FWP 1 n1095_x2-tsr.htm FREE WRITING PROSPECTUS

 

    FREE WRITING PROSPECTUS
    FILED PURSUANT TO RULE 433
    REGISTRATION FILE NO.: 333-206677-20
     

 

 

 

 

Free Writing Prospectus

Collateral Term Sheet

 

$785,922,177 

(Approximate Aggregate Cut-off Date Balance of Mortgage Pool)

 

Wells Fargo Commercial Mortgage Trust 2017-C41

as Issuing Entity

 

Wells Fargo Commercial Mortgage Securities, Inc.

as Depositor

 

Barclays Bank PLC

 Argentic Real Estate Finance LLC

Ladder Capital Finance LLC

 Wells Fargo Bank, National Association

 

as Sponsors and Mortgage Loan Sellers

 

 

Commercial Mortgage Pass-Through Certificates
Series 2017-C41

 

 

November 8, 2017

 

WELLS FARGO SECURITIES

Co-Lead Manager and

Joint Bookrunner

 

BARCLAYS

Co-Lead Manager and  

Joint Bookrunner

     
 

Academy Securities

Co-Manager

 

 

  

 

 

STATEMENT REGARDING THIS FREE WRITING PROSPECTUS

 

The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (‘‘SEC’’) (SEC File No. 333-206677) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the depositor, any underwriter, or any dealer participating in the offering will arrange to send you the prospectus after filing if you request it by calling toll free 1-800-745-2063 (8 a.m. – 5 p.m. EST) or by emailing wfs.cmbs@wellsfargo.com.

 

Nothing in this document constitutes an offer of securities for sale in any jurisdiction where the offer or sale is not permitted. The information contained herein is preliminary as of the date hereof, supersedes any such information previously delivered to you and will be superseded by any such information subsequently delivered and ultimately by the final prospectus relating to the securities. These materials are subject to change, completion, supplement or amendment from time to time.

 

This free writing prospectus has been prepared by the underwriters for information purposes only and does not constitute, in whole or in part, a prospectus for the purposes of Directive 2003/71/EC (as amended) and/or Part VI of the Financial Services and Markets Act 2000, as amended, or other offering document.

 

STATEMENT REGARDING ASSUMPTIONS AS TO SECURITIES, PRICING ESTIMATES AND OTHER INFORMATION

 

The attached information contains certain tables and other statistical analyses (the “Computational Materials”) which have been prepared in reliance upon information furnished by the Mortgage Loan Sellers. Numerous assumptions were used in preparing the Computational Materials, which may or may not be reflected herein. As such, no assurance can be given as to the Computational Materials’ accuracy, appropriateness or completeness in any particular context; or as to whether the Computational Materials and/or the assumptions upon which they are based reflect present market conditions or future market performance. The Computational Materials should not be construed as either projections or predictions or as legal, tax, financial or accounting advice. You should consult your own counsel, accountant and other advisors as to the legal, tax, business, financial and related aspects of a purchase of these securities. Any weighted average lives, yields and principal payment periods shown in the Computational Materials are based on prepayment and/or loss assumptions, and changes in such prepayment and/or loss assumptions may dramatically affect such weighted average lives, yields and principal payment periods. In addition, it is possible that prepayments or losses on the underlying assets will occur at rates higher or lower than the rates shown in the attached Computational Materials. The specific characteristics of the securities may differ from those shown in the Computational Materials due to differences between the final underlying assets and the preliminary underlying assets used in preparing the Computational Materials. The principal amount and designation of any security described in the Computational Materials are subject to change prior to issuance. None of Wells Fargo Securities, LLC, Barclays Capital Inc., Academy Securities, Inc., or any of their respective affiliates, make any representation or warranty as to the actual rate or timing of payments or losses on any of the underlying assets or the payments or yield on the securities. The information in this presentation is based upon management forecasts and reflects prevailing conditions and management’s views as of this date, all of which are subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to us by or on behalf of the Mortgage Loan Sellers or which was otherwise reviewed by us.

 

This free writing prospectus contains certain forward-looking statements. If and when included in this free writing prospectus, the words “expects”, “intends”, “anticipates”, “estimates” and analogous expressions and all statements that are not historical facts, including statements about our beliefs or expectations, are intended to identify forward-looking statements. Any forward-looking statements are made subject to risks and uncertainties which could cause actual results to differ materially from those stated. Those risks and uncertainties include, among other things, declines in general economic and business conditions, increased competition, changes in demographics, changes in political and social conditions, regulatory initiatives and changes in customer preferences, many of which are beyond our control and the control of any other person or entity related to this offering. The forward-looking statements made in this free writing prospectus are made as of the date stated on the cover. We have no obligation to update or revise any forward-looking statement.

 

Wells Fargo Securities is the trade name for the capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including but not limited to Wells Fargo Securities, LLC, a member of NYSE, FINRA, NFA and SIPC, Wells Fargo Prime Services, LLC, a member of FINRA, NFA and SIPC, and Wells Fargo Bank, N.A. Wells Fargo Securities, LLC and Wells Fargo Prime Services, LLC are distinct entities from affiliated banks and thrifts.

 

IMPORTANT NOTICE REGARDING THE OFFERED CERTIFICATES

 

The information herein is preliminary and may be supplemented or amended prior to the time of sale. In addition, the Offered Certificates referred to in these materials and the asset pool backing them are subject to modification or revision (including the possibility that one or more classes of certificates may be split, combined or eliminated at any time prior to issuance or availability of a final prospectus) and are offered on a “when, as and if issued” basis.

 

The underwriters described in these materials may from time to time perform investment banking services for, or solicit investment banking business from, any company named in these materials. The underwriters and/or their affiliates or respective employees may from time to time have a long or short position in any security or contract discussed in these materials.

 

The information contained herein supersedes any previous such information delivered to any prospective investor and will be superseded by information delivered to such prospective investor prior to the time of sale.

 

IMPORTANT NOTICE RELATING TO AUTOMATICALLY-GENERATED EMAIL DISCLAIMERS

 

Any legends, disclaimers or other notices that may appear at the bottom of any email communication to which this free writing prospectus is attached relating to (1) these materials not constituting an offer (or a solicitation of an offer), (2) any representation that these materials are accurate or complete and may not be updated or (3) these materials possibly being confidential, are not applicable to these materials and should be disregarded. Such legends, disclaimers or other notices have been automatically generated as a result of these materials having been sent via Bloomberg or another system.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

2 

 

 

Wells Fargo Commercial Mortgage Trust 2017-C41 Certain Loan Information

 

A.       Summary of the Whole Loans

 

Property Name Mortgage Loan Seller in WFCM 2017-C41 Note(s) Original Balance Holder of Note(1) Lead Servicer for Whole Loan Master Servicer Under Lead Securitization Servicing Agreement Special Servicer Under Lead Securitization Servicing Agreement
Headquarters Plaza Barclays A-1  $75,000,000 CD 2017-CD6(2) Yes Wells Fargo Bank, National Association LNR Partners LLC
A-2  $25,000,000 Citi Real Estate Funding Inc. No
A-3  $35,000,000 WFCM 2017-C41 No
A-4  $15,000,000 WFCM 2017-C41 No
Marriott LAX LCF A-1-A $40,000,000 CGCMT 2017-C4 Yes

Midland Loan Services, a

Division of PNC Bank,

National Association

Midland Loan Services, a

Division of PNC Bank, 

National Association

 

A-2 $62,000,000 LCCM 2017-LC26 No
A-3-A $44,450,000 WFCM 2017-C41 No
Mall of Louisiana Barclays A-1 $65,000,000 BANK 2017-BNK7 Yes Wells Fargo Bank, National Association Rialto Capital Advisors, LLC
A-2 $44,000,000 MSBAM 2017-C34 No
A-3-1 $30,000,000 CGCMT 2017-P8 No
A-3-2 $28,000,000 CGCMT 2017-C4 No
A-4 $50,000,000 COMM 2017-COR2 No
A-5-1 $41,000,000 WFCM 2017-C41 No
A-5-2 $17,000,000 CGCMT 2017-P8 No
A-6 $25,000,000 WFCM 2017-C40 No
A-7 $25,000,000 WFCM 2017-C40 No
U.S. Industrial Portfolio III Barclays A-1-1  $50,000,000 BANK 2017-BNK8(3) Yes Wells Fargo Bank, National Association

Midland Loan Services, a

 

Division of PNC Bank,

 

National Association

 

A-1-2  $40,000,000 Morgan Stanley Bank, N.A. No
A-2  $30,537,149 WFCM 2017-C41 No
National Office Portfolio LCF A-1-A $35,000,000 Ladder Capital Finance LLC Yes

Midland Loan Services, a

 

Division of PNC Bank,

 

National Association(5)

 

Midland Loan Services, a

 

Division of PNC Bank,

 

National Association(5)

 

A-1-B $20,000,000 Ladder Capital Finance LLC No
A-2 $30,000,000 Ladder Capital Finance LLC No
A-3 $30,000,000 WFCM 2017-C41 No
A-4-A $30,000,000 Ladder Capital Finance LLC No
A-5-A $40,000,000 UBS 2017-C5(4)(5) No
Belden Park Crossing LCF A-1-A $13,000,000 Ladder Capital Finance LLC Yes(6) Wells Fargo Bank, National Association(6) LNR Partners LLC(6)
A-1-B $15,000,000 Ladder Capital Finance LLC No
A-2 $23,000,000 WFCM 2017-C41 No
One Century Place Barclays A-1  $44,000,000 Barclays Bank PLC Yes(6) Wells Fargo Bank, National Association(6) LNR Partners LLC(6)
A-2  $22,300,000 WFCM 2017-C41 No
The View at Marlton AREF A-1 $20,500,000 WFCM 2017-C41 Yes Wells Fargo Bank, National Association LNR Partners LLC
A-2 $6,000,000 Argentic Real Estate Finance LLC No

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

3 

 

 

Wells Fargo Commercial Mortgage Trust 2017-C41 Certain Loan Information

 

DoubleTree Berkeley Marina AREF A-1-1 $13,750,000 UBS 2017-C4 Yes Wells Fargo Bank, National Association Rialto Capital Advisors, LLC
A-2 $20,000,000 WFCM 2017-C41 No
    A-1-2, A-1-3 $18,750,000 UBS 2017-C5(4) No    
Macedonia Commons LCF A-1 $18,000,000 WFCM 2017-C41 Yes Wells Fargo Bank, National Association LNR Partners LLC
A-2 $16,200,000 UBS 2017-C4 No
Del Amo Fashion Center Barclays A-1-1, A-2-1, A-3-1,
A-4-1, B-1-1, B-2-1,
B-3-1, B-4-1
$59,300,000 DAFC 2017-AMO Yes KeyBank National Association Cohen Financial, a Division of SunTrust Bank
A-1-2, A-4-2,
B-1-2, B-4-2
$90,000,000 BANK 2017-BNK5 No
A-1-3, A-4-4, B-1-3,
B-1-4, B-4-4
$59,543,000 BANK 2017-BNK6 No
A-1-4 $20,457,000 CGCMT 2017-B1 No
A-2-2-A, B-2-2-A $30,000,000 WFCM 2017-C39 No
A-2-2-B, B-2-2-B $15,000,000 WFCM 2017-C41 No
A-2-4, B-2-4 $25,000,000 WFCM 2017-C40 No
A-2-3, A-4-3,
B-2-3, B-4-3
$60,000,000 WFCM 2017-C38 No
A-3-2, B-3-2 $50,000,000 UBS 2017-C3 No
A-3-3, B-3-3 $45,000,000 UBS 2017-C2 No
A-3-4, B-3-4 $5,000,000 UBS 2017-C4 No
Columbia Park Shopping Center AREF A-1 $50,000,000 WFCM 2017-C39 Yes Wells Fargo Bank,
National Association
LNR Partners LLC
A-2 $12,700,000 WFCM 2017-C41 No

 

(1)Unless otherwise indicated, each note not currently held by a securitization trust is expected to be contributed to a future securitization. No assurance can be provided that any such note will not be split further.

(2)The CD 2017-CD6 transaction is expected to close on November 30, 2017.

(3)The BANK 2017-BNK8 transaction is expected to close on November 15, 2017.

(4)The UBS 2017-C5 transaction is expected to close on November 16, 2017.

(5)The National Office Portfolio whole loan is being serviced under the UBS 2017-C5 pooling and servicing agreement until the securitization of Note A-1, after which it will be serviced pursuant to the related non-serviced pooling and servicing agreement.

(6)The related whole loan is expected to initially be serviced under the WFCM 2017-C41 pooling and servicing agreement until the securitization of the related “lead” pari passu note (namely, the related pari passu note marked “Yes” in the column entitled “Lead Servicer for Whole Loan”), after which the related whole loan will be serviced under the pooling and servicing agreement governing such securitization of the related “lead” pari passu note. The master servicer and special servicer for such securitization will be identified in a notice, report or statement to holders of the WFCM 2017-C41 certificates after the closing of such securitization.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

4 

 

 

Wells Fargo Commercial Mortgage Trust 2017-C41 Certain Loan Information

 

B.       Large Loan Summaries

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

5 

 

 

HEADQUARTERS PLAZA

 

 (GRAPHIC)

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

6 

 

 

HEADQUARTERS PLAZA

 

 (GRAPHIC)

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

7 

 

 

HEADQUARTERS PLAZA

 

 (GRAPHIC)

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

8 

 

 

HEADQUARTERS PLAZA

 

 (GRAPHIC)

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

9 

 

 

HEADQUARTERS PLAZA

 

 (GRAPHIC)

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

10 

 

 

HEADQUARTERS PLAZA

 

 (GRAPHIC)

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

11 

 

  

No. 1 – Headquarters Plaza
 
Loan Information   Property Information
Mortgage Loan Seller: Barclays Bank PLC   Single Asset/Portfolio: Single Asset
Credit Assessment
(Fitch/KBRA/Moody’s):
NR/NR/NR   Property Type: Mixed Use
Original Principal Balance(1): $50,000,000   Specific Property Type: Office/Hospitality/Retail
Cut-off Date Balance(1): $50,000,000   Location: Morristown, NJ
% of Initial Pool Balance: 6.4%   Size(4): 729,516 SF
Loan Purpose: Recapitalization   Cut-off Date Balance Per SF(1)(5): $169.39
Borrower Name: Second Roc-Jersey Associates L.L.C.; Fifth Roc-Jersey Associates L.L.C.   Year Built/Renovated: 1982/2009
Borrower Sponsor: Seth Schochet; Brian Fisher   Title Vesting(6): Fee
Mortgage Rate: 4.355%   Property Manager(7): Various
Note Date: October 20, 2017   4th Most Recent Occupancy (As of)(8): 86.2% (12/31/2013)
Anticipated Repayment Date: NAP   3rd Most Recent Occupancy (As of)(8): 89.3% (12/31/2014)
Maturity Date: November 6, 2027   2nd Most Recent Occupancy (As of)(8): 90.8% (12/31/2015)
IO Period: 120 months   Most Recent Occupancy (As of)(8): 91.3% (12/31/2016)
Loan Term (Original): 120 months   Current Occupancy (As of)(8): 91.8% (8/1/2017)
Seasoning: 0 months    
Amortization Term (Original): NAP    
Loan Amortization Type: Interest-only, Balloon      
Interest Accrual Method: Actual/360      
Call Protection(2): L(24),D(92),O(4)      
Lockbox Type: Hard/Springing Cash Management   Underwriting and Financial Information:  
Additional Debt(1): Yes   4th Most Recent NOI (As of)(9): $15,156,064 (12/31/2014)
Additional Debt Type(1): Pari Passu   3rd Most Recent NOI (As of)(9): $16,616,513 (12/31/2015)
      2nd Most Recent NOI (As of)(9): $16,659,943 (12/31/2016)
      Most Recent NOI (As of)(9): $17,494,529 (TTM 8/31/2017)
Escrows and Reserves(3):     U/W Revenues(9): $39,606,385
      U/W Expenses(9): $22,663,110
Type: Initial Monthly Cap (If Any)   U/W NOI(9): $16,943,274
Taxes $603,660 $201,220 NAP   U/W NCF(9): $14,740,419
Insurance $0 Springing NAP   U/W NOI DSCR(1): 2.56x
Replacement Reserves $0 $15,843 NAP   U/W NCF DSCR(1): 2.23x
FF&E Reserve $0 Springing NAP   U/W NOI Debt Yield(1): 11.3%
TI/LC Reserve $0 $125,000 $6,000,000   U/W NCF Debt Yield(1): 9.8%
Plaza Development Reserve $1,500,000 $0 NAP   As-Is Appraised Value(10): $239,000,000
Unfunded Tenant Obligations $1,722,209 $0 NAP   As-Is Appraisal Valuation Date(10): August 22, 2017
PIP Reserve $0 Springing NAP   Cut-off Date LTV Ratio(1)(10): 62.8%
Deferred Maintenance $73,255 $0 NAP   LTV Ratio at Maturity or ARD(1)(10): 62.8%
             

 

(1)See “The Mortgage Loan” section. All statistical information related to balances per square foot, loan-to-value ratios, debt service coverage ratios and debt yields are based on the Headquarters Plaza Whole Loan (as defined below).

(2)The lockout period will be at least 24 payments, beginning with and including the first payment date of December 6, 2017. Defeasance of the Headquarters Plaza Mortgage Loan is permitted at any time after the earlier to occur of (i) October 20, 2020 or (ii) two years after the closing date of the securitization that includes the last note to be securitized. The assumed lockout period of 24 payments is based on the expected WFCM 2017-C41 securitization trust closing date in November 2017.

(3)See “Escrows” section.

(4)The square feet for the Headquarters Plaza Property (as defined below) includes the office and retail components only and excludes the hotel component of the property. The hotel component of the property consists of 256 rooms and approximately 156,000 square feet.

(5)The Cut-off Date Balance Per SF is calculated using the entire square footage which includes approximately 156,000 square feet of hotel space. If excluding the hotel square footage, the Cut-off Date Balance Per SF is equal to $205.62.

(6)See “Ground Lease” section.

(7)See “Property Management” section.

(8)Figures represent occupancy statistics for the Headquarters Plaza Office/Retail Property (as defined below).

(9)See “Cash Flow Analysis” section.

(10)See “Appraisal” section.

 

The Mortgage Loan. The mortgage loan (the “Headquarters Plaza Mortgage Loan”) is part of a whole loan (the “Headquarters Plaza Whole Loan”) evidenced by four pari passu notes secured by a first mortgage encumbering the fee interest and certain leasehold interests (see the “Ground Lease” section below) in a mixed-use property consisting of three Class A office towers, a retail concourse and a 256-room full service hotel located approximately 30.0 miles northwest of New York City in Morristown, NJ (the “Headquarters Plaza Property”). Promissory Notes A-3 and A-4 (contributed by Barclays Bank PLC), in the aggregate principal amount of $50,000,000, represent the Headquarters Plaza Mortgage Loan and will be included in the WFCM 2017-C41 securitization trust.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

12 

 

 

HEADQUARTERS PLAZA

  

The Headquarters Plaza Whole Loan was co-originated on October 20, 2017 by Barclays Bank PLC and Citi Real Estate Funding Inc. The Headquarters Plaza Whole Loan had an original principal balance of $150,000,000, has an outstanding principal balance as of the Cut-off Date of $150,000,000 and accrues interest at an interest rate of 4.3550% per annum. The Headquarters Plaza Whole Loan had an initial term of 120 months, has a remaining term of 120 months as of the Cut-off Date and requires interest-only payments through the term of the Headquarters Plaza Whole Loan. The Headquarters Plaza Whole Loan matures on November 6, 2027.

 

Notes A-3 and A-4, which will be contributed to the WFCM 2017-C41 Trust, had an aggregate original principal balance of $50,000,000, have an aggregate Cut-off Date Balance of $50,000,000, and together with Note A-2, represent the non-controlling interest in the Headquarters Plaza Whole Loan. The controlling Note A-1 had an original principal balance of $75,000,000, has an outstanding principal balance as of the Cut-off Date of $75,000,000,is currently held by Citi Real Estate Funding Inc. and is expected to be contributed to the CD 2017-CD6 Trust. The non-controlling Note A-2 had an original principal balance of $25,000,000, has an outstanding principal balance as of the Cut-off Date of $25,000,000, is currently held by Citi Real Estate Funding Inc. and is expected to be contributed to a future securitization trust. Each of the mortgage loans evidenced by Notes A-1 and A-2 are referred to herein as the “Headquarters Plaza Pari Passu Companion Loans”. See “Description of the Mortgage Pool—The Whole Loans—The Non-Serviced Pari Passu Whole Loans” and “Pooling and Servicing Agreement” in the Preliminary Prospectus.

 

Note Summary

 

Notes Original Balance   Note Holder Controlling Interest
A-1 $75,000,000   CD 2017-CD6 Yes
A-2 $25,000,000   Citi Real Estate Funding Inc. No
A-3 $35,000,000   WFCM 2017-C41 No
A-4 $15,000,000   WFCM 2017-C41 No
Total $150,000,000      

 

Following the lockout period, on any date before August 6, 2027, the borrower has the right to defease the Headquarters Plaza Whole Loan in whole, but not in part. The lockout period will expire on the earlier to occur of (i) two years after the closing date of the securitization that includes the last note to be securitized or (ii) October 20, 2020. The Headquarters Plaza Whole Loan is prepayable without penalty on or after August 6, 2027.

 

Sources and Uses

 

Sources         Uses      
Original whole loan amount $150,000,000   100.0%   Return of Equity $144,095,793(1)   96.1%
          Reserves 3,899,124   2.6     
          Closing costs 2,005,083   1.3     
                 
Total Sources $150,000,000   100.0%   Total Uses $150,000,000   100.0%

 

(1)There is no existing debt on the Headquarters Plaza Property as of the Headquarters Plaza Whole Loan origination date, as the prior leasehold loan was repaid in connection with the acquisition of the landlord’s interest under the ground lease by a borrower affiliate.

 

The Property. The Headquarters Plaza Property is comprised of three Class A office towers totaling 562,242 square feet, an indoor/outdoor retail concourse totaling 167,274 square feet (together with the office towers, the “Headquarters Plaza Office/Retail Property”) and a full service Hyatt Regency hotel totaling 256 rooms (the “Hyatt Regency at Headquarters Plaza”). The Headquarters Plaza Property is located approximately 30.0 miles northwest of New York City in Morristown, NJ. According to the appraisal, the Headquarters Plaza Property occupies a location adjacent to “The Green” in downtown Morristown along Speedwell Avenue (route 202), within a mile of Interstate 287 and Route 24. The Headquarters Plaza Property was developed by the sponsors between 1982 and 1993, and has since been managed by the sponsors. The Headquarters Plaza Property sits atop a 2,900-space multi-story parking garage (not collateral for the loan), which affiliates of the borrowers purchased from the Municipality of Morristown along with the fee interest (see “Ground Lease” section) in the Headquarters Plaza Property in 2015.

 

Fee above a Plane. The real estate collateral for the Headquarters Plaza Whole Loan is structured as a fee above a plane (the “Upper Area”), which fee-above-a-plane structure is governed by the Declaration (as defined in the loan documents). The owner of the fee interest in the real property located below the Upper Area (the “Lower Area”), as well as the lessee of the Lower Area, are affiliates of the borrowers. The Lower Area which consists of a parking garage is not collateral for the Headquarters Plaza Whole Loan.

 

The Headquarters Plaza Office/Retail Property

 

The Headquarters Plaza Office/Retail Property’s office component is comprised of three Class A multi-tenant office towers. The North Tower is a 202,445 square foot, 12-story tower that was completed in 1987. The East Tower is a 178,277 square foot, 11-story tower that was completed in 1983. The West Tower is a 181,520 square foot, 11-story tower that was completed in 1982. The Headquarters Plaza Office/Retail Property has been maintained by the borrowers who between 2005 and 2016, have invested approximately $28.1 million between tenant improvements and building improvements.

 

The Headquarters Plaza Office/Retail Property has a total of 49 office tenants and 19 retail tenants resulting in a combined occupancy of 91.8% as of August 1, 2017. The tenant mix is diverse, represented by industries including finance, telecommunications, legal, and various state and federal government agencies. The Headquarters Plaza Office/Retail Property has exhibited strong occupancy historically with a weighted average occupancy over the past 11 years of 88.9% and 90.3% over the past five years. The weighted average tenure of current tenancy is 17.0 years. Several of the larger tenants have been at the property for many years, including Riker, Danzig, Scherer (1982), Duff & Phelps, LLC (2007) and Graham, Curtin & Sheridan, P.A. (2002).

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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The largest office tenant, Riker, Danzig, Scherer (“Riker”), occupies 79,170 square feet representing 10.9% of the Headquarters Plaza Office/Retail Property’s total square footage and has been located at the property since 1982. According to Riker, Riker has been at the forefront of the New Jersey legal community since 1882 and has more than 130 years of legal experience in a broad range of practice areas. Other than Riker, no other tenant accounts for more than 6.9% of the Headquarters Plaza Office/Retail Property net rentable square footage.

 

The Headquarters Plaza Property’s retail component is comprised of an indoor and outdoor facing retail concourse which connects to each of the three office towers and the hotel. The retail concourse consists of a 40,000 square foot AMC Theatres and 34,707 square foot fitness center operated by a borrower affiliate. The remaining 92,567 square feet of retail space primarily serves as amenity space for the office tenants and hotel patrons.

 

The following table presents certain information relating to the tenancy at the Headquarters Plaza Office/Retail Property:

 

Major Tenants

 

Tenant Name

Credit Rating (Fitch/Moody’s

/S&P)

Tenant NRSF % of
NRSF
Annual U/W Base Rent PSF(1) Annual
U/W Base Rent(1)
% of Total Annual U/W Base Rent(1) Lease
Expiration
Date
               
Major Tenants              
Riker, Danzig, Scherer NR/NR/NR 79,170 10.9% $25.16  $1,992,128 11.5% 7/31/2025(2)
Chartwell Consulting Group, Inc. NR/NR/NR 50,100 6.9% $28.92 $1,449,135 8.3% 8/31/2021
AMC Theatres NR/NR/NR 40,000 5.5% $17.25 $690,000 4.0% 4/30/2029(3)
Duff & Phelps, LLC NR/NR/NR 33,000 4.5% $30.00 $990,000 5.7% 5/31/2028(4)
Graham, Curtin & Sheridan, P.A. NR/NR/NR 33,000 4.5% $26.50 $874,500 5.0% 6/30/2022(5)
Total Major Tenants   235,270 32.3% $25.48 $5,995,763 34.5%  
               
Non-Major/Amenity Tenants   434,698 59.6% $29.30(6) $11,373,275 65.5%  
               
Occupied Collateral Total   669,968 91.8% $27.86(6) $17,369,038 100.0%  
               
Vacant Space   59,548 8.2%        
               
Collateral Total   729,516 100.0%        
               
(1)Information obtained from the underwritten rent roll and includes rent steps through October 2018.

(2)Riker, Danzig, Scherer has one, five-year or 10-year lease renewal option.

(3)AMC Theatres of has two, five-year lease renewal options.

(4)Duff & Phelps, LLC has one, five-year lease renewal option. Duff & Phelps, LLC has one month of free rent each year beginning 2019 and ending in 2024.

(5)Graham, Curtin & Sheridan, P.A. has one, five-year lease renewal option.

(6)Calculation excludes amenity tenants (46,557 square feet) from the calculation.

 

The following table presents certain information relating to the lease rollover schedule at the Headquarters Plaza Office/Retail Property:

 

Lease Expiration Schedule(1)(2)

 

Year Ending
 December 31,
No. of Leases Expiring Expiring NRSF % of Total NRSF Cumulative Expiring NRSF Cumulative % of Total NRSF Annual
 U/W
Base Rent
% of Annual
 U/W
Base Rent
Annual
 U/W
Base Rent
 PSF
MTM 3 6,585 0.9% 6,585 0.9% $190,128 1.1% $28.87
2017 2 1,210 0.2% 7,795 1.1% $34,030 0.2% $28.12
2018 4 9,759 1.3% 17,554 2.4% $266,206 1.5% $27.28
2019 12 47,933 6.6% 65,487 9.0% $1,537,433 8.9% $32.07
2020 11 87,760 12.0% 153,247 21.0% $2,574,686 14.8% $29.34
2021 11 95,716 13.1% 248,963 34.1% $2,656,373 15.3% $27.75
2022 15 93,638 12.8% 342,601 47.0% $2,743,406 15.8% $29.30
2023 2 10,067 1.4% 352,668 48.3% $397,757 2.3% $39.51
2024 6 35,965 4.9% 388,633 53.3% $1,087,308 6.3% $30.23
2025 8 104,925 14.4% 493,558 67.7% $2,630,978 15.1% $25.07
2026 2 26,274 3.6% 519,832 71.3% $658,834 3.8% $25.08
2027 3 29,925 4.1% 549,757 75.4% $896,780 5.2% $29.97
Thereafter 4 73,654 10.1% 623,411 85.5% $1,695,120 9.8% $23.01
Amenity(3) 3 46,557 6.4% 669,968 91.8% $0 0.0% $0.00
Vacant 0 59,548 8.2% 729,516 100.0% $0 0.0% $0.00
Total/Weighted Average(4) 86 729,516 100.0%     $17,369,038 100.0% $27.86

 

(1)Information obtained from the underwritten rent roll and includes rent steps through October 2018.

(2)Certain tenants may have lease termination or contraction options that are exercisable prior to the originally stated expiration date of the subject lease and that are not considered in the Lease Expiration Schedule.

(3)Amenity space includes a 34,707 square foot fitness facility, a 10,388 square foot hotel ballroom and a 1,462 square foot management office.

(4)Weighted Average Annual U/W Base Rent PSF excludes Amenity and Vacant space.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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The following table presents historical occupancy percentages at the Headquarters Plaza Office/Retail Property:

 

Historical Occupancy(1)

 

12/31/2013(2)

 

12/31/2014(2)

 

12/31/2015(2)

 

12/31/2016(2) 

 

8/1/2017(3) 

86.2%  89.3%  90.8%  91.3%  91.8%

 

(1)Figures represent occupancy statistics for the Headquarters Plaza Office/Retail Property only.

(2)Information obtained from the borrower and reflects average yearly occupancy.

(3)Information obtained from the underwritten rent roll.

 

The following table presents certain information relating to comparable office leases to the Headquarters Plaza Office/Retail Property:

 

Comparable Office Leases(1)

 

Property Name/Location Year Built Stories Total GLA (SF) Distance from Subject Tenant Name Lease Date/Term Lease Area (SF) Annual Base Rent PSF Lease Type

Mount Kemble Corporate
Center (Building B) /

360 Mount Kemble
Avenue,

Morristown, NJ

2001 3 117,000 2.9 miles NFP Property & Casualty Dec 2016 / 7.3 Yrs 3,884 $25.25 Modified Gross
                   

Mount Kemble Corporate
Center (Building B) /

360 Mount Kemble Ave,

Morristown, NJ

2001 3 117,000 2.9 miles Grunethal USA, Inc Mar 2015 /  5.0 Yrs 9,000 $24.00 Modified Gross
                   

67 Park Place East

Morristown, NJ

1973 10 145,019 0.4 miles Omni Active Health Inc Sep 2016 / 5.0 Yrs 7,176 $33.50 Modified Gross
                   

1200 Mt. Kemble
Avenue, Morristown, NJ

1981 3 106,000 5.4 miles Glenmede Trust Company Aug 2016 /  5.6 Yrs 5,499 $27.50 Modified Gross
                   

Washington Office
Center

44 Whippany Rd,
Morristown, NJ

1984 3 220,160 2.1 miles Meridian Capital Partners Jul 2016 / 2.0 Yrs 1,746 $25.00 Modified Gross
                   

60 Columbia Tpke

Morristown, NJ

1980 3 75,450 2.6 miles Assistance in Marketing Inc Dec 2015 / 3.3 Yrs 6,732 $25.00 Modified Gross

 

(1)Information obtained from the appraisal.

 

The Hyatt Regency at Headquarters Plaza

 

The Hyatt Regency at Headquarters Plaza is a 256-room, four-star full service hotel property built in 1993 and located just off the Morristown ”Green”, a landscaped park quadrangle in the Morristown central business district. The Hyatt Regency at Headquarters Plaza has been managed by the Hyatt Hotel Group since 2004. Since 2012, the hotel has operated at an average occupancy of 88.6% never falling below 87.8%, and has been ranked number one in terms of occupancy and RevPAR in its competitive set over that period. According to the sponsors, The Hyatt Regency at Headquarters Plaza placed in the top five in occupancy in the chain for each of 2015 and 2016.

 

The Hyatt Regency at Headquarters Plaza is comprised of 98 standard king guestrooms, 108 standard double-double guest rooms, 48 studio suites and two premium suites. The rooms include hard and soft goods including drapes, bedding, tables, wallpaper, wall-prints, chairs, tables and 55”-65” flat panel televisions. The furnishings include armoires and dressers, chairs, couches and lighting. Hotel amenities include a 130 seat restaurant known as the Eclectic Grill, a lounge and terrace serving light fare and signature drinks, a coffee bar and approximately 36,000 square feet of conference and meeting space consisting of three ballrooms, 32 breakout rooms, an executive boardroom and a conference center located on the lobby level.

 

According to the appraisal, the market segmentation at the Hyatt Regency at Headquarters Plaza is 50.0% corporate individuals, 25.0% group, 15.0% leisure and 10.0% airline. Corporate demand is driven by a variety of pharmaceutical businesses in the area and other fortune 500 companies such as Honeywell, Exxon, GAF, AT&T and others that have a significant presence in the area. Additionally, Morristown New Jersey is home to several office parks and has a large hospital in its downtown which also provides demand for the hotels in the area.

 

The Hyatt Regency at Headquarters Plaza is subject to a management agreement with Hyatt Corporation dated June 16, 2004 that expires on November 20, 2020. The borrowers will be required to deposit 115% of any property improvement plan (“PIP”) costs (in excess of $500,000, and which costs will be exclusive of: (i) the cost of any PIP work which is duplicative of any FF&E approved by the lender for which adequate FF&E reserve funds are being held by the lender and (ii) provided that certain conditions set forth in the loan documents are satisfied as of the applicable date of determination, the amount being held in reserve by any Hyatt

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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Corporation (or any replacement franchisor employed in accordance with the terms of the loan documents) which is available and reasonably anticipated to be used for the PIP work) into a PIP reserve account in connection with the renewal of the management agreement, the execution of a new franchise or management agreement or otherwise (see “Escrows” below). Additionally, the borrower sponsors have invested approximately $16.7 million on hotel improvements between 2005 and 2016, including $7.0 million of room upgrades in 2009.

 

The following table presents certain information relating to the Hyatt Regency at Headquarters Plaza competitive set:

 

Subject and Market Historical Occupancy, ADR and RevPAR(1)

 

 

 

Competitive Set

 

Hyatt Regency at Headquarters
Plaza

 

Penetration Factor

 
Year

  Occupancy (2) 

ADR(2) 

 

RevPAR(2) 

 

Occupancy(3)

 

ADR(3) 

 

RevPAR(3)

 

Occupancy(4) 

 

ADR(4) 

 

RevPAR(4)

 
12/31/2014  69.2%  $159.17  $110.22  90.2%  $158.18  $142.76  130.3%  99.4%  129.5%  
12/31/2015  67.8%  $163.70  $111.04  87.9%  $169.65  $149.05  129.5%  103.6%  134.2%  
12/31/2016  71.0%  $166.54  $118.18  88.4%  $167.26  $147.94  124.6%  100.4%  125.2%  
8/31/2017 TTM  70.6%(5)  $166.68(5)  $117.74(5)  88.8%  $167.87  $149.11  125.8%  100.7%  126.6%  

 

(1)The variances between the underwriting, the hospitality research reports and the above table with respect to Occupancy, ADR and RevPAR for the Hyatt Regency at Headquarters Plaza are attributable to variances in reporting methodologies and/or timing differences.

(2)Information obtained from third party hospitality research reports and weighted on available rooms and occupied rooms, as applicable.

(3)Information obtained from the borrowers.

(4)Penetration Factor figures are calculated based on operating statements provided by the borrowers and competitive set data provided by third party hospitality research reports. Portfolio level figures are weighted based on total room count.

(5)Figures reflect competitive set statistics for the trailing twelve month period ending July 2017.

 

According to the third party information above, the Hyatt Regency at Headquarters Plaza outperformed its competitive set in terms of occupancy, ADR and RevPAR. Per the appraisal, the Hyatt Regency at Headquarters Plaza is the only competitor within walking distance of the downtown Morristown center and the New Jersey Transit, which provides direct access to Newark, New Jersey and New York City. Additionally, the Hyatt Regency at Headquarters Plaza is qualified by airlines as a “downtown” property; therefore it is able to obtain airline contractual revenue. According to the appraisal, there are currently no new hotels proposed for the market.

 

Operating History and Underwritten Net Cash Flow. The following tables present certain information relating to the historical operating performance and the underwritten net cash flow at the Headquarters Plaza Property:

 

Cash Flow Analysis

 

    2014   2015   2016   TTM
 8/31/2017
  U/W   % of U/W
Effective
Gross Income
  U/W $ per SF(1)
Base Rent(2)   $15,256,904   $16,555,502   $16,578,803   $16,969,331   $16,869,472   93.4%   $23.12
Grossed Up Vacant Space(2)   0   0   0   0   1,955,380   10.8   2.68
Rent Steps(2)(3)   0   0   0   0   499,566   2.8   0.68
Total Reimbursables(2)   466,838   477,993   661,301   668,622   391,122   2.2   0.54
Other Income(2) (4)   191,720   174,862   191,433   332,122   305,387   1.7   0.42
Less Vacancy & Credit Loss(2)   0   0   0   0   (1,955,380)(5)   (10.8)   (2.68)
Effective Gross Income(2)   $15,915,462   $17,208,357   $17,431,537   $17,970,075   18,065,547   100.0%   $24.76
                             
Total Operating Expenses(2)   $7,589,741   $7,757,468   $7,635,937   $7,535,179   $7,960,623   44.1%   $10.91
                             
Net Operating Income(2)   $8,325,721   $9,450,889   $9,795,600   $10,434,896   $10,104,924   55.9%   $13.85
TI/LC(2)   0   0   0   0   1,195,318   6.6   1.64
Capital Expenditures(2)   0   0   0   0   145,903   0.8   0.20
Net Cash Flow(2)   $8,325,721   $9,450,889   $9,795,600   $10,434,896   $8,763,702   48.5%   $12.01
                             
Hotel Net Cash Flow(6)   $5,996,876   $6,314,528   $6,019,718   $6,216,483   5,976,717        
                             
Total Net Cash Flow   $14,322,597   $15,765,417   $15,815,318   $16,651,379   $14,740,419        
                             
NOI DSCR(7)   2.29x   2.51x   2.52x   2.64x   2.56x        
NCF DSCR(7)   2.16x   2.38x   2.39x   2.51x   2.23x        
NOI DY(7)   10.1%   11.1%   11.1%   11.7%   11.3%        
NCF DY(7)   9.5%   10.5%   10.5%   11.1%   9.8%        

(1)U/W $ per SF is calculated using the Headquarters Plaza Office/Retail Property square footage as the denominator.

(2)Represents revenues and expenses generated by the Headquarters Plaza Office/Retail Property.

(3)Rent Steps includes tenant rent steps through October 2018.

(4)Other Income consists of administrative fees on security, garage & parking income and other miscellaneous income.

(5)The underwritten economic vacancy is 9.9%. Headquarters Plaza Office/Retail Property was 91.8% physically occupied as of August 1, 2017.

(6)Refer to the “Cash Flow Analysis (Hyatt Regency at Headquarters Plaza only)” table below.

(7)Debt service coverage ratios and debt yields are based on the Headquarters Plaza Whole Loan and the combined Net Operating Income and Net Cash Flow for the Headquarters Plaza Office/Retail Property and the Hyatt Regency at Headquarters Plaza.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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Cash Flow Analysis (Hyatt Regency at Headquarters Plaza only)

 

   2014  2015  2016  TTM
8/31/2017
  U/W  % of
U/W Total Revenue
  U/W $ per Room  
Occupancy  90.2%  87.9%  88.4%  88.8%  88.8%        
ADR  $158.18  $169.65  $167.26  $167.87  $167.87        
RevPAR  $142.76  $149.05  $147.94  $149.11  $149.11        
                        
Room Revenue  $13,339,340  $13,927,168  $13,861,052  $13,933,021  $13,933,021  64.7%  $54,426  
F&B Revenue  7,583,231  7,509,492  7,352,992  7,305,021  7,305,021  33.9  28,535  
Other Revenue  351,323  349,333  391,072  302,796  302,796  1.4  1,183  
Total Revenue  $21,273,894  $21,785,993  $21,605,116  $21,540,838  $21,540,838  100.0%  $84,144  
                        
Total Departmental Expenses  7,604,101  7,550,672  7,278,958  7,082,880  7,082,880  32.9  27,668  
Gross Operating Profit  $13,669,793  $14,235,321  $14,326,158  $14,457,958  $14,457,958  67.1%  $56,476  
                        
Total Undistributed Expenses  6,029,120  6,215,552  6,622,945  6,750,190  6,750,190  31.3  26,368  
Profit Before Fixed Charges  $7,640,673  $8,019,769  $7,703,213  $7,707,768  $7,707,768  35.8%  $30,108  
                        
Total Fixed Charges  810,330  854,145  838,870  648,135  869,418  4.0  3,396  
                        
Net Operating Income  $6,830,343  $7,165,624  $6,864,343  $7,059,633  $6,838,350  31.7%  $26,712  
FF&E  833,467  851,096  844,625  843,150  861,634  4.0  3,366  
Net Cash Flow  $5,996,876  $6,314,528  $6,019,718  $6,216,483  $5,976,717  27.7%  $23,347  

  

Appraisal. As of the appraisal valuation date of August 22, 2017, the Headquarters Plaza Office/Retail Property had an “as-is” appraised value of $160,000,000. As of the appraisal valuation date of August 22, 2017, the Hyatt Regency at Headquarters Plaza had an “as-is” appraised value of $79,000,000. No value was appointed to the Residential Parcel (defined below).

 

Environmental Matters. According to a Phase I environmental site assessment dated September 15, 2017, there was no evidence of any recognized environmental conditions at the Headquarters Plaza Property.

 

Market Overview and Competition. The Headquarters Plaza Property is located in Morris County within the central portion of northern New Jersey. According to the appraisal, the 2016 population and average household income for Morris County is 501,318 and $138,489, respectively. According to the appraisal, the northern and central New Jersey region has an extensive transportation network, as numerous destinations are easily accessible via major highways. Additionally and according to the appraisal, the northern and central Jersey region has good accessibility to public transportation. According to the appraisal, the Headquarters Plaza Property occupies a prominent location adjacent to “The Green” in downtown Morristown along Speedwell Avenue, within a mile of Interstate 287 and Route 24, and about 30 miles northwest of New York City. Additionally, the Headquarters Plaza Property is situated close to express trains (0.5 miles) to New York City, Morristown Airport (3.4 miles) and Newark Liberty International Airport (21.7 miles).

 

The Headquarters Plaza Property is the largest development proximate to The Green and it serves as the anchor commercial development in downtown Morristown. It is situated on a 10.4-acre site and offers amenities such as onsite property management, onsite garage parking, office space with concierge service, a fitness club, a movie theater, onsite daycare, several restaurants, laundry service and various retail mall stores. Per the appraisal, the Morris County court is also located south of the Headquarters Plaza Property and serves as a draw for office space for attorneys and other legal professionals. Additionally and according to the appraisal, there are numerous restaurants in the Morristown downtown area that cater to professionals and serve as a draw to the area. Land uses in the immediate area consist predominantly of residential and office uses with a number of multifamily developments a few miles north of the Headquarters Plaza Property. The neighborhood also provides convenient access to public transportation such as NJ Transit bus and rail stations.

 

According to the appraisal, the total estimated 2017 population within a one-, three- and five-mile radius is 19,636, 55,937 and 119,966, respectively. The total estimated 2017 average household income within a one-, three- and five-mile radius is $105,861, 153,576 and $162,084, respectively. According to a third party report, the Headquarters Plaza Property is located in the Morristown Region office submarket of northern New Jersey. The submarket is comprised of over 15.2 million square feet of inventory with a 22.6% vacancy rate and asking rent of $29.04/SF. According to the appraisal, there are 27 comparable properties, ranging in size from approximately 76,000 SF to 900,000 SF, near the Headquarters Plaza Property. Per the appraisal, the reported comparable rents ranged from $17.95/SF to $38.38/SF with an average of $27.39/SF. The reported vacancies ranged from 0.0% to 53.0% with an average of 7.0%. Currently there are no new office projects in development in the Headquarters Plaza Property’s competitive market.

 

The Hyatt Regency at Headquarters Plaza is part of the Newark area lodging market. According to the appraisal, the local market trends are positive. Per the appraisal, the Hyatt Regency at Headquarters Plaza is classified as an upscale full service hotel that is a four-star rated property. Hotel development in the area consists of a variety of full and limited service properties spread out around

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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major transportation routes. According to the appraisal, the Hyatt Regency at Headquarters Plaza benefits from major corporate demand as fortune 500 companies including Exxon, GAF and AT&T have a significant presence in the area. As the economy has gained strength and momentum after the 2009 recession, the corporate segment has strengthened which is displayed in the improved performance of the competitive set.

 

The Borrower. The borrowers for the Headquarters Plaza Whole Loan are Second Roc-Jersey Associates L.L.C. and Fifth Roc-Jersey Associates L.L.C., both Delaware limited liability companies and special purpose entities, each with two independent directors. Legal counsel to the borrowers delivered a non-consolidation opinion in connection with the origination of the Headquarters Plaza Whole Loan. BCK Realty, LLC, and four Robert S. Olnick Trusts for the benefit of Allison Rubler, Eve Lateiner, Meredith Verona and Robert Lateiner, respectively, are the guarantors of certain nonrecourse carveouts under the Headquarters Plaza Whole Loan. The borrowers are a joint venture between the Fisher Organization (“Fisher”) and the Olnick Organization (“Olnick”).

