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Potential Conflicts of Interest of the Directing Certificateholder
The
special servicer, an affiliate of the entity expected to be the initial
directing certificateholder, will be required to consult with the directing
certificateholder with respect to certain actions of the special servicer
and in certain circumstances obtain the consent of the directing
certificateholder.
The
directing certificateholder and its affiliates may have interests that are
in conflict with those of certificateholders, especially if the directing
certificateholder or any of its affiliates holds certificates, or has
financial interests in or other financial dealings with a borrower or a
parent of a borrower. Each of these relationships may create a conflict of
interest.
Conflicts Between Certificateholders and the Holder of a Companion Loan
With
respect to four (4) mortgage loans (identified as Loan Nos. 1, 3, 4 and 5 on
Annex A-1 to this free writing prospectus), representing approximately 9.6%,
7.6%, 7.2% and 6.5%, respectively, of the aggregate principal balance of the
pool of mortgage loans as of the cut-off date, the related mortgaged
property also secures a related pari
passu companion loan. Pursuant to the related intercreditor
agreement, for so long as each such mortgage loan and the related pari
passu companion loan are serviced under the pooling and servicing
agreement, certain decisions to be made with respect to each such mortgage
loan will be subject to the consent and consultation rights of the directing
certificateholder.
The 589
Fifth Avenue whole loan will be serviced pursuant to the 2013-C13 pooling
and servicing agreement and certain decisions to be made with respect to the
related mortgage loan will be subject to the consent and consultation rights
of the directing certificateholder of that securitization. As a result, you
will have less control over the servicing of the 589 Fifth Avenue mortgage
loan than you would have if such mortgage loan were being serviced by the
master servicer and the special servicer pursuant to the terms of the
pooling and servicing agreement. See “Description
of the Mortgage Pool—The 589 Fifth Avenue Whole Loan” in this free
writing prospectus.
The
interests of the directing certificateholder of the other securitizations or
such other party specified in the other pooling and servicing agreements
entitled to exercise various rights with respect to the servicing of the 589
Fifth Avenue mortgage loan, and the related pari
passu companion loan may conflict with the interests of, and its
decisions may adversely affect, the holders of one or more classes of
offered certificates. No certificateholder may take any action against any
such party for having acted solely in its respective interest.
Potential Conflicts of Interest of the Underwriters and Their Affiliates
The
activities of the underwriters and their respective affiliates may result in
certain conflicts of interest. The underwriters and their respective
affiliates may retain, or own in the future, classes of the offered
certificates, and any voting rights of that class could be exercised by them
in a manner that could adversely impact the certificates. Any of the
underwriters or their respective affiliates may invest or take long or short
positions in securities or instruments, including the offered certificates,
that may be different from your position as an investor in the offered
certificates. If that were to occur, that underwriter or affiliate’s
interests may not be aligned with your interests in the offered certificates
that you acquire.
The
underwriters and their respective affiliates include broker-dealers whose
business includes executing securities and derivative transactions on their
own behalf as principals and on behalf of clients. Accordingly, the
underwriters and their respective affiliates and clients acting through them
from time to time buy, sell or hold securities or other instruments, which
may include one or more classes of the offered certificates, and do so
without consideration of the fact that the underwriters acted as
underwriters for such certificates. Such transactions may result in
underwriters and their respective affiliates and/or their clients having
long or short positions in such instruments. Any such short positions will
increase in value if the related securities or other instruments decrease in
value. Further, the underwriters and their respective affiliates may (on
their own behalf as principals or for their clients) enter into credit
derivative or other derivative transactions with other parties pursuant to
which they sell or buy credit protection with respect to one or more of the
offered certificates. The positions of the underwriters and their respective
affiliates or their clients in such derivative transactions may increase in
value if the offered certificates default or decrease in value. In
conducting such activities, no underwriter or its respective affiliates has
any obligation to take into account the interests of the certificateholders
or any possible effect that such activities could have on them. The
underwriters and their respective affiliates and clients acting through them
may execute such transactions, modify or terminate such derivative positions
and otherwise act with respect to such transactions, and may exercise or
enforce, or refrain from exercising or enforcing, any or all of their rights
and powers in connection therewith, without regard to whether any such
action might have an adverse effect on the offered certificates or the
certificateholders.
In
addition, the underwriters and their respective affiliates will have no
obligation to monitor the performance of the offered certificates or the
actions of the master servicer, the special servicer, the senior trust
advisor, the certificate administrator or the trustee and will have no
authority to advise the master servicer, the special servicer, the senior
trust advisor, the certificate administrator or the trustee or to direct
their actions.
In
addition, the underwriters and their respective affiliates may have ongoing
relationships with, render services to, and engage in transactions with the
borrowers, the sponsors and their respective affiliates, which relationships
and transactions may create conflicts of interest between the underwriters
and their respective affiliates, on the one hand, and the trust, on the
other hand. JPMorgan Chase Bank, National Association and its affiliates
have several roles in this transaction. J.P. Morgan Chase Commercial
Mortgage Securities Corp. is the depositor and a wholly owned subsidiary of
JPMorgan Chase Bank, National Association. JPMorgan Chase Bank, National
Association has (or, as of the closing date, will have) originated or
acquired its mortgage loans and will be selling them to the depositor.
JPMorgan Chase Bank, National Association is also an affiliate of J.P.
Morgan Securities LLC, an underwriter for the offering of the offered
certificates and an initial purchaser of the non-offered certificates.
JPMorgan Chase Bank, National Association is also a sponsor. With respect to
one (1) mortgage loan (identified as Loan No. 17 on Annex A-1 to this free
writing prospectus), representing approximately 1.9% of the Initial Pool
Balance, J.P. Morgan Chase is the largest tenant at the related mortgaged
property and occupies approximately 78.2% of the net rentable area at such
property. Barclays Bank PLC, one of the sponsors and mortgage loan sellers,
is an affiliate of Barclays Capital Inc., an underwriter for the offering of
the offered certificates and an initial purchaser of the non-offered
certificates.
Furthermore, Barclays Bank PLC, a mortgage loan seller and an affiliate of
one of the underwriters, is the purchaser under repurchase agreements with
RAIT CMBS Conduit II, LLC, an affiliate of RAIT Funding, LLC, an originator,
for the purpose of providing short-term warehouse financing of mortgage
loans
originated or acquired by RAIT CMBS Conduit II, LLC. The mortgage loans
intended to be included in the trust subject to the repurchase facility that
were originated by RAIT Funding, LLC have an aggregate outstanding principal
balance as of the cut-off date of approximately $71,286,151. Proceeds
received by RAIT CMBS Conduit II, LLC in connection with this securitization
transaction will be applied, among other things to make payments from RAIT
CMBS Conduit II, LLC to Barclays Bank PLC as the repurchase agreement
counterparty.
See “Summary
of Terms—Certain Affiliations” in this free writing prospectus for a
description of certain affiliations and relationships between the
underwriters and other participants in this offering.
Each of
the foregoing relationships should be considered carefully by you before you
invest in any of the offered certificates.
Other Possible Conflicts of Interest
The
managers of the mortgaged properties and the borrowers may experience
conflicts of interest in the management and/or ownership of the mortgaged
properties because:
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a substantial number of the mortgaged properties are managed by
property managers affiliated with the respective borrowers;
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these property managers also may manage and/or franchise
additional properties, including properties that may compete
with the mortgaged properties; and
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affiliates of the managers and/or the borrowers, or the managers
and/or the borrowers themselves, also may own other properties,
including competing properties.
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None of
the borrowers, property managers, or any of their affiliates or any
employees of the foregoing has any duty to favor the leasing of space in the
mortgaged properties over the leasing of space in other properties, one or
more of which may be adjacent to, or near the mortgaged properties.
With
respect to mortgage loans that have mezzanine debt, the mezzanine lenders
will have certain rights with respect to the related mortgage loan under
certain circumstances, including the right, under certain conditions, to
consent to various modifications and waivers or other matters affecting the
related mortgage loan and certain actions and amendments to the mortgage
loan documents proposed by the special servicer with respect to the related
mortgage loan or to purchase the related mortgage loan after certain
defaults under such mortgage loan. An affiliate of RAIT Funding, LLC, an
originator, is the holder of the mezzanine loans related to the mortgage
loan identified as Loan No. 12 on Annex A-1 to this free writing
prospectus), representing approximately 2.3% of the aggregate principal
balance of the pool of mortgage loans as of the cut-off date. JPMorgan Chase
Bank, National Association, a sponsor and mortgage loan seller, is the
holder of two (2) mezzanine loans related to the mortgage loans identified
as Loan Nos. 6 and 11 on Annex A-1 to this free writing prospectus,
representing approximately 8.8% of the aggregate principal balance of the
pool of mortgage loans as of the cut-off date. These additional financial
interests in the mortgage loans may create conflicts of interest. See “Description
of the Mortgage Pool—Additional
Debt” in this free writing prospectus. In exercising such rights, no
mezzanine lender has any obligation to consider the interests of, or impact
of the exercise of such rights upon, the trust or the certificateholders.
Pentalpha
Surveillance LLC has been appointed the senior trust advisor. See “Transaction
Parties—The Senior Trust Advisor”. Pursuant to the pooling and
servicing agreement, during such time as (x) the Class F certificates have a
certificate balance (taking into account the application of appraisal
reductions to notionally reduce the certificate balance of such class of
certificates) that is less than 25% of its initial certificate balance, or
(y) a holder of the Class F certificates is the majority controlling class
certificateholder and has irrevocably waived its right to exercise any of
its rights as the controlling class certificateholder and such rights have
not been reinstated to a successor controlling class certificateholder, the
senior trust advisor will be required to consult with the special servicer
with respect to certain actions of the special servicer. Additionally,
during that time, the master servicer or the special
servicer,
as applicable, will be required to use commercially reasonable efforts
consistent with the servicing standard to collect a senior trust advisor
consulting fee from the related borrower in connection with certain major
decisions related to the mortgage loans, to the extent not prohibited by the
related mortgage loan documents. In acting as senior trust advisor, the
senior trust advisor is acting solely as a contracting party to the extent
described in this free writing prospectus. See “Transaction
Parties—The Senior Trust Advisor” in this free writing prospectus.
In the
normal course of conducting its business, Pentalpha Surveillance LLC and its
affiliates may have rendered services to, performed surveillance of, and
negotiated with, numerous parties engaged in activities related to
structured finance and commercial mortgage securitization. These parties may
have included the depositor, the sponsors, the mortgage loan sellers, the
master servicer, the special servicer, the certificate administrator, the
trustee or the directing certificateholder or affiliates of any of the
foregoing parties. Each of these relationships, to the extent they exist,
may continue in the future and may involve a conflict of interest with
respect to Pentalpha Surveillance LLC’s duties as senior trust advisor.
There can be no guarantee that the existence of these relationships and
other relationships in the future will not impact the manner in which the
senior trust advisor performs its duties under the pooling and servicing
agreement.
Although
the senior trust advisor is required to consider the servicing standard in
connection with its analysis and reporting regarding the special servicer
under the pooling and servicing agreement, the senior trust advisor will not
itself be bound by the servicing standard.
The
senior trust advisor is prohibited from making a principal investment in any
class of certificates issued by the trust. However, that prohibition will
not be construed to have been violated in connection with riskless principal
transactions effected by a broker-dealer affiliate of the senior trust
advisor or investments by an affiliate of the senior trust advisor if the
senior trust advisor and such affiliate maintain policies and procedures
designed to segregate personnel involved in the activities of the senior
trust advisor under the pooling and servicing agreement from personnel
involved in such affiliate’s investment activities and to prevent such
affiliate and its personnel from gaining access to information regarding the
trust fund and the senior trust advisor and its personnel from gaining
access to such affiliate’s information regarding its investment activities.
In addition, we cannot assure you that such policies and procedures will be
effective for their intended purposes.
Each of
the foregoing relationships should be considered carefully by prospective
investors.
Potential Conflicts of Interest in the Selection of the Mortgage Loans
The
anticipated purchaser of the Class F, Class G and Class NR certificates was
given the opportunity by the sponsors to perform due diligence on the
mortgage loans originally identified by the sponsors for inclusion in the
trust, and to request the removal, re-sizing or modification of other
features of some or all of the mortgage loans or to request certain price
adjustments or cost mitigation arrangements in connection with its agreement
to purchase those classes of certificates.
We cannot
assure you that you or another investor would make requests to modify the
original pool if given the opportunity or that the final pool if influenced
by such buyer’s feedback would not adversely affect the performance of the
certificates offered hereby and benefit the performance of such buyer’s
certificates. Because of the differing subordination levels, such buyer has
interests that may, in some circumstances, differ from those of purchasers
of other classes of certificates, and may desire a portfolio composition
that benefits such buyer but that does not benefit other investors. In
addition, such buyer may enter into hedging or other transactions or
otherwise have business objectives that also could cause its interests with
respect to the asset pool to diverge from those of other purchasers of the
certificates.
The
anticipated purchaser of those certificates will have no liability to any
certificateholder for any actions taken with respect to the preceding two
paragraphs, and the pooling and servicing agreement will provide that each
certificateholder, by its acceptance of a certificate, waives any claims
against such buyer in respect thereof.
It is
anticipated that BlackRock Financial Management, Inc. (or its affiliate) on
behalf of one or more managed funds or accounts will purchase the Class F,
Class G and Class NR certificates and will initially constitute the
directing certificateholder, and thus would have certain rights to direct
and consult with the special servicer as described under “Servicing
of the Mortgage Loans—The Directing Certificateholder” in this free
writing prospectus. In addition, BlackRock Financial Management, Inc. (or
its affiliate) may buy additional certificates that are not Control Eligible
Certificates.
Because
the incentives and actions of the anticipated purchaser of those
certificates may, in some circumstances, differ from or be adverse to those
of purchasers of other classes of certificates, you are advised and
encouraged to make your own investment decision based on a careful review of
the information set forth in this free writing prospectus and your own view
of the mortgage loans.
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Your Lack of Control Over the Trust Can Adversely Impact Your
Investment
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Except as
described in this free writing prospectus, investors in the certificates do
not have the right to make decisions with respect to the administration of
the trust. These decisions are generally made, subject to the express terms
of the pooling and servicing agreement, by the master servicer, the special
servicer, the certificate administrator and the trustee. Any decision made
by any of those parties in respect of the trust in accordance with the terms
of the pooling and servicing agreement, even if it determines that decision
to be in your best interests, may be contrary to the decision that you would
have made and may negatively affect your interests.
Notwithstanding the foregoing, the directing certificateholder appointed by
the controlling class will have certain consent rights prior to the
occurrence and continuance of such time as the Class F certificates have a
certificate balance (taking into account the application of appraisal
reductions to notionally reduce the certificate balance of such class of
certificates) that is less than 25% of its initial certificate balance, and
will have certain non-binding consultation rights prior to such time as the
Class F certificates have a certificate balance (without taking into account
the application of appraisal reductions to notionally reduce the certificate
balance of such class of certificates) that is less than 25% of its initial
certificate balance; provided, however,
that the controlling class may lose any such rights upon the occurrence of
certain events. See “Servicing
of the Mortgage Loans—The Directing Certificateholder” in this free
writing prospectus and “Risk
Factors—Your Lack of Control Over Trust Fund Can Create Risks” in the
prospectus.
In
addition, while there is a senior trust advisor with certain obligations in
respect of reviewing the compliance of the special servicer with certain of
its obligations under the pooling and servicing agreement, the senior trust
advisor has no control rights over actions by the special servicer at any
time and the senior trust advisor has no consultation rights over actions by
the special servicer prior to (i) such time as the Class F certificates have
a certificate balance (taking into account the application of appraisal
reductions to notionally reduce the certificate balance of such class of
certificates) that is less than 25% of its initial certificate balance or
(ii) such time as a holder of the Class F certificates is the majority
controlling class certificateholder and has irrevocably waived its
controlling class rights as described in this free writing prospectus. In
addition, the senior trust advisor only has the limited obligations and
duties set forth in the pooling and servicing agreement, and the special
servicer is under no obligation at any time to act upon any of the senior
trust advisor’s recommendations. In addition, the senior trust advisor has
no (A) fiduciary duty or (B) other duty to act on behalf of the
certificateholders or the trust fund or in the best interest of any
particular certificateholder. It is not intended that the senior trust
advisor act as a surrogate for the certificateholders. Investors should not
rely on the senior trust advisor to affect the special servicer’s actions
under the pooling and servicing agreement or to monitor the actions of the
directing certificateholder or special servicer, other than to the limited
extent specifically required in respect of certain actions of the special
servicer at certain prescribed times under the pooling and servicing
agreement. Further, the senior trust advisor will have no duties with
respect to the non-serviced mortgage loan, such as the 589 Fifth Avenue
mortgage loan, nor will it have any consultation rights on actions taken
with respect to the non-serviced mortgage loan.
In
certain limited circumstances, certificateholders have the right to vote on
matters affecting the trust. In some cases these votes are by
certificateholders taken as a whole and in others the vote is by class. In
all cases, voting is based on the outstanding certificate balance, which is
reduced by realized losses, and in certain cases, by appraisal reductions.
These limitations on voting could adversely affect your ability to protect
your interests with respect to matters voted on by certificateholders. See “Description
of the Certificates—Voting Rights” and “Transaction
Parties—Replacement of the Special Servicer” in this free writing
prospectus.
In
addition, none of the pari
passu companion loans will be included as an asset of the trust fund,
but each will be serviced under the pooling and servicing agreement for this
transaction (other than the 589 Fifth Avenue pari
passu companion loan, which will be serviced under the 2013-C13
pooling and servicing agreement, subject to the 589 Fifth Avenue
intercreditor agreement). The directing certificateholder (or, with respect
to the 589 Fifth Avenue pari
passu companion loan, the 2013-C13 directing certificateholder) will
have certain rights with respect to the related whole loan and the related
mortgaged property, including the right, under certain conditions, to advise
and direct the master servicer and/or the special servicer (or, with respect
to the 589 Fifth Avenue pari passu companion loan, the 2013-C13 master
servicer and/or the 2013-C13 special servicer) with respect to various
servicing matters or mortgage loan modifications affecting the related whole
loan.
The
directing certificateholder in this securitization will have certain
consultation rights with respect to actions taken by the 2013-C13 directing
certificateholder, in the case of the 589 Fifth Avenue pari
passu companion loan. No directing certificateholder (in this
securitization or the securitization of any pari
passu companion loan), in exercising any consultation, consent or
direction rights, will have any obligation to consider the interests of or
the impact on, the holder of the certificates in any transaction other than
the related controlling class for which it is acting. The directing
certificateholder for any other trust may not have the same incentives with
respect to the effects on this trust as would the directing
certificateholder for this securitization.
In
addition, with respect to mortgage loans that have mezzanine debt, the
related mezzanine lender will have the right under certain limited
circumstances to (i) cure certain defaults with respect to, and under
certain default scenarios purchase (without payment of any yield maintenance
charge or prepayment premium) the related mortgage loan and (ii) so long as
no event of default with respect to the related mortgage loan continues
after the mezzanine lender’s cure right has expired, approve certain
modifications and consent to certain actions to be taken with respect to the
related mortgage loan. See “Description
of the Mortgage Pool—Mortgage
Pool Characteristics” and “—Additional
Debt” in this free writing prospectus.
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Special Servicer May Be Directed To Take Actions
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In
connection with the servicing of the specially serviced mortgage loans
(other than the 589 Fifth Avenue mortgage loan), the special servicer may,
at the direction of the directing certificateholder, take actions with
respect to such specially serviced mortgage loans that could adversely
affect the holders of some or all of the classes of certificates offered
hereby. The directing certificateholder will be controlled by the
controlling class certificateholders. The directing certificateholder may
have interests in conflict with those of the certificateholders. As a
result, it is possible that the directing certificateholder may direct the
special servicer to take actions that conflict with the interests of certain
classes of the certificates offered hereby. However, the special servicer is
not permitted to take actions that are prohibited by law or violate the
servicing standard or the terms of the mortgage loan documents. In addition,
except as limited by certain conditions described under “Transaction
Parties—Replacement of the Special Servicer”, the special servicer
may be removed without cause by the directing certificateholder as described
in this free writing prospectus. The special servicer may also be removed in
certain circumstances (x) if a request is made by certificateholders
evidencing not less than 25% of the voting rights (taking into account the
application of appraisal reductions to notionally reduce the respective
certificate balances) of the certificates (other than the Class X-A, Class
X-B, Class X-C and Class R certificates) and (y) upon receipt of approval by
certificateholders holding at least 75% of a quorum of the
certificateholders (which is the holders of certificates evidencing at least
75% of the voting rights (taking into account the application of
realized
losses and the application of appraisal reductions to notionally reduce the
respective certificate balances) of the certificates (other than the Class
X-A, Class X-B, Class X-C and Class R certificates)), as described in this
free writing prospectus. See “Servicing
of the Mortgage Loans—General”, “Transaction
Parties—The Master
Servicer and the Special Servicer” and “Transaction
Parties—Replacement of the Special Servicer” in this free writing
prospectus.
Similarly, the special servicer under the 2013-C13 pooling and servicing
agreement may, at the direction of the 2013-C13 directing certificateholder,
take actions with respect to the 589 Fifth Avenue mortgage loan that could
adversely affect the holders of some or all of the classes of the offered
certificates. See “Servicing
of the Mortgage Loans—The Directing Certificateholder” in this free
writing prospectus. The 2013-C13 directing certificateholder will exercise
its rights in accordance with the 2013-C13 pooling and servicing agreement
and the 589 Fifth Avenue intercreditor agreement, pursuant to which the 589
Fifth Avenue mortgage loan and the 589 Fifth Avenue pari
passu companion loan are serviced. See “Servicing
of the Mortgage Loans—The Directing Certificateholder” in this free
writing prospectus. The directing certificateholder under the 2013-C13
pooling and servicing agreement will exercise its rights in accordance with
such pooling and servicing agreement and the related intercreditor
agreement. Such directing certificateholder may have interests in conflict
with those of the certificateholders of the classes of the offered
certificates in this transaction. As a result, it is possible that such
directing certificateholder may direct the special servicer under the
pooling and servicing agreement entered into in connection with the
securitization of such pari
passu companion loan to take actions that conflict with the interests
of certain classes of the offered certificates. However, such special
servicer will not be permitted to take actions that are prohibited by law or
violate the servicing standards or breach the terms of the related mortgage
loan documents. In addition such special servicer may be removed without
cause by the related directing certificateholder as described in this free
writing prospectus. See “Servicing
of the Mortgage Loans—General,” “—The
Directing Certificateholder” and “Transaction
Parties—The Master Servicer and the Special Servicer” in this free
writing prospectus.
The Sponsors, the Depositor and the Trust Are Subject to Bankruptcy or
Insolvency Laws That May Affect the Trust Fund’s Ownership of the
Mortgage Loans
In the
event of the bankruptcy or insolvency of a sponsor or the depositor, it is
possible the trust’s right to payment from or ownership of the mortgage
loans could be challenged, and if such challenge were successful, delays,
reductions in payments and/or losses on the certificates could occur.
