FWP 1 fwp.htm FREE WRITING PROSPECTUS Unassociated Document
 
 
   
FREE WRITING PROSPECTUS
   
FILED PURSUANT TO RULE 433
   
REGISTRATION FILE NO.: 333-165147-04
     
 
The information in this free writing prospectus is not complete and may be amended prior to the time of sale. This free writing prospectus 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.
 
THIS FREE WRITING PROSPECTUS, DATED SEPTEMBER 19, 2012, MAY BE AMENDED OR COMPLETED PRIOR TO THE TIME OF SALE
(THIS FREE WRITING PROSPECTUS ACCOMPANIES THE ATTACHED PROSPECTUS DATED SEPTEMBER 19, 2012)
 
STATEMENT REGARDING THIS FREE WRITING PROSPECTUS
 
The depositor has filed a registration statement (including a prospectus) with the SEC (SEC File No. 333-165147) for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor 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 this offering will arrange to send you the prospectus if you request it by calling 866-400-7834 or by emailing cmbs-prospectus@jpmorgan.com.
 
$795,606,000 (Approximate)
J.P. Morgan Chase Commercial Mortgage Securities Trust 2012-C8
Issuing Entity
 
J.P. Morgan Chase Commercial Mortgage Securities Corp.
Depositor
 
JPMorgan Chase Bank, National Association
CIBC Inc.
Sponsors and Mortgage Loan Sellers
 
Commercial Mortgage Pass-Through Certificates, Series 2012-C8
 
J.P. Morgan Chase Commercial Mortgage Securities Corp. is offering certain classes of the Commercial Mortgage Pass-Through Certificates, Series 2012-C8 consisting of the Class A-1, Class A-2, Class A-3, Class A-SB and Class X-A certificates. The certificates (which are comprised of the certificates offered by this free writing prospectus and the Class X-B, Class A-S, Class B, Class C, Class EC, Class D, Class E, Class F, Class G, Class NR and Class R certificates) represent the beneficial ownership interests in the issuing entity, which will be a trust named J.P. Morgan Chase Commercial Mortgage Securities Trust 2012-C8. The assets of the trust will primarily consist of a pool of fixed rate commercial mortgage loans, which are generally the sole source of payments on the certificates. Credit enhancement will be provided solely by certain classes of subordinate certificates that will be subordinate to certain classes of senior certificates as described under “Description of the Certificates—Subordination; Allocation of Collateral Support Deficit” in this free writing prospectus. Each class of certificates will be entitled to receive monthly distributions of interest and/or principal on the 4th business day following the 11th day of each month (or if the 11th is not a business day, the next business day), commencing on November 19, 2012.
 
   
 
Initial Class
Certificate
Balance or
Notional Amount(1)
 
 
Initial
Approx.
Pass-Through
Rate
 
 
Pass-Through
Rate
Description
 
 
Assumed
Final
Distribution
Date(3)
 
 
Expected Ratings
(S&P/Fitch/DBRS/KBRA)(5)
 
 
Rated Final
Distribution
Date(3)
Class A-1
 
$    76,634,000
 
%
 
(6)
 
August 2017
 
AAA(sf)/AAA(sf)/AAA(sf)/AAA(sf)
 
October 2045
Class A-2
 
$  189,227,000
 
%
 
(6)
 
September 2017
 
AAA(sf)/AAA(sf)/AAA(sf)/AAA(sf)
 
October 2045
Class A-3
 
$  426,122,000
 
%
 
(6)
 
September 2022
 
AAA(sf)/AAA(sf)/AAA(sf)/AAA(sf)
 
October 2045
Class A-SB
 
$  103,623,000
 
%
 
(6)
 
April 2022
 
AAA(sf)/AAA(sf)/AAA(sf)/AAA(sf)
 
October 2045
Class X-A
 
$  897,898,000(7)
 
%
 
Variable(8)
 
September 2022
 
AAA(sf)/AAA(sf)/AAA(sf)/AAA(sf)
 
October 2045
 
(Footnotes on table on page S-2)
 
You should carefully consider the risk factors beginning on page S-34 of this free writing prospectus and page 9 of the prospectus.
 
Neither the certificates nor the underlying mortgage loans are insured or guaranteed by any governmental agency, instrumentality or private issuer or any other person or entity.
 
The certificates will represent interests in the issuing entity only. They will not represent interests in or obligations of the sponsors, depositor, any of its affiliates or any other entity.
 
The Securities and Exchange Commission and state regulators have not approved or disapproved of the offered certificates or passed upon the adequacy or accuracy of this free writing prospectus or the accompanying prospectus. Any representation to the contrary is a criminal offense. J.P. Morgan Chase Commercial Mortgage Securities Corp. will not list the offered certificates on any securities exchange or on any automated quotation system of any securities association.
 
The underwriters, J.P. Morgan Securities LLC, CIBC World Markets Corp. and Deutsche Bank Securities Inc., will purchase the offered certificates from J.P. Morgan Chase Commercial Mortgage Securities Corp. and will offer them to the public at negotiated prices, plus, in certain cases, accrued interest, determined at the time of sale. J.P. Morgan Securities LLC is acting as lead manager for this offering. J.P. Morgan Securities LLC is acting as sole bookrunner for this offering. CIBC World Markets Corp. and Deutsche Bank Securities Inc. are acting as co-managers for this offering.
 
The underwriters expect to deliver the offered certificates to purchasers in book-entry form only through the facilities of The Depository Trust Company in the United States and Clearstream Banking, société anonyme and Euroclear Bank, as operator of the Euroclear System, in Europe, against payment in New York, New York on or about October 18, 2012.
 
J.P. Morgan
Lead Manager and Sole Bookrunner
 
CIBC World Markets   Deutsche Bank Securities
Co-Manager  Co-Manager
 
September    , 2012
 
 
 

 
 
(MAP)
 
 
 

 
 
SUMMARY OF CERTIFICATES
 
Class
    Initial Class
Certificate Balance
or Notional
Amount(1)
 
 
Approx. Initial Credit Support(2)
 
 
Pass-Through Rate Description
 
 
Assumed
Final
Distribution
Date(3)
 
 
Initial
Approx.
Pass-
Through Rate
 
 
Weighted Average
Life (Yrs.)(4)
 
 
Expected Ratings
(S&P/Fitch/DBRS/KBRA) (5)
 
 
Principal Window(4)
Offered Certificates
                                   
A-1
   $  76,634,000
         
 
30.000%
 
(6)
 
August 2017
 
%
 
2.69
 
AAA(sf)/AAA(sf)/AAA(sf)/AAA(sf)
 
11/12-08/17
A-2
   $  189,227,000
       
 
30.000%
 
(6)
 
September 2017
 
%
 
4.88
 
AAA(sf)/AAA(sf)/AAA(sf)/AAA(sf)
 
08/17-09/17
A-3
   $  426,122,000
       
 
30.000%
 
(6)
 
September 2022
 
%
 
9.75
 
AAA(sf)/AAA(sf)/AAA(sf)/AAA(sf)
 
04/22-09/22
A-SB
   $  103,623,000
       
 
30.000%
 
(6)
 
April 2022
 
%
 
7.36
 
AAA(sf)/AAA(sf)/AAA(sf)/AAA(sf)
 
09/17-04/22
X-A
   $  897,898,000
(7)
 
N/A
 
Variable(8)
 
September 2022
 
%
 
N/A
 
AAA(sf)/AAA(sf)/AAA(sf)/AAA(sf)
 
N/A
Non-Offered Certificates(15)
                                   
X-B
   $  238,681,989
(9)       
 
N/A
 
Variable(10)
 
October 2022
 
%
 
N/A
 
NR/NR/AAA(sf)/AAA(sf)
 
N/A
A-S(11) 
   $  102,292,000
(12)        
 
21.000%
 
(6)
 
September 2022
 
%
 
9.91
 
AAA(sf)/AAA(sf)/AAA(sf)/AAA(sf)
 
09/22-09/22
B (11) 
   $  56,829,000
(12)          
 
16.000%
 
(6)
 
September 2022
 
%
 
9.91
 
AA(sf)/AA(sf)/AA(sf)/AA(sf)
 
09/22-09/22
C(11) 
   $  44,043,000
(12)         
 
12.125%
 
(6)
 
September 2022
 
%
 
9.91
 
A(sf)/A(sf)/A(sf)/A(sf)
 
09/22-09/22
EC(11)(13) 
   $  203,164,000
(12)
 
12.125%
 
(14)
 
September 2022
 
%
 
9.91
 
A(sf)/A(sf)/A(sf)/A(sf)
 
09/22-09/22
D
   $  35,518,000
         
 
9.000%
 
(6)
 
September 2022
 
%
 
9.91
 
BBB+(sf)/BBB+(sf)/BBB (high)(sf)/BBB+(sf)
 
09/22-09/22
E
   $  32,676,000
         
 
6.125%
 
(6)
 
September 2022
 
%
 
9.91
 
BBB-(sf)/BBB-(sf)/BBB (low)(sf)/BBB-(sf)
 
09/22-09/22
F
   $   15,628,000
        
 
4.750%
 
(6)
 
October 2022
 
%
 
9.95
 
BB(sf)/BB(sf)/BB(sf)/BB(sf)
 
09/22-10/22
G
   $  17,049,000
         
 
3.250%
 
(6)
 
October 2022
 
%
 
9.99
 
BB-(sf)/B(sf)/B(sf)/B(sf)
 
10/22-10/22
NR
   $  36,938,989
         
 
0.000%
 
(6)
 
October 2022
 
%
 
9.99
 
NR/NR/NR/NR
 
10/22-10/22
 

(1)
Approximate, subject to a permitted variance of plus or minus 5%.
 
(2)
The initial credit support percentages set forth for the certificates are approximate and, for the Class A-1, Class A-2, Class A-3 and Class A-SB certificates, are represented in the aggregate.
 
(3)
The assumed final distribution dates set forth in this free writing prospectus have been determined on the basis of the assumptions described in “Description of the Certificates—Assumed Final Distribution Date; Rated Final Distribution Date” in this free writing prospectus. The rated final distribution date for each class of offered certificates is October 2045. See “Description of the Certificates—Assumed Final Distribution Date; Rated Final Distribution Date” in this free writing prospectus.
 
(4)
The weighted average life and period during which distributions of principal would be received as set forth in the foregoing table with respect to each class of certificates (other than the Class X-A and Class X-B certificates) are based on the assumptions set forth under “Yield and Maturity Considerations—Weighted Average Life” in this free writing prospectus and on the assumptions that there are no prepayments, modifications or losses in respect of the mortgage loans and that there are no extensions or forbearances of maturity dates of the mortgage loans.
 
(5)
Ratings shown are those of Standard & Poor’s Ratings Services, Fitch, Inc., DBRS, Inc. and Kroll Bond Rating Agency, Inc. Certain nationally recognized statistical rating organizations that were not hired by the depositor may use information they receive pursuant to Rule 17g-5 under the Securities Exchange Act of 1934, as amended, to rate the offered certificates. There can be no assurance as to what ratings a non-hired nationally recognized statistical rating organization would assign. See “Risk Factors—Ratings of the Certificates” and “Ratings” in this free writing prospectus. Standard & Poor’s Ratings Services, Fitch, Inc., DBRS, Inc. and Kroll Bond Rating Agency, Inc. have informed us that the “sf” designation in their ratings represents an identifier for structured finance product ratings. For additional information about this identifier, prospective investors can go to www.standardandpoors.com, www.fitchratings.com, www.dbrs.com and/or www.krollbondratings.com. Important disclaimer:  Credit ratings referenced throughout this material are forward-looking opinions about credit risk and express an agency’s opinion about the ability of and willingness of an issuer of securities to meet its financial obligations in full and on time. Ratings are not indications of investment merit and are not buy, sell or hold recommendations, a measure of asset value, or a signal of the suitability of an investment.
 
(6)
The pass-through rate applicable to the Class A-1, Class A-2, Class A-3, Class A-SB, Class A-S, Class B, Class C, Class D, Class E, Class F, Class G and Class NR certificates on each distribution date will be a per annum rate equal to one of (i) a fixed rate, (ii) the weighted average of the net mortgage rates on the mortgage loans (in each case adjusted, if necessary, to accrue on the basis of a 360-day year consisting of twelve 30-day months), (iii) a rate equal to the lesser of a specified fixed pass-through rate and the rate described in clause (ii) above or (iv) the rate described in clause (ii) above less a specified percentage.
 
(7)
The notional amount of the Class X-A certificates will be equal to the aggregate of the certificate balances of the Class A-1, Class A-2, Class A-3, Class A-SB and Class A-S certificates (without giving effect to any exchange of Class A-S certificates for Class EC certificates). The Class X-A certificates will not be entitled to distributions of principal.
 
(8)
The pass-through rate for the Class X-A certificates for any distribution date will equal the excess, if any, of (a) the weighted average of the net mortgage rates on the mortgage loans (in each case adjusted, if necessary, to accrue on the basis of a 360-day year consisting of twelve 30-day months), over (b) the weighted average of the pass-through rates on the Class A-1, Class A-2, Class A-3, Class A-SB and Class A-S certificates, weighted on the basis of their respective certificate balances immediately prior to that distribution date and without giving effect to any exchange of Class A-S certificates for Class EC certificates. See “Description of the Certificates—Distributions” in this free writing prospectus.
 
(9)
The notional amount of the Class X-B certificates will be equal to the aggregate of the certificate balances of the Class B, Class C, Class D, Class E, Class F, Class G and Class NR certificates (without giving effect to any exchange of Class B and Class C certificates for Class EC certificates). The Class X-B certificates will not be entitled to distributions of principal.
 
(10)
The pass-through rate for the Class X-B certificates for any distribution date will equal the excess, if any, of (a) the weighted average of the net mortgage rates on the mortgage loans (in each case adjusted, if necessary, to accrue on the basis of a 360-day year consisting of twelve 30-day months), over (b) the weighted average of the pass-through rates of the Class B, Class C, Class D, Class E, Class F, Class G and Class NR certificates, weighted on the basis of their respective certificate balances immediately prior to that distribution date and without giving effect to any exchange of Class B and Class C certificates for Class EC certificates. See “Description of the Certificates—Distributions” in this free writing prospectus.
 
(11)
A holder of Class A-S, Class B and Class C certificates may exchange such classes of certificates (on an aggregate basis) for a related amount of Class EC certificates, and a holder of Class EC certificates may exchange that Class for a ratable portion of each Class of Class A-S, Class B and Class C certificates.
 
 
S-2

 
 
(12)
The initial certificate balance of any of the Class A-S, Class B or Class C certificates represents the principal balance of such class without giving effect to any exchange.  The initial certificate balance of the Class EC certificates is equal to the aggregate of the initial certificate balances of the Class A-S, Class B and Class C certificates and represents the maximum principal balance of such class that could be issued in an exchange. In the event that none of the Class A-S, Class B and Class C certificates are exchanged for Class EC certificates, the Class EC certificate balance would be equal to zero. Other than for federal income tax purposes, any exchange of (i) a portion of the Class A-S, Class B or Class C certificates will result in a reduction, on a dollar-for-dollar basis, of a proportionate share of each related component class of Class A-S, Class B and Class C certificates and an increase, on a dollar-for-dollar basis, of the certificate balance of the Class EC certificates, and (ii) any amount of the Class EC certificates will result in a reduction, on a dollar-for-dollar basis, of the certificate balance of the Class EC certificates and an increase, on a dollar-for-dollar basis, of a proportionate share of the related certificate balances of each class of Class A-S, Class B and Class C certificates.
 
(13)
Although the Class EC certificates are listed below the Class C certificates in the chart, the Class EC certificates’ payment entitlements and subordination priority will be a result of the payment entitlements and subordination priority at each level of the related component classes of Class A-S, Class B and Class C certificates. For purposes of determining the approximate initial credit support for Class EC certificates, the calculation is based on the aggregate initial class certificate balance of the Class A-S, Class B and Class C certificates as if they were a single class.
 
(14)
The Class EC certificates will not have a pass-through rate, but will be entitled to receive the sum of the interest otherwise distributable on the Class A-S, Class B and Class C certificates that are exchanged for such Class EC certificates.
 
(15)
The Class R certificates are not represented in the above table.
 
The Class X-B, Class A-S, Class B, Class C, Class EC, Class D, Class E, Class F, Class G, Class NR and Class R certificates are not offered by this free writing prospectus. Any information in this free writing prospectus concerning certificates other than the offered certificates is presented solely to enhance your understanding of the offered certificates.
 
