Filed Pursuant to Rule 424(b)(5)
Registration No. 333-83930
PROSPECTUS SUPPLEMENT
(TO ACCOMPANY PROSPECTUS DATED JUNE 12, 2003)
$721,263,000 (APPROXIMATE)
(Offered Certificates)
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST
Commercial Mortgage Pass-Through Certificates
Series 2003-C5
WACHOVIA COMMERCIAL MORTGAGE SECURITIES, INC.
(Depositor)
<Table>
<Caption>
---------------------------------------
YOU SHOULD CAREFULLY CONSIDER THE THE TRUST FUND:
RISK FACTORS BEGINNING ON PAGE S-38
OF THIS PROSPECTUS SUPPLEMENT AND ON - As of July 15, 2003, the mortgage loans included in the trust fund will have an
PAGE 11 OF THE ACCOMPANYING aggregate principal balance of approximately $1,200,914,923.
PROSPECTUS.
- The trust fund will consist of a pool of 152 fixed rate mortgage loans.
Neither the offered certificates nor
the underlying mortgage loans are - The mortgage loans are secured by first liens on commercial and multifamily
insured or guaranteed by any properties.
government agency or instrumentality.
- All of the mortgage loans were originated or acquired by Wachovia Bank, National
The offered certificates will Association, Citigroup Global Markets Realty Corp., Nomura Credit & Capital, Inc. or
represent interests in the trust fund Artesia Mortgage Capital Corporation.
only. They will not represent
obligations of any other party. The THE CERTIFICATES:
offered certificates will not be
listed on any national securities - The trust fund will issue twenty-two classes of certificates.
exchange or any automated quotation
system of any registered securities - Only the four classes of offered certificates described in the following table are
association. being offered by this prospectus supplement and the accompanying prospectus.
This prospectus supplement may be
used to offer and sell the offered
certificates only if it is
accompanied by the prospectus dated
June 12, 2003.
---------------------------------------
</Table>
<Table>
<Caption>
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
ORIGINAL PERCENTAGE OF ASSUMED FINAL EXPECTED
CERTIFICATE CUT-OFF DATE PASS-THROUGH DISTRIBUTION MOODY'S/S&P
CLASS BALANCE(1) POOL BALANCE RATE DATE(2) CUSIP NO. RATING(3)
- ------------------------------------------------------------------------------------------------------------------------------
Class A-1.............. $226,000,000 18.819% 2.986 % February 15, 2012 929766GR8 Aaa/AAA
Class A-2.............. $439,721,000 36.615% 3.989 % May 15, 2013 929766GS6 Aaa/AAA
Class B................ $ 40,531,000 3.375% 4.107 % June 15, 2013 929766GT4 Aa2/AA
Class C................ $ 15,011,000 1.250% 4.139 % June 15, 2013 929766GU1 Aa3/AA-
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
(Footnotes explaining the table are on page S-2)
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE OFFERED CERTIFICATES OR HAS
DETERMINED THAT THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
Wachovia Securities, LLC, Citigroup Global Markets Inc. (formerly known as
Salomon Smith Barney Inc.) and Nomura Securities International, Inc. are acting
as co-lead managers for this offering and Lehman Brothers Inc. is acting as a
co-manager for this offering. Citigroup Global Markets Inc. is acting as sole
bookrunner with respect to 46.09% of the Class A-2 certificates. Wachovia
Securities, LLC is acting as sole bookrunner with respect to the remainder of
the Class A-2 certificates and all other classes of offered certificates.
Wachovia Securities, LLC, Citigroup Global Markets Inc., Nomura Securities
International Inc. and Lehman Brothers Inc. are required to purchase the offered
certificates from us, subject to certain conditions. The underwriters will offer
the offered certificates to the public from time to time in negotiated
transactions or otherwise at varying prices to be determined at the time of
sale. We expect to receive from this offering approximately 100.18% of the
initial certificate balance of the offered certificates, plus accrued interest
from July 1, 2003 before deducting expenses.
We expect that delivery of the offered certificates will be made in
book-entry form on or about July 8, 2003.
WACHOVIA CITIGROUP NOMURA
LEHMAN BROTHERS
June 24, 2003
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST
- --------------------------------------------------------------------------------
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES SERIES 2003-C5
GEOGRAPHIC OVERVIEW OF MORTGAGE POOL(1)
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE PURPOSE OF EDGAR
FILING.]
[MORTGAGE POOL MAP]
% OF
NUMBER OF AGGREGATE INITIAL
MORTGAGED CUT-OFF DATE POOL
PROPERTY LOCATION PROPERTIES BALANCE BALANCE
- ----------------- ---------- --------------- -------
CA..................... 21 $ 165,370,364 13.8%
Southern(2).......... 12 $ 101,915,236 8.5
Northern(2).......... 9 $ 63,455,128 5.3
FL..................... 22 $ 126,091,191 10.5
NY..................... 9 $ 109,828,105 9.1
OR..................... 3 $ 93,268,994 7.8
TX..................... 16 $ 69,788,469 5.8
DC..................... 4 $ 65,622,490 5.5
PA..................... 4 $ 60,892,175 5.1
CO..................... 8 $ 57,552,179 4.8
AZ..................... 7 $ 56,331,798 4.7
NC..................... 7 $ 49,448,784 4.1
IL..................... 6 $ 36,831,100 3.1
NV..................... 5 $ 36,140,201 3.0
MA..................... 2 $ 32,403,980 2.7
VA..................... 7 $ 29,844,862 2.5
SC..................... 3 $ 29,081,965 2.4
MD..................... 4 $ 23,607,647 2.0
KS..................... 1 $ 20,649,186 1.7
WA..................... 3 $ 19,782,541 1.6
DE..................... 2 $ 19,569,478 1.6
GA..................... 5 $ 17,875,355 1.5
WI..................... 2 $ 14,971,010 1.2
ND..................... 2 $ 12,922,060 1.1
MI..................... 2 $ 11,514,344 1.0
AK..................... 1 $ 8,861,749 0.7
IA..................... 1 $ 7,885,098 0.7
CT..................... 1 $ 7,411,727 0.6
TN..................... 1 $ 4,386,498 0.4
NE..................... 1 $ 3,778,860 0.3
NM..................... 1 $ 3,288,877 0.3
NJ..................... 1 $ 2,196,756 0.2
MO..................... 1 $ 2,153,303 0.2
MN..................... 1 $ 1,563,776 0.1
MORTGAGE POOL BY PROPERTY TYPE
- ------------------------------
[PIE CHART] [ ] > 10.0% of Cut-Off Date Pool Balance
Retail................. 33.8% [ ] > 5.0% - 10.0% of Cut-Off Date Pool Balance
Office................. 28.1% [ ] > 1.0% - 5.0% of Cut-Off Date Pool Balance
Multifamily............ 27.4% [ ] > 0 - 1.0% of Cut-Off Date Pool Balance
Industrial............. 3.3%
Mobile Home Park....... 2.3%
Mixed Use.............. 2.2%
Self Storage........... 2.1%
Hospitality............ 0.9%
GEOGRAPHIC OVERVIEW OF MORTGAGED PROPERTIES(3)
(1) All numerical information concerning the mortgage loans included in the
trust fund is provided on an approximate basis.
(2) For purposes of determining whether a Mortgaged Property is located in
Northern California or Southern California, mortgaged properties located north
of San Luis Obispo County, Kern County and San Bernardino County were included
in Northern California and mortgaged properties located in and south of such
counties were included in Southern California.
(3) Because this table presents information relating to the mortgaged properties
and not the mortgage loans, the information for mortgage loans secured by more
than one mortgaged property is based on allocated loan amounts (allocating the
mortgage loan principal balance to each of those properties by the appraised
values of the mortgaged properties).
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We provide information to you about the offered certificates in two
separate documents that progressively provide more detail: (a) the accompanying
prospectus, which provides general information, some of which may not apply to
the offered certificates and (b) this prospectus supplement, which describes the
specific terms of the offered certificates. You should read both this prospectus
supplement and the prospectus before investing in any of the offered
certificates.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO
PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. THE INFORMATION IN THIS DOCUMENT
MAY ONLY BE ACCURATE AS OF THE DATE OF THIS DOCUMENT. IF THE DESCRIPTIONS OF THE
OFFERED CERTIFICATES VARY BETWEEN THE ACCOMPANYING PROSPECTUS AND THIS
PROSPECTUS SUPPLEMENT, YOU SHOULD RELY ON THE INFORMATION IN THIS PROSPECTUS
SUPPLEMENT.
This prospectus supplement begins with several introductory sections
describing the offered certificates and the trust fund in abbreviated form:
- SUMMARY OF PROSPECTUS SUPPLEMENT, commencing on page S-5 of this
prospectus supplement, which gives a brief introduction of the key
features of the offered certificates and a description of the mortgage
loans included in the trust fund; and
- RISK FACTORS, commencing on page S-38 of this prospectus supplement,
which describes risks that apply to the offered certificates which are
in addition to those described in the prospectus.
This prospectus supplement and the accompanying prospectus include cross
references to sections in these materials where you can find further related
discussions. The Tables of Contents in this prospectus supplement and the
accompanying prospectus identify the pages where these sections are located.
You can find a listing of the pages where capitalized terms used in this
prospectus supplement are defined under the caption "INDEX OF DEFINED TERMS"
beginning on page S-228 in this prospectus supplement.
In this prospectus supplement, the terms "depositor," "we," "us" and "our"
refer to Wachovia Commercial Mortgage Securities, Inc.
WE DO NOT INTEND THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
TO BE AN OFFER OR SOLICITATION:
- if used in a jurisdiction in which such offer or solicitation is not
authorized;
- if the person making such offer or solicitation is not qualified to do
so; or
- if such offer or solicitation is made to anyone to whom it is unlawful
to make such offer or solicitation.
This prospectus supplement and the accompanying prospectus may be used by
us, Wachovia Securities, LLC, our affiliate, and any other of our affiliates
when required under the federal securities laws in connection with offers and
sales of offered certificates in furtherance of market-making activities in
offered certificates. Wachovia Securities, LLC or any such other affiliate may
act as principal or agent in these transactions. Sales will be made at prices
related to prevailing market prices at the time of sale or otherwise.
S-1
(Footnotes to table on the front cover)
- ------------------
(1) Subject to a permitted variance of plus or minus 5.0%.
(2) The Assumed Final Distribution Date has been determined on the basis of the
assumptions set forth in the "DESCRIPTION OF THE CERTIFICATES--Assumed Final
Distribution Date; Rated Final Distribution Date" in this prospectus
supplement and a 0% CPR (as defined in "YIELD AND MATURITY
CONSIDERATIONS--Weighted Average Life" in this prospectus supplement). The
Rated Final Distribution Date is the distribution date to occur in June
2035. See "DESCRIPTION OF THE CERTIFICATES--Assumed Final Distribution Date;
Rated Final Distribution Date" and "RATINGS" in this prospectus supplement.
(3) By each of Moody's Investors Service, Inc. and Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc. See "RATINGS" in
this prospectus supplement.
S-2
TABLE OF CONTENTS
<Table>
SUMMARY OF PROSPECTUS SUPPLEMENT............................ S-5
Overview of the Certificates.............................. S-6
The Parties............................................... S-7
Important Dates and Periods............................... S-9
The Certificates.......................................... S-9
The Mortgage Loans........................................ S-25
RISK FACTORS................................................ S-38
DESCRIPTION OF THE MORTGAGE POOL............................ S-86
General................................................... S-86
Mortgage Loan History..................................... S-87
Certain Terms and Conditions of the Mortgage Loans........ S-88
Assessments of Property Condition......................... S-93
Co-Lender Loans........................................... S-94
Additional Mortgage Loan Information...................... S-98
Twenty Largest Mortgage Loans............................. S-141
The Mortgage Loan Sellers................................. S-160
Underwriting Standards.................................... S-162
Assignment of the Mortgage Loans; Repurchases and
Substitutions.......................................... S-163
Representations and Warranties; Repurchases and
Substitutions.......................................... S-166
Repurchase or Substitution of Cross-Collateralized
Mortgage Loans......................................... S-169
Changes in Mortgage Pool Characteristics.................. S-170
SERVICING OF THE MORTGAGE LOANS............................. S-170
General................................................... S-170
The Master Servicer and the Special Servicer.............. S-171
Servicing and Other Compensation and Payment of
Expenses............................................... S-174
Modifications, Waivers and Amendments..................... S-177
The Controlling Class Representative...................... S-178
Defaulted Mortgage Loans; REO Properties; Purchase
Option................................................. S-180
Inspections; Collection of Operating Information.......... S-182
DESCRIPTION OF THE CERTIFICATES............................. S-183
General................................................... S-183
Registration and Denominations............................ S-183
Certificate Balances and Notional Amount.................. S-185
Pass-Through Rates........................................ S-188
Distributions............................................. S-191
Subordination; Allocation of Losses and Certain
Expenses............................................... S-201
P&I Advances.............................................. S-204
Appraisal Reductions...................................... S-206
Reports to Certificateholders; Available Information...... S-207
Assumed Final Distribution Date; Rated Final Distribution
Date................................................... S-211
Voting Rights............................................. S-212
Termination............................................... S-212
The Trustee............................................... S-213
YIELD AND MATURITY CONSIDERATIONS........................... S-214
Yield Considerations...................................... S-214
Weighted Average Life..................................... S-217
USE OF PROCEEDS............................................. S-220
MATERIAL FEDERAL INCOME TAX CONSEQUENCES.................... S-220
General................................................... S-220
Taxation of the Offered Certificates...................... S-221
ERISA CONSIDERATIONS........................................ S-222
LEGAL INVESTMENT............................................ S-225
</Table>
S-3
<Table>
<Caption>
METHOD OF DISTRIBUTION..................................... S-225
LEGAL MATTERS............................................... S-227
RATINGS..................................................... S-227
INDEX OF DEFINED TERMS...................................... S-228
</Table>
<Table>
ANNEX A-1 CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS AND MORTGAGED
PROPERTIES.................................................. A-1
ANNEX A-1A CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS AND MORTGAGED
PROPERTIES IN LOAN GROUP 1.................................. A-1A
ANNEX A-1B CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS AND MORTGAGED
PROPERTIES IN LOAN GROUP 2.................................. A-1B
ANNEX A-2 CERTAIN INFORMATION REGARDING MULTIFAMILY MORTGAGED
PROPERTIES.................................................. A-2
ANNEX A-3 RESERVE ACCOUNT INFORMATION................................. A-3
ANNEX A-4 COMMERCIAL TENANT SCHEDULE.................................. A-4
ANNEX A-5 CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS AND MORTGAGED
PROPERTIES (CROSSED AND PORTFOLIOS)......................... A-5
ANNEX A-6 DEBT SERVICE PAYMENT SCHEDULE FOR RITE AID BALTIMORE........ A-6
ANNEX B FORM OF DISTRIBUTION DATE STATEMENT......................... B-1
ANNEX C CLASS X-P REFERENCE RATE.................................... C-1
</Table>
S-4
SUMMARY OF PROSPECTUS SUPPLEMENT
- THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROSPECTUS
SUPPLEMENT AND DOES NOT CONTAIN ALL OF THE INFORMATION THAT YOU NEED TO
CONSIDER IN MAKING YOUR INVESTMENT DECISION. TO UNDERSTAND THE TERMS OF
THE OFFERED CERTIFICATES, YOU MUST CAREFULLY READ THIS ENTIRE PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS.
- THIS SUMMARY PROVIDES AN OVERVIEW OF CERTAIN CALCULATIONS, CASH FLOWS AND
OTHER INFORMATION TO AID YOUR UNDERSTANDING AND IS QUALIFIED BY THE FULL
DESCRIPTION OF THESE CALCULATIONS, CASH FLOWS AND OTHER INFORMATION IN
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS.
- WE PROVIDE INFORMATION IN THIS PROSPECTUS SUPPLEMENT ON THE CERTIFICATES
THAT ARE NOT OFFERED BY THIS PROSPECTUS SUPPLEMENT ONLY TO ENHANCE YOUR
UNDERSTANDING OF THE OFFERED CERTIFICATES. WE ARE NOT OFFERING THE
NON-OFFERED CERTIFICATES PURSUANT TO THIS PROSPECTUS SUPPLEMENT.
- FOR PURPOSES OF MAKING DISTRIBUTIONS TO THE CLASS A-1, CLASS A-2 AND
CLASS A-1A CERTIFICATES, THE POOL OF MORTGAGE LOANS WILL BE DEEMED TO
CONSIST OF 2 DISTINCT LOAN GROUPS, LOAN GROUP 1 AND LOAN GROUP 2.
- UNLESS OTHERWISE STATED, ALL PERCENTAGES OF THE MORTGAGE LOANS INCLUDED
IN THE TRUST FUND, OR OF ANY SPECIFIED GROUP OF MORTGAGE LOANS INCLUDED
IN THE TRUST FUND, REFERRED TO IN THIS PROSPECTUS SUPPLEMENT ARE
CALCULATED USING THE AGGREGATE PRINCIPAL BALANCE OF THE MORTGAGE LOANS
INCLUDED IN THE TRUST FUND AS OF THE CUT-OFF DATE (WHICH IS JULY 11, 2003
WITH RESPECT TO 127 MORTGAGE LOANS, JULY 1, 2003 WITH RESPECT TO 22
MORTGAGE LOANS AND JULY 15, 2003 WITH RESPECT TO 3 MORTGAGE LOANS) AFTER
GIVING EFFECT TO PAYMENTS DUE ON OR BEFORE SUCH DATE WHETHER OR NOT
RECEIVED. THE CUT-OFF DATE BALANCE OF EACH MORTGAGE LOAN INCLUDED IN THE
TRUST FUND AND EACH CUT-OFF DATE CERTIFICATE BALANCE IN THIS PROSPECTUS
SUPPLEMENT ASSUMES THE TIMELY RECEIPT OF PRINCIPAL SCHEDULED TO BE PAID
(IF ANY) ON EACH MORTGAGE LOAN AND NO DEFAULTS, DELINQUENCIES OR
PREPAYMENTS ON ANY MORTGAGE LOAN ON OR BEFORE THE RELATED CUT-OFF DATE.
PERCENTAGES OF MORTGAGED PROPERTIES ARE REFERENCES TO THE PERCENTAGES OF
THE AGGREGATE PRINCIPAL BALANCE OF ALL THE MORTGAGE LOANS INCLUDED IN THE
TRUST FUND, OR OF ANY SPECIFIED GROUP OF MORTGAGE LOANS INCLUDED IN THE
TRUST FUND, AS OF THE CUT-OFF DATE REPRESENTED BY THE AGGREGATE PRINCIPAL
BALANCE OF THE RELATED MORTGAGE LOANS AS OF THE CUT-OFF DATE.
- ALL NUMERICAL OR STATISTICAL INFORMATION CONCERNING THE MORTGAGE LOANS
INCLUDED IN THE TRUST FUND IS PROVIDED ON AN APPROXIMATE BASIS.
S-5
OVERVIEW OF THE CERTIFICATES
The table below lists certain summary information concerning the Wachovia
Bank Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates,
Series 2003-C5, which we are offering pursuant to the accompanying prospectus
and this prospectus supplement. Each certificate represents an interest in the
mortgage loans included in the trust fund and the other assets of the trust
fund. The table also describes the certificates that are not offered by this
prospectus supplement (other than the Class Z, Class R-I and Class R-II) which
have not been registered under the Securities Act of 1933, as amended, and which
will be sold to investors in private transactions.
<Table>
<Caption>
CLOSING DATE
CERTIFICATE PERCENTAGE PASS- INITIAL WEIGHTED CASH FLOW OR EXPECTED
BALANCE OR OF CUT-OFF THROUGH PASS- AVERAGE PRINCIPAL MOODY'S/
NOTIONAL DATE POOL CREDIT RATE THROUGH LIFE WINDOW S&P
CLASS AMOUNT(1) BALANCE SUPPORT DESCRIPTION RATE (YEARS)(2) (MON./YR.)(2) RATING(3)
- ----- -------------- ---------- ------- ----------- ------- ---------- ------------- ---------
Class A-1............ $ 226,000,000 18.819% 19.500% Fixed 2.986% 5.70 08/03 - 02/12 Aaa/AAA
Class A-2............ $ 439,721,000 36.615% 19.500% Fixed 3.989% 9.61 02/12 - 05/13 Aaa/AAA
Class B.............. $ 40,531,000 3.375% 16.125% Fixed 4.107% 9.92 05/13 - 06/13 Aa2/AA
Class C.............. $ 15,011,000 1.250% 14.875% Fixed 4.139% 9.94 06/13 - 06/13 Aa3/AA-
Class A-1A........... $ 301,015,000 25.065% 19.500% Fixed 3.812% (4) (4) (4)
Class D.............. $ 31,524,000 2.625% 12.250% Fixed 4.168% (4) (4) (4)
Class E.............. $ 10,508,000 0.875% 11.375% Fixed 4.228% (4) (4) (4)
Class F.............. $ 16,513,000 1.375% 10.000% Fixed(5) 4.535% (4) (4) (4)
Class G.............. $ 19,515,000 1.625% 8.375% Fixed(5) 4.634% (4) (4) (4)
Class H.............. $ 19,515,000 1.625% 6.750% Fixed(5) 5.178% (4) (4) (4)
Class J.............. $ 22,517,000 1.875% 4.875% Fixed 4.298% (4) (4) (4)
Class K.............. $ 12,009,000 1.000% 3.875% Fixed 4.298% (4) (4) (4)
Class L.............. $ 6,005,000 0.500% 3.375% Fixed 4.298% (4) (4) (4)
Class M.............. $ 6,004,000 0.500% 2.875% Fixed 4.298% (4) (4) (4)
Class N.............. $ 6,005,000 0.500% 2.375% Fixed 4.298% (4) (4) (4)
Class O.............. $ 4,503,000 0.375% 2.000% Fixed 4.298% (4) (4) (4)
Class P.............. $ 24,018,922 2.000% 0.000% Fixed 4.298% (4) (4) (4)
Class X-P............ $1,154,968,000 NA NA WAC-IO(6) 1.9188% (6) (6) (6)
Class X-C............ $1,200,914,922 NA NA WAC-IO(6) 0.0898% (6) (6) (6)
</Table>
- ------------------
(1) Subject to a permitted variance of plus or minus 5.0%.
(2) Based on no prepayments and the other assumptions set forth under "YIELD AND
MATURITY CONSIDERATIONS--Weighted Average Life" in this prospectus
supplement.
(3) By each of Moody's Investors Service, Inc. and Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc. See "RATINGS" in
this prospectus supplement.
(4) Not offered by this prospectus supplement. Any information we provide herein
regarding the terms of these certificates is provided only to enhance your
understanding of the offered certificates.
(5) The pass-through rates applicable to the Class F, Class G and Class H
certificates for any distribution date will equal the lesser of the
applicable rate set forth above and the applicable weighted average net
mortgage rate for such date.
(6) The Class X-C and Class X-P certificates are not offered by this prospectus
supplement. Any information we provide herein regarding the terms of these
certificates is provided only to enhance your understanding of the offered
certificates. The Class X-C and Class X-P certificates will not have
certificate balances and their holders will not receive distributions of
principal, but such holders are entitled to receive payments of the
aggregate interest accrued on the notional amount of the Class X-C or Class
X-P certificates, as the case may be, as described in this prospectus
supplement. The interest rates applicable to the Class X-C and Class X-P
certificates for each distribution date will be as described in this
prospectus supplement. See "DESCRIPTION OF THE CERTIFICATES--Pass-Through
Rates" in this prospectus supplement.
[ ] Offered certificates
[ ] Private certificates
S-6
THE PARTIES
THE TRUST FUND................ The trust fund will be created on or about the
closing date pursuant to a pooling and
servicing agreement, dated as of July 1, 2003,
by and among the depositor, the master
servicer, the special servicer and the
trustee.
THE DEPOSITOR................. Wachovia Commercial Mortgage Securities, Inc.
We are a wholly owned subsidiary of Wachovia
Bank, National Association, which is one of
the mortgage loan sellers, the master servicer
and an affiliate of one of the underwriters.
Our principal executive office is located at
301 South College Street, Charlotte, North
Carolina 28288-0166 and our telephone number
is (704) 374-6161. Neither we nor any of our
affiliates have insured or guaranteed the
offered certificates. For more detailed
information, see "THE DEPOSITOR" in the
accompanying prospectus.
On the closing date, we will sell the mortgage
loans and related assets to be included in the
trust fund to the trustee to create the trust
fund.
THE ISSUER.................... The trust fund to be established under the
pooling and servicing agreement. For more
detailed information, see "DESCRIPTION OF THE
CERTIFICATES" in this prospectus supplement
and the accompanying prospectus.
THE MORTGAGE LOAN SELLERS..... Wachovia Bank, National Association, Citigroup
Global Markets Realty Corp., Nomura Credit &
Capital, Inc. and Artesia Mortgage Capital
Corporation. For more information, see
"DESCRIPTION OF THE MORTGAGE POOL--The
Mortgage Loan Sellers" in this prospectus
supplement. The mortgage loan sellers will
sell and assign to us on the closing date the
mortgage loans to be included in the trust
fund. See "DESCRIPTION OF THE MORTGAGE
POOL--Representations and Warranties;
Repurchases and Substitutions" in this
prospectus supplement.
Wachovia Bank, National Association originated
or acquired 64 of the mortgage loans to be
included in the trust fund representing 56.0%
of the cut-off date pool balance of all the
mortgage loans to be included in the trust
fund (47 mortgage loans in loan group 1 or
58.5% and 17 mortgage loans in loan group 2 or
48.4%). Citigroup Global Markets Realty Corp.
originated or acquired 18 of the mortgage
loans to be included in the trust fund
representing 16.9% of the cut-off date pool
balance of all the mortgage loans to be
included in the trust fund (14 mortgage loans
in loan group 1 or 17.3% and 4 mortgage loans
in loan group 2 or 15.7%). Nomura Credit &
Capital, Inc. originated or acquired 38 of the
mortgage loans to be included in the trust
fund representing 14.8% of the cut-off date
pool balance of all the mortgage loans to be
included in the trust fund (26 mortgage loans
in loan group 1 or 14.2% and 12 mortgage loans
in loan group 2 or 16.6%). Artesia Mortgage
Capital Corporation originated or acquired 32
of the mortgage loans to be included in the
trust fund representing 12.4% of the
S-7
cut-off date pool balance of all the mortgage
loans to be included in the trust fund (20
mortgage loans in loan group 1 or 10.1% and 12
mortgage loans in loan group 2 or 19.4%).
THE MASTER SERVICER........... Wachovia Bank, National Association. Wachovia
Bank, National Association is our affiliate
and is one of the mortgage loan sellers and an
affiliate of one of the underwriters. The
master servicer will be primarily responsible
for collecting payments and gathering
information with respect to the mortgage loans
included in the trust fund and the 5 companion
loans which are not part of the trust fund.
See "SERVICING OF THE MORTGAGE LOANS--The
Master Servicer and the Special Servicer" in
this prospectus supplement.
THE SPECIAL SERVICER.......... Lennar Partners, Inc. The special servicer
will be responsible for performing certain
servicing functions with respect to the
mortgage loans included in the trust fund
that, in general, are in default or as to
which default is imminent.
Some holders of certificates (initially the
holder of the Class P certificates) will have
the right to replace the special servicer and
to select a representative who may advise and
direct the special servicer and whose approval
is required for certain actions by the special
servicer under certain circumstances. See
"SERVICING OF THE MORTGAGE LOANS--The Master
Servicer and Special Servicer" in this
prospectus supplement.
THE TRUSTEE................... Wells Fargo Bank Minnesota, N.A. The trustee
will be responsible for distributing payments
to certificateholders and delivering to
certificateholders certain reports on the
mortgage loans included in the trust fund and
the certificates. See "DESCRIPTION OF THE
CERTIFICATES--The Trustee" in this prospectus
supplement.
THE UNDERWRITERS.............. Wachovia Securities, LLC, Citigroup Global
Markets Inc., Nomura Securities International,
Inc. and Lehman Brothers Inc. Wachovia
Securities, LLC is our affiliate and is an
affiliate of Wachovia Bank, National
Association, which is the master servicer and
one of the mortgage loan sellers. Citigroup
Global Markets Inc. is an affiliate of
Citigroup Global Markets Realty Corp., which
is one of the mortgage loan sellers. Nomura
Securities International, Inc. is an affiliate
of Nomura Credit & Capital, Inc., which is one
of the mortgage loan sellers. Wachovia
Securities, LLC, Citigroup Global Markets Inc.
and Nomura Securities International, Inc. are
acting as co-lead managers for this offering
and Lehman Brothers Inc. is acting as a
co-manager for this offering. Citigroup Global
Markets Inc. is acting as sole bookrunner with
respect to 46.09% of the Class A-2
certificates. Wachovia Securities, LLC is
acting as sole bookrunner with respect to the
remainder of the Class A-2 certificates and
all other classes of offered certificates.
S-8
IMPORTANT DATES AND PERIODS
CLOSING DATE.................. On or about July 8, 2003.
CUT-OFF DATE.................. For 127 mortgage loans, representing 81.8% of
the mortgage pool (89 mortgage loans in loan
group 1 or 81.5% and 38 mortgage loans in loan
group 2 or 82.4%), July 11, 2003; for 22
mortgage loans, representing 17.5% of the
mortgage pool (15 mortgage loans in loan group
1 or 17.5% and 7 mortgage loans in loan group
2 or 17.6%), July 1, 2003; and for 3 mortgage
loans, representing 0.7% of the mortgage pool
(3 mortgage loans in loan group 1 or 1.0%),
July 15, 2003. The cut-off date balance of
each mortgage loan included in the trust fund
and each cut-off date certificate balance in
this prospectus supplement assumes the timely
receipt of principal scheduled to be paid (if
any) on each mortgage loan and no defaults,
delinquencies or prepayments on any mortgage
loan as of the related cut-off date.
DISTRIBUTION DATE............. The 15th day of each month or, if such 15th
day is not a business day, the next succeeding
business day, beginning in August 2003.
DETERMINATION DATE............ For any distribution date, the fourth business
day prior to the related distribution date.
COLLECTION PERIOD............. For any distribution date, the period
beginning on the 12th day in the immediately
preceding month (or the day after the
applicable cut-off date in the case of the
first collection period) through and including
the 11th day of the month in which the
distribution date occurs except that with
respect to 3 mortgage loans representing 0.7%
of the mortgage pool (3 mortgage loans in loan
group 1 or 1.0%) the 16th day in the
immediately preceding month (or the day after
the applicable cut-off date in the case of the
first collection period) through and including
the 15th day of the month in which the
distribution date occurs. Notwithstanding the
foregoing, in the event that the last day of a
collection period is not a business day, any
payments with respect to the mortgage loans
which relate to such collection period and are
received on the business day immediately
following such last day will be deemed to have
been received during such collection period
and not during any other collection period.
THE CERTIFICATES
OFFERED CERTIFICATES.......... We are offering to you the following 4 classes
of certificates of our Commercial Mortgage
Pass-Through Certificates, Series 2003-C5
pursuant to this prospectus supplement:
Class A-1
Class A-2
Class B
Class C
S-9
PRIORITY OF DISTRIBUTIONS..... On each distribution date, the owners of the
certificates will be entitled to distributions
of payments or other collections on the
mortgage loans that the master servicer
collected or advanced during or with respect
to the related collection period after
deducting certain fees and expenses. For
purposes of making certain distributions to
the Class A-1, Class A-2 and Class A-1A
certificates, the mortgage pool will be deemed
to consist of 2 loan groups.
- Loan group 1 will consist of (i) all of
the mortgage loans that are not secured
by multifamily properties and/or mobile
home park properties, (ii) 4 mortgage
loans that are secured by multifamily
properties and (iii) 2 mortgage loans
that are secured by mobile home park
properties.
- Loan group 2 will consist of 38 mortgage
loans that are secured by multifamily
properties and 7 mortgage loans that are
secured by mobile home park properties.
Annex A to this prospectus supplement sets
forth the loan group designation for each
mortgage loan.
The trustee will distribute amounts to the
extent that the money is available, in the
following order of priority, to pay:
Interest, concurrently (i) pro rata, on the
Class A-1 and Class A-2 certificates from the
portion of money available attributable to
mortgage loans in loan group 1, (ii) on the
Class A-1A certificates from the portion of
money available attributable to mortgage loans
in loan group 2, and (iii) pro rata, on the
Class X-C and Class X-P certificates from any
and all money attributable to the mortgage
pool; provided, however, if on any
distribution date, the money available on such
distribution date is insufficient to pay in
full the total amount of interest to be paid
to any of the classes as described above,
money available with respect to the entire
mortgage pool will be allocated among all
those classes pro rata.
Principal of the Class A-1 certificates, up to
the principal distribution amount relating to
loan group 1 and, after the Class A-1A
certificate balance has been reduced to zero,
the principal distribution amount relating to
loan group 2 remaining after payments to the
Class A-1A certificates have been made, until
their certificate balance is reduced to zero.
Principal of the Class A-2 certificates, up to
the principal distribution amount relating to
loan group 1 and, after the Class A-1A
certificate balance has been reduced to zero,
the principal distribution amount relating to
loan group 2 remaining after payments to the
Class A-1A certificates have been made, until
their certificate balance is reduced to zero.
S-10
Principal of the Class A-1A certificates, up
to the principal distribution amount relating
to loan group 2 and, after the Class A-2
certificate balance has been reduced to zero,
the principal distribution amount relating to
loan group 1 remaining after payments to the
Class A-2 certificates have been made, until
their certificate balance is reduced to zero.
Reimbursement to the Class A-1, Class A-2 and
Class A-1A certificates, pro rata, for any
realized loss and trust fund expenses borne by
such classes
Interest on the Class B certificates.
Principal of the Class B certificates, up to
the principal distribution amount, until their
certificate balance is reduced to zero.
Reimbursement to the Class B certificates for
any realized losses and trust fund expenses
borne by such class.
Interest on the Class C certificates.
Principal of the Class C certificates, up to
the principal distribution amount, until their
certificate balance is reduced to zero.
Reimbursement to the Class C certificates for
any realized losses and trust fund expenses
borne by such class.
If, on any distribution date, the certificate
balances of the Class B through Class P
certificates have been reduced to zero, but
any two or more of the Class A-1, Class A-2
and/or Class A-1A certificates remain
outstanding, distributions of principal and
interest will be made, pro rata, to the
outstanding Class A-1, Class A-2 and Class
A-1A certificates. See "DESCRIPTION OF THE
CERTIFICATES--Distributions" in this
prospectus supplement.
INTEREST...................... On each distribution date each class of
certificates (other than the Class Z, Class
R-I and Class R-II certificates) will be
entitled to receive:
- for each such class of certificates, one
month's interest at the applicable
pass-through rate accrued during the
calendar month prior to the related
distribution date, on the certificate
balance or notional amount, as
applicable, of such class of certificates
immediately prior to such distribution
date;
- plus any interest that such class of
certificates was entitled to receive on
all prior distribution dates to the
extent not received;
- minus (other than in the case of the
Class X-C and Class X-P certificates)
such class' share of any shortfalls in
interest collections due to prepayments
on mortgage loans included in the trust
fund that are not offset by certain
payments made by the master servicer; and
S-11
- minus (other than in the case of the
Class X-C and Class X-P certificates)
such class' allocable share of any
reduction in interest accrued on any
mortgage loan as a result of a
modification that reduces the related
mortgage rate and allows the reduction in
accrued interest to be added to the
stated principal balance of the mortgage
loan.
As reflected in the chart under "Priority of
Distributions" above, so long as funds are
sufficient on any distribution date to make
distributions of all interest on such
distribution date to the Class A-1, Class A-2,
Class A-1A, Class X-C and Class X-P
certificates, interest distributions on the
Class A-1 and Class A-2 certificates will be
based upon amounts available relating to
mortgage loans in loan group 1 and interest
distributions on the Class A-1A certificates
will be based upon amounts available relating
to mortgage loans in loan group 2.
See "DESCRIPTION OF THE CERTIFICATES,
Certificate Balances and Notional Amount" and
"--Distributions" in this prospectus
supplement.
The Class X-C and Class X-P certificates will
be entitled to distributions of interest-only
on their respective notional amounts. On each
distribution date, the notional amount of the
Class X-C certificates will generally be equal
to the aggregate outstanding certificate
balances of the sequential pay certificates on
such date.
The notional amount of the Class X-P
certificates generally will equal:
(1) until the distribution date in January
2004, the sum of (a) the lesser of
$222,033,000 and the certificate balance
of the Class A-1 certificates, (b) the
lesser of $299,566,000 and the
certificate balance of the Class A-1A
certificates and (c) the aggregate
certificate balances of the Class A-2,
Class B, Class C, Class D, Class E,
Class F, Class G, Class H, Class J,
Class K and Class L certificates;
(2) after the distribution date in January
2004 through and including the
distribution date in July 2004, the sum
of (a) the lesser of $216,992,000 and
the certificate balance of the Class A-1
certificates, (b) the lesser of
$297,670,000 and the certificate balance
of the Class A-1A certificates and (c)
the aggregate certificate balances of
the Class A-2, Class B, Class C, Class
D, Class E, Class F, Class G, Class H,
Class J, Class K and Class L
certificates;
(3) after the distribution date in July 2004
through and including the distribution
date in January 2005, the sum of (a) the
lesser of $197,206,000 and the
certificate balance of the Class A-1
certificates, (b) the lesser of
$290,871,000 and the certificate balance
of the Class A-1A certificates and (c)
the aggregate certificate
S-12
balances of the Class A-2, Class B, Class C, Class D, Class E, Class F, Class G,
Class H, Class J, Class K and Class L certificates;
(4) after the distribution date in January
2005 through and including the
distribution date in July 2005, the sum
of (a) the lesser of $174,741,000 and
the certificate balance of the Class A-1
certificates, (b) the lesser of
$283,236,000 and the certificate balance
of the Class A-1A certificates and (c)
the aggregate certificate balances of
the Class A-2, Class B, Class C, Class
D, Class E, Class F, Class G, Class H,
Class J, Class K and Class L
certificates;
(5) after the distribution date in July 2005
through and including the distribution
date in January 2006, the sum of (a) the
lesser of $152,858,000 and the
certificate balance of the Class A-1
certificates, (b) the lesser of
$275,743,000 and the certificate balance
of the Class A-1A certificates and (c)
the aggregate certificate balances of
the Class A-2, Class B, Class C, Class
D, Class E, Class F, Class G, Class H,
Class J, Class K and Class L
certificates;
(6) after the distribution date in January
2006 through and including the
distribution date in July 2006, the sum
of (a) the lesser of $131,365,000 and
the certificate balance of the Class A-1
certificates, (b) the lesser of
$268,428,000 and the certificate balance
of the Class A-1A certificates and (c)
the aggregate certificate balances of
the Class A-2, Class B, Class C, Class
D, Class E, Class F, Class G, Class H,
Class J and Class K certificates;
(7) after the distribution date in July 2006
through and including the distribution
date in January 2007, the sum of (a) the
lesser of $110,438,000 and the
certificate balance of the Class A-1
certificates, (b) the lesser of
$261,284,000 and the certificate balance
of the Class A-1A certificates, (c) the
aggregate certificate balances of the
Class A-2, Class B, Class C, Class D,
Class E, Class F, Class G, Class H,
Class J certificates and (d) the lesser
of $938,000 and the certificate balance
of the Class K certificates;
(8) after the distribution date in January
2007 through and including the
distribution date in July 2007, the sum
of (a) the lesser of $89,993,000 and the
certificate balance of the Class A-1
certificates, (b) the lesser of
$254,308,000 and the certificate balance
of the Class A-1A certificates, (c) the
aggregate certificate balances of the
Class A-2, Class B, Class C, Class D,
Class E, Class F, Class G, Class H
certificates and
S-13
(d) the lesser of $12,789,000 and the
certificate balance of the Class J
certificates;
(9) after the distribution date in July 2007
through and including the distribution
date in January 2008, the sum of (a) the
lesser of $64,633,000 and the
certificate balance of the Class A-1
certificates, (b) the lesser of
$247,566,000 and the certificate balance
of the Class A-1A certificates, (c) the
aggregate certificate balances of the
Class A-2, Class B, Class C, Class D,
Class E, Class F, Class G, Class H
certificates and (d) the lesser of
$2,527,000 and the certificate balance
of the Class J certificates;
(10) after the distribution date in January
2008 through and including the
distribution date in July 2008, the sum
of (a) the lesser of $37,426,000 and the
certificate balance of the Class A-1
certificates, (b) the lesser of
$237,255,000 and the certificate balance
of the Class A-1A certificates, (c) the
aggregate certificate balances of the
Class A-2, Class B, Class C, Class D
Class E, Class F, Glass G certificates
and (d) the lesser of $12,281,000 and
the certificate balance of the Class H
certificates;
(11) after the distribution date in July 2008
through and including the distribution
date in January 2009, the sum of (a) the
lesser of $19,066,000 and the
certificate balance of the Class A-1
certificates, (b) the lesser of
$230,995,000 and the certificate balance
of the Class A-1A certificates, (c) the
aggregate certificate balances of the
Class A-2, Class B, Class C, Class D,
Class E, Class F, Class G certificates
and (d) the lesser of $2,979,000 and the
certificate balance of the Class H
certificates;
(12) after the distribution date in January
2009 through and including the
distribution date in July 2009, the sum
of (a) the lesser of $434,862,000 and
the certificate balance of the Class A-2
certificates, (b) the lesser of
$224,881,000 and the certificate balance
of the Class A-1A certificates, (c) the
aggregate certificate balances of the
Class B, Class C, Class D, Class E,
Class F certificates and (d) the lesser
of $13,575,000 and the certificate
balance of the Class G certificates;
(13) after the distribution date in July 2009
through and including the distribution
date in January 2010, the sum of (a) the
lesser of $417,680,000 and the
certificate balance of the Class A-2
certificates, (b) the lesser of
$218,970,000 and the certificate balance
of the Class A-1A certificates, (c) the
aggregate certificate balances of the
Class B, Class C, Class D, Class E,
Class F certificates and (d) the lesser
of $5,050,000 and the certificate
balance of the Class G certificates;
S-14
(14) after the distribution date in January
2010 through and including the
distribution date in July 2010, the sum
of (a) the lesser of $341,783,000 and
the certificate balance of the Class A-2
certificates, (b) the lesser of
$197,219,000 and the certificate balance
of the Class A-1A certificates, (c) the
aggregate certificate balances of the
Class B, Class C, Class D, Class E
certificates and (d) the lesser of
$13,419,000 and the certificate balance
of the Class F certificates;
(15) after the distribution date in July 2010
through and including the distribution
date in January 2011, the sum of (a) the
lesser of $326,712,000 and the
certificate balance of the Class A-2
certificates, (b) the lesser of
$192,110,000 and the certificate balance
of the Class A-1A certificates, (c) the
aggregate certificate balances of the
Class B, Class C, Class D, Class E
certificates and (d) the lesser of
$6,133,000 and the certificate balance
of the Class F certificates;
(16) after the distribution date in January
2011 through and including the
distribution date in July 2011, the sum
of (a) the lesser of $303,287,000 and
the certificate balance of the Class A-2
certificates, (b) the lesser of
$187,119,000 and the certificate balance
of the Class A-1A certificates, (c) the
aggregate certificate balances of the
Class B, Class C, Class D certificates
and (d) the lesser of $9,711,000 and the
certificate balance of the Class E
certificates;
(17) after the distribution date in July
2011, $0.
The Class X-C and Class X-P certificates will
accrue interest at a rate as described under
"Pass-Through Rates" below.
The certificates (other than the Class Z,
Class R-I and Class R-II certificates) will
accrue interest on the basis of a 360-day year
consisting of twelve 30-day months.
The interest accrual period with respect to
any distribution date and any class of
certificates (other than the Class Z, Class
R-I and Class R-II certificates) is the
calendar month preceding the month in which
such distribution date occurs.
As reflected in the chart under "Priority of
Distributions" beginning on page S-10 above,
on each distribution date, the trustee will
distribute interest to the holders of the
offered certificates and the Class X
certificates:
- first, concurrently, to the Class X-C
certificates, Class X-P certificates,
Class A-1 certificates, Class A-2 and
Class A-1A certificates as described
above under "Priority of Distribution",
and then to each other class of offered
certificates in alphabetical order; and
- only to the extent funds remain after the
trustee makes all distributions of
interest and principal required to be
made
S-15
on such date to each class of certificates
with a higher priority of distribution.
You may, in certain circumstances, also
receive distributions of prepayment premiums
and yield maintenance charges collected on
the mortgage loans included in the trust
fund. Such distributions are in addition to
the distributions of principal and interest
described above. See "DESCRIPTION OF THE
CERTIFICATES--Distributions" in this
prospectus supplement.
PASS-THROUGH RATES............ The pass-through rate for each class of
certificates (other than the Class X-C, Class
X-P, Class Z, Class R-I and Class R-II
certificates) on each distribution date is set
forth above under "Overview of the
Certificates."
The pass-through rate applicable to the Class
X-C certificates for the initial distribution
date will equal approximately 0.0898% per
annum.
The pass-through rate applicable to the Class
X-C certificates for each distribution date
will, in general, equal the weighted average
of the respective Class X-C strip rates at
which interest accrues from time to time on
the respective Class X-C components prior to
such distribution date (weighted on the basis
of the respective component balances of those
Class X-C components outstanding immediately
prior to such distribution date). Each Class
X-C component will be comprised of all or a
designated portion of the certificate balance
of one of the classes of sequential pay
certificates. In general, the certificate
balance of each class of sequential pay
certificates will constitute a separate Class
X-C component. However, if a portion, but not
all, of the certificate balance of any
particular class of sequential pay
certificates is identified under "--Interest"
above as being part of the notional amount of
the Class X-P certificates immediately prior
to any distribution date, then the identified
portion of the certificate balance will also
represent one or more Class X-C components for
purposes of calculating the pass-through rate
of the Class X-C certificates, and the
remaining portion of the certificate balance
will represent one or more other Class X-C
components for purposes of calculating the
pass-through rate of the Class X-C
certificates. For each distribution date
through and including the distribution date in
July 2011, the Class X-C strip rate for each
Class X-C component will be calculated as
follows:
(1) if such Class X-C component consists of
the entire certificate balance of any
class of sequential pay certificates, and
if the certificate balance does not, in
whole or in part, also constitute a Class
X-P component immediately prior to the
distribution date, then the applicable
Class X-C strip rate will equal the
excess, if any, of (a) the weighted
average net mortgage rate for the
distribution date, over (b) the pass-
through rate in effect for the
distribution date for the applicable class
of sequential pay certificates;
S-16
(2) if such Class X-C component consists of a
designated portion (but not all) of the
certificate balance of any class of
sequential pay certificates, and if the
designated portion of the certificate
balance does not also constitute a Class
X-P component immediately prior to the
distribution date, then the applicable
Class X-C strip rate will equal the
excess, if any, of (a) the weighted
average net mortgage rate for the
distribution date, over (b) the
pass-through rate in effect for the
distribution date for the applicable class
of sequential pay certificates;
(3) if such Class X-C component consists of a
designated portion (but not all) of the
certificate balance of any class of
sequential pay certificates, and if the
designated portion of the certificate
balance also constitutes a Class X-P
component immediately prior to the
distribution date, then the applicable
Class X-C strip rate will equal the
excess, if any, of (a) the weighted
average net mortgage rate for the
distribution date, over (b) the sum of (i)
the Class X-P strip rate for the
applicable Class X-P component, and (ii)
the pass-through rate in effect for the
distribution date for the applicable class
of sequential pay certificates; and
(4) if such Class X-C component consists of
the entire certificate balance of any
class of sequential pay certificates, and
if the certificate balance also
constitutes, in its entirety, a Class X-P
component immediately prior to such
distribution date, then the applicable
Class X-C strip rate will equal the
excess, if any, of (a) the weighted
average net mortgage rate for the
distribution date, over (b) the sum of (i)
the Class X-P strip rate for the
applicable Class X-P component, and (ii)
the pass-through rate in effect for the
distribution date for the applicable class
of sequential pay certificates.
For each distribution date after the
distribution date in July 2011, the
certificate balance of each class of
sequential pay certificates will constitute
one or more separate Class X-C components, and
the applicable Class X-C strip rate with
respect to each such Class X-C component for
each distribution date will equal the excess,
if any, of (a) the weighted average net
mortgage rate for the distribution date, over
(b) the pass-through rate in effect for the
distribution date for the class of sequential
pay certificates.
The pass-through rate applicable to the Class
X-P certificates for the initial distribution
date will equal approximately 1.9188% per
annum.
The pass-through rate applicable to the Class
X-P certificates for each subsequent
distribution date will equal the weighted
average of the respective Class X-P strip
rates, at which interest accrues from time to
time on the respective components prior to
such distribution date (weighted on the basis
of the balances of those Class X-P components
outstanding immediately prior to
S-17
the distribution date). Each Class X-P
component will be comprised of all or a
designated portion of the certificate balance
of a specified class of sequential pay
certificates. If all or a designated portion
of the certificate balance of any class of
sequential pay certificates is identified
under "--Interest" above as being part of the
notional amount of the Class X-P certificates
immediately prior to any distribution date,
then that certificate balance (or designated
portion thereof) will represent one or more
separate Class X-P components for purposes of
calculating the pass-through rate of the Class
X-P certificates. For each distribution date
through and including the distribution date in
July 2011, the Class X-P strip rate for each
Class X-P component will equal (a) the lesser
of (1) the weighted average net mortgage rate
for such distribution date, and (2) the
reference rate specified on Annex C to this
prospectus supplement for such distribution
date minus 0.03% per annum, minus (b) the
pass-through rate for such component (but in
no event will any Class X-P strip rate be less
than zero).
After the distribution date in July 2011, the
Class X-P certificates will cease to accrue
interest and will have a 0% pass-through rate.
The weighted average net mortgage rate for
each distribution date is the weighted average
of the net mortgage rates for the mortgage
loans included in the trust fund as of the
beginning of the related collection period,
weighted on the basis of their respective
stated principal balances immediately
following the preceding distribution date;
provided that, for the purpose of determining
the weighted average net mortgage rate only,
if the mortgage rate for any mortgage loan
included in the trust fund has been modified
in connection with a bankruptcy or similar
proceeding involving the related borrower or a
modification, waiver or amendment granted or
agreed to by the special servicer, the
weighted average net mortgage rate for such
mortgage loan will be calculated without
regard to such event. The net mortgage rate
for each mortgage loan included in the trust
fund will generally equal:
- the mortgage interest rate in effect
for such mortgage loan as of the
closing date; minus
- the applicable administrative cost
rate, as described in this prospectus
supplement.
For the purpose of calculating the weighted
average net mortgage rate, the mortgage rate
of each mortgage loan will be deemed adjusted
as described under "DESCRIPTION OF THE
CERTIFICATES--Pass-Through Rates" in this
prospectus supplement.
The stated principal balance of each mortgage
loan included in the trust fund will generally
equal the balance of that mortgage
S-18
loan as of the cut-off date, reduced as of any
date of determination (to not less than zero)
by:
- the portion of the principal
distribution amount for the related
distribution date that is attributable
to such mortgage loan; and
- the principal portion of any realized
loss incurred in respect of such
mortgage loan during the related
collection period.
The stated principal balance of any mortgage
loan as to which the mortgage rate is reduced
through a modification may be increased in
certain circumstances by the amount of the
resulting interest reduction. See "DESCRIPTION
OF THE CERTIFICATES--Pass-Through Rates" in
this prospectus supplement.
PRINCIPAL DISTRIBUTIONS....... On the closing date, each class of
certificates (other than the Class X-C, Class
X-P, Class Z, Class R-I and Class R-II
certificates) will have the certificate
balance set forth above under "Overview of the
Certificates." The certificate balance for
each class of certificates entitled to receive
principal may be reduced by:
- distributions of principal; and
- allocations of realized losses and
trust fund expenses.
The certificate balance or notional amount of
a class of certificates may be increased in
certain circumstances by the allocation of any
increase in the stated principal balance of
any mortgage loan resulting from the reduction
of the related mortgage rate through
modification. See "DESCRIPTION OF THE
CERTIFICATES--Certificate Balances and
Notional Amount" in this prospectus
supplement.
The Class X-C and Class X-P certificates do
not have principal balances and will not
receive distributions of principal.
As reflected in the chart under "Priority of
Distributions" above:
- generally, the Class A-1 and Class A-2
certificates will only be entitled to
receive distributions of principal
collected or advanced in respect of
mortgage loans in loan group 1 until
the certificate balance of the Class
A-1A certificates has been reduced to
zero, and the Class A-1A certificates
will only be entitled to receive
distributions of principal collected or
advanced in respect of mortgage loans
in loan group 2 until the certificate
principal balance of the Class A-2
certificates has been reduced to zero;
- except as described above, principal is
distributed to each class of
certificates entitled to receive
distributions of principal in
alphabetical and, if applicable,
numerical designation;
S-19
- principal is only distributed on a
class of certificates to the extent
funds remain after the trustee makes
all distributions of principal and
interest on each class of certificates
with an earlier alphabetical and, if
applicable, numerical designation;
- generally, no class of certificates is
entitled to distributions of principal
until the certificate balance of each
class of certificates with an earlier
alphabetical and, if applicable,
numerical designation has been reduced
to zero; and
- in no event will holders of the Class B
and Class C certificates or classes of
non-offered certificates (other than
the Class A-1A certificates) be
entitled to receive any payments of
principal until the certificate
balances of the Class A-1, Class A-2
and Class A-1A certificates have all
been reduced to zero.
The amount of principal to be distributed for
each distribution date generally will be an
amount equal to:
- the scheduled principal payments (other
than balloon payments) due on the mortgage
loans included in the trust fund during the
related collection period whether or not
such scheduled payments are actually
received;
- balloon payments actually received with
respect to mortgage loans included in the
trust fund during the related collection
period;
- prepayments received with respect to the
mortgage loans included in the trust fund
during the related collection period; and
- all liquidation proceeds, insurance
proceeds, condemnation awards and
repurchase and substitution amounts
received during the related collection
period that are allocable to principal.
For purposes of making distributions to the
Class A-1, Class A-2 and Class A-1A
certificates, the principal distribution
amount for each loan group on any distribution
date will be equal to the sum of the
collections specified above but only to the
extent such amounts relate to the mortgage
loans comprising the specified loan group.
SUBORDINATION; ALLOCATION OF
LOSSES AND CERTAIN
EXPENSES.................... Credit support for any class of certificates
(other than the Class Z, Class R-I and Class
R-II certificates) is provided by the
subordination of payments and allocation of
any losses to such classes of certificates
which have a later alphabetical class
designation (other than the Class X-C and
Class X-P certificates). The certificate
balance of a class of certificates (other than
the Class X-C, Class X-P, Class Z, Class R-I
and Class R-II certificates) will be reduced
on each distribution date by any losses on the
mortgage loans that have been realized and
S-20
certain additional trust fund expenses
actually allocated to such class of
certificates on such distribution date.
Losses on the mortgage loans that have been
realized and additional trust fund expenses
will first be allocated to the certificates
(other than the Class A-1A, Class X-C, Class
X-P, Class Z, Class R-I and Class R-II
certificates) that are not offered by this
prospectus supplement and then to the
certificates that are offered certificates and
the Class A-1A certificates in reverse
alphabetical order as indicated on the
following table. Realized losses and
additional trust fund expenses will be
allocated to the certificates without regard
to loan group.
<Table>
<Caption>
PERCENTAGE ORDER OF
ORIGINAL CUT-OFF DATE POOL APPLICATION OF
CLASS DESIGNATION CERTIFICATE BALANCE BALANCE LOSSES AND EXPENSES
----------------- ------------------- ----------------- -------------------
Class A-1........................... $226,000,000 18.819% 4
Class A-2........................... $439,721,000 36.615% 4
Class A-1A.......................... $301,015,000 25.065% 4
Class B............................. $ 40,531,000 3.375% 3
Class C............................. $ 15,011,000 1.250% 2
Other non-offered certificates
(excluding the Class X
certificates)..................... $ 178,636,922 14.875% 1
</Table>
Any losses realized on the mortgage loans
included in the trust fund or additional trust
fund expenses allocated in reduction of the
certificate balance of any class of
certificates will result in a corresponding
reduction in the notional amount of the Class
X-C certificates and, with respect to the
Class A-2, Class B, Class C, Class D, Class E,
Class F, Class G, Class H, Class J, Class K,
and Class L certificates and portions of the
Class A-1 and Class A-1A certificates, a
corresponding reduction in the notional amount
of the Class X-P certificates.
See "DESCRIPTION OF THE
CERTIFICATES--Subordination; Allocation of
Losses and Certain Expenses" in this
prospectus supplement.
PREPAYMENT PREMIUMS; YIELD
MAINTENANCE CHARGES......... On each distribution date, any prepayment
premium or yield maintenance charge collected
during the related collection period on a
mortgage loan included in the trust fund will
be distributed to the holders of each class of
offered certificates and the Class A-1A, Class
D, Class E, Class F, Class G and Class H
certificates then entitled to distributions as
follows:
The holders of each class of offered
certificates and the Class A-1A, Class D,
Class E, Class F, Class G and Class H
certificates then entitled to distributions of
principal with respect to the related loan
group on such distribution date will generally
be entitled to a portion of prepayment
premiums or yield maintenance charges equal to
the product of:
- the amount of such prepayment premiums
or yield maintenance charges;
S-21
- a fraction (in no event greater than
one), the numerator of which is equal
to the excess, if any, of the
pass-through rate of such class of
certificates over the relevant discount
rate, and the denominator of which is
equal to the excess, if any, of the
mortgage interest rate of the prepaid
mortgage loan over the relevant
discount rate; and
- a fraction, the numerator of which is
equal to the amount of principal
distributable on such class of
certificates on such distribution date,
and the denominator of which is the
principal distribution amount for such
distribution date.
If there is more than one class of such
certificates entitled to distributions of
principal with respect to the related loan
group on any particular distribution date on
which a prepayment premium or yield
maintenance charge is distributable, the
aggregate amount of such prepayment premium or
yield maintenance charge will be allocated
among all such classes up to, and on a pro
rata basis in accordance with, the foregoing
entitlements.
The portion, if any, of the prepayment
premiums or yield maintenance charges
remaining after any payments described above
will be distributed to the holders of the
Class X-C certificates.
The "discount rate" applicable to any class of
offered certificates and the Class A-1A, Class
D, Class E, Class F, Class G and Class H
certificates will equal the yield (when
compounded monthly) on the U.S. Treasury issue
with a maturity date closest to the maturity
date for the prepaid mortgage loan or mortgage
loan for which title to the related mortgaged
property was acquired by the trust fund.
- In the event that there are two or more
such U.S. Treasury issues with the same
coupon, the issue with the lowest yield
will be utilized; and
- In the event that there are two or more
such U.S. Treasury issues with maturity
dates equally close to the maturity date
for the prepaid mortgage loan, the issue
with the earliest maturity date will be
utilized.
<Table>
<Caption>
EXAMPLES OF ALLOCATION OF PREPAYMENT PREMIUMS OR
YIELD MAINTENANCE CHARGES
Mortgage interest rate....................... 8%
Pass-through rate for applicable class....... 6%
Discount rate................................ 5%
</Table>
S-22
<Table>
<Caption>
ALLOCATION PERCENTAGE ALLOCATION
FOR APPLICABLE CLASS PERCENTAGE FOR CLASS X-C
--------------------- ------------------------
6% - 5% 100% - 33 1/3% = 66 2/3%
------- = 33 1/3%
8% - 5%
</Table>
See "DESCRIPTION OF THE
CERTIFICATES--Distributions--Allocation of
Prepayment Premiums and Yield Maintenance
Charges" in this prospectus supplement.
ALLOCATION OF ADDITIONAL
INTEREST.................... On each distribution date, any additional
interest collected on a mortgage loan with an
anticipated repayment date during the related
collection period will be distributed to the
holders of the Class Z certificates and will
not be available to provide credit support for
other classes of certificates or offset any
interest shortfalls.
ADVANCING..................... In the event the master servicer fails to
receive one or more scheduled payments of
principal and interest (other than balloon
payments) on a mortgage loan included in the
trust fund by the last day of the related
collection period and the master servicer
determines that such scheduled payment of
principal and interest will be ultimately
recoverable from the related mortgage loan,
the master servicer, or if it fails to do so,
the trustee is required to make a principal
and interest cash advance of such scheduled
payment of principal and interest. These cash
advances are only intended to maintain a
regular flow of scheduled principal and
interest payments on the certificates and are
not intended to guarantee or insure against
losses. In other words, the advances are
intended to provide liquidity (rather than
credit enhancement) to certificateholders. To
the extent described in this prospectus
supplement, the trust fund will pay interest
to the master servicer or the trustee, as the
case may be, on the amount of any principal
and interest cash advance calculated at the
prime rate (provided, that neither the master
servicer nor the trustee will be entitled to
interest for any advances on mortgage loans
accrued prior to the expiration of the
applicable grace periods) and will reimburse
the master servicer or the trustee for any
principal and interest cash advances that are
later determined to be not recoverable. See
"DESCRIPTION OF THE CERTIFICATES--P&I
Advances" in this prospectus supplement.
OPTIONAL TERMINATION OF THE
TRUST FUND.................. The trust fund may be terminated when the
aggregate principal balance of the mortgage
loans included in the trust fund is less than
1.0% of the aggregate principal balance of the
mortgage loans included in the trust fund as
of the cut-off date. See "DESCRIPTION OF THE
CERTIFICATES--Termination" in this prospectus
supplement and in the accompanying prospectus.
The trust fund may also be terminated when the
Class A-1, Class A-2, Class A-1A, Class B and
Class C certificates have been paid in full
and all of the remaining certificates are held
by a single certificateholder. See
"DESCRIPTION OF THE
S-23
CERTIFICATES -- Termination" in this
prospectus supplement.
REGISTRATION AND
DENOMINATION.................. The offered certificates will be registered in
the name of Cede & Co., as nominee for The
Depository Trust Company in the United States,
or in Europe through Clearstream Banking
societe anonyme or Euroclear Bank, societe
anonyme. You will not receive a definitive
certificate representing your interest in the
trust fund, except in the limited
circumstances described in the accompanying
prospectus. See "DESCRIPTION OF THE
CERTIFICATES--Book-Entry Registration and
Definitive Certificates" in the accompanying
prospectus.
Beneficial interests in the Class A-1, Class
A-2, Class B and Class C certificates will be
offered in minimum denominations of $10,000
actual principal amount and in integral
multiples of $1 in excess of those amounts.
MATERIAL FEDERAL INCOME TAX
CONSEQUENCES................ Two separate real estate mortgage investment
conduit (each, a "REMIC") elections will be
made with respect to most of the trust fund.
The offered certificates will evidence regular
interests in a REMIC and generally will be
treated as debt instruments of such REMIC. The
Class R-I and Class R-II certificates will
represent the residual interests in such
REMICs. In addition, a separate REMIC election
has been made with respect to one early
defeasance mortgage loan. The principal
balance of the early defeasance mortgage loan
will represent a "regular interest" in its
related REMIC. The Class Z certificateholders'
entitlement to any additional interest that
has accrued on a related mortgage loan that
provides for the accrual of such additional
interest if the unamortized principal amount
of such mortgage loan is not repaid on the
anticipated repayment date set forth in the
related mortgage note will be treated as a
grantor trust for United States federal income
tax purposes.
The offered certificates will be treated as
newly originated debt instruments for federal
income tax purposes. You will be required to
report income with respect to the offered
certificates using the accrual method of
accounting, even if you otherwise use the cash
method of accounting. It is anticipated that
the Class A-1 Certificates will be issued with
not more than a de minimis amount of original
issue discount and that the other classes of
offered certificates will be treated as having
been issued at a premium for federal income
tax reporting purposes.
For further information regarding the federal
income tax consequences of investing in the
offered certificates, see "MATERIAL FEDERAL
INCOME TAX CONSEQUENCES" in this prospectus
supplement and in the accompanying prospectus.
ERISA CONSIDERATIONS.......... Subject to important considerations described
under "ERISA CONSIDERATIONS" in this
prospectus supplement and the accompanying
prospectus, the following certificates may be
eligible for purchase by persons investing
assets of employee
S-24
benefit plans, individual retirement accounts,
or other retirement plans and accounts:
Class A-1
Class A-2
Class B
Class C
This is based on individual prohibited
transaction exemptions granted to each of
Wachovia Securities, LLC, Citigroup Global
Markets Inc., Nomura Securities International,
Inc. and Lehman Brothers Inc. by the U.S.
Department of Labor. See "ERISA
CONSIDERATIONS" in this prospectus supplement
and in the accompanying prospectus.
SMMEA ELIGIBILITY............. The offered certificates will not constitute
"mortgage related securities" for purposes of
the Secondary Mortgage Market Enhancement Act
of 1984, as amended.
See "LEGAL INVESTMENT" in this prospectus
supplement and in the accompanying prospectus.
RATINGS....................... The offered certificates will not be issued
unless they have received the following
ratings from Moody's Investors Service, Inc.
and Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc.:
<Table>
<Caption>
EXPECTED
RATING FROM
CLASS MOODY'S/S&P
----- -----------
Class A-1.................................. Aaa/AAA
Class A-2.................................. Aaa/AAA
Class B.................................... Aa2/AA
Class C.................................... Aa3/AA-
</Table>
The ratings on the offered certificates
address the likelihood of timely receipt of
interest and ultimate receipt of principal by
the rated final distribution date by the
holders of offered certificates. They do not
address the likely actual rate of prepayments.
Such rate of prepayments, if different than
originally anticipated, could adversely affect
the yield realized by holders of the offered
certificates. See "RATINGS" in this prospectus
supplement and in the accompanying prospectus
for a discussion of the basis upon which
ratings are given, the limitations and
restrictions on the ratings, and conclusions
that should not be drawn from a rating.
THE MORTGAGE LOANS
GENERAL....................... It is expected that the mortgage loans to be
included in the trust fund will have the
following approximate characteristics as of
the cut-off date. All information presented
herein (including loan-to-value ratios and
debt service coverage ratios) with respect to
the 5 mortgage loans with companion loans is
calculated without regard to the related
companion loans except that with respect to
loan number 1 (the Lloyd Center mortgage
loan), unless otherwise specified, the
calculation of loan-to-value ratios and debt
service coverage ratios was based on the
aggregate indebtedness of this mortgage loan
and the related
S-25
pari passu companion loan. All percentages of
the mortgage loans, or any specified group of
mortgage loans, referred to in this prospectus
supplement are approximate percentages. The
totals in the following tables may not add up
to 100% due to rounding.
<Table>
<Caption>
ALL
MORTGAGE LOAN LOAN
LOANS GROUP 1 GROUP 2
-------------- ----------- -----------
Number of mortgage loans........ 152 107 45
Number of crossed loan
pools(1)...................... 5 1 2
Number of mortgaged
properties.................... 154 109 45
Aggregate balance of all
mortgage loans in the trust
fund.......................... $1,200,914,923 $899,899,355 $301,015,567
Number of mortgage loans with
balloon payments(2)........... 122 80 42
Aggregate balance of mortgage
loans with balloon
payments(2)................... $874,651,207 $587,423,974 $287,227,233
Number of mortgage loans with
anticipated repayment dates... 20 19 1
Aggregate balance of mortgage
loans with anticipated
repayment dates............... $276,794,838 $269,560,280 $7,234,558
Number of fully amortizing
mortgage loans................ 9 7 2
Aggregate balance of fully
amortizing mortgage loans..... $23,568,878 $17,015,102 $6,553,776
Number of non-amortizing
mortgage loans................ 1 1 0
Aggregate balance of
non-amortizing mortgage
loans......................... $25,900,000 $25,900,000 $0
Average balance of mortgage
loans......................... $7,900,756 $8,410,274 $6,689,235
Minimum balance of mortgage
loans......................... $505,564 $505,564 $1,391,141
Maximum balance of mortgage
loans......................... $69,922,221 $69,922,221 $28,902,057
Maximum balance for a group of
cross-collateralized and
cross-defaulted loans......... $13,484,224 $7,574,904 $13,484,224
Weighted average cut-off date
loan-to-value ratio(3)........ 72.7% 72.1% 74.6%
Minimum cut-off date
loan-to-value ratio(3)........ 38.0% 38.0% 46.9%
Maximum cut-off date
loan-to-value ratio(3)........ 86.7% 86.7% 82.4%
Weighted average cut-off date
debt service coverage ratio... 1.49x 1.52x 1.43x
Minimum cut-off date debt
service coverage ratio........ 1.03x 1.03x 1.13x
Maximum cut-off date debt
service coverage ratio........ 3.42x 3.42x 2.48x
Weighted average loan-to-value
ratio at stated maturity or
anticipated repayment
date(3)....................... 60.4% 60.0% 61.3%
Weighted average mortgage
interest rate................. 5.629% 5.688% 5.452%
Minimum mortgage interest
rate.......................... 4.040% 4.040% 4.950%
Maximum mortgage interest
rate.......................... 9.310% 7.350% 9.310%
Weighted average remaining term
to maturity or anticipated
repayment date (months)....... 115 114 116
Minimum remaining term to
maturity or anticipated
repayment date (months)....... 55 55 58
</Table>
S-26
<Table>
<Caption>
ALL
MORTGAGE LOAN LOAN
LOANS GROUP 1 GROUP 2
-------------- ----------- -----------
Maximum remaining term to
maturity or anticipated
repayment date (months)....... 278 251 278
Weighted average occupancy
rate(4)....................... 95.1% 95.3% 94.5%
</Table>
-------------------------------------------------
(1) Two (2) crossed loan pools consist of
mortgage loans in both loan group 1 and
loan group 2.
(2) Does not include mortgage loans with
anticipated repayment dates.
(3) For purposes of determining the
loan-to-value ratio with respect to 1
mortgage loan representing 1.2% of the
mortgage pool (1.6% of loan group 1), such
ratio was reduced by taking into account
amounts available under a letter of credit
and in a cash reserve that will be
released upon the achievement of a
specified rental income increase at the
related mortgaged property.
(4) The weighted average occupancy ratio
information shown above excludes 1
mortgage loan secured by a hospitality
property representing 0.9% of the mortgage
pool (1.1% of loan group 1).
SECURITY FOR THE MORTGAGE
LOANS IN THE TRUST FUND....... Generally, all of the mortgage loans included
in the trust fund are non-recourse obligations
of the related borrowers.
- No mortgage loan included in the trust fund
is insured or guaranteed by any government
agency or private insurer.
- All of the mortgage loans included in the
trust fund are secured by first lien fee
mortgages or leasehold mortgages on
commercial, multifamily properties or mobile
home properties.
PROPERTY TYPES................ The following table describes the mortgaged
properties securing the mortgage loans expected
to be included in the trust fund as of the
cut-off date:
MORTGAGED PROPERTIES BY PROPERTY TYPE
<Table>
<Caption>
PERCENTAGE
PERCENTAGE OF CUT-OFF
NUMBER AGGREGATE OF CUT-OFF DATE
OF LOANS/ CUT-OFF DATE DATE POOL GROUP 1
PROPERTY TYPE PROPERTIES BALANCE BALANCE BALANCE
------------- ---------- -------------- ---------- ----------
Retail............... 58/59 $ 405,707,726 33.8% 45.1%
Retail--Anchored.... 35/35 336,194,388 28.0 37.4
Retail--Unanchored.. 14/15 34,821,549 2.9 3.9
Retail--Shadow
Anchored(1)(2).... 9/9 34,691,789 2.9 3.9
Office............... 28/28 336,885,694 28.1 37.4
Multifamily.......... 42/42 329,039,814 27.4 5.7
Industrial........... 5/6 39,745,513 3.3 4.4
Mobile Home Park..... 9/9 27,800,387 2.3 0.5
Mixed Use............ 3/3 25,902,744 2.2 2.9
Self Storage......... 6/6 25,498,610 2.1 2.8
Hospitality.......... 1/1 10,334,434 0.9 1.1
------- -------------- ----- ------
TOTAL......... 152/154 $1,200,914,923 100.0% 100.0%
======= ============== ===== ======
<Caption>
PERCENTAGE
OF CUT-OFF
DATE
GROUP 2
PROPERTY TYPE BALANCE
------------- ----------
Retail............... 0.0%
Retail--Anchored.... 0.0
Retail--Unanchored.. 0.0
Retail--Shadow
Anchored(1)(2).... 0.0
Office............... 0.0
Multifamily.......... 92.2
Industrial........... 0.0
Mobile Home Park..... 7.8
Mixed Use............ 0.0
Self Storage......... 0.0
Hospitality.......... 0.0
-------
TOTAL......... 100.0%
=======
</Table>
S-27
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW
IS A FAIR AND ACCURATE DESCRIPTION OF GRAPHIC
OR IMAGE MATERIAL OMITTED FOR THE PURPOSE OF
EDGAR FILING.]
(PIE CHART)
Retail................. 33.8%
Office................. 28.1%
Multifamily............ 27.4%
Industrial............. 3.3%
Mobile Home Park....... 2.3%
Mixed Use.............. 2.2%
Self Storage........... 2.1%
Hospitality............ 0.9%
-----------------------------------------------
(1) A mortgaged property is considered shadow
anchored if it is in close proximity to an
anchored retail property.
(2) Includes the mortgaged property securing 1
mortgage loan representing 0.1% of the
mortgage pool (0.2% of loan group 1),
which is an unimproved vacant pad leased
to Bank of America, which may develop it
as a bank branch.
GEOGRAPHIC CONCENTRATIONS..... The mortgaged properties are located throughout
31 states and the District of Columbia. The
following table describes the number and
percentage of mortgaged properties in states
which have concentrations of mortgaged
properties above 5.0%:
MORTGAGED PROPERTIES BY GEOGRAPHIC
CONCENTRATION(1)
<Table>
<Caption>
NUMBER OF AGGREGATE PERCENTAGE OF
MORTGAGED CUT-OFF DATE CUT-OFF DATE
STATE PROPERTIES BALANCE POOL BALANCE
----- ---------- -------------- -------------
CA................... 21 $ 165,370,364 13.8%
Southern(2)........ 12 101,915,236 8.5
Northern(2)........ 9 63,455,128 5.3
FL................... 22 126,091,191 10.5
NY................... 9 109,828,105 9.1
OR................... 3 93,268,994 7.8
TX................... 16 69,788,469 5.8
DC................... 4 65,622,490 5.5
PA................... 4 60,892,175 5.1
Other................ 75 510,053,134 42.5
--- -------------- -----
154 $1,200,914,923 100.0%
=== ============== =====
</Table>
-------------------------------------------------
(1) Because this table presents information
relating to the mortgaged properties and
not the mortgage loans, the information
for mortgage loans secured by more than
one mortgaged property is based on
allocated loan amounts (allocating the
mortgage loan principal balance to each of
those properties by the appraised values
of the mortgaged properties).
(2) For purposes of determining whether a
mortgaged property is in Northern
California or Southern California,
mortgaged properties located north of San
Luis Obispo County, Kern County and San
Bernardino County were included in
Northern California and mortgaged
properties located in or south of such
counties were included in Southern
California.
S-28
LOAN GROUP 1
MORTGAGED PROPERTIES BY GEOGRAPHIC
CONCENTRATION(1)
<Table>
<Caption>
NUMBER OF AGGREGATE PERCENTAGE OF
MORTGAGED CUT-OFF DATE CUT-OFF DATE
STATE PROPERTIES BALANCE POOL BALANCE
----- ---------- ------------ -------------
CA................... 14 $136,592,175 15.2%
Southern(2)........ 8 86,933,547 9.7
Northern(2)........ 6 49,658,628 5.5
NY................... 8 100,362,538 11.2
OR................... 3 93,268,994 10.4
FL................... 15 79,830,321 8.9
CO................... 8 57,552,179 6.4
PA................... 3 53,657,617 6.0
Other................ 58 378,635,532 42.1
--- ------------ -----
109 $899,899,355 100.0%
=== ============ =====
</Table>
-------------------------------------------------
(1) Because this table presents information
relating to the mortgaged properties and
not the mortgage loans, the information
for mortgage loans secured by more than
one mortgaged property is based on
allocated loan amounts (allocating the
mortgage loan principal balance to each of
those properties by the appraised values
of the mortgaged properties).
(2) For purposes of determining whether a
mortgaged property is in Northern
California or Southern California,
mortgaged properties located north of San
Luis Obispo County, Kern County and San
Bernardino County were included in
Northern California and mortgaged
properties located in or south of such
counties were included in Southern
California.
LOAN GROUP 2
MORTGAGED PROPERTIES BY GEOGRAPHIC
CONCENTRATION(1)
<Table>
<Caption>
NUMBER OF AGGREGATE PERCENTAGE OF
MORTGAGED CUT-OFF DATE CUT-OFF DATE
STATE PROPERTIES BALANCE POOL BALANCE
----- ---------- ------------ -------------
FL................... 7 $ 46,260,870 15.4%
AZ................... 4 42,186,281 14.0
TX................... 5 36,962,865 12.3
DC................... 2 30,889,619 10.3
CA................... 7 28,778,189 9.6
Southern(2)........ 4 14,981,689 5.0
Northern(2)........ 3 13,796,501 4.6
KS................... 1 20,649,186 6.9
NC................... 3 20,083,244 6.7
DE................... 2 19,569,478 6.5
Other................ 14 55,635,834 18.5
-- ------------ -----
45 $301,015,567 100.0%
== ============ =====
</Table>
-------------------------------------------------
(1) Because this table presents information
relating to the mortgaged properties and
not the mortgage loans, the information
for mortgage loans secured by more than
one mortgaged property is based on
allocated loan amounts (allocating the
mortgage loan principal balance to each of
those properties by the appraised values
of the mortgaged properties).
(2) For purposes of determining whether a
mortgaged property is in Northern
California or Southern California,
mortgaged properties located north of San
Luis Obispo County, Kern County and San
Bernardino County were included in
Northern California and mortgaged
properties located in or south of such
counties were included in Southern
California.
S-29
PRINCIPAL AND INTEREST PAYMENT
TERMS....................... All of the mortgage loans included in the
trust fund accrue interest at a fixed rate,
other than mortgage loans providing for an
anticipated repayment date, which provide for
an increase of fixed interest after a certain
date.
- Payments on the mortgage loans included
in the trust fund are due on the 11th day
of the month, except payments on 22
mortgage loans, representing 17.5% of the
mortgage pool (15 mortgage loans in loan
group 1 or 17.5% and 7 mortgage loans in
loan group 2 or 17.6%), are due on the
first day of the month and payments on 3
mortgage loans, representing 0.7% of the
mortgage pool (3 mortgage loans in loan
group 1 or 1.0%), are due on the 15th day
of the month. No mortgage loan has a
grace period that extends payment beyond
the 16th day of any calendar month.
- As of the cut-off date, 146 of the
mortgage loans, representing 96.8% of the
mortgage pool (103 mortgage loans in loan
group 1 or 96.1% and 43 mortgage loans in
loan group 2 or 98.6%), accrue interest
on an actual/360 basis, and 6 of the
mortgage loans, representing 3.2% of the
mortgage pool (4 mortgage loans in loan
group 1 or 3.9% and 2 mortgage loans in
loan group 2 or 1.4%), accrue interest on
a 30/360 basis. Thirteen (13) of the
mortgage loans, representing 16.5% of the
mortgage pool (9 mortgage loans in loan
group 1 or 16.1% and 4 mortgage loans in
loan group 2 or 17.6%), have periods
during which only interest is due and
periods in which principal and interest
are due. One (1) mortgage loan in group
1, representing 2.2% of the mortgage pool
(or 2.9% of loan group 1), provides that
only interest is due until maturity.
The following tables set forth additional
characteristics of the mortgage loans that we
anticipate to be included in the trust fund as
of the cut-off date:
RANGE OF CUT-OFF DATE BALANCES
<Table>
<Caption>
PERCENTAGE OF
AGGREGATE PERCENTAGE OF CUT-OFF DATE
RANGE OF CUT-OFF NUMBER CUT-OFF DATE CUT-OFF DATE GROUP 1
DATE BALANCES($) OF LOANS BALANCE POOL BALANCE BALANCE
---------------- --------- -------------- ------------- -------------
less than or equal to
2,000,000............. 27 $ 41,725,226 3.5% 3.0%
2,000,001-3,000,000... 15 36,686,621 3.1 2.9
3,000,001-4,000,000... 20 70,535,014 5.9 5.1
4,000,001-5,000,000... 13 58,788,772 4.9 4.9
5,000,001-6,000,000... 9 49,985,246 4.2 3.7
6,000,001-7,000,000... 14 91,424,416 7.6 6.5
7,000,001-8,000,000... 9 65,756,475 5.5 4.1
8,000,001-9,000,000... 4 33,943,474 2.8 2.8
9,000,001-10,000,000.. 3 29,229,574 2.4 2.2
10,000,001-15,000,000.. 17 217,313,187 18.1 16.7
15,000,001-20,000,000.. 11 183,354,167 15.3 20.4
20,000,001-25,000,000.. 4 90,529,293 7.5 5.1
25,000,001-30,000,000.. 3 81,802,057 6.8 5.9
30,000,001-35,000,000.. 1 35,000,000 2.9 3.9
40,000,001-45,000,000.. 1 44,919,182 3.7 5.0
65,000,001-70,000,000.. 1 69,922,221 5.8 7.8
--- -------------- ----- -----
152 $1,200,914,923 100.0% 100.0%
=== ============== ===== =====
<Caption>
PERCENTAGE OF
CUT-OFF DATE
RANGE OF CUT-OFF GROUP 2
DATE BALANCES($) BALANCE
---------------- -------------
less than or equal to
2,000,000............. 4.9%
2,000,001 -
3,000,000............ 3.6
3,000,001 -
4,000,000............ 8.2
4,000,001 -
5,000,000............ 4.8
5,000,001 -
6,000,000............ 5.5
6,000,001 -
7,000,000............ 10.8
7,000,001 -
8,000,000............ 9.5
8,000,001 -
9,000,000............ 2.9
9,000,001 -
10,000,000............ 3.1
10,000,001 -
15,000,000............ 22.2
15,000,001 -
20,000,000............ 0.0
20,000,001 -
25,000,000............ 14.9
25,000,001 -
30,000,000............ 9.6
30,000,001 -
35,000,000............ 0.0
40,000,001 -
45,000,000............ 0.0
65,000,001 -
70,000,000............ 0.0
-----
100.0%
=====
</Table>
S-30
RANGE OF MORTGAGE RATES
<Table>
<Caption>
PERCENTAGE OF
RANGE OF AGGREGATE PERCENTAGE OF CUT-OFF DATE
MORTGAGE NUMBER CUT-OFF DATE CUT-OFF DATE GROUP 1
RATES(%) OF LOANS BALANCE POOL BALANCE BALANCE
-------- --------- -------------- ------------- -------------
4.040 - 5.249.......... 15 $ 153,144,498 12.8% 8.0%
5.250 - 5.499.......... 28 280,724,339 23.4 17.4
5.500 - 5.749.......... 42 365,084,168 30.4 31.1
5.750 - 5.999.......... 38 246,802,455 20.6 27.3
6.000 - 6.249.......... 15 98,277,389 8.2 10.6
6.250 - 6.499.......... 5 28,649,353 2.4 3.2
6.500 - 6.749.......... 1 6,474,997 0.5 0.7
6.750 - 6.999.......... 3 7,373,351 0.6 0.8
7.000 - 7.249.......... 1 5,432,597 0.5 0.6
7.250 - 7.499.......... 1 3,109,158 0.3 0.3
8.500 - 8.749.......... 2 2,998,209 0.2 0.0
9.250 - 9.499.......... 1 2,844,409 0.2 0.0
--- -------------- ----- -----
152 $1,200,914,923 100.0% 100.0%
=== ============== ===== =====
<Caption>
PERCENTAGE OF
RANGE OF CUT-OFF DATE
MORTGAGE GROUP 2
RATES(%) BALANCE
-------- -------------
4.040 - 5.249.......... 26.9%
5.250 - 5.499.......... 41.3
5.500 - 5.749.......... 28.4
5.750 - 5.999.......... 0.5
6.000 - 6.249.......... 1.0
6.250 - 6.499.......... 0.0
6.500 - 6.749.......... 0.0
6.750 - 6.999.......... 0.0
7.000 - 7.249.......... 0.0
7.250 - 7.499.......... 0.0
8.500 - 8.749.......... 1.0
9.250 - 9.499.......... 0.9
-----
100.0%
=====
</Table>
RANGE OF UNDERWRITTEN DSC RATIOS
<Table>
<Caption>
PERCENTAGE PERCENTAGE
PERCENTAGE OF CUT-OFF OF CUT-OFF
AGGREGATE OF CUT-OFF DATE DATE
RANGE OF NUMBER OF CUT-OFF DATE DATE POOL GROUP 1 GROUP 2
DSCRS(X) LOANS BALANCE BALANCE BALANCE BALANCE
-------- --------- -------------- ---------- ---------- ----------
1.00 - 1.04.......... 3 $ 8,839,562 0.7% 1.0% 0.0%
1.05 - 1.09.......... 1 6,539,661 0.5 0.7 0.0
1.10 - 1.14.......... 1 1,391,141 0.1 0.0 0.5
1.15 - 1.19.......... 4 16,425,330 1.4 0.8 3.1
1.20 - 1.24.......... 6 79,432,171 6.6 8.8 0.0
1.25 - 1.29.......... 9 81,321,362 6.8 5.0 12.0
1.30 - 1.34.......... 10 80,208,672 6.7 6.7 6.6
1.35 - 1.39.......... 24 230,910,621 19.2 15.9 29.2
1.40 - 1.44.......... 20 142,302,393 11.8 11.3 13.6
1.45 - 1.49.......... 24 197,705,028 16.5 18.0 12.0
1.50 - 1.54.......... 14 72,648,947 6.0 5.1 8.8
1.55 - 1.59.......... 10 34,607,803 2.9 2.6 3.8
1.60 - 1.64.......... 8 62,321,444 5.2 5.6 4.0
1.65 - 1.69.......... 4 42,246,024 3.5 3.8 2.8
1.70 - 1.74.......... 2 5,494,114 0.5 0.6 0.0
1.75 - 1.79.......... 4 21,702,183 1.8 2.4 0.0
1.80 - 1.84.......... 2 71,541,512 6.0 7.9 0.0
1.85 - 1.89.......... 2 8,830,794 0.7 0.0 2.9
1.95 - 1.99.......... 1 2,572,068 0.2 0.3 0.0
2.15 - 2.19.......... 1 5,986,529 0.5 0.7 0.0
2.30 - 3.79.......... 2 27,887,563 2.3 2.9 0.7
--- -------------- ----- ----- -----
152 $1,200,914,923 100.0% 100.0% 100.0%
=== ============== ===== ===== =====
</Table>
S-31
RANGE OF CUT-OFF DATE LTV RATIOS*
<Table>
<Caption>
PERCENTAGE
PERCENTAGE OF CUT-OFF
AGGREGATE OF CUT-OFF DATE
RANGE OF CUT-OFF NUMBER OF CUT-OFF DATE DATE POOL GROUP 1
DATE LTVS (%) LOANS BALANCE BALANCE BALANCE
---------------- --------- -------------- ---------- ----------
35.01 - 40.00........ 1 $ 505,564 0.0% 0.1%
40.01 - 50.00........ 3 5,190,867 0.4 0.0
50.01 - 55.00........ 3 29,332,927 2.4 2.9
55.01 - 60.00........ 11 68,261,536 5.7 6.8
60.01 - 65.00........ 7 114,307,387 9.5 12.4
65.01 - 70.00........ 25 136,313,315 11.4 11.8
70.01 - 75.00........ 44 264,510,483 22.0 22.4
75.01 - 80.00........ 55 568,331,893 47.3 42.9
80.01 >=........... 3 14,160,951 1.2 0.8
--- -------------- ----- -----
152 $1,200,914,923 100.0% 100.0%
=== ============== ===== =====
<Caption>
PERCENTAGE
OF CUT-OFF
DATE
RANGE OF CUT-OFF GROUP 2
DATE LTVS (%) BALANCE
---------------- ----------
35.01 - 40.00........ 0.0%
40.01 - 50.00........ 1.7
50.01 - 55.00........ 0.9
55.01 - 60.00........ 2.5
60.01 - 65.00........ 0.9
65.01 - 70.00........ 10.1
70.01 - 75.00........ 20.8
75.01 - 80.00........ 60.7
80.01 >=........... 2.3
-----
100.0%
=====
</Table>
-------------------------------------------------
* For purposes of determining the
loan-to-value ratio with respect to 1
mortgage loan representing 1.2% of the
mortgage pool (1.6% of loan group 1), such
ratio was reduced by taking into account
amounts available under a letter of credit
and in a cash reserve that will be released
upon the achievement of a specified rental
income increase at the related mortgaged
property.
RANGE OF REMAINING TERMS TO MATURITY DATE OR
ANTICIPATED REPAYMENT DATE
<Table>
<Caption>
PERCENTAGE
PERCENTAGE OF CUT-OFF
AGGREGATE OF CUT-OFF DATE
RANGE OF REMAINING NUMBER OF CUT-OFF DATE DATE POOL GROUP 1
TERMS (MOS.)* LOANS BALANCE BALANCE BALANCE
------------------ --------- -------------- ---------- ----------
0 - 60............. 4 $ 23,537,609 2.0% 2.0%
61 - 84............. 8 92,571,647 7.7 7.4
85 - 108............ 8 104,171,825 8.7 9.4
109 - 120............ 121 949,227,393 79.0 79.0
157 - 168............ 1 1,607,068 0.1 0.0
169 - 180............ 1 1,563,776 0.1 0.0
181 - 192............ 2 4,764,833 0.4 0.5
193 - 204............ 2 6,381,141 0.5 0.0
229 - 240............ 3 10,170,493 0.8 1.1
241 - 252............ 1 4,074,729 0.3 0.5
277 - 288............ 1 2,844,409 0.2 0.0
--- -------------- ----- -----
152 $1,200,914,923 100.0% 100.0%
=== ============== ===== =====
<Caption>
PERCENTAGE
OF CUT-OFF
DATE
RANGE OF REMAINING GROUP 2
TERMS (MOS.)* BALANCE
------------------ ----------
0 - 60............. 1.7%
61 - 84............. 8.5
85 - 108............ 6.4
109 - 120............ 79.3
157 - 168............ 0.5
169 - 180............ 0.5
181 - 192............ 0.0
193 - 204............ 2.1
229 - 240............ 0.0
241 - 252............ 0.0
277 - 288............ 0.9
-----
100.0%
=====
</Table>
-------------------------------------------------
* With respect to the mortgage loans with
anticipated repayment dates, the remaining
term to maturity was calculated as of the
related anticipated repayment date.
S-32
AMORTIZATION TYPES
<Table>
<Caption>
PERCENTAGE PERCENTAGE OF
AGGREGATE OF CUT-OFF CUT-OFF DATE
NUMBER CUT-OFF DATE DATE GROUP 1
TYPE OF AMORTIZATION OF LOANS BALANCE POOL BALANCE BALANCE
-------------------- -------- -------------- ------------ -------------
Amortizing Balloon..... 111 $ 695,556,207 57.9% 50.7%
Amortizing ARD......... 19 262,649,838 21.9 28.4
Interest-only,
Amortizing Balloon*... 11 179,095,000 14.9 14.6
Non-Amortizing......... 1 25,900,000 2.2 2.9
Fully Amortizing....... 9 23,568,878 2.0 1.9
Interest-only,
Amortizing ARD*....... 1 14,145,000 1.2 1.6
--- -------------- ----- -----
152 $1,200,914,923 100.0% 100.0%
=== ============== ===== =====
<Caption>
PERCENTAGE OF
CUT-OFF DATE
GROUP 2
TYPE OF AMORTIZATION BALANCE
-------------------- -------------
Amortizing Balloon..... 79.5%
Amortizing ARD......... 2.4
Interest-only,
Amortizing Balloon*... 15.9
Non-Amortizing......... 0.0
Fully Amortizing....... 2.2
Interest-only,
Amortizing ARD*....... 0.0
-----
100.0%
=====
</Table>
-------------------------------------------------
* These mortgage loans require payments of
interest-only for a period of 6 to 54 months
from origination prior to the commencement
of payments of principal and interest.
Balloon loans have amortization schedules
significantly longer than their terms to
maturity and have substantial principal
payments due on their maturity dates, unless
prepaid earlier.
Mortgage loans providing for anticipated
repayment dates fully or substantially
amortize through their terms to maturity.
However, if such a mortgage loan is not
prepaid by a date specified in its mortgage
note, interest will accrue at a higher rate
and the borrower will be required to apply all
cash flow generated by the mortgaged property
in excess of its regular debt service payments
and certain other permitted expenses and
reserves to repay principal on the mortgage
loan.
In addition, because the fixed periodic
payment on the mortgage loans is determined
assuming interest is calculated on a "30/360
basis," but interest actually accrues and is
applied on the majority of the mortgage loans
on an "actual/360 basis," there will be less
amortization, absent prepayments, of the
principal balance during the term of the
related mortgage loan, resulting in a higher
final payment on such mortgage loan. This will
occur even if a mortgage loan is a "fully
amortizing" mortgage loan.
See "DESCRIPTION OF THE MORTGAGE POOL--Certain
Terms and Conditions of the Mortgage Loans,"
in this prospectus supplement.
S-33
PREPAYMENT RESTRICTIONS....... All of the mortgage loans included in the
trust fund restrict or prohibit voluntary
prepayments of principal in some manner for
some period of time.
TYPES OF PREPAYMENT RESTRICTIONS
<Table>
<Caption>
PERCENTAGE OF PERCENTAGE OF
AGGREGATE CUT- PERCENTAGE OF CUT-OFF DATE CUT-OFF DATE
NUMBER OFF DATE CUT-OFF DATE GROUP 1 GROUP 2
PREPAYMENT RESTRICTION TYPE OF LOANS BALANCE POOL BALANCE BALANCE BALANCE
--------------------------- -------- -------------- ------------- ------------- -------------
Prohibit prepayment for most
of the term of the mortgage
loan; but permit defeasance
after date specified in
related mortgage note for
most or all of the remaining
term*........................ 139 $1,072,704,398 89.3% 94.1% 75.0%
Prohibit prepayment until date
specified in related mortgage
note and then impose a yield
maintenance charge for most
or all of the remaining
term*........................ 9 82,762,315 6.9 4.0 16.0
Prohibit prepayment for most
of the term of the mortgage
loan; then permit defeasance
until date specified in
related mortgage note or
prepayment subject to the
imposition of a yield
maintenance charge for most
of the remaining term in
either case at the option of
the related borrower*........ 2 42,450,000 3.5 2.0 8.0
Impose a yield maintenance
charge for most or all of the
loan term.................... 1 1,607,068 0.1 0.0 0.5
Prohibit prepayment until date
specified in related mortgage
note and then impose a
prepayment premium for most
of the remaining term*....... 1 1,391,141 0.1 0.0 0.5
--- -------------- ----- ------- -------
152 $1,200,914,923 100.0% 100.0% 100.0%
=== ============== ===== ======= =======
</Table>
----------------------------------------------------
* For the purposes hereof, "remaining term"
refers to either remaining term to maturity
or anticipated repayment date, as
applicable.
See "DESCRIPTION OF THE MORTGAGE
POOL--Additional Mortgage Loan Information" in
this prospectus supplement. The ability of the
master servicer or special servicer to waive
or modify the terms of any mortgage loan
relating to the payment of a prepayment
premium or yield maintenance charge will be
limited as described in this prospectus
supplement. See "SERVICING OF THE MORTGAGE
LOANS--Modifications, Waivers and Amendments"
in this prospectus supplement.
S-34
We make no representations as to the
enforceability of the provisions of any
mortgage notes requiring the payment of a
prepayment premium or yield maintenance charge
or limiting prepayments to defeasance or the
ability of the master servicer or special
servicer to collect any prepayment premium or
yield maintenance charge.
DEFEASANCE.................... One hundred forty-one(141) of the mortgage
loans included in the trust fund as of the
cut-off date, representing 92.9% of the
mortgage pool (103 mortgage loans in loan
group 1 or 96.1% and 38 mortgage loans in loan
group 2 or 83.0%), permit the borrower, under
certain conditions, to substitute United
States government obligations as collateral
for the related mortgage loans (or a portion
thereof) following their respective lockout
periods. Upon such substitution, the related
mortgaged property (or, in the case of a
mortgage loan secured by multiple mortgaged
properties, one or more of such mortgaged
properties) will no longer secure such
mortgage loan. The payments on the defeasance
collateral are required to be at least equal
to an amount sufficient to make, when due, all
payments on the related mortgage loan or
allocated to the related mortgaged property.
Except with respect to 1 such mortgage loan,
representing 0.3% of the mortgage pool (1
mortgage loan included in loan group 1 or
0.3%), defeasance may not occur prior to the
second anniversary of the issuance of the
certificates. See "DESCRIPTION OF THE MORTGAGE
POOL--Certain Terms and Conditions of the
Mortgage Loans--Prepayment Provisions" in this
prospectus supplement.
TWENTY LARGEST MORTGAGE
LOANS....................... The following table describes certain
characteristics of the twenty largest mortgage
loans in the trust fund by aggregate principal
balance as of the cut-off date. With respect
to the loan referenced as the Lloyd Center
mortgage loan in the immediately following
table, the debt service coverage ratio and the
loan-to-value ratios set forth in such table
are based on the aggregate combined principal
balance of the Lloyd Center mortgage loan and
its related companion loan which is pari passu
in the right of entitlement to payment with
the Lloyd Center mortgage loan. The related
companion loan is not included in the trust
fund.
S-35
<Table>
<Caption>
% OF
NUMBER OF APPLICABLE
MORTGAGE % OF CUT-OFF LOAN
LOANS/ CUT-OFF DATE BALANCE
MORTGAGE NUMBER OF CUT-OFF DATE LOAN PER
LOAN MORTGAGED LOAN DATE POOL GROUP PROPERTY SF/
LOAN NAME SELLER PROPERTIES GROUP BALANCE* BALANCE BALANCE TYPE UNIT
- --------- -------- ---------- ----- ------------ ------- ---------- -------------------------- -------
Lloyd Center....... Wachovia 1/1 1 $ 69,922,221 5.8% 7.8% Retail - Anchored $ 114
One South Broad
Street............ Wachovia 1/1 1 44,919,182 3.7 5.0% Office - CBD $ 97
673 First Avenue... Wachovia 1/1 1 35,000,000 2.9 3.9% Office - CBD $ 82
Hamilton House
Apartments........ Wachovia 1/1 2 28,902,057 2.4 9.6% Multifamily - Conventional $95,073
Irongate
Apartments........ Wachovia 1/1 1 27,000,000 2.2 3.0% Multifamily - Conventional $96,429
Columbiana Station
Shopping Center... Wachovia 1/1 1 25,900,000 2.2 2.9% Retail - Anchored $ 96
16 West 61st
Street............ Wachovia 1/1 1 24,953,568 2.1 2.8% Office - CBD $ 223
Arrowhead Highlands
Apartments........ Wachovia 1/1 2 24,200,000 2.0 8.0% Multifamily - Conventional $72,024
AmCap - Union &
Alameda........... Nomura 1/1 1 20,726,538 1.7 2.3% Retail - Anchored $ 86
Plaza Gardens South
Apartments........ Citigroup 1/1 2 20,649,186 1.7 6.9% Multifamily - Conventional $82,597
----- ------------ ----
Subtotal/Weighted
Average........... 10/10 $322,172,752 26.8%
===== ============
2175 K Street,
N.W. ............. Wachovia 1/1 1 $ 18,250,000 1.5% 2.0% Office - CBD $ 181
90 & 110 South
Bedford Road...... Wachovia 1/1 1 17,965,895 1.5 2.0% Office - Medical $ 149
Maryland Corporate
Center............ Citigroup 1/1 1 17,120,000 1.4 1.9% Office - Suburban $ 77
Village on the
Hill.............. Wachovia 1/1 1 17,000,000 1.4 1.9% Multifamily - Conventional $92,391
Anthem Village..... Citigroup 1/1 1 16,904,637 1.4 1.9% Retail - Anchored $ 146
Riviera Plaza...... Citigroup 1/1 1 16,759,445 1.4 1.9% Mixed Use - Retail/Office $ 106
Georgetown Plaza... Citigroup 1/1 1 16,482,871 1.4 1.8% Office - Suburban $ 117
College Grove
Shopping Center... Wachovia 1/1 1 16,281,990 1.4 1.8% Retail - Anchored $ 84
Shoppes of
Parkland.......... Wachovia 1/1 1 15,968,669 1.3 1.8% Retail - Anchored $ 110
Lowell Street...... Nomura 1/1 1 15,403,980 1.3 1.7% Industrial - Flex $ 75
----- ------------ ----
Subtotal/Weighted
Average........... 10/10 $168,137,487 14.0%
===== ============
Totals - Top Twenty
Mortgage Loans by
Cut-Off Date
Balance........... 20/20 $490,310,239 40.8%
===== ============
<Caption>
WEIGHTED WEIGHTED
AVERAGE AVERAGE
CUT-OFF LTV WEIGHTED
WEIGHTED DATE RATIO AT AVERAGE
AVERAGE LTV MATURITY MORTGAGE
LOAN NAME DSCR RATIO OR ARD RATE
- --------- -------- -------- -------- --------
Lloyd Center....... 1.83x 63.5% 53.0% 5.420%
One South Broad
Street............ 1.22x 79.2% 67.5% 6.080%
673 First Avenue... 1.60x 58.3% 48.1% 5.670%
Hamilton House
Apartments........ 1.38x 76.1% 63.1% 5.150%
Irongate
Apartments........ 1.22x 78.5% 70.0% 5.800%
Columbiana Station
Shopping Center... 3.42x 54.6% 54.6% 4.040%
16 West 61st
Street............ 1.69x 62.7% 53.2% 5.930%
Arrowhead Highlands
Apartments........ 1.25x 73.3% 62.0% 5.450%
AmCap - Union &
Alameda........... 1.36x 79.7% 67.0% 5.570%
Plaza Gardens South
Apartments........ 1.38x 78.8% 66.6% 5.640%
Subtotal/Weighted
Average........... 1.64X 69.5% 59.4% 5.501%
2175 K Street,
N.W. ............. 1.29x 73.6% 66.5% 5.960%
90 & 110 South
Bedford Road...... 1.47x 79.9% 67.6% 5.840%
Maryland Corporate
Center............ 1.45x 79.6% 68.6% 5.725%
Village on the
Hill.............. 1.31x 73.9% 66.1% 5.470%
Anthem Village..... 1.45x 68.7% 59.0% 5.420%
Riviera Plaza...... 1.36x 76.2% 65.8% 5.650%
Georgetown Plaza... 1.33x 76.7% 64.7% 5.780%
College Grove
Shopping Center... 1.28x 75.7% 63.2% 5.450%
Shoppes of
Parkland.......... 1.35x 79.5% 66.9% 5.690%
Lowell Street...... 1.48x 69.4% 59.9% 6.400%
Subtotal/Weighted
Average........... 1.38X 75.4% 64.9% 5.736%
Totals - Top Twenty
Mortgage Loans by
Cut-Off Date
Balance........... 1.55X 71.5% 61.3% 5.582%
</Table>
- ---------------
* In the case of a concentration of cross-collateralized mortgage loans, the
aggregate principal balance.
For more information on the twenty largest mortgage loans in the trust
fund, see "DESCRIPTION OF THE MORTGAGE POOL--Twenty Largest Mortgage Loans" in
this prospectus supplement.
CO-LENDER LOANS............... Five (5) mortgage loans to be included in the
trust that were originated or acquired by
Wachovia Bank, National Association,
representing approximately 8.3% of the initial
mortgage pool balance, are in each case,
evidenced by one of two notes which are
secured by a single mortgaged real property.
In each case, the related companion loan will
not be part of the trust fund. One of these
mortgage loans, loan number 1 (the Lloyd
Center mortgage loan), is part of a split loan
structure where the related companion loan is
pari passu in right of entitlement to payment.
The remaining 4 mortgage loans, loan numbers
19, 38, 139 and 148, are each part of a split
loan structure in which the related companion
loan is junior to the related mortgage loan.
Each of these mortgage loans and its related
companion loan are subject to intercreditor
agreements. The intercreditor agreement for
the Lloyd Center mortgage loan allocates
payments between such mortgage loan and the
related companion on a pari passu basis. With
respect to the mortgage loans where the
related companion loans are junior to such
mortgage loan, the related intercreditor
agreement among other things, generally
allocates collections in respect of such loans
first to amounts due on the mortgage loan in
the trust fund and second to amounts due on
S-36
the related companion loan. The master
servicer and special servicer will service and
administer these mortgage loans and their
related companion loans pursuant to the
pooling and serving agreement and the related
intercreditor agreement for so long as the
related mortgage loan is part of the trust
fund. With respect to loan numbers 19 and 38,
the related intercreditor agreements allow the
trust fund and the related companion loans to
receive separate collections of principal and
interest prior to any material defaults.
Amounts attributable to any companion loan
will not be assets of the trust fund, and will
be beneficially owned by the holder of such
companion loan. See "DESCRIPTION OF THE
MORTGAGE POOL--Co-Lender Loans" in this
prospectus supplement.
See "DESCRIPTION OF THE MORTGAGE POOL--
Co-Lender Loans" and "SERVICING OF THE
MORTGAGE LOANS" for a description of certain
rights of the holders of these companion loans
to direct or consent to the servicing of the
related mortgage loans.
S-37
RISK FACTORS
- You should carefully consider, among other things, the following risk
factors (as well as the risk factors set forth under "RISK FACTORS" in
the accompanying prospectus) before making your investment decision.
Additional risks are described elsewhere in this prospectus supplement
under separate headings in connection with discussions regarding
particular aspects of the mortgage loans included in the trust fund or
the certificates.
- 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.
- This prospectus supplement contains forward-looking statements that
involve risk and uncertainties. Actual results could differ materially
from those anticipated in these forward-looking statements as a result of
certain factors, including risks described below and elsewhere in this
prospectus supplement.
- If any of the following risks are realized, your investment could be
materially and adversely affected.
THE OFFERED CERTIFICATES
ONLY TRUST FUND ASSETS ARE
AVAILABLE TO PAY YOU....... If the assets of the trust fund, primarily the
mortgage loans, are insufficient to make
payments on the offered certificates, no other
assets will be available for payment of the
deficiency. See "RISK FACTORS--The Assets of
the Trust Fund May Not Be Sufficient to Pay
Your Certificates" in the accompanying
prospectus.
PREPAYMENTS WILL AFFECT YOUR
YIELD...................... Prepayments. The yield to maturity on the
offered certificates will depend on the rate
and timing of principal payments (including
both voluntary prepayments, in the case of
mortgage loans that permit voluntary
prepayment, and involuntary prepayments, such
as prepayments resulting from casualty or
condemnation, defaults, liquidations or
repurchases for breaches of representations or
warranties or other sales of defaulted mortgage
loans which in either case may not require any
accompanying prepayment premium) on the
mortgage loans included in the trust fund and
how such payments are allocated among the
offered certificates entitled to distributions
of principal.
In addition, upon the occurrence of certain
limited events, a party may be required or
permitted to repurchase or purchase a mortgage
loan from the trust fund and the money paid
would be passed through to the holders of the
certificates with the same effect as if such
mortgage loan had been prepaid in full (except
that no prepayment premium or yield maintenance
charge would be payable with respect to any
such purchase or repurchase). In
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addition, certain of the mortgage loans may
permit prepayment without an accompanying
prepayment premium or yield maintenance charge
if the mortgagee elects to apply casualty
proceeds to the mortgage loan. We cannot make
any representation as to the anticipated rate
of prepayments (voluntary or involuntary) on
the mortgage loans or as to the anticipated
yield to maturity of any certificate.
In addition, because the amount of principal
that will be distributed to the Class A-1,
Class A-2 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
and Class A-2 certificates will be particularly
sensitive to prepayments on mortgage loans in
loan group 1 and the yield on the Class A-1A
certificates will be particularly sensitive to
prepayments on mortgage loans in loan group 2.
See "YIELD AND MATURITY CONSIDERATIONS" in this
prospectus supplement and "YIELD
CONSIDERATIONS" in the accompanying prospectus.
Yield. In general, if you purchase an offered
certificate at a premium and principal
distributions on that offered certificate occur
at a rate faster than you anticipated at the
time of purchase, and no prepayment premiums or
yield maintenance charges are collected, your
actual yield to maturity may be lower than you
had predicted at the time of purchase.
Conversely, if you purchase an offered
certificate at a discount and principal
distributions on that offered certificate occur
at a rate slower than you anticipated at the
time of purchase, your actual yield to maturity
may be lower than you had predicted at the time
of purchase.
Interest Rate Environment. Mortgagors
generally are less likely to prepay if
prevailing interest rates are at or above the
rates borne by their mortgage loans. On the
other hand, mortgagors are more likely to
prepay if prevailing interest rates fall
significantly below the mortgage interest rates
of their mortgage loans. Mortgagors are less
likely to prepay mortgage loans with a lockout
period, yield maintenance charge or prepayment
premium provision, to the extent enforceable,
than similar mortgage loans without such
provisions, with shorter lockout periods or
with lower yield maintenance charges or
prepayment premiums.
Performance Escrows. In connection with the
origination of some of the mortgage loans, the
related borrowers were required to escrow funds
or post a letter of credit related to obtaining
certain performance objectives. In general,
such funds will be released to the related
borrower upon the
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satisfaction of certain conditions. If the
conditions are not satisfied, although the
master servicer will be directed in the pooling
and servicing agreement to hold the escrows,
letters of credit or proceeds of such letters
of credit as additional collateral and not use
the funds to reduce the principal balance of
the related mortgage loan, in the event such
funds are required to be used to reduce the
principal balance of such mortgage loans, such
amounts will be passed through to the holders
of the certificates as principal prepayments.
Premiums. Provisions requiring prepayment
premiums and yield maintenance charges may not
be enforceable in some states and under federal
bankruptcy law, and may constitute interest for
usury purposes. Accordingly, we cannot provide
assurance that the obligation to pay such
premium or charge will be enforceable or, if
enforceable, that the foreclosure proceeds will
be sufficient to pay such prepayment premium or
yield maintenance charge. Additionally,
although the collateral substitution provisions
related to defeasance are not intended to be,
and do not have the same effect on the
certificateholders as, a prepayment, we cannot
provide assurance that a court would not
interpret such provisions as requiring a
prepayment premium or yield maintenance charge
and possibly determine that such provisions are
unenforceable or usurious under applicable law.
Prepayment premiums and yield maintenance
charges are generally not charged for
prepayments resulting from casualty or
condemnation and would not be paid in
connection with repurchases of mortgage loans
for breaches of representations or warranties.
No prepayment premium or yield maintenance
charge will be required for prepayments in
connection with a casualty or condemnation
unless, in the case of most of the mortgage
loans, an event of default has occurred and is
continuing.
Pool Concentrations. Principal payments
(including prepayments) on the mortgage loans
included in the trust fund or in a particular
loan group will occur at different rates. In
addition, mortgaged properties can be released
from the trust fund as a result of prepayments,
defeasance, repurchases, casualties or
condemnations. As a result, the aggregate
balance of the mortgage loans concentrated in
various property types in the trust fund or in
a particular loan group changes over time. You
therefore may be exposed to varying
concentration risks as the mixture of property
types and relative principal balance of the
mortgage loans associated with certain property
types changes. See the table entitled "Range of
Remaining Term to Maturity or Anticipated
Repayment Date for all Mortgage
S-40
Loans as of the Cut-Off Date" under
"DESCRIPTION OF THE MORTGAGE POOL--Additional
Mortgage Loan Information" in this prospectus
supplement for a description of the respective
maturity dates of the mortgage loans included
in the trust fund and in each loan group.
Because principal on the certificates (other
than the Class X-C, Class X-P, Class Z, Class
R-I and Class R-II certificates) is payable in
sequential order to the extent described in
this prospectus supplement under "DESCRIPTION
OF THE CERTIFICATES--Distributions," classes
that have a lower priority of distributions are
more likely to be exposed to the risk of
changing concentrations discussed under
"--Special Risks Associated With High Balance
Mortgage Loans" below than classes with a
higher sequential priority.
BORROWER DEFAULTS MAY
ADVERSELY AFFECT YOUR
YIELD...................... The aggregate amount of distributions on the
offered certificates, the yield to maturity of
the offered certificates, the rate of principal
payments on the offered certificates and the
weighted average life of the offered
certificates will be affected by the rate and
timing of delinquencies and defaults on the
mortgage loans included in the trust fund.
Delinquencies on the mortgage loans included in
the trust fund, if the delinquent amounts are
not advanced, may result in shortfalls in
distributions of interest and/or principal to
the offered certificates for the current month.
Any late payments received on or in respect of
the mortgage loans will be distributed to the
certificates in the priorities described more
fully in this prospectus supplement, but no
interest will accrue on such shortfall during
the period of time such payment is delinquent.
If you calculate your anticipated yield based
on an assumed default rate and an assumed
amount of losses on the mortgage pool that are
lower than the default rate and the amount of
losses actually experienced, and if such losses
are allocated to your class of certificates,
your actual yield to maturity will be lower
than the yield so calculated and could, under
certain scenarios, be negative. The timing of
any loss on a liquidated mortgage loan also
will affect the actual yield to maturity of the
offered certificates to which all or a portion
of such loss is allocable, even if the rate of
defaults and severity of losses are consistent
with your expectations. In general, the earlier
you bear a loss, the greater the effect on your
yield to maturity. See "YIELD AND MATURITY
CONSIDERATIONS" in this prospectus supplement
and "YIELD CONSIDERATIONS" in the accompanying
prospectus.
S-41
Even if losses on the mortgage loans included
in the trust fund are allocated to a particular
class of offered certificates, such losses may
affect the weighted average life and yield to
maturity of other certificates. Losses on the
mortgage loans, to the extent not allocated to
such class of offered certificates, may result
in a higher percentage ownership interest
evidenced by such certificates than would
otherwise have resulted absent such loss. The
consequent effect on the weighted average life
and yield to maturity of the offered
certificates will depend upon the
characteristics of the remaining mortgage
loans.
ADDITIONAL COMPENSATION TO
THE SERVICER WILL AFFECT YOUR
RIGHT TO RECEIVE
DISTRIBUTIONS.............. To the extent described in this prospectus
supplement, the master servicer or the trustee,
as applicable, will be entitled to receive
interest on unreimbursed advances and
unreimbursed servicing expenses. The right of
the master servicer or the trustee to receive
such payments of interest is senior to the
rights of certificateholders to receive
distributions on the offered certificates and,
consequently, may result in additional trust
fund expenses being allocated to the offered
certificates that would not have resulted
absent the accrual of such interest. In
addition, the special servicer will receive a
fee with respect to each specially serviced
mortgage loan and any collections thereon,
including specially serviced mortgage loans
which have been returned to performing status.
This will result in shortfalls which will be
allocated to the offered certificates.
SUBORDINATION OF SUBORDINATE
OFFERED CERTIFICATES....... As described in this prospectus supplement,
unless your certificates are Class A-1 or Class
A-2 certificates, your rights to receive
distributions of amounts collected or advanced
on or in respect of the mortgage loans will be
subordinated to those of the holders of the
offered certificates with an earlier
alphabetical designation and the Class A-1A,
Class X-C and Class X-P certificates.
See "DESCRIPTION OF THE
CERTIFICATES--Distributions--Application of the
Available Distribution Amount" and "DESCRIPTION
OF THE CERTIFICATES--Subordination; Allocation
of Losses and Certain Expenses" in this
prospectus supplement.
YOUR LACK OF CONTROL OVER THE
TRUST FUND CAN CREATE
RISKS...................... You and other certificateholders generally do
not have a right to vote and do not have the
right to make decisions with respect to the
administration of the trust. See
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"SERVICING OF THE MORTGAGE LOANS--General" in
this prospectus supplement. Those decisions are
generally made, subject to the express terms of
the pooling and servicing agreement, by the
master servicer, the trustee or the special
servicer, as applicable. Any decision made by
one of those parties in respect of the trust,
even if that decision is determined to be in
your best interests by that party, may be
contrary to the decision that you or other
certificateholders would have made and may
negatively affect your interests.
Under certain circumstances, the consent or
approval of less than all certificateholders
will be required to take, and will bind all
certificateholders to, certain actions relating
to the trust fund. The interests of those
certificateholders may be in conflict with
those of the other certificateholders. For
example, certificateholders of certain classes
that are subordinate in right of payment may
direct the actions of the special servicer with
respect to troubled mortgage loans and related
mortgaged properties. In certain circumstances,
the holder of a companion loan may direct the
actions of the special servicer with respect to
the related mortgage loan and the holder of
mezzanine or subordinate debt will have certain
consent rights relating to foreclosure or
modification of the related loans. The
interests of such holder of a companion loan or
mezzanine or subordinate debt may be in
conflict with those of the certificateholders.
Additionally, less than all of the
certificateholders may amend the pooling and
servicing agreement in certain circumstances.
See "SERVICING OF THE MORTGAGE LOANS--The
Controlling Class Representative" and
"DESCRIPTION OF THE CERTIFICATES--Voting
Rights" in this prospectus supplement and the
accompanying prospectus.
LIQUIDITY FOR CERTIFICATES
MAY BE LIMITED............. There is currently no secondary market for the
offered certificates. While each underwriter
has informed us that it intends to make a
secondary market in the offered certificates,
none of them is under any obligation to do so.
No secondary market for your certificates may
develop. If a secondary market does develop, it
may not provide you with liquidity of
investment or continue for the life of your
certificates. Lack of liquidity could result in
a substantial decrease in the market value of
your certificates. Your certificates will not
be listed on any securities exchange or traded
in any automated quotation system of any
registered securities association such as
NASDAQ.
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BOOK-ENTRY REGISTRATION...... Your certificates will be initially represented
by one or more certificates registered in the
name of Cede & Co., as the nominee for DTC, and
will not be registered in your name. As a
result, you will not be recognized as a
certificateholder, or holder of record of your
certificates.
POTENTIAL CONFLICTS OF
INTEREST..................... The master servicer is an affiliate of the
depositor and is one of the underwriters and
one of the mortgage loan sellers. This
affiliation could cause a conflict with the
master servicer's duties to the trust under the
pooling and servicing agreement. However, the
pooling and servicing agreement provides that
the mortgage loans shall be administered in
accordance with the servicing standard
described in this prospectus supplement without
regard to an affiliation with any other party
to the pooling and servicing agreement. See
"SERVICING OF THE MORTGAGE LOANS--General" in
this prospectus supplement. Wachovia Bank,
National Association, which is the master
servicer, or one of its affiliates, is also the
holder of the companion loans with respect to 3
mortgage loans, representing 6.1% of the
mortgage pool (1 mortgage loan in group 1 or
7.8% and 2 mortgage loans in group 2 or 1.0%)
and may also purchase certain of the
non-offered certificates. This could cause a
conflict between Wachovia Bank, National
Association's duties to the trust under the
pooling and servicing agreement and its or its
affiliate's interest as a holder of a companion
loan.
The special servicer will be involved in
determining whether to modify or foreclose a
defaulted mortgage loan. An affiliate of the
special servicer may purchase certain other
non-offered certificates (including the
controlling class and the Class Z
certificates). An affiliate of the special
servicer may serve as the initial controlling
class representative. The special servicer and
its affiliates may acquire non-performing loans
or interests in non-performing loans, which may
include REO properties that compete with the
mortgaged properties securing mortgage loans in
the trust. The special servicer and its
affiliates own and are in the business of
acquiring assets similar in type to the assets
of the trust fund. Affiliates of the special
servicer may also make loans on properties that
may compete with the mortgaged properties and
may also advise other clients that own or are
in the business of owning properties that
compete with the mortgaged properties or that
own loans like the mortgage loans included in
the trust. Accordingly, the assets of the
special servicer and its affiliates may,
depending upon the particular circumstances
including the nature and location of such
assets, compete with the mortgaged properties
for tenants, purchasers, financing and
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so forth. See "SERVICING OF THE MORTGAGE
LOANS--Modifications, Waivers and Amendments"
in this prospectus supplement.
This could cause a conflict between the special
servicer's duties to the trust under the
pooling and servicing agreement and its
interest as a holder of a certificate. However,
the pooling and servicing agreement provides
that the mortgage loans shall be administered
in accordance with the servicing standard
without regard to ownership of any certificate
by the master servicer, the special servicer or
any affiliate of the special servicer. See
"SERVICING OF THE MORTGAGE LOANS--General" in
this prospectus supplement.
In addition, the related property managers and
borrowers may experience conflicts of interest
in the management and/or ownership of the
mortgaged properties securing the mortgage
loans because:
- a substantial number of the mortgaged
properties are managed by property managers
affiliated with the respective borrowers;
- these property managers also may manage
and/or franchise additional properties,
including properties that may compete with
the mortgaged properties; and
- affiliates of the property manager and/or
the borrowers, or the property managers
and/or the borrowers themselves also may
own other properties, including competing
properties.
In addition, certain mortgage loans included in
the trust may have been refinancings of debt
previously held by an affiliate of one of the
mortgage loan sellers.
TERRORIST ATTACKS MAY
ADVERSELY AFFECT YOUR
INVESTMENT................. On September 11, 2001, the United States was
subjected to multiple terrorist attacks which
resulted in considerable uncertainty in the
world financial markets. The full impact of
these events is not yet known, but could
include, among other items, increased
volatility in the price of securities including
your certificates. The terrorist attacks may
also adversely affect the revenues or costs of
operation of the mortgaged properties. The
terrorist attacks on the World Trade Center and
the Pentagon suggest an increased likelihood
that large public areas such as shopping malls
or large office buildings could become targets
of terrorist attacks in the future. The
possibility of such attacks could (i) lead to
damage to one or more of the mortgaged
properties if any such attacks occur, (ii)
result in higher
S-45
costs for security and insurance premiums,
particularly for large properties, which could
adversely affect the cash flow at such
mortgaged properties, or (iii) impact leasing
patterns or shopping patterns which could
adversely impact leasing revenue and mall
traffic and percentage rent. As a result, the
ability of the mortgaged properties to generate
cash flow may be adversely affected. See
"--Insurance Coverage on Mortgaged Properties
May Not Cover Special Hazard Losses" below.
The terrorist attacks and the military conflict
in Iraq have significantly reduced air travel
throughout the United States, and, therefore,
have had a negative effect on revenues in areas
heavily dependent on tourism. The decrease in
air travel may have a negative effect on
certain of the mortgaged properties, including
hotel mortgaged properties and those mortgaged
properties located in tourist areas, which
could reduce the ability of such mortgaged
properties to generate cash flow.
It is uncertain what continued effect armed
conflict involving the United States, including
the recent war between the United States and
Iraq or any future conflict with any other
country, will have on domestic and world
financial markets, economies, real estate
markets, insurance costs or business segments.
Foreign conflicts of any kind could have an
adverse effect on the mortgaged properties.
Accordingly, these disruptions, uncertainties
and costs could materially and adversely affect
your investment in the certificates.
THE MORTGAGE LOANS
RISKS ASSOCIATED WITH
COMMERCIAL LENDING MAY BE
DIFFERENT THAN FOR
RESIDENTIAL LENDING........ Commercial and multifamily lending is generally
viewed as exposing a lender (and your
investment in the trust fund) to a greater risk
of loss than lending which is secured by
single-family residences, in part because it
typically involves making larger loans to
single borrowers or groups of related
mortgagors. In addition, unlike loans which are
secured by single-family residences, repayment
of loans secured by commercial and multifamily
properties depends upon the ability of the
related real estate project:
- to generate income sufficient to pay debt
service, operating expenses and leasing
commissions and to make necessary repairs,
tenant improvements and capital
improvements; and
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- in the case of loans that do not fully
amortize over their terms, to retain
sufficient value to permit the borrower to
pay off the loan at maturity through a sale
or refinancing of the mortgaged property.
FUTURE CASH FLOW AND PROPERTY
VALUES ARE NOT
PREDICTABLE................ A number of factors, many beyond the control of
the property owner, may affect the ability of
an income-producing real estate project to
generate sufficient net operating income to pay
debt service and/or to maintain its value.
Among these factors are:
- economic conditions generally and in the
area of the project;
- the age, quality, functionality and design
of the project;
- the degree to which the project competes
with other projects in the area;
- changes or continued weakness in specific
industry segments;
- increases in operating costs;
- the willingness and ability of the owner to
provide capable property management and
maintenance;
- the degree to which the project's revenue
is dependent upon a single tenant or user,
a small group of tenants, tenants
concentrated in a particular business or
industry and the competition to any such
tenants;
- an increase in the capital expenditures
needed to maintain the properties or make
improvements;
- a decline in the financial condition of a
major tenant;
- the location of a mortgaged property;
- whether a mortgaged property can be easily
converted to alternative uses;
- an increase in vacancy rates;
- perceptions regarding the safety,
convenience and attractiveness of such
properties;
- vulnerability to litigation by tenants and
patrons; and
- environmental contamination.
Many of the mortgaged properties securing
mortgage loans included in the trust fund have
leases that expire or may be subject to tenant
termination rights prior to the maturity date
of the related mortgage loan. Certain of such
loans may be leased entirely to a single
tenant. If leases are not renewed or replaced,
if tenants default, if rental rates fall
S-47
and/or if operating expenses increase, the
borrower's ability to repay the loan may be
impaired and the resale value of the property,
which is substantially dependent upon the
property's ability to generate income, may
decline. Even if borrowers successfully renew
leases or relet vacated space, the costs
associated with reletting, including tenant
improvements, leasing commissions and free
rent, can exceed the amount of any reserves
maintained for that purpose and reduce cash
from the mortgaged properties. Although some of
the mortgage loans included in the trust fund
require the borrower to maintain escrows for
leasing expenses, there is no guarantee that
these reserves will be sufficient. In addition,
there are other factors, including changes in
zoning or tax laws, tenant exclusives and
rights of first refusal to lease or purchase,
the availability of credit for refinancing and
changes in interest-rate levels that may
adversely affect the value of a project and/or
the borrower's ability to sell or refinance
without necessarily affecting the ability to
generate current income.
Other factors are more general in nature, such
as:
- national, regional or local economic
conditions (including plant and military
installation closings, industry slowdowns
and unemployment rates);
- local real estate conditions (such as an
oversupply of retail space, office space or
multifamily housing);
- demographic factors;
- consumer confidence;
- consumer tastes and preferences; and
- changes in building codes and other
applicable laws.
The volatility of net operating income will be
influenced by many of the foregoing factors, as
well as by:
- the length of tenant leases;
- the creditworthiness of tenants;
- in the case of rental properties, the rate
at which new rentals occur;
- the property's "operating leverage" (i.e.,
the percentage of total property expenses
in relation to revenue, the ratio of fixed
operating expenses to those that vary with
revenues and the level of capital
expenditures required to maintain the
property and to retain or replace tenants);
and
S-48
- a decline in the real estate market or in
the financial condition of a major tenant
will tend to have a more immediate effect
on the net operating income of property
with short-term revenue sources, such as
short-term or month-to-month leases, and
may lead to higher rates of delinquency or
defaults.
SOME MORTGAGED PROPERTIES MAY
NOT BE READILY CONVERTIBLE
TO ALTERNATIVE USES........ Some of the mortgaged properties securing the
mortgage loans included in the trust fund may
not be readily convertible 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. Mortgaged properties that have been
designated as historic sites, such as the
mortgaged property securing 1 mortgage loan in
loan group 1 (loan number 87), representing
0.4% of the mortgage pool (0.5% of loan group
1), may not be permitted to be converted to
alternative uses. In addition, converting
commercial properties to alternate uses
generally requires substantial capital
expenditures. The liquidation value of any
mortgaged property, subject to limitations of
the kind described above or other limitations
on convertibility of use, may be substantially
less than would be the case if the property
were readily adaptable to other uses.
See "--Special Risks Associated with Industrial
and Mixed Use Facilities" and "--Special Risks
Associated with Mobile Home Park Properties"
below.
LOANS NOT INSURED OR
GUARANTEED................. Generally, the mortgage loans included in the
trust fund will not be an obligation of, or be
insured or guaranteed by, any governmental
entity, by any private mortgage insurer, or by
the depositor, any mortgage loan seller, the
underwriters, the master servicer, the special
servicer, the trustee or any of their
respective affiliates.
We have not evaluated the significance of the
recourse provisions of mortgage loans that may
permit recourse against the related borrower or
another person in the event of a default.
Accordingly, you should assume all of the
mortgage loans included in the trust fund are
nonrecourse loans, and that recourse in the
case of default will be limited to the related
mortgaged property.
S-49
However, in certain circumstances a mortgage
loan seller will be obligated to repurchase or
substitute a mortgage loan sold by it if:
- there is a defect or omission with respect
to certain of the documents relating to
such mortgage loan and such defect or
omission materially and adversely affects
the value of a mortgage loan, the interests
of the trust therein or the interests of
any certificateholder; or
- certain of their respective representations
or warranties concerning such mortgage loan
are breached, and such breach materially
and adversely affects the value of such
mortgage loan, the interests of the trust
therein or the interests of any
certificateholder and is not cured as
required.
We cannot provide assurance that the applicable
mortgage loan seller will be in a financial
position to make such a repurchase or
substitution.
RISKS RELATING TO CERTAIN
PROPERTY TYPES............. Particular types of income properties are
exposed to particular risks. For instance:
SPECIAL RISKS ASSOCIATED WITH
SHOPPING CENTERS AND OTHER
RETAIL PROPERTIES.......... Shopping centers are affected by the health of
the retail industry, which is currently
undergoing a consolidation and is experiencing
changes due to the growing market share of
"off-price" retailing, including the popularity
of home shopping networks, shopping via
Internet web sites and telemarketing. A
particular shopping center may be adversely
affected by the bankruptcy or decline in
drawing power of an anchor, shadow anchor or
major tenant, a shift in consumer demand due to
demographic changes (for example, population
decreases or changes in average age or income)
and/or changes in consumer preference (for
example, to discount retailers).
In the case of retail properties, the failure
of an anchor, shadow anchor or major tenant to
renew its lease, the termination of an anchor,
shadow anchor or major tenant's lease, the
bankruptcy or economic decline of an anchor,
shadow anchor or major tenant, or the cessation
of the business of an anchor, shadow anchor or
major tenant at its store, notwithstanding that
such tenant may continue payment of rent after
"going dark," may have a particularly negative
effect on the economic performance of a
shopping center property given the importance
of anchor tenants, shadow anchor tenants and
major tenants in attracting traffic to other
stores within the same shopping center. In
S-50
addition, the failure of one or more major
tenants, such as an anchor or shadow anchor
tenant, to operate from its premises may
entitle other tenants to rent reductions or the
right to terminate their leases. See "--The
Failure of a Tenant Will Have a Negative Impact
on Single and Tenant Concentration Properties"
below.
In addition, certain of the mortgage loans
secured by retail mortgaged properties have
movie theaters as tenants. These mortgaged
properties are exposed to certain unique risks.
In recent years, the theater industry has
experienced a high level of construction of new
theaters and an increase in competition among
theater operators. This has caused some
operators to experience financial difficulties,
resulting in downgrades in their credit ratings
and, in certain cases, bankruptcy filings. In
addition, because of the unique construction
requirements of theaters, any vacant theater
space would not easily be converted to other
uses.
Retail properties, including shopping centers,
secure 58 of the mortgage loans included in the
trust fund as of the cut-off date, representing
33.8% of the mortgage pool (45.1% of loan group
1).
SPECIAL RISKS ASSOCIATED WITH
OFFICE PROPERTIES.......... Office properties may require their owners to
expend significant amounts of cash to pay for
general capital improvements, tenant
improvements and costs of re-leasing space.
Office properties that are not equipped to
accommodate the needs of modern businesses may
become functionally obsolete and thus
non-competitive.
In addition, a large number of factors may
adversely affect the value of office
properties, including:
- the quality of an office building's
tenants;
- the physical attributes of the building in
relation to competing buildings (e.g. age,
condition, design, access to transportation
and ability to offer certain amenities,
such as sophisticated building systems);
- the physical attributes of the building
with respect to the technological needs of
the tenants, including the adaptability of
the building to changes in the
technological needs of the tenants;
- the desirability of the area as a business
location;
- the presence of competing properties; and
- the strength and nature of the local
economy (including labor costs and quality,
tax environment and quality of life for
employees).
S-51
Moreover, the cost of refitting office space
for a new tenant is often higher than the cost
of refitting other types of properties for new
tenants.
Office properties secure 28 of the mortgage
loans included in the trust fund as of the
cut-off date, representing 28.1% of the
mortgage pool (37.4% of loan group 1).
SPECIAL RISKS ASSOCIATED WITH
MULTIFAMILY PROJECTS....... Multifamily projects are part of a market that,
in general, is characterized by low barriers to
entry. Thus, a particular apartment market with
historically low vacancies could experience
substantial new construction and a resultant
oversupply of units in a relatively short
period of time. Since multifamily apartment
units are typically leased on a short-term
basis, the tenants who reside in a particular
project within such a market may easily move to
alternative projects with more desirable
amenities or locations.
A large number of factors may adversely affect
the value and successful operation of a
multifamily property, including:
- the physical attributes of the apartment
building (for example, its age, appearance
and construction quality);
- the location of the property (for example,
a change in the neighborhood over time);
- the ability of management to provide
adequate maintenance and insurance;
- the types of services and amenities that
the property provides;
- the property's reputation;
- the level of mortgage interest rates
(which, if relatively low, may encourage
tenants to purchase rather than lease
housing);
- the tenant mix;
- dependence upon governmental programs that
provide rent subsidies to tenants pursuant
to tenant voucher programs or tax credits
to developers to provide certain types of
development;
- the presence of competing properties;
- adverse local or national economic
conditions; and
- state and local regulations.
Furthermore, multifamily projects may be
subject to various tax credit, city, state and
federal housing subsidies, rent stabilization
or similar programs. The limitations and
restrictions imposed by these programs could
result in realized losses on the mortgage
loans. In addition, in the
S-52
event that the program is cancelled, it could
result in less income for the project. These
programs may include:
- rent limitations that could adversely
affect the ability of borrowers to increase
rents to maintain the condition of their
mortgaged properties and satisfy operating
expenses; and
- tenant income restrictions that may reduce
the number of eligible tenants in those
mortgaged properties and result in a
reduction in occupancy rates.
The differences in rents between subsidized or
supported properties and other multifamily
rental properties in the same area may not be a
sufficient economic incentive for some eligible
tenants to reside at a subsidized or supported
property that may have fewer amenities or be
less attractive as a residence. As a result,
occupancy levels at a subsidized or supported
property may decline, which may adversely
affect the value and successful operation of
such property.
Multifamily properties secure 42 of the
mortgage loans included in the trust fund as of
the cut-off date, representing 27.4% of the
mortgage pool (4 mortgage loans in loan group 1
or 5.7% and 38 mortgage loans in loan group 2
or 92.2%).
SPECIAL RISKS ASSOCIATED WITH
SELF STORAGE FACILITIES.... The self storage facilities market contains low
barriers to entry. In addition, due to the
short-term nature of self storage leases, self
storage properties also may be subject to more
volatility in terms of supply and demand than
loans secured by other types of properties.
Because of the construction utilized in
connection with certain self storage
facilities, it might be difficult or costly to
convert such a facility to an alternative use.
Thus, the liquidation value of self storage
properties may be substantially less than would
be the case if the same were readily adaptable
to other uses.
In addition, it is difficult to assess the
environmental risks posed by such facilities
due to tenant privacy, anonymity and
unsupervised access to such facilities.
Therefore, such facilities may pose additional
environmental risks to investors. The
environmental site assessments discussed in
this prospectus supplement did not include an
inspection of the contents of the self-storage
units included in the self storage properties.
We therefore cannot provide assurance that all
of the units included in the self storage
properties are free from hazardous substances
or other pollutants or contaminants or will
remain so in the future. See "--Environmental
S-53
Laws May Adversely Affect the Value of and Cash
Flow from a Mortgaged Property" below.
Self storage properties secure 6 of the
mortgage loans included in the trust fund as of
the cut-off date, or approximately 2.1% of the
mortgage pool (6 mortgage loans in loan group 1
or 2.8%).
SPECIAL RISKS ASSOCIATED WITH
INDUSTRIAL AND MIXED USE
FACILITIES................. Industrial and mixed use facilities present
risks not associated with other properties.
Significant factors determining the value of
industrial properties include:
- the quality of tenants;
- building design and adaptability; and
- the location of the property.
Concerns about the quality of tenants,
particularly major tenants, are similar in both
office properties and industrial properties,
although industrial properties are more
frequently dependent on a single tenant.
In addition, properties used for many
industrial purposes are more prone to
environmental concerns than other property
types.
Aspects of building site design and
adaptability affect the value of an industrial
property. Site characteristics which are
valuable to an industrial property include
clear ceiling heights, column spacing, zoning
restrictions, number of bays and bay depths,
divisibility, truck turning radius and overall
functionality and accessibility. In addition,
because of the unique construction requirements
of many industrial properties, any vacant
industrial property may not be easily converted
to other uses. Location is also important
because an industrial property requires the
availability of labor sources, proximity to
supply sources and customers and accessibility
to rail lines, major roadways and other
distribution channels.
Industrial properties may be adversely affected
by reduced demand for industrial space
occasioned by a decline in a particular
industry segment (e.g., a decline in defense
spending), and a particular industrial property
that suited the needs of its original tenant
may be difficult to relet to another tenant or
may become functionally obsolete relative to
newer properties. In addition, lease terms with
respect to industrial properties are generally
for shorter periods of time than with respect
to other properties and may result in a
S-54
substantial percentage of leases expiring in
the same year at any particular industrial
property.
Industrial and mixed use facilities secure 8 of
the mortgage loans included in the trust fund
as of the cut-off date, representing 5.5% of
the mortgage pool (7.3% of loan group 1).
SPECIAL RISKS ASSOCIATED
WITH MOBILE HOME PARK
PROPERTIES................. Mortgage loans secured by liens on mobile home
park properties pose risks not associated with
mortgage loans secured by liens on other types
of income-producing real estate.
The successful operation of a mobile home park
property may depend upon the number of other
competing residential developments in the local
market, such as:
- other mobile home park properties;
- apartment buildings; and
- site-built single family homes.
Other factors may also include:
- the physical attributes of the community,
including its age and appearance;
- location of the mobile home park property;
- the ability of management to provide
adequate maintenance and insurance;
- the types of services or amenities it
provides;
- the property's reputation; and
- state and local regulations, including rent
control and rent stabilization.
The mobile home park properties are "special
purpose" properties that could not be readily
converted to general residential, retail or
office use. Thus, if the operation of any of
the mobile home park properties becomes
unprofitable due to competition, age of the
improvements or other factors such that the
borrower becomes unable to meet its obligations
on the related mortgage loan, the liquidation
value of that mobile home park property may be
substantially less, relative to the amount
owing on the related mortgage loan, than would
be the case if the mobile home park property
were readily adaptable to other uses.
Mobile home park properties secure 9 of the
mortgage loans, representing 2.3% of the
mortgage pool (2 mortgage
S-55
loans in loan group 1 or 0.5% and 7 mortgage
loans in loan group 2 or 7.8%).
ENVIRONMENTAL LAWS MAY
ADVERSELY AFFECT THE VALUE
OF AND CASH FLOW FROM A
MORTGAGED PROPERTY......... If an adverse environmental condition exists
with respect to a mortgaged property securing a
mortgage loan included in the trust fund, the
trust fund will be subject to certain risks
including the following:
- a reduction in the value of such mortgaged
property which may make it impractical or
imprudent to foreclose against such
mortgaged property;
- the potential that the related borrower may
default on the related mortgage loan due to
such borrower's inability to pay high
remediation costs or costs of defending
lawsuits due to an environmental impairment
or difficulty in bringing its operations
into compliance with environmental laws;
- liability for clean-up costs or other
remedial actions, which could exceed the
value of such mortgaged property or the
unpaid balance of the related mortgage
loan; and
- the inability to sell the related mortgage
loan in the secondary market or to lease
such mortgaged property to potential
tenants.
Under certain federal and state laws, federal
and state agencies may impose a statutory lien
over affected property to secure the
reimbursement of remedial costs incurred by
these agencies to correct environmental
conditions. This lien may be superior to the
lien of an existing mortgage. Any such lien
arising with respect to a mortgaged property
securing a mortgage loan included in the trust
fund would adversely affect the value of such
mortgaged property and could make impracticable
the foreclosure by the special servicer on such
mortgaged property in the event of a default by
the related borrower.
Under various federal, state and local laws,
ordinances and regulations, a current or
previous owner or operator of real property, as
well as certain other types of parties, may be
liable for the costs of investigation, removal
or remediation of hazardous or toxic substances
on, under, adjacent to or in such property. The
cost of any required investigation, delineation
and/or remediation and the owner's liability
therefor is generally not limited under
applicable laws. Such liability could exceed
the value of the property and/or the
S-56
aggregate assets of the owner. Under some
environmental laws, a secured lender (such as
the trust fund) may be found to be an "owner"
or "operator" of the related mortgaged property
if it is determined that the lender actually
participated in the hazardous waste management
of the borrower, regardless of whether the
borrower actually caused the environmental
damage. In such cases, a secured lender may be
liable for the costs of any required
investigation, removal or remediation of
hazardous substances. The trust fund's
potential exposure to liability for
environmental costs will increase if the trust
fund, or an agent of the trust fund, actually
takes possession of a mortgaged property or
control of its day-to-day operations. See
"CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS AND
LEASES--Environmental Considerations" in the
accompanying prospectus, and "DESCRIPTION OF
THE MORTGAGE POOL--Assessments of Property
Condition--Environmental Assessments" in this
prospectus supplement.
A third-party environmental consultant
conducted an environmental site assessment (or
updated a previously conducted environmental
site assessment) with respect to each mortgaged
property securing a mortgage loan included in
the trust fund. Such assessments do not
generally include invasive environmental
testing. In each case where the environmental
site assessment or update revealed a material
adverse environmental condition or circumstance
at any mortgaged property, then (depending on
the nature of the condition or circumstance)
one or more of the following actions has been
or is expected to be taken:
- an environmental insurance policy, having
the characteristics described below, was
obtained from a third-party insurer; or
- either (i) an operations and maintenance
program, including, in several cases, with
respect to asbestos-containing materials,
lead-based paint, microbial and/or radon,
or periodic monitoring of nearby
properties, has been or is expected to be
implemented in the manner and within the
time frames specified in the related loan
documents, or (ii) remediation in
accordance with applicable law or
regulations has been performed, is
currently being performed or is expected to
be performed either by the borrower or by
the party responsible for the
contamination; or
- an escrow or reserve was established to
cover the estimated cost of remediation,
with each remediation
S-57
required to be completed within a
reasonable time frame in accordance with
the related loan documents.
We cannot provide assurance, however, that the
environmental assessments identified all
environmental conditions and risks, that the
related borrowers will implement all
recommended operations and maintenance plans,
that such plans will adequately remediate the
environmental condition, or that any
environmental indemnity, insurance or escrow
will fully cover all potential environmental
conditions and risks. In addition, the
environmental condition of the underlying real
properties could be adversely affected by
tenants or by the condition of land or
operations in the vicinity of the properties,
such as underground storage tanks.
With respect to 1 mortgage loan, representing
0.3% of the mortgage pool (0.4% of loan group
1), the related borrower was required to obtain
a secured creditor impaired property
environmental insurance policy, provided:
- the policy premium for the term is fully
paid;
- at issuance, the issuer has, with respect
to this mortgage loan, a claims paying
ability of not less than "AAA" by S&P,
"Aaa" by Moody's, "AAA" by Fitch, Inc. or
"A+XV" by A.M. Best Company; and
- the policy is in an amount not less than
the full principal amount of the loan.
We cannot provide assurance, however, that
should such coverage be needed, coverage would
be available or uncontested, that the terms and
conditions of such coverage would be met, that
coverage would be sufficient for the claims at
issue or that coverage would not be subject to
certain deductibles.
The pooling and servicing agreement will
require that the special servicer obtain an
environmental site assessment of a mortgaged
property securing a mortgage loan included in
the trust fund prior to taking possession of
the property through foreclosure or otherwise
or assuming control of its operation. Such
requirement effectively precludes enforcement
of the security for the related mortgage note
until a satisfactory environmental site
assessment is obtained (or until any required
remedial action is thereafter taken), but will
decrease the likelihood that the trust fund
will become liable for a material adverse
environmental condition at the mortgaged
property. However, we cannot give assurance
that the requirements of the pooling and
servicing agreement will effectively insulate
the trust fund from potential
S-58
liability for a materially adverse
environmental condition at any mortgaged
property. See "DESCRIPTION OF THE POOLING AND
SERVICING AGREEMENTS--Realization Upon
Defaulted Mortgage Loans," "RISK
FACTORS--Environmental Liability May Affect the
Lien on a Mortgaged Property and Expose the
Lender to Costs" and "CERTAIN LEGAL ASPECTS OF
MORTGAGE LOANS AND LEASES--Environmental
Considerations" in the accompanying prospectus.
SPECIAL RISKS ASSOCIATED WITH
BALLOON LOANS AND
ANTICIPATED REPAYMENT DATE
LOANS...................... One hundred forty-three (143) of the mortgage
loans, representing 98.0% of the mortgage pool
(100 mortgage loans in loan group 1 or 98.1%
and 43 mortgage loans in loan group 2 or
97.8%), provide for scheduled payments of
principal and/or interest based on amortization
schedules significantly longer than their
respective remaining terms to maturity or
provide for payments of interest only until the
respective maturity date and, in each case, a
balloon payment on their respective maturity
dates. Twenty (20) of these mortgage loans
included in the trust fund as of the cut-off
date, representing 23.0% of the mortgage pool
(19 mortgage loans in loan group 1 or 30.0% and
1 mortgage loan in loan group 2 or 2.4%), are
anticipated repayment date loans, which provide
that if the principal balance of the loan is
not repaid on a date specified in the related
mortgage note, the loan will accrue interest at
an increased rate.
- A borrower's ability to make a balloon
payment or repay its anticipated repayment
date loan on the anticipated repayment date
typically will depend upon its ability
either to refinance fully the loan or to
sell the related mortgaged property at a
price sufficient to permit the borrower to
make such payment.
- Whether or not losses are ultimately
sustained, any delay in the collection of a
balloon payment on the maturity date or
repayment on the anticipated repayment date
that would otherwise be distributable on
your certificates will likely extend the
weighted average life of your certificates.
- The ability of a borrower to effect a
refinancing or sale will be affected by a
number of factors, including the value of
the related mortgaged property, the level
of available mortgage rates at the time of
sale or refinancing, the borrower's equity
in the mortgaged property, the financial
condition and operating history
S-59
of the borrower and the mortgaged property,
tax laws, prevailing general and regional
economic conditions and the availability of
credit for loans secured by multifamily or
commercial properties, as the case may be.
We cannot assure you that each borrower under a
balloon loan or an anticipated repayment date
loan will have the ability to repay the
principal balance of such mortgage loan on the
related maturity date or anticipated repayment
date, as applicable. In addition, fully
amortizing mortgage loans which pay interest on
an "actual/360" basis but have fixed monthly
payments may, in fact, have a small balloon
payment due at maturity. For additional
description of risks associated with balloon
loans, see "RISK FACTORS--Balloon Payments on
Mortgage Loans Result in Heightened Risk of
Borrower Default" in the accompanying
prospectus.
In order to maximize recoveries on defaulted
mortgage loans, the pooling and servicing
agreement permits the special servicer to
extend and modify mortgage loans that are in
material default or as to which a payment
default (including the failure to make a
balloon payment) is imminent; subject, however,
to the limitations described under "SERVICING
OF THE MORTGAGE LOANS--Modifications, Waivers
and Amendments" in this prospectus supplement.
We cannot provide assurance, however, that any
such extension or modification will increase
the present value of recoveries in a given
case. Any delay in collection of a balloon
payment that would otherwise be distributable
on your certificates, whether such delay is due
to borrower default or to modification of the
related mortgage loan, will likely extend the
weighted average life of your certificates. See
"YIELD AND MATURITY CONSIDERATIONS" in this
prospectus supplement and "YIELD
CONSIDERATIONS" in the accompanying prospectus.
ADVERSE CONSEQUENCES
ASSOCIATED WITH BORROWER
CONCENTRATION, BORROWERS
UNDER COMMON CONTROL AND
RELATED BORROWERS.......... Certain borrowers under the mortgage loans
included in the trust fund are affiliated or
under common control with one another. In such
circumstances, any adverse circumstances
relating to a borrower or an affiliate thereof
and affecting one of the related mortgage loans
or mortgaged properties could also affect other
mortgage loans or mortgaged properties of the
related borrower. In particular, the
S-60
bankruptcy or insolvency of any such borrower
or affiliate could have an adverse effect on
the operation of all of the mortgaged
properties of that borrower and its affiliates
and on the ability of such related mortgaged
properties to produce sufficient cash flow to
make required payments on the mortgage loans.
For example, if a person that owns or directly
or indirectly controls several mortgaged
properties experiences financial difficulty at
one mortgaged property, they could defer
maintenance at one or more other mortgaged
properties in order to satisfy current expenses
with respect to the mortgaged property
experiencing financial difficulty, or they
could attempt to avert foreclosure by filing a
bankruptcy petition that might have the effect
of interrupting payments for an indefinite
period on all the related mortgage loans. In
particular, such person experiencing financial
difficulty or becoming subject to a bankruptcy
proceeding may have an adverse effect on the
funds available to make distributions on the
certificates and may lead to a downgrade,
withdrawal or qualification (if applicable) of
the ratings of the certificates.
Mortgaged properties owned by related borrowers
are likely to:
- have common management, increasing the risk
that financial or other difficulties
experienced by the property manager could
have a greater impact on the pool of
mortgage loans included in the trust fund;
and
- have common general partners or managing
members which would increase the risk that
a financial failure or bankruptcy filing
would have a greater impact on the pool of
mortgage loans included in the trust fund.
One (1) mortgage loan (loan number 1)
represents 5.8% of the cut-off date balance
(7.8% of loan group 1) and its sponsor is
Glimcher Realty Trust.
Although the mortgage loans within an
individual portfolio are generally
cross-collateralized and cross-defaulted with
the other mortgage loans in such portfolio, the
mortgage loans in one portfolio are not
cross-collateralized or cross-defaulted with
the mortgage loans in the other portfolio. No
group or borrower concentration represents more
than 5.8% of the mortgage pool or 7.8% of loan
group 1 or 9.6% of loan group 2.
S-61
THE GEOGRAPHIC CONCENTRATION
OF MORTGAGED PROPERTIES
SUBJECTS THE TRUST FUND TO
A GREATER EXTENT TO STATE
AND REGIONAL CONDITIONS.... Except as indicated in the following tables,
less than 5.0% of the mortgage loans, by
cut-off date balance or loan group balance, are
secured by mortgaged properties in any one
state.
MORTGAGED PROPERTIES BY GEOGRAPHIC
CONCENTRATION(1)
<Table>
<Caption>
NUMBER OF AGGREGATE PERCENTAGE OF
MORTGAGED CUT-OFF DATE CUT-OFF DATE
STATE PROPERTIES BALANCE BALANCE
----- ---------- -------------- -------------
CA................... 21 $ 165,370,364 13.8%
Southern(2)........ 12 101,915,236 8.5
Northern(2)........ 9 63,455,128 5.3
FL................... 22 126,091,191 10.5
NY................... 9 109,828,105 9.1
OR................... 3 93,268,994 7.8
TX................... 16 69,788,469 5.8
DC................... 4 65,622,490 5.5
PA................... 4 60,892,175 5.1
Other................ 75 510,053,134 42.5
--- -------------- -----
154 $1,200,914,923 100.0%
=== ============== =====
</Table>
-------------------------------------------------
(1) Because this table presents information
relating to the mortgaged properties and
not the mortgage loans, the information
for mortgage loans secured by more than
one mortgaged property is based on
allocated loan amounts (allocating the
mortgage loan principal balance to each of
those properties by the appraised values
of the mortgaged properties).
(2) For purposes of determining whether a
mortgaged property is in Northern
California or Southern California,
mortgaged properties located north of San
Luis Obispo County, Kern County and San
Bernardino County were included in
Northern California and mortgaged
properties located in or south of such
counties were included in Southern
California.
S-62
LOAN GROUP 1
MORTGAGED PROPERTIES BY GEOGRAPHIC
CONCENTRATION(1)
<Table>
<Caption>
NUMBER OF AGGREGATE PERCENTAGE OF
MORTGAGED CUT-OFF DATE CUT-OFF DATE
STATE PROPERTIES BALANCE GROUP 1 BALANCE
----- ---------- -------------- ---------------
CA................... 14 $ 136,592,175 15.2%
Southern(2)........ 8 86,933,547 9.7
Northern(2)........ 6 49,658,628 5.5
NY................... 8 100,362,538 11.2
OR................... 3 93,268,994 10.4
FL................... 15 79,830,321 8.9
CO................... 8 57,552,179 6.4
PA................... 3 53,657,617 6.0
Other................ 58 378,635,532 42.1
--- -------------- -----
109 $ 899,899,355 100.0%
=== ============== =====
</Table>
-------------------------------------------------
(1) Because this table presents information
relating to the mortgaged properties and
not the mortgage loans, the information
for mortgage loans secured by more than
one mortgaged property is based on
allocated loan amounts (allocating the
mortgage loan principal balance to each of
those properties by the appraised values
of the mortgaged properties).
(2) For purposes of determining whether a
mortgaged property is in Northern
California or Southern California,
mortgaged properties located north of San
Luis Obispo County, Kern County and San
Bernardino County were included in
Northern California and mortgaged
properties located in or south of such
counties were included in Southern
California.
LOAN GROUP 2
MORTGAGED PROPERTIES BY GEOGRAPHIC
CONCENTRATION(1)
<Table>
<Caption>
PERCENTAGE OF
NUMBER OF AGGREGATE CUT-OFF DATE
MORTGAGED CUT-OFF DATE POOL GROUP 2
STATE PROPERTIES BALANCE BALANCE
----- ---------- -------------- ---------------
FL................... 7 $ 46,260,870 15.4%
AZ................... 4 42,186,281 14.0
TX................... 5 36,962,865 12.3
DC................... 2 30,889,619 10.3
CA................... 7 28,778,189 9.6
Southern(2)........ 4 14,981,689 5.0
Northern(2)........ 3 13,796,501 4.6
KS................... 1 20,649,186 6.9
NC................... 3 20,083,244 6.7
DE................... 2 19,569,478 6.5
Other................ 14 55,635,834 18.5
-- -------------- -----
45 $ 301,015,567 100.0%
== ============== =====
</Table>
-------------------------------------------------
(1) Because this table presents information
relating to the mortgaged properties and
not the mortgage loans, the information
for mortgage loans secured by more than
one mortgaged property is based on
allocated loan amounts (allocating the
mortgage loan principal balance to each of
those properties by the appraised values
of the mortgaged properties).
(2) For purposes of determining whether a
mortgaged property is in Northern
California or Southern California,
mortgaged properties located north of San
Luis Obispo County, Kern County and San
Bernardino County were included in
Northern California and mortgaged
properties located in or south of such
counties were included in Southern
California.
S-63
The concentration of mortgaged properties in a
specific state or region will make the
performance of the trust fund as a whole more
sensitive to the following in the state or
region where the mortgagors and the mortgaged
properties are located:
- economic conditions;
- conditions in the real estate market;
- changes in governmental rules and fiscal
policies;
- acts of God or terrorism (which may result
in uninsured losses); and
- other factors which are beyond the control
of the mortgagors.
For more information regarding the
concentration of mortgaged properties in
California, see "DESCRIPTION OF THE MORTGAGE
POOL--Certain State Specific Considerations" in
this prospectus supplement.
SPECIAL RISKS ASSOCIATED WITH
HIGH BALANCE MORTGAGE
LOANS...................... Several of the mortgage loans included in the
trust fund, individually or together with other
such mortgage loans with which they are
cross-collateralized, have principal balances
as of the cut-off date that are substantially
higher than the average principal balance of
the mortgage loans in the trust fund as of the
cut-off date.
In general, concentrations in a mortgage pool
of loans with larger-than-average balances can
result in losses that are more severe, relative
to the size of the pool, than would be the case
if the aggregate balance of the pool were more
evenly distributed.
- The largest single mortgage loan included
in the trust fund as of the cut-off date
represents 5.8% of the mortgage pool (7.8%
of loan group 1).
- The largest group of cross-collateralized
mortgage loans included in the trust fund
as of the cut-off date represents in the
aggregate 1.1% of the mortgage pool (4.5%
of loan group 2).
- The five largest mortgage loans or groups
of cross-collateralized mortgage loans
included in the trust fund as of the
cut-off date represent, in the aggregate,
17.1% of the mortgage pool (4 mortgage
loans in loan group 1 or 19.7% and 1
mortgage loan in loan group 2 or 9.6%).
S-64
- The ten largest mortgage loans or groups of
cross-collateralized mortgage loans
included in the trust fund as of the
cut-off date represent, in the aggregate,
26.8% of the mortgage pool (7 mortgage
loans in loan group 1 or 27.6% and 3
mortgage loans in loan group 2 or 24.5%).
CONCENTRATION OF MORTGAGED
PROPERTY TYPES SUBJECT THE
TRUST FUND TO INCREASED
RISK OF DECLINE IN A
PARTICULAR INDUSTRY........ A concentration of mortgaged property types can
increase the risk that a decline in a
particular industry or business would have a
disproportionately large impact on a pool of
mortgage loans. For example, if there is a
decline in tourism, the hotel industry might be
adversely affected, leading to increased losses
on loans secured by hospitality properties as
compared to the mortgage loans secured by other
property types.
In that regard:
- mortgage loans included in the trust fund
and secured by retail properties represent
as of the cut-off date 33.8% of the
mortgage pool (based on the primary
property type for combined office/retail
properties) (45.1% of loan group 1);
- mortgage loans included in the trust fund
and secured by office properties represent
as of the cut-off date 28.1% of the
mortgage pool (based on the primary
property type for combined office/retail
properties) (37.4% of loan group 1);
- mortgage loans included in the trust fund
and secured by multifamily properties
represent as of the cut-off date 27.4% of
the mortgage pool (5.7% of loan group 1 and
92.2% of loan group 2); and
- mortgage loans included in the trust fund
and secured by industrial and mixed use
properties represent as of the cut-off date
5.5% of the mortgage pool (7.3% of loan
group 1).
WE HAVE NOT REUNDERWRITTEN
ANY OF THE MORTGAGE
LOANS...................... We have not reunderwritten the mortgage loans
included in the trust fund. Instead, we have
relied on the representations and warranties
made by the mortgage loan sellers, and the
mortgage loan sellers' respective obligations
to repurchase, cure or substitute a mortgage
loan in the event that a representation or
warranty was not true when made and such breach
materially and adversely affects the value of
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the mortgage loan or the interests of the
certificateholders therein. These
representations and warranties do not cover all
of the matters that we would review in
underwriting a mortgage loan and you should not
view them as a substitute for reunderwriting
the mortgage loans. If we had reunderwritten
the mortgage loans included in the trust fund,
it is possible that the reunderwriting process
may have revealed problems with a mortgage loan
not covered by representations or warranties
given by the mortgage loan sellers. In
addition, we cannot provide assurance that the
mortgage loan sellers will be able to
repurchase or substitute a mortgage loan if a
representation or warranty has been breached.
See "DESCRIPTION OF THE MORTGAGE
POOL--Representations and Warranties;
Repurchases and Substitutions" in this
prospectus supplement.
FORECLOSURE ON MORTGAGED
PROPERTIES MAY RESULT IN
ADVERSE TAX CONSEQUENCES... One or more of the REMICs relating to the
assets of the trust fund might become subject
to federal (and possibly state or local) tax on
certain of its net income from the operation
and management of a mortgaged property
subsequent to the trust fund's acquisition of a
mortgaged property pursuant to a foreclosure or
deed-in-lieu of foreclosure. Any such tax would
substantially reduce net proceeds available for
distribution to you. See "MATERIAL FEDERAL
INCOME TAX CONSEQUENCES--Taxation of Owners of
REMIC Regular Certificates," and "--Taxation of
Owners of REMIC Residual Certificates" in the
accompanying prospectus. In addition, if the
trust fund were to acquire one or more
mortgaged properties pursuant to a foreclosure
or deed in lieu of foreclosure, upon
acquisition of those mortgaged properties, the
trust fund may in certain jurisdictions,
particularly in New York, be required to pay
state or local transfer or excise taxes upon
liquidation of such properties. Such state or
local taxes may reduce net proceeds available
for distribution to the certificateholders.
INSURANCE COVERAGE ON
MORTGAGED PROPERTIES MAY
NOT COVER SPECIAL HAZARD
LOSSES..................... The master servicer (with respect to mortgage
loans that are not specially serviced mortgage
loans) and/or special servicer (with respect to
specially serviced mortgage loans) will
generally be required to cause the borrower on
each mortgage loan included in the trust fund
and serviced by it to maintain such insurance
coverage on the related mortgaged property as
is required under the related mortgage,
including hazard insurance; provided that each
of the
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master servicer and/or the special servicer may
satisfy its obligation to cause hazard
insurance to be maintained with respect to any
mortgaged property by acquiring a blanket or
master single interest insurance policy. In
general, the standard form of fire and extended
coverage policy covers physical damage to or
destruction of the improvements on the related
mortgaged property by fire, lightning,
explosion, smoke, windstorm and hail, and riot,
strike and civil commotion, subject to the
conditions and exclusions specified in each
policy. The mortgage loans generally do not
require earthquake insurance.
Although the policies covering the mortgaged
properties are underwritten by different
insurers under different state laws in
accordance with different applicable state
forms, and therefore do not contain identical
terms and conditions, most such policies
typically may not cover any physical damage
resulting from:
- war;
- terrorism;
- revolution;
- governmental actions;
- floods, and other water-related causes;
- earth movement (including earthquakes,
landslides and mud flows);
- wet or dry rot;
- vermin;
- domestic animals;
- sink holes or similarly occurring soil
conditions; and
- other kinds of risks not specified in the
preceding paragraph.
In light of the September 11, 2001 terrorist
attacks in New York City and the Washington,
D.C. area, many reinsurance companies (which
assume some of the risk of policies sold by
primary insurers) have indicated that they
intend to eliminate coverage for acts of
terrorism from their reinsurance policies.
Without that reinsurance coverage, primary
insurance companies would have to assume that
risk themselves, which may cause them to
eliminate such coverage in their policies,
increase the amount of the deductible for acts
of terrorism or charge higher premiums for such
coverage. In order to offset this risk,
Congress passed the Terrorism Risk Insurance
Act of 2002, which
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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 is subject of 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.
Through December 2004, insurance carriers are
required under the program to provide terrorism
coverage in their basic "all-risk" policies. By
September 1, 2004, the Secretary of the
Treasury shall determine whether mandatory
participation should be extended through
December 2005. Any commercial property and
casualty terrorism insurance exclusion that was
in force on November 26, 2002, is automatically
voided to the extent that it excludes losses
that would otherwise be insured losses, subject
to the immediately preceding paragraph. Any
state approval of such types of exclusions in
force on November 26, 2002, is also voided.
However, the Terrorism Insurance Program
applies to United States risks only and to acts
that are committed by an individual or
individuals acting on behalf of a foreign
person or foreign interest as an effort to
influence or coerce United States civilians or
the United States government. It
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remains unclear what acts will fall under the
purview of the Terrorism Insurance Program.
Furthermore, because the Terrorism Insurance
Program has only been recently passed into law,
there can be no assurance that it or state
legislation will substantially lower the cost
of obtaining terrorism insurance.
Finally, the Terrorism Insurance Program
terminates on December 31, 2004 (with a
potential to extend to December 31, 2005).
There can be no assurance that such temporary
program will create any long-term changes in
the availability and cost of such insurance.
Moreover, there can be no assurance that such
program will be renewed or subsequent terrorism
insurance legislation will be passed upon its
expiration.
No assurance can be given that the mortgaged
properties will continue to have the benefit of
insurance against terrorist acts. In addition,
no assurance can be given that the coverage for
such acts, if maintained or obtained, will be
broad enough to cover the particular act of
terrorism that may be committed or that the
amount of coverage will be sufficient to repair
and restore the mortgaged property or to repay
the mortgage loan in full. This could have a
material and adverse affect on your
certificates.
Pursuant to the terms of the pooling and
servicing agreement, the master servicer or the
special servicer may not be required to
maintain insurance covering terrorist or
similar acts, nor will it be required to call a
default under a mortgage loan, if the related
borrower fails to maintain such insurance (even
if required to do so under the related loan
documents) if the special servicer has
determined, with the consent of the controlling
class representative, in accordance with the
servicing standards that either--
- such insurance is not available at
commercially reasonable rates and that such
hazards are not at the time commonly
insured against for properties similar to
the mortgaged property and located in or
around the region in which such mortgaged
property is located; or
- such insurance is not available at any
rate.
In addition, with respect to certain mortgage
loans, the lender has waived the right to
require terrorism insurance.
Any losses incurred with respect to mortgage
loans included in the trust fund due to
uninsured risks or insufficient hazard
insurance proceeds could adversely affect
distributions on your certificates.
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ADDITIONAL DEBT ON SOME
MORTGAGE LOANS CREATES
ADDITIONAL RISKS........... In general, the borrowers are:
- required to satisfy any existing
indebtedness encumbering the related
mortgaged property as of the closing of the
related mortgage loan; and
- prohibited from encumbering the related
mortgaged property with additional secured
debt without the lender's prior approval.
None of the mortgage loans included in the
trust fund, other than the mortgage loans with
companion loans, are secured by mortgaged
properties that secure other loans outside the
trust fund; provided that, in the case of 2
mortgage loans in loan group 2 (loan numbers
111 and 148), representing 0.4% of the mortgage
pool (1.4% of loan group 2), the related
mortgaged properties are encumbered by
subordinate debt, which in each case is subject
to the terms of an intercreditor agreement
and/or a standstill agreement in favor of the
mortgagee.
One (1) mortgage loan in loan group 1 (loan
number 17), representing 1.4% of the mortgage
pool (1.8% of loan group 1), has existing debt
of $1,643,000 secured solely by a $1,643,000
tenant renewal escrow reserve related to the
loan. Except for the noteholder's rights in the
escrowed funds, the note evidencing such debt
is not secured by the related mortgaged
property; provided that such additional debt is
not subordinate to the mortgage loan in respect
of the tenant renewal escrow reserve.
One (1) mortgage loan in loan group 2 (loan
number 22), representing 1.2% of the mortgage
pool (5.0% of loan group 2), provides that the
borrower, under certain specified
circumstances, may encumber the related
mortgaged property with subordinate debt in the
future.
One (1) mortgage loan in loan group 1 (loan
number 70), representing 0.5% of the mortgage
pool (0.7% of loan group 1), has existing
unsecured debt incurred by the borrower other
than in the ordinary course of business.
Two (2) mortgage loans in loan group 1 (loan
numbers 14 and 58), representing 2.0% of the
mortgage pool (2.6% of loan group 1), provide
that the borrower under certain circumstances
may incur, without lender consent, additional
unsecured indebtedness other than in the
ordinary course of business.
With respect to 1 mortgage loan in loan group 1
(loan number 21), representing 1.3% of the
mortgage pool (1.7%
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of loan group 1), certain equity owners have
pledged their equity interests in the
non-managing member of the related borrower as
security for a preferred return to be paid to
another equity holder in the non-managing
member. The holder of the preferred equity has
executed an agreement with the mortgagee
providing, among other things, that the
preferred equity interest is subordinate to the
rights of the related mortgagee, does not
constitute a claim against the mortgage
borrower and is not to be paid while any
mortgage loan payments are currently due and
unpaid. In addition, in the case of 16 mortgage
loans (loan numbers 4, 9, 37, 42, 44, 46, 54,
58, 60, 63, 78, 93, 94, 122, 125 and 138,
representing 10.9% of the mortgage pool (14
mortgage loans in loan group 1 or 10.7% and 2
mortgage loans in loan group 2 or 11.3%), the
related mortgage loan documents provide that,
under certain circumstances, the entities with
a controlling ownership interest in the
borrower may pledge their interests in the
borrower as security for mezzanine debt in the
future, subject to the terms of a subordination
and standstill agreement to be entered into in
favor of the lender and the satisfaction of
certain financial conditions.
Fourteen (14) mortgage loans (loan numbers 41,
51, 62, 79, 83, 85, 98, 108, 109, 112, 119,
124, 127 and 135), representing 4.8% of the
mortgage pool (7 mortgage loans in loan group 1
or 2.3% and 7 mortgage loans in loan group 2 or
12.4%), do not prohibit the related borrower
from incurring additional unsecured debt or an
owner of an interest in the related borrower
from pledging its ownership interest in the
related borrower as security for mezzanine debt
because the related borrower is not required by
either the mortgage loan documents or related
organizational documents to be a special
purpose entity.
Further, certain of the mortgage loans included
in the trust fund do not prohibit limited
partners or other owners of non-controlling
interests in the related borrower from pledging
their interests in the borrower as security for
mezzanine debt.
Secured subordinated debt encumbering any
mortgaged property may increase the difficulty
of refinancing the related mortgage loan at
maturity and the possibility that reduced cash
flow could result in deferred maintenance.
Also, in the event that the holder of the
subordinated debt has filed for bankruptcy or
been placed in involuntary receivership,
foreclosure by any senior lienholder (including
the trust fund) on the mortgaged property could
be delayed. In general, the mortgage loans
included in the trust fund, and the mortgage
loan documents and organizational
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documents of the related borrower, do not
prohibit the borrower from incurring additional
indebtedness if incurred in the ordinary course
of business and not secured by a lien on the
related mortgaged properties.
In addition, certain mortgage loans, which may
include the mortgage loans previously described
in this risk factor, permit the related
borrower to incur, or do not prohibit the
related borrower from incurring, unsecured debt
to an affiliate of, or owner of an interest in,
the borrower or to an affiliate of such an
owner. Further, certain of the mortgage loans
permit additional liens on the related
mortgaged properties for (1) assessments, taxes
or other similar charges or (2) liens which in
the aggregate constitute an immaterial and
insignificant monetary amount with respect to
the net value of the related borrower's assets.
A default by the borrower on such additional
indebtedness could impair the borrower's
financial condition and result in the
bankruptcy or receivership of the borrower
which would cause a delay in the foreclosure by
the trust fund on the mortgaged property. It
may not be evident that a borrower has incurred
any such future subordinate second lien debt
until the related mortgage loan otherwise
defaults. In cases in which one or more
subordinate liens are imposed on a mortgaged
property or the borrower incurs other
indebtedness, the trust fund is subject to
additional risks, including, without
limitation, the following:
- the risk that the necessary maintenance of
the mortgaged property could be deferred to
allow the borrower to pay the required debt
service on the subordinate financing and
that the value of the mortgaged property
may fall as a result;
- the risk that the borrower may have a
greater incentive to repay the subordinate
or unsecured indebtedness first;
- the risk that it may be more difficult for
the borrower to refinance the mortgage loan
or to sell the mortgaged property for
purposes of making any balloon payment upon
the maturity of the mortgage loan;
- the existence of subordinated debt
encumbering any mortgaged property may
increase the difficulty of refinancing the
related mortgage loan at maturity and the
possibility that reduced cash flow could
result in deferred maintenance; and
- the risk that, in the event that the holder
of the subordinated debt has filed for
bankruptcy or been placed in involuntary
receivership, foreclosing on the
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mortgaged property could be delayed and the
trust may be subjected to the costs and
administrative burdens of involvement in
foreclosure or bankruptcy proceedings or
related litigation.
See "CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
AND LEASES--Subordinate Financing" and
"--Due-on-Sale and Due-on-Encumbrance" in the
accompanying prospectus and "DESCRIPTION OF THE
MORTGAGE POOL--Certain Terms and Conditions of
the Mortgage Loans--Other Financing" and
"--Due-on-Sale and Due-on-Encumbrance
Provisions" in this prospectus supplement.
Mezzanine debt is debt that is incurred by the
owner of equity in one or more borrowers and is
secured by a pledge of the equity ownership
interests in such borrowers. Because mezzanine
debt is secured by the obligor's equity
interest in the related borrowers, such
financing effectively reduces the obligor's
economic stake in the related mortgaged
property. The existence of mezzanine debt may
reduce cash flow on the borrower's mortgaged
property after the payment of debt service and
may increase the likelihood that the owner of a
borrower will permit the value or income
producing potential of a mortgaged property to
fall and may create a 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 mezzanine debt,
the holder of such mezzanine debt would be
entitled to foreclose upon the equity in the
related mortgagor, which has been pledged to
secure payment of such mezzanine debt. Although
such transfer of equity may not trigger the due
on sale clause under the related mortgage loan,
it could cause the obligor under such mezzanine
debt to file for bankruptcy, which could
negatively affect the operation of the related
mortgaged property and such borrower's ability
to make payments on the related mortgage loan
in a timely manner.
See "CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
AND LEASES--Due-on-Sale and Due-on-
Encumbrance" in the accompanying prospectus and
"DESCRIPTION OF THE MORTGAGE POOL--Certain
Terms and Conditions of the Mortgage
Loans--Other Financing" and "--Due-on-Sale and
Due-on-Encumbrance Provisions" in this
prospectus supplement.
Although the companion loans related to the 5
mortgage loans which are part of a loan pair
are not assets of the trust fund, the related
borrower is still obligated to make
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interest and principal payments on the
companion loans. As a result, the trust fund is
subject to additional risks, including:
- the risk that the necessary maintenance of
the related mortgaged property could be
deferred to allow the borrower to pay the
required debt service on these subordinate
obligations and that the value of the
mortgaged property may fall as a result;
and
- the risk that it may be more difficult for
the borrower to refinance the mortgage loan
or to sell the mortgaged property for
purposes of making any balloon payment on
the entire balance of both the loans
contained in the loan pair upon the
maturity of the mortgage loans.
In addition, although the companion loans with
respect to 4 of the mortgage loans are
subordinate to the related mortgage loan, the
companion loan with respect to the Lloyd's
Center mortgage loan is pari passu with such
mortgage loan.
THE BORROWER'S FORM OF ENTITY
MAY CAUSE SPECIAL RISKS.... Most of the borrowers are legal entities rather
than individuals. Mortgage loans made to legal
entities may entail risks of loss greater than
those of mortgage loans made to individuals.
For example, a legal entity, as opposed to an
individual, may be more inclined to seek legal
protection from its creditors under the
bankruptcy laws. Unlike individuals involved in
bankruptcies, most of the entities generally do
not have personal assets and creditworthiness
at stake. The bankruptcy of a borrower, or a
general partner or managing member of a
borrower, may impair the ability of the lender
to enforce its rights and remedies under the
related mortgage.
Many of the borrowers are not special purpose
entities structured to limit the possibility of
becoming insolvent or bankrupt, and therefore
may be more likely to become insolvent or the
subject of a voluntary or involuntary
bankruptcy proceeding because such borrowers
may be:
- operating entities with businesses distinct
from the operation of the property with the
associated liabilities and risks of
operating an ongoing business; or
- individuals that have personal liabilities
unrelated to the property.
However, any borrower, even a special purpose
entity structured to be bankruptcy-remote, as
an owner of real estate will be subject to
certain potential liabilities and risks. We
cannot provide assurances that any borrower
will
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not file for bankruptcy protection or that
creditors of a borrower or a corporate or
individual general partner or managing member
of a borrower will not initiate a bankruptcy or
similar proceeding against such borrower or
corporate or individual general partner or
managing member.
Furthermore, with respect to any related
borrowers, creditors of a common parent in
bankruptcy may seek to consolidate the assets
of such borrowers with those of the parent.
Consolidation of the assets of such borrowers
would likely have an adverse effect on the
funds available to make distributions on your
certificates, and may lead to a downgrade,
withdrawal or qualification of the ratings of
your certificates. See "CERTAIN LEGAL ASPECTS
OF MORTGAGE LOANS AND LEASES--Bankruptcy Laws"
in the accompanying prospectus.
In addition, with respect to 11 mortgage loans,
representing 7.9% of the mortgage pool (10
mortgage loans in loan group 1 or 1.0% and 1
mortgage loan in loan group 2 or 0.5%) the
borrowers own the related mortgaged property as
tenants in common. These mortgage loans may be
subject to prepayment, including during periods
when prepayment might otherwise be prohibited,
as a result of partition. Although some of the
related borrowers have purported to waive any
right of partition, we cannot assure you that
any such waiver would be enforced by a court of
competent jurisdiction.
