2/1/2004
82 3/17/2004 61.83 52.22 100.00 5/1/2004
83 3/1/2004 80.00 80.00 95.65 5/18/2004
84 3/1/2004 80.00 80.00 85.24 5/18/2004
85 1/15/2004 64.95 55.00 100.00 1/20/2004
- ----------------------------------------------------------------------------------------------------------------------------
86 2/26/2004 61.70 50.10 96.20 1/22/2004
87 8/4/2003 76.77 66.91 100.00 5/7/2004
88 4/30/2004 81.09 71.67 70.80 6/14/2004
89 3/26/2004 78.91 62.79 97.50 5/12/2004
90 3/1/2004 78.24 78.24 90.40 5/19/2004
- ----------------------------------------------------------------------------------------------------------------------------
91 6/12/2004 70.82 60.00 91.60 6/30/2004
92 5/6/2004 78.23 66.84 93.00 3/31/2004
93 5/14/2004 78.03 60.86 93.00 4/30/2004
94 5/25/2004 80.00 71.70 97.80 6/1/2004
95 3/9/2004 78.26 78.26 96.11 4/15/2004
- ----------------------------------------------------------------------------------------------------------------------------
96 5/7/2004 79.63 67.27 87.50 6/16/2004
97 3/10/2004 71.21 59.65 94.80 4/30/2004
98 3/19/2004 69.14 53.51 100.00 4/1/2004
99 4/6/2004 52.36 47.96 91.90 4/1/2004
100 4/19/2004 74.60 71.90 100.00 4/1/2004
- ----------------------------------------------------------------------------------------------------------------------------
101 1/24/2004 53.33 40.81 100.00 5/24/2004
102 6/19/2004 67.16 56.85 78.90 6/15/2004
103 4/6/2004 43.69 43.69 94.90 6/16/2004
104 5/7/2004 70.97 63.22 95.31 4/4/2004
105 12/9/2003 69.58 58.91 90.24 4/1/2004
- ----------------------------------------------------------------------------------------------------------------------------
106 4/30/2004 79.02 66.84 96.28 4/13/2004
107 3/25/2004 73.64 54.12 100.00 6/16/2004
108 8/28/2003 54.61 46.10 86.49 4/26/2004
109 1/26/2004 64.56 54.18 95.90 5/31/2004
110 4/11/2004 74.01 62.92 100.00 6/1/2004
- ----------------------------------------------------------------------------------------------------------------------------
111 5/15/2004 70.35 60.45 100.00 6/2/2004
112 3/6/2004 78.54 78.54 100.00 4/30/2004
113 4/28/2004 74.26 60.84 84.30 5/31/2004
114 2/17/2004 75.00 65.47 95.00 4/20/2004
115 12/10/2003 69.52 64.68 86.51 4/1/2004
- ----------------------------------------------------------------------------------------------------------------------------
116 3/18/2004 58.62 51.51 98.48 5/31/2004
117 6/9/2004 66.67 55.86 100.00 6/1/2004
118 12/3/2003 69.58 58.91 87.34 7/1/2004
119 5/4/2004 79.20 66.89 100.00 6/1/2004
120 4/16/2004 81.98 69.05 97.30 4/6/2004
- ----------------------------------------------------------------------------------------------------------------------------
121 4/27/2004 51.62 43.04 100.00 4/15/2004
122 4/6/2004 64.10 55.00 100.00 4/1/2004
123 6/9/2004 75.00 63.78 94.50 6/11/2004
124 2/10/2004 67.20 55.88 100.00 6/4/2004
125 3/18/2004 59.77 19.25 100.00 3/29/2004
- ----------------------------------------------------------------------------------------------------------------------------
126 2/24/2004 68.97 54.38 98.20 6/1/2004
127 7/17/2003 78.70 69.96 100.00 4/30/2004
128 3/26/2004 74.17 63.29 100.00 6/1/2004
129 5/28/2004 72.60 61.58 100.00 6/20/2004
130 4/27/2004 81.09 71.67 96.50 2/29/2004
- ----------------------------------------------------------------------------------------------------------------------------
131 1/21/2003 76.12 76.12 84.00 5/3/2004
132 5/11/2004 77.21 65.47 100.00 5/1/2004
133 5/25/2004 75.22 68.72 91.50 6/3/2004
134 4/19/2004 82.66 73.06 81.00 4/14/2004
135 5/17/2004 74.30 63.63 94.20 4/30/2004
- ----------------------------------------------------------------------------------------------------------------------------
136 12/11/2003 66.41 61.79 97.61 4/1/2004
137 3/2/2004 67.35 58.46 100.00 5/1/2004
138 1/26/2004 50.81 42.81 94.00 5/28/2004
139 1/26/2004 55.89 46.96 100.00 6/1/2004
140 2/24/2004 63.00 49.72 95.50 4/1/2004
- ----------------------------------------------------------------------------------------------------------------------------
141 3/18/2004 57.20 43.98 100.00 1/1/2004
CONTROL LARGEST TENANT LARGEST TENANT
NUMBER LARGEST TENANT SQ FT LEASE EXPIRATION
- ----------------------------------------------------------------------------------------------------------------------------------
1 Tao Restaurant & Nightclub 43,679 12/31/2013
2 Omnicom Group, Inc. 336,673 4/30/2017
3 Liz Claiborne, Inc. 347,938 12/31/2012
4 Macy's 439,632 7/31/2021
5 Galyan's 84,000 2/2/2018
- ----------------------------------------------------------------------------------------------------------------------------------
6 Golden Touch Imports, Inc. 26,488 9/30/2008
7 Master Lease 87,750 4/12/2009
8 Sprint Communications 251,287 12/31/2014
9 NAP 0
10 McRae's Home & Men 86479 10/31/2015
- ----------------------------------------------------------------------------------------------------------------------------------
11 J Walter Thompson Company 456,132 8/31/2006
12 AT&T / AT&T Corporation 68325 5/31/2005
13 Warner Bros. 39,103 7/31/2006
14 Home Depot 111,892 2/1/2018
15 Lowes Home Center 121,333 2/28/2021
- ----------------------------------------------------------------------------------------------------------------------------------
16 Analytic Services, Inc. (ANSER) 120,114 3/31/2013
17 J.C. Penney 105121 12/31/2011
18 Linens N Things 32,875 2/1/2014
19 AMC 20 Theatres 82,303 9/30/2017
20 Farmers Insurance Exchange 42547 5/31/2009
- ----------------------------------------------------------------------------------------------------------------------------------
21 NAP 0
22 Carmike Cinemas 75,255 2/1/2021
23 BLT & Associates, Inc. 29,325 9/30/2007
24 Federal Express Corporation 108,793 3/9/2018
25 99 Ranch Market 36,960 12/31/05
- ----------------------------------------------------------------------------------------------------------------------------------
26 Albertson's 39,880 4/30/2008
27 Circuit City 60,000 10/31/2023
28 NAP 0
29 Dentalco Mgmt Services 12,857 9/30/2006
30 Metal Management 20,695 11/30/2005
- ----------------------------------------------------------------------------------------------------------------------------------
31 Kohl's 86,843 1/31/2022
32 SCT Corporation 50579 1/31/2012
33 Borders 42,600 2/1/2018
34 HCA Health One 11,751 7/31/2013
35 State Farm Auto 58,958 6/1/2009
- ----------------------------------------------------------------------------------------------------------------------------------
36 Farmer Jack 63,892 6/30/2023
37 Bed Bath and Beyond 27,000 1/1/2013
38 Universal Insurance 32,171 9/30/2014
39 NAP 0
40 Raley's 66445 12/31/2007
- ----------------------------------------------------------------------------------------------------------------------------------
41 NAP 0
42 NAP 0
43 Sav-On 21,424 8/31/2009
44 Minyard Foods dba Sack N Save (450) 60,000 12/31/2008
45 Gap 9,209 6/1/2009
- ----------------------------------------------------------------------------------------------------------------------------------
46 Cost Plus World Mrkt 17,836 1/31/2014
47 K&G for Men 34,922 4/30/2006
48 Lowe's HIW, Inc. 133,000 10/16/2029
49 Raymours Furniture Co. Inc. 72,000 11/30/2018
50 Consol. Electrical Dist. 32627 12/31/2005
- ----------------------------------------------------------------------------------------------------------------------------------
51 James P. Warmington - Master Lease 70,557 4/30/2017
52 Phy Com Res Corp. (Texas Cancer Center) 21,962 12/31/2009
53 USGSA-DOD 31,953 4/1/2012
54 Aramis, Inc 17,000 10/31/2015
55 Adventure 16 11,766 2/28/2012
- ----------------------------------------------------------------------------------------------------------------------------------
56 Greater Long Beach Ortho. 12,273 8/3/2013
57 Sharp Chula Vista Medical 24,381 10/11/2011
58 Catholic Healthcare West 26,635 11/30/2012
59 Ann Taylor Retail, Inc. 7,500 7/1/2012
60 BrightHouse, LLC 17299 2/28/2011
- ----------------------------------------------------------------------------------------------------------------------------------
61 NAP 0
62 Bari Management 11,283 5/31/2011
63 Bruno's Supermarket 45,490 9/1/2011
64 Bally's Total Fitness 28,940 11/1/2008
65 Defiance Testing & Engineering Service, 61,425 1/31/2011
- ----------------------------------------------------------------------------------------------------------------------------------
66 Orlin & Cohen Orthopedic Associates, LP 5,192 3/31/2005
67 St Louis University 14,707 8/28/2011
68 Inner Circle Entertainment 10,830 1/31/2006
69 Dept. of Veteran Affairs 31,010 3/1/2008
70 Fry's Electronics 101,943 5/1/2015
- ----------------------------------------------------------------------------------------------------------------------------------
71 Western Communities Family Practice Associates, Inc. 12,206 3/1/2010
72 Wal-Mart 73,870 7/28/2019
73 NAP 0
74 Food Lion 37,192 3/1/2018
75 NAP 0
- ----------------------------------------------------------------------------------------------------------------------------------
76 United Artists 47,200 12/1/2015
77 The Beeler-Manske Clinic 15,644 10/1/2010
78 Wellington Regional Mecial Center 12,303 7/10/2013
79 Persopolis Oriental Rugs 3,786 6/1/2005
80 Wellpoint Health Networks 34,600 6/12/2008
- ----------------------------------------------------------------------------------------------------------------------------------
81 Nevada Radiation Therapy Management Services, Inc. 4,437 9/7/2010
82 KNTV/NBC 25,450 8/1/2012
83 NAP 0
84 NAP 0
85 Borders 25231 1/31/2019
- ----------------------------------------------------------------------------------------------------------------------------------
86 So. Cal Housing Devel. 16,369 9/30/2008
87 NAP 0
88 NAP 0
89 Farm Fresh 43,342 12/31/2016
90 NAP 0
- ----------------------------------------------------------------------------------------------------------------------------------
91 Half Moon Bar and Grill 6000 9/24/2014
92 Concentra Integrated 39131 11/30/2013
93 Goody's Family Clothing, Inc. 25000 10/31/2011
94 Casitas to Castles Furniture 8000 11/30/2007
95 NAP 0
- ----------------------------------------------------------------------------------------------------------------------------------
96 Elite Distributors, Inc. 3,000 10/1/2004
97 Private Eyes, Inc. 4,428 5/31/2008
98 Forney Engineering 186,000 9/30/2015
99 Bakehouse Foods 10,782 2/1/2008
100 Maude's Hacienda 4,654 7/31/2013
- ----------------------------------------------------------------------------------------------------------------------------------
101 TK Noodle 3,174 11/1/2012
102 Bacchanalia 11,470 1/31/2008
103 Aqualogic 13,746 4/1/2006
104 East Valley Diagnostic Imaging 7,535 3/31/2007
105 Houston Ear, Nose & Throat Clinic 3,950 9/1/2007
- ----------------------------------------------------------------------------------------------------------------------------------
106 Fashion Bug 7,000 10/1/2011
107 Silgan Containers Manufacturing Corp. 42,000 6/30/2020
108 NAP 0
109 NAP 0
110 Office Depot 21,500 5/31/2019
- ----------------------------------------------------------------------------------------------------------------------------------
111 CVS Drug Store (former Eckerds) 13813 2/1/2023
112 Daniello's 4,376 1/1/2014
113 NAP 0
114 Cowhey Girard 4,320 12/31/2007
115 Thomas Spann Clinic 19,555 9/1/2007
- ----------------------------------------------------------------------------------------------------------------------------------
116 NAP 0
117 Insight Health Corp. Prop 3,448 7/14/2009
118 The Fort Worth Clinic, P.A. 31,738 12/31/2010
119 Dollar Tree 10,000 6/30/2008
120 NAP 0
- ----------------------------------------------------------------------------------------------------------------------------------
121 Bank of America 5,000 1/1/2014
122 Giant Food Store 53,236 6/30/2026
123 AutoZone (ADAP Inc.) 10,000 3/31/2005
124 Trader Joe's 9,825 10/19/2013
125 AMC Theater 32,405 7/31/2015
- ----------------------------------------------------------------------------------------------------------------------------------
126 NCRS, Inc. 7,022 3/31/2006
127 Famous Footwear 4,840 9/1/2005
128 CVS 10,880 10/31/2023
129 Dollar Tree 10,000 5/1/2009
130 NAP 0
- ----------------------------------------------------------------------------------------------------------------------------------
131 Washington Mutual 3,600 8/31/2012
132 The Holland Group 10,610 6/30/2008
133 Hollywood Video 6,000 4/30/2014
134 NAP 0
135 Southern Voice 5,840 1/31/2008
- ----------------------------------------------------------------------------------------------------------------------------------
136 Augusta Orthopedic 8,623 7/31/2005
137 Nevada Urology Associates, Ltd. 6,774 7/31/2017
138 NAP 0
139 NAP 0
140 Silver State Plastics 4,400 6/30/2005
- ----------------------------------------------------------------------------------------------------------------------------------
141 Radio Shack Corporation 3,000 7/30/2011
SECOND SECOND
CONTROL SECOND LARGEST TENANT LARGEST TENANT
NUMBER LARGEST TENANT SQ FT LEASE EXPIRATION
- --------------------------------------------------------------------------------------------------------------------------------
1 VCR Showroom 38,920 12/31/2028
2 WPIX, Inc. 94,412 3/31/2010
3 Gloria Vanderbuilt Apparel Co. 12,730 7/31/2007
4 JC Penney 176,713 11/30/2021
5 Copeland's Cheesecake 10,753 1/31/2018
- --------------------------------------------------------------------------------------------------------------------------------
6 Crystal Kobe, Ltd. 17,921 8/31/2010
7 Belk Resort Store 65,921 11/1/2023
8 Wachovia/Prudential Securities 187,645 2/28/2006
9 NAP 0
10 J.C. Penney 86222 3/31/2010
- --------------------------------------------------------------------------------------------------------------------------------
11 Credit Suisse Asset Mgmt 343,715 10/31/2014
12 Hawaii Insurance Consultants 64592 12/31/2007
13 WB Telepictures 24,559 4/4/2010
14 MJR Theater 80,909 4/1/2029
15 Best Buy 51,325 1/31/2010
- --------------------------------------------------------------------------------------------------------------------------------
16 HNTB Corporation 44,337 5/31/2013
17 K's Merchandise Mart 79670 1/30/2012
18 REI 22,987 12/1/2013
19 T.J. Maxx 49,993 8/31/2013
20 Imagistics International, Inc. 42301 2/29/2008
- --------------------------------------------------------------------------------------------------------------------------------
21 NAP 0
22 Circuit City 33,021 2/1/2021
23 CNN America, Inc. 14,512 12/31/2007
24 NAP 0
25 Dollar City 11,500 3/14/2009
- --------------------------------------------------------------------------------------------------------------------------------
26 Big Lots 25,500 1/31/2011
27 S. Stein & Company 45,000 5/1/2016
28 NAP 0
29 MedQuist Transcriptions, Ltd. 10,474 2/28/2009
30 Blue Water Grill 20,000 8/31/2014
- --------------------------------------------------------------------------------------------------------------------------------
31 Giant Food Store 54,346 3/31/2022
32 Salt Lake City Tribune 31243 6/30/2025
33 NAP 0
34 Ridge View Endoscopy 7,111 6/9/2013
35 Solar Int'l Shipping 10,136 3/1/2011
- --------------------------------------------------------------------------------------------------------------------------------
36 Hollywood Video 6,600 2/26/2014
37 Michaels 23,881 2/1/2012
38 KG & V 14,709 10/31/2009
39 NAP 0
40 99 Cent Only Stores 26300 1/31/2011
- --------------------------------------------------------------------------------------------------------------------------------
41 NAP 0
42 NAP 0
43 Factory 2-U Stores 15,000 1/31/2009
44 Movie Tavern at Central Park (100) 28,192 8/31/2013
45 Western Title 8,300 7/1/2006
- --------------------------------------------------------------------------------------------------------------------------------
46 Pier 1 Imports 11,348 6/30/2012
47 TJ Maxx 24,541 1/31/2008
48 NAP 0
49 NAP 0
50 Telecom Enterprises, Inc. 9924 5/31/2005
- --------------------------------------------------------------------------------------------------------------------------------
51 CJ & S Corporation 8,657 5/31/2009
52 Columbia Medical Center 14,026 3/1/2009
53 US Army Reserve Command 31,595 6/1/2008
54 Focus Features LLC 17,000 6/30/2011
55 Billabong 5,572 2/28/2009
- --------------------------------------------------------------------------------------------------------------------------------
56 Los Alamitos Internal Medical Group 10,049 8/21/2013
57 Drs. Romero and Mondragon 5,325 11/27/2006
58 Glendale Family Care Medical Group 6,272 9/15/2013
59 Louisiana Connection, Ltd. (French Conn) 6,000 1/31/2012
60 Novare Puritan Events 15559 2/28/2009
- --------------------------------------------------------------------------------------------------------------------------------
61 NAP 0
62 Washington Mutual Bank 6,810 3/15/2011
63 CVS 12,464 12/1/2004
64 Denver Massage Therapy 18,884 10/1/2014
65 O/E Systems, Inc. 44,380 1/6/2007
- --------------------------------------------------------------------------------------------------------------------------------
66 Orlin & Cohen Orthopedic Associates, LP 3,258 3/31/2006
67 Cardiology Diagnostics 6,864 9/6/2011
68 Chili's Grill & Bar 6,000 6/11/2009
69 Burns & Wilcox 17,710 2/1/2013
70 NAP 0
- --------------------------------------------------------------------------------------------------------------------------------
71 OB/GYN Specialists of the Palm Beaches 5,118 3/23/2010
72 Piggly Wiggly 26,280 9/30/2009
73 NAP 0
74 CVS Pharmacy 9,118 2/1/2008
75 NAP 0
- --------------------------------------------------------------------------------------------------------------------------------
76 NAP 0
77 Dorothy Merritt MD 6,847 8/1/2008
78 Wellington Regional Mecial Center 11,169 5/31/2014
79 Lemongrass 3,500 10/1/2008
80 Northrop Grumman PrB Systems 25,457 8/31/2006
- --------------------------------------------------------------------------------------------------------------------------------
81 Nader Abdelsayed, M.D. 4,323 9/16/2011
82 Buder Ingel 14,472 7/1/2005
83 NAP 0
84 NAP 0
85 Countrywide Home Loans 2612 3/31/2006
- --------------------------------------------------------------------------------------------------------------------------------
86 CA-Dept of Corrections 15,497 5/31/2009
87 NAP 0
88 NAP 0
89 Dragon Connection 4,831 9/30/2008
90 NAP 0
- --------------------------------------------------------------------------------------------------------------------------------
91 Bank One 3411 7/27/2014
92 Onyx Acceptance Corp. 23282 5/31/2005
93 Dollar Tree 6000 1/31/2007
94 Shar's Bosch Kitchen Center 4000 5/31/2013
95 NAP 0
- --------------------------------------------------------------------------------------------------------------------------------
96 All Top Granite 3,000 5/1/2007
97 Gregory B. Bragg & Assoc. 3,885 5/30/2008
98 NAP 0
99 Speed Press Tool 9,520 9/1/2006
100 Brick Oven 4,568 12/31/2009
- --------------------------------------------------------------------------------------------------------------------------------
101 Baja Fresh 2,780 2/1/2010
102 Poliform #112 & 114 3,220 8/31/2008
103 CSC Outsourcing, Inc. 10,666 10/1/2011
104 At One Yoga 6,014 2/25/2005
105 Caldwell D.D.S. 3,693 5/1/2013
- --------------------------------------------------------------------------------------------------------------------------------
106 Dollar Tree 6,000 10/1/2006
107 NAP 0
108 NAP 0
109 NAP 0
110 NAP 0
- --------------------------------------------------------------------------------------------------------------------------------
111 NAP 0
112 WAMU 4,000 1/1/2014
113 NAP 0
114 Lindsay Insurance 4,275 9/30/2007
115 Orthopedics Associates 12,547 1/1/2008
- --------------------------------------------------------------------------------------------------------------------------------
116 NAP 0
117 Rancho Physical Therapy 2,868 4/30/2006
118 M.Rankine, MD & C.K.P Nair, MD 4,150 2/28/2006
119 CATO 3,900 2/1/2008
120 NAP 0
- --------------------------------------------------------------------------------------------------------------------------------
121 AT & T Wireless 2,540 11/1/2008
122 NAP 0
123 CORT Furniture 8,468 5/31/2008
124 Johnnie's New York Pizzeria & Cafe 1,786 12/8/2013
125 NAP 0
- --------------------------------------------------------------------------------------------------------------------------------
126 Impressions Inc. 5,186 10/31/2008
127 Teresa Williams and Essential Pet, LLC 4,084 10/1/2006
128 NAP 0
129 CATO 4,160 2/1/2010
130 NAP 0
- --------------------------------------------------------------------------------------------------------------------------------
131 Arce Taekwondo, LLC 2,700 3/31/2007
132 Tennessee Pediatrics 6,210 8/31/2008
133 Rupsha Donuts 1,435 10/31/2008
134 NAP 0
135 Waveguide Consulting, Inc. 4,860 7/31/2008
- --------------------------------------------------------------------------------------------------------------------------------
136 Hosp Dr. Hosp of Augusta 3,740 2/28/2005
137 Nevada Urology Research, LLC 1,142 5/31/2017
138 NAP 0
139 NAP 0
140 Go Fishin 3,201 1/31/2007
- --------------------------------------------------------------------------------------------------------------------------------
141 NAP 0
THIRD THIRD
CONTROL THIRD LARGEST TENANT LARGEST TENANT
NUMBER LARGEST TENANT SQ FT LEASE EXPIRATION
- -----------------------------------------------------------------------------------------------------------------------------------
1 Madame Tussaud Las Vegas 28,000 12/31/2014
2 United Nations Population Fund 91,021 12/31/2010
3 Segret, Inc 10,762 6/30/2006
4 Old Navy 52,420 1/31/2007
5 Restoration Hardware 9,573 1/31/2013
- -----------------------------------------------------------------------------------------------------------------------------------
6 A.K.N.Y, Inc 15,750 4/30/2008
7 Rave Motion Pictures 64,725 12/1/2023
8 CCH Legal Information 165,635 2/28/2019
9 NAP 0
10 Parisian 84062 8/6/2011
- -----------------------------------------------------------------------------------------------------------------------------------
11 EM Warburg Pincus & Co., Inc. 111,545 10/31/2009
12 McCorriston Miller Mukai MacKinnon 35606 12/31/2011
13 Warner- Idea Place 18,135 12/31/2014
14 University of Michigan 41,500 2/1/2017
15 Safeway Stores Inc. 48,911 3/31/2011
- -----------------------------------------------------------------------------------------------------------------------------------
16 Energy Shirlington 16,343 9/30/2014
17 Southern Illinois Healthcare 52286 11/30/2009
18 Cost Plus Market 18,300 2/1/2015
19 Micro Center 44,806 10/31/2012
20 One Nation Insurance 39620 7/31/2007
- -----------------------------------------------------------------------------------------------------------------------------------
21 NAP 0
22 Old Navy 25,000 7/1/2005
23 RAW Entertainment 14,472 3/31/2007
24 NAP 0
25 Career Academy of Beauty 7,328 1/31/2014
- -----------------------------------------------------------------------------------------------------------------------------------
26 Rite Aid 23,672 11/30/2012
27 Hi-Fi Fitness 5,000 8/31/2009
28 NAP 0
29 Howard County MD 10,146 6/30/2006
30 Eagle New Media Investments LLC 16,102 8/31/2004
- -----------------------------------------------------------------------------------------------------------------------------------
31 Marshall's 30,616 10/31/2011
32 The Boyer Company LC 23054 10/31/2007
33 NAP 0
34 Rocky Mountain Cancer 6,258 7/31/2008
35 Open Spirit Corp. 9,243 5/1/2007
- -----------------------------------------------------------------------------------------------------------------------------------
36 Dots, Inc. 3,600 1/31/2008
37 Border's 23,000 1/1/2023
38 Tower Automotive 13,576 3/31/2009
39 NAP 0
40 Hollywood Entertainment Corp. 8000 1/31/2006
- -----------------------------------------------------------------------------------------------------------------------------------
41 NAP 0
42 NAP 0
43 Greenback Dollar Stores 11,300 1/31/2009
44 Cornerstone America (350) 7,767 2/28/2010
45 Banana Republic 7,013 6/1/2009
- -----------------------------------------------------------------------------------------------------------------------------------
46 Aaron Brothers 6,500 2/28/2012
47 The Mattress Firm 7,200 5/31/2008
48 NAP 0
49 NAP 0
50 EZ Shipper Racks 7070 5/31/2006
- -----------------------------------------------------------------------------------------------------------------------------------
51 Benny Tsang 8,467 12/31/2006
52 Matlock OB/GYN 10,941 12/31/2012
53 Anteon Corporation 12,549 12/1/2008
54 Carl Fischer LLC, dba Fischer 8,500 4/30/2006
55 Bikram Yoga 3,899 4/30/2007
- -----------------------------------------------------------------------------------------------------------------------------------
56 Alliance Imaging, Inc. 4,866 8/3/2013
57 South Bay Women's Health 4,661 1/2/2012
58 GM Occupational Medicine 5,088 11/12/2012
59 NAP 0
60 Vertis, Inc. 10607 4/30/2008
- -----------------------------------------------------------------------------------------------------------------------------------
61 NAP 0
62 Coldwell Banker 6,724 11/21/2006
63 Hallmark Gold Crown 4,100 3/1/2008
64 Jo Ann Fabrics 15,500 11/1/2006
65 United Solar Sytems Corp. 31,067 9/30/2009
- -----------------------------------------------------------------------------------------------------------------------------------
66 Promedica Imaging PC 3,034 10/31/2008
67 Orthopedic Specialists 6,149 11/8/2011
68 Kelly-Moore Paint 6,000 8/31/2008
69 Farmers Insurance 10,550 8/1/2007
70 NAP 0
- -----------------------------------------------------------------------------------------------------------------------------------
71 Comprehensive Women's Medical Center 3,637 3/3/2010
72 Dollar Tree 5,625 2/28/2007
73 NAP 0
74 Boater's World 5,000 6/1/2008
75 NAP 0
- -----------------------------------------------------------------------------------------------------------------------------------
76 NAP 0
77 Sid Acharya 3,322 9/1/2008
78 S&K Investments Group Inc. 6,219 7/31/2014
79 Carla Shoes 3,377 8/1/2005
80 Casa Pacifica 6,614 3/31/2007
- -----------------------------------------------------------------------------------------------------------------------------------
81 S. Anjum and D. Wattoo, M.D. 4,282 8/10/2010
82 NAP 0
83 NAP 0
84 NAP 0
85 Franklin Covey 1893 5/1/2006
- -----------------------------------------------------------------------------------------------------------------------------------
86 CA-Dept of Corrections 12,840 8/31/2005
87 NAP 0
88 NAP 0
89 Frame Up 3,474 4/30/2005
90 NAP 0
- -----------------------------------------------------------------------------------------------------------------------------------
91 Massage Envy 3002 8/26/2009
92 The Travelers Indemnity Co. 11821 8/31/2008
93 Rent A Center East 5000 8/31/2009
94 Baker's Furniture 3340 8/31/2005
95 NAP 0
- -----------------------------------------------------------------------------------------------------------------------------------
96 Enviro Air 3,000 4/1/2007
97 The Law Office of M. Mittelman 3,003 8/15/2008
98 NAP 0
99 World Emergency Relief 8,716 4/1/2006
100 Galaxy Cafe 2,678 12/31/2010
- -----------------------------------------------------------------------------------------------------------------------------------
101 WYSE 2,600 4/1/2006
102 Bungalow 2,900 6/30/2005
103 KMS Courier 9,000 5/1/2005
104 Jetz Americana 5,989 4/30/2009
105 Premier Internal Medicine Associates 3,379 3/1/2009
- -----------------------------------------------------------------------------------------------------------------------------------
106 Hibbetts 4,500 2/1/2006
107 NAP 0
108 NAP 0
109 NAP 0
110 NAP 0
- -----------------------------------------------------------------------------------------------------------------------------------
111 NAP 0
112 Nextel 1,350 1/1/2009
113 NAP 0
114 Mercy Management 3,528 9/30/2005
115 South Texas Adult Medicine 7,832 7/1/2006
- -----------------------------------------------------------------------------------------------------------------------------------
116 NAP 0
117 Michael J. Sebahar, MD Nat 2,335 6/5/2005
118 Texas Eyelid Center, P.A. 4,088 5/31/2006
119 Radio Shack 2,800 7/1/2008
120 NAP 0
- -----------------------------------------------------------------------------------------------------------------------------------
121 Panda Express 2,275 11/1/2013
122 NAP 0
123 Woodcraft (LaCuesta Enterprises) 6,800 7/31/2007
124 Daphne's Greek Cafe 1,720 6/3/2013
125 NAP 0
- -----------------------------------------------------------------------------------------------------------------------------------
126 Sierra Cleaning Systems 4,092 12/31/2005
127 Parker Wine & Liquor 3,366 7/1/2007
128 NAP 0
129 Manhattan Menswear 3,200 5/1/2007
130 NAP 0
- -----------------------------------------------------------------------------------------------------------------------------------
131 Papa Johns 1,500 7/31/2007
132 H.A. Beasley 3,179 12/31/2006
133 Marble Slab Creamery 1,365 10/31/2008
134 NAP 0
135 Silverman Construction 3,136 3/31/2008
- -----------------------------------------------------------------------------------------------------------------------------------
136 Surgical Specialist 3,395 3/31/2005
137 NAP 0
138 NAP 0
139 NAP 0
140 High Sierra Towing 3,201 4/30/2005
- -----------------------------------------------------------------------------------------------------------------------------------
141 NAP 0
ENVIRONMENTAL ENVIRONMENTAL
CONTROL PHASE I PHASE II ENGINEERING SEISMIC
NUMBER REPORT DATE PHASE II REPORT DATE REPORT DATE REPORT DATE PML (%)
- -----------------------------------------------------------------------------------------------------------------------------
1 3/3/2004 No 3/9/2004
2 12/1/2003 No 11/21/2003
3 1/29/2004 No 1/23/2004
4 5/21/2004 No 5/1/2004
5 4/16/2004 No 4/20/2004
- -----------------------------------------------------------------------------------------------------------------------------
6 6/3/2004 No 5/21/2004
7 1/6/2004 No 12/9/2003
8 2/4/2004 No 3/1/2004
9 6/23/2004 No 7/7/2004 6/23/2004 17
10 7/2/2004 No 7/2/2004
- -----------------------------------------------------------------------------------------------------------------------------
11 9/26/2003 No 9/26/2003
12 7/6/2004 No 7/1/2004
13 4/23/2004 No 4/23/2004 4/16/2004 18
14 5/25/2004 No 5/28/2004
15 3/2/2004 No 3/4/2004
- -----------------------------------------------------------------------------------------------------------------------------
16 5/21/2004 No 4/8/2004
17 5/18/2004 No 6/4/2004 5/18/2004 7
18 5/21/2004 No 5/28/2004
19 5/3/2004 No 5/7/2004 5/7/2004 13
20 5/21/2004 No 5/24/2004
- -----------------------------------------------------------------------------------------------------------------------------
21 4/23/2004 No 4/15/2004
22 4/22/2004 No 3/25/2004
23 5/6/2004 No 6/10/2004 5/6/2004 17
24 1/21/2004 No 2/27/2004 2/24/2004 8
25 3/5/2004 No 3/5/2004 2/25/2004 19
- -----------------------------------------------------------------------------------------------------------------------------
26 2/17/2004 Yes 3/22/2004 2/6/2004 4/14/2004 16
27 3/24/2004 No 3/24/2004
28 6/8/2004 No 6/8/2004
29 5/13/2004 No 5/13/2004
30 6/22/2004 No 6/22/2004
- -----------------------------------------------------------------------------------------------------------------------------
31 4/21/2004 No 3/31/2004
32 6/10/2004 No 6/9/2004 6/8/2004 9
33 5/11/2004 No 5/11/2004
34 12/16/2003 No 12/13/2003
35 6/1/2004 No 6/1/2004
- -----------------------------------------------------------------------------------------------------------------------------
36 6/8/2004 No 6/15/2004
37 4/7/2004 No 3/22/2004
38 4/16/2004 No 3/29/2004
39 3/9/2004 No 3/10/2004
40 4/26/2004 No 4/28/2004 4/28/2004 14
- -----------------------------------------------------------------------------------------------------------------------------
41 5/20/2004 No 5/21/2004 5/21/2004 12
42 6/8/2004 No 6/14/2004
43 2/23/2004 No 2/25/2004
44 12/12/2003 No 12/12/2003
45 10/31/2003 No 10/17/2003
- -----------------------------------------------------------------------------------------------------------------------------
46 3/12/2004 No 3/4/2004 3/12/2004 5
47 6/10/2004 No 6/10/2004
48 5/20/2004 No
49 12/5/2003 No 12/5/2003
50 7/1/2004 No 6/30/2004 7/1/2004 16
- -----------------------------------------------------------------------------------------------------------------------------
51 1/29/2004 No 1/27/2004 1/29/2004 17
52 12/3/2003 No 12/31/2003
53 3/12/2004 No 3/12/2004
54 12/4/2003 No 12/4/2003
55 7/21/2003 No 9/9/2003 12/20/02 11
- -----------------------------------------------------------------------------------------------------------------------------
56 4/6/2004 No 3/18/2004 3/18/2004 4
57 4/6/2004 No 3/18/2004 3/18/2004 4
58 4/6/2004 No 3/18/2004 3/18/2004 5
59 4/26/2004 No 4/23/2004
60 5/26/2004 No 5/26/2004
- -----------------------------------------------------------------------------------------------------------------------------
61 3/1/2004 No 2/23/2004
62 2/26/2004 No 3/2/2004 3/3/2004 16
63 5/7/2004 No 4/1/2004
64 5/11/2004 No 4/30/2004
65 3/9/2004 No 3/11/2004
- -----------------------------------------------------------------------------------------------------------------------------
66 2/25/2004 No 2/11/2004
67 4/6/2004 No 3/18/2004
68 3/29/2004 No 3/29/2004 5/13/2004 18
69 3/24/2004 No 3/25/2004
70 5/17/2004 No 5/14/2004 5/24/2004 19
- -----------------------------------------------------------------------------------------------------------------------------
71 4/6/2004 No 3/18/2004
72 3/19/2004 No 3/19/2004
73 4/14/2004 Yes 4/15/2004 4/18/2004
74 6/11/2004 No 6/16/2004
75 7/8/2003 No 6/24/2003
- -----------------------------------------------------------------------------------------------------------------------------
76 5/18/2004 No 5/18/2004 5/18/2004 2
77 12/19/2003 No 12/31/2003
78 4/6/2004 No 3/18/2004
79 5/21/2004 No 6/1/2004
80 4/9/2004 No 4/20/2004 4/16/2004 18
- -----------------------------------------------------------------------------------------------------------------------------
81 4/6/2004 No 3/18/2004
82 5/18/2004 No 4/7/2004 4/7/2004 17
83 2/19/2004 No 3/17/2003
84 2/18/2004 No 3/17/2004
85 2/19/2004 No 1/20/2004
- -----------------------------------------------------------------------------------------------------------------------------
86 2/23/2004 No 2/25/2004 2/17/2004 10
87 9/18/2003 No 9/10/2003 9/10/2003 11
88 7/13/2004 No 7/12/2004
89 4/6/2004 No 4/8/2004
90 2/19/2004 No 3/17/2004
- -----------------------------------------------------------------------------------------------------------------------------
91 7/12/2004 No 7/12/2004
92 5/6/2004 No 5/6/2004
93 5/13/2004 No 5/13/2004
94 6/8/2004 No 6/8/2004
95 4/23/2004 No 4/10/2004
- -----------------------------------------------------------------------------------------------------------------------------
96 5/20/2004 No 5/14/2004
97 3/19/2004 No 3/24/2004 3/24/2004 16
98 4/13/2004 No 5/12/2004
99 6/15/2004 No 4/23/2004 4/26/2004 16
100 5/26/2004 No 4/21/2004
- -----------------------------------------------------------------------------------------------------------------------------
101 2/25/2004 No 2/2/2004 2/24/2004 10
102 5/19/2004 No 5/19/2004
103 5/19/2004 No 4/19/2004 4/14/2004 16
104 5/14/2004 No 5/11/2004
105 12/3/2003 No 12/31/2003
- -----------------------------------------------------------------------------------------------------------------------------
106 5/3/2004 No 5/4/2004
107 4/1/2004 No 4/1/2004
108 9/23/2003 No 9/16/2003
109 3/3/2004 No 3/18/2004
110 4/16/2004 No 4/16/2004 4/16/2004 7
- -----------------------------------------------------------------------------------------------------------------------------
111 6/2/2004 No 6/2/2004
112 3/16/2004 No 3/15/2004
113 5/4/2004 No 5/4/2004
114 3/23/2004 No 2/16/2004
115 1/14/2004 No 12/31/2003
- -----------------------------------------------------------------------------------------------------------------------------
116 4/12/2004 No 4/5/2004
117 6/21/2004 No 6/25/2004
118 12/3/2003 No 12/31/2003
119 5/19/2004 No 5/4/2004
120 4/13/2004 No 4/12/2004
- -----------------------------------------------------------------------------------------------------------------------------
121 5/24/2004 No 5/12/2004 5/11/2004 10
122 4/19/2004 No
123 6/23/2004 No 6/21/2004
124 3/2/2004 No 3/2/2004 3/2/2004 10
125 3/19/2004 No 3/23/2004
- -----------------------------------------------------------------------------------------------------------------------------
126 6/10/2004 No 2/20/2004 2/20/2004 7
127 7/29/2003 No 7/25/2003
128 3/24/2004 No 3/24/2004
129 6/17/2004 No 6/14/2004
130 7/13/2004 No 7/12/2004
- -----------------------------------------------------------------------------------------------------------------------------
131 1/27/2003 No 1/31/2003
132 4/30/2004 No 5/11/2004
133 5/15/2004 No 5/15/2004
134 7/13/2004 No 7/12/2004 7/12/2004 14
135 5/19/2004 No 5/19/2004
- -----------------------------------------------------------------------------------------------------------------------------
136 12/3/2003 No 12/31/2003
137 6/2/2004 No 6/2/2004 6/2/2004 1
138 2/26/2004 No 3/18/2004
139 2/26/2004 No 2/16/2004
140 5/6/2004 No 2/19/2004 2/19/2004 7
- -----------------------------------------------------------------------------------------------------------------------------
141 4/5/2004 No 3/30/2004
EARTHQUAKE UPFRONT ACTUAL MONTHLY ACTUAL
CONTROL INSURANCE UPFRONT ACTUAL REPLACEMENT REPLACEMENT UPFRONT MONTHLY
NUMBER REQUIRED REPAIR RESERVE ($) RESERVES ($) RESERVES ($) TI / LC ($) TI / LC ($)
- ------------------------------------------------------------------------------------------------------------------------------------
1 No 0 0 0 0 0
2 No 2,696,000 0 0 0 91,334
3 No 14,056 9,591 9,591 0 0
4 No 0 0 0 0 0
5 No 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
6 No 390,579 7,440 7,440 38,690 38,690
7 No 0 4,007 4,007 10,066,680 0
8 No 500,000 0 49,029 29,596,526 0
9 Yes 567,625 0 175,005 0 0
10 No 1,500,000 0 9,839 600,000 0
- ------------------------------------------------------------------------------------------------------------------------------------
11 No 26,250 2,914,533 0 16,441,190 0
12 No 5,275,000 0 0 1,000,000 47,039
13 No 0 0 4,161 168,925 0
14 No 0 0 0 0 0
15 No 5,750,239 0 0 3,357,481 0
- ------------------------------------------------------------------------------------------------------------------------------------
16 No 0 0 4,090 875,557 17,200
17 No 0 0 9,336 1,000,000 0
18 No 0 0 0 0 0
19 No 0 2,486 2,486 0 0
20 No 315,879 0 5,921 1,065,807 0
- ------------------------------------------------------------------------------------------------------------------------------------
21 No 5,600 7,333 7,333 0 0
22 No 0 0 0 0 0
23 No 222,400 531,723 1,673 23,597 23,597
24 No 0 0 1,179 0 0
25 No 35,750 0 2,088 234,270 3,846
- ------------------------------------------------------------------------------------------------------------------------------------
26 No 0 14,795 1,940 0 0
27 No 0 0 2,000 0 0
28 No 0 5,767 5,767 0 0
29 No 1,000 75,000 2,958 0 9,167
30 No 215,000 0 2,769 600,000 0
- ------------------------------------------------------------------------------------------------------------------------------------
31 No 0 0 0 0 0
32 No 0 0 2,014 0 13,426
33 No 150,100 533 533 0 0
34 No 0 0 0 0 0
35 No 8,293 1,790 1,790 12,500 12,500
- ------------------------------------------------------------------------------------------------------------------------------------
36 No 0 0 1,451 0 7,256
37 No 0 0 0 0 0
38 No 22,813 0 0 4,167 4,167
39 No 0 4,778 4,778 0 0
40 No 0 0 1,453 0 3,876
- ------------------------------------------------------------------------------------------------------------------------------------
41 No 0 0 0 0 0
42 No 0 4,000 4,000 0 0
43 No 0 26,777 0 350,000 9,167
44 No 22,033 0 3,209 0 16,044
45 No 0 845 845 550,000 0
- ------------------------------------------------------------------------------------------------------------------------------------
46 No 0 0 542 0 0
47 No 24,866 4,444 2,222 150,000 6,778
48 No 0 0 0 0 0
49 No 0 0 900 0 6,000
50 No 10,100 0 6,451 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
51 No 0 500 500 150,000 5,400
52 No 0 0 0 0 0
53 No 0 775 775 8,333 8,333
54 No 0 0 1,862 0 0
55 No 0 692 692 2,595 2,595
- ------------------------------------------------------------------------------------------------------------------------------------
56 No 0 0 0 11,262 0
57 No 0 0 0 81,963 0
58 No 0 0 0 138,000 0
59 No 5,000 0 313 0 0
60 No 0 0 1,468 200,000 6,667
- ------------------------------------------------------------------------------------------------------------------------------------
61 No 111,438 5,440 5,440 0 0
62 No 59,585 15,000 761 25,000 5,167
63 No 35,000 1,395 1,395 2,000 2,000
64 No 3,361 1,897 1,897 0 0
65 No 6,123 0 1,920 250,000 7,679
- ------------------------------------------------------------------------------------------------------------------------------------
66 No 10,106 0 0 0 0
67 No 0 0 0 63,550 0
68 No 0 0 0 0 0
69 No 0 0 0 0 0
70 No 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
71 No 0 0 0 0 0
72 No 1,313 0 4,918 0 0
73 No 0 0 3,750 0 0
74 No 114,063 1,054 1,054 0 0
75 No 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
76 No 0 0 0 0 0
77 No 0 32,000 0 0 0
78 No 0 0 0 0 0
79 No 433,294 0 0 0 0
80 No 0 0 110 0 417
- ------------------------------------------------------------------------------------------------------------------------------------
81 No 0 0 0 0 0
82 No 0 0 0 100,000 4,167
83 No 211,625 4,065 4,065 0 0
84 No 192,406 4,690 4,690 0 0
85 No 14,250 372 372 2,977 2,977
- ------------------------------------------------------------------------------------------------------------------------------------
86 No 0 100,000 1,681 200,000 8,333
87 No 0 1,077 1,077 0 0
88 No 41,828 60,000 1,208 0 0
89 No 0 893 893 1,667 1,667
90 No 205,750 4,248 4,248 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
91 No 0 610 305 2,834 1,466
92 No 0 0 1,460 350,000 7,306
93 No 0 50,000 0 0 4,583
94 No 6,000 35,000 584 3,827 1,914
95 No 0 39,185 4,185 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
96 No 0 801 801 0 0
97 No 0 1,778 889 110,000 5,000
98 No 1,000,000 1,550 1,550 3,720 3,720
99 No 0 0 0 0 0
100 No 0 209 209 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
101 No 0 0 0 0 0
102 No 0 0 617 0 1,667
103 No 0 0 0 0 0
104 No 0 0 0 0 0
105 No 0 60,000 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
106 No 0 471 471 2,000 2,000
107 No 9,250 0 525 0 1,750
108 No 34,825 1,850 1,850 0 0
109 No 42,500 3,083 3,083 0 0
110 No 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
111 No 0 350 175 0 0
112 No 0 137 137 1,300 1,300
113 No 5,688 17,805 742 0 0
114 No 18,563 945 945 2,000 2,000
115 No 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
116 No 0 0 0 0 0
117 No 0 365 365 0 0
118 No 0 0 0 0 0
119 No 0 371 371 1,000 1,000
120 No 0 0 3,833 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
121 No 0 0 0 0 0
122 No 0 0 7,985 0 0
123 No 0 394 394 2,625 2,625
124 No 0 119 120 683 683
125 No 1,875 783 783 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
126 No 0 19,362 0 28,173 0
127 No 750 293 293 3,350 3,350
128 No 0 232 136 0 0
129 No 0 372 372 17,000 1,166
130 No 20,700 828 414 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
131 No 0 188 188 1,542 1,542
132 No 938 0 308 0 2,917
133 No 0 0 200 0 750
134 No 4,531 2,500 306 0 0
135 No 0 0 1,088 0 2,500
- ------------------------------------------------------------------------------------------------------------------------------------
136 No 0 0 0 0 0
137 No 0 495 165 0 0
138 No 11,250 1,750 1,750 0 0
139 No 0 1,638 1,638 0 0
140 No 0 6,624 0 15,135 0
- ------------------------------------------------------------------------------------------------------------------------------------
141 No 0 0 0 0 0
MONTHLY
CONTROL MONTHLY INSURANCE
NUMBER TAX ESCROW ($) ESCROW ($) BORROWER NAME
- ------------------------------------------------------------------------------------------------------------------------------------
1 0 0 Grand Canal Shops II, LLC
2 569,383 60,468 SLG 220 News Owner LLC
3 420,000 18,000 Lechar Realty LLC; Lechar Realty Corp.
4 0 0 Westland Garden State Plaza Limited Partnership and GSP Holdings LLC
5 0 0 Stony Point Fashion Park Associates, L.L.C.
- ------------------------------------------------------------------------------------------------------------------------------------
6 195,000 0 L. Charney 1410 Broadway, LLC
7 0 0 Destin Commons, LTD.
8 854,276 151,263 111 Chelsea Commerce LP
9 31,600 68,300 Town and Country Hotel, LLC
10 77,402 5,323 TUP 130, LLC
- ------------------------------------------------------------------------------------------------------------------------------------
11 1,391,085 140,000 237 Max Park Avenue, L.P.
12 81,900 26,970 WATERFRONT PARTNERS I, LLC, WATERFRONT PARTNERS II, LLC
13 45,109 7,917 3500 Partners, LLC
14 0 0 Brighton Holdings LLC
15 63,889 10,513 Laurel Lakes, LLC
- ------------------------------------------------------------------------------------------------------------------------------------
16 36,624 7,725 Transwestern Quincy, L.L.C.
17 84,081 14,875 Bayview University Mall, L.L.C.
18 0 0 Renaissance Retail LLC
19 65,866 3,750 Lakha Properties - Santa Clara, LLC
20 52,468 8,333 Brookwood Tamarac Plaza Investors, LLC
- ------------------------------------------------------------------------------------------------------------------------------------
21 28,818 9,388 USA Preston Park 1, LLC, USA Preston Park 2, LLC, USA Preston Park 3, LLC, USA Preston
Park 4, LLC, USA Preston Park 5, LLC, USA Preston Park 6, LLC, USA Preston Park 7,
LLC, USA Preston Park 8,LLC, USA Preston Park 9, LLC, USA Preston Park 10, LLC, USA
Preston Park 11, LLC, USA Preston Park 12, LLC, USA Preston Park 13, LLC, USA Preston
Park 14, LLC, USA Preston Park 15, LLC, USA Preston Park 16, LLC, USA Preston Park 17,
LLC, USA Preston Park 18, LLC, USA Preston Park 19, LLC, USA Preston Park 20, LLC, USA
Preston Park 21, LLC, USA Preston Park 22, LLC, USA Preston Park 23, LLC
22 0 0 NP/I&G Conyers Crossroads, LLC
23 0 8,304 SKB-Sunset, LLC, CC-Sunset, LLC, Schwartz-Sunset, LLC, Hart-Sunset, LLC, Quandt-
Sunset, LLC
24 0 0 Fe-San Francisco CA, LLC
25 28,281 3,332 11564-11604 Sylvan Street Apartments LLC; 15405 Vanowen Street, LP; 256 S. Rampart
Street, LP; 250 S. Reno Street, LP; Haynes Palm Apartments, LLC; Dickens Victory
Apartments LLC
- ------------------------------------------------------------------------------------------------------------------------------------
26 12,270 3,282 White Road Partners, LLC
27 12,720 4,624 1030 W. North Ave. Bldg. LLC
28 16,965 8,168 USA Preston Pointe 1, LLC, USA Preston Pointe 2, LLC, USA Preston Pointe 3, LLC, USA
Preston Pointe 4, LLC, USA Preston Pointe 5, LLC, USA Preston Pointe 6, LLC, USA
Preston Pointe 7, LLC, USA Preston Pointe 8,LLC, USA Preston Pointe 9, LLC, USA
Preston Pointe 10, LLC, USA Preston Pointe 11, LLC, USA Preston Pointe 12, LLC, USA
Preston Pointe 13, LLC, USA Preston Pointe 14, LLC, USA Preston Pointe 15, LLC, USA
Preston Pointe 16, LLC, USA Preston Pointe 17, LLC, USA Preston Pointe 18, LLC, USA
Preston Pointe 19, LLC, USA Preston Pointe 20, LLC, USA Preston Pointe 21, LLC, USA
Preston Pointe 22, LLC, USA Preston Pointe 23, LLC, USA Preston Pointe 24, LLC, USA
Preston Pointe 25, LLC
29 21,184 2,867 BRIT-Century Plaza LLC
30 55,130 4,069 Boyce Building Group LLC
- ------------------------------------------------------------------------------------------------------------------------------------
31 0 0 Reitnour Investment Properties - Limerick, L.P.
32 23,012 3,263 Gateway Office 1, LC
33 67,000 0 SCLLC KC ONE LLC
34 0 0 MOB Skyridge I of Colorado, LLC
35 29,081 2,043 NNN Sugar Creek Center, LLC, NNN Sugar Creek Center 1, LLC, NNN Sugar Creek Center 2,
LLC, NNN Sugar Creek Center 3, LLC, NNN Sugar Creek Center 4, LLC, NNN Sugar Creek
Center 5, LLC, NNN Sugar Creek Center 6, LLC, NNN Sugar Creek Center 7, LLC, NNN
Sugar Creek Center 8,LLC, NNN Sugar Creek Center 9, LLC, NNN Sugar Creek Center 10,
LLC, NNN Sugar Creek Center 11, LLC, NNN Sugar Creek Center 12, LLC, NNN Sugar Creek
Center 13, LLC, NNN Sugar Creek Center 14, LLC, NNN Sugar Creek Center 15, LLC, NNN
Sugar Creek Center 16, LLC, NNN Sugar Creek Center 17, LLC, NNN Sugar Creek Center 18,
LLC, NNN Sugar Creek Center 19, LLC, NNN Sugar Creek Center 20, LLC, NNN Sugar Creek
Center 21, LLC, NNN Sugar Creek Center 22, LLC, NNN Sugar Creek Center 23, LLC, NNN
Sugar Creek Center 24, LLC, NNN Sugar Creek Center 25, LLC
- ------------------------------------------------------------------------------------------------------------------------------------
36 25,000 4,200 G/W Jefferson - St. Jean LLC
37 671 0 Brighton Commercial, LLC
38 0 2,793 Brass Works Equities, LLC
39 13,276 5,885 Grey Shoal, L.L.C.