 
S-3

 
 
TABLE OF CONTENTS
 
SUMMARY OF CERTIFICATES
S-2
 
Risks Relating to Affiliation with a
 
IMPORTANT NOTICE ABOUT
   
Franchise or Hotel Management
 
INFORMATION PRESENTED IN
   
Company
S-48
THIS FREE WRITING
   
Self-Storage Properties Have
 
PROSPECTUS AND THE
   
Special Risks
S-49
ACCOMPANYING PROSPECTUS
S-9
 
Multifamily Properties Have Special
 
SUMMARY OF TERMS
S-11
 
Risks
S-49
RISK FACTORS
S-34
 
Manufactured Housing Community
 
The Offered Certificates May Not Be
   
Properties Have Special Risks
S-50
a Suitable Investment for You
S-34
 
Risks of Lease Early Termination
 
The Credit Crisis and Downturn in
   
Options
S-51
the Real Estate Market Have
   
Geographic Concentration Entails
 
Adversely Affected and May
   
Risks
S-52
Continue To Adversely Affect
   
Risks Relating to Mortgage Loan
 
the Value of Commercial
   
Concentrations and Borrower-
 
Mortgage-Backed Securities
S-34
 
Sponsor Concentrations
S-53
Market Considerations and Limited
   
The Borrower’s Form of Entity May
 
Liquidity
S-35
 
Cause Special Risks
S-55
Legal and Regulatory Provisions
   
Tenancies-in-Common May Hinder
 
Affecting Investors Could
   
Recovery
S-57
Adversely Affect the Liquidity of
   
Ability To Incur Other Borrowings
 
the Certificates
S-36
 
Entails Risk
S-58
The Volatile Economy and Credit
   
Borrower May Be Unable To Repay
 
Crisis May Increase Loan
   
Remaining Principal Balance on
 
Defaults and Affect the Value
   
Maturity Date or Anticipated
 
and Liquidity of Your Investment
S-38
 
Repayment Date
S-59
The Prospective Performance of the
   
Tenant Concentration Entails Risk
S-59
Mortgage Loans Included in the
   
Certain Additional Risks Relating to
 
Trust Fund Should Be
   
Tenants
S-60
Evaluated Separately from the
   
Options and Other Purchase Rights
 
Performance of the Mortgage
   
May Affect Value or Hinder
 
Loans in Any of Our Other
   
Recovery with Respect to the
 
Trusts
S-40
 
Mortgaged Properties
S-62
Commercial Lending Is Dependent
   
Risks Related to Redevelopment
 
Upon Net Operating Income
S-41
 
and Renovation at the
 
Risks Relating to Underwritten Net
   
Mortgaged Properties
S-62
Cash Flow
S-42
 
Mortgaged Properties Leased to
 
Limited Information Causes
   
Borrowers or Borrower-Affiliated
 
Uncertainty
S-42
 
Entities Also Have Risks
S-63
No Reunderwriting of the Mortgage
   
Tenant Bankruptcy Entails Risks
S-63
Loans
S-42
 
Mortgage Loans Are Nonrecourse
 
Risks Associated with Commercial
   
and Are Not Insured or
 
Real Estate Lending
S-43
 
Guaranteed
S-64
Office Properties Have Special
   
Lack of Skillful Property
 
Risks
S-43
 
Management Entails Risks
S-64
Risks Associated with Retail
   
The Performance of a Mortgage
 
Properties
S-44
 
Loan and the Related
 
Mixed Use Facilities Have Special
   
Mortgaged Property Depends in
 
Risks
S-46
 
Part on Who Controls the
 
Industrial Properties Have Special
   
Borrower and the Related
 
Risks
S-46
 
Mortgaged Property
S-64
Hotel Properties Have Special Risks
S-47
     
 
 
S-4

 
 
Some Mortgaged Properties May
   
Your Lack of Control Over the Trust
 
Not Be Readily Convertible to
   
Can Adversely Impact Your
 
Alternative Uses
S-65
 
Investment
S-77
Condominium Ownership May Limit
   
Special Servicer May Be Directed
 
Use and Improvements
S-65
 
To Take Actions
S-78
Mortgage Loans Secured by
   
The Sponsors, the Depositor and
 
Leasehold Interests May
   
the Trust Are Subject to
 
Expose Investors to Greater
   
Bankruptcy or Insolvency Laws
 
Risks of Default and Loss
S-66
 
That May Affect the Trust
 
Limitations of Appraisals
S-66
 
Fund’s Ownership of the
 
Different Timing of Mortgage Loan
   
Mortgage Loans
S-78
Amortization Poses Certain
   
Risks Relating to Prepayments and
 
Risks
S-66
 
Repurchases
S-79
Environmental Risks Relating to the
   
Risks Relating to Substitutions of
 
Mortgaged Properties
S-66
 
Mortgaged Properties by the
 
Availability of Earthquake, Flood
   
Related Borrower
S-82
and Other Insurance
S-68
 
Optional Early Termination of the
 
Risks Associated with Blanket
   
Trust Fund May Result in an
 
Insurance Policies or Self-
   
Adverse Impact on Your Yield or
 
Insurance
S-69
 
May Result in a Loss
S-83
Availability of Terrorism Insurance
S-69
 
The Mortgage Loan Sellers May Not
 
Zoning Compliance, Use
   
Be Able To Make a Required
 
Restrictions and Condemnation
   
Repurchase or Substitution of a
 
May Adversely Affect Property
   
Defective Mortgage Loan
S-83
Value
S-70
 
Realization on Certain Mortgage
 
Increases in Real Estate Taxes Due
   
Loans May Be Adversely
 
to Termination of a PILOT
   
Affected by the Rights of the
 
Program or Other Tax
   
Mezzanine Lender
S-83
Abatement Arrangements May
   
Limited Obligations
S-83
Reduce Net Cash Flow and
   
Recent Changes to Accounting
 
Payments to Certificateholders
S-70
 
Standards and Regulatory
 
Litigation or Other Legal
   
Restrictions Could Have an
 
Proceedings Could Adversely
   
Adverse Impact on the
 
Affect the Mortgage Loans
S-71
 
Certificates
S-84
Certain of the Mortgage Loans Lack
   
Tax Consequences Related to
 
Customary Provisions
S-72
 
Foreclosure
S-84
Shari’ah Compliant Loans
S-72
 
State and Local Tax Considerations
S-84
Potential Conflicts of Interest
S-72
 
Ratings of the Certificates
S-85
Potential Conflicts of Interest of
   
DESCRIPTION OF THE MORTGAGE
 
the Sponsors and Mortgage
   
POOL
S-87
Loan Sellers
S-72
 
General
S-87
Potential Conflicts of Interest of
   
Mortgage Pool Characteristics
S-88
the Master Servicer and the
   
General
S-88
Special Servicer
S-73
 
Fee & Leasehold Estates;
 
Potential Conflicts of Interest of
   
Ground Leases
S-89
the Directing
   
Mortgage Loan Concentrations
S-90
Certificateholder
S-74
 
Cross-Collateralized Mortgage
 
Potential Conflicts of Interest of
   
Loans; Multi-Property
 
the Underwriters and Their
   
Mortgage Loans and
 
Affiliates
S-74
 
Related Borrower Mortgage
 
Other Possible Conflicts of
   
Loans
S-91
Interests
S-75
 
Tenancies-in-Common
S-92
Potential Conflicts of Interest in
   
Property Type Concentrations
S-93
the Selection of the
   
Geographic Concentrations
S-94
Mortgage Loans
S-76
 
Additional Debt
S-95
 
 
S-5

 
 
Net Cash Flow and Certain
   
Book-Entry Registration and
 
Underwriting Considerations
S-98
 
Definitive Certificates
S-164
 Mortgaged Property Considerations
S-99
 
List of Certificateholders
S-166
Environmental Considerations
S-99
 
Distributions
S-166
Property Renovation Issues
S-101
 
Allocation of Yield Maintenance
 
Litigation Considerations;
   
Charges
S-178
Bankruptcy Issues and
   
Assumed Final Distribution Date;
 
Other Proceedings
S-101
 
Rated Final Distribution Date
S-179
Tenant Issues
S-102
 
Subordination; Allocation of
 
Purchase Options and Rights of
   
Collateral Support Deficit
S-180
First Refusal
S-104
 
Advances
S-182
Additional Considerations
S-104
 
Appraisal Reductions
S-185
Assessments of Property Value and
   
Reports to Certificateholders;
 
Condition
S-105
 
Certain Available Information
S-188
Appraisals
S-105
 
Voting Rights
S-195
Engineering Reports
S-105
 
Termination; Retirement of
 
Zoning and Building Code
   
Certificates
S-195
Compliance and
   
SERVICING OF THE MORTGAGE
 
Condemnation
S-105
 
LOANS
S-197
Certain Terms and Conditions of the
   
General
S-197
Mortgage Loans
S-106
 
The Directing Certificateholder
S-200
ARD Loans
S-110
 
Limitation on Liability of Directing
 
Releases of Individual
   
Certificateholder
S-203
Mortgaged Properties
S-111
 
The Senior Trust Advisor
S-204
Other Releases
S-113
 
Consultation Duties of the
 
Additional Mortgage Loan
   
Senior Trust Advisor After a
 
Information
S-117
 
Control Event
S-206
Sale of Mortgage Loans; Mortgage
   
Replacement of the Special
 
File Delivery
S-120
 
Servicer
S-207
Representations and Warranties;
   
Termination and Resignation of
 
Repurchases and Substitutions
S-121
 
the Senior Trust Advisor
S-207
Lockbox Accounts
S-124
 
Senior Trust Advisor
 
TRANSACTION PARTIES
S-126
 
Compensation
S-208
The Sponsors and Mortgage Loan
   
Maintenance of Insurance
S-209
Sellers
S-126
 
Modifications, Waivers and
 
JPMorgan Chase Bank,
   
Amendments
S-211
National Association
S-126
 
Mortgage Loans with “Due-on-Sale”
 
CIBC Inc.
S-134
 
and “Due-on-Encumbrance”
 
The Depositor
S-142
 
Provisions
S-212
Significant Obligor
S-143
 
Realization Upon Defaulted
 
The Trust
S-143
 
Mortgage Loans
S-213
The Trustee and the Certificate
   
Inspections; Collection of Operating
 
Administrator
S-144
 
Information
S-215
Resignation and Removal of the
   
Certain Matters Regarding the
 
Trustee and the Certificate
   
Master Servicer, the Special
 
Administrator
S-146
 
Servicer, the Senior Trust
 
The Master Servicer
S-147
 
Advisor and the Depositor
S-216
The Special Servicer
S-149
 
Rating Agency Confirmations
S-217
Replacement of the Special Servicer
 S-151
 
Evidence as to Compliance
S-219
Servicing and Other Compensation
   
Servicer Termination Events
S-220
and Payment of Expenses
S-153
 
Rights Upon Servicer Termination
 
The Senior Trust Advisor
S-160
 
Event
S-222
DESCRIPTION OF THE
   
Amendment
S-223
CERTIFICATES
S-162
 
CERTAIN AFFILIATIONS,
 
General
S-162
 
RELATIONSHIPS AND RELATED
 
 
 
S-6

 
 
TRANSACTIONS INVOLVING
   
General
S-236
TRANSACTION PARTIES
S-225
 
Tax Status of Offered Certificates
S-236
PENDING LEGAL PROCEEDINGS
   
Taxation of Offered Certificates
S-237
INVOLVING TRANSACTION
   
Taxation of Foreign Investors
S-238
PARTIES
S-226
 
Further Information
S-238
USE OF PROCEEDS
S-226
 
CERTAIN STATE AND LOCAL TAX
 
YIELD AND MATURITY
   
CONSIDERATIONS
S-238
CONSIDERATIONS
S-227
 
CERTAIN ERISA CONSIDERATIONS
S-239
Yield Considerations
S-227
 
CERTAIN LEGAL ASPECTS OF THE
 
Weighted Average Life
S-230
 
MORTGAGE LOANS
S-241
Yield Sensitivity of the Class X-A
   
LEGAL INVESTMENT
S-243
Certificates
S-233
 
LEGAL MATTERS
S-243
Pre-Tax Yield to Maturity Tables
S-234
 
RATINGS
S-243
MATERIAL FEDERAL INCOME TAX
   
INDEX OF DEFINED TERMS
S-245
CONSEQUENCES
S-236
     

  ANNEX A-1
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS AND
 
MORTGAGED PROPERTIES
  ANNEX A-2
CERTAIN POOL CHARACTERISTICS OF THE MORTGAGE LOANS AND
 
MORTGAGED PROPERTIES
  ANNEX A-3
DESCRIPTION OF TOP TEN MORTGAGE LOANS AND ADDITIONAL
 
MORTGAGE LOAN INFORMATION
  ANNEX B
FORM OF REPORT TO CERTIFICATEHOLDERS
  ANNEX C
FORM OF SENIOR TRUST ADVISOR ANNUAL REPORT
  ANNEX D-1
MORTGAGE LOAN REPRESENTATIONS AND WARRANTIES
  ANNEX D-2
EXCEPTIONS TO MORTGAGE LOAN REPRESENTATIONS AND WARRANTIES
  ANNEX E
CLASS A-SB PLANNED PRINCIPAL BALANCE SCHEDULE
  ANNEX F
EAST 54 AMORTIZATION SCHEDULE
 
 
S-7

 
IMPORTANT NOTICE REGARDING THE OFFERED CERTIFICATES
 
THE OFFERED CERTIFICATES REFERRED TO IN THESE MATERIALS 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. PROSPECTIVE INVESTORS SHOULD UNDERSTAND THAT, WHEN CONSIDERING THE PURCHASE OF THE OFFERED CERTIFICATES, A CONTRACT OF SALE WILL COME INTO BEING NO SOONER THAN THE DATE ON WHICH THE RELEVANT CLASS OF CERTIFICATES HAS BEEN PRICED AND THE UNDERWRITERS HAVE CONFIRMED THE ALLOCATION OF CERTIFICATES TO BE MADE TO INVESTORS; ANY “INDICATIONS OF INTEREST” EXPRESSED BY ANY PROSPECTIVE INVESTOR, AND ANY “SOFT CIRCLES” GENERATED BY THE UNDERWRITERS, WILL NOT CREATE BINDING CONTRACTUAL OBLIGATIONS FOR SUCH PROSPECTIVE INVESTORS, ON THE ONE HAND, OR THE UNDERWRITERS, THE DEPOSITOR OR ANY OF THEIR RESPECTIVE AGENTS OR AFFILIATES, ON THE OTHER HAND.
 
AS A RESULT OF THE FOREGOING, A PROSPECTIVE INVESTOR MAY COMMIT TO PURCHASE CERTIFICATES THAT HAVE CHARACTERISTICS THAT MAY CHANGE, AND EACH PROSPECTIVE INVESTOR IS ADVISED THAT ALL OR A PORTION OF THE CERTIFICATES REFERRED TO IN THESE MATERIALS MAY BE ISSUED WITHOUT ALL OR CERTAIN OF THE CHARACTERISTICS DESCRIBED IN THIS FREE WRITING PROSPECTUS OR MAY BE ISSUED WITH CHARACTERISTICS THAT DIFFER FROM THE CHARACTERISTICS DESCRIBED IN THESE MATERIALS. THE UNDERWRITERS’ OBLIGATION TO SELL CERTIFICATES TO ANY PROSPECTIVE INVESTOR IS CONDITIONED ON THE CERTIFICATES AND THE TRANSACTION HAVING THE CHARACTERISTICS DESCRIBED IN THESE MATERIALS. IF THE UNDERWRITERS DETERMINE THAT ONE OR MORE CONDITIONS ARE NOT SATISFIED IN ANY MATERIAL RESPECT, SUCH PROSPECTIVE INVESTOR WILL BE NOTIFIED, AND NEITHER THE DEPOSITOR NOR ANY UNDERWRITER WILL HAVE ANY OBLIGATION TO SUCH PROSPECTIVE INVESTOR TO DELIVER ANY PORTION OF THE CERTIFICATES THAT SUCH PROSPECTIVE INVESTOR HAS COMMITTED TO PURCHASE, AND THERE WILL BE NO LIABILITY BETWEEN THE UNDERWRITERS, THE DEPOSITOR OR ANY OF THEIR RESPECTIVE AGENTS OR AFFILIATES, ON THE ONE HAND, AND SUCH PROSPECTIVE INVESTOR, ON THE OTHER HAND, AS A CONSEQUENCE OF THE NON-DELIVERY.
 
EACH PROSPECTIVE INVESTOR HAS REQUESTED THAT THE UNDERWRITERS PROVIDE TO SUCH PROSPECTIVE INVESTOR INFORMATION IN CONNECTION WITH SUCH PROSPECTIVE INVESTOR’S CONSIDERATION OF THE PURCHASE OF CERTAIN OFFERED CERTIFICATES DESCRIBED IN THESE MATERIALS. THESE MATERIALS ARE BEING PROVIDED TO EACH PROSPECTIVE INVESTOR FOR INFORMATION PURPOSES ONLY IN RESPONSE TO SUCH PROSPECTIVE INVESTOR’S SPECIFIC REQUEST, 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 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 IN THIS FREE WRITING PROSPECTUS 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.
 
THIS FREE WRITING PROSPECTUS DOES NOT CONTAIN ALL INFORMATION THAT IS REQUIRED TO BE INCLUDED IN THE PROSPECTUS AND THE PROSPECTUS SUPPLEMENT.

 
S-8

 
 
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS FREE WRITING
PROSPECTUS AND THE ACCOMPANYING PROSPECTUS
 
Information about the offered certificates is contained in two separate documents that progressively provide more detail:  (a) the accompanying prospectus, which provides general information, some of which may not apply to the offered certificates; and (b) this free writing prospectus, which describes the specific terms of the offered certificates.
 
You should rely only on the information contained in this free writing prospectus and the prospectus. We have not authorized anyone to provide you with information that is different from that contained in this free writing prospectus and the prospectus. The information contained in this free writing prospectus is accurate only as of the date of this free writing prospectus.
 
This free writing prospectus begins with several introductory sections describing the certificates and the trust in abbreviated form:
 
Summary of Certificates, commencing on page S-2 of this free writing prospectus, which sets forth important statistical information relating to the certificates;
 
Summary of Terms, commencing on page S-11 of this free writing prospectus, which gives a brief introduction of the key features of the certificates and a description of the underlying mortgage loans; and
 
Risk Factors, commencing on page S-34 of this free writing prospectus, which describe risks that apply to the certificates which are in addition to those described in the prospectus with respect to the securities issued by the trust generally.
 
This free writing prospectus and the accompanying prospectus include cross references to Sections in these materials where you can find further related discussions. The Tables of Contents in this free writing prospectus and the prospectus identify the pages where these Sections are located.
 
Certain capitalized terms are defined and used in this free writing prospectus and the prospectus to assist you in understanding the terms of the offered certificates and this offering. The capitalized terms used in this free writing prospectus are defined on the pages indicated under the caption “Index of Defined Terms” commencing on page S-245 of this free writing prospectus. The capitalized terms used in the prospectus are defined on the pages indicated under the caption “Index of Defined Terms” commencing on page 126 of the prospectus.
 
All annexes and schedules attached to this free writing prospectus are a part of this free writing prospectus.
 
In this free writing prospectus, the terms “depositor,” “we,” “us” and “our” refer to J.P. Morgan Chase Commercial Mortgage Securities Corp.
 
Until ninety days after the date of this free writing prospectus, all dealers that buy, sell or trade the offered certificates, whether or not participating in this offering, may be required to deliver a free writing prospectus and the prospectus. This is in addition to the dealers’ obligation to deliver a free writing prospectus and the prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

 
S-9

 
 
EUROPEAN ECONOMIC AREA
 
THIS FREE WRITING PROSPECTUS HAS BEEN PREPARED ON THE BASIS THAT ANY OFFER OF OFFERED CERTIFICATES IN ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA WHICH HAS IMPLEMENTED THE PROSPECTUS DIRECTIVE (EACH, A “RELEVANT MEMBER STATE”) WILL BE MADE PURSUANT TO AN EXEMPTION UNDER THE PROSPECTUS DIRECTIVE (AS DEFINED BELOW) FROM THE REQUIREMENT TO PUBLISH A PROSPECTUS FOR OFFERS OF OFFERED CERTIFICATES. ACCORDINGLY ANY PERSON MAKING OR INTENDING TO MAKE AN OFFER TO THE PUBLIC IN THAT RELEVANT MEMBER STATE OF OFFERED CERTIFICATES WHICH ARE THE SUBJECT OF AN OFFERING CONTEMPLATED IN THIS FREE WRITING PROSPECTUS AS COMPLETED BY FINAL TERMS IN RELATION TO THE OFFER OF THOSE OFFERED CERTIFICATES MAY ONLY DO SO IN CIRCUMSTANCES IN WHICH NO OBLIGATION ARISES FOR THE TRUST OR AN UNDERWRITER TO PUBLISH A PROSPECTUS PURSUANT TO ARTICLE 3 OF THE PROSPECTUS DIRECTIVE IN RELATION TO SUCH OFFER.
 
NEITHER THE TRUST NOR ANY OF THE UNDERWRITERS HAS AUTHORISED, NOR DOES ANY OF THEM AUTHORISE, THE MAKING OF ANY OFFER OF OFFERED CERTIFICATES IN CIRCUMSTANCES IN WHICH AN OBLIGATION ARISES FOR THE TRUST OR AN UNDERWRITER TO PUBLISH OR SUPPLEMENT A PROSPECTUS FOR SUCH OFFER.
 