BANKRUPTCY PROCEEDINGS ENTAIL
CERTAIN RISKS.............. Under federal bankruptcy law, the filing of a
petition in bankruptcy by or against a borrower
will stay the sale of the mortgaged property
owned by that borrower, as well as the
commencement or continuation of a foreclosure
action. In addition, even if a court determines
that the value of the mortgaged property is
less than the principal balance of the mortgage
loan it secures, the court may prevent a lender
from foreclosing on the mortgaged property
(subject to certain protections available to
the lender). As part of a restructuring plan, a
court also may reduce the amount of secured
indebtedness to the then-current value of the
mortgaged property, which would make the lender
a general unsecured creditor for the difference
between the then-current value and the amount
of its outstanding mortgage indebtedness. A
bankruptcy court also may: (1) grant a debtor a
reasonable time to cure a payment default on a
mortgage loan; (2) reduce periodic payments due
under a mortgage loan; (3) change the rate of
interest due on a
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mortgage loan; or (4) otherwise alter the
mortgage loan's repayment schedule.
Moreover, the filing of a petition in
bankruptcy by, or on behalf of, a junior
lienholder may stay the senior lienholder from
taking action to foreclose on the junior lien.
Additionally, the borrower's trustee or the
borrower, as debtor-in-possession, has certain
special powers to avoid, subordinate or
disallow debts. In certain circumstances, the
claims of the trustee may be subordinated to
financing obtained by a debtor-in-possession
subsequent to its bankruptcy.
Under federal bankruptcy law, the lender will
be stayed from enforcing a borrower's
assignment of rents and leases. Federal
bankruptcy law also may interfere with the
master servicer's or special servicer's ability
to enforce lockbox requirements. The legal
proceedings necessary to resolve these issues
can be time consuming and costly and may
significantly delay or diminish the receipt of
rents. Rents also may escape an assignment to
the extent they are used by the borrower to
maintain the mortgaged property or for other
court authorized expenses.
Additionally, pursuant to subordination
agreements for certain of the mortgage loans,
the subordinate lenders may have agreed that
they will not take any direct actions with
respect to the related subordinated debt,
including any actions relating to the
bankruptcy of the borrower, and that the holder
of the mortgage loan will have all rights to
direct all such actions. There can be no
assurance that in the event of the borrower's
bankruptcy, a court will enforce such
restrictions against a subordinated lender.
In its decision in In re 203 North LaSalle
Street Partnership, 246 B.R. 325 (Bankr. N.D.
Ill. March 10, 2000), the United States
Bankruptcy Court for the Northern District of
Illinois refused to enforce a provision of a
subordination agreement that allowed a first
mortgagee to vote a second mortgagee's claim
with respect to a Chapter 11 reorganization
plan on the grounds that pre-bankruptcy
contracts cannot override rights expressly
provided by the Bankruptcy Code. This holding,
which one court has already followed,
potentially limits the ability of a senior
lender to accept or reject a reorganization
plan or to control the enforcement of remedies
against a common borrower over a subordinated
lender's objections.
As a result of the foregoing, the trustee's
recovery with respect to borrowers in
bankruptcy proceedings may be significantly
delayed, and the aggregate amount ultimately
collected may be substantially less than the
amount owed.
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Certain of the mortgage loans have a sponsor
that has previously filed bankruptcy. In each
case, the related entity or person has emerged
from bankruptcy. However, we cannot assure you
that such sponsors will not be more likely than
other sponsors to utilize their rights in
bankruptcy in the event of any threatened
action by the mortgagee to enforce its rights
under the related loan documents.
INSPECTIONS AND APPRAISALS
MAY NOT ACCURATELY REFLECT
VALUE OR CONDITION OF
MORTGAGED PROPERTY......... In general, appraisals represent only the
analysis and opinion of qualified experts and
are not guaranties of present or future value,
and may determine a value of a property that is
significantly higher than the amount that can
be obtained from the sale of a mortgaged
property under a distress or liquidation sale.
Information regarding the values of the
mortgaged properties at the date of such report
is presented under "DESCRIPTION OF THE MORTGAGE
POOL--Additional Mortgage Loan Information" in
this prospectus supplement for illustrative
purposes only. Any engineering reports or site
inspections obtained in connection with this
offering represent only the analysis of the
individual engineers or site inspectors
preparing such reports at the time of such
report, and may not reveal all necessary or
desirable repairs, maintenance or capital
improvement items.
THE MORTGAGED PROPERTIES MAY
NOT BE IN COMPLIANCE WITH
CURRENT ZONING LAWS........ The mortgaged properties securing the mortgage
loans included in the trust fund are typically
subject to building and zoning ordinances and
codes affecting the construction and use of
real property. Since the zoning laws applicable
to a mortgaged property (including, without
limitation, density, use, parking and set-back
requirements) are usually subject to change by
the applicable regulatory authority at any
time, the improvements upon the mortgaged
properties may not comply fully with all
applicable current and future zoning laws. Such
changes may limit the ability of the related
borrower to rehabilitate, renovate and update
the premises, and to rebuild or utilize the
premises "as is" in the event of a casualty
loss with respect thereto. Such limitations may
adversely affect the cash flow of the mortgaged
property following such loss.
RESTRICTIONS ON CERTAIN OF
THE MORTGAGED PROPERTIES MAY
LIMIT THEIR USE............ Certain of the mortgaged properties securing
mortgage loans included in the trust fund which
are non-conforming
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may not be "legal non-conforming" uses. The
failure of a mortgaged property to comply with
zoning laws or to be a "legal non-conforming"
use may adversely affect the market value of
the mortgaged property or the borrower's
ability to continue to use it in the manner it
is currently being used.
In addition, certain of the mortgaged
properties are subject to certain use
restrictions imposed pursuant to restrictive
covenants, governmental requirements,
reciprocal easement agreements or operating
agreements or, in the case of those mortgaged
properties that are condominiums, condominium
declarations or other condominium use
restrictions or regulations, especially in a
situation where the mortgaged property does not
represent the entire condominium building. Such
use restrictions include, for example,
limitations on the character of the
improvements or the properties, limitations
affecting noise and parking requirements, among
other things, and limitations on the borrowers'
right to operate certain types of facilities
within a prescribed radius. These limitations
could adversely affect the ability of the
related borrower to lease the mortgaged
property on favorable terms, thus adversely
affecting the borrower's ability to fulfill its
obligations under the related mortgage loan.
COMPLIANCE WITH APPLICABLE
LAWS AND REGULATIONS MAY
RESULT IN LOSSES........... A borrower may be required to incur costs to
comply with various existing and future
federal, state or local laws and regulations
applicable to the related mortgaged property
securing a mortgage loan included in the trust
fund. Examples of these laws and regulations
include zoning laws and the Americans with
Disabilities Act of 1990, which requires all
public accommodations to meet certain federal
requirements related to access and use by
disabled persons. See "CERTAIN LEGAL ASPECTS OF
MORTGAGE LOANS AND LEASES--Americans with
Disabilities Act" in the accompanying
prospectus. The expenditure of such costs or
the imposition of injunctive relief, penalties
or fines in connection with the borrower's
noncompliance could negatively impact the
borrower's cash flow and, consequently, its
ability to pay its mortgage loan.
ENFORCEABILITY OF DUE-ON-SALE
CLAUSES AND ASSIGNMENTS OF
LEASES AND RENTS IS
LIMITED.................... The mortgages securing the mortgage loans
included in the trust fund generally contain
due-on-sale clauses, which permit the
acceleration of the maturity of the related
mortgage loan if the borrower sells, transfers
or conveys the
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related mortgaged property or its interest in
the mortgaged property without the consent of
the lender. There also may be limitations on
the enforceability of such clauses. The
mortgages also generally include a
debt-acceleration clause, which permits the
acceleration of the related mortgage loan upon
a monetary or non-monetary default by the
borrower. The courts of all states will
generally enforce clauses providing for
acceleration in the event of a material payment
default, but may refuse the foreclosure of a
mortgaged property when acceleration of the
indebtedness would be inequitable or unjust or
the circumstances would render acceleration
unconscionable. However, certain of the
mortgage loans included in the trust fund
permit one or more transfers of the related
mortgaged property to pre-approved borrowers or
pursuant to pre-approved conditions set forth
in the related mortgage loan documents without
the lender's approval. See "CERTAIN LEGAL
ASPECTS OF MORTGAGE LOANS AND
LEASES--Due-on-Sale and Due-on-Encumbrance" in
the accompanying prospectus.
The mortgage loans included in the trust fund
may also be secured by an assignment of leases
and rents pursuant to which the borrower
typically assigns its right, title and interest
as landlord under the leases on the related
mortgaged property and the income derived
therefrom to the lender as further security for
the related mortgage loan, while retaining a
license to collect rents for so long as there
is no default. In the event the borrower
defaults, the license terminates and the lender
is entitled to collect the rents. Such
assignments are typically not perfected as
security interests prior to the lender's taking
possession of the related mortgaged property
and/or appointment of a receiver. Some state
laws may require that the lender take
possession of the mortgaged property and obtain
a judicial appointment of a receiver before
becoming entitled to collect the rents. In
addition, if bankruptcy or similar proceedings
are commenced by or in respect of the borrower,
the lender's ability to collect the rents may
be adversely affected. See "CERTAIN LEGAL
ASPECTS OF MORTGAGE LOANS AND LEASES--Leases
and Rents" in the accompanying prospectus.
LIMITATIONS ON THE BENEFITS
OF CROSS-COLLATERALIZED AND
CROSS-DEFAULTED
PROPERTIES................. Five (5) groups of mortgage loans, representing
in the aggregate 3.2% of the mortgage pool (5
mortgage loans in loan group 1 or 1.3% and 6
mortgage loans in loan group 2 or 8.7%), are
groups of mortgage loans that are
cross-collateralized and cross-defaulted with
each of the other
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mortgage loans in their respective groups. In
addition, some mortgage loans are secured by
first lien deeds of trust or mortgages, as
applicable, on multiple properties securing the
joint and several obligations of multiple
borrowers. Such arrangements could be
challenged as fraudulent conveyances by
creditors of any of the related borrowers or by
the representative of the bankruptcy estate of
any related borrower if one or more of such
borrowers becomes a debtor in a bankruptcy
case. Generally, under federal and most state
fraudulent conveyance statutes, a lien granted
by any such borrower could be voided if a court
determines that:
- such borrower was insolvent at the time of
granting the lien, was rendered insolvent
by the granting of the lien, was left with
inadequate capital or was not able to pay
its debts as they matured; and
- the borrower did not, when it allowed its
mortgaged property to be encumbered by the
liens securing the indebtedness represented
by the other cross-collateralized loans,
receive "fair consideration" or "reasonably
equivalent value" for pledging such
mortgaged property for the equal benefit of
the other related borrowers.
We cannot provide assurances that a lien
granted by a borrower on a cross-collateralized
loan to secure the mortgage loan of another
borrower, or any payment thereon, would not be
avoided as a fraudulent conveyance. See
"DESCRIPTION OF THE MORTGAGE POOL--Certain
Terms and Conditions of the Mortgage
Loans--Cross-Default and
Cross-Collateralization of Certain Mortgage
Loans; Certain Multi-Property Mortgage Loans"
and Annex A-5 to this prospectus supplement for
more information regarding the
cross-collateralized loans. No mortgage loan
included in the trust fund (other than the
mortgage loans with companion loans) is
cross-collateralized with a mortgage loan not
included in the trust fund.
CERTAIN MORTGAGE LOANS ARE
SUBJECT TO EARLY
DEFEASANCE................. One mortgage loan included in the trust fund as
of the cut-off date (loan number 107)
representing 0.3% of the mortgage pool (0.3% of
loan group 1), permits the related borrower to
defease its mortgage loan prior to the second
anniversary of the date a REMIC election was
made with respect to such mortgage loan. The
applicable mortgage loan seller has agreed to
repurchase such mortgage loan from the trust
fund in the event it defeases prior to the
second anniversary of the startup day of the
related
S-80
REMIC. In the event the applicable mortgage
loan seller fails or is unable to purchase such
mortgage loan prior to such early defeasance,
the special servicer will sell such mortgage
loan from the trust fund. Depending on the
price received from such liquidation, a loss
could result.
SINGLE TENANTS AND
CONCENTRATION OF TENANTS
SUBJECT THE TRUST FUND
TO INCREASED RISK.......... Sixteen (16) of the mortgaged properties
securing mortgage loans in loan group 1,
representing 6.3% of the mortgage pool (8.4% of
loan group 1), are leased wholly to a single
tenant or are wholly owner occupied. Certain
other of the mortgaged properties are leased in
large part to a single tenant or are in large
part owner occupied. Any default by a major
tenant could adversely affect the related
borrower's ability to make payments on the
related mortgage loan. We cannot provide
assurances that any major tenant will continue
to perform its obligations under its lease (or,
in the case of an owner-occupied mortgaged
property, under the related mortgage loan
documents).
With respect to certain of the mortgage loans,
the related borrower has given to certain
tenants a right of first refusal in the event a
sale is contemplated or an option to purchase
all or a portion of the mortgaged property and
this provision, if not waived, may impede the
mortgagee's ability to sell the related
mortgaged property at foreclosure or adversely
affect the foreclosure proceeds.
In addition, certain of the mortgaged
properties that are leased to single tenants or
a major tenant may have leases that terminate
prior to the maturity date of the related
mortgage loan. Mortgaged properties leased to a
single tenant, or a small number of tenants,
are more likely to experience interruptions of
cash flow if a tenant fails to renew its lease
because there may be less or no rental income
until new tenants are found and it may be
necessary to expend substantial amounts of
capital to make the space acceptable to new
tenants.
Retail and office properties also may be
adversely affected if there is a concentration
of particular tenants among the mortgaged
properties or of tenants in a particular
business or industry. For example, with respect
to 7 mortgage loans (loan numbers 80, 83, 89,
96, 98, 103 and 124) representing 2.2% of the
mortgage pool (2.9% of loan group 1), the
single tenant of each mortgaged property is
Walgreens. For further information regarding
certain significant tenants at the mortgaged
properties, see Annex A-4 to this prospectus
supplement.
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THE FAILURE OF A TENANT WILL
HAVE A NEGATIVE IMPACT ON
SINGLE TENANT AND TENANT
CONCENTRATION PROPERTIES... The bankruptcy or insolvency of a major tenant
or sole tenant, or a number of smaller tenants,
in retail, industrial and office properties may
adversely affect the income produced by a
mortgaged property. Under the Bankruptcy Code,
a tenant has the option of assuming or
rejecting any unexpired lease. If the tenant
rejects the lease, the landlord's claim for
breach of the lease would be a general
unsecured claim against the tenant (absent
collateral securing the claim) and the amounts
the landlord could claim would be limited.
LITIGATION MAY HAVE ADVERSE
AFFECT ON BORROWERS........ From time to time, there may be legal
proceedings pending, threatened or ongoing
against the borrowers, managers and their
respective affiliates relating to the business
of, or arising out of the ordinary course of
business of, the borrowers, managers, sponsors
and their respective affiliates, and certain of
the borrowers, managers, sponsors and their
respective affiliates are subject to legal
proceedings relating to the business of, or
arising out of the ordinary course of business
of, the borrowers, managers, sponsors or their
respective affiliates. In addition, certain
borrowers, managers and their respective
affiliates may be or have been subject to
investigation, civil penalty, criminal penalty,
or enforcement (including for example the
sponsors related to the 16 West 61st loan and
the Plaza Gardens South loan.) See "DESCRIPTION
OF THE MORTGAGE POOL -- Twenty Largest Mortgage
Loans". It is possible that such proceedings
may have a material adverse effect on any
borrower's ability to meet its obligations
under the related mortgage loan and, thus, on
distributions on your certificates.
POOR PROPERTY MANAGEMENT WILL
LOWER THE PERFORMANCE OF
THE RELATED MORTGAGED
PROPERTY................... The successful operation of a real estate
project depends upon the property manager's
performance and viability. The property manager
is responsible for:
- responding to changes in the local market;
- planning and implementing the rental
structure;
- operating the property and providing
building services;
- managing operating expenses; and
S-82
- assuring that maintenance and capital
improvements are carried out in a timely
fashion.
Properties deriving revenues primarily from
short-term sources, such as short-term leases,
are generally more management intensive than
properties leased to creditworthy tenants under
long-term leases.
We make no representation or warranty as to the
skills of any present or future managers.
Additionally, we cannot provide assurance that
the property managers will be in a financial
condition to fulfill their management
responsibilities throughout the terms of their
respective management agreements.
CONDEMNATIONS OF MORTGAGED
PROPERTIES MAY RESULT IN
LOSSES..................... From time to time, there may be condemnations
pending or threatened against one or more of
the mortgaged properties securing mortgage
loans included in the trust fund. The proceeds
payable in connection with a total condemnation
may not be sufficient to restore the related
mortgaged property or to satisfy the remaining
indebtedness of the related mortgage loan. The
occurrence of a partial condemnation may have a
material adverse effect on the continued use
of, or income generation from, the affected
mortgaged property. Therefore, we cannot give
assurances that the occurrence of any
condemnation will not have a negative impact
upon distributions on your certificates.
THE STATUS OF A GROUND LEASE
MAY BE UNCERTAIN IN A
BANKRUPTCY PROCEEDING...... Certain mortgaged properties included in the
trust fund may be secured at least in part by
leasehold interests. Pursuant to Section 365(h)
of the Bankruptcy Code, ground lessees have the
right to continue in a ground lease even though
the representative of their bankrupt ground
lessor rejects the lease. The leasehold
mortgages provide that the borrower may not
elect to treat the ground lease as terminated
on account of any such rejection by the ground
lessor without the prior approval of the holder
of the mortgage note. In a bankruptcy of a
ground lessee/borrower, the ground
lessee/borrower under the protection of the
Bankruptcy Code has the right to assume
(continue) or reject (terminate) any or all of
its ground leases. If the ground lessor and the
ground lessee/borrower are concurrently
involved in bankruptcy proceedings, the trustee
may be unable to enforce the bankrupt ground
lessee/borrower's right to continue in a ground
lease rejected by a bankrupt ground lessor. In
such circumstances, a ground
S-83
lease could be terminated notwithstanding
lender protection provisions contained therein
or in the related mortgage.
In addition, certain of the mortgaged
properties securing the mortgage loans are
subject to operating leases. The operating
lessee then sublets space in the mortgaged
property to sub-tenants. Therefore, the cash
flow from the rented mortgaged property will be
subject to the bankruptcy risks with respect to
the operating lessee.
MORTGAGE LOAN SELLERS MAY NOT
BE ABLE TO MAKE A REQUIRED
REPURCHASE OR SUBSTITUTION
OF A DEFECTIVE MORTGAGE
LOAN....................... Each mortgage loan seller is the sole
warranting party in respect of the mortgage
loans sold by such mortgage loan seller to us.
Neither we nor any of our affiliates (except,
in certain circumstances, for Wachovia Bank,
National Association in its capacity as a
mortgage loan seller) are obligated to
repurchase or substitute any mortgage loan in
connection with either a breach of any mortgage
loan seller's representations and warranties or
any document defects, if such mortgage loan
seller defaults on its obligation to do so. We
cannot provide assurances that the mortgage
loan sellers will have the financial ability to
effect such repurchases or substitutions.
In addition, one or more of the mortgage loan
sellers has acquired a portion of the mortgage
loans included in the trust fund in one or more
secondary market purchases (including the Lloyd
Center mortgage loan (loan number 1), which is
the largest mortgage loan by principal
balance). Such purchases may be challenged as
fraudulent conveyances. Such a challenge if
successful, may have a negative impact on the
distributions on your certificates. See
"DESCRIPTION OF THE MORTGAGE POOL--Assignment
of the Mortgage Loans; Repurchases and
Substitutions" and "--Representations and
Warranties; Repurchases and Substitutions" in
this prospectus supplement and "DESCRIPTION OF
THE POOLING AND SERVICING
AGREEMENTS--Representations and Warranties;
Repurchases" in the accompanying prospectus.
ONE ACTION JURISDICTION MAY
LIMIT THE ABILITY OF THE
SPECIAL SERVICER TO
FORECLOSE ON THE MORTGAGED
PROPERTY................... Some states (including California) have laws
that prohibit more than one judicial action to
enforce a mortgage obligation, and some courts
have construed the term judicial action
broadly. Accordingly, the special servicer is
required to obtain advice of counsel prior to
enforcing any
S-84
of the trust fund's rights under any of the
mortgage loans that include mortgaged
properties where this rule could be applicable.
In the case of either a cross-collateralized
and cross-defaulted mortgage loan or a
multi-property mortgage loan which is secured
by mortgaged properties located in multiple
states, the special servicer may be required to
foreclose first on properties located in states
where such "one action" rules apply (and where
non-judicial foreclosure is permitted) before
foreclosing on properties located in the states
where judicial foreclosure is the only
permitted method of foreclosure. As a result,
the special servicer may incur delay and
expense in foreclosing on mortgaged properties
located in states affected by one action rules.
See "CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
AND LEASES--Foreclosure" in the accompanying
prospectus.
S-85
DESCRIPTION OF THE MORTGAGE POOL
GENERAL
The pool of mortgage loans (each, a "Mortgage Loan") included in the Trust
Fund (the "Mortgage Pool") is expected to consist of 152 fixed rate mortgage
loans (the "Mortgage Loans"), with an aggregate principal balance (the "Cut-Off
Date Pool Balance") of $1,200,914,923. The "Cut-Off Date" for (i) 127 of the
Mortgage Loans is July 11, 2003, (ii) 22 of the Mortgage Loans is July 1, 2003
and (iii) for 3 of the Mortgage Loans is July 15, 2003. The "Cut-Off Date
Balance" of each Mortgage Loan will equal the unpaid principal balance thereof
as of the related Cut-Off Date, after reduction for all payments of principal
due on or before such date, whether or not received. The Mortgage Pool will be
deemed to consist of 2 loan groups ("Loan Group 1" and "Loan Group 2" and,
collectively, the "Loan Groups"). Loan Group 1 will consist of (i) all of the
Mortgage Loans that are not secured by multifamily properties and/or mobile home
park properties, (ii) 4 Mortgage Loans that are secured by multifamily
properties and (iii) 2 Mortgage Loans that are secured by mobile home park
properties. Loan Group 1 is expected to consist of 107 Mortgage Loans, with an
aggregate Cut-Off Date Balance of $899,899,355 (the "Cut-Off Date Group 1
Balance"). Loan Group 2 will consist of 38 Mortgage Loans that are secured by
Mortgaged Properties that are multifamily properties and 7 Mortgage Loans that
are secured by mobile home park properties. Loan Group 2 is expected to consist
of 45 Mortgage Loans, with an aggregate Cut-Off Date Balance of $301,015,567
(the "Cut-Off Date Group 2 Balance" and, together with the Cut-Off Date Group 1
Balance the "Cut-Off Date Group Balances"). Annex A-1 to this Prospectus
Supplement sets forth the Loan Group designation with respect to each Mortgage
Loan. The Cut-Off Date Balances of all of the Mortgage Loans in the Mortgage
Pool range from $505,564 to $69,922,221. The Mortgage Loans in the Mortgage Pool
have an average Cut-Off Date Balance of $7,900,756. The Cut-Off Date Balances of
the Mortgage Loans in Loan Group 1 range from $505,564 to $69,922,221. The
Mortgage Loans in Loan Group 1 have an average Cut-Off Date Balance of
$8,410,274. The Cut-Off Date Balances of the Mortgage Loans in Loan Group 2
range from $1,391,141 to $28,902,057. The Mortgage Loans in Loan Group 2 have an
average Cut-Off Date Balance of $6,689,235. References to percentages of
Mortgaged Properties referred to in this Prospectus Supplement without further
description are references to the percentages of the Cut-Off Date Pool Balance
represented by the aggregate Cut-Off Date Balance of the related Mortgage Loans
and references to percentages of Mortgage Loans in a particular Loan Group
without further description are references to the related Cut-Off Date Group
Balance. The descriptions in this Prospectus Supplement of the Mortgage Loans
and the Mortgaged Properties are based upon the pool of Mortgage Loans as it is
expected to be constituted as of the close of business on the Closing Date,
assuming that (1) all scheduled principal and/or interest payments due on or
before the Cut-Off Date will be made, and (2) there will be no principal
prepayments on or before the Cut-Off Date. All percentages of the Mortgage Loans
or any specified group of Mortgage Loans referred to in this Prospectus
Supplement are approximate percentages. All numerical and statistical
information presented herein (including Cut-Off Date Balances, loan-to-value
ratios and debt service coverage ratios) with respect to the Co-Lender Loans are
calculated without regard to the related Companion Loan; provided that, with
respect to the Lloyd Center Loan (loan number 1), numerical and statistical
information presented herein with respect to loan-to-value ratios and debt
service coverage ratios include the related Companion Loan as well as such
Mortgage Loan.
All of the Mortgage Loans are evidenced by a promissory note (each a
"Mortgage Note") and are secured by a mortgage, deed of trust or other similar
security instrument (each, a "Mortgage") that creates a first mortgage lien on a
fee simple estate (or, with respect to 2 Mortgage Loans in Loan Group 1,
representing 1.9% of the Cut-Off Date Pool Balance and 2.6% of Loan Group 1, on
the related borrower's fee simple estate and leasehold estate, or, with respect
to 3 Mortgage Loans in Loan Group 1, representing 4.7% of the Cut-Off Date Pool
Balance and 6.3% of Loan Group 1, on the related borrower's leasehold estate) in
an income-producing real property (each, a "Mortgaged Property").
S-86
Set forth below are the number of Mortgage Loans, and the approximate
percentage of the Cut-Off Date Pool Balance represented by such Mortgage Loans,
that are secured by Mortgaged Properties operated for each indicated purpose:
MORTGAGED PROPERTIES BY PROPERTY TYPE
<Table>
<Caption>
PERCENTAGE PERCENTAGE
PERCENTAGE OF CUT-OFF OF CUT-OFF
NUMBER AGGREGATE OF CUT-OFF DATE DATE
OF LOANS/ CUT-OFF DATE DATE POOL GROUP 1 GROUP 2
PROPERTY TYPE PROPERTIES BALANCE BALANCE BALANCE BALANCE
- ------------- ---------- -------------- ---------- ---------- ----------
Retail..................................... 58/59 $ 405,707,726 33.8% 45.1% 0.0%
Retail--Anchored......................... 35/35 336,194,388 28.0 37.4 0.0
Retail--Unanchored....................... 14/15 34,821,549 2.9 3.9 0.0
Retail--Shadow Anchored(1)(2)............ 9/9 34,691,789 2.9 3.9 0.0
Office..................................... 28/28 336,885,694 28.1 37.4 0.0
Multifamily................................ 42/42 329,039,814 27.4 5.7 92.2
Industrial................................. 5/6 39,745,513 3.3 4.4 0.0
Mobile Home Park........................... 9/9 27,800,387 2.3 0.5 7.8
Mixed Use.................................. 3/3 25,902,744 2.2 2.9 0.0
Self Storage............................... 6/6 25,498,610 2.1 2.8 0.0
Hospitality................................ 1/1 10,334,434 0.9 1.1 0.0
------- -------------- ------ ------ ------
TOTAL............................. 152/154 $1,200,914,923 100.0% 100.0% 100.0%
======= ============== ====== ====== ======
</Table>
- ---------------
(1) A Mortgaged Property is classified as shadow anchored if it is in close
proximity to an anchored retail property.
(2) Includes the Mortgaged Property securing 1 Mortgage Loan representing 0.1%
of the Cut-Off Date Pool Balance (0.2% of the Group 1 Cut-Off Date Balance),
which is an unimproved vacant pad leased to Bank of America, which may
develop it as a bank branch.
MORTGAGE LOAN HISTORY
All of the Mortgage Loans will be acquired on the Closing Date by the
Depositor from the Mortgage Loan Sellers. Wachovia Bank, National Association
("Wachovia"), in its capacity as a Mortgage Loan Seller, originated or acquired
64 of the Mortgage Loans to be included in the Trust Fund representing 56.0% of
the Cut-Off Date Pool Balance (47 Mortgage Loans in Loan Group 1 or 58.5% of the
related Cut-Off Date Group Balance and 17 Mortgage Loans in Loan Group 2 or
48.4% of the related Cut-Off Date Group Balance). Citigroup Global Markets
Realty Corp. ("Citigroup") originated or acquired 18 of the Mortgage Loans to be
included in the Trust Fund representing 16.9% of the Cut-Off Date Pool Balance
(14 Mortgage Loans in Loan Group 1 or 17.3% of the related Cut-Off Date Group
Balance and 4 Mortgage Loans in Loan Group 2 or 15.7% of the related Cut-Off
Date Group Balance). Nomura Credit & Capital, Inc. ("Nomura") originated or
acquired 38 of the Mortgage Loans to be included in the Trust Fund representing
14.8% of the Cut-Off Date Pool Balance (26 Mortgage Loans in Loan Group 1 or
14.2% of the related Cut-Off Date Group Balance and 12 Mortgage Loans in Loan
Group 2 or 16.6% of the related Cut-Off Date Group Balance). Artesia Mortgage
Capital Corporation ("Artesia") originated or acquired 32 of the Mortgage Loans
to be included in the Trust Fund representing 12.4% of the Cut-Off Date Pool
Balance (20 Mortgage Loans in Loan Group 1 or 10.1% of the related Cut-Off Date
Group Balance and 12 Mortgage Loans in Loan Group 2 or 19.4% of the related
Cut-Off Date Group Balance). None of the Mortgage Loans was 30 days or more
delinquent as of the Cut-Off Date, and no Mortgage Loan has been 30 days or more
delinquent during the 12 months preceding the Cut-Off Date (or since the date of
origination if such Mortgage Loan has been originated within the past 12
months).
S-87
CERTAIN TERMS AND CONDITIONS OF THE MORTGAGE LOANS
Mortgage Rates; Calculations of Interest. All of the Mortgage Loans bear
interest at rates (each a "Mortgage Rate") that will remain fixed for their
remaining terms, provided, however, that after the applicable Anticipated
Repayment Date, the interest rate on the related ARD Loans will increase as
described in this Prospectus Supplement. See "--Amortization" below. One hundred
forty-six (146) of the Mortgage Loans, representing 96.8% of the Cut-Off Date
Pool Balance (103 Mortgage Loans in Loan Group 1 or 96.1% of the related Cut-Off
Date Group Balance and 43 Mortgage Loans in Loan Group 2 or 98.6% of the related
Cut-Off Date Group Balance), accrue interest on the basis (an "Actual/360
basis") of the actual number of days elapsed over a 360 day year. Six (6) of the
Mortgage Loans, representing 3.2% of the Cut-Off Date Pool Balance (4 Mortgage
Loans in Loan Group 1 or 3.9% of the related Cut-Off Date Group Balance and 2
Mortgage Loans in Loan Group 2 or 1.4% of the related Cut-Off Date Group
Balance), accrue interest on the basis (a "30/360 basis") of a 360-day year
consisting of 12 thirty-day months. Thirteen (13) of the Mortgage Loans,
representing 16.5% of the Cut-Off Date Pool Balance (9 Mortgage Loans in Loan
Group 1 or 16.1% of the related Cut-Off Date Group Balance and 4 Mortgage Loans
in Loan Group 2 or 17.6% of the related Cut-Off Date Group Balance), have
periods during which only interest is due and periods in which principal and
interest are due. One (1) of the Mortgage Loans, representing 2.2% of the
Cut-Off Date Pool Balance (1 Mortgage Loan in Loan Group 1 or 2.9% of the
related Cut-Off Date Group Balance), is interest-only for its entire term.
Mortgage Loan Payments. Scheduled payments of principal and/or interest
other than Balloon Payments (the "Periodic Payments") on all of the Mortgage
Loans are due monthly.
Due Dates. Generally, the Mortgage Loans are due on the date (each such
date, a "Due Date") occurring on the 11th day of the month (or in the case of 22
Mortgage Loans, the first day of the month, or in the case of 3 Mortgage Loans,
the 15th day of the month). All of the Mortgage Loans due on the 11th day of the
month have no grace period, and no mortgage loan has a grace period that extends
payment beyond the 16th day of any calendar month.
Amortization. One hundred forty-three (143) of the Mortgage Loans (the
"Balloon Loans"), representing 98.0% of the Cut-Off Date Pool Balance (100
Mortgage Loans in Loan Group 1 or 98.1% of the related Cut-Off Date Group
Balance and 43 Mortgage Loans in Loan Group 2 or 97.8% of the related Cut-Off
Date Group Balance), provide for Periodic Payments based on amortization
schedules significantly longer than their respective terms to maturity, in each
case with payments on their respective scheduled maturity dates of principal
amounts outstanding (each such amount, together with the corresponding payment
of interest, a "Balloon Payment"). One (1) of the Mortgage Loans, representing
2.2% of the Cut-Off Date Pool Balance (1 Mortgage Loan in Loan Group 1, or 2.9%
of the related Cut-Off Date Group Balance), provides for interest-only Periodic
Payments for the entire term and does not amortize. Nine (9) of the Mortgage
Loans (the "Fully Amortizing Loans"), representing 2.0% of the Cut-Off Date Pool
Balance (7 Mortgage Loans in Loan Group 1 or 1.9% of the related Cut-Off Date
Group Balance and 2 Mortgage Loans in Loan Group 2 or 2.2% of the related
Cut-Off Date Group Balance), fully or substantially amortize through their
respective remaining terms to maturity. In addition, because the fixed periodic
payments on the Fully Amortizing Loans are determined assuming interest is
calculated on a 30/360 Basis, but interest actually accrues and is applied on
the Fully Amortizing Loans on an Actual/360 Basis, there will be less
amortization, absent prepayments, of the related principal balances during the
terms of the Fully Amortizing Loans, resulting in a higher final payment on the
Fully Amortizing Loans.
Twenty (20) of the Mortgage Loans (the "ARD Loans"), representing 23.0% of
the Cut-Off Date Pool Balance (19 Mortgage Loans in Loan Group 1 or 30.0% of the
related Cut-Off Date Group Balance and 1 Mortgage Loans in Loan Group 2 or 2.4%
of the related Cut-Off Date Group Balance), provide that if the unamortized
principal amount thereof is not repaid on a date set forth in the related
Mortgage Note (the "Anticipated Repayment Date"), the Mortgage Loan will accrue
additional interest (the "Additional Interest") at the rate set forth therein
and the borrower will be required to apply excess monthly cash flow (the "Excess
Cash Flow") generated by the Mortgaged Property (as determined in the related
loan documents) to the repayment of principal outstanding on the Mortgage Loan.
On or before the
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Anticipated Repayment Date, the ARD Loans generally require the related borrower
to enter into a cash management agreement whereby all Excess Cash Flow will be
deposited directly into a lockbox account. Any amount received in respect of
Additional Interest will be distributed to the holders of the Class Z
Certificates. Generally, Additional Interest will not be included in the
calculation of the Mortgage Rate for a Mortgage Loan, and will only be paid
after the outstanding principal balance of the Mortgage Loan together with all
interest thereon at the Mortgage Rate has been paid. With respect to such
Mortgage Loans, no Prepayment Premiums or Yield Maintenance Charges will be due
in connection with any principal prepayment after the Anticipated Repayment
Date.
Twelve (12) of the Balloon Loans and ARD Loans, representing 16.1% of the
Cut-Off Date Pool Balance (9 Mortgage Loans in Loan Group 1 or 16.1% of the
related Cut-Off Date Group Balance and 3 Mortgage Loans in Loan Group 2 or 15.9%
of the related Cut-Off Date Group Balance), provide for monthly payments of
interest-only for the first 6 months to 54 months of their respective terms
followed by payments which amortize a portion of the principal balance of the
Mortgage Loans by their related maturity dates or Anticipated Repayment Dates,
as applicable, but not the entire principal balance of the Mortgage Loans. One
of the Balloon Loans, representing 2.2% of the Cut-Off Date Pool Balance (1
Mortgage Loan in Loan Group 1 or 2.9%) provides for monthly payments of interest
until maturity and does not provide for any amortization of principal.
Prepayment Provisions. As of the Cut-Off Date, all of the Mortgage Loans
restrict or prohibit voluntary principal prepayment. In general, the Mortgage
Loans (i) prohibit voluntary prepayment of principal until a date specified in
the related Mortgage Note, but permit defeasance after a date specified in the
related Mortgage Note for most of the remaining term (139 Mortgage Loans, or
89.3% of the Cut-Off Date Pool Balance (102 Mortgage Loans in Loan Group 1 or
94.1% of the related Cut-Off Date Group Balance and 37 Mortgage Loans in Loan
Group 2 or 75.0% of the related Cut-Off Date Group Balance)), (ii) prohibit
voluntary prepayment of principal for a period ending on a date specified in the
related Mortgage Note, and thereafter impose a Prepayment Premium (1 Mortgage
Loan, or 0.1% of the Cut-Off Date Pool Balance (0.5% of the Cut-Off Date Group 2
Balance)), or (iii) prohibit voluntary prepayment of principal for a period
specified in the related Mortgage Note and thereafter impose a Yield Maintenance
Charge until a date specified in the related Mortgage Note (9 Mortgage Loans, or
6.9% of the Cut-Off Date Pool Balance (4 Mortgage Loans in Loan Group 1 or 3.9%
of the related Cut-Off Date Group Balance and 5 Mortgage Loans in Loan Group 2
or 16.0% of the related Cut-Off Date Group Balance)); provided that, for
purposes of each of the foregoing, "remaining term" refers to either the
remaining term to maturity or the Anticipated Repayment Date, as applicable, of
the related Mortgage Loan. See "--Additional Mortgage Loan Information" in this
Prospectus Supplement. In addition, 2 Mortgage Loans representing 3.5% of the
Cut-Off Date Pool Balance (1 Mortgage Loan in Loan Group 1 or 2.0% of the
related Cut-Off Date Group Balance and 1 Mortgage Loan in Loan Group 2 or 8.0%
of the related Cut-Off Date Group Balance) prohibit voluntary prepayment for a
period ending on a date specified in the related Mortgage Note and thereafter
permit defeasance at the option of the borrower and/or permit the related
borrower to voluntarily prepay the related Mortgage Loan subject to the
imposition of a Yield Maintenance Charge for a period specified in the related
Mortgage Note. Prepayment Premiums and Yield Maintenance Charges, if and to the
extent collected, will be distributed as described in this Prospectus Supplement
under "DESCRIPTION OF THE CERTIFICATES--Distributions--Allocation of Prepayment
Premiums and Yield Maintenance Charges." The Depositor makes no representation
as to the enforceability of the provisions of any Mortgage Note requiring the
payment of a Prepayment Premium or Yield Maintenance Charge, or of the
collectability of any Prepayment Premium or Yield Maintenance Charge.
Certain state laws limit the amounts that a lender may collect from a
borrower as an additional charge in connection with the prepayment of a mortgage
loan. The Mortgage Loans generally do not require the payment of Prepayment
Premiums or Yield Maintenance Charges in connection with a prepayment, in whole
or in part, of the related Mortgage Loan as a result of or in connection with a
total casualty or condemnation. Furthermore, the enforceability, under the laws
of a number of states, of provisions providing for payments comparable to the
Prepayment Premiums and/or Yield Maintenance
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Charges upon an involuntary prepayment is unclear. No assurance can be given
that, at the time a Prepayment Premium or Yield Maintenance Charge is required
to be made on a Mortgage Loan in connection with an involuntary prepayment, any
obligation to pay such Prepayment Premium or Yield Maintenance Charge will be
enforceable under applicable state law.
The Mortgage Loans included in the trust fund (other than the Nomura
Mortgage Loans, certain of the Citigroup Mortgage Loans, and certain of the
Artesia Mortgage Loans) provide that, in the event of a partial prepayment of
such Mortgage Loan due to the receipt of insurance proceeds or a condemnation
award in connection with a casualty or condemnation, the monthly debt service
payment of such Mortgage Loan will remain unchanged. See "RISK
FACTORS--Prepayments Will Affect Your Yield."
One hundred forty-one (141) of the Mortgage Loans, or 92.9% of the Cut-Off
Date Pool Balance (103 Mortgage Loans in Loan Group 1 or 96.1% of the related
Cut-Off Date Group Balance and 38 Mortgage Loans in Loan Group 2 or 83.0% of the
related Cut-Off Date Group Balance), provide that, in general, under certain
conditions, the related borrower will have the right, no earlier than two years
following the Closing Date (except with respect to the Early Defeasance Loan),
to substitute a pledge of Defeasance Collateral in exchange for a release of the
related Mortgaged Property (or a portion thereof) from the lien of the related
Mortgage without the prepayment of the Mortgage Loan or the payment of the
applicable Prepayment Premium or Yield Maintenance Charge. Mortgage Loans
secured by more than one Mortgaged Property which provide for partial defeasance
generally require that (i) prior to the release of a related Mortgaged Property
(or a portion thereof), a specified percentage (generally 125% of the allocated
loan amount for such Mortgaged Property be defeased and (ii) that certain debt
service coverage ratios and loan-to-value ratio tests be satisfied with respect
to the remaining Mortgaged Properties after the defeasance. In general,
"Defeasance Collateral" is required to consist of United States government
obligations that provide for payments on or prior, but as close as possible, to
all successive Due Dates and the scheduled maturity date (or the Anticipated
Repayment Date in the case of the ARD Loans), with each such payment being equal
to or greater than (with any excess to be returned to the borrower (in some
cases, after the related Mortgage Loan is paid in full)) the Periodic Payment
due on such date or (i) in the case of a Balloon Loan on the scheduled maturity
date, the Balloon Payment, or (ii) in the case of an ARD Loan, the principal
balance on its Anticipated Repayment Date. The Pooling and Servicing Agreement
requires the Master Servicer or the Special Servicer to require each borrower
that proposes to prepay its Mortgage Loan to pledge Defeasance Collateral in
lieu of making a prepayment, to the extent the related Mortgage Loan documents
enable the Master Servicer or the Special Servicer, as applicable, to make such
requirement, but in each case subject to certain conditions, including that the
defeasance would not have an adverse effect on REMIC status of any of the REMICs
(accordingly, no defeasance would be required or permitted prior to the second
anniversary of the Closing Date or, in the case of the Early Defeasance Loan
REMIC, the "start-up" date of such Early Defeasance Loan REMIC). The cash amount
a borrower must expend to purchase, or deliver to the Master Servicer in order
for the Master Servicer to purchase, such Defeasance Collateral may be in excess
of the principal balance of the related Mortgage Loan. There can be no
assurances that a court would not interpret such portion of the cash amount that
exceeds the principal balance as a form of prepayment consideration and would
not take it into account for usury purposes. In some states some forms of
prepayment consideration are unenforceable. One (1) of the Mortgage Loans (the
"Early Defeasance Loan"), representing 0.3% of the Cut-off Date Pool Balance (1
Mortgage Loan in Loan Group 1 or 0.3% of the related Cut-Off Date Group
Balance), permits the related borrower to defease the related Mortgage Loan
prior to the second anniversary of the Closing Date. The Early Defeasance Loan
is indicated as loan number 107 on Annex A-1 to this Prospectus Supplement. The
Early Defeasance Loan will constitute the primary asset of a separate loan REMIC
(the "Early Defeasance Loan REMIC").
Neither the Master Servicer nor the Special Servicer is permitted to waive
or modify the terms of any Mortgage Loan prohibiting voluntary prepayments
during a Lockout Period or requiring the payment of a Prepayment Premium or
Yield Maintenance Charge except under the circumstances described in "SERVICING
OF THE MORTGAGE LOANS--Modifications, Waivers and Amendments" in this Prospectus
Supplement.
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Other Financing. With limited exceptions, all of the Mortgage Loans
prohibit the related borrower from encumbering the Mortgaged Property with
additional secured debt without the lender's prior consent, except in the case
of 2 Mortgage Loans (loan numbers 111 and 148), representing approximately 0.4%
of the Cut-Off Date Pool Balance (2 Mortgage Loans in Loan Group 2 or 1.4% of
the related Cut-Off Date Group Balance), the related mortgaged property is
encumbered by existing subordinate debt (other than a Companion Loan) which in
each case is subject to the terms of an intercreditor agreement and/or a
standstill agreement in favor of the mortgage. Two (2) Mortgage Loans (loan
numbers 17 and 70) representing 1.9% of the Cut-Off Date Pool Balance (2.5% of
the Cut-Off Date Group 1 Balance) have existing unsecured debt other than in the
ordinary course of business. One (1) Mortgage Loan (loan number 22),
representing 1.2% of the Cut-Off Date Pool Balance (1 Mortgage Loan in Loan
Group 2 or 5.0% of the related Cut-Off Date Group Balance), provides that the
borrower, under certain specified circumstances, may encumber the related
mortgaged property with subordinate debt in the future. In addition, in the case
of those Mortgage Loans which require or allow letters of credit to be posted by
the related borrowers as additional security for such Mortgage Loans, in lieu of
reserves or otherwise, the related borrower may be obligated to pay fees and
expenses associated with the letter of credit and/or to reimburse the letter of
credit issuer or others in the event of a draw upon the letter of credit by the
lender. See "--Due-On-Sale and Due-On-Encumbrance Provisions" below.
One (1) Mortgage Loan (loan number 17), representing 1.4% of the Cut-Off
Date Pool Balance (1 Mortgage Loan in Loan Group 1 or 1.8% of the related
Cut-Off Date Group Balance), has existing subordinate debt secured by a
$1,643,000 tenant renewal escrow reserve related to the loan. Under the terms of
the escrow, payments are made under the note to the extent of disbursements
under the escrow. Interest accrues under the promissory note evidencing the debt
to the extent that interest accrues on the escrowed funds. By its terms, the
promissory note is subordinate to the Mortgage Loan, except for any rights of
the seller in the escrowed funds. The sole recourse of the seller for recovery
under the promissory note is the escrowed funds, and the seller has no claim
against the borrower other than for the disbursement of the escrowed funds
pursuant to the escrow agreement or claims under the escrow agreement, or for
default under the promissory note if the borrower does not allow distribution of
funds to pay the note under the escrow agreement.
With respect to 1 Mortgage Loan (loan number 21), representing 1.3% of the
Cut-Off Date Pool Balance (1.7% of the Cut-Off Date Group 1 Balance), the
ownership interests of the direct or indirect owners of the related borrower
have been pledged as security for mezzanine debt, subject to the terms of an
intercreditor agreement. With respect to 16 Mortgage Loans (loan numbers 4, 9,
37, 42, 44, 46, 54, 58, 60, 63, 78, 93, 94, 122, 125 and 138), representing
10.9% of the Cut-Off Date Pool Balance (14 Mortgage Loans in Loan Group 1 or
10.7% of the related Cut-Off Date Group Balance and 2 Mortgage Loans in Loan
Group 2 or 11.3% of the related Cut-Off Date Group Balance), the related
Mortgage Loan documents provide that, under certain circumstances, the owners
with a controlling ownership interest in the borrower may pledge their interests
in the borrower as security for debt financing, generally referred to as
mezzanine debt, in the future, subject to the terms of a subordination and
standstill agreement to be entered into in favor of the lender and the
satisfaction of certain financial conditions. Of the Mortgage Loans included in
the Trust Fund that permit future mezzanine debt as described in the preceding
sentence, 4 Mortgage Loans (loan numbers 9, 54, 60 and 122), representing 3.0%
of the Cut-Off Date Pool Balance, permit non-managing membership interests in
the related borrower, at any time when the borrower is controlled by AmCap,
Inc., to be pledged as security for mezzanine debt. See "RISK FACTORS--Some
Mortgaged Properties May Be Encumbered by Subordinated Debt Which May Delay
Foreclosure" in this Prospectus Supplement. In addition, 14 Mortgage Loans
included in the trust fund as of the Cut-Off Date (loan numbers 41, 51, 62, 79,
83, 85, 98, 108, 109, 112, 119, 124, 127 and 135), representing 4.8% of the
Cut-Off Date Pool Balance (7 Mortgage Loans in Loan Group 1 or 2.3% of the
related Cut-Off Date Group Balance and 7 Mortgage Loans in Loan Group 2 or 12.4%
of the related Cut-Off Date Group Balance), do not prohibit the related borrower
from incurring additional unsecured debt or an owner of an interest in the
related borrower from pledging its ownership interest in the related borrower as
security for mezzanine debt because the related borrower is not required by
either the mortgage loan documents or related organizational documents to be a
special purpose entity. Further, certain of the
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Mortgage Loans included in the trust fund do not prohibit limited partners or
other owners of non-controlling interests in the related borrower from pledging
their interests in the borrower as security for mezzanine debt. See "RISK
FACTORS--Additional Debt on Some Mortgage Loans Creates Additional Risk" in this
Prospectus Supplement.
In addition, with respect to the Co-Lender Loans, the related Mortgaged
Property also secures the lien of the applicable Companion Loan. See
"--Co-Lender Loans" in this Prospectus Supplement.
Nonrecourse Obligations. The Mortgage Loans are generally nonrecourse
obligations of the related borrowers and, upon any such borrower's default in
the payment of any amount due under the related Mortgage Loan, the holder
thereof may look only to the related Mortgaged Property for satisfaction of the
borrower's obligations. In addition, in those cases where recourse to a borrower
or guarantor is purportedly permitted, the Depositor has not undertaken an
evaluation of the financial condition of any such person, and prospective
investors should therefore consider all of the Mortgage Loans to be nonrecourse.
Due-On-Sale and Due-On-Encumbrance Provisions. Substantially all of the
Mortgages contain "due-on-sale" and "due-on-encumbrance" clauses that, in
general, permit the holder of the Mortgage to accelerate the maturity of the
related Mortgage Loan if the borrower sells or otherwise transfers or encumbers
the related Mortgaged Property or prohibit the borrower from doing so without
the consent of the holder of the Mortgage. However, certain of the Mortgage
Loans may permit one or more transfer of the related Mortgaged Property to
pre-approved borrowers or pursuant to pre-approved conditions without lender
approval. As provided in, and subject to, the Pooling and Servicing Agreement,
the Special Servicer will determine, in a manner consistent with the servicing
standard described in this Prospectus Supplement under "SERVICING OF THE
MORTGAGE LOANS--General," whether to exercise any right the holder of any
Mortgage may have under any such clause to accelerate payment of the related
Mortgage Loan upon, or to withhold its consent to, any transfer or further
encumbrance of the related Mortgaged Property.
Cross-Default and Cross-Collateralization of Certain Mortgage Loans;
Certain Multi-Property Mortgage Loans. Five (5) groups of Mortgage Loans (loan
numbers 53 and 65, 99 and 100, 114 and 117, 93, 125 and 138, and 112 and 135),
representing 3.2% in aggregate of the Cut-Off Date Pool Balance (5 Mortgage
Loans in Loan Group 1 or 1.3% and 6 Mortgage Loans in Loan Group 2 or 8.7%) are
groups of Mortgage Loans that are cross-collateralized and cross-defaulted with
the other Mortgage Loans in such group as indicated in Annex A-5. Although the
Mortgage Loans within each group are cross-collateralized and cross-defaulted
with the other mortgage loans in such group, the Mortgage Loans in one group are
not cross-collateralized or cross-defaulted with the Mortgage Loans in the other
group. As of the Closing Date, no Mortgage Loan, except the Co-Lender Loans,
will be cross-collateralized or cross-defaulted with any loan that is not
included in the Mortgage Pool. The Master Servicer or the Special Servicer, as
the case may be, will determine whether to enforce the cross-default and
cross-collateralization rights upon a mortgage loan default with respect to any
of these Mortgage Loans. The Certificateholders will not have any right to
participate in or control any such determination. No other Mortgage Loans are
subject to cross-collateralization or cross-default provisions.
Two (2) of the Mortgage Loans (loan numbers 53 and 65), representing 1.1%
of the Cut-Off Date Pool Balance (4.5% of the Cut-Off Date Group 2 Balance),
provide that the cross-default and cross-collateralization provisions may be
terminated in the event one of the Mortgage Loans is defeased or assumed without
a simultaneous defeasance or assumption of the other, provided that a
no-downgrade letter is received from the applicable rating agencies, certain
loan-to-value ratio, debt service coverage ratio and occupancy tests are
satisfied and, in the case of a defeasance of one Mortgage Loan, funds equal to
15% of the appraised value of the Mortgaged Property primarily securing the
defeased Mortgage Loan are deposited as additional security for the remaining,
undefeased Mortgage Loan.
Three (3) Mortgage Loans (loan numbers 93, 125 and 138), representing 6.3%
of the Cut-off Date Pool Balance, which are cross-collateralized and
cross-defaulted with each other, each provide for the release of one (1) or all
of the mortgaged properties from the effects of the cross-collateralization and
cross-default provisions of the respective loans upon an approved sale of such
property, provided that
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(a) the debt service coverage ratio, as determined by the lender, for each of
the 3 Mortgaged Properties for the twelve (12) month period immediately
preceding such release is not less than 1.40x to 1.00, and (b) no event of
default has occurred under any of the loans.
Partial Releases. Certain of the Mortgage Loans permit a partial release
of a portion of the related Mortgage Property not material to the underwriting
of the Mortgage Loan at the time of origination, without any prepayment or
defeasance of the Mortgage Loan.
In the case of one (1) Mortgage Loan (loan number 49), representing 0.6% of
the Cut-Off Date Pool Balance, in the case of a major casualty to 1 of the 2
mortgaged properties securing the loan, the damaged mortgaged property may be
released upon satisfaction of certain conditions, including a partial prepayment
of the loan in an amount equal to the greater of all net proceeds available
which resulted from such insured event or the minimum partial prepayment amounts
allocable to the damaged Mortgaged Property, provided that the remaining
unreleased property has a loan to value ratio of 75% and a debt service coverage
ratio of 1.30x to 1.00.
One (1) of the Mortgage Loans (loan number 15), representing 1.4% of the
Cut-Off Date Pool Balance (1.9% of the Cut-Off Date Group 1 Balance), permits
the partial release of a portion of the Mortgaged Property after the Lockout
Period; provided that (i) the Mortgage Loan is defeased in the amount of
$980,000 and (ii) certain other customary requirements are met.
Low Income Housing Tax Credits. Three (3) of the Mortgage Loans
(representing 0.5% of the Cut-Off Date Pool Balance and 1.9% of the Cut-Off Date
Group 2 Balance), are secured by Mortgaged Properties which are eligible to
receive low-income housing tax credits ("Tax Credits") pursuant to Section 42 of
the Code ("Section 42"). Under Section 42, a property owner must comply with
certain tenant income restrictions and rental restrictions (including certain
rent limitations which may adversely effect the borrowers' ability to raise
rents) over a 15-year compliance period. If a projects fails to adhere to
Section 42 guidelines or is foreclosed, the owner is subject to recapture of the
unearned tax credits plus interest. The applicable Mortgage Loan Sellers review
landlord compliance with these restrictions. The value of the Tax Credits was
not considered as part of the appraised value for purposes of computing the
Cut-Off Date LTV Ratio.
ASSESSMENTS OF PROPERTY CONDITION
Property Inspections. Generally, the Mortgaged Properties were inspected
by or on behalf of the Mortgage Loan Sellers in connection with the origination
or acquisition of the related Mortgage Loans to assess their general condition.
No inspection revealed any patent structural deficiency or any deferred
maintenance considered material and adverse to the value of the Mortgaged
Property as security for the related Mortgage Loan, except in such cases where
adequate reserves have been established.
Appraisals. All of the Mortgaged Properties were appraised by a
state-certified appraiser or an appraiser belonging to the Appraisal Institute
in accordance with the Federal Institutions Reform, Recovery and Enforcement Act
of 1989. The primary purpose of each appraisal was to provide an opinion as to
the market value of the related Mortgaged Property. There can be no assurance
that another appraiser would have arrived at the same opinion of market value.
Environmental Assessments. A "Phase I" environmental site assessment was
performed, in compliance with the guidelines set forth by the American Society
for Testing and Materials ("ASTM ") E-1527-00, by independent environmental
consultants with respect to each Mortgaged Property in connection with the
origination of the related Mortgage Loans. "Phase I" environmental site
assessments generally do not include environmental testing. In certain cases,
environmental testing, including in some cases a "Phase II" environmental site
assessment as recommended by such "Phase I" assessment, was performed.
Generally, in each case where environmental assessments recommended corrective
action, the originator of the Mortgage Loan determined that the necessary
corrective action had been undertaken in a satisfactory manner, was being
undertaken in a satisfactory manner or that such corrective action would be
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adequately addressed post-closing. In some instances, the originator required
that reserves be established to cover the estimated cost of such remediation or
an environmental insurance policy was obtained from a third party.
Engineering Assessments. In connection with the origination of all of the
Mortgage Loans, except for 5 Mortgage Loans (loan numbers 90, 111 139, 145 and
148) representing 0.9% of the Cut-Off Date Pool Balance (0.6% of the Cut-Off
Date Group 1 Balance and 1.9% of the Cut-Off Date Group 2 Balance), a licensed
engineer or architect inspected the related Mortgaged Property to assess the
condition of the structure, exterior walls, roofing, interior structure and
mechanical and electrical systems. The resulting reports indicated deferred
maintenance items and/or recommended capital improvements on the Mortgaged
Properties. Generally, with respect to a majority of Mortgaged Properties, the
related borrowers were required to deposit with the lender an amount equal to at
least 110% of the licensed engineer's estimated cost of the recommended repairs,
corrections or replacements to assure their completion.
Earthquake Analyses. An architectural and/or engineering consultant
performed an analysis on certain Mortgaged Properties located in areas
considered to be an earthquake risk, which includes California, in order to
evaluate the structural and seismic condition of the property and to assess,
based primarily on statistical information, the maximum probable loss for the
property in an earthquake scenario. The resulting reports concluded that in the
event of an earthquake, 1 Mortgaged Property securing 1 Mortgage Loan,
representing 0.9% of the Cut-Off Date Pool Balance (1.2% of the Cut-Off Date
Group 1 Balance), is likely to suffer a probable maximum loss in excess of 20%
of the amount of the estimated replacement cost of the improvements located on
the related Mortgaged Property. The Mortgaged Property described above has
earthquake insurance in place.
Lease Enhancement Policies. Three (3) Mortgage Loans, representing
approximately 0.7% of the Cut-Off Date Pool Balance, provide the tenant with
termination and abatement rights arising from certain condemnations and
casualties ("Condemnation Rights") and has the benefit of a noncancellable lease
enhancement policy issued by Lexington Insurance Company, a member company of
American International Group, Inc. (the "Enhancement Insurer"), which as of June
9, 2003, had a senior unsecured debt rating of "AAA" by S&P. The lease
enhancement policy provides, subject to customary exclusions, that in the event
of a permitted termination by a tenant of its lease as a result of a
condemnation, the Enhancement Insurer will pay to the Master Servicer on behalf
of the Trust Fund the "Loss of Rents" (i.e., a lump sum payment of all
outstanding principal plus, subject to the limitation below, accrued interest on
the related mortgage loan). If the lease permits the tenant to abate all or a
portion of the rent in the event of a condemnation, the "Loss of Rents" will be
in an amount equal to the portion of any rescheduled monthly rental payments not
made by such tenant for the period from the date the abatement commences until
the earlier of the date the abatement ceases or the expiration date of the
initial term of such lease; provided that in the event such payments would
exceed the limits of liability under the policy, then the Enhancement Insurer
may, at its option, pay the present value of the stream of partial abatement
payments in a lump sum. The Enhancement Insurer is not required to pay amounts
due under the related Mortgage Loan other than principal and, subject to the
limitation above, accrued interest, and therefore is not required to pay any
Prepayment Premium or Yield Maintenance Change due thereunder or any amounts the
mortgagor is obligated to pay thereunder to reimburse the master servicer or the
trustee for outstanding advances.
The lease enhancement policy contains certain exclusions from coverage,
including loss arising from damage or destruction directly or indirectly caused
by war, insurrection, rebellion, revolution, usurped power, pollutants or
radioactive matter, or from a taking other than a condemnation by reason of
public health, public safety or the environment.
CO-LENDER LOANS
General. Five (5) Mortgage Loans (loan number 1, the "Lloyd Center Loan",
loan number 19, the "Shoppes of Parkland Loan", loan number 38 the "Hilton
Norfolk Loan", loan number 139, the "Laurel Pointe Apartments Loan" and loan
number 148, the "Timberlake Apartments Loan", and collectively, the
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"Co-Lender Loans") acquired or originated by Wachovia Bank, National
Association, are each evidenced by one of two notes each secured by a single
mortgage and a single assignment of leases and rents. The Lloyd Center Loan is
part of a split loan structure where the companion loan that is part of this
split loan structure is pro rata in its right of entitlement to payment with the
Lloyd Center Loan and is not included as part of the trust (the "Lloyd Center
Pari Passu Loan"). The Shoppes of Parkland Loan, the Hilton Norfolk Loan, the
Laurel Pointe Apartments Loan and the Timberlake Apartments Loan are
collectively referred to herein as the "AB Mortgage Loans". The Shoppes of
Parkland Loan and the Hilton Norfolk Loan are collectively referred to herein as
the "CBA Loans". The Laurel Pointe Apartments Loan and the Timberlake Apartments
Loan are collectively referred to herein as the "AB Apartments Loans". The AB
Mortgage Loans are each represented by the senior notes of two notes. None of
the Companion Loans are included in the trust. The Shoppes of Parkland Companion
Loan and the Hilton Norfolk Companion Loan are referred to herein as the "CBA
Companion Loans". The Laurel Pointe Apartments Companion Loan and the Timberlake
Apartments Companion Loan are referred to herein as the "AB Apartments Companion
Loans". The Lloyd Center Pari Passu Loan, the CBA Companion Loans and the AB
Apartments Companion Loans are collectively referred to herein as the "Companion
Loans". The Lloyd Center Loan has a Cut-Off Date Balance of $69,922,221
representing 5.8% of the Cut-Off Date Pool Balance (7.8% of the Cut-Off Date
Group 1 Balance). The Shoppes of Parkland Loan has a Cut-Off Date Balance of
$15,968,669 representing 1.3% of the Cut-Off Date Pool Balance (1.8% of the
Cut-Off Date Group 1 Balance). The Hilton Norfolk Loan has a Cut-Off Date
Balance of $10,334,434 representing 0.9% of the Cut-Off Date Pool Balance (1.1%
of the Cut-Off Date Group 1 Balance). The Laurel Pointe Apartments Loan has a
Cut-Off Date Balance of $1,607,068 representing 0.1% of the Cut-Off Date Pool
Balance (0.5% of the Cut-Off Date Group 2 Balance). The Timberlake Apartments
Loan has a Cut-Off Date Balance of $1,391,141 representing 0.1% of the Cut-Off
Date Pool Balance (0.5% of the Cut-Off Date Group 2 Balance).
Wachovia Bank, National Association is the holder of the Companion Loans
related to the Lloyd Center Loan and the AB Apartments Loans. The remaining
Companion Loans are held by unaffiliated entities. The holders of the Companion
Loans may only sell each such Companion Loan with the prior written consent of
the Master Servicer or the Special Servicer or, without such consent, to certain
institutional lenders or other parties named in the related Intercreditor
Agreement.
With respect to the Lloyd Center Loan, the terms of an intercreditor
agreement (the "Lloyd Center Intercreditor Agreement") provide that the Lloyd
Center Loan and the Lloyd Center Pari Passu Loan are of equal priority with each
other and no portion of either loan will have priority or preference over the
other. With respect to each of the AB Apartments Loans, under the terms of a
separate intercreditor and servicing agreement (each an "AB Apartments Loan
Intercreditor Agreement") the holder of each of the Timberlake Apartments
Companion Loan and the Laurel Pointe Apartments Companion Loan has agreed to
subordinate its interest in certain respects to the related AB Apartments Loan.
With respect to each of the CBA Loans, under the terms of separate intercreditor
and servicing agreement among noteholders (each a "CBA Intercreditor Agreement"
and collectively with the Lloyd Center Intercreditor Agreement and each AB
Apartments Intercreditor Agreement, the "Intercreditor Agreements") the holder
of each of the Hilton Norfolk Companion Loan and the Shoppes of Parkland
Companion Loan has agreed to subordinate its interest in certain respects to the
related AB Apartments Loan. The Master Servicer and the Special Servicer will
undertake to perform the obligations of the holder of the Lloyd Center Loan, the
AB Apartments Loans and AB Mortgage Loans under the related Intercreditor
Agreements.
Servicing Provisions of the Intercreditor Agreements. With respect to the
Lloyd Center Loan and the Lloyd Center Pari Passu Loan, the Master Servicer and
the Special Servicer will administer the Lloyd Center Loan and the Lloyd Center
Pari Passu Loan pursuant to the Pooling and Servicing Agreement and the Lloyd
Center Intercreditor Agreement for so long as the Lloyd Center Loan is part of
the trust. The holder of the Lloyd Center Pari Passu Loan or an advisor on its
behalf will generally share all of the rights that the Controlling Class
Representative has with respect to directing the Master Servicer and/or the
Special Servicer with respect to the servicing of the Lloyd Center Loan. See
"SERVICING OF THE MORTGAGE LOANS--The Controlling Class Representative in this
Prospectus Supplement.
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With respect to each CBA Loan, the Master Servicer and Special Servicer
will service and administer such loan and its related Companion Loan pursuant to
the Pooling and Servicing Agreement and the related Intercreditor Agreement for
so long as each such CBA Loan is part of the trust. The Master Servicer and/or
Special Servicer may not enter into amendments, modifications or extensions of a
CBA Loan and the related CBA Loan without the consent of the holder of such CBA
Companion Loan if the proposed amendment, modification or extension adversely
affects the holder of the related CBA Companion Loan in a material manner;
provided, however, that such consent right will expire when the repurchase
period described in the next paragraph expires. See "SERVICING OF THE MORTGAGE
LOANS--The Controlling Class Representative" in this Prospectus Supplement.
In the event that (i) any payment of principal or interest on a CBA Loan or
the related CBA Companion Loan becomes 90 or more days delinquent, (ii) the
principal balance of such CBA Loan or the related CBA Companion Loan has been
accelerated, (iii) the principal balance of such CBA Loan or the related CBA
Companion Loan is not paid at maturity, (iv) the borrower declares bankruptcy or
(v) any other event where the cash flow payment under a related CBA Companion
Loan has been interrupted and payments are made pursuant to the event of default
waterfall, the holder of the related CBA Companion Loan will be entitled to
purchase the related CBA Loan from the trust for a period of 30 days after its
receipt of a repurchase option notice, subject to certain conditions set forth
in the related Intercreditor Agreement. The purchase price will generally equal
the unpaid principal balance of the related CBA Loan, together with all unpaid
interest on the related CBA Loan (other than default interest) at the related
mortgage rate and any outstanding servicing expenses, advances and interest on
advances for which the borrower under the related CBA Loan is responsible.
Unless the borrower or an affiliate is purchasing the related CBA Loan, no
prepayment consideration will be payable in connection with the purchase of the
related CBA Loan.
With respect to each of the AB Apartments Loans, the Master Servicer will
administer each such AB Apartments Loan and the related AB Apartments Companion
Loan pursuant to the Pooling and Servicing Agreement and the related AB
Apartments Loan Intercreditor Agreement for so long as the related AB Apartments
Loan is part of the trust. If the principal amount of the related AB Apartments
Companion Loan, less any existing related Appraisal Reduction Amount, is at
least equal to 25% of the original principal amount of the related AB Apartments
Companion Loan, the holder of the related AB Apartments Companion Loan, or an
advisor on its behalf, will be entitled to advise and direct the Master Servicer
and/or Special Servicer with respect to certain matters, including, among other
things, foreclosure or material modifications of the related AB Apartments Loan.
However, no advice or direction may require or cause the Master Servicer or the
Special Servicer to violate any provision of the Pooling and Servicing
Agreement, including the Master Servicer's and the Special Servicer's obligation
to act in accordance with the Servicing Standard. See "SERVICING OF THE MORTGAGE
LOANS -- The Controlling Class Representative" in this Prospectus Supplement.
In the event of any default under an AB Apartments Loan or the related AB
Apartments Companion Loan, the holder of the related AB Apartments Companion
Loan will be entitled to (i) cure each default within five business days of
receipt of notice from the Master Servicer with respect to monetary defaults and
within thirty days of receipt of notice from the Master Servicer with respect to
nonmonetary defaults and/or (ii) purchase the related AB Apartments Loan from
the trust after the expiration of the cure period subject to the conditions
contained in the related AB Apartments Loan Intercreditor Agreement. The
purchase price will generally equal the unpaid principal balance of the related
AB Apartments Loan, together with all unpaid interest on such AB Apartments Loan
(other than default interest) at the related mortgage rate and any unreimbursed
servicing expenses, advances and interest on advances for which the related
borrower under such AB Apartments Loan is responsible. No prepayment
consideration will be payable in connection with such a purchase of the AB
Apartments Loan.
Application of Payments. Pursuant to the Lloyd Center Intercreditor
Agreement, all payments, proceeds and other recoveries on or in respect of the
Lloyd Center Loan and/or the Lloyd Center Pari Passu Loan (subject in each case
to the rights of the Master Servicer, the Special Servicer and the Trustee to
payments and reimbursements as set forth in the Pooling and Servicing Agreement)
will be
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applied to the Lloyd Center Loan and the Lloyd Center Pari Passu Loan on a pro
rata basis according to their respective principal balances.
Pursuant to the related Intercreditor Agreement and prior to the occurrence
of (i) the acceleration of the related CBA Loan or related CBA Companion Loan,
(ii) a monetary event of default or (iii) an event of default triggered by the
bankruptcy of the borrower, the related borrower will make separate monthly
payments of principal and interest to the Master Servicer and the holder of the
related CBA Companion Loan. Any escrow and reserve payments required in respect
of such CBA Loan or the related CBA Companion Loan will be paid to the Master
Servicer.
Following the occurrence and during the continuance of (i) the acceleration
of a CBA Loan or the related CBA Companion Loan, (ii) a monetary event of
default or (iii) an event of default triggered by the bankruptcy of the
borrower, and subject to certain rights of the holder of the related CBA
Companion Loan to purchase the related CBA Loan from the trust, all payments and
proceeds (of whatever nature) on the related CBA Companion Loan will be
subordinated to all payments due on the related CBA Loan and the amounts with
respect to such Loan Pair will be paid first, to the Master Servicer, Special
Servicer or Trustee, up to the amount of any unreimbursed costs and expenses
paid by such entity, including unreimbursed advances and interest thereon,
second, to the Master Servicer and the Special Servicer, in an amount equal to
the accrued and unpaid servicing fees earned by such entity, third, to the
trust, in an amount equal to interest due with respect to the related CBA Loan;
fourth, to the trust, in an amount equal to the principal balance of the related
CBA Loan until paid in full; fifth, to the trust, in an amount equal to any
prepayment premium, to the extent actually paid, allocable to the related CBA
Loan; sixth, to the holder of the related CBA Companion Loan, up to the amount
of any unreimbursed costs and expenses paid by the holder of the related CBA
Companion Loan, seventh, to the holder of the related CBA Companion Loan, in an
amount equal to interest due with respect to the related CBA Companion Loan,
eighth, to the holder of the related CBA Companion Loan, in an amount equal to
the principal balance of the related CBA Companion Loan until paid in full;
ninth, to the holder of the related CBA Companion Loan, in an amount equal to
any prepayment premium, to the extent actually paid, allocable to the related
CBA Companion Loan; tenth, to the trust and the holder of the related CBA
Companion Loan, in an amount equal to any unpaid default interest accrued on the
related CBA Loan and related CBA Companion Loan, respectively; and eleventh, any
excess, to the trust and the holder of the related CBA Companion Loan, pro rata,
based upon the outstanding principal balances; provided that if the principal
balance of the related CBA Companion Loan is equal to zero, then based upon the
initial principal balances.
Pursuant to the related AB Apartments Loan Intercreditor Agreement, to the
extent described below, the right of the holder of the related AB Apartments
Companion Loan to receive payments with respect to the related AB Apartments
Companion Loan is subordinated to the payment rights of the trust to receive
payments with respect to the related AB Apartments Loan. Prior to the occurrence
of an event of default with respect to an AB Apartments Loan, the acceleration
of the related AB Apartments Loan, the occurrence of the related maturity date
or prior to the related AB Apartments Loan becoming a specially serviced
mortgage loan, after payment or reimbursement of any advances (other than
principal and interest advances made by the holder of the related AB Apartments
Companion Loan), advance interest or other costs, fees or expenses related to or
allocable to the related AB Apartments Loan or the AB Apartments Companion Loan,
all payments and proceeds (of whatever nature) received with respect to the
related AB Apartments Loan and the AB Apartments Companion Loan will be paid
first, to the trust, in an amount equal to interest (other than default
interest) due with respect to the related AB Apartments Loan; second, to the
holder of the AB Apartments Companion Loan, in an amount equal to interest
(other than default interest) due with respect to the AB Apartments Companion
Loan; third (a) to the trust and the holder of the AB Apartments Companion Loan,
pro rata, (based upon the amount of principal payments the trust as holder of
the related AB Apartments Loan or the holder of the related AB Companion Loan is
entitled to pursuant to the terms of the related loan documents) in an amount
equal to principal payments received (if any); fourth, to the trust and the
holder of the related AB Apartments Companion Loan, pro rata (based upon the
outstanding principal balance of the related
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AB Apartments Loan and the related AB Apartments Companion Loan), in an amount
equal to any prepayment premium, to the extent actually paid; fifth, to the
trust and the holder of the AB Apartments Companion Loan, pro rata, based upon
any unreimbursed costs and expenses owing to the trust or the holder of the AB
Apartments Companion Loan, respectively, up to the amount of any such
unreimbursed costs and expenses; and sixth, to the trust and the holder of the
related AB Apartments Companion Loan, pro rata, based upon the default interest
respectively accrued under the related AB Apartments Loan and the related AB
Apartments Companion Loan, to the extent actually paid. If any excess amount is
paid by the related borrower, and not otherwise applied in accordance with
foregoing six clauses, such amount will be paid to the trust and the holder of
the related AB Apartments Loan on a pro rata basis.
Following the occurrence and during the continuance of an event of default
with respect to the related AB Apartments Loan, the acceleration of the related
AB Apartments Loan, the occurrence of the related maturity date or the related
AB Apartments Loan becoming a specially serviced mortgage loan pursuant to the
related AB Apartments Loan Intercreditor Agreement and subject to the right of
the holder of the related AB Apartments Companion Loan right to purchase the
related AB Apartments Loan from the trust after payment or reimbursement of any
advances (other than principal and interest advances made by the holder of the
related AB Apartments Companion Loan), advance interest or other costs, fees or
expenses related to or allocable to the related AB Apartments Loan or the
related AB Apartments Companion Loan, all payments and proceeds (of whatever
nature) on the related AB Apartments Companion Loan will be subordinated to all
payments due on and the amounts with respect to the related AB Apartments Loan
and the related AB Apartments Companion Loan will be paid first, to the trust,
in an amount equal to interest (other than default interest) due with respect to
related AB Apartments Loan; second, to the trust, in an amount equal to the
principal balance of the related AB Apartments Loan until paid in full; third,
to the holder of the related AB Apartments Companion Loan, in an amount equal to
interest (other than default interest) due with respect to the related AB
Apartments Companion Loan; fourth, to the holder of the related AB Apartments
Companion Loan, in an amount equal to (b) the principal balance of the related
AB Apartments Companion Loan until paid in full to the trust; fifth, with
respect to the related AB Apartments Loan, to the trust, in an amount equal to
any prepayment premium, to the extent actually paid, allocable to the AB
Apartments Loan; sixth, with respect to the AB Apartments Loan, to the trust, in
an amount equal to any unpaid default interest accrued on the AB Apartments
Loan; seventh, to the holder of the AB Apartments Companion Loan, in an amount
equal to any prepayment premium, to the extent actually paid, allocable to the
AB Apartments Companion Loan; eighth, to the holder of the AB Apartments Loan,
in an amount equal to any unpaid default interest accrued on the AB Apartments
Companion Loan; ninth, to the trust and the holder of the related AB Apartments
Companion Loan, pro rata, based upon the amount of any unreimbursed costs and
expenses, respectively, up to the amount of any such unreimbursed costs and
expenses; and tenth, any excess, to the trust and the holder of the related AB
Apartments Companion Loan, pro rata, based upon the outstanding principal
balances; provided that if the principal balance of the related AB Apartments
Companion Loan is equal to zero, then based upon the initial principal balances.
Application of Amounts Paid to Trust. On or before each distribution date,
amounts payable to the trust as holder of any Co-Lender Loan pursuant to the
Intercreditor Agreements will be included in the Available Distribution Amount
for such Distribution Date to the extent described in this Prospectus Supplement
and amounts payable to the holder of the related Companion Loan will be
distributed to the holder net of fees and expenses on such Companion Loan.
ADDITIONAL MORTGAGE LOAN INFORMATION
The Mortgage Pool. For a detailed presentation of certain of the
characteristics of the Mortgage Loans and the Mortgaged Properties, on an
individual basis, see Annexes A-1, A-2, A-3, A-4, A-5 and A-6 to this Prospectus
Supplement. For purposes of numerical and statistical information set forth in
this Prospectus Supplement and Annexes A-1, A-2, A-3, A-4, A-5 and A-6, such
numerical and statistical information excludes any Companion Loan relating to an
AB Mortgage Loan. For purposes of the calculation of DSC Ratios and LTV Ratios
with respect to the Lloyd Center Loan, such ratios are
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calculated based upon the aggregate indebtedness of the Lloyd Center Loan and
the Lloyd Center Pari Passu Loan. Certain additional information regarding the
Mortgage Loans is contained in this Prospectus Supplement under "--Assignment of
the Mortgage Loans; Repurchases and Substitutions" and "--Representations and
Warranties; Repurchases and Substitutions," and in the Prospectus under
"DESCRIPTION OF THE TRUST FUNDS" and "CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
AND LEASES."
In the schedule and tables set forth in Annexes A-1, A-2, A-3, A-4, A-5 and
A-6 to this Prospectus Supplement, cross-collateralized Mortgage Loans are not
grouped together; instead, references are made under the heading
"Cross-Collateralized Group" with respect to the other Mortgage Loans with which
they are cross-collateralized.
Each of the following tables sets forth certain characteristics of the
Mortgage Pool presented, where applicable, as of the Cut-Off Date. For purposes
of the tables and Annexes A-1, A-2, A-3, A-4, A-5 and A-6:
(i) References to "DSC Ratio" and "DSCR" are references to debt
service coverage ratios. Debt service coverage ratios are used by income
property lenders to measure the ratio of (a) cash currently generated by a
property that is available for debt service (that is, cash that remains
after average cost of non-capital expenses of operation, tenant
improvements, leasing commissions and replacement reserves during the term
of the Mortgage Loan) to (b) required debt service payments. However, debt
service coverage ratios only measure the current, or recent, ability of a
property to service mortgage debt. The DSC Ratio for any Mortgage Loan is
the ratio of "Net Cash Flow" produced by the related Mortgaged Property to
the annualized amount of debt service that will be payable under that
Mortgage Loan commencing after the origination date. The Net Cash Flow for
a Mortgaged Property is the "net cash flow" of such Mortgaged Property as
set forth in, or determined by the applicable Mortgage Loan Seller on the
basis of, Mortgaged Property operating statements, generally unaudited, and
certified rent rolls (as applicable) supplied by the related borrower in
the case of multifamily, mixed use, retail, mobile home park, industrial,
residential health care, self-storage and office properties (each a "Rental
Property"); provided, however, for purposes of calculating the DSC Ratios
and DSCR provided herein with respect to 13 Mortgage Loans (loan numbers 3,
5, 8, 11, 13, 14, 22, 27, 43, 69, 72, 77 and 78), representing 16.5% of the
Cut-Off Date Pool Balance (9 Mortgage Loans in Loan Group 1 or 16.1% of the
related Cut-Off Date Group Balance and 4 Mortgage Loans in Loan Group 2 or
17.6% of the related Cut-Off Date Group Balance), where Periodic Payments
are interest-only for a certain amount of time after origination after
which date the Mortgage Loan amortizes principal for the remaining term of
the loan the debt service used is the annualized amount of debt service
that will be payable under the Mortgage Loan commencing after the
amortization period begins. In general, the Mortgage Loan Sellers relied on
either full-year operating statements, rolling 12-month operating
statements and/or applicable year-to-date financial statements, if
available, and on rent rolls for all Rental Properties that were current as
of a date not earlier than six months prior to the respective date of
origination in determining Net Cash Flow for the Mortgaged Properties.
In general, "net cash flow" is the revenue derived from the use and
operation of a Mortgaged Property less operating expenses (such as utilities,
administrative expenses, repairs and maintenance, tenant improvement costs,
leasing commissions, management fees and advertising), fixed expenses (such as
insurance, real estate taxes and, if applicable, ground lease payments) and
replacement reserves and an allowance for vacancies and credit losses. Net cash
flow does not reflect interest expenses and non-cash items such as depreciation
and amortization, and generally does not reflect capital expenditures, but does
reflect reserves for replacements and an allowance for vacancies and credit
losses.
In determining the "revenue" component of Net Cash Flow for each Rental
Property, the applicable Mortgage Loan Seller generally relied on the most
recent rent roll and/or other known, signed tenant leases or executed extension
options supplied and, where the actual vacancy shown thereon and the market
vacancy was less than 5.0%, assumed a 5.0% vacancy in determining revenue from
rents, except that in the
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case of certain non-multifamily properties, space occupied by such anchor or
single tenants or other large creditworthy tenants may have been disregarded in
performing the vacancy adjustment due to the length of the related leases or
creditworthiness of such tenants, in accordance with the respective Mortgage
Loan Seller's underwriting standards. Where the actual or market vacancy was not
less than 5.0%, the applicable Mortgage Loan Seller determined revenue from
rents by generally relying on the most recent rent roll and/or other known,
signed tenant leases or executed extension options supplied and the greater of
(a) actual historical vacancy at the related Mortgaged Property, (b) historical
vacancy at comparable properties in the same market as the related Mortgaged
Property, and (c) 5.0%. In determining rental revenue for multifamily, self
storage and mobile home park properties, the Mortgage Loan Sellers generally
either reviewed rental revenue shown on the certified rolling 12-month operating
statements, the rolling 3-month operating statements for multifamily properties
or annualized the rental revenue and reimbursement of expenses shown on rent
rolls or operating statements with respect to the prior one-to-twelve month
periods. For the other Rental Properties, the Mortgage Loan Sellers generally
annualized rental revenue shown on the most recent certified rent roll (as
applicable), after applying the vacancy factor, without further regard to the
terms (including expiration dates) of the leases shown thereon. In the case of
hospitality properties, gross receipts were generally determined based upon the
average occupancy not to exceed 75.0% and daily rates achieved during the prior
two-to-three year annual reporting period. In the case of residential health
care facilities, receipts were based on historical occupancy levels, historical
operating revenues and the then current occupancy rates. Occupancy rates for the
private health care facilities were generally within the then current market
ranges, and vacancy levels were generally a minimum of 5.0%. In general, any
non-recurring items and non-property related revenue were eliminated from the
calculation except in the case of residential health care facilities.
In determining the "expense" component of Net Cash Flow for each Mortgaged
Property, the Mortgage Loan Sellers generally relied on rolling 12-month
operating statements and/or full-year or year-to-date financial statements
supplied by the related borrower, except that (a) if tax or insurance expense
information more current than that reflected in the financial statements was
available, the newer information was used, (b) property management fees were
generally assumed to be 3.0% to 7.0% of effective gross revenue (except with
respect to full service hospitality properties, where a minimum of 3.5% of gross
receipts was assumed, with respect to limited service hospitality properties,
where a minimum of 4.0% of gross receipts was assumed, and with respect to
single tenant properties, where fees as low as 3.0% of effective gross receipts
were assumed), (c) assumptions were made with respect to reserves for leasing
commissions, tenant improvement expenses and capital expenditures and (d)
expenses were assumed to include annual replacement reserves. See
"--Underwriting Standards--Escrow Requirements--Replacement Reserves" in this
Prospectus Supplement. In addition, in some instances, the Mortgage Loan Sellers
recharacterized as capital expenditures those items reported by borrowers as
operating expenses (thus increasing "net cash flow") where the Mortgage Loan
Sellers determined appropriate.
The borrowers' financial information used to determine Net Cash Flow was in
most cases borrower certified, but unaudited, and neither the Mortgage Loan
Sellers nor the Depositor verified their accuracy.
(ii) References to "Cut-Off Date LTV" and "Cut-Off Date LTV Ratio" are
references to the ratio, expressed as a percentage, of the Cut-Off Date
Balance of a Mortgage Loan to the appraised value of the related Mortgaged
Property as shown on the most recent third-party appraisal thereof
available to the Mortgage Loan Sellers; provided, however, that with
respect to 1 Mortgage Loan representing 1.2% of the Cut-Off Date Pool
Balance (1.6% of the Group 1 Cut-Off Date Balance), the related LTV Ratio
was reduced by taking into account amounts available under a related letter
of credit and in a cash reserve that will be released upon the achievement
of a specified rental income increase at the related Mortgaged Property.
(iii) References to "Maturity Date LTV Ratio" and "LTV at ARD or
Maturity" are references to the ratio, expressed as a percentage, of the
expected balance of a Balloon Loan on its scheduled maturity date (or ARD
Loan on its Anticipated Repayment Date) (prior to the payment of any
Balloon Payment or principal prepayments) to the appraised value of the
related Mortgaged Property
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as shown on the most recent third-party appraisal thereof available to the
Mortgage Loan Sellers; provided, however, that with respect to 1 Mortgage
Loan representing 1.2% of the Cut-Off Date Pool Balance (1.6% of the Group
1 Cut-Off Date Balance), the related LTV Ratio was reduced by taking into
account amounts available under a related letter of credit and in a cash
reserve that will be released upon the achievement of a specified rental
income increase at the related Mortgaged Property.
(iv) References to "Loan per Sq. Ft., Unit, Bed, Pad or Room" are, for
each Mortgage Loan secured by a lien on a multifamily property (including a
mobile home park property), hospitality property or assisted living
facility or other healthcare property, respectively, references to the
Cut-Off Date Balance of such Mortgage Loan divided by the number of
dwelling units, pads, guest rooms or beds, respectively, that the related
Mortgaged Property comprises, and, for each Mortgage Loan secured by a lien
on a retail, industrial/warehouse, self-storage or office property,
references to the Cut-Off Date Balance of such Mortgage Loan divided by the
net rentable square foot area of the related Mortgaged Property.
(v) References to "Year Built" are references to the year that a
Mortgaged Property was originally constructed or substantially renovated.
With respect to any Mortgaged Property which was constructed in phases, the
"Year Built" refers to the year that the first phase was originally
constructed.
(vi) References to "weighted averages" are references to averages
weighted on the basis of the Cut-Off Date Balances of the related Mortgage
Loans.
(vii) References to "Underwritten Replacement Reserves" represent
estimated annual capital costs, as used by the Mortgage Loan Sellers in
determining Net Cash Flow.
(viii) References to "Administrative Cost Rate" for each Mortgage Loan
represent the sum of (a) the Master Servicing Fee Rate for such Mortgage
Loan, and (b) 0.00210%, which percentage represents the trustee fee rate
with respect to each Mortgage Loan. The Administrative Cost Rate for each
Mortgage Loan is set forth on Annex A-1 hereto.
(ix) References to "Remaining Term to Maturity" represent, with
respect to each Mortgage Loan, the number of months remaining from the
Cut-Off Date to the stated maturity date of such Mortgage Loan (or the
remaining number of months to the Anticipated Repayment Date with respect
to each ARD Loan).
(x) References to "Remaining Amortization Term" represent, with
respect to each Mortgage Loan, the number of months remaining from the
later of the Cut-Off Date and the end of any interest-only period, if any,
to the month in which such Mortgage Loan would fully or substantially
amortize in accordance with such loan's amortization schedule without
regard to any Balloon Payment, if any, due on such Mortgage Loan.
(xi) References to "L ( )" or "Lockout" or "Lockout Period"
represent, with respect to each Mortgage Loan, the period during which
prepayments of principal are prohibited and no substitution of Defeasance
Collateral is permitted. The number indicated in the parentheses indicates
the number of monthly payments of such period (calculated for each Mortgage
Loan from the date of its origination). References to "O ( )" represent
the number of monthly payments for which (a) no Prepayment Premium or Yield
Maintenance Charge is assessed and (b) defeasance is no longer required.
References to "YM ( )" represent the period for which the Yield
Maintenance Charge is assessed. "3% ( )", "2% ( )" and "1% ( )"
each represents the period for which a Prepayment Premium is assessed and
the respective percentage used in the calculation thereof. The periods, if
any, between consecutive Due Dates occurring prior to the maturity date or
Anticipated Repayment Date, as applicable, of a Mortgage Loan during which
the related borrower will have the right to prepay such Mortgage Loan
without being required to pay a Prepayment Premium or a Yield Maintenance
Charge (each such period, an "Open Period") with respect to all of the
Mortgage Loans have been calculated as those Open Periods occurring
immediately prior to the maturity date
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or Anticipated Repayment Date, as applicable, of such Mortgage Loan as set
forth in the related Mortgage Loan documents.
(xii) References to "D ( )" or "Defeasance" represent, with
respect to each Mortgage Loan, the number of monthly payments for which the
related holder of the Mortgage has the right to require the related
borrower, in lieu of a principal prepayment, to pledge to such holder
Defeasance Collateral.
(xiii) References to "Occupancy Percentage" are, with respect to any
Mortgaged Property, references as of the most recently available rent rolls
to (a) in the case of multifamily properties, mobile home park properties
and assisted living facilities, the percentage of units or pads rented, and
is exclusive of hospitality properties, (b) in the case of office and
retail properties, the percentage of the net rentable square footage
rented, and (c) in the case of self-storage facilities, either the
percentage of the net rentable square footage rented or the percentage of
units rented (depending on borrower reporting), and is exclusive of
hospitality properties.
(xiv) References to "Original Term to Maturity" are references to the
term from origination to maturity for each Mortgage Loan (or the term from
origination to the Anticipated Repayment Date with respect to each ARD
Loan).
(xv) References to "NA" indicate that with respect to a particular
category of data, that such data is not applicable.
(xvi) References to "NAV" indicate that, with respect to a particular
category of data, such data is not available.
(xvii) References to "Capital Imp. Reserve" are references to funded
reserves escrowed for repairs, replacements and corrections of issues
outlined in the engineering reports.
(xviii) References to "Replacement Reserve" are references to funded
reserves escrowed for ongoing items such as repairs and replacements,
including, in the case of hospitality properties, reserves for furniture,
fixtures and equipment. In certain cases, however, the subject reserve will
be subject to a maximum amount, and once such maximum amount is reached,
such reserve will not thereafter be funded, except, in some such cases, to
the extent it is drawn upon.
(xix) References to "TI/LC Reserve" are references to funded reserves
escrowed for tenant improvement allowances and leasing commissions. In
certain cases, however, the subject reserve will be subject to a maximum
amount, and once such maximum amount is reached, such reserve will not
thereafter be funded, except, in some such cases, to the extent it is drawn
upon.
(xx) The sum in any column of any of the following tables may not
equal the indicated total due to rounding.
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MORTGAGED PROPERTIES BY PROPERTY TYPE FOR ALL MORTGAGE LOANS(1)
<Table>
<Caption>
% BY WTD. AVG.
CUT-OFF CUT-OFF
NUMBER NUMBER OF DATE AVERAGE CUT- HIGHEST CUT- DATE
OF MORTGAGED AGGREGATE CUT- POOL OFF DATE OFF DATE LTV
PROPERTY TYPE LOANS PROPERTIES OFF DATE BALANCE BALANCE BALANCE BALANCE RATIO
- ------------- ------ ---------- ---------------- ------- ------------ ------------ ---------
Retail............................. 58 59 $ 405,707,726 33.8% $ 6,876,402 $69,922,221 71.3%
Retail -- Anchored................ 35 35 336,194,388 28.0 $ 9,605,554 $69,922,221 71.9%
Retail -- Unanchored.............. 14 15 34,821,549 2.9 $ 2,321,437 $ 5,944,231 68.0%
Retail -- Shadow Anchored(4)...... 9 9 34,691,789 2.9 $ 3,854,643 $ 6,974,213 69.7%
Office............................. 28 28 336,885,694 28.1 $12,031,632 $44,919,182 72.7%
Multifamily........................ 42 42 329,039,814 27.4 $ 7,834,281 $28,902,057 74.8%
Industrial......................... 5 6 39,745,513 3.3 $ 6,624,252 $15,403,980 73.3%
Mobile Home Park................... 9 9 27,800,387 2.3 $ 3,088,932 $ 6,492,750 70.5%
Mixed Use.......................... 3 3 25,902,744 2.2 $ 8,634,248 $16,759,445 75.9%
Self Storage....................... 6 6 25,498,610 2.1 $ 4,249,768 $ 6,474,997 71.6%
Hospitality........................ 1 1 10,334,434 0.9 $10,334,434 $10,334,434 62.2%
--- --- -------------- -----
152 154 $1,200,914,923 100.0% $ 7,798,149 $69,922,221 72.7%
=== === ============== =====
<Caption>
WTD. AVG.
STATED
WTD. AVG. REMAINING
LTV TERM TO WTD. AVG. MINIMUM MAXIMUM WTD. AVG. WTD. AVG.
RATIO AT MATURITY DSC DSC DSC OCCUPANCY MORTGAGE
PROPERTY TYPE MATURITY(2) (MOS.)(2) RATIO RATIO RATIO RATE(3) RATE
- ------------- ----------- --------- --------- ------- ------- --------- ---------
Retail............................. 57.4% 118 1.60x 1.03x 3.42x 96.5% 5.615%
Retail -- Anchored................ 58.4% 117 1.62x 1.03x 3.42x 96.8% 5.539%
Retail -- Unanchored.............. 46.4% 129 1.43x 1.21x 1.71x 95.0% 6.047%
Retail -- Shadow Anchored(4)...... 58.5% 116 1.56x 1.32x 1.78x 95.6% 5.914%
Office............................. 62.4% 111 1.45x 1.22x 1.82x 94.5% 5.748%
Multifamily........................ 62.2% 117 1.41x 1.13x 2.48x 94.4% 5.478%
Industrial......................... 61.0% 112 1.41x 1.33x 1.48x 99.6% 5.986%
Mobile Home Park................... 57.0% 114 1.58x 1.40x 1.96x 95.0% 5.451%
Mixed Use.......................... 67.0% 90 1.40x 1.36x 1.49x 94.2% 5.559%
Self Storage....................... 56.4% 118 1.49x 1.31x 1.76x 82.2% 5.886%
Hospitality........................ 47.8% 119 1.77x 1.77x 1.77x 0.00% 5.730%
60.4% 115 1.49X 1.03X 3.42X 95.1% 5.629%
</Table>
- ---------------
(1) Because this table presents information relating to the mortgaged properties
and not the mortgage loans, the information for mortgage loans secured by
more than one mortgaged property is based on allocated amounts (allocating
the mortgage loan principal balance to each of those properties by the
appraised values of the mortgaged properties).
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
(3) Occupancy Rates were calculated based upon rent rolls made available to the
applicable Mortgage Loan Seller by the related borrowers as of the rent roll
date set forth on Annex A-1 to this Prospectus Supplement but excludes 1
Mortgage Loan secured by a hospitality property representing 0.9% of the
Cut-Off Date Pool Balance.
(4) A Mortgaged Property is considered "shadow anchored" if it is in close
proximity to the anchored property.
S-103
MORTGAGED PROPERTIES BY PROPERTY TYPE FOR LOAN GROUP 1 MORTGAGE LOANS(1)
<Table>
<Caption>
% BY WTD. AVG.
AGGREGATE CUT-OFF AVERAGE HIGHEST CUT-OFF WTD. AVG.
NUMBER OF CUT-OFF DATE CUT-OFF CUT-OFF DATE LTV
PROPERTY NUMBER OF MORTGAGED DATE GROUP 1 DATE DATE LTV RATIO AT
TYPE LOANS PROPERTIES BALANCE BALANCE BALANCE BALANCE RATIO MATURITY(2)
- -------- --------- ---------- ------------ ------- ----------- ----------- --------- -----------
Retail................ 58 59 $405,707,726 45.1% $ 6,876,402 $69,922,221 71.3% 57.4%
Retail -- Anchored... 35 35 336,194,388 37.4 $ 9,605,554 $69,922,221 71.9% 58.4%
Retail -- Shadow
Anchored(4)........ 9 9 34,691,789 3.9 $ 3,854,643 $ 6,974,213 69.7% 58.5%
Retail -- Unanchored.. 14 15 34,821,549 3.9 $ 2,321,437 $ 5,944,231 68.0% 46.4%
Office................ 28 28 336,885,694 37.4 $12,031,632 $44,919,182 72.7% 62.4%
Multifamily........... 4 4 51,653,158 5.7 $12,913,290 $27,000,000 74.3% 65.7%
Industrial............ 5 6 39,745,513 4.4 $ 6,624,252 $15,403,980 73.3% 61.0%
Mixed Use............. 3 3 25,902,744 2.9 $ 8,634,248 $16,759,445 75.9% 67.0%
Self Storage.......... 6 6 25,498,610 2.8 $ 4,249,768 $ 6,474,997 71.6% 56.4%
Hospitality........... 1 1 10,334,434 1.1 $10,334,434 $10,334,434 62.2% 47.8%
Mobile Home Park...... 2 2 4,171,476 0.5 $ 2,085,738 $ 2,572,068 69.6% 53.1%
--------- ---------- ------------ -------
107 109 $899,899,355 100.0% $ 8,255,957 $69,922,221 72.1% 60.0%
========= ========== ============ =======
<Caption>
WTD. AVG.
STATED
REMAINING
TERM TO WTD. AVG. MINIMUM MAXIMUM WTD. AVG. WTD. AVG.
PROPERTY MATURITY DSC DSC DSC OCCUPANCY MORTGAGE
TYPE (MOS.)(2) RATIO RATIO RATIO RATE(3) RATE
- -------- --------- --------- ------- ------- --------- ---------
Retail................ 118 1.60x 1.03x 3.42x 96.5% 5.615%
Retail -- Anchored... 117 1.62x 1.03x 3.42x 96.8% 5.539%
Retail -- Shadow
Anchored(4)........ 116 1.56x 1.32x 1.78x 95.6% 5.914%
Retail -- Unanchored.. 129 1.43x 1.21x 1.71x 95.0% 6.047%
Office................ 111 1.45x 1.22x 1.82x 94.5% 5.748%
Multifamily........... 117 1.36x 1.22x 2.19x 94.5% 5.596%
Industrial............ 112 1.41x 1.33x 1.48x 99.6% 5.986%
Mixed Use............. 90 1.40x 1.36x 1.49x 94.1% 5.559%
Self Storage.......... 118 1.49x 1.31x 1.76x 82.2% 5.886%
Hospitality........... 119 1.77x 1.77x 1.77x 0.0% 5.730%
Mobile Home Park...... 118 1.81x 1.56x 1.96x 85.3% 5.658%
114 1.52X 1.03X 3.42X 95.3% 5.688%
</Table>
- ---------------
(1) Because this table presents information relating to the mortgaged properties
and not the mortgage loans, the information for mortgage loans secured by
more than one mortgaged property is based on allocated amounts (allocating
the mortgage loan principal balance to each of those properties by the
appraised values of the mortgaged properties).
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
(3) Occupancy Rates were calculated based upon rent rolls made available to the
applicable Mortgage Loan Seller by the related borrowers as of the rent roll
date set forth on Annex A-1 to this Prospectus Supplement but excludes 1
Mortgage Loan secured by a hospitality property representing 1.1% of the
Cut-Off Date Group 1 Balance.
(4) A Mortgaged Property is considered "shadow anchored" if it is in close
proximity to the anchored property.
S-104
MORTGAGED PROPERTIES BY PROPERTY TYPE FOR LOAN GROUP 2 MORTGAGE LOANS(1)
<Table>
<Caption>
% BY WTD. AVG.
AGGREGATE CUT-OFF AVERAGE HIGHEST CUT-OFF WTD. AVG.
NUMBER OF CUT-OFF DATE CUT-OFF CUT-OFF DATE LTV
PROPERTY NUMBER OF MORTGAGED DATE GROUP 2 DATE DATE LTV RATIO AT
TYPE LOANS PROPERTIES BALANCE BALANCE BALANCE BALANCE RATIO MATURITY(2)
- -------- --------- ---------- ------------ ------- ---------- ----------- --------- -----------
Multifamily........... 38 38 $277,386,656 92.2% $7,299,649 $28,902,057 74.9% 61.6%
Mobile Home Park...... 7 7 23,628,912 7.8 $3,375,559 $ 6,492,750 70.7% 57.7%
-- -- ------------ -----
45 45 $301,015,567 100.0% $6,689,235 $28,902,057 74.6% 61.3%
== == ============ =====
<Caption>
WTD. AVG.
STATED
REMAINING
TERM TO WTD. AVG. MINIMUM MAXIMUM WTD. AVG. WTD. AVG.
PROPERTY MATURITY DSC DSC DSC OCCUPANCY MORTGAGE
TYPE (MOS.)(2) RATIO RATIO RATIO RATE(3) RATE
- -------- ----------- --------- ------- ------- --------- ---------
Multifamily........... 117 1.42x 1.13x 2.48x 94.3% 5.455%
Mobile Home Park...... 113 1.54x 1.40x 1.86x 96.7% 5.414%
116 1.43X 1.13X 2.48X 94.5% 5.452%
</Table>
- ------------------
(1) Because this table presents information relating to the mortgaged properties
and not the mortgage loans, the information for mortgage loans secured by
more than one mortgaged property is based on allocated amounts (allocating
the mortgage loan principal balance to each of those properties by the
appraised values of the mortgaged properties).
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
(3) Occupancy Rates were calculated based upon rent rolls made available to the
applicable Mortgage Loan Seller by the related borrowers as of the rent roll
date set forth on Annex A-1 to this Prospectus Supplement.
S-105
RANGE OF CUT-OFF DATE BALANCES FOR ALL MORTGAGE LOANS
<Table>
<Caption>
WTD. AVG.
AGGREGATE % BY AVERAGE HIGHEST CUT-OFF DATE
RANGE OF CUT-OFF NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE LTV
DATE BALANCES($) LOANS BALANCE POOL BALANCE BALANCE BALANCE RATIO
- ---------------- --------- -------------- ------------ ------------ ------------ ------------
less than or equal to
2,000,000.......................... 27 $ 41,725,226 3.5% $ 1,545,379 $ 1,987,563 67.7%
2,000,001 - 3,000,000............. 15 36,686,621 3.1 $ 2,445,775 $ 2,844,409 68.6%
3,000,001 - 4,000,000............. 20 70,535,014 5.9 $ 3,526,751 $ 3,995,149 70.2%
4,000,001 - 5,000,000............. 13 58,788,772 4.9 $ 4,522,213 $ 4,990,000 74.7%
5,000,001 - 6,000,000............. 9 49,985,246 4.2 $ 5,553,916 $ 6,000,000 71.8%
6,000,001 - 7,000,000............. 14 91,424,416 7.6 $ 6,530,315 $ 6,977,064 74.7%
7,000,001 - 8,000,000............. 9 65,756,475 5.5 $ 7,306,275 $ 7,885,098 73.7%
8,000,001 - 9,000,000............. 4 33,943,474 2.8 $ 8,485,869 $ 8,861,749 75.0%
9,000,001 - 10,000,000............. 3 29,229,574 2.4 $ 9,743,191 $ 9,939,006 77.8%
10,000,001 - 15,000,000............ 17 217,313,187 18.1 $12,783,129 $15,000,000 75.2%
15,000,001 - 20,000,000............ 11 183,354,167 15.3 $16,668,561 $18,250,000 75.6%
20,000,001 - 25,000,000............ 4 90,529,293 7.5 $22,632,323 $24,953,568 73.1%
25,000,001 - 30,000,000............ 3 81,802,057 6.8 $27,267,352 $28,902,057 70.1%
30,000,001 - 35,000,000............ 1 35,000,000 2.9 $35,000,000 $35,000,000 58.3%
40,000,001 - 45,000,000............ 1 44,919,182 3.7 $44,919,182 $44,919,182 79.2%
65,000,001 - 70,000,000............ 1 69,922,221 5.8 $69,922,221 $69,922,221 63.5%
--- -------------- -----
152 $1,200,914,923 100.0% $ 7,900,756 $69,922,221 72.7%
=== ============== =====
<Caption>
WTD. AVG.
STATED
WTD. AVG. REMAINING
LTV TERM TO WTD. AVG. WTD. AVG.
RANGE OF CUT-OFF RATIO AT MATURITY DSC MORTGAGE
DATE BALANCES($) MATURITY* (MOS.)* RATIO RATE
- ---------------- --------- --------- --------- ---------
less than or equal to
2,000,000.......................... 44.9% 127 1.48x 6.020%
2,000,001 - 3,000,000............. 50.6% 129 1.54x 5.977%
3,000,001 - 4,000,000............. 53.4% 126 1.45x 5.793%
4,000,001 - 5,000,000............. 49.4% 138 1.35x 5.797%
5,000,001 - 6,000,000............. 60.7% 115 1.57x 5.692%
6,000,001 - 7,000,000............. 62.3% 116 1.48x 5.683%
7,000,001 - 8,000,000............. 62.7% 110 1.46x 5.572%
8,000,001 - 9,000,000............. 65.8% 97 1.52x 5.306%
9,000,001 - 10,000,000............. 63.3% 119 1.45x 5.582%
10,000,001 - 15,000,000............ 64.8% 105 1.42x 5.524%
15,000,001 - 20,000,000............ 65.0% 113 1.38x 5.743%
20,000,001 - 25,000,000............ 61.7% 116 1.43x 5.653%
25,000,001 - 30,000,000............ 62.7% 106 1.97x 5.013%
30,000,001 - 35,000,000............ 48.1% 115 1.60x 5.670%
40,000,001 - 45,000,000............ 67.5% 118 1.22x 6.080%
65,000,001 - 70,000,000............ 53.0% 119 1.83x 5.420%
60.4% 115 1.49X 5.629%
</Table>
- ------------------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-106
RANGE OF CUT-OFF DATE BALANCES FOR LOAN GROUP 1 MORTGAGE LOANS
<Table>
<Caption>
% BY WTD. AVG.
AGGREGATE CUT-OFF DATE AVERAGE HIGHEST CUT-OFF DATE
RANGE OF CUT-OFF NUMBER OF CUT-OFF DATE GROUP 1 CUT-OFF DATE CUT-OFF DATE LTV
DATE BALANCES($) LOANS BALANCE BALANCE BALANCE BALANCE RATIO
- ---------------- --------- ------------ ------------ ------------ ------------ ------------
less than or equal to
2,000,000.......................... 18 $ 26,878,220 3.0% $ 1,493,234 $ 1,951,664 69.5%
2,000,001-- 3,000,000.............. 11 25,959,128 2.9 $ 2,359,921 $ 2,791,724 69.3%
3,000,001-- 4,000,000.............. 13 45,849,909 5.1 $ 3,526,916 $ 3,975,279 70.9%
4,000,001-- 5,000,000.............. 10 44,477,704 4.9 $ 4,447,770 $ 4,790,885 76.2%
5,000,001-- 6,000,000.............. 6 33,521,259 3.7 $ 5,586,876 $ 6,000,000 69.4%
6,000,001-- 7,000,000.............. 9 58,889,408 6.5 $ 6,543,268 $ 6,974,213 73.3%
7,000,001-- 8,000,000.............. 5 37,018,446 4.1 $ 7,403,689 $ 7,885,098 73.7%
8,000,001-- 9,000,000.............. 3 25,193,474 2.8 $ 8,397,825 $ 8,861,749 76.2%
9,000,001--10,000,000.............. 2 19,764,006 2.2 $ 9,882,003 $ 9,939,006 77.2%
10,000,001--15,000,000............. 12 150,572,125 16.7 $12,547,677 $14,971,010 73.9%
15,000,001--20,000,000............. 11 183,354,167 20.4 $16,668,561 $18,250,000 75.6%
20,000,001--25,000,000............. 2 45,680,107 5.1 $22,840,053 $24,953,568 70.4%
25,000,001--30,000,000............. 2 52,900,000 5.9 $26,450,000 $27,000,000 66.8%
30,000,001--35,000,000............. 1 35,000,000 3.9 $35,000,000 $35,000,000 58.3%
40,000,001--45,000,000............. 1 44,919,182 5.0 $44,919,182 $44,919,182 79.2%
65,000,001--70,000,000............. 1 69,922,221 7.8 $69,922,221 $69,922,221 63.5%
--- ------------ -----
107 $899,899,355 100.0% $ 8,410,274 $69,922,221 72.1%
=== ============ =====
<Caption>
WTD. AVG.
STATED
WTD. AVG. REMAINING
LTV TERM TO WTD. AVG. WTD. AVG.
RANGE OF CUT-OFF RATIO AT MATURITY DSC MORTGAGE
DATE BALANCES($) MATURITY* (MOS.)* RATIO RATE
- ---------------- --------- --------- --------- ---------
less than or equal to
2,000,000.......................... 45.2% 121 1.41x 6.001%
2,000,001-- 3,000,000.............. 52.4% 128 1.60x 5.773%
3,000,001-- 4,000,000.............. 52.0% 131 1.44x 5.967%
4,000,001-- 5,000,000.............. 50.4% 139 1.36x 5.947%
5,000,001-- 6,000,000.............. 59.1% 114 1.58x 5.861%
6,000,001-- 7,000,000.............. 60.9% 117 1.46x 5.861%
7,000,001-- 8,000,000.............. 63.7% 105 1.36x 5.773%
8,000,001-- 9,000,000.............. 65.6% 101 1.53x 5.412%
9,000,001--10,000,000.............. 64.7% 119 1.46x 5.549%
10,000,001--15,000,000............. 63.9% 103 1.45x 5.575%
15,000,001--20,000,000............. 65.0% 113 1.38x 5.743%
20,000,001--25,000,000............. 59.4% 118 1.54x 5.767%
25,000,001--30,000,000............. 62.5% 100 2.30x 4.938%
30,000,001--35,000,000............. 48.1% 115 1.60x 5.670%
40,000,001--45,000,000............. 67.5% 118 1.22x 6.080%
65,000,001--70,000,000............. 53.0% 119 1.83x 5.420%
60.0% 114 1.52X 5.688%
</Table>
- ------------------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-107
RANGE OF CUT-OFF DATE BALANCES FOR LOAN GROUP 2 MORTGAGE LOANS
<Table>
<Caption>
% BY WTD. AVG.
CUT-OFF CUT-OFF
AGGREGATE DATE AVERAGE HIGHEST DATE
RANGE OF CUT-OFF NUMBER OF CUT-OFF DATE GROUP 2 CUT-OFF DATE CUT-OFF DATE LTV
DATE BALANCES($) LOANS BALANCE BALANCE BALANCE BALANCE RATIO
- ---------------- --------- ------------ ------------ ------------ ------------ ------------
less than or equal to
2,000,000....................... 9 $ 14,847,006 4.9% $ 1,649,667 $ 1,987,563 64.5%
2,000,001 -- 3,000,000............ 4 10,727,492 3.6 $ 2,681,873 $ 2,844,409 67.1%
3,000,001 -- 4,000,000............ 7 24,685,105 8.2 $ 3,526,444 $ 3,995,149 68.8%
4,000,001 -- 5,000,000............ 3 14,311,068 4.8 $ 4,770,356 $ 4,990,000 70.1%
5,000,001 -- 6,000,000............ 3 16,463,987 5.5 $ 5,487,996 $ 5,687,176 76.6%
6,000,001 -- 7,000,000............ 5 32,535,007 10.8 $ 6,507,001 $ 6,977,064 77.3%
7,000,001 -- 8,000,000............ 4 28,738,030 9.5 $ 7,184,507 $ 7,234,884 73.8%
8,000,001 -- 9,000,000............ 1 8,750,000 2.9 $ 8,750,000 $ 8,750,000 71.7%
9,000,001 -- 10,000,000............ 1 9,465,567 3.1 $ 9,465,567 $ 9,465,567 78.9%
10,000,001 -- 15,000,000........... 5 66,741,061 22.2 $13,348,212 $15,000,000 77.9%
20,000,001 -- 25,000,000........... 2 44,849,186 14.9 $22,424,593 $24,200,000 75.9%
25,000,001 -- 30,000,000........... 1 28,902,057 9.6 $28,902,057 $28,902,057 76.1%
-- ------------ -----
45 $301,015,567 100.0% $ 6,689,235 $28,902,057 74.6%
== ============ =====
<Caption>
WTD. AVG.
STATED
WTD. AVG. REMAINING
LTV TERM TO WTD. AVG. WTD. AVG.
RANGE OF CUT-OFF RATIO AT MATURITY DSC MORTGAGE
DATE BALANCES($) MATURITY* (MOS.)* RATIO RATE
- ---------------- --------- --------- --------- ---------
less than or equal to
2,000,000....................... 44.3% 137 1.59x 6.053%
2,000,001 -- 3,000,000............ 46.2% 132 1.41x 6.470%
3,000,001 -- 4,000,000............ 56.1% 118 1.46x 5.469%
4,000,001 -- 5,000,000............ 46.3% 135 1.30x 5.331%
5,000,001 -- 6,000,000............ 63.9% 117 1.56x 5.348%
6,000,001 -- 7,000,000............ 64.8% 116 1.51x 5.362%
7,000,001 -- 8,000,000............ 61.4% 118 1.59x 5.313%
8,000,001 -- 9,000,000............ 66.1% 83 1.51x 5.000%
9,000,001 -- 10,000,000............ 60.5% 119 1.45x 5.650%
10,000,001 -- 15,000,000........... 66.9% 109 1.36x 5.409%
20,000,001 -- 25,000,000........... 64.1% 115 1.31x 5.537%
25,000,001 -- 30,000,000........... 63.1% 117 1.38x 5.150%
61.3% 116 1.43X 5.452%
</Table>
- ------------------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-108
MORTGAGED PROPERTIES BY STATE FOR ALL MORTGAGE LOANS(1)
<Table>
<Caption>
NUMBER OF AGGREGATE % BY AVERAGE HIGHEST WTD. AVG.
MORTGAGED CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
STATE PROPERTIES BALANCE POOL BALANCE BALANCE BALANCE LTV RATIO
- ----- ---------- -------------- ------------ ------------ ------------ ------------
CA................................ 21 $ 165,370,364 13.8% $ 7,874,779 $27,000,000 74.4%
Southern(3)..................... 12 101,915,236 8.5 $ 8,492,936 $16,281,990 74.6%
Northern(3)..................... 9 63,455,128 5.3 $ 7,050,570 $27,000,000 73.9%
FL................................ 22 126,091,191 10.5 $ 5,731,418 $15,968,669 71.8%
NY................................ 9 109,828,105 9.1 $12,203,123 $35,000,000 67.3%
OR................................ 3 93,268,994 7.8 $31,089,665 $69,922,221 66.4%
TX................................ 16 69,788,469 5.8 $ 4,361,779 $13,173,063 74.3%
DC................................ 4 65,622,490 5.5 $16,405,623 $28,902,057 74.7%
PA................................ 4 60,892,175 5.1 $15,223,044 $44,919,182 77.4%
CO................................ 8 57,552,179 4.8 $ 7,194,022 $20,726,538 77.1%
AZ................................ 7 56,331,798 4.7 $ 8,047,400 $24,200,000 72.9%
NC................................ 7 49,448,785 4.1 $ 7,064,112 $15,216,680 74.5%
IL................................ 6 36,831,100 3.1 $ 6,138,517 $10,777,961 76.7%
NV................................ 5 36,140,201 3.0 $ 7,228,040 $16,904,637 73.8%
MA................................ 2 32,403,980 2.7 $16,201,990 $17,000,000 71.8%
VA................................ 7 29,844,862 2.5 $ 4,263,552 $10,334,434 70.1%
SC................................ 3 29,081,963 2.4 $ 9,693,988 $25,900,000 56.6%
MD................................ 4 23,607,647 2.0 $ 5,901,912 $17,120,000 78.5%
KS................................ 1 20,649,186 1.7 $20,649,186 $20,649,186 78.8%
WA................................ 3 19,782,541 1.6 $ 6,594,180 $14,471,606 71.5%
DE................................ 2 19,569,478 1.6 $ 9,784,739 $14,220,416 78.3%
GA................................ 5 17,875,355 1.5 $ 3,575,071 $10,527,461 76.2%
WI................................ 2 14,971,010 1.2 $ 7,485,505 $ 9,551,817 78.0%
ND................................ 2 12,922,060 1.1 $ 6,461,030 $ 7,234,884 75.8%
MI................................ 2 11,514,344 1.0 $ 5,757,172 $ 8,241,138 74.8%
AK................................ 1 8,861,749 0.7 $ 8,861,749 $ 8,861,749 74.5%
IA................................ 1 7,885,098 0.7 $ 7,885,098 $ 7,885,098 75.8%
CT................................ 1 7,411,727 0.6 $ 7,411,727 $ 7,411,727 70.6%
TN................................ 1 4,386,498 0.4 $ 4,386,498 $ 4,386,498 73.1%
NE................................ 1 3,778,860 0.3 $ 3,778,860 $ 3,778,860 77.9%
NM................................ 1 3,288,877 0.3 $ 3,288,877 $ 3,288,877 65.8%
NJ................................ 1 2,196,756 0.2 $ 2,196,756 $ 2,196,756 74.5%
MO................................ 1 2,153,303 0.2 $ 2,153,303 $ 2,153,303 79.8%
MN................................ 1 1,563,776 0.1 $ 1,563,776 $ 1,563,776 68.0%
--- -------------- -----
154 $1,200,914,923 100.0% $ 7,798,149 $69,922,221 72.7%
=== ============== =====
<Caption>
WTD. AVG.
STATED
WTD. AVG. REMAINING
LTV TERM TO WTD. AVG. WTD. AVG.
RATIO AT MATURITY DSC MORTGAGE
STATE MATURITY(2) (MOS.)(2) RATIO RATE
- ----- ----------- --------- --------- ---------
CA................................ 63.9% 106 1.39x 5.619%
Southern(3)..................... 64.1% 102 1.43x 5.519%
Northern(3)..................... 63.7% 112 1.33x 5.779%
FL................................ 58.7% 114 1.45x 5.585%
NY................................ 54.4% 119 1.57x 5.839%
OR................................ 55.9% 116 1.73x 5.487%
TX................................ 60.6% 119 1.46x 5.753%
DC................................ 63.6% 118 1.38x 5.537%
PA................................ 65.5% 118 1.32x 5.941%
CO................................ 64.4% 114 1.34x 5.605%
AZ................................ 62.6% 104 1.40x 5.385%
NC................................ 57.0% 129 1.39x 5.625%
IL................................ 64.7% 118 1.43x 5.619%
NV................................ 54.4% 126 1.38x 5.671%
MA................................ 63.2% 116 1.39x 5.912%
VA................................ 55.2% 118 1.55x 5.745%
SC................................ 54.9% 90 3.19x 4.376%
MD................................ 57.5% 131 1.38x 6.196%
KS................................ 66.6% 113 1.38x 5.640%
WA................................ 60.2% 109 1.49x 5.654%
DE................................ 65.4% 118 1.45x 5.442%
GA................................ 57.1% 132 1.43x 5.737%
WI................................ 65.8% 118 1.35x 5.750%
ND................................ 63.0% 118 1.54x 5.242%
MI................................ 59.1% 118 1.39x 5.785%
AK................................ 68.2% 69 1.69x 5.450%
IA................................ 64.2% 118 1.41x 5.860%
CT................................ 60.0% 115 1.41x 5.890%
TN................................ 61.5% 117 1.62x 5.620%
NE................................ 66.3% 117 1.39x 6.000%
NM................................ 54.6% 117 1.60x 5.160%
NJ................................ 57.5% 119 1.52x 5.860%
MO................................ 67.0% 117 1.39x 5.570%
MN................................ 0.0% 178 1.17x 5.500%
60.4% 115 1.49X 5.629%
</Table>
- ------------------
(1) Because this table presents information relating to the mortgaged properties
and not the mortgage loans, the information for mortgage loans secured by
more than one mortgaged property is based on allocated loan amounts
(allocating the mortgage loan principal balance to each of those properties
by the appraised values of the mortgaged properties).
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
(3) For purposes of determining whether a Mortgaged Property is in Northern
California or Southern California, Mortgaged Properties north of San Luis
Obispo County, Kern County and San Bernardino County were included in
Northern California and Mortgaged Properties in or south of such counties
were included in Southern California.
S-109
MORTGAGED PROPERTIES BY STATE FOR LOAN GROUP 1 MORTGAGE LOANS(1)
<Table>
<Caption>
% BY
NUMBER OF AGGREGATE CUT-OFF DATE AVERAGE HIGHEST WTD. AVG.
MORTGAGED CUT-OFF DATE GROUP 1 CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
STATE PROPERTIES BALANCE BALANCE BALANCE BALANCE LTV RATIO
- ----- ---------- ------------ ------------ ------------ ------------ ------------
CA................................ 14 $136,592,175 15.2% $ 9,756,584 $27,000,000 75.3%
Southern(3)..................... 8 86,933,547 9.7 $10,866,693 $16,281,990 75.3%
Northern(3)..................... 6 49,658,628 5.5 $ 8,276,438 $27,000,000 75.2%
NY................................ 8 100,362,538 11.2 $12,545,317 $35,000,000 66.2%
OR................................ 3 93,268,994 10.4 $31,089,665 $69,922,221 66.4%
FL................................ 15 79,830,321 8.9 $ 5,322,021 $15,968,669 70.7%
CO................................ 8 57,552,179 6.4 $ 7,194,022 $20,726,538 77.1%
PA................................ 3 53,657,617 6.0 $17,885,872 $44,919,182 78.5%
IL................................ 6 36,831,100 4.1 $ 6,138,517 $10,777,961 76.7%
DC................................ 2 34,732,871 3.9 $17,366,435 $18,250,000 75.0%
TX................................ 11 32,825,604 3.6 $ 2,984,146 $ 5,944,231 69.3%
MA................................ 2 32,403,980 3.6 $16,201,990 $17,000,000 71.8%
NC................................ 4 29,365,540 3.3 $ 7,341,385 $15,216,680 77.4%
NV................................ 4 28,963,317 3.2 $ 7,240,829 $16,904,637 72.3%
SC................................ 2 27,690,822 3.1 $13,845,411 $25,900,000 55.9%
VA................................ 5 25,200,789 2.8 $ 5,040,158 $10,334,434 68.3%
MD................................ 2 18,775,676 2.1 $ 9,387,838 $17,120,000 79.6%
WA................................ 2 18,084,455 2.0 $ 9,042,228 $14,471,606 71.0%
GA................................ 4 16,456,517 1.8 $ 4,114,129 $10,527,461 76.5%
WI................................ 2 14,971,010 1.7 $ 7,485,505 $ 9,551,817 78.0%
AZ................................ 3 14,145,516 1.6 $ 4,715,172 $ 7,457,062 73.7%
MI................................ 2 11,514,344 1.3 $ 5,757,172 $ 8,241,138 74.8%
AK................................ 1 8,861,749 1.0 $ 8,861,749 $ 8,861,749 74.5%
IA................................ 1 7,885,098 0.9 $ 7,885,098 $ 7,885,098 75.8%
CT................................ 1 7,411,727 0.8 $ 7,411,727 $ 7,411,727 70.6%
TN................................ 1 4,386,498 0.5 $ 4,386,498 $ 4,386,498 73.1%
NE................................ 1 3,778,860 0.4 $ 3,778,860 $ 3,778,860 77.9%
NJ................................ 1 2,196,756 0.2 $ 2,196,756 $ 2,196,756 74.5%
MO................................ 1 2,153,303 0.2 $ 2,153,303 $ 2,153,303 79.8%
---------- ------------ ------------
109 $899,899,355 100.0% $ 8,255,957 $69,922,221 72.1%
========== ============ ============
<Caption>
WTD. AVG.
STATED
WTD. AVG. REMAINING
LTV RATIO TERM TO WTD. AVG. WTD. AVG.
AT MATURITY DSC MORTGAGE
STATE MATURITY(2) (MOS.)(2) RATIO RATE
- ----- ----------- --------- --------- ---------
CA................................ 65.0% 105 1.37x 5.668%
Southern(3)..................... 65.0% 99 1.41x 5.520%
Northern(3)..................... 64.9% 116 1.31x 5.926%
NY................................ 53.9% 119 1.59x 5.857%
OR................................ 55.9% 116 1.73x 5.487%
FL................................ 58.8% 113 1.47x 5.771%
CO................................ 64.4% 114 1.34x 5.605%
PA................................ 66.6% 118 1.25x 6.028%
IL................................ 64.7% 118 1.43x 5.619%
DC................................ 65.6% 118 1.31x 5.875%
TX................................ 53.3% 130 1.52x 5.996%
MA................................ 63.2% 116 1.39x 5.912%
NC................................ 55.6% 135 1.40x 5.618%
NV................................ 51.4% 128 1.37x 5.738%
SC................................ 55.2% 85 3.30x 4.162%
VA................................ 52.9% 119 1.57x 5.729%
MD................................ 62.5% 110 1.41x 5.824%
WA................................ 59.8% 108 1.48x 5.682%
GA................................ 57.1% 133 1.44x 5.732%
WI................................ 65.8% 118 1.35x 5.750%
AZ................................ 65.7% 84 1.49x 5.522%
MI................................ 59.1% 118 1.39x 5.785%
AK................................ 68.2% 69 1.69x 5.450%
IA................................ 64.2% 118 1.41x 5.860%
CT................................ 60.0% 115 1.41x 5.890%
TN................................ 61.5% 117 1.62x 5.620%
NE................................ 66.3% 117 1.39x 6.000%
NJ................................ 57.5% 119 1.52x 5.860%
MO................................ 67.0% 117 1.39x 5.570%
60.0% 114 1.52X 5.688%
</Table>
- ------------------
(1) Because this table presents information relating to the mortgaged properties
and not the mortgage loans, the information for mortgage loans secured by
more than one mortgaged property is based on allocated loan amounts
(allocating the mortgage loan principal balance to each of those properties
by the appraised values of the mortgaged properties).
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
(3) For purposes of determining whether a Mortgaged Property is in Northern
California or Southern California, Mortgaged Properties north of San Luis
Obispo County, Kern County and San Bernardino County were included in
Northern California and Mortgaged Properties in or south of such counties
were included in Southern California.
S-110
MORTGAGED PROPERTIES BY STATE FOR LOAN GROUP 2 MORTGAGE LOANS(1)
<Table>
<Caption>
% BY
NUMBER OF AGGREGATE CUT-OFF DATE AVERAGE HIGHEST WTD. AVG.
MORTGAGED CUT-OFF DATE GROUP 2 CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
STATE PROPERTIES BALANCE BALANCE BALANCE BALANCE LTV RATIO
- ----- ---------- ------------ ------------ ------------ ------------ ------------
FL................................ 7 $ 46,260,870 15.4% $ 6,608,696 $11,986,107 73.7%
AZ................................ 4 42,186,281 14.0 $10,546,570 $24,200,000 72.7%
TX................................ 5 36,962,865 12.3 $ 7,392,573 $13,173,063 78.8%
DC................................ 2 30,889,619 10.3 $15,444,810 $28,902,057 74.2%
CA................................ 7 28,778,189 9.6 $ 4,111,170 $ 6,977,064 70.2%
Southern (3).................... 4 14,981,689 5.0 $ 3,745,422 $ 6,193,201 70.9%
Northern (3).................... 3 13,796,501 4.6 $ 4,598,834 $ 6,977,064 69.5%
KS................................ 1 20,649,186 6.9 $20,649,186 $20,649,186 78.8%
NC................................ 3 20,083,244 6.7 $ 6,694,415 $15,000,000 70.2%
DE................................ 2 19,569,478 6.5 $ 9,784,739 $14,220,416 78.3%
ND................................ 2 12,922,060 4.3 $ 6,461,030 $ 7,234,884 75.8%
NY................................ 1 9,465,567 3.1 $ 9,465,567 $ 9,465,567 78.9%
PA................................ 1 7,234,558 2.4 $ 7,234,558 $ 7,234,558 69.6%
NV................................ 1 7,176,884 2.4 $ 7,176,884 $ 7,176,884 79.7%
MD................................ 2 4,831,971 1.6 $ 2,415,986 $ 2,844,409 74.2%
VA................................ 2 4,644,074 1.5 $ 2,322,037 $ 3,047,339 79.8%
NM................................ 1 3,288,877 1.1 $ 3,288,877 $ 3,288,877 65.8%
WA................................ 1 1,698,086 0.6 $ 1,698,086 $ 1,698,086 77.2%
MN................................ 1 1,563,776 0.5 $ 1,563,776 $ 1,563,776 68.0%
GA................................ 1 1,418,838 0.5 $ 1,418,838 $ 1,418,838 73.3%
SC................................ 1 1,391,141 0.5 $ 1,391,141 $ 1,391,141 68.9%
-- ------------ -----
45 $301,015,567 100.0% $ 6,689,235 $28,902,057 74.6%
== ============ =====
<Caption>
WTD. AVG.
STATED
WTD. AVG. REMAINING
LTV RATIO TERM TO WTD. AVG. WTD. AVG.
AT MATURITY DSC MORTGAGE
STATE MATURITY(2) (MOS.)(2) RATIO RATE
- ----- ----------- --------- --------- ---------
FL................................ 58.7% 114 1.42x 5.265%
AZ................................ 61.6% 110 1.37x 5.339%
TX................................ 67.1% 109 1.40x 5.538%
DC................................ 61.3% 117 1.45x 5.156%
CA................................ 59.0% 110 1.48x 5.389%
Southern (3).................... 58.3% 119 1.53x 5.517%
Northern (3).................... 59.7% 99 1.42x 5.250%
KS................................ 66.6% 113 1.38x 5.640%
NC................................ 58.9% 121 1.38x 5.637%
DE................................ 65.4% 118 1.45x 5.442%
ND................................ 63.0% 118 1.54x 5.242%
NY................................ 60.5% 119 1.45x 5.650%
PA................................ 57.9% 118 1.89x 5.300%
NV................................ 66.6% 117 1.41x 5.400%
MD................................ 38.1% 211 1.26x 7.640%
VA................................ 67.5% 117 1.44x 5.828%
NM................................ 54.6% 117 1.60x 5.160%
WA................................ 64.3% 119 1.55x 5.350%
MN................................ 0.0% 178 1.17x 5.500%
GA................................ 56.7% 117 1.38x 5.800%
SC................................ 48.5% 197 1.13x 8.625%
61.3% 116 1.43X 5.452%
</Table>
- ------------------
(1) Because this table presents information relating to the mortgaged properties
and not the mortgage loans, the information for mortgage loans secured by
more than one mortgaged property is based on allocated loan amounts
(allocating the mortgage loan principal balance to each of those properties
by the appraised values of the mortgaged properties).
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
(3) For purposes of determining whether a Mortgaged Property is in Northern
California or Southern California, Mortgaged Properties north of San Luis
Obispo County, Kern County and San Bernardino County were included in
Northern California and Mortgaged Properties in or south of such counties
were included in Southern California.
S-111
RANGE OF DSC RATIOS FOR ALL MORTGAGE LOANS
<Table>
<Caption>
% BY CUT- WTD. AVG.
RANGE OF NUMBER OF AGGREGATE CUT-OFF OFF DATE AVERAGE CUT-OFF HIGHEST CUT-OFF CUT-OFF DATE
DSC RATIOS(X) LOANS DATE BALANCE POOL BALANCE DATE BALANCE DATE BALANCE LTV RATIO
- ------------- --------- ----------------- ------------ --------------- --------------- ------------
1.00-1.04......................... 3 $ 8,839,562 0.7% $ 2,946,521 $ 4,074,729 85.0%
1.05-1.09......................... 1 6,539,661 0.5 $ 6,539,661 $ 6,539,661 77.9%
1.10-1.14......................... 1 1,391,141 0.1 $ 1,391,141 $ 1,391,141 68.9%
1.15-1.19......................... 4 16,425,330 1.4 $ 4,106,332 $ 7,027,145 71.6%
1.20-1.24......................... 6 79,432,171 6.6 $13,238,695 $44,919,182 77.7%
1.25-1.29......................... 9 81,321,362 6.8 $ 9,035,707 $24,200,000 74.8%
1.30-1.34......................... 10 80,208,672 6.7 $ 8,020,867 $17,000,000 74.3%
1.35-1.39......................... 24 230,910,621 19.2 $ 9,621,276 $28,902,057 76.5%
1.40-1.44......................... 20 142,302,393 11.8 $ 7,115,120 $15,216,680 75.8%
1.45-1.49......................... 24 197,705,028 16.5 $ 8,237,709 $17,965,895 74.5%
1.50-1.54......................... 14 72,648,947 6.0 $ 5,189,211 $10,940,994 75.1%
1.55-1.59......................... 10 34,607,803 2.9 $ 3,460,780 $ 6,392,521 70.3%
1.60-1.64......................... 8 62,321,444 5.2 $ 7,790,180 $35,000,000 62.7%
1.65-1.69......................... 4 42,246,024 3.5 $10,561,506 $24,953,568 66.3%
1.70-1.74......................... 2 5,494,114 0.5 $ 2,747,057 $ 3,096,620 70.6%
1.75-1.79......................... 4 21,702,183 1.8 $ 5,425,546 $10,334,434 60.6%
1.80-1.84......................... 2 71,541,512 6.0 $35,770,756 $69,922,221 63.5%
1.85-1.89......................... 2 8,830,794 0.7 $ 4,415,397 $ 7,234,558 65.7%
1.95-1.99......................... 1 2,572,068 0.2 $ 2,572,068 $ 2,572,068 66.6%
2.15-2.19......................... 1 5,986,529 0.5 $ 5,986,529 $ 5,986,529 56.5%
2.30-3.79......................... 2 27,887,563 2.3 $13,943,781 $25,900,000 54.1%
--- -------------- ----- ----------- ----------- ----
152 $1,200,914,923 100.0% $ 7,900,756 $69,922,221 72.7%
=== ============== ===== =========== =========== ====
<Caption>
WTD. AVG.
STATED
WTD. AVG. REMAINING
LTV TERM TO WTD. AVG. WTD. AVG.
RANGE OF RATIO AT MATURITY DSC MORTGAGE
DSC RATIOS(X) MATURITY* (MOS.)* RATIO RATE
- ------------- --------- --------- --------- ---------
1.00-1.04......................... 10.9% 217 1.03x 7.054%
1.05-1.09......................... 65.4% 117 1.09x 5.570%
1.10-1.14......................... 48.5% 197 1.13x 8.625%
1.15-1.19......................... 36.4% 177 1.17x 6.181%
1.20-1.24......................... 62.2% 124 1.22x 5.963%
1.25-1.29......................... 63.3% 113 1.27x 5.575%
1.30-1.34......................... 63.0% 115 1.32x 5.703%
1.35-1.39......................... 63.2% 115 1.37x 5.560%
1.40-1.44......................... 63.8% 115 1.41x 5.776%
1.45-1.49......................... 63.9% 106 1.47x 5.640%
1.50-1.54......................... 64.3% 104 1.52x 5.531%
1.55-1.59......................... 57.3% 118 1.56x 5.664%
1.60-1.64......................... 52.1% 118 1.61x 5.667%
1.65-1.69......................... 56.2% 108 1.69x 5.668%
1.70-1.74......................... 59.3% 119 1.70x 5.620%
1.75-1.79......................... 49.0% 118 1.77x 5.799%
1.80-1.84......................... 53.0% 119 1.83x 5.436%
1.85-1.89......................... 53.0% 118 1.88x 5.298%
1.95-1.99......................... 55.3% 119 1.96x 5.290%
2.15-2.19......................... 46.6% 118 2.19x 5.050%
2.30-3.79......................... 53.3% 85 3.35x 4.126%
---- --- ---- -----
60.4% 115 1.49X 5.629%
==== === ==== =====
</Table>
- ------------------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-112
RANGE OF DSC RATIOS FOR LOAN GROUP 1 MORTGAGE LOANS
<Table>
<Caption>
% BY
AGGREGATE CUT-OFF DATE AVERAGE HIGHEST WTD. AVG.
RANGE OF NUMBER OF CUT-OFF DATE GROUP 1 CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
DSC RATIOS(X) LOANS BALANCE BALANCE BALANCE BALANCE LTV RATIO
- ------------- --------- ------------ ------------ ------------ ------------ ------------
1.00 - 1.04.................... 3 $ 8,839,562 1.0% $ 2,946,521 $ 4,074,729 85.0%
1.05 - 1.09.................... 1 6,539,661 0.7 $ 6,539,661 $ 6,539,661 77.9%
1.15 - 1.19.................... 1 7,027,145 0.8 $ 7,027,145 $ 7,027,145 74.0%
1.20 - 1.24.................... 6 79,432,171 8.8 $13,238,695 $44,919,182 77.7%
1.25 - 1.29.................... 7 45,135,255 5.0 $ 6,447,894 $18,250,000 74.5%
1.30 - 1.34.................... 8 60,373,391 6.7 $ 7,546,674 $17,000,000 74.4%
1.35 - 1.39.................... 16 143,100,778 15.9 $ 8,943,799 $20,726,538 76.8%
1.40 - 1.44.................... 13 101,353,869 11.3 $ 7,796,451 $15,216,680 74.8%
1.45 - 1.49.................... 18 161,677,569 18.0 $ 8,982,087 $17,965,895 73.5%
1.50 - 1.54.................... 9 46,033,415 5.1 $ 5,114,824 $10,940,994 75.5%
1.55 - 1.59.................... 7 23,041,020 2.6 $ 3,291,574 $ 5,150,000 70.7%
1.60 - 1.64.................... 5 50,333,796 5.6 $10,066,759 $35,000,000 62.5%
1.65 - 1.69.................... 2 33,815,317 3.8 $16,907,659 $24,953,568 65.8%
1.70 - 1.74.................... 2 5,494,114 0.6 $ 2,747,057 $ 3,096,620 70.6%
1.75 - 1.79.................... 4 21,702,183 2.4 $ 5,425,546 $10,334,434 60.6%
1.80 - 1.84.................... 2 71,541,512 7.9 $35,770,756 $69,922,221 63.5%
1.95 - 1.99.................... 1 2,572,068 0.3 $ 2,572,068 $ 2,572,068 66.6%
2.15 - 2.19.................... 1 5,986,529 0.7 $ 5,986,529 $ 5,986,529 56.5%
2.30 - 3.79.................... 1 25,900,000 2.9 $25,900,000 $25,900,000 54.6%
--- ------------ -----
107 $899,899,355 100.0% $ 8,410,274 $69,922,221 72.1%
=== ============ =====
<Caption>
WTD. AVG.
STATED
WTD. AVG. REMAINING
LTV TERM TO WTD. AVG. WTD. AVG.
RANGE OF RATIO AT MATURITY DSC MORTGAGE
DSC RATIOS(X) MATURITY* (MOS.)* RATIO RATE
- ------------- --------- --------- --------- ---------
1.00 - 1.04.................... 10.9% 217 1.03x 7.054%
1.05 - 1.09.................... 65.4% 117 1.09x 5.570%
1.15 - 1.19.................... 62.1% 117 1.16x 5.570%
1.20 - 1.24.................... 62.2% 124 1.22x 5.963%
1.25 - 1.29.................... 62.2% 118 1.28x 5.742%
1.30 - 1.34.................... 62.4% 118 1.32x 5.840%
1.35 - 1.39.................... 62.9% 117 1.36x 5.655%
1.40 - 1.44.................... 63.3% 114 1.41x 5.895%
1.45 - 1.49.................... 63.5% 105 1.47x 5.674%
1.50 - 1.54.................... 64.2% 103 1.52x 5.642%
1.55 - 1.59.................... 58.7% 117 1.56x 5.862%
1.60 - 1.64.................... 51.9% 116 1.61x 5.679%
1.65 - 1.69.................... 57.1% 105 1.69x 5.804%
1.70 - 1.74.................... 59.3% 119 1.70x 5.620%
1.75 - 1.79.................... 49.0% 118 1.77x 5.799%
1.80 - 1.84.................... 53.0% 119 1.83x 5.436%
1.95 - 1.99.................... 55.3% 119 1.96x 5.290%
2.15 - 2.19.................... 46.6% 118 2.19x 5.050%
2.30 - 3.79.................... 54.6% 83 3.42x 4.040%
60.0% 114 1.52X 5.688%
</Table>
- ------------------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-113
RANGE OF DSC RATIOS FOR LOAN GROUP 2 MORTGAGE LOANS
<Table>
<Caption>
% BY
AGGREGATE CUT-OFF DATE AVERAGE HIGHEST WTD. AVG.
RANGE OF NUMBER OF CUT-OFF DATE GROUP 2 CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
DSC RATIOS(X) LOANS BALANCE BALANCE BALANCE BALANCE LTV RATIO
- ------------- --------- ------------ ------------ ------------ ------------ ------------
1.10 - 1.14........................ 1 $ 1,391,141 0.5% $ 1,391,141 $ 1,391,141 68.9%
1.15 - 1.19........................ 3 9,398,185 3.1 $ 3,132,728 $ 4,990,000 69.9%
1.25 - 1.29........................ 2 36,186,107 12.0 $18,093,053 $24,200,000 75.1%
1.30 - 1.34........................ 2 19,835,281 6.6 $ 9,917,641 $15,000,000 74.2%
1.35 - 1.39........................ 8 87,809,843 29.2 $10,976,230 $28,902,057 75.9%
1.40 - 1.44........................ 7 40,948,524 13.6 $ 5,849,789 $14,220,416 78.1%
1.45 - 1.49........................ 6 36,027,459 12.0 $ 6,004,576 $ 9,465,567 79.3%
1.50 - 1.54........................ 5 26,615,532 8.8 $ 5,323,106 $ 8,750,000 74.4%
1.55 - 1.59........................ 3 11,566,783 3.8 $ 3,855,594 $ 6,392,521 69.5%
1.60 - 1.64........................ 3 11,987,648 4.0 $ 3,995,883 $ 7,091,703 63.5%
1.65 - 1.69........................ 2 8,430,707 2.8 $ 4,215,353 $ 5,687,176 68.2%
1.85 - 1.89........................ 2 8,830,794 2.9 $ 4,415,397 $ 7,234,558 65.7%
2.30 - 3.79........................ 1 1,987,563 0.7 $ 1,987,563 $ 1,987,563 47.3%
-- ------------ -----
45 $301,015,567 100.0% $ 6,689,235 $28,902,057 74.6%
== ============ =====
<Caption>
WTD. AVG.
STATED
WTD. AVG. REMAINING
LTV TERM TO WTD. AVG. WTD. AVG.
RANGE OF RATIO AT MATURITY DSC MORTGAGE
DSC RATIOS(X) MATURITY* (MOS.)* RATIO RATE
- ------------- --------- --------- --------- ---------
1.10 - 1.14........................ 48.5% 197 1.13x 8.625%
1.15 - 1.19........................ 17.2% 222 1.17x 6.637%
1.25 - 1.29........................ 64.6% 106 1.26x 5.367%
1.30 - 1.34........................ 65.0% 108 1.32x 5.284%
1.35 - 1.39........................ 63.8% 113 1.38x 5.407%
1.40 - 1.44........................ 65.1% 118 1.42x 5.484%
1.45 - 1.49........................ 65.7% 112 1.47x 5.486%
1.50 - 1.54........................ 64.3% 107 1.52x 5.341%
1.55 - 1.59........................ 54.5% 118 1.58x 5.270%
1.60 - 1.64........................ 52.6% 125 1.63x 5.619%
1.65 - 1.69........................ 52.5% 118 1.67x 5.121%
1.85 - 1.89........................ 53.0% 118 1.88x 5.298%
2.30 - 3.79........................ 35.9% 116 2.48x 5.250%
61.3% 116 1.43X 5.452%
</Table>
- ------------------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-114
RANGE OF LTV RATIOS FOR ALL MORTGAGE LOANS AS OF THE CUT-OFF DATE
<Table>
<Caption>
WTD. AVG.
AGGREGATE % BY AVERAGE HIGHEST CUT-OFF DATE
RANGE OF NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE LTV
LTV RATIOS(%) LOANS BALANCE POOL BALANCE BALANCE BALANCE RATIO
- ------------- --------- -------------- ------------ ------------ ------------ ------------
35.01 - 40.00...................... 1 $ 505,564 0.0% $ 505,564 $ 505,564 38.0%
40.01 - 50.00...................... 3 5,190,867 0.4 $ 1,730,289 $ 1,987,563 47.5%
50.01 - 55.00...................... 3 29,332,927 2.4 $ 9,777,642 $25,900,000 54.5%
55.01 - 60.00...................... 11 68,261,536 5.7 $ 6,205,594 $35,000,000 57.8%
60.01 - 65.00...................... 7 114,307,387 9.5 $16,329,627 $69,922,221 63.2%
65.01 - 70.00...................... 25 136,313,315 11.4 $ 5,452,533 $16,904,637 68.5%
70.01 - 75.00...................... 44 264,510,483 22.0 $ 6,011,602 $24,200,000 73.4%
75.01 - 80.00...................... 55 568,331,893 47.3 $10,333,307 $44,919,182 78.1%
80.01 - 86.70...................... 3 14,160,951 1.2 $ 4,720,317 $ 6,977,064 84.4%
--- -------------- -----
152 $1,200,914,923 100.0% $ 7,900,756 $69,922,221 72.7%
=== ============== =====
<Caption>
WTD. AVG.
STATED
WTD. AVG. REMAINING
LTV TERM TO WTD. AVG. WTD. AVG.
RANGE OF RATIO AT MATURITY DSC MORTGAGE
LTV RATIOS(%) MATURITY* (MOS.)* RATIO RATE
- ------------- --------- --------- --------- ---------
35.01 - 40.00...................... 0.3% 117 1.22x 5.910%
40.01 - 50.00...................... 35.3% 133 2.02x 6.307%
50.01 - 55.00...................... 53.1% 81 3.18x 4.224%
55.01 - 60.00...................... 42.2% 123 1.62x 5.655%
60.01 - 65.00...................... 51.0% 121 1.77x 5.592%
65.01 - 70.00...................... 56.6% 113 1.50x 5.639%
70.01 - 75.00...................... 62.1% 113 1.43x 5.737%
75.01 - 80.00...................... 65.6% 114 1.37x 5.631%
80.01 - 86.70...................... 41.5% 165 1.24x 6.213%
60.4% 115 1.49X 5.629%
</Table>
- ------------------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-115
RANGE OF LTV RATIOS FOR LOAN GROUP 1 MORTGAGE LOANS AS OF THE CUT-OFF DATE
<Table>
<Caption>
% BY
AGGREGATE CUT-OFF DATE AVERAGE HIGHEST WTD. AVG.
RANGE OF NUMBER OF CUT-OFF DATE GROUP 1 CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
LTV RATIOS(%) LOANS BALANCE BALANCE BALANCE BALANCE LTV RATIO
- ------------- --------- ------------ ------------ ------------ ------------ ------------
35.01 - 40.00...................... 1 $ 505,564 0.1% $ 505,564 $ 505,564 38.0%
50.01 - 55.00...................... 2 26,508,640 2.9 $13,254,320 $25,900,000 54.6%
55.01 - 60.00...................... 9 60,790,210 6.8 $ 6,754,468 $35,000,000 57.9%
60.01 - 65.00...................... 6 111,563,857 12.4 $18,593,976 $69,922,221 63.2%
65.01 - 70.00...................... 18 105,917,979 11.8 $ 5,884,332 $16,904,637 68.7%
70.01 - 75.00...................... 34 201,751,257 22.4 $ 5,933,860 $18,250,000 73.5%
75.01 - 80.00...................... 35 385,677,962 42.9 $11,019,370 $44,919,182 78.2%
80.01 - 86.70...................... 2 7,183,886 0.8 $ 3,591,943 $ 4,074,729 86.5%
--- ------------ -----
107 $899,899,355 100.0% $ 8,410,274 $69,922,221 72.1%
=== ============ =====
<Caption>
WTD. AVG.
WTD. AVG. STATED
LTV REMAINING
RATIO TERM TO WTD. AVG. WTD. AVG.
RANGE OF AT MATURITY DSC MORTGAGE
LTV RATIOS(%) MATURITY* (MOS.)* RATIO RATE
- ------------- --------- --------- --------- ---------
35.01 - 40.00...................... 0.3% 117 1.22x 5.910%
50.01 - 55.00...................... 53.4% 84 3.37x 4.083%
55.01 - 60.00...................... 42.2% 123 1.64x 5.713%
60.01 - 65.00...................... 51.3% 121 1.77x 5.599%
65.01 - 70.00...................... 59.3% 107 1.49x 5.708%
70.01 - 75.00...................... 62.7% 111 1.44x 5.795%
75.01 - 80.00...................... 65.6% 115 1.35x 5.731%
80.01 - 86.70...................... 13.4% 223 1.04x 7.100%
60.0% 114 1.52X 5.688%
</Table>
- ------------------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-116
RANGE OF LTV RATIOS FOR LOAN GROUP 2 MORTGAGE LOANS AS OF THE CUT-OFF DATE
<Table>
<Caption>
% BY
AGGREGATE CUT-OFF DATE AVERAGE HIGHEST WTD. AVG.
RANGE OF NUMBER OF CUT-OFF DATE GROUP 2 CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
LTV RATIOS(%) LOANS BALANCE BALANCE BALANCE BALANCE LTV RATIO
- ------------- --------- ------------ ------------ ------------ ------------ ------------
40.01 - 50.00...................... 3 $ 5,190,867 1.7% $1,730,289 $ 1,987,563 47.5%
50.01 - 55.00...................... 1 2,824,287 0.9 $2,824,287 $ 2,824,287 53.7%
55.01 - 60.00...................... 2 7,471,326 2.5 $3,735,663 $ 3,995,149 56.8%
60.01 - 65.00...................... 1 2,743,531 0.9 $2,743,531 $ 2,743,531 62.4%
65.01 - 70.00...................... 7 30,395,336 10.1 $4,342,191 $ 7,234,558 67.8%
70.01 - 75.00...................... 10 62,759,226 20.8 $6,275,923 $24,200,000 73.1%
75.01 - 80.00...................... 20 182,653,931 60.7 $9,132,697 $28,902,057 77.9%
80.01 - 82.37...................... 1 6,977,064 2.3 $6,977,064 $ 6,977,064 82.4%
-- ------------ -----
45 $301,015,567 100.0% $6,689,235 $28,902,057 74.6%
== ============ =====
<Caption>
WTD. AVG.
STATED
WTD. AVG. REMAINING
LTV TERM TO WTD. AVG. WTD. AVG.
RANGE OF RATIO AT MATURITY DSC MORTGAGE
LTV RATIOS(%) MATURITY* (MOS.)* RATIO RATE
- ------------- --------- --------- --------- ---------
40.01 - 50.00...................... 35.3% 133 2.02x 6.307%
50.01 - 55.00...................... 50.0% 58 1.37x 5.550%
55.01 - 60.00...................... 42.2% 118 1.46x 5.183%
60.01 - 65.00...................... 39.9% 119 1.66x 5.290%
65.01 - 70.00...................... 47.2% 133 1.52x 5.400%
70.01 - 75.00...................... 60.3% 120 1.39x 5.549%
75.01 - 80.00...................... 65.6% 113 1.41x 5.421%
80.01 - 82.37...................... 70.4% 105 1.46x 5.300%
61.3% 116 1.43X 5.452%
</Table>
- ------------------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-117
RANGE OF LTV RATIOS FOR ALL MORTGAGE LOANS AS OF THE MATURITY DATE
<Table>
<Caption>
% BY
RANGE OF AGGREGATE CUT-OFF DATE AVERAGE HIGHEST WTD. AVG.
MATURITY DATE NUMBER OF CUT-OFF DATE POOL CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
LTV RATIOS(%) LOANS BALANCE BALANCE BALANCE BALANCE LTV RATIO
- ------------- --------- -------------- ------------ ------------ ------------ ------------
0.00 - 5.00...................... 8 $ 18,578,878 1.5% $ 2,322,360 $ 4,490,028 71.4%
5.01 - 10.00...................... 3 4,102,845 0.3 $ 1,367,615 $ 1,908,757 56.6%
15.01 - 20.00...................... 1 4,990,000 0.4 $ 4,990,000 $ 4,990,000 67.8%
20.01 - 30.00...................... 1 2,844,409 0.2 $ 2,844,409 $ 2,844,409 74.7%
30.01 - 40.00...................... 6 14,519,731 1.2 $ 2,419,955 $ 3,476,176 60.4%
40.01 - 50.00...................... 11 76,334,580 6.4 $ 6,939,507 $35,000,000 59.9%
50.01 - 55.00...................... 10 147,512,090 12.3 $14,751,209 $69,922,221 62.2%
55.01 - 60.00...................... 22 106,792,862 8.9 $ 4,854,221 $16,904,637 70.0%
60.01 - 65.00...................... 43 312,859,462 26.1 $ 7,275,801 $28,902,057 74.5%
65.01 - 70.00...................... 43 480,160,635 40.0 $11,166,526 $44,919,182 77.7%
70.01 - 75.00...................... 4 32,219,431 2.7 $ 8,054,858 $11,986,107 79.3%
--- -------------- -----
152 $1,200,914,923 100.0% $ 7,900,756 $69,922,221 72.7%
=== ============== =====
<Caption>
WTD. AVG.
STATED
WTD. AVG. REMAINING
RANGE OF LTV TERM TO WTD. AVG. WTD. AVG.
MATURITY DATE RATIO AT MATURITY DSC MORTGAGE
LTV RATIOS(%) MATURITY* (MOS.)* RATIO RATE
- ------------- --------- --------- --------- ---------
0.00 - 5.00...................... 0.4% 224 1.20x 6.239%
5.01 - 10.00...................... 7.4% 117 1.24x 5.910%
15.01 - 20.00...................... 17.8% 203 1.18x 5.470%
20.01 - 30.00...................... 25.6% 278 1.16x 9.310%
30.01 - 40.00...................... 35.3% 138 1.63x 6.133%
40.01 - 50.00...................... 47.7% 118 1.65x 5.737%
50.01 - 55.00...................... 53.4% 111 2.02x 5.306%
55.01 - 60.00...................... 58.4% 114 1.54x 5.757%
60.01 - 65.00...................... 62.5% 115 1.41x 5.568%
65.01 - 70.00...................... 67.0% 111 1.37x 5.675%
70.01 - 75.00...................... 71.4% 76 1.42x 5.399%
60.4% 115 1.49X 5.629%
</Table>
- ------------------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-118
RANGE OF LTV RATIOS FOR LOAN GROUP 1 MORTGAGE LOANS AS OF THE MATURITY DATE
<Table>
<Caption>
% BY
RANGE OF AGGREGATE CUT-OFF DATE AVERAGE HIGHEST WTD. AVG.
MATURITY DATE NUMBER OF CUT-OFF DATE GROUP 1 CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
LTV RATIOS(%) LOANS BALANCE BALANCE BALANCE BALANCE LTV RATIO
- ------------- --------- ------------ ------------ ------------ ------------ ------------
0.00 - 5.00...................... 7 $ 17,015,102 1.9% $ 2,430,729 $ 4,490,028 71.8%
5.01 - 10.00...................... 3 4,102,845 0.5 $ 1,367,615 $ 1,908,757 56.6%
30.01 - 40.00...................... 1 3,109,158 0.3 $ 3,109,158 $ 3,109,158 86.1%
40.01 - 50.00...................... 9 70,948,290 7.9 $ 7,883,143 $35,000,000 59.8%
50.01 - 55.00...................... 7 134,307,223 14.9 $19,186,746 $69,922,221 62.1%
55.01 - 60.00...................... 18 90,464,727 10.1 $ 5,025,818 $16,904,637 69.8%
60.01 - 65.00...................... 31 198,781,543 22.1 $ 6,412,308 $16,482,871 74.0%
65.01 - 70.00...................... 30 370,229,474 41.1 $12,340,982 $44,919,182 77.6%
70.01 - 75.00...................... 1 10,940,994 1.2 $10,940,994 $10,940,994 77.9%
--- ------------ -----
107 $899,899,355 100.0% $ 8,410,274 $69,922,221 72.1%
=== ============ =====
<Caption>
WTD. AVG.
STATED
WTD. AVG. REMAINING
RANGE OF LTV TERM TO WTD. AVG. WTD. AVG.
MATURITY DATE RATIO AT MATURITY DSC MORTGAGE
LTV RATIOS(%) MATURITY* (MOS.)* RATIO RATE
- ------------- --------- --------- --------- ---------
0.00 - 5.00...................... 0.5% 229 1.21x 6.307%
5.01 - 10.00...................... 7.4% 117 1.24x 5.910%
30.01 - 40.00...................... 31.0% 187 1.03x 7.350%
40.01 - 50.00...................... 47.7% 116 1.67x 5.724%
50.01 - 55.00...................... 53.4% 112 2.07x 5.313%
55.01 - 60.00...................... 58.6% 114 1.50x 5.849%
60.01 - 65.00...................... 62.5% 114 1.42x 5.687%
65.01 - 70.00...................... 67.1% 111 1.36x 5.733%
70.01 - 75.00...................... 72.9% 55 1.52x 5.660%
60.0% 114 1.52X 5.688%
</Table>
- ------------------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-119
RANGE OF LTV RATIOS FOR LOAN GROUP 2 MORTGAGE LOANS AS OF THE MATURITY DATE
<Table>
<Caption>
% BY
RANGE OF AGGREGATE CUT-OFF DATE AVERAGE HIGHEST WTD. AVG.
MATURITY DATE NUMBER OF CUT-OFF DATE GROUP 2 CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
LTV RATIOS(%) LOANS BALANCE BALANCE BALANCE BALANCE LTV RATIO
- ------------- --------- ------------ ------------ ------------ ------------ ------------
0.00 - 5.00...................... 1 $ 1,563,776 0.5% $1,563,776 $ 1,563,776 68.0%
15.01 - 20.00.................... 1 4,990,000 1.7 $4,990,000 $ 4,990,000 67.8%
20.01 - 30.00.................... 1 2,844,409 0.9 $2,844,409 $ 2,844,409 74.7%
30.01 - 40.00.................... 5 11,410,574 3.8 $2,282,115 $ 3,476,176 53.4%
40.01 - 50.00.................... 2 5,386,290 1.8 $2,693,145 $ 3,995,149 61.0%
50.01 - 55.00.................... 3 13,204,867 4.4 $4,401,622 $ 7,091,703 63.5%
55.01 - 60.00.................... 4 16,328,135 5.4 $4,082,034 $ 7,234,558 70.9%
60.01 - 65.00.................... 12 114,077,919 37.9 $9,506,493 $28,902,057 75.2%
65.01 - 70.00.................... 13 109,931,161 36.5 $8,456,243 $20,649,186 78.1%
70.01 - 75.00.................... 3 21,278,437 7.1 $7,092,812 $11,986,107 80.0%
-- ------------ -----
45 $301,015,567 100.0% $6,689,235 $28,902,057 74.6%
== ============ =====
<Caption>
WTD. AVG.
STATED
WTD. AVG. REMAINING
RANGE OF LTV TERM TO WTD. AVG. WTD. AVG.
MATURITY DATE RATIO AT MATURITY DSC MORTGAGE
LTV RATIOS(%) MATURITY* (MOS.)* RATIO RATE
- ------------- --------- --------- --------- ---------
0.00 - 5.00...................... 0.0% 178 1.17x 5.500%
15.01 - 20.00.................... 17.8% 203 1.18x 5.470%
20.01 - 30.00.................... 25.6% 278 1.16x 9.310%
30.01 - 40.00.................... 36.5% 125 1.79x 5.801%
40.01 - 50.00.................... 48.0% 139 1.32x 5.899%
50.01 - 55.00.................... 53.7% 105 1.57x 5.238%
55.01 - 60.00.................... 57.8% 118 1.71x 5.247%
60.01 - 65.00.................... 62.5% 116 1.40x 5.361%
65.01 - 70.00.................... 66.6% 112 1.41x 5.480%
70.01 - 75.00.................... 70.6% 87 1.37x 5.265%
61.3% 116 1.43X 5.452%
</Table>
- ------------------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-120
RANGE OF MORTGAGE RATES FOR ALL MORTGAGE LOANS AS OF THE CUT-OFF DATE
<Table>
<Caption>
AGGREGATE % BY AVERAGE HIGHEST WTD. AVG.
RANGE OF NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
MORTGAGE RATES (%) LOANS BALANCE POOL BALANCE BALANCE BALANCE LTV RATIO
- ------------------ --------- -------------- ------------ ------------ ------------ ------------
4.040 - 5.249..................... 15 $ 153,144,498 12.8% $10,209,633 $28,902,057 69.4%
5.250 - 5.499..................... 28 280,724,339 23.4 $10,025,869 $69,922,221 71.3%
5.500 - 5.749..................... 42 365,084,168 30.4 $ 8,692,480 $35,000,000 74.2%
5.750 - 5.999..................... 38 246,802,455 20.6 $ 6,494,801 $27,000,000 73.0%
6.000 - 6.249..................... 15 98,277,389 8.2 $ 6,551,826 $44,919,182 76.7%
6.250 - 6.499..................... 5 28,649,353 2.4 $ 5,729,871 $15,403,980 68.9%
6.500 - 6.749..................... 1 6,474,997 0.5 $ 6,474,997 $ 6,474,997 73.6%
6.750 - 6.999..................... 3 7,373,351 0.6 $ 2,457,784 $ 4,074,729 80.9%
7.000 - 7.249..................... 1 5,432,597 0.5 $ 5,432,597 $ 5,432,597 73.9%
7.250 - 7.499..................... 1 3,109,158 0.3 $ 3,109,158 $ 3,109,158 86.1%
8.500 - 8.749..................... 2 2,998,209 0.2 $ 1,499,105 $ 1,607,068 57.1%
9.250 - 9.499..................... 1 2,844,409 0.2 $ 2,844,409 $ 2,844,409 74.7%
--- -------------- -----
152 $1,200,914,923 100.0% $ 7,900,756 $69,922,221 72.7%
=== ============== =====
<Caption>
WTD. AVG.
STATED
WTD. AVG. REMAINING
LTV TERM TO WTD. AVG. WTD. AVG.
RANGE OF RATIO AT MATURITY DSC MORTGAGE
MORTGAGE RATES (%) MATURITY* (MOS.)* RATIO RATE
- ------------------ --------- --------- --------- ---------
4.040 - 5.249..................... 60.8% 99 1.80x 4.945%
5.250 - 5.499..................... 59.5% 115 1.54x 5.413%
5.500 - 5.749..................... 62.5% 112 1.44x 5.617%
5.750 - 5.999..................... 60.1% 119 1.43x 5.854%
6.000 - 6.249..................... 63.8% 119 1.33x 6.086%
6.250 - 6.499..................... 49.6% 130 1.44x 6.347%
6.500 - 6.749..................... 58.2% 117 1.42x 6.500%
6.750 - 6.999..................... 13.3% 206 1.14x 6.883%
7.000 - 7.249..................... 65.7% 101 1.44x 7.150%
7.250 - 7.499..................... 31.0% 187 1.03x 7.350%
8.500 - 8.749..................... 43.3% 181 1.39x 8.625%
9.250 - 9.499..................... 25.6% 278 1.16x 9.310%
60.4% 115 1.49X 5.629%
</Table>
- ---------------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-121
RANGE OF MORTGAGE RATES FOR LOAN GROUP 1 MORTGAGE LOANS AS OF THE CUT-OFF DATE
<Table>
<Caption>
% BY WTD. AVG.
AGGREGATE CUT-OFF AVERAGE HIGHEST CUT-OFF WTD. AVG.
CUT-OFF DATE CUT-OFF CUT-OFF DATE LTV
RANGE OF NUMBER DATE GROUP 1 DATE DATE LTV RATIO AT
MORTGAGE RATES(%) OF LOANS BALANCE BALANCE BALANCE BALANCE RATIO MATURITY*
- ----------------- -------- ------------ ------- ----------- ----------- --------- ---------
4.040 - 5.249...................... 6 $ 72,215,627 8.0% $12,035,938 $25,900,000 65.4% 59.3%
5.250 - 5.499...................... 10 156,550,168 17.4 $15,655,017 $69,922,221 69.1% 59.0%
5.500 - 5.749...................... 29 279,480,438 31.1 $ 9,637,256 $35,000,000 73.2% 62.0%
5.750 - 5.999...................... 37 245,383,617 27.3 $ 6,631,990 $27,000,000 73.0% 60.2%
6.000 - 6.249...................... 14 95,230,050 10.6 $ 6,802,146 $44,919,182 76.6% 63.7%
6.250 - 6.499...................... 5 28,649,353 3.2 $ 5,729,871 $15,403,980 68.9% 49.6%
6.500 - 6.749...................... 1 6,474,997 0.7 $ 6,474,997 $ 6,474,997 73.6% 58.2%
6.750 - 6.999...................... 3 7,373,351 0.8 $ 2,457,784 $ 4,074,729 80.9% 13.3%
7.000 - 7.249...................... 1 5,432,597 0.6 $ 5,432,597 $ 5,432,597 73.9% 65.7%
7.250 - 7.499...................... 1 3,109,158 0.3 $ 3,109,158 $ 3,109,158 86.1% 31.0%
--- ------------ -----
107 $899,899,355 100.0% $ 8,410,274 $69,922,221 72.1% 60.0%
=== ============ =====
<Caption>
WTD. AVG.
STATED
REMAINING
TERM TO WTD. AVG. WTD. AVG.
RANGE OF MATURITY DSC MORTGAGE
MORTGAGE RATES(%) (MOS.)* RATIO RATE
- ----------------- --------- --------- ---------
4.040 - 5.249...................... 90 2.20x 4.752%
5.250 - 5.499...................... 111 1.62x 5.422%
5.500 - 5.749...................... 111 1.45x 5.630%
5.750 - 5.999...................... 119 1.43x 5.854%
6.000 - 6.249...................... 120 1.33x 6.089%
6.250 - 6.499...................... 130 1.44x 6.347%
6.500 - 6.749...................... 117 1.42x 6.500%
6.750 - 6.999...................... 206 1.14x 6.883%
7.000 - 7.249...................... 101 1.44x 7.150%
7.250 - 7.499...................... 187 1.03x 7.350%
114 1.52X 5.688%
</Table>
- ---------------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-122
RANGE OF MORTGAGE RATES FOR LOAN GROUP 2 MORTGAGE LOANS AS OF THE CUT-OFF DATE
<Table>
<Caption>
% BY
AGGREGATE CUT-OFF DATE AVERAGE HIGHEST WTD. AVG.
RANGE OF NUMBER OF CUT-OFF DATE GROUP 2 CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
MORTGAGE RATES (%) LOANS BALANCE BALANCE BALANCE BALANCE LTV RATIO
- ------------------ --------- ------------ ------------ ------------ ------------ ------------
4.950 - 5.249................... 9 $ 80,928,871 26.9% $8,992,097 $28,902,057 72.9%
5.250 - 5.499................... 18 124,174,171 41.3 $6,898,565 $24,200,000 74.0%
5.500 - 5.749................... 13 85,603,730 28.4 $6,584,902 $20,649,186 77.4%
5.750 - 5.999................... 1 1,418,838 0.5 $1,418,838 $ 1,418,838 73.3%
6.000 - 6.249................... 1 3,047,339 1.0 $3,047,339 $ 3,047,339 79.8%
8.500 - 8.749................... 2 2,998,209 1.0 $1,499,105 $ 1,607,068 57.4%
9.250 - 9.499................... 1 2,844,409 0.9 $2,844,409 $ 2,844,409 74.7%
--------- ------------ ------------
45 $301,015,567 100.0% $6,689,235 $28,902,057 74.6%
========= ============ ============
<Caption>
WTD. AVG.
STATED
WTD. AVG. REMAINING
LTV TERM TO WTD. AVG. WTD. AVG.
RANGE OF RATIO AT MATURITY DSC MORTGAGE
MORTGAGE RATES (%) MATURITY* (MOS.)* RATIO RATE
- ------------------ --------- --------- --------- ---------
4.950 - 5.249................... 62.1% 107 1.45x 5.118%
5.250 - 5.499................... 60.0% 120 1.44x 5.402%
5.500 - 5.749................... 64.0% 112 1.41x 5.576%
5.750 - 5.999................... 56.7% 117 1.38x 5.800%
6.000 - 6.249................... 67.9% 117 1.41x 6.000%
8.500 - 8.749................... 43.3% 181 1.39x 8.625%
9.250 - 9.499................... 25.6% 278 1.16x 9.310%
61.3% 116 1.43X 5.452%
</Table>
- ---------------
*Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-123
RANGE OF ORIGINAL TERMS TO MATURITY OR ANTICIPATED REPAYMENT DATE
FOR ALL MORTGAGE LOANS AS OF THE CUT-OFF DATE
<Table>
<Caption>
RANGE OF ORIGINAL
TERMS TO MATURITY
OR ANTICIPATED AGGREGATE % BY AVERAGE HIGHEST WTD. AVG.
REPAYMENT DATE NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
(MONTHS) LOANS BALANCE POOL BALANCE BALANCE BALANCE LTV RATIO
- ----------------- --------- -------------- ------------ ------------ ------------ ------------
0 - 60............................ 4 $ 23,537,609 2.0% $ 5,884,402 $10,940,994 74.1%
61 - 84........................... 8 92,571,647 7.7 $11,571,456 $25,900,000 68.1%
85 - 108.......................... 7 98,739,228 8.2 $14,105,604 $17,120,000 74.4%
109 - 120......................... 122 954,659,990 79.5 $ 7,825,082 $69,922,221 73.0%
169 - 180......................... 2 3,170,844 0.3 $ 1,585,422 $ 1,607,068 57.3%
193 - 204......................... 1 4,990,000 0.4 $ 4,990,000 $ 4,990,000 67.8%
205 - 216......................... 1 1,391,141 0.1 $ 1,391,141 $ 1,391,141 68.9%
229 - 240......................... 5 14,935,326 1.2 $ 2,987,065 $ 4,490,028 72.6%
289 - 300......................... 1 4,074,729 0.3 $ 4,074,729 $ 4,074,729 86.7%
301 - 312......................... 1 2,844,409 0.2 $ 2,844,409 $ 2,844,409 74.7%
--- -------------- -----
152 $1,200,914,923 100.0% $ 7,900,756 $69,922,221 72.7%
=== ============== =====
<Caption>
WTD. AVG.
RANGE OF ORIGINAL STATED
TERMS TO MATURITY WTD. AVG. REMAINING
OR ANTICIPATED LTV TERM TO WTD. AVG. WTD. AVG.
REPAYMENT DATE RATIO AT MATURITY DSC MORTGAGE
(MONTHS) MATURITY* (MOS.)* RATIO RATE
- ----------------- --------- --------- --------- ---------
0 - 60............................ 69.2% 56 1.48x 5.520%
61 - 84........................... 62.5% 81 1.99x 4.859%
85 - 108.......................... 64.8% 103 1.43x 5.572%
109 - 120......................... 61.0% 117 1.46x 5.675%
169 - 180......................... 19.6% 172 1.39x 7.084%
193 - 204......................... 17.8% 203 1.18x 5.470%
205 - 216......................... 48.5% 197 1.13x 8.625%
229 - 240......................... 7.0% 222 1.21x 6.389%
289 - 300......................... 0.0% 251 1.04x 6.910%
301 - 312......................... 25.6% 278 1.16x 9.310%
60.4% 115 1.49X 5.629%
</Table>
- ---------------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-124
RANGE OF ORIGINAL TERMS TO MATURITY OR ANTICIPATED REPAYMENT DATE
FOR LOAN GROUP 1 MORTGAGE LOANS AS OF THE CUT-OFF DATE
<Table>
<Caption>
RANGE OF ORIGINAL
TERMS TO MATURITY % BY CUT-
OR ANTICIPATED AGGREGATE CUT- OFF DATE AVERAGE CUT- HIGHEST CUT- WTD. AVG.
REPAYMENT DATE NUMBER OF OFF DATE GROUP 1 OFF DATE OFF DATE CUT-OFF DATE
(MONTHS) LOANS BALANCE BALANCE BALANCE BALANCE LTV RATIO
- ----------------- --------- -------------- ------------ ------------ ------------ ------------
0 - 60......................... 2 $ 18,398,056 2.0% $ 9,199,028 $10,940,994 76.5%
61 - 84......................... 5 67,000,259 7.4 $13,400,052 $25,900,000 65.7%
85 - 108......................... 5 79,400,688 8.8 $15,880,138 $17,120,000 73.2%
109 - 120......................... 89 716,090,296 79.6 $ 8,045,958 $69,922,221 72.4%
229 - 240......................... 5 14,935,326 1.7 $ 2,987,065 $ 4,490,028 72.6%
289 - 300......................... 1 4,074,729 0.5 $ 4,074,729 $ 4,074,729 86.7%
--- ------------ -----
107 $899,899,355 100.0% $ 8,410,274 $69,922,221 72.1%
=== ============ =====
<Caption>
WTD. AVG.
RANGE OF ORIGINAL STATED
TERMS TO MATURITY WTD. AVG. REMAINING
OR ANTICIPATED LTV TERM TO WTD. AVG. WTD. AVG.
REPAYMENT DATE RATIO AT MATURITY DSC MORTGAGE
(MONTHS) MATURITY* (MOS.)* RATIO RATE
- ----------------- --------- --------- --------- ---------
0 - 60......................... 71.5% 55 1.50x 5.518%
61 - 84......................... 60.8% 81 2.22x 4.766%
85 - 108......................... 63.9% 102 1.44x 5.598%
109 - 120......................... 60.7% 117 1.47x 5.767%
229 - 240......................... 7.0% 222 1.21x 6.389%
289 - 300......................... 0.0% 251 1.04x 6.910%
60.0% 114 1.52X 5.688%
</Table>
- ------------------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-125
RANGE OF ORIGINAL TERMS TO MATURITY OR ANTICIPATED REPAYMENT DATE
FOR LOAN GROUP 2 MORTGAGE LOANS AS OF THE CUT-OFF DATE
<Table>
<Caption>
RANGE OF ORIGINAL
TERMS TO MATURITY % BY
OR ANTICIPATED AGGREGATE CUT-OFF DATE AVERAGE HIGHEST WTD. AVG.
REPAYMENT DATE NUMBER OF CUT-OFF DATE GROUP 2 CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
(MONTHS) LOANS BALANCE BALANCE BALANCE BALANCE LTV RATIO
- ----------------- --------- ------------ ------------ ------------ ------------ ------------
0 - 60............................. 2 $ 5,139,553 1.7% $2,569,776 $ 2,824,287 65.5%
61 - 84............................ 3 25,571,388 8.5 $8,523,796 $11,986,107 74.3%
85 - 108........................... 2 19,338,539 6.4 $9,669,270 $12,361,475 79.5%
109 - 120.......................... 33 238,569,694 79.3 $7,229,385 $28,902,057 74.8%
169 - 180.......................... 2 3,170,844 1.1 $1,585,422 $ 1,607,068 57.3%
193 - 204.......................... 1 4,990,000 1.7 $4,990,000 $ 4,990,000 67.8%
205 - 216.......................... 1 1,391,141 0.5 $1,391,141 $ 1,391,141 68.9%
301 - 312.......................... 1 2,844,409 0.9 $2,844,409 $ 2,844,409 74.7%
-- ------------ -----
45 $301,015,567 100.0% $6,689,235 $28,902,057 74.6%
== ============ =====
<Caption>
WTD. AVG.
RANGE OF ORIGINAL STATED
TERMS TO MATURITY WTD. AVG. REMAINING
OR ANTICIPATED LTV TERM TO WTD. AVG. WTD. AVG.
REPAYMENT DATE RATIO AT MATURITY DSC MORTGAGE
(MONTHS) MATURITY* (MOS.)* RATIO RATE
- ----------------- --------- --------- --------- ---------
0 - 60............................. 61.0% 58 1.42x 5.527%
61 - 84............................ 66.9% 83 1.37x 5.103%
85 - 108........................... 68.2% 105 1.40x 5.466%
109 - 120.......................... 62.1% 117 1.45x 5.400%
169 - 180.......................... 19.6% 172 1.39x 7.084%
193 - 204.......................... 17.8% 203 1.18x 5.470%
205 - 216.......................... 48.5% 197 1.13x 8.625%
301 - 312.......................... 25.6% 278 1.16x 9.310%
61.3% 116 1.43X 5.452%
</Table>
- ---------------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-126
RANGE OF REMAINING TERMS TO MATURITY OR ANTICIPATED REPAYMENT DATE
FOR ALL MORTGAGE LOANS AS OF THE CUT-OFF DATE
<Table>
<Caption>
RANGE OF REMAINING
TERMS TO MATURITY
OR ANTICIPATED AGGREGATE % BY AVERAGE HIGHEST WTD. AVG.