40 18,587 2,926 5714-18 Elmer Avenue Apartments-DE LLC; 5722-28 Elmer Avenue Apartments-DE LLC;
CG-Dickens/Victory Apartments-DE LLC; 7340 Variel Avenue Apartments-DE LLC; Kaufman
Bloomfield Properties-DE LLC; Oxnard Hazeltine Apartments-DE LLC
- ------------------------------------------------------------------------------------------------------------------------------------
41 0 0 Warmington Serrano Associates
42 17,677 6,030 USA Preston Landing 1, LLC, USA Preston Landing 2, LLC, USA Preston Landing 3, LLC,
USA Preston Landing 4, LLC, USA Preston Landing 5, LLC, USA Preston Landing 6, LLC,
USA Preston Landing 7, LLC, USA Preston Landing 8,LLC, USA Preston Landing 9, LLC,
USA Preston Landing 10, LLC, USA Preston Landing 11, LLC, USA Preston Landing 12, LLC,
USA Preston Landing 13, LLC, USA Preston Landing 14, LLC, USA Preston Landing 15, LLC,
USA Preston Landing 16, LLC, USA Preston Landing 17, LLC, USA Preston Landing 18, LLC,
USA Preston Landing 19, LLC, USA Preston Landing 20, LLC, USA Preston Landing 21, LLC,
USA Preston Landing 22, LLC, USA Preston Landing 23, LLC
43 11,847 1,704 Charleston Plaza, LLC
44 36,723 6,124 Shops/Dunhill at Central Park, LP
45 8,486 2,441 River Shops, LLC
- ------------------------------------------------------------------------------------------------------------------------------------
46 7,170 1,203 NorthPointe Modesto I LLC
47 27,961 2,809 Highline FC Partners LLC
48 7,931 0 Levitz SL Portland-Johnson, L.L.C.
49 10,367 0 R&F Exton, L.P.
50 10,400 1,910 Westlake Village Industrial Park, LLC
- ------------------------------------------------------------------------------------------------------------------------------------
51 23,333 0 Bayport Harrison Associates, LP
52 0 0 MOB 77 of Texas, L.P.
53 6,415 1,214 JDI Peachtree, LLC
54 40,015 0 Kerway Realty, LLC
55 4,043 1,801 The Camp Project, LLC
- ------------------------------------------------------------------------------------------------------------------------------------
56 5,893 2,177 Los Alamitos Investors Limited Partnership
57 11,898 1,209 Chula Vista Medical Plaza Investors, L.P.
58 1,488 2,408 Glendale Healthcare Investors, LP
59 15,414 2,750 Copelands' Properties LLC
60 0 1,667 Puritan Mill, LLC
- ------------------------------------------------------------------------------------------------------------------------------------
61 15,715 0 Allendale Associates, A Limited Partnership
62 9,650 2,840 Adelfia Properties II, LLC
63 8,061 3,117 Gulf Breeze SC, LLC
64 12,579 2,934 Aurora City Square, LLC
65 18,703 5,417 JBD Troy, LLC
- ------------------------------------------------------------------------------------------------------------------------------------
66 50,021 0 RVC Associates L.P.
67 11,866 2,330 St. Louis I Investors, LP
68 0 0 FFHS Associates - Gateway, L.P.
69 0 0 East Lamar LP
70 0 0 SDL Concord Partners, L.P.
- ------------------------------------------------------------------------------------------------------------------------------------
71 5,565 2,701 WRMC I Investors, Ltd.
72 11,587 5,210 Merrill Ridge Plaza Subsidiary LLC
73 18,397 4,383 Carleton In-Town Housing Partners, Ltd.
74 8,329 1,283 Steuart-Solomons Financing, LLC
75 0 0 High Point Partners, LLC
- ------------------------------------------------------------------------------------------------------------------------------------
76 0 0 Olympus Pointe Theatre Investors, LLC
77 0 0 MOB Texas City I of Texas, L.P.
78 998 2,957 WRMC II Properties, LLLP
79 10,013 3,156 Deerwood Village Mall, L.C.
80 37,923 3,242 SMS Mission Oaks, LP
- ------------------------------------------------------------------------------------------------------------------------------------
81 5,809 1,466 Lake Mead Medical Investors Limited Partnership
82 1,564 1,729 840-848 Battery Street, LLC
83 12,394 4,452 VR Wimbledon Limited Partnership
84 14,813 5,081 VR Bayou Oaks Limited Partnership
85 5,338 684 2121 Borders, LLC
- ------------------------------------------------------------------------------------------------------------------------------------
86 0 0 Haven Center Ltd.
87 6,110 842 Hazel Gardens, LLC
88 7,350 1,490 YCW-Desert View Mobile Home Park, LLC
89 7,503 820 Blackwood Capital I, LLC
90 12,569 4,327 VR Ashton Woods Limited Partnership
- ------------------------------------------------------------------------------------------------------------------------------------
91 2,500 375 SABA, LLC
92 13,000 2,180 McDonnell Associates, LLC
93 5,917 1,500 Poinsett Realty Fund 39, LLC
94 2,500 375 Gilhous Ltd LLC
95 5,833 2,164 La Casa West, LTD.
- ------------------------------------------------------------------------------------------------------------------------------------
96 3,282 3,554 Lyons Tech IV, LTD.
97 0 0 Shadelands Executive Center, LLC
98 0 0 FS Harlingen, L.P.
99 4,850 1,303 2270 Camino Vida Roble LLC
100 13,934 0 CPRE-1 End Shady Hollow II, L.P.
- ------------------------------------------------------------------------------------------------------------------------------------
101 0 0 Allan Chook Yee Lau, Linda Yim Seung Lau, John Leong, Fung Kuen Leong, Shek Yee Lau,
Rebecca Lau, Martin Lau and Michael Lau
102 4,405 725 Rock West Investments II, LLC
103 0 0 CMK Kearny Park, LLC
104 6,803 878 Shrubland, LLC
105 0 0 MOB 124 of Texas, L.P.
- ------------------------------------------------------------------------------------------------------------------------------------
106 2,317 1,435 P & N Calera, LLC
107 6,700 630 White Cap DG, LLC
108 8,721 2,617 The Park on Clairmont JV
109 6,319 0 Stevenson Terrace, L.P.
110 4,200 509 Oceangate Property Two, LLC
- ------------------------------------------------------------------------------------------------------------------------------------
111 0 0 Bonino Carefree CVS, LLC
112 4,225 386 SWC 87th & Stoney LLC
113 4,035 1,072 RFR Storage Partners, Inc.
114 5,511 461 Blue Bell IV Associates, L.P.
115 0 0 MOB 88 of Texas, L.P.
- ------------------------------------------------------------------------------------------------------------------------------------
116 0 0 Olbrich by the Lake Associates, LLC
117 2,941 588 Saxony Medical LLC
118 0 0 MOB 97 of Texas, L.P.
119 3,460 1,134 P&N Callaway, LLC
120 10,597 3,026 Nazli, Ltd
- ------------------------------------------------------------------------------------------------------------------------------------
121 0 0 Maclyn L. Morris and Mildred E. Morris, as Trustees of the Morris Revocable Trust
Number Four
122 0 0 G/W DC LLC
123 6,250 1,290 HBNI Orange LLC
124 4,181 358 OliverMcMillan Culver City, LLC
125 5,782 314 Symsack Properties, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
126 2,729 0 Kleppe Industrial Park A, B, & E, LLC
127 7,774 303 WS Parker Marketplace Associates LLC
128 0 0 5100 Beatties Ford Road, LLC
129 3,193 224 Spring Lake Shop Space Limited Partnership
130 4,330 770 Evergreen Mobile Home Park
- ------------------------------------------------------------------------------------------------------------------------------------
131 1,635 644 Bell Park II, L.L.C.
132 3,397 305 Rubicon Tennessee LLC
133 2,688 1,425 Jon's Spring Cypress Plaza, LLC
134 1,610 350 CW-Country Terrace, LLC
135 1,375 1,165 Zonolite Road Properties II, LLC
- ------------------------------------------------------------------------------------------------------------------------------------
136 0 0 MOB 22 of Georgia, LLC
137 874 213 NUA Properties, LLC
138 3,586 0 Melrose Park Manor Associates
139 3,646 0 Birchwood Apartments, L.P.
140 1,464 0 745/755 E. Greg Street, LLC
- ------------------------------------------------------------------------------------------------------------------------------------
141 1,377 80 Richard Drucker
CONTROL CASH GROUND GROUND LEASE ANNUAL GROUND
NUMBER LOCKBOX MANAGEMENT LEASE Y/N EXPIRATION DATE LEASE PAYMENT ($)
- --------------------------------------------------------------------------------------------------------------------
1 Hard In Place Yes 5/14/2093 1
2 Hard In Place No
3 Soft Springing No
4 Hard In Place No
5 Hard In Place No
- --------------------------------------------------------------------------------------------------------------------
6 Soft Springing No
7 No NAP No
8 Hard In Place No
9 Hard In Place No
10 Hard In Place No
- --------------------------------------------------------------------------------------------------------------------
11 Hard In Place No
12 Hard In Place Yes 9/30/2046 1,593,503
13 Hard Springing No
14 No NAP No
15 No NAP No
- --------------------------------------------------------------------------------------------------------------------
16 Hard In Place No
17 Hard Springing No
18 No NAP No
19 No NAP Yes 9/18/2045 1,265,923
20 Hard Springing No
- --------------------------------------------------------------------------------------------------------------------
21 No NAP No
22 No NAP No
23 No NAP No
24 Hard Springing No
25 Hard In Place No
- --------------------------------------------------------------------------------------------------------------------
26 Hard Springing No
27 Hard Springing No
28 No NAP No
29 No NAP No
30 Hard Springing No
- --------------------------------------------------------------------------------------------------------------------
31 Hard Springing No
32 Hard Springing No
33 Hard Springing Yes 5/31/2086 576,839
34 No NAP Yes 4/14/2001 13,259
35 No NAP No
- --------------------------------------------------------------------------------------------------------------------
36 Hard In Place No
37 No NAP No
38 No NAP No
39 No NAP No
40 Hard In Place No
- --------------------------------------------------------------------------------------------------------------------
41 No NAP No
42 No NAP No
43 No NAP No
44 Hard Springing No
45 No NAP No
- --------------------------------------------------------------------------------------------------------------------
46 No NAP No
47 Hard Springing No
48 Hard Springing No
49 Hard Springing No
50 No NAP No
- --------------------------------------------------------------------------------------------------------------------
51 No NAP No
52 No NAP No
53 No NAP No
54 No NAP No
55 No NAP No
- --------------------------------------------------------------------------------------------------------------------
56 No NAP Yes 9/11/2032 30,000
57 No NAP Yes 10/11/2051 61,286
58 No NAP Yes 6/20/2050 109,200
59 Hard Springing No
60 No NAP No
- --------------------------------------------------------------------------------------------------------------------
61 No NAP No
62 Hard Springing No
63 No NAP No
64 Soft Springing No
65 No NAP No
- --------------------------------------------------------------------------------------------------------------------
66 No NAP No
67 No NAP Yes 8/14/2030 15,000
68 No NAP No
69 No NAP No
70 No NAP No
- --------------------------------------------------------------------------------------------------------------------
71 No NAP Yes 4/14/2099 5,200
72 Hard Springing No
73 No NAP No
74 No NAP No
75 No NAP No
- --------------------------------------------------------------------------------------------------------------------
76 No NAP No
77 No NAP Yes 4/30/2001 100
78 No NAP Yes 12/18/2001 5,200
79 No NAP No
80 No NAP No
- --------------------------------------------------------------------------------------------------------------------
81 No NAP Yes 6/30/2065 12,100
82 No NAP No
83 No NAP No
84 No NAP No
85 No NAP No
- --------------------------------------------------------------------------------------------------------------------
86 No NAP No
87 No NAP No
88 No NAP No
89 No NAP No
90 No NAP No
- --------------------------------------------------------------------------------------------------------------------
91 No NAP No
92 No NAP No
93 No NAP No
94 No NAP No
95 No NAP No
- --------------------------------------------------------------------------------------------------------------------
96 No NAP No
97 No NAP No
98 No NAP No
99 No NAP No
100 No NAP No
- --------------------------------------------------------------------------------------------------------------------
101 No NAP No
102 No NAP No
103 No NAP No
104 No NAP No
105 No NAP No
- --------------------------------------------------------------------------------------------------------------------
106 No NAP No
107 Hard Springing No
108 No NAP No
109 No NAP No
110 Hard Springing No
- --------------------------------------------------------------------------------------------------------------------
111 No NAP No
112 No NAP No
113 No NAP No
114 No NAP No
115 No NAP Yes 7/1/2099 1
- --------------------------------------------------------------------------------------------------------------------
116 No NAP No
117 No NAP No
118 No NAP No
119 No NAP No
120 No NAP No
- --------------------------------------------------------------------------------------------------------------------
121 No NAP No
122 Hard In Place No
123 Soft Springing No
124 No NAP No
125 No NAP No
- --------------------------------------------------------------------------------------------------------------------
126 No NAP No
127 No NAP No
128 Hard In Place No
129 No NAP No
130 No NAP No
- --------------------------------------------------------------------------------------------------------------------
131 No NAP No
132 No NAP No
133 No NAP No
134 No NAP No
135 No NAP No
- --------------------------------------------------------------------------------------------------------------------
136 No NAP Yes 7/1/2099 1
137 No NAP No
138 No NAP No
139 No NAP No
140 No NAP No
- --------------------------------------------------------------------------------------------------------------------
141 No NAP No
CONTROL TERRORISM INSURANCE EARNOUT P&I AFTER
NUMBER B NOTE ($) REQUIRED EARNOUT (Y/N) AMOUNT ($) EARNOUT
- --------------------------------------------------------------------------------------------------------------------------
1 Yes No 37,000,000 2,041,482.81
2 56,000,000 Yes No
3 6,981,447 Yes No
4 Yes No
5 Yes No
- --------------------------------------------------------------------------------------------------------------------------
6 Yes No
7 Yes No
8 50,000,000 Yes No
9 Yes No
10 Yes No
- --------------------------------------------------------------------------------------------------------------------------
11 Yes No
12 6,600,000 Yes No
13 Yes No
14 Yes No
15 Yes Yes 6,800,000 238,183.71
- --------------------------------------------------------------------------------------------------------------------------
16 Yes No
17 Yes No
18 Yes Yes 8,263,000 166,591.10
19 2,000,000 Yes No
20 Yes No
- --------------------------------------------------------------------------------------------------------------------------
21 Yes No
22 Yes No
23 Yes No
24 Yes No
25 Yes No
- --------------------------------------------------------------------------------------------------------------------------
26 Yes No
27 Yes No
28 Yes No
29 Yes No
30 Yes No
- --------------------------------------------------------------------------------------------------------------------------
31 Yes No
32 Yes No
33 Yes No
34 Yes No
35 Yes No
- --------------------------------------------------------------------------------------------------------------------------
36 Yes No
37 Yes Yes 4,450,000 64,765.86
38 Yes No
39 Yes No
40 Yes No
- --------------------------------------------------------------------------------------------------------------------------
41 Yes No
42 Yes No
43 Yes No
44 Yes No
45 Yes No
- --------------------------------------------------------------------------------------------------------------------------
46 Yes No
47 Yes No
48 Yes No
49 Yes No
50 Yes No
- --------------------------------------------------------------------------------------------------------------------------
51 Yes No
52 Yes No
53 650,000 Yes No
54 Yes No
55 Yes No
- --------------------------------------------------------------------------------------------------------------------------
56 Yes No
57 Yes No
58 Yes No
59 Yes No
60 Yes No
- --------------------------------------------------------------------------------------------------------------------------
61 Yes No
62 Yes No
63 Yes No
64 Yes No
65 Yes No
- --------------------------------------------------------------------------------------------------------------------------
66 Yes No
67 Yes No
68 Yes No
69 Yes No
70 Yes No
- --------------------------------------------------------------------------------------------------------------------------
71 Yes No
72 Yes No
73 Yes No
74 Yes No
75 Yes No
- --------------------------------------------------------------------------------------------------------------------------
76 Yes No
77 Yes No
78 Yes No
79 Yes No
80 Yes No
- --------------------------------------------------------------------------------------------------------------------------
81 Yes No
82 Yes No
83 Yes No
84 Yes No
85 Yes No
- --------------------------------------------------------------------------------------------------------------------------
86 Yes No
87 250,000 Yes No
88 Yes No
89 Yes No
90 Yes No
- --------------------------------------------------------------------------------------------------------------------------
91 Yes No
92 Yes No
93 Yes No
94 Yes No
95 Yes No
- --------------------------------------------------------------------------------------------------------------------------
96 Yes No
97 Yes No
98 Yes No
99 Yes No
100 Yes No
- --------------------------------------------------------------------------------------------------------------------------
101 Yes No
102 Yes No
103 Yes No
104 Yes No
105 Yes No
- --------------------------------------------------------------------------------------------------------------------------
106 Yes No
107 Yes No
108 Yes No
109 Yes No
110 Yes No
- --------------------------------------------------------------------------------------------------------------------------
111 Yes No
112 Yes No
113 Yes No
114 Yes No
115 Yes No
- --------------------------------------------------------------------------------------------------------------------------
116 Yes No
117 Yes No
118 Yes No
119 Yes No
120 Yes No
- --------------------------------------------------------------------------------------------------------------------------
121 Yes No
122 Yes No
123 Yes No
124 Yes No
125 Yes No
- --------------------------------------------------------------------------------------------------------------------------
126 Yes No
127 Yes No
128 Yes No
129 Yes No
130 Yes No
- --------------------------------------------------------------------------------------------------------------------------
131 Yes No
132 Yes No
133 Yes No
134 Yes No
135 Yes No
- --------------------------------------------------------------------------------------------------------------------------
136 Yes No
137 Yes No
138 Yes No
139 Yes No
140 Yes No
- --------------------------------------------------------------------------------------------------------------------------
141 Yes No
(1) The Open Period is inclusive of the Maturity Date
(2) The Cut-off Date LTV and Underwritten NCF DSCR are based on the total
$427,000,000 financing net of the $37,000,000 principal guarantee.
(3) The 2003 numbers were Annualized for the first two months and Actual for
10 months.
(4) For the purpose of calculating underwritten debt service coverage ratios,
loan-to-value ratios and loan per square foot/unit, the cutoff date
principal balance for each mortgage loan in a split loan structure (x)
includes the cut-off date principal balance of the pari passu mortgage
loan in the trust plus the cut-off date principal balance of any pari
passu mortgage that is not in the trust, and (y) excludes the cut-off date
principal balance of any subordinate mortgage loan in that split loan
structure.
(5) The loan has unsecured subordinate debt in the amount of $8,191,627.
(6) Refer to Annex C-3 for a summary of the amortization schedules for the
loan included in the trust. Amortization on the pari passu A notes is
based roughly on a 360 month schedule.
(7) The loan has Mezzanine debt in the amount of $30,000,000.
(8) Borrowing entity utilizes a tenant-in-common structure
(9) The loan has Mezzanine debt in the amount of $4,000,000.
(10) The Cut-Off Date LTV, DSCR and loan per square foot/unit figures for these
loans are net of the earnout amount.
(11) The 2002 Operating Statement is 8 months Annualized from May to December
2002
(12) The loan has Mezzanine debt in the amount of $1,500,000.
(13) The cutoff date LTV and balloon LTV ratios are calculated taking the
$2,500,000 performace holdback into account.
(14) Factory 2-U is currently under bankruptcy protection and has not yet
affirmed or rejected its lease.
(15) The loan has Mezzanine debt in the amount of $2,080,000.
(16) The loan has Mezzanine debt in the amount of $1,800,000.
(17) After a 26 payment lockout period, the Shady Hollow Village II loan
permits defeasance, and additionally permits prepayment commencing 36
payments after origination upon the payment of the lesser of a specified
percentage (initially 5% and declining annually to a minimum of 1%) of the
amount being prepaid and a yield maintenance charge.
(18) 1140 North 31st Street calls for additional amortization payments of
$7,500 in years 9 and 10
(19) The 2004 Partial Year numbers are based on November 2003 through February
2004 Annualized to represent a Trailing 12.
CERTAIN CHARACTERISTICS OF THE MULTIFAMILY LOANS
CONTROL LOAN
NUMBER NUMBER PROPERTY NAME STREET ADDRESS
- ------------------------------------------------------------------------------------------------------------------------------------
21 09-0001905 Preston Park at Satellite 2110 Preston Park Drive
28 09-0001937 Preston Pointe at Windermere 3100 Preston Pointe Way
39 09-0001911 Stonecrest at Double Oak Mountain Apartments One Stonecrest Drive
41 09-0001933 Serrano Highlands Apartments 25421 Alta Loma
42 09-0001938 Preston Landing at Sweetwater Creek 1100 Preston Landing Circle
- ------------------------------------------------------------------------------------------------------------------------------------
61 09-0001881 Allendale Apartments 535 North Cedar Hill Drive
73 625023201 Treymore at City Place 2101 N. Haskell Ave.
75 09-0001917 Silverstone Apartments 1004-1044 North High Point Road
83 09-0001897 Wimbledon Apartment Homes 16222 Stuebner Airline
84 09-0001898 Bayou Oaks Aparments 13800 Ella Boulevard
- ------------------------------------------------------------------------------------------------------------------------------------
87 09-0001825 Hazel Gardens Apartments 10710 SE 256th Street
88 04-0534 Desert View Mobile Home Park 6500 Desert View Drive
90 09-0001899 Ashton Woods Apartment Homes 17033 Butte Creek
95 09-0001891 La Casa Apartments 121 E. Wedgewood Avenue
108 09-0001823 Park on Clairmont 3180 Clairmont Road
- ------------------------------------------------------------------------------------------------------------------------------------
109 09-0001884 Stevenson Terrace Apartments 6201 North 10th Street
116 09-0001900 Olbrich By the Lake 3528 Atwood Avenue
120 625023541 Willows of Woodhaven 5816 Boca Raton
130 04-0299 Evergreen Mobile Home Park 2819 Caldwell Boulevard
134 04-0533 Country Terrace Mobile Home Park 11 Tuck Circle
- ------------------------------------------------------------------------------------------------------------------------------------
138 09-0001883 Melrose Park Manor Apartments 210 West Cheltenham Avenue
139 09-0001882 Birchwood Hills Apartments 5115 Wissahickon Avenue
CONTROL
NUMBER CITY COUNTY STATE ZIP CODE PROPERTY TYPE
- --------------------------------------------------------------------------------------------------------------------------------
21 Duluth Gwinnett Georgia 30096 Multifamily
28 Cumming Forsyth Georgia 30041 Multifamily
39 Birmingham Shelby Alabama 35242 Multifamily
41 Lake Forest Orange California 92630 Multifamily
42 Lithia Springs Douglas Georgia 30122 Multifamily
- --------------------------------------------------------------------------------------------------------------------------------
61 Allentown Lehigh Pennsylvania 18109 Multifamily
73 Dallas Dallas Texas 75204 Multifamily
75 Madison Dane Wisconsin 53717 Multifamily
83 Houston Harris Texas 77379 Multifamily
84 Houston Harris Texas 77014 Multifamily
- --------------------------------------------------------------------------------------------------------------------------------
87 Kent King Washington 98030 Multifamily
88 West Richland Benton Washington 99353 Mobile Home Park
90 Houston Harris Texas 77090 Multifamily
95 Spokane Spokane Washington 99208 Multifamily
108 Atlanta Dekalb Georgia 30329 Multifamily
- --------------------------------------------------------------------------------------------------------------------------------
109 Philadelphia Philadelphia Pennsylvania 19141 Multifamily
116 Madison Dane Wisconsin 53714 Multifamily
120 Fort Worth Tarrant Texas 76112 Multifamily
130 Nampa Canyon Idaho 83651 Mobile Home Park
134 Reno Washoe Nevada 89506 Mobile Home Park
- --------------------------------------------------------------------------------------------------------------------------------
138 Philadelphia Philadelphia Pennsylvania 19126 Multifamily
139 Philadelphia Philadelphia Pennsylvania 19144 Multifamily
INITIAL
CONTROL INITIAL POOL POOL BALANCE
NUMBER BALANCE ($) PER UNIT OR PAD ($) UTILITIES PAID BY TENANT
- --------------------------------------------------------------------------------------------------------------------------------
21 28,738,243 65,314 Electricity/Water/Sewer
28 21,187,500 61,236 Electricity/Water/Sewer
39 15,350,000 48,730 Electricity/Water/Sewer
41 15,000,000 62,500 Electricity/Gas/Water/Sewer
42 14,925,000 62,188 Electricity/Water/Sewer
- --------------------------------------------------------------------------------------------------------------------------------
61 8,873,259 36,972 Electricity/Gas
73 7,785,441 43,252 Electricity
75 7,400,000 52,857 Electricity/Gas/Water/Sewer
83 6,320,000 39,255 Electricity/Gas/Water/Sewer
84 6,240,000 29,714 Electricity/Water/Sewer
- --------------------------------------------------------------------------------------------------------------------------------
87 5,950,000 78,289 Electricity/Water/Sewer
88 5,910,000 14,275 Electricity/Water/Sewage/Trash
90 5,790,000 32,712 Electricity/Gas/Water/Sewer
95 5,400,000 30,000 Electricity
108 4,259,767 38,376 Electricity/Gas
- --------------------------------------------------------------------------------------------------------------------------------
109 4,196,161 28,352 Electricity
116 3,400,000 51,515 Electricity/Gas/Water/Sewer
120 3,197,163 17,376 Electricity
130 2,555,500 17,996 Electricity/Gas
134 2,397,000 22,829 Electricity/Gas
- --------------------------------------------------------------------------------------------------------------------------------
138 1,397,275 16,634 Electricity
139 1,397,221 17,913 Electricity
STUDIOS 1 BEDROOM 2 BEDROOM
CONTROL AVG RENT AVG RENT AVG RENT
NUMBER # UNITS PER MO. ($) # UNITS PER MO. ($) # UNITS PER MO. ($)
- ------------------------------------------------------------------------------------------------------------------------------
21 0 0 122 857 248 1,097
28 0 0 88 790 202 934
39 0 0 54 670 189 785
41 0 0 70 1184 170 1,373
42 0 0 58 865 162 993
- ------------------------------------------------------------------------------------------------------------------------------
61 0 0 48 695 144 790
73 0 0 84 745 72 923
75 15 565 70 726 55 900
83 1 525 48 606 106 748
84 48 455 90 565 72 708
- ------------------------------------------------------------------------------------------------------------------------------
87 0 0 21 743 49 934
88 414 269 0 0 0 0
90 0 0 76 521 74 669
95 0 0 1 425 139 464
108 0 0 46 825 44 1,011
- ------------------------------------------------------------------------------------------------------------------------------
109 4 553 62 596 73 722
116 4 720 40 831 22 1,051
120 0 0 120 390 64 519
130 141 237 0 0 0 0
134 105 425 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
138 0 0 49 616 35 720
139 1 475 29 610 48 710
3 BEDROOM 4 BEDROOM 5 BEDROOM NUMBER
CONTROL AVG RENT AVG RENT AVG RENT OF
NUMBER # UNITS PER MO. ($) # UNITS PER MO. ($) #UNITS PER MO. ($) ELEVATORS
- ---------------------------------------------------------------------------------------------------------------------------------
21 70 1,270 0 0 0 0 0
28 56 1,075 0 0 0 0 1
39 72 1,000 0 0 0 0 0
41 0 0 0 0 0 0 0
42 20 1,256 0 0 0 0 0
- ---------------------------------------------------------------------------------------------------------------------------------
61 48 970 0 0 0 0 0
73 24 1,255 0 0 0 0 0
75 0 0 0 0 0 0 0
83 6 999 0 0 0 0 0
84 0 0 0 0 0 0 0
- ---------------------------------------------------------------------------------------------------------------------------------
87 6 1,150 0 0 0 0 0
88 0 0 0 0 0 0 0
90 27 869 0 0 0 0 0
95 40 555 0 0 0 0 0
108 21 1,289 0 0 0 0 0
- ---------------------------------------------------------------------------------------------------------------------------------
109 9 951 0 0 0 0 2
116 0 0 0 0 0 0 1
120 0 0 0 0 0 0 0
130 0 0 0 0 0 0 0
134 0 0 0 0 0 0 0
- ---------------------------------------------------------------------------------------------------------------------------------
138 0 0 0 0 0 0 0
139 0 0 0 0 0 0 0
ANNEX C-3
111 EIGHTH AVENUE AMORTIZATION SCHEDULE
PERIOD DATE BALANCE PRINCIPAL INTEREST DEBT SERVICE
0 4/1/2004 80,000,000
1 5/1/2004 80,000,000 - 366,448.89 366,448.89
2 6/1/2004 80,000,000 - 378,663.85 378,663.85
3 7/1/2004 80,000,000 - 366,448.89 366,448.89
4 8/1/2004 80,000,000 - 378,663.85 378,663.85
5 9/1/2004 80,000,000 - 378,663.85 378,663.85
6 10/1/2004 80,000,000 - 366,448.89 366,448.89
7 11/1/2004 80,000,000 - 378,663.85 378,663.85
8 12/1/2004 80,000,000 - 366,448.89 366,448.89
9 1/1/2005 80,000,000 - 378,663.85 378,663.85
10 2/1/2005 80,000,000 - 378,663.85 378,663.85
11 3/1/2005 80,000,000 - 342,018.96 342,018.96
12 4/1/2005 80,000,000 - 378,663.85 378,663.85
13 5/1/2005 80,000,000 - 366,448.89 366,448.89
14 6/1/2005 80,000,000 - 378,663.85 378,663.85
15 7/1/2005 80,000,000 - 366,448.89 366,448.89
16 8/1/2005 80,000,000 - 378,663.85 378,663.85
17 9/1/2005 80,000,000 - 378,663.85 378,663.85
18 10/1/2005 80,000,000 - 366,448.89 366,448.89
19 11/1/2005 80,000,000 - 378,663.85 378,663.85
20 12/1/2005 80,000,000 - 366,448.89 366,448.89
21 1/1/2006 80,000,000 - 378,663.85 378,663.85
22 2/1/2006 80,000,000 - 378,663.85 378,663.85
23 3/1/2006 80,000,000 - 342,018.96 342,018.96
24 4/1/2006 80,000,000 - 378,663.85 378,663.85
25 5/1/2006 79,914,255 85,745.10 366,448.89 452,193.99
26 6/1/2006 79,840,565 73,689.65 378,257.99 451,947.64
27 7/1/2006 79,754,075 86,490.64 365,718.58 452,209.22
28 8/1/2006 79,679,611 74,463.64 377,499.81 451,963.46
29 9/1/2006 79,604,788 74,823.45 377,147.36 451,970.81
30 10/1/2006 79,517,194 87,593.18 364,638.57 452,231.75
31 11/1/2006 79,441,586 75,608.26 376,378.59 451,986.85
32 12/1/2006 79,353,230 88,356.34 363,891.01 452,247.35
33 1/1/2007 79,276,829 76,400.54 375,602.50 452,003.04
34 2/1/2007 79,200,059 76,769.71 375,240.87 452,010.58
35 3/1/2007 79,085,884 114,175.93 338,599.03 452,774.96
36 4/1/2007 79,008,191 77,692.37 374,337.07 452,029.43
37 5/1/2007 78,917,808 90,382.96 361,905.80 452,288.76
38 6/1/2007 78,839,304 78,504.52 373,541.52 452,046.03
39 7/1/2007 78,748,131 91,172.71 361,132.19 452,304.90
40 8/1/2007 78,668,807 79,324.40 372,738.38 452,062.78
41 9/1/2007 78,589,099 79,707.70 372,362.92 452,070.62
42 10/1/2007 78,496,756 92,342.71 359,986.10 452,328.81
43 11/1/2007 78,416,217 80,539.06 371,548.55 452,087.61
44 12/1/2007 78,323,066 93,151.13 359,194.20 452,345.33
45 1/1/2008 78,241,688 81,378.33 370,726.42 452,104.76
46 2/1/2008 78,159,916 81,771.56 370,341.24 452,112.79
47 3/1/2008 78,053,384 106,532.60 346,086.17 452,618.77
48 4/1/2008 77,970,702 82,681.45 369,449.94 452,131.38
49 5/1/2008 77,875,468 95,234.44 357,153.46 452,387.90
50 6/1/2008 77,791,926 83,541.15 368,607.81 452,148.95
51 7/1/2008 77,695,856 96,070.42 356,334.56 452,404.98
52 8/1/2008 77,611,447 84,409.04 367,757.65 452,166.69
53 9/1/2008 77,526,630 84,816.90 367,358.12 452,175.02
54 10/1/2008 77,429,319 97,310.99 355,119.34 452,430.33
55 11/1/2008 77,343,622 85,696.95 366,496.05 452,193.01
56 12/1/2008 77,245,455 98,166.77 354,281.06 452,447.82
57 1/1/2009 77,158,870 86,585.39 365,625.77 452,211.16
58 2/1/2009 77,071,866 87,003.77 365,215.94 452,219.71
59 3/1/2009 76,948,402 123,464.27 329,500.50 452,964.77
60 4/1/2009 76,860,381 88,020.76 364,219.73 452,240.49
ANNEX C-3
111 EIGHTH AVENUE AMORTIZATION SCHEDULE
PERIOD DATE BALANCE PRINCIPAL INTEREST DEBT SERVICE
61 5/1/2009 76,759,955 100,426.48 352,067.52 452,494.00
62 6/1/2009 76,671,023 88,931.35 363,327.75 452,259.10
63 7/1/2009 76,569,711 101,311.95 351,200.14 452,512.09
64 8/1/2009 76,479,861 89,850.61 362,427.27 452,277.88
65 9/1/2009 76,389,576 90,284.77 362,001.98 452,286.76
66 10/1/2009 76,286,948 102,628.04 349,910.94 452,538.99
67 11/1/2009 76,195,731 91,216.93 361,088.87 452,305.80
68 12/1/2009 76,092,197 103,534.50 349,023.01 452,557.51
69 1/1/2010 76,000,039 92,157.98 360,167.05 452,325.03
70 2/1/2010 75,907,435 92,603.29 359,730.84 452,334.13
71 3/1/2010 75,778,889 128,546.34 324,522.28 453,068.62
72 4/1/2010 75,685,217 93,671.90 358,684.07 452,355.97
73 5/1/2010 75,579,295 105,921.74 346,684.55 452,606.29
74 6/1/2010 75,484,659 94,636.34 357,739.34 452,375.68
75 7/1/2010 75,377,799 106,859.59 345,765.87 452,625.46
76 8/1/2010 75,282,189 95,609.98 356,785.60 452,395.57
77 9/1/2010 75,186,117 96,071.97 356,333.05 452,405.01
78 10/1/2010 75,077,862 108,255.62 344,398.37 452,653.98
79 11/1/2010 74,980,803 97,059.29 355,365.90 452,425.19
80 12/1/2010 74,871,587 109,215.70 343,457.90 452,673.60
81 1/1/2011 74,773,531 98,056.01 354,389.54 452,445.56
82 2/1/2011 74,675,001 98,529.82 353,925.42 452,455.24
83 3/1/2011 74,541,076 133,925.20 319,253.33 453,178.53
84 4/1/2011 74,441,423 99,653.06 352,825.14 452,478.19
85 5/1/2011 74,329,685 111,737.93 340,987.21 452,725.14
86 6/1/2011 74,229,010 100,674.51 351,824.56 452,499.07
87 7/1/2011 74,116,279 112,731.21 340,014.23 452,745.44
88 8/1/2011 74,014,573 101,705.69 350,814.45 452,520.14
89 9/1/2011 73,912,376 102,197.14 350,333.04 452,530.18
90 10/1/2011 73,798,164 114,211.84 338,563.85 452,775.70
91 11/1/2011 73,694,922 103,242.83 349,308.72 452,551.55
92 12/1/2011 73,579,693 115,228.70 337,567.78 452,796.47
93 1/1/2012 73,475,394 104,298.50 348,274.62 452,573.12
94 2/1/2012 73,370,592 104,802.47 347,780.95 452,583.42
95 3/1/2012 73,242,410 128,181.75 324,879.41 453,061.16
96 4/1/2012 73,136,482 105,928.26 346,678.16 452,606.42
97 5/1/2012 73,018,642 117,840.05 335,009.78 452,849.84
98 6/1/2012 72,911,632 107,009.52 345,619.00 452,628.52
99 7/1/2012 72,792,741 118,891.49 333,979.83 452,871.32
100 8/1/2012 72,684,640 108,101.08 344,549.75 452,650.82
101 9/1/2012 72,576,016 108,623.43 344,038.07 452,661.50
102 10/1/2012 72,455,555 120,460.89 332,442.51 452,903.39
103 11/1/2012 72,345,825 109,730.37 342,953.75 452,684.12
104 12/1/2012 72,224,288 121,537.30 331,388.09 452,925.39
105 1/1/2013 72,113,440 110,847.87 341,859.09 452,706.95
106 2/1/2013 72,002,056 111,383.49 341,334.41 452,717.90
107 3/1/2013 71,856,465 145,591.06 307,825.86 453,416.92
108 4/1/2013 71,743,840 112,625.20 340,118.07 452,743.27
109 5/1/2013 71,619,488 124,352.28 328,630.63 452,982.91
110 6/1/2013 71,505,718 113,770.28 338,996.39 452,766.67
111 7/1/2013 71,380,252 125,465.78 327,539.88 453,005.67
112 8/1/2013 71,265,326 114,926.28 337,864.01 452,790.29
113 9/1/2013 71,149,844 115,481.61 337,320.03 452,801.64
114 10/1/2013 71,022,714 127,129.91 325,909.77 453,039.67
115 11/1/2013 70,906,060 116,653.92 336,171.68 452,825.60
116 12/1/2013 70,777,790 128,269.88 324,793.09 453,062.97
117 1/1/2014 70,659,953 117,837.40 335,012.38 452,849.78
118 2/1/2014 70,541,546 118,406.79 334,454.62 452,861.42
119 3/1/2014 70,389,581 151,965.34 301,581.83 453,547.17
120 4/1/2014 70,269,867 119,713.24 333,174.87 452,888.11
Balloon 4/1/2014 70,269,867.48 70,269,867.48
ANNEX D
GG2
Structural and Collateral Term Sheet
$2,435,116,000 (Approximate)
GS MORTGAGE SECURITIES CORPORATION II
AS DEPOSITOR
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2004-GG2
Goldman Sachs Mortgage Company
Greenwich Capital Financial Products, Inc.
Commerzbank AG, New York Branch
Mortgage Loan Sellers
Wells Fargo Bank, National Association
Master Servicer
Lennar Partners, Inc.
Special Servicer
July 29, 2004
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you. The Co- Lead Manager s and Co-Managers do not provide accounting, tax or
legal advice. In addition, we mutually agree that, subject to applicable law,
you may disclose any and all aspects of any potential transaction or structure
described herein that are necessary to support any U.S. federal income tax
benefits, without the Co-Lead Managers or Co-Managers imposing any limitation of
any kind.
This material is furnished to you by the Co-Lead Managers and Co-Managers and
not by the issuer of the securities. RBS Greenwich Capital and Goldman, Sachs &
Co. are acting as the co-lead managers ("Co-Lead Managers") and Banc of America
Securities LLC, Credit Suisse First Boston LLC, Morgan Stanley & Co.
Incorporated and Wachovia Capital Markets, LLC are acting as co-managers
("Co-Managers"). None of these parties are acting as agent for the issuer or its
affiliates in connection with the proposed transaction. Neither the issuer nor
any of its affiliates has prepared or taken part in the preparation of these
materials and neither makes any representation as to the accuracy of these
materials.
[RBS GREENWICH CAPITAL LOGO] GOLDMAN, SACHS & CO.
Co-Lead Bookrunning Managers
BANC OF AMERICA SECURITIES LLC CREDIT SUISSE FIRST BOSTON
MORGAN STANLEY WACHOVIA SECURITIES
D-1
GSMS 2004-GG2
- --------------------------------------------------------------------------------
STRUCTURAL OVERVIEW
- --------------------------------------------------------------------------------
OFFERED CERTIFICATES
APPROX. APPROX. APPROX. % OF WEIGHTED ASSUMED FINAL
CERTIFICATE CREDIT CUT-OFF DATE AVERAGE PRINCIPAL DISTRIBUTION
CLASS MOODY'S S&P BALANCE SUPPORT BALANCE LIFE (1) WINDOW (1) DATE (1) RATE TYPE
- ------------------------------------------------------------------------------------------------------------------------------------
A-1 Aaa AAA $45,000,000 13.250% 1.728% 1.213 09/04 - 11/06 11/06 Fixed
- ------------------------------------------------------------------------------------------------------------------------------------
A-2 Aaa AAA $100,000,000 13.250% 3.840% 3.726 11/06 - 05/09 05/09 Fixed
- ------------------------------------------------------------------------------------------------------------------------------------
A-3 Aaa AAA $256,000,000 13.250% 9.830% 4.819 05/09 - 09/09 09/09 Fixed
- ------------------------------------------------------------------------------------------------------------------------------------
A-4 Aaa AAA $208,000,000 13.250% 7.986% 6.468 09/09 - 10/11 10/11 Fixed
- ------------------------------------------------------------------------------------------------------------------------------------
A-5 Aaa AAA $173,000,000 13.250% 6.643% 8.622 10/11 - 11/13 11/13 Fixed (4)
- ------------------------------------------------------------------------------------------------------------------------------------
A-6 Aaa AAA $1,299,650,000 13.250% 49.902% 9.728 11/13 - 07/14 07/14 Fixed (4)
- ------------------------------------------------------------------------------------------------------------------------------------
A-1A Aaa AAA $177,669,000 13.250% 6.822% 6.716 09/04 - 07/14 07/14 Fixed (4)
- ------------------------------------------------------------------------------------------------------------------------------------
B Aa2 AA $65,110,000 10.750% 2.500% 9.977 07/14 - 08/14 08/14 Fixed (4)
- ------------------------------------------------------------------------------------------------------------------------------------
C Aa3 AA- $29,299,000 9.625% 1.125% 9.994 08/14 - 08/14 08/14 Fixed (4)
- ------------------------------------------------------------------------------------------------------------------------------------
D A2 A $52,088,000 7.625% 2.000% 9.994 08/14 - 08/14 08/14 Variable (5)
- ------------------------------------------------------------------------------------------------------------------------------------
E A3 A- $29,300,000 6.500% 1.125% 9.994 08/14 - 08/14 08/14 Variable (5)
- ------------------------------------------------------------------------------------------------------------------------------------
NON-OFFERED CERTIFICATES
APPROX. APPROX. APPROX. % OF WEIGHTED ASSUMED FINAL
CERTIFICATE CREDIT CUT-OFF DATE AVERAGE PRINCIPAL DISTRIBUTION
CLASS MOODY'S S&P BALANCE SUPPORT BALANCE LIFE (1) WINDOW (1) DATE (1) RATE TYPE
- ------------------------------------------------------------------------------------------------------------------------------------
F (2) Baa1 BBB+ $26,044,000 5.500% 1.000% 9.994 08/14 - 08/14 08/14 Variable (6)
- ------------------------------------------------------------------------------------------------------------------------------------
G (2) Baa2 BBB $22,789,000 4.625% 0.875% 9.994 08/14 - 08/14 08/14 Variable (6)
- ------------------------------------------------------------------------------------------------------------------------------------
H (2) Baa3 BBB- $29,299,000 3.500% 1.125% 10.070 08/14 - 09/14 09/14 Variable (6)
- ------------------------------------------------------------------------------------------------------------------------------------
J (2) Ba1 BB+ $6,511,000 3.250% 0.250% 10.078 09/14 - 09/14 09/14 Fixed (4)
- ------------------------------------------------------------------------------------------------------------------------------------
K (2) Ba2 BB $13,022,000 2.750% 0.500% 10.078 09/14 - 09/14 09/14 Fixed (4)
- ------------------------------------------------------------------------------------------------------------------------------------
L (2) Ba3 BB- $13,022,000 2.250% 0.500% 10.078 09/14 - 09/14 09/14 Fixed (4)
- ------------------------------------------------------------------------------------------------------------------------------------
M (2) B1 B+ $9,767,000 1.875% 0.375% 10.175 09/14 - 05/15 05/15 Fixed (4)
- ------------------------------------------------------------------------------------------------------------------------------------
N (2) B2 B $6,511,000 1.625% 0.250% 10.750 05/15 - 07/15 07/15 Fixed (4)
- ------------------------------------------------------------------------------------------------------------------------------------
O (2) B3 B- $9,766,000 1.250% 0.375% 11.810 07/15 - 07/16 07/16 Fixed (4)
- ------------------------------------------------------------------------------------------------------------------------------------
P (2) NR NR $32,555,686 0.000% 1.250% 12.203 07/16 - 08/19 08/19 Fixed (4)
- ------------------------------------------------------------------------------------------------------------------------------------
X-P (2, 3) Aaa AAA $2,474,498,000 N/A N/A N/A N/A N/A WAC/IO
- ------------------------------------------------------------------------------------------------------------------------------------
X-C (2, 3) Aaa AAA $2,604,402,686 N/A N/A N/A N/A N/A WAC/IO
- ------------------------------------------------------------------------------------------------------------------------------------
(1) As of the cut-off date, the weighted average life, principal window and
assumed final payment date were calculated assuming no prepayments will be
made on the mortgage loans prior to their related maturity dates and the
other assumptions set forth under "YIELD AND MATURITY CONSIDERATIONS -
Yield Considerations" in the prospectus supplement.
(2) Not offered hereby. Any information provided herein regarding the terms of
these certificates is provided only to enhance your understanding of the
offered certificates.
(3) The class X-P and class X-C certificates will not have a certificate
balance 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 each of the components of the class X-P
and class X-C certificates as described in the prospectus supplement. The
interest rate applicable to each component of the class X-P and class X-C
certificates for each payment date will equal the rate specified in the
prospectus supplement.
(4) For any distribution date, if the weighted average of the net interest
rates on the mortgage loans (in each case, adjusted if necessary to accrue
on the basis of a 360-day year consisting of twelve 30-day months) as of
their respective due dates in the month preceding the month in which the
related distribution date occurs is less than the rate specified for the
Class A-5, Class A-6, Class A-1A, Class B, Class C, Class J, Class K, Class
L, Class M, Class N, Class O and Class P certificates for that distribution
date, then the pass-through rate for the Class A-5, Class A-6, Class A-1A,
Class B, Class C, Class J, Class K, Class L, Class M, Class N, Class O and
Class P certificates on that distribution date will equal the weighted
average of the net interest rates on the mortgage loans.
(5) For any distribution date the pass-through rates on the Class D
certificates and the Class E certificates will be a per annum rate equal to
the weighted average of the net interest rates on the mortgage loans (in
each case, adjusted if necessary to accrue on the basis of a 360-day year
consisting of twelve 30-day months) minus 0.116% and 0.018%, respectively.
(6) For any distribution date the pass-through rates on the Class F, Class G
and Class H certificates will be a per annum rate equal to the weighted
average of the net interest rates on the mortgage loans (in each case,
adjusted if necessary to accrue on the basis of a 360-day year consisting
of twelve 30-day months).
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you. The Co- Lead Manager s and Co-Managers do not provide accounting, tax or
legal advice. In addition, we mutually agree that, subject to applicable law,
you may disclose any and all aspects of any potential transaction or structure
described herein that are necessary to support any U.S. federal income tax
benefits, without the Co-Lead Managers or Co-Managers imposing any limitation of
any kind.
This material is furnished to you by the Co-Lead Managers and Co-Managers and
not by the issuer of the securities. RBS Greenwich Capital and Goldman, Sachs &
Co. are acting as the co-lead managers ("Co-Lead Managers") and Banc of America
Securities LLC, Credit Suisse First Boston LLC, Morgan Stanley & Co.
Incorporated and Wachovia Capital Markets, LLC are acting as co-managers
"Co-Managers"). None of these parties are acting as agent for the issuer or its
affiliates in connection with the proposed transaction. Neither the issuer nor
any of its affiliates has prepared or taken part in the preparation of these
materials and neither makes any representation as to the accuracy of these
materials.
[RBS GREENWICH CAPITAL LOGO] [GOLDMAN, SACHS & CO. LOGO]
D-2
GSMS 2004-GG2
- --------------------------------------------------------------------------------
MORTGAGE POOL CHARACTERISTICS AS OF THE CUT-OFF DATE
- --------------------------------------------------------------------------------
GENERAL CHARACTERISTICS (1) TOTAL POOL GROUP 2(4) GROUP 1(5)
-------------- ------------ --------------
Initial mortgage pool balance........................................ $2,604,402,687 $177,669,531 $2,426,733,156
Number of mortgage loans............................................. 141 22 119
Number of mortgaged properties....................................... 141 22 119
Percentage of investment grade shadow rated loans (2)................ 22.2% 8.4% 23.2%
Weighted average underwritten debt service coverage ratio(3)......... 1.57x 1.48x 1.57x
Weighted average cut-off date loan-to-value ratio (3)................ 68.30% 70.82% 68.12%
Average cut-off date principal balance............................... $18,470,941 8,075,888 20,392,716
Weighted average mortgage interest rate.............................. 5.624% 5.326% 5.646%
Loans with Single Tenant Percentage ................................. 4.1% 0.0% 4.4%
(1) Unless otherwise noted, references in this term sheet include the senior
pari passu companion loan in the trust secured by the Grand Canal Shoppes
at the Venetian Property, Garden State Plaza Property, 111 Eighth Avenue
Property and 237 Park Avenue Property, do not include the related senior
pari passu companion loan that are outside the trust nor, with respect to
these or any other mortgage loans in a split loan structure, the related
subordinate companion loan.
(2) S&P and Moody's have confirmed that these loans, in the context of their
inclusion in the trust, have credit characteristics consistent with that of
an obligation rated investment grade.
(3) For the purpose of calculating underwritten debt service coverage ratios
and loan-to-value ratios in this term sheet, the cut-off date principal
balance for each mortgage loan in a split loan structure (x) includes the
cut-off date principal balance of the pari passu mortgage loan in the trust
plus the cut-off date principal balance of any pari passu companion loan
that is not in the trust, and (y) excludes the cut-off date principal
balance of any subordinate mortgage loan in that split loan structure.
(4) Loan Group 2 consists of 22 multifamily loans.
(5) Loan Group 1 consists of 119 non-multifamily loans.
- --------------------------------------------------------------------------------
TEN LARGEST LOANS
CUT-OFF DATE % OF INITIAL CUT-OFF SHADOW RATINGS
PRINCIPAL MORTGAGE PROPERTY PROPERTY LOAN BALANCE DATE LTV (MOODYS /S&P)
LOAN NAME BALANCE ($) POOL BALANCE TYPE SIZE PER SF/ROOM DSCR RATIO (%) (1)
- ------------------------------------------------------------------------------------------------------------------------------------
Grand Canal Shoppes $189,548,779 7.3% Retail 536,890 $793 1.68x 50.79% A3 / A
Daily News Building 154,000,000 5.9% Office 1,102,147 $140 2.21 46.67 Baa2 / BBB
1441 Broadway 132,647,486 5.1% Office 460,356 $288 1.33 75.80
Garden State Plaza 130,000,000 5.0% Retail 1,470,454 $354 2.36 53.21 A2 / AA
Stony Point Fashion Park 114,910,606 4.4% Retail 382,636 $300 1.34 71.82
1410 Broadway 97,839,965 3.8% Office 357,139 $274 1.24 78.90
Destin Commons 84,759,743 3.3% Retail 480,150 $177 1.48 79.21
111 Eighth Avenue 80,000,000 3.1% Office 2,941,646 $153 2.08 56.25 Baa2 / A+
Town & Country Resort 71,500,000 2.7% Hospitality 966 $74,017 1.51 64.59
Mall at Barnes Crossing 68,000,000 2.6% Retail 583,887 $116 1.30 80.00
----------------- ----
TOTAL/WTD. AVG. $1,123,206,579 43.1% 1.70X 63.24%
- ------------------------------------------------------------------------------------------------------------------------------------
(1) S&P and Moody's have confirmed that these loans, in the context of their
inclusion in the trust, have credit characteristics consistent with that of
an obligation rated investment grade.