FOR THE PURPOSES OF THIS PROVISION, THE EXPRESSION AN “OFFER OF OFFERED CERTIFICATES TO THE PUBLIC” IN RELATION TO ANY OFFERED CERTIFICATES IN ANY RELEVANT MEMBER STATE MEANS THE COMMUNICATION IN ANY FORM AND BY ANY MEANS OF SUFFICIENT INFORMATION ON THE TERMS OF THE OFFER AND THE OFFERED CERTIFICATES TO BE OFFERED SO AS TO ENABLE AN INVESTOR TO DECIDE TO PURCHASE OR SUBSCRIBE FOR THE CERTIFICATES, AS THE SAME MAY BE VARIED IN THAT MEMBER STATE BY ANY MEASURE IMPLEMENTING THE PROSPECTUS DIRECTIVE IN THAT MEMBER STATE, THE EXPRESSION “PROSPECTUS DIRECTIVE”  MEANS DIRECTIVE 2003/71/EC (AND AMENDMENTS THERETO, INCLUDING THE 2010 PD AMENDING DIRECTIVE, TO THE EXTENT IMPLEMENTED IN THE RELEVANT MEMBER STATE), AND INCLUDES ANY RELEVANT IMPLEMENTING MEASURE IN THE RELEVANT MEMBER STATE AND THE EXPRESSION “2010 PD AMENDING DIRECTIVE”  MEANS DIRECTIVE 2010/73/EU.
 
NOTICE TO RESIDENTS OF THE UNITED KINGDOM
 
THE DISTRIBUTION OF THIS FREE WRITING PROSPECTUS IS MADE BY A PERSON WHO IS NOT AN AUTHORIZED PERSON UNDER THE FINANCIAL SERVICES AND MARKETS ACT 2000. WITHIN THE UNITED KINGDOM, THIS FREE WRITING PROSPECTUS IS DIRECTED ONLY AT PERSONS WHO ARE INSIDE THE UNITED KINGDOM AND QUALIFY EITHER AS INVESTMENT PROFESSIONALS IN ACCORDANCE WITH ARTICLE 19(5), OR ARE PERSONS FALLING WITHIN ARTICLES 49(2)(A) THROUGH (D) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (TOGETHER, “EXEMPT PERSONS”). IT MAY NOT BE PASSED ON EXCEPT TO EXEMPT PERSONS OR OTHER PERSONS IN CIRCUMSTANCES IN WHICH SECTION 21(1) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 DOES NOT APPLY TO THE TRUST (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS “RELEVANT PERSONS”). THIS FREE WRITING PROSPECTUS MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS FREE WRITING PROSPECTUS RELATES, INCLUDING THE OFFERED CERTIFICATES, IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS.
 
POTENTIAL INVESTORS IN THE UNITED KINGDOM ARE ADVISED THAT ALL, OR MOST, OF THE PROTECTIONS AFFORDED BY THE UNITED KINGDOM REGULATORY SYSTEM WILL NOT APPLY TO AN INVESTMENT IN THE OFFERED CERTIFICATES AND THAT COMPENSATION WILL NOT BE AVAILABLE UNDER THE UNITED KINGDOM FINANCIAL SERVICES COMPENSATION SCHEME.
 
 
S-10

 

   
SUMMARY OF TERMS
 
This summary highlights selected information from this free writing prospectus. It does not contain all of the information you need to consider in making your investment decision. To understand all of the terms of the offering of the offered certificates, read this entire document and the accompanying prospectus carefully.
 
Relevant Parties and Dates
   
Depositor
J.P. Morgan Chase Commercial Mortgage Securities Corp., a Delaware corporation, a wholly-owned subsidiary of JPMorgan Chase Bank, National Association, a national banking association organized under the laws of the United States of America, which is a wholly-owned subsidiary of JPMorgan Chase & Co., a Delaware corporation. The depositor’s address is 383 Madison Avenue, 31st Floor, New York, New York 10179, and its telephone number is (212) 272-6858. See “Transaction Parties—The Depositor” in this free writing prospectus.
   
Issuing Entity
J.P. Morgan Chase Commercial Mortgage Securities Trust 2012-C8, a New York common law trust, to be established on the closing date under the pooling and servicing agreement. For more detailed information, see “Transaction Parties—The Trust” in this free writing prospectus.
   
Mortgage Loan Sellers
JPMorgan Chase Bank, National Association, a national banking association organized under the laws of the United States of America and CIBC Inc., a corporation organized under the laws of the State of Delaware. JPMorgan Chase Bank, National Association is also an affiliate of each of the depositor and J.P. Morgan Securities LLC, one of the underwriters. CIBC Inc. is an affiliate of CIBC World Markets Corp., one of the underwriters. See “Transaction Parties—The Sponsors and Mortgage Loan Sellers” in this free writing prospectus.
   
 
Sellers of the Mortgage Loans
 
Seller
 
Number
of
Mortgage
Loans
   
Aggregate
Principal
Balance of
Mortgage
Loans
   
% of Initial
Pool
Balance
 
 
JPMCB
    37       $ 998,391,293     87.8 %  
 
CIBC
    6       138,188,696     12.2    
 
Total
    43       $ 1,136,579,989     100.0 %  
   
Master Servicer
KeyCorp Real Estate Capital Markets, Inc., an Ohio corporation, will be the master servicer and will be responsible for the master servicing and administration of the mortgage loans pursuant to the pooling and servicing agreement. The master servicing office of KeyCorp Real Estate Capital Markets, Inc. is located at 11501 Outlook Street, Suite 300, Overland Park, Kansas 66211, and its telephone number is (913) 317-4100. See “Transaction Parties—The Master Servicer” in this free writing prospectus.
   
Special Servicer
Midland Loan Services, a Division of PNC Bank, National Association will act as special servicer with respect to the
   
 
 
S-11

 

     
 
mortgage loans and will be primarily responsible for making decisions and performing certain servicing functions with respect to the mortgage loans that, in general, are in default or as to which default is imminent. Midland Loan Services, a Division of PNC Bank, National Association was appointed to be the special servicer by BlackRock Financial Management, Inc. (or one of its affiliates), as agent for one or more managed accounts, which is expected to be the initial directing certificateholder and, on the closing date such managed accounts are expected to purchase the Class F, Class G and Class NR certificates and may purchase other classes of certificates. The primary servicing office of Midland Loan Services, a Division of PNC Bank, National Association is located at 10851 Mastin Street, Building 82, Suite 300, Overland Park, Kansas 66210, and its telephone number is (913) 253-9000. See “Transaction Parties—The Special Servicer” in this free writing prospectus.
 
     
Trustee
Wells Fargo Bank, National Association, a national banking association. The corporate trust office of Wells Fargo Bank, National Association is located at 9062 Old Annapolis Road, Columbia, Maryland 21045. See “Transaction Parties—The Trustee and the Certificate Administrator” in this free writing prospectus. Following the transfer of the mortgage loans into the trust, the trustee, on behalf of the trust, will become the mortgagee of record under each mortgage loan.
 
     
Certificate Administrator
Wells Fargo Bank, National Association, a national banking association will initially act as certificate administrator, custodian, certificate registrar and authenticating agent. The corporate trust offices of Wells Fargo Bank, National Association are located at 9062 Old Annapolis Road, Columbia, Maryland 21045 and for certificate transfer services, at Sixth Street & Marquette Avenue, Minneapolis, Minnesota 55479-0113. See “Transaction Parties—The Trustee and the Certificate Administrator” in this free writing prospectus.
 
     
Sponsors
JPMorgan Chase Bank, National Association, a national banking association, and CIBC Inc., a Delaware corporation. For more information, see “Transaction Parties—The Sponsors and Mortgage Loan Sellers” in this free writing prospectus and “The Sponsors” in the prospectus.
 
     
Significant Obligor
The following mortgaged property is a “significant obligor” of the trust within the meaning given that term in Regulation AB under the Securities Act of 1933, as amended:
 
     
 
The Battlefield Mall mortgaged property secures a mortgage loan (identified as Loan No. 1 on Annex A-1 to this free writing prospectus), with a principal balance as of the cut-off date of $125,000,000, which represents approximately 11.0% of the aggregate principal balance of the pool of mortgage loans as of the cut-off date. See “Description of Top Ten Mortgage Loans and Additional Mortgage Loan Information” in Annex A-3 to this free writing prospectus and “Transaction Parties—Significant Obligor” in this free writing prospectus.
 
     
 
 
S-12

 
 
     
Senior Trust Advisor
Pentalpha Surveillance LLC will be the senior trust advisor. The senior trust advisor, after and during such time as the Class F certificates have a certificate balance (taking into account the application of appraisal reductions to notionally reduce the certificate balance of such class of certificates) of less than 25% of the initial certificate balance of the Class F certificates, will generally review the special servicer’s operational practices in respect of specially serviced mortgage loans to formulate an opinion as to whether or not those operational practices generally satisfy the servicing standard with respect to the resolution and/or liquidation of specially serviced mortgage loans. In addition, after and during such time as the Class F certificates have a certificate balance (taking into account the application of appraisal reductions to notionally reduce the certificate balance of such class of certificates) of less than 25% of the initial certificate balance of the Class F certificates, the senior trust advisor will consult with the special servicer with regard to certain matters with respect to the servicing of specially serviced mortgage loans to the extent set forth in the pooling and servicing agreement and described in this free writing prospectus. See “Transaction Parties—The Senior Trust Advisor” in this free writing prospectus.
 
     
 
From time to time and under certain circumstances, the senior trust advisor, in order to maintain its familiarity with the mortgage loans, is required to review promptly certain information available to privileged persons regarding the mortgage loans and certain asset status reports; however, the senior trust advisor generally will not be involved in any assessment of specific actions of the special servicer or be obligated to deliver any reports or otherwise provide feedback to investors as to any specific actions of the special servicer and, in any event, will be subject to limitations set forth in the pooling and servicing agreement and described in this free writing prospectus.
 
     
 
From time to time and under certain circumstances, the senior trust advisor will also prepare an annual report to be provided to the rating agencies and the trustee for the benefit of the certificateholders setting forth its assessment of the special servicer’s performance of its duties under the pooling and servicing agreement on a platform-level basis with respect to the resolution and liquidation of specially serviced mortgage loans.
 
     
 
After the occurrence of a consultation termination event, if the senior trust advisor determines the special servicer is not performing its duties as required under the pooling and servicing agreement or is otherwise not acting in accordance with the servicing standard, the senior trust advisor may recommend the replacement of the special servicer as described under “Transaction Parties—Replacement of the Special Servicer” in this free writing prospectus.
 
     
 
For additional information regarding the responsibilities of the senior trust advisor see “Servicing of the Mortgage Loans—The Senior Trust Advisor” in this free writing prospectus.
 
     
 
 
S-13

 

     
 
The senior trust advisor will be entitled to a fee payable on each distribution date calculated on the outstanding principal amount of each mortgage loan in the trust fund and the senior trust advisor fee rate, and will have certain rights to indemnification for certain expenses by the trust fund. The senior trust advisor will also be entitled under certain circumstances to a consulting fee. See “Servicing of the Mortgage Loans—The Senior Trust Advisor” in this free writing prospectus.
 
     
Directing Certificateholder
The directing certificateholder will be the controlling class certificateholder (or a representative thereof) selected by more than 50% of the controlling class certificateholders, by certificate balance, as certified by the certificate registrar from time to time as provided for in the pooling and servicing agreement.
 
     
 
The controlling class will be the most subordinate class of the Class F, Class G and Class NR certificates then outstanding that has an aggregate certificate balance, as notionally reduced by any appraisal reductions allocable to such class, at least equal to 25% of the initial certificate balance of that class. No other class of certificates will be eligible to act as the controlling class or appoint a directing certificateholder.
 
     
 
The directing certificateholder will have certain consent and consultation rights under the pooling and servicing agreement in certain circumstances; provided that, after and during such time as the Class F certificates have a certificate balance (taking into account the application of appraisal reductions to notionally reduce the certificate balance of such class of certificates) of less than 25% of the initial certificate balance, the consent rights will terminate and, after such time that none of the Class F, Class G and Class NR certificates has a then-outstanding certificate balance at least equal to 25% of the initial certificate balance of that class without regard to the application of any appraisal reductions, the consultation rights of the directing certificateholder will terminate.
 
     
 
It is anticipated that BlackRock Financial Management, Inc. on behalf of one or more managed funds or accounts, will be the initial directing certificateholder. See “Risk Factors—Potential Conflicts of Interest—Potential Conflicts of Interest of the Directing Certificateholder” in this free writing prospectus.
 
     
Certain Affiliations
JPMorgan Chase Bank, National Association and its affiliates have several roles in this transaction. J.P. Morgan Chase Commercial Mortgage Securities Corp. is the depositor and a wholly-owned subsidiary of JPMorgan Chase Bank, National Association. JPMorgan Chase Bank, National Association and CIBC Inc. have (or, as of the closing date, will have) originated or acquired their respective mortgage loans and will be selling them to the depositor. JPMorgan Chase Bank, National Association is also an affiliate of J.P. Morgan Securities LLC, an underwriter for the offering of the offered certificates and an initial purchaser of the non-offered certificates. JPMorgan Chase Bank, National Association is also a sponsor.
 
 
 
 
S-14

 
 
     
 
CIBC Inc., one of the sponsors and mortgage loan sellers, is an affiliate of CIBC World Markets Corp., an underwriter for the offering of the offered certificates. CIBC Inc. is a party to a custodial agreement with Wells Fargo Bank, National Association, the trustee, the certificate administrator and the 17g-5 information provider, pursuant to which Wells Fargo Bank, National Association acts as a custodian with respect to the loan files for the CIBC Inc. mortgage loans.
 
     
 
Midland Loan Services, a Division of PNC Bank, National Association, the special servicer, is an affiliate of BlackRock Financial Management, Inc. BlackRock Financial Management, Inc., on behalf of one or more managed funds or accounts, is the expected initial directing certificateholder.
 
     
 
Wells Fargo Bank, National Association is the trustee, the certificate administrator and the 17g-5 information provider. These roles and other potential relationships may give rise to conflicts of interest as further described in this free writing prospectus under “Risk Factors—Potential Conflicts of Interest”.
 
     
Cut-off Date
With respect to each mortgage loan, the related due date in October 2012, or with respect to any mortgage loan that was originated in September 2012 and has its first due date in November 2012, October 1, 2012.
 
     
Closing Date
On or about October 18, 2012.
 
     
Distribution Date
The 4th business day following each determination date. The first distribution date will be November 19, 2012.
 
     
Interest Accrual Period
Interest will accrue on the offered certificates during the calendar month prior to the related distribution date. Interest will be calculated on the offered certificates assuming that each month has 30 days and each year has 360 days.
 
     
Due Period
For any mortgage loan and any distribution date, the period commencing on the day immediately following the due date for such mortgage loan in the month preceding the month in which that distribution date occurs and ending on and including the due date for such mortgage loan in the month in which that distribution date occurs. However, in the event that the last day of a due period (or applicable grace period) is not a business day, any periodic payments received with respect to the mortgage loans relating to that due period on the business day immediately following that last day will be deemed to have been received during that due period and not during any other due period.
 
     
Determination Date
The 11th calendar day of each month or, if the 11th calendar day is not a business day, then the business day immediately succeeding such 11th calendar day.
 
     
Record Date
With respect to any distribution date, the last business day of the month preceding the month in which that distribution date occurs.
 
     
 
 
S-15

 

     
 
Transaction Overview
 
     
 
On the closing date, each sponsor will sell its respective mortgage loans to the depositor, which will in turn deposit the mortgage loans into the issuing entity, a common law trust created on the closing date. The trust, which will be the issuing entity, will be formed by a pooling and servicing agreement, to be entered into among the depositor, the master servicer, the special servicer, the certificate administrator, the trustee and the senior trust advisor. The master servicer will service the mortgage loans (other than the specially serviced mortgage loans) in accordance with the pooling and servicing agreement and provide the information to the certificate administrator necessary for the certificate administrator to calculate distributions and other information regarding the certificates.
 
     
 
The transfers of the mortgage loans from the sponsors to the depositor and from the depositor to the issuing entity in exchange for the offered certificates are illustrated below:
 
     
 
(flow chart)
 
     
 
 
S-16

 

     
Offered Certificates
 
General
We are offering the following classes of commercial mortgage pass-through certificates as part of Series 2012-C8:
   
 
Class A-1
     
 
Class A-2
     
 
Class A-3
     
 
Class A-SB
     
 
Class X-A
   
 
The certificates will consist of the above classes and the following classes that are not being offered by this free writing prospectus and the accompanying prospectus: Class X-B, Class A-S, Class B, Class C, Class EC, Class D, Class E, Class F, Class G, Class NR and Class R.
   
 
The certificates will collectively represent beneficial ownership in the issuing entity, a trust created by J.P. Morgan Chase Commercial Mortgage Securities Corp. The trust’s assets will primarily be 43 fixed rate commercial mortgage loans secured by first mortgage liens on 84 mortgaged properties.
   
Certificate Balances and Notional Amounts
Your certificates will have the approximate aggregate initial certificate balance or notional amount set forth below, subject to a variance of plus or minus 5%:
           
 
Class A-1
 
$
76,634,000
 
 
Class A-2
 
$
189,227,000
 
 
Class A-3
 
$
426,122,000
 
 
Class A-SB
 
$
103,623,000
 
 
Class X-A
 
$
897,898,000
 
   
Pass-Through Rates
 
   
A. Offered Certificates
Your certificates will accrue interest at an annual rate called a pass-through rate. The initial approximate pass-through rate is set forth below for each class:
 
Class A-1
%
 
Class A-2
%
 
Class A-3
%
 
Class A-SB
%
 
Class X-A
%(1)
         
         
 
(1)
The interest accrual amount on the Class X-A certificates will be calculated by reference to a notional amount equal to the aggregate of the certificate balances of the Class A-1, Class A-2, Class A-3, Class A-SB and Class A-S certificates (without giving effect to any exchange of Class A-S certificates for Class EC certificates). The pass-through rate for the Class X-A certificates for any distribution date will equal the excess, if any, of (a) the weighted average of the net mortgage rates on the mortgage loans (in each case adjusted, if necessary, to accrue on the basis of a 360-day year consisting of twelve 30-day months) for the related distribution date, over (b) the weighted average of the pass-through rates on the Class A-1, Class A-2, Class A-3, Class A-SB and Class A-S certificates (without giving effect to any exchange of Class A-S certificates for Class EC certificates), weighted on the basis of their respective certificate balances immediately prior to that distribution date as described
 
       
 
 
S-17

 
 
 
     
   
under “Description of the Certificates—Distributions” in this free writing prospectus.
 
     
B. Interest Rate Calculation Convention
Interest on the offered certificates will be calculated based on a 360-day year consisting of twelve 30-day months, or a “30/360 basis”.
 
     
 
For purposes of calculating the pass-through rates on the offered certificates, the interest rate for each mortgage loan that accrues interest based on the actual number of days in each month and assuming a 360-day year, or an “actual/360 basis”, will be recalculated, if necessary, so that the amount of interest that would accrue at that recalculated rate in the applicable month, calculated on a 30/360 basis, will equal the amount of interest that is required to be paid on that mortgage loan in that month, subject to certain adjustments as described in “Description of the Certificates—Distributions—Pass-Through Rates” and “—Interest Distribution Amount” in this free writing prospectus.
 