 

The Borrower Sponsors. The borrower sponsors are Brian Fisher and Seth Schochet, representatives of Fisher and Olnick, respectively. Fisher and Olnick have a combined track record of more than 120 years of developing, constructing, owning and managing commercial real estate. According to the borrower sponsors, they are long term owners, having owned and managed most of their portfolios for multiple decades.

 

Fisher is a diversified real estate development and management company founded by Lester Fisher. According to Fisher, in the past decade, Fisher has executed 3,500,000 square feet of new construction development and approximately 2,000,000 square feet of tenant installations. In addition to residential and commercial development, Fisher is involved in other aspects of property management, including maintenance, leasing, tenant relations and finance.

 

Olnick is a privately held New-York-based corporation and has been actively involved in the construction, ownership, management and financing of real estate projects for over 60 years. In 1946, founder Robert S. Olnick pioneered the development of residential housing in the Riverdale section of New York City. The borrower sponsors have indicated that in the five decades that followed, Olnick built thousands of New York City apartments, millions of square feet of commercial space, and several hotels.

 

Escrows. The loan documents provide for upfront reserves in the amount of $1,437,481 for outstanding tenant improvements and leasing commissions, $1,500,000 for plaza development improvements related to an agreement signed by the ground lessor under the HQP Borrower Ground Lease (see “Ground Lease” section below), a borrower affiliate and the Municipality of Morristown, $603,660 for real estate taxes, $284,728 for outstanding free rent associated with five tenants and $73,255 for deferred maintenance. Additionally, the borrowers will be required to deposit 115% of any property improvement plan (“PIP”) costs (only required in the event the PIP costs are in excess of $500,000, and which costs will be exclusive of: (i) the cost of any PIP work which is duplicative of any FF&E approved by the lender for which adequate FF&E reserve funds are being held by the lender and (ii) provided that certain conditions set forth in the loan documents are satisfied as of the applicable date of determination, the amount being held in reserve by any Hyatt Corporation (or any replacement franchisor employed in accordance with the terms of the loan documents) which is available and reasonably anticipated to be used for the PIP work) into a PIP reserve account in connection with the renewal of the management agreement, the execution of a new franchise or management agreement or otherwise. All or a portion of the required PIP deposit may, at the borrowers’ request, be made from excess cash flow on deposit in the excess cash flow reserve (which is funded with all excess cash flow from the Headquarters Plaza Property during the continuance of a Trigger Period). Alternatively, the borrowers may provide a letter of credit in lieu of such cash deposit in an amount equal to the cash deposit that would have been required.

 

The loan documents also provide for ongoing monthly reserves of $201,220 for real estate taxes, $15,843 (approximately $0.26 per Headquarters Plaza Office/Retail Property square foot annually) for replacement reserves, $125,000 (approximately $2.06 per Headquarters Plaza Office/Retail Property square foot annually) for tenant improvements and leasing commissions (subject to a cap of $6,000,000) and an amount equal to the greater of (i) one-twelfth of 4% of hotel-related gross revenues and (ii) the amount of the deposit (if any) then required by the franchisor on account of FF&E under the franchise agreement, for FF&E expenses. The loan documents do not require monthly reserves for insurance premiums as long as the Headquarters Plaza Property is insured under an acceptable blanket insurance policy. Solely with respect to the taxes, insurance premiums and FF&E relating to the hotel property, the borrowers will not be required to make monthly tax and insurance reserve deposits to the extent that the Reserve Waiver Conditions (as defined below) are satisfied.

 

“Reserve Waiver Conditions” means, among other conditions in the loan documents, (i) no event of default has occurred and is continuing, (ii), no monetary or material non-monetary default by franchisor has occurred under the franchise agreement, (iii) the franchisor continues to collect the amounts, and to make the payments and perform the obligations required under the franchise agreement, in each case, relating to the obligations and liabilities for which the applicable reserve account was established and (iv) no Franchise Agreement Trigger Period (as defined below) has occurred and is continuing.

 

Lockbox and Cash Management. The Headquarters Plaza Whole Loan is structured with a hard lockbox and springing cash management. The borrowers were required at origination to deliver letters to (i) all tenants at the Headquarters Plaza Property directing them to pay all rents directly into a lender-controlled lockbox account (provided that, the borrowers were not required to send direction letters to hotel tenants if certain franchise agreement conditions were satisfied, unless the applicable franchise agreement permitted hotel tenants to directly deposit their rental payments into the lender-controlled lockbox account) and (ii) with respect to the Hyatt Regency at Headquarters Plaza, solely to the extent that certain franchise agreement conditions were not satisfied, to each of the credit card companies with which borrowers have entered into credit card agreements. All funds received by the borrowers or managers are required to be immediately deposited in the lockbox account following receipt (except, so long as certain franchise agreement conditions are satisfied, the hotel manager may retain such revenues from the Hyatt Regency at Headquarters Plaza Property), unless a Trigger Period (as defined below) has occurred, in which event such funds are required to be swept on each monthly payment date into the cash management account controlled by the lender for payment of, among other

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

18 

 

 

HEADQUARTERS PLAZA

 

things, debt service, monthly escrows and operating expenses with all excess cash flow to be deposited in an excess cash flow reserve to be held as additional security for the Headquarters Plaza Whole Loan.

 

A “Trigger Period” will commence upon the existence of (i) the occurrence and continuance of an event of default; (ii) the existence of a DSCR Trigger Period (as defined below); (iii) the existence of a Franchise Agreement Trigger Period (as defined below) and (iv) the existence of a Franchise Renewal Trigger Period (as defined below).

 

A “DSCR Trigger Period” occurs when the debt service coverage ratio as calculated in the loan documents is less than 1.30x and will expire when the debt service coverage ratio as calculated in the loan document is greater than 1.35x for two consecutive calendar quarters. A DSCR Trigger Period will not be deemed to exist if the borrowers have (i) deposited cash into an account with the lender as additional collateral for the Headquarters Plaza Whole Loan or (ii) delivered to the lender a letter of credit, in each case in an amount deemed sufficient such that if added to the underwritten cash flow the debt service coverage ratio would be equal to or greater than 1.35x.

 

A “Franchise Agreement Trigger Period” will (a) commence upon the first to occur of (i) the occurrence of any monetary or material non-monetary default under the franchise agreement which results in any party to the franchise agreement having a right to terminate the franchise agreement; (ii) the borrowers or franchisor giving notice that it is terminating the franchise agreement prior to its stated expiration date; (iii) any termination or cancelation of the franchise agreement and/or the franchise agreement otherwise failing to be in full force and effect and (iv) any bankruptcy action with respect to the franchisor and (b) expire upon the lender’s receipt of evidence that (i) either (A) the Franchise Agreement Cure Conditions (as defined below) have been satisfied or (B) the Hyatt at Headquarters Plaza is being branded, flagged and operated pursuant to a replacement franchise agreement in accordance with the terms of the loan documents, and (ii) to the extent that a PIP is required in connection with the satisfaction of the requirements of the foregoing clause (b)(i), the borrowers have made the required PIP deposit pursuant to the loan documents (see “Escrows” above).

 

The “Franchise Agreement Cure Conditions” means each of the following: (i) the borrowers have cured all defaults (if any) under the applicable franchise agreement to the satisfaction of the applicable franchisor, (ii) the borrowers and the applicable franchisor have re-affirmed the applicable franchise agreement as being in full force and effect, (iii) with respect to any applicable bankruptcy or insolvency proceedings involving the applicable franchisor and/or franchise agreement (if any), such franchisor is no longer insolvent or subject to any bankruptcy or insolvency proceedings and has affirmed such franchise agreement pursuant to a final, non-appealable order of a court of competent jurisdiction, and (iv) the Headquarters Plaza Property continues to be operated, flagged and branded pursuant to the franchise agreement.

 

A “Franchise Renewal Trigger Period” will have occurred if a Franchise Renewal Event (as defined below) has not occurred on or before the date which is 12 months prior to the expiration of the then applicable term of the franchise agreement.

 

A “Franchise Renewal Event” will have occurred, among other things described in the loan documents, if (i) the term of the related franchise agreement has been extended or a replacement qualified franchise agreement has been entered into, in each case, for a term of at least ten years and (ii) to the extent a PIP is required in connection with the foregoing, the corresponding PIP deposit has been deposited in the PIP reserve account.

 

Property Management. The hotel portion of the Headquarters Plaza Property is managed by Hyatt Corporation. The non-hotel portions of the Headquarters Plaza Property are managed by G&E Real Estate Management Services, Inc. In addition, Olnick-Fisher Development Associates LLC, an affiliate of the borrowers, acts as asset manager for the entire Headquarters Plaza Property.

 

Assumption. The borrowers have, at any time, the right to transfer the Headquarters Plaza Property, provided that certain conditions are satisfied, including: (i) no event of default has occurred and is continuing, (ii) the borrowers have provided the lender with 60 days’ prior written notice, (iii) the proposed transferee is majority owned and controlled by a qualified transferree under the loan documents or has been approved by the lender, (iv) the payment of an assumption fee equal to (x) with respect to the first assumption, 0.5% of the then-outstanding principal balance of the Headquarters Plaza Whole Loan and (y) with respect to the second and each subsequent assumption, 1.0% of the then-outstanding principal balance of the Headquarters Plaza Whole Loan, and (v) the lender has received confirmation from KBRA, Fitch and Moody’s that such assumption will not result in a downgrade of the respective ratings assigned to the Series 2017-C41 certificates and similar confirmations from each rating agency rating any securities backed by any of the Headquarters Plaza Pari Passu Companion Loans.

 

Ground Lease. The Headquarters Plaza Property is subject to two long-term ground leases. The Headquarters Plaza Whole Loan borrowers are the lessees under a long-term ground lease with respect to the Headquarters Plaza Office/Retail Property and the Hyatt Regency at Headquarters Plaza (the “HQP Borrower Ground Lease”), which ground lease has an annual rent of $189,000, expires on November 11, 2074, and has no renewal, extension or termination rights remaining. Additionally, an affiliate of the borrowers is the lessee with respect to an unimproved, non-income producing residential parcel (the “Residential Parcel”) under the other ground lease (the “Residential Parcel Ground Lease”). The ground lessor (also an affiliate of the borrowers) under both the HQP Borrower Ground Lease and the Residential Parcel Ground Lease has granted a fee mortgage in favor of the lender under the Headquarters Plaza Whole Loan. Accordingly, the Headquarters Plaza Whole Loan is secured by (i) the borrowers’ leasehold interests in the Headquarters Plaza Office/Retail Property and the Hyatt Regency at Headquarters Plaza, (ii) the ground lessor’s fee interest in the Headquarters Plaza Office/Retail Property and the Hyatt Regency at Headquarters Plaza, and (iii) the ground lessor’s fee interest in the Residential Parcel. The leasehold interest in the Residential Parcel, however, is not collateral for the Headquarters Plaza Whole Loan. In the event of a partial release of the Residential Parcel, the ground lease structure will terminate and the borrowers will own the Headquarters Plaza Property (or condominium interests in the Headquarters Plaza Property) in fee (see “Partial Release” below).

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

19 

 

 

HEADQUARTERS PLAZA

 

Partial Release. At any time other than the 45 days prior to and following the securitization of the Headquarters Plaza Whole Loan, the borrowers may cause the release of the fee interest in the Residential Parcel from the lien of the Headquarters Plaza Whole Loan, which may be accomplished either by a condominium conversion or a subdivision release. The Residential Parcel was not assigned value in the appraisal or in the underwriting for the Headquarters Plaza Whole Loan.

 

Condominium Conversion. At the election of the borrower, the ground lessor, the ground lessee of the Residential Parcel and/or any other person designated by the ground lessee of the Residential Parcel to be the initial owner of the Residential Parcel (such person, the “Residential Unit Owner”), a condominium conversion may be effectuated at the Headquarters Plaza Property upon the satisfaction of certain conditions set forth in the Headquarters Plaza Whole Loan documents, which include the satisfaction of the REMIC requirements and the delivery of a rating agency confirmation. In addition, the lender has consent rights over the condominium documents, which include all conveyances, bylaws and estoppels required in order to create the condominium regime. Upon the completion of the condominium conversion, the unit(s) consisting of the Residential Parcel would be released from the lien of the Headquarters Plaza Whole Loan, such unit(s) would be conveyed to the Residential Unit Owner and the ground lease structure would terminate, with the borrower owning the condominium interests in the Headquarters Plaza Office/Retail Property unit and the Hyatt Regency at Headquarters Plaza unit. The borrowers are required to maintain control of the condominium board after the condominium conversion, and such control may pass to the lender and/or any successor owner of the Headquarters Plaza Property upon any foreclosure, deed-in-lieu of foreclosure, or any other transfer pursuant to any exercise of remedy under the Headquarters Plaza Whole Loan loan documents.

 

Subdivision Release. Provided a condominium conversion has not taken place, the borrowers may cause the release of the fee interest in the Residential Parcel from the lien of the Headquarters Plaza Whole Loan upon the successful subdivision of the Residential Parcel from the remaining Headquarters Plaza Property and the creation of one or more separate tax lots with respect to the Residential Parcel. In addition, the borrowers must satisfy certain conditions set forth in the Headquarters Plaza Mortgage Loan documents, which include satisfaction of the REMIC requirements. Upon the release of the Residential Parcel, the borrowers will purchase the remaining Headquarters Plaza Property (which remainder would include all of the real property in which the borrowers currently have a leasehold estate) from the ground lessor for $1.00 and the ground lease structure will terminate.

 

Real Estate Substitution. Not permitted.

 

Subordinate and Mezzanine Indebtedness. Not permitted.

 

Terrorism Insurance. The Headquarters Plaza Whole Loan documents require that the “all risk” insurance policy required to be maintained by the borrowers provide coverage for terrorism in an amount equal to the original principal balance of the Headquarters Plaza Whole Loan, with a replacement cost endorsement.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

20 

 

 

Marriott LAX

 

(Graphic) 

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

21 

 

 

Marriott LAX

 

(Graphic) 

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

22 

 

 

No. 2 – Marriott LAX
 
Loan Information   Property Information
Mortgage Loan Seller: Ladder Capital Finance LLC   Single Asset/Portfolio: Single Asset
Credit Assessment (Fitch/KBRA/Moody’s): NR/NR/NR   Property Type: Hospitality
Original Principal Balance(1): $44,450,000   Specific Property Type: Full Service
Cut-off Date Balance(1): $44,057,272   Location: Los Angeles, CA
% of Initial Pool Balance: 5.6%   Size: 1,004 Rooms
Loan Purpose: Refinance   Cut-off Date Balance Per Room(1): $144,578
Borrower Name: XLD LAX Owner, LLC   Year Built/Renovated: 1972/2017
Borrower Sponsor: XLD Group N.A. Real Estate Development, Inc.   Title Vesting: Fee
Mortgage Rate: 5.114%   Property Manager: Marriott Hotel Services, Inc.
Note Date: March 6, 2017   4th Most Recent Occupancy: 86.8% (12/31/2012)
Anticipated Repayment Date: NAP   3rd Most Recent Occupancy (As of): 87.2% (12/31/2013)
Maturity Date: March 6, 2027   2nd Most Recent Occupancy (As of): 88.7% (12/31/2014)
IO Period: None   Most Recent Occupancy (As of): 86.8% (12/31/2015)
Loan Term (Original): 120 months   Current Occupancy (As of)(4): 84.6% (12/31/2016)
Seasoning: 8 months      
Amortization Term (Original): 360 months   Underwriting and Financial Information:
Loan Amortization Type: Amortizing Balloon    
Interest Accrual Method: Actual/360   4th Most Recent NOI (As of): $11,496,681 (12/31/2013)
Call Protection: L(32),D(84),O(4)   3rd Most Recent NOI (As of): $15,005,502 (12/31/2014)
Lockbox Type(2): Hard/Upfront Cash Management   2nd Most Recent NOI (As of): $18,522,050 (12/31/2015)
Additional Debt(1): Yes   Most Recent NOI (As of)(4): $20,201,595 (12/31/2016)
Additional Debt Type(1): Pari Passu      
      U/W Revenues: $72,058,354
      U/W Expenses: $51,979,491
      U/W NOI: $20,078,862
Escrows and Reserves(3):         U/W NCF: $16,475,945
          U/W NOI DSCR(1): 2.10x
Type: Initial Monthly Cap (If Any)   U/W NCF DSCR(1): 1.72x
Taxes $0 Springing NAP   U/W NOI Debt Yield(1): 13.8%
Insurance $0 Springing NAP   U/W NCF Debt Yield(1): 11.4%
FF&E Reserve $0 Springing NAP   Appraised Value(5): $300,800,000
PIP Reserve $12,975,832 $0 NAP   Appraisal Valuation Date(5): February 1, 2018
Seasonality Reserve $0 Springing $475,000   Cut-off Date LTV Ratio(1)(5): 48.3%
Environmental Reserve $50,000 $0 NAP   LTV Ratio at Maturity(1)(5): 40.2%
             
               
(1)See “The Mortgage Loan” section. All statistical information related to balances per room, loan-to-value ratios, debt service coverage ratios and debt yields are based on the Marriott LAX Whole Loan (as defined below).

(2)See “Lockbox and Cash Management” section.

(3)See “Escrows” section.

(4)See “Cash Flow Analysis” section.

(5)The appraiser concluded to an “as-complete” value of $300,800,000 as of February 1, 2018, which assumes the completion of a $46.5 million property improvement plan. The Cut-off Date LTV Ratio and LTV Ratio at Maturity are calculated based on the “as-complete” appraised value. The Cut-off Date LTV Ratio and LTV Ratio at Maturity based on the February 1, 2017 “as-is” appraised value of $257,000,000 are 56.5% and 47.0%, respectively.

 

The Mortgage Loan. The mortgage loan (the “Marriott LAX Mortgage Loan”) is part of a whole loan (the “Marriott LAX Whole Loan”) that is evidenced by three pari passu promissory notes (Notes A-1-A, A-2, and A-3-A) and secured by a first mortgage encumbering the fee interest in a full service hotel located in Los Angeles, California (the “Marriott LAX Property”). The Marriott LAX Whole Loan was originated on March 6, 2017 by Ladder Capital Finance I LLC and Series TRS of Ladder Capital Finance I LLC. The Marriott LAX Whole Loan had an original principal balance of $146,450,000, has an outstanding principal balance as of the Cut-off Date of $145,156,075 and accrues interest at an interest rate of 5.114% per annum. The Marriott LAX Whole Loan had an initial term of 120 months, has a remaining term of 112 months as of the Cut-off Date and requires payments of principal and interest based on a 30-year amortization schedule. The Marriott LAX Whole Loan matures on March 6, 2027.

 

The Marriott LAX Mortgage Loan, which is evidenced by the non-controlling Note A-3-A and will be contributed to the WFCM 2017-C41 Trust, had an original principal balance of $44,450,000 and has an outstanding principal balance as of the Cut-off Date of $44,057,272. The controlling Note A-1-A was contributed to the CGCMT 2017-C4 Trust and had an original principal balance of $40,000,000. The non-controlling Note A-2 was contributed to the LCCM 2017-LC26 Trust and had an original principal balance of $62,000,000. See “Description of the Mortgage Pool-The Whole Loans” in the Preliminary Prospectus.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

23 

 

 

Marriott LAX

 

Pari Passu Note Summary

 

  Original Balance   Note Holder Controlling Piece
Note A-1-A $40,000,000   CGCMT 2017-C4 Yes
Note A-2 $62,000,000   LCCM 2017-LC26 No
Note A-3-A $44,450,000   WFCM 2017-C41 No
Total $146,450,000      

 

Following the lockout period, the borrower has the right to defease the Marriott LAX Whole Loan in whole, but not in part, on any payment date on or after December 6, 2019 and before December 6, 2026. In addition, the Marriott LAX Whole Loan is prepayable without penalty on or after December 6, 2026.

 

Sources and Uses

 

Sources         Uses      
Original whole loan amount $146,450,000   100.0%   Loan payoff $82,184,809    56.1%
          Reserves 13,025,832    8.9
          Closing costs 4,147,916    2.8
          Return of Equity 47,091,443    32.2 
Total Sources $146,450,000   100.0%   Total Uses $146,450,000   100.0%

 

The Property. The Marriott LAX Property is a full service hotel with 1,004 guestrooms located on West Century Boulevard in Los Angeles, California. The Marriott LAX Property is situated on a 10.7-acre parcel located approximately 0.4 miles east of the Los Angeles International Airport (“LAX Airport”). The Marriott LAX Property was built in 1972 and is spread across three structures totaling 665,000 square feet. The Marriott LAX Property is currently undergoing a $46.5 million property improvement plan (“PIP”) that is expected to be completed in 2017. The Marriott LAX Property features three restaurants, a bar, a lobby lounge, a concierge club, a gift shop, an outdoor pool and spa, a fitness center, a FedEx Business Center, a Starbucks, a Hertz desk and 49,000 square feet of meeting space. The Marriott LAX Property contains 356 standard king guestrooms, 429 double/double rooms, 121 king suites, 46 standard queens, 33 king ADA rooms, 14 double/double ADA rooms and 5 hospitality suites. The Marriott LAX Property offers shuttle service to and from all LAX Airport terminals and offers nightly, weekly, or monthly parking with 1,345 surface and subterranean garage parking spaces, accounting for a parking ratio of 1.3 spaces per room. According to the appraisal, the demand segmentation for the Marriott LAX Property is 59% transient, 25% contract, and 17% group. The Marriott LAX Property operates under a hotel operating agreement with Marriott Hotel Services, Inc. which expires on September 28, 2040 with two, 10-year extension options.

 

Marriott LAX PIP Budget. The following table identifies the budgeted amounts associated with aspects of the PIP renovation for the Marriott LAX Property:

 

PIP Budget(1)

 

Line Item   Total Cost   Cost Per Room
Guestrooms   $28,306,000   $28,193   
M Club Lounge   1,500,000    1,494
Lobby/Great Room   6,708,000    6,681
LCD TV Purchase   1,523,000    1,517
Miscellaneous Items   4,444,000    4,426
Additional Projects   3,996,000    3,980
Total Costs   $46,477,000   $46,292   
(1)As of September 21, 2017, the PIP renovation was approximately 81.1% complete. According to the borrower, the remaining portion of the PIP renovation is expected to be completed in 2017.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

24 

 

 

Marriott LAX

 

Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and the underwritten net cash flow at the Marriott LAX Property:

 

Cash Flow Analysis

 

  2013 2014 2015 2016 U/W % of U/W Total Revenue U/W $ per Room
Occupancy(1) 87.2% 88.7% 86.8% 84.6% 84.6%    
ADR(1) $113.23 $130.38 $147.85 $159.54 $159.54    
RevPAR(1) $98.73 $115.67 $128.33 $135.04 $135.04    
               
Room Revenue $36,181,732 $42,389,282 $47,029,458 $49,621,295 $49,485,718 68.7% $49,289
F&B Revenue 17,027,033 18,153,656 16,660,724 17,382,768 17,335,274 24.1 17,266
Other Revenue

5,794,777

6,082,666

5,301,256

5,251,710

5,237,362

7.3

5,216

Total Revenue $59,003,542 $66,625,604 $68,991,437 $72,255,774 $72,058,354 100.0% $71,771
               
Total Department Expenses

30,517,497

32,803,770

31,683,648

31,657,458

31,570,962

43.8

31,445

Gross Operating Profit $28,486,045 $33,821,835 $37,307,788 $40,598,316 $40,487,392 56.2% $40,326
               
 Total Undistributed Expenses

14,319,647

15,948,430

16,207,792

17,783,601

17,735,012

24.6

17,664

 Profit Before Fixed Charges $14,166,399 $17,873,405 $21,099,996 $22,814,715 $22,752,380 31.6% $22,662
               
Total Fixed Charges

2,669,717

2,867,903

2,577,946

2,613,120

2,673,518

3.7

2,663

               
Net Operating Income(1)(2) $11,496,681 $15,005,502 $18,522,050 $20,201,595 $20,078,862 27.9% $19,999
FF&E

0

0

0

0

3,602,918

5.0

3,589

 Net Cash Flow $11,496,681 $15,005,502 $18,522,050 $20,201,595 $16,475,945 22.9% $16,410
               
NOI DSCR(3) 1.20x 1.57x 1.94x 2.11x 2.10x    
NCF DSCR(3) 1.20x 1.57x 1.94x 2.11x 1.72x    
NOI DY(3) 7.9% 10.3% 12.8% 13.9% 13.8%    
NCF DY(3) 7.9% 10.3% 12.8% 13.9% 11.4%    
(1)Based on the TTM June 2017 third party hospitality research report, the Occupancy, ADR and RevPAR at the Marriott LAX Property were 74.8%, $159.38 and $119.29, respectively. The TTM June 2017 Net Operating Income was $14,063,225. The decreases in Occupancy, ADR, RevPAR and Net Operating Income are primarily due to the ongoing $46.5 million PIP which is expected to be completed by the end of 2017.

(2)Net Operating Income has increased from 2013 to 2016 due to an increase in ADR at the Marriott LAX Property.

(3)DSCRs and DYs are based on the Marriott LAX Whole Loan.

 

Appraisal. As of the appraisal valuation date of February 1, 2018, the Marriott LAX Property had an “as-complete” appraised value of $300,800,000 assuming completion of the PIP. In addition, the appraiser concluded to an “as-is” appraised value of $257,000,000 as of February 1, 2017.

 

Environmental Matters. According to a Phase I environmental assessment dated February 14, 2017, the following recognized environmental conditions exist at the Marriott LAX Property: the existence of groundwater contamination (likely from an off-site source) and soil contamination (potentially from historical uses at the Marriott LAX Property) with the potential for vapor intrusion at the hotel. Post loan closing, the borrower completed a vapor intrusion study, which did not require a vapor mitigation system to be installed. In addition, the borrower provided the lender with a secured creditor environmental insurance policy from Steadfast Insurance Company with a $3,000,000 limit (per occurrence and in the aggregate), $25,000 deductible and 10-year term with a 3-year reporting tail.

 

Market Overview and Competition. The Marriott LAX Property is located in Los Angeles, California, at the northeast corner of Century Boulevard and Airport Boulevard, located 0.4 miles east of the LAX Airport. The LAX Airport reported 80,921,527 passengers in 2016, which was an 8% increase year over year and ranks 5th in the world and 4th in the United States in terms of passengers accommodated. In addition, the LAX Airport handles 71% of the passengers, 75% of the air cargo and 95% of the international passengers and cargo traffic in the six-county southern California region. The LAX Airport is undergoing a $14 billion renovation and rebuild project of the entire airport, which is expected to be completed by 2023 while over 20 projects in development include terminal improvements and upgrades, roadway improvements, runway and taxiway rehabilitation and improvement, and utilities and infrastructure components. The immediate area is characterized by airport-related uses including hotels, car rental facilities, airline reservation centers, distribution warehouses, air freight cargo and commercial and office properties. The Marriott LAX Property is located approximately 1.0 mile west of the San Diego Freeway (I-405) and approximately 2.9 miles southwest of Inglewood which is where the Los Angeles Rams and Los Angeles Chargers are building their new stadium. According to a third party market report, the estimated 2016 population within a one-, three-, and five-mile radius of the Marriott LAX Property was 15,644, 240,748 and 649,549, respectively; the estimated 2016 average household income within a one-mile radius was $55,087. A third party hospitality research report identified 5 other hotels within the Marriott LAX Property’s competitive set. Average daily rate for the competitive set has increased from $115.47 for the trailing twelve month period ending December 2014 to $149.00 for the trailing twelve month period ending December 2016, while occupancy decreased, from 89.5% to 83.6% over the same period. As a result, revenue per available room (“RevPAR”) for the competitive set has improved from $103.40 to $124.54 over the same period.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

25 

 

 

Marriott LAX

 

The following table presents certain information relating to the Marriott LAX Property’s competitive set:

 

Subject and Market Historical Occupancy, ADR and RevPAR(1)

 

 

Competitive Set

Marriott LAX

Penetration Factor

Year

Occupancy

ADR

RevPAR

Occupancy

ADR

RevPAR

Occupancy

ADR

RevPAR

TTM 6/30/2017 89.1% $151.51 $135.04 74.8% $159.38 $119.29 84.0% 105.2% 88.3%
TTM 12/31/2016 83.6% $149.00 $124.54 84.6% $159.54 $135.04 101.2% 107.1% 108.4%
TTM 12/31/2015 85.8% $131.64 $112.94 86.8% $147.85 $128.33 101.2% 112.3% 113.6%
TTM 12/31/2014 89.5% $115.47 $103.40 88.7% $130.38 $115.67 99.1% 112.9% 111.9%
(1)Information obtained from a third party hospitality research report dated July 18, 2017. The competitive set includes: Sheraton Hotel Gateway Los Angeles Airport, Crowne Plaza Los Angeles Airport, Hyatt Regency Los Angeles Airport, Hilton Los Angeles Airport and Westin Los Angeles Airport.

 

The Borrower. The borrower is XLD LAX Owner, LLC, a Delaware limited liability company and single purpose entity with two independent directors. Counsel to the borrower delivered a non-consolidation opinion in connection with origination. XLD Group N.A. Real Estate Development, Inc. (“XLD Group”) is the guarantor of certain nonrecourse carveouts under the Marriott LAX Mortgage Loan.

 

The Borrower Sponsor. The borrower sponsor is XLD Group, which was founded by Zhang Jun in 1997. Mr. Jun has been CEO/COO since inception and is also CEO of Shanghai Yudu Real Estate Development Co. The XLD Group is involved in various industries including real estate investment, property development, eco-tourism, home improvement and construction projects, forestry and consulting services. The XLD Group also owns the Torrance Marriott Redondo Beach, which they acquired for $74 million in November 2013. The Torrance Marriott Redondo Beach was its first investment outside of China.

 

Escrows. At loan closing, $12,975,832 was deposited by the borrower into the Marriott LAX FF&E Reserve (defined below) to fully fund the expected costs of the ongoing PIP and $50,000 was deposited by the borrower into an environmental reserve with the lender related to potential vapor intrusion. The loan documents do not require ongoing monthly deposits for tax and insurance reserves as long as Marriott continues to pay taxes and insurance directly. The loan documents do not require ongoing deposits for FF&E reserves as long as Marriott continues to collect 5% of gross revenues on a monthly basis for the replacement of furniture, fixtures and equipment. In the event deposits in the FF&E reserve account are insufficient to pay in full the estimated cost of any required PIP work, the borrower is required to deposit an amount equal to (i) 115% of the estimated cost to complete such PIP work, less (ii) the amounts allocated in the FF&E reserve to complete such work. The Marriott LAX FF&E Reserve is held by the Marriott LAX Manager (defined below) under its management agreement with the borrower. The lender has a security interest in the Marriott LAX FF&E Reserve which it may foreclose upon if the management agreement is no longer in effect.

 

Throughout the term of the Marriott LAX Whole Loan, the borrower is required to make monthly deposits in the seasonality reserve in an amount equal to the lesser of the excess cash flow available after debt service or 20% of the seasonality cap of $475,000. If on the October 6th payment date of each calendar year, the seasonality reserve balance is less than $475,000, all excess cash flow will be swept into that account until the required $475,000 balance is achieved. The borrower may request a redetermination of the need for a seasonality reserve up to two times per calendar year and if the lender determines that a shortfall to pay monthly debt service did not exist during the preceding 12 months, remaining funds in the seasonality reserve will be released to the borrower and no further monthly deposits shall be required.

 

Lockbox and Cash Management. The Marriott LAX Whole Loan requires a lender-controlled lockbox account (the “Marriott LAX Mortgage Loan Lockbox”), which is already in place with upfront cash management. Marriott Hotel Services, Inc. (the “Marriott LAX Manager”), under its management agreement with the borrower, collects all revenues generated by the Marriott LAX Property and pays all property expenses, makes deposits into a reserve held by the Marriott LAX Mortgage Loan Manager (the “Marriott LAX FF&E Reserve”) for FF&E and property improvement plan and pays various fees payable to the Marriott LAX Manager and its affiliates. All excess cash flow after making such payments is required to be directed by the Marriott LAX Manager to the Marriott LAX Mortgage Loan Lockbox. Prior to the occurrence of a Cash Trap Event Period (defined below), all excess cash flow in the Marriott LAX Whole Loan Lockbox after payment of all sums due and payable under the loan documents will be remitted to the borrower. During a Cash Trap Event Period, all excess cash flow in the Marriott LAX Whole Loan Lockbox after payment of all sums due and payable under the loan documents will be retained by the lender as additional collateral.

 

A “Cash Trap Event Period” will commence upon the earlier of (i) the occurrence and continuance of an event of default; (ii) the net cash flow debt service coverage ratio falling below 1.40x; (iii) the delivery of notice by the Marriott LAX Manager of any breach or default by the borrower that, with the passage of time and/or delivery of notice, permits the Marriott LAX Manager to terminate or cancel the hotel management agreement; or (iv) the occurrence of an event of default by the borrower or the Marriott LAX Manager under the hotel management agreement. A Cash Trap Event Period will end, with regard to clause (i), upon the cure of such event of default; with regard to clause (ii), upon the net cash flow debt service coverage ratio being at least 1.40x for two consecutive calendar quarters; with regard to clause (iii), upon receipt of satisfactory evidence that the borrower has cured the default under the hotel management agreement or entered into a replacement hotel management agreement; and with regard to clause (iv), upon either (1) receipt of satisfactory evidence that the hotel management agreement is in full force and effect with no default thereunder or (2) the borrower entering into a replacement hotel management agreement.

 

Property Management. The Marriott LAX Property is managed by Marriott Hotel Services, Inc. [“Marriott LAX Manager”]

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

26 

 

 

Marriott LAX

 

Assumption. The borrower has an unlimited right to transfer the Marriott LAX Property; provided that certain conditions are satisfied, including that (i) no event of default has occurred and is continuing; (ii) the lender reasonably determines that the proposed transferee and guarantor satisfy the lender’s credit review and underwriting standards, taking into consideration the transferee’s experience, financial strength and general business standing; and (iii) the lender has received confirmation from the applicable rating agencies that such assumption will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the Series 2017-C41 Certificates and similar confirmations from each rating agency rating any securities backed by the Marriott LAX companion loans with respect to the ratings of such securities.

 

Partial Release. Not permitted.

 

Real Estate Substitution. Not permitted.

 

Subordinate and Mezzanine Indebtedness. Not permitted.

 

Ground Lease. None.

 

Terrorism Insurance. The loan documents require that the “all risk” insurance policy required to be maintained by the borrower provide coverage for terrorism in an amount equal to the full replacement cost of the Marriott LAX Property. The loan documents also require business interruption insurance covering no less than the 24-month period following the occurrence of a casualty event, together with a 12-month extended period of indemnity.

 

Earthquake Insurance. The loan documents do not require earthquake insurance. The seismic report indicated a probable maximum loss for the entire Marriott LAX Property of 18.0%. The seismic risk assessment report identified a scenario expected loss of 18.0% for the annex building, 24.0% for the tower building, 16.0% for the ballroom building and 14.0% for the subterranean parking garage.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

27 

 

 

MALL OF LOUISIANA

 

 (Graphic)

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

28 

 

 

MALL OF LOUISIANA

 

(Graphic) 

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

29 

 

 

MALL OF LOUISIANA

 

(Graphic) 

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

30 

 

 

MALL OF LOUISIANA

 

 (Graphic)

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

31 

 

 

MALL OF LOUISIANA

 

(Graphic) 

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

32 

 

 

No. 3 – Mall of Louisiana
 
Loan Information   Property Information
Mortgage Loan Seller: Barclays Bank PLC   Single Asset/Portfolio: Single Asset

Credit Assessment

 

(Fitch/KBRA/Moody’s):

 

NR/NR/NR   Property Type: Retail
Original Principal Balance(1): $41,000,000   Specific Property Type: Super Regional Mall
Cut-off Date Balance(1): $41,000,000   Location: Baton Rouge, LA
% of Initial Pool Balance: 5.2%   Size: 776,789 SF
Loan Purpose: Recapitalization   Cut-off Date Balance Per SF(1): $418.39
Borrower Name: Mall of Louisiana, LLC; Mall of Louisiana Land, LLC   Year Built/Renovated: 1997/2008
Sponsor: GGP Real Estate Holding I, Inc.   Title Vesting: Fee
Mortgage Rate: 3.984%   Property Manager: Self-managed
Note Date: July 26, 2017   4th Most Recent Occupancy (As of): 93.9% (12/31/2013)
Anticipated Repayment Date: NAP   3rd Most Recent Occupancy (As of): 96.5% (12/31/2014)
Maturity Date: August 1, 2027   2nd Most Recent Occupancy (As of : 96.6% (12/31/2015)
IO Period: 36 months   Most Recent Occupancy (As of): 94.4% (12/31/2016)
Loan Term (Original): 120 months   Current Occupancy (As of)(3): 91.8% (6/30/2017)
Seasoning: 3 months    
Amortization Term (Original): 360 months   Underwriting and Financial Information:
Loan Amortization Type: Interest-only, Amortizing Balloon      
Interest Accrual Method: Actual/360   4th Most Recent NOI (As of): $33,541,166 (12/31/2014)
Call Protection: L(27),D(89),O(4)   3rd Most Recent NOI (As of): $34,580,536 (12/31/2015)
Lockbox Type: Hard/Springing Cash Management   2nd Most Recent NOI (As of): $35,038,477 (12/31/2016)
Additional Debt(1): Yes   Most Recent NOI (As of): $34,995,624 (TTM 4/30/2017)
Additional Debt Type(1): Pari Passu    
      U/W Revenues: $43,215,234
      U/W Expenses: $7,152,311
      U/W NOI: $36,062,923
          U/W NCF: $34,433,637
          U/W NOI DSCR(1): 1.94x
          U/W NCF DSCR(1): 1.85x
Escrows and Reserves(2):         U/W NOI Debt Yield(1): 11.1%
Type: Initial Monthly Cap (If Any)   U/W NCF Debt Yield(1): 10.6%
Taxes $0 Springing NAP   As-Is Appraised Value: $570,000,000
Insurance $0 Springing NAP   As-Is Appraisal Valuation Date: June 23, 2017
Replacement Reserves $0 Springing $155,169   Cut-off Date LTV Ratio(1): 57.0%
TI/LC Reserve $0 Springing $1,551,690   LTV Ratio at Maturity or ARD(1): 49.3%
             
               
(1)See “The Mortgage Loan” section. All statistical financial information related to balance per square foot, loan-to-value ratios, debt service coverage ratios and debt yields are based on the funded outstanding principal balance of the Mall of Louisiana Whole Loan (as defined below).

(2)See “Escrows” section.

(3)Current Occupancy includes Main Event (6.0% of NRA) which has a signed lease but is not expected to take occupancy until August 2018 and excludes temporary tenants. The Mall of Louisiana Whole Loan guarantor has provided a guaranty for all outstanding landlord obligations and fifteen months of gap rent specific to Main Event.

 

The Mortgage Loan. The mortgage loan (the “Mall of Louisiana Mortgage Loan”) is part of a whole loan (the “Mall of Louisiana Whole Loan”) evidenced by nine pari passu promissory notes, secured by the fee interest in a 776,789 square foot portion of a super-regional mall and adjacent power center in Baton Rouge, Louisiana (the “Mall of Louisiana Property”). The Mall of Louisiana Whole Loan was co-originated on July 26, 2017 by Barclays Bank PLC, Bank of America, N.A. and Citi Real Estate Funding Inc. The Mall of Louisiana Whole Loan had an original principal balance of $325,000,000, has an outstanding principal balance as of the Cut-off Date of $325,000,000 and accrues interest at an interest rate of 3.984% per annum. The Mall of Louisiana Whole Loan had an initial term of 120 months, has a remaining term of 117 months as of the Cut-off Date and requires payments of interest-only until August 1, 2020, after which payments of interest and principal based on a 30-year amortization schedule are required through its term. The Mall of Louisiana Whole Loan matures on August 1, 2027.

 

Note A-5-1, which will be contributed to the WFCM 2017-C41 Trust, has an original principal balance of $41,000,000, has an outstanding principal balance as of the Cut-off Date of $41,000,000 and represents a non-controlling interest in the Mall of Louisiana Whole Loan. The non-controlling Notes A-6 and A-7 had an aggregate original principal balance of $50,000,000, have an aggregate outstanding principal balance as of the Cut-off Date of $50,000,000 and were contributed to the WFCM 2017-C40 Trust. The controlling Note A-1 had an original principal balance of $65,000,000, has an outstanding principal balance as of the Cut-off Date of $65,000,000 and was contributed to the BANK 2017-BNK7 Trust. The non-controlling Notes A-3-1 and A-5-2 had an aggregate original principal balance of $47,000,000, have an aggregate outstanding principal balance as of the Cut-off Date of $47,000,000 and were contributed to the CGCMT 2017-P8 Trust. The non-controlling Note A-2 had an original principal balance of $44,000,000, has

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

33 

 

 

MALL OF LOUISIANA

 

an outstanding principal balance as of the Cut-off Date of $44,000,000 and was contributed to the MSBAM 2017-C34 Trust. The non-controlling Note A-3-2 had an original principal balance of $28,000,000, has an outstanding principal balance as of the Cut-off Date of $28,000,000 and was contributed to the CGCMT 2017-C4 Trust. The non-controlling Note A-4 had an original principal balance of $50,000,000, has an outstanding principal balance as of the Cut-off Date of $50,000,000 and was contributed to the COMM 2017-COR2 Trust. The following table presents a summary of the promissory notes comprising the Mall of Louisiana Whole Loan. The lender provides no assurances that any non-securitized notes will not be split further. See “Description of the Mortgage Pool—The Whole Loans—The Non-Serviced Pari Passu Whole Loans” in the Preliminary Prospectus.

 

Note Summary

 

Notes Original Balance   Note Holder Controlling Interest
A-1 $65,000,000   BANK 2017-BNK7 Yes
A-2 $44,000,000   MSBAM 2017-C34 No
A-3-1 and A-5-2 $47,000,000   CGCMT 2017-P8 No
A-4 $50,000,000   COMM 2017-COR2 No
A-3-2 $28,000,000   CGCMT 2017-C4 No
A-5-1 $41,000,000   WFCM 2017-C41 No
A-6 and A-7 $50,000,000   WFCM 2017-C40 No
Total $325,000,000      

 

Following the lockout period, the Mall of Louisiana Borrower (as defined below) has the right to defease the Mall of Louisiana Whole Loan in whole, but not in part. In addition, the Mall of Louisiana Whole Loan is prepayable without penalty on or after May 1, 2027. The lockout period will expire two years after the closing date of the WFCM 2017-C41 Trust.

 

Sources and Uses

 

Sources         Uses      
Original whole loan amount $325,000,000   100.0%   Closing costs $1,411,459   0.4%
          Return of equity(1) 323,588,541   99.6
Total Sources $325,000,000 100.0%   Total Uses $325,000,000   100.0%

 

(1)The Mall of Louisiana Property was previously unencumbered. The Mall of Louisiana Whole Loan sponsor acquired the Mall of Louisiana Property for approximately $265 million in 2004 and including the $100 million spent on the 2008 property expansion, maintains a cost basis of approximately $413 million.

 

The Property. The Mall of Louisiana Property consists of a two-story enclosed super-regional mall known as the Mall of Louisiana, which contains a total of 1,593,545 square feet and is anchored by non-collateral anchors Dillard’s, Dillard’s Men’s & Home, JC Penney, Macy’s and Sears. The 776,789 square foot portion of the Mall of Louisiana that serves as collateral for the Mall of Louisiana Whole Loan was 91.8% leased as of June 30, 2017 by 135 retail and restaurant tenants. The largest tenants by size are AMC Theatres (9.6% of NRA, 5.9% of underwritten base rent, expiring July 2026), Dick’s Sporting Goods (9.5% of NRA, 3.3% of underwritten base rent, expiring January 2019), Nordstrom Rack (3.9% of NRA, 2.0% of underwritten base rent, expiring September 2025) and Forever 21 (3.5% of NRA, 5.1% of underwritten base rent, expiring January 2019). Main Event (6.0% of NRA, 4.0% of underwritten base rent, expiring June 2028) has a signed lease but is not expected to take occupancy until August 2018. The Mall of Louisiana Whole Loan guarantor has provided a guaranty for all outstanding landlord obligations and fifteen months of gap rent specific to Main Event.

 

No other tenant represents more than 1.9% of NRA or 2.6% of underwritten rent. Other notable tenants at the Mall of Louisiana Property include: Apple, DSW, Lush Handmade Cosmetics, Michael Kors, Pandora, Pottery Barn and Williams Sonoma. The Mall of Louisiana Property features an 11-bay food court and nine full service restaurants. Inline sales at the Mall of Louisiana Property as of May 31, 2017 were approximately $183 million with an average of $585 PSF ($496 PSF excluding Apple), resulting in an occupancy cost of 13.6% (16.1% excluding Apple).

 

The Mall of Louisiana Property was built in 1997 and renovated in 2008 with a $100 million expansion project which added over 330,000 square feet, comprised of a 125,000 square foot lifestyle component, a 140,000 square foot power center and 15-screen stadium seating cinema with IMAX – 3D. The Mall of Louisiana features the only Sears within 40 miles and the only Macy’s, Dick’s Sporting Goods and Nordstrom Rack within 60 miles. The Mall of Louisiana Property includes 8,404 surface parking spaces (approximately 5.3 per 1,000 square feet).