PROPERTY TYPES
NUMBER OF
MORTGAGED AGGREGATE CUT-OFF DATE % OF INITIAL MORTGAGE WTD. AVG. CUT-OFF
PROPERTY TYPE PROPERTIES PRINCIPAL BALANCE ($) POOL BALANCE WTD. AVG. DSCR DATE LTV RATIO (%)
- ------------------------------------------------------------------------------------------------------------------------------------
Retail 58 $1,173,372,600 45.1% 1.57x 67.84%
Office 46 1,037,654,717 39.8% 1.58 68.22
Multifamily 19 166,807,031 6.4% 1.49 70.13
Industrial 10 78,380,438 3.0% 1.78 66.61
Hospitality 1 71,500,000 2.7% 1.51 64.59
Mixed Use 1 47,955,354 1.8% 1.26 77.53
Other 2 14,120,046 0.5% 1.22 76.32
Mobile Home Park 3 10,862,500 0.4% 1.31 81.43
Self-Storage 1 3,750,000 0.1% 1.52 74.26
--- -------------- -----
TOTAL/WTD. AVG. 141 $2,604,402,687 100.0% 1.57X 68.30%
- ------------------------------------------------------------------------------------------------------------------------------------
PROPERTY LOCATIONS
NUMBER OF
MORTGAGED AGGREGATE CUT-OFF DATE % OF INITIAL MORTGAGE WTD. AVG. CUT-OFF
PROPERTY LOCATION PROPERTIES PRINCIPAL BALANCE ($) POOL BALANCE WTD. AVG. DSCR DATE LTV RATIO (%)
- ------------------------------------------------------------------------------------------------------------------------------------
New York 8 $567,465,832 21.8% 1.69x 63.64%
California 31 434,434,914 16.7% 1.51 68.17
Nevada 7 218,292,368 8.4% 1.66 53.57
Virginia 3 165,750,118 6.4% 1.33 73.28
Florida 9 136,588,047 5.2% 1.46 77.10
New Jersey 1 130,000,000 5.0% 2.36 53.21
Georgia 10 123,632,269 4.7% 1.61 71.93
Texas 16 107,857,915 4.1% 1.47 73.96
Other (1) 56 720,381,224 27.7% 1.41 74.96
--- -------------- -----
TOTAL/WTD. AVG. 141 $2,604,402,687 100.0% 1.57X 68.30%
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Includes 20 states and the District of Columbia
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you. The Co- Lead Manager s and Co-Managers do not provide accounting, tax or
legal advice. In addition, we mutually agree that, subject to applicable law,
you may disclose any and all aspects of any potential transaction or structure
described herein that are necessary to support any U.S. federal income tax
benefits, without the Co-Lead Managers or Co-Managers imposing any limitation of
any kind.
This material is furnished to you by the Co-Lead Managers and Co-Managers and
not by the issuer of the securities. RBS Greenwich Capital and Goldman, Sachs &
Co. are acting as the co-lead managers ("Co-Lead Managers") and Banc of America
Securities LLC, Credit Suisse First Boston LLC, Morgan Stanley & Co.
Incorporated and Wachovia Capital Markets, LLC are acting as co-managers
("Co-Managers"). None of these parties are acting as agent for the issuer or its
affiliates in connection with the proposed transaction. Neither the issuer nor
any of its affiliates has prepared or taken part in the preparation of these
materials and neither makes any representation as to the accuracy of these
materials.
[RBS GREENWICH CAPITAL LOGO] [GOLDMAN, SACHS & CO. LOGO]
D-3
GSMS 2004-GG2
- --------------------------------------------------------------------------------
MORTGAGE POOL CHARACTERISTICS AS OF THE CUT-OFF DATE
- --------------------------------------------------------------------------------
DISTRIBUTION OF CUT-OFF DATE PRINCIPAL BALANCE
- ------------------------------------------------------------------------------------------------------------------------
NUMBER OF PERCENTAGE OF AGGREGATE
RANGE OF CUT-OFF DATE BALANCES ($) MORTGAGE LOANS CUT-OFF DATE BALANCE CUT-OFF DATE BALANCE
- -------------------------------------------------------------------------------------------------------------------------
534,283 - 999,999 1 $534,283 0.0%
1,000,000 - 1,999,999 5 7,532,888 0.3
2,000,000 - 2,999,999 12 31,654,438 1.2
3,000,000 - 3,999,999 14 48,277,092 1.9
4,000,000 - 5,999,999 24 122,417,213 4.7
6,000,000 - 7,999,999 15 105,546,506 4.1
8,000,000 - 9,999,999 19 169,076,053 6.5
10,000,000 - 14,999,999 10 124,929,285 4.8
15,000,000 - 19,999,999 11 179,927,227 6.9
20,000,000 - 29,999,999 11 264,162,435 10.1
30,000,000 - 39,999,999 2 70,050,000 2.7
40,000,000 - 49,999,999 5 228,755,354 8.8
50,000,000 - 99,999,999 7 530,433,042 20.4
100,000,000 - 149,999,999 3 377,558,092 14.5
150,000,000 - 189,548,779 2 343,548,779 13.2
--- -------------- -----
TOTAL 141 $2,604,402,687 100.0%
- -------------------------------------------------------------------------------------------------------------------------
DISTRIBUTION OF DSCR
- -------------------------------------------------------------------------------------------------------------------------
NUMBER OF PERCENTAGE OF AGGREGATE
RANGE OF DSCR (X) MORTGAGE LOANS CUT-OFF DATE BALANCE CUT-OFF DATE BALANCE
- -------------------------------------------------------------------------------------------------------------------------
1.17 - 1.19 2 $18,294,845 0.7%
1.20 - 1.29 23 479,121,301 18.4
1.30 - 1.39 31 680,270,605 26.1
1.40 - 1.49 30 335,370,778 12.9
1.50 - 1.59 18 283,386,224 10.9
1.60 - 1.69 13 262,978,303 10.1
1.70 - 1.79 7 79,653,725 3.1
1.80 - 1.89 4 15,584,496 0.6
1.90 - 1.99 2 13,023,958 0.5
2.00 - 2.29 6 256,037,831 9.8
2.30 - 2.79 4 169,880,620 6.5
2.80 - 3.49 1 10,800,000 0.4
--- -------------- -----
TOTAL 141 $2,604,402,687 100.0%
- -------------------------------------------------------------------------------------------------------------------------
DISTRIBUTION OF AMORTIZATION TYPE
- -------------------------------------------------------------------------------------------------------------------------
NUMBER OF PERCENTAGE OF AGGREGATE
AMORTIZATION TYPE MORTGAGE LOANS CUT-OFF DATE BALANCE CUT-OFF DATE BALANCE
- -------------------------------------------------------------------------------------------------------------------------
Amortizing 90 $1,479,194,354 56.8%
Interest Only, Then Amortizing 41 918,543,333 35.3
Interest Only 9 191,665,000 7.4
Fully Amortizing 1 15,000,000 0.6
--- -------------- -----
TOTAL 141 $2,604,402,687 100.0%
- -------------------------------------------------------------------------------------------------------------------------
DISTRIBUTION OF LOCKBOXES
- -------------------------------------------------------------------------------------------------------------------------
NUMBER OF PERCENTAGE OF AGGREGATE
LOCKBOX TYPE MORTGAGE LOANS CUT-OFF DATE BALANCE CUT-OFF DATE BALANCE
- -------------------------------------------------------------------------------------------------------------------------
Hard 34 $1,384,552,935 53.2%
Soft 4 242,087,451 9.3
- -------------------------------------------------------------------------------------------------------------------------
DISTRIBUTION OF LTV RATIOS AT CUT-OFF DATE
- -------------------------------------------------------------------------------------------------------------------------
NUMBER OF PERCENTAGE OF AGGREGATE
RANGE OF LTV (%) MORTGAGE LOANS CUT-OFF DATE BALANCE CUT-OFF DATE BALANCE
- -------------------------------------------------------------------------------------------------------------------------
35.70 - 49.99 6 $202,053,452 7.8%
50.00 - 54.99 7 337,889,335 13.0
55.00 - 59.99 6 97,193,059 3.7
60.00 - 64.99 12 256,620,922 9.9
65.00 - 69.99 18 190,176,216 7.3
70.00 - 74.99 28 327,534,334 12.6
75.00 - 79.99 51 1,004,261,069 38.6
80.00 - 87.52 13 188,674,301 7.2
--- -------------- -----
TOTAL 141 $2,604,402,687 100.0%
- -------------------------------------------------------------------------------------------------------------------------
DISTRIBUTION OF MORTGAGE INTEREST RATE (%)
- -------------------------------------------------------------------------------------------------------------------------
NUMBER OF PERCENTAGE OF AGGREGATE
RANGE OF MORTGAGE RATES (%) MORTGAGE LOANS CUT-OFF DATE BALANCE CUT-OFF DATE BALANCE
- -------------------------------------------------------------------------------------------------------------------------
4.280% - 4.500% 6 $181,559,000 7.0%
4.501% - 5.000% 8 425,525,356 16.3
5.001% - 5.500% 29 350,930,307 13.5
5.501% - 6.000% 62 941,985,289 36.2
6.001% - 6.500% 27 622,424,168 23.9
6.501% - 7.000% 8 66,728,567 2.6
7.001% - 7.100% 1 15,250,000 0.6
--- -------------- -----
TOTAL 141 $2,604,402,687 100.0%
- -------------------------------------------------------------------------------------------------------------------------
DISTRIBUTION OF ORIGINAL TERMS TO MATURITY
- -------------------------------------------------------------------------------------------------------------------------
RANGE OF ORIGINAL TERMS TO MATURITY NUMBER OF PERCENTAGE OF AGGREGATE
(MOS) MORTGAGE LOANS CUT-OFF DATE BALANCE CUT-OFF DATE BALANCE
- -------------------------------------------------------------------------------------------------------------------------
59-60 15 $371,471,352 14.3%
61 - 96 8 155,308,888 6.0
97 - 108 6 88,261,944 3.4
109 - 119 2 268,910,606 10.3
120 - 120 105 1,647,360,385 63.3
121 - 180 5 73,089,511 2.8
--- -------------- -----
TOTAL 141 $2,604,402,687 100.0%
- -------------------------------------------------------------------------------------------------------------------------
DISTRIBUTION OF REMAINING TERMS TO MATURITY
- -------------------------------------------------------------------------------------------------------------------------
RANGE OF REMAINING TERMS TO MATURITY NUMBER OF PERCENTAGE OF AGGREGATE
(MOS) MORTGAGE LOANS CUT-OFF DATE BALANCE CUT-OFF DATE BALANCE
- -------------------------------------------------------------------------------------------------------------------------
43 - 60 15 $371,471,352 14.3%
61 - 96 8 155,308,888 6.0
97 - 108 6 88,261,944 3.4
109 - 119 85 1,590,378,491 61.1
120 - 120 23 332,892,500 12.8
121 - 180 4 66,089,511 2.5
--- -------------- -----
TOTAL 141 $2,604,402,687 100.0%
- -------------------------------------------------------------------------------------------------------------------------
DISTRIBUTION OF REMAINING AMORTIZATION TERMS
- -------------------------------------------------------------------------------------------------------------------------
RANGE OF REMAINING AMORTIZATION TERMS NUMBER OF PERCENTAGE OF AGGREGATE
(MOS) MORTGAGE LOANS CUT-OFF DATE BALANCE CUT-OFF DATE BALANCE
- -------------------------------------------------------------------------------------------------------------------------
Interest Only 9 $191,665,000 7.4%
155 - 299 11 65,922,237 2.5
300 - 349 11 315,484,546 12.1
350 - 360 110 2,031,330,904 78.0
--- ------------- ----
TOTAL 141 $2,604,402,687 100.0%
- -------------------------------------------------------------------------------------------------------------------------
DISTRIBUTION OF PREPAYMENT PROVISIONS
- -------------------------------------------------------------------------------------------------------------------------
NUMBER OF PERCENTAGE OF AGGREGATE
PREPAYMENT PROVISIONS MORTGAGE LOANS CUT-OFF DATE BALANCE CUT-OFF DATE BALANCE
- -------------------------------------------------------------------------------------------------------------------------
Defeasance 124 $2,479,602,609 95.2%
Greater of Yield Maintenance or 1% 16 120,100,077 4.6
Defeasance/Declining Fee 1 4,700,000 0.2
--- -------------- -----
TOTAL 141 $2,604,402,687 100.0%
- -------------------------------------------------------------------------------------------------------------------------
DISTRIBUTION OF ESCROW TYPES
- -------------------------------------------------------------------------------------------------------------------------
NUMBER OF PERCENTAGE OF AGGREGATE
ESCROW TYPE (1) MORTGAGE LOANS CUT-OFF DATE BALANCE CUT-OFF DATE BALANCE
- -------------------------------------------------------------------------------------------------------------------------
TI/LC (2) 64 $1,271,769,686 54.1%
Real Estate Tax 107 1,745,455,863 67.0
Insurance 97 1,697,992,061 65.2
--- ------------- ----
Replacement Reserve 100 1,544,745,764 59.3
- -------------------------------------------------------------------------------------------------------------------------
(1) Includes initial and ongoing reserves and escrows.
(2) The statistical information for the TI/LC Reserve percentage of initial
mortgage pool balance does not include mortgage loans secured by
multifamily, hospitality, mobile home park, or self-storage properties.
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you. The Co- Lead Manager s and Co-Managers do not provide accounting, tax or
legal advice. In addition, we mutually agree that, subject to applicable law,
you may disclose any and all aspects of any potential transaction or structure
described herein that are necessary to support any U.S. federal income tax
benefits, without the Co-Lead Managers or Co-Managers imposing any limitation of
any kind.
This material is furnished to you by the Co-Lead Managers and Co-Managers and
not by the issuer of the securities. RBS Greenwich Capital and Goldman, Sachs &
Co. are acting as the co-lead managers ("Co-Lead Managers") and Banc of America
Securities LLC, Credit Suisse First Boston LLC, Morgan Stanley & Co.
Incorporated and Wachovia Capital Markets, LLC are acting as co-managers
("Co-Managers"). None of these parties are acting as agent for the issuer or its
affiliates in connection with the proposed transaction. Neither the issuer nor
any of its affiliates has prepared or taken part in the preparation of these
materials and neither makes any representation as to the accuracy of these
materials.
[RBS GREENWICH CAPITAL LOGO] [GOLDMAN, SACHS & CO. LOGO]
D-4
GSMS 2004-GG2
- --------------------------------------------------------------------------------
MORTGAGE POOL CHARACTERISTICS AS OF THE CUT-OFF DATE
- --------------------------------------------------------------------------------
The table below identifies each of the mortgage loans included in the trust
and its corresponding companion loan.
ORIGINAL % OF INITIAL AGGREGATE SUBORDINATE
PRINCIPAL LOAN POOL COMPANION COMPANION LOAN
MORTGAGE LOAN BALANCE BALANCE LOAN BALANCE BALANCE
------------- ------- ------- ------------ -------
Grand Canal Shoppes at the
Venetian................ $190,000,000 7.3% $237,000,000(1) NA
Daily News Building....... $154,000,000 5.9% $56,000,000 $56,000,000(3)
1441 Broadway............. $133,000,000 5.1% $6,981,447 $6,981,447(4)
Garden State Plaza........ $130,000,000 5.0% $390,000,000(1) NA
111 Eighth Avenue......... $80,000,000 3.1% $420,000,000(2) $50,000,000(2)
237 Park Avenue........... $67,333,333 2.6% $230,666,667(1) NA
Waterfront Plaza.......... $61,000,000 2.3% $6,600,000 $6,600,000(5)
Mercado Santa Clara....... $32,800,000 1.3% $2,000,000 $2,000,000(6)
700 Westpark Office....... $9,800,000 0.4% $650,000 $650,000(7)
Hazel Gardens Apartments.. $5,950,000 0.2% $250,000 $250,000(8)
PARI PASSU CONTROLLING INITIAL INITIAL
COMPANION LOAN POOLING & SERVICING MASTER SPECIAL
MORTGAGE LOAN BALANCE AGREEMENT(9) SERVICER(10) SERVICER(11)
------------- ------- ------------ ------------ ------------
Grand Canal Shoppes at the
Venetian................ $237,000,000 2004-GG2 Wells Fargo Lennar
Daily News Building....... NA 2004-GG2 Wells Fargo Lennar
1441 Broadway............. NA 2004-GG2 Wells Fargo Lennar
Garden State Plaza........ $390,000,000 LBUBS 2004C4 Wachovia(12) Lennar
111 Eighth Avenue......... $370,000,000 2004-GG1 Wachovia Lennar
237 Park Avenue........... $230,666,667 GCCFC C2 Wachovia Lennar
Waterfront Plaza.......... NA 2004-GG2 Wells Fargo Lennar
Mercado Santa Clara....... NA 2004-GG2 Wells Fargo Lennar
700 Westpark Office....... NA 2004-GG2 Wells Fargo Lennar
Hazel Gardens Apartments.. NA 2004-GG2 Wells Fargo Lennar
(1) Comprised of multiple pari passu mortgage notes.
(2) This figure represents multiple pari passu mortgage loans in the aggregate
original principal amount of $370,000,000 and two subordinate mortgage
loans in the aggregate original principal amount of $50,000,000. For
additional information on the subordinate mortgage loans, see "Ten Largest
Mortgage Loans - 111 Eighth Avenue."
(3) For additional information on the subordinate mortgage loan, see "Ten
Largest Mortgage Loans - Daily News Building."
(4) For additional information on the subordinate mortgage loan, see "Ten
Largest Mortgage Loans - 1441 Broadway."
(5) The Waterfront Plaza subordinate companion loan has an interest rate of
6.00%.
(6) The Mercado Santa Clara subordinate companion loan has an interest rate of
12.75%.
(7) The 700 Westpark Office subordinate companion loan has an interest rate of
12.75%.
(8) The Hazel Garden Apartments subordinate companion loan has an interest rate
of 13.50%.
(9) 2004-GG2 refers to the pooling and servicing agreement for this
transaction. LBUBS 2004C4 refers to the pooling and servicing agreement
entered into in connection with the Structured Asset Securities Corporation
II, as depositor, LB-UBS Commercial Mortgage Trust Series 2004-C4. GCCFC C2
refers to the pooling and servicing agreement entered into in connection
with the Greenwich Capital Commercial Funding Corp., as depositor,
Commercial Mortgage Pass-Through Certificates, Series 2003-C2. 2004-GG1
refers to the pooling and servicing agreement entered into in connection
with the Greenwich Capital Commercial Funding Corp., as depositor,
Commercial Mortgage Pass-Through Certificates, Series 2004-GG1.
(10) Wells Fargo refers to Wells Fargo Bank, National Association, Midland
refers to Midland Loan Services, Inc. and Wachovia refers to Wachovia Bank,
National Association.
(11) Lennar refers to Lennar Partners, Inc.
(12) Midland Loan Services, Inc. is the primary servicer for this Mortgage Loan
pursuant to a sub-servicing agreement.
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you. The Co- Lead Manager s and Co-Managers do not provide accounting, tax or
legal advice. In addition, we mutually agree that, subject to applicable law,
you may disclose any and all aspects of any potential transaction or structure
described herein that are necessary to support any U.S. federal income tax
benefits, without the Co-Lead Managers or Co-Managers imposing any limitation of
any kind.
This material is furnished to you by the Co-Lead Managers and Co-Managers and
not by the issuer of the securities. RBS Greenwich Capital and Goldman, Sachs &
Co. are acting as the co-lead managers ("Co-Lead Managers") and Banc of America
Securities LLC, Credit Suisse First Boston LLC, Morgan Stanley & Co.
Incorporated and Wachovia Capital Markets, LLC are acting as co-managers
("Co-Managers"). None of these parties are acting as agent for the issuer or its
affiliates in connection with the proposed transaction. Neither the issuer nor
any of its affiliates has prepared or taken part in the preparation of these
materials and neither makes any representation as to the accuracy of these
materials.
[RBS GREENWICH CAPITAL LOGO] [GOLDMAN, SACHS & CO. LOGO]
D-5
GSMS 2004-GG2
- --------------------------------------------------------------------------------
MORTGAGE POOL CHARACTERISTICS AS OF THE CUT-OFF DATE
- --------------------------------------------------------------------------------
MORTGAGE POOL PREPAYMENT PROFILE
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL POOL
- ------------------------------------------------------------------------------------------------------------------------------------
PREPAYMENT SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER
RESTRICTIONS 2004 2005 2006 2007 2008 2009 2010 2011
- ------------------------------------------------------------------------------------------------------------------------------------
Locked out / Defeasance 100.00% 100.00% 97.20% 95.89% 95.88% 94.68% 91.59% 95.70%
> of YM or 1% 0.00% 0.00% 2.80% 3.93% 3.93% 5.10% 5.10% 4.05%
Percentage Penalty 0.00% 0.00% 0.00% 0.19% 0.19% 0.22% 0.22% 0.24%
- ------------------------------------------------------------------------------------------------------------------------------------
Open 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 3.09% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Balance of Mortgage
Loans ($mm) 2,604.40 2,584.53 2,560.65 2,528.70 2,491.38 2,108.16 2,073.50 1,897.59
% OF CUT-OFF BALANCE 100.00% 99.24% 98.32% 97.09% 95.66% 80.95% 79.62% 72.86%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PREPAYMENT SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER
RESTRICTIONS 2012 2013 2014 2015 2016 2017 2018 2019
- ------------------------------------------------------------------------------------------------------------------------------------
Locked out / Defeasance 95.66% 87.38% 37.49% 100.00% 100.00% 100.00% 100.00% 0.00%
> of YM or 1% 4.06% 4.23% 5.92% 0.00% 0.00% 0.00% 0.00% 0.00%
Percentage Penalty 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
Open 0.28% 8.39% 56.58% 0.00% 0.00% 0.00% 0.00% 0.00%
TOTAL 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 0.00%
Balance of Mortgage
Loans ($mm) 1,856.94 1,742.57 117.59 42.10 8.85 2.89 1.56 0.00
% OF CUT-OFF BALANCE 71.30% 66.91% 4.52% 1.62% 0.34% 0.11% 0.06% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
1. Table calculated using modeling assumptions as described in the
prospectus supplement.
2. Differences in totals may exist due to rounding.
- ------------------------------------------------------------------------------------------------------------------------------------
LOAN GROUP 2
- ------------------------------------------------------------------------------------------------------------------------------------
PREPAYMENT SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER
RESTRICTIONS 2004 2005 2006 2007 2008 2009 2010 2011
- ------------------------------------------------------------------------------------------------------------------------------------
Locked out / Defeasance 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
> of YM or 1% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Percentage Penalty 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
Open 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Balance of Mortgage
Loans ($mm) 177.67 176.08 173.71 171.04 168.25 80.86 78.79 76.61
% OF CUT-OFF BALANCE 100.00% 99.10% 97.77% 96.27% 94.70% 45.51% 44.35% 43.12%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PREPAYMENT SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER
RESTRICTIONS 2012 2013 2014 2015 2016 2017 2018 2019
- ------------------------------------------------------------------------------------------------------------------------------------
Locked out / Defeasance 92.98% 93.71% 100.00% 100.00% 100.00% 100.00% 100.00% 0.00%
> of YM or 1% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Percentage Penalty 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
Open 7.02% 6.29% 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% 100.00% 0.00%
Balance of Mortgage
Loans ($mm) 74.32 57.50 6.47 5.34 4.15 2.89 1.56 0.00
% OF CUT-OFF BALANCE 41.83% 32.36% 3.64% 3.00% 2.33% 1.63% 0.88% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
1. Table calculated using modeling assumptions as described in the
prospectus supplement.
2. Differences in totals may exist due to rounding.
- ------------------------------------------------------------------------------------------------------------------------------------
LOAN GROUP 1
- ------------------------------------------------------------------------------------------------------------------------------------
PREPAYMENT SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER
RESTRICTIONS 2004 2005 2006 2007 2008 2009 2010 2011
- ------------------------------------------------------------------------------------------------------------------------------------
Locked out / Defeasance 100.00% 100.00% 97.00% 95.59% 95.58% 94.46% 91.26% 95.52%
> of YM or 1% 0.00% 0.00% 3.00% 4.21% 4.22% 5.31% 5.30% 4.23%
Percentage Penalty 0.00% 0.00% 0.00% 0.20% 0.20% 0.23% 0.23% 0.25%
- ------------------------------------------------------------------------------------------------------------------------------------
Open 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 3.21% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Balance of Mortgage
Loans ($mm) 2,426.73 2,408.45 2,386.94 2,357.66 2,323.13 2,027.30 1,994.71 1,820.98
% OF CUT-OFF BALANCE 100.00% 99.25% 98.36% 97.15% 95.73% 83.54% 82.20% 75.04%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PREPAYMENT SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER
RESTRICTIONS 2012 2013 2014 2015 2016 2017
- ------------------------------------------------------------------------------------------------------------------------------------
Locked out / Defeasance 95.77% 87.17% 33.85% 100.00% 100.00% 0.00%
> of YM or 1% 4.23% 4.38% 6.27% 0.00% 0.00% 0.00%
Percentage Penalty 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
Open 0.00% 8.46% 59.88% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 100.00% 100.00% 100.00% 100.00% 100.00% 0.00%
Balance of Mortgage
Loans ($mm) 1,782.61 1,685.07 111.13 36.77 4.70 0.00
% OF CUT-OFF BALANCE 73.46% 69.44% 4.58% 1.52% 0.19% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
1. Table calculated using modeling assumptions as described in the
prospectus supplement.
2. Differences in totals may exist due to rounding.
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you. The Co- Lead Manager s and Co-Managers do not provide accounting, tax or
legal advice. In addition, we mutually agree that, subject to applicable law,
you may disclose any and all aspects of any potential transaction or structure
described herein that are necessary to support any U.S. federal income tax
benefits, without the Co-Lead Managers or Co-Managers imposing any limitation of
any kind.
This material is furnished to you by the Co-Lead Managers and Co-Managers and
not by the issuer of the securities. RBS Greenwich Capital and Goldman, Sachs &
Co. are acting as the co-lead managers ("Co-Lead Managers") and Banc of America
Securities LLC, Credit Suisse First Boston LLC, Morgan Stanley & Co.
Incorporated and Wachovia Capital Markets, LLC are acting as co-managers
("Co-Managers"). None of these parties are acting as agent for the issuer or its
affiliates in connection with the proposed transaction. Neither the issuer nor
any of its affiliates has prepared or taken part in the preparation of these
materials and neither makes any representation as to the accuracy of these
materials.
[RBS GREENWICH CAPITAL LOGO] [GOLDMAN, SACHS & CO. LOGO]
D-6
GSMS 2004-GG2
- --------------------------------------------------------------------------------
TRANSACTION TERMS
- --------------------------------------------------------------------------------
ISSUE TYPE Sequential Pay REMIC
CUT-OFF DATE August 2004. All mortgage loan
characteristics are based on balances as of the
cut-off date after application of all payments due
on or before such date (whether or not received).
All percentages presented herein are approximate.
MORTGAGE POOL The mortgage pool consists of 141 mortgage
loans with an aggregate cut-off date balance of
$2,604,402,687, subject to a variance of +/- 5%.
The mortgage loans are secured by 141 mortgaged
real properties located throughout 28 states and
the District of Columbia. Loan Group 1 is
comprised of 119 loans and Loan Group 2 is
comprised of 22 loans.
DEPOSITOR GS Mortgage Securities Corporation II
MORTGAGE LOAN SELLERS Goldman Sachs Mortgage Company, Greenwich Capital
Financial Products, Inc. and Commerzbank AG, New
York Branch
UNDERWRITERS Greenwich Capital Markets, Inc. and Goldman, Sachs
& Co. as Co-Lead Bookrunning Managers Banc of
America Securities LLC, Credit Suisse First Boston
LLC, Morgan Stanley & Co. Incorporated and
Wachovia Capital Markets LLC as Co-Managers
TRUSTEE LaSalle Bank National Association
FISCAL AGENT ABN AMRO Bank N.V.
MASTER SERVICER Wells Fargo Bank, National Association
SPECIAL SERVICER Lennar Partners, Inc.
RATING AGENCIES Moody's Investors Service, Inc. and Standard and
Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.
DENOMINATIONS $10,000 minimum for the offered certificates.
CLOSING DATE On or about August 12, 2004
SETTLEMENT TERMS Book-entry through DTC for all offered
certificates.
DETERMINATION DATE The sixth day of each month, or if such sixth day
is not a business day, the next succeeding
business day.
DISTRIBUTION DATE The tenth day of each month, or if such tenth day
is not a business day, the next succeeding
business day, provided that the distribution date
will be at least four business days following the
determination date.
DISTRIBUTIONS Each class of offered certificates will be
entitled on each distribution date to interest
accrued at its pass-through rate for that
distribution date on the outstanding certificate
balance of the class during the prior calendar
month. Interest on the offered certificates will
be calculated on the basis of twelve 30-day months
and a 360-day year. Generally, the interest from
the Available Distribution Amount related to Loan
Group 1 will be used to pay interest to class A-1,
A-2, A-3, A-4, A-5 and A-6, pro rata, until paid
in full. Generally, the interest from the
Available Distribution Account related to Loan
Group 2 will be used to pay interest to the class
A-1A until paid in full. Generally, any remaining
Available Distribution Amount will be used to pay
interest to class X-P and X-C, pro rata, until
paid in full. If any of the above Available
Distribution Amounts are not sufficient to pay
interest on class A-1, A-2, A-3, A-4, A-5, A-6,
A-1A, X-P and X-C, then the entire Available
Distribution Amount will be used to pay interest
pro rata to those certificates.
Generally, the Available Distribution Amount
related to Loan Group 1 will be used to pay
principal to class A-1, A-2, A-3, A-4, A-5 and
A-6, in that order, until paid in full, then to
pay principal to class A-1A until paid in full.
Generally, the Available Distribution Amount
related to Loan Group 2 will be used to pay
principal to the class A-1A until paid in full,
then to pay principal to the class A-1, A-2, A-3,
A-4, A-5 and A-6 in that order, until paid in
full. After class A-1, A-2, A-3, A-4, A-5, A-6 and
A-1A are paid all amounts to which they are
entitled, the remaining Available Distribution
Amount related to both groups will be used to pay
interest and principal sequentially to class B, C,
D, E, F, G, H, J, K, L, M, N, O and P.
LOSSES Realized Losses and Additional Trust Fund
Expenses, if any, will be allocated to the class
P, class O, class N, class M, class L, class K,
class J, class H, class G, class F, class E, class
D, class C and class B certificates, in that
order, and then, pro rata, to the class A-1, class
A-2, class A-3, class A-4, class A-5, class A-6,
and class A-1A certificates regardless of Loan
Group.
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you. The Co- Lead Manager s and Co-Managers do not provide accounting, tax or
legal advice. In addition, we mutually agree that, subject to applicable law,
you may disclose any and all aspects of any potential transaction or structure
described herein that are necessary to support any U.S. federal income tax
benefits, without the Co-Lead Managers or Co-Managers imposing any limitation of
any kind.
This material is furnished to you by the Co-Lead Managers and Co-Managers and
not by the issuer of the securities. RBS Greenwich Capital and Goldman, Sachs &
Co. are acting as the co-lead managers ("Co-Lead Managers") and Banc of America
Securities LLC, Credit Suisse First Boston LLC, Morgan Stanley & Co.
Incorporated and Wachovia Capital Markets, LLC are acting as co-managers
("Co-Managers"). None of these parties are acting as agent for the issuer or its
affiliates in connection with the proposed transaction. Neither the issuer nor
any of its affiliates has prepared or taken part in the preparation of these
materials and neither makes any representation as to the accuracy of these
materials.
[RBS GREENWICH CAPITAL LOGO] [GOLDMAN, SACHS & CO. LOGO]
D-7
GSMS 2004-GG2
- --------------------------------------------------------------------------------
TRANSACTION TERMS
- --------------------------------------------------------------------------------
PREPAYMENT PREMIUMS AND Any prepayment premiums or yield maintenance
YIELD MAINTENANCE CHARGES charges collected will be distributed to
certificateholders on the distribution date
following the prepayment. On each distribution
date, the holders of any class of offered
certificates and class F, class G and class H
certificates that are then entitled to principal
distributions will be entitled to a portion of
prepayment premiums or yield maintenance charges
equal to the product of (a) the amount of the
prepayment premiums or yield maintenance charges
net of workout fees and liquidation fees payable
from the related loan group, multiplied by (b) a
fraction, the numerator of which is equal to the
excess, if any, of the pass-through rate for that
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, multiplied by (c) a fraction, the
numerator of which is equal to the amount of
principal payable to that class of certificates on
that payment date, and the denominator of which is
the Total Principal Payment Amount payable from
the related loan group for that payment date. The
portion, if any, of the prepayment premiums or
yield maintenance charges remaining after any
payments described above will be distributed 100%
to the holders of the class X-C certificates.
ADVANCES The master servicer and, if it fails to do so, the
trustee and, if it fails to do so, the fiscal
agent will be obligated to make P&I advances and
servicing advances, including delinquent property
taxes and insurance, but only to the extent that
those advances are not deemed non-recoverable and
in the case of P&I advances subject to any
appraisal reductions that may occur. For some of
the mortgage loans that are part of a split loan
structure, the master servicer or special servicer
of another securitization may make servicing and
P&I advances for the loans included in our trust.
APPRAISAL REDUCTIONS An appraisal reduction generally will be created
in the amount, if any, by which the principal
balance of a required appraisal loan (plus other
amounts overdue or advanced in connection with
such loan) exceeds 90% of the appraised value of
the related mortgaged property plus certain
escrows and reserves (including letters of credit)
held with respect to the mortgage loan. As a
result of calculating an appraisal reduction
amount for a given mortgage loan, the interest
portion of any P&I advance for such loan will be
reduced, which will have the effect of reducing
the amount of interest available for distribution
to the certificates in reverse alphabetical order
of the classes. A required appraisal loan will
cease to be a required appraisal loan when the
related mortgage loan has been brought current for
at least three consecutive months and no other
circumstances exist, which would cause such
mortgage loan to be a required appraisal loan.
OPTIONAL TERMINATION The master servicer, the special servicer and
certain certificateholders will have the option to
terminate the trust, in whole but not in part, and
purchase the remaining assets of the trust on or
after the payment date on which the stated
principal balance of the mortgage loans then
outstanding is less than 1.0% of the initial
mortgage pool balance. The purchase price will
generally be at a price equal to the unpaid
aggregate principal balance of the mortgage loans
(or fair market value in the case of REO
Properties), plus accrued and unpaid interest and
certain other additional trust fund expenses, as
described in the prospectus supplement. In
addition, after the certificate balance of the
class A-1 through class E certificates has been
reduced to zero, the trust may also be terminated,
subject to the consent of the master servicer (in
its sole discretion), if all of the remaining
series 2004-GG2 certificates (excluding class R
and class LR) are held by a single
certificateholder, that certificateholder may
exchange all of the then outstanding series
2004-GG2 certificates (excluding class R and class
LR) for the mortgage loans remaining in the trust.
CONTROLLING CLASS The class of sequential pay certificates (a) which
bears the latest alphabetical class designation
(other than the class X-P, class X-C, class R and
class LR certificates) and (b) which has a
certificate balance greater than 25% of its
original certificate balance provided, however,
that if no class of sequential pay certificates
satisfies clause (b) above, the controlling class
will be the outstanding class of sequential pay
certificates bearing the latest alphabetical class
designation (other than the class X-P, class X-C,
class R and class LR certificates); provided,
further, with respect to certain issues related to
the mortgage loans that are part of a split
structure, the holder of the majority interest of
the related subordinated or pari passu companion
loan may have certain consultation or approval
rights with respect to servicing matters, as
described in the prospectus supplement.
TENANTS References in this term sheet to the rating of a
tenant may refer to the rating of a parent of the
actual tenant and the rated entity may not be an
actual party to that lease. The rated parent may
not guarantee the lease.
ERISA The offered certificates are expected to be ERISA
eligible.
SMMEA The class A-1, A-2, A-3, A-4, A-5, A-6, A-1A, B
and C certificates are expected to be
"mortgage-related securities" for the purposes of
SMMEA so long as they remain rated in one of the
two highest rating categories by a nationally
recognized statistical rating organization.
None of the offered certificates or the mortgage loans included in the trust
which back the certificates is insured or guaranteed by any governmental agency
or instrumentality or by any private mortgage insurer or by The Royal Bank of
Scotland plc, the depositor, the underwriters, the mortgage loan sellers, the
master servicer, the special servicer, or any other party.
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you. The Co- Lead Manager s and Co-Managers do not provide accounting, tax or
legal advice. In addition, we mutually agree that, subject to applicable law,
you may disclose any and all aspects of any potential transaction or structure
described herein that are necessary to support any U.S. federal income tax
benefits, without the Co-Lead Managers or Co-Managers imposing any limitation of
any kind.
This material is furnished to you by the Co-Lead Managers and Co-Managers and
not by the issuer of the securities. RBS Greenwich Capital and Goldman, Sachs &
Co. are acting as the co-lead managers ("Co-Lead Managers") and Banc of America
Securities LLC, Credit Suisse First Boston LLC, Morgan Stanley & Co.
Incorporated and Wachovia Capital Markets, LLC are acting as co-managers
("Co-Managers"). None of these parties are acting as agent for the issuer or its
affiliates in connection with the proposed transaction. Neither the issuer nor
any of its affiliates has prepared or taken part in the preparation of these
materials and neither makes any representation as to the accuracy of these
materials.
[RBS GREENWICH CAPITAL LOGO] [GOLDMAN, SACHS & CO. LOGO]
D-8
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PROSPECTUS
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GS MORTGAGE SECURITIES CORPORATION II
SELLER
COMMERCIAL MORTGAGE PASS-THROUGH
CERTIFICATES (ISSUABLE IN SERIES)
GS Mortgage Securities Corporation II from time to time will offer Commercial
Mortgage Pass-Through Certificates in separate series. We will offer the
certificates through this prospectus and a separate prospectus supplement for
each series. If specified in the related prospectus supplement, we may not
offer all of the classes of certificates in a particular series. For each
series, we will establish a trust fund consisting primarily of (i) mortgage
loans secured by first, second or third liens on commercial real estate,
multifamily and/or mixed residential/commercial properties or (ii) certain
financial leases and similar arrangements equivalent to such mortgage loans and
other assets as described in this prospectus and to be specified in the related
prospectus supplement. The certificates of a series will evidence beneficial
ownership interests in the trust fund. The certificates of a series may be
divided into two or more classes which may have different interest rates and
which may receive principal payments in differing proportions and at different
times. In addition, the rights of certain holders of classes may be subordinate
to the rights of holders of other classes to receive principal and interest.
The certificates of any series are not obligations of GS Mortgage Securities
Corporation II or any of its affiliates, and neither the certificates nor the
underlying mortgage loans are insured or guaranteed by any governmental agency.
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The Securities and Exchange Commission and state securities regulators have not
approved or disapproved of the offered certificates or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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No secondary market will exist for a series of certificates prior to its
offering. We cannot assure you that a secondary market will develop for the
certificates of any series or, if it does develop, that it will continue.
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INVESTING IN THE OFFERED CERTIFICATES INVOLVES RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 3 OF THIS PROSPECTUS. FOR EACH SERIES, SEE "RISK FACTORS" IN
THE RELATED PROSPECTUS SUPPLEMENT.
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The certificates may be offered through one or more different methods,
including offerings through underwriters, as more fully described under "PLAN
OF DISTRIBUTION" on page 77 of this prospectus and in the related prospectus
supplement. Our affiliates may from time to time act as agents or underwriters
in connection with the sale of the offered certificates. Offerings of certain
classes of the certificates, as specified in the related prospectus supplement,
may be made in one or more transactions exempt from the registration
requirements of the Securities Act of 1933, as amended. Such offerings are not
being made pursuant to this prospectus or the related registration statement.
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This prospectus may not be used to consummate sales of the offered certificates
unless accompanied by a prospectus supplement.
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July 29, 2004
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS AND EACH ACCOMPANYING PROSPECTUS SUPPLEMENT
Information about the offered certificates is contained in two separate
documents that progressively provide more detail: (a) this prospectus, which
provides general information, some of which may not apply to the offered
certificates; and (b) the accompanying prospectus supplement for each series,
which describes the specific terms of the offered certificates. IF THE TERMS OF
THE OFFERED CERTIFICATES VARY BETWEEN THIS PROSPECTUS AND THE ACCOMPANYING
PROSPECTUS SUPPLEMENT, YOU SHOULD RELY ON THE INFORMATION IN THE PROSPECTUS
SUPPLEMENT.
You should rely only on the information contained in this prospectus and
the accompanying prospectus supplement. We have not authorized anyone to
provide you with information that is different from that contained in this
prospectus and the prospectus supplement. The information in this prospectus is
accurate only as of the date of this prospectus.
Certain capitalized terms are defined and used in this prospectus to
assist you in understanding the terms of the offered certificates and this
offering. The capitalized terms used in this prospectus are defined on the
pages indicated under the caption "INDEX OF DEFINED TERMS" beginning on page 81
in this prospectus.
In this prospectus, the terms "Seller," "we," "us" and "our" refer to GS
Mortgage Securities Corporation II.
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If you require additional information, the mailing address of our
principal executive offices is GS Mortgage Securities Corporation II, 85 Broad
Street, New York, NY 10004 and the telephone number is (212) 902-1000. For
other means of acquiring additional information about us or a series of
certificates, see "INCORPORATION OF CERTAIN INFORMATION BY REFERENCE" beginning
on page 79 of this prospectus.
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TABLE OF CONTENTS
Risk Factors................................................................3
The Prospectus Supplement...................................................5
The Seller..................................................................7
Use of Proceeds.............................................................7
Description of the Certificates.............................................8
The Mortgage Pools.........................................................15
Servicing of the Mortgage Loans............................................19
Credit Enhancement.........................................................25
Swap Agreement.............................................................28
Yield Considerations.......................................................28
Certain Legal Aspects of the Mortgage Loans................................30
Federal Income Tax Consequences............................................46
Federal Income Tax Consequences for REMIC Certificates.....................47
State Tax Considerations...................................................73
ERISA Considerations.......................................................73
Legal Investment...........................................................75
Plan of Distribution.......................................................77
Incorporation of Certain Information By Reference..........................79
Legal Matters..............................................................80
Index of Defined Terms.....................................................81
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RISK FACTORS
You should carefully consider the following risks and the risks described
under "RISK FACTORS" in the prospectus supplement for the applicable series of
certificates before making an investment decision. In particular, distribution
on your certificates will depend on payments received on and other recoveries
with respect to the mortgage loans. Therefore, you should carefully consider
the risk factors relating to the mortgage loans and the mortgaged properties.
Your investment could be materially and adversely affected if any of the
following risks are realized.
RISKS OF COMMERCIAL AND MULTIFAMILY LENDING GENERALLY.
Commercial and multifamily lending generally exposes the lender to a
greater risk of loss than one-to four-family residential lending. Commercial
and multifamily lending typically involves larger loans to single borrowers or
groups of related borrowers than residential one-to four-family mortgage loans.
Further, the repayment of loans secured by income producing properties is
typically dependent upon the successful operation of the related real estate
project. If the cash flow from the project is reduced (for example, if leases
are not obtained or renewed), the borrower's ability to repay the loan may be
impaired. Commercial and multifamily real estate can be affected significantly
by the supply and demand in the market for the type of property securing the
loan and, therefore, may be subject to adverse economic conditions. Market
values may vary as a result of economic events or governmental regulations
outside the control of the borrower or lender that impact the cash flow of the
property. For example, some laws may require modifications to properties such
as the Americans with Disabilities Act, and rent control laws may limit rent
collections in the case of multifamily properties. See "CERTAIN LEGAL ASPECTS
OF THE MORTGAGE LOANS" "--Certain Laws and Regulations," "--Type of Mortgaged
Property" and "--Americans With Disabilities Act" in this prospectus.
It is unlikely that we will obtain new appraisals of the mortgaged
properties or assign new valuations to the mortgage loans in connection with
the offering of the offered certificates. The market values of the underlying
mortgaged properties could have declined since the origination of the related
mortgage loans.
YOUR CERTIFICATES ARE NOT OBLIGATIONS OF ANY OTHER PERSON OR ENTITY.
Your certificates will represent beneficial ownership interests solely in
the assets of the related trust fund and will not represent an interest in or
obligation of us, the originator, the trustee, the master servicer, the special
servicer or any other person. We or another entity may have a limited
obligation to repurchase or substitute certain mortgage loans under certain
circumstances as described in the agreement relating to a particular series.
Distributions on any class of certificates will depend solely on the amount and
timing of payments and other collections in respect of the related mortgage
loans. We cannot assure you that these amounts, together with other payments
and collections in respect of the related mortgage loans, will be sufficient to
make full and timely distributions on any offered certificates. The offered
certificates and the mortgage loans will be insured or guaranteed, in whole or
in part, by the United States or any governmental entity or by any private
mortgage or other insurer only to the extent the prospectus supplement so
provides.
LIMITED LIQUIDITY.
There will have been no secondary market for any series of your
certificates prior to the related offering. We cannot assure you that such a
secondary market will develop or, if it does develop, that it will provide you
with liquidity of investment or continue for the life of your certificates.
VARIABILITY IN AVERAGE LIFE OF OFFERED CERTIFICATES.
The payment experience on the related mortgage loans will affect the
actual payment experience on and the weighted average lives of the offered
certificates and, accordingly, may affect the yield on the offered
certificates. Prepayments on the mortgage loans will be influenced by:
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o the prepayment provisions of the related mortgage notes;
o a variety of economic, geographic and other factors, including
prevailing mortgage rates and the cost and availability of refinancing for
commercial mortgage loans.
o In general, if prevailing interest rates fall significantly below the
interest rates on the mortgage loans, you should expect the rate of
prepayment on the mortgage loans to increase. Conversely, if prevailing
interest rates rise significantly above the interest rates on the mortgage
loans, you should expect the rate of prepayment to decrease.
Certain of the mortgage loans may provide for a prepayment premium if
prepaid during a specified period, and certain of the mortgage loans may
prohibit prepayments of principal in whole or in part during a specified
period. See "DESCRIPTION OF THE MORTGAGE POOL" in the related prospectus
supplement for a description of the prepayment premiums and lockout periods, if
any, for the mortgage loans underlying a series of certificates. Such
prepayment premiums and lockout periods can, but do not necessarily, reduce the
likelihood of prepayments. However, in certain jurisdictions, the
enforceability of provisions in mortgage loans prohibiting or limiting
prepayment or requiring prepayment premiums in connection with prepayments may
be subject to limitations as described under "CERTAIN LEGAL ASPECTS OF THE
MORTGAGE LOANS--Enforceability of Certain Provisions--Prepayment Provisions."
We cannot assure you as to the effect of such prepayment premiums or lockout
periods on the rate of mortgage loan prepayment.
The extent to which the master servicer or special servicer, if any,
forecloses upon, takes title to and disposes of any mortgaged property related
to a mortgage loan will affect the weighted average lives of your certificates.
If the master servicer or special servicer, if any, forecloses upon a
significant number of the related mortgage loans, and depending upon the amount
and timing of recoveries from the related mortgaged properties, your
certificates may have a shorter weighted average life.
Delays in liquidations of defaulted mortgage loans and modifications
extending the maturity of mortgage loans will tend to delay the payment of
principal on the mortgage loans. The ability of the related borrower to make
any required balloon payment typically will depend upon its ability either to
refinance the mortgage loan or to sell the related mortgaged property. If a
significant number of the mortgage loans underlying a particular series require
balloon payments at maturity, there is a risk that a number of such mortgage
loans may default at maturity, or that the master servicer or special servicer,
if any, may extend the maturity of a number of such mortgage loans in
connection with workouts. We cannot assure you as to the borrowers' abilities
to make mortgage loan payments on a full and timely basis, including any
balloon payments at maturity. Bankruptcy of the borrower or adverse conditions
in the market where the mortgaged property is located may, among other things,
delay the recovery of proceeds in the case of defaults. Losses on the mortgage
loans due to uninsured risks or insufficient hazard insurance proceeds may
create shortfalls in distributions to certificateholders. Any required
indemnification of the master servicer or special servicer in connection with
legal actions relating to the trust, the related agreements or the certificates
may also result in such shortfalls.
CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS.
The laws of the jurisdictions in which the mortgaged properties are
located (which laws may vary substantially) govern many of the legal aspects of
the mortgage loans. These laws may affect the ability to foreclose on, and, in
turn the ability to realize value from, the mortgaged properties securing the
mortgage loans. For example, state law determines:
o what proceedings are required for foreclosure;
o whether the borrower and any foreclosed junior lienors may redeem the
property and the conditions under which these rights of redemption may be
exercised;
o whether and to what extent recourse to the borrower is permitted; and
o what rights junior mortgagees have and whether the amount of fees and
interest that lenders may charge is limited.
In addition, the laws of some jurisdictions may render certain provisions
of the mortgage loans unenforceable or subject to limitations which may affect
lender's rights under the mortgage loans.
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Installment contracts and financial leases also may be subject to similar legal
requirements. See "CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS" in this
prospectus. Delays in liquidations of defaulted mortgage loans and shortfalls
in amounts realized upon liquidation as a result of the application of such
laws may create delays and shortfalls in payments to certificateholders.
ENVIRONMENTAL LAW CONSIDERATIONS.
Before the trustee, special servicer or the master servicer, as
applicable, acquires title to a property on behalf of the trust or assumes
operation of the property, it will be required to obtain an environmental site
assessment of the mortgaged property pursuant to the American Society for
Testing and Materials (ASTM) guidelines, specifically E 1527-00. This
requirement will decrease the likelihood that the trust will become liable
under any environmental law. However, this requirement may effectively preclude
foreclosure until a satisfactory environmental site assessment is obtained (or
until any required remedial action is taken). Moreover, this requirement may
not necessarily insulate the trust from potential liability under environmental
laws.
Under the laws of certain states, failure to remediate environmental
conditions as required by the state may give rise to a lien on a mortgaged
property or a restriction on the right of the owner to transfer the mortgaged
property to ensure the reimbursement of remediation expenses incurred by the
state. Although the costs of remedial action could be substantial, it is
unclear as to whether and under what circumstances such costs or the
requirement to remediate would be imposed on a secured lender such as the trust
fund. However, under the laws of some states and under applicable federal law,
a lender may be liable for such costs in certain circumstances as the "owner"
or "operator" of the Mortgaged Property. See "CERTAIN LEGAL ASPECTS OF THE
MORTGAGE LOANS--Environmental Risks."
RISK OF EARLY TERMINATION.
The trust for a series of certificates may be subject to optional
termination under certain circumstances by certain persons named in the
prospectus supplement for your certificates. In the event of such termination,
you might receive some principal payments earlier than otherwise expected,
which could adversely affect your anticipated yield to maturity.