     
C. Servicing and Administration Fees
The master servicer and special servicer are entitled to a master servicing fee and a special servicing fee, respectively, from the interest payments on each mortgage loan and with respect to special servicing fees, if the related loan interest payments are insufficient, then from general collections on all mortgage loans. The servicing fee for each distribution date pursuant to the pooling and servicing agreement, which includes the master servicing fee and the portion of the servicing fee payable to the primary servicer, is calculated on the outstanding principal amount of each mortgage loan in the trust at the servicing fee rate equal to a per annum rate ranging from 0.0200% to 0.0600%. The special servicing fee for each distribution date is calculated based on the outstanding principal amount of each mortgage loan that is a specially serviced mortgage loan or REO Loan at the special servicing fee rate equal to a per annum rate of 0.25%. Any primary servicing fees or sub-servicing fees will be paid by the master servicer or special servicer, respectively, out of the fees described above. The master servicer and special servicer are also entitled to additional fees and amounts, including income on the amounts held in certain accounts and certain permitted investments, liquidation fees and workout fees.
 
     
 
The certificate administrator fee for each distribution date is calculated on the outstanding principal amount of each mortgage loan in the trust fund at the certificate administrator fee rate equal to a per annum rate of 0.0040%. The trustee fee is payable by the certificate administrator from the certificate administrator fee. The senior trust advisor will be entitled to a fee on each distribution date calculated on the outstanding principal amount of each mortgage loan in the trust fund and at the senior trust advisor fee rate, which will be a per annum rate of 0.0019%. The senior trust advisor will also be entitled under certain circumstances to a consulting fee. Fees payable by the trust to the master servicer, special servicer and senior trust advisor are generally payable prior to any distributions to certificateholders. See “Transaction Parties—Servicing and Other Compensation
 
     
 
 
S-18

 

     
 
and Payment of Expenses” and “Servicing of the Mortgage Loans—The Senior Trust Advisor” in this free writing prospectus.
 
     
Distributions
   
     
A. Amount and Order of Distributions
On each Distribution Date, funds available for distribution from the mortgage loans, net of specified trust fees, reimbursements and expenses, yield maintenance charges or other prepayment premiums and excess interest will be distributed to the certificates in the following amounts and order of priority:
 
     
 
First/Class A-1, Class A-2, Class A-3, Class A-SB, Class X-A and Class X-B certificates: To pay interest on the Class A-1, Class A-2, Class A-3, Class A-SB, Class X-A and Class X-B certificates, pro rata, in each case in accordance with their interest entitlements.
 
     
 
Second/Class A-1, Class A-2, Class A-3 and Class A-SB certificates: To the extent of funds allocated to principal and available for distribution: (a) first, to principal on the Class A-SB certificates, until the certificate balance of the Class A-SB certificates is reduced to the planned principal balance for the related distribution date set forth in Annex E to this free writing prospectus, (b) second, to principal on the Class A-1 certificates, until the certificate balance of the Class A-1 certificates has been reduced to zero, (c) third, to principal on the Class A-2 certificates, until the certificate balance of the Class A-2 certificates has been reduced to zero, (d) fourth, to principal on the Class A-3 certificates, until the certificate balance of the Class A-3 certificates has been reduced to zero and (e) fifth, to principal on the Class A-SB certificates, until the certificate balance of the Class A-SB certificates has been reduced to zero. If the certificate balance of each class of certificates other than the Class A-1, Class A-2, Class A-3 and Class A-SB certificates has been reduced to zero as a result of the allocation of mortgage loan losses to those certificates, funds available for distributions of principal will be distributed to the Class A-1, Class A-2, Class A-3 and Class A-SB certificates, pro rata, without regard to the distribution priorities described above or the planned principal balance of the Class A-SB certificates.
 
     
 
Third/Class A-1, Class A-2, Class A-3 and Class A-SB certificates: To reimburse the Class A-1, Class A-2, Class A-3 and Class A-SB certificates, pro rata, for any previously unreimbursed losses on the mortgage loans allocable to principal that were previously borne by those classes.
 
     
 
Fourth/Non-offered certificates: In the amounts and order of priority described in “Description of the Certificates—Distributions” in this free writing prospectus.
 
     
B. Interest and Principal Entitlements
A description of the interest entitlement of each class of certificates (other than the Class R certificates) can be found in “Description of the Certificates—Distributions—Interest Distribution Amount” in this free writing prospectus.
 
     
 
 
S-19

 
 
     
 
A description of the amount of principal required to be distributed to each class of certificates entitled to principal on a particular distribution date can be found in “Description of the Certificates—Distributions—Principal Distribution Amount” in this free writing prospectus.
 
     
C. Yield Maintenance Charges
Yield maintenance charges with respect to the mortgage loans will be allocated to the certificates as described in “Description of the Certificates—Allocation of Yield Maintenance Charges” in this free writing prospectus.
 
     
 
For an explanation of the calculation of yield maintenance charges, see “Description of the Mortgage Pool—Certain Terms and Conditions of the Mortgage Loans” in this free writing prospectus.
 
     
 
On each distribution date, any excess interest collected in respect of a mortgage loan in the trust fund with an anticipated repayment date during the related collection period will be distributed to the holders of the Class NR certificates. This interest will not be available to provide credit support for other classes of certificates or offset any interest shortfalls.
 
     
D. General
The chart below describes the manner in which the payment rights of certain classes of certificates will be senior or subordinate, as the case may be, to the payment rights of other classes of certificates. The chart shows the entitlement to receive principal and/or interest of certain classes of certificates (other than excess interest that accrues on each mortgage loan that has an anticipated repayment date) on any distribution date in descending order. It also shows the manner in which mortgage loan losses are allocated to certain classes of the certificates offered hereby in ascending order (beginning with the non-offered certificates, other than the Class R certificates); provided that no principal payments or mortgage loan losses will be allocated to the Class X-A, Class X-B or Class R certificates, although principal payments and mortgage loan losses may reduce the notional amount of the Class X-A or Class X-B certificates and, therefore, the amount of interest they accrue.
 
     
 
 
Class A-1, Class A-2,
Class A-3, Class A-SB,
Class X-A(1) and Class X-B(1)
certificates
 
 
       
 
Non-offered certificates(2)
 
     
       
 
(1)
The Class X-A and Class X-B certificates are interest-only certificates and the Class X-B certificates are not offered by this free writing prospectus.
 
 
(2)
Other than the Class X-B and Class R certificates.
     
 
Other than the subordination of certain classes of certificates, as described above, no other form of credit enhancement will be available for the benefit of the holders of the certificates offered hereby.
   
 
 
S-20

 
 
     
 
Principal losses on mortgage loans that are allocated to a class of certificates (other than the Class X-A, Class X-B or Class R certificates) will reduce the certificate balance of that class of certificates.
 
     
 
The notional amount of the Class X-A certificates will be reduced by the amount of principal losses allocated to the Class A-1, Class A-2, Class A-3, Class A-SB and Class A-S certificates (without giving effect to any exchange of Class A-S certificates for Class EC certificates). The notional amount of the Class X-B certificates will be reduced by the amount of principal losses allocated to the Class B, Class C, Class D, Class E, Class F, Class G and Class NR certificates (without giving effect to any exchange of Class B and Class C certificates for Class EC certificates).
 
     
 
The Class EC certificates will receive the sum of the principal and interest and other amounts otherwise distributable to the Class A-S, Class B and Class C certificates that are exchanged for such Class EC certificates and will similarly be allocated the realized losses and other shortfalls otherwise allocable to the Class A-S, Class B and Class C certificates that are exchanged for such Class EC certificates.
 
     
 
See “Description of the Certificates” in this free writing prospectus.
 
     
E. Shortfalls in Available Funds
The following types of shortfalls in available funds will reduce distributions to the classes of certificates with the lowest payment priorities: shortfalls resulting from the payment of special servicing fees and other additional compensation that the special servicer is entitled to receive; shortfalls resulting from interest on advances made by the master servicer, the special servicer or the trustee (to the extent not covered by late payment charges or default interest paid by the related borrower); shortfalls resulting from the application of appraisal reductions to reduce principal and interest advances; shortfalls resulting from extraordinary expenses of the trust, including indemnification payments payable to the depositor, master servicer, special servicer, certificate administrator, trustee or senior trust advisor; shortfalls resulting from a modification of a mortgage loan’s interest rate or principal balance; and shortfalls resulting from other unanticipated or default-related expenses of the trust. Prepayment interest shortfalls on the mortgage loans that are not covered by certain compensating interest payments made by the master servicer are required to be allocated among the classes of certificates (other than the Class EC and Class R certificates), on a pro rata basis, to reduce the amount of interest payable on each such class of certificates to the extent described in this free writing prospectus. The Class EC certificates will receive the sum of the interest distributable to the Class A-S, Class B and Class C certificates that are exchanged for such Class EC certificates, and will therefore bear the risk of prepayment interest shortfalls allocated to such certificates. See “Description of the Certificates—Distributions—Priority” in this free writing prospectus.
 
     
 
 
S-21

 

     
F. Excess Interest
On each distribution date, any excess interest in respect of the increase in the interest rate on any mortgage loan with an anticipated repayment date after the related anticipated repayment date to the extent actually collected and applied as interest during a due period will be distributed to the holders of the Class NR certificates on the related distribution date. This excess interest will not be available to make distributions to any other class of certificates or to provide credit support for other classes of certificates or offset any interest shortfalls or to pay any other amounts to any other party under the pooling and servicing agreement. The Class NR certificates will be entitled to such distributions of excess interest notwithstanding any reduction of their related certificate balance to zero.
 
     
Advances
     
       
A. P&I Advances
The master servicer is required to advance a delinquent periodic mortgage loan payment (unless the master servicer or the special servicer determines that the advance would be non-recoverable). Neither the master servicer nor the trustee will be required to advance balloon payments due at maturity in excess of the regular periodic payment, interest in excess of a mortgage loan’s regular interest rate, default interest, late payment charges, prepayment premiums or yield maintenance charges. The amount of the interest portion of any advance will be subject to reduction to the extent that an appraisal reduction of the related mortgage loan has occurred. See “Description of the Certificates—Advances” in this free writing prospectus. There may be other circumstances in which the master servicer will not be required to advance a full month of principal and/or interest. If the master servicer fails to make a required advance, the trustee will be required to make the advance, unless the trustee determines that the advance would be non-recoverable. See “Description of the Certificates—Advances” in this free writing prospectus. If an interest advance is made by the master servicer, the master servicer will not advance its servicing fee, but will advance the certificate administrator’s fee. See “Description of the Certificates—Advances” in this free writing prospectus.
 
     
B. Property Protection Advances
The master servicer may be required, and the special servicer may be permitted, to make advances to pay delinquent real estate taxes, assessments and hazard insurance premiums and similar expenses necessary to:
 
       
 
protect and maintain (and in the case of REO properties, lease and manage) the related mortgaged property;
 
       
 
maintain the lien on the related mortgaged property; or
 
       
 
enforce the related mortgage loan documents.
 
       
 
If the master servicer fails to make a required advance of this type, the trustee will be required to make this advance. None of the master servicer, the special servicer or the trustee is required to advance amounts determined by such party to be non-
 
     
 
 
S-22

 

     
 
recoverable. See “Description of the Certificates—Advances” in this free writing prospectus.
 
     
C. Interest on Advances
The master servicer, the special servicer and the trustee, as applicable, will be entitled to interest on the above described advances at the “Prime Rate” as published in The Wall Street Journal, as described in this free writing prospectus. Interest accrued on outstanding advances may result in reductions in amounts otherwise payable on the certificates. Neither the master servicer nor the trustee will be entitled to interest on advances made with respect to principal and interest due on a mortgage loan until the related due date has passed and any grace period for late payments applicable to the mortgage loan has expired. See “Description of the Certificates—Advances” and “—Subordination; Allocation of Collateral Support Deficit” in this free writing prospectus.
 
   
The Mortgage Loans
 
   
The Mortgage Pool
The trust’s primary assets will be 43 fixed rate commercial mortgage loans, each evidenced by one or more promissory notes secured by first mortgages, deeds of trust, deeds to secure debt or similar security instruments on the fee and/or leasehold estate of the related borrower in 84 commercial and multifamily properties.
 
     
 
The aggregate principal balance of the mortgage loans as of the cut-off date will be approximately $1,136,579,989.
 
     
 
The following tables set forth certain anticipated characteristics of the mortgage loans as of the cut-off date (unless otherwise indicated).
 
     
 
The sum of the numerical data in any column may not equal the indicated total due to rounding. Unless otherwise indicated, all figures and percentages presented in this “Summary of Terms” are calculated as described under “Description of the Mortgage Pool—Additional Mortgage Loan Information” in this free writing prospectus and, unless otherwise indicated, such figures and percentages are approximate and in each case, represent the indicated figure or percentage of the aggregate principal balance of the pool of mortgage loans as of the cut-off date. The principal balance of each mortgage loan as of the cut-off date assumes the timely receipt of principal scheduled to be paid on or before the cut-off date and no defaults, delinquencies or prepayments on, or modifications of, any mortgage loan on or prior to the cut-off date. Whenever percentages and other information in this free writing prospectus are presented on the mortgaged property level rather than the mortgage loan level, the information for mortgage loans secured by more than one mortgaged property is based on allocated loan amounts as stated in Annex A-1 to this free writing prospectus.
 
     
 
The mortgage loans will have the following approximate characteristics as of the cut-off date:
 
     
 
 
S-23

 
 
         
  Cut-off Date Mortgage Loan Characteristics  
         
     
All Mortgage Loans
 
         
 
Aggregate outstanding principal balance(1)
 
$1,136,579,989
 
 
Number of mortgage loans
 
43
 
 
Number of mortgaged properties
 
84
 
 
Number of crossed loan pools
 
0
 
 
Crossed loan pools as a percentage
 
0.0%
 
 
Range of mortgage loan principal balances
 
$4,244,672 to $125,000,000
 
 
Average mortgage loan principal balances
 
$26,432,093
 
 
Range of mortgage rates
 
3.89200% to 5.52300%
 
 
Weighted average mortgage rate
 
4.70106%
 
 
Range of original terms to maturity(2)
 
60 months to 120 months
 
 
Weighted average original term to maturity(2)
 
109 months
 
 
Range of remaining terms to maturity(2)
 
58 months to 120 months
 
 
Weighted average remaining term to maturity(2)
 
107 months
 
 
Range of original amortization term(3)
 
300 months to 360 months
 
 
Weighted average original amortization term(3)
 
352 months
 
 
Range of remaining amortization terms(3)
 
294 months to 360 months
 
 
Weighted average remaining amortization term(3)
 
351 months
 
 
Range of loan-to-value ratios(4)
 
48.9% to 75.0%
 
 
Weighted average loan-to-value ratio(4)
 
64.6%
 
 
Range of loan-to-value ratios as of the maturity date(2)(4)
 
40.8% to 68.9%
 
 
Weighted average loan-to-value ratio as of the maturity date(2)(4)
 
55.0%
 
 
Range of debt service coverage ratios(5)(6)
 
1.28x to 2.65x
 
 
Weighted average debt service coverage ratio(5)(6)
 
1.63x
 
 
Percentage of aggregate outstanding principal balance consisting of:
     
 
Balloon
 
64.0%
 
 
Interest Only-Balloon
 
22.1%
 
 
Interest Only
 
5.0%
 
 
ARD-Balloon
 
4.7%
 
 
ARD-Interest Only-Balloon
 
3.7%
 
 
ARD-Interest Only
 
0.5%
 
         
         
  (1)  Subject to a permitted variance of plus or minus 5%.  
       
 
(2)
In the case of six (6) mortgage loans with anticipated repayment dates (identified as Loan Nos. 8, 13, 26, 38, 39 and 42 on Annex A-1 to this free writing prospectus), representing approximately 8.9% of the aggregate principal balance of the pool of mortgage loans as of the cut-off date, as of the related anticipated repayment date. In the case of one (1) mortgage loan (identified as Loan No. 23 on Annex A-1 to this free writing prospectus), representing approximately 1.4% of the aggregate principal balance of the pool of mortgage loans as of the cut-off date, such numerical and statistical information was determined without regard to the borrower’s one-year maturity date extension option.
 
       
 
(3)
Excludes five (5) mortgage loans (identified as Loan Nos. 17, 25, 28, 32 and 42 on Annex A-1 to this free writing prospectus), representing approximately 5.5% of the aggregate principal balance of the pool of mortgage loans as of the cut-off date, that are interest-only for the entire term or until the related anticipated repayment date.
 
 
 
 
S-24

 

       
 
(4)
In the case of one (1) mortgage loan (identified as Loan No. 35 on Annex A-1 to this free writing prospectus), representing approximately 0.8% of the aggregate principal balance of the pool of mortgage loans as of the cut-off date, the loan-to-value ratio was based upon an “as-stabilized” or “as-adjusted” basis. If the “as-is” value for Loan No. 35 were used, the loan-to-value ratio as of the cut-off date would be 83.5%. For further information see Annex A-1 to this free writing prospectus. See “Risk Factors—Limitations of Appraisals” in this free writing prospectus. The remaining mortgage loans were calculated using “as-is” values as described under “Description of the Mortgage PoolAdditional Mortgage Loan Information” in this free writing prospectus.
 
       
 
(5)
For all partial interest only loans, the debt service coverage ratio was calculated based on the first principal and interest payments to be made into the trust during the term of the mortgage loan. With respect to one (1) mortgage loan (identified as Loan No. 10 on Annex A-1 to this free writing prospectus), representing approximately 2.9% of the aggregate principal balance of the pool of mortgage loans as of the cut-off date, the debt service coverage ratio was calculated using the average of the monthly principal and interest payments during the 12-month period following the cut-off date. See Annex F to this free writing prospectus.
 
       
 
(6)
With respect to eleven (11) mortgaged properties (identified as Loan Nos. 2.02, 3, 4, 5, 10, 12, 16, 18, 21, 27 and 31 on Annex A-1 to this free writing prospectus), representing approximately 34.0% of the aggregate principal balance of the pool of mortgage loans as of the cut-off date by allocated loan amount, certain assumptions and/or adjustments were made to the occupancy, underwritten net cash flow and underwritten debt service coverage ratios reflected in the table above. For specific discussions on the particular assumptions and adjustments, see “Description of the Mortgage PoolNet Cash Flow and Certain Underwriting Considerations” in this free writing prospectus. See also Annex A-1 and Annex A-3 to this free writing prospectus.
 