The
transfer of the mortgage loans by the sponsors in connection with this
offering is not expected to qualify for the securitization safe harbor
adopted by the Federal Deposit Insurance Corporation for securitizations
sponsored by insured depository institutions (12 C.F.R. § 360.6); however,
the safe harbor is non-exclusive.
In the
case of each sponsor, an opinion of counsel will be rendered on the closing
date, based on certain facts and assumptions and subject to certain
qualifications, to the effect that the transfer of the applicable mortgage
loans by such sponsor to the depositor would generally be respected in the
event of a bankruptcy or insolvency of such sponsor. Nevertheless, we cannot
assure you that the Federal Deposit Insurance Corporation, a bankruptcy
trustee, if applicable, or another interested party would not attempt to
assert that such transfer was not a sale. Even if a challenge were not
successful, it is possible that payments on the certificates offered hereby
would be delayed while a court resolves the claim.
In
addition, since the trust is a common law trust, it may not be eligible for
relief under the federal bankruptcy laws, unless it can be characterized as
a “business trust” for purposes of the federal bankruptcy laws. Bankruptcy
courts look at various considerations in making this determination, so it is
not possible to predict with any certainty whether or not the trust would be
characterized as a “business trust”. Regardless of whether a bankruptcy
court ultimately determines that the trust is a “business trust”, it is
possible that payments on the certificates offered hereby would be delayed
while the court resolved the issue.
Title II
of the Dodd Frank Wall Street Reform and Consumer Protection Act provides
for an orderly liquidation authority under which the Federal Deposit
Insurance Corporation can be appointed as receiver
of
certain systemically important non-bank financial companies and their direct
or indirect subsidiaries in certain cases. We make no representation as to
whether this would apply to any of the sponsors. In January 2011, the
acting general counsel of the Federal Deposit Insurance Corporation issued a
letter in which he expressed his view that, under then-existing regulations,
the Federal Deposit Insurance Corporation, as receiver under the orderly
liquidation authority, would not, in the exercise of its orderly liquidation
authority repudiation powers, recover as property of a financial company
assets transferred by the financial company, provided that the transfer
satisfies the conditions for the exclusion of assets from the financial
company’s estate under the bankruptcy code. The letter further noted that,
while the Federal Deposit Insurance Corporation staff may be considering
recommending further regulations under orderly liquidation authority, the
acting general counsel would recommend that such regulations incorporate a
90 day transition period for any provisions affecting the Federal Deposit
Insurance Corporation’s statutory power to disaffirm or repudiate contracts.
If, however, the Federal Deposit Insurance Corporation were to adopt a
different approach than that described in the acting general counsel’s
letter, delays or reductions in payments on the offered certificates would
occur.
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Risks Relating to Prepayments and Repurchases
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The yield
to maturity on your certificates will depend, in significant part, upon the
rate and timing of principal payments on the mortgage loans. For this
purpose, principal payments include both voluntary prepayments, if
permitted, and involuntary prepayments, such as prepayments resulting from
casualty or condemnation, defaults and liquidations or repurchases upon
breaches of representations and warranties or document defects.
In
addition, it is important to note that previously issued commercial
mortgage-backed securities (including, potentially, certain commercial
mortgage-backed securities sponsored by JPMorgan Chase Bank, National
Association and Barclays Bank PLC or affiliates thereof) have recently
experienced greater losses than expected, and in certain circumstances
significantly greater losses, as a result of defaults and liquidations of
the mortgage loans that comprise those commercial mortgage-backed
securities. We cannot assure you that the losses actually incurred with
respect to the mortgage loans that back the certificates offered hereby will
not similarly exceed any assumed or expected losses. See “Yield
and Maturity Considerations” in this free writing prospectus.
The yield
on each of the classes of certificates that have a pass-through rate equal
to, limited by, or based on, the weighted-average mortgage rate would be
adversely affected if mortgage loans with higher interest rates pay faster
than the mortgage loans with lower interest rates. The pass-through rates on
these classes of certificates may also be adversely affected as a result of
a decrease in the weighted average of the net mortgage rates on the mortgage
loans even if principal prepayments do not occur. See “Yield
and Maturity Considerations” in this free writing prospectus.
The
Class X-A and Class X-B certificates will not be entitled to distributions
of principal but instead will accrue interest on their respective notional
amounts. Because the notional amount of the Class X-A certificates is based
upon the outstanding certificate balances of the Class A-1, Class A-2,
Class A-3, Class A-4, Class A-SB and Class A-S certificates and the notional
amount of the Class X-B certificates is based upon the outstanding
certificate balances of the Class B and Class C certificates, the yield to
maturity on the Class X-A and Class X-B certificates will be extremely
sensitive to the rate and timing of prepayments of principal, liquidations
and principal losses on the mortgage loans to the extent allocated to the
related classes of certificates. In particular, the Class X-A certificates
(and to a lesser extent, the Class X-B certificates) will be sensitive to
prepayments on the mortgage loans because the prepayments will have the
effect of reducing the notional amount of the Class X-A certificates first.
A rapid rate of principal prepayments, liquidations and/or principal losses
on the mortgage loans could result in the failure to recoup the initial
investment in the Class X-A certificates and then the Class X-B
certificates. Investors in the Class X-A and Class X-B certificates should
fully consider the associated risks, including the risk that an extremely
rapid rate of amortization, prepayment or other liquidation of the mortgage
loans could result in the failure of such investors to recoup fully their
initial investments.
In
addition, with respect to the Class A-SB certificates, the extent to which
the planned balances are achieved and the sensitivity of the Class A-SB
certificates to principal prepayments on the mortgage loans will depend in
part on the period of time during which the Class A-1, Class A-2, Class A-3
and Class A-4 certificates remain outstanding. As such, the Class A-SB
certificates will become more sensitive to the rate of prepayments on the
mortgage loans than they were when the Class A-1, Class A-2, Class A-3 and
Class A-4 certificates were outstanding.
The
investment performance of your certificates may vary materially and
adversely from your expectations if the actual rate of prepayment on the
mortgage loans is higher or lower than you anticipate.
Any
changes in the weighted average lives of your certificates may adversely
affect your yield. Prepayments resulting in a shortening of weighted average
lives of your certificates may be made at a time of low interest rates when
you may be unable to reinvest the resulting payment of principal on your
certificates at a rate comparable to the effective yield anticipated by you
in making your investment in the certificates, while delays and extensions
resulting in a lengthening of those weighted average lives may occur at a
time of high interest rates when you may have been able to reinvest
principal payments that would otherwise have been received by you at higher
rates.
In
addition, the extent to which prepayments on the mortgage loans in the trust
fund ultimately affect the average life of the certificates offered hereby
will depend on the terms of the certificates offered hereby, more
particularly:
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A class of certificates offered hereby that entitles the holders
of those certificates to a disproportionately larger share of
the prepayments on the mortgage loans increases the “call risk”
or the likelihood of early retirement of that class if the rate
of prepayment is relatively fast; and
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A class of certificates offered hereby that entitles the holders
of the certificates offered hereby to a disproportionately
smaller share of the prepayments on the mortgage loans increases
the likelihood of “extension risk” or an extended average life
of that class if the rate of prepayment is relatively slow.
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See “Yield
and Maturity Considerations” in this free writing prospectus.
Although
the mortgage loans generally have prepayment protection in the form of
lockout periods and/or one or more of the following: (a) defeasance,
(b) yield maintenance or (c) prepayment premium provisions, we cannot assure
you that the related borrowers will refrain from prepaying their related
mortgage loans due to the existence of yield maintenance charges or
prepayment premiums or that involuntary prepayments will not occur.
There are
thirteen (13) mortgage loans (identified as Loan Nos. 1, 2, 6, 10, 13, 18,
19, 21, 22, 28, 29, 33 and 39 on Annex A-1 to this free writing prospectus),
representing approximately 38.7% of the aggregate principal balance of the
pool of mortgage loans as of the cut-off date, that permit prepayment
together with the payment of a yield maintenance premium, generally
following the end of a lockout period of at least 24 months from the first
due date.
We are
not aware of any relevant publicly available or authoritative statistics
with respect to the historical prepayment experiences of commercial mortgage
loans. However, the rate at which voluntary prepayments occur on the
mortgage loans will be affected by a variety of factors, including:
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the terms of the related mortgage loans;
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the length of any prepayment lockout period;
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the level of prevailing interest rates;
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the availability of mortgage credit;
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any applicable yield maintenance charges and prepayment
premiums;
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the master servicer’s or special servicer’s ability to enforce
those yield maintenance charges or prepayment premiums;
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the failure to meet certain requirements for the release of
escrows;
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the occurrence of casualties or natural disasters; and
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economic, demographic, tax, legal or other factors.
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In
addition, the rate at which voluntary prepayments occur may also be impacted
by the existence of any purchase options related to a mortgaged property.
The exercise of the purchase option could occur during what would otherwise
be a lockout/defeasance period. The resulting prepayment is required to be
accompanied by a yield maintenance charge. See “Yield
and Maturity Considerations” in this free writing prospectus.
Further, the rate at which voluntary prepayments occur may also be impacted
by the ability of borrowers with respect to certain mortgage loans to affect
a paydown of amounts owing under the related mortgage loan documents in
connection with a release of a portion of the related mortgaged property
during periods in which prepayments on the mortgage loan were otherwise
prohibited. See “Description
of the Mortgage Pool—Mortgaged Property Considerations—Tenant Issues”
in this free writing prospectus for additional information relating to
prepayment provisions on certain mortgage loans in the trust.
We cannot
assure you that the obligation to pay any yield maintenance charge or
prepayment premium will be enforceable. See “—Risks
Relating to Prepayments and Repurchases” in this free writing
prospectus. Provisions requiring yield maintenance charges or prepayment
premiums may not be enforceable in some jurisdictions and under federal
bankruptcy law. Those provisions also may be interpreted as constituting the
collection of interest for usury purposes. Also, we cannot assure you that
liquidation proceeds will be sufficient to pay an enforceable yield
maintenance charge or prepayment premium. Generally, no yield maintenance
charge or prepayment premium will be required for prepayments in connection
with a casualty or condemnation. In addition, certain of the mortgage loans
permit the related borrower, after a partial casualty or partial
condemnation or a change in applicable laws that would allow a lender to
accelerate the related mortgage loan pursuant to the related mortgage loan
documents, to prepay the remaining principal balance of the mortgage loan
(after application of the related insurance proceeds or condemnation award
to pay the principal balance of the mortgage loan), which may in certain
cases not be accompanied by any prepayment consideration; provided that
the prepayment of the remaining balance is made within a specified period of
time following the date of the application of proceeds or award and/or no
event of default has occurred and is continuing under the mortgage loan. See
“Risk Factors—Risks
Relating to Enforceability of Yield Maintenance Charges, Prepayment Premiums
or Defeasance Provisions” in the prospectus.
Additionally, although the collateral substitution provisions related to
defeasance do not have the same effect on the certificateholders as
prepayment, we cannot assure you that a court would not interpret those
provisions as requiring a yield maintenance charge or prepayment premium. In
certain jurisdictions, those collateral substitution provisions might be
deemed unenforceable under applicable law or public policy, or usurious.
Certain
shortfalls in interest as a result of involuntary prepayments may reduce the
available distribution amount. In addition, if a mortgage loan seller
repurchases any mortgage loan from the trust due to breaches of
representations or warranties or document defects, the repurchase price paid
will be passed through to the holders of the certificates offered hereby
with the same effect as if the mortgage loan had been prepaid in part or in
full, and no yield maintenance charge or prepayment premium will be
payable. Mezzanine lenders and holders of preferred equity in a borrower
may have the option to purchase the related mortgage loan after certain
defaults, and the purchase price may not include any yield maintenance
payments or prepayment charges. In addition, certain of the mortgage loans
are secured by mortgaged properties that have franchisors, tenants or other
parties that have an option to purchase the mortgaged property. See “—Certain
Additional Risks Relating to Tenants” above. A
repurchase or the exercise of such a purchase option may adversely affect
the yield to maturity on the certificates offered hereby.
Certain
of the mortgage loans are secured in part by letters of credit and/or cash
reserves that in each such case:
(i) will be released to the related borrower, in whole or in part,
upon satisfaction by that borrower of certain performance related
conditions, which may include, in some cases, meeting debt service coverage
ratio levels and/or satisfying leasing conditions; and
(ii) if not so released, may, at the discretion of the lender, prior
to loan maturity (or earlier loan default or loan acceleration), be drawn on
and/or applied to prepay or defease the related mortgage loan if such
performance related conditions are not satisfied within specified time
periods.
In
addition, with respect to certain of the mortgage loans, if the borrower
does not satisfy the performance conditions and does not qualify for the
release of the related cash reserve, the reserve, less, in some cases, a
yield maintenance charge or prepayment premium (which, in some cases, may be
paid out of the related additional collateral), may be applied to reduce the
principal balance of the mortgage loan and the remaining unpaid balance of
the mortgage loan may be re-amortized over the remaining amortization term.
If such amount is used to prepay or defease the mortgage loan as described
in paragraph (ii) above, there is no obligation on the part of the related
borrower to replenish such cash reserves.
Risks Relating to Substitutions of Mortgaged Properties by the Related
Borrower
With
respect to certain mortgage loans, the related mortgage loan documents
permit the related borrower to substitute certain other properties for
mortgaged properties currently securing the related mortgage loan. As a
result, it is possible that certain of the mortgaged properties that secure
one of these mortgage loans may not secure such mortgage loan for its entire
term. Although any substitution will have to meet certain conditions,
including loan-to-value tests and/or receipt of written confirmation from
the rating agencies that any ratings of the certificates will not, as a
result of the proposed substitution, be downgraded, qualified or withdrawn,
the replacement property may differ from the substituted property with
respect to certain characteristics. See “Description
of the Mortgage Pool—Certain Terms and Conditions of the Mortgage
Loans—Defeasance; Collateral Substitution; Property Releases” and
see the individual mortgage loan and portfolio descriptions under “Description
of Top Ten Mortgage Loans and Additional Mortgage Loan Information”
in Annex A-3 to this free writing prospectus.
Optional Early Termination of the Trust Fund May Result in an Adverse
Impact on Your Yield or May Result in a Loss
The
certificates will be subject to optional early termination by means of the
purchase of the mortgage loans and any REO properties in the trust fund. We
cannot assure you that the proceeds from a sale of the mortgage loans and/or
REO properties 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 certificates offered hereby affected by such a
termination may suffer an adverse impact on the overall yield on their
certificates, may experience repayment of their investment at an
unpredictable and inopportune time or may even incur a loss on their
investment. See “Description
of the Certificates—Termination; Retirement of Certificates” in this
free writing prospectus.
The Mortgage Loan Sellers May Not Be Able To Make a Required Repurchase
or Substitution of a Defective Mortgage Loan
The
related mortgage loan seller is the sole warranting party in respect of the
mortgage loans sold by it to us. Neither we nor any of our affiliates
(except, in certain circumstances, for JPMorgan Chase Bank, National
Association solely in its capacity as a mortgage loan seller) are obligated
to repurchase or substitute any mortgage loan in connection with either a
material breach of a mortgage loan seller’s
representations and warranties or any material document defects, if the
applicable mortgage loan seller defaults on its obligation to do so. We
cannot provide assurances that the applicable mortgage loan seller will have
the financial ability to effect such repurchases or substitutions. Any
mortgage loan that is not repurchased or substituted and that is not a
“qualified mortgage” for a REMIC may cause designated portions of the trust
fund to fail to qualify as one or more REMICs or cause the trust fund to
incur a tax. See “Transaction
Parties—The Sponsors and Mortgage Loan Sellers” and “Description
of the Mortgage Pool—Representations and Warranties; Repurchases and
Substitutions” in this free writing prospectus.
Realization on Certain Mortgage Loans May Be Adversely Affected by the
Rights of the Mezzanine Lender
Mezzanine
lenders commonly hold a defaulted mortgage loan purchase option pursuant to
the related intercreditor agreement, which generally permits the mezzanine
lender to purchase its related defaulted mortgage loan for a purchase price
generally equal to the outstanding principal balance of the related
defaulted mortgage loan, together with accrued and unpaid interest
(exclusive of default interest) on, and unpaid servicing expenses,
protective advances and interest on advances related to, such defaulted
mortgage loan. However, in the event a mezzanine lender is not obligated to
pay some or all of those fees and additional expenses, including any
liquidation fee payable to the special servicer under the terms of the
pooling and servicing agreement, then the exercise of such party’s rights
under the intercreditor agreement to purchase the related mortgage loan from
the trust may result in a loss to the trust in the amount of those fees and
additional expenses. Furthermore, a mezzanine lender generally has the
right to cure defaults under the related defaulted mortgage loan, thereby
delaying the mortgagee’s ability to realize on or otherwise take action with
respect to such defaulted mortgage loan.
Limited Obligations
The
certificates, when issued, will represent beneficial interests in the trust
fund. The certificates will not represent an interest in, or obligation of,
the sponsors, the mortgage loan sellers, the depositor, the master servicer,
the special servicer, the certificate administrator, the trustee or any
other person. The primary assets of the trust fund will be the notes
evidencing the mortgage loans, and the primary security and source of
payment for the mortgage loans will be the mortgaged properties and the
other collateral described in this free writing prospectus. Payments on the
certificates offered hereby are expected to be derived from payments made by
the borrowers on or in respect of the mortgage loans. We cannot assure you
that the cash flow from the mortgaged properties and the proceeds of any
sale or refinancing of the mortgaged properties will be sufficient to pay
the principal of, and interest on, the mortgage loans or to distribute in
full the amounts of interest and principal to which the holders of the
certificates offered hereby are entitled. See “Description
of the Certificates—General” in this free writing prospectus.
Changes to Accounting Standards and Regulatory Restrictions Could Have
an Adverse Impact on the Certificates
None of
the issuing entity, the depositor, the sponsors or the underwriters make any
representation or warranty regarding any accounting implications related to
the certificates offered hereby. The Financial Accounting Standards Board
has adopted changes to the accounting standards for structured
products. These changes, or any other future changes, may impact the
accounting for entities such as the trust and could require the trust to be
consolidated in an investor’s financial statements. Each investor in the
certificates offered hereby should consult its accounting advisor to
determine the impact these accounting changes might have as a result of an
investment in the certificates offered hereby.
Tax Consequences Related to Foreclosure
If the
trust were to acquire a mortgaged property subsequent to a default on the
related mortgage loan pursuant to a foreclosure or deed in lieu of
foreclosure, the special servicer would be required to retain an independent
contractor to operate and manage such mortgaged property. Among other
things, the independent contractor would not be able to perform construction
work other than repair, maintenance or certain types of tenant build-outs,
unless such construction was more than 10%
completed
when the default on the related mortgage loan became imminent. Any (i) net
income from such operation and management (other than qualifying “rents from
real property”), (ii) rental income based on the net profits of a tenant or
sub-tenant or allocable to a service that is noncustomary in the area and
for the type of property involved, and (iii) rental income attributable to
personal property leased in connection with a lease of real property if the
rent attributable to that personal property exceeds 15% of the total rent at
the related mortgaged property for the taxable year, will subject the REMIC
to federal (and possibly state or local) tax on such income at the highest
marginal corporate tax rate (currently 35%), thereby reducing net proceeds
available for distribution to certificateholders. No determination has been
made whether any portion of the income from the mortgaged property
constitutes “rents from real property”. The pooling and servicing agreement
provides that the special servicer will be permitted to cause the REMICs to
earn “net income from foreclosure property” that is subject to tax if it
determines that the net after-tax benefit to certificateholders is greater
than another method of operating, e.g.,
net leasing the mortgaged property. See “Material
Federal Income Tax Consequences” in this free writing prospectus. In
addition, if the trust were to acquire any mortgaged property pursuant to a
foreclosure or deed in lieu of foreclosure, upon acquisition of those
mortgaged properties, the trust 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.
State and Local Tax Considerations
In
addition to the federal income tax consequences described under the heading
“Material
Federal Income Tax Consequences” in this free writing prospectus,
potential purchasers should consider the state and local income tax
consequences of the acquisition, ownership and disposition of the
certificates. State and local income tax laws may differ substantially from
the corresponding federal law, and this free writing prospectus does not
purport to describe any aspects of the income tax laws of the states or
localities in which the mortgaged properties are located or of any other
applicable state or locality.
It is possible that one or
more jurisdictions may attempt to tax nonresident holders of certificates
solely by reason of the location in that jurisdiction of the depositor, the
certificate administrator, the trustee, the related borrower or the
mortgaged properties or on some other basis, may require nonresident holders
of certificates to file returns in such jurisdiction or may attempt to
impose penalties for failure to file such returns; and it is possible that
any such jurisdiction will ultimately succeed in collecting such taxes
or penalties from nonresident holders of certificates. We cannot assure you
that holders of certificates will not be subject to tax in any particular
state or local taxing jurisdiction.
If any
tax or penalty is successfully asserted by any state or local taxing
jurisdiction, none of the depositor, the related borrower, the certificate
administrator, the trustee, the master servicer or the special servicer will
be obligated to indemnify or otherwise to reimburse the holders of
certificates therefor.
Potential
purchasers should consult their own tax advisors with respect to the various
state and local tax consequences of an investment in the certificates.
Ratings of the Certificates
The
ratings assigned to the offered certificates by Moody’s Investors Service,
Inc. and Fitch Ratings, Inc. are based, among other things, on the economic
characteristics of the mortgaged properties and other relevant structural
features of the transaction. A security rating does not represent any
assessment of the yield to maturity that a certificateholder may experience.
The ratings assigned to the offered certificates reflect only the views of
the respective rating agencies as of the date such ratings were issued.
Future events could have an adverse impact on such ratings. The ratings may
be reviewed, revised, suspended, downgraded, qualified or withdrawn entirely
by the applicable rating agency as a result of changes in or unavailability
of information. The ratings do not consider to what extent the offered
certificates will be subject to prepayment or that the outstanding principal
amount of any class of the offered certificates will be prepaid.
Furthermore, the amount, type and nature of credit support, if any, provided
with respect to the offered certificates are determined on the basis of
criteria established by each rating agency. These
criteria
are sometimes based upon analysis of the behavior of mortgage loans in a
larger group. However, we cannot assure you that the historical data
supporting that 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 the mortgage loans in the
trust. As evidenced by the significant amount of downgrades, qualifications
and withdrawals of ratings assigned to previously issued commercial
mortgage-backed securities during the recent credit crisis by the hired
rating agencies and other nationally recognized statistical rating
organizations, the assumptions by the rating agencies engaged by the
depositor and other nationally recognized statistical rating organizations
regarding the performance of the mortgage loans related to such commercial
mortgage-backed securities were not, in all cases, correct.
