The information in this free writing prospectus may be amended and/or supplemented prior to the time of sale. The information in this free writing prospectus supersedes any contrary information contained in any prior free writing prospectus relating to the subject securities and will be superseded by any contrary information contained in any subsequent free writing prospectus prior to the time of sale. In addition, certain information regarding the subject securities is not yet available and, accordingly, has been omitted from this free writing prospectus.

The depositor has filed a registration statement (including a prospectus) with the SEC (SEC File No. 333-130789) for the offering to which this free writing prospectus relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing trust and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the depositor, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling toll free 1-866-803-9204.

This free writing prospectus does not contain all information that is required to be included in the base prospectus and the prospectus supplement.

Any legends, disclaimers or other notices that may appear at the bottom of, or attached to, the email communication to which this material may have been attached are not applicable to these materials and should be disregarded. Such legends, disclaimers or other notices have been automatically generated as a result of these materials having been sent via Bloomberg or another email system.

$1,824,348,000 (Approximate)
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES TRUST 2006-PWR12

SERIES 2006-PWR12 COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
Bear Stearns Commercial Mortgage Securities Inc.

Prudential Mortgage Capital Funding, LLC
Bear Stearns Commercial Mortgage, Inc.
Wells Fargo Bank, National Association
Principal Commercial Funding II, LLC
Principal Commercial Funding, LLC
Nationwide Life Insurance Company
as Sponsors and Mortgage Loan Sellers

We, Bear Stearns Commercial Mortgage Securities Inc., are establishing a trust fund. The offered certificates are mortgage-backed securities issued by the trust fund. Only the classes of mortgage pass-through certificates listed in the table below are being offered by this prospectus supplement and the accompanying prospectus. The trust fund will consist primarily of a pool of 213 commercial and multifamily first lien mortgage loans, with an initial mortgage pool balance of approximately $2,079,030,155. The Series 2006-PWR12 certificates are obligations of the issuing entity only and are not obligations of the depositor, the sponsors, the mortgage loan sellers or any of their respective affiliates, and neither the Series 2006-PWR12 certificates nor the underlying mortgage loans are insured or guaranteed by any governmental agency or any other person or entity. The trust fund will issue 25 classes of commercial mortgage pass-through certificates, 8 of which are being offered by this prospectus supplement. The offered certificates will accrue interest from June 1, 2006. Each class of certificates will be entitled to receive monthly distributions of interest or principal and interest on the 11th day of each month, commencing on July 11, 2006. No one will list the offered certificates on any national securities exchange or any automated quotation system of any registered securities association.

Investing in the offered certificates involves risks. You should review carefully the factors set forth under ‘‘Risk Factors’’ commencing on page S-36 of this prospectus supplement and page 2 in the accompanying prospectus.


Class	Approximate Initial Certificate Balance (1)		Approximate Initial Pass-Through Rate	Pass-Through Rate Description			Ratings (Moody’s / S&P)
Class A-1	$	68,100,000	%		(2	)	Aaa / AAA
Class A-2	$	49,000,000	%		(2	)	Aaa / AAA
Class A-3	$	150,500,000	%		(2	)	Aaa / AAA
Class A-AB	$	119,800,000	%		(2	)	Aaa / AAA
Class A-4	$	873,250,000	%		(2	)	Aaa / AAA
Class A-1A	$	194,671,000	%		(2	)	Aaa / AAA
Class A-M	$	207,903,000	%		(2	)	Aaa / AAA
Class A-J	$	161,124,000	%		(2	)	Aaa / AAA

This prospectus supplement may be used to offer and sell the offered certificates only if it is accompanied by our prospectus dated March 31, 2006.

The Securities and Exchange Commission and state securities regulators have not approved or disapproved the certificates offered to you or determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Bear, Stearns & Co. Inc. and Morgan Stanley & Co. Incorporated are the underwriters of this offering. Bear, Stearns & Co. Inc. and Morgan Stanley & Co. Incorporated will act as co-lead and co-bookrunning managers.

TABLE OF CONTENTS PAGE ----- PROSPECTUS SUPPLEMENT Summary................................................................. S-7 Risk Factors............................................................ S-36 Capitalized Terms Used in this Prospectus Supplement.................... S-64 Forward-Looking Statements.............................................. S-64 Transaction Parties..................................................... S-64 Description of the Offered Certificates................................. S-87 Yield and Maturity Considerations....................................... S-118 Description of the Mortgage Pool........................................ S-126 Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement.............................................. S-155 Certain Legal Aspects of Mortgage Loans................................. S-176 Material Federal Income Tax Consequences................................ S-176 ERISA Considerations.................................................... S-179 Legal Investment........................................................ S-182 Legal Matters........................................................... S-182 Ratings................................................................. S-183 Glossary................................................................ S-185 Schedule I: Amortization Schedule.................................... I-1 Schedule II: Class A-AB Planned Principal Balances.................... II-1 Appendix A: Mortgage Pool Information (Tables)....................... A-1 Appendix B: Certain Characteristics of the Mortgage Loans and Mortgaged Properties ................................. B-1 Appendix C: Certain Characteristics of the Multifamily and Manufactured Housing Community Loans.................. C-1 Appendix D: Summaries of the Ten Largest Mortgage Loans.............. D-1 Appendix E: Global Clearance, Settlement and Tax Documentation Procedures............................................ E-1 ---------- S-3 IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS Information about the offered certificates is provided in two separate documents that progressively provide more detail: o the accompanying prospectus, which provides general information, some of which may not apply to a particular class of offered certificates, including your class; and o this prospectus supplement, which describes the specific terms of your class of offered certificates. You should rely only on the information contained in this prospectus supplement and the accompanying prospectus. The depositor has not authorized anyone to provide you with information that is different from that contained in this prospectus supplement and the prospectus. ---------- This prospectus supplement and the accompanying prospectus include cross references to sections in these materials where you can find further related discussions. The tables of contents in this prospectus supplement and the prospectus identify the pages where these sections are located. Cross-references are included in this prospectus supplement and in the accompanying prospectus which direct you to more detailed descriptions of a particular topic. You can also find references to key topics in the table of contents in this prospectus supplement on page S-3 and the table of contents in the accompanying prospectus on page ii. You can find the definitions of capitalized terms that are used in this prospectus supplement under the caption "Glossary" beginning on page S-185 in this prospectus supplement and the definitions of capitalized terms that are used in the accompanying prospectus under the caption "Glossary" beginning on page 108 in the accompanying prospectus. In this prospectus supplement, the terms "depositor", "we" and "us" refer to Bear Stearns Commercial Mortgage Securities Inc. ---------- EUROPEAN ECONOMIC AREA IN RELATION TO EACH MEMBER STATE OF THE EUROPEAN ECONOMIC AREA WHICH HAS IMPLEMENTED THE PROSPECTUS DIRECTIVE (EACH, A "RELEVANT MEMBER STATE"), EACH UNDERWRITER HAS REPRESENTED AND AGREED THAT WITH EFFECT FROM AND INCLUDING THE DATE ON WHICH THE PROSPECTUS DIRECTIVE IS IMPLEMENTED IN THAT RELEVANT MEMBER STATE (THE "RELEVANT IMPLEMENTATION DATE") IT HAS NOT MADE AND WILL NOT MAKE AN OFFER OF CERTIFICATES TO THE PUBLIC IN THAT RELEVANT MEMBER STATE PRIOR TO THE PUBLICATION OF A PROSPECTUS IN RELATION TO THE CERTIFICATES WHICH HAS BEEN APPROVED BY THE COMPETENT AUTHORITY IN THAT RELEVANT MEMBER STATE OR, WHERE APPROPRIATE, APPROVED IN ANOTHER RELEVANT MEMBER STATE AND NOTIFIED TO THE COMPETENT AUTHORITY IN THAT RELEVANT MEMBER STATE, ALL IN ACCORDANCE WITH THE PROSPECTUS DIRECTIVE, EXCEPT THAT IT MAY, WITH EFFECT FROM AND INCLUDING THE RELEVANT IMPLEMENTATION DATE, MAKE AN OFFER OF CERTIFICATES TO THE PUBLIC IN THAT RELEVANT MEMBER STATE AT ANY TIME: S-4 (A) TO LEGAL ENTITIES WHICH ARE AUTHORISED OR REGULATED TO OPERATE IN THE FINANCIAL MARKETS OR, IF NOT SO AUTHORISED OR REGULATED, WHOSE CORPORATE PURPOSE IS SOLELY TO INVEST IN SECURITIES; (B) TO ANY LEGAL ENTITY WHICH HAS TWO OR MORE OF (1) AN AVERAGE OF AT LEAST 250 EMPLOYEES DURING THE LAST FINANCIAL YEAR; (2) A TOTAL BALANCE SHEET OF MORE THAN (EURO)43,000,000 AND (3) AN ANNUAL NET TURNOVER OF MORE THAN (EURO)50,000,000, AS SHOWN IN ITS LAST ANNUAL OR CONSOLIDATED ACCOUNTS; OR (C) IN ANY OTHER CIRCUMSTANCES WHICH DO NOT REQUIRE THE PUBLICATION BY THE ISSUER OF A PROSPECTUS PURSUANT TO ARTICLE 3 OF THE PROSPECTUS DIRECTIVE. FOR THE PURPOSES OF THIS PROVISION, THE EXPRESSION AN "OFFER OF CERTIFICATES TO THE PUBLIC" IN RELATION TO ANY 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 CERTIFICATES TO BE OFFERED SO AS TO ENABLE AN INVESTOR TO DECIDE TO PURCHASE OR SUBSCRIBE THE CERTIFICATES, AS THE SAME MAY BE VARIED IN THAT MEMBER STATE BY ANY MEASURE IMPLEMENTING THE PROSPECTUS DIRECTIVE IN THAT MEMBER STATE AND THE EXPRESSION "PROSPECTUS DIRECTIVE" MEANS DIRECTIVE 2003/71/EC AND INCLUDES ANY RELEVANT IMPLEMENTING MEASURE IN EACH RELEVANT MEMBER STATE. UNITED KINGDOM EACH UNDERWRITER HAS REPRESENTED AND AGREED THAT: (A) IT HAS ONLY COMMUNICATED OR CAUSED TO BE COMMUNICATED AND WILL ONLY COMMUNICATE OR CAUSE TO BE COMMUNICATED AN INVITATION OR INDUCEMENT TO ENGAGE IN INVESTMENT ACTIVITY (WITHIN THE MEANING OF SECTION 21 OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (THE "FSMA")) RECEIVED BY IT IN CONNECTION WITH THE ISSUE OR SALE OF THE CERTIFICATES IN CIRCUMSTANCES IN WHICH SECTION 21(1) OF THE FSMA DOES NOT APPLY TO THE ISSUER; AND (B) IT HAS COMPLIED AND WILL COMPLY WITH ALL APPLICABLE PROVISIONS OF THE FSMA WITH RESPECT TO ANYTHING DONE BY IT IN RELATION TO THE CERTIFICATES IN, FROM OR OTHERWISE INVOLVING THE UNITED KINGDOM. NOTICE TO UNITED KINGDOM INVESTORS THE DISTRIBUTION OF THIS FREE WRITING PROSPECTUS IF MADE BY A PERSON WHO IS NOT AN AUTHORISED PERSON UNDER THE FSMA, IS BEING MADE ONLY TO, OR DIRECTED ONLY AT, PERSONS WHO (1) ARE OUTSIDE THE UNITED KINGDOM, OR (2) HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS, OR (3) ARE PERSONS FALLING WITHIN ARTICLES 49(2)(A) THROUGH (D) ("HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC.") OR 19 (INVESTMENT PROFESSIONALS) OF THE FINANCIAL SERVICES AND MARKET ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS THE "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. S-5 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-6 SUMMARY The following summary is a short description of the main terms of the offered certificates and the pooled mortgage loans. This summary does not contain all of the information that may be important to you. To fully understand the terms of the offered certificates and the pooled mortgage loans, you will need to read both this prospectus supplement and the accompanying prospectus. OVERVIEW OF THE SERIES 2006-PWR12 CERTIFICATES The offered certificates will be part of a series of commercial mortgage pass-through certificates designated as the series 2006-PWR12 Commercial Mortgage Pass-Through Certificates. The series 2006-PWR12 certificates will consist of 25 classes. The immediately following table identifies and specifies various characteristics for those classes of series 2006-PWR12 certificates that bear interest. SERIES 2006-PWR12 COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES APPROX. % APPROX. % INITIAL APPROX. OF INITIAL APPROX. INITIAL WEIGHTED TOTAL INITIAL TOTAL MORTGAGE PASS- AVERAGE PRINCIPAL / RATINGS CREDIT PRINCIPAL BALANCE POOL PASS-THROUGH THROUGH LIFE NOTIONAL CLASS MOODY'S/S&P SUPPORT OR NOTIONAL AMOUNT BALANCE RATE DESCRIPTION RATE (YEARS) WINDOW ----- ------------ --------- ------------------ ---------- ----------------- --------------- -------- ------------ Offered Certificates A-1 Aaa/AAA 30.000% $ 68,100,000 3.276% % 2.99 7/06 - 3/11 A-2 Aaa/AAA 30.000% $ 49,000,000 2.357% % 4.83 3/11 - 6/11 A-3 Aaa/AAA 30.000% $ 150,500,000 7.239% % 6.60 5/12 - 4/13 A-AB Aaa/AAA 30.000% $ 119,800,000 5.762% % 7.32 6/11 -12/15 A-4 Aaa/AAA 30.000% $ 873,250,000 42.003% % 9.75 12/15 - 4/16 A-1A Aaa/AAA 30.000% $ 194,671,000 9.364% % 8.84 7/06 - 5/16 A-M Aaa/AAA 20.000% $ 207,903,000 10.000% % 9.89 5/16 - 5/16 A-J Aaa/AAA 12.250% $ 161,124,000 7.750% % 9.94 5/16 - 6/16 Certificates Not Offered X Aaa/AAA N/A $2,079,030,155 N/A Variable IO % 9.02 7/06 - 9/16 B Aa2/AA 10.125% $ 44,180,000 2.125% % 9.97 6/16 - 6/16 C Aa3/AA- 9.250% $ 18,191,000 0.875% % 9.97 6/16 - 6/16 D A2/A 7.625% $ 33,785,000 1.625% % 9.97 6/16 - 6/16 E A3/A- 6.625% $ 20,790,000 1.000% % 9.97 6/16 - 6/16 F Baa1/BBB+ 5.375% $ 25,988,000 1.250% % 9.97 6/16 - 6/16 G Baa2/BBB 4.375% $ 20,790,000 1.000% % 9.97 6/16 - 6/16 H Baa3/BBB- 3.125% $ 25,988,000 1.250% % 9.97 6/16 - 6/16 J Ba1/BB+ 2.750% $ 7,796,000 0.375% % 9.97 6/16 - 6/16 K Ba2/BB 2.375% $ 7,797,000 0.375% % 9.97 6/16 - 6/16 L Ba3/BB- 2.000% $ 7,796,000 0.375% % 9.97 6/16 - 6/16 M B1/B+ 1.750% $ 5,198,000 0.250% % 9.97 6/16 - 6/16 N B2/B 1.500% $ 5,197,000 0.250% % 9.97 6/16 - 6/16 O B3/B- 1.250% $ 5,198,000 0.250% % 9.97 6/16 - 6/16 P NR/NR 0.000% $ 25,988,155 1.250% % 10.04 6/16 - 9/16 In reviewing the foregoing table, prospective investors should note that-- o The Class X certificates will have an initial notional amount that is equal to the aggregate principal balance of the other classes of certificates set forth in the table. o The actual total principal balance or notional amount, as applicable, of any class of series 2006-PWR12 certificates at initial issuance may be larger or smaller than the amount shown above, depending on the S-7 actual size of the initial mortgage pool balance or for other reasons. The actual size of the initial mortgage pool balance may be as much as 5% larger or smaller than the amount presented in this prospectus supplement. o The ratings shown in the table are those of Moody's Investors Service, Inc. and Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., respectively. The rated final distribution date for the certificates is the distribution date in September 2038. o The percentages indicated under the column "Approx. % Initial Total Credit Support" with respect to each of the class A-1, A-2, A-3, A-AB, A-4 and A-1A certificates, represent the initial approximate credit support for those classes in the aggregate as if they were a single class of certificates. o For purposes of making distributions to the class A-1, A-2, A-3, A-AB, A-4 and A-1A certificates, the pool of mortgage loans will be deemed to consist of two distinct loan groups, loan group 1 and loan group 2. Loan group 1 will consist of 185 pooled mortgage loans, representing 90.6% of the initial mortgage pool balance. Loan group 2 will consist of 28 pooled mortgage loans, representing 9.4% of the initial mortgage pool balance. Loan group 2 will consist of 92.9% of the initial mortgage pool balance of all the pooled mortgage loans secured by multifamily and manufactured housing community properties. o The pass-through rates for the class __, __, __, __, __, and certificates will remain fixed at the initial pass-through rate for the respective class (described in the table above as "Fixed"). The pass-through rates for the class __, __, __, __, __, __, __, __, __, and __ certificates will equal the lesser of the initial pass-through rate for the respective class and the weighted average of the adjusted net mortgage interest rates on the pooled mortgage loans from time to time (described in the table above as "WAC Cap"). The pass-through rates for the class __ and __ certificates will equal the weighted average of the adjusted net mortgage interest rates on the pooled mortgage loans from time to time minus a specified percentage (described in the table above as "WAC - X%"). The pass-through rates for the class __ and __ certificates will equal the weighted average of the adjusted net mortgage interest rates on the pooled mortgage loans from time to time (described in the table above as "WAC"). The pass-through rate for the class X certificates will equal the excess of the weighted average of the adjusted net mortgage interest rates on the pooled mortgage loans from time to time over the weighted average of the pass-through rates from time to time on the classes of certificates with principal balances (described in the table above as "Variable IO"). In the case of the class X certificates and each other class of certificates for which the pass-through rate is based upon, limited by or equal to the weighted average of the adjusted net mortgage rate of the pooled mortgage loans, the initial pass-through rate listed in the table is approximate. The manner of the calculation of the weighted average of the adjusted net mortgage interest rates on the pooled mortgage loans from time to time is described under the heading "Description of the Offered Certificates--Distributions--Calculation of Pass-Through Rates" in this prospectus supplement. o The weighted average lives and principal/notional windows presented in the table above have been calculated based on, among others, the assumptions that (i) each pooled mortgage loan with an anticipated repayment date is paid in full on that date, (ii) no pooled mortgage loan is otherwise prepaid prior to maturity (0% CPR), (iii) no defaults or losses occur with respect to the pooled mortgage loans and (iv) no extensions of maturity dates of mortgage loans occur. See "Yield and Maturity Considerations--Weighted Average Life" in this prospectus supplement. o The series 2006-PWR12 certificates will also include the class R and V certificates, which do not have principal balances or notional amounts and do not accrue interest. The class R and V certificates are not presented in the table above and are not offered by this prospectus supplement. S-8 RELEVANT PARTIES ISSUING ENTITY................ Bear Stearns Commercial Mortgage Securities Trust 2006-PWR12, a New York common law trust, will issue the certificates. The trust will be formed pursuant to the pooling and servicing agreement among the depositor, the master servicers, the special servicers, the certificate administrator, the tax administrator and the trustee. See "Transaction Parties--The Issuing Entity" in this prospectus supplement. DEPOSITOR..................... Bear Stearns Commercial Mortgage Securities Inc. is the depositor. As depositor, Bear Stearns Commercial Mortgage Securities Inc. will acquire the mortgage loans from the mortgage loan sellers and deposit them into the trust fund. See "Transaction Parties--The Depositor" in this prospectus supplement. MASTER SERVICERS.............. Wells Fargo Bank, National Association will act as a master servicer with respect to those pooled mortgage loans sold by Bear Stearns Commercial Mortgage, Inc., Wells Fargo Bank, National Association, Principal Commercial Funding II, LLC, Principal Commercial Funding, LLC and Nationwide Life Insurance Company to the depositor for deposit into the trust fund (and any related non-pooled mortgage loans that are secured by the same mortgaged property as those pooled mortgage loans). Prudential Asset Resources, Inc. will act as a master servicer with respect to those pooled mortgage loans sold by Prudential Mortgage Capital Funding, LLC to the depositor for deposit into the trust fund (and any related non-pooled mortgage loans that are secured by the same mortgaged property as those pooled mortgage loans). The following table sets forth the approximate percentage of the pooled mortgage loans in the mortgage pool, loan group 1 and loan group 2 that are serviced by each master servicer. NUMBER OF % OF INITIAL % OF INITIAL % OF INITIAL POOLED MORTGAGE MORTGAGE LOAN GROUP 1 LOAN GROUP 2 MASTER SERVICER LOANS POOL BALANCE BALANCE BALANCE ------------------- --------------- ------------ ------------ ------------ Wells Fargo Bank, National Association..... 176 61.5% 62.7% 49.7% Prudential Asset Resources, Inc.. 37 38.5% 37.3% 50.3% See "Transaction Parties--The Master Servicers" in this prospectus supplement. Each master servicer will be primarily responsible for servicing and administering, directly or through sub-servicers, mortgage loans for which it is the respective master servicer (a) as to which there is no S-9 default or reasonably foreseeable default that would give rise to a transfer of servicing to the applicable special servicer and (b) as to which any such default or reasonably foreseeable default has been corrected, including as part of a work-out. In addition, each master servicer will be primarily responsible for making principal and interest advances and servicing advances, for the mortgage loans it is the respective master servicer for, under the pooling and servicing agreement. The master servicing fee in any month is an amount equal to the product of the portion of the per annum master servicing fee rate applicable to that month, determined in the same manner as the applicable mortgage rate is determined for each mortgage loan for that month, and the stated principal balance of each mortgage loan. The master servicing fee rate for Wells Fargo Bank, National Association and Prudential Asset Resources, Inc. will range, on a loan-by-loan basis, from 0.02% per annum to 0.14% per annum. In addition, the master servicers will be entitled to retain certain borrower-paid fees and certain income from investment of certain accounts maintained as part of the trust fund, as additional servicing compensation. Wells Fargo Bank, National Association will also act as servicer report administrator and in that capacity will be responsible for the assembly and combination of various reports prepared by the special servicers and the other master servicer. When we refer in this prospectus supplement to a master servicer in relation to one or more of the mortgage loans, we mean the applicable master servicer for those mortgage loans as identified above. SPECIAL SERVICERS............. ARCap Servicing, Inc., a Delaware corporation, will act as special servicer with respect to all of the pooled mortgage loans in the trust fund (and any related non-pooled mortgage loans that are secured by the same mortgaged property), other than the 1675 Broadway and the Tuscany Plaza pooled mortgage loans (and the related non-pooled mortgage loans). In this prospectus supplement, we sometimes refer to ARCap Servicing, Inc. in that capacity as the general special servicer. Prudential Asset Resources, Inc. will act as special servicer with respect to the pooled mortgage loan and the non-pooled mortgage loan that are together secured by the mortgaged properties identified on Appendix B to this prospectus supplement as 1675 Broadway and with respect to the pooled mortgage loan and the non-pooled mortgage loan that are together secured by the mortgaged properties identified on Appendix B to this prospectus supplement as Tuscany Plaza. Generally, the applicable special servicer will service a mortgage loan upon the occurrence of certain events that cause that mortgage loan to become a "specially serviced mortgage loan." The special servicers' principal compensation for their special servicing activities will be the special servicing fee, the workout fee and the liquidation fee. See "Servicing of the Mortgage Loans Under the Series 2006-PWR12 S-10 Pooling and Servicing Agreement" and "Transaction Parties--The Special Servicer" in this prospectus supplement. The special servicing fee is an amount equal to, in any month, the product of the portion of a rate equal to 0.25% per annum applicable to that month, determined in the same manner as the applicable mortgage rate is determined for each specially serviced mortgage loan for that month, and the stated principal balance of each specially serviced mortgage loan. The liquidation fee means, generally, 1.0% of the liquidation proceeds received in connection with a final disposition of a specially serviced mortgage loan or REO property or portion thereof and any condemnation proceeds and insurance proceeds received by the trust fund other than in connection with the purchase or repurchase of any pooled mortgage loan from the trust fund by any person (net of any default interest, late payment charges and/or post-ARD additional interest). The workout fee is a fee payable with respect to any worked-out mortgage loan (which means a specially serviced mortgage loan for which three consecutive full and timely monthly payments have been made, there is no other event causing it to constitute a specially serviced mortgage loan, and certain other conditions have been met), equal to 1.0% of the amount of each collection of interest (other than default interest and/or post-ARD additional interest) and principal received (including any insurance proceeds or condemnation proceeds received and applied as a payment of interest and principal) on that mortgage loan for so long as it remains a worked-out mortgage loan. In addition, the applicable special servicer will be entitled to retain certain borrower paid fees and certain income from investment of certain accounts maintained as part of the trust fund, as additional servicing compensation. When we refer in this prospectus supplement to a special servicer in relation to one or more of the mortgage loans, we mean the applicable special servicer for those mortgage loans as identified above. PRIMARY SERVICERS............. Principal Global Investors, LLC will act as primary servicer with respect to all of the pooled mortgage loans sold by Principal Commercial Funding, LLC and Principal Commercial Funding II, LLC to the depositor for deposit into the trust fund. Nationwide Life Insurance Company will act as primary servicer with respect to all of the pooled mortgage loans sold by Nationwide Life Insurance Company to the depositor for deposit into the trust fund. See "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement" and "Transaction Parties--Primary Servicers" in this prospectus supplement. S-11 Each of Principal Global Investors, LLC and Nationwide Life Insurance Company will be entitled to receive a primary servicing fee on each mortgage loan for which it is the primary servicer in an amount equal to the product of the applicable primary servicing fee rate and the stated principal balance of the applicable mortgage loan immediately before the related due date (prorated for the number of days during the calendar month for that mortgage loan for which interest actually accrues on that mortgage loan). The primary servicing fee is payable only from collections on the related mortgage loan and is included in the applicable master servicing fee rate for each of the related pooled mortgage loans. The primary servicing fee rate for Principal Global Investors, LLC is 0.01% per annum. The primary servicing fee rate for Nationwide Life Insurance Company will range, on a loan-by-loan basis, from 0.065% per annum to 0.275% per annum. CERTIFICATE ADMINISTRATOR, TAX ADMINISTRATOR AND CERTIFICATE REGISTRAR...... Wells Fargo Bank, National Association, will act as certificate administrator, tax administrator and certificate registrar. The certificate administrator is required to make distributions of the available distribution amount on each distribution date to the certificateholders and to prepare reports detailing the distributions to certificateholders on each distribution date and the performance of the pooled mortgage loans and mortgaged properties. The certificate administrator fee is an amount equal to, in any month, the product of the portion of a rate equal to __% per annum applicable to that month, determined in the same manner as the applicable mortgage rate is determined for each mortgage loan for that month, and the stated principal balance of each mortgage loan. TRUSTEE AND CUSTODIAN......... LaSalle Bank National Association, a national banking association, will act as trustee of the trust fund on behalf of the Series 2006-PWR12 certificateholders and as custodian. See "Transaction Parties--The Trustee" in this prospectus supplement. In addition, the trustee will be primarily responsible for back-up advancing if a master servicer fails to perform its advancing obligations. Following the transfer of the underlying mortgage loans into the trust fund, the trustee, on behalf of the trust fund, will become the holder of each mortgage loan transferred to the trust fund. The trustee fee is an amount equal to, in any month, the product of the portion of a rate equal to __% per annum applicable to that month, determined in the same manner as the applicable mortgage rate is determined for each mortgage loan for that month, and the stated principal balance of each mortgage loan. SPONSORS...................... Prudential Mortgage Capital Funding, LLC, a Delaware limited liability company, Bear Stearns Commercial Mortgage, Inc., a New York corporation, Wells Fargo Bank, National Association, a national banking association, Principal Commercial Funding II, LLC, a Delaware limited liability company, Principal Commercial Funding, LLC, a Delaware limited liability company, and Nationwide Life S-12 Insurance Company, an Ohio corporation, are sponsors of this transaction. As sponsors, Prudential Mortgage Capital Funding, LLC, Bear Stearns Commercial Mortgage, Inc., Wells Fargo Bank, National Association, Principal Commercial Funding II, LLC, Principal Commercial Funding, LLC and Nationwide Life Insurance Company have organized and initiated the transactions in which the certificates will be issued and will sell mortgage loans to the depositor. The depositor will transfer the mortgage loans to the trust fund, and the trust fund will then issue the certificates. See "Transaction Parties--The Sponsors, Mortgage Loan Sellers and Originators" in this prospectus supplement. MORTGAGE LOAN SELLERS......... Prudential Mortgage Capital Funding, LLC, Bear Stearns Commercial Mortgage, Inc., Wells Fargo Bank, National Association, Principal Commercial Funding II, LLC, Principal Commercial Funding, LLC and Nationwide Life Insurance Company are the mortgage loan sellers. The following table sets forth the number and the approximate percentage of the pooled mortgage loans in the mortgage pool, loan group 1 and group 2 that have been sold by the related mortgage loan seller to the depositor. NUMBER OF NUMBER OF NUMBER OF POOLED POOLED POOLED MORTGAGE MORTGAGE % OF INITIAL % OF INITIAL % OF INITIAL MORTGAGE LOANS IN LOANS IN MORTGAGE LOAN GROUP 1 LOAN GROUP 2 MORTGAGE LOAN SELLER LOANS LOAN GROUP 1 LOAN GROUP 2 POOL BALANCE BALANCE BALANCE ------------------------------------------ --------- ------------ ------------ ------------ ------------ ------------ Prudential Mortgage Capital Funding, LLC.. 37 27 10 38.5% 37.3% 50.3% Bear Stearns Commercial Mortgage, Inc..... 42 37 5 20.3% 20.7% 16.3% Wells Fargo Bank, National Association.... 68 61 7 20.3% 20.5% 17.7% Principal Commercial Funding II, LLC...... 40 35 5 10.2% 10.1% 11.5% Principal Commercial Funding, LLC......... 14 14 0 5.7% 6.3% 0.0% Nationwide Life Insurance Company......... 12 11 1 5.0% 5.1% 4.1% ORIGINATORS................... Each mortgage loan seller or its affiliate originated the mortgage loans as to which it is acting as mortgage loan seller. See "Transaction Parties--The Sponsors, Mortgage Loan Sellers and Originators" in this prospectus supplement. UNDERWRITERS.................. Bear, Stearns & Co. Inc. and Morgan Stanley & Co. Incorporated are the underwriters of this offering. Bear, Stearns & Co. Inc. and Morgan Stanley & Co. Incorporated will act as co-lead and co-bookrunning managers. AFFILIATIONS AND CERTAIN RELATIONSHIPS AMONG TRANSACTION PARTIES........ Prudential Mortgage Capital Funding, LLC, a sponsor and mortgage loan seller, Prudential Mortgage Capital Company, LLC, an originator, and Prudential Asset Resources, Inc., one of the master servicers and the special servicer for the 1675 Broadway loan group and the Tuscany Plaza loan group, are affiliates. S-13 Bear Stearns Commercial Mortgage, Inc., a sponsor, originator and mortgage loan seller, Bear Stearns Commercial Mortgage Securities Inc., the depositor, and Bear, Stearns & Co. Inc., one of the underwriters, are affiliates. Wells Fargo Bank, National Association, a sponsor, originator and mortgage loan seller, is also one of the master servicers, the certificate administrator, the tax administrator and the certificate registrar with respect to the mortgage loans and the trust fund. Principal Commercial Funding II, LLC, a sponsor and mortgage loan seller, Principal Commercial Funding, LLC, a sponsor, originator and mortgage loan seller and Principal Global Investors, LLC, the primary servicer with respect to those mortgage loans sold to the trust fund by Principal Commercial Funding II, LLC and Principal Commercial Funding, LLC, are affiliates. Nationwide Life Insurance Company, a sponsor, originator and mortgage loan seller, is also the primary servicer with respect to those mortgage loans sold to the trust fund by Nationwide Life Insurance Company. See "Transaction Parties--The Sponsors, Mortgage Loan Sellers and Originators" and "--Affiliations and Certain Relationships Among Transaction Parties" in this prospectus supplement. SERIES 2006-PWR12 CONTROLLING CLASS REPRESENTATIVE....... At any time of determination, the holder of the majority interest in the most subordinate class of principal balance certificates that has a total principal balance at least equal to 25% of its total initial principal balance (or, if no class satisfies that condition, the holder of the majority interest in the most subordinate class of principal balance certificates then outstanding) will be entitled to appoint a representative that generally will be entitled to-- o replace the applicable special servicer, and o direct the applicable special servicer with respect to various special servicing matters as to the pooled mortgage loans for which it is the applicable special servicer. Notwithstanding the foregoing, the series 2006-PWR12 controlling class representative will generally not have those rights with respect to the 1675 Broadway loan group, unless a 1675 Broadway Change of Control Event exists with respect to that loan group, or with respect to the Tuscany Plaza loan group, unless a Tuscany Plaza Change of Control Event exists with respect to that loan group. See "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement--The Series 2006-PWR12 Controlling Class Representative" and "Description of the Mortgage Pool--Subordinate and/or Other Financing--Split Loan Structures--The 1675 Broadway S-14 Loan Group" and "--The Tuscany Plaza Loan Group" in this prospectus supplement. It is expected that ARCap REIT, Inc. will be the initial representative of the series 2006-PWR12 controlling class. OTHER NOTEHOLDERS............. Each of the pooled mortgage loans secured by the mortgaged properties identified on Appendix B to this prospectus supplement as 1675 Broadway and Tuscany Plaza are part of a split loan structure that includes both a pooled mortgage loan and one or more non-pooled mortgage loans that in each case is subordinate to the related pooled mortgage loan. Each of those loan groups will be principally serviced and administered under the series 2006-PWR12 pooling and servicing agreement. In connection with the 1675 Broadway loan group and the Tuscany Plaza loan group, the holder of the related non-pooled mortgage loan (or a representative on its behalf), will have one or more of the following: various approval and/or consultation rights with respect to material servicing decisions, rights to appoint or replace the party that performs special servicing duties, rights to cure defaults and/or options to purchase the related pooled mortgage loan if the loans in that group become defaulted. See "Description of the Mortgage Pool--Certain Characteristics of the Mortgage Pool--Subordinate and/or Other Financing--Split Loan Structures" and "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement--Trust-Serviced Non-Pooled Noteholder of the 1675 Broadway Loan Group" and "--Trust-Serviced Non-Pooled Noteholder of the Tuscany Plaza Loan Group" in this prospectus supplement for more information with respect to these rights. The table below shows the mortgage loans that have split loan structures: PRIORITY OF ORIGINAL AGGREGATE NON-POOLED % OF INITIAL % OF INITIAL % OF INITIAL CUT-OFF DATE PRINCIPAL BALANCE OF MORTGAGE LOAN MORTGAGE POOL LOAN GROUP 1 LOAN GROUP 2 BALANCE OF POOLED NON-POOLED MORTGAGE RELATIVE TO POOLED MORTGAGE LOAN BALANCE BALANCE BALANCE MORTGAGE LOAN LOAN(S) MORTGAGE LOAN ------------- ------------- ------------ ------------ ----------------- -------------------- ------------------ 1675 Broadway 7.5% 8.2% N/A $155,000,000 $25,000,000 Subordinate Tuscany Plaza 1.3% 1.4% N/A $ 27,000,000 $ 3,375,000 Subordinate SIGNIFICANT DATES AND PERIODS CUT-OFF DATE.................. The pooled mortgage loans will be considered part of the trust fund as of their respective cut-off dates. The cut-off date with respect to each pooled mortgage loan is the due date for the monthly debt service payment that is due in June 2006 (or, in the case of any mortgage loan that has its first due date after June 2006, the later of the date of origination of that pooled mortgage loan and the date that would have been its due date in June 2006 under the terms of that mortgage loan if a monthly payment were scheduled to be due in that month). All payments and collections received on the pooled mortgage loans after their respective cut-off dates will belong to the trust fund, except that S-15 any payments or collections that represent amounts due on or before that date will be excluded. ISSUE DATE.................... The date of initial issuance for the series 2006-PWR12 certificates will be on or about June 21, 2006. DETERMINATION DATE............ The monthly cut-off for information regarding the pooled mortgage loans that must be reported to the holders of the series 2006-PWR12 certificates on any distribution date will be the close of business on the determination date in the same calendar month as that distribution date. In any given calendar month, the determination date will be the fifth business day prior to the related distribution date. DISTRIBUTION DATE/DISTRIBUTION FREQUENCY.................. Distributions on the series 2006-PWR12 certificates are scheduled to occur on the 11th calendar day of each month, or, if that day is not a business day, then the next succeeding business day, commencing in July 2006. RECORD DATE................... The record date for each monthly distribution on the series 2006-PWR12 certificates will be the last business day of the prior calendar month, except as may otherwise be set forth in this prospectus supplement with regard to final distributions. COLLECTION PERIOD............. Amounts available for distribution on the series 2006-PWR12 certificates on any distribution date will depend on the payments and other collections received on or with respect to the pooled mortgage loans during the related collection period, and any advances of payments due (without regard to grace periods) on or with respect to the pooled mortgage loans in the month in which the distribution date occurs. In general, each collection period-- o will relate to a particular distribution date, o will be approximately one month long, o will begin when the prior collection period ends or, in the case of the first collection period, will begin as of the respective cut-off dates for the mortgage loans, and o will end at the close of business on the determination date immediately preceding the related distribution date. INTEREST ACCRUAL PERIOD....... The interest accrual period for each distribution date will be the calendar month immediately preceding the month in which that distribution date occurs. ASSUMED FINAL DISTRIBUTION DATES...................... The distribution date on which each class of offered certificates is expected to be paid in full, assuming no delinquencies, losses, modifications, extensions of maturity dates, repurchases or, except as contemplated by the next sentence, prepayments of the pooled mortgage loans after the initial issuance of the certificates, is set forth opposite that class in the table below. For purposes of the table, each pooled mortgage loan with an anticipated repayment date is assumed to S-16 repay in full on its anticipated repayment date. The actual final distribution date for any class of offered certificates may be earlier or later (and could be substantially later) than the assumed final distribution date for that class. MONTH AND YEAR OF ASSUMED FINAL CLASS DISTRIBUTION DATE ----- ----------------- A-1 March 2011 A-2 June 2011 A-3 April 2013 A-AB December 2015 A-4 April 2016 A-1A May 2016 A-M May 2016 A-J June 2016 RATED FINAL DISTRIBUTION DATE....................... To the extent described in this prospectus supplement, the ratings of each class of offered certificates address the likelihood of the timely payment of interest and the ultimate payment of principal due on the certificates of that class on or before the distribution date in September 2038. DESCRIPTION OF THE OFFERED CERTIFICATES GENERAL....................... The trust fund will issue 25 classes of the series 2006-PWR12 certificates with an approximate total principal balance at initial issuance equal to $2,079,030,155. Only the class A-1, A-2, A-3, A-AB, A-4, A-1A, A-M and A-J certificates are being offered by this prospectus supplement. The remaining classes of the series 2006-PWR12 certificates (other than the class R and V certificates) will be offered separately in a private offering. DENOMINATIONS................. We intend to deliver the offered certificates in minimum denominations of $25,000, in the case of the class A-1, A-2, A-3, A-AB, A-4, A-1A, A-M and A-J certificates. Investments in excess of the minimum denominations may be made in multiples of $1. CLEARANCE AND SETTLEMENT...... You will hold your offered certificates in book-entry form through The Depository Trust Company, in the United States, or Clearstream Banking, societe anonyme or Euroclear Bank as operator of The Euroclear System, in Europe. As a result, you will not receive a fully registered physical certificate representing your interest in any offered certificate, except under the limited circumstances described under "Description of the Certificates--Book-Entry Registration and Definitive Certificates" in the accompanying prospectus. CERTIFICATE PRINCIPAL BALANCES AND CERTIFICATE NOTIONAL AMOUNTS........... The class A-1, A-2, A-3, A-AB, A-4, A-1A, A-M, A-J, B, C, D, E, F, G, H, J, K, L, M, N, O and P certificates will be the series 2006-PWR12 certificates with principal balances and are sometimes referred to as the series 2006-PWR12 principal balance certificates. The table S-17 appearing under the caption "--Overview of the Series 2006-PWR12 Certificates" above identifies the approximate total principal balance of each class of series 2006-PWR12 principal balance certificates at initial issuance, subject to a variance which depends on, among other things, the actual size of the initial mortgage pool balance. The actual size of the initial mortgage pool balance is subject to a variance of plus or minus 5%. The total principal balance of each class of series 2006-PWR12 principal balance certificates will be reduced on each distribution date by the amount of any distributions of principal actually made on, and any losses actually allocated to, that class of certificates on that distribution date. The class X certificates will not have principal balances and the holders of those classes will not be entitled to distributions of principal. For purposes of calculating the amount of accrued interest with respect to those certificates, however, the class X certificates will have a total notional amount equal to the total principal balance of the class A-1, A-2, A-3, A-AB, A-4, A-1A, A-M, A-J, B, C, D, E, F, G, H, J, K, L, M, N, O and P certificates outstanding from time to time. The table appearing under the caption "--Overview of the Series 2006-PWR12 Certificates" above identifies the approximate total notional amount of the class X certificates at initial issuance, subject to a variance which depends on, among other things, the actual size of the initial mortgage pool balance. The actual size of the initial mortgage pool balance is subject to a variance of plus or minus 5%. The total notional amount of the class X certificates will be reduced on each distribution date by the amount of any distributions of principal actually made on, and any losses actually allocated to, any class of series 2006-PWR12 principal balance certificates on that distribution date. PASS-THROUGH RATES............ The class A-1, A-2, A-3, A-AB, A-4, A-1A, X, A-M, A-J, B, C, D, E, F, G, H, J, K, L, M, N, O and P certificates will be the series 2006-PWR12 certificates that bear interest and are sometimes referred to as the series 2006-PWR12 interest-bearing certificates. The table appearing under the caption "--Overview of the Series 2006-PWR12 Certificates" above provides the indicated information regarding the pass-through rate at which each of those classes of the series 2006-PWR12 certificates will accrue interest. The weighted average of the adjusted net mortgage interest rates on the pooled mortgage loans from time to time will be calculated in the manner described under the heading "Description of the Offered Certificates--Distributions--Calculation of Pass-Through Rates" in this prospectus supplement. See also "Glossary--Weighted Average Pool Pass-Through Rate". DISTRIBUTIONS A. GENERAL.................... For purposes of allocating distributions on the certificates, the mortgage pool will be divided into: o loan group 1 consisting of 185 pooled mortgage loans, representing 90.6% of the initial mortgage pool balance, and S-18 o loan group 2 consisting of 28 pooled mortgage loans, representing 9.4% of the initial mortgage pool balance. Loan group 2 will consist of 92.9% of the initial mortgage pool balance of all the pooled mortgage loans secured by multifamily or manufactured housing community properties. The certificate administrator will make distributions of interest and, if and when applicable, principal on the classes of series 2006-PWR12 certificates, first, on the class A-1, A-2, A-3, A-AB, A-4, A-1A and X certificates; second, on the class A-M certificates; third, on the class A-J certificates; and then on the other classes of certificates in order of their alphabetical designation. Allocation of interest distributions among the class A-1, A-2, A-3, A-AB, A-4, A-1A and X certificates is described under "--Distributions of Interest" below. Allocation of principal distributions among the class A-1, A-2, A-3, A-AB, A-4 and A-1A certificates is described under "--Distributions of Principal" below. The class X certificates do not have principal balances and do not entitle their holders to distributions of principal. In general, the funds available for distribution to certificateholders on each distribution date will be net of all forms of compensations payable to the parties to the pooling and servicing agreement, reimbursements of servicing advances, P&I advances, interest on those advances and indemnification expenses. See "Description of the Offered Certificates--Distributions--Priority of Distributions" and "Description of the Offered Certificates--Fees and Expenses" in this prospectus supplement. B. DISTRIBUTIONS OF INTEREST.. Each class of series 2006-PWR12 certificates (other than the class R and V certificates) will bear interest. With respect to each interest-bearing class, interest will accrue during each interest accrual period based upon: o the pass-through rate for that class and interest accrual period; o the total principal balance or notional amount, as the case may be, of that class outstanding immediately prior to the related distribution date; and o the assumption that each year consists of twelve 30-day months. A whole or partial prepayment on a pooled mortgage loan, whether made by the related borrower or resulting from the application of insurance proceeds and/or condemnation proceeds, may not be accompanied by the amount of one full month's interest on the prepayment. As and to the extent described under "Description of the Offered Certificates--Distributions--Interest Distributions" in this prospectus supplement, prepayment interest shortfalls may be allocated to reduce the amount of accrued interest otherwise payable to the holders of all the series 2006-PWR12 principal balance certificates on a pro rata basis. On each distribution date, subject to available funds and the allocation and distribution priorities described under "--General" above, you will S-19 be entitled to receive your proportionate share of all unpaid distributable interest accrued with respect to your class of offered certificates through the end of the related interest accrual period. Interest distributions with respect to the class A-1, A-2, A-3, A-AB, A-4, A-1A and X certificates will be made concurrently: o in the case of the class A-1, A-2, A-3, A-AB and A-4 certificates, on a pro rata basis in accordance with their respective interest entitlements, from available funds attributable to loan group 1; o in the case of the class A-1A certificates, from available funds attributable to loan group 2; and o in the case of the class X certificates, from available funds attributable to loan group 1 and loan group 2; provided that, if the portion of available funds with respect to either loan group is insufficient to pay in full the total amount of interest otherwise required to be distributed with respect to any of class A-1, A-2, A-3, A-AB, A-4, A-1A and/or X certificates as described above, then distributions of interest will be made on the class A-1, A-2, A-3, A-AB, A-4, A-1A and X certificates on a pro rata basis in accordance with their respective interest entitlements, from available funds attributable to the entire mortgage pool, without regard to loan group. See "Description of the Offered Certificates--Distributions--Interest Distributions" and "--Priority of Distributions" in this prospectus supplement. C. DISTRIBUTIONS OF PRINCIPAL.................. Subject to-- o available funds, o the distribution priorities described under "--General" above, and o the reductions of principal balances described under "--Reductions of Certificate Principal Balances in Connection with Losses and Expenses" below, the holders of each class of offered certificates will be entitled to receive a total amount of principal over time equal to the total principal balance of their particular class at initial issuance. The certificate administrator must make principal distributions in a specified sequential order to ensure that: o no distributions of principal will be made to the holders of the class B, C, D, E, F, G, H, J, K, L, M, N, O and P certificates until, in the case of each of those classes, the total principal balance of all classes of offered certificates with principal balances is reduced to zero; S-20 o no distributions of principal will be made to the holders of the class A-M and A-J certificates until, in the case of each of those classes, the total principal balance of all more senior classes of series 2006-PWR12 certificates is reduced to zero; o except as described in the paragraph following these bullets, distributions of principal on the class A-1A certificates will be made only from the portion of the total distributable principal funds attributable to loan group 2 plus, only after the total principal balance of the class A-1, A-2, A-3, A-AB and A-4 certificates has been reduced to zero (if the class A-1A certificate are still outstanding at the time of that reduction), from the remaining portion of the total distributable principal funds attributable to loan group 1; o except as described in the paragraph following these bullets, distributions of principal on the class A-1, A-2, A-3, A-AB and A-4 certificates collectively will be made only from the portion of the total distributable funds attributable to loan group 1 plus, only after the principal balance of the class A-1A certificates is reduced to zero (if any of the class A-1, A-2, A-3, A-AB and/or A-4 certificates are still outstanding at the time of that reduction), from the remaining portion of the total distributable principal funds attributable to loan group 2; and o except as described in the paragraph following these bullets, no distributions of principal will be made with respect to the class A-4 certificates until the total principal balance of the class A-1, A-2, A-3 and A-AB certificates is reduced to zero; no distributions of principal will be made with respect to the class A-1, A-2 or A-3 certificates on any distribution date until the total principal balance of the class A-AB certificates is reduced to the scheduled principal balance for that distribution date set forth on Schedule II to this prospectus supplement; no additional distributions of principal will be made with respect to the class A-AB certificates until the total principal balance of the class A-1, A-2 and A-3 certificates is reduced to zero; no distributions of principal will be made with respect to the class A-3 certificates until the total principal balance of the class A-1 and A-2 certificates is reduced to zero; and no distributions of principal will be made with respect to the class A-2 certificates until the total principal balance of the class A-1 certificates is reduced to zero, all as described in this prospectus supplement under "Description of the Offered Certificates -- Distributions -- Principal Distributions". Because of losses on the pooled mortgage loans, and/or default-related or other unanticipated expenses of the trust fund, the total principal balance of the class A-M, A-J, B, C, D, E, F, G, H, J, K, L, M, N, O and P certificates could be reduced to zero at a time when two or more of the class A-1, A-2, A-3, A-AB, A-4 and/or A-1A certificates remain outstanding. Under those circumstances, any distributions of principal on the class A-1, A-2, A-3, A-AB, A-4 and A-1A certificates will be made on a pro rata basis (in accordance with their respective total S-21 principal balances immediately prior to that distribution date) from remaining available funds (after interest distributions on the class A-1, A-2, A-3, A-AB, A-4, A-1A and X certificates) attributable to the entire mortgage pool without regard to loan group. The total distributions of principal to be made on the series 2006-PWR12 certificates on any distribution date will, in general, be a function of-- o the amount of scheduled payments of principal due or, in cases involving balloon loans that remain unpaid after their stated maturity dates and mortgage loans as to which the related mortgaged properties have been acquired on behalf of (or partially on behalf of) the trust fund, deemed due, on the pooled mortgage loans during the same calendar month in which the subject distribution date occurs, which payments are either received as of the end of the related collection period or advanced by the applicable master servicer or the trustee, as applicable, and o the amount of any prepayments and other unscheduled collections of previously unadvanced principal with respect to the pooled mortgage loans that are received during the related collection period. However, the amount of principal otherwise distributable on the certificates collectively on any distribution date will be reduced by the following amounts, to the extent those amounts are paid or reimbursed from collections or advances of principal: (1) advances determined to have become nonrecoverable, (2) advances that remain unreimbursed immediately following the modification of a mortgage loan and its return to performing status, (3) certain special servicing compensation and (4) certain other expenses. Portions of the principal distributable on the certificates collectively on any distribution date will be attributed to loan group 1 and/or loan group 2 according to the attribution rules described in this prospectus supplement. In general, collections or advances of principal on a pooled mortgage loan will be attributed to the loan group that contains that pooled mortgage loan. See "Glossary--Principal Distribution Amount" in this prospectus supplement. The class X certificates do not entitle their holders to any distributions of principal. See "Description of the Offered Certificates--Distributions--Principal Distributions" and "--Priority of Distributions" and "Glossary--Principal Distribution Amount" in this prospectus supplement. D. DISTRIBUTIONS OF YIELD MAINTENANCE CHARGES AND OTHER PREPAYMENT PREMIUMS................... Any yield maintenance charge or prepayment premium collected in respect of a pooled mortgage loan generally will be distributed, in the S-22 proportions described in this prospectus supplement, to the holders of the class X certificates and/or to the holders of any class A-1, A-2, A-3, A-AB, A-4, A-1A, A-M, A-J, B, C, D, E, F, G and/or H certificates, then entitled to receive distributions of principal. See "Description of the Offered Certificates--Distributions--Distributions of Yield Maintenance Charges and Prepayment Premiums" in this prospectus supplement. REDUCTIONS OF CERTIFICATE PRINCIPAL BALANCES IN CONNECTION WITH LOSSES AND EXPENSES................... Because of losses on the pooled mortgage loans and/or default-related and other unanticipated expenses of the trust fund, the total principal balance of the mortgage pool, net of advances of principal, may fall below the total principal balance of the series 2006-PWR12 certificates. If and to the extent that those losses and expenses cause such a deficit to exist following the distributions made on the series 2006-PWR12 certificates on any distribution date, then the principal balances of the series 2006-PWR12 principal balance certificates generally will be sequentially reduced (without accompanying principal distributions) in the reverse order of distribution priority (first, class P, then class O and so on), until that deficit is eliminated. Any reduction of the total principal balance of the class A-1, A-2, A-3, A-AB, A-4 and A-1A certificates will be allocated among those classes on a pro rata basis in accordance with the relative sizes of those principal balances at the time of the reduction. See "Description of the Offered Certificates--Reductions of Certificate Principal Balances in Connection with Realized Losses and Additional Trust Fund Expenses" in this prospectus supplement. ADVANCES OF DELINQUENT MONTHLY DEBT SERVICE PAYMENTS...... With respect to the pooled mortgage loans for which it is the applicable master servicer, each master servicer will be required to make debt service advances with respect to any delinquent scheduled monthly payments, other than balloon payments, of principal and/or interest and to make advances for the pooled mortgage loans that are balloon loans and become defaulted upon their maturity dates, on the same amortization schedule as if the maturity date had not occurred. The trustee must make any of those advances that a master servicer is required, but fails, to make. Any party that makes a debt service advance will be entitled to be reimbursed for that advance, together with interest at the prime lending rate described more fully in this prospectus supplement. However, interest will commence accruing on any monthly debt service advance made in respect of a scheduled monthly debt service payment only on the date on which any applicable grace period for that payment expires. Notwithstanding the foregoing, none of the master servicers or the trustee will be required to make any debt service advance that it or the applicable special servicer determines, in its reasonable good faith judgment, will not be recoverable (together with interest on the advance) from proceeds of the related mortgage loan. Absent bad faith, the determination by any authorized person that a debt service advance S-23 constitutes a nonrecoverable advance as described above will be conclusive and binding. In addition, a designated servicer must obtain an appraisal or conduct an internal valuation of the mortgaged property securing a pooled mortgage loan following a material default or the occurrence of certain other events described in this prospectus supplement. Based upon the results of such appraisal, the amount otherwise required to be advanced with respect to interest on that pooled mortgage loan may be reduced as described under the heading "Description of the Offered Certificates--Advances of Delinquent Monthly Debt Service Payments" in this prospectus supplement. Due to the distribution priorities described in this prospectus supplement, any reduction in advances will generally reduce the funds available to pay interest on the respective classes of subordinate interest-bearing series 2006-PWR12 certificates sequentially in the reverse order of distribution priority (first, class P, then class O and so on) up to the total amount of the reduction. See "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement--Required Appraisals" in this prospectus supplement and "Description of the Certificates--Advances in Respect of Delinquencies" in the accompanying prospectus. EARLY TERMINATION............. The trust fund may be terminated and therefore the series 2006-PWR12 certificates may be retired early by certain designated entities when the total outstanding principal balance of the pooled mortgage loans, net of advances of principal, is reduced to 1.0% or less of the initial mortgage pool balance. THE TRUST FUND CREATION OF THE TRUST FUND.... We will use the net proceeds from the issuance and sale of the series 2006-PWR12 certificates as the consideration to purchase the mortgage loans that will back those certificates from the mortgage loan sellers. Promptly upon acquisition, we will transfer those mortgage loans to the trust fund in exchange for the series 2006-PWR12 certificates. In this prospectus supplement, we sometimes refer to those mortgage loans as pooled mortgage loans. As described under "Description of the Offered Certificates--Distributions--General" above, the pooled mortgage loans will be divided into loan group 1 and loan group 2 for purposes of calculating distributions on the certificates. A. GENERAL CONSIDERATIONS..... When reviewing the information that we have included in this prospectus supplement with respect to the pooled mortgage loans, please note that-- o All numerical information provided with respect to the pooled mortgage loans is provided on an approximate basis. o References to initial mortgage pool balance mean the aggregate cut-off date principal balance of all the pooled mortgage loans, references to the initial loan group 1 balance mean the aggregate cut-off date principal balance of the pooled mortgage loans in S-24 loan group 1 and references to the initial loan group 2 balance mean the aggregate cut-off date principal balance of the pooled mortgage loans in loan group 2. o All weighted average information provided with respect to the pooled mortgage loans or any sub-group of pooled mortgage loans reflects a weighting based on their respective cut-off date principal balances. We will transfer the cut-off date principal balance for each of the pooled mortgage loans to the trust fund. o With respect to pooled mortgage loans that have one or more related non-pooled mortgage loans, we generally present loan-to-value ratios, debt service coverage ratios and loan per net rentable square foot or unit, as applicable, in this prospectus supplement in a manner that reflects the applicable pooled mortgage loan without regard to any related non-pooled subordinate loan(s). o Some of the pooled mortgage loans are part of a group of pooled mortgage loans that are cross-collateralized and cross-defaulted with each other. In general, when a pooled mortgage loan is cross-collateralized and cross-defaulted with one or more other pooled mortgage loans, we present the information regarding those pooled mortgage loans as if each of them was secured only by the related mortgaged properties identified on Appendix B to this prospectus supplement, except that loan-to-value ratio, debt service coverage ratio and loan per unit or square foot information is presented for a cross-collateralized group on an aggregate basis in the manner described in this prospectus supplement. None of the mortgage loans in the trust fund will be cross-collateralized with any mortgage loan that is not in the trust fund (except as described in this prospectus supplement with respect to the pooled mortgage loans secured by the mortgaged properties respectively identified on Appendix B as 1675 Broadway and Tuscany Plaza). o The information for mortgage loans secured by more than one mortgaged property in this prospectus supplement is generally based on allocated loan amounts as stated in Appendix A when information is presented relating to mortgaged properties and not mortgage loans. B. PRINCIPAL BALANCES......... The trust's primary assets will be two hundred thirteen (213) mortgage loans with an aggregate principal balance as of the cut-off date of approximately $2,079,030,155. It is possible that the aggregate mortgage loan balance will vary by up to 5% on the closing date. As of the cut-off date, the principal balance of the pooled mortgage loans ranged from approximately $800,000 to approximately $156,500,000 and the mortgage loans had an approximate average balance of $9,760,705. C. ENCUMBERED INTERESTS....... The table below shows the number of, and percentage of the initial mortgage pool balance, initial loan group 1 balance and initial loan group 2 balance secured by, mortgaged properties for which the encumbered interest is as indicated: S-25 NUMBER OF % OF INITIAL % OF INITIAL % OF INITIAL MORTGAGED MORTGAGE LOAN GROUP 1 LOAN GROUP 2 ENCUMBERED INTEREST PROPERTIES POOL BALANCE BALANCE BALANCE ---------------------------- ---------- ------------ ------------ ------------ Fee(1) ..................... 228 90.2% 89.2% 100% Leasehold .................. 7 9.6% 10.6% 0.0% Fee in part and leasehold in part .................... 1 0.2% 0.2% 0.0% ---------- (1) Includes mortgaged properties for which (i) the borrower's interest consists of overlapping fee and leasehold interests or (ii) the fee owner has signed the related mortgage and has agreed to subordinate its fee interest to the related leasehold mortgage. D. PROPERTY TYPES ............ The table below shows the number of, and percentage of the initial mortgage pool balance, initial loan group 1 balance and initial loan group 2 balance secured by, mortgaged properties operated primarily for each indicated purpose: NUMBER OF % OF INITIAL % OF INITIAL % OF INITIAL MORTGAGED MORTGAGE LOAN GROUP 1 LOAN GROUP 2 PROPERTY TYPES PROPERTIES POOL BALANCE BALANCE BALANCE ---------------------------- ---------- ------------ ------------ ------------ Retail ..................... 90 40.8% 45.0% 0.0% Office ..................... 41 25.0% 27.6% 0.0% Industrial ................. 38 11.9% 13.1% 0.0% Multifamily ................ 28 9.2% 0.4% 94.1% Hospitality ................ 24 8.1% 8.9% 0.0% Mixed Use .................. 6 2.2% 2.5% 0.0% Other ...................... 1 1.0% 1.1% 0.0% Self Storage ............... 6 0.9% 1.0% 0.0% Manufactured Housing Community ............... 2 0.9% 0.4% 5.9% E. STATE CONCENTRATIONS ...... The table below shows the number of, and percentage of the initial mortgage pool balance, initial loan group 1 balance and initial loan group 2 balance secured by, mortgaged properties located in the indicated states or regions: S-26 NUMBER OF % OF INITIAL % OF INITIAL % OF INITIAL MORTGAGED MORTGAGE LOAN GROUP 1 LOAN GROUP 2 STATE/REGION PROPERTIES POOL BALANCE BALANCE BALANCE ---------------------------- ---------- ------------ ------------ ------------ California.................. 48 14.7% 14.8% 13.8% Southern CA.............. 30 10.0% 10.6% 4.1% Northern CA.............. 18 4.7% 4.2% 9.7% New York.................... 11 14.4% 15.5% 3.4% Michigan.................... 4 8.3% 9.0% 0.7% Ohio........................ 18 7.2% 7.2% 6.7% Texas....................... 21 6.2% 4.8% 20.0% ---------- The remaining mortgaged properties are located throughout thirty four (34) other states and the United States Virgin Islands. No more than 5% of the initial mortgage pool balance is secured by mortgaged properties located in any of those other jurisdictions. Northern California includes areas with zip codes above 93600 and Southern California includes areas with zip codes of 93600 and below. F. OTHER MORTGAGE LOAN FEATURES .................. As of the cut-off date, the mortgage loans had the following characteristics: o The most recent scheduled payment of principal and interest on any mortgage loan was not thirty days or more past due, and no mortgage loan has been thirty days or more past due in the past year. o Twenty one (21) groups of mortgage loans were made to the same borrower or to borrowers that are affiliated with one another through partial or complete direct or indirect common ownership. The five (5) largest groups represent 3.1%, 2.4%, 1.6%, 1.5% and 1.5%, respectively, of the initial outstanding pool balance. See Appendix B to this prospectus supplement. o Forty (40) mortgaged properties, securing mortgage loans representing 11.0% of the initial outstanding pool balance, are each 100% leased to a single tenant. o The mortgage interest rate for each pooled mortgage loan is fixed for the remaining term of the loan, except for (i) increases resulting from the application of default interest rate following a default, (ii) in the case of a loan with an anticipated repayment date, any increase described below that may occur if the loan is not repaid by the anticipated repayment date and (iii) changes that result from any other loan-specific provisions that are described on the "Footnotes to Appendix B and C" in this prospectus supplement. o Fixed periodic payments on the mortgage loans are generally determined assuming interest is calculated on a 30/360 basis, but interest actually accrues and is applied on certain mortgage loans on an actual/360 basis. Accordingly, there will be less S-27 amortization of the principal balance during the term of these mortgage loans, resulting in a higher final payment on these mortgage loans. o No mortgage loan permits negative amortization or the deferral of accrued interest (except excess interest that would accrue in the case of any mortgage loan having an anticipated repayment date after the applicable anticipated repayment date for such loan). G. BALLOON LOANS/ARD LOANS ... As of the cut-off date, the mortgage loans had the following additional characteristics: o All of the pooled mortgage loans are balloon mortgage loans. For purposes of this prospectus supplement, we consider a mortgage loan to be a "balloon loan" if its principal balance is not scheduled to be fully or substantially amortized by the loan's stated maturity date or if it is an ARD loan. See Schedule I to this prospectus supplement for the amortization schedule for the pooled mortgage loan secured by the mortgaged property identified on Appendix B to this prospectus supplement as American Business Center, which is a balloon loan with a nonstandard amortization schedule. o Twenty nine (29) pooled mortgage loans, representing 13.6% of the initial mortgage pool balance (representing 15.0% of the initial loan group 1 balance), are "ARD" or "hyperamortizing" mortgage loans that provide material incentives to, but do not require, the related borrower to pay the mortgage loan in full by a specified "anticipated repayment date" prior to the stated maturity date. Those incentives include an increase in the mortgage rate and/or principal amortization at or following the anticipated repayment date. Because of the incentives, we consider the ARD loans to be balloon loans also. H. INTEREST-ONLY LOANS ....... As of the cut-off date, the mortgage loans had the following additional characteristics: o Seventy five (75) pooled mortgage loans, representing 59.8% of the initial mortgage pool balance (which pooled mortgage loans consist of sixty seven (67) pooled mortgage loans in loan group 1, representing 62.2% of the initial loan group 1 balance, and eight (8) pooled mortgage loans in loan group 2, representing 36.4% of the initial loan group 2 balance), provide for initial interest-only periods that expire 4 to 60 months following their respective origination dates. o Fifteen (15) pooled mortgage loans, representing 8.4% of the initial mortgage pool balance (which pooled mortgage loans consist of 12 pooled mortgage loans in loan group 1, representing 8.8% of the initial loan group 1 balance, and 3 pooled mortgage loans in loan group 2, representing 4.7% of the initial loan group 2 balance), provide for no amortization and for interest-only payments for their entire term to maturity or ARD. S-28 I. PREPAYMENT/DEFEASANCE PROVISIONS............... As of their respective cut-off dates, all of the pooled mortgage loans restrict voluntary principal prepayments as follows: o One hundred and thirty eight (138) pooled mortgage loans, representing 63.1% of the initial mortgage pool balance (which pooled mortgage loans consist of 119 pooled mortgage loans in loan group 1, representing 61.3% of the initial loan group 1 balance, and 19 pooled mortgage loans in loan group 2, representing 80.2% of the initial loan group 2 balance), prohibit voluntary principal prepayments for a period ending on a date determined by the related mortgage loan documents (which may be the maturity date), which period is referred to in this prospectus supplement as a lock-out period, but permit the related borrower, after an initial period of at least two years following the date of issuance of the series 2006-PWR12 certificates, to defease the pooled mortgage loan by pledging certain government securities and obtaining the release of all or a portion of the mortgaged property from the lien of the mortgage. o Forty three (43) pooled mortgage loans, representing 27.4% of the initial mortgage pool balance (which pooled mortgage loans consist of 36 pooled mortgage loans in loan group 1, representing 28.7% of the initial loan group 1 balance, and 7 pooled mortgage loans in loan group 2, representing 15.4% of the initial loan group 2 balance), prohibit voluntary principal prepayments during a lock-out period, and following the lock-out period provide for prepayment premiums or yield maintenance charges calculated on the basis of the greater of a yield maintenance formula and 1% of the amount prepaid. o Twenty five (25) pooled mortgage loans, representing 5.5% of the initial mortgage pool balance (which pooled mortgage loans consist of 23 pooled mortgage loans in loan group 1, representing 5.6% of the initial loan group 1 balance, and 2 pooled mortgage loans in loan group 2, representing 4.4% of the initial loan group 2 balance), prohibit voluntary principal prepayments during a lock-out period, and following the lock-out period provide for a prepayment premium or yield maintenance charge calculated on the basis of the greater of a yield maintenance formula and 1% of the amount prepaid, and also permit the related borrower, after an initial period of at least two years following the date of the issuance of the series 2006-PWR12 certificates, to defease the pooled mortgage loan by pledging certain government securities and obtaining the release of the mortgaged property from the lien of the mortgage. o Two (2) pooled mortgage loans, representing 1.9% of the initial mortgage pool balance (which pooled mortgage loans represent 2.1% of the initial loan group 1 balance), permit prepayment at any time with the payment of a prepayment premium or yield maintenance charge calculated on the basis of the greater of a yield maintenance formula and 1% of the amount prepaid. S-29 o One (1) pooled mortgage loan, representing 1.0% of the initial mortgage pool balance (which pooled mortgage loan represents 1.1% of the initial loan group 1 balance), permits prepayment in whole or in part at any time during the first two years following the date of issuance of the series 2006-PWR12 certificates with the payment of a prepayment premium or yield maintenance charge calculated on the basis of the greater of a yield maintenance formula and 1% of the amount prepaid, and thereafter, only permits the related borrower to defease the pooled mortgage loan by pledging certain government securities and obtaining the release of the mortgaged property from the lien of the mortgage. o Two (2) pooled mortgage loans, representing 0.8% of the initial mortgage pool balance (which pooled mortgage loans represent 0.9% of the initial loan group 1 balance) are cross-collateralized with each other but have different restrictions on prepayment, and one of those pooled mortgage loans, representing 0.5% of the initial mortgage pool balance (and 0.6% of the initial loan group 1 balance) prohibits voluntary principal prepayments during a lock-out period but permits the related borrower, after an initial period of at least two years following the date of issuance of the series 2006-PWR12 certificates, to defease that pooled mortgage loan by pledging certain government securities and obtaining the release of the mortgaged property from the lien of the mortgage, and the other pooled mortgage loan, representing 0.3% of the initial mortgage pool balance (and 0.3% of the initial loan group 1 balance), permits prepayment at any time with the payment of a prepayment premium or yield maintenance charge calculated on the basis of the greater of a yield maintenance formula and 1% of the amount prepaid. o Two (2) pooled mortgage loans, representing 0.3% of the initial mortgage pool balance (which pooled mortgage loans represent 0.3% of the initial loan group 1 balance), which are cross-collateralized, prohibit voluntary principal prepayments during a lock-out period, and following the lock-out period, the borrower may prepay one of these loans (but not the other) in full -- without the payment of a prepayment premium or yield maintenance charge, provided that certain debt service coverage ratio and loan-to-value ratio tests are satisfied -- and may prepay the other of these loans in full with the payment of a prepayment premium or yield maintenance charge calculated on the basis of the greater of a yield maintenance formula and 1% of the amount prepaid. Notwithstanding the foregoing, the mortgage loans generally provide for an open period of one (1) to seven (7) months prior to and including the maturity date or anticipated repayment date in which the related borrower may prepay the mortgage loan without premium or defeasance requirements. S-30 See "Description of the Mortgage Pool--Certain Characteristics of the Mortgage Pool--Cross-Collateralized Mortgage Loans and Multi-Property Mortgage Loans; Mortgage Loans with Affiliated Borrowers" and "--Voluntary Prepayment and Defeasance Provisions" in this prospectus supplement. J. GENERAL CHARACTERISTICS.. As of the cut-off date, the mortgage loans had the following characteristics: MORTGAGE POOL LOAN GROUP 1 LOAN GROUP 2 -------------- -------------- ------------ Initial aggregate cut-off date principal balance (+/-5%)........................................... $2,079,030,155 $1,884,359,127 $194,671,028 Number of pooled mortgage loans...................... 213 185 28 Number of mortgaged properties....................... 236 208 28 Largest cut-off date principal balance............... $ 156,500,000 $ 156,500,000 $ 32,934,213 Smallest cut-off date principal balance.............. $ 800,000 $ 800,000 $ 1,140,000 Average cut-off date principal balance............... $ 9,760,705 $ 10,185,725 $ 6,952,537 Highest mortgage interest rate....................... 6.6600% 6.6600% 6.4510% Lowest mortgage interest rate........................ 4.8500% 4.8500% 5.3880% Weighted average mortgage interest rate.............. 5.7886% 5.7959% 5.7177% Longest original term to maturity or anticipated repayment date.................................... 124 mos. 124 mos. 120 mos. Shortest original term to maturity or anticipated repayment date.................................... 60 mos. 60 mos. 60 mos. Weighted average original term to maturity or anticipated repayment date........................ 115 mos. 115 mos. 114 mos. Longest remaining term to maturity or anticipated repayment date.................................... 123 mos. 123 mos. 119 mos. Shortest remaining term to maturity or anticipated repayment date.................................... 55 mos. 55 mos. 58 mos. Weighted average remaining term to maturity or anticipated repayment date........................ 113 mos. 113 mos. 113 mos. Highest debt service coverage ratio, based on underwritten net cash flow*....................... 2.88x 2.34x 2.88x Lowest debt service coverage ratio, based on underwritten net cash flow*....................... 1.11x 1.15x 1.11x Weighted average debt service coverage ratio, based on underwritten net cash flow*.................... 1.54x 1.55x 1.40x S-31 MORTGAGE POOL LOAN GROUP 1 LOAN GROUP 2 -------------- -------------- ------------ Highest debt service coverage ratio (after IO period), based on underwritten net cash flow*..... 2.88x 2.34x 2.88x Lowest debt service coverage ratio (after IO period), based on underwritten net cash flow*..... 1.10x 1.10x 1.11x Weighted average debt service coverage ratio (after IO period), based on underwritten net cash flow*.. 1.38x 1.39x 1.31x Highest cut-off date loan-to-value ratio*............ 80.3% 80.3% 79.9% Lowest cut-off date loan-to-value ratio*............. 36.8% 38.1% 36.8% Weighted average cut-off date loan-to-value ratio*... 