THE PROSPECTUS SUPPLEMENT
The prospectus supplement for each series of offered certificates will,
among other things, describe to the extent applicable:
o any structural features, such as multiple levels of trusts or the use of
special finance vehicles to hold the mortgage pool, used in structuring
the transaction;
o whether the trust will be treated for federal income tax purposes as one
or more grantor trusts, FASITs or REMICs;
o the identity of each class within such series;
o the initial aggregate principal amount, the interest rate (or the method
for determining such rate) and the authorized denominations of each class
of offered certificates;
o certain information concerning the mortgage loans relating to such
series, including the principal amount, type and characteristics of such
mortgage loans on the cut-off date, and, if applicable, the amount of any
reserve fund;
o the identity of the master servicer;
o the identity of the special servicer, if any, and the characteristics of
any specially serviced mortgage loans;
o the method of selection and powers of any representative of a class of
certificates permitted to direct or approve actions of the special
servicer;
o the circumstances, if any, under which the offered certificates are
subject to redemption prior to maturity;
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o the final scheduled distribution date of each class of offered
certificates;
o the method used to calculate the aggregate amount of principal available
and required to be applied to the offered certificates on each
distribution date;
o the order of the application of principal and interest payments to each
class of offered certificates and the allocation of principal to be so
applied;
o the extent of subordination of any subordinate certificates;
o for each class of offered certificates, the principal amount that would
be outstanding on specified distribution dates if the mortgage loans
relating to such series were prepaid at various assumed rates;
o the distribution dates for each class of offered certificates;
o the representations and warranties to be made by us or another entity
relating to the mortgage loans;
o information with respect to the terms of the subordinate certificates or
residual certificates, if any;
o additional information with respect to any credit enhancement or cash
flow agreement and, if the certificateholders will be materially dependent
upon any provider of credit enhancement or cash flow agreement
counterparty for timely payment of interest and/or principal, information
(including financial statements) regarding such provider or counterparty;
o additional information with respect to the plan of distribution;
o whether the offered certificates will be available in definitive form or
through the book-entry facilities of The Depository Trust Company (the
"Depository") or another depository;
o if a trust fund contains a concentration of mortgage loans having a
single borrower or that are cross-collateralized and/or cross-defaulted
with each other, or mortgage loans secured by mortgaged properties leased
to a single lessee, including affiliates, representing 20% or more of the
aggregate principal balance of the mortgage loans in such trust fund,
financial statements for such mortgaged properties as well as specific
information with respect to such mortgage loans, mortgaged properties and,
to the extent material, leases and additional information concerning any
common ownership, common management or common control of, or
cross-default, cross-collateralization or similar provisions relating to,
such mortgaged properties and the concentration of credit risk thereon;
o if a trust fund contains a concentration of mortgage loans having a
single borrower or that are cross-collateralized and/or cross-defaulted
with each other, or mortgage loans secured by mortgaged properties leased
to a single lessee, including its affiliates, representing 10% or more,
but less than 20%, of the aggregate principal balance of the mortgage
loans in such trust fund, selected financial information with respect to
such mortgaged properties as well as, to the extent material, specific
information with respect to any common ownership, common management or
common control of, or cross-default, cross-collateralization or similar
provisions relating to, such mortgaged properties and the concentration of
credit risk thereon;
o if applicable, additional information concerning any known concerns
regarding unique economic or other factors where there is a material
concentration of any of the mortgage loans in a specific geographic
region;
o if applicable, additional financial and other information concerning
individual mortgaged properties when there is a substantial concentration
of one or a few mortgage loans in a jurisdiction or region experiencing
economic difficulties which may have a material effect on such mortgaged
properties;
o if a trust fund contains a substantial concentration of one or a few
mortgage loans in a single jurisdiction, a description of material
differences, if any, between the legal aspects of mortgage loans in such
jurisdiction and the summary of general legal aspects of mortgage loans
set forth under "CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS" in this
prospectus;
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o the rating assigned to each class of offered certificates by the
applicable nationally recognized statistical rating organization or
organizations; and
o whether any class of offered certificates qualifies as "mortgage related
securities" under the Secondary Mortgage Market Enhancement Act of 1984,
as amended, as described under "LEGAL INVESTMENT" in this prospectus.
THE SELLER
GS Mortgage Securities Corporation II (the "Seller") was incorporated in
the State of Delaware on November 16, 1995, for the purpose of engaging in the
business, among other things, of acquiring and depositing mortgage assets in
trusts in exchange for certificates evidencing interests in such trusts and
selling or otherwise distributing such certificates. The principal executive
offices of the Seller are located at 85 Broad Street, New York, New York 10004.
Its telephone number is (212) 902-1000. The Seller will not have any material
assets other than the trust funds.
Neither the Seller, nor any of its affiliates will insure or guarantee
distributions on the certificates of any series offered by means of this
prospectus and any related prospectus supplement. The Agreement (as defined
below) for each series will provide that the Holders of the certificates for
such series will have no rights or remedies against the Seller or any of its
affiliates for any losses or other claims in connection with the certificates
or the mortgage loans other than the repurchase or substitution of the mortgage
loans by the Seller, if specifically set forth in such Agreement.
The Certificate of Incorporation, as amended, of the Seller provides that
a director of the corporation shall not be liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent that such exemption from liability or limitation of
liability is not permitted under the Delaware General Corporation Law as
currently in effect or as may be amended. In addition, the Bylaws of the Seller
provide that the Seller shall indemnify to the full extent permitted by law any
person made or threatened to be made a party to any action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person or such person's testator or intestate is or was a director,
officer or employee of the Seller or serves or served, at the request of the
Seller, any other enterprise as a director, officer or employee. Insofar as
indemnification for liabilities arising under the Securities Act of 1933, as
amended (the "Securities Act"), may be permitted to directors, officers and
controlling persons of the Seller pursuant to the foregoing provisions, or
otherwise, the Seller has been advised that, in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
USE OF PROCEEDS
The Seller intends to apply all or substantially all of the net proceeds
from the sale of each series offered hereby and by the related prospectus
supplement to acquire the mortgage loans relating to such series, to establish
any reserve funds, for the series, to obtain other credit enhancement, if any,
for the series, to pay costs incurred in connection with structuring and
issuing the certificates and for general corporate purposes. Certificates may
be exchanged by the Seller for mortgage loans.
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DESCRIPTION OF THE CERTIFICATES*
The certificates of each series will be issued pursuant to a separate
Pooling and Servicing Agreement (the "Agreement")** to be entered into among
the Seller, the Master Servicer, the Special Servicer, if any, and the Trustee
for that series and any other parties described in the related prospectus
supplement, substantially in the form filed as an exhibit to the Registration
Statement of which this prospectus is a part or in such other form as may be
described in the related prospectus supplement. The following summaries
describe certain provisions expected to be common to each series and the
Agreement with respect to the underlying Trust Fund. However, the prospectus
supplement for each series will describe more fully additional characteristics
of the certificates offered thereby and any additional provisions of the
related Agreement.
At the time of issuance, it is anticipated that the offered certificates
of each series will be rated "investment grade," typically one of the four
highest generic rating categories, by at least one nationally recognized
statistical rating organization at the request of the Seller. Each of such
rating organizations specified in the related prospectus supplement as rating
the offered certificates of the related series at the request of the Seller
will be referred to as a "Rating Agency." 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. There can be no
assurance as to whether any rating agency not requested to rate the offered
certificates will nonetheless issue a rating and, if so, what such rating would
be. A rating assigned to the offered certificates by a rating agency that has
not been requested by the Seller to do so may be lower than the rating assigned
by a rating agency pursuant to the Seller's request.
GENERAL
The certificates of each series will be issued in registered or book-entry
form and will represent beneficial ownership interests in a trust created
pursuant to the Agreement for such series. The assets in the trust
(collectively, the "Trust Fund") for each series will consist of the following,
to the extent provided in the Agreement:
(i) the pool of mortgage loans conveyed to the Trustee pursuant to
the Agreement;
(ii) all payments on or collections in respect of the mortgage loans
due on or after the date specified in the related prospectus
supplement;
(iii) all property acquired by foreclosure or deed in lieu of
foreclosure with respect to the mortgage loans; and
(iv) such other assets or rights, such as a Funding Note, as are
described in the related prospectus supplement.
In addition, the Trust Fund for a series may include various forms of
credit enhancement, such as, but not limited to, insurance policies on the
mortgage loans, letters of credit, certificate guarantee insurance policies,
the right to make draws upon one or more reserve funds or other arrangements
acceptable to each Rating Agency rating the offered certificates. See "CREDIT
ENHANCEMENT" in this prospectus. Such other assets, if any, will be described
more fully in the related prospectus supplement.
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* Whenever in this Prospectus the term "certificates," "trust fund" and
"mortgage pool" are used, such terms will be deemed to apply, unless the
context indicates otherwise, to a specific series of certificates, the
trust fund underlying the related series and the related mortgage pool.
** In the case of a Funding Note (as described below), some or all of the
provisions described herein as being part of the Agreement may be found
in other contractual documents connected with such Funding Note, such as
a collateral indenture or a separate servicing agreement, and the term
"Agreement" as used in this Prospectus will include such other
contractual documents. The Prospectus Supplement for a series in which a
Funding Note is used will describe such other contractual documents and
will indicate in which documents various provisions mentioned in this
Prospectus are to be found and any modifications to such provisions.
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The prospectus supplement for any series will describe any specific
features of the transaction established in connection with the holding of the
underlying mortgage pool. For example, if so indicated in the prospectus
supplement, at the time the mortgage loans are to be acquired from a third
party and conveyed to the Trust Fund, the third party may establish a
bankruptcy-remote special-purpose entity or a trust, to which the mortgage
loans will be conveyed and which in turn will issue to the Trustee a debt
instrument collateralized by, having recourse only to, and paying through
payments (which may be net of servicing fees and any retained yield) from, the
mortgage pool (a "Funding Note"), and such debt instrument may be conveyed to
the Trust Fund as the medium for holding the mortgage pool.
If specified in the related prospectus supplement, certificates of a given
series may be issued in a single class or two or more classes which may pay
interest at different rates, may represent different allocations of the right
to receive principal and interest payments, and certain of which may be
subordinated to other classes in the event of shortfalls in available cash flow
from the underlying mortgage loans or realized losses on the underlying
mortgage loans. Alternatively, or in addition, if so specified in the related
prospectus supplement, classes may be structured to receive principal payments
in sequence. The related prospectus supplement may provide that each class in a
group of classes structured to receive sequential payments of principal will be
entitled to be paid in full before the next class in the group is entitled to
receive any principal payments, or may provide for partially concurrent
principal payments among one or more of such classes. If so specified in the
related prospectus supplement, a class of offered certificates may also provide
for payments of principal only or interest only or for disproportionate
payments of principal and interest. Subordinate Certificates of a given series
of offered certificates may be offered in the same prospectus supplement as the
Senior Certificates of such series or may be offered in a separate prospectus
supplement or may be offered in one or more transactions exempt from the
registration requirements of the Securities Act. Each class of offered
certificates of a series will be issued in the minimum denominations specified
in the related prospectus supplement.
The prospectus supplement for any series including types of classes
similar to any of those described above will contain a description of their
characteristics and risk factors, including, as applicable:
(i) mortgage principal prepayment effects on the weighted average
lives of such classes;
(ii) the risk that interest only, or disproportionately interest
weighted, classes purchased at a premium may not return their
purchase prices under rapid prepayment scenarios; and
(iii) the degree to which an investor's yield is sensitive to
principal prepayments.
The offered certificates of each series will be freely transferable and
exchangeable at the office specified in the related Agreement and prospectus
supplement; provided, however, that certain classes of offered certificates may
be subject to transfer restrictions described in the related prospectus
supplement.
If specified in the related prospectus supplement, the offered
certificates may be transferable only in book-entry form through the facilities
of the Depository or another depository identified in such prospectus
supplement.
If the certificates of a class are transferable only on the books of the
Depository, no person acquiring such a certificate that is in book-entry form
(each, a "beneficial owner") will be entitled to receive a physical certificate
representing such certificate except in the limited circumstances described in
the related prospectus supplement. Instead, such certificates will be
registered in the name of a nominee of the Depository, and beneficial interests
in the certificates will be held by investors through the book-entry facilities
of the Depository, as described in this prospectus. The Seller has been
informed by the Depository that its nominee will be Cede & Co. Accordingly,
Cede & Co. is expected to be the holder of record of any such certificates that
are in book-entry form.
If the certificates of a class are transferable only on the books of the
Depository, each beneficial owner's ownership of such a certificate will be
recorded on the records of the brokerage firm, bank, thrift institution or
other financial intermediary (each, a "Financial Intermediary") that maintains
the beneficial
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owner's account for such purpose. In turn, the Financial Intermediary's
ownership of such certificate will be recorded on the records of the Depository
(or of a participating firm that acts as agent for the Financial Intermediary,
whose interest will in turn be recorded on the records of the Depository, if
the beneficial owner's Financial Intermediary is not a Depository participant).
Beneficial ownership of a book-entry certificate may only be transferred in
compliance with the procedures of such Financial Intermediaries and Depository
participants. Because the Depository can act only on behalf of participants,
who in turn act on behalf of indirect participants and certain banks, the
ability of a beneficial owner to pledge book-entry certificates to persons or
entities that do not participate in the Depository system, or to otherwise act
with respect to such book-entry certificates, may be limited due to the lack of
a physical certificate for such book-entry certificates.
The Depository, which is a New York-chartered limited purpose trust
company, performs services for its participants, some of whom (and/or their
representatives) own the Depository. In accordance with its normal procedure,
the Depository is expected to record the positions held by each Depository
participant in the book-entry certificates, whether held for its own account or
as a nominee for another person. In general, beneficial ownership of
certificates will be subject to the rules, regulations and procedures governing
the Depository and Depository participants as are in effect from time to time.
If the offered certificates are transferable on the books of the
Depository, the Depository, or its nominee as record holder of the offered
certificates, will be recognized by the Seller and the Trustee as the owner of
such certificates for all purposes, including notices and consents. In the
event of any solicitation of consents from or voting by Certificateholders
pursuant to the Agreement, the Trustee may establish a reasonable record date
and give notice of such record date to the Depository. In turn, the Depository
will solicit votes from the beneficial owners in accordance with its normal
procedures, and the beneficial owners will be required to comply with such
procedures in order to exercise their voting rights through the Depository.
Distributions of principal of and interest on the book-entry certificates
will be made on each Distribution Date to the Depository or its nominee. The
Depository will be responsible for crediting the amount of such payments to the
accounts of the applicable Depository participants in accordance with the
Depository's normal procedures. Each Depository participant will be responsible
for disbursing such payments to the beneficial owners for which it is holding
book-entry certificates and to each Financial Intermediary for which it acts as
agent. Each such Financial Intermediary will be responsible for disbursing
funds to the beneficial owners of the book-entry certificates that it
represents.
The information in this prospectus concerning the Depository and its
book-entry system has been obtained from sources believed to be reliable, but
the Seller takes no responsibility for the accuracy or completeness of the
information.
In the event a depository other than the Depository is identified in a
prospectus supplement, information similar to that set forth above will be
provided with respect to such depository and its book-entry facilities in such
prospectus supplement.
DISTRIBUTIONS ON CERTIFICATES
Distributions of principal and interest on the certificates of each series
will be made to the registered holders of these certificates
("Certificateholders" or "Holders") by the Trustee (or such other paying agent
as may be identified in the related prospectus supplement) on the day (the
"Distribution Date") specified in the related prospectus supplement, beginning
in the period specified in the related prospectus supplement following the
establishment of the related Trust Fund. Distributions for each series will be
made by check mailed to the address of the person entitled thereto as it
appears on the certificate register for such series maintained by the Trustee,
by wire transfer or by such other method as is specified in the related
prospectus supplement. The final distribution in retirement of the certificates
of each series will be made upon presentation and surrender of the certificates
at the office or agency specified in the notice to the Certificateholders of
such final distribution, or in such other manner specified in the related
prospectus supplement. In addition, the prospectus supplement relating to each
series will set forth the applicable due period, prepayment period, record
date, Cut-Off Date and determination date in respect of each series of
certificates.
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With respect to each series of certificates on each Distribution Date, the
Trustee (or such other paying agent as may be identified in the related
prospectus supplement) will distribute to the Certificateholders the amounts of
principal and/or interest, calculated as described in the related prospectus
supplement, that are due to be paid on such Distribution Date. In general, such
amounts will include previously undistributed payments of principal (including
principal prepayments, if any) and interest on the mortgage loans (or amounts
in respect of the mortgage loans) received by the Trustee after a date
specified in the related prospectus supplement (the "Cut-Off Date") and prior
to the day preceding each Distribution Date specified in the related prospectus
supplement.
The related prospectus supplement for any series of certificates will
specify, for any Distribution Date on which the principal balance of the
mortgage loans is reduced due to losses, the priority and manner in which such
losses will be allocated. As more fully described in the related prospectus
supplement, losses on mortgage loans generally will be allocated after all
proceeds of defaulted mortgage loans have been received by reducing the
outstanding principal amount of the most subordinate outstanding class of
certificates. If specified in the related prospectus supplement, losses may be
estimated on the basis of a qualified appraisal of the Mortgaged Property and
allocated prior to the final liquidation of the Mortgaged Property. The related
prospectus supplement for any series of certificates also will specify the
manner in which principal prepayments, negative amortization and interest
shortfalls will be allocated among the classes of certificates.
ACCOUNTS
It is expected that the Agreement for each series of certificates will
provide that the Trustee establish an account (the "Distribution Account") into
which the Master Servicer will deposit amounts held in the Collection Account
and from which account distributions will be made with respect to a given
Distribution Date. On each Distribution Date, the Trustee will apply amounts on
deposit in the Distribution Account generally to make distributions of interest
and principal to the Certificateholders in the manner described in the related
prospectus supplement.
It is also expected that the Agreement for each series of certificates
will provide that the Master Servicer establish and maintain a special trust
account (the "Collection Account") in the name of the Trustee for the benefit
of Certificateholders. As more fully described in the related prospectus
supplement, the Master Servicer will deposit into the Collection Account (other
than in respect of principal of, or interest on, the mortgage loans due on or
before the Cut-Off Date):
(1) all payments on account of principal, including principal
prepayments, on the mortgage loans;
(2) all payments on account of interest on the mortgage loans and all
Prepayment Premiums;
(3) all proceeds from any insurance policy relating to a mortgage loan
("Insurance Proceeds") other than proceeds applied to restoration of
the related Mortgaged Property or otherwise applied in accordance with
the terms of the related mortgage loans;
(4) all proceeds from the liquidation of a mortgage loan ("Liquidation
Proceeds"), including the sale of any Mortgaged Property acquired on
behalf of the Trust Fund through foreclosure or deed in lieu of
foreclosure ("REO Property");
(5) all proceeds received in connection with the taking of a Mortgaged
Property by eminent domain;
(6) any amounts required to be deposited in connection with the
application of co-insurance clauses, flood damage to REO Properties
and blanket policy deductibles;
(7) any amounts required to be deposited from income with respect to any
REO Property and deposited in the REO Account (to the extent the funds
in the REO Account exceed the expenses of operating and maintaining
REO Properties and reserves established for those expenses); and
(8) any amounts received from borrowers which represent recoveries of
Property Protection Expenses to the extent not retained by the Master
Servicer to reimburse it for such expenses.
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The Special Servicer, if any, will be required to remit immediately to the
Master Servicer or the Trustee any amounts of the types described above that it
receives in respect of the Specially Serviced Mortgage Loans. "Prepayment
Premium" means any premium or yield maintenance charge paid or payable by the
related borrower in connection with any principal prepayment on any mortgage
loan. "Property Protection Expenses" comprise certain costs and expenses
incurred in connection with defaulted mortgage loans, acquiring title or
management of REO Property or the sale of defaulted mortgage loans or REO
Properties, as more fully described in the related Agreement.
As set forth in the Agreement for each series, the Master Servicer will be
entitled to make from time to time certain withdrawals from the Collection
Account to, among other things:
(i) remit certain amounts for the related Distribution Date into the
Distribution Account;
(ii) to the extent specified in the related prospectus supplement,
reimburse Property Protection Expenses and pay taxes, assessments
and insurance premiums and certain third-party expenses in
accordance with the Agreement;
(iii) pay accrued and unpaid servicing fees to the Master Servicer out
of all mortgage loan collections; and
(iv) reimburse the Master Servicer, the Special Servicer, if any, the
Trustee and the Seller for certain expenses and provide
indemnification to the Seller, the Master Servicer, the Trustee
and, if applicable, the Special Servicer, as described in the
Agreement.
The amounts at any time credited to the Collection Account may be invested
in Permitted Investments that are payable on demand or in general mature or are
subject to withdrawal or redemption on or before the business day preceding the
next succeeding Master Servicer Remittance Date. The Master Servicer will be
required to remit amounts required for distribution to Certificateholders to
the Distribution Account on the business day preceding the related Distribution
Date that is specified in the related prospectus supplement (the "Master
Servicer Remittance Date"). The income from the investment of funds in the
Collection Account in Permitted Investments either will constitute additional
servicing compensation for the Master Servicer, and the risk of loss of funds
in the Collection Account resulting from such investments will be borne by the
Master Servicer, or will be remitted to the Certificateholders or other persons
specified in the related prospectus supplement. The amount of any such loss
will be required to be deposited by the Master Servicer in the Collection
Account immediately as realized.
It is expected that the Agreement for each series of certificates will
provide that a special trust account (the "REO Account") will be established
and maintained in order to be used in connection with each REO Property and, if
specified in the related prospectus supplement, certain other Mortgaged
Properties. To the extent set forth in the Agreement, certain withdrawals from
the REO Account will be made to, among other things:
(i) make remittances to the Collection Account as required by the
Agreement;
(ii) pay taxes, assessments, insurance premiums, other amounts
necessary for the proper operation, management and maintenance of
the REO Properties and such other Mortgaged Properties and
certain third-party expenses in accordance with the Agreement
(including expenses relating to any appraisal, property
inspection and environmental assessment reports required by the
Agreement); and
(iii) provide for the reimbursement of certain expenses in respect of
the REO Properties and such Mortgaged Properties.
The amount at any time credited to each REO Account will be fully insured
to the maximum coverage possible or will be invested in Permitted Investments
that mature, or are subject to withdrawal or redemption, on or before the
business day on which such amounts are required to be remitted to the Master
Servicer for deposit in the Collection Account. The income from the investment
of funds in the REO Account in Permitted Investments shall be deposited in the
REO Account for remittance to the Collection Account, and the risk of loss of
funds in the REO Account resulting from such investments will be borne by the
Trust Fund or by the person described in the prospectus supplement.
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"Permitted Investments" will consist of certain high quality debt
obligations consistent with the ratings criteria of, or otherwise satisfactory
to, the Rating Agencies.
As described in the related prospectus supplement for a series of
certificates where the underlying mortgage loans are held through a Funding
Note, some of the accounts described above may be held by the issuer or
collateral trustee of such Funding Note.
AMENDMENT
The Agreement for each series will provide that it may be amended by the
parties thereto without the consent of any of the Certificateholders:
(i) to cure any ambiguity;
(ii) to correct or supplement any provision in the Agreement that
may be inconsistent with any other provision in the Agreement;
(iii) to make other provisions with respect to matters or questions
arising under the Agreement which are not materially
inconsistent with the provisions of the Agreement; or
(iv) for such other reasons specified in the related prospectus
supplement.
To the extent specified in the Agreement, each Agreement also will provide
that it may be amended by the parties thereto with the consent of the Holders
of certificates representing an aggregate outstanding principal amount of not
less than 66 2/3% (or such other percentage as may be specified in the related
prospectus supplement) of each class of certificates affected by the proposed
amendment for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of the Agreement or modifying in any
manner the rights of Certificateholders; provided, however, that no such
amendment may, among other things:
(b) reduce in any manner the amount of, or delay the timing of,
payments received on mortgage loans which are required to be
distributed on any certificate without the consent of each
affected Certificateholder;
(c) reduce the aforesaid percentage of certificates the Holders of
which are required to consent to any such amendment, without the
consent of the Holders of all certificates then outstanding;
(d) alter the servicing standard set forth in the related Agreement.
Further, the Agreement for each series may provide that the parties
thereto, at any time and from time to time, without the consent of the
Certificateholders, may amend the Agreement to modify, eliminate or add to any
of its provisions to such extent as shall be necessary to maintain the
qualification of the Trust Fund as a "real estate mortgage investment conduit"
(a "REMIC"), a "financial asset securitization investment trust" (a "FASIT") or
grantor trust, as the case may be, or to prevent the imposition of any
additional state or local taxes, at all times that any of the certificates are
outstanding; provided, however, that such action, as evidenced by an opinion of
counsel acceptable to the Trustee, is necessary or helpful to maintain such
qualification or to prevent the imposition of any such taxes, and would not
adversely affect in any material respect the interest of any Certificateholder.
The Agreement relating to each series may provide that no amendment to
such Agreement will be made unless there has been delivered in accordance with
such Agreement an opinion of counsel to the effect that such amendment will not
cause such series to fail to qualify as a REMIC, FASIT or grantor trust at any
time that any of the certificates are outstanding or cause a tax to be imposed
on the Trust Fund under the provisions of the Code.
The prospectus supplement for a series may describe other or different
provisions concerning the amendment of the related Agreement.
TERMINATION
As may be more fully described in the related prospectus supplement, the
obligations of the parties to the Agreement for each series will terminate
upon:
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(i) the purchase of all of the assets of the related Trust Fund, as
described in the related prospectus supplement;
(ii) the later of (a) the distribution to Certificateholders of that
series of final payment with respect to the last outstanding
mortgage loan or (b) the disposition of all property acquired
upon foreclosure or deed in lieu of foreclosure with respect to
the last outstanding mortgage loan and the remittance to the
Certificateholders of all funds due under the Agreement;
(iii) the sale of the assets of the related Trust Fund after the
principal amounts of all certificates have been reduced to zero
under certain circumstances set forth in the Agreement; or
(iv) mutual consent of the parties and all Certificateholders.
With respect to each series, the Trustee will give or cause to be given
written notice of termination of the Agreement in the manner described in the
related Agreement to each Certificateholder and the final distribution will be
made only upon surrender and cancellation of the related certificates in the
manner described in the Agreement.
REPORTS TO CERTIFICATEHOLDERS
Concurrently with each distribution for each series, the Trustee (or such
other paying agent as may be identified in the related prospectus supplement)
will make available to each Certificateholder several monthly reports setting
forth such information as is specified in the Agreement and described in the
related prospectus supplement, which may include the following information, if
applicable:
(i) information as to principal and interest distributions,
principal amounts, Advances and scheduled principal balances of
the mortgage loans;
(ii) updated information regarding the mortgage loans and a
loan-by-loan listing showing certain information which may
include loan name, property type, location, unpaid principal
balance, interest rate, paid through date and maturity date,
which loan-by-loan listing may be made available
electronically;
(iii) financial information relating to the underlying Mortgaged
Properties;
(iv) information with respect to delinquent mortgage loans;
(v) information on mortgage loans which have been modified; and
(vi) information with respect to REO Properties.
The Master Servicer or the Trustee will be required to mail to Holders of
offered certificates of each series periodic unaudited reports concerning the
related Trust Fund. Unless and until definitive certificates are issued, such
reports may be sent on behalf of the related Trust Fund to Cede & Co., as
nominee of the Depository and other registered Holders of the offered
certificates, pursuant to the applicable Agreement. If so specified in the
related prospectus supplement, such reports may be sent to beneficial owners
identified to the Master Servicer or the Trustee. Such reports may also be
available to holders of interests in the certificates upon request to their
respective Depository participants. We will file or cause to be filed with the
Securities and Exchange Commission (the "Commission") such periodic reports
with respect to each Trust Fund as are required under the Securities and
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations of the Commission thereunder. Reports that we have filed with the
Commission pursuant to the Exchange Act will be filed by means of the
Electronic Data Gathering, Analysis and Retrieval ("EDGAR") system and,
therefore, should be available at the Commission's site on the World Wide Web.
THE TRUSTEE
The Seller will select a bank or trust company to act as trustee (the
"Trustee") under the Agreement for each series and the Trustee will be
identified in the related prospectus supplement. The commercial bank or trust
company serving as Trustee may have normal banking relationships with the
Seller, the Master Servicer, the Special Servicer, if any, and their respective
affiliates.
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THE MORTGAGE POOLS
GENERAL
Each mortgage pool will consist of one or more mortgage loans secured by
first, second or more junior mortgages, deeds of trust or similar security
instruments ("Mortgages") on, or installment contracts ("Installment
Contracts") for the sale of or financial leases and other similar arrangements
equivalent to such mortgage loans on, fee simple or leasehold interests in
commercial real property, multifamily residential property, mixed
residential/commercial property, and related property and interests (each such
interest or property, as the case may be, a "Mortgaged Property"). Each such
mortgage loan, lease or Installment Contract is referred to as a mortgage loan
in this prospectus.
Mortgage loans will be of one or more of the following types:
1. mortgage loans with fixed interest rates;
2. mortgage loans with adjustable interest rates;
3. mortgage loans with principal balances that fully amortize over their
remaining terms to maturity;
4. mortgage loans whose principal balances do not fully amortize but
instead provide for a substantial principal payment at the stated
maturity of the loan;
5. mortgage loans that provide for recourse against only the Mortgaged
Properties;
6. mortgage loans that provide for recourse against the other assets of
the related borrowers; and
7. any other types of mortgage loans described in the related prospectus
supplement.
Certain mortgage loans ("Simple Interest Loans") may provide that
scheduled interest and principal payments on those mortgage loans are applied
first to interest accrued from the last date to which interest has been paid to
the date such payment is received and the remaining balance is applied to
principal, and other mortgage loans may provide for payment of interest in
advance rather than in arrears.
Mortgage loans may also be secured by one or more assignments of leases
and rents, management agreements, security agreements, or rents, fixtures and
personalty or operating agreements relating to the Mortgaged Property and in
some cases by certain letters of credit, personal guarantees or both. Pursuant
to an assignment of leases and rents, the obligor on the related promissory
note assigns its right, title and interest as landlord under each lease and the
income derived therefrom to the related lender, while retaining a right, or in
some cases a license, to collect the rents for so long as there is no default.
If the borrower defaults, the license terminates and the related lender is
entitled to collect the rents from tenants to be applied to the monetary
obligations of the borrower. State law may limit or restrict the enforcement of
the assignment of leases and rents by a lender until the lender takes
possession of the related Mortgaged Property and a receiver is appointed. See
"CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS--Leases and Rents" in this
prospectus.
Certain mortgage loans may provide for "equity participations" which, as
specified in the related prospectus supplement, may or may not be assigned to
the Trust Fund. If so specified in the related prospectus supplement, the
mortgage loans may provide for holdbacks of certain of the proceeds of such
loans. In such event, the amount of such holdback may be deposited by the
Seller into an escrow account held by the Trustee as provided in the related
prospectus supplement.
The mortgage loans generally will not be insured or guaranteed by the
United States, any governmental agency or any private mortgage insurer. Any
such insurance or guarantee, if any, will be specifically described in the
related prospectus supplement.
15
The prospectus supplement relating to each series will generally provide
specific information regarding the characteristics of the mortgage loans, as of
the Cut-Off Date, including, among other things:
(i) the aggregate principal balance of the mortgage loans and the
largest, smallest and average principal balance of the mortgage loans;
(ii) the types of properties securing the mortgage loans and the
aggregate principal balance of the mortgage loans secured by each type
of property;
(iii) the interest rate or range of interest rates of the mortgage loans
and the weighted average Mortgage Interest Rate of the mortgage loans;
(iv) the original and remaining terms to stated maturity of the mortgage
loans and the seasoning of the mortgage loans;
(v) the earliest and latest origination date and maturity date and the
weighted average original and remaining terms to stated maturity of the
mortgage loans;
(vi) the loan-to-valuation ratios at origination and current loan
balance-to-original valuation ratios of the mortgage loans;
(vii) the geographic distribution of the Mortgaged Properties underlying
the mortgage loans;
(viii) the minimum interest rates, margins, adjustment caps, adjustment
frequencies, indices and other similar information applicable to
adjustable rate mortgage loans;
(ix) the debt service coverage ratios relating to the mortgage loans;
(x) information with respect to the prepayment provisions, if any, of
the mortgage loans;
(xi) information as to the payment characteristics of the mortgage
loans, including, without limitation, balloon payment and other
amortization provisions; and
(xii) payment delinquencies, if any, relating to the mortgage loans. If
specified in the related prospectus supplement, the Seller may segregate
the mortgage loans in a mortgage pool into separate mortgage loan groups
(as described in the related prospectus supplement) as part of the
structure of the payments of principal and interest on the certificates
of a series. In such case, the Seller may disclose the above-specified
information by mortgage loan group.
In the event that the mortgage loans consist of financial leases or
Installment Contracts, the related prospectus supplement will provide
appropriate specific information analogous to that described above.
In the event detailed information regarding the mortgage loans is not
provided in the prospectus supplement or the composition of the mortgage loans
changes in any material respect from that described in the related prospectus
supplement, the Seller will file a current report on Form 8-K (the "Form 8-K")
with the Securities and Exchange Commission within 15 days after the initial
issuance of each series of certificates (each, a "Closing Date"), as specified
in the related prospectus supplement, which will set forth information with
respect to the mortgage loans included in the Trust Fund for a series as of the
related Closing Date. The Form 8-K will be available to the Certificateholders
of the related series promptly after its filing.
UNDERWRITING AND INTERIM SERVICING STANDARDS APPLICABLE TO THE MORTGAGE LOANS
The mortgage loans underlying the certificates of a series will be
newly-originated or seasoned mortgage loans and will be purchased or otherwise
acquired from third parties, which third parties may or may not be originators
of such mortgage loans and may or may not be affiliates of the Seller. The
origination standards and procedures applicable to such mortgage loans may
differ from series to series or among the mortgage loans in a given mortgage
pool, depending on the identity of the originator or originators. In the case
of seasoned mortgage loans, the procedures by which such mortgage loans have
been serviced from their origination to the time of their inclusion in the
related mortgage pool may also differ from series to series or among the
mortgage loans in a given mortgage pool.
16
The related prospectus supplement for each series will provide information
as to the origination standards and procedures applicable to the mortgage loans
in the related mortgage pool and, to the extent applicable and material, will
provide information as to the servicing of such mortgage loans prior to their
inclusion in the mortgage pool.
ASSIGNMENT OF MORTGAGE LOANS
At the time of issuance of the certificates of each series, the Seller
will cause the mortgage loans (or, in the case of a structure using a Funding
Note, the Funding Note) to be assigned to the Trustee, together with, as more
fully specified in the related prospectus supplement, all payments due on or
with respect to such mortgage loans (or Funding Note), other than principal and
interest due on or before the Cut-Off Date and principal prepayments received
on or before the Cut-Off Date. The Trustee, concurrently with such assignment,
will execute and deliver certificates evidencing the beneficial ownership
interests in the related Trust Fund to the Seller in exchange for the mortgage
loans. Each mortgage loan will be identified in a schedule appearing as an
exhibit to the Agreement for the related series (the "Mortgage Loan Schedule").
The Mortgage Loan Schedule will include, among other things, as to each
mortgage loan, information as to its outstanding principal balance as of the
close of business on the Cut-Off Date, as well as information respecting the
interest rate, the scheduled monthly (or other periodic) payment of principal
and interest as of the Cut-Off Date and the maturity date of each mortgage
loan.
In addition, the Seller will, as to each mortgage loan, deliver to the
Trustee, to the extent required by the Agreement:
(i) the mortgage note, endorsed to the order of the Trustee without
recourse;
(ii) the Mortgage and an executed assignment of the Mortgage in favor
of the Trustee or otherwise as required by the Agreement;
(iii) any assumption, modification or substitution agreements relating
to the mortgage loan;
(iv) a lender's title insurance policy (or owner's policy in the case of
a financial lease or an Installment Contract), together with its
endorsements, or, in the case of mortgage loans that are not covered by
title insurance, an attorney's opinion of title issued as of the date of
origination of the mortgage loan;
(v) if the assignment of leases, rents and profits is separate from the
Mortgage, an executed re-assignment of assignment of leases, rents and
profits to the Trustee;
(vi) a copy of any recorded UCC-1 financing statements and related
continuation statements, together with (in the case of such UCC-1
financing statements which are in effect as of the Closing Date) an
original executed UCC-2 or UCC-3 statement, in a form suitable for
filing, disclosing the assignment to the Trustee of a security interest
in any personal property constituting security for the repayment of the
Mortgage; and
(vii) such other documents as may be described in the Agreement (such
documents, collectively, the "Mortgage Loan File").
Unless otherwise expressly permitted by the Agreement, all documents
included in the Mortgage Loan File are to be original executed documents;
provided, however, that in instances where the original recorded mortgage,
mortgage assignment or any document necessary to assign the Seller's interest
in financial leases or Installment Contracts to the Trustee, as described in
the Agreement, has been retained by the applicable jurisdiction or has not yet
been returned from recordation, the Seller may deliver a photocopy certified to
be the true and complete copy of the original submitted for recording, and the
Master Servicer will cause the original of each such document which is
unavailable because it is being or has been submitted for recordation and has
not yet been returned, to be delivered to the Trustee as soon as available.
The Trustee will hold the Mortgage Loan File for each mortgage loan in
trust for the benefit of all Certificateholders. Pursuant to the Agreement, the
Trustee is obligated to review the Mortgage Loan File
17
for each mortgage loan within a specified number of days after the execution
and delivery of the Agreement. If any document in the Mortgage Loan File is
found to be defective in any material respect, the Trustee will promptly notify
the Seller, the originator of the related mortgage loan or such other party as
is designated in the related Agreement (the "Responsible Party") and the Master
Servicer. To the extent described in the related prospectus supplement, if the
Responsible Party cannot cure such defect within the time period specified in
the related prospectus supplement, the Responsible Party will be obligated to
either substitute the affected mortgage loan with a Substitute Mortgage Loan or
Loans, or to repurchase the related mortgage loan from the Trustee within the
time period specified in such prospectus supplement at a price specified in the
prospectus supplement, expected to be generally equal to the principal balance
of the mortgage loan as of the date of purchase or, in the case of a series as
to which an election has been made to treat the related Trust Fund as a REMIC,
at such other price as may be necessary to avoid a tax on a prohibited
transaction, as described in Section 860F(a) of the Code, in each case together
with accrued interest at the applicable Mortgage Interest Rate to the first day
of the month following such repurchase, plus the amount of any unreimbursed
advances made by the Master Servicer (or such other party as specified in the
related Agreement) in respect of such mortgage loan (the "Repurchase Price").
This substitution or purchase obligation will constitute the sole remedy
available to the Holders of certificates or the Trustee for a material defect
in a constituent document.
The related prospectus supplement will describe procedures for the review
and holding of mortgage loans in the case of a structure using a Funding Note.
REPRESENTATIONS AND WARRANTIES
To the extent specified in the related prospectus supplement, the
Responsible Party with respect to each mortgage loan will have made certain
representations and warranties in respect of such mortgage loan and such
representations and warranties will have been assigned to the Trustee and/or
the Seller will have made certain representations and warranties in respect of
the mortgage loans directly to the Trustee. Such representations and warranties
will be set forth in an annex to the related prospectus supplement. Upon the
discovery of the breach of any such representation or warranty in respect of a
mortgage loan that materially and adversely affects the interests of the
Certificateholders of the related series, the Responsible Party or the Seller,
as the case may be, will be obligated either to cure such breach in all
material respects within the time period specified in such prospectus
supplement, to replace the affected mortgage loan with a Substitute Mortgage
Loan or Loans or to repurchase such mortgage loan at a price specified in the
prospectus supplement, expected to be generally equal to the Repurchase Price.
The Master Servicer, the Special Servicer or the Trustee will be required to
enforce such obligation of the Responsible Party or the Seller for the benefit
of the Trustee and the Certificateholders, following the practices it would
employ in its good faith business judgment were it the owner of such mortgage
loan. Subject to the ability of the Responsible Party or the Seller to cure
such breach in all material respects or deliver Substitute Mortgage Loans for
certain mortgage loans as described below, such repurchase or substitution
obligation will constitute the sole remedy available to the Certificateholders
of such series for a breach of a representation or warranty by the Responsible
Party or the Seller.
The proceeds of any repurchase of a mortgage loan will be deposited,
subject to certain limitations set forth in the related Agreement, into the
Collection Account.
If permitted by the related Agreement for a series, within the period of
time specified in the related prospectus supplement, following the date of
issuance of a series of certificates, the Responsible Party or the Seller, as
the case may be, may deliver to the Trustee mortgage loans ("Substitute
Mortgage Loans") in substitution for any one or more of the mortgage loans
("Defective Mortgage Loans") initially included in the Trust Fund (or in the
mortgage pool underlying a Funding Note) but which do not conform in one or
more respects to the description of the mortgage loans contained in the related
prospectus supplement, as to which a breach of a representation or warranty is
discovered, which breach materially and adversely affects the interests of the
Certificateholders, or as to which a document in the related Mortgage Loan File
is defective in any material respect. The required characteristics of any
Substitute Mortgage Loan will generally include, among other things, that such
Substitute Mortgage Loan on the date of substitution, will:
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(i) have an outstanding principal balance, after deduction of all
scheduled payments due in the month of substitution, not in excess of
the outstanding principal balance of the Defective Mortgage Loan (the
amount of any shortfall to be distributed to Certificateholders in the
month of substitution);
(ii) have a Mortgage Interest Rate not less than (and not more than 1%
greater than) the Mortgage Interest Rate of the Defective Mortgage Loan;
(iii) have a remaining term to maturity not greater than (and not more
than one year less than) that of the Defective Mortgage Loan; and
(iv) comply with all of the representations and warranties set forth in
the Agreement as of the date of substitution.
If so specified in the related prospectus supplement, other entities may
also make representations and warranties with respect to the mortgage loans
included in a mortgage pool. Such other entity will generally have the same
obligations with respect to such representations and warranties as the
Responsible Party or the Seller as more fully described in the prospectus
supplement.
SERVICING OF THE MORTGAGE LOANS
GENERAL
The prospectus supplement related to a series will identify the master
servicer (the "Master Servicer") to service and administer the mortgage loans
as described below, and will set forth certain information concerning the
Master Servicer. The Master Servicer will be responsible for servicing the
mortgage loans pursuant to the Agreement for the related series. The Master
Servicer may have other business relationships with the Seller and its
affiliates.
If so specified in the related prospectus supplement, the servicing of
certain mortgage loans that are in default or otherwise require special
servicing (the "Specially Serviced Mortgage Loans") will be performed by a
special servicer (the "Special Servicer"). Certain information concerning the
Special Servicer and the standards for determining which mortgage loans will
become Specially Serviced Mortgage Loans will be set forth in such prospectus
supplement. Subject to the terms of the related Agreement, the Special Servicer
(and not the Master Servicer) will then be responsible for:
negotiating modifications, waivers, amendments and other forbearance
arrangements with the borrower of any Specially Serviced Mortgage Loan,
subject to the limitations described under "-- Modifications, Waivers and
Amendments" below;
foreclosing on such Specially Serviced Mortgage Loan if no suitable
arrangements can be made to cure the default in the manner specified in the
related prospectus supplement; and
supervising the management and operation of the related Mortgaged
Property if acquired through foreclosure or a deed in lieu of foreclosure.
The Special Servicer may have other business relationships with the Seller
and its affiliates.
If specified in the prospectus supplement for a series of certificates,
certain of the duties specified in the prospectus supplement as Master Servicer
duties may be performed by the Special Servicer.
The Master Servicer and the Special Servicer, if any, may subcontract the
servicing of all or a portion of the mortgage loans to one or more
sub-servicers, in accordance with the terms of the related Agreement. Such
sub-servicers may have other business relationships with the Seller and its
affiliates.
SERVICING STANDARDS
The Master Servicer and, except when acting at the direction of any
Operating Advisor, the Special Servicer, if any, will be required to service
and administer the mortgage loans in accordance with the servicing standards
described in the related Agreement. The servicing standards are generally
expected to provide that the mortgage loans are serviced and administered
solely in the best interests of and for
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the benefit of the Certificateholders (as determined by the Master Servicer or
the Special Servicer, if any, as the case may be, in its reasonable judgment
without taking into account differing payment priorities among the classes of
the related series of certificates and any conflicts of interest involving it),
in accordance with the terms of the Agreement and the mortgage loans and, to
the extent consistent with such terms, in the same manner in which, and with
the same care, skill, prudence and diligence with which, it services and
administers similar mortgage loans in other portfolios, giving due
consideration to the customary and usual standards of practice of prudent
institutional commercial mortgage lenders and loan servicers. If so specified
in the related prospectus supplement, the Master Servicer and Special Servicer,
if any, may also be required to service and administer the mortgage loans in
the best interest of an insurer or guarantor or in accordance with the
provisions of a related Funding Note.
OPERATING ADVISOR
If so specified in the related prospectus supplement, an advisor (the
"Operating Advisor") may be selected to advise, direct and approve
recommendations of the Special Servicer with respect to certain decisions
relating to the servicing of the Specially Serviced Mortgage Loans. The related
prospectus supplement will provide specific information with respect to the
following matters: (i) the duration of the term of the Operating Advisor; (ii)
the method of selection of the Operating Advisor; (iii) certain decisions as to
which the Operating Advisor will have the power to direct and approve actions
of the Special Servicer (for example, foreclosure of a Mortgaged Property
securing a Specially Serviced Mortgage Loan, modification of a Specially
Serviced Mortgage Loan, extension of the maturity of a Specially Serviced
Mortgage Loan beyond a specified term and methods of compliance with
environmental laws) and (iv) the information, recommendations and reports to be
provided to the Operating Advisor by the Special Servicer.
COLLECTIONS AND OTHER SERVICING PROCEDURES
The Master Servicer and, with respect to any Specially Serviced Mortgage
Loans, the Special Servicer, if any, will make efforts to collect all payments
called for under the mortgage loans and will, consistent with the related
Agreement, follow such collection procedures as it deems necessary or
desirable. Consistent with the above, the Master Servicer or Special Servicer,
if any, may have the discretion under the Agreement for the related series to
waive any late payment or assumption charge or penalty interest in connection
with any late payment or assumption of a mortgage loan and to extend the due
dates for payments due on a mortgage note.
It is expected that the Agreement for each series will provide that the
Master Servicer establish and maintain an escrow account in which the Master
Servicer will be required to deposit amounts received from each borrower, if
required by the terms of the mortgage loan, for the payment of taxes,
assessments, certain mortgage and hazard insurance premiums and other
comparable items. The Special Servicer, if any, will be required to remit
amounts received for such purposes on mortgage loans serviced by it for deposit
in the escrow account and will be entitled to direct the Master Servicer to
make withdrawals from the escrow account as may be required for the servicing
of such mortgage loans. Withdrawals from the escrow account may be made to
effect timely payment of taxes, assessments, mortgage and hazard insurance
premiums and comparable items, to refund to borrowers amounts determined to be
overages, to remove amounts deposited in the escrow account in error, to pay
interest to borrowers on balances in the escrow account, if required, to repair
or otherwise protect the Mortgaged Properties and to clear and terminate such
account. The Master Servicer, or such other person as may be specified in the
related prospectus supplement, will be entitled to all income on the funds in
the escrow account invested in Permitted Investments not required to be paid to
borrowers under applicable law. The Master Servicer will be responsible for the
administration of the escrow account. If amounts on deposit in the escrow
account are insufficient to pay any tax, insurance premium or other similar
item when due, such item will be payable from amounts on deposit in the
Collection Account or otherwise in the manner set forth in the prospectus
supplement and the Agreement for the related series.
INSURANCE
The Agreement for each series will require that the Master Servicer
maintain or require each borrower to maintain insurance in accordance with the
related Mortgage, which generally will include a
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standard fire and hazard insurance policy with extended coverage. To the extent
required by the related Mortgage, the coverage of each such standard hazard
insurance policy will be in an amount that is not less than the lesser of 90%
of the replacement cost of the improvements securing such mortgage loan or the
outstanding principal balance owing on such mortgage loan. The related
Agreement may require that if a Mortgaged Property is located in a federally
designated special flood hazard area, the Master Servicer must maintain or
require the related borrower to maintain, in accordance with the related
Mortgage, flood insurance in an amount equal to the lesser of the unpaid
principal balance of the related mortgage loan and the maximum amount
obtainable with respect to the Mortgaged Property. To the extent set forth in
the related prospectus supplement, the cost of any such insurance maintained by
the Master Servicer will be an expense of the Trust Fund payable out of the
Collection Account.
The Master Servicer or, if so specified in the related prospectus
supplement, the Special Servicer, if any, will cause to be maintained fire and
hazard insurance with extended coverage on each REO Property in an amount
expected to generally be equal to the greater of (i) an amount necessary to
avoid the application of any coinsurance clause contained in the related
insurance policy and (ii) 90% of the replacement cost of the improvements which
are a part of such property. The cost of any such insurance with respect to an
REO Property will be an expense of the Trust Fund payable out of amounts on
deposit in the related REO Account or, if such amounts are insufficient, from
the Collection Account. The related Agreement may also require the Master
Servicer or, if so specified in the related prospectus supplement, the Special
Servicer, if any, to maintain flood insurance providing substantially the same
coverage as described above on any REO Property which is located in a federally
designated special flood hazard area.
The related Agreement may provide that the Master Servicer or the Special
Servicer, if any, as the case may be, may satisfy its obligation to cause
hazard policies to be maintained by maintaining a master, or single interest,
insurance policy insuring against losses on the mortgage loans or REO
Properties, as the case may be. The incremental cost of such insurance
allocable to any particular mortgage loan, if not borne by the related
borrower, may be an expense of the Trust Fund. Alternatively, if permitted in
the related Agreement, the Master Servicer may satisfy its obligation by
maintaining, at its expense, a blanket policy (i.e., not a single interest or
master policy) insuring against losses on the mortgage loans or REO Properties,
as the case may be. If such a blanket policy contains a deductible clause, the
Master Servicer or the Special Servicer, if any, as the case may be, will be
obligated to deposit in the Collection Account all sums which would have been
deposited in the Collection Account but for such clause.
In general, the standard form of fire and hazard extended coverage policy
will cover physical damage to, or destruction of, the improvements on the
Mortgaged Property caused by fire, lightning, explosion, smoke, windstorm,
hail, riot, strike and civil commotion, subject to the conditions and
exclusions particularized in each policy. Since the standard hazard insurance
policies relating to the mortgage loans generally will be underwritten by
different insurers and will cover Mortgaged Properties located in various
jurisdictions, such policies will not contain identical terms and conditions.
The most significant terms in the policies, however, generally will be
determined by state law and conditions. Most such policies typically will not
cover any physical damage resulting from war, revolution, governmental actions,
floods and other water-related causes, earth movement (including earthquakes,
landslides and mudflows), nuclear reaction, wet or dry rot, vermin, rodents,
insects or domestic animals, theft and, in certain cases, vandalism. The
foregoing list is merely indicative of certain kinds of uninsured risks and is
not intended to be all-inclusive. Any losses incurred with respect to mortgage
loans due to uninsured risks (including earthquakes, mudflows and floods) or
insufficient hazard insurance proceeds could affect distributions to the
Certificateholders.
The standard hazard insurance policies typically will contain a
"coinsurance" clause which, in effect, will require the insured at all times to
carry insurance of a specified percentage (generally 80% to 90%) of the full
replacement value of the dwellings, structures and other improvements on the
Mortgaged Property in order to recover the full amount of any partial loss. If
the insured's coverage falls below this specified percentage, such clause will
typically provide that the insurer's liability in the event of partial loss
will not exceed the greater of (i) the actual cash value (the replacement cost
less physical depreciation) of the structures and other improvements damaged or
destroyed and (ii) such proportion
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of the loss, without deduction for depreciation, as the amount of insurance
carried bears to the specified percentage of the full replacement cost of such
dwellings, structures and other improvements.
In addition, to the extent required by the related Mortgage, the Master
Servicer or Special Servicer, if any, may require the borrower to maintain
other forms of insurance including, but not limited to, loss of rent
endorsements, business interruption insurance and comprehensive public
liability insurance, and the related Agreement may require the Master Servicer
or Special Servicer, if any, to maintain public liability insurance with
respect to any REO Properties. Any cost incurred by the Master Servicer or
Special Servicer, if any, in maintaining any such insurance policy will be
added to the amount owing under the mortgage loan where the terms of the
mortgage loan so permit; provided, however, that the addition of such cost will
not be taken into account for purposes of calculating the distribution to be
made to Certificateholders. Such costs may be recovered by the Master Servicer
and the Special Servicer, if any, from the Collection Account, with interest
thereon, as provided by the Agreement.
Other forms of insurance, such as a pool insurance policy, special hazard
insurance policy, bankruptcy bond, repurchase bond or guarantee insurance, may
be maintained with respect to the mortgage loans to the extent provided in the
related prospectus supplement.