We are
not obligated to maintain any particular rating with respect to any class of
the offered certificates, and the ratings initially assigned to the offered
certificates by either or both of the rating agencies engaged by the
depositor to rate the offered certificates could change adversely as a
result of changes affecting, among other things, the underlying mortgage
loans, the mortgaged properties, the sponsors, the certificate
administrator, the trustee, the senior trust advisor, the master servicer or
the special servicer, or as a result of changes to ratings criteria employed
by either or both of the rating agencies engaged by the depositor to rate
the offered certificates. Although these changes would not necessarily be
or result from an event of default on any underlying mortgage loan, any
adverse change to the ratings of the offered certificates would likely have
an adverse effect on the market value, liquidity and/or regulatory
characteristics of those certificates. Changes affecting the mortgaged
properties, the trustee, the certificate administrator, the master servicer,
the special servicer or another person may have an adverse effect on the
ratings of the offered certificates, and thus on the liquidity, market value
and regulatory characteristics of the offered certificates, although such
adverse changes would not necessarily be an event of default under any
related mortgage loan. See “Ratings”
in this free writing prospectus.
Further,
a rating of any class of offered certificates below an investment grade
rating by any of the rating agencies engaged by the depositor or another
nationally recognized statistical rating organization, whether initially or
as a result of a ratings downgrade, could adversely affect the ability of a
benefit plan or other investor to purchase or retain that class. See “Certain
ERISA Considerations” and “Legal
Investment” in this free writing prospectus.
The
depositor has requested a rating on the offered certificates from Moody’s
Investors Service, Inc. and Fitch Ratings, Inc. We cannot assure you as to
whether another nationally recognized statistical rating organization will
rate any class of the offered certificates or, if it were to rate any class
of offered certificates, what rating would be assigned by it. Additionally,
other nationally recognized statistical rating organizations that we have
not engaged to rate the offered certificates may nevertheless issue
unsolicited credit ratings on one or more classes of the offered
certificates, relying on information they receive pursuant to Rule 17g-5
under the Securities Exchange Act of 1934, as amended, or otherwise. If any
such unsolicited ratings are issued, we cannot assure you that they will not
be different from the ratings assigned by the rating agencies engaged by the
depositor. The issuance of an unsolicited rating of a class of the offered
certificates that is lower than the ratings assigned by the rating agencies
engaged by the depositor may adversely impact the liquidity, market value
and regulatory characteristics of that class. As part of the process of
obtaining ratings for the offered certificates, the depositor had initial
discussions with and submitted certain materials to six nationally
recognized statistical rating organizations. Based on preliminary feedback
from those nationally recognized statistical rating organizations at that
time, the depositor selected two of them to rate the offered certificates,
and did not select the other four nationally recognized statistical rating
organizations due, in part, to their initial subordination levels for the
various classes of the offered certificates. Had the depositor selected the
other four nationally recognized statistical rating organizations to rate
the offered certificates, we cannot assure you as to the ratings that they
would ultimately have assigned to the offered certificates. Although
unsolicited ratings may be issued by any nationally recognized statistical
rating organization, a nationally recognized statistical rating organization
might be more likely to issue an unsolicited rating if it was not selected
after having provided preliminary feedback to the depositor. In addition,
neither the depositor nor any other person or entity will have any duty to
notify you if any other nationally recognized statistical rating
organization issues, or
delivers
notice of its intention to issue, unsolicited ratings on one or more classes
of the offered certificates after the date of this free writing prospectus.
In no event will rating agency confirmations from any such other nationally
recognized statistical rating organization (except insofar as the matter
involves a mortgage loan with a split loan structure and such other rating
organization is hired to rate securities backed by the related companion
loan) be a condition to any action, or the exercise of any right, power or
privilege by any person or entity under the pooling and servicing agreement.
Furthermore, the United States Securities and Exchange Commission may
determine that either or both of the rating agencies engaged by the
depositor to rate the offered certificates no longer qualifies as a
nationally recognized statistical rating organization, or is no longer
qualified to rate the offered certificates, and that determination may have
an adverse effect on the liquidity, market value and regulatory
characteristics of the offered certificates. See “Ratings”
in this free writing prospectus.
DESCRIPTION OF THE MORTGAGE POOL
The trust
will consist primarily of a pool of 45 fixed rate commercial mortgage loans
with an aggregate principal balance of approximately $1,148,151,830 as of
the Cut-off Date (the “Initial
Pool Balance”).
On or
about August 19, 2013 (the “Closing
Date”), J.P. Morgan Chase Commercial Mortgage Securities Corp., as
depositor, will acquire the mortgage loans from JPMorgan Chase Bank,
National Association (“JPMCB”)
and Barclays Bank PLC (“Barclays”)
pursuant to a separate mortgage loan purchase agreement with each mortgage
loan seller (each, a “Purchase
Agreement”). We will then assign our interests in the mortgage loans,
without recourse, to Wells Fargo Bank, National Association, as trustee for
the benefit of the holders of the certificates (each a “Certificateholder”).
The “Cut-off
Date” with respect to each mortgage loan is the related due date in
August 2013, or with respect to any mortgage loan that was originated in
July 2013 and has its first due date in September 2013, the related due date
in August 2013. All percentages of the mortgage loans and Mortgaged
Properties, or of any specified group of mortgage loans and Mortgaged
Properties, referred to in this free writing prospectus without further
description are approximate percentages by Cut-off Date Balances and/or
allocated loan amounts.
The “Cut-off
Date Balance” of any mortgage loan will be the unpaid principal
balance of that mortgage loan as of the Cut-off Date for such mortgage loan,
after application of all payments due on or before that date, whether or not
received.
The
mortgage loans were originated in the period between May 22, 2013 and July
24, 2013, and were selected for this transaction from mortgage loans
specifically originated for securitizations of this type by the mortgage
loan sellers and their respective affiliates, or originated by others and
acquired by the mortgage loan sellers specifically for a securitization of
this type, in either case, taking into account, among other factors, rating
agency criteria and anticipated feedback from investors in the most
subordinate certificates, property type and geographic
location. Twenty (20) mortgage loans, representing approximately 39.6% of
the Initial Pool Balance, will not have made any scheduled debt service
payments as of the related Cut-off Date.
As of the
Cut-off Date, none of the mortgage loans will be 30 days or more delinquent
and none of the mortgage loans have been 30 days or more delinquent since
origination. A mortgage loan will be treated as 30 days delinquent if the
scheduled payment for a due date is not received from the related borrower
by the immediately following due date.
The
mortgage loans are not insured or guaranteed by the sponsors, the mortgage
loan sellers or any other person or entity. You should consider all of the
mortgage loans to be nonrecourse loans as to which recourse in the case of
default will be limited to the specific property and other assets, if any,
pledged to secure the related mortgage loan.
As used
in this free writing prospectus, the term “mortgage loan” refers to the
mortgage loans that are assets of the trust, which will be in the form of
either a whole mortgage loan or, in the case of any of the Meadows Mall
Whole Loan, the 589 Fifth Avenue Whole Loan, the SanTan Village Whole Loan
and the Southridge Mall Whole Loan (each as described below), includes only
the related mortgage loan but does not include the related pari
passu companion loan.
Lenders
typically look to the “Debt Yield” and/or “Debt Service Coverage Ratio” or
“DSCR”, each of which is based on the property’s net operating income, and
the “Loan-to-Value Ratio” or “LTV” as important factors in evaluating the
risk of default on that loan and the likelihood of recovery of the principal
balance of the loan in the event of a default and liquidation. See “Description
of the Trust Funds—Mortgage Loans—Default and Loss Considerations with
Respect to the Mortgage Loans” in the
prospectus for a description of Debt Service Coverage Ratios, net operating
income, LTV Ratios and Debt Yield, the manner in which these terms are
calculated and important considerations related to their use.
Mortgage Pool Characteristics
For a
discussion of the presentation of statistical information on the mortgage
loans and Mortgaged Properties described in this free writing prospectus and
the related Annexes, see “—Additional
Mortgage Loan Information”. Calculations of Debt Service Coverage
Ratios, LTV Ratios and Debt Yields will differ, and may differ
significantly, depending on the assumptions and inputs used. The information
presented in this free writing prospectus reflects assumptions and inputs
provided by the mortgage loan sellers in connection with the origination of
the mortgage loans. For purposes of the mortgage loan and pool composition
data and other information contained in this free writing prospectus
(including the annexes and all numerical and statistical information
presented in this free writing prospectus, including Cut-off Date Balances,
LTV Ratios, Debt Service Coverage Ratios and Debt Yields) with respect to
each of the Whole Loans (each as described below), such information, unless
otherwise indicated, is calculated including the principal balance and debt
service payment of the related pari
passu companion loan. See “Risk
Factors—Commercial Lending Is Dependent Upon Net Operating Income”
and “—Limitations
of Appraisals” in this free writing prospectus.
The
tables set forth in this free writing prospectus present certain anticipated
characteristics of the mortgage loans as of the Cut-off Date (unless
otherwise indicated). The sum of the numerical data in any column may not
equal the indicated total due to rounding. Unless otherwise indicated, all
figures and percentages presented in these tables are calculated as
described below under “—Additional
Mortgage Loan Information” and, unless otherwise indicated, such
figures and percentages are approximate and in each case, represent the
indicated figure or percentage of the aggregate principal balance of the
pool of mortgage loans as of the Cut-off Date. The principal balance of each
mortgage loan as of the Cut-off Date assumes the timely receipt of principal
scheduled to be paid on or before the Cut-off Date and no defaults,
delinquencies or prepayments on, or modifications of, any mortgage loan on
or prior to the Cut-off Date. Whenever percentages and other information in
this free writing prospectus are presented on the Mortgaged Property level
rather than the mortgage loan level, the information for mortgage loans
secured by more than one Mortgaged Property is based on allocated loan
amounts as stated in Annex A-1 to this free writing prospectus.
General Mortgage Loan Characteristics
(As of the Cut-off Date unless otherwise indicated)
| |
|
|
Initial Pool Balance(1)
|
$1,148,151,830
|
|
Number of mortgage loans
|
45
|
|
Number of Mortgaged Properties
|
89
|
|
Number of crossed loan pools
|
0
|
|
Crossed loan pools as a percentage
|
0.0%
|
|
Range of Cut-off Date Balances
|
$3,000,000 to $109,797,026
|
|
Average Cut-off Date Balance
|
$25,514,485
|
|
Range of Mortgage Rates
|
3.09350% to 5.97700%
|
|
Weighted average Mortgage Rate
|
4.57466%
|
|
Range of original terms to maturity(2)
|
60 months to 120 months
|
|
Weighted average original term to maturity(2)
|
105 months
|
|
Range of remaining terms to maturity(2)
|
59 months to 120 months
|
|
Weighted average remaining term to maturity(2)
|
104 months
|
|
Range of original amortization term(3)(4)
|
240 months to 360 months
|
|
Weighted average original amortization term(3)(4)
|
344 months
|
|
Range of remaining amortization terms(3)(4)
|
239 months to 360 months
|
|
Weighted average remaining amortization term(3)(4)
|
344 months
|
|
Range of Loan-to-Value Ratios(5)(6)
|
44.9% to 74.8%
|
|
Weighted average Loan-to-Value Ratio(5)(6)
|
63.6%
|
|
Range of Loan-to-Value Ratios as of the maturity date(2)(5)(6)
|
34.6% to 66.1%
|
|
Weighted average Loan-to-Value Ratio as of the maturity date(2)(5)(6)
|
54.4%
|
|
Range of UW NCF DSCR (4)(6)(7)
|
1.26x to 3.38x
|
|
Weighted average UW NCF DSCR (4)(6)(7)
|
1.65x
|
|
Percentage of Initial Pool Balance consisting of:
|
|
|
Balloon
|
63.6%
|
|
Interest-Only Balloon
|
23.2%
|
|
Interest Only
|
10.8%
|
|
ARD-Balloon
|
2.4%
|
|
(1)
|
Subject to a permitted variance of plus or minus 5%.
|
|
(2)
|
In the case of two (2) mortgage loans with Anticipated Repayment
Dates (identified as Loan Nos. 17 and 37 on Annex A-1 to this
free writing prospectus), representing approximately 2.4% of the
Initial Pool Balance, calculated as of the related Anticipated
Repayment Dates.
|
|
(3)
|
Excludes three (3) mortgage loans (identified as Loan Nos. 3, 19
and 21 on Annex A-1 to this free writing prospectus),
representing approximately 10.8% of the Initial Pool Balance,
that are interest-only for the entire term or until the related
Anticipated Repayment Date.
|
|
(4)
|
In the case of one (1) mortgage loan (identified as Loan
No. 12 on Annex A-1 to this free writing prospectus),
representing approximately 2.3% of the aggregate principal
balance of the pool of mortgage loans as of the cut-off date,
the loan will amortize based on the planned amortization
schedule set forth on Annex F to this free writing prospectus,
and the UW NCF DSCR ratio was calculated using the average of
principal and interest payments over the first 12 months after
the Cut-off Date.
|
|
(5)
|
In the case of one (1) mortgage loan (identified as Loan No. 18
on Annex A-1 to this free writing prospectus), representing
approximately 1.7% of the Initial Pool Balance, the
Loan-to-Value Ratios were based upon a “hypothetical value at
stabilization” rather than the appraised “as-is” value. The
“hypothetical value at stabilization” appraised value of
$26,800,000 results in a Cut-off Date LTV Ratio of 74.6%, and
the “as-is” value of $20,000,000 results in a Cut-off Date LTV
Ratio of 100.0%. For further information see Annex A-1 to this
free writing prospectus. See “Risk
Factors—Limitations of Appraisals,” “Transaction
Parties—The Sponsors and Mortgage Loan Sellers—JPMorgan Chase,
National Association—Exceptions to JPMCB’s Disclosed
Underwriting Guidelines” and “—Assessments
of Property Value and Condition—Appraisals” in this free
writing prospectus. The remaining mortgage loans were calculated
using “as-is” values as described under “—Additional
Mortgage Loan Information” in this free writing
prospectus.
|
|
(6)
|
For each mortgage loan related to a Whole Loan (each as
described below), the calculation of the Loan-to-Value Ratios
and UW NCF DSCRs include the principal balance and debt service
payment of the related pari
passu companion loan.
|
|
(7)
|
For each
partial interest-only loan, the UW NCF DSCR was calculated based
on the first principal and interest payment to be made into the
trust during the term of the mortgage loan once amortization has
commenced. For all interest-only loans, the UW NCF DSCR was
calculated based on the sum of the first 12 interest payments
following the cut-off date. With respect to thirty-six (36)
Mortgaged Properties (identified as Loan Nos. 1, 2, 3, 4, 5, 14,
16, 23, 25, 26 and 29 on Annex A-1 to this free writing
prospectus) securing
eleven (11) mortgage loans, representing 48.2% of Initial Pool
Balance by allocated loan amount, certain assumptions and/or
adjustments were made to the occupancy, UW NCF and UW NCF DSCRs
reflected in the table above. For specific discussions on those
particular assumptions and adjustments, see “—Net
Cash Flow and Certain
|
|
|
Underwriting Considerations”, “—Mortgaged
Property Considerations—Tenant Issues—Occupancy and Tenant
Concentrations” and “—Additional
Mortgage Loan Information” in this free writing
prospectus. See also Annex A-1 and Annex A-3 to this free
writing prospectus.
|
Fee & Leasehold Estates; Ground Leases
Each
mortgage loan is evidenced by one or more promissory notes (each, a “Mortgage
Note”) and secured by one or more mortgages, deeds of trust or other
similar security instruments (each, a “Mortgage”).
In all cases, the Mortgages create a first mortgage lien (except with
respect to the Mortgage Loan referred to as Hyatt Regency Cleveland on Annex
A-1 to this free writing prospectus which is a subordinate lien as described
under “Description
of the Mortgage Pool—Additional Debt” in this free writing
prospectus):
(1) on a fee simple estate in one or more commercial properties;
and/or
(2) on a leasehold estate in one or more commercial properties;
and/or
(3) on a combination of fee simple estates and leasehold estates
in one or more commercial properties (each of the fee simple estates and/or
leasehold estates described in clauses (1), (2) and/or this clause (3), a “Mortgaged
Property”).
The table
below shows the distribution of underlying interests encumbered by the
mortgages related to the Mortgaged Properties:
Underlying Estate Distribution(1)
|
|
|
Number of
Mortgaged Properties
|
|
Aggregate Cut-off
Date Balance
|
|
Approx.
% of Initial Pool
Balance
|
|
Fee
|
|
85
|
|
$1,038,751,830
|
|
|
90.5%
|
|
Fee/Leasehold
|
|
1
|
|
87,500,000
|
|
|
7.6
|
|
Leasehold
|
|
|
|
|
|
|
|
|
Total:
|
|
|
|
|
|
|
|
|
|
(1)
|
Because this table presents information relating to Mortgaged
Properties and not mortgage loans, the information for mortgage
loans secured by more than one Mortgaged Property is based on
allocated loan amounts as set forth in Annex A-1.
|
Mortgage
loans secured by ground leases present certain bankruptcy and foreclosure
risks not present with mortgage loans secured by fee simple estates. See “Risk
Factors—Mortgage Loans Secured by Leasehold Interests May Expose Investors
to Greater Risks of Default and Loss” in this free writing prospectus
and “Risk
Factors—Mortgage Loans Secured by Leasehold Interests May Expose Investors
to Greater Risks of Default and Loss”, “Certain
Legal Aspects of Mortgage Loans—Foreclosure” and “Certain
Legal Aspects of Mortgage Loans—Bankruptcy Laws” in the prospectus.
As
regards ground leases, also see representation No. 36 on Annex D-1 to this
free writing prospectus and the exceptions to those representations on Annex
D-2 to this free writing prospectus.
Mortgage Loan Concentrations
Top Ten Mortgage Loans
The
following table shows certain information regarding the ten largest mortgage
loans by Cut-off Date Balance:
|
|
|
Mortgage
Loan Cut-off
Date Balance
|
|
Approx.
% of Initial Pool
Balance
|
|
|
|
|
|
|
Cut-off Date
LTV Ratio(1)
|
|
|
|
Meadows Mall
|
|
$109,797,026 |
|
|
9.6%
|
|
$ |
533
|
|
1.49x
|
|
|
69.9%
|
|
Retail
|
|
Spirit Portfolio
|
|
$102,134,091 |
|
|
8.9%
|
|
$ |
66
|
|
1.63x
|
|
|
59.8%
|
|
Various
|
|
589 Fifth Avenue
|
|
$87,500,000
|
|
|
7.6%
|
|
$ |
1,033
|
|
2.00x
|
|
|
59.3%
|
|
Mixed Use
|
|
SanTan Village
|
|
$82,726,432
|
|
|
7.2%
|
|
$ |
194
|
|
2.12x
|
|
|
55.6%
|
|
Retail
|
|
Southridge Mall
|
|
$75,000,000
|
|
|
6.5%
|
|
$ |
226
|
|
1.53x
|
|
|
69.1%
|
|
Retail
|
|
Texas Industrial Portfolio
|
|
$73,400,000
|
|
|
6.4%
|
|
$ |
32
|
|
1.48x
|
|
|
68.6%
|
|
Industrial
|
|
Plaza La Cienega
|
|
$61,100,000
|
|
|
5.3%
|
|
$ |
198
|
|
1.33x
|
|
|
64.3%
|
|
Mixed Use
|
|
Embassy Suites Glendale
|
|
$49,939,536
|
|
|
4.3%
|
|
$ |
183,601
|
|
1.74x
|
|
|
64.7%
|
|
Hotel
|
|
Sand Creek Crossing
|
|
$34,947,365
|
|
|
3.0%
|
|
$ |
139
|
|
1.46x
|
|
|
65.6%
|
|
Retail
|
|
Republic Services Corporate Headquarters
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
Office
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Top 3 Total/Weighted Average
|
|
$299,431,116 |
|
|
26.1%
|
|
|
|
|
1.69x
|
|
|
63.4%
|
|
|
|
Top 5 Total/Weighted Average
|
|
$457,157,548 |
|
|
39.8%
|
|
|
|
|
1.74x
|
|
|
62.9%
|
|
|
|
Top 10 Total/Weighted Average
|
|
$704,544,449 |
|
|
61.4%
|
|
|
|
|
1.66x
|
|
|
63.7%
|
|
|
|
(1)
|
In the case of each of the mortgage loans that is part of a
Whole Loan, each of which has a pari
passu companion loan that is not part of the trust, the
Loan per Unit, UW NCF DSCR and Cut-off Date LTV Ratio for such
mortgage loan have been calculated based on the principal
balance, debt service payment and Underwritten Net Cash Flow for
the mortgage loan included in the trust and the related pari
passu companion loan in the aggregate.
|
For more
information regarding the ten largest mortgage loans and/or loan
concentrations and related Mortgaged Properties, see the individual mortgage
loan and portfolio descriptions under “Description
of Top Ten Mortgage Loans and Additional Mortgage Loan Information”
in Annex A-3 to this free writing prospectus. Other than with respect to the
top 10 mortgage loans identified in the table above, each of the other
mortgage loans represents no more than 2.4% of the Initial Pool Balance.
See “Risk
Factors—Risks Relating to Mortgage Loan Concentrations and Borrower-Sponsor
Concentrations” in this free writing prospectus.
Cross-Collateralized Mortgage Loans; Multi-Property Mortgage Loans and
Related Borrower Mortgage Loans
The pool
of mortgage loans will include three (3) mortgage loans (identified as Loan
Nos. 2, 6 and 11 on Annex A-1 to this free writing prospectus), representing
approximately 17.7% of the Initial Pool Balance, which are each secured by
two or more properties (other than through cross-collateralization of that
mortgage loan with other mortgage loans). In some cases, however, the amount
of the mortgage lien encumbering a particular property may be less than the
full amount of indebtedness under the mortgage loan, generally to minimize
recording tax. In such instances, the mortgage amount may equal a specified
percentage (generally ranging from 100% to 150%, inclusive) of the appraised
value or allocated loan amount for the particular Mortgaged Property. This
would limit the extent to which proceeds from that property would be
available to offset declines in value of the other Mortgaged Properties
securing the same mortgage loan or group of cross-collateralized mortgage
loans. See “Risk
Factors—The Volatile Economy and Credit Crisis May Increase Loan Defaults
and Affect the Value and Liquidity of Your Investment” in this free
writing prospectus.
The table
below shows each individual mortgage loan that is secured by two or more
Mortgaged Properties.
Multi-Property Mortgage Loans
Mortgage Loan/Property Portfolio Names
|
|
Aggregate Cut-off
Date Balance
|
|
Approx.
% of Initial Pool
Balance
|
|
Spirit Portfolio
|
|
$102,134,091
|
|
|
8.9
|
% |
|
Texas Industrial Portfolio
|
|
73,400,000
|
|
|
6.4
|
|
|
Copper Creek Portfolio
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
% |
Two (2)
groups of mortgage loans comprised of four (4) mortgage loans (identified as
Loan Nos. 20, 27, 31 and 34 on Annex A-1 to this free writing prospectus),
representing approximately 3.9% of the Initial Pool Balance, are not
cross-collateralized but have sponsors related to each other, but no group
of mortgage loans having sponsors that are related to each other represents
more than approximately 2.3% of the Initial Pool Balance. The following
table shows each group of mortgage loans having borrowers that are related
to each other. See “Risk
Factors—Risks Relating to Mortgage Loan Concentrations and Borrower-Sponsor
Concentrations” in this free writing prospectus in addition to
Annex-A-1 to this free writing prospectus.