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

34 

 

 

MALL OF LOUISIANA

 

The following table presents certain information relating to the tenancy at the Mall of Louisiana Property:

 

Major Tenants

 

Tenant Name Credit Rating (Fitch/Moody’s/
S&P)(1)
Tenant NRSF(2)(3) % of
NRSF(2)
Annual U/W Base Rent PSF(4) Annual
U/W Base Rent(4)
% of Total Annual U/W Base Rent 5/30/2017 TTM Sales PSF(3) 5/30/2017 TTM Occupancy Cost Lease
Expiration
Date
                   
Major Tenants                  
AMC Theatres B/B1/B+ 74,400 9.6% $23.38 $1,739,472 5.9% $560,583(5) 22.6% 7/21/2026
Forever 21 NR/NR/NR 26,885 3.5% $55.20 $1,483,980 5.1% $183 28.6% 1/31/2019
Main Event(6) NR/NR/NR 46,900 6.0% $25.00 $1,172,500 4.0% N/A N/A 6/30/2028
Dick’s Sporting Goods NR/NR/NR 74,061 9.5% $13.00 $962,793 3.3% $131 11.9% 1/31/2019
Nordstrom Rack BBB+/Baa1/BBB+ 30,002 3.9% $19.25 $577,500 2.0% N/A N/A 9/30/2025
Total Major Tenants 252,248 32.5% $23.53 $5,936,245 20.2%      
                   
Other Tenants   460,886 59.3% $50.73 $23,378,585 79.8%      
Occupied Total   713,134 91.8% $41.11 $29,314,830 100.0%      
                   
Vacant Retail Space   63,655 8.2%            
Collateral Total 776,789 100.0%            
                   
Non-Collateral Anchor Tenants                
Dillard’s / Dillard’s Men’s and Home(7) BBB-/Baa3/BBB- 370,655         $148 N/A N/A
Macy’s BBB/Baa3/BBB- 204,890         $166 N/A N/A
JC Penney B+/B1/B+ 116,568         $309 N/A N/A
Sears / Sears Auto Center CC/Caa2/CCC+ 113,517         $123 N/A N/A
                   

 

(1)Certain ratings are those of the parent company whether or not the parent company guarantees the lease.

(2)Tenant NSRF and % of NSFR are based on the underwritten rent roll.

(3)Tenant NRSF and Sales PSF for the Non-Collateral Anchor Tenants are as of 2016 as reported in the appraisal.

(4)Annual U/W Base Rent includes contractual rent increases through August 2018.

(5)Sales PSF is shown as Sales per screen (15 screens).

(6)Main Event has an executed lease but is not expected to take occupancy until August 2018. The Mall of Louisiana Whole Loan guarantor has provided a guaranty for all outstanding landlord obligations and fifteen months of gap rent specific to Main Event.

(7)Dillard’s / Dillard’s Men’s and Home stores have been combined for this table.

 

The following table presents certain information relating to the historical sales and occupancy costs at the Mall of Louisiana Property:

 

Historical Tenant Sales (PSF) and Occupancy Costs

 

Historical Tenant Sales (PSF)

 

  2014 2015 2016 5/31/2017 TTM 5/31/2017 TTM Occupancy Cost
Total In-Line          
Comparable Sales PSF w/Apple $557 $568 $571 $585 13.6%
Comparable Sales PSF w/o Apple $481 $493 $488 $496 16.1%
           

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

35 

 

 

MALL OF LOUISIANA

 

The following table presents certain information relating to the lease rollover schedule at the Mall of Louisiana Property:

 

Lease Expiration Schedule(1)(2)

 

Year Ending
 December 31,
No. of Leases Expiring Expiring NRSF % of Total NRSF Cumulative Expiring NRSF Cumulative % of Total NRSF Annual
 U/W
Base Rent
% of Total Annual U/W Base Rent Annual
 U/W
Base Rent
 PSF(3)
2017 11 27,967 3.6% 27,967 3.6% $2,330,756 8.0% $83.34
2018 23 82,248 10.6% 110,215 14.2% $3,354,434 11.4% $40.78
2019 17 165,390 21.3% 275,605 35.5% $4,979,391 17.0% $30.11
2020 14 43,189 5.6% 318,794 41.0% $2,581,653 8.8% $59.78
2021 16 60,190 7.7% 378,984 48.8% $2,840,401 9.7% $47.19
2022 10 32,000 4.1% 410,984 52.9% $1,317,420 4.5% $41.17
2023 11 39,863 5.1% 450,847 58.0% $2,544,415 8.7% $63.83
2024 7 32,366 4.2% 483,213 62.2% $1,357,288 4.6% $41.94
2025 9 58,878 7.6% 542,091 69.8% $1,792,374 6.1% $30.44
2026 6 88,514 11.4% 630,605 81.2% $2,885,732 9.8% $32.60
2027 6 11,360 1.5% 641,965 82.6% $1,081,295 3.7% $95.18
Thereafter 5 71,169 9.2% 713,134 91.8% $2,249,670 7.7% $31.61
Vacant 0 63,655 8.2% 776,789 100.0% $0 0.0% $0.00
Total/Wtd. Avg. 135 776,789 100.0%     $29,314,830 100.0% $41.11

 

(1)Information obtained from the underwritten rent roll.

(2)Certain tenants may have lease termination or contraction options that are exercisable prior to the originally stated expiration date of the subject lease and that are not considered in the Lease Expiration Schedule.

(3)Weighted Average Annual U/W Base Rent PSF excludes vacant space.

 

The following table presents historical occupancy percentages at the Mall of Louisiana Property:

 

Historical Occupancy

 

12/31/2014(1)

12/31/2015(1)

12/31/2016(1)

6/30/2017(2)

96.5% 96.6% 94.4% 91.8%

 

(1)Information obtained from the borrower and includes temporary tenants.

(2)Information obtained from the underwritten rent roll and includes Main Event (6.0% of NRA) which has a signed lease but is not expected to take occupancy until August 2018 and excludes temporary tenants.

 

Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and underwritten net cash flow at the Mall of Louisiana Property:

 

Cash Flow Analysis

 

  2014 2015 2016 TTM 4/30/2017 U/W % of U/W Effective Gross Income U/W $ per SF
Base Rent(1) $27,008,300 $27,841,212 $28,448,668 $28,641,673 $30,002,849(2) 69.4% $38.62
Grossed Up Vacant Space 0 0 0 0 3,395,375 7.9 4.37
Total Reimbursables 10,554,704 10,707,373 10,410,615 10,242,969 10,408,010 24.1 13.40
Specialty Leasing 3,089,790 3,046,453 3,044,110 2,921,431 2,956,431 6.8 3.81
Other Income(3) 402,762 384,936 331,822 399,049 384,049 0.9 0.49
Less Vacancy & Credit Loss

0

0

0

0

(3,931,479)

(9.1)

(5.06)

Effective Gross Income $41,055,555 $41,979,974 $42,235,214 $42,205,123 $43,215,234 100.0% $55.63
              0.00
Total Operating Expenses

7,514,389

7,399,438

7,196,737

7,209,498

7,152,311

16.6

9.21

Net Operating Income $33,541,166 $34,580,536 $35,038,477 $34,995,624 $36,062,923 83.4% $46.43
               
 TI/LC 0 0 0 0 1,473,928 3.4 1.90
Capital Expenditures

0

0

0

0

155,358

0.4

0.20

Net Cash Flow $33,541,166 $34,580,536 $35,038,477 $34,995,624 $34,433,637 79.7% $44.33
               
NOI DSCR(4) 1.80x 1.86x 1.89x 1.88x 1.94x    
NCF DSCR(4) 1.80x 1.86x 1.89x 1.88x 1.85x    
NOI DY(4) 10.3% 10.6% 10.8% 10.8% 11.1%    
NCF DY(4) 10.3% 10.6% 10.8% 10.8% 10.6%    
                 
(1)Base Rent includes percentage rent.

(2)U/W Base Rent includes all tenants with signed leases and contractual rent steps through August 2018.

(3)Other Income includes carousel revenue, rebates, and miscellaneous non-rental income.

(4)Based on the Mall of Louisiana Whole Loan amount of $325,000,000.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

36 

 

 

MALL OF LOUISIANA

 

Appraisal. As of the appraisal valuation date of June 23, 2017, the Mall of Louisiana Property had an “as-is” appraised value of $570,000,000.

 

Environmental Matters. According to the Phase I environmental report dated July 24, 2017, there was no evidence of any recognized environmental conditions at the Mall of Louisiana Property.

 

Market Overview and Competition. The Mall of Louisiana Property is located in East Baton Rouge Parish within the greater Baton Rouge metropolitan statistical area (“MSA”) of Louisiana. The Mall of Louisiana Property is located approximately six miles southeast of the Baton Rouge central business district, immediately south of Interstate 10, which connects to Interstate 12 approximately three miles north and connects to the New Orleans metropolitan area to the southeast. East Baton Rouge Parish includes the City of Baton Rouge and other established neighborhoods including Mid-City, the Garden District and Spanish Town, and is home of the capital of Louisiana, Louisiana State University, Southern University and Baton Rouge Community College. There are two hospitals located within approximately two miles of the Mall of Louisiana Property: Baton Rouge General Medical Center and Our Lady of the Lake Regional Medical Center. East Baton Rouge Parish’s top employers include Turner Industries Group LLC (9,875 employees), LSU System (6,250 employees), Performance Contractors (5,500 employees), Our Lady of the Lake Regional Medical Center (4,500 employees) and ExxonMobil (4,214 employees). IBM recently developed a $55 million office and residential building in downtown Baton Rouge and has committed to maintain 800 new jobs through 2023 in downtown Baton Rouge. The Baton Rouge MSA had a 2016 unemployment rate of 5.2% continuing year over year declines since 2011.

 

According to the appraisal, the primary trade area for the Mall of Louisiana Property encompasses an approximately fifteen-mile radius. The estimated 2016 population within a five-, ten- and fifteen-mile radius around the Mall of Louisiana Property was 169,831, 406,664 and 603,052, respectively. The estimated 2016 average household income within the same radii was $90,572, $76,294 and $74,587, respectively. The 2016 fifteen-mile radius population and average household income reflects a compound annual growth rate from 2000-2016 of 1.0% and 2.4%, respectively. Estimated 2016 average retail sales per household within a fifteen-mile radius of the Mall of Louisiana Property was $48,449.

 

The Mall of Louisiana Property is located in the Baton Rouge retail market which had 2017 first quarter-end average asking rents of $11.32 per square foot and a vacancy rate of 4.5%, a 1.3% decrease from the first quarter-end 2016, with only 11,581 square feet vacant in the market. There are currently six lifestyle centers and regional malls in the Baton Rouge retail market with 2017 first quarter-end average asking rents of $19.61 per square foot and a vacancy rate of 8.6%, a 1.7% decrease from the first quarter-end 2016, with 74,739 square feet of positive absorption. There is no proposed new competitive supply noted by the appraisal.

 

The following table presents certain information relating to competitive properties for the Mall of Louisiana Property:

 

Competitive Properties(1)

 

Property / Location Property Type Year Built/ Renovated Total GLA (SF) Est. Sales PSF Occupancy Distance Major/Anchor Tenants

Mall of Louisiana

Baton Rouge, LA

Super Regional Mall 1997/2008 776,789(1) $585(1)(2) 91.8%(1)(3) --

Dillard’s (non-collateral), Dillard’s Men’s (non-collateral), JC Penney (non-collateral), Macy’s (non-collateral), Sears (non-collateral), AMC Theatres

 

Perkins Rowe

Baton Rouge, LA

 

Lifestyle Center 2006/N/A 749,300 $420 85% 1.5 miles

Cinemark, LA Fitness, Barnes & Noble, Fresh Market

 

Town Center at Cedar Lodge Baton Rouge, LA

 

Lifestyle Center 2007/N/A 410,000 $400 98% 5.0 miles Whole Foods, Books A Million, LOFT, Gap

Siegen Lane Marketplace

Baton Rouge, LA

 

Power Center 1994/2002 462,150 N/A 100% 3.0 miles Walmart, Lowes, Bed Bath Beyond, TJMaxx

Cortana Mall(4)

Baton Rouge, LA

 

Super Regional Mall 1976/2010 1,360,000 $250 30% 6.5 miles Dillard’s, JC Penney
                 
(1)Information obtained from the appraisal and underwritten rent roll for the subject collateral. Total GLA, Est. Sales PSF and Occupancy are shown for the collateral portion of the Mall of Louisiana.

(2)Comparable inline sales shown as of May 2017. Comparable inline sales excluding Apple for that period were $496 per square foot.

(3)Occupancy is as of June 30, 2017 and includes Main Event (6.0% of NRA) which has a signed lease but is not expected to take occupancy until August 2018 and excludes temporary tenants. The Mall of Louisiana Whole Loan guarantor has provided a guaranty for all outstanding landlord obligations and fifteen months of gap rent specific to Main Event.

(4)Cortana Mall is the only other enclosed shopping mall in Baton Rouge. Only two of the six anchor units at Cortana Mall are currently occupied and approximately 45 of 110 inline stores are occupied.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

37 

 

 

MALL OF LOUISIANA

 

The Borrower. The borrowers are Mall of Louisiana, LLC and Mall of Louisiana Land, LLC (individually and collectively, the “Mall of Louisiana Borrower”), each a single-purpose Delaware limited liability company, with at least two independent directors. Legal counsel to the Mall of Louisiana Borrower delivered a non-consolidation opinion in connection with the origination of the Mall of Louisiana Whole Loan.

 

The Borrower Sponsor. The borrower sponsor and nonrecourse carveout guarantor is GGP Real Estate Holding I, Inc., wholly owned by GGP Inc. GGP Inc. (NYSE: GGP) is an S&P 500 company focused exclusively on owning, managing, leasing and redeveloping retail properties throughout the United States. GGP Inc.’s portfolio as of March 2017 included 127 properties (121 million square feet) in 40 states with an enterprise value of approximately $39 billion. See “Description of the Mortgage Pool— Loan Purpose; Default History, Bankruptcy Issues and Other Proceedings” in the Preliminary Prospectus.

 

GGP Real Estate Holding I, Inc. has provided a guaranty for payment of $1,726,914 in unfunded tenant allowances for ten various tenants and a guaranty related to the tenant Main Event for payment of $8,519,922 comprised of unfunded tenant allowances ($3,986,500), landlord work ($3,067,797) and gap rent ($1,465,625).

 

Escrows. During a Trigger Period (as defined below), unless there are sufficient funds in the lockbox account to make the deposits, the Mall of Louisiana Borrower is required to deposit monthly (i) 1/12th of the estimated annual real estate taxes and 1/12th of the estimated annual insurance premiums (unless the Mall of Louisiana Property is covered by a blanket insurance policy and the premiums for the blanket policy are prepaid for at least one year in advance), (ii) $12,931 to a replacement reserve subject to a cap of $155,169 and (iii) $129,308 to a tenant improvement and leasing commissions reserve subject to a cap of $1,551,690.

 

A “Trigger Period” will commence upon (i) an event of default or (ii) the debt service coverage ratio being less than 1.15x. A Trigger Period will end upon (i) the cure or waiver of the event of default and (ii) the debt service coverage ratio being equal to or greater than 1.15x.

 

Lockbox and Cash Management. A hard lockbox is in place with respect to the Mall of Louisiana Whole Loan. Funds deposited to the lockbox will be swept daily to the Mall of Louisiana Borrower’s operating account unless a Trigger Period exists. During a Trigger Period, funds in the lockbox are required to be transferred daily to a cash management account under the sole control of the lender for the payment of, among other things, debt service, monthly escrows and operating expenses with all excess cash being deposited to an excess cash reserve to be held as additional security for the Mall of Louisiana Whole Loan.

 

Property Management. The Mall of Louisiana Property is managed by an affiliate of the Mall of Louisiana Borrower.

 

Assumption. The Mall of Louisiana Borrower has the right to transfer the Mall of Louisiana Property provided that certain conditions are satisfied, including (i) no event of default has occurred and is continuing; (ii) the Mall of Louisiana Property will be managed by a qualifying manager; (iii) a replacement guarantor has assumed the obligations of the Mall of Louisiana Whole Loan guarantor; (iv) the lender has received a non-consolidation opinion; and (v) the transferee is a qualified transferee.

 

Partial Release. The Mall of Louisiana Borrower may obtain the release of any vacant, non-income producing, unimproved parcel or outlot (including “air rights” parcels), any expansion parcel or the Picardy Street Extension Parcel (as defined below) in connection with a transfer to a person other than a person owned or controlled by the Mall of Louisiana Borrower, provided among other conditions that the following are satisfied: (i) no event of default has occurred and is continuing, and (ii)(A) as it relates to any parcel release other than an expansion parcel release: (a) the lender receives evidence that the parcel is not necessary for the operation of the Mall of Louisiana Property and that it may be readily separated from the Mall of Louisiana Property without material diminution of the value of the Mall of Louisiana Property, (b) the lender receives rating agency confirmation (except with respect to a release of the Picardy Street Expansion Parcel so long as it remains vacant, non-income producing and unimproved), (c) the loan to value ratio for the remaining property is less than or equal to 125% provided that the Mall of Louisiana Borrower may prepay the Mall of Louisiana Whole Loan and pay the associated yield maintenance premium in order to meet the required loan to value ratio or (B) as it relates to the release of an expansion parcel: (x) the lender receives evidence that (I) during the time that the expansion parcel was a part of the Mall of Louisiana Property, any tenants that were relocated to the expansion parcel from other areas of the Mall of Louisiana Property have been replaced with tenants of comparable credit quality and paying equal or better rent than the relocated tenants or (II) to the extent existing tenants are proposed to be relocated to the expansion parcel after its release, the Mall of Louisiana Borrower has entered into fully executed replacement leases with replacement tenants of comparable credit quality and on rental terms equal or better than the existing tenant and (y) the release of the expansion parcel does not have a material adverse effect on the use or value of the Mall of Louisiana Property, the priority of the lien of the mortgage, the enforcement of the Mall of Louisiana Whole Loan documents, or the Mall of Louisiana Borrower’s ability to repay the Mall of Louisiana Whole Loan.

 

The “Picardy Street Extension Parcel” is the portion of land subject to the extension and/or widening of Picardy Street by the City of Baton Rouge.

 

Real Estate Substitution. The Mall of Louisiana Borrower may obtain the release of a vacant, non-income producing, unimproved parcel, provided among other conditions that the following are satisfied: (i) no event of default has occurred or is continuing, (ii) simultaneous with the substitution, the Mall of Louisiana Borrower acquires an exchange parcel at or adjacent to the Mall of Louisiana Property of reasonably equivalent value to the release parcel, (iii) rating agency confirmation is obtained and (iv) the loan to value ratio immediately after the substitution is less than or equal to 125%, provided that the Mall of Louisiana Borrower may prepay the Mall of Louisiana Whole Loan and pay the associated yield maintenance premium in order to meet the required loan to value ratio.

 

Real Estate Expansion. The Mall of Louisiana Borrower may acquire one or more expansion parcels, provided among other conditions that the following are satisfied: (i) no event of default has occurred or is continuing, and (ii) the Mall of Louisiana Borrower acquires fee simple or leasehold interest in the expansion parcel. Any expansion parcel may be released (see “Partial Release” above.)

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

38 

 

 

MALL OF LOUISIANA

 

Subordinate and Mezzanine Indebtedness. Not permitted.

 

Ground Lease. None.

 

Terrorism Insurance. The Mall of Louisiana Borrower is required to obtain and maintain property insurance, commercial general liability insurance and business interruption insurance that covers acts of terrorism in an amount determined by the lender in its sole discretion (but not to exceed the full replacement cost of the Mall of Louisiana Property and 18-months of business interruption insurance), provided that if the Terrorism Risk Insurance Program Reauthorization Act of 2015 or any extension thereof or substantially similar program (“TRIPRA”) is in effect, the Mall of Louisiana Whole Loan documents provide for an annual terrorism premium cap of two times the cost of the annual premiums for property and business interruption insurance required under the related Mall of Louisiana Whole Loan documents.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

39 

 

ADLER PORTFOLIO

 

 

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

40 

 

 

ADLER PORTFOLIO

 

 

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

41 

 

 

No. 4 – Adler Portfolio
 
Loan Information   Property Information
Mortgage Loan Seller: Wells Fargo Bank, National Association   Single Asset/Portfolio: Portfolio

Credit Assessment

(Fitch/KBRA/Moody’s):

NR/NR/NR   Property Type(2): Various
Original Principal Balance: $40,300,000   Specific Property Type(2): Various
Cut-off Date Principal Balance: $40,300,000   Location(2): Various
% of Initial Pool Balance: 5.1%   Size: 969,753 SF
Loan Purpose: Acquisition  

Cut-off Date Principal

Balance Per SF:

$41.56
Borrower Names:

AK Leasehold I, LLC;

AK Leasehold I PSW, LLC

  Year Built/Renovated(2): Various
      Title Vesting(3): Leasehold
  Adler Kawa Real Estate Advisors, LLC;   Property Manager: Self-managed
Sponsor: Adler Kawa Real Estate Services, LLC;      
  Matthew L. Adler      
Mortgage Rate: 4.355%      
Note Date: November 7, 2017   4th Most Recent Occupancy: NAV
Anticipated Repayment Date: NAP   3rd Most Recent Occupancy (As of): 90.3% (12/31/2014)
Maturity Date: November 11, 2027   2nd Most Recent Occupancy (As of): 89.9% (12/31/2015)
IO Period: 36 months   Most Recent Occupancy (As of): 92.0% (12/31/2016)
Loan Term (Original): 120 months   Current Occupancy (As of): 87.7% (10/31/2017)
Seasoning: 0 months    
Amortization Term (Original): 300 months    
Loan Amortization Type: Interest-only, Amortizing Balloon      
Interest Accrual Method: Actual/360   Underwriting and Financial Information(4):
Call Protection: L(24),D(92),O(4)   4th Most Recent NOI (As of): $7,183,631 (12/31/2014)
Lockbox Type: Hard/Upfront Cash Management   3rd Most Recent NOI (As of): $7,280,877 (12/31/2015)
Additional Debt: None   2nd Most Recent NOI (As of): $8,205,698 (12/31/2016)
Additional Debt Type: NAP   Most Recent NOI (As of): $8,334,310 (TTM 9/30/2017)
      U/W Revenues: $12,623,243
Escrows and Reserves(1):     U/W Expenses: $6,535,092
          U/W NOI(4): $6,088,151
Type: Initial Monthly Cap (If Any)   U/W NCF: $4,975,958
Taxes $337,662 $147,716 NAP   U/W NOI DSCR: 2.30x
Insurance $0 Springing NAP   U/W NCF DSCR: 1.88x
Replacement Reserves $0 $22,016 NAP   U/W NOI Debt Yield: 15.1%
TI/LC Reserve $2,000,000 $149,590 $3,800,000   U/W NCF Debt Yield: 12.3%
Deferred Maintenance Reserves $814,288 $0 NAP   As-Is Appraised Value: $81,630,000
Ground Rent Reserve $0 $154,167 NAP   As-Is Appraisal Valuation Date(5): Various
Rent Concession $60,371 $0 NAP   Cut-off Date LTV Ratio: 49.4%
Tenant Specific TI/LC Reserve $384,368 $0 NAP   LTV Ratio at Maturity or ARD: 40.7%

(1)See “Escrows” section.

(2)See “The Property” section.

(3)See “Ground Lease” section.

(4)See “Cash Flow Analysis” section.

(5)See “Appraisal” section.

 

The Mortgage Loan. The mortgage loan (the “Adler Portfolio Mortgage Loan”) is evidenced by a single promissory note that is secured by a first mortgage encumbering the leasehold interest in a portfolio of three office properties and five industrial properties (the “Adler Portfolio Properties”). The Adler Portfolio Mortgage Loan was originated on November 7, 2017 by Wells Fargo Bank, National Association. The Adler Portfolio Mortgage Loan had an original principal balance of $40,300,000, has an outstanding principal balance as of the Cut-off Date of $40,300,000 and accrues interest at an interest rate of 4.355% per annum. The Adler Portfolio Mortgage Loan had an initial term of 120 months, has a remaining term of 120 months as of the Cut-off Date and requires interest-only payments during the first 36 payment periods, followed by payments of principal and interest based on a 25-year amortization schedule. The Adler Portfolio Mortgage Loan matures on November 11, 2027.

 

Following the lockout period, the borrower has the right to defease the Adler Portfolio Mortgage Loan in whole, or in part (see “Partial Release” section), on any date before August 11, 2027. In addition, the Adler Portfolio Mortgage Loan is prepayable without penalty on or after August 11, 2027.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

42 

 

 

ADLER PORTFOLIO

 

Sources and Uses

 

Sources         Uses      
Original loan amount $40,300,000   59.4%   Purchase price $60,064,000   88.6%
Sponsor’s new cash contribution 27,514,703   40.6      Closing costs 4,154,018   6.1   
          Reserves 3,596,685   5.3   
Total Sources $67,814,703 100.0%   Total Uses $67,814,703   100.0%

 

The Property. The Adler Portfolio Properties comprise the leasehold interest in eight office and industrial properties totaling 969,753 square feet of rentable area (three office properties totaling 502,751 square feet and five industrial flex properties totaling 467,002 square feet) located in North Carolina, Tennessee and Texas. As of October 31, 2017, in aggregate, the Adler Portfolio Properties were 87.7% occupied by 183 tenants with no tenant accounting for more than 4.7% of Annual U/W Base Rent. Over the past three years, the Adler Portfolio Properties have averaged 90.7% occupancy. Each of the Adler Portfolio Properties is subject to a 99-year ground lease through 2116 (see “Ground Lease” section).

 

Carmel Executive Park (223,288 square feet, 23.0% of net rentable area, 39.6% of Annual U/W Base Rent)

Carmel Executive Park comprises six, three-story multi-tenant class B office buildings ranging in size from 25,741 square feet to 37,041 square feet and located in Charlotte, North Carolina, approximately 12 miles south of the central business district (the “Carmel Executive Park Property”). The Carmel Executive Park Property is situated just north of Highway 51 and approximately 2.8 miles northeast of the 1.2 million square foot, GGP-owned Carolina Place Mall. In addition, the Carmel Executive Park Property is situated approximately 17.1 miles southeast of the Charlotte Douglas International Airport, 2.2 miles east of Interstate 485 and 6.0 miles southeast of Interstate 77. The Carmel Executive Park Property was built between 1982 and 1989 and is situated on a 12.1-acre parcel. The Carmel Executive Park Property contains 919 parking spaces, resulting in a parking ratio of 4.1 spaces per 1,000 square feet. As of October 31, 2017, the Carmel Executive Park Property was 91.9% occupied by 87 tenants.

 

Vista Point North (143,810 square feet, 14.8% of net rentable area, 18.6% of Annual U/W Base Rent)

Vista Point North comprises one, one-story office building and three flex buildings built in 2000 and located in Lewisville, Texas (the “Vista Point North Property”), approximately 22.3 miles northwest of the Dallas central business district and 10.5 miles north of DFW International Airport. The Vista Point North Property is situated along the Sam Rayburn Tollway (SH 121) and just south of Interstate 35 East, in close proximity to various shopping, dining, entertainment and hotel properties. Notable corporate users in the immediate vicinity of the Vista Point North Property include JPMorgan Chase, TIAA-CREF, Ally Financial and Horizon Health Corporation. The three flex buildings within the Vista Point North Property are served by 13 dock doors with clear heights ranging from 18- to 24-feet. The Vista North Property contains 564 parking spaces, resulting in a parking ratio of 3.9 spaces per 1,000 square feet of rentable area. As of October 31, 2017, the Vista Point North Property was 88.0% occupied by 12 tenants.

 

Greenbriar Business Park (135,653 square feet, 14.0% of net rentable area, 12.9% of Annual U/W Base Rent)

Greenbriar Business Park comprises a one-story, class B office building located in downtown Nashville, Tennessee (the “Greenbriar Business Park Property”). The Greenbriar Business Park Property is situated approximately 6.7 miles from the Opryland Hotel and Convention Center, 2.5 miles north of the Nashville International Airport and 2.0 miles north of Interstate 40. The Greenbriar Business Park Property was built in 1986 and renovated in 2006 and is situated on a 10.8-acre parcel. The Greenbriar Business Park Property comprises 432 parking spaces, resulting in a parking ratio of 3.2 spaces per 1,000 square feet of rentable area. As of October 31, 2017, the Greenbriar Business Park Property was 89.8% occupied by 23 tenants.

 

Houston Flex Properties (467,002 square feet, 48.2% of net rentable area, 29.0% of Annual U/W Base Rent)

Five of the eight Adler Portfolio Properties are located throughout the Houston metropolitan area: Commerce Park North, Technipark Ten Service Center, Crescent 10 Facility, Westchase Park and Plaza Southwest (cumulatively, the “Houston Flex Properties”). Each of the Houston Flex Properties is a flex building ranging in size from 47,816 square feet to 152,173 square feet with clear heights ranging from 13- to 21-feet. As of October 31, 2017, in aggregate, the Houston Flex Properties were 85.0% occupied by 66 tenants.

 

Commerce Park North (97,332 square feet, 10.0% of net rentable area, 6.3% of Annual U/W Base Rent) comprises three flex buildings built between 1983 and 2011 and located approximately 18.0 miles north of the Houston central business district (the “Commerce Park North Property”). The Commerce Park North Property is situated along Interstate 45, 10.7 miles west of Houston International Airport and 9.4 miles south of Exxon Mobil’s office campus. As of October 31, 2017, the Commerce Park North Property was 92.1% occupied by 5 tenants.

 

The remaining four Houston Flex Properties (Technipark Ten Service Center, Crescent 10 Facility, Westchase Park and Plaza Southwest) each account for 1.7% to 8.6% of the Annual U/W Base Rent of the Adler Portfolio Mortgage Loan and are located approximately 10 to 20 miles west of the Houston central business district. The Technipark Ten Service Center property, and Crescent 10 Facility property are situated adjacent to one another, approximately 19.5 miles west of downtown Houston, just north of Interstate Highway 10. The Westchase Park property is approximately 13.5 miles west of downtown Houston, just east of Route 8. The Plaza Southwest property is approximately 10.2 miles west of downtown Houston, just south of Interstate Highway 69.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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The following tables presents certain information relating to the Adler Portfolio Properties:

 

Property Name Location Property Type

Year Built/

Renovated

No. of Tenants NRSF % of Total NRSF Occupancy

% Office/

% Industrial

Dock Doors Clear Height
Carmel Executive Park Charlotte, NC Office 1982/1989 85 223,288 23.0% 91.9% 100% / 0% NAP NAP
Vista Point North Lewisville, TX Office 2000/NAP 11 143,810 14.8% 88.0% 94.3% / 5.7% 13 18’-24’
Greenbriar Business Park Nashville, TN Office 1986/2006 22 135,653 14.0% 89.8% 94.2% / 5.8% 4 15’
Plaza Southwest Houston, TX Flex 1972/NAP 24 152,173 15.7% 89.6% 39.4% / 60.6% 22 14’
Commerce Park North Houston, TX Flex 1983/NAP 5 97,332 10.0% 92.1% 43.7% / 56.3% 22 16’-21’
Crescent 10 Facility Houston, TX Flex 1978/NAP 24 98,008 10.1% 84.0% 37.8% / 62.2% 5 14’

Technipark Ten

Service Center

Houston, TX Flex 1984/NAP 5 71,673 7.4% 92.5% 77.7% / 22.3% 8 13’-19’
Westchase Park Houston, TX Flex 1983/NAP 7 47,816 4.9% 46.6% 41.8% / 58.2% 4 14’
Total/Weighted Average     183 969,753 100.0% 87.7%      

 

Property Name Annual U/W Base Rent Annual U/W Base Rent PSF(1) % of Annual U/W Base Rent Allocated Loan Amount % of ALA Appraised Value Allocated LTV
Carmel Executive Park $4,109,074 $18.40 39.6% $13,800,000 34.2% $26,730,000 51.6%
Vista Point North $1,926,543 $13.40 18.6% $7,400,000 18.4% $14,710,000 50.3%
Greenbriar Business Park $1,338,468 $9.87 12.9% $6,000,000 14.9% $12,000,000 50.0%
Plaza Southwest $887,949 $5.84 8.6% $4,700,000 11.7% $7,250,000 64.8%
Commerce Park North $658,821 $6.77 6.3% $2,700,000 6.7% $6,200,000 43.5%
Crescent 10 Facility $664,652 $6.78 6.4% $2,650,000 6.6% $6,100,000 43.4%
Technipark Ten Service Center $620,107 $8.65 6.0% $2,300,000 5.7% $5,620,000 40.9%
Westchase Park $178,535 $3.73 1.7% $750,000 1.9% $3,020,000 24.8%
Total/ Weighted Average $10,384,149 $12.21 100.0% $40,300,000 100.0% $81,630,000 49.4%

 

(1) Weighted Average Annual U/W Base Rent PSF excludes vacant space.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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The following table presents certain information relating to the tenancy at the Adler Portfolio Properties:

 

Major Tenants

 

Tenant Name Property

Credit Rating (Fitch/

Moody’s/
S&P)(1)

Tenant NRSF % of
NRSF
Annual U/W Base Rent PSF Annual
U/W Base Rent
% of Total Annual U/W Base Rent Lease
Expiration
Date
Major Tenants          
Caterpillar Financial Services Greenbriar Business Park A/A3/A  33,055 3.4%  $14.65 $484,256 4.7% 11/30/2020(2)
Alford Services, Inc

Commerce

Park North

NR/NR/NR  52,715 5.4%  $8.87 $467,531 4.5% 5/31/2021(3)
M/I Homes(4) Vista Point North BB-/B1/B+  19,597 2.0%  $21.05 $412,483 4.0% 5/31/2023(5)
Crump Life Insurance Services

Carmel

Executive Park

NR/NR/NR  19,838 2.0%  $19.67 $390,195 3.8% 6/30/2021(6)
Elite View Imaging, Inc Vista Point North NR/NR/NR  15,749 1.6%  $23.00 $362,227 3.5% 1/31/2023(7)
Schlumberger Technology Corp Technipark Ten Service Center NR/A1/AA-  33,946 3.5%  $8.47 $287,476 2.8% 10/31/2019(8)
Regus Vista Point North NR/NR/NR  15,490 1.6%  $17.50 $271,075 2.6% 4/23/2024(9)
Total Major Tenants  190,390 19.6%  $14.05 $2,675,243 25.8%  
             
Non-Major Tenants      660,344 68.1%  $11.67 $7,708,906 74.2%  
                 
Occupied Collateral Total     850,734 87.7% $12.21 $10,384,149 100.0%  
                 
Vacant Space      119,019 12.3%        
                 
Collateral Total      969,753 100.0%        
                 

 

(1)Certain ratings are those of the parent company whether or not the parent guarantees the lease.

(2)Caterpillar Financial Services has two, five-year renewal options.

(3)Alford Services, Inc. has one, seven-year renewal option.

(4)M/I Homes leases 18,997 square feet of office space, and 600 square feet of storage space, which have Annual U/W Base Rent PSF of $21.38 and $12.00, respectively.

(5)M/I Homes has one, five-year renewal option.

(6)Crump Life Insurance has two, three-year renewal options.

(7)Elite View Imaging, Inc. has one, one-year renewal option.

(8)Schlumberger Technology Corp has two, five-year renewal options.

(9)Regus has two, five-year renewal options.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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The following table presents certain information relating to the lease rollover schedule at the Adler Portfolio Properties:

 

Lease Expiration Schedule(1)(2)

 

Year Ending
 December 31,
No. of Leases Expiring Expiring NRSF % of Total NRSF Cumulative Expiring NRSF Cumulative % of Total NRSF Annual
 U/W
Base Rent
Annual
 U/W
Base Rent
 PSF(3)
MTM 4 8,943 0.9% 8,943 0.9% $70,267 $7.86
2017 6 23,403 2.4% 32,346 3.3% $458,080 $19.57
2018 51 148,776 15.3% 181,122 18.7% $1,633,403 $10.98
2019 53 226,490 23.4% 407,612 42.0% $2,570,099 $11.35
2020 36 152,870 15.8% 560,482 57.8% $1,984,768 $12.98
2021 19 170,933 17.6% 731,415 75.4% $1,805,079 $10.56
2022 14 56,455 5.8% 787,870 81.2% $696,388 $12.34
2023 6 43,306 4.5% 831,176 85.7% $854,310 $19.73
2024 1 15,490 1.6% 846,666 87.3% $271,075 $17.50
2025 1 4,068 0.4% 850,734 87.7% $40,680 $10.00
2026 0 0 0.0% 850,734 87.7% $0 $0.00
2027 0 0 0.0% 850,734 87.7% $0 $0.00
Thereafter 0 0 0.0% 850,734 87.7% $0 $0.00
Vacant 0 119,019 12.3% 969,753 100.0% $0 $0.00
Total/Weighted Avg. 191 969,753 100.0%     $10,384,149 $12.21%
(1)Information obtained from the underwritten rent roll.

(2)Certain tenants may have lease termination options that are exercisable prior to the originally stated expiration date of the subject lease and that are not considered in the Lease Expiration Schedule.

(3)Weighted Average Annual U/W Base Rent PSF excludes vacant space.

 

The following table presents historical occupancy percentages at the Adler Portfolio Properties:

 

Historical Occupancy

 

12/31/2014(1)

12/31/2015(1)

12/31/2016(1)

10/31/2017(2)

90.3% 89.9% 92.0% 87.7%

 

(1)Information obtained from the borrowers.

(2)Information obtained from the underwritten rent roll.

 

Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and Underwritten Net Cash Flow at the Adler Portfolio Properties:

 

Cash Flow Analysis(1)

 

    2014   2015   2016  

TTM

9/31/2017

  U/W   % of U/W Effective Gross Income  

U/W

$ per SF

Base Rent   $9,465,366   $9,970,895   $10,459,399   $10,596,841    $10,384,149   82.3%   $10.71  
Grossed Up Vacant Space   0   0   0   0   1,453,162   11.5%   $1.50  
Total Reimbursables   2,302,342   2,250,534   2,446,122   2,381,491    2,085,375   16.5%   $2.15  
Other Income   260,220   92,299   169,312   166,632    153,719   1.2%   $0.16  
Less Vacancy & Credit Loss  

0

 

0

 

0

 

0

 

(1,453,162)(1)

 

(11.5%)

 

($1.50)

 
Effective Gross Income   $12,027,929   $12,313,728   $13,074,834   $13,144,964   $12,623,243   100.0%   $13.02  
                               
Operating Expenses   $4,844,298   $5,032,851   $4,869,136   $4,810,655   $4,685,091   37.1%   $4.83  
Ground Rent  

0(2)

 

0(2)

 

0(2)

 

0(2)

 

1,850,000(2)

 

14.7%

 

$1.91 

 
Total Operating Expenses   $4,844,298   $5,032,851   $4,869,136   $4,810,655    $6,535,092   51.8%   $6.74  
                               
  Net Operating Income   $7,183,631   $7,280,877   $8,205,698   $8,334,310    $6,088,151   48.2%   $6.28  
TI/LC   0   0       0   847,680   6.7%   $0.87  
Capital Expenditures  

0

 

0

   

0

 

264,514

 

2.1%

 

$0.27

 
  Net Cash Flow   $7,183,631   $7,280,877   $8,205,698   $8,334,310    $4,975,958   39.4%   $5.13  
                               
NOI DSCR   2.71x   2.75x   3.10x   3.15x   2.30x          
NCF DSCR   2.71x   2.75x   3.10x   3.15x   1.88x          
NOI DY   17.8%   18.1%   20.4%   20.7%   15.1%          
NCF DY   17.8%   18.1%   20.4%   20.7%   12.3%          

 

(1)The underwritten economic vacancy is 12.3%. The Adler Portfolio Properties were 87.7% physically occupied as of October 31, 2017.

(2)The Adler Portfolio Properties were not previously encumbered by ground leases. In conjunction with the origination of the Adler Portfolio Mortgage Loan, the properties were divided into separate fee and leasehold interests, and the fee interest was conveyed to a third party (see “Ground Lease” section).

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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Appraisal. As of the appraisal valuation dates ranging from August 24, 2017 to September 7, 2017, the Adler Portfolio Properties had an aggregate “as-is” appraised value of $81,630,000.

 

Environmental Matters. According to the Phase I environmental assessment dated between September 1, 2017, and September 19, 2017, there was no evidence of any recognized environmental conditions at the Adler Portfolio Properties.

 

Market Overview and Competition. The following table presents certain information related to the submarkets of each of the Adler Portfolio Properties. The information presented on this table was obtained from third party market research reports and the appraisals.

 

Property Name Submarket Name Submarket Property Type Submarket Data Reporting Period Submarket Inventory Submarket Vacancy Rate Submarket Asking Rent Appraiser’s Market Rent 5-Mile Population 5-Mile Median Household Income
Carmel Executive Park South Charlotte

Office

(Class B)

Q2 2017 6,852,093 12.8% $19.63 $21.00 208,174 $76,362
Vista Point North Lewisville / Denton Office Q2 2017 3,397,501 10.8% $18.82 $22.00 221,143 $74,291
Vista Point North Lewisville Industrial - Flex Q3 2017 3,186,279 6.5% $11.23 $12.50 221,143 $74,291
Greenbriar Business Park Airport North Office Q2 2017 6,329,685 4.2% $20.32 $9.77 153,456 $40,638
Plaza Southwest Southwest Industrial Q2 2017 64,516,643 5.7% $7.80 $6.50 572,464 $53,431
Commerce Park North North Industrial Q2 2017 85,063,279 9.3% $7.44 $7.50 286,674 $50,901
Crescent 10 Facility Northwest Industrial Q2 2017 146,074,764 4.9% $7.44 $8.25 247,669 $75,641
Technipark Ten Service Center Northwest Industrial Q2 2017 146,074,764 4.9% $7.44 $9.50 242,675 $75,854
Westchase Park Southwest Industrial Q2 2017 64,516,643 5.7% $7.80 $8.50 580,184 $48,266

 

The Borrowers. The borrowers are AK Leasehold I, LLC; and AK Leasehold I PSW, LLC, each of which is a Delaware limited liability company and single purpose entity with at least one independent director. Legal counsel to the borrower delivered a non-consolidation opinion in connection with the origination of the Adler Portfolio Mortgage Loan. Adler Kawa Real Estate Advisors, LLC, Adler Kawa Real Estate Services, LLC, and Matthew L. Adler are the guarantors of certain nonrecourse carveouts under the Adler Portfolio Mortgage Loan.

 

The Borrower Sponsors. The loan sponsors are Adler Kawa Real Estate Advisors, LLC; Adler Kawa Real Estate Services, LLC; and Matthew L. Adler. Adler Kawa Real Estate Advisors (“Adler Kawa”) is a joint venture between Adler Group and Kawa Capital Management, and is a vertically integrated real estate investment company that focuses on the acquisition and operations of multi-tenant office and industrial properties. Adler Kawa was formed in July 2012 to expand Adler Group’s fund management platform, and the company has sourced and closed 21 acquisitions representing over $320 million of equity. Adler Kawa currently manages over six million square feet of commercial real estate space in 10 cities across the eastern and southern United States. Matthew L. Adler is the president and CEO of Adler Kawa, and has managed the investment performance of over 12 million square feet of commercial real estate properties.

 

Escrows. The Adler Portfolio Mortgage Loan documents provide for upfront escrows in the amount of $337,662 for real estate taxes, $2,000,000 for tenant improvement and leasing commission reserves, $814,288 for deferred maintenance reserves, $60,371 for rent concession reserves related to the Elite View Imaging, and $384,368 for tenant specific tenant improvement and leasing commission reserves. The loan documents also provide for ongoing monthly escrow deposits of $147,716 for real estate taxes, $22,016 for replacement reserves, $149,590 for TI/LC reserves (subject to a cap of $3,800,000 so long as no event of default has occurred, the debt service coverage ratio is at least 1.25x, and at least 75.0% of the net rentable area in the Adler Portfolio Properties is occupied by tenants satisfying certain conditions), and $154,167 for ground rent reserves.

 

The Adler Portfolio Mortgage Loan documents do not require ongoing monthly escrows for insurance premiums as long as (i) no event of default has occurred and is continuing and (ii) the borrower provides the lender with evidence that the Adler Portfolio Properties’ insurance coverage is included in a blanket policy and such policy is in full force and effect and (iii) the borrower pays all applicable insurance premiums and provides the lender with evidence of renewals.

 

Lockbox and Cash Management. The Adler Portfolio Mortgage Loan requires a lender-controlled lockbox account, which is in place, and that the borrower directs the tenants to pay their rents directly into such lockbox account. The Adler Portfolio Mortgage Loan documents also require that all rents received by the borrower or the property manager be deposited into the lockbox account within one business day of receipt. All funds in the lockbox account are required to be swept daily into a lender-controlled cash management account and disbursed in accordance with the loan documents. Prior to the occurrence of a Cash Trap Event Period (as defined below), all excess cash flow is required to be distributed to the borrowers. During a Cash Trap Event Period, all excess cash flow is required to be swept to a lender-controlled cash management account.

 

A “Cash Trap Event Period” will commence upon the earlier of the following:

 

(i)the occurrence and continuance of an event of default; or

(ii)the debt service coverage ratio being less than 1.25x at the end of any calendar month.

 

A Cash Trap Event Period will end:

 

with regard to clause (i), upon the cure of such event of default; and

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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ADLER PORTFOLIO

 

with regard to clause (ii), upon the debt service coverage ratio being at least 1.30x for two consecutive calendar quarters.

 

Property Management. The Adler Portfolio Properties are managed by managed by an affiliate of the borrower.

 

Assumption. The borrowers have the right to transfer the Adler Portfolio Properties, provided that no event of default has occurred and is continuing and certain other conditions are satisfied, including (i) the lender’s reasonable determination that the proposed transferee and guarantor satisfy the lender’s credit review and underwriting standards, taking into consideration transferees experience, financial strength and general business standing; (ii) execution of a recourse guaranty and an environmental indemnity by an affiliate of the transferee; and (iii) if requested by the lender, rating agency confirmation from Fitch, KBRA and Moody’s that the transfer will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the Series 2017-C41 certificates.

 

Partial Release. Following the second anniversary of the issuance of the WFCM 2017-C41 certificates, the borrower is permitted to obtain the release of up to 25% of the Adler Portfolio Properties (based on allocated loan amounts), subject to certain conditions, including (i) partial defeasance in an amount equal to the greater of 100% of net sale proceeds or 115% of allocated loan amount (subject to a cap of 120% of allocated loan amount); (ii) the debt service coverage ratio of the remaining properties is not less than the greater of 1.65x and the debt service coverage ratio prior to the release; (iii) the debt yield of the remaining properties is not less than the greater of 10.0% and the debt yield prior to the release; (iv) the LTV of the remaining properties is no greater than the lesser of 65.0% and the LTV prior to the release; (v) the ground lease of the released property is no longer be cross-defaulted with the ground leases of the remaining properties; and (vi) rating agency confirmation.