FIDELITY BONDS AND ERRORS AND OMISSIONS INSURANCE
The Agreement for each series may require that the Master Servicer and the
Special Servicer, if any, obtain and maintain in effect a fidelity bond or
similar form of insurance coverage (which may provide blanket coverage) or a
combination of fidelity bond and insurance coverage insuring against loss
occasioned by fraud, theft or other intentional misconduct of the officers,
employees and agents of the Master Servicer or the Special Servicer, as the
case may be. The related Agreement may allow the Master Servicer and the
Special Servicer, if any, to self-insure against loss occasioned by the errors
and omissions of the officers, employees and agents of the Master Servicer or
Special Servicer, as the case may be, so long as certain criteria set forth in
the Agreement are met.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Master Servicer's principal compensation for its activities under the
Agreement for each series will come from the payment to it or retention by it,
with respect to each payment of interest on a mortgage loan, of a "Servicing
Fee" (as defined in the related prospectus supplement). The exact amount or
method of calculating such Servicing Fee will be established in the prospectus
supplement and Agreement for the related series. Since the aggregate unpaid
principal balance of the mortgage loans will generally decline over time, the
Master Servicer's servicing compensation will ordinarily decrease as the
mortgage loans amortize.
In addition, the Agreement for a series may provide that the Master
Servicer will be entitled to receive, as additional compensation, certain other
fees and amounts, including but not limited to (i) late fees and certain other
fees collected from borrowers and (ii) any interest or other income earned on
funds deposited in the Collection Account (as described under "DESCRIPTION OF
THE CERTIFICATES-- Accounts" in this prospectus) and, except to the extent such
income is required to be paid to the related borrowers, the escrow account.
If specified in the related prospectus supplement, the Master Servicer may
be obligated to pay the fees and expenses of the Trustee.
The exact amount or method of calculating the servicing fee of the Special
Servicer, if any, and the source from which such fee will be paid will be
described in the prospectus supplement for the related series.
In addition to the compensation described above, the Master Servicer and
the Special Servicer, if any (or any other party specified in the related
prospectus supplement), may retain, or be entitled to the reimbursement of,
such other amounts and expenses as are described in the related prospectus
supplement.
ADVANCES
The related prospectus supplement will set forth the obligations, if any,
of the Master Servicer to make any advances ("Advances") with respect to
delinquent payments on mortgage loans, payments of
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taxes, insurance and property protection expenses or otherwise. Any such
Advances will be made in the form and manner described in the prospectus
supplement and Agreement for the related series. The Master Servicer will be
obligated to make such an Advance only to the extent that the Master Servicer
has determined that such Advance will be recoverable. Any funds thus advanced,
including Advances previously made, that the Master Servicer determines are not
ultimately recoverable, will be reimbursable to the Master Servicer, with
interest, from amounts in the Collection Account to the extent and in the
manner described in the related prospectus supplement.
If a borrower makes a principal payment between scheduled payment dates,
the borrower may be required to pay interest on the prepayment amount only to
the date of prepayment. If and to the extent described in the related
prospectus supplement, the Master Servicer's Servicing Fee may be reduced or
the Master Servicer may be otherwise obligated to advance funds to the extent
necessary to remit interest on any full or partial prepayment received from the
date of receipt to the next succeeding scheduled payment date.
MODIFICATIONS, WAIVERS AND AMENDMENTS
If so specified in the related prospectus supplement, the Agreement for
each series will provide that the Master Servicer may have the discretion,
subject to certain conditions set forth in the prospectus supplement, to
modify, waive or amend certain of the terms of any mortgage loan without the
consent of the Trustee or any Certificateholder. The extent to which the Master
Servicer may modify, waive or amend any terms of the mortgage loans without
such consent will be specified in the related prospectus supplement.
Subject to the terms and conditions set forth in the Agreement, the
Special Servicer, if any, may modify, waive or amend the terms of any Specially
Serviced Mortgage Loan if the Special Servicer determines that a material
default has occurred or a payment default has occurred or is reasonably
foreseeable. The Special Servicer, if any, may extend the maturity date of such
mortgage loan to a date not later than the date described in the related
prospectus supplement. The ability of the Special Servicer to modify, waive or
amend the terms of any mortgage loan may be subject to such additional
limitations, including approval requirements, as are set forth in the related
prospectus supplement.
Subject to the terms and conditions set forth in the Agreement, the
Special Servicer, if any, will not agree to any modification, waiver or
amendment of the payment terms of a mortgage loan unless the Special Servicer
has determined that such modification, waiver or amendment is reasonably likely
to produce a greater recovery on a present value basis than liquidation of the
mortgage loan or has made such other determination described in the related
prospectus supplement. Prior to agreeing to any modification, waiver or
amendment of the payment terms of a mortgage loan, the Special Servicer, if
any, will give notice of its agreement to a modification, waiver or amendment
in the manner set forth in the prospectus supplement and Agreement for the
related series.
The prospectus supplement for a series may describe other or different
provisions concerning the modification, waiver or amendment of the terms of the
related mortgage loans, including, without limitation, requirements for the
approval of an Operating Advisor.
EVIDENCE OF COMPLIANCE
The Agreement for each series will provide that the Master Servicer and
the Special Servicer, if any, at their own expense, each will cause a firm of
independent public accountants to furnish to the Trustee, annually on or before
a date specified in the Agreement, a statement as to compliance with the
Agreement by the Master Servicer or Special Servicer, as the case may be.
In addition, the Agreement will provide that the Master Servicer and the
Special Servicer, if any, each will deliver to the Trustee, annually on or
before a date specified in the Agreement, a statement signed by an officer to
the effect that, based on a review of its activities during the preceding
calendar year, to the best of such officer's knowledge, the Master Servicer or
Special Servicer, as the case may be, has fulfilled its obligations under the
Agreement throughout such year or, if there has been a default in the
fulfillment of any such obligation, specifying each such default and the nature
and status of the default,
23
and, in the case of a series of certificates as to which a REMIC or FASIT
election has been made, whether the Master Servicer or the Special Servicer, as
the case may be, has received a challenge from the Internal Revenue Service as
to the status of the Trust Fund as a REMIC or FASIT.
CERTAIN MATTERS WITH RESPECT TO THE MASTER SERVICER, THE SPECIAL SERVICER AND
THE TRUSTEE
The Agreement for each series will provide that neither the Master
Servicer nor the Special Servicer, if any, nor any of their directors,
officers, employees or agents will be under any liability to the Trust Fund or
the Certificateholders for any action taken, or for refraining from the taking
of any action, in good faith pursuant to the Agreement, or for errors in
judgment; provided, however, that neither the Master Servicer nor the Special
Servicer, if any, nor any such person will be protected against any breach of
representations or warranties made by the Master Servicer or the Special
Servicer, as the case may be, in the Agreement, against any specific liability
imposed on the Master Servicer or the Special Servicer, as the case may be,
pursuant to the Agreement, or any liability that would otherwise be imposed by
reason of willful misfeasance, bad faith, or negligence in the performance of
its duties or by reason of reckless disregard of its obligations and duties
thereunder. The Agreement will further provide that the Master Servicer, the
Special Servicer, if any, and any of their directors, officers, employees or
agents will be entitled to indemnification by the Trust Fund and will be held
harmless against any loss, liability or expense incurred in connection with any
legal action relating to the Agreement or the certificates, other than any
loss, liability or expense incurred (i) by reason of willful misfeasance, bad
faith or negligence in the performance of their duties or by reason of reckless
disregard of their obligations and duties thereunder or (ii) in certain other
circumstances specified in the Agreement. Any loss resulting from such
indemnification will reduce amounts distributable to Certificateholders and
will be borne by Certificateholders in the manner described in the related
prospectus supplement.
Neither the Master Servicer nor the Special Servicer, if any, may resign
from its obligations and duties under the Agreement except upon a determination
that its performance of its duties thereunder is no longer permissible under
applicable law or for other reasons described in the prospectus supplement. No
such resignation of the Master Servicer will become effective until the Trustee
or a successor Master Servicer has assumed the Master Servicer's obligations
and duties under the Agreement. No such resignation of a Special Servicer will
become effective until the Trustee, the Master Servicer or a successor Special
Servicer has assumed the Special Servicer's obligations and duties under the
Agreement.
The Trustee may resign from its obligations under the Agreement pursuant
to the terms of the Agreement at any time, in which event a successor Trustee
will be appointed. In addition, the Seller may remove the Trustee if the
Trustee ceases to be eligible to act as Trustee under the Agreement or if the
Trustee becomes insolvent, at which time the Seller will become obligated to
appoint a successor Trustee. The Trustee also may be removed at any time by the
Holders of certificates evidencing the Voting Rights specified in the related
prospectus supplement. Any resignation and removal of the Trustee, and the
appointment of a successor Trustee, will not become effective until acceptance
of such appointment by the successor Trustee.
EVENTS OF DEFAULT
Events of default (each, an "Event of Default") with respect to the Master
Servicer and the Special Servicer, if any, under the Agreement for each series
may include, among other things:
(i) with respect to the Master Servicer, any failure by the Master
Servicer to deposit in the Collection Account or remit to the Trustee
for deposit in the Distribution Account for distribution to
Certificateholders any payment required to be made by the Master
Servicer under the terms of the Agreement on the day required pursuant
to the terms of the Agreement;
(ii) with respect to the Special Servicer, if any, any failure by the
Special Servicer to remit to the Master Servicer for deposit in the
Collection Account on the day required any amounts received by it in
respect of a Specially Serviced Mortgage Loan and required to be so
remitted;
(iii) with respect to the Master Servicer and the Special Servicer, if
any, any failure on the part of the Master Servicer or the Special
Servicer, as the case may be, duly to observe or perform
24
in any material respect any other of the covenants or agreements on the
part of the Master Servicer or the Special Servicer, as the case may be,
which failure continues unremedied for a period of days specified in the
related Agreement after written notice of such failure has been given to
the applicable party;
(iv) with respect to the Master Servicer or the Special Servicer, if
any, the entering against the Master Servicer or the Special Servicer,
as the case may be, of a decree or order of a court, agency or
supervisory authority for the appointment of a conservator or receiver
or liquidator in any insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, provided that any such decree or order shall
have remained in force undischarged or unstayed for a period of 60 days;
(v) with respect to the Master Servicer or the Special Servicer, if any,
the consent by the Master Servicer or the Special Servicer, as the case
may be, to the appointment of a conservator or receiver or liquidator or
liquidating committee in any insolvency, readjustment of debt,
marshaling of assets and liabilities, voluntary liquidation or similar
proceedings of or relating to it or of or relating to all or
substantially all of its property; and
(vi) with respect to the Master Servicer or the Special Servicer, if
any, the admission by the Master Servicer or Special Servicer, as the
case may be, in writing of its inability to pay its debts generally as
they become due, the filing by the Master Servicer or the Special
Servicer, as the case may be, of a petition to take advantage of any
applicable insolvency or reorganization statute or the making of an
assignment for the benefit of its creditors or the voluntary suspension
of the payment of its obligations.
As long as an Event of Default remains unremedied, the Trustee may, and as
long as an Event of Default remains unremedied or under certain other
circumstances, if any, described in the related prospectus supplement at the
written direction of the Holders of certificates holding at least the
percentage specified in the prospectus supplement of all of the Voting Rights
of the class or classes specified in the prospectus supplement shall, by
written notice to the Master Servicer or Special Servicer, as the case may be,
terminate all of the rights and obligations of the Master Servicer or the
Special Servicer, as the case may be, whereupon the Trustee or another
successor Master Servicer or Special Servicer appointed by the Trustee will
succeed to all authority and power of the Master Servicer or Special Servicer
under the Agreement and will be entitled to similar compensation arrangements.
"Voting Rights" means the portion of the voting rights of all certificates that
is allocated to any certificate in accordance with the terms of the Agreement.
CREDIT ENHANCEMENT
GENERAL
If specified in the related prospectus supplement for any series, credit
enhancement may be provided with respect to one or more classes of the series
or the related mortgage loans. Credit enhancement may be in the form of the
subordination of one or more classes of the certificates of such series, the
establishment of one or more reserve funds, overcollateralization, a letter of
credit, certificate guarantee insurance policies, the use of cross-support
features or another method of credit enhancement described in the related
prospectus supplement, or any combination of the foregoing.
Any credit enhancement will provide protection against risks of loss and
will guarantee repayment of the principal balance of the certificates and
interest thereon only to the extent described in the related prospectus
supplement. If losses occur which exceed the amount covered by credit
enhancement or which are not covered by the credit enhancement,
Certificateholders will bear their allocable share of deficiencies.
If credit enhancement is provided with respect to a series, or the related
mortgage loans, the related prospectus supplement will include a description of
(a) the amount payable under such credit enhancement, (b) any conditions to
payment thereunder not otherwise described in this prospectus, (c) the
conditions (if any) under which the amount payable under such credit
enhancement may be
25
reduced and under which such credit enhancement may be terminated or replaced
and (d) the material provisions of any agreement relating to such credit
enhancement. Additionally, the related prospectus supplement will set forth
certain information with respect to the issuer of any third-party credit
enhancement, including (i) a brief description of its principal business
activities, (ii) its principal place of business, place of incorporation and
the jurisdiction under which it is chartered or licensed to do business, (iii)
if applicable, the identity of regulatory agencies which exercise primary
jurisdiction over the conduct of its business and (iv) its total assets, and
its stockholders' or policyholders' surplus, if applicable, as of the date
specified in such prospectus supplement. In addition, if the Certificateholders
of such series will be materially dependent upon any provider of credit
enhancement for timely payment of interest and/or principal on their
certificates, the related prospectus supplement will include audited financial
statements on a comparative basis for at least the prior two years and any
other appropriate financial information regarding such provider.
SUBORDINATE CERTIFICATES
If so specified in the related prospectus supplement, one or more classes
of a series may be subordinate certificates. If so specified in the related
prospectus supplement, the rights of the Holders of subordinate certificates
(the "Subordinate Certificates") to receive distributions of principal and
interest on any Distribution Date will be subordinated to such rights of the
Holders of senior certificates (the "Senior Certificates") to the extent
specified in the related prospectus supplement. The Agreement may require a
trustee that is not the Trustee to be appointed to act on behalf of Holders of
Subordinate Certificates.
A series may include one or more classes of Senior Certificates entitled
to receive cash flows remaining after distributions are made to all other
Senior Certificates of such series. Such right to receive payments will
effectively be subordinate to the rights of other Holders of Senior
Certificates. A series also may include one or more classes of Subordinate
Certificates entitled to receive cash flows remaining after distributions are
made to other Subordinate Certificates of such series. If so specified in the
related prospectus supplement, the subordination of a class may apply only in
the event of (or may be limited to) certain types of losses not covered by
insurance policies or other credit support, such as losses arising from damage
to property securing a mortgage loan not covered by standard hazard insurance
policies.
The related prospectus supplement will set forth information concerning
the amount of subordination of a class or classes of Subordinate Certificates
in a series, the circumstances in which such subordination will be applicable,
the manner, if any, in which the amount of subordination will decrease over
time, the manner of funding any related reserve fund and the conditions under
which amounts in any applicable reserve fund will be used to make distributions
to Holders of Senior Certificates and/or to Holders of Subordinate Certificates
or be released from the applicable Trust Fund.
CROSS-SUPPORT FEATURES
If the mortgage loans for a series are divided into separate mortgage loan
groups, each backing a separate class or classes of a series, credit support
may be provided by a cross-support feature which requires that distributions be
made on Senior Certificates backed by one mortgage loan group prior to
distributions on Subordinate Certificates backed by another mortgage loan group
within the Trust Fund. The related prospectus supplement for a series which
includes a cross-support feature will describe the manner and conditions for
applying such cross-support feature.
LETTER OF CREDIT
If specified in the related prospectus supplement, a letter of credit with
respect to a series of certificates will be issued by the bank or financial
institution specified in such prospectus supplement (the "Letter of Credit
Bank"). Under the letter of credit, the Letter of Credit Bank will be obligated
to honor drawings thereunder in an aggregate fixed dollar amount, net of
unreimbursed payments thereunder, equal to the percentage specified in the
related prospectus supplement of the aggregate principal balance of the
mortgage loans on the applicable Cut-Off Date or of one or more classes of
certificates
26
(the "Letter of Credit Percentage"). If so specified in the related prospectus
supplement, the letter of credit may permit drawings in the event of losses not
covered by insurance policies or other credit support, such as losses arising
from damage not covered by standard hazard insurance policies. The amount
available under the letter of credit will, in all cases, be reduced to the
extent of the unreimbursed payments thereunder. The obligations of the Letter
of Credit Bank under the letter of credit for any series of certificates will
expire at the earlier of the date specified in the related prospectus
supplement or the termination of the Trust Fund. A copy of the letter of credit
for a series, if any, will be filed with the Commission as an exhibit to a
current report on Form 8-K to be filed within 15 days of issuance of the
certificates of the applicable series.
CERTIFICATE GUARANTEE INSURANCE
If so specified in the related prospectus supplement, certificate
guarantee insurance, if any, with respect to a series of certificates will be
provided by one or more insurance companies. Such certificate guarantee
insurance will guarantee, with respect to one or more classes of certificates
of the applicable series, timely distributions of interest and principal to the
extent set forth in or determined in the manner specified in the related
prospectus supplement. If so specified in the related prospectus supplement,
the certificate guarantee insurance will also guarantee against any payment
made to a Certificateholder which is subsequently covered as a "voidable
preference" payment under the Bankruptcy Code. A copy of the certificate
guarantee insurance policy for a series, if any, will be filed with the
Commission as an exhibit to a current report on Form 8-K to be filed with the
Commission within 15 days of issuance of the certificates of the applicable
series.
RESERVE FUNDS
If specified in the related prospectus supplement, one or more reserve
funds may be established with respect to a series, in which cash, a letter of
credit, Permitted Investments or a combination of cash, a letter of credit
and/or Permitted Investments, in the amounts, if any, specified in the related
prospectus supplement will be deposited. The reserve funds for a series may
also be funded over time by depositing in that reserve a specified amount of
the distributions received on the applicable mortgage loans if specified in the
related prospectus supplement. The Seller may pledge the reserve funds to a
separate collateral agent specified in the related prospectus supplement.
Amounts on deposit in any reserve fund for a series, together with the
reinvestment income thereon, if any, will be applied by the Trustee for the
purposes, in the manner, and to the extent specified in the related prospectus
supplement. A reserve fund may be provided to increase the likelihood of timely
payments of principal of, and interest on, the certificates, if required as a
condition to the rating of such series by each Rating Agency. If so specified
in the related prospectus supplement, reserve funds may be established to
provide limited protection, in an amount satisfactory to each Rating Agency,
against certain types of losses not covered by insurance policies or other
credit support, such as losses arising from damage not covered by standard
hazard insurance policies. Reserve funds also may be established for other
purposes and in such amounts as will be specified in the related prospectus
supplement. Following each Distribution Date amounts in any reserve fund in
excess of any amount required to be maintained in that reserve fund may be
released from the reserve fund under the conditions and to the extent specified
in the related prospectus supplement and will not be available for further
application by the Trustee.
Moneys deposited in any reserve fund will be invested in Permitted
Investments at the direction of the Seller or such other person specified in
the related prospectus supplement. Any reinvestment income or other gain from
such investments will be credited to the related reserve fund for such series,
and any loss resulting from such investments will be charged to such reserve
fund in accordance with the terms of the related Agreement. If specified in the
related prospectus supplement, such income or other gain may be payable to the
Master Servicer as additional servicing compensation, and any loss resulting
from such investment will be borne by the Master Servicer. The right of the
Trustee to make draws on the reserve fund, if any, will be an asset of the
Trust Fund, but the reserve fund itself will only be a part of the Trust Fund
if so provided in the related prospectus supplement.
27
Additional information concerning any reserve fund will be set forth in
the related prospectus supplement, including the initial balance of such
reserve fund, the balance required to be maintained in the reserve fund, the
manner in which such required balance will decrease over time, the manner of
funding such reserve fund, the purpose for which funds in the reserve fund may
be applied to make distributions to Certificateholders and use of investment
earnings from the reserve fund, if any.
SWAP AGREEMENT
If so specified in the prospectus supplement relating to a series of
certificates, the Trust Fund will enter into or obtain an assignment of a swap
agreement pursuant to which the Trust Fund will have the right to receive, and
may have the obligation to make, certain payments of interest (or other
payments) as set forth or determined as described in that swap agreement. The
prospectus supplement relating to a series of certificates having the benefit
of an interest rate swap agreement will describe the material terms of such
agreement and the particular risks associated with the interest rate swap
feature, including market and credit risk, the effect of counterparty defaults
and other risks, if any. The prospectus supplement relating to such series of
certificates also will set forth certain information relating to the corporate
status, ownership and credit quality of the counterparty or counterparties to
such swap agreement. In addition, if the Certificateholders of such series will
be materially dependent upon any counterparty for timely payment of interest
and/or principal on their certificates, the related prospectus supplement will
include audited financial statements on a comparative basis for at least the
prior two years and any other appropriate financial information regarding such
counterparty. A swap agreement may include one or more of the following types
of arrangements, or another arrangement described in the related prospectus
supplement.
Interest Rate Swap. In an interest rate swap, the Trust Fund will exchange
the stream of interest payments on the mortgage loans for another stream of
interest payments based on a notional amount, which may be equal to the
principal amount of the mortgage loans as it declines over time.
Interest Rate Caps. In an interest rate cap, the Trust Fund or the swap
counterparty, in exchange for a fee, will agree to compensate the other if a
particular interest rate index rises above a rate specified in the swap
agreement. The fee for the cap may be a single up-front payment to or from the
Trust Fund, or a series of payments over time.
Interest Rate Floors. In an interest rate floor, the Trust Fund or the
swap counterparty, in exchange for a fee, will agree to compensate the other if
a particular interest rate index falls below a rate or level specified in the
swap agreement. As with interest rate caps, the fee may be a single up-front
payment or it may be paid periodically.
Interest Rate Collars. An interest rate collar is a combination of an
interest rate cap and an interest rate floor. One party agrees to compensate
the other if a particular interest rate index rises above the cap and, in
exchange, will be compensated if the interest rate index falls below the floor.
YIELD CONSIDERATIONS
GENERAL
The yield to maturity on any class of offered certificates will depend
upon, among other things, the price at which such certificates are purchased,
the amount and timing of any delinquencies and losses incurred by such class,
the rate and timing of payments of principal on the mortgage loans, and the
amount and timing of recoveries and Insurance Proceeds from REO mortgage loans
and related REO Properties, which, in turn, will be affected by the
amortization schedules of the mortgage loans, the timing of principal payments
(particularly Balloon Payments) on the related mortgage loans (including delay
in such payments resulting from modifications and extensions), the rate of
principal prepayments, including prepayments by borrowers and prepayments
resulting from defaults, repurchases arising in connection with certain
breaches of the representations and warranties made in the Agreement and the
exercise of the right of optional termination of the Trust Fund. Generally,
prepayments on the mortgage loans will tend to shorten the weighted average
lives of each class of certificates, whereas delays in liquidations
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of defaulted mortgage loans and modifications extending the maturity of
mortgage loans will tend to lengthen the weighted average lives of each class
of certificates. See "CERTAIN LEGAL ASPECTS OF THE MORTGAGE
LOANS--Enforceability of Certain Provisions" in this prospectus for a
description of certain provisions of each Agreement and statutory, regulatory
and judicial developments that may affect the prepayment experience and
maturity assumptions on the mortgage loans.
PREPAYMENT AND MATURITY ASSUMPTIONS
The related prospectus supplement may indicate that the related mortgage
loans may be prepaid in full or in part at any time, generally without
prepayment premium. Alternatively, a Trust Fund may include mortgage loans that
have significant restrictions on the ability of a borrower to prepay without
incurring a prepayment premium or to prepay at all. As described above, the
prepayment experience of the mortgage loans will affect the weighted average
life of the offered certificates. A number of factors may influence prepayments
on multifamily and commercial loans, including enforceability of due-on-sale
clauses, prevailing mortgage market interest rates and the availability of
mortgage funds, changes in tax laws (including depreciation benefits for
income-producing properties), changes in borrowers' net equity in the Mortgaged
Properties, servicing decisions, prevailing general economic conditions and the
relative economic vitality of the areas in which the Mortgaged Properties are
located, the terms of the mortgage loans (for example, the existence of
due-on-sale clauses), the quality of management of any income-producing
Mortgaged Properties and, in the case of Mortgaged Properties held for
investment, the availability of other opportunities for investment. A number of
factors may discourage prepayments on multifamily loans and commercial loans,
including the existence of any lockout or prepayment premium provisions in the
underlying mortgage note. A lockout provision prevents prepayment within a
certain time period after origination. A prepayment premium imposes an
additional charge on a borrower who wishes to prepay. Some of the mortgage
loans may have substantial principal balances due at their stated maturities
("Balloon Payments"). Balloon Payments involve a greater degree of risk than
fully amortizing loans because the ability of the borrower to make a Balloon
Payment typically will depend upon its ability either to refinance the loan or
to sell the related Mortgaged Property. The ability of a borrower to accomplish
either of these goals will be affected by a number of factors, including the
level of available mortgage rates at the time of the attempted sale or
refinancing, the borrower's equity in the related Mortgaged Property, the
financial condition of the borrower and operating history of the related
Mortgaged Property, tax laws, prevailing economic conditions and the
availability of credit for commercial real estate projects generally. See
"CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS-- Enforceability of Certain
Provisions" in this prospectus.
If the purchaser of a certificate offered at a discount calculates its
anticipated yield to maturity based on an assumed rate of distributions of
principal that is faster than that actually experienced on the mortgage loans,
the actual yield to maturity will be lower than that so calculated. Conversely,
if the purchaser of a certificate offered at a premium calculates its
anticipated yield to maturity based on an assumed rate of distributions of
principal that is slower than that actually experienced on the mortgage loans,
the actual yield to maturity will be lower than that so calculated. In either
case, the effect of voluntary and involuntary prepayments of the mortgage loans
on the yield on one or more classes of the certificates of such series in the
related Trust Fund may be mitigated or exacerbated by any provisions for
sequential or selective distribution of principal to such classes.
The timing of changes in the rate of principal payments on the mortgage
loans may significantly affect an investor's actual yield to maturity, even if
the average rate of distributions of principal is consistent with an investor's
expectation. In general, the earlier a principal payment is received on the
mortgage loans and distributed on a certificate, the greater the effect on such
investor's yield to maturity. The effect of an investor's yield of principal
payments occurring at a rate higher (or lower) than the rate anticipated by the
investor during a given period may not be offset by a subsequent like decrease
(or increase) in the rate of principal payments.
The weighted average life of a certificate refers to the average amount of
time that will elapse from the date of issuance of the certificate until each
dollar of principal is repaid to the Certificateholders. The weighted average
life of the offered certificates will be influenced by the rate at which
principal on the mortgage loans is paid, which may be in the form of scheduled
amortization or prepayments.
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Prepayments on mortgage loans are commonly measured relative to a prepayment
standard or model. As more fully described in the related prospectus
supplement, the model generally represents an assumed constant rate of
prepayment each month relative to the then outstanding principal balance of a
pool of new mortgage loans.
There can be no assurance that the mortgage loans will prepay at any rate
mentioned in any prospectus supplement. In general, if prevailing interest
rates fall below the mortgage interest rates on the mortgage loans, the rate of
prepayment can be expected to increase.
CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS
The following discussion contains summaries of certain legal aspects of
mortgage loans which are general in nature. Because many of the legal aspects
of mortgage loans are governed by the laws of the jurisdictions where the
related mortgaged properties are located (which laws may vary substantially),
the following summaries do not purport to be complete, to reflect the laws of
any particular jurisdiction, to reflect all the laws applicable to any
particular mortgage loan or to encompass the laws of all jurisdictions in which
the properties securing the mortgage loans are situated. In the event that the
Trust Fund for a given series includes mortgage loans having material
characteristics other than as described below, the related prospectus
supplement will set forth additional legal aspects relating thereto.
MORTGAGES AND DEEDS OF TRUST GENERALLY
The mortgage loans (other than financial leases and Installment Contracts)
for a series will consist of loans secured by either mortgages or deeds of
trust or other similar security instruments. There are two parties to a
mortgage, the mortgagor, who is the borrower or obligor and owner of the
mortgaged property, and the mortgagee, who is the lender. In a mortgage
transaction, the mortgagor delivers to the mortgagee a note, bond or other
written evidence of indebtedness and a mortgage. A mortgage creates a lien upon
the real property encumbered by the mortgage as security for the obligation
evidenced by the note, bond or other evidence of indebtedness. Although a deed
of trust is similar to a mortgage, a deed of trust has three parties, the
borrower-property owner called the trustor (similar to a mortgagor), a lender
called the beneficiary (similar to a mortgagee), and a third-party grantee
called the trustee. Under a deed of trust, the borrower irrevocably grants the
property to the trustee, until the debt is paid, in trust for the benefit of
the beneficiary to secure payment of the obligation generally with a power of
sale. The trustee's authority under a deed of trust and the mortgagee's
authority under a mortgage are governed by applicable law, the express
provisions of the deed of trust or mortgage, as applicable, and, in some cases,
in deed of trust transactions, the directions of the beneficiary.
The real property covered by a mortgage is most often the fee estate in
land and improvements. However, a mortgage may encumber other interests in real
property such as a tenant's interest in a lease of land or improvements, or
both, and the leasehold estate created by such lease. A mortgage covering an
interest in real property other than the fee estate requires special provisions
in the instrument creating such interest or in the mortgage to protect the
mortgagee against termination of such interest before the mortgage is paid.
Certain representations and warranties in the related Agreement will be made
with respect to the mortgage loans which are secured by an interest in a
leasehold estate.
Priority of the lien on mortgaged property created by mortgages and deeds
of trust depends on their terms and, generally, on the order of filing with a
state, county or municipal office, although such priority may in some states be
altered by the existence of leases in place with respect to the mortgaged
property and by the mortgagee's or beneficiary's knowledge of unrecorded liens
or encumbrances against the mortgaged property. However, filing or recording
may not establish priority over certain mechanic's liens or governmental claims
for real estate taxes and assessments or, in some states, for reimbursement of
investigation, delineation and/or remediation costs of certain environmental
conditions. See "--Environmental Risks" below. In addition, the Code provides
priority to certain tax liens over the lien of the mortgage.
INSTALLMENT CONTRACTS
The mortgage loans for a series may also consist of Installment Contracts.
Under an Installment Contract the seller (referred to in this Section as the
"lender") retains legal title to the property and enters
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into an agreement with the purchaser (referred to in this Section as the
"borrower") for the payment of the purchase price, plus interest, over the term
of such contract. Only after full performance by the borrower of the contract
is the lender obligated to convey title to the real estate to the purchaser. As
with mortgage or deed of trust financing, during the effective period of the
Installment Contract, the borrower generally is responsible for maintaining the
property in good condition and for paying real estate taxes, assessments and
hazard insurance premiums associated with the property.
The method of enforcing the rights of the lender under an Installment
Contract varies on a state-by-state basis depending upon the extent to which
state courts are willing, or able pursuant to state statute, to enforce the
contract strictly according to its terms. The terms of Installment Contracts
generally provide that upon a default by the borrower, the borrower loses his
or her right to occupy the property, the entire indebtedness is accelerated,
and the buyer's equitable interest in the property is forfeited. The lender in
such a situation does not have to foreclose in order to obtain title to the
property, although in some cases a quiet title action is in order if the
borrower has filed the Installment Contract in local land records and an
ejectment action may be necessary to recover possession. In a few states,
particularly in cases of borrower default during the early years of an
Installment Contract, the courts will permit ejectment of the buyer and a
forfeiture of his or her interest in the property. However, most state
legislatures have enacted provisions by analogy to mortgage law protecting
borrowers under Installment Contracts from the harsh consequences of
forfeiture. Under such statutes, a judicial or nonjudicial foreclosure may be
required, the lender may be required to give notice of default and the borrower
may be granted some grace period during which the contract may be reinstated
upon full payment of the default amount and the borrower may have a
post-foreclosure statutory redemption right. In other states, courts in equity
may permit a borrower with significant investment in the property under an
Installment Contract for the sale of real estate to share in the proceeds of
sale of the property after the indebtedness is repaid or may otherwise refuse
to enforce the forfeiture clause. Nevertheless, generally speaking, the
lender's procedures for obtaining possession and clear title under an
Installment Contract for the sale of real estate in a given state are simpler
and less time-consuming and costly than are the procedures for foreclosing and
obtaining clear title to a mortgaged property.
FINANCIAL LEASES
The mortgage loans for a series also may consist of financial leases.
Under a financial lease on real property, the lessor retains legal title to the
leased property and enters into an agreement with the lessee (referred to in
this Section as the "lessee") under which the lessee makes lease payments
approximately equal to the principal and interest payments that would be
required on a mortgage note for a loan covering the same property. Title to the
real estate typically is conveyed to the lessee at the end of the lease term
for a price approximately equal to the remaining unfinanced equity, determined
by reference to the unpaid principal amount, market value, or another method
specified in the related Agreement. As with Installment Contracts, the lessee
generally is responsible for maintaining the property in good condition and for
paying real estate taxes, assessments and hazard insurance premiums associated
with the property during the lease term. The related prospectus supplement will
describe the specific legal incidents of any financial leases that are included
in the mortgage loan pool for a series.
RIGHTS OF MORTGAGEES OR BENEFICIARIES
The form of the mortgage or deed of trust used by many institutional
lenders confers on the mortgagee or beneficiary the right both to receive all
proceeds collected under any hazard insurance policy and all awards made in
connection with any condemnation proceedings, and to apply such proceeds and
awards to any indebtedness secured by the mortgage or deed of trust, in such
order as the mortgagee or beneficiary may determine. Thus, in the event
improvements on the property are damaged or destroyed by fire or other
casualty, or in the event the property is taken by condemnation, the mortgagee
or beneficiary under the senior mortgage or deed of trust 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 absent the
express obligation to make the proceeds available for restoration of the
property to apply the same to the indebtedness secured by the senior mortgage
or deed of trust. Proceeds in excess of the amount of senior mortgage
indebtedness will, in most cases, be
31
applied to the indebtedness of a junior mortgage or trust deed, if any. The
laws of certain states may limit the ability of mortgagees or beneficiaries to
apply the proceeds of hazard insurance and partial condemnation awards to the
secured indebtedness. In such states, the mortgagor or trustor must be allowed
to use the proceeds of hazard insurance to repair the damage unless the
security of the mortgagee or beneficiary has been impaired. Similarly, in
certain states, the mortgagee or beneficiary is entitled to the award for a
partial condemnation of the real property security only to the extent that its
security is impaired.
The form of mortgage or deed of trust used by many institutional lenders
typically contains a "future advance" clause, which provides, in essence, 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 or deed of trust.
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 "optional" advance. If the mortgagee or beneficiary is
obligated to advance the additional amounts, the advance may be entitled to
receive the same priority as amounts initially made under the mortgage or deed
of trust, notwithstanding that there may be intervening junior mortgages or
deeds of trust and other liens between the date of recording of the mortgage or
deed of trust and the date of the future advance, and notwithstanding that the
mortgagee or beneficiary had actual knowledge of such intervening junior
mortgages or deeds of trust and other liens at the time of the advance. Where
the mortgagee or beneficiary is not obligated to advance the additional amounts
and has actual knowledge of the intervening junior mortgages or deeds of trust
and other liens, the advance may be subordinate to such intervening junior
mortgages or deeds of trust and other 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 related loan agreement up to a "credit
limit" amount stated in the recorded mortgage.
Another provision typically found in the form of the mortgage or deed of
trust used by many institutional lenders obligates the mortgagor or trustor to
pay before delinquency all taxes and assessments on the property and, when due,
all encumbrances, charges and liens on the property which are or which may
become prior to the lien of the mortgage or deed of trust, to provide and
maintain fire insurance on the property, to maintain and repair the property
and not to commit or permit any waste of the property, and to appear in and
defend any action or proceeding purporting to affect the property or the rights
of the mortgagee or beneficiary under the mortgage or deed of trust. Upon a
failure of the mortgagor or trustor to perform any of these obligations, the
mortgagee or beneficiary is given the right under the mortgage or deed of trust
to perform the obligation itself, at its election, with the mortgagor or
trustor agreeing to reimburse the mortgagee or beneficiary for any sums
expended by the mortgagee or beneficiary on behalf of the trustor. All sums so
expended by the mortgagee or beneficiary become part of the indebtedness
secured by the mortgage or deed of trust.
The form of mortgage or deed of trust used by many institutional lenders
typically requires the mortgagor or trustor to obtain the consent of the
mortgagee or beneficiary in respect of actions affecting the mortgaged
property, including, without limitation, leasing activities (including new
leases and termination or modification of existing leases), alterations and
improvements to buildings forming a part of the mortgaged property, and
management and leasing agreements for the mortgaged property. Tenants will
often refuse to execute a lease unless the mortgagee or beneficiary 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 mortgagee or beneficiary may,
unless the mortgage loan provides otherwise, refuse to consent to matters
approved by a junior mortgagee or beneficiary with the result that the value of
the security for the junior mortgage or deed of trust is diminished. For
example, a senior mortgagee or beneficiary may decide not to approve a lease or
to refuse to grant to a tenant a non-disturbance agreement. If, as a result,
the lease is not executed, the value of the mortgaged property may be
diminished.
FORECLOSURE
Foreclosure of a mortgage is generally accomplished by judicial action
initiated by the service of legal pleadings upon all necessary parties having
an interest in the real property. Delays in completion of foreclosure may
occasionally result from difficulties in locating such necessary parties. When
the
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mortgagee's right to foreclose is contested, the legal proceedings necessary to
resolve the issue can be time consuming. A judicial foreclosure may be subject
to delays and expenses similarly encountered in other civil litigation, and may
take several years to complete. At the completion of the judicial foreclosure
proceedings, if the mortgagee prevails, the court ordinarily issues a judgment
of foreclosure and appoints a referee or other designated official to conduct
the sale of the property. Such sales are made in accordance with procedures
which vary from state to state. The purchaser at such sale acquires the estate
or interest in real property covered by the mortgage. If the mortgage covered
the tenant's interest in a lease and leasehold estate, the purchaser will
acquire such tenant's interest subject to the tenant's obligations under the
lease to pay rent and perform other covenants contained in the lease.
Foreclosure of a deed of trust is commonly accomplished by a non-judicial
trustee's sale under a specific provision in the deed of trust and/or
applicable statutory requirements which authorizes the trustee, generally
following a request from the beneficiary/lender, to sell the property at public
sale upon any default by the borrower under the terms of the note or deed of
trust. A number of states may also require that a lender provide notice of
acceleration of a note to the borrower. Notice requirements under a trustee's
sale vary from state to state. In some states, prior to the trustee's sale the
trustee must record a notice of default and send a copy to the
borrower-trustor, to any person who has recorded a request for a copy of a
notice of default and notice of sale and to any successor in interest to the
trustor. In addition, the trustee must provide notice in some states to any
other person having an interest in the real property, including any junior
lienholders, and to certain other persons connected with the deed of trust. In
some states, the borrower, or any other person having a junior encumbrance on
the real estate, may, during a reinstatement period, cure the default by paying
the entire amount in arrears plus the costs and expenses (in some states,
limited to reasonable costs and expenses) incurred in enforcing the obligation.
Generally, state law controls the amount of foreclosure expenses and costs,
including attorneys' fees, which may be recovered by a lender. If the deed of
trust is not reinstated, a notice of sale must be posted in a public place and,
in most states, published for a specific period of time in one or more
newspapers. In addition, some state laws require that a copy of the notice of
sale be posted on the property and sent to all parties having an interest in
the real property.
In case of foreclosure under either a mortgage or a deed of trust, the
sale by the referee or other designated official or by the trustee is often a
public sale. However, because of the difficulty a potential buyer at the sale
might have in determining the exact status of title to the property subject to
the lien of the mortgage or deed of trust and the redemption rights that may
exist (see "--Rights of Redemption" below), and because the physical condition
and financial performance of the property may have deteriorated during the
foreclosure proceedings and/or for a variety of other reasons, a third party
may be unwilling to purchase the property at the foreclosure sale. Some states
require that the lender disclose to potential bidders at a trustee's sale all
known facts materially affecting the value of the property. Such disclosure may
have an adverse effect on the trustee's ability to sell the property or the
sale price of the property. Potential buyers may further question the prudence
of purchasing property at a foreclosure sale as a result of the 1980 decision
of the United States Court of Appeals for the Fifth Circuit in Durrett v.
Washington National Insurance Company and other decisions that have followed
the reasoning of Durrett with respect to fraudulent conveyances under
applicable bankruptcy law. In Durrett and its progeny, the Fifth Circuit and
other courts held that the transfer of real property pursuant to a
non-collusive, regularly conducted foreclosure sale was subject to the
fraudulent transfer provisions of the applicable bankruptcy laws, including the
requirement that the price paid for the property constitute "fair
consideration." The reasoning and result of Durrett and its progeny in respect
of the federal bankruptcy code, as amended from time to time (11 U.S.C.) (the
"Bankruptcy Code") was rejected, however, by the United States Supreme Court in
May 1994. The case could nonetheless be persuasive to a court applying a state
fraudulent conveyance law which has provisions similar to those construed in
Durrett.
For these and other reasons, it is common for the lender to purchase the
property from the trustee, referee or other designated official for an amount
equal to the lesser of the fair market value of such property and the
outstanding principal amount of the indebtedness secured by the mortgage or
deed of trust, together with accrued and unpaid interest and the expenses of
foreclosure, in which event, if the amount bid by the lender equals the full
amount of such debt, interest and expenses, the mortgagee's
33
debt will be extinguished. Thereafter, subject to the mortgagor's right in some
states to remain in possession during a redemption period, if applicable, the
lender will assume the burdens of ownership, including paying operating
expenses and real estate taxes and making repairs until it can arrange a sale
of the property to a third party. Frequently, the lender employs a third party
management company to manage and operate the property. The costs of operating
and maintaining commercial property may be significant and may be greater than
the income derived from that property. The costs of management and operation of
those mortgaged properties which are hotels, motels or nursing or convalescent
homes or hospitals may be particularly significant because of the expertise,
knowledge and, especially with respect to nursing or convalescent homes or
hospitals, regulatory compliance, required to run such operations and the
effect which foreclosure and a change in ownership may have on the public's and
the industry's (including franchisor's) perception of the quality of such
operations. The lender will commonly obtain the services of a real estate
broker and pay the broker's commission in connection with the sale of the
property. Depending upon market conditions, the ultimate proceeds of the sale
of the property may not equal the amount due to the lender in connection with
the property. Moreover, a lender commonly incurs substantial legal fees and
court costs in acquiring a mortgaged property through contested foreclosure
and/or bankruptcy proceedings. Furthermore, an increasing number of states
require that any adverse environmental conditions be eliminated before a
property may be resold. In addition, a lender may be responsible under federal
or state law for the cost of remediating a mortgaged property that is
environmentally contaminated. See "--Environmental Risks" below. As a result, a
lender could realize an overall loss on a mortgage loan even if the related
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 mortgage loan, plus accrued interest.
In foreclosure proceedings, some courts have applied general equitable
principles. These equitable principles are generally designed to relieve the
borrower from the legal effect of the borrower's defaults under the loan
documents. Examples of equitable remedies that have been fashioned include
judicial requirements that the lender undertake affirmative and expensive
actions to determine the causes 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 judgment and have required
that lenders reinstate loans or recast payment schedules in order to
accommodate borrowers who are suffering from temporary financial disability. In
other cases, courts have limited the right of the lender to foreclose if the
default under the mortgage instrument is not monetary, such as the borrower's
failing to maintain adequately the property or the borrower's executing a
second mortgage or deed of trust affecting the property. Finally, some courts
have been faced with the issue of whether or not federal or state
constitutional provisions reflecting due process concerns for adequate notice
require that borrowers under deeds of trust or mortgages receive notices in
addition to the statutorily-prescribed minimum notice. For the most part, these
cases have upheld the notice provisions as being reasonable or have found that
the sale by a trustee under a deed of trust, or under a mortgage having a power
of sale, does not involve sufficient state action to afford constitutional
protections to the borrower. There may, however, be state transfer taxes due
and payable upon obtaining such properties at foreclosure. Such taxes could be
substantial.
Under the REMIC provisions of the Code (if applicable) and the related
Agreement, the Master Servicer or Special Servicer, if any, may be required to
hire an independent contractor to operate any REO Property. The costs of such
operation may be significantly greater than the costs of direct operation by
the Master Servicer or Special Servicer, if any. Under Section 856(e)(3) of the
Code, property acquired by foreclosure generally must not be held beyond the
close of the third taxable year after the taxable year in which the acquisition
occurs. With respect to a series of certificates for which an election is made
to qualify the Trust Fund or a part of the Trust Fund as a REMIC, the Agreement
will permit foreclosed property to be held for more than the time period
permitted by Section 856(e)(3) of the Code if the Trustee receives (i) an
extension from the Internal Revenue Service or (ii) an opinion of counsel to
the effect that holding such property for such period is permissible under the
applicable REMIC provisions.
34
STATE LAW LIMITATIONS ON LENDERS
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 from the foreclosure sale. In some
states, redemption may occur only upon payment of the entire principal balance
of the loan, accrued interest and expenses of foreclosure. In some states,
redemption may be authorized even if the former borrower pays only a portion of
the sums due. The effect of these types of statutory rights of redemption is to
diminish the ability of the lender to sell the foreclosed property. Such rights
of redemption would defeat the title of any purchaser from the lender
subsequent to foreclosure or sale under a deed of trust. Consequently, the
practical effect of the redemption right is to force the lender to retain the
property and pay the expenses of ownership until the redemption period has run.
See "--Rights of Redemption" below.
Certain states have imposed statutory prohibitions against or limitations
on recourse to the borrower. For example, some state statutes limit the right
of the beneficiary or mortgagee to obtain a deficiency judgment against the
borrower following foreclosure or sale under a deed of trust. A deficiency
judgment is a personal judgment against the former borrower equal in most cases
to the difference between the net amount realized upon the public sale of the
real property and the amount due to the lender. Other statutes require the
beneficiary or mortgagee to exhaust the security afforded under a deed of trust
or mortgage by foreclosure in an attempt to satisfy the full debt before
bringing a personal action against the borrower on the debt without first
exhausting such security. In some states, the lender, if it first pursues
judgment through a personal action against the borrower on the debt, may be
deemed to have elected a remedy and may thereafter be precluded from exercising
remedies with respect to the security. Consequently, the practical effect of
the election requirement, when applicable, is that lenders will usually proceed
first against the property encumbered by the mortgage or deed of trust rather
than bringing personal action against the borrower. Other statutory provisions
limit any deficiency judgment against the former borrower following a judicial
sale to the excess of the outstanding debt over the fair market value of the
property at the time of the public sale. The purpose of these statutes is
generally to prevent a beneficiary or a mortgagee from obtaining a large
deficiency judgment against the former borrower as a result of low bids or the
absence of bids at the judicial sale. See "--Anti-Deficiency Legislation;
Bankruptcy Laws" below.
ENVIRONMENTAL RISKS
Real property pledged as security to a lender may be subject to potential
environmental risks. Of particular concern may be those mortgaged properties
which are, or have been, the site of manufacturing, industrial or disposal
activity. Such environmental risks may give rise to a diminution in value of
property securing any mortgage loan or, in certain circumstances as more fully
described below, liability for cleanup costs or other remedial actions, which
liability could exceed the value of such property or the principal balance of
the related mortgage loan. In certain circumstances, a lender may choose not to
foreclose on contaminated property rather than risk incurring liability for
remedial actions.
Under the laws of certain states, failure to perform any investigative
and/or remedial action required or demanded by the state of any condition or
circumstance that (i) may pose an imminent or substantial endangerment to the
public health or welfare or the environment, (ii) may result in a release or
threatened release of any hazardous material or hazardous substance, or (iii)
may give rise to any environmental claim or demand (each such condition or
circumstance, an "Environmental Condition") may, in certain circumstances, give
rise to a lien on the property to ensure the reimbursement of investigative
and/or remedial costs incurred by the state. In several states, such lien has
priority over the lien of an existing mortgage against such property. In any
case, the value of a Mortgaged Property as collateral for a mortgage loan could
be adversely affected by the existence of an Environmental Condition.
It is unclear as to whether and under what circumstances cleanup costs, or
the obligation to take remedial actions, can be imposed on a secured lender
such as the Trust Fund with respect to each series. Under the laws of some
states and under the federal Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended ("CERCLA"), a lender may be
liable as an "owner
35
or operator" for costs of addressing releases or threatened releases of
hazardous substances on a mortgaged property if such lender or its agents or
employees have participated in the management of the operations of the
borrower, even though the environmental damage or threat was caused by a prior
owner or other third party. Excluded from CERCLA's definition of "owner or
operator," however, is a person "who without participating in the management of
a ... facility, holds indicia of ownership primarily to protect his security
interest" (the "secured creditor exemption").
Notwithstanding the secured creditor exemption, a lender may be held
liable under CERCLA as an owner or operator, if such lender or its employees or
agents participate in management of the property. The Asset Conservation,
Lender Liability, and Deposit Insurance Protection Act of 1996 (the "Lender
Liability Act") defines the term "participating in management" to impose
liability on a secured lender who exercises actual control over operational
aspects of the facility; however, the terms and conditions of the Lender
Liability Act have not been fully clarified by the courts. A number of
environmentally related activities before the loan is made and during its
pendency, as well as "workout" steps to protect a security interest, are
identified as permissible to protect a security interest without triggering
liability. The Lender Liability Act also identifies the circumstances in which
foreclosure and post-foreclosure activities will not trigger CERCLA liability.
The Lender Liability Act also amends the federal Solid Waste Disposal Act
to limit the liability of lenders holding a security interest for costs of
cleaning up contamination for underground storage tanks. However, the Lender
Liability Act has no effect on other federal or state environmental laws
similar to CERCLA that may impose liability on lenders and other persons, and
not all of those laws provide for a secured creditor exemption. Liability under
many of these laws may exist even if the lender did not cause or contribute to
the contamination and regardless of whether the lender has actually taken
possession of the property through foreclosure, deed in lieu of foreclosure, or
otherwise. Moreover, such liability is not limited to the original or
unamortized principal balance of a loan or to the value of a property securing
a loan.
At the time the mortgage loans were originated, it is possible that no
environmental assessment or a very limited environmental assessment of the
Mortgaged Properties was conducted.
The related Agreement will provide that the Master Servicer or the Special
Servicer, if any, acting on behalf of the Trust Fund, may not acquire title to,
or possession of, a Mortgaged Property underlying a mortgage loan, take over
its operation or take any other action that might subject a given Trust Fund to
liability under CERCLA or comparable laws unless the Master Servicer or Special
Servicer, if any, has previously determined, based upon a Phase I environmental
site assessment (as described below) or other specified environmental
assessment prepared by a person who regularly conducts such environmental
assessments, that the Mortgaged Property is in compliance with applicable
environmental laws and that there are no circumstances relating to use,
management or disposal of any hazardous materials for which investigation,
monitoring, containment, clean-up or remediation could be required under
applicable environmental laws, or that it would be in the best economic
interest of a given Trust Fund to take such actions as are necessary to bring
the Mortgaged Property into compliance therewith or as may be required under
such laws. A Phase I environmental site assessment generally involves
identification of recognized environmental conditions (as defined in Guideline
E1527-00 of the American Society for Testing and Materials Guidelines) and/or
historic recognized environmental conditions (as defined in Guideline E1527-00
of the American Society for Testing and Materials Guidelines) based on records
review, site reconnaissance and interviews, but does not involve a more
intrusive investigation such as sampling or testing of materials. This
requirement effectively precludes enforcement of the security for the related
mortgage loan until a satisfactory environmental assessment is obtained or any
required remedial action is taken, reducing the likelihood that a given Trust
Fund will become liable for any Environmental Condition affecting a Mortgaged
Property, but making it more difficult to realize on the security for the
mortgage loan. However, there can be no assurance that any environmental
assessment obtained by the Master Servicer will detect all possible
Environmental Conditions or that the other requirements of the Agreement, even
if fully observed by the Master Servicer and the Special Servicer, if any, will
in fact insulate a given Trust Fund from liability for Environmental
Conditions.
If a lender is or becomes liable for clean-up costs, it may bring an
action for contribution against the current owners or operators, the owners or
operators at the time of on-site disposal activity or certain
36
other parties who may have contributed to or exacerbated the environmental
hazard, but such persons or entities may be bankrupt or otherwise judgment
proof. Furthermore, such action against the borrower may be adversely affected
by the limitations on recourse in the loan documents. Similarly, in some states
anti-deficiency legislation and other statutes requiring the lender to exhaust
its security before bringing a personal action against the borrower-trustor
(see "--Anti-Deficiency Legislation; Bankruptcy Laws" below) may curtail the
lender's ability to recover from its borrower the environmental clean-up and
other related costs and liabilities incurred by the lender. Shortfalls
occurring as the result of imposition of any clean-up costs will be addressed
in the prospectus supplement and Agreement for the related series.