Related Borrower Loans
Mortgage Loan/Property Portfolio Names
|
|
Aggregate
Cut-off Date Principal
Balance
|
|
Approx.
% of Initial Pool
Balance
|
|
Group 1:
|
|
|
|
|
|
|
|
Sky Harbor Manufactured Housing
|
|
$ 18,580,000
|
|
|
1.6
|
% |
|
Colonial Village and Valley View
|
|
|
|
|
|
|
|
Total for Group 1:
|
|
|
|
|
|
% |
|
Group 2:
|
|
|
|
|
|
|
|
Prime Center at Northridge
|
|
$ 10,217,099
|
|
|
0.9
|
% |
|
Market at Lake Tapps
|
|
|
|
|
|
|
|
Total for Group 2:
|
|
|
|
|
|
% |
Mortgage
loans with related borrowers are identified under “Related
Borrower” on Annex A-1 to this free writing prospectus. See “Risk
Factors—Risks Relating to Mortgage Loan Concentrations and Borrower-Sponsor
Concentrations” in this free writing prospectus in addition to
Annex A-1 and the footnotes related thereto.
One (1)
Mortgaged Property (identified as Loan No. 3 on Annex A-1 to this free
writing prospectus), securing a mortgage loan representing 7.6% of the
Initial Pool Balance, has one or more borrowers or fee owners who have
signed an accommodation mortgage that own all or a portion of the related
Mortgaged Property as tenants-in-common, and the respective
tenants-in-common have agreed to a waiver of their rights of partition. See
“Risk
Factors—Tenancies-in-Common May Hinder Recovery” in this free writing
prospectus.
Property Type Concentrations
The table
below shows the property type concentrations of the Mortgaged Properties:
Property Type Distribution(1)
|
|
|
Number of
Mortgaged
Properties
|
|
Aggregate Cut-off
Date Balance
|
|
Approx.
% of Initial Pool
Balance
|
|
Retail
|
|
34
|
|
|
$497,603,153
|
|
|
43.3
|
% |
|
Hotel
|
|
10
|
|
|
169,072,561
|
|
|
14.7
|
|
|
Mixed Use
|
|
5
|
|
|
161,422,389
|
|
|
14.1
|
|
|
Office
|
|
8
|
|
|
137,207,240
|
|
|
12.0
|
|
|
Industrial
|
|
26
|
|
|
126,996,626
|
|
|
11.1
|
|
|
Manufactured Housing
|
|
3
|
|
|
29,615,216
|
|
|
2.6
|
|
|
Multifamily
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
|
|
|
|
|
|
% |
|
(1)
|
Because this table presents information relating to Mortgaged
Properties and not mortgage loans, the information for mortgage
loans secured by more than one Mortgaged Property is based on
allocated loan amounts as set forth in Annex A-1 to this free
writing prospectus.
|
With
respect to the retail properties and mixed use properties with retail
components set forth in the above chart, we note in particular the
following:
|
|
●
|
In the case of one (1) Mortgaged Property (identified as Loan
No. 1 on Annex A-1 to this free writing prospectus), securing a
mortgage loan, representing approximately 9.6% of the Initial
Pool Balance, a competing regional mall is under construction
approximately nine miles away from the Mortgaged Property, with
the first phase scheduled to be completed in 2015. See “Risk
Factors—Risks Associated with Retail Properties” in this
free writing prospectus.
|
|
|
●
|
Thirty-three (33) of the Mortgaged Properties (identified as
Loan Nos. 1, 2.02, 2.05, 2.06, 2.07, 2.08, 2.09, 2.10, 2.12,
2.13, 2.14, 2.15, 2.16, 2.17, 2.18, 2.19, 2.20, 2.21. 2.22,
2.23, 4, 5, 9, 13, 16, 19, 22, 29, 31, 33, 37, 39 and 45 on
Annex A-1 to this free writing prospectus), securing fifteen
(15) mortgage loans, representing approximately 42.9% of the
Initial Pool Balance by allocated loan amount, are considered by
the applicable sponsor to have an “anchor tenant”, which tenants
occupy space at the related property, but may or may not occupy
space that is collateral for the related mortgage loan. These
Mortgaged Properties may also benefit from an additional “shadow
anchor” tenant.
|
|
|
●
|
Three (3) of the Mortgaged Properties (identified as Loan Nos.
4, 13 and 36 on Annex A-1 to this free writing prospectus),
securing three (3) mortgage loans, representing approximately
10.1% of the Initial Pool Balance, are secured by a property
that has a theater as one of the five largest tenants (by net
rentable area leased) at the Mortgaged Property. See “Risk
Factors—Some Mortgaged Properties May Not Be Readily Convertible
to Alternative Uses” and “—Tenant
Bankruptcy Entails Risks” in this free writing
prospectus.
|
|
|
●
|
Four (4) of the Mortgaged Properties (identified as Loan Nos.
22, 36, 41 and 42 on Annex A-1 to this free writing prospectus),
securing four (4) mortgage loans, representing approximately
2.8% of the Initial Pool Balance, have one or more restaurants
among the five largest tenants (by net rentable area leased) at
the Mortgaged Property.
|
|
|
●
|
Four (4) of the Mortgaged Properties (identified as Loan Nos.
2.05, 2.06, 7 and 39 on Annex A-1 to this free writing
prospectus), securing three (3) mortgage loans, representing
approximately 6.9% of the Initial Pool Balance by allocated loan
amount, have one or more fitness centers as part of its retail
mix. See “Risk
Factors—Some Mortgaged Properties May Not Be Readily Convertible
to Alternative Uses” in this free writing prospectus.
|
See “Risk
Factors—Risks Associated with Retail Properties” in this free writing
prospectus.
With
respect to the office properties set forth in the above chart, we note in
particular the following:
|
|
●
|
One (1) Mortgaged Property (identified as Loan No. 21 on Annex
A-1 to this free writing prospectus), securing a mortgage loan
representing approximately 1.6% of the Initial Pool Balance, is
listed on the National Register of Historic Places. Such
property has restrictions related to renovations, construction
or other restrictions. See “Risk
Factors—Zoning Compliance, Use Restrictions and Condemnation May
Adversely Affect Property Value” and “—Some
Mortgaged Properties May Not Be Readily Convertible to
Alternative Uses”.
|
With
respect to the hotel properties set forth in the above chart, we note in
particular the following:
|
|
●
|
Ten (10) Mortgaged Properties (identified as Loan Nos. 8, 14,
15, 24, 25, 26, 28, 30, 32 and 40 on Annex A-1 to this free
writing prospectus), securing ten (10) mortgage loans,
representing approximately 14.7% of the Initial Pool Balance by
allocated loan amount, are affiliated with a franchise,
licensing or hotel management company through a franchise or
management agreement. See “Risk
Factors—Risks Relating to Affiliation with a Franchise or Hotel
Management Company” in this free writing prospectus.
|
|
|
●
|
One (1) Mortgaged Property (identified as Loan No. 8 on
Annex A-1 to this free writing prospectus), securing a mortgage
loan representing approximately 4.3% of the Initial Pool
Balance, is identified as a hotel property even though it is
comprised of a mixture of hotel and restaurant facilities.
|
|
|
●
|
One (1) Mortgaged Property (identified as Loan No. 26 on
Annex A-1 to this free writing prospectus), securing a mortgage
loan representing approximately 1.1% of the Initial Pool
Balance, is identified as a hotel property even though it is
comprised of a mixture of hotel and retail facilities.
|
|
|
●
|
One (1) Mortgaged Property (identified as Loan No. 26 on Annex
A-1 to this free writing prospectus), securing a mortgage loan
representing approximately 1.1% of the Initial Pool Balance, is
listed on the National Register of Historic Places. Such
property has restrictions related to renovations, construction
or other restrictions. See “Risk
Factors—Zoning Compliance, Use Restrictions and Condemnation May
Adversely Affect Property Value” and “—Some
Mortgaged Properties May Not Be Readily Convertible to
Alternative Uses”.
|
|
|
●
|
One (1) Mortgaged Property (identified as Loan No. 8 on Annex
A-1 to this free writing prospectus), securing a mortgage loan
representing approximately 4.3% of the Initial Pool Balance is
subject to a certain grant deed between the borrower and the
City of Glendale, which deed contains a covenant to use the
Mortgaged Property solely and perpetually as a first class
hotel. A violation of this use restriction triggers the City of
Glendale’s right to terminate the interest in the Mortgaged
Property granted to the borrower. Pursuant to the terms of the
deed, this covenant terminates in August 2015. After a
foreclosure, the trust may be restricted by this provision from
converting the mortgaged property to an alternative use. See “Risk
Factors—Zoning Compliance, Use Restrictions and Condemnation May
Adversely Affect Property Value” and “—Some
Mortgaged Properties May Not Be Readily Convertible to
Alternative Uses”.
|
See “Risk
Factors—Hotel Properties Have Special Risks” and “—Risks
Relating to Affiliation with a Franchise or Hotel Management Company”
in this free writing prospectus.
Geographic Concentrations
The
Mortgaged Properties are located in 26 states. The following table lists the
states that have concentrations of Mortgaged Properties of 5% or more of the
Initial Pool Balance:
Geographic Distribution(1)
|
|
|
Number of
Mortgaged
Properties
|
|
Aggregate Cut-off
Date Balance
|
|
Approx.
% of Initial Pool
Balance
|
|
California
|
|
4
|
|
|
$155,486,901
|
|
|
13.5
|
% |
|
New York
|
|
6
|
|
|
142,681,756
|
|
|
12.4
|
|
|
Arizona
|
|
3
|
|
|
120,326,432
|
|
|
10.5
|
|
|
Texas
|
|
26
|
|
|
113,478,532
|
|
|
9.9
|
|
|
Nevada
|
|
1
|
|
|
109,797,026
|
|
|
9.6
|
|
|
Illinois
|
|
6
|
|
|
84,893,852
|
|
|
7.4
|
|
|
Wisconsin
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
|
|
|
|
|
|
% |
|
(1)
|
Because this table presents information relating to Mortgaged
Properties and not mortgage loans, the information for mortgage
loans secured by more than one Mortgaged Property is based on
allocated loan amounts as set forth in Annex A-1.
|
The
remaining Mortgaged Properties are located throughout 19 other states, with
no more than 4.3% of the Initial Pool Balance by allocated loan amount
secured by Mortgaged Properties located in any such jurisdiction.
Repayments by borrowers and the market value of the related Mortgaged
Properties could be affected by economic conditions generally or specific to
geographic areas or the regions of the United States, particularly where
Mortgaged Properties are concentrated in distinct geographic areas. In this
regard, we note that the Mortgaged Properties included in the trust include
the following:
|
|
●
|
Seven (7) Mortgaged Properties (identified as Loan Nos. 7, 8, 9,
24, 30, 31 and 43 on Annex A-1 to this free writing prospectus),
securing seven (7) mortgage loans, representing approximately
15.9% of the Initial Pool Balance, are located in areas that are
considered a high earthquake risk (seismic zones 3 or 4). These
Mortgaged Properties are located in California and
Washington. Seismic reports were prepared with respect to these
Mortgaged Properties, and based on those reports, no Mortgaged
Property has a probable maximum loss in excess of 18%.
|
|
|
●
|
Fifty-three (53) Mortgaged Properties (identified as Loan
Nos. 2, 6, 7, 9, 16, 19, 30, 32, 38 and 42 on Annex A-1 to this
free writing prospectus), securing ten (10) mortgage loans,
representing approximately 29.6% of the Initial Pool Balance by
allocated loan amount, are located in coastal areas in states or
territories more susceptible to hurricanes.
|
See “Risk
Factors—Geographic Concentration Entails Risks” in this free writing
prospectus.
General. Substantially all of the mortgage loans permit the related
borrower to incur limited indebtedness in the ordinary course of business
that is not secured by the related Mortgaged Property. Moreover, in general,
any borrower that does not meet single purpose entity criteria may not be
restricted from incurring unsecured debt.
The terms
of certain mortgage loans permit the borrowers to post letters of credit
and/or surety bonds for the benefit of the mortgagee under the mortgage
loans, which may constitute a contingent reimbursement obligation of the
related borrower or an affiliate. The issuing bank or surety will not
typically agree to subordination and standstill protection benefiting the
mortgagee. See “Risk
Factors—Additional Debt or the Ability To Incur Other Borrowings Entails
Risk” in this free writing prospectus.
Pari Passu Split Loans. The mortgage loans secured by the
Mortgaged Properties identified on Annex A-1 to this free writing
prospectus as “Meadows Mall”, “589 Fifth Avenue”, “SanTan Village” and
“Southridge Mall” are each evidenced by one of two pari
passu mortgage notes secured by a single mortgage and a single
assignment of leases and rents or by the same set of mortgages and
assignments of leases and rents in the case of any Whole Loan secured by
multiple Mortgaged Properties.
The “Meadows
Mall Mortgage Loan”, identified as Loan No. 1 on Annex A-1 to this
free writing prospectus, representing approximately 9.6% of the Initial Pool
Balance, has a pari
passu companion loan that is not included in the trust, and which is
referred to in this free writing prospectus as the “Meadows
Mall Pari Passu Companion Loan”. Together, the Meadows Mall Mortgage
Loan and the Meadows Mall Pari Passu Companion Loan, are referred to in this
free writing prospectus as the “Meadows
Mall Whole Loan”, and comprises the entire mortgage loan evidenced by
those interests.
The “589
Fifth Avenue Mortgage Loan”, identified as Loan No. 3 on Annex A-1 to
this free writing prospectus, representing approximately 7.6% of the Initial
Pool Balance, has a pari
passu companion loan that is not included in the trust, and which is
referred to in this free writing prospectus as the “589
Fifth Avenue Pari Passu Companion Loan”. Together, the 589 Fifth
Avenue Mortgage Loan and the 589 Fifth Avenue Pari Passu Companion Loan, are
referred to in this free writing prospectus as the “589
Fifth Avenue Whole Loan”, and comprises the entire mortgage loan
evidenced by those interests.
The “SanTan
Village Mortgage Loan”, identified as Loan No. 4 on Annex A-1 to this
free writing prospectus, representing approximately 7.2% of the Initial Pool
Balance, has a pari
passu companion loan that is not included in the trust, and which is
referred to in this free writing prospectus as the “SanTan
Village Pari Passu Companion Loan”. Together, the SanTan Village
Mortgage Loan and the SanTan Village Pari Passu Companion Loan, are referred
to in this free writing prospectus as the “SanTan
Village Whole Loan”, and comprises the entire mortgage loan evidenced
by those interests.
The “Southridge
Mall Mortgage Loan”, identified as Loan No. 5 on Annex A-1 to this
free writing prospectus, representing approximately 6.5% of the Initial Pool
Balance, has a pari
passu companion loan that is not included in the trust, and which is
referred to in this free writing prospectus as the “Southridge
Mall Pari Passu Companion Loan”. Together, the Southridge Mall
Mortgage Loan and the Southridge Mall Pari Passu Companion Loan, are
referred to in this free writing prospectus as the “Southridge
Mall Whole Loan”, and comprises the entire mortgage loan evidenced by
those interests.
The
Meadows Mall Pari Passu Companion Loan, the 589 Fifth Avenue Pari Passu
Companion Loan, the SanTan Village Pari Passu Companion Loan and the
Southridge Mall Pari Passu Companion Loan are sometimes referred to in this
free writing prospectus, individually or collectively, as the context
requires, as a “Companion
Loan”. In addition, the Meadows Mall Whole Loan, the 589 Fifth
Avenue Whole Loan, the SanTan Village Whole Loan and the Southridge Mall
Whole Loan are sometimes referred to in this free writing prospectus,
individually or collectively, as the context requires, as a “Whole
Loan”.
Each of
the Whole Loans will initially be serviced by the master servicer and the
special servicer pursuant to the Pooling and Servicing Agreement (except for
the 589 Fifth Avenue Whole Loan, which will be serviced by the 2013-C13
Master Servicer and the 2013-C13 Special Servicer pursuant to the 2013-C13
Pooling and Servicing Agreement and the applicable intercreditor agreement)
and the applicable intercreditor agreement.
“Serviced
Mortgage Loan” means each of the Meadows Mall Mortgage Loan, the
SanTan Village Mortgage Loan and the Southridge Mall Mortgage Loan.
“Non-Serviced
Mortgage Loan” means the 589 Fifth Avenue Mortgage Loan.
“Serviced
Whole Loan” means each of the Meadows Mall Whole Loan, the SanTan
Village Whole Loan and the Southridge Mall Whole Loan.
“Non-Serviced
Whole Loan” means the 589 Fifth Avenue Whole Loan.
“Serviced
Pari Passu Companion Loan” means each of the Meadows Mall Companion
Loan, the SanTan Village Companion Loan and the Southridge Mall Companion
Loan).
“Non-Serviced
Pari Passu Companion Loan” means the 589 Fifth Avenue Companion Loan.
The
Serviced Pari Passu Companion Loans and Non-Serviced Pari Passu Companion
Loan are sometimes referred to in this free writing prospectus as “Pari
Passu Companion Loans”.
Information regarding each Whole Loan and its related Companion Loan as of
the Cut-off Date is as set forth in the following table:
Pari Passu Split Loan Summary
|
|
|
|
|
Mortgage Loan
Cut-off Date
Balance
|
|
Approx.
% of
Initial
Pool
Balance
|
|
Pari Passu
Companion
Loan Original
Balance
|
|
Subordinate
Companion
Loan
Original
Balance
|
|
Mortgage Loan UW NCF
DSCR(1)
|
|
Whole
Loan UW NCF
DSCR(1)
|
|
Mortgage Loan Cut-
off Date
LTV
Ratio(1)
|
|
Whole
Loan Cut-
off
Date LTV Ratio(1)
|
|
1
|
|
Meadows Mall
|
|
$ 109,797,026
|
|
9.6%
|
|
$54,399,435
|
|
|
N/A
|
|
1.49x
|
|
1.49x
|
|
69.9%
|
|
69.9%
|
|
3
|
|
589 Fifth Avenue
|
|
$ 87,500,000
|
|
7.6%
|
|
$87,500,000
|
|
|
N/A
|
|
2.00x
|
|
2.00x
|
|
59.3%
|
|
59.3%
|
|
4
|
|
SanTan Village
|
|
$ 82,726,432
|
|
7.2%
|
|
$54,818,720
|
|
|
N/A
|
|
2.12x
|
|
2.12x
|
|
55.6%
|
|
55.6%
|
|
5
|
|
Southridge Mall
|
|
$ 75,000,000
|
|
6.5%
|
|
$50,000,000
|
|
|
N/A
|
|
1.53x
|
|
1.53x
|
|
69.1%
|
|
69.1%
|
|
(1)
|
The Whole Loan is comprised of two pari passu loans and UW NCF
DSCR and LTV Ratios are presented on an aggregate basis.
|
Mezzanine Debt. Although the mortgage loans generally place certain
restrictions on incurring mezzanine debt by the pledging of general
partnership and managing member equity interests in a borrower, such as
specific percentage or control limitations, the terms of the Mortgages
generally permit, subject to certain limitations, the pledge of less than a
controlling portion of the limited partnership or non-managing membership
equity interests in a borrower. Certain mortgage loans described below
permit the incurrence of mezzanine debt subject to satisfaction of certain
conditions including a certain maximum combined loan-to-value ratio and/or a
minimum combined DSCR, and in some cases mezzanine debt is already in
place; provided,
however, that with respect to the SanTan Village Whole Loan, there is
no maximum combined loan-to-value ratio or minimum combined DSCR required in
connection with the future permitted mezzanine debt. Also, certain of the
mortgage loans do not restrict the pledging of ownership interests in the
related borrower, but do restrict the transfer of ownership interests in a
borrower by imposing limitations on transfer of control or a specific
percentage of ownership interests. In addition, in general, a borrower that
does not meet single-purpose entity criteria may not be restricted in any
way from incurring mezzanine debt. To the extent that a direct or indirect
equity owner in a mortgage borrower has previously incurred, or in the
future incurs, mezzanine debt secured by its equity interests, the holders
of such mezzanine loans may have (or, in the case of the existing mezzanine
loans described below, do have) the right to cure certain defaults occurring
on the related mortgage loan, consent rights over certain modifications,
waivers and amendments of the related mortgage loan, and the right to
purchase the related mortgage loan if certain defaults on the related
mortgage loan occur. The purchase price generally required to be paid in
connection with the purchase of a mortgage loan by a mezzanine lender is
equal to the outstanding principal balance of the related mortgage loan,
together with accrued and unpaid interest (other than default interest) on,
and unpaid servicing expenses, liquidation fees in certain circumstances,
protective advances and interest on Advances related to, such mortgage loan.
However, with respect to permitted future mezzanine loans, that price may
have different components. In addition, the holder of the mezzanine debt
typically is able to foreclose upon the ownership interests in the related
borrower subject to the terms of an intercreditor agreement, which typically
require either confirmation from each Rating Agency that the transfer would
not result in the downgrade, withdrawal or qualification of the then-current
ratings assigned to any class of certificates offered hereby, lender
approval or that the holder of the ownership interests is an entity which
meets certain financial and other tests under the related intercreditor
agreement. See “Risk
Factors—Additional Debt or the Ability To Incur Other Borrowings Entails
Risk” in this free writing prospectus.
Existing Mezzanine Debt. As of the Cut-off Date, the mortgage loan
sellers have informed us that they are aware of the following mezzanine
indebtedness with respect to mortgage loans the mortgage loan sellers are
selling to the depositor.
|
|
|
|
|
Mortgage
Loan Cut-off
Date
Balance
|
|
Approx. % of Initial Pool Balance
|
|
Mezzanine
Loan Cut-off
Date Balance
|
|
Mortgage Loan UW NCF
DSCR
|
|
|
|
Mortgage
Loan Cut-off Date LTV
Ratio
|
|
Combined Cut-off
Date LTV Ratio(2)
|
|
6
|
|
Texas Industrial Portfolio
|
|
$73,400,000
|
|
|
6.4%
|
|
$7,418,500
|
|
|
1.48x
|
|
1.27x
|
|
68.6%
|
|
75.6%
|
|
11
|
|
Copper Creek Portfolio
|
|
$27,760,000
|
|
|
2.4%
|
|
$6,000,000
|
|
|
1.55x
|
|
1.13x
|
|
69.7%
|
|
84.8%
|
|
12
|
|
575 Maryville Centre Drive
|
|
$26,371,384
|
|
|
2.3%
|
|
$2,600,000
|
|
|
1.48x
|
|
1.29x
|
|
65.9%
|
|
72.4%
|
|
28
|
|
Element Dallas Fort Worth
Airport North
|
|
$10,000,000
|
|
|
0.9%
|
|
$3,000,000
|
|
|
1.89x
|
|
1.24x
|
|
62.9%
|
|
81.8%
|
|
(1)
|
The combined UW NCF DSCR reflects the combined UW NCF DSCR for
the aggregate of all mortgage debt (regardless of lien priority)
and mezzanine debt related to the Mortgaged Property.
|
|
(2)
|
The combined Cut-off Date LTV Ratio reflects the combined
Cut-off Date LTV Ratio for the aggregate of all mortgage debt
(regardless of lien priority) and mezzanine debt related to the
Mortgaged Property.
|
Certain
risks relating to additional debt are described in “Risk
Factors—Additional Debt or the Ability To Incur Other Borrowings Entails
Risk” and “Certain
Legal Aspects of the Mortgage Loans” in this free writing prospectus.