 

Real Estate Substitution. Not permitted.

 

Subordinate and Mezzanine Indebtedness. Not permitted.

 

Ground Lease. The Adler Portfolio Properties are subject to eight separate 99-year ground leases, each of which has an expiration date of November 5, 2116 (the “Adler Portfolio Ground Leases”). The Adler Portfolio Ground Leases have an aggregate annual ground rent of $1,850,000 with 2% annual escalations through year 30. The ground lessors comprise eight Delaware limited liability companies. The fee interests in the Adler Portfolio Properties are each subject to a separate first mortgage lien granted to a third-party lender contemporaneous with the loan closing, which is subordinate to the respective ground lease. See “Description of the Mortgage Pool – Mortgage Pool Characteristics – Fee & Leasehold Estates; Ground Leases” in the Preliminary Prospectus.

 

Terrorism Insurance. The loan documents require that the “all risk” insurance policy required to be maintained by the borrowers provide coverage for terrorism in an amount equal to the full replacement cost of the Adler Portfolio Properties. The loan documents also require business interruption insurance covering no less than the 18-month period following the occurrence of a casualty event, together with a six-month extended period of indemnity.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

48 

 

 

U.S. INDUSTRIAL PORTFOLIO III

 (GRAPHIC)

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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U.S. INDUSTRIAL PORTFOLIO III

 

(GRAPHIC) 

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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No. 5 – U.S. Industrial Portfolio III
 
Loan Information   Property Information
Mortgage Loan Seller: Barclays Bank PLC   Single Asset/Portfolio: Portfolio
Credit Assessment (Fitch/KBRA/Moody’s): NR/NR/NR   Property Type: Various – See Table
Original Principal Balance(1): $30,537,149   Specific Property Type: Various – See Table
Cut-off Date Principal Balance(1): $30,537,149   Location: Various – See Table
% of Initial Pool Balance: 3.9%   Size: 2,886,593 SF
Loan Purpose: Acquisition   Cut-off Date Balance Per SF(1): $41.76
Borrower Name(2): Various   Year Built/Renovated: Various – See Table
Borrower Sponsors: Brennan Investment Group Acquisitions LLC   Title Vesting: Fee
Mortgage Rate: 4.180%   Property Manager: Self-managed
Note Date: October 12, 2017   4th Most Recent Occupancy (As of): 100.0% (12/31/2013)
Anticipated Repayment Date: NAP   3rd Most Recent Occupancy (As of): 100.0% (12/31/2014)
Maturity Date: November 5, 2027   2nd Most Recent Occupancy(As of): 100.0% (12/31/2015)
IO Period: 60 months   Most Recent Occupancy(As of): 100.0% (12/31/2016)
Loan Term (Original): 120 months   Current Occupancy (As of)(5): 100.0% (11/1/2017)
Seasoning: 0 months    
Amortization Term (Original): 360 months   Underwriting and Financial Information:
Loan Amortization Type: Interest-only, Amortizing Balloon      
Interest Accrual Method: Actual/360   4th Most Recent NOI (As of): $11,492,070 (12/31/2014)
Call Protection(3): L(24),D(89),O(7)   3rd Most Recent NOI (As of): $11,626,063 (12/31/2015)
Lockbox Type: Hard/Springing Cash Management   2nd Most Recent NOI (As of): $12,055,263 (12/31/2016)
Additional Debt(1): Yes   Most Recent NOI (As of): $12,203,308 (TTM 6/30/2017)
Additional Debt Type(1): Pari Passu      
          U/W Revenues: $15,292,243
          U/W Expenses: $3,981,653
          U/W NOI: $11,310,590
          U/W NCF: $10,415,416
Escrows and Reserves(4):         U/W NOI DSCR(1): 1.60x
          U/W NCF DSCR(1): 1.48x
Type: Initial Monthly Cap (If Any)   U/W NOI Debt Yield(1): 9.4%
Taxes $0 Springing NAP   U/W NCF Debt Yield(1): 8.6%
Insurance $0 Springing NAP   As-Is Appraised Value(6): $166,300,000
Replacement Reserves $0 $6,250 NAP   As-Is Appraisal Valuation Date(6): June 16, 2017
TI/LC Reserves $120,000 Springing (4)   Cut-off Date LTV Ratio(1)(6): 72.5%
Security Deposit Reserves $453,411 $0 NAP   LTV Ratio at Maturity or ARD(1)(6): 66.0%
             
               
(1)See “The Mortgage Loan” section. All statistical financial information related to balance per square foot, loan-to-value ratios, debt service coverage ratios and debt yields are based on the funded outstanding principal balance of the U.S. Industrial Portfolio III Whole Loan (as defined below).

(2)See “The Borrowers” section.

(3)The defeasance lockout period will be at least 24 payment dates beginning with and including the first payment date of December 5, 2017. Defeasance of the U.S. Industrial Portfolio III Whole Loan is permitted after the date that is the earlier to occur of (i) two years after the closing date of the securitization that includes the last note to be securitized, and (ii) October 12, 2020. The assumed lockout period of 24 payments is based on the expected WFCM 2017-C41 Trust closing date in November 2017.

(4)See “Escrows” section.

(5)Current Occupancy includes PNC Acquisition Company, Inc. (75,902 SF, 2.6% of net rentable area), which leases 100.0% of the space at the 900 Chaddick Drive property but is currently dark.

(6)See “Appraisals” section. The As-Is Appraised Value reflects the “As Portfolio” value of $166,300,000 for the U.S. Industrial Portfolio III Properties (as defined below) as a whole which includes an 4.0% premium to the aggregate “As-is” value of the individual U.S. Industrial Portfolio III Properties. The sum of the “As-is” values for each of the U.S. Industrial Portfolio III Properties on an individual basis is $159,940,000, which represents a Cut-off Date LTV Ratio and LTV Ratio at Maturity of 75.4% and 68.6%, respectively.

 

The Mortgage Loan. The mortgage loan (the “U.S. Industrial Portfolio III Mortgage Loan”) is part of a whole loan (the “U.S. Industrial Portfolio III Whole Loan”) that is evidenced by three pari passu promissory notes (Notes A-1-1, A-1-2 and A-2) that are secured by a first mortgage encumbering 21 single tenant industrial and office properties located across 10 states, totaling 2,886,593 square feet (the “U.S. Industrial Portfolio III Properties”). The U.S. Industrial Portfolio III Whole Loan was originated on October 12, 2017 by Barclays Bank PLC and Morgan Stanley Bank, N.A. The U.S. Industrial Portfolio III Whole Loan has an original principal balance of $120,537,149, has an outstanding principal balance as of the Cut-off Date of $120,537,149 and accrues interest at an interest rate of 4.180% per annum. The U.S. Industrial Portfolio III Whole Loan has an initial term of 120 months, has a remaining term of 120 months as of the Cut-off Date and requires interest-only payments for the first 60 payments, after which payments of interest and principal will be based on a 30-year amortization schedule. The U.S. Industrial Portfolio III Whole Loan matures on November 5, 2027.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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The U.S. Industrial Portfolio III Mortgage Loan is evidenced by Note A-2, which will be contributed to the WFCM 2017-C41 Trust, had an original principal balance of $30,537,149, has an outstanding principal balance as of the Cut-off Date of $30,537,149 and represents the non-controlling interest in the U.S. Industrial Portfolio III Whole Loan. The controlling Note A-1-1 had an original principal balance of $50,000,000, has an outstanding principal balance as of the Cut-off Date of $50,000,000 and is expected to be contributed to the BANK 2017-BNK8 Trust. The non-controlling Note A-1-2 had an original principal balance of $40,000,000, has an outstanding principal balance as of the Cut-off Date of $40,000,000, is currently held by Morgan Stanley Bank, N.A. and is expected to be contributed to one or more future securitizations. See “Description of the Mortgage Pool—The Whole Loans—The Non-Serviced Pari Passu Whole Loans” and “Pooling and Servicing Agreement” in the Preliminary Prospectus.

 

Note Summary

 

Notes Original Balance   Note Holder Controlling Interest
A-1-1 $50,000,000   BANK 2017-BNK8 (expected) Yes
A-1-2 $40,000,000   Morgan Stanley Bank, N.A. No
A-2 $30,537,149   WFCM 2017-C41 No
Total $120,537,149      

 

Following the lockout period, the borrowers have the right to defease the U.S. Industrial Portfolio III Whole Loan in whole, or in part (see “Partial Release” section), on any date before May 5, 2027. In addition, the U.S. Industrial Portfolio III Whole Loan is prepayable without penalty on or after May 5, 2027. The lockout period will expire on the earlier to occur of (i) two years after the closing date of the securitization that includes the last note to be securitized and (ii) October 12, 2020.

 

Sources and Uses

 

Sources         Uses      
Original loan amount $120,537,149   71.2%   Purchase price $164,603,823   97.2%
Sponsor’s new cash contribution 48,798,629    28.8       Closing costs 4,158,544   2.5
          Reserves 573,411   0.3
Total Sources $169,335,778   100.0%   Total Uses $169,335,778   100.0%

 

The Properties. The U.S. Industrial Portfolio III Properties are comprised of 21 single tenant industrial and office properties totaling 2,886,593 square feet. The U.S. Industrial Portfolio III Properties are located across 10 states, with the largest concentration of properties in Ohio (28.1% of net rentable area), Virginia (24.1% of net rentable area) and Florida (13.0% of net rentable area). The U.S. Industrial Portfolio III Properties were built between 1952 and 2015, range in size from approximately 32,688 square feet to 378,270 square feet and are all leased on a triple net basis. As of October 1, 2017 the weighted average remaining lease term for the U.S. Industrial Portfolio III Properties was approximately 11.8 years. The U.S. Industrial Portfolio III Properties consist of 19 industrial properties (approximately 96.6% of net rentable area) and two suburban office properties. The U.S. Industrial Portfolio III Properties serve as the headquarters location for nine tenants. The U.S. Industrial Portfolio III Properties are 100.0% leased to 21 tenants as of November 1, 2017.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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The following table presents certain information relating to the U.S. Industrial Portfolio III Properties:

 

Property Name –  

Location 

Property
Type
Allocated
Whole Loan
Cut-off Date Principal Balance
% of Portfolio Cut-off Date Principal Balance U/W NOI(1) Year Built/ Renovated Net Rentable Area (SF) Appraised
Value

2121 Gardner Street – 

Elliston, VA 

Industrial $16,504,712 13.7% $1,674,703 2000 / NAP 378,270 $21,900,000
975 Cottonwood Avenue - Hartland, WI Industrial $10,174,137 8.4% $1,018,666 2000, 2015 / NAP 175,042 $13,500,000
4925 Bulls Bay Highway - Jacksonville, FL Industrial $9,910,363 8.2% $986,726 2006 / NAP 198,408 $13,150,000
1500 Southeast 37th Street - Grimes, IA Industrial $7,536,398 6.3% $716,745 1961 / 2017 248,257 $10,000,000
1501 Industrial Boulevard - Harleysville, PA Industrial $7,385,670 6.1% $658,271 1973 / 2013 112,253 $9,800,000
10450 Medallion Drive - Cincinnati, OH Industrial $7,385,670 6.1% $783,609 1998 / NAP 151,506 $9,800,000

1001 DDC Way – 

Fairfield, OH 

Office $6,413,475 5.3% $686,609 1981 / 2004 66,444 $8,510,000

1152 Armorlite Drive – 

San Marcos, CA 

Industrial $5,222,724 4.3% $335,570 1986 / NAP 44,313 $6,930,000
3800 West Broward Boulevard - Plantation, FL Office $5,124,751 4.3% $548,720 1956 / 2010 32,688 $6,800,000
2900 & 2950 Hill Avenue - Toledo, OH Industrial $5,087,069 4.2% $541,032 1955 / NAP 237,698 $6,750,000
1972 Salem Industrial Drive - Salem, VA Industrial $4,898,659 4.1% $536,163 1972 / NAP 317,144 $6,500,000
1700 Highland Road - Twinsburg, OH Industrial $4,917,500 4.1% $506,714 1986, 1996 / NAP 115,169 $6,525,000
1800 University Parkway - Sarasota, FL Industrial $4,823,295 4.0% $479,598 1965 / NAP 105,752 $6,400,000

621 Hunt Valley Circle – 

New Kensington, PA 

Industrial $3,918,927 3.3% $491,244 2002 / 2009 61,796 $5,200,000

5000 Askins Lane – 

Houston, TX 

Industrial $3,655,153 3.0% $339,211 1978 / NAP 100,040 $4,850,000
900 Chaddick Drive(2) - Wheeling, IL Industrial $3,542,107 2.9% ($314,806) 1982 / NAP 75,902 $4,700,000
6600 Chapek Parkway - Cuyahoga Heights, OH Industrial $3,391,379 2.8% $327,365 1952-2006 / NAP 157,950 $4,500,000

53208 Columbia Drive – 

Elkhart, IN 

Industrial $3,316,015 2.8% $416,748 2005 / NAP 117,938 $4,400,000

7750 Hub Parkway – 

Valley View, OH 

Industrial $3,184,128 2.6% $327,365 1971, 1980 / NAP 83,404 $4,225,000

21699 Torrence Avenue & 

2701 Kalvelage Drive – 

Sauk Village, IL 

Industrial $2,110,191 1.8% $230,778 1977, 2000 / NAP 67,995 $2,800,000
3221 Cherry Palm Drive - Tampa, FL Industrial $2,034,826 1.7% $266,049 1988 / NAP 38,624 $2,700,000
Total/Weighted Average   $120,537,149 100.0% $11,310,590   2,886,593 $159,940,000(3)

 

(1)A vacancy adjustment to 5.0% has been underwritten at the portfolio level.

(2)The 900 Chaddick Drive property is currently 100.0% leased to PNC Acquisition Company, Inc. through January 2019. PNC Acquisition Company, Inc. is currently dark at the 900 Chaddick Drive property. In the event PNC Acquisition Company, Inc. does not renew at expiration in January 2019, PNC Acquisition Company, Inc. will be required to pay a non-renewal fee of $380,000 in connection with the non-renewal notice on or before January 31, 2018. No rent was underwritten for the 900 Chaddick Drive property.

(3)The Total Appraised Value of $159,940,000 represents the sum of the individual Appraised Values of the U.S. Industrial Portfolio III Properties, as compared to the “As-portfolio” Appraised Value of $166,300,000.

 

2121 Gardner Street. The largest property by allocated loan amount is 2121 Gardner Street, a 378,270 square foot manufacturing facility situated on approximately 58.9 acres in Elliston, Virginia. 2121 Gardner Street was constructed in 2000 and consists of an industrial component (approximately 81.4% of the 2121 Gardner Street property) and an office component (approximately 18.6% of the 2121 Gardner Street property). The industrial component features 22 to 40 foot clear heights, two drive-in grade level doors and 33 dock-high doors.

 

2121 Gardner Street is currently 100.0% leased to Rowe Fine Furniture on a triple net basis through July 2028, with four five-year renewal options. 2121 Gardner Street is the corporate headquarters for Rowe Fine Furniture. Founded 70 years ago, Rowe Fine Furniture manufactures upholstered furniture, which is sold through major and independent home furnishing retailers across the

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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U.S. INDUSTRIAL PORTFOLIO III

 

United States and abroad. 2121 Gardner Street accounts for approximately 13.1% and 14.1% of the net rentable area and underwritten base rent, respectively, of the U.S. Industrial Portfolio III Properties.

 

975 Cottonwood Avenue. The second largest property by allocated loan amount is 975 Cottonwood Avenue, a 175,042 square foot warehouse and distribution facility situated on approximately 18.2 acres in Hartland, Wisconsin. 975 Cottonwood Avenue was originally constructed in 2000 with an addition constructed in 2015 and consists of an industrial component (approximately 79.2% of the 975 Cottonwood Avenue property) and an office component (approximately 20.8% of the 975 Cottonwood Avenue property). The industrial component features 25 to 26-foot clear heights, three drive-in grade level doors and six dock-high doors.

 

975 Cottonwood Avenue is currently 100.0% leased to Dorner Manufacturing Corp. on a triple net basis through October 2035. 975 Cottonwood Avenue is the corporate headquarters for Dorner Manufacturing Corp. Founded in 1966, Dorner Manufacturing Corp. is a privately held leader in the design, application, manufacturing, and integration of conveyor systems. 975 Cottonwood Avenue accounts for approximately 6.1% and 8.6% of the net rentable area and underwritten base rent, respectively, of the U.S. Industrial Portfolio III Properties.

 

4925 Bulls Bay Highway. The third largest property by allocated loan amount is 4925 Bulls Bay Highway, a 198,408 square foot warehouse and distribution facility situated on approximately 13.3 acres in Jacksonville, Florida. 4925 Bulls Bay Highway was constructed in 2006 and consists of an approximately 92.0% industrial component and an approximately 8.0% office component. The industrial component of the property features approximately 24-foot clear heights, 24 drive-in grade level doors and two dock-high doors.

 

4925 Bulls Bay Highway is currently 100.0% leased to Southeastern Aluminum Products on a triple net basis through February 2027. 4925 Bulls Bay Highway is the headquarters for Southeastern Aluminum Products. Founded in 1952, Southeastern Aluminum Products manufactures and distributes bathroom shower doors and enclosures. 4925 Bulls Bay Highway accounts for approximately 6.9% and 8.3% of the net rentable area and underwritten base rent, respectively, of the U.S. Industrial Portfolio III Properties.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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U.S. INDUSTRIAL PORTFOLIO III

 

The following table presents certain information relating to the tenancy at the U.S. Industrial Portfolio III Properties:

 

Major Tenants(1)

 

  Property Name Credit
Rating
(Fitch/

Moody’s/
S&P)(2)
Tenant NRSF % of
NRSF
Annual U/W Base Rent PSF(3) Annual
U/W Base
Rent(3)
% of
Total Annual U/W
Base Rent
Lease
Expiration
Date
               
Major Tenants              
Rowe Fine Furniture(4) Various(5) NR/NR/NR 695,414 24.1% $3.26 $2,266,842 18.6% 7/31/2028(5)
Ryko Solutions, Inc. 1500 Southeast 37th Street NR/NR/NR 248,257 8.6% $2.97 $736,590 6.0% 8/31/2032
Northern Stamping Co. Various(6) NR/NR/NR 241,354 8.4% $2.80 $674,610 5.5% 11/30/2031
Decorative Panels International 2900 & 2950 Hill Avenue NR/NR/NR 237,698 8.2% $2.35 $557,956 4.6% 11/30/2030
Southeastern Aluminum Products 4925 Bulls Bay Highway NR/NR/NR 198,408 6.9% $5.10 $1,011,027 8.3% 2/28/2027
Dorner Manufacturing Corp. 975 Cottonwood Avenue NR/NR/NR 175,042 6.1% $5.96 $1,043,145 8.6% 10/31/2035
Sigma Corporation Various(7) NR/NR/NR 168,035 5.8% $3.49 $586,055 4.8% 7/31/2031
KDM Signs, Inc. 10450 Medallion Drive NR/NR/NR 151,506 5.2% $5.32 $805,985 6.6% 7/31/2025
LTI Flexible Products, Inc. 53208 Columbia Drive NR/B3/NR 117,938 4.1% $3.63 $427,559 3.5% 10/31/2026
TAC Materials. Inc. 1700 Highland Road NR/NR/NR 115,169 4.0% $4.51 $519,926 4.3% 8/31/2028
Accupac, Inc. 1501 Industrial Boulevard NR/NR/NR 112,253 3.9% $6.02 $675,321 5.5% 3/31/2032
Halifax Sarasota LLC 1800 University Parkway NR/NR/NR 105,752 3.7% $4.65 $492,211 4.0% 1/31/2032
DDC Center Holding Corp. 1001 DDC Way NR/NR/NR 66,444 2.3% $10.58 $702,893 5.8% 7/31/2025
Bacharach, Inc. 621 Hunt Valley Circle NR/NR/NR 61,796 2.1% $8.14 $503,152 4.1% 12/31/2024
The San Diego Union - Tribune(8) 1152 Armorlite Drive NR/B1/B 44,313 1.5% $7.77 $344,312 2.8% 12/31/2027
Amphenol Custom Cable, Inc.(9) 3221 Cherry Palm Drive NR/Baa1/BBB+ 38,624 1.3% $7.06 $272,844 2.2% 7/31/2028
The Chrysalis Center, Inc.(10) 3800 West Broward Boulevard NR/NR/NR 32,688 1.1% $17.17 $561,350 4.6% 12/31/2027
Occupied Collateral Total     2,810,691 97.4% $4.33 $12,181,778 100.0%  
                 
Vacant Space(11)     75,902 2.6%        
                 
Collateral Total   2,886,593 100.0%        
                 

 

(1)Information obtained from the underwritten rent roll.

(2)Credit ratings are those of the parent company whether or not the parent company guarantees the lease.

(3)Annual U/W Base Rent PSF and Annual U/W Base Rent include contractual rent steps through September 2018, totaling $289,801.

(4)The Rowe Fine Furniture lease expires July 31, 2028 at both properties. Rowe Fine Furniture has four, five year renewal options at the 1972 Salem Industrial Drive Property and four, five year renewal options at the 2121 Gardner Street Property. Rowe Fine Furniture subleases 126,275 square feet of its space at the 1972 Salem Industrial Drive property to Turman Lumber Company at $1.60 PSF. Annual U/W Base Rent reflects the blend of the lower sublease rent and the contractual rent of the respective square footage.

(5)Rowe Fine Furniture is the sole tenant at two of the U.S. Industrial Portfolio III Properties: 1972 Salem Industrial Drive (317,144 square feet, 11.0% of total square feet and 4.5% of Total Annual U/W Base Rent) and 2121 Gardner Street (378,270 square feet, 13.7% of total square feet and 14.1% of Total U/W Base Rent).

(6)Northern Stamping Co. is the sole tenant at two of the U.S. Industrial Portfolio III Properties: 6600 Chapek Pkwy (157,950 square feet, 5.5% of total square feet and 2.8% of Total Annual U/W Base Rent) and 7750 Hub Pkwy (83,404 square feet, 2.9% of total square feet and 2.8% of Total Annual U/W Rent). The Northern Stamping Co. lease expires December 31, 2027 at both properties.

(7)Sigma Corporation is the sole tenant at two of the U.S. Industrial Portfolio III Properties: 5000 Askins Lane (100,040 square feet, 3.5% of total square feet and 2.9% of Total Annual U/W Base Rent) and 21699 Torrence Ave & 2701 Kalvelage Drive (67,995 square feet, 2.4% of total square feet and 1.9% of Total Annual U/W Rent). The Sigma Corporation lease expires July 31, 2031 at both properties.

(8)The San Diego Union – Tribune subleases its entire space to ACI-California, LLC at $7.77 PSF. Annual U/W Base Rent reflects the sublease rent, which is lower than the prime lease rent.

(9)Amphenol Custom Cable, Inc. has the right to terminate its lease without penalty on (i) November 1, 2018, and (ii) November 1, 2024, in each case, with 180 days’ notice.

(10)The Chrysalis Center, Inc. subleases 10,303 square feet of its space to Bank of America at $23.49 PSF. Annual U/W Base Rent reflects The Chrysalis Center, Inc.’s contractual rent at $17.17.

(11)The entire 900 Chaddick Drive property is shown as Vacant Space. The property is currently 100.0% leased to PNC Acquisition Company, Inc. through January 2019. PNC Acquisition Company, Inc. is currently dark at the 900 Chaddick Drive property. In the event PNC Acquisition Company, Inc. does not renew its lease at expiration in January 2019, PNC Acquisition Company, Inc. will be required to pay a non-renewal fee of $380,000 in connection with the non-renewal notice on or before January 31, 2018. No rent was underwritten for the 900 Chaddick Drive property.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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The following table presents certain information relating to the lease rollover schedule at the U.S. Industrial Portfolio III Properties:

 

Lease Expiration Schedule(1)(2)

 

Year Ending
 December 31,
No. of Leases Expiring Expiring NRSF % of Total NRSF Cumulative
Expiring
NRSF
Cumulative % of Total
NRSF
Annual
 U/W
Base Rent
% of Total Annual U/W Base Rent Annual
 U/W
Base Rent
 PSF(3)
MTM 0 0 0.0% 0 0.0% $0 0.0% $0.00
2017 0 0 0.0% 0 0.0% $0 0.0% $0.00
2018 0 0 0.0% 0 0.0% $0 0.0% $0.00
2019 0 0 0.0% 0 0.0% $0 0.0% $0.00
2020 0 0 0.0% 0 0.0% $0 0.0% $0.00
2021 0 0 0.0% 0 0.0% $0 0.0% $0.00
2022 0 0 0.0% 0 0.0% $0 0.0% $0.00
2023 0 0 0.0% 0 0.0% $0 0.0% $0.00
2024 1 61,796 2.1% 61,796 2.1% $503,152 4.1% $8.14
2025 2 217,950 7.6% 279,746 9.7% $1,508,878 12.4% $6.92
2026 1 117,938 4.1% 397,684 13.8% $427,559 3.5% $3.63
2027 3 275,409 9.5% 673,093 23.3% $1,916,689 15.7% $6.96
Thereafter 13 2,137,598 74.1% 2,810,691 97.4% $7,825,500 64.2% $3.66
Vacant(3) 0 75,902 2.6% 2,886,593 100.0% $0 0.0% $0.00
Total/Weighted Average 20 2,886,593 100.0%     $12,181,778 100.0% $4.33

 

(1)Information obtained from the underwritten rent roll.

(2)Certain tenants may have lease termination options that are exercisable prior to the originally stated expiration date of the subject lease and that are not considered in the Lease Expiration Schedule.

(3)The entire 900 Chaddick Drive property is shown as Vacant. The property is currently 100.0% leased to PNC Acquisition Company, Inc. through January 2019. PNC Acquisition Company, Inc. is currently dark at the 900 Chaddick Drive property. In the event PNC Acquisition Company, Inc. does not renew at expiration in January 2019, PNC Acquisition Company, Inc. will be required to pay a non-renewal fee of $380,000 in connection with the non-renewal notice on or before January 31, 2018. No rent was underwritten for the 900 Chaddick Drive property. Weighted Average Annual U/W Base Rent PSF excludes vacant space.

 

The following table presents historical occupancy percentages at the U.S. Industrial Portfolio III Properties:

 

Historical Occupancy

 

12/31/2013(1)

12/31/2014(1)

12/31/2015(1)

12/31/2016(1)

11/1/2017(2)

100.0% 100.0% 100.0% 100.0% 100.0%

 

(1)Information obtained from the borrower.

(2)Information obtained from the underwritten rent roll. Occupancy includes PNC Acquisition Company, Inc. (75,902 SF, 2.6% of net rentable area), which leases 100.0% of the space at the 900 Chaddick Drive property but is currently dark.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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U.S. INDUSTRIAL PORTFOLIO III

 

Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and the underwritten net cash flow at the U.S. Industrial Portfolio III Properties:

 

Cash Flow Analysis

 

  2014 2015 2016 TTM 6/30/2017 U/W % of U/W Effective Gross Income U/W $ per SF
  Base Rent $11,275,200 $11,626,356 $12,032,044 $12,183,306 $12,181,778(1) 79.7% $4.22
  Grossed Up Vacant Space 0 0 0 0 377,424 2.5 0.13
  Total Reimbursables(3) 2,264,342 2,355,463 2,290,350 2,265,200 3,675,807 24.0 1.27
  Other Income 216,870 768 3,219 0 0 0.0 0.00
  Less Vacancy & Free Rent

0

0

0

0

(942,766)(2)

(6.2)

(0.33)

  Effective Gross Income $13,756,412 $13,982,587 $14,325,613 $14,448,506 $15,292,243 100.0% $5.30
               
  Total Operating Expenses $2,264,342 $2,356,524 $2,270,350 $2,245,198 $3,981,653 26.0% $1.38
               
 
  Net Operating Income $11,492,070 $11,626,063 $12,055,263 $12,203,308 $11,310,590 74.0% $3.92
TI/LC 0 0 0 0 596,602 3.9 0.21
   Capital Expenditures

0

0

0

0

298,573

2.0

0.10

  Net Cash Flow $11,492,070 $11,626,063 $12,055,263 $12,203,308 $10,415,416 68.1% $3.61
               
NOI DSCR(3) 1.63x 1.65x 1.71x 1.73x 1.60x    
NCF DSCR(3) 1.63x 1.65x 1.71x 1.73x 1.48x    
NOI DY(3) 9.5% 9.6% 10.0% 10.1% 9.4%    
NCF DY(3) 9.5% 9.6% 10.0% 10.1% 8.6%    

 

(1)U/W Base Rent includes contractual rent steps through September 2018 totalling $280,181. With respect to three of the U.S. Industrial Portfolio III Properties, all or a portion of the space is subleased. Base Rent reflects the blend of the lower sublease rent and the contractual rent of the respective square footage, or in the case of The Chrysalis Center, Inc. property, the prime lease rent, which is lower than the sublease rent.

(2)The underwritten economic vacancy is 5.0%. The U.S. Industrial Portfolio III Properties are 100.0% occupied as of November 1, 2017, including PNC Acquisition Company, Inc. (75,902 SF, 2.6% of net rentable area), which leases 100.0% of the space at the 900 Chaddick Drive property but is currently dark.

(3)The debt service coverage ratios and debt yields are based on the U.S. Industrial Portfolio III Whole Loan.

 

Appraisal. As of the appraisal valuation date of June 16, 2017, the U.S. Industrial Portfolio III Properties had an “As-is” appraised value of $166,300,000, which reflects a 4.0% premium attributed to the aggregate “As-is” value of the U.S. Industrial Portfolio III Properties as a whole. The sum of the “As-is” values for each of the U.S. Industrial Portfolio III Properties on an individual basis is $159,940,000, which represents a Cut-off Date LTV Ratio and Maturity Date LTV Ratio of 75.4% and 68.6%, respectively.

 

Environmental Matters. According to Phase I environmental site assessments (“ESA”) with dates ranging from August 2, 2017 to August 23, 2017, there was no evidence of any recognized environmental conditions at the U.S. Industrial Portfolio III Properties with the exception of the 1972 Salem Industrial Drive and 2900 & 2950 Hill Avenue properties. The 1972 Salem Industrial Drive property is equipped with four below-ground hydraulic lifts, which have hydraulic tanks, each containing 40 gallons of hydraulic fluid. There is potential for release of the hydraulic fluid into the surrounding groundwater and soil due to the age of the tanks. According to a Phase I ESA report performed in 2008, a Phase II ESA was performed at the 1972 Salem Industrial Drive property in 2006 to evaluate the presence of former underground storage tanks (USTs) and surface stains near a diesel above-ground storage tank (AST) at the 1972 Salem Industrial Drive property. No removal documentation was on file regarding the USTs. However, stained soil was reportedly removed from the AST’s surrounding area in 2006. The Phase II ESA identified chemicals in the groundwater in the surrounding area of the former USTs, as well as stained surface soil in the surrounding area of the AST, suggesting further and continued leakage. Based on the absence of the additional documentation and soil analysis, the ESA concluded that this represents a recognized environmental condition. The borrower has obtained environmental insurance for a period of 10 years, which is to be renewed for an additional period of 36 months, with limits of $5,000,000 per incident and $5,000,000 in the aggregate, with a deductible of $100,000.

 

The 2900 & 2950 Hill Avenue property contained hydraulic lifts, which were reportedly removed in the 1970s. However, no documentation is available regarding the potential hydraulic fluid releases in the area of the former lifts. Additionally, floor drains and various other subfloor structures located in the former truck maintenance area discharged into a drainage ditch at the 2900 & 2950 Hill Avenue property until 2001. Based on the absence of the additional documentation and soil analysis, and based on the former use of the 2900 & 2950 Hill Avenue property, as well as the potential fluid releases, the Phase I ESA concluded that this represents a recognized environmental condition. Environmental insurance was obtained in lieu of a Phase II investigation. The borrower has obtained environmental insurance for a period of 10 years, which is to be renewed for an additional period of 36 months, with limits of $5,000,000 per incident and $5,000,000 in the aggregate, with a deductible of $100,000.

 

Market Overview and Competition. The U.S. Industrial Portfolio III Properties are geographically diverse, located in 21 different cities across 10 states. The U.S. Industrial Portfolio III Properties are located in Ohio (28.1% of net rentable area), Virginia (24.1% of net rentable area), Florida (13.0% of net rentable area), Iowa (8.6% of net rentable area), Wisconsin (6.1% of net rentable area),

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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Pennsylvania (6.0% of net rentable area) and Illinois (5.0% of net rentable area) with 9.1% of net rentable area located across an additional three other states.

 

The Borrowers. The borrowers consist of 21 single-purpose Delaware limited liability companies, each with two independent directors. Michael Brennan, Robert Vanecko, Scott McKibben, Sam Mandarino, Allen Crosswell, Troy MacMane and Greenwood Holding Company, LLC, each a principal of Brennan Investment Group (“Brennan”), are the guarantors of certain nonrecourse carveouts under the U.S. Industrial Portfolio III Whole Loan. The borrowers are indirectly owned 10% by USIP III Manager LLC (of which Michael Brennan and William Vanecko are non-member managers) and 90% by Northstar Summit Holding III, LLC. Northstar Summit Holding III, LLC is indirectly owned by Deep Springs, L.P., a Cayman Island limited partnership owned by non-U.S. investors, of which the general partner is Morningstar Summit Holdings Company Limited and the manager is CDH Real Estate Investment Management Company Limited, which is controlled by Li Guo, William Shang Wi Hsu and Xiaoming Song. The non-recourse carveout guarantors collectively own 1.6% of the equity in the borrowers. Several of the non-recourse carveout guarantors reported that they or entities affiliated with them had been involved in foreclosures, discounted payoffs, modifications and/or litigation related to commercial real estate loans and/or investments in commercial real properties. See “Description of the Mortgage Pool—Loan Purpose, Default History, Bankruptcy Issues and Other Proceedings” in the Preliminary Prospectus.

 

The Borrower Sponsor. The borrower sponsor is Brennan Investment Group Acquisitions LLC (“Brennan”). Brennan is a real estate investments firm specializing in investments in industrial properties. Brennan Management LLC (an affiliate of Brennan) manages industrial assets. Affiliates of Brennan own a portfolio of industrial properties totaling approximately 33.0 million SF. Michael Brennan, the co-founder and chairman of Brennan, was the co-founder of First Industrial Realty Trust in 1994 and served as President, CEO and member of the Board of Directors until 2008.

 

Escrows. The loan documents provide for upfront reserves in the amount of $453,411 for security deposits held by the borrowers and $120,000 for the re-leasing of the PNC Acquisition, Inc. space at the 900 Chaddick Drive property. The borrowers are also required to deposit the $380,000 non-renewal fee into the TI/LC reserve, if paid by PNC Acquisition, Inc. in connection with the non-renewal notice on or before January 31, 2018. At the origination of the U.S. Industrial Portfolio III Whole Loan, the borrowers agreed to complete approximately $729,003 of required repairs, for which no reserve deposit was required at origination. The borrowers have until June 30, 2018 to complete the repair work, after which time they are required under the loan documents to deposit into the required repairs reserve the aggregate amount for unfinished required repairs set forth on the required repairs schedule; provided that if a required repair is a tenant’s obligation under its lease and such required repair is not completed by June 30, 2018, the borrowers will have additional time as reasonably necessary to complete the required repairs, which additional time may not exceed an additional six months.

 

The loan documents provide for ongoing monthly escrows of $6,250 for capital expenditures. The loan documents do not require ongoing monthly escrows for taxes and insurance premiums as long as (i) no event of default has occurred and is continuing, (ii) to the extent that the applicable tenant is required to pay such taxes and insurance premiums, such taxes and insurance premiums are paid prior to delinquency and (iii) the borrower provides the lender with evidence that the U.S. Industrial Portfolio III Properties are insured via an acceptable blanket insurance policy and such policy is in full force and effect.

 

The loan documents provide for ongoing monthly TI/LC escrows commencing on each payment date following the Rent Sweep Start Date (as set forth in the table below) for each Expiring Tenant (as set forth in the table below), an amount equal to such expiring Tenant’s Monthly Sweep Amount (as set forth in the table below) for the related property until the applicable Max TI/LC Reserve Cap (as set forth in the table below) has been deposited with the lender.

 

Expiring Tenant Bacharach, Inc. DDC Center KDM Signs LTI Flexible Products Southeastern Aluminum The Chrysalis Center, Inc. Rowe Fine Furniture(1) Rowe Fine Furniture(2)
Lease Roll Date 12/31/2024 7/31/2025 7/31/2025 10/31/2026 2/28/2027 12/31/2027 7/31/2028 7/31/2028
Rent Sweep Start Date 7/1/2024 2/1/2025 2/1/2025 5/1/2026 9/1/2026 7/1/2026 4/1/2026 4/1/2026
Monthly Sweep Amount $30,898 $143,962 $75,753 $58,969 $99,204 $81,720 $157,613 $105,715
Max TI/LC Reserve Cap $185,388 $863,772 $454,518 $353,814 $595,224 $490,320 $945,675 $634,288

 

(1)Represents Rowe Fine Furniture at the 2121 Gardner Street property.

(2)Represents Rowe Fine Furniture at the 1972 Salem Industrial Drive property.

 

In addition, on each payment date during a Major Tenant Rollover Reserve Event (as defined below), the borrower is required to deposit the related tenant’s Monthly Sweep Amount into the TI/LC reserve until the Max TI/LC Reserve Cap has been deposited.

 

A “Major Tenant Rollover Reserve Event” means with respect to Rowe Fine Furniture or any replacement tenant therefor: (i) a period that commences on the earlier of (a) the date such tenant gives notice to vacate or exercise any termination option and (b) the date six months prior to the maturity date of the U.S. Industrial Portfolio III Whole Loan, and ends when either (x) such tenant’s lease has been renewed on terms and conditions acceptable to the lender, and the lender receives a tenant estoppel stating that such tenant is in occupancy of the entirety of its space and paying full contractual rent or (y) the entirety of such tenant’s space has been relet to one or more replacement tenants reasonably acceptable to the lender under a lease reasonably acceptable to the lender and the lender receives a tenant estoppel stating that such tenant is in occupancy of the entirety of its space and paying full contractual

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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rent (a “Replacement Tenant Cure”) or (z) the Max TI/LC Reserve Cap has been deposited; (ii) a period that commences on the date such tenant has vacated or gone dark in its space or terminated or given notice of intent to terminate its lease and ends when either (x) such tenant is in occupancy of the entirety of its space and the lender receives a tenant estoppel stating that such tenant is in occupancy of the entirety of its space and paying full contractual rent, (y) a Replacement Tenant Cure has occurred or (z) the Max TI/LC Reserve Cap has been deposited; or (iii) a period that commences on the date the tenant has made or been the subject of a bankruptcy filing and ends when either (x) such tenant’s lease has been affirmed in bankruptcy and the lender receives a tenant estoppel stating that such tenant is in occupancy of the entirety of its space and paying full contractual rent, or (y) a Replacement Tenant Cure has occurred or (z) the Max TI/LC Reserve Cap has been deposited.

 

Lockbox and Cash Management. The U.S. Industrial Portfolio III Whole Loan requires a lender-controlled lockbox account, which is already in place, and that the borrower and property manager direct all tenants to pay rent payments directly into such lockbox account. The loan documents also require that all rents received by the borrower or property manager be deposited into the lockbox account within two business day of receipt. Prior to the occurrence of a Cash Management Period (as defined below), all excess funds on deposit in the lockbox account are disbursed to the borrower. During a Cash Management Period, all funds are swept to a lender-controlled cash management account and disbursed on each payment date in accordance with the loan documents, with all excess cash flow to be deposited to an excess cash reserve to be held as additional security for the U.S. Industrial Portfolio III Whole Loan.

 

A “Cash Management Period” will commence upon the earlier of (a) the occurrence and continuance of an event of default; or (b) the amortizing debt service coverage ratio (after deducting the amount of any Low DSCR Collateral (as defined below), from the principal balance of the U.S. Industrial Portfolio III Whole Loan) is below 1.15x for six consecutive months, based on the trailing six months operating statement and rent roll and ends upon (i), with respect to clause (a), the cure of such event of default, as accepted by the lender in its sole discretion, or (ii) with respect to clause (b), either (x) the amortizing debt service coverage ratio (calculated in the manner set forth in (b)) is at least 1.15x for six consecutive calendar months or (y) Low DSCR Collateral shall have been delivered to the lender.

 

The “Low DSCR Collateral” means cash or a letter of credit meeting the requirements of the U.S. Industrial Portfolio III Whole Loan documents, in an amount by which the principal balance of the U.S. Industrial Portfolio III Whole Loan would need to be reduced such that, after recomputing the related monthly payment under a 360 month amortization schedule, the debt service coverage ratio would be at least 1.15x. Low DSCR Collateral may be released if the amortizing debt service coverage ratio for six consecutive months, without giving effect to the Low DSCR Collateral, is at least 1.15x.

 

Property Management. The U.S. Industrial Portfolio III Properties are managed by Brennan Management LLC, an affiliate of the borrower.

 

Assumption. The borrower has a right to transfer the U.S. Industrial Portfolio III Properties, provided that certain conditions are satisfied, including (i) no event of default has occurred and is continuing; (ii) the lender has reasonably determined that the proposed transferee and guarantor satisfy the lender’s credit review and underwriting standards, taking into consideration transferee experience, financial strength and general business standing; (iii) execution of a recourse guaranty and an environmental indemnity by an affiliate of the transferee; and (iv) the lender has received confirmation from Moody’s, Fitch and KBRA that such assumption will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the Series 2017-C41 Certificates and similar confirmations from each rating agency rating any securities backed by any U.S. Industrial Portfolio III pari passu companion loans with respect to the ratings of such securities.

 

Partial Release. Following the lockout period and prior to the open prepayment date, the borrowers are permitted to partially release any of the U.S. Industrial Portfolio III Properties, subject to certain conditions including (i) no event of default has occurred and is continuing; (ii) the defeasance of an amount of principal equal to the Release Amount (as defined below); (iii) the principal balance is reduced by an amount that would result in the debt service coverage ratio (as calculated in the U.S. Industrial Portfolio III Whole Loan documents) of the remaining U.S. Industrial Portfolio III Properties following the release being no less than the greater of (a) 1.40x and (b) the lesser of (1) 1.75x or (2) the debt service coverage ratio of the U.S. Industrial Portfolio III Properties immediately prior to the release; (iv) the principal balance is reduced by an amount that would result in the debt yield (as calculated in the U.S. Industrial Portfolio III Whole Loan documents) of the remaining U.S. Industrial Portfolio III Properties following the release being no less than the greater of (a) 8.4% and (b) the lesser of (1) 10.1% or (2) the debt yield of the U.S. Industrial Portfolio III Properties immediately prior to the release; (v) after giving effect to the release, no remaining single tenant’s gross rent shall exceed 30% of the total remaining properties’ gross rent; and (vi) the lender receives a legal opinion that the release satisfies REMIC requirements.

 

The “Release Amount” will be (i) with respect to the release of properties representing up to 15% of the lesser of the total net rentable area and the total gross revenue, not to exceed five properties, 100% of the allocated loan amount for each such property, plus the amount, if any necessary to satisfy the debt service coverage ratio and debt yield tests above; (ii) with respect to the release of properties representing the next 5% of the lesser of the total net rentable area and the total gross revenue, 105% of the allocated loan amount for each such property, plus the amount, if any necessary to satisfy the debt service coverage ratio and debt yield tests above; and (iii) thereafter, with respect to the remaining properties,110% of the allocated loan amount, plus the amount, if any necessary to satisfy the debt service coverage ratio and debt yield tests above.

 

Free Release. The borrowers are permitted to obtain the free release of an unimproved release parcel at the 10450 Medallion Drive property, provided that certain conditions are satisfied, including among others, that the release (i) does not adversely affect the use or operation of, or access to, the remaining portion of the property, (ii) does not violate any leases or legal requirements, compliance with zoning and separate tax lot requirements, and (iii) is in compliance with REMIC requirements. Pursuant to its lease, the tenant at the 10450 Medallion Drive Property, KDM Signs, Inc., has the right to cause the subdivision of such property into such release parcel and the remaining property, and to purchase such release parcel for a purchase price of $1.00.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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Real Estate Substitution. Not permitted.

 

Rights of First Offer. Not permitted.

 

Subordinate and Mezzanine Indebtedness. None.

 

Ground Lease. None.