68.7% 68.6% 69.5% ---------- * In the case of the pooled mortgage loans that are secured by mortgaged properties that also secure a related non-pooled mortgage loan that is subordinate to that pooled mortgage loan, debt service coverage ratio and loan-to-value information is generally presented in this prospectus supplement without regard to the non-pooled mortgage loan. Considering the combined annualized monthly debt service payable as of the cut-off date under the pooled mortgage loan and the non-pooled mortgage loan in those cases, the highest, lowest and weighted average debt service coverage ratio (based on underwritten net cash flow) of the mortgage pool would be 2.88x, 1.11x and 1.52x, respectively, of loan group 1 would be 2.34x, 1.14x and 1.53x, respectively, and of loan group 2 would be 2.88x, 1.11x and 1.40x, respectively. Considering the combined annualized monthly debt service payable as of the cut-off date under the pooled mortgage loan and the non-pooled mortgage loan in those cases, the highest, lowest and weighted average debt service coverage ratio (after IO period) (based on underwritten net cash flow) of the mortgage pool would be 2.88x, 0.97x and 1.36x, respectively, of loan group 1 would be 2.34x, 0.97x and 1.37x, respectively, and of loan group 2 would be 2.88x, 1.11x and 1.31x, respectively. For purposes of the calculation of the debt service coverage ratios presented in this footnote for the Tuscany Plaza Non-Pooled Subordinate Loan, which bears interest from time to time at an annual rate equal to LIBOR plus 4.00% (subject to a floor interest rate equal to 7.50% per annum), we assumed that LIBOR is equal to 5.15% per annum at all times. Considering the combined principal balance of the pooled mortgage loan and the non-pooled mortgage loan in those cases, the highest, lowest and weighted average cut-off date loan-to-appraised value ratio would be 80.3%, 36.8% and 69.1%, respectively, of loan group 1 would be 80.3%, 38.1% and 69.1%, respectively, and of loan group 2 would be 79.9%, 36.8% and 69.5%, respectively. K. REMOVAL OF LOANS FROM THE TRUST FUND........... One or more of the pooled mortgage loans may be removed from the trust fund pursuant to the purchase rights and obligations described below. 1. SELLER REPURCHASE AND SUBSTITUTION Each mortgage loan seller will make certain representations and warranties with respect to the mortgage loans sold by it. If a mortgage loan seller discovers or has been notified of a material breach of any of its representations and warranties or a material defect in the documentation of any mortgage loan as described under "The Mortgage Pool--Representations and Warranties" in this prospectus S-32 supplement, then that mortgage loan seller will be required to either cure the breach or defect, repurchase the affected mortgage loan from the trust fund or substitute the affected mortgage loan with another mortgage loan. If the related mortgage loan seller decides to repurchase the affected mortgage loan, the repurchase would have the same effect on the offered certificates as a prepayment in full of such mortgage loan, except that the purchase will not be accompanied by any prepayment premium or yield maintenance charge. 2. FAIR VALUE PURCHASE OPTION Pursuant to the pooling and servicing agreement, the series 2006-PWR12 controlling class representative or the applicable special servicer, in that order, has the option to purchase from the trust any defaulted pooled mortgage loan that, among other conditions, is delinquent 120 days or more with respect to any balloon payment or 60 days or more with respect to any other monthly payment. The applicable purchase price will be equal to the fair value of the pooled mortgage loan as determined by the applicable special servicer for such mortgage loan, subject to verification by the trustee if the special servicer is the purchaser. 3. OTHER DEFAULTED LOAN PURCHASE OPTIONS Pursuant to the related intercreditor agreements, the holder of a subordinate non-pooled mortgage loan that is part of a split loan structure that includes a pooled mortgage loan, or the holder of a mezzanine loan incurred by the owners of a borrower may have an option to purchase the related pooled mortgage loan from the trust fund following a material default. The applicable purchase price is generally not less than the sum of the outstanding principal balance of the pooled mortgage loan together with accrued and unpaid interest, outstanding servicing advances and certain other costs or expenses. The purchase price will generally not include any prepayment premium or yield maintenance charge. ADDITIONAL ASPECTS OF THE OFFERED CERTIFICATES AND THE TRUST FUND FEDERAL TAX STATUS............ Elections will be made to treat designated portions of the trust fund as three separate "real estate mortgage investment conduits" or "REMICs" under Sections 860A through 860G of the Internal Revenue Code. Those REMICs will exclude collections of additional interest accrued and deferred as to payment with respect to each mortgage loan with an anticipated repayment date that remains outstanding past that date, which collections will constitute a grantor trust for federal income tax purposes. The offered certificates will constitute "regular interests" in a REMIC. The offered certificates generally will be treated as newly originated debt instruments for federal income tax purposes. This means that you will be required to report income on your certificates in accordance with the accrual method of accounting, regardless of your usual method of accounting. The offered certificates will not represent any interest in the grantor trust referred to above. S-33 We anticipate that the class __, __, __ and certificates will be treated as having been issued with more than a de minimis amount of original issue discount, that the class __, __, __, __, and __ certificates will be treated as having been issued with a de minimis amount of original issue discount and that the class __, __, and __ certificates will be issued at a premium. When determining the rate of accrual of original issue discount and market discount and the amortization of premium, for federal income tax purposes, the prepayment assumption will be that, subsequent to the date of any determination-- o the pooled mortgage loans with anticipated repayment dates will, in each case, be paid in full on that date, o no pooled mortgage loan will otherwise be prepaid prior to maturity, and o there will be no extension of the maturity of any pooled mortgage loan. However, no representation is made as to the actual rate at which the pooled mortgage loans will prepay, if at all. For a more detailed discussion of United States federal income tax aspects of investing in the offered certificates, see "Material Federal Income Tax Consequences" in this prospectus supplement and in the accompanying prospectus. ERISA......................... The offered certificates are generally eligible for purchase by employee benefit plans pursuant to the prohibited transaction exemptions granted to the underwriters, subject to certain considerations discussed in the sections titled "ERISA Considerations" in this prospectus supplement and "Certain ERISA Considerations" in the accompanying prospectus. You should refer to the sections in this prospectus supplement and the accompanying prospectus referenced above. If you are a benefit plan fiduciary considering purchase of any offered certificates you should, among other things, consult with your counsel to determine whether all required conditions have been satisfied. LEGAL INVESTMENT.............. The offered certificates will not 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 prospectus supplement and in the accompanying prospectus. RATINGS....................... The ratings for the offered certificates shown in the table appearing under the caption "--Overview of the Series 2006-PWR12 S-34 Certificates" above are those of Moody's, Inc. and Standard & Poor's, a division of The McGraw-Hill Companies, Inc., respectively. It is a condition to their issuance that the respective classes of offered certificates receive credit ratings no lower than those shown in that table. The ratings of the offered certificates address the timely payment of interest and the ultimate payment of principal on or before the rated final distribution date. A security rating is not a recommendation to buy, sell or hold securities and the assigning rating agency may revise or withdraw its rating at any time. For a description of the limitations of the ratings of the offered certificates, see "Ratings" in this prospectus supplement. S-35 RISK FACTORS You should carefully consider the risks described below and those described in the accompanying prospectus under "Risk Factors" before making an investment decision. Your investment in the offered certificates will involve some degree of risk. If any of the following risks are realized, your investment could be materially and adversely affected. In addition, other risks unknown to us or which we currently consider immaterial may also impair your investment. This prospectus supplement also contains forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including the risks described below and elsewhere in this prospectus supplement and the accompanying prospectus. RISKS RELATED TO THE OFFERED CERTIFICATES THE TRUST FUND'S ASSETS MAY BE INSUFFICIENT TO ALLOW FOR REPAYMENT IN FULL ON YOUR CERTIFICATES. If the assets of the trust fund are insufficient to make distributions on the offered certificates, no other assets will be available for distribution of the deficiency. The offered certificates will represent interests in the trust fund only and will not be obligations of or represent interests in us, any of our affiliates or any other person or entity. The offered certificates have not been guaranteed or insured by any governmental agency or instrumentality or by any other person or entity. SUBORDINATION OF THE CLASS A-M AND A-J CERTIFICATES TO THE CLASS A-1, A-2, A-3, A-AB, A-4 AND A-1A CERTIFICATES WILL AFFECT THE TIMING OF PAYMENTS AND THE APPLICATION OF LOSSES ON THOSE RESPECTIVE CLASSES OF CERTIFICATES. If you purchase class A-M or A-J certificates, then your offered certificates will provide credit support to the class A-1, A-2, A-3, A-AB, A-4 and A-1A certificates. As a result, purchasers of class A-M or A-J certificates will receive distributions after, and must bear the effects of losses on the pooled mortgage loans before, the holders of those other classes of certificates. When making an investment decision, you should consider, among other things-- o the distribution priorities of the respective classes of the series 2006-PWR12 certificates, o the order in which the principal balances of the respective classes of the series 2006-PWR12 certificates with principal balances will be reduced in connection with losses and default-related shortfalls, and o the characteristics and quality of the pooled mortgage loans. A DISPROPORTIONATELY HIGH RATE OF PREPAYMENTS ON POOLED MORTGAGE LOANS WITH RELATIVELY HIGH MORTGAGE INTEREST RATES MAY ADVERSELY AFFECT THE YIELD ON CERTAIN CLASSES OF CERTIFICATES. The pass-through rate on certain classes of certificates is based upon, equal to or limited by the weighted average of the adjusted net mortgage interest rates on the pooled mortgage loans from time to time. If you purchase a class of certificates with a pass-through rate that is based upon, equal to or limited by the weighted average of the adjusted net mortgage interest rates, the pass-through rate (and, accordingly, the yield) on your offered certificates could (or in the case of a class of certificates with a pass-through rate equal to or based upon the weighted average of the adjusted net mortgage interest rates, will) be adversely affected if pooled mortgage loans with relatively high mortgage interest rates experienced a faster rate of principal payments than pooled mortgage loans with relatively low mortgage interest rates. THE YIELDS TO MATURITY ON THE OFFERED CERTIFICATES DEPEND ON A NUMBER OF FACTORS THAT CANNOT BE PREDICTED WITH ANY CERTAINTY. The yield on your offered certificates will depend on, among other things-- o the price you paid for your offered certificates, and S-36 o the rate, timing and amount of distributions on your offered certificates. The rate, timing and amount of distributions on your offered certificates will depend on-- o the pass-through rate for, and the other payment terms of, your offered certificates, o the rate and timing of payments and other collections of principal on the pooled mortgage loans, which in turn will be affected by amortization schedules, the dates on which balloon payments are due and the rate and timing of principal prepayments and other unscheduled collections, including for this purpose, any prepayments occurring by application of earnout reserves or performance holdback amounts (see the "Footnotes to Appendix B and Appendix C" for more detail) if leasing criteria are not satisfied, collections made in connection with liquidations of pooled mortgage loans due to defaults, casualties or condemnations affecting the mortgaged properties, or purchases or other removals of pooled mortgage loans from the trust fund, o the rate and timing of defaults, and the severity of losses, if any, on the pooled mortgage loans, o the rate and timing of reimbursements made to the master servicers, the special servicers or the trustee for nonrecoverable advances and/or for advances previously made in respect of a worked-out pooled mortgage loan that are not repaid at the time of the workout, o the rate, timing, severity and allocation of other shortfalls and expenses that reduce amounts available for distribution on the series 2006-PWR12 certificates, and o servicing decisions with respect to the pooled mortgage loans. These factors cannot be predicted with any certainty. Accordingly, you may find it difficult to analyze the effect that these factors might have on the yield to maturity of your offered certificates. In the absence of significant losses on the mortgage pool, holders of the class A-1, A-2, A-3, A-AB and A-4 certificates should be concerned with these factors primarily insofar as they relate to the pooled mortgage loans in loan group 1. Until the class A-1, A-2, A-3, A-AB and A-4 certificates are retired, holders of the class A-1A certificates should, in the absence of significant losses on the mortgage pool, be concerned with these factors primarily insofar are they relate to the pooled mortgage loans in loan group 2. The principal balance of the class A-1, A-2, A-3, A-AB and A-4 certificates will be particularly affected by the rate and timing of payments and other collections of principal on the pooled mortgage loans in loan group 1 and, except following the retirement of the class A-1A certificates or in connection with significant losses on the mortgage pool, should be largely unaffected by the rate and timing of payments and other collections of principal on the pooled mortgage loans in loan group 2. The principal balance of the class A-1A certificates will be particularly affected by the rate and timing of payments and other collections of principal on the pooled mortgage loans in loan group 2 and, except following retirement of the class A-1, A-2, A-3, A-AB and A-4 certificates or in connection with significant losses on the mortgage pool, should be largely unaffected by the rate and timing of payments and other collections of principal on the pooled mortgage loans in loan group 1. INCORRECT ASSUMPTIONS REGARDING PRINCIPAL PAYMENTS AND PREPAYMENTS MAY LEAD TO A LOWER THAN EXPECTED YIELD ON YOUR INVESTMENT. In deciding whether to purchase any offered certificates, you should make an independent decision as to the appropriate assumptions regarding principal payments and prepayments on the pooled mortgage loans to be used. If you purchase your offered certificates at a premium, and if payments and other collections of principal on the pooled mortgage loans occur at a rate faster than you anticipated at the time of your purchase, then your actual yield to maturity may be lower than you had assumed at the time of your purchase. Conversely, if you purchase your offered certificates at a discount, and if payments and other collections of principal on the pooled mortgage loans occur at a rate slower than you anticipated at the time of your purchase, then your actual yield to maturity may be lower than you had S-37 assumed at the time of your purchase. Insofar as the principal (if any) of your offered certificate is repaid, you may not be able to reinvest the amounts that you receive in an alternative investment with a yield comparable to the yield on your offered certificates. Generally speaking, a borrower is less likely to prepay a mortgage loan if prevailing interest rates are at or above the interest rate borne by its mortgage loan. On the other hand, a borrower is more likely to prepay if prevailing rates fall significantly below the interest rate borne by its mortgage loan. Borrowers are less likely to prepay mortgage loans with lock-out periods, prepayment premiums or yield maintenance charge provisions, to the extent enforceable, than otherwise identical mortgage loans without these provisions, with shorter lock-out periods or with lower or no prepayment premiums and/or yield maintenance charges. A HIGH RATE AND EARLY OCCURRENCE OF BORROWER DELINQUENCIES AND DEFAULTS MAY ADVERSELY AFFECT YOUR INVESTMENT. If you calculate the anticipated yield of your offered certificates based on a rate of default or amount of losses lower than that actually experienced by the pooled mortgage loans and those additional losses result in a reduction of the total distributions on, or the total principal balance or notional amount, as applicable, of your offered certificates, your actual yield to maturity will be lower than expected and could be negative under certain extreme scenarios. The timing of any loss on a liquidated mortgage loan that results in a reduction of the total distributions on or the total principal balance or notional amount of your offered certificates will also affect the actual yield to maturity of your offered certificates, even if the rate of defaults and severity of losses are consistent with your expectations. In general, the earlier a loss is borne by you, the greater the effect on your yield to maturity. Delinquencies on the pooled mortgage loans, if the delinquent amounts are not advanced, may result in shortfalls in distributions of interest and/or principal to the holders of the offered certificates for the current month. Furthermore, no interest will accrue on this shortfall during the period of time that the payment is delinquent. In addition, if the debt service advances and/or servicing advances are made with respect to a pooled mortgage loan after default and the loan is thereafter worked out under terms that do not provide for the repayment of those advances in full at the time of the workout, then any reimbursements of those advances prior to the actual collection of the amount for which the advance was made may also result in shortfalls in distributions of principal to the holders of the offered certificates with principal balances for the current month. Even if losses on the pooled mortgage loans are not allocated to a particular class of offered certificates with principal balances, the losses may affect the weighted average life and yield to maturity of that class of offered certificates. In the case of any material monetary or material non-monetary default, the applicable special servicer may accelerate the maturity of the related pooled mortgage loan, which could result in an acceleration of payments to the series 2006-PWR12 certificateholders. In addition, losses on the pooled mortgage loans, even if not allocated to a class of offered certificates with principal balances, may result in a higher percentage ownership interest evidenced by those offered certificates in the remaining pooled mortgage loans than would otherwise have resulted absent the loss. The consequent effect on the weighted average life and yield to maturity of the offered certificates will depend upon the characteristics of those remaining mortgage loans in the trust fund. THE PAYMENT OF EXPENSES OF THE TRUST FUND MAY REDUCE THE AMOUNT OF DISTRIBUTIONS ON YOUR OFFERED CERTIFICATES. As described in this prospectus supplement, various fees, out-of-pocket expenses and liabilities will constitute expenses of the trust fund for which the trust fund is not entitled to reimbursement from any person or entity. Shortfalls in available funds will result from the payment of these expenses and those shortfalls will generally be borne as described under "Description of the Offered Certificates" in this prospectus supplement. The payment of the expenses of the trust fund may result in shortfalls on one or more classes of offered certificates in any particular month even if those shortfalls do not ultimately become realized as losses on those offered certificates. YOU WILL HAVE LIMITED ABILITY TO CONTROL THE SERVICING OF THE POOLED MORTGAGE LOANS AND THE PARTIES WITH CONTROL OVER THE SERVICING OF THE POOLED MORTGAGE LOANS MAY HAVE INTERESTS THAT CONFLICT WITH YOUR INTERESTS. Generally, as a holder of any of the offered certificates, you will not have any rights to participate in decisions with respect to the administration of the trust fund, and your offered certificates generally do not entitle you to vote, except with respect to specified actions set forth in the series 2006-PWR12 pooling and servicing agreement. Decisions relating to the administration of the trust fund will generally be made by other parties, whose decisions (even if they are made in the best S-38 interests of the certificateholders as a collective whole) may differ from the decisions that you would have made and may be contrary to your interests. In addition, their authority to make decisions and take action will be subject to (a) the express terms of the series 2006-PWR12 pooling and servicing agreement, (b) any rights of the series 2006-PWR12 controlling class representative, and (c) in the case of the 1675 Broadway pooled mortgage loan and the Tuscany Plaza pooled mortgage loan, the rights of the respective holder of the related non-pooled mortgage loan under the related intercreditor agreement. See "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement--The Series 2006-PWR12 Controlling Class Representative" and "Description of the Mortgage Pool--Certain Characteristics of the Mortgage Pool --Subordinate and/or Other Financing--Split Loan Structures--The 1675 Broadway Loan Group" and "--The Tuscany Plaza Loan Group" in this prospectus supplement. IF A MASTER SERVICER, A PRIMARY SERVICER OR A SPECIAL SERVICER PURCHASES SERIES 2006-PWR12 CERTIFICATES OR IF IT SERVICES NON-POOLED MORTGAGE LOANS, A CONFLICT OF INTEREST COULD ARISE BETWEEN ITS DUTIES AND ITS INTERESTS IN THE SERIES 2006-PWR12 CERTIFICATES. A master servicer, a primary servicer or a special servicer or an affiliate thereof may purchase series 2006-PWR12 certificates. The purchase of series 2006-PWR12 certificates by a master servicer, a primary servicer or a special servicer, or by an affiliate of that servicer, could cause a conflict between that servicer's duties under the series 2006-PWR12 pooling and servicing agreement and the interests of that servicer or affiliate as a holder of a series 2006-PWR12 certificate, especially to the extent that certain actions or events have a disproportionate effect on one or more classes of series 2006-PWR12 certificates. Furthermore, the master servicers, the primary servicers and the special servicers have each advised us that they intend to continue to service existing and new commercial and multifamily mortgage loans for their affiliates and for third parties, including portfolios of mortgage loans similar to the mortgage loans included in the trust fund. These other mortgage loans and the related mortgaged properties may be in the same markets as, or have owners, obligors or property managers in common with, certain of the mortgage loans in the trust fund and the related mortgaged properties. To the extent that overlap exists, the interests of the master servicers, the primary servicers, the special servicers and their respective affiliates and their other clients may differ from, and compete with, the interests of the trust fund. However, under the series 2006-PWR12 pooling and servicing agreement and the primary servicing agreements, the master servicers, the primary servicers and the special servicers, as applicable, are each required to service the mortgage loans for which it is responsible in accordance with the Servicing Standard. VARIOUS OTHER SECURITIZATION-LEVEL CONFLICTS OF INTEREST MAY HAVE AN ADVERSE EFFECT ON YOUR OFFERED CERTIFICATES. Conflicts Between Various Classes of Certificateholders and Lenders. Pursuant to the provisions of the various pooling and servicing and/or intercreditor agreements that govern the servicing of the pooled mortgage loans, in the case of each pooled mortgage loan, (a) the applicable party that is responsible for performing special servicing duties with respect to that pooled mortgage loan following a material default is given considerable latitude in determining when and how to liquidate or modify that pooled mortgage loan, (b) one or more third parties or representatives on their behalf will be entitled (among other rights) to replace that applicable party and grant or withhold consent to proposed servicing actions involving that pooled mortgage loan, (c) except in limited circumstances, those third parties will not include you and will consist of one or more of (i) the holders of a class of subordinate series 2006-PWR12 certificates and/or (ii) the holders of a non-pooled subordinate loan secured by the same mortgaged property as the pooled mortgage loan and (d) other third parties or their representatives who may also have consultation rights with respect to various servicing matters. For a discussion of those arrangements, see "Description of the Mortgage Pool--Certain Characteristics of the Mortgage Pool--Subordinate and/or Other Financing--Split Loan Structures" and "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement" in this prospectus supplement. Those certificateholders, noteholders or other parties and their respective representatives may have interests that differ, perhaps materially, from yours. For instance, a particular representative or similar party may believe that deferring enforcement of a defaulted mortgage loan will result in higher future proceeds than would earlier enforcement, whereas the interests of the trust fund may be better served by prompt action, since delay followed by a market downturn could result in less proceeds to the trust fund than would have been realized if earlier action had been taken. You should expect these certificateholders, noteholders or other parties to exercise their rights and powers in a manner that they determine is appropriate in their respective sole discretion. None of them will have any liability for acting solely in its own interests. The initial series 2006-PWR12 controlling class representative will be an affiliate of the general special servicer. The initial holders of the 1675 Broadway non-pooled mortgage loan and the Tuscany Plaza non-pooled mortgage loan will be affiliated with each other and will be affiliates of the applicable sponsor, mortgage S-39 loan seller and originator, the applicable master servicer and the applicable special servicer of the related pooled mortgage loan. Conflicts Between the Trust Fund and the Mortgage Loan Sellers and Their Affiliates. Conflicts of interest may arise between the trust fund, on the one hand, and the mortgage loan sellers and their affiliates that engage in the acquisition, development, operation, financing and disposition of real estate, on the other hand. Those conflicts may arise because a mortgage loan seller and its affiliates intend to continue to actively acquire, develop, operate, lease, finance and dispose of real estate-related assets in the ordinary course of their businesses. During the course of their business activities, the respective mortgage loan sellers and their affiliates may acquire, sell or lease properties, or finance loans secured by properties (or by ownership interests in the related borrowers) which may include the mortgaged properties securing the pooled mortgage loans or properties that are in the same markets as those mortgaged properties. Additionally, the proceeds of certain of the pooled mortgage loans were used to refinance debt previously held by a mortgage loan seller or an affiliate of a mortgage loan seller and the mortgage loan sellers or their affiliates may have or may have had equity investments in the borrowers (or in the owners of the borrowers) or mortgaged properties under certain of the pooled mortgage loans. Each of the mortgage loan sellers and their affiliates have made and/or may make or have preferential rights to make loans to, or equity investments in, affiliates of the borrowers under the mortgage loans. Further, in the case of certain of the loan groups, the holder of one or more related non-pooled mortgage loans may be a mortgage loan seller or an affiliate of a mortgage loan seller. In the circumstances described above, the interests of those mortgage loan sellers and their affiliates may differ from, and compete with, the interests of the trust fund. Decisions made with respect to those assets may adversely affect the amount and timing of distributions on the offered certificates. YOU MAY BE BOUND BY THE ACTIONS OF OTHER SERIES 2006-PWR12 CERTIFICATEHOLDERS EVEN IF YOU DO NOT AGREE WITH THOSE ACTIONS. In some circumstances, the holders of a specified percentage of the series 2006-PWR12 certificates will be entitled to direct, consent to or approve certain actions, including amending the series 2006-PWR12 pooling and servicing agreement. In these cases, this direction, consent or approval will be sufficient to bind all holders of series 2006-PWR12 certificates regardless of whether you agree with that direction, consent or approval. LACK OF A SECONDARY MARKET FOR THE OFFERED CERTIFICATES MAY MAKE IT DIFFICULT FOR YOU TO RESELL YOUR OFFERED CERTIFICATES AT ALL OR AT THE PRICE YOU WANT. There currently is no secondary market for the offered certificates. Although the underwriters have advised us that they currently intend to make a secondary market in the offered certificates, they are under no obligation to do so. Accordingly, we cannot assure you that a secondary market for the offered certificates will develop. Moreover, if a secondary market does develop, we cannot assure you that it will provide you with liquidity of investment or that it will continue for the life of the offered certificates. The offered certificates will not be listed on any securities exchange. Lack of liquidity could adversely affect the market value of the offered certificates. The market value of the offered certificates at any time may be affected by many other factors, including then prevailing interest rates, and no representation is made by any person or entity as to what the market value of any offered certificate will be at any time. BECAUSE THE OFFERED CERTIFICATES ARE IN BOOK-ENTRY FORM, YOUR RIGHTS CAN ONLY BE EXERCISED INDIRECTLY AND THERE MAY BE OTHER ADVERSE CONSEQUENCES. Each class of offered certificates initially will be represented by one or more certificates registered in the name of Cede & Co., as the nominee for The Depository Trust Company, and will not be registered in the names of the related beneficial owners of those certificates or their nominees. For more detailed information, you should refer to the following sections in the accompanying prospectus: (1) "Risk Factors--Risks Relating to the Certificates--If your certificates are issued in book-entry form, you will only be able to exercise your rights indirectly through DTC and you may also have limited access to information regarding those certificates"; and (2) "Description of the Certificates--Book-Entry Registration and Definitive Certificates". S-40 RISKS RELATED TO THE MORTGAGE LOANS EACH OF THE VARIOUS TYPES OF MORTGAGED PROPERTIES ARE SUBJECT TO UNIQUE RISKS WHICH MAY REDUCE PAYMENTS ON YOUR CERTIFICATES. Mortgaged properties representing security for 40.8%, 25.0%, 11.9%, 9.2%, 8.1%, 2.2%, 1.0%, 0.9% and 0.9% of the initial mortgage pool balance are fee and/or leasehold interests in retail properties, office properties, industrial properties, multifamily properties, hospitality properties, mixed use properties, other properties, self storage properties and manufactured housing community properties, respectively. Loan group 1 consists of 185 pooled mortgage loans, representing 90.6% of the initial mortgage pool balance. Loan group 2 consists of 28 pooled mortgage loans, representing 9.4% of the initial mortgage pool balance. Loan group 2 will consist of 92.9% of the initial mortgage pool balance of all the pooled mortgage loans secured by multifamily or manufactured housing community properties. Mortgage loans that are secured by liens on the types of properties securing the pooled mortgage loan are exposed to unique risks particular to those types of properties. For more detailed information, you should refer to the following sections in the accompanying prospectus: (1) "Risk Factors--Risks Relating to the Mortgage Loans"; and (2) "Description of the Trust Funds--Mortgage Loans". THE REPAYMENT OF A MULTIFAMILY OR COMMERCIAL MORTGAGE LOAN IS DEPENDENT ON THE CASH FLOW PRODUCED BY THE CORRESPONDING MORTGAGED PROPERTY, WHICH CAN BE VOLATILE AND INSUFFICIENT TO ALLOW TIMELY PAYMENT ON YOUR OFFERED CERTIFICATES. The mortgage loans that we intend to include in the trust fund are secured by various types of income-producing properties, and there are certain risks that are generally applicable to loans secured by all of those property types. Commercial lending is generally thought to expose a lender to greater risk than one-to-four family residential lending because, among other things, it typically involves larger loans. The repayment of a commercial mortgage loan is typically dependent upon the ability of the applicable property to produce cash flow. Even the liquidation value of a commercial property is determined, in substantial part, by the amount of the property's cash flow (or its potential to generate cash flow). However, net operating income and cash flow can be volatile and may be insufficient to cover debt service on the loan at any given time. The mortgage loans that we intend to include in the trust fund were originated either after the cut-off date or within twelve months prior to the cut-off date. Consequently, the mortgage loans should generally be considered not to have long-standing payment histories and, in some cases, the mortgage loans have little or no payment histories. The net operating income, cash flow and property value of the mortgaged properties may be adversely affected by any one or more of the following factors: o the age, design and construction quality of the property; o perceptions regarding the safety, convenience and attractiveness of the property; o the proximity and attractiveness of competing properties; o the adequacy and effectiveness of the property's operations, management and maintenance; o increases in operating expenses (including but not limited to insurance premiums) at the property and in relation to competing properties; o an increase in the capital expenditures needed to maintain the property or make improvements; o the dependence upon a single tenant, or a concentration of tenants in a particular business or industry; S-41 o a decline in the financial condition of a major tenant; o an increase in vacancy rates; and o a decline in rental rates as leases are renewed or entered into with new tenants. Other factors are more general in nature, such as: o national, regional or local economic conditions (including plant closings, military base closings, industry slowdowns and unemployment rates); o local real estate conditions (such as an oversupply of competing properties, rental space or multifamily housing); o demographic factors; o decreases in consumer confidence; o changes in prices for key commodities or products; o changes in consumer tastes and preferences, including the effects of adverse publicity; and o retroactive changes in building codes. The volatility of net operating income will be influenced by many of the foregoing factors, as well as by: o the length of tenant leases; o the creditworthiness of tenants; o the level of tenant defaults; o the ability to convert an unsuccessful property to an alternative use; o new construction in the same market as the mortgaged property; o rent control laws or other laws impacting operating costs; o the number and diversity of tenants; o the availability of trained labor necessary for tenant operations; o the rate at which new rentals occur; and o the property's operating leverage (which is 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 under mortgage loans secured by such properties. S-42 Certain of the retail properties have theaters as part of the mortgaged property. These retail properties are exposed to certain unique risks. For example, decreasing attendance at a theater property could adversely affect revenue of a theater which may, in turn, cause the tenant to experience financial difficulties. In addition, because of unique construction requirements of theaters, any vacant theater space would not easily be converted to other uses. Certain of the retail properties have health clubs as part of the mortgaged property. Several factors may adversely affect the value and successful operation of a health club, including: (1) the physical attributes of the health club (e.g., its age, appearance and layout); (2) the reputation, safety, convenience and attractiveness of the property to users; (3) the quality and philosophy of management; (4) management's ability to control membership growth and attrition; (5) competition in the tenant's marketplace from other health clubs and alternatives to health clubs; or (6) adverse changes in economic and social conditions and demographic changes (e.g., population decreases or changes in average age or income), which may result in decreased demand. In addition, there may be significant costs associated with changing consumer preferences (e.g., multi-purpose clubs from single purpose clubs or varieties of equipment, classes, services and amenities). In addition, health clubs may not be readily convertible to alternative uses if those properties were to become unprofitable for any reason. The liquidation value of any such health club consequently may be less than would be the case of the property were readily adaptable to changing consumer preferences for other uses. Furthermore, if the debt service under a pooled mortgage loan is scheduled to increase during the term of the loan pursuant to an increase in the mortgage interest rate, the expiration of an interest-only period or otherwise, there can be no assurance that the net cash flow at the property will be sufficient to pay the additional debt service and, even if it is sufficient, the requirement to pay the additional debt service may reduce the cash flow available to the borrower to operate and maintain the mortgaged property. THE PROSPECTIVE PERFORMANCE OF THE COMMERCIAL AND MULTIFAMILY 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 mortgage loan. Each income-producing real property represents a separate and distinct business venture; and, as a result, each of the multifamily and commercial mortgage loans included in one of the depositor's trusts 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 pooled mortgage loans underlying the offered certificates independently from the performance of 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 prospectus supplement does not include disclosure concerning the delinquency and loss experience of static pools of periodic originations by the sponsors of assets of the type to be securitized (known as "static pool information"). Because of the highly heterogeneous nature of the assets in commercial mortgage backed securities transactions, static pool information for prior securitized pools, even those involving the same asset types (e.g., hotels or office buildings), may be S-43 misleading, since the economics of the properties and terms of the loans may be materially different. In particular, static pool information showing 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 prospectus supplement with respect to the pooled mortgage loans, and not on the basis of any successful performance of other pools of securitized commercial mortgage loans. CERTAIN MORTGAGE LOANS MAY HAVE A LIMITED OPERATING HISTORY. The properties securing certain of the mortgage loans are newly constructed and/or recently opened and, as such, have a limited operating history. There can be no assurance that any of the properties, whether newly constructed and/or recently opened or otherwise, will perform as anticipated. NON-RECOURSE LOANS LIMIT REMEDIES FOLLOWING BORROWER DEFAULT. The mortgage loans that will back the offered certificates are generally non-recourse loans. Therefore, recourse generally may be had only against the specific mortgaged property securing a pooled mortgage loan and any other assets that may have been pledged to secure that pooled mortgage loan, which may or may not be sufficient to repay that pooled mortgage loan in full. Consequently, the repayment of each pooled mortgage loan will be primarily dependent upon the sufficiency of the net operating income from the related mortgaged property and, at maturity, upon the market value of that mortgaged property. Even in cases where the related mortgage loan documents provide for recourse against the borrower, a guarantor or another entity, we cannot assure you that significant amounts will be realized in respect of that recourse in the event of a default with respect to any pooled mortgage loan. No mortgage loan that we intend to include in the trust fund is insured or guaranteed by the United States of America, any governmental agency or instrumentality, any private mortgage insurer or by us, any mortgage loan seller, either master servicer, any special servicer, any primary servicer, the trustee, the certificate administrator, any underwriter or any of their respective affiliates. THE CONCENTRATION OF LOANS AND NUMBER OF LOANS WITH THE SAME OR RELATED BORROWERS INCREASES THE POSSIBILITY OF LOSS ON THE LOANS WHICH COULD REDUCE PAYMENTS ON YOUR CERTIFICATES. The effect of mortgage pool loan losses will be more severe: o if the pool is comprised of a small number of mortgage loans, each with a relatively large principal amount; or o if the losses relate to loans that account for a disproportionately large percentage of the pool's aggregate principal balance of all mortgage loans. The largest of the pooled mortgage loans or group of cross-collateralized and cross-defaulted pooled mortgage loans is the pooled mortgage loan secured by the mortgaged properties collectively identified on Appendix B as Woodland Mall, which represents 7.5% of the initial mortgage pool balance (and 8.3% of the initial loan group 1 balance). The ten largest pooled mortgage loans or groups of cross-collateralized and cross-defaulted pooled mortgage loans in the aggregate represent 32.1% of the initial mortgage pool balance. Each of the other pooled mortgage loans or groups of cross-collateralized and cross-defaulted pooled mortgage loans represents no greater than 1.4% of the initial mortgage pool balance. In addition, the mortgage pool includes some groups of mortgage loans where the mortgage loans in the particular group are not cross-collateralized or cross-defaulted but were made to borrowers related through common ownership of partnership or other equity interests and where, in general, the related mortgaged properties are commonly managed. See "Description of the Mortgage Pool--Cross-Collateralized Mortgage Loans and Multi-Property Mortgage Loans; Mortgage Loans with Affiliated Borrowers" in this prospectus supplement. S-44 LIMITATIONS ON THE ENFORCEABILITY OF MULTI-BORROWER/MULTI-PROPERTY ARRANGEMENTS MAY HAVE AN ADVERSE EFFECT ON RECOURSE IN THE EVENT OF A DEFAULT ON A MORTGAGE LOAN. The trust fund will include some mortgage loans and groups of cross-collateralized mortgage loans that, in each case, represent the obligations of multiple borrowers that are liable on a joint and several basis for the repayment of the entire indebtedness evidenced by the related mortgage loan or group of cross-collateralized mortgage loans. Arrangements whereby multiple borrowers grant their respective mortgaged properties as security for a mortgage loan could be challenged as fraudulent conveyances by the creditors or the bankruptcy estate of any of the related borrowers. Under federal and most state fraudulent conveyance statutes, the incurring of an obligation or the transfer of property, including the granting of a mortgage lien, by a person may be voided under certain circumstances if: o the person did not receive fair consideration or reasonably equivalent value in exchange for the obligation or transfer; and o the person: (1) was insolvent at the time of the incurrence of the obligation or transfer, or (2) was engaged in a business or a transaction or was about to engage in a business or a transaction, for which the person's assets constituted an unreasonably small amount of capital after giving effect to the incurrence of the obligation or the transfer, or (3) intended to incur, or believed that it would incur, debts that would be beyond the person's ability to pay as those debts matured. Accordingly, a lien granted by a borrower could be avoided if a court were to determine that: o the borrower did not receive fair consideration or reasonably equivalent value when pledging its mortgaged property for the equal benefit of the other related borrowers; and o the borrower was insolvent at the time of granting the lien, was rendered insolvent by the granting of the lien, was left with inadequate capital or was not able to pay its debts as they matured. We cannot assure you that a lien granted by a borrower on its mortgaged property to secure a multi-borrower/multi-property mortgage loan or group of cross-collateralized mortgage loans, or any payment thereon, would not be avoided as a fraudulent conveyance. In addition, when multiple real properties secure a mortgage loan or group of cross-collateralized mortgage loans, the amount of the mortgage encumbering any particular one of those properties may be less than the full amount of the related aggregate mortgage loan indebtedness, to minimize recording tax. This mortgage amount is generally established at 100% to 150% of the appraised value or allocated loan amount for the mortgaged property and will limit the extent to which proceeds from the property will be available to offset declines in value of the other properties securing the same mortgage loan. See "Description of the Mortgage Pool--Certain Characteristics of the Mortgage Pool" in this prospectus supplement for more information regarding any multi-property mortgage loans in the trust fund. STATE AND FEDERAL LAWS APPLICABLE TO FORECLOSURE ACTIONS MAY AFFECT THE TIMING OF PAYMENTS ON YOUR CERTIFICATES. The ability to realize upon the pooled mortgage loans may be limited by the application of state laws. For example, some states, including California, have laws prohibiting more than one "judicial action" to enforce a mortgage obligation. Some courts have construed the term "judicial action" broadly. In the case of any pooled mortgage loan secured by mortgaged properties located in multiple states, the applicable master servicer or the applicable special servicer may be required to foreclose first on mortgaged properties located in states where these "one action" rules apply (and where non-judicial foreclosure is permitted) before foreclosing on properties located in states where judicial foreclosure is the only S-45 permitted method of foreclosure. The application of other state and federal laws may delay or otherwise limit the ability to realize on the pooled mortgage loans. CONVERTING COMMERCIAL PROPERTIES TO ALTERNATIVE USES MAY REQUIRE SIGNIFICANT EXPENSES WHICH COULD REDUCE PAYMENTS ON YOUR CERTIFICATES; AND LIMITED ADAPTABILITY FOR OTHER USES MAY SUBSTANTIALLY LOWER THE LIQUIDATION VALUE OF A MORTGAGED PROPERTY. Some of the mortgaged properties may not be readily convertible to alternative uses if those properties were to become unprofitable for any reason. This is because: o converting commercial properties to alternate uses or converting single-tenant commercial properties to multi-tenant properties generally requires substantial capital expenditures; and o zoning, land use or other restrictions also may prevent alternative uses. The liquidation value of a mortgaged property not readily convertible to an alternative use may be substantially less than would be the case if the mortgaged property were readily adaptable to other uses. If this type of mortgaged property were liquidated and a lower liquidation value were obtained, less funds would be available for distributions on your certificates. See "--Mortgaged Properties that are Not In Compliance with Zoning and Building Code Requirements and Use Restrictions Could Adversely Affect Payments on Your Certificates" below. PROPERTY VALUE MAY BE ADVERSELY AFFECTED EVEN WHEN THERE IS NO CHANGE IN CURRENT OPERATING INCOME. Various factors may adversely affect the value of the mortgaged properties without affecting the properties' current net operating income. These factors include, among others: o changes in governmental regulations, fiscal policy, zoning or tax laws; o potential environmental legislation or liabilities or other legal liabilities; o proximity and attractiveness of competing properties; o new construction of competing properties in the same market; o convertibility of a mortgaged property to an alternative use; o the availability of refinancing; and o changes in interest rate levels. TENANT CONCENTRATION INCREASES THE RISK THAT CASH FLOW WILL BE INTERRUPTED WHICH COULD REDUCE PAYMENTS ON YOUR CERTIFICATES. A deterioration in the financial condition of a tenant can be particularly significant if a mortgaged property is leased to a single or large tenant or a small number of tenants because rent interruptions by a tenant may cause the borrower to default on its obligations to the lender. Forty (40) of the mortgaged properties, representing security for 11.0% of the initial mortgage pool balance (and for 11.8% of the initial loan group 1 balance and 2.7% of the initial loan group 2 balance), are leased to single tenants. Mortgaged properties leased to a single tenant or a small number of tenants also are more susceptible to interruptions of cash flow if a tenant fails to renew its lease or defaults under its lease. This is so because: o the financial effect of the absence of rental income may be severe; o more time may be required to re-lease the space; and S-46 o substantial capital costs may be incurred to make the space appropriate for replacement tenants. Additionally, some of the tenants at the mortgaged properties (including sole tenants or other significant tenants) have lease termination option dates or lease expiration dates that are prior to or shortly after the related maturity date or anticipated repayment date, including the mortgaged property identified on Appendix B as 9 Finderne Avenue, which also has a parent in bankruptcy. See "--Tenant Bankruptcies May Adversely Affect the Income Produced by the Mortgaged Properties and May Adversely Affect the Payments on Your Certificates" below. Certain of the mortgaged properties may have tenants that sublet all or a portion of their space and although the rent roll continues to reflect those tenants' occupancy and those tenants continue to be responsible under the related lease, those tenants may not be in physical occupancy of their space. See Appendix B to this prospectus supplement for the expiration date of the leases for each of the top 3 tenants at each mortgaged property. There are a number of other mortgaged properties that similarly have a significant amount of scheduled lease expirations or potential terminations before the maturity of the related pooled mortgage loan, although those circumstances were generally addressed by escrow requirements or other mitigating provisions. Another factor that you should consider is that retail, industrial and office properties also may be adversely affected if there is a concentration of tenants or of tenants in the same or similar business or industry. In some cases, the sole or a significant tenant is related to the subject borrower or an affiliate of that borrower. For further information with respect to tenant concentrations, see Appendix B to this prospectus supplement. VARIOUS ASSET-LEVEL CONFLICTS OF INTEREST MAY HAVE AN ADVERSE EFFECT ON YOUR CERTIFICATES. Conflicts Between Managers and the Borrowers. Substantially all of the property managers for the mortgaged properties securing the pooled mortgage loans or their affiliates manage additional properties, including properties that may compete with those mortgaged properties. Affiliates of the managers, and certain of the managers themselves, also may own other properties, including competing properties. The managers of the mortgaged properties securing the pooled mortgage loans may accordingly experience conflicts of interest in the management of those mortgaged properties. Mortgaged Properties Leased to Borrowers or Borrower Affiliated Entities Also Have Risks. If a mortgaged property is leased in whole or substantial part to the borrower under the mortgage loan or to an affiliate of the borrower, there may be conflicts. For instance, a landlord may be more inclined to waive lease conditions for an affiliated tenant than it would for an unaffiliated tenant. We cannot assure you that the conflicts arising where a borrower is affiliated with a tenant at a mortgaged property will not adversely impact the value of the related mortgage loan. In some cases this affiliated lessee is physically occupying space related to its business; in other cases, the affiliated lessee is a tenant under a master lease with the borrower, under which the tenant is obligated to make rent payments but does not occupy any space at the mortgaged property. These master leases are typically used to bring occupancy to a "stabilized" level but may not provide additional economic support for the mortgage loan. We cannot assure you the space "leased" by a borrower affiliate will eventually be occupied by third party tenants and consequently, a deterioration in the financial condition of the borrower or its affiliates can be particularly significant to the borrower's ability to perform under the mortgage loan as it can directly interrupt the cash flow from the mortgaged property if the borrower's or its affiliate's financial condition worsens. These risks may be mitigated when mortgaged properties are leased to unrelated third parties. RENEWAL, TERMINATION, EXPIRATION OF LEASES AND RELETTING ENTAILS RISKS THAT MAY ADVERSELY AFFECT YOUR INVESTMENT. Repayment of pooled mortgage loans secured by retail, office and industrial properties will be affected by the expiration of leases and the ability of the related borrowers and property managers to renew the leases or to relet the space on comparable terms. Certain mortgaged properties securing the pooled mortgage loans may be leased in whole or in part to government sponsored tenants who have the right to cancel their leases at any time because of lack of appropriations. In addition, certain of the mortgaged properties securing the pooled mortgage loans may be leased to either a single or other significant tenant with a lease termination option date or lease expiration date that is prior to the maturity date or anticipated repayment date of such mortgage loan. In addition, certain properties may have significant tenants or groups of tenants that are paying rent but are not in occupancy or may have vacant space that is not leased, and in certain cases, the occupancy percentage could be less than S-47 80%. Additionally, certain properties may have tenants who have executed leases but have not yet taken occupancy or commenced rent payments. Any "dark" space may cause the property to be less desirable to other potential tenants or the related tenant may be more likely to default in its obligations under the lease. Certain properties may also have adjoining properties with "dark" spaces or "dark" shadow anchors. We cannot assure you that those tenants will continue to fulfill their lease obligations or that the space will be relet. In the case of certain pooled mortgage loans, all or a substantial portion of the tenant leases at the mortgaged property may expire, or grant to one or more tenants a lease termination option that is exercisable, at various times prior to the loan's maturity date or anticipated repayment date, including single tenant properties whose sole tenant lease may expire or terminate prior to the loan's maturity date. We cannot assure you that (1) leases that expire can be renewed, (2) the space covered by leases that expire or are terminated can be re-leased in a timely manner at comparable rents or on comparable terms or (3) the related borrower will have the cash or be able to obtain the financing to fund any required tenant improvements. Further, lease provisions among tenants may conflict in certain instances, and create termination or other risks. For example, the tenant at the mortgaged property identified as 9 Finderne Avenue has the ability to terminate its lease on the 5th anniversary of the lease. Income from and the market value of the mortgaged properties securing the pooled mortgage loans would be adversely affected if vacant space in the mortgaged properties could not be leased for a significant period of time, if tenants were unable to meet their lease obligations or if, for any other reason, rental payments could not be collected or if one or more tenants ceased operations at the mortgaged property. Upon the occurrence of an event of default by a tenant, delays and costs in enforcing the lessor's rights could occur. In addition, certain tenants at the mortgaged properties securing the pooled mortgage loans may be entitled to terminate their leases or reduce their rents based upon negotiated lease provisions if, for example, an anchor tenant ceases operations at the related mortgaged property. In these cases, we cannot assure you that the operation of these provisions will not allow a termination or rent reduction. A tenant's lease may also be terminated or its terms otherwise adversely affected if a tenant becomes the subject of a bankruptcy proceeding. If a significant portion of a mortgaged property is leased to a single tenant, the failure of the borrower to relet that portion of the subject mortgaged property if that tenant vacates or fails to perform its obligations will have a greater adverse effect on your investment than if the subject mortgaged property were leased to a greater number of tenants. Even if vacated space is successfully relet, the costs associated with reletting, including tenant improvements and leasing commissions, could be substantial and could reduce cash flow from the related mortgaged properties. Seventy five (75) of the mortgaged loans, representing security for 40.4% of that portion of the initial mortgage pool balance that is represented by retail, office, industrial, other and/or mixed use properties, as of the cut-off date have either upfront and/or continuing reserves for tenant improvements and leasing commissions which may serve to defray such costs. There can be no assurances, however, that the funds (if any) held in such reserves for tenant improvements and leasing commissions will be sufficient to cover any of the costs and expenses associated with tenant improvements or leasing commission obligations. In addition, if a tenant defaults in its obligations to a borrower, the borrower may incur substantial costs and experience significant delays associated with enforcing rights and protecting its investment, including costs incurred in renovating or reletting the property. If a mortgaged property has multiple tenants, re-leasing costs and costs of enforcing remedies against defaulting tenants may be more frequent than in the case of mortgaged properties with fewer tenants, thereby reducing the cash flow available for debt service payments. These costs may cause a borrower to default in its other obligations which could reduce cash flow available for debt service payments. Multi-tenanted mortgaged properties also may experience higher continuing vacancy rates and greater volatility in rental income and expenses. See Appendix A, Appendix B, Appendix C and Appendix D to this prospectus supplement for additional information regarding the occupancy or leasing percentages at the mortgaged properties. See Appendix B to this prospectus supplement for the lease expiration dates for the three largest tenants (or, if applicable, single tenant) at each retail, office, industrial or mixed-use mortgaged property. The Percent Leased presented in Appendix B and Appendix D for each mortgaged property should not be construed as a statement that the relevant units, area or pads are occupied. S-48 A CONCENTRATION OF MORTGAGED PROPERTIES IN ONE OR MORE GEOGRAPHIC AREAS REDUCES DIVERSIFICATION AND MAY INCREASE THE RISK THAT YOUR CERTIFICATES MAY NOT BE PAID IN FULL. Mortgaged properties located in California, New York, Michigan, Ohio and Texas represent security for 14.7%, 14.4%, 8.3%, 7.2% and 6.2%, respectively, of the initial mortgage pool balance. Concentrations of mortgaged properties in geographic areas may increase the risk that adverse economic or other developments or natural or man-made disasters affecting a particular region of the country could increase the frequency and severity of losses on mortgage loans secured by those properties. In some historical periods, several regions of the United States have experienced significant real estate downturns when others have not. Regional economic declines or conditions in regional real estate markets could adversely affect the income from, and market value of, the mortgaged properties. Other regional factors, e.g., earthquakes, floods, hurricanes, changes in governmental rules or fiscal policies or terrorist acts also may adversely affect the mortgaged properties. For example, mortgaged properties located in California may be more susceptible to certain hazards (such as earthquakes, widespread fires or hurricanes) than properties in other parts of the country and mortgaged properties located in coastal states and the United States Virgin Islands generally may be more susceptible to hurricanes than properties in other parts of the country. The hurricanes of 2005 and related windstorms, floods and tornadoes caused extensive and catastrophic physical damage in and to coastal and inland areas located in the Gulf Coast region of the United States (parts of Texas, Louisiana, Mississippi and Alabama), parts of Florida and certain other parts of the southeastern United States. The mortgage loans do not all require the maintenance of flood insurance for the related mortgaged properties. We cannot assure you that any hurricane damage would be covered by insurance. See "--Other Risks --The Hurricanes of 2005" below, "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement--Maintenance of Insurance" in this prospectus supplement and "Description of the Pooling and Servicing Agreements--Hazard Insurance Policies" in the accompanying prospectus. PRIOR BANKRUPTCIES OR OTHER PROCEEDINGS MAY BE RELEVANT TO FUTURE PERFORMANCE. There can be no assurance that any borrower, or any principals of a borrower, have not been a party to bankruptcy proceedings, foreclosure proceedings or deed-in-lieu of foreclosure transactions, or other material proceedings, in the past or that certain principals have not been equity owners in other mortgaged properties that have been subject to foreclosure proceedings. In this respect, the principals of certain borrowers have been involved in foreclosure proceedings within the last 10 years. For example, with respect to the pooled mortgage loan secured by the mortgaged property identified on Appendix B to this prospectus supplement as McCallum Highlands, which represents security for approximately 0.4% of the initial mortgage pool balance (and 4.7% of the initial loan group 2 balance), the mortgaged property formerly secured a loan to a borrower affiliate that was the subject of a workout in 2005; that lender was repaid all principal and interest in full and the loan was performing when refinanced in 2006 by the related Mortgage Loan Seller. In addition, there may be pending or threatened foreclosure proceedings or other material proceedings of the borrowers, the borrower principals and the managers of the mortgaged properties securing the pooled mortgage loans and/or their respective affiliates. If a borrower or a principal of a borrower has been a party to such a proceeding or transaction in the past, we cannot also assure you that the borrower or principal will not be more likely than other borrowers or principals to avail itself or cause a borrower to avail itself of its legal rights, under the Bankruptcy Code or otherwise, in the event of an action or threatened action by the mortgagee or its servicer to enforce the related mortgage loan documents, or otherwise conduct its operations in a manner that is in the best interests of the lender and/or the mortgaged property. We cannot assure you that any foreclosure proceedings or other material proceedings will not have a material adverse effect on your investment. TENANT BANKRUPTCIES MAY ADVERSELY AFFECT THE INCOME PRODUCED BY THE MORTGAGED PROPERTIES AND MAY ADVERSELY AFFECT THE PAYMENTS ON YOUR CERTIFICATES. The bankruptcy or insolvency of a major tenant, or a number of smaller tenants, in retail, industrial and office properties, may adversely affect the income produced by the related mortgaged property. Under the federal bankruptcy code, a tenant/debtor has the option of affirming or rejecting any unexpired lease. If the tenant rejects the lease, the landlord's claim for breach of the lease would be a general unsecured claim against the tenant, absent collateral securing the claim. The claim would be limited to the unpaid rent under the lease for the periods prior to the bankruptcy petition, or earlier surrender of the leased premises, plus the rent under the lease for the greater of one year, or 15%, not to exceed three years, of the remaining term of such lease and the actual amount of the recovery could be less than the amount of the claim. S-49 G-I Holdings, Inc., the parent of the single tenant at the mortgaged property identified on Appendix B to this prospectus supplement as 9 Finderne Avenue, representing security for 0.6% of the initial mortgage pool balance (and 0.7% of the initial loan group 1 balance), has been in Chapter 11 proceedings since 2001. Additionally, major tenants at other mortgaged properties may have had prior bankruptcies or are currently in bankruptcy. ENVIRONMENTAL CONDITIONS OF THE MORTGAGED PROPERTIES MAY SUBJECT THE TRUST FUND TO LIABILITY UNDER FEDERAL AND STATE LAWS, REDUCING THE VALUE AND CASH FLOW OF THE MORTGAGED PROPERTIES, WHICH MAY RESULT IN REDUCED PAYMENTS ON YOUR OFFERED CERTIFICATES. The trust fund could become liable under certain circumstances for a material adverse environmental condition at any of the mortgaged properties securing the pooled mortgage loans. Any potential environmental liability could reduce or delay payments on the offered certificates. Various environmental laws may make a current or previous owner or operator of real property liable for the costs of removal or remediation of hazardous or toxic substances on, under or adjacent to such property. Those laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of the hazardous or toxic substances. For example, certain laws impose liability for release of asbestos-containing materials into the air or require the removal or containment of asbestos-containing materials. In some states, contamination of a property may give rise to a lien on the property to assure payment of the costs of cleanup. In some states, this lien has priority over the lien of a pre-existing mortgage. Additionally, third parties may seek recovery from owners or operators of real properties for cleanup costs, property damage or personal injury associated with releases of, or other exposure to, hazardous substances related to the properties. The owner's liability for any required remediation generally is not limited by law and could, accordingly, exceed the value of the property and/or the aggregate assets of the owner. The presence of hazardous or toxic substances also may adversely affect the owner's ability to refinance the property or to sell the property to a third party. The presence of, or strong potential for contamination by, hazardous substances consequently can have a materially adverse effect on the value of the property and a borrower's ability to repay its mortgage loan. In addition, under certain circumstances, a lender (such as the trust) could be liable for the costs of responding to an environmental hazard. Except for mortgaged properties that are the subject of environmental insurance obtained in lieu of a Phase I environmental site assessment as described under "Description of the Mortgage Pool--Assessments of Property Value and Condition--Environmental Insurance", all of the mortgaged properties securing the mortgage loans have been subject to environmental site assessments by a third-party consultant, or in some cases an update of a previous assessment or transaction screen, in connection with the origination of the pooled mortgage loans. In some cases, a Phase II site assessment was also performed or recommended. In certain cases, these assessments revealed conditions that resulted in requirements that the related borrowers establish operations and maintenance plans, monitor the mortgaged property or nearby properties, abate or remediate the condition, and/or provide additional security such as letters of credit, reserves, a secured creditor impaired property policy, environmental insurance policy or pollution legal liability environmental impairment policy or environmental indemnification. In certain cases, recommended Phase II site assessments were not performed and reserves or insurance policies were obtained in lieu thereof or the related lender otherwise determined not to have the Phase II site assessment performed. Additionally, certain of the mortgaged properties have had recognized environmental conditions for which remediation has previously occurred or ongoing remediation or monitoring is still continuing. In certain cases where the environmental consultant recommended that action be taken in respect of a materially adverse or potentially material adverse environmental condition at the related mortgaged property, then: o an environmental consultant investigated those conditions and recommended no further investigations or remediation; or o a responsible third party was identified as being responsible for the remediation; or o the related originator of the pooled mortgage loan generally required the related borrower: S-50 (a) to take investigative and/or remedial action (which may have included obtaining a Phase II environmental assessment); or (b) to carry out an operation and maintenance plan or other specific remedial measures post-closing and/or to establish an escrow reserve in an amount estimated to be sufficient for effecting that investigation, plan and/or the remediation; or (c) to monitor the environmental condition and/or to carry out additional testing, in the manner and within the time frame specified in the related mortgage loan documents; or (d) to obtain or seek a letter from the applicable regulatory authority stating that no further action was required; or (e) to obtain environmental insurance (in the form of a secured creditor impaired property policy or other form of environmental insurance) or provide an indemnity from an individual or an entity. Some borrowers under the pooled mortgage loans may not have satisfied or may not satisfy all post-closing obligations required by the related mortgage loan documents with respect to environmental matters. There can be no assurance that recommended operations and maintenance plans have been implemented or will continue to be complied with. In some cases, the environmental consultant did not recommend that any action be taken by the related borrower with respect to a potential adverse environmental condition at a mortgaged property because a responsible party, other than the related borrower, had been identified with respect to that condition. There can be no assurance, however, that such a responsible party will be willing or financially able to address the subject condition. With respect to the mortgaged property identified on Appendix B to this prospectus supplement as Stone Mountain Square, which represents security for approximately 1.5% of the initial pool balance (and 1.6% of the initial loan group 1 balance), the mortgaged property was historically used for dry cleaning operations. Based upon this historic use, soil and groundwater sampling was conducted and no contaminants were detected in the shallow soils, however, the groundwater sample taken was not determinative. The environmental report recommended that a groundwater sample be collected downgradient of the former dry cleaners at an estimated cost of $5,000. The environmental consultant has estimated that should groundwater or soil impact be detected, the cost to remediate the condition would likely be in the range of $100,000 to $300,000. With respect to the mortgaged property identified on Appendix B to this prospectus supplement as Ardmore West Shopping Center, which represents security for approximately 1.0% of the initial pool balance (and 1.1% of the initial loan group 1 balance), a Phase I Environmental Site Assessment recommended that a Phase II Dry Cleaning Facility Environmental Screening be performed to determine if soil had been impacted. As a mitigate, the borrower purchased a Pollution Legal Liability (PLL) environmental insurance policy with limits of liability of $10,500,000, and a $50,000 deductible. Although the policy excludes dry cleaning constituents from both soil and groundwater coverage (known conditions), a principal of the borrower has (i) guaranteed the full payment of all costs arising out of the existence of the dry cleaner, and (ii) indemnified the lender against all losses related to the existence of the dry cleaner, in the aggregate amount of $500,000, which is in excess of three times the projected clean up costs. With respect to the pooled mortgage loan secured by the mortgaged property identified on Appendix B to this prospectus supplement as Bellevue Plaza, which represents security for approximately 0.4% of the initial mortgage pool balance (and 0.5% of the initial loan group 1 balance), the property securing the mortgage loan has documented soil and ground water impact from an on-site dry cleaning business. The mortgaged property has been enrolled in the State of Tennessee Dry Cleaner Emergency Response Program ("Tennessee DCERP") since 1997; the State of Tennessee pays for remediation at a property under DCERP in an amount up to $200,000 per year. Although the environmental consultant has estimated that future costs of remediation will not exceed this amount, a pollution limited liability environmental impairment policy issued by Indian Harbor Insurance Company was obtained with a policy limit of $2,500,000 and a $50,000 deductible. In addition, an upfront reserve of $50,000 was taken at origination to offset the deductible for a claim under this policy. The policy expires on February 13, 2016, prior to the maturity date, but a policy is required to be in place during the loan term; S-51 the policy limit may be adjusted during the seventh year of the loan term to be in the amount of the then estimated costs of the remediation, if the Tennessee DCERP has not yet issued a "no further action" letter. With respect to the pooled mortgage loan secured by the mortgaged property identified on Appendix B to this prospectus supplement as Rialto Square Shopping Center, which represents security for approximately 0.3% of the initial mortgage pool balance (and 0.3% of the initial loan group 1 balance), the Phase I environmental site assessment identified on-site soil contamniation arising from a dry cleaning operation at the property. In lieu of a Phase II environmental site assessment, the pooled mortgage loan seller required a recourse guaranty up to $2,000,000 from the loan's individual sponsors, which will terminate if and when the related borrower posts an environmental reserve in an amount equal to 125% of the estimated remediation work or obtains a no further action letter. In addition, certain properties may be undergoing ongoing monitoring in connection with past remediations or low levels of contaminations. Thirty (30) pooled mortgage loans, representing 5.5% of the initial mortgage pool balance (which pooled mortgage loans consist of 26 pooled mortgage loans in loan group 1, representing 5.7% of the initial loan group 1 balance, and 4 pooled mortgage loans in loan group 2, representing 3.8% of the initial loan group 2 balance), are each the subject of a group secured creditor impaired property policy or an individual secured creditor impaired property policy, environmental insurance policy or pollution legal liability environmental impairment policy. In the case of each of these policies, the insurance was obtained to provide coverage for certain losses that may arise from certain known or suspected adverse environmental conditions that exist or may arise at the related mortgaged property or was obtained in lieu of a Phase I environmental site assessment, in lieu of a recommended or required Phase II environmental site assessment or in lieu of an environmental indemnity from a borrower principal or a high net-worth entity. We describe the secured creditor impaired property policies, environmental insurance policies and pollution legal liability environmental impairment policies under "Description of the Mortgage Pool--Assessments of Property Value and Condition--Environmental Insurance" in this prospectus supplement. We cannot assure you that the environmental assessments revealed all existing or potential environmental risks or that all adverse environmental conditions have been completely abated or remediated or that any reserves, insurance or operations and maintenance plans will be sufficient to remediate the environmental conditions. Moreover, we cannot assure you that: o future laws, ordinances or regulations will not impose any material environmental liability; or o the current environmental condition of the mortgaged properties will not be adversely affected by tenants or by the condition of land or operations in the vicinity of the mortgaged properties (such as underground storage tanks). Portions of some of the mortgaged properties securing the pooled mortgage loans may include tenants who operate on-site dry-cleaners or gasoline stations. Both types of operations involve the use and storage of hazardous substances, leading to an increased risk of liability to the tenant, the landowner and, under certain circumstances, a lender (such as the trust) under environmental laws. Dry-cleaners and gasoline station operators may be required to obtain various environmental permits and licenses in connection with their operations and activities and comply with various environmental laws, including those governing the use and storage of hazardous substances. These operations incur ongoing costs to comply with environmental laws governing, among other things, containment systems and underground storage tank systems. In addition, any liability to borrowers under environmental laws, including in connection with releases into the environment of gasoline, dry-cleaning solvents or other hazardous substances from underground storage tank systems or otherwise, could adversely impact the related borrower's ability to repay the related pooled mortgage loan. Problems associated with mold may pose risks to the real property and may also be the basis for personal injury claims against a borrower. Although the mortgaged properties are required to be inspected periodically, there is no set of generally accepted standards for the assessment of mold currently in place. If left unchecked, the growth of mold could result in the interruption of cash flow, litigation and remediation expenses which could adversely impact collections from a mortgaged property. The Phase I reports of certain mortgaged properties reported the presence of mold and recommended remediation of the mold. In addition, many of the insurance policies presently covering the mortgaged properties may specifically exclude losses due to mold. S-52 Before the applicable special servicer acquires title to a mortgaged property on behalf of the trust, it must obtain an environmental assessment of the related pooled property, or rely on a recent environmental assessment. This requirement will decrease the likelihood that the trust will become liable under any environmental law. However, this requirement may effectively preclude foreclosure until a satisfactory environmental assessment is obtained, or until any required remedial action is thereafter taken. There is accordingly some risk that the mortgaged property will decline in value while this assessment is being obtained. Moreover, we cannot assure you that this requirement will effectively insulate the trust from potential liability under environmental laws. Any such potential liability could reduce or delay payments to series 2006-PWR12 certificateholders. IF A BORROWER IS UNABLE TO REPAY ITS LOAN ON ITS MATURITY DATE OR DOES NOT REPAY ITS LOAN ON ANY ANTICIPATED REPAYMENT DATE, YOU MAY EXPERIENCE A LOSS OR DELAY IN PAYMENTS ON YOUR CERTIFICATES. As described in this prospectus supplement, all of the pooled mortgage loans are balloon mortgage loans, including 13.6% of the pooled mortgage loans that provide material incentives for the related borrowers to repay the loan by their respective anticipated repayment dates prior to maturity. The ability of a borrower to make the required balloon payment on a balloon loan at maturity, and the ability of a borrower to repay a mortgage loan on or before any related anticipated repayment date, in each case depends upon its ability either to refinance the related pooled mortgage loan or to sell the mortgaged property for an amount that is sufficient to repay the mortgage loan in full with interest. A borrower's ability to achieve either of these goals will be affected by a number of factors, including: o the availability of, and competition for, credit for commercial properties; o prevailing interest rates; o the fair market value of the related mortgaged property; o the borrower's equity in the related mortgaged property; o the borrower's financial condition; o the operating history and occupancy level of the mortgaged property; o tax laws; and o prevailing general and regional economic conditions. The availability of funds in the credit markets fluctuates over time. None of the mortgage loan sellers, any party to the series 2006-PWR12 pooling and servicing agreement or any other person will be under any obligation to refinance any mortgage loan. A BORROWER'S OTHER LOANS MAY REDUCE THE CASH FLOW AVAILABLE TO THE MORTGAGED PROPERTY WHICH MAY ADVERSELY AFFECT PAYMENT ON YOUR CERTIFICATES; MEZZANINE FINANCING REDUCES A PRINCIPAL'S EQUITY IN, AND THEREFORE ITS INCENTIVE TO SUPPORT, A MORTGAGED PROPERTY. In the case of the mortgaged properties identified on Appendix B to this prospectus supplement as 1675 Broadway and Tuscany Plaza, that mortgaged property secures not only a pooled mortgage loan but also one or more non-pooled mortgage loans that are subordinate in right of payment to the related pooled mortgage loan. In addition, the borrowers or their affiliates under the pooled mortgage loans secured by the mortgaged properties identified on Appendix B to this prospectus supplement as 1675 Broadway and Tower at Erieview (which are among the ten largest pooled mortgage loans) and some of the other pooled mortgage loans have incurred, or are permitted to incur in the future, other indebtedness that is secured by the related mortgaged properties or direct or indirect ownership interests in the borrower. Furthermore, the pooled mortgage loans generally do not prohibit indebtedness that is secured by equipment or other personal property located at the S-53 mortgaged property or other obligations in the ordinary course of business relating to the mortgaged property. See "Description of the Mortgage Pool - Certain Characteristics of the Mortgage Pool -Subordinate and/or Other Financing" and Appendix B to this prospectus supplement. Except as described in that section and Appendix B, we make no representation with respect to the pooled mortgage loans as to whether any subordinate financing currently encumbers any mortgaged property, whether any borrower has incurred material unsecured debt or whether a third-party holds debt secured by a pledge of an equity interest in a related borrower. Additionally, the terms of certain pooled mortgage loans permit or require the borrowers to post letters of credit and/or surety bonds for the benefit of the related mortgage loan, which may constitute a contingent reimbursement obligation of the related borrower or an affiliate. The issuing bank or surety will not typically agree to subordination and standstill protection benefiting the mortgagee. In addition, in general, those borrowers that have not agreed to certain special purpose covenants in the related mortgage loan documents are not prohibited from incurring additional debt. Such additional debt may be secured by other property owned by those borrowers. Certain of these borrowers may have already incurred additional debt. In addition, the owners of such borrowers generally are not prohibited from incurring mezzanine debt secured by pledges of their equity interests in those borrowers. When a mortgage loan borrower, or its constituent members, also has one or more other outstanding loans, even if the loans are subordinated or are mezzanine loans not directly secured by the mortgaged property, the trust is subjected to additional risks. For example, the borrower may have difficulty servicing and repaying multiple loans. Also, the existence of another loan generally will make it more difficult for the borrower to obtain refinancing of the mortgage loan or sell the related mortgaged property and may thus jeopardize the borrower's ability to make any balloon payment due under the mortgage loan at maturity or to repay the mortgage loan on its anticipated repayment date. Moreover, the need to service additional debt may reduce the cash flow available to the borrower to operate and maintain the mortgaged property. Debt that is incurred by an equity owner of a borrower and is the subject of a guaranty of such borrower or is secured by a pledge of the equity ownership interests in such borrower effectively reduces the equity owners' economic stake in the related mortgaged property. While the mezzanine lender has no security interest in or rights to the related mortgaged property, a default under the mezzanine loan could cause a change in control of the related borrower. The existence of such debt may reduce cash flow on the related borrower's mortgaged property after the payment of debt service and may increase the likelihood that the owner of a borrower will permit the value or income producing potential of a mortgaged property to suffer by not making capital infusions to support the mortgaged property. Additionally, if the borrower, or its constituent members, are obligated to another lender, actions taken by other lenders could impair the security available to the trust fund. If a junior lender files an involuntary bankruptcy petition against the borrower, or the borrower files a voluntary bankruptcy petition to stay enforcement by a junior lender, the trust's ability to foreclose on the mortgaged property will be automatically stayed, and principal and interest payments might not be made during the course of the bankruptcy case. The bankruptcy of a junior lender also may operate to stay foreclosure by the trust. Further, if another loan secured by the mortgaged property is in default, the other lender may foreclose on the mortgaged property, absent an agreement to the contrary, thereby causing a delay in payments and/or an involuntary repayment of the mortgage loan prior to maturity. The trust may also be subject to the costs and administrative burdens of involvement in foreclosure proceedings or related litigation. BANKRUPTCY PROCEEDINGS RELATING TO A BORROWER CAN RESULT IN DISSOLUTION OF THE BORROWER AND THE ACCELERATION OF THE RELATED MORTGAGE LOAN AND CAN OTHERWISE IMPAIR REPAYMENT OF THE RELATED MORTGAGE LOAN. Under the federal bankruptcy code, the filing of a bankruptcy petition by or against a borrower will stay the commencement or continuation of a foreclosure action. In addition, if a court determines that the value of the mortgaged property is less than the principal balance of the mortgage loan it secures, the court may reduce the amount of secured indebtedness to the then current value of the mortgaged property. Such an action would make the lender a general unsecured creditor for the difference between the then current value and the amount of its outstanding mortgage indebtedness. A bankruptcy court also may: o grant a debtor a reasonable time to cure a payment default on a mortgage loan; S-54 o reduce monthly payments due under a mortgage loan; o change the rate of interest due on a mortgage loan; or o otherwise alter the mortgage loan's repayment schedule. Additionally, the trustee of the borrower's bankruptcy or the borrower, as debtor in possession, has special powers to avoid, subordinate or disallow debts. In some circumstances, the claims of the mortgage lender may be subordinated to financing obtained by a debtor-in-possession subsequent to its bankruptcy. The filing of a bankruptcy petition will also stay the lender from enforcing a borrower's assignment of rents and leases. The federal bankruptcy code also may interfere with the trustee's ability to enforce any lockbox requirements. The legal proceedings necessary to resolve these issues can be time consuming and costly and may significantly delay or reduce the lender's receipt of rents. A bankruptcy court may also permit rents otherwise subject to an assignment and/or lockbox arrangement to be used by the borrower to maintain the mortgaged property or for other court authorized expenses. As a result of the foregoing, the recovery with respect to borrowers in bankruptcy proceedings may be significantly delayed, and the aggregate amount ultimately collected may be substantially less than the amount owed. The mortgage pool includes some groups of mortgage loans where the mortgage loans in the particular group are not cross-collateralized or cross-defaulted but were made to borrowers related through common ownership of partnership or other equity interests and where, in general, the related mortgaged properties are commonly managed. See "Description of the Mortgage Pool--Cross-Collateralized Mortgage Loans and Multi-Property Mortgage Loans; Mortgage Loans with Affiliated Borrowers" in this prospectus supplement. The bankruptcy or insolvency of any such borrower or respective affiliate could have an adverse effect on the operation of all of the related mortgaged properties and on the ability of such related mortgaged properties to produce sufficient cash flow to make required payments on the related mortgage loans. For example, if a person that owns or controls several mortgaged properties experiences financial difficulty at one such property, it could defer maintenance at one or more other mortgaged properties in order to satisfy current expenses with respect to the mortgaged property experiencing financial difficulty, or it could attempt to avert foreclosure by filing a bankruptcy petition that might have the effect of interrupting monthly payments for an indefinite period on all the related pooled mortgage loans. As a result of the foregoing, the recovery with respect to borrowers in bankruptcy proceedings may be significantly delayed, and the aggregate amount ultimately collected may be substantially less than the amount owed. A number of the borrowers under the pooled mortgage loans are limited or general partnerships. Under some circumstances, the bankruptcy of a general partner of the partnership may result in the dissolution of that partnership. The dissolution of a borrower partnership, the winding up of its affairs and the distribution of its assets could result in an early repayment of the related mortgage loan. With respect to a number of the pooled mortgage loans, the borrowers own the related mortgaged property as tenants in common. The bankruptcy, dissolution or action for partition by one or more of the tenants in common could result in an early repayment of the related mortgage loan, significant delay in recovery against the tenant in common borrowers, a material impairment in property management and a substantial decrease in the amount recoverable upon the related pooled mortgage loan. Not all tenants in common for all pooled mortgage loans are special purpose entities. We cannot assure you that any principal or affiliate of any borrower under a pooled mortgage loan has not been a party to any bankruptcy proceeding. BORROWERS THAT ARE NOT BANKRUPTCY REMOTE ENTITIES MAY BE MORE LIKELY TO FILE BANKRUPTCY PETITIONS AND THIS MAY ADVERSELY AFFECT PAYMENTS ON YOUR CERTIFICATES. While many of the borrowers under the pooled mortgage loans have agreed to certain special purpose covenants to limit the bankruptcy risk arising from activities unrelated to the operation of the mortgaged property, some borrowers under the pooled mortgage loans are not special purpose entities. Additionally, most borrowers under the pooled mortgage loans and their owners do not have an independent director whose consent would be required to file a bankruptcy petition on behalf S-55 of such borrower. One of the purposes of an independent director is to avoid a bankruptcy petition filing that is intended solely to benefit a borrower's affiliate and is not justified by the borrower's own economic circumstances. THE OPERATION OF COMMERCIAL PROPERTIES IS DEPENDENT UPON SUCCESSFUL MANAGEMENT. The successful operation of a real estate project depends upon the property manager's performance and viability. The property manager is generally responsible for: o responding to changes in the local market; o planning and implementing the rental structure; o operating the property and providing building services; o managing operating expenses; and o assuring that maintenance and capital improvements are carried out in a timely fashion. Properties deriving revenues primarily from short-term sources are generally more management-intensive than properties leased to creditworthy tenants under long-term leases. A property manager, by controlling costs, providing appropriate service to tenants and overseeing property maintenance and general upkeep, can improve cash flow, reduce vacancy, leasing and repair costs and preserve building value. On the other hand, management errors can, in some cases, impair short-term cash flow and the long-term viability of an income producing property. We make no representation or warranty as to the skills of any present or future managers with respect to the mortgaged properties securing the pooled mortgage loans. Additionally, we cannot assure you that any of those property managers will be in a financial condition to fulfill their management responsibilities throughout the terms of their respective management agreements. PROVISIONS REQUIRING YIELD MAINTENANCE CHARGES OR DEFEASANCE PROVISIONS MAY NOT BE ENFORCEABLE. Provisions in the pooled mortgage loans requiring yield maintenance charges or lock-out periods may not be enforceable in some states and under federal bankruptcy law. Provisions in the pooled mortgage loans requiring yield maintenance charges also may be interpreted as constituting the collection of interest for usury purposes. Accordingly, we cannot assure you that the obligation to pay any yield maintenance charge under a pooled mortgage loan will be enforceable. Also, we cannot assure you that foreclosure proceeds under a pooled mortgage loan will be sufficient to pay an enforceable yield maintenance charge. Additionally, although the collateral substitution provisions in the pooled mortgage loans related to defeasance do not have the same effect on the series 2006-PWR12 certificateholders as prepayment, we cannot assure you that a court would not interpret those provisions as requiring a yield maintenance charge. In certain jurisdictions, those collateral substitution provisions might be deemed unenforceable under applicable law or public policy, or usurious. THE ABSENCE OF LOCKBOXES ENTAILS RISKS THAT COULD ADVERSELY AFFECT PAYMENTS ON YOUR CERTIFICATES. Most of the mortgage loans that we intend to include in the trust fund do not require the related borrower presently to cause rent and other payments to be made into a lockbox account maintained on behalf of the mortgagee, although some of those mortgage loans do provide for a springing lockbox. If rental payments are not required to be made directly into a lockbox account, there is a risk that the borrower will divert such funds for other purposes. S-56 RESERVES TO FUND CAPITAL EXPENDITURES MAY BE INSUFFICIENT AND THIS MAY ADVERSELY AFFECT PAYMENTS ON YOUR CERTIFICATES. Although many of the mortgage loans that we intend to include in the trust fund require that funds be put aside for specific reserves, certain of those mortgage loans do not require any reserves. Furthermore, we cannot assure you that any such reserve amounts that do or may exist at any time will be sufficient to cover the actual costs of the items for which the reserves were established. We also cannot assure you that cash flow from the related mortgaged properties will be sufficient to fully fund any applicable ongoing monthly reserve requirements. INADEQUACY OF TITLE INSURERS MAY ADVERSELY AFFECT PAYMENTS ON YOUR CERTIFICATES. Title insurance for a mortgaged property generally insures a lender against risks relating to a lender not having a first lien with respect to a mortgaged property, and in some cases can insure a lender against specific other risks. The protection afforded by title insurance depends on the ability of the title insurer to pay claims made upon it. We cannot assure you that with respect to any pooled mortgage loan: o a title insurer will have the ability to pay title insurance claims made upon it; o the title insurer will maintain its present financial strength; or o a title insurer will not contest claims made upon it. MORTGAGED PROPERTIES THAT ARE NOT IN COMPLIANCE WITH ZONING AND BUILDING CODE REQUIREMENTS AND USE RESTRICTIONS COULD ADVERSELY AFFECT PAYMENTS ON YOUR CERTIFICATES. Noncompliance with zoning and building codes may cause the borrower with respect to any pooled mortgage loan to experience cash flow delays and shortfalls that would reduce or delay the amount of proceeds available for distributions on your certificates. The mortgage loan sellers have taken steps to establish that the use and operation of the mortgaged properties securing the pooled mortgage loans are in compliance in all material respects with all applicable zoning, land-use and building ordinances, rules, regulations, and orders. Evidence of this compliance may be in the form of legal opinions, zoning consultants reports, confirmations from government officials, title policy endorsements and/or representations by the related borrower in the related mortgage loan documents. These steps may not have revealed all possible violations. Some violations of zoning, land use and building regulations may be known to exist at any particular mortgaged property, but the mortgage loan sellers generally do not consider those defects known to them to be material or have obtained title policy endorsements and/or law and ordinance insurance to mitigate the risks of loss associated with any material violation or noncompliance. In some cases, the use, operation and/or structure of a mortgaged property constitutes a permitted nonconforming use and/or structure as a result of changes in zoning laws after such mortgaged properties were constructed or for other reasons, and the structure may not be rebuilt to its current state or be used for its current purpose if a material casualty event occurs. Insurance proceeds may not be sufficient to pay the related pooled mortgage loan in full if a material casualty event were to occur, or the mortgaged property, as rebuilt for a conforming use and/or structure, may not generate sufficient income to service the related pooled mortgage loan and the value of the mortgaged property or its revenue producing potential may not be the same as it was before the casualty. If a mortgaged property could not be rebuilt to its current state or its current use were no longer permitted due to building violations or changes in zoning or other regulations, then the borrower might experience cash flow delays and shortfalls or be subject to penalties that would reduce or delay the amount of proceeds available for distributions on your certificates. In addition, certain mortgaged properties may be subject to zoning, land use or building restrictions in the future. In this respect, certain of the mortgaged properties may be subject to historical landmark designations, which restrict the ability of the related owners to alter the structures. Certain mortgaged properties may be subject to use restrictions pursuant to reciprocal easement or operating agreements. Such use restrictions could include, for example, limitations on the character of the improvements or the properties, limitations affecting noise and parking requirements, signs and common area use, and limitations on the S-57 borrower's right to certain types of facilities within a prescribed radius, among other things. These limitations could adversely affect the ability of the borrower to lease the mortgaged property on favorable terms, thus adversely affecting the borrower's ability to fulfill its obligations under the related mortgage loans. CONDEMNATIONS WITH RESPECT TO MORTGAGED PROPERTIES COULD ADVERSELY AFFECT PAYMENTS ON YOUR CERTIFICATES. From time to time, there may be condemnations pending or threatened against one or more of the mortgaged properties securing the pooled mortgage loans. We cannot assure you that the proceeds payable in connection with a total condemnation will be sufficient to restore the subject mortgaged property or to satisfy the remaining indebtedness of the related pooled mortgage loan. The occurrence of a partial condemnation may have a material adverse effect on the continued use of the affected mortgaged property, or on an affected borrower's ability to meet its obligations under the related pooled mortgage loan. Therefore, we cannot assure you that the occurrence of any condemnation will not have a negative impact upon the distributions on your certificates. THE ABSENCE OF OR INADEQUACY OF INSURANCE COVERAGE ON THE PROPERTY MAY ADVERSELY AFFECT PAYMENTS ON YOUR CERTIFICATES. The mortgaged properties securing the pooled mortgage loans may suffer casualty losses due to risks (including acts of terrorism) that are not covered by insurance or for which insurance coverage is not adequate or available at commercially reasonable rates or has otherwise been contractually limited by the related mortgage loan documents. Moreover, if reconstruction or major repairs are required following a casualty, changes in laws that have occurred since the time of original construction may materially impair the borrower's ability to effect such reconstruction or major repairs or may materially increase the cost thereof. Some of the mortgaged properties securing the pooled mortgage loans are located in California, Texas, Florida, Louisiana, the United States Virgin Islands and coastal areas of certain other states and jurisdictions (including southeastern coastal states), which states and areas have historically been at greater risk of acts of nature, including earthquakes, hurricanes and floods. The mortgage loans that we intend to include in the trust fund generally do not expressly require borrowers to maintain insurance coverage for earthquakes, hurricanes or floods and we cannot assure you that borrowers will attempt or be able to obtain adequate insurance against such risks. With respect to substantially all of the mortgage loans that we intend to include in the trust, the related mortgage loan documents generally provide that either (a) the borrowers are required to maintain full or partial insurance coverage for property damage to the related mortgaged property against certain acts of terrorism (except that (i) the requirement to obtain such insurance coverage may be subject to, in certain instances, the commercial availability of that coverage, certain limitations with respect to the cost thereof and/or whether such hazards are at the time commonly insured against for property similar to such mortgaged properties and located in or around the region in which such mortgaged property is located and (ii) in certain cases the borrower is permitted to self-insure for that coverage subject to the borrower's owner satisfying certain minimum net worth requirements or having an investment grade rating and satisfying maximum leverage limits on its real estate portfolio) or (b) the borrowers are required to provide such additional insurance coverage as a lender (such as the trust) may reasonably require to protect its interests or to cover such hazards as are commonly insured against for similarly situated properties. At the time existing insurance policies are subject to renewal, there is no assurance that terrorism insurance coverage will continue to be available and covered under the new policies or, if covered, whether such coverage will be adequate. Most insurance policies covering commercial real properties such as the mortgaged properties are subject to renewal on an annual basis. If such coverage is not currently in effect, is not adequate or is ultimately not continued with respect to some of the mortgaged properties and one of those mortgaged properties suffers a casualty loss as a result of a terrorist act, then the resulting casualty loss could reduce the amount available to make distributions on your certificates. Such policies may also not provide coverage for biological, chemical or nuclear events. In addition, in cases where the related mortgage loan documents do not expressly require insurance against acts of terrorism, but permit the lender to require such other insurance as is reasonable, the related borrower may challenge whether maintaining insurance against acts of terrorism is reasonable in light of all the circumstances, including the cost. Some of the mortgaged properties securing the pooled mortgage loans are covered by blanket insurance policies which also cover other properties of the related borrower or its affiliates. In the event that such policies are drawn on to S-58 cover losses on such other properties, the amount of insurance coverage available under such policies may thereby be reduced and could be insufficient to cover each mortgaged property's insurable risks. After the terrorist attacks of September 11, 2001, the cost of insurance coverage for acts of terrorism increased and the availability of such insurance decreased. In response to this situation, Congress enacted the Terrorism Risk Insurance Act of 2002, which was amended and extended by the Terrorism Risk Insurance Extension Act of 2005, signed into law by President Bush on December 22, 2005. The Terrorism Risk Insurance Extension Act of 2005 requires that qualifying insurers offer terrorism insurance coverage in all property and casualty insurance policies on terms not materially different than terms applicable to other losses. The federal government covers 90% (85% for acts of terrorism occurring in 2007) of the losses from covered certified acts of terrorism on commercial risks in the United States only, in excess of a specified deductible amount calculated as a percentage of an affiliated insurance group's prior year premiums on commercial lines policies covering risks in the United States. This specified deductible amount is 17.5% of such premiums for losses occurring in 2006, and 20% of such premiums for losses occurring in 2007. Further, to trigger coverage under the Terrorism Risk Insurance Extension Act of 2005, the aggregate industry property and casualty insurance losses resulting from an act of terrorism must exceed $50 million from April 2006 through December 2006 and $100 million for acts of terrorism occurring in 2007. The Terrorism Risk Insurance Extension Act of 2005 now excludes coverage for commercial auto, burglary and theft, surety, professional liability and farm owners' multiperil. The Terrorism Risk Insurance Extension Act of 2005 will expire on December 31, 2007. The Terrorism Risk Insurance Extension Act of 2005 applies only to losses resulting from attacks that have been committed by individuals on behalf of a foreign person or foreign interest, and does not cover acts of purely domestic terrorism. Further, any such attack must be certified as an "act of terrorism" by the federal government, which decision is not subject to judicial review. As a result, insurers may continue to try to exclude from coverage under their policies losses resulting from terrorist acts not covered by the Terrorism Risk Insurance Extension Act of 2005. Moreover, the Terrorism Risk Insurance Extension Act of 2005's deductible and copayment provisions still leave insurers with high potential exposure for terrorism-related claims. Because nothing in the act prevents an insurer from raising premium rates on policyholders to cover potential losses, or from obtaining reinsurance coverage to offset its increased liability, the cost of premiums for such terrorism insurance coverage is still expected to be high. In addition to exclusions related to terrorism, certain of the insurance policies covering the mortgaged properties may specifically exclude coverage for losses due to mold or other potential causes of loss. We cannot assure you that a mortgaged property will not incur losses related to a cause of loss that is excluded from coverage under the related insurance policy. As a result of these factors, the amount available to make distributions on your certificates could be reduced. PROPERTY INSPECTIONS AND ENGINEERING REPORTS MAY NOT REFLECT ALL CONDITIONS THAT REQUIRE REPAIR ON A MORTGAGED PROPERTY. Licensed engineers or consultants generally inspected the related mortgaged properties (unless improvements are not part of the mortgaged property) and, in most cases, prepared engineering reports in connection with the origination of the pooled mortgage loans or with this offering to assess items such as structure, exterior walls, roofing, interior construction, mechanical and electrical systems and general condition of the site, buildings and other improvements. However, we cannot assure you that all conditions requiring repair or replacement were identified. In those cases where a material condition was disclosed, such condition generally has been or is generally required to be remedied to the mortgagee's satisfaction, or funds or a letter of credit as deemed necessary by the related mortgage loan seller or the related engineer or consultant have been reserved to remedy the material condition. Neither we nor any of the mortgage loan sellers conducted any additional property inspections in connection with the issuance of the series 2006-PWR12 certificates. APPRAISALS MAY NOT ACCURATELY REFLECT THE VALUE OF THE MORTGAGED PROPERTIES. In general, in connection with the origination of each pooled mortgage loan or in connection with this offering, an appraisal was conducted in respect of the related mortgaged property by an independent appraiser that was state-certified and/or a Member of the Appraisal Institute or an update of an existing appraisal was obtained. The resulting estimates of value are the basis of the cut-off date loan-to-value ratios referred to in this prospectus supplement. In some cases, the S-59 related appraisal may value the property on a portfolio basis, which may result in a higher value than the aggregate value that would result from a separate individual appraisal on each mortgaged property. Those estimates represent the analysis and opinion of the person performing the appraisal or market analysis and are not guarantees of present or future values. The appraiser may have reached a different conclusion of value than the conclusion that would be reached by a different appraiser appraising the same property, or that would have been reached separately by the mortgage loan sellers based on their internal review of such appraisals. Moreover, the values of the mortgaged properties securing the pooled mortgage loans may have changed significantly since the appraisal or market study was performed. In addition, appraisals seek to establish the amount a typically motivated buyer would pay a typically motivated seller. Such amount could be significantly higher than the amount obtained from the sale of a mortgaged property under a distress or liquidation sale. The estimates of value reflected in the appraisals and the related loan-to-value ratios are presented for illustrative purposes only in Appendix A and Appendix B to this prospectus supplement. In each case, the estimate presented is the one set forth in the most recent appraisal available to us as of the cut-off date, although we generally have not obtained updates to the appraisals. We cannot assure you that the appraised values indicated accurately reflect past, present or future market values of the mortgaged properties securing the pooled mortgage loans. The appraisals for certain of the mortgaged properties state a "stabilized value" as well as an "as-is" value for such properties based on the assumption that certain events will occur with respect to the re-tenanting, renovation or other repositioning of such properties. The stabilized value is presented as the Appraised Value in this prospectus supplement to the extent stated in the notes titled "Footnotes to Appendix B and Appendix C". THE OPERATION OF A MORTGAGED PROPERTY FOLLOWING FORECLOSURE MAY AFFECT THE TAX STATUS OF THE TRUST FUND AND MAY ADVERSELY AFFECT PAYMENTS ON YOUR CERTIFICATES. If the trust fund acquires a mortgaged property as a result of a foreclosure or deed in lieu of foreclosure, the applicable special servicer will generally retain an independent contractor to operate the property. Any net income from operations other than qualifying "rents from real property" within the meaning of Section 856(d) of the Internal Revenue Code of 1986, or any rental income based on the net profits of a tenant or sub-tenant or allocable to a non-customary service, will subject the trust fund to a federal tax on such income at the highest marginal corporate tax rate, which is currently 35%, and, in addition, possible state or local tax. In this event, the net proceeds available for distribution on your certificates may be reduced. The applicable special servicer may permit the trust fund to earn such above described "net income from foreclosure property" but only if it determines that the net after-tax benefit to certificateholders is greater than under another method of operating or leasing the mortgaged property. In addition, if the trust fund were to acquire one or more mortgaged properties pursuant to a foreclosure or deed in lieu of foreclosure, upon acquisition of those mortgaged properties, the trust may in certain jurisdictions, particularly in New York and California, be required to pay state or local transfer or excise taxes upon liquidation of such properties. Such state or local taxes may reduce net proceeds available for distribution to the series 2006-PWR12 certificateholders. TENANT LEASES MAY HAVE PROVISIONS THAT COULD ADVERSELY AFFECT PAYMENTS ON YOUR CERTIFICATES. In certain jurisdictions, if tenant leases are subordinate to the liens created by the mortgage and do not contain attornment provisions which require the tenant to recognize a successor owner, following foreclosure, as landlord under the lease, the leases may terminate upon the transfer of the property to a foreclosing lender or purchaser at foreclosure. Not all leases were reviewed to ascertain the existence of these provisions. Accordingly, if a mortgaged property is located in such a jurisdiction and is leased to one or more tenants under leases that are subordinate to the mortgage and do not contain attornment provisions, such mortgaged property could experience a further decline in value if such tenants' leases were terminated. This is particularly likely if such tenants were paying above-market rents or could not be replaced. Some of the leases at the mortgaged properties securing the mortgage loans included in the trust may not be subordinate to the related mortgage. If a lease is not subordinate to a mortgage, the trust will not possess the right to dispossess the tenant upon foreclosure of the mortgaged property unless it has otherwise agreed with the tenant. If the lease contains provisions inconsistent with the mortgage, for example, provisions relating to application of insurance proceeds or condemnation awards, or which could affect the enforcement of the lender's rights (such as a right of first refusal to purchase the property), the provisions of the lease will take precedence over the provisions of the mortgage. S-60 LITIGATION ARISING OUT OF ORDINARY BUSINESS COULD ADVERSELY AFFECT PAYMENTS ON YOUR CERTIFICATES. There may be pending or threatened legal proceedings against the borrowers, the borrower principals and the managers of the mortgaged properties securing the pooled mortgage loans and/or their respective affiliates arising out of their ordinary course of business. We cannot assure you that any such litigation would not have a material adverse effect on your certificates. THE COSTS OF COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT OF 1990 AND FAIR HOUSING LAWS MAY ADVERSELY AFFECT A BORROWER'S ABILITY TO REPAY ITS MORTGAGE LOAN. Under the Americans with Disabilities Act of 1990, public accommodations are required to meet certain federal requirements related to access and use by disabled persons. Borrowers may incur costs complying with the Americans with Disabilities Act. In addition, noncompliance could result in the imposition of fines by the federal government or an award of damages to private litigants. If a borrower incurs such costs or fines, the amount available to make payments on the related pooled mortgage loan would be reduced. In addition, under the Federal Fair Housing Act, analogous statutes in some states and regulations and guidelines issued pursuant to those laws, any and all otherwise-available units in a multifamily apartment building must be made available to any disabled person who meets the financial criteria generally applied by the landlord, including implementing alterations and accommodations in certain circumstances. The costs of this compliance may be high and the penalties for noncompliance may be severe. Thus, these fair housing statutes, regulations and guidelines present a risk of increased operating costs to the borrowers under the pooled mortgage loans secured by multifamily apartment buildings, which may reduce (perhaps significantly) amounts available for payment on the related pooled mortgage loan. LOANS SECURED BY MORTGAGES ON A LEASEHOLD INTEREST WILL SUBJECT YOUR INVESTMENT TO A RISK OF LOSS UPON A LEASE DEFAULT. In the case of eight (8) mortgaged properties, with an aggregate allocated loan amount representing 9.8% of the initial mortgage pool balance (and 10.8% of the initial loan group 1 balance), the borrower's interest consists solely, or in material part, of a leasehold or sub-leasehold interest under a ground lease. These mortgaged properties consist of the mortgaged properties identified on Appendix B to this prospectus supplement as 1675 Broadway, Titan-El Paso, 5399 Lauby Road Building, Sweetwater Square, Courtyard Marriott Orlando, McMinnville Market Center, South Pointe Crossing and Canon Plaza. Leasehold mortgage loans are subject to certain risks not associated with mortgage loans secured by a lien on the fee estate of the borrower. The most significant of these risks is that if the borrower's leasehold were to be terminated upon a lease default, the lender (such as the trust) would lose its security. Generally, each related ground lease requires the ground lessor to give the lender notice of the ground lessee/borrower's defaults under the ground lease and an opportunity to cure them, permits the leasehold interest to be assigned to the lender or the purchaser at a foreclosure sale, in some cases only upon the consent of the ground lessor, and contains certain other protective provisions typically included in a "mortgageable" ground lease. Upon the bankruptcy of a lessor or a lessee under a ground lease, the debtor entity has the right to assume or reject the lease. If a debtor ground lessor rejects the lease, the ground lessee has the right to remain in possession of its leased premises for the rent otherwise payable under the lease for the term of the lease (including renewals). If a debtor ground lessee/borrower rejects any or all of the leases, the leasehold lender could succeed to the ground lessee/borrower's position under the lease only if the ground lease specifically grants the lender such right. If both the ground lessor and the ground lessee/borrower are involved in bankruptcy proceedings, the trustee may be unable to enforce the bankrupt ground lessee/borrower's right to refuse to treat a ground lease rejected by a bankrupt lessor as terminated. In such circumstances, a ground lease could be terminated notwithstanding lender protection provisions contained therein or in the mortgage. Most of the ground leases securing the mortgaged properties provide that the ground rent payable thereunder increases during the term of the lease. These increases may adversely affect the cash flow and net income of the borrower from the mortgaged property. S-61 The grant of a mortgage lien on its fee interest by a land owner/ground lessor to secure the debt of a borrower/ground lessee may be subject to challenge as a fraudulent conveyance. Among other things, a legal challenge to the granting of the liens may focus on the benefits realized by the land owner/ground lessor from the loan. If a court concluded that the granting of the mortgage lien was an avoidable fraudulent conveyance, it might take actions detrimental to the holders of the offered certificates, including, under certain circumstances, invalidating the mortgage lien on the fee interest of the land owner/ground lessor. CONDOMINIUM OR COOPERATIVE OWNERSHIP MAY LIMIT USE AND IMPROVEMENTS. With respect to certain of the pooled mortgage loans, the related mortgaged property consists an interest of the related borrower in commercial condominium or cooperative interests in buildings and/or other improvements and/or land, and related interests in the common areas and the related voting rights in the condominium association, or ownership interest in the cooperative. The condominium or cooperative interests described above in some cases may constitute less than a majority of such voting rights and/or may not entail an ability to prevent adverse changes in the governing organizational document for the condominium or cooperative entity. In the case of condominiums, a board of managers generally has discretion to make decisions affecting the condominium and there may be no assurance that the borrower under a mortgage loan secured by one or more interests in that condominium will have any control over decisions made by the related board of managers. Thus, decisions made by that board of managers, including regarding assessments to be paid by the unit owners, insurance to be maintained on the condominium and many other decisions affecting the maintenance of that condominium, may have a significant impact on the mortgage loans in the trust fund that are secured by mortgaged properties consisting of such condominium interests. There can be no assurance that the related board of managers will always act in the best interests of the borrower under those mortgage loans. Further, due to the nature of condominiums, a default on the part of the borrower with respect to such mortgaged properties will not allow the applicable special servicer the same flexibility in realizing on the collateral as is generally available with respect to commercial properties that are not condominiums. The rights of other unit owners, the documents governing the management of the condominium units and the state and local laws applicable to condominium units must be considered. In addition, in the event of a casualty with respect to the subject mortgaged property, due to the possible existence of multiple loss payees on any insurance policy covering such mortgaged property, there could be a delay in the allocation of related insurance proceeds, if any. In the case of cooperatives, there is likewise no assurance that the borrower under a mortgage loan secured by ownership interests in the cooperative will have any control over decisions made by the cooperative's board of directors, that such decisions may not have a significant impact on the mortgage loans in the trust fund that are secured by mortgaged properties consisting of cooperative interests or that the operation of the property before or after any foreclosure will not be adversely affected by rent control or rent stabilization laws. See "Risk Factors--Risks Related to Mortgage Loans--Mortgage loans secured by cooperatively owned apartment buildings are subject to the risk that tenant-shareholders of a cooperatively owned apartment building will be unable to make the required maintenance payments" in the accompanying prospectus. Consequently, servicing and realizing upon the collateral described above could subject the series 2006-PWR12 certificateholders to a greater delay, expense and risk than with respect to a mortgage loan secured by a commercial property that is not a condominium. TENANCIES IN COMMON MAY HINDER RECOVERY. The seventeen (17) pooled mortgage loans secured by the mortgaged properties identified on Appendix B to this prospectus supplement as Southdale Office Centre, Reserve at Woodbridge, Mattress Discounters, Wadsworth Boulevard Marketplace, 940 N Central, 770 East El Camino Real, Micron Building, Lindale Crossing, Radisson Hotel - Kenosha, Security Central Storage, North Ranch Plaza, Hidden Lakes Center, The Broadway Center, Bonita Commerce Center, City Mattress Center, Petaluma Industrial Buildings and 10223 Sepulveda Boulevard, which represent 2.1%, 0.9%, 0.6%, 0.6%, 0.5%, 0.4%, 0.4%, 0.3%, 0.3%, 0.2%, 0.2%, 0.2%, 0.2%, 0.2%, 0.1%, 0.1% and 0.1%, respectively, of the initial mortgage pool balance (and, in the aggregate, 7.2% of the initial loan group 1 balance and 9.2% of the initial loan group 2 balance), have borrowers that own the related mortgaged properties as tenants in common. In general, with respect to a tenant in common ownership structure, each tenant in common owns an undivided share in the property and if such tenant in common desires to sell its interest in the property (and is unable to find a buyer or otherwise needs to force a partition), such tenant in common has the ability to request that a court order a sale of the property and distribute the proceeds to each tenant in common proportionally. As a result, if a borrower exercises such right of partition, the related pooled mortgage loan may be subject to prepayment. In addition, the tenant in common structure may cause delays in the enforcement of remedies because each time a tenant in common borrower files for bankruptcy, the bankruptcy court stay will be reinstated. In some cases, the related tenant in common borrower waived its right to partition, reducing the risk of partition. However, there can be no S-62 assurance that, if challenged, this waiver would be enforceable. In addition, in some cases, the related pooled mortgage loan documents provide for full recourse or personal liability for losses as to the related tenant in common borrower and the guarantor or for the occurrence of an event of default under such pooled loan documents if a tenant in common files for partition. In some cases, the related borrower is a special purpose entity (in some cases bankruptcy remote), reducing the risk of bankruptcy. There can be no assurance that a bankruptcy proceeding by a single tenant in common borrower will not delay enforcement of this pooled mortgage loan. Additionally, in some cases, subject to the terms of the related mortgage loan documents, a borrower or a tenant-in-common borrower may assign its interests to one or more tenant-in-common borrowers. Such change to, or increase in, the number of tenant-in-common borrowers increases the risks related to this ownership structure. THE RECORDING OF THE MORTGAGES IN THE NAME OF MERS MAY AFFECT THE YIELD ON THE CERTIFICATES. The mortgages or assignments of mortgage for some of the pooled mortgage loans have been or may be recorded in the name of Mortgage Electronic Registration Systems, Inc. or MERS, solely as nominee for the lender and its successors and assigns. Subsequent assignments of those mortgages are registered electronically through the MERS system. However, if MERS discontinues the MERS system and it becomes necessary to record an assignment of mortgage to the Trustee, then any related expenses will be paid by the Trust and will reduce the amount available to pay principal of and interest on the certificates. The recording of mortgages in the name of MERS is a fairly recent practice in the commercial mortgage lending industry. Public recording officers and others may have limited, if any, experience with lenders seeking to foreclose mortgages, assignments of which are registered with MERS. Accordingly, delays and additional costs in commencing, prosecuting and completing foreclosure proceedings and conducting foreclosures sales of the mortgaged properties could result. Those delays and the additional costs could in turn delay the distribution of liquidation proceeds to certificateholders and increase the amount of losses on the pooled mortgage loans. THERE MAY BE CHANGES IN THE TAX LAWS OF THE U.S. VIRGIN ISLANDS; NO GROSS-UP. The pooled mortgage loan secured by the mortgaged property identified on Appendix B to this prospectus supplement as Guinea Grove Apartments, representing 0.3% of the initial mortgage pool balance (and 2.7% of the initial loan group 2 balance), is secured by a property located in the United States Virgin Islands ("USVI") and is an obligation of a borrower organized in the USVI. USVI law currently provides an exemption from USVI withholding tax for USVI-source interest payments on loans secured by a property or properties located in the USVI. We cannot assure you that this exemption will not change in the future or that USVI law will not otherwise change, and this mortgage loan will not provide for any gross-up in the event of the imposition of any such withholding tax. As a result, if the exemption is changed or any additional tax is imposed, it may result in a shortfall with respect to this pooled mortgage loans. In addition, in the event that the trust acquires the mortgaged property securing such pooled mortgage loan, the trust may be treated as engaged in a trade or business in the USVI and may be subject to tax on net income or gains with respect to that net income. OTHER RISKS TERRORIST ATTACKS MAY ADVERSELY AFFECT THE VALUE OF THE OFFERED CERTIFICATES AND PAYMENTS ON THE UNDERLYING MORTGAGE LOANS. Terrorist attacks may occur at any time at any location in the world, including in the United States and at or near the mortgaged properties that secure the pooled mortgage loans. It is impossible to predict when, how, why or where terrorist attacks may occur in the United States or elsewhere and the nature and extent of the effects of any terrorist attacks on world, national, regional or local economies, securities, financial or real estate markets or spending or travel habits. Perceptions that terrorist attacks may occur or be imminent may have the same or similar effects as actual terrorist attacks, even if terrorist attacks do not materialize. S-63 THE HURRICANES OF 2005. In August, September and October 2005, Hurricanes Katrina, Rita and Wilma and related windstorms, floods and tornadoes caused extensive and catastrophic physical damage in and to coastal and inland areas located in the Gulf Coast region of the United States (parts of Texas, Louisiana, Mississippi and Alabama), parts of Florida and certain other parts of the southeastern United States. That damage, and the national, regional and local economic and other effects of that damage, are not yet fully assessed or known, although the mortgage loan sellers are not aware of material physical damage to the mortgaged properties securing the respective pooled mortgage loans being sold by them. Initial economic effects appeared to include nationwide decreases in oil supplies and refining capacity, nationwide increases in gas prices and regional interruptions in travel and transportation, tourism and economic activity generally in some of the affected areas. It is not possible to determine the extent to which these effects may be temporary or how long they may last. Other temporary and/or long-term effects on national, regional and local economies, securities, financial and real estate markets and spending or travel habits may subsequently arise or become apparent in connection with the hurricanes and their aftermath. Furthermore, there can be no assurance that displaced residents of the affected areas will return, that the economies in the affected areas will recover sufficiently to support income producing real estate at pre-storm levels or that the costs of clean-up will not have a material adverse effect on the national economy. Because standard hazard insurance policies generally do not provide coverage for damage arising from floods and windstorms, property owners in the affected areas may not be insured for the damage to their properties and, in the aggregate, this may affect the timing and extent of local and regional economic recovery. ADDITIONAL RISKS. See "Risk Factors" in the accompanying prospectus for a description of other risks and special considerations that may be applicable to your offered certificates. CAPITALIZED TERMS USED IN THIS PROSPECTUS SUPPLEMENT From time to time we use capitalized terms in this prospectus supplement. Each of those capitalized terms will have the meaning assigned to it in the "Glossary" attached to this prospectus supplement. FORWARD-LOOKING STATEMENTS This prospectus supplement and the accompanying prospectus include the words "expects", "intends", "anticipates", "estimates" and similar words and expressions. These words and expressions are intended to identify forward-looking statements. Any forward-looking statements are made subject to risks and uncertainties that could cause actual results to differ materially from those stated. These risks and uncertainties include, among other things, declines in general economic and business conditions, increased competition, changes in demographics, changes in political and social conditions, regulatory initiatives and changes in customer preferences, many of which are beyond our control and the control of any other person or entity related to this offering. The forward-looking statements made in this prospectus supplement are accurate as of the date stated on the cover of this prospectus supplement. We have no obligation to update or revise any forward-looking statement. TRANSACTION PARTIES THE ISSUING ENTITY The issuing entity with respect to the offered certificates will be the Bear Stearns Commercial Mortgage Securities Trust 2006-PWR12 (the "Trust"). The Trust is a New York common law trust that will be formed on the closing date pursuant to the series 2006-PWR12 pooling and servicing agreement. The only activities that the Trust may perform are those set forth in the series 2006-PWR12 pooling and servicing agreement, which are generally limited to owning and administering the mortgage loans and any REO Property, disposing of defaulted mortgage loans and REO Property, issuing the certificates, making distributions, providing reports to certificateholders and other activities described in this prospectus supplement. Accordingly, the Trust may not issue securities other than the certificates, or invest in securities, other than S-64 investing of funds in the certificate account and other accounts maintained under the series 2006-PWR12 pooling and servicing agreement in certain short-term high-quality investments. The Trust may not lend or borrow money, except that the master servicers and the trustee may make advances of delinquent principal and interest payments and servicing advances to the Trust, but only to the extent the advancing party deems these advances to be recoverable from the related mortgage loan. These advances are intended to provide liquidity, rather than credit support. The series 2006-PWR12 pooling and servicing agreement may be amended as set forth under "Description of the Offered Certificates--Amendment of the Series 2006-PWR12 Pooling and Servicing Agreement" in this prospectus supplement. The Trust administers the mortgage loans through the trustee, the certificate administrator, the tax administrator, the master servicers, the primary servicers and the special servicers. A discussion of the duties of the trustee, the certificate administrator, the tax administrator, the certificate registrar, the master servicers, the primary servicers and the special servicers, including any discretionary activities performed by each of them, is set forth under "--The Trustee," "--The Certificate Administrator, Tax Administrator and Certificate Registrar," "--The Master Servicers," and "--The Special Servicers" and "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement" in this prospectus supplement. The only assets of the Trust other than the mortgage loans and any REO Properties are the Certificate Account and other accounts maintained pursuant to the series 2006-PWR12 pooling and servicing agreement and the short-term investments in which funds in the Certificate Account and other accounts are invested. The Trust has no present liabilities, but has potential liability relating to ownership of the mortgage loans and any REO Properties, and the other activities described in this prospectus supplement, and indemnity obligations to the trustee, the certificate administrator, the master servicers and the special servicers and similar parties under any pooling and servicing agreement which governs the servicing of each pooled mortgage loan that is part of a split loan structure. The fiscal year of the Trust is the calendar year. The Trust has no executive officers or board of directors and acts through the trustee, the certificate administrator, the master servicers, the primary servicers and the special servicers. The depositor is contributing the mortgage loans to the Trust. The depositor is purchasing the mortgage loans from the mortgage loan sellers, as described in this prospectus supplement under "Description of the Mortgage Pool--Assignment of the Pooled Mortgage Loans" and "--Representations and Warranties." Since the Trust is a common law trust, it may not be eligible for relief under the federal bankruptcy laws, unless it can be characterized as a "business trust" for purposes of the federal bankruptcy laws. Bankruptcy courts look at various considerations in making this determination, so predicting with any certainty whether or not the trust would be characterized as a "business trust" is not possible. THE DEPOSITOR Bear Stearns Commercial Mortgage Securities Inc., the depositor, was incorporated in the State of Delaware on April 20, 1987. Our principal executive offices are located at 383 Madison Avenue, New York, New York 10179. Our telephone number is (212) 272-2000. We do not have, nor is it expected in the future that we will have, any significant assets and are not engaged in any activities except those related to the securitization of assets. The depositor was formed for the purpose of acting as a depositor in asset backed securities transactions. During the period from April 23, 2002 to the cut-off date, the depositor acted as depositor with respect to commercial and multifamily mortgage loan securitization transactions, in an aggregate amount of approximately $19.0 billion. BSCMI has acted as a sponsor or co-sponsor of these transactions and contributed a substantial portion of the mortgage loans in such transactions, with the remainder having been contributed by numerous other loan sellers. Bear Stearns Commercial Mortgage Securities Inc. will have minimal ongoing duties with respect to the offered certificates and the mortgage loans. The depositor's duties will include, without limitation, (i) appointing a successor trustee in the event of the resignation or removal of the trustee, (ii) providing information in its possession with respect to the certificates to the tax administrator to the extent necessary to perform REMIC tax administration, (iii) indemnifying the trustee, the tax administrator and trust for any liability, assessment or costs arising from the depositor's bad faith, negligence or malfeasance in providing such information, (iv) indemnifying the trustee and the tax administrator against certain securities laws liabilities, and (v) signing or to contracting with each master servicer, as applicable, signing any annual report on Form 10-K, including the certification therein required under the Sarbanes-Oxley Act, and any distribution reports on Form 10-D and Current Reports on Form 8-K required to be filed by the trust. The depositor is also required under the Underwriting Agreement to indemnify the Underwriters for certain securities law liabilities. S-65 THE SPONSORS, MORTGAGE LOAN SELLERS AND ORIGINATORS PRUDENTIAL MORTGAGE CAPITAL FUNDING, LLC Overview Prudential Mortgage Capital Funding, LLC ("PMCF"), a Delaware limited liability company formed in 1997, is a sponsor of this transaction and one of the mortgage loan sellers. Prudential Mortgage Capital Company, LLC ("PMCC"), an affiliate of PMCF, originated and underwrote all of the mortgage loans sold by PMCF to the depositor in this transaction, which represent 38.5% of the initial mortgage pool balance. PMCF is a wholly-owned subsidiary of PMCC and is an affiliate of Prudential Asset Resources, Inc., one of the master servicers in this transaction. PMCF and PMCC's ultimate beneficial owner is Prudential Financial, Inc. (NYSE: PRU). The principal offices of PMCF are located at Four Gateway Center, 8th Floor, 100 Mulberry Street, Newark, New Jersey 07102. PMCF's telephone number is (888) 263-6800. A significant aspect of PMCC's business is the origination, underwriting and sale to PMCF of mortgage loans secured by commercial and multifamily properties, which mortgage loans are in turn primarily sold through CMBS securitizations. PMCF has been actively involved in the securitization of mortgage loans since 1998. From January 1, 2003, through March 31, 2006, PMCC originated for securitization approximately 550 mortgage loans, having a total original principal amount of approximately $7.74 billion, which were assigned to PMCF, and approximately $5.74 billion (this number includes several mortgage loans originated in 2002) have been included in approximately 17 securitizations. In connection with originating mortgage loans for securitization, PMCF and/or certain of its affiliates also originate subordinate or mezzanine debt which is generally not securitized. Of the $5.74 billion in mortgage loans originated by PMCC and assigned to PMCF that have been included in securitizations since January 1, 2003, approximately $295.60 million have been included in securitizations in which an affiliate of PMCF was depositor, and $5.44 billion have been included in securitizations in which an unaffiliated entity acted as depositor. In its fiscal year ended December 31, 2005, PMCC originated and assigned to PMCF approximately 226 mortgage loans for securitization, having an aggregate principal balance of approximately $2.35 billion. The property types most frequently securing mortgage loans originated by PMCC for securitization are office, retail, and multifamily properties. However, PMCC also originates mortgage loans secured by industrial, self storage, hospitality, manufactured housing, mixed-use and other types of properties for its securitization program. States with the largest concentration of mortgage loans have, in the past, included New York, California, and Texas; however, each securitization may include other states with significant concentrations. At origination of a mortgage loan, PMCC assigns the loan to PMCF which, together with other sponsors or loan sellers, initiates the securitization of these loans by transferring the loans to the depositor or another entity that acts in a similar capacity as the depositor, which loans will ultimately be transferred to the issuing entity for the related securitization. In coordination with the underwriters selected for a particular securitization, PMCF works with the Rating Agencies, loan sellers and servicers in structuring the transaction. Multiple seller transactions in which PMCF has participated to date as a mortgage loan seller include (i) the "IQ" program, in which PMCF, Morgan Stanley Mortgage Capital Inc. ("MSMC") and other entities act as sellers, and Morgan Stanley Capital I Inc., an affiliate of MSMC, acts as depositor; and (ii) the "PWR" program, in which PMCF, Wells Fargo Bank and other sellers act as sellers, and BSCMSI or an affiliate acts as depositor. Prior to this transaction, PMCF sold approximately $612.20 million of mortgage loans under the IQ program and approximately $4.66 billion of mortgage loans under the PWR program. Prudential Asset Resources, Inc. ("PAR"), an affiliate of PMCF and PMCC, a master servicer and a special servicer in this transaction, services the mortgage loans on PMCF's behalf. See "--Master Servicers" in this prospectus supplement. S-66 PMCC's Underwriting Standards General. PMCC originates and underwrites loans through its offices in Newark, New York City, McLean, Atlanta, Chicago, Dallas, San Francisco and Los Angeles. All of the PMCC mortgage loans in this transaction were originated by PMCC or an affiliate of PMCC, in each case, generally in accordance with the underwriting guidelines described below. Each lending situation is unique, however, and the facts and circumstances surrounding each mortgage loan, such as the quality and location of the real estate collateral, the sponsorship of the borrower and the tenancy of the collateral, will impact the extent to which the general guidelines below are applied to a specific mortgage loan. These underwriting guidelines are general, and there is no assurance that every mortgage loan will comply in all respects with the guidelines. Mortgage Loan Analysis. The PMCC credit underwriting team for each mortgage loan was comprised of PMCC real estate professionals. The underwriting team for each mortgage loan is required to conduct a review of the related property, generally including undertaking analyses of the appraisal, the engineering report, the environmental report, the historical property operating statements (to the extent available), current rent rolls, current and historical real estate taxes, and a review of tenant leases. A limited examination of certain key principals of borrower and, if the borrower is not a newly formed special purpose entity, the borrower itself, is performed prior to approval of the mortgage loan. This analysis includes a review of (i) available financial statements (which are generally unaudited), (ii) third-party credit reports, and (iii) judgment, lien, bankruptcy and pending litigation searches. The credit of certain key tenants is also examined as part of the underwriting process. Generally, a member of the PMCC underwriting team visits each property to confirm the occupancy rates of the property, the overall quality of the property, including its physical attributes, the property's market and the utility of the property within the market. As part of its underwriting procedures, PMCC also generally obtains the third party reports or other documents described in this prospectus supplement under "Description of the Mortgage Pool--Assessments of Property Value and Condition", "--Appraisals", "--Environmental Assessments", "--Property Condition Assessments", "--Seismic Review Process", and "--Zoning and Building Compliance". Loan Approval. All mortgage loans must be approved by a loan committee that is generally comprised of PMCC professionals. As the size of the mortgage loan increases, the composition of the applicable committee shifts from a regional focus to one that requires involvement by senior officers and/or directors of PMCC, its affiliates and its parent. The loan committee may approve a mortgage loan as recommended, request additional due diligence, modify the terms, or reject a mortgage loan. Debt Service Coverage Ratio and LTV Ratio. PMCC's underwriting standards generally require a minimum debt service coverage ratio of 1.20x and a maximum loan to value ratio of 80%. However, these requirements constitute solely a guideline, and exceptions to these guidelines may be approved based on the individual characteristics of a particular mortgage loan, such as the types of tenants and leases at the applicable real property; the existence of additional collateral such as reserves, letters of credit or guarantees; the existence of subordinate or mezzanine debt; PMCC's projection of improved property performance in the future; and other relevant factors. The debt service coverage ratio guidelines listed above are calculated based on anticipated underwritten net cash flow at the time of origination. Therefore, the debt service coverage ratio for each mortgage loan as reported elsewhere in this prospectus supplement may differ from the amount calculated at the time of origination. In addition, PMCC's underwriting guidelines generally permit a maximum amortization period of 30 years. However, certain mortgage loans may provide for interest-only payments prior to maturity, or for an interest-only period during a portion of the term of the mortgage loan. See "Description of the Mortgage Pool" in this prospectus supplement. Escrow Requirements. PMCC often requires a borrower to fund various escrows for taxes and insurance, replacement reserves, capital expenses and/or environmental remediation or monitoring, or, in some cases, requires such reserves to be funded only following a triggering event, such as an event of default under the related mortgage loan. PMCC may also require reserves for deferred maintenance, re-tenanting expenses, and capital expenses, in some cases only during periods when certain debt service coverage ratio tests are not satisfied. In some cases, the borrower is permitted to post a letter of credit or guaranty, or provide periodic evidence that the items for which the escrow or reserve would have been established are being paid or addressed, in lieu of funding a given reserve or escrow. PMCC conducts a case by case analysis to determine the need for a particular escrow or reserve and, consequently, such requirements may be modified and/or waived in connection with particular loans. S-67 See Appendix B to obtain specific information on the escrow requirements for the PMCC originated loans included in this transaction. BEAR STEARNS COMMERCIAL MORTGAGE, INC. Overview Bear Stearns Commercial Mortgage, Inc., a New York corporation ("BSCMI") is a sponsor of this transaction and is one of the mortgage loan sellers. BSCMI or an affiliate originated and underwrote all of the mortgage loans sold to the depositor by it, which represent 20.3% of the initial mortgage pool balance. BSCMI originates and underwrites loans through its New York City and Los Angeles offices. BSCMI is a wholly-owned subsidiary of The Bear Stearns Companies Inc. (NYSE: BSC) and an affiliate of Bear, Stearns & Co. Inc., one of the underwriters. The principal offices of BSCMI are located at 383 Madison Avenue, New York, New York 10179, and its telephone number is (212) 272-2000. BSCMI's primary business is the underwriting, origination and sale of mortgage loans secured by commercial or multifamily properties. BSCMI sells the great majority of the mortgage loans that it originates through commercial mortgage backed securities ("CMBS") securitizations. BSCMI, with its commercial mortgage lending affiliates and predecessors, began originating commercial mortgage loans in 1995 and securitizing commercial mortgage loans in 1996. As of January 1, 2006, the total amount of commercial mortgage loans originated by BSCMI since 1995 was in excess of $29 billion, of which approximately $22 billion has been securitized. Of the approximately $22 billion of securitized commercial mortgage loans, approximately $14 billion has been securitized by an affiliate of BSCMI acting as depositor, and approximately $8 billion has been securitized by unaffiliated entities acting as depositor. In its fiscal year ended November 30, 2005, BSCMI originated approximately $10 billion of commercial mortgage loans, of which approximately $3 billion was securitized by an affiliate of BSCMI acting as depositor, and approximately $3 billion was securitized by unaffiliated entities acting as depositor. BSCMI's annual commercial mortgage loan originations have grown from approximately $65 million in 1995 to approximately $1 billion in 2000 and to approximately $10 billion in 2005. The commercial mortgage loans originated by BSCMI include both fixed and floating rate loans and both conduit loans and large loans. BSCMI primarily originates loans secured by retail, office, multifamily, hospitality, industrial and self storage properties, but also originates loans secured by manufactured housing communities, theaters, land subject to a ground lease and mixed use properties. BSCMI originates loans in every state and in Puerto Rico and the U.S. Virgin Islands. As a sponsor, BSCMI originates mortgage loans and, either by itself or together with other sponsors or loan sellers, initiates their securitization by transferring the mortgage loans to a depositor, which in turn transfers them to the issuing entity for the related securitization. In coordination with Bear, Stearns & Co. Inc. and other underwriters, BSCMI works with Rating Agencies, loan sellers and servicers in structuring the securitization transaction. BSCMI acts as sponsor, originator or mortgage loan seller both in transactions in which it is the sole sponsor and mortgage loan seller as well as in transactions in which other entities act as sponsor and/or mortgage loan seller. Multiple seller transactions in which BSCMI has participated to date include each of the prior series of certificates issued under the "TOP" program, in which BSCMI, Wells Fargo Bank, National Association, Principal Commercial Funding, LLC and Morgan Stanley Mortgage Capital Inc. generally are mortgage loan sellers and sponsors, and the depositor and Morgan Stanley Capital I Inc., which is an affiliate of Morgan Stanley Mortgage Capital Inc., have alternately acted as depositor and the "PWR" program, in which BSCMI, Prudential Mortgage Capital Funding, LLC, Wells Fargo Bank, National Association, Principal Commercial Funding, LLC and Nationwide Life Insurance Company generally are mortgage loan sellers, and the depositor and Bear Stearns Commercial Mortgage Securities II Inc. act as depositor. As of January 1, 2006, BSCMI securitized approximately $5 billion of commercial mortgage loans through the TOP program and approximately $5 billion of commercial mortgage loans through the PWR program. Neither BSCMI nor any of its affiliates acts as servicer of the commercial mortgage loans in its securitizations. Instead, BSCMI sells the right to be appointed servicer of its securitized mortgage loans to rating-agency approved servicers, including Wells Fargo Bank, National Association, a master servicer in this transaction, and Bank of America, N.A. S-68 BSCMI's Underwriting Standards General. All of the BSCMI mortgage loans were originated by BSCMI or an affiliate of BSCMI, in each case, generally in accordance with the underwriting criteria summarized below. Each lending situation is unique, however, and the facts and circumstance surrounding the mortgage loan, such as the quality, tenancy and location of the real estate collateral and the sponsorship of the borrower, will impact the extent to which the general criteria are applied to a specific mortgage loan. The underwriting criteria are general, and we cannot assure you that every mortgage loan will comply in all respects with the criteria. Mortgage Loan Analysis. The BSCMI credit underwriting team for each mortgage loan is comprised of real estate professionals from BSCMI. The underwriting team for each mortgage loan is required to conduct an extensive review of the related mortgaged property, including an analysis of the appraisal, engineering report, environmental report, historical property operating statements, rent rolls, current and historical real estate taxes, and a review of tenant leases. The review includes a market analysis which focuses on supply and demand trends, rental rates and occupancy rates. The credit and background of the borrower and certain key principals of the borrower are examined prior to approval of the mortgage loan. This analysis includes a review of historical financial statements (which are generally unaudited), historical income tax returns of the borrower and its principals, third-party credit reports, judgment, lien, bankruptcy and pending litigation searches. Borrowers generally are required to be special purpose entities. The credit of key tenants is also examined as part of the underwriting process. A member of the BSCMI underwriting team visits and inspects each property to confirm occupancy rates and to analyze the property's market and utility within the market. Loan Approval. Prior to commitment, all mortgage loans must be approved by a loan committee comprised of senior real estate professionals from BSCMI and its affiliates. The loan committee may either approve a mortgage loan as recommended, request additional due diligence, modify the terms or reject a mortgage loan. Debt Service Coverage Ratio and LTV Ratio. BSCMI's underwriting criteria generally require the following minimum debt service coverage ratios and maximum loan to value ratios for each indicated property type: PROPERTY TYPE DSCR GUIDELINE LTV RATIO GUIDELINE ------------------------------ -------------- ------------------- Multifamily 1.20x 80% Office 1.25x 75% Anchored Retail 1.20x 80% Unanchored Retail 1.30x 75% Self storage 1.30x 75% Hotel 1.40x 70% Industrial 1.25x 70% Manufactured Housing Community 1.25x 75% Debt service coverage ratios are calculated based on anticipated underwritten net cash flow at the time of origination. Therefore, the debt service coverage ratio for each mortgage loan as reported elsewhere in this prospectus supplement may differ from the amount determined at the time of origination. Escrow Requirements. BSCMI generally requires a borrower to fund various escrows for taxes and insurance, replacement reserves and capital expenses. Generally, the required escrows for mortgage loans originated by BSCMI are as follows: Taxes and Insurance-Typically, a pro rated initial deposit and monthly deposits equal to 1/12 of the annual property taxes (based on the most recent property assessment and the current millage rate) and annual property insurance premium. Replacement Reserves-Monthly deposits generally based on the greater of the amount recommended pursuant to a building condition report prepared for BSCMI or the following minimum amounts: S-69 PROPERTY TYPE RESERVE GUIDELINE ----------------------------- Multifamily $250 per unit Office $0.20 per square foot Retail $0.15 per square foot Self storage $0.15 per square foot Hotel 5% of gross revenue Industrial $0.10 - $0.15 per square foot Manufactured Housing Community $50 per pad Deferred Maintenance/Environmental Remediation-An initial deposit, upon funding of the mortgage loan, in an amount generally equal to 125% of the estimated costs of the recommended substantial repairs or replacements pursuant to the building condition report completed by a licensed engineer and the estimated costs of environmental remediation expenses as recommended by an independent environmental assessment. Re-tenanting-In some cases major leases expire within the mortgage loan term. To mitigate this risk, special reserves may be funded either at closing and/or during the mortgage loan term to cover certain anticipated leasing commissions or tenant improvement costs which may be associated with re-leasing the space occupied by these tenants. WELLS FARGO BANK, NATIONAL ASSOCIATION Wells Fargo Bank, National Association, a national banking association ("Wells Fargo Bank"), is a sponsor of this transaction and is one of the mortgage loan sellers. Wells Fargo Bank originated and underwrote all of the mortgage loans it is selling to us, which represent 20.3% of the initial mortgage pool balance. Wells Fargo Bank is a wholly-owned subsidiary of Wells Fargo & Company (NYSE: WFC). The principal office of Wells Fargo Bank's commercial mortgage origination division is located at 45 Fremont Street, 9th Floor, San Francisco, California 94105, and its telephone number is (415) 396-7697. Wells Fargo Bank is engaged in a general consumer banking, commercial banking, and trust business, offering a wide range of commercial, corporate, international, financial market, retail and fiduciary banking services. Wells Fargo Bank is a national banking association chartered by the Office of the Comptroller of the Currency (the "OCC") and is subject to the regulation, supervision and examination of the OCC. Wells Fargo Bank's Commercial Mortgage Securitization Program Wells Fargo Bank has been active as a participant in securitizations of commercial and multifamily mortgage loans since 1995. Wells Fargo Bank originates commercial and multifamily mortgage loans and, together with other mortgage loan sellers and sponsors, participates in the securitization of such mortgage loans by transferring them to an unaffiliated securitization depositor and participating in structuring decisions. Multiple mortgage loan seller transactions in which Wells Fargo Bank has participated include the "TOP" program in which the depositor and Morgan Stanley Capital I Inc. have alternately acted as depositor, the "PWR" program in which the depositor and the BSCMSI II Depositor act as depositor and the "HQ" and "LIFE" programs in which Morgan Stanley Capital I Inc. acts as depositor. Between the inception of its commercial mortgage securitization program in 1995 and December 31, 2005, Wells Fargo Bank originated approximately 2,966 fixed rate commercial and multifamily mortgage loans with an aggregate original principal balance of approximately $14.6 billion, which were included in approximately 42 securitization transactions. The properties securing these loans include multifamily, office, retail, industrial, hospitality, manufactured housing and self storage properties. Wells Fargo Bank and certain of its affiliates also originate other commercial and multifamily mortgage loans that are not securitized, including subordinated and mezzanine loans. In the year ended December 31, 2005, Wells Fargo Bank originated and securitized commercial and multifamily mortgage loans with an aggregate original principal balance of approximately $3.9 billion, all of which were included in securitization transactions in which an unaffiliated entity acted as depositor. S-70 Servicing Wells Fargo Bank services the mortgage loans that it originates, and is acting as one of the master servicers in this transaction. See "--Master Servicers" in this prospectus supplement. Wells Fargo Bank is also acting as certificate administrator, certificate registrar and tax administrator in this transaction. Underwriting Standards Wells Fargo Bank generally underwrites commercial and multifamily mortgage loans originated for securitization in accordance with the underwriting criteria described below. Each lending situation is unique, however, and the facts and circumstances surrounding a particular mortgage loan, such as the quality, location and tenancy of the mortgaged property and the sponsorship of the borrower, will impact the extent to which the underwriting criteria are applied to that mortgage loan. The underwriting criteria are general guidelines, and in many cases exceptions to one or more of the criteria may be approved. Accordingly, no representation is made that each mortgage loan originated by Wells Fargo Bank will comply in all respects with the underwriting criteria. An underwriting team comprised of real estate professionals conducts a review of the mortgaged property related to each loan, generally including an analysis of historical property operating statements, if available, rent rolls, current and historical real estate taxes, and tenant leases. The borrower and certain key principals of the borrower are reviewed for financial strength and other credit factors, generally including financial statements (which are generally unaudited), third-party credit reports, and judgment, lien, bankruptcy and pending litigation searches. Depending on the type of the mortgaged property and other factors, the credit of key tenants also may also be reviewed. Each mortgaged property is generally inspected to ascertain its overall quality, competitiveness, physical attributes, neighborhood, market, accessibility, visibility and demand generators. Wells Fargo Bank generally obtains the third party reports or other documents described in this prospectus supplement under "Description of the Mortgage Pool-Assessments of Property Value and Condition," "-Appraisals," "--Environmental Assessments," "--Property Condition Assessments," "--Seismic Review Process," and "--Zoning and Building Code Compliance." A loan committee of senior real estate professionals reviews each proposed mortgage loan before a commitment is made. The loan committee may approve or reject a proposed loan, or may approve it subject to modifications or satisfaction with additional due diligence. Debt Service Coverage Ratio and LTV Ratio. Wells Fargo Bank's underwriting criteria generally require a minimum debt service coverage ratio of 1.20x and a maximum loan-to-value ratio of 80%. However, as noted above, these criteria are general guidelines, and exceptions to them may be approved based on the characteristics of a particular mortgage loan. For example, Wells Fargo Bank may originate a mortgage loan with a lower debt service coverage ratio or a higher loan-to-value ratio based on relevant factors such as the types of tenants and leases at the mortgaged property or additional credit support such as reserves, letters of credit or guarantees. In addition, with respect to certain mortgage loans originated by Wells Fargo Bank or its affiliates there may exist subordinate debt secured by the related mortgaged property and/or mezzanine debt secured by direct or indirect ownership interests in the borrower. Such mortgage loans may have a lower debt service coverage ratio, and a higher loan-to-value ratio, if such subordinate or mezzanine debt is taken into account. For purposes of the underwriting criteria, Wells Fargo Bank calculates the debt service coverage ratio for each mortgage loan on the basis of underwritten net cash flow at loan origination. Therefore, the debt service coverage ratio for each mortgage loan as reported in this prospectus supplement and Appendix B hereto may differ from the ratio for such mortgage loan calculated at the time of origination. In addition, Wells Fargo Bank's underwriting criteria generally permit a maximum amortization period of 30 years. However, certain mortgage loans may provide for interest-only payments prior to maturity, or for an interest-only period during a portion of the term of the mortgage loan. See "Description of the Mortgage Pool" in this prospectus supplement. Escrow Requirements. Wells Fargo Bank may require a borrower to fund escrows