Future Mezzanine Debt. With respect to the mortgage loans listed in
the following chart, the mortgage loan sellers have informed us that the
direct and indirect equity owners of the borrower are permitted to incur
future mezzanine debt, subject to the satisfaction of conditions contained
in the related loan documents, including, among other things, the combined
maximum loan-to-value ratio and the combined minimum DSCR, as listed in the
following chart and determined in accordance with the related loan
documents. With respect to the SanTan Village Whole Loan, the permitted
future mezzanine debt relates to a corporate financing of the sponsor of the
borrower or its affiliates (excluding the related borrower), and there is no
maximum combined loan-to-value ratio or minimum combined DSCR required in
connection with the future permitted mezzanine debt and there is no
requirement for an intercreditor agreement between the lenders.
|
Loan
No.
|
|
Mortgage Loan
|
|
Mortgage Loan
Cut-off Date Balance
|
|
Combined
Maximum LTV
Ratio
|
|
Combined Minimum DSCR
|
|
1
|
|
Meadows Mall(1)
|
|
$ 109,797,026
|
|
|
63%
|
|
1.57x
|
|
4
|
|
SanTan Village
|
|
$ 82,726,432
|
|
|
N/A(2)
|
|
N/A(2)
|
|
13
|
|
Country Club Mall
|
|
$ 26,150,000
|
|
|
67.5%
|
|
1.35x
|
|
(1)
|
The mortgage loan documents also require a combined debt yield
of 9.47%.
|
|
(2)
|
The loan documents do not contain combined maximum LTV Ratio and
Combined Minimum DSCR tests. The mortgage loan documents do
require that the value of the pledged equity constitute no more
than 15% of the total value of the assets securing such
financing.
|
The
mortgage loans may also permit mezzanine debt in circumstances where, if the
mezzanine lender were to take possession of the equity collateral, such
transfer would not trigger any due-on-sale clause.
Generally, upon a default under a mezzanine loan, the holder of the
mezzanine loan would be entitled to foreclose upon the equity in the related
borrower, which has been pledged to secure payment of such mezzanine debt.
Although this transfer of equity may not trigger the due-on-sale clause
under the related mortgage loan, it could cause a change in control of the
borrower and/or cause the obligor under the mezzanine debt to file for
bankruptcy, which could negatively affect the operation of the related
Mortgaged Property and the related borrower’s ability to make payments on
the related mortgage loan in a timely manner.
Certain
risks relating to additional debt are described in “Risk
Factors—Additional Debt or the Ability To Incur Other Borrowings Entails
Risk” and “Certain
Legal Aspects of the Mortgage Loans” in this free writing prospectus.
Unsecured Debt. Substantially all of the mortgage loans permit the
related borrower to incur limited indebtedness in the ordinary course of
business that is not secured by the related Mortgaged Property. Moreover, in
general, any borrower that does not meet single purpose entity criteria may
not be restricted from incurring unsecured debt.
See “Risk
Factors—Additional Debt or the Ability To Incur Other Borrowings Entails
Risk” in this free writing prospectus.
The Meadows Mall Whole Loan
The
Meadows Mall Mortgage Loan (identified as Loan No. 1 on Annex A-1 to this
free writing prospectus), representing approximately 9.6% of the Initial
Pool Balance, is part of a split loan structure comprised of two mortgage
notes, each of which is secured by the same mortgage instrument on the same
underlying Mortgaged Property.
The
Meadows Mall Mortgage Loan is evidenced by a promissory note with a Cut-off
Date Balance of $109,797,026. The Meadows Mall Pari Passu Companion Loan is
evidenced by another promissory note with a Cut-off Date Balance of
$54,399,435 and is not included in the trust. Only the Meadows Mall
Mortgage Loan is included in the trust. The Meadows Mall Mortgage Loan and
the Meadows Mall Pari Passu Companion Loan are pari
passu with each other in terms of priority and are collectively
referred to in this free writing prospectus as the Meadows Mall Whole
Loan. It is anticipated that the Meadows Mall Pari Passu Companion Loan
will be included in a future securitization; however, we cannot assure you
that this will ultimately occur.
The
holders (the “Meadows
Mall Noteholders”) of each promissory note comprising the Meadows
Mall Whole Loan have entered into a co-lender agreement (the “Meadows
Mall Intercreditor Agreement”) that sets forth the respective rights
of each Meadows Mall Noteholder. Pursuant to the terms of the Meadows Mall
Intercreditor Agreement, the Meadows Mall Whole Loan will be serviced and
administered pursuant to the Pooling and Servicing Agreement by the master
servicer and the special servicer, as the case may be, according to the
Servicing Standard. The Meadows Mall Intercreditor Agreement provides that
expenses, losses and shortfalls relating to the Meadows Mall Whole Loan will
be allocated on a pro
rata basis to the Meadows Mall Noteholders.
The
Meadows Mall Whole Loan and any related REO Property will be serviced and
administered by the master servicer and, if necessary, the special servicer,
pursuant to the Pooling and Servicing Agreement, in the manner described
under “Servicing
of the Mortgage Loans” in this free writing prospectus, but subject
to the terms of the Meadows Mall Intercreditor Agreement. In servicing the
Meadows Mall Whole Loan, the Servicing Standard set forth in the Pooling and
Servicing Agreement will require the master servicer and the special
servicer to take into account the interests, as a collective whole, of both
the Certificateholders and the holder of the Meadows Mall Pari Passu
Companion Loan.
Amounts
payable to the trust as holder of the Meadows Mall Mortgage Loan pursuant to
the Meadows Mall Intercreditor Agreement will be included in the Available
Distribution Amount for the related Distribution Date to the extent
described in this free writing prospectus, and amounts payable to the holder
of the Meadows Mall Pari Passu Companion Loan will be distributed to such
holder net of certain fees and expenses on the Meadows Mall Pari Passu
Companion Loan as set forth in the Meadows Mall Intercreditor Agreement and
will not be available for distributions on the Offered Certificates.
The
Meadows Mall Intercreditor Agreement sets forth the respective rights of the
holder of the Meadows Mall Mortgage Loan and the holder of the Meadows Mall
Pari Passu Companion Loan with respect to distributions of funds received in
respect of the Meadows Mall Whole Loan, and provides, in general, that:
|
|
●
|
the Meadows Mall Mortgage Loan and the Meadows Mall Pari Passu
Companion Loan are of equal priority with each other and no
portion of either of them will have priority or preference over
any portion of the other or security therefor;
|
|
|
●
|
all payments, proceeds and other recoveries on or in respect of
the Meadows Mall Whole Loan or the related Mortgaged Property
will be applied to the Meadows Mall Mortgage Loan and the
Meadows Mall Pari Passu Companion Loan on a pro rata and pari
passu basis according to their respective outstanding principal
balances (subject, in each case, to the payment of amounts for
required reserves or escrows required by the related mortgage
loan documents and payment and reimbursement rights of the
master servicer, the special servicer, the senior trust advisor,
the certificate administrator and the trustee) in accordance
with the terms of the Meadows Mall Intercreditor Agreement and
the Pooling and Servicing Agreement; and
|
|
|
●
|
costs, fees, expenses, losses and shortfalls relating to the
Meadows Mall Whole Loan will be allocated, on a pro rata and
pari passu basis, to the Meadows Mall Mortgage Loan and the
Meadows Mall Pari Passu Companion Loan in accordance with the
terms of the Meadows Mall Intercreditor Agreement and the
Pooling and Servicing Agreement.
|
Notwithstanding the foregoing, if a P&I Advance is made with respect to the
Meadows Mall Mortgage Loan pursuant to the terms of the Pooling and
Servicing Agreement, then that P&I Advance, together with interest on that
P&I Advance, may only be reimbursed out of future payments and collections
on the Meadows Mall Mortgage Loan or, as and to the extent described under “Description
of the Certificates—Advances” in this free writing prospectus, on
other mortgage loans, but not out of payments or other collections on the
Meadows Mall Pari Passu Companion Loan or any loans included in any future
securitization trust related to the Meadows Mall Pari Passu Companion Loan.
Certain
costs and expenses (such as a pro
rata share of a Servicing Advance) allocable to the Meadows Mall Pari
Passu Companion Loan may be paid or reimbursed out of payments and other
collections on the mortgage pool, subject to the trust’s right to
reimbursement from future payments and other collections on the Meadows Mall
Pari Passu Companion Loan or from general collections with respect to the
securitization of the Meadows Mall Pari Passu Companion Loan. This may
result in temporary (or, if not ultimately reimbursed, permanent) shortfalls
to holders of the certificates.
The
controlling noteholder under the Meadows Mall Intercreditor Agreement will
be the trust as holder of the Meadows Mall Mortgage Loan; provided that,
prior to the occurrence and continuance of a Control Event, the Controlling
Class Certificateholder (or the Directing Certificateholder on its behalf)
will be entitled to exercise the rights of the controlling noteholder with
respect to the Meadows Mall Whole Loan. The Directing Certificateholder
will be entitled to exercise all of the rights of the trust in its capacity
as the controlling noteholder under the Meadows Mall Intercreditor
Agreement, as set forth under “Servicing
of the Mortgage Loans—The Directing Certificateholder” with respect
to the Meadows Mall Whole Loan, and the implementation of any recommended
actions outlined in an Asset Status Report with respect to the Meadows Mall
Whole Loan will require the special servicer to consult with the Directing
Certificateholder as and to the extent described in this free writing
prospectus under “Servicing
of the Mortgage Loans—General”. Pursuant to the terms of the Pooling
and Servicing Agreement, the Directing Certificateholder will have the same
consent and/or consultation rights with respect to the Meadows Mall Whole
Loan as it does, and for so long as it does, with respect to the other
mortgage loans included in the trust.
In
addition, pursuant to the terms of the Meadows Mall Intercreditor Agreement,
the holder of the Meadows Mall Pari Passu Companion Loan (or its
representative which, at any time the Meadows Mall Pari Passu Companion Loan
is included in a securitization, may be the controlling class
certificateholder for that securitization or any other party assigned the
rights to exercise the rights of the holder of the Meadows Mall Pari Passu
Companion Loan, as and to the extent provided in the related pooling and
servicing agreement) will (i) have the right to receive copies of all
notices, information and reports that the master servicer or special
servicer, as applicable, is required to provide to the Directing
Certificateholder (within the same time frame such notices, information and
reports are or would have been required to be provided to the Directing
Certificateholder under the Pooling and Servicing Agreement without regard
to the occurrence of a Control Event or Consultation Termination Event) with
respect to any major decisions to be taken with respect to the Meadows Mall
Whole Loan or the implementation of any recommended action outlined in an
Asset Status Report relating to the Meadows Mall Whole Loan and (ii) have
the right to be consulted on a strictly non-binding basis to the extent the
holder of the Meadows Mall Pari Passu Companion Loan requests consultation
with respect to certain major decisions to be taken with respect to the
Meadows Mall Whole Loan or the implementation of any recommended action
outlined in an Asset Status Report relating to the Meadows Mall Whole
Loan. The consultation right of the holder of the Meadows Mall Pari Passu
Companion Loan (or its representative) will expire 10 business days
following the delivery of written notice and information relating to the
matter subject to consultation whether or not the holder of the Meadows Mall
Pari Passu Companion Loan (or its representative) has responded within such
period; provided that
if the master servicer or special servicer, as applicable, proposes a new
course of action that is materially different from the actions previously
proposed, the 10 business-day consultation period will be deemed to begin
anew from the date of delivery of such new proposal and delivery of all
information related to such new proposal. Notwithstanding the consultation
rights of the holder of the Meadows Mall Pari Passu Companion Loan (or its
representative) described above, the master servicer or special servicer, as
applicable, is permitted to take any material action or any action set forth
in the Asset Status Report before the expiration of the aforementioned 10
business-day period if it determines that immediate action with respect to
such decision is necessary to protect the interests of the holders of the
Meadows Mall Mortgage Loan and the Meadows Mall Pari Passu Companion
Loan. Neither the master servicer nor the special servicer will be
obligated at any time to follow or take any alternative actions recommended
by the holder of the Meadows Mall Pari Passu Companion Loan (or its
representative, including, if the Meadows Mall Pari Passu Companion Loan has
been contributed to a securitization, the related controlling class
representative).
In
addition to the consultation rights of the holder of the Meadows Mall Pari
Passu Companion Loan (or its representative) described above, pursuant to
the terms of the Meadows Mall Intercreditor Agreement, the holder of the
Meadows Mall Pari Passu Companion Loan (or its representative) will have the
right to attend (in-person or telephonically in the discretion of the master
servicer or special servicer, as applicable) annual meetings with the master
servicer or special servicer, as applicable, upon reasonable notice and at
times reasonably acceptable to the master servicer or special servicer, as
applicable, for the purpose of discussing servicing issues related to the
Meadows Mall Whole Loan.
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Sale of Defaulted Meadows Mall Whole Loan
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Pursuant
to the terms of the Meadows Mall Intercreditor Agreement, if the Meadows
Mall Whole Loan becomes a defaulted mortgage loan, and if the special
servicer determines to sell the Meadows Mall Mortgage Loan that has become a
Specially Serviced Mortgage Loan in accordance with the Pooling and
Servicing Agreement, then the special servicer will be required to sell the
Meadows Mall Pari Passu Companion Loan together with the Meadows Mall
Mortgage Loan as one whole loan. In connection with any such sale, the
special servicer will be required to follow the procedures set forth under “Servicing
of the Mortgage Loans—Realization Upon Defaulted Mortgage Loans.”
Notwithstanding the foregoing, the special servicer will not be permitted to
sell the Meadows Mall Whole Loan if it becomes a defaulted mortgage loan
without the written consent of the holder of the Meadows Mall Pari Passu
Companion Loan (provided that
such consent is not required if the holder of the Meadows Mall Pari Passu
Companion Loan is the borrower or an affiliate of the borrower) unless the
special servicer has delivered to the holder of the Meadows Mall Pari Passu
Companion Loan: (a) at least
15
business days prior written notice of any decision to attempt to sell the
Meadows Mall Whole Loan; (b) at least 10 days prior to the proposed sale
date, a copy of each bid package (together with any material amendments to
such bid packages) received by the special servicer in connection with any
such proposed sale; (c) at least 10 days prior to the proposed sale date, a
copy of the most recent appraisal for the Meadows Mall Whole Loan, and any
documents in the servicing file reasonably requested by the holder of the
Meadows Mall Pari Passu Companion Loan that are material to the price of the
Meadows Mall Whole Loan; and (d) until the sale is completed, and a
reasonable period of time (but no less time than is afforded to other
offerors) prior to the proposed sale date, all information and other
documents being provided to other offerors and all leases or other documents
that are approved by the master servicer or the special servicer in
connection with the proposed sale; provided that
the holder of the Meadows Mall Pari Passu Companion Loan may waive any of
the delivery or timing requirements set forth in this sentence. Subject to
the terms of the Pooling and Servicing Agreement, the holder of the Meadows
Mall Pari Passu Companion Loan (or its representative) will be permitted to
bid at any sale of the Meadows Mall Whole Loan (unless such person is the
borrower or an agent or affiliate of the borrower).
See “Servicing
of the Mortgage Loans—Realization Upon Defaulted Mortgage Loans” below
in this free writing prospectus.
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Special Servicer Appointment Rights
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Pursuant
to the Meadows Mall Intercreditor Agreement, the controlling noteholder with
respect to the Meadows Mall Whole Loan (which will be the trust) will have
the right, with or without cause, to replace the special servicer then
acting with respect to the Meadows Mall Whole Loan and appoint a replacement
special servicer in lieu thereof without the consent of the holder of the
Meadows Mall Pari Passu Companion Loan. The Directing Certificateholder
(prior to a Control Event), and the applicable certificateholders with the
requisite percentage of Voting Rights (after a Control Event) will exercise
the rights of the trust as controlling noteholder, and will have the right,
with or without cause, to replace the special servicer then acting with
respect to the Meadows Mall Whole Loan and appoint a replacement special
servicer in lieu thereof, as described under “Servicing
of the Mortgage Loans—Rights Upon Servicer Termination Event” in this
free writing prospectus.
The 589 Fifth Avenue Whole Loan
The 589
Fifth Avenue Mortgage Loan (identified as Loan No. 3 on Annex A-1 to this
free writing prospectus), representing approximately 7.6% of the Initial
Pool Balance, is part of a split loan structure comprised of two mortgage
notes, each of which is secured by the same mortgage instrument on the same
underlying Mortgaged Property.
The 589
Fifth Avenue Mortgage Loan is evidenced by a promissory note with a Cut-off
Date Balance of $87,500,000. The 589 Fifth Avenue Pari Passu Companion Loan
is evidenced by another promissory note with a Cut-off Date Balance of
$87,500,000 and is not included in the trust. Only the 589 Fifth Avenue
Mortgage Loan is included in the trust. The 589 Fifth Avenue Mortgage Loan
and the 589 Fifth Avenue Pari Passu Companion Loan are pari
passu with each other in terms of priority and are collectively
referred to in this free writing prospectus as the 589 Fifth Avenue Whole
Loan.
The
holders (the “589
Fifth Avenue Noteholders”) of each promissory note comprising the 589
Fifth Avenue Whole Loan have entered into a co-lender agreement (the “589
Fifth Avenue Intercreditor Agreement”) that sets forth the respective
rights of each 589 Fifth Avenue Noteholder. Pursuant to the terms of the 589
Fifth Avenue Intercreditor Agreement, the 589 Fifth Avenue Whole Loan will
be serviced and administered pursuant to the terms of the pooling and
servicing agreement (the “2013-C13
Pooling and Servicing Agreement”) entered into in connection with the
issuance of the J.P. Morgan Chase Commercial Mortgage Securities Trust
2013-C13, Commercial Mortgage Pass-Through Certificates, Series 2013-C13.
The 589 Fifth Avenue Intercreditor Agreement provides that expenses, losses
and
shortfalls relating to the 589 Fifth Avenue Whole Loan will be allocated on
a pro
rata basis to the 589 Fifth Avenue Noteholders.
The
holder of the 589 Fifth Avenue Pari Passu Companion Loan (the
controlling class certificateholder (or the directing certificateholder
on its behalf) under the 2013-C13 Pooling and Servicing Agreement (the “2013-C13
Directing Certificateholder”)) will be the holder of the 589
Fifth Avenue Pari Passu Companion Loan for this purpose so long as no
control event has occurred under the 2013-C13 Pooling and Servicing
Agreement), will have the right to consult with and advise the master
servicer under the 2013-C13 Pooling and Servicing Agreement (the “2013-C13
Master Servicer”) and the special servicer under the 2013-C13
Pooling and Servicing Agreement (the “2013-C13
Special Servicer”) with respect to the 589 Fifth Avenue Whole
Loan, but will be required to consult with the holder of the 589 Fifth
Avenue Mortgage Loan (the Directing Certificateholder will be the holder
of the 589 Fifth Avenue Mortgage Loan for this purpose so long as no
Control Event has occurred under the Pooling and Servicing Agreement for
this transaction) with respect to such advice, consent or action. In
the event that the parties exercising the rights of the holder of the
589 Fifth Avenue Pari Passu Companion Loan and the holder of the 589
Fifth Avenue Mortgage Loan under the 589 Fifth Avenue Intercreditor
Agreement disagree, the decision of the party exercising the rights of
the holder of the 589 Fifth Avenue Pari Passu Companion Loan will be
binding.
The 589
Fifth Avenue Whole Loan and any related REO Property will be serviced and
administered by the 2013-C13 Master Servicer and, if necessary, the 2013-C13
Special Servicer, according to the terms of the 2013-C13 Pooling and
Servicing Agreement and the servicing standard thereunder, which requires
the 2013-C13 Master Servicer and the 2013-C13 Special Servicer to take into
account the interests, as a collective whole, of both the Certificateholders
and the holder of the 589 Fifth Avenue Pari Passu Companion Loan.
Amounts
payable to the trust as holder of the 589 Fifth Avenue Mortgage Loan
pursuant to the 589 Fifth Avenue Intercreditor Agreement will be included in
the Available Distribution Amount for the related Distribution Date to the
extent described in this free writing prospectus, and amounts payable to the
holder of the 589 Fifth Avenue Pari Passu Companion Loan will be distributed
to such holder net of certain fees and expenses on the 589 Fifth Avenue Pari
Passu Companion Loan as set forth in the 589 Fifth Avenue Intercreditor
Agreement and will not be available for distributions on the Offered
Certificates.
The 589
Fifth Avenue Intercreditor Agreement sets forth the respective rights of the
holder of the 589 Fifth Avenue Mortgage Loan and the holder of the 589 Fifth
Avenue Pari Passu Companion Loan with respect to distributions of funds
received in respect of the 589 Fifth Avenue Whole Loan, and provides, in
general, that:
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the 589 Fifth Avenue Mortgage Loan and the 589 Fifth Avenue Pari
Passu Companion Loan are of equal priority with each other and
no portion of either of them will have priority or preference
over any portion of the other or security therefor;
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all payments, proceeds and other recoveries on or in respect of
the 589 Fifth Avenue Whole Loan or the related Mortgaged
Property will be applied to the 589 Fifth Avenue Mortgage Loan
and the 589 Fifth Avenue Pari Passu Companion Loan on a pro
rata and pari passu basis according to their respective
outstanding principal balances (subject, in each case, to the
payment of amounts for required reserves or escrows required by
the related mortgage loan documents and payment and
reimbursement rights of the master servicer, the special
servicer, the senior trust advisor, the certificate
administrator and the trustee) in accordance with the terms of
the 589 Fifth Avenue Intercreditor Agreement and the 2013-C13
Pooling and Servicing Agreement; and
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costs, fees, expenses, losses and shortfalls relating to the 589
Fifth Avenue Whole Loan will be allocated, on a pro
rata and pari
passu basis, to the 589 Fifth Avenue Mortgage Loan and
the 589
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Fifth Avenue Pari Passu Companion Loan in accordance with the
terms of the 589 Fifth Avenue Intercreditor Agreement and the
2013-C13 Pooling and Servicing Agreement.