 

Terrorism Insurance. The loan documents require that the “all risk” insurance policy required to be maintained by the borrower provide coverage for terrorism in an amount equal to the full replacement cost of the U.S. Industrial Portfolio III Properties. The loan documents also require business interruption insurance for a period of at least 12 months that covers loss or damage by terrorist acts, together with a six-month extended period of indemnity; provided that such coverage is available.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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(GRAPHIC) 

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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 (GRAPHIC)

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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No. 6 – National Office Portfolio
 
Loan Information   Property Information
Mortgage Loan Seller: Ladder Capital Finance LLC   Single Asset/Portfolio: Portfolio
      Property Type: Office
Original Principal Balance(1): $30,000,000   Specific Property Type: Suburban
Cut-off Date Balance(1): $29,965,119   Location(4): Various
% of Initial Pool Balance: 3.8%   Size: 2,572,700 SF
Loan Purpose: Refinance   Cut-off Date Balance Per SF(1): $71.83
Borrower Name:

JBA Portfolio, LLC

 

  Year Built/Renovated(4): Various
Borrower Sponsors: Andrew J. Segal   Title Vesting: Fee
Mortgage Rate: 4.610%   Property Manager: Self-managed
Note Date: October 6, 2017      
Anticipated Repayment Date: NAP   3rd Most Recent Occupancy (As of): 66.3% (12/31/2014)
Maturity Date: October 6, 2027   2nd Most Recent Occupancy (As of): 70.7% (12/31/2015)
IO Period: None   Most Recent Occupancy (As of): 72.1% (12/31/2016)
Loan Term (Original): 120 months   Current Occupancy (As of): 77.5% (8/31/2017)
Seasoning: 1 month    
Amortization Term (Original): 360 months   Underwriting and Financial Information:
Loan Amortization Type: Amortizing Balloon      
Interest Accrual Method: Actual/360   4th Most Recent NOI (As of): $14,479,070 (12/31/2014)
Call Protection(2): L(25),D(91),O(4)   3rd Most Recent NOI (As of): $16,387,470 (12/31/2015)
Lockbox Type: Hard/Springing Cash Management   2nd Most Recent NOI (As of)(5): $14,293,715 (12/31/2016)
Additional Debt(1): Yes   Most Recent NOI (As of)(5): $16,618,026 (TTM 8/31/2017)
Additional Debt Type(1): Pari Passu; Future Mezzanine    
      U/W Revenues: $38,630,025
      U/W Expenses: $18,051,854
Escrows and Reserves(3):         U/W NOI(5): $20,578,171
          U/W NCF: $18,648,646
Type: Initial Monthly Cap (If Any)   U/W NOI DSCR(1): 1.81x
Taxes $2,076,255 $337,483  NAP     U/W NCF DSCR(1): 1.64x
Insurance $271,808 $20,908 NAP   U/W NOI Debt Yield(1): 11.1%
Replacement Reserves $150,000 $53,598 $1,157,715   U/W NCF Debt Yield(1): 10.1%
TI/LC Reserve $7,176,724 $0 $3,859,050   As-Is Appraised Value: $287,750,000
Outstanding TI/LC $2,575,793 $0 NAP   As-Is Appraisal Valuation Date(6): Various
Deferred Maintenance $196,044 $0 NAP   Cut-off Date LTV Ratio(1): 64.2%
Free Rent Reserve $1,656,704 $0 NAP   LTV Ratio at Maturity(1): 52.2%
             
               
(1)See “The Mortgage Loan” and “Subordinate and Mezzanine Indebtedness” sections. All statistical financial information related to balances per square foot, loan-to-value ratios, debt service coverage ratios and debt yields are based on the National Office Portfolio Whole Loan (as defined below).

(2)The lockout period will be at least 25 payments, beginning with and including the first payment date of November 6, 2017. Defeasance of the National Office Portfolio Whole Loan is permitted at any time after the earlier to occur of (i) October 6, 2021 or (ii) two years after the closing date of the securitization that includes the last note to be securitized.

(3)See “Escrows” section.

(4)See table below titled “National Office Portfolio Properties.”

(5)The increase in Net Operating Income from TTM 8/31/2017 to UW is primarily due to an increase in portfolio-wide occupancy from 72.1% as of 12/31/2016 to 77.5% as of 8/31/2017.

(6)See “Appraisal” section.

 

The Mortgage Loan. The mortgage loan (the “National Office Portfolio Mortgage Loan”) is part of a whole loan (the “National Office Portfolio Whole Loan”) that is evidenced by six pari passu promissory notes (Notes A-1-A, A-1-B, A-2, A-3, A-4-A and A-5-A) secured by the fee interest encumbering an 18-property portfolio of office properties totaling 2,572,700 SF located throughout the Dallas, Texas metropolitan statistical area (“MSA”) (1,605,894 SF; 62.4% of NRA), the Atlanta, Georgia MSA (490,913 SF; 19.1% of NRA), the Phoenix, Arizona MSA (263,681 SF; 10.2% of NRA), and the Chicago, Illinois MSA (212,212 SF; 8.2% of NRA) (collectively, the “National Office Portfolio Properties” or the “National Office Portfolio”). The National Office Portfolio Whole Loan was originated on October 6, 2017 by Ladder Capital Finance LLC (“LCF”). The National Office Portfolio Whole Loan had an original principal balance of 185,000,000, has an outstanding principal balance as of the Cut-off Date of $184,784,901 and accrues interest at an interest rate of 4.610% per annum. The National Office Portfolio Whole Loan had an initial term of 120 months, has a remaining term of 119 months as of the Cut-off Date and requires payments of principal and interest based on a 30-year amortization schedule. The National Office Portfolio Whole Loan matures on October 6, 2027.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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The National Office Portfolio Mortgage Loan, which is evidenced by the non-controlling Note A-3 and will be contributed to the WFCM 2017-C41 trust, had an original principal balance of $30,000,000 and has an outstanding principal balance as of the Cut-off Date of $29,965,119. The non-controlling Note A-5-A, with an aggregate original principal balance of $35,000,000 was contributed to the UBS 2017-C5 trust. The controlling Note A-1-A and the non-controlling Notes A-1-B, A-2, and A-4-A, with an aggregate original principal balance of $120,000,000, are currently held by LCF and are expected to be contributed one or more future trusts. The lender provides no assurances that any non-securitized pari passu note will not be split further. See “Description of the Mortgage Pool—The Whole Loans—The Serviced Whole Loans” and “Pooling and Servicing Agreement” in the Preliminary Prospectus.

 

Note Summary

 

Notes Original Balance   Note Holder Controlling Interest
A-1-A $35,000,000   LCF or an affiliate Yes
A-1-B $20,000,000   LCF or an affiliate No
A-2 $30,000,000   LCF or an affiliate No
A-3 $30,000,000   WFCM 2017-C41 No
A-4-A $35,000,000   LCF or an affiliate No
A-5-A $35,000,000   UBS 2017-C5 No
Total $185,000,000      

 

The defeasance lockout period will expire on the earlier to occur of (i) two years after the closing date of the securitization that includes the last National Office Portfolio promissory note to be securitized and (ii) October 6, 2021. Following the lockout period, the borrower has the right to defease the National Office Portfolio Whole Loan in whole, but not in part, on any date before July 6, 2027. In addition, the National Office Portfolio Whole Loan is prepayable without penalty on or after July 6, 2027, in whole, but not in part.

 

Sources and Uses

 

Sources         Uses      
Original whole loan amount $185,000,000   99.7%   Loan Payoff(1) $169,099,307   91.2%
Sponsor’s new cash contribution 500,000   0.3      Reserves 14,103,328   7.6
          Closing costs 2,297,365   1.2
Total Sources $185,500,000   100.0%   Total Uses $185,500,000   100.0%
(1)The loan payoff includes $129,463,638 of the previous loan amount for the National Office Portfolio Properties (as defined below) as well as $39,635,669 in an additional required pay down of the Beal Bank Facility (as defined below).

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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The Properties. The National Office Portfolio is comprised of 18 office properties totaling 2,572,700 SF located throughout the Dallas, Texas MSA (1,605,894 SF; 62.4% of NRA; 64.0% UW NOI), the Atlanta, Georgia MSA (490,913 SF; 19.1% of NRA; 17.8% UW NOI), the Phoenix, Arizona MSA (263,681 SF; 10.2% of NRA; 4.7% UW NOI), and the Chicago, Illinois MSA (212,212 SF; 8.2% of NRA; 13.5% UW NOI). The National Office Portfolio Properties were constructed between 1973 and 1987 and range in size from 46,769 SF to 381,383 SF. The National Office Portfolio Properties are 77.5% occupied as of August 31, 2017 and are leased to more than 1,000 tenants.

 

The following table presents certain information relating to the National Office Portfolio Properties:

 

National Office Portfolio Properties

 

Property Name City, State Allocated Cut-Off Date Balance(1) % of Portfolio Cut-Off Date Balance Occupancy(2) Year Built/Renovated  Net rentable area Appraised Value Allocated LTV(1)(3)
8330 LBJ Freeway Dallas, TX $34,212,175 18.5% 85.3% 1984/2010 381,383 $42,750,000 80.0%
101 East Park Boulevard Plano, TX $26,788,816 14.5% 87.1% 1983/2012 225,445 $36,100,000 74.2%
13601 Preston Road Dallas, TX $21,520,948 11.6% 82.0% 1973/2009 261,975 $27,500,000 78.3%
1750 East Golf Road Schaumburg, IL $17,479,653 9.5% 97.3% 1985/2013 212,212 $35,400,000 49.4%
14800 Quorum Drive Addison, TX $9,708,699 5.3% 76.7% 1981/2011 103,877 $13,550,000 71.7%
1995 North Park Place Atlanta, GA $8,629,954 4.7% 76.9% 1985/2013 99,920 $12,200,000 70.7%
Northlake - 2295 Parklake Dr NE Atlanta, GA $8,522,080 4.6% 79.8% 1973/2014 121,528 $10,600,000 80.4%
4751 Best Road Atlanta, GA $8,090,582 4.4% 84.2% 1987/2013 93,084 $11,900,000 68.0%
The Centre - 4099 McEwen Road Farmers Branch, TX $7,029,817 3.8% 77.6% 1979/2013 123,711 $11,800,000 59.6%
The Centre - 4101 McEwen Road Farmers Branch, TX $7,029,817 3.8% 61.3% 1979/2013 124,326 $12,100,000 58.1%
11225 North 28th Drive Phoenix, AZ $6,580,340 3.6% 78.6% 1982/2011 135,501 $9,070,000 72.6%
10000 North 31st Ave Phoenix, AZ $5,909,121 3.2% 64.4% 1982/2012 128,180 $9,900,000 59.7%
The Centre - 4001 McEwen Road Farmers Branch, TX $5,493,605 3.0% 70.3% 1980/2013 95,192 $10,000,000 54.9%
4425 W Airport Fwy Irving, TX $4,638,600 2.5% 71.6% 1981/2015 85,212 $8,400,000 55.2%
Northlake - 2302 Parklake Dr NE Atlanta, GA $4,095,233 2.2% 42.3% 1979/2014 111,223 $11,800,000 34.7%
Northlake - 2305&2309 Parklake Dr NE Atlanta, GA $3,362,086 1.8% 70.0% 1973/2014 65,158 $5,880,000 57.2%
12100 Ford Road Farmers Branch, TX $3,096,396 1.7% 57.2% 1979/2012 158,004 $12,500,000 24.8%
The Centre - 4000N&S McEwen Road Farmers Branch, TX $2,596,977 1.4% 100.0% 1979/2013 46,769 $6,300,000 41.2%
Total/Weighted Average   $184,784,901 100.0% 77.5%   2,572,700 $287,750,000 64.2%

 

(1)Allocated Cut-off Date Balance is based on the National Office Portfolio Whole Loan Cut-off Date balance.

(2)Information obtained from the underwritten rent roll dated August 31, 2017.

(3)There are no release provisions in the National Office Portfolio Whole Loan documents.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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The following table presents certain information relating to the tenancies at the National Office Portfolio Properties:

 

Major Tenants(1)

 

Tenant Name Credit Rating (Fitch/Moody’s/
S&P)(2)
Tenant NRSF % of
NRSF
Annual U/W Base Rent
PSF(3)
Annual
U/W Base
Rent(3)
% of Total Annual
U/W Base Rent
Lease
Expiration
Date
           
Major Tenants          
Career Education Corporation NR/NR/NR 116,387 4.5% $27.29 $3,176,713 8.8% 5/31/2020
Trinity Universal Insurance Co(4) A-/A3/A- 84,114 3.3% $16.50 $1,387,881 3.9% 6/30/2025
Assurance Agency, Ltd(5) NR/NR/NR 63,113 2.5% $27.19 $1,716,198 4.8% 9/30/2023
Nurtur Health, Inc.(6) NR/NR/NR 47,780 1.9% $16.50 $788,370 2.2% 12/31/2020
Centene Corporation(6) NR/NR/NR 46,769 1.8% $16.00 $748,304 2.1% 12/31/2020
Total Major Tenants 358,163 13.9% $21.83 $7,817,466 21.7%  
               
Non-Major Tenants   1,635,654 63.6% $17.22 $28,172,756 78.3%  
               
Occupied Collateral Total   1,993,817 77.5% $18.05 $35,990,222 100.0%  
               
Vacant Space   578,883 22.5%        
               
Collateral Total   2,572,700 100.0%        
               
(1)Information is based on the underwritten rent roll.

(2)Certain ratings are those of the parent company whether or not the parent guarantees the lease.

(3)Annual U/W Base Rent PSF and Annual U/W Base Rent include rent escalations through May 1, 2018

(4)Trinity Universal Insurance Co has a one-time termination option right effective June 30, 2022 with nine months’ notice.

(5)Assurance Agency, Ltd has a one-time termination option right effective September 30, 2019 with 12 months’ notice and payment of a termination fee.

(6)Centene Corporation and Nurtur Health, Inc. are affiliates.

 

The following table presents certain information relating to the lease rollover schedule at the National Office Portfolio Properties:

 

Lease Expiration Schedule(1)(2)

 

Year Ending
 December 31,
No. of Leases Expiring Expiring
NRSF
% of
Total
NRSF
Cumulative Expiring
NRSF
Cumulative % of Total
NRSF
Annual
 U/W
Base Rent(3)
% of Total Annual
U/W Base Rent
Annual
 U/W
Base Rent
 PSF(3)(4)
MTM/Other 51 39,513 1.5% 39,513 1.5% $270,677 0.8% $6.85
2017 109 85,872 3.3% 125,385 4.9% $1,444,085 4.0% $16.82
2018 497 472,242 18.4% 597,627 23.2% $8,109,026 22.5% $17.17
2019 136 237,336 9.2% 834,963 32.5% $3,923,323 10.9% $16.53
2020 129 453,555 17.6% 1,288,518 50.1% $8,888,453 24.7% $19.60
2021 48 169,035 6.6% 1,457,553 56.7% $2,752,426 7.6% $16.28
2022 41 125,942 4.9% 1,583,495 61.5% $2,295,525 6.4% $18.23
2023 16 178,109 6.9% 1,761,604 68.5% $3,897,421 10.8% $21.88
2024 7 31,737 1.2% 1,793,341 69.7% $579,435 1.6% $18.26
2025 7 105,069 4.1% 1,898,410 73.8% $1,756,997 4.9% $16.72
2026 5 11,420 0.4% 1,909,830 74.2% $237,306 0.7% $20.78
2027 3 29,575 1.1% 1,939,405 75.4% $732,317 2.0% $24.76
2028 & Beyond 5 54,412 2.1% 1,993,817 77.5% $1,103,231 3.1% $20.28
Vacant 0 578,883 22.5% 2,572,700 100.0% $0 0.0% $0.00
Total/Weighted Average 1,054 2,572,700 100.0%     $35,990,222 100.0% $18.05

 

(1)Information obtained from the underwritten rent roll.

(2)Certain tenants have lease termination options that are exercisable prior to the originally stated expiration date of the subject lease and which are not reflected in the Lease Expiration Schedule.

(3)Annual U/W Base Rent and Annual U/W Base Rent PSF include rent escalations through May 1, 2018.

(4)Weighted Average Annual U/W Base Rent PSF excludes vacant space.

 

The following table presents historical occupancy percentages at the National Office Portfolio Properties:

 

Historical Occupancy

 

12/31/2014(1)

12/31/2015(1)

12/31/2016(1)

8/31/2017(2)

66.3% 70.7% 72.1% 77.5%

 

(1)Information obtained from the borrower.

(2)Information obtained from the underwritten rent roll.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and the underwritten net cash flow at the National Office Portfolio Properties:

 

Cash Flow Analysis

 

 
2014
2015 2016

TTM

8/31/2017(1)

U/W(1) % of U/W Effective Gross Income

U/W $

per SF

Base Rent $29,707,261 $31,605,828 $29,782,062 $32,129,184 $35,148,882(2)      91.0% $13.66(2)
Grossed Up Vacant Space 0 0 0 0 10,595,946 27.4 4.12       
Total Reimbursables 1,053,998 1,438,663 1,599,768 1,768,146 2,773,638 7.2 1.08       
Other Income 675,665 835,275 680,692 707,505 707,505 1.8 0.28       
Less Vacancy & Credit Loss

0

0

0

0

(10,595,946)(3)

(27.4)

(4.12)   

Effective Gross Income $31,436,924 $33,879,766 $32,062,523 $34,604,835 $38,630,025 100.0% $15.02       
               
Total Operating Expenses 16,957,854 17,492,296 17,768,808 17,986,810 18,051,854 46.7 7.02       
 

 

 

 

 

 

 

 

Net Operating Income $14,479,070 $16,387,470 $14,293,715 $16,618,026 $20,578,171   53.3% $8.00       
TI/LC 0 0 0 0 1,286,350  3.3 0.50       
Capital Expenditures

0

0

0

0

643,175

    1.7

0.25    

Net Cash Flow $14,479,070 $16,387,470 $14,293,715 $16,618,026 $18,648,646    48.3% $7.25       
               
NOI DSCR(4) 1.27x 1.44x 1.25x 1.46x 1.81x    
NCF DSCR(4) 1.27x 1.44x 1.25x 1.46x 1.64x    
NOI DY(4) 7.8% 8.9% 7.7% 9.0% 11.1%    
NCF DY(4) 7.8% 8.9% 7.7% 9.0% 10.1%    
(1)The increase in Net Operating Income from TTM 8/31/2017 to U/W is primarily due to an increase in portfolio wide occupancy from 72.1% as of 12/31/2016 to 77.5% as of 8/31/2017.

(2)Annual U/W Base Rent PSF and Annual U/W Base Rent include contractual rent steps through May 2018, totalling $429,625.

(3)The underwritten economic vacancy is 21.8%. As of August 31, 2017, the National Office Portfolio Properties were 77.5% physically occupied.

(4)The debt service coverage ratios and debt yields are based on the National Office Portfolio Whole Loan.

 

Appraisal. As of the appraisal valuation dates ranging from July 13, 2017 to July 18, 2017, the National Office Portfolio Properties had an “as-is” appraised value of $287,750,000.

 

Environmental Matters. According to the Phase I environmental site assessments ranging from July 20, 2017 to July 31, 2017, there are no recognized environmental conditions at the National Office Portfolio Properties.

 

Market Overview and Competition. The National Office Portfolio Properties are located across the Dallas, Texas MSA (ten properties), the Atlanta, Georgia MSA (five properties), the Phoenix, Arizona MSA (two properties), and the Chicago, Illinois MSA (one property).

 

Dallas:

 

There are 10 National Office Portfolio Properties located in the Dallas, Texas MSA totaling 1,605,894 SF (62.4% of total portfolio SF), which generate $11,963,658 in UW NCF (64.2% of total underwritten base rent). According to the appraisal, the Dallas/Fort Worth office market has an inventory of 359.2 million SF of office space with 705,773 SF of positive absorption. As of second quarter 2017, the Dallas-Fort Worth MSA office market is 85.7% occupied with an average asking rent of $24.64 PSF. The properties are located in several submarkets: LBJ Freeway, Richardson/Plano, Las Colinas, and Mid Cities, which are discussed below.

 

According to the appraisal, the LBJ Freeway office submarket contains a total inventory of approximately 22.6 million SF of office space across 265 buildings. As of the second quarter 2017, the LBJ Freeway office submarket had a direct vacancy rate of 22.1% and a weighted average rental rate of $21.83 PSF. The Richardson/Plano office submarket contains a total inventory of 40.8 million SF of office space across 1,371 buildings. As of the second quarter of 2017, the Richardson Plano office submarket had a direct vacancy rate of 15.3% and a direct weighted average rental rate of $24.20 PSF. The Las Colinas submarket contains a total inventory of 39.8 million SF of office space across 433 buildings. As of the second quarter of 2017, the Las Colinas office submarket had a direct vacancy rate of 14.5% and a direct weighted average rental rate of $25.03 PSF. The Mid-Cities office submarket contains a total inventory of approximately 40.3 million SF of office space across 2,578 buildings. As of the second quarter 2017, the Mid-Cities office submarket had a direct vacancy rate of 13.3% and a weighted average rental rate of $21.73 PSF.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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NATIONAL OFFICE PORTFOLIO

 

The following table presents certain market information relating to the National Office Portfolio Properties located in Dallas:

 

Dallas Office Market and Submarket Overview(1)

 

Submarket Inventory (SF) Number
of
Buildings
Direct
Vacancy
Rate
Under
Construction
SF
Direct Net
Absorption
2Q2017
Direct Wtd. Avg.
Rental Rate (PSF)
 
 
 
Las Colinas 39,798,523 433 14.5% 845,749 783,960 $25.03  
LBJ Freeway 22,597,412 265 22.1% 0 (34,659) $21.83  
Mid-Cities 40,307,595 2,578 13.3% 752,298 (139,772) $21.73  
Richardson/Plano 40,752,851 1,371 15.3% 866,960 (8,030) $24.20  
(1)Information is based on the appraisals.

 

Atlanta:

 

There are five National Office Portfolio Properties located in the Atlanta, Georgia MSA totaling 490,913 SF (19.1% of total portfolio SF) which generate $3,295,050 in UW NCF (20.6% of total underwritten base rent). As of the second quarter 2017, the Atlanta office submarket is 88.1% occupied with an average asking rent of $22.71 PSF. Total office inventory in the Atlanta market area amounted to 307,054,764 SF in 16,077 buildings for the same period. Quoted rents in the market are on average $22.71 PSF, and have seen a steady increase since a 10-year low of $18.78 PSF in 2012. In the Atlanta market, there is currently 5,273,668 SF of office space under construction. The properties are located in several submarkets: Northlake, South Atlanta, and Northwest Atlanta, which are discussed below.

 

According to the appraisal, the Northlake office submarket contains a total inventory of approximately 29.8 million SF across 2,308 buildings. As of the second quarter 2017, the Northlake office submarket had a direct vacancy rate of 10.0% and a weighted average rental rate of $18.67 PSF. The South Atlanta office submarket contains a total inventory of 24.7 million SF of office space across 2,560 buildings. As of the second quarter 2017, the South Atlanta office submarket had a direct vacancy rate of 10.3% and a direct weighted average rental rate of $16.70 PSF. The Northwest Atlanta office submarket contains a total inventory of 50.2 million SF of office space across 3,185 buildings. As of the second quarter 2017, the Northwest Atlanta office submarket had a direct vacancy rate of 12.0% and a weighted average rental rate of $21.65 PSF.

 

The following table presents certain market information relating to the National Office Portfolio Properties located in Atlanta:

 

Atlanta Office Market and Submarket Overview(1)

 

Submarket Inventory (SF) Number
of
Buildings
Direct
Vacancy
Rate
Under
Construction
SF
Direct Net
Absorption
2Q2017
Direct Wtd. Avg.
Rental Rate
(PSF)
 
 
 
 
Northlake  29,818,728 2,308 10.0% 319,066  (244,795) $18.67  
Northwest Atlanta  50,157,394 3,185 12.0% 762,139  157,831 $21.65  
South Atlanta  24,714,942 2,560 10.3% 60,000  224,395 $16.70  
(1)Information is based on the appraisals.

 

The Borrower. The borrower is JBA Portfolio, LLC (the “National Office Portfolio Borrower”), a single-purpose Delaware limited liability company structured to be bankruptcy remote. Legal counsel to the borrower delivered a non-consolidation opinion in connection with the origination of the National Office Portfolio Whole Loan. Andrew J. Segal is the borrower sponsor and nonrecourse carve-out guarantor.

 

The Borrower Sponsor. The borrower sponsor is Andrew J. Segal, who is the Chairman & CEO of Boxer Property, which specializes in acquiring underperforming assets and engaging in leasing programs to attract smaller commercial tenants. The Boxer Property portfolio currently includes 90 properties totaling 12,005,023 SF of office space, 1,265 hotel keys, and 1,090,395 SF of retail. The properties are located in Texas, Illinois, Georgia, Arizona, Colorado, Massachusetts, California, Ohio, New Jersey, and Minnesota.

 

Escrows. The National Office Portfolio Whole Loan documents provide for escrows in the amount of $2,076,255 for upfront tax reserves and $337,483 to be collected on a monthly basis. The National Office Portfolio Whole Loan documents also provide for upfront insurance premium reserves of $271,808 and $20,908 to be collected on a monthly basis. At origination, a replacement reserve was established in the amount of $150,000. Throughout the loan term $53,598 per month ($0.02 PSF) will be deposited in the replacement reserve on an ongoing basis. Such replacement reserve is capped at $1,157,715 ($0.45 PSF), however, collections

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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NATIONAL OFFICE PORTFOLIO

 

will resume if the reserve is drawn down upon. In addition, every four years, the National Office Portfolio Borrower will be required to provide a summary of the capital expenditures for the prior four-year period, and if such expenditures exceeded $0.45 PSF, the National Office Portfolio Borrower will be required to make additional deposits into the replacement reserve during the following 24 months equal to 1/24th of such excess. At origination, $196,044 was collected to complete all deferred maintenance items identified by the engineer. The National Office Portfolio Borrower has covenanted to complete all repairs within 180 days of origination with the exception of the fire/life safety/ADA items which are to be completed within 60 days of origination.

 

At origination, $7,176,724 ($2.79 PSF) was collected upfront for future tenant improvements and leasing commissions in connection with new leases at the National Office Portfolio Properties. If such reserve falls below $3,859,050 ($1.50 PSF), the National Office Portfolio Borrower is required to replenish such reserve at a rate of $0.50 PSF per year ($1,286,350) to the cap of $3,859,050 ($1.50 PSF). The National Office Portfolio Borrower is permitted to use TI/LC reserve funds to renovate vacant space without having a tenant for a cost up to $10 PSF for a cumulative square footage not to exceed the aggregate cap of 150,000 SF during the loan term. At origination, $2,575,793 was collected in connection with outstanding obligations owed by the National Office Portfolio Borrower to tenants and $1,656,704 was collected in connection with free rent owed tenants. Funds will be disbursed based on the schedule within the related National Office Portfolio Properties Loan agreement.

 

Lockbox and Cash Management. A hard lockbox is in place with respect to the National Office Portfolio Whole Loan. The National Office Portfolio Whole Loan has springing cash management during the continuance of a Cash Flow Sweep Event (as defined below). On a daily basis, funds on deposit in the lockbox account will be transferred to the National Office Portfolio Borrower’s operating account, provided that during the continuance of a Cash Flow Sweep Event, funds deposited into the lockbox account are required to be swept on a daily basis into a cash management account controlled by the lender and applied and disbursed in accordance with the National Office Portfolio Whole Loan documents, with any excess cash held by the lender as additional collateral for the National Office Portfolio Whole Loan. Upon the termination of any Cash Flow Sweep Event, excess cash will no longer be held by the lender and, provided that no other Cash Flow Sweep Event is then in effect, all amounts then on deposit in the lockbox account will be disbursed to the National Office Portfolio Borrower.

 

A “Cash Flow Sweep Event” will occur if (i) an event of default occurs under the loan documents, (ii) an event of default occurs under the management agreement, or (iii) the debt service coverage ratio falls below 1.15x, based on trailing three-month income (a “DSCR Sweep Event”). A Cash Flow Sweep Event will continue until, in regard to clause (i) above, the cure of such event of default, or in regard to clause (ii) above, a replacement manager acceptable to the lender is put in place, or in regard to clause (iii) above, the debt service coverage ratio is in excess of 1.25x for two consecutive quarters.

 

In the event a DSCR Sweep Event occurs, in lieu of establishing the clearing management account, the National Office Portfolio Borrower may elect to post cash collateral in the sum of $209,000 per month during the DSCR Sweep Event with the lender (such deposit, the “Sweep Event Deposit”), to be held as additional collateral for the National Office Portfolio Whole Loan and applied in accordance with the loan documents; provided that if the National Office Portfolio Borrower makes such election, upon the National Office Portfolio Borrower’s failure to make any monthly Sweep Event Deposit, the National Office Portfolio Borrower will be required to establish the cash management account and the National Office Portfolio will be subject to in-place cash management. Provided that another Cash Flow Sweep Event is not then occurring, upon the date that the DSCR Sweep Event is cured (by the debt service coverage ratio being in excess of 1.25x for two consecutive quarters) the Sweep Event Deposit will be returned in full to the National Office Portfolio Borrower, and provided that no other Cash Flow Sweep Event then exists, any amounts in the cash management account will be returned to the National Office Portfolio Borrower.

 

Property Management. The National Office Portfolio Properties are managed by an affiliate of the borrower.

 

Assumption. The borrower has the right to transfer the National Office Portfolio Properties in their entirety, provided that certain other conditions are satisfied, including, but not limited to: (i) no event of default has occurred and is continuing; (ii) the lender’s reasonable determination that the proposed transferee and guarantor satisfy the lender’s credit review and underwriting standards, taking into consideration transferee experience, financial strength and general business standing; and (iii) if requested by the lender, rating agency confirmation from the applicable rating agencies that the transfer will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the Series 2017-C41 certificates and similar confirmations from each rating agency rating any securities backed by the National Office Portfolio companion loans with respect to the ratings of such securities.

 

Partial Release. Not permitted

 

Real Estate Substitution. Not permitted.

 

Beal Bank Pledge. The National Office Portfolio Properties were collateral under a large corporate facility that Boxer F2, L.P. has with Beal Bank USA, a Nevada Thrift (“Beal Bank”), in the original principal amount of $464,000,000 (the “Beal Bank Facility”). In connection with funding of the National Office Portfolio Whole Loan, each National Office Portfolio Property was released from the Beal Bank Facility and dropped into a newly-formed SPE subsidiary of the Beal Bank Facility borrower. The Beal Bank Facility will continue to provide that the parent of the National Office Portfolio Borrower (i.e. the Beal Bank Facility borrower) will be required to submit any and all distributions received from the National Office Portfolio Whole Loan borrower to Beal Bank, including periodic distributions and net proceeds of any sale or refinancing. These remaining obligations of the parent company are secured by a pledge to Beal Bank of ownership interests in the National Office Portfolio Whole Loan borrower (the “Beal Pledge”). The Beal Pledge does not secure any principal amount or regular payments and may only be foreclosed upon in the event of the failure of the parent to make the required payments of distributions to Beal Bank (the parent is only obligated to make distributions to Beal Bank if it receives distributions from the property owner) or upon the occurrence of an event of default under the National Office Portfolio Whole Loan. The Beal Pledge is subject to an intercreditor agreement with the National Office Portfolio Whole Loan lender which will permit Beal Bank to foreclose upon the equity in the National Office Portfolio Whole Loan borrower as long as the foreclosing party is Beal Bank or another qualified transferee (provided that Beal Bank or such other qualified transferee has assets (in name or under

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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management or advisement in excess) of $1 billion and capital surplus/equity or market capitalization of at least $400 million). Beal Bank also has additional cure rights beyond the National Office Portfolio Borrower cure periods and consistent with customary intercreditor provisions. Beal Bank has an option to purchase the National Office Portfolio Properties in the event that (i) the National Office Portfolio Whole Loan has been accelerated or (ii) the lender under the National Office Portfolio Whole Loan has received written notice from the National Office Portfolio Borrower that it will no longer perform under the loan. Beal Bank is pre-approved as an assuming National Office Portfolio Borrower pursuant to the National Office Portfolio Whole Loan documents as long as it is a qualified transferee at the time of the assumption (and meets the required net worth and capital surplus/equity or market capitalization test); Beal Bank is otherwise required to satisfy all of the assumption requirements in the National Office Portfolio Whole Loan documents in connection with an exercise of its purchase option for the National Office Portfolio Properties.

 

Subordinate and Mezzanine Indebtedness. In connection with a sale of the properties and assumption of the loan by the purchaser, the loan documents permit mezzanine financing from an institutional lender subject to: (i) no event of default under the related loan documents has occurred and is continuing, (ii) a maximum combined loan-to-value ratio up to 70.0%, (iii) a minimum combined net operating income debt yield of 11.12%, (iv) the lender’s review and approval of (a) the terms and conditions of the mezzanine loan and the mezzanine loan documents and (b) the structure of the mezzanine borrower, (v) the receipt of a rating agency confirmation from each of the applicable rating agencies that the mezzanine financing will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the Series 2017-C41 certificates or any other securities evidencing an interest in a National Office Portfolio companion loan, and (vi) the execution of an intercreditor agreement acceptable to the lender.

 

Ground Lease. None.

 

Terrorism Insurance. The loan documents require that the “all risk” insurance policy required to be maintained by the borrower provide coverage for terrorism in an amount equal to the full replacement cost of the National Office Portfolio Properties, as well as business interruption insurance covering no less than the 12-month period following the occurrence of a casualty event, together with an up to six-month extended period of indemnity.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

70 

 

 

HGI SAVANNAH HISTORIC DISTRICT

 

 (GRAPHIC)

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

71 

 

 

HGI SAVANNAH HISTORIC DISTRICT

 

 (GRAPHIC)

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

72 

 

 

No. 7 – HGI Savannah Historic District
 
Loan Information   Property Information
Mortgage Loan Seller: Wells Fargo Bank, National Association   Single Asset/Portfolio: Single Asset
Credit Assessment (Fitch/Moody’s/KBRA): NR/NR/NR   Property Type: Hospitality
Original Principal Balance: $26,500,000   Specific Property Type: Select Service
Cut-off Date Balance: $26,500,000   Location: Savannah, GA
% of Initial Pool Balance: 3.4%   Size: 133 Rooms
Loan Purpose: Refinance   Cut-off Date Balance Per Room: $199,248
Borrower Name: NP Bay Ventures, LLC   Year Built/Renovated: 2005/2011
Sponsors: S. Jay Patel   Title Vesting: Fee
Mortgage Rate: 4.550%   Property Manager: Self-managed
Note Date: October 31, 2017   4th Most Recent Occupancy (As of): 94.1% (12/31/2013)
Anticipated Repayment Date: NAP   3rd Most Recent Occupancy (As of): 91.6% (12/31/2014)
Maturity Date: November 11, 2027   2nd Most Recent Occupancy (As of): 87.8% (12/31/2015)
IO Period: None   Most Recent Occupancy (As of)(2): 91.8% (12/31/2016)
Loan Term (Original): 120 months   Current Occupancy (As of)(2): 90.6% (8/31/2017)
Seasoning: 0 months      
Amortization Term (Original): 360 months   Underwriting and Financial Information:
Loan Amortization Type: Amortizing Balloon    
Interest Accrual Method: Actual/360   4th Most Recent NOI (As of): $3,699,891 (12/31/2014)
Call Protection: L(24),D(91),O(5)   3rd Most Recent NOI (As of): $3,939,659 (12/31/2015)
Lockbox Type: Springing   2nd Most Recent NOI (As of)(2): $3,290,794 (12/31/2016)
Additional Debt: None   Most Recent NOI (As of)(2): $3,119,385 (TTM 8/31/2017)
Additional Debt Type: NAP   U/W Revenues(2): $8,930,140
      U/W Expenses: $5,631,974
      U/W NOI(2): $3,298,166
      U/W NCF: $2,940,961
          U/W NOI DSCR: 2.03x
Escrows and Reserves:         U/W NCF DSCR: 1.81x
          U/W NOI Debt Yield: 12.4%
Type: Initial Monthly Cap (If Any)   U/W NCF Debt Yield: 11.1%
Taxes $46,645 $46,648 NAP   As-Stabilized Appraised Value(3): $56,100,000
Insurance $0 Springing(1) NAP   As-Stabilized Appraisal Valuation Date(3): September 1, 2018
FF&E Reserve $0 (1) NAP   Cut-off Date LTV Ratio(3): 47.2%
PIP Reserve $7,000,000 $0 NAP   LTV Ratio at Maturity or ARD(3): 38.3%
             
               
(1)See “Escrows” section.

(2)See “Cash Flow Analysis” section.

(3)See “Appraisal” section.

 

The Mortgage Loan. The mortgage loan (the “HGI Savannah Historic District Mortgage Loan”) is evidenced by a single promissory note secured by a first mortgage encumbering the fee interest in a select service hotel located in Savannah, Georgia (the “HGI Savannah Historic District Property”). The HGI Savannah Historic District Mortgage Loan was originated on October 31, 2017 by Wells Fargo Bank, National Association. The HGI Savannah Historic District Mortgage Loan had an original principal balance of $26,500,000, has an outstanding principal balance as of the Cut-off Date of $26,500,000 and accrues interest at an interest rate of 4.550% per annum. The HGI Savannah Historic District Mortgage Loan had an initial term of 120 months, has a remaining term of 120 months as of the Cut-off Date and requires payments of principal and interest based on a 30-year amortization schedule through the term of the HGI Savannah Historic District Mortgage Loan. The HGI Savannah Historic District Mortgage Loan matures on November 11, 2027.

 

Following the lockout period, the borrower has the right to defease the HGI Savannah Historic District Mortgage Loan in whole, but not in part, on any payment date before July 11, 2027. In addition, the HGI Savannah Historic District Mortgage Loan is prepayable without penalty on or after July 11, 2027.

 

Sources and Uses

 

Sources         Uses      
Original loan amount $26,500,000   98.2%   Loan payoff $19,532,383    72.4%
Borrower sponsor equity contribution 490,592   1.8      PIP reserve 7,000,000   25.9 
          Real estate tax reserve 46,645    0.2
          Closing costs 411,564    1.5
Total Sources $26,990,592   100.0%   Total Uses $26,990,592   100.0%

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

73 

 

 

HGI SAVANNAH HISTORIC DISTRICT

 

The Property. The HGI Savannah Historic District Property consists of a six-story, select-service hotel comprised of 133 guestrooms located in the historic district of Savannah, Georgia. The HGI Savannah Historic District Property is situated on a 0.4-acre parcel, and amenities include a restaurant, outdoor heated pool and whirlpool, fitness center, guest laundry facilities, 24-hour business center, sundry shop, and approximately 1,364 square feet of meeting space. The HGI Savannah Historic District Property contains 81 king guestrooms and 52 queen/queen guestrooms, of which 30 rooms are two-bedroom suites. All guestrooms feature a microwave, refrigerator, 37” flat screen television, desk and complimentary high-speed internet access. The HGI Savannah Historic District Property contains 67 parking spaces within a subterranean garage, accounting for a parking ratio of 0.5 spaces per room.

 

The HGI Savannah Historic District Property was built in 2005, and the borrower commenced a property improvement plan (“PIP”) totaling approximately $7.0 million in November 2017 ($52,632 per key). The PIP is scheduled for completion by March 2018 and was reserved for at the origination of the HGI Savannah Historic District Mortgage Loan. Planned PIP renovations include new soft and case goods, new guestroom bathrooms (approximately 90% are expected to convert from bathtubs to walk-in showers), new flooring, upgraded lighting fixtures and new signage. In addition, the borrower plans to modernize and expand the restaurant with a bar area, renovate the lobby and expand the 24-hour pantry.

 

According to the appraisal, the demand segmentation for the HGI Savannah Historic District Property is 15% commercial, 75% leisure, and 10% meeting and group. The hotel franchise agreement with Hilton Inns, Inc. expires on February 28, 2028.

 

Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and the underwritten net cash flow at the HGI Savannah Historic District Property:

 

Cash Flow Analysis

 

  2014 2015 2016(1)

TTM  

8/31/2017(1)

U/W(1) % of U/W
Total
Revenue
U/W $
per Room
Occupancy 91.6% 87.8% 91.8% 90.6% 92.1%    
ADR $150.41 $167.71 $158.82  $162.85  $164.22    
RevPAR $137.83 $147.33 $145.81  $147.58  $151.31    
               
Room Revenue  $6,691,130  $7,152,193  $7,097,968  $7,164,316  $7,345,497 82.3% $55,229
F&B Revenue  607,853  676,043  609,866  559,707  573,779 6.4 4,314
Other Revenue 784,882 843,409 906,590 939,812 1,010,864 11.3 7,600
Total Revenue

$8,083,865

$8,671,645

$8,614,424

$8,663,835

$8,930,140

100.0%

$67,144

               
Total Department Expenses

2,092,039

2,285,501

2,467,861

2,505,074

2,545,546

28.5

19,139

Gross Operating Profit $5,991,826 $6,386,144 $6,146,563 $6,158,761 $6,384,593 71.5% $48,004
               
 Total Undistributed Expenses

1,983,341

2,008,959

2,187,866

2,371,472

2,415,427

27.0

18,161

 Profit Before Fixed Charges $4,008,485 $4,377,184 $3,958,697 $3,787,288 $3,969,166 44.4% $29,843
               
Total Fixed Charges

308,594

437,526

667,903

667,903

671,000

7.5%

5,045

               
Net Operating Income $3,699,891 $3,939,659 $3,290,794 $3,119,385 $3,298,166 36.9% $24,798
FF&E

0

0

0

0

357,206

4.0

2,686

 Net Cash Flow $3,699,891 $3,939,659 $3,290,794 $3,119,385 $2,940,961 32.9% $22,112
               
NOI DSCR 2.28x 2.43x 2.03x 1.92x 2.03x    
NCF DSCR 2.28x 2.43x 2.03x 1.92x 1.81x    
NOI DY 14.0% 14.9% 12.4% 11.8% 12.4%    
NCF DY 14.0% 14.9% 12.4% 11.8% 11.1%    
               
(1)The HGI Savannah Historic District Property lost approximately 735 room nights in October 2016 due to Hurricane Matthew. The 2016 and TTM 8/31/2017 statements reflect actual performance and exclude any revenue for such lost room nights. If adjusted to include the occupancy and related revenue from the October 2016 lost room nights, the 2016 Occupancy, ADR, RevPAR, Net Operating Income, NOI DSCR and NOI DY would be 93.3%, $160.24, $149.54, $3,466,809, 2.14x and 13.1%, respectively; and the TTM 8/31/2017 Occupancy, ADR, RevPAR, Net Operating Income, NOI DSCR and NOI DY would be 92.1%, $164.22, $151.31, $3,295,400, 2.03x and 12.4%, respectively. The U/W Room Revenue is based on the TTM 8/31/2017 statement adjusted for the October 2016 lost room nights.

 

Appraisal. The appraiser concluded to an “as-stabilized” appraised value of $56,100,000 with an appraisal valuation date of September 1, 2018. The “as-stabilized” appraised value assumes the completion of the planned PIP, which was reserved for at the origination of the HGI Savannah Historic District Mortgage Loan (see “The Property” section above). The “as-is” appraised value is $46,000,000 with a valuation date of September 1, 2017. The Cut-off Date LTV Ratio and LTV Ratio at Maturity based on the “as-is” appraised value are 57.6% and 46.6%, respectively.

 

Environmental Matters. According to a Phase I environmental assessment dated October 4, 2017, there was no evidence of any recognized environmental conditions at the HGI Savannah Historic District Property.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

74 

 

 

HGI SAVANNAH HISTORIC DISTRICT

 

Market Overview and Competition. The HGI Savannah Historic District Property is located in the center of the Historic District of downtown Savannah, Georgia, along West Bay Street, just two blocks south of the Savannah River. The HGI Savannah Historic District Property is situated approximately one half mile from Interstate 16, 10 miles east of Interstate 95, and 13 miles from the Savannah/Hilton Head International Airport. According to the appraisal, the Savannah Historic District is a major tourist attraction known for its rich history, warm climate, walkable downtown, and numerous shops and restaurants. Savannah attracted approximately 13.9 million visitors in 2016, a 1.4% increase from 2015, of which 7.9 million were overnight visitors. Direct visitor spending in 2016 was approximately $2.8 billion, a 4.5% increase from 2015, contributing approximately $962 million to lodging. Additional demand drivers in the area include the Telfair Academy of Art and Science, The Port of Savannah (the fourth busiest port in the country) and the Savannah International Trade and Convention Center. The convention center, which is located directly across the river from the HGI Savannah Historic District Property, provides approximately 100,000 square feet of exhibit space, a 23,000-square foot grand ballroom, 20,000 square feet of meeting space, and a 376-seat auditorium.

 

According to a third party market report, the estimated 2017 population within a one-, three- and five-mile radius of the HGI Savannah Historic District Property was 9,879, 52,783 and 50,856, respectively; the estimated 2017 average household income within the same radii was $48,413, $44,765 and $53,532, respectively.

 

The following table presents certain information relating to the HGI Savannah Historic District Property’s competitive set:

 

Subject and Market Historical Occupancy, ADR and RevPAR(1)

 

 

Competitive Set

HGI Savannah Historic District

Penetration Factor

Year 

Occupancy

ADR

RevPAR

Occupancy

ADR

RevPAR

Occupancy

ADR

RevPAR

8/31/2017 TTM 82.6% $157.20 $129.89 90.6% $162.55 $147.31 109.7% 103.4% 113.4%
12/31/2016 80.9% $154.40 $124.94 92.0% $160.06 $147.31 113.7% 103.7% 117.9%
12/31/2015 80.2% $152.38 $122.24 88.3% $162.69 $143.65 110.1% 106.8% 117.5%
(1)Information obtained from a third party hospitality research report dated September 18, 2017. The competitive set includes the following hotels: Hilton Garden Inn Savannah Historic District, Hampton Inn Savannah Historic District, Courtyard Savannah Downtown Historic District, Hampton Inn Suites Savannah Historic District, Holiday Inn Express Savannah Historic District and Springhill Suites Savannah Downtown Historic District.

 

The Borrower. The borrower is NP Bay Ventures, LLC, a Delaware limited liability company and single purpose entity with one independent director. S. Jay Patel serves as the guarantor of certain nonrecourse carveouts under the HGI Savannah Historic District Mortgage Loan.

 

The Borrower Sponsor. The borrower sponsor is S. Jay Patel (the President and CEO of the North Point Hospitality (“North Point”)). Founded in 1978, North Point is an Atlanta-based hospitality development and management company that has developed 35 hotels with a total investment of over $400 million. The company currently owns and operates eight Hilton and Marriott branded hotels in the southeast U.S. with six additional hotels under construction or in active development at a total project cost of over $230 million.

 

Escrows. The HGI Savannah Historic District Mortgage Loan documents provide for upfront escrows in the amount of $46,645 for real estate taxes and $7,000,000 for the PIP, which commenced in November 2017. The HGI Savannah Historic District loan documents provide for ongoing monthly escrows of $46,648 for real estate taxes.

 

Commencing with the monthly payment date occurring in December 2018, the HGI Savannah Historic District Mortgage Loan documents require ongoing monthly FF&E reserves equal to (i) 1/12 of 1% of the underwritten revenue up to and including the monthly payment date occurring in November 2019; followed by (ii) 1/12 of 2% of the underwritten revenue up to and including the monthly payment date occurring in November 2020; and (iii) thereafter, an amount equal to 1/12 of 4% of the underwritten revenue.

 

The HGI Savannah Historic District Mortgage Loan documents do not require ongoing monthly escrows for insurance premiums as long as (i) no event of default has occurred and is continuing and (ii) the borrower provides the lender with evidence that the HGI Savannah Historic District Property’s insurance coverage is included in a blanket policy and such policy is in full force and effect and (iii) the borrower pays all applicable insurance premiums and provides the lender with evidence of renewals.