REPAYMENT DATE NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
(MONTHS) LOANS BALANCE POOL BALANCE BALANCE BALANCE LTV RATIO
- ------------------ --------- -------------- ------------ ------------ ------------ ------------
0 - 60............................ 4 $ 23,537,609 2.0% $ 5,884,402 $10,940,994 74.1%
61 - 84........................... 8 92,571,647 7.7 $11,571,456 $25,900,000 68.1%
85 - 108.......................... 8 104,171,825 8.7 $13,021,478 $17,120,000 74.4%
109 - 120......................... 121 949,227,393 79.0 $ 7,844,854 $69,922,221 73.0%
157 - 168......................... 1 1,607,068 0.1 $ 1,607,068 $ 1,607,068 46.9%
169 - 180......................... 1 1,563,776 0.1 $ 1,563,776 $ 1,563,776 68.0%
181 - 192......................... 2 4,764,833 0.4 $ 2,382,417 $ 3,109,158 83.6%
193 - 204......................... 2 6,381,141 0.5 $ 3,190,571 $ 4,990,000 68.0%
229 - 240......................... 3 10,170,493 0.8 $ 3,390,164 $ 4,490,028 67.5%
241 - 252......................... 1 4,074,729 0.3 $ 4,074,729 $ 4,074,729 86.7%
277 - 288......................... 1 2,844,409 0.2 $ 2,844,409 $ 2,844,409 74.7%
--- -------------- -----
152 $1,200,914,923 100.0% $ 7,900,756 $69,922,221 72.7%
=== ============== =====
<Caption>
WTD. AVG.
RANGE OF REMAINING STATED
TERMS TO MATURITY WTD. AVG. REMAINING
OR ANTICIPATED LTV TERM TO WTD. AVG. WTD. AVG.
REPAYMENT DATE RATIO AT MATURITY DSC MORTGAGE
(MONTHS) MATURITY* (MOS.)* RATIO RATE
- ------------------ --------- --------- --------- ---------
0 - 60............................ 69.2% 56 1.48x 5.520%
61 - 84........................... 62.5% 81 1.99x 4.859%
85 - 108.......................... 64.8% 102 1.43x 5.654%
109 - 120......................... 61.0% 117 1.46x 5.667%
157 - 168......................... 38.7% 167 1.61x 8.625%
169 - 180......................... 0.0% 178 1.17x 5.500%
181 - 192......................... 20.2% 187 1.03x 7.176%
193 - 204......................... 24.5% 202 1.17x 6.158%
229 - 240......................... 0.7% 239 1.30x 6.020%
241 - 252......................... 0.0% 251 1.04x 6.910%
277 - 288......................... 25.6% 278 1.16x 9.310%
60.4% 115 1.49X 5.629%
</Table>
- ---------------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-127
RANGE OF REMAINING TERMS TO MATURITY OR ANTICIPATED REPAYMENT DATE
FOR LOAN GROUP 1 MORTGAGE LOANS AS OF THE CUT-OFF DATE
<Table>
<Caption>
RANGE OF REMAINING
TERMS TO MATURITY % BY
OR ANTICIPATED AGGREGATE CUT-OFF DATE AVERAGE HIGHEST WTD. AVG.
REPAYMENT DATE NUMBER OF CUT-OFF DATE GROUP 1 CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
(MONTHS) LOANS BALANCE BALANCE BALANCE BALANCE LTV RATIO
- ------------------ --------- ------------ ------------ ------------ ------------ ------------
0 - 60............................ 2 $ 18,398,056 2.0% $ 9,199,028 $10,940,994 76.5%
61 - 84........................... 5 67,000,259 7.4 $13,400,052 $25,900,000 65.7%
85 - 108.......................... 6 84,833,285 9.4 $14,138,881 $17,120,000 73.2%
109 - 120......................... 88 710,657,699 79.0 $ 8,075,656 $69,922,221 72.4%
181 - 192......................... 2 4,764,833 0.5 $ 2,382,417 $ 3,109,158 83.6%
229 - 240......................... 3 10,170,493 1.1 $ 3,390,164 $ 4,490,028 67.5%
241 - 252......................... 1 4,074,729 0.5 $ 4,074,729 $ 4,074,729 86.7%
--- ------------ ------
107 $899,899,355 100.0% $ 8,410,274 $69,922,221 72.1%
=== ============ ======
<Caption>
WTD. AVG.
RANGE OF REMAINING STATED
TERMS TO MATURITY WTD. AVG. REMAINING
OR ANTICIPATED LTV TERM TO WTD. AVG. WTD. AVG.
REPAYMENT DATE RATIO AT MATURITY DSC MORTGAGE
(MONTHS) MATURITY* (MOS.)* RATIO RATE
- ------------------ ----------- --------- --------- ---------
0 - 60............................ 71.5% 55 1.50x 5.518%
61 - 84........................... 60.8% 81 2.22x 4.766%
85 - 108.......................... 64.0% 102 1.44x 5.697%
109 - 120......................... 60.7% 117 1.47x 5.756%
181 - 192......................... 20.2% 187 1.03x 7.176%
229 - 240......................... 0.7% 239 1.30x 6.020%
241 - 252......................... 0.0% 251 1.04x 6.910%
60.0% 114 1.52X 5.688%
</Table>
- ---------------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-128
RANGE OF REMAINING TERMS TO MATURITY OR ANTICIPATED REPAYMENT DATE
FOR LOAN GROUP 2 MORTGAGE LOANS AS OF THE CUT-OFF DATE
<Table>
<Caption>
RANGE OF REMAINING
TERMS TO MATURITY % BY
OR ANTICIPATED AGGREGATE CUT-OFF DATE AVERAGE HIGHEST WTD. AVG.
REPAYMENT DATE NUMBER OF CUT-OFF DATE GROUP 2 CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
(MONTHS) LOANS BALANCE BALANCE BALANCE BALANCE LTV RATIO
- ------------------ --------- ------------ ------------ ------------ ------------ ------------
0 - 60.......................... 2 $ 5,139,553 1.7% $2,569,776 $ 2,824,287 65.5%
61 - 84......................... 3 25,571,388 8.5 $8,523,796 $11,986,107 74.3%
85 - 108........................ 2 19,338,539 6.4 $9,669,270 $12,361,475 79.5%
109 - 120....................... 33 238,569,694 79.3 $7,229,385 $28,902,057 74.8%
157 - 168....................... 1 1,607,068 0.5 $1,607,068 $ 1,607,068 46.9%
169 - 180....................... 1 1,563,776 0.5 $1,563,776 $ 1,563,776 68.0%
193 - 204....................... 2 6,381,141 2.1 $3,190,571 $ 4,990,000 68.0%
277 - 288....................... 1 2,844,409 0.9 $2,844,409 $ 2,844,409 74.7%
--------- ------------ ------------
45 $301,015,567 100.0% $6,689,235 $28,902,057 74.6%
========= ============ ============
<Caption>
WTD. AVG.
RANGE OF REMAINING STATED
TERMS TO MATURITY WTD. AVG. REMAINING
OR ANTICIPATED LTV TERM TO WTD. AVG. WTD. AVG.
REPAYMENT DATE RATIO AT MATURITY DSC MORTGAGE
(MONTHS) MATURITY* (MOS.)* RATIO RATE
- ------------------ --------- --------- --------- ---------
0 - 60.......................... 61.0% 58 1.42x 5.527%
61 - 84......................... 66.9% 83 1.37x 5.103%
85 - 108........................ 68.2% 105 1.40x 5.466%
109 - 120....................... 62.1% 117 1.45x 5.400%
157 - 168....................... 38.7% 167 1.61x 8.625%
169 - 180....................... 0.0% 178 1.17x 5.500%
193 - 204....................... 24.5% 202 1.17x 6.158%
277 - 288....................... 25.6% 278 1.16x 9.310%
61.3% 116 1.43X 5.452%
</Table>
- ---------------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-129
RANGE OF REMAINING AMORTIZATION TERMS FOR ALL MORTGAGE LOANS AS OF THE CUT-OFF
DATE
<Table>
<Caption>
RANGE OF AGGREGATE % BY AVERAGE HIGHEST WTD. AVG.
REMAINING AMORTIZATION NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
TERMS(1) (MONTHS) LOANS BALANCE POOL BALANCE BALANCE BALANCE LTV RATIO
- ---------------------- --------- -------------- ------------ ------------ ------------ ------------
85-120............................ 2 $ 1,114,204 0.1% $ 557,102 $ 608,640 45.9%
121-132........................... 3 4,102,845 0.3 $ 1,367,615 $ 1,908,757 56.6%
145-180........................... 1 1,563,776 0.1 $ 1,563,776 $ 1,563,776 68.0%
181-192........................... 1 1,655,676 0.1 $ 1,655,676 $ 1,655,676 78.8%
193-228........................... 1 4,990,000 0.4 $ 4,990,000 $ 4,990,000 67.8%
229-264........................... 11 32,681,880 2.7 $ 2,971,080 $ 4,490,028 69.7%
265-300........................... 17 102,271,928 8.5 $ 6,015,996 $35,000,000 66.4%
301-348........................... 6 34,395,215 2.9 $ 5,732,536 $17,120,000 74.6%
349-360........................... 109 992,239,400 82.6 $ 9,103,114 $69,922,221 74.0%
Non-Amortizing.................... 1 25,900,000 2.2 $25,900,000 $25,900,000 54.6%
--- -------------- -----
152 $1,200,914,923 100.0% $ 7,900,756 $69,922,221 72.7%
=== ============== =====
<Caption>
WTD. AVG.
STATED
WTD. AVG. REMAINING
RANGE OF LTV TERM TO WTD. AVG. WTD. AVG.
REMAINING AMORTIZATION RATIO AT MATURITY DSC MORTGAGE
TERMS(1) (MONTHS) MATURITY(2) (MOS.)(2) RATIO RATE
- ---------------------- ----------- --------- --------- ---------
85-120............................ 0.3% 117 1.22x 5.910%
121-132........................... 7.4% 117 1.24x 5.910%
145-180........................... 0.0% 178 1.17x 5.500%
181-192........................... 0.0% 187 1.03x 6.850%
193-228........................... 17.8% 203 1.18x 5.470%
229-264........................... 22.6% 178 1.34x 6.133%
265-300........................... 52.6% 116 1.54x 5.764%
301-348........................... 60.8% 127 1.43x 6.481%
349-360........................... 63.2% 112 1.45x 5.607%
Non-Amortizing.................... 54.6% 83 3.42x 4.040%
60.4% 115 1.49X 5.629%
</Table>
The weighted average remaining amortization term for all Mortgage Loans
(excluding non-amortizing loans) is 347 months.
- ------------------
(1) The remaining amortization term shown for any Mortgage Loan that is
interest-only for part of its term does not include the number of months
during which it is interest-only, but rather is the number of months
remaining at the end of such interest-only period.
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-130
RANGE OF REMAINING AMORTIZATION TERMS FOR LOAN GROUP 1 MORTGAGE LOANS AS OF THE
CUT-OFF DATE
<Table>
<Caption>
% BY CUT-
RANGE OF AGGREGATE CUT- OFF DATE AVERAGE CUT- HIGHEST CUT- WTD. AVG.
REMAINING AMORTIZATION NUMBER OF OFF DATE GROUP 1 OFF DATE OFF DATE CUT-OFF DATE
TERMS(1) (MONTHS) LOANS BALANCE BALANCE BALANCE BALANCE LTV RATIO
- ---------------------- --------- -------------- ------------ ------------ ------------ ------------
85 - 120......................... 2 $ 1,114,204 0.1% $ 557,102 $ 608,640 45.9%
121 - 132......................... 3 4,102,845 0.5 $ 1,367,615 $ 1,908,757 56.6%
181 - 192......................... 1 1,655,676 0.2 $ 1,655,676 $ 1,655,676 78.8%
229 - 264......................... 8 24,865,937 2.8 $ 3,108,242 $ 4,490,028 73.9%
265 - 300......................... 13 87,412,397 9.7 $ 6,724,031 $35,000,000 65.2%
301 - 348......................... 3 28,552,597 3.2 $ 9,517,532 $17,120,000 76.4%
349 - 360......................... 76 726,295,700 80.7 $ 9,556,522 $69,922,221 73.5%
Non-Amortizing.................... 1 25,900,000 2.9 $25,900,000 $25,900,000 54.6%
--------- -------------- ------------
107 $899,899,355 100.0% $ 8,410,274 $69,922,221 72.1%
========= ============== ============
<Caption>
WTD. AVG.
STATED
WTD. AVG. REMAINING
RANGE OF LTV RATIO TERM TO WTD. AVG. WTD. AVG.
REMAINING AMORTIZATION AT MATURITY DSC MORTGAGE
TERMS(1) (MONTHS) MATURITY(2) (MOS.)(2) RATIO RATE
- ---------------------- ----------- --------- --------- ---------
85 - 120......................... 0.3% 117 1.22x 5.910%
121 - 132......................... 7.4% 117 1.24x 5.910%
181 - 192......................... 0.0% 187 1.03x 6.850%
229 - 264......................... 18.4% 197 1.25x 6.375%
265 - 300......................... 51.9% 115 1.53x 5.799%
301 - 348......................... 66.1% 106 1.46x 5.974%
349 - 360......................... 62.9% 113 1.46x 5.694%
Non-Amortizing.................... 54.6% 83 3.42x 4.040%
60.0% 114 1.52X 5.688%
</Table>
The weighted average remaining amortization term for all Group 1 Mortgage Loans
(excluding non-amortizing loans) is 346 months.
- ---------------
(1) The remaining amortization term shown for any Mortgage Loan that is
interest-only for part of its term does not include the number of months
during which it is interest-only, but rather is the number of months
remaining at the end of such interest-only period.
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-131
RANGE OF REMAINING AMORTIZATION TERMS
FOR LOAN GROUP 2 MORTGAGE LOANS AS OF THE CUT-OFF DATE
<Table>
<Caption>
% BY
RANGE OF AGGREGATE CUT-OFF DATE AVERAGE HIGHEST WTD. AVG.
REMAINING AMORTIZATION NUMBER OF CUT-OFF DATE GROUP 2 CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
TERMS(1) (MONTHS) LOANS BALANCE BALANCE BALANCE BALANCE LTV RATIO
- ---------------------- --------- ------------ ------------ ------------ ------------ ------------
145 - 180.......................... 1 $ 1,563,776 0.5% $1,563,776 $ 1,563,776 68.0%
193 - 228.......................... 1 4,990,000 1.7 $4,990,000 $ 4,990,000 67.8%
229 - 264.......................... 3 7,815,943 2.6 $2,605,314 $ 3,476,176 56.3%
265 - 300.......................... 4 14,859,531 4.9 $3,714,883 $ 9,465,567 73.4%
301 - 348.......................... 3 5,842,618 1.9 $1,947,539 $ 2,844,409 65.6%
349 - 360.......................... 33 265,943,700 88.3 $8,058,900 $28,902,057 75.6%
--------- ------------ ------------
45 $301,015,567 100.0% $6,689,235 $28,902,057 74.6%
========= ============ ============
<Caption>
WTD. AVG.
STATED
WTD. AVG. REMAINING
RANGE OF LTV TERM TO WTD. AVG. WTD. AVG.
REMAINING AMORTIZATION RATIO AT MATURITY DSC MORTGAGE
TERMS(1) (MONTHS) MATURITY(2) (MOS.)(2) RATIO RATE
- ---------------------- ----------- --------- --------- ---------
145 - 180.......................... 0.0% 178 1.17x 5.500%
193 - 228.......................... 17.8% 203 1.18x 5.470%
229 - 264.......................... 36.2% 118 1.66x 5.361%
265 - 300.......................... 56.2% 118 1.57x 5.557%
301 - 348.......................... 34.7% 228 1.28x 8.958%
349 - 360.......................... 64.1% 112 1.42x 5.371%
61.3% 116 1.43X 5.452%
</Table>
The weighted average remaining amortization term for all Group 2 Mortgage Loans
is 348 months.
- ---------------
(1) The remaining amortization term shown for any Mortgage Loan that is
interest-only for part of its term does not include the number of months
during which it is interest-only, but rather is the number of months
remaining at the end of such interest-only period.
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-132
AMORTIZATION TYPES FOR ALL MORTGAGE LOANS
<Table>
<Caption>
% BY
AGGREGATE CUT-OFF DATE AVERAGE HIGHEST WTD. AVG.
NUMBER OF CUT-OFF DATE POOL CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
AMORTIZATION TYPES LOANS BALANCE BALANCE BALANCE BALANCE LTV RATIO
- ------------------ --------- -------------- ------------ ------------ ------------ ------------
Amortizing Balloon................ 111 $ 695,556,207 57.9% $ 6,266,272 $28,902,057 74.1%
Amortizing ARD.................... 19 262,649,838 21.9 $13,823,676 $69,922,221 71.7%
Interest-only, Amortizing
Balloon(2)...................... 11 179,095,000 14.9 $16,281,364 $35,000,000 72.0%
Interest-only Balloon............. 1 25,900,000 2.2 $25,900,000 $25,900,000 54.6%
Fully Amortizing.................. 9 23,568,878 2.0 $ 2,618,764 $ 4,990,000 70.7%
Interest-only, Amortizing
ARD(2).......................... 1 14,145,000 1.2 $14,145,000 $14,145,000 69.0%
--- -------------- -----
152 $1,200,914,923 100.0% $ 7,900,756 $69,922,221 72.7%
=== ============== =====
<Caption>
WTD. AVG.
STATED
WTD. AVG. REMAINING
LTV TERM TO WTD. AVG. WTD. AVG.
RATIO AT MATURITY DSC MORTGAGE
AMORTIZATION TYPES MATURITY(1) (MOS.)(1) RATIO RATE
- ------------------ ----------- --------- --------- ---------
Amortizing Balloon................ 61.6% 115 1.46x 5.675%
Amortizing ARD.................... 60.9% 111 1.50x 5.632%
Interest-only, Amortizing
Balloon(2)...................... 62.6% 114 1.38x 5.623%
Interest-only Balloon............. 54.6% 83 3.42x 4.040%
Fully Amortizing.................. 4.1% 220 1.20x 6.076%
Interest-only, Amortizing
ARD(2).......................... 65.7% 94 1.48x 5.500%
60.4% 115 1.49X 5.629%
</Table>
- ------------------
(1) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
(2) These Mortgage Loans require payments of interest-only for a period of 6 to
54 months from origination prior to the commencement of payments of
principal and interest.
S-133
AMORTIZATION TYPES FOR LOAN GROUP 1 MORTGAGE LOANS
<Table>
<Caption>
% BY
AGGREGATE CUT-OFF DATE AVERAGE HIGHEST WTD. AVG.
NUMBER OF CUT-OFF DATE GROUP 1 CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
AMORTIZATION TYPES LOANS BALANCE BALANCE BALANCE BALANCE LTV RATIO
- ------------------ --------- ------------ ------------ ------------ ------------ ------------
Amortizing Balloon................ 72 $456,278,974 50.7% $ 6,337,208 $24,953,568 73.7%
Amortizing ARD.................... 18 255,415,280 28.4 $14,189,738 $69,922,221 71.8%
Interest-only, Amortizing
Balloon(2)...................... 8 131,145,000 14.6 $16,393,125 $35,000,000 71.3%
Interest-only Balloon............. 1 25,900,000 2.9 $25,900,000 $25,900,000 54.6%
Fully Amortizing.................. 7 17,015,102 1.9 $ 2,430,729 $ 4,490,028 71.8%
Interest-only, Amortizing
ARD(2).......................... 1 14,145,000 1.6 $14,145,000 $14,145,000 69.0%
--- ------------ -----
107 $899,899,355 100.0% $ 8,410,274 $69,922,221 72.1%
=== ============ =====
<Caption>
WTD. AVG.
STATED
WTD. AVG. REMAINING
LTV TERM TO WTD. AVG. WTD. AVG.
RATIO AT MATURITY DSC MORTGAGE
AMORTIZATION TYPES MATURITY(1) (MOS.)(1) RATIO RATE
- ------------------ ----------- --------- --------- ---------
Amortizing Balloon................ 61.3% 114 1.47x 5.779%
Amortizing ARD.................... 60.9% 111 1.49x 5.641%
Interest-only, Amortizing
Balloon(2)...................... 62.1% 115 1.41x 5.726%
Interest-only Balloon............. 54.6% 83 3.42x 4.040%
Fully Amortizing.................. 0.5% 229 1.21x 6.307%
Interest-only, Amortizing
ARD(2).......................... 65.7% 94 1.48x 5.500%
60.0% 114 1.52X 5.688%
</Table>
- ------------------
(1) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
(2) These Mortgage Loans require payments of interest-only for a period of 12 to
54 months from origination prior to the commencement of payments of
principal and interest.
S-134
AMORTIZATION TYPES FOR LOAN GROUP 2 MORTGAGE LOANS
<Table>
<Caption>
% BY
AGGREGATE CUT-OFF DATE AVERAGE HIGHEST WTD. AVG.
NUMBER CUT-OFF DATE GROUP 2 CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
AMORTIZATION TYPES OF LOANS BALANCE BALANCE BALANCE BALANCE LTV RATIO
- ------------------ --------- ------------ ------------ ------------ ------------ ------------
Amortizing Balloon................ 39 $239,277,233 79.5% $ 6,135,314 $28,902,057 75.1%
Interest-only, Amortizing
Balloon(2)...................... 3 47,950,000 15.9 $15,983,333 $24,200,000 73.9%
Amortizing ARD.................... 1 7,234,558 2.4 $ 7,234,558 $ 7,234,558 69.6%
Fully Amortizing.................. 2 6,553,776 2.2 $ 3,276,888 $ 4,990,000 67.8%
--------- ------------ ------------
45 $301,015,567 100.0% $ 6,689,235 $28,902,057 74.6%
========= ============ ============
<Caption>
WTD. AVG.
STATED
WTD. AVG. REMAINING
LTV TERM TO WTD. AVG. WTD. AVG.
RATIO AT MATURITY DSC MORTGAGE
AMORTIZATION TYPES MATURITY(1) (MOS.)(1) RATIO RATE
- ------------------ ----------- ----------- --------- ---------
Amortizing Balloon................ 62.1% 115 1.44x 5.479%
Interest-only, Amortizing
Balloon(2)...................... 64.1% 111 1.32x 5.340%
Amortizing ARD.................... 57.9% 118 1.89x 5.300%
Fully Amortizing.................. 13.5% 197 1.18x 5.477%
61.3% 116 1.43X 5.452%
</Table>
- ---------------
(1) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
(2) These Mortgage Loans require payments of interest-only for a period of 6 to
24 months from origination prior to the commencement of payments of
principal and interest.
S-135
RANGE OF OCCUPANCY RATES FOR ALL MORTGAGE LOANS
OTHER THAN LOANS SECURED BY HOSPITALITY PROPERTIES(1)
<Table>
<Caption>
AGGREGATE % BY AVERAGE HIGHEST WTD. AVG.
NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF OCCUPANCY RATES (%) LOANS BALANCE POOL BALANCE BALANCE BALANCE LTV RATIO
- ---------------------------- --------- -------------- ------------ ------------ ------------ ------------
70.00 - 74.99...................... 3 $ 12,982,207 1.1% $ 4,327,402 $ 6,055,668 72.2%
75.00 - 79.99...................... 2 7,479,777 0.6 $ 3,739,889 $ 6,974,213 56.3%
80.00 - 84.99...................... 6 57,688,159 4.8 $ 9,614,693 $17,120,000 75.4%
85.00 - 89.99...................... 11 63,835,004 5.4 $ 5,803,182 $ 9,939,006 71.9%
90.00 - 94.99...................... 38 329,117,380 27.6 $ 8,660,984 $44,919,182 75.4%
95.00 - 99.99...................... 31 353,185,186 29.7 $11,393,071 $69,922,221 71.8%
100.00 - 100.00.................... 60 366,292,776 30.8 $ 6,104,880 $35,000,000 71.7%
--- -------------- -----
151 $1,190,580,489 100.0% $ 7,884,639 $69,922,221 72.8%
=== ============== =====
<Caption>
WTD. AVG.
STATED
WTD. AVG. REMAINING
LTV TERM TO WTD. AVG. WTD. AVG.
RATIO AT MATURITY DSC MORTGAGE
RANGE OF OCCUPANCY RATES (%) MATURITY(2) (MOS.)(2) RATIO RATE
- ---------------------------- ----------- --------- --------- ---------
70.00 - 74.99...................... 54.6% 118 1.44x 5.782%
75.00 - 79.99...................... 45.8% 116 1.74x 5.985%
80.00 - 84.99...................... 64.0% 114 1.44x 5.732%
85.00 - 89.99...................... 61.5% 106 1.56x 5.467%
90.00 - 94.99...................... 63.7% 113 1.38x 5.670%
95.00 - 99.99...................... 60.4% 113 1.61x 5.382%
100.00 - 100.00.................... 57.4% 120 1.47x 5.825%
60.5% 115 1.49X 5.628%
</Table>
- ------------------
(1) Occupancy rates were calculated based upon rent rolls made available to the
applicable Mortgage Loan Seller by the related borrowers as of the rent roll
date set forth on Annex A-1 to this Prospectus Supplement but excludes 1
Mortgage Loan secured by a hospitality property, representing 0.9% of the
Cut-Off Date Pool Balance.
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-136
RANGE OF OCCUPANCY RATES FOR LOAN GROUP 1 MORTGAGE LOANS
OTHER THAN LOANS SECURED BY HOSPITALITY PROPERTIES(1)
<Table>
<Caption>
AGGREGATE CUT- % BY CUT-OFF AVERAGE CUT- HIGHEST CUT- WTD. AVG.
NUMBER OF OFF DATE DATE GROUP 1 OFF DATE OFF DATE CUT-OFF DATE
RANGE OF OCCUPANCY RATES (%) LOANS BALANCE BALANCE BALANCE BALANCE LTV RATIO
- ---------------------------------- --------- -------------- --------------- ------------ ------------ ------------
70.00 - 74.99.................... 3 $ 12,982,207 1.5% $ 4,327,402 $ 6,055,668 72.2%
75.00 - 79.99.................... 2 7,479,777 0.8 $ 3,739,889 $ 6,974,213 56.3%
80.00 - 84.99.................... 4 47,307,579 5.3 $11,826,895 $17,120,000 77.4%
85.00 - 89.99.................... 7 37,894,799 4.3 $ 5,413,543 $ 9,939,006 72.8%
90.00 - 94.99.................... 22 209,488,028 23.5 $ 9,522,183 $44,919,182 75.4%
95.00 - 99.99.................... 15 239,355,277 26.9 $15,957,018 $69,922,221 70.2%
100.00 - 100.00................... 53 335,057,255 37.7 $ 6,321,835 $35,000,000 71.3%
--- ------------ -----
106 $889,564,922 100% $ 8,392,122 $69,922,221 72.3%
=== ============ =====
<Caption>
WTD. AVG.
STATED
WTD. AVG. REMAINING
LTV RATIO TERM TO WTD. AVG. WTD. AVG.
AT MATURITY DSC MORTGAGE
RANGE OF OCCUPANCY RATES (%) MATURITY(2) (MOS.)(2) RATIO RATE
- ---------------------------------- ----------- --------- --------- ---------
70.00 - 74.99.................... 54.6% 118 1.44x 5.782%
75.00 - 79.99.................... 45.8% 116 1.74x 5.985%
80.00 - 84.99.................... 66.0% 113 1.39x 5.859%
85.00 - 89.99.................... 62.8% 105 1.51x 5.606%
90.00 - 94.99.................... 65.1% 108 1.37x 5.785%
95.00 - 99.99.................... 59.4% 115 1.71x 5.385%
100.00 - 100.00................... 57.1% 119 1.48x 5.816%
60.2% 114 1.51X 5.687%
</Table>
- ------------------
(1) Occupancy rates were calculated based upon rent rolls made available to the
applicable Mortgage Loan Seller by the related borrowers as of the rent roll
date set forth on Annex A-1 to this Prospectus Supplement but excludes 1
Mortgage Loan secured by a hospitality property, representing 1.1% of the
Cut-Off Date Group 1 Balance.
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-137
RANGE OF OCCUPANCY RATES FOR LOAN GROUP 2 MORTGAGE LOANS(1)
<Table>
<Caption>
% BY
AGGREGATE CUT-OFF DATE AVERAGE HIGHEST WTD. AVG.
NUMBER OF CUT-OFF DATE GROUP 2 CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF OCCUPANCY RATES (%) LOANS BALANCE BALANCE BALANCE BALANCE LTV RATIO
- ---------------------------- --------- ------------ ------------ ------------ ------------ ------------
80.00 - 84.99.................... 2 $ 10,380,580 3.4% $5,190,290 $ 7,091,703 66.1%
85.00 - 89.99.................... 4 25,940,205 8.6 $6,485,051 $ 8,750,000 70.7%
90.00 - 94.99.................... 16 119,629,352 39.7 $7,476,835 $24,200,000 75.3%
95.00 - 99.99.................... 16 113,829,909 37.8 $7,114,369 $28,902,057 75.3%
100.00 - 100.00.................... 7 31,235,521 10.4 $4,462,217 $12,361,475 75.2%
-- ------------ -----
45 $301,015,567 100.0% $6,689,235 $28,902,057 74.6%
== ============ =====
<Caption>
WTD. AVG.
STATED
WTD. AVG. REMAINING
LTV TERM TO WTD. AVG. WTD. AVG.
RATIO AT MATURITY DSC MORTGAGE
RANGE OF OCCUPANCY RATES (%) MATURITY(2) (MOS.)(2) RATIO RATE
- ---------------------------- ----------- --------- --------- ---------
80.00 - 84.99.................... 54.7% 118 1.63x 5.153%
85.00 - 89.99.................... 59.7% 106 1.62x 5.264%
90.00 - 94.99.................... 61.2% 122 1.39x 5.469%
95.00 - 99.99.................... 62.7% 110 1.41x 5.377%
100.00 - 100.00.................... 59.9% 128 1.42x 5.917%
61.3% 116 1.43X 5.452%
</Table>
- ------------------
(1) Occupancy rates were calculated based upon rent rolls made available to the
applicable Mortgage Loan Seller by the related borrowers as of the rent roll
date set forth on Annex A-1 to this Prospectus Supplement.
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-138
PERCENTAGE OF MORTGAGE POOL BY PREPAYMENT RESTRICTION(1)(2)(3)(4)
<Table>
<Caption>
PREPAYMENT RESTRICTION JULY-03 JULY-04 JULY-05 JULY-06 JULY-07 JULY-08 JULY-09 JULY-10
- ---------------------- --------- --------- --------- --------- --------- --------- --------- -------
Lockout............................ 99.61% 99.61% 42.73% 23.20% 1.07% 0.37% 0.37% 0.40%
Defeasance......................... 0.26% 0.26% 54.93% 69.73% 89.18% 88.92% 88.79% 87.15%
Yield Maintenance.................. 0.13% 0.13% 2.34% 7.07% 9.75% 10.71% 10.84% 9.08%
Prepayment Premium................. 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% 3.37%
Total.............................. 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Total Beginning Balance as of the
Cut-Off Date (in millions)........ $1,200.91 $1,187.30 $1,172.08 $1,154.91 $1,136.13 $1,094.45 $1,065.55 $966.34
Percent of Cut-Off Date Pool
Balance........................... 100.00% 98.87% 97.60% 96.17% 94.61% 91.13% 88.73% 80.47%
<Caption>
PREPAYMENT RESTRICTION JULY-11 JULY-12 JULY-13
- ---------------------- ------- ------- -------
Lockout............................ 0.14% 0.15% 5.61%
Defeasance......................... 86.95% 85.72% 59.43%
Yield Maintenance.................. 9.49% 10.38% 34.96%
Prepayment Premium................. 0.00% 0.00% 0.00%
Open............................... 3.43% 3.75% 0.00%
Total.............................. 100.00% 100.00% 100.00%
Total Beginning Balance as of the
Cut-Off Date (in millions)........ $930.86 $830.87 $ 21.58
Percent of Cut-Off Date Pool
Balance........................... 77.51% 69.19% 1.80%
</Table>
- ------------------
(1) Prepayment provisions in effect as a percentage of outstanding loan balances
as of the indicated date assuming no prepayments on the Mortgage Loans (and
assuming that an ARD Loan will be repaid in full on its Anticipated
Repayment Date), if any.
(2) As of the Cut-Off Date.
(3) Based upon the assumptions set forth in footnote (1) above, after July 2003,
the outstanding loan balances represent less than 1.8% of the Cut-Off Date
Pool Balance.
(4) Assumed yield maintenance for 2 loans where at the borrower's option, the
loan can also be defeased.
PERCENTAGE OF LOAN GROUP 1 BY PREPAYMENT RESTRICTION(1)(2)(3)(4)
<Table>
<Caption>
PREPAYMENT RESTRICTION JULY-03 JULY-04 JULY-05 JULY-06 JULY-07 JULY-08 JULY-09 JULY-10 JULY-11
- ---------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Lockout............................ 99.65% 99.66% 40.29% 26.22% 0.77% 0.00% 0.00% 0.00% 0.00%
Defeasance......................... 0.35% 0.34% 56.76% 68.69% 93.92% 93.74% 93.63% 92.16% 92.01%
Yield Maintenance.................. 0.00% 0.00% 2.95% 5.09% 5.31% 6.26% 6.37% 3.35% 3.41%
Prepayment Premium................. 0.00% 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% 4.48% 4.58%
Total.............................. 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Total Beginning Balance as of the
Cut-Off Date (in millions)........ $899.90 $889.97 $878.82 $866.23 $852.44 $820.77 $797.35 $726.93 $697.08
Percent of Cut-Off Date Pool
Balance........................... 100.00% 98.90% 97.66% 96.26% 94.73% 91.21% 88.60% 80.78% 77.46%
<Caption>
PREPAYMENT RESTRICTION JULY-12 JULY-13
- ---------------------- ------- -------
Lockout............................ 0.00% 0.00%
Defeasance......................... 91.23% 70.51%
Yield Maintenance.................. 3.73% 29.49%
Prepayment Premium................. 0.00% 0.00%
Open............................... 5.03% 0.00%
Total.............................. 100.00% 100.00%
Total Beginning Balance as of the
Cut-Off Date (in millions)........ $619.51 $ 12.33
Percent of Cut-Off Date Pool
Balance........................... 68.84% 1.37%
</Table>
- ------------------
(1) Prepayment provisions in effect as a percentage of outstanding loan balances
as of the indicated date assuming no prepayments on the Mortgage Loans (and
assuming that an ARD Loan will be repaid in full on its Anticipated
Repayment Date), if any.
(2) As of the Cut-Off Date.
(3) Based upon the assumptions set forth in footnote (1) above, after July 2003,
the outstanding loan balances represent less than 1.4% of the Cut-Off Date
Group 1 Balance.
(4) Assumed yield maintenance for 1 loan where at the borrower's option, the
loan can also be defeased.
S-139
PERCENTAGE OF LOAN GROUP 2 BY PREPAYMENT RESTRICTION(1)(2)(3)(4)
<Table>
<Caption>
PREPAYMENT RESTRICTION JULY-03 JULY-04 JULY-05 JULY-06 JULY-07 JULY-08 JULY-09 JULY-10 JULY-11
- ---------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Lockout............................ 99.47% 99.46% 50.02% 14.14% 2.00% 1.47% 1.48% 1.63% 0.54%
Defeasance......................... 0.00% 0.00% 49.44% 72.86% 74.94% 74.46% 74.42% 71.91% 71.84%
Yield Maintenance.................. 0.53% 0.54% 0.54% 13.00% 23.06% 24.07% 24.11% 26.46% 27.62%
Prepayment Premium................. 0.00% 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% 0.00%
Total.............................. 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Total Beginning Balance as of the
Cut-Off Date (in millions)........ $301.02 $297.33 $293.26 $288.69 $283.69 $273.68 $268.19 $239.41 $233.78
Percent of Cut-Off Date Pool
Balance........................... 100.00% 98.78% 97.42% 95.90% 94.24% 90.92% 89.10% 79.53% 77.66%
<Caption>
PREPAYMENT RESTRICTION JULY-12 JULY-13
- ---------------------- ------- -------
Lockout............................ 0.58% 13.08%
Defeasance......................... 69.57% 44.68%
Yield Maintenance.................. 29.84% 42.24%
Prepayment Premium................. 0.00% 0.00%
Open............................... 0.00% 0.00%
Total.............................. 100.00% 100.00%
Total Beginning Balance as of the
Cut-Off Date (in millions)........ $211.36 $ 9.26
Percent of Cut-Off Date Pool
Balance........................... 70.22% 3.08%
</Table>
- ------------------
(1) Prepayment provisions in effect as a percentage of outstanding loan balances
as of the indicated date assuming no prepayments on the Mortgage Loans (and
assuming that an ARD Loan will be repaid in full on its Anticipated
Repayment Date), if any.
(2) As of the Cut-Off Date.
(3) Based upon the assumptions set forth in footnote (1) above, after July 2003,
the outstanding loan balances represent less than 3.1% of the Cut-Off Date
Group 2 Balance.
(4) Assumed yield maintenance for 1 loan where at the borrower's option, the
loan can also be defeased.
S-140
TWENTY LARGEST MORTGAGE LOANS
The following table and summaries describe the twenty largest Mortgage
Loans or groups of cross-collateralized mortgage loans in the Mortgage Pool by
Cut-Off Date Balance:
<Table>
<Caption>
NUMBER OF % OF
MORTGAGE % OF APPLICABLE
LOANS/ CUT-OFF CUT-OFF LOAN
MORTGAGE NUMBER OF CUT-OFF DATE DATE BALANCE
LOAN MORTGAGED LOAN DATE POOL GROUP PROPERTY PER
LOAN NAME SELLER PROPERTIES GROUP BALANCE* BALANCE BALANCE TYPE SF/UNIT
- --------- -------- ---------- ----- ------------ ------- ---------- ------------------- -----------
Lloyd Center......... Wachovia 1/1 1 $ 69,922,221 5.8% 7.8% Retail - Anchored $ 114
One South Broad Office - CBD
Street.............. Wachovia 1/1 1 44,919,182 3.7 5.0% $ 97
673 First Avenue..... Wachovia 1/1 1 35,000,000 2.9 3.9% Office - CBD $ 82
Hamilton House Multifamily -
Apartments.......... Wachovia 1/1 2 28,902,057 2.4 9.6% Conventional $95,073
Multifamily -
Irongate Apartments.. Wachovia 1/1 1 27,000,000 2.2 3.0% Conventional $96,429
Columbiana Station Retail - Anchored
Shopping Center..... Wachovia 1/1 1 25,900,000 2.2 2.9% $ 96
16 West 61st Office - CBD
Street.............. Wachovia 1/1 1 24,953,568 2.1 2.8% $ 223
Arrowhead Highlands Multifamily -
Apartments.......... Wachovia 1/1 2 24,200,000 2.0 8.0% Conventional $72,024
AmCap - Union & Retail - Anchored
Alameda............. Nomura 1/1 1 20,726,538 1.7 2.3% $ 86
Plaza Gardens South Multifamily -
Apartments.......... Citigroup 1/1 2 20,649,186 1.7 6.9% Conventional $82,597
----- ------------ ----
SUBTOTAL............. 10/10 $322,172,752 26.8%
===== ============ ====
2175 K Street, N.W... Wachovia 1/1 1 $ 18,250,000 1.5% 2.0% Office - CBD $ 181
90 & 110 South Office - Medical
Bedford Road........ Wachovia 1/1 1 17,965,895 1.5 2.0% $ 149
Maryland Corporate Office - Suburban
Center.............. Citigroup 1/1 1 17,120,000 1.4 1.9% $ 77
Village on the Multifamily -
Hill................ Wachovia 1/1 1 17,000,000 1.4 1.9% Conventional $92,391
Anthem Village....... Citigroup 1/1 1 16,904,637 1.4 1.9% Retail - Anchored $ 146
Mixed Use -
Riviera Plaza........ Citigroup 1/1 1 16,759,445 1.4 1.9% Retail/Office $ 106
Georgetown Plaza..... Citigroup 1/1 1 16,482,871 1.4 1.8% Office - Suburban $ 117
College Grove Retail - Anchored
Shopping Center..... Wachovia 1/1 1 16,281,990 1.4 1.8% $ 84
Shoppes of Parkland.. Wachovia 1/1 1 15,968,669 1.3 1.8% Retail - Anchored $ 110
Lowell Street........ Nomura 1/1 1 15,403,980 1.3 1.7% Industrial - Flex $ 75
----- ------------ ----
SUBTOTAL............. 10/10 $168,137,487 14.0%
===== ============ ====
TOTAL/WTD. AVG....... 20/20 $490,310,239 40.8%
===== ============ ====
<Caption>
WEIGHTED WEIGHTED
AVERAGE AVERAGE
CUT-OFF LTV WEIGHTED
WEIGHTED DATE RATIO AT AVERAGE
AVERAGE LTV MATURITY MORTGAGE
LOAN NAME DSCR RATIO OR ARD RATE
- --------- -------- -------- -------- --------
Lloyd Center......... 1.83x 63.5% 53.0% 5.420%
One South Broad
Street.............. 1.22x 79.2% 67.5% 6.080%
673 First Avenue..... 1.60x 58.3% 48.1% 5.670%
Hamilton House
Apartments.......... 1.38x 76.1% 63.1% 5.150%
Irongate Apartments.. 1.22x 78.5% 70.0% 5.800%
Columbiana Station
Shopping Center..... 3.42x 54.6% 54.6% 4.040%
16 West 61st
Street.............. 1.69x 62.7% 53.2% 5.930%
Arrowhead Highlands
Apartments.......... 1.25x 73.3% 62.0% 5.450%
AmCap - Union &
Alameda............. 1.36x 79.7% 67.0% 5.570%
Plaza Gardens South
Apartments.......... 1.38x 78.8% 66.6% 5.640%
---- ----- ---- -----
SUBTOTAL............. 1.64X 69.5% 59.4% 5.501%
==== ===== ==== =====
2175 K Street, N.W... 1.29x 73.6% 66.5% 5.960%
90 & 110 South
Bedford Road........ 1.47x 79.9% 67.6% 5.840%
Maryland Corporate
Center.............. 1.45x 79.6% 68.6% 5.725%
Village on the
Hill................ 1.31x 73.9% 66.1% 5.470%
Anthem Village....... 1.45x 68.7% 59.0% 5.420%
Riviera Plaza........ 1.36x 76.2% 65.8% 5.650%
Georgetown Plaza..... 1.33x 76.7% 64.7% 5.780%
College Grove
Shopping Center..... 1.28x 75.7% 63.2% 5.450%
Shoppes of Parkland.. 1.35x 79.5% 66.9% 5.690%
Lowell Street........ 1.48x 69.4% 59.9% 6.400%
---- ----- ---- -----
SUBTOTAL............. 1.38X 75.4% 64.9% 5.736%
==== ===== ==== =====
TOTAL/WTD. AVG....... 1.55X 71.5% 61.3% 5.582%
==== ===== ==== =====
</Table>
- ------------------
* In the case of a concentration of cross-collateralized mortgage loans, the
aggregate principal balance.
Lloyd Center
The Loan. The Mortgage Loan (the "Lloyd Center Loan") is secured by a
first mortgage encumbering the fee estate in a regional mall located in
Portland, Oregon. The Lloyd Center Loan represents approximately 5.8% of the
Cut-Off Date Pool Balance. The Lloyd Center Loan was originated on May 12, 2003,
and has a principal balance as of the Cut-Off Date of $69,922,221. The Lloyd
Center Loan, which is evidenced by a pari passu note dated May 12, 2003, is a
portion of a whole loan with an original principal balance of $140,000,000. The
other loan related to the Lloyd Center Loan is evidenced by a separate note
dated May 12, 2003 (the "Lloyd Center Pari Passu Loan"), with an original
principal balance of $70,000,000. The Lloyd Center Pari Passu Loan will not be
an asset of the trust. The Lloyd Center Loan and the Lloyd Center Pari Passu
Loan will be governed by an intercreditor and servicing agreement, as described
in this preliminary prospectus supplement under "DESCRIPTION OF THE
S-141
MORTGAGE POOL--Co-Lender Loans" and will be serviced pursuant to the terms of
the pooling and servicing agreement.
The Lloyd Center Loan has a remaining term of 119 months to its anticipated
repayment date of June 11, 2013. The Lloyd Center Loan may be prepaid on or
after March 11, 2013, and permits total or partial defeasance with United States
government obligations beginning two years after the Closing Date.
The Borrower. The borrower is LC Portland, LLC, a special purpose entity.
Legal counsel to the borrower delivered a non-consolidation opinion in
connection with the origination of the Lloyd Center Loan. The sponsor of the
borrower is Glimcher Realty Trust ("Glimcher"). Glimcher is a fully integrated,
self-administered and self-managed publicly traded REIT rated BB/Ba3 by S&P and
Moody's, respectively. Glimcher owns, lease, manages, acquires and develops
enclosed regional shopping malls, shopping centers and single tenant retail
properties in the United States. Glimcher and its affiliates currently have
interests in 71 properties in 22 states, totaling approximately 25.6 million
square feet.
The Property. The Mortgaged Property is an approximately 1,229,140 square
foot regional mall situated on approximately 37.9 acres, constructed in 1960 and
renovated in 1991. The Mortgaged Property is located in Portland, Oregon, within
the Portland-Salem, Oregon-Washington metropolitan statistical area. As of April
25, 2003, the occupancy rate for the Mortgaged Property securing the Lloyd
Center Loan was approximately 95.1%. The Mortgaged Property is anchored by a
Nordstrom and a Sears, which are not part of the collateral. The largest tenant
is Meier & Frank Company ("Meier & Frank"), a division of the May Department
Stores Company, occupying approximately 297,050 square feet, or approximately
24.2% of the net rentable area. A full-line department store for the entire
family, Meier & Frank operates 21 stores in 10 markets in the Northwest. The
Meier & Frank lease expires in January 2006. As of June 2, 2003, The May
Department Stores Company was rated A2 (Moody's) and A (S&P). The second largest
tenant is Dollar Tree Stores, Inc. ("Dollar Tree"), occupying approximately
79,242 square feet or 6.4% of the net rentable area. Dollar Tree operates
discount variety stores offering merchandise at the fixed price of $1.00. The
Dollar Tree lease expires in July 2010. The third largest tenant is Lloyd Center
Cinemas, occupying approximately 66,403 square feet, or approximately 5.4% of
the net rentable area. Lloyd Center Cinemas is owned and operated by Regal
Cinemas, which operates a cinema on one of the outparcels of the Mortgaged
Property. The Lloyd Center Cinemas lease expires in December 2011.
S-142
The following table presents information relating to the major tenants at
the Mortgaged Property:
<Table>
<Caption>
% OF NET % OF NET
ACTUAL RENTABLE RENTABLE DATE OF LEASE
TENANT RENT AREA (SF) AREA EXPIRATION
- ------ ---------- --------- -------- --------------
Nordstrom (Anchor owned, not part of
collateral)......................... 130,000
Sears (Anchor owned, not part of
collateral)......................... 111,645
Meier & Frank Company................. 1.5% 297,050 24.2% January 2006
Dollar Tree........................... 0.9% 79,242 6.4% July 2010
Lloyd Center Cinemas (Ground Lease)... 0.8% 66,403 5.4% December 2011
Safeway, Inc. (Ground Lease).......... 1.8% 56,415 4.6% December 2018
Toys "R" Us........................... 1.5% 47,035 3.8% January 2005
Marshall's............................ 2.5% 37,800 3.1% January 2004
Ross Dress For Less (Glimcher Master
Lease).............................. 3.7% 35,516 2.9% November 2013
Lloyd Mall Cinema 8................... 4.1% 31,179 2.5% January 2012
Barnes & Noble........................ 2.7% 27,500 2.2% January 2012
OHSU Medical Group.................... 2.3% 23,130 1.9% January 2007
Lloyd Center Ice Rink (Ohio
Entertainment Corp.)................ 1.3% 22,034 1.8% February 2004
</Table>
The following table presents information relating to the lease rollover
schedule at the Mortgaged Property:
<Table>
<Caption>
CUMULATIVE %
# OF ROLLING WA BASE TOTAL SF % OF TOTAL SF CUMULATIVE % OF % OF ACTUAL OF ACTUAL
YEAR LEASES RENT/SF ROLLING ROLLING ROLLING(1) SF ROLLING(1) RENT ROLLING(1) RENT ROLLING(1)
- ---- ------------ --------------- -------- ------------- --------------- --------------- ---------------
2003 15 $26.01 27,435 2.2% 2.2% 4.3% 4.3%
2004 24 $16.18 133,816 10.9% 13.1% 13.1% 17.4%
2005 16 $14.75 88,128 7.2% 20.3% 7.9% 25.3%
2006 33 $ 6.32 353,152 28.7% 49.0% 13.5% 38.8%
2007 23 $22.92 85,485 7.0% 56.0% 11.9% 50.6%
2008 14 $28.76 24,200 2.0% 57.9% 4.2% 54.9%
2009 6 $26.89 19,570 1.6% 59.5% 3.2% 58.0%
2010 9 $ 7.71 95,465 7.8% 67.3% 4.5% 62.5%
2011 18 $16.67 114,617 9.3% 76.6% 11.6% 74.1%
2012 22 $24.80 116,243 9.5% 86.1% 17.4% 91.5%
2013 5 $19.65 46,656 3.8% 89.9% 5.5% 97.0%
</Table>
- ------------------
(1) Calculated based on approximate square footage occupied by each tenant.
Escrows. The loan documents provide for certain monthly escrows of real
estate taxes, insurance (unless the policies are blanket policies), ground rent
and replacement reserves in the amount of $240,000 per year. In addition, the
loan documents require the borrower to deposit with the mortgagee at the closing
of the Lloyd Center Loan, a sum of $1,065,593 (aggregated with the corresponding
amount relative to the Lloyd Center Pari Passu Loan) for tenant improvements for
a total of 5 tenants representing 6.4% of the net rentable area. The loan
documents also require the borrower to deposit with the mortgagee (aggregated
with the corresponding amount relative to the Lloyd Center Pari Passu Loan) a
sum of $660,000 per year for tenant improvements and leasing commissions. See
Annex A-3 to this preliminary prospectus supplement for information regarding
escrow reserves.
S-143
Lock Box Account. All tenant payments due under the applicable tenant
leases shall be directly deposited into a mortgagee designated lock box account.
Management. Glimcher Properties Limited Partnership and Glimcher
Development Corporation, each an affiliate of Glimcher Realty Trust, are the
property managers for the Mortgaged Property securing the Lloyd Center Loan.
Glimcher Realty Trust or its affiliates currently manage approximately 25.6
million square feet of commercial space. The property manager is affiliated with
the sponsor.
One South Broad Street
The Loan. The Mortgage Loan (the "One South Broad Street Loan") is secured
by a first mortgage encumbering an office building located in Philadelphia,
Pennsylvania. The One South Broad Street Loan represents approximately 3.7% of
the Cut-Off Date Pool Balance. The One South Broad Street Loan was originated on
April 15, 2003 and has a principal balance as of the Cut-Off Date of
$44,919,182.
The One South Broad Street Loan has a remaining term of 118 months and
matures on May 11, 2013. The One South Broad Street Loan may be prepaid on or
after April 11, 2013 and permits defeasance with United States government
obligations beginning two years after the Closing Date.
The Borrower. The borrower is Broad One L.P., a special purpose entity.
Legal counsel to the borrower delivered a non-consolidation opinion in
connection with the origination of the One South Broad Street Loan. The sponsors
are Mark Karasick and Victor Gerstein. Mr. Karasick currently owns approximately
6.8 million square feet of office and industrial space. Mr. Gerstein is a
practicing real estate attorney who has participated in the acquisition of
approximately 18 commercial and residential properties over the past 25 years.
The Property. The Mortgaged Property is an approximately 464,420 square
foot office building situated on approximately .5 acres in the central business
district of Philadelphia, Pennsylvania, within the Philadelphia, Pennsylvania
metropolitan statistical area. The property was constructed in 1932 and was
renovated in 2001. As of May 12, 2003, the occupancy rate for the Mortgaged
Property securing the One South Broad Street Loan was approximately 91.6%. The
largest tenant is Wachovia Bank, National Association ("Wachovia") occupying
approximately 218,355 square feet, or approximately 47.0% of the net rentable
area. Wachovia is the fifth largest consumer bank in the United States with over
80,000 employees and approximately $341 billion in assets. The Wachovia lease
expires in December 2010. As of June 9, 2003, Wachovia had senior unsecured debt
ratings of Aa3 (Moody's) and A (S&P). The second largest tenant is Dorland
Sweeney Jones ("Dorland") occupying approximately 32,278 square feet, or
approximately 7.0% of the net rentable area. Dorland is a healthcare
communications agency that advertises pharmaceutical and health specialty
products. The Dorland lease expires in July 2011. The third largest tenant is
Electronic Ink, Inc., ("Electronic Ink") occupying approximately 30,922 square
feet, or approximately 6.7% of the net rentable area. Electronic Ink is a
technology design and development company. The Electronic Ink lease expires in
October 2010.
The following table presents information relating to major tenants at the
Mortgaged Property:
<Table>
<Caption>
% OF NET % OF NET
ACTUAL RENTABLE RENTABLE DATE OF LEASE
TENANT RENT AREA (SF) AREA EXPIRATION
------ ------ --------- -------- -------------
Wachovia.............................. 50.8% 218,355 47.0% December 2010
Dorland Sweeney Jones................. 7.4% 32,278 7.0% July 2011
Electronic Ink........................ 7.6% 30,922 6.7% October 2010
Red Tettemer.......................... 6.9% 28,116 6.1% January 2012
Borders Books......................... 5.4% 25,000 5.4% January 2019
</Table>
S-144
The following table presents information relating to the lease rollover
schedule at the Mortgaged Property:
<Table>
<Caption>
CUMULATIVE %
# OF LEASES WA BASE TOTAL SF % OF TOTAL SF CUMULATIVE % OF % OF ACTUAL OF ACTUAL
YEAR ROLLING RENT/SF ROLLING ROLLING ROLLING(1) SF ROLLING(1) RENT ROLLING(1) RENT ROLLING(1)
- ---- ----------- --------------- -------- ------------- --------------- --------------- ---------------
2003 1 $18.00 1,000 0.2% 0.2% 0.2% 0.2%
2004 1 $21.00 1,974 0.4% 0.6% 0.5% 0.7%
2005 2 $21.03 20,486 4.4% 5.1% 4.8% 5.5%
2006 4 $20.78 10,402 2.2% 7.3% 2.4% 7.9%
2007 0 $ 0.00 0 0.0% 7.3% 0.0% 7.9%
2008 1 $23.00 3,174 0.7% 8.0% 0.8% 8.7%
2009 0 $ 0.00 0 0.0% 8.0% 0.0% 8.7%
2010 4 $20.98 249,277 53.7% 61.6% 58.4% 67.1%
2011 3 $21.18 57,143 12.3% 74.0% 13.5% 80.7%
2012 2 $21.87 28,116 6.1% 80.0% 6.9% 87.5%
2013 1 $21.00 22,528 4.9% 84.9% 5.3% 92.8%
</Table>
- ------------------
(1) Calculated based on approximate square footage occupied by each tenant.
Escrows. The loan documents provide for certain escrows of real estate
taxes and insurance and provide for replacement reserves. In addition, the loan
documents require the borrower to deposit with mortgagee (i) at the closing of
the One South Broad Street Loan, a sum of $362,000 for tenant rent abatements
and (ii) a sum of $175,000 per year for tenant improvements and leasing
commissions. In addition, the loan documents require the borrower to deposit an
additional $700,000 per year, not to exceed $3.5 million in the aggregate,
beginning in January, 2006, specifically for the Wachovia space rolling in
December 2010. See Annex A-3 to this preliminary prospectus supplement for
information regarding escrow reserves.
Lock Box Account. At any time during the term of the One South Broad
Street Loan, (i) if the debt service coverage ratio, as computed by the
mortgagee, is less than 1.05x, (ii) upon the occurrence of an event of default
under the loan documents, or (iii) if by June 11, 2009 Wachovia does not elect
to renew its lease, the borrower must notify the property manager that any and
all tenant payments due under the applicable tenant leases shall be directly
deposited into a mortgagee designated lock box account.
Management. Keystone Property Trust is the property manager for the
Mortgaged Property securing the One South Broad Street Loan. Keystone Property
Trust is headquartered in Pennsylvania and currently manages approximately 120
properties, totaling approximately 27 million square feet.
673 First Avenue
The Loan. The Mortgage Loan (the "673 First Avenue Loan") is secured by a
first mortgage encumbering the borrower's leasehold interest in an office
property located in New York, New York. The 673 First Avenue Loan represents
approximately 2.9% of the Cut-Off Date Pool Balance. The 673 First Avenue Loan
was originated on February 7, 2003 and has a principal balance as of the Cut-Off
Date of $35,000,000. The 673 First Avenue Loan provides for interest-only
payments for the first 24 months of its term, and thereafter, fixed monthly
payments of principal and interest.
The 673 First Avenue Loan has a remaining term of 115 months and matures on
February 11, 2013. The 673 First Avenue Loan may be prepaid on or after November
11, 2012, and permits defeasance with United States government obligations
beginning two years after the Closing Date.
The ownership of the subject property represents a leasehold interest which
has an original term (together with any extension options, whether or not
currently exercised) that expires in August 2037. The ground lessor has agreed
to give the holder of the 673 First Avenue Loan notice of, and the right to
cure, any default or breach by the lessee.
S-145
The Borrower. The borrower is Green 673 Realty LLC, a special purpose
entity. Legal counsel to the borrower delivered a non-consolidation opinion in
connection with the origination of the 673 First Avenue Loan. The sponsor of the
borrower is SL Green Realty Corporation, Inc. ("SL Green Realty"). SL Green
Realty, a publicly-traded real estate investment trust ("REIT") established in
1980 by Steven Green, is a self-managed REIT specializing in property
management, acquisitions, financing, development, construction and leasing. SL
Green Realty currently owns and manages approximately 26 properties, totaling
approximately 13 million square feet in New York City.
The Property. The Mortgaged Property is an approximately 396,596 square
foot (excluding a 30,000 square foot parking garage that is leased to a tenant)
Class B office building containing ground floor retail, situated on
approximately 0.8 acres, constructed in 1928, with renovations in 1989. As of
January 13, 2003, the occupancy rate for the Mortgaged Property securing the 673
First Avenue Loan was 100.0%. The largest tenant is UNICEF ("UNICEF") occupying
approximately 81,100 square feet, or approximately 19.0% of the net rentable
area through three separate leases. UNICEF, which became a permanent part of the
United Nations system in 1953, advocates the cause of children living in poverty
in developing countries by striving to reduce childhood death and illness and to
protect children in the midst of war and natural disaster. The UNICEF leases
expire in December 2003 with 1,100 square feet expiring in December 2013. The
second largest tenant is Kallir, Phillips, Ross, Inc. ("KPR, Inc."), occupying
approximately 80,000 square feet, or approximately 18.8% of the net rentable
area. KPR, Inc. is a full-service high-tech public relations and marketing
consultation firm established in 1976 and is currently the nation's
second-largest healthcare/medical agency public relations firm. The KPR, Inc.
lease expires in June 2004. The third largest tenant is New York Presbyterian
Hospital ("NYPH"), occupying approximately 76,000 square feet directly, or
approximately 17.8% of the net rentable area. The New York-Presbyterian
Healthcare System ("NYP Healthcare System") is a federation of top-quality
hospitals, specialty institutes, and continuing care centers throughout New
York, New Jersey and Connecticut. The NYPH original leases expire in August
2006. Including space it subleases in the building, NYPH occupies a total of
approximately 189,999 square feet, or approximately 44.5% of the net rentable
area.
The following table presents information relating to the major tenants at
the Mortgaged Property:
<Table>
<Caption>
% OF NET % OF NET
ACTUAL RENTABLE RENTABLE DATE OF LEASE
TENANT RENT AREA (SF) AREA EXPIRATION
- ------ ------ --------- -------- --------------
UNICEF*.................................. 20.6% 81,100 19.0% December 2003,
December 2013
Kallir, Phillips, Ross, Inc. ............ 19.1% 80,000 18.8% June 2004
New York Presbyterian Hospital*.......... 17.6% 76,000 17.8% August 2006
Franklin Strategic Planning*............. 12.8% 40,000 9.4% April 2004
Republic of South Africa................. 10.6% 40,000 9.4% April 2004
MacMillan Book Club...................... 10.5% 40,000 9.4% October 2005
</Table>
- ---------------
* In addition to the above space, NYPH subleases an additional 113,999 square
feet from other tenants within the Mortgaged Property, including 40,000 square
feet from UNICEF, 24,999 square feet from Franklin Strategic Planning, 40,000
square feet from MacMillan Book Club and 9,000 square feet from Newbridge
Communications making NYPH the largest tenant, when subleases are included,
with 189,999 square feet, or approximately 44.5% of the net rentable area.
S-146
The following table presents information relating to the lease rollover
schedule at the Mortgaged Property:
<Table>
<Caption>
CUMULATIVE %
# OF ROLLING WA BASE TOTAL SF % OF TOTAL SF CUMULATIVE % OF % OF ACTUAL OF ACTUAL
YEAR LEASES RENT/SF ROLLING ROLLING ROLLING(1) SF ROLLING(1) RENT ROLLING(1) RENT ROLLING(1)
- ---- ------------ --------------- -------- ------------- --------------- --------------- ---------------
2003 5 $29.88 83,531 19.6% 19.6% 21.3% 21.3%
2004 6 $25.65 203,944 47.8% 67.4% 44.7% 66.0%
2005 3 $31.34 50,000 11.7% 79.1% 13.4% 79.4%
2006 2 $27.07 76,000 17.8% 96.9% 17.6% 97.0%
2007 1 $10.00 300 0.1% 97.0% 0.0% 97.0%
2008 0 $ 0.00 0 0.0% 97.0% 0.0% 97.0%
2009 0 $ 0.00 0 0.0% 97.0% 0.0% 97.0%
2010 0 $ 0.00 0 0.0% 97.0% 0.0% 97.0%
2011 1 $27.83 10,658 2.5% 99.5% 2.5% 99.6%
2012 1 $30.00 1,063 0.2% 99.7% 0.3% 99.8%
2013 1 $18.54 1,100 0.3% 100.0% 0.2% 100.0%
</Table>
- ------------------
(1) Calculated based on approximate square footage occupied by each tenant.
Escrows. The loan documents provide for certain escrows of real estate
taxes and insurance and provide for replacement reserves. In addition, to
mitigate the near term rollover risk, the loan documents required the borrower
to deposit with the mortgagee a sum of $3,000,000 at the closing of the loan,
and an additional $1,000,000 per year for tenant improvements and leasing
commissions, not to exceed $6,000,000 in the aggregate. The loan documents also
required a $1,500,000 guarantee from the sponsor, SL Green Realty, be given
relating to additional tenant improvements. The total escrow available at the
end of the first year of the loan will be approximately $5,500,000, including
the sponsor guarantee. See Annex A-3 to this preliminary prospectus supplement
for information regarding escrow reserves.
Lock Box Account. At any time during the term of the 673 First Avenue Loan
upon the occurrence of an event of default under the loan documents, the
borrower must notify the tenants that any and all tenant payments due under the
applicable tenant leases shall be directly deposited into a mortgagee designated
lock box account.
Management. SL Green Realty is the property manager for the Mortgaged
Property securing the 673 First Avenue Loan. SL Green Realty currently manages
approximately 13 million square feet of commercial space in New York City and
has managed the Mortgaged Property since its acquisition in 1988. The property
manager is affiliated with the sponsor.
Hamilton House Apartments
The Loan. The Mortgage Loan (the "Hamilton House Apartments Loan") is
secured by a first deed of trust encumbering a 304-unit multifamily complex
located in Washington, DC. The Hamilton House Apartments Loan represents
approximately 2.4% of the Cut-Off Date Pool Balance. The Hamilton House
Apartments Loan was originated on March 13, 2003 and has a principal balance as
of the Cut-Off Date of $28,902,057.
The Hamilton House Apartments Loan has a remaining term of 117 months and
matures on April 11, 2013. The Hamilton House Apartments Loan may be prepaid
with the payment of a yield maintenance premium on or after May 11, 2007, and
may be prepaid without penalty or premium on or after February 11, 2013.
The Borrower. The borrower is GBSK, L.L.C., a special purpose entity.
Legal counsel to the borrower delivered a non-consolidation opinion in
connection with the origination of the Hamilton House Apartments Loan. The
sponsors of the borrower are Gary Squire and Claude Keener. Mr. Squire and
S-147
Mr. Keener have been engaged in the acquisition, renovation, construction and
management of residential properties in the northeast Washington, DC area since
1984, and their current portfolio consists of approximately 1,500 condominium
and apartment units.
The Property. The Mortgaged Property is a 304-unit apartment complex
consisting of one ten-story high-rise building situated on approximately 0.8
acres in Washington, DC, within the Washington, DC metropolitan statistical
area. The Mortgaged Property was constructed in 1965 and renovated in 1999. As
of January 21, 2003, the occupancy rate for the Mortgaged Property securing the
Hamilton House Apartments Loan was approximately 97.4%. Amenities located at the
Mortgaged Property include a swimming pool, a 24-hour fitness center, a 24-hour
front desk, an elegant lobby with four elevators, a gated entrance, a laundry
facility, in-house dry cleaning service and a rooftop sun deck.
The following table presents information relating to the unit configuration
of the Mortgaged Property:
<Table>
<Caption>
APPROXIMATE APPROXIMATE % OF NET
NO. OF UNIT SIZE NET RENTABLE RENTABLE ASKING
UNIT MIX UNITS (SF) AREA (SF) AREA RENTAL RATE
- -------- ------ ----------- ------------ -------- ---------------
Studio...................... 210 465 97,650 58.0% $1,133
1-BR/1-BA................... 87 718 62,466 37.1% $1,739
2-BR/2-BA................... 7 1,163 8,141 4.8% $2,615
--- ----- ------- ----- ---------------
Total/Weighted Average...... 304 553 168,257 100.0% $1,341/$2.42/SF
=== ===== ======= ===== ===============
</Table>
Escrows. The loan documents provide for certain escrows of real estate
taxes and insurance and provide for replacement reserves. See Annex A-3 to this
preliminary prospectus supplement for information regarding escrow reserves.
Lock Box Account. The Hamilton House Apartments Loan documents do not
require a lock box account.
Management. Keener Management is the property manager for the Mortgaged
Property securing the Hamilton House Apartments Loan. Keener Management is
affiliated with the sponsors of the borrower and currently manages approximately
1,500 condominium and apartment units.
Irongate Apartments
The Loan. The Mortgage Loan (the "Irongate Apartments Loan") is secured by
a first deed of trust encumbering a 280-unit multifamily complex located in
Sacramento, California. The Irongate Apartments Loan represents approximately
2.2% of the Cut-Off Date Pool Balance. The Irongate Apartments Loan was
originated on March 18, 2003 and has a principal balance as of the Cut-Off Date
of $27,000,000. The Irongate Apartments Loan provides for interest-only payments
during the first thirty months of its term, and thereafter, fixed monthly
payments of principal and interest.
The Irongate Apartments Loan has a remaining term of 117 months and matures
on April 11, 2013. The Irongate Apartments Loan may be prepaid on or after
February 11, 2013, and permits defeasance with United States government
obligations beginning four years after its first payment date.
The Borrower. The borrower is Irongate Investors, LLC, a special purpose
entity. Legal counsel to the borrower delivered a non-consolidation opinion in
connection with the origination of the Irongate Apartments Loan. The sponsor of
the borrower is the Grupe Holding Company ("Grupe"), a Stockton,
California-based developer of master planned communities and multifamily
properties, which Mr. Greenlaw "Fritz" Grupe founded in 1966. Grupe has
developed more than 10,000 multifamily units nationwide. The company's current
holdings and developments are concentrated in northern California and include
614 multifamily units with an additional 434 units under construction. Grupe
defaulted on a number of non-recourse loans in the early 1990's.
The Property. The Mortgaged Property is a 280-unit garden-style apartment
complex consisting of 19 buildings situated on approximately 13.6 acres in
Sacramento, California, within the Sacramento,
S-148
California metropolitan statistical area. The Mortgaged Property was constructed
in 2002. As of March 6, 2003, the occupancy rate was approximately 91.4%.
Amenities located at the Mortgaged Property include a swimming pool, a business
center, a clubhouse, a volleyball court, a barbeque area, a tot lot, an adjacent
lakeside park, garages and covered parking.
The following table presents information relating to the unit configuration
of the Mortgaged Property:
<Table>
<Caption>
APPROXIMATE APPROXIMATE % OF NET
NO. OF UNIT SIZE NET RENTABLE RENTABLE ASKING
UNIT MIX UNITS (SF) AREA (SF) AREA RENTAL RATE
- -------- ------ ----------- ------------ --------- ---------------
1-BR/1-BA.................. 112 771 86,352 30.9% $950
2-BR/2-BA.................. 144 1,133 163,152 58.4% $1,295
3-BR/2-BA.................. 24 1,240 29,760 10.7% $1,425
--- ----- ------- ----- ---------------
Total/Weighted Average..... 280 997 279,264 100.0% $1,168/$1.17/SF
=== ===== ======= ===== ===============
</Table>
Escrows. The Irongate Apartments Loan documents provide for the escrows of
real estate taxes and insurance and provide for replacement reserves. See Annex
A-3 to this preliminary prospectus supplement for information regarding escrow
reserves.
Lock Box Account. The Irongate Apartments Loan documents do not require a
lock box account.
Management. The Mortgaged Property is managed by Grupe Management, an
affiliate of the Borrower. Grupe Management currently manages approximately
10,000 units that the Grupe Holding Company has developed nationwide, including
approximately 614 units in Sacramento, California. The property manager is
affiliated with the sponsor.
Columbiana Station Shopping Center
The Loan. The Mortgage Loan (the "Columbiana Station Shopping Center
Loan") is secured by a first mortgage encumbering an anchored retail center
located in Columbia, South Carolina. The Columbiana Station Shopping Center Loan
represents approximately 2.2% of the Cut-Off Date Pool Balance. The Columbiana
Station Shopping Center Loan was originated on June 3, 2003 and has a principal
balance as of the Cut-Off Date of $25,900,000. The Columbiana Station Shopping
Center Loan provides for interest-only payments for the length of the loan term.
The Columbiana Station Shopping Center Loan has a remaining term of 83
months and matures on June 11, 2010. The Columbiana Station Shopping Center Loan
may be prepaid with the payment of a yield maintenance premium on or after
August 11, 2005, and may be prepaid without penalty or premium on or after April
11, 2010.
The Borrower. The borrower is Inland Southeast Columbiana, L.L.C., a
special purpose entity. Legal counsel to the borrower delivered a
non-consolidation opinion in connection with the origination of the Columbiana
Station Shopping Center Loan. The sponsor of the borrower is Inland Retail Real
Estate Trust, Inc. ("IRRTI"). IRRTI is a closely held real estate investment
trust with more than 35 years of experience. The IRRTI portfolio currently
consists of approximately 8.5 million square feet of commercial real estate with
management of approximately 22 million square feet commercial space and
approximately 15,500 apartment units.
The Property. The Mortgaged Property is an approximately 270,187 square
foot anchored retail center situated on approximately 36.0 acres and constructed
between 1999 and 2001. The Mortgaged Property is located in Columbia, South
Carolina, within the Columbia, South Carolina metropolitan statistical area. As
of April 17, 2003, the occupancy rate for the Mortgaged Property securing the
Columbiana Station Shopping Center Loan was approximately 97.5%. The largest
tenant is Dick's Sporting Goods, Inc. ("Dick's") occupying approximately 45,741
square feet, or approximately 16.9% of the net rentable area. Dick's is a
sporting goods retailer of brand name sporting goods equipment, apparel and
footwear. The Dick's lease expires in January 2016. The second largest tenant is
Goody's Family Clothing,
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Inc. ("Goody's"), occupying approximately 45,500 square feet, or approximately
16.8% of the net rentable area. Goody's retails moderately-priced apparel for
men, women and children. The Goody's lease expires in May 2016. The third
largest tenant is Circuit City Stores, Inc. ("Circuit City"), occupying
approximately 28,446 square feet, or approximately 10.5% of the net rentable
area. Circuit City is a specialty retailer of brand name consumer electronics,
personal computers, entertainment software, and other products. The Circuit City
lease expires in January 2020.
The following table presents information relating to the major tenants at
the Mortgaged Property:
<Table>
<Caption>
% OF % OF NET
ACTUAL NET RENTABLE RENTABLE DATE OF LEASE
TENANT RENT AREA (SF) AREA EXPIRATION
- ------ ---------- ------------ -------- -------------
Dick's................................ 12.9% 45,741 16.9% January 2016
Goody's............................... 10.9% 45,500 16.8% May 2016
Circuit City.......................... 9.5% 28,446 10.5% January 2020
Petsmart.............................. 8.0% 26,160 9.7% January 2015
Michael's Stores...................... 6.1% 25,020 9.3% February 2010
</Table>
The following table presents information relating to the lease rollover
schedule at the Mortgaged Property:
<Table>
<Caption>
CUMULATIVE %
# OF LEASES WA BASE TOTAL SF % OF TOTAL SF CUMULATIVE % OF % OF ACTUAL OF ACTUAL
YEAR ROLLING RENT/SF ROLLING ROLLING ROLLING(1) SF ROLLING(1) RENT ROLLING(1) RENT ROLLING(1)
- ---- ----------- --------------- -------- ------------- --------------- --------------- ---------------
2003 0 $ 0 0 0.0% 0.0% 0.0% 0.0%
2004 1 $18.00 6,300 2.3% 2.3% 2.9% 2.9%
2005 11 $22.78 20,442 7.6% 9.9% 11.9% 14.8%
2006 2 $41.04 1,340 0.5% 10.4% 1.4% 16.2%
2007 1 $28.00 1,163 0.4% 10.8% 0.8% 17.1%
2008 1 $28.00 1,200 0.4% 11.3% 0.9% 17.9%
2009 2 $18.14 15,488 5.7% 17.0% 7.2% 25.1%
2010 2 $13.94 29,651 11.0% 28.0% 10.6% 35.7%
</Table>
- ------------------
(1) Calculated based on approximate square footage occupied by each tenant.
Escrows. The loan documents do not require escrows. See Annex A-3 to this
preliminary prospectus supplement for information regarding escrow reserves.
Lock Box Account. The Columbiana Station Shopping Center Loan documents do
not require a lock box account.
Management. Inland Mid-Atlantic Management Corp. is the property manager
for the Mortgaged Property securing the Columbiana Station Shopping Center Loan.
The company currently manages approximately 24 properties containing
approximately 2.3 million square feet of retail space in North & South Carolina,
Virginia, Maryland and Pennsylvania.
16 West 61st Street
The Loan. The Mortgage Loan (the "16 West 61st Street Loan") is secured by
a first mortgage encumbering an office building located in New York, New York.
The 16 West 61st Street Loan represents approximately 2.1% of the Cut-Off Date
Pool Balance. The 16 West 61st Street Loan was originated on April 22, 2003 and
has a principal balance as of the Cut-Off Date of $24,953,568.
The 16 West 61st Street Loan has a remaining term of 118 months and matures
on May 11, 2013. The 16 West 61st Street Loan may be prepaid on or after March
11, 2013 and permits defeasance with United States government obligations
beginning two years after the Closing Date.
S-150
The Borrower. The borrower is 16 Lincoln Square LLC, a special purpose
entity. Legal counsel to the borrower delivered a non-consolidation opinion in
connection with the origination of the 16 West 61st Street Loan. The sponsors
are Kenneth Carmel, Andrew G. Roos, and Jerome M. Cohen. The sponsors are
principals of GVA Williams Real Estate, one of New York City's oldest
full-service real estate companies.
The Property. The Mortgaged Property is an approximately 112,080 square
foot office building, with ground level retail space, situated on approximately
0.3 acres in the central business district of New York, New York, within the New
York-Northern New Jersey-Long Island metropolitan statistical area. The property
was constructed in 1924 and was renovated in 2002. As of April 1, 2003, the
occupancy rate for the Mortgaged Property securing the 16 West 61st Street Loan
was 100.0%. The largest tenant is New York Institute of Technology ("NYIT")
occupying approximately 60,000 square feet, or approximately 53.5% of the net
rentable area. NYIT provides career-oriented and professional education that
offers opportunity to all qualified students to support applications-oriented
research. The NYIT lease expires in June 2018. The second largest tenant is the
City of New York Parks & Recreation department ("CNYPR") occupying approximately
34,580 square feet, or approximately 30.9% of the net rentable area. CNYPR has
had their Manhattan headquarters at the Mortgaged Property for over 20 years.
CNYPR's lease expires in April 2012. The third largest tenant is Eastern
Mountain Sports ("EMS") occupying approximately 17,500 square feet, or
approximately 15.6% of the net rentable area. EMS, founded in 1967, has grown
into one of the nation's leading outdoor specialty retailers, with more than 80
retail stores, as well as a significant online presence. EMS is currently based
in Peterborough, New Hampshire. The EMS lease expires in January 2006.
The following table presents information relating to major tenants at the
Mortgaged Property:
<Table>
<Caption>
% OF NET % OF NET
ACTUAL RENTABLE RENTABLE DATE OF LEASE
TENANT RENT AREA (SF) AREA EXPIRATION
- ------ ------ --------- -------- -------------
New York Institute of Technology........... 52.2% 60,000 53.5% June 2018
City of New York Parks & Recreation........ 33.5% 34,580 30.9% April 2012
Eastern Mountain Sports.................... 14.3% 17,500 15.6% January 2006
</Table>
The following table presents information relating to the lease rollover
schedule at the Mortgaged Property:
<Table>
<Caption>
CUMULATIVE %
# OF LEASES WA BASE TOTAL SF % OF TOTAL CUMULATIVE % OF % OF ACTUAL OF ACTUAL
YEAR ROLLING RENT/SF ROLLING ROLLING SF ROLLING(1) SF ROLLING(1) RENT ROLLING(1) RENT ROLLING(1)
- ---- ----------- --------------- -------- ------------- --------------- --------------- ---------------
2003 0 $ 0.00 0 0.0% 0.0% 0.0% 0.0%
2004 0 $ 0.00 0 0.0% 0.0% 0.0% 0.0%
2005 0 $ 0.00 0 0.0% 0.0% 0.0% 0.0%
2006 1 $38.49 17,500 15.6% 15.6% 14.3% 14.3%
2007 0 $ 0.00 0 0.0% 15.6% 0.0% 14.3%
2008 0 $ 0.00 0 0.0% 15.6% 0.0% 14.3%
2009 0 $ 0.00 0 0.0% 15.6% 0.0% 14.3%
2010 0 $ 0.00 0 0.0% 15.6% 0.0% 14.3%
2011 0 $ 0.00 0 0.0% 15.6% 0.0% 14.3%
2012 1 $45.65 34,580 30.9% 46.5% 33.5% 47.8%
2013 0 $ 0.00 0 0.0% 46.5% 0.0% 47.8%
</Table>
- ------------------
(1) Calculated based on approximate square footage occupied by each tenant.
Escrows. The loan documents provide for certain escrows of real estate
taxes and insurance and provide for replacement reserves. In addition, the loan
documents required the borrower to deposit with mortgagee at the closing of the
16 West 61st Street Loan, a sum of $660,000, which will be used to
S-151
reimburse NYIT for work to be completed on its space (the "TI Reimbursement
Escrow"). The TI Reimbursement Escrow will be released once the mortgagee
receives satisfactory evidence that the work has been satisfactorily completed
pursuant to the terms and conditions of the lease. See Annex A-3 to this
preliminary prospectus supplement for information regarding escrow reserves.
Lock Box Account. On April 30, 2011, twelve months prior to the expiration
of the City of New York Parks & Recreation lease, the Borrower will be required
to post a letter of credit ("LOC") in the amount of $800,000. If the LOC is not
posted, or at any time during the term of the 16 West 61st Street Loan upon the
occurrence of an event of default under the loan documents, the borrower must
notify the tenants that any and all tenant payments due under the applicable
tenant leases shall be directly deposited into a mortgagee designated lock box
account. The lock box will terminate if the City of New York Parks & Recreation
lease is renewed or an acceptable replacement tenant takes occupancy and begins
paying rent.
Management. Williams Real Estate Co. Inc., and Williams U.S.A. Realty
Services, Inc. are the property managers for the Mortgaged Property. Both are
related entities of the borrower and of the sponsor, GVA Williams Real Estate,
which is in the field of property management, providing a full range of services
to individual building owners, as well as institutional clients. It currently
manages a portfolio of approximately 15.0 million rentable square feet for both
individual and corporate clients.
Arrowhead Highlands Apartments
The Loan. The Mortgage Loan (the "Arrowhead Highlands Apartments Loan") is
secured by a first deed of trust encumbering a 336-unit multifamily complex
located in Glendale, Arizona. The Arrowhead Highlands Apartments Loan represents
approximately 2.0% of the Cut-Off Date Pool Balance. The Arrowhead Highlands
Apartments Loan was originated on March 31, 2003 and has a principal balance as
of the Cut-Off Date of $24,200,000. The Arrowhead Highlands Apartments Loan
provides for interest-only payments for the first six months of its term, and
thereafter, fixed monthly payments of principal and interest.
The Arrowhead Highlands Apartments Loan has a remaining term of 117 months
and matures on April 11, 2013. The Arrowhead Highlands Apartments Loan may be
prepaid without penalty or premium on or after November 11, 2012, and permits
either defeasance with United States government obligations or prepayment
subject to the payment of a yield maintenance premium, beginning three years
after its first payment date.
The Borrower. The borrower is Arrowhead Highlands L.L.C., a special
purpose entity. The sponsors are Scott Taylor and Jeff Mark, the principals in
Mark-Taylor Residential, which they founded in 1992. Mark-Taylor Residential is
the largest builder/developer of multi-family projects in Arizona. Mr. Taylor
has been involved in the real estate business since 1990. Mr. Mark has been a
developer for more than 20 years and has built in excess of 15,000 units during
his career. Since its inception, Mark-Taylor Residential has opened and leased
23 new properties totaling approximately 7,000 units.
The Property. The Mortgaged Property is a 336-unit, Class A, garden-style
apartment complex consisting of 39 buildings situated on approximately 22.5
acres in Glendale, Arizona, within the Phoenix, Arizona metropolitan statistical
area and constructed in 2001. As of March 1, 2003, the occupancy rate for the
Mortgaged Property securing the Arrowhead Highlands Apartments Loan was
approximately 92.3%. Amenities located at the Mortgaged Property include a
personal concierge service, 24-hour fitness center, sauna, swimming pool and
clubhouse.
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The following table presents information relating to the unit configuration
of the Mortgaged Property:
<Table>
<Caption>
APPROXIMATE APPROXIMATE % OF NET
NO. OF UNIT SIZE NET RENTABLE RENTABLE ASKING
UNIT MIX UNITS (SF) AREA (SF) AREA RENTAL RATE
- -------- ------ ----------- ------------ -------- -------------
1-BR/1-BA................... 44 774 34,056 10.0% $ 750
1-BR/1-BA................... 60 924 55,440 16.3 868
2-BR/2-BA................... 79 976 77,104 22.7 880
2-BR/2-BA................... 113 1,059 119,667 35.3 951
3-BR/2-BA................... 40 1,323 52,920 15.6 1,170
--- ----- ------- ----- -------------
Total/Weighted Average...... 336 1,009 339,187 100.0% $932/$0.92/SF
=== ===== ======= ===== =============
</Table>
Escrows. The loan documents provide for certain escrows of real estate
taxes and insurance and provide for replacement reserves. See Annex A-3 to this
preliminary prospectus supplement for information regarding escrow reserves.
Lock Box Account. The Arrowhead Highlands Apartments Loan documents do not
require a lock box account.
Management. Mark-Taylor Residential is the property manager for the
Mortgaged Property securing the Arrowhead Highlands Apartments Loan. The company
manages Mark-Taylor Residential's 23 properties (approximately 7,000 units) as
well as approximately 3,500 units owned and/or built by organizations unrelated
to Mark-Taylor Residential. The property manager is affiliated with the
sponsors.
AmCap--Union & Alameda
The Loan. The Mortgage Loan (the "AmCap--Union & Alameda Loan") is secured
by a first deed of trust encumbering an anchored retail center located in
Lakewood, Colorado. The AmCap--Union & Alameda Loan represents approximately
1.7% of the Cut-Off Date Pool Balance. The AmCap--Union & Alameda Loan was
originated on March 12, 2003 and has a Cut-Off Date Balance of $20,726,538.
The AmCap--Union & Alameda Loan has a remaining term of 117 months to its
anticipated repayment date of April 11, 2013. The AmCap--Union & Alameda Loan
may be prepaid on or after May 11, 2010, and permits defeasance with United
States government obligations beginning two years after the Closing Date.
The Borrower. The borrower is ADLP--U&A, LLC, a special purpose entity.
Legal counsel to the borrower delivered a non-consolidation opinion in
connection with the origination of the AmCap--Union & Alameda Loan. The sponsor
is Jay Kaiser, president of AmCap Incorporated, a privately held company. Jay
Kaiser is also the sponsor for three other AmCap mortgage loans (AmCap--84th &
Pecos, AmCap--Jewell & Wadsworth and AmCap--Gerbes Center) included in the
trust. AmCap Incorporated, founded in 1979, is headquartered in Stamford,
Connecticut, and is the owner and operator of income-producing real estate
nationwide totaling nearly 3,000,000 square feet.
The Property. The Mortgaged Property is an approximately 239,636 square
foot shopping center situated on approximately 24 acres in Lakewood, Colorado,
within the Denver, Colorado metropolitan statistical area. The property was
constructed in 1978 and was renovated in 1998. As of May 20, 2003, the occupancy
rate for the Mortgaged Property securing the AmCap--Union & Alameda Loan was
approximately 97.6%. The largest tenant is King Soopers ("King Soopers")
occupying approximately 71,220 square feet, or approximately 29.7% of the net
rentable area. King Soopers is the largest grocery store chain in the Denver
area and has been operating in the Denver area for over 70 years. King Soopers
is a wholly owned subsidiary of Kroger, Inc., which as of April 15, 2003, had a
senior unsecured debt rating of "Baa3" (Moody's) and "BBB-" (S&P). The King
Soopers lease expires in January 2006. King Soopers has three five-year renewal
options at its current rent of $4.82 per square foot. The second largest tenant
is 24 Hour Fitness ("24 Hour Fitness") occupying approximately 42,161 square
feet, or approximately 17.6% of the net rentable area. 24 Hour Fitness was
founded in 1983 and is the world's
S-153
largest privately owned and operated fitness center chain. It currently has over
2.7 million members in over 300 clubs in the United States, Asia and Europe. The
24 Hour Fitness lease expires in January 2015. The third largest tenant is Ace
Hardware, ("Ace Hardware") occupying approximately 32,000 square feet, or
approximately 13.4% of the net rentable area. Ace Hardware was founded in 1924
and has grown into one of the nation's leading dealer-owned hardware
cooperatives. Ace Hardware has over 5,100 stores in 50 states and 62 countries.
The Ace Hardware lease expires in March 2006.
The following table presents information relating to the major tenants at
the Mortgaged Property:
<Table>
<Caption>
NET % OF NET
% OF GROSS RENTABLE RENTABLE DATE OF LEASE
TENANT REVENUE AREA (SF) AREA EXPIRATION
- ------ ---------- ------------ -------- -------------
King Soopers........................... 21.0% 71,220 29.7% January 2006
24 Hour Fitness........................ 25.2% 42,161 17.6% January 2015
Ace Hardware........................... 4.9% 32,000 13.4% March 2006
ICG Telecom............................ 11.9% 17,018 7.1% April 2004
Bank Of Nova Scotia.................... 10.2% 16,808 7.0% June 2009
</Table>
The following table presents information relating to the lease rollover
schedule at the Mortgaged Property:
<Table>
<Caption>
% OF TOTAL CUMULATIVE %
# OF LEASES WA BASE TOTAL SF % OF TOTAL SF CUMULATIVE % OF BASE RENTAL OF TOTAL RENTAL
YEAR ROLLING RENT/SF ROLLING ROLLING ROLLING(1) SF ROLLING(1) REVENUES ROLLING(1) REVENUES ROLLING
- ---- ----------- --------------- -------- ------------- --------------- ------------------- ----------------
2003 1 $19.00 5,370 2.2% 2.2% 4.7% 4.7%
2004 4 $12.73 20,318 8.5% 10.7% 12.0% 16.7%
2005 4 $18.79 6,725 2.8% 13.5% 5.9% 22.5%
2006 9 $ 5.56 116,758 48.7% 62.3% 30.1% 52.6%
2007 3 $13.25 9,830 4.1% 66.4% 6.0% 58.6%
2008 1 $18.50 1,400 0.6% 66.9% 1.2% 59.8%
2009 1 $ 9.87 16,808 7.0% 74.0% 7.7% 67.5%
2010 2 $12.87 14,438 6.0% 80.0% 8.6% 76.1%
2011 0 $ 0.00 0 0.0% 80.0% 0.0% 76.1%
2012 0 $ 0.00 0 0.0% 80.0% 0.0% 76.1%
2013 0 $ 0.00 0 0.0% 80.0% 0.0% 76.1%
</Table>
- ------------------
(1) Calculated based on approximate square footage occupied by each tenant.
Escrows. The loan documents provide for certain escrows of real estate
taxes and insurance and provide for replacement reserves. In addition, the loan
documents require the borrower to deposit with mortgagee, a sum of $10,526 per
month for tenant improvements and leasing commissions should the reserve fall
below the cap of $200,000, which was taken at the closing of the AmCap--Union &
Alameda loan. See Annex A-3 to this preliminary prospectus supplement for
information regarding escrow reserves.
Lock Box Account. At any time during the term of the AmCap--Union &
Alameda Loan, (i) upon the occurrence of an event of default under the loan
documents, or (ii) one month prior to the anticipated repayment date, the
borrower must notify the tenants that any and all tenant payments due under the
applicable tenant leases shall be directly deposited into a mortgagee designated
lock box account.
Management. AmCap Properties, Inc is the property manager for the
Mortgaged Property securing the AmCap--Union & Alameda Loan. Established in
1979, AmCap Properties, Inc., which is headquartered in Stamford, Connecticut,
has developed a network of institutional and private commercial real estate
developers and owners who rely on AmCap Properties, Inc. for third party leasing
and management. AmCap Properties, Inc. currently has a leasing and/or management
portfolio of nearly 4,000,000 square feet. The property manager is affiliated
with the sponsor.
S-154
Plaza Gardens South Apartments
The Loan. The Mortgage Loan (the "Plaza Gardens South Apartments Loan") is
secured by a first mortgage encumbering a 250-unit multifamily complex located
in Overland Park, Kansas. The Plaza Gardens South Apartments Loan represents
approximately 1.7% of the Cut-Off Date Pool Balance. The Plaza Gardens South
Apartments Loan was originated on November 14, 2002 and has a principal balance
as of the Cut-Off Date of $20,649,186.
The Plaza Gardens South Apartments Loan has a remaining term of 113 months
and matures on December 1, 2012. The Plaza Gardens South Apartments Loan may be
prepaid on or after November 1, 2012, and permits defeasance with United States
government obligations beginning two years after the Closing Date.
The Borrower. The borrower is Plaza Gardens South of Overland Park, Inc.,
a special purpose entity. Legal counsel to the borrower has delivered a
non-consolidation opinion in connection with the origination of the Plaza
Gardens South Apartments Loan. The sponsor is Michael G. Schlup. Mr. Schlup has
over 15 years experience in real estate development, construction and management
having developed over 1,000 single family homes, townhomes and apartment units.
In 1993, Mr. Schlup pleaded guilty to eight counts of conspiracy to commit fraud
and filing false statements on loan and credit applications. At no time did Mr.
Schlup file for bankruptcy protection nor were any properties owned by Mr.
Schlup subject to foreclosure or deed-in-lieu.
The Property. The Mortgaged Property is a 250-unit garden-style apartment
complex consisting of 29 buildings situated on approximately 25.7 acres in
Overland Park, Kansas, within the Kansas City, Kansas metropolitan statistical
area and constructed in 2002. As of April 1, 2003, the occupancy rate for the
Mortgaged Property securing the Plaza Gardens South Apartments Loan was
approximately 97.2%. Amenities located at the Mortgaged Property include a large
clubhouse, outdoor swimming pool and hot tub, a 20-seat theatre, workout
facility, racquetball court, two tanning beds, steam room, a library with a
computer with internet access, basketball courts, putting greens and playground
areas. Unit amenities include patios/balconies, a brick fireplace, marble,
ceramic, and vinyl floors, a full size washer and dryer, a Jacuzzi tub, a
ceiling fan, a microwave, a dishwasher and disposal, a large stove, a central
vacuum cleaning system and walk-in closets.
The following table presents information relating to the unit configuration
at the Mortgaged Property:
<Table>
<Caption>
APPROXIMATE APPROXIMATE % OF NET
NO. OF UNIT SIZE NET RENTABLE RENTABLE ASKING
UNIT MIX UNITS (SF) AREA (SF) AREA RENTAL RANGE
- -------- ------ ----------- ------------ -------- ----------------
1-BR/1-BA.................. 77 856 65,912 23.2% $605-$1,150
2-BR/2-BA.................. 135 1,170 157,950 55.7% $600-$1,312
3-BR/2-BA.................. 38 1,573 59,774 21.1% $810-$1,575
--- ----- ------- ------ ----------------
Total/Weighted Average..... 250 1,139 283,636 100.00% $ 1,075/$0.94/SF
=== ===== ======= ====== ================
</Table>
Escrows. The loan documents provide for certain escrows of real estate
taxes and insurance and provide for replacement reserves. In addition, the
borrower deposited with mortgagee, at the closing of the Plaza Gardens South
Apartments Loan, a sum of $900,000, to be released when certain earnout
conditions are satisfied. These conditions include achieving a 90% physical
occupancy and a 1.20x DSCR using an 8.0% constant for nine consecutive months.
The loan is recourse to the Borrower until these reserve release conditions are
achieved. If the earnout conditions are not satisfied on or before 30 months
after the closing, the $900,000 will become a permanent debt service reserve.
See Annex A-3 to this preliminary prospectus supplement for information
regarding escrow reserves.
Lock Box Account. The loan documents do not require a lock box account.
Management. Schlup Investments, Inc. is the property manager for the
Mortgaged Property securing the Plaza Gardens South Apartments Loan. The
property manager is affiliated with the sponsor.
S-155
2175 K Street, N.W.
<Table>
- -------------------------------------------------------
PROPERTY INFORMATION
Number of Mortgaged Real Properties... 1
Location (City, State)................ Washington, DC
Property Type......................... Office
Size (SF)............................. 100,837
Occupancy as of March 31, 2003........ 97.5%
Year Built............................ 1980
Appraisal Value....................... $24,800,000
Underwritten Occupancy................ 92.5%
Underwritten Revenues................. $3,189,042
Underwritten Total Expenses........... $1,357,745
Underwritten Net Operating Income
(NOI)................................ $1,831,297
Underwritten Net Cash Flow (NCF)...... $1,692,589
- --------------------------------------------------------
</Table>
<Table>
- --------------------------------------------------------
MORTGAGE LOAN INFORMATION
Mortgage Loan Seller...................... Wachovia
Cut-Off Date Balance...................... $18,250,000
Percentage of Cut-Off Date Pool Balance... 1.5%
Cut-off Date Loan Balance Per SF.......... $181
Number of Mortgage Loans.................. 1
Type of Security.......................... Fee
Mortgage Rate............................. 5.960%
Original Term/Amortization................ 120/360
Remaining Term/Amortization............... 118/360
Cut-Off Date LTV.......................... 73.6%
Maturity Date LTV......................... 66.5%
Underwritten DSCR on NOI.................. 1.40x
Underwritten DSCR on NCF.................. 1.29x
- --------------------------------------------------------
</Table>
The following table presents information relating to major tenants at the
Mortgaged Property:
<Table>
<Caption>
% OF NET % OF NET
ACTUAL RENTABLE RENTABLE DATE OF LEASE
TENANT RENT AREA (SF) AREA EXPIRATION
------ ------ --------- -------- --------------
U.S. Chemical Safety & Hazard Investigation
Board...................................... 20.2% 19,116 19.0% September 2010
The George Washington University............. 18.9% 17,962 17.8% December 2005
Cameron McKenna LLP.......................... 12.9% 11,841 11.7% October 2003
McCarthy, Sweeney & Harkaway................. 7.8% 7,380 7.3% May 2010
The Medical Society of D.C. ................. 7.7% 7,296 7.2% October 2008
U.S. Hispanic Chamber of Commerce............ 5.4% 5,882 5.8% April 2010
</Table>
90 & 110 South Bedford Road
<Table>
- -------------------------------------------------------
PROPERTY INFORMATION
Number of Mortgaged Real
Properties........................ 1
Location (City, State).............. Mount Kisco, NY
Property Type....................... Office
Size (SF)........................... 120,211
Occupancy as of March 21, 2003...... 100.0%
Year Built/Year Renovated........... 1975/1996
Appraisal Value..................... $22,500,000
Underwritten Occupancy.............. 95.0%
Underwritten Revenues............... $3,438,240
Underwritten Total Expenses......... $1,386,213
Underwritten Net Operating Income
(NOI)............................. $2,052,026
Underwritten Net Cash Flow (NCF).... $1,874,533
- -------------------------------------------------------
</Table>
<Table>
- ---------------------------------------------------------
MORTGAGE LOAN INFORMATION
Mortgage Loan Seller...................... Wachovia
Cut-Off Date Balance...................... $17,965,895
Percentage of Cut-Off Date Pool Balance... 1.5%
Cut-off Date Loan Balance Per SF.......... $149
Number of Mortgage Loans.................. 1
Type of Security.......................... Fee
Mortgage Rate............................. 5.840%
Original Term/Amortization................ 120/360
Remaining Term/Amortization............... 118/358
Cut-Off Date LTV.......................... 79.9%
Maturity Date LTV......................... 67.6%
Underwritten DSCR on NOI.................. 1.61x
Underwritten DSCR on NCF.................. 1.47x
- ---------------------------------------------------------
</Table>
The following table presents information relating to all four tenants at
the Mortgaged Property:
<Table>
<Caption>
% OF NET % OF NET
ACTUAL RENTABLE RENTABLE DATE OF LEASE
TENANT RENT AREA (SF) AREA EXPIRATION
- ------ ------ --------- -------- -------------
Mount Kisco Medical Group................ 81.9% 101,385 84.3% April 2033
Merrill Lynch............................ 9.8% 9,721 8.1% November 2004
Northern Westchester Cardiac
Rehabilitation......................... 5.0% 5,605 4.7% October 2005
The Therapy Center....................... 3.4% 3,500 2.9% June 2004
</Table>
S-156
Maryland Corporate Center
<Table>
- ------------------------------------------------------
PROPERTY INFORMATION
Number of Mortgaged Real Properties..... 1
Location (City, State).................. Lanham, MD
Property Type........................... Office
Size (SF)............................... 223,521
Occupancy as of April 30, 2003.......... 83.0%
Year Built.............................. 1984-1989
Appraised Value......................... $21,500,000
Underwritten Occupancy.................. 82.6%
Underwritten Revenues................... $3,637,368
Underwritten Total Expenses............. $1,543,310
Underwritten Net Operating Income
(NOI)................................. $2,094,058
Underwritten Net Cash Flow (NCF)........ $1,779,640
- ------------------------------------------------------
</Table>
<Table>
- ---------------------------------------------------------
MORTGAGE LOAN INFORMATION
Mortgage Loan Seller...................... Citigroup
Cut-Off Date Balance...................... $17,120,000
Percentage of Cut-Off Date Pool Balance... 1.4%
Cut-Off Date Loan Balance Per SF.......... $77
Number of Mortgage Loans.................. 1
Type of Security.......................... Fee
Mortgage Rate............................. 5.725%
Original Term/Amortization................ 108/336
Remaining Term/Amortization............... 103/336
Cut-Off Date LTV.......................... 79.6%
Maturity Date LTV......................... 68.6%
Underwritten DSCR on NOI.................. 1.71x
Underwritten DSCR on NCF.................. 1.45x
- ---------------------------------------------------------
</Table>
The following table presents information relating to major tenants at the
Mortgaged Property:
<Table>
<Caption>
% OF GROSS NET % OF NET
POTENTIAL RENTABLE RENTABLE DATE OF LEASE
TENANT RENT AREA (SF) AREA EXPIRATION
- ------ ---------- --------- -------- -------------
Lockheed Martin....................... 27.8% 50,098 22.4% June 2009
QSS Group............................. 9.1% 16,846 7.5% May 2004
Jackson and Tull...................... 8.1% 14,418 6.5% July 2006
Nextlink Comm./XO Comm. .............. 6.3% 11,468 5.1% October 2005
Booz, Allen & Hamilton................ 5.4% 9,134 4.1% November 2003
</Table>
Village on the Hill
<Table>
- -------------------------------------------------------
PROPERTY INFORMATION
Number of Mortgaged Real
Properties......................... 1
Location (City, State)............... Framingham, MA
Property Type........................ Multifamily
Size (Units)......................... 184
Occupancy as of February 28, 2003.... 97.3%
Year Built........................... 1968
Appraised Value...................... $23,000,000
Underwritten Occupancy............... 95.0%
Underwritten Revenues................ $2,308,367
Underwritten Total Expenses.......... $740,560
Underwritten Net Operating
Income(NOI)........................ $1,567,807
Underwritten Net Cash Flow (NCF)..... $1,514,999
- -------------------------------------------------------
</Table>
<Table>
- ----------------------------------------------------------
MORTGAGE LOAN INFORMATION
Mortgage Loan Seller...................... Wachovia
Cut-Off Date Balance...................... $17,000,000
Percentage of Cut-Off Date Pool Balance... 1.4%
Cut-Off Date Loan Balance Per Unit........ $92,391
Number of Mortgage Loans.................. 1
Type of Security.......................... Fee
Mortgage Rate............................. 5.470%
Original Term/Amortization................ 120/360
Remaining Term/Amortization............... 118/360
Cut-Off Date LTV.......................... 73.9%
Maturity Date LTV......................... 66.1%
Underwritten DSCR on NOI.................. 1.36x
Underwritten DSCR on NCF.................. 1.31x
- ----------------------------------------------------------
</Table>
The following table presents information relating to the unit configuration
at the Mortgaged Property:
<Table>
<Caption>
APPROXIMATE APPROXIMATE % OF NET
NO. OF UNIT SIZE NET RENTABLE RENTABLE ASKING
UNIT MIX UNITS (SF) AREA (SF) AREA (SF) RENTAL RATES
- -------- ------ ----------- ------------ --------- ---------------
Studio..................... 2 500 1,000 0.6% $900
1-BR/1-BA.................. 88 720 63,360 41.0% $1,085
2-BR/2-BA.................. 92 980 90,160 58.3% $1,245
3-BR/2-BA.................. 1 1,510 -- 0.0% Employee Unit
4-BR/2-BA.................. 1 1,960 -- 0.0% Employee Unit
--- ---- ------- ----- ---------------
Total/Weighted Average..... 184 859 154,520 100.0% $1,163/$1.37/SF
=== ==== ======= ===== ===============
</Table>
S-157
Anthem Village
<Table>
- ---------------------------------------------------------
PROPERTY INFORMATION
Number of Mortgaged Real Properties... 1
Location (City, State)................ Henderson, NV
Property Type......................... Retail-Anchored
Size (SF)............................. 115,719
Occupancy as of January 13, 2003...... 93.0%
Year Built............................ 2002
Appraised Value....................... $24,600,000
Underwritten Occupancy................ 89.8%
Underwritten Revenues................. $2,287,452
Underwritten Total Expenses........... $556,876
Underwritten Net Operating Income
(NOI)............................... $1,730,576
Underwritten Net Cash Flow (NCF)...... $1,665,650
- ---------------------------------------------------------
</Table>
<Table>
- ----------------------------------------------------------
MORTGAGE LOAN INFORMATION
Mortgage Loan Seller....................... Citigroup
Cut-Off Date Balance....................... $16,904,637
Percentage of Cut-Off Date Pool Balance.... 1.4%
Cut-Off Date Loan Balance Per SF........... $146
Number of Mortgage Loans................... 1
Type of Security........................... Fee
Mortgage Rate.............................. 5.420%
Original Term/Amortization................. 108/360
Remaining Term/Amortization................ 103/355
Cut-Off Date LTV........................... 68.7%
Maturity Date LTV.......................... 59.0%
Underwritten DSCR on NOI................... 1.51x
Underwritten DSCR on NCF................... 1.45x
- ----------------------------------------------------------
</Table>
The following table presents information relating to the major tenants at
the Mortgaged Property:
<Table>
<Caption>
% OF GROSS NET % OF NET
POTENTIAL RENTABLE RENTABLE DATE OF LEASE
TENANT RENT AREA (SF) AREA EXPIRATION
- ------ ---------- --------- -------- -------------
The Vons Companies.................... 37.6% 55,855 48.3% November 2026
Longs Drug Stores..................... 13.1% 21,482 18.6% February 2027
Blockbuster........................... 5.0% 4,075 3.5% December 2011
Doc Holiday's......................... 6.0% 4,039 3.5% December 2011
Wells Fargo........................... 4.6% 3,600 3.1% January 2012
</Table>
Riviera Plaza
<Table>
- ---------------------------------------------------------
PROPERTY INFORMATION
Number of Mortgaged Real Properties...... 1
Location (City, State)................... Portland, OR
Property Type............................ Mixed Use
Office/Retail
Size (SF)................................ 158,820
Occupancy as of April 16, 2003........... 96.6%
Year Built/Year Renovated................ 1967/2000
Appraised Value.......................... $22,000,000
Underwritten Occupancy................... 91.7%
Underwritten Revenues.................... $2,371,582
Underwritten Total Expenses.............. $629,953
Underwritten Net Operating Income
(NOI).................................. $1,741,629
Underwritten Net Cash Flow (NCF)......... $1,585,551
- ---------------------------------------------------------
</Table>
<Table>
- ---------------------------------------------------------
MORTGAGE LOAN INFORMATION
Mortgage Loan Seller...................... Citigroup
Cut-Off Date Balance...................... $16,759,445
Percentage of Cut-Off Date Pool Balance... 1.4%
Cut-Off Date Loan Balance Per SF.......... $106
Number of Mortgage Loans.................. 1
Type of Security.......................... Fee
Mortgage Rate............................. 5.650%
Original Term/Amortization................ 108/360
Remaining Term/Amortization............... 103/355
Cut-Off Date LTV.......................... 76.2%
Maturity Date LTV......................... 65.8%
Underwritten DSCR on NOI.................. 1.49x
Underwritten DSCR on NCF.................. 1.36x
- ---------------------------------------------------------
</Table>
The following table presents information relating to major tenants at the
Mortgaged Property:
<Table>
<Caption>
% OF GROSS NET % OF NET
POTENTIAL RENTABLE RENTABLE DATE OF LEASE
TENANT RENT AREA (SF) AREA EXPIRATION
- ------ ---------- --------- -------- -------------
Don Rasmussen Company................. 40.0% 92,168 58.0% August 2016
Collins Pine Company.................. 13.9% 13,975 8.8% August 2010
Western Medical Consultants, Inc. .... 8.6% 9,324 5.9% November 2008
Massachusetts Mutual Life Insurance
Co. ................................ 5.1% 5,937 3.7% January 2008
Todd Consulting Inc. ................. 4.6% 5,362 3.4% March 2007
</Table>
S-158
Georgetown Plaza
<Table>
- --------------------------------------------------------
PROPERTY INFORMATION
Number of Mortgaged Real Properties... 1
Location (City, State)................ Washington, DC
Property Type......................... Office
Size (SF)............................. 140,495
Occupancy as of April 25, 2003........ 84.0%
Year Built/Year Renovated............. 1964/2001
Appraised Value....................... $21,500,000
Underwritten Occupancy................ 84.9%
Underwritten Revenues................. $3,307,637
Underwritten Total Expenses........... $1,507,917
Underwritten Net Operating Income
(NOI)............................... $1,799,720
Underwritten Net Cash Flow (NCF)...... $1,537,086
- --------------------------------------------------------
</Table>
<Table>
- ---------------------------------------------------------
MORTGAGE LOAN INFORMATION
Mortgage Loan Seller...................... Citigroup
Cut-Off Date Balance...................... $16,482,871
Percentage of Cut-Off Date Pool Balance... 1.4%
Cut-Off Date Loan Balance Per SF.......... $117
Number of Mortgage Loans.................. 1
Type of Security.......................... Leasehold
Mortgage Rate............................. 5.780%
Original Term/Amortization................ 120/360
Remaining Term/Amortization............... 119/359
Cut-Off Date LTV.......................... 76.7%
Maturity Date LTV......................... 64.7%
Underwritten DSCR on NOI.................. 1.55x
Underwritten DSCR on NCF.................. 1.33x
- ---------------------------------------------------------
</Table>
The following table presents information relating to major tenants at the
Mortgaged Property:
<Table>
<Caption>
% OF GROSS NET % OF NET
POTENTIAL RENTABLE RENTABLE DATE OF LEASE
TENANT RENT AREA (SF) AREA EXPIRATION
- ------ ---------- --------- -------- -------------
Georgetown University................. 35.8% 46,327 33.0% July 2005
Theodore's Furniture.................. 6.2% 11,738 8.4% July 2004
Bomstein Agency....................... 5.9% 7,546 5.4% November 2011
Lado Enterprises(1)................... 4.4% 7,530 5.4% June 2013
Discovery Creek....................... 3.6% 5,085 3.6% April 2013
</Table>
- ---------------
(1) Based on Lado Enterprise's downsizing of space effective July 1, 2003 and
extension of the lease term.
College Grove Shopping Center
<Table>
- ---------------------------------------------------------
PROPERTY INFORMATION
Number of Mortgaged Real Properties... 1
Location (City, State)................ San Diego, CA
Property Type......................... Retail-Anchored
Size (SF)............................. 193,912
Occupancy as of May 31, 2003.......... 99.3%
Year Built/Year Renovated............. 1960/1999
Appraised Value....................... $21,500,000
Underwritten Occupancy................ 95.0%
Underwritten Revenues................. $2,504,586
Underwritten Total Expenses........... $967,970
Underwritten Net Operating Income
(NOI)............................... $1,536,616
Underwritten Net Cash Flow (NCF)...... $1,416,225
- ---------------------------------------------------------
</Table>
<Table>
- ---------------------------------------------------------
MORTGAGE LOAN INFORMATION
Mortgage Loan Seller...................... Wachovia
Cut-Off Date Balance...................... $16,281,990
Percentage of Cut-Off Date Pool Balance... 1.4%
Cut-Off Date Loan Balance Per SF.......... $84
Number of Mortgage Loans.................. 1
Type of Security.......................... Fee
Mortgage Rate............................. 5.450%
Original Term/Amortization................ 120/360
Remaining Term/Amortization............... 119/359
Cut-Off Date LTV.......................... 75.7%
Maturity Date LTV......................... 63.2%
Underwritten DSCR on NOI.................. 1.39x
Underwritten DSCR on NCF.................. 1.28x
- ---------------------------------------------------------
</Table>
The following table presents information relating to the major tenants at
the Mortgaged Property:
<Table>
<Caption>
% OF NET % OF NET
ACTUAL RENTABLE RENTABLE DATE OF LEASE
TENANT RENT AREA (SF) AREA EXPIRATION
- ------ ------ --------- -------- -------------
Mervyns.................................. 2.5% 74,168 38.2% January 2009
Longs Drug Stores........................ 5.7% 25,241 13.0% May 2009
Staples.................................. 23.9% 24,000 12.4% February 2015
Big Lots................................. 10.6% 20,000 10.3% February 2005
Party City............................... 13.6% 12,115 6.2% April 2010
Bank of America.......................... 6.8% 7,000 3.6% May 2012
Coco's................................... 0.7% 6,056 3.1% June 2005
Washington Mutual........................ 5.7% 6,000 3.1% July 2005
</Table>
S-159
Shoppes Of Parkland
<Table>
- --------------------------------------------------------
PROPERTY INFORMATION
Number of Mortgaged Real
Properties......................... 1
Location (City, State)............... Parkland, FL
Property Type........................ Retail-Anchored
Size (SF)............................ 145,652
Occupancy as of March 31, 2003....... 100.0%
Year Built........................... 2000
Appraisal Value...................... $20,100,000
Underwritten Occupancy............... 95.0%
Underwritten Revenues................ $2,270,340
Underwritten Total Expenses.......... $727,220
Underwritten Net Operating Income
(NOI).............................. $1,543,121
Underwritten Net Cash Flow (NCF)..... $1,500,038
- --------------------------------------------------------
</Table>
<Table>
- ---------------------------------------------------------
MORTGAGE LOAN INFORMATION
Mortgage Loan Seller....................... Wachovia
Cut-Off Date Balance....................... 15,968,669
Percentage of Cut-Off Date Pool Balance.... 1.3%
Cut-Off Date Loan Balance Per SF........... $110
Number of Mortgage Loans................... 1
Type of Security........................... Fee
Mortgage Rate.............................. 5.690%
Original Term/Amortization................. 120/360
Remaining Term/Amortization................ 118/358
Cut-Off Date LTV........................... 79.5%
Maturity Date LTV.......................... 66.9%
Underwritten DSCR on NOI................... 1.39x
Underwritten DSCR on NCF................... 1.35x
- ---------------------------------------------------------
</Table>
The following table presents information relating to the major tenants at
the Mortgaged Property:
<Table>
<Caption>
% OF NET % OF NET
ACTUAL RENTABLE RENTABLE DATE OF LEASE
TENANT RENT AREA (SF) AREA EXPIRATION
- ------ ------ --------- -------- -------------
BJ's Wholesale Club...................... 55.8% 108,532 74.5% January 2021
Oxford Academy........................... 7.5% 6,800 4.7% December 2011
Carlucci's Gourmet Market................ 7.4% 6,400 4.4% October 2012
Lucky Dragon............................. 3.0% 2,400 1.6% January 2011
Creative Image Salon..................... 2.9% 2,400 1.6% November 2005
</Table>
Lowell Street
<Table>
- -------------------------------------------------------
PROPERTY INFORMATION
Number of Mortgaged Real
Properties......................... 1
Location (City, State)............... Wilmington, MA
Property Type........................ Industrial
Size (SF)............................ 206,187
Occupancy as of July 1, 2003......... 100.0%
Year Built/Year Renovated............ 1958/2002
Appraisal Value...................... $22,200,000
Underwritten Occupancy............... 90.0%
Underwritten Revenues................ $2,623,930
Underwritten Total Expenses.......... $736,265
Underwritten Net Operating Income
(NOI).............................. $1,887,665
Underwritten Net Cash Flow (NCF)..... $1,724,193
- -------------------------------------------------------
</Table>
<Table>
- ----------------------------------------------------------
MORTGAGE LOAN INFORMATION
Mortgage Loan Seller...................... Nomura
Cut-Off Date Balance...................... $15,403,980
Percentage of Cut-Off Date Pool Balance... 1.3%
Cut-off Date Loan Balance Per SF.......... $75
Number of Mortgage Loans.................. 1
Type of Security.......................... Fee
Mortgage Rate............................. 6.400%
Original Term/Amortization................ 120/360
Remaining Term/Amortization............... 113/353
Cut-Off Date LTV.......................... 69.4%
Maturity Date LTV......................... 59.9%
Underwritten DSCR on NOI.................. 1.62x
Underwritten DSCR on NCF.................. 1.48x
- ----------------------------------------------------------
</Table>
The following table presents information relating to major tenants at the
Mortgaged Property:
<Table>
<Caption>
% OF GROSS NET % OF NET
ACTUAL RENTABLE RENTABLE DATE OF LEASE
TENANT RENT AREA (SF) AREA EXPIRATION
- ------ ---------- --------- -------- -------------
ION Track Instruments................. 51.4% 84,994 41.2% May 2009
Viasys Healthcare, Inc. .............. 33.0% 83,842 40.7% August 2012
Empirix (Teradyne).................... 15.6% 37,351 18.1% October 2003
</Table>
THE MORTGAGE LOAN SELLERS
The Depositor will acquire the Mortgage Loans from the Mortgage Loan
Sellers on or prior to the Closing Date pursuant to separate mortgage loan
purchase agreements (each, a "Mortgage Loan Purchase Agreement" and together,
the "Mortgage Loan Purchase Agreements"). The Mortgage Loan Sellers originated
or acquired the Mortgage Loans as described above under "-- Mortgage Loan
History."
S-160
Sixty-four (64) of the Mortgage Loans (the "Wachovia Mortgage Loans"),
representing 56.0% of the Cut-Off Date Pool Balance (47 Mortgage Loans in Loan
Group 1 or 58.5% of the related Cut-Off Date Group Balance and 17 Mortgage Loans
in Loan Group 2 or 48.4% of the related Cut-Off Date Group Balance), were
originated or acquired by Wachovia Bank, National Association (formerly known as
First Union National Bank). Wachovia is a national banking association whose
principal offices are located in Charlotte, North Carolina. Wachovia's business
is subject to examination and regulation by federal banking authorities and its
primary federal bank regulatory authority is the Office of the Comptroller of
the Currency. Wachovia is a wholly-owned subsidiary of Wachovia Corporation. As
of March 31, 2003, Wachovia had total assets of $348 billion. Wachovia is acting
as the Master Servicer. Wachovia Securities, LLC is acting as an Underwriter for
this transaction and is an affiliate of Wachovia.
Eighteen (18) of the Mortgage Loans (the "Citigroup Mortgage Loans"),
representing 16.9% of the Cut-Off Date Pool Balance (14 Mortgage Loans in Loan
Group 1 or 17.3% of the related Cut-Off Date Group Balance and 4 Mortgage Loans
in Loan Group 2 or 15.7% of the related Cut-Off Date Group Balance), were
originated or acquired by Citigroup Global Markets Realty Corp., a New York
corporation whose principal offices are located in New York, New York that is
primarily engaged in the business of purchasing and originating commercial
mortgage loans. Citigroup is a subsidiary of Citigroup Financial Products, Inc.
An affiliate of Citigroup, Citigroup Global Markets Inc., is acting as an
Underwriter for this transaction.
Thirty-eight (38) of the Mortgage Loans (the "Nomura Mortgage Loans"),
representing 14.8% of the Cut-Off Date Pool Balance (26 Mortgage Loans in Loan
Group 1 or 14.2% of the related Cut-Off Date Group Balance and 12 Mortgage Loans
in Loan Group 2 or 16.6% of the related Cut-Off Date Group Balance), were
originated or acquired by Nomura Credit & Capital, Inc. Nomura is a Delaware
corporation whose principal offices are located in New York, New York. Nomura is
a subsidiary of Nomura Holding America Inc., and an indirect subsidiary of
Nomura Holdings, Inc., one of the largest global investment banking and
securities firms, with a market capitalization of approximately $20 billion.
Nomura is a HUD approved mortgagee primarily engaged in the business of
originating and acquiring mortgage loans and other assets. An affiliate of
Nomura, Nomura Securities International, Inc., is acting as an Underwriter for
this transaction.
Thirty-two (32) of the Mortgage Loans (the "Artesia Mortgage Loans"),
representing 12.4% of the Cut-Off Date Pool Balance (20 Mortgage Loans in Loan
Group 1 or 10.1% of the related Cut-Off Date Group Balance and 12 Mortgage Loans
in Loan Group 2 or 19.4% of the related Cut-Off Date Group Balance), were
originated or acquired by Artesia Mortgage Capital Corporation. Artesia is a
Delaware corporation engaged in the business of originating and securitizing
U.S. commercial mortgage loans. Its principal offices are located in the Seattle
suburb of Issaquah, Washington. It is a wholly-owned subsidiary of Dexia Bank
which is rated "AA+" by Fitch, Inc., "AA" by S&P and "Aa2" by Moody's. Dexia
Bank is part of Dexia Group, a diversified financial services firm located in
Brussels, Belgium with a balance sheet of 351 billion EUR ($368 billion) and a
stock market capitalization of approximately 14 billion EUR ($15 billion) as of
December 2002.
Wachovia has no obligation to repurchase or substitute any of the Citigroup
Mortgage Loans, the Nomura Mortgage Loans or the Artesia Mortgage Loans, Nomura
has no obligation to repurchase or substitute any of the Wachovia Mortgage
Loans, Citigroup Mortgage Loans or the Artesia Mortgage Loans, Citigroup has no
obligation to repurchase or substitute any of the Wachovia Mortgage Loans,
Nomura Mortgage Loans or the Artesia Mortgage Loans and Artesia has no
obligation to repurchase or substitute any of the Wachovia Mortgage Loans, the
Citigroup Mortgage Loans or the Nomura Mortgage Loans.
All information concerning the Wachovia Mortgage Loans contained herein or
used in the preparation of this Prospectus Supplement is as underwritten by
Wachovia. All information concerning the Citigroup Mortgage Loans contained
herein or used in the preparation of this Prospectus Supplement is as
underwritten by Citigroup. All information concerning the Nomura Mortgage Loans
contained herein or used in the preparation of this Prospectus Supplement is as
underwritten by Nomura. All information
S-161
concerning the Artesia Mortgage Loans contained herein or used in the
preparation of this Prospectus Supplement is as underwritten by Artesia.
UNDERWRITING STANDARDS
General. Each Mortgage Loan Seller's commercial real estate finance or
commercial mortgage banking group has the authority, with the approval from the
appropriate credit committee, to originate fixed-rate, first lien mortgage loans
for securitization. Each Mortgage Loan Seller's commercial real estate finance
or commercial mortgage banking operation is staffed by real estate
professionals. Each Mortgage Loan Seller's loan underwriting group is an
integral component of the commercial real estate finance or commercial mortgage
banking group which also includes groups responsible for loan origination and
closing mortgage loans.
Upon receipt of a loan package, the respective Mortgage Loan Seller's loan
underwriters commence an extensive review of the borrower's financial condition
and creditworthiness and the real estate which will secure the loan.
Loan Analysis. Generally, each Mortgage Loan Seller performs both a credit
analysis and collateral analysis with respect to a loan applicant and the real
estate that will secure the loan. In general, credit analysis of the borrower
and the real estate includes a review of historical financial statements, third
party credit reports, judgment, lien, bankruptcy and pending litigation searches
and, if applicable, the loan payment history of the borrower. Each Mortgage Loan
Seller typically performs a qualitative analysis which incorporates independent
credit checks and published debt and equity information with respect to certain
principals of the borrower as well as the borrower itself. Borrowers are
generally required to be single-purpose entities although they are generally not
required to be structured to limit the possibility of becoming insolvent or
bankrupt. The collateral analysis typically includes an analysis of the
historical property operating statements, rent rolls, operating budgets, a
projection of future performance, if applicable, and a review of tenant leases.
Each Mortgage Loan Seller generally requires third party appraisals, as well as
environmental and building condition reports. Each report is reviewed for
acceptability by a staff member of the applicable Mortgage Loan Seller or a
third-party consultant for compliance with program standards. Generally, the
results of these reviews are incorporated into the underwriting report. One (1)
Mortgage Loan (representing 5.8% of Cut-off Date Pool Balance (1 Mortgage Loan
in Loan Group 1 or 7.8% of the related Cut-Off Date Group Balance) sold to the
Depositor by Wachovia, was originated by Lehman Brothers Holdings Inc., and 3
Mortgage Loans (representing 0.7% of Cut-off Date Balance (3 Mortgage Loans in
Loan Group 1 or 1.0% of the related Cut-Off Date Group Balance) sold to the
Depositor by Wachovia were originated by Cap Lease Funding, Inc. In each case,
the related Mortgage Loan Seller re-underwrote such mortgage loan. In some
instances, one or more provisions of the guidelines were waived or modified by
the related Mortgage Loan Seller where it was determined not to adversely affect
the mortgage loans originated by it in any material respect.
Loan Approval. Prior to commitment, all mortgage loans must be approved by
the applicable Mortgage Loan Seller's credit committee in accordance with its
credit policies.
Debt Service Coverage Ratio and LTV Ratio. Each Mortgage Loan Seller's
underwriting standards generally mandate minimum debt service coverage ratios
and maximum loan-to-value ratios. The debt service coverage ratio guidelines are
generally calculated based on net cash flow at the time of origination. In
addition, each Mortgage Loan Seller's underwriting guidelines generally permit a
maximum amortization period of 30 years. However, notwithstanding such
guidelines, in certain circumstances the actual debt service coverage ratios,
loan-to-value ratios and amortization periods for the mortgage loans originated
by such Mortgage Loan Seller may vary from these guidelines.
S-162
Escrow Requirements. Each Mortgage Loan Seller requires most borrowers to
fund various escrows for taxes and insurance, capital expenses and replacement
reserves. Generally, the required escrows for mortgage loans originated by each
Mortgage Loan Seller are as follows:
- Taxes--Typically an initial deposit and monthly escrow deposits equal to
1/12th of the annual property taxes (based on the most recent property
assessment and the current millage rate) are required to provide the
Mortgage Loan Seller with sufficient funds to satisfy all taxes and
assessments.
- Insurance--If the property is insured under an individual policy (i.e.,
the property is not covered by a blanket policy), typically an initial
deposit and monthly escrow deposits equal to 1/12th of the annual
property insurance premium are required to provide the Mortgage Loan
Seller with sufficient funds to pay all insurance premiums.
- Replacement Reserves--Replacement reserves are generally calculated in
accordance with the expected useful life of the components of the
property during the term of the mortgage loan.
- Completion Repair/Environmental Remediation--Typically, a completion
repair or remediation reserve is required where an environmental or
engineering report suggests that such reserve is necessary. Upon funding
of the applicable Mortgage Loan, the Mortgage Loan Seller generally
requires that at least 110% of the estimated costs of repairs or
replacements be reserved and generally requires that repairs or
replacements be completed within a year after the funding of the
applicable Mortgage Loan.
- Tenant Improvement/Lease Commissions--In some cases, major tenants have
lease expirations within the Mortgage Loan term. To mitigate this risk,
special reserves may be required to be funded either at closing of the
Mortgage Loan and/or during the Mortgage Loan term to cover certain
anticipated leasing commissions or tenant improvement costs which might
be associated with re-leasing the space occupied by such tenants.
ASSIGNMENT OF THE MORTGAGE LOANS; REPURCHASES AND SUBSTITUTIONS
On the Closing Date, the Depositor will transfer the Mortgage Loans,
without recourse, to the Trustee for the benefit of the Certificateholders. In
connection with such transfer, the Depositor will require each Mortgage Loan
Seller to deliver to the Trustee or to a document custodian appointed by the
Trustee (a "Custodian"), among other things, the following documents with
respect to each Mortgage Loan originated or acquired by the applicable Mortgage
Loan Seller (the "Mortgage File"): (i) the original Mortgage Note, endorsed on
its face or by allonge attached thereto, without recourse, to the order of the
Trustee or in blank (or, if the original Mortgage Note has been lost, an
affidavit to such effect from the applicable Mortgage Loan Seller or another
prior holder, together with a copy of the Mortgage Note); (ii) the original or a
copy of the Mortgage, together with an original or copy of any intervening
assignments of the Mortgage, in each case (unless not yet returned by the
applicable recording office) with evidence of recording indicated thereon or
certified by the applicable recorder's office; (iii) the original or a copy of
any related assignment of leases and of any intervening assignments thereof (if
such item is a document separate from the Mortgage), in each case (unless not
yet returned by the applicable recording office) with evidence of recording
indicated thereon or certified by the applicable recorder's office; (iv) an
original assignment of the Mortgage in favor of the Trustee or in blank and
(subject to the completion of certain missing recording information) in
recordable form; (v) an original assignment of any related assignment of leases
(if such item is a document separate from the Mortgage or if such item is not
included as part of item (iv) above) in favor of the Trustee or in blank and
(subject to the completion of certain missing recording information) in
recordable form; (vi) the original assignment of all unrecorded documents
relating to the Mortgage Loan, if not already assigned pursuant to items (iv) or
(v) above; (vii) originals or copies of all modification, consolidation,
assumption and substitution agreements in those instances in which the terms or
provisions of the Mortgage or Mortgage Note have been modified or the Mortgage
Loan has been assumed or consolidated; (viii) the original or a copy of the
policy or certificate of lender's title insurance issued on the date of the
origination of such Mortgage Loan, or, if such policy
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has not been issued or located, an irrevocable, binding commitment (which may be
a marked version of the policy that has been executed by an authorized
representative of the title company or an agreement to provide the same pursuant
to binding escrow instructions executed by an authorized representative of the
title company) to issue such title insurance policy; (ix) any filed copies
(bearing evidence of filing) or other evidence of filing satisfactory to the
Trustee of any UCC financing statements, related amendments and continuation
statements in the possession of the applicable Mortgage Loan Seller; (x) an
original assignment in favor of the Trustee of any financing statement executed
and filed in favor of the applicable Mortgage Loan Seller in the relevant
jurisdiction; (xi) the original or copy of any ground lease, ground lessor
estoppel, environmental insurance policy or guaranty relating to such Mortgage
Loan; (xii) any intercreditor agreement relating to permitted debt (including
mezzanine debt) of the mortgagor; (xiii) copies of any loan agreement, escrow
agreement, or security agreement relating to such Mortgage Loan; (xiv) a copy of
any letter of credit and related transfer documents related to such Mortgage
Loan; and (xv) for any hospitality properties, copies of franchise agreements
and comfort letters, if any, and the originals of any documents required to
transfer or assign the comfort letters.
As provided in the Pooling and Servicing Agreement, the Trustee or a
Custodian on its behalf is required to review each Mortgage File within a
specified period following its receipt thereof. If any of the documents
described in the preceding paragraph is found during the course of such review
to be missing from any Mortgage File or defective, and in either case such
omission or defect materially and adversely affects the value of the applicable
Mortgage Loan, the interest of the Trust therein or the interests of any
Certificateholder, the applicable Mortgage Loan Seller, if it does not deliver
the document or cure the defect (other than omissions solely due to a document
not having been returned by the related recording office) within a period of 90
days following such Mortgage Loan Seller's receipt of notice thereof, will be
obligated pursuant to the applicable Mortgage Loan Purchase Agreement (the
relevant rights under which will be assigned by the Depositor to the Trustee) to
(1) repurchase the affected Mortgage Loan within such 90-day period at a price
(the "Purchase Price") generally equal to the sum of (i) the unpaid principal
balance of such Mortgage Loan, (ii) the unpaid accrued interest on such Mortgage
Loan (calculated at the applicable Mortgage Rate) to but not including the Due
Date in the Collection Period in which the purchase is to occur and (iii)
certain Additional Trust Fund Expenses in respect of such Mortgage Loan,
including but not limited to, servicing expenses that are reimbursable to the
Master Servicer, the Special Servicer or the Trustee plus any interest thereon
and on any related P&I Advances or (2) substitute a Qualified Substitute
Mortgage Loan for such Mortgage Loan and pay the Master Servicer for deposit
into the Certificate Account a shortfall amount equal to the difference between
the Purchase Price of the deleted Mortgage Loan calculated as of the date of
substitution and the Stated Principal Balance of such Qualified Substitute
Mortgage Loan as of the date of substitution (the "Substitution Shortfall
Amount"); provided that, unless the breach would cause the Mortgage Loan not to
be a qualified mortgage within the meaning of Section 860G(a)(3) of the Code,
the applicable Mortgage Loan Seller will generally have an additional 90-day
period to deliver the document or cure the defect, as the case may be, if it is
diligently proceeding to effect such delivery or cure and provided further, no
such document omission or defect (other than with respect to the Mortgage Note,
the Mortgage, the title insurance policy, the ground lease, any letter of
credit, any franchise agreement, comfort letter, and comfort letter transfer
document (the "Core Material Documents")) will be considered to materially and
adversely affect the interests of the Certificateholders in, or the value of,
the affected Mortgage Loans unless the document with respect to which the
document omission or defect exists is required in connection with an imminent
enforcement of the mortgagee's rights or remedies under the related Mortgage
Loan, defending any claim asserted by any borrower or third party with respect
to the Mortgage Loan, establishing the validity or priority of any lien or any
collateral securing the Mortgage Loan or for any immediate significant servicing
obligation. With respect to material document defects other than those involving
the Core Material Documents, any applicable cure period may be extended if the
document involved is not needed imminently. Such extension will end upon 30 days
notice of such need as reasonably determined by the Master Servicer or Special
Servicer (with a possible 30 day extension if the Master Servicer or Special
Servicer agrees that the applicable Mortgage Loan Seller is diligently pursuing
a cure). All material
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document defects regardless of the document involved will be cured no later than
2 years after the Closing Date; provided, however, that the initial 90 day cure
period described herein will not be reduced.
In addition, the related Mortgage Loan Seller with respect to the Mortgage
Loan identified in this Prospectus Supplement as the Walgreens -- Thrasher's
Corner, WA Mortgage Loan, pursuant to the related Mortgage Loan Purchase
Agreement is obligated to repurchase such Mortgage Loan if it fails to deliver
what is considered to be an acceptable tenant estoppel certificate from the sole
tenant of the related Mortgaged Property within 60 days following the Closing
Date.
In addition, the Mortgage Loan Seller with respect to the Mortgage Loan
identified in this Prospectus Supplement as the 673 First Avenue Loan, pursuant
to the related Mortgage Loan Purchase Agreement, is obligated to repurchase such
Mortgage Loan if a certain tenant at the related Mortgage Property fails to
execute a certain lease and such failure causes a default under such Mortgage
Loan.
The foregoing repurchase or substitution obligation constitutes the sole
remedy available to the Certificateholders and the Trustee for any uncured
failure to deliver, or any uncured defect in, a constituent Mortgage Loan
document. Each Mortgage Loan Seller is solely responsible for its repurchase or
substitution obligation, and such obligations will not be the responsibility of
the Depositor.
To the extent set forth in the Pooling and Servicing Agreement the Trustee
will promptly cause each of the assignments described in clauses (iv), (v) and
(x) of the second preceding paragraph to be submitted for recording or filing,
as applicable, in the appropriate public records. See "DESCRIPTION OF THE
POOLING AND SERVICING AGREEMENTS--Assignment of Mortgage Assets; Repurchases" in
the Prospectus.
A "Qualified Substitute Mortgage Loan" is a mortgage loan which must, on
the date of substitution: (i) have an outstanding Stated Principal Balance,
after application of all scheduled payments of principal and interest due during
or prior to the month of substitution, not in excess of the Stated Principal
Balance of the deleted Mortgage Loan as of the Due Date in the calendar month
during which the substitution occurs; (ii) have a Mortgage Rate not less than
the Mortgage Rate of the deleted Mortgage Loan; (iii) have the same Due Date as
the deleted Mortgage Loan; (iv) accrue interest on the same basis as the deleted
Mortgage Loan (for example, on the basis of a 360-day year consisting of twelve
30-day months); (v) have a remaining term to stated maturity not greater than,
and not more than two years less than, the remaining term to stated maturity of
the deleted Mortgage Loan; (vi) have an original loan-to-value ratio not higher
than that of the deleted Mortgage Loan and a current loan-to-value ratio not
higher than the then-current loan-to-value ratio of the deleted Mortgage Loan;
(vii) comply as of the date of substitution with all of the representations and
warranties set forth in the applicable Mortgage Loan Purchase Agreement; (viii)
have an environmental report with respect to the related Mortgaged Property
which will be delivered as a part of the related servicing file; (ix) have an
original debt service coverage ratio not less than the original debt service
coverage ratio of the deleted Mortgage Loan; (x) be determined by an opinion of
counsel to be a "qualified replacement mortgage" within the meaning of Section
860G(a)(4) of the Code; (xi) not have a maturity date after the date two years
prior to the Rated Final Distribution Date; (xii) not be substituted for a
deleted Mortgage Loan unless the Trustee has received prior confirmation in
writing by each Rating Agency that such substitution will not result in the
withdrawal, downgrade or qualification of the rating assigned by the Rating
Agency to any Class of Certificates then rated by the Rating Agency (the cost,
if any, of obtaining such confirmation to be paid by the applicable Mortgage
Loan Seller); (xiii) have a date of origination that is not more than 12 months
prior to the date of substitution; (xiv) have been approved by the Controlling
Class Representative; (xv) not be substituted for a deleted Mortgage Loan if it
would result in the termination of the REMIC status of any of the REMICs or the
imposition of tax on any of the REMICs other than a tax on income expressly
permitted or contemplated to be received by the terms of the Pooling and
Servicing Agreement and (xvi) become a part of the same Loan Group as the
deleted Mortgage Loan. In the event that one or more mortgage loans are
substituted for one or more deleted Mortgage Loans, then the amounts described
in clause (i) shall be determined on the basis of aggregate principal balances
and the rates described in clause (ii) above and the remaining term to stated
maturity referred to in clause (v) above shall be determined on a weighted
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average basis; provided, that no individual Mortgage Loan shall have a Mortgage
Rate, net of the related Administrative Cost Rate, that is less than the highest
Pass-Through Rate of any Class of Sequential Pay Certificates bearing a fixed
rate. When a Qualified Substitute Mortgage Loan is substituted for a deleted
Mortgage Loan, the applicable Mortgage Loan Seller will be required to certify
that such Mortgage Loan meets all of the requirements of the above definition
and shall send such certification to the Trustee.
REPRESENTATIONS AND WARRANTIES; REPURCHASES AND SUBSTITUTIONS
In each Mortgage Loan Purchase Agreement, the applicable Mortgage Loan
Seller has represented and warranted with respect to each Mortgage Loan (subject
to certain exceptions specified in each Mortgage Loan Purchase Agreement), as of
the Closing Date, or as of such other date specifically provided in the
representation and warranty, among other things, generally that:
(i) the information set forth in the schedule of Mortgage Loans
attached to the applicable Mortgage Loan Purchase Agreement (which contains
certain of the information set forth in Annex A-1 to this Prospectus
Supplement) was true and correct in all material respects as of the Cut-Off
Date;
(ii) as of the date of its origination, such Mortgage Loan complied in
all material respects with, or was exempt from, all requirements of
federal, state or local law relating to the origination of such Mortgage
Loan;
(iii) immediately prior to the sale, transfer and assignment to the
Depositor, the applicable Mortgage Loan Seller had good and marketable
title to, and was the sole owner of, each Mortgage Loan, and is
transferring the Mortgage Loan free and clear of any and all liens,
pledges, charges, security interests or any other ownership interests of
any nature encumbering such Mortgage Loan;
(iv) the proceeds of such Mortgage Loan have been fully disbursed and
there is no requirement for future advances thereunder;
(v) each related Mortgage Note, Mortgage, assignment of leases, if
any, and other agreements executed in connection with such Mortgage Loan is
the legal, valid and binding obligation of the related mortgagor (subject
to any nonrecourse provisions therein and any state anti-deficiency or
market value limit deficiency legislation), enforceable in accordance with
its terms, except (a) that certain provisions contained in such Mortgage
Loan documents are or may be unenforceable in whole or in part under
applicable state or federal laws, but neither the application of any such
laws to any such provision nor the inclusion of any such provision renders
any of the Mortgage Loan documents invalid as a whole and such Mortgage
Loan documents taken as a whole are enforceable to the extent necessary and
customary for the practical realization of the rights and benefits afforded
thereby, and (b) as such enforcement may be limited by bankruptcy,
insolvency, receivership, reorganization, moratorium, redemption,
liquidation or other laws affecting the enforcement of creditors' rights
generally, and by general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at law);
(vi) as of the date of its origination, there was no valid offset,
defense, counterclaim, abatement or right to rescission with respect to any
of the related Mortgage Notes, Mortgage(s) or other agreements executed in
connection therewith, and, as of the Cut-Off Date, there was no valid
offset, defense, counterclaim or right to rescission with respect to such
Mortgage Note, Mortgage(s) or other agreements, except in each case, with
respect to the enforceability of any provisions requiring the payment of
default interest, late fees, additional interest, prepayment premiums or
yield maintenance charges and the applicable Mortgage Loan Seller has no
knowledge of any such rights, defenses or counterclaims having been
asserted;
(vii) each related assignment of Mortgage and assignment of assignment
of leases from the applicable Mortgage Loan Seller to the Trustee
constitutes the legal, valid and binding first priority assignment from
such Mortgage Loan Seller (subject to the customary limitations set forth
in (v) above);
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(viii) the related Mortgage is a valid and enforceable first lien on
the related Mortgaged Property except for the exceptions set forth in
paragraph (v) above and (a) the lien of current real property taxes, ground
rents, water charges, sewer rents and assessments not yet due and payable,
(b) covenants, conditions and restrictions, rights of way, easements and
other matters of public record, none of which, individually or in the
aggregate, materially and adversely interferes with the current use of the
Mortgaged Property or the security intended to be provided by such Mortgage
or with the mortgagor's ability to pay its obligations under the Mortgage
Loan when they become due or materially and adversely affects the value of
the Mortgaged Property, (c) the exceptions (general and specific) and
exclusions set forth in the related title insurance policy or appearing of
record, none of which, individually or in the aggregate, materially and
adversely interferes with the current use of the Mortgaged Property or the
security intended to be provided by such Mortgage or with the mortgagor's
ability to pay its obligations under the Mortgage Loan when they become due
or materially and adversely affects the value of the Mortgaged Property,
(d) other matters to which like properties are commonly subject, none of
which, individually or in the aggregate, materially and adversely
interferes with the current use of the Mortgaged Property or the security
intended to be provided by such Mortgage or with the mortgagor's ability to
pay its obligations under the Mortgage Loan when they become due or
materially and adversely affects the value of the Mortgaged Property, (e)
the right of tenants (whether under ground leases, space leases or
operating leases) at the Mortgaged Property to remain following a
foreclosure or similar proceeding (provided that such tenants are
performing under such leases) and (f) if such Mortgage Loan is
cross-collateralized with any other Mortgage Loan, the lien of the Mortgage
for such other Mortgage Loan, none of which, individually or in the
aggregate, materially and adversely interferes with the current use of the
Mortgaged Property or the security intended to be provided by such Mortgage
or with the mortgagor's ability to pay its obligations under the Mortgage
Loan when they become due or materially and adversely affects the value of
the Mortgaged Property;
(ix) all real estate taxes and governmental assessments, or
installments thereof, which would be a lien on the Mortgaged Property and
that prior to the Cut-Off Date have become delinquent in respect of the
related Mortgaged Property have been paid, or an escrow of funds in an
amount sufficient to cover such payments has been established;
(x) each Mortgaged Property was covered by (1) a fire and extended
perils included within the classification "All Risk of Physical Loss"
insurance policy in an amount (subject to a customary deductible) at least
equal to the lesser of the replacement cost of improvements located on such
Mortgaged Property, with no deduction for depreciation, or the outstanding
principal balance of the Mortgage Loan and in any event, the amount
necessary to avoid the operation of any co-insurance provisions; (2)
business interruption or rental loss insurance in an amount at least equal
to 12 months of operations of the related Mortgaged Property; and (3)
comprehensive general liability insurance against claims for personal and
bodily injury, death or property damage occurring on, in or about the
related Mortgaged Property in an amount customarily required by prudent
commercial mortgage lenders, but not less than $1 million; such insurance
is required by the Mortgage or related Mortgage Loan documents and was in
full force and effect with respect to each related Mortgaged Property at
origination and to the knowledge of the Mortgage Loan Seller, all insurance
coverage required under each Mortgage is in full force and effect with
respect to each Mortgaged Property; and no notice of termination or
cancellation with respect to any such insurance policy has been received by
the Mortgage Loan Seller; except for certain amounts not greater than
amounts which would be considered prudent by a commercial mortgage lender
with respect to a similar Mortgage Loan and which are set forth in the
related Mortgage, any insurance proceeds in respect of a casualty loss,
will be applied either to the repair or restoration of the related
Mortgaged Property with mortgagee or a third-party custodian acceptable to
mortgagee having the right to hold and disburse the proceeds as the repair
or restoration progresses, other than with respect to amounts that are
customarily acceptable to commercial and multifamily mortgage lending
institutions, or the reduction of the outstanding principal balance of the
Mortgage Loan and accrued interest thereon; to the Mortgage Loan Seller's
knowledge, the insurer with respect to each policy is qualified to do
business in the
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relevant jurisdiction to the extent required; the insurance policies
contain a standard mortgagee clause or names the mortgagee, its successors
and assigns as loss payees in the case of property insurance policies and
additional insureds in the case of liability insurance policies and provide
that they are not terminable and may not be reduced without 30 days prior
written notice to the mortgagee (or, with respect to non-payment of
premiums, 10 days prior written notice to the mortgagee) or such lesser
period as prescribed by applicable law; and each Mortgage requires that the
mortgagor maintain insurance as described above or permits the mortgagee to
require insurance as described above;
(xi) as of the Closing Date, each Mortgage Loan was not, and in the
prior 12 months (or since the date of origination if such Mortgage Loan has
been originated within the past 12 months), has not been, 30 days or more
past due in respect of any Scheduled Payment; and
(xii) one or more environmental site assessments or updates thereof
were performed by an environmental consulting firm independent of the
applicable Mortgage Loan Seller and the applicable Mortgage Loan Seller's
affiliates with respect to each related Mortgaged Property during the 18-
month period preceding the origination of the related Mortgage Loan, and
the applicable Mortgage Loan Seller, having made no independent inquiry
other than to review the report(s) prepared in connection with the
assessment(s) referenced herein, has no actual knowledge and has received
no notice of any material and adverse environmental condition or
circumstance affecting such Mortgaged Property that was not disclosed in
such report(s).
In the case of a breach of any of the representations and warranties in any
Mortgage Loan Purchase Agreement that materially and adversely affects the value
of a Mortgage Loan, the interests of the Trust therein or the interests of any
Certificateholder, the applicable Mortgage Loan Seller, if it does not cure such
breach within a period of 90 days following its receipt of notice thereof, is
obligated pursuant to the applicable Mortgage Loan Purchase Agreement (the
relevant rights under which have been assigned by the Depositor to the Trustee)
to either substitute a Qualified Substitute Mortgage Loan and pay any
Substitution Shortfall Amount or to repurchase the affected Mortgage Loan within
such 90-day period at the applicable Purchase Price; provided that, unless the
breach would cause the Mortgage Loan not to be a qualified mortgage within the
meaning of Section 860G(a)(3) of the Code, the applicable Mortgage Loan Seller
generally has an additional 90-day period to cure such breach if it is
diligently proceeding with such cure. Each Mortgage Loan Seller is solely
responsible for its repurchase or substitution obligation, and such obligations
will not be the responsibility of the Depositor.
The foregoing substitution or repurchase obligation constitutes the sole
remedy available to the Certificateholders and the Trustee for any uncured
breach of any Mortgage Loan Seller's representations and warranties regarding
its Mortgage Loans. There can be no assurance that the applicable Mortgage Loan
Seller will have the financial resources to repurchase any Mortgage Loan at any
particular time. Each Mortgage Loan Seller is the sole warranting party in
respect of the Mortgage Loans sold by such Mortgage Loan Seller to the
Depositor, and none of the Depositor nor any of such party's affiliates (except
with respect to Wachovia Bank, National Association in its capacity as a
Mortgage Loan Seller) will be obligated to substitute or repurchase any such
affected Mortgage Loan in connection with a breach of a Mortgage Loan Seller's
representations and warranties if such Mortgage Loan Seller defaults on its
obligation to do so.
With respect to any Mortgage Loan which has become a Defaulted Mortgage
Loan under the Pooling and Servicing Agreement or with respect to which the
related Mortgaged Property has been foreclosed and which is the subject of a
repurchase claim under the related Mortgage Loan Purchase Agreement, the Special
Servicer with the consent of the Controlling Class Representative will be
required to notify the related Mortgage Loan Seller in writing of its intention
to sell such Defaulted Mortgage Loan or such foreclosed Mortgaged Property at
least 45 days prior to commencing any such action. Such Mortgage Loan Seller
shall have 10 business days to determine whether or not to consent to such sale.
If such Mortgage Loan Seller does not consent to such sale, the Special Servicer
shall contract with a third party set forth in the Pooling and Servicing
Agreement (a "Determination Party") as to the merits of such sale. If the
related Determination Party determines that the proposed sale is reasonable,
given the
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circumstances, and subsequent to such sale, a court of competent jurisdiction
determines that such Mortgage Loan Seller was liable under the related Mortgage
Loan Agreement and required to repurchase such Defaulted Mortgage Loan or REO
Property in accordance with the terms thereof, then such Mortgage Loan Seller
will be required to pay an amount equal to the difference (if any) between the
proceeds of the related action and the price at which such Mortgage Loan Seller
would have been obligated to pay had such Mortgage Loan Seller repurchased such
Defaulted Mortgage Loan or REO Property in accordance with the terms thereof
which shall generally include the costs related to contracting with the
Determination Party. In the event that (a) the Special Servicer ignores the
determination of the Determination Party and liquidates the related Defaulted
Mortgage Loan or REO Property and/or (b) a court of competent jurisdiction
determines that such Mortgage Loan Seller was not obligated to repurchase the
related Defaulted Mortgage or REO Property, the costs of contracting with the
Determination Party will constitute Additional Trust Fund Expenses and the
Mortgage Loan Seller is not liable for any such difference.
REPURCHASE OR SUBSTITUTION OF CROSS-COLLATERALIZED MORTGAGE LOANS
If (i) any Mortgage Loan is required to be repurchased or substituted for
in the manner described above in "--Assignment of the Mortgage Loans;
Repurchases and Substitutions" or "--Representations and Warranties; Repurchases
and Substitutions", (ii) such Mortgage Loan is cross-collateralized and
cross-defaulted with one or more other Mortgage Loans (each a "Crossed Loan"
and, collectively, a "Crossed Group"), and (iii) the applicable document
omission or defect (a "Defect") or breach of a representation and warranty (a
"Breach") does not constitute a Defect or Breach, as the case may be, as to any
other Crossed Loan in such Crossed Group (without regard to this paragraph),
then the applicable Defect or Breach, as the case may be, will be deemed to
constitute a Defect or Breach, as the case may be, as to any other Crossed Loan
in the Crossed Group for purposes of this paragraph, and the related Mortgage
Loan Seller will be required to repurchase or substitute for such other Crossed
Loan(s) in the related Crossed Group as provided above in "--Assignment of the
Mortgage Loans; Repurchases and Substitutions" or "--Representations and
Warranties; Repurchases and Substitutions" unless: (i) the debt service coverage
ratio for all of the remaining Crossed Loans for the four calendar quarters
immediately preceding the repurchase or substitution is not less than the debt
service coverage ratio for all such related Crossed Loans, including the
affected Crossed Loan, for the four calendar quarters immediately preceding the
repurchase or substitution, (ii) the loan-to-value ratio for any of the
remaining related Crossed Loans, determined at the time of repurchase or
substitution, is not greater than the loan-to-value ratio for all such related
Crossed Loans, including the affected Crossed Loan, determined at the time of
repurchase or substitution, and (iii) the Trustee receives an opinion of counsel
to the effect that such repurchase or substitution is permitted by the REMIC
provisions. In the event that one or more of such other Crossed Loans satisfy
the aforementioned criteria, the Mortgage Loan Seller may elect either to
repurchase or substitute for only the affected Crossed Loan as to which the
related Breach or Defect exists or to repurchase or substitute for all of the
Crossed Loans in the related Crossed Group.
To the extent that the related Mortgage Loan Seller repurchases or
substitutes for an affected Crossed Loan as described in the immediately
preceding paragraph while the Trustee continues to hold any related Crossed
Loans, the related Mortgage Loan Seller and the Depositor have agreed in the
related Mortgage Loan Purchase Agreement to forbear from enforcing any remedies
against the other's Primary Collateral (as defined below), but each is permitted
to exercise remedies against the Primary Collateral securing its respective
affected Crossed Loans, including, with respect to the Trustee, the Primary
Collateral securing Mortgage Loans still held by the Trustee. If the exercise of
remedies by one party would materially impair the ability of the other party to
exercise its remedies with respect to the Primary Collateral securing the
Crossed Loans held by such party, then both parties have agreed in the related
Mortgage Loan Purchase Agreement to forbear from exercising such remedies until
the loan documents evidencing and securing the
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relevant Mortgage Loans can be modified in a manner that complies with the
Mortgage Loan Purchase Agreement to remove the threat of material impairment as
a result of the exercise of remedies or some other accommodation can be reached.
"Primary Collateral" means the Mortgaged Property directly securing a Crossed
Loan and excluding any property as to which the related lien may only be
foreclosed upon by virtue of the cross collateralization features of such loans.
CHANGES IN MORTGAGE POOL CHARACTERISTICS
The descriptions in this Prospectus Supplement of the Mortgage Loans and
the Mortgaged Properties are based upon the Mortgage Pool as it is expected to
be constituted as of the close of business on the Closing Date, assuming that
(i) all scheduled principal and interest payments due on or before the Cut-Off
Date will be made, and (ii) there will be no principal prepayments on or before
the Cut-Off Date. Prior to the issuance of the Certificates, Mortgage Loans may
be removed from the Mortgage Pool as a result of prepayments, delinquencies,
incomplete documentation or otherwise, if the Depositor or the applicable
Mortgage Loan Seller deems such removal necessary, appropriate or desirable. A
limited number of other mortgage loans may be included in the Mortgage Pool
prior to the issuance of the Certificates, unless including such mortgage loans
would materially alter the characteristics of the Mortgage Pool as described in
this Prospectus Supplement. The Depositor believes that the information set
forth in this Prospectus Supplement will be representative of the
characteristics of the Mortgage Pool as it will be constituted at the time the
Certificates are issued, although the range of Mortgage Rates and maturities as
well as other characteristics of the Mortgage Loans described in this Prospectus
Supplement may vary.
A Current Report on Form 8-K (the "Form 8-K") will be available to
purchasers of the Offered Certificates on or shortly after the Closing Date and
will be filed, together with the Pooling and Servicing Agreement, with the
Securities and Exchange Commission within fifteen days after the initial
issuance of the Offered Certificates.
SERVICING OF THE MORTGAGE LOANS
GENERAL
The Master Servicer and the Special Servicer, either directly or through
sub-servicers, are required to service and administer the Mortgage Loans for the
benefit of the Certificateholders, in accordance with applicable law, the terms
of the Pooling and Servicing Agreement, the terms of the related Intercreditor
Agreement, if applicable, and the terms of the respective Mortgage Loans and, if
applicable, the Companion Loans, to the extent consistent with the foregoing,
(a) in the same manner in which, and with the same care, skill, prudence and
diligence with which, the Master Servicer or the Special Servicer, as the case
may be, generally services and administers similar mortgage loans with similar
borrowers (i) for other third-parties, giving due consideration to customary and
usual standards of practice of prudent institutional commercial mortgage lenders
servicing their own loans, or (ii) held in its own portfolio, whichever standard
is higher, (b) with a view to the maximization of the recovery on such Mortgage
Loans on a net present value basis and the best interests of the
Certificateholders and the Trust or, if a Co-Lender Loan and its related
Companion Loan (a "Loan Pair") are involved, with view towards the maximization
of recovery on such Loan Pair to the Certificateholders, the holder of the
related Companion Loan and the Trust Fund (as a collective whole, taking into
account that the Companion Loans related to the AB Mortgage Loans are
subordinate to the applicable AB Mortgage Loans to the extent set forth in the
related Intercreditor Agreement), and (c) without regard to (i) any relationship
that the Master Servicer or the Special Servicer, as the case may be, or any
affiliate thereof, may have with the related borrower, the Mortgage Loan Sellers
or any other party to the Pooling and Servicing Agreement or any affiliate
thereof; (ii) the ownership of any Certificate or Companion Loan by the Master
Servicer or the Special Servicer, as the case may be, or by any affiliate
thereof; (iii) the right of the Master Servicer or the Special Servicer, as the
case may be, to receive compensation or other fees for its services rendered
pursuant to the Pooling and Servicing Agreement; (iv) the obligation of the
Master Servicer to make
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Advances (as defined in this Prospectus Supplement); (v) the ownership,
servicing or management by the Master Servicer or the Special Servicer or any
affiliate thereof for others of any other mortgage loans or real property; (vi)
any obligation of the Master Servicer, or any affiliate thereof, to repurchase
or substitute a Mortgage Loan as a Mortgage Loan Seller; (vii) any obligation of
the Master Servicer or any affiliate thereof to cure a breach of a
representation and warranty with respect to a Mortgage Loan; and (viii) any debt
the Master Servicer or Special Servicer or any affiliate of either has extended
to any obligor on a Mortgage Note.
The Master Servicer and the Special Servicer may appoint sub-servicers with
respect to the Mortgage Loans; provided that the Master Servicer and the Special
Servicer will remain obligated under the Pooling and Servicing Agreement for the
servicing of the Mortgage Loans. The Trust Fund will not be responsible for any
fees owed to any sub-servicer retained by the Master Servicer or the Special
Servicer. Each sub-servicer retained thereby will be reimbursed by the Master
Servicer or the Special Servicer, as the case may be, for certain expenditures
which it makes, generally to the same extent the Master Servicer or Special
Servicer would be reimbursed under the Pooling and Servicing Agreement.
Set forth below, following the subsection captioned "--The Master Servicer
and the Special Servicer," is a description of certain pertinent provisions of
the Pooling and Servicing Agreement relating to the servicing of the Mortgage
Loans. Reference is also made to the Prospectus, in particular to the section
captioned "DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS," for important
information in addition to that set forth in this Prospectus Supplement
regarding the terms and conditions of the Pooling and Servicing Agreement as
they relate to the rights and obligations of the Master Servicer and Special
Servicer thereunder. The Special Servicer generally has all of the rights to
indemnity and reimbursement, and limitations on liability, that the Master
Servicer is described as having in the Prospectus and certain additional rights
to indemnity as provided in the Pooling and Servicing Agreement relating to
actions taken at the direction of the Controlling Class Representative (and, in
certain circumstances the holder of an AB Apartment Companion Loan), and the
Special Servicer rather than the Master Servicer will perform the servicing
duties described in the Prospectus with respect to Specially Serviced Mortgage
Loans and REO Properties (each as described in this Prospectus Supplement). In
addition to the circumstances for resignation of the Master Servicer set forth
in the Prospectus, the Master Servicer and the Special Servicer each has the
right to resign at any other time provided that (i) a willing successor thereto
has been found, (ii) each of the Rating Agencies confirms in writing that the
successor's appointment will not result in a withdrawal, qualification or
downgrade of any rating or ratings assigned to any class of Certificates, (iii)
the resigning party pays all costs and expenses in connection with such
transfer, and (iv) the successor accepts appointment prior to the effectiveness
of such resignation. See "DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS--
Certain Matters Regarding the Master Servicer and the Depositor" in the
Prospectus.
THE MASTER SERVICER AND THE SPECIAL SERVICER
Wachovia Bank, National Association, in its capacity as Master Servicer
under the Pooling and Servicing Agreement (in such capacity, the "Master
Servicer"), will be responsible for servicing the Mortgage Loans (other than
Specially Serviced Mortgage Loans and REO Properties). Although the Master
Servicer will be authorized to employ agents, including sub-servicers, to
directly service the Mortgage Loans for which it will be responsible, the Master
Servicer will remain liable for its servicing obligations under the Pooling and
Servicing Agreement.
Wachovia Bank, National Association is a wholly owned subsidiary of
Wachovia Corporation, and is our affiliate and one of the Mortgage Loan Sellers
and an affiliate of one of the Underwriters. Wachovia Bank, National
Association's principal servicing offices are located at NC 1075, 8739 Research
Drive URP4, Charlotte, North Carolina 28262. In addition it is anticipated that
Wachovia Bank, National Association (or an affiliated entity) will be the holder
of the Companion Loans related to the Lloyd Center Loan and the AB Apartments
Loans described herein.
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As of March 31, 2003, Wachovia Bank, National Association and its
affiliates were responsible for master or primary servicing approximately 8,488
commercial and multifamily loans, totaling approximately $68.5 billion in
aggregate outstanding principal amounts, including loans securitized in
mortgage-backed securitization transactions.
The information set forth in this Prospectus Supplement concerning Wachovia
Bank, National Association has been provided by Wachovia Bank, National
Association, and neither the Depositor nor the Underwriters make any
representation or warranty as to the accuracy or completeness of such
information. Wachovia Bank, National Association (apart from its obligations as
a Mortgage Loan Seller and except for the information in the first three
paragraphs under this heading) will make no representations as to the validity
or sufficiency of the Pooling and Servicing Agreement, the Certificates, the
Mortgage Loans, this Prospectus Supplement or related documents.
Lennar Partners, Inc., a Florida corporation, (the "Special Servicer") is a
subsidiary of LNR Property Corporation ("LNR") and will be responsible for
special servicing any Specially Serviced Mortgage Loans and REO Properties. The
principal executive offices of the Special Servicer are located at 1601
Washington Avenue, Miami Beach, Florida 33139, and its telephone number is (305)
695-5600. LNR, its subsidiaries and affiliates are involved in the real estate
investment and management business and engage principally in (i) acquiring,
developing, managing and repositioning commercial and multifamily residential
real estate properties, (ii) acquiring (often in partnership with financial
institutions or real estate funds) and managing portfolios of mortgage loans and
other real estate assets, (iii) investing in unrated and non-investment grade
rated commercial mortgage-backed securities as to which LNR has the right to be
special servicer, and (iv) making high yielding real estate related loans and
equity investments. The Special Servicer has regional offices located across the
country in Florida, Georgia, Oregon and California. As of April 30, 2003, the
Special Servicer and its affiliates were managing a portfolio which included an
original count of over 14,800 assets in most states with an original face value
of over $94 billion, most of which are commercial real estate assets. Included
in this managed portfolio are $91 billion of commercial real estate assets
representing 108 securitization transactions, for which the Special Servicer is
servicer or special servicer.
The Special Servicer and its affiliates own and are in the business of
acquiring assets similar in type to the assets of the Trust Fund. Accordingly,
the assets of the Special Servicer and its affiliates may, depending upon the
particular circumstances including the nature and location of such assets,
compete with the Mortgaged Properties for tenants, purchasers, financing and so
forth.
The information set forth herein regarding the Special Servicer has been
provided by Lennar Partners, Inc. and neither the Depositor nor any Underwriter
makes any representation or warranty as to the accuracy or completeness of such
information.
The Pooling and Servicing Agreement permits the holder (or holders) of the
majority of the Voting Rights allocated to the Controlling Class to replace the
Special Servicer and to select a representative (the "Controlling Class
Representative") who may advise the Special Servicer and whose approval is
required for certain actions by the Special Servicer under certain
circumstances. The Controlling Class Representative is selected by holders of
Certificates representing more than 50% of the Certificate Balance of the
Controlling Class. See "--The Controlling Class Representative" in this
Prospectus Supplement. Such holder (or holders) will be required to pay all
out-of-pocket costs related to the transfer of servicing if the Special Servicer
is replaced other than due to an Event of Default, including without limitation,
any costs relating to Rating Agency confirmation and legal fees associated with
the transfer. The "Controlling Class" is the Class of Sequential Pay
Certificates, (a) which bears the latest alphabetical Class designation and (b)
the Certificate Balance of which is greater than 25% of its original Certificate
Balance; provided, however, that if no Class of Sequential Pay Certificates
satisfies clause (b) above, the Controlling Class shall be the outstanding Class
of Certificates (other than the Class Z Certificates, the REMIC Residual
Certificates or the Class X Certificates) bearing the latest alphabetical Class
designation. The Class A-1, Class A-2 and Class A-1A Certificates will be
treated as one Class for determining the Controlling Class. Any such replacement
of a Special Servicer will be subject to, among other things, (i) the delivery
of
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notice of the proposed replacement to the Rating Agencies and receipt of written
confirmation from the Rating Agencies that the replacement will not result in a
qualification, downgrade or withdrawal of any of the then current ratings
assigned to the Certificates, and (ii) the written agreement of the successor
Special Servicer to be bound by the terms and conditions of the Pooling and
Servicing Agreement. See "DESCRIPTION OF THE CERTIFICATES--Voting Rights" in
this Prospectus Supplement and the accompanying Prospectus.
The Special Servicer is responsible for servicing and administering any
Mortgage Loan or Companion Loan as to which (a) the related Mortgagor has (i)
failed to make when due any Balloon Payment unless the Master Servicer has, on
or prior to the due date of such Balloon Payment, received written evidence from
an institutional lender of such lender's binding commitment to refinance such
Mortgage Loan or Companion Loan within 120 days after the due date of such
Balloon Payment (provided that if such refinancing does not occur during such
time specified in the commitment, a Servicing Transfer Event will be deemed to
have occurred), or (ii) failed to make when due any Periodic Payment (other than
a Balloon Payment), and such failure has continued unremedied for 60 days; (b)
the Master Servicer or the Special Servicer (in the case of the Special
Servicer, with the consent of the Controlling Class Representative) has
determined, in its good faith reasonable judgment and in accordance with the
Servicing Standard, based on communications with the related Mortgagor, that a
default in making a Periodic Payment (including a Balloon Payment) is likely to
occur and is likely to remain unremedied for at least 60 days; (c) there shall
have occurred a default (other than as described in clause (a) above and, in
certain circumstances, the failure to maintain insurance for terrorist or
similar attacks or for other risks required by the mortgage loan documents to be
insured against pursuant to the terms of the Pooling and Servicing Agreement)
that the Master Servicer or the Special Servicer (in the case of the Special
Servicer, with the consent of the Controlling Class Representative) shall have
determined, in its good faith and reasonable judgment and in accordance with the
Servicing Standard, materially impairs the value of the Mortgaged Property as
security for the Mortgage Loan and, if applicable, Companion Loan or otherwise
materially adversely affects the interests of Certificateholders and that
continues unremedied beyond the applicable grace period under the terms of the
Mortgage Loan (or, if no grace period is specified, for 60 days and provided
that a default that gives rise to an acceleration right without any grace period
shall be deemed to have a grace period equal to zero); (d) a decree or order
under any bankruptcy, insolvency or similar law shall have been entered against
the related borrower and such decree or order shall have remained in force,
undischarged, undismissed or unstayed for a period of 60 days; (e) the related
borrower shall consent to the appointment of a conservator or receiver or
liquidator in any insolvency or similar proceedings of or relating to such
related borrower or of or relating to all or substantially all of its property;
(f) the related borrower shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; (g)
the Master Servicer shall have force placed insurance against damages or losses
arising from acts of terrorism due to the failure of the related borrower to
maintain or cause such insurance to be maintained and (1) subsequent to such
force placement such borrower fails to maintain or cause to be maintained
insurance coverage against damages or losses arising from acts of terrorism for
a period of 60 days (or such shorter time period as the Controlling Class
Representative may consent to) or (2) the Master Servicer fails to have been
reimbursed for any Servicing Advances made in connection with the force
placement of such insurance coverage (unless the circumstances giving rise to
such forced placement of such insurance coverage have otherwise been cured and
the Master Servicer has been reimbursed for any Servicing Advances made in
connection with the forced placement of such insurance coverage); or (h) the
Master Servicer shall have received notice of the commencement of foreclosure or
similar proceedings with respect to the related Mortgaged Property (each event
described in clauses (a) through (h) above, a "Servicing Transfer Event").
In general, as long as the related Co-Lender Loan is owned by the Trust,
each Companion Loan will be serviced and administered under the Pooling and
Servicing Agreement as if it were a Mortgage Loan and the holder of the related
Mortgage Note were a Certificateholder. If a Companion Loan becomes specially
serviced, then the Co-Lender Loan will become a Specially Serviced Mortgage
Loan. If a Co-
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Lender Loan becomes a Specially Serviced Mortgage Loan, then the related
Companion Loan will become a Specially Serviced Mortgage Loan.
If any amounts due under the AB Mortgage Loans or the related Companion
Loans are accelerated after an event of default under the applicable Mortgage
Loan documents, the holder of the related Companion Loan will be entitled to
purchase the related Mortgage Loan at the price described under "DESCRIPTION OF
THE MORTGAGE POOL--Co-Lender Loans" in this Prospectus Supplement.
If a Servicing Transfer Event occurs with respect to any Mortgage Loan or
Companion Loan, the Master Servicer is in general required to transfer its
servicing responsibilities with respect to such Mortgage Loan and Companion Loan
to the Special Servicer. Notwithstanding such transfer, the Master Servicer will
continue to receive payments on such Mortgage Loan and Companion Loan (including
amounts collected by the Special Servicer), to make certain calculations with
respect to such Mortgage Loan and Companion Loan, and to make remittances
(including, if necessary, P&I Advances with respect to such Mortgage Loan) and
prepare certain reports to the Trustee with respect to such Mortgage Loan. If
title to the related Mortgaged Property is acquired by the Trust Fund (upon
acquisition, an "REO Property"), whether through foreclosure, deed in lieu of
foreclosure or otherwise, the Special Servicer will continue to be responsible
for the management thereof. Mortgage Loans and Companion Loans serviced by the
Special Servicer are referred to in this Prospectus Supplement as "Specially
Serviced Mortgage Loans" and, together with any REO Properties, constitute
"Specially Serviced Trust Fund Assets". The Master Servicer has no
responsibility for the Special Servicer's performance of its duties under the
Pooling and Servicing Agreement.
A Mortgage Loan or Companion Loan will cease to be a Specially Serviced
Mortgage Loan (and will become a "Corrected Mortgage Loan" as to which the
Master Servicer will re-assume servicing responsibilities):
(a) with respect to the circumstances described in clause (a) of the
definition of Servicing Transfer Event, when the related borrower has made
three consecutive full and timely Periodic Payments under the terms of such
Mortgage Loan (as such terms may be changed or modified in connection with
a bankruptcy or similar proceeding involving the related borrower or by
reason of a modification, waiver or amendment granted or agreed to by the
Special Servicer);
(b) with respect to any of the circumstances described in clauses (b),
(d), (e) and (f) of the definition of Servicing Transfer Event, when such
circumstances cease to exist in the good faith, reasonable judgment of the
Special Servicer, but, with respect to any bankruptcy or insolvency
proceedings described in clauses (d), (e) and (f) no later than the entry
of an order or decree dismissing such proceeding;
(c) with respect to the circumstances described in clause (c) of the
definition of Servicing Transfer Event, when such default is cured; and
(d) with respect to the circumstances described in clause (g) of the
definition of Servicing Transfer Event, when such proceedings are
terminated;
so long as at that time no other Servicing Transfer Event then exists and
provided no additional default is foreseeable in the reasonable good faith
judgment of the Special Servicer.
SERVICING AND OTHER COMPENSATION AND PAYMENT OF EXPENSES
The principal compensation to be paid to the Master Servicer in respect of
its servicing activities is the Master Servicing Fee. The "Master Servicing Fee"
is payable monthly on a loan-by-loan basis from amounts received in respect of
interest on each Mortgage Loan (including each Specially Serviced Mortgage Loan,
and from REO Revenue with respect to each REO Mortgage Loan), is calculated on
the basis of a 360-day year consisting of twelve 30-day months, accrues at the
related Master Servicing Fee Rate and is computed on the basis of the same
principal amount respecting which any related interest payment due on the
Mortgage Loan is computed. The "Master Servicing Fee Rate" is a per annum rate
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ranging from 0.0400% to 0.1450%. As of the Cut-Off Date the weighted average
Master Servicing Fee Rate will be approximately 0.0465% per annum. All
references in this section to "Mortgage Loans" will include the Companion Loans.
If a borrower prepays a Mortgage Loan on a date that is prior to its Due
Date in any Collection Period, the amount of interest (net of related Master
Servicing Fees and, if applicable, Additional Interest) that accrues on the
Mortgage Loan during such Collection Period will be less (such shortfall, a
"Prepayment Interest Shortfall") than the amount of interest (net of related
Master Servicing Fees and, if applicable, Additional Interest and without regard
to any Prepayment Premium or Yield Maintenance Charge actually collected) that
would have accrued on the Mortgage Loan through its Due Date. If such a
principal prepayment occurs during any Collection Period after the Due Date for
such Mortgage Loan in such Collection Period, the amount of interest (net of
related Master Servicing Fees) that accrues and is collected on the Mortgage
Loans during such Collection Period will exceed (such excess, a "Prepayment
Interest Excess") the amount of interest (net of related Master Servicing Fees,
and without regard to any Prepayment Premium or Yield Maintenance Charge
actually collected) that would have been collected on the Mortgage Loan during
such Collection Period if the borrower had not prepaid. Any Prepayment Interest
Excesses collected will be paid to the Master Servicer as additional servicing
compensation. However, with respect to each Distribution Date, the Master
Servicer is required to deposit into the Certificate Account (such deposit, a
"Compensating Interest Payment"), without any right of reimbursement therefor,
with respect to each Mortgage Loan (other than a Specially Serviced Mortgage
Loan and other than any Mortgage Loan on which the Special Servicer has waived a
prepayment restriction) that was subject to a voluntary Principal Prepayment
during the most recently ended Collection Period creating a Prepayment Interest
Shortfall, an amount equal to the lesser of (i) the sum of (a) the Master
Servicing Fee (up to a Master Servicing Fee Rate of 0.02% per annum) received by
the Master Servicer during such Collection Period on such Mortgage Loan and (b)
investment income earned by the Master Servicer on the related Principal
Prepayment during the most recently ended Collection Period, and (ii) the amount
of the related Prepayment Interest Shortfall; provided, however, to the extent
any such Prepayment Interest Shortfall is the result of the Master Servicer's
failure to enforce the applicable Mortgage Loan documents, the amount in clause
(a) shall include the entire Master Servicing Fee on the applicable Mortgage
Loan for such Collection Period. Compensating Interest Payments will not cover
shortfalls in Mortgage Loan interest accruals that result from any liquidation
of a defaulted Mortgage Loan, or of any REO Property acquired in respect
thereof, that occurs during a Collection Period prior to the related Due Date
therein or involuntary prepayments.
The principal compensation to be paid to the Special Servicer in respect of
its special servicing activities is the Special Servicing Fee (together with the
Master Servicing Fee, the "Servicing Fees") and, under the circumstances
described in this Prospectus Supplement, Liquidation Fees and Workout Fees. The
"Special Servicing Fee" is calculated on the basis of a 360-day year consisting
of twelve 30-day months, accrues at a rate (the "Special Servicing Fee Rate")
equal to 0.2500% per annum and is computed on the basis of the same principal
amount respecting which any related interest payment due on such Specially
Serviced Mortgage Loan or REO Mortgage Loan, as the case may be. However, earned
Special Servicing Fees are payable out of general collections on the Mortgage
Loans then on deposit in the Certificate Account. The Special Servicing Fee with
respect to any Specially Serviced Mortgage Loan (or REO Mortgage Loan) will
cease to accrue if such loan (or the related REO Property) is liquidated or if
such loan becomes a Corrected Mortgage Loan. The Special Servicer is entitled to
a "Liquidation Fee" with respect to each Specially Serviced Trust Fund Asset,
which Liquidation Fee generally will be in an amount equal to 1.0000% of all
amounts received in respect of such Mortgage Loan or the related REO Property,
as applicable, payable by withdrawal from such amounts on deposit in the
Certificate Account. However, no Liquidation Fee will be payable in connection
with, or out of, insurance proceeds, condemnation proceeds or liquidation
proceeds resulting from the purchase of any Specially Serviced Trust Fund Asset
(i) by a Mortgage Loan Seller (as described in this Prospectus Supplement under
"DESCRIPTION OF THE MORTGAGE POOL--Assignment of the Mortgage Loans; Repurchases
and Substitutions" and "--Representations and Warranties; Repurchases and
Substitutions"), (ii) by the Master Servicer, the Special Servicer, the Majority
Subordinate Certificateholder or the purchasing
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Certificateholder as described in this Prospectus Supplement under "DESCRIPTION
OF THE CERTIFICATES--Termination" or (iii) in certain other limited
circumstances, including in connection with the purchase of the Co-Lender Loans
as described under "DESCRIPTION OF THE MORTGAGE POOL--Co-Lender Loans". The
Special Servicer also is entitled to a "Workout Fee" with respect to each
Corrected Mortgage Loan, which is generally equal to 1.0000% of all payments of
interest and principal received on such Mortgage Loan for so long as it remains
a Corrected Mortgage Loan, payable by withdrawal from such amounts on deposit in
the Certificate Account. If the Special Servicer is terminated or resigns, it
will retain the right to receive any and all Workout Fees payable with respect
to any Mortgage Loan that became a Corrected Mortgage Loan during the period
that it acted as Special Servicer and remained a Corrected Mortgage Loan at the
time of its termination or resignation or if the Special Servicer resolved the
circumstances and/or conditions (including by way of a modification of the
related Mortgage Loan documents) causing the Mortgage Loan to be a Specially
Serviced Loan, but the Mortgage Loan had not as of the time the Special Servicer
is terminated or resigns become a Corrected Mortgage Loan because the related
borrower had not made three consecutive monthly debt service payments and
subsequently becomes a Corrected Mortgage Loan as a result of making such three
consecutive payments. The successor Special Servicer will not be entitled to any
portion of those Workout Fees.