       
 
The mortgage loans accrue interest based on the following conventions:
 
     
  Interest Accrual Basis    
 
Interest Accrual Basis
 
Number of
Mortgage
Loans
 
Aggregate
Principal Balance
of Mortgage
Loans
 
% of Initial
Pool Balance
   
 
Actual/360
 
43
 
$1,136,579,989
 
100.0%
   
 
Total:
 
43
 
$1,136,579,989
 
100.0%
   
     
  Amortization Types  
                 
 
Amortization Type
 
Number of
Mortgage
Loans
 
Aggregate
Principal Balance
of Mortgage
Loans
 
% of Initial
Pool Balance
 
 
Balloon
 
28
   
$
726,947,897     
 
64.0
%
 
 
Interest Only-Balloon
 
5
     
251,531,000     
 
22.1
   
 
Interest Only
 
4
     
56,900,000     
 
5.0
   
 
ARD-Balloon
 
4
     
53,871,092     
 
4.7
   
 
ARD-Interest Only-Balloon
 
1
     
41,500,000     
 
3.7
   
 
ARD-Interest Only
 
1
     
5,830,000     
 
0.5
   
 
Total:
 
43
   
$
1,136,579,989     
 
100.0
%
 
   
     
 
Six (6) mortgage loans (identified as Loan Nos. 8,13, 26, 38, 39 and 42 on Annex A-1 to this free writing prospectus), representing approximately 8.9% of the aggregate principal balance of the pool of mortgage loans as of the cut-off date,
   
 
 
S-25

 


     
 
provide for an increase in the related interest rate after a certain date, referred to as the anticipated repayment date. The interest accrued in excess of the original rate, together with any interest on that accrued interest (if any, as required by the related mortgage loan documents and to the extent permitted by applicable law), will be deferred and will not be paid until the principal balance of the related mortgage loan has been paid, at which time the excess interest, to the extent actually collected, will be required to be paid to the Class NR certificates. After the anticipated repayment date, cash flow in excess of that required for debt service and certain budgeted expenses with respect to the related mortgaged property would be applied towards the payment of principal (without payment of a yield maintenance charge or prepayment premium) of the related mortgage loan until its principal balance has been reduced to zero and then to the payment of accrued excess interest. A substantial principal payment will be required to pay off each such mortgage loan on its anticipated repayment date. The actual term for each such mortgage loan is longer than the period up to the related mortgage loan’s anticipated repayment date. See “Description of the Mortgage Pool—Certain Terms and Conditions of the Mortgage Loans—ARD Loans” in this free writing prospectus.
 
     
 
See “Description of the Mortgage Pool—Additional Mortgage Loan Information” and “—Certain Terms and Conditions of the Mortgage Loans” in this free writing prospectus.
 
     
 
The following table contains general information regarding the prepayment provisions of the mortgage loans:
 
     
 
Overview of Prepayment Protection(1)(2)
 
                 
 
Prepayment Protection
 
Number of Mortgage
Loans
 
Aggregate
Principal Balance
of Mortgage
Loans
 
% of Initial
Pool Balance
 
 
Yield Maintenance(3)
   
28
 
$
  705,278,670      
   62.1%
 
 
Defeasance
   
15
 
 
431,301,319  
   
37.9
 
 
Total:
   
43
 
$
 1,136,579,989      
  100.0%
 
       
       
 
(1)
See Annex A-1 to this free writing prospectus for specific criteria applicable to the mortgage loans.
 
         
 
(2)
Certain mortgage loans may permit the application of escrows to prepay a portion of the principal balance. The application of such escrows may or may not require a payment of a yield maintenance charge or a prepayment premium based on the amount of the principal that is being paid and may be applied during a lockout/defeasance period.
 
         
 
(3)
One (1) mortgage loan (identified as Loan No. 6 on Annex A-1 to this free writing prospectus), representing approximately 5.1% of the aggregate principal balance of the pool of mortgage loans as of the cut-off date, allows for the partial release of one individual mortgaged property without the payment of a yield maintenance charge during such time as a yield maintenance charge would otherwise be payable. Such partial release could result in a partial prepayment of such mortgage loan up to the allocated loan amount of such released property without payment of a yield maintenance charge or prepayment premium. See “Description of the Mortgage Pool—Certain Terms and Conditions of the Mortgage Loans—Releases of Individual Mortgaged Properties” in this free writing prospectus.
 
       
 
 
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Defeasance permits the related borrower to substitute direct non-callable U.S. Treasury obligations or, in certain cases, other government securities for the related mortgaged property as collateral for the related mortgage loan.
 
     
 
The mortgage loans generally permit voluntary prepayment without payment of a yield maintenance charge or any prepayment premium during a limited “open period” immediately prior to and including the stated maturity date or anticipated repayment date as follows:
 
     
 
Prepayment Open Periods(1)
 
     
 
Open Periods (Payments)
 
Number of
Mortgage
Loans
 
Aggregate
Principal Balance
of Mortgage
Loans
 
% of Initial
Pool Balance
 
 
1
   
 3
 
$
 72,789,975    
   6.4
%  
 
2
   
 1
 
 
 10,959,145     
1.0
   
 
3
   
21
   
397,484,268  
 
35.0
   
 
4
   
11
   
320,900,106  
 
28.2
   
 
5
   
 2
   
108,383,622  
 
9.5
   
 
6
   
 1
   
58,229,429  
 
5.1
   
 
7
   
 1
   
125,000,000  
 
11.0
   
 
9
   
 1
   
15,750,000  
 
1.4
   
 
13
   
 1
   
19,676,548  
 
1.7
   
 
15
   
 1
   
7,406,898  
 
0.7
   
 
Total:
   
43
 
$
1,136,579,989     
100.0
%  
       
       
 
(1)
  See Annex A-1 to this free writing prospectus for specific criteria applicable to the mortgage loans.  
         
 
See “Description of the Mortgage Pool—Additional Mortgage Loan Information” and “—Certain Terms and Conditions of the Mortgage Loans—Defeasance; Collateral Substitution; Property Releases” in this free writing prospectus.
 
     
 
Current Uses of the Mortgaged Properties(1)
 
 
 
Property Type
 
Number of Mortgaged Properties
 
Aggregate Principal Balance of Mortgaged Properties
 
% of Initial
Pool Balance
 
 
Office
   
17
 
$
404,999,730  
      35.6
%
 
 
Retail
   
24
   
298,336,684  
 
26.2
   
 
Mixed Use
   
18
   
185,776,386  
 
16.3
   
 
Industrial
   
  8
   
102,173,622  
 
9.0
   
 
Hotel
   
  4
   
83,203,747  
 
7.3
   
 
Self Storage
   
11
   
36,170,964  
 
3.2
   
 
Multifamily
   
  1
   
19,676,548  
 
1.7
   
 
Manufactured Housing
   
  1
   
6,242,309  
 
0.5
   
 
Total:
   
84
 
$
1,136,579,989  
  100.0
%
 
         
         
 
(1)
Because this table presents information relating to mortgaged properties and not mortgage loans, the information for mortgage loans secured by more than one mortgaged property is based on allocated loan amounts as set forth in Annex A-1.  
       
 
 
S-27

 

     
 
The mortgaged properties are located in 22 states. The following table lists the states that have concentrations of mortgaged properties of 5% or more of the aggregate principal balance of the pool of mortgage loans as of the cut-off date:
 
     
 
Geographic Distribution(1)
 
 
Geographic Location
 
  Number of
Mortgaged
Properties
    Aggregate
Principal Balance
of Mortgaged
Properties
    % of Initial
Pool Balance
 
 
Texas
   
18
 
$
222,210,844  
 
19.6
%
 
 
Maryland
   
20
   
143,855,260  
  
12.7
   
 
Missouri
   
  1
   
125,000,000  
  
11.0
   
 
North Carolina
   
  4
   
98,046,942  
 
8.6
   
 
Florida
   
  8
   
88,589,557  
 
7.8
   
 
Washington
   
  1
   
84,000,000  
 
7.4
   
 
Massachusetts
   
  6
   
74,634,899  
 
6.6
   
 
Connecticut
   
  3
   
62,863,809  
 
5.5
   
 
Total:
   
61
 
$
899,201,311  
 
79.1
%
 
         
         
 
(1)
Because this table presents information relating to mortgaged properties and not mortgage loans, the information for mortgage loans secured by more than one mortgaged property is based on allocated loan amounts as set forth in Annex A-1.
 
       
Additional Aspects of Certificates
 
       
  Denominations
The offered certificates (other than the Class X-A certificates) that are initially offered and sold to purchasers will be issued in minimum denominations of $10,000 and integral multiples of $1 in excess of $10,000. The Class X-A certificates will be issued, maintained and transferred only in minimum denominations of authorized initial notional amounts of not less than $1,000,000 and in integral multiples of $1 in excess of $1,000,000.
 
       
Registration, Clearance and Settlement
Each class of certificates offered hereby will initially be registered in the name of Cede & Co., as nominee of The Depository Trust Company, or DTC.
 
       
 
You may hold certificates offered hereby through: (1) DTC in the United States; or (2) Clearstream Banking, société anonyme or Euroclear Bank, as operator of the Euroclear System. Transfers within DTC, Clearstream Banking, société anonyme or Euroclear Bank, as operator of the Euroclear System, will be made in accordance with the usual rules and operating procedures of those systems.
 
       
 
We may elect to terminate the book-entry system through DTC (with the consent of the DTC participants), Clearstream Banking, société anonyme or Euroclear Bank, as operator of the Euroclear System, with respect to all or any portion of any class of the certificates offered hereby.
 
       
 
See “Description of the Certificates—Book-Entry Registration and Definitive Certificates” in this free writing prospectus and in the prospectus.
 
     
 
 
S-28

 

         
 
Information Available to Certificateholders
On each distribution date, the certificate administrator will prepare and make available to each certificateholder of record, initially expected to be Cede & Co., a statement as to the distributions being made on that date. Additionally, under certain circumstances, certificateholders of record may be entitled to certain other information regarding the trust. See “Description of the Certificates—Reports to Certificateholders; Certain Available Information” in this free writing prospectus.
 
         
 
Deal Information/Analytics
Certain information concerning the mortgage loans and the certificates may be available to subscribers through the following services:
 
       
   
Bloomberg, L.P., Trepp, LLC, Intex Solutions, Inc., BlackRock Financial Management, Inc., Interactive Data Corporation, CMBS.com and Markit;
 
         
   
the certificate administrator’s website initially located at “www.ctslink.com”; and
 
         
   
the master servicer’s website initially located at “www.keybank.com/key2cre”.
 
         
 
Optional Termination
On any distribution date on which the aggregate principal balance of the pool of mortgage loans is less than 1% of the aggregate principal balance of the mortgage loans as of the cut-off date, certain entities specified in this free writing prospectus will have the option to purchase all of the remaining mortgage loans (and all property acquired through exercise of remedies in respect of any mortgage loan) at the price specified in this free writing prospectus. Exercise of this option will terminate the trust and retire the then outstanding certificates. The trust may also be terminated in connection with a voluntary exchange of all the then outstanding certificates (other than the Class R certificates), including the Class X-A and Class X-B certificates (provided, however, that the Class A-1, Class A-2, Class A-3, Class A-SB, Class A-S, Class B, Class C, Class EC, Class D and Class E certificates are no longer outstanding, there is only one holder of the outstanding certificates and the master servicer consents to the exchange), for the mortgage loans remaining in the trust.
 
         
   
See “Description of the Certificates—Termination; Retirement of Certificates” in this free writing prospectus and “Description of the Certificates—Termination” in the prospectus.
 
         
 
Required Repurchases or Substitutions of Mortgage Loans
Under certain circumstances, the related mortgage loan seller may be obligated to repurchase (without payment of any yield maintenance charge or prepayment premium) or substitute for an affected mortgage loan from the trust as a result of a material document defect or a material breach of a representation and warranty made by the related mortgage loan seller with respect to the mortgage loan in the mortgage loan purchase agreement that materially and adversely affects the value of the mortgage loan, the value of the related mortgaged property or the interests
 
         
 
 
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of certificateholders in the mortgage loan. See “Description of the Mortgage Pool—Representations and Warranties; Repurchases and Substitutions” in this free writing prospectus.
 
         
 
Sale of Defaulted Loans
Pursuant to the pooling and servicing agreement, the special servicer may offer to sell to any person (or may offer to purchase) any specially serviced mortgage loan if it determines that no satisfactory arrangements can be made for collection of delinquent payments and such a sale would be in the best economic interest of the trust on a net present value basis. The special servicer is generally required to accept the highest offer received from any person as more particularly described in “Servicing of the Mortgage Loans—Realization Upon Defaulted Mortgage Loans” in this free writing prospectus. However, with respect to each mortgage loan with a related mezzanine loan (including if any such mezzanine loan is originated in the future), the sale by the special servicer of any defaulted mortgage loan is subject to the rights of the holders of the related mezzanine debt to exercise its option to purchase the related mortgage loan following a default to the extent set forth in the related intercreditor agreement.
 
         
 
Tax Status
Elections will be made to treat designated portions of the trust as two separate REMICs – a lower-tier REMIC and an upper-tier REMIC – for federal income tax purposes. In addition the portions of the trust representing (i) the Class A-S, Class B and Class C certificates that have been exchanged for the Class EC certificates and the related distribution account and (ii) interest that is deferred after the anticipated repayment date of each mortgage loan with an anticipated repayment date and the related distribution account will be treated as a grantor trust for federal income tax purposes. In the opinion of counsel, the portions of the trust referred to above will qualify for this treatment.
 
         
    Pertinent federal income tax consequences of an investment in the certificates offered hereby include:  
         
   
Each class of offered certificates will represent “regular interests” in a REMIC as further described under “Material Federal Income Tax Consequences” in this free writing prospectus.
 
         
   
Each regular interest will be treated as a newly originated debt instrument for federal income tax purposes.
 
         
   
You will be required to report income on the regular interest represented by your offered certificates using the accrual method of accounting.
 
         
   
It is anticipated that the Class     and Class     certificates will be issued with original issue discount and that the Class     certificates will be issued at a premium for federal income tax purposes.
 
         
   
See “Material Federal Income Tax Consequences” in this free writing prospectus and the prospectus.
 
         
 
 
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Certain ERISA Considerations
 
Subject to important considerations described under “Certain ERISA Considerations” in this free writing prospectus and the prospectus, the certificates offered hereby are eligible for purchase by persons investing assets of employee benefit plans or individual retirement accounts.
 
                       
Legal Investment
 
No class of the offered certificates will constitute “mortgage related securities” for purposes of the Secondary Mortgage Market Enhancement Act of 1984, as amended.
 
                       
   
If your investment activities are subject to legal investment laws and regulations, regulatory capital requirements, or review by regulatory authorities, then you may be subject to restrictions on investment in the offered certificates. You should consult your own legal advisors for assistance in determining the suitability of and consequences to you of the purchase, ownership, and sale of the offered certificates.
 
                       
   
See “Legal Investment” in this free writing prospectus and in the prospectus.
 
                       
Ratings
 
The offered certificates will not be issued unless each of the offered classes receives the following ratings from Fitch, Inc., DBRS, Inc. and Kroll Bond Rating Agency, Inc.:
 
                       
        
S&P(1)
 
Fitch(1)
 
DBRS(1)
 
KBRA(1)
 
   
Class A-1
 
AAA(sf)
 
AAA(sf)
 
AAA(sf)
 
AAA(sf)
 
   
Class A-2
 
AAA(sf)
 
AAA(sf)
 
AAA(sf)
 
AAA(sf)
 
   
Class A-3
 
AAA(sf)
 
AAA(sf)
 
AAA(sf)
 
AAA(sf)
 
   
Class A-SB
 
AAA(sf)
 
AAA(sf)
 
AAA(sf)
 
AAA(sf)
 
   
Class X-A
 
AAA(sf)
 
AAA(sf)
 
AAA(sf)
 
AAA(sf)
 
                         
                         
   
(1)
Standard & Poor’s Ratings Services, Fitch, Inc., DBRS, Inc. and Kroll Bond Rating Agency, Inc. have informed us that the “sf” designation in their ratings represents an identifier for structured finance product ratings. For additional information about this identifier, prospective investors can go to www.standardandpoors.com, www.fitchratings.com, www.dbrs.com and/or www.krollbondratings.com.
 
                         
   
The ratings address the likelihood of full and timely payment to the certificateholders of all distributions of interest at the applicable pass-through rate on the offered certificates on each distribution date and the ultimate payment in full of the certificate balance of each class of offered certificates on a date that is not later than the rated final distribution date with respect to such class of certificates. Each security rating assigned to the offered certificates should be evaluated independently of any other security rating. Such ratings on the offered certificates do not address the tax attributes of such certificates or the receipt of any default interest or prepayment premium or constitute an assessment of the likelihood or frequency of prepayments on the mortgage loans.
 
                         
   
In general, the ratings address credit risk and not prepayment risk and do not represent any assessment of the yield to maturity that purchasers may experience as a result of the rate of principal prepayments. A security rating is not a recommendation to buy, sell, or hold securities, a measure of asset value or a
 
                         
 
 
S-31

 
 
                         
   
signal of the suitability of an investment, and may be subject to revision or withdrawal at any time by the assigning rating agency. Ratings are forward-looking opinions about credit risk and express an agency’s opinion about the ability and willingness of an issuer of securities to meet its financial obligations in full and on time. Ratings are not indications of investment merit. See “Ratings” in this free writing prospectus. A security rating does not represent any assessment of the yield to maturity that investors may experience or the possibility that the holders of the Class X-A certificates might not fully recover their initial investment in the event of delinquencies or defaults, prepayments (both voluntary (to the extent permitted) and involuntary), or losses in respect of the mortgage loans.
 
                         
   
As described in this free writing prospectus, the amounts payable with respect to the Class X-A certificates consist only of interest. If the mortgage loans were to prepay in the initial month, with the result that the holders of the Class X-A certificates receive only a single month’s interest and therefore, suffer a nearly complete loss of their investment, all amounts “due” to such holders will nevertheless have been paid, and such result is consistent with the rating received on the Class X-A certificates. The notional amount of the Class X-A certificates on which interest is calculated may be reduced by the allocation of realized losses and prepayments, whether voluntary or involuntary. The ratings do not address the timing or magnitude of reductions of such notional amount, but only the obligation to pay interest timely on the notional amount, as so reduced from time to time. Therefore, the ratings of the Class X-A certificates should be evaluated independently from similar ratings on other types of securities.
 
                         
   
The rated final distribution date will be the distribution date in October 2045. See “Yield and Maturity Considerations” and “Description of the Certificates—Advances” in this free writing prospectus.
 
                         
   
Additionally, other nationally recognized statistical rating organizations that we have not engaged to rate the offered certificates may nevertheless issue unsolicited credit ratings on one or more classes of certificates, relying on information they receive pursuant to Rule 17g-5 under the Securities Exchange Act of 1934, as amended. If any such unsolicited ratings are issued, we cannot assure you that they will not be different from or lower than any ratings assigned to the offered certificates by any other nationally recognized statistical rating organization. The issuance of an unsolicited rating of a class of the offered certificates that is lower than the ratings assigned by the nationally recognized statistical rating organizations engaged by the depositor may adversely impact the liquidity, market value and regulatory characteristics of that class. As part of the process of obtaining ratings for the offered certificates, the depositor had initial discussions with and submitted certain materials to Standard & Poor’s Ratings Services, Fitch, Inc., DBRS, Inc., Kroll Bond Rating Agency, Inc., Moody’s Investors Service, Inc. and Morningstar Credit Ratings, LLC. Based on
 
                         
 
 
S-32

 
 
                         
   
preliminary feedback from those nationally recognized statistical rating organizations at that time, the depositor selected Standard & Poor’s Ratings Services, Fitch, Inc., DBRS, Inc. and Kroll Bond Rating Agency, Inc. to rate the offered certificates and not the other two nationally recognized statistical rating organizations due, in part, to those nationally recognized statistical rating organizations’ initial subordination levels for the various classes of offered certificates. Had the depositor selected such other nationally recognized statistical rating organizations to rate the offered certificates, we cannot assure you as to the ratings that such other nationally recognized statistical rating organizations would ultimately have assigned to the offered certificates. Although unsolicited ratings may be issued by any nationally recognized statistical rating organization, a nationally recognized statistical rating organization might be more likely to issue an unsolicited rating if it was not selected after having provided preliminary feedback to the depositor. See “Risk Factors—Ratings of the Certificates” and “Ratings” in this free writing prospectus.
 