RIGHTS OF REDEMPTION
In some states, after foreclosure sale pursuant to a deed of trust or a
mortgage, the borrower and certain foreclosed junior lienors are given a
specified period in which to redeem the property from the foreclosure sale. In
some states, redemption may occur only upon payment of the entire principal
balance of the loan, accrued interest and expenses of foreclosure. In other
states, redemption may be authorized if the former borrower pays only a portion
of the sums due. The effect of a right of redemption is to diminish the ability
of the lender to sell the foreclosed property. The right of redemption may
defeat the title of any purchaser at a foreclosure sale or any purchaser from
the lender subsequent to a foreclosure sale or sale under a deed of trust.
Certain states permit a lender to avoid a post-sale redemption by waiving its
right to a deficiency judgment. Consequently, the practical effect of the
post-foreclosure redemption right is often to force the lender to retain the
property and pay the expenses of ownership until the redemption period has run.
Whether the lender has any rights to recover these expenses from a borrower who
redeems the property depends on the applicable state statute. The related
prospectus supplement will contain a description of any statutes that prohibit
recovery of such expenses from a borrower in states where a substantial number
of the Mortgaged Properties for a particular series are located. In some
states, there is no right to redeem property after a trustee's sale under a
deed of trust.
Borrowers under Installment Contracts generally do not have the benefits
of redemption periods such as may exist in the same jurisdiction for mortgage
loans. Where redemption statutes do exist under state laws for Installment
Contracts, the redemption period is usually far shorter than for mortgages.
JUNIOR MORTGAGES; RIGHTS OF SENIOR MORTGAGEES
The mortgage loans for a series may include mortgage loans secured by
mortgages or deeds of trust some of which are junior to other mortgages or
deeds of trust, some of which may be held by other lenders or institutional
investors. The rights of the Trust Fund (and therefore the Certificateholders),
as mortgagee under a junior mortgage or beneficiary under a junior deed of
trust, are subordinate to those of the mortgagee under the senior mortgage or
beneficiary under the senior deed of trust, including the prior rights of the
senior mortgagee to receive hazard insurance and condemnation proceeds and to
cause the property securing the mortgage loan to be sold upon default of the
borrower or trustor, thereby extinguishing the junior mortgagee's or junior
beneficiary's lien unless the junior mortgagee or junior beneficiary asserts
its subordinate interest in the property in foreclosure litigation and,
possibly, satisfies the defaulted senior mortgage or deed of trust. As
discussed more fully below, a junior mortgagee or junior beneficiary may
satisfy a defaulted senior loan in full and, in some states, may cure such
default and loan. In most states, no notice of default is required to be given
to a junior mortgagee or junior beneficiary, and junior mortgagees or junior
beneficiaries are seldom given notice of defaults on senior mortgages. However,
in order for a foreclosure action in some states to be effective against a
junior mortgagee or junior beneficiary, the junior mortgagee or junior
beneficiary must be named in any foreclosure action, thus giving notice to
junior lienors of the pendency of the foreclosure action on the senior
mortgage.
ANTI-DEFICIENCY LEGISLATION; BANKRUPTCY LAWS
Some of the mortgage loans for a series will be nonrecourse loans as to
which, in the event of default by a borrower, recourse may be had only against
the specific property which secures the related mortgage loan and not against
the borrower's other assets. Even if recourse is available pursuant to the
37
terms of the mortgage loan against the borrower's assets in addition to the
Mortgaged Property, certain states have imposed statutory prohibitions which
impose prohibitions against or limitations on such recourse. For example, some
state statutes limit the right of the beneficiary or mortgagee to obtain a
deficiency judgment against the borrower following foreclosure or sale under a
deed of trust. A deficiency judgment is a personal judgment against the former
borrower equal in most cases to the difference between the net amount realized
upon the public sale of the real property and the amount due to the lender.
Other statutes require the beneficiary or mortgagee to exhaust the security
afforded under a deed of trust or mortgage by foreclosure in an attempt to
satisfy the full debt before bringing a personal action against the borrower.
In certain 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 these states, the lender, following judgment on such
personal action, may be deemed to have elected a remedy and absent judicial
permission, may be precluded from exercising remedies with respect to the
security. Consequently, the practical effect of the election requirement, when
applicable, is that lenders will usually proceed first against the security
rather than bringing a personal action against the borrower. Other statutory
provisions limit any deficiency judgment against the former borrower following
a judicial sale to the excess of the outstanding debt over the fair market
value of the property at the time of the public sale. The purpose of these
statutes is generally to prevent a beneficiary or a mortgagee from obtaining a
large deficiency judgment against the former borrower as a result of low bids
or the absence of bids at the judicial sale.
The Bankruptcy Code and related state laws may interfere with or affect
the ability of a lender to realize upon collateral and/or to enforce a
deficiency judgment. For example, under the Bankruptcy Code, virtually all
actions (including foreclosure actions and deficiency judgment proceedings) are
automatically stayed upon the filing of the bankruptcy petition, and, usually,
no interest or principal payments are made during the course of the bankruptcy
case. The delay and the consequences caused by an automatic stay can be
significant. Also, under the Bankruptcy Code, the filing of a petition in
bankruptcy by or on behalf of a junior lienor may stay the senior lender from
taking action to foreclose out such junior lien.
Under the Bankruptcy Code, provided certain substantive and procedural
safeguards for the lender are met, the amount and terms of a mortgage secured
by property of the debtor may be modified under certain circumstances. In many
jurisdictions, the outstanding amount of the loan secured by the real property
may be reduced to the then-current value of the property (with a corresponding
partial reduction of the amount of lender's security interest) pursuant to a
confirmed plan or lien avoidance proceeding, thus leaving the lender a general
unsecured creditor for the difference between such value and the outstanding
balance of the loan. Other modifications may include the reduction in the
amount of each scheduled payment, which reduction may result from a reduction
in the rate of interest and/or the alteration of the repayment schedule (with
or without affecting the unpaid principal balance of the loan), and/or an
extension (or reduction) of the final maturity date. Some courts with federal
bankruptcy jurisdiction have approved plans, based on the particular facts of
the reorganization case, that effected the curing 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.
The Bankruptcy Code has been amended to provide that a lender's perfected
pre-petition security interest in leases, rents and hotel revenues continues in
the post-petition leases, rents and hotel revenues, unless a bankruptcy court
orders to the contrary "based on the equities of the case." Thus, unless a
court orders otherwise, revenues from a Mortgaged Property generated after the
date the bankruptcy petition is filed will constitute "cash collateral" under
the Bankruptcy Code. Debtors may only use cash collateral upon obtaining the
lender's consent or a prior court order finding that the lender's interest in
the Mortgaged Properties and the cash collateral is "adequately protected" as
such term is defined and interpreted under the Bankruptcy Code. It should be
noted, however, that the court may find that the lender has no security
interest in either pre-petition or post-petition revenues if the court finds
38
that the loan documents do not contain language covering accounts, room rents,
or other forms of personalty necessary for a security interest to attach to
hotel revenues.
Federal bankruptcy law provides generally that rights and obligation under
an unexpired lease of the debtor/lessee may not be terminated or modified at
any time after the commencement of a case under the Bankruptcy Code solely on
the basis of a provision in the lease to such effect or because of certain
other similar events. This prohibition on so-called "ipso facto clauses" could
limit the ability of the Trustee for a series of certificates to exercise
certain contractual remedies with respect to any 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, which
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 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 of
the lease if the assignment is not fully perfected under state law prior to
commencement of the bankruptcy proceeding. See "--Leases and Rents" below.
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 unpaid rent reserved under the lease for the periods prior to the
bankruptcy petition (or earlier surrender of the leased premises) which are
unrelated to the rejection, plus the rent reserved by the lease, without
acceleration, for the greater of one year or 15%, not to exceed three years, of
the remaining term of the lease.
If a trustee in bankruptcy on behalf of a lessor, or a lessor as
debtor-in-possession, rejects an unexpired lease of real property, the lessee
may treat 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 against rents reserved under the lease for the balance of the
term after the date of rejection of the lease, and any such renewal or
extension of the lease, any damages occurring after such date caused by the
nonperformance of any obligation of the lessor under the lease after such date.
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 Trustee for the benefit of Certificateholders.
39
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 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.
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 prebankruptcy 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.
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
payment of its assets, unless (i) at the time there was at least one other
general partner and the written provisions of the limited partnership permit
the business of the limited partnership to be carried on by the remaining
general partner and that general partner does so or (ii) the written provisions
of the limited partnership agreement permit the limited partners to agree
within a specified time frame (often 60 days) after 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 or limited partner of a
mortgagor that is a partnership, or the bankruptcy of a member of a mortgagor
that is a limited liability company or the bankruptcy of a shareholder of a
mortgagor that is a corporation may provide the opportunity in the bankruptcy
case of such partner, member or shareholder to obtain an order from a court
consolidating the assets and liabilities of the partner, member or shareholder
with those of the mortgagor pursuant to the doctrines of
40
substantive consolidation or piercing the corporate veil. In such a case, the
respective Mortgaged Property, for example, would become property of the estate
of such bankrupt partner, member or shareholder. Not only would the Mortgaged
Property be available to satisfy the claims of creditors of such partner,
member or shareholder, 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 interest in the Mortgaged
Property.
STATUTORY LIABILITIES
The Internal Revenue Code of 1986, as amended, provides priority to
certain tax liens over the lien of the mortgage. In addition, substantive
requirements are imposed upon mortgage lenders in connection with the
origination and the servicing of mortgage loans by numerous federal and some
state consumer protection laws. These laws may impose specific statutory
liabilities upon lenders who originate mortgage loans and who fail to comply
with the provisions of the law. In some cases, this liability may affect
assignees of the mortgage loans.
ENFORCEABILITY OF CERTAIN PROVISIONS
Prepayment Provisions
Courts generally enforce claims requiring prepayment fees unless
enforcement would, under the circumstances, be unconscionable. However, the
laws of certain states may render prepayment fees unenforceable after a
mortgage loan has been outstanding for a certain number of years, or may limit
the amount of any prepayment fee to a specified percentage of the original
principal amount of the mortgage loan, to a specified percentage of the
outstanding principal balance of a mortgage loan, or to a fixed number of
months' interest on the prepaid amount. In certain states, prepayment fees
payable on default or other involuntary acceleration of a mortgage loan may not
be enforceable against the mortgagor. Some state statutory provisions may also
treat certain prepayment fees as usurious if in excess of statutory limits. See
"--Applicability of Usury Laws" below. Some of the mortgage loans for a series
may not require the payment of specified fees as a condition to prepayment or
such requirements have expired, and to the extent some mortgage loans do
require such fees, such fees may not necessarily deter borrowers from prepaying
their mortgage loans.
Due-on-Sale Provisions
The enforceability of due-on-sale clauses has been the subject of
legislation or litigation in many states, and in some cases, typically
involving single family residential mortgage transactions, their enforceability
has been limited or denied. In any event, in situations relating primarily to
residential properties, the Garn-St Germain Depository Institutions Act of 1982
(the "Garn-St Germain Act") preempts state constitutional, statutory and case
law that prohibits the enforcement of due-on-sale clauses and permits lenders
to enforce these clauses in accordance with their terms, subject to certain
exceptions. As a result, due-on-sale clauses have become generally enforceable
except in those states whose legislatures exercised their authority to regulate
the enforceability of such clauses with respect to mortgage loans that were (i)
originated or assumed during the "window period" under the Garn-St Germain Act,
which ended in all cases not later than October 15, 1982, and (ii) originated
by lenders other than national banks, federal savings institutions and federal
credit unions. Also, the Garn-St Germain Act does "encourage" lenders to permit
assumption of loans at the original rate of interest or at some other rate less
than the average of the original rate and the market rates.
The Agreement for each series will provide that if any mortgage loan
contains a provision in the nature of a "due-on-sale" clause, which by its
terms provides that: (i) such mortgage loan shall (or may at the mortgagee's
option) become due and payable upon the sale or other transfer of an interest
in the related Mortgaged Property; or (ii) such mortgage loan may not be
assumed without the consent of the related mortgagee in connection with any
such sale or other transfer, then, for so long as such mortgage loan is
included in the Trust Fund, the Master Servicer, on behalf of the Trustee,
shall take such actions as it deems to be in the best interest of the
Certificateholders in accordance with the servicing standard set forth in the
Agreement, and may waive or enforce any due-on-sale clause contained in the
related mortgage loan.
41
In addition, under federal bankruptcy law, due-on-sale clauses may not be
enforceable in bankruptcy proceedings and may, under certain circumstances, be
eliminated in any modified mortgage resulting from such bankruptcy proceeding.
Acceleration on Default
Some of the mortgage loans for a series will include a "debt acceleration"
clause, which permits the lender to accelerate the full debt upon a monetary or
nonmonetary default of the borrower. State courts generally will enforce
clauses providing for acceleration in the event of a material payment default
after giving effect to any appropriate notices. The equity courts of any state,
however, may refuse to foreclose 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. Furthermore, in
some states, the borrower may avoid foreclosure and reinstate an accelerated
loan by paying only the defaulted amounts and the costs and attorneys' fees
incurred by the lender in collecting such defaulted payments.
Forms of notes, mortgages and deeds of trust used by lenders may contain
provisions obligating the borrower to pay a late charge if payments are not
timely made. 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.
Upon foreclosure, courts have applied general equitable principles. These
equitable principles are generally designed to relieve the borrower from the
legal effect of his defaults under the loan documents. Examples of judicial
remedies that have been fashioned include judicial requirements that the lender
undertake affirmative and expensive actions to determine the causes 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 judgment and have required that lenders reinstate loans or recast
payment schedules in order to accommodate borrowers who are suffering from
temporary financial disability. In other cases, courts have limited the right
of the lender to foreclose if the default under the mortgage instrument is not
monetary, such as the borrower's failing to maintain adequately the property or
the borrower's executing a second mortgage or deed of trust affecting the
property. Finally, some courts have been faced with the issue of whether or not
federal or state constitutional provisions reflecting due process concerns for
adequate notice require that borrowers under deeds of trust or mortgages
receive notices in addition to the statutorily-prescribed minimum. For the most
part, these cases have upheld the notice provisions as being reasonable or have
found that the sale by a trustee under a deed of trust, or by a mortgagee under
a mortgage having a power of sale, does not involve sufficient state action to
afford constitutional protections to the borrower.
State courts also are known to apply various legal and equitable
principles to avoid enforcement of the forfeiture provisions of Installment
Contracts. For example, a lender's practice of accepting late payments from the
borrower may be deemed a waiver of the forfeiture clause. State courts also may
impose equitable grace periods for payment of arrearages or otherwise permit
reinstatement of the contract following a default. Not infrequently, if a
borrower under an Installment Contract has significant equity in the property,
equitable principles will be applied to reform or reinstate the contract or to
permit the borrower to share the proceeds upon a foreclosure sale of the
property if the sale price exceeds the debt.
Servicemembers Civil Relief Act
Generally, under the terms of the Servicemembers Civil Relief Act, a
borrower who enters military service after the origination of the borrower's
residential loan, including a borrower who was in reserve status and is called
to active duty after origination of the mortgage loan, upon norification by
such borrower, shall not be charged interest, including fees and charges, in
excess of 6% per annum during the period of the 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. In addition, the Relief Act provides
broad discretion for a court to modify a mortgage loan upon application by the
borrower. The Relief Act applies to borrowers 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
42
military. The California Military and Veterans Code provides protection
equivalent to that provided by the Relief Act to California national guard
members called up to active service by the Governor, California national guard
members called up to active service by the President and reservists called to
active duty. Because the Relief Act and the California Military Code apply to
borrowers who enter military service, no information can be provided as to the
number of mortgage loans that may be affected by the Relief Act or the
California Military Code. Application of the Relief Act or the California
Military Code would adversely affect, for an indeterminate period of time, the
ability of the master 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 or the California Military Code would result in a reduction of
the amounts distributable to the holders of the related series of securities,
and the prospectus supplement may specify that the shortfalls would not be
covered by advances or, any form of credit support provided in connection with
the securities. In addition, the Relief Act and the California Military Code
impose limitations that impair the ability of the master servicer to foreclose
on an affected mortgage loan or enforce rights under a Home Improvement
Contract or Manufactured Housing Contract during the borrower's period of
active duty status, and, under certain circumstances, during an additional
three month period after that period. Thus, if a mortgage loan or Home
Improvement Contract or Manufactured Housing Contract goes into default, there
may be delays and losses occasioned as a result.
Forfeitures in Drug and RICO Proceedings
Federal law provides that property purchased or improved with assets
derived from criminal activity or otherwise tainted, or used in the commission
of certain offenses, can be seized and ordered forfeited to the United States
of America. The offenses which can trigger such a seizure and forfeiture
include, among others, violations of the Racketeer Influenced and Corrupt
Organizations Act, the Bank Secrecy Act, the anti-money laundering laws and
regulations, including the USA Patriot Act of 2001 and the regulations issued
pursuant to that Act, as well as the narcotic drug laws. In many instances, the
United States may seize the property even before a conviction occurs.
In the event of a forfeiture proceeding, a lender may be able to establish
its interest in the property by proving that (1) its mortgage was executed and
recorded before the commission of the illegal conduct from which the assets
used to purchase or improve the property were derived or before any other crime
upon which the forfeiture is based, or (2) the lender was, 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 defense will be successful.
APPLICABILITY OF USURY LAWS
State and federal usury laws limit the interest that lenders are entitled
to receive on a mortgage loan. In determining whether a given transaction is
usurious, courts may include charges in the form of "points" and "fees" as
"interest," but may exclude payments in the form of "reimbursement of
foreclosure expenses" or other charges found to be distinct from "interest."
If, however, the amount charged for the use of the money loaned is found to
exceed a statutorily established maximum rate, the loan is generally found
usurious regardless of the form employed or the degree of overcharge. Title V
of the Depository Institutions Deregulation and Monetary Control Act of 1980,
enacted in March 1980 ("Title V"), provides that state usury limitations shall
not apply to certain types of residential (including multifamily but not other
commercial) first mortgage loans originated by certain lenders after March 31,
1980. A similar federal statute was in effect with respect to mortgage loans
made during the first three months of 1980. The statute 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.
In any state in which application of Title V has been expressly rejected
or a provision limiting discount points or other charges is adopted, no
mortgage loan originated after the date of such state action will be eligible
for inclusion as part of the Trust Fund unless (i) such mortgage loan provides
for
43
such interest rate, discount points and charges as are permitted in such state
or (ii) such mortgage loan provides that its terms shall 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 mortgagor's counsel
has rendered an opinion that such choice of law provision would be given
effect.
Statutes differ in their provisions as to the consequences of a usurious
loan. One group of statutes requires the lender to forfeit the interest due
above the applicable limit or imposes a specified penalty. Under this statutory
scheme, the borrower may cancel the recorded mortgage or deed of trust upon
paying its debt with lawful interest, and the lender may foreclose, but only
for the debt plus lawful interest. A second group of statutes is more severe. A
violation of this type of usury law results in the invalidation of the
transaction, thereby permitting the borrower to cancel the recorded mortgage or
deed of trust without any payment or prohibiting the lender from foreclosing.
ALTERNATIVE MORTGAGE INSTRUMENTS
Alternative mortgage instruments, including adjustable rate mortgage
loans, originated by non-federally chartered lenders have historically been
subjected to a variety of restrictions. Such restrictions differed from state
to state, resulting in difficulties in determining whether a particular
alternative mortgage instrument originated by a state-chartered lender was in
compliance with applicable law. These difficulties were alleviated
substantially as a result of the enactment of Title VIII of the Garn-St Germain
Act ("Title VIII"). Title VIII provides that, notwithstanding any state law to
the contrary, state-chartered banks may originate alternative mortgage
instruments in accordance with regulations promulgated by the Comptroller of
the Currency with respect to origination of alternative mortgage instruments by
national banks, state-chartered credit unions may originate alternative
mortgage instruments in accordance with regulations promulgated by the National
Credit Union Administration (the "NCUA") with respect to origination of
alternative mortgage instruments by federal credit unions, and all other
non-federally chartered housing creditors, including state-chartered savings
and loan associations, state-chartered savings banks and mortgage banking
companies, may originate alternative mortgage instruments in accordance with
the regulations promulgated by the Federal Home Loan Bank Board (now the Office
of Thrift Supervision) with respect to origination of alternative mortgage
instruments by federal savings and loan associations. Title VIII provides that
any state may reject applicability of the provision of Title VIII by adopting,
prior to October 15, 1985, a law or constitutional provision expressly
rejecting the applicability of such provisions. Certain states have taken such
action.
LEASES AND RENTS
Some of the mortgage loans for a series may be secured by an assignment of
leases and rents, either through a separate document of assignment or as
incorporated in the related mortgage. Under such assignments, the borrower
under the mortgage loan typically assigns its right, title and interest as
landlord under each lease and the income derived therefrom to the lender, while
retaining a license to collect the rents for so long as there is no default
under the mortgage loan. In the event the borrower defaults, the license
terminates and the lender may be entitled to collect rents. The manner of
perfecting the lender's interest in rents may depend on whether the borrower's
assignment was absolute or one granted as security for the loan. Failure to
properly perfect the lender's interest in rents may result in the loss of a
substantial pool of funds which could otherwise serve as a source of repayment
for the loan. Some state laws may require that to perfect its interest in
rents, the lender must take possession of the property and/or obtain judicial
appointment of a 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 to property ownership. 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. In the event of
borrower default, the amount of rent the lender is able to collect from the
tenants can significantly affect the value of the lender's security interest.
SECONDARY FINANCING; DUE-ON-ENCUMBRANCE PROVISIONS
Some of the mortgage loans for a series may not restrict secondary
financing, thereby permitting the borrower to use the Mortgaged Property as
security for one or more additional loans. Some of the
44
mortgage loans may preclude secondary financing (often by permitting the first
lender to accelerate the maturity of its loan if the borrower further encumbers
the Mortgaged Property) or may require the consent of the senior lender to any
junior or substitute financing; however, such provisions may be unenforceable
in certain jurisdictions under certain circumstances. The Agreement for each
series will provide that if any mortgage loan contains a provision in the
nature of a "due-on-encumbrance" clause, which by its terms: (i) provides that
such mortgage loan shall (or may at the mortgagee's option) become due and
payable upon the creation of any lien or other encumbrance on the related
Mortgaged Property; or (ii) requires the consent of the related mortgagee to
the creation of any such lien or other encumbrance on the related Mortgaged
Property, then for so long as such mortgage loan is included in a given Trust
Fund, the Master Servicer or, if such mortgage loan is a Specially Serviced
Mortgage Loan, the Special Servicer (or such other party as indicated in the
Agreement), on behalf of such Trust Fund, shall exercise (or decline to
exercise) any right it may have as the mortgagee of record with respect to such
mortgage loan (x) to accelerate the payments thereon, or (y) to withhold its
consent to the creation of any such lien or other encumbrance, in a manner
consistent with the servicing standard set forth in the Agreement.
Where the borrower encumbers the 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. Second,
acts of the senior lender which 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 an existing junior lender is
prejudiced 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, delay and in certain
circumstances even prevent the taking of action by the senior lender. Fourth,
the bankruptcy of a junior lender may operate to stay foreclosure or similar
proceedings by the senior lender.
CERTAIN LAWS AND REGULATIONS
The Mortgaged Properties will be subject to compliance with various
federal, state and local statutes and regulations. Failure to comply (together
with an inability to remedy any such failure) could result in material
diminution in the value of a Mortgaged Property which could, together with the
possibility of limited alternative uses for a particular Mortgaged Property
(e.g., a nursing or convalescent home or hospital), result in a failure to
realize the full principal amount of the related mortgage loan.
TYPE OF MORTGAGED PROPERTY
The lender may be subject to additional risk depending upon the type and
use of the Mortgaged Property in question. For instance, Mortgaged Properties
which are hospitals, nursing homes or convalescent homes may present special
risks to lenders in large part due to significant governmental regulation of
the operation, maintenance, control and financing of health care institutions.
Mortgages on Mortgaged Properties which are owned by the borrower under a
condominium form of ownership are subject to the declaration, by-laws and other
rules and regulations of the condominium association. Mortgaged Properties
which are hotels or motels may present additional risk to the lender in that:
(i) hotels and motels are typically operated pursuant to franchise, management
and operating agreements which may be terminable by the franchisor, manager or
operator; and (ii) the transferability of the hotel's operating, liquor and
other licenses to the entity acquiring the hotel either through purchase or
foreclosure is subject to the vagaries of local law requirements. In addition,
Mortgaged Properties which are multifamily residential properties or
cooperatively owned multifamily properties may be subject to rent control laws,
which could impact the future cash flows of such properties.
AMERICANS WITH DISABILITIES ACT
Under Title III of the Americans with Disabilities Act of 1990 and rules
promulgated thereunder (collectively, the "ADA"), in order to protect
individuals with disabilities, public accommodations (such as hotels,
restaurants, shopping centers, hospitals, schools and social service center
establishments) must
45
remove architectural and communication barriers which are structural in nature
from existing places of public accommodation to the extent "readily
achievable." In addition, under the ADA, alterations to a place of public
accommodation or a commercial facility are to be made so that, to the maximum
extent feasible, such altered portions are readily accessible to and usable by
disabled individuals. The "readily achievable" standard takes into account,
among other factors, the financial resources of the affected site, owner,
landlord or other applicable person. In addition to imposing a possible
financial burden on the borrower in its capacity as owner or landlord, the ADA
may also impose such requirements on a foreclosing lender who succeeds to the
interest of the borrower as owner or landlord. Furthermore, since the "readily
achievable" standard may vary depending on the financial condition of the owner
or landlord, a foreclosing lender who is financially more capable than the
borrower of complying with the requirements of the ADA may be subject to more
stringent requirements than those to which the borrower is subject.
FEDERAL INCOME TAX CONSEQUENCES
The following represents the opinion of Cadwalader, Wickersham & Taft LLP,
special counsel to the Seller, as to the matters discussed in this section. The
following is a general discussion of the anticipated material federal income
tax consequences of the purchase, ownership and disposition of certificates.
The discussion below does not purport to address all federal income tax
consequences that may be applicable to particular categories of investors, some
of which, such as banks, insurance companies and foreign investors, may be
subject to special rules. Further, the authorities on which this discussion is
based, and the opinions referred to below, are subject to change or differing
interpretations, which could apply retroactively. This discussion reflects the
applicable provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), as well as regulations (the "REMIC Regulations") promulgated by the
U.S. Department of Treasury (the "Treasury"). Investors should consult their
own tax advisors in determining the federal, state, local and other tax
consequences to them of the purchase, ownership and disposition of
certificates.
For purposes of this discussion, where the applicable prospectus
supplement provides for a retention of a portion of the interest payments on
the mortgage loans underlying a series of certificates, references to the
Mortgage will be deemed to refer to that portion of the mortgage loans held by
the Trust Fund which does not include the retained interest payments.
References to a "holder" or "Certificateholder" in this discussion generally
mean the beneficial owner of a certificate.
This discussion addresses the federal income tax consequences of the
treatment of the Trust Fund as a REMIC under "--FEDERAL INCOME TAX CONSEQUENCES
FOR REMIC CERTIFICATES" in this prospectus and as a grantor trust under
"--Federal Income Tax Consequences for Certificates as to which No REMIC
Election is Made" in this prospectus. If an election is made instead to treat a
Trust Fund as a FASIT, the applicable federal income tax consequences will be
discussed in the related prospectus supplement.
46
FEDERAL INCOME TAX CONSEQUENCES FOR REMIC CERTIFICATES
GENERAL
With respect to a particular series of certificates, an election may be
made to treat the Trust Fund or one or more segregated pools of assets in the
Trust Fund as one or more REMICs within the meaning of Code Section 860D. A
Trust Fund or a portion of a Trust Fund as to which a REMIC election will be
made will be referred to as a "REMIC Pool." For purposes of this discussion,
certificates of a series as to which one or more REMIC elections are made are
referred to as "REMIC Certificates" and will consist of one or more classes of
"Regular Certificates" and one class of "Residual Certificates" in the case of
each REMIC Pool. Qualification as a REMIC requires ongoing compliance with
certain conditions. With respect to each series of REMIC Certificates,
Cadwalader, Wickersham & Taft LLP has rendered its opinion that, assuming (i)
the making of a timely election, (ii) compliance with all provisions of the
applicable Agreement and (iii) compliance with any changes in the law,
including any amendments to the Code or applicable Treasury regulations, each
REMIC Pool will qualify as a REMIC. The Regular Certificates will be considered
to be "regular interests" in the REMIC Pool and generally will be treated for
federal income tax purposes as if they were newly originated debt instruments,
and the Residual Certificates will be considered to be "residual interests" in
the REMIC Pool. The prospectus supplement for each series of certificates will
indicate whether one or more REMIC elections with respect to the related Trust
Fund will be made, in which event references to "REMIC" or "REMIC Pool" in this
prospectus shall be deemed to refer to each such REMIC Pool. If so specified in
the applicable prospectus supplement, the portion of a Trust Fund as to which a
REMIC election is not made may be treated as a grantor trust for federal income
tax purposes. See "--Federal Income Tax Consequences for Certificates as to
Which No REMIC Election Is Made" below. For purposes of this discussion, unless
otherwise specified, the term "mortgage loans" will be used to refer to
mortgage loans and Installment Contracts.
STATUS OF REMIC CERTIFICATES
REMIC Certificates held by a domestic building and loan association will
constitute "a regular or residual interest in a REMIC" within the meaning of
Code Section 7701(a)(19)(C)(xi) but only in the same proportion that the assets
of the REMIC Pool would be treated as "loans . . . secured by an interest in
real property which is . . . residential real property" or "loans secured by an
interest in . . . health . . . institutions or facilities, including structures
designed or used previously for residential purposes for . . . persons under
care" (such as single family or multifamily properties or health-care
properties, but not other commercial properties) within the meaning of Code
Section 7701(a)(19)(C), and otherwise will not qualify for such treatment.
REMIC Certificates held by a real estate investment trust will constitute "real
estate assets" within the meaning of Code Section 856(c)(5)(B), and interest on
the Regular Certificates and income with respect to Residual Certificates will
be considered "interest on obligations secured by mortgages on real property or
on interests in real property" within the meaning of Code Section 856(c)(3)(B)
in the same proportion that, for both purposes, the assets of the REMIC Pool
would be so treated. If at all times 95% or more of the assets of the REMIC
Pool qualify for each of the foregoing respective treatments, the REMIC
Certificates will qualify for the corresponding status in their entirety. For
purposes of Code Section 856(c)(5)(B), payments of principal and interest on
the mortgage loans that are reinvested pending distribution to holders of REMIC
Certificates qualify for such treatment. Where multiple REMIC Pools are a part
of a tiered structure they will be treated as one REMIC for purposes of the
tests described above respecting asset ownership of more or less than 95%.
Regular Certificates will represent "qualified mortgages," within the meaning
of Code Section 860G(a)(3), for other REMICs and "permitted assets," within the
meaning of Code Section 860L(c), for financial asset securitization investment
trusts. REMIC Certificates held by certain financial institutions will
constitute an "evidence of indebtedness" within the meaning of Code Section
582(c)(1).
QUALIFICATION AS A REMIC
In order for a REMIC Pool to qualify as a REMIC, there must be ongoing
compliance on the part of the REMIC Pool with the requirements set forth in the
Code. The REMIC Pool must fulfill an asset test,
47
which requires that no more than a de minimis portion of the assets of the
REMIC Pool, as of the close of the third calendar month beginning after the
"Startup Day," which for purposes of this discussion is the date of issuance of
the REMIC Certificates, and at all times thereafter, may consist of assets
other than "qualified mortgages" and "permitted investments." The REMIC
Regulations provide a safe harbor pursuant to which the de minimis requirement
is met if at all times the aggregate adjusted basis of the nonqualified assets
is less than 1% of the aggregate adjusted basis of all the REMIC Pool's assets.
An entity that fails to meet the safe harbor may nevertheless demonstrate that
it holds no more than a de minimis amount of nonqualified assets. A REMIC also
must provide "reasonable arrangements" to prevent its residual interest from
being held by "disqualified organizations" and must furnish applicable tax
information to transferors or agents that violate this requirement. See
"--Taxation of Residual Certificates--Tax-Related Restrictions on Transfer of
Residual Certificates--Disqualified Organizations" below.
A qualified mortgage is any obligation that is principally secured by an
interest in real property and that is either transferred to the REMIC Pool on
the Startup Day or is purchased by the REMIC Pool within a three-month period
thereafter pursuant to a fixed price contract in effect on the Startup Day.
Qualified mortgages include whole mortgage loans, such as the mortgage loans,
certificates of beneficial interest in a grantor trust that holds mortgage
loans, regular interests in another REMIC, such as certificates in a trust as
to which a REMIC election has been made, loans secured by timeshare interests
and loans secured by shares held by a tenant stockholder in a cooperative
housing corporation, provided, in general, (i) the fair market value of the
real property security, including its buildings and structural components, is
at least 80% of the principal balance of the related mortgage loan either at
origination or as of the Startup Day (an original loan-to-value ratio of not
more than 125% with respect to the real property security) or (ii)
substantially all the proceeds of the mortgage loan or the underlying mortgage
loan were used to acquire, improve or protect an interest in real property
that, at the origination date, was the only security for the mortgage loan or
underlying mortgage loan. If the mortgage loan has been substantially modified
other than in connection with a default or reasonably foreseeable default, it
must meet the loan-to-value test in (i) of the preceding sentence as of the
date of the last such modification. A qualified mortgage includes a qualified
replacement mortgage, which is any property that would have been treated as a
qualified mortgage if it were transferred to the REMIC Pool on the Startup Day
and that is received either (i) in exchange for any qualified mortgage within a
three-month period thereafter or (ii) in exchange for a "defective obligation"
within a two-year period thereafter. A "defective obligation" includes (i) a
mortgage in default or as to which default is reasonably foreseeable, (ii) a
mortgage as to which a customary representation or warranty made at the time of
transfer to the REMIC Pool has been breached, (iii) a mortgage that was
fraudulently procured by the mortgagor, and (iv) a mortgage that was not in
fact principally secured by real property, but only if such mortgage is
disposed of within 90 days of discovery. A mortgage loan that is "defective" as
described in clause (iv) that is not sold or, if within two years of the
Startup Day, exchanged, within 90 days of discovery, ceases to be a qualified
mortgage after such 90-day period.
Permitted investments include cash flow investments, qualified reserve
assets, and foreclosure property. A cash flow investment is an investment,
earning a return in the nature of interest, of amounts received on or with
respect to qualified mortgages for a temporary period, not exceeding 13 months,
until the next scheduled distribution to holders of interests in the REMIC
Pool. A qualified reserve asset is any intangible property held for investment
that is part of any reasonably required reserve maintained by the REMIC Pool to
provide for payments of expenses of the REMIC Pool or amounts due on the
regular or residual interests in the event of defaults (including
delinquencies) on the qualified mortgages, lower than expected reinvestment
returns, prepayment interest shortfalls and certain other contingencies. The
reserve fund will be disqualified if more than 30% of the gross income from the
assets in such fund for the year is derived from the sale or other disposition
of property held for less than three months, unless required to prevent a
default on the regular interests caused by a default on one or more qualified
mortgages. A reserve fund must be reduced "promptly and appropriately" as
payments on the mortgage loans are received. Foreclosure property is real
property acquired by the REMIC Pool in connection with the default or imminent
default of a qualified mortgage and generally not held beyond the close of the
48
third calendar year beginning after the year in which such property is acquired
with an extension that may be granted by the Internal Revenue Service (the
"Service").
In addition to the foregoing requirements, the various interests in a
REMIC Pool also must meet certain requirements. All of the interests in a REMIC
Pool must be either of the following: (i) one or more classes of regular
interests or (ii) a single class of residual interests on which distributions,
if any, are made pro rata. A regular interest is an interest in a REMIC Pool
that is issued on the Startup Day with fixed terms, is designated as a regular
interest, and unconditionally entitles the holder to receive a specified
principal amount (or other similar amount), and provides that interest payments
(or other similar amounts), if any, at or before maturity either are payable
based on a fixed rate or a qualified variable rate, or consist of a specified,
nonvarying portion of the interest payments on qualified mortgages. Such a
specified portion may consist of a fixed number of basis points, a fixed
percentage of the total interest, or a fixed or qualified variable or inverse
variable rate on some or all of the qualified mortgages minus a different fixed
or qualified variable rate. The specified principal amount of a regular
interest that provides for interest payments consisting of a specified,
nonvarying portion of interest payments on qualified mortgages may be zero. A
residual interest is an interest in a REMIC Pool other than a regular interest
that is issued on the Startup Day and that is designated as a residual
interest. An interest in a REMIC Pool may be treated as a regular interest even
if payments of principal with respect to such interest are subordinated to
payments on other regular interests or the residual interest in the REMIC Pool,
and are dependent on the absence of defaults or delinquencies on qualified
mortgages or permitted investments, lower than reasonably expected returns on
permitted investments, unanticipated expenses incurred by the REMIC Pool or
prepayment interest shortfalls. Accordingly, the Regular Certificates of a
series will constitute one or more classes of regular interests, and the
Residual Certificates with respect to that series will constitute a single
class of residual interests on which distributions are made pro rata.
If an entity, such as the REMIC Pool, fails to comply with one or more of
the ongoing requirements of the Code for REMIC status during any taxable year,
the Code provides that the entity will not be treated as a REMIC for such year
and thereafter. In this event, an entity with multiple classes of ownership
interests may be treated as a separate association taxable as a corporation
under Treasury regulations, and the Regular Certificates may be treated as
equity interests in that entity. The Code, however, authorizes the Treasury
Department to issue regulations that address situations where failure to meet
one or more of the requirements for REMIC status occurs inadvertently and in
good faith, and disqualification of the REMIC Pool would occur absent
regulatory relief. Investors should be aware, however, that the Conference
Committee Report to the Tax Reform Act of 1986 (the "1986 Act") indicates that
the relief may be accompanied by sanctions, such as the imposition of a
corporate tax on all or a portion of the REMIC Pool's income for the period of
time in which the requirements for REMIC status are not satisfied.
TAXATION OF REGULAR CERTIFICATES
General
In general, interest and original issue discount on a Regular Certificate
will be treated as ordinary income to a holder of the Regular Certificate (the
"Regular Certificateholder") as they accrue, and principal payments on a
Regular Certificate will be treated as a return of capital to the extent of the
Regular Certificateholder's basis in the Regular Certificate allocable thereto
(other than accrued market discount not yet reported as income). Regular
Certificateholders must use the accrual method of accounting with regard to
Regular Certificates, regardless of the method of accounting otherwise used by
such Regular Certificateholders.
Original Issue Discount
Certificates on which accrued interest is capitalized and deferred will
be, and other classes of Regular Certificates may be, issued with "original
issue discount" within the meaning of Code Section 1273(a). Holders of any
class of Regular Certificates having original issue discount generally must
include original issue discount in ordinary income for federal income tax
purposes as it accrues, in accordance with the constant yield method that takes
into account the compounding of interest, in
49
advance of receipt of the cash attributable to such income. The following
discussion is based in part on temporary and final Treasury regulations (the
"OID Regulations") under Code Sections 1271 through 1273 and 1275 and in part
on the provisions of the 1986 Act. Regular Certificateholders should be aware,
however, that the OID Regulations do not adequately address certain issues
relevant to prepayable securities, such as the Regular Certificates. To the
extent such issues are not addressed in such regulations, it is anticipated
that the Trustee will apply the methodology described in the Conference
Committee Report to the 1986 Act. No assurance can be provided that the Service
will not take a different position as to those matters not currently addressed
by the OID Regulations. Moreover, the OID Regulations include an anti-abuse
rule allowing the Service to apply or depart from the OID Regulations where
necessary or appropriate to ensure a reasonable tax result in light of the
applicable statutory provisions. A tax result will not be considered
unreasonable under the anti-abuse rule in the absence of a substantial effect
on the present value of a taxpayer's tax liability. Investors are advised to
consult their own tax advisors as to the discussion in this section and the
appropriate method for reporting interest and original issue discount with
respect to the Regular Certificates.
Each Regular Certificate (except to the extent described below with
respect to a Regular Certificate on which principal is distributed by random
lot ("Random Lot Certificates")) will be treated as a single installment
obligation for purposes of determining the original issue discount includible
in a Regular Certificateholder's income. The total amount of original issue
discount on a Regular Certificate is the excess of the "stated redemption price
at maturity" of the Regular Certificate over its "issue price". The issue price
of a class of Regular Certificates offered pursuant to this prospectus
generally is the first price at which a substantial amount of Regular
Certificates of that class is sold to the public (excluding bond houses,
brokers and underwriters). Although unclear under the OID Regulations, the
Seller intends to treat the issue price of a class as to which there is no sale
of a substantial amount as of the issue date or that is retained by the Seller
as the fair market value of that class as of the issue date. The issue price of
a Regular Certificate also includes the amount paid by an initial Regular
Certificateholder for accrued interest that relates to a period prior to the
issue date of the Regular Certificate, unless the Regular Certificateholder
elects on its federal income tax return to exclude such amount from the issue
price and to recover it on the first Distribution Date. The stated redemption
price at maturity of a Regular Certificate always includes the original
principal amount of the Regular Certificate, but generally will not include
distributions of stated interest if such interest distributions constitute
"qualified stated interest". Under the OID Regulations, qualified stated
interest generally means interest payable at a single fixed rate or a qualified
variable rate (as described below) provided that such interest payments are
unconditionally payable at intervals of one year or less during the entire term
of the Regular Certificate. Because there is no penalty or default remedy in
the case of nonpayment of interest with respect to a Regular Certificate, it is
possible that no interest on any class of Regular Certificates will be treated
as qualified stated interest. However, except as provided in the following
three sentences or in the applicable prospectus supplement, because the
underlying mortgage loans provide for remedies in the event of default, it is
anticipated that the Trustee will treat interest with respect to the Regular
Certificates as qualified stated interest. Distributions of interest on an
Accrual Certificate, or on other Regular Certificates with respect to which
deferred interest will accrue, will not constitute qualified stated interest,
in which case the stated redemption price at maturity of such Regular
Certificates includes all distributions of interest as well as principal
thereon. Likewise, the Seller intends to treat an "interest only" class, or a
class on which interest is substantially disproportionate to its principal
amount (a so-called "super-premium" class) as having no qualified stated
interest. Where the interval between the issue date and the first Distribution
Date on a Regular Certificate is shorter than the interval between subsequent
Distribution Dates, the interest attributable to the additional days will be
included in the stated redemption price at maturity.
Under a de minimis rule, original issue discount on a Regular Certificate
will be considered to be zero if such original issue discount is less than
0.25% of the stated redemption price at maturity of the Regular Certificate
multiplied by the weighted average maturity of the Regular Certificate. For
this purpose, the weighted average maturity of the Regular Certificate is
computed as the sum of the amounts determined by multiplying the number of full
years (i.e., rounding down partial years) from the issue date until each
distribution is scheduled to be made by a fraction, the numerator of which is
the
50
amount of each distribution included in the stated redemption price at maturity
of the Regular Certificate and the denominator of which is the stated
redemption price at maturity of the Regular Certificate. The Conference
Committee Report to the 1986 Act provides that the schedule of such
distributions should be determined in accordance with the assumed rate of
prepayment of the mortgage loans (the "Prepayment Assumption") and the
anticipated reinvestment rate, if any, relating to the Regular Certificates.
The Prepayment Assumption with respect to a series of Regular Certificates will
be set forth in the related prospectus supplement. Holders generally must
report de minimis OID pro rata as principal payments are received, and such
income will be capital gain if the Regular Certificate is held as a capital
asset. However, under the OID Regulations, Regular Certificateholders may elect
to accrue all de minimis original issue discount as well as market discount and
market premium under the constant yield method. See "--Election to Treat All
Interest Under the Constant Yield Method" below.
A Regular Certificateholder generally must include in gross income for any
taxable year the sum of the "daily portions," as defined below, of the original
issue discount on the Regular Certificate accrued during an accrual period for
each day on which it holds the Regular Certificate, including the date of
purchase but excluding the date of disposition. It is anticipated that the
Trustee will treat the monthly period ending on the day before each
Distribution Date as the accrual period. With respect to each Regular
Certificate, a calculation will be made of the original issue discount that
accrues during each successive full accrual period (or shorter period from the
date of original issue) that ends on the day before the related Distribution
Date on the Regular Certificate. The Conference Committee Report to the 1986
Act states that the rate of accrual of original issue discount is intended to
be based on the Prepayment Assumption. Other than as discussed below with
respect to a Random Lot Certificate, the original issue discount accruing in a
full accrual period would be the excess, if any, of (i) the sum of (a) the
present value of all of the remaining distributions to be made on the Regular
Certificate as of the end of that accrual period and (b) the distributions made
on the Regular Certificate during the accrual period that are included in the
Regular Certificate's stated redemption price at maturity, over (ii) the
adjusted issue price of the Regular Certificate at the beginning of the accrual
period. The present value of the remaining distributions referred to in the
preceding sentence is calculated based on (i) the yield to maturity of the
Regular Certificate at the issue date, (ii) events (including actual
prepayments) that have occurred prior to the end of the accrual period and
(iii) the Prepayment Assumption. For these purposes, the adjusted issue price
of a Regular Certificate at the beginning of any accrual period equals the
issue price of the Regular Certificate, increased by the aggregate amount of
original issue discount with respect to the Regular Certificate that accrued in
all prior accrual periods and reduced by the amount of distributions included
in the Regular Certificate's stated redemption price at maturity that were made
on the Regular Certificate in such prior periods. The original issue discount
accruing during any accrual period (as determined in this paragraph) will then
be divided by the number of days in the period to determine the daily portion
of original issue discount for each day in the period. With respect to an
initial accrual period shorter than a full accrual period, the daily portions
of original issue discount must be determined according to an appropriate
allocation under any reasonable method.
Under the method described above, the daily portions of original issue
discount required to be included in income by a Regular Certificateholder
generally will increase to take into account prepayments on the Regular
Certificates as a result of prepayments on the mortgage loans that exceed the
Prepayment Assumption, and generally will decrease (but not below zero for any
period) if the prepayments are slower than the Prepayment Assumption. However,
in the case of certain classes of Regular Certificates of a series, an increase
in prepayments on the mortgage loans can result in both a change in the
priority of principal payments with respect to such classes and either an
increase or decrease in the daily portions of original issue discount with
respect to such classes.
In the case of a Random Lot Certificate, it is anticipated that the
Trustee will determine the yield to maturity of such certificate based upon the
anticipated payment characteristics of the class as a whole under the
Prepayment Assumption. In general, the original issue discount accruing on each
Random Lot Certificate in a full accrual period would be its allocable share of
the original issue discount with respect to the entire class, as determined in
accordance with the preceding paragraph. However, in the case of a distribution
in retirement of the entire unpaid principal balance of any Random Lot
Certificate (or portion of such unpaid principal balance), (a) the remaining
unaccrued original issue discount allocable to such
51
certificate (or to such portion) will accrue at the time of such distribution,
and (b) the accrual of original issue discount allocable to each remaining
certificate of such class (or the remaining unpaid principal balance of a
partially redeemed Random Lot Certificate after a distribution of principal has
been received) will be adjusted by reducing the present value of the remaining
payments on such class and by reducing the adjusted issue price of such class
to the extent of the portion of the adjusted issue price attributable to the
portion of the unpaid principal balance of such class that was distributed. The
Seller believes that the foregoing treatment is consistent with the "pro rata
prepayment" rules of the OID Regulations, but with the rate of accrual of
original issue discount determined based on the Prepayment Assumption for the
class as a whole. Investors are advised to consult their tax advisors as to
this treatment.
Acquisition Premium
A purchaser of a Regular Certificate at a price greater than its adjusted
issue price but less than its stated redemption price at maturity will be
required to include in gross income the daily portions of the original issue
discount on the Regular Certificate reduced pro rata by a fraction, the
numerator of which is the excess of its purchase price over such adjusted issue
price and the denominator of which is the excess of the remaining stated
redemption price at maturity over the adjusted issue price. Alternatively, such
a subsequent purchaser may elect to treat all such acquisition premium under
the constant yield method, as described below under the heading "--Election to
Treat All Interest Under the Constant Yield Method " below.
Variable Rate Regular Certificates
Regular Certificates may provide for interest based on a variable rate.
Under the OID Regulations, interest is treated as payable at a variable rate
if, generally, (i) the issue price does not exceed the original principal
balance by more than a specified amount and (ii) the interest compounds or is
payable at least annually at current values of (a) one or more "qualified
floating rates", (b) a single fixed rate and one or more qualified floating
rates, (c) a single "objective rate", or (d) a single fixed rate and a single
objective rate that is a "qualified inverse floating rate". A floating rate is
a qualified floating rate if variations in the rate can reasonably be expected
to measure contemporaneous variations in the cost of newly borrowed funds,
where such rate is subject to a fixed multiple that is greater than 0.65 but
not more than 1.35. Such rate may also be increased or decreased by a fixed
spread or subject to a fixed cap or floor, or a cap or floor that is not
reasonably expected as of the issue date to affect the yield of the instrument
significantly. An objective rate is any rate (other than a qualified floating
rate) that is determined using a single fixed formula and that is based on
objective financial or economic information, provided that such information is
not (i) within the control of the issuer or a related party or (ii) unique to
the circumstances of the issuer or a related party. A qualified inverse
floating rate is a rate equal to a fixed rate minus a qualified floating rate
that inversely reflects contemporaneous variations in the cost of newly
borrowed funds; an inverse floating rate that is not a qualified inverse
floating rate may nevertheless be an objective rate. A class of Regular
Certificates may be issued under this prospectus that provides for interest
that is not a fixed rate and also does not have a variable rate under the
foregoing rules, for example, a class that bears different rates at different
times during the period it is outstanding such that it is considered
significantly "front-loaded" or "back-loaded" within the meaning of the OID
Regulations. It is possible that such a class may be considered to bear
"contingent interest" within the meaning of the OID Regulations. The OID
Regulations, as they relate to the treatment of contingent interest, are by
their terms not applicable to Regular Certificates. However, if final
regulations dealing with contingent interest with respect to Regular
Certificates apply the same principles as existing contingent rules, such
regulations may lead to different timing of income inclusion that would be the
case under the OID Regulations. Furthermore, application of such principles
could lead to the characterization of gain on the sale of contingent interest
Regular Certificates as ordinary income. Investors should consult their tax
advisors regarding the appropriate treatment of any Regular Certificate that
does not pay interest at a fixed rate or variable rate as described in this
paragraph.
Under the REMIC Regulations, a Regular Certificate (i) bearing a rate that
is tied to current values of a rate that qualifies as a variable rate under the
OID Regulations (or the highest, lowest or average of two or more such variable
rates, including a rate based on the average cost of funds of one or more
52
financial institutions), or a positive or negative multiple of such a rate
(plus or minus a specified number of basis points), or that represents a
weighted average of rates on some or all of the mortgage loans, including such
a rate that is subject to one or more caps or floors, or (ii) bearing one or
more such variable rates for one or more periods or one or more fixed rates for
one or more periods, and a different variable rate or fixed rate for other
periods, qualifies as a regular interest in a REMIC. It is anticipated that the
Trustee will treat Regular Certificates that qualify as regular interests under
this rule in the same manner as obligations bearing a variable rate for
original issue discount reporting purposes.
The amount of original issue discount with respect to a Regular
Certificate bearing a variable rate of interest will accrue in the manner
described above under "--Original Issue Discount" with the yield to maturity
and future payments on such Regular Certificate generally to be determined by
assuming that interest will be payable for the life of the Regular Certificate
based on the initial rate (or, if different, the value of the applicable
variable rate as of the pricing date) for the relevant class. It is anticipated
that the Trustee will treat such variable interest as qualified stated
interest, other than variable interest on an interest-only or super-premium
class, which will be treated as non-qualified stated interest includible in the
stated redemption price at maturity. Ordinary income reportable for any period
will be adjusted based on subsequent changes in the applicable interest rate
index.