As additional servicing compensation, the Master Servicer or the Special
Servicer is entitled to retain all modification fees, assumption fees,
defeasance fees, assumption application fees, late payment charges and default
interest (to the extent not used to offset interest on Advances, Additional
Trust Fund Expenses (other than Special Servicing Fees, Workout Fees and/or
Liquidation Fees) and the cost of property inspections as provided in the
Pooling and Servicing Agreement) and Prepayment Interest Excesses collected from
borrowers on Mortgage Loans. In addition, to the extent the Master Servicer or
the Special Servicer receives late payment charges or default interest on a
Mortgage Loan for which interest on Advances or Additional Trust Fund Expenses
related to such Mortgage Loan has been paid and not previously reimbursed to the
Trust Fund, such late payment charges or default interest will be used to
reimburse the Trust Fund for such payment of interest or Additional Trust Fund
Expenses. In addition, each of the Master Servicer and the Special Servicer is
authorized to invest or direct the investment of funds held in those accounts
maintained by it that relate to the Mortgage Loans or REO Properties, as the
case may be, in certain short-term United States government securities and
certain other permitted investment grade obligations, and the Master Servicer
and the Special Servicer each will be entitled to retain any interest or other
income earned on such funds held in those accounts maintained by it, but shall
be required to cover any losses on investments of funds held in those accounts
maintained by it, from its own funds without any right to reimbursement, except
in certain limited circumstances described in the Pooling and Servicing
Agreement.
Each of the Master Servicer and Special Servicer is, in general, required
to pay all ordinary expenses incurred by it in connection with its servicing
activities under the Pooling and Servicing Agreement, including the fees of any
sub-servicers retained by it, and is not entitled to reimbursement therefor
except as expressly provided in the Pooling and Servicing Agreement. However,
each of the Master Servicer and Special Servicer is permitted to pay certain of
such expenses (including certain expenses incurred as a result of a Mortgage
Loan default) directly out of the Certificate Account and at times without
regard to the Mortgage Loan with respect to which such expenses were incurred.
See "DESCRIPTION OF THE CERTIFICATES--Distributions" in this Prospectus
Supplement and "DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS--Certificate
Account" and "--Servicing Compensation and Payment of Expenses" in the
Prospectus.
As and to the extent described in this Prospectus Supplement under
"DESCRIPTION OF THE CERTIFICATES--P&I Advances," each of the Master Servicer and
the Trustee is entitled to receive interest, at the Reimbursement Rate, on any
reimbursable servicing expenses incurred by it. Such interest will compound
annually and will be paid, contemporaneously with the reimbursement of the
related servicing expense, first out of late payment charges and default
interest received on the related Mortgage Loan and then from general collections
on the Mortgage Loans then on deposit in the Certificate Account.
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In addition, to the extent the Master Servicer receives late payment charges or
default interest on a Mortgage Loan for which interest on servicing expenses
related to such Mortgage Loan has been paid from general collections on deposit
in the Certificate Account and not previously reimbursed, such late payment
charges or default interest will be used to reimburse the Trust Fund for such
payment of interest.
MODIFICATIONS, WAIVERS AND AMENDMENTS
The Pooling and Servicing Agreement permits the Special Servicer (subject,
with respect to the Co-Lender Loans, to certain rights of the holder of the
related Companion Loan) to modify, waive or amend any term of any Mortgage Loan
if (a) it determines, in accordance with the servicing standard described under
"--General" above, that it is appropriate to do so and the Special Servicer
determines that such modification, waiver or amendment is not "significant"
within the meaning of Treasury Regulations Section 1.860G-2(b), and (b) except
as described in the following paragraph, such modification, waiver or amendment,
will not (i) affect the amount or timing of any related payments of principal,
interest or other amount (including Prepayment Premiums and Yield Maintenance
Charges) payable under the Mortgage Loan, (ii) affect the obligation of the
related borrower to pay a Prepayment Premium or Yield Maintenance Charge or
permit a principal prepayment during the applicable Lockout Period, (iii) except
as expressly provided by the related Mortgage or in connection with a material
adverse environmental condition at the related Mortgaged Property, result in a
release of the lien of the related Mortgage on any material portion of such
Mortgaged Property without a corresponding principal prepayment in an amount not
less than the fair market value of the property released, (iv) if such Mortgage
Loan is equal to or in excess of 5% of the then aggregate current principal
balances of all Mortgage Loans or $20,000,000, or is one of the ten largest
Mortgage Loans by Stated Principal Balance as of such date, permit the transfer
of (A) the related Mortgaged Property or any interest therein or (B) equity
interests in the related borrower or an equity owner of the borrower that would
result, in the aggregate during the term of the related Mortgage Loan, in a
transfer greater than 49% of the total interest in the borrower and/or any
equity owner of the borrower or a transfer of voting control in the borrower or
an equity owner of the borrower without the prior written confirmation from each
Rating Agency (as applicable) that such change will not result in the
qualification, downgrade or withdrawal of the ratings then assigned to the
Certificates or (v) in the good faith, reasonable judgment of the Special
Servicer, materially impair the security for the Mortgage Loan or reduce the
likelihood of timely payment of amounts due thereon.
Notwithstanding clause (b) of the preceding paragraph and, with respect to
the Co-Lender Loans, subject to certain rights of the holders of the related
Companion Loan, the Special Servicer may (i) reduce the amounts owing under any
Specially Serviced Mortgage Loan by forgiving principal, accrued interest and/or
any Prepayment Premium or Yield Maintenance Charge, (ii) reduce the amount of
the Periodic Payment on any Specially Serviced Mortgage Loan, including by way
of a reduction in the related Mortgage Rate, (iii) forbear in the enforcement of
any right granted under any Mortgage Note or Mortgage relating to a Specially
Serviced Mortgage Loan, (iv) extend the maturity date of any Specially Serviced
Mortgage Loan, and/or (v) accept a principal prepayment during any Lockout
Period; provided that (x) the related borrower is in default with respect to the
Specially Serviced Mortgage Loan or, in the reasonable, good faith judgment of
the Special Servicer, such default by the borrower is reasonably foreseeable,
(y) in the reasonable, good faith judgment of the Special Servicer, such
modification, would increase the recovery to Certificateholders on a net present
value basis and (z) such modification, waiver or amendment does not result in a
tax being imposed on the Trust Fund or cause any REMIC relating to the assets of
the Trust Fund to fail to qualify as a REMIC at any time the Certificates are
outstanding. In no event, however, is the Special Servicer permitted to (i)
extend the maturity date of a Mortgage Loan beyond a date that is two years
prior to the Rated Final Distribution Date, (ii) reduce the Mortgage Rate of a
Mortgage Loan to less than the lesser of (a) the original Mortgage Rate of such
Mortgage Loan, (b) the highest Pass-Through Rate of any Class of Certificates
(other than any Class of Class X Certificates) then outstanding, or (c) a rate
below the then prevailing interest rate for comparable loans, as determined by
the Special Servicer, (iii) if the Mortgage Loan is secured by a ground lease
(and not also by the corresponding fee simple interest), extend the maturity
date of such Mortgage Loan beyond a date which is 20 years prior to the
expiration of the term of such ground lease or (iv) defer interest due
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on any Mortgage Loan in excess of 10% of the Stated Principal Balance of such
Mortgage Loan or defer the collection of interest on any Mortgage Loan without
accruing interest on such deferred interest at a rate at least equal to the
Mortgage Rate of such Mortgage Loan. The Special Servicer will have the ability,
subject to the servicing standard described under "--General" above, to modify
Mortgage Loans with respect to which default is reasonably foreseeable, but
which are not yet in default.
The Special Servicer is required to notify the Trustee, the Master
Servicer, the Controlling Class Representative and the Rating Agencies and, with
respect to the Co-Lender Loans, the holders of the related Companion Loan, of
any material modification, waiver or amendment of any term of any Specially
Serviced Mortgage Loan, and to deliver to the Trustee or the related Custodian
(with a copy to the Master Servicer), for deposit in the related Mortgage File,
an original counterpart of the agreement related to such modification, waiver or
amendment, promptly (and in any event within ten business days) following the
execution thereof. Copies of each agreement whereby any such modification,
waiver or amendment of any term of any Specially Serviced Mortgage Loan is
effected are required to be available for review during normal business hours at
the offices of the Special Servicer. See "DESCRIPTION OF THE
CERTIFICATES--Reports to Certificateholders; Available Information" in this
Prospectus Supplement.
For any Mortgage Loan other than a Specially Serviced Mortgage Loan and
subject to the rights of the Special Servicer, the Master Servicer is
responsible for any request by a borrower for the consent to modify, waive or
amend certain terms as specified in the Pooling and Servicing Agreement,
including, without limitation, (i) approving certain leasing activity, (ii)
approving certain substitute property managers, (iii) approving certain waivers
regarding the timing or need to audit certain financial statements and (iv)
approving certain consents with respect to right-of-ways and easements and
consents to subordination of the related Mortgage Loan to such easements or
right-of-ways.
THE CONTROLLING CLASS REPRESENTATIVE
Subject to the succeeding paragraphs, the Controlling Class Representative
is entitled to advise the Special Servicer with respect to the following actions
of the Special Servicer and, the Special Servicer is not permitted to take any
of the following actions as to which the Controlling Class Representative, has
objected in writing within ten business days of being notified thereof (provided
that if such written objection has not been received by the Special Servicer
within such ten business day period, then the Controlling Class Representative's
approval will be deemed to have been given):
(i) any actual or proposed foreclosure upon or comparable conversion
(which may include acquisitions of an REO Property) of the ownership of
properties securing such of the Specially Serviced Mortgage Loans as come
into and continue in default;
(ii) any modification or waiver of any term of the related Mortgage
Loan Documents of a Mortgage Loan that relates to the Maturity Date,
Mortgage Rate, principal balance, amortization term, payment frequency or
any provision requiring the payment of a Prepayment Premium or Yield
Maintenance Charge (other than a modification consisting of the extension
of the maturity date of a Mortgage Loan for one year or less) or a material
non-monetary term;
(iii) any actual or proposed sale of an REO Property (other than in
connection with the termination of the Trust Fund as described under
"DESCRIPTION OF THE CERTIFICATES--Termination" in this Prospectus
Supplement or pursuant to a Purchase Option as described below under
"--Defaulted Mortgage Loans; REO Properties; Purchase Option");
(iv) any determination to bring an REO Property into compliance with
applicable environmental laws or to otherwise address hazardous materials
located at an REO Property;
(v) any acceptance of substitute or additional collateral or release
of material collateral for a Mortgage Loan unless required by the
underlying loan documents;
(vi) any waiver of a "due-on-sale" or "due-on-encumbrance" clause;
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(vii) any release of any performance or "earn-out" reserves, escrows
or letters of credit;
(viii) any acceptance of an assumption agreement releasing a borrower
from liability under a Mortgage Loan;
(ix) any termination of the related property manager for Mortgage
Loans having an outstanding principal balance of greater than $5,000,000;
(x) any termination of, or modification of, all applicable franchise
agreements related to any Mortgage Loan secured by a hotel;
(xi) any determination to allow a borrower not to maintain terrorism
insurance; and
(xii) any determination to decrease the time period referenced in
clause (g) of the definition of Servicing Transfer Event
In addition, the Controlling Class Representative may, direct the Special
Servicer to take, or to refrain from taking, such other actions as the
Controlling Class Representative may deem advisable or as to which provision is
otherwise made in the Pooling and Servicing Agreement; provided that no such
direction and no objection contemplated by the prior paragraph may (i) require
or cause the Special Servicer to violate any REMIC provisions, any provision of
the Pooling and Servicing Agreement or applicable law, including the Special
Servicer's obligation to act in accordance with the servicing standards
described under "--General" above, or (ii) expose the Master Servicer, the
Special Servicer, the Trust Fund or the Trustee to liability, or materially
expand the scope of the Special Servicer or its responsibilities under the
Pooling and Servicing Agreement or cause the Special Servicer to act or fail to
act in a manner which, in the reasonable judgment of the Special Servicer, is
not in the best interests of the Certificateholders. {Allied Capital
Corporation} will be the initial Controlling Class Representative.
Notwithstanding the foregoing, pursuant to the Pooling and Servicing
Agreement and the Lloyd Center Intercreditor Agreement, the holder of the Lloyd
Center Pari Passu Loan will generally share with the Controlling Class
Representative the rights given to the Controlling Class Representative under
the Pooling and Servicing Agreement to direct the Master Servicer and/or the
Special Servicer with respect to the servicing of the Lloyd Center Loan and the
Lloyd Center Pari Passu Loan. In general, in the event that the Controlling
Class Representative is required to give its consent or advice or otherwise take
any action with respect to the Lloyd Center Loan, the Controlling Class
Representative will generally be required to confer with the holder of the Lloyd
Center Pari Passu Loan regarding such advice or consent. In the event that the
Controlling Class Representative and the holder of the Lloyd Center Pari Passu
Loan disagree with respect to such advice, consent or action, the Lloyd Center
Intercreditor Agreement and the Pooling and Servicing Agreement provide that the
Controlling Class Representative and the holder of the Lloyd Center Pari Passu
Loan will contract with a third party designated under the Lloyd Center
Intercreditor Agreement to resolve such disagreement and the decision of such
third party will be binding upon the Controlling Class Representative and the
holder of the Lloyd Center Pari Passu Loan in accordance with the Lloyd Center
Intercreditor Agreement.
Notwithstanding the foregoing, if the unpaid principal amount of an AB
Apartments Companion Loan, net of any existing related Appraisal Reduction
Amount with respect to such AB Apartments Loan and the related AB Apartments
Companion Loan (calculated as if the loans were a single mortgage loan), is
equal to or greater than 25% of the original unpaid principal amount of the
related AB Apartments Companion Loan, then (i) the Controlling Class
Representative will not be entitled to exercise any of the rights and powers
described above with respect to the related AB Apartments Loan and the related
AB Apartments Companion Loan and, instead, the holder of the related AB
Apartments Companion Loan or its designee will be entitled to exercise the same
or similar rights and powers with respect to the related AB Apartments Loan and
the related AB Apartments Companion Loan and (ii) subject to the requirements of
the two immediately preceding paragraphs, the holder of the related AB
Apartments Companion Loan or its designee will be entitled to direct the Special
Servicer with respect to the acceptance of a discounted payoff with respect to
the related AB Apartments Companion Loan, the modification, extension, amendment
or waiver of any material non-monetary term of the AB Apartments
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Loan and the AB Apartments Companion Loan if a Servicing Transfer Event occurs,
and any release of collateral for the AB Apartments Loan and the AB Apartments
Companion Loan (other than in accordance with the related Mortgage Loan
documents). See "DESCRIPTION OF THE MORTGAGE POOL--Co-Lender Loans--Servicing
Provisions of the Intercreditor Agreements".
Notwithstanding the foregoing, the holder of a CBA Companion Loan may
exercise certain approval rights relating to a modification of such CBA
Companion Loan that materially and adversely affects the holder of such CBA
Companion Loan prior to the expiration of the related repurchase period. See
"DESCRIPTION OF THE MORTGAGE POOL--Co-Lender Loans--Servicing Provisions of the
Intercreditor Agreements".
Limitation on Liability of the Controlling Class Representative. The
Controlling Class Representative will not have any liability to the
Certificateholders for any action taken, or for refraining from the taking of
any action, or for errors in judgment; provided, however, that the Controlling
Class Representative will not be protected against any liability to a
Controlling Class Certificateholder which would otherwise be imposed by reason
of willful misfeasance, bad faith or negligence in the performance of duties or
by reason of reckless disregard of obligations or duties. By its acceptance of a
Certificate, each Certificateholder confirms its understanding that the
Controlling Class Representative may take actions that favor the interests of
one or more Classes of the Certificates over other Classes of the Certificates,
and that the Controlling Class Representative may have special relationships and
interests that conflict with those of holders of some Classes of the
Certificates; and each Certificateholder agrees to take no action against the
Controlling Class Representative or any of its officers, directors, employees,
principals or agents as a result of such a special relationship or conflict.
Each holder of an AB Apartments Companion Loan or its designee, in
connection with exercising the rights and powers described above with respect to
the related AB Apartments Loan and the related AB Apartments Companion Loan,
will be entitled to substantially the same limitations on liability to which the
Controlling Class Representative is entitled.
DEFAULTED MORTGAGE LOANS; REO PROPERTIES; PURCHASE OPTION
The Pooling and Servicing Agreement contains provisions requiring, within
60 days after a Mortgage Loan becomes a Defaulted Mortgage Loan, the Special
Servicer to determine the fair value of the Mortgage Loan in accordance with the
servicing standard. A "Defaulted Mortgage Loan" is a Mortgage Loan (i) that is
delinquent sixty days or more with respect to a Periodic Payment (not including
the Balloon Payment) or (ii) that is delinquent in respect of its Balloon
Payment unless the Master Servicer has, on or prior to the due date of such
Balloon Payment, received written evidence from an institutional lender of such
lender's binding commitment to refinance such Mortgage Loan within 120 days
after the due date of such Balloon Payment (provided that if such refinancing
does not occur during such time specified in the commitment, the related
Mortgage Loan will immediately become a Defaulted Mortgage Loan), in either case
such delinquency to be determined without giving effect to any grace period
permitted by the related Mortgage Loan documents and without regard to any
acceleration of payments under the related Mortgage and Mortgage Note or (iii)
as to which the Master Servicer or Special Servicer has, by written notice to
the related Mortgagor, accelerated the maturity of the indebtedness evidenced by
the related Mortgage Note. The Special Servicer will be permitted to change,
from time to time, its determination of the fair value of a Defaulted Mortgage
Loan based upon changed circumstances, new information or otherwise, in
accordance with the servicing standard; provided, however, that the Special
Servicer will update its determination of the fair value of a Defaulted Mortgage
Loan at least once every 90 days.
In the event a Mortgage Loan becomes a Defaulted Mortgage Loan, the
Majority Subordinate Certificateholder will have an assignable option to
purchase (subject to, in certain instances, the rights of subordinated secured
creditors to purchase the related Mortgage Loan) (the "Purchase Option") the
Defaulted Mortgage Loan from the Trust Fund at a price (the "Option Price")
equal to (i) the outstanding principal balance of the Defaulted Mortgage Loan as
of the date of purchase, plus all accrued
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and unpaid interest on such balance plus all related fees and expenses, if the
Special Servicer has not yet determined the fair value of the Defaulted Mortgage
Loan, or (ii) the fair value of the Defaulted Mortgage Loan as determined by the
Special Servicer, if the Special Servicer has made such fair value
determination. If the Purchase Option is not exercised by the Majority
Subordinate Certificateholder or any assignee thereof within 60 days of a
Mortgage Loan becoming a Defaulted Mortgage Loan, then the Majority Subordinate
Certificateholder shall assign the Purchase Option to the Special Servicer for
fifteen days. If the Purchase Option is not exercised by the Special Servicer or
its assignee within such fifteen day period, then the Purchase Option shall
revert to the Majority Subordinate Certificateholder.
Unless and until the Purchase Option with respect to a Defaulted Mortgage
Loan is exercised, the Special Servicer will be required to pursue such other
resolution strategies available under the Pooling and Servicing Agreement,
including workout and foreclosure, consistent with the servicing standard
described under "--General" above, but the Special Servicer generally will not
be permitted to sell the Defaulted Mortgage Loan other than pursuant to the
exercise of the Purchase Option.
If not exercised sooner, the Purchase Option with respect to any Defaulted
Mortgage Loan will automatically terminate upon (i) the related Mortgagor's cure
of all defaults on the Defaulted Mortgage Loan, (ii) the acquisition on behalf
of the Trust Fund of title to the related Mortgaged Property by foreclosure or
deed in lieu of foreclosure or (iii) the modification or pay-off (full or
discounted) of the Defaulted Mortgage Loan in connection with a workout. In
addition, the Purchase Option with respect to a Defaulted Mortgage Loan held by
any person will terminate upon the exercise of the Purchase Option by any other
holder of the Purchase Option.
If (a) the Purchase Option is exercised with respect to a Defaulted
Mortgage Loan and the person expected to acquire the Defaulted Mortgage Loan
pursuant to such exercise is the Majority Subordinate Certificateholder, the
Special Servicer, or any affiliate of any of them (in other words, the Purchase
Option has not been assigned to another unaffiliated person) and (b) the Option
Price is based on the Special Servicer's determination of the fair value of the
Defaulted Mortgage Loan, the Trustee will be required to determine if the Option
Price represents a fair price for the Defaulted Mortgage Loan. In making such
determination, the Trustee will be entitled to rely on the most recent appraisal
of the related Mortgaged Property that was prepared in accordance with the terms
of the Pooling and Servicing Agreement.
If title to any Mortgaged Property is acquired by the Trustee on behalf of
the Certificateholders pursuant to foreclosure proceedings instituted by the
Special Servicer or otherwise, the Special Servicer, after notice to the
Controlling Class Representative, shall use its reasonable best efforts to sell
any REO Property as soon as practicable in accordance with the servicing
standard but prior to the end of the third calendar year following the year of
acquisition, unless (i) the Internal Revenue Service grants an extension of time
to sell such property (an "REO Extension") or (ii) it obtains an opinion of
counsel generally to the effect that the holding of the property for more than
three years after the end of the calendar year in which it was acquired will not
result in the imposition of a tax on the Trust Fund or cause any REMIC relating
to the assets of the Trust Fund to fail to qualify as a REMIC under the Code. If
the Special Servicer on behalf of the Trustee has not received an Extension or
such Opinion of Counsel and the Special Servicer is not able to sell such REO
Property within the period specified above, or if an REO Extension has been
granted and the Special Servicer is unable to sell such REO Property within the
extended time period, the Special Servicer shall auction the property pursuant
to the auction procedure set forth below.
The Special Servicer shall give the Controlling Class Representative, the
Master Servicer and the Trustee not less than five days' prior written notice of
its intention to sell any such REO Property, and shall auction the REO Property
to the highest bidder (which may be the Special Servicer) in accordance with the
servicing standard described in the Pooling and Servicing Agreement; provided,
however, that the Master Servicer, Special Servicer, Majority Subordinate
Certificateholder, any independent contractor engaged by the Master Servicer or
the Special Servicer pursuant to the Pooling and Servicing Agreement (or any
officer or affiliate thereof) shall not be permitted to purchase the REO
Property at a price less
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than the outstanding principal balance of such Mortgage Loan as of the date of
purchase, plus all accrued but unpaid interest and related fees and expenses,
except in limited circumstances set forth in the Pooling and Servicing
Agreement; and provided, further, that if the Special Servicer intends to bid on
any REO Property, (i) the Special Servicer shall notify the Trustee of such
intent, (ii) the Trustee shall promptly obtain, at the expense of the Trust an
appraisal of such REO Property (or internal valuation in accordance with the
procedures specified in the Pooling and Servicing Agreement) and (iii) the
Special Servicer shall not bid less than the greater of (x) the fair market
value set forth in such appraisal (or internal valuation) or (y) the outstanding
principal balance of such Mortgage Loan, plus all accrued but unpaid interest
and related fees and expenses.
Subject to the REMIC Provisions, the Special Servicer shall act on behalf
of the Trust in negotiating and taking any other action necessary or appropriate
in connection with the sale of any REO Property or the exercise of the Purchase
Option, including the collection of all amounts payable in connection therewith.
Notwithstanding anything to the contrary herein, neither the Trustee, in its
individual capacity, nor any of its Affiliates may bid for any REO Property or
purchase any Defaulted Mortgage Loan. Any sale of a Defaulted Mortgage Loan
(pursuant to the Purchase Option) or REO Property shall be without recourse to,
or representation or warranty by, the Trustee, the Depositor, any Mortgage Loan
Seller, the Special Servicer, the Master Servicer or the Trust. Notwithstanding
the foregoing, nothing herein shall limit the liability of the Master Servicer,
the Special Servicer or the Trustee to the Trust and the Certificateholders for
failure to perform its duties in accordance with the Pooling and Servicing
Agreement. None of the Special Servicer, the Master Servicer, the Depositor or
the Trustee shall have any liability to the Trust or any Certificateholder with
respect to the price at which a Defaulted Mortgage Loan is sold if the sale is
consummated in accordance with the terms of the Pooling and Servicing Agreement.
The proceeds of any sale after deduction of the expenses of such sale incurred
in connection therewith shall be deposited within one business day in the
Certificate Account.
INSPECTIONS; COLLECTION OF OPERATING INFORMATION
The Special Servicer or the Master Servicer is required to perform or cause
to be performed a physical inspection of a Mortgaged Property as soon as
practicable after the related Mortgage Loan becomes a Specially Serviced
Mortgage Loan or the related debt service coverage ratio is below 1.00x; the
expense of which will be payable first, out of penalty interest and late payment
charges otherwise payable to the Special Servicer or the Master Servicer, as the
case may be, and received in the Collection Period during which such inspection
related expenses were incurred, then at the Trust Fund's expense. In addition,
beginning in 2004, with respect to each Mortgaged Property securing a Mortgage
Loan with a principal balance (or allocated loan amount) at the time of such
inspection of more than or equal to $2,000,000, the Master Servicer (with
respect to each such Mortgaged Property securing a Mortgage Loan other than a
Specially Serviced Mortgage Loan) and the Special Servicer (with respect to each
Mortgaged Property securing a Specially Serviced Mortgage Loan) is required at
its expense to inspect or cause to be inspected the Mortgaged Property every
calendar year and with respect to each Mortgaged Property securing a Mortgage
Loan with a principal balance (or allocated loan amount) at the time of such
inspection of less than $2,000,000 once every other calendar year; provided that
the Master Servicer is not obligated to inspect any Mortgaged Property that has
been inspected by the Special Servicer in the previous 6 months. The Special
Servicer and the Master Servicer each will be required to prepare a written
report of each such inspection performed by it that describes the condition of
the Mortgaged Property and that specifies the existence with respect thereto of
any sale, transfer or abandonment or any material change in its condition or
value.
The Special Servicer or the Master Servicer is also required consistent
with the servicing standard described under "--General" above to collect from
the related borrower and review the quarterly and annual operating statements of
each Mortgaged Property and to cause annual operating statements to be prepared
for each REO Property. Generally, the Mortgage Loans require the related
borrower to deliver an annual property operating statement. However, there can
be no assurance that any operating statements required to be delivered will in
fact be delivered, nor is the Master Servicer or Special Servicer likely to
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have any practical means of compelling such delivery in the case of an otherwise
performing Mortgage Loan.
Copies of the inspection reports and operating statements referred to above
are required to be available for review by Certificateholders during normal
business hours at the offices of the Special Servicer or the Master Servicer, as
applicable. See "DESCRIPTION OF THE CERTIFICATES--Reports to Certificateholders;
Available Information" in this Prospectus Supplement.
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Wachovia Bank Commercial Mortgage Trust, Commercial Mortgage
Pass-Through Certificates, Series 2003-C5 (the "Certificates") will be issued
pursuant to a Pooling and Servicing Agreement, dated as of July 1, 2003, among
the Depositor, the Master Servicer, the Special Servicer and the Trustee (the
"Pooling and Servicing Agreement"). The Certificates represent in the aggregate
the entire beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of: (i) the Mortgage Loans and all payments and other
collections in respect of the Mortgage Loans received or applicable to periods
after the applicable Cut-Off Date (exclusive of payments of principal and
interest due, and principal prepayments received, on or before the Cut-Off
Date); (ii) any REO Property acquired on behalf of the Trust Fund; (iii) such
funds or assets as from time to time are deposited in the Certificate Account,
the REO Accounts, the Additional Interest Account, the Gain on Sale Reserve
Account and the Interest Reserve Account (see "DESCRIPTION OF THE POOLING AND
SERVICING AGREEMENTS--Certificate Account" in the Prospectus); and (iv) certain
rights of the Depositor under each Mortgage Loan Purchase Agreement relating to
Mortgage Loan document delivery requirements and the representations and
warranties of the Mortgage Loan Sellers regarding the Mortgage Loans.
The Certificates consist of the following classes (each, a "Class")
designated as: (i) the Class A-1, Class A-2 and Class A-1A Certificates
(collectively, the "Class A Certificates"); (ii) the Class B, Class C, Class D,
Class E, Class F, Class G, Class H, Class J, Class K, Class L, Class M, Class N,
Class O and Class P Certificates (collectively, the "Subordinate Certificates"
and, together with the Class A Certificates, the "Sequential Pay Certificates");
(iii) the Class X-C and Class X-P Certificates (collectively, the "Class X
Certificates" and collectively with the Sequential Pay Certificates, the "REMIC
Regular Certificates"); (iv) the Class R-I and Class R-II Certificates
(collectively, the "REMIC Residual Certificates"); and (v) the Class Z
Certificates.
Only the Class A-1, Class A-2, Class B and Class C Certificates
(collectively, the "Offered Certificates") are offered hereby. {The Class A-1A,
Class D, Class E, Class F, Class G, Class H, Class J, Class K, Class L, Class M,
Class N, Class O, Class P, Class X-C and Class X-P Certificates} (collectively,
the "Non-Offered Certificates"), the Class Z Certificates and the REMIC Residual
Certificates have not been registered under the Securities Act and are not
offered hereby. Accordingly, information in this Prospectus Supplement regarding
the terms of the Non-Offered Certificates is provided solely because of its
potential relevance to a prospective purchaser of an Offered Certificate.
REGISTRATION AND DENOMINATIONS
The Offered Certificates will be made available in book-entry format
through the facilities of The Depository Trust Company ("DTC"). The Class A-1,
Class A-2, Class B and Class C Certificates will be offered in denominations of
not less than $10,000 actual principal amount and in integral multiples of $1 in
excess thereof.
The holders of Offered Certificates may hold their Certificates through DTC
(in the United States) or Clearstream Banking, societe anonyme ("Clearstream")
or Euroclear Bank, societe anonyme ("Euroclear") (in Europe) if they are
Participants of such respective system, or indirectly through organizations that
are Participants in such systems. Clearstream and Euroclear will hold omnibus
positions
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on behalf of the Clearstream Participants and the Euroclear Participants,
respectively, through customers' securities accounts in Clearstream and
Euroclear's names on the books of their respective depositaries (collectively,
the "Depositaries") which in turn will hold such positions in customers'
securities accounts in the Depositaries' names on the books of DTC. DTC is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code and a "clearing agency" registered pursuant
to Section 17A of the Securities Exchange Act of 1934, as amended. DTC was
created to hold securities for its Participants and to facilitate the clearance
and settlement of securities transactions between Participants through
electronic computerized book-entries, thereby eliminating the need for physical
movement of certificates. Participants include securities brokers and dealers,
banks, trust companies and clearing corporations. Indirect access to the DTC
system also is available to others such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly ("Indirect Participants").
Transfers between DTC Participants will occur in accordance with DTC rules.
Transfers between Clearstream Participants and Euroclear Participants will occur
in accordance with their applicable rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly through Clearstream Participants or
Euroclear Participants, on the other, will be effected in DTC in accordance with
DTC rules on behalf of the relevant European international clearing system by
its Depositary; however, such cross-market transactions will require delivery of
instructions to the relevant European international clearing system by the
counterparty in such system in accordance with its rules and procedures. If the
transaction complies with all relevant requirements, Euroclear or Clearstream,
as the case may be, will then deliver instructions to the Depositary to take
action to effect final settlement on its behalf.
Because of time-zone differences, it is possible that credits of securities
in Clearstream or 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, 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. Similarly, reports
distributed to Certificateholders pursuant to the Pooling and Servicing
Agreement and requests for the consent of Certificateholders will be delivered
to beneficial owners only through DTC, Euroclear, Clearstream and their
respective Participants. Under a book-entry format, holders of Offered
Certificates may experience some delay in their receipt of payments, reports and
notices, since such payments, reports and notices will be forwarded by the
Trustee to Cede & Co., as nominee for DTC. DTC will forward such payments,
reports and notices to its Participants, which thereafter will forward them to
Indirect Participants, Clearstream, Euroclear or holders of Offered
Certificates, as applicable.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
Offered Certificates among Participants on whose behalf it acts with respect to
the Offered Certificates and to receive and transmit distributions of principal
of, and interest on, the Offered Certificates. Participants and Indirect
Participants with which the
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holders of Offered Certificates have accounts with respect to the Offered
Certificates similarly are required to make book-entry transfers and receive and
transmit such payments on behalf of their respective holders of Offered
Certificates. Accordingly, although the holders of Offered Certificates will not
possess the Offered Certificates, the Rules provide a mechanism by which
Participants will receive payments on Offered Certificates and will be able to
transfer their interest.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a holder of
Offered Certificates to pledge such Certificates to persons or entities that do
not participate in the DTC system, or to otherwise act with respect to such
Certificates, may be limited due to the lack of a physical certificate for such
Certificates.
DTC has advised the Depositor that it will take any action permitted to be
taken by a holder of an Offered Certificate under the Pooling and Servicing
Agreement only at the direction of one or more Participants to whose accounts
with DTC the Offered Certificates are credited. DTC may take conflicting actions
with respect to other undivided interests to the extent that such actions are
taken on behalf of Participants whose holdings include such undivided interests.
Except as required by law, none of the Depositor, the Underwriters, the
Master Servicer, the Special Servicer nor the Trustee will have any liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests in the Offered Certificates held by Cede & Co.,
as nominee for DTC, or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
Clearstream is a limited liability company (a societe anonyme) organized
under the laws of Luxembourg. Clearstream holds securities for its participating
organizations ("Clearstream Participants") and facilitates the clearance and
settlement of securities transactions between Clearstream Participants through
electronic book-entry changes in accounts of Clearstream Participants, thereby
eliminating the need for physical movement of certificates.
Euroclear was created in 1968 to hold securities for participants of
Euroclear ("Euroclear Participants") and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment.
The information in this Prospectus Supplement concerning DTC, Clearstream
or Euroclear and their book-entry systems has been obtained from sources
believed to be reliable, but neither the Depositor nor any of the Underwriters
takes any responsibility for the accuracy or completeness thereof.
CERTIFICATE BALANCES AND NOTIONAL AMOUNT
Subject to a permitted variance of plus or minus 5.0%, the respective
Classes of Sequential Pay Certificates will have the Certificate Balances
representing the approximate percentage of the Cut-Off Date Pool Balance as set
forth in the following table:
<Table>
<Caption>
PERCENTAGE OF
CLOSING DATE CUT-OFF DATE
CLASS OF CERTIFICATES CERTIFICATE BALANCE POOL BALANCE
- --------------------- ------------------- -------------
Class A-1 Certificates....................... $226,000,000 18.819%
Class A-2 Certificates....................... $439,721,000 36.615%
Class B Certificates......................... $ 40,531,000 3.375%
Class C Certificates......................... $ 15,011,000 1.250%
Non-Offered Certificates (other than Class X
Certificates).............................. $479,651,922 39.941%
</Table>
The "Certificate Balance" of any Class of Sequential Pay Certificates
outstanding at any time represents the maximum amount that the holders thereof
are entitled to receive as distributions allocable to principal from the cash
flow on the Mortgage Loans and the other assets in the Trust Fund. The
Certificate Balance of each Class of Sequential Pay Certificates will be reduced
on each Distribution Date
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by any distributions of principal actually made on such Class of Certificates on
such Distribution Date, and further by any Realized Losses and Additional Trust
Fund Expenses actually allocated to such Class of Certificates on such
Distribution Date.
The Class X Certificates do not have Certificate Balances, but represent
the right to receive the distributions of interest in amounts equal to the
aggregate interest accrued on the applicable notional amount (each, a "Notional
Amount") of the related Class of Class X Certificates. On each Distribution
Date, the Notional Amount of the Class X-C Certificates generally will be equal
to the aggregate outstanding Certificate Balances of the Sequential Pay
Certificates on such Distribution Date. The initial Notional Amount of the Class
X-C Certificates will be $1,200,914,922
The Notional Amount of the Class XP Certificates will generally equal:
(1) until the Distribution Date in January 2004, the sum of (a) the lesser
of $222,033,000 and the Certificate Balance of the Class A-1
Certificates, (b) the lesser of $299,566,000 and the Certificate
Balance of the Class A-1A Certificates and (c) the aggregate
Certificate Balances of the Class A-2, Class B, Class C, Class D,
Class E, Class F, Class G, Class H, Class J, Class K and Class L
Certificates;
(2) after the Distribution Date in January 2004 through and including the
Distribution Date in July 2004, the sum of (a) the lesser of
$216,992,000 and the Certificate Balance of the Class A-1
Certificates, (b) the lesser of $297,670,000 and the Certificate
Balance of the Class A-1A Certificates and (c) the aggregate
Certificate Balances of the Class A-2, Class B, Class C, Class D,
Class E, Class F, Class G, Class H, Class J, Class K and Class L
Certificates;
(3) after the Distribution Date in July 2004 through and including the
Distribution Date in January 2005, the sum of (a) the lesser of
$197,206,000 and the Certificate Balance of the Class A-1
Certificates, (b) the lesser of $290,871,000 and the Certificate
Balance of the Class A-1A Certificates and (c) the aggregate
Certificate Balances of the Class A-2, Class B, Class C, Class D,
Class E and Class F, Class G, Class H, Class J, Class K and Class L
Certificates;
(4) after the Distribution Date in January 2005 through and including the
Distribution Date in July 2005, the sum of (a) the lesser of
$174,741,000 and the Certificate Balance of the Class A-1
Certificates, (b) the lesser of $283,236,000 and the Certificate
Balance of the Class A-1A Certificates and (c) the aggregate
Certificate Balances of the Class A-2, Class B, Class C, Class D,
Class E and Class F, Class G, Class H, Class J, Class K and Class L
Certificates;
(5) after the Distribution Date in July 2005 through and including the
Distribution Date in January 2006, the sum of (a) the lesser of
$152,858,000 and the Certificate Balance of the Class A-1
Certificates, (b) the lesser of $275,743,000 and the Certificate
Balance of the Class A-1A Certificates and (c) the aggregate
Certificate Balances of the Class A-2, Class B, Class C, Class D,
Class E, Class F and Class G, Class H, Class J, Class K and Class L
Certificates;
(6) after the Distribution Date in January 2006 through and including the
Distribution Date in July 2006, the sum of (a) the lesser of
$131,365,000 and the Certificate Balance of the Class A1 Certificates,
(b) the lesser of $268,428,000 and the Certificate Balance of the
Class A-1A Certificates and (c) the aggregate Certificate Balances of
the Class A-2, Class B, Class C, Class D, Class E, Class F, Class G,
Class H, Class J and Class K Certificates;
(7) after the Distribution Date in July 2006 through and including the
Distribution Date in January 2007, the sum of (a) the lesser of
$110,438,000 and the Certificate Balance of the Class A-1
Certificates, (b) the lesser of $261,284,000 and the Certificate
Balance of the Class A-1A Certificates, (c) the aggregate Certificate
Balances of the Class A-2, Class B, Class C, Class D, Class E, Class
F, Class G, Class H, Class J Certificates and (d) the lesser of
$938,000 and the Certificate Balance of the Class K Certificates;
(8) after the Distribution Date in January 2007 through and including the
Distribution Date in July 2007, the sum of (a) the lesser of
$89,993,000 and the Certificate Balance of the Class A-1
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Certificates, (b) the lesser of $254,308,000 and the Certificate
Balance of the Class A-1A Certificates, (c) the aggregate Certificate
Balances of the Class A-2, Class B, Class C, Class D, Class E, Class
F, Class G, Class H Certificates and (d) the lesser of $12,789,000 and
the Certificate Balance of the Class J Certificates;
(9) after the Distribution Date in July 2007 through and including the
Distribution Date in January 2008, the sum of (a) the lesser of
$64,633,000 and the Certificate Balance of the Class A-1 Certificates,
(b) the lesser of $247,566,000 and the Certificate Balance of the
Class A-1A Certificates, (c) the Certificate Balances of the Class
A-2, Class B, Class C, Class D, Class E, Class F, Class G, Class H
Certificates and (d) the lesser of $2,527,000 and the Certificate
Balance of the Class J Certificates;
(10) after the Distribution Date in January 2008 through and including the
Distribution Date in July 2008, the sum of (a) the lesser of
$37,426,000 and the Certificate Balance of the Class A-1 Certificates,
(b) the lesser of $237,255,000 and the Certificate Balance of the
Class A-1A Certificates, (c) the Certificate Balances of the Class
A-2, Class B, Class C, Class D, Class E, Class F, Class G Certificates
and (d) the lesser of $12,281,000 and the Certificate Balance of the
Class H Certificates;
(11) after the Distribution Date in July 2008 through and including the
Distribution Date in January 2009, the sum of (a) the lesser of
$19,066,000 and the Certificate Balance of the Class A-1 Certificates,
(b) the lesser of $230,995,000 and the Certificate Balance of the
Class A-1A Certificates, (c) the Certificate Balances of the Class
A-2, Class B, Class C, Class D, Class E, Class F, Class G Certificates
and (d) the lesser of $2,979,000 and the Certificate Balance of the
Class H Certificates;
(12) after the Distribution Date in January 2009 through and including the
Distribution Date in July 2009, the sum of (a) the lesser of
$434,862,000 and the Certificate Balance of the Class A-2
Certificates, (b) the lesser of $224,881,000 and the Certificate
Balance of the Class A-1A Certificates, (c) the aggregate Certificate
Balances of the Class B, Class C, Class D, Class E, Class F
Certificates and (d) the lesser of $13,575,000 and the Certificate
Balance of the Class G Certificates;
(13) after the Distribution Date in July 2009 through and including the
Distribution Date in January 2010, the sum of (a) the lesser of
$417,680,000 and the Certificate Balance of the Class A-2
Certificates, (b) the lesser of $218,970,000 and the Certificate
Balance of the Class A-1A Certificates, (c) the aggregate Certificate
Balances of the Class B, Class C, Class D, Class E, Class F
Certificates and (d) the lesser of $5,050,000 and the Certificate
Balance of the Class G Certificates;
(14) after the Distribution Date in January 2010 through and including the
Distribution Date in July 2010, the sum of (a) the lesser of
$341,783,000 and the Certificate Balance of the Class A-2
Certificates, (b) the lesser of $197,219,000 and the Certificate
Balance of the Class A-1A Certificates, (c) the aggregate Certificate
Balances of the Class B, Class C, Class D, Class E Certificates and
(d) the lesser of $13,419,000 and the Certificate Balance of the Class
F Certificates;
(15) after the Distribution Date in July 2010 through and including the
Distribution Date in January 2011, the sum of (a) the lesser of
$326,712,000 and the Certificate Balance of the Class A-2
Certificates, (b) the lesser of $192,110,000 and the Certificate
Balance of the Class A-1A Certificates, (c) the aggregate Certificate
Balances of the Class B, Class C, Class D, Class E Certificates and
(d) the lesser of $6,133,000 and the Certificate Balance of the Class
F Certificates;
(16) after the Distribution Date in January 2011 through and including the
Distribution Date in July 2011, the sum of (a) the lesser of
$303,287,000 and the Certificate Balance of the Class A-2
Certificates, (b) the lesser of $187,119,000 and the Certificate
Balance of the Class A-1A
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Certificates, (c) the aggregate Certificate Balances of the Class B,
Class C, Class D Certificates and (d) the lesser of $9,711,000 and the
Certificate Balance of the Class E Certificates;
(17) after the Distribution Date in July 2011, $0.
The initial Notional Amount of the Class X-P Certificates will be
$1,154,968,000.
The Certificate Balance of any Class of Sequential Pay Certificates may be
increased by the amount, if any, of Certificate Deferred Interest added to such
Class Certificate Balance. With respect to any Mortgage Loan as to which the
Mortgage Rate has been reduced through a modification on any Distribution Date,
"Mortgage Deferred Interest" is the amount by which (a) interest accrued at such
reduced rate is less than (b) the amount of interest that would have accrued on
such Mortgage Loan at the Mortgage Rate before such reduction, to the extent
such amount has been added to the outstanding principal balance of such Mortgage
Loan. On each Distribution Date the amount of interest distributable to a Class
of Sequential Pay Certificates will be reduced by the amount of Mortgage
Deferred Interest allocable to such Class (any such amount, "Certificate
Deferred Interest"), such allocation being in reverse alphabetical order (except
with respect to the Class A-1, Class A1-A and Class A-2 Certificates, which
amounts shall be applied pro rata (based on remaining Class Certificate
Balances) to such Classes). The Certificate Balance of each Class of Sequential
Pay Certificates to which Certificate Deferred Interest has been so allocated on
a Distribution Date will be increased by the amount of Certificate Deferred
Interest. Any increase in the Certificate Balance of a Class of Sequential Pay
Certificates will result in an increase in the Notional Amount of the Class X-C
Certificates, and to the extent there is an increase in the Certificate Balance
of the Class A-1, Class A-2, Class A-1A, Class B, Class C, Class D, Class E,
Class F, Class G, Class H, Class J, Class K or Class L Certificates and subject
to the limits described in the description of the Notional Amount of the Class
X-P Certificates above, the Class X-P Certificates.
The REMIC Residual Certificates do not have Certificate Balances or
Notional Amounts, but represent the right to receive on each Distribution Date
any portion of the Available Distribution Amount (as defined below) for such
date that remains after the required distributions have been made on all the
REMIC Regular Certificates. It is not anticipated that any such portion of the
Available Distribution Amount will result in more than a de minimis distribution
to the REMIC Residual Certificates.
The Class Z Certificates do not have Certificate Balances or Notional
Amounts, but represent the right to receive on each Distribution Date any
amounts of Additional Interest received in the related Collection Period.
PASS-THROUGH RATES
The Pass-Through Rate applicable to the Class A-1, Class A-2, Class B and
Class C Certificates for each Distribution Date will equal the respective fixed
rate per annum set forth on the front cover of this Prospectus Supplement. Each
component will be deemed to have a Pass-Through Rate equal to the Pass-Through
Rate on the related Class of Certificates.
The Pass-Through Rate applicable to the Class X-C Certificates for the
initial Distribution Date will equal approximately 0.0898% per annum.
The Pass-Through Rate applicable to the Class X-C Certificates for each
subsequent Distribution Date will equal the weighted average of the respective
Class X-C Strip Rates, at which interest accrues from time to time on the
respective components (the "Class X-C Components") of the Class X-C Certificates
outstanding immediately prior to such Distribution Date (weighted on the basis
of the outstanding balances of those Class X-C Components immediately prior to
the Distribution Date). Each Class X-C Component will be comprised of all or a
designated portion of the Certificate Balance of one of the Classes of
Sequential Pay Certificates. In general, the Certificate Balance of each Class
of Sequential Pay Certificates will constitute a separate Class X-C Component.
However, if a portion, but not all, of the Certificate Balance of any particular
Class of Sequential Pay Certificates is identified under "--Certificate
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Balances and Notional Amount" above as being part of the Notional Amount of the
Class X-P Certificates immediately prior to any Distribution Date, then the
identified portion of the Certificate Balance will also represent one or more
separate Class X-C Components for purposes of calculating the Pass-Through Rate
of the Class X-C Certificates, and the remaining portion of the Certificate
Balance will represent one or more other separate Class X-C Components for
purposes of calculating the Pass-Through Rate of the Class X-C Certificates. For
each Distribution Date through and including the Distribution Date in July 2011,
the "Class X-C Strip Rate" for each Class X-C Component will be calculated as
follows:
(1) if such Class X-C Component consists of the entire Certificate Balance
of any Class of Sequential Pay Certificates, and if the Certificate
Balance does not, in whole or in part, also constitute a Class X-P
Component immediately prior to the Distribution Date, then the
applicable Class X-C Strip Rate will equal the excess, if any, of (a)
the Weighted Average Net Mortgage Rate for the Distribution Date, over
(b) the Pass-Through Rate in effect for the Distribution Date for the
applicable Class of Sequential Pay Certificates;
(2) if such Class X-C Component consists of a designated portion (but not
all) of the Certificate Balance of any Class of Sequential Pay
Certificates, and if the designated portion of the Certificate Balance
does not also constitute a Class X-P Component immediately prior to the
Distribution Date, then the applicable Class X-C Strip Rate will equal
the excess, if any, of (a) the Weighted Average Net Mortgage Rate for
the Distribution Date, over (b) the Pass-Through Rate in effect for the
Distribution Date for the applicable Class of Sequential Pay
Certificates;
(3) if such Class X-C Component consists of a designated portion (but not
all) of the Certificate Balance of any Class of Sequential Pay
Certificates, and if the designated portion of the Certificate Balance
also constitutes a Class X-P Component immediately prior to the
Distribution Date, then the applicable Class X-C Strip Rate will equal
the excess, if any, of (a) the Weighted Average Net Mortgage Rate for
the Distribution Date, over (b) the sum of (i) the Class X-P Strip Rate
for the applicable Class X-P Component, and (ii) the Pass-Through Rate
in effect for the Distribution Date for the applicable Class of
Sequential Pay Certificates; and
(4) if such Class X-C Component consists of the entire Certificate Balance
of any Class of Sequential Pay Certificates, and if the Certificate
Balance also constitutes, in its entirety, a Class X-P Component
immediately prior to such Distribution Date, then the applicable Class
X-C Strip Rate will equal the excess, if any, of (a) the Weighted
Average Net Mortgage Rate for the Distribution Date, over (b) the sum
of (i) the Class X-P Strip Rate for the applicable Class X-P Component,
and (ii) the Pass-Through Rate in effect for the Distribution Date for
the applicable Class of Sequential Pay Certificates.
For each Distribution Date after the Distribution Date in July 2011, the
entire Certificate Balance of each Class of Sequential Pay Certificates will
constitute one or more separate Class X-C Components, and the applicable Class
X-C Strip Rate with respect to each such Class X-C Component for each
Distribution Date will equal the excess, if any, of (a) the Weighted Average Net
Mortgage Rate for the Distribution Date, over (b) the Pass-Through Rate in
effect for the Distribution Date for the Class of Sequential Pay Certificates.
The Pass-Through Rate applicable to the Class X-P Certificates for the
initial Distribution Date will equal approximately 1.9188% per annum.
The Pass-Through Rate applicable to the Class X-P Certificates for each
subsequent Distribution Date will equal the weighted average of the respective
Class X-P Strip Rates, at which interest accrues from time to time on the
respective components (the "Class X-P Components") of the Class X-P Certificates
outstanding immediately prior to such Distribution Date (weighted on the basis
of the balances of those Class X-P Components immediately prior to the
Distribution Date). Each Class X-P Component will be comprised of all or a
designated portion of the Certificate Balance of a specified Class
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of Sequential Pay Certificates. If all or a designated portion of the
Certificate Balance of any Class of Sequential Pay Certificates is identified
under "--Certificate Balances and Notional Amount" above as being part of the
Notional Amount of the Class X-P Certificates immediately prior to any
Distribution Date, then that Certificate Balance (or designated portion thereof)
will represent one or more separate Class X-P Components for purposes of
calculating the Pass-Through Rate of the Class X-P Certificates. For each
Distribution Date through and including the Distribution Date in July 2011, the
"Class X-P Strip Rate" for each Class X-P Component will equal (x) the lesser of
(1) the Weighted Average Net Mortgage Rate for such Distribution Date, and (2)
the reference rate specified on Annex C to this Prospectus Supplement for such
Distribution Date {minus 0.03% per annum}, minus (y) the Pass-Through Rate for
such Component (but in no event will any Class X-P Strip Rate be less than
zero).
After the Distribution Date in July 2011, the Class X-P Certificates will
cease to accrue interest and will have a 0% Pass-Through Rate.
In the case of each Class of REMIC Regular Certificates, interest at the
applicable Pass-Through Rate will be payable monthly on each Distribution Date
and will accrue during each Interest Accrual Period on the Certificate Balance
(or, in the case of the Class X Certificates, the respective Notional Amount) of
such Class of Certificates immediately following the Distribution Date in such
Interest Accrual Period (after giving effect to all distributions of principal
made on such Distribution Date). Interest on each Class of REMIC Regular
Certificates will be calculated on the basis of a 360-day year consisting of
twelve 30-day months. With respect to any Class of REMIC Regular Certificates
and any Distribution Date, the "Interest Accrual Period" will be the preceding
calendar month which will be deemed to consist of 30 days.
The Class Z Certificates will not have a Pass-Through Rate or be entitled
to distributions in respect of interest other than Additional Interest.
The "Weighted Average Net Mortgage Rate" for each Distribution Date is the
weighted average of the Net Mortgage Rates for the Mortgage Loans as of the
commencement of the related Collection Period, weighted on the basis of their
respective Stated Principal Balances immediately following the preceding
Distribution Date; provided that, for the purpose of determining the Weighted
Average Net Mortgage Rate only, if the Mortgage Rate for any Mortgage Loan has
been modified in connection with a bankruptcy or similar proceeding involving
the related borrower or a modification, waiver or amendment granted or agreed to
by the Special Servicer, the Weighted Average Net Mortgage Rate for such
Mortgage Loan will be calculated without regard to such event. The "Net Mortgage
Rate" for each Mortgage Loan will generally equal (x) the Mortgage Rate in
effect for such Mortgage Loan as of the Cut-Off Date, minus (y) the applicable
Administrative Cost Rate for such Mortgage Loan. Notwithstanding the foregoing,
because no Mortgage Loan, other than 6 Mortgage Loans (loan numbers 6, 90, 107,
111, 136 and 148), accrue interest on the basis of a 360-day year consisting of
twelve 30-day months (which is the basis on which interest accrues in respect of
the REMIC Regular Certificates), then, solely for purposes of calculating the
Weighted Average Net Mortgage Rate for each Distribution Date, the Mortgage Rate
of each Mortgage Loan, other than the 6 Mortgage Loan, representing 3.2% of the
Cut-Off Date Pool Balance (3.9% of the Cut-Off Date Group 1 Balance and 1.4% of
the Cut-Off Date Group 2 Balance), which accrues interest on a 30/360 basis, in
effect during any calendar month will be deemed to be the annualized rate at
which interest would have to accrue in respect of such loan on a 30/360 basis in
order to derive the aggregate amount of interest (other than default interest)
actually accrued in respect of such loan during such calendar month; provided,
however, that, the Mortgage Rate in effect during (a) December of each year that
does not immediately precede a leap year, and January of each year will be the
per annum rate stated in the related Mortgage Note unless the final Distribution
Date occurs in January or February immediately following such December or
January and (b) in February of each year will be determined inclusive of the one
day of interest retained from the immediately preceding January and, if
applicable, December. The "Stated Principal Balance" of each Mortgage Loan
outstanding at any time will generally be an amount equal to the principal
balance thereof as of the Cut-Off Date, (a) reduced on each Distribution Date
(to not less than zero) by (i) the portion of the Principal Distribution Amount
for that date which is attributable to such Mortgage Loan and (ii) the principal
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portion of any Realized Loss incurred in respect of such Mortgage Loan during
the related Collection Period and (b) increased on each Distribution Date by any
Mortgage Deferred Interest added to the principal balance of such Mortgage Loan
on such Distribution Date. The Stated Principal Balance of a Mortgage Loan may
also be reduced in connection with any forced reduction of the actual unpaid
principal balance thereof imposed by a court presiding over a bankruptcy
proceeding in which the related borrower is a debtor. Notwithstanding the
foregoing, if any Mortgage Loan is paid in full, liquidated or otherwise removed
from the Trust Fund, commencing as of the first Distribution Date following the
Collection Period during which such event occurred, the Stated Principal Balance
of such Mortgage Loan will be zero.
The "Collection Period" for each Distribution Date is the period that
begins on the 12th day in the month immediately preceding the month in which
such Distribution Date occurs (or the day after the applicable Cut-Off Date in
the case of the first Collection Period) and ends on and includes the 11th day
in the same month as such Distribution Date except that with respect to 3
Mortgage Loans representing 0.7% of the Cut Off Date Pool Balance (1.0% of the
Cut-Off Date Group 1 Balance) the period that begins on the 16th day in the
month immediately preceding the month in which such Distribution Date occurs (or
the day after the applicable Cut-Off Date in the case of the first Collection
Period) and ends on and includes the 15th day in the same month as such
Distribution Date. Notwithstanding the foregoing, in the event that the last day
of a Collection Period is not a business day, any payments received with respect
to the Mortgage Loans relating to such Collection Period on the business day
immediately following such day will be deemed to have been received during such
Collection Period and not during any other Collection Period. The "Determination
Date" will be, for any Distribution Date, the fourth business day prior to such
Distribution Date.
DISTRIBUTIONS
General. Distributions on the Certificates are made by the Trustee, to the
extent of the Available Distribution Amount, on the fifteenth day of each month
or, if any such fifteenth day is not a business day, then on the next succeeding
business day with the same force and effect (each, a "Distribution Date").
Except as described below, all such distributions will be made to the persons in
whose names the Certificates are registered (the "Certificateholders") at the
close of business on the last business day of the month preceding the month in
which the related Distribution Date occurs and shall be made by wire transfer of
immediately available funds, if such Certificateholder shall have provided
wiring instructions no less than five business days prior to such record date,
or otherwise by check mailed to the address of such Certificateholder as it
appears in the Certificate register. The final distribution on any Certificate
(determined without regard to any possible future reimbursement of any Realized
Loss or Additional Trust Fund Expense previously allocated to such Certificate)
will be made only upon presentation and surrender of such Certificate at the
location that will be specified in a notice of the pendency of such final
distribution. All distributions made with respect to a Class of Sequential
Certificates will be allocated pro rata among the outstanding Certificates of
such Class based on their respective percentage interests in such Class. The
first Distribution Date on which investors in the Offered Certificates may
receive distributions will be the Distribution Date occurring in August 2003.
The Available Distribution Amount. The aggregate amount available for
distributions of interest and principal to Certificateholders on each
Distribution Date (the "Available Distribution Amount") will, in general, equal
the sum of the following amounts:
(a) the total amount of all cash received on or in respect of the
Mortgage Loans and any REO Properties by the Master Servicer as of the
close of business on the last day of the related Collection Period (or, in
the event that the Collection Period is deemed to end on the business day
prior to the Distribution Date, amounts collected by or on behalf of the
Master Servicer as of 3:00 p.m. New
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York City time) and not previously distributed with respect to the
Certificates or applied for any other permitted purpose, exclusive of any
portion thereof that represents one or more of the following:
(i) any Periodic Payments collected but due on a Due Date after the
related Collection Period;
(ii) any Prepayment Premiums and Yield Maintenance Charges;
(iii) all amounts in the Certificate Account that are payable or
reimbursable to any person other than the Certificateholders, including
any Servicing Fees and Trustee Fees on the Mortgage Loans;
(iv) any amounts deposited in the Certificate Account in error;
(v) any Additional Interest on the ARD Loans (which is separately
distributed to the Class Z Certificates);
(vi) if such Distribution Date occurs during February of any year
or during January of any year that is not a leap year, the Interest
Reserve Amounts with respect to the Mortgage Loans to be deposited in
the Interest Reserve Account and held for future distribution; and
(vii) with respect to 3 Mortgage Loans (identified as loan numbers
90, 107 and 136 on Annex A-1 to this Prospectus Supplement) any
prepayment received in the related Collection Period on the related
Distribution Date, but such payment will be part of the Available
Distribution Amount for the immediately succeeding Distribution Date.
(b) all P&I Advances made by the Master Servicer or the Trustee with
respect to such Distribution Date;
(c) any Compensating Interest Payment made by the Master Servicer to
cover the aggregate of any Prepayment Interest Shortfalls experienced
during the related Collection Period; and
(d) if such Distribution Date occurs during March of any year or if
such Distribution Date is the final Distribution Date and occurs in
February or, if such year is not a leap year, in January, the aggregate of
the Interest Reserve Amounts then on deposit in the Interest Reserve
Account in respect of each Mortgage Loan.
See "SERVICING OF THE MORTGAGE LOANS--Servicing and Other Compensation and
Payment of Expenses" in this Prospectus Supplement, "--P&I Advances" below and
"DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS--Certificate Account" in
the Prospectus.
Any Prepayment Premiums or Yield Maintenance Charges actually collected
will be distributed separately from the Available Distribution Amount. See
"--Distributions--Allocation of Prepayment Premiums and Yield Maintenance
Charges."
Interest Reserve Account. The Master Servicer will establish and maintain
an "Interest Reserve Account" in the name of the Trustee for the benefit of the
holders of the Certificates. With respect to each Distribution Date occurring in
February and each Distribution Date occurring in any January which occurs in a
year that is not a leap year, there will be withdrawn from the Certificate
Account and deposited to the Interest Reserve Account in respect of each
Mortgage Loan (the "Interest Reserve Loans") which accrues interest on an
Actual/360 Basis an amount equal to one day's interest at the related Mortgage
Rate on its Stated Principal Balance, as of the Due Date in the month in which
such Distribution Date occurs, to the extent a Periodic Payment or P&I Advance
is timely made in respect thereof for such Due Date (all amounts so deposited in
any consecutive January (if applicable) and February in respect of each Interest
Reserve Loan, the "Interest Reserve Amount"). With respect to each Distribution
Date occurring in March, or in the event the final Distribution Date occurs in
February or, if such year is not a leap year, in January, there will be
withdrawn from the Interest Reserve Account the amounts deposited from the
immediately preceding February and, if applicable, January, and such
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withdrawn amount is to be included as part of the Available Distribution Amount
for such Distribution Date.
Gain on Sale Reserve Account. The Trustee will establish and will maintain
a "Gain on Sale Reserve Account" in the name of the Trustee for the benefit of
the Certificateholders. To the extent that gains realized on sales of Mortgaged
Properties, if any, are not used to offset Realized Losses previously allocated
to the Certificates, such gains will be held and applied to offset future
Realized Losses, if any.
Additional Interest Account. The Trustee will establish and will maintain
an "Additional Interest Account" in the name of the Trustee for the benefit of
the holders of the Class Z Certificates. Prior to the applicable Distribution
Date, an amount equal to the Additional Interest received during the related
Collection Period will be deposited into the Additional Interest Account.
Application of the Available Distribution Amount. On each Distribution
Date, the Trustee will (except as otherwise described under "--Termination"
below) apply amounts on deposit in the Certificate Account, to the extent of the
Available Distribution Amount, in the following order of priority:
(1) concurrently, to distributions of interest (i) from the portion of
the Available Distribution Amount for such Distribution Date attributable
to Mortgage Loans in Loan Group 1, to the holders of the Class A-1
Certificates and Class A-2 Certificates, pro rata,in accordance with the
respective amounts of Distributable Certificate Interest in respect of such
Classes of Certificates on such Distribution Date, in an amount equal to
all Distributable Certificate Interest in respect of such Classes of
Certificates for such Distribution Date and, to the extent not previously
paid, for all prior Distribution Dates, (ii) from the portion of the
Available Distribution Amount for such Distribution Date attributable to
Mortgage Loans in Loan Group 2, to the holders of the Class A-1A
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates, and (iii)
from the entire Available Distribution Amount for such Distribution Date
relating to the entire Mortgage Pool, to the holders of the Class X-C and
Class X-P Certificates, pro rata, in accordance with the respective amounts
of Distributable Certificate Interest in respect of such Classes of
Certificates on such Distribution Date, in an amount equal to all
Distributable Certificate Interest in respect of such Class of Certificates
for such Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates; provided, however, on any Distribution Date where
the Available Distribution Amount (or applicable portion thereof) is not
sufficient to make distributions in full to the related Classes of
Certificates as described above, the Available Distribution Amount will
allocated among the above Classes of Certificates without regard to Loan
Group, pro rata, in accordance with the respective amounts of Distributable
Certificate Interest in respect of such Classes of Certificates on such
Distribution Date, in an amount equal to all Distributable Certificate
Interest in respect of each such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all prior
Distribution Dates;
(2) to distributions of principal to the holders of the Class A-1
Certificates in an amount (not to exceed the then outstanding Certificate
Balance of the Class A-1 Certificates) equal to the Group 1 Principal
Distribution Amount for such Distribution Date and, after the Class A-1A
Certificates have been retired, the Group 2 Principal Distribution Amount
remaining after payments to the Class A-1A Certificates have been made on
such Distribution Date;
(3) after the Class A-1 Certificates have been retired, to
distributions of principal to the holders of the Class A-2 Certificates in
an amount (not to exceed the then outstanding Certificate Balance of the
Class A-2 Certificates) equal to the Group 1 Principal Distribution Amount
for such Distribution Date and, after the Class A-1A Certificates have been
retired, the Group 2 Principal Distribution Amount remaining after payments
to the Class A-1A Certificates have been made on such Distribution Date, in
each case less any portion thereof distributed in respect of the Class A-1
Certificates on such Distribution Date;
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(4) to distributions of principal to the holders of the Class A-1A
Certificates in an amount (not to exceed the then outstanding Certificate
Balance of the Class A-1A Certificate) equal to the Group 2 Principal
Distribution Amount for such Distribution and, after the Class A-2
Certificates have been retired, the Group 1 Principal Distribution Amount
remaining after payments to the Class A-2 Certificates have been made on
such Distribution Date;
(5) to distributions to the holders of the Class A-1 Certificates,
Class A-2 Certificates, Class A-1A Certificates, pro rata, in accordance
with the respective amounts of Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Classes of Certificates and
for which no reimbursement has previously been received, to reimburse such
holders for all such Realized Losses and Additional Trust Fund Expenses, if
any;
(6) to distributions of interest to the holders of the Class B
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(7) after the Class A-1 Certificates, Class A-2 and Class A-1A
Certificates have been retired, to distributions of principal to the
holders of the Class B Certificates in an amount (not to exceed the then
outstanding Certificate Balance of the Class B Certificates) equal to the
Principal Distribution Amount for such Distribution Date, less any portion
thereof distributed in respect of the Class A-1 Certificates, Class A-2
Certificates and/or Class A-1A on such Distribution Date;
(8) to distributions to the holders of the Class B Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and
for which no reimbursement has previously been received;
(9) to distributions of interest to the holders of the Class C
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(10) after the Class A-1 Certificates, Class A-2 Certificates, Class
A-1A Certificates and Class B Certificates have been retired, to
distributions of principal to the holders of the Class C Certificates in an
amount (not to exceed the then outstanding Certificate Balance of the Class
C Certificates) equal to the Principal Distribution Amount for such
Distribution Date, less any portion thereof distributed in respect of the
Class A-1 Certificates, Class A-2 Certificates, Class A-1A Certificates
and/or Class B Certificates on such Distribution Date;
(11) to distributions to the holders of the Class C Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and
for which no reimbursement has previously been received;
(12) to distributions of interest to the holders of the Class D
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(13) after the Class A-1 Certificates, Class A-2 Certificates, Class
A-1A Certificates, Class B Certificates and Class C Certificates have been
retired, to distributions of principal to the holders of the Class D
Certificates in an amount (not to exceed the then outstanding Certificate
Balance of the Class D Certificates) equal to the Principal Distribution
Amount for such Distribution Date, less any portion thereof distributed in
respect of the Class A-1 Certificates, Class A-2 Certificates, Class A-1A
Certificates, Class B Certificates and/or Class C Certificates on such
Distribution Date;
(14) to distributions to the holders of the Class D Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and
for which no reimbursement has previously been received;
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(15) to distributions of interest to the holders of the Class E
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(16) after the Class A-1 Certificates, Class A-2 Certificates, Class
A-1A Certificates, Class B Certificates, Class C Certificates and Class D
Certificates have been retired, to distributions of principal to the
holders of the Class E Certificates in an amount (not to exceed the then
outstanding Certificate Balance of the Class E Certificates) equal to the
Principal Distribution Amount for such Distribution Date, less any portion
thereof distributed in respect of the Class A-1 Certificates, Class A-2
Certificates, Class A-1A Certificates, Class B Certificates, Class C
Certificates and/or Class D Certificates on such Distribution Date;
(17) to distributions to the holders of the Class E Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and
for which no reimbursement has previously been received;
(18) to distributions of interest to the holders of the Class F
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(19) after the Class A-1 Certificates, Class A-2 Certificates, Class
A-1A Certificates, Class B Certificates, Class C Certificates, Class D
Certificates and Class E Certificates have been retired, to distributions
of principal to the holders of the Class F Certificates in an amount (not
to exceed the then outstanding Certificate Balance of the Class F
Certificates) equal to the Principal Distribution Amount for such
Distribution Date, less any portion thereof distributed in respect of the
Class A-1 Certificates, Class A-2 Certificates, Class A-1A Certificates,
Class B Certificates, Class C Certificates, Class D Certificates and/or
Class E Certificates on such Distribution Date;
(20) to distributions to the holders of the Class F Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and
for which no reimbursement has previously been received;
(21) to distributions of interest to the holders of the Class G
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(22) after the Class A-1 Certificates, Class A-2 Certificates, Class
A-1A Certificates, Class B Certificates, Class C Certificates, Class D
Certificates, Class E Certificates and Class F Certificates have been
retired, to distributions of principal to the holders of the Class G
Certificates in an amount (not to exceed the then outstanding Certificate
Balance of the Class G Certificates) equal to the Principal Distribution
Amount for such Distribution Date, less any portion thereof distributed in
respect of the Class A-1 Certificates, Class A-2 Certificates, Class A-1A
Certificates, Class B Certificates, Class C Certificates, Class D
Certificates, Class E Certificates and/or Class F Certificates on such
Distribution Date;
(23) to distributions to the holders of the Class G Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and
for which no reimbursement has previously been received;
(24) to distributions of interest to the holders of the Class H
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(25) after the Class A-1 Certificates, Class A-2 Certificates, Class
A-1A Certificates, Class B Certificates, Class C Certificates, Class D
Certificates, Class E Certificates, Class F Certificates and Class G
Certificates have been retired, to distributions of principal to the
holders of the Class H Certificates in an amount (not to exceed the then
outstanding Certificate Balance of the Class H Certificates) equal to the
Principal Distribution Amount for such Distribution Date, less any portion
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thereof distributed in respect of the Class A-1 Certificates, Class A-2
Certificates, Class A-1A Certificates, Class B Certificates, Class C
Certificates, Class D Certificates, Class E Certificates, Class F
Certificates and/or Class G Certificates on such Distribution Date;
(26) to distributions to the holders of the Class H Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and
for which no reimbursement has previously been received;
(27) to distributions of interest to the holders of the Class J
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(28) after the Class A-1 Certificates, Class A-2 Certificates, Class
A-1A Certificates, Class B Certificates, Class C Certificates, Class D
Certificates, Class E Certificates, Class F Certificates, Class G
Certificates and Class H Certificates have been retired, to distributions
of principal to the holders of the Class J Certificates in an amount (not
to exceed the then outstanding Certificate Balance of the Class J
Certificates) equal to the Principal Distribution Amount for such
Distribution Date, less any portion thereof distributed in respect of the
Class A-1 Certificates, Class A-2 Certificates, Class A-1A Certificates,
Class B Certificates, Class C Certificates, Class D Certificates, Class E
Certificates, Class F Certificates, Class G Certificates and/or Class H
Certificates on such Distribution Date;
(29) to distributions to the holders of the Class J Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and
for which no reimbursement has previously been received;
(30) to distributions of interest to the holders of the Class K
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(31) after the Class A-1 Certificates, Class A-2 Certificates, Class
A-1A Certificates, Class B Certificates, Class C Certificates, Class D
Certificates, Class E Certificates, Class F Certificates, Class G
Certificates, Class H Certificates and Class J Certificates have been
retired, to distributions of principal to the holders of the Class K
Certificates in an amount (not to exceed the then outstanding Certificate
Balance of the Class K Certificates) equal to the Principal Distribution
Amount for such Distribution Date, less any portion thereof distributed in
respect of the Class A-1 Certificates, Class A-2 Certificates, Class A-1A
Certificates, Class B Certificates, Class C Certificates, Class D
Certificates, Class E Certificates, Class F Certificates, Class G
Certificates, Class H Certificates and/or Class J Certificates on such
Distribution Date;
(32) to distributions to the holders of the Class K Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and
for which no reimbursement has previously been received;
(33) to distributions of interest to the holders of the Class L
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(34) after the Class A-1 Certificates, Class A-2 Certificates, Class
A-1A Certificates, Class B Certificates, Class C Certificates, Class D
Certificates, Class E Certificates, Class F Certificates, Class G
Certificates, Class H Certificates, Class J Certificates and Class K
Certificates have been retired, to distributions of principal to the
holders of the Class L Certificates in an amount (not to exceed the then
outstanding Certificate Balance of the Class L Certificates) equal to the
Principal Distribution Amount for such Distribution Date, less any portion
thereof distributed in respect of the Class A-1 Certificates, Class A-2
Certificates, Class A-1A Certificates, Class B Certificates, Class C
Certificates, Class D Certificates, Class E Certificates, Class F
Certificates, Class G Certificates, Class H Certificates, Class J
Certificates and/or Class K Certificates on such Distribution Date;
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(35) to distributions to the holders of the Class L Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and
for which no reimbursement has previously been received;
(36) to distributions of interest to the holders of the Class M
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(37) after the Class A-1 Certificates, Class A-2 Certificates, Class
A-1A Certificates, Class B Certificates, Class C Certificates, Class D
Certificates, Class E Certificates, Class F Certificates, Class G
Certificates, Class H Certificates, Class J Certificates, Class K
Certificates and Class L Certificates have been retired, to distributions
of principal to the holders of the Class M Certificates in an amount (not
to exceed the then outstanding Certificate Balance of the Class M
Certificates) equal to the Principal Distribution Amount for such
Distribution Date, less any portion thereof distributed in respect of the
Class A-1 Certificates, Class A-2 Certificates, Class A-1A Certificates,
Class B Certificates, Class C Certificates, Class D Certificates, Class E
Certificates, Class F Certificates, Class G Certificates, Class H
Certificates, Class J Certificates, Class K Certificates and/or Class L
Certificates on such Distribution Date;
(38) to distributions to the holders of the Class M Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and
for which no reimbursement has previously been received;
(39) to distributions of interest to the holders of the Class N
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(40) after the Class A-1 Certificates, Class A-2 Certificates, Class
A-1A Certificates, Class B Certificates, Class C Certificates, Class D
Certificates, Class E Certificates, Class F Certificates, Class G
Certificates, Class H Certificates, Class J Certificates, Class K
Certificates, Class L Certificates and Class M Certificates have been
retired, to distributions of principal to the holders of the Class N
Certificates in an amount (not to exceed the then outstanding Certificate
Balance of the Class N Certificates) equal to the Principal Distribution
Amount for such Distribution Date, less any portion thereof distributed in
respect of the Class A-1 Certificates, Class A-2 Certificates, Class A-1A
Certificates, Class B Certificates, Class C Certificates, Class D
Certificates, Class E Certificates, Class F Certificates, Class G
Certificates, Class H Certificates, Class J Certificates, Class K
Certificates, Class L Certificates and/or Class M Certificates on such
Distribution Date;
(41) to distributions to the holders of the Class N Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and
for which no reimbursement has previously been received;
(42) to distributions of interest to the holders of the Class O
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(43) after the Class A-1 Certificates, Class A-2 Certificates, Class
A-1A Certificates, Class B Certificates, Class C Certificates, Class D
Certificates, Class E Certificates, Class F Certificates, Class G
Certificates, Class H Certificates, Class J Certificates, Class K
Certificates, Class L Certificates, Class M Certificates and Class N
Certificates have been retired, to distributions of principal to the
holders of the Class O Certificates in an amount (not to exceed the then
outstanding Certificate Balance of the Class O Certificates) equal to the
Principal Distribution Amount for such Distribution Date, less any portion
thereof distributed in respect of the Class A-1 Certificates, Class A-2
Certificates, Class A-1A Certificates, Class B Certificates, Class C
Certificates, Class D Certificates, Class E Certificates, Class F
Certificates, Class G Certificates, Class H Certificates, Class J
Certificates, Class K Certificates, Class L Certificates, Class M
Certificates and/or Class N Certificates on such Distribution Date;
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(44) to distributions to the holders of the Class O Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and
for which no reimbursement has previously been received;
(45) to distributions of interest to the holders of the Class P
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(46) after the Class A-1 Certificates, Class A-2 Certificates, Class
A-1A Certificates, Class B Certificates, Class C Certificates, Class D
Certificates, Class E Certificates, Class F Certificates, Class G
Certificates, Class H Certificates, Class J Certificates, Class K
Certificates, Class L Certificates, Class M Certificates, Class N
Certificates and Class O Certificates have been retired, to distributions
of principal to the holders of the Class P Certificates in an amount (not
to exceed the then outstanding Certificate Balance of the Class P
Certificates) equal to the Principal Distribution Amount for such
Distribution Date, less any portion thereof distributed in respect of the
Class A-1 Certificates, Class A-2 Certificates, Class A-1A Certificates,
Class B Certificates, Class C Certificates, Class D Certificates, Class E
Certificates, Class F Certificates, Class G Certificates, Class H
Certificates, Class J Certificates, Class K Certificates, Class L
Certificates, Class M Certificates, Class N Certificates and/or Class O
Certificates on such Distribution Date;
(47) to distributions to the holders of the Class P Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and
for which no reimbursement has previously been received; and
(48) to distributions to the holders of the REMIC Residual
Certificates in an amount equal to the balance, if any, of the Available
Distribution Amount remaining after the distributions to be made on such
Distribution Date as described in clauses (1) through (47) above;
provided that, on each Distribution Date, if any, after the aggregate of the
Certificate Balances of the Subordinate Certificates has been reduced to zero as
a result of the allocations of Realized Losses and Additional Trust Fund
Expenses, and in any event on the final Distribution Date in connection with a
termination of the Trust Fund (see "DESCRIPTION OF THE
CERTIFICATES--Termination" in this Prospectus Supplement), the payments of
principal to be made as contemplated by clauses (2), (3) and (4) above with
respect to the Class A-1 Certificates, the Class A-2 Certificates and the Class
A-1A Certificates will be so made to the holders of the respective Classes of
such Certificates which remain outstanding up to an amount equal to, and pro
rata as between such Classes in accordance with, the respective then outstanding
Certificate Balances of such Classes of Certificates and without regard to the
Principal Distribution Amount for such date.
Distributable Certificate Interest. The "Distributable Certificate
Interest" in respect of each Class of REMIC Regular Certificates for each
Distribution Date equals the Accrued Certificate Interest in respect of such
Class of Certificates for such Distribution Date, reduced (other than in the
case of the Class X Certificates) (to not less than zero) by (i) such Class's
allocable share (calculated as described below) of the aggregate of any
Prepayment Interest Shortfalls resulting from principal prepayments made on the
Mortgage Loans during the related Collection Period that are not covered by the
Master Servicer's Compensating Interest Payment for such Distribution Date (the
aggregate of such Prepayment Interest Shortfalls that are not so covered, as to
such Distribution Date, the "Net Aggregate Prepayment Interest Shortfall") and
(ii) any Certificate Deferred Interest allocated to such Class of REMIC Regular
Certificates.
The "Accrued Certificate Interest" in respect of each Class of Sequential
Pay Certificates for each Distribution Date will equal one month's interest at
the Pass-Through Rate applicable to such Class of Certificates for such
Distribution Date accrued for the related Interest Accrual Period on the related
Certificate Balance outstanding immediately prior to such Distribution Date. The
"Accrued Certificate Interest" in respect of the Class X-C and Class X-P
Certificates for any Distribution Date will equal the amount of one month's
interest at the related Pass-Through Rate on the Notional Amount of the
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Class X-C or Class X-P Certificates, as the case may be, outstanding immediately
prior to such Distribution Date. Accrued Certificate Interest will be calculated
on a 30/360 basis.
The portion of the Net Aggregate Prepayment Interest Shortfall for any
Distribution Date that is allocable to each Class of REMIC Regular Certificates
(other than the Class X Certificates) will equal the product of (a) such Net
Aggregate Prepayment Interest Shortfall, multiplied by (b) a fraction, the
numerator of which is equal to the Accrued Certificate Interest in respect of
such Class of Certificates for such Distribution Date, and the denominator of
which is equal to the aggregate Accrued Certificate Interest in respect of all
Classes of REMIC Regular Certificates (other than the Class X Certificates) for
such Distribution Date.
Any such Prepayment Interest Shortfalls allocated to the Senior
Certificates, to the extent not covered by the Master Servicer's Compensating
Interest Payment for such Distribution Date, will reduce the Distributable
Certificate Interest as described above.
Principal Distribution Amount. So long as both the Class A-2 and Class
A-1A Certificates remain outstanding, the Principal Distribution Amount for each
Distribution Date will be calculated on a Loan Group-by-Loan Group basis (the
"Group 1 Principal Distribution Amount" and "Group 2 Principal Distribution
Amount," respectively). On each Distribution Date after the Certificate Balances
of either the Class A-2 or Class A-1A Certificates have been reduced to zero, a
single Principal Distribution Amount will be calculated in the aggregate for
both Loan Groups. The "Principal Distribution Amount" for each Distribution Date
with respect to a Loan Group or the Mortgage Pool will generally equal the
aggregate of the following (without duplication) to the extent paid by the
related borrower during the related Collection Period or advanced by the Master
Servicer or the Trustee, as applicable:
(a) the aggregate of the principal portions of all Scheduled Payments
(other than Balloon Payments) and of any Assumed Scheduled Payments due or
deemed due, on or in respect of the Mortgage Loans in such Loan Group or
the Mortgage Pool, as applicable, for their respective Due Dates occurring
during the related Collection Period, to the extent not previously paid by
the related borrower or advanced by the Master Servicer or Trustee, as
applicable, prior to such Collection Period;
(b) the aggregate of all principal prepayments received on the
Mortgage Loans in such Loan Group or the Mortgage Pool, as applicable,
during the related Collection Period;
(c) with respect to any Mortgage Loan in such Loan Group or the
Mortgage Pool, as applicable, as to which the related stated maturity date
occurred during or prior to the related Collection Period, any payment of
principal made by or on behalf of the related borrower during the related
Collection Period (including any Balloon Payment), net of any portion of
such payment that represents a recovery of the principal portion of any
Scheduled Payment (other than a Balloon Payment) due, or the principal
portion of any Assumed Scheduled Payment deemed due, in respect of such
Mortgage Loan on a Due Date during or prior to the related Collection
Period and not previously recovered;
(d) the aggregate of the principal portion of all liquidation
proceeds, insurance proceeds, condemnation awards and proceeds of
repurchases of Mortgage Loans in such Loan Group or the Mortgage Pool, as
applicable, and Substitution Shortfall Amounts with respect to Mortgage
Loans in such Loan Group or the Mortgage Pool, as applicable, and, to the
extent not otherwise included in clause (a), (b) or (c) above, payments and
other amounts that were received on or in respect of Mortgage Loans in such
Loan Group or the Mortgage Pool, as applicable, during the related
Collection Period and that were identified and applied by the Master
Servicer as recoveries of principal, in each case net of any portion of
such amounts that represents a recovery of the principal portion of any
Scheduled Payment (other than a Balloon Payment) due, or of the principal
portion of any Assumed Scheduled Payment deemed due, in respect of the
related Mortgage Loan on a Due Date during or prior to the related
Collection Period and not previously recovered; and
(e) if such Distribution Date is subsequent to the initial
Distribution Date, the excess, if any, of the Group 1 Principal
Distribution Amount, the Group 2 Principal Distribution Amount and the
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Principal Distribution Amount, as the case may be, for the immediately
preceding Distribution Date, over the aggregate distributions of principal
made on the Certificates on such immediately preceding Distribution Date.
Notwithstanding the foregoing, unless otherwise noted, where Principal
Distribution Amount is used in this Prospectus Supplement without specific
reference to any Loan Group, it refers to the Principal Distribution Amount with
respect to the entire Mortgage Pool.
The "Scheduled Payment" due on any Mortgage Loan on any related Due Date is
the amount of the Periodic Payment (including Balloon Payments) that is or would
have been, as the case may be, due thereon on such date, without regard to any
waiver, modification or amendment of such Mortgage Loan granted or agreed to by
the Special Servicer or otherwise resulting from a bankruptcy or similar
proceeding involving the related borrower, without regard to the accrual of
Additional Interest on or the application of any Excess Cash Flow to pay
principal on an ARD Loan, without regard to any acceleration of principal by
reason of default, and with the assumption that each prior Scheduled Payment has
been made in a timely manner. The "Assumed Scheduled Payment" is an amount
deemed due (i) on any Balloon Loan that is delinquent in respect of its Balloon
Payment beyond the first Determination Date that follows its stated maturity
date and (ii) on an REO Mortgage Loan. The Assumed Scheduled Payment deemed due
on any such Balloon Loan on its stated maturity date and on each successive
related Due Date that it remains or is deemed to remain outstanding will equal
the Scheduled Payment that would have been due thereon on such date if the
related Balloon Payment had not come due but rather such Mortgage Loan had
continued to amortize in accordance with such loan's amortization schedule, if
any, and to accrue interest at the Mortgage Rate in effect as of the Closing
Date. The Assumed Scheduled Payment deemed due on any REO Mortgage Loan on each
Due Date that the related REO Property remains part of the Trust Fund will equal
the Scheduled Payment that would have been due in respect of such Mortgage Loan
on such Due Date had it remained outstanding (or, if such Mortgage Loan was a
Balloon Mortgage Loan and such Due Date coincides with or follows what had been
its stated maturity date, the Assumed Scheduled Payment that would have been
deemed due in respect of such Mortgage Loan on such Due Date had it remained
outstanding).
Distributions of the Principal Distribution Amount will constitute the only
distributions of principal on the Certificates. Reimbursements of previously
allocated Realized Losses and Additional Trust Fund Expenses will not constitute
distributions of principal for any purpose and will not result in an additional
reduction in the Certificate Balance of the Class of Certificates in respect of
which any such reimbursement is made.
Treatment of REO Properties. Notwithstanding that any Mortgaged Property
may be acquired as part of the Trust Fund through foreclosure, deed in lieu of
foreclosure or otherwise, the related Mortgage Loan will be treated, for
purposes of determining (i) distributions on the Certificates, (ii) allocations
of Realized Losses and Additional Trust Fund Expenses to the Certificates, and
(iii) the amount of Trustee Fees and Servicing Fees payable under the Pooling
and Servicing Agreement, as having remained outstanding until such REO Property
is liquidated. In connection therewith, operating revenues and other proceeds
derived from such REO Property (net of related operating costs) will be
"applied" by the Master Servicer as principal, interest and other amounts that
would have been "due" on such Mortgage Loan, and the Master Servicer will be
required to make P&I Advances in respect of such Mortgage Loan, in all cases as
if such Mortgage Loan had remained outstanding. References to "Mortgage Loan" or
"Mortgage Loans" in the definitions of "Principal Distribution Amount" and
"Weighted Average Net Mortgage Rate" are intended to include any Mortgage Loan
as to which the related Mortgaged Property has become an REO Property (an "REO
Mortgage Loan").
Allocation of Prepayment Premiums and Yield Maintenance Charges. In the
event a borrower is required to pay any Prepayment Premium or Yield Maintenance
Charge, the amount of such payments actually collected will be distributed in
respect of the Offered Certificates and the Class A-1A, Class D, Class E, Class
F, Class G and Class H Certificates as set forth below. "Yield Maintenance
Charges" are fees paid or payable, as the context requires, as a result of a
prepayment of principal on a Mortgage Loan,
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which fees have been calculated (based on Scheduled Payments on such Mortgage
Loan) to compensate the holder of the Mortgage for reinvestment losses based on
the value of a discount rate at or near the time of prepayment. Any other fees
paid or payable, as the context requires, as a result of a prepayment of
principal on a Mortgage Loan, which are calculated based upon a specified
percentage (which may decline over time) of the amount prepaid are considered
"Prepayment Premiums".
Any Prepayment Premiums or Yield Maintenance Charges collected on a
Mortgage Loan during the related Collection Period will be distributed as
follows: on each Distribution Date and with respect to the collection of any
Prepayment Premiums or Yield Maintenance Charges on the Mortgage Loans, the
holders of each Class of Offered Certificates and the Class A-1A, Class D, Class
E, Class F, Class G and Class H Certificates then entitled to distributions of
principal with respect to the related Loan Group on such Distribution Date will
be entitled to an amount of Prepayment Premiums or Yield Maintenance Charges
equal to the product of (a) the amount of such Prepayment Premiums or Yield
Maintenance Charges; (b) a fraction (which in no event may be greater than one),
the numerator of which is equal to the excess, if any, of the Pass-Through Rate
of such Class of Certificates over the relevant Discount Rate (as defined
below), and the denominator of which is equal to the excess, if any, of the
Mortgage Rate of the prepaid Mortgage Loan over the relevant Discount Rate; and
(c) a fraction, the numerator of which is equal to the amount of principal
distributable on such Class of Certificates on such Distribution Date, and the
denominator of which is the Principal Distribution Amount for such Distribution
Date. If there is more than one such Class of Certificates entitled to
distributions of principal with respect to the related Loan Group on any
particular Distribution Date on which a Prepayment Premium or Yield Maintenance
Charge is distributable, the aggregate amount of such Prepayment Premium or
Yield Maintenance Charge will be allocated among all such Classes up to, and on
a pro rata basis in accordance with, their respective entitlements thereto in
accordance with, the first sentence of this paragraph. The portion, if any, of
the Prepayment Premiums or Yield Maintenance Charges remaining after any such
payments described above will be distributed to the holders of the Class X-C
Certificates.
The "Discount Rate" applicable to any Class of Offered Certificates and the
Class A-1A, Class D, Class E, Class F, Class G and Class H Certificates will
equal the yield (when compounded monthly) on the U.S. Treasury issue with a
maturity date closest to the maturity date for the prepaid Mortgage Loan or REO
Mortgage Loan. In the event that there are two or more such U.S. Treasury issues
(a) with the same coupon, the issue with the lowest yield will be utilized, and
(b) with maturity dates equally close to the maturity date for the prepaid
Mortgage Loan or REO Mortgage Loan, the issue with the earliest maturity date
will be utilized.
For an example of the foregoing allocation of Prepayment Premiums and Yield
Maintenance Charges, see "SUMMARY OF PROSPECTUS SUPPLEMENT" in this Prospectus
Supplement. The Depositor makes no representation as to the enforceability of
the provision of any Mortgage Note requiring the payment of a Prepayment Premium
or Yield Maintenance Charge, or of the collectability of any Prepayment Premium
or Yield Maintenance Charge. See "DESCRIPTION OF THE MORTGAGE POOL--Certain
Terms and Conditions of the Mortgage Loans--Prepayment Provisions" in this
Prospectus Supplement.
Distributions of Additional Interest. On each Distribution Date, any
Additional Interest collected on an ARD Loan during the related Collection
Period will be distributed to the holders of the Class Z Certificates. There can
be no assurance that any Additional Interest will be collected on the ARD Loans.
SUBORDINATION; ALLOCATION OF LOSSES AND CERTAIN EXPENSES
The rights of holders of the Subordinate Certificates to receive
distributions of amounts collected or advanced on the Mortgage Loans will be
subordinated, to the extent described in this Prospectus Supplement, to the
rights of holders of the Class A and Class X Certificates and each other such
Class of Subordinate Certificates, if any, with an earlier alphabetical Class
designation. This subordination provided by the Subordinate Certificates, is
intended to enhance the likelihood of timely receipt by the holders of the Class
A and Class X Certificates of the full amount of Distributable Certificate
Interest payable in
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respect of such Classes of Certificates on each Distribution Date, and the
ultimate receipt by the holders of each Class of the Class A Certificates of
principal in an amount equal to the entire related Certificate Balance.
Similarly, but to decreasing degrees, this subordination is also intended to
enhance the likelihood of timely receipt by the holders of the Class B and Class
C Certificates of the full amount of Distributable Certificate Interest payable
in respect of such Classes of Certificates on each Distribution Date, and the
ultimate receipt by the holders of such Certificates of, in the case of each
such Class thereof, principal equal to the entire related Certificate Balance.
The protection afforded (a) to the holders of the Class C Certificates by means
of the subordination of the Non-Offered Certificates (other than the Class A-1A
and Class X Certificates) (b) to the holders of the Class B Certificates by
means of the subordination of the Class C and the Non-Offered Certificates
(other than the Class A-1A and Class X Certificates), and (c) to the holders of
the Class A and Class X Certificates by means of the subordination of the
Subordinate Certificates, will be accomplished by (i) the application of the
Available Distribution Amount on each Distribution Date in accordance with the
order of priority described under "--Distributions--Application of the Available
Distribution Amount" above and (ii) by the allocation of Realized Losses and
Additional Trust Fund Expenses as described below. Until the first Distribution
Date after the aggregate of the Certificate Balances of the Subordinate
Certificates has been reduced to zero, the Class A-2 Certificates will receive
principal payments only after the Certificate Balance of the Class A-1
Certificates has been reduced to zero. However, after the Distribution Date on
which the Certificate Balances of the Subordinate Certificates have been reduced
to zero, the Class A-1 and Class A-2 Certificates, to the extent such
Certificates remain outstanding, will bear shortfalls in collections and losses
incurred in respect of the Mortgage Loans pro rata in respect of distributions
of principal and then the Class A-1, Class A-2, Class A-1A, Class X-C and Class
X-P Certificates, to the extent such Certificates remain outstanding, will bear
such shortfalls pro rata in respect of distributions of interest. No other form
of credit support will be available for the benefit of the holders of the
Offered Certificates.
Allocation to the Class A-1 and Class A-2 Certificates (unless the
aggregate Certificate Balance of each Class of Subordinate Certificates has been
reduced to zero, first to the Class A-1 Certificates until the Certificate
Balance thereof has been reduced to zero, then to the Class A-2 Certificates
until the Certificate Balance thereof has been reduced to zero) and to the Class
A-1A Certificates, for so long as they are outstanding, of the entire Principal
Distribution Amount with respect to the related Loan Group for each Distribution
Date will have the effect of reducing the aggregate Certificate Balance of the
Class A-1, Class A-2 and Class A-1A Certificates at a proportionately faster
rate than the rate at which the aggregate Stated Principal Balance of the
Mortgage Pool will reduce. Thus, as principal is distributed to the holders of
such Class A-1, Class A-2 and Class A-1A Certificates, the percentage interest
in the Trust Fund evidenced by such Class A-1, Class A-2 and Class A-1A
Certificates will be decreased (with a corresponding increase in the percentage
interest in the Trust Fund evidenced by the Subordinate Certificates), thereby
increasing, relative to their respective Certificate Balances, the subordination
afforded such Class A-1, Class A-2 and Class A-1A Certificates by the
Subordinate Certificates.
On each Distribution Date, following all distributions on the Certificates
to be made on such date, the aggregate of all Realized Losses and Additional
Trust Fund Expenses related to all Mortgage Loans (without regard to Loan
Groups), that have been incurred since the Cut-Off Date through the end of the
related Collection Period and that have not previously been allocated as
described below will be allocated among the respective Classes of Sequential Pay
Certificates (in each case in reduction of their respective Certificate
Balances) as follows, but in the aggregate only to the extent that the aggregate
Certificate Balance of all Classes of Sequential Pay Certificates remaining
outstanding after giving effect to the distributions on such Distribution Date
exceeds the aggregate Stated Principal Balance of the Mortgage Pool that will be
outstanding immediately following such Distribution Date: first, to the Class P
Certificates, until the remaining Certificate Balance of such Class of
Certificates is reduced to zero; second, to the Class O Certificates, until the
remaining Certificate Balance of such Class of Certificates is reduced to zero;
third, to the Class N Certificates, until the remaining Certificate Balance of
such Class of Certificates is reduced to zero; fourth, to the Class M
Certificates, until the remaining Certificate Balance of such Class of
Certificates is reduced to zero; fifth, to the Class L Certificates, until the
remaining Certificate Balance of such Class of Certificates is reduced to zero;
sixth, to the Class K Certificates, until
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the remaining Certificate Balance of such Class of Certificates is reduced to
zero; seventh, to the Class J Certificates, until the remaining Certificate
Balance of such Class of Certificates is reduced to zero; eighth, to the Class H
Certificates, until the remaining Certificate Balance of such Class of
Certificates is reduced to zero; ninth, to the Class G Certificates, until the
remaining Certificate Balance of such Class of Certificates is reduced to zero;
tenth, to the Class F Certificates, until the remaining Certificate Balance of
such Class of Certificates is reduced to zero; eleventh, to the Class E
Certificates, until the remaining Certificate Balance of such Class of
Certificates is reduced to zero; twelfth, to the Class D Certificates, until the
remaining Certificate Balance of such Class of Certificates is reduced to zero;
thirteenth, to the Class C Certificates, until the remaining Certificate Balance
of such Class of Certificates is reduced to zero; fourteenth, to the Class B
Certificates, until the remaining Certificate Balance of such Class of
Certificates is reduced to zero; and, last, to the Class A-1 Certificates, the
Class A-2 and Class A-1A Certificates, pro rata, in proportion to their
respective outstanding Certificate Balances, until the remaining Certificate
Balances of such Classes of Certificates are reduced to zero.
"Realized Losses" are losses arising from the inability to collect all
amounts due and owing under any defaulted Mortgage Loan, including by reason of
the fraud or bankruptcy of the borrower or a casualty of any nature at the
related Mortgaged Property, to the extent not covered by insurance. The Realized
Loss in respect of a liquidated Mortgage Loan (or related REO Property) is an
amount generally equal to the excess, if any, of (a) the outstanding principal
balance of such Mortgage Loan as of the date of liquidation, together with (i)
all accrued and unpaid interest thereon to but not including the Due Date in the
Collection Period in which the liquidation occurred (exclusive of any related
default interest in excess of the Mortgage Rate, Additional Interest, Prepayment
Premium or Yield Maintenance Charges) and (ii) certain related unreimbursed
servicing expenses, over (b) the aggregate amount of liquidation proceeds, if
any, recovered in connection with such liquidation. If any portion of the debt
due under a Mortgage Loan (other than Additional Interest and default interest
in excess of the Mortgage Rate) is forgiven, whether in connection with a
modification, waiver or amendment granted or agreed to by the Special Servicer
or in connection with the bankruptcy or similar proceeding involving the related
borrower, the amount so forgiven also will be treated as a Realized Loss.
"Additional Trust Fund Expenses" include, among other things, (i) any
Special Servicing Fees, Liquidation Fees, Determination Party fees (in certain
circumstances) or Workout Fees paid to the Special Servicer, (ii) any interest
paid to the Master Servicer, and/or the Trustee in respect of unreimbursed
Advances (to the extent not otherwise offset by penalty interest and late
payment charges) and amounts payable to the Special Servicer in connection with
certain inspections of Mortgaged Properties required pursuant to the Pooling and
Servicing Agreement (to the extent not otherwise offset by penalty interest and
late payment charges otherwise payable to the Special Servicer and received in
the Collection Period during which such inspection related expenses were
incurred) and (iii) any of certain unanticipated expenses of the Trust Fund,
including certain indemnities and reimbursements to the Trustee of the type
described under "DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS--Certain
Matters Regarding the Trustee" in the Prospectus, certain indemnities and
reimbursements to the Master Servicer, the Special Servicer and the Depositor of
the type described under "DESCRIPTION OF THE POOLING AND SERVICING
AGREEMENTS--Certain Matters Regarding the Master Servicer and the Depositor" in
the Prospectus (the Special Servicer having the same rights to indemnity and
reimbursement as described thereunder with respect to the Master Servicer),
certain Rating Agency fees to the extent such fees are not paid by any other
party and certain federal, state and local taxes and certain tax related
expenses, payable from the assets of the Trust Fund and described under
"MATERIAL FEDERAL INCOME TAX CONSEQUENCES--Taxation of Owners of REMIC Residual
Certificates--Prohibited Transactions Tax and Other Taxes" in the Prospectus and
"SERVICING OF THE MORTGAGE LOANS--Defaulted Mortgage Loans; REO Properties;
Purchase Option" in this Prospectus Supplement. Additional Trust Fund Expenses
will reduce amounts payable to Certificateholders and, subject to the
distribution priorities described above, may result in a loss on one or more
Classes of Offered Certificates.
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P&I ADVANCES
On or about each Distribution Date, the Master Servicer is obligated,
subject to the recoverability determination described in the next paragraph, to
make advances (each, a "P&I Advance") out of its own funds or, subject to the
replacement thereof as provided in the Pooling and Servicing Agreement, from
funds held in the Certificate Account that are not required to be distributed to
Certificateholders (or paid to any other Person pursuant to the Pooling and
Servicing Agreement) on such Distribution Date, in an amount that is generally
equal to the aggregate of all Periodic Payments (other than Balloon Payments)
and any Assumed Scheduled Payments, net of related Master Servicing Fees, in
respect of the Mortgage Loans and any REO Loans during the related Collection
Period, in each case to the extent such amount was not paid by or on behalf of
the related borrower or otherwise collected (or previously advanced by the
Master Servicer) as of the close of business on the last day of the Collection
Period. The Master Servicer's obligations to make P&I Advances in respect of any
Mortgage Loan, subject to the recoverability determination, will continue until
liquidation of such Mortgage Loan or disposition of any REO Property acquired in
respect thereof. However, if the Periodic Payment on any Mortgage Loan has been
reduced in connection with a bankruptcy or similar proceeding or a modification,
waiver or amendment granted or agreed to by the Special Servicer, the Master
Servicer will be required to advance only the amount of the reduced Periodic
Payment (net of related Servicing Fees) in respect of subsequent delinquencies.
In addition, if it is determined that an Appraisal Reduction Amount exists with
respect to any Required Appraisal Loan (as defined below), then, with respect to
the Distribution Date immediately following the date of such determination and
with respect to each subsequent Distribution Date for so long as such Appraisal
Reduction Amount exists, the Master Servicer will be required in the event of
subsequent delinquencies to advance in respect of such Mortgage Loan only an
amount equal to the sum of (i) the amount of the interest portion of the P&I
Advance that would otherwise be required without regard to this sentence, minus
the product of (a) such Appraisal Reduction Amount and (b) the per annum
Pass-Through Rate (i.e., for any month, one twelfth of the Pass-Through Rate)
applicable to the Class of Certificates, to which such Appraisal Reduction
Amount is allocated as described in "--Appraisal Reductions" below and (ii) the
amount of the principal portion of the P&I Advance that would otherwise be
required without regard to this sentence. Pursuant to the terms of the Pooling
and Servicing Agreement, if the Master Servicer fails to make a P&I Advance
required to be made, the Trustee shall then be required to make such P&I
Advance, in such case, subject to the recoverability standard described below.
Neither the Master Servicer nor Trustee will be required to make a P&I Advance
or any other advance for any Balloon Payments, default interest, late payment
charges, Prepayment Premiums, Yield Maintenance Charges or Additional Interest.
The Master Servicer (or the Trustee) is entitled to recover any P&I Advance
made out of its own funds from any amounts collected in respect of the Mortgage
Loan (net of related Master Servicing Fees with respect to collections of
interest and net of related Liquidation Fees and Workout Fees with respect to
collections of principal) as to which such P&I Advance was made whether such
amounts are collected in the form of late payments, insurance and condemnation
proceeds or liquidation proceeds, or any other recovery of the related Mortgage
Loan or REO Property ("Related Proceeds"). Neither the Master Servicer nor the
Trustee is obligated to make any P&I Advance that it determines in accordance
with the servicing standards described in this Prospectus Supplement, would, if
made, not be recoverable from Related Proceeds (a "Nonrecoverable P&I Advance"),
and the Master Servicer (or the Trustee) is entitled to recover, from general
funds on deposit in the Certificate Account, any P&I Advance made that it later
determines to be a Nonrecoverable P&I Advance plus interest at the Reimbursement
Rate. See "DESCRIPTION OF THE CERTIFICATES--Advances in Respect of
Delinquencies" and "DESCRIPTION OF THE POOLING AND SERVICING
AGREEMENTS--Certificate Account" in the Prospectus.
In connection with the recovery by the Master Servicer or the Trustee of
any P&I Advance made by it or the recovery by the Master Servicer or the Trustee
of any reimbursable servicing expense (which may include non-recoverable
advances to the extent deemed to be in the best interest of the
Certificateholders) incurred by it (each such P&I Advance or expense, an
"Advance"), the Master Servicer or the Trustee,
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as applicable, is entitled to be paid interest compounded annually at a per
annum rate equal to the Reimbursement Rate. Such interest will be paid
contemporaneously with the reimbursement of the related Advance first out of
late payment charges and default interest received on the related Mortgage Loan
in which such reimbursement is made and then from general collections on the
Mortgage Loans then on deposit in the Certificate Account; provided, however,
that the Master Servicer and/or the Trustee will not be entitled to interest on
any P&I Advance which is made for any Mortgage Loan which has accrued prior to
the expiration of the applicable grace period. In addition, to the extent the
Master Servicer receives late payment charges or default interest on a Mortgage
Loan for which interest on Advances related to such Mortgage Loan has been paid
from general collections on deposit in the Certificate Account and not
previously reimbursed to the Trust Fund, such late payment charges or default
interest will be used to reimburse the Trust Fund for such payment of interest.
The "Reimbursement Rate" is equal to the "prime rate" published in the "Money
Rates" section of The Wall Street Journal, as such "prime rate" may change from
time to time, accrued on the amount of such Advance from the date made to but
not including the date of reimbursement. To the extent not offset or covered by
amounts otherwise payable on the Non-Offered Certificates, interest accrued on
outstanding Advances will result in a reduction in amounts payable on the
Offered Certificates, subject to the distribution priorities described in this
Prospectus Supplement.
Upon a determination that a previously made Advance is not recoverable,
instead of obtaining reimbursement out of general collections immediately, the
Master Servicer, or the Trustee, as applicable, may, in its sole discretion,
elect to obtain reimbursement for such nonrecoverable Advance over time (not to
exceed 6 months or such longer period of time as agreed to by the Master
Servicer and the Controlling Class Representative, each in its sole discretion)
and the unreimbursed portion of such Advance will accrue interest at the prime
rate. At any time after such a determination to obtain reimbursement over time,
the Master Servicer, the Special Servicer or the Trustee, as applicable, may, in
its sole discretion, decide to obtain reimbursement immediately. The fact that a
decision to recover such nonrecoverable Advances over time, or not to do so,
benefits some Classes of Certificateholders to the detriment of other Classes
shall not, with respect to the Master Servicer, constitute a violation of the
Servicing Standard and/or with respect to the Trustee, constitute a violation of
any fiduciary duty to Certificateholders or contractual duty under the Pooling
and Servicing Agreement.
If a Specially Serviced Mortgage Loan becomes a Corrected Mortgage Loan the
Master Servicer, in accordance with the Servicing Standard, and the Trustee, in
accordance with its fiduciary duty to the Certificateholders and its contractual
duties under the Pooling and Servicing Agreement and with the consent of the
Controlling Class Representative, may elect to obtain reimbursement for a
recoverable Advance over a period of time and the unreimbursed portion of such
Advance will accrue interest at the prime rate; provided, however, that if such
period of time exceeds twenty-four (24) months and the unreimbursed portion of
such Advance will accrue interest at the prime rate plus one percent (1%). The
fact that a decision to (i) recover Advances on such Mortgage Loan over a period
of time exceeding twenty-four months, or (ii) allow interest to accrue at a
reimbursement rate greater than the prime rate benefits some Classes of
Certificateholders to the detriment of other Classes shall not, with respect to
the Master Servicer, constitute a violation of the servicing standard with
respect to the Trustee, constitute a violation of any fiduciary duty to
Certificateholders or contractual duty under the Pooling and Servicing
Agreement. Any Advance made by the Master Servicer or the Trustee, as
applicable, is intended to maintain liquidity for the benefit of the
Certificateholders, rather than to provide credit support.
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APPRAISAL REDUCTIONS
Upon the earliest of the date (each such date, a "Required Appraisal Date")
that (1) any Mortgage Loan is 60 days delinquent in respect of any Periodic
Payments, (2) any REO Property is acquired on behalf of the Trust Fund in
respect of any Mortgage Loan, (3) any Mortgage Loan has been modified by the
Special Servicer to reduce the amount of any Periodic Payment, other than a
Balloon Payment, (4) a receiver is appointed and continues in such capacity in
respect of the Mortgaged Property securing any Mortgage Loan, (5) a borrower
with respect to any Mortgage Loan becomes subject to any bankruptcy proceeding
or (6) a Balloon Payment with respect to any Mortgage Loan has not been paid on
its scheduled maturity date, unless the Master Servicer has, on or prior to 60
days following the scheduled maturity date of such Balloon Payment, received
written evidence from an institutional lender of such lender's binding
commitment to refinance such Mortgage Loan within 120 days after the Due Date of
such Balloon Payment (provided that if such refinancing does not occur during
such time specified in the commitment, the related Mortgage Loan will
immediately become a Required Appraisal Loan) or (7) any Mortgage Loan is
outstanding 60 days after the third anniversary of an extension of its scheduled
maturity date (each such Mortgage Loan, including an REO Mortgage Loan, a
"Required Appraisal Loan"), the Special Servicer is required to obtain (within
60 days of the applicable Required Appraisal Date) an appraisal of the related
Mortgaged Property prepared in accordance with 12 CFR Section 225.62 and
conducted in accordance with the standards of the Appraisal Institute by a
Qualified Appraiser (or with respect to any Mortgage Loan with an outstanding
principal balance less than $2 million, an internal valuation performed by the
Special Servicer), unless such an appraisal had previously been obtained within
the prior twelve months. A "Qualified Appraiser" is an independent appraiser,
selected by the Special Servicer or the Master Servicer, that is a member in
good standing of the Appraisal Institute, and that, if the state in which the
subject Mortgaged Property is located certifies or licenses appraisers, is
certified or licensed in such state, and in each such case, who has a minimum of
five years experience in the subject property type and market. The cost of such
appraisal will be advanced by the Master Servicer, subject to the Master
Servicer's right to be reimbursed therefor out of Related Proceeds or, if not
reimbursable therefrom, out of general funds on deposit in the Certificate
Account. As a result of any such appraisal, it may be determined that an
"Appraisal Reduction Amount" exists with respect to the related Required
Appraisal Loan, such determination to be made by the Master Servicer as
described below. The Appraisal Reduction Amount for any Required Appraisal Loan
will equal the excess, if any, of (a) the sum (without duplication), as of the
first Determination Date immediately succeeding the Master Servicer's obtaining
knowledge of the occurrence of the Required Appraisal Date if no new appraisal
is required or the date on which the appraisal or internal valuation, if
applicable, is obtained and each Determination Date thereafter so long as the
related Mortgage Loan remains a Required Appraisal Loan, of (i) the Stated
Principal Balance of such Required Appraisal Loan, (ii) to the extent not
previously advanced by or on behalf of the Master Servicer or the Trustee, all
unpaid interest on the Required Appraisal Loan through the most recent Due Date
prior to such Determination Date at a per annum rate equal to the related Net
Mortgage Rate (exclusive of any portion thereof that constitutes Additional
Interest), (iii) all accrued but unpaid Servicing Fees and all accrued but
unpaid Additional Trust Fund Expenses in respect of such Required Appraisal
Loan, (iv) all related unreimbursed Advances (plus accrued interest thereon)
made by or on behalf of the Master Servicer, the Special Servicer or the Trustee
with respect to such Required Appraisal Loan and (v) all currently due and
unpaid real estate taxes and reserves owed for improvements and assessments,
insurance premiums, and, if applicable, ground rents in respect of the related
Mortgaged Property, over (b) an amount equal to the sum of (i) all escrows,
reserves and letters of credit held for the purposes of reserves (provided such
letters of credit may be drawn upon for reserve purposes under the related
Mortgage Loan documents) held with respect to such Required Appraisal Loan, plus
(ii) 90% of the appraised value (net of any prior liens and estimated
liquidation expenses) of the related Mortgaged Property as determined by such
appraisal. If the Special Servicer has not obtained a new appraisal (or
performed an internal valuation, if applicable) within the time limit described
above, the Appraisal Reduction Amount for the related Mortgage Loan will equal
25% of the principal balance of such Mortgage Loan, to be adjusted upon receipt
of the new appraisal (or internal valuation, if applicable). In the event a
borrower fails to make a balloon payment on a Scheduled Maturity Date and no
appraisal has
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been received within 120 days of such failure, the Appraisal Reduction Amount
for the related Mortgage Loan will equal 25% of the principal balance of such
Mortgage Loan, to be adjusted upon receipt of the new appraisal.
As a result of calculating an Appraisal Reduction Amount with respect to a
Mortgage Loan, the P&I Advance for such Mortgage Loan for the related
Distribution Date will be reduced, which will have the effect of reducing the
amount of interest available for distribution to the Subordinate Certificates in
reverse alphabetical order of the Classes. See "--P&I Advances" above. For the
purpose of calculating P&I Advances only, the aggregate Appraisal Reduction
Amounts will be allocated to the Certificate Balance of each Class of Sequential
Pay Certificates in reverse alphabetical order.
REPORTS TO CERTIFICATEHOLDERS; AVAILABLE INFORMATION
Trustee Reports. Based solely on information provided in monthly reports
prepared by the Master Servicer and the Special Servicer (and subject to the
limitations with respect thereto) and delivered to the Trustee, the Trustee is
required to provide or make available either electronically (on the Trustee's
internet website initially located at "www.ctslink.com/cmbs") or by first class
mail on each Distribution Date to each Certificateholder:
(a) A statement (a "Distribution Date Statement"), substantially in
the form of Annex B to this Prospectus Supplement, setting forth, among
other things, for each Distribution Date:
(i) the amount of the distribution to the holders of each Class of
REMIC Regular Certificates in reduction of the Certificate Balance
thereof;
(ii) the amount of the distribution to the holders of each Class of
REMIC Regular Certificates allocable to Distributable Certificate
Interest;
(iii) the amount of the distribution to the holders of each Class
of REMIC Regular Certificates allocable to Prepayment Premiums and Yield
Maintenance Charges;
(iv) the amount of the distribution to the holders of each Class of
REMIC Regular Certificates in reimbursement of previously allocated
Realized Losses and Additional Trust Fund Expenses;
(v) the Available Distribution Amount for such Distribution Date;
(vi) (a) the aggregate amount of P&I Advances made in respect of
such Distribution Date with respect to the Mortgage Pool and each Loan
Group; and (b) the aggregate amount of servicing advances with respect
to each Loan Group as of the close of business on the related
Determination Date;
(vii) the aggregate unpaid principal balance of the Mortgage Pool
and each Loan Group outstanding as of the close of business on the
related Determination Date;
(viii) the aggregate Stated Principal Balance of the Mortgage Pool
and each Loan Group outstanding immediately before and immediately after
such Distribution Date;
(ix) the number, aggregate unpaid principal balance, weighted
average remaining term to maturity or Anticipated Repayment Date and
weighted average Mortgage Rate of the Mortgage Loans in the Mortgage
Pool and each Loan Group as of the close of business on the related
Determination Date;
(x) the number and aggregate Stated Principal Balance (immediately
after such Distribution Date) (and with respect to each delinquent
Mortgage Loan, a brief description of the reason for delinquency, if
known by the Master Servicer or Special Servicer, as applicable) of
Mortgage Loans (a) delinquent 30-59 days, (b) delinquent 60-89 days, (c)
delinquent 90 days or more, and (d) as to which foreclosure proceedings
have been commenced;
(xi) as to each Mortgage Loan referred to in the preceding clause
(x) above: (a) the loan number thereof, (b) the Stated Principal Balance
thereof immediately following such Distribution Date and (c) a brief
description of any loan modification;
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(xii) with respect to any Mortgage Loan as to which a liquidation
event occurred during the related Collection Period (other than a
payment in full), (a) the loan number thereof, (b) the aggregate of all
liquidation proceeds and other amounts received in connection with such
liquidation event (separately identifying the portion thereof allocable
to distributions on the Certificates), and (c) the amount of any
Realized Loss in connection with such liquidation event;
(xiii) with respect to any REO Property included in the Trust Fund
as to which the Special Servicer has determined, in accordance with
accepted servicing standards, that all payments or recoveries with
respect to such property have been ultimately recovered (a "Final
Recovery Determination") was made during the related Collection Period,
(a) the loan number of the related Mortgage Loan, (b) the aggregate of
all liquidation proceeds and other amounts received in connection with
such Final Recovery Determination (separately identifying the portion
thereof allocable to distributions on the Certificates), and (c) the
amount of any Realized Loss in respect of the related REO Property in
connection with such Final Recovery Determination;
(xiv) the Accrued Certificate Interest in respect of each Class of
REMIC Regular Certificates for such Distribution Date;
(xv) any unpaid Distributable Certificate Interest in respect of
each Class of REMIC Regular Certificates after giving effect to the
distributions made on such Distribution Date;
(xvi) the Pass-Through Rate for each Class of REMIC Regular
Certificates for such Distribution Date;
(xvii) the Principal Distribution Amount, the Loan Group 1
Principal Distribution Amount and the Loan Group 2 Principal
Distribution Amount for such Distribution Date (and, in the case of any
principal prepayment or other unscheduled collection of principal
received during the related Collection Period, the loan number for the
related Mortgage Loan and the amount of such prepayment or other
collection of principal);
(xviii) the aggregate of all Realized Losses incurred during the
related Collection Period and all Additional Trust Fund Expenses
incurred during the related Collection Period;
(xix) the aggregate of all Realized Losses and Additional Trust
Fund Expenses that were allocated to each Class on such Distribution
Date;
(xx) the Certificate Balance of each Class of REMIC Regular
Certificates (other than the Class X Certificates) and the Notional
Amount of the Class X-C and Class X-P Certificates immediately before
and immediately after such Distribution Date, separately identifying any
reduction therein due to the allocation of Realized Losses and
Additional Trust Fund Expenses on such Distribution Date;
(xxi) the certificate factor for each Class of REMIC Regular
Certificates immediately following such Distribution Date;
(xxii) the aggregate amount of interest on P&I Advances paid to the
Master Servicer or the Trustee with respect to the Mortgage Pool and
each Loan Group during the related Collection Period;
(xxiii) the aggregate amount of interest on servicing advances paid
to the Master Servicer, the Special Servicer and the Trustee with
respect to the Mortgage Pool and each Loan Group during the related
Collection Period;
(xxiv) the aggregate amount of servicing fees and Trustee Fees paid
to the Master Servicer, the Special Servicer and the Trustee, as
applicable, during the related Collection Period;
(xxv) the loan number for each Required Appraisal Loan and any
related Appraisal Reduction Amount as of the related Determination Date;
(xxvi) the original and then current credit support levels for each
Class of REMIC Regular Certificates;
(xxvii) the original and then current ratings for each Class of
REMIC Regular Certificates;
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(xxviii) the aggregate amount of Prepayment Premiums and Yield
Maintenance Charges with respect to the Mortgage Pool and each Loan
Group collected during the related Collection Period;
(xxix) the amounts, if any, actually distributed with respect to
the Class R-I Certificates, Class R-II Certificates and Class Z
Certificates on such Distribution Date; and
(xxx) the value of any REO Property included in the Trust Fund at
the end of the Collection Period, based on the most recent appraisal or
valuation.
(b) A "CMSA Loan Periodic Update File" and a "CMSA Property File" (in
electronic form and substance as provided by the Master Servicer and/or the
Special Servicer) setting forth certain information (with respect to CMSA
Loan Periodic Update File, as of the related Determination Date provided
that the Collection Period will be deemed to end on the related
Determination Date) with respect to the Mortgage Loans and the Mortgaged
Properties, respectively.
(c) A "CMSA Collateral Summary File" and a "CMSA Bond File" setting
forth certain information with respect to the Mortgage Loans and the
Certificates, respectively.
The Master Servicer and/or the Special Servicer is required to deliver (in
electronic format acceptable to the Trustee and Master Servicer) to the Trustee
prior to each Distribution Date, and the Trustee is required to provide or make
available electronically or by first class mail to each Certificateholder, the
Depositor, the Underwriters and each Rating Agency on each Distribution Date,
the following reports as of the Determination Date:
(a) CMSA Delinquent Loan Status Report;
(b) CMSA Historical Loan Modification and Corrected Mortgage Loan
Report;
(c) CMSA Historical Liquidation Report;
(d) CMSA REO Status Report;
(e) CMSA Watch List Report;
(f) CMSA Operating Statement Analysis Report;
(g) CMSA NOI Adjustment Worksheet;
(h) CMSA Comparative Financial Status Report; and
(i) An "Updated Collection Report" identifying each mortgage loan with
respect to which the Master Servicer received a Periodic Payment or
principal payment after the Determination Date and before the business day
immediately preceding the Distribution Date for the related month (a "P&I
Advance Date").
Each of the reports referenced as CMSA reports will be in the form
prescribed in the standard Commercial Mortgage Securities Association ("CMSA")
investor reporting package. Forms of these reports are available at the CMSA's
website located at www.cmsa.org.
The reports identified in clauses (a), (b), (c), (d), (i) and (j) above are
referred to in this Prospectus Supplement as the "Unrestricted Servicer
Reports", and the reports identified in clauses (e), (f), (g) and (h) above are
referred to in this Prospectus Supplement as the "Restricted Servicer Reports".
In addition, within a reasonable period of time after the end of each
calendar year, the Trustee is required to send to each person who at any time
during the calendar year was a Certificateholder of record, a report summarizing
on an annual basis (if appropriate) certain items provided to Certificateholders
in the monthly Distribution Date Statements and such other information as may be
required to enable such Certificateholders to prepare their federal income tax
returns. Such information is required to include the amount of original issue
discount accrued on each Class of Certificates and information regarding the
expenses of the Trust Fund. Such requirements shall be deemed to be satisfied to
the extent such information is provided pursuant to applicable requirements of
the Code in force from time to time.
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The information that pertains to Specially Serviced Trust Fund Assets
reflected in reports will be based solely upon the reports delivered by the
Special Servicer or the Master Servicer to the Trustee prior to related
Distribution Date. Absent manifest error, none of the Master Servicer, the
Special Servicer or the Trustee will be responsible for the accuracy or
completeness of any information supplied to it by a Mortgagor or third party
that is included in any reports, statements, materials or information prepared
or provided by the Master Servicer, the Special Servicer or the Trustee, as
applicable.
Book-Entry Certificates. Until such time as definitive Offered
Certificates are issued in respect of the Book-Entry Certificates, the foregoing
information will be available to the holders of the Book-Entry Certificates only
to the extent it is forwarded by or otherwise available through DTC and its
Participants. Any beneficial owner of a Book-Entry Certificate who does not
receive information through DTC or its Participants may request that the Trustee
reports be mailed directly to it by written request to the Trustee (accompanied
by evidence of such beneficial ownership) at the Corporate Trust Office of the
Trustee. The manner in which notices and other communications are conveyed by
DTC to its Participants, and by its Participants to the holders of the
Book-Entry Certificates, will be governed by arrangements among them, subject to
any statutory or regulatory requirements as may be in effect from time to time.
The Master Servicer, the Special Servicer, the Trustee and the Depositor are
required to recognize as Certificateholders only those persons in whose names
the Certificates are registered on the books and records of the Certificate
Registrar.
Information Available Electronically. On or prior to each Distribution
Date, the Trustee will make available to the general public via its internet
website initially located at "www.ctslink.com/cmbs," (i) the related
Distribution Date Statement, (ii) the CMSA Loan Periodic Update File, CMSA loan
setup file, CMSA Bond File and CMSA Collateral Summary File, (iii) the
Unrestricted Servicer Reports, (iv) as a convenience for interested parties (and
not in furtherance of the distribution thereof under the securities laws), the
Prospectus Supplement, the Prospectus and the Pooling and Servicing Agreement,
and (v) any other items at the request of the Depositor.
In addition, on each Distribution Date, the Trustee will make available
upon a restricted basis, (i) the Restricted Servicer Reports, (ii) the CMSA
Property File and (iii) any other items at the request of the Depositor. The
Trustee shall provide access to such restricted reports, upon written request,
to any Privileged Person and to any other person upon the direction of the
Depositor.
The Trustee and Master Servicer make no representations or warranties as to
the accuracy or completeness of any report, document or other information made
available on its internet website and assumes no responsibility therefor. In
addition, the Trustee and the Master Servicer may disclaim responsibility for
any information distributed by the Trustee or the Master Servicer, as the case
may be, for which it is not the original source.
The Master Servicer may make available each month via the Master Servicer's
internet website, initially located at "www.wachovia.com" (i) to any interested
party, the Unrestricted Servicer Reports, the CMSA loan setup file and the CMSA
Loan Periodic Update File, and (ii) to any Privileged Person, with the use of a
password provided by the Master Servicer to such Privileged Person, the
Restricted Servicer Reports and the CMSA Property File. For assistance with the
Master Servicer's internet website, investors may call (800) 326-1334.
"Privileged Person" means any Certificateholder or any person identified to
the Trustee or the Master Servicer, as applicable, as a prospective transferee
of an Offered Certificate or any interests therein (that, with respect to any
such holder or Certificate Owner or prospective transferee, has provided to the
Trustee or the Master Servicer, as applicable, a certification in the form
attached to the Pooling and Servicing Agreement), any Rating Agency, the
Mortgage Loan Sellers, any holder of a Companion Loan (only with respect to its
Companion Loan), the Underwriters or any party to the Pooling and Servicing
Agreement.
In connection with providing access to the Trustee's internet website or
the Master Servicer's internet website, the Trustee or the Master Servicer, as
applicable, may require registration and the acceptance of a
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disclaimer. Neither the Trustee nor the Master Servicer shall be liable for the
dissemination of information in accordance with the Pooling and Servicing
Agreement.
Other Information. The Pooling and Servicing Agreement requires that the
Master Servicer or the Special Servicer make available at its offices primarily
responsible for administration of the Trust Fund, during normal business hours,
or send the requesting party at the expense of such requesting party, for review
by any holder or Certificate Owner owning an Offered Certificate or an interest
therein or any person identified by the Trustee to the Master Servicer or
Special Servicer, as the case may be, as a prospective transferee of an Offered
Certificate or an interest therein, originals or copies of, among other things,
the following items: (a) the Pooling and Servicing Agreement and any amendments
thereto, (b) all Distribution Date Statements delivered to holders of the
relevant Class of Offered Certificates since the Closing Date, (c) all officer's
certificates delivered by the Master Servicer since the Closing Date as
described under "DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS--Evidence
as to Compliance" in the Prospectus, (d) all accountants' reports delivered with
respect to the Master Servicer since the Closing Date as described under
"DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS--Evidence as to Compliance"
in the Prospectus, (e) the most recent property inspection report prepared by or
on behalf of the Master Servicer in respect of each Mortgaged Property, (f) the
most recent Mortgaged Property annual operating statements and rent roll, if
any, collected by or on behalf of the Master Servicer, (g) any and all
modifications, waivers and amendments of the terms of a Mortgage Loan entered
into by the Special Servicer, (h) the Mortgage File relating to each Mortgage
Loan, and (i) any and all officers' certificates and other evidence prepared by
the Master Servicer or the Special Servicer to support its determination that
any Advance was or, if made, would not be recoverable from Related Proceeds.
Copies of any and all of the foregoing items will be available from the Master
Servicer or Special Servicer, as the case may be, upon request; however, the
Master Servicer or Special Servicer, as the case may be, will be permitted to
require (other than from the Rating Agencies) a certification from the person
seeking such information (covering among other matters, confidentiality) and
payment of a sum sufficient to cover the reasonable costs and expenses of
providing such information to Certificateholders, Certificate Owners and their
prospective transferees, including, without limitation, copy charges and
reasonable fees for employee time and for space.
ASSUMED FINAL DISTRIBUTION DATE; RATED FINAL DISTRIBUTION DATE
The "Assumed Final Distribution Date" with respect to any Class of REMIC
Regular Certificates is the Distribution Date on which the Certificate Balance
of such Class of Certificates would be reduced to zero based on the assumption
that no Mortgage Loan is voluntarily prepaid prior to its stated maturity date
(except for the ARD Loans which are assumed to be paid in full on their
respective Anticipated Repayment Dates) and otherwise based on the "Table
Assumptions" set forth under "YIELD AND MATURITY CONSIDERATIONS--Weighted
Average Life" in this Prospectus Supplement, which Distribution Date shall in
each case be as follows:
<Table>
<Caption>
ASSUMED FINAL
CLASS DESIGNATION DISTRIBUTION DATE
- ----------------- -----------------
Class A-1.............................................. February 15, 2012
Class A-2.............................................. May 15, 2013
Class B................................................ June 15, 2013
Class C................................................ June 15, 2013
</Table>
THE ASSUMED FINAL DISTRIBUTION DATES SET FORTH ABOVE WERE CALCULATED
WITHOUT REGARD TO ANY DELAYS IN THE COLLECTION OF BALLOON PAYMENTS AND WITHOUT
REGARD TO A REASONABLE LIQUIDATION TIME WITH RESPECT TO ANY MORTGAGE LOANS THAT
MAY BE DELINQUENT. ACCORDINGLY, IN THE EVENT OF DEFAULTS ON THE MORTGAGE LOANS,
THE ACTUAL FINAL DISTRIBUTION DATE FOR ONE OR MORE CLASSES OF THE OFFERED
CERTIFICATES MAY BE LATER, AND COULD BE SUBSTANTIALLY LATER, THAN THE RELATED
ASSUMED FINAL DISTRIBUTION DATE(S).
In addition, the Assumed Final Distribution Dates set forth above were
calculated on the basis of a 0% CPR (as defined in this Prospectus Supplement)
(except that it is assumed that the ARD Loans pay their respective principal
balances on their related Anticipated Repayment Dates) and no losses on the
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Mortgage Loans. Because the rate of principal payments (including prepayments)
on the Mortgage Loans can be expected to exceed the scheduled rate of principal
payments, and could exceed such scheduled rate by a substantial amount, and
because losses may occur in respect of the Mortgage Loans, the actual final
Distribution Date for one or more Classes of the Offered Certificates may be
earlier, and could be substantially earlier, than the related Assumed Final
Distribution Date(s). The rate of principal payments (including prepayments) on
the Mortgage Loans will depend on the characteristics of the Mortgage Loans, as
well as on the prevailing level of interest rates and other economic factors,
and no assurance can be given as to actual principal payment experience.
Finally, the Assumed Final Distribution Dates were calculated assuming there
would not be an early termination of the Trust Fund. See "YIELD AND MATURITY
CONSIDERATIONS" and "DESCRIPTION OF THE MORTGAGE POOL" in this Prospectus
Supplement and in the accompanying Prospectus.
The "Rated Final Distribution Date" with respect to each Class of Offered
Certificates is the Distribution Date in June 2035, the first Distribution Date
that follows the second anniversary of the end of the amortization term for the
Mortgage Loan that, as of the Cut-Off Date, has the longest remaining
amortization term. The rating assigned by a Rating Agency to any Class of
Offered Certificates entitled to receive distributions in respect of principal
reflects an assessment of the likelihood that Certificateholders of such Class
will receive, on or before the Rated Final Distribution Date, all principal
distributions to which they are entitled. See "RATINGS" in this Prospectus
Supplement.
VOTING RIGHTS
At all times during the term of the Pooling and Servicing Agreement, 100%
of the voting rights for the Certificates (the "Voting Rights") will be
allocated among the respective Classes of Certificates as follows: (i) 4% in the
aggregate in the case of the Class X Certificates (allocated, pro rata, between
the Classes of Class X Certificates based on Notional Amount) and (ii) in the
case of any other Class of Certificates, a percentage equal to the product of
96% and a fraction, the numerator of which is equal to the aggregate Certificate
Balance of such Class of Certificates (as adjusted by treating any Appraisal
Reduction Amount as a Realized Loss solely for the purposes of adjusting Voting
Rights) and the denominator of which is equal to the aggregate Certificate
Balances of all Classes of Certificates, determined as of the Distribution Date
immediately preceding such time; provided, however, that the treatment of any
Appraisal Reduction Amount as a Realized Loss shall not reduce the Certificate
Balances of any Class for the purpose of determining the Controlling Class, the
Controlling Class Representative or the Majority Subordinate Certificateholder.
The holders of the Class R-I, Class R-II and Class Z Certificates will not be
entitled to any Voting Rights. Voting Rights allocated to a Class of
Certificates will be allocated among the related Certificateholders in
proportion to the percentage interests in such Class evidenced by their
respective Certificates. The Class A-1, Class A-2 and Class A-1A Certificates
will be treated as one Class for determining the Controlling Class. In addition,
if either the Master Servicer or the Special Servicer is the holder of any
Sequential Pay Certificate, neither of the Master Servicer or Special Servicer,
in its capacity as a Certificateholder, will have Voting Rights with respect to
matters concerning compensation affecting the Master Servicer or the Special
Servicer. See "DESCRIPTION OF THE CERTIFICATES--Voting Rights" in the
Prospectus.
TERMINATION
The obligations created by the Pooling and Servicing Agreement will
terminate following the earlier of (i) the final payment (or advance in respect
thereof) or other liquidation of the last Mortgage Loan or REO Property subject
thereto, and (ii) the purchase of all of the Mortgage Loans and all of the REO
Properties, if any, remaining in the Trust Fund by the Master Servicer, the
Special Servicer or any single Certificateholder (so long as such
Certificateholder is not an affiliate of the Depositor or a Mortgage Loan
Seller) that is entitled to greater than 50% of the Voting Rights allocated to
the Class of Sequential Pay Certificates with the latest alphabetical class
designation then outstanding (or if no Certificateholder is entitled to greater
than 50% of the Voting Rights of such Class, the Certificateholder with the
largest percentage of Voting Rights allocated to such Class) (the "Majority
Subordinate Certificateholder") and
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distribution or provision for distribution thereof to the Certificateholders.
Written notice of termination of the Pooling and Servicing Agreement will be
given to each Certificateholder, and the final distribution will be made only
upon surrender and cancellation of the Certificates at the office of the Trustee
or other registrar for the Certificates or at such other location as may be
specified in such notice of termination.
Any such purchase by the Master Servicer, the Special Servicer or the
Majority Subordinate Certificateholder of all the Mortgage Loans and all of the
REO Properties, if any, remaining in the Trust Fund is required to be made at a
price equal to (i) the aggregate Purchase Price of all the Mortgage Loans (other
than REO Mortgage Loans) then included in the Trust Fund, plus (ii) the fair
market value of all REO Properties then included in the Trust Fund, as
determined by an independent appraiser selected by the Master Servicer and
approved by the Trustee (which may be less than the Purchase Price for the
corresponding REO Loan), minus (iii) if the purchaser is the Master Servicer,
the aggregate of amounts payable or reimbursable to the Master Servicer under
the Pooling and Servicing Agreement. Such purchase will effect early retirement
of the then outstanding Offered Certificates, but the right of the Master
Servicer, the Special Servicer or the Majority Subordinate Certificateholder to
effect such purchase is subject to the requirement that the aggregate principal
balance of the Mortgage Loans is less than {1}% of the Cut-Off Date Pool
Balance.
The purchase price paid in connection with the purchase of all Mortgage
Loans and REO Properties remaining in the Trust Fund, exclusive of any portion
thereof payable or reimbursable to any person other than the Certificateholders,
will constitute part of the Available Distribution Amount for the final
Distribution Date. The Available Distribution Amount for the final Distribution
Date will be distributed by the Trustee generally as described in this
Prospectus Supplement under "--Distributions--Application of the Available
Distribution Amount," except that the distributions of principal on any Class of
Sequential Pay Certificates described thereunder will be made, subject to
available funds and the distribution priorities described thereunder, in an
amount equal to the entire Certificate Balance of such Class remaining
outstanding.
An exchange by any Certificateholder of all of the then outstanding
Certificates for all of the Mortgage Loans and each REO Property remaining in
the Trust Fund may be made: (i) if the then outstanding Certificates are held by
a single Certificateholder, (ii) after the Class A-1, Class A-2, Class A-1A,
Class B and Class C Certificates have been paid in full, and (iii) by giving
written notice to each of the parties to the Pooling and Servicing Agreement no
later than 30 days prior to the anticipated date of exchange. In the event that
such Certificateholder elects to exchange its Certificates for all of the
Mortgage Loans and each REO Property remaining in the Trust Fund, such
Certificateholder must deposit in the Certificate Account in immediately
available funds in an amount equal to all amounts then due and owing to the
Master Servicer, the Special Servicer, the Trustee, the Paying Agent, the
Certificate Registrar, the REMIC Administrator and their respective agents under
the Pooling and Servicing Agreement.
THE TRUSTEE
Wells Fargo Bank Minnesota, N.A. ("Wells Fargo") is acting as Trustee
pursuant to the Pooling and Servicing Agreement. Wells Fargo, a direct, wholly
owned subsidiary of Wells Fargo & Company, is a national banking association
originally chartered in 1872 and is engaged in a wide range of activities
typical of a national bank. Wells Fargo conducts its trustee and securities
administration services at its offices in Columbia, Maryland. Its address there
is 9062 Old Annapolis Road, Columbia, Maryland 21045-1951. Certificateholders
and other interested parties should direct their inquiries to Wells Fargo CMBS
Customer Service office. The telephone number is (301) 815-6600. See
"DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS--The Trustee," "--Duties of
the Trustee," "--Certain Matters Regarding the Trustee" and "--Resignation and
Removal of the Trustee" in the Prospectus. As compensation for its services, the
Trustee will be entitled to receive monthly, from general funds on deposit in
the Certificate Account, the Trustee Fee. The "Trustee Fee" for each Mortgage
Loan and REO Loan for any Distribution Date equals one month's interest for the
most recently ended calendar month (calculated on the basis of a 360-day year
consisting of twelve 30-day months), accrued at the Trustee
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Fee rate on the Stated Principal Balance of such Mortgage Loan or REO Loan, as
the case may be, outstanding immediately following the prior Distribution Date
(or, in the case of the initial Distribution Date, as of the Closing Date). The
Trustee Fee rate is a per annum rate set forth in the Pooling and Servicing
Agreement. In addition, the Trustee will be entitled to recover from the Trust
Fund all {reasonable} unanticipated expenses and disbursements incurred or made
by the Trustee in accordance with any of the provisions of the Pooling and
Servicing Agreement, but not including expenses incurred in the ordinary course
of performing its duties as Trustee under the Pooling and Servicing Agreement,
and not including any such expense, disbursement or advance as may arise from
its willful misconduct, negligence or bad faith.
The Trustee is also authorized to invest or direct the investment of funds
held in the Certificate Account and the Additional Interest Account maintained
by it that relate to the Mortgage Loans or REO Properties, as the case may be,
in certain short-term United States government securities and certain other
permitted investment grade obligations, and the Trustee will be entitled to
retain any interest or other income earned on such funds held in those accounts
maintained by it, but shall be required to cover any losses on investments of
funds held in those accounts maintained by it, from its own funds without any
right to reimbursement, except in certain limited circumstances described in the
Pooling and Servicing Agreement. The Trustee will not be entitled to any fee
with respect to any Companion Loan.
The Trustee also has certain duties with respect to REMIC administration
(in such capacity the "REMIC Administrator"). See "MATERIAL FEDERAL INCOME TAX
CONSEQUENCES--Taxation of Owners of REMIC Residual Certificates--Reporting and
Other Administrative Matters" in the Prospectus.
YIELD AND MATURITY CONSIDERATIONS
YIELD CONSIDERATIONS
General. The yield on any Offered Certificate will depend on, among other
things, (a) the price at which such Certificate is purchased by an investor and
(b) the rate, timing and amount of distributions on such Certificate. The rate,
timing and amount of distributions on any Offered Certificate will in turn
depend on, among other things, (i) the Pass-Through Rate for such Certificate,
(ii) the rate and timing of principal payments (including principal prepayments)
and other principal collections on the Mortgage Loans and the extent to which
such amounts are to be applied in reduction of the Certificate Balance, (iii)
the rate, timing and severity of Realized Losses and Additional Trust Fund
Expenses and the extent to which such losses and expenses are allocable in
reduction of the Certificate Balance, and (iv) the timing and severity of any
Net Aggregate Prepayment Interest Shortfalls and the extent to which such
shortfalls allocable are in reduction of the Distributable Certificate Interest
payable on the related Class.
Rate and Timing of Principal Payment. The yield to holders of any Offered
Certificates purchased at a discount or premium will be affected by the rate and
timing of principal payments made in reduction of the Certificate Balance of any
Class of Sequential Pay Certificates. As described in this Prospectus
Supplement, the Group 1 Principal Distribution Amount (and, after the Class A-1A
Certificates have been retired, 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 the Certificate Balance thereof is
reduced to zero, and then, in respect of the Class A-2 Certificates until the
Certificate Balance thereof is reduced to zero, and the Group 2 Principal
Distribution Amount (and, after the Class A-2 Certificates have been retired,
any remaining Group 1 Principal Distribution Amount) for each Distribution Date
will generally be distributable first to the Class A-1A Certificates. After
those distributions, the remaining Principal Distribution Amount with respect to
the Mortgage Pool will generally be distributable entirely in respect of the
Class B Certificates, and the Class C Certificates and then the Non-Offered
Certificates (other than the Class A-1A, Class X-C and Class X-P Certificates),
in that order, in each case until the Certificate Balance of such Class of
Certificates is reduced to zero. Consequently, the rate and timing of principal
payments that are distributed or otherwise result in reduction of the
Certificate Balance of any
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Class of Offered Certificates, will be directly related to the rate and timing
of principal payments on or in respect of the Mortgage Loans, which will in turn
be affected by the amortization schedules thereof, the dates on which Balloon
Payments are due, any extension of maturity dates by the Master Servicer or the
Special Servicer, and the rate and timing of principal prepayments and other
unscheduled collections thereon (including for this purpose, collections made in
connection with liquidations of Mortgage Loans due to defaults, casualties or
condemnations affecting the Mortgaged Properties, or purchases of Mortgage Loans
out of the Trust Fund). Furthermore, because the amount of principal that will
be distributed to the Class A-1, Class A-2 and Class A-1A Certificates will
generally be based upon the particular Loan Group that the related Mortgage Loan
is deemed to be in, the yield on the Class A-1 and Class A-2 Certificates will
be particularly sensitive to prepayments on Mortgage Loans in Loan Group 1 and
the yield on the Class A-1A Certificates will be particularly sensitive to
prepayments on Mortgage Loans in Loan Group 2. In addition, although the
borrowers under ARD Loans may have certain incentives to repay ARD Loans on
their Anticipated Repayment Dates, there can be no assurance that the related
borrowers will be able to repay the ARD Loans on their Anticipated Repayment
Date. The failure of a borrower to repay the ARD Loans on their Anticipated
Repayment Dates will not be an event of default under the terms of the ARD
Loans, and pursuant to the terms of the Pooling and Servicing Agreement, neither
the Master Servicer nor the Special Servicer will be permitted to take any
enforcement action with respect to a borrower's failure to pay Additional
Interest or principal in excess of the principal component of the constant
Periodic Payment, other than requests for collection, until the scheduled
maturity of the ARD Loans; provided, that the Master Servicer or the Special
Servicer, as the case may be, may take action to enforce the Trust Fund's right
to apply Excess Cash Flow to principal in accordance with the terms of the ARD
Loans' documents.
Prepayments and, assuming the respective stated maturity dates therefor
have not occurred, liquidations and purchases of the Mortgage Loans, will result
in distributions on the Certificates of amounts that would otherwise be
distributed over the remaining terms of the Mortgage Loans. Defaults on the
Mortgage Loans, particularly at or near their stated maturity dates, may result
in significant delays in payments of principal on the Mortgage Loans (and,
accordingly, on the Offered Certificates that are Sequential Pay Certificates)
while work-outs are negotiated or foreclosures are completed. See "SERVICING OF
THE MORTGAGE LOANS--Modifications, Waivers and Amendments" in this Prospectus
Supplement and "DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS--Realization
Upon Defaulted Mortgage Loans" and "CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS AND
LEASES--Foreclosure" in the Prospectus.
The extent to which the yield to maturity of any Class of Offered
Certificates may vary from the anticipated yield will depend upon the degree to
which such Certificates are purchased at a discount or premium and when, and to
what degree, payments of principal on the Mortgage Loans (and, with respect to
the Class A-1, Class A-2 and Class A-1A Certificates, which Loan Group such
Mortgage Loan is deemed to be in) in turn are distributed or otherwise result in
reduction of the Certificate Balance of such Certificates. An investor should
consider, in the case of any Offered Certificate purchased at a discount, the
risk that a slower than anticipated rate of principal payments on the Mortgage
Loans could result in an actual yield to such investor that is lower than the
anticipated yield and, in the case of any Offered Certificate purchased at a
premium, the risk that a faster than anticipated rate of principal payments
could result in an actual yield to such investor that is lower than the
anticipated yield. In general, the earlier a payment of principal on the
Mortgage Loans is distributed to or otherwise results in reduction of the
principal balance of an Offered Certificate purchased at a discount or premium,
the greater will be the effect on an investor's yield to maturity. As a result,
the effect on an investor's yield of principal payments on the Mortgage Loans
occurring at a rate higher (or lower) than the rate anticipated by the investor
during any particular period would not be fully offset by a subsequent like
reduction (or increase) in the rate of such principal payments. Because the rate
of principal payments on the Mortgage Loans will depend on future events and a
variety of factors (as described more fully below), no assurance can be given as
to such rate or the rate of principal prepayments in particular. The Depositor
is not aware of any relevant publicly available or authoritative statistics with
respect to the historical prepayment experience of a large group of mortgage
loans comparable to the Mortgage Loans.
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Losses and Shortfalls. The yield to holders of the Offered Certificates
will also depend on the extent to which such holders are required to bear the
effects of any losses or shortfalls on the Mortgage Loans. Losses and other
shortfalls on the Mortgage Loans will, with the exception of any Net Aggregate
Prepayment Interest Shortfalls, generally be borne by the holders of the
respective Classes of Sequential Pay Certificates to the extent of amounts
otherwise distributable in respect of such Certificates, in reverse alphabetical
order of their Class designations. Realized Losses and Additional Trust Fund
Expenses will be allocated, as and to the extent described in this Prospectus
Supplement, to the holders of the respective Classes of Sequential Pay
Certificates other than the Class A-1, Class A-2 and Class A-1A Certificates (in
reduction of the Certificate Balance of each such Class), in reverse
alphabetical order of their Class designations. In the event of a reduction of
the Certificate Balances of all such Classes of Certificates, such losses and
shortfalls will then be borne, pro rata, by the Class A-1 Certificates, Class
A-2 and Class A-1A Certificates (and the Class X Certificates with respect to
shortfalls of interest). As more fully described in this Prospectus Supplement
under "DESCRIPTION OF THE CERTIFICATES--Distributions--Distributable Certificate
Interest," Net Aggregate Prepayment Interest Shortfalls will generally be borne
by the respective Classes of REMIC Regular Certificates (other than the Class X
Certificates) on a pro rata basis.
Certain Relevant Factors. The rate and timing of principal payments and
defaults and the severity of losses on the Mortgage Loans may be affected by a
number of factors, including, without limitation, prevailing interest rates, the
terms of the Mortgage Loans (for example, due-on-sale clauses, Lockout Periods,
provisions requiring the payment of Prepayment Premiums, Yield Maintenance
Charges and amortization terms that require Balloon Payments), the demographics
and relative economic vitality of the areas in which the Mortgaged Properties
are located and the general supply and demand for rental units, hotel/motel
guest rooms, health care facility beds, mobile home park pads or comparable
commercial space, as applicable, in such areas, the quality of management of the
Mortgaged Properties, the servicing of the Mortgage Loans, possible changes in
tax laws and other opportunities for investment. See "RISK FACTORS--The Mortgage
Loans" and "DESCRIPTION OF THE MORTGAGE POOL" in this Prospectus Supplement and
"YIELD CONSIDERATIONS--Prepayment Considerations" in the accompanying
Prospectus.
The rate of prepayment on the Mortgage Pool is likely to be affected by
prevailing market interest rates for mortgage loans of a comparable type, term
and risk level. When the prevailing market interest rate is below a mortgage
interest rate, the related borrower may have an incentive to refinance its
mortgage loan. {As of the Cut-Off Date, all of the Mortgage Loans may be prepaid
at any time after the expiration of any applicable Lockout Period, subject, in
some cases, to the payment of a Prepayment Premium or a Yield Maintenance
Charge.} A requirement that a prepayment be accompanied by a Prepayment Premium
or Yield Maintenance Charge may not provide a sufficient economic disincentive
to deter a borrower from refinancing at a more favorable interest rate.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell or
refinance Mortgaged Properties in order to realize their equity therein, to meet
cash flow needs or to make other investments. In addition, some borrowers may be
motivated by federal and state tax laws (which are subject to change) to sell
Mortgaged Properties prior to the exhaustion of tax depreciation benefits.
The Depositor makes no representation as to the particular factors that
will affect the rate and timing of prepayments and defaults on the Mortgage
Loans, as to the relative importance of such factors, as to the percentage of
the principal balance of the Mortgage Loans that will be prepaid or as to
whether a default will have occurred as of any date or as to the overall rate of
prepayment or default on the Mortgage Loans.
Delay in Payment of Distributions. Because monthly distributions will not
be made to Certificateholders until a date that is scheduled to be up to {15}
days following the Due Dates for the Mortgage Loans during the related
Collection Period, the effective yield to the holders of the Offered
Certificates will be
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lower than the yield that would otherwise be produced by the applicable
Pass-Through Rates and purchase prices (assuming such prices did not account for
such delay).
Unpaid Distributable Certificate Interest. As described under "DESCRIPTION
OF THE CERTIFICATES--Distributions--Application of the Available Distribution
Amount" in this Prospectus Supplement, if the portion of the Available
Distribution Amount distributable in respect of interest on any Class of Offered
Certificates on any Distribution Date is less than the Distributable Certificate
Interest then payable for such Class, the shortfall will be distributable to
holders of such Class of Certificates on subsequent Distribution Dates, to the
extent of available funds. Any such shortfall will not bear interest, however,
and will therefore negatively affect the yield to maturity of such Class of
Certificates for so long as it is outstanding.
Optional Termination. Any optional termination of the Trust Fund would
have an effect similar to a prepayment in full of the Mortgage Loans (without,
however, the payment of any Prepayment Premiums or Yield Maintenance Charges)
and, as a result, investors in any Certificates purchased at a premium might not
fully recoup their initial investment. See "DESCRIPTION OF THE CERTIFICATES--
Termination" in this Prospectus Supplement.
WEIGHTED AVERAGE LIFE
The weighted average life of any Class A-1 and Class A-2, Class B, and
Class C Certificate refers to the average amount of time that will elapse from
the assumed Closing Date until each dollar allocable to principal of such
Certificate is distributed to the investor. The weighted average life of any
such Offered Certificate will be influenced by, among other things, the rate at
which principal on the Mortgage Loans is paid or otherwise collected or advanced
and applied to pay principal of such Offered Certificate, which may be in the
form of scheduled amortization, voluntary prepayments, insurance and
condemnation proceeds and liquidation proceeds. As described in this Prospectus
Supplement, the Group 1 Principal Distribution Amount (and, after the Class A-1A
Certificates have been retired, 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 the Certificate Balance thereof is
reduced to zero, and then, to the Class A-2 Certificates until the Certificate
Balances thereof is reduced to zero, the Group 2 Principal Distribution Amount
(and, after the Class A-2 Certificates have been retired, any remaining Group 1
Principal Distribution Amount) for each Distribution Date will generally be
distributable first to the Class A-1A Certificates. After those distributions,
the remaining Principal Distribution Amount with respect to the Mortgage Pool
generally be distributable entirely in respect of the Class B Certificates, and
the Class C Certificates, in that order, in each case until the Certificate
Balance of such Class of Certificates is reduced to zero.
The tables below indicate the percentage of the initial Certificate Balance
of each Class of Offered Certificates that would be outstanding after each of
the dates shown and the corresponding weighted average life of each such Class
of Offered Certificates. To the extent that the Mortgage Loans or the
Certificates have characteristics that differ from those assumed in preparing
the tables, the Class A-1, Class A-2, Class B and Class C Certificates may
mature earlier or later than indicated by the tables. Accordingly, the Mortgage
Loans will not prepay at any constant rate nor will the Mortgage Loans prepay at
the same rate, and it is highly unlikely that the Mortgage Loans will prepay in
a manner consistent with the assumptions described above. In addition,
variations in the actual prepayment experience and in the balance of the
Mortgage Loans that actually prepay may increase or decrease the percentages of
initial Certificate Balances (and shorten or extend the weighted average lives)
shown in the following tables. Investors are urged to conduct their own analyses
of the rates at which the Mortgage Loans may be expected to prepay.
Prepayments on mortgage loans may be measured by a prepayment standard or
model. The model used in this Prospectus Supplement is the "Constant Prepayment
Rate" or "CPR" model. The CPR model represents an assumed constant annual rate
of prepayment each month, expressed as a per annum percentage of the then
scheduled principal balance of the pool of mortgage loans. As used in the tables
set
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forth below, the column headed "0% CPR" assumes that none of the Mortgage Loans
is prepaid in whole or in part before maturity or the Anticipated Repayment
Date, as the case may be. The columns headed "25% CPR", "50% CPR", "75% CPR" and
"100% CPR," respectively, assume that prepayments are made each month at those
levels of CPR on the Mortgage Loans that are eligible for prepayment under the
Table Assumptions set forth in the next paragraph (each such scenario, a
"Scenario"). There is no assurance, however, that prepayments on the Mortgage
Loans will conform to any level of CPR, and no representation is made that the
Mortgage Loans will prepay at the levels of CPR shown or at any other prepayment
rate.
The tables below were derived from calculations based on the following
assumptions (the "Table Assumptions"): (i) no Mortgage Loan prepays during any
applicable Lockout Period or any period during which Defeasance Collateral is
permitted or required to be pledged or any period during which a yield
maintenance charge or prepayment premium is required (otherwise, in the case of
each table, each Mortgage Loan is assumed to prepay at the indicated level of
CPR, with each prepayment being applied on the first day of the applicable month
in which it is assumed to be received), (ii) the Pass-Through Rates and initial
Certificate Balances of the respective Classes of Sequential Pay Certificates
are as described in this Prospectus Supplement, (iii) there are no delinquencies
or defaults with respect to, and no modifications, waivers or amendments of the
terms of, the Mortgage Loans, (iv) there are no Realized Losses, Additional
Trust Fund Expenses or Appraisal Reduction Amounts with respect to the Mortgage
Loans or the Trust Fund, (v) scheduled interest and principal payments on the
Mortgage Loans are timely received, (vi) ARD Loans pay in full on their
Anticipated Repayment Dates, (vii) all Mortgage Loans have Due Dates on the
first day of each month and accrue interest on the respective basis described in
this Prospectus Supplement (i.e., a 30/360 basis or an actual/360 basis), (viii)
all prepayments are accompanied by a full month's interest and there are no
Prepayment Interest Shortfalls, (ix) there are no breaches of the Mortgage Loan
Sellers' representations and warranties regarding its Mortgage Loans, (x) all
applicable Prepayment Premiums and Yield Maintenance Charges are collected, (xi)
no party entitled thereto exercises its right of optional termination of the
Trust Fund described in this Prospectus Supplement, (xii) the borrowers under
the Mortgage Loans which permit the borrower to choose between defeasance or a
yield maintenance charge chooses to be subject to a yield maintenance charge,
(xiii) distributions on the Certificates are made on the 15th day (each assumed
to be a business day) of each month, commencing in August 2003, and (xiv) the
Closing Date for the sale of the Offered Certificates is July 8, 2003.
The tables set forth below indicate the resulting weighted average lives of
each Class of Offered Certificates and set forth the percentages of the initial
Certificate Balance of such Class of Offered Certificates that would be
outstanding after each of the dates shown in each case assuming the indicated
level of CPR. For purposes of the following tables, the weighted average life of
an Offered Certificate is determined by (i) multiplying the amount of each
principal distribution thereon by the number of years from the assumed Closing
Date of such Certificate to the related Distribution Date, (ii) summing the
results and (iii) dividing the sum by the aggregate amount of the reductions in
the principal balance of such Certificate.
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PERCENTAGES OF THE CLOSING DATE CERTIFICATE BALANCE OF THE CLASS A-1
CERTIFICATES
<Table>
<Caption>
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE
OTHERWISE AT INDICATED CPR
---------------------------------------------------------
DISTRIBUTION DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ----------------- -------- --------- --------- --------- ----------
Initial Date................................ 100 100 100 100 100
7/15/04..................................... 96 96 96 96 96
7/15/05..................................... 91 91 91 91 91
7/15/06..................................... 85 85 85 85 85
7/15/07..................................... 79 79 79 79 79
7/15/08..................................... 65 65 65 65 65
7/15/09..................................... 55 55 55 55 55
7/15/10..................................... 23 22 21 19 9
7/15/11..................................... 10 6 2 0 0
7/15/12..................................... 0 0 0 0 0
Weighted average life (in years)............ 5.70 5.65 5.60 5.56 5.43
</Table>
PERCENTAGES OF THE CLOSING DATE CERTIFICATE BALANCE OF THE CLASS A-2
CERTIFICATES
<Table>
<Caption>
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE
OTHERWISE AT INDICATED CPR
---------------------------------------------------------
DISTRIBUTION DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ----------------- -------- --------- --------- --------- ----------
Initial Date................................ 100 100 100 100 100
7/15/04..................................... 100 100 100 100 100
7/15/05..................................... 100 100 100 100 100
7/15/06..................................... 100 100 100 100 100
7/15/07..................................... 100 100 100 100 100
7/15/08..................................... 100 100 100 100 100
7/15/09..................................... 100 100 100 100 100
7/15/10..................................... 100 100 100 100 100
7/15/11..................................... 100 100 100 99 98
7/15/12..................................... 88 84 82 81 81
7/15/13..................................... 0 0 0 0 0
Weighted average life (in years)............ 9.61 9.55 9.51 9.46 9.31
</Table>
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PERCENTAGES OF THE CLOSING DATE CERTIFICATE BALANCE OF THE CLASS B CERTIFICATES
<Table>
<Caption>
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE
OTHERWISE AT INDICATED CPR
---------------------------------------------------------
DISTRIBUTION DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ----------------- -------- --------- --------- --------- ----------
Initial Date................................ 100 100 100 100 100
7/15/04..................................... 100 100 100 100 100
7/15/05..................................... 100 100 100 100 100
7/15/06..................................... 100 100 100 100 100
7/15/07..................................... 100 100 100 100 100
7/15/08..................................... 100 100 100 100 100
7/15/09..................................... 100 100 100 100 100
7/15/10..................................... 100 100 100 100 100
7/15/11..................................... 100 100 100 100 100
7/15/12..................................... 100 100 100 100 100
7/15/13..................................... 0 0 0 0 0
Weighted average life (in years)............ 9.92 9.90 9.87 9.85 9.69
</Table>
PERCENTAGES OF THE CLOSING DATE CERTIFICATE BALANCE OF THE CLASS C CERTIFICATES
<Table>
<Caption>
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE
OTHERWISE AT INDICATED CPR
---------------------------------------------------------
DISTRIBUTION DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ----------------- -------- --------- --------- --------- ----------
Initial Date................................ 100 100 100 100 100
7/15/04..................................... 100 100 100 100 100
7/15/05..................................... 100 100 100 100 100
7/15/06..................................... 100 100 100 100 100
7/15/07..................................... 100 100 100 100 100
7/15/08..................................... 100 100 100 100 100
7/15/09..................................... 100 100 100 100 100
7/15/10..................................... 100 100 100 100 100
7/15/11..................................... 100 100 100 100 100
7/15/12..................................... 100 100 100 100 100
7/15/13..................................... 0 0 0 0 0
Weighted average life (in years)............ 9.94 9.94 9.94 9.85 9.76
</Table>
USE OF PROCEEDS
Substantially all of the proceeds from the sale of the Offered Certificates
will be used by the Depositor to purchase the Mortgage Loans and to pay certain
expenses in connection with the issuance of the Certificates.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following summary of the anticipated material federal income tax
consequences of the purchase, ownership and disposition of Offered Certificates
is based on the advice of Cadwalader, Wickersham & Taft LLP, counsel to the
Depositor. This summary is based on laws, regulations, including the REMIC
regulations promulgated by the Treasury Department (the "REMIC Regulations"),
rulings and decisions
S-220
now in effect or (with respect to the regulations) proposed, all of which are
subject to change either prospectively or retroactively. This summary does not
address the federal income tax consequences of an investment in Offered
Certificates applicable to all categories of investors, some of which (for
example, banks and insurance companies) may be subject to special rules.
Prospective investors should consult their tax advisors regarding the federal,
state, local and other tax consequences to them of the purchase, ownership and
disposition of Offered Certificates.
For federal income tax purposes, two separate REMIC elections will be made
with respect to segregated asset pools that make up the trust, other than the
Early Defeasance Loan and any Additional Interest on the ARD Loans. Upon the
issuance of the Offered Certificates, Cadwalader, Wickersham & Taft LLP will
deliver its opinion generally to the effect that, assuming compliance with all
provisions of the Pooling and Servicing Agreement, for federal income tax
purposes, each such REMIC will qualify as a REMIC under the Code. For federal
income tax purposes, the REMIC Regular Certificates will represent ownership of
the "regular interests" in one of such REMICs and generally will be treated as
newly originated debt instruments of such REMIC. In addition, the Early
Defeasance Loan will constitute the sole asset of the Early Defeasance Loan
REMIC and the "regular interest" in such Early Defeasance Loan REMIC (instead of
the related Mortgage Loan and any related REO Property) will be an asset of one
of the aforementioned REMIC. See "MATERIAL FEDERAL INCOME TAX
CONSEQUENCES--REMICs" in the Prospectus. The portion of the Trust Fund
consisting of Additional Interest and the Additional Interest Account will be
treated as a grantor trust for federal income tax purposes, and the Class Z
certificates will represent undivided beneficial interests in the related
assets. See "MATERIAL FEDERAL INCOME TAX CONSEQUENCES--REMICs" and "--Grantor
Trust Funds" in the Prospectus.
TAXATION OF THE OFFERED CERTIFICATES
Based on expected issue prices, it is anticipated that the Class A-1
Certificates will be issued with not more than a de minimis amount of original
issue discount and that the other classes of Offered Certificates will be
treated as having been issued at a premium for federal income tax reporting
purposes. The prepayment assumption that will be used in determining the rate of
accrual of original issue discount, if any, or amortization of issue premium for
federal income tax purposes will be based on the assumption that subsequent to
the date of any determination the Mortgage Loans will pay at a rate equal to a
CPR of 0%, except that it is assumed that the ARD Loans will pay their
respective outstanding principal balances on their related Anticipated Repayment
Dates. No representation is made that the Mortgage Loans will pay at that rate
or at any other rate. See "MATERIAL FEDERAL INCOME TAX
CONSEQUENCES--REMICs--Taxation of Owners of REMIC Regular Certificates--Original
Issue Discount" in the Prospectus.
The Internal Revenue Service (the "IRS") has issued regulations (the "OID
Regulations") under Sections 1271 to 1275 of the Code generally addressing the
treatment of debt instruments issued with original issue discount. Purchasers of
the Offered Certificates should be aware that the OID Regulations and Section
1272(a)(6) of the Code do not adequately address certain issues relevant to, or
are not applicable to, securities such as the Offered Certificates. The OID
Regulations in some circumstances permit the holder of a debt instrument to
recognize original issue discount under a method that differs from that used by
the issuer. Accordingly, it is possible that the holder of an Offered
Certificate issued with original issue discount may be able to select a method
for recognizing original issue discount that differs from that used by the
Trustee in preparing reports to the Certificateholders and the IRS. Prospective
purchasers of Offered Certificates are advised to consult their tax advisors
concerning the tax treatment of such Certificates.
As described above, based on their anticipated issue prices (including
accrued interest), the Offered Certificates, other than the Class A-1
Certificates, will be treated for federal income tax purposes as having been
issued at a premium. Whether any holder of such a Class of Certificates will be
treated as holding a Certificate with amortizable bond premium will depend on
such Certificateholder's purchase price and the distributions remaining to be
made on such Certificate at the time of its acquisition by such
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Certificateholder. Holders of each such class of Certificates should consult
their own tax advisors regarding the possibility of making an election to
amortize such premium. See "MATERIAL FEDERAL INCOME TAX CONSEQUENCES--Taxation
of Owners of REMIC Regular Certificates--Premium" in the accompanying
Prospectus.
The Offered Certificates will be treated as "real estate assets" within the
meaning of Section 856(c)(5)(B) of the Code for a "real estate investment trust"
(a "REIT"). In addition, interest (including original issue discount) on the
Offered Certificates will be interest described in Section 856(c)(3)(B) of the
Code for a REIT. However, the Offered Certificates will generally only be
considered assets described in Section 7701(a)(19)(C) of the Code for a domestic
building and loan association to the extent that the Mortgage Loans are secured
by multifamily and mobile home park properties and, accordingly, investment in
the Offered Certificates may not be suitable for certain thrift institutions.
The Offered Certificates will not qualify under the foregoing sections to the
extent of any Mortgage Loan that has been defeased with U.S. government
obligations.
Prepayment Premiums and Yield Maintenance Charges actually collected will
be distributed to the holders of the Offered Certificates as described in this
Prospectus Supplement. It is not entirely clear under the Code when the amount
of a Yield Maintenance Charge or Prepayment Premium should be taxed to the
holder of an Offered Certificate, but it is not expected, for federal income tax
reporting purposes, that Yield Maintenance Charges or Prepayment Premiums will
be treated as giving rise to any income to the holders of the Offered
Certificates prior to the Master Servicer's actual receipt of a Yield
Maintenance Charge or Prepayment Premium, as the case may be. It is not entirely
clear whether Yield Maintenance Charges or Prepayment Premiums give rise to
ordinary income or capital gains and Certificateholders should consult their own
tax advisors concerning this character issue and the treatment of Yield
Maintenance Charges and Prepayment Premiums in general.
The Treasury Department has issued final regulations that make certain
modifications to the withholding, backup withholding, and information reporting
rules. These regulations attempt to unify certification requirements and to
modify reliance standards. These regulations were effective January 1, 2001.
Prospective non-United States investors are urged to consult their tax advisors
regarding these regulations.
For further information regarding the federal income tax consequences of
investing in the Offered Certificates, see "MATERIAL FEDERAL INCOME TAX
CONSEQUENCES--REMICs" in the Prospectus.
ERISA CONSIDERATIONS
The following description is general in nature, is not intended to be
all-inclusive, is based on the law and practice in force at the date of this
document and is subject to any subsequent changes therein. In view of the
individual nature of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and Code consequences, each potential investor that is a Plan
(as described below) is advised to consult its own legal advisor with respect to
the specific ERISA and Code consequences of investing in the Offered
Certificates and to make its own independent decision. The following is merely a
summary and should not be construed as legal advice.
A fiduciary of any employee benefit plan or other retirement plan or
arrangement, including individual retirement accounts and annuities, Keogh plans
and collective investment funds, separate accounts and general accounts in which
such plans, accounts or arrangements are invested, that is subject to ERISA or
Section 4975 of the Code (a "Plan") should carefully review with its legal
advisors whether the purchase or holding of Offered Certificates could give rise
to a transaction that is prohibited or is not otherwise permitted either under
ERISA or Section 4975 of the Code or whether there exists any statutory or
administrative exemption applicable thereto. Other employee benefit plans,
including governmental plans (as defined in Section 3(32) of ERISA) and church
plans (as defined in Section 3(33) of ERISA and provided no election has been
made under Section 410(d) of the Code), while not subject to the foregoing
S-222
provisions of ERISA or the Code, may be subject to materially similar provisions
of applicable federal, state or local law ("Similar Law").
The U.S. Department of Labor has issued individual exemptions to each of
the Underwriters (Prohibited Transaction Exemption ("PTE") 96-22 (April 3, 1996)
to Wachovia Corporation, and its subsidiaries and its affiliates, which include
Wachovia Securities, LLC ("Wachovia Securities"), PTE 89-89 (October 17, 1989)
to Citigroup Global Markets Inc. ("Citigroup Securities"), PTE 91-14 (February
22, 1991) to Lehman Brothers Inc. ("Lehman") and PTE 93-32 (May 14, 1993) to
Nomura Securities International, Inc. ("Nomura Securities") (each, as amended,
an "Exemption" and collectively, the "Exemptions"), each of which generally
exempts from the application of the prohibited transaction provisions of
Sections 406(a) and (b) and 407(a) of ERISA, and the excise taxes imposed on
such prohibited transactions pursuant to Sections 4975(a) and (b) of the Code,
the purchase, sale and holding of mortgage pass-through certificates
underwritten by an Underwriter, as hereinafter defined, provided that certain
conditions set forth in the Exemptions are satisfied. For purposes of this
discussion, the term "Underwriter" shall include (a) Wachovia Securities, (b)
Citigroup Securities, (c) Lehman Brothers Inc. (d) Nomura Securities, (e) any
person directly or indirectly, through one or more intermediaries, controlling,
controlled by or under common control with Wachovia Securities, Citigroup
Securities, Lehman Brothers Inc. or Nomura Securities and (f) any member of the
underwriting syndicate or selling group of which Wachovia Securities, Citigroup
Securities, Nomura Securities, Lehman Brothers Inc. or a person described in (e)
is a manager or co-manager with respect to the Offered Certificates.
The obligations covered by the Exemptions include mortgage loans such as
the Mortgage Loans. The Exemptions would apply to the acquisition, holding and
resale of the Offered Certificates by a Plan only if specific conditions
(certain of which are described below) are met. It is not clear whether the
Exemptions apply to participant directed Plans as described in Section 404(c) of
ERISA or Plans that are subject to Section 4975 of the Code but that are not
subject to Title I of ERISA, such as certain Keogh plans and certain individual
retirement accounts. The Exemptions would not apply to governmental plans,
certain church plans and other employee benefit plans that are not subject to
the prohibited transaction provisions of ERISA or the Code but that may be
subject to Similar Law.
The Exemptions set forth five general conditions that, among others, must
be satisfied for a transaction involving the purchase, sale and holding of the
Offered Certificates by a Plan to be eligible for exemptive relief thereunder.
First, the acquisition of the Offered Certificates by a Plan must be on terms,
including the price paid for the Certificates, that are at least as favorable to
the Plan as they would be in an arm's-length transaction with an unrelated
party. Second, the Offered Certificates at the time of acquisition by the Plan
must be rated in one of the four highest generic rating categories by Standard &
Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. ("S&P"),
Moody's Investors Service, Inc. ("Moody's") or Fitch, Inc. ("Fitch") or any
successor thereto (each, an "NRSRO"). Third, the Trustee cannot be an affiliate
of any other member of the Restricted Group, other than an Underwriter; the
"Restricted Group" consists of each of the Underwriters, the Depositor, the
Master Servicer, the Special Servicer, the Trustee, any sub-servicer and any
obligor with respect to Mortgage Loans constituting more than 5.0% of the
aggregate unamortized principal balance of the Mortgage Loans as of the date of
initial issuance of the Offered Certificates, and any of their affiliates.
Fourth, the sum of all payments made to and retained by any Underwriter in
connection with the distribution or placement of the Offered Certificates must
represent not more than reasonable compensation for underwriting such
Certificates; the sum of all payments made to and retained by the Depositor
pursuant to the assignment of the Mortgage Loans to the Trust Fund must
represent not more than the fair market value of such obligations; and the sum
of all payments made to and retained by the Master Servicer, the Special
Servicer or any sub-servicer must represent not more than reasonable
compensation for such person's services under the Pooling and Servicing
Agreement and reimbursement of such person's reasonable expenses in connection
therewith. Fifth, the investing Plan must be an accredited investor as defined
in Rule 501(a)(1) of Regulation D of the Securities and Exchange Commission
under the Securities Act.
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A fiduciary of a Plan contemplating purchasing any Class of the Offered
Certificates must make its own determination that, at the time of such purchase,
such Certificates satisfy the general conditions set forth above.
The Exemptions also require that the Trust Fund meet the following
requirements: (i) the Trust Fund must consist solely of assets of the type that
have been included in other investment pools; (ii) certificates in such other
investment pools must have been rated in one of the four highest generic rating
categories by S&P, Moody's or Fitch for at least one year prior to the Plan's
acquisition of the Offered Certificates; and (iii) certificates in such other
investment pools must have been purchased by investors other than Plans for at
least one year prior to any Plan's acquisition of the Offered Certificates.
If the general conditions of the Exemptions are satisfied, the Exemptions
may provide an exemption from the restrictions imposed by Sections 406(a) and
407(a) of ERISA (as well as the excise taxes imposed by Sections 4975(a) and (b)
of the Code by reason of Sections 4975(c)(1)(A) through (D) of the Code) in
connection with (i) the direct or indirect sale, exchange or transfer of the
Offered Certificates in the initial issuance of Certificates between the
Depositor or an Underwriter and a Plan when the Depositor, an Underwriter, the
Trustee, the Master Servicer, the Special Servicer, a sub-servicer or an obligor
with respect to Mortgage Loans is a "Party in Interest," as defined in the
Prospectus, with respect to the investing Plan, (ii) the direct or indirect
acquisition or disposition in the secondary market of the Offered Certificates
by a Plan and (iii) the holding of Offered Certificates by a Plan. However, no
exemption is provided from the restrictions of Sections 406(a)(1)(E), 406(a)(2)
and 407 of ERISA for the acquisition or holding of the Offered Certificate on
behalf of an "Excluded Plan" by any person who has discretionary authority or
renders investment advice with respect to the assets of such Excluded Plan. For
purposes hereof, an Excluded Plan is a Plan sponsored by any member of the
Restricted Group.
If certain specific conditions of the Exemptions are also satisfied, each
such Exemption may provide relief from the restrictions imposed by reason of
Sections 406(b)(1) and (b)(2) of ERISA and the taxes imposed by Section
4975(c)(1)(E) of the Code to an obligor with respect to Mortgage Loans acting as
a fiduciary with respect to the investment of a Plan's assets in the Offered
Certificates (or such obligor's affiliate) only if, among other requirements (i)
such obligor is an obligor with respect to 5% or less of the fair market value
of the obligations or receivables contained in the Trust, (ii) the investing
Plan is not an Excluded Plan, (iii) a Plan's investment in each class of the
Offered Certificates does not exceed 25% of all of the Certificates of that
class outstanding at the time of the acquisition, (iv) immediately after the
acquisition, no more than 25% of the assets of the Plan are invested in
certificates representing an interest in trusts (including the Trust Fund)
containing assets sold or serviced by the Depositor or the Master Servicer and
(v) in the case of the acquisition of the Offered Certificates in connection
with their initial issuance, at least 50% of each Class of Offered Certificates
in which Plans have invested and at least 50% of the aggregate interest in the
Trust Fund is acquired by persons independent of the Restricted Group.
The Exemptions also apply to transactions in connection with the servicing,
management and operation of the Trust Fund, provided that, in addition to the
general requirements described above, (a) such transactions are carried out in
accordance with the terms of a binding pooling and servicing agreement, (b) the
pooling and servicing agreement is provided to, or described in all material
respects in the prospectus or private placement memorandum provided to,
investing Plans before their purchase of Certificates issued by the Trust Fund
and (c) the terms and conditions for the defeasance of a mortgage obligation and
substitution of a new mortgage obligation, as so described, have been approved
by an NRSRO and do not result in any Offered Certificates receiving a lower
credit rating from the NRSRO than the current rating. The Pooling and Servicing
Agreement is a pooling and servicing agreement as defined in the Exemptions. The
Pooling and Servicing Agreement provides that all transactions relating to the
servicing, management and operations of the Trust Fund must be carried out in
accordance with the Pooling and Servicing Agreement.
Before purchasing any Class of Offered Certificate, a fiduciary of a Plan
should itself confirm that the specific and general conditions of the Exemptions
and the other requirements set forth in the Exemptions would be satisfied.