or reserves for taxes and insurance or, in some cases, requires such escrows or reserves to be funded only upon a triggering event, such as an event of default under the related mortgage loan. Wells Fargo Bank may also require a borrower to fund escrows or reserves for other purposes such as deferred maintenance, re-tenanting expenses and capital expenditures, in some cases only during periods when certain debt service coverage ratios are not satisfied. In some cases, in lieu of funding an escrow or reserve, the S-71 borrower is permitted to post a letter of credit or guaranty, or provide periodic evidence that the items for which the escrow or reserve would have been established are being paid or addressed. Wells Fargo Bank reviews the need for a particular escrow or reserve on a loan-by-loan basis and does not require escrows or reserves to be funded for each mortgage loan. PRINCIPAL COMMERCIAL FUNDING II, LLC Principal Commercial Funding II, LLC ("PCFII") a Delaware limited liability company formed in 2005, is a sponsor of this transaction and one of the mortgage loan sellers. PCFII is an entity owned jointly by U.S. Bank National Association ("USB"), a subsidiary of U.S. Bancorp (NYSE:USB) and Principal Commercial Funding, LLC ("PCF"), a subsidiary of Principal Global Investors, LLC ("PGI") which is a wholly owned subsidiary of Principal Life Insurance Company. Principal Life Insurance Company is a wholly-owned subsidiary of Principal Financial Services, Inc., which is wholly-owned by Principal Financial Group (NYSE: PFG). The principal offices of PCFII are located at 801 Grand Avenue, Des Moines, Iowa 50392, telephone number (515) 248-3944. PCFII's principal business is the underwriting, origination and sale of mortgage loans secured by commercial and multifamily properties, which mortgage loans are in turn primarily sold into securitizations. PCF or USB have sourced all of the mortgage loans PCFII is selling in this transaction, which represent 10.2% of the initial mortgage pool balance. Principal Commercial Funding II, LLC's Commercial Real Estate Securitization Program In 2006, PCFII began participating in the securitization of mortgage loans. PCFII sources mortgage loans through its owners, PCF and USB. PCF and its affiliates underwrite the mortgage loans for PCFII. PCFII, with the other mortgage loan sellers, participates in the securitization of such mortgage loans by transferring the mortgage loans to a securitization depositor or another entity that acts in a similar capacity. Multiple mortgage loan seller transactions in which PCF has and in which PCFII is anticipating to participate in include the "TOP" program in which Bear Stearns Commercial Mortgage Securities Inc. and Morgan Stanley Capital I Inc. have alternately acted as depositor, the "PWR" program in which Bear Stearns Commercial Mortgage Securities Inc. acts as depositor and the "IQ" and "HQ" programs in which Morgan Stanley Capital I Inc. has acted as depositor. Since the inception of PCF's mortgage loan securitization program in 1998, the total amount of commercial and multifamily mortgage loans originated by PCF and/or PCFII that have been included in securitizations as of March 31, 2006, was approximately $7.8 billion. As of such date, these securitized loans included approximately 1,173 mortgage loans, all of which were fixed rate and which have been included in approximately 33 securitizations. In connection with originating mortgage loans for securitization, certain of PCFII's affiliates also originate subordinate or mezzanine debt which is generally not securitized. In its fiscal year ended December 31, 2005, PCF and/or PCFII originated and securitized approximately $2.2 billion of commercial and multifamily mortgage loans, all of which were included in securitizations in which an unaffiliated entity acted as depositor. PCF's and/or PCFII's total securitizations have grown from approximately $337.7 million in 1999 to approximately $2.2 billion in 2005. The mortgage loans originated for PCFII include fixed rate conduit loans. PCFII's conduit loan program (which is the program under which PCFII's mortgage loans being securitized in this transaction were originated), will also sometimes originate large loans to be securitized within conduit issuances. The mortgage loans originated for PCFII are secured by multifamily, office, retail, industrial, hotel, manufactured housing and self storage properties. Servicing Principal Global Investors, LLC, an affiliate of PCF and PCFII, services all of the commercial mortgage loans originated for PCF and PCFII for securitization. Additionally, PGI is the primary servicer for the mortgage loans sold by PCF and PCFII in this transaction. See "Transactions Parties--Primary Servicer" in this prospectus supplement. Underwriting Standards PCFII's mortgage loans originated for securitization are underwritten by PCF and its affiliates, and, in each case, will generally be originated in accordance with the underwriting criteria described below. Each lending situation is unique, however, and the facts and circumstance surrounding the mortgage loan, such as the quality and location of the real estate S-72 collateral, the sponsorship of the borrower and the tenancy of the collateral, will impact the extent to which the general guidelines below are applied to a specific mortgage loan. The underwriting criteria are general, and in many cases exceptions may be approved to one or more of these guidelines. Accordingly, no representation is made that every mortgage loan will comply in all respects with the criteria set forth below. The credit underwriting team for each mortgage loan is comprised of real estate professionals. The underwriting team for each mortgage loan is required to conduct a review of the related mortgaged property, generally including an analysis of the historical property operating statements, if available, rent rolls, current and historical real estate taxes, and a review of tenant leases. The review includes a market analysis which focuses on supply and demand trends, rental rates and occupancy rates. The credit of the borrower and certain key principals of the borrower are examined for financial strength and character prior to approval of the mortgage loan. This analysis generally includes a review of financial statements (which are generally unaudited), third-party credit reports, judgment, lien, bankruptcy and pending litigation searches. Depending on the type of real property collateral involved and other relevant circumstances, the credit of key tenants also may be examined as part of the underwriting process. Generally, a member of the underwriting team (or someone on its behalf), visits the property for a site inspection to ascertain the overall quality and competitiveness of the property, including its physical attributes, neighborhood and market, accessibility and visibility and demand generators. As part of its underwriting procedures, the third party reports or other documents described in this prospectus supplement under "Description of the Mortgage Pool--Assessments of Property Value and Condition," "--Appraisals," "--Environmental Assessments," "--Property Condition Assessments," "--Seismic Review Process," and "--Zoning and Building Code Compliance" are generally obtained. All mortgage loans must be approved by a loan committee comprised of senior real estate professionals. The loan committee may either approve a mortgage loan as recommended, request additional due diligence, modify the terms, or reject a mortgage loan. DEBT SERVICE COVERAGE RATIO AND LOAN-TO-VALUE RATIO. The underwriting standards for PCFII's mortgage loans generally require a minimum debt service coverage ratio of 1.20x and maximum loan-to-value ratio of 80%. However, these requirements constitute solely a guideline, and exceptions to these guidelines may be approved based on the individual characteristics of a mortgage loan. For example, a mortgage loan originated for PCFII may have a lower debt service coverage ratio or higher loan-to-value ratio based on the types of tenants and leases at the subject real property, the taking of additional collateral such as reserves, letters of credit and/or guarantees, real estate professional's judgment of improved property performance in the future and/or other relevant factors. In addition, with respect to certain mortgage loans originated for PCFII, there may exist subordinate debt secured by the related mortgaged property and/or mezzanine debt secured by direct or indirect ownership interests in the borrower. Such mortgage loans may have a lower debt service coverage ratio, and a higher loan-to-value ratio, if such subordinate or mezzanine debt is taken into account. The debt service coverage ratio guidelines set forth above are calculated based on underwritten net cash flow at origination. Therefore, the debt service coverage ratio for each mortgage loan as reported in this prospectus supplement and Appendix B hereto may differ from the amount calculated at the time of origination. In addition, PCFII's underwriting guidelines generally permit a maximum amortization period of 30 years. However, certain mortgage loans may provide for interest-only payments prior to maturity, or for an interest-only period during a portion of the term of the mortgage loan. See "Description of the Mortgage Pool" in this prospectus supplement. ESCROW REQUIREMENTS. PCFII borrowers are often required to fund various escrows for taxes and insurance or, in some cases, requires such reserves to be funded only upon a triggering event, such as an event of default under the related mortgage loan. Additional reserves may be required for deferred maintenance, re-tenanting expenses and capital expenses, in some cases only during periods when certain debt service coverage ratio tests are not satisfied. In some cases, the borrower is permitted to post a letter of credit or guaranty, or provide periodic evidence that the items for which the escrow or reserve would have been established are being paid or addressed, in lieu of funding a given reserve or escrow. Case-by-case analysis is done to determine the need for a particular escrow or reserve. Consequently, the aforementioned escrows and reserves are not established for every multifamily and commercial mortgage loan originated for PCFII. The information set forth in this prospectus supplement concerning the sponsors has been provided by them. S-73 PRINCIPAL COMMERCIAL FUNDING, LLC Principal Commercial Funding, LLC ("PCF") a Delaware limited liability company formed in 1998, is a sponsor of this transaction and one of the mortgage loan sellers. PCF is a wholly owned subsidiary of Principal Global Investors, LLC, which is a wholly owned subsidiary of Principal Life Insurance Company. Principal Life Insurance Company is a wholly-owned subsidiary of Principal Financial Services, Inc., which is wholly-owned by Principal Financial Group (NYSE: PFG). The principal offices of PCF are located at 801 Grand Avenue, Des Moines, Iowa 50392, telephone number (515) 248-3944. PCF's principal business is the underwriting, origination and sale of mortgage loans secured by commercial and multifamily properties, which mortgage loans are in turn primarily sold into securitizations. PCF or an affiliate of PCF originated all of the mortgage loans it is selling to us, which represent 5.7% of the initial mortgage pool balance. Principal Commercial Funding, LLC's Commercial Real Estate Securitization Program PCF has been active as a participant in securitizations of commercial mortgage loans since 1999. PCF originates mortgage loans and either by itself or together with other mortgage loan sellers, participates in the securitization of such mortgage loans by transferring the mortgage loans to a securitization depositor or another entity that acts in a similar capacity. Multiple mortgage loan seller transactions in which PCF has participated in to date include the "TOP" program in which the depositor and Morgan Stanley Capital I Inc. have alternately acted as depositor, the "PWR" program in which the depositor and the BSCMSI II Depositor act as depositor and the "IQ", "HQ" and "LIFE" programs in which Morgan Stanley Capital I Inc. has acted as depositor. As of March 31, 2006, the total amount of commercial and multifamily mortgage loans originated by PCF and included in securitizations since the inception of its commercial mortgage securitization program in 1998 was approximately $7.8 billion (the "PCF Securitized Loans"). As of such date, the PCF Securitized Loans included approximately 1,173 mortgage loans, all of which were fixed rate, which have been included in approximately 33 securitizations. In connection with originating commercial mortgage loans for securitization, PCF and/or certain of PCF's affiliates also originate subordinate or mezzanine debt which is generally not securitized. In its fiscal year ended December 31, 2005, PCF originated and securitized approximately $2.2 billion of commercial and multifamily mortgage loans, all of which were included in securitizations in which an unaffiliated entity acted as depositor. PCF's total securitizations have grown from approximately $337.7 million in 1999 to approximately $2.2 billion in 2005. The commercial mortgage loans originated by PCF include fixed rate conduit loans. PCF's conduit loan program (which is the program under which PCF originated the mortgage loans that will be deposited into the transaction described in this prospectus supplement), also sometimes originates large loans which have been securitized within conduit issuances. PCF originates commercial mortgage loans secured by multifamily, office, retail, industrial, hotel, manufactured housing and self storage properties. Servicing Principal Global Investors, LLC, an affiliate of PCF and PCFII, services all of the commercial mortgage loans originated for PCF and PCFII for securitization. Additionally, PGI is the primary servicer for the mortgage loans sold by PCF and PCFII in this transaction. See "Transactions Parties--Primary Servicer" in this prospectus supplement. Underwriting Standards Conduit mortgage loans originated for securitization by PCF or an affiliate of PCF in each case, will generally be originated in accordance with the underwriting criteria described below. Each lending situation is unique, however, and the facts and circumstance surrounding the mortgage loan, such as the quality and location of the real estate collateral, the sponsorship of the borrower and the tenancy of the collateral, will impact the extent to which the general guidelines below are applied to a specific mortgage loan. The underwriting criteria are general, and in many cases exceptions may be approved to one or more of these guidelines. Accordingly, no representation is made that every mortgage loan will comply in all respects with the criteria set forth below. S-74 The credit underwriting team for each mortgage loan is comprised of real estate professionals of PCF and certain of its affiliates. The underwriting team for each mortgage loan is required to conduct a review of the related mortgaged property, generally including an analysis of the historical property operating statements, if available, rent rolls, current and historical real estate taxes, and a review of tenant leases. The review includes a market analysis which focuses on supply and demand trends, rental rates and occupancy rates. The credit of the borrower and certain key principals of the borrower are examined for financial strength and character prior to approval of the mortgage loan. This analysis generally includes a review of financial statements (which are generally unaudited), third-party credit reports, judgment, lien, bankruptcy and pending litigation searches. Depending on the type of real property collateral involved and other relevant circumstances, the credit of key tenants also may be examined as part of the underwriting process. Generally, a member of the underwriting team (or someone on its behalf), visits the property for a site inspection to ascertain the overall quality and competitiveness of the property, including its physical attributes, neighborhood and market, accessibility and visibility and demand generators. As part of its underwriting procedures, PCF also generally obtains the third party reports or other documents described in this prospectus supplement under "Description of the Mortgage Pool--Assessments of Property Value and Condition," "--Appraisals," "--Environmental Assessments," "--Property Condition Assessments," "--Seismic Review Process," and "--Zoning and Building Code Compliance." Prior to commitment, all mortgage loans must be approved by a loan committee comprised of senior real estate professionals from PCF and its affiliates. The loan committee may either approve a mortgage loan as recommended, request additional due diligence, modify the terms, or reject a mortgage loan. DEBT SERVICE COVERAGE RATIO AND LOAN-TO-VALUE RATIO. PCF's underwriting standards generally require a minimum debt service coverage ratio of 1.20x and maximum loan-to-value ratio of 80%. However, these requirements constitute solely a guideline, and exceptions to these guidelines may be approved based on the individual characteristics of a mortgage loan. For example, PCF or its affiliates may originate a mortgage loan with a lower debt service coverage ratio or higher loan-to-value ratio based on the types of tenants and leases at the subject real property, the taking of additional collateral such as reserves, letters of credit and/or guarantees, PCF's judgment of improved property performance in the future and/or other relevant factors. In addition, with respect to certain mortgage loans originated by PCF or its affiliates there may exist subordinate debt secured by the related mortgaged property and/or mezzanine debt secured by direct or indirect ownership interests in the borrower. Such mortgage loans may have a lower debt service coverage ratio, and a higher loan-to-value ratio, if such subordinate or mezzanine debt is taken into account. The debt service coverage ratio guidelines set forth above are calculated based on underwritten net cash flow at origination. Therefore, the debt service coverage ratio for each mortgage loan as reported in this prospectus supplement and Appendix B hereto may differ from the amount calculated at the time of origination. In addition, PCF's underwriting guidelines generally permit a maximum amortization period of 30 years. However, certain mortgage loans may provide for interest-only payments prior to maturity, or for an interest-only period during a portion of the term of the mortgage loan. See "Description of the Mortgage Pool" in this prospectus supplement. ESCROW REQUIREMENTS. PCF often requires a borrower to fund various escrows for taxes and insurance or, in some cases, requires such reserves to be funded only upon a triggering event, such as an event of default under the related mortgage loan. PCF may also require reserves for deferred maintenance, re-tenanting expenses and capital expenses, in some cases only during periods when certain debt service coverage ratio tests are not satisfied. In some cases, the borrower is permitted to post a letter of credit or guaranty, or provide periodic evidence that the items for which the escrow or reserve would have been established are being paid or addressed, in lieu of funding a given reserve or escrow. PCF conducts a case-by-case analysis to determine the need for a particular escrow or reserve. Consequently, the aforementioned escrows and reserves are not established for every multifamily and commercial mortgage loan originated by PCF. The information set forth in this prospectus supplement concerning the sponsors has been provided by them. NATIONWIDE LIFE INSURANCE COMPANY Nationwide Life Insurance Company ("Nationwide Life"), an Ohio corporation, is a sponsor of this transaction and one of the mortgage loan sellers. Nationwide Life is a provider of long-term savings and retirement products in the United States and is a wholly-owned subsidiary of Nationwide Financial Services, Inc. ("Nationwide Financial"), a large diversified financial and insurance services provider in the United States. Nationwide Financial had assets of approximately $117 billion S-75 (unaudited) as of March 31, 2006. The principal offices of Nationwide Life are located at One Nationwide Plaza, Columbus, Ohio 43215. Nationwide Life originated all of the mortgage loans it is selling to us, which represent 5.0% of the initial mortgage pool balance. Nationwide Financial's real estate investment department originated approximately $2.9 billion in commercial mortgage loans in 2005, has averaged over $2.0 billion in commercial mortgage loan originations per year over the past five years and currently manages over $11.8 billion of mortgage loans for Nationwide Life, its affiliates and third party participants. Nationwide Life acts as primary servicer for the mortgage loans sold to a securitization by Nationwide Life. Nationwide Life has financial strength ratings of "Aa3", "AA-" and "A+" from Moody's, S&P and A.M. Best, respectively. Nationwide Life's Commercial Real Estate Securitization Program Nationwide Life has been active as a participant in securitizations of commercial mortgage loans since 2001. Nationwide Life originates commercial and multifamily mortgage loans and, together with other mortgage loan sellers and sponsors, participates in the securitization of such mortgage loans by transferring them to an unaffiliated securitization depositor and participating in structuring decisions. Multiple mortgage loan seller transactions in which Nationwide Life has participated include the "PWR" program in which Bear Stearns Commercial Mortgage Securities Inc. and Bear Stearns Commercial Mortgage Securities II Inc. have acted as depositor and the "IQ" program in which Morgan Stanley Capital I Inc. acts as depositor. As of March 31, 2006, the total amount of commercial and multifamily mortgage loans originated by Nationwide Life and included in securitizations since the inception of its commercial mortgage securitization program in 2001 was approximately $1.2 billion (the "Nationwide Life Securitized Loans"). As of such date, the Nationwide Life Securitized Loans included approximately 139 mortgage loans, all of which were fixed rate, which have been included in approximately 12 securitizations. The properties securing these loans include multifamily, office, retail, industrial, and hospitality properties. Nationwide Life and certain of its affiliates also originate other commercial and multifamily mortgage loans that are not securitized, including subordinated and mezzanine loans. In the year ended December 31, 2005, Nationwide Life originated and securitized commercial and multifamily mortgage loans with an aggregate original principal balance of approximately $402 million, all of which were included in securitization transactions in which an unaffiliated entity acted as depositor. Servicing Nationwide Life is a primary servicer in this transaction. See "Transactions Parties--Primary Servicer" in this prospectus supplement. Underwriting Standards Mortgage loans originated for securitization by Nationwide Life or an affiliate of Nationwide Life in each case, will generally be originated in accordance with the underwriting criteria described below. Each lending situation is unique, however, and the facts and circumstance surrounding the mortgage loan, such as the quality, type and location of the real property collateral, the sponsorship of the borrower and the tenancy of the collateral, will impact the extent to which the general guidelines below are applied to a specific mortgage loan. The underwriting criteria are general, and in many cases exceptions may be approved to one or more of these guidelines. Accordingly, no representation is made that every mortgage loan will comply in all respects with the criteria set forth below. The credit underwriting team for each proposed mortgage loan investment is comprised of real estate professionals of Nationwide Life and certain of its affiliates. The underwriting team for each proposed mortgage loan investment is required to conduct a review of the related collateral property, generally including an analysis of the historical property operating statements, if available, rent rolls, current and historical real estate taxes, and a review of tenant leases. The review includes a market analysis which focuses on supply and demand trends, rental rates and occupancy rates. The credit of the borrower and certain key principals of the borrower are examined for financial strength and character prior to approval of the proposed mortgage loan investment. This analysis generally includes a review of financial statements (which are generally unaudited), third-party credit reports, and judgment, lien, bankruptcy and pending litigation searches. Depending on the type of real property collateral involved and other relevant circumstances, the financial strength of key tenants also may be examined as part of the underwriting process. Generally, a member of the underwriting team (or someone on its behalf), S-76 visits the property for a site inspection to ascertain the overall quality and competitiveness of the property, including its physical attributes, neighborhood and market, accessibility, visibility and other demand generators. As part of its underwriting procedures, Nationwide Life also generally obtains the third party reports or other documents such as environmental assessments and engineering reports. Prior to commitment, all proposed mortgage loan investments must be approved by a loan committee comprised of senior real estate professionals from Nationwide Life and its affiliates. The loan committee may either approve a mortgage loan as recommended, request additional due diligence, modify the terms of the proposed mortgage loan investment, or reject the proposed mortgage loan investment. Nationwide Life's underwriting standards generally require a minimum debt service coverage ratio of 1.20x and a maximum loan-to-value ratio of 80%. However, these requirements serve merely as a recommended guideline, and exceptions to these guidelines may be approved based on the individual characteristics of a proposed mortgage loan investment. For example, Nationwide Life or its affiliates may originate a mortgage loan with a lower debt service coverage ratio or higher loan-to-value ratio based on the types of tenants and leases at the subject real property, the taking of additional collateral such as reserves, letters of credit and/or guarantees, Nationwide Life's judgment of improved property performance in the future, and/or other relevant factors. In addition, with respect to certain mortgage loans originated by Nationwide Life or its affiliates, there may exist subordinate debt secured by the real property collateral and/or mezzanine debt secured by direct or indirect ownership interests in the borrower. Such mortgage loans may have a lower debt service coverage ratio, and a higher loan-to-value ratio, if such subordinate or mezzanine debt is taken into account. The debt service coverage ratio guidelines set forth above are calculated based on underwritten net cash flow at origination. Therefore, the debt service coverage ratio for each mortgage loan included in a securitization and reported in the related disclosure may differ from the amount calculated at the time of origination. In addition, Nationwide Life's underwriting guidelines generally permit a maximum amortization period of 30 years. However, certain mortgage loans may provide for interest-only payments prior to maturity, or for an interest-only period during a portion of the term of the mortgage loan. Nationwide Life often requires a borrower to fund various escrows for taxes and insurance or, in some cases, requires such reserves to be funded only upon a triggering event, such as an event of default under the related mortgage loan. Nationwide Life may also require reserves for deferred maintenance, re-tenanting expenses and capital expenses, in some cases only during periods when certain debt service coverage ratio tests are not satisfied. In some cases, the borrower is permitted to post a letter of credit or guaranty, or provide periodic evidence that the items for which the escrow or reserve would have been established are being paid or addressed, in lieu of funding a given reserve or escrow. Nationwide Life conducts a case-by-case analysis to determine the need for a particular escrow or reserve. Consequently, the aforementioned escrows and reserves are not established for every mortgage loan originated by Nationwide Life. The information set forth in this prospectus supplement concerning the sponsors has been provided by them. THE TRUSTEE LaSalle Bank National Association ("LaSalle") will act as the trustee under the series 2006-PWR12 pooling and servicing agreement. LaSalle is a national banking association formed under the federal laws of the United States of America. Its parent company, LaSalle Bank Corporation, is a subsidiary of ABN AMRO Bank N.V., a Netherlands banking corporation. LaSalle has extensive experience serving as trustee on securitizations of commercial mortgage loans. Since 1994, LaSalle has served as trustee on approximately 640 commercial mortgage-backed security transactions involving assets similar to the mortgage loans. As of March 31, 2006, LaSalle's portfolio of commercial mortgage-backed security transactions which it currently serves as trustee numbers 403 with an outstanding certificate balance of approximately $262.7 billion. The depositor, the master servicers, the special servicers and the primary servicers may maintain banking relationships in the ordinary course of business with LaSalle. The trustee's corporate trust office is located at 135 South LaSalle Street, Suite 1625, Chicago, Illinois, 60603. Attention: Global Securities and Trust Services Group - Bear Stearns Commercial Mortgage Securities Inc., Commercial Mortgage Pass-Through Certificates, Series 2006-PWR12, or at such other address as the trustee may designate from time to time. S-77 Eligibility Requirements The trustee is at all times required to be, and will be required to resign if it fails to be, (i) a corporation, bank, trust company or association organized and doing business under the laws of the United States of America or any state thereof or the District of Columbia, authorized under such laws to exercise trust powers, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by federal or state authority and (iii) an institution whose short-term debt obligations are at all times rated not less than "P-1" by Moody's and "A-1" by S&P and whose long-term unsecured debt, is at all times rated not less than "Aa3" by Moody's and "A+" by S&P, or a rating otherwise acceptable to the Rating Agencies as evidenced by a confirmation from each Rating Agency that such trustee will not cause a downgrade, withdrawal or qualification of the then current ratings of any class of certificates. Notwithstanding the foregoing, if the trustee fails to meet the ratings requirements above, the trustee shall be deemed to meet such ratings requirements if it appoints a fiscal agent as backup liquidity provider, if the fiscal agent meets the ratings requirements above and assumes the trustee's obligation to make any advance required to be made by a master servicer, that was not made by the applicable master servicer under the series 2006-PWR12 pooling and servicing agreement. Duties of the Trustee The trustee will make no representations as to the validity or sufficiency of the series 2006-PWR12 pooling and servicing agreement, the certificates or any asset or related document and is not accountable for the use or application by the depositor or the master servicers or the special servicers of any of the certificates or any of the proceeds of the certificates, or for the use or application by the depositor or the master servicers or the special servicers of funds paid in consideration of the assignment of the mortgage loans to the trust or deposited into any fund or account maintained with respect to the certificates or any account maintained pursuant to the series 2006-PWR12 pooling and servicing agreement or for investment of any such amounts. If no Event of Default has occurred and is continuing, the trustee is required to perform only those duties specifically required under the series 2006-PWR12 pooling and servicing agreement. However, upon receipt of the various certificates, reports or other instruments required to be furnished to it, the trustee is required to examine the documents and to determine whether they conform to the requirements of the series 2006-PWR12 pooling and servicing agreement. The trustee is required to notify certificateholders of any termination of a master servicer or special servicer or appointment of a successor to a master servicer or a special servicer. The trustee will be obligated to make any advance required to be made, and not made, by a master servicer or a special servicer under the series 2006-PWR12 pooling and servicing agreement, provided that the trustee will not be obligated to make any advance that it deems to be a nonrecoverable advance. The trustee will be entitled, but not obligated, to rely conclusively on any determination by a master servicer or a special servicer, that an advance, if made, would be a nonrecoverable advance. The trustee will be entitled to reimbursement for each advance made by it in the same manner and to the same extent as, but prior to, each master servicer. See "Description of the Offered Certificates--Advances" in this prospectus supplement. In addition to having express duties under the series 2006-PWR12 pooling and servicing agreement, the trustee, as a fiduciary, also has certain duties unique to fiduciaries under applicable law. In general, the trustee will be subject to certain federal laws and, because the series 2006-PWR12 pooling and servicing agreement is governed by New York law, certain New York state laws. As a national bank acting in a fiduciary capacity, the trustee will, in the administration of its duties under the series 2006-PWR12 pooling and servicing agreement, be subject to certain regulations promulgated by the Office of the Comptroller of the Currency, specifically those set forth in Chapter 12, Part 9 of the Code of Federal Regulations. New York common law has required fiduciaries of common law trusts formed in New York to perform their duties in accordance with the "prudent person" standard, which, in this transaction, would require the trustee to exercise such diligence and care in the administration of the trust as a person of ordinary prudence would employ in managing his own property. However, under New York common law, the application of this standard of care can be restricted contractually to apply only after the occurrence of a default. The series 2006-PWR12 pooling and servicing agreement provides that the trustee is subject to the prudent person standard only for so long as an Event of Default has occurred and remains uncured. Matters Regarding the Trustee The trust fund will indemnify the trustee and its directors, officers, employees, agents and affiliates against any and all losses, liabilities, damages, claims or expenses, including, without limitation, reasonable attorneys' fees, arising with respect to the series 2006-PWR12 pooling and servicing agreement, the mortgage loans or the series 2006-PWR12 certificates, other than (i) those resulting from the breach of the trustee's representations, warranties or covenants or from S-78 willful misconduct, bad faith, fraud or negligence in the performance of, or negligent disregard of, its duties, (ii) the trustee's allocable overhead and (iii) any cost or expense expressly required to be borne by the trustee. The trustee will not be liable for any action reasonably taken, suffered or omitted by it in good faith and believed by it to be authorized by the series 2006-PWR12 pooling and servicing agreement. The Trustee will not be required to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties under the series 2006-PWR12 pooling and servicing agreement or in the exercise of any of its rights or powers if, in the opinion of that entity, the repayment of those funds or adequate indemnity against that risk or liability is not reasonably assured to it. Provisions similar to the provisions described under the sections of the accompanying prospectus entitled "Description of the Pooling and Servicing Agreements--Eligibility of the Trustee", " --Duties of the Trustee", "--Regarding the Fees, Indemnities and Powers of the Trustee" and "--Resignation and Removal of the Trustee" will apply to the certificate administrator and the tax administrator. Resignation and Removal of the Trustee The trustee may at any time resign from its obligations and duties under the series 2006-PWR12 pooling and servicing agreement by giving written notice to the depositor, the certificate administrator, the tax administrator, the master servicers, the special servicers, the Rating Agencies, and all certificateholders. Upon receiving the notice of resignation, the depositor is required to promptly appoint a successor trustee meeting the requirements set forth above. If no successor trustee shall have been so appointed and have accepted appointment within 30 days after the giving of the notice of resignation, the resigning trustee may petition any court of competent jurisdiction for the appointment of a successor trustee. If at any time the trustee (i) shall cease to be eligible to continue as trustee under the series 2006-PWR12 pooling and servicing agreement, or (ii) shall become incapable of acting, or shall be adjudged bankrupt or insolvent, or a receiver of the trustee or of its property shall be appointed, or any public officer shall take charge or control of the trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, or (iii) the continuation of the trustee as such would result in a downgrade, qualification or withdrawal of the rating by the Rating Agencies of any class of certificates with a rating as evidenced in writing by the Rating Agencies, then the depositor may remove the trustee and appoint a successor trustee meeting the eligibility requirements set forth above. Holders of the certificates entitled to more than 50% of the voting rights may, at their expense, at any time remove the trustee without cause and appoint a successor trustee. Any resignation or removal of the trustee and appointment of a successor trustee will not become effective until acceptance of appointment by the successor trustee meeting the eligibility requirements set forth above. Upon any succession of the trustee, the predecessor trustee will be entitled to the payment of compensation and reimbursement agreed to under the series 2006-PWR12 pooling and servicing agreement for services rendered and expenses incurred prior to the date of removal. Trustee Compensation As compensation for the performance of its duties as trustee, LaSalle Bank National Association will be paid the monthly trustee fee. The trustee fee is an amount equal to, in any month, the product of the portion of a rate equal to % per annum applicable to such month, determined in the same manner as the applicable mortgage rate is determined for each pooled mortgage loan for such month, and the stated principal balance of each pooled mortgage loan. In addition, the trustee will be entitled to recover from the trust fund all reasonable unanticipated expenses and disbursements incurred or made by the trustee in accordance with any of the provisions of the series 2006-PWR12 pooling and servicing agreement, but not including routine expenses incurred in the ordinary course of performing its duties as trustee under the series 2006-PWR12 pooling and servicing agreement, and not including any expense, disbursement or advance as may arise from its willful misfeasance, negligence or bad faith. The Custodian LaSalle will also act as custodian under the series 2006-PWR12 pooling and servicing agreement. As custodian, LaSalle will hold the mortgage loan files exclusively for the use and benefit of the Trust. The custodian will not have any duty or obligation to inspect, review or examine any of the documents, instruments, certificates or other papers relating to the S-79 pooled mortgage loans delivered to it to determine their validity. The custodian's duties regarding the mortgage loan files will be governed by the series 2006-PWR12 pooling and servicing agreement. LaSalle provides custodial services on over 1000 residential, commercial and asset-backed securitization transactions and maintains almost 2.5 million custodial files in its two vault locations in Elk Grove, Illinois and Irvine, California. LaSalle's two vault locations can maintain a total of approximately 6 million custody files. All custody files are segregated and maintained in secure and fire resistant facilities in compliance with customary industry standards. The vault construction complies with Fannie Mae/Ginnie Mae guidelines applicable to document custodians. LaSalle maintains disaster recovery protocols to ensure the preservation of custody files in the event of force majeure and maintains, in full force and effect, such fidelity bonds and/or insurance policies as are customarily maintained by banks which act as custodians. LaSalle uses unique tracking numbers for each custody file to ensure segregation of collateral files and proper filing of the contents therein and accurate file labeling is maintained through a monthly reconciliation process. LaSalle uses a proprietary collateral review system to track and monitor the receipt and movement internally or externally of custody files and any release or reinstatement of collateral. LaSalle and BSCMI are parties to a custodial agreement whereby LaSalle, for consideration, provides custodial services to BSCMI for certain commercial mortgage loans originated or purchased by it. Pursuant to this custodial agreement, LaSalle is currently providing custodial services for most of the mortgage loans to be sold by BSCMI to the depositor in connection with this securitization. The terms of the custodial agreement are customary for the commercial mortgage-backed securitization industry providing for the delivery, receipt, review and safekeeping of mortgage loan files. LaSalle and PMCF are parties to a custodial agreement whereby LaSalle, for consideration, provides custodial services to PMCF for certain commercial mortgage loans originated or purchased by it. Pursuant to this custodial agreement, LaSalle is currently providing custodial services for all of the mortgage loans to be sold by PMCF to the depositor in connection with this securitization. The terms of the custodial agreement are customary for the commercial mortgage-backed securitization industry providing for the delivery, receipt, review and safekeeping of mortgage loan files. THE CERTIFICATE ADMINISTRATOR, TAX ADMINISTRATOR AND CERTIFICATE REGISTRAR Wells Fargo Bank, National Association ("Wells Fargo Bank") will serve as the certificate administrator (in such capacity, the "certificate administrator"). In addition, Wells Fargo Bank will serve as certificate registrar (in such capacity, the "certificate registrar") for purposes of authenticating, recording and otherwise providing for the registration of the offered certificates and of transfers and exchanges of the definitive certificates, if issued. Furthermore, Wells Fargo Bank will serve as tax administrator for purposes of making REMIC elections and filing tax returns on behalf of the trust and making available to the Internal Revenue Service and other specified persons all information furnished to it necessary to compute any tax imposed (A) as a result of the transfer of an ownership interest in a class R certificate to any person who is a disqualified organization, including the information described in Treasury Regulations Sections 1.860D-1(b)(5) and 1.860E-2(a)(5) with respect to the "excess inclusions" of such class R certificate and (B) as a result of any regulated investment company, real estate investment trust, common trust fund, partnership, trust, estate or organization described in Section 1381 of the Internal Revenue Code of 1986, as amended, that holds an ownership interest in a class R certificate having as among its record holders at any time any person which is a disqualified organization. Wells Fargo Bank is a national banking association and a wholly-owned subsidiary of Wells Fargo & Company. A diversified financial services company with approximately $482 billion in assets, 23 million customers and 153,000 employees as of December 31, 2005, Wells Fargo & Company is a U.S. bank holding company, providing banking, insurance, trust, mortgage and consumer finance services throughout the United States and internationally. Wells Fargo Bank provides retail and commercial banking services and corporate trust, custody, securities lending, securities transfer, cash management, investment management and other financial and fiduciary services. The depositor, the mortgage loan sellers, any master servicer, any special servicer and any primary servicer may maintain banking and other commercial relationships with Wells Fargo Bank and its affiliates. Wells Fargo Bank's principal corporate trust offices are located at 9062 Old Annapolis Road, Columbia, Maryland 21045-1951 and its office for certificate transfer services is located at Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479-0113. Wells Fargo Bank is also one of the master servicers and a mortgage loan seller. As compensation for the performance of its duties as certificate administrator, tax administrator and certificate registrar, Wells Fargo will be paid a monthly certificate administrator fee. The certificate administrator fee is an amount equal to, in any month, the product of the portion of a rate equal to __% per annum applicable to such month, determined in the same manner as the applicable mortgage rate is determined for each S-80 pooled mortgage loan for such month, and the stated principal balance of each pooled mortgage loan. The certificate administrator and certificate registrar will be entitled to indemnification upon similar terms to the trustee. Certificate Administrator Under the terms of the series 2006-PWR12 pooling and servicing agreement, the certificate administrator is responsible for securities administration, which includes pool performance calculations, distribution calculations and the preparation of monthly distribution reports. In addition, the certificate administrator is responsible for the preparation of all REMIC tax returns on behalf of the Trust REMICs and the preparation of monthly distribution reports on Form 10-D, annual reports on Form 10-K and current reports on Form 8-K that are required to be filed with the Securities and Exchange Commission on behalf of the Trust. Wells Fargo Bank has been engaged in the business of commercial mortgage-backed securities administration since 1997. It has acted as certificate administrator with respect to more than 325 series of commercial mortgage-backed securities and, as of March 31, 2006, was acting as certificate administrator with respect to more than $260 billion of outstanding commercial mortgage-backed securities. There have been no material changes to Wells Fargo Bank's policies or procedures with respect to its certificate administrator function other than changes required by applicable law. In the past three years, Wells Fargo Bank has not materially defaulted on its certificate administrator obligations under any pooling and servicing agreement or caused an early amortization or other performance triggering event because of servicing by Wells Fargo Bank with respect to commercial mortgage-backed securities. Certain information set forth in this prospectus supplement concerning the certificate administrator, tax administrator and certificate registrar has been provided by them. Matters Regarding the Certificate Administrator The trust fund will indemnify the certificate administrator and its directors, officers, employees, agents and affiliates against any and all losses, liabilities, damages, claims or expenses, including, without limitation, reasonable attorneys' fees, arising with respect to the series 2006-PWR12 pooling and servicing agreement, the mortgage loans or the series 2006-PWR12 certificates, other than (i) those resulting from the breach of the certificate administrator's representations, warranties or covenants or from willful misconduct, bad faith, fraud or negligence in the performance of, or negligent disregard of, its duties, (ii) the certificate administrator's allocable overhead and (iii) any cost or expense expressly required to be borne by the certificate administrator. The certificate administrator will not be liable for any action reasonably taken, suffered or omitted by it in good faith and believed by it to be authorized by the series 2006-PWR12 pooling and servicing agreement. The certificate administrator will not be required to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties under the series 2006-PWR12 pooling and servicing agreement or in the exercise of any of its rights or powers if, in the opinion of that entity, the repayment of those funds or adequate indemnity against that risk or liability is not reasonably assured to it. Provisions similar to the provisions described under the sections of the accompanying prospectus entitled "Description of the Pooling and Servicing Agreements--Eligibility of the certificate administrator", " --Duties of the certificate administrator", "--Regarding the Fees, Indemnities and Powers of the certificate administrator" and "--Resignation and Removal of the certificate administrator" will apply to the certificate administrator and the tax administrator. MASTER SERVICERS WELLS FARGO BANK, NATIONAL ASSOCIATION Wells Fargo Bank will be a master servicer under the series 2006-PWR12 pooling and servicing agreement with respect to those pooled mortgage loans sold by Bear Stearns Commercial Mortgage, Inc., Wells Fargo Bank, National Association, Principal Commercial Funding II, LLC, Principal Commercial Funding, LLC and Nationwide Life Insurance S-81 Company to the depositor. The principal commercial mortgage servicing offices of Wells Fargo Bank are located at 45 Fremont Street, 2nd Floor, San Francisco, California 94105. Wells Fargo Bank has originated and serviced commercial mortgage loans since before 1975 and has serviced securitized commercial mortgage loans since 1993. Wells Fargo Bank is approved as a master servicer, primary servicer and special servicer for commercial mortgage-backed securities rated by Moody's, S&P and Fitch. Moody's does not assign specific ratings to servicers. S&P has assigned to Wells Fargo Bank the ratings of STRONG as a primary servicer and ABOVE AVERAGE as a master servicer and special servicer. Fitch has assigned to Wells Fargo Bank the ratings of CMS2 as a master servicer, CPS1 as a primary servicer and CSS1 as a special servicer. S&P's and Fitch's ratings of a servicer are based on an examination of many factors, including the servicer's financial condition, management team, organizational structure and operating history. As of March 31, 2006, the commercial mortgage servicing group of Wells Fargo Bank was responsible for servicing approximately 9,493 commercial and multifamily mortgage loans with an aggregate outstanding principal balance of approximately $77.6 billion, including approximately 8,151 loans securitized in approximately 84 commercial mortgage-backed securitization transactions with an aggregate outstanding principal balance of approximately $72.8 billion, and also including loans owned by institutional investors and government sponsored entities such as Freddie Mac. The properties securing these loans are located in all 50 states and include retail, office, multifamily, industrial, hospitality and other types of income-producing properties. According to the Mortgage Bankers Association of America, as of December 31, 2005, Wells Fargo Bank was the fourth largest commercial mortgage servicer in terms_of the aggregate outstanding principal balance of loans being serviced. Wells Fargo Bank has developed policies, procedures and controls for the performance of its master servicing obligations in compliance with applicable servicing agreements, servicing standards and the servicing criteria set forth in Item 1122 of Regulation AB. These policies, procedures and controls include, among other things, measures for notifying borrowers of payment delinquencies and other loan defaults and for working with borrowers to facilitate collections and performance prior to the occurrence of a servicing transfer event. A Wells Fargo Bank proprietary website (www.wellsfargo.com/com/comintro) provides investors with access to investor reports for commercial mortgage-backed securitization transactions for which Wells Fargo Bank is master servicer, and also provides borrowers with access to current and historical loan and property information for these transactions. Certain of the duties of the master servicers and the provisions of the series 2006-PWR12 pooling and servicing agreement are set forth under "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement" in this prospectus supplement. The manner in which collections on the mortgage loans are to be maintained is described under "Description of the Agreements--Collection and Other Servicing Procedures" and "--Certificate Account and Other Collection Accounts" in the accompanying prospectus. The advance obligations of each master servicer are described under "Description of the Offered Certificates--Advances" in this prospectus supplement. Certain terms of the series 2006-PWR12 pooling and servicing agreement regarding the master servicer's removal, replacement, resignation or transfer are described under "--Events of Default" and in the prospectus under "Description of the Agreements--Matters Regarding a Master Servicer and the Depositor" in this prospectus supplement. Certain limitations on the master servicer's liability under the series 2006-PWR12 pooling and servicing agreement are described under "Description of the Agreements--Matters Regarding a Master Servicer and the Depositor" in the prospectus and under "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement" in this prospectus supplement. Wells Fargo Bank may appoint one or more sub-servicers to perform all or any portion of its duties under the series 2006-PWR12 pooling and servicing agreement, as described under "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement" in this prospectus supplement and under "Description of the Agreements--Subservicers" in the accompanying prospectus. Wells Fargo Bank monitors and reviews the performance of sub-servicers appointed by it. Wells Fargo Bank has received an issuer rating of "Aaa" from Moody's. Wells Fargo Bank's long term deposits are rated "Aaa" by Moody's, "AA" by S&P and "AA+" by Fitch. S-82 Wells Fargo & Company is the holding company for Wells Fargo Bank. Wells Fargo & Company files reports with the Securities and Exchange Commission as required under the Securities Exchange Act of 1934, as amended. Such reports include information regarding Wells Fargo Bank and may be obtained at the website maintained by the Securities and Exchange Commission at www.sec.gov. The information set forth in this prospectus supplement concerning Wells Fargo Bank has been provided by it. PRUDENTIAL ASSET RESOURCES, INC. Prudential Asset Resources, Inc. ("PAR"), a Delaware corporation, will act as a master servicer with respect to those pooled mortgage loans sold by Prudential Mortgage Capital Funding, LLC to the depositor for deposit into the trust fund (and as special servicer for the 1675 Broadway loan group and the Tuscany Plaza loan group). PAR is a wholly owned subsidiary of PMCC, which is an indirect subsidiary of Prudential Financial, Inc. and an affiliate of Prudential Mortgage Capital Company, LLC, one of the originators. PAR is an affiliate of Prudential Mortgage Capital Funding, LLC, a sponsor and one of the mortgage loan sellers. PAR'S principal offices are located at 2200 Ross Avenue, Suite 4900E, Dallas, TX 75201. PAR, which has been servicing commercial real estate mortgage loans, agricultural loans and single-family mortgages since March 2001, services commercial mortgage loan portfolios for a variety of Prudential companies, as well as for CMBS transactions, Fannie Mae and FHA. PAR has policies and procedures for the performance of its master servicing obligations in compliance with applicable servicing agreements. Recently, PAR has modified some of its policies and procedures to conform to the servicing criteria set forth in Item 1122 of Regulation AB and in connection with the transition of its servicing system to a Strategy platform, which is widely used in the commercial mortgage loan servicing industry. From time to time PAR and its affiliates are parties to lawsuits and other legal proceedings arising in the ordinary course of business. PAR does not believe that any such lawsuits or legal proceedings would, individually or in the aggregate, have a material adverse effect on its business or its ability to service as master servicer. PAR is a rated master and primary servicer by S&P and Fitch and has been approved to be a master and primary servicer in transactions rated by Moody's. There have been no material non-compliance or default issues for PAR in its servicing of CMBS loans. PAR's portfolio of serviced loans has grown substantially, as shown by the table below which indicates the aggregate outstanding principal balance of loans serviced by PAR as of the respective year-end: Commercial Mortgage Loans 2005 2004 2003 ------------------------- --------------- --------------- --------------- CMBS $ 9,031,936,108 $ 6,820,173,095 $ 5,286,632,411 Total $46,502,629,927 $44,396,359,820 $35,642,879,817 The information set forth in this prospectus supplement concerning PAR has been provided by it. PRIMARY SERVICERS PRINCIPAL GLOBAL INVESTORS, LLC Principal Global Investors, LLC ("PGI") will act as primary servicer with respect to the pooled mortgage loans sold to the depositor by Principal Commercial Funding, LLC and Principal Commercial Funding II, LLC. PGI, a Delaware limited liability company, is a wholly owned subsidiary of Principal Life Insurance Company. PGI is the parent of Principal Commercial Funding, LLC, which owns a 49% interest in Principal Commercial Funding II, LLC. The principal servicing offices of PGI are located at 801 Grand Avenue, Des Moines, Iowa 50392. PGI is ranked "Above Average" as a primary servicer and a special servicer of commercial real estate loans by S&P. PGI has extensive experience in servicing commercial real estate mortgage loans. PGI has been engaged in the servicing of commercial mortgage loans since 1970 and commercial mortgage loans originated for securitization since 1998. As of March 31, 2006, PGI was responsible for servicing approximately 2,820 commercial and multifamily mortgage loans, with an aggregate outstanding principal balance of approximately $20 billion. The portfolio of loans serviced by PGI includes commercial mortgage loans included in commercial mortgage-backed securitizations, portfolio S-83 loans and loans serviced for non-affiliated clients. The portfolio consists of multifamily, office, retail, industrial, warehouse and other types of income-producing properties. PGI services loans in most states throughout the United States. As of March 31, 2006, PGI was a primary servicer in approximately 36 commercial mortgage-backed securitization transactions, servicing approximately 1,230 loans with an aggregate outstanding principal balance of approximately $7.8 billion. PGI will enter into a servicing agreement with Wells Fargo Bank, as a master servicer, to service the commercial mortgage loans sold to the depositor by Principal Commercial Funding, LLC and Principal Commercial Funding II, LLC and will agree, pursuant to that servicing agreement, to service such mortgage loans in accordance with the servicing standard. PGI's responsibilities will include, but are not limited to: o collecting payments on the loans and remitting such amounts, net of certain fees to be retained by PGI as servicing compensation and certain other amounts, including escrow and reserve funds, to the master servicer; o providing certain CMSA reports to the master servicer; o processing certain borrower requests (and obtaining, when required, consent of the related master servicer and/or special servicer, as applicable); and o handling early stage delinquencies and collections; provided that servicing of defaulted loans is transferred from PGI to the applicable special servicer, as required pursuant to the terms of the series 2006-PWR12 pooling and servicing agreement. PGI has developed policies, procedures and controls for the performance of primary servicing obligations consistent with applicable servicing agreements and servicing standards. The information set forth in this prospectus supplement concerning PGI has been provided by PGI. NATIONWIDE LIFE INSURANCE COMPANY Nationwide Life Insurance Company ("Nationwide Life"), an Ohio corporation, will act as primary servicer with respect to the pooled mortgage loans sold to the depositor by Nationwide Life. Nationwide Life is a provider of long-term savings and retirement products in the United States and is a wholly-owned subsidiary of Nationwide Financial Services, Inc. ("Nationwide Financial"), a large diversified financial and insurance services provider in the United States. The principal offices of Nationwide Life are located at One Nationwide Plaza, Columbus, Ohio 43215. Nationwide Life has extensive experience in servicing commercial real estate mortgage loans. Nationwide Life has been engaged in the servicing mortgage loans since 1970 and commercial mortgage loans originated for securitization since 2001. As of March 31, 2006, Nationwide Life was responsible for servicing approximately 1,696 commercial and multifamily mortgage loans, with an aggregate outstanding principal balance of approximately $11.9 billion. The portfolio of loans serviced by Nationwide Life includes commercial mortgage loans included in commercial mortgage-backed securitizations, portfolio loans and loans serviced for non-affiliated clients. The portfolio consists of multifamily, office, retail, industrial, warehouse and other types of income-producing properties. Nationwide Life services loans in most states throughout the United States. As of March 31, 2006, Nationwide Life was a primary servicer in approximately 12 commercial mortgage-backed securitization transactions, servicing approximately 133 loans with an aggregate outstanding principal balance of approximately $1.0 billion. Nationwide Life will enter into a primary servicing agreement with Wells Fargo Bank, as a master servicer, to provide certain primary services to the commercial mortgage loans sold to the depositor by Nationwide Life, and will agree, S-84 pursuant to such primary servicing agreement, to service such commercial mortgage loans in accordance with the servicing standard. Nationwide Life's primary servicing responsibilities will include, but are not necessarily limited to: o collecting payments on the loans and remitting such amounts, net of certain fees to be retained by Nationwide Life as servicing compensation and certain other amounts, including escrow and reserve funds, to the master servicer; o providing certain CMSA reports to the master servicer; o processing certain borrower requests (and obtaining, when required, consent of the master servicer and/or special servicer, as applicable); and o handling early stage delinquencies and collections; provided that servicing of defaulted loans is transferred from Nationwide Life to the applicable special servicer, as required pursuant to the terms of the pooling and servicing agreement. Nationwide Life has developed policies, procedures and controls for the performance of primary servicing obligations consistent with applicable servicing agreements and servicing standards. Nationwide Life may utilize one or more sub-servicers for some or all the above functions per the applicable servicing agreements. The information set forth in this prospectus supplement concerning Nationwide Life has been provided by Nationwide Life. THE SPECIAL SERVICERS ARCAP SERVICING, INC. ARCap Servicing, Inc. ("ASI") will be appointed as the special servicer of all of the pooled mortgage loans in the trust fund (and any related non-pooled mortgage loans that are secured by the same mortgaged property), other than the 1675 Broadway and the Tuscany Plaza pooled mortgage loans (and the related non-pooled mortgage loans). As such, ASI will be responsible for servicing the Specially Serviced Mortgage Loans and REO Properties related to the loans for which it is the applicable special servicer. ASI is a corporation organized under the laws of the state of Delaware and is a wholly-owned subsidiary of ARCap REIT, Inc. ARCap REIT, Inc. is anticipated to be the controlling class representative with respect to the transaction described in this prospectus supplement. The principal offices of ARCap Servicing, Inc. are located at 5221 N. O'Connor Blvd. Suite 600, Irving, Texas 75039, and its telephone number is 972-868-5300. Certain of the duties of the applicable special servicer and the provisions of the series 2006-PWR12 pooling and servicing agreement regarding the applicable special servicer, including without limitation information regarding the rights and obligations of the special servicer with respect to delinquencies, losses, bankruptcies and recoveries and the ability of the special servicer to waive or modify the terms of the pooled mortgage loans are set forth under "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement --Modifications, Waivers, Amendments and Consents," "--Fair Value Purchase Option" and "--Procedures with Respect to Defaulted Mortgage Loans and REO Properties" in this prospectus supplement. Certain terms of the series 2006-PWR12 pooling and servicing agreement regarding the special servicer's removal, replacement, resignation or transfer are described under "--Replacement of the Special Servicers" in this prospectus supplement. Certain limitations on the special servicer's liability under the series 2006-PWR12 pooling and servicing agreement are described under "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement" in this prospectus supplement. ASI will service the specially serviced mortgage loans in this transaction in accordance with the procedures set forth in the series 2006-PWR12 pooling and servicing agreement and in accordance with the mortgage loan documents and applicable laws. ASI is on S&P's Select Servicer list as a U.S. Commercial Mortgage Special Servicer and is ranked "strong" by S&P. ASI also has a special servicer rating of "CSS1" from Fitch. As of March 31, 2006, ASI was the named special servicer in approximately 54 commercial mortgage-backed securities transactions representing approximately 8,190 loans, with an aggregate outstanding principal balance of approximately $59.6 billion. The portfolio includes multifamily, office, retail, hospitality, industrial and other types of income-producing properties, located in the United States, Canada, Virgin S-85 Islands and Puerto Rico. With respect to these transactions as of March 31, 2006, ASI was administering approximately 61 assets with an outstanding principal balance of approximately $326.9 million. All of these specially serviced assets are serviced in accordance with the applicable procedures set forth in the related pooling and servicing agreement that governs the asset. Since its inception in 2002 and through March 31, 2006, ASI has resolved 222 total assets, including multifamily, office, retail, hospitality, industrial and other types of income-producing properties, with an aggregate principal balance of $1.24 billion. The general special servicer will segregate and hold all funds collected and received in connection with the operation of each applicable REO Property separate and apart from its own funds and general assets and will establish and maintain with respect to each applicable REO Property one or more accounts held in trust for the benefit of the certificateholders (and the holder of the related Non-Pooled Mortgage Loan(s) if in connection with an applicable Trust-Serviced Mortgage Loan Group). This account or accounts will be an Eligible Account. The funds in this account or accounts will not be commingled with the funds of the special servicer, or the funds of any of the general special servicer's other serviced assets that are not serviced pursuant to the series 2006-PWR12 pooling and servicing agreement. ARCap Servicing, Inc. has developed policies, procedures and controls for the performance of its special servicing obligations in compliance with the series 2006-PWR12 pooling and servicing agreement, applicable law and the applicable servicing standard. ASI has been special servicing assets for approximately 4 years and employs a seasoned asset management staff with an average of 13 years experience in this line of business. Two additional senior managers in the special servicing group have 29 and 17 years of industry experience, respectively. ASI was formed in 2002 for the purpose of supporting its parent's related business of acquiring and managing investments in subordinated CMBS for its own account and those of its managed funds. Since December 31, 2002 the number of commercial mortgage-backed securities transactions with respect to which ASI is the named special servicer has grown from approximately 24 transactions representing approximately 4,004 loans with an aggregate outstanding principal balance of approximately $24.5 billion, to approximately 54 transactions consisting of approximately 8,190 loans with an approximate outstanding aggregate principal balance of $59.6 billion as of March 31, 2006. The information set forth in this prospectus supplement concerning ASI has been provided by it. PRUDENTIAL ASSET RESOURCES, INC. PAR will be appointed as the special servicer for the 1675 Broadway and the Tuscany Plaza pooled mortgage loans and the related non-pooled mortgage loans. See "--The Master Servicers--Prudential Asset Resources, Inc." above. Prudential Asset Resources, Inc. (in the context of special servicing, "PAR Special Servicing"), a Delaware corporation, is a wholly owned subsidiary of PMCC, which is an indirect subsidiary of Prudential Financial, Inc. and an affiliate of Prudential Mortgage Capital Company, LLC, one of the originators. PAR Special Servicing is an affiliate of Prudential Mortgage Capital Funding, LLC, a sponsor and one of the mortgage loan sellers. PAR is one of the Master Servicers and is acting as the named special servicer for two (2) loan groups in this transaction. PAR Special Servicing's office is located at 2 Ravinia Drive, Suite 1400, Atlanta, GA 30346. PAR Special Servicing, which has been servicing commercial real estate mortgage loans since March 2001, specially services commercial mortgage loan portfolios for a variety of Prudential companies, as well as for CMBS, Fannie Mae and certain third party investors. PAR Special Servicing has policies and procedures for the performance of its special servicing obligations in compliance with applicable servicing agreements. PAR Special Servicing has policies and procedures in place to handle delinquencies, losses, bankruptcies and recoveries consistent with the terms of the series 2006-PWR12 pooling and servicing agreement. Recently, as part of PAR, some of PAR Special Servicing's policies and procedures have been modified to conform to the servicing criteria set forth in Item 1122 of Regulation AB and in connection with the transition of its servicing system to a Strategy platform, which is widely used in the commercial mortgage loan servicing industry. From time to time, PAR Special Servicing and its affiliates are parties to lawsuits and other legal proceedings arising in the ordinary course of business. PAR Special Servicing does not believe that any such lawsuits or legal proceedings would, individually or in the aggregate, have a material adverse effect on its business or its ability to service as special servicer. S-86 PAR is a rated special servicer by S&P and Fitch and has been approved to be a special servicer in transactions rated by Moody's. There have been no material non-compliance or default issues for PAR Special Servicing in its servicing of CMBS loans. The amount of loans for which PAR Special Servicing is the named special servicer has increased each of the past three years, as shown in the table below which indicates the aggregate outstanding principal balance of loans naming PAR Special Servicing as special servicer as of the respective year-end: Commercial Mortgage Loans 2005 2004 2003 -------------- --------------- --------------- --------------- CMBS $ 1,136,160,910 $ 1,007,721,965 $ 926,578,222 Total $27,030,758,471 $20,772,526,843 $22,098,430,355 The information set forth in this prospectus supplement concerning PAR has been provided by it. AFFILIATIONS AND CERTAIN RELATIONSHIPS AMONG TRANSACTION PARTIES Prudential Mortgage Capital Funding, LLC, a sponsor and mortgage loan seller, Prudential Mortgage Capital Company, LLC, one of the originators, and Prudential Asset Resources, Inc., one of the master servicers and the special servicer for the 1675 Broadway loan group and the Tuscany Plaza loan group, are affiliates. Bear Stearns Commercial Mortgage, Inc., a sponsor, originator and mortgage loan seller, Bear Stearns Commercial Mortgage Securities Inc., the depositor, and Bear, Stearns & Co. Inc., one of the underwriters, are affiliates. Wells Fargo Bank, National Association, a sponsor, originator and mortgage loan seller, is also one of the master servicers, the certificate administrator, the tax administrator and the certificate registrar with respect to the mortgage loans and the trust fund. Principal Commercial Funding II, LLC, a sponsor, originator and mortgage loan seller, Principal Commercial Funding, LLC, a sponsor, originator and mortgage loan seller and Principal Global Investors, LLC, the primary servicer with respect to those mortgage loans sold to the trust fund by Principal Commercial Funding II, LLC and Principal Commercial Funding, LLC, are affiliates. Nationwide Life Insurance Company, a sponsor, originator and mortgage loan seller, is also the primary servicer with respect to those mortgage loans sold to the trust fund by Nationwide Life Insurance Company. DESCRIPTION OF THE OFFERED CERTIFICATES GENERAL The series 2006-PWR12 certificates will be issued on the Issue Date pursuant to the series 2006-PWR12 pooling and servicing agreement. Some of the provisions of the offered certificates and the series 2006-PWR12 pooling and servicing agreement are described in this "Description of the Offered Certificates" section of this prospectus supplement. For additional detailed information regarding the terms of the series 2006-PWR12 pooling and servicing agreement and the offered certificates, you should refer to the section in this prospectus supplement titled "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement" and to the sections in the accompanying prospectus titled "Description of the Certificates" and "Description of the Pooling and Servicing Agreements". The series 2006-PWR12 certificates collectively will represent the entire beneficial ownership interest in a trust fund consisting primarily of: o the pooled mortgage loans; o any and all payments under and proceeds of the pooled mortgage loans received after the cut-off date, in each case exclusive of payments of principal, interest and other amounts due on or before that date; o the loan documents for the pooled mortgage loans (insofar as they are required to be delivered to the trustee); o certain rights granted to us under the mortgage loan purchase agreements; S-87 o any REO Properties acquired by or on behalf of the trust fund with respect to defaulted pooled mortgage loans (but, in the case of the mortgage loans included in any Mortgage Loan Group, only to the extent of the trust fund's interest therein); and o those funds or assets as from time to time are deposited in each master servicer's collection account described under "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement--Collection Accounts" in this prospectus supplement, each special servicer's REO account as described under "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement--REO Accounts", the certificate administrator's distribution account described under "--Distribution Account" below or the certificate administrator's interest reserve account described under "--Interest Reserve Account" below. The series 2006-PWR12 certificates will include the following classes: o the A-1, A-2, A-3, A-AB, A-4, A-1A, A-M and A-J classes, which are the classes of series 2006-PWR12 certificates that are offered by this prospectus supplement, and o the X, B, C, D, E, F, G, H, J, K, L, M, N, O, P, R and V classes, which are the classes of series 2006-PWR12 certificates that-- 1. will be retained or privately placed by us, and 2. are not offered by this prospectus supplement. It is expected that ARCap CMBS Fund II REIT, Inc., an affiliate of the parent of the initial special servicer will acquire several non-offered classes of the series 2006-PWR12 certificates, including the class P certificates. CERTIFICATE PRINCIPAL BALANCES AND CERTIFICATE NOTIONAL AMOUNTS The class A-1, A-2, A-3, A-AB, A-4, A-1A, A-M, A-J, B, C, D, E, F, G, H, J, K, L, M, N, O and P certificates are the only series 2006-PWR12 certificates that will have principal balances and are sometimes referred to as the principal balance certificates. The principal balance of any of these certificates will represent the total distributions of principal to which the holder of the subject certificate is entitled over time out of payments and other collections on the assets of the trust fund. Accordingly, on each distribution date, the principal balance of each of these certificates will be permanently reduced by any principal distributions actually made with respect to that certificate on that distribution date. See "--Distributions" below. On any particular distribution date, the principal balance of each of these certificates may also be permanently reduced, without any corresponding distribution, in connection with losses on the pooled mortgage loans and default-related and otherwise unanticipated trust fund expenses. Notwithstanding the provisions described above, the principal balance of a principal balance certificate may be restored under limited circumstances in connection with a recovery of amounts that had previously been determined to constitute nonrecoverable advances. See "--Reductions of Certificate Principal Balances in Connection with Realized Losses and Additional Trust Fund Expenses" below. The class X certificates will not have principal balances. For purposes of calculating the amount of accrued interest with respect to those certificates, however, the class X certificates will have a total notional amount equal to the total principal balance of the class A-1, A-2, A-3, A-AB, A-4, A-1A, A-M, A-J, B, C, D, E, F, G, H, J, K, L, M, N, O and P certificates outstanding from time to time. The initial notional amount of the class X certificates is shown in the table appearing under the caption "Summary--Overview of the Series 2006-PWR12 Certificates" in this prospectus supplement. The actual notional amount of the class X certificates at initial issuance may be larger or smaller than the amount shown in that table, depending on, among other things, the actual size of the initial mortgage pool balance. The class R certificates will not have principal balances or notional amounts. They will be residual interest certificates. The holders of the class R certificates are not expected to receive any material payments. The class V certificates will not have principal balances or notional amounts. They will entitle holders to certain additional interest that may accrue with respect to the pooled mortgage loans that are ARD Loans. S-88 In general, principal balances and notional amounts will be reported on a class-by-class basis. In order to determine the principal balance of any principal balance certificate from time to time, you may multiply the original principal balance of that certificate as of the Issue Date, as specified on the face of that certificate, by the then-applicable certificate factor for the relevant class. The certificate factor for any class of principal balance certificates, as of any date of determination, will equal a fraction, expressed as a percentage, the numerator of which will be the then outstanding total principal balance of that class, and the denominator of which will be the original total principal balance of that class. Certificate factors will be reported monthly in the certificate administrator's report. DISTRIBUTION ACCOUNT General. The certificate administrator must establish and maintain an account in which it will hold funds pending their distribution on the series 2006-PWR12 certificates and from which it will make those distributions. That distribution account must be maintained in the name of the certificate administrator on behalf of the trustee and in a manner and with a depository institution that satisfies Moody's and S&P standards for securitizations similar to the one involving the offered certificates. Deposits. On the business day prior to each distribution date, each master servicer will be required to remit to the certificate administrator for deposit in the distribution account the following funds: o All payments and other collections on the pooled mortgage loans and any REO Properties in the trust fund that are then on deposit in that master servicer's collection account, exclusive of any portion of those payments and other collections that represents one or more of the following: 1. monthly debt service payments due on a due date in a month subsequent to the month in which the subject distribution date occurs; 2. with limited exception involving pooled mortgage loans that have due dates occurring after the end of the related collection period, payments and other collections received by or on behalf of the trust fund after the end of the related collection period; 3. Authorized Collection Account Withdrawals, including-- (a) amounts payable to a master servicer or a special servicer as indemnification or as compensation, including master servicing fees, special servicing fees, workout fees, liquidation fees, assumption fees, modification fees and, to the extent not otherwise applied to cover interest on advances, late payment charges and Default Interest, (b) amounts payable in reimbursement of outstanding advances, together with interest on those advances, (c) amounts payable with respect to other trust fund expenses, and (d) amounts deposited in that master servicer's collection account in error. o Any advances of delinquent monthly debt service payments made by that master servicer with respect to those pooled mortgage loans for which it is the applicable master servicer for that distribution date. o Any payments made by that master servicer to cover Prepayment Interest Shortfalls incurred with respect to those pooled mortgage loans for which it is the applicable master servicer during the related collection period. See "--Advances of Delinquent Monthly Debt Service Payments" below and "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement--Collection Accounts" and "--Servicing and Other Compensation and Payment of Expenses" in this prospectus supplement. With respect to the distribution date that occurs during March in any calendar year subsequent to 2006 (and if the final distribution date occurs in January (except in a leap year) or February of any year, with respect to the distribution date in such January or February), the certificate administrator