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Notwithstanding the foregoing, if a P&I Advance is made with respect to the
589 Fifth Avenue Mortgage Loan pursuant to the terms of the Pooling and
Servicing Agreement, then that P&I Advance, together with interest on that
P&I Advance, may only be reimbursed out of future payments and collections
on the 589 Fifth Avenue Mortgage Loan or, as and to the extent described
under “Description
of the Certificates—Advances” in this free writing prospectus, on
other mortgage loans, but not out of payments or other collections on the
589 Fifth Avenue Pari Passu Companion Loan or any loans included in any
securitization trust related to the 589 Fifth Avenue Pari Passu Companion
Loan.
Certain
costs and expenses (such as a pro
rata share of any servicing advance with respect to the 589 Fifth
Avenue Whole Loan made pursuant to the 2013-C13 Pooling and Servicing
Agreement) allocable to the 589 Fifth Avenue Mortgage Loan in accordance
with the 2013-C13 Pooling and Servicing Agreement and the 589 Fifth Avenue
Intercreditor Agreement may be paid or reimbursed out of payments and other
collections on the mortgage pool. This may result in temporary (or, if not
ultimately reimbursed, permanent) shortfalls to holders of the certificates.
The
controlling noteholder under the 589 Fifth Avenue Intercreditor Agreement
will be the 2013-C13 trust as holder of the 589 Fifth Avenue Pari Passu
Companion Loan under the 2013-C13 Pooling and Servicing Agreement; provided that,
prior to the occurrence and continuance of a control event under the
2013-C13 Pooling and Servicing Agreement, the 2013-C13 Directing
Certificateholder will be entitled to exercise the rights of the controlling
noteholder with respect to the 589 Fifth Avenue Whole Loan. The 2013-C13
Directing Certificateholder will be entitled to exercise rights
substantially similar to the rights of the trust, its capacity as the
controlling noteholder under the 589 Fifth Avenue Intercreditor Agreement,
as set forth under “Servicing
of the Mortgage Loans—The Directing Certificateholder” with respect
to the 589 Fifth Avenue Whole Loan, and the implementation of any
recommended actions outlined in an asset status report with respect to the
589 Fifth Avenue Whole Loan will require the 2013-C13 Special Servicer to
consult with the 2013-C13 Directing Certificateholder in a manner
substantially similar to that described in this free writing prospectus
under “Servicing
of the Mortgage Loans—General”. Pursuant to the terms of the 2013-C13
Pooling and Servicing Agreement, the 2013-C13 Directing Certificateholder
will have the same consent and/or consultation rights with respect to the
589 Fifth Avenue Whole Loan as it does, and for so long as it does, with
respect to the other mortgage loans included in that trust.
In
addition, pursuant to the terms of the 589 Fifth Avenue Intercreditor
Agreement, the holder of the 589 Fifth Avenue Mortgage Loan (or its
representative, which will be the Controlling Class Certificateholder or any
other party assigned the rights to exercise the rights of the holder of the
589 Fifth Avenue Mortgage Loan, as and to the extent provided in the Pooling
and Servicing Agreement) will (i) have the right to receive copies of all
notices, information and reports that the 2013-C13 Master Servicer or
2013-C13 Special Servicer, as applicable, is required to provide to the
2013-C13 Directing Certificateholder (within the same time frame such
notices, information and reports are or would have been required to be
provided to the 2013-C13 Directing Certificateholder under the 2013-C13
Pooling and Servicing Agreement without regard to the occurrence of any
control event or consultation termination event under the 2013-C13 Pooling
and Servicing Agreement) with respect to any major decisions to be taken
with respect to the 589 Fifth Avenue Whole Loan or the implementation of any
recommended action outlined in an asset status report relating to the 589
Fifth Avenue Whole Loan and (ii) have the right to be consulted on a
strictly non-binding basis to the extent the holder of the 589 Fifth Avenue
Mortgage Loan requests consultation) with respect to certain major decisions
to be taken with respect to the 589 Fifth Avenue Whole Loan or the
implementation of any recommended action outlined in an asset status report
relating to the 589 Fifth Avenue Whole Loan. The consultation right of the
holder of the 589 Fifth Avenue Mortgage Loan (or its representative) will
expire 10 business days following the delivery of written notice and
information relating to the matter subject to consultation whether or not
the holder of the 589 Fifth Avenue Mortgage Loan (or its representative) has
responded within such period; provided,
that if the 2013-C13 Master Servicer or 2013-C13 Special Servicer, as
applicable, proposes a new course of action that is materially different
from the actions previously proposed, the 10 business-day
consultation period will be deemed to begin anew from the date of delivery
of such new proposal and delivery of all information related to such new
proposal. Notwithstanding the consultation rights of the holder of the 589
Fifth Avenue Mortgage Loan (or its representative) described above, the
2013-C13 Master Servicer or 2013-C13 Special Servicer, as applicable, is
permitted to make any major decision or take any action set forth in the
asset status report before the expiration of the aforementioned
10-business-day period if it determines that immediate action with respect
to such decision is necessary to protect the interests of the holders of the
589 Fifth Avenue Mortgage Loan and the 589 Fifth Avenue Pari Passu
Companion Loan. Neither the 2013-C13 Master Servicer nor the 2013-C13
Special Servicer will be obligated at any time to follow or take any
alternative actions recommended by the holder of the 589 Fifth Avenue
Mortgage Loan (or its representative, including, the directing
certificateholder). The senior trust advisor will have no obligations or
consultation rights under the pooling and servicing agreement for this
transaction with respect to the 589 Fifth Avenue whole loan or any related
REO property. However, the senior trust advisor under the 2013-C13 Pooling
and Servicing Agreement will have certain consultation rights with respect
to the 589 Fifth Avenue Whole Loan that are substantially similar to those
of the senior trust advisor under the Pooling and Servicing Agreement for
this transaction.
Neither
the 2013-C13 Master Servicer nor the 2013-C13 Special Servicer will be
permitted to follow any advice or consultation provided by the holder of the
589 Fifth Avenue Mortgage Loan (or its representative) that would require or
cause the 2013-C13 Master Servicer or the 2013-C13 Special Servicer, as
applicable, to violate any applicable law, including the REMIC provisions,
be inconsistent with the servicing standard under the 2013-C13 Pooling and
Servicing Agreement, require or cause the 2013-C13 Master Servicer or the
2013-C13 Special Servicer, as applicable, to violate provisions of the 589
Fifth Avenue Intercreditor Agreement or the 2013-C13 Pooling and Servicing
Agreement, require or cause the 2013-C13 Master Servicer or the 2013-C13
Special Servicer, as applicable, to violate the terms of the 589 Fifth
Avenue Whole Loan, or materially expand the scope of any of the 2013-C13
Master Servicer’s or the 2013-C13 Special Servicer’s, as applicable,
responsibilities under the 589 Fifth Avenue Intercreditor Agreement.
In
addition to the consultation rights of the holder of the 589 Fifth Avenue
Mortgage Loan (or its representative) described above, pursuant to the terms
of the 589 Fifth Avenue Intercreditor Agreement, the holder of the 589 Fifth
Avenue Mortgage Loan (or its representative) will have the right to attend
(in-person or telephonically in the discretion of the master servicer or
special servicer, as applicable, annual meetings with the 2013-C13 Master
Servicer or 2013-C13 Special Servicer, as applicable, upon reasonable notice
and at times reasonably acceptable to the 2013-C13 Master Servicer or
2013-C13 Special Servicer, as applicable, for the purpose of discussing
servicing issues related to the 589 Fifth Avenue Whole Loan.
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Sale of Defaulted 589 Fifth Avenue Whole Loan
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Pursuant
to the terms of the 589 Fifth Avenue Intercreditor Agreement, if the 589
Fifth Avenue Whole Loan becomes a Defaulted Mortgage Loan, and if the
2013-C13 Special Servicer determines to sell the 589 Fifth Avenue Pari Passu
Companion Loan that has become a specially serviced mortgage loan in
accordance with the 2013-C13 Pooling and Servicing Agreement, then the
2013-C13 Special Servicer will be required to sell the 589 Fifth Avenue
Mortgage Loan together with the 589 Fifth Avenue Pari Passu Companion Loan
as one whole loan. In connection with any such sale, the 2013-C13 Special
Servicer will be required to follow procedures contained in the 2013-C13
Pooling and Servicing Agreement, which are substantially similar to those
set forth under “Servicing
of the Mortgage Loans—Realization Upon Defaulted Mortgage Loans.”
Notwithstanding the foregoing, the 2013-C13 Special Servicer will not be
permitted to sell the 589 Fifth Avenue Whole Loan if it becomes a defaulted
mortgage loan without the written consent of the holder of the 589 Fifth
Avenue Mortgage Loan (provided that such consent is not required if the
holder of the 589 Fifth Avenue Mortgage Loan is the borrower or an affiliate
of the borrower) unless the 2013-C13 Special Servicer has delivered to the
holder of the 589 Fifth Avenue Mortgage Loan: (a) at least 15 business days
prior written notice of any decision to attempt to sell the 589 Fifth Avenue
Whole Loan; (b) at least 10 days prior to the proposed sale date, a copy of
each bid package (together with any material amendments to such bid
packages) received by the 2013-C13 Special Servicer in connection
with any
such proposed sale; (c) at least 10 days prior to the proposed sale date, a
copy of the most recent appraisal for the 589 Fifth Avenue Whole Loan, and
any documents in the servicing file reasonably requested by the holder of
the 589 Fifth Avenue Mortgage Loan that are material to the price of the 589
Fifth Avenue Whole Loan; and (d) until the sale is completed, and a
reasonable period of time (but no less time than is afforded to other
offerors and the 2013-C13 Directing Certificateholder) prior to the proposed
sale date, all information and other documents being provided to other
offerors and all leases or other documents that are approved by the 2013-C13
Master Servicer or the 2013-C13 Special Servicer in connection with the
proposed sale; provided that
the holder of the 589 Fifth Avenue Mortgage Loan may waive any of the
delivery or timing requirements set forth in this sentence. Subject to the
terms of the 2013-C13 Pooling and Servicing Agreement, the holder of the 589
Fifth Avenue Mortgage Loan (or its representative) will be permitted to bid
at any sale of the 589 Fifth Avenue Whole Loan (unless such person is the
borrower or an agent or affiliate of the borrower)).
See “Servicing
of the Mortgage Loans—Realization Upon Defaulted Mortgage Loans” below
in this free writing prospectus.
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Special Servicer Appointment Rights
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Pursuant
to the 589 Fifth Avenue Intercreditor Agreement, the controlling noteholder
(or its representative) with respect to the 589 Fifth Avenue Whole Loan
(which will be the 2013-C13 trust) will have the right, with or without
cause, to replace the special servicer then acting with respect to the 589
Fifth Avenue Whole Loan and appoint a replacement special servicer in lieu
thereof without the consent of the holder of the 589 Fifth Avenue Mortgage
Loan. The 2013-C13 Directing Certificateholder (prior to a control event),
and the applicable Certificateholders under the 2013-C13 Pooling and
Servicing Agreement with the requisite percentage of voting rights (after a
control event under the 2013-C13 Pooling and Servicing Agreement) will
exercise the rights of the 2013-C13 trust as controlling noteholder, and
will have the right, with or without cause, to replace the special servicer
then acting with respect to the 589 Fifth Avenue Whole Loan and appoint a
replacement special servicer in lieu thereof, in a manner substantially
similar to that described under “Servicing
of the Mortgage Loans—Rights Upon Servicer Termination Event” in this
free writing prospectus.
The SanTan Village Whole Loan
The
SanTan Village Mortgage Loan (identified as Loan No. 4 on Annex A-1 to this
free writing prospectus), representing approximately 7.2% of the Initial
Pool Balance, is part of a split loan structure comprised of two mortgage
notes, each of which is secured by the same mortgage instrument on the same
underlying Mortgaged Property.
The
SanTan Village Mortgage Loan is evidenced by a promissory note with a
Cut-off Date Balance of $82,726,432. The related SanTan Village Pari Passu
Companion Loan is evidenced by another promissory note with a Cut-off Date
Balance of $54,818,720 and is not included in the trust. Only the SanTan
Village Mortgage Loan is included in the trust. The SanTan Village Mortgage
Loan and the SanTan Village Pari Passu Companion Loan are pari
passu with each other in terms of priority and are collectively
referred to in this free writing prospectus as the SanTan Village Whole
Loan.
The
holders (the “SanTan
Village Noteholders”) of each promissory note comprising the SanTan
Village Whole Loan have entered into a co-lender agreement (the “SanTan
Village Intercreditor Agreement”) that sets forth the respective
rights of each SanTan Village Noteholder. Pursuant to the terms of the
SanTan Village Intercreditor Agreement, (a) prior to the Closing Date, the
SanTan Village Whole Loan will be serviced and administered pursuant to the
2013-C13 Pooling and Servicing Agreement by the 2013-C13 Master Servicer and
the 2013-C13 Special Servicer, as the case may be, according to the
servicing standard set forth in the 2013-C13 Pooling and Servicing
Agreement, and (b) from and after the Closing Date the SanTan Village Whole
Loan will be serviced and administered by the master servicer and special
servicer, pursuant to the terms of the Pooling and Servicing Agreement,
according to the Servicing Standard and subject to the terms of the SanTan
Village Intercreditor
Agreement. The SanTan Village Intercreditor Agreement provides that
expenses, losses and shortfalls relating to the SanTan Village Whole Loan
will be allocated on a pro
rata basis to the SanTan Village Noteholders.
Prior to
the Closing Date, the SanTan Village Whole Loan (including the SanTan
Village Mortgage Loan) and any related REO Property is being serviced and
administered by the 2013-C13 Master Servicer and, if necessary, the 2013-C13
Special Servicer, pursuant to the 2013-C13 Pooling and Servicing Agreement,
but subject to the terms of the related SanTan Village Intercreditor
Agreement. On and after the Closing Date, the SanTan Village Whole Loan
(including the SanTan Village Mortgage Loan) and any related REO Property
will be serviced and administered by the master servicer and, if necessary,
the special servicer, pursuant to the Pooling and Servicing Agreement and
the SanTan Village Intercreditor Agreement, in the manner described under “Servicing
of the Mortgage Loans” in this free writing prospectus, but subject
to the terms of the SanTan Village Intercreditor Agreement. In servicing
the SanTan Village Whole Loan, the Servicing Standard set forth in the
Pooling and Servicing Agreement will require the master servicer and the
special servicer to take into account the interests, as a collective whole,
of the Certificateholders and the holder of the SanTan Village Pari Passu
Companion Loan.
Amounts
payable to the trust as holder of the SanTan Village Mortgage Loan pursuant
to the related SanTan Village Intercreditor Agreement will be included in
the Available Distribution Amount for the related Distribution Date to the
extent described in this free writing prospectus, and amounts payable to the
holder of the SanTan Village Pari Passu Companion Loan will be distributed
to such holder net of certain fees and expenses on the SanTan Village Pari
Passu Companion Loan as set forth in the SanTan Village Intercreditor
Agreement and will not be available for distributions on the Offered
Certificates.
The
SanTan Village Intercreditor Agreement sets forth the respective rights of
the holder of the SanTan Village Mortgage Loan and the holder of the SanTan
Village Pari Passu Companion Loan with respect to distributions of funds
received in respect of the SanTan Village Whole Loan, and provides, in
general, that:
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the SanTan Village Mortgage Loan and the SanTan Village Pari
Passu Companion Loan are of equal priority with each other and
no portion of either of them will have priority or preference
over any portion of the other or security therefor;
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all payments, proceeds and other recoveries on or in respect of
the SanTan Village Whole Loan or the related Mortgaged Property
will be applied to the SanTan Village Mortgage Loan and the
SanTan Village Pari Passu Companion Loan on a pro
rata and pari
passu basis according to their respective outstanding
principal balances (subject, in each case, to the payment of
amounts for required reserves or escrows required by the related
mortgage loan documents and payment and reimbursement rights of
the master servicer, the special servicer, the senior trust
advisor, the certificate administrator and the trustee) in
accordance with the terms of the SanTan Village Intercreditor
Agreement and the Pooling and Servicing Agreement; and
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costs, fees, expenses, losses and shortfalls with respect to the
SanTan Village Whole Loan will be allocated, on a pro
rata and pari
passu basis, to the SanTan Village Mortgage Loan and the
SanTan Village Pari Passu Companion Loan in accordance with the
terms of the SanTan Village Intercreditor Agreement and the
Pooling and Servicing Agreement).
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Notwithstanding the foregoing, if a P&I Advance is made with respect to the
SanTan Village Mortgage Loan pursuant to the terms of the Pooling and
Servicing Agreement, then that P&I Advance, together with interest on that
P&I Advance, may only be reimbursed out of future payments and collections
on the SanTan Village Mortgage Loan or, as and to the extent described under
“Description
of the Certificates—Advances” in this free writing prospectus, on
other mortgage loans, but not out of payments or other
collections on the SanTan Village Pari Passu Companion Loan or any loans
included in any securitization trust related to the SanTan Village Pari
Passu Companion Loan.
Certain
costs and expenses (such as a pro
rata share of any related Servicing Advances allocable to the SanTan
Village Mortgage Loan may be paid or reimbursed out of payments and other
collections on the mortgage pool, subject to the trust’s right to
reimbursement from future payments and other collections on the SanTan
Village Pari Passu Companion Loan. This may result in temporary (or, if not
ultimately reimbursed, permanent) shortfalls to holders of the certificates.
The
controlling noteholder under the SanTan Village Intercreditor Agreement
will, prior to the Closing Date, be the directing certificateholder under
the 2013-C13 Pooling and Servicing Agreement and, after the Closing Date,
will be the trust as holder of the SanTan Village Mortgage Loan; provided that,
prior to the occurrence and continuance of a Control Event, the Controlling
Class Certificateholder (or the Directing Certificateholder on its behalf)
will be entitled to exercise the rights of the controlling noteholder with
respect to the SanTan Village Whole Loan. The Directing Certificateholder
will be entitled to exercise all of the rights of the trust in its capacity
as the controlling noteholder under the SanTan Village Intercreditor
Agreement, as set forth under “Servicing
of the Mortgage Loans—The Directing Certificateholder” with respect
to the SanTan Village Whole Loan, and the implementation of any recommended
actions outlined in an Asset Status Report with respect to the SanTan
Village Whole Loan requires the special servicer to consult with the
Directing Certificateholder as and to the extent described in this free
writing prospectus under “Servicing
of the Mortgage Loans—General”. Pursuant to the terms of the Pooling
and Servicing Agreement, the Directing Certificateholder will have the same
consent and/or consultation rights with respect to the SanTan Village Whole
Loan as it does, and for so long as it does, with respect to the other
mortgage loans included in the trust.
In
addition, pursuant to the terms of the SanTan Village Intercreditor
Agreement, the holder of the SanTan Village Pari Passu Companion Loan
(which, prior to the occurrence of a control event under the 2013-C13
Pooling and Servicing Agreement, will be the 2013-C13 Directing
Certificateholder as and to the extent provided in the 2013-C13 Pooling and
Servicing Agreement) will (i) have the right to receive copies of all
notices, information and reports that the master servicer or special
servicer is required to provide to the Directing Certificateholder (within
the same time frame such notices, information and reports are or would have
been required to be provided to the Directing Certificateholder under the
Pooling and Servicing Agreement without regard to the occurrence of a
Control Event or Consultation Termination Event) with respect to any major
decisions to be taken with respect to the SanTan Village Whole Loan or the
implementation of any recommended action outlined in an asset status report
relating to the SanTan Village Whole Loan and (ii) have the right to be
consulted on a strictly non-binding basis with respect to certain major
decisions to be taken with respect to the SanTan Village Whole Loan or the
implementation of any recommended action outlined in an asset status report
relating to the SanTan Village Whole Loan. The consultation right of the
holder of the SanTan Village Pari Passu Companion Loan (or its
representative) will expire 10 business days following the delivery of
written notice and information relating to the matter subject to
consultation whether or not the holder of the SanTan Village Pari Passu
Companion Loan (or its representative) has responded within such period; provided,
that if the master servicer or special servicer, as applicable, proposes a
new course of action that is materially different from the actions
previously proposed, the 10 business-day consultation period will be deemed
to begin anew from the date of delivery of such new proposal and delivery of
all information related to such new proposal.
Notwithstanding the consultation rights of the holder of the SanTan Village
Pari Passu Companion Loan (or its representative’s) described above, the
master servicer or special servicer, as applicable, is permitted to take any
material action or any action set forth in the asset status report before
the expiration of the aforementioned 10 business-day period if it determines
that immediate action with respect to such decision is necessary to protect
the interests of the holders of the SanTan Village Mortgage Loan and the
SanTan Village Pari Passu Companion Loan. Neither the master servicer nor
the special servicer will be obligated at any time to follow or take any
alternative actions recommended by the holder of the SanTan Village Pari
Passu Companion Loan (or its representative).
Neither
the master servicer or special servicer, as applicable, will be permitted to
follow any advice or consultation provided by the holder of the SanTan
Village Pari Passu Companion Loan (or its representative) that would require
or cause such party to violate any applicable law, including the REMIC
provisions, violate the servicing standard set forth in the Pooling and
Servicing Agreement, require or cause such party to violate provisions of
the SanTan Village Intercreditor Agreement or the Pooling and Servicing
Agreement, require or cause such party to violate the terms of the SanTan
Village Whole Loan, or materially expand the scope of responsibilities of
any of the master servicer or special servicer, as applicable.
In
addition to the consultation rights of the holder of the SanTan Village Pari
Passu Companion Loan (or its representative) described above, pursuant to
the terms of the SanTan Village Intercreditor Agreement, the holder of the
SanTan Village Pari Passu Companion Loan (or its representative) will have
the right to attend (in-person or telephonically) annual meetings with the
master servicer or special servicer, as applicable, upon reasonable notice
and at times reasonably acceptable to the master servicer or special
servicer, as applicable, such party in which servicing issues related to the
SanTan Village Whole Loan are discussed.
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Sale of Defaulted SanTan
Village Whole Loan
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Pursuant
to the terms of the SanTan Village Intercreditor Agreement, if the SanTan
Village Whole Loan becomes a Defaulted Mortgage Loan, and if the applicable
special servicer determines to sell the SanTan Village Mortgage Loan, then
the applicable special servicer will be required to sell the SanTan Village
Pari Passu Companion Loan together with the SanTan Village Mortgage Loan as
one whole loan. In connection with any such sale, the applicable special
servicer will be required to follow the procedures, or procedures
substantially similar to the procedures, set forth under “Servicing
of the Mortgage Loans—Realization Upon Defaulted Mortgage Loans.”