Although unclear under the OID Regulations, it is anticipated that the
Trustee will treat Regular Certificates bearing an interest rate that is a
weighted average of the net interest rates on mortgage loans which themselves
have fixed or qualified variable rates, as having qualified stated interest. In
the case of adjustable rate mortgage loans, the applicable index used to
compute interest on the mortgage loans in effect on the pricing date (or
possibly the issue date) will be deemed to be in effect over the life of the
mortgage loans beginning with the period in which the first weighted average
adjustment date occurring after the issue date occurs. Adjustments will be made
in each accrual period either increasing or decreasing the amount or ordinary
income reportable to reflect the interest rate on the Regular Certificates.
Market Discount
A purchaser of a Regular Certificate also may be subject to the market
discount rules of Code Section 1276 through 1278. Under these Code sections and
the principles applied by the OID Regulations in the context of original issue
discount, "market discount" is the amount by which the purchaser's original
basis in the Regular Certificate (i) is exceeded by the then-current principal
amount of the Regular Certificate or (ii) in the case of a Regular Certificate
having original issue discount, is exceeded by the adjusted issue price of such
Regular Certificate at the time of purchase. Such purchaser generally will be
required to recognize ordinary income to the extent of accrued market discount
on such Regular Certificate as distributions includible in the stated
redemption price at maturity are received, in an amount not exceeding any such
distribution. Such market discount would accrue in a manner to be provided in
Treasury regulations and should take into account the Prepayment Assumption.
The Conference Committee Report to the 1986 Act provides that until such
regulations are issued, such market discount would accrue either (i) on the
basis of a constant interest rate, (ii) in the ratio of stated interest
allocable to the relevant period to the sum of the interest for such period
plus the remaining interest as of the end of such period, or (iii) in the case
of a Regular Certificate issued with original issue discount, in the ratio of
original issue discount accrued for the relevant period to the sum of the
original issue discount accrued for such period plus the remaining original
issue discount as of the end of such period. Such purchaser also generally will
be required to treat a portion of any gain on a sale or exchange of the Regular
Certificate as ordinary income to the extent of the market discount accrued to
the date of disposition under one of the foregoing methods, less any accrued
market discount previously reported as ordinary income as partial distributions
in reduction of the stated redemption price at maturity were received. Such
purchaser will be required to defer deduction of a portion of the excess of the
interest paid or accrued on indebtedness incurred to purchase or carry a
Regular Certificate over the interest distributable thereon. The deferred
portion of such interest expense in any taxable year generally will not exceed
the accrued market discount on the Regular Certificate for such year. Any such
deferred interest expense is, in general, allowed as a deduction not later than
the year in which the related market discount income is recognized or the
Regular Certificate is disposed of. As an alternative to the inclusion of
market discount in income on the foregoing basis, the Regular Certificateholder
may elect to include
53
market discount in income currently as it accrues on all market discount
instruments acquired by such Regular Certificateholder in that taxable year or
thereafter, in which case the interest deferral rule will not apply. See
"--Election to Treat All Interest Under the Constant Yield Method" below
regarding an alternative manner in which such election may be deemed to be
made.
Market discount with respect to a Regular Certificate will be considered
to be zero if such market discount is less than 0.25% of the remaining stated
redemption price at maturity of such Regular Certificate multiplied by the
weighted average maturity of the Regular Certificate (determined as described
above in the third paragraph under "--Original Issue Discount") remaining after
the date of purchase. It appears that de minimis market discount would be
reported in a manner similar to de minimis original issue discount. See
"--Original Issue Discount" above. Treasury regulations implementing the market
discount rules have not yet been issued, and therefore investors should consult
their own tax advisors regarding the application of these rules. Investors
should also consult Revenue Procedure 92-67 concerning the elections to include
market discount in income currently and to accrue market discount on the basis
of the constant yield method.
Premium
A Regular Certificate purchased at a cost greater than its remaining
stated redemption price at maturity generally is considered to be purchased at
a premium. If the Regular Certificateholder holds such Regular Certificate as a
"capital asset" within the meaning of Code Section 1221, the Regular
Certificateholder may elect under Code Section 171 to amortize such premium
under the constant yield method. Final Treasury Regulations issued under Code
Section 171 do not by their terms apply to prepayable debt instruments such as
the Regular Certificates. However, the Conference Committee Report to the 1986
Act indicates a Congressional intent that the same rules that will apply to the
accrual of market discount on installment obligations will also apply to
amortizing bond premium under Code Section 171 on installment obligations such
as the Regular Certificates, although it is unclear whether the alternatives to
the constant yield method described above under "Market Discount" are
available. Amortizable bond premium will be treated as an offset to interest
income on a Regular Certificate rather than as a separate deduction item. See
"--Election to Treat All Interest Under the Constant Yield Method" below
regarding an alternative manner in which the Code Section 171 election may be
deemed to be made.
Election to Treat All Interest Under the Constant Yield Method
A holder of a debt instrument such as a Regular Certificate may elect to
treat all interest that accrues on the instrument using the constant yield
method, with none of the interest being treated as qualified stated interest.
For purposes of applying the constant yield method to a debt instrument subject
to such an election, (i) interest includes stated interest, original issue
discount, de minimis original issue discount, market discount and de minimis
market discount, as adjusted by any amortizable bond premium or acquisition
premium and (ii) the debt instrument is treated as if the instrument were
issued on the holder's acquisition date in the amount of the holder's adjusted
basis immediately after acquisition. It is unclear whether, for this purpose,
the initial Prepayment Assumption would continue to apply or if a new
prepayment assumption as of the date of the holder's acquisition would apply. A
holder generally may make such an election on an instrument by instrument basis
or for a class or group of debt instruments. However, if the holder makes such
an election with respect to a debt instrument with amortizable bond premium or
with market discount, the holder is deemed to have made elections to amortize
bond premium or to report market discount income currently as it accrues under
the constant yield method, respectively, for all debt instruments acquired by
the holder in the same taxable year or thereafter. The election is made on the
holder's federal income tax return for the year in which the debt instrument is
acquired and is irrevocable except with the approval of the Service. Investors
should consult their own tax advisors regarding the advisability of making such
an election.
SALE OR EXCHANGE OF REGULAR CERTIFICATES
If a Regular Certificateholder sells or exchanges a Regular Certificate,
the Regular Certificateholder will recognize gain or loss equal to the
difference, if any, between the amount realized and its adjusted basis in the
Regular Certificate. The adjusted basis of a Regular Certificate generally will
equal the cost
54
of the Regular Certificate to the seller, increased by any original issue
discount or market discount previously included in the seller's gross income
with respect to the Regular Certificate and reduced by amounts included in the
stated redemption price at maturity of the Regular Certificate that were
previously received by the seller, by any amortized premium and by any
recognized losses.
Except as described above with respect to market discount, and except as
provided in this paragraph, any gain or loss on the sale or exchange of a
Regular Certificate realized by an investor who holds the Regular Certificate
as a capital asset will be capital gain or loss and will be long-term, or
short-term depending on whether the Regular Certificate has been held for the
applicable capital gain holding period. Such gain will be treated as ordinary
income (i) if a Regular Certificate is held as part of a "conversion
transaction" as defined in Code Section 1258(c), up to the amount of interest
that would have accrued on the Regular Certificateholder's net investment in
the conversion transaction at 120% of the appropriate applicable Federal rate
under Code Section 1274(d) in effect at the time the taxpayer entered into the
transaction minus any amount previously treated as ordinary income with respect
to any prior distribution of property that was held as a part of such
transaction, (ii) in the case of a non-corporate taxpayer, to the extent such
taxpayer has made an election under Code Section 163(d)(4) to have net capital
gains taxed as investment income at ordinary rates, or (iii) to the extent that
such gain does not exceed the excess, if any, of (a) the amount that would have
been includible in the gross income of the holder if its yield on such Regular
Certificate were 110% of the applicable Federal rate as of the date of
purchase, over (b) the amount of income actually includible in the gross income
of such holder with respect to the Regular Certificate. In addition, gain or
loss recognized from the sale of a Regular Certificate by certain banks or
thrift institutions will be treated as ordinary income or loss pursuant to Code
Section 582(c). Generally, short-term capital gains of certain non-corporate
taxpayers are subject to the same tax rate as the ordinary income of such
taxpayers for property held for not more than one year, and long-term capital
gains of such taxpayers are subject to a lower maximum tax rate than ordinary
income for those taxpayers for property held for more than one year. The
maximum tax rate for corporations is the same with respect to both ordinary
income and capital gains.
Investors that recognize a loss on a sale or exchange of the 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.
Treatment of Losses
Holders of Regular Certificates will be required to report income with
respect to Regular Certificates on the accrual method of accounting, without
giving effect to delays or reductions in distributions attributable to defaults
or delinquencies on the mortgage loans allocable to a particular class of
Regular Certificates, except to the extent it can be established that such
losses are uncollectible. Accordingly, the holder of a Regular Certificate may
have income, or may incur a diminution in cash flow as a result of a default or
delinquency, but may not be able to take a deduction (subject to the discussion
below) for the corresponding loss until a subsequent taxable year. In this
regard, investors are cautioned that while they may generally cease to accrue
interest income if it reasonably appears that the interest will be
uncollectible, the Internal Revenue Service may take the position that original
issue discount must continue to be accrued in spite of its uncollectibility
until the debt instrument is disposed of in a taxable transaction or becomes
worthless in accordance with the rules of Code Section 166. Under Code Section
166, it appears that holders of Regular Certificates that are corporations or
that otherwise hold the Regular Certificates in connection with a trade or
business should in general be allowed to deduct as an ordinary loss any such
loss sustained during the taxable year on account of any such Regular
Certificates becoming wholly or partially worthless, and that, in general,
holders of Regular Certificates that are not corporations and do not hold the
Regular Certificates in connection with a trade or business will be allowed to
deduct as a short-term capital loss any loss with respect to principal
sustained during the taxable year on account of a portion of any class or
subclass of such Regular Certificates becoming wholly worthless. Although the
matter is not free from doubt, non-corporate holders of Regular Certificates
should be allowed a bad debt deduction at such time as the principal balance of
any class or subclass of such Regular Certificates is reduced to reflect losses
resulting from any liquidated mortgage loans. The Service, however, could take
the position that non-corporate holders will be allowed a bad debt deduction to
reflect such losses only after all mortgage loans remaining in the Trust Fund
55
have been liquidated or such class of Regular Certificates has been otherwise
retired. The Service could also assert that losses on the Regular Certificates
are deductible based on some other method that may defer such deductions for
all holders, such as reducing future cash flow for purposes of computing
original issue discount. This may have the effect of creating "negative"
original issue discount which would be deductible only against future positive
original issue discount or otherwise upon termination of the class. Holders of
Regular Certificates are urged to consult their own tax advisors regarding the
appropriate timing, amount and character of any loss sustained with respect to
such Regular Certificates. While losses attributable to interest previously
reported as income should be deductible as ordinary losses by both corporate
and non-corporate holders the Service may take the position that losses
attributable to accrued original issue discount may only be deducted as capital
losses in the case of non-corporate holders who do not hold Regular
Certificates in connection with a trade or business. Special loss rules are
applicable to banks and thrift institutions, including rules regarding reserves
for bad debts. Such taxpayers are advised to consult their tax advisors
regarding the treatment of losses on Regular Certificates.
TAXATION OF RESIDUAL CERTIFICATES
Taxation of REMIC Income
Generally, the "daily portions" of REMIC taxable income or net loss will
be includible as ordinary income or loss in determining the federal taxable
income of holders of Residual Certificates ("Residual Certificateholders"), and
will not be taxed separately to the REMIC Pool. The daily portions of REMIC
taxable income or net loss of a Residual Certificateholder are determined by
allocating the REMIC Pool's taxable income or net loss for each calendar
quarter ratably to each day in such quarter and by allocating such daily
portion among the Residual Certificateholders in proportion to their respective
holdings of Residual Certificates in the REMIC Pool on such day. REMIC taxable
income is generally determined in the same manner as the taxable income of an
individual using the accrual method of accounting, except that (i) the
limitations on deductibility of investment interest expense and expenses for
the production of income do not apply, (ii) all bad loans will be deductible as
business bad debts and (iii) the limitation on the deductibility of interest
and expenses related to tax-exempt income will apply. The REMIC Pool's gross
income includes interest, original issue discount income and market discount
income, if any, on the mortgage loans (reduced by amortization of any premium
on the mortgage loans), plus issue premium on Regular Certificates, plus income
on reinvestment of cash flows and reserve assets, plus any cancellation of
indebtedness income upon allocation of realized losses to the Regular
Certificates. The REMIC Pool's deductions include interest and original issue
discount expense on the Regular Certificates, servicing fees on the mortgage
loans, other administrative expenses of the REMIC Pool and realized losses on
the mortgage loans. The requirement that Residual Certificateholders report
their pro rata share of taxable income or net loss of the REMIC Pool will
continue until there are no certificates of any class of the related series
outstanding.
The taxable income recognized by a Residual Certificateholder in any
taxable year will be affected by, among other factors, the relationship between
the timing of recognition of interest and original issue discount or market
discount income or amortization of premium with respect to the mortgage loans,
on the one hand, and the timing of deductions for interest (including original
issue discount) or income from amortization of issue premium on the Regular
Certificates, on the other hand. In the event that an interest in the mortgage
loans is acquired by the REMIC Pool at a discount, and one or more of such
mortgage loans is prepaid, the Residual Certificateholder may recognize taxable
income without being entitled to receive a corresponding amount of cash because
(i) the prepayment may be used in whole or in part to make distributions in
reduction of principal on the Regular Certificates and (ii) the discount on the
mortgage loans which is includible in income may exceed the deduction allowed
upon such distributions on those Regular Certificates on account of any
unaccrued original issue discount relating to those Regular Certificates. When
there is more than one class of Regular Certificates that distribute principal
sequentially, this mismatching of income and deductions is particularly likely
to occur in the early years following issuance of the Regular Certificates when
distributions in reduction of principal are being made in respect of earlier
classes of Regular Certificates to the extent that such classes are not issued
with substantial discount or are issued at a premium. If taxable income
attributable to such a mismatching is
56
realized, in general, losses would be allowed in later years as distributions
on the later classes of Regular Certificates are made. Taxable income may also
be greater in earlier years than in later years as a result of the fact that
interest expense deductions, expressed as a percentage of the outstanding
principal amount of such a series of Regular Certificates, may increase over
time as distributions in reduction of principal are made on the lower yielding
classes of Regular Certificates, whereas to the extent that the REMIC Pool
includes fixed rate mortgage loans, interest income with respect to any given
mortgage loan will remain constant over time as a percentage of the outstanding
principal amount of that loan. Consequently, Residual Certificateholders must
have sufficient other sources of cash to pay any federal, state or local income
taxes due as a result of such mismatching or unrelated deductions against which
to offset such income, subject to the discussion of "excess inclusions" below
under "--Limitations on Offset or Exemption of REMIC Income." The timing of
such mismatching of income and deductions described in this paragraph, if
present with respect to a series of certificates, may have a significant
adverse effect upon the Residual Certificateholder's after-tax rate of return.
In addition, a Residual Certificateholder's taxable income during certain
periods may exceed the income reflected by such Residual Certificateholder for
such periods in accordance with generally accepted accounting principles.
Investors should consult their own accountants concerning the accounting
treatment of their investment in Residual Certificates.
Basis and Losses
The amount of any net loss of the REMIC Pool that may be taken into
account by the Residual Certificateholder is limited to the adjusted basis of
the Residual Certificate as of the close of the quarter (or time of disposition
of the Residual Certificate if earlier), determined without taking into account
the net loss for the quarter. The initial adjusted basis of a purchaser of a
Residual Certificate is the amount paid for such Residual Certificate. Such
adjusted basis will be increased by the amount of taxable income of the REMIC
Pool reportable by the Residual Certificateholder and will be decreased (but
not below zero), first, by a cash distribution from the REMIC Pool and, second,
by the amount of loss of the REMIC Pool reportable by the Residual
Certificateholder. Any loss that is disallowed on account of this limitation
may be carried over indefinitely with respect to the Residual Certificateholder
as to whom such loss was disallowed and may be used by such Residual
Certificateholder only to offset any income generated by the same REMIC Pool.
A Residual Certificateholder will not be permitted to amortize directly
the cost of its Residual Certificate as an offset to its share of the taxable
income of the related REMIC Pool. However, that taxable income will not include
cash received by the REMIC Pool that represents a recovery of the REMIC Pool's
basis in its assets. Such recovery of basis by the REMIC Pool will have the
effect of amortization of the issue price of the Residual Certificates over
their life. However, in view of the possible acceleration of the income of
Residual Certificateholders described above under "--Taxation of REMIC Income",
the period of time over which such issue price is effectively amortized may be
longer than the economic life of the Residual Certificates.
A Residual Certificate may have a negative value if the net present value
of anticipated tax liabilities exceeds the present value of anticipated cash
flows. The REMIC Regulations appear to treat the issue price of such a residual
interest as zero rather than such negative amount for purposes of determining
the REMIC Pool's basis in its assets. Regulations have been issued addressing
the federal income tax treatment of "inducement fees" received by transferees
of non-economic Residual Certificates. These regulations require inducement
fees to be included in income over a period reasonably related to the period in
which the related Residual Certificate is expected to generate taxable income
or net loss to its holder. Under two safe harbor methods, inducement fees may
be included in income (i) in the same amounts and over the same period that the
taxpayer uses for financial reporting purposes, provided that such period is
not shorter than the period the related REMIC is expected to generate taxable
income or (ii) ratably over the remaining anticipated weighted average life of
all the regular and residual interests issued by the related REMIC, determined
based on actual distributions projected as remaining to be made on such
interests under the Prepayment Assumption. If the holder of a non-economic
Residual Certificate sells or otherwise disposes of the non-economic Residual
Certificate, any unrecognized portion of the inducement fee must be taken into
account at the time of the sale or disposition. Holders of Residual
Certificates should consult with their tax advisors regarding the effect of
these regulations.
57
Further, to the extent that the initial adjusted basis of a Residual
Certificateholder (other than an original holder) in the Residual Certificate
is greater that the corresponding portion of the REMIC Pool's basis in the
mortgage loans, the Residual Certificateholder will not recover a portion of
such basis until termination of the REMIC Pool unless future Treasury
regulations provide for periodic adjustments to the REMIC income otherwise
reportable by such holder. The REMIC Regulations currently in effect do not so
provide. See "--Treatment of Certain Items of REMIC Income and Expense--Market
Discount" below regarding the basis of mortgage loans to the REMIC Pool and
"--Sale or Exchange of a Residual Certificate" below regarding possible
treatment of a loss upon termination of the REMIC Pool as a capital loss.
Treatment of Certain Items of REMIC Income and Expense
Although the Seller intends to compute REMIC income and expense in
accordance with the Code and applicable regulations, the authorities regarding
the determination of specific items of income and expense are subject to
differing interpretations. The Seller makes no representation as to the
specific method that the Trustee will use for reporting income with respect to
the mortgage loans and expenses with respect to the Regular Certificates, and
different methods could result in different timing of reporting of taxable
income or net loss to Residual Certificateholders or differences in capital
gain versus ordinary income.
Original Issue Discount and Premium. Generally, the REMIC Pool's
deductions for original issue discount will be determined in the same manner as
original issue discount income on Regular Certificates as described above under
"--Taxation of Regular Certificates --Original Issue Discount" and "--Variable
Rate Regular Certificates", without regard to the de minimis rule described in
those sections, and "--Taxation of Regular Certificates --Premium" above.
Market Discount. The REMIC Pool will have market discount income in
respect of mortgage loans if, in general, the basis of the REMIC Pool allocable
to such mortgage loans is exceeded by their unpaid principal balances. The
REMIC Pool's basis in such mortgage loans is generally the fair market value of
the mortgage loans immediately after their transfer to the REMIC Pool. The
REMIC Regulations provide that such basis is equal in the aggregate to the
issue prices of all regular and residual interests in the REMIC Pool (or their
fair market value at the Closing Date, in the case of a retained class). In
respect of mortgage loans that have market discount to which Code Section 1276
applies, the accrued portion of such market discount would be recognized
currently as an item of ordinary income in a manner similar to original issue
discount. Market discount income generally will accrue on a constant yield
method.
Premium. Generally, if the basis of the REMIC Pool in the mortgage loans
exceeds their unpaid principal balances, the REMIC Pool will be considered to
have acquired such mortgage loans at a premium equal to the amount of such
excess. As stated above, the REMIC Pool's basis in mortgage loans is the fair
market value of the mortgage loans, based on the aggregate of the issue prices
(or the fair market value of retained classes) of the regular and residual
interests in the REMIC Pool immediately after their transfer to the REMIC Pool.
In a manner analogous to the discussion above under "--Taxation of Regular
Certificates--Premium," a REMIC Pool that holds a mortgage loan as a capital
asset under Code Section 1221 may elect under Code Section 171 to amortize
premium on whole mortgage loans under the constant yield method. Amortizable
bond premium will be treated as an offset to interest income on the mortgage
loans, rather than as a separate deduction item. To the extent that the
mortgagors with respect to the mortgage loans are individuals, Code Section 171
will not be available for premium on mortgage loans originated on or prior to
September 27, 1985. Premium with respect to such mortgage loans may be
deductible in accordance with a reasonable method regularly employed by the
holder of the mortgage loan. The allocation of such premium pro rata among
principal payments should be considered a reasonable method; however, the
Service may argue that such premium should be allocated in a different manner,
such as allocating such premium entirely to the final payment of principal.
58
Limitations on Offset or Exemption of REMIC Income
A portion or all of the REMIC taxable income includible in determining the
federal income tax liability of a Residual Certificateholder will be subject to
special treatment. That portion, referred to as the "excess inclusion," is
equal to the excess of REMIC taxable income for the calendar quarter allocable
to a Residual Certificate over the daily accruals for such quarterly period of
(i) 120% of the long-term applicable Federal rate that would have applied to
the Residual Certificate (if it were a debt instrument) on the Startup Day
under Code Section 1274(d), multiplied by (ii) the adjusted issue price of such
Residual Certificate at the beginning of such quarterly period. For this
purpose, the adjusted issue price of a Residual Certificate at the beginning of
a quarter is the issue price of the Residual Certificate, plus the amount of
such daily accruals of REMIC income described in this paragraph for all prior
quarters, decreased by any distributions made with respect to such Residual
Certificate prior to the beginning of such quarterly period. Accordingly, the
portion of the REMIC Pool's taxable income that will be treated as excess
inclusions will be a larger portion of such income as the adjusted issue price
of the Residual Certificates diminishes.
The portion of a Residual Certificateholder's REMIC taxable income
consisting of the excess inclusions generally may not be offset by other
deductions, including net operating loss carryforwards, on such Residual
Certificateholder's return. However, net operating loss carryovers are
determined without regard to excess inclusion income. Further, if the Residual
Certificateholder is an organization subject to the tax on unrelated business
income imposed by Code Section 511, the Residual Certificateholder's excess
inclusions will be treated as unrelated business taxable income of such
Residual Certificateholder for purposes of Code Section 511. In addition, REMIC
taxable income is subject to 30% withholding tax with respect to certain
persons who are not U.S. Persons (as defined below under "--Tax-Related
Restrictions on Transfer of Residual Certificates--Foreign Investors"), and
that portion attributable to excess inclusions is not eligible for any
reduction in the rate of withholding tax (by treaty or otherwise). See
"--Taxation of Certain Foreign Investors--Residual Certificates" below.
Finally, if a real estate investment trust or a regulated investment company
owns a Residual Certificate, a portion (allocated under Treasury regulations
yet to be issued) of dividends paid by the real estate investment trust or a
regulated investment company could not be offset by net operating losses of its
shareholders, would constitute unrelated business taxable income for tax-exempt
shareholders, and would be ineligible for reduction of withholding to certain
persons who are not U.S. Persons.
In addition, the Code provides three rules for determining the effect of
excess inclusions on the alternative minimum taxable income of a Residual
Holder. First, alternative minimum taxable income for a Residual Holder is
determined without regard to the special rule, discussed above, that taxable
income cannot be less than excess inclusions. Second, a Residual Holder's
alternative minimum taxable income for a taxable year cannot be less than the
excess inclusions for the year. Third, the amount of any alternative minimum
tax net operating loss deduction must be computed without regard to any excess
inclusions.
Tax-Related Restrictions on Transfer of Residual Certificates
Disqualified Organizations. If any legal or beneficial interest in a
Residual Certificate is transferred to a Disqualified Organization (as defined
below), a tax would be imposed in an amount equal to the product of (i) the
present value of the total anticipated excess inclusions with respect to such
Residual Certificate for periods after the transfer and (ii) the highest
marginal federal income tax rate applicable to corporations. The REMIC
Regulations provide that the anticipated excess inclusions are based on actual
prepayment experience to the date of the transfer and projected payments based
on the Prepayment Assumption. The present value rate equals the applicable
Federal rate under Code Section 1274(d) as of the date of the transfer for a
term ending with the last calendar quarter in which excess inclusions are
expected to accrue. Such a tax generally would be imposed on the transferor of
the Residual Certificate, except that where such transfer is through an agent
(including a broker, nominee or other middleman) for a Disqualified
Organization, the tax would instead be imposed on such agent. However, a
transferor of a Residual Certificate would in no event be liable for such tax
with respect to a transfer if the transferee furnishes to the transferor an
affidavit that the transferee is not a Disqualified Organization and, as of the
time of the transfer, the transferor does not have actual knowledge that such
59
affidavit is false. The tax also may be waived by the Treasury Department if
the Disqualified Organization promptly disposes of the residual interest and
the transferor pays income tax at the highest corporate rate on the excess
inclusions for the period the Residual Certificate is actually held by the
Disqualified Organization.
In addition, if a "Pass-Through Entity" (as defined below) has excess
inclusion income with respect to a Residual Certificate during a taxable year
and a Disqualified Organization is the record holder of an equity interest in
such entity, then a tax is imposed on such entity equal to the product of (i)
the amount of excess inclusions on the Residual Certificate that are allocable
to the interest in the Pass-Through Entity during the period such interest is
held by such Disqualified Organization, and (ii) the highest marginal federal
corporate income tax rate. Such tax would be deductible from the ordinary gross
income of the Pass-Through Entity for the taxable year. The Pass-Through Entity
would not be liable for such tax if it has received an affidavit from such
record holder that it is not a Disqualified Organization or stating such
holder's taxpayer identification number and, during the period such person is
the record holder of the Residual Certificate, the Pass-Through Entity does not
have actual knowledge that such affidavit is false.
If an "electing large partnership" holds a Residual Certificate, all
interests in the electing large partnership are treated as held by Disqualified
Organizations for purposes of the tax imposed upon a Pass-Through Entity by
Section 860E(c) of the Code. An exception to this tax, otherwise available to a
Pass-Through Entity that is furnished certain affidavits by record holders of
interests in the entity and that does not know such affidavits are false, is
not available to an electing large partnership.
For these purposes, (i) "Disqualified Organization" means the United
States, any state or political subdivision of the United States, any foreign
government, any international organization, any agency or instrumentality of
any of the foregoing (provided, that such term does not include an
instrumentality if all of its activities are subject to tax and a majority of
its board of directors is not selected by any such governmental entity), any
cooperative organization furnishing electric energy or providing telephone
service to persons in rural areas as described in Code Section 1381(a)(2)(C),
and any organization (other than a farmers' cooperative described in Code
Section 521) that is exempt from taxation under the Code unless such
organization is subject to the tax on unrelated business income imposed by Code
Section 511, (ii) "Pass-Through Entity" means any regulated investment company,
real estate investment trust, common trust fund, partnership, trust or estate
and certain corporations operating on a cooperative basis. Except as may be
provided in Treasury regulations, any person holding an interest in a
Pass-Through Entity as a nominee for another will, with respect to such
interest, be treated as a Pass-Through Entity and (iii) an "electing large
partnership" means any partnership having more than 100 members during the
preceding tax year (other than certain service partnerships and commodity
pools), which elect to apply simplified reporting provisions under the Code.
The Agreement with respect to a series of certificates will provide that
no legal or beneficial interest in a Residual Certificate may be transferred
unless (i) the proposed transferee provides to the transferor and the Trustee
an affidavit providing its taxpayer identification number and stating that such
transferee is the beneficial owner of the Residual Certificate, is not a
Disqualified Organization and is not purchasing such Residual Certificates on
behalf of a Disqualified Organization (i.e., as a broker, nominee or middleman
of a Disqualified Organization), and (ii) the transferor provides a statement
in writing to the Seller and the Trustee that it has no actual knowledge that
such affidavit is false. Moreover, the Agreement will provide that any
attempted or purported transfer in violation of these transfer restrictions
will be null and void and will vest no rights in any purported transferee. Each
Residual Certificate with respect to a series will bear a legend referring to
such restrictions on transfer, and each Residual Certificateholder will be
deemed to have agreed, as a condition of ownership, to any amendments to the
related Agreement required under the Code or applicable Treasury regulations to
effectuate the foregoing restrictions. Information necessary to compute an
applicable excise tax must be furnished to the Service and to the requesting
party within 60 days of the request, and the Seller or the Trustee may charge a
fee for computing and providing such information.
Noneconomic Residual Interests. The REMIC Regulations would disregard
certain transfers of Residual Certificates, in which case the transferor would
continue to be treated as the owner of the
60
Residual Certificates and thus would continue to be subject to tax on its
allocable portion of the net income of the REMIC Pool. Under the REMIC
Regulations, a transfer of a "noneconomic residual interest" (as defined below)
to a Residual Certificateholder (other than a Residual Certificateholder who is
not a U.S. Person, as defined below under "--Taxation of Certain Foreign
Investors") is disregarded for all federal income tax purposes if a significant
purpose of the transferor is to impede the assessment or collection of tax. A
residual interest in a REMIC (including a residual interest with a positive
value at issuance) is a "noneconomic residual interest" unless, at the time of
the transfer, (i) the present value of the expected future distributions on the
residual interest at least equals the product of the present value of the
anticipated excess inclusions and the highest corporate income tax rate in
effect for the year in which the transfer occurs, and (ii) the transferor
reasonably expects that the transferee will receive distributions from the
REMIC at or after the time at which taxes accrue on the anticipated excess
inclusions in an amount sufficient to satisfy the accrued taxes. The
anticipated excess inclusions and the present value rate are determined in the
same manner as set forth above under "Disqualified Organizations." The REMIC
Regulations explain that a significant purpose to impede the assessment or
collection of tax exists if the transferor, at the time of the transfer, either
knew or should have known that the transferee would be unwilling or unable to
pay taxes due on its share of the taxable income of the REMIC. A safe harbor is
provided if (i) the transferor conducted, at the time of the transfer, a
reasonable investigation of the financial condition of the transferee and found
that the transferee historically had paid its debts as they came due and found
no significant evidence to indicate that the transferee would not continue to
pay its debts as they came due in the future, and (ii) the transferee
represents to the transferor that it understands that, as the holder of the
noneconomic residual interest, the transferee may incur tax liabilities in
excess of cash flows generated by the interest and that the transferee intends
to pay taxes associated with holding the residual interest as they become due,
(iii) the transferee acknowledges to the transferor that it will not cause
income from the noneconomic residual interest to be attributable to a foreign
permanent establishment or fixed base, within the meaning of an applicable
income tax treaty, of such transferee or any other U.S. Person and (iv) the
transfer satisfies one of the following two tests:
(A) the present value of the anticipated tax liabilities associated
with holding the noneconomic residual interest does not exceed the
present value of the sum of: (1) any consideration given to the
transferee to acquire the interest (the inducement payment), (2) future
distributions on the interest, and (3) any anticipated tax savings
associated with holding the interest as the REMIC generates losses. For
purposes of this calculation, the present value is calculated using a
discount rate equal to the lesser of the short-term federal rate and the
compounding period of the transferee, or
(B) the transferee is a domestic taxable corporations with large
amounts of gross and net assets where agreement is made that all future
transfers will be to taxable domestic corporations in transactions that
qualify for one of the safe harbor provisions. Eligibility for this
prong of the safe harbor requires, among other things, that the facts
and circumstances known to the transferor at the time of transfer not
indicate to a reasonable person that the taxes with respect to the
noneconomic residual interest will not be paid, with an unreasonably
low cost for the transfer specifically mentioned as negating
eligibility.
The Agreement with respect to each series of certificates will require the
transferee of a Residual Certificate to certify to the matters in (i) through
(iii), but not (iv) above as part of the affidavit described above under
"--Disqualified Organizations". The transferor must have no actual knowledge or
reason to know that any such statements are false.
Foreign Investors. The REMIC Regulations provide that the transfer of a
Residual Certificate that has "tax avoidance potential" to a "foreign person"
will be disregarded for all federal tax purposes. This rule appears intended to
apply to a transferee who is not a "U.S. Person" (as defined below), unless
such transferee's income is effectively connected with the conduct of a trade
or business within the United States. A Residual Certificate is deemed to have
tax avoidance potential unless, at the time of the transfer, (i) the future
value of expected distributions equals at least 30% of the anticipated excess
inclusions after the transfer, and (ii) the transferor reasonably expects that
the transferee will receive sufficient distributions from the REMIC Pool at or
after the time at which the excess inclusions accrue and
61
prior to the end of the next succeeding taxable year for the accumulated
withholding tax liability to be paid. If the non-U.S. Person transfers the
Residual Certificate back to a U.S. Person, the transfer will be disregarded
and the foreign transferor will continue to be treated as the owner unless
arrangements are made so that the transfer does not have the effect of allowing
the transferor to avoid tax on accrued excess inclusions.
The prospectus supplement relating to a series of certificates may provide
that a Residual Certificate may not be purchased by or transferred to any
person that is not a U.S. Person or may describe the circumstances and
restrictions pursuant to which such a transfer may be made. The term "U.S.
Person" means a citizen or resident of the United States, a corporation,
partnership (except to the extent provided in applicable Treasury regulations)
or other entity created or organized in or under the laws of the United States,
any State thereof or the District of Columbia, an estate that is subject to
U.S. federal income tax regardless of the source of its income, or a trust if a
court within the United States is able to exercise primary supervision over the
administration of such trust, and one or more such U.S. Persons have the
authority to control all substantial decisions of such trust (or, to the extent
provided in applicable Treasury regulations, certain trusts in existence on
August 20, 1996 which are eligible to elect to be treated as U.S. Persons).
Sale or Exchange of a Residual Certificate
Upon the sale or exchange of a Residual Certificate, the Residual
Certificateholder will recognize gain or loss equal to the excess, if any, of
the amount realized over the adjusted basis (as described above under
"--Taxation of residual Certificates--Basis and Losses") of such Residual
Certificateholder in such Residual Certificate at the time of the sale or
exchange. In addition to reporting the taxable income of the REMIC Pool, a
Residual Certificateholder will have taxable income to the extent that any cash
distribution to it from the REMIC Pool exceeds such adjusted basis on that
Distribution Date. Such income will be treated as gain from the sale or
exchange of the Residual Certificate. It is possible that the termination of
the REMIC Pool may be treated as a sale or exchange of a Residual
Certificateholder's Residual Certificate, in which case, if the Residual
Certificateholder has an adjusted basis in such Residual Certificateholder's
Residual Certificate remaining when its interest in the REMIC Pool terminates,
and if such Residual Certificateholder holds such Residual Certificate as a
capital asset under Code Section 1221, then such Residual Certificateholder
will recognize a capital loss at that time in the amount of such remaining
adjusted basis.
Any gain on the sale of a Residual Certificate will be treated as ordinary
income (i) if a Residual Certificate is held as part of a "conversion
transaction" as defined in Code Section 1258(c), up to the amount of interest
that would have accrued on the Residual Certificateholder's net investment in
the conversion transaction at 120% of the appropriate applicable Federal rate
in effect at the time the taxpayer entered into the transaction minus any
amount previously treated as ordinary income with respect to any prior
disposition of property that was held as a part of such transaction or (ii) in
the case of a non-corporate taxpayer, to the extent such taxpayer has made an
election under Code Section 163(d)(4) to have net capital gains taxed as
investment income at ordinary income rates. In addition, gain or loss
recognized from the sale of a Residual Certificate by certain banks or thrift
institutions will be treated as ordinary income or loss pursuant to Code
Section 582(c).
The Conference Committee Report to the 1986 Act provides that, except as
provided in Treasury regulations yet to be issued, the wash sale rules of Code
Section 1091 will apply to dispositions of Residual Certificates where the
seller of the Residual Certificate, during the period beginning six months
before the sale or disposition of the Residual Certificate and ending six
months after such sale or disposition, acquires (or enters into any other
transaction that results in the application of Section 1091) any residual
interest in any REMIC or any interest in a "taxable mortgage pool" (such as a
non-REMIC owner trust) that is economically comparable to a Residual
Certificate.
Mark-to-Market Regulations
Regulations under Code Section 475 require that a securities dealer mark
to market securities held for sale to customers. This mark-to-market
requirement applies to all securities of a dealer, except to the extent that
the dealer has specifically identified a security as held for investment.
Treasury regulations
62
provide that, for purposes of this mark-to-market requirement, a Residual
Certificate is not treated as a security and thus may not be marked to market.
TAXES THAT MAY BE IMPOSED ON THE REMIC POOL
Prohibited Transactions
Income from certain transactions by the REMIC Pool, called prohibited
transactions, will not be part of the calculation of income or loss includible
in the federal income tax returns of Residual Certificateholders, but rather
will be taxed directly to the REMIC Pool at a 100% rate. Prohibited
transactions generally include (i) the disposition of a qualified mortgage
other than for (a) substitution within two years of the Startup Day for a
defective (including a defaulted) obligation (or repurchase in lieu of
substitution of a defective (including a defaulted) obligation at any time) or
for any qualified mortgage within three months of the Startup Day, (b)
foreclosure, default or imminent default of a qualified mortgage, (c)
bankruptcy or insolvency of the REMIC Pool or (d) a qualified (complete)
liquidation, (ii) the receipt of income from assets that are not the type of
mortgages or investments that the REMIC Pool is permitted to hold, (iii) the
receipt of compensation for services or (iv) the receipt of gain from
disposition of cash flow investments other than pursuant to a qualified
liquidation. Notwithstanding clauses (i) and (iv) above, it is not a prohibited
transaction to sell REMIC Pool property to prevent a default on Regular
Certificates as a result of a default on qualified mortgages or to facilitate a
clean-up call (generally, an optional termination to save administrative costs
when no more than a small percentage of the certificates is outstanding). The
REMIC Regulations indicate that the modification of a mortgage loan generally
will not be treated as a disposition if it is occasioned by a default or
reasonably foreseeable default, an assumption of the mortgage loan, the waiver
of a due-on-sale or due-on-encumbrance clause or the conversion of an interest
rate by a mortgagor pursuant to the terms of a convertible adjustable rate
mortgage loan.
Contributions to the REMIC Pool After the Startup Day
In general, the REMIC Pool will be subject to a tax at a 100% rate on the
value of any property contributed to the REMIC Pool after the Startup Day.
Exceptions are provided for cash contributions to the REMIC Pool (i) during the
three months following the Startup Day, (ii) made to a qualified reserve fund
by a Residual Certificateholder, (iii) in the nature of a guarantee, (iv) made
to facilitate a qualified liquidation or clean-up call and (v) as otherwise
permitted in Treasury regulations yet to be issued.
Net Income from Foreclosure Property
The REMIC Pool will be subject to federal income tax at the highest
corporate rate on "net income from foreclosure property," determined by
reference to the rules applicable to real estate investment trusts. Generally,
property acquired by deed in lieu of foreclosure would be treated as
"foreclosure property" for a period not exceeding the close of the third
calendar year beginning after the year in which the REMIC Pool acquired such
property, with a possible extension. Net income from foreclosure property
generally means gain from the sale of a foreclosure property that is inventory
property and gross income from foreclosure property other than qualifying rents
and other qualifying income for a real estate investment trust.
It is not anticipated that the REMIC Pool will receive income or
contributions subject to tax under the preceding three paragraphs, except as
described in the applicable prospectus supplement with respect to net income
from foreclosure property on a commercial or multifamily residential property
that secured a mortgage loan. In addition, it is not anticipated that any
material state income or franchise tax will be imposed on a REMIC Pool.
LIQUIDATION OF THE REMIC POOL
If a REMIC Pool adopts a plan of complete liquidation, within the meaning
of Code Section 860F(a)(4)(A)(i), which may be accomplished by designating in
the REMIC Pool's final tax return a date on which such adoption is deemed to
occur, and sells all of its assets (other than cash) within a 90-day period
beginning on the date of the adoption of the plan of liquidation, the REMIC
Pool will not be subject
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to the prohibited transaction rules on the sale of its assets, provided that
the REMIC Pool credits or distributes in liquidation all of the sale proceeds
plus its cash (other than amounts retained to meet claims) to holders of
Regular Certificates and Residual Certificateholders within the 90-day period.
ADMINISTRATIVE MATTERS
The REMIC Pool will be required to maintain its books on a calendar year
basis and to file federal income tax returns for federal income tax purposes in
a manner similar to a partnership. The form for such income tax return is Form
1066, U.S. Real Estate Mortgage Investment Conduit (REMIC) Income Tax Return.
The Trustee will be required to sign the REMIC Pool's returns. Treasury
regulations provide that, except where there is a single Residual
Certificateholder for an entire taxable year, the REMIC Pool will be subject to
the procedural and administrative rules of the Code applicable to partnerships,
including the determination by the Service of any adjustments to, among other
things, items of REMIC income, gain, loss, deduction or credit in a unified
administrative proceeding. The Residual Certificateholder owning the largest
percentage interest in the Residual Certificates will be obligated to act as
"tax matters person", as defined in applicable Treasury regulations, with
respect to the REMIC Pool. Each Residual Certificateholder will be deemed, by
acceptance of such Residual Certificates, to have agreed (i) to the appointment
of the tax matters person as provided in the preceding sentence and (ii) to the
irrevocable designation of the Trustee as agent for performing the functions of
the tax matters person.
LIMITATIONS ON DEDUCTION OF CERTAIN EXPENSES
An investor who is an individual, estate or trust will be subject to
limitation with respect to certain itemized deductions described in Code
Section 67, to the extent that such itemized deductions, in the aggregate, do
not exceed 2% of the investor's adjusted gross income. In addition, Code
Section 68 provides that itemized deductions otherwise allowable for a taxable
year of an individual taxpayer will be reduced by the lesser of (i) 3% of the
excess, if any, of adjusted gross income over a threshold amount adjusted
annually for inflation or (ii) 80% of the amount of itemized deductions
otherwise allowable for that year. Such limitations will be phased out
beginning in 2006 and eliminated after 2009. In the case of a REMIC Pool, such
deductions may include deductions under Code Section 212 for the Servicing Fee
and all administrative and other expenses relating to the REMIC Pool or any
similar expenses allocated to the REMIC Pool with respect to a regular interest
it holds in another REMIC. Such investors who hold REMIC Certificates either
directly or indirectly through certain pass-through entities may have their pro
rata share of such expenses allocated to them as additional gross income, but
may be subject to such limitation on deductions. In addition, such expenses are
not deductible at all for purposes of computing the alternative minimum tax,
and may cause such investors to be subject to significant additional tax
liability. Temporary Treasury regulations provide that the additional gross
income and corresponding amount of expenses generally are to be allocated
entirely to the holders of Residual Certificates in the case of a REMIC Pool
that would not qualify as a fixed investment trust in the absence of a REMIC
election. However, such additional gross income and limitation on deductions
will apply to the allocable portion of such expenses to holders of Regular
Certificates, as well as holders of Residual Certificates, where such Regular
Certificates are issued in a manner that is similar to pass-through
certificates in a fixed investment trust. In general, such allocable portion
will be determined based on the ratio that a REMIC Certificateholder's income,
determined on a daily basis, bears to the income of all holders of Regular
Certificates and Residual Certificates with respect to a REMIC Pool. As a
result, individuals, estates or trusts holding REMIC Certificates (either
directly or indirectly through a grantor trust, partnership, S corporation,
REMIC, or certain other pass-through entities described in the foregoing
temporary Treasury regulations) may have taxable income in excess of the
interest income at the pass-through rate on Regular Certificates that are
issued in a single class or otherwise consistently with fixed investment trust
status or in excess of cash distributions for the related period on Residual
Certificates. All such expenses will be allocable to the Residual Certificates
or as otherwise indicated in the prospectus supplement.
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TAXATION OF CERTAIN FOREIGN INVESTORS
Regular Certificates
Interest, including original issue discount, distributable to Regular
Certificateholders who are non-resident aliens, foreign corporations, or other
Non-U.S Persons (as defined below), will be considered "portfolio interest"
and, therefore, generally will not be subject to 30% United States withholding
tax, provided that such Non-U.S. Person (i) is not a "10-percent shareholder"
(within the meaning of Code Section 871(h)(3)(B)) of, or a controlled foreign
corporation (described in Code Section 881(c)(3)(C)) related to, the REMIC (or
possibly one or more mortgagors) and (ii) provides the Trustee, or the person
who would otherwise be required to withhold tax from such distributions under
Code Section 1441 or 1442, with an appropriate statement, signed under
penalties of perjury, identifying the beneficial owner and stating, among other
things, that the beneficial owner of the Regular Certificate is a Non-U.S.
Person. If such statement, or any other required statement, is not provided,
30% withholding will apply unless reduced or eliminated pursuant to an
applicable tax treaty or unless the interest on the Regular Certificate is
effectively connected with the conduct of a trade or business within the United
States by such Non-U.S. Person. In the latter case, such Non-U.S. Person will
be subject to United States federal income tax at regular rates. Investors who
are Non-U.S. Persons should consult their own tax advisors regarding the
specific tax consequences to them of owning a Regular Certificate. The term
"Non-U.S. Person" means any person who is not a U.S. Person.
Treasury regulations that were effective January 1, 2001 provide revised
methods of satisfying the beneficial ownership certification requirement
described above. These regulations require, in the case of Regular Certificates
held by a foreign partnership, that (x) the certification described above be
provided by the partners rather than by the foreign partnership and (y) the
partnership provide certain information, including a United States taxpayer
identification number. A look-through rule would apply in the case of tiered
partnerships. Non-U.S. Persons should consult their own tax advisors concerning
the application of the certification requirements in these regulations.
Residual Certificates
The Conference Committee Report to the 1986 Act indicates that amounts
paid to Residual Certificateholders who are Non-U.S. Persons are treated as
interest for purposes of the 30% (or lower treaty rate) United States
withholding tax. Treasury regulations provide that amounts distributed to
Residual Certificateholders may qualify as "portfolio interest", subject to the
conditions described in "Regular Certificates" above, but only to the extent
that (i) the mortgage loans were issued after July 18, 1984 and (ii) the Trust
Fund or segregated pool of assets in that Trust Fund (as to which a separate
REMIC election will be made), to which the Residual Certificate relates,
consists of obligations issued in "registered form" within the meaning of Code
Section 163(f)(1). Generally, whole mortgage loans will not be considered
obligations issued in registered form. Furthermore, a Residual
Certificateholder will not be entitled to any exemption from the 30%
withholding tax (or lower treaty rate) to the extent of that portion of REMIC
taxable income that constitutes an "excess inclusion". See "--Taxation of
Residual Certificates--Limitations on Offset or Exemption of REMIC Income." If
the amounts paid to Residual Certificateholders who are Non-U.S. Persons are
effectively connected with the conduct of a trade or business within the United
States by such Non-U.S. Persons, 30% (or lower treaty rate) withholding will
not apply. Instead, the amounts paid to such Non-U.S. Persons will be subject
to United States federal income tax at regular rates. If 30% (or lower treaty
rate) withholding is applicable, such amounts generally will be taken into
account for purposes of withholding only when paid or otherwise distributed (or
when the Residual Certificate is disposed of) under rules similar to
withholding upon disposition of debt instruments that have original issue
discount. See "--Tax-Related Restrictions on Transfer of Residual
Certificates--Foreign Investors" above concerning the disregard of certain
transfers having "tax avoidance potential." Investors who are Non-U.S. Persons
should consult their own tax advisors regarding the specific tax consequences
to them of owning Residual Certificates.
BACKUP WITHHOLDING
Distributions made on the Regular Certificates, and proceeds from the sale
of the Regular Certificates to or through certain brokers, may be subject to a
"backup" withholding tax under Code
65
Section 3406 at the rate of 28% (increasing to 31% after 2010) on "reportable
payments" (including interest distributions, original issue discount, and,
under certain circumstances, principal distributions) unless the Regular
Certificateholder complies with certain reporting and/or certification
procedures, including the provision of its taxpayer identification number to
the Trustee, its agent or the broker who effected the sale of the Regular
Certificate, or such Certificateholder is otherwise an exempt recipient under
applicable provisions of the Code. Any amounts to be withheld from distribution
on the Regular Certificates would be refunded by the Service or allowed as a
credit against the Regular Certificateholder's federal income tax liability.
Non-U.S. Persons are urged to contact their own tax advisors regarding the
application to them of backup withholding and information reporting.
REPORTING REQUIREMENTS
Reports of accrued interest, original issue discount and information
necessary to compute the accrual of any market discount on the Regular
Certificates will be made annually to the Service and to individuals, estates,
non-exempt and non-charitable trusts, and partnerships who are either holders
of record of Regular Certificates or beneficial owners who own Regular
Certificates through a broker or middleman as nominee. All brokers, nominees
and all other non-exempt holders of record of Regular Certificates (including
corporations, non-calendar year taxpayers, securities or commodities dealers,
real estate investment trusts, investment companies, common trust funds, thrift
institutions and charitable trusts) may request such information for any
calendar quarter by telephone or in writing by contacting the person designated
in Service Publication 938 with respect to a particular series of Regular
Certificates. Holders through nominees must request such information from the
nominee.
The Service's Form 1066 has an accompanying Schedule Q, Quarterly Notice
to Residual Interest Holders of REMIC Taxable Income or Net Loss Allocation.
Treasury regulations require that Schedule Q be furnished by the REMIC Pool to
each Residual Certificateholder by the end of the month following the close of
each calendar quarter (41 days after the end of a quarter under proposed
Treasury regulations) in which the REMIC Pool is in existence.
Treasury regulations require that, in addition to the foregoing
requirements, information must be furnished quarterly to Residual
Certificateholders, furnished annually, if applicable, to holders of Regular
Certificates, and filed annually with the Service concerning Code Section 67
expenses (see "--Limitations on Deduction of Certain Expenses" above) allocable
to such holders. Furthermore, under such regulations, information must be
furnished quarterly to Residual Certificateholders, furnished annually to
holders of Regular Certificates, and filed annually with the Service concerning
the percentage of the REMIC Pool's assets meeting the qualified asset tests
described above under "--Status of REMIC Certificates."
FEDERAL INCOME TAX CONSEQUENCES FOR CERTIFICATES
AS TO WHICH NO REMIC ELECTION IS MADE
STANDARD CERTIFICATES
General
In the event that the applicable Agreement provides that no election is
made to treat a Trust Fund (or a segregated pool of assets in that Trust Fund)
with respect to a series of Certificates that are not designated as "Stripped
Certificates", as described below, as a REMIC (Certificates of such a series
shall be referred to as "Standard Certificates"), in the opinion of Cadwalader,
Wickersham & Taft LLP, the Trust Fund will be classified as a grantor trust
under subpart E, Part 1 of subchapter J of the Code and not as an association
taxable as a corporation or a "taxable mortgage pool" within the meaning of
Code Section 7701(i).