will be required to transfer from the interest reserve account, which S-89 we describe under "--Interest Reserve Account" below, to the distribution account the interest reserve amounts that are then being held in that interest reserve account with respect to the pooled mortgage loans that accrue interest on an Actual/360 Basis. The certificate administrator may, at its own risk, invest funds held in the distribution account in Permitted Investments, which are described in the Glossary to this prospectus supplement, and will be entitled to the interest and other income earned on those funds and will be obligated to make up investment losses. Withdrawals. The certificate administrator may from time to time make withdrawals from the distribution account for any of the following purposes: o to make distributions on the series 2006-PWR12 certificates; o to pay itself, the tax administrator, the servicer report administrator and the trustee monthly fees that are described under "--Matters Regarding the Certificate Administrator, the Tax Administrator and the Trustee" and "--Reports to Certificateholders; Available Information" below; o to pay any indemnities and reimbursements owed to itself, the tax administrator, the trustee and various related persons as described under "--Matters Regarding the Certificate Administrator, the Tax Administrator and the Trustee" below; o to pay for any opinions of counsel required to be obtained in connection with any amendments to the series 2006-PWR12 pooling and servicing agreement; o to pay any federal, state and local taxes imposed on the trust fund, its assets and/or transactions, together with all incidental costs and expenses, that are required to be borne by the trust fund as described under "Material Federal Income Tax Consequences--Taxes that May Be Imposed on the REMIC Pool--Prohibited Transactions" in the accompanying prospectus and "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement--REO Account" in this prospectus supplement; o to pay itself net investment earnings earned on funds in the distribution account for each collection period; o to pay for the cost of recording the series 2006-PWR12 pooling and servicing agreement; o with respect to each distribution date during February of any year subsequent to 2006 and each distribution date during January of any year subsequent to 2006 that is not a leap year, to transfer to the certificate administrator's interest reserve account the interest reserve amounts required to be so transferred in that month with respect to the pooled mortgage loans that accrue interest on an Actual/360 Basis; o to pay to the person entitled thereto any amounts deposited in the distribution account in error; and o to clear and terminate the distribution account upon the termination of the series 2006-PWR12 pooling and servicing agreement. INTEREST RESERVE ACCOUNT The certificate administrator must maintain an account in which it will hold the interest reserve amounts described in the next paragraph with respect to the pooled mortgage loans that accrue interest on an Actual/360 Basis. That interest reserve account must be maintained in the name of the certificate administrator on behalf of the trustee and in a manner and with a depository institution that satisfies Moody's and S&P standards for securitizations similar to the one involving the offered certificates. The certificate administrator may, at its own risk, invest funds held in the interest reserve account in Permitted Investments, which are described in the Glossary to this prospectus supplement, and will be entitled to the interest and other income earned on those funds and will be obligated to make up investment losses. S-90 During January, except in a leap year, and February of each calendar year subsequent to 2006, the certificate administrator must, on or before the distribution date in that month, withdraw from the distribution account and deposit in the interest reserve account the interest reserve amount with respect to each of the pooled mortgage loans that accrue interest on an Actual/360 Basis and for which the monthly debt service payment due in that month was either received or advanced. In general, that interest reserve amount for each of those mortgage loans will equal one day's interest accrued at the related mortgage interest rate net of the Administrative Fee Rate, on the Stated Principal Balance of that mortgage loan as of the end of the related collection period. In the case of an ARD Loan, however, the interest reserve amount will not include Post-ARD Additional Interest. During March of each calendar year after 2006 (and if the final distribution date occurs in January (except in a leap year) or February of any year, during such January or February), the certificate administrator must, on or before the distribution date in that month, withdraw from the interest reserve account and deposit in the distribution account any and all interest reserve amounts then on deposit in the interest reserve account with respect to the pooled mortgage loans that accrue interest on an Actual/360 Basis. All interest reserve amounts that are so transferred from the interest reserve account to the distribution account will be included in the Available Distribution Amount for the distribution date during the month of transfer. DISTRIBUTIONS General. For purposes of allocating payments on certain classes of the offered certificates, the mortgage pool will be divided into: o Loan group 1, which will consist of 185 pooled mortgage loans, with an aggregate cut-off date principal balance of $1,884,359,127, representing 90.6% of the initial mortgage pool balance; and o Loan group 2, which will consist of 28 pooled mortgage loans, with an aggregate cut-off date principal balance of $194,671,028, representing 9.4% of the initial mortgage pool balance. Loan group 2 will consist of 92.9% of the initial mortgage pool balance of all the pooled mortgage loans secured by multifamily or manufactured housing community properties. On each distribution date, the certificate administrator will, subject to the exception described in the next sentence, make all distributions required to be made on the series 2006-PWR12 certificates on that distribution date to the holders of record as of the close of business on the last business day of the calendar month preceding the month in which those distributions are to occur. The final distribution of principal and/or interest to the registered holder of any offered certificate, however, will be made only upon presentation and surrender of that certificate at the location to be specified in a notice of the pendency of that final distribution. Distributions made to a class of series 2006-PWR12 certificateholders will be allocated among those certificateholders in proportion to their respective percentage interests in that class. In order for a series 2006-PWR12 certificateholder to receive distributions by wire transfer on and after any particular distribution date, that certificateholder must provide the certificate administrator with written wiring instructions no later than five days prior to the last day of the calendar month preceding the month in which that distribution date occurs. Otherwise, that certificateholder will receive its distributions by check mailed to it. Cede & Co. will be the registered holder of your offered certificates, and you will receive distributions on your offered certificates through DTC and its participating organizations, until physical certificates are issued, if ever. See "--Delivery, Form and Denomination" below. If, in connection with any distribution date, the certificate administrator has reported the amount of an anticipated distribution to DTC based on the expected receipt of any monthly payment based on information set forth in a report, or any monthly payment expected to be paid on the last two business days preceding such distribution date, and the related borrower fails to make such payments at such time, the certificate administrator will use commercially reasonable efforts to cause DTC to make the revised distribution on a timely basis on such distribution date, but there can be no assurance that DTC will be able to do so. The certificate administrator, the master servicers, the special servicers and the trustee will not be liable or held S-91 responsible for any resulting delay, or claims by DTC resulting therefrom, in the making of such distribution to series 2006-PWR12 certificateholders. In addition, if the certificate administrator incurs out-of-pocket expenses, despite reasonable efforts to avoid or mitigate such expenses, as a consequence of a borrower failing to make such payments, the certificate administrator will be entitled to reimbursement from the trust. Any such reimbursement will constitute "Additional Trust Fund Expenses". Interest Distributions. All of the classes of the series 2006-PWR12 certificates will bear interest, except for the R and V classes. With respect to each interest-bearing class of the series 2006-PWR12 certificates, interest will accrue during each interest accrual period based upon: o the pass-through rate for that class and interest accrual period; o the total principal balance or notional amount, as the case may be, of that class outstanding immediately prior to the related distribution date; and o the assumption that each year consists of twelve 30-day months. On each distribution date, subject to the Available Distribution Amount for that date and the distribution priorities described under "--Priority of Distributions" below, the holders of each interest-bearing class of the series 2006-PWR12 certificates will be entitled to receive-- o the total amount of interest accrued during the related interest accrual period (and any distributable interest that remains unpaid from prior distribution dates) with respect to that class, reduced by o the portion of any Net Aggregate Prepayment Interest Shortfall (if any) for that distribution date that is allocable to that class. In addition, if any class of principal balance certificates experiences the restoration of its principal balance on any distribution date under the limited circumstances that we describe under "--Reductions of Certificate Principal Balances in Connection with Realized Losses and Additional Trust Funds Expenses" below, then that class will also be entitled (also subject to the Available Distribution Amount for that distribution date and the distribution priorities described under "--Priority of Distributions" below) to the interest that would have accrued (at its pass-through rate for the interest accrual period related to such distribution date) for certain prior interest accrual periods and interest will thereafter accrue on the principal balance of that class (as calculated taking into account any such restorations and any reductions in such principal balance from time to time) at the pass-through rate for that class in effect from time to time. If the holders of any interest-bearing class of the series 2006-PWR12 certificates do not receive all of the interest to which they are entitled on any distribution date, as described in the prior paragraphs, then they will continue to be entitled to receive the unpaid portion of that interest on future distribution dates, subject to the Available Distribution Amount for those future distribution dates and the distribution priorities described under "--Priority of Distributions" below. No portion of any Net Aggregate Prepayment Interest Shortfall for any distribution date will be allocable to the class X certificates. The portion of any Net Aggregate Prepayment Interest Shortfall for any distribution date that is allocable to any particular class of series 2006-PWR12 principal balance certificates will equal the product of-- o the amount of that Net Aggregate Prepayment Interest Shortfall, multiplied by o a fraction-- 1. the numerator of which is the total amount of interest accrued during the related interest accrual period with respect to that class of certificates, and S-92 2. the denominator of which is the total amount of interest accrued during the related interest accrual period with respect to all of the series 2006-PWR12 principal balance certificates. Calculation of Pass-Through Rates. The pass-through rate applicable to each interest-bearing class of series 2006-PWR12 certificates for the initial interest accrual period is shown in the table appearing under the caption "Summary--Overview of the Series 2006-PWR12 Certificates" in this prospectus supplement. The pass-through rates for the class __, __, __, __, __, and __ certificates for each subsequent interest accrual period will, in the case of each of those classes, remain fixed at the pass-through rate applicable to that class of certificates for the initial interest accrual period. The pass-through rates for the class __, __, __, __, __, and __ certificates for each subsequent interest accrual period will, in the case of each of these classes, equal the lesser of: o the pass-through rate applicable to that class of certificates for the initial interest accrual period, and o the Weighted Average Pool Pass-Through Rate for the distribution date that corresponds to that subsequent interest accrual period. The pass-through rates applicable to each of the class __, __, and __ certificates for each interest accrual period will equal, in the case of each of those classes, the Weighted Average Pool Pass-Through Rate for the distribution date that corresponds to that interest accrual period, minus a specified percentage. In the case of the class __ certificates, that percentage is __%, in the case of the class __ certificates, that percentage is __%, in the case of the class __ certificates, that percentage is __% and in the case of the class __ certificates, that percentage is __%. The pass-through rate applicable to the class __, __, and __ certificates for each interest accrual period will equal the Weighted Average Pool Pass-Through Rate for the distribution date that corresponds to that interest accrual period. The pass-through rate applicable to the class X certificates in the aggregate for each interest accrual period will equal the excess, if any, of: o the Weighted Average Pool Pass-Through Rate for the distribution date that corresponds to that interest accrual period; over o the weighted average of the pass-through rates for the class A-1, A-2, A-3, A-AB, A-4, A-1A, A-M, A-J, B, C, D, E, F, G, H, J, K, L, M, N, O and P certificates for that interest accrual period, weighted on the basis of the respective total principal balances of those classes of series 2006-PWR12 certificates outstanding immediately prior to the distribution date for that interest accrual period. The calculation of the Weighted Average Pool Pass-Through Rate will be unaffected by any change in the mortgage interest rate for any pooled mortgage loan, including in connection with any bankruptcy or insolvency of the related borrower or any modification of that mortgage loan agreed to by the applicable master servicer or the applicable special servicer. The class R and V certificates are not interest-bearing certificates and will not have pass-through rates. Principal Distributions. Subject to the relevant Available Distribution Amount and the priority of distributions described under "--Priority of Distributions" below, the total amount of principal payable with respect to each class of the series 2006-PWR12 principal balance certificates on each distribution date will equal that class's allocable share of the Principal Distribution Amount for that distribution date as described below. In general, the Principal Distribution Amount for each distribution date will be allocated concurrently to the holders of the class A-1A certificates, on the one hand, and to the holders of the class A-1, A-2, A-3, A-AB and A-4 certificates collectively, on the other, in the following amounts: S-93 o to the holders of the class A-1A certificates in an amount equal to the lesser of-- 1. the portion of the Principal Distribution Amount for that distribution date that is attributable to loan group 2 and, after the total principal balance of the class A-1, A-2, A-3, A-AB and A-4 certificates has been reduced to zero, the portion of the Principal Distribution Amount for that distribution date that is attributable to loan group 1 (net of any portion thereof that is distributable on that distribution date to the holders of the class A-1, A-2, A-3, A-AB and/or A-4 certificates), and 2. the total principal balance of the class A-1A certificates immediately prior to that distribution date; o to the holders of the class A-1, A-2, A-3, A-AB and A-4 certificates collectively in an aggregate amount equal to the lesser of-- 1. the portion of the Principal Distribution Amount for that distribution date that is attributable to loan group 1 and, after the total principal balance of the class A-1A has been reduced to zero, the portion of the Principal Distribution Amount for that distribution date that is attributable to loan group 2 (net of any portion thereof that is distributable on that distribution date to the holders of the class A-1A certificates), and 2. the total principal balance of the class A-1, A-2, A-3, A-AB and A-4 certificates immediately prior to that distribution date. In general, the portion of the Principal Distribution Amount that is allocated to holders of the class A-1, A-2, A-3, A-AB and A-4 certificates collectively as described above (such portion, the "Certificate Group 1 Principal Distribution Amount") on each distribution date will be further allocated among those holders in the following amounts and order of priority: o first, to the holders of the class A-AB certificates in an amount equal to the lesser of-- 1. the Certificate Group 1 Principal Distribution Amount for that distribution date, and 2. an amount sufficient to reduce the total principal balance of the class A-AB certificates to the Class A-AB Planned Principal Balance for that distribution date; o second, to the holders of the class A-1 certificates in an amount equal to the lesser of-- 1. the Certificate Group 1 Principal Distribution Amount for that distribution date, reduced by any portion of that amount that is allocable to reduce the total principal balance of the class A-AB certificates to the Class A-AB Planned Principal Balance for that distribution date as described in the preceding bullet and paid to the holders of that class on that distribution date, and 2. the total principal balance of the class A-1 certificates immediately prior to that distribution date; o third, to the holders of the class A-2 certificates in an amount equal to the lesser of-- 1. the Certificate Group 1 Principal Distribution Amount for that distribution date, reduced by any portion of that amount that is allocable to reduce the total principal balance of the class A-AB certificates to the Class A-AB Planned Principal Balance for that distribution date and/or any portion of that amount that is allocable to the class A-1 certificates as described in the preceding bullets and paid to the holders of those classes on that distribution date, and 2. the total principal balance of the class A-2 certificates immediately prior to that distribution date; o fourth, to the holders of the class A-3 certificates in an amount equal to the lesser of-- 1. the Certificate Group 1 Principal Distribution Amount for that distribution date, reduced by any portion of that amount that is allocable to reduce the total principal balance of the class A-AB S-94 certificates to the Class A-AB Planned Principal Balance for that distribution date and/or any portion of that amount that is allocable to the class A-1 and/or A-2 certificates as described in the preceding bullets and paid to the holders of those classes on that distribution date, and 2. the total principal balance of the class A-3 certificates immediately prior to that distribution date; o fifth, to the holders of the class A-AB certificates in an amount (in addition to the amount allocated to them as described in the first bullet above) equal to the lesser of-- 1. the Certificate Group 1 Principal Distribution Amount for that distribution date, reduced by any portion of that amount that is allocable to reduce the total principal balance of the class A-AB certificates to the Class A-AB Planned Principal Balance for that distribution date as described in the first bullet above and/or any portion of that amount that is allocable to the class A-1, A-2 and/or A-3 certificates as described in the preceding bullets and paid to the holders of those classes on that distribution date, and 2. the total principal balance of the class A-AB certificates immediately after the allocation made pursuant to the first bullet above; and o finally, to the holders of the class A-4 certificates in an amount equal to the lesser of-- 1. the Certificate Group 1 Principal Distribution Amount for that distribution date, reduced by any portion of that amount that is allocable to the class A-AB, A-1, A-2 and/or A-3 certificates as described in the preceding bullets and paid to the holders of those classes on that distribution date, and 2. the total principal balance of the class A-4 certificates immediately prior to that distribution date. Notwithstanding the provisions described in the foregoing paragraphs, if two or more classes of class A-1, A-2, A-3, A-AB, A-4 and A-1A certificates are outstanding as of any Class A Principal Distribution Cross-Over Date or, in any event, as of the final distribution date for the series 2006-PWR12 certificates, then the Principal Distribution Amount for that distribution date and any distribution date thereafter will be allocated among the A-1, A-2, A-3, A-AB, A-4 and A-1A classes on a pro rata basis, without regard to loan group, in accordance with their respective total principal balances immediately prior to that distribution date, in each case up to the total principal balance of the respective class. While one or more of the class A-1, A-2, A-3, A-AB, A-4 and/or A-1A certificates are outstanding, no portion of the Principal Distribution Amount for any distribution date will be allocated to any other class of series 2006-PWR12 certificates. Following the retirement of the class A-1, A-2, A-3, A-AB, A-4 and A-1A certificates, the Principal Distribution Amount for each distribution date will be allocated, first, to the class A-M certificates, second, to the class A-J certificates and then to the respective other classes of principal balance certificates in order of their alphabetical designation (class B, class C and so on), in each case up to the lesser of-- o the portion of that Principal Distribution Amount that remains unallocated, and o the total principal balance of the subject class immediately prior to that distribution date. In no event will the holders of any such other class of principal balance certificates be entitled to receive any distributions of principal until the total principal balance of the class A-1, A-2, A-3, A-AB, A-4 and A-1A certificates and of all other classes of series 2006-PWR12 principal balance certificates, if any, with a higher payment priority under the prior paragraph is reduced to zero. To the extent that a master servicer or the trustee reimburses itself for any nonrecoverable advance (including any interest accrued thereon), or for any advance (including any interest accrued thereon) with respect to a defaulted pooled mortgage loan that remains unreimbursed following its modification and return to performing status, during any collection period out of the principal portion of debt service advances and payments and other collection of principal on the mortgage pool, the Principal Distribution Amount for the related distribution date will be reduced by the amount of such reimbursement (although any such amount that is subsequently recovered will generally be added to the Principal S-95 Distribution Amount for the distribution date following the collection period in which the recovery occurs). See "--Advances of Delinquent Monthly Debt Service Payments", "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement--Servicing and Other Compensation and Payment of Expenses" and "Glossary--Principal Distribution Amount". Loss Reimbursement Amounts. As discussed under "--Reductions of Certificate Principal Balances in Connection with Realized Losses and Additional Trust Fund Expenses" below, the total principal balance of any class of series 2006-PWR12 principal balance certificates may be reduced without a corresponding distribution of principal. If that occurs with respect to any class of series 2006-PWR12 principal balance certificates, then, subject to the relevant Available Distribution Amount and the priority of distributions described under "--Priority of Distributions" below, the holders of that class will be entitled to be reimbursed for the amount of that reduction, without interest (and without duplication of any amount reflected in a restoration of the total principal balance of that class under the limited circumstances described in this prospectus supplement with respect to recoveries of amounts previously determined to have constituted nonrecoverable advances). Priority of Distributions. On each distribution date, prior to making any other distributions of interest and/or principal on the certificates, the certificate administrator will apply the Available Distribution Amount for that distribution date, concurrently: o from the portion of the Available Distribution Amount attributable to loan group 2, to pay interest to the holders of the class A-1A certificates up to the total amount of interest payment distributable with respect to that class on the related distribution date, o from the portion of the Available Distribution Amount attributable to loan group 1, to pay interest to the holders of the class A-1, A-2, A-3, A-AB and A-4 certificates, pro rata in accordance with their respective interest entitlements, up to the total amount of interest payment distributable with respect to each such class on that distribution date, and o from the remaining portion of the Available Distribution Amount, to pay interest to the holders of the class X certificates up to the total amount of interest payment distributable with respect to that class on the related distribution date; provided, however, that if the Available Distribution Amount for the applicable distribution date, or the applicable portion of the Available Distribution Amount attributable to either loan group, is insufficient to pay in full the total amount of interest to be distributable with respect to any of those classes as described above, the Available Distribution Amount will be allocated among all those classes pro rata in accordance with their respective interest entitlements, without regard to loan group. On each distribution date, following the distributions of interest to the holders of the class A-1, A-2, A-3, A-AB, A-4, A-1A and X certificates described above, the certificate administrator will apply any remaining portion of the Available Distribution Amount for that distribution date in the following amounts and order of priority, in each case to the extent of the remaining portion of the Available Distribution Amount for that distribution date: o first, to make distributions of principal to the holders of the class A-1, A-2, A-3, A-AB, A-4 and/or A-1A certificates up to an aggregate amount equal to the lesser of the Principal Distribution Amount for that distribution date and the total principal balance of those classes outstanding immediately prior to that distribution date, which amount shall be allocated between such classes in the amounts and order of priority described under "--Principal Distributions" above (including the provisions described in that section relating to the attribution of portions of the Principal Distribution Amount for any distribution date to loan group 1 and/or loan group 2); o second, to reimburse the holders of the class A-1, A-2, A-3, A-AB, A-4 and/or A-1A certificates for any Realized Losses and Additional Trust Fund Expenses previously allocated to that class (as described under "-Reductions of Certificate Principal Balances in Connection with Realized Losses and Additional Trust Fund S-96 Expenses" below) and for which reimbursement has not previously been made, which distributions shall be made pro rata in accordance with the respective entitlements of those classes; o third, sequentially to the holders of the class A-M, A-J, B, C, D, E, F, G, H, J, K, L, M, N, O and P certificates, in that order (with no distribution to be made on any such class until all the distributions described in this clause have been made to all other such classes with an earlier distribution priority (if any)), first, to make a distribution of interest up to the amount of interest distributable on that class for that distribution date as described above under "--Interest Distributions"; then, to make a distribution of principal up to the portion of the Principal Distribution Amount for that distribution date that is allocated to that class as described above under "--Principal Distributions"; and, finally, to reimburse any Realized Losses and Additional Trust Fund Expenses previously allocated to that class (as described under "-Reductions of Certificate Principal Balances in Connection with Realized Losses and Additional Trust Fund Expenses " below) and for which reimbursement has not previously been made; and o finally, to the holders of the class R certificates any remaining portion of the Available Distribution Amount for that distribution date. Distributions of Yield Maintenance Charges and Prepayment Premiums. If any Yield Maintenance Charge or Prepayment Premium is collected during any particular collection period with respect to any pooled mortgage loan in loan group 1, then on the distribution date corresponding to that collection period, the certificate administrator will pay a portion of that Yield Maintenance Charge or Prepayment Premium (net of liquidation fees payable therefrom) to the holders of any class A-1, A-2, A-3, A-AB, A-4, A-M, A-J, B, C, D, E, F, G or H certificates that are entitled to payments of principal on that distribution date, up to an amount equal to, in the case of any particular class of those certificates, the product of-- o the full amount of that Yield Maintenance Charge or Prepayment Premium (net of liquidation fees payable therefrom), multiplied by o a fraction, which in no event may be greater than 1.0 or less than 0.0, the numerator of which is equal to the excess, if any, of the pass-through rate for that class of certificates over the discount rate, and the denominator of which is equal to the excess, if any, of the mortgage interest rate of the prepaid mortgage loan over the discount rate (provided that if the denominator of such fraction is equal to zero, such fraction will be deemed to equal 0.0), and further multiplied by o a fraction, which in no event may be greater than 1.0, the numerator of which is equal to the amount of principal distributed to the holders of that class of certificates on that distribution date, and the denominator of which is the portion of the Principal Distribution Amount for that distribution date that is attributable to loan group 1. If any Yield Maintenance Charge or Prepayment Premium is collected during any particular collection period with respect to any pooled mortgage loan in loan group 2, then on the distribution date corresponding to that collection period, the certificate administrator will pay a portion of that Yield Maintenance Charge or Prepayment Premium (net of liquidation fees payable therefrom) to the holders of the class A-1A certificates (if they are outstanding on that distribution date), up to an amount equal to, in the case of any particular class of those certificates, the product of-- o the full amount of that Yield Maintenance Charge or Prepayment Premium (net of liquidation fees payable therefrom), multiplied by o a fraction, which in no event may be greater than 1.0 or less than 0.0, the numerator of which is equal to the excess, if any, of the pass-through rate for the class A-1A certificates over the discount rate, and the denominator of which is equal to the excess, if any, of the mortgage interest rate of the prepaid mortgage loan over the discount rate (provided that if the denominator of such fraction is equal to zero, such fraction will be deemed to equal 0.0), and further multiplied by S-97 o a fraction, which in no event may be greater than 1.0, the numerator of which is equal to the amount of principal distributed to the holders of that class of certificates on that distribution date, and the denominator of which is the portion of the Principal Distribution Amount for that distribution date that is attributable to loan group 2. The certificate administrator will pay any remaining portion of that Yield Maintenance Charge or Prepayment Premium to the holders of the class X certificates. The relevant discount rate applicable to any class of certificates with respect to any pooled mortgage loan that is prepaid will equal-- o if a discount rate was used in the calculation of the applicable Yield Maintenance Charge or Prepayment Premium pursuant to the terms of the pooled mortgage loan, that discount rate, converted (if necessary) to a monthly equivalent yield, and o if a discount rate was not used in the calculation of the applicable Yield Maintenance Charge or Prepayment Premium pursuant to the terms of the pooled mortgage loan, the yield calculated by the linear interpolation of the yields, as reported in Federal Reserve Statistical Release H.15--Selected Interest Rates under the heading "U.S. government securities/treasury constant maturities" for the week ending prior to the date of the relevant prepayment, of U.S. Treasury constant maturities with a maturity date, one longer and one shorter, most nearly approximating the maturity date (in the case of a pooled mortgage loan that is not an ARD Loan) or the anticipated repayment date (in the case of a pooled mortgage loan that is an ARD Loan) of that pooled mortgage loan, such interpolated treasury yield converted to a monthly equivalent yield. For purposes of the immediately preceding bullet, the certificate administrator or the applicable master servicer will select a comparable publication as the source of the applicable yields of U.S. Treasury constant maturities if Federal Reserve Statistical Release H.15 is no longer published. See "Risk Factors--Provisions Requiring Yield Maintenance Charges or Defeasance Provisions May Not Be Enforceable" and "Description of the Mortgage Pool--Certain Characteristics of the Mortgage Pool--Voluntary Prepayment and Defeasance Provisions" in this prospectus supplement. Distributions of Post-ARD Additional Interest. The holders of the class V certificates will be entitled to all amounts, if any, collected on the ARD Loans in the trust fund and applied as Post-ARD Additional Interest. It is expected that ARCap CMBS Fund II REIT, Inc. will be the initial holder of the class V certificates. TREATMENT OF REO PROPERTIES Notwithstanding that any mortgaged property or an interest therein may be acquired as part of the trust fund through foreclosure, deed in lieu of foreclosure or otherwise, the related mortgage loan will be treated as having remained outstanding, until the REO Property is liquidated, for purposes of determining-- o distributions on the series 2006-PWR12 certificates, o allocations of Realized Losses and Additional Trust Fund Expenses to the series 2006-PWR12 certificates, and o the amount of all fees payable to the applicable master servicer, the applicable special servicer, the certificate administrator, the servicer report administrator and the trustee under the series 2006-PWR12 pooling and servicing agreement. In connection with the foregoing, the related mortgage loan will be taken into account when determining the Weighted Average Pool Pass-Through Rate and the Principal Distribution Amount for each distribution date. S-98 Operating revenues and other proceeds from an REO Property will be applied-- o first, to pay - or to reimburse the applicable master servicer, the applicable special servicer, the certificate administrator and/or the trustee for the payment of - any taxes, fees, costs and expenses incurred in connection with the operation and disposition of the REO Property, and o thereafter, as collections of principal, interest and other amounts due on the related mortgage loan. To the extent described under "--Advances of Delinquent Monthly Debt Service Payments" below, the applicable master servicer or the trustee, as applicable, will be required to advance delinquent monthly debt service payments with respect to each pooled mortgage loan as to which the corresponding mortgaged property has become an REO Property, in all cases as if the mortgage loan had remained outstanding. REDUCTIONS OF CERTIFICATE PRINCIPAL BALANCES IN CONNECTION WITH REALIZED LOSSES AND ADDITIONAL TRUST FUND EXPENSES As a result of Realized Losses and Additional Trust Fund Expenses, the total Stated Principal Balance of the pooled mortgage loans may decline below the total principal balance of the series 2006-PWR12 certificates. If this occurs following the distributions made to the series 2006-PWR12 certificateholders on any distribution date, then, except to the extent the resulting mismatch exists because of the reimbursement of advances on worked-out loans from advances and collections of principal on the mortgage pool (see "--Advances of Delinquent Monthly Debt Service Payments" below and "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement--Servicing and Other Compensation and Payment of Expenses"), the respective total principal balances of the series 2006-PWR12 principal balance certificates are to be sequentially reduced in the following order, until the total principal balance of those classes of series 2006-PWR12 certificates equals the total Stated Principal Balance of the pooled mortgage loans that will be outstanding immediately following that distribution date. ORDER OF ALLOCATION CLASS ------------------- ----------------------------------- 1st P 2nd O 3rd N 4th M 5th L 6th K 7th J 8th H 9th G 10th F 11th E 12th D 13th C 14th B 15th A-J 16th A-M 17th A-1, A-2, A-3, A-AB, A-4 and A-1A certificates, pro rata based on total outstanding principal balances The above-described reductions in the total principal balances of the respective classes of the series 2006-PWR12 certificates identified in the foregoing table will represent an allocation of the Realized Losses and/or Additional Trust Fund Expenses that caused the particular mismatch in balances between the pooled mortgage loans and those classes of series 2006-PWR12 certificates. In general, certain Additional Trust Fund Expenses will result in a shortfall in the payment of interest on one or more subordinate classes of the series 2006-PWR12 certificates. However, unless and until collections of S-99 principal on the pooled mortgage loans are diverted to cover that interest shortfall, such Additional Trust Fund Expense will not result in a mismatch in balances between the pooled mortgage loans and the series 2006-PWR12 certificates. The Realized Loss, if any, in connection with the liquidation of a defaulted mortgage loan, or related REO property, held by the trust fund, will be an amount generally equal to the excess, if any, of: o the outstanding principal balance of the pooled mortgage loan as of the date of liquidation, together with-- 1. all accrued and unpaid interest on the mortgage loan to, but not including, the due date in the calendar month on which the related net liquidation proceeds, if any, would be distributable to series 2006-PWR12 certificateholders, exclusive, however, of any portion of that interest that represents Default Interest or Post-ARD Additional Interest, and 2. all related unreimbursed servicing advances and unpaid liquidation expenses and certain special servicing fees, liquidation fees and/or workout fees incurred on the mortgage loan, and interest on advances made in respect of the mortgage loan, that resulted in shortfalls to investors and not otherwise considered a Realized Loss, over o the total amount of liquidation proceeds, if any, recovered in respect of that pooled mortgage loan in connection with the liquidation. If any of the debt due under a pooled mortgage loan is forgiven, whether in connection with a modification, waiver or amendment granted or agreed to by the applicable master servicer, the applicable special servicer or any other relevant party or in connection with the bankruptcy, insolvency or similar proceeding involving the related borrower, the amount forgiven, other than Default Interest and Post-ARD Additional Interest, also will be treated as a Realized Loss (but the principal portion of the debt that is forgiven will generally be recognized as a Realized Loss on the distribution date that occurs after the collection period in which the forgiveness occurs and the interest portion of the debt that is forgiven will generally be recognized as a Realized Loss over time). Any reimbursements of advances determined to be nonrecoverable and advance interest thereon, and any payments of workout fees and/or liquidation fees, that are made in any collection period from the principal portion of debt service advances and collections of principal on the mortgage pool that would otherwise be included in the Principal Distribution Amount for the related distribution date (see "--Advances of Delinquent Monthly Debt Service Payments" below and "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement--Servicing and Other Compensation and Payment of Expenses") will create a deficit (or increase an otherwise-existing deficit) between the aggregate Stated Principal Balance of the mortgage pool and the total principal balance of the series 2006-PWR12 certificates on the succeeding distribution date. The related reimbursements and payments made during any collection period will therefore result in the allocation of those amounts as Realized Losses (in reverse sequential order in accordance with the loss allocation rules described above) to reduce principal balances of the series 2006-PWR12 principal balance certificates on the distribution date for that collection period. However, if the Principal Distribution Amount for any distribution date includes any collections of amounts that (i) were previously determined to constitute nonrecoverable advances, (ii) were reimbursed to a master servicer or the trustee from advances or collections in respect of principal thereby resulting in a deficit described above and (iii) were subsequently recovered, then the principal balances of the series 2006-PWR12 certificates will, in general, be restored (in sequential order of class designation) to the extent of the lesser of such amount and the amount of Realized Losses previously allocated thereto. The reimbursement of advances on worked-out loans from advances or collections of principal on the mortgage pool (see "--Advances of Delinquent Monthly Debt Service Payments" below and "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement--Servicing and Other Compensation and Payment of Expenses") during any collection period will create a deficit (or increase an otherwise-existing deficit) between the aggregate Stated Principal Balance of the mortgage pool and the total principal balance of the series 2006-PWR12 certificates on the succeeding distribution date but there will not be any allocation of that deficit to reduce the principal balances of the series 2006-PWR12 principal balance certificates on such distribution date (although an allocation may subsequently be made if the amount reimbursed to the applicable master servicer, the applicable special servicer or the trustee ultimately is deemed to be nonrecoverable from the proceeds of the mortgage loan). S-100 The following items are some examples of Additional Trust Fund Expenses: o any special servicing fees, workout fees and liquidation fees paid to the special servicers that are not otherwise allocated as a Realized Loss; o any interest paid to a master servicer, a special servicer or the trustee with respect to unreimbursed advances (except to the extent that Default Interest and/or late payment charges are used to pay interest on advances as described under "--Advances of Delinquent Monthly Debt Service Payments" below and under "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement--Servicing and Other Compensation and Payment of Expenses--Payment of Expenses; Servicing Advances" in this prospectus supplement); o the cost of various opinions of counsel required or permitted to be obtained in connection with the servicing of the pooled mortgage loans and the administration of the other assets of the trust fund; o any unanticipated, non-mortgage loan specific expenses of the trust fund, including-- 1. any reimbursements and indemnification to the certificate administrator, the trustee and certain related persons, as described under "Transaction Parties--The Trustee--Matters Regarding the Trustee" "Transaction Parties--The Certificate Administrator, Tax Administrator and Certificate Registrar--Matters Regarding the Certificate Administrator" in this prospectus supplement, 2. any reimbursements and indemnification to the master servicers, the special servicers and us, as described under "Description of the Pooling and Servicing Agreements--Some Matters Regarding the Servicer and the Depositor" in the accompanying prospectus, and 3. any federal, state and local taxes, and tax-related expenses payable out of assets of the trust fund, as described under "Material Federal Income Tax Consequences--Taxes That May Be Imposed on the REMIC Pool--Prohibited Transactions" in the accompanying prospectus; o rating agency fees, other than on-going surveillance fees, that cannot be recovered from the borrower and that are not paid by any party to the series 2006-PWR12 pooling and servicing agreement or by the related mortgage loan seller pursuant to the mortgage loan purchase agreement to which it is a party; and o any amounts expended on behalf of the trust fund to remediate an adverse environmental condition at any mortgaged property securing a defaulted mortgage loan, as described under "Description of the Pooling and Servicing Agreements--Realization Upon Defaulted Mortgage Loans" in the accompanying prospectus. However, in general, in the case of each Mortgage Loan Group, the expenses listed in the preceding bullets - other than those relating only to the series 2006-PWR12 trust fund - will be allocable to and borne by (that is, such expenses will reduce the portion of loan payments otherwise payable to the respective holder), the holder of any Non-Pooled Subordinate Loan(s) included in such Mortgage Loan Group prior to being allocated to and borne by the trust as the holder of the pooled mortgage loan included in such Mortgage Loan Group. To the extent they are allocated to and borne by the trust as the holder of the pooled mortgage loan included in such Mortgage Loan Group, those expenses will constitute "Additional Trust Fund Expenses" allocable to the holders of the series 2006-PWR12 certificates. ADVANCES OF DELINQUENT MONTHLY DEBT SERVICE PAYMENTS Each master servicer will be required to make, for each distribution date, a total amount of advances of principal and/or interest generally equal to all scheduled monthly debt service payments, other than balloon payments and Default Interest, and assumed monthly debt service payments (as described below), in each case net of master servicing fees, that-- o were due or deemed due, as the case may be, during the same calendar month in which the subject distribution date occurs, with respect to the pooled mortgage loans as to which it is the applicable master servicer, and S-101 o were not paid by or on behalf of the respective borrowers or otherwise collected as of the close of business on the last day of the related collection period. The advancing obligations of the applicable master servicer described above for any distribution date will apply as described above with respect to scheduled monthly debt service payments or assumed monthly debt service payments due or deemed due in the applicable calendar month, even if those payments are not due or deemed due until after the end of the collection period that ends in that calendar month. Notwithstanding the foregoing, if it is determined that an Appraisal Reduction Amount exists with respect to any pooled mortgage loan, then the applicable master servicer will reduce the interest portion, but not the principal portion, of each monthly debt service advance that it must make with respect to that pooled mortgage loan during the period that the Appraisal Reduction Amount exists. The interest portion of any monthly debt service advance required to be made with respect to any pooled mortgage loan as to which there exists an Appraisal Reduction Amount, will equal the product of-- o the amount of the interest portion of that monthly debt service advance that would otherwise be required to be made for the subject distribution date without regard to this sentence and the prior sentence, multiplied by o a fraction-- 1. the numerator of which is equal to the Stated Principal Balance of the pooled mortgage loan, net of the Appraisal Reduction Amount, and 2. the denominator of which is equal to the Stated Principal Balance of the pooled mortgage loan. With respect to any distribution date, each master servicer will be required to make monthly debt service advances either out of its own funds or, subject to replacement as and to the extent provided in the series 2006-PWR12 pooling and servicing agreement, out of funds held in that master servicer's collection account that are not required to be paid on the series 2006-PWR12 certificates on that distribution date. If either master servicer fails to make a required monthly debt service advance and the trustee is aware of that failure, the trustee will be obligated to make that advance, subject to a determination of recoverability. The master servicers and the trustee will each be entitled to recover any monthly debt service advance made by it out of its own funds from collections on the pooled mortgage loan as to which the advance was made. None of the master servicers or the trustee will be obligated to make any monthly debt service advance that it or the applicable special servicer determines, in its reasonable, good faith judgment, would not ultimately be recoverable (together with interest on the advance) out of collections on the related pooled mortgage loan. If a master servicer or the trustee makes any monthly debt service advance that it or the applicable special servicer subsequently determines, in its reasonable, good faith judgment, will not be recoverable out of collections on the related pooled mortgage loan, it may obtain reimbursement for that advance, together with interest accrued on the advance as described in the second succeeding paragraph, out of general collections on the pooled mortgage loans and any REO Properties in the trust fund on deposit in the respective master servicers' collection accounts from time to time. In making such recoverability determination, such person will be entitled to consider (among other things) only the obligations of the borrower under the terms of the related mortgage loan as it may have been modified, to consider (among other things) the related mortgaged properties in their "as is" or then current conditions and occupancies, as modified by such party's assumptions regarding the possibility and effects of future adverse change with respect to such mortgaged properties, to estimate and consider (among other things) future expenses and to estimate and consider (among other things) the timing of recoveries. In addition, any such person may update or change its recoverability determinations at any time and may obtain from the applicable special servicer any analysis, appraisals or market value estimates or other information in the possession of the applicable special servicer for such purposes. The trustee will be entitled to conclusively rely on any recoverability determination made by a master servicer or a special servicer. Absent bad faith, the determination by any authorized person that an advance constitutes a nonrecoverable advance as described above will be conclusive and binding. S-102 Any monthly debt service advance, with interest, that has been determined to be a nonrecoverable advance with respect to the mortgage pool will be reimbursable from the collection accounts in the collection period in which the nonrecoverability determination is made. Any reimbursement of a nonrecoverable monthly debt service advance, including interest accrued thereon, will be made first from the principal portion of current debt service advances and payments and other collections of principal on the mortgage pool (thereby reducing the Principal Distribution Amount otherwise distributable on the certificates on the related distribution date) prior to the application of any other general collections on the mortgage pool against such reimbursement; provided that, except in extraordinary circumstances, each Rating Agency will be provided with at least 15 days notice before any reimbursement of a nonrecoverable advance will be made from general collections other than collections or advances of principal. To the extent that the amount representing principal is insufficient to fully reimburse the party entitled to the reimbursement, then, such party may elect at its sole option to defer the reimbursement of the portion that exceeds such amount allocable to principal (in which case interest will continue to accrue on the unreimbursed portion of the advance) to one or more future collection periods. To the extent that the reimbursement is made from principal collections, the Principal Distribution Amount otherwise payable on the series 2006-PWR12 certificates on the related distribution date will be reduced and a Realized Loss will be allocated (in reverse sequential order in accordance with the loss allocation rules described above under "--Reductions of Certificate Principal Balances in Connection with Realized Losses and Additional Trust Fund Expenses") to reduce the total principal balance of the series 2006-PWR12 certificates on that distribution date. Additionally, in the event that any monthly debt service advance (including any interest accrued thereon) with respect to a defaulted pooled mortgage loan remains unreimbursed following the time that such pooled mortgage loan is modified and returned to performing status, the applicable master servicer or the trustee will be entitled to reimbursement for that advance (even though that advance has not been determined to be nonrecoverable), on a monthly basis, out of -- but solely out of -- the principal portion of debt service advances and payments and other collections of principal on all the pooled mortgage loans after the application of those principal payments and collections to reimburse any party for nonrecoverable debt service advances (as described in the prior paragraph) and/or nonrecoverable servicing advances as described under "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement--Servicing and Other Compensation and Payment of Expenses" (thereby reducing the Principal Distribution Amount otherwise distributable on the certificates on the related distribution date). If any such advance is not reimbursed in whole on any distribution date due to insufficient advances and collections of principal in respect of the related collection period, then the portion of that advance which remains unreimbursed will be carried over (with interest thereon continuing to accrue) for reimbursement on the following distribution date (to the extent of principal collections available for that purpose). If any such advance, or any portion of any such advance, is determined, at any time during this reimbursement process, to be ultimately nonrecoverable out of collections on the related pooled mortgage loan, then the applicable master servicer or the trustee, as applicable, will be entitled to immediate reimbursement as a nonrecoverable advance in an amount equal to the portion of that advance that remains outstanding, plus accrued interest (under the provisions and subject to the conditions described in the preceding paragraph). The reimbursement of advances on worked-out loans from advances and collections of principal as described in the first sentence of this paragraph during any collection period will result in a reduction of the Principal Distribution Amount otherwise distributable on the certificates on the related distribution date but will not result in the allocation of a Realized Loss on such distribution date (although a Realized Loss may subsequently arise if the amount reimbursed to the applicable master servicer or the trustee ultimately is deemed to be nonrecoverable from the proceeds of the mortgage loan). Portions of the Principal Distribution Amount for any distribution date will be attributed to loan group 1 and/or loan group 2 according to the attribution rules described under "Glossary-Principal Distribution Amount" in this prospectus supplement. Those rules address the reimbursements and recoveries made as described above. The master servicers and the trustee will generally each be entitled to receive interest on monthly debt service advances made by that party out of its own funds. However, that interest will commence accruing on any monthly debt service advance made in respect of a scheduled monthly debt service payment only on the date on which any applicable grace period for that payment expires. Interest will accrue on the amount of each monthly debt service advance for so long as that advance is outstanding, at an annual rate equal to the prime rate as published in the "Money Rates" section of The Wall Street Journal, as that prime rate may change from time to time. Interest accrued with respect to any monthly debt service advance will generally be payable at any time on or after the date when the advance is reimbursed, in which case the payment will be made out of general collections on the mortgage S-103 loans and any REO Properties on deposit in the master servicers' collection accounts, thereby reducing amounts available for distribution on the certificates. Under some circumstances, Default Interest and/or late payment charges may be used to pay interest on advances prior to making payment from those general collections, but prospective investors should assume that the available amounts of Default Interest and late payment charges will be de minimis. For information involving servicing advances that is similar to the information presented in the preceding four paragraphs with respect to monthly debt service advances, see "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement--Servicing and Other Compensation and Payment of Expenses--Payment of Expenses; Servicing Advances" below. A monthly debt service payment will be assumed to be due with respect to: o each pooled mortgage loan that is delinquent with respect to its balloon payment beyond the end of the collection period in which its maturity date occurs and as to which no arrangements have been agreed to for the collection of the delinquent amounts, including an extension of maturity; and o each pooled mortgage loan as to which the corresponding mortgaged property has become an REO Property. The assumed monthly debt service payment deemed due on any pooled mortgage loan described in the prior sentence that is delinquent as to its balloon payment will equal, for its maturity date and for each successive due date that it remains outstanding and part of the trust fund, the monthly debt service payment that would have been due on the mortgage loan on the relevant date if the related balloon payment had not come due and the mortgage loan had, instead, continued to amortize (if amortization was required) and accrue interest according to its terms in effect prior to that maturity date. The assumed monthly debt service payment deemed due on any pooled mortgage loan described in the second preceding sentence as to which the related mortgaged property has become an REO Property, will equal, for each due date that the REO Property or any interest therein remains part of the trust fund, the monthly debt service payment or, in the case of a mortgage loan delinquent with respect to its balloon payment, the assumed monthly debt service payment due or deemed due on the last due date prior to the acquisition of that REO Property. Assumed monthly debt service payments for ARD Loans do not include Post-ARD Additional Interest or accelerated amortization payments that are required to be made from the application of excess cash flow. None of the master servicers or the trustee is required to make any monthly debt service advances with respect to any Non-Pooled Mortgage Loans. S-104 FEES AND EXPENSES The following table summarizes the related fees and expenses to be paid from the assets of the trust fund and the recipient, source and frequency of payments for those fees and expenses. In each case where we describe the amount of an entitlement, we describe that amount without regard to any limitation on the sources of funds from which the entitlement may be paid. Refer to the column titled "sources of funds" for such limitations. Notwithstanding any contrary description set forth in the table, with respect to each Pooled Mortgage Loan that is included in a Trust-Serviced Mortgage Loan Group that includes one or more Non-Pooled Subordinate Loans, special servicing fees, workout fees, liquidation fees, servicing advance reimbursements and interest on servicing advances generally are payable from the assets of the trust fund only to the extent that amounts otherwise available for payment on the related Non-Pooled Subordinate Loan(s) are insufficient. TYPE RECIPIENT AMOUNT FREQUENCY SOURCE OF PAYMENT --------------------- -------------------- ------------------------------------------- ------------ ---------------------------- Fees Master Servicing Fee Master Servicers and The product of the portion of the per annum Monthly. Interest payment on the Primary Servicers master servicing fee rate for the related pooled mortgage loan applicable master servicer and the related and, with respect to unpaid mortgage loan that is applicable to such master servicing fees month, determined in the same manner as the (including any primary applicable mortgage rate is determined for servicing fees) in respect that mortgage loan for such month, and the of any pooled mortgage loan, Stated Principal Balance of that mortgage out of the portion of any loan. The master servicing fee rate will related insurance proceeds, range, on a loan-by-loan basis, from 0.02% condemnation proceeds or per annum to 0.14% per annum. With respect liquidation proceeds to each pooled mortgage loan for which a allocable as interest. primary servicer acts as primary servicer, a portion of the master servicing fee is payable to that primary servicer. Special Servicing Fee Special Servicer The product of the portion of a rate equal Monthly. Any and all collections on to 0.25% per annum that is applicable to the pooled mortgage loans. such month, determined in the same manner as the applicable mortgage rate is determined for each specially serviced mortgage loan for such month, and the Stated Principal Balance of each Specially Serviced Mortgage Loan. Workout Fee Special Servicer 1.0% of each collection of principal and Monthly The related collection of interest on each worked out pooled mortgage following principal and/or interest. loan for as long as it remains a worked-out a workout mortgage loan. and beforeany redefault. S-105 TYPE RECIPIENT AMOUNT FREQUENCY SOURCE OF PAYMENT --------------------- -------------------- ------------------------------------------- ------------ ---------------------------- Liquidation Fee Special Servicer 1.0% of the liquidation proceeds received Upon receipt The related liquidation in connection with a final disposition of a of proceeds, condemnation specially serviced mortgage loan or REO liquidation proceeds or insurance property or portion thereof and any proceeds, proceeds. condemnation proceeds and insurance condemnation proceeds received by the trust fund (net of proceeds and any default interest, late payment charges insurance and/or post-ARD additional interest), other proceedson a than in connection with the purchase or Specially repurchase of any pooled mortgage loan from Serviced the trust fund by any person. Mortgage Loan. Trustee Fee Trustee The product of the portion of a rate equal Monthly. Any and all collections and to % per annum applicable to such month, P&I advances on the mortgage determined in the same manner as the loans in the pool, to the applicable mortgage rate is determined for extent included in the each mortgage loan for such month, and the amounts remitted by the Stated Principal Balance of each pooled master servicers. mortgage loan. Certificate Certificate The product of the portion of a rate equal Monthly. Any and all collections and Administrator Fee Administrator to % per annum applicable to such month, P&I advances on the mortgage determined in the same manner as the loans in the pool, to the applicable mortgage rate is determined for extent included in the each mortgage loan for such month, and the amounts remitted by the Stated Principal Balance of each pooled master servicers. mortgage loan. Servicer Report Servicer Report The product of the portion of a rate equal Monthly. Any and all collections and Administrator Fee Administrator to 0.0005% per annum applicable to such P&I advances on the pooled month, determined in the same manner as the mortgage loans, to the applicable mortgage rate is determined for extent included in the each mortgage loan for such month, and the amounts remitted by the Stated Principal Balance of each pooled master servicers. mortgage loan. S-106 TYPE RECIPIENT AMOUNT FREQUENCY SOURCE OF PAYMENT --------------------- -------------------- ------------------------------------------- ------------ ---------------------------- Additional Servicing Master Servicers, o all application and processing fees From time to Actual collections of the Compensation Primary Servicers for consents to approvals of time. related fees or investment and Special assignments and assumptions, further income. Servicers encumbrances or other lender approval; o all assumption fees, modification fees, extension fees, consent fees, release fees, waiver fees, fees paid in connection with defeasance and earn-out fees or other similar fees (excluding Prepayment Premiums, Yield Maintenance Charges and application and processing fees); o all charges for beneficiary statements or demands, amounts collected for checks returned for insufficient funds and other loan processing fees collected on the pooled mortgage loans; o late payment fees and net default interest on pooled mortgage loans that are not used to pay interest on advances; o all investment income earned on amounts on deposit in the collection accounts and (if not required to be paid to borrower) escrow accounts and any REO accounts; and o any prepayment interest excess. These amounts will be allocated among the master servicers, the primary servicers and the special servicers. S-107 TYPE RECIPIENT AMOUNT FREQUENCY SOURCE OF PAYMENT --------------------- -------------------- ------------------------------------------- ------------ ---------------------------- Expenses Servicing Advances Master Servicer and The amount of any servicing advances. From time to Recoveries on the related Trustee (and Special time. mortgage loan, or to the Servicer, if extent that the party making applicable) the advance determines the advance is nonrecoverable, from any and all collections on the pooled mortgage loans. Interest on Servicing Master Servicer and Interest accrued from time to time on the When the First from late payment Advances Trustee (and Special amount of the servicing advance at the advance is charges and default interest Servicer, if prime lending rate as published in the reimbursed. in excess of the regular applicable) "Money Rates" section of The Wall Street interest rate on the related Journal. pooled mortgage loan, and then from any and all other collections on the pooled mortgage loans. P&I Advances Master Servicer and The amount of any P&I advances. From time to Recoveries on the related Trustee time. mortgage loan, or to the extent that the party making the advance determines it is nonrecoverable, from any and all collections on the pooled mortgage loans. Interest on P&I Master Servicer and Interest accrued from time to time on the When the First from late payment Advances Trustee amount of the advance at the prime lending advance is charges and default interest rate as published in the "Money Rates" reimbursed. in excess of the regular section of The Wall Street Journal. interest rate on the related pooled mortgage loan, and then from any and all other collections on the pooled mortgage loans. S-108 TYPE RECIPIENT AMOUNT FREQUENCY SOURCE OF PAYMENT --------------------- -------------------- ------------------------------------------- ------------ ---------------------------- Indemnification Trustee, Certificate Losses, liabilities and expenses incurred From time to Any and all collections on Expenses Administrator, by the trustee, the certificate time. the pooled mortgage loans. Master Servicers and administrator, a master servicer or a Special Servicers special servicer in connection with any (and their legal action or claim relating to the directors, members, series 2006-PWR12 pooling and servicing managers, officers, agreement or the series 2006-PWR12 employees and certificates (subject to applicable agents) limitations under the pooling and servicing agreement). Additional Trust Fund Third parties Based on third party charges. See From time to Any and all collections on Expenses not advanced "--Reductions of Certificate Principal time. the pooled mortgage loans. Balances in Connection with Realized Losses and Additional Trust Fund Expenses" above. S-109 REPORTS TO CERTIFICATEHOLDERS; AVAILABLE INFORMATION Certificate Administrator Reports. Based solely on monthly reports prepared by the master servicers and the special servicers and delivered to the certificate administrator, the certificate administrator will be required to prepare and make available electronically or, upon written request from registered holders or from those parties that cannot receive such statement electronically, provide by first class mail, on each distribution date to each registered holder of a series 2006-PWR12 certificate, the parties to the series 2006-PWR12 pooling and servicing agreement and any other designee of the depositor, a report setting forth, among other things the following information (in the aggregate and by loan group as appropriate): 1. the amount of the distribution on the distribution date to the holders of each class of principal balance certificates in reduction of the principal balance of the certificates; 2. the amount of the distribution on the distribution date to the holders of each class of interest-bearing certificates allocable to the interest distributable on that class of certificates; 3. the aggregate amount of debt service advances made in respect of the mortgage pool for the distribution date; 4. the aggregate amount of compensation paid to the certificate administrator, the trustee and the servicer report administrator and servicing compensation paid to the master servicers and the special servicers during the related collection period; 5. the aggregate Stated Principal Balance of the mortgage pool outstanding immediately before and immediately after the distribution date; 6. the number, aggregate principal balance, weighted average remaining term to maturity and weighted average mortgage rate of the mortgage loans as of the end of the related collection period; 7. the number and aggregate principal balance of pooled mortgage loans (A) delinquent 30-59 days, (B) delinquent 60-89 days, (C) delinquent 90 days or more and (D) current but specially serviced or in foreclosure but not an REO Property; 8. the value of any REO Property included in the trust fund as of the end of the related collection period, on a loan-by-loan basis, based on the most recent appraisal or valuation; 9. the Available Distribution Amount for the distribution date; 10. the amount of the distribution on the distribution date to the holders of any class of certificates allocable to Yield Maintenance Charges and/or Prepayment Premiums; 11. the total interest distributable for each class of interest-bearing certificates for the distribution date; 12. the pass-through rate in effect for each class of interest-bearing certificates for the interest accrual period related to the current distribution date; 13. the Principal Distribution Amount for the distribution date, separately setting forth the portion thereof that represents scheduled principal and the portion thereof representing prepayments and other unscheduled collections in respect of principal; 14. the total outstanding principal balance or notional amount, as the case may be, of each class of certificates immediately before and immediately after the distribution date, separately identifying any reduction in these amounts as a result of the allocation of Realized Losses and Additional Trust Fund Expenses; 15. the amount of any Appraisal Reduction Amounts effected in connection with the distribution date on a loan-by-loan basis and the aggregate amount of Appraisal Reduction Amounts as of the distribution date; 16. the number and related principal balances of any mortgage loans extended or modified during the related collection period on a loan-by-loan basis; S-110 17. the amount of any remaining unpaid interest shortfalls for each class of interest-bearing certificates as of the close of business on the distribution date; 18. a loan-by-loan listing of each mortgage loan which was the subject of a principal prepayment during the related collection period and the amount of principal prepayment occurring; 19. the amount of the distribution on the distribution date to the holders of each class of certificates in reimbursement of Realized Losses and Additional Trust Fund Expenses previously allocated thereto; 20. the aggregate unpaid principal balance of the pooled mortgage loans outstanding as of the close of business on the related Determination Date; 21. with respect to any mortgage loan as to which a liquidation occurred during the related collection period (other than through a payment in full), (A) the loan number thereof, (B) the aggregate of all liquidation proceeds which are included in the Available Distribution Amount and other amounts received in connection with the liquidation (separately identifying the portion thereof allocable to distributions on the certificates), and (C) the amount of any Realized Loss attributable to the liquidation; 22. with respect to any REO Property included in the trust as to which the applicable special servicer determined that all payments or recoveries with respect to the mortgaged property have been ultimately recovered during the related collection period, (A) the loan number of the related pooled mortgage loan, (B) the aggregate of all Liquidation Proceeds and other amounts received in connection with that determination (separately identifying the portion thereof allocable to distributions on the certificates), and (C) the amount of any Realized Loss attributable to the related REO mortgage loan in connection with that determination; 23. the aggregate amount of interest on monthly debt service advances in respect of the mortgage loans paid to the master servicers and/or the trustee since the prior distribution date; 24. the aggregate amount of interest on servicing advances in respect of the mortgage loans paid to the master servicers, the special servicers and/or the trustee since the prior distribution date; 25. a loan by loan listing of any mortgage loan which was defeased during the related collection period; 26. a loan by loan listing of any material modification, extension or waiver of a mortgage loan; 27. a loan by loan listing of any material breach of the representations and warranties given with respect to mortgage loan by the applicable loan seller, as provided by a master servicer or the depositor; 28. the amounts of any excess liquidation proceeds held in the certificate administrator's account designated for such excess liquidation proceeds; and 29. the amount of the distribution on the distribution date to the holders of the class R certificates. Servicer Report Administrator. One master servicer, called the servicer report administrator, will be responsible for the assembly and combination of various reports prepared by the other master servicer and the special servicers. The servicer report administrator will be entitled to a monthly fee for its services. That fee will accrue with respect to each and every pooled mortgage loan. In each case, that fee will accrue at 0.0005% per annum on the Stated Principal Balance of each subject mortgage loan outstanding from time to time and will be calculated based on the same interest accrual basis, which is either an Actual/360 Basis or a 30/360 Basis, as the subject pooled mortgage loan. The servicer report administrator fee is payable out of general collections on the mortgage loans and any REO Properties in the trust fund. Book-Entry Certificates. See "Description of the Certificates--Book-Entry Registration and Definitive Certificates" in the accompanying prospectus for information regarding the ability of holders of offered certificates in book-entry form to obtain access to the reports of the certificate administrator. Information Available Electronically. The certificate administrator will, and each master servicer may, make the certificate administrator's or that master servicer's, as the case may be, reports available to holders and beneficial owners of the series 2006-PWR12 certificates each month via the certificate administrator's and/or that master servicer's internet website. In addition, the certificate administrator will also make mortgage loan information, as presented in the standard S-111 Commercial Mortgage Securities Association investor reporting package formats, available to holders and beneficial owners of the series 2006-PWR12 certificates via the certificate administrator's internet website. In addition, the certificate administrator will make available on its website (initially located at "www.ctslink.com") any reports on Forms 10-D, 10-K and 8-K and any amendment to those reports that have been filed by the certificate administrator with respect to the trust through the EDGAR system as soon as reasonably practicable after such report has been filed. For assistance with the certificate administrator's internet website, holders and beneficial owners of the series 2006-PWR12 certificates may call (301) 815-6600. The certificate administrator will make no representations or warranties as to the accuracy or completeness of, and may disclaim responsibility for, any information made available by it for which it is not the original source. The certificate administrator and each master servicer may require registration and the acceptance of a disclaimer, as well as, in certain cases, an agreement to keep the subject information confidential, in connection with providing access to that party's internet website. The certificate administrator will not be liable for the dissemination of information by it in accordance with the series 2006-PWR12 pooling and servicing agreement. Other Information. The series 2006-PWR12 pooling and servicing agreement will obligate the trustee, the certificate administrator or both of them, as applicable, to make available or cause to be made available at its respective offices (or those of a document custodian), during normal business hours, upon reasonable advance written notice, for review by any holder or beneficial owner of a series 2006-PWR12 certificate or any person identified to the trustee, the certificate administrator or any document custodian, as applicable, as a prospective transferee of a series 2006-PWR12 certificate or any interest in that certificate, originals or copies, in paper or electronic form, of various documents related to the assets of the trust fund and the administration of the trust fund. Those documents include (among other things) the mortgage files for the pooled mortgage loans; the series 2006-PWR12 pooling and servicing agreement and any amendments thereof; the monthly reports of the certificate administrator; the mortgage loan purchase agreements pursuant to which we purchased the pooled mortgage loans; the annual compliance certificates and annual accountants reports delivered by the master servicers and special servicer; and any officer's certificates or notices of determination that any advance constitutes a nonrecoverable advance. You should assume that the trustee, the certificate administrator or any document custodian, as the case may be, will be permitted to require payment of a sum sufficient to cover the reasonable out-of-pocket costs and expenses of providing the copies. In connection with providing access to or copies of the items described above and under "Information Available Electronically" above, the trustee, the master servicer, the certificate administrator or any document custodian, as the case may be, may require a written confirmation executed by the requesting person or entity generally to the effect that the person or entity is a registered holder, beneficial owner or prospective purchaser of a series 2006-PWR12 certificate and will keep confidential any of the information that has not been filed with the SEC. The trust will file distribution reports on Form 10-D, annual reports on Form 10-K and (if applicable) current reports on Form 8-K with the Securities and Exchange Commission (the "Commission") regarding the certificates, to the extent, and for such time, as it shall be required to do so under the Securities Exchange Act of 1934, as amended. Such reports will be filed under the name "Bear Stearns Commercial Mortgage Securities Trust 2006-PWR12." Members of the public may read and copy any materials filed with the Commission at the Commission's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Additional information regarding the Public Reference Room can be obtained by calling the Commission at 1-800-SEC-0330. The Commission also maintains a site on the World Wide Web at "http://www.sec.gov" at which you can view and download copies of reports, proxy and information statements and other information filed electronically through the Electronic Data Gathering, Analysis and Retrieval ("EDGAR") system. The Depositor has filed the prospectus and the related registration statement, including all exhibits thereto, through the EDGAR system, so the materials should be available by logging onto the Commission's Web site. The Commission maintains computer terminals providing access to the EDGAR system at the office referred to above. VOTING RIGHTS 99.0% of the voting rights will be allocated to the holders of the class A-1, A-2, A-3, A-AB, A-4, A-1A, A-M, A-J, B, C, D, E, F, G, H, J, K, L, M, N, O and P certificates, in proportion to the respective total principal balances of those classes; 0% of the voting rights will S-112 be allocated to the holders of the class X certificates; and 0% of the voting rights will be allocated to the holders of the class R and V certificates. Voting rights allocated to a class of series 2006-PWR12 certificateholders will be allocated among those certificateholders in proportion to their respective percentage interests in that class. DELIVERY, FORM AND DENOMINATION General. We intend to deliver the offered certificates in minimum denominations of $25,000, in the case of the class A-1, A-2, A-3, A-AB, A-4, A-1A, A-M