S-224
Any Plan fiduciary considering the purchase of Offered Certificates should
consult with its counsel with respect to the applicability of the Exemptions and
other issues and determine on its own whether all conditions have been satisfied
and whether the Offered Certificates are an appropriate investment for a Plan
under ERISA and the Code (or, in the case of governmental plans and certain
church plans, under Similar Law) with regard to ERISA's general fiduciary
requirements, including investment prudence and diversification and the
exclusive benefit rule. Each purchaser of the Offered Certificates with the
assets of one or more Plans shall be deemed to represent that each such Plan
qualifies as an "accredited investor" as defined in Rule 501(a)(1) of Regulation
D under the Securities Act. No Plan may purchase or hold an interest in any
Class of Offered Certificates unless such Certificates are rated in one of the
top four generic rating categories by at least one NRSRO at the time of such
purchase, unless such Plan is an insurance company general account that
represents and warrants that it is eligible for, and meets all of the
requirements of, Sections I and III of Prohibited Transaction Class Exemption
95-60.
THE SALE OF OFFERED CERTIFICATES TO A PLAN IS IN NO RESPECT A
REPRESENTATION OR WARRANTY BY THE DEPOSITOR, THE UNDERWRITERS OR ANY OTHER
PERSON THAT THIS INVESTMENT MEETS ALL RELEVANT LEGAL REQUIREMENTS WITH RESPECT
TO INVESTMENTS BY PLANS GENERALLY OR ANY PARTICULAR PLAN, THAT THE EXEMPTIONS
WOULD APPLY TO THE ACQUISITION OF THIS INVESTMENT BY PLANS IN GENERAL OR ANY
PARTICULAR PLAN, OR THAT THIS INVESTMENT IS APPROPRIATE FOR PLANS GENERALLY OR
ANY PARTICULAR PLAN.
LEGAL INVESTMENT
The Offered Certificates will not constitute "mortgage related securities"
for the purposes of the Secondary Mortgage Market Enhancement Act of 1984, as
amended. The appropriate characterization of the Offered Certificates under
various legal investment restrictions, and thus the ability of investors subject
to these restrictions to purchase the Offered Certificates, is subject to
significant interpretive uncertainties. No representations are made as to the
proper characterization of the Offered Certificates for legal investment,
financial institution regulatory, or other purposes, or as to the ability of
particular investors to purchase the Offered Certificates under applicable legal
investment restrictions. The uncertainties described above (and any future
determinations concerning the legal investment or financial institution
regulatory characteristics of the Offered Certificates) may adversely affect the
liquidity of the Offered Certificates. Accordingly, all investors whose
investment activities are subject to legal investment laws and regulations,
regulatory capital requirements or review by regulatory authorities should
consult with their own legal advisors in determining whether and to what extent
the Offered Certificates constitute legal investments for them or are subject to
investment, capital or other restrictions. See "LEGAL INVESTMENT" in the
Prospectus.
METHOD OF DISTRIBUTION
Subject to the terms and conditions set forth in the underwriting agreement
(the "Underwriting Agreement") among the Depositor and Wachovia Securities,
Citigroup Securities, Nomura Securities and Lehman (collectively, the
"Underwriters"), the Depositor has agreed to sell to each of Wachovia
Securities, Citigroup Securities, Nomura Securities and Lehman, and each of
Wachovia Securities, Citigroup Securities, Nomura Securities and Lehman has
agreed to purchase, severally but not jointly, the respective Certificate
Balances as applicable, of each Class of the Offered Certificates as set forth
below, subject in each case to a variance of 5%:
<Table>
<Caption>
CLASS WACHOVIA SECURITIES CITIGROUP SECURITIES NOMURA SECURITIES LEHMAN
- ----- ------------------- -------------------- ----------------- -----------
Class A-1............ $154,462,039 $38,141,873 $33,396,088 $ 0
Class A-2............ $275,531,868 $74,211,428 $64,977,705 $25,000,000
Class B.............. $ 27,701,331 $ 6,840,391 $ 5,989,278 $ 0
Class C.............. $ 10,259,423 $ 2,533,397 $ 2,218,180 $ 0
</Table>
S-225
Wachovia Securities, LLC, Citigroup Global Markets Inc. and Nomura
Securities International, Inc. are acting as co-lead managers for this offering
and Lehman Brothers Inc. is acting as a co-manager for this offering. Citigroup
Global Markets Inc. is acting as sole bookrunner with respect to 46.09% of the
Class A-2 certificates. Wachovia Securities, LLC is acting as sole bookrunner
with respect to the remainder of the Class A-2 certificates and all other
classes of offered certificates.
Proceeds to the Depositor from the sale of the Offered Certificates, before
deducting expenses payable by the Depositor, will be approximately $723,088,637,
which includes accrued interest.
Distribution of the Offered Certificates will be made by each Underwriter
from time to time in negotiated transactions or otherwise at varying prices to
be determined at the time of sale. Wachovia Securities, Inc. or one of its
affiliates may purchase a portion of certain Classes of the Offered
Certificates, purchase certain Offered Certificates for its own account or sell
certain Offered Certificates to one of its affiliates. Sales of the Offered
Certificates may also occur on the Closing Date and other dates after the
Closing Date, as agreed upon in negotiated transactions with various purchasers.
Each Underwriter may effect such transactions by selling the Offered
Certificates to or through dealers, and such dealers may receive compensation in
the form of underwriting discounts, concessions or commissions from such
Underwriter. In connection with the purchase and sale of the Offered
Certificates, Wachovia Securities, Citigroup Securities and Nomura Securities
may be deemed to have received compensation from the Depositor in the form of
underwriting discounts. Each Underwriter and any dealers that participate with
any Underwriter in the distribution of the Offered Certificates may be deemed to
be underwriters and any profit on the resale of the Offered Certificates
positioned by them may be deemed to be underwriting discounts and commissions
under the Securities Act.
Purchasers of the Offered Certificates, including dealers, may, depending
on the facts and circumstances of such purchases, be deemed to be "underwriters"
within the meaning of the Securities Act in connection with reoffers and sales
by them of Offered Certificates. Certificateholders should consult with their
legal advisors in this regard prior to any such reoffer or sale.
The Depositor also has been advised by the Underwriters that each of them,
through one or more of its affiliates, currently intends to make a market in the
Offered Certificates; however, none of the Underwriters has any obligation to do
so, any market making may be discontinued at any time and there can be no
assurance that an active secondary market for the Offered Certificates will
develop. See "RISK FACTORS -- Liquidity for Certificates May Be Limited" in this
Prospectus Supplement and "RISK FACTORS -- Your Ability to Resell Certificates
May Be Limited Because of Their Characteristics" in the accompanying Prospectus.
This Prospectus Supplement and the Prospectus may be used by the Depositor,
Wachovia Securities, an affiliate of the Depositor, and any other affiliate of
the Depositor when required under the federal securities laws in connection with
offers and sales of Offered Certificates in furtherance of market-making
activities in Offered Certificates. Wachovia Securities or any such other
affiliate may act as principal or agent in such transactions. Such sales will be
made at prices related to prevailing market prices at the time of sale or
otherwise.
The Depositor has agreed to indemnify each Underwriter and each person, if
any, who controls any Underwriter within the meaning of Section 15 of the
Securities Act against, or make contributions to each Underwriter and each such
controlling person with respect to, certain liabilities, including liabilities
under the Securities Act.
Wachovia Securities, one of the Underwriters, is an affiliate of the
Depositor and Wachovia Bank, National Association, which is one of the Mortgage
Loan Sellers and the Master Servicer. Wachovia Securities is currently planning
a joint venture with Prudential Financial, Inc. It is expected that a new
broker-dealer will eventually be formed prior to the consummation of the
transaction. Citigroup Securities, one of the Underwriters, is an affiliate of
Citigroup Global Markets Realty Corp., a Mortgage Loan Seller. Nomura
Securities, one of the Underwriters, is an affiliate of Nomura Credit & Capital,
Inc., a Mortgage Loan Seller.
S-226
LEGAL MATTERS
Certain legal matters will be passed upon for the Depositor by Cadwalader,
Wickersham & Taft LLP, Charlotte, North Carolina. Certain legal matters will be
passed upon for the Underwriters by Mayer, Brown, Rowe & Maw, Charlotte, North
Carolina.
RATINGS
The Offered Certificates are required as a condition of their issuance to
have received the following ratings from Moody's and S&P (the "Rating
Agencies"):
<Table>
<Caption>
EXPECTED
RATINGS FROM
CLASS MOODY'S/S&P
- ----- ------------
Class A-1................................................... Aaa/AAA
Class A-2................................................... Aaa/AAA
Class B..................................................... Aa2/AA
Class C..................................................... Aa3/AA-
</Table>
The ratings on the Offered Certificates address the likelihood of timely
receipt by holders thereof of all distributions of interest to which they are
entitled and distributions of principal by the Rated Final Distribution Date set
forth on the cover page of this Prospectus Supplement. The ratings take into
consideration the credit quality of the Mortgage Pool, structural and legal
aspects associated with the Offered Certificates, and the extent to which the
payment stream from the Mortgage Pool is adequate to make payments required
under the Offered Certificates. In addition, rating adjustments may result from
a change in the financial position of the Trustee as back-up liquidity provider.
A security rating does not represent any assessment of the yield to maturity
that investors may experience. In addition, a rating does not address (i) the
likelihood or frequency of voluntary or mandatory prepayments of Mortgage Loans,
(ii) the degree to which such prepayments might differ from those originally
anticipated, (iii) payment of Additional Interest or net default interest, (iv)
whether and to what extent payments of Prepayment Premiums or Yield Maintenance
Charges will be received or the corresponding effect on yield to investors or
(v) whether and to what extent Net Aggregate Prepayment Interest Shortfalls will
be realized or allocated to Certificateholders.
There can be no assurance that any rating agency not requested to rate the
Offered Certificates will not nonetheless issue a rating to any or all Classes
thereof and, if so, what such rating or ratings would be. A rating assigned to
any Class of Offered Certificates by a rating agency that has not been requested
by the Depositor to do so may be lower than the rating assigned thereto by any
of the Rating Agencies.
The ratings on the Offered Certificates should be evaluated independently
from similar ratings on other types of securities. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision or
withdrawal at any time by the assigning rating agency. See "RISK
FACTORS--Ratings Do Not Guarantee Payment and Do Not Address Prepayment Risks"
in the accompanying Prospectus.
S-227
INDEX OF DEFINED TERMS
<Table>
1% ( )...................................................... S-101
16 West 61st Street Loan.................................... S-150
2% ( )...................................................... S-101
24 Hour Fitness............................................. S-153
3% ( )...................................................... S-101
30/360 basis................................................ S-88
673 First Avenue Loan....................................... S-145
AB Apartments Companion Loans............................... S-95
AB Apartments Loan Intercreditor Agreement.................. S-95
AB Apartments Loans......................................... S-95
AB Mortgage Loans........................................... S-95
accredited investor......................................... S-225
Accrued Certificate Interest................................ S-198
Ace Hardware................................................ S-154
Actual/360 basis............................................ S-88
Additional Interest......................................... S-88
Additional Interest Account................................. S-193
Additional Trust Fund Expenses.............................. S-203
Administrative Cost Rate.................................... S-102
Advance..................................................... S-204
AmCap -- Union & Alameda Loan............................... S-153
Anticipated Repayment Date.................................. S-88
Appraisal Reduction Amount.................................. S-206
ARD Loans................................................... S-88
Arrowhead Highlands Apartments Loan......................... S-152
Artesia..................................................... S-87
Artesia Mortgage Loans...................................... S-161
Assumed Final Distribution Date............................. S-211
Assumed Scheduled Payment................................... S-200
ASTM........................................................ S-93
Available Distribution Amount............................... S-191
Balloon Loans............................................... S-88
Balloon Payment............................................. S-88
Breach...................................................... S-169
Capital Imp. Reserve........................................ S-102
CBA Companion Loans......................................... S-95
CBA Loans................................................... S-95
CBA Intercreditor Agreement................................. S-95
Certificate Balance......................................... S-185
Certificate Deferred Interest............................... S-188
Certificateholders.......................................... S-191
Certificates................................................ S-183
Circuit City................................................ S-150
Citigroup................................................... S-87
Citigroup Mortgage Loans.................................... S-161
Citigroup Securities........................................ S-223
Class....................................................... S-183
</Table>
S-228
<Table>
Class A Certificates........................................ S-183
Class X Certificates........................................ S-183
Class X-C Components........................................ S-188
Class X-C Strip Rate........................................ S-189
Class X-P Components........................................ S-189
Class X-P Strip Rate........................................ S-190
Clearstream................................................. S-183
Clearstream Participants.................................... S-185
CMSA........................................................ S-209
CMSA Bond File.............................................. S-209
CMSA Collateral Summary File................................ S-209
CMSA Loan Periodic Update File.............................. S-209
CMSA Property File.......................................... S-209
CNYPR....................................................... S-151
Co-Lender Loans............................................. S-95
Collection Period........................................... S-191
Columbiana Station Shopping Center Loan..................... S-149
Companion Loans............................................. S-95
Compensating Interest Payment............................... S-175
Condemnation Rights......................................... S-94
Constant Prepayment Rate.................................... S-217
Controlling Class........................................... S-172
Controlling Class Representative............................ S-172
Core Material Documents..................................... S-164
Corrected Mortgage Loan..................................... S-174
CPR......................................................... S-217
Crossed Group............................................... S-169
Crossed Loan................................................ S-169
Custodian................................................... S-163
Cut-Off Date................................................ S-86
Cut-Off Date Balance........................................ S-86
Cut-Off Date Group 1 Balance................................ S-86
Cut-Off Date Group 2 Balance................................ S-86
Cut-Off Date Group Balances................................. S-86
Cut-Off Date LTV............................................ S-100
Cut-Off Date LTV Ratio...................................... S-100
Cut-Off Date Pool Balance................................... S-86
D ( )....................................................... S-102
Defaulted Mortgage Loan..................................... S-180
Defeasance.................................................. S-102
Defeasance Collateral....................................... S-90
Defect...................................................... S-169
Depositaries................................................ S-184
Determination Date.......................................... S-191
Dick's...................................................... S-149
Discount Rate............................................... S-201
Distributable Certificate Interest.......................... S-198
Distribution Date........................................... S-191
Distribution Date Statement................................. S-207
</Table>
S-229
<Table>
Dollar Tree.......................................................................................... S-142
Dorland.............................................................................................. S-144
DSC Ratio............................................................................................ S-99
DSCR................................................................................................. S-99
DTC.................................................................................................. S-183
Due Date............................................................................................. S-88
Early Defeasance Loan................................................................................ S-90
Early Defeasance Loan REMIC.......................................................................... S-90
Electronic Ink....................................................................................... S-144
EMS.................................................................................................. S-151
Enhancement Insurer.................................................................................. S-94
ERISA................................................................................................ S-222
Euroclear............................................................................................ S-183
Euroclear Participants............................................................................... S-185
Excess Cash Flow..................................................................................... S-88
Excluded Plan........................................................................................ S-224
Exemption............................................................................................ S-223
Exemptions........................................................................................... S-223
expense.............................................................................................. S-100
Final Recovery Determination......................................................................... S-208
Fitch................................................................................................ S-223
Form 8-K............................................................................................. S-170
Fully Amortizing Loans............................................................................... S-88
Gain on Sale Reserve Account......................................................................... S-193
Glimcher............................................................................................. S-142
Goody's.............................................................................................. S-150
Group 1 Principal Distribution Amount................................................................ S-199
Group 2 Principal Distribution Amount................................................................ S-199
Grupe................................................................................................ S-148
Hamilton House Apartments Loan....................................................................... S-147
Hilton Norfolk Loan.................................................................................. S-94
Indirect Participants................................................................................ S-184
Intercreditor Agreements............................................................................. S-95
Interest Accrual Period.............................................................................. S-190
Interest Reserve Account............................................................................. S-192
Interest Reserve Amount.............................................................................. S-192
Interest Reserve Loans............................................................................... S-192
Irongates Apartments Loan............................................................................ S-148
IRRTI................................................................................................ S-149
IRS.................................................................................................. S-221
King Soopers......................................................................................... S-153
KPR, Inc. ........................................................................................... S-146
Laurel Pointe Apartments Loan........................................................................ S-94
L ( )............................................................................................... S-101
Lehman............................................................................................... S-223
Liquidation Fee...................................................................................... S-175
Lloyd Center Intercreditor Agreement................................................................. S-95
Lloyd Center Loan.................................................................................... S-94
Lloyd Center Pari Passu Loan......................................................................... S-95
</Table>
S-230
<Table>
LNR.................................................................................................. S-172
Loan Group 1......................................................................................... S-86
Loan Group 2......................................................................................... S-86
Loan Groups.......................................................................................... S-86
Loan Pair............................................................................................ S-170
Loan per Sq. Ft., Unit, Bed, Pad or Room............................................................. S-101
LOC.................................................................................................. S-152
Lockout.............................................................................................. S-101
Lockout Period....................................................................................... S-101
LTV at ARD or Maturity............................................................................... S-100
Majority Subordinate Certificateholder............................................................... S-212
Master Servicer...................................................................................... S-171
Master Servicing Fee................................................................................. S-174
Master Servicing Fee Rate............................................................................ S-174
Maturity Date LTV Ratio.............................................................................. S-100
Meier & Frank........................................................................................ S-142
Money Rates.......................................................................................... S-205
Moody's.............................................................................................. S-223
Mortgage............................................................................................. S-86
Mortgage Deferred Interest........................................................................... S-188
Mortgage File........................................................................................ S-163
Mortgage Loan........................................................................................ S-86
Mortgage Loan Purchase Agreement..................................................................... S-160
Mortgage Loan Purchase Agreements.................................................................... S-160
Mortgage Loans....................................................................................... S-86
Mortgage Note........................................................................................ S-86
Mortgage Pool........................................................................................ S-86
Mortgage Rate........................................................................................ S-88
Mortgaged Property................................................................................... S-86
NA................................................................................................... S-102
NAV.................................................................................................. S-102
Net Aggregate Prepayment Interest Shortfall.......................................................... S-198
net cash flow........................................................................................ S-99
Net Cash Flow........................................................................................ S-99
Net Mortgage Rate.................................................................................... S-190
Nomura............................................................................................... S-87
Nomura Mortgage Loans................................................................................ S-161
Nomura Securities.................................................................................... S-223
Non-Offered Certificates............................................................................. S-183
Nonrecoverable P&I Advance........................................................................... S-204
Notional Amount...................................................................................... S-186
NRSRO................................................................................................ S-223
NYIT................................................................................................. S-151
NYPH................................................................................................. S-146
NYP Healthcare System................................................................................ S-146
O ( )............................................................................................... S-101
Occupancy Percentage................................................................................. S-102
Offered Certificates................................................................................. S-183
OID Regulations...................................................................................... S-221
</Table>
S-231
<Table>
One South Broad Street Loan.......................................................................... S-144
Open Period.......................................................................................... S-101
Option Price......................................................................................... S-180
Original Term to Maturity............................................................................ S-102
P&I Advance.......................................................................................... S-204
Party in Interest.................................................................................... S-224
Periodic Payments.................................................................................... S-88
Plan................................................................................................. S-222
Plaza Gardens South Apartments Loan.................................................................. S-155
Pooling and Servicing Agreement...................................................................... S-183
Prepayment Interest Excess........................................................................... S-175
Prepayment Interest Shortfall........................................................................ S-175
Prepayment Premiums.................................................................................. S-201
Primary Collateral................................................................................... S-170
Principal Distribution Amount........................................................................ S-199
Privileged Person.................................................................................... S-210
PTE.................................................................................................. S-223
Purchase Option...................................................................................... S-180
Purchase Price....................................................................................... S-164
P&I Advance Date..................................................................................... S-209
Qualified Appraiser.................................................................................. S-206
Qualified Substitute Mortgage Loan................................................................... S-165
Rated Final Distribution Date........................................................................ S-212
Rating Agencies...................................................................................... S-227
Realized Losses...................................................................................... S-203
Reimbursement Rate................................................................................... S-205
REIT................................................................................................. S-146/222
Related Proceeds..................................................................................... S-204
Remaining Amortization Term.......................................................................... S-101
remaining term....................................................................................... S-89
Remaining Term to Maturity........................................................................... S-101
REMIC................................................................................................ S-24
REMIC Administrator.................................................................................. S-214
REMIC Regular Certificates........................................................................... S-183
REMIC Regulations.................................................................................... S-220
REMIC Residual Certificates.......................................................................... S-183
Rental Property...................................................................................... S-99
REO Extension........................................................................................ S-181
REO Mortgage Loan.................................................................................... S-200
REO Property......................................................................................... S-174
Replacement Reserve.................................................................................. S-102
Required Appraisal Date.............................................................................. S-206
Required Appraisal Loan.............................................................................. S-206
Restricted Group..................................................................................... S-223
Restricted Servicer Reports.......................................................................... S-209
revenue.............................................................................................. S-99
Rules................................................................................................ S-184
S&P.................................................................................................. S-223
Scenario............................................................................................. S-218
</Table>
S-232
<Table>
Scheduled Payment.................................................................................... S-200
Section 42........................................................................................... S-93
Sequential Pay Certificates.......................................................................... S-183
Servicing Fees....................................................................................... S-175
Servicing Transfer Event............................................................................. S-173
Shoppes of Parkland Loan............................................................................. S-94
Similar Law.......................................................................................... S-223
SL Green Realty...................................................................................... S-146
Special Servicer..................................................................................... S-172
Special Servicing Fee................................................................................ S-175
Special Servicing Fee Rate........................................................................... S-175
Specially Serviced Mortgage Loans.................................................................... S-174
Specially Serviced Trust Fund Assets................................................................. S-174
Stated Principal Balance............................................................................. S-190
Subordinate Certificates............................................................................. S-183
Substitution Shortfall Amount........................................................................ S-164
Table Assumptions.................................................................................... S-218
Tax Credits.......................................................................................... S-93
TI/LC Reserve........................................................................................ S-102
Timberlake Apartments Loan........................................................................... S-94
TI Reimbursement Escrow.............................................................................. S-152
Trust Fund........................................................................................... S-183
Trustee Fee.......................................................................................... S-213
Underwriter.......................................................................................... S-223
UNICEF............................................................................................... S-146
Underwriters......................................................................................... S-225
Underwriting Agreement............................................................................... S-225
Underwritten Replacement Reserves.................................................................... S-101
Unrestricted Servicer Reports........................................................................ S-209
Updated Collection Report............................................................................ S-209
Voting Rights........................................................................................ S-212
Wachovia............................................................................................. S-87
Wachovia Mortgage Loans.............................................................................. S-161
Wachovia Securities.................................................................................. S-222
Weighted Average Net Mortgage Rate................................................................... S-190
weighted averages.................................................................................... S-101
Wells Fargo.......................................................................................... S-213
Workout Fee.......................................................................................... S-176
Year Built........................................................................................... S-101
Yield Maintenance Charges............................................................................ S-200
YM ( ).............................................................................................. S-101
</Table>
S-233
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2003-C5
ANNEX A-1 CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS AND MORTGAGED
PROPERTIES
MORTGAGE
LOAN LOAN GROUP
NUMBER NUMBER PROPERTY NAME ADDRESS
- ------------------------------------------------------------------------------------------------------------------------------------
1 1 Lloyd Center 2201 Lloyd Center
2 1 One South Broad Street One South Broad Street
3 1 673 First Avenue 673 First Avenue
4 2 Hamilton House Apartments 1255 New Hampshire Avenue, NW
5 1 Irongate Apartments 3301 Arena Boulevard
6 1 Columbiana Station Shopping Center 234, 238, 240, 242, 244, 246, 301 Harbinson Boulevard
and 1005, 1007, 1009, 1110, 1120, 1230, 1260 Bower
Parkway
7 1 16 West 61st Street 16 West 61st Street
8 2 Arrowhead Highlands Apartments 5901 West Behrend Drive
9 1 AmCap - Union & Alameda 12031 - 12097 West Alameda Parkway
10 2 Plaza Gardens South Apartments 7100 West 141st Street
11 1 2175 K Street, N.W. 2175 K Street, N.W.
12 1 90 & 110 South Bedford Road 90-110 South Bedford Road
13 1 Maryland Corporate Center 7401 & 7501 Forbes Boulevard, 7375 & 7404 Executive
Place
14 1 Village on the Hill 9 School Street
15 1 Anthem Village 2501-2591 Anthem Village Drive
16 1 Riviera Plaza 1618 Southwest First Avenue
17 1 Georgetown Plaza 2233 Wisconsin Avenue Northwest
18 1 College Grove Shopping Center 3412 College Avenue
19 1 Shoppes of Parkland 5901-5993 Hillsboro Boulevard and 7011-7171 North State
Road 7
20 1 Lowell Street 205 & 207 Lowell Street
21 1 The Lassiter at North Hills Shopping Center 4401 Six Forks Road
22 2 Archstone Southpoint Apartments 1800 Southpoint Crossing Drive
23 1 WOW - Chippewa & Hobart Various
23.1 WOW-Chippewa Falls 2521 & 2621 Olson Drive
23.2 WOW-Hobart 1120 O'Hare Boulevard
24 1 Kearny Mesa Crossroads 3750 & 3760 Convoy Street
25 1 Point Plaza East 4-5-6 290, 310, & 322 Israel Road SE
26 2 Valley Stream Village I Apartments 110 Valley Stream Drive
27 1 Beacon Station Business Park 10350 NW 112th Avenue
28 1 Gardens Towne Square 4200 Northlake Boulevard
29 2 Forest Cove Apartments 2401 Repsdorph Road
30 1 Rio Vista Building 8885 Rio San Diego Drive
31 2 Rio Nueces Apartments 600 West 26th Street
32 2 Bermuda Villas Apartments 7325 South West 82nd Street
33 1 8989 Rio Vista Plaza 8989 Rio San Diego Drive
34 1 Tapo Plaza 2196- 2358 Tapo Street
35 1 Market Place Shopping Center 1-26 Plaza Drive
36 1 Creekside Place Shopping Center 23500-23600 Valencia Boulevard
37 1 Village Shoppes of Flowery Branch 5900 Spout Springs Road
38 1 Hilton Norfolk Airport 1500 North Military Highway
39 1 Two Northbrook Place 60 Revere Drive
40 1 10470 Old Placerville Road 10470 Old Placerville Road
41 2 Mohawk Terrace Apartments 1350 & 1400 Crescent-Vischers Ferry Road
42 1 Tudor Business Center 1011 East Tudor Road
43 2 Lexington on Central Apartments 10 West Minnezona Avenue
44 1 301 East Liberty Street 301 East Liberty Street
45 1 New Market 267 Highway 421
46 1 Bank of America Tower 500 Locust Street, 317 Sixth Avenue
47 1 Mill Towne Center 101-235 East Baseline Road
48 1 Village Square 181-185 Main Street
49 1 Hunington Portfolio Various
49.1 Westfield Village Shopping Center 3154 North Fry Road
49.2 The Shops on Memorial 5535 Memorial Drive
50 2 Mistwood Townhomes 2905-3075 40th Ave Southwest
51 2 Calder Commons 520 East Calder Way
52 2 Cypress Springs 3651 North Rancho Drive
53 2 Otter Run Apartments 1025 Assisi Lane
54 1 AmCap - 84th & Pecos 1407-1575 West 84th Avenue
55 2 Woodcreek Senior Commons 1625 Woodcreek Drive
56 1 Lincoln Road Plaza 825-845 Lincoln Road
57 1 Route 6 Plaza 3580 Mohegan Avenue
58 1 River Chase Office Center 4431 North Front Street
59 1 Troutdale Commons 31301 Southwest 257th Avenue
60 1 AmCap - Jewell & Wadsworth 1927 South Wadsworth Boulevard
61 2 Cherokee Mobile Village 10540 East Apache Trail
62 2 Ashley Club Apartments 2101 Scenic Highway
63 1 L Street Self Storage 707 L Street
64 1 Lakeside Office Park 4704 Harlan Street
65 2 Mallard Cove Apartments 2900 Mayport Road
66 2 Kensington Apartments 23525 Arlington Avenue
67 1 Mini U Storage- Fairfax Station 10930 Clara Barton Drive
68 1 Park Meadows Medical 9218 Kimmer Drive
69 1 Bannockburn Mediplex Office Building 2151 Waukegan Road
70 1 York Farm Estates 1870 Baldwin Road
71 2 Candle Park South 2728-2924 15th Street South, and 1425-1502 30th Avenue
South, and 1501 31st Avenue South
72 1 2301 Glades 2301 Glades Road
73 1 Methodist Medical Building 8120 Timberlake Way
74 2 Pleasant Grove 1441 North Jim Miller Road
75 2 Valley Stream Village II Apartments 110 Valley Stream Drive
76 1 Springfield Self Storage 7711 Loisdale Road
77 1 Mizner Place 12300 South Shore Boulevard
78 2 Brandon Oaks 110 Summerfield Way
79 2 Miller Lake Apartments 5400-5500 Southwest 77th Court
80 1 Walgreens - Elgin 1700 Larkin Avenue
81 1 388 West Broadway 388 West Broadway
82 1 Independence Park Shopping Center 3020 Legacy Drive
83 1 Walgreens - Colorado Springs 1730 Platte Avenue East
84 1 Forest Hill Centre 140 Forest Hill Centre
85 2 Arbor Club Apartments 700 East College Boulevard
86 1 Cordova Towne Center Phases II & III 1100, 1134-1138 North Germantown Parkway
87 1 North Denver Industrial 3857-3895 Steele Street
88 1 Beachwalk Center 130 Scenic Highway (US Highway 98 East)
89 1 Walgreens - Tropicana Avenue 4905 West Tropicana Avenue
90 1 Rite Aid - Las Vegas 1815 East Flamingo Road
91 2 Schooner Landing 7100 Shoreline Drive
92 1 Palm Valley Pavilions East 1375-1475 North Litchfield Road
93 1 CRS Tower 8035 East R.L. Thornton Freeway
94 1 Rancho Palomino Medical Center 630 South Rancho Drive
95 1 Randhurst Crossings Shopping Center 1 West Rand Road
96 1 Walgreens - Omaha 8989 West Dodge Road
97 2 Plaza Apartments 400 Ralph Street
98 1 Walgreens - Thrasher's Corner, WA 20812 Bothell Everett Highway
99 2 Bit O Home MHP 5002 West McFadden Avenue
CROSS COLLATERALIZED
AND CROSS DEFAULTED
CITY STATE ZIP CODE LOAN FLAG
- ------------------------------------------------------------------------
Portland OR 97232
Philadelphia PA 19107
New York NY 10016
Washington DC 20036
Sacramento CA 95834
Columbia SC 29212
New York NY 10023
Glendale AZ 85308
Lakewood CO 80228
Overland Park KS 66223
Washington DC DC 20037
Mount Kisco NY 10549
Lanham MD 20706
Framingham MA 01701
Henderson NV 89052
Portland OR 97201
Washington DC 20007
San Diego CA 92115
Parkland FL 33067
Wilmington MA 01887
Raleigh NC 27609
Durham NC 27713
Various WI Various
Chippewa Falls WI 54729
Hobart WI 54115
San Diego CA 92111
Tumwater WA 98501
Christiana DE 19702
Miami FL 33178
Palm Beach Gardens FL 33410
Seabrook TX 77586
San Diego CA 92108
Austin TX 78705
Miami FL 33143
San Diego CA 92108
Simi Valley CA 93063
Fairview Heights IL 62208
Valencia CA 91355
Flowery Branch GA 30542
Norfolk VA 23502
Northbrook IL 60062
Sacramento CA 95827
Halfmoon NY 12065
Anchorage AK 99503
Phoenix AZ 85013
Ann Arbor MI 48104
Boone NC 28607
Des Moines IA 50309
Tempe AZ 85283
Westport CT 06880
Various TX Various
Katy TX 77449
Houston TX 77007
Fargo ND 58104
State College PA 16801
Las Vegas NV 89130
Atlantic Beach FL 32233 Atlantic Beach Portfolio
Federal Heights CO 80260
Fairfield CA 94534
Miami Beach FL 33139
Mohegan Lake NY 10547
Harrisburg PA 17110
Troutdale OR 97060
Lakewood CO 80232
Apache Junction AZ 85220
Pensacola FL 32503
Chula Vista CA 91911
Lakeside CO 80212
Atlantic Beach FL 32233 Atlantic Beach Portfolio
Torrance CA 90501
Fairfax Station VA 22039
Lone Tree CO 80124
Bannockburn IL 60015
Yorktown Heights NY 10598
Fargo ND 58103
Boca Raton FL 33431
Sacramento CA 95823
Dallas TX 75217
Christiana DE 19702
Springfield VA 22150
Wellington FL 33414
Brandon FL 33510
Miami FL 33155
Elgin IL 60123
New York NY 10012
Plano TX 75023
Colorado Springs CO 80909
Lexington NC 27295
Pensacola FL 32503
Cordova TN 38016
Denver CO 80205
Destin FL 32550
Las Vegas NV 89103
Las Vegas NV 89119
Stockton CA 95219
Goodyear AZ 85338
Dallas TX 75228 Boxer
Las Vegas NV 89106
Mount Prospect IL 60056
Omaha NE 68114
White Settlement TX 76108
Bothell WA 98021
Santa Ana CA 92704 Eggleston 1
% OF
AGGREGATE % OF LOAN
LOAN GENERAL PROPERTY SPECIFIC PROPERTY ORIGINAL LOAN CUT-OFF DATE LOAN CUT-OFF DATE GROUP 1
ORIGINATOR TYPE TYPE BALANCE ($) BALANCE ($) BALANCE BALANCE
- ----------------------------------------------------------------------------------------------------------------------------
Wachovia Retail Anchored 70,000,000.00 69,922,220.75 5.82% 7.77%
Wachovia Office CBD 45,000,000.00 44,919,181.80 3.74% 4.99%
Wachovia Office CBD 35,000,000.00 35,000,000.00 2.91% 3.89%
Wachovia Multifamily Conventional 29,000,000.00 28,902,056.77 2.41% 0.00%
Wachovia Multifamily Conventional 27,000,000.00 27,000,000.00 2.25% 3.00%
Wachovia Retail Anchored 25,900,000.00 25,900,000.00 2.16% 2.88%
Wachovia Office CBD 25,000,000.00 24,953,568.34 2.08% 2.77%
Wachovia Multifamily Conventional 24,200,000.00 24,200,000.00 2.02% 0.00%
NCCI Retail Anchored 20,791,000.00 20,726,538.48 1.73% 2.30%
CGM Multifamily Conventional 20,800,000.00 20,649,186.19 1.72% 0.00%
Wachovia Office CBD 18,250,000.00 18,250,000.00 1.52% 2.03%
Wachovia Office Medical 18,000,000.00 17,965,895.32 1.50% 2.00%
CGM Office Suburban 17,120,000.00 17,120,000.00 1.43% 1.90%
Wachovia Multifamily Conventional 17,000,000.00 17,000,000.00 1.42% 1.89%
CGM Retail Anchored 17,000,000.00 16,904,637.36 1.41% 1.88%
CGM Mixed Use Retail/Office 16,850,000.00 16,759,444.83 1.40% 1.86%
CGM Office Suburban 16,500,000.00 16,482,870.79 1.37% 1.83%
Wachovia Retail Anchored 16,300,000.00 16,281,990.26 1.36% 1.81%
Wachovia Retail Anchored 16,000,000.00 15,968,668.70 1.33% 1.77%
NCCI Industrial Flex 15,500,000.00 15,403,979.71 1.28% 1.71%
CGM Retail Anchored 15,310,000.00 15,216,679.80 1.27% 1.69%
Wachovia Multifamily Conventional 15,000,000.00 15,000,000.00 1.25% 0.00%
Wachovia Industrial Distribution 15,000,000.00 14,971,010.41 1.25% 1.66%
Wachovia Industrial Distribution
Wachovia Industrial Distribution
Wachovia Office Suburban 15,000,000.00 14,967,091.25 1.25% 1.66%
AMCC Office Suburban 14,500,000.00 14,471,606.00 1.21% 1.61%
Wachovia Multifamily Conventional 14,250,000.00 14,220,416.33 1.18% 0.00%
AMCC Office Suburban 14,145,000.00 14,145,000.00 1.18% 1.57%
Wachovia Retail Anchored 14,000,000.00 13,959,816.03 1.16% 1.55%
Wachovia Multifamily Conventional 13,200,000.00 13,173,063.39 1.10% 0.00%
Wachovia Office Suburban 13,000,000.00 12,971,419.02 1.08% 1.44%
CGM Multifamily Student Housing 12,400,000.00 12,361,475.06 1.03% 0.00%
Wachovia Multifamily Conventional 12,000,000.00 11,986,106.69 1.00% 0.00%
Wachovia Office Suburban 12,000,000.00 11,976,036.27 1.00% 1.33%
CGM Retail Anchored 11,000,000.00 10,940,994.37 0.91% 1.22%
Wachovia Retail Anchored 10,800,000.00 10,777,960.96 0.90% 1.20%
CGM Retail Anchored 10,550,000.00 10,529,295.73 0.88% 1.17%
Wachovia Retail Anchored 10,560,000.00 10,527,461.29 0.88% 1.17%
Wachovia Hospitality Full Service 10,350,000.00 10,334,433.77 0.86% 1.15%
NCCI Office Suburban 9,950,000.00 9,939,006.32 0.83% 1.10%
CGM Office Suburban 9,825,000.00 9,825,000.00 0.82% 1.09%
AMCC Multifamily Conventional 9,480,000.00 9,465,567.24 0.79% 0.00%
AMCC Office Suburban 8,890,000.00 8,861,748.93 0.74% 0.98%
AMCC Multifamily Conventional 8,750,000.00 8,750,000.00 0.73% 0.00%
NCCI Office Suburban 8,250,000.00 8,241,138.48 0.69% 0.92%
Wachovia Retail Anchored 8,100,000.00 8,090,587.04 0.67% 0.90%
CGM Office CBD 7,900,000.00 7,885,097.89 0.66% 0.88%
CGM Mixed Use Office/Retail 7,500,000.00 7,457,061.86 0.62% 0.83%
CGM Retail Anchored 7,450,000.00 7,411,726.97 0.62% 0.82%
NCCI Retail Unanchored 7,250,000.00 7,237,414.01 0.60% 0.80%
NCCI Retail Unanchored
NCCI Retail Unanchored
AMCC Multifamily Conventional 7,250,000.00 7,234,884.03 0.60% 0.00%
Wachovia Multifamily Student Housing 7,250,000.00 7,234,558.17 0.60% 0.00%
CGM Multifamily Conventional 7,200,000.00 7,176,884.42 0.60% 0.00%
AMCC Multifamily Conventional 7,100,000.00 7,091,702.96 0.59% 0.00%
NCCI Retail Anchored 7,049,000.00 7,027,144.91 0.59% 0.78%
CGM Multifamily Senior Housing 7,000,000.00 6,977,064.39 0.58% 0.00%
Wachovia Retail Shadow Anchored 7,000,000.00 6,974,213.35 0.58% 0.78%
CGM Retail Anchored 7,000,000.00 6,960,286.83 0.58% 0.77%
Wachovia Office Suburban 6,800,000.00 6,786,771.31 0.57% 0.75%
CGM Retail Anchored 6,600,000.00 6,587,328.41 0.55% 0.73%
NCCI Retail Anchored 6,560,000.00 6,539,661.03 0.54% 0.73%
NCCI Mobile Home Park Mobile Home Park 6,500,000.00 6,492,750.50 0.54% 0.00%
NCCI Multifamily Conventional 6,500,000.00 6,479,470.60 0.54% 0.00%
NCCI Self Storage Self Storage 6,500,000.00 6,474,996.69 0.54% 0.72%
NCCI Office Suburban 6,500,000.00 6,467,294.09 0.54% 0.72%
AMCC Multifamily Conventional 6,400,000.00 6,392,520.99 0.53% 0.00%
NCCI Multifamily Conventional 6,200,000.00 6,193,200.97 0.52% 0.00%
Wachovia Self Storage Self Storage 6,065,000.00 6,055,667.53 0.50% 0.67%
AMCC Office Medical 6,050,000.00 6,043,188.89 0.50% 0.67%
Wachovia Office Medical 6,000,000.00 6,000,000.00 0.50% 0.67%
Wachovia Multifamily Conventional 6,000,000.00 5,986,529.37 0.50% 0.67%
AMCC Multifamily Conventional 5,700,000.00 5,687,176.14 0.47% 0.00%
Wachovia Retail Mixed Use 5,625,000.00 5,625,000.00 0.47% 0.63%
CGM Office Medical 5,512,500.00 5,432,597.20 0.45% 0.60%
NCCI Multifamily Conventional 5,450,000.00 5,427,748.84 0.45% 0.00%
Wachovia Multifamily Conventional 5,360,000.00 5,349,062.11 0.45% 0.00%
Wachovia Self Storage Self Storage 5,350,000.00 5,327,132.12 0.44% 0.59%
AMCC Office Suburban 5,150,000.00 5,150,000.00 0.43% 0.57%
AMCC Multifamily Conventional 4,990,000.00 4,990,000.00 0.42% 0.00%
Wachovia Multifamily Conventional 4,852,000.00 4,835,281.00 0.40% 0.00%
Wachovia Retail Anchored 4,800,000.00 4,790,885.31 0.40% 0.53%
NCCI Retail Shadow Anchored 4,800,000.00 4,787,693.45 0.40% 0.53%
AMCC Retail Shadow Anchored 4,750,000.00 4,740,860.19 0.39% 0.53%
Wachovia Retail Anchored 4,675,000.00 4,655,115.95 0.39% 0.52%
NCCI Retail Anchored 4,500,000.00 4,490,027.66 0.37% 0.50%
NCCI Multifamily Conventional 4,500,000.00 4,485,787.34 0.37% 0.00%
AMCC Retail Shadow Anchored 4,400,000.00 4,386,498.12 0.37% 0.49%
AMCC Industrial Warehouse 4,300,000.00 4,300,000.00 0.36% 0.48%
NCCI Retail Anchored 4,160,000.00 4,155,976.11 0.35% 0.46%
Wachovia Retail Anchored 4,100,000.00 4,095,918.43 0.34% 0.46%
Wachovia Retail Anchored 4,384,507.18 4,074,728.81 0.34% 0.45%
Wachovia Multifamily Conventional 4,000,000.00 3,995,149.20 0.33% 0.00%
Wachovia Retail Shadow Anchored 4,000,000.00 3,975,279.41 0.33% 0.44%
NCCI Office Suburban 3,975,000.00 3,948,884.45 0.33% 0.44%
Wachovia Office Medical 3,900,000.00 3,888,032.43 0.32% 0.43%
Wachovia Retail Shadow Anchored 3,900,000.00 3,869,709.40 0.32% 0.43%
Wachovia Retail Anchored 3,789,600.00 3,778,859.73 0.31% 0.42%
NCCI Multifamily Conventional 3,700,000.00 3,685,312.08 0.31% 0.00%
AMCC Retail Anchored 3,620,000.00 3,612,849.14 0.30% 0.40%
NCCI Mobile Home Park Mobile Home Park 3,600,000.00 3,596,125.85 0.30% 0.00%
LOAN
% OF LOAN ADMINISTRATIVE INTEREST
GROUP 2 ORIGINATION FIRST PAY MATURITY DATE MORTGAGE COST RATE ACCRUAL
BALANCE DATE DATE OR ARD RATE (%) (%) METHOD
- --------------------------------------------------------------------------------------------------------------
0.00% 12-May-2003 11-Jul-2003 11-Jun-2013 5.4200% 0.04210% Actual/360
0.00% 15-Apr-2003 11-Jun-2003 11-May-2013 6.0800% 0.04210% Actual/360
0.00% 7-Feb-2003 11-Mar-2003 11-Feb-2013 5.6700% 0.04210% Actual/360
9.60% 13-Mar-2003 11-May-2003 11-Apr-2013 5.1500% 0.04210% Actual/360
0.00% 18-Mar-2003 11-May-2003 11-Apr-2013 5.8000% 0.04210% Actual/360
0.00% 3-Jun-2003 11-Jul-2003 11-Jun-2010 4.0400% 0.04210% 30/360
0.00% 22-Apr-2003 11-Jun-2003 11-May-2013 5.9300% 0.04210% Actual/360
8.04% 31-Mar-2003 11-May-2003 11-Apr-2013 5.4500% 0.04210% Actual/360
0.00% 12-Mar-2003 11-May-2003 11-Apr-2013 5.5700% 0.04210% Actual/360
6.86% 14-Nov-2002 1-Jan-2003 1-Dec-2012 5.6400% 0.14710% Actual/360
0.00% 2-May-2003 11-Jun-2003 11-May-2013 5.9600% 0.04210% Actual/360
0.00% 25-Apr-2003 11-Jun-2003 11-May-2013 5.8400% 0.04210% Actual/360
0.00% 17-Jan-2003 1-Mar-2003 1-Feb-2012 5.7250% 0.04210% Actual/360
0.00% 25-Apr-2003 11-Jun-2003 11-May-2013 5.4700% 0.04210% Actual/360
0.00% 28-Jan-2003 1-Mar-2003 1-Feb-2012 5.4200% 0.04210% Actual/360
0.00% 9-Jan-2003 1-Mar-2003 1-Feb-2012 5.6500% 0.05210% Actual/360
0.00% 5-May-2003 1-Jul-2003 1-Jun-2013 5.7800% 0.04210% Actual/360
0.00% 14-May-2003 11-Jul-2003 11-Jun-2013 5.4500% 0.04210% Actual/360
0.00% 24-Apr-2003 11-Jun-2003 11-May-2013 5.6900% 0.04210% Actual/360
0.00% 21-Nov-2002 11-Jan-2003 11-Dec-2012 6.4000% 0.04210% Actual/360
0.00% 27-Dec-2002 1-Feb-2003 1-Jan-2013 5.8200% 0.04210% Actual/360
4.98% 2-Apr-2003 11-May-2003 11-Apr-2013 5.3600% 0.04210% Actual/360
0.00% 7-May-2003 11-Jun-2003 11-May-2013 5.7500% 0.04210% Actual/360
0.00% 17-Apr-2003 11-Jun-2003 11-May-2010 5.1600% 0.04210% Actual/360
0.00% 13-Apr-2003 11-Jun-2003 11-May-2012 5.6900% 0.04210% Actual/360
4.72% 30-Apr-2003 11-Jun-2003 11-May-2013 5.4200% 0.04210% Actual/360
0.00% 1-May-2003 11-Jun-2003 11-May-2011 5.5000% 0.04210% Actual/360
0.00% 1-Apr-2003 11-May-2003 11-Apr-2013 5.9400% 0.04210% Actual/360
4.38% 30-Apr-2003 11-Jun-2003 11-May-2013 5.5000% 0.04210% Actual/360
0.00% 16-Apr-2003 11-Jun-2003 11-May-2010 5.1500% 0.04210% Actual/360
4.11% 1-Apr-2003 1-May-2003 1-Apr-2012 5.5600% 0.04210% Actual/360
3.98% 2-Jun-2003 11-Jul-2003 11-Jun-2010 5.2000% 0.04210% Actual/360
0.00% 16-Apr-2003 11-Jun-2003 11-May-2013 5.6000% 0.04210% Actual/360
0.00% 2-Jan-2003 1-Mar-2003 1-Feb-2008 5.6600% 0.04210% Actual/360
0.00% 1-May-2003 11-Jun-2003 11-May-2013 5.5000% 0.04210% Actual/360
0.00% 8-Apr-2003 1-Jun-2003 1-May-2013 5.6800% 0.10210% Actual/360
0.00% 24-Mar-2003 11-May-2003 11-Apr-2013 5.6000% 0.04210% Actual/360
0.00% 30-May-2003 11-Jul-2003 11-Jun-2013 5.7300% 0.04210% Actual/360
0.00% 5-Jun-2003 11-Jul-2003 11-Jun-2013 5.4500% 0.04210% Actual/360
0.00% 18-Jun-2003 1-Aug-2003 1-Jul-2013 5.6500% 0.10210% Actual/360
3.14% 15-May-2003 11-Jul-2003 11-Jun-2013 5.6500% 0.04210% Actual/360
0.00% 26-Mar-2003 11-May-2003 11-Apr-2009 5.4500% 0.04210% Actual/360
2.91% 4-Jun-2003 11-Jul-2003 11-Jun-2010 5.0000% 0.04210% Actual/360
0.00% 21-May-2003 11-Jul-2003 11-Jun-2013 5.6000% 0.04210% Actual/360
0.00% 29-May-2003 11-Jul-2003 11-Jun-2013 5.1800% 0.04210% Actual/360
0.00% 7-Apr-2003 1-Jun-2003 1-May-2013 5.8600% 0.08210% Actual/360
0.00% 23-Jan-2003 1-Mar-2003 1-Feb-2008 5.3100% 0.10210% Actual/360
0.00% 31-Jan-2003 1-Mar-2003 1-Feb-2013 5.8900% 0.04210% Actual/360
0.00% 24-Apr-2003 11-Jun-2003 11-May-2013 6.2300% 0.09210% Actual/360
2.40% 17-Apr-2003 11-Jun-2003 11-May-2013 5.4000% 0.04210% Actual/360
2.40% 6-May-2003 11-Jun-2003 11-May-2013 5.3000% 0.08210% Actual/360
2.38% 14-Mar-2003 1-May-2003 1-Apr-2013 5.4000% 0.07210% Actual/360
2.36% 29-May-2003 11-Jul-2003 11-Jun-2013 5.1500% 0.04210% Actual/360
0.00% 12-Mar-2003 11-May-2003 11-Apr-2013 5.5700% 0.04210% Actual/360
2.32% 20-Mar-2003 1-May-2003 1-Apr-2012 5.3000% 0.08210% Actual/360
0.00% 18-Feb-2003 11-Apr-2003 11-Mar-2013 5.9900% 0.04210% Actual/360
0.00% 6-Dec-2002 1-Feb-2003 1-Jan-2013 6.1800% 0.04210% Actual/360
0.00% 6-May-2003 11-Jun-2003 11-May-2013 5.7200% 0.04210% Actual/360
0.00% 10-Apr-2003 1-Jun-2003 1-May-2013 5.7800% 0.08210% Actual/360
0.00% 12-Mar-2003 11-May-2003 11-Apr-2013 5.5700% 0.04210% Actual/360
2.16% 15-May-2003 11-Jul-2003 11-Jun-2013 5.4000% 0.04210% Actual/360
2.15% 8-Apr-2003 11-May-2003 11-Apr-2013 5.4800% 0.09210% Actual/360
0.00% 25-Mar-2003 11-May-2003 11-Apr-2013 6.5000% 0.04210% Actual/360
0.00% 10-Jan-2003 11-Mar-2003 11-Feb-2013 6.0000% 0.04210% Actual/360
2.12% 29-May-2003 11-Jul-2003 11-Jun-2013 5.1500% 0.04210% Actual/360
2.06% 21-May-2003 11-Jul-2003 11-Jun-2013 5.4900% 0.09210% Actual/360
0.00% 30-May-2003 11-Jul-2003 11-Jun-2013 5.5800% 0.08210% Actual/360
0.00% 4-Jun-2003 11-Jul-2003 11-Jun-2013 5.3500% 0.04210% Actual/360
0.00% 16-Apr-2003 11-Jun-2003 11-May-2013 5.6200% 0.04210% Actual/360
0.00% 25-Apr-2003 11-Jun-2003 11-May-2013 5.0500% 0.04210% Actual/360
1.89% 1-May-2003 11-Jun-2003 11-May-2013 5.0400% 0.04210% Actual/360
0.00% 24-Dec-2002 11-Feb-2003 11-Jan-2013 5.9300% 0.04210% Actual/360
0.00% 1-Nov-2001 1-Jan-2002 1-Dec-2011 7.1500% 0.04210% Actual/360
1.80% 28-Feb-2003 11-Apr-2003 11-Mar-2013 5.5200% 0.04210% Actual/360
1.78% 15-Apr-2003 11-Jun-2003 11-May-2013 5.5000% 0.04210% Actual/360
0.00% 26-Mar-2003 11-May-2003 11-Apr-2013 5.8700% 0.04210% Actual/360
0.00% 22-Apr-2003 11-Jun-2003 11-May-2013 5.6400% 0.04210% Actual/360
1.66% 21-May-2003 11-Jul-2003 11-Jun-2020 5.4700% 0.04210% Actual/360
1.61% 4-Apr-2003 11-May-2003 11-Apr-2010 5.0500% 0.04210% Actual/360
0.00% 5-May-2003 11-Jun-2003 11-May-2013 5.8300% 0.04210% Actual/360
0.00% 23-Apr-2003 11-Jun-2003 11-May-2013 6.3500% 0.04210% Actual/360
0.00% 7-May-2003 11-Jun-2003 11-May-2013 5.7700% 0.04210% Actual/360
0.00% 8-Apr-2003 11-May-2003 11-Apr-2013 5.9000% 0.04210% Actual/360
0.00% 9-May-2003 11-Jul-2003 11-Jun-2023 5.8000% 0.06210% Actual/360
1.49% 8-Apr-2003 11-May-2003 11-Apr-2013 5.4800% 0.09210% Actual/360
0.00% 3-Apr-2003 11-May-2003 11-Apr-2013 5.6200% 0.04210% Actual/360
0.00% 12-Jun-2003 11-Aug-2003 11-Jul-2010 5.2000% 0.04210% Actual/360
0.00% 11-Jun-2003 11-Jul-2003 11-Jun-2013 6.1500% 0.04210% Actual/360
0.00% 16-May-2003 11-Jul-2003 11-Jun-2013 6.0000% 0.04210% Actual/360
0.00% 26-Aug-1999 15-Oct-1999 15-Jun-2024 6.9100% 0.04210% 30/360
1.33% 13-May-2003 11-Jul-2003 11-Jun-2013 4.9500% 0.08210% Actual/360
0.00% 23-Dec-2002 11-Feb-2003 11-Jan-2013 5.7500% 0.08210% Actual/360
0.00% 11-Dec-2002 11-Jan-2003 11-Dec-2012 6.1200% 0.04210% Actual/360
0.00% 8-Apr-2003 11-May-2003 11-Apr-2013 5.6200% 0.04210% Actual/360
0.00% 31-Oct-2002 11-Dec-2002 11-Nov-2012 6.0000% 0.04210% Actual/360
0.00% 8-Apr-2003 11-May-2003 11-Apr-2013 6.0000% 0.04210% Actual/360
1.22% 10-Mar-2003 11-Apr-2003 11-Mar-2013 5.6500% 0.04210% Actual/360
0.00% 17-Apr-2003 11-Jun-2003 11-May-2013 5.6500% 0.04210% Actual/360
1.19% 9-May-2003 11-Jul-2003 11-Jun-2013 5.5900% 0.04210% Actual/360
INTEREST ORIGINAL REMAINING
ACCURAL TERM TO TERM TO REMAINING ORIGINAL REMAINING MATURITY DATE OR
METHOD MATURITY OR MATURITY OR IO PERIOD AMORT TERM AMORT TERM MONTHLY P&I ARD BALLOON ARD
DURING IO ARD (MOS.) ARD (MOS.) (MOS.) (MOS.) (MOS.) PAYMENTS ($) BALANCE ($) LOANS
- ------------------------------------------------------------------------------------------------------------------------------------
120 119 360 359 393,945.92 58,339,911.91 Y
120 118 360 358 272,116.59 38,265,684.18 Y
Actual/360 120 115 19 300 300 218,498.37 28,829,379.09 N
120 117 360 357 158,347.61 23,963,300.50 N
Actual/360 120 117 27 360 360 158,423.32 24,063,231.86 N
30/360 84 83 83 (IO) (IO) (IO) 25,900,000.00 N
120 118 360 358 148,764.38 21,164,785.72 N
Actual/360 120 117 3 360 360 136,646.73 20,443,592.24 N
120 117 360 357 118,963.75 17,409,122.45 Y
120 113 360 353 119,933.59 17,451,879.22 N
Actual/360 120 118 34 360 360 108,949.08 16,481,553.23 N
120 118 360 358 106,074.49 15,197,705.99 N
Actual/360 108 103 7 336 336 102,344.79 14,745,315.25 N
Actual/360 120 118 34 360 360 96,204.39 15,202,054.68 N
108 103 360 355 95,672.58 14,521,183.50 Y
108 103 360 355 97,264.23 14,483,607.17 N
120 119 360 359 96,604.21 13,904,674.36 N
120 119 360 359 92,038.91 13,597,623.13 N
120 118 360 358 92,762.70 13,447,880.01 N
120 113 360 353 96,953.42 13,298,971.20 Y
120 114 360 354 90,026.98 12,914,536.39 N
Actual/360 120 117 21 360 360 83,855.47 13,095,940.08 N
120 118 360 358 87,535.93 12,630,409.95 N
84 82 360 358 81,996.38 13,326,543.77 Y
108 106 360 358 84,066.20 12,483,379.39 Y
120 118 360 358 80,196.13 11,877,406.44 N
Actual/360 96 94 52 360 360 80,313.76 13,469,563.42 Y
120 117 360 357 83,397.79 11,854,801.12 N
120 118 360 358 74,948.15 11,029,756.47 N
84 82 360 358 70,983.41 11,547,190.69 Y
108 105 360 357 70,873.34 10,637,165.72 N
84 83 360 359 65,893.31 10,669,838.73 N
120 118 360 358 68,889.48 10,058,130.57 N
60 55 360 355 63,565.49 10,241,503.80 N
120 118 360 358 61,321.21 9,024,346.78 N
120 118 360 358 61,098.60 8,864,489.94 N
120 117 360 357 60,622.74 8,850,480.82 N
120 119 300 299 64,987.48 7,943,258.35 N
120 119 360 359 56,183.26 8,300,389.31 N
120 120 360 360 56,713.42 8,247,589.65 N
120 119 300 299 59,067.76 7,255,440.59 N
72 69 360 357 50,197.92 8,104,823.73 Y
Actual/360 84 83 23 360 360 46,971.90 8,069,677.05 N
120 119 360 359 47,361.52 6,914,307.81 N
120 119 360 359 44,377.96 6,699,550.93 N
120 118 360 358 46,655.78 6,674,106.62 N
60 55 360 355 41,694.44 6,948,192.70 N
120 115 360 355 44,141.01 6,296,839.17 N
120 118 360 358 44,545.23 6,191,961.61 N
120 118 360 358 40,710.99 6,039,096.05 N
120 118 360 358 40,259.59 6,020,047.94 Y
120 117 360 357 40,430.22 5,997,018.94 N
120 119 360 359 38,767.87 5,866,779.75 N
120 117 360 357 40,333.58 5,902,405.09 Y
108 105 360 357 38,871.33 5,961,771.89 N
120 116 360 356 41,923.54 5,936,820.58 N
120 114 360 354 42,782.02 5,967,655.76 N
120 118 360 358 39,553.46 5,720,572.52 N
120 118 360 358 38,641.68 5,562,429.19 N
120 117 360 357 37,535.58 5,492,946.14 Y
120 119 360 359 36,499.50 5,413,879.88 N
120 117 360 357 36,824.76 5,427,539.82 N
120 117 300 297 43,888.47 5,118,994.34 N
120 115 360 355 38,970.78 5,511,786.62 N
120 119 360 359 34,945.68 5,288,365.79 N
120 119 360 359 35,164.03 5,178,555.59 N
120 119 300 299 37,534.72 4,630,498.70 N
120 119 360 359 33,784.03 5,031,146.53 N
Actual/360 120 118 22 336 336 35,482.51 5,154,769.84 N
120 118 360 358 32,392.89 4,942,206.41 N
120 118 360 358 30,738.33 4,693,565.04 N
Actual/360 120 114 18 360 360 33,471.99 4,976,538.07 N
120 101 360 341 37,231.80 4,825,749.02 N
120 116 360 356 31,012.92 4,556,867.22 N
120 118 360 358 30,433.49 4,478,749.79 N
120 117 300 297 34,046.23 4,125,813.28 N
Actual/360 120 118 13 360 360 29,695.10 4,451,218.70 N
Actual/360 204 203 35 204 204 37,623.44 1,307,708.93 N
84 81 360 357 26,195.05 4,300,295.82 N
120 118 360 358 28,255.91 4,051,504.40 N
120 118 300 298 31,961.49 3,762,108.43 N
120 118 360 358 27,780.10 4,002,051.39 N
120 117 300 297 29,835.97 3,608,955.80 Y
240 239 240 239 31,722.34 100,849.79 N
120 117 360 357 25,494.07 3,757,527.57 N
120 117 360 357 25,315.00 3,689,966.54 N
84 84 300 300 25,640.97 3,617,888.84 N
120 119 360 359 25,343.89 3,544,286.18 N
120 119 360 359 24,581.57 3,477,861.81 Y
297 251 297 251 30,737.51 0.00 N
120 119 360 359 21,350.80 3,283,779.18 N
120 114 360 354 23,342.91 3,367,041.86 N
120 113 360 353 24,139.67 3,383,270.66 N
120 117 360 357 22,438.29 3,270,653.09 N
120 112 360 352 23,382.47 3,307,511.02 N
120 117 360 357 22,720.57 3,214,629.59 Y
120 116 360 356 21,357.72 3,106,081.55 N
120 118 360 358 20,895.94 3,038,864.45 N
120 119 360 359 20,644.15 3,016,224.13 N
CUT-OFF DATE
APPRAISED APPRAISAL LTV RATIO
PREPAYMENT PROVISIONS VALUE ($) DATE DSCR (x) (1) (1)
- -------------------------------------------------------------------------------------------------------
L(25),D(91),O(4) 220,100,000 1-May-2003 1.83 63.54%
L(26),D(92),O(2) 56,700,000 3-Mar-2003 1.22 79.22%
L(29),D(87),O(4) 60,000,000 1-Jan-2003 1.60 58.33%
L(48),YM2%(60),YM(9),O(3) 38,000,000 21-Feb-2003 1.38 76.06%
L(48),D(69),O(3) 34,400,000 14-Feb-2003 1.22 78.49%
L(25),GRTR1%orYM(56),O(3) 47,400,000 23-Dec-2002 3.42 54.64%
L(26),D(91),O(3) 39,800,000 8-Oct-2002 1.69 62.70%
L(37),GRTR1%orYM/Defeasance(77),O(6) 33,000,000 11-Mar-2003 1.25 73.33%
L(27),D(57),O(36) 26,000,000 18-Dec-2002 1.36 79.72%
L(31),D(87),O(2) 26,200,000 3-Nov-2002 1.38 78.81%
L(36),GRTR1%orYM/Defeasance(81),O(3) 24,800,000 1-Apr-2003 1.29 73.59%
L(48),D(69),O(3) 22,500,000 18-Mar-2003 1.47 79.85%
L(29),D(77),O(2) 21,500,000 13-Dec-2002 1.45 79.63%
L(36),D(75),O(9) 23,000,000 27-Feb-2003 1.31 73.91%
L(29),D(76),O(3) 24,600,000 2-Dec-2002 1.45 68.72%
L(29),D(77),O(2) 22,000,000 9-Oct-2002 1.36 76.18%
L(25),D(93),O(2) 21,500,000 1-Mar-2003 1.33 76.66%
L(48),D(66),O(6) 21,500,000 17-Apr-2003 1.28 75.73%
L(48),D(69),O(3) 20,100,000 24-Feb-2003 1.35 79.45%
L(31),D(86),O(3) 22,200,000 10-Oct-2002 1.48 69.39%
L(30),D(88),O(2) 19,500,000 18-Sep-2002 1.40 78.03%
L(36),D(80),O(4) 19,700,000 6-Feb-2003 1.31 76.14%
L(48),D(69),O(3) 19,200,000 Various 1.35 77.97%
6,950,000 5-Mar-2003
12,250,000 4-Mar-2003
L(26),D(55),O(3) 19,800,000 29-Jan-2003 1.36 75.59%
L(36),D(69),O(3) 17,750,000 11-Mar-2003 1.48 71.39%
L(26),D(91),O(3) 18,300,000 18-Feb-2003 1.43 77.71%
L(36),D(57),O(3) 20,500,000 4-Mar-2003 1.48 69.00%
L(48),D(68),O(4) 19,500,000 4-Feb-2003 1.40 71.59%
L(35),GRTR1%orYM(81),O(4) 16,530,000 27-Feb-2003 1.38 79.69%
L(26),D(55),O(3) 19,000,000 7-Feb-2003 1.46 68.27%
L(27),D(78),O(3) 15,875,000 11-Mar-2003 1.36 77.87%
L(25),D(56),O(3) 15,240,000 7-Apr-2003 1.29 78.65%
L(48),D(67),O(5) 15,100,000 20-Feb-2003 1.42 79.31%
L(29),D(29),O(2) 14,050,000 10-Sep-2002 1.52 77.87%
L(48),D(68),O(4) 13,700,000 1-Feb-2003 1.36 78.67%
L(26),D(92),O(2) 13,700,000 17-Dec-2002 1.45 76.86%
L(48),D(69),O(3) 13,200,000 20-Dec-2002 1.38 79.75%
L(48),D(69),O(3) 16,625,000 18-Apr-2003 1.77 62.16%
L(25),D(92),O(3) 12,600,000 19-Mar-2003 1.52 78.88%
L(24),D(94),O(2) 13,000,000 30-Apr-2003 1.39 75.58%
L(36),D(81),O(3) 12,000,000 1-Jun-2003 1.45 78.88%
L(36),D(33),O(3) 11,890,000 2-Jan-2003 1.69 74.53%
L(36),D(45),O(3) 12,200,000 9-May-2003 1.51 71.72%
L(25),D(92),O(3) 11,000,000 1-Feb-2003 1.41 74.92%
L(48),D(69),O(3) 10,200,000 21-Mar-2003 1.47 79.32%
L(26),D(91),O(3) 10,400,000 13-Feb-2003 1.41 75.82%
L(29),D(28),O(3) 10,005,000 20-Nov-2002 1.47 74.53%
L(29),D(88),O(3) 10,500,000 1-Feb-2003 1.41 70.59%
L(26),D(88),O(6) 9,850,000 5-Feb-2003 1.34 73.48%
1,760,000 5-Feb-2003
8,090,000 5-Feb-2003
L(36),D(81),O(3) 9,100,000 28-Feb-2003 1.43 79.50%
L(26),D(91),O(3) 10,400,000 12-Feb-2003 1.89 69.56%
L(27),D(90),O(3) 9,000,000 16-Jan-2003 1.41 79.74%
L(36),D(81),O(3) 10,700,000 1-Mar-2003 1.64 66.28%
L(27),D(57),O(36) 9,500,000 16-Dec-2002 1.16 73.97%
L(27),D(78),O(3) 8,470,000 5-Nov-2002 1.46 82.37%
L(48),D(69),O(3) 12,100,000 16-Dec-2002 1.78 57.64%
L(30),D(86),O(4) 8,800,000 1-Nov-2002 1.31 79.09%
L(26),D(90),O(4) 9,250,000 1-Apr-2004 1.41 73.37%
L(26),D(90),O(4) 9,170,000 17-Jan-2003 1.64 71.84%
L(27),D(57),O(36) 8,400,000 18-Dec-2002 1.09 77.85%
L(25),D(92),O(3) 8,550,000 31-Mar-2003 1.49 75.94%
L(27),D(90),O(3) 8,220,000 8-Jan-2003 1.51 78.83%
L(27),D(89),O(4) 8,800,000 5-May-2003 1.42 73.58%
L(29),D(85),O(6) 8,300,000 5-Dec-2002 1.47 77.92%
L(36),D(81),O(3) 8,500,000 1-Mar-2003 1.59 75.21%
L(25),D(92),O(3) 8,400,000 21-Jan-2003 1.53 73.73%
L(48),D(68),O(4) 8,120,000 17-Apr-2003 1.52 74.58%
L(36),D(81),O(3) 8,100,000 24-Apr-2003 1.50 74.61%
L(26),D(91),O(3) 8,650,000 30-Jan-2003 1.49 69.36%
L(48),D(69),O(3) 10,600,000 12-Mar-2003 2.19 56.48%
L(36),D(81),O(3) 8,000,000 18-Mar-2003 1.68 71.09%
L(30),D(87),O(3) 7,500,000 11-Nov-2002 1.41 75.00%
L(43),D(74),O(3) 7,350,000 15-Aug-2001 1.44 73.91%
L(28),D(86),O(6) 6,850,000 4-Feb-2003 1.49 79.24%
L(26),D(91),O(3) 6,700,000 18-Feb-2003 1.49 79.84%
L(49),D(67),O(4) 7,730,000 20-Feb-2003 1.31 68.92%
L(36),D(81),O(3) 6,925,000 1-May-2003 1.56 74.37%
L(36),D(165),O(3) 7,360,000 10-Apr-2003 1.18 67.80%
L(27),D(54),O(3) 7,100,000 23-Feb-2003 1.34 68.10%
L(48),D(69),O(3) 6,000,000 27-Mar-2003 1.28 79.85%
L(26),D(91),O(3) 7,000,000 15-Feb-2003 1.38 68.40%
L(26),D(91),O(3) 6,325,000 7-Mar-2003 1.55 74.95%
L(48),D(69),O(3) 6,000,000 24-Jan-2003 1.35 77.59%
L(25),D(209),O(6) 5,950,000 24-Mar-2003 1.20 75.46%
L(27),D(90),O(3) 6,000,000 8-Jan-2003 1.38 74.76%
L(36),D(81),O(3) 6,000,000 25-Feb-2003 1.62 73.11%
L(36),D(44),O(4) 6,000,000 1-May-2003 1.40 71.67%
L(25),D(92),O(3) 5,200,000 31-Dec-2002 1.43 79.92%
L(48),D(69),O(3) 5,425,000 31-Mar-2003 1.35 75.50%
L(95),YM(202) 4,700,000 1-Jun-1999 1.04 86.70%
L(25),D(92),O(3) 6,860,000 31-Mar-2003 1.38 58.24%
L(48),D(69),O(3) 5,310,000 15-Nov-2002 1.49 74.86%
L(36),D(81),O(3) 5,700,000 8-Nov-2002 1.57 69.28%
L(48),D(69),O(3) 5,600,000 11-Mar-2003 1.42 69.43%
L(32),D(85),O(3) 5,250,000 3-Oct-2002 1.50 73.71%
L(48),D(69),O(3) 4,850,000 1-May-2003 1.39 77.91%
L(28),D(86),O(6) 4,750,000 14-Feb-2003 1.40 77.59%
L(36),D(81),O(3) 5,200,000 9-Mar-2003 1.48 69.48%
L(25),D(92),O(3) 4,800,000 13-Feb-2003 1.40 74.92%
CUT-OFF DATE
LTV RATIO AT NUMBER LOAN
MATURITY OR YEAR YEAR OF UNITS UNIT OF AMOUNT PER OCCUPANCY
ARD (1) BUILT RENOVATED (UNITS) MEASURE (UNIT) ($) RATE (%)
- ----------------------------------------------------------------------------------------------------------------
53.01% 1960 1991 1,229,140 Sq. Ft. 114 95.11%
67.49% 1932 2001 464,420 Sq. Ft. 97 91.56%
48.05% 1928 1989 426,596 Sq. Ft. 82 100.00%
63.06% 1965 1999 304 Units 95,073 97.37%
69.95% 2002 280 Units 96,429 91.43%
54.64% 1999-2001 270,187 Sq. Ft. 96 97.54%
53.18% 1924 2002 112,080 Sq. Ft. 223 100.00%
61.95% 2001 336 Units 72,024 92.26%
66.96% 1978 1998 239,636 Sq. Ft. 86 97.57%
66.61% 2002 250 Units 82,597 97.20%
66.46% 1980 100,837 Sq. Ft. 181 97.50%
67.55% 1975 1996 120,211 Sq. Ft. 149 100.00%
68.58% 1984-1989 223,521 Sq. Ft. 77 83.03%
66.10% 1968 184 Units 92,391 97.28%
59.03% 2002 115,719 Sq. Ft. 146 92.95%
65.83% 1967 2000 158,820 Sq. Ft. 106 96.62%
64.67% 1964 2001 140,495 Sq. Ft. 117 83.95%
63.24% 1960 1999 193,912 Sq. Ft. 84 99.32%
66.90% 2000 145,652 Sq. Ft. 110 100.00%
59.91% 1958 2002 206,187 Sq. Ft. 75 100.00%
66.23% 1965 2002 78,116 Sq. Ft. 195 96.90%
66.48% 1999 288 Units 52,083 94.44%
65.78% Various 753,000 Sq. Ft. 20 100.00%
1998 & 2001 243,000 Sq. Ft. 100.00%
2001 510,000 Sq. Ft. 100.00%
67.31% 1983 126,756 Sq. Ft. 118 91.96%
60.19% 2003 93,509 Sq. Ft. 155 100.00%
64.90% 1987 243 Units 58,520 93.00%
65.71% 2002 78,634 Sq. Ft. 180 100.00%
60.79% 1986 153,067 Sq. Ft. 91 100.00%
66.73% 1985 277 Units 47,556 92.06%
60.77% 1984 108,477 Sq. Ft. 120 93.07%
67.01% 1982 267 Units 46,298 100.00%
70.01% 1967 1985 & 1996 224 Units 53,509 95.98%
66.61% 1989 78,167 Sq. Ft. 153 91.93%
72.89% 1966 1994 149,445 Sq. Ft. 73 92.71%
65.87% 1986 1995*2000*2002 210,553 Sq. Ft. 51 100.00%
64.70% 1995 47,748 Sq. Ft. 221 100.00%
67.05% 2002 92,883 Sq. Ft. 113 100.00%
47.78% 1984-1985 2000 249 Rooms 41,504 76.70%
65.88% 1986 116,000 Sq. Ft. 86 86.93%
63.44% 1978 1999 87,854 Sq. Ft. 112 96.59%
60.46% 1975-2003 266 Units 35,585 92.86%
68.17% 1977*1978 & 1997 2000 80,967 Sq. Ft. 109 100.00%
66.14% 2000 131 Units 66,794 88.55%
62.86% 1986 76,392 Sq. Ft. 108 100.00%
65.68% 1988 134,220 Sq. Ft. 60 98.51%
64.17% 1966-1968 1996-2002 168,392 Sq. Ft. 47 93.45%
69.45% 1986 2002 83,108 Sq. Ft. 90 87.28%
59.97% 1780 1998 14,850 Sq. Ft. 499 86.53%
62.86% Various 40,686 Sq. Ft. 178 83.39%
2003 10,660 Sq. Ft. 100.00%
2002 30,026 Sq. Ft. 77.50%
66.36% 2000-2003 91 Units 79,504 94.51%
57.89% 1991 2001-2002 87 Units 83,156 88.95%
66.63% 1994 144 Units 49,839 95.14%
54.83% 1989 2002 192 Units 36,936 83.85%
62.13% 1973 1998 96,057 Sq. Ft. 73 90.61%
70.39% 2002 96 Units 72,678 97.92%
49.06% 1925 2001*2002 21,213 Sq. Ft. 329 78.79%
67.81% 2002 35,660 Sq. Ft. 195 90.54%
61.84% 2002 66,664 Sq. Ft. 102 91.02%
60.66% 2000 39,596 Sq. Ft. 166 93.56%
65.39% 1978 1997 92,759 Sq. Ft. 71 97.36%
63.32% 1930 1995 414 Pads 15,683 97.80%
66.03% 1986 224 Units 28,926 88.84%
58.17% 2000 88,552 Sq. Ft. 73 92.00%
66.41% 1971 1999 116,047 Sq. Ft. 56 83.31%
62.22% 1987 2002 160 Units 39,953 91.88%
61.65% 1964 1999 94 Units 65,885 100.00%
57.03% 1986 828 Units 7,314 72.71%
62.11% 2002 34,685 Sq. Ft. 174 100.00%
59.59% 1973 2001-2003 40,849 Sq. Ft. 147 86.79%
46.62% 1997-2002 77 Units 77,747 100.00%
58.67% 1994-1996 115 Units 49,454 97.39%
66.35% 1979 1999-2000 19,998 Sq. Ft. 281 100.00%
65.66% 1990 47,035 Sq. Ft. 116 94.70%
66.52% 1965 2002 202 Units 26,870 91.58%
66.85% 2001 81 Units 66,038 92.59%
53.37% 1988 583 Units 9,137 72.01%
64.28% 2001 36,582 Sq. Ft. 141 94.07%
17.77% 1974 2002 160 Units 31,188 92.50%
60.57% 1970 1985*1993-1994 108 Units 44,771 96.30%
67.53% 2002 14,490 Sq. Ft. 331 100.00%
53.74% 1910 2002 3,659 Sq. Ft. 1,308 100.00%
63.27% 1994 2001 31,950 Sq. Ft. 148 100.00%
60.15% 2001 15,120 Sq. Ft. 308 100.00%
1.69% 1999 52,923 Sq. Ft. 85 97.17%
62.63% 1986 168 Units 26,701 95.83%
61.50% 2002 37,560 Sq. Ft. 117 98.67%
60.30% 1943 1999-2000 274,176 Sq. Ft. 16 96.68%
68.16% 1986 2002 52,840 Sq. Ft. 79 100.00%
64.11% 1999 15,120 Sq. Ft. 271 100.00%
0.00% 1999 16,708 Sq. Ft. 244 100.00%
47.87% 1988 114 Units 35,045 92.98%
63.41% 2000 35,188 Sq. Ft. 113 100.00%
59.36% 1972 82,301 Sq. Ft. 48 93.64%
58.40% 1991 29,306 Sq. Ft. 133 100.00%
63.00% 2001 17,207 Sq. Ft. 225 100.00%
66.28% 2003 14,560 Sq. Ft. 260 100.00%
65.39% 1969 1999 144 Units 25,592 93.06%
58.44% 2003 14,490 Sq. Ft. 249 100.00%
62.84% 1947 1957 80 Pads 44,952 100.00%
UW NET
OCCUPANCY MOST RECENT UW REVENUES UW EXPENSES OPERATING UW NET CASH
"AS OF" DATE MOST RECENT PERIOD NOI ($) ($) ($) INCOME ($) FLOW ($)
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25-Apr-2003 Budget July 2003 to June 2004 17,951,911 28,957,524 10,853,969 18,103,556 17,334,541
12-May-2003 2002 4,706,846 9,503,366 4,672,479 4,830,887 3,995,845
13-Jan-2003 AUP 2002 5,635,916 13,303,214 8,470,936 4,832,278 4,187,027
21-Jan-2003 2002 2,566,606 4,130,083 1,441,236 2,688,847 2,612,847
6-Mar-2003 2003 Budget 2,527,172 3,646,560 1,261,037 2,385,523 2,315,523
17-Apr-2003 10 Mo Ann. Ph. II & III 4,349,823 5,041,598 1,347,447 3,694,151 3,580,852
1-Apr-2003 2003/2004 Budget 3,391,557 4,709,331 1,557,060 3,152,271 3,017,157
1-Mar-2003 R12 - Feb 03 2,209,532 3,330,000 1,218,426 2,111,574 2,044,374
20-May-2003 Year ended Dec 31, 2002 1,964,164 2,967,410 824,547 2,142,863 1,946,887
1-Apr-2003 Annualized 6 mos. 4/30/03 2,699,266 2,890,370 844,204 2,046,166 1,983,666
31-Mar-2003 Jan-Mar 2003 Ann'l 1,978,261 3,189,042 1,357,745 1,831,297 1,692,589
21-Mar-2003 Year End 2002 2,093,530 3,438,240 1,386,213 2,052,026 1,874,533
30-Apr-2003 Full Year 2002 1,988,293 3,637,368 1,543,310 2,094,058 1,779,640
28-Feb-2003 Borrower Proforma 1,918,961 2,308,367 740,560 1,567,807 1,514,999
13-Jan-2003 Full Year 2002 1,685,806 2,287,452 556,876 1,730,576 1,665,650
16-Apr-2003 Annualized 10 mo. 12/31/02 1,559,810 2,371,582 629,953 1,741,629 1,585,551
25-Apr-2003 Full Year 2002 1,734,200 3,307,637 1,507,917 1,799,720 1,537,086
31-May-2003 2002 1,639,448 2,504,586 967,970 1,536,616 1,416,225
31-Mar-2003 2002 1,369,125 2,270,340 727,220 1,543,121 1,500,038
1-Jul-2003 2,623,930 736,265 1,887,665 1,724,193
31-Mar-2003 Full Year 2002 789,999 1,995,776 418,843 1,576,933 1,509,198
25-Mar-2003 T-12 Jan 2003 1,501,422 2,369,345 982,679 1,386,665 1,313,225
1-May-2003 2002 1,894,191 1,998,344 420,990 1,577,354 1,415,792
1-May-2003
1-May-2003
31-May-2003 2002 1,269,875 2,649,131 1,038,470 1,610,661 1,340,922
1-Apr-2003 1,845,387 279,415 1,565,972 1,493,954
28-Feb-2003 Rolling 6 - Thru 3/03 1,458,084 2,237,248 791,844 1,445,404 1,378,822
25-Apr-2003 2,396,155 873,206 1,522,949 1,426,579
11-Mar-2003 2002 1,572,952 2,277,255 770,372 1,506,882 1,405,640
21-Apr-2003 Aug02 - Mar03 1,295,752 2,397,719 1,091,231 1,306,488 1,237,238
1-Apr-2003 2002 972,783 2,276,485 804,178 1,472,307 1,244,384
17-Feb-2003 Full Year 2002 1,293,826 2,170,748 930,528 1,240,220 1,160,120
8-Apr-2003 2002 1,087,484 2,031,998 958,307 1,073,691 1,017,691
1-May-2003 2002 1,361,274 1,908,895 606,332 1,302,563 1,173,059
8-Apr-2003 Annualized 11 mos. 12/31/02 1,242,231 1,690,279 444,098 1,246,180 1,159,198
29-Apr-2003 2002 1,216,367 1,693,631 490,433 1,203,198 1,001,420
26-Mar-2003 Full Year 2002 972,807 1,446,129 341,522 1,104,607 1,062,052
4-Apr-2003 1,323,292 274,186 1,049,106 1,007,108
28-Feb-2003 T-12 (2/03) 2,147,236 5,300,668 3,294,576 1,739,446 1,383,917
24-Apr-2003 Year ended Dec 31, 2002 1,002,108 2,088,383 938,222 1,150,161 1,024,058
1-Apr-2003 Trailing-12 3/03 1,218,246 1,566,904 488,484 1,078,420 943,807
1-Apr-2003 Statement 2002 1,098,445 1,872,564 769,451 1,103,113 1,030,761
1-Feb-2003 Statement 2002 1,238,416 1,796,743 709,791 1,086,952 1,020,982
31-Mar-2003 Statement 2002 858,901 1,387,397 512,125 875,272 849,072
28-Feb-2003 Year ended Dec 31, 2002 868,589 1,665,795 770,642 895,153 802,662
15-Apr-2003 3/03 7-mos. Annualized 919,087 1,112,790 233,501 879,289 785,029
1-Mar-2003 Full Year 2002 557,169 2,392,584 1,406,070 986,514 791,347
14-Apr-2003 Full Year 2002 770,694 1,318,867 459,877 858,989 736,240
31-Jan-2003 Full Year 2002 196,520 938,657 158,992 779,665 748,785
13-Jan-2003 1,085,932 317,283 768,649 714,424
13-Jan-2003
13-Jan-2003
3-Apr-2003 Statement 2002 444,609 1,053,376 332,343 721,033 700,558
15-May-2003 T-12 3/2003 915,963 1,529,472 589,808 939,664 911,389
31-Jan-2003 Full Year 2002 648,021 1,226,247 505,767 720,481 684,481
1-Mar-2003 Trailing 12 (3/02-2/03) 802,974 1,405,516 593,109 812,408 764,408
20-May-2003 Year ended Dec 31, 2002 626,365 988,590 370,588 618,002 559,757
22-Apr-2003 Full Year 2002 47,696 1,063,905 359,961 703,944 682,344
15-Jan-2003 1,299,458 378,161 921,296 896,550
31-Mar-2003 Full Year 2002 293,508 996,450 293,857 702,593 674,924
4-Mar-2003 2003 Budget 733,537 983,138 261,047 722,091 669,278
9-Apr-2003 Full Year 2002 548,930 994,529 200,998 793,531 760,590
20-May-2003 Year ended Dec 31, 2002 693,105 842,705 300,930 541,775 490,343
31-Mar-2003 Year ended Dec 31, 2002 683,952 968,345 294,407 673,938 653,288
25-Mar-2003 3 Months Annualized ended Mar 31, 2003 720,710 1,490,392 760,118 730,274 668,450
5-May-2003 3 Months Annualized ended Feb 28, 2003 687,124 1,165,750 402,737 763,013 749,694
1-May-2003 3 Months Annualized ended Apr 30, 2003 940,581 1,606,126 750,962 855,164 688,315
1-Mar-2003 Trailing 12 (3/02-2/03) 668,704 1,221,833 516,207 705,625 665,625
31-Mar-2003 Year ended Dec 31, 2002 685,289 940,795 274,007 666,788 643,788
24-Apr-2003 T-12 thru 3/03 741,056 1,007,364 277,735 729,629 684,995
12-May-2003 954,913 279,596 675,318 609,658
20-Jan-2003 Borrower's Proforma 789,302 886,325 198,055 688,270 636,467
17-Mar-2003 T-6 3/03 Annualized 1,054,507 1,406,099 535,101 870,998 851,748
1-Mar-2003 Statement 2002 706,151 1,011,408 363,701 647,707 618,957
1-Apr-2003 11 mo.Ann. 2002 667,717 792,306 187,753 604,553 564,450
4-Apr-2003 Full Year 2002 688,271 1,110,297 366,919 743,378 644,810
19-Feb-2003 Trailing 12 Months ended Jan 31, 2003 530,528 1,281,258 675,814 605,444 554,944
28-Feb-2003 2002 611,900 799,480 236,698 562,782 542,532
30-Apr-2003 2002 627,068 775,364 223,758 551,607 537,032
28-Feb-2003 Statement 2002 332,046 844,324 232,254 612,070 555,175
15-Apr-2003 Statement 2002 550,035 1,209,262 627,217 582,044 534,044
28-Feb-2003 2002 495,161 977,986 530,359 447,627 420,627
14-Apr-2003 450,000 13,500 436,500 435,631
15-Feb-2003 654,133 102,778 551,355 529,139
1-Apr-2003 Statement 2002 441,955 761,028 206,932 554,096 516,230
28-Feb-2003 2002 484,587 499,739 14,992 484,747 483,688
16-Jan-2003 Year ended Dec 31, 2002 466,937 608,604 107,159 501,445 456,302
25-Mar-2003 3 Months Annualized ended Mar 31, 2003 426,111 1,128,653 663,218 465,435 423,435
21-May-2003 Statement 2002 170,258 730,121 204,225 525,897 493,439
28-Apr-2003 Statement 2002 519,727 990,975 441,546 549,429 430,114
24-Apr-2003 Year ended Dec 31, 2002 461,875 606,474 138,284 468,190 434,500
12-May-2003 413,003 12,390 400,613 399,101
3-Jun-2003 384,414 0 384,414 384,414
31-Mar-2003 2002 422,938 855,829 468,113 387,716 354,086
14-Apr-2003 YTD 1/03 Annualized 520,682 678,617 233,448 445,169 417,286
31-Mar-2003 3 Months Annualized ended Mar 31, 2003 672,764 1,028,449 478,566 549,883 455,769
7-Mar-2003 2002 414,315 566,517 143,327 423,190 382,126
30-May-2003 571,796 129,058 442,738 419,948
3-Apr-2003 390,804 11,724 379,080 377,624
19-Feb-2003 Trailing 12 Months ended Jan 31, 2003 307,792 958,092 563,931 394,161 358,161
25-Mar-2003 392,000 14,025 377,975 372,202
1-Apr-2003 Year ended Dec 31, 2002 399,009 565,719 214,769 350,950 346,950
LARGEST LARGEST
TENANT TENANT LARGEST TENANT
LARGEST TENANT SQ. FT. % OF NRA EXP. DATE
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Meier & Frank Company 297,050 24.17% 31-Jan-2006
Wachovia Bank, N.A. 218,355 47.02% 31-Dec-2010
UNICEF 81,100 19.01% 31-Dec-2003
Dick's 45,741 16.93% 31-Jan-2016
New York Institute of Technology 60,000 53.53% 30-Jun-2018
King Soopers 71,220 29.72% 31-Jan-2006
U.S. Chemical Safety & Hazard Investigation Board 19,116 18.96% 30-Sep-2010
Mount Kisco Medical Group 101,385 84.34% 30-Apr-2033
Lockheed Martin Corporation 50,098 22.41% 30-Jun-2009
The Vons Companies, Inc. 55,855 48.27% 13-Nov-2026
Don Rasmussen Company 92,168 58.03% 5-Aug-2016
Georgetown University 46,327 32.97% 31-Jul-2005
Mervyns 74,168 38.25% 31-Jan-2009
BJ's Wholesale Club 108,532 74.51% 31-Jan-2021
ION Track Instruments 84,994 41.22% 31-May-2009
Harris Teeter, Inc. 20,930 26.79% 31-May-2012
Various Various Various Various
Mason Shoe 123,000 50.62% 30-Jul-2004
Dean Pickle & Specialty Products Co. 510,000 100.00% 30-Jun-2012
Security Union Title Insurance 21,956 17.32% 31-Oct-2004
Department of Health 93,509 100.00% 31-Jul-2015
GSA 78,634 100.00% 31-Dec-2012
Publix 55,999 36.58% 31-Dec-2013
State of California - Dept of Parks & Rec. 19,418 17.90% 31-May-2007
State Farm 35,481 45.39% 31-Aug-2008
The Vons Companies, Inc. 34,406 23.02% 31-Dec-2006
Burlington Coat Factory 67,308 31.97% 31-Jan-2007
Barnes & Noble 26,350 55.19% 31-Jul-2010
Publix 54,340 58.50% 17-Sep-2022
Shell Vacations, LLC - Include Shell Group Inc. 15,161 13.07% 31-Oct-2004
Sutter Connect 73,177 83.29% 31-Jul-2009
US Dept. of Fish & Wildlife 79,557 98.26% 21-Nov-2012
AEC One Stop Group, Inc. 25,894 33.90% 31-Jan-2004
Lowe's Foods 54,000 40.23% 20-Feb-2020
Whitfield Musgrave 33,975 20.18% 31-Jan-2012
Dial America Marketing 9,492 11.42% 30-Nov-2005
Brookstone Properties, Inc. 7,600 51.18% 31-Jan-2019
Various Various Various Various
CiCi's Pizza 4,200 39.40% 31-Jan-2013
C. Lantro's 3,762 12.53% 30-Nov-2007
King Soopers 53,872 56.08% 31-Jul-2008
Brownes & Co. Apothecary 9,250 43.61% 31-Jul-2011
CVS 10,125 28.39% 31-Jan-2027
Smigel Anderson & Sacks 22,221 33.33% 30-Apr-2012
Walgreen Co. 15,120 38.19% 12-Jan-2061
King Soopers 53,959 58.17% 31-Mar-2017
Bank One Colorado, N.A. 23,443 20.20% 31-Mar-2006
Surgical Suite 9,662 27.86% 22-Aug-2012
Northshore Cardiologists 14,221 34.81% 31-Dec-2012
Coldwell Banker 9,519 47.60% 31-Jan-2005
CHW Medical Foundation 20,700 44.01% 30-Nov-2006
Coldwell Banker Residential 7,293 19.94% 31-Oct-2006
Walgreens 14,490 100.00% 31-Mar-2078
Sixty USA, Inc. 3,659 100.00% 30-Apr-2017
Leslie's Pools 4,000 12.52% 30-Nov-2005
Walgreens 15,120 100.00% 31-Dec-2076
Food Lion 33,000 62.35% 9-Nov-2019
Gould's Day Spa & Salon 5,850 15.58% 31-May-2016
Denver Storage Solutions 107966 39.38% Multiple Spaces
Winn Dixie 35,000 66.24% 23-Apr-2018
Walgreens 15,120 100.00% 30-Sep-2059
Thrifty Payless, Inc. 16,708 100.00% 14-Jul-2024
Michael's 23,743 67.47% 30-Oct-2010
Commercial Recovery Systems 12,318 14.97% 31-Mar-2004
Las Vegas Skin and Cancer, Inc. 10,145 34.62% 30-Dec-2008
Palm Beach Tan 3,629 21.09% 31-Jul-2008
Walgreens 14,560 100.00% 30-Apr-2078
Walgreens 14,490 100.00% 31-Mar-2063
2ND
LARGEST 2ND LARGEST
TENANT TENANT % OF 2ND LARGEST TENANT
2ND LARGEST TENANT NAME SQ. FT. NRA (%) EXP. DATE
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Dollar Tree 79,242 6.45% 31-Jul-2010
Dorland Sweeney Jones 32,278 6.95% 31-Jul-2011
Kallir, Phillips, Ross Inc. 80,000 18.75% 30-Jun-2004
Goody's 45,500 16.84% 31-May-2016
The City of New York Parks &
Recreation 34,580 30.85% 30-Apr-2012
24 Hour Fitness 42,161 17.59% 31-Jan-2015
The George Washington University 17,962 17.81% 31-Dec-2005
Merrill Lynch 9,721 8.09% 30-Nov-2004
QSS Group, Inc. 16,846 7.54% 31-May-2004
Longs Drug Stores 21,482 18.56% 28-Feb-2027
Collins Pine Company 13,975 8.80% 31-Aug-2010
Theodore's Furniture 11,738 8.35% 31-Jul-2004
Longs Drug Store 25,241 13.02% 15-May-2009
Oxford Academy 6,800 4.67% 31-Dec-2011
Viasys Healthcare, Inc. 83,842 40.66% 31-Aug-2012
Kerr Drugs 10,200 13.06% 31-Jan-2013
Various Various Various Various
Kell Container Corp. 120,000 49.38% 31-Jan-2008
Resource Consultants, Inc. 16,493 13.01% 30-Apr-2006
Kmart/Office Max 22,011 14.38% 31-Jan-2009
Alvarado Hospital Medical 11,634 10.72% 30-Apr-2008
Affilitated Research Institute 8,240 10.54% 31-Oct-2006
Jo-Ann's House of Fabrics 22,869 15.30% 30-Jun-2008
Best Buy 47,266 22.45% 31-Jan-2010
Applebee's Restaurant 5,711 11.96% 31-Aug-2015
Blockbuster 4,850 5.22% 18-Aug-2007
The Sherwood Group, Inc. 14,004 12.07% 30-Apr-2008
Greystone Environmental 11,680 13.29% 31-Mar-2008
Tom Gittins 1,410 1.74% 21-Nov-2012
JSTOR 11,784 15.43% 30-Nov-2009
Big Lots 31,750 23.66% 31-Jan-2008
Bank of America 29,572 17.56% 31-Dec-2006
CC Services 3,940 4.74% 31-May-2006
PDS Associates d/b/a Waterworks 3,750 25.25% 1-Jul-2008
Various Various Various Various
Orient Cafe 2,435 22.84% 28-Feb-2013
Texadelphia Sandwiches 3,717 12.38% 30-Nov-2007
Bargain City Sales 6,000 6.25% 31-Oct-2006
Sixty, Inc. 3,000 14.14% 30-Apr-2012
Charlie Browns 8,100 22.71% 31-Jul-2022
Michael Baker, Jr., Inc. 20,760 31.14% 30-Sep-2009
Blockbuster Video 4,225 10.67% 28-Feb-2011
Greenbacks 12,804 13.80% 28-Feb-2008
First American Mortgage 9,680 8.34% 28-Feb-2008
Assoc. of Otolarynology 4,943 14.25% 25-Jun-2012
Pulmonary Physicians of N.S. 8,857 21.68% 31-Dec-2012
Gateway Computers 5,825 29.13% 31-Mar-2005
Procedure Center of SF 4,499 9.57% 1-Jun-2013
Gourmet Plus Inc. 5,104 13.95% 31-Dec-2006
Coldwell Banker-Apex Realty 3,780 11.83% 30-Sep-2007
Hollywood Video 4,923 9.30% 9-Nov-2009
The Dollar Shoppe 4,400 11.71% 30-Nov-2007
Kaiser Foundation Health Plan 28,049 10.23% 31-May-2006
Dollar General 8,640 16.35% 5-Mar-2006
Accent Fabrics and Furnishings 4,085 11.61% 30-Jun-2004
Presidential Life 7,862 9.55% MTM
Veterans Administration 7,728 26.37% 19-Jan-2006
Boston Market 3,218 18.70% 30-Jun-2012
3RD 3RD
LARGEST LARGEST
TENANT TENANT 3RD LARGEST TENANT
3RD LARGEST TENANT NAME SQ. FT % OF NRA EXP.DATE
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Lloyd Center Cinemas (GROUND LEASE) 66,403 5.40% 31-Dec-2011
Electronic Ink., Inc. 30,922 6.66% 31-Oct-2010
New York Presbyterian Hospital 76,000 17.82% 31-Aug-2006
Circuit City 28,446 10.53% 31-Jan-2020
Eastern Mountain Sports 17,500 15.61% 31-Jan-2006
Ace Hardware 32,000 13.35% 31-Mar-2006
Cameron McKenna LLP 11,841 11.74% 31-Oct-2003
Norther Westchester Cardiac
Rehabilitation 5,605 4.66% 31-Oct-2005
Jackson & Tull Chartered 14,418 6.45% 31-Jul-2006
Blockbuster 4,075 3.52% 31-Dec-2011
Western Medical Consultants 9,324 5.87% 14-Nov-2008
Bomstein Agency 7,546 5.37% 30-Nov-2011
Staples 24,000 12.38% 28-Feb-2015
Carlucci's Gourmet Mark 6,400 4.39% 31-Oct-2012
Empirix (Teredyne) 37,351 18.12% 31-Oct-2003
Blockbuster 7,087 9.07% 31-Dec-2004
Transtel Communications, Inc. 7,771 6.13% 31-May-2005
The Rag Shop 7,500 4.90% 31-Aug-2006
Countrywide Financial Services 5,916 5.45% 31-Dec-2005
David Evans & Associates 4,164 5.33% 31-Oct-2004
Reed's & Sons Furniture 21,746 14.55% 30-Apr-2004
La-Z-Boy 28,080 13.34% 31-Oct-2004
Sushi Ai 5,000 10.47% 31-Oct-2012
Cross Roads Bar & Grill 4,819 5.19% 31-Jul-2010
Maximus, Inc. 12,626 10.88% 31-Aug-2005
Booth Newspaper 10,989 14.39% 31-Aug-2006
Boone Drugs 6,309 4.70% 28-Feb-2005
Brooks Borg Skiles 19,387 11.51% 31-Dec-2012
Kukui, Inc 3,800 4.57% 31-Oct-2005
Westport Capital Markets 750 5.05% 31-May-2006
Various Various Various Various
Quizno's 1,625 15.24% 29-Feb-2008
River Oaks Cleaners 3,000 9.99% 31-Oct-2012
Market Square Coin Laundry 3,600 3.75% 31-May-2005
Astoria Clothing, Inc. 1,500 7.07% 30-Sep-2012
Nationwide Electrical Supply 5,735 16.08% 31-Oct-2017
Abacus Engineered Systems Inc. 7,762 11.64% 30-Jun-2009
La Costita 4,200 10.61% 30-Apr-2013
Checker Automotive 5,586 6.02% 31-Oct-2005
Multi-Link Communications, Inc. 6,059 5.22% 13-Feb-2006
Lone Tree Cosmetic Center 4,174 12.03% 22-Aug-2012
Northshore Medical Associates 6,882 16.85% 31-Dec-2012
City National Bank 4,654 23.27% 31-Jan-2009
Dr. Paris E. Royo, M.D. 3,567 7.58% 30-Jun-2007
Quorum Management Company 3,423 9.36% 31-May-2007
Body by Design 3,208 10.04% 31-Aug-2007
Dixon & Associates 4,800 9.07% 30-Aug-2005
Stereo One 3,600 9.58% 31-Jan-2008
DARR FMH 21,597 7.88% 30-Apr-2005
Cash's Liquor 3,600 6.81% 30-Jun-2005
California Pools & Spa 2,582 7.34% 30-May-2004
City of Dallas 7,439 9.04% 30-Jun-2004
HealthSouth 5,012 17.10% 31-Dec-2004
Verizon Wireless 2,360 13.72% 31-Aug-2006
LARGEST AFFILIATED MORTGAGE
(> THAN 4% OF POOL) LOAN
LOCKBOX SPONSOR FLAG NUMBER
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WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2003-C5
ANNEX A-1 CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS AND MORTGAGED
PROPERTIES
MORTGAGE LOAN
LOAN GROUP
NUMBER NUMBER PROPERTY NAME ADDRESS CITY
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100 2 Liberty MHP 329 South Harbor Boulevard Santa Ana
101 1 Inwood Retail Center 5201 and 5211-5223 West Lovers Lane & 7979 Inwood Road Dallas
102 2 Wilson Acres Apartments 1806 East First Street Greenville
103 1 Walgreens - Dickinson 100 F.M. 646 Dickinson
104 2 Trails West MHP 1450 Avenida de Mesilla Las Cruces
105 1 1230 48th Avenue 1230 48th Avenue Menominee
106 1 17th Street Plaza 701-761 SE 17th Street Ft. Lauderdale
107 1 Rite Aid - Colonie 1863 Central Avenue Colonie
108 1 Shurgard - Brandon 1010 West Lumsden Road Brandon
109 1 Morgan Country Square 6171-6199 Santa Teresa Boulevard San Jose
110 2 Shockoe Place 1900 East Franklin Street Richmond
111 2 Fairbrooke Senior Housing Apartments 700 West Bel Air Avenue Aberdeen
112 2 La Playa Apartments 1033-1053 2nd Street Lafayette
113 1 Palmetto Plaza 17250-17264 Foothill Boulevard Fontana
114 2 Hacienda MHP 115 East County 22nd Street San Luis
115 1 Village at Dana Park II 3440 East Baseline Road Mesa
116 1 Marshalls - Lodi 2449 West Kettleman Lane Lodi
117 1 Wagon Wheel MHP 4641 Lasater Road Mesquite
118 1 Northpoint Day Centre 4000 Northpoint Parkway Alpharetta
119 1 Shurgard - Oldsmar 3657 Tampa Road Oldsmar
120 2 Twin Palms MHP 3401 West Pecan Boulevard McAllen
121 1 Mini U Storage-Maple Shade 2481 Route 73 South Maple Shade
122 1 AmCap - Gerbes Center 2801-2805 West Truman Boulevard Jefferson City
123 1 Eckerds-Holly Springs 5329 Old Highway 5 at Toonigh Road Holly Springs
124 1 Walgreens - Conroe, TX 1120 North Loop 336 West Conroe
125 1 Harwin Plaza 7111 Harwin Drive Houston
126 2 Fort Stanton Apartments 1535 Morris Road SE Washington
127 2 Pinebrook Apartments 2600-2614 Pinebrook Avenue Landover
128 1 CVS - Shippensburg 701 East King Street Shippensburg
129 1 South Florida - Sample Turnpike 2501-2525 West Sample Road Deerfield Beach
130 1 5405-5407 Port Royal Road 5405-5407 Port Royal Road Springfield
131 1 Montbello Plaza 4660 Peoria Street Denver
132 1 Augusta Commons 2367 Augusta Road West Columbia
133 2 McDonald Place Apartments 1318 North McDonald Road Spokane Valley
134 1 1407-1413 East Cary Street 1407-1413 East Cary Street Richmond
135 1 La Posada Apartments 241 Lafayette Circle Layfayette
136 1 Rite Aid - Baltimore 700 West Saratoga Street Baltimore
137 1 Village Park Shopping Center 2220-2234 West Park Row Pantego
138 1 Antoine Crossing 2800 Antoine Drive Houston
139 2 Laurel Pointe Apartments 100 Laurel Pointe Circle Salisbury
140 1 Meadowbrook Mobile Home Park 1331 West Danby Road Newfield
141 2 Nob Hill Apartments 500 McIntire Road Charlottesville
142 2 Coachella MHP 49615 Park Lane Coachella
143 1 Northcross Business Center 15806 Brookway Drive Huntersville
144 2 Vermillion Homes 501-614 Laura Lane Two Harbors
145 1 Bank of America Pad 896 North Route 59 Aurora
146 1 Bells Ferry Plaza Shopping Center 4311 & 4329 Bells Ferry Road Kennesaw
147 2 Del Mar Apartments 558 College Street Hapeville
148 2 Timberlake Apartments 400 Timberlake View Circle Inman
149 1 South Florida - West Boca 23193 Sandlefoot Plaza Drive Boca Raton
150 1 South Florida - Red Road 5710-5730 Northwest 176th Street Hialeah
151 1 South Florida - Baton II 1000-1050 West Commercial Boulevard Fort Lauderdale
152 1 South Florida - Tamarac 2530 West Commercial Boulevard Tamarac
CROSS COLLATERALIZED
AND CROSS DEFAULTED
STATE ZIP CODE LOAN FLAG
- ---------------------------------------
CA 92704 Eggleston 1
TX 75209
NC 27858
TX 77539
NM 88005
MI 49858
FL 33316
NY 12205
FL 33511
CA 95123
VA 23223
MD 21001
CA 94549 LaFayette
CA 92336
AZ 85349 Eggleston 2
AZ 85204
CA 95242
TX 75181 Eggleston 2
GA 30005
FL 34677
TX 78501
NJ 08052
MO 65109
GA 30188
TX 77301
TX 77036 Boxer
DC 20020
MD 20785
PA 17257
FL 33073
VA 22151
CO 80239
SC 29169
WA 99216
VA 23219
CA 94549 LaFayette
MD 21201
TX 76013
TX 77092 Boxer
NC 39206
NY 14867
VA 22902
CA 92236
NC 28078
MN 55616
IL 60504
GA 30144
GA 30354
SC 29349
FL 33428
FL 33015
FL 33309
FL 33309
(1) For purposes of determining the underwritten loan-to-value ratios of 1
Mortgage Loan representing 1.2% of the Cut-Off Date Balance (1.6% of the Group 1
Cut-Off Date Balance), such ratios were reduced by amounts available under a
letter of credit and in a cash reserve that will be released upon the
achievement of a specified rental income increase at the related mortgaged
property. One Mortgage Loan, representing 5.8% of the Cut-Off Date Balance (7.8%
of the Group 1 Cut-Off Date Balance), is part of a split loan structure and the
related pari passu companion loan is not included in the trust fund. With
respect to this Mortgage Loan, the calculation of loan-to-value ratios and debt
service coverage ratio was based upon the aggregate indebtedness of the Mortgage
Loan and the related pari passu companion loan.
See "DESCRIPTION OF THE MORTGAGED POOL - Additional Mortgage Loan Information"
in the prospectus supplement.
(2) Refer to Annex A-6.
% OF
AGGREGATE % OF LOAN % OF LOAN
LOAN GENERAL PROPERTY ORIGINAL LOAN CUT-OFF DATE LOAN CUT-OFF DATE GROUP 1 GROUP 2
ORIGINATOR TYPE SPECIFIC PROPERTY TYPE BALANCE ($) BALANCE ($) BALANCE BALANCE BALANCE
- ---------------------------------------------------------------------------------------------------------------------------------
NCCI Mobile Home Park Mobile Home Park 3,600,000.00 3,596,125.85 0.30% 0.00% 1.19%
AMCC Retail Unanchored 3,600,000.00 3,585,067.04 0.30% 0.40% 0.00%
Wachovia Multifamily Student Housing 3,500,000.00 3,476,176.30 0.29% 0.00% 1.15%
Wachovia Retail Anchored 3,430,000.00 3,426,245.67 0.29% 0.38% 0.00%
NCCI Mobile Home Park Mobile Home Park 3,300,000.00 3,288,877.15 0.27% 0.00% 1.09%
Wachovia Industrial Distribution 3,300,000.00 3,273,205.56 0.27% 0.36% 0.00%
AMCC Retail Anchored 3,200,000.00 3,190,541.15 0.27% 0.35% 0.00%
Wachovia Retail Anchored 3,354,563.37 3,109,157.66 0.26% 0.35% 0.00%
Wachovia Self Storage Self Storage 3,100,000.00 3,096,619.62 0.26% 0.34% 0.00%
AMCC Retail Unanchored 3,100,000.00 3,095,457.39 0.26% 0.34% 0.00%
Wachovia Multifamily Conventional 3,056,000.00 3,047,338.88 0.25% 0.00% 1.01%
Wachovia Multifamily Section 42 2,900,000.00 2,844,408.98 0.24% 0.00% 0.94%
Wachovia Multifamily Conventional 2,830,000.00 2,824,286.98 0.24% 0.00% 0.94%
AMCC Retail Unanchored 2,800,000.00 2,791,723.49 0.23% 0.31% 0.00%
NCCI Mobile Home Park Mobile Home Park 2,750,000.00 2,743,530.70 0.23% 0.00% 0.91%
NCCI Retail Shadow Anchored 2,716,000.00 2,713,175.07 0.23% 0.30% 0.00%
Wachovia Retail Anchored 2,650,000.00 2,638,944.36 0.22% 0.29% 0.00%
NCCI Mobile Home Park Mobile Home Park 2,575,000.00 2,572,068.35 0.21% 0.29% 0.00%
NCCI Retail Unanchored 2,400,000.00 2,397,494.25 0.20% 0.27% 0.00%
Wachovia Self Storage Self Storage 2,350,000.00 2,347,437.45 0.20% 0.26% 0.00%
NCCI Mobile Home Park Mobile Home Park 2,320,000.00 2,315,265.69 0.19% 0.00% 0.77%
Wachovia Self Storage Self Storage 2,200,000.00 2,196,756.37 0.18% 0.24% 0.00%
NCCI Retail Anchored 2,160,000.00 2,153,303.02 0.18% 0.24% 0.00%
AMCC Retail Anchored 2,100,000.00 2,095,398.54 0.17% 0.23% 0.00%
AMCC Retail Anchored 2,050,000.00 2,046,098.66 0.17% 0.23% 0.00%
NCCI Office Suburban 2,020,000.00 2,006,728.70 0.17% 0.22% 0.00%
AMCC Multifamily Conventional 2,000,000.00 1,987,562.54 0.17% 0.00% 0.66%
AMCC Multifamily Conventional 2,000,000.00 1,987,562.54 0.17% 0.00% 0.66%
Wachovia Retail Anchored 1,960,000.00 1,951,663.59 0.16% 0.22% 0.00%
NCCI Retail Unanchored 1,940,000.00 1,908,757.47 0.16% 0.21% 0.00%
NCCI Industrial Warehouse 1,800,000.00 1,797,317.53 0.15% 0.20% 0.00%
AMCC Retail Unanchored 1,800,000.00 1,793,235.37 0.15% 0.20% 0.00%
AMCC Retail Shadow Anchored 1,800,000.00 1,790,822.33 0.15% 0.20% 0.00%
AMCC Multifamily Conventional 1,700,000.00 1,698,086.13 0.14% 0.00% 0.56%
Wachovia Mixed Use Multifamily/Retail 1,688,000.00 1,686,237.62 0.14% 0.19% 0.00%
Wachovia Multifamily Conventional 1,670,000.00 1,666,628.71 0.14% 0.19% 0.00%
Wachovia Retail Anchored 1,874,658.72 1,655,675.57 0.14% 0.18% 0.00%
NCCI Retail Unanchored 1,650,000.00 1,642,946.37 0.14% 0.18% 0.00%
NCCI Office Suburban 1,630,000.00 1,619,290.98 0.13% 0.18% 0.00%
Wachovia Multifamily Section 42 1,618,000.00 1,607,068.00 0.13% 0.00% 0.53%
Wachovia Mobile Home Park Mobile Home Park 1,612,500.00 1,599,407.25 0.13% 0.18% 0.00%
Wachovia Multifamily Conventional 1,600,000.00 1,596,734.96 0.13% 0.00% 0.53%
NCCI Mobile Home Park Mobile Home Park 1,600,000.00 1,596,236.04 0.13% 0.00% 0.53%
AMCC Office Suburban 1,570,000.00 1,568,245.68 0.13% 0.17% 0.00%
AMCC Multifamily Conventional 1,575,000.00 1,563,775.96 0.13% 0.00% 0.52%
AMCC Retail Shadow Anchored 1,455,000.00 1,453,537.63 0.12% 0.16% 0.00%
AMCC Retail Unanchored 1,440,000.00 1,436,162.63 0.12% 0.16% 0.00%
AMCC Multifamily Conventional 1,425,000.00 1,418,838.41 0.12% 0.00% 0.47%
Wachovia Multifamily Section 42 1,408,000.00 1,391,141.22 0.12% 0.00% 0.46%
NCCI Retail Unanchored 1,410,000.00 1,387,292.80 0.12% 0.15% 0.00%
NCCI Retail Unanchored 820,000.00 806,794.39 0.07% 0.09% 0.00%
NCCI Retail Unanchored 620,000.00 608,640.04 0.05% 0.07% 0.00%
NCCI Retail Unanchored 515,000.00 505,563.91 0.04% 0.06% 0.00%
LOAN
ADMINISTRATIVE INTEREST
ORIGINATION FIRST PAY MATURITY DATE MORTGAGE COST RATE ACCRUAL
DATE DATE OR ARD RATE (%) (%) METHOD
- ---------------------------------------------------------------------------------
9-May-2003 11-Jul-2003 11-Jun-2013 5.5900% 0.04210% Actual/360
29-Apr-2003 11-Jun-2003 11-May-2023 6.2500% 0.04210% Actual/360
8-Apr-2003 11-May-2003 11-Apr-2013 5.4500% 0.04210% Actual/360
16-May-2003 11-Jul-2003 11-Jun-2013 5.5000% 0.04210% Actual/360
11-Apr-2003 11-May-2003 11-Apr-2013 5.1600% 0.04210% Actual/360
14-Feb-2003 11-Apr-2003 11-Mar-2013 6.2500% 0.04210% Actual/360
31-Mar-2003 11-May-2003 11-Apr-2013 5.8000% 0.04210% Actual/360
4-May-1999 15-Jun-1999 15-Feb-2019 7.3500% 0.04210% 30/360
30-May-2003 11-Jul-2003 11-Jun-2013 5.5200% 0.04210% Actual/360
14-May-2003 11-Jul-2003 11-Jun-2013 5.9000% 0.04210% Actual/360
31-Mar-2003 11-May-2003 11-Apr-2013 6.0000% 0.04210% Actual/360
1-Oct-2000 1-Nov-2000 1-Sep-2026 9.3100% 0.04210% 30/360
29-Apr-2003 11-Jun-2003 11-May-2008 5.5500% 0.04210% Actual/360
27-Mar-2003 11-May-2003 11-Apr-2013 5.8000% 0.04210% Actual/360
9-May-2003 11-Jul-2003 11-Jun-2013 5.2900% 0.04210% Actual/360
16-May-2003 11-Jul-2003 11-Jun-2013 5.7700% 0.11210% Actual/360
15-Apr-2003 11-Jun-2003 11-May-2013 6.0000% 0.04210% Actual/360
9-May-2003 11-Jul-2003 11-Jun-2013 5.2900% 0.04210% Actual/360
20-May-2003 11-Jul-2003 11-Jun-2013 5.7500% 0.11210% Actual/360
30-May-2003 11-Jul-2003 11-Jun-2013 5.5200% 0.04210% Actual/360
29-Apr-2003 11-Jun-2003 11-May-2008 5.5000% 0.04210% Actual/360
21-May-2003 11-Jul-2003 11-Jun-2013 5.8600% 0.08210% Actual/360
12-Mar-2003 11-May-2003 11-Apr-2013 5.5700% 0.04210% Actual/360
4-Jun-2003 11-Jul-2003 11-Jun-2023 6.1000% 0.04210% Actual/360
10-Apr-2003 11-Jun-2003 11-May-2013 5.8200% 0.04210% Actual/360
11-Dec-2002 11-Jan-2003 11-Dec-2012 6.1200% 0.04210% Actual/360
7-Mar-2003 11-Apr-2003 11-Mar-2013 5.2500% 0.04210% Actual/360
7-Mar-2003 11-Apr-2003 11-Mar-2013 5.2500% 0.04210% Actual/360
3-Apr-2003 11-May-2003 11-Apr-2013 5.9000% 0.04210% Actual/360
25-Mar-2003 11-May-2003 11-Apr-2013 5.9100% 0.04210% Actual/360
8-May-2003 1-Jul-2003 1-Jun-2013 5.7900% 0.14210% Actual/360
3-Mar-2003 11-Apr-2003 11-Mar-2013 5.9000% 0.04210% Actual/360
24-Jan-2003 11-Mar-2003 11-Feb-2013 5.9300% 0.04210% Actual/360
16-May-2003 11-Jul-2003 11-Jun-2013 5.3500% 0.04210% Actual/360
2-Jun-2003 11-Jul-2003 11-Jun-2013 5.7500% 0.04210% Actual/360
29-Apr-2003 11-Jun-2003 11-May-2013 5.5500% 0.04210% Actual/360
14-Jul-1999 15-Aug-1999 15-Feb-2019 6.8500% 0.04210% 30/360
24-Jan-2003 11-Mar-2003 11-Feb-2013 6.8500% 0.04210% Actual/360
11-Dec-2002 11-Jan-2003 11-Dec-2012 6.1200% 0.04210% Actual/360
1-Jun-2002 1-Jul-2002 1-Jun-2017 8.6250% 0.04210% Actual/360
6-Mar-2003 11-Apr-2003 11-Mar-2013 6.2500% 0.04210% Actual/360
9-May-2003 11-Jun-2003 11-May-2013 5.5000% 0.04210% Actual/360
9-May-2003 11-Jul-2003 11-Jun-2013 5.2900% 0.04210% Actual/360
27-May-2003 11-Jul-2003 11-Jun-2013 5.3900% 0.04210% Actual/360
25-Apr-2003 11-Jun-2003 11-May-2018 5.5000% 0.04210% Actual/360
29-May-2003 11-Jul-2003 11-Jun-2013 5.9500% 0.04210% Actual/360
16-Apr-2003 11-Jun-2003 11-May-2013 6.1300% 0.04210% Actual/360
1-Apr-2003 11-May-2003 11-Apr-2013 5.8000% 0.04210% Actual/360
1-Dec-2001 1-Jan-2002 1-Dec-2019 8.6250% 0.04210% 30/360
25-Mar-2003 11-May-2003 11-Apr-2013 5.9100% 0.04210% Actual/360
25-Mar-2003 11-May-2003 11-Apr-2013 5.9100% 0.04210% Actual/360
25-Mar-2003 11-May-2003 11-Apr-2013 5.9100% 0.04210% Actual/360
25-Mar-2003 11-May-2003 11-Apr-2013 5.9100% 0.04210% Actual/360
INTEREST ORIGINAL REMAINING
ACCURAL TERM TO TERM TO REMAINING ORIGINAL REMAINING MATURITY DATE OR
METHOD MATURITY OR MATURITY OR IO PERIOD AMORT TERM AMORT TERM MONTHLY P&I ARD BALLOON ARD
DURING IO ARD (MOS.) ARD (MOS.) (MOS.) (MOS.) (MOS.) PAYMENTS ($) BALANCE ($) LOANS
- ------------------------------------------------------------------------------------------------------------------------
120 119 360 359 20,644.15 3,016,224.13 N
240 238 240 238 26,510.40 0.00 N
120 117 240 237 23,977.32 2,246,520.52 N
120 119 360 359 19,475.16 2,865,802.01 Y
120 117 360 357 18,039.20 2,727,736.87 N
120 116 240 236 24,120.63 2,185,451.72 N
120 117 360 357 18,776.10 2,698,344.68 N
237 187 291 241 24,756.46 1,120,000.00 N
120 119 360 359 17,640.38 2,591,691.56 N
120 119 300 299 19,784.28 2,393,046.19 N
120 117 360 357 18,322.26 2,592,334.86 N
311 278 360 327 23,983.78 974,533.63 N
60 58 360 358 16,157.32 2,631,613.73 N
120 117 360 357 16,429.09 2,361,051.20 N
120 119 240 239 18,592.22 1,753,847.44 N
120 119 360 359 15,884.36 2,288,102.57 N
120 118 240 238 18,985.42 1,738,179.72 Y
120 119 360 359 14,283.11 2,137,291.73 N
120 119 360 359 14,005.75 2,020,664.47 N
120 119 360 359 13,372.55 1,964,668.79 N
60 58 360 358 13,172.70 2,155,832.56 N
120 119 300 299 13,986.96 1,695,974.90 N
120 117 360 357 12,359.28 1,808,653.00 Y
240 239 240 239 15,276.46 0.00 N
120 118 360 358 12,054.56 1,729,809.26 N
120 113 360 353 12,267.20 1,719,297.29 N
120 116 300 296 11,984.96 1,509,422.64 N
120 116 300 296 11,984.96 1,509,422.64 N
120 117 300 297 12,508.77 1,513,059.60 Y
120 117 132 129 20,023.14 248,005.76 N
120 119 300 299 11,367.47 1,384,292.98 N
120 116 360 356 10,676.46 1,522,533.63 N
120 115 360 355 10,711.04 1,523,190.57 N
120 119 360 359 9,493.04 1,413,709.56 N
120 119 360 359 9,850.71 1,421,200.65 N
120 118 360 358 9,534.53 1,397,598.13 N
235 187 235 187 14,194.98 (steps)(2) 0.00 N
120 115 360 355 10,811.78 1,432,986.04 N
120 113 360 353 9,898.78 1,387,353.76 N
180 167 360 347 12,584.64 1,327,752.97 N
120 116 240 236 11,786.22 1,067,890.67 N
120 118 360 358 9,084.62 1,336,940.86 N
120 119 240 239 10,817.29 1,020,420.33 N
120 119 360 359 8,806.24 1,307,248.81 N
180 178 180 178 12,938.53 0.00 N
120 119 360 359 8,676.75 1,232,391.55 N
120 118 300 298 9,392.71 1,120,418.31 N
120 117 300 297 9,007.88 1,096,299.70 N
216 197 360 341 10,951.28 980,406.13 N
120 117 132 129 14,552.90 180,251.61 N
120 117 132 129 8,463.39 104,827.18 N
120 117 120 117 6,855.28 4,527.01 N
120 117 120 117 5,694.31 3,760.34 N
CUT-OFF DATE
APPRAISED LTV RATIO
PREPAYMENT PROVISIONS VALUE ($) APPRAISAL DATE DSCR (X)(1) (1)
- ----------------------------------------------------------------------------------------------
L(25),D(92),O(3) 5,000,000 13-Feb-2003 1.52 71.92%
L(36),D(201),O(3) 6,000,000 19-Feb-2003 1.37 59.75%
L(48),D(69),O(3) 6,300,000 7-Jan-2003 1.56 55.18%
L(48),D(69),O(3) 4,550,000 1-Mar-2003 1.37 75.30%
L(27),D(90),O(3) 5,000,000 13-Feb-2003 1.60 65.78%
L(48),D(69),O(3) 4,400,000 16-May-2002 1.33 74.39%
L(36),D(81),O(3) 4,850,000 5-Feb-2003 1.52 65.78%
L(47),D(190) 3,610,000 11-Jan-1999 1.03 86.13%
L(48),D(69),O(3) 4,600,000 30-Apr-2003 1.70 67.32%
L(60),GRTR1%orYM(57),O(3) 5,390,000 24-Mar-2003 1.56 57.43%
L(48),D(69),O(3) 3,820,000 17-Sep-2002 1.41 79.77%
L(120),GRTR1%Prepayment+YM or 1%(191) 3,810,000 11-Feb-2003 1.16 74.66%
L(26),D(31),O(3) 5,260,000 6-Mar-2003 1.37 53.69%
L(36),D(81),O(3) 3,750,000 6-Jan-2003 1.62 74.45%
L(25),D(92),O(3) 4,400,000 18-Feb-2003 1.66 62.35%
L(25),D(89),O(6) 3,900,000 15-Mar-2003 1.55 69.57%
L(48),D(69),O(3) 4,150,000 18-Mar-2003 1.33 63.59%
L(25),D(92),O(3) 3,865,000 19-Feb-2003 1.96 66.55%
L(25),D(89),O(6) 3,200,000 25-Feb-2003 1.71 74.92%
L(48),D(69),O(3) 3,500,000 30-Apr-2003 1.76 67.07%
L(26),D(31),O(3) 2,900,000 21-Jan-2003 1.49 79.84%
L(49),D(67),O(4) 2,950,000 11-Apr-2003 1.52 74.47%
L(27),D(57),O(36) 2,700,000 16-Dec-2002 1.39 79.75%
L(36),D(201),O(3) 3,300,000 8-Apr-2003 1.39 63.50%
L(36),D(81),O(3) 3,680,000 20-Jan-2003 1.76 55.60%
L(36),D(81),O(3) 2,810,000 1-Nov-2002 1.52 71.41%
L(36),D(81),O(3) 4,200,000 10-Feb-2003 2.48 47.32%
L(36),D(81),O(3) 2,700,000 12-Feb-2003 1.40 73.61%
L(48),D(69),O(3) 2,450,000 14-Jan-2003 1.29 79.66%
L(27),D(90),O(3) 3,375,000 1-Feb-2003 1.21 56.56%
L(25),D(91),O(4) 2,600,000 28-Mar-2003 1.46 69.13%
L(36),D(81),O(3) 2,450,000 10-Feb-2003 1.55 73.19%
L(36),D(81),O(3) 2,400,000 20-Nov-2002 1.54 74.62%
L(60),GRTR1%orYM(57),O(3) 2,200,000 5-Apr-2003 1.55 77.19%
L(25),D(90),O(5) 2,110,000 26-Mar-2003 1.49 79.92%
L(26),D(91),O(3) 2,230,000 6-Mar-2003 1.29 74.74%
L(95),YM(140) 2,100,000 1-Feb-1999 1.03 78.84%
L(29),D(88),O(3) 2,400,000 16-Oct-2002 1.49 68.46%
L(36),D(81),O(3) 2,600,000 4-Nov-2002 1.82 62.28%
GRTR1%orYM(177),O(3) 3,430,000 30-Jan-2003 1.61 46.85%
L(48),D(69),O(3) 2,150,000 11-Feb-2003 1.56 74.39%
L(26),D(91),O(3) 2,000,000 4-Apr-2003 1.51 79.84%
L(25),D(92),O(3) 3,300,000 18-Feb-2003 1.86 48.37%
L(36),D(81),O(3) 2,350,000 5-Mar-2003 1.62 66.73%
L(36),D(141),O(3) 2,300,000 7-Mar-2003 1.17 67.99%
L(36),D(81),O(3) 1,950,000 11-Mar-2003 1.32 74.54%
L(36),D(81),O(3) 1,945,000 7-Mar-2003 1.48 73.84%
L(48),GRTR1%orYM(69),O(3) 1,935,000 20-Feb-2003 1.38 73.32%
L(180),1%(33),O(3) 2,020,000 31-Jan-2003 1.13 68.87%
L(27),D(90),O(3) 2,425,000 1-Feb-2003 1.25 57.21%
L(27),D(90),O(3) 1,450,000 1-Feb-2003 1.28 55.64%
L(27),D(90),O(3) 1,160,000 1-Feb-2003 1.22 52.47%
L(27),D(90),O(3) 1,330,000 1-Feb-2003 1.22 38.01%
CUT-OFF DATE
LTV RATIO AT NUMBER LOAN
MATURITY OR YEAR OF UNITS UNIT OF AMOUNT PER OCCUPANCY OCCUPANCY
ARD (1) BUILT YEAR RENOVATED (UNITS) MEASURE (UNIT) ($) RATE (%) "AS OF" DATE
- ----------------------------------------------------------------------------------------------------------
60.32% 1946 95 Pads 37,854 98.95% 1-Apr-2003
0.00% 1950-1984 2002 48,595 Sq. Ft. 74 100.00% 28-Feb-2003
35.66% 1980 146 Units 23,809 87.84% 31-Dec-2002
62.98% 2003 13,650 Sq. Ft. 251 100.00% 8-May-2003
54.55% 1995 2001 224 Pads 14,682 83.04% 31-Jan-2003
49.67% 1970-1990 220,631 Sq. Ft. 15 100.00% 7-Mar-2003
55.64% 1988 30,910 Sq. Ft. 103 90.11% 8-Mar-2003
31.02% 1999 11,180 Sq. Ft. 278 100.00% 3-Jun-2003
56.34% 1999 588 Units 5,266 85.20% 31-Mar-2003
44.40% 1979 2000 24,820 Sq. Ft. 125 100.00% 28-Mar-2003
67.86% 1853 2001 46 Units 66,246 100.00% 15-Oct-2002
25.58% 1997 122 Units 23,315 100.00% 30-Sep-2002
50.03% 1962*1967 43 Units 65,681 97.67% 4-Mar-2003
62.96% 2002 26,558 Sq. Ft. 105 100.00% 4-Mar-2003
39.86% 1998 252 Pads 10,887 99.21% 1-Apr-2003
58.67% 2002 10,413 Sq. Ft. 261 100.00% 1-May-2003
41.88% 2003 29,000 Sq. Ft. 91 100.00% 5-Feb-2003
55.30% 1971 227 Pads 11,331 92.51% 11-Mar-2003
63.15% 2002 22,000 Sq. Ft. 109 100.00% 12-Dec-2002
56.13% 2000 473 Units 4,963 89.00% 31-Mar-2003
74.34% 1973 213 Pads 10,870 99.06% 1-Jan-2003
57.49% 1998 429 Units 5,121 92.31% 23-Apr-2003
66.99% 1972 1990 56,266 Sq. Ft. 38 92.46% 20-May-2003
0.00% 2002 13,824 Sq. Ft. 152 100.00% 31-Mar-2003
47.01% 2003 13,650 Sq. Ft. 150 100.00% 21-Apr-2003
61.18% 1979 44,872 Sq. Ft. 45 91.54% 31-Mar-2003
35.94% 1962-1964 1998-2002 95 Units 20,922 94.74% 1-Jan-2003
55.90% 1965 50 Units 39,751 96.00% 1-Jan-2003
61.76% 2003 10,880 Sq. Ft. 179 100.00% 14-Feb-2003
7.35% 1988 21,002 Sq. Ft. 91 100.00% 8-Jan-2003
53.24% 1969 1976 32,057 Sq. Ft. 56 100.00% 1-Apr-2003
62.14% 2002 13,000 Sq. Ft. 138 100.00% 7-Apr-2003
63.47% 2001 12,000 Sq. Ft. 149 100.00% 27-Jan-2003
64.26% 1996 44 Units 38,593 93.18% 1-May-2003
67.36% 1900*1910 1995*1998 23,613 Sq. Ft. 71 100.00% 31-Mar-2003
62.67% 1964 20 Units 83,331 95.00% 29-Apr-2003
0.00% 1998-1999 11,180 Sq. Ft. 148 100.00% 3-Jun-2003
59.71% 1980 48,730 Sq. Ft. 34 87.13% 1-Oct-2002
53.36% 1984 78,479 Sq. Ft. 21 100.00% 31-Mar-2003
38.71% 1999 100 Units 16,071 96.00% 30-Sep-2002
49.67% 1960 209 Pads 7,653 73.78% 1-Jan-2003
66.85% 1964 2000 24 Units 66,531 100.00% 3-Mar-2003
30.92% 1960 111 Pads 14,381 100.00% 1-Apr-2003
55.63% 2002 15,599 Sq. Ft. 101 100.00% 23-Apr-2003
0.00% 1998-2002 36 Units 43,438 97.22% 1-Apr-2003
63.20% 2003 1 Pad 1,453,538 100.00% 30-Apr-2003
57.61% 1996 & 2000 13,600 Sq. Ft. 106 94.49% 31-Mar-2003
56.66% 1970 2001-2002 64 Units 22,169 92.19% 28-Mar-2003
48.53% 2000 64 Units 21,737 92.19% 25-Dec-2002
7.43% 1988 12,528 Sq. Ft. 111 100.00% 8-Jan-2003
7.23% 1997 9,977 Sq. Ft. 81 100.00% 20-Jan-2003
0.39% 1987 7,692 Sq. Ft. 79 100.00% 8-Jan-2003
0.28% 1987 11,004 Sq. Ft. 46 76.34% 29-May-2003
UW NET
MOST RECENT UW REVENUES UW EXPENSES OPERATING UW NET CASH
MOST RECENT PERIOD NOI ($) ($) ($) INCOME ($) FLOW ($)
- -------------------------------------------------------------------------------------------------------------
Year ended Dec 31, 2002 419,617 645,339 263,253 382,086 377,336
Statement 2002 453,765 753,478 269,052 484,426 436,341
2002 527,919 949,225 463,483 485,742 449,242
331,500 9,945 321,555 320,736
Trailing 12 Months ended Mar 31, 2003 346,164 609,320 252,779 356,541 345,341
591,051 132,572 458,480 384,202
Statement 2002 359,794 665,486 300,628 364,858 342,616
309,823 0 309,823 307,028
2003 3-mo. Annualized 375,334 645,679 276,945 368,733 359,913
Statement 2002 441,912 573,227 173,570 399,657 370,506
T-12 Ending 9/30 304,302 500,364 179,544 320,820 309,320
T-12 As of 6/30/02 434,626 690,763 327,235 363,528 333,028
2003 Annualized 318,627 541,521 261,294 280,227 266,295
451,961 105,431 346,529 318,618
Year ended Dec 31, 2002 335,837 652,992 269,142 383,850 371,250
376,965 66,750 310,215 294,525
412,498 105,873 306,625 302,565
Year ended Dec 31, 2002 363,939 671,937 331,301 340,636 335,140
Trailing 12 Months ended Jan 31, 2003 108,781 391,866 85,593 306,273 286,571
2003 3-mo. Annualized 284,472 539,762 250,165 289,597 282,502
Year ended Dec 31, 2002 255,776 432,334 186,074 246,260 235,510
2002 234,920 499,191 237,052 262,138 255,570
Year ended Dec 31, 2002 209,855 315,052 89,060 225,992 206,823
272,923 13,188 259,735 254,281
280,109 21,731 258,377 254,097
3 Months Annualized ended Mar 31, 2003 319,000 512,742 239,332 273,410 224,188
Statement 2002 378,579 781,162 396,445 384,717 356,217
Statement 2002 211,901 460,092 243,570 216,523 201,523
201,280 6,038 195,242 194,154
Year ended Dec 31, 2002 215,317 467,993 160,681 307,312 291,229
Year ended Dec 31, 2002 212,986 281,431 61,840 219,591 199,820
Statement 2002 121,810 279,977 68,790 211,187 198,416
Statement 2002 162,314 256,651 46,651 210,000 198,439
Statement 2002 181,356 299,417 111,422 187,995 176,995
02/2003 T 12 193,617 268,723 86,753 181,970 176,720
2002 184,415 253,494 99,255 154,239 147,792
178,880 0 178,880 176,085
3 Months Annualized ended Mar 31, 2003 287,516 372,912 133,853 239,059 193,350
3 Months Annualized ended Mar 31, 2003 280,188 474,470 172,127 302,343 215,825
T-12 As of 7/31/02 277,286 647,601 379,993 267,608 242,608
2002 276,613 590,813 349,142 241,671 220,771
2002 173,585 220,813 50,420 170,393 164,393
Year ended Dec 31, 2002 235,827 537,769 290,586 247,183 241,583
Statement 2002 26,696 248,242 52,463 195,779 171,409
Statement 2002 140,078 316,806 126,693 190,113 182,013
143,948 6,818 137,130 137,130
Statement 2002 195,259 227,350 46,939 180,410 166,697
Statement 2002 173,925 448,802 280,640 168,162 148,962
T-12 As of 6/30/02 170,812 364,768 200,198 164,570 148,570
Year ended Dec 31, 2002 240,451 314,210 85,021 229,189 218,379
Year ended Dec 31, 2002 124,639 198,428 59,982 138,446 130,484
Year ended Dec 31, 2002 92,854 160,650 54,418 106,232 100,384
Year ended Dec 31, 2002 80,504 165,453 74,611 90,842 83,446
LARGEST LARGEST
TENANT TENANT LARGEST TENANT EXP.
LARGEST TENANT SQ. FT. % OF NRA DATE
- ---------------------------------------------------------------------------------------------------
Inessa Stewart's Antiques 17,933 36.90% 30-Nov-2008
Walgreens 13,650 100.00% 30-Apr-2078
Great Lakes Foods 112,015 50.77% 31-Dec-2005
Walgreens 13,500 43.68% 31-Oct-2028
Rite Aid of New York, Inc. 11,180 100.00% 28-Feb-2019
Mountain Mike's Pizza 2,500 10.07% 31-Jul-2003
Home Center Furniture 3,408 12.83% 31-Oct-2005
Euphoria Salon 5,525 53.06% 30-May-2010
Marshalls 29,000 100.00% 14-Mar-2014
The North American Mission Board of the Southern Baptist 10,000 45.45% 31-Dec-2006
Gerbes 47,526 84.47% 31-May-2006
Eckerds 13,824 100.00% 31-Jan-2023
Walgreens 13,650 100.00% 30-Apr-2078
Genesis Vocational Training, Inc. 19,780 44.08% 30-Jun-2007
CVS 10,880 100.00% 31-Jan-2025
Tire Kingdom 7,104 33.83% 31-Aug-2014
Practical Computer 8,000 24.96% 31-Jul-2007
Chihua's Supermarket 2,860 22.00% 31-May-2007
Hollywood Video 5,200 43.33% 14-Sep-2012
Richmond Restaurant Group 9,512 40.28% 31-Dec-2004
Rite Aid of Maryland, Inc. 11,180 100.00% 28-Feb-2019
The Palace Restaurant & The Palace Special Events 6,042 12.40% 31-Jan-2007
American Business Machines 17,817 22.70% 31-Mar-2005
Intercontinental Acceptance Corporation 7,252 46.49% 14-Feb-2008
Great Gig Productions 2,500 18.38% 31-Jul-2005
Tire Kingdom 6,270 50.05% 31-Aug-2014
Tire Kingdom 6,303 63.18% 30-Apr-2017
Southern Express Lube, Inc. 3,192 41.50% 31-Aug-2007
Accutune 3,472 31.55% 28-Feb-2005
2ND
LARGEST 2ND LARGEST
TENANT TENANT % OF 2ND LARGEST TENANT EXP.
2ND LARGEST TENANT NAME SQ. FT. NRA (%) DATE
- -------------------------------------------------------------------------------------------
Salons of Dallas 5,779 11.89% 30-Sep-2004
K&K Warehousing 108,616 49.23% 30-Nov-2017
Finney, LLC d/b/a Bistro Mezzaluna 4,197 13.58% Multiple Spaces
Radio Shack #01-3812 2,400 9.67% 31-Aug-2003
Neonatology Medical Group 2,433 9.16% 31-Jan-2008
Panda Express 1,800 17.29% 30-Apr-2012
David M. Pehrson, D.M.D. 2,600 11.82% 28-Feb-2008
Happy Garden 2,500 4.44% 31-May-2004
Baz Enterprises LTD dba Stambush Physical 5,175 11.53% 31-Dec-2006
Sample Road Auto Spa 3,482 16.58% 30-Nov-2011
Ace Floors 4,900 15.29% 31-Aug-2006
Colorado Laundries, Inc. 2,600 20.00% 30-Nov-2011
RadioShack 2,800 23.33% 31-Jan-2007
Senor Sol Fine Mexican Food 5,522 11.33% 31-May-2003
Triad USA Marketing Group 14,156 18.04% 31-Jan-2008
Carlsen Douglas Development 3,298 21.14% 31-Aug-2017
Dunkin Donuts 1,890 13.90% 30-Dec-2015
Roadway Muffler & Break 2,323 18.54% 31-Dec-2003
Texeco Lube Center 2,620 26.26% 31-Oct-2011
Precision Tune Auto Care 2,620 34.06% 31-May-2010
Car Wash 3,192 29.01% 30-Nov-2007
3RD
LARGEST 3RD LARGEST
TENANT TENANT % OF 3RD LARGEST TENANT EXP.
3RD LARGEST TENANT NAME SQ. FT NRA DATE LOCKBOX
- -----------------------------------------------------------------------------------------------------
Blockbuster Video, Inc. 5,077 10.45% 31-Mar-2008
Springing
International Quick Signs 1,927 6.23% 30-Apr-2004
Day 1
Kay's Pet Supplies 2,400 9.67% 30-Apr-2005
Carter's Jr. Market 2,370 8.92% 31-Oct-2007
Hot Body Tanning 1,549 14.88% 30-Sep-2007
Springing
Business Partners 2,400 10.91% 30-Jun-2007
Jefferson City Credit 2,000 3.55% MTM Springing
MG Group, Inc. 2,335 5.20% 30-Sep-2003 Springing
Springing
Brake World 2,604 12.40% 31-Aug-2012
Cassell Builder Group 4,525 14.12% 28-Feb-2005
Subway Real Estate Corp. 1,560 12.00% 31-Oct-2009
Payless ShoeSource 2,800 23.33% 30-Nov-2011
Day 1
David's Barbecue 3,253 6.68% 31-Dec-2004 Springing
Veterinary Pharmacies of America Inc. 9,747 12.42% 30-Sep-2007 Springing
Medical Manager (WebMD) 2,678 17.17% 31-Aug-2007
Classy Critters 1,410 10.37% 30-Apr-2005
Precision Tune Auto Care 2,323 18.54% 31-Jan-2004
Subway 1,054 10.56% 31-Mar-2008
Tint World 1,880 24.44% 30-Sep-2011
Auto Sounds Plus 1,736 15.78% 30-Nov-2005 Springing
MORTGAGE
LARGEST AFFILIATED SPONSOR FLAG LOAN
(> THAN 4% OF POOL) NUMBER
- ------------------------------- --------
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
145
146
147
148
149
150
151
152
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2003-C5
ANNEX A-1A CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS AND MORTGAGED
PROPERTIES
MORTGAGE
LOAN LOAN GROUP
NUMBER NUMBER PROPERTY NAME ADDRESS
- ------------------------------------------------------------------------------------------------------------------------------------
1 1 Lloyd Center 2201 Lloyd Center
2 1 One South Broad Street One South Broad Street
3 1 673 First Avenue 673 First Avenue
5 1 Irongate Apartments 3301 Arena Boulevard
6 1 Columbiana Station Shopping Center 234, 238, 240, 242, 244, 246, 301 Harbinson Boulevard and
1005, 1007, 1009, 1110, 1120, 1230, 1260 Bower Parkway
7 1 16 West 61st Street 16 West 61st Street
9 1 AmCap - Union & Alameda 12031 - 12097 West Alameda Parkway
11 1 2175 K Street, N.W. 2175 K Street, N.W.
12 1 90 & 110 South Bedford Road 90-110 South Bedford Road
13 1 Maryland Corporate Center 7401 & 7501 Forbes Boulevard, 7375 & 7404 Executive Place
14 1 Village on the Hill 9 School Street
15 1 Anthem Village 2501-2591 Anthem Village Drive
16 1 Riviera Plaza 1618 Southwest First Avenue
17 1 Georgetown Plaza 2233 Wisconsin Avenue Northwest
18 1 College Grove Shopping Center 3412 College Avenue
19 1 Shoppes of Parkland 5901-5993 Hillsboro Boulevard and 7011-7171 North State Road 7
20 1 Lowell Street 205 & 207 Lowell Street
21 1 The Lassiter at North Hills Shopping Center 4401 Six Forks Road
23 1 WOW - Chippewa & Hobart Various
23.1 WOW-Chippewa Falls 2521 & 2621 Olson Drive
23.2 WOW-Hobart 1120 O'Hare Boulevard
24 1 Kearny Mesa Crossroads 3750 & 3760 Convoy Street
25 1 Point Plaza East 4-5-6 290, 310, & 322 Israel Road SE
27 1 Beacon Station Business Park 10350 NW 112th Avenue
28 1 Gardens Towne Square 4200 Northlake Boulevard
30 1 Rio Vista Building 8885 Rio San Diego Drive
33 1 8989 Rio Vista Plaza 8989 Rio San Diego Drive
34 1 Tapo Plaza 2196- 2358 Tapo Street
35 1 Market Place Shopping Center 1-26 Plaza Drive
36 1 Creekside Place Shopping Center 23500-23600 Valencia Boulevard
37 1 Village Shoppes of Flowery Branch 5900 Spout Springs Road
38 1 Hilton Norfolk Airport 1500 North Military Highway
39 1 Two Northbrook Place 60 Revere Drive
40 1 10470 Old Placerville Road 10470 Old Placerville Road
42 1 Tudor Business Center 1011 East Tudor Road
44 1 301 East Liberty Street 301 East Liberty Street
45 1 New Market 267 Highway 421
46 1 Bank of America Tower 500 Locust Street, 317 Sixth Avenue
47 1 Mill Towne Center 101-235 East Baseline Road
48 1 Village Square 181-185 Main Street
49 1 Hunington Portfolio Various
49.1 Westfield Village Shopping Center 3154 North Fry Road
49.2 The Shops on Memorial 5535 Memorial Drive
54 1 AmCap - 84th & Pecos 1407-1575 West 84th Avenue
56 1 Lincoln Road Plaza 825-845 Lincoln Road
57 1 Route 6 Plaza 3580 Mohegan Avenue
58 1 River Chase Office Center 4431 North Front Street
59 1 Troutdale Commons 31301 Southwest 257th Avenue
60 1 AmCap - Jewell & Wadsworth 1927 South Wadsworth Boulevard
63 1 L Street Self Storage 707 L Street
64 1 Lakeside Office Park 4704 Harlan Street
67 1 Mini U Storage- Fairfax Station 10930 Clara Barton Drive
68 1 Park Meadows Medical 9218 Kimmer Drive
69 1 Bannockburn Mediplex Office Building 2151 Waukegan Road
70 1 York Farm Estates 1870 Baldwin Road
72 1 2301 Glades 2301 Glades Road
73 1 Methodist Medical Building 8120 Timberlake Way
76 1 Springfield Self Storage 7711 Loisdale Road
77 1 Mizner Place 12300 South Shore Boulevard
80 1 Walgreens - Elgin 1700 Larkin Avenue
81 1 388 West Broadway 388 West Broadway
82 1 Independence Park Shopping Center 3020 Legacy Drive
83 1 Walgreens - Colorado Springs 1730 Platte Avenue East
84 1 Forest Hill Centre 140 Forest Hill Centre
86 1 Cordova Towne Center Phases II & III 1100, 1134-1138 North Germantown Parkway
87 1 North Denver Industrial 3857-3895 Steele Street
88 1 Beachwalk Center 130 Scenic Highway (US Highway 98 East)
89 1 Walgreens - Tropicana Avenue 4905 West Tropicana Avenue
90 1 Rite Aid - Las Vegas 1815 East Flamingo Road
92 1 Palm Valley Pavilions East 1375-1475 North Litchfield Road
93 1 CRS Tower 8035 East R.L. Thornton Freeway
94 1 Rancho Palomino Medical Center 630 South Rancho Drive
95 1 Randhurst Crossings Shopping Center 1 West Rand Road
96 1 Walgreens - Omaha 8989 West Dodge Road
98 1 Walgreens - Thrasher's Corner, WA 20812 Bothell Everett Highway
101 1 Inwood Retail Center 5201 and 5211-5223 West Lovers Lane & 7979 Inwood Road
103 1 Walgreens - Dickinson 100 F.M. 646
105 1 1230 48th Avenue 1230 48th Avenue
106 1 17th Street Plaza 701-761 SE 17th Street
107 1 Rite Aid - Colonie 1863 Central Avenue
108 1 Shurgard - Brandon 1010 West Lumsden Road
109 1 Morgan Country Square 6171-6199 Santa Teresa Boulevard
113 1 Palmetto Plaza 17250-17264 Foothill Boulevard
115 1 Village at Dana Park II 3440 East Baseline Road
116 1 Marshalls - Lodi 2449 West Kettleman Lane
117 1 Wagon Wheel MHP 4641 Lasater Road
118 1 Northpoint Day Centre 4000 Northpoint Parkway
119 1 Shurgard - Oldsmar 3657 Tampa Road
121 1 Mini U Storage-Maple Shade 2481 Route 73 South
122 1 AmCap - Gerbes Center 2801-2805 West Truman Boulevard
123 1 Eckerds-Holly Springs 5329 Old Highway 5 at Toonigh Road
124 1 Walgreens - Conroe, TX 1120 North Loop 336 West
125 1 Harwin Plaza 7111 Harwin Drive
128 1 CVS - Shippensburg 701 East King Street
129 1 South Florida - Sample Turnpike 2501-2525 West Sample Road
130 1 5405-5407 Port Royal Road 5405-5407 Port Royal Road
131 1 Montbello Plaza 4660 Peoria Street
132 1 Augusta Commons 2367 Augusta Road
134 1 1407-1413 East Cary Street 1407-1413 East Cary Street
135 1 La Posada Apartments 241 Lafayette Circle
136 1 Rite Aid - Baltimore 700 West Saratoga Street
137 1 Village Park Shopping Center 2220-2234 West Park Row
138 1 Antoine Crossing 2800 Antoine Drive
140 1 Meadowbrook Mobile Home Park 1331 West Danby Road
143 1 Northcross Business Center 15806 Brookway Drive
145 1 Bank of America Pad 896 North Route 59
146 1 Bells Ferry Plaza Shopping Center 4311 & 4329 Bells Ferry Road
149 1 South Florida - West Boca 23193 Sandlefoot Plaza Drive
150 1 South Florida - Red Road 5710-5730 Northwest 176th Street
151 1 South Florida - Baton II 1000-1050 West Commercial Boulevard
152 1 South Florida - Tamarac 2530 West Commercial Boulevard
CROSS COLLATERALIZED
AND CROSS DEFAULTED
CITY STATE ZIP CODE LOAN FLAG
- ------------------------------------------------------------
Portland OR 97232
Philadelphia PA 19107
New York NY 10016
Sacramento CA 95834
Columbia SC 29212
New York NY 10023
Lakewood CO 80228
Washington DC DC 20037
Mount Kisco NY 10549
Lanham MD 20706
Framingham MA 01701
Henderson NV 89052
Portland OR 97201
Washington DC 20007
San Diego CA 92115
Parkland FL 33067
Wilmington MA 01887
Raleigh NC 27609
Various WI Various
Chippewa Falls WI 54729
Hobart WI 54115
San Diego CA 92111
Tumwater WA 98501
Miami FL 33178
Palm Beach Gardens FL 33410
San Diego CA 92108
San Diego CA 92108
Simi Valley CA 93063
Fairview Heights IL 62208
Valencia CA 91355
Flowery Branch GA 30542
Norfolk VA 23502
Northbrook IL 60062
Sacramento CA 95827
Anchorage AK 99503
Ann Arbor MI 48104
Boone NC 28607
Des Moines IA 50309
Tempe AZ 85283
Westport CT 06880
Various TX Various
Katy TX 77449
Houston TX 77007
Federal Heights CO 80260
Miami Beach FL 33139
Mohegan Lake NY 10547
Harrisburg PA 17110
Troutdale OR 97060
Lakewood CO 80232
Chula Vista CA 91911
Lakeside CO 80212
Fairfax Station VA 22039
Lone Tree CO 80124
Bannockburn IL 60015
Yorktown Heights NY 10598
Boca Raton FL 33431
Sacramento CA 95823
Springfield VA 22150
Wellington FL 33414
Elgin IL 60123
New York NY 10012
Plano TX 75023
Colorado Springs CO 80909
Lexington NC 27295
Cordova TN 38016
Denver CO 80205
Destin FL 32550
Las Vegas NV 89103
Las Vegas NV 89119
Goodyear AZ 85338
Dallas TX 75228 Boxer
Las Vegas NV 89106
Mount Prospect IL 60056
Omaha NE 68114
Bothell WA 98021
Dallas TX 75209
Dickinson TX 77539
Menominee MI 49858
Ft. Lauderdale FL 33316
Colonie NY 12205
Brandon FL 33511
San Jose CA 95123
Fontana CA 92336
Mesa AZ 85204
Lodi CA 95242
Mesquite TX 75181 Eggleston 2
Alpharetta GA 30005
Oldsmar FL 34677
Maple Shade NJ 08052
Jefferson City MO 65109
Holly Springs GA 30188
Conroe TX 77301
Houston TX 77036 Boxer
Shippensburg PA 17257
Deerfield Beach FL 33073
Springfield VA 22151
Denver CO 80239
West Columbia SC 29169
Richmond VA 23219
Layfayette CA 94549 LaFayette
Baltimore MD 21201
Pantego TX 76013
Houston TX 77092 Boxer
Newfield NY 14867
Huntersville NC 28078
Aurora IL 60504
Kennesaw GA 30144
Boca Raton FL 33428
Hialeah FL 33015
Fort Lauderdale FL 33309
Tamarac FL 33309
(1) For purposes of determining the underwritten loan-to-value ratios of 1
Mortgage Loan representing 1.2% of the Cut-Off Date Balance (1.6% of the Group 1
Cut-Off Date Balance), such ratios were reduced by amounts available under a
letter of credit and in a cash reserve that will be released upon the
achievement of a specified rental income increase at the related mortgaged
property. One Mortgage Loan, representing 5.8% of the Cut-Off Date Balance (7.8%
of the Group 1 Cut-Off Date Balance), is part of a split loan structure and the
related pari passu companion loan is not included in the trust fund. With
respect to this Mortgage Loan, the calculation of loan-to-value ratios and debt
service coverage ratio was based upon the aggregate indebtedness of the Mortgage
Loan and the related pari passu companion loan.
See "DESCRIPTION OF THE MORTGAGED POOL - Additional Mortgage Loan Information"
in the prospectus supplement.
(2) Refer to Annex A-6.