Notwithstanding the foregoing, the special servicer will not be permitted to
sell the SanTan Village Whole Loan if it becomes a defaulted mortgage loan
without the written consent of the holder of the SanTan Village Pari Passu
Companion Loan (provided that such consent is not required if the holder of
the SanTan Village Pari Passu Companion Loan is the borrower or an affiliate
of the borrower), unless the special servicer has delivered to the holder of
the SanTan Village Pari Passu Companion Loan: (a) at least 15 business days
prior written notice of any decision to attempt to sell the SanTan Village
Whole Loan; (b) at least 10 days prior to the proposed sale date, a copy of
each bid package (together with any amendments to such bid packages)
received by the special servicer in connection with any such proposed sale;
(c) at least 10 days prior to the proposed sale date, a copy of the most
recent appraisal for the SanTan Village Whole Loan, and any documents in the
servicing file requested by the holder of the SanTan Village Pari Passu
Companion Loan (or its representative) that are material to the price of the
SanTan Village Whole Loan; and (d) until the sale is completed, and a
reasonable period of time (but no less time than is afforded to other
offerors and the Directing Certificateholder) prior to the proposed sale
date, all information and other documents being provided to other offerors
and all leases or other documents that are approved by the master servicer
or the special servicer in connection with the proposed sale; provided that
the holder of the SanTan Village Pari Passu Companion Loan may waive any of
the delivery or timing requirements set forth in this sentence. The
borrower or an agent or affiliate of the borrower is not permitted to bid at
any sale of the SanTan Village Whole Loan.
See “Servicing
of the Mortgage Loans—Realization Upon Defaulted Mortgage Loans”
below in this free writing prospectus.
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Special Servicer Appointment Rights
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Pursuant
to the SanTan Village Intercreditor Agreement, the controlling noteholder
with respect to the SanTan Village Whole Loan (which will be the Trust) will
have the right, with or without cause, to replace the special servicer then
acting with respect to the SanTan Village Whole Loan and appoint a
replacement special servicer in lieu thereof without the consent of the
holder of the SanTan Village Pari Passu Companion Loan. The Directing
Certificateholder (prior to a Control Event), and the applicable
certificateholders with the requisite percentage of voting rights (after a
Control Event) will exercise the
rights of
the trust as controlling noteholder, and will have the right, with or
without cause, to replace the special servicer then acting with respect to
the SanTan Village Whole Loan and appoint a replacement special servicer in
lieu thereof, pursuant to terms substantially similar to those described
under “Servicing
of the Mortgage Loans—Rights Upon Servicer Termination Event” in this
free writing prospectus.
The Southridge Mall Whole Loan
The
Southridge Mall Mortgage Loan (identified as Loan No. 5 on Annex A-1 to this
free writing prospectus), representing approximately 6.5% of the Initial
Pool Balance, is part of a split loan structure comprised of two mortgage
notes, each of which is secured by the same mortgage instrument on the same
underlying Mortgaged Property.
The
Southridge Mall Mortgage Loan is evidenced by a promissory note with a
Cut-off Date Balance of $75,000,000. The related Southridge Mall Pari Passu
Companion Loan is evidenced by another promissory note with a Cut-off Date
Balance of $50,000,000 and is not included in the trust. Only the
Southridge Mall Mortgage Loan is included in the trust. The Southridge Mall
Mortgage Loan and the Southridge Mall Pari Passu Companion Loan are pari
passu with each other in terms of priority and are collectively
referred to in this free writing prospectus as the Southridge Mall Whole
Loan.
The
holders (the “Southridge
Mall Noteholders”) of each promissory note comprising the Southridge
Mall Whole Loan have entered into an intercreditor agreement (the “Southridge
Mall Intercreditor Agreement”) that sets forth the respective rights
of each Southridge Mall Noteholder. Pursuant to the terms of the Southridge
Mall Intercreditor Agreement, (a) prior to the Closing Date, the Southridge
Mall Whole Loan is serviced and administered pursuant to the terms of the
pooling and servicing agreement entered into in connection with the JPMBB
Commercial Mortgage Securities Trust 2013-C12 securitization (the “2013-C12
Pooling and Servicing Agreement”) by the designated master servicer
and the special servicer, as the case may be, according to the servicing
standard set forth in the 2013-C12 Pooling and Servicing Agreement and
subject to the terms of the Southridge Mall Intercreditor Agreement, and
(b) from and after the Closing Date, the Southridge Mall Whole Loan will be
serviced and administered by the master servicer, and the special servicer,
pursuant to the terms of the Pooling and Servicing Agreement, according to
the Servicing Standard and subject to the terms of the Southridge Mall
Intercreditor Agreement. The Southridge Mall Intercreditor Agreement
provides that expenses, losses and shortfalls relating to the Southridge
Mall Whole Loan will be allocated on a pro
rata basis to the Southridge Mall Noteholders.
Prior to
the Closing Date, the Southridge Mall Whole Loan and any related REO
Property will be serviced and administered by the series 2013-C12 master
servicer and, if necessary, the series 2013-C12 special servicer, pursuant
to the 2013-C12 Pooling and Servicing Agreement, but subject to the terms of
the related Southridge Mall Intercreditor Agreement. In servicing the
Southridge Mall Whole Loan, the servicing standard set forth in the 2013-C12
Pooling and Servicing Agreement requires the series 2013-C12 master servicer
and the series 2013-C12 special servicer to take into account the interests,
as a collective whole, of the certificateholders thereunder and the holder
of the Southridge Mall Mortgage Loan.
On and
after the Closing Date, the Southridge Mall Whole Loan and any related REO
Property will no longer be serviced pursuant to the 2013-C12 Pooling and
Servicing Agreement and will instead be serviced and administered by the
master servicer and, if necessary, the special servicer, pursuant to the
Pooling and Servicing Agreement, in the manner described under “Servicing
of the Mortgage Loans” in this free writing prospectus, but subject
to the terms of the Southridge Mall Intercreditor Agreement. In servicing
the Southridge Mall Whole Loan, the Servicing Standard set forth in the
Pooling and Servicing Agreement will require the master servicer and the
special servicer to take into account the interests, as a collective whole,
of the Certificateholders and the holder of the Southridge Mall Pari Passu
Companion Loan.
Amounts
payable to the trust as holder of the Southridge Mall Mortgage Loan pursuant
to the Southridge Mall Intercreditor Agreement will be included in the
Available Distribution Amount for the related Distribution Date to the
extent described in this free writing prospectus, and amounts payable to the
holder of the Southridge Mall Pari Passu Companion Loan will be distributed
to such holder net of certain fees and expenses on the Southridge Mall Pari
Passu Companion Loan as set forth in the Southridge Mall Intercreditor
Agreement.
The
Southridge Mall Intercreditor Agreement sets forth the respective rights of
the holder of the Southridge Mall Mortgage Loan and the holder of the
Southridge Mall Pari Passu Companion Loan with respect to distributions of
funds received in respect of the Southridge Mall Whole Loan, and provides,
in general, that:
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the Southridge Mall Mortgage Loan and the Southridge Mall Pari
Passu Companion Loan are of equal priority with each other and
no portion of either of them will have priority or preference
over any portion of the other or security therefor;
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all payments, proceeds and other recoveries on or in respect of
the Southridge Mall Whole Loan or the related Mortgaged Property
will be applied to the Southridge Mall Mortgage Loan and the
Southridge Mall Pari Passu Companion Loan on a pro
rata and pari
passu basis according to their respective outstanding
principal balances (other than (i) insurance proceeds or
condemnation awards applied to the restoration or repair of the
related Mortgaged Property or released to the related borrower
in accordance with the related loan documents, (ii) amounts
required to be deposited by the related loan documents in
reserve or escrow and (iii) certain amounts due, payable or
reimbursable to the master servicer, the special servicer, the
senior trust advisor, the certificate administrator or the
trustee) in accordance with the terms of the Southridge Mall
Intercreditor Agreement and the Pooling and Servicing
Agreement); and
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costs, fees, expenses, losses and shortfalls with respect to the
Southridge Mall Whole Loan will be allocated, on a pro
rata and pari
passu basis, to the Southridge Mall Mortgage Loan and the
Southridge Mall Pari Passu Companion Loan in accordance with the
terms of the Southridge Mall Intercreditor Agreement and the
Pooling and Servicing Agreement.
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Notwithstanding the foregoing, if a P&I Advance is made with respect to the
Southridge Mall Mortgage Loan, then that P&I Advance, together with interest
on that P&I Advance, may only be reimbursed out of future payments and
collections on the Southridge Mall Mortgage Loan or, as and to the extent
described under “Description
of the Certificates—Advances” in this free writing prospectus, on
other mortgage loans, but not out of payments or other collections on the
Southridge Mall Pari Passu Companion Loan.
Certain
costs and expenses (such as a pro
rata share of any related Servicing Advances) allocable to the
Southridge Mall Mortgage Loan may be paid or reimbursed out of payments and
other collections on the mortgage pool, subject to the trust’s right to
reimbursement from future payments and other collections on the Southridge
Mall Pari Passu Companion Loan. This may result in temporary (or, if not
ultimately reimbursed, permanent) shortfalls to holders of the certificates.
The
controlling noteholder under the Southridge Mall Intercreditor Agreement
will be, prior to the Closing Date, the directing certificateholder under
the 2013-C12 Pooling and Servicing Agreement and, on and after the Closing
Date, the trust as holder of the Southridge Mall Mortgage Loan; provided that,
prior to the occurrence and continuance of a Control Event, the Controlling
Class Certificateholder (or the Directing Certificateholder on its behalf)
will be entitled to exercise the rights of the controlling noteholder with
respect to the Southridge Mall Whole Loan. The Directing Certificateholder
will be entitled to exercise all of the rights of the Trust in its capacity
as the controlling noteholder under the Southridge Mall Intercreditor
Agreement, as set forth under “Servicing
of the Mortgage Loans—The Directing
Certificateholder” with respect to the Southridge Mall Whole Loan,
and the implementation of any recommended actions outlined in an Asset
Status Report with respect to the Southridge Mall Whole Loan that requires
the special servicer to consult with the Directing Certificateholder as and
to the extent described in this free writing prospectus under “Servicing
of the Mortgage Loans—General”. Pursuant to the terms of the Pooling
and Servicing Agreement, the Directing Certificateholder will have the same
consent and/or consultation rights with respect to the Southridge Mall Whole
Loan as it does, and for so long as it does, with respect to the other
mortgage loans included in the trust.
In
addition, pursuant to the terms of the Southridge Mall Intercreditor
Agreement, the holder of the Southridge Mall Pari Passu Companion Loan or
its representative (which will be the directing certificateholder under the
2013-C12 Pooling and Servicing Agreement prior to a Control Event, and the
related trustee or other representative thereafter for so long as such
Companion Loan is included in the related trust) will (i) have a right to
receive copies of all notices, information and reports that the master
servicer or special servicer, as applicable, is required to provide to the
Directing Certificateholder (within the same time frame such notices,
information and reports are or would have been required to be provided to
the Directing Certificateholder under the Pooling and Servicing Agreement
without regard to the occurrence of a Control Event or Consultation
Termination Event) with respect to any major decisions to be taken with
respect to the Southridge Mall Whole Loan or the implementation of any
recommended action outlined in an Asset Status Report relating to the
Southridge Mall Whole Loan and (ii) have the right to be consulted on a
strictly non-binding basis with respect to any major decisions to be taken
with respect to the Southridge Mall Whole Loan or the implementation of any
recommended action outlined in an Asset Status Report relating to the
Southridge Mall Whole Loan. The consultation right of the holder of the
Southridge Mall Pari Passu Companion Loan (or its representative) will
expire 10 business days following the delivery of notice and information
relating to the matter subject to consultation whether or not the holder of
the Southridge Mall Pari Passu Companion Loan (or its representative) has
responded within such period; provided that
if the master servicer or special servicer, as applicable, proposes a new
course of action that is materially different from the actions previously
proposed, the 10 business-day consultation period will be deemed to begin
anew from the date of delivery of such new proposal and delivery of all
information related to such new proposal. Notwithstanding the consultation
rights of the holder of the Southridge Mall Pari Passu Companion Loan (or
its representative) described above, the master servicer or special
servicer, as applicable, is permitted to make any major decision or take any
action set forth in the Asset Status Report before the expiration of the
aforementioned 10 business-day period if it determines that immediate action
with respect to such decision is necessary to protect the interests of the
holders of the Southridge Mall Mortgage Loan and the Southridge Mall Pari
Passu Companion Loan. Neither the master servicer nor the special servicer
will be obligated at any time to follow or take any alternative actions
recommended by the holder of the Southridge Mall Pari Passu Companion Loan
(or its representative).
Neither
the master servicer nor the special servicer may follow any advice or
consultation provided by the holder of the Southridge Mall Pari Passu
Companion Loan (or its representative) that would require or cause the
master servicer or the special servicer, as applicable, to violate any
applicable law, including the REMIC provisions, violate its obligation to
act in accordance with the Servicing Standard, require or cause the master
servicer or the special servicer, as applicable, to violate provisions of
the Southridge Mall Intercreditor Agreement or the Pooling and Servicing
Agreement, require or cause the master servicer or the special servicer, as
applicable, to violate the terms of the Southridge Mall Whole Loan, or
materially expand the scope of any of the master servicer’s or the special
servicer’s, as applicable, responsibilities under the Southridge Mall
Intercreditor Agreement.
In
addition to the consultation rights of the holder of the Southridge Mall
Pari Passu Companion Loan (or its representative) described above, pursuant
to the terms of the Southridge Mall Intercreditor Agreement, the holder of
the Southridge Mall Pari Passu Companion Loan (or its representative) will
have the right to attend (in-person or telephonic) annual meetings with the
master servicer or the special servicer, as applicable, upon reasonable
notice and at times reasonably acceptable to the master servicer or the
special servicer, as applicable, for the purpose of discussing servicing
issues related to the Southridge Mall Whole Loan.
Sale of a Defaulted Southridge Mall Whole Loan
Pursuant
to the terms of the Southridge Mall Intercreditor Agreement, if the
Southridge Mall Whole Loan becomes a defaulted mortgage loan and the
applicable special servicer determines to sell the Southridge Mall Mortgage
Loan, then the applicable special servicer will be required to sell the
Southridge Mall Mortgage Loan together with the Southridge Mall Pari Passu
Companion Loan as one whole loan. In connection with any such sale, the
applicable special servicer will be required to follow the procedures set
forth under “Servicing of
the Mortgage Loans—Realization Upon Defaulted Mortgage Loans.”
Notwithstanding the foregoing, the special servicer will not be permitted to
sell the Southridge Mall Whole Loan if it becomes a defaulted mortgage loan
without the written consent of the holder of the Southridge Mall Pari Passu
Companion Loan (or its representative) (unless 50% or more of the
controlling class or the rights of the related directing certificateholder
are held by the borrower or an affiliate of the borrower) unless the special
servicer has delivered to the holder of the Southridge Mall Pari Passu
Companion Loan: (a) at least 15 business days prior written notice of any
decision to attempt to sell the Southridge Mall Whole Loan; (b) at least 10
days prior to the proposed sale date, a copy of each bid package (together
with any amendments to such bid packages) received by the special servicer
in connection with any such proposed sale; (c) at least 10 days prior to the
proposed sale date, a copy of the most recent appraisal for the Southridge
Mall Whole Loan, and any documents in the servicing file reasonably
requested by the holder of the Southridge Mall Pari Passu Companion Loan (or
its representative) that are material to the sale price of the Southridge
Mall Whole Loan; and (d) until the sale is completed, and a reasonable
period of time (but no less time than is afforded to other offerors and the
Directing Certificateholder) prior to the proposed sale date, all
information and other documents being provided to other offerors and all
leases or other documents that are approved by the master servicer or the
special servicer in connection with the proposed sale; provided that
the holder of the Southridge Mall Pari Passu Companion Loan (or its
representative) may waive any of the delivery or timing requirements set
forth in this sentence. Subject to the terms of the Pooling and Servicing
Agreement and the Southridge Mall Intercreditor Agreement, the holder of the
Southridge Mall Mortgage Loan (or its representative) will be permitted to
bid at any sale of the Southridge Mall Whole Loan (unless such person is the
borrower thereunder or an agent or affiliate of the borrower).
See “Servicing
of the Mortgage Loans—Realization Upon Defaulted Mortgage Loans”
below in this free writing prospectus.
Special Servicer Appointment Rights
Pursuant
to the Southridge Mall Intercreditor Agreement, the controlling noteholder
with respect to the Southridge Mall Whole Loan (which will be the Trust)
will have the right, with or without cause, to replace the special servicer
then acting with respect to the Southridge Mall Whole Loan and appoint a
replacement special servicer in lieu thereof. The Directing
Certificateholder (prior to a Control Event), and the applicable
certificateholders with the requisite percentage of voting rights (after a
Control Event) will exercise the rights of the trust as controlling
noteholder, and will have the right, with or without cause, to replace the
special servicer then acting with respect to the Southridge Mall Whole Loan
and appoint a replacement special servicer in lieu thereof, as described
under “Servicing of the
Mortgage Loans—Rights Upon Servicer Termination Event” in this free
writing prospectus.
Senior Debt Related to the Hyatt Regency Cleveland Loan
The
mortgage loan identified as Loan No. 26 on Annex A-1 to this free writing
prospectus, representing approximately 1.1% of the Initial Pool Balance, is
not secured by a first lien. The mortgage loan is subject to Tax Increment
Financing (“TIF”)
Mortgages held by the County of Cuyahoga, Ohio. Each mortgage secures
solely the obligation for the payment due for the specific calendar year
referred to in that specific mortgage. Amounts secured by the TIF Mortgages
are analogous to taxes and the TIF Mortgages are analogous to tax
liens. There is no right to simultaneously accelerate all of the TIF
Mortgages. The definition of “Taxes” under the loan agreement includes debt
service payments required under the TIF documents, therefore requiring the
TIF payments to be made to the tax and insurance escrow by the borrower. A
default in payment will give the trustee under the TIF Mortgages the right
to
enforce the TIF Mortgage for that year’s “Service Payment” but not the
right to accelerate payment of future “Service Payments” that are not
yet due and payable. The TIF Mortgages are senior to the mortgage for
the related mortgage loan. The loan agreement includes a carveout to
the non-recourse provisions for any losses suffered due to the
borrower’s failure to pay taxes, including “Service Payments”.
Net Cash Flow and Certain Underwriting Considerations
Underwritten net cash flow generally includes cash flow (including any cash
flow from master leases) adjusted based on a number of assumptions used by
the mortgage loan sellers. Each investor should review the assumptions
described in “—Additional
Mortgage Loan Information” below and make its own determination of
the appropriateness of the assumptions used in determining underwritten net
cash flow. In addition, with respect to the mortgage loans in the trust, we
note the following:
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In the case of three (3) mortgaged properties (identified as
Loan Nos. 2.02, 3 and 5 on Annex A-1 to this free writing
prospectus), representing approximately 15.2% of the Initial
Pool Balance by allocated loan amount, the occupancy reflected
in this free writing prospectus includes certain tenants that
are among the five (5) largest tenants at the related Mortgaged
Property or which, in the aggregate, constitute a significant
portion of the related Mortgaged Property, that have signed
leases but are not in occupancy and/or are not paying full
contractual rent and the Underwritten Net Cash Flow and
Underwritten Net Cash Flow Debt Service Coverage Ratio reflected
in this free writing prospectus includes rent from those tenants
even though the related tenants are not paying full contractual
rent or are paying reduced or no rent. See Annex A-1 and
Annex A-3 in this free writing prospectus. One of the tenants
is the largest tenant of the Mortgaged Property securing Loan
No. 3, which will occupy 33.6% of the net rentable area. We
cannot assure you that this or any other tenant described in
this paragraph will take occupancy and commence paying rent as
expected or at all.
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In the case of three (3) mortgage loans (identified as Loan Nos.
1, 4 and 5 on Annex A-1 to this free writing prospectus),
representing approximately 23.3% of the Initial Pool Balance,
the Underwritten Net Cash Flow and Underwritten Net Cash Flow
Debt Service Coverage Ratio includes rent from several temporary
tenants at the related Mortgaged Properties. The temporary
tenants are included in the occupancy percentages shown for the
related mortgage loans in Annex A-1 to this free writing
prospectus, and the temporary tenants occupy approximately 7.6%,
4.3% and 3.7%, respectively, of the net rentable area at the
Mortgaged Properties. Rent from such tenants is not included in
“Rents in Place” but has been characterized by the mortgage loan
seller as “Other Income” or “Specialty/Temporary Leasing
Income”.
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In the case of three (3) mortgage loans (identified as Loan
No. 2.02, 2.03 and 16) on Annex A-1 to this free writing
prospectus), representing approximately 3.6% of the Initial Pool
Balance by allocated loan amount, the Underwritten Net Cash
Flow and the Underwritten Net Cash Flow Debt Service Coverage
Ratio were calculated based on the average rent of the single
tenant of the related Mortgaged Property, including all rent
steps, during the term of the mortgage loan.
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In the case of thirty-one (31) Mortgaged Properties securing
six (6) mortgage loans (identified as Loan Nos. 2, 14, 23, 25,
29 and 30 on Annex A-1 to this free writing prospectus),
representing approximately 15.1% of the Initial Pool Balance by
allocated loan amount, the related mortgage loans are secured in
whole or in part by a recently acquired or constructed Mortgaged
Properties that either have no or limited prior operating
history, do not have historical financial information or the
historical financials are inapplicable (or in one case,
renovated from a single-tenant property to a multi-tenant
property).
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In the case of one (1) Mortgaged Property (identified as Loan
No. 26 on Annex A-1 to this free writing prospectus), securing
one (1) mortgage loan representing approximately 1.1% of the
Initial Pool Balance by allocated loan amount, the related
Mortgaged Property benefits from a tax abatement as part of a
tax abatement program that is secured by multiple mortgages in
favor of
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the applicable municipality which have priority over the
mortgage securing such mortgage loan. We cannot assure you
that there will be no enforcement action under the prior
mortgages securing the tax abatement program in connection
with the related borrower’s failure to perform its
obligation to timely make payments that are due in
connection with such tax abatement program.
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See “Risk
Factors—Risks Relating to Underwritten Net Cash Flow”, Annex A-1 and
Annex A-3 (including the related footnotes) in this free writing prospectus.
Mortgaged Property Considerations
Environmental Considerations
In
connection with the origination of the mortgage loans, the related mortgage
loan seller or other originator either (i) obtained or updated an
environmental site assessment for the related Mortgaged Property from a
qualified environmental firm or (ii) obtained an environmental insurance
policy for the related Mortgaged Property. See “Transaction
Parties—The Sponsors and Mortgage Loan Sellers—JPMorgan Chase Bank, National
Association—JPMCB’s Underwriting Guidelines and Processes—Environmental Site
Assessment”, and “—Barclays
Bank PLC—Barclays Underwriting Guidelines and Processes” in this free
writing prospectus.