and A-J certificates. Investments in excess of those minimum denominations may be made in multiples of $1. Each class of offered certificates will initially be represented by one or more certificates registered in the name of Cede & Co., as nominee of The Depository Trust Company. You will not be entitled to receive a physical certificate representing your interest in an offered certificate, except under the limited circumstances described under "Description of the Certificates--Book-Entry Registration and Definitive Certificates" in the accompanying prospectus. For so long as any class of offered certificates is held in book-entry form-- o all references in this prospectus supplement to actions by holders of those certificates will refer to actions taken by DTC upon instructions received from beneficial owners of those certificates through its participating organizations, and o all references in this prospectus supplement to payments, distributions, remittances, notices, reports and statements made or sent to holders of those certificates will refer to payments, distributions, remittances, notices, reports and statements made or sent to DTC or Cede & Co., as the registered holder of those certificates, for payment or transmittal, as applicable, to the beneficial owners of those certificates through its participating organizations in accordance with DTC's procedures. The certificate administrator will initially serve as registrar for purposes of providing for the registration of the offered certificates and, if and to the extent physical certificates are issued to the actual beneficial owners of any of the offered certificates, the registration of transfers and exchanges of those certificates. DTC, Euroclear and Clearstream. You will hold your offered certificates in book-entry form through DTC, in the United States, or Clearstream Banking, societe anonyme or Euroclear Bank as operator of The Euroclear System, in Europe. For additional information regarding DTC and the limited circumstances in which definitive certificates may be issued with respect to the offered certificates, you should refer to the section of the accompanying prospectus titled "Description of the Certificates--Book-Entry Registration and Definitive Certificates". The following paragraphs provide information with respect to Clearstream and Euroclear. It is our understanding that Clearstream holds securities for its member organizations and facilitates the clearance and settlement of securities transactions between its member organizations through electronic book-entry changes in accounts of those organizations. Transactions may be settled in Clearstream in many major currencies across 37 markets. Clearstream is registered as a bank in Luxembourg. It is subject to regulation by the Commission de Surveillance du Secteur Financier, which supervises Luxembourg banks. Clearstream's customers are world-wide financial institutions including underwriters, securities brokers and dealers, banks, trust companies and clearing corporations. It is our understanding that Euroclear holds securities for its member organizations and facilitates the clearance and settlement of transactions between its member organizations through simultaneous electronic book-entry delivery against payment. Transactions may be settled in Euroclear in any of over 40 currencies, including United States dollars. Euroclear is operated by Euroclear Bank S.A./N.V., as Euroclear Operator, under a license agreement with Euroclear plc. The Euroclear Operator is regulated, and examined, by the Belgian Banking and Finance Commission and the National Bank of Belgium. All operations are conducted by the Euroclear Operator, and all Euroclear securities clearance accounts and Euroclear cash accounts are accounts with the Euroclear Operator, not Euroclear plc. Euroclear plc establishes policy for the Euroclear system on behalf of the member organizations of Euroclear. Euroclear and Clearstream have established an electronic bridge between their two systems across which their respective participants may settle trades with each other. S-113 Securities clearance accounts and cash accounts with the Euroclear Operator are governed by the Euroclear Terms and Conditions. The Euroclear Terms and Conditions govern transfers of securities and cash within the Euroclear system, withdrawal of securities and cash from the Euroclear system, and receipts of payments with respect to securities in the Euroclear system. All securities in the Euroclear system are held on a fungible basis without attribution of specific securities to specific securities clearance accounts. The Euroclear Operator acts under the Euroclear Terms and Conditions only on behalf of member organizations of Euroclear and has no record of or relationship with persons holding through those member organizations. Transfers between participants in the DTC system will be effected in the ordinary manner in accordance with DTC's rules and will be settled in same-day funds. Transfers between direct account holders at Euroclear and Clearstream, or between persons or entities participating indirectly in Euroclear or Clearstream, will be effected in the ordinary manner in accordance with their respective procedures and in accordance with DTC's rules. Cross-market transfers between direct participants in DTC, on the one hand, and member organizations at Euroclear or Clearstream, on the other, will be effected through DTC in accordance with DTC's rules and the rules of Euroclear or Clearstream, as applicable. These cross-market transactions will require, among other things, delivery of instructions by the applicable member organization to Euroclear or Clearstream, as the case may be, in accordance with the rules and procedures and within deadlines, Brussels time, established in Euroclear or Clearstream, as the case may be. If the transaction complies with all relevant requirements, Euroclear or Clearstream, as the case may be, will then deliver instructions to its depositary to take action to effect final settlement on its behalf. Because of time-zone differences, the securities account of a member organization of Euroclear or Clearstream purchasing an interest in a global certificate from a DTC participant that is not a member organization, will be credited during the securities settlement processing day, which must be a business day for Euroclear or Clearstream, as the case may be, immediately following the DTC settlement date. Transactions in interests in a book-entry certificate settled during any securities settlement processing day will be reported to the relevant member organization of Euroclear or Clearstream on the same day. Cash received in Euroclear or Clearstream as a result of sales of interests in a book-entry certificate by or through a member organization of Euroclear or Clearstream, as the case may be, to a DTC participant that is not a member organization will be received with value on the DTC settlement date, but will not be available in the relevant Euroclear or Clearstream cash account until the business day following settlement in DTC. See Appendix E to this prospectus supplement for additional information regarding clearance and settlement procedures for offered certificates in book-entry form and for information with respect to tax documentation procedures relating to those certificates. The information in this prospectus supplement concerning DTC, Euroclear and Clearstream, and their book-entry systems, has been obtained from sources believed to be reliable, but neither we nor any of the underwriters take any responsibility for the accuracy or completeness of that information. Registration and Transfer. The holder of any physical certificate representing an offered certificate may transfer or exchange the same in whole or part, subject to the minimum authorized denomination, at the corporate trust office of the certificate registrar or at the office of any transfer agent. No fee or service charge will be imposed by the certificate registrar for any such registration of transfer or exchange. The certificate registrar may require payment by each transferor of a sum sufficient to pay any tax, expense or other governmental charge payable in connection with the transfer. MATTERS REGARDING THE CERTIFICATE ADMINISTRATOR, THE TAX ADMINISTRATOR AND THE TRUSTEE The trustee will be entitled to a monthly fee for its services. That fee will accrue with respect to each and every pooled mortgage loan. In each case, that fee will accrue at __% per annum on the Stated Principal Balance of the subject mortgage loan outstanding from time to time and will be calculated based on the same interest accrual basis, which is either an Actual/360 Basis or a 30/360 Basis, as the subject pooled mortgage loan. The certificate administrator will be entitled to a monthly fee for its services. That fee will accrue with respect to each and every pooled mortgage loan. In each case, that fee will accrue at __% per annum on the Stated Principal Balance of the subject mortgage loan outstanding from time to time and will be calculated based on the same interest accrual basis, which is either an Actual/360 Basis or a 30/360 Basis, as the subject pooled mortgage loan. The sum of the rates at which the trustee fee and the certificate administrator fee accrue will be equal to 0.00125% per annum. The trustee fee and certificate administrator fee are payable out of general collections on the mortgage loans and any REO Properties in the trust fund. S-114 The holders of series 2006-PWR12 certificates representing a majority of the total voting rights may remove any of the certificate administrator, the tax administrator or the trustee, upon written notice to each master servicer, each special servicer, us and the trustee. The trust fund will indemnify the certificate administrator, the tax administrator, the trustee and their respective directors, officers, employees, agents and affiliates against any and all losses, liabilities, damages, claims or expenses, including, without limitation, reasonable attorneys' fees, arising with respect to the series 2006-PWR12 pooling and servicing agreement, the mortgage loans or the series 2006-PWR12 certificates, other than those resulting from the breach of their respective representations and warranties or covenants, negligence, fraud, bad faith or willful misconduct of the certificate administrator, the tax administrator or the trustee, as applicable, other than allocable overhead, and other than any cost or expense expressly required to be borne by the certificate administrator, the tax administrator or the trustee, as applicable. None of the certificate administrator, the tax administrator or the trustee shall be personally liable for any action reasonably taken, suffered or omitted by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by the series 2006-PWR12 pooling and servicing agreement. None of the certificate administrator, the tax administrator or the trustee will be required to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties under the series 2006-PWR12 pooling and servicing agreement or in the exercise of any of its rights or powers if, in the opinion of that entity, the repayment of those funds or adequate indemnity against that risk or liability is not reasonably assured to it. Provisions similar to the provisions described under the sections of the accompanying prospectus entitled "Description of the Pooling and Servicing Agreements--Eligibility of the Trustee", " --Duties of the Trustee", "--Regarding the Fees, Indemnities and Powers of the Trustee" and "--Resignation and Removal of the Trustee" will apply to the certificate administrator and the tax administrator. AMENDMENT OF THE SERIES 2006-PWR12 POOLING AND SERVICING AGREEMENT The circumstances under which the series 2006-PWR12 pooling and servicing agreement may be amended are described in the accompanying prospectus under "Description of the Pooling and Servicing Agreements--Amendment". However, notwithstanding that description: o no such amendment may significantly change the activities of the trust without the consent of the holders of series 2006-PWR12 certificates entitled to not less than 51% of the series 2006-PWR12 voting rights, not taking into account certificates held by us, by any mortgage loan seller or by any affiliates or agents of us or any such mortgage loan seller; o no such amendment may adversely affect in any material respect the interests of any Non-Pooled Subordinate Noteholder, without such respective holder's consent; o the absence of an adverse effect in any material respect on the interests of any particular holder of a rated series 2006-PWR12 certificate can also be evidenced by written confirmation from each of the Rating Agencies that the amendment will not result in a qualification, downgrade or withdrawal of the rating(s) assigned to that certificate; o amendments may also be made without certificateholder consent for the purpose of causing continued sale treatment of the transfers of the pooled mortgage loans by the depositor and/or any mortgage loan seller under applicable standards of the Financial Accounting Standards Board (or any successor thereto) as in effect from time to time; o amendments may also be made without certificateholder consent in order to relax or eliminate certificate transfer restrictions and/or requirements imposed by the REMIC provisions; o no such amendment may adversely affect the status of the applicable grantor trust in which the class V or R certificates evidence interests, without the consent of 100% of the holders of that class of certificates; and S-115 o amendments with certificateholder consent require the consent of the holders of series 2006-PWR12 certificates entitled to not less than 51% of all of the series 2006-PWR12 voting rights. TERMINATION OF THE SERIES 2006-PWR12 POOLING AND SERVICING AGREEMENT The obligations created by the series 2006-PWR12 pooling and servicing agreement will terminate following the earlier of-- 1. the final payment or advance on, or other liquidation of, the last pooled mortgage loan or related REO Property remaining in the trust fund, 2. the purchase of all of the pooled mortgage loans and REO Properties remaining in the trust fund or held on behalf of the trust fund by any single certificateholder or group of certificateholders of the series 2006-PWR12 controlling class, PAR as a master servicer, WFB as a master servicer or the general special servicer, in that order of preference, and 3. the exchange by any single holder of all the series 2006-PWR12 certificates for all of the pooled mortgage loans and REO Properties remaining in the trust fund. Written notice of termination of the series 2006-PWR12 pooling and servicing agreement will be given to each series 2006-PWR12 certificateholder. The final distribution to the registered holder of each series 2006-PWR12 certificate will be made only upon surrender and cancellation of that certificate at the office of the certificate administrator or at any other location specified in the notice of termination. The right of the series 2006-PWR12 controlling class certificateholders, each master servicer and the general special servicer to purchase all of the pooled mortgage loans and REO Properties remaining in the trust fund is subject to the conditions (among others) that-- o the total Stated Principal Balance of the mortgage pool is 1% or less of the initial mortgage pool balance, o within 30 days after notice of the election of that person to make the purchase is given, no person with a higher right of priority to make the purchase notifies the other parties to the series 2006-PWR12 pooling and servicing agreement of its election to do so, o if more than one holder or group of holders of the series 2006-PWR12 controlling class desire to make the purchase, preference will be given to the holder or group of holders with the largest percentage interest in the series 2006-PWR12 controlling class, and o if either master servicer desires to make the purchase, the other master servicer will have the option to purchase all of the pooled mortgage loans and related REO Properties remaining in the trust fund for which it is the applicable master servicer. Any purchase by any single holder or group of holders of the series 2006-PWR12 controlling class, a master servicer, the two master servicers together or the general special servicer of all the pooled mortgage loans and REO Properties remaining in the trust fund is required to be made at a price equal to: o the sum of-- 1. the aggregate Purchase Price of all the pooled mortgage loans remaining in the trust fund, other than any mortgage loans as to which the mortgaged properties have become REO Properties, and 2. the appraised value of all REO Properties then included in the trust fund, in each case as determined by an appraiser mutually agreed upon by the applicable master servicer, the general special servicer and the trustee (or, in the case of any REO Property related to any Mortgage Loan Group, the value of the trust fund's interest therein); minus S-116 o solely in the case of a purchase by a master servicer or the general special servicer, the total of all amounts payable or reimbursable to the purchaser under the series 2006-PWR12 pooling and servicing agreement. The purchase will result in early retirement of the then outstanding series 2006-PWR12 certificates. The termination price, exclusive of any portion of the termination price payable or reimbursable to any person other than the series 2006-PWR12 certificateholders, will constitute part of the Available Distribution Amount for the final distribution date. Any person or entity making the purchase will be responsible for reimbursing the parties to the series 2006-PWR12 pooling and servicing agreement for all reasonable out-of-pocket costs and expenses incurred by the parties in connection with the purchase. An exchange by any single holder of all of the series 2006-PWR12 certificates for all of the pooled mortgage loans and REO Properties remaining in the trust fund may be made by giving written notice to each of the parties to the series 2006-PWR12 pooling and servicing agreement no later than 60 days prior to the anticipated date of exchange. If an exchange is to occur as described above, then the holder of the series 2006-PWR12 certificates, no later than the business day immediately preceding the distribution date on which the final payment on the series 2006-PWR12 certificates is to occur, must deposit in the applicable collection accounts amounts that are together equal to all amounts then due and owing to each master servicer, each special servicer, the certificate administrator, the tax administrator, the trustee and their respective agents under the series 2006-PWR12 pooling and servicing agreement. No such exchange may occur until the total principal balance of the class A-1, A-2, A-3, A-AB, A-4, A-1A, A-M, A-J, B, C, D, E, F, G and H certificates is reduced to zero. The 1675 Broadway Non-Pooled Subordinate Noteholder has the option to purchase the related pooled mortgage loan at the related purchase price specified in the related intercreditor agreement for that mortgage loan in connection with any termination of the 2006-PWR12 pooling and servicing agreement. See "Description of the Mortgage Pool -- Certain Characteristics of the Mortgage Pool--Subordinate and/or Other Financing--Split Loan Structures--The 1675 Broadway Loan Group--Cure and Purchase Rights". This purchase option is senior to the other rights to purchase the pooled mortgage loans described above. EVIDENCE AS TO COMPLIANCE Each master servicer, each special servicer, each primary servicer and the certificate administrator is required, under the pooling and servicing agreement (and each Additional Servicer will be required under its subservicing agreement) to deliver annually to the trustee, the certificate administrator and the depositor on or before the date specified in the series 2006-PWR12 pooling and servicing agreement, an officer's certificate stating that (i) a review of that party's servicing activities during the preceding calendar year or portion of that year and of performance under the series 2006-PWR12 pooling and servicing agreement, the applicable primary servicing agreement or the applicable sub-servicing or primary servicing agreement in the case of an Additional Servicer, as applicable, has been made under the officer's supervision, and (ii) to the best of the officer's knowledge, based on the review, such party has fulfilled all its obligations under the pooling and servicing agreement, the applicable primary servicing agreement or the applicable sub-servicing or primary servicing agreement in the case of an Additional Servicer, as applicable, in all material respects throughout the year or portion thereof, or, if there has been a failure to fulfill any such obligation in any material respect, specifying the failure known to the officer and the nature and status of the failure. In general, none of these parties will be responsible for the performance by any other such party of that other party's duties described above. In addition, each master servicer, each special servicer (regardless of whether a special servicer has commenced special servicing of any pooled mortgage loan), each primary servicer, the certificate administrator and the trustee, each at its own expense, are required to furnish (and each of the preceding parties, as applicable, shall (a) use reasonable efforts to cause, each Servicing Function Participant (other than another such party to the pooling and servicing agreement or a primary servicing agreement) with which it has entered into a servicing relationship on or prior to the Issue Date with respect to the pooled mortgage loans and (b) cause, each Servicing Function Participant (other than another such party (other than itself) to the pooling and servicing agreement or a primary servicing agreement) with which it has entered into a servicing relationship after the Issue Date with respect to the pooled mortgage loans, to furnish, each at its own expense), annually, to the trustee, the certificate administrator and the depositor, a report (an "Assessment of Compliance") assessing compliance by that party with the servicing criteria set forth in Item 1122(d) of Regulation AB that contains the following: S-117 o a statement of the party's responsibility for assessing compliance with the servicing criteria set forth in Item 1122 of Regulation AB applicable to it; o a statement that the party used the criteria in Item 1122(d) of Regulation AB to assess compliance with the applicable servicing criteria; o the party's assessment of compliance with the applicable servicing criteria during and as of the end of the prior fiscal year, setting forth any material instance of noncompliance identified by the party, a discussion of each such failure and the nature and status thereof; and o a statement that a registered public accounting firm has issued an attestation report on the party's assessment of compliance with the applicable servicing criteria during and as of the end of the prior fiscal year. Each party that is required to deliver an Assessment of Compliance will also be required to simultaneously deliver a report (an "Attestation Report") of a registered public accounting firm, prepared in accordance with the standards for attestation engagements issued or adopted by the Public Company Accounting Oversight Board, that expresses an opinion, or states that an opinion cannot be expressed (and the reasons for this), concerning the party's assessment of compliance with the applicable servicing criteria set forth in Item 1122(d) of Regulation AB. YIELD AND MATURITY CONSIDERATIONS YIELD CONSIDERATIONS General. The yield on any offered certificate will depend on-- o the price at which that certificate is purchased by an investor, and o the rate, timing and amount of distributions on that certificate. The rate, timing and amount of distributions on any offered certificate will in turn depend on, among other things: o the pass-through rate for that certificate, o the rate and timing of principal payments, including voluntary and involuntary prepayments, repurchases for material document defects or material breaches of representations, exercise of purchase options by holders of subordinate notes or mezzanine loans, and other principal collections on the pooled mortgage loans, and the extent to which those amounts are to be applied in reduction of the principal balance or notional amount, as applicable, of that certificate, o the rate and timing of reimbursements made to the master servicers, the special servicers or the trustee for nonrecoverable advances and/or for advances previously made in respect of a worked-out pooled mortgage loan that are not repaid at the time of the workout, o the rate, timing and severity of Realized Losses and Additional Trust Fund Expenses and the extent to which those losses and expenses are allocable in reduction of the principal balance or notional amount, as applicable, of that certificate or cause shortfalls in interest distributable to that certificate, and o the timing and severity of any Net Aggregate Prepayment Interest Shortfalls and the extent to which those shortfalls result in the reduction of the interest distributions of that certificate. Rate and Timing of Principal Payments. The yield to maturity on the offered certificates purchased at a discount or a premium will be affected by the rate and timing of principal distributions on, or otherwise resulting in a reduction of the total principal balances or notional amounts of, those certificates. In turn, the rate and timing of distributions on, or otherwise S-118 resulting in a reduction of the total principal balances or notional amounts of, those certificates will be directly related to the rate and timing of principal payments on or with respect to the pooled mortgage loans. Finally, the rate and timing of principal payments on or with respect to the pooled mortgage loans will be affected by their amortization schedules, the dates on which balloon payments are due and the rate and timing of principal prepayments and other unscheduled collections on them, including for this purpose, any prepayments occurring by application of earnout reserves or performance holdback amounts (see the "Footnotes to Appendix B and Appendix C" for more detail) if leasing criteria are not satisfied, collections made in connection with liquidations of pooled mortgage loans due to defaults, casualties or condemnations affecting the mortgaged properties, or purchases or other removals of pooled mortgage loans from the trust fund. In some cases, a mortgage loan's amortization schedule will be recast upon the occurrence of certain events, including prepayments in connection with property releases. With respect to any class of certificates with a pass-through rate based upon, equal to or limited by the Weighted Average Pool Pass-Through Rate, the respective pass-through rate (and, accordingly, the yield) on those classes of offered certificates could (or, in the case of a class of certificates with a pass-through rate based upon or equal to the Weighted Average Pool Pass-Through Rate, will) be adversely affected if pooled mortgage loans with relatively high mortgage interest rates experienced a faster rate of principal payments than pooled mortgage loans with relatively low mortgage interest rates. Prepayments and other early liquidations of the pooled mortgage loans will result in distributions on the offered certificates of amounts that would otherwise be paid over the remaining terms of those mortgage loans. This will tend to shorten the weighted average lives of the offered certificates. Defaults on the pooled mortgage loans, particularly at or near their maturity dates, may result in significant delays in distributions of principal on the pooled mortgage loans and, accordingly, on the offered certificates, while work-outs are negotiated or foreclosures are completed. These delays will tend to lengthen the weighted average lives of the offered certificates. See "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement--Modifications, Waivers, Amendments and Consents" in this prospectus supplement. In addition, the ability of a borrower under an ARD Loan to repay that loan on the related anticipated repayment date will generally depend on its ability to either refinance the mortgage loan or sell the corresponding mortgaged property. Also, a borrower may have little incentive to repay its mortgage loan on the related anticipated repayment date if then prevailing interest rates are relatively high. Accordingly, we cannot assure you that any ARD Loan in the trust fund will be paid in full on its anticipated repayment date. The extent to which the yield to maturity on any offered certificate may vary from the anticipated yield will depend upon the degree to which the certificate is purchased at a discount or premium and when, and to what degree, payments of principal on the pooled mortgage loans are in turn paid in a reduction of the principal balance of the certificate. If you purchase your offered certificates at a discount, you should consider the risk that a slower than anticipated rate of principal payments on the pooled mortgage loans could result in an actual yield to you that is lower than your anticipated yield. If you purchase your offered certificates at a premium, you should consider the risk that a faster than anticipated rate of principal payments on the pooled mortgage loans could result in an actual yield to you that is lower than your anticipated yield. Because the rate of principal payments on or with respect to the pooled mortgage loans will depend on future events and a variety of factors, no assurance can be given as to that rate or the rate of principal prepayments in particular. Delinquencies and Defaults on the Mortgage Loans. The rate and timing of delinquencies and defaults on the pooled mortgage loans will affect-- o the amount of distributions on your offered certificates, o the yield to maturity of your offered certificates, o the rate of principal distributions on your offered certificates, and o the weighted average life of your offered certificates. Delinquencies on the pooled mortgage loans, unless covered by advances, may result in shortfalls in distributions of interest and/or principal on your offered certificates for the current month. Although any shortfalls in distributions of interest S-119 may be made up on future distribution dates, no interest would accrue on those shortfalls. Thus, any shortfalls in distributions of interest would adversely affect the yield to maturity of your offered certificates. If-- o you calculate the anticipated yield to maturity for your offered certificates based on an assumed rate of default on the mortgage loans and amount of losses on the pooled mortgage loans that is lower than the default rate and amount of losses actually experienced, and o the additional losses result in a reduction of the total distributions on, or the total principal balance or notional amount, as applicable, of your offered certificates, then your actual yield to maturity will be lower than you calculated and could, under some scenarios, be negative. The timing of any loss on a liquidated mortgage loan that results in a reduction of the total distributions on or the total principal balance or notional amount of your offered certificates will also affect your actual yield to maturity, even if the rate of defaults and severity of losses are consistent with your expectations. In general, the earlier your loss occurs, the greater the effect on your yield to maturity. Even if losses on the pooled mortgage loans do not result in a reduction of the total distributions on, or the total principal balance or notional amount, as applicable, of your offered certificates, the losses may still affect the timing of distributions on, and the weighted average life and yield to maturity of your offered certificates. In addition, if the applicable master servicer, the applicable special servicer or the trustee reimburses itself for any advance made by it that it has determined is not recoverable out of collections on the related pooled mortgage loan, then that advance (together with accrued interest thereon) will, to the fullest extent permitted, be reimbursed first out of the principal portion of current debt service advances and payments and other collections of principal otherwise distributable on the series 2006-PWR12 certificates, prior to being deemed reimbursed out of payments and other collections of interest on the mortgage pool otherwise distributable on the series 2006-PWR12 certificates. Any such reimbursement from advances and collections of principal will reduce the amount of principal otherwise distributable on the series 2006-PWR12 certificates on the related distribution date. In the event that any advance (including any interest accrued thereon) with respect to a defaulted pooled mortgage loan remains unreimbursed following the time that such pooled mortgage loan is modified and returned to performing status, the relevant master servicer or the trustee, as applicable, will be entitled to reimbursement for that advance (even though that advance has not been determined to be nonrecoverable from collections on the related pooled mortgage loan), out of amounts in the collection accounts representing the principal portion of current debt service advances and payments and other collections of principal after the application of those advances and collections of principal to reimburse any party for nonrecoverable debt service and servicing advances as contemplated by the prior paragraph. Any such reimbursement payments will reduce the amount of principal otherwise distributable on the series 2006-PWR12 certificates on the related distribution date. The Effect of Loan Groups. The mortgage pool has been divided into two loan groups for purposes of calculating distributions on the certificates. As a result, the principal balance of the class A-1, A-2, A-3, A-AB and A-4 certificates will be particularly affected by the rate and timing of payments and other collections of principal on the pooled mortgage loans in loan group 1 and, except following the retirement of the class A-1A certificates or in connection with significant losses on the mortgage pool, should be largely unaffected by the rate and timing of payments and other collections of principal on the pooled mortgage loans in loan group 2. The principal balance of the class A-1A certificates will be particularly affected by the rate and timing of payments and other collections of principal on the pooled mortgage loans in loan group 2 and, except following retirement of the class A-1, A-2, A-3, A-AB and A-4 certificates or in connection with significant losses on the mortgage pool, should be largely unaffected by the rate and timing of payments and other collections of principal on the pooled mortgage loans in loan group 1. Investors should take this into account when reviewing this "Yield and Maturity Considerations" section. S-120 Relevant Factors. The following factors, among others, will affect the rate and timing of principal payments and defaults and the severity of losses on or with respect to the pooled mortgage loans: o prevailing interest rates; o the terms of the mortgage loans, including-- 1. provisions that impose prepayment Lock-out Periods or require Yield Maintenance Charges or Prepayment Premiums, and 2. amortization terms that require balloon payments; o the demographics and relative economic vitality of the areas in which the mortgaged properties are located; o the general supply and demand for commercial and multifamily rental space of the type available at the mortgaged properties in the areas in which those properties are located; o the quality of management of the mortgaged properties; o the servicing of the mortgage loans; o possible changes in tax laws; and o other opportunities for investment. See "Risk Factors", "Description of the Mortgage Pool" and "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement" in this prospectus supplement and "Risk Factors" and "Servicing of the Mortgage Loans" in the accompanying prospectus. The rate of prepayment on the pooled mortgage loans is likely to be affected by prevailing market interest rates for mortgage loans of a comparable type, term and risk level. When the prevailing market interest rate is below the annual rate at which a mortgage loan accrues interest, the related borrower may have an increased incentive to refinance the mortgage loan. Conversely, to the extent prevailing market interest rates exceed the annual rate at which a mortgage loan accrues interest, the related borrower may be less likely to voluntarily prepay the mortgage loan. Assuming prevailing market interest rates exceed the revised mortgage interest rate at which an ARD Loan accrues interest following its anticipated repayment date, the primary incentive for the related borrower to prepay the mortgage loan on or before its anticipated repayment date is to give the borrower access to excess cash flow, most or all of which, in any case net of the minimum required debt service, approved property expenses and any required reserves, must be applied to pay down principal of the mortgage loan. Accordingly, we cannot assure you that any ARD Loan in the trust fund will be prepaid on or before its anticipated repayment date or on any other date prior to maturity. Depending on prevailing market interest rates, the outlook for market interest rates and economic conditions generally, some underlying borrowers may sell their mortgaged properties in order to realize their equity in those properties, to meet cash flow needs or to make other investments. In addition, some underlying borrowers may be motivated by federal and state tax laws, which are subject to change, to sell their mortgaged properties. A number of the underlying borrowers are partnerships. The bankruptcy of the general partner in a partnership may result in the dissolution of the partnership. The dissolution of a borrower partnership, the winding-up of its affairs and the distribution of its assets could result in an acceleration of its payment obligations under the related pooled mortgage loan. S-121 Neither we nor any of the underwriters makes any representation regarding: o the particular factors that will affect the rate and timing of prepayments and defaults on the pooled mortgage loans; o the relative importance of those factors; o the percentage of the total principal balance of the pooled mortgage loans that will be prepaid or as to which a default will have occurred as of any particular date; or o the overall rate of prepayment or default on the pooled mortgage loans. Delay in Payment of Distributions. Because monthly distributions will not be made to certificateholders until, at the earliest, the 11th day of the month following the month in which interest accrued on the offered certificates, the effective yield to the holders of the offered certificates will be lower than the yield that would otherwise be produced by the applicable pass-through rate and purchase prices, assuming the prices did not account for the delay. WEIGHTED AVERAGE LIFE For purposes of this prospectus supplement, the weighted average life of any offered certificate refers to the average amount of time that will elapse from the assumed settlement date of June 21, 2006 until each dollar to be applied in reduction of the total principal balance of those certificates is paid to the investor. For purposes of this "Yield and Maturity Considerations" section, the weighted average life of any offered certificate is determined by: o multiplying the amount of each principal distribution on the offered certificate by the number of years from the assumed settlement date to the related distribution date; o summing the results; and o dividing the sum by the total amount of the reductions in the principal balance of the offered certificate. Accordingly, the weighted average life of any offered certificate will be influenced by, among other things, the rate at which principal of the pooled mortgage loans is paid or otherwise collected or advanced and the extent to which those payments, collections and/or advances of principal are in turn applied in reduction of the principal balance that certificate. As described in this prospectus supplement, the Principal Distribution Amount for each distribution date will be payable first with respect to the class A-1, A-2, A-3, A-AB, A-4 and A-1A certificates (allocated among those classes as described under "Description of the Offered Certificates--Distributions--Principal Distributions" and '"--Distributions--Priority of Distributions" in this prospectus supplement) until the total principal balances of those classes are reduced to zero, and will thereafter be distributable entirely with respect to the other classes of series 2006-PWR12 principal balance certificates sequentially based upon their relative seniority, in each case until the related total principal balance is reduced to zero. As a consequence of the foregoing, the weighted average lives of the class A-1, A-2, A-3, A-AB, A-4 and A-1A certificates as a group may be shorter, and the weighted average lives of the other respective classes of offered certificates may be shorter or longer, than would otherwise be the case if the principal distribution amount for each distribution date were to be allocated and paid on a pro rata basis among those classes of series 2006-PWR12 certificates according to their principal balances. The tables set forth below show, with respect to each class of offered certificates with principal balances, o the weighted average life of that class, and o the percentage of the initial total principal balance of that class that would be outstanding after each of the specified dates, S-122 based upon each of the indicated levels of CPR and the Structuring Assumptions. The actual characteristics and performance of the pooled mortgage loans will differ from the assumptions used in calculating the tables below. Neither we nor any of the underwriters makes any representation that the pooled mortgage loans will behave in accordance with the Structuring Assumptions set forth in this prospectus supplement. The tables below are hypothetical in nature and are provided only to give a general sense of how the principal cash flows might behave under the assumed prepayment scenarios. Any difference between the assumptions used in calculating the tables below and the actual characteristics and performance of the pooled mortgage loans, or actual prepayment experience, will affect the percentages of initial total principal balances outstanding over time and the weighted average lives of the respective classes of the offered certificates. You must make your own decisions as to the appropriate prepayment, liquidation and loss assumptions to be used in deciding whether to purchase any offered certificate. PERCENT OF INITIAL CERTIFICATE BALANCE OUTSTANDING FOR THE CLASS A-1 CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF CPR DISTRIBUTION DATE IN 0% 25% 50% 75% 100% ----------------------------- ---- ---- ---- ---- ---- Issue Date 100% 100% 100% 100% 100% June 2007 89% 89% 89% 89% 89% June 2008 75% 75% 75% 75% 75% June 2009 55% 54% 53% 51% 50% June 2010 29% 27% 25% 24% 24% June 2011 and thereafter 0% 0% 0% 0% 0% Weighted average life (years) 2.99 2.95 2.91 2.89 2.84 PERCENT OF INITIAL CERTIFICATE BALANCE OUTSTANDING FOR THE CLASS A-2 CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF CPR DISTRIBUTION DATE IN 0% 25% 50% 75% 100% ----------------------------- ---- ---- ---- ---- ---- Issue Date 100% 100% 100% 100% 100% June 2007 100% 100% 100% 100% 100% June 2008 100% 100% 100% 100% 100% June 2009 100% 100% 100% 100% 100% June 2010 100% 100% 100% 100% 100% June 2011 and thereafter 0% 0% 0% 0% 0% Weighted average life (years) 4.83 4.81 4.79 4.76 4.55 PERCENT OF INITIAL CERTIFICATE BALANCE OUTSTANDING FOR THE CLASS A-3 CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF CPR DISTRIBUTION DATE IN 0% 25% 50% 75% 100% ----------------------------- ---- ---- ---- ---- ---- Issue Date 100% 100% 100% 100% 100% June 2007 100% 100% 100% 100% 100% June 2008 100% 100% 100% 100% 100% June 2009 100% 100% 100% 100% 100% June 2010 100% 100% 100% 100% 100% June 2011 100% 99% 98% 98% 98% June 2012 80% 79% 78% 78% 78% June 2013 and thereafter 0% 0% 0% 0% 0% Weighted average life (years) 6.60 6.57 6.56 6.55 6.50 S-123 PERCENT OF INITIAL CERTIFICATE BALANCE OUTSTANDING FOR THE CLASS A-AB CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF CPR DISTRIBUTION DATE IN 0% 25% 50% 75% 100% ----------------------------- ---- ---- ---- ---- ---- Issue Date 100% 100% 100% 100% 100% June 2007 100% 100% 100% 100% 100% June 2008 100% 100% 100% 100% 100% June 2009 100% 100% 100% 100% 100% June 2010 100% 100% 100% 100% 100% June 2011 100% 100% 100% 100% 100% June 2012 79% 79% 79% 79% 79% June 2013 58% 56% 56% 55% 55% June 2014 36% 34% 34% 33% 33% June 2015 10% 8% 8% 8% 8% June 2016 and thereafter 0% 0% 0% 0% 0% Weighted average life (years) 7.32 7.27 7.26 7.26 7.25 PERCENT OF INITIAL CERTIFICATE BALANCE OUTSTANDING FOR THE CLASS A-4 CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF CPR DISTRIBUTION DATE IN 0% 25% 50% 75% 100% ----------------------------- ---- ---- ---- ---- ---- Issue Date 100% 100% 100% 100% 100% June 2007 100% 100% 100% 100% 100% June 2008 100% 100% 100% 100% 100% June 2009 100% 100% 100% 100% 100% June 2010 100% 100% 100% 100% 100% June 2011 100% 100% 100% 100% 100% June 2012 100% 100% 100% 100% 100% June 2013 100% 100% 100% 100% 100% June 2014 100% 100% 100% 100% 100% June 2015 100% 100% 100% 100% 100% June 2016 and thereafter 0% 0% 0% 0% 0% Weighted average life (years) 9.75 9.74 9.73 9.72 9.58 PERCENT OF INITIAL CERTIFICATE BALANCE OUTSTANDING FOR THE CLASS A-1A CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF CPR DISTRIBUTION DATE IN 0% 25% 50% 75% 100% ----------------------------- ---- ---- ---- ---- ---- Issue Date 100% 100% 100% 100% 100% June 2007 99% 99% 99% 99% 99% June 2008 98% 98% 98% 98% 98% June 2009 97% 97% 97% 97% 97% June 2010 96% 96% 96% 96% 96% June 2011 86% 86% 86% 86% 86% June 2012 85% 85% 85% 85% 85% June 2013 83% 83% 83% 83% 83% June 2014 82% 82% 82% 82% 82% June 2015 80% 80% 80% 80% 80% June 2016 and thereafter 0% 0% 0% 0% 0% Weighted average life (years) 8.84 8.82 8.81 8.79 8.66 S-124 PERCENT OF INITIAL CERTIFICATE BALANCE OUTSTANDING FOR THE CLASS A-M CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF CPR DISTRIBUTION DATE IN 0% 25% 50% 75% 100% ----------------------------- ---- ---- ---- ---- ---- Issue Date 100% 100% 100% 100% 100% June 2007 100% 100% 100% 100% 100% June 2008 100% 100% 100% 100% 100% June 2009 100% 100% 100% 100% 100% June 2010 100% 100% 100% 100% 100% June 2011 100% 100% 100% 100% 100% June 2012 100% 100% 100% 100% 100% June 2013 100% 100% 100% 100% 100% June 2014 100% 100% 100% 100% 100% June 2015 100% 100% 100% 100% 100% June 2016 and thereafter 0% 0% 0% 0% 0% Weighted average life (years) 9.89 9.89 9.88 9.86 9.78 PERCENT OF INITIAL CERTIFICATE BALANCE OUTSTANDING FOR THE CLASS A-J CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF CPR DISTRIBUTION DATE IN 0% 25% 50% 75% 100% ----------------------------- ---- ---- ---- ---- ---- Issue Date 100% 100% 100% 100% 100% June 2007 100% 100% 100% 100% 100% June 2008 100% 100% 100% 100% 100% June 2009 100% 100% 100% 100% 100% June 2010 100% 100% 100% 100% 100% June 2011 100% 100% 100% 100% 100% June 2012 100% 100% 100% 100% 100% June 2013 100% 100% 100% 100% 100% June 2014 100% 100% 100% 100% 100% June 2015 100% 100% 100% 100% 100% June 2016 and thereafter 0% 0% 0% 0% 0% Weighted average life (years) 9.94 9.93 9.91 9.89 9.81 S-125 DESCRIPTION OF THE MORTGAGE POOL GENERAL We intend to include the 213 mortgage loans identified on Appendix B to this prospectus supplement in the trust fund. The mortgage pool consisting of those mortgage loans will have an initial mortgage pool balance of $2,079,030,155. The mortgage pool will consist of two loan groups. Loan group 1 will consist of 185 mortgage loans and have an initial mortgage pool balance of $1,884,359,127. Loan group 2 will consist of 28 mortgage loans and have an initial mortgage pool balance of $194,671,028. However, the actual initial mortgage pool balance may be as much as 5% smaller or larger than that amount if any of those mortgage loans are removed from the mortgage pool or any other mortgage loans are added to the mortgage pool. See "--Changes in Mortgage Pool Characteristics" below. The initial mortgage pool balance will equal the total cut-off date principal balance of all the pooled mortgage loans. The cut-off date principal balance of any mortgage loan included in the trust fund is equal to its unpaid principal balance as of the cut-off date, after application of all monthly debt service payments due with respect to the mortgage loan on or before that date, whether or not those payments were received. The cut-off date principal balance of each mortgage loan that we intend to include in the trust fund is shown on Appendix B to this prospectus supplement. Those cut-off date principal balances range from $800,000 to $156,500,000 and the average of those cut-off date principal balances is $9,760,705. A description of the underwriting standards for each of Prudential Mortgage Capital Funding, LLC (and Prudential Mortgage Capital Company, LLC), Bear Stearns Commercial Mortgage, Inc., Wells Fargo Bank, National Association, Principal Commercial Funding II, LLC, Principal Commercial Funding, LLC and Nationwide Life Insurance Company are set forth in this prospectus supplement under "The Sponsors, Mortgage Loan Sellers and Originators--Prudential Mortgage Capital Funding, LLC--PMCC's Underwriting Standards," "--Bear Stearns Commercial Mortgage, Inc.--BSCMI's Underwriting Standards," "--Wells Fargo Bank, National Association--Underwriting Standards, "--Principal Commercial Funding II, LLC--Underwriting Standards," "--Principal Commercial Funding, LLC--Underwriting Standards" and "--Nationwide Life Insurance Company--Underwriting Standards," respectively. The pooled mortgage loans included in this transaction were selected for this transaction from mortgage loans specifically originated for securitizations of this type by or on behalf of each mortgage loan seller taking into account, among other factors, rating agency criteria and anticipated feedback, anticipated subordinate investor feedback, property type and geographic location. Each of the mortgage loans that we intend to include in the trust fund is an obligation of the related borrower to repay a specified sum with interest. Each of those mortgage loans is evidenced by one or more promissory notes and secured by, among other things, a mortgage, deed of trust or other similar security instrument that creates a mortgage lien on the fee ownership and/or leasehold interest of the related borrower or another party in one or more commercial or multifamily real properties. That mortgage lien is, in all cases, a first priority lien, subject only to Permitted Encumbrances. CERTAIN CHARACTERISTICS OF THE MORTGAGE POOL Concentration of Mortgage Loans and Borrowers. Several of the pooled mortgage loans or groups of cross-collateralized and cross-defaulted pooled mortgage loans have cut-off date principal balances that are substantially higher than the average cut-off date principal balance. The largest of the pooled mortgage loans or group of cross-collateralized and cross-defaulted pooled mortgage loans is the Woodland Mall, which has a cut-off date principal balance of $156,500,000 and represents 7.5% of the initial mortgage pool balance. The ten largest pooled mortgage loans or group of cross-collateralized and cross-defaulted pooled mortgage loans have cut-off date principal balances that collectively represent 32.1% of the initial mortgage pool balance. Each of these loans is described on Appendix D to this prospectus supplement. S-126 Cross-Collateralized Mortgage Loans and Multi-Property Mortgage Loans; Mortgage Loans with Affiliated Borrowers The mortgage pool will include nine (9) mortgage loans, representing 9.2% of the initial mortgage pool balance (representing 10.1% of the initial loan group 1 balance), that are, in each such case, secured by two or more properties, and two (2) groups totaling four (4) cross-collateralized pooled mortgage loans, which groups represent 1.1% of the initial mortgage pool balance (and 1.2% of the initial loan group 1 balance), that in the aggregate are secured by 36 properties. However, the amount of the mortgage lien encumbering a particular property or group of those properties may be less than the full amount of the related mortgage loan or group of cross-collateralized mortgage loans, generally to minimize recording tax. In such instances, the mortgage amount is generally set at an amount equal to a specified percentage (generally ranging from 100% to 150%, inclusive) of the appraised value or allocated loan amount for the particular property or group of properties. This would limit the extent to which proceeds from that property or group of properties would be available to offset declines in value of the other mortgaged properties securing the same mortgage loan in the trust fund. In addition, the mortgage pool includes some groups of mortgage loans where the mortgage loans in the particular group are not cross-collateralized or cross-defaulted but the loans were made to borrowers related through common ownership of partnership or other equity interests and where, in general, the related mortgaged properties are commonly managed. The table below shows each group of two or more pooled mortgage loans that-- o are not cross-collateralized or cross-defaulted, but o have the same or affiliated borrowers/owners, and o have a total cut-off date principal balance (considering all loans in the group) that is equal to at least 1.0% of the initial mortgage pool balance. % OF INITIAL MORTGAGE MORTGAGE LOAN/PROPERTY PORTFOLIO NAMES POOL BALANCE --------------------------------------- ------------ Group 1: Embassy Office Park - Pool A 1.7% Embassy Office Park - Pool B 1.4% --- TOTAL FOR GROUP: 3.1% Group 2: Marriott Courtyard Solana Beach 0.7% Best Western Miramar 0.4% Best Western Porterville 0.3% Howard Johnson San Diego 0.3% Days Inn Mission Bay 0.3% Days Inn Encinitas 0.3% --- TOTAL FOR GROUP: 2.4% Group 3: Brown Deer Business Park 1.2% 940 N Central 0.5% --- TOTAL FOR GROUP: 1.6% Group 4: 5150 Center Street 0.5% 3870 Highway D 0.4% 201 West 10th Avenue 0.4% 2181 Logan Avenue 0.3% --- TOTAL FOR GROUP: 1.5% S-127 % OF INITIAL MORTGAGE MORTGAGE LOAN/PROPERTY PORTFOLIO NAMES POOL BALANCE --------------------------------------- ------------ Group 5: Hilton Garden Inn Glastonbury 0.6% Hawthorn Suites Franklin 0.4% Fairfield Inn & Suites, (Bethlehem, PA) 0.3% Comfort Inn North Dartmouth 0.2% --- TOTAL FOR GROUP: 1.5% Group 6: The Coliseum Center 0.7% Bellflower Shopping Center 0.4% La Tijera Shopping Center 0.3% --- TOTAL FOR GROUP: 1.4% Due Dates. Subject, in some cases, to a next business day convention, all of the pooled mortgage loans provide for scheduled payments of principal and/or interest to be due on the first day of each month, except for forty two (42) mortgage loans, representing 39.9% of the initial mortgage pool balance, which provide for scheduled payments of principal and interest to be due on the third or fifth day of each month. The mortgage loans have various grace periods. In no case does the due date for a balloon payment or the expiration of the grace period for that payment occur later than the eighth day of the month. The due date or the expiration of the grace period for monthly debt service payments (other than balloon payments) may occur after the end of the collection period, but in this event the applicable master servicer will be required to advance the payment without advance interest accruing until the grace period expires. For purposes of the foregoing discussion, a grace period is the number of days before a late payment charge is due on the mortgage loan, which may be different from the date an event of default would occur under the mortgage loan. Mortgage Rates; Calculations of Interest. Each of the pooled mortgage loans currently accrues interest at the annual rate specified with respect to that mortgage loan on Appendix B to this prospectus supplement. The mortgage interest rate for each pooled mortgage loan is fixed for the remaining term of the loan, except for (i) increases resulting from the application of default interest rate following a default, (ii) in the case of a loan with an anticipated repayment date, any increase described below that may occur if the loan is not repaid by the anticipated repayment date and (iii) changes that result from any other loan-specific provisions (if any) that are described on the "Footnotes to Appendix B and C". Except for ARD Loans that remain outstanding past their respective anticipated repayment dates, none of the mortgage loans that we intend to include in the trust fund provides for negative amortization or for the deferral of interest. Each of the mortgage loans that we intend to include in the trust fund accrues interest on either an Actual/360 Basis or a 30/360 Basis. Amortization Characteristics. All of the mortgage loans are balloon loans that, in each case, provide for: o an amortization schedule that is significantly longer than its remaining term to stated maturity (or anticipated repayment date) or, alternatively, for no amortization prior to maturity (or the anticipated repayment date); and o a substantial payment of principal on its maturity date (unless the mortgage loan has an anticipated repayment date) generally equal to 5% or more of the original mortgage loan amount. See Schedule I to this prospectus supplement for the amortization schedule for the pooled mortgage loans secured by the mortgaged property identified on Appendix B to this prospectus supplement as American Business Center, which is a balloon loan with a nonstandard amortization schedule. Twenty nine (29) pooled mortgage loans, representing 13.6% of the initial mortgage pool balance (which are included in loan group 1, representing 15.0% of the initial loan group 1 balance), are "ARD" or "hyperamortizing" loans that provide material incentives (as described below) to, but do not require, the related borrower to pay the mortgage loan in full S-128 by a specified date prior to the stated maturity date. We consider that specified date to be the anticipated repayment date for the mortgage loan. Because of these incentives, we consider the ARD loans also to be balloon loans. We cannot assure you, however, that these incentives will result in any of these pooled mortgage loans being paid in full on or before its anticipated repayment date. Seventy five (75) of the balloon mortgage loans (including hyperamortizing loans), representing 59.8% of the initial mortgage pool balance (which pooled mortgage loans consist of sixty seven (67) pooled mortgage loans in loan group 1, representing 62.2% of the initial loan group 1 balance, and eight (8) pooled mortgage loans in loan group 2, representing 36.4% of the initial loan group 2 balance), provide for initial interest-only periods that expire 4 to 60 months following their respective origination dates; and fifteen (15) of the pooled mortgage loans (including hyperamortizing loans), representing 8.4% of the initial mortgage pool balance (which pooled mortgage loans consist of 12 pooled mortgage loans in loan group 1, representing 8.8% of the initial loan group 1 balance and 3 pooled mortgage loans in loan group 2, representing 4.7% of the initial loan group 2 balance), provide for no amortization and for interest-only payments for their entire term to maturity or anticipated repayment date. In the case of each loan with an anticipated repayment date, the incentive provisions, which in each case will become effective as of that anticipated repayment date, include: o The accrual of interest in excess of the initial mortgage interest rate. The mortgage interest rate will generally increase by the excess of a specified yield on United States Treasury securities over the initial mortgage interest rate, a fixed number of percentage points or a sum of such excess and a fixed number of percentage points. The additional interest will generally be deferred and become payable (in some cases, with compound interest) only after the outstanding principal balance of the pooled mortgage loan is paid in full. Collections of this additional interest will be payable to the holders of the Class V certificates and will not be part of the Available Distribution Amount at any time. o The application of excess cash flow from the mortgaged property to pay the principal amount of the pooled mortgage loan. The payment of principal will be in addition to the principal portion of the normal monthly debt service payment. Some of the pooled mortgage loans may, in each case, provide for a recast of the amortization schedule and an adjustment of the monthly debt service payments on the mortgage loan upon application of specified amounts of condemnation proceeds or insurance proceeds to pay the related unpaid principal balance or upon application of specified earnout escrow or holdback amounts if certain property performance criteria are not satisfied. Some of the individual pooled mortgage loans that are secured by multiple mortgaged properties and that permit partial prepayments of the individual or aggregate indebtedness in connection with releases of individual properties also provide for a recast of the amortization and an adjustment of the monthly debt service payments on the mortgage loan(s) upon any such prepayment and release. On some of the pooled mortgage loans that provide for the accrual of interest on an Actual/360 Basis, the amount of the fixed periodic payments were determined as if interest were to be calculated on a 30/360 Basis, which will result in a higher payment due at maturity than would otherwise have been the case. Voluntary Prepayment and Defeasance Provisions. As of the cut-off date, the following prepayment restrictions and defeasance provisions applied to the pooled mortgage loans: o One hundred thirty eight (138) pooled mortgage loans, representing 63.1% of the initial mortgage pool balance (which pooled mortgage loans consist of 119 pooled mortgage loans in loan group 1, representing 61.3% of the initial loan group 1 balance, and 19 pooled mortgage loans in loan group 2, representing 80.2% of the initial loan group 2 balance), prohibit voluntary principal prepayments for a period ending on a date determined by the related mortgage loan documents (which may be the maturity date), which period is referred to in this prospectus supplement as a lock-out period, but permit the related borrower, after an initial period of at least two years following the date of issuance of the series 2006-PWR12 certificates, to defease the pooled mortgage loan by pledging certain government securities and obtaining the release of all or a portion of the mortgaged property from the lien of the mortgage. S-129 o Forty three (43) pooled mortgage loans, representing 27.4% of the initial mortgage pool balance (which pooled mortgage loans consist of 36 pooled mortgage loans in loan group 1, representing 28.7% of the initial loan group 1 balance, and 7 pooled mortgage loans in loan group 2, representing 15.4% of the initial loan group 2 balance), prohibit voluntary principal prepayments during a lock-out period, and following the lock-out period provide for prepayment premiums or yield maintenance charges calculated on the basis of the greater of a yield maintenance formula and 1% of the amount prepaid. o Twenty five (25) pooled mortgage loans, representing 5.5% of the initial mortgage pool balance (which pooled mortgage loans consist of 23 pooled mortgage loans in loan group 1, representing 5.6% of the initial loan group 1 balance, and 2 pooled mortgage loans in loan group 2, representing 4.4% of the initial loan group 2 balance), prohibit voluntary principal prepayments during a lock-out period, and following the lock-out period provide for a prepayment premium or yield maintenance charge calculated on the basis of the greater of a yield maintenance formula and 1% of the amount prepaid, and also permit the related borrower, after an initial period of at least two years following the date of the issuance of the series 2006-PWR12 certificates, to defease the pooled mortgage loan by pledging certain government securities and obtaining the release of the mortgaged property from the lien of the mortgage. o Two (2) pooled mortgage loans, representing 1.9% of the initial mortgage pool balance (which pooled mortgage loans represent 2.1% of the initial loan group 1 balance), permit prepayment at any time with the payment of a prepayment premium or yield maintenance charge calculated on the basis of the greater of a yield maintenance formula and 1% of the amount prepaid. o One (1) pooled mortgage loan, representing 1.0% of the initial mortgage pool balance (which pooled mortgage loan represents 1.1% of the initial loan group 1 balance), permits prepayment in whole or in part at any time during the first two years following the date of issuance of the series 2006-PWR12 certificates with the payment of a prepayment premium or yield maintenance charge calculated on the basis of the greater of a yield maintenance formula and 1% of the amount prepaid, and thereafter, only permits the related borrower to defease the pooled mortgage loan by pledging certain government securities and obtaining the release of the mortgaged property from the lien of the mortgage. o Two (2) pooled mortgage loans, representing 0.8% of the initial mortgage pool balance (which pooled mortgage loans represent 0.9% of the initial loan group 1 balance) are cross-collateralized with each other but have different restrictions on prepayment, and one of those pooled mortgage loans, representing 0.5% of the initial mortgage pool balance (and 0.6% of the initial loan group 1 balance) prohibits voluntary principal prepayments during a lock-out period but permits the related borrower, after an initial period of at least two years following the date of issuance of the series 2006-PWR12 certificates, to defease that pooled mortgage loan by pledging certain government securities and obtaining the release of the mortgaged property from the lien of the mortgage, and the other pooled mortgage loan, representing 0.3% of the initial mortgage pool balance (and 0.3% of the initial loan group 1 balance), permits prepayment at any time with the payment of a prepayment premium or yield maintenance charge calculated on the basis of the greater of a yield maintenance formula and 1% of the amount prepaid. o Two (2) pooled mortgage loans, representing 0.3% of the initial mortgage pool balance (which pooled mortgage loans represent 0.3% of the initial loan group 1 balance), which are cross-collateralized, prohibit voluntary principal prepayments during a lock-out period, and following the lock-out period, the borrower may prepay one of these loans (but not the other) in full -- without the payment of a prepayment premium or yield maintenance charge, provided that certain debt service coverage ratio and loan-to-value ratio tests are satisfied -- and may prepay the other of these loans in full with the payment of a prepayment premium or yield maintenance charge calculated on the basis of the greater of a yield maintenance formula and 1% of the amount prepaid. Notwithstanding the foregoing, the mortgage loans generally provide for an open period of one (1) to seven (7) months prior to and including the maturity date or anticipated repayment date in which the related borrower may prepay the mortgage loan without premium or defeasance requirements. S-130 In addition, some loans permit partial prepayments despite Lock-out Periods and Yield Maintenance Charges that may otherwise apply. See "--Cross-Collateralized Mortgage Loans and Multi-Property Mortgage Loans; Mortgage Loans with Affiliated Borrowers" above and Appendix D. In general, if defeasance is permitted under a pooled mortgage loan, the defeasance collateral must consist of Government Securities. Under each pooled mortgage loan that provides for the payment of a Yield Maintenance Charge in connection with a principal prepayment, the amount of the charge is generally calculated so as to result in a payment to the lender that is equal to the difference between (a) the present value of the remaining scheduled principal and interest payments that would have become due with respect to the prepaid portion of the pooled mortgage loan had the prepayment not occurred discounted at a rate generally equal to the yield to maturity on specified United States Treasury securities with a maturity generally corresponding to the maturity date or anticipated repayment date of the pooled mortgage loan, determined on a date close to the date of the prepayment, minus (b) the amount of the prepayment. In certain cases, the amount of the Yield Maintenance Charge is subject to a minimum amount that is equal to a fixed percentage of the amount of the principal prepayment. The discount rate to be used in the calculation of a Yield Maintenance Charge is generally equal to the rate which, when compounded monthly, is equal to the semi-annual yield (plus applicable spread, if any) of the corresponding United States Treasury securities described above. Partial Release; Substitutions. Some of the pooled mortgage loans or groups of cross-collateralized pooled mortgage loans that are secured by two or more mortgaged properties, and some of the pooled mortgage loans that are secured by a mortgaged property that consists of multiple parcels, permit the borrower to obtain the release of the mortgage on one or more of the properties or parcels upon a partial prepayment or partial defeasance of the loan or group or a substitution of all or some of the mortgaged properties or parcels (in each case, subject to the satisfaction of various conditions). The following table summarizes the related provisions for releases in connection with partial prepayment, partial defeasance and substitution. S-131 RELEASE CONDITIONS ----------------------------------------------------------------- RELEASE TYPES DSCR AND LTV CONDITIONS: ---------------------------- ----------------------------------------------- FOR LOANS WITH MORE THAN TWO PROPERTIES, WHETHER DSCR/LTV CONDITION IS % OF MEASURED INDIVIDUALLY FOR ALLOCATED EACH POST-RELEASE PROPERTY LOAN (OR, IN THE CASE OF AMOUNT THAT SUBSTITUTION, FOR THE PARTIAL PARTIAL PROPERTY MUST BE SUBSTITUTE PROPERTY) OR IN MORTGAGE LOAN/PROPERTY PREPAY- DEFEAS- SUBSTI- DEFEASED OR MIN. MAX. AGGREGATE FOR ALL POST- NAME(S) MENT ANCE TUTION PREPAID DSCR (1) LTV (1) RELEASE PROPERTIES --------------------------- ------- ------- -------- ----------- -------- ------- -------------------------- Broken Sound Portfolio (2) No Yes No 110% 1.15x 75.0% Aggregate Embassy Office Park- Pool A (3) No Yes No 100%(4) 1.25x 80.0% Aggregate Titan Portfolio Yes No No 115% 1.25x 80.0% Aggregate Embassy Office Park - Pool B (3) No Yes No 100%(4) 1.25x 80.0% Aggregate InTown Suites Portfolio Yes Yes No 110% (5) N/A Aggregate Murrietta Center & Bolsa Medical No Yes No 125% 1.25x 75.0% Individually Creme de la Creme No Yes No 125% 1.40x(8) (9) N/A Albany Industrial Park and 5075 Cameron Street Industrial Building (10) Yes No No 100% 1.45x 60.0% N/A Ardmore West Shopping Center No Yes No 125% 1.17x(11) 73.2% N/A Arcadia Village SC & Fiesta Shops West (12) No No (12) 1.20x 80.0% N/A RELEASE CONDITIONS --------------------------- LENDER IS ALLOWED TO EXPRESSLY CONDITION TRANSACTION ON RATING MAX. NO. OF MORTGAGE LOAN/PROPERTY AGENCY RELEASES NAME(S) CONFIRMATION PERMITTED --------------------------- ------------- ----------- Broken Sound Portfolio (2) Yes N/A Embassy Office Park- Pool A (3) Yes N/A Titan Portfolio Yes N/A Embassy Office Park - Pool B (3) Yes N/A InTown Suites Portfolio Yes(6) N/A Murrietta Center & Bolsa Medical Yes 1(7) Creme de la Creme Yes N/A Albany Industrial Park and 5075 Cameron Street Industrial Building (10) No 1 Ardmore West Shopping Center No N/A Arcadia Village SC & Fiesta Shops West Yes 1(13) (1) In some cases, an additional condition under the loan documents is that the debt service coverage ratio or loan-to-value ratio, as applicable, not deteriorate immediately after giving effect to the release. S-132 (2) The borrower under the pooled mortgage loan secured by the mortgaged properties identified on Appendix B to this prospectus supplement as Broken Sound Portfolio, which represents approximately 2.3% of the initial mortgage pool balance (and 2.5% of the initial loan group 1 balance), is entitled to obtain a release of one or more of the mortgaged properties in connection with a sale of the property to, and the assumption of a portion of the indebtedness under the loan by, a third party, subject to satisfaction of certain conditions set forth in the related mortgage loan documents, including the following: (i) the debt service coverage ratio of the property to be released must exceed 1.15x, (ii) the loan-to-value ratio of the property to be released must not exceed 75% (based on an updated appraisal), (iii) the aggregate debt service coverage ratio for the remaining properties must exceed the greater of 1.15x and the aggregate debt service coverage ratio of all the properties (including the property to be released) immediately prior to the sale, (iv) the aggregate loan-to-value ratio of the remaining properties must not exceed the lesser of 75% and the loan-to-value ratio of all the properties (including the property to be released) immediately prior to the sale, and (v) if required by the holder of the pooled mortgage loan, the related borrower must deliver confirmation from each Rating Agency that the release would not result in the downgrade, withdrawal or qualification of the then outstanding ratings on the series 2006-PWR12 certificates. The provisions described in this note are in addition to the provisions generally described in the table with respect to these pooled mortgage loans. In addition to the other conditions set forth in the table with respect to partial releases in connection with the defeasance, such a partial release is permitted only after the expiration of the defeasance lockout period that generally applies under the related mortgage loan documents. (3) The respective borrower under each of the individual pooled mortgage loans secured by the mortgaged properties identified on Appendix B to this prospectus supplement as Embassy Office Park Portfolio - Pool A, which represents approximately 1.7% of the initial mortgage pool balance (and 1.9% of the initial loan group 1 balance), and Embassy Office Park Portfolio - Pool B, which represents approximately 1.4% of the initial mortgage pool balance (and 1.5% of the initial loan group 1 balance), is entitled to obtain a release of one or more (but not more than four) of the mortgaged properties securing the respective pooled mortgage loan in connection with a sale of the property to, and the assumption of a portion of the indebtedness under the loan by, a third party, subject to satisfaction of certain conditions set forth in the related mortgage loan documents, including the following: (i) the debt service coverage ratio of each mortgaged property to be transferred (each a "Release Property") and each of the remaining individual mortgaged properties comprising the applicable portfolio (the "Remaining Property") is at least 1.25x, (ii) the loan-to-value ratio with respect to the Remaining Property must not exceed 80%, (iii) the loan-to-value ratio with respect to the Release Property must not exceed 80%, (iv) the ratio of the allocated loan amount of the Release Property to the purchase price paid by the purchaser must not exceed 80%, (v) if a single tenant accounts for at least 75% of the Release Property's net rentable area or gross potential rent, the allocated loan amount must be less than the "as dark" value of the Release Property, and (vi) the related borrower must deliver confirmation from each Rating Agency that the release would not result in the downgrade, withdrawal or qualification of the then outstanding ratings on the series 2006-PWR12 certificates. If these conditions are not satisfied, the borrower under each of these pooled mortgage loans is permitted to partially defease a portion of the related pooled mortgage loan in an amount sufficient to satisfy such test, and the allocated loan amounts for the individual properties comprising the Remaining Property will be reduced, on a pro rata basis, by the principal amount defeased. The provisions described in this note are in addition to the provisions generally described in the table with respect to these pooled mortgage loans. (4) The release price is an amount equal to the greater of (i) the allocated loan amount with respect to the individual property and (ii) an amount such that after giving effect to such defeasance, the DSCR with respect to the remaining properties is not less than 1.25x and the ratio of the aggregate allocated loan amounts of the remaining properties to the value of the remaining properties is not greater then 80%. (5) The percentage equal to the net cash flow for the trailing 12-month period over the outstanding principal balance of the applicable note, after giving effect to the release, must equal or exceed the product of (a) 11.33% multiplied by (b) a fraction, the numerator of which is the original release amounts of all properties and the denominator of which is the release amounts of all properties (as may have been reduced through the date of determination by the pro rata application of principal paid prior to such date through prepayment or otherwise). (6) Confirmation of the ratings of the series 2006-PWR12 certificates is not required if the aggregate of the allocated loan amounts for the release property and all previously released properties is less than or equal to than 20% of the original principal amount of the pooled mortgage loan. (7) Only the Bolsa Medical Center property can be released. (8) The greater of (i) 1.40x and (ii) DSCR immediately prior to the release. S-133 (9) The lesser of (i) the loan-to-value ratio for the property on the date of origination and (ii) the loan-to-value ratio for the property immediately prior to the release. (10) Subject to the satisfaction of certain conditions, the related borrower may prepay one of these loans in full without the payment of a prepayment premium or yield maintenance charge. (11) The greater of (i) 1.17x and (ii) debt service coverage ratio immediately prior to the release. (12) The borrower is entitled to the release if the other conditions set forth in the table are satisfied but the borrower is permitted to make a prepayment up to a maximum amount equal to $300,000 in order to satisfy the debt service coverage ratio and loan-to-value ratio conditions. (13) Only the Fiesta Shops West property can be released. S-134 Furthermore, certain pooled mortgage loans permit the release or substitution of specified air rights, parcels of real estate or improvements that secure the mortgage loans but were not assigned any material value or considered a source of any material cash flow for purposes of determining the related Appraised Value or Underwritten Net Cash Flow. Such real estate is permitted to be released without payment of a release price and consequent reduction of the principal balance of the subject mortgage loan or substitution of additional collateral if zoning and other conditions are satisfied. Non-Recourse Obligations. The pooled mortgage loans are generally non-recourse obligations of the related borrowers and, upon any such borrower's default in the payment of any amount due under the related pooled mortgage loan, the holder thereof may look only to the related mortgaged property for satisfaction of the borrower's obligations. In those cases where the loan documents permit recourse to the borrower or a guarantor, we have not evaluated the financial condition of any such person, and prospective investors should thus consider all of the pooled mortgage loans to be non-recourse. None of the pooled mortgage loans is insured or guaranteed by any mortgage loan seller or any of their affiliates, the United States, any government entity or instrumentality, any private mortgage insurer or any other person. "Due-on-Sale" and "Due-on-Encumbrance" Provisions. The mortgages generally contain due-on-sale and due-on-encumbrance clauses that permit the holder of the mortgage to accelerate the maturity of the related pooled mortgage loan if the borrower sells or otherwise transfers or encumbers the related mortgaged property or that prohibit the borrower from doing so without the consent of the holder of the mortgage. However, some of the pooled mortgage loans permit transfers of the related mortgaged property, subject to confirmation by each of the Rating Agencies to the effect that the transfer will not result in a qualification, downgrade or withdrawal of any of its then current ratings of the series 2006-PWR12 certificates and/or reasonable approval of the proposed transferee by the holder of the mortgage, payment of an assumption fee, which may be waived by the applicable master servicer and/or the applicable special servicer, as the case may be, or, if collected, will be paid to the applicable master servicer and/or the applicable special servicer as additional servicing compensation, and certain other conditions. In addition, some of the pooled mortgage loans permit the borrower to transfer the related mortgaged property to an affiliate or subsidiary of the borrower, or an entity of which the borrower is the controlling beneficial owner, upon the satisfaction of certain limited conditions set forth in the applicable mortgage loan documents and/or as determined by the applicable master servicer or permit one or more of the following transfers in limited circumstances: (1) a transfer of the related mortgaged property to a person that is affiliated with or otherwise related to the borrower; (2) transfers by the borrower of the mortgaged property to specified entities or types of entities; (3) issuance by the borrower of new partnership or membership interests; (4) changes in ownership between existing shareholders, partners or members, as applicable, of the borrower; (5) a transfer of non-controlling ownership interests in the related borrower; (6) transfers of interests in the related borrower for estate planning purposes or otherwise upon the death of a principal; or (7) other transfers similar in nature to the foregoing. The applicable master servicer or the applicable special servicer will determine, in a manner consistent with the Servicing Standard, whether to exercise any right it may have under any due-on-sale or due-on-encumbrance clause to accelerate payment of the related mortgage loan upon, or to withhold its consent to, any transfer or further encumbrance of the related mortgaged property in accordance with the series 2006-PWR12 pooling and servicing agreement. Encumbered Interests. In the case of two hundred twenty eight (228) mortgaged properties, representing security for 90.2% of the initial mortgage pool balance (which mortgaged properties represent security for pooled mortgage loans consisting of 200 pooled mortgage loans in loan group 1, representing 89.2% of the initial loan group 1 balance, and 28 pooled mortgage loans in loan group 2, representing 100% of the initial loan group 2 balance), the borrower's interest in the related mortgaged property consists of a fee interest (and we consider the borrower's interest in a mortgaged property to be a fee interest if (i) the borrower's interest consists of overlapping fee and leasehold interests or (ii) the fee owner has signed the related mortgage and has agreed to subordinate its fee interest to the related leasehold mortgage). In the case of seven (7) mortgaged