% OF
AGGREGATE % OF LOAN
LOAN GENERAL PROPERTY ORIGINAL LOAN CUT-OFF DATE LOAN CUT-OFF DATE GROUP 1 ORIGINATION
ORIGINATOR TYPE SPECIFIC PROPERTY TYPE BALANCE ($) BALANCE ($) BALANCE BALANCE DATE
- ---------------------------------------------------------------------- -------------------------------------------------------------
Wachovia Retail Anchored 70,000,000.00 69,922,220.75 5.82% 7.77% 12-May-2003
Wachovia Office CBD 45,000,000.00 44,919,181.80 3.74% 4.99% 15-Apr-2003
Wachovia Office CBD 35,000,000.00 35,000,000.00 2.91% 3.89% 7-Feb-2003
Wachovia Multifamily Conventional 27,000,000.00 27,000,000.00 2.25% 3.00% 18-Mar-2003
Wachovia Retail Anchored 25,900,000.00 25,900,000.00 2.16% 2.88% 3-Jun-2003
Wachovia Office CBD 25,000,000.00 24,953,568.34 2.08% 2.77% 22-Apr-2003
NCCI Retail Anchored 20,791,000.00 20,726,538.48 1.73% 2.30% 12-Mar-2003
Wachovia Office CBD 18,250,000.00 18,250,000.00 1.52% 2.03% 2-May-2003
Wachovia Office Medical 18,000,000.00 17,965,895.32 1.50% 2.00% 25-Apr-2003
CGM Office Suburban 17,120,000.00 17,120,000.00 1.43% 1.90% 17-Jan-2003
Wachovia Multifamily Conventional 17,000,000.00 17,000,000.00 1.42% 1.89% 25-Apr-2003
CGM Retail Anchored 17,000,000.00 16,904,637.36 1.41% 1.88% 28-Jan-2003
CGM Mixed Use Retail/Office 16,850,000.00 16,759,444.83 1.40% 1.86% 9-Jan-2003
CGM Office Suburban 16,500,000.00 16,482,870.79 1.37% 1.83% 5-May-2003
Wachovia Retail Anchored 16,300,000.00 16,281,990.26 1.36% 1.81% 14-May-2003
Wachovia Retail Anchored 16,000,000.00 15,968,668.70 1.33% 1.77% 24-Apr-2003
NCCI Industrial Flex 15,500,000.00 15,403,979.71 1.28% 1.71% 21-Nov-2002
CGM Retail Anchored 15,310,000.00 15,216,679.80 1.27% 1.69% 27-Dec-2002
Wachovia Industrial Distribution 15,000,000.00 14,971,010.41 1.25% 1.66% 7-May-2003
Wachovia Industrial Distribution
Wachovia Industrial Distribution
Wachovia Office Suburban 15,000,000.00 14,967,091.25 1.25% 1.66% 17-Apr-2003
AMCC Office Suburban 14,500,000.00 14,471,606.00 1.21% 1.61% 13-Apr-2003
AMCC Office Suburban 14,145,000.00 14,145,000.00 1.18% 1.57% 1-May-2003
Wachovia Retail Anchored 14,000,000.00 13,959,816.03 1.16% 1.55% 1-Apr-2003
Wachovia Office Suburban 13,000,000.00 12,971,419.02 1.08% 1.44% 16-Apr-2003
Wachovia Office Suburban 12,000,000.00 11,976,036.27 1.00% 1.33% 16-Apr-2003
CGM Retail Anchored 11,000,000.00 10,940,994.37 0.91% 1.22% 2-Jan-2003
Wachovia Retail Anchored 10,800,000.00 10,777,960.96 0.90% 1.20% 1-May-2003
CGM Retail Anchored 10,550,000.00 10,529,295.73 0.88% 1.17% 8-Apr-2003
Wachovia Retail Anchored 10,560,000.00 10,527,461.29 0.88% 1.17% 24-Mar-2003
Wachovia Hospitality Full Service 10,350,000.00 10,334,433.77 0.86% 1.15% 30-May-2003
NCCI Office Suburban 9,950,000.00 9,939,006.32 0.83% 1.10% 5-Jun-2003
CGM Office Suburban 9,825,000.00 9,825,000.00 0.82% 1.09% 18-Jun-2003
AMCC Office Suburban 8,890,000.00 8,861,748.93 0.74% 0.98% 26-Mar-2003
NCCI Office Suburban 8,250,000.00 8,241,138.48 0.69% 0.92% 21-May-2003
Wachovia Retail Anchored 8,100,000.00 8,090,587.04 0.67% 0.90% 29-May-2003
CGM Office CBD 7,900,000.00 7,885,097.89 0.66% 0.88% 7-Apr-2003
CGM Mixed Use Office/Retail 7,500,000.00 7,457,061.86 0.62% 0.83% 23-Jan-2003
CGM Retail Anchored 7,450,000.00 7,411,726.97 0.62% 0.82% 31-Jan-2003
NCCI Retail Unanchored 7,250,000.00 7,237,414.01 0.60% 0.80% 24-Apr-2003
NCCI Retail Unanchored
NCCI Retail Unanchored
NCCI Retail Anchored 7,049,000.00 7,027,144.91 0.59% 0.78% 12-Mar-2003
Wachovia Retail Shadow Anchored 7,000,000.00 6,974,213.35 0.58% 0.78% 18-Feb-2003
CGM Retail Anchored 7,000,000.00 6,960,286.83 0.58% 0.77% 6-Dec-2002
Wachovia Office Suburban 6,800,000.00 6,786,771.31 0.57% 0.75% 6-May-2003
CGM Retail Anchored 6,600,000.00 6,587,328.41 0.55% 0.73% 10-Apr-2003
NCCI Retail Anchored 6,560,000.00 6,539,661.03 0.54% 0.73% 12-Mar-2003
NCCI Self Storage Self Storage 6,500,000.00 6,474,996.69 0.54% 0.72% 25-Mar-2003
NCCI Office Suburban 6,500,000.00 6,467,294.09 0.54% 0.72% 10-Jan-2003
Wachovia Self Storage Self Storage 6,065,000.00 6,055,667.53 0.50% 0.67% 30-May-2003
AMCC Office Medical 6,050,000.00 6,043,188.89 0.50% 0.67% 4-Jun-2003
Wachovia Office Medical 6,000,000.00 6,000,000.00 0.50% 0.67% 16-Apr-2003
Wachovia Multifamily Conventional 6,000,000.00 5,986,529.37 0.50% 0.67% 25-Apr-2003
Wachovia Retail Mixed Use 5,625,000.00 5,625,000.00 0.47% 0.63% 24-Dec-2002
CGM Office Medical 5,512,500.00 5,432,597.20 0.45% 0.60% 1-Nov-2001
Wachovia Self Storage Self Storage 5,350,000.00 5,327,132.12 0.44% 0.59% 26-Mar-2003
AMCC Office Suburban 5,150,000.00 5,150,000.00 0.43% 0.57% 22-Apr-2003
Wachovia Retail Anchored 4,800,000.00 4,790,885.31 0.40% 0.53% 5-May-2003
NCCI Retail Shadow Anchored 4,800,000.00 4,787,693.45 0.40% 0.53% 23-Apr-2003
AMCC Retail Shadow Anchored 4,750,000.00 4,740,860.19 0.39% 0.53% 7-May-2003
Wachovia Retail Anchored 4,675,000.00 4,655,115.95 0.39% 0.52% 8-Apr-2003
NCCI Retail Anchored 4,500,000.00 4,490,027.66 0.37% 0.50% 9-May-2003
AMCC Retail Shadow Anchored 4,400,000.00 4,386,498.12 0.37% 0.49% 3-Apr-2003
AMCC Industrial Warehouse 4,300,000.00 4,300,000.00 0.36% 0.48% 12-Jun-2003
NCCI Retail Anchored 4,160,000.00 4,155,976.11 0.35% 0.46% 11-Jun-2003
Wachovia Retail Anchored 4,100,000.00 4,095,918.43 0.34% 0.46% 16-May-2003
Wachovia Retail Anchored 4,384,507.18 4,074,728.81 0.34% 0.45% 26-Aug-1999
Wachovia Retail Shadow Anchored 4,000,000.00 3,975,279.41 0.33% 0.44% 23-Dec-2002
NCCI Office Suburban 3,975,000.00 3,948,884.45 0.33% 0.44% 11-Dec-2002
Wachovia Office Medical 3,900,000.00 3,888,032.43 0.32% 0.43% 8-Apr-2003
Wachovia Retail Shadow Anchored 3,900,000.00 3,869,709.40 0.32% 0.43% 31-Oct-2002
Wachovia Retail Anchored 3,789,600.00 3,778,859.73 0.31% 0.42% 8-Apr-2003
AMCC Retail Anchored 3,620,000.00 3,612,849.14 0.30% 0.40% 17-Apr-2003
AMCC Retail Unanchored 3,600,000.00 3,585,067.04 0.30% 0.40% 29-Apr-2003
Wachovia Retail Anchored 3,430,000.00 3,426,245.67 0.29% 0.38% 16-May-2003
Wachovia Industrial Distribution 3,300,000.00 3,273,205.56 0.27% 0.36% 14-Feb-2003
AMCC Retail Anchored 3,200,000.00 3,190,541.15 0.27% 0.35% 31-Mar-2003
Wachovia Retail Anchored 3,354,563.37 3,109,157.66 0.26% 0.35% 4-May-1999
Wachovia Self Storage Self Storage 3,100,000.00 3,096,619.62 0.26% 0.34% 30-May-2003
AMCC Retail Unanchored 3,100,000.00 3,095,457.39 0.26% 0.34% 14-May-2003
AMCC Retail Unanchored 2,800,000.00 2,791,723.49 0.23% 0.31% 27-Mar-2003
NCCI Retail Shadow Anchored 2,716,000.00 2,713,175.07 0.23% 0.30% 16-May-2003
Wachovia Retail Anchored 2,650,000.00 2,638,944.36 0.22% 0.29% 15-Apr-2003
NCCI Mobile Home Park Mobile Home Park 2,575,000.00 2,572,068.35 0.21% 0.29% 9-May-2003
NCCI Retail Unanchored 2,400,000.00 2,397,494.25 0.20% 0.27% 20-May-2003
Wachovia Self Storage Self Storage 2,350,000.00 2,347,437.45 0.20% 0.26% 30-May-2003
Wachovia Self Storage Self Storage 2,200,000.00 2,196,756.37 0.18% 0.24% 21-May-2003
NCCI Retail Anchored 2,160,000.00 2,153,303.02 0.18% 0.24% 12-Mar-2003
AMCC Retail Anchored 2,100,000.00 2,095,398.54 0.17% 0.23% 4-Jun-2003
AMCC Retail Anchored 2,050,000.00 2,046,098.66 0.17% 0.23% 10-Apr-2003
NCCI Office Suburban 2,020,000.00 2,006,728.70 0.17% 0.22% 11-Dec-2002
Wachovia Retail Anchored 1,960,000.00 1,951,663.59 0.16% 0.22% 3-Apr-2003
NCCI Retail Unanchored 1,940,000.00 1,908,757.47 0.16% 0.21% 25-Mar-2003
NCCI Industrial Warehouse 1,800,000.00 1,797,317.53 0.15% 0.20% 8-May-2003
AMCC Retail Unanchored 1,800,000.00 1,793,235.37 0.15% 0.20% 3-Mar-2003
AMCC Retail Shadow Anchored 1,800,000.00 1,790,822.33 0.15% 0.20% 24-Jan-2003
Wachovia Mixed Use Multifamily/Retail 1,688,000.00 1,686,237.62 0.14% 0.19% 2-Jun-2003
Wachovia Multifamily Conventional 1,670,000.00 1,666,628.71 0.14% 0.19% 29-Apr-2003
Wachovia Retail Anchored 1,874,658.72 1,655,675.57 0.14% 0.18% 14-Jul-1999
NCCI Retail Unanchored 1,650,000.00 1,642,946.37 0.14% 0.18% 24-Jan-2003
NCCI Office Suburban 1,630,000.00 1,619,290.98 0.13% 0.18% 11-Dec-2002
Wachovia Mobile Home Park Mobile Home Park 1,612,500.00 1,599,407.25 0.13% 0.18% 6-Mar-2003
AMCC Office Suburban 1,570,000.00 1,568,245.68 0.13% 0.17% 27-May-2003
AMCC Retail Shadow Anchored 1,455,000.00 1,453,537.63 0.12% 0.16% 29-May-2003
AMCC Retail Unanchored 1,440,000.00 1,436,162.63 0.12% 0.16% 16-Apr-2003
NCCI Retail Unanchored 1,410,000.00 1,387,292.80 0.12% 0.15% 25-Mar-2003
NCCI Retail Unanchored 820,000.00 806,794.39 0.07% 0.09% 25-Mar-2003
NCCI Retail Unanchored 620,000.00 608,640.04 0.05% 0.07% 25-Mar-2003
NCCI Retail Unanchored 515,000.00 505,563.91 0.04% 0.06% 25-Mar-2003
LOAN
ADMINISTRATIVE INTEREST
FIRST PAY MATURITY MORTGAGE COST RATE ACCRUAL
DATE DATE OR ARD RATE (%) (%) METHOD
- ---------------------------------------------------------------------
11-Jul-2003 11-Jun-2013 5.4200% 0.04210% Actual/360
11-Jun-2003 11-May-2013 6.0800% 0.04210% Actual/360
11-Mar-2003 11-Feb-2013 5.6700% 0.04210% Actual/360
11-May-2003 11-Apr-2013 5.8000% 0.04210% Actual/360
11-Jul-2003 11-Jun-2010 4.0400% 0.04210% 30/360
11-Jun-2003 11-May-2013 5.9300% 0.04210% Actual/360
11-May-2003 11-Apr-2013 5.5700% 0.04210% Actual/360
11-Jun-2003 11-May-2013 5.9600% 0.04210% Actual/360
11-Jun-2003 11-May-2013 5.8400% 0.04210% Actual/360
1-Mar-2003 1-Feb-2012 5.7250% 0.04210% Actual/360
11-Jun-2003 11-May-2013 5.4700% 0.04210% Actual/360
1-Mar-2003 1-Feb-2012 5.4200% 0.04210% Actual/360
1-Mar-2003 1-Feb-2012 5.6500% 0.05210% Actual/360
1-Jul-2003 1-Jun-2013 5.7800% 0.04210% Actual/360
11-Jul-2003 11-Jun-2013 5.4500% 0.04210% Actual/360
11-Jun-2003 11-May-2013 5.6900% 0.04210% Actual/360
11-Jan-2003 11-Dec-2012 6.4000% 0.04210% Actual/360
1-Feb-2003 1-Jan-2013 5.8200% 0.04210% Actual/360
11-Jun-2003 11-May-2013 5.7500% 0.04210% Actual/360
11-Jun-2003 11-May-2010 5.1600% 0.04210% Actual/360
11-Jun-2003 11-May-2012 5.6900% 0.04210% Actual/360
11-Jun-2003 11-May-2011 5.5000% 0.04210% Actual/360
11-May-2003 11-Apr-2013 5.9400% 0.04210% Actual/360
11-Jun-2003 11-May-2010 5.1500% 0.04210% Actual/360
11-Jun-2003 11-May-2013 5.6000% 0.04210% Actual/360
1-Mar-2003 1-Feb-2008 5.6600% 0.04210% Actual/360
11-Jun-2003 11-May-2013 5.5000% 0.04210% Actual/360
1-Jun-2003 1-May-2013 5.6800% 0.10210% Actual/360
11-May-2003 11-Apr-2013 5.6000% 0.04210% Actual/360
11-Jul-2003 11-Jun-2013 5.7300% 0.04210% Actual/360
11-Jul-2003 11-Jun-2013 5.4500% 0.04210% Actual/360
1-Aug-2003 1-Jul-2013 5.6500% 0.10210% Actual/360
11-May-2003 11-Apr-2009 5.4500% 0.04210% Actual/360
11-Jul-2003 11-Jun-2013 5.6000% 0.04210% Actual/360
11-Jul-2003 11-Jun-2013 5.1800% 0.04210% Actual/360
1-Jun-2003 1-May-2013 5.8600% 0.08210% Actual/360
1-Mar-2003 1-Feb-2008 5.3100% 0.10210% Actual/360
1-Mar-2003 1-Feb-2013 5.8900% 0.04210% Actual/360
11-Jun-2003 11-May-2013 6.2300% 0.09210% Actual/360
11-May-2003 11-Apr-2013 5.5700% 0.04210% Actual/360
11-Apr-2003 11-Mar-2013 5.9900% 0.04210% Actual/360
1-Feb-2003 1-Jan-2013 6.1800% 0.04210% Actual/360
11-Jun-2003 11-May-2013 5.7200% 0.04210% Actual/360
1-Jun-2003 1-May-2013 5.7800% 0.08210% Actual/360
11-May-2003 11-Apr-2013 5.5700% 0.04210% Actual/360
11-May-2003 11-Apr-2013 6.5000% 0.04210% Actual/360
11-Mar-2003 11-Feb-2013 6.0000% 0.04210% Actual/360
11-Jul-2003 11-Jun-2013 5.5800% 0.08210% Actual/360
11-Jul-2003 11-Jun-2013 5.3500% 0.04210% Actual/360
11-Jun-2003 11-May-2013 5.6200% 0.04210% Actual/360
11-Jun-2003 11-May-2013 5.0500% 0.04210% Actual/360
11-Feb-2003 11-Jan-2013 5.9300% 0.04210% Actual/360
1-Jan-2002 1-Dec-2011 7.1500% 0.04210% Actual/360
11-May-2003 11-Apr-2013 5.8700% 0.04210% Actual/360
11-Jun-2003 11-May-2013 5.6400% 0.04210% Actual/360
11-Jun-2003 11-May-2013 5.8300% 0.04210% Actual/360
11-Jun-2003 11-May-2013 6.3500% 0.04210% Actual/360
11-Jun-2003 11-May-2013 5.7700% 0.04210% Actual/360
11-May-2003 11-Apr-2013 5.9000% 0.04210% Actual/360
11-Jul-2003 11-Jun-2023 5.8000% 0.06210% Actual/360
11-May-2003 11-Apr-2013 5.6200% 0.04210% Actual/360
11-Aug-2003 11-Jul-2010 5.2000% 0.04210% Actual/360
11-Jul-2003 11-Jun-2013 6.1500% 0.04210% Actual/360
11-Jul-2003 11-Jun-2013 6.0000% 0.04210% Actual/360
15-Oct-1999 15-Jun-2024 6.9100% 0.04210% 30/360
11-Feb-2003 11-Jan-2013 5.7500% 0.08210% Actual/360
11-Jan-2003 11-Dec-2012 6.1200% 0.04210% Actual/360
11-May-2003 11-Apr-2013 5.6200% 0.04210% Actual/360
11-Dec-2002 11-Nov-2012 6.0000% 0.04210% Actual/360
11-May-2003 11-Apr-2013 6.0000% 0.04210% Actual/360
11-Jun-2003 11-May-2013 5.6500% 0.04210% Actual/360
11-Jun-2003 11-May-2023 6.2500% 0.04210% Actual/360
11-Jul-2003 11-Jun-2013 5.5000% 0.04210% Actual/360
11-Apr-2003 11-Mar-2013 6.2500% 0.04210% Actual/360
11-May-2003 11-Apr-2013 5.8000% 0.04210% Actual/360
15-Jun-1999 15-Feb-2019 7.3500% 0.04210% 30/360
11-Jul-2003 11-Jun-2013 5.5200% 0.04210% Actual/360
11-Jul-2003 11-Jun-2013 5.9000% 0.04210% Actual/360
11-May-2003 11-Apr-2013 5.8000% 0.04210% Actual/360
11-Jul-2003 11-Jun-2013 5.7700% 0.11210% Actual/360
11-Jun-2003 11-May-2013 6.0000% 0.04210% Actual/360
11-Jul-2003 11-Jun-2013 5.2900% 0.04210% Actual/360
11-Jul-2003 11-Jun-2013 5.7500% 0.11210% Actual/360
11-Jul-2003 11-Jun-2013 5.5200% 0.04210% Actual/360
11-Jul-2003 11-Jun-2013 5.8600% 0.08210% Actual/360
11-May-2003 11-Apr-2013 5.5700% 0.04210% Actual/360
11-Jul-2003 11-Jun-2023 6.1000% 0.04210% Actual/360
11-Jun-2003 11-May-2013 5.8200% 0.04210% Actual/360
11-Jan-2003 11-Dec-2012 6.1200% 0.04210% Actual/360
11-May-2003 11-Apr-2013 5.9000% 0.04210% Actual/360
11-May-2003 11-Apr-2013 5.9100% 0.04210% Actual/360
1-Jul-2003 1-Jun-2013 5.7900% 0.14210% Actual/360
11-Apr-2003 11-Mar-2013 5.9000% 0.04210% Actual/360
11-Mar-2003 11-Feb-2013 5.9300% 0.04210% Actual/360
11-Jul-2003 11-Jun-2013 5.7500% 0.04210% Actual/360
11-Jun-2003 11-May-2013 5.5500% 0.04210% Actual/360
15-Aug-1999 15-Feb-2019 6.8500% 0.04210% 30/360
11-Mar-2003 11-Feb-2013 6.8500% 0.04210% Actual/360
11-Jan-2003 11-Dec-2012 6.1200% 0.04210% Actual/360
11-Apr-2003 11-Mar-2013 6.2500% 0.04210% Actual/360
11-Jul-2003 11-Jun-2013 5.3900% 0.04210% Actual/360
11-Jul-2003 11-Jun-2013 5.9500% 0.04210% Actual/360
11-Jun-2003 11-May-2013 6.1300% 0.04210% Actual/360
11-May-2003 11-Apr-2013 5.9100% 0.04210% Actual/360
11-May-2003 11-Apr-2013 5.9100% 0.04210% Actual/360
11-May-2003 11-Apr-2013 5.9100% 0.04210% Actual/360
11-May-2003 11-Apr-2013 5.9100% 0.04210% Actual/360
ORIGINAL
INTEREST TERM TO REMAINING
ACCURAL MATURITY TERM TO REMAINING ORIGINAL REMAINING MATURITY DATE OR
METHOD OR ARD MATURITY OR IO PERIOD AMORT TERM AMORT TERM MONTHLY P&I ARD BALLOON ARD
DURING IO (MOS.) ARD (MOS.) (MOS.) (MOS.) (MOS.) PAYMENTS ($) BALANCE ($) LOANS
- -------------------------------------------------------------------------------------------------------------------------------
120 119 360 359 393,945.92 58,339,911.91 Y
120 118 360 358 272,116.59 38,265,684.18 Y
Actual/360 120 115 19 300 300 218,498.37 28,829,379.09 N
Actual/360 120 117 27 360 360 158,423.32 24,063,231.86 N
30/360 84 83 83 (IO) (IO) (IO) 25,900,000.00 N
120 118 360 358 148,764.38 21,164,785.72 N
120 117 360 357 118,963.75 17,409,122.45 Y
Actual/360 120 118 34 360 360 108,949.08 16,481,553.23 N
120 118 360 358 106,074.49 15,197,705.99 N
Actual/360 108 103 7 336 336 102,344.79 14,745,315.25 N
Actual/360 120 118 34 360 360 96,204.39 15,202,054.68 N
108 103 360 355 95,672.58 14,521,183.50 Y
108 103 360 355 97,264.23 14,483,607.17 N
120 119 360 359 96,604.21 13,904,674.36 N
120 119 360 359 92,038.91 13,597,623.13 N
120 118 360 358 92,762.70 13,447,880.01 N
120 113 360 353 96,953.42 13,298,971.20 Y
120 114 360 354 90,026.98 12,914,536.39 N
120 118 360 358 87,535.93 12,630,409.95 N
84 82 360 358 81,996.38 13,326,543.77 Y
108 106 360 358 84,066.20 12,483,379.39 Y
Actual/360 96 94 52 360 360 80,313.76 13,469,563.42 Y
120 117 360 357 83,397.79 11,854,801.12 N
84 82 360 358 70,983.41 11,547,190.69 Y
120 118 360 358 68,889.48 10,058,130.57 N
60 55 360 355 63,565.49 10,241,503.80 N
120 118 360 358 61,321.21 9,024,346.78 N
120 118 360 358 61,098.60 8,864,489.94 N
120 117 360 357 60,622.74 8,850,480.82 N
120 119 300 299 64,987.48 7,943,258.35 N
120 119 360 359 56,183.26 8,300,389.31 N
120 120 360 360 56,713.42 8,247,589.65 N
72 69 360 357 50,197.92 8,104,823.73 Y
120 119 360 359 47,361.52 6,914,307.81 N
120 119 360 359 44,377.96 6,699,550.93 N
120 118 360 358 46,655.78 6,674,106.62 N
60 55 360 355 41,694.44 6,948,192.70 N
120 115 360 355 44,141.01 6,296,839.17 N
120 118 360 358 44,545.23 6,191,961.61 N
120 117 360 357 40,333.58 5,902,405.09 Y
120 116 360 356 41,923.54 5,936,820.58 N
120 114 360 354 42,782.02 5,967,655.76 N
120 118 360 358 39,553.46 5,720,572.52 N
120 118 360 358 38,641.68 5,562,429.19 N
120 117 360 357 37,535.58 5,492,946.14 Y
120 117 300 297 43,888.47 5,118,994.34 N
120 115 360 355 38,970.78 5,511,786.62 N
120 119 300 299 37,534.72 4,630,498.70 N
120 119 360 359 33,784.03 5,031,146.53 N
Actual/360 120 118 22 336 336 35,482.51 5,154,769.84 N
120 118 360 358 32,392.89 4,942,206.41 N
Actual/360 120 114 18 360 360 33,471.99 4,976,538.07 N
120 101 360 341 37,231.80 4,825,749.02 N
120 117 300 297 34,046.23 4,125,813.28 N
Actual/360 120 118 13 360 360 29,695.10 4,451,218.70 N
120 118 360 358 28,255.91 4,051,504.40 N
120 118 300 298 31,961.49 3,762,108.43 N
120 118 360 358 27,780.10 4,002,051.39 N
120 117 300 297 29,835.97 3,608,955.80 Y
240 239 240 239 31,722.34 100,849.79 N
120 117 360 357 25,315.00 3,689,966.54 N
84 84 300 300 25,640.97 3,617,888.84 N
120 119 360 359 25,343.89 3,544,286.18 N
120 119 360 359 24,581.57 3,477,861.81 Y
297 251 297 251 30,737.51 0.00 N
120 114 360 354 23,342.91 3,367,041.86 N
120 113 360 353 24,139.67 3,383,270.66 N
120 117 360 357 22,438.29 3,270,653.09 N
120 112 360 352 23,382.47 3,307,511.02 N
120 117 360 357 22,720.57 3,214,629.59 Y
120 118 360 358 20,895.94 3,038,864.45 N
240 238 240 238 26,510.40 0.00 N
120 119 360 359 19,475.16 2,865,802.01 Y
120 116 240 236 24,120.63 2,185,451.72 N
120 117 360 357 18,776.10 2,698,344.68 N
237 187 291 241 24,756.46 1,120,000.00 N
120 119 360 359 17,640.38 2,591,691.56 N
120 119 300 299 19,784.28 2,393,046.19 N
120 117 360 357 16,429.09 2,361,051.20 N
120 119 360 359 15,884.36 2,288,102.57 N
120 118 240 238 18,985.42 1,738,179.72 Y
120 119 360 359 14,283.11 2,137,291.73 N
120 119 360 359 14,005.75 2,020,664.47 N
120 119 360 359 13,372.55 1,964,668.79 N
120 119 300 299 13,986.96 1,695,974.90 N
120 117 360 357 12,359.28 1,808,653.00 Y
240 239 240 239 15,276.46 0.00 N
120 118 360 358 12,054.56 1,729,809.26 N
120 113 360 353 12,267.20 1,719,297.29 N
120 117 300 297 12,508.77 1,513,059.60 Y
120 117 132 129 20,023.14 248,005.76 N
120 119 300 299 11,367.47 1,384,292.98 N
120 116 360 356 10,676.46 1,522,533.63 N
120 115 360 355 10,711.04 1,523,190.57 N
120 119 360 359 9,850.71 1,421,200.65 N
120 118 360 358 9,534.53 1,397,598.13 N
235 187 235 187 14,194.98 (steps) (2) 0.00 N
120 115 360 355 10,811.78 1,432,986.04 N
120 113 360 353 9,898.78 1,387,353.76 N
120 116 240 236 11,786.22 1,067,890.67 N
120 119 360 359 8,806.24 1,307,248.81 N
120 119 360 359 8,676.75 1,232,391.55 N
120 118 300 298 9,392.71 1,120,418.31 N
120 117 132 129 14,552.90 180,251.61 N
120 117 132 129 8,463.39 104,827.18 N
120 117 120 117 6,855.28 4,527.01 N
120 117 120 117 5,694.31 3,760.34 N
CUT-OFF
APPRAISED DATE LTV
PREPAYMENT PROVISIONS VALUE ($) APPRAISAL DATE DSCR (X) (1) RATIO (1)
- -----------------------------------------------------------------------------------------------
L(25),D(91),O(4) 220,100,000 1-May-2003 1.83 63.54%
L(26),D(92),O(2) 56,700,000 3-Mar-2003 1.22 79.22%
L(29),D(87),O(4) 60,000,000 1-Jan-2003 1.60 58.33%
L(48),D(69),O(3) 34,400,000 14-Feb-2003 1.22 78.49%
L(25),GRTR1%orYM(56),O(3) 47,400,000 23-Dec-2002 3.42 54.64%
L(26),D(91),O(3) 39,800,000 8-Oct-2002 1.69 62.70%
L(27),D(57),O(36) 26,000,000 18-Dec-2002 1.36 79.72%
L(36),GRTR1%orYM/Defeasance(81),O(3) 24,800,000 1-Apr-2003 1.29 73.59%
L(48),D(69),O(3) 22,500,000 18-Mar-2003 1.47 79.85%
L(29),D(77),O(2) 21,500,000 13-Dec-2002 1.45 79.63%
L(36),D(75),O(9) 23,000,000 27-Feb-2003 1.31 73.91%
L(29),D(76),O(3) 24,600,000 2-Dec-2002 1.45 68.72%
L(29),D(77),O(2) 22,000,000 9-Oct-2002 1.36 76.18%
L(25),D(93),O(2) 21,500,000 1-Mar-2003 1.33 76.66%
L(48),D(66),O(6) 21,500,000 17-Apr-2003 1.28 75.73%
L(48),D(69),O(3) 20,100,000 24-Feb-2003 1.35 79.45%
L(31),D(86),O(3) 22,200,000 10-Oct-2002 1.48 69.39%
L(30),D(88),O(2) 19,500,000 18-Sep-2002 1.40 78.03%
L(48),D(69),O(3) 19,200,000 Various 1.35 77.97%
6,950,000 5-Mar-2003
12,250,000 4-Mar-2003
L(26),D(55),O(3) 19,800,000 29-Jan-2003 1.36 75.59%
L(36),D(69),O(3) 17,750,000 11-Mar-2003 1.48 71.39%
L(36),D(57),O(3) 20,500,000 4-Mar-2003 1.48 69.00%
L(48),D(68),O(4) 19,500,000 4-Feb-2003 1.40 71.59%
L(26),D(55),O(3) 19,000,000 7-Feb-2003 1.46 68.27%
L(48),D(67),O(5) 15,100,000 20-Feb-2003 1.42 79.31%
L(29),D(29),O(2) 14,050,000 10-Sep-2002 1.52 77.87%
L(48),D(68),O(4) 13,700,000 1-Feb-2003 1.36 78.67%
L(26),D(92),O(2) 13,700,000 17-Dec-2002 1.45 76.86%
L(48),D(69),O(3) 13,200,000 20-Dec-2002 1.38 79.75%
L(48),D(69),O(3) 16,625,000 18-Apr-2003 1.77 62.16%
L(25),D(92),O(3) 12,600,000 19-Mar-2003 1.52 78.88%
L(24),D(94),O(2) 13,000,000 30-Apr-2003 1.39 75.58%
L(36),D(33),O(3) 11,890,000 2-Jan-2003 1.69 74.53%
L(25),D(92),O(3) 11,000,000 1-Feb-2003 1.41 74.92%
L(48),D(69),O(3) 10,200,000 21-Mar-2003 1.47 79.32%
L(26),D(91),O(3) 10,400,000 13-Feb-2003 1.41 75.82%
L(29),D(28),O(3) 10,005,000 20-Nov-2002 1.47 74.53%
L(29),D(88),O(3) 10,500,000 1-Feb-2003 1.41 70.59%
L(26),D(88),O(6) 9,850,000 5-Feb-2003 1.34 73.48%
1,760,000 5-Feb-2003
8,090,000 5-Feb-2003
L(27),D(57),O(36) 9,500,000 16-Dec-2002 1.16 73.97%
L(48),D(69),O(3) 12,100,000 16-Dec-2002 1.78 57.64%
L(30),D(86),O(4) 8,800,000 1-Nov-2002 1.31 79.09%
L(26),D(90),O(4) 9,250,000 1-Apr-2004 1.41 73.37%
L(26),D(90),O(4) 9,170,000 17-Jan-2003 1.64 71.84%
L(27),D(57),O(36) 8,400,000 18-Dec-2002 1.09 77.85%
L(27),D(89),O(4) 8,800,000 5-May-2003 1.42 73.58%
L(29),D(85),O(6) 8,300,000 5-Dec-2002 1.47 77.92%
L(48),D(68),O(4) 8,120,000 17-Apr-2003 1.52 74.58%
L(36),D(81),O(3) 8,100,000 24-Apr-2003 1.50 74.61%
L(26),D(91),O(3) 8,650,000 30-Jan-2003 1.49 69.36%
L(48),D(69),O(3) 10,600,000 12-Mar-2003 2.19 56.48%
L(30),D(87),O(3) 7,500,000 11-Nov-2002 1.41 75.00%
L(43),D(74),O(3) 7,350,000 15-Aug-2001 1.44 73.91%
L(49),D(67),O(4) 7,730,000 20-Feb-2003 1.31 68.92%
L(36),D(81),O(3) 6,925,000 1-May-2003 1.56 74.37%
L(48),D(69),O(3) 6,000,000 27-Mar-2003 1.28 79.85%
L(26),D(91),O(3) 7,000,000 15-Feb-2003 1.38 68.40%
L(26),D(91),O(3) 6,325,000 7-Mar-2003 1.55 74.95%
L(48),D(69),O(3) 6,000,000 24-Jan-2003 1.35 77.59%
L(25),D(209),O(6) 5,950,000 24-Mar-2003 1.20 75.46%
L(36),D(81),O(3) 6,000,000 25-Feb-2003 1.62 73.11%
L(36),D(44),O(4) 6,000,000 1-May-2003 1.40 71.67%
L(25),D(92),O(3) 5,200,000 31-Dec-2002 1.43 79.92%
L(48),D(69),O(3) 5,425,000 31-Mar-2003 1.35 75.50%
L(95),YM(202) 4,700,000 1-Jun-1999 1.04 86.70%
L(48),D(69),O(3) 5,310,000 15-Nov-2002 1.49 74.86%
L(36),D(81),O(3) 5,700,000 8-Nov-2002 1.57 69.28%
L(48),D(69),O(3) 5,600,000 11-Mar-2003 1.42 69.43%
L(32),D(85),O(3) 5,250,000 3-Oct-2002 1.50 73.71%
L(48),D(69),O(3) 4,850,000 1-May-2003 1.39 77.91%
L(36),D(81),O(3) 5,200,000 9-Mar-2003 1.48 69.48%
L(36),D(201),O(3) 6,000,000 19-Feb-2003 1.37 59.75%
L(48),D(69),O(3) 4,550,000 1-Mar-2003 1.37 75.30%
L(48),D(69),O(3) 4,400,000 16-May-2002 1.33 74.39%
L(36),D(81),O(3) 4,850,000 5-Feb-2003 1.52 65.78%
L(47),D(190) 3,610,000 11-Jan-1999 1.03 86.13%
L(48),D(69),O(3) 4,600,000 30-Apr-2003 1.70 67.32%
L(60),GRTR1%orYM(57),O(3) 5,390,000 24-Mar-2003 1.56 57.43%
L(36),D(81),O(3) 3,750,000 6-Jan-2003 1.62 74.45%
L(25),D(89),O(6) 3,900,000 15-Mar-2003 1.55 69.57%
L(48),D(69),O(3) 4,150,000 18-Mar-2003 1.33 63.59%
L(25),D(92),O(3) 3,865,000 19-Feb-2003 1.96 66.55%
L(25),D(89),O(6) 3,200,000 25-Feb-2003 1.71 74.92%
L(48),D(69),O(3) 3,500,000 30-Apr-2003 1.76 67.07%
L(49),D(67),O(4) 2,950,000 11-Apr-2003 1.52 74.47%
L(27),D(57),O(36) 2,700,000 16-Dec-2002 1.39 79.75%
L(36),D(201),O(3) 3,300,000 8-Apr-2003 1.39 63.50%
L(36),D(81),O(3) 3,680,000 20-Jan-2003 1.76 55.60%
L(36),D(81),O(3) 2,810,000 1-Nov-2002 1.52 71.41%
L(48),D(69),O(3) 2,450,000 14-Jan-2003 1.29 79.66%
L(27),D(90),O(3) 3,375,000 1-Feb-2003 1.21 56.56%
L(25),D(91),O(4) 2,600,000 28-Mar-2003 1.46 69.13%
L(36),D(81),O(3) 2,450,000 10-Feb-2003 1.55 73.19%
L(36),D(81),O(3) 2,400,000 20-Nov-2002 1.54 74.62%
L(25),D(90),O(5) 2,110,000 26-Mar-2003 1.49 79.92%
L(26),D(91),O(3) 2,230,000 6-Mar-2003 1.29 74.74%
L(95),YM(140) 2,100,000 1-Feb-1999 1.03 78.84%
L(29),D(88),O(3) 2,400,000 16-Oct-2002 1.49 68.46%
L(36),D(81),O(3) 2,600,000 4-Nov-2002 1.82 62.28%
L(48),D(69),O(3) 2,150,000 11-Feb-2003 1.56 74.39%
L(36),D(81),O(3) 2,350,000 5-Mar-2003 1.62 66.73%
L(36),D(81),O(3) 1,950,000 11-Mar-2003 1.32 74.54%
L(36),D(81),O(3) 1,945,000 7-Mar-2003 1.48 73.84%
L(27),D(90),O(3) 2,425,000 1-Feb-2003 1.25 57.21%
L(27),D(90),O(3) 1,450,000 1-Feb-2003 1.28 55.64%
L(27),D(90),O(3) 1,160,000 1-Feb-2003 1.22 52.47%
L(27),D(90),O(3) 1,330,000 1-Feb-2003 1.22 38.01%
CUT-OFF DATE
LTV RATIO AT NUMBER LOAN
MATURITY OR YEAR OF UNITS UNIT OF AMOUNT PER OCCUPANCY OCCUPANCY
ARD (1) BUILT YEAR RENOVATED (UNITS) MEASURE (UNIT) ($) RATE (%) "AS OF" DATE
- ----------------------------------------------------------------------------------------------------------------
53.01% 1960 1991 1,229,140 Sq. Ft. 114 95.11% 25-Apr-2003
67.49% 1932 2001 464,420 Sq. Ft. 97 91.56% 12-May-2003
48.05% 1928 1989 426,596 Sq. Ft. 82 100.00% 13-Jan-2003
69.95% 2002 280 Units 96,429 91.43% 6-Mar-2003
54.64% 1999-2001 270,187 Sq. Ft. 96 97.54% 17-Apr-2003
53.18% 1924 2002 112,080 Sq. Ft. 223 100.00% 1-Apr-2003
66.96% 1978 1998 239,636 Sq. Ft. 86 97.57% 20-May-2003
66.46% 1980 100,837 Sq. Ft. 181 97.50% 31-Mar-2003
67.55% 1975 1996 120,211 Sq. Ft. 149 100.00% 21-Mar-2003
68.58% 1984-1989 223,521 Sq. Ft. 77 83.03% 30-Apr-2003
66.10% 1968 184 Units 92,391 97.28% 28-Feb-2003
59.03% 2002 115,719 Sq. Ft. 146 92.95% 13-Jan-2003
65.83% 1967 2000 158,820 Sq. Ft. 106 96.62% 16-Apr-2003
64.67% 1964 2001 140,495 Sq. Ft. 117 83.95% 25-Apr-2003
63.24% 1960 1999 193,912 Sq. Ft. 84 99.32% 31-May-2003
66.90% 2000 145,652 Sq. Ft. 110 100.00% 31-Mar-2003
59.91% 1958 2002 206,187 Sq. Ft. 75 100.00% 1-Jul-2003
66.23% 1965 2002 78,116 Sq. Ft. 195 96.90% 31-Mar-2003
65.78% Various 753,000 Sq. Ft. 20 100.00% 1-May-2003
1998 & 2001 243,000 Sq. Ft. 0 100.00% 1-May-2003
2001 510,000 Sq. Ft. 0 100.00% 1-May-2003
67.31% 1983 126,756 Sq. Ft. 118 91.96% 31-May-2003
60.19% 2003 93,509 Sq. Ft. 155 100.00% 1-Apr-2003
65.71% 2002 78,634 Sq. Ft. 180 100.00% 25-Apr-2003
60.79% 1986 153,067 Sq. Ft. 91 100.00% 11-Mar-2003
60.77% 1984 108,477 Sq. Ft. 120 93.07% 1-Apr-2003
66.61% 1989 78,167 Sq. Ft. 153 91.93% 1-May-2003
72.89% 1966 1994 149,445 Sq. Ft. 73 92.71% 8-Apr-2003
65.87% 1986 1995*2000*2002 210,553 Sq. Ft. 51 100.00% 29-Apr-2003
64.70% 1995 47,748 Sq. Ft. 221 100.00% 26-Mar-2003
67.05% 2002 92,883 Sq. Ft. 113 100.00% 4-Apr-2003
47.78% 1984-1985 2000 249 Rooms 41,504 76.70% 28-Feb-2003
65.88% 1986 116,000 Sq. Ft. 86 86.93% 24-Apr-2003
63.44% 1978 1999 87,854 Sq. Ft. 112 96.59% 1-Apr-2003
68.17% 1977*1978 & 1997 2000 80,967 Sq. Ft. 109 100.00% 1-Feb-2003
62.86% 1986 76,392 Sq. Ft. 108 100.00% 28-Feb-2003
65.68% 1988 134,220 Sq. Ft. 60 98.51% 15-Apr-2003
64.17% 1966-1968 1996-2002 168,392 Sq. Ft. 47 93.45% 1-Mar-2003
69.45% 1986 2002 83,108 Sq. Ft. 90 87.28% 14-Apr-2003
59.97% 1780 1998 14,850 Sq. Ft. 499 86.53% 31-Jan-2003
62.86% Various 40,686 Sq. Ft. 178 83.39% 13-Jan-2003
2003 10,660 Sq. Ft. 0 100.00% 13-Jan-2003
2002 30,026 Sq. Ft. 0 77.50% 13-Jan-2003
62.13% 1973 1998 96,057 Sq. Ft. 73 90.61% 20-May-2003
49.06% 1925 2001*2002 21,213 Sq. Ft. 329 78.79% 15-Jan-2003
67.81% 2002 35,660 Sq. Ft. 195 90.54% 31-Mar-2003
61.84% 2002 66,664 Sq. Ft. 102 91.02% 4-Mar-2003
60.66% 2000 39,596 Sq. Ft. 166 93.56% 9-Apr-2003
65.39% 1978 1997 92,759 Sq. Ft. 71 97.36% 20-May-2003
58.17% 2000 88,552 Sq. Ft. 73 92.00% 5-May-2003
66.41% 1971 1999 116,047 Sq. Ft. 56 83.31% 1-May-2003
57.03% 1986 828 Units 7,314 72.71% 24-Apr-2003
62.11% 2002 34,685 Sq. Ft. 174 100.00% 12-May-2003
59.59% 1973 2001-2003 40,849 Sq. Ft. 147 86.79% 20-Jan-2003
46.62% 1997-2002 77 Units 77,747 100.00% 17-Mar-2003
66.35% 1979 1999-2000 19,998 Sq. Ft. 281 100.00% 1-Apr-2003
65.66% 1990 47,035 Sq. Ft. 116 94.70% 4-Apr-2003
53.37% 1988 583 Units 9,137 72.01% 30-Apr-2003
64.28% 2001 36,582 Sq. Ft. 141 94.07% 28-Feb-2003
67.53% 2002 14,490 Sq. Ft. 331 100.00% 14-Apr-2003
53.74% 1910 2002 3,659 Sq. Ft. 1,308 100.00% 15-Feb-2003
63.27% 1994 2001 31,950 Sq. Ft. 148 100.00% 1-Apr-2003
60.15% 2001 15,120 Sq. Ft. 308 100.00% 28-Feb-2003
1.69% 1999 52,923 Sq. Ft. 85 97.17% 16-Jan-2003
61.50% 2002 37,560 Sq. Ft. 117 98.67% 21-May-2003
60.30% 1943 1999-2000 274,176 Sq. Ft. 16 96.68% 28-Apr-2003
68.16% 1986 2002 52,840 Sq. Ft. 79 100.00% 24-Apr-2003
64.11% 1999 15,120 Sq. Ft. 271 100.00% 12-May-2003
0.00% 1999 16,708 Sq. Ft. 244 100.00% 3-Jun-2003
63.41% 2000 35,188 Sq. Ft. 113 100.00% 14-Apr-2003
59.36% 1972 82,301 Sq. Ft. 48 93.64% 31-Mar-2003
58.40% 1991 29,306 Sq. Ft. 133 100.00% 7-Mar-2003
63.00% 2001 17,207 Sq. Ft. 225 100.00% 30-May-2003
66.28% 2003 14,560 Sq. Ft. 260 100.00% 3-Apr-2003
58.44% 2003 14,490 Sq. Ft. 249 100.00% 25-Mar-2003
0.00% 1950-1984 2002 48,595 Sq. Ft. 74 100.00% 28-Feb-2003
62.98% 2003 13,650 Sq. Ft. 251 100.00% 8-May-2003
49.67% 1970-1990 220,631 Sq. Ft. 15 100.00% 7-Mar-2003
55.64% 1988 30,910 Sq. Ft. 103 90.11% 8-Mar-2003
31.02% 1999 11,180 Sq. Ft. 278 100.00% 3-Jun-2003
56.34% 1999 588 Units 5,266 85.20% 31-Mar-2003
44.40% 1979 2000 24,820 Sq. Ft. 125 100.00% 28-Mar-2003
62.96% 2002 26,558 Sq. Ft. 105 100.00% 4-Mar-2003
58.67% 2002 10,413 Sq. Ft. 261 100.00% 1-May-2003
41.88% 2003 29,000 Sq. Ft. 91 100.00% 5-Feb-2003
55.30% 1971 227 Pads 11,331 92.51% 11-Mar-2003
63.15% 2002 22,000 Sq. Ft. 109 100.00% 12-Dec-2002
56.13% 2000 473 Units 4,963 89.00% 31-Mar-2003
57.49% 1998 429 Units 5,121 92.31% 23-Apr-2003
66.99% 1972 1990 56,266 Sq. Ft. 38 92.46% 20-May-2003
0.00% 2002 13,824 Sq. Ft. 152 100.00% 31-Mar-2003
47.01% 2003 13,650 Sq. Ft. 150 100.00% 21-Apr-2003
61.18% 1979 44,872 Sq. Ft. 45 91.54% 31-Mar-2003
61.76% 2003 10,880 Sq. Ft. 179 100.00% 14-Feb-2003
7.35% 1988 21,002 Sq. Ft. 91 100.00% 8-Jan-2003
53.24% 1969 1976 32,057 Sq. Ft. 56 100.00% 1-Apr-2003
62.14% 2002 13,000 Sq. Ft. 138 100.00% 7-Apr-2003
63.47% 2001 12,000 Sq. Ft. 149 100.00% 27-Jan-2003
67.36% 1900*1910 1995*1998 23,613 Sq. Ft. 71 100.00% 31-Mar-2003
62.67% 1964 20 Units 83,331 95.00% 29-Apr-2003
0.00% 1998-1999 11,180 Sq. Ft. 148 100.00% 3-Jun-2003
59.71% 1980 48,730 Sq. Ft. 34 87.13% 1-Oct-2002
53.36% 1984 78,479 Sq. Ft. 21 100.00% 31-Mar-2003
49.67% 1960 209 Pads 7,653 73.78% 1-Jan-2003
55.63% 2002 15,599 Sq. Ft. 101 100.00% 23-Apr-2003
63.20% 2003 1 Pad 1,453,538 100.00% 30-Apr-2003
57.61% 1996 & 2000 13,600 Sq. Ft. 106 94.49% 31-Mar-2003
7.43% 1988 12,528 Sq. Ft. 111 100.00% 8-Jan-2003
7.23% 1997 9,977 Sq. Ft. 81 100.00% 20-Jan-2003
0.39% 1987 7,692 Sq. Ft. 79 100.00% 8-Jan-2003
0.28% 1987 11,004 Sq. Ft. 46 76.34% 29-May-2003
UW NET
MOST RECENT UW REVENUES UW EXPENSES OPERATING UW NET CASH
MOST RECENT PERIOD NOI ($) ($) ($) INCOME ($) FLOW ($)
- -----------------------------------------------------------------------------------------------------------
Budget July 2003 to June 2004 17,951,911 28,957,524 10,853,969 18,103,556 17,334,541
2002 4,706,846 9,503,366 4,672,479 4,830,887 3,995,845
AUP 2002 5,635,916 13,303,214 8,470,936 4,832,278 4,187,027
2003 Budget 2,527,172 3,646,560 1,261,037 2,385,523 2,315,523
10 Mo Ann. Ph. II & III 4,349,823 5,041,598 1,347,447 3,694,151 3,580,852
2003/2004 Budget 3,391,557 4,709,331 1,557,060 3,152,271 3,017,157
Year ended Dec 31, 2002 1,964,164 2,967,410 824,547 2,142,863 1,946,887
Jan-Mar 2003 Ann'l 1,978,261 3,189,042 1,357,745 1,831,297 1,692,589
Year End 2002 2,093,530 3,438,240 1,386,213 2,052,026 1,874,533
Full Year 2002 1,988,293 3,637,368 1,543,310 2,094,058 1,779,640
Borrower Proforma 1,918,961 2,308,367 740,560 1,567,807 1,514,999
Full Year 2002 1,685,806 2,287,452 556,876 1,730,576 1,665,650
Annualized 10 mo. 12/31/02 1,559,810 2,371,582 629,953 1,741,629 1,585,551
Full Year 2002 1,734,200 3,307,637 1,507,917 1,799,720 1,537,086
2002 1,639,448 2,504,586 967,970 1,536,616 1,416,225
2002 1,369,125 2,270,340 727,220 1,543,121 1,500,038
2,623,930 736,265 1,887,665 1,724,193
Full Year 2002 789,999 1,995,776 418,843 1,576,933 1,509,198
2002 1,894,191 1,998,344 420,990 1,577,354 1,415,792
2002 1,269,875 2,649,131 1,038,470 1,610,661 1,340,922
1,845,387 279,415 1,565,972 1,493,954
2,396,155 873,206 1,522,949 1,426,579
2002 1,572,952 2,277,255 770,372 1,506,882 1,405,640
2002 972,783 2,276,485 804,178 1,472,307 1,244,384
2002 1,361,274 1,908,895 606,332 1,302,563 1,173,059
Annualized 11 mos. 12/31/02 1,242,231 1,690,279 444,098 1,246,180 1,159,198
2002 1,216,367 1,693,631 490,433 1,203,198 1,001,420
Full Year 2002 972,807 1,446,129 341,522 1,104,607 1,062,052
1,323,292 274,186 1,049,106 1,007,108
T-12 (2/03) 2,147,236 5,300,668 3,294,576 1,739,446 1,383,917
Year ended Dec 31, 2002 1,002,108 2,088,383 938,222 1,150,161 1,024,058
Trailing-12 3/03 1,218,246 1,566,904 488,484 1,078,420 943,807
Statement 2002 1,238,416 1,796,743 709,791 1,086,952 1,020,982
Year ended Dec 31, 2002 868,589 1,665,795 770,642 895,153 802,662
3/03 7-mos. Annualized 919,087 1,112,790 233,501 879,289 785,029
Full Year 2002 557,169 2,392,584 1,406,070 986,514 791,347
Full Year 2002 770,694 1,318,867 459,877 858,989 736,240
Full Year 2002 196,520 938,657 158,992 779,665 748,785
1,085,932 317,283 768,649 714,424
Year ended Dec 31, 2002 626,365 988,590 370,588 618,002 559,757
1,299,458 378,161 921,296 896,550
Full Year 2002 293,508 996,450 293,857 702,593 674,924
2003 Budget 733,537 983,138 261,047 722,091 669,278
Full Year 2002 548,930 994,529 200,998 793,531 760,590
Year ended Dec 31, 2002 693,105 842,705 300,930 541,775 490,343
3 Months Annualized ended Feb 28, 2003 687,124 1,165,750 402,737 763,013 749,694
3 Months Annualized ended Apr 30, 2003 940,581 1,606,126 750,962 855,164 688,315
T-12 thru 3/03 741,056 1,007,364 277,735 729,629 684,995
954,913 279,596 675,318 609,658
Borrower's Proforma 789,302 886,325 198,055 688,270 636,467
T-6 3/03 Annualized 1,054,507 1,406,099 535,101 870,998 851,748
11 mo.Ann. 2002 667,717 792,306 187,753 604,553 564,450
Full Year 2002 688,271 1,110,297 366,919 743,378 644,810
2002 627,068 775,364 223,758 551,607 537,032
Statement 2002 332,046 844,324 232,254 612,070 555,175
450,000 13,500 436,500 435,631
654,133 102,778 551,355 529,139
Statement 2002 441,955 761,028 206,932 554,096 516,230
2002 484,587 499,739 14,992 484,747 483,688
Year ended Dec 31, 2002 466,937 608,604 107,159 501,445 456,302
Statement 2002 170,258 730,121 204,225 525,897 493,439
Statement 2002 519,727 990,975 441,546 549,429 430,114
Year ended Dec 31, 2002 461,875 606,474 138,284 468,190 434,500
413,003 12,390 400,613 399,101
384,414 0 384,414 384,414
YTD 1/03 Annualized 520,682 678,617 233,448 445,169 417,286
3 Months Annualized ended Mar 31, 2003 672,764 1,028,449 478,566 549,883 455,769
2002 414,315 566,517 143,327 423,190 382,126
571,796 129,058 442,738 419,948
390,804 11,724 379,080 377,624
392,000 14,025 377,975 372,202
Statement 2002 453,765 753,478 269,052 484,426 436,341
331,500 9,945 321,555 320,736
591,051 132,572 458,480 384,202
Statement 2002 359,794 665,486 300,628 364,858 342,616
309,823 0 309,823 307,028
2003 3-mo. Annualized 375,334 645,679 276,945 368,733 359,913
Statement 2002 441,912 573,227 173,570 399,657 370,506
451,961 105,431 346,529 318,618
376,965 66,750 310,215 294,525
412,498 105,873 306,625 302,565
Year ended Dec 31, 2002 363,939 671,937 331,301 340,636 335,140
Trailing 12 Months ended Jan 31, 2003 108,781 391,866 85,593 306,273 286,571
2003 3-mo. Annualized 284,472 539,762 250,165 289,597 282,502
2002 234,920 499,191 237,052 262,138 255,570
Year ended Dec 31, 2002 209,855 315,052 89,060 225,992 206,823
272,923 13,188 259,735 254,281
280,109 21,731 258,377 254,097
3 Months Annualized ended Mar 31, 2003 319,000 512,742 239,332 273,410 224,188
201,280 6,038 195,242 194,154
Year ended Dec 31, 2002 215,317 467,993 160,681 307,312 291,229
Year ended Dec 31, 2002 212,986 281,431 61,840 219,591 199,820
Statement 2002 121,810 279,977 68,790 211,187 198,416
Statement 2002 162,314 256,651 46,651 210,000 198,439
02/2003 T 12 193,617 268,723 86,753 181,970 176,720
2002 184,415 253,494 99,255 154,239 147,792
178,880 0 178,880 176,085
3 Months Annualized ended Mar 31, 2003 287,516 372,912 133,853 239,059 193,350
3 Months Annualized ended Mar 31, 2003 280,188 474,470 172,127 302,343 215,825
2002 276,613 590,813 349,142 241,671 220,771
Statement 2002 26,696 248,242 52,463 195,779 171,409
143,948 6,818 137,130 137,130
Statement 2002 195,259 227,350 46,939 180,410 166,697
Year ended Dec 31, 2002 240,451 314,210 85,021 229,189 218,379
Year ended Dec 31, 2002 124,639 198,428 59,982 138,446 130,484
Year ended Dec 31, 2002 92,854 160,650 54,418 106,232 100,384
Year ended Dec 31, 2002 80,504 165,453 74,611 90,842 83,446
LARGEST
TENANT
LARGEST TENANT SQ. FT.
- ---------------------------------------------------------------------
Meier & Frank Company 297,050
Wachovia Bank, N.A. 218,355
UNICEF 81,100
Dick's 45,741
New York Institute of Technology 60,000
King Soopers 71,220
U.S. Chemical Safety & Hazard Investigation Board 19,116
Mount Kisco Medical Group 101,385
Lockheed Martin Corporation 50,098
The Vons Companies, Inc. 55,855
Don Rasmussen Company 92,168
Georgetown University 46,327
Mervyns 74,168
BJ's Wholesale Club 108,532
ION Track Instruments 84,994
Harris Teeter, Inc. 20,930
Various Various
Mason Shoe 123,000
Dean Pickle & Specialty Products Co. 510,000
Security Union Title Insurance 21,956
Department of Health 93,509
GSA 78,634
Publix 55,999
State of California - Dept of Parks & Rec. 19,418
State Farm 35,481
The Vons Companies, Inc. 34,406
Burlington Coat Factory 67,308
Barnes & Noble 26,350
Publix 54,340
Shell Vacations, LLC - Include Shell Group Inc. 15,161
Sutter Connect 73,177
US Dept. of Fish & Wildlife 79,557
AEC One Stop Group, Inc. 25,894
Lowe's Foods 54,000
Whitfield Musgrave 33,975
Dial America Marketing 9,492
Brookstone Properties, Inc. 7,600
Various Various
CiCi's Pizza 4,200
C. Lantro's 3,762
King Soopers 53,872
Brownes & Co. Apothecary 9,250
CVS 10,125
Smigel Anderson & Sacks 22,221
Walgreen Co. 15,120
King Soopers 53,959
Bank One Colorado, N.A. 23,443
Surgical Suite 9,662
Northshore Cardiologists 14,221
Coldwell Banker 9,519
CHW Medical Foundation 20,700
Coldwell Banker Residential 7,293
Walgreens 14,490
Sixty USA, Inc. 3,659
Leslie's Pools 4,000
Walgreens 15,120
Food Lion 33,000
Gould's Day Spa & Salon 5,850
Denver Storage Solutions 107966
Winn Dixie 35,000
Walgreens 15,120
Thrifty Payless, Inc. 16,708
Michael's 23,743
Commercial Recovery Systems 12,318
Las Vegas Skin and Cancer, Inc. 10,145
Palm Beach Tan 3,629
Walgreens 14,560
Walgreens 14,490
Inessa Stewart's Antiques 17,933
Walgreens 13,650
Great Lakes Foods 112,015
Walgreens 13,500
Rite Aid of New York, Inc. 11,180
Mountain Mike's Pizza 2,500
Home Center Furniture 3,408
Euphoria Salon 5,525
Marshalls 29,000
The North American Mission Board of the Southern Baptist 10,000
Gerbes 47,526
Eckerds 13,824
Walgreens 13,650
Genesis Vocational Training, Inc. 19,780
CVS 10,880
Tire Kingdom 7,104
Practical Computer 8,000
Chihua's Supermarket 2,860
Hollywood Video 5,200
Richmond Restaurant Group 9,512
Rite Aid of Maryland, Inc. 11,180
The Palace Restaurant & The Palace Special Events 6,042
American Business Machines 17,817
Intercontinental Acceptance Corporation 7,252
Great Gig Productions 2,500
Tire Kingdom 6,270
Tire Kingdom 6,303
Southern Express Lube, Inc. 3,192
Accutune 3,472
2ND
LARGEST LARGEST 2ND LARGEST
TENANT LARGEST TENANT EXP. TENANT TENANT % OF 2ND LARGEST TENANT
% OF NRA DATE 2ND LARGEST TENANT NAME SQ. FT. NRA (%) EXP. DATE
- -------------------------------------------------------------------------------------------------------------------------
24.17% 31-Jan-2006 Dollar Tree 79,242 6.45% 31-Jul-2010
47.02% 31-Dec-2010 Dorland Sweeney Jones 32,278 6.95% 31-Jul-2011
19.01% 31-Dec-2003 Kallir, Phillips, Ross Inc. 80,000 18.75% 30-Jun-2004
16.93% 31-Jan-2016 Goody's 45,500 16.84% 31-May-2016
53.53% 30-Jun-2018 The City of New York Parks & Recreation 34,580 30.85% 30-Apr-2012
29.72% 31-Jan-2006 24 Hour Fitness 42,161 17.59% 31-Jan-2015
18.96% 30-Sep-2010 The George Washington University 17,962 17.81% 31-Dec-2005
84.34% 30-Apr-2033 Merrill Lynch 9,721 8.09% 30-Nov-2004
22.41% 30-Jun-2009 QSS Group, Inc. 16,846 7.54% 31-May-2004
48.27% 13-Nov-2026 Longs Drug Stores 21,482 18.56% 28-Feb-2027
58.03% 5-Aug-2016 Collins Pine Company 13,975 8.80% 31-Aug-2010
32.97% 31-Jul-2005 Theodore's Furniture 11,738 8.35% 31-Jul-2004
38.25% 31-Jan-2009 Longs Drug Store 25,241 13.02% 15-May-2009
74.51% 31-Jan-2021 Oxford Academy 6,800 4.67% 31-Dec-2011
41.22% 31-May-2009 Viasys Healthcare, Inc. 83,842 40.66% 31-Aug-2012
26.79% 31-May-2012 Kerr Drugs 10,200 13.06% 31-Jan-2013
Various Various Various Various Various Various
50.62% 30-Jul-2004 Kell Container Corp. 120,000 49.38% 31-Jan-2008
100.00% 30-Jun-2012
17.32% 31-Oct-2004 Resource Consultants, Inc. 16,493 13.01% 30-Apr-2006
100.00% 31-Jul-2015
100.00% 31-Dec-2012
36.58% 31-Dec-2013 Kmart/Office Max 22,011 14.38% 31-Jan-2009
17.90% 31-May-2007 Alvarado Hospital Medical 11,634 10.72% 30-Apr-2008
45.39% 31-Aug-2008 Affilitated Research Institute 8,240 10.54% 31-Oct-2006
23.02% 31-Dec-2006 Jo-Ann's House of Fabrics 22,869 15.30% 30-Jun-2008
31.97% 31-Jan-2007 Best Buy 47,266 22.45% 31-Jan-2010
55.19% 31-Jul-2010 Applebee's Restaurant 5,711 11.96% 31-Aug-2015
58.50% 17-Sep-2022 Blockbuster 4,850 5.22% 18-Aug-2007
13.07% 31-Oct-2004 The Sherwood Group, Inc. 14,004 12.07% 30-Apr-2008
83.29% 31-Jul-2009 Greystone Environmental 11,680 13.29% 31-Mar-2008
98.26% 21-Nov-2012 Tom Gittins 1,410 1.74% 21-Nov-2012
33.90% 31-Jan-2004 JSTOR 11,784 15.43% 30-Nov-2009
40.23% 20-Feb-2020 Big Lots 31,750 23.66% 31-Jan-2008
20.18% 31-Jan-2012 Bank of America 29,572 17.56% 31-Dec-2006
11.42% 30-Nov-2005 CC Services 3,940 4.74% 31-May-2006
51.18% 31-Jan-2019 PDS Associates d/b/a Waterworks 3,750 25.25% 1-Jul-2008
Various Various Various Various Various Various
39.40% 31-Jan-2013 Orient Cafe 2,435 22.84% 28-Feb-2013
12.53% 30-Nov-2007 Texadelphia Sandwiches 3,717 12.38% 30-Nov-2007
56.08% 31-Jul-2008 Bargain City Sales 6,000 6.25% 31-Oct-2006
43.61% 31-Jul-2011 Sixty, Inc. 3,000 14.14% 30-Apr-2012
28.39% 31-Jan-2027 Charlie Browns 8,100 22.71% 31-Jul-2022
33.33% 30-Apr-2012 Michael Baker, Jr., Inc. 20,760 31.14% 30-Sep-2009
38.19% 12-Jan-2061 Blockbuster Video 4,225 10.67% 28-Feb-2011
58.17% 31-Mar-2017 Greenbacks 12,804 13.80% 28-Feb-2008
20.20% 31-Mar-2006 First American Mortgage 9,680 8.34% 28-Feb-2008
27.86% 22-Aug-2012 Assoc. of Otolarynology 4,943 14.25% 25-Jun-2012
34.81% 31-Dec-2012 Pulmonary Physicians of N.S. 8,857 21.68% 31-Dec-2012
47.60% 31-Jan-2005 Gateway Computers 5,825 29.13% 31-Mar-2005
44.01% 30-Nov-2006 Procedure Center of SF 4,499 9.57% 1-Jun-2013
19.94% 31-Oct-2006 Gourmet Plus Inc. 5,104 13.95% 31-Dec-2006
100.00% 31-Mar-2078
100.00% 30-Apr-2017
12.52% 30-Nov-2005 Coldwell Banker-Apex Realty 3,780 11.83% 30-Sep-2007
100.00% 31-Dec-2076
62.35% 9-Nov-2019 Hollywood Video 4,923 9.30% 9-Nov-2009
15.58% 31-May-2016 The Dollar Shoppe 4,400 11.71% 30-Nov-2007
39.38% Multiple Spaces Kaiser Foundation Health Plan 28,049 10.23% 31-May-2006
66.24% 23-Apr-2018 Dollar General 8,640 16.35% 5-Mar-2006
100.00% 30-Sep-2059
100.00% 14-Jul-2024
67.47% 30-Oct-2010 Accent Fabrics and Furnishings 4,085 11.61% 30-Jun-2004
14.97% 31-Mar-2004 Presidential Life 7,862 9.55% MTM
34.62% 30-Dec-2008 Veterans Administration 7,728 26.37% 19-Jan-2006
21.09% 31-Jul-2008 Boston Market 3,218 18.70% 30-Jun-2012
100.00% 30-Apr-2078
100.00% 31-Mar-2063
36.90% 30-Nov-2008 Salons of Dallas 5,779 11.89% 30-Sep-2004
100.00% 30-Apr-2078
50.77% 31-Dec-2005 K&K Warehousing 108,616 49.23% 30-Nov-2017
43.68% 31-Oct-2028 Finney, LLC d/b/a Bistro Mezzaluna 4,197 13.58% Multiple Spaces
100.00% 28-Feb-2019
10.07% 31-Jul-2003 Radio Shack #01-3812 2,400 9.67% 31-Aug-2003
12.83% 31-Oct-2005 Neonatology Medical Group 2,433 9.16% 31-Jan-2008
53.06% 30-May-2010 Panda Express 1,800 17.29% 30-Apr-2012
100.00% 14-Mar-2014
45.45% 31-Dec-2006 David M. Pehrson, D.M.D. 2,600 11.82% 28-Feb-2008
84.47% 31-May-2006 Happy Garden 2,500 4.44% 31-May-2004
100.00% 31-Jan-2023
100.00% 30-Apr-2078
44.08% 30-Jun-2007 Baz Enterprises LTD dba Stambush Physical 5,175 11.53% 31-Dec-2006
100.00% 31-Jan-2025
33.83% 31-Aug-2014 Sample Road Auto Spa 3,482 16.58% 30-Nov-2011
24.96% 31-Jul-2007 Ace Floors 4,900 15.29% 31-Aug-2006
22.00% 31-May-2007 Colorado Laundries, Inc. 2,600 20.00% 30-Nov-2011
43.33% 14-Sep-2012 RadioShack 2,800 23.33% 31-Jan-2007
40.28% 31-Dec-2004
100.00% 28-Feb-2019
12.40% 31-Jan-2007 Senor Sol Fine Mexican Food 5,522 11.33% 31-May-2003
22.70% 31-Mar-2005 Triad USA Marketing Group 14,156 18.04% 31-Jan-2008
46.49% 14-Feb-2008 Carlsen Douglas Development 3,298 21.14% 31-Aug-2017
18.38% 31-Jul-2005 Dunkin Donuts 1,890 13.90% 30-Dec-2015
50.05% 31-Aug-2014 Roadway Muffler & Break 2,323 18.54% 31-Dec-2003
63.18% 30-Apr-2017 Texeco Lube Center 2,620 26.26% 31-Oct-2011
41.50% 31-Aug-2007 Precision Tune Auto Care 2,620 34.06% 31-May-2010
31.55% 28-Feb-2005 Car Wash 3,192 29.01% 30-Nov-2007
3RD
LARGEST 3RD LARGEST
TENANT TENANT % OF 3RD LARGEST TENANT EXP.
3RD LARGEST TENANT NAME SQ. FT NRA DATE
- ------------------------------------------------------------------------------------------------
Lloyd Center Cinemas (GROUND LEASE) 66,403 5.40% 31-Dec-2011
Electronic Ink., Inc. 30,922 6.66% 31-Oct-2010
New York Presbyterian Hospital 76,000 17.82% 31-Aug-2006
Circuit City 28,446 10.53% 31-Jan-2020
Eastern Mountain Sports 17,500 15.61% 31-Jan-2006
Ace Hardware 32,000 13.35% 31-Mar-2006
Cameron McKenna LLP 11,841 11.74% 31-Oct-2003
Norther Westchester Cardiac Rehabilitation 5,605 4.66% 31-Oct-2005
Jackson & Tull Chartered 14,418 6.45% 31-Jul-2006
Blockbuster 4,075 3.52% 31-Dec-2011
Western Medical Consultants 9,324 5.87% 14-Nov-2008
Bomstein Agency 7,546 5.37% 30-Nov-2011
Staples 24,000 12.38% 28-Feb-2015
Carlucci's Gourmet Mark 6,400 4.39% 31-Oct-2012
Empirix (Teredyne) 37,351 18.12% 31-Oct-2003
Blockbuster 7,087 9.07% 31-Dec-2004
Transtel Communications, Inc. 7,771 6.13% 31-May-2005
The Rag Shop 7,500 4.90% 31-Aug-2006
Countrywide Financial Services 5,916 5.45% 31-Dec-2005
David Evans & Associates 4,164 5.33% 31-Oct-2004
Reed's & Sons Furniture 21,746 14.55% 30-Apr-2004
La-Z-Boy 28,080 13.34% 31-Oct-2004
Sushi Ai 5,000 10.47% 31-Oct-2012
Cross Roads Bar & Grill 4,819 5.19% 31-Jul-2010
Maximus, Inc. 12,626 10.88% 31-Aug-2005
Booth Newspaper 10,989 14.39% 31-Aug-2006
Boone Drugs 6,309 4.70% 28-Feb-2005
Brooks Borg Skiles 19,387 11.51% 31-Dec-2012
Kukui, Inc 3,800 4.57% 31-Oct-2005
Westport Capital Markets 750 5.05% 31-May-2006
Various Various Various Various
Quizno's 1,625 15.24% 29-Feb-2008
River Oaks Cleaners 3,000 9.99% 31-Oct-2012
Market Square Coin Laundry 3,600 3.75% 31-May-2005
Astoria Clothing, Inc. 1,500 7.07% 30-Sep-2012
Nationwide Electrical Supply 5,735 16.08% 31-Oct-2017
Abacus Engineered Systems Inc. 7,762 11.64% 30-Jun-2009
La Costita 4,200 10.61% 30-Apr-2013
Checker Automotive 5,586 6.02% 31-Oct-2005
Multi-Link Communications, Inc. 6,059 5.22% 13-Feb-2006
Lone Tree Cosmetic Center 4,174 12.03% 22-Aug-2012
Northshore Medical Associates 6,882 16.85% 31-Dec-2012
City National Bank 4,654 23.27% 31-Jan-2009
Dr. Paris E. Royo, M.D. 3,567 7.58% 30-Jun-2007
Quorum Management Company 3,423 9.36% 31-May-2007
Body by Design 3,208 10.04% 31-Aug-2007
Dixon & Associates 4,800 9.07% 30-Aug-2005
Stereo One 3,600 9.58% 31-Jan-2008
DARR FMH 21,597 7.88% 30-Apr-2005
Cash's Liquor 3,600 6.81% 30-Jun-2005
California Pools & Spa 2,582 7.34% 30-May-2004
City of Dallas 7,439 9.04% 30-Jun-2004
HealthSouth 5,012 17.10% 31-Dec-2004
Verizon Wireless 2,360 13.72% 31-Aug-2006
Blockbuster Video, Inc. 5,077 10.45% 31-Mar-2008
International Quick Signs 1,927 6.23% 30-Apr-2004
Kay's Pet Supplies 2,400 9.67% 30-Apr-2005
Carter's Jr. Market 2,370 8.92% 31-Oct-2007
Hot Body Tanning 1,549 14.88% 30-Sep-2007
Business Partners 2,400 10.91% 30-Jun-2007
Jefferson City Credit 2,000 3.55% MTM
MG Group, Inc. 2,335 5.20% 30-Sep-2003
Brake World 2,604 12.40% 31-Aug-2012
Cassell Builder Group 4,525 14.12% 28-Feb-2005
Subway Real Estate Corp. 1,560 12.00% 31-Oct-2009
Payless ShoeSource 2,800 23.33% 30-Nov-2011
David's Barbecue 3,253 6.68% 31-Dec-2004
Veterinary Pharmacies of America Inc. 9,747 12.42% 30-Sep-2007
Medical Manager (WebMD) 2,678 17.17% 31-Aug-2007
Classy Critters 1,410 10.37% 30-Apr-2005
Precision Tune Auto Care 2,323 18.54% 31-Jan-2004
Subway 1,054 10.56% 31-Mar-2008
Tint World 1,880 24.44% 30-Sep-2011
Auto Sounds Plus 1,736 15.78% 30-Nov-2005
MORTGAGE
LARGEST AFFILIATED SPONSOR FLAG LOAN
LOCKBOX (> THAN 4% OF POOL) NUMBER
- ---------------------------------------------------------------------------------------
Day 1 1
Springing 2
Springing 3
5
6
Springing 7
Springing 9
Springing 11
12
13
Springing 14
Springing 15
16
17
18
19
Springing 20
In-Place Soft with With Springing Hard 21
Springing 23
23.1
23.2
Springing 24
Day 1 25
Day 1 27
28
Springing 30
Springing 33
34
35
36
37
38
39
Springing 40
Springing 42
Springing 44
45
46
47
48
49
49.1
49.2
Springing 54
56
57
58
59
Springing 60
63
64
67
68
Springing 69
70
72
73
76
77
80
Springing 81
82
Springing 83
84
86
87
88
Springing 89
Day 1 90
92
Springing 93
94
95
Springing 96
98
101
Springing 103
105
106
Day 1 107
108
109
113
115
Springing 116
117
118
119
121
Springing 122
123
124
Springing 125
Springing 128
129
130
131
132
134
135
Day 1 136
Springing 137
Springing 138
140
143
145
146
149
150
151
Springing 152
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2003-C5
ANNEX A-1B CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS AND MORTGAGED
PROPERTIES
MORTGAGE
LOAN LOAN GROUP
NUMBER NUMBER PROPERTY NAME
- ----------------------------------------------------------
4 2 Hamilton House Apartments
8 2 Arrowhead Highlands Apartments
10 2 Plaza Gardens South Apartments
22 2 Archstone Southpoint Apartments
26 2 Valley Stream Village I Apartments
29 2 Forest Cove Apartments
31 2 Rio Nueces Apartments
32 2 Bermuda Villas Apartments
41 2 Mohawk Terrace Apartments
43 2 Lexington on Central Apartments
50 2 Mistwood Townhomes
51 2 Calder Commons
52 2 Cypress Springs
53 2 Otter Run Apartments
55 2 Woodcreek Senior Commons
61 2 Cherokee Mobile Village
62 2 Ashley Club Apartments
65 2 Mallard Cove Apartments
66 2 Kensington Apartments
71 2 Candle Park South
74 2 Pleasant Grove
75 2 Valley Stream Village II Apartments
78 2 Brandon Oaks
79 2 Miller Lake Apartments
85 2 Arbor Club Apartments
91 2 Schooner Landing
97 2 Plaza Apartments
99 2 Bit O Home MHP
100 2 Liberty MHP
102 2 Wilson Acres Apartments
104 2 Trails West MHP
110 2 Shockoe Place
111 2 Fairbrooke Senior Housing Apartments
112 2 La Playa Apartments
114 2 Hacienda MHP
120 2 Twin Palms MHP
126 2 Fort Stanton Apartments
127 2 Pinebrook Apartments
133 2 McDonald Place Apartments
139 2 Laurel Pointe Apartments
141 2 Nob Hill Apartments
142 2 Coachella MHP
144 2 Vermillion Homes
147 2 Del Mar Apartments
148 2 Timberlake Apartments
ADDRESS CITY STATE ZIP CODE
- -------------------------------------------------------------------------------------------------------------------------
1255 New Hampshire Avenue, NW Washington DC 20036
5901 West Behrend Drive Glendale AZ 85308
7100 West 141st Street Overland Park KS 66223
1800 Southpoint Crossing Drive Durham NC 27713
110 Valley Stream Drive Christiana DE 19702
2401 Repsdorph Road Seabrook TX 77586
600 West 26th Street Austin TX 78705
7325 South West 82nd Street Miami FL 33143
1350 & 1400 Crescent-Vischers Ferry Road Halfmoon NY 12065
10 West Minnezona Avenue Phoenix AZ 85013
2905-3075 40th Ave Southwest Fargo ND 58104
520 East Calder Way State College PA 16801
3651 North Rancho Drive Las Vegas NV 89130
1025 Assisi Lane Atlantic Beach FL 32233
1625 Woodcreek Drive Fairfield CA 94534
10540 East Apache Trail Apache Junction AZ 85220
2101 Scenic Highway Pensacola FL 32503
2900 Mayport Road Atlantic Beach FL 32233
23525 Arlington Avenue Torrance CA 90501
2728-2924 15th Street South, and 1425-1502 30th Avenue South, and 1501 31st Avenue South Fargo ND 58103
1441 North Jim Miller Road Dallas TX 75217
110 Valley Stream Drive Christiana DE 19702
110 Summerfield Way Brandon FL 33510
5400-5500 Southwest 77th Court Miami FL 33155
700 East College Boulevard Pensacola FL 32503
7100 Shoreline Drive Stockton CA 95219
400 Ralph Street White Settlement TX 76108
5002 West McFadden Avenue Santa Ana CA 92704
329 South Harbor Boulevard Santa Ana CA 92704
1806 East First Street Greenville NC 27858
1450 Avenida de Mesilla Las Cruces NM 88005
1900 East Franklin Street Richmond VA 23223
700 West Bel Air Avenue Aberdeen MD 21001
1033-1053 2nd Street Lafayette CA 94549
115 East County 22nd Street San Luis AZ 85349
3401 West Pecan Boulevard McAllen TX 78501
1535 Morris Road SE Washington DC 20020
2600-2614 Pinebrook Avenue Landover MD 20785
1318 North McDonald Road Spokane Valley WA 99216
100 Laurel Pointe Circle Salisbury NC 39206
500 McIntire Road Charlottesville VA 22902
49615 Park Lane Coachella CA 92236
501-614 Laura Lane Two Harbors MN 55616
558 College Street Hapeville GA 30354
400 Timberlake View Circle Inman SC 29349
% OF
CROSS COLLATERALIZED AGGREGATE
AND CROSS DEFAULTED LOAN GENERAL PROPERTY ORIGINAL LOAN CUT-OFF DATE LOAN CUT-OFF DATE
LOAN FLAG ORIGINATOR TYPE SPECIFIC PROPERTY TYPE BALANCE ($) BALANCE ($) BALANCE
- ------------------------------------------------------------------------------------------------------------------------------
Wachovia Multifamily Conventional 29,000,000.00 28,902,056.77 2.41%
Wachovia Multifamily Conventional 24,200,000.00 24,200,000.00 2.02%
CGM Multifamily Conventional 20,800,000.00 20,649,186.19 1.72%
Wachovia Multifamily Conventional 15,000,000.00 15,000,000.00 1.25%
Wachovia Multifamily Conventional 14,250,000.00 14,220,416.33 1.18%
Wachovia Multifamily Conventional 13,200,000.00 13,173,063.39 1.10%
CGM Multifamily Student Housing 12,400,000.00 12,361,475.06 1.03%
Wachovia Multifamily Conventional 12,000,000.00 11,986,106.69 1.00%
AMCC Multifamily Conventional 9,480,000.00 9,465,567.24 0.79%
AMCC Multifamily Conventional 8,750,000.00 8,750,000.00 0.73%
AMCC Multifamily Conventional 7,250,000.00 7,234,884.03 0.60%
Wachovia Multifamily Student Housing 7,250,000.00 7,234,558.17 0.60%
CGM Multifamily Conventional 7,200,000.00 7,176,884.42 0.60%
Atlantic Beach Portfolio AMCC Multifamily Conventional 7,100,000.00 7,091,702.96 0.59%
CGM Multifamily Senior Housing 7,000,000.00 6,977,064.39 0.58%
NCCI Mobile Home Park Mobile Home Park 6,500,000.00 6,492,750.50 0.54%
NCCI Multifamily Conventional 6,500,000.00 6,479,470.60 0.54%
Atlantic Beach Portfolio AMCC Multifamily Conventional 6,400,000.00 6,392,520.99 0.53%
NCCI Multifamily Conventional 6,200,000.00 6,193,200.97 0.52%
AMCC Multifamily Conventional 5,700,000.00 5,687,176.14 0.47%
NCCI Multifamily Conventional 5,450,000.00 5,427,748.84 0.45%
Wachovia Multifamily Conventional 5,360,000.00 5,349,062.11 0.45%
AMCC Multifamily Conventional 4,990,000.00 4,990,000.00 0.42%
Wachovia Multifamily Conventional 4,852,000.00 4,835,281.00 0.40%
NCCI Multifamily Conventional 4,500,000.00 4,485,787.34 0.37%
Wachovia Multifamily Conventional 4,000,000.00 3,995,149.20 0.33%
NCCI Multifamily Conventional 3,700,000.00 3,685,312.08 0.31%
Eggleston 1 NCCI Mobile Home Park Mobile Home Park 3,600,000.00 3,596,125.85 0.30%
Eggleston 1 NCCI Mobile Home Park Mobile Home Park 3,600,000.00 3,596,125.85 0.30%
Wachovia Multifamily Student Housing 3,500,000.00 3,476,176.30 0.29%
NCCI Mobile Home Park Mobile Home Park 3,300,000.00 3,288,877.15 0.27%
Wachovia Multifamily Conventional 3,056,000.00 3,047,338.88 0.25%
Wachovia Multifamily Section 42 2,900,000.00 2,844,408.98 0.24%
LaFayette Wachovia Multifamily Conventional 2,830,000.00 2,824,286.98 0.24%
Eggleston 2 NCCI Mobile Home Park Mobile Home Park 2,750,000.00 2,743,530.70 0.23%
NCCI Mobile Home Park Mobile Home Park 2,320,000.00 2,315,265.69 0.19%
AMCC Multifamily Conventional 2,000,000.00 1,987,562.54 0.17%
AMCC Multifamily Conventional 2,000,000.00 1,987,562.54 0.17%
AMCC Multifamily Conventional 1,700,000.00 1,698,086.13 0.14%
Wachovia Multifamily Section 42 1,618,000.00 1,607,068.00 0.13%
Wachovia Multifamily Conventional 1,600,000.00 1,596,734.96 0.13%
NCCI Mobile Home Park Mobile Home Park 1,600,000.00 1,596,236.04 0.13%
AMCC Multifamily Conventional 1,575,000.00 1,563,775.96 0.13%
AMCC Multifamily Conventional 1,425,000.00 1,418,838.41 0.12%
Wachovia Multifamily Section 42 1,408,000.00 1,391,141.22 0.12%
LOAN
% LOAN ADMINISTRATIVE INTEREST
GROUP 2 ORIGINATION FIRST PAY MATURITY DATE MORTGAGE COST RATE ACCRUAL
BALANCE DATE DATE OR ARD RATE (%) (%) METHOD
- ----------------------------------------------------------------------------------------
9.60% 13-Mar-2003 11-May-2003 11-Apr-2013 5.1500% 0.04210% Actual/360
8.04% 31-Mar-2003 11-May-2003 11-Apr-2013 5.4500% 0.04210% Actual/360
6.86% 14-Nov-2002 1-Jan-2003 1-Dec-2012 5.6400% 0.14710% Actual/360
4.98% 2-Apr-2003 11-May-2003 11-Apr-2013 5.3600% 0.04210% Actual/360
4.72% 30-Apr-2003 11-Jun-2003 11-May-2013 5.4200% 0.04210% Actual/360
4.38% 30-Apr-2003 11-Jun-2003 11-May-2013 5.5000% 0.04210% Actual/360
4.11% 1-Apr-2003 1-May-2003 1-Apr-2012 5.5600% 0.04210% Actual/360
3.98% 2-Jun-2003 11-Jul-2003 11-Jun-2010 5.2000% 0.04210% Actual/360
3.14% 15-May-2003 11-Jul-2003 11-Jun-2013 5.6500% 0.04210% Actual/360
2.91% 4-Jun-2003 11-Jul-2003 11-Jun-2010 5.0000% 0.04210% Actual/360
2.40% 17-Apr-2003 11-Jun-2003 11-May-2013 5.4000% 0.04210% Actual/360
2.40% 6-May-2003 11-Jun-2003 11-May-2013 5.3000% 0.08210% Actual/360
2.38% 14-Mar-2003 1-May-2003 1-Apr-2013 5.4000% 0.07210% Actual/360
2.36% 29-May-2003 11-Jul-2003 11-Jun-2013 5.1500% 0.04210% Actual/360
2.32% 20-Mar-2003 1-May-2003 1-Apr-2012 5.3000% 0.08210% Actual/360
2.16% 15-May-2003 11-Jul-2003 11-Jun-2013 5.4000% 0.04210% Actual/360
2.15% 8-Apr-2003 11-May-2003 11-Apr-2013 5.4800% 0.09210% Actual/360
2.12% 29-May-2003 11-Jul-2003 11-Jun-2013 5.1500% 0.04210% Actual/360
2.06% 21-May-2003 11-Jul-2003 11-Jun-2013 5.4900% 0.09210% Actual/360
1.89% 1-May-2003 11-Jun-2003 11-May-2013 5.0400% 0.04210% Actual/360
1.80% 28-Feb-2003 11-Apr-2003 11-Mar-2013 5.5200% 0.04210% Actual/360
1.78% 15-Apr-2003 11-Jun-2003 11-May-2013 5.5000% 0.04210% Actual/360
1.66% 21-May-2003 11-Jul-2003 11-Jun-2020 5.4700% 0.04210% Actual/360
1.61% 4-Apr-2003 11-May-2003 11-Apr-2010 5.0500% 0.04210% Actual/360
1.49% 8-Apr-2003 11-May-2003 11-Apr-2013 5.4800% 0.09210% Actual/360
1.33% 13-May-2003 11-Jul-2003 11-Jun-2013 4.9500% 0.08210% Actual/360
1.22% 10-Mar-2003 11-Apr-2003 11-Mar-2013 5.6500% 0.04210% Actual/360
1.19% 9-May-2003 11-Jul-2003 11-Jun-2013 5.5900% 0.04210% Actual/360
1.19% 9-May-2003 11-Jul-2003 11-Jun-2013 5.5900% 0.04210% Actual/360
1.15% 8-Apr-2003 11-May-2003 11-Apr-2013 5.4500% 0.04210% Actual/360
1.09% 11-Apr-2003 11-May-2003 11-Apr-2013 5.1600% 0.04210% Actual/360
1.01% 31-Mar-2003 11-May-2003 11-Apr-2013 6.0000% 0.04210% Actual/360
0.94% 1-Oct-2000 1-Nov-2000 1-Sep-2026 9.3100% 0.04210% 30/360
0.94% 29-Apr-2003 11-Jun-2003 11-May-2008 5.5500% 0.04210% Actual/360
0.91% 9-May-2003 11-Jul-2003 11-Jun-2013 5.2900% 0.04210% Actual/360
0.77% 29-Apr-2003 11-Jun-2003 11-May-2008 5.5000% 0.04210% Actual/360
0.66% 7-Mar-2003 11-Apr-2003 11-Mar-2013 5.2500% 0.04210% Actual/360
0.66% 7-Mar-2003 11-Apr-2003 11-Mar-2013 5.2500% 0.04210% Actual/360
0.56% 16-May-2003 11-Jul-2003 11-Jun-2013 5.3500% 0.04210% Actual/360
0.53% 1-Jun-2002 1-Jul-2002 1-Jun-2017 8.6250% 0.04210% Actual/360
0.53% 9-May-2003 11-Jun-2003 11-May-2013 5.5000% 0.04210% Actual/360
0.53% 9-May-2003 11-Jul-2003 11-Jun-2013 5.2900% 0.04210% Actual/360
0.52% 25-Apr-2003 11-Jun-2003 11-May-2018 5.5000% 0.04210% Actual/360
0.47% 1-Apr-2003 11-May-2003 11-Apr-2013 5.8000% 0.04210% Actual/360
0.46% 1-Dec-2001 1-Jan-2002 1-Dec-2019 8.6250% 0.04210% 30/360
ORIGINAL
INTEREST TERM TO REMAINING
ACCRUAL MATURITY TERM TO REMAINING ORIGINAL REMAINING MATURITY DATE OR
METHOD OR ARD MATURITY OR IO PERIOD AMORT TERM AMORT TERM MONTHLY P & I ARD BALLOON ARD
DURING IO (MOS.) ARD (MOS.) (MOS.) (MOS.) (MOS.) PAYMENTS ($) BALANCE ($) LOANS
- ------------------------------------------------------------------------------------------------------------
120 117 360 357 158,347.61 23,963,300.50 N
Actual/360 120 117 3 360 360 136,646.73 20,443,592.24 N
120 113 360 353 119,933.59 17,451,879.22 N
Actual/360 120 117 21 360 360 83,855.47 13,095,940.08 N
120 118 360 358 80,196.13 11,877,406.44 N
120 118 360 358 74,948.15 11,029,756.47 N
108 105 360 357 70,873.34 10,637,165.72 N
84 83 360 359 65,893.31 10,669,838.73 N
120 119 300 299 59,067.76 7,255,440.59 N
ACTUAL/360 84 83 23 360 360 46,971.90 8,069,677.05 N
120 118 360 358 40,710.99 6,039,096.05 N
120 118 360 358 40,259.59 6,020,047.94 Y
120 117 360 357 40,430.22 5,997,018.94 N
120 119 360 359 38,767.87 5,866,779.75 N
108 105 360 357 38,871.33 5,961,771.89 N
120 119 360 359 36,499.50 5,413,879.88 N
120 117 360 357 36,824.76 5,427,539.82 N
120 119 360 359 34,945.68 5,288,365.79 N
120 119 360 359 35,164.03 5,178,555.59 N
120 118 360 358 30,738.33 4,693,565.04 N
120 116 360 356 31,012.92 4,556,867.22 N
120 118 360 358 30,433.49 4,478,749.79 N
ACTUAL/360 204 203 35 204 204 37,623.44 1,307,708.93 N
84 81 360 357 26,195.05 4,300,295.82 N
120 117 360 357 25,494.07 3,757,527.57 N
120 119 360 359 21,350.80 3,283,779.18 N
120 116 360 356 21,357.72 3,106,081.55 N
120 119 360 359 20,644.15 3,016,224.13 N
120 119 360 359 20,644.15 3,016,224.13 N
120 117 240 237 23,977.32 2,246,520.52 N
120 117 360 357 18,039.20 2,727,736.87 N
120 117 360 357 18,322.26 2,592,334.86 N
311 278 360 327 23,983.78 974,533.63 N
60 58 360 358 16,157.32 2,631,613.73 N
120 119 240 239 18,592.22 1,753,847.44 N
60 58 360 358 13,172.70 2,155,832.56 N
120 116 300 296 11,984.96 1,509,422.64 N
120 116 300 296 11,984.96 1,509,422.64 N
120 119 360 359 9,493.04 1,413,709.56 N
180 167 360 347 12,584.64 1,327,752.97 N
120 118 360 358 9,084.62 1,336,940.86 N
120 119 240 239 10,817.29 1,020,420.33 N
180 178 180 178 12,938.53 0.00 N
120 117 300 297 9,007.88 1,096,299.70 N
216 197 360 341 10,951.28 980,406.13 N
APPRAISED CUT-OFF DATE
PREPAYMENT PROVISIONS VALUE ($) APPRAISAL DATE DSCR (X) LTV RATIO
- -----------------------------------------------------------------------------------------
L(48),YM2%(60),YM(9),O(3) 38,000,000 21-Feb-2003 1.38 76.06%
L(37),GRTR1%orYM/Defeasance(77),O(6) 33,000,000 11-Mar-2003 1.25 73.33%
L(31),D(87),O(2) 26,200,000 3-Nov-2002 1.38 78.81%
L(36),D(80),O(4) 19,700,000 6-Feb-2003 1.31 76.14%
L(26),D(91),O(3) 18,300,000 18-Feb-2003 1.43 77.71%
L(35),GRTR1%orYM(81),O(4) 16,530,000 27-Feb-2003 1.38 79.69%
L(27),D(78),O(3) 15,875,000 11-Mar-2003 1.36 77.87%
L(25),D(56),O(3) 15,240,000 7-Apr-2003 1.29 78.65%
L(36),D(81),O(3) 12,000,000 1-Jun-2003 1.45 78.88%
L(36),D(45),O(3) 12,200,000 9-May-2003 1.51 71.72%
L(36),D(81),O(3) 9,100,000 28-Feb-2003 1.43 79.50%
L(26),D(91),O(3) 10,400,000 12-Feb-2003 1.89 69.56%
L(27),D(90),O(3) 9,000,000 16-Jan-2003 1.41 79.74%
L(36),D(81),O(3) 10,700,000 1-Mar-2003 1.64 66.28%
L(27),D(78),O(3) 8,470,000 5-Nov-2002 1.46 82.37%
L(25),D(92),O(3) 8,550,000 31-Mar-2003 1.49 75.94%
L(27),D(90),O(3) 8,220,000 8-Jan-2003 1.51 78.83%
L(36),D(81),O(3) 8,500,000 1-Mar-2003 1.59 75.21%
L(25),D(92),O(3) 8,400,000 21-Jan-2003 1.53 73.73%
L(36),D(81),O(3) 8,000,000 18-Mar-2003 1.68 71.09%
L(28),D(86),O(6) 6,850,000 4-Feb-2003 1.49 79.24%
L(26),D(91),O(3) 6,700,000 18-Feb-2003 1.49 79.84%
L(36),D(165),O(3) 7,360,000 10-Apr-2003 1.18 67.80%
L(27),D(54),O(3) 7,100,000 23-Feb-2003 1.34 68.10%
L(27),D(90),O(3) 6,000,000 8-Jan-2003 1.38 74.76%
L(25),D(92),O(3) 6,860,000 31-Mar-2003 1.38 58.24%
L(28),D(86),O(6) 4,750,000 14-Feb-2003 1.40 77.59%
L(25),D(92),O(3) 4,800,000 13-Feb-2003 1.40 74.92%
L(25),D(92),O(3) 5,000,000 13-Feb-2003 1.52 71.92%
L(48),D(69),O(3) 6,300,000 7-Jan-2003 1.56 55.18%
L(27),D(90),O(3) 5,000,000 13-Feb-2003 1.60 65.78%
L(48),D(69),O(3) 3,820,000 17-Sep-2002 1.41 79.77%
L(120),GRTR1%Prepayment+YM or 1%(191) 3,810,000 11-Feb-2003 1.16 74.66%
L(26),D(31),O(3) 5,260,000 6-Mar-2003 1.37 53.69%
L(25),D(92),O(3) 4,400,000 18-Feb-2003 1.66 62.35%
L(26),D(31),O(3) 2,900,000 21-Jan-2003 1.49 79.84%
L(36),D(81),O(3) 4,200,000 10-Feb-2003 2.48 47.32%
L(36),D(81),O(3) 2,700,000 12-Feb-2003 1.40 73.61%
L(60),GRTR1%orYM(57),O(3) 2,200,000 5-Apr-2003 1.55 77.19%
GRTR1%orYM(177),O(3) 3,430,000 30-Jan-2003 1.61 46.85%
L(26),D(91),O(3) 2,000,000 4-Apr-2003 1.51 79.84%
L(25),D(92),O(3) 3,300,000 18-Feb-2003 1.86 48.37%
L(36),D(141),O(3) 2,300,000 7-Mar-2003 1.17 67.99%
L(48),GRTR1%orYM(69),O(3) 1,935,000 20-Feb-2003 1.38 73.32%
L(180),1%(33),O(3) 2,020,000 31-Jan-2003 1.13 68.87%
CUT-OFF DATE
LTV RATIO AT NUMBER LOAN
MATURITY OR YEAR OF UNITS UNIT OF AMOUNT PER OCCUPANCY OCCUPANCY
ARD BUILT YEAR RENOVATED (UNITS) MEASURE (UNIT) ($) RATE (%) "AS OF" DATE
- -------------------------------------------------------------------------------------------------
63.06% 1965 1999 304 Units 95,073 97.37% 21-Jan-2003
61.95% 2001 336 Units 72,024 92.26% 1-Mar-2003
66.61% 2002 250 Units 82,597 97.20% 1-Apr-2003
66.48% 1999 288 Units 52,083 94.44% 25-Mar-2003
64.90% 1987 243 Units 58,520 93.00% 28-Feb-2003
66.73% 1985 277 Units 47,556 92.06% 21-Apr-2003
67.01% 1982 267 Units 46,298 100.00% 17-Feb-2003
70.01% 1967 1985 & 1996 224 Units 53,509 95.98% 8-Apr-2003
60.46% 1975-2003 266 Units 35,585 92.86% 1-Apr-2003
66.14% 2000 131 Units 66,794 88.55% 31-Mar-2003
66.36% 2000-2003 91 Units 79,504 94.51% 3-Apr-2003
57.89% 1991 2001-2002 87 Units 83,156 88.95% 15-May-2003
66.63% 1994 144 Units 49,839 95.14% 31-Jan-2003
54.83% 1989 2002 192 Units 36,936 83.85% 1-Mar-2003
70.39% 2002 96 Units 72,678 97.92% 22-Apr-2003
63.32% 1930 1995 414 Pads 15,683 97.80% 31-Mar-2003
66.03% 1986 224 Units 28,926 88.84% 25-Mar-2003
62.22% 1987 2002 160 Units 39,953 91.88% 1-Mar-2003
61.65% 1964 1999 94 Units 65,885 100.00% 31-Mar-2003
58.67% 1994-1996 115 Units 49,454 97.39% 1-Mar-2003
66.52% 1965 2002 202 Units 26,870 91.58% 19-Feb-2003
66.85% 2001 81 Units 66,038 92.59% 28-Feb-2003
17.77% 1974 2002 160 Units 31,188 92.50% 15-Apr-2003
60.57% 1970 1985*1993-1994 108 Units 44,771 96.30% 28-Feb-2003
62.63% 1986 168 Units 26,701 95.83% 25-Mar-2003
47.87% 1988 114 Units 35,045 92.98% 31-Mar-2003
65.39% 1969 1999 144 Units 25,592 93.06% 19-Feb-2003
62.84% 1947 1957 80 Pads 44,952 100.00% 1-Apr-2003
60.32% 1946 95 Pads 37,854 98.95% 1-Apr-2003
35.66% 1980 146 Units 23,809 87.84% 31-Dec-2002
54.55% 1995 2001 224 Pads 14,682 83.04% 31-Jan-2003
67.86% 1853 2001 46 Units 66,246 100.00% 15-Oct-2002
25.58% 1997 122 Units 23,315 100.00% 30-Sep-2002
50.03% 1962*1967 43 Units 65,681 97.67% 4-Mar-2003
39.86% 1998 252 Pads 10,887 99.21% 1-Apr-2003
74.34% 1973 213 Pads 10,870 99.06% 1-Jan-2003
35.94% 1962-1964 1998-2002 95 Units 20,922 94.74% 1-Jan-2003
55.90% 1965 50 Units 39,751 96.00% 1-Jan-2003
64.26% 1996 44 Units 38,593 93.18% 1-May-2003
38.71% 1999 100 Units 16,071 96.00% 30-Sep-2002
66.85% 1964 2000 24 Units 66,531 100.00% 3-Mar-2003
30.92% 1960 111 Pads 14,381 100.00% 1-Apr-2003
0.00% 1998-2002 36 Units 43,438 97.22% 1-Apr-2003
56.66% 1970 2001-2002 64 Units 22,169 92.19% 28-Mar-2003
48.53% 2000 64 Units 21,737 92.19% 25-Dec-2002
UW NET
MOST RECENT UW REVENUES UW EXPENSES OPERATING UW NET CASH
MOST RECENT PERIOD NOI ($) ($) ($) INCOME ($) FLOW ($)
- -------------------------------------------------------------------------------------------------------
2002 2,566,606 4,130,083 1,441,236 2,688,847 2,612,847
R12 - Feb 03 2,209,532 3,330,000 1,218,426 2,111,574 2,044,374
Annualized 6 mos. 4/30/03 2,699,266 2,890,370 844,204 2,046,166 1,983,666
T-12 Jan 2003 1,501,422 2,369,345 982,679 1,386,665 1,313,225
Rolling 6 - Thru 3/03 1,458,084 2,237,248 791,844 1,445,404 1,378,822
Aug02 - Mar03 1,295,752 2,397,719 1,091,231 1,306,488 1,237,238
Full Year 2002 1,293,826 2,170,748 930,528 1,240,220 1,160,120
2002 1,087,484 2,031,998 958,307 1,073,691 1,017,691
Statement 2002 1,098,445 1,872,564 769,451 1,103,113 1,030,761
Statement 2002 858,901 1,387,397 512,125 875,272 849,072
Statement 2002 444,609 1,053,376 332,343 721,033 700,558
T-12 3/2003 915,963 1,529,472 589,808 939,664 911,389
Full Year 2002 648,021 1,226,247 505,767 720,481 684,481
Trailing 12 (3/02-2/03) 802,974 1,405,516 593,109 812,408 764,408
Full Year 2002 47,696 1,063,905 359,961 703,944 682,344
Year ended Dec 31, 2002 683,952 968,345 294,407 673,938 653,288
3 Months Annualized ended Mar 31, 2003 720,710 1,490,392 760,118 730,274 668,450
Trailing 12 (3/02-2/03) 668,704 1,221,833 516,207 705,625 665,625
Year ended Dec 31, 2002 685,289 940,795 274,007 666,788 643,788
Statement 2002 706,151 1,011,408 363,701 647,707 618,957
Trailing 12 Months ended Jan 31, 2003 530,528 1,281,258 675,814 605,444 554,944
2002 611,900 799,480 236,698 562,782 542,532
Statement 2002 550,035 1,209,262 627,217 582,044 534,044
2002 495,161 977,986 530,359 447,627 420,627
3 Months Annualized ended Mar 31, 2003 426,111 1,128,653 663,218 465,435 423,435
2002 422,938 855,829 468,113 387,716 354,086
Trailing 12 Months ended Jan 31, 2003 307,792 958,092 563,931 394,161 358,161
Year ended Dec 31, 2002 399,009 565,719 214,769 350,950 346,950
Year ended Dec 31, 2002 419,617 645,339 263,253 382,086 377,336
2002 527,919 949,225 463,483 485,742 449,242
Trailing 12 Months ended Mar 31, 2003 346,164 609,320 252,779 356,541 345,341
T-12 Ending 9/30 304,302 500,364 179,544 320,820 309,320
T-12 As of 6/30/02 434,626 690,763 327,235 363,528 333,028
2003 Annualized 318,627 541,521 261,294 280,227 266,295
Year ended Dec 31, 2002 335,837 652,992 269,142 383,850 371,250
Year ended Dec 31, 2002 255,776 432,334 186,074 246,260 235,510
Statement 2002 378,579 781,162 396,445 384,717 356,217
Statement 2002 211,901 460,092 243,570 216,523 201,523
Statement 2002 181,356 299,417 111,422 187,995 176,995
T-12 As of 7/31/02 277,286 647,601 379,993 267,608 242,608
2002 173,585 220,813 50,420 170,393 164,393
Year ended Dec 31, 2002 235,827 537,769 290,586 247,183 241,583
Statement 2002 140,078 316,806 126,693 190,113 182,013
Statement 2002 173,925 448,802 280,640 168,162 148,962
T-12 As of 6/30/02 170,812 364,768 200,198 164,570 148,570
LARGEST
LARGEST TENANT TENANT
SQ. FT.
- -----------------------
2ND 3RD
LARGEST LARGEST 2ND LARGEST LARGEST
TENANT LARGEST TENANT EXP. 2ND LARGEST TENANT TENANT % OF 2ND LARGEST TENANT EXP. TENANT
% OF NRA DATE TENANT NAME SQ. FT. NRA (%) DATE 3RD LARGEST TENANT NAME SQ. FT.
- ----------------------------------------------------------------------------------------------------------------------------
3RD LARGEST
TENANT % OF 3RD LARGEST TENANT EXP.
NRA DATE
- ------------------------------------
MORTGAGE
LARGEST AFFILIATED SPONSOR FLAG LOAN
LOCKBOX (> THAN 4% OF POOL) NUMBER
- ----------------------------------------------------
4
8
10
22
26
29
31
32
41
43
50
Springing 51
52
53
55
61
62
65
66
71
74
75
78
79
85
91
97
99
100
102
104
110
111
112
114
120
126
127
133
139
141
142
144
147
148
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2003-C5
ANNEX A-2 CERTAIN INFORMATION REGARDING MULTIFAMILY
MORTGAGED PROPERTIES
MORTGAGE
LOAN LOAN GROUP
NUMBER NUMBER PROPERTY NAME PROPERTY ADDRESS
- ------------------------------------------------------------------------------------------------------------------------------------
4 2 Hamilton House Apartments 1255 New Hampshire Avenue, NW
5 1 Irongate Apartments 3301 Arena Boulevard
8 2 Arrowhead Highlands Apartments 5901 West Behrend Drive
10 2 Plaza Gardens South Apartments 7100 West 141st Street
14 1 Village on the Hill 9 School Street
22 2 Archstone Southpoint Apartments 1800 Southpoint Crossing Drive
26 2 Valley Stream Village I Apartments 110 Valley Stream Drive
29 2 Forest Cove Apartments 2401 Repsdorph Road
31 2 Rio Nueces Apartments 600 West 26th Street
32 2 Bermuda Villas Apartments 7325 South West 82nd Street
41 2 Mohawk Terrace Apartments 1350 & 1400 Crescent-Vischers Ferry Road
43 2 Lexington on Central Apartments 10 West Minnezona Avenue
50 2 Mistwood Townhomes 2905-3075 40th Ave Southwest
51 2 Calder Commons 520 East Calder Way
52 2 Cypress Springs 3651 North Rancho Drive
53 2 Otter Run Apartments 1025 Assisi Lane
55 2 Woodcreek Senior Commons 1625 Woodcreek Drive
62 2 Ashley Club Apartments 2101 Scenic Highway
65 2 Mallard Cove Apartments 2900 Mayport Road
66 2 Kensington Apartments 23525 Arlington Avenue
70 1 York Farm Estates 1870 Baldwin Road
71 2 Candle Park South 2728-2924 15th Street South, and 1425-1502
30th Avenue South, and 1501 31st Avenue South
74 2 Pleasant Grove 1441 North Jim Miller Road
75 2 Valley Stream Village II Apartments 110 Valley Stream Drive
78 2 Brandon Oaks 110 Summerfield Way
79 2 Miller Lake Apartments 5400-5500 Southwest 77th Court
85 2 Arbor Club Apartments 700 East College Boulevard
91 2 Schooner Landing 7100 Shoreline Drive
97 2 Plaza Apartments 400 Ralph Street
102 2 Wilson Acres Apartments 1806 East First Street
110 2 Shockoe Place 1900 East Franklin Street
111 2 Fairbrooke Senior Housing Apartments 700 West Bel Air Avenue
112 2 La Playa Apartments 1033-1053 2nd Street
126 2 Fort Stanton Apartments 1535 Morris Road SE
127 2 Pinebrook Apartments 2600-2614 Pinebrook Avenue
133 2 McDonald Place Apartments 1318 North McDonald Road
135 1 La Posada Apartments 241 Lafayette Circle
139 2 Laurel Pointe Apartments 100 Laurel Pointe Circle
141 2 Nob Hill Apartments 500 McIntire Road
144 2 Vermillion Homes 501-614 Laura Lane
147 2 Del Mar Apartments 558 College Street
148 2 Timberlake Apartments 400 Timberlake View Circle
PROPERTY PROPERTY ZIP
PROPERTY CITY STATE CODE COUNTY
- ----------------------------------------------------------------------------------------------
Washington DC 20036 District of Columbia
Sacramento CA 95834 Sacramento
Glendale AZ 85308 Maricopa
Overland Park KS 66223 Johnson
Framingham MA 01701 Middlesex
Durham NC 27713 Durham
Christiana DE 19702 New Castle
Seabrook TX 77586 Harris
Austin TX 78705 Travis
Miami FL 33143 Miami-Dade
Halfmoon NY 12065 Saratoga
Phoenix AZ 85013 Maricopa
Fargo ND 58104 Cass
State College PA 16801 Centre
Las Vegas NV 89130 Clark
Atlantic Beach FL 32233 Duval
Fairfield CA 94534 Solano
Pensacola FL 32503 Escambia
Atlantic Beach FL 32233 Duval
Torrance CA 90501 Los Angeles
Yorktown Heights NY 10598 Westchester
Fargo ND 58103 Cass
Dallas TX 75217 Dallas
Christiana DE 19702 New Castle
Brandon FL 33510 Hillsborough
Miami FL 33155 Miami-Dade
Pensacola FL 32503 Escambia
Stockton CA 95219 San Joaquin
White Settlement TX 76108 Tarrant
Greenville NC 27858 Pitt
Richmond VA 23223 Richmond City
Aberdeen MD 21001 Harford
Lafayette CA 94549 Contra Costa
Washington DC 20020 District of Columbia
Landover MD 20785 Prince George's
Spokane Valley WA 99216 Spokane
Layfayette CA 94549 Contra Costa
Salisbury NC 39206 Rowan
Charlottesville VA 22902 Charlottesville City
Two Harbors MN 55616 Lake
Hapeville GA 30354 Fulton
Inman SC 29349 Spartanburg
GENERAL PROPERTY ELEVATOR UTILITIES NUMBER OF NUMBER OF 1 NUMBER OF 2 NUMBER OF 3
TYPE SPECIFIC PROPERTY TYPE BUILDINGS TENANT PAYS STUDIO UNITS BR UNITS BR UNITS BR UNITS
- -----------------------------------------------------------------------------------------------------------------------------------
Multifamily Conventional Y P,C 210 87 7
Multifamily Conventional N W,E,P,C 112 144 24
Multifamily Conventional N E,W,P,C 104 192 40
Multifamily Conventional N E,P,C,G 77 135 38
Multifamily Conventional N E,P,C 2 88 92 1
Multifamily Conventional N E,P,W,C 118 138 32
Multifamily Conventional N E,C,P 81 162
Multifamily Conventional N E,W,P,C 134 143
Multifamily Student Housing N E,P,C 226 40 1
Multifamily Conventional N E,P,C 56 96 64 8
Multifamily Conventional N NAV 154 112
Multifamily Conventional N E,G 54 77
Multifamily Conventional N W,E,G 54 37
Multifamily Student Housing Y P,C 1 86
Multifamily Conventional N E,P,C 32 88 24
Multifamily Conventional N W,E,G 48 96 48
Multifamily Senior Housing N E,P,C,G 76 20
Multifamily Conventional N E 160 64
Multifamily Conventional N W,E 48 112
Multifamily Conventional N E 37 48 9
Multifamily Conventional N E,P,C 63 11 2
Multifamily Conventional N W,E,G 98 17
Multifamily Conventional N E 32 140 30
Multifamily Conventional N E,P,C 27 54
Multifamily Conventional N W,E 45 82 33
Multifamily Conventional N W,E,P,C 48 57 3
Multifamily Conventional N E 120 48
Multifamily Conventional N E,P,G,C 73 41
Multifamily Conventional N None 24 76 44
Multifamily Student Housing N E,P,C 32 83 31
Multifamily Conventional Y P, C 44 2
Multifamily Section 42 Y E, P,C 114 8
Multifamily Conventional N E,P,C 17 22 4
Multifamily Conventional N E 1 50 44
Multifamily Conventional N E 21 25 4
Multifamily Conventional N E,G 40 4
Multifamily Conventional N E, P,C 12 8
Multifamily Section 42 N E,P,W,C 40 48
Multifamily Conventional N E,P,C 24
Multifamily Conventional N E 36
Multifamily Conventional N E 64
Multifamily Section 42 N E,P,C,W 32 32
AVERAGE RENT; AVERAGE RENT; AVERAGE RENT; AVERAGE RENT; AVERAGE RENT;
NUMBER OF 4+ RENT RANGES - RENT RANGES - 1 RENT RANGES - 2 RENT RANGES - 3 RENT RANGES - 4+ MORTGAGE LOAN
BR UNITS STUDIO UNITS BR UNITS BR UNITS BR UNITS BR UNITS NUMBER
- -----------------------------------------------------------------------------------------------------------------------------------
1133;1133 - 1133 1739;1739 - 1739 2615;2615 - 2615 4
950;950-950 1295;1295-1295 1425;1425-1425 5
830;750-850 927;880-950 1218;1218-1218 8
824;605-1,150 1,109;600-1,312 1490;810-1575 10
1 900;900-900 1085;1065-1105 1245;1225-1265 NAP NAP 14
609;609-609 746;746-746 873;873-873 22
867;700-1750 857;940-1030 26
641;490-720 832;914-1000 29
629; 400-895 1173;800-1250 1800 31
660;660-660 725;725-725 883;870-895 1075;1075-1075 32
550;460-695 684;565-900 41
849;710-960 1095;875-1340 43
892;820-995 1170;1125-1265 50
680;680-680 1385;1320-1450 51
663;645-680 754; 723-770 860; 709-875 52
582;550-625 684;600-740 831;690-875 53
926; 825-1075 1142;1110-1295 55
525;409-570 693;545-720 62
587;500-640 722;635-775 65
773;698-795 915;795-965 1174;1,085-1195 66
1 1325;1125-1525 1643;1410-1875 2020;1040-3000 3000;3000-3000 70
727;655-845 922;870-1000 71
477; 475-500 573; 450-600 676; 600-695 74
835;825-845 955;935-975 75
568;549-594 673;664-724 811;784-839 78
597;506-688 748;685-810 1020;1020-1020 79
524; 524-524 689; 689-689 85
635;620-650 867;750-1050 91
486; 248 - 520 612; 513 - 640 696; 695 - 720 97
428;428-428 626;580-650 845;815-875 102
840;675-1045 1380;1325-1435 110
490;490-490 598;598-598 111
948;740-1350 1125;850-1400 1445;1190-1700 112
366;366-366 654;545-780 770;663-920 126
700;595-750 838;765-865 954;787-1010 127
622;585-625 702;685-725 133
1175;1000-1350 1245;1150-1340 135
12 555;520-590 613;560-665 685;630-740 139
788;735-880 141
771;740-805 144
638;550-689 147
481;468-493 568;522-613 148
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2003-C5
ANNEX A-3 RESERVE ACCOUNT INFORMATION
MORTGAGE
LOAN LOAN GROUP GENERAL PROPERTY
NUMBER NUMBER PROPERTY NAME TYPE SPECIFIC PROPERTY TYPE
- ------ ------ ------------- ---- ----------------------
1 1 Lloyd Center Retail Anchored
2 1 One South Broad Street Office CBD
3 1 673 First Avenue Office CBD
4 2 Hamilton House Apartments Multifamily Conventional
5 1 Irongate Apartments Multifamily Conventional
6 1 Columbiana Station Shopping Center Retail Anchored
7 1 16 West 61st Street Office CBD
8 2 Arrowhead Highlands Apartments Multifamily Conventional
9 1 AmCap - Union & Alameda Retail Anchored
10 2 Plaza Gardens South Apartments Multifamily Conventional
11 1 2175 K Street, N.W. Office CBD
12 1 90 & 110 South Bedford Road Office Medical
13 1 Maryland Corporate Center Office Suburban
14 1 Village on the Hill Multifamily Conventional
15 1 Anthem Village Retail Anchored
16 1 Riviera Plaza Mixed Use Retail/Office
17 1 Georgetown Plaza Office Suburban
18 1 College Grove Shopping Center Retail Anchored
19 1 Shoppes of Parkland Retail Anchored
20 1 Lowell Street Industrial Flex
21 1 The Lassiter at North Hills Shopping Center Retail Anchored
22 2 Archstone Southpoint Apartments Multifamily Conventional
23 1 WOW - Chippewa & Hobart Industrial Distribution
23.1 WOW-Chippewa Falls Industrial Distribution
23.2 WOW-Hobart Industrial Distribution
24 1 Kearny Mesa Crossroads Office Suburban
25 1 Point Plaza East 4-5-6 Office Suburban
26 2 Valley Stream Village I Apartments Multifamily Conventional
27 1 Beacon Station Business Park Office Suburban
28 1 Gardens Towne Square Retail Anchored
29 2 Forest Cove Apartments Multifamily Conventional
30 1 Rio Vista Building Office Suburban
31 2 Rio Nueces Apartments Multifamily Student Housing
32 2 Bermuda Villas Apartments Multifamily Conventional
33 1 8989 Rio Vista Plaza Office Suburban
34 1 Tapo Plaza Retail Anchored
35 1 Market Place Shopping Center Retail Anchored
36 1 Creekside Place Shopping Center Retail Anchored
37 1 Village Shoppes of Flowery Branch Retail Anchored
38 1 Hilton Norfolk Airport Hospitality Full Service
39 1 Two Northbrook Place Office Suburban
40 1 10470 Old Placerville Road Office Suburban
41 2 Mohawk Terrace Apartments Multifamily Conventional
42 1 Tudor Business Center Office Suburban
43 2 Lexington on Central Apartments Multifamily Conventional
44 1 301 East Liberty Street Office Suburban
45 1 New Market Retail Anchored
46 1 Bank of America Tower Office CBD
47 1 Mill Towne Center Mixed Use Office/Retail
48 1 Village Square Retail Anchored
49 1 Hunington Portfolio Retail Unanchored
49.1 Westfield Village Shopping Center Retail Unanchored
49.2 The Shops on Memorial Retail Unanchored
50 2 Mistwood Townhomes Multifamily Conventional
51 2 Calder Commons Multifamily Student Housing
52 2 Cypress Springs Multifamily Conventional
53 2 Otter Run Apartments Multifamily Conventional
54 1 AmCap - 84th & Pecos Retail Anchored
55 2 Woodcreek Senior Commons Multifamily Senior Housing
56 1 Lincoln Road Plaza Retail Shadow Anchored
57 1 Route 6 Plaza Retail Anchored
58 1 River Chase Office Center Office Suburban
59 1 Troutdale Commons Retail Anchored
60 1 AmCap - Jewell & Wadsworth Retail Anchored
61 2 Cherokee Mobile Village Mobile Home Park Mobile Home Park
62 2 Ashley Club Apartments Multifamily Conventional
63 1 L Street Self Storage Self Storage Self Storage
64 1 Lakeside Office Park Office Suburban
65 2 Mallard Cove Apartments Multifamily Conventional
66 2 Kensington Apartments Multifamily Conventional
67 1 Mini U Storage- Fairfax Station Self Storage Self Storage
68 1 Park Meadows Medical Office Medical
69 1 Bannockburn Mediplex Office Building Office Medical
70 1 York Farm Estates Multifamily Conventional
71 2 Candle Park South Multifamily Conventional
72 1 2301 Glades Retail Mixed Use
73 1 Methodist Medical Building Office Medical
74 2 Pleasant Grove Multifamily Conventional
75 2 Valley Stream Village II Apartments Multifamily Conventional
76 1 Springfield Self Storage Self Storage Self Storage
77 1 Mizner Place Office Suburban
78 2 Brandon Oaks Multifamily Conventional
79 2 Miller Lake Apartments Multifamily Conventional
80 1 Walgreens - Elgin Retail Anchored
81 1 388 West Broadway Retail Shadow Anchored
82 1 Independence Park Shopping Center Retail Shadow Anchored
83 1 Walgreens - Colorado Springs Retail Anchored
84 1 Forest Hill Centre Retail Anchored
85 2 Arbor Club Apartments Multifamily Conventional
86 1 Cordova Towne Center Phases II & III Retail Shadow Anchored
87 1 North Denver Industrial Industrial Warehouse
88 1 Beachwalk Center Retail Anchored
89 1 Walgreens - Tropicana Avenue Retail Anchored
90 1 Rite Aid - Las Vegas Retail Anchored
91 2 Schooner Landing Multifamily Conventional
92 1 Palm Valley Pavilions East Retail Shadow Anchored
93 1 CRS Tower Office Suburban
94 1 Rancho Palomino Medical Center Office Medical
95 1 Randhurst Crossings Shopping Center Retail Shadow Anchored
96 1 Walgreens - Omaha Retail Anchored
97 2 Plaza Apartments Multifamily Conventional
98 1 Walgreens - Thrasher's Corner, WA Retail Anchored
99 2 Bit O Home MHP Mobile Home Park Mobile Home Park
100 2 Liberty MHP Mobile Home Park Mobile Home Park
101 1 Inwood Retail Center Retail Unanchored
INITIAL DEPOSIT TO
ANNUAL DEPOSIT CAPITAL
MONTHLY TAX MONTHLY INSURANCE TO REPLACEMENT IMPROVEMENTS INITIAL TI/LC ONGOING TI/LC
ESCROW ESCROW RESERVES RESERVES ESCROW FOOTNOTE
------ ------ -------- -------- ------ --------
118,111 120,000 532,797 (1)
83,794 20,750 46,442 23,438 (1)
124,748 22,983 79,313 3,000,000 (1)
17,513 4,937 60,800 11,750
19,472 5,350 36,960
43,104 2,129 22,416
18,457 2,765 67,200
14,361 5,564 23,578 200,000 (1)
8,550 5,169 62,500
31,751 2,246 12,216 535,000 (1)
27,523 7,720 57,549 50,000
23,668 4,587 44,704 4,013 835,281.27 (1)
10,735 4,184 52,808 10,219
10,498 2,777 11,572
11,892 2,991 46,056 149,875 (1)
29,988 3,000 28,099 (1)
18,750 2,488 18,137 16,250 (1)
30,631 4,070 14,565 (1)
30,000 1,931 30,325 320,948 (1)
7,876 1,000 15,824 (1)
20,936 4,000
28,421 2,634 37,650 4,825 (1)
13,095 4,470 19,013 75,000 (1)
7,000 2,709 18,702
7,996 3,408 60,750 5,625
29,344 11,981 15,727
17,035 7,571 22,960 6,625
19,663 5,397 55,400 280,938
12,195 3,847 19,526 350,000 (1)
26,215 66,750 35,725
18,153 56,000 64,375
11,659 716 17,742 169,078
13,044 6,296 22,914 15,459 150,000 (1)
16,325 3,696 46,309 (1)
14,600 1,674 4,775 21,875 (1)
7,992 2,319 9,289
14,175 6,580 400,000
38,862 2,667 23,200 147,000 371,510 (1)
$ 9,073 $ 1,577 13,178 (1)
22,110 4,307 72,352
10,107 (2) 24,290 1,000
7,370 2,368 26,200
23,333 1,867 15,425 (1)
4,573 2,589 34,897 16,125 (1)
35,430 2,563 33,678 11,625 (1)
12,932 1,217 16,622 74,955 (1)
5,112 1,799 3,044 11,608 (1)
5,760 2,619 6,102 (1)
12,053 4,390 20,475
8,802 28,275
7,762 2,101 36,000
7,532 12,008 48,000 211,375
3,074 1,371 6,750 157,000 (1)
8,474 1,631 21,600
5,869 1,824 4,030
8,297 4,269 5,349 (1)
7,569 1,140 6,666 (1)
2,703 1,256 5,939 (1)
2,861 830 6,984
2,509 1,603
8,038 9,474 61,824
3,745 936 13,319
14,000 1,301 23,118 18,138 (1)
7,528 9,828 40,000 177,625
4,442 1,334 23,500 52,500
6,351 395 90,000
3,440 440 6,937 (1)
3,927 778 4,084
10,834 2,546 19,250
13,198 1,509 25,875
6,929 125,000 (1)
7,010 666 10,497 1,463 100,000 (1)
5,625 6,055 50,500 16,375
926 1,194 20,250
4,748 318
7,588 (2) (1)
8,986 2,868 89,707 29,000
8,756 7,539 25,488 24,688
1,500 833 1,000 (1)
8,738 1,399 4,793 (1)
3,635 408 11,210
6,631 7,092 42,000 56,875
9,863 2,027 5,790 (1)
8,462 4,205 41,126 (1)
3,695 1,601 7,926 1,250 (1)
1,361 2,284
4,951 4,195 33,630 87,550
1,458 434 3,519 (1)
8,175 1,059 16,464 8,125 (1)
3,124 965 8,132 8,750 50,000 (1)
6,145 829 2,237 (1)
5,401 3,993 36,000 4,375
2,174
2,154 489 10,250
3,670 576 1,600
12,668 1,438 8,261 100,000 (1)
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2003-C5
ANNEX A-3 RESERVE ACCOUNT INFORMATION
MORTGAGE
LOAN LOAN GROUP GENERAL PROPERTY
NUMBER NUMBER PROPERTY NAME TYPE SPECIFIC PROPERTY TYPE
------ ------ ------------- ---- ----------------------
102 2 Wilson Acres Apartments Multifamily Student Housing
103 1 Walgreens - Dickinson Retail Anchored
104 2 Trails West MHP Mobile Home Park Mobile Home Park
105 1 1230 48th Avenue Industrial Distribution
106 1 17th Street Plaza Retail Anchored
107 1 Rite Aid - Colonie Retail Anchored
108 1 Shurgard - Brandon Self Storage Self Storage
109 1 Morgan Country Square Retail Unanchored
110 2 Shockoe Place Multifamily Conventional
111 2 Fairbrooke Senior Housing Apartments Multifamily Section 42
112 2 La Playa Apartments Multifamily Conventional
113 1 Palmetto Plaza Retail Unanchored
114 2 Hacienda MHP Mobile Home Park Mobile Home Park
115 1 Village at Dana Park II Retail Shadow Anchored
116 1 Marshalls - Lodi Retail Anchored
117 1 Wagon Wheel MHP Mobile Home Park Mobile Home Park
118 1 Northpoint Day Centre Retail Unanchored
119 1 Shurgard - Oldsmar Self Storage Self Storage
120 2 Twin Palms MHP Mobile Home Park Mobile Home Park
121 1 Mini U Storage-Maple Shade Self Storage Self Storage
122 1 AmCap - Gerbes Center Retail Anchored
123 1 Eckerds-Holly Springs Retail Anchored
124 1 Walgreens - Conroe, TX Retail Anchored
125 1 Harwin Plaza Office Suburban
126 2 Fort Stanton Apartments Multifamily Conventional
127 2 Pinebrook Apartments Multifamily Conventional
128 1 CVS - Shippensburg Retail Anchored
129 1 South Florida - Sample Turnpike Retail Unanchored
130 1 5405-5407 Port Royal Road Industrial Warehouse
131 1 Montbello Plaza Retail Unanchored
132 1 Augusta Commons Retail Shadow Anchored
133 2 McDonald Place Apartments Multifamily Conventional
134 1 1407-1413 East Cary Street Mixed Use Multifamily/Retail
135 1 La Posada Apartments Multifamily Conventional
136 1 Rite Aid - Baltimore Retail Anchored
137 1 Village Park Shopping Center Retail Unanchored
138 1 Antoine Crossing Office Suburban
139 2 Laurel Pointe Apartments Multifamily Section 42
140 1 Meadowbrook Mobile Home Park Mobile Home Park Mobile Home Park
141 2 Nob Hill Apartments Multifamily Conventional
142 2 Coachella MHP Mobile Home Park Mobile Home Park
143 1 Northcross Business Center Office Suburban
144 2 Vermillion Homes Multifamily Conventional
145 1 Bank of America Pad Retail Shadow Anchored
146 1 Bells Ferry Plaza Shopping Center Retail Unanchored
147 2 Del Mar Apartments Multifamily Conventional
148 2 Timberlake Apartments Multifamily Section 42
149 1 South Florida - West Boca Retail Unanchored
150 1 South Florida - Red Road Retail Unanchored
151 1 South Florida - Baton II Retail Unanchored
152 1 South Florida - Tamarac Retail Unanchored
INITIAL DEPOSIT TO
ANNUAL DEPOSIT CAPITAL
MONTHLY TAX MONTHLY INSURANCE TO REPLACEMENT IMPROVEMENTS INITIAL TI/LC ONGOING TI/LC
ESCROW ESCROW RESERVES RESERVES ESCROW FOOTNOTE
------ ------ -------- -------- ------ --------
5,336 2,291 36,500 28,704
2,135 1,076
7,253 2,314 22,063 12,031 (1)
9,098 4,994 4,637 150,000 (1)
2,795
5,085 1,540 3,723 50,000 (1)
689 1,148 11,500 7,313
866 4,022 21,360
2,869 4,252 13,932 73,781
959 (2) 3,936 (1)
1,089 365 10,631
2,417 441 (1)
673 380 4,060 (1)
2,349 1,351
2,083 459 16,750 (1)
2,530 627
4,896 453
417 188 1,628 93,000 (1)
181 2,074 (1)
542 2,048
3,403 577 8,976 14,400 (1)
1,755 1,018 28,500
2,021 541 15,000 15,000
1,088
4,211 1,202 3,150 2,500 (1)
1,783 445 4,812 12,500 (1)
785 108 1,950 (1)
2,200 (2) 1,800 (1)
2,555 546 9,900
602 527 5,250 (1)
916 1,550 6,447 125,500
2,795
4,605 811 9,746 4,938 (1)
4,938 1,010 15,696 2,688 (1)
2,770 1,687 19,992
8,462 1,416 19,855 313
1,422 357 6,000
1,871 481 4,813
1,273 310 3,120 (1)
1,754 745 8,100 17,500
264
1,489 322 2,040 25,000 (1)
2,318 1,907 16,000 47,900
2,775 644 12,800
2,002 761 1,880 12,188 (1)
1,656 297 1,500 250 (1)
1,317 368 1,154 (1)
2,038 534 1,650 (1)
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2003-C5
ANNEX A-4 COMMERCIAL TENANT SCHEDULE
MORTGAGE
LOAN LOAN GROUP GENERAL PROPERTY CUT-OFF DATE LOAN
NUMBER NUMBER PROPERTY NAME TYPE SPECIFIC PROPERTY TYPE BALANCE ($)
- ------------------------------------------------------------------------------------------------------------------------------------
1 1 Lloyd Center Retail Anchored 69,922,220.75
2 1 One South Broad Street Office CBD 44,919,181.80
3 1 673 First Avenue Office CBD 35,000,000.00
6 1 Columbiana Station Shopping Center Retail Anchored 25,900,000.00
7 1 16 West 61st Street Office CBD 24,953,568.34
9 1 AmCap - Union & Alameda Retail Anchored 20,726,538.48
11 1 2175 K Street, N.W. Office CBD 18,250,000.00
12 1 90 & 110 South Bedford Road Office Medical 17,965,895.32
13 1 Maryland Corporate Center Office Suburban 17,120,000.00
15 1 Anthem Village Retail Anchored 16,904,637.36
16 1 Riviera Plaza Mixed Use Retail/Office 16,759,444.83
17 1 Georgetown Plaza Office Suburban 16,482,870.79
18 1 College Grove Shopping Center Retail Anchored 16,281,990.26
19 1 Shoppes of Parkland Retail Anchored 15,968,668.70
20 1 Lowell Street Industrial Flex 15,403,979.71
21 1 The Lassiter at North Hills Shopping Center Retail Anchored 15,216,679.80
23 1 WOW - Chippewa & Hobart Industrial Distribution 14,971,010.41
23.1 WOW-Chippewa Falls Industrial Distribution
23.2 WOW-Hobart Industrial Distribution
24 1 Kearny Mesa Crossroads Office Suburban 14,967,091.25
25 1 Point Plaza East 4-5-6 Office Suburban 14,471,606.00
27 1 Beacon Station Business Park Office Suburban 14,145,000.00
28 1 Gardens Towne Square Retail Anchored 13,959,816.03
30 1 Rio Vista Building Office Suburban 12,971,419.02
33 1 8989 Rio Vista Plaza Office Suburban 11,976,036.27
34 1 Tapo Plaza Retail Anchored 10,940,994.37
35 1 Market Place Shopping Center Retail Anchored 10,777,960.96
36 1 Creekside Place Shopping Center Retail Anchored 10,529,295.73
37 1 Village Shoppes of Flowery Branch Retail Anchored 10,527,461.29
39 1 Two Northbrook Place Office Suburban 9,939,006.32
40 1 10470 Old Placerville Road Office Suburban 9,825,000.00
42 1 Tudor Business Center Office Suburban 8,861,748.93
44 1 301 East Liberty Street Office Suburban 8,241,138.48
45 1 New Market Retail Anchored 8,090,587.04
46 1 Bank of America Tower Office CBD 7,885,097.89
47 1 Mill Towne Center Mixed Use Office/Retail 7,457,061.86
48 1 Village Square Retail Anchored 7,411,726.97
49 1 Hunington Portfolio Retail Unanchored 7,237,414.01
49.1 Westfield Village Shopping Center Retail Unanchored
49.2 The Shops on Memorial Retail Unanchored
54 1 AmCap - 84th & Pecos Retail Anchored 7,027,144.91
56 1 Lincoln Road Plaza Retail Shadow Anchored 6,974,213.35
57 1 Route 6 Plaza Retail Anchored 6,960,286.83
58 1 River Chase Office Center Office Suburban 6,786,771.31
59 1 Troutdale Commons Retail Anchored 6,587,328.41
60 1 AmCap - Jewell & Wadsworth Retail Anchored 6,539,661.03
64 1 Lakeside Office Park Office Suburban 6,467,294.09
68 1 Park Meadows Medical Office Medical 6,043,188.89
69 1 Bannockburn Mediplex Office Building Office Medical 6,000,000.00
72 1 2301 Glades Retail Mixed Use 5,625,000.00
73 1 Methodist Medical Building Office Medical 5,432,597.20
77 1 Mizner Place Office Suburban 5,150,000.00
80 1 Walgreens - Elgin Retail Anchored 4,790,885.31
81 1 388 West Broadway Retail Shadow Anchored 4,787,693.45
82 1 Independence Park Shopping Center Retail Shadow Anchored 4,740,860.19
83 1 Walgreens - Colorado Springs Retail Anchored 4,655,115.95
84 1 Forest Hill Centre Retail Anchored 4,490,027.66
86 1 Cordova Towne Center Phases II & III Retail Shadow Anchored 4,386,498.12
87 1 North Denver Industrial Industrial Warehouse 4,300,000.00
88 1 Beachwalk Center Retail Anchored 4,155,976.11
89 1 Walgreens - Tropicana Avenue Retail Anchored 4,095,918.43
90 1 Rite Aid - Las Vegas Retail Anchored 4,074,728.81
92 1 Palm Valley Pavilions East Retail Shadow Anchored 3,975,279.41
93 1 CRS Tower Office Suburban 3,948,884.45
94 1 Rancho Palomino Medical Center Office Medical 3,888,032.43
95 1 Randhurst Crossings Shopping Center Retail Shadow Anchored 3,869,709.40
96 1 Walgreens - Omaha Retail Anchored 3,778,859.73
98 1 Walgreens - Thrasher's Corner, WA Retail Anchored 3,612,849.14
101 1 Inwood Retail Center Retail Unanchored 3,585,067.04
103 1 Walgreens - Dickinson Retail Anchored 3,426,245.67
105 1 1230 48th Avenue Industrial Distribution 3,273,205.56
106 1 17th Street Plaza Retail Anchored 3,190,541.15
107 1 Rite Aid - Colonie Retail Anchored 3,109,157.66
109 1 Morgan Country Square Retail Unanchored 3,095,457.39
113 1 Palmetto Plaza Retail Unanchored 2,791,723.49
115 1 Village at Dana Park II Retail Shadow Anchored 2,713,175.07
116 1 Marshalls - Lodi Retail Anchored 2,638,944.36
118 1 Northpoint Day Centre Retail Unanchored 2,397,494.25
122 1 AmCap - Gerbes Center Retail Anchored 2,153,303.02
123 1 Eckerds-Holly Springs Retail Anchored 2,095,398.54
124 1 Walgreens - Conroe, TX Retail Anchored 2,046,098.66
125 1 Harwin Plaza Office Suburban 2,006,728.70
128 1 CVS - Shippensburg Retail Anchored 1,951,663.59
129 1 South Florida - Sample Turnpike Retail Unanchored 1,908,757.47
130 1 5405-5407 Port Royal Road Industrial Warehouse 1,797,317.53
131 1 Montbello Plaza Retail Unanchored 1,793,235.37
132 1 Augusta Commons Retail Shadow Anchored 1,790,822.33
134 1 1407-1413 East Cary Street Mixed Use Multifamily/Retail 1,686,237.62
136 1 Rite Aid - Baltimore Retail Anchored 1,655,675.57
137 1 Village Park Shopping Center Retail Unanchored 1,642,946.37
138 1 Antoine Crossing Office Suburban 1,619,290.98
143 1 Northcross Business Center Office Suburban 1,568,245.68
145 1 Bank of America Pad Retail Shadow Anchored 1,453,537.63
146 1 Bells Ferry Plaza Shopping Center Retail Unanchored 1,436,162.63
149 1 South Florida - West Boca Retail Unanchored 1,387,292.80
150 1 South Florida - Red Road Retail Unanchored 806,794.39
151 1 South Florida - Baton II Retail Unanchored 608,640.04
152 1 South Florida - Tamarac Retail Unanchored 505,563.91
NUMBER OF UNITS UNIT OF
(UNITS) MEASURE LARGEST TENANT
- ------------------------------------------------------------------------------
1,229,140 Sq. Ft. Meier & Frank Company
464,420 Sq. Ft. Wachovia Bank, N.A.
426,596 Sq. Ft. UNICEF
270,187 Sq. Ft. Dick's
112,080 Sq. Ft. New York Institute of Technology
239,636 Sq. Ft. King Soopers
100,837 Sq. Ft. U.S. Chemical Safety & Hazard Investigation Board
120,211 Sq. Ft. Mount Kisco Medical Group
223,521 Sq. Ft. Lockheed Martin Corporation
115,719 Sq. Ft. The Vons Companies, Inc.
158,820 Sq. Ft. Don Rasmussen Company
140,495 Sq. Ft. Georgetown University
193,912 Sq. Ft. Mervyns
145,652 Sq. Ft. BJ's Wholesale Club
206,187 Sq. Ft. ION Track Instruments
78,116 Sq. Ft. Harris Teeter, Inc.
753,000 Sq. Ft. Various
243,000 Sq. Ft. Mason Shoe
510,000 Sq. Ft. Dean Pickle & Specialty Products Co.
126,756 Sq. Ft. Security Union Title Insurance
93,509 Sq. Ft. Department of Health
78,634 Sq. Ft. GSA
153,067 Sq. Ft. Publix
108,477 Sq. Ft. State of California - Dept of Parks & Rec.
78,167 Sq. Ft. State Farm
149,445 Sq. Ft. The Vons Companies, Inc.
210,553 Sq. Ft. Burlington Coat Factory
47,748 Sq. Ft. Barnes & Noble
92,883 Sq. Ft. Publix
116,000 Sq. Ft. Shell Vacations, LLC - Include Shell Group Inc.
87,854 Sq. Ft. Sutter Connect
80,967 Sq. Ft. US Dept. of Fish & Wildlife
76,392 Sq. Ft. AEC One Stop Group, Inc.
134,220 Sq. Ft. Lowe's Foods
168,392 Sq. Ft. Whitfield Musgrave
83,108 Sq. Ft. Dial America Marketing
14,850 Sq. Ft. Brookstone Properties, Inc.
40,686 Sq. Ft. Various
10,660 Sq. Ft. CiCi's Pizza
30,026 Sq. Ft. C. Lantro's
96,057 Sq. Ft. King Soopers
21,213 Sq. Ft. Brownes & Co. Apothecary
35,660 Sq. Ft. CVS
66,664 Sq. Ft. Smigel Anderson & Sacks
39,596 Sq. Ft. Walgreen Co.
92,759 Sq. Ft. King Soopers
116,047 Sq. Ft. Bank One Colorado, N.A.
34,685 Sq. Ft. Surgical Suite
40,849 Sq. Ft. Northshore Cardiologists
19,998 Sq. Ft. Coldwell Banker
47,035 Sq. Ft. CHW Medical Foundation
36,582 Sq. Ft. Coldwell Banker Residential
14,490 Sq. Ft. Walgreens
3,659 Sq. Ft. Sixty USA, Inc.
31,950 Sq. Ft. Leslie's Pools
15,120 Sq. Ft. Walgreens
52,923 Sq. Ft. Food Lion
37,560 Sq. Ft. Gould's Day Spa & Salon
274,176 Sq. Ft. Denver Storage Solutions
52,840 Sq. Ft. Winn Dixie
15,120 Sq. Ft. Walgreens
16,708 Sq. Ft. Thrifty Payless, Inc.
35,188 Sq. Ft. Michael's
82,301 Sq. Ft. Commercial Recovery Systems
29,306 Sq. Ft. Las Vegas Skin and Cancer, Inc.
17,207 Sq. Ft. Palm Beach Tan
14,560 Sq. Ft. Walgreens
14,490 Sq. Ft. Walgreens
48,595 Sq. Ft. Inessa Stewart's Antiques
13,650 Sq. Ft. Walgreens
220,631 Sq. Ft. Great Lakes Foods
30,910 Sq. Ft. Walgreens
11,180 Sq. Ft. Rite Aid of New York, Inc.
24,820 Sq. Ft. Mountain Mike's Pizza
26,558 Sq. Ft. Home Center Furniture
10,413 Sq. Ft. Euphoria Salon
29,000 Sq. Ft. Marshalls
22,000 Sq. Ft. The North American Mission Board of the Southern Baptist
56,266 Sq. Ft. Gerbes
13,824 Sq. Ft. Eckerds
13,650 Sq. Ft. Walgreens
44,872 Sq. Ft. Genesis Vocational Training, Inc.
10,880 Sq. Ft. CVS
21,002 Sq. Ft. Tire Kingdom
32,057 Sq. Ft. Practical Computer
13,000 Sq. Ft. Chihua's Supermarket
12,000 Sq. Ft. Hollywood Video
23,613 Sq. Ft. Richmond Restaurant Group
11,180 Sq. Ft. Rite Aid of Maryland, Inc.
48,730 Sq. Ft. The Palace Restaurant & The Palace Special Events
78,479 Sq. Ft. American Business Machines
15,599 Sq. Ft. Intercontinental Acceptance Corporation
1 Pad
13,600 Sq. Ft. Great Gig Productions
12,528 Sq. Ft. Tire Kingdom
9,977 Sq. Ft. Tire Kingdom
7,692 Sq. Ft. Southern Express Lube, Inc.
11,004 Sq. Ft. Accutune
2ND LARGEST
LARGEST TENANT TENANT % OF 2ND LARGEST TENANT
% OF NRA LARGEST TENANT EXP. DATE 2ND LARGEST TENANT NAME NRA (%) EXP. DATE
- -------------------------------------------------------------------------------------------------------------------------
24.17% 31-Jan-2006 Dollar Tree 6.45% 31-Jul-2010
47.02% 31-Dec-2010 Dorland Sweeney Jones 6.95% 31-Jul-2011
19.01% 31-Dec-2003 Kallir, Phillips, Ross Inc. 18.75% 30-Jun-2004
16.93% 31-Jan-2016 Goody's 16.84% 31-May-2016
53.53% 30-Jun-2018 The City of New York Parks & Recreation 30.85% 30-Apr-2012
29.72% 31-Jan-2006 24 Hour Fitness 17.59% 31-Jan-2015
18.96% 30-Sep-2010 The George Washington University 17.81% 31-Dec-2005
84.34% 30-Apr-2033 Merrill Lynch 8.09% 30-Nov-2004
22.41% 30-Jun-2009 QSS Group, Inc. 7.54% 31-May-2004
48.27% 13-Nov-2026 Longs Drug Stores 18.56% 28-Feb-2027
58.03% 5-Aug-2016 Collins Pine Company 8.80% 31-Aug-2010
32.97% 31-Jul-2005 Theodore's Furniture 8.35% 31-Jul-2004
38.25% 31-Jan-2009 Longs Drug Store 13.02% 15-May-2009
74.51% 31-Jan-2021 Oxford Academy 4.67% 31-Dec-2011
41.22% 31-May-2009 Viasys Healthcare, Inc. 40.66% 31-Aug-2012
26.79% 31-May-2012 Kerr Drugs 13.06% 31-Jan-2013
Various Various Various Various Various
50.62% 30-Jul-2004 Kell Container Corp. 49.38% 31-Jan-2008
100.00% 30-Jun-2012
17.32% 31-Oct-2004 Resource Consultants, Inc. 13.01% 30-Apr-2006
100.00% 31-Jul-2015
100.00% 31-Dec-2012
36.58% 31-Dec-2013 Kmart/Office Max 14.38% 31-Jan-2009
17.90% 31-May-2007 Alvarado Hospital Medical 10.72% 30-Apr-2008
45.39% 31-Aug-2008 Affilitated Research Institute 10.54% 31-Oct-2006
23.02% 31-Dec-2006 Jo-Ann's House of Fabrics 15.30% 30-Jun-2008
31.97% 31-Jan-2007 Best Buy 22.45% 31-Jan-2010
55.19% 31-Jul-2010 Applebee's Restaurant 11.96% 31-Aug-2015
58.50% 17-Sep-2022 Blockbuster 5.22% 18-Aug-2007
13.07% 31-Oct-2004 The Sherwood Group, Inc. 12.07% 30-Apr-2008
83.29% 31-Jul-2009 Greystone Environmental 13.29% 31-Mar-2008
98.26% 21-Nov-2012 Tom Gittins 1.74% 21-Nov-2012
33.90% 31-Jan-2004 JSTOR 15.43% 30-Nov-2009
40.23% 20-Feb-2020 Big Lots 23.66% 31-Jan-2008
20.18% 31-Jan-2012 Bank of America 17.56% 31-Dec-2006
11.42% 30-Nov-2005 CC Services 4.74% 31-May-2006
51.18% 31-Jan-2019 PDS Associates d/b/a Waterworks 25.25% 1-Jul-2008
Various Various Various Various Various
39.40% 31-Jan-2013 Orient Cafe 22.84% 28-Feb-2013
12.53% 30-Nov-2007 Texadelphia Sandwiches 12.38% 30-Nov-2007
56.08% 31-Jul-2008 Bargain City Sales 6.25% 31-Oct-2006
43.61% 31-Jul-2011 Sixty, Inc. 14.14% 30-Apr-2012
28.39% 31-Jan-2027 Charlie Browns 22.71% 31-Jul-2022
33.33% 30-Apr-2012 Michael Baker, Jr., Inc. 31.14% 30-Sep-2009
38.19% 12-Jan-2061 Blockbuster Video 10.67% 28-Feb-2011
58.17% 31-Mar-2017 Greenbacks 13.80% 28-Feb-2008
20.20% 31-Mar-2006 First American Mortgage 8.34% 28-Feb-2008
27.86% 22-Aug-2012 Assoc. of Otolarynology 14.25% 25-Jun-2012
34.81% 31-Dec-2012 Pulmonary Physicians of N.S. 21.68% 31-Dec-2012
47.60% 31-Jan-2005 Gateway Computers 29.13% 31-Mar-2005
44.01% 30-Nov-2006 Procedure Center of SF 9.57% 1-Jun-2013
19.94% 31-Oct-2006 Gourmet Plus Inc. 13.95% 31-Dec-2006
100.00% 31-Mar-2078
100.00% 30-Apr-2017
12.52% 30-Nov-2005 Coldwell Banker-Apex Realty 11.83% 30-Sep-2007
100.00% 31-Dec-2076
62.35% 9-Nov-2019 Hollywood Video 9.30% 9-Nov-2009
15.58% 31-May-2016 The Dollar Shoppe 11.71% 30-Nov-2007
39.38% Multiple Spaces Kaiser Foundation Health Plan 10.23% 31-May-2006
66.24% 23-Apr-2018 Dollar General 16.35% 5-Mar-2006
100.00% 30-Sep-2059
100.00% 14-Jul-2024
67.47% 30-Oct-2010 Accent Fabrics and Furnishings 11.61% 30-Jun-2004
14.97% 31-Mar-2004 Presidential Life 9.55% MTM
34.62% 30-Dec-2008 Veterans Administration 26.37% 19-Jan-2006
21.09% 31-Jul-2008 Boston Market 18.70% 30-Jun-2012
100.00% 30-Apr-2078
100.00% 31-Mar-2063
36.90% 30-Nov-2008 Salons of Dallas 11.89% 30-Sep-2004
100.00% 30-Apr-2078
50.77% 31-Dec-2005 K&K Warehousing 49.23% 30-Nov-2017
43.68% 31-Oct-2028 Finney, LLC d/b/a Bistro Mezzaluna 13.58% Multiple Spaces
100.00% 28-Feb-2019
10.07% 31-Jul-2003 Radio Shack #01-3812 9.67% 31-Aug-2003
12.83% 31-Oct-2005 Neonatology Medical Group 9.16% 31-Jan-2008
53.06% 30-May-2010 Panda Express 17.29% 30-Apr-2012
100.00% 14-Mar-2014
45.45% 31-Dec-2006 David M. Pehrson, D.M.D. 11.82% 28-Feb-2008
84.47% 31-May-2006 Happy Garden 4.44% 31-May-2004
100.00% 31-Jan-2023
100.00% 30-Apr-2078
44.08% 30-Jun-2007 Baz Enterprises LTD dba Stambush Physical 11.53% 31-Dec-2006
100.00% 31-Jan-2025
33.83% 31-Aug-2014 Sample Road Auto Spa 16.58% 30-Nov-2011
24.96% 31-Jul-2007 Ace Floors 15.29% 31-Aug-2006
22.00% 31-May-2007 Colorado Laundries, Inc. 20.00% 30-Nov-2011
43.33% 14-Sep-2012 RadioShack 23.33% 31-Jan-2007
40.28% 31-Dec-2004
100.00% 28-Feb-2019
12.40% 31-Jan-2007 Senor Sol Fine Mexican Food 11.33% 31-May-2003
22.70% 31-Mar-2005 Triad USA Marketing Group 18.04% 31-Jan-2008
46.49% 14-Feb-2008 Carlsen Douglas Development 21.14% 31-Aug-2017
18.38% 31-Jul-2005 Dunkin Donuts 13.90% 30-Dec-2015
50.05% 31-Aug-2014 Roadway Muffler & Break 18.54% 31-Dec-2003
63.18% 30-Apr-2017 Texeco Lube Center 26.26% 31-Oct-2011
41.50% 31-Aug-2007 Precision Tune Auto Care 34.06% 31-May-2010
31.55% 28-Feb-2005 Car Wash 29.01% 30-Nov-2007
3RD LARGEST
TENANT % OF 3RD LARGEST TENANT MORTGAGE LOAN
3RD LARGEST TENANT NAME NRA EXP. DATE NUMBER
- -----------------------------------------------------------------------------------------------
Lloyd Center Cinemas (GROUND LEASE) 5.40% 31-Dec-2011 1
Electronic Ink., Inc. 6.66% 31-Oct-2010 2
New York Presbyterian Hospital 17.82% 31-Aug-2006 3
CIRCUIT CITY 10.53% 31-JAN-2020 6
Eastern Mountain Sports 15.61% 31-Jan-2006 7
Ace Hardware 13.35% 31-Mar-2006 9
Cameron McKenna LLP 11.74% 31-Oct-2003 11
Norther Westchester Cardiac Rehabilitation 4.66% 31-Oct-2005 12
Jackson & Tull Chartered 6.45% 31-Jul-2006 13
Blockbuster 3.52% 31-Dec-2011 15
Western Medical Consultants 5.87% 14-Nov-2008 16
Bomstein Agency 5.37% 30-Nov-2011 17
Staples 12.38% 28-Feb-2015 18
Carlucci's Gourmet Mark 4.39% 31-Oct-2012 19
Empirix (Teredyne) 18.12% 31-Oct-2003 20
Blockbuster 9.07% 31-Dec-2004 21
23
23.1
23.2
Transtel Communications, Inc. 6.13% 31-May-2005 24
25
27
The Rag Shop 4.90% 31-Aug-2006 28
Countrywide Financial Services 5.45% 31-Dec-2005 30
David Evans & Associates 5.33% 31-Oct-2004 33
Reed's & Sons Furniture 14.55% 30-Apr-2004 34
La-Z-Boy 13.34% 31-Oct-2004 35
Sushi Ai 10.47% 31-Oct-2012 36
Cross Roads Bar & Grill 5.19% 31-Jul-2010 37
Maximus, Inc. 10.88% 31-Aug-2005 39
40
42
Booth Newspaper 14.39% 31-Aug-2006 44
Boone Drugs 4.70% 28-Feb-2005 45
Brooks Borg Skiles 11.51% 31-Dec-2012 46
Kukui, Inc 4.57% 31-Oct-2005 47
Westport Capital Markets 5.05% 31-May-2006 48
Various Various Various 49
Quizno's 15.24% 29-Feb-2008 49.1
River Oaks Cleaners 9.99% 31-Oct-2012 49.2
Market Square Coin Laundry 3.75% 31-May-2005 54
Astoria Clothing, Inc. 7.07% 30-Sep-2012 56
Nationwide Electrical Supply 16.08% 31-Oct-2017 57
Abacus Engineered Systems Inc. 11.64% 30-Jun-2009 58
La Costita 10.61% 30-Apr-2013 59
Checker Automotive 6.02% 31-Oct-2005 60
Multi-Link Communications, Inc. 5.22% 13-Feb-2006 64
Lone Tree Cosmetic Center 12.03% 22-Aug-2012 68
Northshore Medical Associates 16.85% 31-Dec-2012 69
City National Bank 23.27% 31-Jan-2009 72
Dr. Paris E. Royo, M.D. 7.58% 30-Jun-2007 73
Quorum Management Company 9.36% 31-May-2007 77
80
81
Body by Design 10.04% 31-Aug-2007 82
83
Dixon & Associates 9.07% 30-Aug-2005 84
Stereo One 9.58% 31-Jan-2008 86
DARR FMH 7.88% 30-Apr-2005 87
Cash's Liquor 6.81% 30-Jun-2005 88
89
90
California Pools & Spa 7.34% 30-May-2004 92
City of Dallas 9.04% 30-Jun-2004 93
HealthSouth 17.10% 31-Dec-2004 94
Verizon Wireless 13.72% 31-Aug-2006 95
96
98
Blockbuster Video, Inc. 10.45% 31-Mar-2008 101
103
105
International Quick Signs 6.23% 30-Apr-2004 106
107
Kay's Pet Supplies 9.67% 30-Apr-2005 109
Carter's Jr. Market 8.92% 31-Oct-2007 113
Hot Body Tanning 14.88% 30-Sep-2007 115
116
Business Partners 10.91% 30-Jun-2007 118
Jefferson City Credit 3.55% MTM 122
123
124
MG Group, Inc. 5.20% 30-Sep-2003 125
128
Brake World 12.40% 31-Aug-2012 129
Cassell Builder Group 14.12% 28-Feb-2005 130
Subway Real Estate Corp. 12.00% 31-Oct-2009 131
Payless ShoeSource 23.33% 30-Nov-2011 132
134
136
David's Barbecue 6.68% 31-Dec-2004 137
Veterinary Pharmacies of America Inc. 12.42% 30-Sep-2007 138
Medical Manager (WebMD) 17.17% 31-Aug-2007 143
145
Classy Critters 10.37% 30-Apr-2005 146
Precision Tune Auto Care 18.54% 31-Jan-2004 149
Subway 10.56% 31-Mar-2008 150
Tint World 24.44% 30-Sep-2011 151
Auto Sounds Plus 15.78% 30-Nov-2005 152
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2003-C5
ANNEX A-5 CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS AND MORTGAGED
PROPERTIES (CROSSED & PORTFOLIOS)
MORTGAGE LOAN GROUP CROSS COLLATERALIZED AND
LOAN NUMBER NUMBER PROPERTY NAME CITY STATE CROSS DEFAULTED LOAN FLAG
- ----------------------------------------------------------------------------------------------------------------------
23 1 WOW - Chippewa & Hobart Various WI
- ----------------------------------------------------------------------------------------------------------------------
23.1 WOW-Chippewa Falls Chippewa Falls WI
23.2 WOW-Hobart Hobart WI
Various Atlantic Beach Portfolio Atlantic Beach FL Atlantic Beach Portfolio
- ----------------------------------------------------------------------------------------------------------------------
53 2 Otter Run Apartments Atlantic Beach FL Atlantic Beach Portfolio
65 2 Mallard Cove Apartments Atlantic Beach FL Atlantic Beach Portfolio
49 1 Hunington Portfolio Various TX
- ----------------------------------------------------------------------------------------------------------------------
49.1 Westfield Village Shopping Center Katy TX
49.2 The Shops on Memorial Houston TX
Various Eggleston 1 Portfolio Santa Ana CA Eggleston 1 Portfolio
- ----------------------------------------------------------------------------------------------------------------------
99 2 Bit O Home MHP Santa Ana CA Eggleston 1 Portfolio
100 2 Liberty MHP Santa Ana CA Eggleston 1 Portfolio
Various Eggleston 2 Portfolio Various Various Eggleston 2 Portfolio
- ----------------------------------------------------------------------------------------------------------------------
114 2 Hacienda MHP San Luis AZ Eggleston 2 Portfolio
117 1 Wagon Wheel MHP Mesquite TX Eggleston 2 Portfolio
Various Boxer Portfolio Various TX Boxer Portfolio
- ----------------------------------------------------------------------------------------------------------------------
93 1 CRS Tower Dallas TX Boxer Portfolio
125 1 Harwin Plaza Houston TX Boxer Portfolio
138 1 Antoine Crossing Houston TX Boxer Portfolio
Various LaFayette Portfolio Various CA LaFayette Portfolio
- ----------------------------------------------------------------------------------------------------------------------
112 2 La Playa Apartments Lafayette CA LaFayette Portfolio
135 1 La Posada Apartments Layfayette CA LaFayette Portfolio
% OF
AGGREGATE % OF LOAN % OF LOAN
ORIGINAL LOAN CUT-OFF DATE LOAN CUT-OFF DATE GROUP 1 GROUP 2
BALANCE ($) BALANCE ($) BALANCE BALANCE BALANCE
- ------------------------------------------------------------------------------
15,000,000 14,971,010.41 1.25% 1.66% 0.00%
- ------------------------------------------------------------------------------
13,500,000 13,484,224 1.12%
- ------------------------------------------------------------------------------
7,100,000.00 7,091,702.96 0.59% 0.00% 2.36%
6,400,000.00 6,392,520.99 0.53% 0.00% 2.12%
7,250,000.00 7,237,414.01 0.60% 0.80% 0.00%
- ------------------------------------------------------------------------------
7,200,000 7,192,252 0.60%
- ------------------------------------------------------------------------------
3,600,000.00 3,596,125.85 0.30% 0.00% 1.19%
3,600,000.00 3,596,125.85 0.30% 0.00% 1.19%
5,325,000 5,315,599 0.44%
- ------------------------------------------------------------------------------
2,750,000.00 2,743,530.70 0.23% 0.00% 0.91%
2,575,000.00 2,572,068.35 0.21% 0.29% 0.00%
7,625,000 7,574,904 0.63%
- ------------------------------------------------------------------------------
3,975,000.00 3,948,884.45 0.33% 0.44% 0.00%
2,020,000.00 2,006,728.70 0.17% 0.22% 0.00%
1,630,000.00 1,619,290.98 0.13% 0.18% 0.00%
4,500,000 4,490,916 0.37%
- ------------------------------------------------------------------------------
2,830,000.00 2,824,286.98 0.24% 0.00% 0.94%
1,670,000.00 1,666,628.71 0.14% 0.19% 0.00%
ORIGINAL REMAINING
TERM TO TERM TO REMAINING ORIGINAL REMAINING MATURITY DATE OR
MATURITY OR MATURITY OR IO PERIOD AMORT TERM AMORT TERM MONTHLY P&I ARD BALLOON APPRAISED
ARD (MOS.) ARD (MOS.) (MOS.) (MOS.) (MOS.) PAYMENTS ($) BALANCE ($) VALUE ($) DSCR (X)
- -----------------------------------------------------------------------------------------------------------------------
120 118 360 358 87,535.93 12,630,409.95 19,200,000 1.35
- -----------------------------------------------------------------------------------------------------------------------
6,950,000
12,250,000
120 119 360 359 73,714 11,155,146 19,200,000 1.62
- -----------------------------------------------------------------------------------------------------------------------
120 119 360 359 38,767.87 5,866,779.75 10,700,000 1.64
120 119 360 359 34,945.68 5,288,365.79 8,500,000 1.59
120 118 360 358 44,545.23 6,191,961.61 9,850,000 1.34
- -----------------------------------------------------------------------------------------------------------------------
1,760,000
8,090,000
120 119 360 359 41,288 6,032,448 9,800,000 1.46
- -----------------------------------------------------------------------------------------------------------------------
120 119 360 359 20,644.15 3,016,224.13 4,800,000 1.40
120 119 360 359 20,644.15 3,016,224.13 5,000,000 1.52
120 119 Various Various 32,875 3,891,139 8,265,000 1.80
- -----------------------------------------------------------------------------------------------------------------------
120 119 240 239 18,592.22 1,753,847.44 4,400,000 1.66
120 119 360 359 14,283.11 2,137,291.73 3,865,000 1.96
120 113 360 353 46,306 6,489,922 11,110,000 1.61
- -----------------------------------------------------------------------------------------------------------------------
120 113 360 35 24,139.67 3,383,270.66 5,700,000 1.57
120 113 360 353 12,267.20 1,719,297.29 2,810,000 1.52
120 113 360 353 9,898.78 1,387,353.76 2,600,000 1.82
Various Various 360 358 25,692 4,029,212 7,490,000 1.34
- -----------------------------------------------------------------------------------------------------------------------
60 58 360 358 16,157.32 2,631,613.73 5,260,000 1.37
120 118 360 358 9,534.53 1,397,598.13 2,230,000 1.29
CUT-OFF DATE
LTV RATIO AT NUMBER OF LOAN MORTGAGE
CUT-OFF DATE MATURITY OR UNITS UNIT OF AMOUNT PER UW NET CASH FLOW LOAN
LTV RATIO ARD (UNITS) MEASURE (UNIT) ($) ($) NUMBER
- ------------------------------------------------------------------------------------------------
77.97% 65.78% 753,000 Sq. Ft. 20 1,415,792 23
- ------------------------------------------------------------------------------------------------
243,000 Sq. Ft. 23.1
510,000 Sq. Ft. 23.2
70.51% 58.33% 352 Units 38,366 1,430,033 Various
- ------------------------------------------------------------------------------------------------
66.28% 54.83% 192 Units 36,936 764,408 53
75.21% 62.22% 160 Units 39,953 665,625 65
73.48% 62.86% 40,686 Sq. Ft. 178 714,424 49
- ------------------------------------------------------------------------------------------------
10,660 Sq. Ft. 49.1
30,026 Sq. Ft. 49.2
73.42% 61.58% 175 Pads 41,403 724,286 Various
- ------------------------------------------------------------------------------------------------
74.92% 62.84% 80 Pads 44,952 346,950 99
71.92% 60.32% 95 Pads 37,854 377,336 100
64.38% 47.33% 479 Pads 11,102 706,390 Various
- ------------------------------------------------------------------------------------------------
62.35% 39.86% 252 Pads 10,887 371,250 114
66.55% 55.30% 227 Pads 11,331 335,140 117
68.35% 58.56% 205,652 Sq. Ft. 41 895,782 Various
- ------------------------------------------------------------------------------------------------
69.28% 59.36% 82,301 Sq. Ft. 48 455,769 93
71.41% 61.18% 44,872 Sq. Ft. 45 224,188 125
62.28% 53.36% 78,479 Sq. Ft. 21 215,825 138
61.50% 54.72% 63 Units 72,231 414,087 Various
- ------------------------------------------------------------------------------------------------
53.69% 50.03% 43 Units 65,681 266,295 112
74.74% 62.67% 20 Units 83,331 147,792 135
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2003-C5
ANNEX A-6 DEBT SERVICE PAYMENT SCHEDULE FOR RITE AID BALTIMORE
MORTGAGE LOAN MORTGAGE LOAN MORTGAGE LOAN
NUMBER 136 RITE NUMBER 136 RITE NUMBER 136 RITE
LOAN AID - BALTIMORE LOAN AID - BALTIMORE LOAN AID - BALTIMORE
PAY PAYMENT PAY PAYMENT PAY PAYMENT
PERIOD SCHEDULE PERIOD SCHEDULE PERIOD SCHEDULE
- ---------------------------- ------------------------------- -------------------------------
1 14,194.98 80 14,194.98 159 14,645.86
2 14,194.98 81 14,194.98 160 14,645.86
3 14,194.98 82 14,194.98 161 14,645.86
4 14,194.98 83 14,194.98 162 14,645.86
5 14,194.98 84 14,194.98 163 14,645.86
6 14,194.98 85 14,194.98 164 14,645.86
7 14,194.98 86 14,194.98 165 14,645.86
8 14,194.98 87 14,194.98 166 14,645.86
9 14,194.98 88 14,194.98 167 14,645.86
10 14,194.98 89 14,194.98 168 14,645.86
11 14,194.98 90 14,194.98 169 14,645.86
12 14,194.98 91 14,194.98 170 14,645.86
13 14,194.98 92 14,194.98 171 14,645.86
14 14,194.98 93 14,194.98 172 14,645.86
15 14,194.98 94 14,194.98 173 14,645.86
16 14,194.98 95 14,194.98 174 14,645.86
17 14,194.98 96 14,194.98 175 14,645.86
18 14,194.98 97 14,194.98 176 14,645.86
19 14,194.98 98 14,194.98 177 14,645.86
20 14,194.98 99 14,194.98 178 14,645.86
21 14,194.98 100 14,194.98 179 14,645.86
22 14,194.98 101 14,194.98 180 14,645.86
23 14,194.98 102 14,194.98 181 14,645.86
24 14,194.98 103 14,194.98 182 14,645.86
25 14,194.98 104 14,194.98 183 14,645.86
26 14,194.98 105 14,194.98 184 14,645.86
27 14,194.98 106 14,194.98 185 14,645.86
28 14,194.98 107 14,194.98 186 14,645.86
29 14,194.98 108 14,194.98 187 14,645.86
30 14,194.98 109 14,194.98 188 14,645.86
31 14,194.98 110 14,194.98 189 14,645.86
32 14,194.98 111 14,194.98 190 14,645.86
33 14,194.98 112 14,194.98 191 14,645.86
34 14,194.98 113 14,194.98 192 14,645.86
35 14,194.98 114 14,194.98 193 14,645.86
36 14,194.98 115 14,194.98 194 14,645.86
37 14,194.98 116 14,645.86 195 14,645.86
38 14,194.98 117 14,645.86 196 14,645.86
39 14,194.98 118 14,645.86 197 14,645.86
40 14,194.98 119 14,645.86 198 14,645.86
41 14,194.98 120 14,645.86 199 14,645.86
42 14,194.98 121 14,645.86 200 14,645.86
43 14,194.98 122 14,645.86 201 14,645.86
44 14,194.98 123 14,645.86 202 14,645.86
45 14,194.98 124 14,645.86 203 14,645.86
46 14,194.98 125 14,645.86 204 14,645.86
47 14,194.98 126 14,645.86 205 14,645.86
48 14,194.98 127 14,645.86 206 14,645.86
49 14,194.98 128 14,645.86 207 14,645.86
50 14,194.98 129 14,645.86 208 14,645.86
51 14,194.98 130 14,645.86 209 14,645.86
52 14,194.98 131 14,645.86 210 14,645.86
53 14,194.98 132 14,645.86 211 14,645.86
54 14,194.98 133 14,645.86 212 14,645.86
55 14,194.98 134 14,645.86 213 14,645.86
56 14,194.98 135 14,645.86 214 14,645.86
57 14,194.98 136 14,645.86 215 14,645.86
58 14,194.98 137 14,645.86 216 14,645.86
59 14,194.98 138 14,645.86 217 14,645.86
60 14,194.98 139 14,645.86 218 14,645.86
61 14,194.98 140 14,645.86 219 14,645.86
62 14,194.98 141 14,645.86 220 14,645.86
63 14,194.98 142 14,645.86 221 14,645.86
64 14,194.98 143 14,645.86 222 14,645.86
65 14,194.98 144 14,645.86 223 14,645.86
66 14,194.98 145 14,645.86 224 14,645.86
67 14,194.98 146 14,645.86 225 14,645.86
68 14,194.98 147 14,645.86 226 14,645.86
69 14,194.98 148 14,645.86 227 14,645.86
70 14,194.98 149 14,645.86 228 14,645.86
71 14,194.98 150 14,645.86 229 14,645.86
72 14,194.98 151 14,645.86 230 14,645.86
73 14,194.98 152 14,645.86 231 14,645.86
74 14,194.98 153 14,645.86 232 14,645.86
75 14,194.98 154 14,645.86 233 14,645.86
76 14,194.98 155 14,645.86 234 14,645.86
77 14,194.98 156 14,645.86 235 14,645.94
78 14,194.98 157 14,645.86
79 14,194.98 158 14,645.86
ANNEX B
WELLS FARGO BANK MINNESOTA, N.A. WACHOVIA COMMERCIAL MORTGAGE SECURITIES, INC. For Additional Information, please contact
CORPORATE TRUST SERVICES COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES CTSLink Customer Service
9062 OLD ANNAPOLIS ROAD SERIES 2003-C5 (301) 815-6600
COLUMBIA, MD 21045 Reports Available on the World Wide Web
@ WWW.ctslink.com/cmbs
PAYMENT DATE: 07/15/2003
RECORD DATE: 06/30/2003
DISTRIBUTION DATE STATEMENT
TABLE OF CONTENTS
STATEMENT SECTIONS PAGE(S)
------------------ -------
Certificate Distribution Detail 2
Certificate Factor Detail 3
Reconciliation Detail 4
Other required Information 5
Cash Reconciliation 6
Ratings Detail 7
Current Mortgage Loan and Property Stratification Tables 8-10
Mortgage Loan Detail 11
Principal Prepayment Detail 12
Historical Detail 13
Delinquency Loan Detail 14
Specially Serviced Loan Detail 15-16
Modified Loan Detail 17
Liquidated Loan Detail 18
DEPOSITOR
Wachovia Commercial Mortgage Securities, Inc.
301 South College Street
Charlotte, NC 28288-1016
Contact: Tim Steward
Phone Number (704) 593-7822
MASTER SERVICER
Wachovia Bank, National Association
8739 Research Drive
URP 4, NC1075
Charlotte, NC 28262
Contact: Timothy S. Ryan
Phone Number (704) 593-7878
SPECIAL SERVICER
Lennar Partners, Inc.
760 N.W. 107th Avenue
Miami, FL 33172
Contact: Steve Bruha
Phone Number (305) 229-6614
This report has been compiled from information provided to Wells Fargo Bank MN,
N.A. by various third parties, which may include the Master Servicer, Special
Servicer and others.
Wells Fargo Bank MN, N.A. has not independently confirmed the accuracy of
information received from these third parties and assumes no duty to do so.
Wells Fargo Bank MN, N.A. expressly disclaims any responsibility for the
accuracy or completeness of information furnished by third parties.
Copyright 2003, Wells Fargo Bank Minnesota, N.A.
B-1
WELLS FARGO BANK MINNESOTA, N.A. WACHOVIA COMMERCIAL MORTGAGE SECURITIES, INC. For Additional Information, please contact
CORPORATE TRUST SERVICES COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES CTSLink Customer Service
9062 OLD ANNAPOLIS ROAD SERIES 2003-C5 (301) 815-6600
COLUMBIA, MD 21045 Reports Available on the World Wide Web
@ WWW.ctslink.com/cmbs
PAYMENT DATE: 07/15/2003
RECORD DATE: 06/30/2003
CERTIFICATE DISTRIBUTION DETAIL
Class\ Pass-Through Original Beginning Principal Interest
Component CUSIP Rate Balance Balance Distribution Distribution
- --------------------------------------------------------------------------------
A-1 0.000000% 0.00 0.00 0.00 0.00
A-1A 0.000000% 0.00 0.00 0.00 0.00
A-2 0.000000% 0.00 0.00 0.00 0.00
B 0.000000% 0.00 0.00 0.00 0.00
C 0.000000% 0.00 0.00 0.00 0.00
D 0.000000% 0.00 0.00 0.00 0.00
E 0.000000% 0.00 0.00 0.00 0.00
F 0.000000% 0.00 0.00 0.00 0.00
G 0.000000% 0.00 0.00 0.00 0.00
H 0.000000% 0.00 0.00 0.00 0.00
J 0.000000% 0.00 0.00 0.00 0.00
K 0.000000% 0.00 0.00 0.00 0.00
L 0.000000% 0.00 0.00 0.00 0.00
M 0.000000% 0.00 0.00 0.00 0.00
N 0.000000% 0.00 0.00 0.00 0.00
O 0.000000% 0.00 0.00 0.00 0.00
P 0.000000% 0.00 0.00 0.00 0.00
Z 0.000000% 0.00 0.00 0.00 0.00
R-I 0.000000% 0.00 0.00 0.00 0.00
R-II 0.000000% 0.00 0.00 0.00 0.00
- --------------------------------------------------------------------------------
Totals
- --------------------------------------------------------------------------------
Realized Loss / Current
Class\ Prepayment Additional Trust Total Ending Subordination
Component Premium Fund Expenses Distribution Balance Level (1)
- ------------------------------------------------------------------------------
A-1 0.00 0.00 0.00 0.00 0.00%
A-1A 0.00 0.00 0.00 0.00 0.00%
A-2 0.00 0.00 0.00 0.00 0.00%
B 0.00 0.00 0.00 0.00 0.00%
C 0.00 0.00 0.00 0.00 0.00%
D 0.00 0.00 0.00 0.00 0.00%
E 0.00 0.00 0.00 0.00 0.00%
F 0.00 0.00 0.00 0.00 0.00%
G 0.00 0.00 0.00 0.00 0.00%
H 0.00 0.00 0.00 0.00 0.00%
J 0.00 0.00 0.00 0.00 0.00%
K 0.00 0.00 0.00 0.00 0.00%
L 0.00 0.00 0.00 0.00 0.00%
M 0.00 0.00 0.00 0.00 0.00%
N 0.00 0.00 0.00 0.00 0.00%
O 0.00 0.00 0.00 0.00 0.00%
P 0.00 0.00 0.00 0.00 0.00%
Z 0.00 0.00 0.00 0.00 0.00%
R-I 0.00 0.00 0.00 0.00 0.00%
R-II 0.00 0.00 0.00 0.00 0.00%
- ------------------------------------------------------------------------------
Totals
- ------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
Original Beginning Ending
Pass-Through Notional Notional Interest Prepayment Total Notional
Class CUSIP Rate Amount Amount Distribution Premium Distribution Amount
- ----------------------------------------------------------------------------------------------------------
X-C 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
X-P 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
- ----------------------------------------------------------------------------------------------------------
(1) Calculated by taking (A) the sum of the ending certificate balance of all
classes less (B) the sum of (i) the ending certificate balance of the designated
class and (ii) the ending certificate balance of all classes which are not
subordinate to the designated class and dividing the result by (A).
Copyright 2003, Wells Fargo Bank Minnesota, N.A.
B-2
WELLS FARGO BANK MINNESOTA, N.A. WACHOVIA COMMERCIAL MORTGAGE SECURITIES, INC. For Additional Information, please contact
CORPORATE TRUST SERVICES COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES CTSLink Customer Service
9062 OLD ANNAPOLIS ROAD SERIES 2003-C5 (301) 815-6600
COLUMBIA, MD 21045 Reports Available on the World Wide Web
@ WWW.ctslink.com/cmbs
PAYMENT DATE: 07/15/2003
RECORD DATE: 06/30/2003
CERTIFICATE FACTOR DETAIL
Realized Loss /
Beginning Principal Interest Prepayment Additional Trust Ending
Class CUSIP Balance Distribution Distribution Premium Fund Expenses Balance
- -----------------------------------------------------------------------------------------------------
A-1 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-1A 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-2 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
C 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
D 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
E 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
F 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
G 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
H 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
J 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
K 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
L 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
M 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
N 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
O 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
P 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
Z 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
R-I 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
R-II 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
- -----------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------
Beginning Ending
Notional Interest Prepayment Notional
Class CUSIP Amount Distribution Premium Amount
- -------------------------------------------------------------------
X-C 0.00000000 0.00000000 0.00000000 0.00000000
X-P 0.00000000 0.00000000 0.00000000 0.00000000
- -------------------------------------------------------------------
Copyright 2003, Wells Fargo Bank Minnesota, N.A.
B-3
WELLS FARGO BANK MINNESOTA, N.A. WACHOVIA COMMERCIAL MORTGAGE SECURITIES, INC. For Additional Information, please contact
CORPORATE TRUST SERVICES COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES CTSLink Customer Service
9062 OLD ANNAPOLIS ROAD SERIES 2003-C5 (301) 815-6600
COLUMBIA, MD 21045 Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
PAYMENT DATE: 07/15/2003
RECORD DATE: 06/30/2003
RECONCILIATION DETAIL
ADVANCE SUMMARY
P & I Advances Outstanding 0.00
Servicing Advances Outstanding 0.00
Reimbursement for Interest on Advances
Paid from general collections 0.00
Reimbursement for Interest on Servicing
Advances paid from general collections 0.00
Aggregate Amount of Nonrecoverable Advances 0.00
SERVICING FEE SUMMARY
Current Period Accrued Servicing Fees 0.00
Less Delinquent Servicing Fees 0.00
Less Reductions to Servicing Fees 0.00
Plus Servicing Fees for Delinquent Payments Received 0.00
Plus Adjustments for Prior Servicing Calculation 0.00
Total Servicing Fees Collected 0.00
CERTIFICATE INTEREST RECONCILIATION
Accrued Net Aggregate Distributable Distributable Additional Remaining Unpaid
Certificate Prepayment Certificate Certificate Interest Trust Fund Interest Distributable
Class Interest Interest Shortfall Interest Adjustment Expenses Distribution Certificate Interest
====================================================================================================================================
A-1
A-1A
A-2
X-C
X-P
B
C
D
E
F
G
H
J
K
L
M
N
O
P
R-I
R-II
====================================================================================================================================
Total
====================================================================================================================================
Copyright 2003, Wells Fargo Bank Minnesota, N.A.
B-4
WELLS FARGO BANK MINNESOTA, N.A. WACHOVIA COMMERCIAL MORTGAGE SECURITIES, INC. For Additional Information, please contact
CORPORATE TRUST SERVICES COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES CTSLink Customer Service
9062 OLD ANNAPOLIS ROAD SERIES 2003-C5 (301) 815-6600
COLUMBIA, MD 21045 Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
PAYMENT DATE: 07/15/2003
RECORD DATE: 06/30/2003
OTHER REQUIRED INFORMATION
Available Distribution Amount 0.00
Aggregate Number of Outstanding Loans 0
Aggregate Stated Principal Balance of Loans before Distributions 0.00
Aggregate Stated Principal Balance of Loans after Distributions 0.00
Aggregate Unpaid Principal Balance of Loans 0.00
Net Swap Payment received from Counterparty 0.00
Net Swap Payment made to Counterparty 0.00
Aggregate Amount of Servicing Fee 0.00
Aggregate Amount of Special Servicing Fee 0.00
Aggregate Amount of Trustee Fee 0.00
Aggregate Trust Fund Expenses 0.00
Interest Reserve Deposit 0.00
Interest Reserve Withdrawal 0.00
Specially Serviced Loans not Delinquent
Number of Outstanding Loans 0
Aggregate Unpaid Principal Balance 0.00
Appraisal Reduction Amount
Appraisal Cumulative Most Recent
Loan Reduction ASER App. Red.
Number Amount Amount Date
===================================================
===================================================
Total
===================================================
Copyright 2003, Wells Fargo Bank Minnesota, N.A.
B-5
WELLS FARGO BANK MINNESOTA, N.A. WACHOVIA COMMERCIAL MORTGAGE SECURITIES, INC. For Additional Information, please contact
CORPORATE TRUST SERVICES COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES CTSLink Customer Service
9062 OLD ANNAPOLIS ROAD SERIES 2003-C5 (301) 815-6600
COLUMBIA, MD 21045 Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
PAYMENT DATE: 07/15/2003
RECORD DATE: 06/30/2003
CASH RECONCILIATION DETAIL
TOTAL FUNDS COLLECTED
INTEREST:
Interest paid or advanced 0.00
Interest reductions due to Non-Recoverability Determinations 0.00
Interest Adjustments 0.00
Deferred Interest 0.00
Net Prepayment Interest Shortfall 0.00
Net Prepayment Interest Excess 0.00
Extension Interest 0.00
Interest Reserve Withdrawal 0.00
--------
TOTAL INTEREST COLLECTED 0.00
PRINCIPAL:
Scheduled Principal 0.00
Unscheduled Principal 0.00
Principal Prepayments 0.00
Collection of Principal after Maturity Date 0.00
Recoveries from Liquidation and Insurance Proceeds 0.00
Excess of Prior Principal Amounts paid 0.00
Curtailments 0.00
Negative Amortization 0.00
Principal Adjustments 0.00
--------
TOTAL PRINCIPAL COLLECTED 0.00
OTHER:
Prepayment Penalties/Yield Maintenance 0.00
Repayment Fees 0.00
Borrower Option Extension Fees 0.00
Equity Payments Received 0.00
Net Swap Counterparty Payments Received 0.00
--------
TOTAL OTHER COLLECTED 0.00
--------
TOTAL FUNDS COLLECTED 0.00
========
TOTAL FUNDS DISTRIBUTED
FEES:
Master Servicing Fee 0.00
Trustee Fee 0.00
Certificate Administration Fee 0.00
Insurer Fee 0.00
Miscellaneous Fee 0.00
--------
TOTAL FEES 0.00
ADDITIONAL TRUST FUND EXPENSES:
Reimbursement for Interest on Advances 0.00
ASER Amount 0.00
Special Servicing Fee 0.00
Reduction of funds due to Non-Recoverability Determinations 0.00
Rating Agency Expenses 0.00
Attorney Fees & Expenses 0.00
Bankruptcy Expense 0.00
Taxes Imposed on Trust Fund 0.00
Non-Recoverable Advances 0.00
Other-Expenses 0.00
--------
TOTAL ADDITIONAL TRUST FUND EXPENSES 0.00
INTEREST RESERVE DEPOSIT 0.00
PAYMENTS TO CERTIFICATEHOLDERS & OTHERS:
Interest Distribution 0.00
Principal Distribution 0.00
Prepayment Penalties/Yield Maintenance 0.00
Borrower Option Extension Fees 0.00
Equity Payments Paid 0.00
Net Swap Counterparty Payments Paid 0.00
--------
TOTAL PAYMENTS TO CERTIFICATEHOLDERS & OTHERS 0.00
--------
TOTAL FUNDS DISTRIBUTED 0.00
========
Copyright 2003, Wells Fargo Bank Minnesota, N.A.
B-6
WELLS FARGO BANK MINNESOTA, N.A. WACHOVIA COMMERCIAL MORTGAGE SECURITIES, INC. For Additional Information, please contact
CORPORATE TRUST SERVICES COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES CTSLink Customer Service
9062 OLD ANNAPOLIS ROAD SERIES 2003-C5 (301) 815-6600
COLUMBIA, MD 21045 Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
PAYMENT DATE: 07/15/2003
RECORD DATE: 06/30/2003
RATINGS DETAIL
Original Ratings Current Ratings (1)
--------------------------------------------------------
Class CUSIP Fitch Moody's S & P Fitch Moody's S & P
===================================================================================
A-1
A-1A
A-2
X-C
X-P
B
C
D
E
F
G
H
J
K
L
M
N
O
P
R-I
R-II
===================================================================================
NR - Designates that the class was not rated by the above agency at the time
of original issuance.
X - Designates that the above rating agency did not rate any classes in
this transaction at the time of original issuance.
N/A - Data not available this period.
1) For any class not rated at the time of original issuance by any particular
rating agency, no request has been made subsequent to issuance to obtain rating
information, if any, from such rating agency. The current ratings were obtained
directly from the applicable rating agency within 30 days of the payment date
listed above. The ratings may have changed since they were obtained. Because the
ratings may have changed, you may want to obtain current ratings directly from
the rating agencies.
Fitch, Inc. Moody's Investors Service Standard & Poor's Rating Services
One State Street Plaza 99 Church Street 55 Water Street
New York, New York 10004 New York, New York 10007 New York, New York 10041
(212) 908-0500 (212) 553-0300 (212) 438-2430
Copyright 2003, Wells Fargo Bank Minnesota, N.A.
B-7
WELLS FARGO BANK MINNESOTA, N.A. WACHOVIA COMMERCIAL MORTGAGE SECURITIES, INC. For Additional Information, please contact
CORPORATE TRUST SERVICES COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES CTSLink Customer Service
9062 OLD ANNAPOLIS ROAD SERIES 2003-C5 (301) 815-6600
COLUMBIA, MD 21045 Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
PAYMENT DATE: 07/15/2003
RECORD DATE: 06/30/2003
CURRENT MORTGAGE LOAN AND PROPERTY STRATIFICATION TABLES
SCHEDULED BALANCE
% of
Scheduled # of Scheduled Agg. WAM Weighted
Balance Loans Balance Bal. (2) WAC Avg DSCR(1)
=============================================================================================================================
=============================================================================================================================
Totals
=============================================================================================================================
STATE (3)
% of
# of Scheduled Agg. WAM Weighted
State Props Balance Bal. (2) WAC Avg DSCR(1)
=============================================================================================================================
=============================================================================================================================
Totals
=============================================================================================================================
See footnotes on last page of this section.
Copyright 2003, Wells Fargo Bank Minnesota, N.A.
B-8
WELLS FARGO BANK MINNESOTA, N.A. WACHOVIA COMMERCIAL MORTGAGE SECURITIES, INC. For Additional Information, please contact
CORPORATE TRUST SERVICES COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES CTSLink Customer Service
9062 OLD ANNAPOLIS ROAD SERIES 2003-C5 (301) 815-6600
COLUMBIA, MD 21045 Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
PAYMENT DATE: 07/15/2003
RECORD DATE: 06/30/2003
CURRENT MORTGAGE LOAN AND PROPERTY STRATIFICATION TABLES
DEBT SERVICE COVERAGE RATIO (1)
% of
Debt Service # of Scheduled Agg. WAM Weighted
Coverage Ratio Loans Balance Bal. (2) WAC Avg DSCR(1)
=============================================================================================================================
=============================================================================================================================
Totals
=============================================================================================================================
NOTE RATE
=============================================================================================================================
% of
Note # of Scheduled Agg. WAM Weighted
Rate Loans Balance Bal. (2) WAC Avg DSCR(1)
=============================================================================================================================
=============================================================================================================================
Totals
=============================================================================================================================
PROPERTY TYPE (3)
% of
PROPERTY # of Scheduled Agg. WAM Weighted
TYPE Props Balance Bal. (2) WAC Avg DSCR(1)
=============================================================================================================================
=============================================================================================================================
Totals
=============================================================================================================================
SEASONING
% of
# of Scheduled Agg. WAM Weighted
Seasoning Loans Balance Bal. (2) WAC Avg DSCR(1)
=============================================================================================================================
=============================================================================================================================
Totals
=============================================================================================================================
See footnotes on last page of this section.
Copyright 2003, Wells Fargo Bank Minnesota, N.A.
B-9
WELLS FARGO BANK MINNESOTA, N.A. WACHOVIA COMMERCIAL MORTGAGE SECURITIES, INC. For Additional Information, please contact
CORPORATE TRUST SERVICES COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES CTSLink Customer Service
9062 OLD ANNAPOLIS ROAD SERIES 2003-C5 (301) 815-6600
COLUMBIA, MD 21045 Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
PAYMENT DATE: 07/15/2003
RECORD DATE: 06/30/2003
CURRENT MORTGAGE LOAN AND PROPERTY STRATIFICATION TABLES
ANTICIPATED REMAINING TERM (ARD AND BALLOON LOANS)
% of
Anticipated Remaining # of Scheduled Agg. WAM Weighted
Term (2) Loans Balance Bal. (2) WAC Avg DSCR(1)
=============================================================================================================================
=============================================================================================================================
Totals
=============================================================================================================================
REMAINING AMORTIZATION TERM (ARD AND BALLOON LOANS)
% of
Anticipated Remaining # of Scheduled Agg. WAM Weighted
Term (2) Loans Balance Bal. (2) WAC Avg DSCR(1)
=============================================================================================================================
=============================================================================================================================
Totals
=============================================================================================================================
REMAINING STATED TERM (FULLY AMORTIZING LOANS)
% of
Anticipated Remaining # of Scheduled Agg. WAM Weighted
Term (2) Loans Balance Bal. (2) WAC Avg DSCR(1)
=============================================================================================================================
=============================================================================================================================
Totals
=============================================================================================================================
AGE OF MOST RECENT NOI
% of
Anticipated Remaining # of Scheduled Agg. WAM Weighted
Term (2) Loans Balance Bal. (2) WAC Avg DSCR(1)
=============================================================================================================================
=============================================================================================================================
Totals
=============================================================================================================================
(1) Debt Service Coverage Ratios are updated periodically as new NOI figures
become available from borrowers on an asset level. In all cases the most current
DSCR provided by the Servicer is used. To the extent that no DSCR is provided by
the Servicer, information from the offering document is used. The Trustee makes
no representations as to the accuracy of the data provided by the borrower for
this calculation.
(2) Anticipated Remaining Term and WAM are each calculated based upon the term
from the current month to the earlier of the Anticipated Repayment Date, if
applicable, and the Maturity Date.
(3) Data in this table was calculated by allocating pro-rata the current loan
information to the properties based upon the Cut-off Date balance of each
property as disclosed in the offering document.
Copyright 2003, Wells Fargo Bank Minnesota, N.A.
B-10
WELLS FARGO BANK MINNESOTA, N.A. WACHOVIA COMMERCIAL MORTGAGE SECURITIES, INC. For Additional Information, please contact
CORPORATE TRUST SERVICES COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES CTSLink Customer Service
9062 OLD ANNAPOLIS ROAD SERIES 2003-C5 (301) 815-6600
COLUMBIA, MD 21045 Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
PAYMENT DATE: 07/15/2003
RECORD DATE: 06/30/2003
MORTGAGE LOAN DETAIL
Anticipated
Loan Property Interest Principal Gross Repayment
Number ODCR Type(1) City State Payment Payment Coupon Date
===============================================================================
</Table>
===============================================================================
Neg. Beginning Ending Paid Appraisal Appraisal Res. Mod.
Loan Maturity Amort Scheduled Scheduled Thru Reduction Reduction Strat. Code
Number Date (Y/N) Balance Balance Date Date Amount (2) (3)
========================================================================================
========================================================================================
========================================================================================
(1) Property Type Code
----------------------
MF - Multi-Family OF - Office
RT - Retail MU - Mixed Use
HC - Health Care LO - Lodging
IN - Industrial SS - Self Storage
WH - Warehouse OT - Other
MH - Mobile Home Park
(2) Resolution Strategy Code
---------------------------
1 - Modification 6 - DPO 10 - Deed in Lieu Of
2 - Foreclosure 7 - REO Foreclosure
3 - Bankruptcy 8 - Resolved 11 - Full Payoff
4 - Extension 9 - Pending Return 12 - Reps and Warranties
5 - Note Sale to Master Servicer 13 - Other or TBD
(3) Modification Code
--------------------
1 - Maturity Date Extension
2 - Amortization Change
3 - Principal Write-Off
4 - Combination
Copyright 2003, Wells Fargo Bank Minnesota, N.A.
B-11
WELLS FARGO BANK MINNESOTA, N.A. WACHOVIA COMMERCIAL MORTGAGE SECURITIES, INC. For Additional Information, please contact
CORPORATE TRUST SERVICES COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES CTSLink Customer Service
9062 OLD ANNAPOLIS ROAD SERIES 2003-C5 (301) 815-6600
COLUMBIA, MD 21045 Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
PAYMENT DATE: 07/15/2003
RECORD DATE: 06/30/2003
PRINCIPAL PREPAYMENT DETAIL
Principal Prepayment Amount Prepayment Penalties
Offering Document ----------------------------------- -----------------------------------------------
Loan Number Cross-Reference Payoff Amount Curtailment Amount Prepayment Premium Yield Maintenance Premium
=======================================================================================================================
=======================================================================================================================
Totals
=======================================================================================================================
Copyright 2003, Wells Fargo Bank Minnesota, N.A.
B-12
WELLS FARGO BANK MINNESOTA, N.A. WACHOVIA COMMERCIAL MORTGAGE SECURITIES, INC. For Additional Information, please contact
CORPORATE TRUST SERVICES COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES CTSLink Customer Service
9062 OLD ANNAPOLIS ROAD SERIES 2003-C5 (301) 815-6600
COLUMBIA, MD 21045 Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
PAYMENT DATE: 07/15/2003
RECORD DATE: 06/30/2003
HISTORICAL DETAIL
Delinquencies Prepayments Rate and Maturities
- -----------------------------------------------------------------------------------------------------------------------------------
Distribution 30-59 Days 60-89 Days 90 Days or More Foreclosure REO Modifications Curtailments Payoff Next Weighted Avg.
Date # Balance # Balance # Balance # Balance # Balance # Balance # Amount # Amount Coupon Remit WAM
===================================================================================================================================
===================================================================================================================================
Note: Foreclosure and REO Totals are excluded from the delinquencies aging
categories.
Copyright 2003, Wells Fargo Bank Minnesota, N.A.
B-13
WELLS FARGO BANK MINNESOTA, N.A. WACHOVIA COMMERCIAL MORTGAGE SECURITIES, INC. For Additional Information, please contact
CORPORATE TRUST SERVICES COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES CTSLink Customer Service
9062 OLD ANNAPOLIS ROAD SERIES 2003-C5 (301) 815-6600
COLUMBIA, MD 21045 Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
PAYMENT DATE: 07/15/2003
RECORD DATE: 06/30/2003
DELINQUENCY LOAN DETAIL
Offering # of Current Outstanding Status of Resolution
Document Months Paid Through P&I P&I Mortgage Strategy
Loan Number Cross-Reference Delinq. Date Advances Advances ** Loan (1) Code (2)
==================================================================================================
==================================================================================================
Totals
==================================================================================================
Actual Outstanding
Servicing Foreclosure Principal Servicing Bankruptcy REO
Loan Number Transfer Date Date Balance Advances Date Date
====================================================================================
====================================================================================
Totals
====================================================================================
(1) Status of Mortgage Loan
A - Payment Not Received 0 - Current - Assumed Scheduled Payment
But Still in Grace Period 1 - One Month Delinquent (Performing Matured Balloon)
B - Late Payment But Less 2 - Two Months Delinquent 7 - Foreclosure
Than 1 Month Delinquent 3 - Three or More Months Delinquent 9 - REO
(2) Resolution Strategy Code
1 - Modification 6 - DPO 10 - Deed In Lieu Of
2 - Foreclosure 7 - REO Foreclosure
3 - Bankruptcy 8 - Resolved 11 - Full Payoff
4 - Extension 9 - Pending Return 12 - Reps and Warranties
5 - Note Sale to Master Servicer 13 - Other or TBD
** Outstanding P & I Advances include the current period advance.
Copyright 2003, Wells Fargo Bank Minnesota, N.A.
B-14
WELLS FARGO BANK MINNESOTA, N.A. WACHOVIA COMMERCIAL MORTGAGE SECURITIES, INC. For Additional Information, please contact
CORPORATE TRUST SERVICES COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES CTSLink Customer Service
9062 OLD ANNAPOLIS ROAD SERIES 2003-C5 (301) 815-6600
COLUMBIA, MD 21045 Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
PAYMENT DATE: 07/15/2003
RECORD DATE: 06/30/2003
SPECIALLY SERVICED LOAN DETAIL - PART 1
Offering Servicing Resolution
Loan Document Transfer Strategy Scheduled Property Interest Actual
Number Cross-Referance Date Code (1) Balance Type (2) State Rate Balance
=====================================================================================================
=====================================================================================================
Net Remaining
Loan Operating DSCR Note Maturity Amortization
Number Income Date DSCR Date Date Term
==================================================================
==================================================================
(1) Resolution Strategy Code
1 - Modification 6 - DPO 10 - Deed in Lieu Of
2 - Foreclosure 7 - REO Foreclosure
3 - Bankruptcy 8 - Resolved 11 - Full Payoff
4 - Extension 9 - Pending Return 12 - Reps and Warranties
5 - Note Sale to Master Servicer 13 - Other or TBD
(2) Property Type Code
MF - Multi-Family OF - Office
RT - Retail MU - Mixed Use
HC - Health Care LO - Lodging
IN - Industrial SS - Self Storage
WH - Warehouse OT - Other
MH - Mobile Home Park
Copyright 2003, Wells Fargo Bank Minnesota, N.A.
B-15
WELLS FARGO BANK MINNESOTA, N.A. WACHOVIA COMMERCIAL MORTGAGE SECURITIES, INC. For Additional Information, please contact
CORPORATE TRUST SERVICES COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES CTSLink Customer Service
9062 OLD ANNAPOLIS ROAD SERIES 2003-C5 (301) 815-6600
COLUMBIA, MD 21045 Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
PAYMENT DATE: 07/15/2003
RECORD DATE: 06/30/2003
SPECIALLY SERVICED LOAN DETAIL - PART 2
Offering Resolution Site
Loan Document Strategy Inspection Appraisal Appraisal Other REO
Number Cross-Reference Code(1) Date Phase 1 Date Date Value Property Revenue Comment
===============================================================================================================================
===============================================================================================================================
(1) Resolution Strategy Code
1 - Modification 6 - DPO 10 - Deed in Lieu Of
2 - Foreclosure 7 - REO Foreclosure
3 - Bankruptcy 8 - Resolved 11 - Full Payoff
4 - Extension 9 - Pending Return 12 - Reps and Warranties
5 - Note Sale to Master Servicer 13 - Other or TBD
Copyright 2003, Wells Fargo Bank Minnesota, N.A.