                         
   
In addition, neither the depositor nor any other person or entity will have any duty to notify you if any other nationally recognized statistical rating organization issues, or delivers notice of its intention to issue, unsolicited ratings on one or more classes of offered certificates after the date of this free writing prospectus. In no event will rating agency confirmations from any such other nationally recognized statistical rating organization be a condition to any action, or the exercise of any right, power or privilege by any person or entity under the pooling and servicing agreement.
 
                         
   
Furthermore, the Securities and Exchange Commission may determine that any or all of the nationally recognized statistical rating organizations engaged by the depositor to rate the offered certificates no longer qualifies as a nationally recognized statistical rating organization, or is no longer qualified to rate the offered certificates, and that determination may have an adverse effect on the liquidity, market value and regulatory characteristics of the offered certificates. See “Risk Factors—Ratings of the Certificates” and “Ratings” in this free writing prospectus.
 
       
       
       
       
       
       
       
       
       
       
       
       
 
 
S-33

 
 
RISK FACTORS
 
You should carefully consider the following risks and those risks described in “Risk Factors” in the accompanying prospectus before making an investment decision. In particular, distributions on your certificates will depend on payments received on, and other recoveries with respect to, the mortgage loans. Therefore, you should carefully consider the risk factors relating to the mortgage loans and the mortgaged properties.
 
The risks and uncertainties described below are not the only ones relating to the certificates offered hereby. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also impair your investment. If any of the following events or circumstances identified as risks actually occur or materialize, your investment could be materially and adversely affected. This free writing prospectus also contains forward looking statements that involve risks and uncertainties. Actual results could differ materially from those anticipated in these forward looking statements as a result of certain factors, including the risks described below and elsewhere in this free writing prospectus. In connection with the information presented in this free writing prospectus relating to risks that may relate to certain of the mortgage loans or the mortgage loans in general, examples are sometimes given with respect to a particular risk and a particular mortgage loan. However, the fact that examples are given should not be interpreted as meaning that such examples reflect all of the mortgage loans in the trust to which such risk is applicable.
 
In this “Risk Factors” discussion we sometimes give examples of mortgage loans that exhibit or may be subject to a particular risk factor. The presentation of such examples should not be construed as statements that the related risk factor does not apply to other mortgage loans or that the identified mortgage loan is not subject to other risk factors described herein.
 
The Offered Certificates May Not Be a Suitable Investment for You
 
The certificates offered hereby are not suitable investments for all investors. In particular, you should not purchase any class of certificates offered hereby unless you understand and are able to bear the prepayment, credit, liquidity and market risks associated with that class of certificates. For the reasons set forth in these “Risk Factors”, the yield to maturity and the aggregate amount and timing of distributions on the certificates offered hereby are subject to material variability from period to period and over the life of those certificates. The interaction of the foregoing factors and their effects are impossible to predict and are likely to change from time to time. As a result, an investment in the certificates offered hereby involves substantial risks and uncertainties and should be considered only by sophisticated institutional investors with substantial investment experience with similar types of securities and who have conducted appropriate diligence on the mortgage loans and the certificates offered hereby.
 
The Credit Crisis and Downturn in the Real Estate Market Have Adversely Affected and May Continue To Adversely Affect the Value of Commercial Mortgage-Backed Securities
 
In recent years, the real estate and securitization markets, including the market for commercial mortgage-backed securities, as well as the debt markets, global financial markets and the economy generally, have experienced significant dislocations, illiquidity and volatility. Declining real estate values, coupled with diminished availability of leverage and/or refinancings for commercial real estate have resulted in increased delinquencies and defaults on commercial mortgage loans. In addition, the downturn in the general economy has affected the financial strength of many commercial real estate tenants and has resulted in increased rent delinquencies and increased vacancies, particularly in the retail sector. Any continued downturn may lead to increased vacancies, decreased rents or other declines in income from, or the value of, commercial real estate, which would likely have an adverse effect on commercial mortgage-backed securities that are backed by loans secured by such commercial real estate and thus affect the values of such commercial mortgage-backed securities. We cannot assure you that the dislocation in the commercial mortgage-backed securities market will not continue to occur or become more severe. Even if the commercial mortgage-backed securities market does recover, the mortgaged
 
 
S-34

 
 
properties and therefore, the mortgage loans and the certificates offered hereby, may decline in value. Any further economic downturn may adversely affect the financial resources of the related borrower under the mortgage loans and may result in the inability of the related borrower to make principal and interest payments on, or refinance, the outstanding debt when due or to sell the mortgaged properties for an aggregate amount sufficient to pay off the outstanding debt when due. In the event of default by a borrower under any of the mortgage loans, the trust may suffer a partial or total loss with respect to such mortgage loan and consequently, the certificates offered hereby. Any delinquency or loss on the mortgage loans may have an adverse effect on the distributions of principal and interest received by holders of the certificates.
 
In addition to credit factors directly affecting commercial mortgage-backed securities, the continuing fallout from a downturn in the residential mortgage-backed securities market and markets for other asset-backed and structured products has also affected the commercial mortgage-backed securities market by contributing to a decline in the market value and liquidity of securitized investments such as commercial mortgage-backed securities. The deterioration of other structured products markets may continue to adversely affect the value of commercial mortgage-backed securities. Even if commercial mortgage-backed securities are performing as anticipated, the value of such commercial mortgage-backed securities in the secondary market may nevertheless decline as a result of a deterioration in general market conditions for other asset backed or structured products. Trading activity associated with commercial mortgage-backed securities indices may also drive spreads on those indices wider than spreads on commercial mortgage-backed securities, thereby resulting in a decrease in value of such commercial mortgage-backed securities.
 
Market Considerations and Limited Liquidity
 
Lack of liquidity could result in a decline in the market value of the certificates offered hereby. In addition, the market value of the certificates offered hereby at any time may be affected by many factors, including then prevailing interest rates, and no representation is made by any person or entity as to the market value of any offered certificate at any time. See “Risk Factors—Your Ability to Resell Certificates May Be Limited Because of Their Characteristics” in the prospectus.
 
The mortgage-backed securities market has experienced unprecedented disruptions resulting from reduced investor demand and increased yield requirements for those securities. As a result, the secondary market for mortgage-backed securities has experienced extremely limited liquidity. Although market conditions have improved recently somewhat for commercial mortgage-backed securities, there can be no assurance that such improvement will continue or that similar or worse disruptions will not occur again. Accordingly, it is possible that for some period of time investors who desire to sell certificates offered hereby in the secondary market may find fewer potential purchasers and experience lower resale prices than under “normal” market conditions.
 
The market value of the certificates offered hereby can decline even if the certificates offered hereby and the mortgage loans are performing at or above your expectations. The market value of the certificates offered hereby will be sensitive to fluctuations in current interest rates. However, any change in the market value of the certificates offered hereby may be disproportionately impacted by upward or downward movement in current interest rates.
 
The market value of the certificates offered hereby will also be influenced by the supply of and demand for commercial mortgage-backed securities generally. The supply of commercial mortgage-backed securities will depend on, among other things, the amount of commercial mortgage loans, whether newly originated or held in portfolios, that are available for securitization. In addition, recently enacted financial reform legislation in the United States could adversely affect the availability of credit for commercial real estate. A number of factors will affect investors’ demand for commercial mortgage-backed securities, including:
 
 
the availability of alternative investments that offer higher yields or are perceived as being a better credit risk, having a less volatile market value or being more liquid;
 
 
S-35

 
 
 
legal and other restrictions that prohibit a particular entity from investing in commercial mortgage-backed securities or limit the amount or types of commercial mortgage-backed securities that it may acquire;
 
 
investors’ perceptions regarding the commercial real estate markets, which may be adversely affected by, among other things, a decline in real estate values or an increase in defaults and foreclosures on commercial mortgage loans secured by income producing properties; and
 
 
investors’ perceptions regarding the capital markets in general, which may be adversely affected by political, social and economic events completely unrelated to the commercial real estate markets; and
 
 
the impact on demand generally for commercial mortgage-backed securities as a result of the existence or cancellation of government-sponsored economic programs.
 
If you decide to sell any certificates offered hereby, the ability to sell those certificates will depend on, among other things, whether and to what extent a secondary market then exists for those certificates, and you may have to sell at a discount from the price you paid for reasons unrelated to the performance of the certificates or the mortgage loans.
 
The offered certificates will not be listed on any national securities exchange or traded on any automated quotation systems of any registered securities association, and there is currently no secondary market for the certificates offered hereby. While the underwriters currently intend to make a secondary market in the certificates offered hereby, no underwriter is obligated to do so, any market-making may be discontinued at any time, and there can be no assurance that an active secondary market for the certificates offered hereby will develop. Additionally, one or more purchasers may purchase substantial portions of one or more classes of certificates offered hereby. Accordingly, you may not have an active or liquid secondary market for the certificates offered hereby. Lack of liquidity could result in a substantial decrease in the market value and may adversely affect the regulatory characteristics of the certificates offered hereby. The market value of the certificates offered hereby also may be affected by many other factors, including the then-prevailing interest rates and market perceptions of risks associated with commercial mortgage lending. No representation is made by any person or entity as to what the market value of any offered certificate will be at any time. Furthermore, you should be aware that the market for securities of the same type as the certificates offered hereby has in the past been volatile and offered very limited liquidity. See “Risk Factors—Your Ability to Resell Certificates May Be Limited Because of Their Characteristics” in the prospectus.
 
The liquidity of the offered certificates may also be affected by present uncertainties and future unfavorable determinations concerning legal investment. No class of the offered certificates will constitute “mortgage related securities” for purposes of the Secondary Mortgage Market Enhancement Act of 1984, as amended. See “Legal Investment” in this free writing prospectus.
 
Legal and Regulatory Provisions Affecting Investors Could Adversely Affect the Liquidity of the Certificates
 
We make no representation as to the proper characterization of the offered certificates for legal investment, financial institution regulatory, financial reporting or other purposes, as to the ability of particular investors to purchase the offered certificates under applicable legal investment or other restrictions, or as to the consequences of an investment in the offered certificates for such purposes or under such restrictions. We note that regulatory or legislative provisions applicable to certain investors may have the effect of limiting or restricting their ability to hold or acquire commercial mortgage-backed securities, which in turn may adversely affect the ability of investors in the offered certificates who are not subject to those provisions to resell such certificates in the secondary market. For example:
 
 
Member States of the European Economic Area have implemented Article 122a of the Banking Consolidation Directive (Directive 2006/48/EC, as amended), which applies to new securitizations issued on or after January 1, 2011 as well as securitizations issued prior to that date where new
 
 
S-36

 
 
 
 
assets are added or substituted after December 31, 2014. Article 122a imposes a severe capital charge on a securitization position acquired by a European Economic Area-regulated credit institution unless, among other conditions, (a) the originator, sponsor or original lender for the securitization has explicitly disclosed to the European Economic Area-regulated credit institution that it will retain, on an ongoing basis, a material net economic interest of not less than 5% in respect of certain specified credit risk tranches or asset exposures, and (b) the acquiring institution is able to demonstrate that it has undertaken certain due diligence in respect of its securitization position and the underlying exposures and that procedures are established for such activities to be monitored on an on-going basis. For purposes of Article 122a of the Banking Consolidation Directive, a European Economic Area-regulated credit institution may be subject to the capital requirements as a result of activities of its overseas affiliates, including those that are based in the United States. Requirements similar to the retention requirement in Article 122a are scheduled to apply in the future to investment in securitizations by European Economic Area insurance and reinsurance undertakings and by investment funds managed by European Economic Area alternative investment fund managers. None of the mortgage loan sellers, the depositor or the trust has taken, or intends to take, any steps to comply with the requirements of Article 122a. Since neither the depositor nor the mortgage loan sellers will retain a 5% net economic interest with respect to the certificates offered hereby in one of the forms prescribed by Article 122a of the Banking Consolidation Directive, the adverse effect of Article 122a of the Banking Consolidation Directive to European Economic Area-regulated institutions and their affiliates may cause them not to invest in the certificates, which in turn may adversely affect the liquidity of the certificates in the secondary market. This could adversely affect your ability to transfer certificates or the price you may receive upon a sale of your certificates.
 
 
The Dodd-Frank Wall Street Reform and Consumer Protection Act enacted in the United States requires that federal banking regulators amend their regulations such that capital charges imposed on banking institutions are determined to a lesser extent on the ratings of their investments. No such regulations have yet been proposed or adopted. When such regulations are proposed or adopted, investments in commercial mortgage-backed securities by such institutions may result in greater capital charges to financial institutions that own commercial mortgage-backed securities, or otherwise adversely affect the attractiveness of investments in or treatment of commercial mortgage-backed securities for regulatory capital purposes.
 
 
Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act added a provision, commonly referred to as the “Volcker Rule”, to federal banking laws to generally prohibit various covered banking entities from engaging in proprietary trading or acquiring or retaining an ownership interest in, sponsoring or having certain relationships with a hedge fund or private equity fund, subject to certain exemptions. The Volcker Rule also provides for certain supervised nonbank financial companies that engage in such activities or have such interests or relationships to be subject to additional capital requirements, quantitative limits or other restrictions. Section 619 became effective on July 21, 2012, subject to certain conformance periods, but proposed implementing rules have not been adopted. Although the Volcker Rule and the proposed implementing rules contain exemptions applicable to securitizations of loans, due to the lack of clarity as to the application of the Volcker Rule and these exemptions to certain securitized products as well as the fact that the implementing rules have not been finally adopted, we cannot assure you as to the effect of the Volcker Rule and the final implementing regulations on the ability or desire of certain investors subject to the Volcker Rule to invest in or to continue to hold commercial mortgage-backed securities, and as a result we cannot assure that the Volcker Rule as finally implemented will not adversely affect the market value or liquidity of the certificates.
 
 
The Financial Accounting Standards Board has adopted changes to the accounting standards for structured products. These changes, or any future changes, may affect the accounting for entities such as the trust, could under certain circumstances require an investor or its owner generally to consolidate the assets of the trust in its financial statements and record third parties’ investments in the trust as liabilities of that investor or owner or could otherwise adversely affect the manner in
 
 
S-37

 
 
 
 
which the investor or its owner must report an investment in commercial mortgage-backed securities for financial reporting purposes.
 
Accordingly, all investors whose investment activities are subject to legal investment laws and regulations, regulatory capital requirements, or review by regulatory authorities should consult with their own legal, accounting and other advisors in determining whether, and to what extent, the offered certificates will constitute legal investments for them or are subject to investment or other restrictions, unfavorable accounting treatment, capital charges or reserve requirements.
 
The Volatile Economy and Credit Crisis May Increase Loan Defaults and Affect the Value and Liquidity of Your Investment
 
The global economy recently experienced a significant recession, as well as a severe, ongoing disruption in the credit markets, including the general absence of investor demand for and purchases of commercial mortgage-backed securities and other asset-backed securities and structured financial products. While the United States economy may technically be out of the recession, any recovery could be fragile and may not be sustainable for any specific period of time, and the global or United States economy could slip into an even more significant recession. Continued downward price pressures and increasing defaults and foreclosures in residential real estate or other conditions that severely depressed the overall economy and contributed to the credit crisis have also led to increased vacancies, decreased rents or other/declines in income from, or the value of, commercial real estate. Additionally, the lack of credit liquidity, correspondingly higher mortgage rates and decreases in the value of commercial properties have prevented many commercial mortgage borrowers from refinancing their mortgages. These circumstances have increased delinquency and default rates of securitized commercial mortgage loans, and may lead to widespread commercial mortgage defaults. In addition, the declines in commercial real estate values have resulted in reduced borrower equity, hindering such borrower’s ability to refinance in an environment of increasingly restrictive lending standards and giving them less incentive to cure delinquencies and avoid foreclosure. Higher loan-to-value ratios are likely to result in lower recoveries on foreclosure, and an increase in loss severities above those that would have been realized had commercial property values remained the same or continued to increase. Defaults, delinquencies and losses have further decreased property values, thereby resulting in additional defaults by commercial mortgage borrowers, further credit constraints, further declines in property values and further adverse effects on the perception of the value of commercial mortgage-backed securities. Even if the real estate market does recover, the mortgaged property underlying the mortgage loans and, therefore, the certificates, may decline in value. Any further economic downturn may adversely affect the financial resources of the related borrowers and may result in the inability of the related borrowers to make interest payments on the related mortgage loans and repayment at maturity. In the event of default by the related borrowers under the related mortgage loans, the certificateholders would likely suffer a loss on their investment.
 
In addition, commercial mortgage lenders have adjusted their loan underwriting standards, which has reduced the availability of mortgage credit to prospective borrowers. These developments have contributed, and may continue to contribute, to a weakening in the commercial real estate market as these adjustments have, among other things, inhibited refinancing and reduced the number of potential buyers of commercial real estate. The continued use or further adjustment of these loan underwriting standards may contribute to further increases in delinquencies and losses on commercial mortgage loans generally.
 
The global financial markets have recently experienced increased volatility due to uncertainty surrounding the level and sustainability of sovereign debt of certain countries that are part of the European Union, including Ireland, Greece, Spain, Portugal and Italy, as well as the sustainability of the European Union itself. Some economists, observers and market participants have expressed concerns regarding the sustainability of the monetary union and the common currency in their current forms. Concerns regarding sovereign debt may spread to other countries at any time. In particular, the pace of progress, or the lack of progress, of federal deficit reduction talks in the United States may cause continued volatility. In addition, certain countries in the Middle East are undergoing changes in
 
 
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government following widespread protests, commonly referred to as the “Arab Spring”. It is uncertain what effects the Arab Spring will have in the Middle East or what effects such events might have on the United States and world financial markets, particular business segments, world commodity prices or otherwise. Furthermore, many state and local governments in the United States are experiencing, and are expected to continue to experience, severe budgetary constraints. Market volatility or disruption could result if a state were to default on its debt, or a significant local government were to default on its debt or seek relief from their debt in bankruptcy or by agreement with their creditors. In addition, recently-enacted financial reform legislation in the United States could adversely affect the availability of credit for commercial real estate.
 
Any or all of the circumstances described above may lead to further volatility in or disruption of the credit markets at any time. Moreover, other types of events, domestic or international, may affect general economic conditions and financial markets, such as wars, revolts, insurrections, armed conflicts, energy supply or price disruptions, terrorism, political crises, natural disasters and man-made disasters. We cannot predict such matters or their effect on the value or performance of the certificates.
 