See “Risk
Factors—Environmental Risks Relating to the Mortgaged Properties” in
this free writing prospectus and “Certain
Legal Aspects of the Mortgage Loans—Environmental Risks” in the
prospectus. In addition, with respect to the mortgage loans in the trust,
we note the following:
With
respect to one (1) mortgage loan (identified as Loan No. 11.01 on Annex A-1
to this free writing prospectus), representing approximately 1.4% of the
Initial Pool Balance by allocated loan amount, the related Phase I
environmental site assessment reports numerous historical recognized
environmental conditions related to the use of the Mortgaged Property as an
industrial property. Investigations performed in 2008 indicated the
presence of chlorinated solvents in soil and groundwater, and the Mortgaged
Property entered into the Illinois Environmental Protection Agency (“IEPA”
) site remediation program. Additional investigations did not reveal the
presence of elevated levels of any other contaminant. As part of the
remediation, the Mortgaged Property is subject to a deed restriction which
limits the use of the Mortgaged Property to commercial or industrial uses
and prohibits the installation of any water wells on the Mortgaged
Property. Additionally, as modeling indicated that potential indoor air
remediation could be exceeded based on the soil and groundwater collected
outside the building, a subslab depressurization system was installed to
mitigate any potential impact of the chlorinated solvents on the interior
air by evacuating any potential vapors prior to entering the building. In
2009, the IEPA granted the Mortgaged Property no further remediation status
based on the reports and the remediation efforts. The assessment also
reported the former presence of underground storage tanks and a complaint in
1990 regarding the dumping of acids and paints in a nearby field, but the
report indicated that there was no evidence of any spills or contamination
related to the foregoing. Finally, the assessment notes in 2001,
approximately 10 gallons of chromic acid was spilled at the Mortgaged
Property, and that the tenant at the Mortgaged Property removed 100 yards of
soil and debris from the Mortgaged Property after the issuance of a
violation notice from the IEPA. The assessment concluded that no additional
action was required for any of these environmental issues, but we cannot
assure you that the environmental site assessment accurately identified and
characterized all potential contamination concerns at the Mortgaged
Property, or that any remediation efforts at the Mortgaged Property will
continue to limit exposure to potential contaminants.
With
respect to one (1) mortgage loan (identified as Loan No. 7 on Annex A-1 to
this free writing prospectus), representing approximately 5.3% of the
Initial Pool Balance, the environmental site assessments (“ESAs”)
recommended that a limited subsurface investigation be conducted to evaluate
the potential for residual impacts from historical activities at the
Mortgaged Property including spray painting, a drycleaner listed as present
in the 1970s, the removal of ten underground storage tanks without complete
documentation currently available, and automotive service facilities with a
waste oil tank,
hydraulic lifts and a clarifier. Although no such investigation was
performed, an environmental insurance policy naming the lender as an
insured was obtained at origination of the related mortgage loan with
limits of $5,000,000 individually and $10,000,000 in the aggregate, for
a ten year term, with a three year extended reporting period and subject
to a $50,000 deductible.
With
respect to one (1) mortgage loan (identified as Loan No. 31 on Annex A-1 to
this free writing prospectus), representing approximately 0.7% of the
Initial Pool Balance, the Phase I environmental site assessment identified
the existence of a dry cleaning facility at the Mortgaged Property and
indicated that its historical use of tetrachloroethylene (“PCE”) created a
recognized environmental condition. According to the Phase II environmental
site assessment, the environmental consultant reported that there was little
risk of PCE spreading deeper or laterally and that the concentration of PCE
may decrease naturally over time. According to the Phase II environmental
site assessment, the cost to excavate and dispose of the impacted soil would
be approximately $20,000. At origination, $30,000 was reserved to cover
these costs. However, we cannot assure you that the assessment accurately
characterized the level of contamination or, in the event additional
contamination is discovered on the Mortgaged Property, that any responsible
parties will be able to complete any additional remediation measures
required by the applicable authorities.
With
respect to one (1) mortgage loan (identified as Loan No. 2 on Annex A-1 to
this free writing prospectus), representing approximately 8.9% of the
Initial Pool Balance, the related ESA reported concerns at three of the
Mortgaged Properties. With respect to the Mortgaged Property referred to as
CarMax, the Mortgaged Property maintains a gasoline above ground storage
tank (“AST”) for fueling at the service center. A short fill pipe runs
underground to the AST, and a 120 foot dispensing pipe runs underground from
the AST to a dispenser. Although the ESA did not identify any reported
leaks from the fueling system, recent integrity test results for the
underground pipes were not available for the ESA review and the ESA
therefore recommended that structural integrity of the underground pipes be
confirmed. Additionally, the ESA estimated that if a leak were to be
discovered in an underground fuel pipe and if such leak were to contaminate
both soil and groundwater, the worst case remediation scenario could cost
approximately $80,000 to $100,000. We cannot assure you that in the event
that such a leak and such contamination were to be discovered that any
necessary remediation would in fact cost no more than the ESA worst case
cost estimate. With respect to the Mortgaged Property referred to as
Kroger-La Grange, the ESA noted that two double-walled fiberglass USTs for
gasoline and diesel fuel were installed in 2009 and have leak detection
systems. Additionally, a recent inventory reconciliation report was
available to the ESA demonstrating that no fuel release has occurred.
Although no recent tank tightness test information was available for review
by the ESA, in light of the inventory information and the recent and modern
construction of the USTs and their leak detection system, the ESA concluded
that there is no material threat of a leak. We cannot assure you that any
future testing will not identify any leaks. With respect to the Mortgaged
Property referred to as Home Depot / Art Van Furniture, two fuel oil leaking
underground storage tank (“LUST”) incidents on a larger parcel that
previously had included the Mortgaged Property were issued No Further Action
letters by the Illinois EPA in 1992-1993. The ESA concluded that no impacts
to the Mortgaged Property are expected and recommended no further action.
Although certain recommended investigations were not performed, an
environmental insurance policy naming the lender as an insured was obtained
at origination of the related mortgage loan with limits of $2,000,000
individually and $10,000,000 in the aggregate, for a ten year term, with a
three year extended reporting period and subject to a $25,000
deductible. We cannot assure you that any future excavations at the
Mortgaged Property for redevelopment or utility work would not discover any
LUST-related impacts or that in the event that any impacts were found and in
the event that any lender were to become an owner or operator of the
Mortgaged Property that the insurance policy would cover the entire costs of
any related remediation.
With
respect to one (1) mortgage loan (identified as Loan No. 19 on Annex A-1 to
this free writing prospectus), representing approximately 1.6% of the
Initial Pool Balance, the Phase I environmental site assessment indicates
that the Mortgaged Property is located adjacent to a property that is listed
on a database for leaking underground storage tanks. According to the
assessment, a Schwegmann Giant Supermarket once operated on both the
Mortgaged Property and the adjacent property, and five underground storage
tanks associated with the supermarket were located on the adjacent
property. In
1989,
four of the underground storage tanks located on the adjacent property
failed tank tightness tests and there was a leak of gasoline and diesel
fuel into the adjacent property. Subsequent soil borings indicated that
the property had been impacted by the release, and a contaminant plume
was identified extending north and south of the area where the
underground storage tanks were located on the adjacent property. As
part of the remediation activities, approximately 2,100 cubic yards of
contaminated soil was reportedly removed from the adjacent property and
disposed of at an off-site landfill. In 1995, the Louisiana Department
of Environmental Quality granted closure on the underground storage
tanks, and the state agency subsequently granted termination of
groundwater remediation and monitoring in 1997. However, we cannot
assure you that the assessment accurately characterized the level of
contamination on the adjacent property or, in the event additional
contamination is discovered on the adjacent property or the Mortgaged
Property, that any responsible parties will be able to complete any
additional remediation measures required by the applicable authorities.
With
respect to one (1) mortgage loan (identified as Loan No. 21 on Annex A-1 to
this free writing prospectus), representing approximately 1.6% of the
Initial Pool Balance, the environmental site assessment indicated the
presence of chlorinated volatile organic compounds, primarily
trichloroethene, in the soil, groundwater, and indoor air at the Mortgaged
Property. Air sampling conducted at the Mortgaged Property revealed
elevated levels of trichloroethene in indoor air from one of the tenant’s
spaces at the Mortgaged Property. The environmental consultant intends to
(i) collect additional indoor air samples from multiple tenant spaces to
evaluate the concentrations of trichloroethene following the implementation
of additional air treatments, and (ii) implement sodium permanganate
bench-scale testing on soil and groundwater from a location near a
monitoring well at the Mortgaged Property to develop a remedial plan for
treating groundwater and saturated soil at the Mortgaged Property. The
assessment provided a cost estimate scenario of between $677,000 and
$946,000 to identify and complete any remediation efforts at the Mortgaged
Property, and the lender reserved $946,000 at origination of the mortgage
loan to ensure completion of the remediation. Finally, the assessment noted
that the Mortgaged Property has a long history of industrial use, and that
up to 11 feet of urban fill, containing cinders, ash, and debris, has been
detected at the Mortgaged Property. A fill on the adjacent property to the
south contained elevated concentrations of metals, polynuclear aromatic
hydrocarbons, and petroleum hydrocarbons, and it is likely that the fill
located on the Mortgaged Property contains similar contaminants. We cannot
assure you regarding the extent of any environmental contamination at the
Mortgaged Property, that the borrower will be able to complete any required
remediation at the Mortgaged Property or that the amount reserved by the
lender at origination will be sufficient to pay for the costs of such
remediation.
With
respect to one (1) mortgage loan (identified as Loan No. 29 on Annex A-1 to
this free writing prospectus), representing approximately 0.8% of the
Initial Pool Balance, the environmental site assessment recommended that a
limited subsurface investigation be conducted to evaluate the potential for
historic contamination from both: (a) three underground storage tanks from
the Mortgaged Property, which were reportedly removed in 1977 before current
laws specified closure sampling protocols, and (b) the historic presence of
a former laundry establishment that potential conducted dry cleaning at the
Mortgaged Property, each of which represents a recognized environmental
condition. Additionally, the assessment noted that a former LUST incident
at the Mortgaged Property was investigated and received case closure from
the Arizona Department of Environmental Quality. The borrower has obtained
an environmental insurance policy that includes lender collateral
protection. The term of the policy extends from September 25, 2010 until
September 25, 2013, with aggregate coverage limits of $10,000,000 and a
deductible of $25,000. Upon expiration of the policy, the borrower is
required to either renew the policy or obtain an identical policy. However,
we cannot assure you regarding the extent of any environmental concerns at
the Mortgaged Property or any potential future remediation requirements, or
that any proceeds from a claim under the environmental policy will be
sufficient to satisfy any losses incurred with respect to the potential
environmental issues at the Mortgaged Property.
See also
representation number 43 on Annex D-1 to this free writing prospectus and
the exceptions to those representations on Annex D-2 to this free writing
prospectus.
Property Renovation Issues
Certain
of the Mortgaged Properties are properties that are currently undergoing or
are expected to undergo in the future redevelopment or renovation.
With
respect to one (1) mortgage loan (identified as Loan No. 26 on Annex A-1 to
this free writing prospectus), representing approximately 1.1% of the
Initial Pool Balance, the mortgaged property has 36 months to complete a
Hyatt Property Improvement Program (“PIP”),
estimated to cost approximately $7,000,000. The mortgage loan has an FF&E
reserve in an amount equal to no less than 7.0% of gross income from
operations of the mortgaged property through December 31, 2016, and 4.0% of
gross income from operations of the mortgaged property after December 31,
2016. The mortgage loan has springing recourse to the guarantor if there is
a PIP shortfall not covered by the related borrower. At the time of closing
of the mortgage loan, $3,100,000 was held by Hyatt in an account for the PIP
obligation and the lender has a security interest in such account.
In
addition, in the case of one (1) other mortgage loan (identified as Loan No.
13 on Annex A-1 to this free writing prospectus), representing approximately
2.3% of the Initial Pool Balance, two of the tenants at the related
Mortgaged Property have the right to expand their leased premises. Pursuant
to the leases, the tenants are generally responsible for the costs and
expenses incurred in constructing the expansions. If one or both tenants
elect to expand their premises, we cannot assure you that the construction
will be completed as planned or that the failure to complete such
construction will not have a material adverse impact on the zoning
compliance or the operation of the Mortgaged Property or otherwise.
We can
provide no assurances that any of those renovations or expansions will be
completed or that the failure to do so will not have a material adverse
impact on the related Mortgaged Properties.
See “Risk
Factors—Risks Related to Redevelopment and Renovation at the Mortgaged
Properties” in this free writing prospectus.
Litigation Considerations; Bankruptcy Issues and Other Proceedings
There may
be pending or threatened legal proceedings against, or other past or present
adverse regulatory circumstances experienced by, the borrowers, their
sponsors and managers of the Mortgaged Properties and their respective
affiliates arising out of the ordinary business of the borrowers, their
sponsors, managers and affiliates. In addition, certain of the borrower
sponsors and/or entities controlled thereby have been a party to bankruptcy
proceedings, mortgage loan defaults and restructures, discounted payoffs,
foreclosure proceedings or deed-in-lieu of foreclosure transactions, or
other material proceedings (including criminal proceedings) in the past. In
some cases, Mortgaged Properties securing certain of the mortgage loans
previously secured other loans that had been in default, restructured or the
subject of a discounted payoff, foreclosure or deed-in-lieu of foreclosure.
In this regard, we note the following with respect to the mortgage loans in
the trust:
With
respect to nine (9) mortgage loans (identified as Loan Nos. 3, 8, 18, 20,
22, 29, 30, 32 and 34 on Annex A-1 to this free writing prospectus),
representing approximately 19.7% of the Initial Pool Balance, within the
last ten (10) years either (a) sponsors (or affiliates thereof) have
previously sponsored real estate projects (including in some such cases, the
particular Mortgaged Property or Mortgaged Properties in this trust) that
became or are currently the subject of foreclosure proceedings, deed-in-lieu
of foreclosure, short sale, loan restructuring or similar proceedings or (b)
the mortgage loan refinanced a prior loan secured by the related Mortgaged
Property, or the related Mortgaged Property otherwise secured a prior loan,
which prior loan was the subject of a foreclosure, maturity default or a
discounted payoff, short sale, forbearance or other restructuring. See “Risk
Factors—Risks Associated with Commercial Real Estate Lending”, “—The
Borrower’s Form of Entity May Cause Special Risks” and “—Litigation
or Other Legal Proceedings Could Adversely Affect the Mortgage Loans”.
With
respect to one (1) mortgage loan (identified as Loan No. 1 on Annex A-1 to
this free writing prospectus), representing approximately 9.6% of the
Initial Pool Balance, the related borrower is a subsidiary of General Growth
Properties, Inc. and was included as a debtor in the bankruptcy of the
parent corporation. General Growth Properties, Inc. filed for Chapter
11 bankruptcy in 2009, together with approximately 160 property level
borrowers. While the bankruptcy court specifically declined to
substantively consolidate the assets of any property level subsidiary
with the assets of General Growth Properties, Inc. or any of its
affiliates so as to treat all the related parties as a single bankrupt
entity, the court did deny motions brought by various property-level
lenders to dismiss the bankruptcy cases of these property-level
borrowers as being made in bad faith. Furthermore, over the objection
of property level lenders, as part of the post-petition
debtor-in-possession financing for General Growth Properties, Inc., the
court permitted the use of cash generated from these subsidiary
properties in excess of amounts necessary to pay interest (at the
pre-petition rate) to be distributed to the bankrupt parent entities for
general corporate purposes. The court did, however, require “adequate
protection” be given to the lenders of the bankrupt property level
borrowers in the form of a first lien on the cash collateral account
where cash distributed to the bankrupt parent entities was on deposit.
Certain characteristics of this mortgage loan may be similar to the
structure employed by General Growth Properties, Inc. and these
borrowers prior to their bankruptcy filings in 2009. We cannot assure
you that the sponsor will not, or will not cause the borrower under the
related mortgage loan to avail itself of its rights in bankruptcy in the
event the Mortgaged Property experiences economic hardship. See “Risk
Factors—Risks Associated with Commercial Real Estate Lending”, “—The
Borrower’s Form of Entity May Cause Special Risks” and “—Litigation
or Other Legal Proceedings Could Adversely Affect the Mortgage Loans”.
With
respect to one (1) mortgage loan (identified as Loan No. 40 on Annex A-1 to
this free writing prospectus), representing approximately 0.5% of the
Initial Pool Balance, the guarantor reports that it is currently subject to
a lawsuit alleging claims of breach of fiduciary duty and fraud in a
previous transaction involving an unrelated hotel property. The guarantor
provided an affidavit denying all allegations under such lawsuit, and the
loan will be full recourse to the Mortgagor and the guarantor in the event
that any representations in such affidavit are not true, correct and
complete in all material respects.
With
respect to one (1) mortgage loan (identified as Loan No. 28 on Annex A-1 to
this free writing prospectus), representing approximately 0.9% of the
Initial Pool Balance, the related sponsor placed its affiliate that owned
the Mortgaged Property into Chapter 11 bankruptcy in 2010. The sponsor had
difficulty in finding permanent financing to refinance the construction
loan, and the bankruptcy was filed after a maturity default. During the
proceedings, the construction loan was subsequently restructured, and the
affiliate emerged from bankruptcy in August 2011. In addition, the related
sponsors and guarantors are indirect limited partners in a venture that has
filed for bankruptcy. We cannot assure you that these sponsors will not
avail themselves of their rights or cause the borrower under the related
mortgage loan to similarly avail itself of its rights in bankruptcy in the
event similar economic hardships impact the related Mortgaged Property. See
“Risk Factors—Risks
Associated with Commercial Real Estate Lending”, “—The
Borrower’s Form of Entity May Cause Special Risks” and “—Litigation
or Other Legal Proceedings Could Adversely Affect the Mortgage Loans”.
With
respect to one (1) mortgage loan (identified as Loan No. 32 on Annex A-1 to
this free writing prospectus), representing approximately 0.7% of the
Initial Pool Balance, the related sponsor placed tenant-in-common borrowers
on an acquisition mortgage loan secured by hotel properties into Chapter 11
bankruptcy in 2010. During negotiations with the original lender regarding
a potential restructuring of the loan, the original lender assigned the loan
to a new lender, which declared the loan to be in default and commenced
foreclosure proceedings, which prompted the bankruptcy filings. Eventually,
the sponsor and the new lender settled out of court, and the loan was
reinstated. We cannot assure you that this sponsor will not avail himself
of his rights or cause the borrower under the related mortgage loan to
similarly avail itself of its rights in bankruptcy in the event similar
economic hardships impact the related Mortgaged Property. See “Risk
Factors—Risks Associated with Commercial Real Estate Lending”, “—The
Borrower’s Form of Entity May Cause Special Risks” and “—Litigation
or Other Legal Proceedings Could Adversely Affect the Mortgage Loans”.
With
respect to one (1) mortgage loan (identified as Loan No. 2 on Annex A-1 to
this free writing prospectus), representing approximately 8.9% of the
Initial Pool Balance, the borrower reported that certain shareholders of
Spirit Realty Capital Inc. (“Spirit”),
the indirect parent of the borrower, have filed a complaint alleging
multiple causes of action relating to a proposed merger between Spirit and
Cole Credit
Property Trust II, Inc. The plaintiffs and Spirit have entered into a
memorandum of understanding relating to a proposed settlement of this
litigation matter whereby all claims against Spirit will be released in
exchange for Spirit paying the plaintiffs’ counsel $175,000 in
attorneys’ fees and $15,000 in expenses, and Spirit supplementing its
proxy statement with an agreed upon disclosure supplement. The parties
are currently conducting confirmatory discovery in connection with the
court’s confirmation of the proposed settlement.
See “Risk
Factors—Litigation or Other Legal Proceedings Could Adversely Affect the
Mortgage Loans” in this free writing prospectus and “Risk
Factors—Litigation Concerns” in the prospectus. See also
representations and warranties Nos. 15, 41, 42 and 50 on Annex D-1 to this
free writing prospectus and the exceptions to those representations on Annex
D-2 to this free writing prospectus.
Occupancy and Tenant
Concentrations. Mortgaged Properties that are owner-occupied or
leased to a single tenant, or leased to a tenant that makes up a significant
portion of the rental income, are more susceptible to interruptions of cash
flow if that tenant’s business operations are negatively impacted or if such
tenant fails to renew its lease.
See “Risk
Factors—Risks of Lease Early Termination Options” and “—Certain
Additional Risks Relating to Tenants” in this free writing
prospectus, and Annex A-3 to this free writing prospectus.
In
addition, the Mortgaged Properties securing mortgage loans included in the
trust have single tenant concentrations as set forth below:
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Nine (9) of the Mortgaged Properties securing five (5) loans
(identified as Loan Nos. 6.03, 6.08, 6.10, 6.18, 6.19, 10, 16,
37 and 39 on Annex A-1 to this free writing prospectus),
representing approximately 6.7% of the Initial Pool Balance by
allocated loan amount, are leased to a single tenant. With
respect to certain of these mortgage loans, the single tenant’s
lease expires prior to the related maturity date. See Annex A-1
to this free writing prospectus for tenant lease expiration
dates for the single tenants at these respective Mortgaged
Properties.
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With respect to two (2) of the mortgage loans (identified as
Loan Nos. 2 and 11 on Annex A-1 to this free writing
prospectus), representing approximately 11.3% of the Initial
Pool Balance, all of the Mortgaged Properties making up the
portfolio mortgage loans are leased to a single tenant (except
for one Mortgaged Property related to Loan No. 2).
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No Mortgaged Property leased to a single tenant secures a
mortgage loan representing more than approximately 2.4% of the
Initial Pool Balance by allocated loan amount.
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Mortgaged
Properties securing certain mortgage loans have tenant lease concentrations.
For certain information on the top ten tenants at each of the top ten
mortgage loans, see the chart entitled “Tenant Summary” on Annex A-3 to this
free writing prospectus. In addition, see Annex A-1 for the identity and
size of the top five tenants at each Mortgaged Property. Further, we note
the following with respect to the mortgage loans in the trust:
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With respect to twelve (12) Mortgaged Properties (identified as
Loan Nos. 2.02, 6.05, 6.13, 6.15, 6.16, 6.17, 9, 17, 27, 29, 33
and 45 on Annex A-1 to this free writing prospectus),
representing eight (8) mortgage loans, representing
approximately 7.1% of the Initial Pool Balance by allocated loan
amount, the related Mortgaged Properties are leased to a tenant
that makes up 50% or more (but less than 100%) of the rentable
square footage.
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See “Risk
Factors—Tenant Concentration Entails Risk” in this free writing
prospectus.
Certain
Mortgaged Properties securing some of the mortgage loans may have low
occupancy rates. For the occupancy rate and the date of its measurement for
each mortgage loan, see Annex A-1 to this free writing prospectus. Further,
we note the following with respect to the mortgage loans in the trust:
With
respect to one (1) mortgage loan (identified as Loan No. 26 on Annex A-1 to
this free writing prospectus), representing approximately 1.1% of the
Initial Pool Balance, the retail portion of the property is 42% vacant.
Certain
of the Mortgaged Properties are leased to affiliates of the related
borrower. In that regard, we note the following with respect to the
mortgage loans in this trust:
Expirations.
Certain of the Mortgaged Properties are subject to tenant leases that expire
before the maturity date of the related mortgage loan. For tenant lease
expiration information in the form of a lease rollover chart relating to
each of the top ten mortgage loans, see the related summaries attached as
Annex A-3 to this free writing prospectus. In addition, see Annex A-1 to
this free writing prospectus for tenant lease expiration dates for the five
largest tenants at each Mort