B-16
WELLS FARGO BANK MINNESOTA, N.A. WACHOVIA COMMERCIAL MORTGAGE SECURITIES, INC. For Additional Information, please contact
CORPORATE TRUST SERVICES COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES CTSLink Customer Service
9062 OLD ANNAPOLIS ROAD SERIES 2003-C5 (301) 815-6600
COLUMBIA, MD 21045 Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
PAYMENT DATE: 07/15/2003
RECORD DATE: 06/30/2003
MODIFIED LOAN DETAIL
Offering
Loan Document Pre-Modification
Number Cross-Reference Balance Modification Date Modification Description
===============================================================================================
===============================================================================================
Totals
===============================================================================================
Copyright 2003, Wells Fargo Bank Minnesota, N.A.
B-17
WELLS FARGO BANK MINNESOTA, N.A. WACHOVIA COMMERCIAL MORTGAGE SECURITIES, INC. For Additional Information, please contact
CORPORATE TRUST SERVICES COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES CTSLink Customer Service
9062 OLD ANNAPOLIS ROAD SERIES 2003-C5 (301) 815-6600
COLUMBIA, MD 21045 Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
PAYMENT DATE: 07/15/2003
RECORD DATE: 06/30/2003
LIQUIDATED LOAN DETAIL
Final Recovery Offering
Loan Determination Document Appraisal Appraisal Actual Gross
Number Date Cross-Reference Date Value Balance Proceeds
================================================================================
================================================================================
Current Total
================================================================================
Cumulative Total
================================================================================
Gross Proceeds Aggregate Net Net Proceeds Repurchased
Loan as a % of Liquidation Liquidation as a % of Realized by Seller
Number Actual Balance Expenses * Proceeds Actual Balance Loss (Y/N)
=======================================================================================
=======================================================================================
Current Total
=======================================================================================
Cumulative Total
=======================================================================================
* Aggregate liquidation expenses also include outstanding P & I advances and
unpaid fees(servicing, trustee, etc.).
Copyright 2003, Wells Fargo Bank Minnesota, N.A.
B-18
ANNEX C
CLASS X-P REFERENCE RATE SCHEDULE
<Table>
<Caption>
INTEREST
ACCRUAL CLASS X-P
PERIOD DISTRIBUTION DATE REFERENCE RATE
- -------- ----------------- --------------
1 08/15/03 5.76183%
2 09/15/03 5.76179%
3 10/15/03 5.57984%
4 11/15/03 5.76170%
5 12/15/03 5.57976%
6 01/15/04 5.76163%
7 02/15/04 5.57969%
8 03/15/04 5.57982%
9 04/15/04 5.76150%
10 05/15/04 5.57957%
11 06/15/04 5.76142%
12 07/15/04 5.57949%
13 08/15/04 5.76133%
14 09/15/04 5.76129%
15 10/15/04 5.57936%
16 11/15/04 5.76120%
17 12/15/04 5.57928%
18 01/15/05 5.57923%
19 02/15/05 5.57919%
20 03/15/05 5.57969%
21 04/15/05 5.76095%
22 05/15/05 5.57904%
23 06/15/05 5.76085%
24 07/15/05 5.57895%
25 08/15/05 5.76076%
26 09/15/05 5.76071%
27 10/15/05 5.57882%
28 11/15/05 5.76062%
29 12/15/05 5.57873%
30 01/15/06 5.57868%
31 02/15/06 5.57864%
32 03/15/06 5.57923%
33 04/15/06 5.76035%
34 05/15/06 5.57848%
35 06/15/06 5.76025%
36 07/15/06 5.57838%
37 08/15/06 5.76013%
38 09/15/06 5.76008%
39 10/15/06 5.57822%
40 11/15/06 5.75996%
41 12/15/06 5.57811%
42 01/15/07 5.57806%
43 02/15/07 5.57800%
44 03/15/07 5.57866%
45 04/15/07 5.75965%
46 05/15/07 5.57782%
47 06/15/07 5.75953%
48 07/15/07 5.57771%
</Table>
<Table>
<Caption>
INTEREST
ACCRUAL CLASS X-P
PERIOD DISTRIBUTION DATE REFERENCE RATE
- -------- ----------------- --------------
49 08/15/07 5.75940%
50 09/15/07 5.75934%
51 10/15/07 5.57753%
52 11/15/07 5.75921%
53 12/15/07 5.57740%
54 01/15/08 5.75908%
55 02/15/08 5.57728%
56 03/15/08 5.57942%
57 04/15/08 5.76078%
58 05/15/08 5.57902%
59 06/15/08 5.76103%
60 07/15/08 5.57930%
61 08/15/08 5.76089%
62 09/15/08 5.76082%
63 10/15/08 5.57910%
64 11/15/08 5.76067%
65 12/15/08 5.57896%
66 01/15/09 5.57888%
67 02/15/09 5.57881%
68 03/15/09 5.57958%
69 04/15/09 5.76027%
70 05/15/09 5.57987%
71 06/15/09 5.76140%
72 07/15/09 5.57972%
73 08/15/09 5.76124%
74 09/15/09 5.76116%
75 10/15/09 5.57948%
76 11/15/09 5.76098%
77 12/15/09 5.57932%
78 01/15/10 5.57923%
79 02/15/10 5.57915%
80 03/15/10 5.57998%
81 04/15/10 5.76053%
82 05/15/10 5.58124%
83 06/15/10 5.77442%
84 07/15/10 5.64503%
85 08/15/10 5.83379%
86 09/15/10 5.83377%
87 10/15/10 5.64679%
88 11/15/10 5.83374%
89 12/15/10 5.64675%
90 01/15/11 5.64673%
91 02/15/11 5.64671%
92 03/15/11 5.64771%
93 04/15/11 5.83364%
94 05/15/11 5.64664%
95 06/15/11 5.83638%
96 07/15/11 5.64932%
</Table>
C-1
PROSPECTUS
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
(ISSUABLE IN SERIES)
WACHOVIA COMMERCIAL MORTGAGE SECURITIES, INC.
DEPOSITOR
Wachovia Commercial Mortgage Securities, Inc. will periodically offer
certificates in one or more series. Each series of certificates will represent
the entire beneficial ownership interest in a trust fund. Distributions on the
certificates of any series will be made only from the assets of the related
trust fund.
Neither the certificates nor any assets in the related trust fund will be
obligations of, or be guaranteed by, the depositor, any servicer or any of their
respective affiliates. Neither the certificates nor any assets in the related
trust fund will be guaranteed or insured by any governmental agency or
instrumentality or by any person, unless otherwise provided in the prospectus
supplement.
The primary assets of the trust fund may include:
- multifamily and commercial mortgage loans, including participations
therein;
- mortgage-backed securities evidencing interests in or secured by
multifamily and commercial mortgage loans, including participations
therein, and other mortgage-backed securities;
- direct obligations of the United States or other government agencies; or
- a combination of the assets described above.
INVESTING IN THE OFFERED CERTIFICATES INVOLVES RISKS. YOU SHOULD REVIEW
THE INFORMATION APPEARING UNDER THE CAPTION "RISK FACTORS" ON PAGE 11 AND IN THE
PROSPECTUS SUPPLEMENT BEFORE PURCHASING ANY OFFERED CERTIFICATE.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE OFFERED CERTIFICATES OR DETERMINED
THAT THIS PROSPECTUS OR THE ACCOMPANYING PROSPECTUS SUPPLEMENT IS ACCURATE OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
June 12, 2003
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT..... 3
ADDITIONAL INFORMATION...................................... 4
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE........... 4
SUMMARY OF PROSPECTUS....................................... 5
RISK FACTORS................................................ 11
DESCRIPTION OF THE TRUST FUNDS.............................. 34
YIELD CONSIDERATIONS........................................ 40
THE DEPOSITOR............................................... 45
USE OF PROCEEDS............................................. 45
DESCRIPTION OF THE CERTIFICATES............................. 46
DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS......... 53
DESCRIPTION OF CREDIT SUPPORT............................... 67
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS AND LEASES.......... 69
MATERIAL FEDERAL INCOME TAX CONSEQUENCES.................... 84
STATE AND OTHER TAX CONSEQUENCES............................ 108
ERISA CONSIDERATIONS........................................ 108
LEGAL INVESTMENT............................................ 112
METHOD OF DISTRIBUTION...................................... 114
LEGAL MATTERS............................................... 115
FINANCIAL INFORMATION....................................... 115
RATINGS..................................................... 115
INDEX OF PRINCIPAL DEFINITIONS.............................. 116
</Table>
2
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT
We provide information to you about the offered certificates in two
separate documents that provide progressively more detail:
- this prospectus, which provides general information, some of which may
not apply to your series of certificates; and
- the accompanying prospectus supplement, which describes the specific
terms of your series of certificates.
If the description of your certificates in the accompanying prospectus
supplement differs from the related description in this prospectus, you should
rely on the information in that prospectus supplement.
This prospectus may not be used to consummate sales of the offered
certificates of any series unless accompanied by the prospectus supplement for
that series. This prospectus and the prospectus supplements also may be used by
us, Wachovia Securities, LLC, our affiliate, and any other of our affiliates
when required under the federal securities laws in connection with offers and
sales of offered certificates in furtherance of market-making activities in the
offered certificates. Wachovia Securities, LLC or any such other affiliate may
act as principal or agent in such transactions. Such sales will be made at
prices related to prevailing market prices at the time of sale or otherwise.
Some capitalized terms used in this prospectus are defined under the
caption "Index of Principal Definitions" beginning on page 116 in this
prospectus.
In this prospectus, the terms "depositor", "we", "us" and "our" refer to
Wachovia Commercial Mortgage Securities, Inc.
------------------------
Until 90 days after the date of each prospectus supplement, all dealers
effecting transactions in the offered certificates covered by that prospectus
supplement, whether or not participating in the distribution thereof, may be
required to deliver such prospectus supplement and this prospectus. This is in
addition to the obligation of dealers to deliver a prospectus and prospectus
supplement when acting as underwriters and with respect to their unsold
allotments or subscriptions.
You should rely only on any information or representations contained or
incorporated by reference in this prospectus and the related prospectus
supplement. This prospectus and any prospectus supplement do not constitute an
offer to sell or a solicitation of an offer to buy any securities in any state
or other jurisdiction in which such offer would be unlawful.
3
ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement (of which this prospectus forms a part) under the Securities Act of
1933, as amended, with respect to the offered certificates. This prospectus and
the prospectus supplement do not contain all of the information set forth in the
registration statement. For further information, you should refer to the
registration statement and the exhibits attached thereto. Copies of the
Registration Statement may be obtained from the Public Reference Section of the
Securities and Exchange Commission, Washington, D.C. 20549, upon payment of the
prescribed charges, or may be examined free of charge at the Securities and
Exchange Commission's offices, 450 Fifth Street, N.W., Washington, D.C. 20549 or
at the regional offices of the Securities and Exchange Commission located at The
Woolworth Building, 233 Broadway, New York, New York 10279 and 175 W. Jackson
Boulevard, Suite 900, Chicago, Illinois 60604. The Securities and Exchange
Commission also maintains a site on the World Wide Web at "http://www.sec.gov"
at which you can view and download copies of reports, proxy and information
statements and other information filed electronically through the Electronic
Data Gathering, Analysis and Retrieval system.
We will file or cause to be filed with the Securities and Exchange
Commission such periodic reports with respect to each trust fund as are required
under the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Securities and Exchange Commission thereunder.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
We are incorporating in this prospectus by reference all documents and
reports filed by us with respect to a trust fund pursuant to Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended. You may
obtain, without charge, a copy of any or all documents or reports incorporated
in this prospectus by reference, to the extent such documents or reports relate
to an offered certificate. Exhibits to those documents will be provided to you
only if such exhibits were specifically incorporated by reference in those
documents. Requests to the depositor should be directed in writing to Wachovia
Commercial Mortgage Securities, Inc., 301 South College Street, Charlotte, North
Carolina 28288-0166, Attention: Secretary, or by telephone at 704-374-6161.
4
SUMMARY OF PROSPECTUS
The following summary is a brief description of the main terms of the
offered certificates. For this reason, the summary does not contain all the
information that may be important to you. You will find a detailed description
of the terms of the offered certificates following this summary and in the
accompanying prospectus supplement.
The Trust Assets.............. Each series of certificates will represent the
entire beneficial ownership interest in a trust
fund consisting primarily of any of the
following:
- mortgage assets;
- certificate accounts;
- forms of credit support;
- cash flow agreements; and
- amounts on deposit in a pre-funding account.
The Mortgage Assets........... The mortgage assets with respect to each series
of certificates may consist of any of the
following:
- multifamily and commercial mortgage loans,
including participations therein;
- commercial mortgage-backed securities,
including participations therein;
- direct obligations of the United States or
other government agencies; and
- a combination of the assets described above.
The mortgage loans will not be guaranteed or
insured by us or any of our affiliates or,
unless otherwise provided in the prospectus
supplement, by any governmental agency or
instrumentality or other person. The mortgage
loans will be primarily secured by first or
junior liens on, or security interests in fee
simple, leasehold or a similar interest in, any
of the following types of properties:
- residential properties consisting of five or
more rental or cooperatively owned dwelling
units;
- shopping centers;
- retail buildings or centers;
- hotels and motels;
- office buildings;
- nursing homes;
- hospitals or other health-care related
facilities;
- industrial properties;
- warehouse, mini-warehouse or self-storage
facilities;
- mobile home parks;
- mixed use properties; and
- other types of commercial properties.
Some or all of the mortgage loans may also be
secured by an assignment of one or more leases
of all or a portion of the related mortgaged
properties. A significant or the sole source of
5
payments on certain mortgage loans will be the
rental payments due under the related leases.
A mortgage loan may have an interest rate that
has any of the following features:
- is fixed over its term;
- adjusts from time to time;
- is partially fixed and partially floating;
- is floating based on one or more formulae or
indices;
- may be converted from a floating to a fixed
interest rate;
- may be converted from a fixed to a floating
interest rate; or
- interest is not paid currently but is accrued
and added to the principal balance.
A mortgage loan may provide for any of the
following:
- scheduled payments to maturity;
- payments that adjust from time to time;
- negative amortization or accelerated
amortization;
- full amortization or require a balloon
payment due on its stated maturity date;
- prohibitions on prepayment;
- releases or substitutions of collateral,
including defeasance thereof with direct
obligations of the United States; and
- payment of a premium or a yield maintenance
penalty in connection with a principal
prepayment.
Unless otherwise described in the prospectus
supplement for a series of certificates:
- the mortgaged properties may be located in
any one of the 50 states, the District of
Columbia or the Commonwealth of Puerto Rico;
- all mortgage loans will have original terms
to maturity of not more than 40 years;
- all mortgage loans will have individual
principal balances at origination of not less
than $100,000;
- all mortgage loans will have been originated
by persons other than the depositor; and
- all mortgage assets will have been purchased,
either directly or indirectly, by the
depositor on or before the date of initial
issuance of the related series of
certificates.
Any commercial mortgage-backed securities
included in a trust fund will evidence
ownership interests in or be secured by
mortgage loans similar to those described above
and other mortgage-backed securities. Some
commercial mortgage-backed securities included
in a trust fund may be guaranteed or insured by
an affiliate of the depositor, Freddie Mac,
Fannie Mae, Ginnie Mae, Farmer Mac or any other
person specified in the prospectus supplement.
6
Certificate Accounts.......... Each trust fund will include one or more
accounts established and maintained on behalf
of the certificateholders. All payments and
collections received or advanced with respect
to the mortgage assets and other assets in the
trust fund will be deposited into those
accounts. A certificate account may be
maintained as an interest bearing or a
non-interest bearing account, and funds may be
held as cash or reinvested.
Credit Support................ The following types of credit support may be
used to enhance the likelihood of distributions
on certain classes of certificates:
- subordination of junior certificates;
- over collateralization;
- letters of credit;
- insurance policies;
- guarantees;
- reserve funds; and/or
- other types of credit support described in
the prospectus supplement and a combination
of any of the above.
Cash Flow Agreements.......... Cash flow agreements are used to reduce the
effects of interest rate or currency exchange
rate fluctuations on the underlying mortgage
assets or on one or more classes of
certificates and increase the likelihood of
timely distributions on the certificates or
such classes of certificates, as the case may
be. The trust fund may include any of the
following types of cash flow agreements:
- guaranteed investment contracts;
- interest rate swap or exchange contracts;
- interest rate cap or floor agreements;
- currency exchange agreements;
- yield supplement agreements; or
- other types of similar agreements described
in the prospectus supplement.
Pre-Funding Account;
Capitalized Interest
Account..................... A trust fund may use monies deposited into a
pre-funding account to acquire additional
mortgage assets following a closing date for
the related series of certificates. The amount
on deposit in a pre-funding account will not
exceed 25% of the pool balance of the trust
fund as of the cut-off date on which the
ownership of the mortgage loans and rights to
payment thereon are deemed transferred to the
trust fund, as specified in the related
prospectus supplement. The depositor will
select any additional mortgage assets using
criteria that is substantially similar to the
criteria used to select the mortgage assets
included in the trust fund on the closing date.
If provided in the prospectus supplement, a
trust fund also may include amounts on deposit
in a separate capitalized interest account. The
depositor may use amounts on deposit in a
capitalized interest account to supplement
investment earnings, if any, of amounts on
deposit in the pre-funding account,
7
supplement interest collections of the trust
fund, or such other purpose as specified in the
prospectus supplement.
Amounts on deposit in any pre-funding account
or any capitalized interest account will be
held in cash or invested in short-term
investment grade obligations. Amounts remaining
on deposit in any pre-funding account and any
capitalized interest account after the end of
the related pre-funding period will be
distributed to certificateholders as described
in the prospectus supplement.
Description of Certificates... Each series of certificates will include one or
more classes. Each series of certificates will
represent in the aggregate the entire
beneficial ownership interest in the related
trust fund. The offered certificates are the
classes of certificates being offered to you
pursuant to the prospectus supplement. The
non-offered certificates are the classes of
certificates not being offered to you pursuant
to the prospectus supplement. Information on
the non-offered certificates is being provided
solely to assist you in your understanding of
the offered certificates.
Distributions on
Certificates................ The certificates may provide for different
methods of distributions to specific classes.
Any class of certificates may:
- provide for the accrual of interest thereon
based on fixed, variable or floating rates;
- be senior or subordinate to one or more other
classes of certificates with respect to
interest or principal distribution and the
allocation of losses on the assets of the
trust fund;
- be entitled to principal distributions, with
disproportionately low, nominal or no
interest distributions;
- be entitled to interest distributions, with
disproportionately low, nominal or no
principal distributions;
- provide for distributions of principal or
accrued interest only after the occurrence of
certain events, such as the retirement of one
or more other classes of certificates;
- provide for distributions of principal to be
made at a rate that is faster or slower than
the rate at which payments are received on
the mortgage assets in the related trust
fund;
- provide for distributions of principal
sequentially, based on specified payment
schedules or other methodologies; and
- provide for distributions based on a
combination of any of the above features.
Interest on each class of offered certificates
of each series will accrue at the applicable
pass-through rate on the outstanding
certificate balance or notional amount.
Distributions of interest with respect to one
or more classes of certificates may be reduced
to the extent of certain delinquencies, losses
and other contingencies described in this
prospectus and the prospectus supplement.
The certificate balance of a certificate
outstanding from time to time represents the
maximum amount that the holder thereof is
8
then entitled to receive in respect of
principal from future cash flow on the assets
in the related trust fund. Unless otherwise
specified in the prospectus supplement,
distributions of principal will be made on each
distribution date to the class or classes of
certificates entitled thereto until the
certificate balance of such certificates is
reduced to zero. Distributions of principal to
any class of certificates will be made on a pro
rata basis among all of the certificates of
such class.
Advances...................... A servicer may be obligated as part of its
servicing responsibilities to make certain
advances with respect to delinquent scheduled
payments and property related expenses which it
deems recoverable. The trust fund may be
charged interest for any advance. We will not
have any responsibility to make such advances.
One of our affiliates may have the
responsibility to make such advances, but only
if that affiliate is acting as a servicer or
master servicer for the related series of
certificates.
Termination................... A series of certificates may be subject to
optional early termination through the
repurchase of the mortgage assets in the
related trust fund.
Registration of
Certificates................ One or more classes of the offered certificates
may be initially represented by one or more
certificates registered in the name of Cede &
Co. as the nominee of The Depository Trust
Company. If your offered certificates are so
registered, you will not be entitled to receive
a definitive certificate representing your
interest except in the event that physical
certificates are issued under the limited
circumstances described in this prospectus and
the prospectus supplement.
Tax Status of the
Certificates................ The certificates of each series will constitute
either:
- "regular interests" or "ownership interests"
in a trust fund treated as a "real estate
mortgage investment conduit" under the
Internal Revenue Code of 1986, as amended;
- interests in a trust fund treated as a
grantor trust under applicable provisions of
the Internal Revenue Code of 1986, as
amended;
- "regular interests" or "residual interests"
in a trust fund treated as a "financial
assets securitization investment trust" under
the Internal Revenue Code of 1986, as
amended; or
- any combination of any of the above features.
ERISA Considerations.......... If you are a fiduciary of an employee benefit
plan or other retirement plan or arrangement
that is subject to the Employee Retirement
Income Security Act of 1974, as amended, or
Section 4975 of the Internal Revenue Code of
1986, as amended, or any materially similar
federal, state or local law, or any person who
proposes to use "plan assets" of any of these
plans to acquire any offered certificates, you
should carefully review with your legal counsel
whether the purchase or holding of any offered
certificates could give rise to transactions
not permitted under these laws. The prospectus
supplement will specify if investment in some
certificates may require a representation that
9
the investor is not (or is not investing on
behalf of) a plan or similar arrangement or if
other restrictions apply.
Legal Investment.............. The prospectus supplement will specify whether
the offered certificates will constitute
"mortgage related securities" for purposes of
the Secondary Mortgage Market Enhancement Act
of 1984, as amended. If your investment
authority is subject to legal restrictions you
should consult your legal counsel to determine
whether and to what extent the offered
certificates constitute legal investments for
you.
Rating........................ At the date of issuance, as to each series,
each class of offered certificates will not be
rated lower than investment grade by one or
more nationally recognized statistical rating
agencies. A security rating is not a
recommendation to buy, sell or hold securities
and may be subject to qualification, revision
or withdrawal at any time by the assigning
rating organization.
10
RISK FACTORS
YOU SHOULD CONSIDER THE FOLLOWING RISK FACTORS, IN ADDITION TO THE RISK
FACTORS IN THE PROSPECTUS SUPPLEMENT, IN DECIDING WHETHER TO PURCHASE ANY OF THE
OFFERED CERTIFICATES. THE RISKS AND UNCERTAINTIES DESCRIBED BELOW, TOGETHER WITH
THOSE DESCRIBED IN THE PROSPECTUS SUPPLEMENT UNDER "RISK FACTORS", SUMMARIZE THE
MATERIAL RISKS RELATING TO YOUR CERTIFICATES.
YOUR ABILITY TO RESELL
CERTIFICATES MAY BE LIMITED
BECAUSE OF THEIR
CHARACTERISTICS............. You may not be able to resell your
certificates and the value of your
certificates may be less than you anticipated
for a variety of reasons including:
- a secondary market for your certificates
may not develop;
- interest rate fluctuations;
- the absence of redemption rights; and
- the limited sources of information about
the certificates other than that provided
in this prospectus, the prospectus
supplement and the monthly report to
certificateholders.
THE ASSETS OF THE TRUST FUND
MAY NOT BE SUFFICIENT TO PAY
YOUR CERTIFICATES........... Unless otherwise specified in the prospectus
supplement, neither the offered certificates
of any series nor the mortgage assets in the
related trust fund will be guaranteed or
insured by us or any of our affiliates, by any
governmental agency or instrumentality or by
any other person. No offered certificate of
any series will represent a claim against or
security interest in the trust fund for any
other series. Accordingly, if the related
trust fund has insufficient assets to make
payments on the certificates, there will be no
other assets available for payment of the
deficiency.
Additionally, the trustee, master servicer,
special servicer or other specified person may
under certain circumstances withdraw some
amounts on deposit in certain funds or
accounts constituting part of a trust fund,
including the certificate account and any
accounts maintained as credit support, as
described in the prospectus supplement. The
trustee, master servicer, special servicer or
other specified person may have the authority
to make these withdrawals for purposes other
than the payment of principal of or interest
on the related series of certificates.
The prospectus supplement for a series of
certificates may provide for one or more
classes of certificates that are
11
subordinate to one or more other classes of
certificates in entitlement to certain
distributions on the certificates. On any
distribution date in which the related trust
fund has incurred losses or shortfalls in
collections on the mortgage assets, the
subordinate certificates initially will bear
the amount of such losses or shortfalls and,
thereafter, the remaining classes of
certificates will bear the remaining amount of
such losses or shortfalls. The priority,
manner and limitations on the allocation of
losses and shortfalls will be specified in the
prospectus supplement.
PREPAYMENTS AND REPURCHASES OF
THE MORTGAGE ASSETS WILL
AFFECT THE TIMING OF YOUR
CASH FLOW AND MAY AFFECT
YOUR YIELD.................. Prepayments (including those caused by
defaults on the mortgage loans and repurchases
for breach of representation or warranty) on
the mortgage loans in a trust fund generally
will result in a faster rate of principal
payments on one or more classes of the related
certificates than if payments on such mortgage
assets were made as scheduled. Thus, the
prepayment experience on the mortgage assets
may affect the average life of each class of
related certificates. The rate of principal
payments on mortgage loans varies between
pools and from time to time is influenced by a
variety of economic, demographic, geographic,
social, tax, legal and other factors.
We cannot provide any assurance as to the rate
of prepayments on the mortgage loans in any
trust fund or that such rate will conform to
any model described in this prospectus or in
any prospectus supplement. As a result,
depending on the anticipated rate of
prepayment for the mortgage loans in any trust
fund, the retirement of any class of
certificates could occur significantly earlier
or later than you expected.
The rate of voluntary prepayments will also be
affected by:
- the voluntary prepayment terms of the
mortgage loan, including prepayment
lock-out periods and prepayment premiums;
- then-current interest rates being charged
on similar mortgage loans; and
- the availability of mortgage credit.
A series of certificates may include one or
more classes of certificates with entitlements
to payments prior to other classes of
certificates. As a result, yields on classes
of
12
certificates with a lower priority of payment,
including classes of offered certificates, of
such series may be more sensitive to
prepayments on mortgage assets. A series of
certificates may include one or more classes
offered at a significant premium or discount.
Yields on such classes of certificates will be
sensitive, and in some cases extremely
sensitive, to prepayments on mortgage assets
and, where the amount of interest payable with
respect to a class is disproportionately high,
as compared to the amount of principal, a
holder might, in some prepayment scenarios,
fail to recoup its original investment.
If a mortgage loan is in default, it may not
be possible to collect a prepayment premium.
No person will be required to pay any premium
if a mortgage loan is repurchased for a breach
of representation or warranty.
The yield on your certificates may be less
than anticipated because:
- the prepayment premium or yield
maintenance required under certain
prepayment scenarios may not be
enforceable in some states or under
federal bankruptcy laws; and
- some courts may consider the prepayment
premium to be usurious.
OPTIONAL EARLY TERMINATION OF
THE TRUST FUND MAY RESULT IN
AN ADVERSE IMPACT ON YOUR
YIELD OR MAY RESULT IN A
LOSS........................ A series of certificates may be subject to
optional early termination by means of the
repurchase of the mortgage assets in the
related trust fund. We cannot assure you that
the proceeds from a sale of the mortgage
assets will be sufficient to distribute the
outstanding certificate balance plus accrued
interest and any undistributed shortfalls in
interest accrued on the certificates that are
subject to the termination. Accordingly, the
holders of such certificates may suffer an
adverse impact on the overall yield on their
certificates, may experience repayment of
their investment at an unpredictable and
inopportune time or may even incur a loss on
their investment.
RATINGS DO NOT GUARANTEE
PAYMENT AND DO NOT ADDRESS
PREPAYMENT RISKS............ Any rating assigned by a rating agency to a
class of offered certificates will reflect
only its assessment of the likelihood that
holders of certificates of such class will
receive payments to which such
certificateholders are
13
entitled under the related pooling and
servicing agreement. Ratings do not address:
- the likelihood that principal prepayments
(including those caused by defaults) on
the related mortgage loans will be made;
- the degree to which the rate of
prepayments on the related mortgage loans
might differ from that originally
anticipated;
- the likelihood of early optional
termination of the related trust fund;
- the possibility that prepayments on the
related mortgage loans at a higher or
lower rate than anticipated by an investor
may cause such investor to experience a
lower than anticipated yield; or
- the possibility that an investor that
purchases an offered certificate at a
significant premium might fail to recoup
its initial investment under certain
prepayment scenarios.
The amount, type and nature of credit
support, if any, provided with respect to a
series of certificates will be determined on
the basis of criteria established by each
rating agency rating classes of certificates
of such series. Those criteria are sometimes
based upon an actuarial analysis of the
behavior of mortgage loans in a larger
group. However, we cannot provide assurance
that the historical data supporting any such
actuarial analysis will accurately reflect
future experience, or that the data derived
from a large pool of mortgage loans will
accurately predict the delinquency,
foreclosure or loss experience of any
particular pool of mortgage loans. In other
cases, a rating agency may base their
criteria upon determinations of the values
of the mortgaged properties that provide
security for the mortgage loans. However, we
cannot provide assurance that those values
will not decline in the future.
UNUSED AMOUNTS IN PRE-FUNDING
ACCOUNTS MAY BE RETURNED TO
YOU AS A PREPAYMENT......... The prospectus supplement will disclose when
we are using a pre-funding account to purchase
additional mortgage assets in connection with
the issuance of certificates. Amounts on
deposit in a pre-funding account that are not
used to acquire additional mortgage assets by
the end of the pre-funding period for a series
of certificates may be distributed to holders
of those certificates as a prepayment
14
of principal, which may materially and
adversely affect the yield on those
certificates.
ADDITIONAL MORTGAGE ASSETS
ACQUIRED IN CONNECTION WITH
THE USE OF A PRE-FUNDING
ACCOUNT MAY CHANGE THE
AGGREGATE CHARACTERISTICS OF
A TRUST FUND................ Any additional mortgage assets acquired by a
trust fund with funds in a pre-funding account
may possess substantially different
characteristics than the mortgage assets in
the trust fund on the closing date for a
series of certificates. Therefore, the
aggregate characteristics of a trust fund
following the pre-funding period may be
substantially different than the
characteristics of a trust fund on the closing
date for that series of certificates.
NET OPERATING INCOME PRODUCED
BY A MORTGAGED PROPERTY MAY
BE INADEQUATE TO REPAY THE
MORTGAGE LOANS.............. The value of a mortgage loan secured by a
multifamily or commercial property is directly
related to the net operating income derived
from that property because the ability of a
borrower to repay a loan secured by an
income-producing property typically depends
primarily upon the successful operation of
that property rather than upon the existence
of independent income or assets of the
borrower. The reduction in the net operating
income of the property may impair the
borrower's ability to repay the loan.
Many of the mortgage loans included in a trust
fund may be secured by liens on owner-occupied
mortgaged properties or on mortgaged
properties leased to a single tenant.
Accordingly, a decline in the financial
condition of the borrower or single tenant may
have a disproportionately greater affect on
the net operating income from such mortgaged
properties than would be the case with respect
to mortgaged properties with multiple tenants.
FUTURE VALUE OF A MORTGAGED
PROPERTY AND ITS NET
OPERATING INCOME AND CASH
FLOW IS NOT PREDICTABLE..... Commercial and multifamily property values and
cash flows and net operating income from such
mortgaged properties are volatile and may be
insufficient to cover debt service on the
related mortgage loan at any given
15
time. Property value, cash flow and net
operating income depend upon a number of
factors, including:
- changes in general or local economic
conditions and/or specific industry
segments;
- declines in real estate values;
- an oversupply of commercial or multifamily
properties in the relevant market;
- declines in rental or occupancy rates;
- increases in interest rates, real estate
tax rates and other operating expenses;
- changes in governmental rules, regulations
and fiscal policies, including
environmental legislation;
- perceptions by prospective tenants and, if
applicable, their customers, of the
safety, convenience, services and
attractiveness of the property;
- the age, construction quality and design
of a particular property;
- whether the mortgaged properties are
readily convertible to alternative uses;
- acts of God; and
- other factors beyond our control or the
control of a servicer.
NONRECOURSE LOANS LIMIT THE
REMEDIES AVAILABLE FOLLOWING
A MORTGAGOR DEFAULT......... The mortgage loans will not be an obligation
of, or be insured or guaranteed by, any
governmental entity, by any private mortgage
insurer, or by the depositor, the originators,
the master servicer, the special servicer, the
trustee or any of their respective affiliates.
Each mortgage loan included in a trust fund
generally will be a nonrecourse loan. If there
is a default (other than a default resulting
from voluntary bankruptcy, fraud or wilful
misconduct) there will generally only be
recourse against the specific mortgaged
properties and other assets that have been
pledged to secure such mortgage loan. Even if
a mortgage loan provides for recourse to a
mortgagor or its affiliates, it is unlikely
the trust fund ultimately could recover any
amounts not covered by the mortgaged property.
16
SPECIAL RISKS OF MORTGAGE
LOANS SECURED BY
MULTIFAMILY PROPERTIES...... Mortgage loans secured by multifamily
properties may constitute a material
concentration of the mortgage loans in a trust
fund. Adverse economic conditions, either
local, regional or national, may limit the
amount of rent that a borrower may charge for
rental units, and may result in a reduction in
timely rent payments or a reduction in
occupancy levels. Occupancy and rent levels
may also be affected by:
- construction of additional housing units;
- local military base closings;
- developments at local colleges and
universities;
- national, regional and local politics,
including, in the case of multifamily
rental properties, current or future rent
stabilization and rent control laws and
agreements;
- the level of mortgage interest rates,
which may encourage tenants in multifamily
rental properties to purchase housing;
- tax credit and city, state and federal
housing subsidy or similar programs which
may impose rent limitations and may
adversely affect the ability of the
applicable borrowers to increase rents to
maintain the mortgaged properties in
proper condition during periods of rapid
inflation or declining market value of the
mortgaged properties;
- tax credit and city, state and federal
housing subsidy or similar programs which
may impose income restrictions on tenants
and which may reduce the number of
eligible tenants in such mortgaged
properties and result in a reduction in
occupancy rates applicable thereto; and
- the possibility that some eligible tenants
may not find any differences in rents
between subsidized or supported properties
and other multifamily rental properties in
the same area to be a sufficient economic
incentive to reside at a subsidized or
supported property, which may have fewer
amenities or otherwise be less attractive
as a residence.
All of these conditions and events may
increase the possibility that a borrower may
be unable to meet its obligations under its
mortgage loan.
17
The multifamily projects market is
characterized generally by low barriers to
entry. Thus, a particular apartment market
with historically low vacancies could
experience substantial new construction, and a
resultant oversupply of units, in a relatively
short period of time. Because multifamily
apartment units are typically leased on a
short-term basis, the tenants who reside in a
particular project within such a market may
easily move to alternative projects with more
desirable amenities or locations.
SPECIAL RISKS OF MORTGAGE
LOANS SECURED BY
RETAIL PROPERTIES........... Mortgage loans secured by retail properties
may constitute a material concentration of the
mortgage loans in a trust fund. Significant
factors determining the value of retail
properties are:
- the quality of the tenants; and
- the fundamental aspects of real estate
such as location and market demographics.
The correlation between the success of tenant
businesses and property value is more direct
with respect to retail properties than other
types of commercial property because a
significant component of the total rent paid
by retail tenants is often tied to a
percentage of gross sales. Significant tenants
at a retail property play an important part in
generating customer traffic and making a
retail property a desirable location for other
tenants at that property. Accordingly, retail
properties may be adversely affected if a
significant tenant ceases operations at those
locations, which may occur on account of a
voluntary decision not to renew a lease,
bankruptcy or insolvency of the tenant, the
tenant's general cessation of business
activities or for other reasons. In addition,
some tenants at retail properties may be
entitled to terminate their leases or pay
reduced rent if an anchor tenant ceases
operations at the property. In those cases, we
cannot provide assurance that any anchor
tenants will continue to occupy space in the
related shopping centers.
Shopping centers, in general, are affected by
the health of the retail industry. In
addition, a shopping center may be adversely
affected by the bankruptcy or decline in
drawing power of an anchor tenant, the risk
that an anchor tenant may vacate
notwithstanding that tenant's continuing
obligation to pay rent, a shift in consumer
demand due to demographic changes (for
example, population decreases
18
or changes in average age or income) and/or
changes in consumer preference (for example,
to discount retailers).
Unlike other income producing properties,
retail properties also face competition from
sources outside a given real estate market,
such as:
- catalogue retailers;
- home shopping networks;
- the internet;
- telemarketing; and
- outlet centers.
Continued growth of these alternative retail
outlets (which are often characterized by
lower operating costs) could adversely affect
the rents collectible at the retail properties
which secure mortgage loans in a trust fund.
SPECIAL RISKS OF MORTGAGE
LOANS SECURED BY
HOSPITALITY PROPERTIES...... Mortgage loans secured by hospitality
properties (e.g., a hotel or motel) may
constitute a material concentration of the
mortgage loans in a trust fund. Various
factors affect the economic viability of a
hospitality property, including:
- location, quality and franchise
affiliation (or lack thereof);
- adverse economic conditions, either local,
regional or national, which may limit the
amount that a consumer is willing to pay
for a room and may result in a reduction
in occupancy levels;
- the construction of competing hospitality
properties, which may result in a
reduction in occupancy levels;
- the increased sensitivity of hospitality
properties (relative to other commercial
properties) to adverse economic conditions
and competition, as hotel rooms generally
are rented for short periods of time;
- the financial strength and capabilities of
the owner and operator of a hospitality
property, which may have a substantial
impact on the property's quality of
service and economic performance; and
- the generally seasonal nature of the
hospitality industry, which can be
expected to cause periodic fluctuations in
room and other revenues, occupancy levels,
room rates and operating expenses.
In addition, the successful operation of a
hospitality property with a franchise
affiliation may depend in part
19
upon the strength of the franchisor, the
public perception of the franchise service
mark and the continued existence of any
franchise license agreement. The
transferability of a franchise license
agreement may be restricted, and a lender or
other person that acquires title to a
hospitality property as a result of
foreclosure may be unable to succeed to the
borrower's rights under the franchise license
agreement. Moreover, the transferability of a
hospitality property's operating, liquor and
other licenses upon a transfer of the
hospitality property, whether through purchase
or foreclosure, is subject to local law
requirements and may not be transferable.
SPECIAL RISKS OF MORTGAGE
LOANS SECURED BY
OFFICE BUILDINGS............ Mortgage loans secured by office buildings may
constitute a material concentration of the
mortgage loans in a trust fund. Significant
factors determining the value of office
buildings include:
- the quality of the tenants in the
building;
- the physical attributes of the building in
relation to competing buildings; and
- the strength and stability of the market
area as a desirable business location.
An economic decline in the business operated
by the tenants may adversely affect an office
building. That risk is increased if revenue is
dependent on a single tenant or if there is a
significant concentration of tenants in a
particular business or industry.
Office buildings are also subject to
competition with other office properties in
the same market. Competition is affected by a
property's:
- age;
- condition;
- design (e.g., floor sizes and layout);
- access to transportation; and
- ability or inability to offer certain
amenities to its tenants, including
sophisticated building systems (such as
fiber optic cables, satellite
communications or other base building
technological features).
The success of an office building also depends
on the local economy. A company's decision to
locate office headquarters in a given area,
for example, may be affected by such factors
as labor cost and quality, tax environment and
20
quality of life issues such as schools and
cultural amenities. A central business
district may have an economy which is markedly
different from that of a suburb. The local
economy and the financial condition of the
owner will impact on an office building's
ability to attract stable tenants on a
consistent basis. In addition, the cost of
refitting office space for a new tenant is
often more costly than for other property
types.
SPECIAL RISKS OF MORTGAGE
LOANS SECURED BY WAREHOUSE
AND SELF STORAGE
FACILITIES.................. Mortgage loans secured by warehouse and
storage facilities may constitute a material
concentration of the mortgage loans in a trust
fund. The storage facilities market contains
low barriers to entry.
Increased competition among self storage
facilities may reduce income available to
repay mortgage loans secured by a self storage
facility. Furthermore, the inability of a
borrower to police what is stored in a self
storage facility due to privacy considerations
may increase environmental risks.
SPECIAL RISKS OF MORTGAGE
LOANS SECURED BY
HEALTHCARE-RELATED
PROPERTIES.................. The mortgaged properties may include health
care-related facilities, including senior
housing, assisted living facilities, skilled
nursing facilities and acute care facilities.
- Senior housing generally consists of
facilities with respect to which the
residents are ambulatory, handle their own
affairs and typically are couples whose
children have left the home and at which
the accommodations are usually apartment
style;
- Assisted living facilities are typically
single or double room occupancy,
dormitory-style housing facilities which
provide food service, cleaning and some
personal care and with respect to which
the tenants are able to medicate
themselves but may require assistance with
certain daily routines;
- Skilled nursing facilities provide
services to post trauma and frail
residents with limited mobility who
require extensive medical treatment; and
- Acute care facilities generally consist of
hospital and other facilities providing
short-term, acute medical care services.
Certain types of health care-related
properties, particularly acute care
facilities, skilled nursing facilities and
some assisted living facilities, typically
receive a substantial
21
portion of their revenues from government
reimbursement programs, primarily Medicaid and
Medicare. Medicaid and Medicare are subject to
statutory and regulatory changes, retroactive
rate adjustments, administrative rulings,
policy interpretations, delays by fiscal
intermediaries and government funding
restrictions. Moreover, governmental payors
have employed cost-containment measures that
limit payments to health care providers, and
there exist various proposals for national
health care reform that could further limit
those payments. Accordingly, we cannot provide
assurance that payments under government
reimbursement programs will, in the future, be
sufficient to fully reimburse the cost of
caring for program beneficiaries. If those
payments are insufficient, net operating
income of health care-related facilities that
receive revenues from those sources may
decline, which consequently could have an
adverse affect on the ability of the related
borrowers to meet their obligations under any
mortgage loans secured by health care-related
facilities.
Moreover, health care-related facilities are
generally subject to federal and state laws
that relate to the adequacy of medical care,
distribution of pharmaceuticals, rate setting,
equipment, personnel, operating policies and
additions to facilities and services. In
addition, facilities where such care or other
medical services are provided are subject to
periodic inspection by governmental
authorities to determine compliance with
various standards necessary to continued
licensing under state law and continued
participation in the Medicaid and Medicare
reimbursement programs. Furthermore, under
applicable federal and state laws and
regulations, Medicare and Medicaid
reimbursements are generally not permitted to
be made to any person other than the provider
who actually furnished the related medical
goods and services. Accordingly, in the event
of foreclosure, the trustee, the master
servicer, the special servicer or a subsequent
lessee or operator of any health care-related
facility securing a defaulted mortgage loan
generally would not be entitled to obtain from
federal or state governments any outstanding
reimbursement payments relating to services
furnished at such property prior to
foreclosure. Any of the aforementioned events
may adversely affect the ability of the
related borrowers to meet their mortgage loan
obligations.
Providers of assisted living services are also
subject to state licensing requirements in
certain states. The failure of an operator to
maintain or renew any required license or
regulatory approval could prevent it from
continuing operations at a health care-related
facility or, if applicable,
22
bar it from participation in government
reimbursement programs. In the event of
foreclosure, we cannot provide assurance that
the trustee or any other purchaser at a
foreclosure sale would be entitled to the
rights under the licenses, and the trustee or
other purchaser may have to apply in its own
right for the applicable license. We cannot
provide assurance that the trustee or other
purchaser could obtain the applicable license
or that the related mortgaged property would
be adaptable to other uses.
Government regulation applying specifically to
acute care facilities, skilled nursing
facilities and certain types of assisted
living facilities includes health planning
legislation, enacted by most states, intended,
at least in part, to regulate the supply of
nursing beds. The most common method of
control is the requirement that a state
authority first make a determination of need,
evidenced by its issuance of a certificate of
need, before a long-term care provider can
establish a new facility, add beds to an
existing facility or, in some states, take
certain other actions (for example, acquire
major medical equipment, make major capital
expenditures, add services, refinance
long-term debt, or transfer ownership of a
facility). States also regulate nursing bed
supply in other ways. For example, some states
have imposed moratoria on the licensing of new
beds, or on the certification of new Medicaid
beds, or have discouraged the construction of
new nursing facilities by limiting Medicaid
reimbursements allocable to the cost of new
construction and equipment. In general, a
certificate of need is site specific and
operator specific; it cannot be transferred
from one site to another, or to another
operator, without the approval of the
appropriate state agency. Accordingly, in the
case of foreclosure upon a mortgage loan
secured by a lien on a health care-related
mortgaged property, the purchaser at
foreclosure might be required to obtain a new
certificate of need or an appropriate
exemption. In addition, compliance by a
purchaser with applicable regulations may in
any case require the engagement of a new
operator and the issuance of a new operating
license. Upon a foreclosure, a state
regulatory agency may be willing to expedite
any necessary review and approval process to
avoid interruption of care to a facility's
residents, but we cannot provide assurance
that any state regulatory agency will do so or
that the state regulatory agency will issue
any necessary licenses or approvals.
Federal and state government "fraud and abuse"
laws also apply to health care-related
facilities. "Fraud and abuse"
23
laws generally prohibit payment or
fee-splitting arrangements between health care
providers that are designed to induce or
encourage the referral of patients to, or the
recommendation of, a particular provider for
medical products or services. Violation of
these restrictions can result in license
revocation, civil and criminal penalties, and
exclusion from participation in Medicare or
Medicaid programs. The state law restrictions
in this area vary considerably from state to
state. Moreover, the federal anti-kickback law
includes broad language that potentially could
be applied to a wide range of referral
arrangements, and regulations designed to
create "safe harbors" under the law provide
only limited guidance. Accordingly, we cannot
provide assurance that such laws will be
interpreted in a manner consistent with the
practices of the owners or operators of the
health care-related mortgaged properties that
are subject to those laws.
The operators of health care-related
facilities are likely to compete on a local
and regional basis with others that operate
similar facilities, some of which competitors
may be better capitalized, may offer services
not offered by such operators, or may be owned
by non-profit organizations or government
agencies supported by endowments, charitable
contributions, tax revenues and other sources
not available to such operators. The
successful operation of a health care-related
facility will generally depend upon:
- the number of competing facilities in the
local market;
- the facility's age and appearance;
- the reputation and management of the
facility;
- the types of services the facility
provides; and
- where applicable, the quality of care and
the cost of that care.
The inability of a health care-related
mortgaged property to flourish in a
competitive market may increase the likelihood
of foreclosure on the related mortgage loan,
possibly affecting the yield on one or more
classes of the related series of offered
certificates.
SPECIAL RISKS OF MORTGAGE
LOANS SECURED BY INDUSTRIAL
AND MIXED-USE FACILITIES.... Mortgage loans secured by industrial and
mixed-use facilities may constitute a material
concentration of the
24
mortgage loans in a trust fund. Significant
factors determining the value of industrial
properties include:
- the quality of tenants;
- building design and adaptability; and
- the location of the property.
Concerns about the quality of tenants,
particularly major tenants, are similar in
both office properties and industrial
properties, although industrial properties are
more frequently dependent on a single tenant.
In addition, properties used for many
industrial purposes are more prone to
environmental concerns than other property
types.
Aspects of building site design and
adaptability affect the value of an industrial
property. Site characteristics which are
valuable to an industrial property include
clear heights, column spacing, zoning
restrictions, number of bays and bay depths,
divisibility, truck turning radius and overall
functionality and accessibility. Location is
also important because an industrial property
requires the availability of labor sources,
proximity to supply sources and customers and
accessibility to rail lines, major roadways
and other distribution channels.
Industrial properties may be adversely
affected by reduced demand for industrial
space occasioned by a decline in a particular
industry segment (e.g. a decline in defense
spending), and a particular industrial
property that suited the needs of its original
tenant may be difficult to relet to another
tenant or may become functionally obsolete
relative to newer properties.
POOR PROPERTY MANAGEMENT WILL
ADVERSELY AFFECT THE
PERFORMANCE OF THE RELATED
MORTGAGED PROPERTY.......... Each mortgaged property securing a mortgage
loan which has been sold into a trust fund is
managed by a property manager (which generally
is an affiliate of the borrower) or by the
borrower itself. The successful operation of a
real estate project is largely dependent on
the performance and viability of the
management of such project. The property
manager is responsible for:
- operating the property;
- providing building services;
- responding to changes in the local market;
and
- planning and implementing the rental
structure, including establishing levels
of rent payments and
25
advising the borrowers so that maintenance
and capital improvements can be carried out
in a timely fashion.
We cannot provide assurance regarding the
performance of any operators, leasing agents
and/or property managers or persons who may
become operators and/or property managers upon
the expiration or termination of management
agreements or following any default or
foreclosure under a mortgage loan. In
addition, the property managers are usually
operating companies and unlike limited purpose
entities, may not be restricted from incurring
debt and other liabilities in the ordinary
course of business or otherwise. There can be
no assurance that the property managers will
at all times be in a financial condition to
continue to fulfill their management
responsibilities under the related management
agreements throughout the terms of those
agreements.
BALLOON PAYMENTS ON MORTGAGE
LOANS RESULT IN HEIGHTENED
RISK OF BORROWER DEFAULT.... Some of the mortgage loans included in a trust
fund may not be fully amortizing (or may not
amortize at all) over their terms to maturity
and, thus, will require substantial principal
payments (that is, balloon payments) at their
stated maturity. Mortgage loans of this type
involve a greater degree of risk than
self-amortizing loans because the ability of a
borrower to make a balloon payment typically
will depend upon either:
- its ability to fully refinance the loan;
or
- its ability to sell the related mortgaged
property at a price sufficient to permit
the borrower to make the balloon payment.
The ability of a borrower to accomplish either
of these goals will be affected by a number of
factors, including:
- the value of the related mortgaged
property;
- the level of available mortgage interest
rates at the time of sale or refinancing;
- the borrower's equity in the related
mortgaged property;
- the financial condition and operating
history of the borrower and the related
mortgaged property;
- tax laws;
- rent control laws (with respect to certain
residential properties);
26
- Medicaid and Medicare reimbursement rates
(with respect to hospitals and nursing
homes);
- prevailing general economic conditions;
and
- the availability of credit for loans
secured by commercial or multifamily, as
the case may be, real properties
generally.
THE SERVICER WILL HAVE
DISCRETION TO HANDLE OR
AVOID OBLIGOR DEFAULTS IN A
MANNER WHICH MAY BE ADVERSE
TO YOUR INTERESTS........... If and to the extent specified in the
prospectus supplement defaulted mortgage loans
exist or are imminent, in order to maximize
recoveries on defaulted mortgage loans, the
related pooling and servicing agreement will
permit (within prescribed limits) the master
servicer or a special servicer to extend and
modify mortgage loans that are in default or
as to which a payment default is imminent.
While the related pooling and servicing
agreement generally will require a master
servicer to determine that any such extension
or modification is reasonably likely to
produce a greater recovery on a present value
basis than liquidation, we cannot provide
assurance that any such extension or
modification will in fact increase the present
value of receipts from or proceeds of the
affected mortgage loans.
In addition, a master servicer or a special
servicer may receive a workout fee based on
receipts from or proceeds of such mortgage
loans that would otherwise be payable to the
certificateholders.
PROCEEDS RECEIVED UPON
FORECLOSURE OF MORTGAGE
LOANS SECURED PRIMARILY BY
JUNIOR MORTGAGES MAY RESULT
IN LOSSES................... To the extent specified in the prospectus
supplement, some of the mortgage loans
included in a trust fund may be secured
primarily by junior mortgages. When
liquidated, mortgage loans secured by junior
mortgages are entitled to satisfaction from
proceeds that remain from the sale of the
related mortgaged property after the mortgage
loans senior to such mortgage loans have been
satisfied. If there are insufficient funds to
satisfy both the junior mortgage loans and
senior mortgage loans, the junior mortgage
loans would suffer a loss and, accordingly,
one or more classes of certificates would bear
such loss. Therefore, any risks of
deficiencies associated with first mortgage
loans will be greater with respect to junior
mortgage loans.
27
CREDIT SUPPORT MAY NOT COVER
LOSSES OR RISKS WHICH COULD
ADVERSELY AFFECT PAYMENT ON
YOUR CERTIFICATES........... The prospectus supplement for the offered
certificates of each series will describe any
credit support provided with respect to those
certificates. Use of credit support will be
subject to the conditions and limitations
described in this prospectus and in the
related prospectus supplement. Moreover,
credit support may not cover all potential
losses or risks; for example, credit support
may or may not cover fraud or negligence by a
mortgage loan originator or other parties.
A series of certificates may include one or
more classes of subordinate certificates
(which may include offered certificates), if
so provided in the prospectus supplement.
Although subordination is intended to reduce
the risk to holders of senior certificates of
delinquent distributions or ultimate losses,
the amount of subordination will be limited
and may decline under certain circumstances.
In addition, if principal payments on one or
more classes of certificates of a series are
made in a specified order of priority, any
limits with respect to the aggregate amount of
claims under any related credit support may be
exhausted before the principal of the lower
priority classes of certificates of such
series has been fully repaid. As a result, the
impact of losses and shortfalls experienced
with respect to the mortgage assets may fall
primarily upon those classes of certificates
having a lower priority of payment. Moreover,
if a form of credit support covers more than
one series of certificates, holders of
certificates of one series will be subject to
the risk that such credit support will be
exhausted by the claims of the holders of
certificates of one or more other series.
Regardless of the form of credit enhancement
provided, the amount of coverage will be
limited in amount and in most cases will be
subject to periodic reduction in accordance
with a schedule or formula. The master
servicer will generally be permitted to
reduce, terminate or substitute all or a
portion of the credit enhancement for any
series of certificates if the applicable
rating agency indicates that the then-current
rating of those certificates will not be
adversely affected. The rating of any series
of certificates by any applicable rating
agency may be lowered following the initial
issuance of those certificates as a result of
the downgrading of the obligations of any
applicable credit support provider, or as a
result of losses on the related mortgage
assets substantially in excess of the levels
contemplated by that rating agency at the time
28
of its initial rating analysis. None of the
depositor, the master servicer or any of our
or the master servicer's affiliates will have
any obligation to replace or supplement any
credit enhancement, or to take any other
action to maintain any rating of any series of
certificates.
MORTGAGORS OF COMMERCIAL
MORTGAGE LOANS ARE
SOPHISTICATED AND MAY TAKE
ACTIONS ADVERSE TO YOUR
INTERESTS................... Mortgage loans made to partnerships,
corporations or other entities may entail
risks of loss from delinquency and foreclosure
that are greater than those of mortgage loans
made to individuals. The mortgagor's
sophistication and form of organization may
increase the likelihood of protracted
litigation or bankruptcy in default
situations.
SOME ACTIONS ALLOWED BY THE
MORTGAGE MAY BE LIMITED BY
LAW......................... Mortgages securing mortgage loans included in
a trust fund may contain a due-on-sale clause,
which permits the lender to accelerate the
maturity of the mortgage loan if the borrower
sells, transfers or conveys the related
mortgaged property or its interest in the
mortgaged property. Mortgages securing
mortgage loans included in a trust fund may
also include a debt-acceleration clause, which
permits the lender to accelerate the debt upon
a monetary or non-monetary default of the
borrower. Such clauses are not always
enforceable. The courts of all states will
enforce clauses providing for acceleration in
the event of a material payment default. The
equity courts of any state, however, may
refuse the foreclosure of a mortgage or deed
of trust when an acceleration of the
indebtedness would be inequitable or unjust or
the circumstances would render the
acceleration unconscionable.
ASSIGNMENT OF LEASES AND RENTS
TO PROVIDE FURTHER SECURITY
FOR MORTGAGE LOANS POSES
SPECIAL RISKS............... The mortgage loans included in any trust fund
typically will be secured by an assignment of
leases and rents pursuant to which the
borrower assigns to the lender its right,
title and interest as landlord under the
leases of the related mortgaged property, and
the income derived therefrom, as further
security for the related mortgage loan, while
retaining a license to collect rents for so
long as there is no default. If the borrower
defaults, the license terminates and the
lender is entitled to collect rents. Some
state laws may require that the lender take
possession of the mortgaged property and
obtain a judicial appointment
29
of a receiver before becoming entitled to
collect the rents. In addition, bankruptcy or
the commencement of similar proceedings by or
in respect of the borrower may adversely
affect the lender's ability to collect the
rents.
INCLUSION IN A TRUST FUND OF
DELINQUENT MORTGAGE LOANS
MAY ADVERSELY AFFECT THE
RATE OF DEFAULTS AND
PREPAYMENTS ON THE MORTGAGE
LOANS....................... If so provided in the prospectus supplement,
the trust fund for a series of certificates
may include mortgage loans that are delinquent
as of the date they are deposited in the trust
fund. A mortgage loan will be considered
"delinquent" if it is 30 days or more past its
most recently contractual scheduled payment
date in payment of all amounts due according
to its terms. In any event, at the time of its
creation, the trust fund will not include
delinquent loans which by principal amount are
more than 20% of the aggregate principal
amount of all mortgage loans in the trust
fund. If so specified in the prospectus
supplement, the servicing of such mortgage
loans will be performed by a special servicer.
Credit support provided with respect to a
series of certificates may not cover all
losses related to delinquent mortgage loans,
and investors should consider the risk that
the inclusion of such mortgage loans in the
trust fund may adversely affect the rate of
defaults and prepayments on the mortgage loans
in the trust fund and the yield on the offered
certificates of such series.
ENVIRONMENTAL LIABILITY MAY
AFFECT THE LIEN ON A
MORTGAGED PROPERTY AND
EXPOSE THE LENDER TO
COSTS....................... Under certain laws, contamination of real
property may give rise to a lien on the
property to assure the costs of cleanup. In
several states, that lien has priority over an
existing mortgage lien on a property. In
addition, under the laws of some states and
under the federal Comprehensive Environmental
Response, Compensation, and Liability Act of
1980, a lender may be liable, as an "owner" or
"operator," for costs of addressing releases
or threatened releases of hazardous substances
at a property, if agents or employees of the
lender have become sufficiently involved in
the operations of the borrower, regardless of
whether or not the environmental damage or
threat was caused by the borrower. A lender
also risks such liability on foreclosure of
the mortgage. In addition, liabilities imposed
upon a borrower by CERCLA or other
environmental laws may adversely affect a
borrower's ability to repay a loan. If a
30
trust fund includes mortgage loans and the
prospectus supplement does not otherwise
specify, the related pooling and servicing
agreement will contain provisions generally to
the effect that the master servicer, acting on
behalf of the trust fund, may not acquire
title to a mortgaged property or assume
control of its operation unless the master
servicer, based upon a report prepared by a
person who regularly conducts environmental
site assessments, has made the determination
that it is appropriate to do so. These
provisions are designed to reduce
substantially the risk of liability for costs
associated with remediation of hazardous
substances, but we cannot provide assurance in
a given case that those risks can be
eliminated entirely. In addition, it is likely
that any recourse against the person preparing
the environmental report, and such person's
ability to satisfy a judgment, will be
limited.
ONE ACTION JURISDICTION MAY
LIMIT THE ABILITY OF THE
SPECIAL SERVICER TO
FORECLOSE ON A MORTGAGED
PROPERTY.................... Several states (including California) have
laws that prohibit more than one "judicial
action" to enforce a mortgage obligation, and
some courts have construed the term "judicial
action" broadly. The special servicer may need
to obtain advice of counsel prior to enforcing
any of the trust fund's rights under any of
the mortgage loans that include mortgaged
properties where the rule could be applicable.
In the case of a mortgage loan secured by
mortgaged properties located in multiple
states, the special servicer may be required
to foreclose first on properties located in
states where "one action" rules apply (and
where non-judicial foreclosure is permitted)
before foreclosing on properties located in
states where judicial foreclosure is the only
permitted method of foreclosure.
RIGHTS AGAINST TENANTS MAY BE
LIMITED IF LEASES ARE NOT
SUBORDINATE TO THE MORTGAGE
OR DO NOT CONTAIN ATTORNMENT
PROVISIONS.................. Some of the tenant leases contain provisions
that require the tenant to attorn to (that is,
recognize as landlord under the lease) a
successor owner of the property following
foreclosure. Some of the leases may be either
subordinate to the liens created by the
mortgage loans or else contain a provision
that requires the tenant to subordinate the
lease if the mortgagee agrees to enter into a
non-disturbance agreement.
31
In some states, if tenant leases are
subordinate to the liens created by the
mortgage loans and such leases do not contain
attornment provisions, such leases may
terminate upon the transfer of the property to
a foreclosing lender or purchaser at
foreclosure. Accordingly, in the case of the
foreclosure of a mortgaged property located in
such a state and leased to one or more
desirable tenants under leases that do not
contain attornment provisions, such mortgaged
property could experience a further decline in
value if such tenants' leases were terminated
(e.g., if such tenants were paying
above-market rents).
If a lease is senior to a mortgage, the lender
will not (unless it has otherwise agreed with
the tenant) possess the right to dispossess
the tenant upon foreclosure of the property,
and if the lease contains provisions
inconsistent with the mortgage (e.g.,
provisions relating to application of
insurance proceeds or condemnation awards),
the provisions of the lease will take
precedence over the provisions of the
mortgage.
IF MORTGAGED PROPERTIES ARE
NOT IN COMPLIANCE WITH CURRENT
ZONING LAWS, YOU MAY NOT BE
ABLE TO RESTORE COMPLIANCE
FOLLOWING A CASUALTY LOSS... Due to changes in applicable building and
zoning ordinances and codes which have come
into effect after the construction of
improvements on certain of the mortgaged
properties, some improvements may not comply
fully with current zoning laws (including
density, use, parking and set-back
requirements) but may qualify as permitted
non-confirming uses. Such changes may limit
the ability of the related mortgagor to
rebuild the premises "as is" in the event of a
substantial casualty loss. Such limitations
may adversely affect the ability of the
mortgagor to meet its mortgage loan
obligations from cash flow. Insurance proceeds
may not be sufficient to pay off such mortgage
loan in full. In addition, if the mortgaged
property were to be repaired or restored in
conformity with then current law, its value
could be less than the remaining balance on
the mortgage loan and it may produce less
revenue than before such repair or
restoration.
INSPECTIONS OF THE MORTGAGED
PROPERTIES WERE LIMITED..... The mortgaged properties were inspected by
licensed engineers in connection with the
origination of the mortgage loans to assess
the structure, exterior walls, roofing
interior construction, mechanical and
electrical systems and general condition of
the site, buildings and
32
other improvements located on the mortgaged
properties. We cannot provide assurance that
all conditions requiring repair or replacement
have been identified in such inspections.
LITIGATION CONCERNS........... There may be legal proceedings pending and,
from time to time, threatened against the
mortgagors or their affiliates relating to the
business, or arising out of the ordinary
course of business, of the mortgagors and
their affiliates. We cannot provide assurance
that such litigation will not have a material
adverse effect on the distributions to you on
your certificates.
33
DESCRIPTION OF THE TRUST FUNDS
GENERAL
The primary assets of each trust fund will consist of mortgage assets which
include (i) one or more multifamily and/or commercial mortgage loans and
participations therein, (ii) CMBS, (iii) direct obligations of the United States
or other government agencies, or (iv) a combination of the assets described in
clauses (i), (ii) and (iii). Each trust fund will be established by the
depositor. Each mortgage asset will be selected by the depositor for inclusion
in a trust fund from among those purchased, either directly or indirectly, from
a prior holder thereof, which may or may not be the originator of such mortgage
loan or the issuer of such CMBS and may be an affiliate of the depositor. The
mortgage assets will not be guaranteed or insured by the depositor or any of its
affiliates or, unless otherwise provided in the prospectus supplement, by any
governmental agency or instrumentality or by any other person. The discussion
below under the heading "--Mortgage Loans--Leases," unless otherwise noted,
applies equally to mortgage loans underlying any CMBS included in a particular
trust fund.
MORTGAGE LOANS-LEASES
General. The mortgage loans will be evidenced by mortgage notes secured by
mortgages or deeds of trust or similar security instruments that create first or
junior liens on, or installment contracts for the sale of, mortgaged properties
consisting of (i) multifamily properties, which are residential properties
consisting of five or more rental or cooperatively owned dwelling units in
high-rise, mid-rise or garden apartment buildings or other residential
structures, or (ii) commercial properties, which include office buildings,
retail stores, hotels or motels, nursing homes, hospitals or other health
care-related facilities, mobile home parks, warehouse facilities, mini-warehouse
facilities, self-storage facilities, industrial plants, mixed use or other types
of income-producing properties or unimproved land. The multifamily properties
may include mixed commercial and residential structures and may include
apartment buildings owned by private cooperative housing corporations. If so
specified in the prospectus supplement, each mortgage will create a first
priority mortgage lien on a mortgaged property. A mortgage may create a lien on
a borrower's leasehold estate in a property; however, the term of any such
leasehold will exceed the term of the mortgage note by at least ten years. Each
mortgage loan will have been originated by a person other than the depositor.
If so specified in the prospectus supplement, mortgage assets for a series
of certificates may include mortgage loans made on the security of real estate
projects under construction. In that case, the prospectus supplement will
describe the procedures and timing for making disbursements from construction
reserve funds as portions of the related real estate project are completed. In
addition, mortgage assets may include mortgage loans that are delinquent as of
the date of issuance of a series of certificates. In that case, the prospectus
supplement will set forth, as to each such mortgage loan, available information
as to the period of such delinquency, any forbearance arrangement then in
effect, the condition of the related mortgaged property and the ability of the
mortgaged property to generate income to service the mortgage debt.
Leases. To the extent specified in the prospectus supplement, the
commercial properties may be leased to lessees that occupy all or a portion of
such properties. Pursuant to a lease assignment, the borrower may assign its
right, title and interest as lessor under each lease and the income derived
therefrom to the mortgagee, while retaining a license to collect the rents for
so long as there is no default. If the borrower defaults, the license terminates
and the mortgagee or its agent is entitled to collect the rents from the lessee
for application to the monetary obligations of the borrower. State law may limit
or restrict the enforcement of the lease assignments by a mortgagee until it
takes possession of the mortgaged property and/or a receiver is appointed. See
"Certain Legal Aspects of the Mortgage Loans and Leases--Leases and Rents."
Alternatively, to the extent specified in the prospectus supplement, the
borrower and the mortgagee may agree that payments under leases are to be made
directly to a servicer.
To the extent described in the prospectus supplement, the leases, which may
include "bond-type" or "credit-type" leases, may require the lessees to pay rent
that is sufficient in the aggregate to cover all scheduled payments of principal
and interest on the mortgage loans and, in certain cases, their pro rata
34
share of the operating expenses, insurance premiums and real estate taxes
associated with the mortgaged properties. A "bond-type" lease is a lease between
a lessor and a lessee for a specified period of time with specified rent
payments that are at least sufficient to repay the related note(s). A bond-type
lease requires the lessee to perform and pay for all obligations related to the
leased premises and provides that, no matter what occurs with regard to the
leased premises, the lessee is obligated to continue to pay its rent. A
"credit-type" lease is a lease between a lessor and a lessee for a specified
period of time with specified rent payments at least sufficient to repay the
related note(s). A credit-type lease requires the lessee to perform and pay for
most of the obligations related to the leased premises, excluding only a few
landlord duties which remain the responsibility of the borrower/lessor. Leases
(other than bond-type leases) may require the borrower to bear costs associated
with structural repairs and/or the maintenance of the exterior or other portions
of the mortgaged property or provide for certain limits on the aggregate amount
of operating expenses, insurance premiums, taxes and other expenses that the
lessees are required to pay.
If so specified in the prospectus supplement, under certain circumstances
the lessees may be permitted to set off their rental obligations against the
obligations of the borrowers under the leases. In those cases where payments
under the leases (net of any operating expenses payable by the borrowers) are
insufficient to pay all of the scheduled principal and interest on the mortgage
loans, the borrowers must rely on other income or sources generated by the
mortgaged property to make payments on the mortgage loan. To the extent
specified in the prospectus supplement, some commercial properties may be leased
entirely to one lessee. This is generally the case in bond-type leases and
credit-type leases. In such cases, absent the availability of other funds, the
borrower must rely entirely on rent paid by such lessee in order for the
borrower to pay all of the scheduled principal and interest on the related
commercial loan. To the extent specified in the prospectus supplement, some
leases (not including bond-type leases) may expire prior to the stated maturity
of the mortgage loan. In such cases, upon expiration of the leases the borrowers
will have to look to alternative sources of income, including rent payment by
any new lessees or proceeds from the sale or refinancing of the mortgaged
property, to cover the payments of principal and interest due on the mortgage
loans unless the lease is renewed. As specified in the prospectus supplement,
some leases may provide that upon the occurrence of a casualty affecting a
mortgaged property, the lessee will have the right to terminate its lease,
unless the borrower, as lessor, is able to cause the mortgaged property to be
restored within a specified period of time. Some leases may provide that it is
the lessor's responsibility to restore the mortgaged property to its original
condition after a casualty. Some leases may provide that it is the lessee's
responsibility to restore the mortgaged property to its original condition after
a casualty. Some leases may provide a right of termination to the lessee if a
taking of a material or specified percentage of the leased space in the mortgage
property occurs, or if the ingress or egress to the leased space has been
materially impaired.
Default and Loss Considerations with Respect to the Mortgage
Loans. Mortgage loans secured by liens on income-producing properties are
substantially different from loans which are secured by owner-occupied
single-family homes. The repayment of a loan secured by a lien on an income
producing property is typically dependent upon the successful operation of such
property (that is, its ability to generate income). Moreover, some or all of the
mortgage loans included in a trust fund may be non-recourse loans, which means
that, absent special facts, recourse in the case of default will be limited to
the mortgaged property and such other assets, if any, that the borrower pledged
to secure repayment of the mortgage loan.
Lenders typically look to the Debt Service Coverage Ratio of a loan secured
by income-producing property as an important measure of the risk of default on
such a loan. As more fully set forth in the prospectus supplement, the Debt
Service Coverage Ratio of a mortgage loan at any given time is the ratio of (i)
the Net Operating Income of the mortgaged property for a twelve-month period to
(ii) the annualized scheduled payments on the mortgage loan and on any other
loan that is secured by a lien on the mortgaged property prior to the lien of
the mortgage. As more fully set forth in the prospectus supplement, Net
Operating Income means, for any given period, the total operating revenues
derived from a mortgaged property, minus the total operating expenses incurred
in respect of the mortgaged property other than (i) non-cash items such as
depreciation and amortization, (ii) capital expenditures and
35
(iii) debt service on loans (including the mortgage loan) secured by liens on
the mortgaged property. The Net Operating Income of a mortgaged property will
fluctuate over time and may not be sufficient to cover debt service on the
mortgage loan at any given time. An insufficiency of Net Operating Income can be
compounded or solely caused by an adjustable rate mortgage loan. As the primary
source of the operating revenues of a non-owner occupied income-producing
property, the condition of the applicable real estate market and/or area economy
may effect rental income (and maintenance payments from tenant-stockholders of a
private cooperative housing corporation). In addition, properties typically
leased, occupied or used on a short-term basis, such as certain health
care-related facilities, hotels and motels, and mini warehouse and self-storage
facilities, tend to be affected more rapidly by changes in market or business
conditions than do properties typically leased, occupied or used for longer
periods, such as warehouses, retail stores, office buildings and industrial
plants. Commercial loans may be secured by owner-occupied mortgaged properties
or mortgaged properties leased to a single tenant. Accordingly, a decline in the
financial condition of the mortgagor or single tenant, as applicable, may have a
disproportionately greater effect on the Net Operating Income from such
mortgaged properties than the case of mortgaged properties with multiple
tenants.
The Debt Service Coverage Ratio should not be relied upon as the sole
measure of the risk of default of any loan, however, since other factors may
outweigh a high Debt Service Coverage Ratio. With respect to a balloon mortgage
loan, for example, the risk of default as a result of the unavailability of a
source of funds to finance the related balloon payment at maturity on terms
comparable to or better than those of the balloon mortgage loans could be
significant even though the related Debt Service Coverage Ratio is high.
Increases in operating expenses due to the general economic climate or
economic conditions in a locality or industry segment, such as increases in
interest rates, real estate tax rates, energy costs, labor costs and other
operating expenses, and/or changes in governmental rules, regulations and fiscal
policies may also affect the risk of default on a mortgage loan. As may be
further described in the prospectus supplement, in some cases leases of
mortgaged properties may provide that the lessee, rather than the
borrower/landlord, is responsible for payment of operating expenses. However,
the existence of such "net of expense" provisions will result in stable Net
Operating Income to the borrower/landlord only to the extent that the lessee is
able to absorb operating expense increases while continuing to make rent
payments. See "--Leases" above.
While the duration of leases and the existence of any "net of expense"
provisions are often viewed as the primary considerations in evaluating the
credit risk of mortgage loans secured by certain income-producing properties,
such risk may be affected equally or to a greater extent by changes in
government regulation of the operator of the property. Examples of the latter
include mortgage loans secured by health care-related facilities, the income
from which and the operating expenses of which are subject to state and/or
federal regulations, such as Medicare and Medicaid, and multifamily properties
and mobile home parks, which may be subject to state or local rent control
regulation and, in certain cases, restrictions on changes in use of the
property. Low- and moderate-income housing in particular may be subject to legal
limitations and regulations but, because of such regulations, may also be less
sensitive to fluctuations in market rents generally.
Lenders also look to the Loan-to-Value Ratio of a mortgage loan as a
measure of risk of loss if a property must be liquidated following a default.
The lower the Loan-to-Value Ratio, the greater the percentage of the borrower's
equity in a mortgaged property, and thus the greater the cushion provided to the
lender against loss on liquidation following a default.
Loan-to-Value Ratios will not necessarily constitute an accurate measure of
the risk of liquidation loss in a pool of mortgage loans. For example, the value
of a mortgaged property as of the date of initial issuance of the related series
of certificates may be less than the fair market value of the mortgaged property
determined in an appraisal determined at loan origination, and will likely
continue to fluctuate from time to time based upon changes in economic
conditions and the real estate market. Moreover, even when current, an appraisal
is not necessarily a reliable estimate of value. Appraised values of income-
36
producing properties are generally based on the market comparison method (recent
resale value of comparable properties at the date of the appraisal), the cost
replacement method (the cost of replacing the property at such date), the income
capitalization method (a projection of value based upon the property's projected
net cash flow), or upon a selection from or interpolation of the values derived
from such methods. Each of these appraisal methods can present analytical
difficulties. It is often difficult to find truly comparable properties that
have recently been sold; the replacement cost of a property may have little to
do with its current market value; and income capitalization is inherently based
on inexact projections of income and expense and the selection of an appropriate
capitalization rate. Where more than one of these appraisal methods are used and
provide significantly different results, an accurate determination of value and,
correspondingly, a reliable analysis of default and loss risks, is even more
difficult.
While the depositor believes that the foregoing considerations are
important factors that generally distinguish loans secured by liens on
income-producing real estate from single-family mortgage loans, there is no
assurance that all of such factors will in fact have been prudently considered
by the originators of the mortgage loans, or that, for a particular mortgage
loan, they are complete or relevant. See "Risk Factors--Net Operating Income
Produced by a Mortgaged Property May Be Inadequate to Repay the Mortgage Loans"
and "--Balloon Payments on Mortgage Loans Result in Heightened Risk of Borrower
Default."
Payment Provisions of the Mortgage Loans. Unless otherwise specified in
the prospectus supplement, all of the mortgage loans will have original terms to
maturity of not more than 40 years and will provide for scheduled payments of
principal, interest or both, to be made on specified dates that occur monthly or
quarterly or at such other interval as is specified in the prospectus
supplement. A mortgage loan (i) may provide for no accrual of interest or for
accrual of interest thereon at an interest rate that is fixed over its term or
that adjusts from time to time, or that may be converted at the borrower's
election from an adjustable to a fixed interest rate, or from a fixed to an
adjustable interest rate, (ii) may provide for the formula, index or other
method by which the interest rate will be calculated, (iii) may provide for
level payments to maturity or for payments that adjust from time to time to
accommodate changes in the interest rate or to reflect the occurrence of certain
events, and may permit negative amortization or accelerated amortization, (iv)
may be fully amortizing over its term to maturity, or may provide for little or
no amortization over its term and thus require a balloon payment on its stated
maturity date, and (v) may contain a prohibition on prepayment for a specified
lockout period or require payment of a prepayment premium or a yield maintenance
penalty in connection with a prepayment, in each case as described in the
prospectus supplement. A mortgage loan may also contain an equity participation
provision that entitles the lender to a share of profits realized from the
operation or disposition of the mortgaged property, as described in the
prospectus supplement. If holders of any series or class of offered certificates
will be entitled to all or a portion of a prepayment premium or an equity
participation, the prospectus supplement will describe the prepayment premium
and/or equity participation and the method or methods by which any such amounts
will be allocated to holders.
Mortgage Loan Information in Prospectus Supplements. Each prospectus
supplement will contain certain information pertaining to the mortgage loans in
the related trust fund which will generally include the following: (i) the
aggregate outstanding principal balance and the largest, smallest and average
outstanding principal balance of the mortgage loans as of the applicable Cut-Off
Date, (ii) the type or types of property that provide security for repayment of
the mortgage loans, (iii) the original and remaining terms to maturity of the
mortgage loans and the seasoning of the mortgage loans, (iv) the earliest and
latest origination date and maturity date and weighted average original and
remaining terms to maturity (or for ARD loans, the anticipated repayment date)
of the mortgage loans, (v) the original Loan-to-Value Ratios of the mortgage
loans, (vi) the mortgage interest rates or range of mortgage interest rates and
the weighted average mortgage interest rate carried by the mortgage loans, (vii)
the geographic distribution of the mortgaged properties on a state-by-state
basis, (viii) information with respect to the prepayment provisions, if any, of
the mortgage loans, (ix) with respect to adjustable rate mortgage loans, the
index or indices upon which such adjustments are based, the adjustment dates,
the range of gross
37
margins and the weighted average gross margin, and any limits on mortgage
interest rate adjustments at the time of any adjustment and over the life of the
adjustable rate mortgage loans, (x) Debt Service Coverage Ratios either at
origination or as of a more recent date (or both) and (xi) information regarding
the payment characteristics of the mortgage loans, including without limitation
balloon payment and other amortization provisions. In appropriate cases, the
prospectus supplement will also contain certain information available to the
depositor that pertains to the provisions of leases and the nature of tenants of
the mortgaged properties. If specific information regarding the mortgage loans
is not known to the depositor at the time the certificates are initially
offered, the depositor will provide more general information of the nature
described above in the prospectus supplement, and the depositor will set forth
specific information of the nature described above in a report which will be
available to purchasers of the related certificates at or before the initial
issuance thereof and will be filed as part of a Current Report on Form 8-K with
the Securities and Exchange Commission within 15 days following such issuance.
CMBS
CMBS may include (i) private (that is, not guaranteed or insured by the
United States or any agency or instrumentality thereof) mortgage participations,
mortgage pass-through certificates or other mortgage-backed securities such as
mortgage-backed securities that are similar to a series of certificates or (ii)
certificates insured or guaranteed by Freddie Mac, Fannie Mae, Ginnie Mae or
Farmer Mac, provided that each CMBS will evidence an interest in, or will be
secured by a pledge of, mortgage loans that conform to the descriptions of the
mortgage loans contained in this prospectus.
The CMBS may have been issued in one or more classes with characteristics
similar to the classes of certificates described in this prospectus.
Distributions in respect of the CMBS will be made by the CMBS servicer or the
CMBS trustee on the dates specified in the prospectus supplement. The CMBS
issuer or the CMBS servicer or another person specified in the prospectus
supplement may have the right or obligation to repurchase or substitute assets
underlying the CMBS after a certain date or under other circumstances specified
in the prospectus supplement.
Reserve funds, subordination or other credit support similar to that
described for the certificates under "Description of Credit Support" may have
been provided with respect to the CMBS. The type, characteristics and amount of
such credit support, if any, will be a function of the characteristics of the
underlying mortgage loans and other factors and generally will have been
established on the basis of the requirements of any rating agency that may have
assigned a rating to the CMBS, or by the initial purchasers of the CMBS.
The prospectus supplement for certificates that evidence interests in CMBS
will specify, to the extent available and deemed material, (i) the aggregate
approximate initial and outstanding principal amount and type of the CMBS to be
included in the trust fund, (ii) the original and remaining term to stated
maturity of the CMBS, if applicable, (iii) the pass-through or bond rate of the
CMBS or the formula for determining such rates, (iv) the payment characteristics
of the CMBS, (v) the CMBS issuer, CMBS servicer and CMBS trustee, (vi) a
description of the credit support, if any, (vii) the circumstances under which
the related underlying mortgage loans, or the CMBS themselves, may be purchased
prior to their maturity, (viii) the terms on which mortgage loans may be
substituted for those originally underlying the CMBS, (ix) the servicing fees
payable under the CMBS agreement, (x) the type of information in respect of the
underlying mortgage loans described under "--Mortgage Loans--Leases--Mortgage
Loan Information in Prospectus Supplements" and (xi) the characteristics of any
cash flow agreements that relate to the CMBS.
To the extent required under the securities laws, CMBS included among the
assets of a trust fund will (i) either have been registered under the Securities
Act of 1933, as amended, or be eligible for resale under Rule 144(k) under the
Securities Act of 1933, as amended, and (ii) have been acquired in a bona fide
secondary market transaction and not from the issuer or an affiliate.
38
CERTIFICATE ACCOUNTS
Each trust fund will include one or more certificate accounts established
and maintained on behalf of the certificateholders into which the person or
persons designated in the prospectus supplement will, to the extent described in
this prospectus and in the prospectus supplement, deposit all payments and
collections received or advanced with respect to the mortgage assets and other
assets in the trust fund. A certificate account may be maintained as an interest
bearing or a non-interest bearing account, and funds held therein may be held as
cash or invested in certain short-term, investment grade obligations, in each
case as described in the prospectus supplement.
CREDIT SUPPORT
If so provided in the prospectus supplement, partial or full protection
against certain defaults and losses on the mortgage assets in the trust fund may
be provided to one or more classes of certificates in the form of subordination
of one or more other classes of certificates or by one or more other types of
credit support, such as over collateralization, a letter of credit, insurance
policy, guarantee or reserve fund, or by a combination thereof. The amount and
types of credit support, the identity of the entity providing it (if applicable)
and related information with respect to each type of credit support, if any,
will be set forth in the prospectus supplement for the certificates of each
series. The prospectus supplement for any series of certificates evidencing an
interest in a trust fund that includes CMBS will describe in the same fashion
any similar forms of credit support that are provided by or with respect to, or
are included as part of the trust fund evidenced by or providing security for,
such CMBS to the extent information is available and deemed material. The type,
characteristic and amount of credit support will be determined based on the
characteristics of the mortgage assets and other factors and will be
established, in part, on the basis of requirements of each rating agency rating
a series of certificates. If so specified in the prospectus supplement, any
credit support may apply only in the event of certain types of losses or
delinquencies and the protection against losses or delinquencies provided by
such credit support will be limited. See "Risk Factors--Credit Support May Not
Cover Losses or Risks Which Could Adversely Affect Payment on Your Certificates"
and "Description of Credit Support."
CASH FLOW AGREEMENTS
If so provided in the prospectus supplement, the trust fund may include
guaranteed investment contracts pursuant to which moneys held in the funds and
accounts established for the related series will be invested at a specified
rate. The trust fund may also include interest rate exchange agreements,
interest rate cap or floor agreements, currency exchange agreements or similar
agreements designed to reduce the effects of interest rate or currency exchange
rate fluctuations on the mortgage assets or on one or more classes of
certificates. The principal terms of any guaranteed investment contract or other
agreement, and the identity of the obligor under any guaranteed investment
contract or other agreement, will be described in the prospectus supplement.
PRE-FUNDING
If so provided in the prospectus supplement, a trust fund may include
amounts on deposit in a separate pre-funding account that may be used by the
trust fund to acquire additional mortgage assets. Amounts in a pre-funding
account will not exceed 25% of the pool balance of the trust fund as of the Cut-
Off Date. Additional mortgage assets will be selected using criteria that are
substantially similar to the criteria used to select the mortgage assets
included in the trust fund on the closing date. The trust fund may acquire such
additional mortgage assets for a period of time of not more than 120 days after
the closing date for the related series of certificates. Amounts on deposit in
the pre-funding account after the end of the pre-funding period will be
distributed to certificateholders or such other person as set forth in the
prospectus supplement.
In addition, a trust fund may include a separate capitalized interest
account. Amounts on deposit in the capitalized interest account may be used to
supplement investment earnings, if any, of amounts on
39
deposit in the pre-funding account, supplement interest collections of the trust
fund, or such other purpose as specified in the prospectus supplement. Amounts
on deposit in the capitalized interest account and pre-funding account generally
will be held in cash or invested in short-term investment grade obligations. Any
amounts on deposit in the capitalized interest account will be released after
the end of the pre-funding period as specified in the prospectus supplement. See
"Risk Factors--Unused Amounts in Pre-Funding Accounts May Be Returned to You as
a Prepayment."
YIELD CONSIDERATIONS
GENERAL
The yield on any offered certificate will depend on the price paid by the
certificateholder, the pass-through rate of the certificate and the amount and
timing of distributions on the certificate. See "Risk Factors--Prepayments and
Repurchases of the Mortgage Assets Will Affect the Timing of Your Cash Flow and
May Affect Your Yield." The following discussion contemplates a trust fund that
consists solely of mortgage loans. While you generally can expect the
characteristics and behavior of mortgage loans underlying CMBS to have the same
effect on the yield to maturity and/or weighted average life of a class of
certificates as will the characteristics and behavior of comparable mortgage
loans, the effect may differ due to the payment characteristics of the CMBS. If
a trust fund includes CMBS, the prospectus supplement will discuss the effect
that the CMBS payment characteristics may have on the yield to maturity and
weighted average lives of the offered certificates.
PASS-THROUGH RATE
The certificates of any class within a series may have a fixed, variable or
adjustable pass-through rate, which may or may not be based upon the interest
rates borne by the mortgage loans in the related trust fund. The prospectus
supplement will specify the pass-through rate for each class of certificates or,
in the case of a class of offered certificates with a variable or adjustable
pass-through rate, the method of determining the pass-through rate; the effect,
if any, of the prepayment of any mortgage loan on the pass-through rate of one
or more classes of offered certificates; and whether the distributions of
interest on the offered certificates of any class will be dependent, in whole or
in part, on the performance of any obligor under a cash flow agreement.
PAYMENT DELAYS
A period of time will elapse between the date upon which payments on the
mortgage loans in the related trust fund are due and the distribution date on
which such payments are passed through to certificateholders. That delay will
effectively reduce the yield that would otherwise be produced if payments on
such mortgage loans were distributed to certificateholders on or near the date
they were due.
SHORTFALLS IN COLLECTIONS OF INTEREST RESULTING FROM PREPAYMENTS
When a borrower makes a principal prepayment on a mortgage loan in full or
in part, the borrower is generally charged interest only for the period from the
date on which the preceding scheduled payment was due up to the date of such
prepayment, instead of for the full accrual period, that is, the period from the
due date of the preceding scheduled payment up to the due date for the next
scheduled payment. However, interest accrued on any series of certificates and
distributable thereon on any distribution date will generally correspond to
interest accrued on the principal balance of mortgage loans for their respective
full accrual periods. Consequently, if a prepayment on any mortgage loan is
distributable to certificateholders on a particular distribution date, but such
prepayment is not accompanied by interest thereon for the full accrual period,
the interest charged to the borrower (net of servicing and administrative fees)
may be less than the corresponding amount of interest accrued and otherwise
payable on the certificates of the related series. If and to the extent that any
prepayment interest shortfall is allocated to a class of offered certificates,
the yield on the offered certificates will be adversely affected.
40
The prospectus supplement will describe the manner in which any prepayment
interest shortfalls will be allocated among the classes of certificates. If so
specified in the prospectus supplement, the master servicer will be required to
apply some or all of its servicing compensation for the corresponding period to
offset the amount of any prepayment interest shortfalls. The prospectus
supplement will also describe any other amounts available to offset prepayment
interest shortfalls. See "Description of the Pooling and Servicing
Agreements--Servicing Compensation and Payment of Expenses."
PREPAYMENT CONSIDERATIONS
A certificate's yield to maturity will be affected by the rate of principal
payments on the mortgage loans in the related trust fund and the allocation of
those principal payments to reduce the principal balance (or notional amount, if
applicable) of the certificate. The rate of principal payments on the mortgage
loans will in turn be affected by the amortization schedules of the mortgage
loans (which, in the case of adjustable rate mortgage loans, will change
periodically to accommodate adjustments to their mortgage interest rates), the
dates on which any balloon payments are due, and the rate of principal
prepayments thereon (including for this purpose, prepayments resulting from
liquidations of mortgage loans due to defaults, casualties or condemnations
affecting the mortgaged properties, or purchases of mortgage loans out of the
trust fund). Because the rate of principal prepayments on the mortgage loans in
any trust fund will depend on future events and a variety of factors (as
discussed more fully below), it is impossible to predict with assurance a
certificate's yield to maturity.
The extent to which the yield to maturity of a class of offered
certificates of any series may vary from the anticipated yield will depend upon
the degree to which they are purchased at a discount or premium and when, and to
what degree, payments of principal on the mortgage loans in the related trust
fund are in turn distributed on such certificates (or, in the case of a class of
Stripped Interest Certificates, result in the reduction of the notional amount
of the Stripped Interest Certificate). Further, an investor should consider, in
the case of any offered certificate purchased at a discount, the risk that a
slower than anticipated rate of principal payments on the mortgage loans in the
trust fund could result in an actual yield to such investor that is lower than
the anticipated yield and, in the case of any offered certificate purchased at a
premium, the risk that a faster than anticipated rate of principal payments
could result in an actual yield to such investor that is lower than the
anticipated yield. In general, the earlier a prepayment of principal on the
mortgage loans is distributed on an offered certificate purchased at a discount
or premium (or, if applicable, is allocated in reduction of the notional amount
thereof), the greater will be the effect on the investor's yield to maturity. As
a result, the effect on an investor's yield of principal payments (to the extent
distributable in reduction of the principal balance or notional amount of the
investor's offered certificates) occurring at a rate higher (or lower) than the
rate anticipated by the investor during any particular period would not be fully
offset by a subsequent like reduction (or increase) in the rate of principal
payments.
A class of certificates, including a class of offered certificates, may
provide that on any distribution date the holders of certificates are entitled
to a pro rata share of the prepayments (including prepayments occasioned by
defaults) on the mortgage loans in the related trust fund that are distributable
on that date, to a disproportionately large share (which, in some cases, may be
all) of such prepayments, or to a disproportionately small share (which, in some
cases, may be none) of the prepayments. As and to the extent described in the
prospectus supplement, the entitlements of the various classes of
certificateholders of any series to receive payments (and, in particular,
prepayments) of principal of the mortgage loans in the related trust fund may
vary based on the occurrence of certain events (e.g., the retirement of one or
more classes of a series of certificates) or subject to certain contingencies
(e.g., prepayment and default rates with respect to the mortgage loans).
In general, the notional amount of a class of Stripped Interest
Certificates will either (i) be based on the principal balances of some or all
of the mortgage assets in the related trust fund or (ii) equal the certificate
balances of one or more of the other classes of certificates of the same series.
Accordingly, the yield on such Stripped Interest Certificates will be directly
related to the amortization of the mortgage assets or classes of certificates,
as the case may be. Thus, if a class of certificates of any series consists of
41
Stripped Interest Certificates or Stripped Principal Certificates, a lower than
anticipated rate of principal prepayments on the mortgage loans in the related
trust fund will negatively affect the yield to investors in Stripped Principal
Certificates, and a higher than anticipated rate of principal prepayments on the
mortgage loans will negatively affect the yield to investors in Stripped
Interest Certificates.
The depositor is not aware of any relevant publicly available or
authoritative statistics with respect to the historical prepayment experience of
a large group of multifamily or commercial mortgage loans. However, the extent
of prepayments of principal of the mortgage loans in any trust fund may be
affected by a number of factors, including, without limitation, the availability
of mortgage credit, the relative economic vitality of the area in which the
mortgaged properties are located, the quality of management of the mortgaged
properties, the servicing of the mortgage loans, possible changes in tax laws
and other opportunities for investment. In addition, the rate of principal
payments on the mortgage loans in any trust fund may be affected by the
existence of lockout periods and requirements that principal prepayments be
accompanied by prepayment premiums, and by the extent to which such provisions
may be practicably enforced.
The rate of prepayment on a pool of mortgage loans is also affected by
prevailing market interest rates for mortgage loans of a comparable type, term
and risk level. When the prevailing market interest rate is below a mortgage
coupon, a borrower may have an increased incentive to refinance its mortgage
loan. In addition, as prevailing market interest rates decline, even borrowers
with adjustable rate mortgage loans that have experienced a corresponding
interest rate decline may have an increased incentive to refinance for purposes
of either (i) converting to a fixed rate loan and thereby "locking in" such rate
or (ii) taking advantage of the initial "teaser rate" (a mortgage interest rate
below what it would otherwise be if the applicable index and gross margin were
applied) on another adjustable rate mortgage loan.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell
mortgaged properties in order to realize their equity therein, to meet cash flow
needs or to make other investments. In addition, some borrowers may be motivated
by federal and state tax laws (which are subject to change) to sell mortgaged
properties prior to the exhaustion of tax depreciation benefits. The depositor
will make no representation as to the particular factors that will affect the
prepayment of the mortgage loans in any trust fund, as to the relative
importance of such factors, as to the percentage of the principal balance of the
mortgage loans that will be paid as of any date or as to the overall rate of
prepayment on the mortgage loans.
WEIGHTED AVERAGE LIFE AND MATURITY
The rate at which principal payments are received on the mortgage loans in
a trust fund will affect the ultimate maturity and the weighted average life of
one or more classes of a series of certificates. Weighted average life refers to
the average amount of time that will elapse from the date of issuance of an
instrument until each dollar of the principal amount of such instrument is
repaid to the investor.
The weighted average life and maturity of a class of certificates of a
series will be influenced by the rate at which principal on the mortgage loans,
whether in the form of scheduled amortization or prepayments (for this purpose,
the term "prepayment" includes voluntary prepayments, liquidations due to
default and purchases of mortgage loans out of the trust fund), is paid to that
class of certificateholders. Prepayment rates on loans are commonly measured
relative to a prepayment standard or model, such as the CPR prepayment model or
the SPA prepayment model. CPR represents an assumed constant rate of prepayment
each month (expressed as an annual percentage) relative to the then outstanding
principal balance of a pool of loans for the life of those loans. SPA represents
an assumed variable rate of prepayment each month (expressed as an annual
percentage) relative to the then outstanding principal balance of a pool of
loans, with different prepayment assumptions often expressed as percentages of
SPA. For example, a prepayment assumption of 100% of SPA assumes prepayment
rates of 0.2% per annum of the then outstanding principal balance of loans in
the first month of the life of the loans and an additional 0.2% per annum in
each following month until the 30th month. Beginning in the 30th month, and in
each
42
following month during the life of the loans, 100% of SPA assumes a constant
prepayment rate of 6% per annum each month.
Neither CPR nor SPA nor any other prepayment model or assumption purports
to be a historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of any particular pool of loans. Moreover, the
CPR and SPA models were developed based upon historical prepayment experience
for single-family loans. Thus, it is unlikely that the prepayment experience of
the mortgage loans included in any trust fund will conform to any particular
level of CPR or SPA.
The prospectus supplement for each series of certificates will contain
tables, if applicable, setting forth the projected weighted average life of each
class of offered certificates and the percentage of the initial certificate
balance of each class that would be outstanding on specified distribution dates
based on the assumptions stated in the prospectus supplement, including
assumptions that borrowers make prepayments on the mortgage loans at rates
corresponding to various percentages of CPR or SPA, or at such other rates
specified in the prospectus supplement. The tables and assumptions will
illustrate the sensitivity of the weighted average lives of the certificates to
various assumed prepayment rates and will not be intended to predict, or to
provide information that will enable investors to predict, the actual weighted
average lives of the certificates.
CONTROLLED AMORTIZATION CLASSES AND COMPANION CLASSES
A series of certificates may include one or more controlled amortization
classes that are designed to provide increased protection against prepayment
risk by transferring that risk to one or more companion classes. Unless
otherwise specified in the prospectus supplement, each controlled amortization
class will either be a planned amortization class or a targeted amortization
class. In general, distributions of principal on a planned amortization class of
certificates are made in accordance with a specified amortization schedule so
long as prepayments on the underlying mortgage loans occur within a specified
range of constant prepayment rates and, as described below, so long as one or
more companion classes remain to absorb excess cash flows and make up for
shortfalls. For example, if the rate of prepayments is significantly higher than
expected, the excess prepayments will be applied to retire the companion classes
prior to reducing the principal balance of a planned amortization class. If the
rate of prepayments is significantly lower than expected, a disproportionately
large portion of prepayments may be applied to a planned amortization class.
Once the companion classes for a planned amortization class are retired, the
planned amortization class of certificates will have no further prepayment
protection. A targeted amortization class of certificates is similar to a
planned amortization class of certificates, but a targeted amortization class
structure generally does not draw on companion classes to make up cash flow
shortfalls, and will generally not provide protection to the targeted
amortization class against the risk that prepayments occur more slowly than
expected.
In general, the reduction of prepayment risk afforded to a controlled
amortization class comes at the expense of one or more companion classes of the
same series (any of which may also be a class of offered certificates) which
absorb a disproportionate share of the overall prepayment risk of a given
structure. As more particularly described in the prospectus supplement, the
holders of a companion class will receive a disproportionately large share of
prepayments when the rate of prepayment exceeds the rate assumed in structuring
the controlled amortization class, and (in the case of a companion class that
supports a planned amortization class of certificates) a disproportionately
small share of prepayments (or no prepayments) when the rate of prepayment falls
below that assumed rate. Thus, as and to the extent described in the prospectus
supplement, a companion class will absorb a disproportionate share of the risk
that a relatively fast rate of prepayments will result in the early retirement
of the investment, that is, "call risk," and, if applicable, the risk that a
relatively slow rate of prepayments will extend the average life of the
investment, that is, "extension risk", that would otherwise be allocated to the
related controlled amortization class. Accordingly, companion classes can
exhibit significant average life variability.
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OTHER FACTORS AFFECTING YIELD, WEIGHTED AVERAGE LIFE AND MATURITY
Balloon Payments; Extensions of Maturity. Some or all of the mortgage
loans included in a trust fund may require that balloon payments be made at
maturity. Because the ability of a borrower to make a balloon payment typically
will depend upon its ability either to refinance the loan or to sell the
mortgaged property, there is a risk that mortgage loans that require balloon
payments may default at maturity, or that the maturity of such a mortgage loan
may be extended in connection with a workout. In the case of defaults, recovery
of proceeds may be delayed by, among other things, bankruptcy of the borrower or
adverse conditions in the market where the property is located. In order to
minimize losses on defaulted mortgage loans, the master servicer or a special
servicer, to the extent and under the circumstances set forth in this prospectus
and in the prospectus supplement, may be authorized to modify mortgage loans
that are in default or as to which a payment default is imminent. Any defaulted
balloon payment or modification that extends the maturity of a mortgage loan may
delay distributions of principal on a class of offered certificates and thereby
extend the weighted average life of the certificates and, if the certificates
were purchased at a discount, reduce the yield thereon.
Negative Amortization. Mortgage loans that permit negative amortization
can affect the weighted average life of a class of certificates. In general,
mortgage loans that permit negative amortization by their terms limit the amount
by which scheduled payments may adjust in response to changes in mortgage
interest rates and/or provide that scheduled payment amounts will adjust less
frequently than the mortgage interest rates. Accordingly, during a period of
rising interest rates, the scheduled payment on a mortgage loan that permits
negative amortization may be less than the amount necessary to amortize the loan
fully over its remaining amortization schedule and pay interest at the then
applicable mortgage interest rate. In that case, the mortgage loan balance would
amortize more slowly than necessary to repay it over its schedule and, if the
amount of scheduled payment were less than the amount necessary to pay current
interest at the applicable mortgage interest rate, the loan balance would
negatively amortize to the extent of the amount of the interest shortfall.
Conversely, during a period of declining interest rates, the scheduled payment
on a mortgage loan that permits negative amortization may exceed the amount
necessary to amortize the loan fully over its remaining amortization schedule
and pay interest at the then applicable mortgage interest rate. In that case,
the excess would be applied to principal, thereby resulting in amortization at a
rate faster than necessary to repay the mortgage loan balance over its schedule.
A slower or negative rate of mortgage loan amortization would
correspondingly be reflected in a slower or negative rate of amortization for
one or more classes of certificates of the related series. Accordingly, the
weighted average lives of mortgage loans that permit negative amortization (and
that of the classes of certificates to which any such negative amortization
would be allocated or which would bear the effects of a slower rate of
amortization on the mortgage loans) may increase as a result of such feature. A
faster rate of mortgage loan amortization will shorten the weighted average life
of the mortgage loans and, correspondingly, the weighted average lives of those
classes of certificates then entitled to a portion of the principal payments on
those mortgage loans. The prospectus supplement will describe, if applicable,
the manner in which negative amortization in respect of the mortgage loans in
any trust fund is allocated among the respective classes of certificates of the
related series.
Foreclosures and Payment Plans. The number of foreclosures and the
principal amount of the mortgage loans that are foreclosed in relation to the
number and principal amount of mortgage loans that are repaid in accordance with
their terms will affect the weighted average lives of those mortgage loans and,
accordingly, the weighted average lives of and yields on the certificates of the
related series. Servicing decisions made with respect to the mortgage loans,
including the use of payment plans prior to a demand for acceleration and the
restructuring of mortgage loans in bankruptcy proceedings, may also have an
effect upon the payment patterns of particular mortgage loans and thus the
weighted average lives of and yields on the certificates of the related series.
Losses and Shortfalls on the Mortgage Assets. The yield to holders of the
offered certificates of any series will directly depend on the extent to which
such holders are required to bear the effects of any losses or shortfalls in
collections arising out of defaults on the mortgage assets in the related trust
fund and
44
the timing of such losses and shortfalls. In general, the earlier that any such
loss or shortfall occurs, the greater will be the negative effect on yield for
any class of certificates that is required to bear the effects of the loss or
shortfall.
The amount of any losses or shortfalls in collections on the mortgage
assets in any trust fund (to the extent not covered or offset by draws on any
reserve fund or under any instrument of credit support) will be allocated among
the classes of certificates of the related series in the priority and manner,
and subject to the limitations, specified in the prospectus supplement. As
described in the prospectus supplement, such allocations may result in
reductions in the entitlements to interest and/or certificate balances of one or
more classes of certificates, or may be effected simply by a prioritization of
payments among the classes of certificates. The yield to maturity on a class of
subordinate certificates may be extremely sensitive to losses and shortfalls in
collections on the mortgage assets in the related trust fund.
Additional Certificate Amortization. In addition to entitling
certificateholders to a specified portion (which may range from none to all) of
the principal payments received on the mortgage assets in the related trust
fund, one or more classes of certificates of any series, including one or more
classes of offered certificates of a series, may provide for distributions of
principal from (i) amounts attributable to interest accrued but not currently
distributable on one or more classes of Accrual Certificates, (ii) excess funds
or (iii) any other amounts described in the prospectus supplement. As
specifically set forth in the prospectus supplement, "excess funds" generally
will represent that portion of the amounts distributable in respect of the
certificates of any series on any distribution date that represent (i) interest
received or advanced on the mortgage assets in the related trust fund that is in
excess of the interest currently distributable on that series of certificates,
as well as any interest accrued but not currently distributable on any Accrual
Certificates of that series or (ii) prepayment premiums, payments from equity
participations entitling the lender to a share of profits realized from the
operation or disposition of the mortgaged property, or any other amounts
received on the mortgage assets in the trust fund that do not constitute
interest thereon or principal thereof.
The amortization of any class of certificates out of the sources described
in the preceding paragraph would shorten the weighted average life of
certificates and, if those certificates were purchased at a premium, reduce the
yield on those certificates. The prospectus supplement will discuss the relevant
factors that you should consider in determining whether distributions of
principal of any class of certificates out of such sources would have any
material effect on the rate at which your certificates are amortized.
THE DEPOSITOR
Wachovia Commercial Mortgage Securities, Inc., the depositor, is a North
Carolina corporation organized on August 17, 1988 as a wholly-owned subsidiary
of Wachovia Bank, National Association (formerly known as First Union National
Bank), a national banking association with its main office located in Charlotte,
North Carolina. Wachovia Bank, National Association is a subsidiary of Wachovia
Corporation, a North Carolina corporation registered as a bank holding company
under the Bank Holding Company Act of 1956, as amended. Wachovia Corporation is
a financial holding company under the Gramm-Leach-Bliley Act. The depositor's
principal business is to acquire, hold and/or sell or otherwise dispose of cash
flow assets, usually in connection with the securitization of that asset. The
depositor maintains its principal office at 301 South College Street, Charlotte,
North Carolina 28288-0166. Its telephone number is 704-374-6161. There can be no
assurance that the depositor will have any significant assets.
USE OF PROCEEDS
The net proceeds to be received from the sale of certificates will be
applied by the depositor to the purchase of trust assets or will be used by the
depositor for general corporate purposes. The depositor expects to sell the
certificates from time to time, but the timing and amount of offerings of
certificates will
45
depend on a number of factors, including the volume of mortgage assets acquired
by the depositor, prevailing interest rates, availability of funds and general
market conditions.
DESCRIPTION OF THE CERTIFICATES
GENERAL
In the aggregate, the certificates of each series of certificates will
represent the entire beneficial ownership interest in the trust fund created
pursuant to the related pooling and servicing agreement. Each series of
certificates may consist of one or more classes of certificates (including
classes of offered certificates), and such class or classes may (i) provide for
the accrual of interest thereon at a fixed, variable or adjustable rate; (ii) be
senior or subordinate to one or more other classes of certificates in
entitlement to certain distributions on the certificates; (iii) be entitled, as
Stripped Principal Certificates, to distributions of principal with
disproportionately small, nominal or no distributions of interest; (iv) be
entitled, as Stripped Interest Certificates, to distributions of interest with
disproportionately small, nominal or no distributions of principal; (v) provide
for distributions of principal and/or interest thereon that commence only after
the occurrence of certain events such as the retirement of one or more other
classes of certificates of such series; (vi) provide for distributions of
principal to be made, from time to time or for designated periods, at a rate
that is faster (and, in some cases, substantially faster) or slower (and, in
some cases, substantially slower) than the rate at which payments or other
collections of principal are received on the mortgage assets in the related
trust fund; (vii) provide for distributions of principal to be made, subject to
available funds, based on a specified principal payment schedule or other
methodology; and/or (viii) provide for distributions based on a combination of
two or more components thereof with one or more of the characteristics described
in this paragraph, including a Stripped Principal Certificate component and a
Stripped Interest Certificate component, to the extent of available funds, in
each case as described in the prospectus supplement. Any such classes may
include classes of offered certificates. With respect to certificates with two
or more components, references in this prospectus to certificate balance,
notional amount and pass-through rate refer to the principal balance, if any,
notional amount, if any, and the pass-through rate, if any, for that component.
Each class of offered certificates of a series will be issued in minimum
denominations corresponding to the certificate balances or, in the case of
Stripped Interest Certificates or REMIC residual certificates, notional amounts
or percentage interests specified in the prospectus supplement. As provided in
the prospectus supplement, one or more classes of offered certificates of any
series may be issued in fully registered, definitive form or may be offered in
book-entry format through the facilities of DTC. The offered certificates of
each series (if issued as definitive certificates) may be transferred or
exchanged, subject to any restrictions on transfer described in the prospectus
supplement, at the location specified in the prospectus supplement, without the
payment of any service charge, other than any tax or other governmental charge
payable in connection therewith. Interests in a class of book-entry certificates
will be transferred on the book-entry records of DTC and its participating
organizations. See "Risk Factors--Your Ability to Resell Certificates May Be
Limited Because of Their Characteristics," and "--The Assets of the Trust Fund
May Not Be Sufficient to Pay Your Certificates".
DISTRIBUTIONS
Distributions on the certificates of each series will be made by or on
behalf of the trustee or master servicer on each distribution date as specified
in the prospectus supplement from the Available Distribution Amount for such
series and such distribution date.
Except as otherwise specified in the prospectus supplement, distributions
on the certificates of each series (other than the final distribution in
retirement of any certificate) will be made to the persons in whose names those
certificates are registered on the record date, which is the close of business
on the last business day of the month preceding the month in which the
applicable distribution date occurs, and the amount of each distribution will be
determined as of the close of business on the determination date that
46
is specified in the prospectus supplement. All distributions with respect to
each class of certificates on each distribution date will be allocated pro rata
among the outstanding certificates in that class. The trustee will make payments
either by wire transfer in immediately available funds to the account of a
certificateholder at a bank or other entity having appropriate facilities
therefor, if such certificateholder has provided the trustee or other person
required to make such payments with wiring instructions (which may be provided
in the form of a standing order applicable to all subsequent distributions) no
later than the date specified in the prospectus supplement (and, if so provided
in the prospectus supplement, such certificateholder holds certificates in the
requisite amount or denomination specified in the prospectus supplement), or by
check mailed to the address of the certificateholder as it appears on the
certificate register; provided, however, that the trustee will make the final
distribution in retirement of any class of certificates (whether definitive
certificates or book-entry certificates) only upon presentation and surrender of
the certificates at the location specified in the notice to certificateholders
of such final distribution.
DISTRIBUTIONS OF INTEREST ON THE CERTIFICATES
Each class of certificates of each series (other than certain classes of
Stripped Principal Certificates and certain REMIC residual certificates that
have no pass-through rate) may have a different pass-through rate which may be
fixed, variable or adjustable. The prospectus supplement will specify the pass-
through rate or, in the case of a variable or adjustable pass-through rate, the
method for determining the pass-through rate, for each class. Unless otherwise
specified in the prospectus supplement, interest on the certificates of each
series will be calculated on the basis of a 360-day year consisting of twelve
30-day months.
Distributions of interest in respect of the certificates of any class
(other than any class of Accrual Certificates that will be entitled to
distributions of accrued interest commencing only on the distribution date, or
under the circumstances, specified in the prospectus supplement, and other than
any class of Stripped Principal Certificates or REMIC residual certificates that
is not entitled to any distributions of interest) will be made on each
distribution date based on the Accrued Certificate Interest for such class and
such distribution date, subject to the sufficiency of the portion of the
Available Distribution Amount allocable to such class on such distribution date.
Prior to the time interest is distributable on any class of Accrual
Certificates, the amount of Accrued Certificate Interest otherwise distributable
on that class will be added to the certificate balance of that class on each
distribution date. With respect to each class of certificates (other than some
classes of Stripped Interest Certificates and REMIC residual certificates),
Accrued Certificate Interest for each distribution date will be equal to
interest at the applicable pass-through rate accrued for a specified period
(generally the period between distribution dates) on the outstanding certificate
balance thereof immediately prior to such distribution date. Unless otherwise
provided in the prospectus supplement, Accrued Certificate Interest for each
distribution date on Stripped Interest Certificates will be similarly calculated
except that it will accrue on a notional amount that is either (i) based on the
principal balances of some or all of the mortgage assets in the related trust
fund or (ii) equal to the certificate balances of one or more other classes of
certificates of the same series. Reference to a notional amount with respect to
a class of Stripped Interest Certificates is solely for convenience in making
certain calculations and does not represent the right to receive any
distributions of principal.
If so specified in the prospectus supplement, the amount of Accrued
Certificate Interest that is otherwise distributable on (or, in the case of
Accrual Certificates, that may otherwise be added to the certificate balance of)
one or more classes of the certificates of a series will be reduced to the
extent that any prepayment interest shortfalls, as described under "Yield
Considerations--Shortfalls in Collections of Interest Resulting from
Prepayments" exceed the amount of any sums (including, if and to the extent
specified in the prospectus supplement, the master servicer's servicing
compensation) that are applied to offset such shortfalls. The particular manner
in which prepayment interest shortfalls will be allocated among some or all of
the classes of certificates of that series will be specified in the prospectus
supplement. The prospectus supplement will also describe the extent to which the
amount of Accrued Certificate Interest that is otherwise distributable on (or,
in the case of Accrual Certificates, that may
47
otherwise be added to the certificate balance of) a class of offered
certificates may be reduced as a result of any other contingencies, including
delinquencies, losses and deferred interest on or in respect of the mortgage
assets in the related trust fund. Unless otherwise provided in the prospectus
supplement, any reduction in the amount of Accrued Certificate Interest
otherwise distributable on a class of certificates by reason of the allocation
to such class of a portion of any deferred interest on or in respect of the
mortgage assets in the related trust fund will result in a corresponding
increase in the certificate balance of that class. See "Risk Factors--Prepayment
and Repurchases of the Mortgage Assets Will Affect the Timing of Your Cash Flow
and May Affect Your Yield" and "Yield Considerations."
DISTRIBUTIONS OF PRINCIPAL OF THE CERTIFICATES
Each class of certificates of each series (other than certain classes of
Stripped Interest Certificates or REMIC residual certificates) will have a
certificate balance which, at any time, will equal the then maximum amount that
the holders of certificates of that class will be entitled to receive in respect
of principal out of the future cash flow on the mortgage assets and other assets
included in the related trust fund. The outstanding certificate balance of a
class of certificates will be reduced by distributions of principal made on
those certificates from time to time and, if so provided in the prospectus
supplement, further by any losses incurred in respect of the related mortgage
assets allocated to those certificates from time to time. In turn, the
outstanding certificate balance of a class of certificates may be increased as a
result of any deferred interest on or in respect of the related mortgage assets
that is allocated to those certificates from time to time, and will be
increased, in the case of a class of Accrual Certificates prior to the
distribution date on which distributions of interest on those Accrual
Certificates are required to commence, by the amount of any Accrued Certificate
Interest in respect thereof (reduced as described above). Unless otherwise
provided in the prospectus supplement, the initial aggregate certificate balance
of all classes of a series of certificates will not be greater than the
aggregate outstanding principal balance of the related mortgage assets as of the
applicable Cut-Off Date, after application of scheduled payments due on or
before such date, whether or not received.
As and to the extent described in the prospectus supplement, distributions
of principal with respect to a series of certificates will be made on each
distribution date to the holders of the class or classes of certificates of such
series entitled to distributions until the certificate balances of those
certificates have been reduced to zero. Distributions of principal with respect
to one or more classes of certificates may be made at a rate that is faster
(and, in some cases, substantially faster) than the rate at which payments or
other collections of principal are received on the mortgage assets in the
related trust fund, may not commence until the occurrence of certain events,
such as the retirement of one or more other classes of certificates of the same
series, or may be made at a rate that is slower (and, in some cases,
substantially slower) than the rate at which payments or other collections of
principal are received on such mortgage assets. In addition, distributions of
principal with respect to one or more classes of controlled amortization
certificates may be made, subject to available funds, based on a specified
principal payment schedule and, with respect to one or more classes of companion
classes of certificates, may be contingent on the specified principal payment
schedule for a controlled amortization class of certificates of the same series
and the rate at which payments and other collections of principal on the
mortgage assets in the related trust fund are received. Unless otherwise
specified in the prospectus supplement, distributions of principal of any class
of certificates will be made on a pro rata basis among all of the certificates
belonging to that class.
COMPONENTS
To the extent specified in the prospectus supplement, distribution on a
class of certificates may be based on a combination of two or more different
components as described under "--General" above. To that extent, the
descriptions set forth under "--Distributions of Interest on the Certificates"
and "--Distributions of Principal of the Certificates" above also relate to
components of such a class of certificates. In such case, reference in those
sections to certificate balance and pass-through rate refer to the principal
balance, if any, of any of the components and the pass-through rate, if any, on
any component, respectively.
48
DISTRIBUTIONS ON THE CERTIFICATES IN RESPECT OF PREPAYMENT PREMIUMS OR IN
RESPECT OF EQUITY PARTICIPATIONS
If so provided in the prospectus supplement, prepayment premiums or
payments in respect of equity participations entitling the lender to a share of
profits realized from the operation or disposition of the mortgaged property
received on or in connection with the mortgage assets in any trust fund will be
distributed on each distribution date to the holders of the class of
certificates of the related series entitled thereto in accordance with the
provisions described in such prospectus supplement.
ALLOCATION OF LOSSES AND SHORTFALLS
If so provided in the prospectus supplement for a series of certificates
consisting of one or more classes of subordinate certificates, on any
distribution date in respect of which losses or shortfalls in collections on the
mortgage assets have been incurred, the amount of such losses or shortfalls will
be borne first by a class of subordinate certificates in the priority and manner
and subject to the limitations specified in the prospectus supplement. See
"Description of Credit Support" for a description of the types of protection
that may be included in shortfalls on mortgage assets comprising the trust fund.
ADVANCES IN RESPECT OF DELINQUENCIES
With respect to any series of certificates evidencing an interest in a
trust fund, unless otherwise provided in the prospectus supplement, a servicer
or another entity described therein will be required as part of its servicing
responsibilities to advance on or before each distribution date its own funds or
funds held in the related certificate account that are not included in the
Available Distribution Amount for such distribution date, in an amount equal to
the aggregate of payments of principal (other than any balloon payments) and
interest (net of related servicing fees) that were due on the mortgage loans in
the trust fund and were delinquent on the related determination date, subject to
the servicer's (or another entity's) good faith determination that such advances
will be reimbursable from the loan proceeds. In the case of a series of
certificates that includes one or more classes of subordinate certificates and
if so provided in the prospectus supplement, each servicer's (or another
entity's) advance obligation may be limited only to the portion of such
delinquencies necessary to make the required distributions on one or more
classes of senior certificates and/or may be subject to the servicer's (or
another entity's) good faith determination that such advances will be
reimbursable not only from the loan proceeds but also from collections on other
trust assets otherwise distributable on one or more classes of subordinate
certificates. See "Description of Credit Support".
Advances are intended to maintain a regular flow of scheduled interest and
principal payments to holders of the class or classes of certificates entitled
thereto, rather than to guarantee or insure against losses. Unless otherwise
provided in the prospectus supplement, advances of a servicer's (or another
entity's) funds will be reimbursable only out of recoveries on the mortgage
loans (including amounts received under any form of credit support) respecting
which advances were made and, if so provided in the prospectus supplement, out
of any amounts otherwise distributable on one or more classes of subordinate
certificates of such series; provided, however, that any advance will be
reimbursable from any amounts in the related certificate account prior to any
distributions being made on the certificates to the extent that a servicer (or
such other entity) shall determine in good faith that such advance is not
ultimately recoverable from related proceeds on the mortgage loans or, if
applicable, from collections on other trust assets otherwise distributable on
the subordinate certificates.
If advances have been made from excess funds in a certificate account, the
master servicer or other person that advanced such funds will be required to
replace such funds in the certificate account on any future distribution date to
the extent that funds then in the certificate account are insufficient to permit
full distributions to certificateholders on that date. If so specified in the
prospectus supplement, the obligation of a master servicer or other specified
person to make advances may be secured by a cash advance reserve fund or a
surety bond. If applicable, we will provide in the prospectus supplement
information regarding the characteristics of, and the identity of any obligor
on, any such surety bond.
49
If and to the extent so provided in the prospectus supplement, any entity
making advances will be entitled to receive interest on those advances for the
period that such advances are outstanding at the rate specified therein and will
be entitled to pay itself that interest periodically from general collections on
the mortgage assets prior to any payment to certificateholders as described in
the prospectus supplement.
The prospectus supplement for any series of certificates evidencing an
interest in a trust fund that includes CMBS will describe any comparable
advancing obligation of a party to the related pooling and servicing agreement
or of a party to the related CMBS agreement.
REPORTS TO CERTIFICATEHOLDERS
On each distribution date a master servicer or trustee will forward to the
holder of certificates of each class of a series a distribution date statement
accompanying the distribution of principal and/or interest to those holders. As
further provided in the prospectus supplement, the distribution date statement
for each class will set forth to the extent applicable and available:
(i) the amount of such distribution to holders of certificates of such
class applied to reduce the certificate balance thereof;
(ii) the amount of such distribution to holders of certificates of
such class allocable to Accrued Certificate Interest;
(iii) the amount, if any, of such distribution to holders of
certificates of such class allocable to prepayment premiums;
(iv) the amount of servicing compensation received by each servicer and
such other customary information as the master servicer or the
trustee deems necessary or desirable, or that a certificateholder
reasonably requests, to enable certificateholders to prepare their
tax returns;
(v) the aggregate amount of advances included in such distribution and
the aggregate amount of unreimbursed advances at the close of
business on, or as of a specified date shortly prior to, such
distribution date;
(vi) the aggregate principal balance of the related mortgage loans on,
or as of a specified date shortly prior to, such distribution
date;
(vii) the number and aggregate principal balance of any mortgage loans
in respect of which (A) one scheduled payment is delinquent, (B)
two scheduled payments are delinquent, (C) three or more
scheduled payments are delinquent and (D) foreclosure proceedings
have been commenced;
(viii) with respect to any mortgage loan liquidated during the related
prepayment period (as to the current distribution date, generally
the period extending from the prior distribution date to and
including the current distribution date) in connection with a
default on that mortgage loan or because the mortgage loan was
purchased out of the trust fund (other than a payment in full),
(A) the loan number, (B) the aggregate amount of liquidation
proceeds received and (C) the amount of any loss to
certificateholders;
(ix) with respect to any REO Property sold during the related
collection period, (A) the loan number of the related mortgage
loan, (B) the aggregate amount of sales proceeds and (C) the
amount of any loss to certificateholders in respect of the related
mortgage loan;
(x) the certificate balance or notional amount of each class of
certificates (including any class of certificates not offered
hereby) immediately before and immediately after such distribution
date, separately identifying any reduction in the certificate
balance due to the allocation of any losses in respect of the
related mortgage loans;
(xi) the aggregate amount of principal prepayments made on the mortgage
loans during the related prepayment period;
50
(xii) the amount deposited in or withdrawn from any reserve fund on such
distribution date, and the amount remaining on deposit in the
reserve fund as of the close of business on such distribution
date;
(xiii) the amount of any Accrued Certificate Interest due but not paid on
such class of offered certificates at the close of business on
such distribution date; and
(xiv) if such class of offered certificates has a variable pass-through
rate or an adjustable pass-through rate, the pass-through rate
applicable thereto for such distribution date.
In the case of information furnished pursuant to subclauses (i)-(iv) above,
the amounts will be expressed as a dollar amount per minimum denomination of the
relevant class of offered certificates or per a specified portion of such
minimum denomination. The prospectus supplement for each series of offered
certificates will describe any additional information to be included in reports
to the holders of such certificates.
Within a reasonable period of time after the end of each calendar year, the
related master servicer or trustee, as the case may be, will be required to
furnish to each person who at any time during the calendar year was a holder of
an offered certificate a statement containing the information set forth in
subclauses (i)-(iv) above, aggregated for such calendar year or the applicable
portion thereof during which such person was a certificateholder. Such
obligation will be deemed to have been satisfied to the extent that
substantially comparable information is provided pursuant to any requirements of
the Code as are from time to time in force. See, however, "Description of the
Certificates--Book-Entry Registration and Definitive Certificates."
If the trust fund for a series of certificates includes CMBS, the ability
of the related master servicer or trustee, as the case may be, to include in any
distribution date statement information regarding the mortgage loans underlying
such CMBS will depend on the reports received with respect to such CMBS. In such
cases, the prospectus supplement will describe the loan-specific information to
be included in the distribution date statements that will be forwarded to the
holders of the offered certificates of that series in connection with
distributions made to them.
VOTING RIGHTS
The voting rights evidenced by each series of certificates will be
allocated among the respective classes of such series in the manner described in
the prospectus supplement.
Certificateholders will generally have a right to vote only with respect to
required consents to certain amendments to the related pooling and servicing
agreement and as otherwise specified in the prospectus supplement. See
"Description of the Pooling and Servicing Agreements--Amendment." The holders of
specified amounts of certificates of a particular series will have the
collective right to remove the related trustee and also to cause the removal of
the related master servicer in the case of an event of default under the related
pooling and servicing agreement on the part of the master servicer. See
"Description of the Pooling and Servicing Agreements--Events of Default,"
"--Rights upon Event of Default" and "--Resignation and Removal of the Trustee."
TERMINATION
The obligations created by the pooling and servicing agreement for each
series of certificates will terminate upon the payment (or provision for
payment) to certificateholders of that series of all amounts held in the related
certificate account, or otherwise by the related master servicer or trustee or
by a special servicer, and required to be paid to such certificateholders
pursuant to such pooling and servicing agreement following the earlier of (i)
the final payment or other liquidation of the last mortgage asset subject to the
pooling and servicing agreement or the disposition of all property acquired upon
foreclosure of any mortgage loan subject to the pooling and servicing agreement
and (ii) the purchase of all of the assets of the related trust fund by the
party entitled to effect such termination, under the circumstances and in the
manner that will be described in the prospectus supplement. Written notice of
termination of a
51
pooling and servicing agreement will be given to each certificateholder of the
related series, and the final distribution will be made only upon presentation
and surrender of the certificates of such series at the location to be specified
in the notice of termination.
If so specified in the prospectus supplement, a series of certificates will
be subject to optional early termination through the repurchase of the assets in
the related trust fund by a party that will be specified in the prospectus
supplement, under the circumstances and in the manner set forth in the
prospectus supplement. If so provided in the prospectus supplement, upon the
reduction of the certificate balance of a specified class or classes of
certificates by a specified percentage or amount, a party identified in the
prospectus supplement will be authorized or required to solicit bids for the
purchase of all the assets of the related trust fund, or of a sufficient portion
of such assets to retire such class or classes, under the circumstances and in
the manner set forth in the prospectus supplement. In any event, unless
otherwise disclosed in the prospectus supplement, any such repurchase or
purchase shall be at a price or prices that are generally based upon the unpaid
principal balance of, plus accrued interest on, all mortgage loans (other than
mortgage loans secured by REO Properties) then included in a trust fund and the
fair market value of all REO Properties then included in the trust fund, which
may or may not result in full payment of the aggregate certificate balance plus
accrued interest and any undistributed shortfall in interest for the then
outstanding certificates. Any sale of trust fund assets will be without recourse
to the trust and/or certificateholders, provided, however, that there can be no
assurance that in all events a court would accept such a contractual
stipulation.
BOOK-ENTRY REGISTRATION AND DEFINITIVE CERTIFICATES
If so provided in the prospectus supplement, one or more classes of the
offered certificates of any series will be offered in book-entry format through
the facilities of DTC, and each such class will be represented by one or more
global certificates registered in the name of DTC or its nominee.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking corporation" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC holds securities that its participating organizations deposit
with DTC. DTC also facilitates the settlement among participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book entry changes in their accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
participants that maintain accounts with DTC include securities brokers and
dealers, banks, trust companies and clearing corporations and may include
certain other organizations. DTC is owned by a number of its direct participants
and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and
the National Association of Securities Dealers, Inc. Access to the DTC system
also is available to indirect participants in the DTC system such as securities
brokers and dealers, banks and trust companies that clear through or maintain a
custodial relationship with a direct participant in the DTC system, either
directly or indirectly. The rules applicable to DTC and its participants are on
file with the Securities and Exchange Commission.
Purchases of book-entry certificates under the DTC system must be made by
or through direct participants in the DTC system, which will receive a credit
for the book-entry certificates on DTC's records. A certificate owner's
ownership interest as an actual purchaser of a book-entry certificate will in
turn be recorded on the records of direct participants and indirect
participants. Certificate owners will not receive written confirmation from DTC
of their purchases, but certificate owners are expected to receive written
confirmations providing details of such transactions, as well as periodic
statements of their holdings, from the direct participant or indirect
participant through which each certificate owner entered into the transaction.
Transfers of ownership interest in the book-entry certificates will be
accomplished by entries made on the books of participants acting on behalf of
certificate owners. Certificate owners will not receive certificates
representing their ownership interests in the book-entry certificates, except in
the event that use of the book-entry system for the book-entry certificates of
any series is discontinued as described below.
52
DTC will not know the identity of actual certificate owners of the
book-entry certificates; DTC's records reflect only the identity of the direct
participants in the DTC system to whose accounts such certificates are credited.
The participants will remain responsible for keeping account of their holdings
on behalf of their customers. Notices and other communications conveyed by DTC
to direct participants in the DTC system, by direct participants to indirect
participants, and by direct participants and indirect participants to
certificate owners will be governed by arrangements among them, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Distributions on the book-entry certificates will be made to DTC. DTC's
practice is to credit direct participants' accounts on the related distribution
date in accordance with their respective holdings shown on DTC's records unless
DTC has reason to believe that it will not receive payment on such date.
Disbursement of such distributions by participants to certificate owners will be
governed by standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of each such participant (and not
of DTC, the depositor or any trustee or master servicer), subject to any
statutory or regulatory requirements as may be in effect from time to time.
Under a book-entry system, certificate owners may receive payments after the
related distribution date.
As may be provided in the prospectus supplement, the only
"certificateholder" (as such term is used in the related pooling and servicing
agreement) of a book-entry certificate will be the nominee of DTC, and the
certificate owners will not be recognized as certificateholders under the
pooling and servicing agreement. Certificate owners will be permitted to
exercise the rights of certificateholders under the related pooling and
servicing agreement only indirectly through the participants who in turn will
exercise their rights through DTC. The depositor is informed that DTC will take
action permitted to be taken by a certificateholder under a pooling and
servicing agreement only at the direction of one or more participants to whose
account with DTC interests in the book-entry certificates are credited.
Because DTC can act only on behalf of direct participants in the DTC
system, who in turn act on behalf of indirect participants and certain
certificate owners, the ability of a certificate owner to pledge its interest in
book-entry certificates to persons or entities that do not participate in the
DTC system, or otherwise take actions in respect of its interest in book-entry
certificates, may be limited due to the lack of a physical certificate
evidencing such interest.
As may be specified in the prospectus supplement, certificates initially
issued in book-entry form will be issued as definitive certificates to
certificate owners or their nominees, rather than to DTC or its nominee, only if
(i) the depositor advises the trustee in writing that DTC is no longer willing
or able to properly discharge its responsibilities as depository with respect to
such certificates and the depositor is unable to locate a qualified successor or
(ii) the depositor, at its option, elects to terminate the book-entry system
through DTC with respect to such certificates. Upon the occurrence of either of
the events described in the preceding sentence, DTC will be required to notify
all participants of the availability through DTC of definitive certificates.
Upon surrender by DTC of the certificate or certificates representing a class of
book-entry certificates, together with instructions for registration, the
trustee or other designated party will be required to issue to the certificate
owners identified in such instructions the definitive certificates to which they
are entitled, and thereafter the holders of such definitive certificates will be
recognized as certificateholders under the related pooling and servicing
agreement.
DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS
GENERAL
The certificates of each series will be issued pursuant to a pooling and
servicing agreement or other agreement specified in the prospectus supplement.
In general, the parties to a pooling and servicing agreement will include the
depositor, the trustee, the master servicer and, in some cases, a special
servicer appointed as of the date of the pooling and servicing agreement.
However, a pooling and servicing agreement that relates to a trust fund that
consists solely of CMBS may not include a master servicer or
53
other servicer as a party. All parties to each pooling and servicing agreement
under which certificates of a series are issued will be identified in the
prospectus supplement.
A form of a pooling and servicing agreement has been filed as an exhibit to
the registration statement of which this prospectus is a part. However, the
provisions of each pooling and servicing agreement will vary depending upon the
nature of the certificates to be issued thereunder and the nature of the related
trust fund. The following summaries describe certain provisions that may appear
in a pooling and servicing agreement under which certificates that evidence
interests in mortgage loans will be issued. The prospectus supplement for a
series of certificates will describe any provision of the related pooling and
servicing agreement that materially differs from the description thereof
contained in this prospectus and, if the related trust fund includes CMBS, will
summarize all of the material provisions of the related pooling and servicing
agreement. The summaries in this prospectus do not purport to be complete and
are subject to, and are qualified in their entirety by reference to, all of the
provisions of the pooling and servicing agreement for each series of
certificates and the description of such provisions in the prospectus
supplement. As used in this prospectus with respect to any series, the term
"certificate" refers to all of the certificates of that series, whether or not
offered hereby and by the prospectus supplement, unless the context otherwise
requires.
ASSIGNMENT OF MORTGAGE ASSETS; REPURCHASES
As set forth in the prospectus supplement, generally at the time of
issuance of any series of certificates, the depositor will assign (or cause to
be assigned) to the designated trustee the mortgage loans to be included in the
related trust fund, together with, unless otherwise specified in the prospectus
supplement, all principal and interest to be received on or with respect to such
mortgage loans after the Cut-Off Date, other than principal and interest due on
or before the Cut-Off Date. The trustee will, concurrently with such assignment,
deliver the certificates to or at the direction of the depositor in exchange for
the mortgage loans and the other assets to be included in the trust fund for
such series. Each mortgage loan will be identified in a schedule appearing as an
exhibit to the related pooling and servicing agreement. Such schedule generally
will include detailed information that pertains to each mortgage loan included
in the related trust fund, which information will typically include the address
of the related mortgaged property and type of such property; the mortgage
interest rate and, if applicable, the applicable index, gross margin, adjustment
date and any rate cap information; the original and remaining term to maturity;
the original amortization term; the original and outstanding principal balance;
and the Loan-to-Value Ratio and Debt Service Coverage Ratio as of the date
indicated.
With respect to each mortgage loan to be included in a trust fund, the
depositor will deliver (or cause to be delivered) to the related trustee (or to
a custodian appointed by the trustee) certain loan documents which will include
the original mortgage note (or lost note affidavit) endorsed, without recourse,
to the order of the trustee, the original mortgage (or a certified copy thereof)
with evidence of recording indicated thereon and an assignment of the mortgage
to the trustee in recordable form. The related pooling and servicing agreement
will require that the depositor or other party thereto promptly cause each such
assignment of mortgage to be recorded in the appropriate public office for real
property records.
The related trustee (or the custodian appointed by the trustee) will be
required to review the mortgage loan documents within a specified period of days
after receipt thereof, and the trustee (or the custodian) will hold such
documents in trust for the benefit of the certificateholders of the related
series. Unless otherwise specified in the prospectus supplement, if any document
is found to be missing or defective, in either case such that interests of the
certificateholders are materially and adversely affected, the trustee (or such
custodian) will be required to notify the master servicer and the depositor, and
the master servicer will be required to notify the relevant seller of the
mortgage asset. In that case, and if the mortgage asset seller cannot deliver
the document or cure the defect within a specified number of days after receipt
of such notice, then unless otherwise specified in the prospectus supplement,
the mortgage asset seller will be obligated to replace the related mortgage loan
or repurchase it from the trustee at a price that will be specified in the
prospectus supplement.
54
If so provided in the prospectus supplement, the depositor will, as to some
or all of the mortgage loans, assign or cause to be assigned to the trustee the
related lease assignments. In certain cases, the trustee, or master servicer, as
applicable, may collect all moneys under the related leases and distribute
amounts, if any, required under the leases for the payment of maintenance,
insurance and taxes, to the extent specified in the related leases. The trustee,
or if so specified in the prospectus supplement, the master servicer, as agent
for the trustee, may hold the leases in trust for the benefit of the
certificateholders.
With respect to each CMBS in certificate form, the depositor will deliver
or cause to be delivered to the trustee (or the custodian) the original
certificate or other definitive evidence of such CMBS together with bond power
or other instruments, certifications or documents required to transfer fully
such CMBS to the trustee for the benefit of the certificateholders. With respect
to each CMBS in uncertificated or book-entry form or held through a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, the
depositor and the trustee will cause such CMBS to be registered directly or on
the books of such clearing corporation or of a financial intermediary in the
name of the trustee for the benefit of the certificateholders. Unless otherwise
provided in the prospectus supplement, the related pooling and servicing
agreement will require that either the depositor or the trustee promptly cause
any CMBS in certificated form not registered in the name of the trustee to be
reregistered, with the applicable persons, in the name of the trustee.
REPRESENTATIONS AND WARRANTIES; REPURCHASES
The depositor will, with respect to each mortgage loan in the related trust
fund, make or assign certain representations and warranties made by the
warranting party, covering, by way of example: (i) the accuracy of the
information set forth for such mortgage loan on the schedule of mortgage loans
appearing as an exhibit to the related pooling and servicing agreement; (ii) the
enforceability of the related mortgage note and mortgage and the existence of
title insurance insuring the lien priority of the related mortgage; (iii) the
warranting party's title to the mortgage loan and the authority of the
warranting party to sell the mortgage loan; and (iv) the payment status of the
mortgage loan. Each warranting party will be identified in the prospectus
supplement.
Unless otherwise provided in the prospectus supplement, each pooling and
servicing agreement will provide that the master servicer and/or trustee will be
required to notify promptly any warranting party of any breach of any
representation or warranty made by it in respect of a mortgage loan that
materially and adversely affects the interests of the related
certificateholders. If such warranting party cannot cure such breach within a
specified period following the date on which it was notified of such breach,
then, unless otherwise provided in the prospectus supplement, it will be
obligated to repurchase such mortgage loan from the trustee within a specified
period at a price that will be specified in the prospectus supplement. If so
provided in the prospectus supplement for a series of certificates, a warranting
party, in lieu of repurchasing a mortgage loan as to which a breach has
occurred, will have the option, exercisable upon certain conditions and/or
within a specified period after initial issuance of such series of certificates,
to replace such mortgage loan with one or more other mortgage loans, in
accordance with standards that will be described in the prospectus supplement.
This repurchase or substitution obligation may constitute the sole remedy
available to holders of certificates of any series for a breach of
representation and warranty by a warranting party. Moreover, neither the
depositor (unless it is the warranting party) nor any entity acting solely in
its capacity as the master servicer will be obligated to purchase or replace a
mortgage loan if a warranting party defaults on its obligation to do so.
The dates as of which representations and warranties have been made by a
warranting party will be specified in the prospectus supplement. In some cases,
such representations and warranties will have been made as of a date prior to
the date upon which the related series of certificates is issued, and thus may
not address events that may occur following the date as of which they were made.
However, the depositor will not include any mortgage loan in the trust fund for
any series of certificates if anything has come to the depositor's attention
that would cause it to believe that the representations and warranties made in
respect of such mortgage loan will not be accurate in all material respects as
of such date of issuance.
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CERTIFICATE ACCOUNT
General. The master servicer and/or the trustee will, as to each trust
fund, establish and maintain or cause to be established and maintained
certificate accounts for the collection of payments on the related mortgage
loans, which will be established so as to comply with the standards of each
rating agency that has rated any one or more classes of certificates of the
related series. As described in the prospectus supplement, a certificate account
may be maintained either as an interest-bearing or a non-interest-bearing
account, and the funds held therein may be held as cash or invested in permitted
investments, such as United States government securities and other investment
grade obligations specified in the related pooling and servicing agreement. Any
interest or other income earned on funds in the certificate account will be paid
to the related master servicer or trustee as additional compensation. If
permitted by such rating agency or agencies and so specified in the prospectus
supplement, a certificate account may contain funds relating to more than one
series of mortgage pass-through certificates and may contain other funds
representing payments on mortgage loans owned by the related master servicer or
serviced by it on behalf of others.
Deposits. Unless otherwise provided in the related pooling and servicing
agreement and described in the prospectus supplement, the related master
servicer, trustee or special servicer will be required to deposit or cause to be
deposited in the certificate account for each trust fund within a certain period
following receipt (in the case of collections and payments), the following
payments and collections received, or advances made, by the master servicer, the
trustee or any special servicer subsequent to the Cut-Off Date (other than
payments due on or before the Cut-Off Date):
(i) all payments on account of principal, including principal
prepayments, on the mortgage loans;
(ii) all payments on account of interest on the mortgage loans,
including any default interest collected, in each case net of any
portion thereof retained by the master servicer, any special
servicer or sub-servicer as its servicing compensation or as
compensation to the trustee;
(iii) all insurance proceeds received under any hazard, title or other
insurance policy that provides coverage with respect to a
mortgaged property or the related mortgage loan (other than
proceeds applied to the restoration of the property or released
to the related borrower in accordance with the customary
servicing practices of the master servicer (or, if applicable, a
special servicer) and/or the terms and conditions of the related
mortgage and all other liquidation proceeds received and retained
in connection with the liquidation of defaulted mortgage loans or
property acquired in respect thereof, by foreclosure or
otherwise, together with the Net Operating Income (less
reasonable reserves for future expenses) derived from the
operation of any mortgaged properties acquired by the trust fund
through foreclosure or otherwise;
(iv) any amounts paid under any instrument or drawn from any fund that
constitutes credit support for the related series of certificates
as described under "Description of Credit Support;"
(v) any advances made as described under "Description of the
Certificate--Advances in Respect of Delinquencies;"
(vi) any amounts paid under any cash flow agreement, as described under
"Description of the Trust Funds--Cash Flow Agreements;"
(vii) all liquidation proceeds resulting from the purchase of any
mortgage loan, or property acquired in respect thereof, by the
depositor, any mortgage asset seller or any other specified
person as described under "--Assignment of Mortgage Assets;
Repurchases" and "--Representations and Warranties; Repurchases,"
all liquidation proceeds resulting from the purchase of any
defaulted mortgage loan as described under "--Realization Upon
Defaulted
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Mortgage Loans," and all liquidation proceeds resulting from any
mortgage asset purchased as described under "Description of the
Certificates--Termination;"
(viii) any amounts paid by the master servicer to cover prepayment
interest shortfalls arising out of the prepayment of mortgage
loans as described under "--Servicing Compensation and Payment of
Expenses;"
(ix) to the extent that any such item does not constitute additional
servicing compensation to the master servicer or a special
servicer, any payments on account of modification or assumption
fees, late payment charges, prepayment premiums or lenders' equity
participations on the mortgage loans;
(x) all payments required to be deposited in the certificate account
with respect to any deductible clause in any blanket insurance
policy described under "--Hazard Insurance Policies;"
(xi) any amount required to be deposited by the master servicer or the
trustee in connection with losses realized on investments for the
benefit of the master servicer or the trustee, as the case may be,
of funds held in the certificate account; and
(xii) any other amounts required to be deposited in the certificate
account as provided in the related pooling and servicing agreement
and described in the prospectus supplement.
Withdrawals. Unless otherwise provided in the related pooling and
servicing agreement and described in the prospectus supplement, the master
servicer, trustee or special servicer may make withdrawals from the certificate
account for each trust fund for any of the following purposes:
(i) to make distributions to the certificateholders on each
distribution date;
(ii) to reimburse the master servicer or any other specified person
for unreimbursed amounts advanced by it as described under
"Description of the Certificates--Advances in Respect of
Delinquencies," such reimbursement to be made out of amounts
received which were identified and applied by the master servicer
as late collections of interest (net of related servicing fees)
on and principal of the particular mortgage loans with respect to
which the advances were made or out of amounts drawn under any
form of credit support with respect to such mortgage loans;
(iii) to reimburse the master servicer or a special servicer for unpaid
servicing fees earned by it and certain unreimbursed servicing
expenses incurred by it with respect to mortgage loans in the
trust fund and properties acquired in respect thereof, such
reimbursement to be made out of amounts that represent
liquidation proceeds and insurance proceeds collected on the
particular mortgage loans and properties, and net income
collected on the particular properties, with respect to which
such fees were earned or such expenses were incurred or out of
amounts drawn under any form of credit support with respect to
such mortgage loans and properties;
(iv) to reimburse the master servicer or any other specified person for
any advances described in clause (ii) above made by it, any
servicing expenses referred to in clause (iii) above incurred by
it and any servicing fees earned by it, which, in the good faith
judgment of the master servicer or such other person, will not be
recoverable from the amounts described in clauses (ii) and (iii),
respectively, such reimbursement to be made from amounts collected
on other mortgage loans in the related trust fund or, if and to
the extent so provided by the related pooling and servicing
agreement and described in the prospectus supplement, only from
that portion of amounts collected on such other mortgage loans
that is otherwise distributable on one or more classes of
subordinate certificates of the related series;
(v) if and to the extent described in the prospectus supplement, to
pay the master servicer, a special servicer or another specified
entity (including a provider of credit support) interest
57
accrued on the advances described in clause (ii) above made by it
and the servicing expenses described in clause (iii) above
incurred by it while such remain outstanding and unreimbursed;
(vi) to pay for costs and expenses incurred by the trust fund for
environmental site assessments performed with respect to mortgaged
properties that constitute security for defaulted mortgage loans,
and for any containment, clean-up or remediation of hazardous
wastes and materials present on such mortgaged properties, as
described under "--Realization Upon Defaulted Mortgage Loans;"
(vii) to reimburse the master servicer, the depositor, or any of their
respective directors, officers, employees and agents, as the case
may be, for certain expenses, costs and liabilities incurred
thereby, as and to the extent described under "--Certain Matters
Regarding the Master Servicer and the Depositor;"
(viii) if and to the extent described in the prospectus supplement, to
pay the fees of the trustee;
(ix) to reimburse the trustee or any of its directors, officers,
employees and agents, as the case may be, for certain expenses,
costs and liabilities incurred thereby, as and to the extent
described under "--Certain Matters Regarding the Trustee;"
(x) to pay the master servicer or the trustee, as additional
compensation, interest and investment income earned in respect of
amounts held in the certificate account and, to the extent
described in the prospectus supplement, prepayment interest
excesses collected from borrowers in connection with prepayments
of mortgage loans and late charges and default interest collected
from borrowers;
(xi) to pay (generally from related income) for costs incurred in
connection with the operation, management and maintenance of any
mortgaged property acquired by the trust fund by foreclosure or
otherwise;
(xii) if one or more elections have been made to treat the trust fund or
designated portions thereof as a REMIC, to pay any federal, state
or local taxes imposed on the trust fund or its assets or
transactions, as and to the extent described under "Material
Federal Income Tax Consequences--Taxation of Owners of REMIC
Residual Certificates--Prohibited Transactions Tax and Other
Taxes;"
(xiii) to pay for the cost of an independent appraiser or other expert
in real estate matters retained to determine a fair sale price
for a defaulted mortgage loan or a property acquired in respect
thereof in connection with the liquidation of such mortgage loan
or property;
(xiv) to pay for the cost of various opinions of counsel obtained
pursuant to the related pooling and servicing agreement for the
benefit of certificateholders;
(xv) to pay for the cost of recording the pooling and servicing
agreement if recorded in accordance with the pooling and servicing
agreement;
(xvi) to make any other withdrawals permitted by the related pooling and
servicing agreement and described in the prospectus supplement;
and
(xvii) to clear and terminate the certificate account upon the
termination of the trust fund.
COLLECTION AND OTHER SERVICING PROCEDURES
Master Servicer. The master servicer for any mortgage pool, directly or
through sub-servicers, will be required to make reasonable efforts to collect
all scheduled mortgage loan payments and will be required to follow such
collection procedures as it would follow with respect to mortgage loans that are
comparable to such mortgage loans and held for its own account, provided such
procedures are consistent with (i) the terms of the related pooling and
servicing agreement and any related instrument of credit support included
58
in the related trust fund, (ii) applicable law and (iii) the servicing standard
specified in the pooling and servicing agreement.
The master servicer will also be required to perform other customary
functions of a servicer of comparable loans, including maintaining escrow or
impound accounts for payment of taxes, insurance premiums and similar items, or
otherwise monitoring the timely payment of those items; attempting to collect
delinquent payments; supervising foreclosures; conducting property inspections
on a periodic or other basis; managing REO Properties; and maintaining servicing
records relating to the mortgage loans. Generally, the master servicer will be
responsible for filing and settling claims in respect of particular mortgage
loans under any applicable instrument of credit support. See "Description of
Credit Support."
A master servicer may agree to modify, waive or amend any term of any
mortgage loan serviced by it in a manner consistent with the servicing standard
specified in the pooling and servicing agreement; provided that the
modification, waiver or amendment will not (i) affect the amount or timing of
any scheduled payments of principal or interest on the mortgage loan or (ii) in
the judgment of the master servicer, materially impair the security for the
mortgage loan or reduce the likelihood of timely payment of amounts due thereon.
A master servicer also may agree to any other modification, waiver or amendment
if, in its judgment (x) a material default on the mortgage loan has occurred or
a payment default is imminent and (y) such modification, waiver or amendment is
reasonably likely to produce a greater recovery with respect to the mortgage
loan on a present value basis than would liquidation.
Sub-Servicers. A master servicer may delegate its servicing obligations in
respect of the mortgage loans serviced by it to one or more third-party
sub-servicers, but the master servicer will remain liable for such obligations
under the related pooling and servicing agreement unless otherwise provided in
the prospectus supplement. Unless otherwise provided in the prospectus
supplement, each sub-servicing agreement between a master servicer and a
sub-servicer must provide that, if for any reason the master servicer is no
longer acting in such capacity, the trustee or any successor master servicer may
assume the master servicer's rights and obligations under such sub-servicing
agreement.
Generally, the master servicer will be solely liable for all fees owed by
it to any sub-servicer, irrespective of whether the master servicer's
compensation pursuant to the related pooling and servicing agreement is
sufficient to pay such fees. Each sub-servicer will be reimbursed by the master
servicer for certain expenditures which it makes, generally to the same extent
the master servicer would be reimbursed under a pooling and servicing agreement.
See "--Certificate Account" and "--Servicing Compensation and Payment of
Expenses."
Special Servicers. If and to the extent specified in the prospectus
supplement, a special servicer may be a party to the related pooling and
servicing agreement or may be appointed by the master servicer or another
specified party to perform certain specified duties (for example, the servicing
of defaulted mortgage loans) in respect of the servicing of the related mortgage
loans. The special servicer under a pooling and servicing agreement may be an
affiliate of the depositor and may have other normal business relationships with
the depositor or the depositor's affiliates. The master servicer will be liable
for the performance of a special servicer only if, and to the extent, set forth
in the prospectus supplement.
Each pooling and servicing agreement may provide that neither the special
servicer nor any director, officer, employee or agent of the special servicer
will be under any liability to the related trust fund or certificateholders for
any action taken, or not taken, in good faith pursuant to the pooling and
servicing agreement or for errors in judgment; provided, however, that neither
the special servicer nor any such person will be protected against any breach of
a representation, warranty or covenant made in such pooling and servicing
agreement, or against any expense or liability that such person is specifically
required to bear pursuant to the terms of such pooling and servicing agreement,
or against any liability that would otherwise be imposed by reason of
misfeasance, bad faith or negligence in the performance of obligations or duties
thereunder.
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REALIZATION UPON DEFAULTED MORTGAGE LOANS
A borrower's failure to make required mortgage loan payments may mean that
operating income is insufficient to service the mortgage debt, or may reflect
the diversion of that income from the servicing of the mortgage debt. In
addition, a borrower that is unable to make mortgage loan payments may also be
unable to make timely payment of taxes and to otherwise maintain and insure the
related mortgaged property. In general, the related master servicer will be
required to monitor any mortgage loan that is in default, evaluate whether the
causes of the default can be corrected over a reasonable period without
significant impairment of the value of the related mortgaged property, initiate
corrective action in cooperation with the borrower if cure is likely, inspect
the related mortgaged property and take such other actions as are consistent
with the servicing standard specified in the pooling and servicing agreement. A
significant period of time may elapse before the master servicer is able to
assess the success of any such corrective action or the need for additional
initiatives.
The time within which the master servicer can make the initial
determination of appropriate action, evaluate the success of corrective action,
develop additional initiatives, institute foreclosure proceedings and actually
foreclose (or accept a deed to a mortgaged property in lieu of foreclosure) on
behalf of the certificateholders may vary considerably depending on the
particular mortgage loan, the mortgaged property, the borrower, the presence of
an acceptable party to assume the mortgage loan and the laws of the jurisdiction
in which the mortgaged property is located. If a borrower files a bankruptcy
petition, the master servicer may not be permitted to accelerate the maturity of
the related mortgage loan or to foreclose on the mortgaged property for a
considerable period of time. See "Certain Legal Aspects of Mortgage Loans and
Leases."
A pooling and servicing agreement may grant to the master servicer, a
special servicer, a provider of credit support and/or the holder or holders of
certain classes of certificates of the related series a right of first refusal
to purchase from the trust fund, at a predetermined purchase price (which, if
insufficient to fully fund the entitlements of certificateholders to principal
and interest thereon, will be specified in the prospectus supplement), any
mortgage loan as to which a specified number of scheduled payments are
delinquent. In addition, the prospectus supplement may specify other methods for
the sale or disposal of defaulted mortgage loans pursuant to the terms of the
related pooling and servicing agreement.
If a default on a mortgage loan has occurred, the master servicer, on
behalf of the trustee, may at any time institute foreclosure proceedings,
exercise any power of sale contained in the related mortgage, obtain a deed in
lieu of foreclosure, or otherwise acquire title to the related mortgaged
property, by operation of law or otherwise, if such action is consistent with
the servicing standard specified in the pooling and servicing agreement. Unless
otherwise specified in the prospectus supplement, the master servicer may not,
however, acquire title to any mortgaged property or take any other action that
would cause the trustee, for the benefit of certificateholders of the related
series, or any other specified person to be considered to hold title to, to be a
"mortgagee-in-possession" of, or to be an "owner" or an "operator" of, such
mortgaged property within the meaning of certain federal environmental laws,
unless the master servicer has previously determined, based on a report prepared
by a person who regularly conducts environmental audits (which report will be an
expense of the trust fund), that:
(i) either the mortgaged property is in compliance with applicable
environmental laws and regulations or, if not, that taking such
actions as are necessary to bring the mortgaged property into
compliance therewith is reasonably likely to produce a greater
recovery on a present value basis than not taking such actions;
and
(ii) either there are no circumstances or conditions present at the
mortgaged property relating to the use, management or disposal of
hazardous materials for which investigation, testing, monitoring,
containment, cleanup or remediation could be required under any
applicable environmental laws and regulations or, if such
circumstances or conditions are present for which any such action
could reasonably be expected to be required, taking such actions
with respect to the mortgaged property is reasonably likely to
produce a greater recovery on a
60
present value basis than not taking such actions. See "Certain
Legal Aspects of Mortgage Loans and Leases--Environmental
Considerations."
If title to any mortgaged property is acquired by a trust fund as to which
a REMIC election has been made, the master servicer, on behalf of the trust
fund, will be required to sell the mortgaged property by the end of the third
calendar year following the year of acquisition or unless (i) the Internal
Revenue Service grants an extension of time to sell such property or (ii) the
trustee receives an opinion of independent counsel to the effect that the
holding of the property by the trust fund for more than three years after the
end of the calendar year in which it was acquired will not result in the
imposition of a tax on the trust fund or cause the trust fund to fail to qualify
as a REMIC under the Code at any time that any certificate is outstanding.
Subject to the foregoing, the master servicer will generally be required to
solicit bids for any mortgaged property so acquired in such a manner as will be
reasonably likely to realize a fair price for such property. If the trust fund
acquires title to any mortgaged property, the master servicer, on behalf of the
trust fund, may retain an independent contractor to manage and operate such
property. The retention of an independent contractor, however, will not relieve
the master servicer of its obligation to manage such mortgaged property in a
manner consistent with the servicing standard specified in the pooling and
servicing agreement.
If liquidation proceeds collected with respect to a defaulted mortgage loan
are less than the outstanding principal balance of the defaulted mortgage loan
plus interest accrued thereon plus the aggregate amount of reimbursable expenses
incurred by the master servicer with respect to such mortgage loan, the trust
fund will realize a loss in the amount of such difference. The master servicer
will be entitled to reimburse itself from the liquidation proceeds recovered on
any defaulted mortgage loan (prior to the distribution of such liquidation
proceeds to certificateholders), amounts that represent unpaid servicing
compensation in respect of the mortgage loan, unreimbursed servicing expenses
incurred with respect to the mortgage loan and any unreimbursed advances of
delinquent payments made with respect to the mortgage loan.
HAZARD INSURANCE POLICIES
Each pooling and servicing agreement may require the related master
servicer to cause each mortgage loan borrower to maintain a hazard insurance
policy that provides for such coverage as is required under the related mortgage
or, if the mortgage permits the holder thereof to dictate to the borrower the
insurance coverage to be maintained on the related mortgaged property, such
coverage as is consistent with the requirements of the servicing standard
specified in the pooling and servicing agreement. Such coverage generally will
be in an amount equal to the lesser of the principal balance owing on such
mortgage loan and the replacement cost of the mortgaged property, but in either
case not less than the amount necessary to avoid the application of any
co-insurance clause contained in the hazard insurance policy. The ability of the
master servicer to assure that hazard insurance proceeds are appropriately
applied may be dependent upon its being named as an additional insured under any
hazard insurance policy and under any other insurance policy referred to below,
or upon the extent to which information concerning covered losses is furnished
by borrowers. All amounts collected by the master servicer under any such policy
(except for amounts to be applied to the restoration or repair of the mortgaged
property or released to the borrower in accordance with the master servicer's
normal servicing procedures and/or to the terms and conditions of the related
mortgage and mortgage note) will be deposited in the related certificate
account. The pooling and servicing agreement may provide that the master
servicer may satisfy its obligation to cause each borrower to maintain such a
hazard insurance policy by maintaining a blanket policy insuring against hazard
losses on all of the mortgage loans in the related trust fund. If such blanket
policy contains a deductible clause, the master servicer will be required, in
the event of a casualty covered by such blanket policy, to deposit in the
related certificate account all sums that would have been deposited therein but
for such deductible clause.
In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements of the property by fire,
lightning, explosion, smoke, windstorm and hail, riot, strike and civil
commotion, subject to the conditions and exclusions specified in each policy.
Although
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the policies covering the mortgaged properties will be underwritten by different
insurers under different state laws in accordance with different applicable
state forms, and therefore will not contain identical terms and conditions, most
such policies typically do not cover any physical damage resulting from war,
revolution, governmental actions, terrorism, floods and other water-related
causes, earth movement (including earthquakes, landslides and mudflows), wet or
dry rot, vermin, domestic animals and certain other kinds of risks.
The hazard insurance policies covering the mortgaged properties will
typically contain co-insurance clauses that in effect require an insured at all
times to carry insurance of a specified percentage (generally 80% to 90%) of the
full replacement value of the improvements on the property in order to recover
the full amount of any partial loss. If the insured's coverage falls below this
specified percentage, such clauses generally provide that the insurer's
liability in the event of partial loss does not exceed the lesser of (i) the
replacement cost of the improvements less physical depreciation and (ii) such
proportion of the loss as the amount of insurance carried bears to the specified
percentage of the full replacement cost of such improvements.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS
Certain of the mortgage loans may contain a due-on-sale clause that
entitles the lender to accelerate payment of the mortgage loan upon any sale or
other transfer of the related mortgaged property made without the lender's
consent. Certain of the mortgage loans may also contain a due-on-encumbrance
clause that entitles the lender to accelerate the maturity of the mortgage loan
upon the creation of any other lien or encumbrance upon the mortgaged property.
The master servicer will determine whether to exercise any right the trustee may
have under any such provision in a manner consistent with the servicing standard
specified in the pooling and servicing agreement. Unless otherwise specified in
the prospectus supplement, the master servicer will be entitled to retain as
additional servicing compensation any fee collected in connection with the
permitted transfer of a mortgaged property. See "Certain Legal Aspects of
Mortgage Loans and Leases--Due-on-Sale and Due-on-Encumbrance."
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Generally, a master servicer's primary servicing compensation with respect
to a series of certificates will come from the periodic payment to it of a
portion of the interest payments on each mortgage loan in the related trust
fund. Since that compensation is generally based on a percentage of the
principal balance of each such mortgage loan outstanding from time to time, it
will decrease in accordance with the amortization of the mortgage loans. The
prospectus supplement with respect to a series of certificates may provide that,
as additional compensation, the master servicer may retain all or a portion of
late payment charges, prepayment premiums, modification fees and other fees
collected from borrowers and any interest or other income that may be earned on
funds held in the certificate account. Any sub-servicer will receive a portion
of the master servicer's compensation as its sub-servicing compensation.
In addition to amounts payable to any sub-servicer, a master servicer may
be required, to the extent provided in the prospectus supplement, to pay from
amounts that represent its servicing compensation certain expenses incurred in
connection with the administration of the related trust fund, including, without
limitation, payment of the fees and disbursements of independent accountants and
payment of expenses incurred in connection with distributions and reports to
certificateholders. Certain other expenses, including certain expenses related
to mortgage loan defaults and liquidations and, to the extent so provided in the
prospectus supplement, interest on such expenses at the rate specified therein,
and the fees of the trustee and any special servicer, may be required to be
borne by the trust fund.
If and to the extent provided in the prospectus supplement, the master
servicer may be required to apply a portion of the servicing compensation
otherwise payable to it in respect of any period to prepayment interest
shortfalls.
See "Yield Considerations--Shortfalls in Collections of Interest Resulting
from Prepayments."
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EVIDENCE AS TO COMPLIANCE
Each pooling and servicing agreement may require that, on or before a
specified date in each year, the master servicer cause a firm of independent
public accountants to furnish a statement to the trustee to the effect that,
based on an examination by such firm conducted substantially in compliance with
the Uniform Single Audit Program for Mortgage Bankers, the servicing by or on
behalf of the master servicer of mortgage loans under pooling and servicing
agreements substantially similar to each other (which may include the related
pooling and servicing agreement) was conducted through the preceding calendar
year or other specified twelve-month period in compliance with the terms of such
agreements except for any significant exceptions or errors in records that, in
the opinion of such firm, paragraph 4 of the Uniform Single Audit Program for
Mortgage Bankers requires it to report. Each pooling and servicing agreement
will also provide for delivery to the trustee, on or before a specified date in
each year, of a statement signed by one or more officers of the master servicer
to the effect that the master servicer has fulfilled its material obligations
under the pooling and servicing agreement throughout the preceding calendar year
or other specified twelve-month period.
Copies of the annual accountants' statement and the statement of officers
of a master servicer will be made available to certificateholders upon written
request to the master servicer.
CERTAIN MATTERS REGARDING THE MASTER SERVICER AND THE DEPOSITOR
The master servicer under a pooling and servicing agreement may be an
affiliate of the depositor and may have other normal business relationships with
the depositor or the depositor's affiliates. The related pooling and servicing
agreement may permit the master servicer to resign from its obligations
thereunder upon a determination that such obligations are no longer permissible
under applicable law or are in material conflict by reason of applicable law
with any other activities carried on by it at the date of the pooling and
servicing agreement. Unless applicable law requires the master servicer's
resignation to be effective immediately, no such resignation will become
effective until the trustee or a successor servicer has assumed the master
servicer's obligations and duties under the pooling and servicing agreement. The
related pooling and servicing agreement may also provide that the master
servicer may resign at any other time provided that (i) a willing successor
master servicer has been found, (ii) each of the rating agencies that has rated
any one or more classes of certificates of the related series confirms in
writing that the successor's appointment will not result in a withdrawal,
qualification or downgrade of any rating or ratings assigned to any such class
of certificates, (iii) the resigning party pays all costs and expenses in
connection with such transfer, and (iv) the successor accepts appointment prior
to the effectiveness of such resignation. Unless otherwise specified in the
prospectus supplement, the master servicer will also be required to maintain a
fidelity bond and errors and omissions policy that provides coverage against
losses that may be sustained as a result of an officer's or employee's
misappropriation of funds, errors and omissions or negligence, subject to
certain limitations as to amount of coverage, deductible amounts, conditions,
exclusions and exceptions.
Each pooling and servicing agreement may further provide that none of the
master servicer, the depositor and any director, officer, employee or agent of
either of them will be under any liability to the related trust fund or
certificateholders for any action taken, or not taken, in good faith pursuant to
the pooling and servicing agreement or for errors in judgment; provided,
however, that none of the master servicer, the depositor and any such person
will be protected against any breach of a representation, warranty or covenant
made in such pooling and servicing agreement, or against any expense or
liability that such person is specifically required to bear pursuant to the
terms of such pooling and servicing agreement, or against any liability that
would otherwise be imposed by reason of misfeasance, bad faith or negligence in
the performance of obligations or duties thereunder. Unless otherwise specified
in the prospectus supplement, each pooling and servicing agreement will further
provide that the master servicer, the depositor and any director, officer,
employee or agent of either of them will be entitled to indemnification by the
related trust fund against any loss, liability or expense incurred in connection
with the pooling and servicing agreement or the related series of certificates;
provided, however, that such indemnification will not extend to any loss,
liability or expense (i) that such person is specifically required
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to bear pursuant to the terms of such agreement, and is not reimbursable
pursuant to the pooling and servicing agreement; (ii) incurred in connection
with any breach of a representation, warranty or covenant made in the pooling
and servicing agreement; (iii) incurred by reason of misfeasance, bad faith or
negligence in the performance of obligations or duties under the pooling and
servicing agreement. In addition, each pooling and servicing agreement will
provide that neither the master servicer nor the depositor will be under any
obligation to appear in, prosecute or defend any legal action unless such action
is related to its respective duties under the pooling and servicing agreement
and, unless it has received sufficient assurance as to the reimbursement of the
costs and liabilities of such legal action or, in its opinion such legal action
does not involve it in any expense or liability. However, each of the master
servicer and the depositor will be permitted, in the exercise of its discretion,
to undertake any such action that it may deem necessary or desirable with
respect to the enforcement and/or protection of the rights and duties of the
parties to the pooling and servicing agreement and the interests of the
certificateholders thereunder. In such event, the legal expenses and costs of
such action, and any liability resulting therefrom, will be expenses, costs and
liabilities of the certificateholders, and the master servicer or the depositor,
as the case may be, will be entitled to charge the related certificate account
therefor.
Subject, in certain circumstances, to the satisfaction of certain
conditions that may be required in the related pooling and servicing agreement,
any person into which the master servicer or the depositor may be merged or
consolidated, or any person resulting from any merger or consolidation to which
the master servicer or the depositor is a party, or any person succeeding to the
business of the master servicer or the depositor, will be the successor of the
master servicer or the depositor, as the case may be, under the related pooling
and servicing agreement.
EVENTS OF DEFAULT
The events of default for a series of certificates under the related
pooling and servicing agreement generally will include (i) any failure by the
master servicer to distribute or cause to be distributed to certificateholders,
or to remit to the trustee for distribution to certificateholders in a timely
manner, any amount required to be so distributed or remitted, provided that such
failure is permitted so long as the failure is corrected by 10:00 a.m. on the
related distribution date, (ii) any failure by the master servicer or the
special servicer duly to observe or perform in any material respect any of its
other covenants or obligations under the pooling and servicing agreement which
continues unremedied for 30 days after written notice of such failure has been
given to the master servicer or the special servicer, as applicable, by any
party to the pooling and servicing agreement, or to the master servicer or the
special servicer, as applicable, by certificateholders entitled to not less than
25% (or such other percentage specified in the prospectus supplement) of the
voting rights for such series (subject to certain extensions provided in the
related pooling and servicing agreement); and (iii) certain events of
insolvency, readjustment of debt, marshaling of assets and liabilities or
similar proceedings in respect of or relating to the master servicer or the
special servicer and certain actions by or on behalf of the master servicer or
the special servicer indicating its insolvency or inability to pay its
obligations. Material variations to the foregoing events of default (other than
to add thereto or shorten cure periods or eliminate notice requirements) will be
specified in the prospectus supplement.
RIGHTS UPON EVENT OF DEFAULT
So long as an event of default under a pooling and servicing agreement
remains unremedied, the depositor or the trustee will be authorized, and at the
direction of certificateholders entitled to not less than 25% (or such other
percentage specified in the prospectus supplement) of the voting rights for such
series, the trustee will be required, to terminate all of the rights and
obligations of the master servicer as master servicer under the pooling and
servicing agreement, whereupon the trustee will succeed to all of the
responsibilities, duties and liabilities of the master servicer under the
pooling and servicing agreement (except that if the master servicer is required
to make advances in respect of mortgage loan delinquencies, but the trustee is
prohibited by law from obligating itself to do so, or if the prospectus
supplement so specifies, the trustee will not be obligated to make such
advances) and will be entitled to similar
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compensation arrangements. If the trustee is unwilling or unable so to act, it
may (or, at the written request of certificateholders entitled to at least 51%
(or such other percentage specified in the prospectus supplement) of the voting
rights for such series, it will be required to) appoint, or petition a court of
competent jurisdiction to appoint, a loan servicing institution that (unless
otherwise provided in the prospectus supplement) is acceptable to each rating
agency that assigned ratings to the offered certificates of such series to act
as successor to the master servicer under the pooling and servicing agreement.
Pending such appointment, the trustee will be obligated to act in such capacity.
No certificateholder will have the right under any pooling and servicing
agreement to institute any proceeding with respect thereto unless such holder
previously has given to the trustee written notice of default and unless
certificateholders entitled to at least 25% (or such other percentage specified
in the prospectus supplement) of the voting rights for the related series shall
have made written request upon the trustee to institute such proceeding in its
own name as trustee thereunder and shall have offered to the trustee reasonable
indemnity, and the trustee for 60 days (or such other period specified in the
prospectus supplement) shall have neglected or refused to institute any such
proceeding. The trustee, however, will be under no obligation to exercise any of
the trusts or powers vested in it by any pooling and servicing agreement or to
make any investigation of matters arising thereunder or to institute, conduct or
defend any litigation thereunder or in relation thereto at the request, order or
direction of any of the holders of certificates of the related series, unless
such certificateholders have offered to the trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby.
AMENDMENT
Each pooling and servicing agreement may be amended by the parties thereto,
without the consent of any of the holders of the related certificates, (i) to
cure any ambiguity, (ii) to correct, modify or supplement any provision in the
pooling and servicing agreement that may be inconsistent with any other
provision therein, (iii) to add any other provisions with respect to matters or
questions arising under the pooling and servicing agreement that are not
inconsistent with the provisions thereof, (iv) to comply with any requirements
imposed by the Code or (v) for any other purpose; provided that such amendment
(other than an amendment for the purpose specified in clause (iv) above) may not
(as evidenced by an opinion of counsel to such effect satisfactory to the
trustee) adversely affect in any material respect the interests of any such
holder. Each pooling and servicing agreement may also be amended for any purpose
by the parties, with the consent of certificateholders entitled to at least 51%
(or such other percentage specified in the prospectus supplement) of the voting
rights for the related series allocated to the affected classes; provided,
however, that no such amendment may (x) reduce in any manner the amount of, or
delay the timing of, payments received or advanced on mortgage loans that are
required to be distributed in respect of any certificate without the consent of
the holder of such certificate, (y) adversely affect in any material respect the
interests of the holders of any class of certificates, in a manner other than as
described in clause (x), without the consent of the holders of all certificates
of such class or (z) modify the provisions of the pooling and servicing
agreement described in this paragraph without the consent of the holders of all
certificates of the related series. However, unless otherwise specified in the
related pooling and servicing agreement, the trustee will be prohibited from
consenting to any amendment of a pooling and servicing agreement pursuant to
which a REMIC election is to be or has been made unless the trustee shall first
have received an opinion of counsel to the effect that such amendment will not
result in the imposition of a tax on the related trust fund or cause the related
trust fund to fail to qualify as a REMIC at any time that the related
certificates are outstanding.
LIST OF CERTIFICATEHOLDERS
Upon written request of any certificateholder of record made for purposes
of communicating with other holders of certificates of the same series with
respect to their rights under the related pooling and servicing agreement, the
trustee or other specified person will afford such certificateholder access,
during normal business hours, to the most recent list of certificateholders of
that series then maintained by such person.
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THE TRUSTEE
The trustee under each pooling and servicing agreement will be named in the
related prospectus supplement. The commercial bank, national banking
association, banking corporation or trust company that serves as trustee may
have typical banking relationships with the depositor and its affiliates and
with any master servicer and its affiliates.
DUTIES OF THE TRUSTEE
The trustee for a series of certificates will make no representation as to
the validity or sufficiency of the related pooling and servicing agreement, the
certificates or any mortgage loan or related document and will not be
accountable for the use or application by or on behalf of any master servicer of
any funds paid to the master servicer or any special servicer in respect of the
certificates or the mortgage loans, or any funds deposited into or withdrawn
from the certificate account or any other account by or on behalf of the master
servicer or any special servicer. If no event of default under a related pooling
and servicing agreement has occurred and is continuing, the trustee will be
required to perform only those duties specifically required under the related
pooling and servicing agreement. However, upon receipt of any of the various
certificates, reports or other instruments required to be furnished to it
pursuant to the pooling and servicing agreement, the trustee will be required to
examine such documents and to determine whether they conform to the requirements
of the pooling and servicing agreement.
CERTAIN MATTERS REGARDING THE TRUSTEE
The trustee for a series of certificates may be entitled to
indemnification, from amounts held in the related certificate account, for any
loss, liability or expense incurred by the trustee in connection with the
trustee's acceptance or administration of its trusts under the related pooling
and servicing agreement; provided, however, that such indemnification will not
extend to any loss, liability or expense that constitutes a specific liability
imposed on the trustee pursuant to the pooling and servicing agreement, or to
any loss, liability or expense incurred by reason of willful misfeasance, bad
faith or negligence on the part of the trustee in the performance of its
obligations and duties thereunder, or by reason of its reckless disregard of
such obligations or duties, or as may arise from a breach of any representation,
warranty or covenant of the trustee made in the pooling and servicing agreement.
As and to the extent described in the prospectus supplement, the fees and normal
disbursements of any trustee may be the expense of the related master servicer
or other specified person or may be required to be borne by the related trust
fund.
RESIGNATION AND REMOVAL OF THE TRUSTEE
The trustee for a series of certificates will be permitted at any time to
resign from its obligations and duties under the related pooling and servicing
agreement by giving written notice thereof to the depositor. Upon receiving such
notice of resignation, the master servicer (or such other person as may be
specified in the prospectus supplement) will be required to use reasonable
efforts to promptly appoint a successor trustee. If no successor trustee shall
have accepted an appointment within a specified period after the giving of such
notice of resignation, the resigning trustee may petition any court of competent
jurisdiction to appoint a successor trustee.
Unless otherwise provided in the prospectus supplement, if at any time the
trustee ceases to be eligible to continue as such under the related pooling and
servicing agreement, or if at any time the trustee becomes incapable of acting,
or if certain events of (or proceedings in respect of) bankruptcy or insolvency
occur with respect to the trustee, the depositor will be authorized to remove
the trustee and appoint a successor trustee. In addition, unless otherwise
provided in the prospectus supplement, holders of the certificates of any series
entitled to at least 51% (or such other percentage specified in the prospectus
supplement) of the voting rights for such series may at any time (with or
without cause) remove the trustee and appoint a successor trustee.
Any resignation or removal of the trustee and appointment of a successor
trustee will not become effective until acceptance of appointment by the
successor trustee.
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DESCRIPTION OF CREDIT SUPPORT
GENERAL
Credit support may be provided with respect to one or more classes of the
certificates of any series, or with respect to the related mortgage assets.
Credit support may be in the form of over-collateralization, a letter of credit,
the subordination of one or more classes of certificates, the use of a pool
insurance policy or guarantee insurance, the establishment of one or more
reserve funds or another method of credit support described in the prospectus
supplement, or any combination of the foregoing. If so provided in the
prospectus supplement, any form of credit support may provide credit enhancement
for more than one series of certificates to the extent described in the
prospectus supplement.
The credit support generally will not provide protection against all risks
of loss and will not guarantee payment to certificateholders of all amounts to
which they are entitled under the related pooling and servicing agreement. If
losses or shortfalls occur that exceed the amount covered by the credit support
or that are not covered by the credit support, certificateholders will bear
their allocable share of deficiencies. Moreover, if a form of credit support
covers more than one series of certificates, holders of certificates of one
series will be subject to the risk that such credit support will be exhausted by
the claims of the holders of certificates of one or more other series before the
former receive their intended share of such coverage.
If credit support is provided with respect to one or more classes of
certificates of a series, or with respect to the related mortgage assets, the
prospectus supplement will include a description of (i) the nature and amount of
coverage under such credit support, (ii) any conditions to payment thereunder
not otherwise described in this prospectus, (iii) the conditions (if any) under
which the amount of coverage under such credit support may be reduced and under
which such credit support may be terminated or replaced and (iv) the material
provisions relating to such credit support. Additionally, the prospectus
supplement will set forth certain information with respect to the obligor under
any instrument of credit support, generally including (w) a brief description of
its principal business activities, (x) its principal place of business, place of
incorporation and the jurisdiction under which it is chartered or licensed to do
business, (y) if applicable, the identity of the regulatory agencies that
exercise primary jurisdiction over the conduct of its business and (z) its total
assets, and its stockholders equity or policyholders' surplus, if applicable, as
of a date that will be specified in the prospectus supplement. See "Risk
Factors--Credit Support May Not Cover Losses or Risks Which Could Adversely
Affect Payment on Your Certificates."