Investors should consider that general conditions in the commercial real estate and mortgage markets may adversely affect the performance of the mortgage loans and accordingly the performance of the certificates offered hereby. In addition, in connection with all the circumstances described above, you should be aware in particular that:
 
 
such circumstances may result in substantial delinquencies and defaults on the mortgage loans and adversely affect the amount of liquidation proceeds the trust fund would realize in the event of foreclosures and liquidations;
 
 
defaults on the mortgage loans may occur in large concentrations over a period of time, which might result in rapid declines in the value of your certificates;
 
 
notwithstanding that the mortgage loans were recently underwritten and originated or acquired, the values of the mortgaged properties may have declined since the related mortgage loans were originated or acquired and may decline following the issuance of the certificates offered hereby and such declines may be substantial and occur in a relatively short period following the issuance of the certificates offered hereby; and such declines may or may not occur for reasons largely unrelated to the circumstances of the particular property;
 
 
if you determine to sell certificates offered hereby, you may be unable to do so or you may be able to do so only at a substantial discount from the price you paid; this may be the case for reasons unrelated to the then-current performance of the certificates offered hereby or the mortgage loans; and this may be the case within a relatively short period following the issuance of the certificates offered hereby;
 
 
if the mortgage loans default, then the yield on your investment may be substantially reduced notwithstanding that liquidation proceeds may be sufficient to result in the repayment of the principal of and accrued interest on your certificates; an earlier than anticipated repayment of principal (even in the absence of losses) in the event of a default in advance of the maturity date would tend to shorten the weighted average period during which you earn interest on your investment; and a later than anticipated repayment of principal (even in the absence of losses) in the event of a default upon the maturity date would tend to delay your receipt of principal and the interest on your investment may be insufficient to compensate you for that delay;
 
 
even if liquidation proceeds received on defaulted mortgage loans are sufficient to cover the principal and accrued interest on those mortgage loans, the trust fund may experience losses in the form of special servicing fees and other expenses, and you may bear losses as a result, or your yield may be adversely affected by such losses;
 
 
the time periods to resolve defaulted mortgage loans may be long, and those periods may be further extended because of borrower bankruptcies, judicial foreclosure and related litigation; and
 
 
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this may be especially true in the case of loans made to borrowers that have, or whose affiliates have, substantial debts other than the mortgage loan, including related subordinate or mezzanine financing. See “—Potential Conflicts of Interest” in this free writing prospectus;
 
 
trading activity associated with indices of commercial mortgage-backed securities may also drive spreads on those indices wider than spreads on commercial mortgage-backed securities, thereby resulting in a decrease in value of such commercial mortgage-backed securities, including your certificates, and spreads on those indices may be affected by a variety of factors, and may or may not be affected for reasons involving the commercial real estate markets and may be affected for reasons that are unknown and cannot be discerned; and
 
 
even if you intend to hold your certificates, depending on your circumstances, you may be required to report declines in the value of your certificates, and/or record losses, on your financial statements or regulatory or supervisory reports, and/or repay or post additional collateral for any secured financing, hedging arrangements, repurchase transactions or other financial transactions that you have entered into that are backed by or make reference to your certificates, in each case as if your certificates were to be sold immediately.
 
In connection with all the circumstances described above, the risks we describe elsewhere under “Risk Factors” in this free writing prospectus and the accompanying prospectus are heightened substantially, and you should review and carefully consider such risk factors in light of such circumstances.
 
The Prospective Performance of the Mortgage Loans Included in the Trust Fund Should Be Evaluated Separately from the Performance of the Mortgage Loans in Any of Our Other Trusts
 
While there may be certain common factors affecting the performance and value of income-producing real properties in general, those factors do not apply equally to all income-producing real properties and, in many cases, there are unique factors that will affect the performance and/or value of a particular income-producing real property. Moreover, the effect of a given factor on a particular real property will depend on a number of variables, including but not limited to property type, geographic location, competition, sponsorship and other characteristics of the property and the related commercial mortgage loan. Each income-producing real property represents a separate and distinct business venture and, as a result, each of the mortgage loans requires a unique underwriting analysis. Furthermore, economic and other conditions affecting real properties, whether worldwide, national, regional or local, vary over time. The performance of a pool of mortgage loans originated and outstanding under a given set of economic conditions may vary significantly from the performance of an otherwise comparable mortgage pool originated and outstanding under a different set of economic conditions. Accordingly, investors should evaluate the mortgage loans underlying the certificates offered hereby independently from the performance of commercial mortgage loans underlying any other series of certificates.
 
As a result of the distinct nature of each pool of commercial mortgage loans, and the separate mortgage loans within the pool, this free writing prospectus does not include disclosure concerning the delinquency and loss experience of static pools of periodic originations by the sponsor of assets of the type to be securitized (known as “static pool data”). Because of the highly heterogeneous nature of the assets in commercial mortgage backed securities transactions, static pool data for prior securitized pools, even those involving the same asset types (e.g., hotels or office buildings), may be misleading, since the economics of the properties and terms of the loans may be materially different. In particular, static pool data that may show a low level of delinquencies and defaults would not be indicative of the performance of this pool or any other pools of mortgage loans originated by the same sponsor or sponsors. Therefore, investors should evaluate this offering on the basis of the information set forth in this free writing prospectus with respect to the mortgage loans, and not on the basis of any successful performance of other pools of securitized commercial mortgage loans.
 
 
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Commercial Lending Is Dependent Upon Net Operating Income
 
The liquidation value of a commercial property is determined, in substantial part, by the capitalization of the property’s cash flow. However, net operating income can be volatile and may be insufficient to cover debt service on the commercial mortgage loan at any given time.
 
For historical financial information relating to the mortgaged properties, including net operating income for the most recent reporting period and prior three calendar years, to the extent available, prospective investors should review Annex A-1 to this free writing prospectus. Certain mortgage loans are secured in whole or in part by mortgaged properties that have no prior operating history available or otherwise lack historical financial figures and information. A mortgaged property may lack prior operating history or historical financial information because it is newly constructed, it is a recent acquisition by the related borrower or it is a single-tenant property that is subject to a triple net lease. In addition, a tenant’s lease may contain confidentiality provisions that restrict the mortgage loan sellers’ access to or disclosure of such tenant’s financial information. The underwritten net cash flows and underwritten net operating income for such mortgaged properties are derived principally from current rent rolls or tenant leases (or, in some cases, based on leases that are not yet in place or on tenants that may have signed a lease or lease amendment expanding its space but are not yet in occupancy and/or paying rent) and historical expenses, adjusted to account for inflation, significant occupancy increases and a market rate management fee. However, there can be no assurance that actual cash flows from such mortgaged properties will meet such projected cash flows, income and expense levels or that those funds will be sufficient to meet the payment obligations of the related mortgage loans. See “Description of the Mortgage Pool—Additional Mortgage Loan Information” in this free writing prospectus and “Risk Factors—Commercial and Multifamily Mortgage Loans Have Risks That May Affect Payments on Your Certificates” in the prospectus.
 
The volatility of net operating income will be influenced by many of the foregoing factors, as well as by:
 
 
the length of tenant leases (including that in certain cases, all or substantially all of the tenants, or one or more sole, anchor or other major tenant, at a particular mortgaged property have leases that expire or permit the tenant(s) to terminate its or their lease(s) during the term of the related mortgage loan);
 
 
the creditworthiness of tenants;
 
 
tenant defaults;
 
 
in the case of rental properties, the rate at which new rentals occur; and
 
 
the property’s “operating leverage” which is generally the percentage of total property expenses in relation to revenue, the ratio of fixed operating expenses to those that vary with revenues, and the level of capital expenditures required to maintain the property and to retain or replace tenants.
 
A decline in the real estate market or in the financial condition of a major tenant will tend to have a more immediate effect on the net operating income of properties with short-term revenue sources, such as short-term or month-to-month leases, and may lead to higher rates of delinquency or defaults.
 
In addition, underwritten or adjusted cash flows, by their nature, are speculative and are based upon certain assumptions and projections. The failure of such assumptions or projections in whole or in part could cause the underwritten net operating income (calculated as describe in “Description of the Mortgage Pool—Additional Mortgage Loan Information”) to vary substantially from the actual net operating income of a mortgaged property. See “—Risks Relating to Underwritten Net Cash Flow” below.
 
 
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Risks Relating to Underwritten Net Cash Flow
 
As described under “Description of the Mortgage Pool—Additional Mortgage Loan Information” in this free writing prospectus, underwritten net cash flow generally includes cash flow (including any cash flow from master leases) adjusted based on a number of assumptions used by the mortgage loan sellers. No representation is made that the underwritten net cash flow set forth in this free writing prospectus as of the cut-off date or any other date represents future net cash flows. For example, with respect to certain mortgage loans included in the trust, the occupancy of the related mortgaged property reflects tenants that have signed leases but have not yet taken occupancy and/or are not paying full contractual rent or tenants that are seeking or may in the future seek to sublet all or a portion of their respective spaces, or tenants that are “dark” tenants but paying rent. Each investor should review these and other similar assumptions and make its own determination of the appropriate assumptions to be used in determining underwritten net cash flow. In many cases, co-tenancy provisions were assumed to be satisfied and vacant space was assumed to be occupied and space that was due to expire was assumed to have been re-let, in each case at market rates that may have exceeded current rent.
 
In the event of the inaccuracy of any assumptions or projections used in connection with the calculation of underwritten net cash flow, the actual net cash flow could be significantly adversely affected.
 
In addition, the debt service coverage ratios set forth in this free writing prospectus for the mortgage loans and the mortgaged properties vary, and may vary substantially, from the debt service coverage ratios for the mortgage loans and the mortgaged properties as calculated pursuant to the definition of such ratios as set forth in the related mortgage loan documents. See “Description of the Mortgage Pool—Mortgaged Property Considerations—Tenant Issues” in this free writing prospectus for additional information on certain of the mortgage loans in the trust.
 
Limited Information Causes Uncertainty
 
Some of the mortgage loans that we intend to include in the trust are mortgage loans that were made to enable the related borrower to acquire the related mortgaged property. Accordingly, for certain of these mortgage loans, limited or no historical operating information is available with respect to the related mortgaged properties. As a result, you may find it difficult to analyze the historical performance of those mortgaged properties.
 
No Reunderwriting of the Mortgage Loans
 
We have not reunderwritten the mortgage loans. Instead, we have relied on the representations and warranties made by the mortgage loan sellers, and the applicable mortgage loan seller’s obligation to repurchase, substitute for or cure a mortgage loan in the event that a representation or warranty was not true when made and such breach materially and adversely affects the value of the mortgage loan, the value of the related mortgaged property or the interests of the certificateholders. These representations and warranties do not cover all of the matters that we would review in underwriting a mortgage loan and you should not view them as a substitute for reunderwriting the mortgage loans. Furthermore, these representations and warranties in some respects represent an allocation of risk rather than a confirmed description of the mortgage loans, although neither of the mortgage loan sellers has made representations and warranties that it knows to be untrue (subject to the exceptions to the representations and warranties described in the purchase agreement and this free writing prospectus). If we had reunderwritten the mortgage loans, it is possible that the reunderwriting process may have revealed problems with a mortgage loan not covered by a representation or warranty. In addition, we can give no assurance that the applicable mortgage loan seller will be able to repurchase a mortgage loan if a representation or warranty has been breached. See “Description of the Mortgage Pool—Representations and Warranties; Repurchases and Substitutions” in this free writing prospectus.
 
 
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Risks Associated with Commercial Real Estate Lending
 
The borrower’s ability to make payments due on its related mortgage loan will be subject to the risks generally associated with real estate investments. These risks include adverse changes in general or local economic conditions, real estate values generally and in the locales of the related mortgaged properties, interest rates, real estate tax rates, other operating expenses (including costs of energy), inflation, the supply of and demand for properties of the type involved, zoning laws or other governmental rules and policies (including environmental restrictions), competitive conditions (including changes in land use and construction of new competitive properties) that may affect the ability of a borrower to obtain or maintain full occupancy of the related mortgaged properties, bankruptcy or other events adversely affecting the tenants or prospective tenants at such mortgaged properties, civil disorder, acts of war or of terrorists, acts of God, such as floods or earthquakes, and other factors beyond the control of the related borrower. Due to these and other factors, the performance of real estate has historically been cyclical. Such factors may make it difficult for the mortgaged properties to generate sufficient net operating income to make full and timely payments on the related mortgage loans. Also, if any major repair or improvement is required at a mortgaged property, we cannot assure you that the related borrower (or tenant, if required under its lease) will be able to obtain funds to make such repair or improvement. As with all real estate, if reconstruction (for example, following fire or other casualty) or any major repair or improvement is required at a mortgaged property, changes in governmental approvals may be applicable and may materially affect the cost to, or ability of, the related borrower to effect such reconstruction, major repair or improvement. Furthermore, certain of the reciprocal easement and operating agreements or anchor tenant leases may provide that the anchor tenant is permitted to terminate its lease or operating covenant in certain circumstances, including if a mortgaged property is substantially damaged or taken by condemnation. See “—Risks Associated with Retail Properties” below.
 
Office Properties Have Special Risks
 
Seventeen (17) of the mortgaged properties securing twelve (12) of the mortgage loans, representing approximately 35.6% of the aggregate principal balance of the pool of mortgage loans as of the cut-off date, are office properties.
 
A large number of factors may adversely affect the value of office properties, including:
 
 
the quality of an office building’s tenants;
 
 
an economic decline in the business operated by the tenants;
 
 
the physical attributes of the building in relation to competing buildings (e.g., age, condition, design, appearance, location, access to transportation and ability to offer certain amenities, such as sophisticated building systems and/or business wiring requirements);
 
 
the physical attributes of the building with respect to the technological needs of the tenants, including the adaptability of the building to changes in the technological needs of the tenants;
 
 
the diversity of an office building’s tenants (or reliance on a single or dominant tenant);
 
 
the desirability of the area as a business location;
 
 
the strength and nature of the local economy, including labor costs, tax environment and the quality of life for employees; and
 
 
an adverse change in population, patterns of telecommuting or sharing of office space, and employment growth (all of which affect the demand for office space).
 
Certain of the mortgage loans identified as being secured by office properties are medical office properties, which are subject to certain additional risks. The performance of a medical office property may depend on (i) the proximity of such property to a hospital or other health care establishment and
 
 
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(ii) reimbursements for patient fees from private or government-sponsored insurers. Issues related to reimbursement (ranging from non-payment to delays in payment) from such insurers could adversely impact cash flow at such mortgaged property.
 
Moreover, the cost of refitting office space for a new tenant is often higher than the cost of refitting other types of properties for new tenants. See “Risks Relating to Mortgage Loan Concentrations and Borrower-Sponsor Concentrations” below and “Description of the Mortgage Pool—Mortgage Pool Characteristics—Property Type Concentrations” in this free writing prospectus.
 
Risks Associated with Retail Properties
 
Sixteen (16) of the mortgaged properties, securing sixteen (16) mortgage loans representing approximately 26.2% of the aggregate principal balance of the pool of mortgage loans as of the cut-off date by allocated loan amount, are retail properties, and fourteen (14) of those mortgaged properties (identified as Loan Nos. 1, 16, 17, 22, 25, 26, 27, 28, 30, 31, 36, 37, 39 and 43 on Annex A-1 to this free writing prospectus), securing approximately 25.1% of the aggregate principal balance of the pool of mortgage loans as of the cut-off date by allocated loan amount, may have one or more “anchor tenants”, which may or may not be tenants at the mortgaged properties that represent collateral for the related mortgage loan. The value of retail properties is significantly affected by the quality of the tenants as well as fundamental aspects of real estate, such as location and market demographics. The correlation between success of tenant businesses and a retail property’s value may be more direct with respect to retail properties than other types of commercial property because a component of the total rent paid by certain retail tenants is often tied to a percentage of gross sales.
 
Whether a retail property is “anchored”, “shadow anchored” or “unanchored” is also an important consideration. The presence or absence of an “anchor tenant” or a “shadow anchor tenant” in or near a retail property also can be important because anchors play a key role in generating customer traffic and making a center desirable for other tenants. An “anchor tenant” located on a related property is usually proportionately larger in size than most other tenants in the property and is vital in attracting customers to a retail property. A “shadow anchor tenant” is usually proportionally larger in size than most tenants in the property, is important in attracting customers to a retail property and is located sufficiently close and convenient to the property so as to influence and attract potential customers, but is not located on the mortgaged property. The economic performance of an anchored or shadow anchored retail property will consequently be adversely affected by:
 
 
an anchor tenant’s or shadow anchor tenant’s failure to renew or extend its lease;
 
 
termination of an anchor tenant’s or shadow anchor tenant’s lease or, if the anchor tenant or shadow anchor tenant owns its own site, a decision to vacate;
 
 
the bankruptcy or economic decline of an anchor tenant, shadow anchor tenant or self-owned anchor; or
 
 
the cessation of the business of an anchor tenant, a shadow anchor tenant or of a self-owned anchor (notwithstanding its continued payment of rent).
 
In certain instances with respect to the mortgaged properties, anchor tenant leases expire during the term of the related mortgage loan or such tenants may have the option to terminate their respective leases early. See “Description of Top Ten Mortgage Loans and Additional Mortgage Loan Information” in Annex A-3 to this free writing prospectus for the lease rollover schedules for certain of the mortgage loans and see Annex A-1 to this free writing prospectus for the lease expiration dates for the five largest tenants (based on net rentable area leased) at each mortgaged property. We cannot assure you that if anchor tenants or shadow anchor tenants at a particular mortgaged property were to close or remain vacant, such anchor tenants or shadow anchor tenants, as applicable, would be replaced in a timely manner or, if part of the collateral for the related mortgage loan, without incurring material additional costs to the related borrower and resulting in adverse economic effects. See “Description of the Mortgage Pool—
 
 
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Mortgaged Property Considerations—Tenant Issues—Terminations” and “—Expirations” in this free writing prospectus.
 
In addition, various anchor parcels and/or anchor improvements at a mortgaged property may be owned by the anchor tenant (or an affiliate of the anchor tenant) or by a third party and therefore not be part of the related mortgaged property and the related borrower may not receive rental income from such anchor tenant.
 
Retail properties that have anchor tenant-owned stores often have reciprocal easement and operating agreements between the retail property owner and such anchor tenants containing certain operating and maintenance covenants. Although an anchor tenant that owns its own parcel does not pay rent, it generally is required to pay a contribution toward common area maintenance and real estate taxes on the improvements and related real property. Anchor tenants that lease their stores often have operating covenants as well. Such operating covenants may be provided for in the anchor tenant lease or in the reciprocal easement and operating agreement, if any, affecting the mortgaged property. Anchor tenants that have no operating covenants or whose covenants have expired previously or will expire during the term of the related mortgage loan are or will not be contractually obligated to operate their stores at the applicable mortgaged property. A number of the tenant leases and reciprocal easement and operating agreements at the mortgaged properties have co-tenancy clauses which permit such stores to abate the rent payable, refrain from opening for business, cease operating and/or terminate their leases if certain anchor or other major tenants, and/or if a specified percentage of the stores at the related mortgaged property, are not occupied and operating and also have certain other termination rights related to sales targets. Certain of the operating covenants with respect to the mortgaged properties have expired or will expire prior to the maturity date of the related mortgage loan. We cannot assure you that operating covenants will be obtained in the future for these or any of the anchor tenants.
 
Certain tenant (including anchor tenant) estoppels obtained in connection with the origination of the mortgage loans identify disputes between the related borrower and the applicable anchor tenant or tenant, or alleged defaults or potential defaults by the applicable property owner under the lease or reciprocal easement and operating agreement. Such disputes, defaults or potential defaults could result in a tenant off-setting rent or could lead to a termination or attempted termination of the applicable lease or reciprocal easement and operating agreement by the tenant or to litigation against the related borrower. There can be no assurance that the identified tenant disputes will not have a material adverse effect on the ability of the related borrowers to repay the mortgage loan. In addition, there can be no assurance that the tenant estoppels obtained identify all potential disputes that may arise with tenants.
 