 

Lockbox and Cash Management. Upon the occurrence of a Cash Trap Event Period (as defined below), the HGI Savannah Historic District Mortgage Loan requires that the borrower establish a lockbox account and the borrower or property manager must cause all rents to be deposited directly into such lockbox account. During a Cash Trap Event Period, all excess cash flow after payment of all sums due and payable under the loan documents and all operating expenses will be retained by the lender as additional collateral for the HGI Savannah Historic District Mortgage Loan.

 

A “Cash Trap Event Period” will commence upon the earlier of the following:

 

(i)the occurrence and continuance of an event of default; or

 

(ii)the debt service coverage ratio being less than 1.15x at the end of any calendar quarter; provided, however, that through May 2019, the net cash flow used to calculate the debt service coverage ratio for any month in which all guest rooms are not available to guests due to renovation work will be based on the prior year.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

75 

 

 

HGI SAVANNAH HISTORIC DISTRICT

 

A Cash Trap Event Period will end:

with regard to clause (i), upon the cure of such event of default; and

with regard to clause (ii), upon the debt service coverage ratio being at least 1.20x for two consecutive calendar quarters.

 

Property Management. The HGI Savannah Historic District Property is managed by an affiliate of the borrower.

 

Assumption. The borrower has a two-time right to transfer the HGI Savannah Historic District Property provided that certain conditions are satisfied, including (i) no event of default under the HGI Savannah Historic District Mortgage Loan documents has occurred and is continuing; (ii) the lender reasonably determines that the proposed transferee and guarantor satisfy the lender’s credit review and underwriting standards, taking into consideration the transferee’s experience, financial strength and general business standing; and (iii) if requested by lender, rating agency confirmation that the sale and assumption will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the Series 2017-C41 certificates.

 

Partial Release. Not permitted.

 

Real Estate Substitution. Not permitted.

 

Subordinate and Mezzanine Indebtedness. Not permitted.

 

Ground Lease. None.

 

Terrorism Insurance. The loan documents require that the “all risk” insurance policy required to be maintained by the borrower provide coverage for terrorism in an amount equal to the full replacement cost of the HGI Savannah Historic District Property. The loan documents also require business interruption insurance covering no less than the 12-month period following the occurrence of a casualty event, together with a six-month extended period of indemnity.

 

Windstorm and Flood Insurance. The HGI Savannah Historic District Mortgage Loan documents require windstorm and flood insurance covering the full replacement cost of the HGI Savannah Historic District Property during the loan term. At the time of loan closing, the HGI Savannah Historic District Property had windstorm insurance coverage and flood insurance in the maximum limit available under the National Flood Insurance Program together with excess coverage.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

76 

 

  

BELDEN PARK CROSSING

 

(GRAFIC) 

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

77 

 

 

BELDEN PARK CROSSING

 

(GRAFIC) 

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

78 

 

 

BELDEN PARK CROSSING

 

(GRAFIC) 

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

79 

 

 

 

No. 8 – Belden Park Crossing
 
Loan Information   Property Information
Mortgage Loan Seller: Ladder Capital Finance LLC   Single Asset/Portfolio: Single Asset

Credit Assessment

 

(Fitch/KBRA/Moody’s):

 

NR/NR/NR   Property Type: Retail
Original Principal Balance: $23,000,000   Specific Property Type: Anchored
Cut-off Date Principal Balance: $23,000,000   Location: Canton, OH
% of Initial Pool Balance: 2.9%   Size: 483,984 SF
Loan Purpose: Acquisition   Cut-off Date Balance Per SF(1): $105.38
Borrower Name: Belden Park Delaware, LLC   Year Built/Renovated: 1995/2016
Sponsor: Robert L. Stark   Title Vesting: Fee
Mortgage Rate: 4.681%   Property Manager: Self-managed
Note Date: October 13, 2017   4th Most Recent Occupancy (As of)(4): 97.1% (12/31/2013)
Anticipated Repayment Date: NAP   3rd Most Recent Occupancy (As of)(4): 100.0% (12/31/2014)
Maturity Date: November 6, 2027   2nd Most Recent Occupancy (As of)(4): 98.7% (12/31/2015)
IO Period: 24 months   Most Recent Occupancy (As of)(4): 93.6% (12/31/2016)
Loan Term (Original): 120 months   Current Occupancy (As of)(4): 96.7% (9/29/2017)
Seasoning: 0 months    
Amortization Term (Original): 360 months   Underwriting and Financial Information:
Loan Amortization Type: Interest-only, Amortizing Balloon      
Interest Accrual Method: Actual/360   4th Most Recent NOI (As of): $5,144,476 (12/31/2014)
Call Protection(2): L(24),D(92),O(4)   3rd Most Recent NOI (As of): $5,227,077 (12/31/2015)
Lockbox Type: Hard/Springing Cash Management   2nd Most Recent NOI (As of): $5,500,754 (12/31/2016)
Additional Debt(1): Yes   Most Recent NOI (As of): $5,059,261 (TTM 8/31/2017)
Additional Debt Type(1): Pari Passu    
      U/W Revenues: $7,866,498
      U/W Expenses: $2,449,394
          U/W NOI(1): $5,417,104
          U/W NOI DSCR(1): 1.71x
Escrows and Reserves(3):         U/W NCF DSCR(1):  1.61x
          U/W NOI Debt Yield(1):  10.6%
Type: Initial Monthly Cap (If Any)   U/W NCF Debt Yield(1): 10.0%
Taxes $553,362 $110,672 NAP   As-Is Appraised Value: $68,600,000
Insurance $55,700 $6,963 NAP   As-Is Appraisal Valuation Date: September 1, 2017
Replacement Reserves $479,837 $6,010 NAP   Cut-off Date LTV Ratio(1): 74.3%
TI/LC Reserve $250,000 $20,114 $1,500,000   LTV Ratio at Maturity or ARD(1): 63.8%
Deferred Maintenance $2,500,000 $0 NAP      
               
(1)See “The Mortgage Loan” section. All statistical information related to balances per square foot, loan-to-value ratios, debt service coverage ratios and debt yields are based on the Belden Park Crossing Whole Loan (as defined below).

(2)The lockout period will be at least 24 payments, beginning with and including the first payment date of December 6, 2017. Defeasance of the Belden Park Crossing Whole Loan is permitted at any time after the earlier to occur of (i) October 13, 2020 or (ii) two years after the closing date of the securitization that includes the last note to be securitized.

(3)See “Escrows” section.

(4)See “Historical Occupancy” section.

 

The Mortgage Loan. The mortgage loan (the “Belden Park Crossing Mortgage Loan”) is part of a whole loan (the “Belden Park Crossing Whole Loan”) that is evidenced by three pari passu promissory notes (Notes A-1-A, A-1-B, and A-2) and secured by a first mortgage encumbering the fee interest in a 483,984 square foot anchored retail center in Canton, Ohio (the “Belden Park Crossing Property”). The Belden Park Crossing Whole Loan was originated on October 13, 2017 by Ladder Capital Finance LLC. The Belden Park Crossing Whole Loan had an original principal balance of $51,000,000, has an outstanding principal balance as of the Cut-off Date of $51,000,000 and accrues interest at an interest rate of 4.681% per annum. The Belden Park Crossing Whole Loan had an initial term of 120 months, has a remaining term of 120 months as of the Cut-off Date and requires interest-only payments for the first 24 payments following origination and, thereafter, requires payments of principal and interest based on a 30-year amortization schedule. The Belden Park Crossing Whole Loan matures on November 6, 2027.

 

The Belden Park Crossing Mortgage Loan, which is evidenced by the non-controlling Note A-2, and will be contributed to the WFCM 2017-C41 Trust, had an original principal balance at origination of $23,000,000 and has an outstanding principal balance as of the Cut-off Date of $23,000,000. The controlling note A-1-A and non-controlling note A-1-B, which had an aggregate original principal balance at origination of $28,000,000 are expected to be contributed to one or more future securitization trusts. See “Description of the Mortgage Pool—The Whole Loans” in the Preliminary Prospectus.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

80 

 

 

BELDEN PARK CROSSING

 

Pari Passu Note Summary

 

  Original Balance   Note Holder Controlling Piece
Note A-1-A $13,000,000   LCF or an affiliate Yes
Note A-1-B $15,000,000   LCF or an affiliate No
Note A-2 $23,000,000   WFCM 2017-C41 No
Total $51,000,000      

 

The defeasance lockout period will expire on the earlier to occur of (i) two years after the closing date of the securitization that includes the last Belden Park Crossing promissory note to be securitized and (ii) October 13, 2020. Following the lockout period, the borrower has the right to defease the Belden Park Crossing Mortgage Loan in whole, but not in part, on any date before August 6, 2027. In addition, the Belden Park Crossing Mortgage Loan is prepayable without penalty on or after August 6, 2027.

 

Sources and Uses

 

Sources         Uses      
Original whole loan amount $51,000,000     70.4%   Purchase Price $67,000,000   92.5%
Sponsor’s new cash contribution 18,963,010   26.2   Reserves 3,838,899(1)   5.3   
Seller Credit 2,500,000     3.5   Closing costs 1,624,111   2.2   
Total Sources $72,463,010    100.0%   Total Uses $72,463,010    100.0%
(1)$2,500,000 is held in escrow by the title company.

 

The Property. The Belden Park Crossing Property is a 483,984 square foot retail shopping center built in two phases in 1995 and 1997 and located in Canton, Ohio. The Belden Park Crossing Property is anchored by Kohl’s, Dick’s Sporting Goods, and Value City Furniture with other major tenants including Jo-Ann Fabrics, DSW, Fresh Thyme Farmers Market (“Fresh Thyme”) and Petsmart. The Belden Park Crossing Property is situated on two parcels totaling approximately 44.5 acres and contains 1,648 surface parking spaces resulting in a parking ratio of 3.4 spaces per 1,000 square feet of rentable area. As of September 29, 2017, the Belden Park Crossing Property was 96.7% occupied by 27 tenants.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

81 

 

 

BELDEN PARK CROSSING

 

The following table presents certain information relating to the tenancy at the Belden Park Crossing Property:

 

Major Tenants

 

Tenant Name Credit Rating (Fitch/
Moody’s/
S&P)(1)
Tenant NRSF % of
NRSF
Annual U/W Base Rent PSF(2) Annual
U/W Base Rent(2)
% of Total Annual U/W Base Rent Sales PSF(3) Occupancy Cost(3) Lease
Expiration
Date(4)
Anchor Tenant – Collateral                
Kohl’s BBB/Baa2/BBB- 99,776 20.6% $8.56 $854,381 13.6% $301 3.7% 1/31/2021(5)
Dick’s Sporting Goods NR/NR/NR 65,120 13.5% $12.50 $814,000 12.9% $300 5.4% 10/31/2020(6)
Value City Furniture NR/NR/NR 50,000 10.3% $7.00 $350,000 5.6% NAV NAV 1/31/2021
Total Anchor Tenant – Collateral 214,896 44.4% $9.39 $2,018,381 32.1%      
               
Major Tenants – Collateral              
Jo-Ann Fabrics NR/Caa1/B 46,042 9.5% $13.00 $598,546 9.5% $132 9.9% 1/31/2023
DSW NR/NR/NR 31,859 6.6% $12.00 $382,308 6.1% NAV NAV 1/31/2022(7)
Fresh Thyme NR/NR/NR 29,576 6.1% $16.00 $473,216 7.5% NAV NAV 9/30/2027(8)
Petsmart NR/Ba3/B 26,326 5.4% $12.40 $326,363 5.2% NAV NAV 1/31/2023
Total Major Tenants – Collateral 133,803 27.6% $13.31 $1,780,433 28.3%      
                   
Non-Major Tenants – Collateral 119,504 24.7% $20.89 $2,496,738 39.7%      
                   
Occupied Collateral Total 468,203 96.7% $13.45 $6,295,553 100.0%      
                   
Vacant Space   15,781 3.3%            
                   
Collateral Total 483,984 100.0%            
                   

(1)Certain ratings are those of the parent company whether or not the parent guarantees the lease.

(2)Annual U/W Base Rent PSF and Annual U/W Base Rent include contractual rent steps through May 2018, totaling $87,237.

(3)Sales PSF and Occupancy Costs represent the TTM period ending June 30, 2017. Sales PSF and Occupancy Costs are not available for tenants who have not reported a full year of sales data.

(4)Certain tenants may have lease termination options that are exercisable prior to the originally stated expiration date of the subject lease.

(5)Kohl’s has five 5-year renewal options.

(6)Dick’s Sporting Goods has one 5-year renewal option.

(7)DSW has two 5-year extension options

(8)Fresh Thyme has four 5-year extension options.

 

The following table presents certain information relating to the lease rollover schedule at the Belden Park Crossing Property:

 

Lease Expiration Schedule(1)(2)

 

Year Ending
 December 31,
No. of Leases Expiring Expiring NRSF % of Total NRSF Cumulative Expiring NRSF Cumulative % of Total NRSF Annual
 U/W
Base Rent
% of Total Annual U/W Base Rent Annual
 U/W
Base Rent
 PSF(3)
MTM 1 15,000 3.1% 15,000 3.1% $256,350 4.1% $17.09
2017 0 0 0.0% 15,000 3.1% $0 0.0% $0.00
2018 0 0 0.0% 15,000 3.1% $0 0.0% $0.00
2019 5 21,077 4.4% 36,077 7.5% $366,206 5.8% $17.37
2020 4 95,645 19.8% 131,722 27.2% $1,349,194 21.4% $14.11
2021 3 151,576 31.3% 283,298 58.5% $1,232,839 19.6% $8.13
2022 2 36,558 7.6% 319,856 66.1% $518,579 8.2% $14.19
2023 5 91,004 18.8% 410,860 84.9% $1,446,023 23.0% $15.89
2024 2 10,651 2.2% 421,511 87.1% $239,744 3.8% $22.51
2025 1 6,348 1.3% 427,859 88.4% $95,220 1.5% $15.00
2026 0 0 0.0% 427,859 88.4% $0 0.0% $0.00
Thereafter 4 40,344 8.3% 468,203 96.7% $791,397 12.6% $19.62
Vacant 0 15,781 3.3% 483,984 100.0% $0 0.0% $0.00
Total/Weighted Average 27 483,984 100.0%     $6,295,553 100.0% $13.45
(1)Information obtained from the underwritten rent roll.

(2)Certain tenants may have lease termination options that are exercisable prior to the originally stated expiration date of the subject lease and that are not considered in the Lease Expiration Schedule.

(3)Weighted Average Annual U/W Base Rent PSF excludes vacant space.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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The following table presents historical occupancy percentages at the Belden Park Crossing Property:

 

Historical Occupancy

 

12/31/2013(1)

12/31/2014(1)

12/31/2015(1)

12/31/2016(1)

9/29/2017(2)

97.1% 100.0% 98.7% 93.6% 96.7%

 

(1)Information obtained from the borrower

(2)Information obtained from the underwritten rent roll.

 

Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and underwritten net cash flow at the Belden Park Crossing Property:

 

Cash Flow Analysis

 

  2014 2015 2016 TTM 8/31/2017 U/W % of U/W Effective Gross Income U/W $ per SF
Base Rent $5,707,365 $5,861,200 $6,027,842 $5,716,988 $6,295,553(1) 80.0% $13.01
Grossed Up Vacant Space 0 0 0 0 244,651 3.1 0.51
Percentage Rent 0 0 2,027 498 0 0 0.00
Total Reimbursables 1,597,129 1,651,376 1,858,932 1,628,895 1,718,003 21.8 3.55
Other Income 24,025 24,258 21,825 21,201 21,201 0.3 0.04
Less Vacancy & Credit Loss

0

0

0

0

(412,910)(2)

(5.2)

(0.85)

Effective Gross Income $7,328,519 $7,536,834 $7,910,626 $7,367,583 $7,866,498 100.0% $16.25
               
Total Operating Expenses $2,214,043 $2,309,757 $2,409,871 $2,308,322 $2,449,394 31.1% $5.06
               
Net Operating Income

$5,114,476

$5,227,077

$5,500,754

$5,059,261

$5,417,104

68.9%

$11.19

TI/LC 0 0 0 0 238,094 3.0 0.49
Capital Expenditures 0 0 0 0 72,598 0.9 0.15
Net Cash Flow

$5,114,476

$5,227,077

$5,500,754

$5,059,261

$5,106,412

64.9%

$10.55

               
NOI DSCR 1.61x 1.65x 1.74x 1.60x 1.71x    
NCF DSCR 1.61x 1.65x 1.74x 1.60x 1.61x    
NOI DY 10.0% 10.2% 10.8% 9.9% 10.6%    
NCF DY 10.0% 10.2% 10.8% 9.9% 10.0%    
(1)U/W Base Rent includes contractual rent step through May 2018, totaling $87,237.

(2)The underwritten economic vacancy is 5.0%. The Belden Park Crossing Property was 96.7% physically occupied as of September 29, 2017.

 

Appraisal. As of the appraisal valuation date of September 1, 2017, the Belden Park Crossing Property had an “as-is” appraised value of $68,600,000.

 

Environmental Matters. According to the Phase I environmental assessment dated September 15, 2017, there was no evidence of any recognized environmental conditions at the Belden Park Crossing Property.

 

Market Overview and Competition. The Belden Park Crossing Property is located in Canton, Ohio, which is approximately 23.4 miles south of Akron, Ohio approximately 60.1 miles south of Cleveland, Ohio. The Belden Park Crossing Property is located in close proximity to Interstate 77, which is adjacent to the Belden Park Crossing Property and connects north to Akron and Cleveland and south through Newcomerstown, Ohio. The Belden Park Crossing Property is located at the intersection of Everhard Road and Dressler Road which had an average daily traffic count of 26,800.

 

According to the appraisal, the estimated 2016 population within a three- and five-mile radius of the Belden Park Crossing Property was 48,180 and 149,435, respectively, while the average household income within the same radii was $77,340 and $71,922, respectively. According to the appraisal, the Belden Park Crossing Property is located in the Belden Village retail submarket within the Canton metropolitan statistical area. As of the second quarter of 2017, the Belden Village retail submarket contained a total inventory of 299 buildings consisting of approximately 6.8 million square feet of retail space with a vacancy rate of approximately 4.0%. Since 2013, the vacancy rate in the Belden Village retail submarket has never been above 6.0%. The appraiser concluded to a blended market rent of $11.91 per square foot triple net, approximately 2.0% above the Belden Park Crossing Property’s weighted average occupied underwritten base rent of $11.67 per square foot triple net.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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The following table presents certain information relating to some comparable retail properties for the Belden Park Crossing Property:

 

Comparable Leases(1)

 

Property Name/ Location Year Built/ Renovated Total GLA (SF) Total Occupancy Distance from Subject Tenant Name

Lease Date /

Term

Lease Area (SF) Annual Base Rent PSF Lease Type

Altman Plaza

Canton, OH

2017/NAP 704,411 100.0% 0.8 miles Marc’s July 2017 / 20 Yrs 46,365 $9.41 Net

The Strip

Canton, OH

1996/NAP 786,928 100.0% 1.5 miles Confidential February 2015 / 5 Yrs 34,277 $14.90 Net

Thursday’s Plaza West

Canton, OH

1995/NAP 101,357 98.2% 0.9 miles Ashely Furniture December 2015 / 5 Yrs 32,815 $7.75 Net

Venue at Belden

Canton, OH

2016/NAP 129,128 84.7% 0.6 miles Moe’s Southwestern Grill July 2017 / 10 Yrs 2,500 $25.00 Net
(1)Information obtained from the appraisal, third party market research reports and underwritten rent roll.

 

The Borrower. The borrower is Belden Park Delaware, LLC, a Delaware limited liability company and a single purpose entity with two independent directors. Legal counsel to the borrower delivered a non-consolidation opinion in connection with the origination of the Belden Park Crossing Mortgage Loan. Robert L. Stark is the guarantor of certain nonrecourse carveouts under the Belden Park Crossing Mortgage Loan.

 

The Borrower Sponsor. The borrower sponsor is Robert L. Stark, who is the president & CEO of Stark Enterprises. Mr. Stark founded Stark Enterprises in 1978. Stark Enterprises is headquartered in Cleveland, Ohio, and is a full service real estate development company with nearly 40 years of experience in acquisition, development, leasing, property management, construction, architectural design, landscape, architecture and marketing. Stark’s portfolio consists of retail, entertainment, office, residential, hotel and student housing environments, totaling approximately seven million square feet. Mr. Stark specializes in projects ranging from strip centers to power centers to mixed-use “community cores.” Mr. Stark has an indirect equity interest in a real estate project which received a loan modification including debt forgiveness. See “Description of the Mortgage Pool – Loan Purpose; Default History, Bankruptcy Issues and Other Proceedings” in the Preliminary Prospectus.

 

Escrows. The loan documents provide for upfront reserves of $553,362 for real estate taxes, $55,700 for insurance premiums, $479,837 for replacement reserves and $250,000 for tenant improvements and leasing commissions. The loan documents also require ongoing monthly reserves in an amount equal to $110,672 for real estate taxes, $6,963 for insurance premiums, $6,010 for replacement reserves. There is also a $2,500,000 upfront deferred maintenance reserve for roof repairs, which is held by the title company.

 

For tenant improvements and leasing commissions, the borrower is required to deposit into a rollover account (i) $20,114 during the term of the Belden Park Crossing Whole Loan (subject to a rollover funds cap in the amount of $1,500,000) and (ii) an additional $61,620 for tenant improvements and leasing commissions during the 24-month interest-only period. If a Significant Tenant Extension Event (defined below) occurs, any amounts on deposit in the rollover account in excess of $1,000,000 are to be paid to the borrower, and the borrower will thereafter only be required to make the monthly deposits described in clause (i) of the prior sentence. If a Significant Tenant Partial Extension Event (defined below) occurs, on a one-time basis for each Significant Tenant (defined below), the lender must release to the borrower rollover funds equal to $10.00 per square foot multiplied by the leasable square footage of the leased premises of the applicable Significant Tenant that achieved the Significant Tenant Partial Extension Event; provided that if (I) a Significant Tenant Partial Extension Event is achieved with respect to the each leased premises leased by a Significant Tenant prior to the commencement date of the renewal notice period for each Significant Tenant pursuant to its lease, and (II) after giving effect to any one or more disbursements of rollover funds to the borrower as described in this sentence, the amount of rollover funds in the rollover account is less than $1,000,000, the borrower will be required to make the monthly deposits as described in clause (i) and clause (ii) of the prior sentence until such time as the amount of funds on deposit in the rollover account next equals or exceeds $1,000,000. The “Significant Tenants” are Kohl’s, Value City Furniture and Dick’s.

 

A “Significant Tenant Extension Event” occurs if each Significant Tenant either extends its lease for a period of at least 5 years beyond the current end of its term and on market rate terms that are reasonably acceptable to the lender or a replacement tenant or tenants are in occupancy and open for business and paying aggregate rent that is at least 95% of the rent paid by the applicable Significant Tenant with respect to all of the space demised as of the date of loan origination by the applicable Significant Tenant pursuant to a lease that is in form and substance satisfactory to the lender.

 

A “Significant Tenant Partial Extension Event” occurs if any one or more of the Significant Tenants either extends its lease for a period of at least 5 years beyond the current end date on market rate terms that are reasonably acceptable to the lender or a replacement tenant or tenants are in occupancy and open for business and paying aggregate rent that is at least 95% of the rent paid by the applicable Significant Tenant with respect to all of the space demised as of the date of closing by the applicable Significant Tenant pursuant to a lease that is in form and substance satisfactory to the lender.

 

Lockbox and Cash Management. The Belden Park Crossing Whole Loan requires a lender-controlled lockbox account, which is already in place, and requires the borrower to direct tenants to pay their rents directly into such lockbox account. The loan documents also require that any rent received by the borrower or property manager is deposited into the lockbox account within one business day of receipt. During a Cash Management Trigger Event Period, all excess cash flow after payment of all sums due and payable under the Belden Park Crossing Whole Loan documents and all operating expenses will be held by lender as additional collateral for the Belden Park Crossing Whole Loan.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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A “Cash Management Trigger Event Period” will commence upon the earliest of (i) the occurrence and continuance of an event of default; (ii) the amortizing debt service coverage ratio being less than 1.20x for two consecutive quarters; (iii) any Significant Tenant (or such tenant’s parent, if applicable) becoming insolvent or filing for bankruptcy; (iv) the earlier of (1) the date on which any Significant Tenant has failed to renew its lease or enter into a new lease, in each case for substantially all of its demised premises, and such Significant Tenant’s lease is in the last 9 months of its stated term and (2) the commencement date of the period pursuant to any Significant Tenant’s lease during which such Significant Tenant must give notice of renewal or extension, and such Significant Tenant has failed to so give such notice of renewal or extension, (v) the date on which Kohl’s gives notice that it intends to terminate its lease or vacate, surrender or cease to conduct its normal business operations at substantially all of its demised premises or otherwise “go dark” or (vi) the date on which (1) Dick’s gives notice that it intends to terminate its lease or vacate, surrender or cease to conduct its normal business operations at substantially all of its demised premises or otherwise “go dark” and (2) the Target store on the neighboring property has ceased to conduct its normal business operations or has otherwise “gone dark” or subsequently does cease to conduct its normal business operations or otherwise “goes dark”. Such Cash Management Trigger Event Period shall terminate: with regard to clause (i), upon the cure of such event of default if accepted by lender; with regard to clause (ii), upon the amortizing debt service coverage ratio being equal to or greater than 1.25x for two consecutive calendar quarters; with regard to clause (iii) on the date on which (A) the applicable lease has been irrevocably assumed by the respective tenant and each such tenant is in occupancy and is paying full, unabated post-petition rent without offset or credit, (B) the applicable lease is assigned to, and assumed by, an assignee reasonably acceptable to the lender pursuant to a final court order, with such assignee occupying substantially all of the space demised under each such lease, being open for business and paying full, unabated post-petition rent without offset or credit or (C) which the applicable Significant Tenant or parent company is solvent to the lender’s satisfaction for 2 consecutive quarters; with regard to clause (iv) on the date on which (A) the applicable Significant Tenant has renewed its lease or entered into a new lease for substantially all of its demised premises and has paid full, unabated rent under its lease or (B) a replacement tenant or tenants are in occupancy and open for business and paying aggregate rent that is at least 95% of the rent paid by the applicable Significant Tenant with respect to all of the space demised as of the date of closing by the applicable Significant Tenant pursuant to a lease that is in form and substance satisfactory to the lender; with regard to clause (v) on the date on which (A) Kohl’s has irrevocably revoked or rescinded any such notice, been open for business and conducted normal business operations at substantially all of its demised premises and paid full, unabated rent under its lease for 2 consecutive quarters or (B) a replacement tenant or tenants are in occupancy and open for business and paying aggregate rent that is at least 95% of the rent paid by Kohl’s with respect to all of the space demised as of the date of closing by Kohl’s pursuant to a lease that is in form and substance satisfactory to the lender; and with regard to clause (vi), on the date on which Dick’s has (A) irrevocably revoked or rescinded any such notice, been open for business and conducted normal business operations at substantially all of its demised premises and paid full, unabated rent under its lease for 2 consecutive quarters or (B) a replacement tenant or tenants are in occupancy and open for business and paying aggregate rent that is at least 95% of the rent paid by Dick’s with respect to all of the space demised as of the date of closing by Dick’s pursuant to a lease that is in form and substance satisfactory to the lender.

 

Property Management. The Belden Park Crossing Property is managed by an affiliate of the borrower.

 

Assumption. The borrower has a two-time right to transfer the Belden Park Crossing Property, provided that certain conditions are satisfied, including, but not limited to: (i) no mortgage loan event of default has occurred and is continuing; (ii) the lender’s reasonable determination that the proposed transferee and guarantor satisfy the lender’s credit review and underwriting standards, taking into consideration the transferee’s experience, financial strength and general business standing; (iii) execution of a recourse guaranty and an environmental indemnity by an acceptable replacement guarantor; and (iv) confirmation from the applicable rating agencies that the transfer will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the Series 2017-C41 certificates.

 

Partial Release. None

 

Real Estate Substitution. Not permitted.

 

Subordinate and Mezzanine Indebtedness. Not permitted.

 

Ground Lease. None.

 

Terrorism Insurance. The loan documents require that the “all risk” insurance policy required to be maintained by the borrower provide coverage for terrorism in an amount equal to the full replacement cost of the Belden Park Crossing Property. The loan documents also require business interruption insurance covering no less than the 12-month period following the occurrence of a casualty event, together with a 12-month extended period of indemnity.

 

Earthquake Insurance. The loan documents do not require earthquake insurance.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

85 

 

 

 

ONE CENTURY PLACE

 

(GRAPHIC) 

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

86 

 

 

ONE CENTURY PLACE

 

(GRAPHIC) 

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

87 

 

 

ONE CENTURY PLACE

 

(GRAPHIC) 

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

88 

 

 

No. 9 – One Century Place
 
Loan Information   Property Information
Mortgage Loan Seller: Barclays Bank PLC   Single Asset/Portfolio: Single Asset
Credit Assessment (Fitch/KBRA/Moody’s): NR/NR/NR   Property Type: Office
Original Principal Balance(1): $22,300,000   Specific Property Type: Suburban
Cut-off Date Balance(1): $22,300,000   Location: Nashville, TN
% of Initial Pool Balance: 2.8%   Size: 538,792 SF
Loan Purpose: Acquisition   Cut-off Date Balance Per SF(1): $123.05
Borrower: SCUS OCP LLC   Year Built/Renovated: 1991/2016
Borrower Sponsor: Stone Company SPC   Title Vesting: Fee
Mortgage Rate: 3.790%   Property Manager: Transwestern
Note Date: October 19, 2017   4th Most Recent Occupancy(4): NAV
Anticipated Repayment Date: NAP   3rd Most Recent Occupancy(4): 93.0% (12/31/2014)
Maturity Date: November 6, 2027   2nd Most Recent Occupancy(4): 98.7% (12/31/2015)
IO Period: 120 months   Most Recent Occupancy (As of)(4): 99.8% (12/31/2016)
Loan Term (Original): 120 months   Current Occupancy (As of)(4): 99.8% (10/11/2017)
Seasoning: 0 months    
Amortization Term (Original): NAP   Underwriting and Financial Information:
Loan Amortization Type: Interest-only, Balloon      
Interest Accrual Method: Actual/360   4th Most Recent NOI: $6,367,858 (12/31/2014)
Call Protection: L(23),GRTR 1% or YM(91),O(6)   3rd Most Recent NOI: $6,220,568 (12/31/2015)
Lockbox Type: Hard/Springing Cash Management   2nd Most Recent NOI: $6,986,174 (12/31/2016)
Additional Debt(1): Yes   Most Recent NOI:  $7,145,819 (TTM 8/31/2017)
Additional Debt Type(1)(2): Pari Passu; Future Mezzanine    
         
      U/W Revenues: $12,080,931
      U/W Expenses: $4,449,986
          U/W NOI: $7,630,945
Escrows and Reserves(3):         U/W NCF: $6,967,293
          U/W NOI DSCR(1): 3.00x
Type: Initial Monthly Cap (If Any)   U/W NCF DSCR(1): 2.73x
Taxes $0 Springing NAP   U/W NOI Debt Yield(1): 11.5%
Insurance $0 Springing NAP   U/W NCF Debt Yield(1): 10.5%
Replacement Reserves $0 Springing NAP   As-Is Appraised Value: $102,000,000
TI/LC Reserve $0 Springing NAP   As-Is Appraisal Valuation Date: September 15, 2017
Elevator Upgrades Repair Reserve $2,455,896 $0 NAP   Cut-off Date LTV Ratio(1): 65.0%
Willis Tenant Reserves $0 Springing NAP   LTV Ratio at Maturity or ARD(1): 65.0%
             

(1)See “The Mortgage Loan” section. All statistical information related to balances per square foot, loan-to-value ratios, debt service coverage ratios and debt yields are based on the One Century Place Whole Loan (as defined below).

(2)See “Subordinate and Mezzanine Indebtedness” section.

(3)See “Escrows” section.

(4)See “Historical Occupancy” section. Historical occupancy prior to 12/31/2014 is unavailable due to acquisition financing.

 

The Mortgage Loan. The mortgage loan (the “One Century Place Mortgage Loan”) is part of a whole loan (the “One Century Place Whole Loan”) evidenced by two pari passu notes secured by a first mortgage encumbering the fee interest in a 538,792 square foot office complex located in Nashville, Tennessee (the “One Century Place Property”). The One Century Place Whole Loan was originated on October 19, 2017 by Barclays Bank PLC. The One Century Place Whole Loan had an original principal balance of $66,300,000, has an outstanding principal balance as of the Cut-off Date of $66,300,000 and accrues interest at an interest rate of 3.790% per annum. The One Century Place Whole Loan had an initial term of 120 months, has a remaining term of 120 months as of the Cut-off Date and requires payments of interest-only through the term of the One Century Place Whole Loan. The One Century Place Whole Loan matures on November 6, 2027.

 

Note A-2, which will be contributed to the WFCM 2017-C41 Trust, had an original principal balance of $22,300,000, has an outstanding principal balance as of the Cut-off Date of $22,300,000 and represents the non-controlling interest in the One Century Place Whole Loan. The controlling Note A-1, had an original principal balance of $44,000,000, has an outstanding principal balance as of the Cut-off Date of $44,000,000, is currently held by Barclays Bank PLC and is expected to be contributed to one or more future securitizations. The lender provides no assurances that any non-securitized notes will not be split further. See “Description of the Mortgage Pool—The Whole Loans—The Non-Serviced Pari Passu Whole Loans” in the Preliminary Prospectus. The following table presents a summary of the promissory notes comprising the One Century Place Whole Loan.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

89 

 

 

ONE CENTURY PLACE

 

Note Summary

 

Notes Original Balance   Note Holder Controlling Interest
A-1 $44,000,000   Barclays Bank PLC Yes
A-2 $22,300,000   WFCM 2017-C41 No
Total $66,300,000      

 

On November 6, 2019 and on any business day thereafter, the borrowers have the right to prepay the One Century Place Whole Loan in whole (or in part in connection with a Debt Yield Cure Prepayment, as defined below) on any date on or before May 6, 2027, provided that the borrower pays the greater of a yield maintenance premium or a prepayment premium equal to 1.0% of the principal amount being prepaid. In addition, the One Century Place Whole Loan is prepayable without penalty after May 6, 2027.

 

Sources and Uses

 

Sources       Uses    
Original loan amount $66,300,000 63.7%   Purchase price $100,000,000 96.0%
Borrower sponsors’ new cash contribution 37,838,990 36.3      Reserves 2,455,896 2.4   
        Closing costs 1,683,094 1.6   
             
Total Sources $104,138,990 100.0%   Total Uses $104,138,990 100.0%

 

The Property. The One Century Place Property consists of a 538,792 square foot, Class A office building located in Nashville, Tennessee, at the I-40/Briley Parkway interchange on the north side of the Nashville International Airport, less than 10.0 miles from downtown Nashville. Constructed in 1991, the One Century Place Property sits on a 28.4-acre site with views of the Downtown Nashville skyline. The One Century Place Property features amenities including a 37,268 square foot conference center with a 200-seat amphitheater and 14 additional meeting spaces that can accommodate up to 75 people each. Additionally, the One Century Place Property includes a full-service cafeteria, with a patio that can seat up to 300 people for breakfast and lunch, as well as provide catering services. According to the sponsor, approximately $5.9 million of capital expenditures have been invested in the One Century Place Property over the last 10 years, including a roof replacement, cooling towers replacement, restroom renovations and parking improvements. The One Century Place Property features both surface and underground garage parking totaling a combined 2,119 spaces (approximately 3.9 per 1,000 square foot).

 

The One Century Place Property is leased to 13 tenants across a diverse spectrum of industries, including government, insurance, financial services, technology and transportation industries. The largest tenants at the One Century Place Property include Willis North America (“Willis”) (36.7% of U/W base rent), Asurion (22.3% of U/W base rent), Tennessee Lottery (11.5% of U/W base rent), and Tennessee Valley Authority (9.7% of U/W base rent). According to the sponsor, Willis as a provider of risk management, insurance brokerage and other risk services, is one of the world’s oldest insurance brokers and is the original tenant at the One Century Place Property. Asurion is a technology solutions company that provides maintenance and insurance services for smartphones, tablets, consumer electronics and other appliances. Tennessee Lottery has sold lottery tickets since 2004 and has provided over $300 million to education programs in the state, and is headquartered at the One Century Place Property. Tennessee Valley Authority is a federally-owned corporation that provides navigation, flood control, electricity generation and economic development in the Tennessee Valley region and ranks as the second largest seller of electricity with over $10.6 billion in revenue in 2016. As of October 11, 2017, the One Century Place Property was 99.8% occupied by 13 tenants, with 72.1% of the net rentable area and 69.1% of the U/W base rent attributable to investment grade tenants.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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The following table presents certain information relating to the tenancy at the One Century Place Property:

 

Major Tenants

 

Tenant Name

Credit Rating (Fitch/Moody’s/

S&P)(1)

Tenant NRSF % of
NRSF
Annual U/W Base Rent PSF(2) Annual
U/W Base Rent(2)
% of Total Annual U/W Base Rent Lease
Expiration
Date
             
Major Tenant          
Willis BBB/Baa3/NR 177,351 32.9% $24.71 $4,382,343 36.7% 4/30/2026(3)
Asurion NR/B1/B+ 105,219 19.5% $25.31 $2,663,583 22.3% 12/31/2023(4)
Tennessee Lottery(5) NR/Aaa/AAA 55,962 10.4% $24.56 $1,374,418 11.5% 4/30/2025(6)
Tennessee Valley Authority NR/Aaa/AA+ 45,807 8.5% $25.22 $1,155,252 9.7% 10/31/2023(7)
American President Lines, Ltd. NR/NR/NR 40,653 7.5% $24.35 $989,839 8.3% 5/31/2021(8)
Total Major Tenants 424,992 78.9% $24.86 $10,565,435 88.6%  
             
Non-Major Tenants(9) 112,459 20.9% $12.09 $1,360,156 11.4%  
             
Occupied Collateral Total 537,451 99.8% $22.19 $11,925,592 100.0%  
             
Vacant Space   1,341 0.2%        
               
Collateral Total 538,792 100.0%        
               
                 
(1)Certain ratings are those of the parent company whether or not the parent guarantees the lease.

(2)Annual U/W Base Rent PSF and Annual U/W Base Rent include contractual rent steps through August 2018, totaling $258,251.

(3)Willis has two, five-year lease renewal options.

(4)Asurion has two, five-year lease renewal options. Asurion has a one-time right to terminate its lease effective September 1, 2019 by providing 12 months’ notice and by the payment of all unamortized brokerage commissions, concessions and tenant improvement allowance in accordance with their lease. See “Escrows” below.

(5)Tennessee Lottery subleases 4,164 square feet to GTECH Corporation and 340 square feet to Scientific Games International, Inc., both coterminous with the Tennessee Lottery lease.

(6)Tennessee Lottery has two, five-year lease renewal options.

(7)Tennessee Valley Authority has two, five-year lease renewal options. Tennessee Valley Authority has a one-time right to terminate its lease effective October 31, 2020 with 12 months’ notice and by the payment of all unamortized costs, six months of rent, and other such payments set forth in the lease if (i) the programmatic element or business unit of Tennessee Valley Authority is no longer doing business within a 50-mile radius of the One Century Place Property or (ii) Tennessee Valley Authority needs less than 90 personnel to conduct its business with reasonable evidence of such factor.

(8)American President Lines, Ltd. has one, five-year lease renewal option. American President Lines, Ltd. has a one-time right to terminate its lease effective August 31, 2019 by providing 10 months’ notice and by the payment of all unamortized brokerage commissions, concessions, tenant improvement allowances and four months of rent in accordance with their lease.

(9)Sodexo was not considered a Major Tenant as Sodexo operates 61,566 square feet of cafe and conference center building amenities space and thus pays reduced rents.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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The following table presents certain information relating to the lease rollover schedule at the One Century Place Property:

 

Lease Expiration Schedule(1)(2)

 

Year Ending
 December 31,
No. of Leases Expiring Expiring NRSF % of Total NRSF Cumulative Expiring NRSF Cumulative % of Total NRSF Annual
 U/W
Base Rent
% of Total Annual U/W Base Rent Annual
 U/W
Base Rent
 PSF(3)
MTM 0 0 0.0% 0 0.0% $0 0.0% $0.00
2017 1 1,656 0.3% 1,656 0.3% $34,114 0.3% $20.60
2018 2 14,071 2.6% 15,727 2.9% $342,907 2.9% $24.37
2019(4) 1 1 0.0% 15,728 2.9% $3,600 0.0% $3,600
2020(5) 2 4,650 0.9% 20,378 3.8% $57,458 0.5% $12.36
2021(6) 2 102,219 19.0% 122,597 22.8% $1,172,539 9.8% $11.47
2022 1 30,515 5.7% 153,112 28.4% $739,378 6.2% $24.23
2023 2 151,026 28.0% 304,138 56.4% $3,818,836 32.0% $25.29
2024 0 0 0.0% 304,138 56.4% $0 0.0% $0.00
2025 1 55,962 10.4% 360,100 66.8% $1,374,418 11.5% $24.56
2026 1 177,351 32.9% 537,451 99.8% $4,382,343 36.7% $24.71
2027 0 0 0.0% 537,451 99.8% $0 0.0% $0.00
Thereafter 0 0 0.0% 537,451 99.8% $0 0.0% $0.00
Vacant 0 1,341 0.2% 538,792 100.0% $0 0.0% $0.00
Total/Weighted Average 13 538,792 100.0%     $11,925,592 100.0% $22.19
(1)Information obtained from the underwritten rent roll.

(2)Certain tenants may have lease termination options that are exercisable prior to the originally stated expiration date of the subject lease and that are not considered in the Lease Expiration Schedule.

(3)Weighted Average U/W Base Rent PSF excludes vacant space.

(4)2019 represents XO Communications, a telecommunication tenant which operates optical fiber and other telecommunications equipment throughout the One Century Place Property.

(5)2020 includes 2,845 square feet of management office and storage space.

(6)2021 includes all of Sodexo’s leased area and rent, which includes the contractual right to use the cafe space to provide meals to third-party customers, which right is renewed annually.

 

The following table presents historical occupancy percentages at the One Century Place Property:

 

Historical Occupancy

 

12/31/2013(1)

 

12/31/2014(1)(2)

 

12/31/2015(1)(2)

 

12/31/2016(1)

 

10/11/2017(3)

             
NAV  93.0%  98.7%  99.8%  99.8%

 

(1)Information obtained from the borrower. Historical occupancy prior to 12/31/2014 is unavailable due to acquisition financing.

(2)The increase from 12/31/2014 occupancy to 12/31/2015 occupancy is primarily attributable to the Cummins, Inc. lease commencing on August 1, 2015 for 30,515 square feet

(3)Information obtained from the underwritten rent roll.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the underwritten net cash flow at the One Century Place Property:

 

Cash Flow Analysis

 

   2014  2015(1)  2016(1)  TTM
8/31/2017(1)
  U/W(1)  % of U/W Effective Gross Income  U/W $ per SF
Base Rent  $10,756,676  $10,561,928  $11,240,027  $11,507,964  $12,482,529(2)  103.3%  $23.17
Grossed Up Vacant Space  $0  $0  $0  $0  $34,866  0.3  0.06
Total Reimbursables  $352,178  $105,505  $183,490  $54,972  $57,003  0.5  0.11
Other Income  $182,561  $173,449  $102,875  $135,254  $135,254  1.1  0.25
Less Vacancy & Credit Loss  0  0  0  0 

(628,720)(3)

  (5.2)  (1.17)
Effective Gross Income  $11,291,415  $10,840,882  $11,526,392  $11,698,190  $12,080,931  100.0%  $22.42
                      
Total Operating Expenses  $4,923,558  $4,620,314  $4,540,218  $4,552,371  $4,449,986  36.8%  $8.26
                      
Net Operating Income  $6,367,858  $6,220,568  $6,986,174  $7,145,819  $7,630,945  63.2%  $14.16
TI/LC  0  0  0  0  538,792  4.5  1.00
Capital Expenditures  0  0  0  0  124,861  1.0  0.23
Net Cash Flow  $6,367,858  $6,220,568  $6,986,174  $7,145,819  $6,967,293  57.7%  $12.93
                      
NOI DSCR(4)  2.50x  2.44x  2.74x  2.80x  3.00x      
NCF DSCR(4)  2.50x  2.44x  2.74x  2.80x  2.73x      
NOI DY(4)  9.6%  9.4%  10.5%  10.8%  11.5%      
NCF DY(4)  9.6%  9.4%  10.5%  10.8%  10.5%      
(1)The increase in Net Operating Income from 2015 to U/W is primarily attributable to Cummins, Inc. lease commencing on August 1, 2015 for 30,515 square feet.

(2)U/W Base Rent includes contractual rent steps through August 2018, totaling $258,251 and straight-line rent through maturity totaling $556,937 for four investment grade tenants.

(3)The underwritten economic vacancy is 5.0%. The One Century Place Property was 99.8% leased as of October 11, 2017.

(4)Debt service coverage ratios and debt yields are based on the One Century Place Whole Loan.

 

Appraisal. As of the appraisal valuation date of September 15, 2017 the One Century Place Property had an “as-is” appraised value of $102,000,000. The appraised value excludes the 15.0 acre development release partial described in the “Free Release” section below.

 

Environmental Matters. According to a Phase I environmental site assessment dated July 6, 2017, there was no evidence of any recognized environmental conditions at the One Century Place Property.

 

Market Overview and Competition. The One Century Place Property is located in the Airport North office submarket of the Nashville market, in close proximity to the Nashville International Airport. The Nashville International Airport served more than 13.0 million passengers in 2016, an 11.0% increase over the previous year. In August 2016, the Metro Nashville Airport Authority announced a $1.2 billion renovation and expansion to be completed in phases over the subsequent five to seven years. The One Century Place Property benefits from access to the Briley Parkway within a mile of the property, and Interstate 40 within 2.0 miles of the One Century Place Property.