SUBORDINATE CERTIFICATES
If so specified in the prospectus supplement, one or more classes of
certificates of a series may be subordinate certificates which are subordinated
in right of payment to one or more other classes of senior certificates. If so
provided in the prospectus supplement, the subordination of a class may apply
only in the event of (or may be limited to) certain types of losses or
shortfalls. The prospectus supplement will set forth information concerning the
amount of subordination provided by a class or classes of subordinate
certificates in a series, the circumstances under which such subordination will
be available and the manner in which the amount of subordination will be made
available.
CROSS-SUPPORT PROVISIONS
If the mortgage assets in any trust fund are divided into separate groups,
each supporting a separate class or classes of certificates of a series, credit
support may be provided by cross-support provisions requiring that distributions
be made on senior certificates evidencing interests in one group of mortgage
assets prior to distributions on subordinate certificates evidencing interests
in a different group of mortgage assets within the trust fund. The prospectus
supplement for a series that includes a cross-support provision will describe
the manner and conditions for applying such provisions.
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INSURANCE OR GUARANTEES WITH RESPECT TO MORTGAGE LOANS
If so provided in the prospectus supplement for a series of certificates,
mortgage loans included in the related trust fund will be covered for certain
default risks by insurance policies or guarantees. To the extent material, a
copy of each such instrument will accompany the Current Report on Form 8-K to be
filed with the Securities and Exchange Commission within 15 days of issuance of
the certificates of the related series.
LETTER OF CREDIT
If so provided in the prospectus supplement for a series of certificates,
deficiencies in amounts otherwise payable on such certificates or certain
classes thereof will be covered by one or more letters of credit, issued by a
bank or financial institution specified in such prospectus supplement. Under a
letter of credit, the bank or financial institution providing the letter of
credit will be obligated to honor draws thereunder in an aggregate fixed dollar
amount, net of unreimbursed payments thereunder, generally equal to a percentage
specified in the prospectus supplement of the aggregate principal balance of the
mortgage assets on the related Cut-Off Date or of the initial aggregate
certificate balance of one or more classes of certificates. If so specified in
the prospectus supplement, the letter of credit may permit draws only in the
event of certain types of losses and shortfalls. The amount available under the
letter of credit will, in all cases, be reduced to the extent of the
unreimbursed payments thereunder and may otherwise be reduced as described in
the prospectus supplement. The obligations of the bank or financial institution
providing the letter of credit for each series of certificates will expire at
the earlier of the date specified in the prospectus supplement or the
termination of the trust fund. A copy of any such letter of credit will
accompany the Current Report on Form 8-K to be filed with the Securities and
Exchange Commission within 15 days of issuance of the certificates of the
related series.
CERTIFICATE INSURANCE AND SURETY BONDS
If so provided in the prospectus supplement for a series of certificates,
deficiencies in amounts otherwise payable on such certificates or certain
classes thereof will be covered by insurance policies and/or surety bonds
provided by one or more insurance companies or sureties. Such instruments may
cover, with respect to one or more classes of certificates of the related
series, timely distributions of interest and/or full distributions of principal
on the basis of a schedule of principal distributions set forth in or determined
in the manner specified in the prospectus supplement. A copy of any such
instrument will accompany the Current Report on Form 8-K to be filed with the
Securities and Exchange Commission within 15 days of issuance of the
certificates of the related series.
RESERVE FUNDS
If so provided in the prospectus supplement for a series of certificates,
deficiencies in amounts otherwise payable on such certificates or certain
classes thereof will be covered (to the extent of available funds) by one or
more reserve funds in which cash, a letter of credit, permitted investments, a
demand note or a combination thereof will be deposited, in the amounts specified
in such prospectus supplement. If so specified in the prospectus supplement, the
reserve fund for a series may also be funded over time by a specified amount of
the collections received on the related mortgage assets.
Amounts on deposit in any reserve fund for a series, together with the
reinvestment income thereon, if any, will be applied for the purposes, in the
manner, and to the extent specified in the prospectus supplement. If so
specified in the prospectus supplement, reserve funds may be established to
provide protection only against certain types of losses and shortfalls.
Following each distribution date, amounts in a reserve fund in excess of any
amount required to be maintained in the reserve fund may be released from the
reserve fund under the conditions and to the extent specified in the prospectus
supplement.
If so specified in the prospectus supplement, amounts deposited in any
reserve fund will be invested in permitted investments, such as United States
government securities and other investment grade obligations specified in the
related pooling and servicing agreement. Unless otherwise specified in the
prospectus
68
supplement, any reinvestment income or other gain from such investments will be
credited to the related reserve fund for such series, and any loss resulting
from such investments will be charged to such reserve fund. However, such income
may be payable to any related master servicer or another service provider as
additional compensation for its services. The reserve fund, if any, for a series
will not be a part of the trust fund unless otherwise specified in the
prospectus supplement.
CREDIT SUPPORT WITH RESPECT TO CMBS
If so provided in the prospectus supplement for a series of certificates,
any CMBS included in the related trust fund and/or the related underlying
mortgage loans may be covered by one or more of the types of credit support
described in this prospectus. The prospectus supplement for any series of
certificates evidencing an interest in a trust fund that includes CMBS will
describe to the extent information is available and deemed material, any similar
forms of credit support that are provided by or with respect to, or are included
as part of the trust fund evidenced by or providing security for, such CMBS. The
type, characteristic and amount of credit support will be determined based on
the characteristics of the mortgage assets and other factors and will be
established, in part, on the basis of requirements of each rating agency rating
the certificates of such series. If so specified in the prospectus supplement,
any such credit support may apply only in the event of certain types of losses
or delinquencies and the protection against losses or delinquencies provided by
such credit support will be limited.
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS AND LEASES
The following discussion contains general summaries of certain legal
aspects of loans secured by commercial and multifamily residential properties.
Because such legal aspects are governed by applicable state law (which laws may
differ substantially), the summaries do not purport to be complete, to reflect
the laws of any particular state, or to encompass the laws of all states in
which the security for the mortgage loans (or mortgage loans underlying any
CMBS) is situated. Accordingly, the summaries are qualified in their entirety by
reference to the applicable laws of those states. See "Description of the Trust
Funds--Mortgage Loans--Leases." For purposes of the following discussion,
"mortgage loan" includes a mortgage loan underlying a CMBS.
GENERAL
Each mortgage loan will be evidenced by a note or bond and secured by an
instrument granting a security interest in real property, which may be a
mortgage, deed of trust or a deed to secure debt, depending upon the prevailing
practice and law in the state in which the related mortgaged property is
located. Mortgages, deeds of trust and deeds to secure debt are collectively
referred to as "mortgages" in this prospectus and, unless otherwise specified,
in any prospectus supplement. A mortgage creates a lien upon, or grants a title
interest in, the real property covered thereby, and represents the security for
the repayment of the indebtedness customarily evidenced by a promissory note.
The priority of the lien created or interest granted will depend on the terms of
the mortgage and, in some cases, on the terms of separate subordination
agreements or intercreditor agreements with others that hold interests in the
real property, the knowledge of the parties to the mortgage and, generally, the
order of recordation of the mortgage in the appropriate public recording office.
However, the lien of a recorded mortgage will generally be subordinate to
later-arising liens for real estate taxes and assessments and other charges
imposed under governmental police powers. Additionally, in some states,
mechanic's and materialman's liens have priority over mortgage liens.
The mortgagee's authority under a mortgage, the beneficiary's authority
under a deed of trust and the grantee's authority under a deed to secure debt
are governed by the express provisions of the related instrument, the law of the
state in which the real property is located, certain federal laws (including,
without limitation, the Soldiers' and Sailors' Civil Relief Act of 1940) and, in
some deed of trust transactions, the trustee's authority is further limited by
the directions of the beneficiary.
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TYPES OF MORTGAGE INSTRUMENTS
There are two parties to a mortgage: a mortgagor (the borrower and usually
the owner of the subject property) and a mortgagee (the lender). In a mortgage,
the mortgagor grants a lien on the subject property in favor of the mortgagee. A
deed of trust is a three-party instrument, among a trustor (the equivalent of a
borrower), a trustee to whom the real property is conveyed, and a beneficiary
(the lender) for whose benefit the conveyance is made. Under a deed of trust,
the trustor grants the property to the trustee, in trust, irrevocably until the
debt is paid, and generally with a power of sale. A deed to secure debt
typically has two parties. The borrower, or grantor, conveys title to the real
property to the grantee, or lender, generally with a power of sale, until such
time as the debt is repaid. In a case where the borrower is a land trust, there
would be an additional party to a mortgage instrument because legal title to the
property is held by a land trustee under a land trust agreement for the benefit
of the borrower. At origination of a mortgage loan involving a land trust, the
borrower generally executes a separate undertaking to make payments on the
mortgage note. The mortgagee's authority under a mortgage, the trustee's
authority under a deed of trust and the grantee's authority under a deed to
secure debt are governed by the express provisions of the related instrument,
the law of the state in which the real property is located, certain federal laws
and, in some deed of trust transactions, the directions of the beneficiary.
LEASES AND RENTS
Mortgages that encumber income-producing property often contain an
assignment of rents and leases, pursuant to which the borrower assigns to the
lender the borrower's right, title and interest as landlord under each lease and
the income derived therefrom, while (unless rents are to be paid directly to the
lender) retaining a revocable license to collect the rents for so long as there
is no default. If the borrower defaults, the license terminates and the lender
is entitled to collect the rents. Local law may require that the lender take
possession of the property and/or obtain a court-appointed receiver before
becoming entitled to collect the rents. Lenders that actually take possession of
the property, however, may incur potentially substantial risks attendant to
being a mortgagee in possession. Such risks include liability for environmental
clean-up costs and other risks inherent in property ownership. See
"--Environmental Considerations." In most states, hotel and motel room
receipts/revenues are considered accounts receivable under the Uniform
Commercial Code; in cases where hotels or motels constitute loan security, the
receipts/revenues are generally pledged by the borrower as additional security
for the loan. In general, the lender must file financing statements in order to
perfect its security interest in the receipts/revenues and must file
continuation statements, generally every five years, to maintain perfection of
such security interest. Even if the lender's security interest in room
receipts/revenues is perfected under the Uniform Commercial Code, it will
generally be required to commence a foreclosure action or otherwise take
possession of the property in order to collect the room receipts/revenues
following a default. See "--Bankruptcy Laws."
PERSONALTY
In the case of certain types of mortgaged properties, such as hotels,
motels and nursing homes, personal property (to the extent owned by the borrower
and not previously pledged) may constitute a significant portion of the
property's value as security. The creation and enforcement of liens on personal
property are governed by the Uniform Commercial Code. Accordingly, if a borrower
pledges personal property as security for a mortgage loan, the lender generally
must file Uniform Commercial Code financing statements in order to perfect its
security interest therein, and must file continuation statements, generally
every five years, to maintain that perfection.
COOPERATIVE LOANS
If specified in the prospectus supplement, the mortgage loans may consist
of loans secured by "blanket mortgages" on the property owned by cooperative
housing corporations. If specified in the prospectus supplement, the mortgage
loans may consist of cooperative loans secured by security interests in
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shares issued by private cooperative housing corporations and in the related
proprietary leases or occupancy agreements granting exclusive rights to occupy
specific dwelling units in the cooperatives' buildings. The security agreement
will create a lien upon, or grant a title interest in, the property which it
covers, the priority of which will depend on the terms of the particular
security agreement as well as the order of recordation of the agreement in the
appropriate recording office. Such a lien or title interest is not prior to the
lien for real estate taxes and assessments and other charges imposed under
governmental police powers.
A cooperative generally owns in fee or has a leasehold interest in land and
owns in fee or leases the building or buildings thereon and all separate
dwelling units in the buildings. The cooperative is owned by tenant-stockholders
who, through ownership of stock or shares in the corporation, receive
proprietary leases or occupancy agreements which confer exclusive rights to
occupy specific units. Generally, a tenant-stockholder of a cooperative must
make a monthly payment to the cooperative representing such tenant-
stockholder's pro rata share of the cooperative's payments for its blanket
mortgage, real property taxes, maintenance expenses and other capital or
ordinary expenses. The cooperative is directly responsible for property
management and, in most cases, payment of real estate taxes, other governmental
impositions and hazard and liability insurance. If there is a blanket mortgage
or mortgages on the cooperative apartment building or underlying land, as is
generally the case, or an underlying lease of the land, as is the case in some
instances, the cooperative, as property mortgagor, or lessee, as the case may
be, is also responsible for meeting these mortgage or rental obligations. A
blanket mortgage is ordinarily incurred by the cooperative in connection with
either the construction or purchase of the cooperative's apartment building or
obtaining of capital by the cooperative. The interest of the occupant under
proprietary leases or occupancy agreements as to which that cooperative is the
landlord are generally subordinate to the interest of the holder of a blanket
mortgage and to the interest of the holder of a land lease. If the cooperative
is unable to meet the payment obligations (i) arising under a blanket mortgage,
the mortgagee holding a blanket mortgage could foreclose on that mortgage and
terminate all subordinate proprietary leases and occupancy agreements, or (ii)
arising under its land lease, the holder of the landlord's interest under the
land lease could terminate it and all subordinate proprietary leases and
occupancy agreements. Also, a blanket mortgage on a cooperative may provide
financing in the form of a mortgage that does not fully amortize, with a
significant portion of principal being due in one final payment at maturity. The
inability of the cooperative to refinance a mortgage and its consequent
inability to make such final payment could lead to foreclosure by the mortgagee
and termination of all proprietary leases and occupancy agreements. Similarly, a
land lease has an expiration date and the inability of the cooperative to extend
its term, or, in the alternative, to purchase the land, could lead to
termination of the cooperatives' interest in the property and termination of all
proprietary leases and occupancy agreements. Upon foreclosure of a blanket
mortgage on a cooperative, the lender would normally be required to take the
mortgaged property subject to state and local regulations that afford tenants
who are not shareholders various rent control and other protections. A
foreclosure by the holder of a blanket mortgage or the termination of the
underlying lease could eliminate or significantly diminish the value of any
collateral held by a party who financed the purchase of cooperative shares by an
individual tenant stockholder.
An ownership interest in a cooperative and accompanying occupancy rights
are financed through a cooperative share loan evidenced by a promissory note and
secured by an assignment of and a security interest in the occupancy agreement
or proprietary lease and a security interest in the related cooperative shares.
The lender generally takes possession of the share certificate and a counterpart
of the proprietary lease or occupancy agreement and financing statements
covering the proprietary lease or occupancy agreement and the cooperative shares
are filed in the appropriate state and local offices to perfect the lender's
interest in its collateral. Subject to the limitations discussed below, upon
default of the tenant-stockholder, the lender may sue for judgment on the
promissory note, dispose of the collateral at a public or private sale or
otherwise proceed against the collateral or tenant-stockholder as an individual
as provided in the security agreement covering the assignment of the proprietary
lease or occupancy agreement and the pledge of cooperative shares. See
"--Foreclosure--Cooperative Loans" below.
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JUNIOR MORTGAGES; RIGHTS OF SENIOR LENDERS
Some of the mortgage loans included in a trust fund may be secured by
mortgage instruments that are subordinate to mortgage instruments held by other
lenders. The rights of the trust fund (and therefore the certificateholders), as
holder of a junior mortgage instrument, are subordinate to those of the senior
lender, including the prior rights of the senior lender to receive rents, hazard
insurance and condemnation proceeds and to cause the mortgaged property to be
sold upon borrower's default and thereby extinguish the trust fund's junior lien
unless the master servicer or special servicer satisfies the defaulted senior
loan, or, if permitted, asserts its subordinate interest in a property in
foreclosure litigation. As discussed more fully below, in many states a junior
lender may satisfy a defaulted senior loan in full, adding the amounts expended
to the balance due on the junior loan. Absent a provision in the senior mortgage
instrument, no notice of default is required to be given to the junior lender.
The form of the mortgage instrument used by many institutional lenders
confers on the lender the right both to receive all proceeds collected under any
hazard insurance policy and all awards made in connection with any condemnation
proceedings, and (subject to any limits imposed by applicable state law) to
apply such proceeds and awards to any indebtedness secured by the mortgage
instrument in such order as the lender may determine. Thus, if improvements on a
property are damaged or destroyed by fire or other casualty, or if the property
is taken by condemnation, the holder of the senior mortgage instrument will have
the prior right to collect any insurance proceeds payable under a hazard
insurance policy and any award of damages in connection with the condemnation
and to apply the same to the senior indebtedness. Accordingly, only the proceeds
in excess of the amount of senior indebtedness will be available to be applied
to the indebtedness secured by a junior mortgage instrument.
The form of mortgage instrument used by many institutional lenders
typically contains a "future advance" clause, which provides, in general, that
additional amounts advanced to or on behalf of the mortgagor or trustor by the
mortgagee or beneficiary are to be secured by the mortgage instrument. While
such a clause is valid under the laws of most states, the priority of any
advance made under the clause depends, in some states, on whether the advance
was an "obligatory" or an "optional" advance. If the lender is obligated to
advance the additional amounts, the advance may be entitled to receive the same
priority as the amounts advanced at origination, notwithstanding that
intervening junior liens may have been recorded between the date of recording of
the senior mortgage instrument and the date of the future advance, and
notwithstanding that the senior lender had actual knowledge of such intervening
junior liens at the time of the advance. Where the senior lender is not
obligated to advance the additional amounts and has actual knowledge of the
intervening junior liens, the advance may be subordinate to such intervening
junior liens. Priority of advances under a "future advance" clause rests, in
many other states, on state law giving priority to all advances made under the
loan agreement up to a "credit limit" amount stated in the recorded mortgage.
Another provision typically found in the form of mortgage instrument used
by many institutional lenders permits the lender to itself perform certain
obligations of the borrower (for example, the obligations to pay when due all
taxes and assessments on the property and, when due, all encumbrances, charges
and liens on the property that are senior to the lien of the mortgage
instrument, to maintain hazard insurance on the property, and to maintain and
repair the property) upon a failure of the borrower to do so, with all sums so
expended by the lender becoming part of the indebtedness secured by the mortgage
instrument.
The form of mortgage instrument used by many institutional lenders
typically requires the borrower to obtain the consent of the lender in respect
of actions affecting the mortgaged property, including the execution of new
leases and the termination or modification of existing leases, the performance
of alterations to buildings forming a part of the mortgaged property and the
execution of management and leasing agreements for the mortgaged property.
Tenants will often refuse to execute leases unless the lender executes a written
agreement with the tenant not to disturb the tenant's possession of its premises
in the event of a foreclosure. A senior lender may refuse to consent to matters
approved by a junior lender, with the result that the value of the security for
the junior mortgage instrument is diminished.
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FORECLOSURE
General. Foreclosure is a legal procedure that allows the lender to seek
to recover its mortgage debt by enforcing its rights and available legal
remedies under the mortgage in respect of the mortgaged property. If the
borrower defaults in payment or performance of its obligations under the note or
mortgage, the lender has the right to institute foreclosure proceedings to sell
the real property at public auction to satisfy the indebtedness.
Foreclosure Procedures Vary From State to State. Two primary methods of
foreclosing a mortgage are judicial foreclosure, involving court proceedings,
and non-judicial foreclosure pursuant to a power of sale usually granted in the
mortgage instrument. Other foreclosure procedures are available in some states,
but they are either infrequently used or available only in limited
circumstances.
A foreclosure action is subject to most of the delays and expenses of other
lawsuits if defenses are raised or counterclaims are interposed, and sometimes
requires years to complete. Moreover, the filing by or against the
borrower-mortgagor of a bankruptcy petition would impose an automatic stay on
such proceedings and could further delay a foreclosure sale.
Judicial Foreclosure. A judicial foreclosure proceeding is conducted in a
court having jurisdiction over the mortgaged property. Generally, the action is
initiated by the service of legal pleadings upon all parties having a
subordinate interest of record in the real property and all parties in
possession of the property, under leases or otherwise, whose interests are
subordinate to the mortgage. Delays in completion of the foreclosure may
occasionally result from difficulties in locating proper defendants. As stated
above, if the lender's right to foreclose is contested by any defendant, the
legal proceedings may be time-consuming. In addition, judicial foreclosure is a
proceeding in equity and, therefore, equitable defenses may be raised against
the foreclosure. Upon successful completion of a judicial foreclosure
proceeding, the court generally issues a judgment of foreclosure and appoints a
referee or other officer to conduct a public sale of the mortgaged property, the
proceeds of which are used to satisfy the judgment. Such sales are made in
accordance with procedures that vary from state to state.
Non-Judicial Foreclosure/Power of Sale. Foreclosure of a deed of trust is
generally accomplished by a non-judicial trustee's sale pursuant to a power of
sale typically granted in the deed of trust. A power of sale may also be
contained in any other type of mortgage instrument if applicable law so permits.
A power of sale under a deed of trust or mortgage allows a non-judicial public
sale to be conducted generally following a request from the beneficiary/lender
to the trustee to sell the property upon default by the borrower and after
notice of sale is given in accordance with the terms of the mortgage and
applicable state law. In some states, prior to such sale, the trustee under the
deed of trust must record a notice of default and notice of sale and send a copy
to the borrower and to any other party which has recorded a request for a copy
of a notice of default and notice of sale. In addition, in some states the
trustee must provide notice to any other party having an interest of record in
the real property, including junior lienholders. A notice of sale must be posted
in a public place and, in most states, published for a specified period of time
in one or more newspapers. The borrower or a junior lienholder may then have the
right, during a reinstatement period required in some states, to cure the
default by paying the entire actual amount in arrears (without regard to the
acceleration of the indebtedness), plus the lender's expenses incurred in
enforcing the obligation. In other states, the borrower or the junior lienholder
is not provided a period to reinstate the loan, but has only the right to pay
off the entire debt to prevent the foreclosure sale. In addition to such cure
rights, in most jurisdictions, the borrower-mortgagor or a subordinate
lienholder can seek to enjoin the non-judicial foreclosure by commencing a court
proceeding. Generally, state law governs the procedure for public sale, the
parties entitled to notice, the method of giving notice and the applicable time
periods.
Both judicial and non-judicial foreclosures may result in the termination
of leases at the mortgaged property, which in turn could result in the reduction
in the income for such property. Some of the factors that will determine whether
or not a lease will be terminated by a foreclosure are: the provisions of
applicable state law, the priority of the mortgage vis-a-vis the lease in
question, the terms of the lease and
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the terms of any subordination, non-disturbance and attornment agreement between
the tenant under the lease and the mortgagee.
Equitable Limitations on Enforceability of Certain Provisions. United
States courts have traditionally imposed general equitable principles to limit
the remedies available to lenders in foreclosure actions. These principles are
generally designed to relieve borrowers from the effects of mortgage defaults
perceived as harsh or unfair. Relying on such principles, a court may alter the
specific terms of a loan to the extent it considers necessary to prevent or
remedy an injustice, undue oppression or overreaching, or may require the lender
to undertake affirmative actions to determine the cause of the borrower's
default and the likelihood that the borrower will be able to reinstate the loan.
In some cases, courts have substituted their judgment for the lender's and have
required that lenders reinstate loans or recast payment schedules in order to
accommodate borrowers who are suffering from a temporary financial disability.
In other cases, courts have limited the right of the lender to foreclose in the
case of a non-monetary default, such as a failure to adequately maintain the
mortgaged property or placing a subordinate mortgage or other encumbrance upon
the mortgaged property. Finally, some courts have addressed the issue of whether
federal or state constitutional provisions reflecting due process concerns for
adequate notice require that a borrower receive notice in addition to
statutorily prescribed minimum notice. For the most part, these cases have
upheld the reasonableness of the notice provisions or have found that a public
sale under a mortgage providing for a power of sale does not involve sufficient
state action to trigger constitutional protections.
Public Sale. A third party may be unwilling to purchase a mortgaged
property at a public sale for a number of reasons, including the difficulty in
determining the exact status of title to the property (due to, among other
things, redemption rights that may exist) and because of the possibility that
physical deterioration of the property may have occurred during the foreclosure
proceedings. For these reasons, it is common for the lender to purchase the
mortgaged property for an amount equal to the secured indebtedness and accrued
and unpaid interest plus the expenses of foreclosure, in which event the
borrower's debt will be extinguished. Thereafter, subject to the borrower's
right in some states to remain in possession during a redemption period, the
lender will become the owner of the property and have both the benefits and
burdens of ownership, including the obligation to pay debt service on any senior
mortgages, to pay taxes, to obtain casualty insurance and to make such repairs
as are necessary to render the property suitable for sale. The costs involved in
a foreclosure process can often be quite expensive; such costs may include,
depending on the jurisdiction involved, legal fees, court administration fees,
referee fees and transfer taxes or fees. The costs of operating and maintaining
a commercial or multifamily residential property may be significant and may be
greater than the income derived from that property. The lender also will
commonly obtain the services of a real estate broker and pay the broker's
commission in connection with the sale or lease of the property. Depending upon
market conditions, the ultimate proceeds of the sale of the property may not
equal the lender's investment in the property. Moreover, because of the expenses
associated with acquiring, owning and selling a mortgaged property, a lender
could realize an overall loss on a mortgage loan even if the mortgaged property
is sold at foreclosure, or resold after it is acquired through foreclosure, for
an amount equal to the full outstanding principal amount of the loan plus
accrued interest.
The holder of a junior mortgage that forecloses on a mortgaged property
does so subject to senior mortgages and any other prior liens, and may be
obliged to keep senior mortgage loans current in order to avoid foreclosure of
its interest in the property. In addition, if the foreclosure of a junior
mortgage triggers the enforcement of a "due-on-sale" clause contained in a
senior mortgage, the junior mortgagee could be required to pay the full amount
of the senior mortgage indebtedness, including penalty fees and court costs, or
face foreclosure.
Rights of Redemption. The purposes of a foreclosure action are to enable
the lender to realize upon its security and to bar the borrower, and all persons
who have interests in the property that are subordinate to that of the
foreclosing lender, from exercise of their "equity of redemption." The doctrine
of equity of redemption provides that, until the property encumbered by a
mortgage has been sold in accordance with a properly conducted foreclosure and
foreclosure sale, those having interests that are subordinate to that of
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the foreclosing lender have an equity of redemption and may redeem the property
by paying the entire debt with interest. Those having an equity of redemption
must generally be made parties and joined in the foreclosure proceeding in order
for their equity of redemption to be terminated.
The equity of redemption is a common-law (non-statutory) right which should
be distinguished from post-sale statutory rights of redemption. In some states,
after sale pursuant to a deed of trust or foreclosure of a mortgage, the
borrower and foreclosed junior lienors are given a statutory period in which to
redeem the property. In some states, statutory redemption may occur only upon
payment of the foreclosure sale price. In other states, redemption may be
permitted if the former borrower pays only a portion of the sums due. The effect
of a statutory right of redemption is to diminish the ability of the lender to
sell the foreclosed property because the exercise of a right of redemption would
defeat the title of any purchaser through a foreclosure. Consequently, the
practical effect of the redemption right is to force the lender to maintain the
property and pay the expenses of ownership until the redemption period has
expired. In some states, a post-sale statutory right of redemption may exist
following a judicial foreclosure, but not following a trustee's sale under a
deed of trust.
Anti-Deficiency Legislation. Some or all of the mortgage loans may be
nonrecourse loans, as to which recourse in the case of default will be limited
to the mortgaged property and such other assets, if any, that were pledged to
secure the mortgage loan. However, even if a mortgage loan by its terms provides
for recourse to the borrower's other assets, a lender's ability to realize upon
those assets may be limited by state law. For example, in some states a lender
cannot obtain a deficiency judgment against the borrower following a
non-judicial foreclosure. A deficiency judgment is a personal judgment against
the former borrower equal to the difference between the net amount realized upon
the public sale of the real property and the amount due to the lender. Other
statutes may require the lender to exhaust the security afforded under a
mortgage before bringing a personal action against the borrower. In certain
other states, the lender has the option of bringing a personal action against
the borrower on the debt without first exhausting such security; however, in
some of those states, the lender, following judgment on such personal action,
may be deemed to have elected a remedy and thus may be precluded from
foreclosing upon the security. Consequently, lenders in those states where such
an election of remedy provision exists will usually proceed first against the
security. Finally, other statutory provisions, designed to protect borrowers
from exposure to large deficiency judgments that might result from bidding at
below-market values at the foreclosure sale, limit any deficiency judgment to
the excess of the outstanding debt over the judicially determined fair market
value of the property at the time of the sale.
Leasehold Risks. Mortgage loans may be secured by a mortgage on the
borrower's leasehold interest in a ground lease. Leasehold mortgage loans are
subject to certain risks not associated with mortgage loans secured by a lien on
the fee estate of the borrower. The most significant of these risks is that if
the borrower's leasehold were to be terminated upon a lease default or the
bankruptcy of the lessee or the lessor, the leasehold mortgagee would lose its
security. This risk may be substantially lessened if the ground lease contains
provisions protective of the leasehold mortgagee, such as a provision that
requires the ground lessor to give the leasehold mortgagee notices of lessee
defaults and an opportunity to cure them, a provision that permits the leasehold
estate to be assigned to and by the leasehold mortgagee or the purchaser at a
foreclosure sale, a provision that gives the leasehold mortgagee the right to
enter into a new ground lease with the ground lessor on the same terms and
conditions as the old ground lease or a provision that prohibits the ground
lessee/borrower from treating the ground lease as terminated in the event of the
ground lessor's bankruptcy and rejection of the ground lease by the trustee for
the debtor/ground lessor. Certain mortgage loans, however, may be secured by
liens on ground leases that do not contain all or some of these provisions.
Regulated Healthcare Facilities. A mortgage loan may be secured by a
mortgage on a nursing home or other regulated healthcare facility. In most
jurisdictions, a license (which is nontransferable and may not be assigned or
pledged) granted by the appropriate state regulatory authority is required to
operate a regulated healthcare facility. Accordingly, the ability of a person
acquiring this type of property upon a foreclosure sale to take possession of
and operate the same as a regulated healthcare facility may be prohibited by
applicable law. Notwithstanding the foregoing, however, in certain jurisdictions
the person
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acquiring this type of property at a foreclosure sale may have the right to
terminate the use of the same as a regulated health care facility and convert it
to another lawful purpose.
Cross-Collateralization. Certain of the mortgage loans may be secured by
more than one mortgage covering mortgaged properties located in more than one
state. Because of various state laws governing foreclosure or the exercise of a
power of sale and because, in general, foreclosure actions are brought in state
court and the courts of one state cannot exercise jurisdiction over property in
another state, it may be necessary upon a default under a cross-collateralized
mortgage loan to foreclose on the related mortgaged properties in a particular
order rather than simultaneously in order to ensure that the lien of the
mortgages is not impaired or released.
Cooperative Loans. The cooperative shares owned by the tenant-stockholder
and pledged to the lender are, in almost all cases, subject to restrictions on
transfer as set forth in the cooperative's certificate of incorporation and
by-laws, as well as the proprietary lease or occupancy agreement, and may be
cancelled by the cooperative for failure by the tenant-stockholder to pay rent
or other obligations or charges owed by such tenant-stockholder, including
mechanics' liens against the cooperative apartment building incurred by such
tenant-stockholder. The proprietary lease or occupancy agreement generally
permit the cooperative to terminate such lease or agreement in the event an
obligor fails to make payments or defaults in the performance of covenants
required thereunder. Typically, the lender and the cooperative enter into a
recognition agreement which establishes the rights and obligations of both
parties in the event of a default by the tenant-stockholder. A default under the
proprietary lease or occupancy agreement will usually constitute a default under
the security agreement between the lender and the tenant-stockholder.
The recognition agreement generally provides that, in the event that the
tenant-stockholder has defaulted under the proprietary lease or the occupancy
agreement is terminated, the cooperative will recognize the lender's lien
against proceeds from the sale of the cooperative apartment, subject, however,
to the cooperative's right to sums due under such proprietary lease or occupancy
agreement. The total amount owed to the cooperative by the tenant-stockholder,
which the lender generally cannot restrict and does not monitor, could reduce
the value of the collateral below the outstanding principal balance of the
cooperative loan and accrued and unpaid interest thereon.
Recognition agreements also provide that in the event of a foreclosure on a
cooperative loan, the lender must obtain the approval or consent of the
cooperative as required by the proprietary lease before transferring the
cooperative shares or assigning the proprietary lease. Generally, the lender is
not limited in any rights it may have to dispossess the tenant-stockholders.
In some states, foreclosure on the cooperative shares is accomplished by a
sale in accordance with the provisions of Article 9 of the Uniform Commercial
Code and the security agreement relating to those shares. Article 9 of the
Uniform Commercial Code requires that a sale be conducted in a "commercially
reasonable" manner. Whether a foreclosure sale has been conducted in a
"commercially reasonable" manner will depend on the facts in each case. In
determining commercial reasonableness, a court will look to the notice given the
debtor and the method, manner, time, place and terms of the foreclosure.
Generally, a sale conducted according to the usual practice of banks selling
similar collateral will be considered reasonably conducted.
Article 9 of the Uniform Commercial Code provides that the proceeds of the
sale will be applied first to pay the costs and expenses of the sale and then to
satisfy the indebtedness secured by the lender's security interest. The
recognition agreement, however, generally provides that the lender's right to
reimbursement is subject to the right of the cooperatives to receive sums due
under the proprietary lease or occupancy agreement. If there are proceeds
remaining, the lender must account to the tenant-stockholder for the surplus.
Conversely, if a portion of the indebtedness remains unpaid, the tenant-
stockholder is generally responsible for the deficiency.
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BANKRUPTCY LAWS
Operation of the Bankruptcy Code and related state laws may interfere with
or affect the ability of a lender to realize upon collateral and/or to enforce a
deficiency judgment. For example, under the Bankruptcy Code, virtually all
actions (including foreclosure actions and deficiency judgment proceedings) to
collect a debt are automatically stayed upon the filing of the bankruptcy
petition and, often, no interest or principal payments are made during the
course of the bankruptcy case. The delay and the consequences thereof caused by
the automatic stay can be significant. Also, under the Bankruptcy Code, the
filing of a petition in bankruptcy by or on behalf of a junior lienholder would
stay the senior lender from proceeding with any foreclosure action.
Under the Bankruptcy Code, provided certain substantive and procedural
safeguards protective of the lender's secured claim are met, the amount and
terms of a mortgage loan secured by a lien on property of the debtor may be
modified under certain circumstances. For example, if the loan is undersecured,
the outstanding amount of the loan which would remain secured may be reduced to
the then-current value of the property (with a corresponding partial reduction
of the amount of lender's security interest) pursuant to a confirmed plan, thus
leaving the lender a general unsecured creditor for the difference between such
value and the outstanding balance of the loan. Other modifications may include
the reduction in the amount of each scheduled payment by means of a reduction in
the rate of interest and/or an alteration of the repayment schedule (with or
without affecting the unpaid principal balance of the loan), and/or by an
extension (or shortening) of the term to maturity. Some bankruptcy courts have
approved plans, based on the particular facts of the reorganization case, that
effected the cure of a mortgage loan default by paying arrearages over a number
of years. Also under federal bankruptcy law, a bankruptcy court may permit a
debtor through its rehabilitative plan to de-accelerate a secured loan and to
reinstate the loan even though the lender accelerated the mortgage loan and
final judgment of foreclosure had been entered in state court (provided no sale
of the property had yet occurred) prior to the filing of the debtor's petition.
This may be done even if the full amount due under the original loan is never
repaid.
Federal bankruptcy law provides generally that rights and obligations under
an unexpired lease of the debtor/lessee may not be terminated or modified at any
time after the commencement of a case under the Bankruptcy Code solely on the
basis of a provision in the lease to such effect or because of certain other
similar events. This prohibition could limit the ability of the trustee for a
series of certificates to exercise certain contractual remedies with respect to
the leases. In addition, Section 362 of the Bankruptcy Code operates as an
automatic stay of, among other things, any act to obtain possession of property
from a debtor's estate. This may delay a trustee's exercise of such remedies for
a related series of certificates in the event that a related lessee or a related
mortgagor becomes the subject of a proceeding under the Bankruptcy Code. For
example, a mortgagee would be stayed from enforcing a lease assignment by a
mortgagor related to a mortgaged property if the related mortgagor was in a
bankruptcy proceeding. The legal proceedings necessary to resolve the issues
could be time-consuming and might result in significant delays in the receipt of
the assigned rents. Similarly, the filing of a petition in a bankruptcy by or on
behalf of a lessee of a mortgaged property would result in a stay against the
commencement or continuation of any state court proceeding for past due rent,
for accelerated rent, for damages or for a summary eviction order with respect
to a default under the lease that occurred prior to the filing of the lessee's
petition. Rents and other proceeds of a mortgage loan may also escape an
assignment thereof if the assignment is not fully perfected under state law
prior to commencement of the bankruptcy proceeding. See "--Leases and Rents."
In addition, the Bankruptcy Code generally provides that a trustee or
debtor-in-possession may, subject to approval of the court, (a) assume the lease
and retain it or assign it to a third party or (b) reject the lease. If the
lease is assumed, the trustee in bankruptcy on behalf of the lessee, or the
lessee as debtor-in-possession, or the assignee, if applicable, must cure any
defaults under the lease, compensate the lessor for its losses and provide the
lessor with "adequate assurance" of future performance. Such remedies may be
insufficient, however, as the lessor may be forced to continue under the lease
with a lessee that is a poor credit risk or an unfamiliar tenant if the lease
was assigned, and any assurances provided to the lessor may, in fact, be
inadequate. If the lease is rejected, such rejection generally
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constitutes a breach of the executory contract or unexpired lease immediately
before the date of filing the petition. As a consequence, the other party or
parties to such lease, such as the mortgagor, as lessor under a lease, would
have only an unsecured claim against the debtor for damages resulting from such
breach which could adversely affect the security for the related mortgage loan.
In addition, pursuant to Section 502(b)(6) of the Bankruptcy Code, a lessor's
damages for lease rejection in respect of future rent installments are limited
to the rent reserved by the lease, without acceleration, for the greater of one
year or 15% of the remaining term of the lease, but not more than three years.
If a trustee in bankruptcy on behalf of a lessor, or a lessor as
debtor-in-possession, rejects an unexpired lease of real property, the lessee
may treat such lease as terminated by such rejection or, in the alternative, the
lessee may remain in possession of the leasehold for the balance of such term,
and for any renewal or extension of such term that is enforceable by the lessee
under applicable nonbankruptcy law. The Bankruptcy Code provides that if a
lessee elects to remain in possession after such a rejection of a lease, the
lessee may offset any damages occurring after such date caused by the
nonperformance of any obligation of the lessor under the lease after such date
against rents reserved under the lease. To the extent provided in the related
prospectus supplement, the lessee will agree under certain leases to pay all
amounts owing thereunder to the master servicer without offset. To the extent
that such a contractual obligation remains enforceable against the lessee, the
lessee would not be able to avail itself of the rights of offset generally
afforded to lessees of real property under the Bankruptcy Code.
In a bankruptcy or similar proceeding of a mortgagor, action may be taken
seeking the recovery, as a preferential transfer or on other grounds, of any
payments made by the mortgagor, or made directly by the related lessee, under
the related mortgage loan to the trust fund. Payments on long-term debt may be
protected from recovery as preferences if they are payments in the ordinary
course of business made on debts incurred in the ordinary course of business.
Whether any particular payment would be protected depends upon the facts
specific to a particular transaction.
A trustee in bankruptcy, in some cases, may be entitled to collect its
costs and expenses in preserving or selling the mortgaged property ahead of
payment to the lender. In certain circumstances, a debtor in bankruptcy may have
the power to grant liens senior to the lien of a mortgage, and analogous state
statutes and general principles of equity may also provide a mortgagor with
means to halt a foreclosure proceeding or sale and to force a restructuring of a
mortgage loan on terms a lender would not otherwise accept. Moreover, the laws
of certain states also give priority to certain tax liens over the lien of a
mortgage or deed of trust. Under the Bankruptcy Code, if the court finds that
actions of the mortgagee have been unreasonable, the lien of the related
mortgage may be subordinated to the claims of unsecured creditors.
Certain of the mortgagors may be partnerships. The laws governing limited
partnerships in certain states provide that the commencement of a case under the
Bankruptcy Code with respect to a general partner will cause a person to cease
to be a general partner of the limited partnership, unless otherwise provided in
writing in the limited partnership agreement. This provision may be construed as
an "ipso facto" clause and, in the event of the general partner's bankruptcy,
may not be enforceable. Certain limited partnership agreements of the mortgagors
may provide that the commencement of a case under the Bankruptcy Code with
respect to the related general partner constitutes an event of withdrawal
(assuming the enforceability of the clause is not challenged in bankruptcy
proceedings or, if challenged, is upheld) that might trigger the dissolution of
the limited partnership, the winding up of its affairs and the distribution of
its assets, unless (i) at the time there was at least one other general partner
and the written provisions of the limited partnership agreement permit the
business of the limited partnership to be carried on by the remaining general
partner and that general partner does so or (ii) the written provisions of the
limited partnership agreement permit the limited partner to agree within a
specified time frame (often 60 days) after such withdrawal to continue the
business of the limited partnership and to the appointment of one or more
general partners and the limited partners do so. In addition, the laws governing
general partnerships in certain states provide that the commencement of a case
under the Bankruptcy Code or state bankruptcy laws with respect to a general
partner of such partnerships triggers the dissolution of such partnership, the
winding up of its affairs and the distribution of its assets. Such state laws,
however, may not be enforceable or effective in a bankruptcy case. The
dissolution of a mortgagor, the winding up of its
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affairs and the distribution of its assets could result in an acceleration of
its payment obligation under a related mortgage loan, which may reduce the yield
on the related series of certificates in the same manner as a principal
prepayment.
In addition, the bankruptcy of the general partner of a mortgagor that is a
partnership may provide the opportunity for a trustee in bankruptcy for such
general partner, such general partner as a debtor-in-possession, or a creditor
of such general partner to obtain an order from a court consolidating the assets
and liabilities of the general partner with those of the mortgagor pursuant to
the doctrines of substantive consolidation or piercing the corporate veil. In
such a case, the mortgaged property could become property of the estate of such
bankrupt general partner. Not only would the mortgaged property be available to
satisfy the claims of creditors of such general partner, but an automatic stay
would apply to any attempt by the trustee to exercise remedies with respect to
such mortgaged property. However, such an occurrence should not affect the
trustee's status as a secured creditor with respect to the mortgagor or its
security in the mortgaged property.
ENVIRONMENTAL CONSIDERATIONS
General. A lender may be subject to environmental risks when taking a
security interest in real property. Of particular concern may be properties that
are or have been used for industrial, manufacturing, military, disposal or
certain commercial activities. Such environmental risks include the possible
diminution of the value of a contaminated property or, as discussed below,
potential liability for clean-up costs or other remedial actions and natural
resource damages that could exceed the value of the property or the amount of
the lender's loan. In certain circumstances, a lender may decide to abandon a
contaminated mortgaged property as collateral for its loan rather than foreclose
and risk liability for such costs.
Superlien Laws. Under certain federal and state laws, contamination on a
property may give rise to a lien on the property for clean-up costs. In several
states, such a lien has priority over all existing liens, including those of
existing mortgages. In these states, the lien of a mortgage may lose its
priority to such a "superlien."
CERCLA. The federal Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended ("CERCLA"), imposes strict liability on
present and past "owners" and "operators" of contaminated real property for the
costs of clean-up. Excluded from CERCLA's definition of "owner" or "operator,"
however, is a lender that, "without participating in the management" of a
facility holds indicia of ownership primarily to protect his security interest
in the facility. This secured creditor exemption is intended to provide a lender
certain protections from liability under CERCLA as an owner or operator of
contaminated property. However, a secured lender may be liable as an "owner" or
"operator" of a contaminated mortgaged property if agents or employees of the
lender are deemed to have actually participated in the management of such
mortgaged property or the operations of the borrower. Such liability may exist
even if the lender did not cause or contribute to the contamination and
regardless of whether the lender has actually taken possession of a mortgaged
property through foreclosure, deed in lieu of foreclosure or otherwise.
Moreover, such liability, if incurred, would not be limited to, and could
substantially exceed, the original or unamortized principal balance of a loan or
to the value of the property securing a loan.
In addition, lenders may face potential liability for remediation of
releases of petroleum or hazardous wastes from underground storage tanks under
the federal Resource Conservation and Recovery Act ("RCRA"), if they are deemed
to be the "owners" or "operators" of facilities in which they have a security
interest or upon which they have foreclosed.
The federal Asset Conservation, Lender Liability and Deposit Insurance
Protection Act of 1996 (the "Lender Liability Act") seeks to clarify the actions
a lender may take without incurring liability as an "owner" or "operator" of
contaminated property or underground petroleum storage tanks. The Lender
Liability Act amends CERCLA and RCRA to provide guidance on actions that do or
do not constitute "participation in management." However, the protections
afforded by these amendments are subject to
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terms and conditions that have not been clarified by the courts. Moreover, the
Lender Liability Act does not, among other things: (1) eliminate potential
liability to lenders under CERCLA or RCRA, (2) necessarily reduce credit risks
associated with lending to borrowers having significant environmental
liabilities or potential liabilities, (3) eliminate environmental risks
associated with taking possession of contaminated property or underground
storage tanks or assuming control of the operations thereof, or (4) necessarily
affect liabilities or potential liabilities under state environmental laws which
may impose liability on "owners or operators" but do not incorporate the secured
creditor exemption.
Certain Other State Laws. Many states have statutes similar to CERCLA and
RCRA, and not all of those statutes provide for a secured creditor exemption.
In a few states, transfers of some types of properties are conditioned upon
cleanup of contamination. In these cases, a lender that becomes the owner of a
property through foreclosure, deed in lieu of foreclosure or otherwise, may be
required to enter into an agreement with the state providing for the cleanup of
the contamination before selling or otherwise transferring the property.
Beyond statute-based environmental liability, there exist common law causes
of action (for example, actions based on nuisance or on toxic tort resulting in
death, personal injury, or damage to property) related to hazardous
environmental conditions on a property. While a party seeking to hold a lender
liable in such cases may face litigation difficulties, unanticipated or
uninsured liabilities of the borrower may jeopardize the borrower's ability to
meet its loan obligations.
Additional Considerations. The cost of remediating hazardous substance
contamination at a property can be substantial. If a lender becomes liable, it
can bring an action for contribution against other potentially liable parties,
but such parties may be bankrupt or otherwise judgment proof. Accordingly, it is
possible that such costs could become a liability of the trust fund and occasion
a loss to the certificateholders.
To reduce the likelihood of such a loss, unless otherwise specified in the
prospectus supplement, the pooling and servicing agreement will provide that the
master servicer, acting on behalf of the trustee, may not take possession of a
mortgaged property or take over its operation unless the master servicer, based
solely on a report (as to environmental matters) prepared by a person who
regularly conducts environmental site assessments, has made the determination
that it is appropriate to do so, as described under "Description of the Pooling
and Servicing Agreements--Realization upon Defaulted Mortgage Loans."
If a lender forecloses on a mortgage secured by a property, the operations
of which are subject to environmental laws and regulations, the lender may be
required to operate the property in accordance with those laws and regulations.
Such compliance may entail substantial expense, especially in the case of
industrial or manufacturing properties.
In addition, a lender may be obligated to disclose environmental conditions
on a property to government entities and/or to prospective buyers (including
prospective buyers at a foreclosure sale or following foreclosure). Such
disclosure may result in the imposition of certain investigation or remediation
requirements and/or decrease the amount that prospective buyers are willing to
pay for the affected property, sometimes substantially, and thereby decrease the
ability of the lender to recoup its investment in a loan upon foreclosure.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE
Certain of the mortgage loans may contain "due-on-sale" and
"due-on-encumbrance" clauses that purport to permit the lender to accelerate the
maturity of the loan if the borrower transfers or encumbers the related
mortgaged property. In recent years, court decisions and legislative actions
placed substantial restrictions on the right of lenders to enforce such clauses
in many states. By virtue, however, of the Garn-St. Germain Depository
Institutions Act of 1982 (the "Garn Act"), effective October 15, 1982 (which
purports to preempt state laws that prohibit the enforcement of due-on-sale
clauses by providing, among other matters, that "due-on-sale" clauses in certain
loans made after the effective date of the Garn Act are
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enforceable, within certain limitations as set forth in the Garn Act and the
regulations promulgated thereunder), a master servicer may nevertheless have the
right to accelerate the maturity of a mortgage loan that contains a
"due-on-sale" provision upon transfer of an interest in the property, regardless
of the master servicer's ability to demonstrate that a sale threatens its
legitimate security interest.
SUBORDINATE FINANCING
Certain of the mortgage loans may not restrict the ability of the borrower
to use the mortgaged property as security for one or more additional loans.
Where a borrower encumbers a mortgaged property with one or more junior liens,
the senior lender is subjected to additional risk. First, the borrower may have
difficulty servicing and repaying multiple loans. Moreover, if the subordinate
financing permits recourse to the borrower (as is frequently the case) and the
senior loan does not, a borrower may have more incentive to repay sums due on
the subordinate loan. Second, acts of the senior lender that prejudice the
junior lender or impair the junior lender's security may create a superior
equity in favor of the junior lender. For example, if the borrower and the
senior lender agree to an increase in the principal amount of or the interest
rate payable on the senior loan, the senior lender may lose its priority to the
extent any existing junior lender is harmed or the borrower is additionally
burdened. Third, if the borrower defaults on the senior loan and/or any junior
loan or loans, the existence of junior loans and actions taken by junior lenders
can impair the security available to the senior lender and can interfere with or
delay the taking of action by the senior lender. Moreover, the bankruptcy of a
junior lender may operate to stay foreclosure or similar proceedings by the
senior lender.
DEFAULT INTEREST AND LIMITATIONS ON PREPAYMENTS
Notes and mortgages may contain provisions that obligate the borrower to
pay a late charge or additional interest if payments are not timely made, and in
some circumstances, may prohibit prepayments for a specified period and/or
condition prepayments upon the borrower's payment of prepayment fees or yield
maintenance penalties. In certain states, there are or may be specific
limitations upon the late charges which a lender may collect from a borrower for
delinquent payments. Certain states also limit the amounts that a lender may
collect from a borrower as an additional charge if the loan is prepaid. In
addition, the enforceability of provisions that provide for prepayment fees or
penalties upon an involuntary prepayment is unclear under the laws of many
states.
CERTAIN LAWS AND REGULATIONS; TYPES OF MORTGAGED PROPERTIES
The mortgaged properties will be subject to compliance with various
federal, state and local statutes and regulations. Failure to comply (together
with an inability to remedy any such failure) could result in material
diminution in the value of a mortgaged property which could, together with the
possibility of limited alternative uses for a particular mortgaged property
(e.g., a nursing or convalescent home or hospital), result in a failure to
realize the full principal amount of the related mortgage loan. Mortgages on
properties which are owned by the mortgagor under a condominium form of
ownership are subject to the declaration, by-laws and other rules and
regulations of the condominium association. Mortgaged properties which are
hotels or motels may present additional risk in that hotels and motels are
typically operated pursuant to franchise, management and operating agreements
which may be limited by the operator. In addition, the transferability of the
hotel's liquor and other licenses to an entity acquiring the hotel either
through purchases or foreclosure is subject to the vagaries of local law
requirements. In addition, mortgaged properties which are multifamily
residential properties may be subject to rent control laws, which could impact
the future cash flows of such properties.
APPLICABILITY OF USURY LAWS
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980 ("Title V") provides that state usury limitations shall not apply to
certain types of residential (including multifamily) first mortgage loans
originated by certain lenders after March 31, 1980. Title V authorized any state
to
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reimpose interest rate limits by adopting, before April 1, 1983, a law or
constitutional provision that expressly rejects application of the federal law.
In addition, even where Title V is not so rejected, any state is authorized
by the law to adopt a provision limiting discount points or other charges on
mortgage loans covered by Title V. Certain states have taken action to reimpose
interest rate limits and/or to limit discount points or other charges.
No mortgage loan originated in any state in which application of Title V
has been expressly rejected or a provision limiting discount points or other
charges has been adopted will (if originated after that rejection or adoption)
be eligible for inclusion in a trust fund unless (i) such mortgage loan provides
for such interest rate, discount points and charges as are permitted in such
state or (ii) such mortgage loan provides that the terms thereof are to be
construed in accordance with the laws of another state under which such interest
rate, discount points and charges would not be usurious and the borrower's
counsel has rendered an opinion that such choice of law provision would be given
effect.
SOLDIERS' AND SAILORS' CIVIL RELIEF ACT OF 1940
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended (the "Relief Act"), a borrower who enters military service after the
origination of such borrower's mortgage loan (including a borrower who was in
reserve status and is called to active duty after origination of the mortgage
loan), may not be charged interest (including fees and charges) above an annual
rate of 6% during the period of such borrower's active duty status, unless a
court orders otherwise upon application of the lender. The Relief Act applies to
individuals who are members of the Army, Navy, Air Force, Marines, National
Guard, Reserves, Coast Guard and officers of the U.S. Public Health Service
assigned to duty with the military. Because the Relief Act applies to
individuals who enter military service (including reservists who are called to
active duty) after origination of the related mortgage loan, no information can
be provided as to the number of loans with individuals as borrowers that may be
affected by the Relief Act. Application of the Relief Act would adversely
affect, for an indeterminate period of time, the ability of any servicer to
collect full amounts of interest on certain of the mortgage loans. Any
shortfalls in interest collections resulting from the application of the Relief
Act would result in a reduction of the amounts distributable to the holders of
the related series of certificates, and would not be covered by advances or,
unless otherwise specified in the prospectus supplement, any form of credit
support provided in connection with such certificates. In addition, the Relief
Act imposes limitations that would impair the ability of the servicer to
foreclose on an affected mortgage loan during the borrower's period of active
duty status and, under certain circumstances, during an additional three-month
period thereafter.
AMERICANS WITH DISABILITIES ACT
Under Title III of the Americans with Disabilities Act of 1990 and rules
promulgated thereunder (collectively, the "ADA"), in order to protect
individuals with disabilities, public accommodations (such as hotels,
restaurants, shopping centers, hospitals, schools and social service center
establishments) must remove architectural and communication barriers that are
structural in nature from existing places of public accommodation to the extent
"readily achievable." In addition, under the ADA, alterations to a place of
public accommodation or a commercial facility are to be made so that, to the
maximum extent feasible, such altered portions are readily accessible to and
usable by disabled individuals. The "readily achievable" standard takes into
account, among other factors, the financial resources of the affected site,
owner, landlord or other applicable person. The requirements of the ADA may also
be imposed on a foreclosing lender who succeeds to the interest of the borrower
as owner or landlord. Since the "readily achievable" standard may vary depending
on the financial condition of the owner or landlord, a foreclosing lender who is
financially more capable than the borrower of complying with the requirements of
the ADA may be subject to more stringent requirements than those to which the
borrower is subject.
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FORFEITURE IN DRUG, RICO AND MONEY LAUNDERING VIOLATIONS
Federal law provides that property purchased or improved with assets
derived from criminal activity or otherwise tainted, or used in the commission
of certain offenses, can be seized and ordered forfeited to the United States of
America. The offenses which can trigger such a seizure and forfeiture include,
among others, violations of the Racketeer Influenced and Corrupt Organizations
Act, the Bank Secrecy Act, the anti-money laundering laws and regulations,
including the USA Patriot Act of 2001 and the regulations issued pursuant to
that Act, as well as the narcotic drug laws. In many instances, the United
States may seize the property even before a conviction occurs.
In the event of a forfeiture proceeding, a lender may be able to establish
its interest in the property by proving that (1) its mortgage was executed and
recorded before the commission of the illegal conduct from which the assets used
to purchase or improve the property were derived or before the commission of any
other crime upon which the forfeiture is based, or (2) the lender, at the time
of the execution of the mortgage, "did not know or was reasonably without cause
to believe that the property was subject to forfeiture." However, there is no
assurance that such a defense will be successful.
FEDERAL DEPOSIT INSURANCE ACT; COMMERCIAL MORTGAGE LOAN SERVICING
Under the Federal Deposit Insurance Act, federal bank regulatory
authorities, including the Office of the Comptroller of the Currency (OCC), have
the power to determine if any activity or contractual obligation of a bank
constitutes an unsafe or unsound practice or violates a law, rule or regulation
applicable to such bank. If Wachovia Bank, National Association (Wachovia) or
another bank is a servicer and/or a mortgage loan seller for a series and the
OCC, which has primary regulatory authority over Wachovia and other banks, were
to find that any obligation of Wachovia or such other bank under the related
pooling and servicing agreement or other agreement or any activity of Wachovia
or such other bank constituted an unsafe or unsound practice or violated any
law, rule or regulation applicable to it, the OCC could order Wachovia or such
other bank, among other things, to rescind such contractual obligation or
terminate such activity.
In March 2003, the OCC issued a temporary cease and desist order against a
national bank (as to which no conservator or receiver had been appointed)
asserting that, contrary to safe and sound banking practices, the bank was
receiving inadequate servicing compensation in connection with several credit
card securitizations sponsored by its affiliates because of the size and
subordination of the contractual servicing fee, and ordered the bank, among
other things, to immediately resign as servicer, to cease all servicing activity
within 120 days and to immediately withhold funds from collections in an amount
sufficient to compensate it for its actual costs and expenses of servicing
(notwithstanding the priority of payments in the related securitization
agreements).
While the depositor does not believe that the OCC would consider, with
respect to any series, (i) provisions relating to Wachovia or another bank
acting as a servicer under the related pooling and servicing agreement, (ii) the
payment or amount of the servicing compensation payable to Wachovia or another
bank or (iii) any other obligation of Wachovia or another bank under the related
pooling and servicing agreement or other contractual agreement under which the
depositor may purchase mortgage loans from Wachovia or another bank, to be
unsafe or unsound or violative of any law, rule or regulation applicable to it,
there can be no assurance that the OCC in the future would not conclude
otherwise. If the OCC did reach such a conclusion, and ordered Wachovia or
another bank to rescind or amend any such agreement, payments on certificates
could be delayed or reduced.
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MATERIAL FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following is a general discussion of the anticipated material federal
income tax consequences of the purchase, ownership and disposition of offered
certificates. This discussion is directed solely to certificateholders that hold
the certificates as capital assets within the meaning of section 1221 of the
Code and it does not purport to discuss all federal income tax consequences that
may be applicable to particular categories of investors, some of which (e.g.,
banks, insurance companies and foreign investors) may be subject to special
rules. Further, the authorities on which this discussion, and the opinion
referred to below, are based are subject to change or differing interpretations,
which could apply retroactively. Taxpayers and preparers of tax returns
(including those filed by any REMIC or other issuer) should be aware that under
applicable Treasury regulations a provider of advice on specific issues of law
is not considered an income tax return preparer unless the advice is given with
respect to the consequences of contemplated actions and is directly relevant to
the determination of an entry on a tax return. Accordingly, taxpayers should
consult their own tax advisors and tax return preparers regarding the
preparation of any item on a tax return, even where the anticipated tax
treatment has been discussed herein. In addition to the federal income tax
consequences described herein, potential investors should consider the state and
local tax consequences, if any, of the purchase, ownership and disposition of
offered certificates. See "State and Other Tax Consequences." Certificateholders
are advised to consult their own tax advisors concerning the federal, state,
local or other tax consequences to them of the purchase, ownership and
disposition of offered certificates.
The following discussion addresses securities of two general types: (i)
REMIC Certificates representing interests in a trust, or a portion thereof, that
the master servicer or the trustee will elect to have treated as a real estate
mortgage investment conduit ("REMIC") under sections 860A through 860G (the
"REMIC Provisions") of the Code and (ii) grantor trust certificates representing
interests in a grantor trust fund as to which no such election will be made. If
no REMIC election is made, the trust fund may elect to be treated as a financial
assets securitization investment trust ("FASIT"). The prospectus supplement
relating to such an election will describe the requirements for the
classification of the trust as a FASIT and the consequences to a holder of
owning certificates in a FASIT. The prospectus supplement for each series of
certificates also will indicate whether a REMIC election (or elections) will be
made for the related trust or applicable portion thereof and, if such an
election is to be made, will identify all "regular interests" and "residual
interests" in each REMIC. For purposes of this tax discussion, references to a
"certificateholder" or a "holder" are to the beneficial owner of a certificate.
The following discussion is limited in applicability to offered
certificates. Moreover, this discussion applies only to the extent that mortgage
assets held by a trust fund consist solely of mortgage loans. To the extent that
other mortgage assets, including REMIC Certificates and mortgage pass-through
certificates, are to be held by a trust, the tax consequences associated with
the inclusion of such assets will be disclosed in the related prospectus
supplement. In addition, if cash flow agreements, other than guaranteed
investment contracts, are included in a trust, the tax consequences associated
with any cash flow agreements also will be disclosed in the related prospectus
supplement. See "Description of the Trust Funds--Cash Flow Agreements."
Furthermore, the following discussion is based in part upon the rules
governing original issue discount that are set forth in sections 1271-1273 and
1275 of the Code and in the Treasury regulations issued thereunder (the "OID
Regulations"), and in part upon the REMIC provisions and the Treasury
regulations issued thereunder (the "REMIC Regulations"). The OID regulations do
not adequately address certain issues relevant to, and in some instances provide
that they are not applicable to, securities such as the certificates.
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REMICS
Classification of REMICs. It is the opinion of Cadwalader, Wickersham &
Taft LLP, counsel to the depositor, that upon the issuance of each series of
REMIC Certificates, assuming compliance with all provisions of the related
pooling and servicing agreement and based upon the law on the date thereof, for
federal income tax purposes the related trust will qualify as one or more REMICs
and the REMIC Certificates offered will be considered to evidence ownership of
"regular interests" ("REMIC Regular Certificates") or "residual interests"
("REMIC Residual Certificates") under the REMIC provisions.
If an entity electing to be treated as a REMIC fails to comply with one or
more of the ongoing requirements of the Code for such status during any taxable
year, the Code provides that the entity will not be treated as a REMIC for such
year and thereafter. In that event, such entity may be taxable as a corporation
under Treasury regulations, and the related REMIC Certificates may not be
accorded the status or given the tax treatment described below. Although the
Code authorizes the Treasury Department to issue regulations providing relief in
the event of an inadvertent termination of REMIC status, no such regulations
have been issued. Any such relief, moreover, may be accompanied by sanctions,
such as the imposition of a corporate tax on all or a portion of the trust
fund's income for the period during which the requirements for such status are
not satisfied. The pooling and servicing agreement with respect to each REMIC
will include provisions designed to maintain the trust status as a REMIC under
the REMIC provisions. It is not anticipated that the status of any trust as a
REMIC will be terminated.
Characterization of Investments in REMIC Certificates. In general, with
respect to each series of certificates for which a REMIC election is made,
certificates held by a real estate investment trust will constitute "real estate
assets" within the meaning of section 856(c)(5)(B) of the Code, and each such
series of certificates will constitute assets described in section
7701(a)(19)(C) of the Code in the same proportion that the assets of the REMIC
underlying such certificates would be so treated. However, to the extent that
the REMIC assets constitute mortgages on property not used for residential or
certain other prescribed purposes, the REMIC Certificates will not be treated as
assets qualifying under section 7701(a)(19)(C)(v) of the Code. Moreover, if 95%
or more of the assets of the REMIC qualify for any of the foregoing treatments
at all times during a calendar year, the REMIC Certificates will qualify for the
corresponding status in their entirety for that calendar year. Interest on the
REMIC Regular Certificates and income allocated to the class of REMIC Residual
Certificates will be interest described in section 856(c)(3)(B) of the Code to
the extent that such certificates are treated as "real estate assets" within the
meaning of section 856(c)(5)(B) of the Code. In addition, generally the REMIC
Regular Certificates will be "qualified mortgages" within the meaning of section
860G(a)(3) of the Code. The determination as to the percentage of the REMIC's
assets that constitute assets described in the foregoing sections of the Code
will be made with respect to each calendar quarter based on the average adjusted
basis of each category of the assets held by the REMIC during such calendar
quarter. The servicer or the trustee will report those determinations to
certificateholders in the manner and at the times required by the applicable
Treasury regulations.
The assets of the REMIC will include, in addition to mortgage loans,
payments on mortgage loans held pending distribution on the REMIC Certificates
and property acquired by foreclosure held pending sale, and may include amounts
in reserve accounts. It is unclear whether property acquired by foreclosure held
pending sale and amounts in reserve accounts would be considered to be part of
the mortgage loans, or whether such assets otherwise would receive the same
treatment as the mortgage loans for purposes of all of the foregoing sections.
The related prospectus supplement will describe whether any mortgage loans
included in the trust fund will not be treated as assets described in the
foregoing sections. The REMIC regulations do provide that payments on mortgage
loans held pending distribution are considered part of the mortgage.
Tiered REMIC Structures. For certain series of REMIC Certificates, two or
more separate elections may be made to treat designated portions of the related
trust fund as separate or tiered REMICs for federal income tax purposes. Upon
the issuance of any such series of REMIC Certificates, counsel to the depositor
will deliver its opinion generally to the effect that, assuming compliance with
all provisions of the
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related pooling and servicing agreement, the tiered REMICs will each qualify as
a REMIC and the REMIC Certificates issued by the tiered REMICs, respectively,
will be considered to evidence ownership of REMIC Regular Certificates or REMIC
Residual Certificates in the related REMIC within the meaning of the REMIC
provisions.
For purposes of determining whether the REMIC Certificates are "real estate
assets" within the meaning of section 856(c)(5)(B) of the Code, "loans secured
by an interest in real property" under section 7701(a)(19)(C) of the Code, and
whether the income generated by these certificates is interest described in
section 856(c)(3)(B) of the Code, the tiered REMICs will be treated as one
REMIC.
TAXATION OF OWNERS OF REMIC REGULAR CERTIFICATES
General. Except as otherwise stated in this discussion, REMIC Regular
Certificates will be treated for federal income tax purposes as debt instruments
issued by the REMIC and not as ownership interests in the REMIC or its assets.
Moreover, holders of REMIC Regular Certificates that otherwise report income
under a cash method of accounting will be required to report income with respect
to REMIC Regular Certificates under an accrual method.
Original Issue Discount. Certain REMIC Regular Certificates may be issued
with "original issue discount" within the meaning of section 1273(a) of the
Code. Any holders of REMIC Regular Certificates issued with original issue
discount generally will be required to include original issue discount in income
as it accrues, in accordance with the method described below, in advance of the
receipt of the cash attributable to such income. In addition, section 1272(a)(6)
of the Code provides special rules applicable to REMIC Regular Certificates and
certain other debt instruments issued with original issue discount. Regulations
have not been issued under that section.
The Code requires that a prepayment assumption be used with respect to
mortgage loans held by a REMIC in computing the accrual of original issue
discount on REMIC Regular Certificates issued by that REMIC, and that
adjustments be made in the amount and rate of accrual of such discount to
reflect differences between the actual prepayment rate and the prepayment
assumption. The prepayment assumption is to be determined in a manner prescribed
in Treasury regulations; as noted above, those regulations have not been issued.
The conference committee report accompanying the Tax Reform Act of 1986
indicates that the regulations will provide that the prepayment assumption used
with respect to a REMIC Regular Certificate must be the same as that used in
pricing the initial offering. The prepayment assumption used in reporting
original issue discount for each series of REMIC Regular Certificates will be
consistent with this standard and will be disclosed in the related prospectus
supplement. However, neither the depositor nor any other person will make any
representation that the mortgage loans will in fact prepay at a rate conforming
to the prepayment assumption or at any other rate.
The original issue discount, if any, on a REMIC Regular Certificate will be
the excess of its stated redemption price at maturity over its issue price. The
issue price of a particular class of REMIC Regular Certificates will be the
first cash price at which a substantial amount of REMIC Regular Certificates of
that class is sold (excluding sales to bond houses, brokers and underwriters).
If less than a substantial amount of a particular class of REMIC Regular
Certificates is sold for cash on or prior to the date of their initial issuance,
the issue price will be the fair market value on the issuance date. Under the
OID regulations, the stated redemption price of a REMIC Regular Certificate is
equal to the total of all payments to be made on such certificate other than
"qualified stated interest." "Qualified stated interest" includes interest
payable unconditionally at least annually at a single fixed rate, at a
"qualified floating rate," or at an "objective rate," or a combination of a
single fixed rate and one or more "qualified floating rates," or one "qualified
inverse floating rates," or a combination of "qualified floating rates" that
does not operate in a manner that accelerates or defers interest payments on
such REMIC Regular Certificates.
It is not entirely clear under the Code that interest paid to the REMIC
Regular Certificates that are subject to early termination through prepayments
and that have limited enforcement rights should be considered "qualified stated
interest". However, unless disclosed otherwise in the prospectus supplement, the
trust fund intends to treat stated interest as "qualified stated interest" for
determining if, and to what
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extent, the REMIC Regular Certificates have been issued with original issue
discount. Nevertheless, holders of the REMIC Regular Certificates should consult
their own tax advisors with respect to whether interest in the REMIC Regular
Certificates qualifies as "qualified stated interest" under the Code.
In the case of REMIC Regular Certificates bearing adjustable interest
rates, the determination of the total amount of original issue discount and the
timing of the inclusion thereof will vary according to the characteristics of
such REMIC Regular Certificates. If the original issue discount rules apply to
such certificates, the related prospectus supplement will describe the manner in
which these rules will be applied in preparing information returns to the
certificateholders and the Internal Revenue Service (the "IRS").
In addition, if the accrued interest to be paid on the first distribution
date is computed with respect to a period that begins prior to the issuance of
the certificates, a portion of the purchase price paid for a REMIC Regular
Certificate will reflect accrued interest. The OID regulations state that all or
some portion of such accrued interest may be treated as a separate asset the
cost of which is recovered entirely out of interest paid on the first
distribution date. It is unclear how an election to do so would be made under
the OID regulations and whether such an election could be made unilaterally by a
certificateholder.
Notwithstanding the general definition of original issue discount, original
issue discount on a REMIC Regular Certificate will be considered to be de
minimis if it is less than 0.25% of the stated redemption price of the REMIC
Regular Certificate multiplied by its weighted average life. For this purpose,
the weighted average life of the REMIC Regular Certificate is computed as the
sum of the amounts determined, as to each payment included in the stated
redemption price of such REMIC Regular Certificate, by multiplying the number of
complete years, rounding down for partial years, from the issue date until any
payment is expected to be made (taking into account the prepayment assumption)
by a fraction, the numerator of which is the amount of the payment, and the
denominator of which is the stated redemption price at maturity. Under the OID
Regulations, original issue discount of only a de minimis amount will be
included in income as each payment of stated principal is made, based on the
product of the total amount of such de minimis original issue discount and a
fraction, the numerator of which is the amount of such principal payment and the
denominator of which is the outstanding stated principal amount of the REMIC
Regular Certificate. The OID regulations also would permit a certificateholder
to elect to accrue de minimis original issue discount into income currently
based on a constant yield method. See "--Taxation of Owners of REMIC Regular
Certificates--Market Discount" for a description of such election under the OID
Regulations.
If original issue discount on a REMIC Regular Certificate is in excess of a
de minimis amount, the holder of such certificate must include in ordinary gross
income the sum of the "daily portions" of original issue discount for each day
during its taxable year on which it held such REMIC Regular Certificate,
including the purchase date but excluding the disposition date. In the case of
an original holder of a REMIC Regular Certificate, the daily portions of
original issue discount will be determined as follows.
As to each "accrual period," that is, each period that ends on a date that
corresponds to a distribution date and begins on the first day following the
immediately preceding accrual period, a calculation will be made of the portion
of the original issue discount that accrued during such accrual period. The
portion of original issue discount that accrues in any accrual period will equal
the excess, if any, of (i) the sum of (a) the present value, as of the end of
the accrual period, of all of the distributions remaining to be made on the
REMIC Regular Certificate, if any, in future periods and (b) the distributions
made on such REMIC Regular Certificate during the accrual period of amounts
included in the stated redemption price, over (ii) the adjusted issue price of
the REMIC Regular Certificate at the beginning of the accrual period. The
present value of the remaining distributions referred to in the preceding
sentence will be calculated assuming that distributions on the REMIC Regular
Certificate will be received in future periods based on the mortgage loans being
prepaid at a rate equal to the prepayment assumption and using a discount rate
equal to the original yield to maturity of the certificate. For these purposes,
the original yield to maturity of the certificate will be calculated based on
its issue price and assuming that distributions on the certificate will be made
in all accrual periods based on the mortgage loans being prepaid at a rate equal
to
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the prepayment assumption. The adjusted issue price of a REMIC Regular
Certificate at the beginning of any accrual period will equal the issue price of
such certificate, increased by the aggregate amount of original issue discount
that accrued with respect to such certificate in prior accrual periods, and
reduced by the amount of any distributions made on such REMIC Regular
Certificate in prior accrual periods of amounts included in the stated
redemption price. The original issue discount accruing during any accrual
period, computed as described above, will be allocated ratably to each day
during the accrual period to determine the daily portion of original issue
discount for such day.
A subsequent purchaser of a REMIC Regular Certificate that purchases such
certificate at a cost (excluding any portion of such cost attributable to
accrued qualified stated interest) less than its remaining stated redemption
price will also be required to include in gross income the daily portions of any
original issue discount with respect to such certificate. However, each such
daily portion will be reduced, if such cost is in excess of its "adjusted issue
price," in proportion to the ratio such excess bears to the aggregate original
issue discount remaining to be accrued on such REMIC Regular Certificate. The
adjusted issue price of a REMIC Regular Certificate on any given day equals the
sum of (i) the adjusted issue price (or, in the case of the first accrual
period, the issue price) of the certificate at the beginning of the accrual
period, including the first day and (ii) the daily portions of original issue
discount for all days during the related accrual period up to the day of
determination.
Market Discount. A Certificateholder that purchases a REMIC Regular
Certificate at a market discount, that is, in the case of a REMIC Regular
Certificate issued without original issue discount, at a purchase price less
than its remaining stated principal amount, or in the case of a REMIC Regular
Certificate issued with original issue discount, at a purchase price less than
its adjusted issue price, will recognize gain upon receipt of each distribution
representing stated redemption price. In particular, under section 1276 of the
Code such a certificateholder generally will be required to allocate the portion
of each such distribution representing stated redemption price first to accrued
market discount not previously included in income, and to recognize ordinary
income to that extent. A certificateholder may elect to include market discount
in income currently as it accrues rather than including it on a deferred basis
in accordance with the foregoing. If the election is made, it will apply to all
market discount bonds acquired by such certificateholder on or after the first
day of the taxable year to which the election applies. In addition, the OID
regulations permit a certificateholder to elect to accrue all interest, discount
and premium in income as interest, based on a constant yield method. If such an
election were made with respect to a REMIC Regular Certificate with market
discount, the certificateholder would be deemed to have made an election to
currently include market discount in income with respect to all other debt
instruments having market discount that such certificateholder acquires during
the taxable year of the election or thereafter, and possibly previously acquired
instruments. Similarly, a certificateholder that made this election for a
certificate that is acquired at a premium would be deemed to have made an
election to amortize bond premium with respect to all debt instruments having
amortizable bond premium that such certificateholder owns or acquires. See
"--Taxation of Owners of REMIC Regular Certificates--Premium." Each of these
elections to accrue interest, discount and premium with respect to a certificate
on a constant yield method or as interest would be irrevocable.
Market discount with respect to a REMIC Regular Certificate will be
considered to be de minimis for purposes of section 1276 of the Code if such
market discount is less than 0.25% of the remaining stated redemption price of
such REMIC Regular Certificate multiplied by the number of full years to
maturity remaining after the date of its purchase. In interpreting a similar
rule with respect to original issue discount on obligations payable in
installments, the OID Regulations refer to the weighted average maturity of
obligations, and it is likely that the same rule will be applied with respect to
market discount, presumably taking into account the prepayment assumption. If
market discount is treated as de minimis under this rule, it appears that the
actual discount would be treated in a manner similar to original issue discount
of a de minimis amount. See "--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount." Such treatment would result in discount
being included in income at a slower rate than discount would be required to be
included in income using the method described above.
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Section 1276(b)(3) of the Code specifically authorizes the Treasury
Department to issue regulations providing for the method for accruing market
discount on debt instruments, the principal of which is payable in more than one
installment. Until regulations are issued, the rules described in the committee
report accompanying the Tax Reform Act of 1986 apply. That committee report
indicates that REMIC Regular Certificates should accrue market discount either:
- on the basis of a constant yield method;
- in the case of a REMIC Regular Certificate issued without original issue
discount, in an amount that bears the same ratio to the total remaining
market discount as the stated interest paid during the accrual period
bears to the total amount of stated interest remaining to be paid as of
the beginning of the accrual period; or
- in the case of a REMIC Regular Certificate issued with original issue
discount, in an amount that bears the same ratio to the total remaining
market discount as the original issue discount accrued in the accrual
period bears to the total original issue discount remaining on the REMIC
Regular Certificate at the beginning of the accrual period.
Furthermore, the prepayment assumption used in calculating the accrual of
original issue discount is also used in calculating the accrual of market
discount. Because the regulations referred to in this paragraph have not been
issued, it is not possible to predict what effect such regulations might have on
the tax treatment of a REMIC Regular Certificate purchased at a discount in the
secondary market.
To the extent that REMIC Regular Certificates provide for monthly or other
periodic distributions throughout their term, the effect of these rules may be
to require market discount to be includible in income at a rate that is not
significantly slower than the rate at which such discount would accrue if it
were original issue discount. Moreover, in any event a holder of a REMIC Regular
Certificate generally will be required to treat a portion of any gain on the
sale or exchange of such certificate as ordinary income to the extent of the
market discount accrued to the date of disposition under one of the foregoing
methods, less any accrued market discount previously reported as ordinary
income.
Further, under section 1277 of the Code a holder of a REMIC Regular
Certificate may be required to defer a portion of its interest deductions for
the taxable year attributable to any indebtedness incurred or continued to
purchase or carry a REMIC Regular Certificate purchased with market discount.
For these purposes, the de minimis rule referred to above applies. Any such
deferred interest expense would not exceed the market discount that accrues
during such taxable year and is, in general, allowed as a deduction not later
than the year in which such market discount is includible in income. If such
holder elects to include market discount in income currently as it accrues on
all market discount instruments acquired by such holder in that taxable year or
thereafter, the interest deferral rule described above will not apply.
Premium. A REMIC Regular Certificate purchased at a cost (excluding
accrued qualified stated interest) greater than its remaining stated redemption
price will be considered to be purchased at a premium. The holder of such a
REMIC Regular Certificate may elect under section 171 of the Code to amortize
such premium against qualified stated interest under the constant yield method
over the life of the certificate. If made, such an election will apply to all
debt instruments having amortizable bond premium that the holder owns or
subsequently acquires. Amortizable premium will be treated as an offset to
interest income on the related debt instrument, rather than as a separate
interest deduction. The OID regulations also permit certificateholders to elect
to include all interest, discount and premium in income based on a constant
yield method, further treating the certificateholder as having made the election
to amortize premium generally. See "--Taxation of Owners of REMIC Regular
Certificates--Market Discount." The committee report accompanying the Tax Reform
Act of 1986 states that the same rules that apply to accrual of market discount
will also apply in amortizing bond premium under section 171 of the Code.
Realized Losses. Under section 166 of the Code, both noncorporate holders
of the REMIC Regular Certificates that acquire such certificates in connection
with a trade or business and corporate holders of
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the REMIC Regular Certificates should be allowed to deduct, as ordinary losses,
any losses sustained during a taxable year in which their certificates become
wholly or partially worthless as the result of one or more realized losses on
the residential loans. However, it appears that a noncorporate holder that does
not acquire a REMIC Regular Certificate in connection with a trade or business
will not be entitled to deduct a loss under section 166 of the Code until such
holder's certificate becomes wholly worthless and that the loss will be
characterized as a short-term capital loss. Losses sustained on the mortgage
loans may be "events which have occurred before the close of the accrued period"
that can be taken into account under Code section 1272(a)(6) for purposes of
determining the amount of OID that accrues on a certificate.
The holder of a REMIC Regular Certificate eventually will recognize a loss
or reduction in income attributable to previously accrued and included income
that as the result of a realized loss ultimately will not be realized, but the
law is unclear with respect to the timing and character of such loss or
reduction in income.
TAXATION OF OWNERS OF REMIC RESIDUAL CERTIFICATES
General. As residual interests, the REMIC Residual Certificates will be
subject to tax rules that differ significantly from those that would apply if
the REMIC Residual Certificates were treated for federal income tax purposes as
direct ownership interests in the mortgage loans included in a trust fund or as
debt instruments issued by the REMIC.
An original holder of a REMIC Residual Certificate generally will be
required to report its daily portion of the taxable income or, subject to the
limitations noted in this discussion, the net loss of the REMIC for each day
during a calendar quarter that such holder owned such REMIC Residual
Certificate. For this purpose, the taxable income or net loss of the REMIC will
be allocated to each day in the calendar quarter ratably using a "30 days per
month/90 days per quarter/360 days per year" convention unless the related
prospectus supplement states otherwise. The daily amounts so allocated will then
be allocated among the REMIC Residual Certificateholders in proportion to their
respective ownership interests on such day. Any amount included in the gross
income or allowed as a loss of any REMIC Residual Certificateholder by virtue of
this paragraph will be treated as ordinary income or loss. The taxable income of
the REMIC will be determined under the rules described below in "--Taxable
Income of the REMIC" and will be taxable to the REMIC Residual
Certificateholders without regard to the timing or amount of cash distributions
by the REMIC. Ordinary income derived from REMIC Residual Certificates will be
"portfolio income" for purposes of the taxation of taxpayers subject to
limitations under section 469 of the Code on the deductibility of "passive
losses."
A holder of a REMIC Residual Certificate that purchased such certificate
from a prior holder of such certificate also will be required to report on its
federal income tax return amounts representing its daily share of the taxable
income or loss of the REMIC for each day that it holds such REMIC Residual
Certificate. Those daily amounts generally will equal the amounts of taxable
income or net loss determined as described above. The Committee Report indicates
that certain modifications of the general rules may be made, by regulations,
legislation or otherwise, to reduce or increase the income of a REMIC Residual
Certificateholder that purchased such REMIC Residual Certificate from a prior
holder of such certificate at a price greater than (or less than) the adjusted
basis, such REMIC Residual Certificate would have had in the hands of an
original holder of such certificate. The REMIC Regulations, however, do not
provide for any such modifications.
It is uncertain how payments received by a holder of a REMIC Residual
interest in connection with the acquisition of such REMIC Residual Certificate
should be treated and holders of REMIC Residual Certificates should consult
their tax advisors concerning the treatment of such payments for income tax
purposes.
The amount of income REMIC Residual Certificateholders will be required to
report (or the tax liability associated with such income) may exceed the amount
of cash distributions received from the REMIC for the corresponding period.
Consequently, REMIC Residual Certificateholders should have other sources of
funds sufficient to pay any federal income taxes due as a result of their
ownership of
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REMIC Residual Certificates or unrelated deductions against which income may be
offset, subject to the rules relating to "excess inclusions," residual interests
without "significant value" and "noneconomic" residual interests discussed
below. The fact that the tax liability associated with the income allocated to
REMIC Residual Certificateholders may exceed the cash distributions received by
such REMIC Residual Certificateholders for the corresponding period may
significantly adversely affect such REMIC Residual Certificateholders' after-tax
rate of return.
Taxable Income of the REMIC. The taxable income of the REMIC will equal
the income from the mortgage loans and other assets of the REMIC plus any
cancellation of indebtedness income due to the allocation of realized losses to
REMIC Regular Certificates, less the deductions allowed to the REMIC for
interest on the REMIC Regular Certificates, amortization of any premium on the
mortgage loans, bad debt losses with respect to the mortgage loans and, except
as described below, for servicing, administrative and other expenses.
For purposes of determining its taxable income, the REMIC will have an
initial aggregate basis in its assets equal to the sum of the issue prices of
all REMIC Certificates (or, if a class of REMIC Certificates is not sold
initially, fair market value). Such aggregate basis will be allocated among the
mortgage loans and the other assets of the REMIC in proportion to their
respective fair market values. The issue price of any REMIC Certificates offered
by this prospectus and the related prospectus supplement will be determined in
the manner described above under "--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount." If one or more classes of REMIC
Certificates are retained initially rather than sold, the master servicer or the
trustee may be required to estimate the fair market value of the REMIC's
interests in its mortgage loans and other property in order to determine the
basis to the REMIC of the mortgage loans and other property held by such REMIC.
Subject to possible application of the de minimis rules, the method of
accrual by the REMIC of original issue discount income and market discount
income with respect to mortgage loans that it holds will be equivalent to the
method for accruing original issue discount income for holders of REMIC Regular
Certificates. However, a REMIC that acquires loans at a market discount must
include such market discount in income currently, as it accrues, on a constant
interest basis. See "--Taxation of Owners of REMIC Regular Certificates" above,
which describes a method for accruing such discount income that is analogous to
that required to be used by a REMIC as to mortgage loans with market discount
that it holds.
A mortgage loan will be deemed to have been acquired with discount (or
premium) if the REMIC's basis in that mortgage loan is less than (or greater
than) its stated redemption price. Any such discount will be includible in the
income of the REMIC as it accrues, under a method similar to the method
described above for accruing original issue discount on the REMIC Regular
Certificates. It is anticipated that each REMIC will elect under section 171 of
the Code to amortize any premium on the mortgage loans. Premium on any mortgage
loan to which such election applies may be amortized under a constant yield
method, presumably taking into account a prepayment assumption. However, this
election would not apply to any mortgage loan originated on or before September
27, 1985. Instead, premium on such a mortgage loan should be allocated among the
principal payments thereon and be deductible by the REMIC as those payments
become due or upon the prepayment of such mortgage loan.
A REMIC will be allowed deductions for interest on the REMIC Regular
Certificates equal to the deductions that would be allowed if the REMIC Regular
Certificates were indebtedness of the REMIC. Original issue discount will be
considered to accrue for this purpose as described above under "--Taxation of
Owners of REMIC Regular Certificate--Original Issue Discount," except that the
de minimis rule and the adjustments for subsequent holders of REMIC Regular
Certificates described therein will not apply.
If a class of REMIC Regular Certificates is issued at a price in excess of
the stated redemption price of such class, the net amount of interest deductions
that are allowed the REMIC in each taxable year with respect to the REMIC
Regular Certificates of such class will be reduced by an amount equal to the
portion of the premium that is considered to be amortized or repaid in that
year. Although the matter is not entirely certain, it is likely that Issue
Premium would be amortized under a constant yield method in a
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manner analogous to the method of accruing original issue discount described
above under "--Taxation of Owners of REMIC Regular Certificates--Original Issue
Discount."
As a general rule, the taxable income of a REMIC will be determined in the
same manner as if the REMIC were an individual having the calendar year as its
taxable year and using the accrual method of accounting. However, no item of
income, gain, loss or deduction allocable to a prohibited transaction will be
taken into account. See "--Prohibited Transactions Tax and Other Taxes" below.
The limitation on miscellaneous itemized deductions imposed on individuals by
section 67 of the Code will not be applied at the REMIC level so that the REMIC
will be allowed deductions for servicing, administrative and other non-interest
expenses in determining its taxable income. All such expenses will be allocated
as a separate item to the holders of REMIC Certificates, subject to the
limitation of section 67 of the Code. See "--Possible Pass-Through of
Miscellaneous Itemized Deductions." If the deductions allowed to the REMIC
exceed its gross income for a calendar quarter, such excess will be the net loss
for the REMIC for that calendar quarter.
Basis Rules, Net Losses and Distributions. The adjusted basis of a REMIC
Residual Certificate will be equal to the amount paid for such REMIC Residual
Certificate, increased by amounts included in the income of the REMIC Residual
Certificateholder and decreased (but not below zero) by distributions made, and
by net losses allocated, to such REMIC Residual Certificateholder.
A REMIC Residual Certificateholder is not allowed to take into account any
net loss for any calendar quarter to the extent such net loss exceeds such REMIC
Residual Certificateholder's adjusted basis in its REMIC Residual Certificate as
of the close of such calendar quarter. Any loss that is not currently deductible
by reason of this limitation may be carried forward indefinitely to future
calendar quarters and, subject to the same limitation, may be used only to
offset income from the REMIC Residual Certificate. The ability of REMIC Residual
Certificateholders to deduct net losses may be subject to additional limitations
under the Code, as to which REMIC Residual Certificateholders should consult
their tax advisors.
Any distribution on a REMIC Residual Certificate will be treated as a
nontaxable return of capital to the extent it does not exceed the holder's
adjusted basis in such REMIC Residual Certificate. To the extent a distribution
on a REMIC Residual Certificate exceeds such adjusted basis, it will be treated
as gain from the sale of such REMIC Residual Certificate. Holders of certain
REMIC Residual Certificates may be entitled to distributions early in the term
of the related REMIC under circumstances in which their bases in such REMIC
Residual Certificates will not be sufficiently large that such distributions
will be treated as nontaxable returns of capital. Their bases in such REMIC
Residual Certificates will initially equal the amount paid for such REMIC
Residual Certificates and will be increased by their allocable shares of taxable
income of the trust fund. However, such bases increases may not occur until the
end of the calendar quarter, or perhaps the end of the calendar year, with
respect to which such REMIC taxable income is allocated to the REMIC Residual
Certificateholders. To the extent such REMIC Residual Certificateholders'
initial bases are less than the distributions to such REMIC Residual
Certificateholders, and increases in such initial bases either occur after such
distributions or are less than the amount of such distributions, gain will be
recognized to such REMIC Residual Certificateholders on such distributions and
will be treated as gain from the sale of their REMIC Residual Certificates.
The effect of these rules is that a REMIC Residual Certificateholder may
not amortize its basis in a REMIC Residual Certificate, but may only recover its
basis through distributions, through the deduction of any net losses of the
REMIC or upon the sale of its REMIC Residual Certificate. See "--Sales of REMIC
Certificates." For a discussion of possible modifications of these rules that
may require adjustments to income of a holder of a REMIC Residual Certificate
other than an original holder in order to reflect any difference between the
cost of such REMIC Residual Certificate to such REMIC Residual Certificateholder
and the adjusted basis such REMIC Residual Certificate would have in the hands
of an original holder, see "--Taxation of Owners of REMIC Residual
Certificates--General."
Excess Inclusions. Any "excess inclusions" with respect to a REMIC
Residual Certificate will be subject to federal income tax in all events.
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In general, the "excess inclusions" with respect to a REMIC Residual
Certificate for any calendar quarter will be the excess, if any, of:
- the sum of the daily portions of REMIC taxable income allocable to such
REMIC Residual Certificate; over
- the sum of the "daily accruals" for each day during such quarter that
such REMIC Residual Certificate was held by such REMIC Residual
Certificateholder.
The daily accruals of a REMIC Residual Certificateholder will be determined
by allocating to each day during a calendar quarter its ratable portion of the
product of the "adjusted issue price" of the REMIC Residual Certificate at the
beginning of the calendar quarter and 120% of the "long-term Federal rate" in
effect on the date the certificates were issued. For this purpose, the adjusted
issue price of a REMIC Residual Certificate as of the beginning of any calendar
quarter will be equal to the issue price of the REMIC Residual Certificate,
increased by the sum of the daily accruals for all prior quarters and decreased
(but not below zero) by any distributions made with respect to such REMIC
Residual Certificate before the beginning of such quarter. The issue price of a
REMIC Residual Certificate is the initial offering price to the public
(excluding bond houses and brokers) at which a substantial amount of the REMIC
Residual Certificates were sold. The "long-term Federal rate" is an average of
current yields on Treasury securities with a remaining term of greater than nine
years, computed and published monthly by the IRS.
For REMIC Residual Certificateholders, an excess inclusion:
- will not be permitted to be offset by deductions, losses or loss
carryovers from other activities;
- will be treated as "unrelated business taxable income" to an otherwise
tax-exempt organization; and
- will not be eligible for any rate reduction or exemption under any tax
treaty with respect to the 30% United States withholding tax imposed on
distributions to foreign investors. See, however, "--Foreign Investors in
REMIC Certificates" below.
In the case of any REMIC Residual Certificates held by a real estate
investment trust, the aggregate excess inclusions with respect to such REMIC
Residual Certificates, reduced (but not below zero) by the real estate
investment trust taxable income, excluding any net capital gain, will be
allocated among the shareholders of such trust in proportion to the dividends
received by such shareholders from such trust, and any amount so allocated will
be treated as an excess inclusion with respect to a REMIC Residual Certificate
as if held directly by such shareholder. The Treasury could issue regulations
which apply a similar rule to regulated investment companies, common trust funds
and certain cooperatives. The REMIC Regulations currently do not address this
subject.
In addition, there are three rules for determining the effect of excess
inclusions on the alternative minimum taxable income of a REMIC Residual
Certificateholder. First, alternative minimum taxable income for a REMIC
Residual Certificateholder is determined without regard to the special rule
discussed above, that taxable income cannot be less than excess inclusions.
Second, a REMIC Residual Certificateholder's alternative minimum taxable income
for a taxable year cannot be less than the excess inclusions for the year.
Third, the amount of any alternative minimum tax net operating loss deduction
must be computed without regard to any excess inclusions.
Noneconomic REMIC Residual Certificates. Under the REMIC regulations,
transfers of "noneconomic" REMIC Residual Certificates will be disregarded for
all federal income tax purposes if "a significant purpose of the transfer was to
enable the transferor to impede the assessment or collection of tax". If such
transfer is disregarded, the purported transferor will continue to remain liable
for any taxes due with respect to the income on such "noneconomic" REMIC
Residual Certificate. The REMIC regulations provide that a REMIC Residual
Certificate is noneconomic unless, based on the prepayment assumptions and on
any required or permitted cleanup calls, or required liquidation provisions, the
present value of the expected future distributions discounted at the "applicable
Federal rate" on the REMIC Residual Certificate equals at least the present
value of the expected tax on the anticipated excess inclusions and the
transferor reasonably expects that the transferee will receive distributions
with respect to
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the REMIC Residual Certificate at or after the time the taxes accrue on the
anticipated excess inclusions in an amount sufficient to satisfy the accrued
taxes. The REMIC regulations explain that a significant purpose to impede the
assessment or collection of tax exists if the transferor, at the time of the
transfer, either knew or should have known that the transferee would be
unwilling or unable to pay taxes due on its share of the taxable income of the
REMIC. Under the REMIC regulations, as amended July 19, 2002, a safe harbor is
provided if (1) the transferor conducted, at the time of the transfer, a
reasonable investigation of the financial condition of the transferee and found
that the transferee historically had paid its debts as they came due in the
future, (2) the transferee represents to the transferor that it understands
that, as the holder of the noneconomic residual interest, the transferee may
incur tax liabilities in excess of cash flows generated by the interest and that
the transferee intends to pay taxes associated with holding the residual
interest as they become due and (3) the transferee represents to the transferor
that it will not cause income from the REMIC Residual Certificate to be
attributable to a foreign permanent establishment or fixed base (within the
meaning of an applicable income tax treaty) of the transferee or any other
United States person. Accordingly, all transfers of REMIC Residual Certificates
that may constitute noneconomic residual interests will be subject to certain
restrictions under the terms of the related pooling and servicing agreement that
are intended to reduce the possibility of any such transfer being disregarded.
Such restrictions will require each party to a transfer to provide an affidavit
to certify to the matters in the preceding sentence.
In addition to the three conditions set forth above, a fourth condition has
been added that must be satisfied in one of two alternative ways for the
transferor to have a "safe harbor" against ignoring the transfer. Either:
(a) the present value of the anticipated tax liabilities associated with
holding the noneconomic residual interest not exceed the sum of:
(i) the present value of any consideration given the transferee to
acquire the interest;
(ii) the present value of the expected future distributions on the
interest; and
(iii) the present value of the anticipated tax savings associated with
holding the interest as the REMIC generates losses.
For purposes of the computations under this alternative, the transferee is
assumed to pay tax at the highest rate of tax specified in Section 11(b)(1) of
the Code (currently 35%) or, in certain circumstances, the alternative minimum
tax rate. Further, present values are generally computed using a discount rate
equal to the short-term Federal rate set forth in Section 1274(d) of the Code
for the month of the transfer and the compounding period used by the transferee;
or
(b) the following requirements are satisfied:
(i) the transferee is a domestic "C" corporation (other than a
corporation exempt from taxation of a regulated investment company
or real estate investment trust) that meets certain gross and net
asset tests (generally, $100 million of gross assets and $10
million of net assets for the current year and the two preceding
fiscal years);
(ii) the transferee agrees in writing that it will transfer the
residual interest only to a subsequent transferee that is an
eligible corporation and meets the requirements for a safe harbor
transfer; and
(iii) the facts and circumstances known to the transferor on or before
the date of the transfer do not reasonably indicate that the
taxes associated with ownership of the residual interest will not
be paid by the transferee.
Prior to purchasing a REMIC Residual Certificate, prospective purchasers
should consider the possibility that a purported transfer of such REMIC Residual
Certificate by such a purchaser to another purchaser at some future date may be
disregarded in accordance with the above-described rules which would result in
the retention of tax liability by such purchaser. The related prospectus
supplement will
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disclose whether offered REMIC Residual Certificates may be considered
"noneconomic" residual interests under the REMIC Regulations; provided, however,
that any disclosure that a REMIC Residual Certificate will not be considered
"noneconomic" will be based upon certain assumptions, and the depositor will
make no representation that a REMIC Residual Certificate will not be considered
"noneconomic" for purposes of the above-described rules. See "--Taxation of
Owners of REMIC Residual Certificates--Foreign Investors in REMIC Certificates"
below for additional restrictions applicable to transfers of certain REMIC
Residual Certificates to foreign persons.
Mark-to-Market Rules. Section 475 provides a requirement that a securities
dealer mark-to-market securities held for sale to customers. Treasury
regulations provide that for purposes of this mark-to-market requirement, a
REMIC Residual Certificate is not treated as a security and thus cannot be
marked to market.
Possible Pass-Through of Miscellaneous Itemized Deductions. Fees and
expenses of a REMIC generally will be allocated to the holders of the related
REMIC Residual Certificates. The applicable Treasury regulations indicate,
however, that in the case of a REMIC that is similar to a single class grantor
trust, all or a portion of such fees and expenses should be allocated to the
holders of the related REMIC Regular Certificates. Unless otherwise stated in
the related prospectus supplement, such fees and expenses will be allocated to
holders of the related REMIC Residual Certificates in their entirety and not to
the holders of the related REMIC Regular Certificates.
With respect to REMIC Residual Certificates or REMIC Regular Certificates
which receive an allocation of fees and expenses in accordance with the
preceding discussion, if any holder thereof is an individual, estate or trust,
or a certain "pass-through entity," an amount equal to these fees and expenses
will be added to the certificateholder's gross income and the certificateholder
will treat such fees and expenses as a miscellaneous itemized deduction subject
to the limitation of section 67 of the Code to the extent they exceed in the
aggregate two percent of a taxpayer's adjusted gross income. In addition,
section 68 of the Code provides that the amount of itemized deductions otherwise
allowable for an individual whose adjusted gross income exceeds a specified
amount will be reduced by the lesser of:
- 3% of the excess of the individual's adjusted gross income over such
amount; and
- 80% of the amount of itemized deductions otherwise allowable for the
taxable year.
However the section 68 reduction of allowable itemized deductions will be phased
out beginning in 2006 and eliminated after 2009.
In determining the alternative minimum taxable income of such a holder of a
REMIC Certificate that is an individual, estate or trust, or a "pass-through
entity," beneficially owned by one or more individuals, estates or trusts, no
deduction will be allowed for such holder's allocable portion of servicing fees
and other miscellaneous itemized deductions of the REMIC, even though an amount
equal to the amount of such fees and other deductions will be included in such
holder's gross income. Accordingly, such REMIC Certificates may not be
appropriate investments for individuals, estates or trusts, or pass-through
entities beneficially owned by one or more individuals, estates or trusts. Such
prospective investors should carefully consult with their own tax advisors prior
to making an investment in such certificates.
Sales of REMIC Certificates. If a REMIC Certificate is sold, the selling
certificateholder will recognize gain or loss equal to the difference between
the amount realized on the sale and its adjusted basis in the REMIC Certificate.
The adjusted basis of a REMIC Regular Certificate generally will equal the cost
of such REMIC Regular Certificate to such certificateholder, increased by income
reported by such certificateholder with respect to such REMIC Regular
Certificate, including original issue discount and market discount income, and
reduced (but not below zero) by distributions on such REMIC Regular Certificate
received by such certificateholder and by any amortized premium. The adjusted
basis of a REMIC Residual Certificate will be determined as described under
"--Basis Rules, Net Losses and Distributions". Except as provided in the
following two paragraphs, any such gain or loss will be capital gain or loss,
provided such REMIC Certificate is held as a capital asset within the meaning of
section 1221 of the Code. Investors that recognize a loss on a sale or exchange
of the REMIC Regular
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Certificates for federal income tax purposes in excess of certain threshold
amounts should consult their tax advisors as to the need to file IRS Form 8886
(disclosing certain potential tax shelters) on their federal income tax returns.
Gain from the sale of a REMIC Regular Certificate that might otherwise be
capital gain will be treated as ordinary income to the extent such gain does not
exceed the excess, if any, of:
- the amount that would have been includible in the seller's income with
respect to such REMIC Regular Certificate assuming that income had
accrued thereon at a rate equal to 110% of the "applicable Federal rate"
determined as of the date of purchase of such REMIC Regular Certificate,
over
- the amount of ordinary income actually includible in the seller's income
prior to such sale.
In addition, gain recognized on the sale of a REMIC Regular Certificate by
a seller who purchased such REMIC Regular Certificate at a market discount will
be taxable as ordinary income in an amount not exceeding the portion of such
discount that accrued during the period such REMIC Certificate was held by such
holder, reduced by any market discount included in income under the rules
described above under "--Taxation of Owners of REMIC Regular
Certificates--Market Discount" and "--Premium."
REMIC Certificates will be "evidences of indebtedness" within the meaning
of section 582(c)(1) of the Code, so that gain or loss recognized from the sale
of a REMIC Certificate by a bank or thrift institution to which such section
applies will be ordinary income or loss.
A portion of any gain from the sale of a REMIC Regular Certificate that
might otherwise be capital gain may be treated as ordinary income to the extent
that such certificate is held as part of a "conversion transaction" within the
meaning of section 1258 of the Code. A conversion transaction generally is one
in which the taxpayer has taken two or more positions in the same or similar
property that reduce or eliminate market risk and substantially all of the
taxpayer's return is attributable to the time value of money. The amount of gain
so realized in a conversion transaction that is recharacterized as ordinary
income generally will not exceed the amount of interest that would have accrued
on the taxpayer's net investment at 120% of the appropriate "applicable Federal
rate" at the time the taxpayer enters into the conversion transaction, subject
to appropriate reduction for prior inclusion of interest and other ordinary
income items from the transaction.
Finally, a taxpayer may elect to have net capital gain taxed at ordinary
income rates rather than capital gains rates in order to include such net
capital gain in total net investment income for the taxable year, for purposes
of the rule that limits the deduction of interest on indebtedness incurred to
purchase or carry property held for investment to a taxpayer's net investment
income.
Except as may be provided in Treasury regulations yet to be issued, if the
seller of a REMIC Residual Certificate reacquires a REMIC Residual Certificate,
or acquires any other residual interest in a REMIC or any similar interest in a
"taxable mortgage pool" during the period beginning six months before, and
ending six months after, the date of such sale, such sale will be subject to the
"wash sale" rules of section 1091 of the Code. In that event, any loss realized
by the REMIC Residual Certificateholder on the sale will not be deductible, but
instead will be added to such REMIC Residual Certificateholder's adjusted basis
in the newly acquired asset.
Prohibited Transactions Tax and Other Taxes. The Code imposes a tax on
REMICs equal to 100% of the net income derived from "prohibited transactions".
In general, subject to certain specified exceptions, a prohibited transaction
means:
- the disposition of a mortgage loan;
- the receipt of income from a source other than a mortgage loan or certain
other permitted investments;
- the receipt of compensation for services; or
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- gain from the disposition of an asset purchased with the payments on the
mortgage loans for temporary investment pending distribution on the REMIC
Certificates.
It is not anticipated that the REMIC will engage in any prohibited
transactions in which it would recognize a material amount of net income.
In addition, certain contributions to a REMIC made after the day on which
the REMIC issues all of its interests could result in the imposition of a tax on
the REMIC equal to 100% of the value of the contributed property. The pooling
and servicing agreement will include provisions designed to prevent the
acceptance of any contributions that would be subject to such tax.
REMICs also are subject to federal income tax at the highest corporate rate
on "net income from foreclosure property," determined by reference to the rules
applicable to real estate investment trusts. "Net income from foreclosure
property" generally means gain from the sale of a foreclosure property that is
inventory property and gross income from foreclosure property other than
qualifying rents and other qualifying income for a real estate investment trust.
A REMIC may recognize "net income from foreclosure property" subject to federal
income tax if the Trustee or applicable servicer determines that the recovery to
certificateholders is likely to be greater on an after tax basis than earning
qualifying income that is not subject to tax.
Unless otherwise disclosed in the related prospectus supplement, it is not
anticipated that any material state or local income or franchise tax will be
imposed on any REMIC.
Unless otherwise stated in the related prospectus supplement, and to the
extent permitted by then applicable laws, any tax on prohibited transactions,
contributions, "net income from foreclosure property" or state or local tax
imposed on the REMIC will be borne by the related servicer or trustee in any
case out of its own funds, if such tax arose out of a breach of such person's
obligations under the related pooling and servicing agreement and in respect of
compliance with applicable laws and regulations. Any such tax not borne by a
servicer or trustee will be charged against the related trust fund resulting in
a reduction in amounts payable to holders of the related REMIC Certificates.
Tax and Restrictions on Transfers of REMIC Residual Certificates to Certain
Organizations. If a REMIC Residual Certificate is transferred to a
"disqualified organization," a tax would be imposed in an amount equal to the
product of:
- the present value discounted using the "applicable Federal rate" of the
total anticipated excess inclusions with respect to such REMIC Residual
Certificate for periods after the transfer; and
- the highest marginal federal income tax rate applicable to corporations.
The anticipated excess inclusions must be determined as of the date that
the REMIC Residual Certificate is transferred and must be based on events that
have occurred up to the time of such transfer, the prepayment assumption,
required or permitted cleanup calls, or required liquidation provisions. Such a
tax generally would be imposed on the transferor of the REMIC Residual
Certificate, except that where such transfer is through an agent for a
disqualified organization, the tax would instead be imposed on such agent.
However, a transferor of a REMIC Residual Certificate would in no event be
liable for such tax with respect to a transfer if the transferee furnishes to
the transferor an affidavit that the transferee is not a disqualified
organization and, as of the time of the transfer, the transferor does not have
actual knowledge that such affidavit is false. Moreover, an entity will not
qualify as a REMIC unless there are reasonable arrangements designed to ensure
that residual interests are not held by disqualified organizations and
information necessary for the application of the tax are made available.
Restrictions on the transfer of REMIC Residual Certificates and certain other
provisions that are intended to meet this requirement will be included in each
pooling and servicing agreement, and will be discussed more fully in any
prospectus supplement relating to the offering of any REMIC Residual
Certificate.
In addition, if a "pass-through entity" includes in income excess
inclusions with respect to a REMIC Residual Certificate, and disqualified
organization is the record holder of an interest in such entity, then a tax will
be imposed on such entity equal to the product of the amount of excess
inclusions allocable to the
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interest in the pass-through entity held by such disqualified organization and
the highest marginal federal income tax rate imposed on corporations. A
pass-through entity will not be subject to this tax for any period, however, if
each record holder of an interest in such pass-through entity furnishes to such
pass-through entity such holder's social security number and a statement under
penalty of perjury that such social security number is that of the recordholder
or a statement under penalty of perjury that such record holder is not a
disqualified organization.
For these purposes, a "disqualified organization" generally means:
- the United States, any State or political subdivision thereof, any
foreign government, any international organization, or any agency or
instrumentality of the foregoing (but would exclude as instrumentalities
entities not treated as instrumentalities under section 168(h)(2)(D) of
the Code or the Freddie Mac), or any organization (other than a
cooperative described in section 521 of the Code);
- any organization that is exempt from federal income tax, unless it is
subject to the tax imposed by section 511 of the Code; or
- any organization described in section 1381(a)(2)(C) of the Code.
For these purposes, a "pass-through entity" means any regulated investment
company, real estate investment trust, trust, partnership or certain other
entities described in section 860E(e)(6) of the Code. In addition, a person
holding an interest in a pass-through entity as a nominee for another person
will, with respect to such interest, be treated as a pass-through entity.
Termination. A REMIC will terminate immediately after the distribution
date following receipt by the REMIC of the final payment in respect of the
mortgage loans or upon a sale of the REMIC's assets following the adoption by
the REMIC of a plan of complete liquidation. The last distribution on a REMIC
Regular Certificate will be treated as a payment in retirement of a debt
instrument. In the case of a REMIC Residual Certificate, if the last
distribution on such REMIC Residual Certificate is less than the REMIC Residual
Certificateholder's adjusted basis in such REMIC Residual Certificate, such
REMIC Residual Certificateholder should be treated as realizing a loss equal to
the amount of such difference. Such loss may be treated as a capital loss and
may be subject to the "wash sale" rules of section 1091 of the Code.
Reporting and Other Administrative Matters. Solely for purposes of the
administrative provisions of the Code, the REMIC will be treated as a
partnership and REMIC Residual Certificateholders will be treated as partners.
Unless otherwise stated in the related prospectus supplement, either the trustee
or the servicer generally will hold at least a nominal amount of REMIC Residual
Certificates, will file REMIC federal income tax returns on behalf of the
related REMIC, and will be designated as and will act as the "tax matters
person" with respect to the REMIC in all respects.
As the tax matters person, the trustee or the servicer, as the case may be,
will, subject to certain notice requirements and various restrictions and
limitations, generally have the authority to act on behalf of the REMIC and the
REMIC Residual Certificateholders in connection with the administrative and
judicial review of items of income, deduction, gain or loss of the REMIC, as
well as the REMIC's classification. REMIC Residual Certificateholders will
generally be required to report such REMIC items consistently with their
treatment on the related REMIC's tax return and may in some circumstances be
bound by a settlement agreement between the trustee or the servicer, as the case
may be, as tax matters person, and the IRS concerning any such REMIC item.
Adjustments made to the REMIC tax return may require a REMIC Residual
Certificateholder to make corresponding adjustments on its return, and an audit
of the REMIC's tax return, or the adjustments resulting from such an audit,
could result in an audit of a REMIC Residual Certificateholder's return. No
REMIC will be registered as a tax shelter pursuant to section 6111 of the Code
because it is not anticipated that any REMIC will have a net loss for any of the
first five taxable years of its existence. Any person that holds a REMIC
Residual Certificate as a nominee for another person may be required to furnish
to the related REMIC, in a manner to be provided in Treasury regulations, the
name and address of such person and other information.
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Reporting of interest income, including any original issue discount, with
respect to REMIC Regular Certificates is required annually, and may be required
more frequently under Treasury regulations. These information reports generally
are required to be sent to individual holders of REMIC Regular Interests and the
IRS; holders of REMIC Regular Certificates that are corporations, trusts,
securities dealers and certain other non-individuals will be provided interest
and original issue discount income information and the information set forth in
the following paragraph upon request in accordance with the requirements of the
applicable regulations. The information must be provided by the later of 30 days
after the end of the quarter for which the information was requested, or two
weeks after the receipt of the request. The REMIC must also comply with rules
requiring that information relating to be reported to the IRS. Reporting with
respect to the REMIC Residual Certificates, including income, excess,
inclusions, investment expenses and relevant information regarding qualification
of the REMIC's assets will be made as required under the Treasury regulations,
generally on a quarterly basis.
As applicable, the REMIC Regular Certificate information reports will
include a statement of the adjusted issue price of the REMIC Regular Certificate
at the beginning of each accrual period. In addition, the reports will include
information required by regulations with respect to computing the accrual of any
market discount. Because exact computation of the accrual of market discount on
a constant yield method would require information relating to the holder's
purchase price that the REMIC may not have, such regulations only require that
information pertaining to the appropriate proportionate method of accruing
market discount be provided. See "--Taxation of Owners of REMIC Regular
Certificates--Market Discount."
The responsibility for complying with the foregoing reporting rules will be
borne by either the trustee or the servicer, unless otherwise stated in the
related prospectus supplement.
Backup Withholding with Respect to REMIC Certificates. Payments of
interest and principal, and proceeds from the sale of REMIC Certificates, may be
subject to the "backup withholding tax" at a rate of 28% (increasing to 31%
after 2010) if recipients of such payments fail to furnish to the payor certain
information, including their taxpayer identification numbers, or otherwise fail
to establish an exemption from such tax. Any amounts deducted and withheld from
a distribution to a recipient would be allowed as a credit against such
recipient's federal income tax. Furthermore, certain penalties may be imposed by
the IRS on a recipient of payments that is required to supply information but
that does not do so in the proper manner.
Foreign Investors in REMIC Certificates. A REMIC Regular Certificateholder
that is not a "United States Person" and is not subject to federal income tax as
a result of any direct or indirect connection to the United States in addition
to its ownership of a REMIC Regular Certificate will not, unless otherwise
stated in the related prospectus supplement, be subject to United States federal
income or withholding tax in respect of a distribution on a REMIC Regular
Certificate, provided that the holder complies to the extent necessary with
certain identification requirements (including delivery of a statement, signed
under penalties of perjury, certifying that such certificateholder is not a
United States Person and providing the name and address of such
certificateholder. For these purposes, "United States Person" means:
- a citizen or resident of the United States;
- a corporation or partnership (or other entity treated as a corporation or
a partnership for United States Federal income tax purposes created or
organized in, or under the laws of, the United States, any State thereof
or the District of Columbia (unless, in the case of a partnership,
Treasury regulations are enacted that provide otherwise);
- an estate whose income is includible in gross income for United States
federal income tax purposes regardless of its source; and
- a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust, and one or more United
States persons have the authority to control all substantial decisions of
the trust.
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It is possible that the IRS may assert that the foregoing tax exemption
should not apply with respect to interest distributed on a REMIC Regular
Certificate that is held by:
- a REMIC Residual Certificateholder that owns directly or indirectly a 10%
or greater interest in the REMIC Residual Certificates; or
- to the extent of the amount of interest paid by the related mortgagor on
a particular mortgage loan, a REMIC Regular Certificateholder that owns a
10% or greater ownership interest in such mortgage or a controlled
foreign corporation of which such mortgagor is a "United States
shareholder" within the meaning of section 951(b) of the Code.
If the holder does not qualify for exemption, distributions of interest,
including distributions in respect of accrued original issue discount, to such
holder may be subject to a tax rate of 30%, subject to reduction under any
applicable tax treaty. In addition, the foregoing rules will not apply to exempt
a United States shareholder of a controlled foreign corporation from taxation on
such United States shareholder's allocable portion of the interest income
received by such controlled foreign corporation. Further, it appears that a
REMIC Regular Certificate would not be included in the estate of a nonresident
alien individual and would not be subject to United States estate taxes.
However, certificateholders who are non-resident alien individuals should
consult their tax advisors concerning this question. Transfers of REMIC Residual
Certificates to investors that are not United States persons will be prohibited
under the related pooling and servicing agreement.
The Treasury Department issued final regulations which make certain
modifications to the withholding, backup withholding and information reporting
rules described above. Prospective investors are urged to consult their own tax
advisors regarding these regulations.
GRANTOR TRUST FUNDS
Classification of Grantor Trust Funds. With respect to each series of
grantor trust certificates, counsel to the depositor will deliver its opinion to
the effect that, assuming compliance with the pooling and servicing agreement,
the grantor trust fund will be classified as a grantor trust under subpart E,
part I of subchapter J of the Code and not as a partnership or an association
taxable as a corporation. Accordingly, each holder of a grantor trust
certificate generally will be treated as the owner of an interest in the
mortgage loans included in the grantor trust fund.
For purposes of the following discussion, a grantor trust certificate
represents an undivided equitable ownership interest in the principal of the
mortgage loans constituting the related grantor trust fund, together with
interest thereon at a pass-through rate, will be referred to as a "grantor trust
fractional interest certificate." A grantor trust certificate representing
ownership of all or a portion of the difference between interest paid on the
mortgage loans constituting the related grantor trust fund less normal
administration fees and any spread and interest paid to the holders of grantor
trust fractional interest certificates issued with respect to a grantor trust
fund will be referred to as a "grantor trust strip certificate." A grantor trust
strip certificate may also evidence a nominal ownership interest in the
principal of the mortgage loans constituting the related grantor trust fund.
CHARACTERIZATION OF INVESTMENTS IN GRANTOR TRUST CERTIFICATES
Grantor Trust Fractional Interest Certificates. Except as discussed in the
related prospectus supplement, in the case of grantor trust fractional interest
certificates, counsel to the depositor will deliver an opinion that, in general,
grantor trust fractional interest certificates will represent interests in:
- assets described in section 7701(a)(19)(C) of the Code;
- "obligation[s] which . . . [are] principally secured by an interest in
real property" within the meaning of section 860G(a)(3)(A) of the Code;
and
- "real estate assets" within the meaning of section 856(c)(5)(B) of the
Code.
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In addition, counsel to the depositor will deliver an opinion that interest
on grantor trust fractional interest certificates will to the same extent be
considered "interest on obligations secured by mortgages on real property or on
interests in real property" within the meaning of section 856(c)(3)(B) of the
Code.
Grantor Trust Strip Certificates. Even if grantor trust strip certificates
evidence an interest in a grantor trust fund consisting of mortgage loans that
are assets described in section 7701(a)(19)(C) of the Code, "real estate assets"
within the meaning of section 856(c)(5)(B) of the Code, and the interest on
which is "interest on obligations secured by mortgages on real property" within
the meaning of section 856(c)(3)(B) of the Code, it is unclear whether the
grantor trust strip certificates, and the income they produce, will be so
characterized. Although the policies underlying such sections may suggest that
such characterization is appropriate, counsel to the depositor will not deliver
any opinion on the characterization of these certificates. Prospective
purchasers of grantor trust strip certificates should consult their tax advisors
regarding whether the grantor trust strip certificates, and the income they
produce, will be so characterized.
The grantor trust strip certificates will be "obligation[s] (including any
participation or certificate of beneficial ownership therein) which . . . [are]
principally secured by an interest in real property" within the meaning of
section 860G(a)(3)(A) of the Code.
TAXATION OF OWNERS OF GRANTOR TRUST FRACTIONAL INTEREST CERTIFICATES
General. Holders of a particular series of grantor trust fractional
interest certificates generally will be required to report on their federal
income tax returns their shares of the entire income from the mortgage loans
(including reasonable servicing fees and other expenses) and will be entitled to
deduct their shares of any such reasonable servicing fees and other expenses. In
some situations, the taxpayer's deduction may be subject to itemized deduction
limitations and be limited if the taxpayer is subject to the corporate
alternative minimum tax. For a more detailed discussion of these limitations,
see "--Taxation of Owners of REMIC Residual Certificates--Possible Pass-Through
of Miscellaneous Itemized Deductions".
Although it is not entirely clear, it appears that in transactions in which
multiple classes of grantor trust certificates are issued, such fees and
expenses should be allocated among the classes of grantor trust certificates
using a method that recognizes that each such class benefits from the related
services. In the absence of further guidance, it is intended to base information
returns or reports on a method that allocates such expenses among classes of
grantor trust certificates with respect to each period based on the
distributions made to each such class during that period.
The federal income tax treatment of grantor trust fractional interest
certificates of any series will depend on whether they are subject to the
"stripped bond" rules of section 1286 of the Code. Grantor trust fractional
interest certificates may be subject to those rules if a class of grantor trust
strip certificates is issued as part of the same series of Certificates or the
depositor or any of its affiliates retains a right to receive a specified
portion of the interest payable on a mortgage asset. Further, the IRS has ruled
that an unreasonably high servicing fee retained by a seller or servicer will be
treated as a retained ownership interest in mortgages that constitutes a
stripped coupon. For purposes of determining what constitutes reasonable
servicing fees for various types of mortgages the IRS has established certain
"safe harbors." The servicing fees paid with respect to the mortgage loans for
certain series of grantor trust certificates may be higher than the "safe
harbors" and, accordingly, may not constitute reasonable servicing compensation.
The related prospectus supplement will include information regarding servicing
fees paid to a servicer or their respective affiliates necessary to determine
whether the preceding "safe harbor" rules apply.
If Stripped Bond Rules Apply. If the stripped bond rules apply, each
grantor trust fractional interest certificate will be treated as having been
issued with "original issue discount" within the meaning of section 1273(a) of
the Code, subject, however, to the discussion below regarding the treatment of
certain stripped bonds as market discount bonds and de minimis market discount
discussion below. See "--Taxation of Owners of Grantor Trust Fractional Interest
Certificates--Market Discount." Under the stripped bond rules, the holder of a
grantor trust fractional interest certificate will be required to report
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"qualified stated interest" from its grantor trust fractional interest
certificate for each month, as such amounts are received or accrued (based on
the holder's method of accounting) and will be required to report an amount
equal to the original issue discount income that accrues on such certificate in
that month calculated under a constant yield method, in accordance with the
rules of the Code relating to original issue discount.
The original issue discount on a grantor trust fractional interest
certificate will be the excess of such certificate's stated redemption price
over its issue price. The issue price of a grantor trust fractional interest
certificate as to any purchaser will be equal to the price paid by such
purchaser for the grantor trust fractional interest certificate. The stated
redemption price of a grantor trust fractional interest certificate will be the
sum of all payments to be made on such certificate, other than "qualified stated
interest," and the certificate's share of reasonable servicing and other
expenses. See "--Taxation of Owners of Grantor Trust Fractional Interest
Certificates--If Stripped Bond Rules Do Not Apply" for a definition of
"qualified stated interest." In general, the amount of such income that accrues
in any month would equal the product of such holder's adjusted basis in such
grantor trust fractional interest certificate at the beginning of such month
(see "--Sales of Grantor Trust Certificates") and the yield of such grantor
trust fractional interest certificate to such holder. Such yield would be
computed at the rate that, if used to discount the holder's share of future
payments on the mortgage loans, would cause the present value of those future
payments to equal the price at which the holder purchased such certificate. In
computing yield under the stripped bond rules, a certificateholder's share of
future payments on the mortgage loans will not include any payments made in
respect of any spread or any other ownership interest in the mortgage loans
retained by the depositor, a servicer, or their respective affiliates, but will
include such certificateholder's share of any reasonable servicing fees and
other expenses.
With respect to certain categories of debt instruments, section 1272(a)(6)
of the Code requires the use of a reasonable prepayment assumption and conforms
to the prepayment assumption used in pricing the instrument. Regulations could
be adopted applying those provisions to the grantor trust fractional interest
certificates. It is unclear whether those provisions would be applicable to the
grantor trust fractional interest certificates or whether use of a reasonable
prepayment assumption may be required or permitted without reliance on these
rules. It is also uncertain, if a prepayment assumption is used, whether the
assumed prepayment rate would be determined based on conditions at the time of
the first sale of the grantor trust fractional interest certificate or, with
respect to any holder, at the time of purchase of the grantor trust fractional
interest certificate by that holder. Certificateholders are advised to consult
their own tax advisors concerning reporting original issue discount in general
and, in particular, whether a prepayment assumption should be used in reporting
original issue discount with respect to grantor trust fractional interest
certificates.
In the case of a grantor trust fractional interest certificate acquired at
a price equal to the principal amount of the mortgage loans allocable to such
certificate, the use of a prepayment assumption generally would not have any
significant effect on the yield used in calculating accruals of interest income.
In the case, however, of a grantor trust fractional interest certificate
acquired at a discount or premium, the use of a reasonable prepayment assumption
would increase or decrease such yield, and thus accelerate or decelerate,
respectively, the reporting of income.
If a prepayment assumption is not used, then when a mortgage loan prepays
in full, the holder of a grantor trust fractional interest certificate acquired
at a discount or a premium generally will recognize income or loss, which under
amendments to the Code adopted in 1997 would be capital except to the extent of
any accrued market discount equal to the difference between the portion of the
prepaid principal amount of the mortgage loan that is allocable to such
certificate and the portion of the adjusted basis of such certificate that is
allocable to such certificateholder's interest in the mortgage loan. If a
prepayment assumption is used, although there is no guidance, logically that no
separate item of income or loss should be recognized upon a prepayment. Instead,
a prepayment should be treated as a partial payment of the stated redemption
price of the grantor trust fractional interest certificate and accounted for
under a method similar to that described for taking account of original issue
discount on REMIC Regular Certificates. See "--Taxation of Owners of REMIC
Regular Certificates--Original Issue Discount." It is unclear whether
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any other adjustments would be required to reflect differences between an
assumed prepayment rate and the actual rate of prepayments.
In the absence of statutory or administrative clarification, it is
currently intended to base information reports or returns to the IRS and
certificateholders in transactions subject to the stripped bond rules on a
prepayment assumption that will be disclosed in the related prospectus
supplement and on a constant yield computed using a representative initial
offering price for each class of certificates. However, neither the depositor
nor any other person will make any representation that the mortgage loans will
in fact prepay at a rate conforming to such stripped bond prepayment assumption
or any other rate and certificateholders should bear in mind that the use of a
representative initial offering price will mean that such information returns or
reports, even if otherwise accepted as accurate by the IRS, will in any event be
accurate only as to the initial certificateholders of each series who bought at
that price.
Under Treasury regulation section 1.1286-1(b), certain stripped bonds are
to be treated as market discount bonds and, accordingly, any purchaser of such a
bond is to account for any discount on the bond as market discount rather than
original issue discount. This treatment only applies, however, if immediately
after the most recent disposition of the bond by a person stripping one or more
coupons from the bond and disposing of the bond or coupon, there is less than a
de minimis amount of original issue discount or the annual stated rate of
interest payable on the original bond is no more than one percentage point lower
than the gross interest rate payable on the original mortgage loan before
subtracting any servicing fee or any stripped coupon. Original issue discount or
market discount on a grantor trust fractional interest certificate are de
minimis if less than 0.25% of the stated redemption price multiplied by the
weighted average maturity of the mortgage loans. Original issue discount or
market discount of only a de minimis amount will be included in income in the
same manner as de minimis original issue discount and market discount described
in "--If Stripped Bond Rules Do Not Apply" and "--Market Discount."
If Stripped Bond Rules Do Not Apply. Subject to the discussion below on
original issue discount, if the stripped bond rules do not apply to a grantor
trust fractional interest certificate, the certificateholder will be required to
report its share of the interest income on the mortgage loans in accordance with
such certificateholder's normal method of accounting. The original issue
discount rules will apply to a grantor trust fractional interest certificate to
the extent it evidences an interest in mortgage loans issued with original issue
discount.
The original issue discount, if any, on the mortgage loans will equal the
difference between the stated redemption price of such mortgage loans and their
issue price. Under the OID regulations, the stated redemption price is equal to
the total of all payments to be made on such mortgage loan other than "qualified
stated interest." "Qualified stated interest" generally includes interest that
is unconditionally payable at least annually at a single fixed rate, at a
"qualified floating rate" or at an "objective rate." In general, the issue price
of a mortgage loan will be the amount received by the borrower from the lender
under the terms of the mortgage loan, less any "points" paid by the borrower,
and the stated redemption price of a mortgage loan will equal its principal
amount, unless the mortgage loan provide for an initial below-market rate of
interest or the acceleration or the deferral of interest payments.
In the case of mortgage loans bearing adjustable or variable interest
rates, the related prospectus supplement will describe the manner in which such
rules will be applied with respect to those mortgage loans in preparing
information returns to the certificateholders and the IRS.
Notwithstanding the general definition of original issue discount, original
issue discount will be considered to be de minimis if such original issue
discount is less than 0.25% of the stated redemption price multiplied by the
weighted average maturity of the mortgage loan. For this purpose, the weighted
average maturity of the mortgage loan will be computed by multiplying the number
of full years from the issue date until such payment is expected to be made by a
fraction, the numerator of which is the amount of the payment and the
denominator of which is the stated redemption price of the mortgage loan. Under
the OID regulations, original issue discount of only a de minimis amount will
generally be included in income as each payment of stated principal price is
made, based on the product of the total amount of such de minimis original issue
discount and a fraction, the numerator of which is the amount of each such
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payment and the denominator of which is the outstanding stated principal amount
of the mortgage loan. The OID Regulations also permit a certificateholder to
elect to accrue de minimis original issue discount into income currently based
on a constant yield method. See "--Market Discount" below.
If original issue discount is in excess of a de minimis amount, all
original issue discount with respect to a mortgage loan will be required to be
accrued and reported in income each month, based on a constant yield. The OID
regulations suggest that no prepayment assumption is appropriate in computing
the yield on prepayable obligations issued with original issue discount. In the
absence of statutory or administrative clarification, it currently is not
intended to base information reports or returns to the IRS and
certificateholders on the use of a prepayment assumption in transactions not
subject to the stripped bond rules. However, section 1272(a)(6) of the Code may
require that a prepayment assumption be made in computing yield with respect to
all mortgage-backed securities. Certificateholders are advised to consult their
own tax advisors concerning whether a prepayment assumption should be used in
reporting original issue discount with respect to grantor trust fractional
interest certificates. Certificateholders should refer to the related prospectus
supplement with respect to each series to determine whether and in what manner
the original issue discount rules will apply to mortgage loans in such series.
A purchaser of a grantor trust fractional interest certificate that
purchases such grantor trust fractional interest certificate at a cost less than
such certificate's allocable portion of the aggregate remaining stated
redemption price of the mortgage loans held in the related trust fund will also
be required to include in gross income such certificate's daily portions of any
original issue discount with respect to such mortgage loans. However, each such
daily portion will be reduced, if the cost of such grantor trust fractional
interest certificate to such purchaser is in excess of such certificate's
allocable portion of the aggregate "adjusted issue prices" of the mortgage loans
held in the related trust fund, approximately in proportion to the ratio such
excess bears to such certificate's allocable portion of the aggregate original
issue discount remaining to be accrued on such mortgage loans. The adjusted
issue price of a mortgage loan on any given day equals the sum of the adjusted
issue price of such mortgage loan at the beginning of the accrual period that
includes such day plus the daily portions of original issue discount for all
days during such accrual period prior to such day. The adjusted issue price of a
mortgage loan at the beginning of any accrual period will equal the issue price
of such mortgage loan, increased by the aggregate amount of original issue
discount with respect to such mortgage loan that accrued in prior accrual
periods, and reduced by the amount of any payments made on such mortgage loan in
prior accrual periods of amounts included in its stated redemption price.
The trustee or servicer, as applicable, will provide to any holder of a
grantor trust fractional interest certificate such information as such holder
may reasonably request from time to time with respect to original issue discount
accruing on grantor trust fractional interest certificates. See "--Grantor Trust
Reporting" below.
Market Discount. If the stripped bond rules do not apply to the grantor
trust fractional interest certificate, a certificateholder may be subject to the
market discount rules of sections 1276 through 1278 of the Code to the extent an
interest in a mortgage loan is considered to have been purchased at a "market
discount." If market discount is in excess of a de minimis amount, the holder
generally will be required to include in income in each month the amount of such
discount that has accrued through such month that has not previously been
included in income, but limited, in the case of the portion of such discount
that is allocable to any mortgage loan, to the payment of stated redemption
price on such mortgage loan that is received by or due to the trust fund in that
month. A certificateholder may elect to include market discount in income
currently as it accrues under a constant yield method rather than including it
on a deferred basis in accordance with the foregoing. If made, such election
will apply to all market discount bonds acquired by such certificateholder
during or after the first taxable year to which such election applies. In
addition, the OID regulations would permit a certificateholder to elect to
accrue all interest, discount and premium in income as interest, based on a
constant yield method. If such an election were made with respect to a mortgage
loan with market discount, the certificateholder would be deemed to have made an
election to currently include market discount in income with respect to all
other debt instruments having market discount that such certificateholder
acquires during the taxable year of the election and
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thereafter and, possibly, previously acquired instruments. Similarly, a
certificateholder that made this election for a certificate acquired at a
premium would be deemed to have made an election to amortize bond premium with
respect to all debt instruments having amortizable bond premium that such
certificateholder owns or acquires. See "--Taxation of Owners of REMIC Regular
Certificates--Premium." Each of these elections to accrue interest, discount and
premium with respect to a certificate on a constant yield method or as interest
is irrevocable.
Section 1276(b)(3) of the Code authorized the Treasury Department to issue
regulations providing for the method for accruing market discount on debt
instruments where principal is payable in more than one installment. Until such
time as regulations are issued by the Treasury Department, certain rules
described in the Committee Report apply. For a more detailed discussion of the
treatment of market discount, see "Taxation of Owners of REMIC Regular
Certificates--Market Discount".
Because the mortgage loans will provide for periodic payments of stated
redemption price, such discount may be required to be included in income at a
rate that is not significantly slower than the rate at which such discount would
be included in income if it were original issue discount. Market discount with
respect to mortgage loans generally will be considered to be de minimis if it is
less than 0.25% of the stated redemption price of the mortgage loans multiplied
by the number of full years to maturity remaining after the date of its
purchase. In interpreting a similar rule with respect to original issue discount
on obligations payable in installments, the OID regulations refer to the
weighted average maturity of obligations, and it is likely that the same rule
will be applied with respect to market discount, presumably taking into account
the prepayment assumption used, if any. The effect of using a prepayment
assumption could be to accelerate the reporting of such discount income. If
market discount is treated as de minimis under the foregoing rule, it appears
that actual discount would be treated in a manner similar to original issue
discount of a de minimis amount. See "--If Stripped Bond Rules Do Not Apply."
Further, under the rules described in "--Taxation of Owners of REMIC Regular
Certificates--Market Discount," any discount that is not original issue discount
and exceeds a de minimis amount may require the deferral of interest expense
deductions attributable to accrued market discount not yet includible in income,
unless an election has been made to report market discount currently as it
accrues. This rule applies without regard to the origination dates of the
mortgage loans.
Premium. If a certificateholder is treated as acquiring the underlying
mortgage loans at a premium, that is, at a price in excess of their remaining
stated redemption price, such certificateholder may elect under section 171 of
the Code to amortize using a constant yield method. Amortizable premium is
treated as an offset to interest income on the related debt instrument, rather
than as a separate interest deduction.
It is unclear whether a prepayment assumption should be used in computing
amortization of premium allowable under section 171 of the Code. If premium is
not subject to amortization using a prepayment assumption and a mortgage loan
prepays in full, the holder of a grantor trust fractional interest certificate
acquired at a premium should recognize a loss, equal to the difference between
the portion of the prepaid principal amount of the mortgage loan that is
allocable to the certificate and the portion of the adjusted basis of the
certificate that is allocable to the mortgage loan. If a prepayment assumption
is used to amortize such premium, it appears that such a loss would be
unavailable. Instead, if a prepayment assumption is used, a prepayment should be
treated as a partial payment of the stated redemption price of the grantor trust
fractional interest certificate and accounted for under a method similar to that
described for taking account of original issue discount on REMIC Regular
Certificates. See "--Taxation of Owners of REMIC Regular Certificates--Original
Issue Discount." It is unclear whether any other adjustments would be required
to reflect differences between the prepayment assumption used, if any, and the
actual rate of prepayments.
Taxation of Owners of Grantor Trust Strip Certificates. The "stripped
coupon" rules of section 1286 of the Code will apply to the grantor trust strip
certificates. Except as described above in "--If Stripped Bond Rules Apply," no
regulations or published rulings under section 1286 of the Code have been issued
and some uncertainty exists as to how it will be applied to securities such as
the grantor trust strip
105
certificates. Accordingly, holders of grantor trust strip certificates should
consult their own tax advisors concerning the method to be used in reporting
income or loss with respect to such certificates.
The OID regulations in so far as they describe the application of the
constant yield method, do not apply to instruments to which section 1272(a)(6)
applies, which may include grantor trust strip certificates as well as grantor
trust fractional interest certificates, although they provide general guidance
as to how the original issue discount sections of the Code will be applied. In
addition, the discussion below is subject to the discussion under "--Possible
Application of Contingent Payment Rules" below and assumes that the holder of a
grantor trust strip certificate will not own any grantor trust fractional
interest certificates.
Under the stripped coupon rules, it appears that original issue discount
will be required to be accrued in each month on the grantor trust strip
certificates based on a constant yield method. In effect, each holder of grantor
trust strip certificates would include as interest income in each month an
amount equal to the product of such holder's adjusted basis in such grantor
trust strip certificate at the beginning of such month and the yield of such
grantor trust strip certificate to such holder. Such yield would be calculated
based on the price paid for that grantor trust strip certificate by its holder
and the payments remaining to be made thereon at the time of the purchase, plus
an allocable portion of the servicing fees and expenses to be paid with respect
to the mortgage loans. See "--If Stripped Bond Rules Apply" above.
As noted above, section 1272(a)(6) of the Code requires that a prepayment
assumption be used in computing the accrual of original issue discount with
respect to certain categories of debt instruments, and that adjustments be made
in the amount and rate of accrual of such discount when prepayments do not
conform to such prepayment assumption. Regulations could be adopted applying
those provisions to the grantor trust strip certificates. It is unclear whether
those provisions would be applicable to the grantor trust strip certificates or
whether use of a prepayment assumption may be required or permitted in the
absence of such regulations. It is also uncertain, if a prepayment assumption is
used, whether the assumed prepayment rate would be determined based on
conditions at the time of the first sale of the grantor trust strip certificate
or, with respect to any subsequent holder, at the time of purchase of the
grantor trust strip certificate by that holder.
The accrual of income on the grantor trust strip certificates will be
significantly slower if a prepayment assumption is permitted to be made than if
yield is computed assuming no prepayments. In the absence of statutory or
administrative guidance, it is intended to base information returns or reports
to the IRS and certificateholders on the stripped bond prepayment assumption
disclosed in the related prospectus supplement and on a constant yield computed
using a representative initial offering price for each class of certificates.
However, neither the depositor nor any other person will make any representation
that the mortgage loans will in fact prepay at a rate conforming to the stripped
bond prepayment assumption. Prospective purchasers of the grantor trust strip
certificates should consult their own tax advisors regarding the use of the
stripped bond prepayment assumption.
It is unclear under what circumstances, if any, the prepayment of a
mortgage loan will give rise to a loss to the holder of a grantor trust strip
certificate. If a grantor trust strip certificate is treated as a single
instrument and the effect of prepayments is taken into account in computing
yield with respect to such grantor trust strip certificate, it appears that no
loss may be available as a result of any particular prepayment unless
prepayments occur at a rate faster than the stripped bond prepayment assumption.
However, if a grantor trust strip certificate is treated as an interest in
discrete mortgage loans, or if the stripped bond prepayment assumption is not
used, then when a mortgage loan is prepaid, the holder of a grantor trust strip
certificate should be able to recognize a loss equal to the portion of the
adjusted issue price of the grantor trust strip certificate that is allocable to
such mortgage loan. In addition, any loss may be treated as a capital loss.
Possible Application of Contingent Payment Rules. The coupon stripping
rules' general treatment of stripped coupons is to regard them as newly issued
debt instruments in the hands of each purchaser. To the extent that payments on
the grantor trust strip certificates would cease if the mortgage loans were
prepaid in full, the grantor trust strip certificates could be considered to be
debt instruments providing for contingent payments. Under the OID regulations,
debt instruments providing for contingent payments are
106
not subject to the same rules as debt instruments providing for non contingent
payments. Final regulations have been promulgated with respect to contingent
payment debt instruments. However, these regulations do not specifically address
the grantor trust strip certificates or other securities subject to the stripped
bond rules of section 1286 of the Code. Certificateholders should consult their
tax advisors concerning the possible application of the contingent payment rules
to the grantor trust strip certificates.
Sales of Grantor Trust Certificates. Any gain or loss, equal to the
difference between the amount realized on the sale or exchange of a grantor
trust certificate and its adjusted basis, recognized on such sale or exchange of
a grantor trust certificate by an investor who holds such grantor trust
certificate as a capital asset, will be capital gain or loss, except to the
extent of accrued and unrecognized market discount, which will be treated as
ordinary income. The adjusted basis of a grantor trust certificate generally
will equal its cost, increased by any income reported by the seller and reduced
(but not below zero) by any previously reported losses, any amortized premium
and by any distributions with respect to such grantor.
Gain or loss from the sale of a grantor trust certificate may be partially
or wholly ordinary and not capital in certain circumstances. Gain attributable
to accrued and unrecognized market discount will be treated as ordinary income,
as will gain or loss recognized by banks and other financial institutions
subject to section 582(c) of the Code. Furthermore, a portion of any gain that
might otherwise be capital gain may be treated as ordinary income to the extent
that the grantor trust certificate is held as part of a "conversion transaction"
within the meaning of section 1258 of the Code. A conversion transaction
generally is one in which the taxpayer has taken two or more positions in the
same or similar property that reduce or eliminate market risk and the taxpayer's
return is substantially attributable to the time value of money. The amount of
gain realized in a conversion transaction that is recharacterized as ordinary
income generally will not exceed the amount of interest that would have accrued
on the taxpayer's net investment at 120% of the appropriate "applicable Federal
rate" at the time the taxpayer enters into the conversion transaction, subject
to appropriate reduction for prior inclusion of interest and other ordinary
income items from the transaction. Finally, a taxpayer may elect to have net
capital gain taxed at ordinary income rates rather than capital gains rates in
order to include such net capital gain in total net investment income for that
taxable year, for purposes of the rule that limits the deduction of interest on
indebtedness incurred to purchase or carry property held for investment to a
taxpayer's net investment income. Investors that recognize a loss on a sale or
exchange of the grantor trust certificates for federal income tax purposes in
excess of certain threshold amounts should consult their tax advisors as to the
need to file IRS Form 8886 (disclosing certain potential tax shelters) on their
federal income tax returns.
Grantor Trust Reporting. As may be provided in the related prospectus
supplement, the trustee or servicer, as applicable, will furnish to each holder
of a grantor trust certificate, with each distribution, a statement setting
forth the amount of such distribution allocable to principal on the underlying
mortgage loans and to interest thereon at the related pass-through interest
rate. In addition, within a reasonable time after the end of each calendar year,
the trustee or servicer will furnish to each certificateholder during such year
such customary factual information as the depositor or the reporting party deems
necessary or desirable to enable holders of grantor trust certificates to
prepare their tax returns and will furnish comparable information to the IRS as
and when required by law to do so. Because the rules for accruing discount and
amortizing premium with respect to the grantor trust certificates are uncertain
in various respects, there is no assurance the IRS will agree with the trustee's
or servicer's information reports. Moreover, such information reports, even if
otherwise accepted as accurate by the IRS, will in any event be accurate only as
to the initial certificateholders that bought their certificates at the
representative initial offering price used in preparing such reports.
Backup Withholding. In general, the rules described in "--Taxation of
Owners of REMIC Residual Certificates--Backup Withholding with Respect to REMIC
Certificates" will also apply to grantor trust certificates.
Foreign Investor. In general, the discussion with respect to REMIC Regular
Certificates in "--Taxation of Owners of REMIC Residual Certificates--Foreign
Investors in REMIC Certificates"
107
applies to grantor trust certificates except that grantor trust certificates
will, unless otherwise disclosed in the related prospectus supplement, be
eligible for exemption from United States withholding tax, subject to the
conditions described in such discussion, only to the extent the related mortgage
loans were originated after July 18, 1984. However, to the extent the grantor
trust certificate represents an interest in real property (e.g., because of
foreclosures), it would be treated as representing a United States real property
interest for United States federal income tax purposes. This could result in
withholding consequences to non-U.S. certificateholders and potential U.S.
taxation.
To the extent that interest on a grantor trust certificate would be exempt
under sections 871(h)(1) and 881(c) of the Code from United States withholding
tax, and the grantor trust certificate is not held in connection with a
certificateholder's trade or business in the United States, such grantor trust
certificate will not be subject to United States estate taxes in the estate of a
non-resident alien individual.
STATE AND OTHER TAX CONSEQUENCES
In addition to the federal income tax consequences described in "Material
Federal Income Tax Consequences," potential investors should consider the state
and local tax consequences of the acquisition, ownership and disposition of the
offered certificates. State tax law may differ substantially from the
corresponding federal tax law, and the discussion above does not purport to
describe any aspect of the tax laws of any state or other jurisdiction.
Therefore, prospective investors should consult their own tax advisors with
respect to the various tax consequences of investments in the offered
certificates.
ERISA CONSIDERATIONS
GENERAL
ERISA and the Code impose certain requirements on retirement plans and
other employee benefit plans or arrangements, including individual retirement
accounts, individual retirement annuities, medical savings accounts, Keogh
plans, collective investment funds and separate and general accounts in which
such plans, accounts or arrangements are invested that are subject to the
fiduciary responsibility provisions of ERISA and Section 4975 of the Code (all
of which are referred to in this prospectus as "Plans"), and on persons who are
fiduciaries with respect to Plans, in connection with the investment of Plan
assets. Certain employee benefit plans, such as governmental plans (as defined
in ERISA Section 3(32)), and, if no election has been made under Section 410(d)
of the Code, church plans (as defined in Section 3(33) of ERISA) are not subject
to ERISA requirements. However, such plans may be subject to the provisions of
other applicable federal, state or local law (which may contain restrictions
substantially similar to those in ERISA and the Code).
ERISA generally imposes on Plan fiduciaries certain general fiduciary
requirements, including those of investment prudence and diversification and the
requirement that a Plan's investments be made in accordance with the documents
governing the Plan. In addition, ERISA and the Code prohibit a broad range of
transactions involving assets of a Plan and persons ("Parties-in-Interest") who
have certain specified relationships to the Plan, unless a statutory or
administrative exemption is available. Certain Parties-in-Interest that
participate in a prohibited transaction may be subject to an excise tax imposed
pursuant to Section 4975 of the Code, unless a statutory or administrative
exemption is available. These prohibited transactions generally are set forth in
Section 406 of ERISA and Section 4975 of the Code.
Plan Asset Regulations. A Plan's investment in offered certificates may
cause the trust assets to be deemed "plan assets" of a Plan. Section 2510.3-101
of the regulations of the United States Department of Labor (the "DOL") provides
that when a Plan acquires an equity interest in an entity, the Plan's assets
include both such equity interest and an undivided interest in each of the
underlying assets of the entity, unless certain exceptions not applicable to
this discussion apply, or unless the equity participation in the entity by
"benefit plan investors" (defined to include Plans and certain employee benefit
plans not subject to ERISA, including foreign and governmental plans) is not
"significant." For this purpose, in general,
108
equity participation in a trust fund will be "significant" on any date if,
immediately after the most recent acquisition of any certificate, 25% or more of
any class of certificates is held by benefit plan investors (excluding for this
calculation any person, other than a benefit plan investor, who has
discretionary authority or control, or provides investment advice (direct or
indirect) for a fee with respect to the assets of the trust fund).
Any person who has discretionary authority or control respecting the
management or disposition of plan assets of a Plan, and any person who provides
investment advice with respect to such assets for a fee, will generally be a
fiduciary of the investing plan. If the trust assets constitute plan assets,
then any party exercising management or discretionary control regarding those
assets, such as a master servicer, a special servicer or any sub-servicer, may
be deemed to be a Plan "fiduciary" with respect to the investing Plan, and thus
subject to the fiduciary responsibility provisions and prohibited transaction
provisions of ERISA and the Code. In addition, if the trust assets constitute
plan assets, the purchase of certificates by a Plan, as well as the operation of
the trust fund, may constitute or involve a prohibited transaction under ERISA
and the Code.
PROHIBITED TRANSACTION EXEMPTIONS
Wachovia Corporation ("Wachovia") has received from the DOL an individual
prohibited transaction exemption (the "Exemption"), which generally exempts from
the application of the prohibited transaction provisions of sections 406(a) and
(b) and 407(a) of ERISA, and the excise taxes imposed on such prohibited
transactions pursuant to Section 4975(a) and (b) of the Code, certain
transactions, among others, relating to the servicing and operation of mortgage
pools and the purchase, sale and holding of mortgage pass-through certificates
underwritten by an underwriter, provided that certain conditions set forth in
the Exemption application are satisfied. For purposes of this Section, "ERISA
Considerations," the term "underwriter" includes (i) Wachovia, (ii) any person
directly or indirectly, through one or more intermediaries, controlling,
controlled by or under common control with Wachovia, and (iii) any member of the
underwriting syndicate or selling group of which Wachovia or a person described
in (ii) is a manager or co-manager with respect to a class of certificates. See
"Method of Distribution."
The Exemption sets forth five general conditions which, among others, must
be satisfied for a transaction involving the purchase, sale and holding of
offered certificates by a Plan to be eligible for exemptive relief under the
Exemption:
First, the acquisition of offered certificates by a Plan must be on terms
that are at least as favorable to the Plan as they would be in an arm's-length
transaction with an unrelated party.
Second, the offered certificates at the time of acquisition by the Plan
must be rated in one of the four highest generic rating categories by Standard &
Poor's Rating Services, a division of The McGraw-Hill Companies, Inc. ("Standard
& Poor's"), Moody's Investors Service, Inc. ("Moody's"), or Fitch, Inc.
("Fitch").
Third, the trustee cannot be an affiliate of any other member of the
Restricted Group other than an underwriter. The "Restricted Group" consists of
any underwriter, the depositor, the trustee, the master servicer, the special
servicer, any sub-servicer, the provider of any credit support and any obligor
with respect to mortgage assets (including mortgage loans underlying a CMBS not
issued by Fannie Mae, Freddie Mac or Ginnie Mae) constituting more than 5% of
the aggregate unamortized principal balance of the mortgage assets in the
related trust fund as of the date of initial issuance of the certificates.
Fourth, the sum of all payments made to and retained by the underwriter(s)
in connection with the distribution or placement of certificates must represent
not more than reasonable compensation for underwriting or placing the
certificates; the sum of all payments made to and retained by the depositor
pursuant to the assignment of the mortgage assets to the related trust fund must
represent not more than the fair market value of such obligations; and the sum
of all payments made to and retained by the master servicer and any sub-servicer
must represent not more than reasonable compensation for such person's
109
services under the related pooling and servicing agreement and reimbursement of
such person's reasonable expenses in connection therewith.
Fifth, the investing Plan must be an accredited investor as defined in Rule
501(a)(1) of Regulation D of the Securities and Exchange Commission under the
Securities Act of 1933, as amended.
In the event the obligations used to fund the trust fund have not all been
transferred to the trust fund on the closing date, additional obligations
meeting certain requirements as specified in the Exemption may be transferred to
the trust fund in exchange for the amounts credited to the Pre-Funding Account
during a period required by the Exemption, commencing on the closing date and
ending no later than the earliest to occur of: (i) the date the amount on
deposit in the Pre-Funding Account (as defined in the Exemption) is less than
the minimum dollar amount specified in the pooling and servicing agreement; (ii)
the date on which an event of default occurs under the pooling and servicing
agreement; or (iii) the date which is the later of three months or 90 days after
the closing date. In addition, the amount in the Pre-Funding Account may not
exceed 25% of the aggregate principal amount of the offered certificates.
Certain other conditions of the Exemption relating to pre-funding accounts must
also be met, in order for the exemption to apply. The prospectus supplement will
discuss whether pre-funding accounts will be used.
The Exemption also requires that the trust fund meet the following
requirements: (i) the trust fund must consist solely of assets of the type that
have been included in other investment pools; (ii) certificates in such other
investment pools must have been rated in one of the four highest categories of
Standard & Poor's, Moody's, or Fitch for at least one year prior to the Plan's
acquisition of certificates; and (iii) certificates in such other investment
pools must have been purchased by investors other than Plans for at least one
year prior to any Plan's acquisition of certificates.
The Exemption generally applies to mortgage loans such as the mortgage
loans to be included in any trust fund. It is not clear whether the Exemption
applies to participant directed plans as described in Section 404(c) of ERISA or
plans that are subject to Section 4975 of the Code but that are not subject to
Title I of ERISA, such as certain Keogh plans and certain individual retirement
accounts. If mortgage loans are secured by leasehold interests, each lease term
must be at least 10 years longer than the term of the relevant mortgage loan.
If the general conditions set forth in the Exemption are satisfied, the
Exemption may provide an exemption from the restrictions imposed by Sections
406(a) and 407(a) of ERISA (as well as the excise taxes imposed by Sections
4975(a) and (b) of the Code by reason of Sections 4975(c)(1)(A) through (D) of
the Code) in connection with (i) the direct or indirect sale, exchange or
transfer of offered certificates acquired by a Plan upon issuance from the
depositor or underwriter when the depositor, underwriter, master servicer,
special servicer, sub-servicer, trustee, provider of credit support, or obligor
with respect to mortgage assets is a "Party in Interest" under ERISA with
respect to the investing Plan, (ii) the direct or indirect acquisition or
disposition in the secondary market of offered certificates by a Plan and (iii)
the holding of offered certificates by a Plan. However, no exemption is provided
from the restrictions of Sections 406(a)(1)(E), 406(a)(2) and 407 of ERISA for
the acquisition or holding of a certificate on behalf of an "Excluded Plan" by
any person who has discretionary authority or renders investment advice with
respect to the assets of such Excluded Plan. For this purpose, an Excluded Plan
is a Plan sponsored by any member of the Restricted Group.
If certain specific conditions set forth in the Exemption are also
satisfied, the Exemption may provide relief from the restrictions imposed by
Sections 406(b)(1) and (b)(2) of ERISA and the taxes imposed by Sections 4975(a)
and (b) of the Code by reason of Section 4975(c)(1)(E) of the Code to an obligor
acting as a fiduciary with respect to the investment of a Plan's assets in the
certificates (or such obligor's affiliate) only if, among other requirements (i)
such obligor (or its affiliate) is an obligor with respect to 5% percent or less
of the fair market value of the assets contained in the trust fund and is
otherwise not a member of the Restricted Group, (ii) a Plan's investment in
certificates does not exceed 25% of all of the certificates outstanding at the
time of the acquisition, (iii) immediately after the acquisition, no more than
25% of the assets of the Plan are invested in certificates representing an
interest in trusts (including the trust fund) containing assets sold or serviced
by the depositor or a servicer and (iv) in the case of the
110
acquisition of the certificates in connection with their initial issuance, at
least 50% of the certificates are acquired by persons independent of the
Restricted Group and at least 50% of the aggregate interest in the trust fund is
acquired by persons independent of the Restricted Group.
The Exemption also applies to transactions in connection with the
servicing, management and operation of the trust fund, provided that, in
addition to the general requirements described above, (a) such transactions are
carried out in accordance with the terms of a binding pooling and servicing
agreement, (b) the pooling and servicing agreement is provided to, or described
in all material respects in the prospectus or private placement memorandum
provided to, investing Plans before their purchase of certificates issued by the
trust fund and (c) the terms and conditions for the defeasance of a mortgage
obligation and substitution of a new mortgage obligation, as so directed, have
been approved by an NRSRO and do not result in any certificates receiving a
lower credit rating from the NRSRO than the current rating. The pooling and
servicing agreements will each be a "Pooling and Servicing Agreement" as defined
in the Exemption. Each pooling and servicing agreement will provide that all
transactions relating to the servicing, management and operations of the trust
fund must be carried out in accordance with the pooling and servicing agreement.
The DOL has issued a Prohibited Transaction Class Exemption 95-60 (the
"Class Exemption"), which provides relief from the application of the prohibited
transaction provisions of Sections 406(a), 406(b) and 407(a) of ERISA and
Section 4975 of the Code for transactions in connection with the servicing,
management and operation of a trust in which an insurance company general
account has an interest as a result of its acquisition of certificates issued by
such trust, provided that certain conditions are satisfied. Insurance company
general accounts meeting the specified conditions may generally purchase, in
reliance on the Class Exemption, classes of certificates that do not meet the
requirements of the Exemption solely because they have not received a rating at
the time of the acquisition in one of the four highest rating categories from
Standard & Poor's, Moody's, or Fitch. In addition to the foregoing Class
Exemption, relief may be available to certain insurance company general
accounts, which support policies issued by any insurer on or before December 31,
1998 to or for the benefit of employee benefit plans, under regulations
published by the DOL under Section 401(c) of ERISA, that became applicable on
July 5, 2001.
Any Plan fiduciary considering the purchase of certificates should consult
with its counsel with respect to the applicability of the Exemption and other
issues and determine on its own whether all conditions have been satisfied and
whether the certificates are an appropriate investment for a Plan under ERISA
and the Code (or, in the case of governmental plans or church plans, under
applicable federal, state or local law). The prospectus supplement will specify
the representations required by purchasers of certificates, but generally, each
purchaser using the assets of one or more Plans to purchase a certificate shall
be deemed to represent that each such Plan qualifies as an "accredited investor"
as defined in Rule 501(a)(1) of Regulation D under the Securities Act of 1933,
and no Plan will be permitted to purchase or hold such certificates unless such
certificates are rated in one of the top four rating categories by at least one
rating agency at the time of such purchase, unless such Plan is an insurance
company general account that represents and warrants that it is eligible for,
and meets all of the requirements of, Sections I and III of Prohibited
Transaction Class Exemption 95-60. Each purchaser of classes of certificates
that are not rated at the time of purchase in one of the top four rating
categories by at least one rating agency shall be deemed to represent that it is
eligible for, and meets all of the requirements of, Sections I and III of
Prohibited Transaction Class Exemption 95-60. The prospectus supplement with
respect to a series of certificates may contain additional information regarding
the application of the Exemption or any other exemption, with respect to the
certificates offered thereby.
111
LEGAL INVESTMENT
If so specified in the related prospectus supplement, the offered
certificates will constitute "mortgage related securities" for purposes of
SMMEA. 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 offered certificates, may be subject to
significant interpretive uncertainties. Accordingly, investors whose investment
authority is subject to investment laws and regulations, regulatory capital
requirements or review by regulatory authorities should consult their own legal
advisors to determine whether and to what extent the Non-SMMEA Certificates
constitute legal investments for them.
Generally, only classes of offered certificates that (1) are rated in one
of the two highest rating categories by any 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, will be "mortgage related
securities" for purposes of SMMEA. Classes of offered certificates qualifying as
"mortgage related securities" will constitute legal investments for persons,
trusts, corporations, partnerships, associations, business trusts and business
entities (including depository institutions, insurance companies 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 agency or instrumentality thereof constitute legal
investments for such entities. Under SMMEA, a number of states enacted
legislation, on or before the October 3, 1991 cutoff for such enactments,
limiting to various extents the ability of certain entities (in particular,
insurance companies) to invest in "mortgage related securities" secured by liens
on residential, or mixed residential and commercial properties, in most cases by
requiring the affected investors to rely solely upon existing state law, and not
SMMEA. Pursuant to Section 347 of the Riegle Community Development and
Regulatory Improvement Act of 1994, which amended the definition of "mortgage
related security" to include, in relevant part, offered certificates satisfying
the rating and qualified originator requirements for "mortgage related
securities," but evidencing interests in a trust fund consisting, in whole or in
part, of first liens on one or more parcels of real estate upon which are
located one or more commercial structures, states were authorized to enact
legislation, on or before September 23, 2001, specifically referring to Section
347 and prohibiting or restricting the purchase, holding or investment by
state-regulated entities in such types of offered certificates. Accordingly, the
investors affected by any state legislation overriding the preemptive effect of
SMMEA will be authorized to invest in offered certificates qualifying as
"mortgage related securities" only to the extent provided in that legislation.
SMMEA also amended the legal investment authority of federally-chartered
depository institutions as follows: federal savings and loan associations and
federal savings banks may invest in, sell or otherwise deal in "mortgage related
securities" without limitation as to the percentage of their assets represented
thereby, federal credit unions may invest in such securities, and national banks
may purchase such securities for their own account without regard to the
limitations generally applicable to investment securities set forth in 12 U.S.C.
sec. 24 (Seventh), subject in each case to such 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. sec. 1.5 concerning
"safety and soundness" and retention of credit information), certain "Type IV
securities," defined in 12 C.F.R. sec. 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
112
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 offered certificates will qualify as "commercial
mortgage-related securities," and thus as "Type IV securities," for investment
by national banks. The National Credit Union Administration (the "NCUA") has
adopted rules, codified at 12 C.F.R. Part 703, which permit federal credit
unions to invest in "mortgage related securities," other than stripped mortgage
related securities, residual interests in mortgage related securities, and
commercial mortgage related securities, subject to compliance with general rules
governing investment policies and practices; however, credit unions approved for
the NCUA's "investment pilot program" under 12 C.F.R. sec. 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. sec. 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," which
thrift institutions subject to the jurisdiction of the OTS should consider
before investing in any of the offered certificates.
All depository institutions considering an investment in the offered
certificates should review the "Supervisory Policy Statement on Investment
Securities and End-User Derivatives Activities" (the "1998 Policy Statement") of
the Federal Financial Institutions Examination Council, which has been adopted
by the Board of Governors of the Federal Reserve System, the Federal Deposit
Insurance Corporation, the OCC and the OTS, effective May 26, 1998, and by the
NCUA effective October 1, 1998. The 1998 Policy Statement sets forth general
guidelines which depository institutions must follow in managing risks
(including market, credit, liquidity, operational (transaction), and legal
risks) applicable to all securities (including mortgage pass-through securities
and mortgage-derivative products) used for investment purposes.
Institutions whose investment activities are subject to regulation by
federal and state authorities should review rules, policies and guidelines
adopted from time to time by such authorities before purchasing any offered
certificates, as certain series or classes may be deemed unsuitable investments,
or may otherwise be restricted, under such 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 offered
certificates issued in book-entry form, provisions which may restrict or
prohibit investments in securities which are issued in book-entry form.
Except as to the status of certain classes of offered certificates as
"mortgage related securities," no representations are made as to the proper
characterization of the offered certificates for legal investment purposes,
financial institution regulatory purposes, or other purposes, or as to the
ability of particular investors to purchase offered certificates under
applicable legal investment restrictions. The uncertainties described above (and
any unfavorable future determinations concerning legal investment or financial
institution regulatory characteristics of the offered certificates) may
adversely affect the liquidity of the offered certificates.
Accordingly, all investors whose investment activities are subject to legal
investment laws and regulations, regulatory capital requirements or review by
regulatory authorities should consult with their own legal advisors in
determining whether and to what extent the offered certificates of any class
constitute legal investments or are subject to investment, capital or other
restrictions and, if applicable, whether SMMEA has been overridden in any
jurisdiction relevant to such investor.
113
METHOD OF DISTRIBUTION
The offered certificates offered by the prospectus and the related
prospectus supplements will be offered in series. The distribution of the
offered certificates may be effected from time to time in one or more
transactions, including negotiated transactions, at a fixed public offering
price or at varying prices to be determined at the time of sale or at the time
of commitment therefor. The prospectus supplement for the offered certificates
of each series will, as to each class of such certificates, set forth the method
of the offering, either the initial public offering price or the method by which
the price at which the certificates of such class will be sold to the public can
be determined, any class or classes of offered certificates, or portions
thereof, that will be sold to affiliates of the depositor, the amount of any
underwriting discounts, concessions and commissions to underwriters, any
discounts or commissions to be allowed to dealers and the proceeds of the
offering to the depositor. If so specified in the prospectus supplement, the
offered certificates of a series will be distributed in a firm commitment
underwriting, subject to the terms and conditions of the underwriting agreement,
by Wachovia Securities, LLC, acting as underwriter with other underwriters, if
any, named in the prospectus supplement. Alternatively, the prospectus
supplement may specify that offered certificates will be distributed by Wachovia
Securities, LLC acting as agent. If Wachovia Securities, LLC acts as agent in
the sale of offered certificates, Wachovia Securities, LLC will receive a
selling commission with respect to such offered certificates, depending on
market conditions, expressed as a percentage of the aggregate certificate
balance or notional amount of such offered certificates as of the date of
issuance. The exact percentage for each series of certificates will be disclosed
in the prospectus supplement. To the extent that Wachovia Securities, LLC elects
to purchase offered certificates as principal, Wachovia Securities, LLC may
realize losses or profits based upon the difference between its purchase price
and the sales price. The prospectus supplement with respect to any series
offered other than through underwriters will contain information regarding the
nature of such offering and any agreements to be entered into between the
depositor or any affiliate of the depositor and purchasers of offered
certificates of such series.
This prospectus and prospectus supplements also may be used by the
depositor, Wachovia Securities, LLC, an affiliate of the depositor, and any
other affiliate of the depositor when required under the federal securities laws
in connection with offers and sales of offered certificates in furtherance of
market-making activities in offered certificates. Wachovia Securities, LLC or
any such other affiliate may act as principal or agent in such transactions.
Such sales will be made at prices related to prevailing market prices at the
time of sale or otherwise.
If so specified in a prospectus supplement, all or a portion of one or more
classes of the offered certificates identified in the prospectus supplement may
be retained or sold by the depositor either directly or indirectly through an
underwriter, including Wachovia Securities, LLC to one or more affiliates of the
depositor. This prospectus and prospectus supplements may be used by any such
affiliate to resell offered certificates publicly or privately to affiliated or
unaffiliated parties either directly or indirectly through an underwriter,
including Wachovia Securities, LLC
The depositor will agree to indemnify Wachovia Securities, LLC and any
underwriters and their respective controlling persons against certain civil
liabilities, including liabilities under the Securities Act of 1933, as amended,
or will contribute to payments that any such person may be required to make in
respect thereof.
In the ordinary course of business, Wachovia Securities, LLC and the
depositor may engage in various securities and financing transactions, including
repurchase agreements to provide interim financing of the depositor's mortgage
loans pending the sale of such mortgage loans or interests therein, including
the certificates.
The depositor anticipates that the offered certificates will be sold
primarily to institutional investors which may include affiliates of the
depositor. Purchasers of offered certificates, including dealers, may, depending
on the facts and circumstances of such purchases, be deemed to be "underwriters"
within the meaning of the Securities Act of 1933, as amended, in connection with
reoffers and sales by them of
114
offered certificates. Certificateholders should consult with their legal
advisors in this regard prior to any such reoffer or sale.
As to each series of certificates, only those classes rated in an
investment grade rating category by any rating agency will be offered hereby.
Any class of certificates not offered by this prospectus may be initially
retained by the depositor, and may be sold by the depositor at any time to one
or more institutional investors.
Underwriters or agents and their associates may be customers of (including
borrowers from), engage in transactions with, and/or perform services for the
depositor, its affiliates, and the trustee in the ordinary course of business.
LEGAL MATTERS
Unless otherwise specified in the prospectus supplement, certain legal
matters in connection with the certificates of each series, including certain
federal income tax consequences, will be passed upon for the depositor by
Cadwalader, Wickersham & Taft LLP, Charlotte, North Carolina.
FINANCIAL INFORMATION
A new trust fund will be formed with respect to each series of
certificates, and no trust fund will engage in any business activities or have
any assets or obligations prior to the issuance of the related series of
certificates. Accordingly, no financial statements with respect to any trust
fund will be included in this prospectus or in the prospectus supplement.
RATINGS
It is a condition to the issuance of any class of offered certificates that
they shall have been rated not lower than investment grade, that is, in one of
the four highest rating categories, by at least one rating agency.
Ratings on commercial mortgage pass-through certificates address the
likelihood of receipt by the holders thereof of all collections on the
underlying mortgage assets to which such holders are entitled. These ratings
address the structural, legal and issuer-related aspects associated with such
certificates, the nature of the underlying mortgage assets and the credit
quality of the guarantor, if any. Ratings on commercial mortgage pass-through
certificates do not represent any assessment of the likelihood of principal
prepayments by borrowers or of the degree by which such prepayments might differ
from those originally anticipated. As a result, certificateholders might suffer
a lower than anticipated yield, and, in addition, holders of Stripped Interest
Certificates in extreme cases might fail to recoup their initial investments.
There can be no assurance that any rating agency not requested to rate the
offered certificates will not nonetheless issue a rating to any or all classes
thereof and, if so, what such rating or ratings would be. A rating assigned to
any class of offered certificates by a rating agency that has not been requested
by the depositor to do so may be lower than the rating assigned to a class of
offered certificates by one or more of the rating agencies that has been
requested by the depositor to rate the offered certificates.
A security rating is not a recommendation to buy, sell or hold securities
and may be subject to qualification, revision or withdrawal at any time by the
assigning rating organization. Each security rating should be evaluated
independently of another security rating.
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INDEX OF PRINCIPAL DEFINITIONS
"Accrual Certificates" means certificates which provide for distributions
of accrued interest thereon commencing only following the occurrence of certain
events, such as the retirement of one or more other classes of certificates of
such series.
"Accrued Certificate Interest" means, with respect to each class of
certificates and each distribution date, other than certain classes of Stripped
Interest Certificates and REMIC Residual certificates, the amount equal to the
interest accrued for a specified period (generally the period between
distribution dates) on the outstanding certificate balance of those certificates
immediately prior to such distribution date, at the applicable pass-through
rate, as described under "Distributions of Interest on the Certificates" in this
prospectus.
"Available Distribution Amount" means, for any series of certificates and
any distribution date, the total of all payments or other collections (or
advances in lieu thereof) on, under or in respect of the mortgage assets and any
other assets included in the related trust fund that are available for
distribution to the certificateholders of that series on that date. The
particular components of the Available Distribution Amount for any series on
each distribution date will be more specifically described in the prospectus
supplement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Constant Prepayment Rate" or "CPR" means a rate that represents an assumed
constant rate of prepayment each month (which is expressed on a per annum basis)
relative to the outstanding principal balance of a pool of mortgage loans for
the life of such mortgage loans.
"Cut-Off Date" means the date on which the ownership of the mortgage loans
of a related series of certificates and rights to payment thereon are deemed
transferred to the trust fund, as specified in the related prospectus
supplement.
"Debt Service Coverage Ratio" means, with respect to a mortgage loan at any
given time and as more fully set forth in the prospectus supplement, the ratio
of (i) the Net Operating Income of the mortgaged property for a twelve-month
period to (ii) the annualized scheduled payments on the mortgage loan and on any
other loan that is secured by a lien on the mortgaged property prior to the lien
of the mortgage.
"DTC" means The Depository Trust Company.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Farmer Mac" or "FAMC" means the Federal Agricultural Mortgage Corporation.
"Loan-to-Value Ratio" means, as more fully set forth in the prospectus
supplement, the ratio (expressed as a percentage) of (i) the then outstanding
principal balance of the mortgage loan and the outstanding principal balance of
any loan secured by a lien on the mortgaged property prior to the lien of the
mortgage, to (ii) the value of the mortgaged property, which is generally its
fair market value determined in an appraisal obtained by the originator at the
origination of such loan.
"Net Operating Income" means, as more fully set forth in the prospectus
supplement and for any given period, the total operating revenues derived from a
mortgaged property, minus the total operating expenses incurred in respect of
the mortgaged property other than (i) non-cash items such as depreciation and
amortization, (ii) capital expenditures and (iii) debt service on loans
(including the mortgage loan) secured by liens on the mortgaged property.
"REMIC" means a "real estate mortgage investment conduit" under the Code.
"REMIC Certificate" means a certificate issued by a trust fund relating to
a series of certificate where an election is made to treat the trust fund as a
REMIC.
"REO Property" means any mortgaged property acquired on behalf of the trust
fund in respect of a defaulted mortgage loan through foreclosure, deed in lieu
of foreclosure or otherwise.
116
"SMMEA" means the Secondary Mortgage Market Enhancement Act of 1984, as
amended.
"Standard Prepayment Assumption" or "SPA" means a rate that represents an
assumed variable rate of prepayment each month (which is expressed on a per
annum basis) relative to the then outstanding principal balance of a pool of
loans, with different prepayment assumptions often expressed as percentages of
SPA.
"Stripped Interest Certificates" means certificates which are entitled to
interest distributions with disproportionately small, nominal or no principal
distributions.
"Stripped Principal Certificates" means certificates which are entitled to
principal distributions with disproportionately small, nominal or no interest
distributions.
117
The file "WBCMT 2003-C5 Prospectus Annexes A1-6.xls", which is a Microsoft
Excel*, Version 5.0 spreadsheet, that provides in electronic format certain
information shown in Annexes A-1, A-1A, A-1B, A-2, A-3, A-4, A-5 and A-6. In
addition, the spreadsheet provides certain Mortgage Loan and Mortgaged Property
information contained in Annex A-1 and information detailing the changes in the
amount of monthly payments with regard to certain Mortgage Loans. As described
under "DESCRIPTION OF THE CERTIFICATES--Reports to Certificateholders; Available
Information" in the Prospectus Supplement, each month the Paying Agent will make
available through its internet website an electronic file in CMSA format
updating and supplementing the information contained in the "WBCMT 2003-C5
Prospectus Annexes A1-6.xls" file.
To open the file, insert the diskette into your floppy drive. Copy the file
"WBCMT 2003-C5 Prospectus Annexes A1-6.xls" to your hard drive or network drive.
Open the file "WBCMT 2003-C5 Prospectus Annexes A1-6.xls" as you would normally
open any spreadsheet in Microsoft Excel. After the file is opened, a securities
law legend will be displayed. READ THE LEGEND CAREFULLY. To view the data, see
the worksheets labeled "Disclaimer", "A-1 Loan and Property Schedule" or "A-1A
Loan Group 1 Prop Schedule" or "A-1B Loan Group 2 Prop Schedule" or "A-2
Multifamily Data" or "A-3 Reserve Accounts" or "A-4 Commercial Tenant Schedule"
or "A-5 Crossed Collateralized Pool" or "A-6 Debt Service", respectively.
* Microsoft Excel is a registered trademark of Microsoft Corporation.
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UNTIL OCTOBER 1, 2003, ALL DEALERS THAT EFFECT TRANSACTIONS IN THE OFFERED
CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO
DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS. THIS IS IN ADDITION TO THE
DEALERS' OBLIGATION TO DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
------------------------
TABLE OF CONTENTS
PAGE
-----
PROSPECTUS SUPPLEMENT
Summary of Prospectus Supplement................ S-5
Risk Factors.................................... S-38
Description of the Mortgage Pool................ S-86
Servicing of The Mortgage Loans................. S-170
Description of the Certificates................. S-183
Yield and Maturity Considerations............... S-214
Use of Proceeds................................. S-220
Material Federal Income Tax Consequences........ S-220
ERISA Considerations............................ S-222
Legal Investment................................ S-225
Method of Distribution.......................... S-225
Legal Matters................................... S-227
Ratings......................................... S-227
Index of Defined Terms.......................... S-228
Annex A-1....................................... A-1
Annex A-1A...................................... A-1A
Annex A-1B...................................... A-1B
Annex A-2....................................... A-2
Annex A-3....................................... A-3
Annex A-4....................................... A-4
Annex A-5....................................... A-5
Annex A-6....................................... A-6
Annex B......................................... B-1
Annex C......................................... C-1
PROSPECTUS
Additional Information.......................... 4
Incorporation of Certain Information By
Reference..................................... 4
Summary of Prospectus........................... 5
Risk Factors.................................... 11
Description of the Trust Funds.................. 34
Yield Considerations............................ 40
The Depositor................................... 45
Use of Proceeds................................. 45
Description of the Certificates................. 46
Description of the Pooling and Servicing
Agreements.................................... 53
Description of Credit Support................... 67
Certain Legal Aspects of Mortgage Loans and
Leases........................................ 69
Material Federal Income Tax Consequences........ 84
State and Other Tax Consequences................ 108
ERISA Considerations............................ 108
Legal Investment................................ 112
Method of Distribution.......................... 114
Legal Matters................................... 115
Financial Information........................... 115
Ratings......................................... 115
Index of Principal Definitions.................. 116
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$721,263,000
(APPROXIMATE)
WACHOVIA COMMERCIAL
MORTGAGE SECURITIES, INC.
(DEPOSITOR)
WACHOVIA BANK COMMERCIAL
MORTGAGE TRUST
COMMERCIAL MORTGAGE PASS-THROUGH
CERTIFICATES SERIES 2003-C5
---------------------
PROSPECTUS SUPPLEMENT
---------------------
WACHOVIA
CITIGROUP
NOMURA
LEHMAN BROTHERS
June 24, 2003
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