Rental payments from tenants of retail properties typically comprise the largest portion of the net operating income of those mortgaged properties. Certain tenants at the mortgaged properties may be paying rent but are not yet in occupancy or have signed leases but have not yet started paying rent and/or are not yet in occupancy. See “—Certain Additional Risks Relating to Tenants” in this free writing prospectus. Risks applicable to anchor tenants (such as bankruptcy, failure to renew leases, early terminations of leases and vacancies) also apply to other tenants. We cannot assure you that the rate of occupancy at the stores will remain at the current levels or that the net operating income contributed by the mortgaged properties will remain at its current or past levels. See “—Risks of Lease Early Termination Options” in this free writing prospectus.
 
Borrowers and property managers of mortgaged properties may currently own, and in the future property managers of mortgaged properties and affiliates of borrowers may develop or acquire, additional properties and lease space in other properties in the same market areas where the mortgaged properties are located. Property managers at the related mortgaged properties also may manage competing properties. None of the property managers or any other party has any duty to favor the leasing of space in the mortgaged properties over the leasing of space in other properties, one or more of which may be adjacent to, or near the mortgaged properties.
 
Retail properties also face competition from sources outside a given real estate market. Factory outlet centers, discount shopping centers and clubs, video shopping networks, catalogue retailers, home shopping networks, direct mail, Internet selling and telemarketing all compete with more traditional retail
 
 
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properties for consumer dollars. Continued growth of these and other alternative retail outlets could adversely affect the rents collectible at the mortgaged properties secured by retail properties. Increased competition could adversely affect income from and market value of those mortgaged properties.
 
In addition, certain of the retail properties have tenants that are subject to risks unique to their business, such as theaters and restaurants. See “Description of the Mortgage Pool—Mortgage Pool Characteristics—Property Type Concentrations” in this free writing prospectus. In such cases, aspects of building site design and adaptability affect the value of such properties and other retailers at the mortgaged property. See “—Some Mortgaged Properties May Not Be Readily Convertible to Alternative Uses” below. In addition, decreasing patronage at such properties could adversely affect revenue of the property, which may, in turn, cause the tenant to experience financial difficulties, resulting in downgrades in their credit, lease defaults, ratings and, in certain cases, bankruptcy filings. See “—Tenant Bankruptcy Entails Risks” below. Additionally, receipts at such properties are also affected not only by objective factors but by subjective factors. For instance, restaurant receipts are affected by such varied influences as the current personal income levels in the community, an individual consumer’s preference for type of food, style of dining and restaurant atmosphere, the perceived popularity of the restaurant, food safety concerns related to personal health with the handling of food items at the restaurant or by food suppliers and the actions and/or behaviors of staff and management and level of service to the customers. In addition, because of unique construction requirements of such properties, any vacant space would not easily be converted to other uses.
 
Mixed Use Facilities Have Special Risks
 
Eighteen (18) mortgaged properties securing five (5) mortgage loans, representing approximately 16.3% of the aggregate principal balance of the pool of mortgage loans as of the cut-off date, are mixed use properties.
 
Mixed use mortgaged properties consist of office, retail and other components, and as such, the mortgage loans secured by mixed use mortgaged properties will share risks associated with such underlying components. In addition, a mixed use property may be managed by a manager that is not experienced in managing all of the property types comprising the mortgaged property.
 
Industrial Properties Have Special Risks
 
Eight (8) mortgaged properties securing two (2) mortgage loans, representing approximately 9.0% of the aggregate principal balance of the pool of mortgage loans as of the cut-off date, are industrial properties. Significant factors determining the value of industrial properties are:
 
 
the quality of tenants;
 
 
reduced demand for industrial space because of a decline in a particular industry segment;
 
 
the property becoming functionally obsolete;
 
 
building design and adaptability;
 
 
unavailability of labor sources;
 
 
changes in access, energy prices, strikes, relocation of highways, the construction of additional highways or other factors;
 
 
changes in proximity of supply sources;
 
 
the expenses of converting a previously adapted space to general use; and
 
 
the location of the property.
 
 
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Concerns about the quality of tenants, particularly major tenants, are similar in both office properties and industrial properties, although industrial properties may be more frequently dependent on a single or a few tenants.
 
Industrial properties may be adversely affected by reduced demand for industrial space occasioned by a decline in a particular industry segment (for example, a decline in defense spending), and a particular industrial or warehouse property that suited the needs of its original tenant may be difficult to relet to another tenant or may become functionally obsolete relative to newer properties. In addition, lease terms with respect to industrial properties are generally for shorter periods of time and may result in a substantial percentage of leases expiring in the same year at any particular industrial property. In addition, mortgaged properties used for many industrial purposes are more prone to environmental concerns than other property types.
 
Aspects of building site design and adaptability affect the value of an industrial property. Site characteristics that are generally desirable for a warehouse/industrial property include high clear ceiling heights, wide column spacing, a large number of bays (loading docks) and large bay depths, divisibility, a layout that can accommodate large truck minimum turning radii and overall functionality and accessibility.
 
In addition, because of unique construction requirements of many industrial properties, any vacant industrial property space may not be easily converted to other uses. Thus, if the operation of any of the industrial properties becomes unprofitable due to competition, age of the improvements or other factors such that the borrower becomes unable to meet its obligations on the related mortgage loan, the liquidation value of that industrial property may be substantially less, relative to the amount owing on the related mortgage loan, than would be the case if the industrial property were readily adaptable to other uses.
 
Location is also important because an industrial property requires the availability of labor sources, proximity to supply sources and customers and accessibility to rail lines, major roadways and other distribution channels.
 
Hotel Properties Have Special Risks
 
Four (4) of the mortgaged properties securing three (3) of the mortgage loans, representing approximately 7.3% of the aggregate principal balance of the pool of mortgage loans as of the cut-off date, are hotel properties. See “Risk Factors—Commercial and Multifamily Mortgage Loans Have Risks That May Affect Payments on Your Certificates” in the prospectus.
 
Because rooms are generally rented for short periods of time, the financial performance of hospitality properties tends to be affected by adverse economic conditions and competition more quickly than other commercial properties. Additionally, as a result of high operating costs, relatively small decreases in revenue can cause significant stress on a property’s cash flow. Furthermore, the previous terrorist attacks in the United States and the potential for future terrorist attacks may have adversely affected the occupancy rates and, accordingly, the financial performance of hospitality properties.
 
Moreover, the hospitality and lodging industry is generally seasonal in nature and different seasons affect different hospitality properties differently depending on type and location. This seasonality can be expected to cause periodic fluctuations in a hospitality property’s room and restaurant revenues, occupancy levels, room rates and operating expenses. We cannot assure you that cash flow will be sufficient to offset any shortfalls that occur at the mortgaged property during slower periods or that the related mortgage loans provide for seasonality reserves, or if seasonality reserves are provided for, that such reserves will be funded or will be sufficient or available to fund such shortfalls.
 
In addition, hospitality properties that are limited-service hotels may subject a lender to more risk than full-service hotels as they generally require less capital for construction than full-service hotels. In addition, as limited-service hotels generally offer fewer amenities than full-service hotels, they are less distinguishable from each other. As a result, it is easier for limited-service hotels to experience increased or unforeseen competition.
 
 
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In addition to hotel operations, some hospitality properties also operate entertainment complexes, that include restaurants, lounges and/or nightclubs and derive a significant portion of the related property’s revenue therefrom. Consumer demand for entertainment resorts is particularly sensitive to downturns in the economy and the corresponding impact on discretionary spending on leisure activities. Changes in discretionary consumer spending or consumer preferences could be driven by factors such as perceived or actual general economic conditions, the current housing crisis and the credit crisis, high energy, fuel and food costs, the increased cost of travel, the potential for bank failures,  the weakened job market, perceived or actual disposable consumer income and wealth, fears of recession and changes in consumer confidence in the economy, or fears of war and future acts of terrorism. These factors could reduce consumer demand for the leisure activities that the property offers, thus imposing practical limits on pricing and harming operations. Restaurants and nightclubs are particularly vulnerable to changes in consumer preferences. In addition, a nightclub’s, restaurant’s or bar’s revenue is extremely dependent on its popularity and perception. These characteristics are subject to change rapidly and there can be no assurance that any of the property’s nightclubs, restaurants or bars will maintain their current level of popularity or perception in the market. Any such change could have a material adverse effect on the net cash flow of the property.
 
Some of the hotels have liquor licenses associated with the mortgaged property. The liquor licenses for these mortgaged properties are generally held by affiliates of the related borrowers, unaffiliated managers or operating lessees. The laws and regulations relating to liquor licenses generally prohibit the transfer of such licenses to any person, or condition such transfer on the prior approval of the governmental authority that issued the license. In the event of a foreclosure of a hotel property that holds a liquor license, the special servicer on behalf of the trust or a purchaser in a foreclosure sale would likely have to apply for a new license, which might not be granted or might be granted only after a delay that could be significant. There can be no assurance that a new license could be obtained promptly or at all. The lack of a liquor license in a full-service hotel could have an adverse impact on the revenue from the related mortgaged property or on the hotel’s occupancy rate.
 
Additionally, certain of these mortgaged properties may have been designated as historic or landmark buildings or may be located in areas designated as historic or landmark. Such properties may have restrictions related to renovations, construction or other restrictions. See “Description of the Mortgage Pool—Mortgage Pool Characteristics—Property Type Concentrations” in this free writing prospectus.
 
Risks Relating to Affiliation with a Franchise or Hotel Management Company
 
Four (4) of the mortgaged properties securing three (3) mortgage loans (identified as Loan Nos. 7, 14 and 40 on Annex A-1 to this free writing prospectus), representing approximately 7.3% of the aggregate principal balance of the pool of mortgage loans as of the cut-off date, are affiliated with a franchise or hotel management company through a franchise or management agreement. See “Risk Factors—Commercial and Multifamily Mortgage Loans Have Risks That May Affect Payments on Your Certificates” in the prospectus.
 
The continuation of a franchise agreement or management agreement is subject to specified operating standards, property improvement plans, and other terms and conditions set forth in such agreements. The failure of a borrower to maintain such standards or adhere to other applicable terms and conditions could result in the loss or cancellation of their rights under the franchise agreement or management agreement. In addition, some of the franchise agreements applicable to the hotel mortgaged properties expire during the term of the related mortgage loan. There can be no assurance that a replacement franchise could be obtained in the event of a termination. In addition, replacement franchises may require significantly higher fees as well as the investment of capital to bring the hotel into compliance with the requirements of the replacement franchisor. Any provision in a franchise agreement or management agreement providing for termination because of a bankruptcy of a franchisor or manager generally will not be enforceable.
 
The franchise license agreements and the property management agreements generally restrict transfers of the subject agreement, transfers of the ownership interests of the related borrower and/or
 
 
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transfers of the subject hospitality mortgaged property, and generally (a) contain certain approval rights regarding the transferee and/or (b) prohibit certain transfers for various reasons, including, without limitation, that (i) the transferee does not have sufficient financial resources to fulfill the owner’s obligations under the franchise agreement or management agreement, as applicable, (ii) the transferee is among a group of specifically designated prohibited transferees and/or (iii) the transferee is a competitor (within the meaning of the franchise agreement or management agreement). Such restrictions may impact a foreclosure sale or a sale of an REO property. In the event of a foreclosure, the lender may not have the right to use the franchise license without the franchisor’s consent or the manager might be able to terminate the management agreement. Conversely, in the case of certain mortgage loans, the lender may be unable to remove a franchisor or a hotel management company that it desires to replace following a foreclosure and, further, may be limited as regards the pool of potential transferees for a foreclosure or real estate owned property.
 
Self-Storage Properties Have Special Risks
 
Eleven (11) of the mortgaged properties securing two (2) mortgage loans, representing approximately 3.2% of the aggregate principal balance of the pool of mortgage loans as of the cut-off date, are self-storage properties.
 
The self-storage facilities market contains low barriers to entry. In addition, due to the short-term nature of self-storage leases, self-storage properties also may be subject to more volatility in terms of supply and demand than loans secured by other types of properties.
 
Because of the construction utilized in connection with certain self-storage facilities, it might be difficult or costly to convert such a facility to an alternative use. Thus the liquidation value of self-storage properties may be substantially less than would be the case if the same were readily adaptable to other uses.
 
In addition, it is difficult to assess the environmental risks posed by such facilities due to tenant privacy, anonymity and unsupervised access to such facilities. Therefore, such facilities may pose additional environmental risks to investors. The environmental site assessments discussed in this free writing prospectus did not include an inspection of the contents of the self-storage units included in the self-storage properties. We therefore cannot provide assurance that all of the units included in the self-storage properties are free from hazardous materials, or that they will remain so in the future.
 
Multifamily Properties Have Special Risks
 
One (1) of the mortgage loans, representing approximately 1.7% of the aggregate principal balance of the pool of mortgage loans as of the cut-off date, is secured by one (1) multifamily property.
 
A large number of factors may adversely affect the value and successful operation of a multifamily property, including:
 
 
the physical attributes of the apartment or student housing building (e.g., its age, appearance and construction quality);
 
 
the quality of property management;
 
 
the location of the property (e.g., a change in the neighborhood over time or increased crime in the neighborhood);
 
 
the ability of management to provide adequate security, maintenance and insurance;
 
 
the types of services the property provides;
 
 
the property’s reputation;
 
 
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the level of mortgage interest rates (which may encourage tenants to purchase rather than rent housing);
 
 
the generally short terms of residential leases and the need for continued reletting;
 
 
rent concessions and month-to-month leases, which may impact cash flow at the property;
 
 
in the case of student housing facilities, which may be more susceptible to damage or wear and tear than other types of multifamily housing, the reliance on the financial well-being of the college or university to which it relates, competition from on-campus housing units, which may adversely affect occupancy, the physical layout of the housing, which may not be readily convertible to traditional multifamily use, and that student tenants have a higher turnover rate than other types of multifamily tenants, which in certain cases is compounded by the fact that student leases are available for periods of less than 12 months;
 
 
restrictions on the age of tenants who may reside at the property;
 
 
state and local regulations, including rent control and rent stabilization;
 
 
the presence of competing properties and residential developments in the local market;
 
 
the existence of corporate tenants renting large blocks of units at the property, which in the event such tenant vacates would leave the property with a significant percentage of unoccupied space, and in the event such tenant was renting at an above-market rent may make finding replacement tenants difficult;
 
 
the tenant mix, particularly if the tenants are predominantly students, personnel from or workers related to a military base or workers from a particular business or industry;
 
 
adverse local, regional or national economic conditions, which may limit the amount of rent that can be charged and may result in a reduction in timely rent payments or a reduction in occupancy;
 
 
state and local regulations;
 
 
government assistance/rent subsidy programs; and
 
 
national, state or local politics.
 
Manufactured Housing Community Properties Have Special Risks
 
One (1) mortgage loan, representing approximately 0.5% of the aggregate principal balance of the pool of mortgage loans as of the cut-off date, is secured by one (1) manufactured housing community property.
 
Commercial mortgage loans secured by liens on manufactured housing community properties pose risks not associated with commercial mortgage loans secured by liens on other types of income-producing real estate. The successful operation of a manufactured housing community property may depend upon the number of other competing residential developments in the local market, such as:
 
 
other manufactured housing community properties;
 
 
apartment buildings; and
 
 
site-built single family homes.
 
Other factors may also include:
 
 
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the physical attributes of the community, including its age and appearance;
 
 
location of the manufactured housing community property, including the seasonal effect upon occupancy, particularly with respect to seasonal sites occupied by recreational vehicles and travel-trailers, which often have short term rental contracts;
 
 
the percentage of owner-occupied homes versus rental homes;
 
 
restrictions on the age of tenants who may reside at the property;
 
 
the ability of management to provide adequate maintenance and insurance;
 
 
the types of services or amenities provided;
 
 
the property’s reputation; and
 
 
state and local regulations, including rent control and rent stabilization.
 
The manufactured housing community property included in the pool of mortgage loans is a “single-purpose” property that could not be readily converted to general residential, retail or office use. Thus, if the operation of the manufactured housing community property becomes unprofitable due to competition, age of the improvements or other factors such that the borrower becomes unable to meet its obligations on the mortgage loan, the liquidation value of that manufactured housing community property may be substantially less, relative to the amount owing on the mortgage loan, than would be the case if the manufactured housing community property were readily adaptable to other uses.
 
Risks of Lease Early Termination Options
 
Retail leases often give tenants the right to terminate the related lease or abate or reduce the related rent (i) if the borrower for the applicable mortgaged property allows uses at the mortgaged property in violation of use restrictions in current tenant leases, (ii) if the borrower or any of its affiliates owns other properties within a certain radius of the mortgaged property and allows uses at those properties in violation of use restrictions, (iii) if the related borrower fails to provide a designated number of parking spaces or otherwise fails to comply with particular parking agreements, (iv) if there is construction at the related mortgaged property or an adjacent property (whether or not such adjacent property is owned or controlled by the borrower or any of its affiliates) that may interfere with visibility or a tenant’s use of the mortgaged property, (v) upon casualty or condemnation with respect to all or a portion of the mortgaged property that renders such mortgaged property unsuitable for a tenant’s use or if the borrower fails to rebuild such mortgaged property within a certain time, (vi) if a tenant’s use is not permitted by zoning or applicable law, (vii) if a tenant is not permitted to exercise expansion rights at the mortgaged property, (viii) if the landlord fails to undertake various property renovations or improvement, or (ix) if the landlord defaults on its obligations under the lease. In each identified instance the borrower may have interests adverse to the mortgagee, and we cannot assure you that the borrower will not violate those restrictions if it feels that such violation may otherwise benefit it or its affiliates to do so, even where such action is to the detriment of the mortgaged property.
 
In addition, it is common for other tenants at anchored or shadow-anchored retail centers to have the right to terminate their lease or abate or reduce rent if an anchor or shadow anchor tenant goes dark. Even if other tenants do not have termination or rent abatement rights, because an anchor or shadow anchor tenant plays a key role in generating customer traffic and making a center desirable for other tenants, we cannot assure you that any loss of an anchor tenant will not have a material adverse impact on the non-anchor tenants’ ability to operate, which may in turn adversely impact the borrower’s ability to meet its obligations under the related mortgage loan documents. If an anchor tenant goes dark, generally the borrower’s only remedy is to terminate that lease after the anchor tenant has been dark for a specified amount of time.
 
 
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Certain of the tenant leases for the mortgaged properties permit the related tenant to terminate its lease and/or abate or reduce rent if the tenant fails to meet certain sales targets or other business objectives for a specified period of time. We cannot assure you that all or any of these tenants will meet the sales targets or business objectives required to avoid the exercise of any termination and/or abatement rights.
 
In addition, certain of the tenant leases for the mortgaged properties permit the affected tenants to terminate their leases and/or abate or reduce rent if a certain number of anchor tenants, shadow anchors and/or a percentage of the tenants cease to operate at the applicable mortgaged property. Further, certain of the tenant leases for the other mortgaged properties may permit affected tenants to terminate their leases or reduce their rent if a tenant at an adjacent or nearby property terminates its lease or goes dark.
 
In addition to termination options tied to certain triggers described above that are common with respect to retail properties, certain tenant leases of other property types permit the related tenant t