 

As of the second quarter of 2017, the Airport North office submarket had approximately 6.3 million square feet of office inventory, average asking rents of $20.32 per square foot and a vacancy rate of 4.2%. According to the appraisal, the 2016 estimated population within a one-, three- and five-mile radius of the One Century Place Property was 3,780, 39,861 and 147,318, respectively; while the 2016 estimated average household income within the same radii was $52,753, $54,100 and $54,051, respectively.

 

The following table presents certain information relating to comparable office leases for the One Century Place Property:

 

Comparable Leases(1)

 

Property
Name/Location
Year Built Occupancy Distance
from
Subject
Tenant Name Lease
Date/Term
Lease Area
(SF)
Annual Base
Rent
PSF
Lease Type

UBS Tower

Nashville, TN

1973 94% 8.1 miles Houzz Inc.

Mar. 2018 /

10 Yrs.

18,675 $27.00 FSG

Lakeview I

Nashville, TN

1986 68% 0.2 miles Confidential

Feb. 2018 / 

5 Yrs.

5,500 $22.25 FSG

Highland Ridge II

Nashville, TN

1984 98% 1.3 miles Confidential

Sep. 2017 /

5 Yrs.

NAV $23.30 FSG

Highland Ridge I

Nashville, TN

1983 82% 1.1 miles Confidential

Aug. 2017 /

7 Yrs.

7,830 $23.75 FSG

L&C Tower

Nashville, TN

1955 75% 8.9 miles NIC Ink

May 2017 /

5 Yrs.

3,000 $27.50 FSG

 

(1)Information obtained from the appraisal and third party reports.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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The Borrower. The borrower for the One Century Place Whole Loan is SCUS OCP LLC, a Delaware limited liability company and a special purpose entity with two independent directors. Legal counsel to the borrower delivered a non-consolidation opinion in connection with the origination of the One Century Place Whole Loan. Stone Company SPC is the guarantor of certain nonrecourse carveouts under the One Century Place Whole Loan. The guarantor must at all times maintain a net worth of at least $70,000,000 and maintain liquid assets of at least $7,000,000, as reasonably determined by the lender.

 

The Borrower Sponsor. The borrower sponsor is Stone Company SPC. Stone Company SPC is beneficially owned by a Middle Eastern family office.

 

Escrows. The loan documents provide for upfront reserves in the amount of $2,455,896 for work relating to repairs, replacements, improvements, upgrades and modernization of the elevator systems at the One Century Place Property.

 

The loan documents do not require monthly reserve deposits for real estate taxes and replacement reserves so long as no Cash Sweep Period (as defined below) has occurred and is continuing. The loan documents do not require ongoing monthly escrows for insurance premiums as long as (i) no Cash Sweep Period is in effect and (ii) the borrower provides the lender with evidence that the One Century Place Property is insured via an acceptable blanket insurance policy and such policy is in full force and effect. Following the occurrence and during the continuance of a Cash Sweep Period, the borrower is required to make monthly deposits of one-twelfth of the real estate taxes due, one-twelfth of the estimated insurance premiums (when such blanket insurance policy is not in-place) and $6,735 (approximately $0.15 per square foot annually) for replacement reserves (capped at $242,456).

 

Following the occurrence and during the continuance of a Cash Sweep Period, the borrower is required to make monthly deposits of $38,164 (approximately $0.85 per square foot annually) for TI/LCs (capped at $1,373,914). The borrower is also required to deposit into the TI/LC reserve any lease termination fees at the One Century Place Property. If Asurion gives notice to terminate its lease on September 1, 2019 and the final lease termination payment is less than $2,500,000, then the borrower will also be required to deposit into the TI/LC reserve one-twelfth of the difference between $2,500,000 and the Asurion lease termination payment for twelve months on each payment date. On each payment date during the continuance of a Cash Sweep Period caused by a Willis Trigger Event (as defined below), the borrower will be required to sweep all excess cash flow from the One Century Place Property into a reserve (the “Willis Rollover Reserve”) until the amount on deposit in the Willis Rollover Reserve equals or exceeds $4,877,153 to be used for TI/LCs in connection with re-leasing the Willis space. Additionally, on the payment date occurring in May, 2020 and on each payment date thereafter through and including the payment date occurring in April 2021, the borrower is required to deposit $64,429 for the full amount of an outstanding tenant improvement allowance obligation pursuant to the Willis lease for the period commencing May 1, 2021 and ending on April 30, 2022.

 

A “Cash Sweep Period” means the occurrence of (i) an event of default, (ii) the net operating income debt yield (as calculated under the loan documents) being less than 8.0% for any two consecutive calendar quarters or (iii) if prior to May 1, 2025 the borrower failing to deliver to the lender an estoppel (the “Willis Condition Satisfaction Estoppel”) evidencing the renewal of the Willis lease by Willis or one or more acceptable replacement tenants subject to conditions set forth in the One Century Place Whole Loan documents including a minimum term of five years and the applicable replacement tenant or tenants paying full, unabated rent which equals or exceeds 85.0% of the rent payable under the Willis lease (the “Willis Trigger Event”). A Cash Sweep Period will cease upon (a) with respect to (i), the cure of such event of default, (b) with respect to (ii), the net operating income debt yield being equal to or greater than 8.0% for any two consecutive calendar quarters and (c) with respect to (iii), the receipt of the Willis Condition Satisfaction Estoppel or the amount on deposit in the Willis Rollover Reserve equals or exceeds $4,877,153. With respect to (ii), the borrower has the option to partially prepay the One Century Place Whole Loan on or after November 6, 2019 with the payment of a yield maintenance premium (the “Debt Yield Cure Prepayment”), or post cash or a letter of credit in amount equal to such prepayment that would result in the achievement of such debt yield.

 

Lockbox and Cash Management. The One Century Place Whole Loan is structured with a hard lockbox and springing cash management. The borrower was required at origination to deliver letters to all tenants at the One Century Place Property directing them to pay all rents directly into a lender-controlled lockbox account. All funds received by the borrower or manager are required to be deposited in the lockbox account within two business days following receipt. During the occurrence and continuance of a Cash Sweep Period, all funds are required to be swept each business day into the cash management account controlled by the lender and disbursed on each payment date in accordance with the loan documents, with all excess cash flow to be deposited to an excess cash reserve to be held as additional security for the One Century Place Whole Loan (unless such Cash Sweep Period was caused solely by a Willis Trigger Event).

 

Property Management. The One Century Place Property is managed by Transwestern Commercial Services Georgia, L.L.C., d/b/a Transwestern (“Transwestern”). Transwestern is a privately held property manager which specializes in agency leasing, tenant advisory, capital markets and asset services with 35 U.S. offices and based in Houston, Texas.

 

Assumption. The borrower has, at any time (other than the period 60 days prior to a securitization of a note or the period 60 days after a securitization of a note) the right to transfer the One Century Place Property, provided that certain conditions are satisfied, including: (i) no event of default has occurred and is continuing, (ii) the borrower has provided the lender with prior written notice, (iii) the proposed transferee qualifies as a qualified transferee under the loan documents and (iv) the lender has received confirmation from KBRA, Fitch and Moody’s that such assumption will not result in a downgrade of the respective ratings assigned to the Series 2017-C41 certificates and similar confirmations from each rating agency rating any securities backed by any of the One Century Place companion loans.

 

Free Release. On or after November 6, 2018, on any business day, the borrower is permitted to obtain the release of a 15-acre development parcel, subject to the satisfaction of certain conditions contained in the loan agreement, including but not limited to (i) no event of default has occurred and is continuing, (ii) the release will not adversely affect the access to the remaining property, (iii) the borrower has obtained separate tax identification numbers, (iv) the owner of the development parcel will not be permitted to

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

94 

 

 

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lease, directly or indirectly, any portion of any space at the development parcel to any tenant and any affiliates of such tenant under any lease at the remaining property unless certain conditions are satisfied in the One Century Place Whole Loan documents, (v) the release conforms to REMIC requirements, (vi) evidence is provided that the remaining property will be in compliance with all applicable legal and zoning requirements and (vii) the loan-to-value ratio for the remaining property is in compliance with all REMIC requirements and no greater than 65.0%.

 

Real Estate Substitution. Not permitted.

 

Future Mezzanine Indebtedness. Provided no event of default has occurred and is continuing, the borrower is permitted to incur future mezzanine indebtedness on the earlier to occur of (x) two years after the closing date of the securitization that includes the last note to be securitized or (y) October 19, 2020, provided (a) prior written notice of not less than 30 days, but not more than 90 days, is provided to the lender specifying the origination date of the permitted mezzanine loan, (b) the mezzanine lender enters into an intercreditor agreement acceptable to the rating agencies and reasonably acceptable to the lender, (c) the mezzanine loan will have a term that is coterminous or in excess of the term of the One Century Place Whole Loan, (d) the mezzanine loan will be current pay and will not be a payment in kind structure, (e) the combined loan-to-value ratio for the One Century Place Whole Loan and permitted mezzanine loan will not be greater than 63.4%, (f) the debt service coverage ratio of the One Century Place Whole Loan and the permitted mezzanine loan is equal to or greater than 2.57x, (g) the debt yield of the One Century Place Whole Loan and the permitted mezzanine loan is equal to or greater than 10.9%, (h) if the mezzanine loan is floating rate, the borrower is required to acquire and maintain an interest rate cap or swap agreement from a counterparty reasonably acceptable to the lender, (h) a rating agency confirmation from each of KBRA, Fitch and Moody’s that the future mezzanine indebtedness will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the Series 2017-C41 Certificates and similar ratings confirmations from each rating agency rating any securities backed by the One Century Place companion loans with respect to the ratings of such securities, and (i) any other requirements as stated under the One Century Place Whole Loan documents are met.

 

Future Unsecured Indebtedness. The borrower is permitted to obtain subordinate unsecured loans from a direct or indirect owner of the borrower, provided (i) prior written notice of not less than 30 days, but not more than 90 days, is provided to the lender specifying the origination date of the permitted unsecured loan, (ii) the subordinate loan is made in accordance with the borrower’s organizational documents, (iii) the subordinate loan will have a fixed rate of interest and will not have a stated maturity date which occurs on or prior to the maturity date of the One Century Place Whole Loan, (iv) payments under or with respect to any such subordinate loan will be made only from excess cash flow from the One Century Place Property, (v) the holder of the subordinate loan will waive all rights to declare default and pursue remedies with respect to such subordinate loan while the One Century Place Whole Loan is outstanding, (vi) the maximum amount of such subordinate loan will not exceed 10.0% of the amount of the One Century Place Whole Loan, (vii) proceeds of such subordinated loan will be used only in connection with the One Century Place Property and the operation, maintenance and repair of the One Century Place Property, (viii) such subordinate loan will be deemed to be discharged upon a foreclosure of any mezzanine indebtedness, (ix) rating agency confirmation, and (x) any other requirements as stated under the One Century Place Whole Loan documents are met.

 

Ground Lease. None.

 

Terrorism Insurance. The One Century Place Whole Loan documents require that the “all risk” insurance policy required to be maintained by the borrower provide coverage for terrorism in an amount equal to the full replacement cost of the One Century Place Property, or that if the Terrorism Risk Insurance Program Reauthorization Act is no longer in effect and such policies contain an exclusion for acts of terrorism, the borrower will obtain, to the extent available, a stand-alone policy that provides the same coverage as the policies would have if such exclusion did not exist. The loan documents also require business interruption insurance covering no less than an amount equal to 100% of the projected gross income from the One Century Place Property on an actual loss sustained basis for a period beginning on the date of business interruption and continuing until the restoration of the One Century Place Property is completed, or the 24-month period following the occurrence of a casualty event, together with a 12-month extended period of indemnity.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

95 

 

 

61 GROVE STREET

 

(Graphic) 

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

96 

 

 

61 GROVE STREET

 

(Graphic) 

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

97 

 

 

No. 10 – 61 Grove Street
 
Loan Information   Property Information
Mortgage Loan Seller: Ladder Capital Finance LLC   Single Asset/Portfolio: Single Asset
Credit Assessment (Fitch/KBRA/Moody’s): NR/NR/NR/NR   Property Type: Mixed Use
Original Principal Balance: $21,650,000   Specific Property Type: Multifamily/Retail
Cut-off Date Balance: $21,650,000   Location: New York, NY
% of Initial Pool Balance: 2.8%   Size: 12 Units
Loan Purpose: Refinance   Cut-off Date Balance Per Unit: $1,804,167
Borrowers: 61 Grove St. Owner LLC   Year Built/Renovated: 1900/2016
Sponsors: Alfred Sabetfard   Title Vesting: Fee
Mortgage Rate: 4.370%   Property Manager: Self-managed
Note Date: October 30, 2017   4th Most Recent Occupancy (As of)(2): NAV
Anticipated Repayment Date: NAP   3rd Most Recent Occupancy (As of)(2): NAV
Maturity Date: November 6, 2027   2nd Most Recent Occupancy (As of)(2): 75.0% (12/31/2015)
IO Period: 120 months   Most Recent Occupancy (As of)(2): 100.0% (12/31/2016)
Loan Term (Original): 120 months   Current Occupancy (As of)(2): 91.7% (9/1/2017)
Seasoning: 0 months    
Amortization Term (Original): 0 months   Underwriting and Financial Information:
Loan Amortization Type: Interest-only, Balloon      
Interest Accrual Method: Actual/360   4th Most Recent NOI (As of):  NAV
Call Protection: L(24),D(92),O(4)   3rd Most Recent NOI (As of)(3): $1,326,540 (12/31/2015)
Lockbox Type: Springing   2nd Most Recent NOI (As of)(3): $1,470,659 (12/31/2016)
Additional Debt: None   Most Recent NOI (As of)(3): $1,484,162 (TTM 8/31/2017)
Additional Debt Type: NAP    
      U/W Revenues: $1,825,172
      U/W Expenses: $382,105
      U/W NOI: $1,443,067
      U/W NCF: $1,433,465
      U/W NOI DSCR: 1.50x
Escrows and Reserves(1):     U/W NCF DSCR: 1.49x
      U/W NOI Debt Yield: 6.7%
Type: Initial Monthly Cap (If Any)   U/W NCF Debt Yield: 6.6%
Taxes $137,528 $22,921 NAP   As-Is Appraised Value: $39,500,000
Insurance $3,916 $979 NAP   As-Is Appraisal Valuation Date: August 29, 2017
Replacement Reserves $15,000 $300 $15,000   Cut-off Date LTV Ratio: 54.8%
TI/LC Reserves $75,000 $1,250 $75,000   LTV Ratio at Maturity or ARD: 54.8%
             
                 
(1)See “Escrows” section.

(2)See table titled “Historical Occupancy”.

(3)See table titled “Cash Flow Analysis”.

 

The Mortgage Loan. The mortgage loan (the “61 Grove Street Mortgage Loan”) is evidenced by a single promissory note that is secured by a first mortgage encumbering a mixed use multifamily and retail building located in New York, New York (the “61 Grove Street Property”). The 61 Grove Street Mortgage Loan was originated on October 30, 2017 by Ladder Capital Finance LLC. The 61 Grove Street Mortgage Loan had an original principal balance of $21,650,000, has an outstanding principal balance as of the Cut-off Date of $21,650,000, and accrues interest at a rate of 4.370% per annum. The 61 Grove Street Mortgage Loan had an initial term of 120 months, has a remaining term of 120 months as of the Cut-off Date and requires interest-only payments through the term of the 61 Grove Street Mortgage Loan. The 61 Grove Street Mortgage Loan matures on November 6, 2027.

 

Following the lockout period, the borrower has the right to defease the 61 Grove Street Mortgage Loan in whole, but not in part, on any date before August 6, 2027. In addition, the 61 Grove Street Mortgage Loan is prepayble without penalty on or after August 6, 2027.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

98 

 

 

61 GROVE STREET

 

Sources and Uses

 

Sources         Uses      
Original loan amount $21,650,000   100.0%   Loan Payoff $17,057,918   78.8%
          Return of Equity 3,870,575   17.9
          Closing costs 490,063   2.3
          Reserves 231,444   1.1
                 
Total Sources $21,650,000   100.0%   Total Uses $21,650,000   100.00%

 

The Property. The 61 Grove Street Property consists of a 5-story mixed-use apartment building located in New York, NY. The 61 Grove Street Property is located on a through block parcel from Grove Street to Christopher Street, between Seventh Avenue South and Bleecker Street in the West Village neighborhood of Manhattan. Developed in 1900 and renovated in 2016, the 61 Grove Street Property is made up of twelve residential units and 3,000 square feet of retail space. The residential units feature amenities including a laundry facility with 6 washers and 6 dryers. In addition, nine of the residential units have either a private deck or a balcony. The 3,000 square feet of retail space at the 61 Grove Street Property is 100% occupied by two retail tenants. Hakata Restaurant occupies 2,000 square feet with a lease expiration in December 2025 and Big Gay Ice Cream Shop occupies the remaining 1,000 square feet with a lease expiration in September 2021. The residential units at the 61 Grove Street Property were previously subject to New York rent control or rent stabilization laws. See “Risk Factors—Risk Relating to the Mortgage Loans—Multifamily Properties Have Special Risks” in the Preliminary Prospectus.

 

As of September 1, 2017, the multifamily units were 91.7% occupied and the retail tenants were 100.0% occupied.

 

The following table presents certain information relating to the unit mix of the 61 Grove Street Property:

 

Apartment Unit Summary(1)

 

Unit Type No. of Units % of Total Units Average Unit Size (SF) Average Monthly Market Rent per Unit
Four Bedroom 8 66.7% 800 $9,000
Five Bedroom 4 33.3% 900 $9,750
Total/Weighted Average 12   100.0%  833 $9,250

(1)Information obtained from the appraisal.

 

The following table presents historical occupancy percentages at the 61 Grove Street Property:

 

Historical Occupancy

 

12/31/2013(1)

12/31/2014(1)

12/31/2015(2)(3)(4)

12/31/2016(2)(3)(4)

9/1/2017(2)(4)(5)

NAV NAV 75.0% 100.0% 91.7%

 

(1)Occupancy history before 2015 is unavailable as borrower purchased the property during 2014.

(2)Information obtained from the borrower.

(3)Occupancy increased from 2015 to 2016 due to a full renovation at the property after the borrower purchased it during 2014.

(4)Occupancy is based on the residential units only.

(5)As of September 1, 2017, 11 of the 12 residential units were occupied, while the 3,000 square feet of retail space was 100% occupied.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

99 

 

 

61 GROVE STREET

 

Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and underwritten net cash flow at the 61 Grove Street Property:

 

Cash Flow Analysis

 

  2015 2016 TTM 8/31/2017 U/W % of U/W
Effective
Gross
Income
U/W $
per Unit
Base Rent $1,645,113 $1,793,541 $1,846,980 $1,825,172 100.0% $152,098
Grossed Up Vacant Space 0 0 0 98,340 5.4 8,195
Other Income 0 0 0 0 0.0 0.0
Less Vacancy & Credit Loss

0

0

0

(98,340)(1)

(5.4)

(8,195)

Effective Gross Income $1,645,113 $1,793,541 $1,846,980 $1,825,172 100.0% $152,098
 

 

 

 

 

 

 

Total Operating Expenses $318,573 $322,882 $362,818 $382,105 20.9% $31,842
 

 

 

 

 

 

 

Net Operating Income $1,326,540 $1,470,659 $1,484,162 $1,443,067 79.1% $120,256
Capital Expenditures

0

0

0

9,602

0.5

800

Net Cash Flow $1,326,540 $1,470,659 $1,484,162 $1,433,465 78.5% $119,455
             
NOI DSCR 1.38x 1.53x 1.55x 1.50x    
NCF DSCR 1.38x 1.53x 1.55x 1.49x    
NOI DY 6.1% 6.8% 6.9% 6.7%    
NCF DY 6.1% 6.8% 6.9% 6.6%    

(1)The underwritten economic vacancy is 5.1%. As of September 1, 2017 the apartment units were 91.7% physically occupied and the commercial units were 100.0% physically occupied.

 

Appraisal. As of the appraisal valuation date of August 29, 2017, the 61 Grove Street Property had an “as-is” appraised value of $39,500,000.

 

Environmental Matters. According to a Phase I environmental assessment dated October 2, 2017, there are no recognized environmental conditions at the 61 Grove Street Property.

 

Market Overview and Competition. The 61 Grove Street Property is located between Seventh Avenue South and Bleecker Street, in the West Village neighborhood of Manhattan. The neighborhood is dominated by single-family townhouses, small loft buildings and walk-up apartment buildings. The occupancy and demand for housing types similar to the 61 Grove Street Property is driven by students of the nearby New York University campus as well as young affluent professionals who work in the neighboring office markets.

 

The West Village draws crowds through the Whitney Museum of American Art located 0.7 miles from the 61 Grove Street Property, the High Line located 1.2 miles from the 61 Grove Street Property, the Hudson River Park located 0.5 miles from the 61 Grove Street Property, and Hotel Gansevoort located 0.6 miles from the 61 Grove Street Property. Within a one mile radius of the 61 Grove Street Property population has grown over 7.2% since 2010 reaching a population of 105,444. Average income within a 0.5 mile radius of the 61 Grove Street Property is $173,606.

 

The weighted average U/W Base Rent for the multifamily tenants at the 61 Grove Street Property was $8,976 per unit per month which is 3.0% below the appraiser’s weighted average market rent of $9,250 per unit per month.

 

The retail space at the 61 Grove Street Property is fully occupied, and the retail tenants have a weighted average U/W Base Rent of $191.29 per square foot gross, which is 10.2% below the appraiser’s market rent of $213.00 per square foot gross. Revenue from commercial tenants makes up 29.8% of U/W Gross Revenue.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

100 

 

 

61 GROVE STREET

 

The following table presents certain information relating to comparable multifamily rental properties to 61 Grove Street Property:

 

Competitive Set(1)

 

             
  Location Distance to Subject Property Type Number of Units

Average Monthly Market Rent Per Unit

Total Occupancy

61 Grove Street (Subject)

 

New York, NY -- Mid-Rise 12 $9,250 91.7%(2)

7 Morton Street

 

New York, NY 0.2 miles Mid-Rise 20 $4,409 98.0%

54 Morton Street

 

New York, NY 0.3 miles Mid-Rise 10 $10,504(3) 90.0%

Lincoln Terrace

 

New York, NY 0.4 miles Mid-Rise 39 $3,303(3) 93.6%
62 Leroy Street South

New York, NY

 

0.3 miles Mid-Rise 37 $3,450(3) 97.6%
218-220 Thompson Street New York, NY 0.5 miles Mid-Rise 32 $6,501 98.1%
                         
(1)Information obtained from the appraisal.

(2)Information based upon actual rents and occupied units according to the September 1, 2017 rent roll.

(3)Based on weighted average unit size and quoted rate per month.

 

The Borrower. The borrower is 61 Grove St. Owner LLC, a Delaware limited liability company and a single purpose entity with one independent director. Legal counsel to the borrower delivered a non-consolidation opinion in connection with the origination of the 61 Grove Street Mortgage Loan. Alfred Sabetfard is the guarantor of certain nonrecourse carveouts under the 61 Grove Street Mortgage Loan.

 

The Sponsor. The borrower sponsor is Alfred Sabetfard, who is the principal and founder of the Sabet Group, which is a family owned and operated real estate company with over 35 years of experience in the industry. Sabet Group specializes in development, sale, rental and management of multi-family residential and commercial high-rises to construction and management of custom and speculative up-scale luxury homes and estates. Mr. Sabetfard owns 17 residential properties in Manhattan, nine properties in Boston and three in Los Angeles.

 

Escrows. Upfront escrows were collected in the amounts of (i) $137,528 for real estate taxes, (ii) $3,916 for insurance premiums, (iii)$15,000 for replacement reserves and (iv) $75,000 for tenant improvements and leasing commissions (“TI/LC”). The loan documents also provide for ongoing monthly reserves of $22,921 for real estate taxes and $979 for insurance premiums. There is an ongoing $300 monthly escrow for replacement reserves (capped at $15,000) and an ongoing $1,250 monthly escrow for TI/LC (capped at $75,000).

 

Lockbox and Cash Management. Upon the occurrence and continuance of a Cash Management Trigger Event (as defined below) the borrower is required to establish a lender-controlled lockbox account and instruct non-residential tenants to deposit rents into such lockbox account (with residential rents being collected by the borrower or property manager and deposited into the lockbox account).

 

A “Cash Management Trigger Event” will commence if: (i) an event of default has occurred or is continuing; or (ii) the net cash flow debt service coverage ratio (“NCF DSCR”) for the 61 Grove Street Property falls below 1.20x. A Cash Management Trigger Event will end: with respect to clause (i) upon the cure of the event of default accepted by lender in its sole absolute discretion; and with respect to clause (ii) when the 61 Grove Street Property achieves a NCF DSCR above 1.25x for two consecutive quarters.

 

Property Management. The 61 Grove Street Property is self-managed.

 

Assumption. The borrower has an unlimited right to transfer the 61 Grove Street Property, provided that certain conditions are satisfied, including, but not limited to: (i) no mortgage loan default or event of default has occurred and is continuing; (ii) the lender’s reasonable determination that the proposed transferee and guarantor satisfy the lender’s credit review and underwriting standards, taking into consideration the transferee’s experience, financial strength and general business standing; (iii) execution of a recourse guaranty and an environmental indemnity by an acceptable replacement guarantor; and (iv) confirmation from the applicable rating agencies that the transfer will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the Series 2017-C41 certificates.

 

Partial Release. Not permitted.

 

Real Estate Substitution. Not permitted.

 

Subordinate and Mezzanine Indebtedness. Not permitted.

 

Ground Lease. None.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

101 

 

 

61 GROVE STREET

 

Terrorism Insurance. The loan documents require that the “all risk” insurance policy to be maintained by the borrower provide coverage for terrorism in an amount equal to the full replacement cost of the 61 Grove Street Property. The loan documents also require business interruption insurance covering no less than the 18-month period following the occurrence of a casualty event, together with a 12-month extended period of indemnity.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

102 

 

 

No. 11 – 777 Township Line Road
 
Loan Information   Property Information
Mortgage Loan Seller: Barclays Bank PLC   Single Asset/Portfolio: Single Asset
Credit Assessment (Fitch/KBRA/Moody’s): NR/NR/NR   Property Type: Office
Original Principal Balance: $21,000,000   Specific Property Type: Suburban
Cut-off Date Balance: $21,000,000   Location: Yardley, PA
% of Initial Pool Balance: 2.7%   Size: 110,000 SF
Loan Purpose: Refinance   Cut-off Date Balance Per SF: $190.91
Borrower: Pembroke Township LP   Year Built/Renovated: 2006/NAP
Borrower Sponsors: Pembroke Hobson LLC; John B. Vander   Title Vesting: Fee
  Zwaag; Richard C. Hamlin; Jeffrey J.   Property Manager: CBRE, Inc.
  Irmer   4th Most Recent Occupancy(4): NAV
Mortgage Rate: 4.598%   3rd Most Recent Occupancy(4): NAV
Note Date: October 6, 2017   2nd Most Recent Occupancy(4): 64.7% (12/31/2015)
Anticipated Repayment Date: NAP   Most Recent Occupancy (As of)(4): 90.2% (12/31/2016)
Maturity Date: October 6, 2027   Current Occupancy (As of)(4): 90.6% (10/1/2017)
IO Period: 24 months    
Loan Term (Original): 120 months   Underwriting and Financial Information:
Seasoning: 1 month      
Amortization Term (Original): 360 months   4th Most Recent NOI(4): $2,300,408 (12/31/2014)
Loan Amortization Type: Interest-only, Amortizing Balloon   3rd Most Recent NOI(4):

$1,420,541 (Annualized 5 12/31/2015)

Interest Accrual Method: Actual/360   2nd Most Recent NOI(4): $1,471,430 (12/31/2016)
Call Protection: L(25),D(90),O(5)   Most Recent NOI(4): $1,794,191 (TTM 7/31/2017)
Lockbox Type: Hard/Springing Cash Management    
Additional Debt: None      
Additional Debt Type: NAP   U/W Revenues: $3,396,888
      U/W Expenses: $1,426,482
          U/W NOI: $1,970,406
          U/W NCF: $1,808,188
Escrows and Reserves:         U/W NOI DSCR: 1.53x
          U/W NCF DSCR: 1.40x
Type: Initial Monthly Cap (If Any)   U/W NOI Debt Yield: 9.4%
Taxes $37,954 $37,954 NAP   U/W NCF Debt Yield: 8.6%
Insurance(1) $0 Springing NAP   As-Is Appraised Value: $28,000,000
Replacement Reserves $0 $1,833 $110,000   As-Is Appraisal Valuation Date: August 25, 2017
TI/LC Reserve(2) $495,000 $9,167 $825,000   Cut-off Date LTV Ratio: 75.0%
Other(3) $373,487 $0 NAP   LTV Ratio at Maturity or ARD: 64.2%
             

(1)Ongoing monthly reserves for insurance are not required so long as insurance requirements are being satisfied by a blanket policy acceptable to the lender.

(2)Ongoing monthly TI/LC reserves are required on each payment date in the amount of (a) $9,167 commencing on November 6, 2017 through and including October 6, 2020 and (b) $13,750 commencing on November 6, 2020.

(3)The Upfront Other Reserve represents $279,887 for outstanding tenant improvement obligations for Morgan Stanley and $93,600 for outstanding tenant improvement obligations for Good Shepherd.

(4)See “Historical Occupancy” and “Cash Flow Analysis” sections. Historical occupancy prior to 12/31/2015 is unavailable as the borrower sponsors acquired the 777 Township Line Road Property (as defined below) in August 2015. 3rd Most Recent NOI represents partial August through December 2015 annualized operating history due to the borrower sponsors’ acquisition in August 2015. The increase from 12/31/2015 occupancy to 12/31/2016 occupancy is primarily attributable to 38,825 square feet of net rentable area on the third floor previously occupied by Harte Hanks being partially relet to ETHOS Health Communications and Morgan Stanley. The decrease from 3rd Most Recent NOI to 2nd Most Recent NOI is primarily attributable to the vacancy on the third floor subsequent to Harte Hanks vacating and prior to ETHOS Health Communications and Morgan Stanley taking occupancy. The increase from Most Recent NOI to U/W NOI is primarily attributable to ETHOS Health Communications’ lease and Morgan Stanley’s lease commencing December 1, 2016 and February 14, 2017, respectively.

 

The mortgage loan is evidenced by a single promissory note secured by the fee interest in a three-story, Class-A suburban office building located in Yardley, Pennsylvania (the “777 Township Line Road Property”). The 777 Township Line Road Property was built in 2006, consists of 110,000 square feet, is LEED Silver certified and is situated on a 10.9-acre site. Tenants at the 777 Township Line Road Property include the University of Pennsylvania Health System, ETHOS Health Communications and Hill Wallack. The 777 Township Line Road Property contains 545 surface parking spaces, resulting in a parking ratio of 5.0 spaces per 1,000 square feet of rentable area. As of October 1, 2017, the 777 Township Line Road Property was 90.6% occupied by six tenants.

 

The 777 Township Line Road Property is located in Bucks County, Pennsylvania, approximately 15.0 miles south of Princeton and 20.0 miles north of Philadelphia. The 777 Township Line Road Property benefits from its proximity to Interstate 95 which intersects with PA Route 332 in the immediate vicinity of the 777 Township Line Road Property. Additionally, approximately 4 miles east of the 777 Township Line Road Property are commuter rail lines which provide direct access from Trenton, New Jersey to New York City. According to the appraisal, the 2017 population within a one-, three- and five-mile radius of the 777 Township Line Road Property

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

103 

 

 

777 TOWNSHIP LINE ROAD

 

was 5,264, 47,407, and 152,475, respectively; and the average household income within the same radii was $129,733, $153,806 and $128,693, respectively.

 

Sources and Uses

 

Sources       Uses    
Original loan amount $21,000,000 100.0%   Loan payoff $17,887,977 85.2%
        Closing costs 1,192,572 5.7   
        Return of equity 1,013,010 4.8   
        Reserves 906,441 4.3   
Total Sources $21,000,000 100.0%   Total Uses $21,000,000 100.0%

 

The following table presents certain information relating to the tenancy at the 777 Township Line Road Property:

 

Major Tenant

 

Tenant Name

Credit Rating (Fitch/Moody’s/

S&P)(1)

Tenant NRSF % of
NRSF
Annual U/W Base Rent PSF(2) Annual
U/W Base Rent(2)
% of Total Annual U/W Base Rent Lease
Expiration
Date
             
Major Tenant          
University of Pennsylvania Health System NR/Aa1/AA+ 31,677 28.8% $24.77 $784,639 30.6% 2/28/2027(3)
ETHOS Health Communications NR/NR/NR 28,016 25.5% $27.50 $770,440 30.0% 2/28/2024(4)
Hill Wallack NR/NR/NR 17,358 15.8% $23.50 $407,913 15.9% 4/30/2023(5)
Stark & Stark NR/NR/NR 10,775 9.8% $24.85 $267,759 10.4% 4/30/2022   
Morgan Stanley(6) A/A3/BBB+ 6,645 6.0% $31.23 $207,523 8.1% 9/30/2027(7)
Good Shepherd Penn Partners NR/NR/NR 5,200 4.7% $24.50 $127,400 5.0% 2/28/2027(8)
Total Major Tenants 99,671 90.6% $25.74 $2,565,674 100.0%  
             
Non-Major Tenants 0 0.0% $0.00 $0 0.0%  
             
Occupied Collateral Total 99,671 90.6% $25.74 $2,565,674 100.0%  
             
Vacant Space   10,329 9.4%        
               
Collateral Total 110,000 100.0%        
               

(1)Certain ratings are those of the parent company whether or not the parent guarantees the lease.

(2)Annual U/W Base Rent PSF and Annual U/W Base Rent include contractual rent steps through March 2018, totaling $30,675 and straight-line rent through maturity totaling $90,047 for two investment grade tenants.

(3)University of Pennsylvania Health System has one, five-year lease renewal option.

(4)ETHOS Health Communications has one, five-year lease renewal option.

(5)Hill Wallack has two, five-year lease renewal options.

(6)Morgan Stanley has a one-time right to terminate its lease effective February 14, 2023 by providing 12 months’ written notice and delivering a termination payment of $200,783.

(7)Morgan Stanley has two, five-year lease renewal options.

(8)Good Shepard Penn Partners has one, five-year lease renewal option.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

104 

 

 

777 TOWNSHIP LINE ROAD

 

The following table presents certain information relating to the lease rollover schedule at the 777 Township Line Road Property:

 

Lease Expiration Schedule(1)(2)

 

Year Ending
 December 31,
No. of Leases Expiring Expiring NRSF % of Total NRSF Cumulative Expiring NRSF Cumulative % of Total NRSF Annual
 U/W
Base Rent
% of Total Annual U/W Base Rent Annual
 U/W
Base Rent
 PSF(3)
MTM 0 0 0.0% 0 0.0% $0 0.0% $0.00
2017 0 0 0.0% 0 0.0% $0 0.0% $0.00
2018 0 0 0.0% 0 0.0% $0 0.0% $0.00
2019 0 0 0.0% 0 0.0% $0 0.0% $0.00
2020 0 0 0.0% 0 0.0% $0 0.0% $0.00
2021 0 0 0.0% 0 0.0% $0 0.0% $0.00
2022 1 10,775 9.8% 10,775 9.8% $267,759 10.4% $24.85
2023 1 17,358 15.8% 28,133 25.6% $407,913 15.9% $23.50
2024 1 28,016 25.5% 56,149 51.0% $770,440 30.0% $27.50
2025 0 0 0.0% 56,149 51.0% $0 0.0% $0.00
2026 0 0 0.0% 56,149 51.0% $0 0.0% $0.00
2027 3 43,522 39.6% 99,671 90.6% $1,119,563 43.6% $25.72
Thereafter 0 0 0.0% 99,671 90.6% $0 0.0% $0.00
Vacant 0 10,329 9.4% 110,000 100.0% $0 0.0% $0.00
Total/Weighted Average 6 110,000 100.0%     $2,565,674 100.0% $25.74
(1)Information obtained from the underwritten rent roll.

(2)Certain tenants may have lease termination options that are exercisable prior to the originally stated expiration date of the subject lease and that are not considered in the Lease Expiration Schedule.

(3)Weighted Average U/W Base Rent PSF excludes vacant space.

 

The following table presents historical occupancy percentages at the 777 Township Line Road Property:

 

Historical Occupancy

 

12/31/2014(1)

12/31/2015(2)

12/31/2016(1)(2)

10/1/2017(3)

NAV 64.7% 90.2% 90.6%

 

(1)Information obtained from the borrower. Historical occupancy prior to 12/31/2015 is unavailable as the borrower sponsors acquired the 777 Township Line Road Property in August 2015.

(2)The increase from 12/31/2015 occupancy to 12/31/2016 occupancy is primarily attributable to 38,825 square feet of net rentable area on the third floor previously occupied by Harte Hanks being partially relet to ETHOS Health Communications and Morgan Stanley.

(3)Information obtained from the underwritten rent roll.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

105 

 

 

777 TOWNSHIP LINE ROAD

 

Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the underwritten net cash flow at the 777 Township Line Road Property:

 

Cash Flow Analysis(1)

 

  2014(2) Annualized 5 2015(2)(3) 2016(4) TTM 7/31/2017(4) U/W(4) % of U/W Effective Gross Income U/W $ per SF
Base Rent $2,224,719 $1,683,419 $1,744,124 $2,080,063 $2,565,674(5) 75.5% $23.32
Grossed Up Vacant Space 0 0 0 0 294,377 8.7 2.68
Total Reimbursables 1,383,159 818,787 868,127 878,179 978,240 28.8 8.89
Less Vacancy & Credit Loss

0

0

0

0

(441,404)(6)

(13.0)

(4.01)

Effective Gross Income $3,607,878 $2,502,205 $2,612,251 $2,958,242 $3,396,888 100.0% $30.88
               
Total Operating Expenses $1,307,470 $1,081,664 $1,140,821 $1,164,051 $1,426,482 42.0% $12.97
               
Net Operating Income $2,300,408 $1,420,541 $1,471,430 $1,794,191 $1,970,406 58.0% $17.91
TI/LC 0 0 0 0 140,218(7) 4.1 1.27
Capital Expenditures

0

0

0

0

22,000

0.6

0.20

Net Cash Flow $2,300,408 $1,420,541 $1,471,430 $1,794,191 $1,808,188 53.2% $16.44
               
NOI DSCR 1.78x 1.10x 1.14x 1.39x 1.53x    
NCF DSCR 1.78x 1.10x 1.14x 1.39x 1.40x    
NOI DY 11.0% 6.8% 7.0% 8.5% 9.4%    
NCF DY 11.0% 6.8% 7.0% 8.5% 8.6%    
(1)Historical operating history prior to 2014 is unavailable, as the borrower sponsors acquired the 777 Township Line Road Property in August 2015. 2014 operating history was provided by the previous owner to the borrower sponsor.

(2)The decrease in Net Operating Income from 2014 to 2015 is primarily attributable to the vacancy on the third floor subsequent to Harte Hanks vacating and prior to ETHOS Health Communications and Morgan Stanley taking occupancy.

(3)2015 NOI represents partial August through December 2015 annualized operating history due to the borrower sponsors’ acquisition in August 2015.

(4)The increase in Net Operating Income from 2016 to U/W is primarily attributable to ETHOS Health Communications’ lease and Morgan Stanley’s lease commencing December 1, 2016 and February 14, 2017, respectively.

(5)U/W Base Rent includes contractual rent steps through March 2018, totaling $30,675 and straight-line rent through maturity totaling $90,047 for two investment grade tenants.

(6)The underwritten economic vacancy is 11.5%. The 777 Township Line Road Property was 90.6% leased as of October 1, 2017.

(7)U/W TI/LC is inclusive of a TI/LC credit equivalent to one-tenth of the upfront TI/LC reserve of $495,000.

 

The following table presents certain information relating to comparable office leases for the 777 Township Line Road Property:

 

Comparable Leases(1)

 

Property Name/Location Distance from Subject Tenant Name Lease Date/Term Lease Area (SF) Annual Base Rent PSF Lease Type

1040 Stony Hill Road

Yardley, PA

0.7 miles Managed Markets Oct. 2017 / 77 Mos. 17,559 $27.00 MG

100 Brandywine Blvd.

Newtown, PA

1.2 miles inVentiv Health Inc.

Feb. 2017 /

90 Mos.

36,560 $26.25 MG

41 University Drive

Newtown, PA

2.1 miles EPAM Systems Expansion

Nov. 2016 /

90 Mos.

3,350 $28.00 MG

1020 Stony Hill Road

Yardley, PA

0.8 miles Janney Montgomery

Aug. 2016 /

36.0 Mos.

6,289 $27.50 MG

(1)       Information obtained from the appraisal and third party reports.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

106 

 

 

No. 12 – The View at Marlton
 
Loan Information   Property Information
Mortgage Loan Seller: Argentic Real Estate Finance LLC   Single Asset/Portfolio: Single Asset

Credit Assessment

(Fitch/KBRA/Moody’s):

NR/NR/NR   Property Type: Retail
Original Principal Balance(1): $20,500,000   Specific Property Type: Anchored
Cut-off Date Balance(1): $20,500,000   Location: Marlton, NJ
% of Initial Pool Balance: 2.6%   Size: 91,069 SF
Loan Purpose: Refinance  

Cut-off Date

Balance Per SF(1):

$290.99
Borrower: The View at Marlton, LLC   Year Built/Renovated: 2017/NAP
Borrower Sponsor: Peter C. Abrams; Henry Gorenstein; Panagiotis (“Peter”) Lazaropoulos   Title Vesting: Fee
Mortgage Rate: 4.680%   Property Manager: Self-managed
      4th Most Recent Occupancy (As of)(4): NAV
Note Date: September 27, 2017   3rd Most Recent Occupancy (As of)(4): NAV
Anticipated Repayment Date: NAP   2nd Most Recent Occupancy (As of)(4): NAV
Maturity Date: October 6, 2027   Most Recent Occupancy (As of)(4): NAV
IO Period: 24 months   Current Occupancy (As of)(5): 100.0% (9/27/2017)
Loan Term (Original): 120 months    
Seasoning: 1 month   Underwriting and Financial Information:
Amortization Term (Original): 360 months   4th Most Recent NOI (As of)(4): NAV
Loan Amortization Type: Interest-only, Amortizing Balloon   3rd Most Recent NOI (As of)(4): NAV
Interest Accrual Method: Actual/360   2nd Most Recent NOI (As of)(4): NAV
Call Protection(2): L(25),D(91),O(4)   Most Recent NOI (As of)(4): NAV
Lockbox Type: Hard/Springing Cash Management    
Additional Debt: Yes   U/W Revenues: $3,129,139
Additional Debt Type: Pari Passu   U/W Expenses: $848,755
      U/W NOI: $2,280,383
Escrows and Reserves:     U/W NCF: $2,171,101
Type: Initial Monthly Cap (If Any)   U/W NOI DSCR(1): 1.39x
Taxes $0 Springing NAP   U/W NCF DSCR(1): 1.32x
Insurance $0 Springing NAP   U/W NOI Debt Yield(1): 8.6%
Replacement Reserves $0 $1,518 NAP   U/W NCF Debt Yield(1): 8.2%
TI/LC Reserve $372,857 $10,417(3) $625,000   As-Stabilized Appraised Value: $36,500,000
Rent Reserve $139,244 $0 NAP   As-Stabilized Appraisal Valuation Date: February 1, 2018
Malvern School Unpaid Obligations $967,288 $0 NAP   Cut-off Date LTV Ratio(1)(6): 72.6%
Earnout Reserve $3,300,000 $0 NAP   LTV Ratio at Maturity or ARD(1)(6): 62.3%
                 
(1)The View at Marlton Whole Loan (as defined below), which had an original principal balance of $26,500,000, is comprised of two pari passu notes (Notes A-1 and A-2). The controlling Note A-1 had an original principal balance of $20,500,000, has an outstanding principal balance of $20,500,000 as of the Cut-off Date and will be contributed to the WFCM 2017-C41 Trust. The non-controlling Note A-2, had an original principal balance of $6,000,000 and will be contributed to a future trust or trusts. All statistical financial information related to balances per square foot, loan-to-value ratios, debt service coverage ratios and debt yields are based on The View at Marlton Whole Loan. The lender provides no assurances that any non-securitized pari passu note will not be split further.

(2)Following the lockout period, on any date before July 6, 2027, the borrower has the right to defease The View at Marlton Whole Loan in whole, but not in part. The lockout period will expire on the earlier to occur of (i) two years after the closing date of the securitization that includes the last note to be securitized and (ii) November 6, 2019. The assumed lockout period of 25 payments is based on the expected WFCM 2017-C41 securitization trust closing date in November 2017. The View at Marlton Whole Loan is prepayable without penalty on or after July 6, 2027.

(3)The View at Marlton Whole Loan documents require that the borrower deposit $10,417 for monthly tenant improvements and leasing commissions starting January 1, 2023.

(4)Historical occupancy and financial information for The View at Marlton Property were not available as it was built in 2017.

(5)The current occupancy of 100.0% includes The Malvern School space, which is undergoing construction. The construction is expected to be completed in February 2018.

(6)The As-Stabilized Appraised Value is based on the assumption that The Malvern School is in occupancy, open for business and paying full unabated rent. The View at Marlton Mortgage Loan is structured with an economic holdback of $3,300,000, which may be used by the lender to pay down the mortgage loan if certain conditions related to The Malvern School are not satisfied within 12 months of origination. The Cut-off Date LTV Ratio and LTV Ratio at Maturity shown above are based on the Cut-off Date Balance and As-stabilized Appraised Value. Based on the Cut-off Date Balance and Maturity Date Balance net of the economic holdback funds ($3,300,000) and the as-is appraised value of $33,600,000, the Cut-off Date LTV Ratio and LTV Ratio at Maturity are 69.1% and 57.9%, respectively.