properties, representing security for 9.6% of the initial mortgage pool balance (representing 10.6% of the initial loan group 1 balance), the borrower's interest in the related mortgaged property consists of a leasehold interest. One of these mortgaged properties is the mortgaged property that secures the 1675 Broadway pooled mortgage loan, which is one of the ten largest pooled mortgage S-135 loans. In the case of one (1) mortgaged property Canon Plaza, representing security for 0.2% of the initial mortgage pool balance (representing 0.2% of the initial loan group 1 balance), the borrower's interest in the related mortgaged property consists of a fee interest in a portion of the property and a leasehold interest in another portion of the property. See "Summaries of the Ten Largest Mortgage Loans--1675 Broadway" on Appendix D in this prospectus supplement. See "Risk Factors--Loans Secured by Mortgages on a Leasehold Interest Will Subject Your Investment to a Risk of Loss Upon a Lease Default" in this prospectus supplement. Subordinate and/or Other Financing. SPLIT LOAN STRUCTURES The 1675 Broadway Loan Group The 1675 Broadway Pooled Mortgage Loan and the 1675 Broadway Non-Pooled Subordinate Loan have the same borrower and are secured by the same mortgage instrument encumbering the 1675 Broadway Mortgaged Property. The 1675 Broadway Non-Pooled Subordinate Loan is not an asset of the trust, but will be serviced pursuant to the series 2006-PWR12 pooling and servicing agreement. The 1675 Broadway Non-Pooled Subordinate Loan has the same maturity date as the 1675 Broadway Pooled Mortgage Loan and a fixed interest rate of 6.2135% per annum. Set forth below is a general description of the rights granted to the 1675 Non-Pooled Subordinate Noteholder pursuant to the collective arrangements evidenced by the related Mortgage Loan Group Intercreditor Agreement and the series 2006-PWR12 pooling and servicing agreement. Application of Funds. For so long as there exists and is continuing with respect to the 1675 Broadway Loan Group (i) a monetary event of default or (ii) any non-monetary event of default that causes the 1675 Broadway Pooled Mortgage Loan and the 1675 Broadway Non-Pooled Subordinate Loan to become specially serviced mortgage loans, the related intercreditor agreement requires that all amounts received in respect of those loans (excluding certain required reserves or reimbursements received on account of recoveries in respect of advances and all amounts due, payable or reimbursable to any servicer or the trustee, including without limitation advances made in connection with the 1675 Broadway Loan Group, together with accrued and unpaid interest thereon) be applied to pay accrued and unpaid interest (other than Default Interest) and principal (until such amounts have been paid in full) payable on the 1675 Broadway Pooled Mortgage Loan prior to paying interest or principal to the holder of the 1675 Broadway Non-Pooled Subordinate Loan. Approval and Consultation Rights. Except under the circumstances described below in this "--Approval and Consultation Rights" section, the applicable master servicer and the applicable special servicer will be required to obtain the prior written consent of the 1675 Broadway Non-Pooled Subordinate Noteholder prior to taking any Material Action (which consent may be deemed given under the circumstances contemplated by the related intercreditor agreement); provided, that in the event that the applicable master servicer or the applicable special servicer determines in accordance with the Servicing Standard that immediate action is necessary to protect the interests of the series 2006-PWR12 certificateholders and the 1675 Broadway Non-Pooled Subordinate Noteholder (as a collective whole), the applicable master servicer or the applicable special servicer may take any such action without waiting for the 1675 Broadway Non-Pooled Subordinate Noteholder's response. In addition, the applicable master servicer or the applicable special servicer will not be obligated to seek approval from the 1675 Broadway Non-Pooled Subordinate Noteholder for any actions to be taken by it if: (i) the applicable master servicer or the applicable special servicer, as applicable, notified the 1675 Broadway Non-Pooled Subordinate Noteholder in writing of various actions that the applicable master servicer or the applicable special servicer, as applicable, proposes to take with respect to the workout or liquidation of the 1675 Broadway Loan Group; and (ii) for 60 days following the first such notice, the 1675 Broadway Non-Pooled Subordinate Noteholder has objected to all of those proposed actions and has failed to suggest any alternative actions that the applicable master servicer or the applicable special servicer considers to be consistent with the Servicing Standard. If and for so long as any 1675 Broadway Change of Control Event exists, then the 1675 Broadway Non-Pooled Subordinate Noteholder will not have the rights and powers described above in this "--Approval and Consultation Rights" section, and neither the applicable master servicer nor the applicable special servicer will be required to consult with or seek the consent of the 1675 Broadway Non-Pooled Subordinate Noteholder with respect to any Material Action related to the 1675 Broadway Loan Group. Instead, the series 2006-PWR12 controlling class representative will have such rights and the applicable master servicer or the applicable special servicer will be required to consult with or seek the consent of the series 2006-PWR12 controlling class representative with respect to any Material Action related to the 1675 Broadway Loan Group. S-136 In addition, unless a 1675 Broadway Change of Control Event exists, subject to the provisions in the intercreditor agreement, the 1675 Broadway Non-Pooled Subordinate Noteholder (through the applicable master servicer or special servicer) may communicate with, respond to requests from, and deliver any proposals to, the related borrower with respect to the items set forth above in respect of the 1675 Broadway Loan Group, the 1675 Broadway Mortgaged Property and the related borrower, and may forward copies of such communications or proposals to the holder of the 1675 Broadway Pooled Mortgage Loan. The applicable master servicer or the applicable special servicer, as the case may be, will be required to follow the recommendations of the 1675 Broadway Non-Pooled Subordinate Noteholder with respect to such items set forth in the immediately preceding sentence, unless such master servicer or special servicer, as the case may be, determines that following such recommendations would violate the Servicing Standard. Notwithstanding the foregoing, no advice, direction or objection given or made by the 1675 Broadway Non-Pooled Subordinate Noteholder or the series 2006-PWR12 controlling class representative, as contemplated by the second preceding paragraph, may, and the applicable master servicer and the applicable special servicer are each to ignore any advice, direction or objection so given that in its reasonable judgment would: o require or cause the applicable master servicer or the applicable special servicer to violate applicable law, the terms of the 1675 Broadway Loan Group or the related pooled mortgage loan intercreditor agreement or any other provision of the series 2006-PWR12 pooling and servicing agreement, including that party's obligation to act in accordance with the Servicing Standard; o result in an adverse tax consequence for the trust fund; or o expand the scope of the applicable master servicer's or the applicable special servicer's responsibilities under the series 2006-PWR12 pooling and servicing agreement. Unless a 1675 Broadway Change of Control Event exists: o the 1675 Broadway Non-Pooled Subordinate Noteholder will have the right to appoint and remove the applicable special servicer for the 1675 Broadway Loan Group as described under "--Right to Appoint Special Servicer" below; o neither the applicable master servicer nor the applicable special servicer may enter into any sub-servicing agreement with respect to the 1675 Broadway Loan Group without the consent of the 1675 Broadway Non-Pooled Subordinate Noteholder; o the 1675 Broadway Non-Pooled Subordinate Noteholder may require the applicable master servicer or the applicable special servicer to terminate any particular sub-servicing agreement with respect to the 1675 Broadway Loan Group; and o if PAR is no longer a master servicer, the 1675 Broadway Non-Pooled Subordinate Noteholder may require the applicable master servicer to-- 1. appoint a sub-servicer, acceptable to the 1675 Broadway Non-Pooled Subordinate Noteholder in its sole discretion, with respect to the 1675 Broadway Loan Group, and 2. delegate all of its primary servicing responsibilities and duties, and assign all of its corresponding master servicing compensation (exclusive of a portion of the corresponding master servicing fee that is in excess of a reasonable primary servicing fee), with respect to the 1675 Broadway Loan Group to that sub-servicer. For so long as a 1675 Broadway Change of Control Event exists, the foregoing rights of the 1675 Broadway Non-Pooled Subordinate Noteholder with respect to the 1675 Broadway Loan Group will instead be exercisable by the series 2006-PWR12 controlling class representative. The rights referred to in the last bullet above may have a material adverse effect on the ability of the trust fund to obtain a successor to PAR as master servicer. S-137 The initial 1675 Broadway Non-Pooled Subordinate Noteholder will be an affiliate of the related sponsor and mortgage loan seller, the applicable master servicer and the applicable special servicer. The 1675 Broadway Non-Pooled Subordinate Noteholder may have relationships and interests that conflict with those of the series 2006-PWR12 certificateholders. It has no obligations to the series 2006-PWR12 certificateholders and may act solely in its own interests. No series 2006-PWR12 certificateholder may take any action against the 1675 Broadway Non-Pooled Subordinate Noteholder for acting solely in its own interests. Right to Appoint Special Servicer. Notwithstanding any contrary provision of the series 2006-PWR12 pooling and servicing agreement, in connection with the special servicing of the 1675 Broadway Loan Group only, at any time prior to the occurrence of a 1675 Broadway Change of Control Event, the holder of the 1675 Broadway Non-Pooled Subordinate Loan may remove the existing special servicer for the 1675 Broadway Loan Group, with or without cause, and appoint a successor to the special servicer for the 1675 Broadway Loan Group, in which case the designated party will be the special servicer for the 1675 Broadway Loan Group. However, that appointment will be subject to, among other things, receipt by the trustee of written confirmation from each of the Rating Agencies that the appointment will not result in a qualification, downgrade or withdrawal of any of the ratings then assigned thereby to the series 2006-PWR12 certificates. Cure and Purchase Rights. The 1675 Broadway Non-Pooled Subordinate Noteholder will be entitled (subject to certain terms and conditions set forth in the related intercreditor agreement), whether or not a 1675 Broadway Change of Control Event has occurred, to cure a monetary event of default or other event of default that may be cured by the payment of money within 10 days after the later of its receipt of notice of such event of default or the expiration of the grace period. However, there may not be more than nine "cure events" over the life of the 1675 Broadway Loan Group, more than three consecutive "cure events" or more than six "cure events", whether or not consecutive, in any 12-month period. In addition, the 1675 Broadway Non-Pooled Subordinate Noteholder will be entitled (subject to certain terms and conditions set forth in the related intercreditor agreement), whether or not a 1675 Broadway Change of Control Event has occurred, to purchase the 1675 Broadway Pooled Mortgage Loan (in whole but not in part) for a purchase price equal to the Purchase Price if an event of default under the 1675 Broadway Loan Group has occurred and the 1675 Broadway Loan Group becomes specially serviced or if the trust is being terminated. That purchase price will not include any prepayment premium or yield maintenance charge. The Tuscany Plaza Loan Group The Tuscany Plaza Pooled Mortgage Loan and the Tuscany Plaza Non-Pooled Subordinate Loan have the same borrower and are secured by the same mortgage instrument encumbering the Tuscany Plaza Mortgaged Property. The Tuscany Plaza Non-Pooled Subordinate Loan is not an asset of the trust, but will be serviced pursuant to the series 2006-PWR12 pooling and servicing agreement. The Tuscany Plaza Non-Pooled Subordinate Loan has the same maturity date as the Tuscany Plaza Pooled Mortgage Loan and an interest rate equal to the greater of 7.50% per annum and a fluctuating rate per annum equal to the sum of the one-month LIBOR rate plus 4.00%, as such rate may be adjusted on a monthly basis. The one-month LIBOR rate is not subject to a cap. Set forth below is a general description of the rights granted to the Tuscany Plaza Non-Pooled Subordinate Noteholder pursuant to the collective arrangements evidenced by the related Mortgage Loan Group Intercreditor Agreement and the series 2006-PWR12 pooling and servicing agreement. Application of Funds. For so long as there exists and is continuing with respect to the Tuscany Plaza Loan Group (i) a monetary event of default or (ii) any material non-monetary event of default, the related intercreditor agreement requires that all amounts received in respect of those loans (excluding certain required reserves; proceeds, awards or settlements to be applied to the restoration or repair of the Tuscany Plaza Mortgaged Property or released to the related borrower; and reimbursements received on account of recoveries in respect of advances and all amounts due, payable or reimbursable to any servicer or the trustee, including without limitation advances made in connection with the Tuscany Plaza Loan Group, together with accrued and unpaid interest thereon) be applied to pay accrued and unpaid interest (other than Default Interest) and principal (until such amounts have been paid in full) payable on the Tuscany Plaza Pooled Mortgage Loan prior to paying interest or principal to the holder of the Tuscany Plaza Non-Pooled Subordinate Loan. Approval and Consultation Rights. Except under the circumstances described below in this "The Tuscany Plaza Loan Group" section, the applicable master servicer and the applicable special servicer will be required to obtain the prior written consent of the Tuscany Plaza Non-Pooled Subordinate Noteholder prior to taking any Material Action (which consent may be deemed given under the circumstances contemplated by the related intercreditor agreement); provided, that in the S-138 event that the applicable master servicer or the applicable special servicer determines in accordance with the Servicing Standard that immediate action is necessary to protect the interests of the series 2006-PWR12 certificateholders and the Tuscany Plaza Non-Pooled Subordinate Noteholder (as a collective whole), the applicable master servicer or the applicable special servicer may take any such action without waiting for the Tuscany Plaza Non-Pooled Subordinate Noteholder's response. In addition, the applicable master servicer or the applicable special servicer will not be obligated to seek approval from the Tuscany Plaza Non-Pooled Subordinate Noteholder for any actions to be taken by it if: (i) the applicable master servicer or the applicable special servicer, as applicable, notified the Tuscany Plaza Non-Pooled Subordinate Noteholder in writing of various actions that the applicable master servicer or the applicable special servicer, as applicable, proposes to take with respect to the workout or liquidation of the Tuscany Plaza Loan Group; and (ii) for 30 days following the first such notice, the Tuscany Plaza Non-Pooled Subordinate Noteholder has objected to all of those proposed actions and has failed to suggest any alternative actions that the applicable master servicer or the applicable special servicer considers to be consistent with the Servicing Standard. In addition, the applicable master servicer or special servicer, as applicable, is required to consult with the Tuscany Plaza Non-Pooled Subordinate Noteholder on a non-binding basis with respect to proposals to take any significant action with respect to the Tuscany Plaza Loan Group or the Tuscany Plaza Mortgaged Property and consider alternative actions recommended by the Tuscany Plaza Non-Pooled Subordinate Noteholder (but may, in its discretion acting in accordance with the Servicing Standard reject any advice, objection or recommendation by the Tuscany Plaza Non-Pooled Subordinate Noteholder) in connection with (i) any adoption or implementation of a business plan submitted by the related borrower with respect to the Tuscany Plaza Mortgaged Property, (ii) the execution or renewal of any lease (if a lender approval is provided for in the related loan documents), (iii) the release of any escrow held in conjunction with the Tuscany Plaza Mortgage Loan to the related borrower not expressly required by the loan documents, (iv) material alterations on the Tuscany Plaza Mortgaged Property, if approval by the lender is required by the related loan documents, or (v) the waiver of any notice provision related to prepayment of all or any portion of the Tuscany Plaza Mortgage Loan. These non-binding consultation rights, however, do not limit any rights (if any) that the Tuscany Plaza Non-Pooled Subordinate Noteholder may otherwise then have in connection with a Material Action. If and for so long as any Tuscany Plaza Change of Control Event exists, then the Tuscany Plaza Non-Pooled Subordinate Noteholder will not have the rights and powers described above in this "--Tuscany Plaza Loan Group" section, and neither the applicable master servicer nor the applicable special servicer will be required to consult with or seek the consent of the Tuscany Plaza Non-Pooled Subordinate Noteholder with respect to any Material Action related to the Tuscany Plaza Loan Group. Instead, the series 2006-PWR12 controlling class representative will have such rights and the applicable master servicer or the applicable special servicer will be required to consult with or seek the consent of the series 2006-PWR12 controlling class representative with respect to any Material Action related to the Tuscany Plaza Loan Group. Notwithstanding the foregoing, no advice, direction or objection given or made by the Tuscany Plaza Non-Pooled Subordinate Noteholder or the series 2006-PWR12 controlling class representative, as contemplated by the second preceding paragraph, may, and the applicable master servicer and the applicable special servicer are each to ignore any advice, direction or objection so given that in its reasonable judgment would: o require or cause the applicable master servicer or the applicable special servicer to violate applicable law, the terms of the Tuscany Plaza Loan Group or the related pooled mortgage loan intercreditor agreement or any other provision of the series 2006-PWR12 pooling and servicing agreement, including that party's obligation to act in accordance with the Servicing Standard; or o result in an adverse tax consequence for the trust fund. The initial Tuscany Plaza Non-Pooled Subordinate Noteholder will be an affiliate of the related sponsor, mortgage loan seller, the applicable master servicer and the applicable special servicer. The Tuscany Plaza Non-Pooled Subordinate Noteholder may have relationships and interests that conflict with those of the series 2006-PWR12 certificateholders. It has no obligations to the series 2006-PWR12 certificateholders and may act solely in its own interests. No series 2006-PWR12 certificateholder may take any action against the Tuscany Plaza Non-Pooled Subordinate Noteholder for acting solely in its own interests. S-139 Right to Appoint Special Servicer. Notwithstanding any contrary provision of the series 2006-PWR12 pooling and servicing agreement, in connection with the special servicing of the Tuscany Plaza Loan Group only, at any time prior to the occurrence of a Tuscany Plaza Change of Control Event, the holder of the Tuscany Plaza Non-Pooled Subordinate Loan may remove the existing special servicer for the Tuscany Plaza Loan Group, with or without cause, and appoint a successor to the special servicer for the Tuscany Plaza Loan Group, in which case the designated party will be the special servicer for the Tuscany Plaza Loan Group. However, that appointment will be subject to, as applicable, among other things, receipt by the trustee of written confirmation from each of the Rating Agencies that the appointment will not result in a qualification, downgrade or withdrawal of any of the ratings then assigned thereby to the series 2006-PWR12 certificates. Cure and Purchase Rights. The Tuscany Plaza Non-Pooled Subordinate Noteholder will be entitled (subject to certain terms and conditions set forth in the related intercreditor agreement), whether or not a Tuscany Plaza Change of Control Event has occurred, to cure a monetary event of default or other event of default that may be cured by the payment of money within 5 days after the later of its receipt of notice of such event of default or the expiration of the grace period. However, there may not be more than six "cure events" over the life of the Tuscany Plaza Loan Group and no single "cure event" may exceed three consecutive months. In addition, the Tuscany Plaza Non-Pooled Subordinate Noteholder will be entitled (subject to certain terms and conditions set forth in the related intercreditor agreement), whether or not a Tuscany Plaza Change of Control Event has occurred, to purchase the Tuscany Plaza Pooled Mortgage Loan (in whole but not in part) for a purchase price generally equal to the Purchase Price if (i) any principal or interest payment on the Tuscany Plaza Loan Group is 10 or more days delinquent, (ii) the Tuscany Plaza Loan Group has been accelerated, (iii) the principal balance of the Tuscany Plaza Loan Group is not paid at maturity, (iv) the related borrower files a petition for bankruptcy or (v) an event of default under the Tuscany Plaza Loan Group occurs and continues and the Tuscany Plaza Loan Group becomes specially serviced. The purchase price will not include any amount in respect of advances that were reimbursed out of general collections of the Trust Fund or any prepayment premium, exit fee, default interest or late charge. OTHER PROPERTY-SECURED FINANCING AND MEZZANINE AND SIMILAR FINANCING Existing (Mezzanine and Similar Financing) The following table summarizes information regarding mezzanine and similar financing incurred by one or more owners of the borrower that is secured by a pledge of all or a portion of that owner's direct or indirect equity interests in the borrower. TRANSFER OF MORE THAN 49% INTEREST IN OTHER OTHER LOAN IS % OF ORIGINAL OTHER LENDER HAS OTHER LENDER OTHER LENDER HAS LOAN IS PROHIBITED PRESENTLY INITIAL PRINCIPAL EXECUTED OR WILL HAS CURE DEFAULTED LOAN WITHOUT RATING AGENCY HELD BY MORTGAGE MORTGAGE AMOUNT OF EXECUTE RIGHTS FOR PURCHASE OPTION CONFIRMATION (UNLESS RELATED LOAN/PROPERTY POOL MEZZANINE/ INTERCREDITOR OR MORTGAGE LOAN FOR THE MORTGAGE TO A QUALIFIED MORTGAGE LOAN PORTFOLIO NAMES BALANCE SIMILAR DEBT SIMILAR AGREEMENT DEFAULTS LOAN TRANSFEREE) SELLER ----------------- -------- ------------ ----------------- ------------- ---------------- --------------------- ------------- Tower at Erieview 2.1% $8,566,308 Yes Yes Yes Yes No Except as otherwise indicated in the table: o in cases where the transfer of the other loan is restricted, any transferee of all or a greater than 49% interest in the mezzanine loan must meet certain financial and other qualifications, unless confirmation has been obtained from each Rating Agency that the transfer would not result in the downgrade, withdrawal or qualification of the then current ratings on the series 2006-PWR12 certificates; o in cases where the other lender has a purchase option, if the pooled mortgage loan is in default beyond the expiration of applicable grace and cure periods, the junior lender generally has the right to purchase the pooled mortgage loan, in whole and not in part, for a price that is not less than the outstanding principal balance thereof and all accrued and unpaid interest thereon (but generally excluding any late payment fees, default interest or prepayment premium); and S-140 o in cases where the applicable mortgage loan seller is the current holder of the other loan, that seller may sell or transfer the loan at any time in its sole discretion. Permitted In Future (Secured Financing and Mezzanine and Similar Financing) The following table summarizes information regarding the circumstances under which the borrowers or their owners are permitted to incur secondary financing secured by the mortgaged property and/or mezzanine and similar financing secured by a pledge of all or a portion of an owner's direct or indirect equity interests in the borrower: MINIMUM MAXIMUM MORTGAGE COMBINED DEBT COMBINED LENDER OTHER LENDER SERVICE LTV ALLOWED TO % OF MAXIMUM MUST EXECUTE COVERAGE RATIO RATIO OF REQUIRE INITIAL PRINCIPAL INTERCREDITOR OF MORTGAGE MORTGAGE RATING MORTGAGE LOAN/PROPERTY MORTGAGE TYPE OF DEBT AMOUNT OR SIMILAR LOAN AND LOAN AND AGENCY PORTFOLIO NAMES POOL BALANCE PERMITTED PERMITTED AGREEMENT OTHER LOAN OTHER LOAN CONFIRMATION --------------------------- ------------ -------------------- --------- ------------- -------------- ---------- ------------ 1675 Broadway 7.5% Mezzanine (1) (1) Yes 1.25x N/A Yes The Coliseum Center 0.7% Mezzanine (2) Yes 1.10x 80% Yes Broken Sound Portfolio 2.3% Mezzanine N/A Yes 1.15x 75% Yes InTown Suites Portfolio 1.0% Mezzanine N/A Yes 1.20x 80% Yes Baylor Medical Plaza and Baylor Surgicare Grapevine 0.8% Mezzanine (3) N/A Yes 1.20x 80% Yes Marriott Courtyard Solana Beach 0.7% Mezzanine N/A Yes 1.40x 70% No Nicolet Office Center 0.5% Mezzanine N/A No 1.20x 80% Yes Tri-City Pavilion 0.5% Mezzanine N/A Yes 1.20x 75% Yes Bellflower Shopping Center 0.4% Mezzanine (2) Yes 1.10x 80% Yes Best Western Miramar 0.4% Mezzanine N/A Yes 1.40x 70% No Micron Building 0.4% Mezzanine (4) (2) Yes 1.20x 85% Yes College Park Apartments 0.4% Property-Secured N/A No 1.25x 75% Yes 1300 Virginia Drive 0.4% Mezzanine N/A Yes 1.07x 85% Yes Laurel Commons 0.3% Property-Secured N/A No 1.25x 80% Yes Thomas Road Project 0.3% Property-Secured (5) N/A Yes (5) (5) Yes and Mezzanine N/A Yes 1.20x 75% Yes Best Western Porterville 0.3% Mezzanine N/A Yes 1.40x 70% No Howard Johnson San Diego 0.3% Mezzanine N/A Yes 1.40x 70% No Days Inn Mission Bay 0.3% Mezzanine N/A Yes 1.40x 70% No Days Inn Encinitas 0.3% Mezzanine N/A Yes 1.40x 70% No 100 Tamal Plaza 0.2% Mezzanine N/A Yes 1.25x 75% Yes Hidden Lakes Center 0.2% Property-Secured N/A No 1.35x 75% Yes Bonita Commerce Center 0.2% Property-Secured N/A No 1.35x 75% Yes North Ranch Plaza 0.2% Mezzanine N/A Yes 1.30x 75% No (1) The amount of debt permitted to be incurred on any date is constrained by applicable debt service coverage ratio and/or loan-to-value ratio requirements but in no event may exceed $10,000,000. (2) The amount of debt permitted to be incurred on any date is constrained by applicable debt service coverage ratio and/or loan-to-value ratio requirements. (3) The indebtedness is permitted only in connection with the construction of certain expansion space. S-141 (4) The indebtedness is permitted only in connection with a sale of the related mortgaged property. (5) The related borrower is permitted to incur secured subordinate indebtedness in the future in connection with the construction of an additional flex building (with approximately 5,700 square feet of space) on the premises, subject to the satisfaction of certain conditions, including: (i) the debt service coverage ratio of the additional building must be at least 1.20x with respect to the subordinate indebtedness only; (ii) the subordinate indebtedness must have a maturity date that is co-terminous with the related pooled mortgage loan; (iii) the subordinate lender must be approved by the holder of the pooled mortgage loan; (iv) the subordinate lender must execute intercreditor documentation satisfactory to the holder of the pooled mortgage loan; and (v) if required by the holder of the pooled mortgage loan, the borrower must cause to be delivered a confirmation from the Rating Agencies to the effect that the incurrence of the indebtedness will not result in a qualification, downgrade or withdrawal of any of the ratings on the series 2006-PWR12 certificates. Additional Related Information In addition, there may be other mortgage loans that we intend to include in the trust fund, as to which direct and indirect equity owners of the related borrower have pledged or are permitted in the future to pledge their respective equity interests to secure financing, or as to which the related borrower is permitted to incur subordinate debt secured by the related mortgaged property. See "Legal Aspects of Mortgage Loans--Subordinate Financing" in the accompanying prospectus and "Risk Factors--A Borrower's Other Loans May Reduce the Cash Flow Available to the Mortgaged Property Which May Adversely Affect Payment on Your Certificates; Mezzanine Financing Reduces a Principal's Equity in, and Therefore Its Incentive to Support, a Mortgaged Property" in this prospectus supplement. The pooled mortgage loans generally do not prohibit indebtedness secured by equipment or other personal property located at the mortgaged property. Other Additional Financing With respect to thirty seven (37) pooled mortgage loans, representing 5.3% of the initial mortgage pool balance (consisting of thirty two (32) pooled mortgage loans in loan group 1, representing 4.9% of the initial loan group 1 balance, and five (5) pooled mortgage loans in loan group 2, representing 8.5% of the initial loan group 2 balance), the borrower is not a special purpose entity. In general, borrowers that are not special purposes entities, and certain other borrowers that have not agreed to certain special purpose covenants in the related mortgage loan documents, are not prohibited from incurring additional debt, which may include debt that is secured by other property owned by the borrower, and the owners of such borrowers are not prohibited from incurring mezzanine debt secured by pledges of their equity interests in those borrowers. Certain of these borrowers and owners may have already incurred such additional debt. The mortgage loans generally do not prohibit the related borrower from incurring other unsecured indebtedness, including but not limited to trade payables, in the ordinary course of business, or from incurring indebtedness secured by equipment or other personal property located at the mortgaged property. In some cases, this debt has included or may include loans from affiliates, members or partners. With respect to the pooled mortgage loan secured by the mortgaged property identified on Appendix B to this prospectus supplement as 1675 Broadway, representing 7.5% of the initial mortgage pool balance (and 8.2% of the initial loan group 1 balance), the loan documents permit the related borrower to incur future unsecured subordinate indebtedness from its affiliates in an amount up to $5,000,000, provided that, among other conditions, a subordination agreement acceptable to the mortgage lender is delivered. With respect to the pooled mortgage loan secured by the mortgaged property identified on Appendix B to this prospectus supplement as Tuscany Plaza, representing 1.3% of the initial mortgage pool balance (and 1.4% of the initial loan group 1 balance), the loan documents permit the related borrower to incur future unsecured subordinate indebtedness from a borrower principal in an amount up to $1,000,000, provided that, among other conditions, a subordination agreement acceptable to the mortgage lender is delivered and the intercompany debt is for a term not to exceed 90 days. S-142 With respect to the pooled mortgage loan secured by the mortgaged property identified on Appendix B to this prospectus supplement as Data Point, representing 0.6% of the initial mortgage pool balance (and 0.7% of the initial loan group 1 balance), the loan documents permit the related borrower to incur future unsecured subordinate indebtedness from its members and affiliates, provided that, among other conditions, a subordination agreement acceptable to the holder of the pooled mortgage loan is delivered, the amount of the intercompany debt does not exceed $2,000,000 and the subordinate debt is not subsequently transferred without approval of the holder of the pooled mortgage loan. With respect to the pooled mortgage loan secured by the mortgaged property identified on Appendix B to this prospectus supplement as Bellevue Plaza, representing 0.4% of the initial mortgage pool balance (and 0.5% of the initial loan group 1 balance), the loan documents permit the related borrower to incur future unsecured subordinate indebtedness in an amount up to $250,000 for working capital purposes, provided that, among other conditions, a subordination agreement acceptable to the mortgage lender is delivered. With respect to the pooled mortgage loan secured by the mortgaged property identified on Appendix B to this prospectus supplement as Radisson Hotel - Kenosha, representing 0.3% of the initial mortgage pool balance (and 0.4% of the initial loan group 1 balance), the loan documents permit the related borrower to incur future unsecured subordinate debt from its members, provided that, among other conditions, a subordinate agreement acceptable to the mortgage lender is delivered and the intercompany debt does not exceed $700,000. We make no representation with respect to the pooled mortgage loans as to whether any other secured subordinate financing currently encumbers any mortgaged property, whether any borrower is the obligor on any material unsecured debt or whether a third party holds debt secured by a pledge of an equity interest in any related borrower. See "Legal Aspects of the Mortgage Loans--Subordinate Financing" in the accompanying prospectus and "Risk Factors--A Borrower's Other Loans May Reduce The Cash Flow Available To The Mortgaged Property Which May Adversely Affect Payment On Your Certificates; Mezzanine Financing Reduces a Principal's Equity in, and Therefore Its Incentive to Support, a Mortgaged Property" in this prospectus supplement. Additional Collateral. One hundred eighty seven (187) pooled mortgage loans, representing 84.5% of the initial mortgage pool balance (which pooled mortgage loans consist of 160 pooled mortgage loans in loan group 1, representing 83.3% of the initial loan group 1 balance, and 27 pooled mortgage loans in loan group 2, representing 95.9% of the initial loan group 2 balance) have the benefit of either upfront and/or continuing cash reserves that are to be maintained for specified periods and/or purposes, such as taxes and insurance, deferred maintenance, environmental remediation, debt service, tenant improvements and leasing commissions and capital improvements. See Appendix B to this prospectus supplement for further information with respect to reserves. Cash Management Agreements/Lockboxes. Fifty five (55) pooled mortgage loans, representing 50.2% of the initial mortgage pool balance (which pooled mortgage loans consist of fifty four (54) pooled mortgage loans in loan group 1, representing 54.4% of the initial loan group 1 balance, and one (1) pooled mortgage loan in loan group 2, representing 9.2% of the initial loan group 2 balance), generally provide that rents, credit card receipts, accounts receivables payments and other income derived from the related mortgaged properties will be subject to a cash management/lockbox arrangement. Appendix B to this prospectus supplement sets forth (among other things) the type of provisions (if any) for the establishment of a lockbox under the terms of each pooled mortgage loan. The following is a description of each type of provision: o Hard. The related borrower is required to instruct the tenants and other payors to pay all rents and other revenue directly to an account controlled by the applicable servicer on behalf of the trust. Such revenue generally is either (a) swept and remitted to the related borrower unless a default or other "trigger" event under the related mortgage loan documents has occurred or (b) not made immediately available to the related borrower, but instead is forwarded to a cash management account controlled by the applicable servicer on behalf of the trust and then applied according to the related mortgage loan documents, which typically S-143 contemplate application to sums payable under the related mortgage loan and, in certain transactions, to expenses at the related mortgaged property, with any excess remitted to the related borrower. o Soft, Springing Hard. Revenue from the related mortgaged property is generally paid by the tenants and other payors to the related borrower or the property manager and then forwarded to an account controlled by the applicable servicer on behalf of the trust fund. Until the occurrence of certain specified "trigger" events, which typically include an event of default under the mortgage loan, such revenue is forwarded to an account controlled by the related borrower or is otherwise made available to the related borrower. Upon the occurrence of such a trigger event, the mortgage loan documents require the related borrower to instruct tenants and other payors to pay directly into an account controlled by the applicable servicer on behalf of the trust fund; the revenue is then applied by the applicable servicer on behalf of the trust fund according to the related mortgage loan documents. o Soft. Revenue from the related mortgaged property is generally paid by the tenants and other payors to the borrower or the property manager and forwarded to an account controlled by the applicable servicer on behalf of the trust fund. The funds are then either made available to the related borrower or are applied by the applicable servicer on behalf of the trust fund according to the related mortgage loan documents. o Springing Hard. Revenue from the related mortgaged property is generally paid by the tenants and other payors to the related borrower or property manager. Upon the occurrence of certain specified "trigger" events, which typically include an event of default under the mortgage loan, the mortgage loan documents contemplate establishment of a hard lockbox and require the related borrower to instruct tenants to pay directly into an account controlled by the applicable servicer on behalf of the trust fund; the revenue is then applied by the applicable servicer on behalf of the trust fund according to the related mortgage loan documents. o None. Revenue from the related mortgaged property is paid to the related borrower and is not subject to a lockbox as of the Issue Date, and no lockbox is contemplated to be established during the mortgage loan term. In connection with any hard lockbox, income deposited directly into the related lockbox account may not include amounts paid in cash that are paid directly to the related property manager, notwithstanding requirements to the contrary. Furthermore, with respect to certain multifamily and hospitality properties, cash or "over-the-counter" receipts may be deposited into the lockbox account by the property manager. Pooled mortgage loans whose terms call for the establishment of a lockbox account require that the amounts paid to the property manager will be deposited into the applicable lockbox account on a regular basis. Lockbox accounts will not be assets of the trust fund. Hazard Insurance. See "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement--Maintenance of Insurance" in this prospectus supplement and "Description of the Pooling and Servicing Agreements--Hazard Insurance Policies" in the accompanying prospectus for a description of the obligations of the master servicers and the special servicers with respect to the enforcement of the obligations of the borrowers under the mortgage loan documents and other matters related to the maintenance of insurance. Each borrower under a pooled mortgage loan is required to maintain all insurance required by the terms of the loan documents in the amounts set forth therein, which will be obtained from an insurer meeting the requirements of the loan documents. This includes a fire and hazard insurance policy with extended coverage. Certain mortgage loans may permit the hazard insurance policy to be maintained by a tenant of the mortgaged property, or may permit the borrower or a tenant to self-insure. The coverage of each policy will generally be in an amount, subject to a deductible customary in the related geographic area, that is not less than the lesser of (a) the full replacement cost of the improvements that are security for the subject pooled mortgage loan, with no deduction for depreciation, and (b) the outstanding principal balance owing on that mortgage loan, but in any event, in an amount sufficient to avoid the application of any coinsurance clause. S-144 If, on the date of origination of a mortgage loan, a material portion of the improvements on a mortgaged property was in an area identified in the Federal Register by the Federal Emergency Management Agency ("FEMA") as having special flood hazards (and such flood insurance is required by FEMA and has been made available), the loan documents generally require flood insurance meeting the requirements of the current guidelines of the Federal Insurance Administration in an amount representing coverage of at least the lesser of (a) the outstanding principal balance of the mortgage loan and (b) the maximum amount of flood insurance available for the mortgaged property permitted by FEMA. Tenant Matters. Described and listed below are special considerations regarding tenants at the mortgaged properties securing the mortgage loans that we intend to include in the trust fund-- o Forty (40) mortgaged properties representing security for 11.0% of the initial mortgage pool balance (and for 11.8% of the initial loan group 1 balance, and 2.7% of the initial loan group 2 balance), are either wholly owner-occupied or leased to a single tenant. o Some of the mortgaged properties that are office, industrial or retail properties may have a tenant that has ceased to occupy its space at a mortgaged property but continues to pay rent under its lease. o Certain of the multifamily properties have material tenant concentrations of students or military personnel. o Certain of the multifamily rental properties receive rent subsidies from the United States Department of Housing and Urban Development under its Section 8 program or otherwise. o Certain of the multifamily rental properties are subject to local rent control and rent stabilization laws. o There may be several cases in which a particular entity is a tenant at more than one of the mortgaged properties, and although it may not be one of the three largest tenants at any of those properties, it is significant to the success of the properties in the aggregate. o With respect to certain of the mortgage loans, the related borrower has given to certain tenants a right of first refusal in the event a sale is contemplated or an option to purchase all or a portion of the mortgaged property and this provision, if not waived, may impede the mortgagee's ability to sell the related mortgaged property at foreclosure or adversely affect the foreclosure proceeds. Generally, these rights do not apply to a transfer arising out of foreclosure or a deed in lieu of foreclosure, but the applicable tenant typically retains its right of first refusal following foreclosure or a deed in lieu of foreclosure, and any sale by the lender or other new lender would be subject to such right. In addition, a right of first refusal may be conferred by statute to mobile home owners through their owners' association; however, such right does not apply to a transfer arising out of foreclosure or a deed in lieu of foreclosure. o With respect to certain of the mortgage loans, the sole tenant or a significant tenant at the related mortgaged property is affiliated with the related borrower. o Included in the mortgaged properties are five (5) medical office properties, identified on Appendix B to this prospectus supplement, securing 1.6% of the initial mortgage pool balance (and 1.8% of the initial loan group 1 balance). A portion of other mortgaged properties may be utilized as a medical office. 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 (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 affect cash flow at such mortgaged property. In addition, with respect to the mortgaged property identified on Appendix B to this prospectus supplement as Baylor Surgicare Grapevine, which represents security for approximately 0.3% of the initial pool balance (and 0.3% of the initial loan group 1 balance), and which is cross-defaulted and cross-collateralized with the mortgaged property identified S-145 on Appendix B to this prospectus supplement as Baylor Medical Plaza, which represents security for approximately 0.5% of the initial pool balance (and 0.6% of the initial loan group 1 balance), the sole tenant has an option to purchase the Baylor Surgicare Grapevine mortgaged property upon the occurrence of certain trigger events, including specified casualty and condemnation events, the expiration of current lease term (which occurs more than five years after the loan's ARD) or a continuing landlord default. If the purchase option is so exercised, the Baylor Surgicare Grapevine mortgaged property may be released upon payment of the related pooled mortgage loan in full, including applicable prepayment charges. ASSESSMENTS OF PROPERTY VALUE AND CONDITION Appraisals. In connection with the origination of each pooled mortgage loan or in connection with this offering, an appraisal was conducted in respect of the related mortgaged property by an independent appraiser that was state-certified and/or a Member of the Appraisal Institute or an update of an existing appraisal was obtained. In each case, the appraisal complied, or the appraiser certified that it complied, with the real estate appraisal regulations issued jointly by the federal bank regulatory agencies under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, as amended. In general, those appraisals represent the analysis and opinion of the person performing the appraisal and are not guarantees of, and may not be indicative of, present or future value. We cannot assure you that another person would not have arrived at a different valuation, even if such person used the same general approach to and same method of valuing the property or that different valuations would not have been reached separately by the mortgage loan sellers based on their internal review of such appraisals. In certain cases, appraisals may reflect "as stabilized" values reflecting certain assumptions such as future construction completion, projected re-tenanting or increased tenant occupancies. The appraisals obtained as described above sought to establish the amount a typically motivated buyer would pay a typically motivated seller. Such amount could be significantly higher than the amount obtained from the sale of a mortgaged property under a distress or liquidation sale. Information regarding the values of the mortgaged properties as of the cut-off date is presented in this prospectus supplement for illustrative purposes only. None of these appraisals are more than 12 months old as of the cut-off date. See "Risk Factors--Appraisals May Inaccurately Reflect the Value of the Mortgaged Properties" in this prospectus supplement. Environmental Assessments. Except for mortgaged properties that are the subject of environmental insurance obtained in lieu of a Phase I environmental site assessment as described under "--Environmental Insurance" below, all of the mortgaged properties securing the pooled mortgage loans have been subject to environmental site assessments by a third-party consultant, or in some cases an update of a previous assessment or transaction screen, in connection with the origination of the pooled mortgage loans. In some cases, a Phase II site assessment was also performed. In certain cases, these environmental assessments revealed conditions that resulted in requirements that the related borrowers establish operations and maintenance plans, monitor the mortgaged property or nearby properties, abate or remediate the condition, and/or provide additional security such as letters of credit, reserves, secured creditor impaired property policy, environmental insurance policy or pollution limited liability environmental impairment policy or environmental indemnification. None of these environmental assessments are more than 12 months old as of the cut-off date, except in the case of one (1) mortgaged property, representing security for 0.2% of the initial mortgage pool balance (and 0.3% of the initial loan group 1 balance), for which the related environmental assessment is more than 12 months old as of the cut-off date. See "Risk Factors--Environmental Conditions of the Mortgaged Properties May Subject the Trust Fund to Liability Under Federal and State Laws, Reducing the Value and Cash Flow of the Mortgaged Properties, Which May Result in Reduced Payments on Your Offered Certificates" in this prospectus supplement. Property Condition Assessments. In general, a licensed engineer, architect or consultant inspected the related mortgaged property, in connection with the origination of each of the pooled mortgage loans or in connection with this offering, to assess the condition of the structure, exterior walls, roofing, interior structure and mechanical and electrical systems. Engineering reports by licensed engineers, architects or consultants generally were prepared, except for newly constructed properties and properties for which the borrower's interest consists of a fee interest solely on the land and not any improvements, for the mortgaged properties in connection with the origination of the related pooled mortgage loan or in connection with this offering. None of these engineering reports are more than 12 months old as of the cut-off date. See "Risk Factors--Property Inspections and Engineering Reports May Not Reflect All Conditions That Require Repair on a Mortgaged Property" in this prospectus S-146 supplement. In certain cases where material deficiencies were noted in such reports, the related borrower was required to establish reserves for replacement or repair or remediate the deficiency. Seismic Review Process. In general, the underwriting guidelines applicable to the origination of the pooled mortgage loans required that prospective borrowers seeking loans secured by properties located in California and areas of other states where seismic risk is deemed material obtain a seismic engineering report of the building and, based thereon and on certain statistical information, an estimate of damage based on the percentage of the replacement cost of the building in an earthquake scenario. This percentage of the replacement cost is expressed in terms of probable maximum loss ("PML"), probable loss ("PL"), or scenario expected loss ("SEL"). Generally, any of the pooled mortgage loans as to which the property was estimated to have PML, PL or SEL in excess of 20% of the estimated replacement cost, would either be subject to a lower loan-to-value limit at origination, be conditioned on seismic upgrading (or appropriate reserves or letter of credit for retrofitting) or be conditioned on satisfactory earthquake insurance, or be structured with recourse to an individual guarantor for a portion of the loan amount. Zoning and Building Code Compliance. Each mortgage loan seller took steps to establish that the use and operation of the mortgaged properties that represent security for its pooled mortgage loans, at their respective dates of origination, were in compliance in all material respects with, or were legally existing non-conforming uses or structures under, applicable zoning, land-use and similar laws and ordinances, but we cannot assure you that such steps revealed all possible violations. Evidence of such compliance may have been in the form of legal opinions, zoning consultants reports, confirmations from government officials, title insurance endorsements, survey endorsements and/or representations by the related borrower contained in the related mortgage loan documents. Violations may be known to exist at any particular mortgaged property, but the related mortgage loan seller has informed us that it does not consider any such violations known to it to be material. Environmental Insurance. Thirty (30) mortgaged properties, securing 5.5% of the initial mortgage pool balance (which pooled mortgage loans consist of 26 pooled mortgage loans in loan group 1, representing 5.7% of the initial loan group 1 balance, and 4 pooled mortgage loans in loan group 2, representing 3.8% of the initial loan group 2 balance), are each the subject of a group secured creditor impaired property policy or an individual secured creditor impaired property policy, environmental insurance policy or pollution legal liability environmental impairment policy. In the case of each of these policies, the insurance was obtained to provide coverage for certain losses that may arise from certain known or suspected adverse environmental conditions that exist or may arise at the related mortgaged property or was obtained in lieu of a Phase I environmental site assessment, in lieu of a recommended or required Phase II environmental site assessment or in lieu of an environmental indemnity from a borrower principal or a high net-worth entity. These policies will be assigned to the trust. The premiums for these policies have been or, as of the date of initial issuance of the series 2006-PWR12 certificates, will have been paid in full. In general, each of the secured creditor impaired property, environmental insurance or pollution limited liability environmental impairment policies referred to above provides coverage with respect to the subject pooled mortgage loans for one or more of the following losses, subject to the coverage limits discussed below, and further subject to each policy's conditions and exclusions: o if during the term of a policy, a borrower defaults under its mortgage loan and adverse environmental conditions exist at levels above legal limits on the related underlying real property, the insurer will indemnify the insured for the outstanding principal balance of the related mortgage loan on the date of the default, together with accrued interest from the date of default until the date that the outstanding principal balance is paid; or o if the insured becomes legally obligated to pay as a result of a claim first made against the insured and reported to the insurer during the term of a policy, for bodily injury, property damage or clean-up costs resulting from adverse environmental conditions on, under or emanating from an underlying real property, the insurer will pay the lesser of a specified amount and the amount of that claim; and/or S-147 o if the insured enforces the related mortgage, the insurer will thereafter pay the lesser of a specified amount and the amount of the legally required clean-up costs for adverse environmental conditions at levels above legal limits which exist on or under the acquired underlying real property, provided that the appropriate party reported those conditions to the government in accordance with applicable law. With respect to the mortgaged property identified on Appendix B to this prospectus supplement as Ardmore West Shopping Center, which represents security for approximately 1.0% of the initial pool balance (and 1.1% of the initial loan group 1 balance), a pollution legal liability environmental insurance policy naming the lender as the insured was provided by the borrower in lieu of an environmental indemnity with a limit of liability of $10,500,000, with a $50,000 deductible. However, the policy does not cover contamination to either soil or groundwater from dry cleaning constituents. The lender and its successors and assigns is named as "additional insured" on the policy. The policy will remain in effect during the loan term of 10 years. With respect to the pooled mortgage loan secured by the mortgaged property identified on Appendix B to this prospectus supplement as Bellevue Plaza, which represents security for approximately 0.4% of the initial mortgage pool balance (and 0.5% of the initial loan group 1 balance), a pollution limited liability environmental impairment policy was provided by the borrower, with a policy limit of $2,500,000 for remediation costs relating to documented soil and ground water impact from an on-site dry cleaning business at the property. The policy expires on February 13, 2006, prior to the maturity date, but the borrower is obligated to keep a policy in place during the term of the loan. There is a $50,000 deductible for each claim. The secured creditor impaired property, environmental insurance and pollution limited liability impairment environmental policies do not cover adverse environmental conditions that the insured first became aware of before the term of the policy unless those conditions were disclosed to the insurer before the policy was issued. The policies also do not insure against any liability resulting from the presence of asbestos containing materials, radon gas or lead paint. However, property condition assessments or engineering surveys were conducted for the mortgaged properties covered by the policies. If the related report disclosed the existence of material amounts of lead based paint, asbestos containing materials or radon gas affecting such a mortgaged property, the related borrower was required to remediate the condition before the closing of the related pooled mortgage loan, establish a reserve from loan proceeds in an amount considered sufficient by the mortgage loan seller or agree to establish an operations and maintenance plan. The secured creditor impaired property, environmental insurance and pollution limited liability environmental policies may contain additional limitations and exclusions, such as an exclusion from coverage for mold and other microbial contamination, and a limitation that coverage be limited to the lesser of the outstanding loan balance or post-foreclosure cleanup cost, further subject to policy limits. The group secured creditor impaired property policy generally requires that the appropriate party associated with the trust report a claim during the term of the policy, which generally extends five years beyond the term of each covered mortgage loan. No individual claim under the group policy may exceed $5,000,000. Except as described above with respect to certain pooled mortgage loans, there is no deductible under the secured creditor impaired property, environmental insurance and pollution limited liability impairment environmental policies. In general, the applicable master servicer will be required to report any claims of which it is aware that arise under a secured credit impaired property, environmental insurance or pollution limited liability impairment environmental policy relating to a mortgage loan while that loan is not a specially serviced mortgage loan and the applicable special servicer will be required to report any claims of which it is aware that arise under the policy while that loan is a specially serviced mortgage loan or the related mortgaged property has become an REO property. Each insurance policy referred to above has been issued or, as of the date of initial issuance of the series 2006-PWR12 certificates, will have been issued. LOAN PURPOSE Fifty nine (59) pooled mortgage loans, representing 35.4% of the initial mortgage pool balance (which pooled mortgage loans consist of 57 pooled mortgage loans in loan group 1, representing 37.8% of the initial loan group 1 balance, S-148 and 2 pooled mortgage loans in loan group 2, representing 12.8% of the initial loan group 2 balance), were originated in connection with the borrower's acquisition of the mortgaged property that secures such mortgage loan, and one hundred fifty four (154) pooled mortgage loans, representing 64.6% of the initial mortgage pool balance (which pooled mortgage loans consist of 128 pooled mortgage loans in loan group 1, representing 62.2% of the initial loan group 1 balance, and 26 pooled mortgage loans in loan group 2, representing 87.2% of the initial loan group 2 balance), were originated in connection with the borrower's refinancing of a previous mortgage loan. ADDITIONAL MORTGAGE LOAN INFORMATION Each of the tables presented in Appendix A to this prospectus supplement sets forth selected characteristics of the mortgage pool presented, where applicable, as of the cut-off date. For a detailed presentation of certain of the characteristics of the pooled mortgage loans and the related mortgaged properties, on an individual basis, see Appendix B and Appendix C to this prospectus supplement, and for a brief summary of the ten (10) largest mortgage loans or groups of cross-collateralized loans in the mortgage pool, see Appendix D to this prospectus supplement. Additional information regarding the pooled mortgage loans is contained (a) in this prospectus supplement under "Risk Factors" and elsewhere in this "Description of the Mortgage Pool" section and (b) under "Legal Aspects of Mortgage Loans" in the accompanying prospectus. For purposes of the numbers presented in this prospectus supplement as well as the tables in Appendix A and for the information presented in Appendix B, Appendix C and Appendix D: (1) References to "DSCR" are references to "Debt Service Coverage Ratios". In general, debt service coverage ratios are used by income property lenders to measure the ratio of (a) cash currently generated by a property or expected to be generated by a property based upon executed leases that is available for debt service to (b) required debt service payments. However, debt service coverage ratios only measure the current, or recent, ability of a property to service mortgage debt. If a property does not possess a stable operating expectancy (for instance, if it is subject to material leases that are scheduled to expire during the loan term and that provide for above-market rents and/or that may be difficult to replace), a debt service coverage ratio may not be a reliable indicator of a property's ability to service the mortgage debt over the entire remaining loan term. For purposes of this prospectus supplement (unless specifically stated otherwise), including for the tables in Appendix A and the information presented in Appendix B, Appendix C and Appendix D, the "Debt Service Coverage Ratio" or "DSCR" for any pooled mortgage loan is calculated pursuant to the definition thereof under the "Glossary" in this prospectus supplement. The debt service coverage ratio information presented in this prospectus supplement with respect to each pooled mortgage loan included in a Mortgage Loan Group that includes one or more Non-Pooled Subordinate Loans reflects the debt service payable under that pooled mortgage loan but does not reflect the debt service payable on those Non-Pooled Subordinate Loans. The debt service coverage ratio information for the pooled mortgage loans contained in any group of cross-collateralized pooled mortgage loans is calculated on the basis of the aggregate cash flow generated by all the mortgaged properties securing the group and the aggregate debt service payable under all of those pooled mortgage loans. In connection with the calculation of DSCR, in determining Underwritten Net Cash Flow for a mortgaged property, the applicable mortgage loan seller relied on rent rolls and other generally unaudited financial information provided by the respective borrowers and calculated stabilized estimates of cash flow that took into consideration historical financial statements, material changes in the operating position of the mortgaged property of which the mortgage loan seller was aware (e.g., new signed leases or end of "free rent" periods and market data), and estimated capital expenditures, leasing commissions and tenant improvement reserves. The applicable mortgage loan seller made changes to operating statements and operating information obtained from the respective borrowers, resulting in either an increase or decrease in the estimate of Underwritten Net Cash Flow derived therefrom, based upon the mortgage loan seller's evaluation of such operating statements and operating information and the assumptions applied by the respective borrowers in preparing such statements and information. In most cases, the relevant borrower supplied "trailing-12 months" income and/or expense information or the most recent operating statements or rent rolls were utilized. In some cases, partial year operating income data was annualized, with certain adjustments for items deemed not appropriate to be annualized. In some instances, historical expenses were inflated. For purposes of calculating Underwritten Net Cash Flow for pooled mortgage loans where leases have been executed by S-149 one or more affiliates of the borrower, the rents under some of such leases have been adjusted downward to reflect market rents for similar properties if the rent actually paid under the lease was significantly higher than the market rent for similar properties. Historical operating results may not be available for some of the pooled mortgage loans which are secured by mortgaged properties with newly constructed improvements, mortgaged properties with triple net leases, mortgaged properties that have recently undergone substantial renovations and newly acquired mortgaged properties. In such cases, items of revenue and expense used in calculating Underwritten Net Cash Flow were generally derived from rent rolls, estimates set forth in the related appraisal, leases with tenants or from other borrower-supplied information. No assurance can be given with respect to the accuracy of the information provided by any borrowers, or the adequacy of the procedures used by the applicable mortgage loan seller in determining the presented operating information. The Debt Service Coverage Ratios are presented in this prospectus supplement for illustrative purposes only and, as discussed above, are limited in their usefulness in assessing the current, or predicting the future, ability of a mortgaged property to generate sufficient cash flow to repay the related mortgage loan. Accordingly, no assurance can be given, and no representation is made, that the Debt Service Coverage Ratios accurately reflect that ability. (2) References in the tables to "Cut-off Date LTV" are references to "Cut-off Date Loan-to-Value Ratio", references to "Balloon LTV" are references to "LTV Ratio at Maturity" and references to "Remaining Term" are references to "Stated Remaining Term to Maturity or ARD". For purposes of this prospectus supplement (unless specifically stated otherwise), including for the tables in Appendix A and the information presented in Appendix B, Appendix C and Appendix D, the "Cut-off Date Loan-to-Value Ratio", "LTV Ratio at Maturity" or "Stated Remaining Term to Maturity or ARD" for any mortgage loan is calculated pursuant to the definition thereof under the "Glossary" in this prospectus supplement. The loan-to-value ratio information presented in this prospectus supplement with respect to each pooled mortgage loan included in a Mortgage Loan Group that includes one or more Non-Pooled Subordinate Loans reflects the indebtedness under that pooled mortgage loan but does not reflect the indebtedness on those Non-Pooled Subordinate Loans. The loan-to-value ratio information for the pooled mortgage loans contained in any group of cross-collateralized pooled mortgage loans is calculated on the basis of the aggregate indebtedness under all of those pooled mortgage loans and the aggregate value of all the mortgaged properties securing the group. The value of the related mortgaged property or properties for purposes of determining the Cut-off Date LTV are each based on the appraisals described above under "--Assessments of Property Value and Condition--Appraisals". No representation is made that any such value would approximate either the value that would be determined in a current appraisal of the related mortgaged property or the amount that would be realized upon a sale. (3) The loan per net rentable square foot or unit, as applicable, information presented in this prospectus supplement with respect to each pooled mortgage loan included in a Mortgage Loan Group that includes one or more Non-Pooled Subordinate Loans reflects the indebtedness under that pooled mortgage loan but does not reflect the indebtedness on those Non-Pooled Subordinate Loans. Loan per net rentable area or unit for the pooled mortgage loans in any group of cross-collateralized pooled mortgage loans is calculated on the basis of the aggregate indebtedness under the group and the aggregate net rentable area or units at all the mortgaged properties securing the group. (4) You should review the notes to Appendix B to this prospectus supplement for information regarding certain loan-specific adjustments regarding the calculation of debt service coverage ratio information, loan-to-value ratio information and/or loan per net rentable square foot or unit with respect to certain of the pooled mortgage loans. (5) References to "weighted averages" of the pooled mortgage loans in the mortgage pool or any particular sub-group of the pooled mortgage loans are references to averages weighted on the basis of the cut-off date principal balances of the pooled mortgage loans in the mortgage pool or that sub-group, as the case may be. S-150 (6) If we present a debt rating for some tenants and not others in the tables, you should assume that the other tenants are not rated and/or have below-investment grade ratings. Presentation of a tenant rating should not be construed as a statement that the relevant tenant will perform or be able to perform its obligations under the related lease. (7) We present maturity and anticipated repayment dates and original and remaining terms for the pooled mortgage loans based on the assumption that scheduled monthly debt service payments, including balloon payments, will be distributed to investors in the respective months in which those payments are due. The sum in any column of any of the tables in Appendix A may not equal the indicated total due to rounding. Generally, the loan documents with respect to the mortgage loans require the borrowers to provide the related lender (such as the trust) with annual operating statements and rent rolls. CHANGES IN MORTGAGE POOL CHARACTERISTICS The foregoing description of the mortgage pool and the corresponding mortgaged properties is based upon scheduled principal payments due on the pooled mortgage loans on or before the cut-off date. Before the Issue Date, one or more pooled mortgage loans may be removed from the mortgage pool if we deem the removal necessary or appropriate or if those mortgage loans are prepaid. A limited number of other mortgage loans may be included in the mortgage pool before the Issue Date, unless including those mortgage loans would materially alter the characteristics of the mortgage pool, as described in this prospectus supplement. Accordingly, the characteristics of the mortgage loans constituting the mortgage pool at the time of initial issuance of the offered certificates may vary from those described in this prospectus supplement. ASSIGNMENT OF THE POOLED MORTGAGE LOANS On or before the Issue Date, the mortgage loan sellers will transfer to us those mortgage loans that are to be included in the trust fund, and we will transfer to the trust fund all of those mortgage loans. In each case, the transferor will assign the mortgage loans, without recourse, to the trustee, except as described in the next succeeding paragraph. See the section of the accompanying prospectus titled "Description of the Pooling and Servicing Agreements--Assignment of Mortgage Loans; Repurchases". With respect to any mortgage for which the related assignment of mortgage, assignment of assignment of leases, security agreements and/or UCC financing statements has been recorded in the name of Mortgage Electronic Registration Systems, Inc. ("MERS") or its designee, no assignment of mortgage, assignment of assignment of leases, security agreements and/or UCC financing statements in favor of the trustee will be required to be prepared or delivered and, instead, the applicable master servicer, at the direction of the related mortgage loan seller, will take all actions as are necessary to cause the trustee on behalf of the trust fund to be shown as, and the trustee will take all actions necessary to confirm that the trustee on behalf of the trust fund is shown as, the owner of the related pooled mortgage loan on the records of MERS for purposes of the system of recording transfers of beneficial ownership of mortgages maintained by MERS. The trustee will include the foregoing confirmation in any certification required to be delivered by the trustee after the issue date pursuant to the series 2006-PWR12 pooling and servicing agreement. If-- o any of the documents required to be delivered by a mortgage loan seller to the trustee is not delivered or is otherwise defective, and o that omission or defect materially and adversely affects the interests of the series 2006-PWR12 certificateholders, or any of them, with respect to the subject loan, including, but not limited to, a material and adverse effect on any of the payments payable with respect to any of the series 2006-PWR12 certificates or on the value of those certificates, then the omission or defect will constitute a material document defect. The series 2006-PWR12 pooling and servicing agreement may provide that the absence of select mortgage loan documents is deemed to be a material document defect. The S-151 rights of the series 2006-PWR12 certificateholders, or of the trustee on their behalf, against the applicable mortgage loan seller with respect to any material document defect are described under "--Cures, Repurchases and Substitutions" below. The series 2006-PWR12 pooling and servicing agreement requires that, unless recorded in the name of MERS, the assignments in favor of the trustee with respect to each pooled mortgage loan be submitted for recording in the real property records or filing with the Secretary of State, as applicable, of the appropriate jurisdictions within a specified number of days following the delivery at the expense of the related mortgage loan seller. REPRESENTATIONS AND WARRANTIES As of the Issue Date, each mortgage loan seller will make, with respect to each of the pooled mortgage loans sold to us by that mortgage loan seller, specific representations and warranties generally to the effect that, subject to certain exceptions contained in the applicable mortgage loan purchase agreement: o The information relating to the mortgage loan set forth in the loan schedule attached to the mortgage loan purchase agreement, will be true and correct in all material respects as of the cut-off date. That information will include select items of information included on Appendix B to this prospectus supplement, including-- 1. the identification of the related mortgaged property, 2. the cut-off date principal balance of the mortgage loan, 3. the amount of the monthly debt service payment, 4. the mortgage interest rate, and 5. the maturity date and the original and remaining term to stated maturity (or, in the case of an ARD Loan, the anticipated repayment date and the original and remaining term to that date). o Immediately prior to its transfer and assignment of the related pooled mortgage loan, the mortgage loan seller had good title to, and was the sole owner of, the mortgage loan. o Except as otherwise described under "--Certain Characteristics of the Mortgage Pool--Subordinate and/or Other Financing" above, the related mortgage instrument is a valid and, subject to the exceptions in the next bullet, enforceable first priority lien upon the corresponding mortgaged property, free and clear of all liens and encumbrances other than Permitted Encumbrances. o The promissory note, the mortgage instrument and each other agreement executed by or on behalf of the related borrower in connection with the mortgage loan is the legal, valid and binding obligation of the related borrower, subject to any non-recourse provisions contained in any of the foregoing agreements and any applicable state anti-deficiency or market value limit deficiency legislation. In addition, each of the foregoing agreements is enforceable against the maker in accordance with its terms, except as enforcement may be limited by (1) bankruptcy, insolvency, fraudulent transfer, reorganization or other similar laws affecting the enforcement of creditors' rights generally and (2) general principles of equity, and except that certain provisions in those agreements may be further limited or rendered unenforceable by applicable law, but, subject to the limitations set forth in the foregoing clauses (1) and (2), those limitations or that unenforceability will not render those loan documents invalid as a whole or substantially interfere with the mortgagee's realization of the principal benefits and/or security provided thereby. o The mortgage loan seller has no knowledge of any proceeding pending or any written notice of any proceeding threatened for the condemnation of all or any material portion of the mortgaged property securing any pooled mortgage loan. o There exists an American Land Title Association or comparable form of lender's title insurance policy, as approved for use in the applicable jurisdiction (or, if the title policy has yet to be issued, a pro forma policy or marked up title insurance commitment or a preliminary title policy with escrow instructions binding on the S-152 issuer), on which the required premium has been paid, insuring that the related mortgage is a valid first priority lien of the related mortgage instrument in the original principal amount of the mortgage loan after all advances of principal, subject only to-- 1. Permitted Encumbrances, and 2. the discussion under "Certain Characteristics of the Mortgage Pool--Subordinate and/or Other Financing" above. o The proceeds of the pooled mortgage loan have been fully disbursed, except in those cases where the full amount of the pooled mortgage loan has been made but a portion of the proceeds is being held in escrow or reserve accounts pending satisfaction of conditions relating to leasing, repairs and other matters with respect to the related mortgaged property, and there is no requirement for future advances under the pooled mortgage loan. o If the related mortgage instrument is a deed of trust, a trustee, duly qualified under applicable law to serve as such, has either been properly designated and currently so serves or may be substituted in accordance with the mortgage and applicable law. o Except as identified in the engineering report obtained in connection with the origination of the mortgage loan, the related mortgaged property is to the applicable mortgage loan seller's knowledge, free and clear of any damage that would materially and adversely affect its value as security for the mortgage loan (except in any such case where (1) an escrow of funds or insurance coverage or a letter of credit exists in an amount reasonably estimated to be sufficient to effect the necessary repairs and maintenance or (2) such repairs and maintenance have been completed or are required to be completed). The mortgage loan purchase agreements will set forth additional representations and warranties to be made by each mortgage loan seller. The representations and warranties made by each mortgage loan seller as described above will be assigned by us to the trustee under the series 2006-PWR12 pooling and servicing agreement. If-- o there exists a breach of any of the above-described representations and warranties made by a mortgage loan seller, and o that breach materially and adversely affects the interests of the series 2006-PWR12 certificateholders, or any of them, with respect to the subject loan, including, but not limited to, a material and adverse effect on any of the payments payable with respect to any of the series 2006-PWR12 certificates or on the value of those certificates, then that breach will be a material breach of the representation and warranty. The rights of the series 2006-PWR12 certificateholders, or of the trustee on their behalf, against the applicable mortgage loan seller with respect to any material breach are described under "--Cures, Repurchases and Substitutions" below. CURES, REPURCHASES AND SUBSTITUTIONS If there exists a material breach of any of the representations and warranties made by a mortgage loan seller with respect to any of the mortgage loans sold to us by that mortgage loan seller, as discussed under "--Representations and Warranties" above, or a material document defect with respect to any of those mortgage loans, as discussed under "--Assignment of the Pooled Mortgage Loans" above, then the applicable mortgage loan seller will be required to take one of the following courses of action: o cure the material breach or the material document defect in all material respects; o repurchase the affected pooled mortgage loan at the applicable Purchase Price; or S-153 o prior to the second anniversary of the date of initial issuance of the offered certificates, so long as it does not result in a qualification, downgrade or withdrawal of any rating assigned by the Rating Agencies to the series 2006-PWR12 certificates, as confirmed in writing by each of the Rating Agencies, replace the affected pooled mortgage loan with a substitute mortgage loan that-- 1. has comparable payment terms to those of the pooled mortgage loan that is being replaced, and 2. is acceptable to the series 2006-PWR12 controlling class representative. If the applicable mortgage loan seller replaces one pooled mortgage loan with another mortgage loan, as described in the third bullet of the preceding paragraph, then it will be required to pay to the trust fund the amount, if any, by which-- o the Purchase Price, exceeds o the Stated Principal Balance of the substitute mortgage loan as of the date it is added to the trust. The time period within which the applicable mortgage loan seller must complete the remedy, repurchase or substitution described in the second preceding paragraph, will generally be limited to 90 days following the earlier of its discovery or receipt of notice of the material breach or material document defect, as the case may be. However, in most cases, if the mortgage loan seller is diligently attempting to correct the problem, then it will be entitled to an additional 90 days to complete that remedy, repurchase or substitution. If a pooled mortgage loan as to which a material document defect or material breach of representation exists is to be repurchased or replaced as described above, the pooled mortgage loan is part of a group of cross-collateralized pooled mortgage loans and the applicable document defect or breach does not constitute a material document defect or material breach, as the case may be, as to the other pooled mortgage loans that are part of that group (without regard to this paragraph), then the applicable document defect or breach will be deemed to constitute a material document defect or material breach as to each such other loan in the group for purposes of the above provisions, and the related mortgage loan seller will be obligated to repurchase or replace each such other loan in accordance with the provisions described above unless, in the case of such breach or document defect, the