Where there is no retention of a portion of the interest payments with
respect to the mortgage loans underlying the Standard Certificates, the holder
of each such Standard Certificate (a "Standard Certificateholder") in such
series will be treated as the owner of a pro rata undivided interest in the
ordinary income and corpus portions of the Trust Fund represented by its
Standard Certificate and will
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be considered the beneficial owner of a pro rata undivided interest in each of
the mortgage loans, subject to the discussion below under "--Recharacterization
of Servicing Fees." Accordingly, the holder of a Standard Certificate of a
particular series will be required to report on its federal income tax return
its pro rata share of the entire income from the mortgage loans represented by
its Standard Certificate, including interest at the coupon rate on such
mortgage loans, original issue discount (if any), Prepayment Premiums,
assumption fees, and late payment charges received by the Master Servicer, in
accordance with such Standard Certificateholder's method of accounting. A
Standard Certificateholder generally will be able to deduct its share of the
Servicing Fee and all administrative and other expenses of the Trust Fund in
accordance with its method of accounting, provided that such amounts are
reasonable compensation for services rendered to that Trust Fund. However,
investors who are individuals, estates or trusts who own Standard Certificates,
either directly or indirectly through certain pass-through entities, will be
subject to limitation with respect to certain itemized deductions described in
Code Section 67, including deductions under Code Section 212 for the Servicing
Fee and all such administrative and other expenses of the Trust Fund, to the
extent that such deductions, in the aggregate, do not exceed two percent of an
investor's adjusted gross income. In addition, Code Section 68 provides that
itemized deductions otherwise allowable for a taxable year of an individual
taxpayer will be reduced by the lesser of (i) 3% of the excess, if any, of
adjusted gross income over a threshold amount adjusted annually for inflation,
or (ii) 80% of the amount of itemized deductions otherwise allowable for that
year. As a result, such investors holding Standard Certificates, directly or
indirectly through a pass-through entity, may have aggregate taxable income in
excess of the aggregate amount of cash received on such Standard Certificates
with respect to interest at the pass-through rate on such Standard
Certificates. In addition, such expenses are not deductible at all for purposes
of computing the alternative minimum tax, and may cause such investors to be
subject to significant additional tax liability. Moreover, where there is fixed
retained yield with respect to the mortgage loans underlying a series of
Standard Certificates or where the Servicing Fee is in excess of reasonable
servicing compensation, the transaction will be subject to the application of
the "stripped bond" and "stripped coupon" rules of the Code, as described below
under "--Recharacterization of Servicing Fees" and "--Stripped Certificates,"
respectively.
Tax Status
In the opinion of Cadwalader, Wickersham & Taft LLP, Standard Certificates
will have the following status for federal income tax purposes:
1. A Standard Certificate owned by a "domestic building and loan
association" within the meaning of Code Section 7701(a)(19) will be
considered to represent "loans secured by an interest in real property"
within the meaning of Code Section 7701(a)(19)(C)(v), provided that the
real property securing the mortgage loans represented by that Standard
Certificate is of the type described in such section of the Code.
2. A Standard Certificate owned by a real estate investment trust
will be considered to represent "real estate assets" within the meaning
of Code Section 856(c)(5)(B) to the extent that the assets of the
related Trust Fund consist of qualified assets, and interest income on
such assets will be considered "interest on obligations secured by
mortgages on real property" to such extent within the meaning of Code
Section 856(c)(3)(B).
3. A Standard Certificate owned by a REMIC will be considered to
represent an "obligation . . . which is principally secured by an
interest in real property" within the meaning of Code Section
860G(a)(3)(A) to the extent that the assets of the related Trust Fund
consist of "qualified mortgages" within the meaning of Code Section
860G(a)(3).
4. A certificate owned by a "financial asset securitization
investment trust" within the meaning of Code Section 860L(c) will be
considered to represent "permitted assets" within the meaning of Code
Section 860L(c) to the extent that the assets of the trust estate
consist of "debt instruments" or other permitted assets within the
meaning of Code Section 860L(c).
Premium and Discount
Standard Certificateholders are advised to consult with their tax advisors
as to the federal income tax treatment of premium and discount arising either
upon initial acquisition of Standard Certificates or thereafter.
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Premium. The treatment of premium incurred upon the purchase of a Standard
Certificate will be determined generally as described above under "--Federal
Income Tax Consequences for REMIC Certificates--Taxation of Residual
Certificates--Premium."
Original Issue Discount. The original issue discount rules will be
applicable to a Standard Certificateholder's interest in those mortgage loans
as to which the conditions for the application of those sections are met. Rules
regarding periodic inclusion of original issue discount income are applicable
to mortgages of corporations originated after May 27, 1969, mortgages of
noncorporate mortgagors (other than individuals) originated after July 1, 1982,
and mortgages of individuals originated after March 2, 1984. Under the OID
Regulations, such original issue discount could arise by the charging of points
by the originator of the mortgages in an amount greater than a statutory de
minimis exception, including a payment of points currently deductible by the
borrower under applicable Code provisions or, under certain circumstances, by
the presence of "teaser rates" on the mortgage loans.
Original issue discount must generally be reported as ordinary gross
income as it accrues under a constant interest method that takes into account
the compounding of interest, in advance of the cash attributable to such
income. It is anticipated that no prepayment assumption will be assumed for
purposes of such accrual. However, Code Section 1272 provides for a reduction
in the amount of original issue discount includible in the income of a holder
of an obligation that acquires the obligation after its initial issuance at a
price greater than the sum of the original issue price and the previously
accrued original issue discount, less prior payments of principal. Accordingly,
if such mortgage loans acquired by a Standard Certificateholder are purchased
at a price equal to the then unpaid principal amount of such mortgage loans, no
original issue discount attributable to the difference between the issue price
and the original principal amount of such mortgage loans (i.e., points) will be
includible by such holder.
Market Discount. Standard Certificateholders also will be subject to the
market discount rules to the extent that the conditions for application of
those sections are met. Market discount on the mortgage loans will be
determined and will be reported as ordinary income generally in the manner
described above under "--Federal Income Tax Consequences for REMIC
Certificates--Taxation of Regular Certificates--Market Discount," except that
the ratable accrual methods described in that section will not apply. Rather,
the holder will accrue market discount pro rata over the life of the mortgage
loans, unless the constant yield method is elected. It is anticipated that no
prepayment assumption will be assumed for purposes of such accrual.
Recharacterization of Servicing Fees
If the Servicing Fee paid to the Master Servicer were deemed to exceed
reasonable servicing compensation, the amount of such excess would represent
neither income nor a deduction to Certificateholders. In this regard, there are
no authoritative guidelines for federal income tax purposes as to either the
maximum amount of servicing compensation that may be considered reasonable in
the context of this or similar transactions or whether, in the case of the
Standard Certificate, the reasonableness of servicing compensation should be
determined on a weighted average or loan-by-loan basis. If a loan-by-loan basis
is appropriate, the likelihood that such amount would exceed reasonable
servicing compensation as to some of the mortgage loans would be increased.
Service guidance indicates that a servicing fee in excess of reasonable
compensation ("excess servicing") will cause the mortgage loans to be treated
under the "stripped bond" rules. Such guidance provides safe harbors for
servicing deemed to be reasonable and requires taxpayers to demonstrate that
the value of servicing fees in excess of such amounts is not greater than the
value of the services provided.
Accordingly, if the Service's approach is upheld, a servicer who receives
a servicing fee in excess of such amounts would be viewed as retaining an
ownership interest in a portion of the interest payments on the mortgage loans.
Under the rules of Code Section 1286, the separation of ownership of the right
to receive some or all of the interest payments on an obligation from the right
to receive some or all of the principal payments on the obligation would result
in treatment of such mortgage loans as "stripped coupons" and "stripped bonds".
Subject to the de minimis rule discussed below under "--Stripped Certificates,"
each stripped bond or stripped coupon could be considered for this purpose as a
non-interest bearing obligation issued on the date of issue of the Standard
Certificates, and the original issue discount rules of the Code would apply to
the Stripped Certificateholder. While Standard
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Certificateholders would still be treated as owners of beneficial interests in
a grantor trust for federal income tax purposes, the corpus of such trust could
be viewed as excluding the portion of the mortgage loans the ownership of which
is attributed to the Master Servicer, or as including such portion as a second
class of equitable interest. Applicable Treasury regulations treat such an
arrangement as a fixed investment trust, since the multiple classes of trust
interests should be treated as merely facilitating direct investments in the
trust assets and the existence of multiple classes of ownership interests is
incidental to that purpose. In general, such a recharacterization should not
have any significant effect upon the timing or amount of income reported by a
Standard Certificateholder, except that the income reported by a cash method
holder may be slightly accelerated. See "--Stripped Certificates" below for a
further description of the federal income tax treatment of stripped bonds and
stripped coupons.
Sale or Exchange of Standard Certificates
Upon sale or exchange of a Standard Certificate, a Standard
Certificateholder will recognize gain or loss equal to the difference between
the amount realized on the sale and its aggregate adjusted basis in the
mortgage loans and the other assets represented by the Standard Certificate. In
general, the aggregate adjusted basis will equal the Standard
Certificateholder's cost for the Standard Certificate, increased by the amount
of any income previously reported with respect to the Standard Certificate and
decreased by the amount of any losses previously reported with respect to the
Standard Certificate and the amount of any distributions received thereon.
Except as provided above with respect to market discount on any mortgage loans,
and except for certain financial institutions subject to the provisions of Code
Section 582(c), any such gain or loss would be capital gain or loss if the
Standard Certificate was held as a capital asset. However, gain on the sale of
a Standard Certificate will be treated as ordinary income (i) if a Standard
Certificate is held as part of a "conversion transaction" as defined in Code
Section 1258(c), up to the amount of interest that would have accrued on the
Standard Certificateholder's net investment in the conversion transaction at
120% of the appropriate applicable Federal rate in effect at the time the
taxpayer entered into the transaction minus any amount previously treated as
ordinary income with respect to any prior disposition of property that was held
as a part of such transaction or (ii) in the case of a non-corporate taxpayer,
to the extent such taxpayer has made an election under Code Section 163(d)(4)
to have net capital gains taxed as investment income at ordinary income rates.
Long-term capital gains of certain non-corporate taxpayers generally are
subject to a lower maximum tax rate than ordinary income or short-term capital
gains of such taxpayers for property held for more than one year. The maximum
tax rate for corporations is the same with respect to both ordinary income and
capital gains.
Investors that recognize a loss on a sale or exchange of the Standard
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.
STRIPPED CERTIFICATES
General
Pursuant to Code Section 1286, the separation of ownership of the right to
receive some or all of the principal payments on an obligation from ownership
of the right to receive some or all of the interest payments results in the
creation of "stripped bonds" with respect to principal payments and "stripped
coupons" with respect to interest payments. For purposes of this discussion,
certificates that are subject to those rules will be referred to as "Stripped
Certificates".
The certificates will be subject to those rules if (i) the Seller or any
of its affiliates retains (for its own account or for purposes of resale), in
the form of fixed retained yield or otherwise, an ownership interest in a
portion of the payments on the mortgage loans, (ii) the Master Servicer is
treated as having an ownership interest in the mortgage loans to the extent it
is paid (or retains) servicing compensation in an amount greater than
reasonable consideration for servicing the mortgage loans (See "--Standard
Certificates--Recharacterization of Servicing Fees" above) and (iii)
certificates are issued in two or more classes or subclasses representing the
right to non-pro-rata percentages of the interest and principal payments on the
mortgage loans.
In general, a holder of a Stripped Certificate will be considered to own
"stripped bonds" with respect to its pro rata share of all or a portion of the
principal payments on each mortgage loan and/or "stripped
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coupons" with respect to its pro rata share of all or a portion of the interest
payments on each mortgage loan, including the Stripped Certificate's allocable
share of the servicing fees paid to the Master Servicer, to the extent that
such fees represent reasonable compensation for services rendered. See
discussion above under "--Standard Certificates--Recharacterization of
Servicing Fees" above. Although not free from doubt, for purposes of reporting
to Stripped Certificateholders, the servicing fees will be allocated to the
Stripped Certificates in proportion to the respective entitlements to
distributions of each class (or subclass) of Stripped Certificates for the
related period or periods. The holder of a Stripped Certificate generally will
be entitled to a deduction each year in respect of the servicing fees, as
described under "--Standard Certificates--General" above, subject to the
limitation described in that section.
Code Section 1286 treats a stripped bond or a stripped coupon as an
obligation issued at an original issue discount on the date that such stripped
interest is purchased. Although the treatment of Stripped Certificates for
federal income tax purposes is not clear in certain respects at this time,
particularly where such Stripped Certificates are issued with respect to a
mortgage pool containing variable-rate mortgage loans, in the opinion of
Cadwalader, Wickersham & Taft LLP (i) the Trust Fund will be treated as a
grantor trust under subpart E, Part 1 of subchapter J of the Code and not as an
association taxable as a corporation or a "taxable mortgage pool" within the
meaning of Code Section 7701(i), and (ii) each Stripped Certificate should be
treated as a single installment obligation for purposes of calculating original
issue discount and gain or loss on disposition. This treatment is based on the
interrelationship of Code Section 1286, Code Sections 1272 through 1275, and
the OID Regulations. While under Code Section 1286 computations with respect to
Stripped Certificates arguably should be made in one of the ways described
below under "--Taxation of Stripped Certificates--Possible Alternative
Characterizations," the OID Regulations state, in general, that two or more
debt instruments issued by a single issuer to a single investor in a single
transaction should be treated as a single debt instrument for original issue
discount purposes. The Agreement requires that the Trustee make and report all
computations described below using this aggregate approach, unless substantial
legal authority requires otherwise.
Furthermore, Treasury regulations provide for the treatment of a Stripped
Certificate as a single debt instrument issued on the date it is purchased for
purposes of calculating any original issue discount. In addition, under these
regulations, a Stripped Certificate that represents a right to payments of both
interest and principal may be viewed either as issued with original issue
discount or market discount (as described below), at a de minimis original
issue discount, or, presumably, at a premium. This treatment suggests that the
interest component of such a Stripped Certificate would be treated as qualified
stated interest under the OID Regulations. Further, these final regulations
provide that the purchaser of such a Stripped Certificate will be required to
account for any discount as market discount rather than original issue discount
if either (i) the initial discount with respect to the Stripped Certificate was
treated as zero under the de minimis rule, or (ii) no more than 100 basis
points in excess of reasonable servicing is stripped off the related mortgage
loans. Any such market discount would be reportable as described under
"--Federal Income Tax Consequences for REMIC Certificates--Taxation of Regular
Certificates --Market Discount," without regard to the de minimis rule under
the Treasury regulations, assuming that a prepayment assumption is employed in
such computation.
Status of Stripped Certificates
No specific legal authority exists as to whether the character of the
Stripped Certificates, for federal income tax purposes, will be the same as
that of the mortgage loans. Although the issue is not free from doubt, in the
opinion of Cadwalader, Wickersham & Taft LLP, Stripped Certificates owned by
applicable holders should be considered to represent "real estate assets"
within the meaning of Code Section 856(c)(5)(B), "obligation[s] principally
secured by an interest in real property" within the meaning of Code Section
860G(a)(3)(A), and "loans secured by an interest in real property" within the
meaning of Code Section 7701(a)(19)(C)(v), and interest (including original
issue discount) income attributable to Stripped Certificates should be
considered to represent "interest on obligations secured by mortgages on real
property" within the meaning of Code Section 856(c)(3)(B), provided that in
each case the mortgage loans and interest on such mortgage loans qualify for
such treatment. The application of such Code provisions to buy-down mortgage
loans is uncertain. See "--Standard Certificates--Tax Status" above.
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Taxation of Stripped Certificates
Original Issue Discount. Except as described above under "--General," each
Stripped Certificate will be considered to have been issued at an original
issue discount for federal income tax purposes. Original issue discount with
respect to a Stripped Certificate must be included in ordinary income as it
accrues, in accordance with a constant interest method that takes into account
the compounding of interest, which may be prior to the receipt of the cash
attributable to such income. Based in part on the OID Regulations and the
amendments to the original issue discount sections of the Code made by the 1986
Act, the amount of original issue discount required to be included in the
income of a holder of a Stripped Certificate (referred to in this discussion as
a "Stripped Certificateholder") in any taxable year likely will be computed
generally as described above under "-- Federal Income Tax Consequences for
REMIC Certificates--Taxation of Regular Certificates -- Original Issue
Discount" and "--Variable Rate Regular Certificates." However, with the
apparent exception of a Stripped Certificate issued with de minimis original
issue discount as described above under "--General," the issue price of a
Stripped Certificate will be the purchase price paid by each Stripped
Certificateholder, and the stated redemption price at maturity will include the
aggregate amount of the payments to be made on the Stripped Certificate to such
Stripped Certificateholder, presumably under the Prepayment Assumption.
If the mortgage loans prepay at a rate either faster or slower than that
under the Prepayment Assumption, a Stripped Certificateholder's recognition of
original issue discount will be either accelerated or decelerated and the
amount of such original issue discount will be either increased or decreased
depending on the relative interests in principal and interest on each mortgage
loan represented by such Stripped Certificateholder's Stripped Certificate.
While the matter is not free from doubt, the holder of a Stripped Certificate
should be entitled in the year that it becomes certain (assuming no further
prepayments) that the holder will not recover a portion of its adjusted basis
in such Stripped Certificate to recognize an ordinary loss equal to such
portion of unrecoverable basis.
As an alternative to the method described above, the fact that some or all
of the interest payments with respect to the Stripped Certificates will not be
made if the mortgage loans are prepaid could lead to the interpretation that
such interest payments are "contingent" within the meaning of the OID
Regulations. The OID Regulations, as they relate to the treatment of contingent
interest, are by their terms not applicable to prepayable securities such as
the Stripped Certificates. However, if final regulations dealing with
contingent interest with respect to the Stripped Certificates apply the same
principles as the OID Regulations, such regulations may lead to different
timing of income inclusion that would be the case under the OID Regulations.
Furthermore, application of such principles could lead to the characterization
of gain on the sale of contingent interest Stripped Certificates as ordinary
income. Investors should consult their tax advisors regarding the appropriate
tax treatment of Stripped Certificates.
Sale or Exchange of Stripped Certificates. Sale or exchange of a Stripped
Certificate prior to its maturity will result in gain or loss equal to the
difference, if any, between the amount received and the Stripped
Certificateholder's adjusted basis in such Stripped Certificate, as described
above under "--Federal Income Tax Consequences for REMIC Certificates--Taxation
of Regular Certificates--Sale or Exchange of Regular Certificates." To the
extent that a subsequent purchaser's purchase price is exceeded by the
remaining payments on the Stripped Certificates, such subsequent purchaser will
be required for federal income tax purposes to accrue and report such excess as
if it were original issue discount in the manner described above. It is not
clear for this purpose whether the assumed prepayment rate that is to be used
in the case of a Stripped Certificateholder other than an original Stripped
Certificateholder should be the Prepayment Assumption or a new rate based on
the circumstances at the date of subsequent purchase.
Investors that recognize a loss on a sale or exchange of the Stripped
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.
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Purchase of More Than One Class of Stripped Certificates. Where an
investor purchases more than one class of Stripped Certificates, it is
currently unclear whether for federal income tax purposes such classes of
Stripped Certificates should be treated separately or aggregated for purposes
of the rules described above.
Possible Alternative Characterizations. The characterizations of the
Stripped Certificates discussed above are not the only possible interpretations
of the applicable Code provisions. For example, the Stripped Certificateholder
may be treated as the owner of (i) one installment obligation consisting of
such Stripped Certificate's pro rata share of the payments attributable to
principal on each mortgage loan and a second installment obligation consisting
of such Stripped Certificate's pro rata share of the payments attributable to
interest on each mortgage loan, (ii) as many stripped bonds or stripped coupons
as there are scheduled payments of principal and/or interest on each mortgage
loan or (iii) a separate installment obligation for each mortgage loan,
representing the Stripped Certificate's pro rata share of payments of principal
and/or interest to be made with respect thereto. Alternatively, the holder of
one or more classes of Stripped Certificates may be treated as the owner of a
pro rata fractional undivided interest in each mortgage loan to the extent that
such Stripped Certificate, or classes of Stripped Certificates in the
aggregate, represent the same pro rata portion of principal and interest on
each such mortgage loan, and a stripped bond or stripped coupon (as the case
may be), treated as an installment obligation or contingent payment obligation,
as to the remainder. Treasury regulations regarding original issue discount on
stripped obligations make the foregoing interpretations less likely to be
applicable. The preamble to these regulations states that they are premised on
the assumption that an aggregation approach is appropriate for determining
whether original issue discount on a stripped bond or stripped coupon is de
minimis, and solicits comments on appropriate rules for aggregating stripped
bonds and stripped coupons under Code Section 1286.
Because of these possible varying characterizations of Stripped
Certificates and the resultant differing treatment of income recognition,
Stripped Certificateholders are urged to consult their own tax advisors
regarding the proper treatment of Stripped Certificates for federal income tax
purposes.
REPORTING REQUIREMENTS AND BACKUP WITHHOLDING
It is anticipated that, the Trustee will furnish, within a reasonable time
after the end of each calendar year, to each Standard Certificateholder or
Stripped Certificateholder at any time during such year, such information
(prepared on the basis described above) as the Trustee deems to be necessary or
desirable to enable such Certificateholders to prepare their federal income tax
returns. Such information will include the amount of original issue discount
accrued on certificates held by persons other than Certificateholders exempted
from the reporting requirements. The amounts required to be reported by the
Trustee may not be equal to the proper amount of original issue discount
required to be reported as taxable income by a Certificateholder, other than an
original Certificateholder that purchased at the issue price. In particular, in
the case of Stripped Certificates such reporting will be based upon a
representative initial offering price of each class of Stripped Certificates or
as otherwise provided in the prospectus supplement. It is anticipated that the
Trustee will also file such original issue discount information with the
Service. If a Certificateholder fails to supply an accurate taxpayer
identification number or if the Secretary of the Treasury determines that a
Certificateholder has not reported all interest and dividend income required to
be shown on his federal income tax return, backup withholding may be required
in respect of any reportable payments, as described above under "--Federal
Income Tax Consequences for REMIC Certificates--Reporting Requirements and
Backup Withholding" above.
On June 20, 2002, the IRS published proposed regulations which will, when
effective, 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 investment trust is defined as an entity classified as a "trust"
under Treasury Regulations 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 passed and the regulations have not
been finalized. It is unclear when, or if, these regulations will become final.
72
TAXATION OF CERTAIN FOREIGN INVESTORS
To the extent that a certificate evidences ownership in mortgage loans
that are issued on or before July 18, 1984, interest or original issue discount
paid by the person required to withhold tax under Code Section 1441 or 1442 to
nonresident aliens, foreign corporations, or other Non-U.S. Persons generally
will be subject to 30% United States withholding tax, or such lower rate as may
be provided for interest by an applicable tax treaty. Accrued original issue
discount recognized by the Standard Certificateholder or Stripped
Certificateholder on original issue discount recognized by the Standard
Certificateholder or Stripped Certificateholders on the sale or exchange of
such a certificate also will be subject to federal income tax at the same rate.
Treasury regulations provide that interest or original issue discount paid
by the Trustee or other withholding agent to a Non-U.S. Person evidencing
ownership interest in mortgage loans issued after July 18, 1984 will be
"portfolio interest" and will be treated in the manner, and such persons will
be subject to the same certification requirements, described above under
"--Federal Income Tax Consequences for REMIC Certificates--Taxation of Certain
Foreign Investors--Regular Certificates."
STATE TAX CONSIDERATIONS
In addition to the Federal income tax consequences described in "FEDERAL
INCOME TAX CONSEQUENCES" in this prospectus, potential investors should
consider the state income tax consequences of the acquisition, ownership, and
disposition of the certificates. State income tax law may differ substantially
from the corresponding federal law, and this discussion does not purport to
describe any aspect of the income tax laws of any state. Therefore, potential
investors should consult their own tax advisors with respect to the various
state tax consequences of an investment in the certificates.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes certain requirements on employee benefit plans subject to ERISA ("ERISA
Plans") and prohibits certain transactions between ERISA Plans and persons who
are parties in interest (as defined under ERISA) ("parties in interest") with
respect to such Plans. The Code prohibits a similar set of transactions between
certain plans ("Code Plans," and together with ERISA Plans, "Plans") and
persons who are disqualified persons (as defined in the Code) with respect to
Code Plans.
Investments by ERISA Plans and entities the assets of which are deemed to
include plan assets are subject to ERISA's general fiduciary requirements,
including the requirement of investment prudence and diversification and the
requirement that investments be made in accordance with the documents governing
the ERISA Plan. Before investing in a certificate, an ERISA Plan fiduciary
should consider, among other factors, whether to do so is appropriate in view
of the overall investment policy and liquidity needs of the ERISA Plan. Such
fiduciary should especially consider the sensitivity of the investments to the
rate of principal payments (including prepayments) on the mortgage loans, as
discussed in the prospectus supplement related to a series.
PROHIBITED TRANSACTIONS
Section 406 of ERISA and Section 4975 of the Code prohibit parties in
interest and disqualified persons with respect to ERISA Plans and Code Plans
from engaging in certain transactions involving such Plans and their assets
unless a statutory or administrative exemption applies to the transaction.
Section 4975 of the Code and Sections 502(i) and 502(l) of ERISA provide for
the imposition of certain excise taxes and civil penalties on certain persons
that engage or participate in such prohibited transactions. The Seller, the
Master Servicer, the Special Servicer, if any, the Trustee or certain
affiliates of the Seller, Master Servicer, Special Servicer or Trustee, might
be considered or might become parties in interest or disqualified persons with
respect to an ERISA Plan or a Code Plan. If so, the acquisition or holding of
certificates by or on behalf of such Plan could be considered to give rise to a
"prohibited transaction" within the meaning of ERISA and/or the Code unless an
administrative exemption described below or some other exemption is available.
73
Special caution should be exercised before the assets of a Plan are used
to purchase a certificate if, with respect to such assets, the Seller, the
Master Servicer, the Special Servicer, if any, the Trustee or an affiliate of
the Seller, Master Servicer, Special Servicer or Trustee, either: (a) has
investment discretion with respect to the investment of such assets of such
Plan; or (b) has authority or responsibility to give, or regularly gives
investment advice with respect to such assets for a fee and pursuant to an
agreement or understanding that such advice will serve as a primary basis for
investment decisions with respect to such assets and that such advice will be
based on the particular investment needs of the Plan.
Further, if the assets included in a Trust Fund were deemed to constitute
"plan assets," it is possible that an ERISA Plan's investment in the
certificates might be deemed to constitute a delegation, under ERISA, of the
duty to manage plan assets by the fiduciary deciding to invest in the
certificates, and certain transactions involved in the operation of the Trust
Fund might be deemed to constitute prohibited transactions under ERISA and/or
the Code. Neither ERISA nor the Code defines the term "plan assets."
The U.S. Department of Labor (the "Department") has issued regulations
(the "Regulations") concerning whether or not a Plan's assets would be deemed
to include an interest in the underlying assets of an entity (such as the Trust
Fund) for purposes of the reporting and disclosure and general fiduciary
responsibility provisions of ERISA, as well as for the prohibited transaction
provisions of ERISA and the Code, if the Plan acquires an "equity interest"
(such as a certificate) in such an entity.
Certain exceptions are provided in the Regulations whereby an investing
Plan's assets would be deemed merely to include its interest in the
certificates instead of being deemed to include an interest in the assets of
the Trust Fund. However, it cannot be predicted in advance nor can there be a
continuing assurance whether such exceptions may be met, because of the factual
nature of certain of the rules set forth in the Regulations. For example, one
of the exceptions in the Regulations states that the underlying assets of an
entity will not be considered "plan assets" if less than 25% of the value of
all classes of equity interests are held by "benefit plan investors," which are
defined as ERISA Plans, Code Plans, employee benefit plans not subject to ERISA
(for example, governmental plans) and entities whose underlying assets include
plan assets by reason of a Plan's investment therein, but this exception is
tested immediately after each acquisition of an equity interest in the entity
whether upon initial issuance or in the secondary market.
Pursuant to the Regulations, if the assets of the Trust Fund were deemed
to be plan assets by reason of a Plan's investment in any certificates, such
plan assets would include an undivided interest in the mortgage loans, the
mortgages underlying the mortgage loans and any other assets held in the Trust
Fund. Therefore, because the mortgage loans and other assets held in the Trust
Fund may be deemed to be the assets of each Plan that purchases certificates,
in the absence of an exemption, the purchase, sale or holding of certificates
of any series or class by a Plan might result in a prohibited transaction and
the imposition of civil penalties or excise taxes. The Department has issued
administrative exemptions from application of certain prohibited transaction
restrictions of ERISA and the Code to several underwriters of mortgage-backed
securities (each, an "Underwriter's Exemption"). Such an Underwriter's
Exemption can only apply to mortgage-backed securities which, among other
conditions, are sold in an offering with respect to which such underwriter
serves as the sole or a managing underwriter, or as a selling or placement
agent. If such an Underwriter's Exemption might be applicable to a series of
certificates, the related prospectus supplement will refer to such possibility.
OTHER PLANS
Certain 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
that no election has been made under Section 410(d) of the Code), are not
subject to the provisions of ERISA or Section 4975 of the Code. However, such
plans may be subject to materially similar provisions of applicable federal,
state or local law. A fiduciary of any such plan should consult its advisors
regarding the applicability of any such law and whether the fiduciary's ability
to invest in a certificate on behalf of such plan would be limited.
UNRELATED BUSINESS TAXABLE INCOME--RESIDUAL INTERESTS
The purchase of a certificate that is a Residual Certificate by any
person, including any employee benefit plan that is exempt from federal income
tax under Code Section 501(a), including most varieties
74
of ERISA Plans, may give rise to "unrelated business taxable income" as
described in Code Sections 511-515 and 860E. Further, prior to the purchase of
an interest in a Residual Certificate, a prospective transferee may be required
to provide an affidavit to a transferor that it is not, nor is it purchasing an
interest in a Residual Certificate on behalf of, a "Disqualified Organization,"
which term as defined above includes certain tax-exempt entities not subject to
Code Section 511, such as certain governmental plans, as discussed above under
"FEDERAL INCOME TAX CONSEQUENCES--Federal Income Tax Consequences for REMIC
Certificates--Taxation of Residual Certificates."
DUE TO THE COMPLEXITY OF THESE RULES AND THE PENALTIES IMPOSED UPON
PERSONS INVOLVED IN PROHIBITED TRANSACTIONS, IT IS PARTICULARLY IMPORTANT THAT
INDIVIDUALS RESPONSIBLE FOR INVESTMENT DECISIONS WITH RESPECT TO ERISA PLANS
AND CODE PLANS CONSULT WITH THEIR COUNSEL REGARDING THE CONSEQUENCES UNDER
ERISA AND/OR THE CODE OF THEIR ACQUISITIONS AND OWNERSHIP OF CERTIFICATES.
THE SALE OF CERTIFICATES TO A PLAN IS IN NO RESPECT A REPRESENTATION BY
THE SELLER OR THE APPLICABLE UNDERWRITER THAT THIS INVESTMENT MEETS ALL
RELEVANT LEGAL REQUIREMENTS WITH RESPECT TO INVESTMENTS BY PLANS GENERALLY OR
ANY PARTICULAR PLAN, OR THAT THIS INVESTMENT IS APPROPRIATE FOR PLANS GENERALLY
OR ANY PARTICULAR PLAN.
LEGAL INVESTMENT
THE SECONDARY MORTGAGE MARKET ENHANCEMENT ACT
If so specified in the prospectus supplement, certain classes of
Certificates will constitute "mortgage related securities" for purposes of the
Secondary Mortgage Market Enhancement Act of 1984, as amended ("SMMEA").
Generally, the only classes of certificates which will qualify as "mortgage
related securities" will be those that (1) are rated in one of two highest
rating categories by at least one nationally recognized statistical rating
organization; and (2) are part of a series evidencing interests in a trust fund
consisting of loans originated by certain 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" ("Non-SMMEA Certificates") under various legal investment
restrictions, and thus the ability of investors subject to these restrictions
to purchase such certificates, may be subject to significant interpretive
uncertainties. Accordingly, all investors whose investment activities are
subject to legal investment laws and regulations, regulatory capital
requirements, or review by regulatory authorities should consult with their own
legal advisors in determining whether and to what extent the Non-SMMEA
Certificates constitute legal investments for them.
Those classes of 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 those entities.
Under SMMEA, a number of states enacted legislation, on or before the
October 3, 1991 cutoff for those enactments, limiting to varying extents the
ability of certain entities (in particular, insurance companies) to invest in
"mortgage related securities" secured by liens on residential, or mixed
residential and commercial properties, in most cases by requiring the affected
investors to rely solely upon existing state law, and not SMMEA. Pursuant to
Section 347 of the Riegle Community Development and Regulatory Improvement Act
of 1994, which amended the definition of "mortgage related security" to
include, in relevant part, certificates satisfying the rating and qualified
originator requirements for "mortgage related securities," but evidencing
interests in a Trust Fund consisting, in whole or in part, of first liens on
one or more parcels of real estate upon which are located one or more
commercial structures, states were authorized to enact legislation, on or
before September 23, 2001, specifically referring to Section 347 and
prohibiting or restricting the purchase, holding or investment by
state-regulated entities in those types of certificates. Accordingly, the
investors affected by any state legislation overriding the preemptive effect of
SMMEA will be authorized to invest in certificates qualifying as "mortgage
related securities" only to the extent provided in that legislation.
75
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 class of 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 (unless the credit union complies with the
requirements of 12 C.F.R. Section 703.16(e) for investing in those 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 certificates.
All depository institutions considering an investment in the 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 Reserve Board"), the
Federal Deposit Insurance Corporation (the "FDIC"), 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
or state authorities should review rules, policies and guidelines adopted from
time to time by such authorities before purchasing any 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 to any certificates
issued in book-entry form, provisions which may restrict or prohibit
investments in securities which are issued in book-entry form.
76
Except as to the status of certain classes of certificates as "mortgage
related securities", no representations are made as to the proper
characterization of the certificates for legal investment purposes, financial
institution regulatory purposes or other purposes, or as to the ability of
particular investors to purchase 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 certificates) may adversely affect the liquidity of the
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 CERTIFICATES CONSTITUTE LEGAL
INVESTMENTS FOR THEM OR ARE SUBJECT TO INVESTMENT, CAPITAL, OR OTHER
RESTRICTIONS, AND, IF APPLICABLE, WHETHER SMMEA HAS BEEN OVERRIDDEN IN ANY
JURISDICTION RELEVANT TO THAT INVESTOR.
THE APPRAISAL REGULATIONS
Pursuant to Title XI of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 ("FIRREA"), the Federal Reserve Board, the OCC, the
FDIC and the OTS have adopted regulations (the "Appraisal Regulations")
applicable to bank holding companies, their non-bank subsidiaries and
state-chartered banks that are members of the Federal Reserve System (12 C.F.R.
Section Section 225.61-225.67), national banks (12 C.F.R. Section Section
34.41-34.47), state-chartered banks that are not members of the Federal Reserve
System (12 C.F.R. Part 323), and savings associations (12 C.F.R. Part 564),
respectively. The Appraisal Regulations, which are substantially similar,
although not identical, for each agency, generally require the affected
institutions and entities to obtain appraisals performed by state-certified or
state-licensed appraisers (each, a "FIRREA Appraisal") in connection with a
wide range of real estate-related transactions, including the purchase of
interests in loans secured by real estate in the form of mortgage-backed
securities, unless an exemption applies. With respect to purchases of
mortgage-backed securities such as the certificates offered hereby, the
Appraisal Regulations provide for an exemption from the requirement of
obtaining new FIRREA Appraisals for the properties securing the underlying
loans so long as at the time of origination each such loan was the subject of
either a FIRREA Appraisal, or, if a FIRREA Appraisal was not required, met the
appraisal requirements of the appropriate regulator.
No assurance can be given that each of the underlying mortgage loans in a
mortgage pool will have been the subject of a FIRREA Appraisal or, if a FIRREA
Appraisal was not required, an appraisal that conformed to the requirements of
the appropriate regulator at origination. To the extent available, information
will be provided in the prospectus supplement with respect to appraisals on the
mortgage loans underlying each series of certificates. However, such
information may not be available on every mortgage loan. Prospective investors
that may be subject to the Appraisal Regulations are advised to consult with
their legal advisors and/or the appropriate regulators with respect to the
effect of such regulations on their ability to invest in a particular series of
certificates.
PLAN OF DISTRIBUTION
The certificates offered hereby and by means of the related prospectus
supplements will be offered through one or more of the methods described below.
The prospectus supplement with respect to each such series of certificates will
describe the method of offering of such series of certificates, including the
initial public offering or purchase price of each class of certificates or the
method by which such price will be determined and the net proceeds to the
Seller of such sale.
The offered certificates will be offered through the following methods
from time to time and offerings may be made concurrently through more than one
of these methods or an offering of a particular series of certificates may be
made through a combination of two or more of these methods:
1. By negotiated firm commitment underwriting and public reoffering
by underwriters specified in the applicable prospectus supplement;
77
2. By placements by the Seller with investors through dealers; and
3. By direct placements by the Seller with investors.
As more fully described in the prospectus supplement, if underwriters are
used in a sale of any offered certificates, such certificates will be acquired
by the underwriters for their own account and may be resold from time to time
in one or more transactions, including negotiated transactions, at a fixed
public offering price or at varying prices to be determined at the time of sale
or at the time of commitment to sell. Firm commitment underwriting and public
reoffering by underwriters may be done through underwriting syndicates or
through one or more firms acting alone. The specific managing underwriter or
underwriters, if any, with respect to the offer and sale of the offered
certificates of a particular series will be set forth on the cover of the
related prospectus supplement and the members of the underwriting syndicate, if
any, will be named in such prospectus supplement. If so specified in the
related prospectus supplement, the offered certificates will be distributed in
a firm commitment underwriting, subject to the terms and conditions of the
underwriting agreement, by Goldman, Sachs & Co. acting as underwriter with
other underwriters, if any, named in the prospectus supplement. The Seller is
an affiliate of Goldman, Sachs & Co. The prospectus supplement will describe
any discounts and commissions to be allowed or paid by the Seller to the
underwriters, any other items constituting underwriting compensation and any
discounts and commissions to be allowed or paid to the dealers. The obligations
of the underwriters will be subject to certain conditions precedent. The
underwriters with respect to a sale of any class of certificates will be
obligated to purchase all such certificates if any are purchased. The Seller
and, if specified in the prospectus supplement, a selling Certificateholder
will agree to indemnify the underwriters against certain civil liabilities,
including liabilities under the Securities Act or will contribute to payments
required to be made in respect of these liabilities.
In the ordinary course of business, Goldman, Sachs & Co., or its
affiliates, and the Seller may engage in various securities and financing
transactions, including repurchase agreements to provide interim financing of
the Seller's mortgage loans pending the sale of such mortgage loans or
interests in those mortgage loans, including the certificates.
If specified in the prospectus supplement relating to a series of
certificates, a holder of one or more classes of offered certificates that is
required to deliver a prospectus in connection with the offer and sale of the
certificates may offer and sell, pursuant to this prospectus and a related
prospectus supplement, such classes directly, through one or more underwriters
to be designated at the time of the offering of such certificates or through
dealers acting as agent and/or principal. The specific managing underwriter or
underwriters, if any, with respect to any such offer and sale of certificates
by unaffiliated parties will be set forth on the cover of the prospectus
supplement applicable to such certificates and the members of the underwriting
syndicate, if any, will be named in such prospectus supplement, and the
prospectus supplement will describe any discounts and commissions to be allowed
or paid by such unaffiliated parties to the underwriters, any other items
constituting underwriting compensation and any discounts and commissions to be
allowed or paid to any dealers participating in such offering. Any offerings
described in this paragraph may be restricted in the manner specified in such
prospectus supplement. Such transactions may be effected at market prices
prevailing at the time of sale, at negotiated prices or at fixed prices. The
underwriters and dealers participating in such selling Certificateholder's
offering of such certificates may receive compensation in the form of
underwriting discounts or commissions from such selling Certificateholder, and
such dealers may receive commissions from the investors purchasing such
certificates for whom they may act as agent (which discounts or commissions
will not exceed those customary in those types of transactions involved). Any
dealer that participates in the distribution of such certificates may be deemed
to be an "underwriter" within the meaning of the Securities Act, and any
commissions and discounts received by such dealer and any profit on the resale
of such certificates by such dealer might be deemed to be underwriting
discounts and commissions under the Securities Act.
If the certificates of a series are offered other than through
underwriters, the related prospectus supplement will contain information
regarding the nature of such offering and any agreements to be entered into
between the Seller and dealers and/or the Seller and the purchasers of such
certificates. Purchasers of 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
78
reoffers and sales by them of certificates. Holders of certificates should
consult with their legal advisors in this regard prior to any such reoffer or
sale.
The place and time of delivery for each series of certificates offered
hereby and by means of the related prospectus supplement will be set forth in
the prospectus supplement with respect to such series.
If and to the extent required by applicable law or regulation, this
prospectus will be used by Goldman, Sachs & Co. in connection with offers and
sales of the offered certificates in certain market-making transactions at
prices related to prevailing market prices at the time of sale. The Seller will
not receive any proceeds from such transactions. Goldman, Sachs & Co. may act
as principal or agent in such transactions.
If specified in the prospectus supplement relating to certificates of a
particular series offered hereby, the Seller, any affiliate of the Seller or
any other person or persons specified in the prospectus supplement may purchase
some or all of such certificates from the underwriter or underwriters or such
other person or persons specified in such prospectus supplement. Such purchaser
may thereafter from time to time offer and sell, pursuant to this prospectus
and the related prospectus supplement, some or all of such certificates so
purchased, directly, through one or more underwriters to be designated at the
time of the offering of such certificates, through dealers acting as agent
and/or principal or in such other manner as may be specified in the related
prospectus supplement. Such offering may be restricted in the manner specified
in such prospectus supplement. Such transactions may be effected at market
prices prevailing at the time of sale, at negotiated prices or at fixed prices.
Any underwriters and dealers participating in such purchaser's offering of such
certificates may receive compensation in the form of underwriting discounts or
commissions from such purchaser and such dealers may receive commissions from
the investors purchasing such certificates for whom they may act as agent
(which discounts or commissions will not exceed those customary in those types
of transactions involved). Any dealer that participates in the distribution of
such certificates may be deemed to be an "underwriter" within the meaning of
the Securities Act, and any commissions and discounts received by such dealer
and any profit on the resale or such certificates by such dealer might be
deemed to be underwriting discounts and commissions under the Securities Act.
INCORPORATION OF CERTAIN INFORMATION
BY REFERENCE
All documents filed by us pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act subsequent to the date of this prospectus and prior to the
termination of the offering of the offered certificates of a series will be
deemed to be incorporated by reference into this prospectus and to be a part of
this prospectus from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
in this prospectus shall be deemed to be modified or superseded for purposes of
this prospectus to the extent that a statement contained in this prospectus or
in any other subsequently filed document which is or is deemed to be
incorporated by reference in this prospectus modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this prospectus.
We will provide without charge to each person to whom a copy of this
prospectus is delivered, upon the written or oral request of such person, a
copy of any and all of the documents incorporated by reference in this
prospectus (not including the exhibits to such documents, unless such exhibits
are specifically incorporated by reference in such documents). Requests for
such copies should be directed to the office of the Secretary, 85 Broad Street,
New York, New York 10004 (phone: 212/902-1000).
This prospectus and the prospectus supplement for each series are parts of
our Registration Statement. This prospectus does not contain, and the related
prospectus supplement will not contain, all of the information in our
Registration Statement. For further information, please see our Registration
Statement and the accompanying exhibits which we have filed with the
Commission. This prospectus and any prospectus supplement may summarize
contracts and/or other documents. For further information, please see the copy
of the contract or other document filed as an exhibit to the Registration
Statement. You can obtain copies of the Registration Statement from the
Commission upon payment of
79
the prescribed charges, or you can examine the Registration Statement free of
charge at the Commission's offices. Reports and other information filed with
the Commission can be read and copied at the Public Reference Room maintained
by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. You can
obtain information on the operation of the Public Reference Room by calling
1-800-SEC-0330. The Commission also maintains a site on the World Wide Web at
"http://www.sec.gov" at which users can view and download copies of reports,
proxy and information statements and other information filed electronically
through the EDGAR system. Copies of the Agreement pursuant to which a series of
certificates is issued will be provided to each person to whom a prospectus and
the related prospectus supplement are delivered, upon written or oral request
directed to our offices at 85 Broad Street, SC Level, New York, New York 10004
(phone: 212/902-1171), Attention: Prospectus Department.
LEGAL MATTERS
The validity of the certificates offered hereby and certain federal income
tax matters will be passed upon for the Seller by Cadwalader, Wickersham & Taft
LLP or by other counsel identified in the related prospectus supplement.
80
INDEX OF DEFINED TERMS
PAGE
-------
1986 Act .................................. 49
1998 Policy Statement ..................... 76
ADA ....................................... 45
Advances .................................. 22
Agreement ................................. 8
Appraisal Regulations ..................... 77
Balloon Payments .......................... 29
Bankruptcy Code ........................... 33
beneficial owner .......................... 9
CERCLA .................................... 35
Certificateholders ........................ 10
Closing Date .............................. 16
Code ...................................... 46
Code Plans ................................ 73
Collection Account ........................ 11
Commission ................................ 14
Cut-Off Date .............................. 11
Defective Mortgage Loans .................. 18
Department ................................ 74
Depository ................................ 6
Disqualified Organization ................. 60
Distribution Account ...................... 11
Distribution Date ......................... 10
EDGAR ..................................... 14
ERISA ..................................... 73
ERISA Plans ............................... 73
Event of Default .......................... 24
Exchange Act .............................. 14
FASIT ..................................... 13
FDIC ...................................... 76
Federal Reserve Board ..................... 76
Financial Intermediary .................... 9
FIRREA .................................... 77
FIRREA Appraisal .......................... 77
Form 8-K .................................. 16
Funding Note .............................. 9
Garn-St Germain Act ....................... 41
Holders ................................... 10
Installment Contracts ..................... 15
Insurance Proceeds ........................ 11
Lender Liability Act ...................... 36
Letter of Credit Bank ..................... 26
Letter of Credit Percentage ............... 27
Liquidation Proceeds ...................... 11
Master Servicer ........................... 19
Master Servicer Remittance Date ........... 12
Mortgage Loan File ........................ 17
Mortgage Loan Schedule .................... 17
PAGE
-------
Mortgaged Property ........................ 15
Mortgages ................................. 15
NCUA ...................................... 44, 76
Non-SMMEA Certificates .................... 75
OCC ....................................... 76
OID Regulations ........................... 50
Operating Advisor ......................... 20
OTS ....................................... 76
Pass-Through Entity ....................... 60
Permitted Investments ..................... 13
Plans ..................................... 73
Prepayment Assumption ..................... 51
Prepayment Premium ........................ 12
Property Protection Expenses .............. 12
Random Lot Certificates ................... 50
Rating Agency ............................. 8
Regular Certificateholder ................. 49
Regular Certificates ...................... 47
Regulations ............................... 74
REMIC ..................................... 13
REMIC Certificates ........................ 47
REMIC Pool ................................ 47
REMIC Regulations ......................... 46
REO Account ............................... 12
REO Property .............................. 11
Repurchase Price .......................... 18
Residual Certificateholders ............... 56
Residual Certificates ..................... 47
Responsible Party ......................... 18
Securities Act ............................ 7
Seller .................................... 7
Senior Certificates ....................... 26
Service ................................... 49
Servicing Fee ............................. 22
Simple Interest Loans ..................... 15
SMMEA ..................................... 75
Special Servicer .......................... 19
Specially Serviced Mortgage Loans ......... 19
Standard Certificateholder ................ 66
Standard Certificates ..................... 66
Startup Day ............................... 48
Stripped Certificateholder ................ 71
Stripped Certificates ..................... 66, 69
Subordinate Certificates .................. 26
Substitute Mortgage Loans ................. 18
Title V ................................... 43
Title VIII ................................ 44
Treasury .................................. 46
81
PAGE
-----
Trust Fund ...................... 8
Trustee ......................... 14
Underwriter's Exemption ......... 74
PAGE
-----
U.S. Person ..................... 61
82
The attached diskette contains a Microsoft Excel(1), Version 5.0
spreadsheet file (the "Spreadsheet File") that can be put on a user-specified
hard drive or network drive. The Spreadsheet File is "GSMS04GG2.xls". It
provides, in electronic format, (i) certain statistical information that appears
under the caption "Description of the Mortgage Pool" in this prospectus
supplement and in Annex A, Annex B and Annex C to the prospectus supplement.
Defined terms used and not otherwise defined in the Spreadsheet File shall have
the respective meanings assigned to them in this prospectus supplement. All the
information contained in the Spreadsheet File is subject to the same limitations
and qualifications contained in this prospectus supplement. To the extent that
the information in electronic format contained in the attached diskette is
different from the caption "Description of the Mortgage Pool" in this prospectus
supplement and in Annex A, Annex B and Annex C to this prospectus supplement,
the information in electronic format is superseded by the related information in
print format. Prospective investors are advised to read carefully and should
rely, solely, on this prospectus supplement and the accompanying prospectus
relating to the Certificates in making their investment decision.
Open the file as you would normally open any spreadsheet in Microsoft
Excel. Before the file is displayed, a message will appear notifying you that
the file is Read Only. Click the "READ ONLY" button, and after the file is
opened, a securities law legend will be displayed. READ THE LEGEND CAREFULLY.
- ---------------------------------------
(1) Microsoft Excel is a registered trademark of Microsoft Corporation.
================================================================================
No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this prospectus and
prospectus supplement. You must not rely on any unauthorized information or
representations. This prospectus and prospectus supplement is an offer to sell
only the certificates offered hereby, but only under circumstances and in
jurisdictions where it is lawful to do so. The information contained in this
prospectus and prospectus supplement is current only as of its date.
--------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
------
Summary of Prospectus Supplement ................. S-8
Risk Factors ..................................... S-26
Description of the Mortgage Pool ................. S-62
Description of the Offered Certificates .......... S-95
Yield, Prepayment and Maturity
Considerations ................................ S-115
The Pooling Agreement ............................ S-130
Use Of Proceeds .................................. S-161
Federal Income Tax Consequences .................. S-161
State Tax Considerations ......................... S-162
ERISA Considerations ............................. S-163
Legal Investment ................................. S-164
Plan of Distribution ............................. S-165
Legal Matters .................................... S-166
Ratings .......................................... S-166
Index of Significant Definitions ................. S-168
Annex A--Mortgage Pool Information ............... A-1
Annex B-- Ten Largest Mortgage Loans ............. B-1
Annex C--Certain Characteristics of the
Mortgage Loans ................................ C-1
Annex D--Structural and Collateral Term
Sheet ......................................... D-1
PROSPECTUS
Table of Contents ................................ 2
Risk Factors ..................................... 3
The Prospectus Supplement ........................ 5
The Seller ....................................... 7
Use of Proceeds .................................. 7
Description of the Certificates .................. 8
The Mortgage Pools ............................... 15
Servicing of the Mortgage Loans .................. 19
Credit Enhancement ............................... 25
Swap Agreement ................................... 28
Yield Considerations ............................. 28
Certain Legal Aspects of the Mortgage
Loans ......................................... 30
Federal Income Tax Consequences .................. 46
Federal Income Tax Consequences for
REMIC Certificates ............................ 47
State Tax Considerations ......................... 73
ERISA Considerations ............................. 73
Legal Investment ................................. 75
Plan of Distribution ............................. 77
Incorporation of Certain Information by
Reference ..................................... 79
Legal Matters .................................... 80
Index of Defined Terms ........................... 81
UNTIL NOVEMBER 3, 2004, ALL DEALERS EFFECTING TRANSACTIONS IN THE
OFFERED CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS. THIS IS IN ADDITION
TO THE DEALER'S OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS AN
UNDERWRITER AND WITH RESPECT TO AN UNSOLD ALLOTMENT OR SUBSCRIPTION.
================================================================================
================================================================================
$2,435,116,000
(APPROXIMATE)
GS MORTGAGE
SECURITIES CORPORATION II
(AS DEPOSITOR)
COMMERCIAL MORTGAGE
PASS-THROUGH CERTIFICATES
SERIES 2004-GG2
Class A-1 Certificates ........... $ 45,000,000
Class A-2 Certificates ........... $ 100,000,000
Class A-3 Certificates ........... $ 256,000,000
Class A-4 Certificates ........... $ 208,000,000
Class A-5 Certificates ........... $ 173,000,000
Class A-6 Certificates ........... $1,299,650,000
Class A-1A Certificates .......... $ 177,669,000
Class B Certificates ............. $ 65,110,000
Class C Certificates ............. $ 29,299,000
Class D Certificates ............. $ 52,088,000
Class E Certificates ............. $ 29,300,000
--------------------------------------------------------------
PROSPECTUS SUPPLEMENT
--------------------------------------------------------------
[RBS GREENWICH CAPITAL LOGO]
GOLDMAN, SACHS & CO.
BANC OF AMERICA SECURITIES LLC
CREDIT SUISSE FIRST BOSTON
MORGAN STANLEY
WACHOVIA SECURITIES
JULY 29, 2004
================================================================================