 

The mortgage loan (“The View at Marlton Mortgage Loan”) is part of a whole loan (“The View at Marlton Whole Loan”) that is evidenced by two promissory notes (Notes A-1 and A-2) secured by a first mortgage encumbering the fee interest in an anchored retail property located in Marlton, New Jersey (“The View at Marlton Property”). See “Description of the Mortgage Pool- The Whole Loans – The View at Marlton Whole Loan” and “Pooling and Servicing Agreement” in the Preliminary Prospectus.

 

The View at Marlton Whole Loan was originated on September 27, 2017 by Argentic Real Estate Finance LLC. The View at Marlton Whole Loan had an original principal balance of $26,500,000, has an outstanding principal balance as of the Cut-off Date of $26,500,000 and accrues interest at an interest rate of 4.680% per annum. The View at Marlton Whole Loan had an initial term of 120 months, has a remaining term of 119 months as of the Cut-off Date and requires interest-only payments during the first 24

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

107 

 

 

THE VIEW AT MARLTON

 

payment periods, followed by payments of principal and interest based on a 30-year amortization schedule. The View at Marlton Whole Loan matures on October 6, 2027.

 

Note Summary

 

Notes Original Balance Note Holder Controlling Interest
A-1  $20,500,000 WFCM 2017-C41 Yes
A-2  $6,000,000 Argentic Real Estate Finance LLC No
Total  $26,500,000    

 

Sources and Uses

 

Sources         Uses      
Original whole loan amount $26,500,000   100.0%   Loan payoff(1) $17,004,620   64.2%
          Reserves 4,779,389   18.0   
          Return of equity 4,228,569   16.0   
          Closing costs 487,423   1.8   
Total Sources $26,500,000   100.0%   Total Uses $26,500,000   100.0%
(1)The View at Marlton Mortgage Loan refinances a previous construction loan.

 

The View at Marlton Property is a newly-constructed, 91,069 square foot neighborhood shopping center located in Marlton, New Jersey. Situated on a 10.9-acre site, The View at Marlton Property is comprised of a pad site that is improved with a one-story building built in 2010 (which improvements are not part of the collateral) in addition to four, single-story buildings, most of which were built in 2017. A Whole Foods supermarket is located diagonally across from The View at Marlton Property. The View at Marlton Property has five existing ingress/egress points including easements with neighboring parcels.

 

As of September 27, 2017, The View at Marlton Property was 100.0% leased to 15 tenants. The View at Marlton Property is anchored by a free-standing 45,000 square foot (49.4% of the net rentable area) LA Fitness, which is on an initial lease term of 15.4 years that commenced in 2017 with three, five-year renewal options remaining. LA Fitness is a health club chain in the United States and Canada. AAA Mid-Atlantic, Inc. (“AAA”) is the second largest tenant and occupies 10,662 square feet (11.7% of the net rentable area) within the retail strip building at The View at Marlton Property. AAA provides online services to help members with their cars and driving, insurance, banking, and loan needs in the United States and Canada. AAA has an initial lease term of 10 years that commenced in 2017 with three, five-year renewal options. The Malvern School is the third largest tenant and has signed a lease with respect to an 8,400 square foot (9.2% of the net rentable area), free-standing building for 14 years with three, five-year renewal options. The Malvern School is a year-round private preschool that was founded in 1998 and has 26 locations (excluding the location at The View at Marlton Property) throughout Southeastern Pennsylvania and Central and Southern New Jersey. Construction is underway on The Malvern School space and completion of the space is slated for February 2018. Under the terms of its lease, The Malvern School’s rent will commence on the earlier of (a) the opening of The Malvern School for business, or (b) 30 days following the date that The Malvern School secures (i) a temporary certificate of occupancy so as long as all life/safety items of landlord’s work are complete and The Malvern School is able to obtain all permanent approvals from the State of New Jersey to operate its business from the premises or, (ii) a final certificate of occupancy.

 

The pad site is occupied by BB&T Bank which operates under a ground lease which expires in 2025. The remaining 11 tenants represent a mix of local and national tenants including Luxury Nails, Dunkin Donuts, and European Wax Center.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

108 

 

 

THE VIEW AT MARLTON

 

The following table presents certain information relating to the tenancies at the View at Marlton Property:

 

Major Tenants

 

Tenant Name Credit Rating (Fitch / Moody’s / S&P)(1) Tenant NRSF % of NRSF Annual U/W Base Rent PSF(2) Annual U/W Base Rent(2) % of Total Annual U/W Base Rent Sales PSF(3) Occupancy Cost(3) Lease Expiration Date  
 
 
                     
Anchor Tenant                  
LA Fitness NR/NR/NR 45,000 49.4% $22.50 $1,012,500 40.3% NAV NAV 10/31/2032(4)  
Total Anchor Tenant 45,000 49.4% $22.50 $1,012,500 40.3%        
                     
Major Tenants                  
AAA NR/NR/NR 10,662 11.7% $22.04 $235,000 9.3% NAV NAV 7/16/2027(5)  
The Malvern School NR/NR/NR 8,400 9.2% $24.00 $201,600 8.0% NAV NAV 1/31/2032(6)  
Luxury Nails NR/NR/NR 4,289 4.7% $35.50 $152,260 6.1% NAV NAV 10/4/2027(7)  
BB&T Bank(8) A+/A2/A- 3,600 4.0% $45.83 $165,000 6.6% NAV NAV 8/31/2025(9)  
Total Major Tenants 26,951 29.6% $27.97 $753,860 30.0%        
                     
Non-Major Tenants 19,118 21.0% $39.08 $747,148 29.7%        
                         
Occupied Total   91,069 100.0% $27.60 $2,513,508 100.0%        
                     
Vacant Space   0 0.0%              
                     
Collateral Total   91,069 100.0%              
                     

 

(1)Certain ratings are those of the parent company whether or not the parent guarantees the lease.

(2)Annual U/W Base Rent PSF and Annual U/W Base Rent include contractual rent steps through September 2018 totaling $1,000.

(3)Sales PSF and Occupancy Cost are not available.

(4)LA Fitness has three, 5-year renewal options remaining.

(5)AAA has three, 5-year renewal options remaining.

(6)The Malvern School has three, 5-year renewal options remaining.

(7)Luxury Nails has two, 5-year renewal options remaining.

(8)BB&T Bank has a right of first refusal for the purchase of its leased premises if it is sold separate from the rest of the The View at Marlton Property.

(9)BB&T Bank is subject to a ground lease and owns its improvements. BB&T Bank has three, 5-year renewal options remaining.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

109 

 

 

THE VIEW AT MARLTON

 

The following table presents certain information relating to the lease rollover schedule at The View at Marlton Property:

 

Lease Expiration Schedule(1)(2)

 

Year Ending
December 31,
No. of Leases Expiring Expiring NRSF % of Total
NRSF
Cumulative
Expiring NRSF
Cumulative% of Total NRSF Annual
U/W
Base Rent
% of Total Annual U/W Base Rent Annual
U/W
Base Rent PSF
MTM 0 0 0.0% 0 0.0% $0 0.0% $0.00
2017 0 0 0.0% 0 0.0% $0 0.0% $0.00
2018 0 0 0.0% 0 0.0% $0 0.0% $0.00
2019 0 0 0.0% 0 0.0% $0 0.0% $0.00
2020 0 0 0.0% 0 0.0% $0 0.0% $0.00
2021 0 0 0.0% 0 0.0% $0 0.0% $0.00
2022 0 0 0.0% 0 0.0% $0 0.0% $0.00
2023 0 0 0.0% 0 0.0% $0 0.0% $0.00
2024 1 1,000 1.1% 1,000 1.1% $38,000 1.5% $38.00
2025 1 3,600 4.0% 4,600 5.1% $165,000 6.6% $45.83
2026 0 0 0.0% 4,600 5.1% $0 0.0% $0.00
2027 10 31,069  34.1% 35,669 39.2% $996,408 39.6% $32.07
Thereafter 3 55,400 60.8% 91,069 100.0% $1,314,100 52.3% $23.72
Vacant  0 0 0.0% 91,069 100.0%  $0 0.0% $0.00
Total/Weighted Average 15  91,069 100.0%     $2,513,508  100.0%  $27.60

 

(1)Information obtained from the underwritten rent roll.

(2)Certain tenants may have lease termination options that are exercisable prior to the originally stated expiration date of the subject lease and that are not considered in the Lease Expiration Schedule.

 

The following table presents historical occupancy percentages at the View at Marlton Property:

 

Historical Occupancy(1)

 

2014

2015

2016

9/27/2017(2)

NAV NAV NAV 100.0%

 

(1)Historical occupancy for The View at Marlton Property was not available as it was built in 2017.

(2)Information obtained from the underwritten rent roll.

 

Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and underwritten net cash flow at The View at Marlton Property:

 

Cash Flow Analysis(1)

 

  U/W % of U/W Effective Gross Income U/W $ per SF
Base Rent $2,513,508(2) 80.3% $27.60
Grossed Up Vacant Space 0 0.0 0.00
Percentage Rent 0 0.0 0.00
Total Reimbursables 780,322 24.9 8.57
Rent Abatements 0 0.0 0.00
Other Income 0 0.0 0.00
Less Vacancy & Credit Loss

(164,692)(3)

(5.3)

(1.81)

Effective Gross Income $3,129,139 100.0% $34.36
       
Total Operating Expenses $848,755 27.1% $9.32
 

 

 

Net Operating Income $2,280,383 72.9% $25.04
TI/LC 91,069 2.9 1.00
Capital Expenditures

18,214

0.6

0.20

Net Cash Flow $2,171,101 69.4% $23.84
       
NOI DSCR 1.39x    
NCF DSCR  1.32x    
NOI DY 8.6%    
NCF DY 8.2%    
(1)Historical information for The View at Marlton Property was not available as it was built in 2017.

(2)U/W Base Rent includes contractual rent steps of $1,000 through September 2018 and base rent of $201,600 for The Malvern School, which is not yet in occupancy.

(3)The underwritten economic vacancy is 5.0%. The View at Marlton Property was 100.0% leased as of September 27, 2017.

 

The following table presents certain information relating to comparable retail properties for the strip retail space at The View at Marlton Property:

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

110 

 

 

THE VIEW AT MARLTON

 

Comparable Leases(1)

 

Property Year Built / Renovated Total NRA (SF) Tenant Name Leased SF Lease Term (Months) Base Rent (PSF) Lease Type
Market Place at Garden State Park 2006/NAV 543,680 For Eyes – Renewal 2,012 60 $45.00 Triple Net
1901 Deptford Center Road 2016/NAV 19,800 Mission BBQ 3,800 180 $36.00 Triple Net
700 Midlantic Drive 2016/NAV 10,784 Naf Naf Grill 3,000 120 $45.00 Triple Net
Voorhees Town Center 1970-2009/NAV 317,121 Friendly’s 2,999 180 $35.01 Triple Net
Strip Center 1968/NAV 9,075 Turning Point 3,485 120 $32.00 Triple Net
Marlton Crossing Phase II 1992/NAV 102,409 Sally’s Beauty Supply 1,420 60 $35.00 Triple Net
Ellis Shopping Center 1959/NAV 194,854 Honeygrow 2,107 120 $32.00 Triple Net

 

(1) Information obtained from the appraisal.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

111 

 

 

No. 13 – Corporate Center I & III
 
Loan Information   Property Information
Mortgage Loan Seller: Argentic Real Estate Finance LLC   Single Asset/Portfolio: Single Asset

Credit Assessment

(Fitch/KBRA/Moody’s):

NR/NR/NR   Property Type: Office
Original Principal Balance: $20,250,000   Specific Property Type: Suburban
Cut-off Date Balance: $20,250,000   Location: Las Vegas, NV
% of Initial Pool Balance: 2.6%   Size: 95,002 SF
Loan Purpose: Acquisition   Cut-off Date Balance Per SF: $213.15
Borrower Name: Las Vegas Corporate Center, LLC; Las Vegas Professional Center, LLC   Year Built/Renovated: 2009/NAP
Sponsors: Dr. David James Smith   Title Vesting: Fee
Mortgage Rate: 5.770%   Property Manager: Olympia Management, LLC
Note Date: November 2, 2017   4th Most Recent Occupancy (As of): 90.5% (12/31/2013)
Anticipated Repayment Date: NAP   3rd Most Recent Occupancy (As of): 92.5% (12/31/2014)
Maturity Date: November 6, 2027   2nd Most Recent Occupancy (As of): 94.5% (12/31/2015)
IO Period: None   Most Recent Occupancy (As of): 100.0% (12/31/2016)
Loan Term (Original): 120 months   Current Occupancy (As of): 100.0% (10/12/2017)
Seasoning: 0 months    
Amortization Term (Original): 360 months   Underwriting and Financial Information:
Loan Amortization Type: Amortizing Balloon      
Interest Accrual Method: Actual/360   4th Most Recent NOI (As of): $2,053,242 (12/31/2014)
Call Protection: L(24),D(93),O(3)   3rd Most Recent NOI (As of): $1,986,990 (12/31/2015)
Lockbox Type: Hard/Upfront Cash Management   2nd Most Recent NOI (As of): $2,112,684 (12/31/2016)
Additional Debt: No   Most Recent NOI (As of): $2,278,781 (TTM 8/31/2017)
Additional Debt Type: NAP      
      U/W Revenues: $2,544,232
      U/W Expenses: $426,553
      U/W NOI: $2,117,679
          U/W NCF: $1,861,473
          U/W NOI DSCR: 1.49x
          U/W NCF DSCR: 1.31x
Escrows and Reserves:         U/W NOI Debt Yield: 10.5%
Type: Initial Monthly Cap (If Any)   U/W NCF Debt Yield: 9.2%
Taxes $8,247 $8,247 NAP   As-Is Appraised Value: $30,300,000
Insurance $7,680 $2,560 NAP   As-Is Appraisal Valuation Dates: October 12, 2017
Replacement Reserves $0 $1,583 NAP   Cut-off Date LTV Ratio: 66.8%
TI/LC Reserve $250,000 $19,792 NAP   LTV Ratio at Maturity or ARD: 56.3%
             
                 

The Corporate Center I & III mortgage loan is evidenced by a single promissory note that is secured by a first mortgage encumbering the borrower’s fee interest in two three-story, office buildings totaling 95,002 square feet and located in Las Vegas, NV (the “Corporate Center I & III Property”). The Corporate Center I & III Property is located within a larger office development and maintains a location near the I-215 beltway, four miles west of McCarran International Airport and eight miles southeast of the Las Vegas strip. Constructed in 2009, the Corporate Center I & III Property is situated on a 6.4-acre site and features 380 parking spaces, resulting in a parking ratio of 4.0 spaces per 1,000 square feet of rentable area. MVP Realty Management, the seller, recently executed a lease, in June 2017, for an aggregate of three suites, totaling 24,742 square feet (26.0% NRA). The 2016 estimated population within a one-, three- and five-mile radius of the Corporate Center I & III Property was 12,753, 105,116 and 289,390, respectively, while the 2016 estimated average household income within the same radii was $61,616, $77,086 and $74,174, respectively. As of October 12, 2017 the Corporate Center I & III Property was 100.0% occupied by 16 tenants. According to a third party market research report, the Corporate Center I & III Property is located in the Southwest Las Vegas office submarket, within the San Francisco industrial market, which, as of the third quarter of 2017, contained a total inventory of approximately 64.2 million square feet. As of the third quarter of 2017 the Southwest Las Vegas office market reported a vacancy rate of 14.0% and an average asking rental rate of $19.08 per square foot, full service gross.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

112 

 

 

CORPORATE CENTER I & III 

 

Sources and Uses

 

Sources         Uses      
Original whole loan amount $20,250,000   65.6%   Purchase Price $30,125,000    97.6%
Sponsor’s new cash contribution 10,612,020   34.4   Closing Costs 471,093   1.5
          Reserves 265,927   0.9
                 
Total Sources $30,862,020 100.0%   Total Uses $30,862,020   100.0%

 

The following table presents certain information relating to the tenancy at the Corporate Center I & III Property:

 

Major Tenants

 

Tenant Name Credit Rating (Fitch/
Moody’s/
S&P)
Tenant NRSF % of
NRSF
Annual U/W Base Rent PSF(1) Annual
U/W Base Rent(1)
% of Total
Annual U/W
Base Rent
Lease
Expiration
Date
               
Major Tenants              
MVP Realty Management(2) NR/NR/NR 24,742 26.0% $26.00 $643,221 26.8% 5/31/2022(3)
Nevada Spine Clinic NR/NR/NR 13,815 14.5% $27.83 $384,518 16.0% 5/4/2019(4)
Provident Group NR/NR/NR 11,184 11.8% $26.61 $297,577 12.4% 8/30/2021(5)
LV Laser & Lipo NR/NR/NR 8,129 8.6% $24.03 $195,343 8.1% 12/31/2019(6)
Las Vegas Surgical Associates NR/NR/NR 7,406 7.8% $24.38 $180,587 7.5% 2/28/2024(7)
Total Major Tenants 65,276 68.7% $26.06 $1,701,245 70.8%  
               
Non-Major Tenants 29,726 31.3% $23.59 $701,168 29.2%  
               
Occupied Collateral Total 95,002 100.0% $25.29 $2,402,413 100.0%  
               
Vacant Space   0 0.0%        
               
Collateral Total 95,002 100.0%        
               
(1)Annual U/W Base Rent PSF and Annual U/W Base Rent include contractual rent steps through October 2018 totaling $49,945 and forward rent totaling $57,840.

(2)MVP subleases Suite 290 to Haines & Krieger.

(3)MVP Realty Management has two five-year lease renewal options.

(4)Nevada Spine Clinic has two five-year lease renewal options.

(5)Provident Group has two five-year lease renewal options. Provident Group has the right to vacate its premises on August 30, 2019.

(6)LV Laser & Lipo has two five-year lease renewal options.

(7)Las Vegas Surgical Associates has two five-year lease renewal options.

 

The following table presents certain information relating to the lease rollover schedule at the Corporate Center I & III Property:

 

Lease Expiration Schedule(1)(2)

 

Year Ending
 December 31,
No. of Leases Expiring Expiring NRSF % of Total NRSF Cumulative Expiring NRSF Cumulative % of Total NRSF Annual
 U/W
Base Rent
% of Total Annual
 U/W
Base Rent
Annual
 U/W
Base Rent
 PSF
MTM 0 0 0.0% 0 0.0% $0 0.0% $0.00
2017  0 0 0.0% 0 0.0% $0 0.0% $0.00
2018  1 2,372 2.5% 2,372 2.5% $51,235 2.1% $21.60
2019  6 30,191 31.8% 32,563 34.3% $807,211 33.6% $26.74
2020  0 0 0.0% 32,563 34.3% $0 0.0% $0.00
2021  3 15,985 16.8% 48,548 51.1% $403,934 16.8% $25.27
2022  4 27,242 28.7% 75,790 79.8% $694,846 28.9% $25.51
2023  0 0 0.0% 75,790 79.8% $0 0.0% $0.00
2024  5 15,718 16.5% 91,508 96.3% $367,346 15.3% $23.37
2025  0 0 0.0% 91,508 96.3% $0 0.0% $0.00
2026  1 3,494 3.7% 95,002 100.0% $77,842 3.2% $22.28
2027  0 0 0.0% 95,002 100.0% $0 0.0% $0.00
Thereafter  0 0 0.0% 95,002 100.0% $0 0.0% $0.00
Vacant  0 0 0.0% 95,002 100.0% $0 0.0% $0.00
Total/Weighted Average 20 95,002 100.0%     $2,402,413 100.0% $25.29
(1)Information obtained from the underwritten rent roll.

(2)Certain tenants may have lease termination options that are exercisable prior to the originally stated expiration date of the subject lease and that are not considered in the Lease Expiration Table.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

113 

 

 

CORPORATE CENTER I & III 

 

The following table presents historical occupancy percentages at the Corporate Center I & III Property:

 

Historical Occupancy

 

12/31/2013 (1)

 

12/31/2014 (1)

 

12/31/2015(1)

 

12/31/2016(1)

 

10/12/2017(2)

90.5%  92.5%  94.5%  100.0%  100.0%

 

(1)Information obtained from the borrower.

(2)Information obtained from the underwritten rent roll.

 

Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and the underwritten net cash flow at the Corporate Center I & III Property:

 

Cash Flow Analysis

 

   2014  2015  2016  TTM
8/31/2017
  U/W  % of U/W Effective Gross Income  U/W $ per
SF
 
Base Rent  $2,091,117  $2,030,797  $2,126,093  $2,279,710  $2,402,413(1)  94.4%  $25.29  
Total Reimbursables  438,756  405,015  419,531  453,800  424,511  16.7  4.47  
Less Vacancy & Credit Loss  0  0  0  0 

(282,692)(2)

  (11.1)  (2.98)  
Effective Gross Income  $2,529,873  $2,435,812  $2,545,624  $2,733,510  $2,544,232  100.0%  $26.78  
                        
Total Operating Expenses  $476,631  $448,822  $432,940  $454,729  $426,553  16.8%  $4.49  
Net Operating Income  $2,053,242  $1,986,990  $2,112,684  $2,278,781  $2,117,679  83.2%  $22.29  
TI/LC  0  0  0  0  262,206  10.3  2.76  
Capital Expenditures  0  0  0  0  (6,000)  (0.2)  (0.06)  
Net Cash Flow  $2,053,242  $1,986,990  $2,112,684  $2,278,781  $1,861,473  73.2%  $19.59  
                        
NOI DSCR  1.44x  1.40x  1.49x  1.60x  1.49x        
NCF DSCR  1.44x  1.40x  1.49x  1.60x  1.31x        
NOI DY  10.1%  9.8%  10.4%  11.3%  10.5%        
NCF DY  10.1%  9.8%  10.4%  11.3%  9.2%        
(1)U/W Base Rent includes contractual rent increases through October 2018 totaling $46,945 and forward starting rent totaling $57,840 associated with Sibel Real Estate Investments.

(2)The underwritten economic vacancy is 10.0%. The Corporate Center I & III Property was 100.0% physically occupied as of October 12, 2017.

 

The following table presents certain information relating to comparable office leases for the Corporate Center I & III Property:

 

Comparable Leases(1)

 

Property
Name/Location
Year Built/ Renovated Total GLA (SF) Distance from Subject Tenant Name

Lease Date

/ Term

Lease Area (SF) Annual Base Rent PSF Lease Type
9205 W Russell Rd, Suite 300 Las Vegas, NV 2014/NAP 88,100 1.3 miles Liberty Mutual Insurance Mar 2017 / 5 Yrs 7,727 $30.00 Modified Gross
Martin Business Center 9340 Martin Ave Las Vegas, NV 2006/NAP 10,638 0.9 miles NAV Jun 2017 / 3.2 Yrs 1,105 $28.56 Full Service
6655 S Cimarron Rd, Suite 100 Las Vegas, NV 2006/NAP 52,305 1.0 mile NAV Jul 2017 / 5 Yrs 24,352 $27.00 Modified Gross
8345 W Sunset Road, Suite 2 Las Vegas, NV 2005/NAP 75,917 1.0 mile NAV Jul 2017 / 5 Yrs 12,048 $27.00 Modified Gross
4280 S Hualapai Way, Suite 1 Las Vegas, NV 2004/NAP 26,218 4.2 miles Better Life Realty Oct 2017 / 3 Yrs 1,426 $24.00 NNN
(1)Information obtained from the appraisal.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

114 

 

 

No. 14 – DoubleTree Berkeley Marina
 
Loan Information   Property Information
Mortgage Loan Seller: Argentic Real Estate Finance LLC   Single Asset/Portfolio: Single Asset
Credit Assessment (Fitch/KBRA/Moody’s): NR/NR/NR   Property Type: Hospitality
Original Principal Balance(1): $20,000,000   Specific Property Type: Full Service
Cut-off Date Balance(1): $20,000,000   Location: Berkeley, CA
% of Initial Pool Balance: 2.5%   Size: 378 Rooms
Loan Purpose: Refinance   Cut-off Date Balance Per Room(1): $138,889
Borrower Name: 200 Marina Boulevard, Berkeley, LLC   Year Built/Renovated: 1972/2016
Sponsor: Junson Capital   Title Vesting: Leasehold
Mortgage Rate: 4.820%   Property Manager: Pyramid Berkeley Management L.P.
Note Date: August 9, 2017   4th Most Recent Occupancy (As of): NAV
Anticipated Repayment Date: NAP   3rd Most Recent Occupancy (As of): 84.7% (12/31/2014)
Maturity Date: September 6, 2027   2nd Most Recent Occupancy (As of): 88.5% (12/31/2015)
IO Period: 30 months   Most Recent Occupancy (As of): 89.3% (12/31/2016)
Loan Term (Original): 120 months   Current Occupancy (As of): 90.3% (6/30/2017)
Seasoning: 2 months      
Amortization Term (Original): 360 months    
Loan Amortization Type: Interest-only, Amortizing Balloon   Underwriting and Financial Information:
Interest Accrual Method: Actual/360   4th Most Recent NOI (As of): $6,562,968 (12/31/2014)
Call Protection: L(26),D(90),O(4)   3rd Most Recent NOI (As of): $7,381,645 (12/31/2015)
Lockbox Type: Hard/Springing Cash Management   2nd Most Recent NOI (As of): $7,756,386 (12/31/2016)
Additional Debt(1): Yes   Most Recent NOI (As of): $7,405,797 (TTM 6/30/2017)
Additional Debt Type(1)(2): Pari Passu; Future Mezzanine   U/W Revenues: $31,423,806
      U/W Expenses: $24,020,252
      U/W NOI: $7,403,554
Escrows and Reserves:     U/W NCF: $6,146,602
Type: Initial Monthly Cap (If Any)   U/W NOI DSCR(1): 2.23x
Taxes $441,167 $83,083 NAP   U/W NCF DSCR(1): 1.86x
Insurance $62,786 $7,550 NAP   U/W NOI Debt Yield(1): 14.1%
Replacement Reserves $0 $65,466 NAP   U/W NCF Debt Yield(1): 11.7%
Deferred Maintenance $54,125 $0 NAP   As-Is Appraised Value: $100,300,000
Elective Capital Expenditure(3) $1,062,268 $0 NAP   As-Is Appraisal Valuation Date: April 11, 2017
Ground Rent Reserve(4)(5) $173,305 $0 NAP   Cut-off Date LTV Ratio(1): 52.3%
Seasonality Working Capital Reserve(6) $310,000 $0 NAP   LTV Ratio at Maturity or ARD(1): 45.6%
             
               
(1)The DoubleTree Berkeley Marina Whole Loan (as defined below), which had an original principal balance of $52,500,000, is comprised of four pari passu notes (Notes A-1-1, A-1-2, A-1-3 and A-2). The non-controlling Note A-2 had an original principal balance of $20,000,000, has an outstanding principal balance of $20,000,000 as of the Cut-Off Date and will be contributed to the WFCM 2017-C41 Trust. The controlling Note A-1-1 had an original principal balance of $13,750,000 and was contributed to the UBS 2017-C4 trust and the non-controlling Notes A-1-2 and A-1-3 had an original principal balance of $18.75 million and was contributed to UBS 2017-C5. All statistical financial information related to balances per room, loan-to-value ratios, debt service coverage ratios and debt yields are based on the DoubleTree Berkeley Marina Whole Loan. The lender provides no assurances that any non-securitized pari passu note will not be split further.

(2)The borrower is permitted to incur future mezzanine debt, provided the following conditions are satisfied: (i) a maximum principal balance of $10 million; (ii) a maximum combined loan-to-value ratio of 60.0%; (iii) a minimum combined debt service coverage ratio of 1.82x; (iv) a minimum combined net cash flow debt yield of 11.5%; (v) the receipt of rating agency confirmation from Fitch, KBRA and Moody’s that the mezzanine financing will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the Series 2017-C41 Certificates and similar rating confirmations from each rating agency rating any securities backed by the Note A-1-1, Note A-1-2, or Note A-1-3 with respect to the ratings of such securities; (vi) the execution of an intercreditor agreement acceptable to the lender.

(3)The Elective Capital Expenditure is to address property upgrades. The Sponsor has spent nearly $500,000 and plans to commence an additional $1,500,000 ($3,968 per key) room renovation which is projected to be completed by February 2018.

(4)If the borrower fails to timely deliver payment of Ground Rent or following an Event of Default, monthly deposits will then be required, to the extent that the balance of the Ground Rent Reserve Account is less than an amount equal to the product of (x) the largest monthly payment of Ground Rent and any other amounts that were due and payable under the Ground Lease in any trailing twelve month period and (y) 1.10 (the “Ground Rent Reserve Account Cap”). If the lender determines that the funds on deposit in the Ground Rent Reserve Account will be insufficient to pay (or in excess of) the Ground Rents next coming due (including, without limitation, as a result of any rate or percentage increase in Ground Rent), the lender may increase (or decrease) the monthly contribution required to be made by the borrower to the Ground Rent Reserve Account.

(5)The DoubleTree Berkeley Marina Property is subject to a ground lease, which commenced in January 2008 for a term of 50 years with current annual ground rent of $734916

(6)The Seasonality Working Capital Reserve funds may be used for any monthly debt service payments occurring in December and January of each year if and only to the extent there is insufficient cash flow from the DoubleTree Berkeley Marina Property to provide a DSCR above 1.20x.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

115 

 

 

DOUBLETREE BERKELEY MARINA

 

The DoubleTree Berkeley Marina Mortgage Loan is part of a whole loan (the “DoubleTree Berkeley Marina Whole Loan”) that is evidenced by four promissory notes (Notes A-1-1, A-1-2, A-1-3 and A-2) secured by a first mortgage encumbering the leasehold interest of a 378-room full-service hotel property located in Berkeley, California (the “DoubleTree Berkeley Marina Property”). See “Description of the Mortgage Pool—The Whole Loans—DoubleTree Berkeley Marina Whole Loan” and “Pooling and Servicing Agreement” in the Preliminary Prospectus.

 

The DoubleTree Berkeley Marina Property was constructed in 1972, with a second phase consisting of three buildings of additional guestrooms built in 1988, and is situated on a 13-acre site. Amenities at the DoubleTree Berkeley Marina Property include an onsite restaurant, room service, 15,622 square feet of meeting space, indoor pool and spa, fitness room, business center, numerous patio areas, lobby gift shop, high speed Wi-Fi, and a complementary shuttle service within a 3-mile radius. The Doubletree Berkeley Marina Hotel also abuts approximately 1,000 square feet of dock area that the City of Berkeley leases to Hornblower Cruises and Events, from which Hornblower Cruises and Events hosts dining cruises and private events, weddings, etc. All of the rooms feature either a balcony or patio, and some guest rooms offer views of San Francisco Bay, the skyline or Berkeley Hills. Major renovations occurred in two phases (2008 and 2013) by the previous owner at a total cost of $15.9 million, and when combined with the $3.4 million invested by the sponsor, results in a total of $19.3 million of investment into the property over the previous ten years.

 

The DoubleTree Berkeley Marina Property contains 431 surface parking spaces, resulting in a parking ratio of 1.14 spaces per guestroom. According to the appraisal, the estimated 2017 the market segmentation at the DoubleTree Berkeley Marina Property is 22% commercial, 21% meeting & group, 55% leisure, and 2% government. The franchise agreement with Double Tree Franchise LLC expires in February 2029.

 

Note Summary

 

Notes Original Balance   Note Holder Controlling Interest
A-1-1 $13,750,000   UBS 2017-C4 Yes
A-1-2, A-1-3 $18,750,000   UBS 2017-C5 No
A-2 $20,000,000   WFCM 2017-C41 No
Total $52,500,000      

 

Sources and Uses

 

Sources         Uses      
Original loan amount(1) $52,500,000   100.0%   Loan Payoff(2) 32,778,229   62.4%
          Return of Equity(2) 16,219,215   30.9   
          Reserves 2,103,651   4.0   
          Closing Costs 1,398,905   2.7   
Total Sources $52,500,000   100.0%   Total Uses $52,500,000   100.0%
(1)The DoubleTree Berkeley Marina Mortgage Loan is part of the DoubleTree Berkeley Marina Whole Loan, which is comprised of four pari passu promissory notes with an aggregate original principal balance of $52,500,000.

(2)The borrower paid off existing debt of $32.8 million encumbering the DoubleTree Berkeley Marina Property in March 2017 through an intercompany loan. The proceeds of the DoubleTree Berkeley Marina Whole Loan were used to return cash of approximately $16.2 million to the borrower sponsor ($32.8 million of which was used to payoff the existing loan to the borrower, $2.1 million to fund reserves and $1.4 million to pay closing costs).

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

116 

 

 

DOUBLETREE BERKELEY MARINA

 

Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and underwritten net cash flow at the DoubleTree Berkeley Marina Property:

 

Cash Flow Analysis

 

   2014  2015  2016  TTM 6/30/2017  U/W  % of U/W Total Revenue  U/W $ per Room  
Occupancy  84.7%  88.5%  89.3%  90.3%  90.3%        
ADR  $172.89  $185.69  $190.18  $186.24  $186.24        
RevPAR  $146.37  $164.34  $169.74  $168.19  $168.19        
                        
Room Revenue  $20,194,277  $22,673,831  $23,482,868  $23,205,641  $23,205,641  73.8%  $61,391  
F&B Revenue(1)  5,008,601  6,009,210  6,488,186  6,583,014  6,583,014  20.9  17,415  
Other Revenue(2)  583,004  791,107 

1,563,168

 

1,635,151

 

1,635,151

 

5.2

 

4,326

 
Total Revenue 

$25,785,882

 

$29,474,148

 

$31,534,222

 

$31,423,806

 

$31,423,806

 

100.0%

  $83,132  
                        
Total Department Expenses 

9,976,645

 

10,908,072

 

12,044,475

 

12,349,552

 

12,349,552

 

39.3

 

32,671

 
Gross Operating Profit  $15,809,237  $18,566,076  $19,489,747  $19,074,254  $19,074,254  60.7%  $50,461  
                        
 Total Undistributed Expenses 

7,447,332

 

8,503,166

 

9,075,206

 

9,038,423

 

9,031,652

 

28.7

 

23,893

 
 Profit Before Fixed Charges  $8,361,905  $10,062,910  $10,414,541  $10,035,831  $10,042,602  32.0%  26,568  
                        
Total Fixed Charges 

1,798,937

 

2,681,265

 

2,658,155

 

2,630,034

 

2,639,048

 

8.4

 

6,982

 
                        
Net Operating Income  $6,562,968  $7,381,645  $7,756,386  $7,405,797  $7,403,554  23.6%  $19,586  
FF&E 

1,031,435

 

1,178,966

 

1,261,369

 

1,256,952

 

1,256,952

 

4.0

 

3,325

 
 Net Cash Flow  $5,531,533  $6,202,679  $6,495,017  $6,148,845  6,146,602  19.6%  16,261  
                        
NOI DSCR(3)  1.98x  2.23x  2.34x  2.24x  2.23x        
NCF DSCR(3)  1.67x  1.87x  1.96x  1.86x  1.86x        
NOI DY(3)  12.5%  14.1%  14.8%  14.1%  14.1%        
NCF DY(3)  10.5%  11.8%  12.4%  11.7%  11.7%        
                        
(1)Food and Beverage Revenue accounts for approximately 20.9% of U/W Revenue.

(2)Other Revenue includes parking expense and Information and Telecom Systems expense.

(3)The debt service coverage ratios and debt yields are based on the Doubletree Berkeley Marina Whole Loan.

 

The following table presents certain information relating to the DoubleTree Berkeley Marina Property’s competitive set:

 

Subject and Market Historical Occupancy, ADR and RevPAR(1)

 

  

Competitive Set

 

DoubleTree Berkeley Marina(1)

 

Penetration Factor

Year

 

Occupancy

 

ADR

 

RevPAR

 

Occupancy

 

ADR

 

RevPAR

 

Occupancy

 

ADR

 

RevPAR

2/28/2017 TTM  86.6%  $169.33  $172.56  89.7%  $189.41  $169.99  103.6%  111.9%  98.5%
2/28/2016 TTM  85.7%  $189.25  $162.11  89.1%  $188.59  $168.05  104.0%  99.7%  103.7%
2/28/2015 TTM  84.2%  $199.33  $142.52  86.7%  $172.88  $149.94  103.0%  86.7%  105.2%
(1)Information obtained from the appraisal report dated August 10, 2017. The competitive set included the following hotels: Hilton Garden Inn San Francisco Oakland Bay Bridge, Four Points by Sheraton San Francisco Bay Bridge, The Hotel Shattuck Plaza, Hyatt House Emeryville San Francisco Bay Area, and Courtyard Oakland Emeryville.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

117 

 

 

No. 15 – Redmont Hotel Curio
 
Loan Information   Property Information
Mortgage Loan Seller: Ladder Capital Finance LLC   Single Asset/Portfolio: Single Asset
Credit Assessment (Fitch/Moody’s/Kroll): NR/NR/NR   Property Type: Hospitality
Original Principal Balance: $19,000,000   Specific Property Type: Full Service
Cut-off Date Balance: $19,000,000   Location: Birmingham, AL
% of Initial Pool Balance: 2.4%   Size: 120 Rooms
Loan Purpose: Refinance   Cut-off Date Balance Per Room: $158,333
Borrower Names(1): Bayshore Redmont; Inc., Legacy Lodging, LLC   Year Built/Renovated: 1925/2016
Borrower Sponsor(1): James W. Lewis Jr.   Title Vesting(6): Fee
Mortgage Rate: 5.291%   Property Manager: Self-managed(7)
Note Date: October 26, 2017   4th Most Recent Occupancy: NAV
Anticipated Repayment Date: NAP   3rd Most Recent Occupancy (As of)(8): NAV
Maturity Date: November 6, 2027   2nd Most Recent Occupancy (As of)(8): NAV
IO Period: 0 months   Most Recent Occupancy (As of): 57.3% (12/31/2016)
Loan Term (Original): 120 months   Current Occupancy (As of): 76.2% (9/30/2017)
Seasoning: 0 months      
Amortization Term (Original): 360 months   Underwriting and Financial Information:
Loan Amortization Type: Amortizing Balloon    
Interest Accrual Method: Actual/360   4th Most Recent NOI (As of)(8): NAV
Call Protection: L(24),D(92),O(4)   3rd Most Recent NOI (As of)(8): NAV
Lockbox Type: Hard/Upfront Cash Management   2nd Most Recent NOI (As of): $1,047,283 (T9 12/31/2016 Annualized)
Additional Debt: Yes   Most Recent NOI (As of): $2,481,557 (TTM 9/30/2017)
Additional Debt Type(2): Future Mezzanine      
      U/W Revenues: $7,708,491
      U/W Expenses: $5,303,779
      U/W NOI: $2,404,712
Escrows and Reserves:         U/W NCF: $2,096,372
          U/W NOI DSCR: 1.90x
Type: Initial Monthly Cap (If Any)   U/W NCF DSCR: 1.66x
Taxes $25,726 $8,575 NAP   U/W NOI Debt Yield: 12.7%
Insurance $81,176 $6,765 NAP   U/W NCF Debt Yield: 11.0%
FF&E Reserve $0 (3) NAP   As-Is Appraised Value: $31,800,000
Seasonality Reserve $0 (4) NAP   As-Is Appraisal Valuation Date: September 6, 2017
PIP Reserve $0 (5) NAP   Cut-off Date LTV Ratio: 59.7%
          LTV Ratio at Maturity: 49.6%
             
             
(1)The borrower and borrower sponsor previously filed for Chapter 11 bankruptcy. Both emerged from bankruptcy in January 2013. The borrower sponsor has also been involved in several foreclosures within the past seven years.

(2)If the Redmont Hotel Curio Mortgage Property is transferred and the Redmont Hotel Curio Mortgage Loan is assumed in accordance with the related loan documents, then the owners of direct or indirect equity interests in the borrower may obtain permitted mezzanine financing subject to standard pre-conditions including (i) the combined loan-to-value ratio may not exceed 59.7%, (ii) the combined debt service coverage may not be less than 1.68x (iii) an intercreditor agreement, (iv) combined debt yield no less than 11.03%, and (v) Rating Agency confirmation.

(3)Throughout the term of the Redmont Hotel Curio Mortgage Loan (as defined below), ongoing reserves will be collected for FF&E, equaling 1/12 of 4% of monthly gross revenues for the Redmont Hotel Curio Property.

(4)If future PIP work is required by the franchisor, the Redmont Hotel Curio Mortgage Borrower will be required to post 125% of the costs of such work into the PIP Reserve less the amount of FF&E Funds that remain in the FF&E Account not allocated for the completion of FF&E work.

(5)Ongoing reserves for seasonality are springing and will be collected upon trailing 12 month performance. The seasonality reserve will be restored through the borrower payments and excess cash flow during the seasonal months and the seasonality reserve cap would need to be fully replenished by the end of the non-seasonal period. Monthly shortfall deposits and the seasonality reserve cap shall be based on 125% of any montly operating shortfalls.

(6)The property is also secured by the borrowers’ rights in a master lease and master sub-lease as further described in “Description of the Mortgage Pool—Mortgage Pool Characteristics—Property Types—Hospitality Properties”.

(7)The property manager is Rhaglan Hospitality LLC, who is an affiliate of the borrower.

(8)The Redmont Hotel Curio Property was closed in 2014 to undergo a gut renovation before reopening in 2016.

 

The mortgage loan (the “Redmont Hotel Curio Mortgage Loan”) is evidenced by a single promissory note secured by a first mortgage encumbering the fee interest in a full service hotel located in Birmingham, Alabama (the “Redmont Hotel Curio Property”) totaling 120 rooms situated on a 0.15 acre site. The Redmont Hotel Curio Property was originally constructed in 1925 and closed in July 2014 to undergo a complete gut renovation. The Redmont Hotel Curio Property reopened in March 2016. Since July 2014, approximately $20 million was invested into property improvements as part of the gut renovation. The Redmont Hotel Curio Property features a restaurant, a rooftop lounge with a bar, 3,000 square feet of meeting space, a gym, a sundry store and 120 parking spaces (approximately 1.0 spaces per room) offered through valet service. The Redmont Hotel Curio Property is roughly 0.4 miles southeast of the Birmingham Jefferson Convention Complex, in the heart of downtown Birmingham.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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REDMONT HOTEL CURIO

 

Sources and Uses

 

Sources         Uses      
Original loan amount $19,000,000   100.0%   Loan Payoff $16,578,760    87.3%
          Reserves 106,902    0.6
          Closing Costs 1,048,069    5.5
          Return of sponsor equity 1,266,268   6.7
                 
Total Sources $19,000,000   100.0%   Total Uses $19,000,000   100.0%

 

Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and the underwritten net cash flow at the Redmont Hotel Curio Property:

 

Cash Flow Analysis

 

   T-9
12/31/2016 Annualized(1)
  TTM
9/30/2017(1)
  U/W  % of U/W
Total Revenue
  U/W $ per
Room
Occupancy  57.3%  76.2%  76.2%      
ADR  $137.45  $147.42  $147.42      
RevPAR  $78.70  $112.34  $112.34      
                
Room Revenue  $3,752,436  $4,920,581  $4,920,581  63.8%  $41,005
F&B Revenue  1,663,539  2,476,737  2,476,737  32.1%  20,639
Other Revenue  273,341  311,173  311,173  4.0%  2,593
Total Revenue  $5,689,316  $7,708,491  $7,708,491  100.0%  $64,237
                
Total Department Expenses  2,605,795  2,959,220  2,959,220  38.4%  24,660
Gross Operating Profit  $3,083,521  $4,749,271  $4,749,271  61.6%  $39,577
                
 Total Undistributed Expenses  1,911,164  2,066,530  2,157,265  28.0  17,977
 Profit Before Fixed Charges  $1,172,357  $2,682,741  $2,592,006  33.6%  $21,600
                
Total Fixed Charges  125,075  201,184  187,294  2.4  1,561
                
Net Operating Income  $1,047,283  $2,481,557  $2,404,712  31.2%  $20,039
FF&E  0  0  308,340  4.0  2,570
 Net Cash Flow  $1,047,283  $2,481,557  $2,096,372  27.2%  $17,470
                
NOI DSCR  0.83x  1.96x  1.90x      
NCF DSCR  0.83x  1.96x  1.66x      
NOI DY  5.5%  13.1%  12.7%      
NCF DY  5.5%  13.1%  11.0%      
                

(1)The hotel was closed for remodeling between 2014 and 2016 and, as such, historical financial information is unavailable for that period. It re-opened under the Curio flag in March 2016.

 

The following table presents certain information relating to the Redmont Hotel Curio Property’s competitive set:

 

Subject and Market Historical Occupancy, ADR and RevPAR(1)

 

Marriott Courtyard

 

  

Competitive Set 

 

 

The Redmont Hotel Curio

 

Penetration Factor

Year

 

Occupancy

 

ADR

 

RevPAR

 

Occupancy

 

ADR

 

RevPAR

 

Occupancy

 

ADR

 

RevPAR

TTM 09/30/2017  67.3%  $143.66  $96.64  76.1%  $147.37  $112.20  113.2%  102.6%  116.1%
TTM 09/30/2016  66.9%  $138.49  $92.68  51.3%  $135.31  $69.43  76.7%  97.7%  74.9%
TTM 09/30/2015(2)  66.8%  $137.27  $91.75  NAV  NAV  NAV  NAV  NAV  NAV
(1)Information obtained from a third party hospitality research report dated October 17, 2017. The competitive set includes: the Hyatt Regency The Wynfrey Hotel, The Hotel Highland Downtown UAB, Hampton Inn Suites Birmingham Downtown Tutwiler, and Westin Birmingham.

(2)The hotel was closed for remodeling between 2014 and 2016 and, as such, historical occupancy is unavailable for 2015. It re-opened under the Curio flag in March 2016.

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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Wells Fargo Commercial Mortgage Trust 2017-C41 Transaction Contact Information

 

C.       Transaction Contact Information

 

Questions regarding this Structural and Collateral Term Sheet may be directed to any of the following individuals:

 

Wells Fargo Securities, LLC  
   
Brigid Mattingly Tel. (312) 269-3062
   
A.J. Sfarra Tel. (212) 214-5613
   
Alex Wong Tel. (212) 214-5615
   
Barclays Capital Inc.  
   
Daniel Vinson Tel. (212) 528-8224
   
Brian Wiele Tel. (212) 412-5780
   
Brian La Belle Tel. (212) 526-1809

 

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

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