following conditions are satisfied: o the mortgage loan seller (at its expense) delivers or causes to be delivered to the trustee an opinion of counsel to the effect that its repurchase of only those pooled mortgage loans affected by the material defect or breach (without regard to the provisions of this paragraph) will not result in an adverse REMIC or grantor trust event under the pooling and servicing agreement, and o both of the following conditions would be satisfied if the mortgage loan seller were to repurchase or replace only those affected pooled mortgage loans (and not the other loans in the group): o the debt service coverage ratio for all those other loans (excluding the affected loan(s)) for the four calendar quarters immediately preceding the repurchase or replacement is not less than the least of (A) 0.10x below the debt service coverage ratio for the group (including the affected loans set forth in Appendix B to this prospectus supplement, (B) the debt service coverage ratio for the group (including the affected loans) for the four preceding calendar quarters preceding the repurchase or replacement and (C) 1.25x; and o the loan-to-value ratio for the other loans in the group is not greater than the greatest of (A) the loan-to-value ratio for the group (including the affected loan(s)) set forth in Appendix B to this prospectus supplement plus 10%, (B) the loan-to-value ratio for the group (including the affected loan(s)) at the time of repurchase or replacement, and (C) 75%. The cure/repurchase/substitution obligations of each of the mortgage loan sellers, as described above, will constitute the sole remedy available to the series 2006-PWR12 certificateholders in connection with a material breach of any of the representations and warranties made by that mortgage loan seller or a material document defect, in any event with respect to a mortgage loan in the trust fund. S-154 No person other than the related mortgage loan seller will be obligated to perform the obligations of that mortgage loan seller if it fails to perform its cure/repurchase/substitution or other remedial obligations. A mortgage loan seller may have only limited assets with which to fulfill any obligations on its part that may arise as a result of a material document defect or a material breach of any of the mortgage loan seller's representations or warranties. We cannot assure you that a mortgage loan seller has or will have sufficient assets with which to fulfill any obligations on its part that may arise. Expenses incurred by the applicable master servicer, the applicable special servicer and the trustee with respect to enforcing any such obligation will be borne by the applicable mortgage loan seller, or if not, will be reimbursable out of one of the collection accounts to be maintained by the master servicers. SERVICING OF THE MORTGAGE LOANS UNDER THE SERIES 2006-PWR12 POOLING AND SERVICING AGREEMENT GENERAL The servicing and administration of the mortgage loans and any REO Properties in the trust fund will be governed by the series 2006-PWR12 pooling and servicing agreement. In this "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement" section, we describe some of the provisions of the series 2006-PWR12 pooling and servicing agreement relating to the servicing and administration of the mortgage loans and REO Properties subject thereto. You should refer to the accompanying prospectus, in particular the section captioned "Description of the Pooling and Servicing Agreements", for additional important information regarding provisions of the series 2006-PWR12 pooling and servicing agreement that relate to the rights and obligations of the master servicers and the special servicers. Prudential Asset Resources, Inc. will act as master servicer with respect to those pooled mortgage loans sold by PMCF to us for deposit into the trust fund (and any related Non-Pooled Mortgage Loans). Wells Fargo Bank, National Association will act as master servicer with respect to those pooled mortgage loans sold by it, Bear Stearns Commercial Mortgage, Inc., Principal Commercial Funding II, LLC, Principal Commercial Funding, LLC and Nationwide Life Insurance Company to us for deposit into the trust fund (and any related Non-Pooled Mortgage Loans). Principal Global Investors, LLC will act as initial primary servicer on behalf of the applicable master servicer with respect to all of the pooled mortgage loans sold by Principal Commercial Funding II, LLC and Principal Commercial Funding, LLC to us for deposit into the trust fund. Nationwide Life Insurance Company will act as initial primary servicer on behalf of the applicable master servicer with respect to all of the pooled mortgage loans sold by it to us for deposit into the trust fund. ARCap Servicing, Inc. will act as special servicer with respect to all of the pooled mortgage loans and any related Non-Pooled Mortgage Loans, other than the 1675 Broadway Loan Group and the Tuscany Plaza Loan Group. Prudential Asset Resources, Inc. will act as special servicer with respect to the 1675 Broadway Loan Group and the Tuscany Plaza Loan Group. In the case of the pooled mortgage loans sold by Principal Commercial Funding II, LLC, Principal Commercial Funding, LLC and Nationwide Life Insurance Company to us for deposit into the trust fund, the applicable master servicer will perform most of its duties through Principal Global Investors, LLC and Nationwide Life, respectively, as the related primary servicer, which cannot be terminated, including by a successor to the master servicer, except for cause. In the case of a number of other pooled mortgage loans, it is expected that the applicable master servicer may engage one or more sub-servicers whose rights to receive a specified subservicing fee cannot be terminated (except for cause), including by a successor master servicer. Notwithstanding the appointment of those primary servicers or those sub-servicers, the applicable master servicer will remain obligated and liable to the trustee and the certificateholders for the performance of its obligations and duties under the series 2006-PWR12 pooling and servicing agreement to the same extent and under the same terms and conditions as if it alone were servicing and administering the related pooled mortgage loans. Without limiting the preceding statement, the parties to the series 2006-PWR12 pooling and servicing agreement will be required to accept the performance by the primary servicers of the loan servicing duties for which the applicable master servicer is responsible under the series 2006-PWR12 pooling and servicing agreement. The master servicers and the special servicers will each be responsible for servicing and administering the mortgage loans and any REO Properties for which it is responsible, directly or through the primary servicers or sub-servicers, in accordance with the Servicing Standard. S-155 In general, subject to the more specific discussions in the other subsections of this "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement" section, each master servicer will be responsible for the servicing and administration of-- o all mortgage loans as to which it is the applicable master servicer and no Servicing Transfer Event has occurred, and o all worked-out mortgage loans as to which it is the applicable master servicer and no new Servicing Transfer Event has occurred. If a Servicing Transfer Event occurs with respect to any such mortgage loan, that mortgage loan will not be considered to be "worked-out" until all applicable Servicing Transfer Events with respect to such mortgage loan have ceased to exist as contemplated by the definition of "Servicing Transfer Event" in the glossary to this prospectus supplement. Each special servicer, on the other hand, will generally be responsible for the servicing and administration of each mortgage loan as to which a Servicing Transfer Event has occurred and is continuing and for which it is the applicable special servicer. Each special servicer will also be responsible for the administration of each REO Property for which it is the applicable special servicer. The applicable master servicer will transfer servicing of a mortgage loan to the applicable special servicer upon the occurrence of a Servicing Transfer Event with respect to that mortgage loan. The applicable special servicer will return the servicing of that mortgage loan to the applicable master servicer, and that mortgage loan will be considered to have been worked-out, if and when all Servicing Transfer Events with respect to that mortgage loan cease to exist. Notwithstanding the transfer of the servicing of any pooled mortgage loan to the applicable special servicer, the applicable master servicer will continue to be responsible for providing various reports to the certificate administrator and/or the trustee, making any required monthly debt service advances and making any required servicing advances with respect to any specially serviced mortgage loans and REO Properties as to which it is the applicable master servicer. None of the master servicers or special servicers will have responsibility for the performance by any other master servicer or special servicer of its respective obligations and duties under the series 2006-PWR12 pooling and servicing agreement, unless the same party acts in all or any two such capacities. For as long as any pooled mortgage loan included in a Trust-Serviced Mortgage Loan Group, or any related REO Property, is part of the trust fund, the applicable master servicer and, if and when necessary, the applicable special servicer will be responsible for servicing and administering and will otherwise have duties to the holders of the related Trust-Serviced Non-Pooled Mortgage Loan, including any such holders under the applicable pooling and servicing agreements in future securitizations. The servicing and administration of the Trust-Serviced Mortgage Loan Groups and any related REO Property are to be conducted for the benefit of the series 2006-PWR12 certificateholders and the holder of the related Trust-Serviced Non-Pooled Mortgage Loan, as a collective whole. The Trust-Serviced Non-Pooled Mortgage Loans will not be part of the trust fund. The section in the accompanying prospectus entitled "Description of the Pooling and Servicing Agreements--Some Matters Regarding the Servicer and the Depositor" discusses how each master servicer and each special servicer may resign or assign its obligations under the series 2006-PWR12 pooling and servicing agreement. SERVICING AND OTHER COMPENSATION AND PAYMENT OF EXPENSES The Master Servicing Fee. The principal compensation to be paid to the master servicers with respect to their master servicing activities will be the master servicing fee. Master servicing fees earned with respect to any pooled mortgage loan will be payable to the applicable master servicer for that pooled mortgage loan. The master servicing fee: o will be earned with respect to each and every pooled mortgage loan, including-- 1. each such pooled mortgage loan, if any, that is a specially serviced mortgage loan, S-156 2. each such pooled mortgage loan, if any, as to which the corresponding mortgaged property has become an REO Property, and 3. each such pooled mortgage loan as to which defeasance has occurred; and o in the case of each such pooled mortgage loan, will-- 1. be calculated on the same interest accrual basis as that pooled mortgage loan, which will be a 30/360 Basis or an Actual/360 Basis, as applicable, 2. accrue at a master servicing fee rate, on a loan-by-loan basis, 3. accrue on the same principal amount as interest accrues or is deemed to accrue from time to time with respect to that pooled mortgage loan, and 4. be payable monthly to the applicable master servicer from amounts received with respect to interest on that pooled mortgage loan. Each of Principal Global Investors, LLC and Nationwide Life will be entitled to a primary servicing fee with respect to the pooled mortgage loans for which it is the primary servicer. The rate at which the primary servicing fee for each mortgage loan accrues is included in the applicable master servicing fee rate for each of those pooled mortgage loans. If a master servicer resigns or is terminated for any reason, that master servicer will be entitled to continue to receive a portion of the master servicing fee that accrues with respect to each pooled mortgage loan for which it is the applicable master servicer at a specified number of basis points (which number of basis points may be zero). Any successor master servicer will be entitled to receive the other portion of that master servicing fee. The applicable master servicer will be entitled to a master servicing fee with respect to its master servicing activities relating to the Trust-Serviced Non-Pooled Mortgage Loans, which fee will be payable solely from interest collections on the related Trust-Serviced Non-Pooled Mortgage Loan. Prepayment Interest Shortfalls. The series 2006-PWR12 pooling and servicing agreement will require each master servicer to make a non-reimbursable compensating interest payment on each distribution date in an amount equal to the total amount of Prepayment Interest Shortfalls (if any) incurred in connection with principal prepayments received during the most recently ended collection period with respect to pooled mortgage loans as to which that master servicer is the applicable master servicer, to the extent those Prepayment Interest Shortfalls arose from voluntary principal prepayments made by a borrower on such pooled mortgage loans that are not specially serviced mortgage loans or defaulted mortgage loans. Neither master servicer will be required to make a compensating interest payment in connection with involuntary principal prepayments (including those made out of insurance proceeds, condemnation proceeds or liquidation proceeds), principal prepayments accepted with the specific consent of the series 2006-PWR12 controlling class representative or on specially serviced mortgage loans or defaulted mortgage loans. Any payments made by a master servicer with respect to any distribution date to cover Prepayment Interest Shortfalls will be included in the Available Distribution Amount for that distribution date, as described under "Description of the Offered Certificates--Distributions" in this prospectus supplement. If the amount of Prepayment Interest Shortfalls incurred with respect to the pooled mortgage loans during any collection period exceeds the total of any and all payments made by the master servicers with respect to the related distribution date to cover those Prepayment Interest Shortfalls with respect to the pooled mortgage loans respectively being serviced by them, then the resulting Net Aggregate Prepayment Interest Shortfall will be allocated among the respective classes of the series 2006-PWR12 principal balance certificates, in reduction of the interest distributable on those certificates, on a pro rata basis as and to the extent described under "Description of the Offered Certificates--Distributions--Interest Distributions" in this prospectus supplement. The provisions described under "--Certain Remittance Provisions and Coverage for Related Potential Shortfalls" below do not modify (by increasing or decreasing) a servicer's obligation (or lack thereof) to pay compensating interest in respect of borrower-created Prepayment Interest Shortfalls as described under this section. Certain Remittance Provisions and Coverage for Related Potential Shortfalls. In the case of each of the pooled mortgage loans that provide for scheduled payments to be due on the third or fifth day of each month, if the pooled mortgage S-157 loan is the subject of a principal prepayment after the end of the collection period ending in any month and the pooled mortgage loan is not a specially serviced mortgage loan or a defaulted mortgage loan, then the applicable master servicer will be required to cause to be included in the Available Distribution Amount for the distribution date occurring in that month (a) the principal portion of the payment, (b) any interest that accompanied the payment (in circumstances involving a principal prepayment this will be net of any portion of the accompanying interest payment that is a prepayment interest excess representing interest accrued from and after the due date in that month, which portion will be retained by the applicable master servicer as additional master servicer compensation) and (c) as already described under (and without duplication of the obligations described in) "Prepayment Interest Shortfalls" above, solely in the case of a principal prepayment made before the due date in that month, if the borrower is not required to pay interest to the next due date, a payment of compensating interest (to be made by the applicable master servicer from its own funds) in an amount equal to the interest that would have accrued (at the related Mortgage Pass-Through Rate) on the principal portion of the payment from and including the prepayment date to but excluding that due date. If the applicable master servicer fails to perform all obligations set forth in the previous sentence, then that failure will constitute an Event of Default on the part of the applicable master servicer, but the applicable master servicer will be entitled to cure that Event of Default (and may not be terminated under the series 2006-PWR12 pooling and servicing agreement unless it does not effect such cure) by making (from its own funds), not later than the master servicer remittance date in the month immediately following the month in which the payment occurred, a payment of compensating interest in an aggregate amount equal to the sum of one-month's interest (at the related Mortgage Pass-Through Rate) on the principal portion of the payment and (as already described under (and without duplication of the obligations described in) "Prepayment Interest Shortfalls" above, solely in the case of a prepayment that was made in the earlier month before the due date in that month) the interest that would have accrued (at the related Mortgage Pass-Through Rate) on the prepayment from and including the prepayment date to but excluding that due date (net of any portion of such aggregate amount that the applicable master servicer otherwise pays as compensating interest as described under "--Prepayment Interest Shortfalls" above). If the master servicer performs the obligation described in second preceding sentence above, then the principal amounts remitted as described in that sentence will constitute a part of the Principal Distribution Amount for the distribution date immediately following the date of the principal prepayment (and an updated CMSA loan periodic update file will reflect this). If the master servicer initially fails to perform that obligation (whether or not it cures the failure as described above), then the principal amounts that would otherwise (if the master servicer had not failed to perform its obligations as described above) have been included in the Principal Distribution Amount for the distribution date immediately following the date of the principal prepayment will instead be treated as if they were collections of principal received during the collection period related to the next succeeding distribution date. In the case of each of those pooled mortgage loans that matures on the third or fifth day of a month, if the related balloon payment due on that maturity date is timely received on its due date, then that balloon payment will be considered to have been received during the collection period related to that month's distribution date for purposes of distributing the Available Distribution Amount and the Principal Distribution Amount for that month; otherwise, the applicable master servicer will be required to make the applicable monthly debt service advance as otherwise described under "Description of the Offered Certificates--Advances of Delinquent Monthly Debt Service Payments". In the case of the pooled mortgage loans that permit a prepayment to be made, subject to a next business day convention, during the first five days of a month in which prepayment is permitted, the applicable master servicer will in any event be entitled to remit those prepayments as part of the master servicer remittance amount for that month so as to avoid a prepayment interest shortfall that may otherwise result. Principal Special Servicing Compensation. The principal compensation to be paid to the special servicers with respect to their special servicing activities will be-- o the special servicing fee, o the workout fee, and o the liquidation fee. Special servicing fees, workout fees and liquidation fees earned with respect to each mortgage loan or any related REO Property will be payable to the applicable special servicer. S-158 Special Servicing Fee. The special servicing fee: o will be earned with respect to-- 1. each specially serviced mortgage loan serviced by the applicable special servicer, if any, and 2. each mortgage loan serviced by the applicable special servicer, if any, as to which the corresponding mortgaged property has become an REO Property; o in the case of each mortgage loan described in the foregoing bullet, will-- 1. be calculated on the same interest accrual basis as that mortgage loan, which will be a 30/360 Basis or an Actual/360 Basis, as applicable, 2. accrue at a special servicing fee rate of 0.25% per annum, and 3. accrue on the same principal amount as interest accrues or is deemed to accrue from time to time with respect to that mortgage loan; and o except as otherwise described in the next paragraph, will be payable monthly from related liquidation proceeds, insurance proceeds or condemnation proceeds (if any) and then from general collections on all the pooled mortgage loans and any related REO Properties that are on deposit in the master servicers' collection accounts from time to time. Notwithstanding the foregoing, any special servicing fees earned with respect to any Mortgage Loan Group that includes a Non-Pooled Subordinate Loan will be payable out of any collections on or with respect to the applicable Non-Pooled Subordinate Loan and/or the applicable Non-Pooled Subordinate Noteholder's share of collections on any related REO Property then in the possession of the applicable master servicer prior to payment out of any collections described in the last bullet of the immediately preceding paragraph. Any special servicing fees earned with respect to any Non-Pooled Subordinate Loan will be payable solely out of collections on that Non-Pooled Subordinate Loan. Workout Fee. The applicable special servicer will, in general, be entitled to receive a workout fee with respect to each mortgage loan worked out by that special servicer. Except as otherwise described in the next sentence, the workout fee will be payable out of, and will be calculated by application of a workout fee rate of 1.00% to, each payment of interest, other than Default Interest and Post-ARD Additional Interest, and each payment of principal received on the mortgage loan for so long as it remains a worked-out mortgage loan. Notwithstanding the foregoing, any workout fees earned with respect to any Mortgage Loan Group that includes a Non-Pooled Subordinate Loan will be payable out of any collections on or with respect to the related Non-Pooled Subordinate Loan and/or the related Non-Pooled Subordinate Noteholder's share of collections on any related REO Property then in the possession of the applicable master servicer prior to payment out of any collections on the related pooled mortgage loans or any other pooled mortgage loan. Any workout fees earned with respect to any Non-Pooled Subordinate Loan will be payable solely out of collections on that Non-Pooled Subordinate Loan. The workout fee with respect to any worked-out mortgage loan will cease to be payable if that worked-out mortgage loan again becomes a specially serviced mortgage loan or if the related mortgaged property becomes an REO Property. However, a new workout fee would become payable if the mortgage loan again became a worked-out mortgage loan after having again become a specially serviced mortgage loan. If a special servicer is terminated or resigns, it will retain the right to receive any and all workout fees payable with respect to mortgage loans that were worked-out by it (or, except in circumstances where that special servicer is terminated for cause, as to which the circumstances that constituted the applicable Servicing Transfer Event were resolved and the borrower has timely made at least one monthly debt service payment according to that work-out) and as to which no new Servicing Transfer Event had occurred as of the time of its termination or resignation. The successor to that special servicer will not be entitled to any portion of those workout fees. Although workout fees are intended to provide the special servicers with an incentive to perform their duties better, the payment of any workout fee will reduce amounts payable to the series 2006-PWR12 certificateholders. S-159 Liquidation Fee. The applicable special servicer will be entitled to receive a liquidation fee with respect to each specially serviced mortgage loan for which a full, partial or discounted payoff is obtained from the related borrower. The applicable special servicer will also be entitled to receive a liquidation fee with respect to any specially serviced mortgage loan or REO Property as to which it receives any liquidation proceeds, insurance proceeds or condemnation proceeds, except as described in the next paragraph. In each case, except as described in the next paragraph, the liquidation fee will be payable from, and will be calculated by application of a liquidation fee rate of 1.00% to, the related payment or proceeds, exclusive of any portion of that payment or proceeds that represents a recovery of Default Interest, late payment charges and/or Post-ARD Additional Interest. In general, no liquidation fee will be payable based on, or out of, proceeds received in connection with the purchase or repurchase of any pooled mortgage loan from the trust fund by any person (whether by a mortgage loan seller in connection with a material breach of representation or warranty or a material document defect in accordance with the related mortgage loan purchase agreement or by the general special servicer or 2006-PWR12 controlling class representative pursuant to the exercise of the option described under "--Fair Value Purchase Option" below, by any person in connection with a termination of the trust fund or by another creditor of the related borrower pursuant to any co-lender, intercreditor or other similar agreement, or otherwise). Any liquidation fees earned with respect to any Mortgage Loan Group that includes a Non-Pooled Subordinate Loan will be payable out of any collections on or with respect to the related Non-Pooled Subordinate Loan and/or the related Non-Pooled Subordinate Noteholder's share of proceeds or payments then in the possession of the applicable master servicer prior to payment out of any collections on the related pooled mortgage loan or any other pooled mortgage loans. Any liquidation fees earned with respect to any Non-Pooled Subordinate Loan will be payable solely out of collections on that Non-Pooled Subordinate Loan. Although liquidation fees are intended to provide the special servicers with an incentive to better perform their duties, the payment of any liquidation fee will reduce amounts payable to the series 2006-PWR12 certificateholders. Additional Servicing Compensation. The following items collected on any mortgage loan will be allocated among the master servicers and the special servicers as additional compensation in accordance with the series 2006-PWR12 pooling and servicing agreement: o any late payment charges and Default Interest actually collected on the pooled mortgage loans, except to the extent that the series 2006-PWR12 pooling and servicing agreement requires the application of late payment charges and/or Default Interest to the payment or reimbursement of interest accrued on advances previously made on the related mortgage loan, o any Prepayment Interest Excesses arising from any principal prepayments on the pooled mortgage loans, and o any assumption fees, assumption application fees, modification fees, extension fees, consent fees, release fees, waiver fees, fees paid in connection with defeasance and earn-out fees or other similar fees. Each of the master servicers and each of the special servicers will be authorized to invest or direct the investment of funds held in any collection account, escrow and/or reserve account or REO account maintained by it, in Permitted Investments. See "--Collection Accounts" below. The applicable master servicer or special servicer -- o will be entitled to retain any interest or other income earned on those funds, and o will be required to cover any losses of principal of those investments from its own funds, to the extent those losses are incurred with respect to investments made for the benefit of that master servicer or special servicer, as applicable. No master servicer or special servicer will be obligated, however, to cover any losses resulting from the bankruptcy or insolvency of any depository institution or trust company holding any of those accounts. S-160 Payment of Expenses; Servicing Advances. Each of the master servicers, the special servicers and the trustee will be required to pay its overhead and any general and administrative expenses incurred by it in connection with its activities under the series 2006-PWR12 pooling and servicing agreement. The master servicers, the special servicers and the trustee will not be entitled to reimbursement for these expenses except as expressly provided in the series 2006-PWR12 pooling and servicing agreement. Any and all customary, reasonable and necessary out-of-pocket costs and expenses incurred by a master servicer or a special servicer in connection with the servicing or administration of a mortgage loan and any related mortgaged properties as to which a default, delinquency or other unanticipated event has occurred or is imminent, or in connection with the administration of any REO Property, will be servicing advances. The series 2006-PWR12 pooling and servicing agreement may also designate certain other expenses as servicing advances. Subject to the limitations described below, each master servicer will be required to make any servicing advances relating to any mortgage loan or REO Property for which it is the applicable master servicer, including any servicing advances relating to any Trust-Serviced Mortgage Loan Groups or related mortgaged properties or REO Properties for which it is the applicable master servicer. Servicing advances will be reimbursable from future payments and other collections, including insurance proceeds, condemnation proceeds and liquidation proceeds, received in connection with the related mortgage loan or REO Property. In addition, each special servicer may periodically require the applicable master servicer to reimburse that special servicer for any servicing advances made by it with respect to a particular mortgage loan or REO Property. Upon so reimbursing a special servicer for any servicing advance, the applicable master servicer will be deemed to have made the advance. The applicable special servicer must notify the applicable master servicer whenever a servicing advance is required to be made with respect to any specially serviced mortgage loan or REO Property, and the applicable master servicer must make the servicing advance, except that the applicable special servicer must make any necessary emergency advances on a specially serviced mortgage loan or REO Property. If a master servicer is required under the series 2006-PWR12 pooling and servicing agreement to make a servicing advance, but does not do so within ten days after the servicing advance is required to be made, then the trustee will be required: o if it has actual knowledge of the failure, to give the defaulting party notice of its failure, and o if the failure continues for one more business day, to make the servicing advance. Except for the applicable master servicer, the applicable special servicer or the trustee as described above, no person - including the holder of any related Non-Pooled Mortgage Loan - will be required to make any servicing advances with respect to any mortgage loan or related mortgaged property or REO property. Despite the foregoing discussion or anything else to the contrary in this prospectus supplement, none of the master servicers, the special servicers or the trustee will be obligated to make servicing advances that it or the applicable special servicer determines, in its reasonable, good faith judgment, would not be ultimately recoverable from expected collections on the related mortgage loan or REO Property. If the applicable master servicer, the applicable special servicer or the trustee makes any servicing advance that it subsequently determines, in its reasonable, good faith judgment, is not recoverable from expected collections on the related mortgage loan or REO Property, it may obtain reimbursement for that advance, together with interest on that advance, out of general collections on the mortgage loans and any REO Properties on deposit in that master servicer's collection account from time to time. Notwithstanding the provision described in the preceding sentence, such person will not be permitted to reimburse itself out of those general collections for any servicing advance related to a Mortgage Loan Group that includes a Non-Pooled Subordinate Loan that it has determined is not recoverable, except to the extent that amounts collected on or in respect of the applicable Non-Pooled Subordinate Loan are insufficient for that reimbursement. The trustee may conclusively rely on the determination of the applicable master servicer or the applicable special servicer regarding the nonrecoverability of any servicing advance. Absent bad faith, the determination by any authorized person that an advance constitutes a nonrecoverable advance as described above will be conclusive and binding. Any servicing advance (with interest) that has been determined to be a nonrecoverable advance with respect to the mortgage pool will be reimbursable from the collection accounts in the collection period in which the nonrecoverability determination is made. Any reimbursement of a nonrecoverable servicing advance (including interest accrued thereon) will be made first from the principal portion of current debt service advances and payments and other collections of principal on S-161 the mortgage pool (thereby reducing the Principal Distribution Amount otherwise distributable on the certificates on the related distribution date) prior to the application of any other general collections on the mortgage pool against such reimbursement. To the extent that the amount representing principal is insufficient to fully reimburse the party entitled to the reimbursement, then such party may elect at its sole option to defer the reimbursement of the portion that exceeds such amount (in which case interest will continue to accrue on the unreimbursed portion of the advance). To the extent that the reimbursement is made from principal collections, the Principal Distribution Amount otherwise payable on the series 2006-PWR12 certificates on the related distribution date will be reduced and a Realized Loss will be allocated (in reverse sequential order in accordance with the loss allocation rules described above under "--Reductions of Certificate Principal Balances in Connection with Realized Losses and Additional Trust Fund Expenses") to reduce the total principal balance of the series 2006-PWR12 certificates on that distribution date. Additionally, in the event that any servicing advance (including any interest accrued thereon) with respect to a defaulted pooled mortgage loan remains unreimbursed following the time that such pooled mortgage loan is modified and returned to performing status, the applicable master servicer or the trustee will be entitled to reimbursement for that advance (even though that advance has not been determined to be nonrecoverable), on a monthly basis, out of -- but solely out of -- the principal portion of current debt service advances and payments and other collections of principal on all the pooled mortgage loans after the application of those principal advances and principal payments and collections to reimburse any party for nonrecoverable servicing advances (as described in the prior paragraph) and/or nonrecoverable debt service advances as described under "Description of the Offered Certificates--Advances of Delinquent Monthly Debt Service Payments" (thereby reducing the Principal Distribution Amount otherwise distributable on the related distribution date). If any such advance is not reimbursed in whole on any distribution date due to insufficient principal advances and principal collections during the related collection period, then the portion of that advance which remains unreimbursed will be carried over (with interest thereon continuing to accrue) for reimbursement on the following distribution date (to the extent of principal collections available for that purpose). If any such advance, or any portion of any such advance, is determined, at any time during this reimbursement process, to be ultimately nonrecoverable out of collections on the related pooled mortgage loan, then the applicable master servicer or the trustee, as applicable, will be entitled to immediate reimbursement as a nonrecoverable advance in an amount equal to the portion of that advance that remains outstanding, plus accrued interest (as described in the preceding paragraph). The reimbursement of advances on worked-out loans from principal advances and collections of principal as described in the first sentence of this paragraph during any collection period will result in a reduction of the Principal Distribution Amount otherwise distributable on the certificates on the related distribution date but will not result in the allocation of a Realized Loss on such distribution date (although a Realized Loss may subsequently arise if the amount reimbursed to the applicable master servicer or the trustee ultimately turns out to be nonrecoverable from the proceeds of the mortgage loan). The pooling and servicing agreement will also permit the applicable master servicer, and require the applicable master servicer at the direction of the applicable special servicer if a specially serviced mortgage loan or REO Property is involved, to pay directly out of that master servicer's collection account any servicing expense that, if advanced by that master servicer or special servicer, would not be recoverable (together with interest on the advance) from expected collections on the related mortgage loan or REO Property. This is only to be done, however, when the applicable master servicer or the applicable special servicer, as the case may be, has determined in accordance with the Servicing Standard that making the payment is in the best interests of the series 2006-PWR12 certificateholders (or, if a Trust-Serviced Mortgage Loan Group is involved, the best interest of the series 2006-PWR12 certificateholders and the related Trust-Serviced Non-Pooled Noteholder(s)), as a collective whole. In addition, if the servicing expense relates to a Mortgage Loan Group that includes a Non-Pooled Subordinate Loan, the applicable master servicer will not be permitted to pay that servicing expense from general collections on the mortgage loans and any REO Properties in the trust fund on deposit in that master servicer's collection account, except to the extent that amounts collected on or in respect of the applicable Non-Pooled Subordinate Loan are insufficient for that payment. The master servicers, the special servicers and the trustee will each be entitled to receive interest on servicing advances made by that entity. The interest will accrue on the amount of each servicing advance for so long as the servicing advance is outstanding, at a rate per annum equal to the prime rate as published in the "Money Rates" section of The Wall Street Journal, as that prime rate may change from time to time. Interest accrued with respect to any servicing advance will generally be payable at any time on or after the date when the advance is reimbursed, in which case the payment will be made out of general collections on the mortgage loans and any REO Properties on deposit in the master servicers' collection accounts (or, alternatively, solely if the servicing advance relates to a Mortgage Loan Group that includes a Non-Pooled Subordinate Loan, out of collections on the related Non-Pooled Subordinate Loan to the maximum extent possible), thereby S-162 reducing amounts available for distribution on the certificates. Under some circumstances, Default Interest and/or late payment charges may be used to pay interest on advances prior to making payment from those general collections, but prospective investors should assume that the available amounts of Default Interest and late payment charges will be de minimis. THE SERIES 2006-PWR12 CONTROLLING CLASS REPRESENTATIVE Controlling Class. As of any date of determination, the controlling class of series 2006-PWR12 certificateholders will be the holders of the most subordinate class of series 2006-PWR12 principal balance certificates then outstanding that has a total principal balance that is not less than 25% of that class's original total principal balance. However, if no class of series 2006-PWR12 principal balance certificates has a total principal balance that satisfies this requirement, then the controlling class of series 2006-PWR12 certificateholders will be the holders of the most subordinate class of series 2006-PWR12 principal balance certificates then outstanding that has a total principal balance greater than zero. For purposes of determining the series 2006-PWR12 controlling class, the class A-1, A-2, A-3, A-AB, A-4 and A-1A certificates will represent a single class. Appointment of Controlling Class Representative. The holders of series 2006-PWR12 certificates representing more than 50% of the total principal balance of the series 2006-PWR12 controlling class will be entitled to select a representative having the rights and powers described under "--Rights and Powers of Controlling Class Representative" below and to replace an existing series 2006-PWR12 controlling class representative. The series 2006-PWR12 controlling class representative may resign at any time. ARCap REIT, Inc., an affiliate of the parent of the initial general special servicer is expected to be the initial series 2006-PWR12 controlling class representative. Rights and Powers of Controlling Class Representative. No later than approximately 45 days after the occurrence of a Servicing Transfer Event with respect to any specially serviced mortgage loan, the applicable special servicer must, in general, deliver to the series 2006-PWR12 controlling class representative, among others, an asset status report with respect to that mortgage loan and the related mortgaged property or properties. That asset status report is required to include the following information to the extent reasonably determinable: o a summary of the status of the subject specially serviced mortgage loan and any negotiations with the related borrower; o a discussion of the general legal and environmental considerations reasonably known to the applicable special servicer, consistent with the Servicing Standard, that are applicable to the exercise of remedies set forth in the series 2006-PWR12 pooling and servicing agreement and to the enforcement of any related guaranties or other collateral for the related specially serviced mortgage loan and whether outside legal counsel has been retained; o the most current rent roll and income or operating statement available for the related mortgaged property or properties; o a summary of the applicable special servicer's recommended action with respect to the specially serviced mortgage loan; o the appraised value of the related mortgaged property or properties, together with the assumptions used in the calculation thereof; and o such other information as the applicable special servicer deems relevant in light of the Servicing Standard. S-163 The applicable special servicer will be required to make one or more revisions to the report if the controlling class representative objects to the then current version of the asset status report and may in its discretion update or revise the current version of an asset status report, provided that the applicable special servicer will not make any revisions in response to objections of the controlling class representative at any time following the date that is 90 days following the delivery of its initial version of the report. The applicable special servicer will be required to implement the recommended action as outlined in the current version of an asset status report if the series 2006-PWR12 controlling class representative approves the report, the controlling class representative fails to object to the report within a specified number of days following its receipt or the applicable special servicer determines in accordance with the Servicing Standard that any objection made by the controlling class representative is not in the best interests of all the certificateholders (or, in the case of a Trust-Serviced Mortgage Loan Group, in the best interests of all the series 2006-PWR12 certificateholders and the related Trust-Serviced Non-Pooled Noteholder), as a collective whole. The applicable special servicer may, subject to the foregoing, take any action set forth in an asset status report before the expiration of the period during which the series 2006-PWR12 controlling class representative may reject the report if-- o the applicable special servicer has reasonably determined that failure to take that action would materially and adversely affect the interests of the series 2006-PWR12 certificateholders or (if a Trust-Serviced Mortgage Loan Group is involved) the related Trust-Serviced Non-Pooled Noteholder, and o it has made a reasonable effort to contact the series 2006-PWR12 controlling class representative. The applicable special servicer may not take any action inconsistent with an asset status report that has been adopted as described above, unless that action would be required in order to act in accordance with the Servicing Standard. In addition, the applicable special servicer generally will not be permitted to take or consent to the applicable master servicer taking any Material Action not otherwise covered by an approved asset status report, unless and until the applicable special servicer has notified the series 2006-PWR12 controlling class representative and the series 2006-PWR12 controlling class representative has consented (or failed to object) thereto in writing within ten (10) business days of having been notified thereof in writing and provided with all reasonably requested information by it (or, in the case of a proposed action for which the applicable master servicer has requested approval from the applicable special servicer, within any shorter period during which that special servicer is initially entitled to withhold consent without being deemed to have approved the action). However, the applicable special servicer may take any Material Action without waiting for the response of the series 2006-PWR12 controlling class representative if the applicable special servicer determines that immediate action is necessary to protect the interests of the series 2006-PWR12 certificateholders and, if affected thereby, a Trust-Serviced Non-Pooled Noteholder, as a collective whole. Furthermore, the series 2006-PWR12 controlling class representative may, in general, direct the applicable special servicer to take, or to refrain from taking, any actions as that representative may deem advisable with respect to the servicing and administration of specially serviced mortgage loans and REO Properties or as to which provision is otherwise made in the series 2006-PWR12 pooling and servicing agreement. In the case of the 1675 Broadway Loan Group, the series 2006-PWR12 controlling class representative will generally not have the rights otherwise described above unless a 1675 Broadway Change of Control Event exists. In the case of the Tuscany Plaza Loan Group, the series 2006-PWR12 controlling class representative will generally not have the rights otherwise described above unless a Tuscany Plaza Change of Control Event exists. Notwithstanding the provisions described above, the series 2006-PWR12 controlling class representative may not direct the applicable special servicer to act, and the applicable special servicer is to ignore any direction for it to act, in any manner that would-- o require or cause the applicable special servicer to violate applicable law, the terms of any mortgage loan or any other provision of the series 2006-PWR12 pooling and servicing agreement, including that party's obligation to act in accordance with the Servicing Standard; S-164 o result in an adverse tax consequence for the trust fund; o expose the trust, the parties to the series 2006-PWR12 pooling and servicing agreement or any of their respective affiliates, members, managers, officers, directors, employees or agents, to any material claim, suit or liability; or o materially expand the scope of a master servicer's or the applicable special servicer's responsibilities under the series 2006-PWR12 pooling and servicing agreement. Also notwithstanding the foregoing, the 1675 Broadway Loan Group special servicer will not be obligated to obtain the approval of or accept direction from the series 2006-PWR12 controlling class representative regarding any asset status report or the actions contemplated by that report with respect to the 1675 Broadway Loan Group, or to even prepare any asset status report with respect to the 1675 Broadway Loan Group, or otherwise obtain approval of or accept direction from the 2006-PWR12 controlling class representative with respect to any Material Action involving the 1675 Broadway Loan Group, unless a 1675 Broadway Change of Control Event has occurred and is continuing. Instead, the 1675 Broadway Loan Group special servicer will be required to obtain the approval of or accept direction from the 1675 Broadway Non-Pooled Subordinate Noteholder. However, solely for informational purposes, the applicable special servicer will prepare a report for the series 2006-PWR12 controlling class representative with respect to the 1675 Broadway Loan Group if those loans become specially serviced. Also notwithstanding the foregoing, the Tuscany Plaza Loan Group special servicer will not be obligated to obtain the approval of or accept direction from the series 2006-PWR12 controlling class representative regarding any asset status report or the actions contemplated by that report with respect to the Tuscany Plaza Loan Group, or to even prepare any asset status report with respect to the Tuscany Plaza Loan Group, or otherwise obtain approval of or accept direction from the 2006-PWR12 controlling class representative with respect to any Material Action involving the Tuscany Plaza Loan Group, unless a Tuscany Plaza Change of Control Event has occurred and is continuing. Instead, the Tuscany Plaza Loan Group special servicer will be required to obtain the approval of or accept direction from the Tuscany Plaza Non-Pooled Subordinate Noteholder. However, solely for informational purposes, the applicable special servicer will prepare a report for the series 2006-PWR12 controlling class representative with respect to the Tuscany Plaza Loan Group if those loans become specially serviced. When reviewing the rest of this "Servicing Under the Series 2006-PWR12 Pooling and Servicing Agreement" section, it is important that you consider the effects that the rights and powers of the series 2006-PWR12 controlling class representative discussed above could have on the actions of the applicable special servicer. Liability to Borrowers. In general, any and all expenses of the series 2006-PWR12 controlling class representative are to be borne by the holders of the series 2006-PWR12 controlling class, in proportion to their respective percentage interests in that class, and not by the trust fund. However, if a claim is made against the series 2006-PWR12 controlling class representative by a borrower with respect to the pooling and servicing agreement or any particular mortgage loan and the trust or a party to the pooling and servicing agreement is also named in the relevant legal action, the applicable special servicer will generally assume the defense of the claim on behalf of and at the expense of the trust fund, provided that the applicable special servicer (in its sole judgment) determines that the controlling class representative acted in good faith, without negligence or willful misfeasance with regard to the particular matter at issue. Liability to the Trust Fund and Certificateholders. The series 2006-PWR12 controlling class representative may have special relationships and interests that conflict with those of the holders of one or more classes of the series 2006-PWR12 certificates, may act solely in the interests of the holders of the controlling class of series 2006-PWR12 certificates, does not have any duty to the holders of any class of series 2006-PWR12 certificates other than the controlling class of series 2006-PWR12 certificates and may take actions that favor the interests of the holders of the controlling class of series 2006-PWR12 certificates over those of other classes of series 2006-PWR12 certificates. It will have no liability to any other series 2006-PWR12 certificateholders for having acted as described above and those other series 2006-PWR12 certificateholders may not take any action against it for having acted as described above. Defense of Litigation. If a claim is made against the controlling class representative by a borrower with respect to the series 2006-PWR12 pooling and servicing agreement or any particular mortgage loan, the series 2006-PWR12 controlling S-165 class representative must immediately notify the certificate administrator, the trustee, the applicable master servicer, the applicable primary servicer and the applicable special servicer, whereupon (if a special servicer, a master servicer, a primary servicer, the certificate administrator, the trustee or the trust are also named parties to the same action and, in the sole judgment of the applicable special servicer, (i) the series 2006-PWR12 controlling class representative had acted in good faith, without negligence or willful misfeasance, with regard to the particular matter at issue, and (ii) there is no potential for a special servicer, a master servicer, a primary servicer, the certificate administrator, the trustee or the trust to be an adverse party in such action as regards the series 2006-PWR12 controlling class representative), the applicable special servicer on behalf of the trust must (subject to the provisions described under "Description of the Pooling and Servicing Agreements--Some Matters Regarding the Servicer and the Depositor" in the accompanying prospectus) assume the defense of any such claim against the series 2006-PWR12 controlling class representative; provided, however, that no judgment against the series 2006-PWR12 controlling class representative shall be payable out of the trust fund. TRUST-SERVICED NON-POOLED NOTEHOLDER OF THE 1675 BROADWAY LOAN GROUP The holders of the subordinate non-pooled mortgage loan secured by the mortgaged property identified on Appendix B to this prospectus supplement as 1675 Broadway will have the approval and other rights described under "Description of the Mortgage Pool--Certain Characteristics of the Mortgage Pool--Subordinate and/or Other Financing--Split Loan Structures--The 1675 Broadway Loan Group" in this prospectus supplement. TRUST-SERVICED NON-POOLED NOTEHOLDER OF THE TUSCANY PLAZA LOAN GROUP The holders of the subordinate non-pooled mortgage loan secured by the mortgaged property identified on Appendix B to this prospectus supplement as Tuscany Plaza will have the approval and other rights described under "Description of the Mortgage Pool--Certain Characteristics of the Mortgage Pool--Subordinate and/or Other Financing--Split Loan Structures--The Tuscany Plaza Loan Group" in this prospectus supplement. REPLACEMENT OF THE SPECIAL SERVICERS The series 2006-PWR12 controlling class representative may remove the existing general special servicer, with or without cause, and appoint a successor to the general special servicer, except that, if the removal is without cause, the cost of transferring the special servicing responsibilities for the general special servicer will be the responsibility of the series 2006-PWR12 controlling class certificateholders. However, any such appointment of a successor special servicer will be subject to, among other things, receipt by the trustee of written confirmation from each of the Rating Agencies that the appointment will not result in a qualification, downgrade or withdrawal of any of the ratings then assigned thereby to the series 2006-PWR12 certificates. Notwithstanding the foregoing, in the case of the 1675 Broadway Loan Group and the Tuscany Plaza Loan Group, the related Non-Pooled Subordinate Noteholder will have the right to replace the existing special servicer with respect to the applicable Mortgage Loan Group, with or without cause, and appoint a successor to that special servicer (subject to confirmation from each of the Rating Agencies that the appointment will not result in a qualification, downgrade or withdrawal of any rating then assigned by that Rating Agency to a class of series 2006-PWR12 certificates). However, if a 1675 Broadway Change of Control Event or a Tuscany Plaza Change of Control Event exists, then the series 2006-PWR12 controlling class representative will be entitled to exercise that right with respect to the applicable Mortgage Loan Group (subject to confirmation from each of the Rating Agencies that the appointment will not result in a qualification, downgrade or withdrawal of any rating then assigned by that Rating Agency to a class of series 2006-PWR12 certificates). For additional information, see "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement--The Series 2006-PWR12 Controlling Class Representative" and "Description of the Mortgage Pool--Subordinate and/or Other Financing--Split Loan Structures--The 1675 Broadway Loan Group" and "--The Tuscany Plaza Loan Group" in this prospectus supplement. MAINTENANCE OF INSURANCE In the case of each mortgage loan, the applicable master servicer will be required to use reasonable efforts consistent with the Servicing Standard to cause the related borrower to maintain (including identifying the extent to which a borrower is maintaining insurance coverage and, if the borrower does not so maintain, the applicable master servicer will be required to itself cause to be maintained with Qualified Insurers having the Required Claims-Paying Ratings) for the related mortgaged property: S-166 o a fire and casualty extended coverage insurance policy, which does not provide for reduction due to depreciation, in an amount that is generally at least equal to the lesser of the full replacement cost of improvements securing the mortgage loan or the outstanding principal balance of the mortgage loan, but, in any event, in an amount sufficient to avoid the application of any co-insurance clause, and o all other insurance coverage as is required, or (subject to the Servicing Standard) that the holder of the mortgage loan is entitled to reasonably require, under the related mortgage loan documents. Notwithstanding the foregoing, however: o the applicable master servicer will not be required to maintain any earthquake or environmental insurance policy on any mortgaged property unless that insurance policy was in effect at the time of the origination of the related mortgage loan pursuant to the related mortgage loan documents and is available at commercially reasonable rates (and if the applicable master servicer does not cause the borrower to maintain or itself maintain such earthquake or environmental insurance policy on any mortgaged property, the applicable special servicer will have the right, but not the duty, to obtain, at the trust's expense, earthquake or environmental insurance on any mortgaged property securing a specially serviced mortgage loan or an REO Property so long as such insurance is available at commercially reasonable rates); and o except as provided below, in no event will the applicable master servicer be required to cause the borrower to maintain, or itself obtain, insurance coverage that the applicable master servicer has determined is either (i) not available at any rate or (ii) not available at commercially reasonable rates and the related hazards are not at the time commonly insured against for properties similar to the related mortgaged property and located in or around the region in which the related mortgaged property is located (in each case, as determined by the applicable master servicer, which will be entitled to rely, at its own expense, on insurance consultants in making such determination) (and the related determinations by the applicable master servicer must be made not less frequently (but need not be made more frequently) than annually). Notwithstanding the provision described in the final bullet of the prior paragraph, the applicable master servicer must, prior to availing itself of any limitation described in that bullet with respect to any pooled mortgage loan that has a Stated Principal Balance in excess of $2,500,000, obtain the approval or disapproval of the applicable special servicer (and, in connection therewith, the applicable special servicer will be required to comply with any applicable provisions of the series 2006-PWR12 pooling and servicing agreement described above under "--The Series 2006-PWR12 Controlling Class Representative--Rights and Powers of Controlling Class Representative"). The applicable master servicer will be entitled to conclusively rely on the determination of the applicable special servicer. With respect to each specially serviced mortgage loan and REO Property, the applicable special servicer will generally be required to use reasonable efforts, consistent with the Servicing Standard, to maintain (and, in the case of specially serviced mortgage loans, the applicable special servicer will be required to (i) direct the applicable master servicer to make a servicing advance for the costs associated with coverage that the applicable special servicer determines to maintain, in which case the applicable master servicer will be required to make that servicing advance (subject to the recoverability determination and servicing advance procedures described in this prospectus supplement) or (ii) direct the applicable master servicer to cause that coverage to be maintained under the applicable master servicer's force-placed insurance policy, in which case that applicable master servicer will be required to so cause that coverage to be maintained to the extent that the identified coverage is available under the applicable master servicer's existing force-placed policy) with Qualified Insurers having the Required Claims-Paying Ratings (a) a fire and casualty extended coverage insurance policy, which does not provide for reduction due to depreciation, in an amount that is at least equal to the lesser of (i) the full replacement cost of improvements at such REO Property or (ii) the outstanding principal balance of the related mortgage loan, but, in any event, in an amount sufficient to avoid the application of any co-insurance clause, (b) a comprehensive general liability insurance policy with coverage comparable to that which would be required under prudent lending requirements and in an amount not less than $1 million per occurrence and (c) to the extent consistent with the Servicing Standard, a business interruption or rental loss insurance covering revenues or rents for a period of at least twelve months. However, the applicable special servicer will not be required in any event to maintain or obtain insurance coverage described in this paragraph beyond what is reasonably available at commercially reasonable rates and consistent with the Servicing Standard. S-167 If (1) a master servicer or special servicer obtains and maintains, or causes to be obtained and maintained, a blanket policy or master force-placed policy insuring against hazard losses on all of the mortgage loans or REO Properties, as applicable, as to which it is the applicable master servicer or the applicable special servicer, as the case may be, then, to the extent such policy (a) is obtained from a Qualified Insurer having the Required Claims-Paying Ratings, and (b) provides protection equivalent to the individual policies otherwise required, or (2) a master servicer or special servicer has long-term unsecured debt obligations that are rated not lower than "A2" by Moody's and "A" by S&P, and that master servicer or that special servicer self-insures for its obligation to maintain the individual policies otherwise required, then that master servicer or that special servicer, as the case may be, will conclusively be deemed to have satisfied its obligation to cause hazard insurance to be maintained on the related mortgaged properties or REO Properties, as applicable. Such a blanket or master force-placed policy may contain a deductible clause (not in excess of a customary amount), in which case the applicable master servicer or the applicable special servicer, as the case may be, whichever maintains such policy, must if there has not been maintained on any mortgaged property or REO Property thereunder a hazard insurance policy complying with the requirements described above, and there will have been one or more losses that would have been covered by such an individual policy, promptly deposit into the applicable collection account maintained by the applicable master servicer, from its own funds, the amount not otherwise payable under the blanket or master force-placed policy in connection with such loss or losses because of such deductible clause to the extent that any such deductible exceeds the deductible limitation that pertained to the related mortgage loan (or, in the absence of any such deductible limitation, the deductible limitation for an individual policy which is consistent with the Servicing Standard) and, in the case of a Trust-Serviced Mortgage Loan Group, to the extent that the corresponding pooled mortgage loan is affected. Subject to the foregoing discussion, see also "Description of Pooling and Servicing Agreements--Hazard Insurance Policies" in the accompanying prospectus. ENFORCEMENT OF DUE-ON-ENCUMBRANCE AND DUE-ON-SALE PROVISIONS In connection with each pooled mortgage loan, the applicable master servicer or the applicable special servicer, as the case may be, will be required to determine whether to waive any violation of a due-on-sale or due-on-encumbrance provision or to approve any borrower request for consent to an assignment and assumption of the mortgage loan or a further encumbrance of the related mortgaged property. However, subject to the related mortgage loan documents, if the subject pooled mortgage loan (either alone or, if applicable, with other related pooled mortgage loans) exceeds specified size thresholds (either actual or relative) or fails to satisfy other applicable conditions imposed by the Rating Agencies, then neither that master servicer nor that special servicer may enter into such a waiver or approval, unless it has received written confirmation from either or both Rating Agencies, as applicable, that this action would not result in the qualification, downgrade or withdrawal of any of the ratings then assigned by that Rating Agency or those Rating Agencies, as the case may be, to the series 2006-PWR12 certificates. Furthermore, except in limited circumstances, a master servicer may not enter into such a waiver or approval without the consent of the applicable special servicer, and the applicable special servicer will not be permitted to grant that consent or to itself enter into such a waiver or approval unless the applicable special servicer has complied with any applicable provisions of the series 2006-PWR12 pooling and servicing agreement and/or Mortgage Loan Group Intercreditor Agreement described above under "--The Series 2006-PWR12 Controlling Class Representative--Rights and Powers of Controlling Class Representative" or "Description of the Mortgage Pool--Certain Characteristics of the Mortgage Pool --Subordinate and/or Other Financing--Split Loan Structures--The 1675 Broadway Loan Group" and "--The Tuscany Plaza Loan Group". TRANSFERS OF INTERESTS IN BORROWERS Each master servicer will generally have the right to consent to any transfers of an interest in a borrower under a non-specially serviced mortgage loan, to the extent the transfer is allowed under the terms of that mortgage loan (without the exercise of any lender discretion other than confirming the satisfaction of other specified conditions that do not include any other lender discretion), including any consent to transfer to any subsidiary or affiliate of a borrower or to a person acquiring less than a majority interest in the borrower. However, subject to the terms of the related mortgage loan documents and applicable law, if-- o the subject mortgage loan is a pooled mortgage loan that alone - or together with all other pooled mortgage loans that have the same or a known affiliated borrower - is one of the ten largest mortgage loans in the trust fund (according to Stated Principal Balance); has a cut-off date principal balance in excess of $20,000,000; or S-168 has a principal balance at the time of such proposed transfer that is equal to or greater than 5% of the then aggregate mortgage pool balance; and o the transfer is of an interest in the borrower of greater than 49%, then the applicable master servicer may not consent to the transfer unless it has received written confirmation from each of the Rating Agencies that this action would not result in the qualification, downgrade or withdrawal of any of the ratings then assigned by that Rating Agency to the series 2006-PWR12 certificates. In addition, the series 2006-PWR12 pooling and servicing agreement may require the applicable master servicer to obtain the consent of the applicable special servicer prior to consenting to the transfers of interests in borrowers that such master servicer is otherwise entitled to consent to as described above. MODIFICATIONS, WAIVERS, AMENDMENTS AND CONSENTS The applicable special servicer, with respect to a specially serviced mortgage loan, or the applicable master servicer, with respect to any other mortgage loan, may, consistent with the Servicing Standard agree to: o modify, waive or amend any term of any mortgage loan; o extend the maturity of any mortgage loan; o defer or forgive the payment of interest (including Default Interest and Post-ARD Additional Interest) on and principal of any mortgage loan; o defer or forgive the payment of late payment charges on any mortgage loan; o defer or forgive Yield Maintenance Charges or Prepayment Premiums on any mortgage loan; o permit the release, addition or substitution of collateral securing any mortgage loan; or o permit the release, addition or substitution of the borrower or any guarantor of any mortgage loan. The ability of a special servicer or a master servicer to agree to any of the foregoing, however, is subject to the discussions under "--The Series 2006-PWR12 Controlling Class Representative--Rights and Powers of Controlling Class Representative" and "--Enforcement of Due-on-Sale and Due-on-Encumbrance Provisions" above and "Description of the Mortgage Pool--Certain Characteristics of the Mortgage Pool--Subordinate and Other Financing--Split Loan Structure-- The 1675 Broadway Loan Group" and "-- The Tuscany Plaza Loan Group" in this prospectus supplement, and further, to each of the following limitations, conditions and restrictions: o Unless the applicable master servicer has obtained the consent of the applicable special servicer, a master servicer may not agree to modify, waive or amend any term of, or take any of the other above-referenced actions with respect to, any mortgage loan in the trust fund, that would affect the amount or timing of any related payment of principal, interest or other amount payable under that mortgage loan or materially and adversely affect the security for that mortgage loan, except (a) for certain waivers of Default Interest, late payment charges and Post-ARD Additional Interest and (b) with respect to certain routine matters. o With limited exceptions generally involving the waiver of Default Interest and late payment charges, the applicable special servicer may not agree to, or consent to the applicable master servicer's agreeing to, modify, waive or amend any term of, and may not take, or consent to the master servicer's taking, any of the other above-referenced actions with respect to any mortgage loan, if doing so would-- 1. affect the amount or timing of any related payment of principal, interest or other amount payable under the mortgage loan, or S-169 2. in the judgment of the applicable special servicer, materially impair the security for the mortgage loan, unless a material default on the mortgage loan has occurred or, in the judgment of the applicable special servicer, a default with respect to payment on the mortgage loan is reasonably foreseeable, and the modification, waiver, amendment or other action is reasonably likely to produce an equal or a greater recovery to the series 2006-PWR12 certificateholders and, in the case of a Trust-Serviced Loan Group, the related Trust-Serviced Non-Pooled Noteholder, all as a collective whole, on a present value basis than would liquidation. o As regards modifications, waivers and amendments of a Trust-Serviced Mortgage Loan Group: 1. following any modification, extension, waiver or amendment of the payment terms of that Trust-Serviced Mortgage Loan Group, any payments on and proceeds of that Trust-Serviced Mortgage Loan Group must be allocated and applied (as among the mortgage loans in that Trust-Serviced Mortgage Loan Group) in accordance with the allocation and payment priorities set forth in the related Mortgage Loan Group Intercreditor Agreement, such that none of the trust as holder of the related pooled mortgage loan and the holder of that Trust-Serviced Non-Pooled Mortgage Loan will gain a priority over the other with respect to any payment, which priority is not reflected in the related Mortgage Loan Group Intercreditor Agreement; and 2. in the case of any Mortgage Loan group that also includes a Non-Pooled Subordinate Loan, to the extent consistent with the Servicing Standard, taking into account the extent to which the related Non-Pooled Subordinate Loan is junior to the related pooled mortgage loan, (a) no waiver, reduction or deferral of any amounts due on the pooled mortgage loan will be effected prior to the waiver, reduction or deferral of the entire corresponding item in respect of the related Non-Pooled Subordinate Loan, and (b) no reduction of the mortgage rate (exclusive, if applicable, of any portion thereof that represents the rate at which Post-ARD Additional Interest is calculated) of the related pooled mortgage loan will be effected prior to the reduction of the mortgage rate (exclusive, if applicable, of any portion thereof that represents the rate at which Post-ARD Additional Interest is calculated) of the related Non-Pooled Subordinate Loan. o Neither the applicable master servicer nor the applicable special servicer may extend the date on which any balloon payment is scheduled to be due on any mortgage loan to a date beyond the earliest of-- 1. with certain exceptions, five years after the mortgage loan's stated maturity if the mortgage loan is the subject of an environmental insurance policy, 2. five years prior to the rated final distribution date, and 3. if the mortgage loan is secured by a lien solely or primarily on the related borrower's leasehold interest in the corresponding mortgaged property, 20 years or, to the extent consistent with the Servicing Standard, giving due consideration to the remaining term of the ground lease, ten years, prior to the end of the then current term of the related ground lease, plus any unilateral options to extend. o Neither the applicable master servicer nor the applicable special servicer may make or permit any modification, waiver or amendment of any term of, or take any of the other above-referenced actions with respect to, any mortgage loan, if doing so would-- 1. cause any of REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC under the Internal Revenue Code or either of the respective grantor trusts related to the class R and class V certificates to fail to qualify as a grantor trust under the Internal Revenue Code, 2. result in the imposition of any tax on prohibited transactions or contributions after the startup date of any of REMIC I, REMIC II or REMIC III under the Internal Revenue Code or the imposition of any S-170 tax on either of the respective grantor trusts related to the class R and class V certificates under the Internal Revenue Code, or 3. adversely affect the status of any portion of the trust fund that is intended to be a grantor trust under the Internal Revenue Code. o Subject to applicable law, the related mortgage loan documents and the Servicing Standard, neither the applicable master servicer nor the applicable special servicer may permit any modification, waiver or amendment of any term of any mortgage loan that is not a specially serviced mortgage loan unless all related fees and expenses are paid by the borrower. o The applicable special servicer may not permit or consent to the applicable master servicer's permitting any borrower to add or substitute any real estate collateral for any mortgage loan, unless the applicable special servicer has first-- 1. determined, based upon an environmental assessment prepared by an independent person who regularly conducts environmental assessments, at the expense of the borrower, that-- (a) the additional or substitute collateral is in compliance with applicable environmental laws and regulations, and (b) there are no circumstances or conditions present with respect to the new collateral relating to the use, management or disposal of any hazardous materials for which investigation, testing, monitoring, containment, clean-up or remediation would be required under any then applicable environmental laws or regulations; and 2. received, at the expense of the related borrower to the extent permitted to be charged by the holder of the mortgage loan under the related mortgage loan documents, confirmation from each of the Rating Agencies that the addition or substitution of real estate collateral will not result in a qualification, downgrade or withdrawal of any rating then assigned by that Rating Agency to a class of series 2006-PWR12 certificates. o With limited exceptions generally involving the delivery of substitute collateral, the paydown of the subject mortgage loan or the release of non-material parcels, the applicable special servicer may not release or consent to the applicable master servicer's releasing any material real property collateral securing an outstanding mortgage loan in the trust fund other than in accordance with the terms of, or upon satisfaction of, the mortgage loan. The foregoing limitations, conditions and restrictions will not apply to any of the acts referenced in this "--Modifications, Waivers, Amendments and Consents" section that occurs automatically, or that results from the exercise of a unilateral option by the related borrower within the meaning of Treasury regulation section 1.1001-3(c)(2)(iii), in any event, under the terms of the subject mortgage loan in effect on the date of initial issuance of the offered certificates or, in the case of a replacement mortgage loan, on the date it is added to the trust fund. Also, in no event will either the applicable master servicer or the applicable special servicer be required to oppose the confirmation of a plan in any bankruptcy or similar proceeding involving a borrower if, in its judgment, opposition would not ultimately prevent the confirmation of the plan or one substantially similar. Also notwithstanding the foregoing, the applicable master servicer will not be required to seek the consent of, or provide prior notice to, the applicable special servicer or any series 2006-PWR12 certificateholder or obtain any confirmation from the Rating Agencies in order to approve waivers of minor covenant defaults (other than financial covenants) or grant approvals and consents in connection with various routine matters. All modifications, amendments, material waivers and other material actions entered into or taken and all consents with respect to the mortgage loans must be in writing. Each of the master servicers and the special servicers must deliver to the trustee for deposit in the related mortgage file, an original counterpart of the agreement relating to a such modification, waiver, amendment or other action agreed to or taken by it, promptly following its execution. S-171 In circumstances in which the applicable master servicer is not permitted to enter into a modification, waiver, consent or amendment without the approval of the applicable special servicer, that master servicer must provide a written recommendation and explain the rationale therefor and deliver all pertinent documents to the applicable special servicer and to the series 2006-PWR12 controlling class representative or, if applicable, the related Non-Pooled Subordinate Noteholder. If approval is granted by the applicable special servicer, the applicable master servicer will be responsible for entering into the relevant documentation. REQUIRED APPRAISALS Within approximately 60 days following the occurrence of any Appraisal Trigger Event with respect to any of the pooled mortgage loans, the applicable special servicer must obtain an appraisal of the related mortgaged property from an independent appraiser meeting the qualifications imposed in the series 2006-PWR12 pooling and servicing agreement, unless-- o an appraisal had previously been obtained within the prior twelve months, and o the applicable special servicer has no knowledge of changed circumstances that in the judgment of the applicable special servicer would materially affect the value of the mortgaged property. Notwithstanding the foregoing, if the Stated Principal Balance of the subject mortgage loan is less than $2,000,000, then the applicable special servicer may, at its option, perform an internal valuation of the related mortgaged property. As a result of any appraisal or other valuation, it may be determined by a special servicer, in consultation with the series 2006-PWR12 controlling class representative or, if applicable, the related Non-Pooled Subordinate Noteholder, that an Appraisal Reduction Amount exists with respect to the subject mortgage loan. An Appraisal Reduction Amount is relevant to the amount of any advances of delinquent interest required to be made with respect to the affected pooled mortgage loan and, in the case of the 1675 Broadway Loan Group and the Tuscany Plaza Loan Group, the determination of whether the trust or the related Non-Pooled Subordinate Noteholder, as applicable, exercises certain control rights with respect to the related loan group. See "Description of the Offered Certificates--Advances of Delinquent Monthly Debt Service Payments" in this prospectus supplement. If an Appraisal Trigger Event occurs with respect to any specially serviced mortgage loan, then the applicable special servicer will have an ongoing obligation to obtain or perform, as the case may be, on or about each anniversary of the occurrence of that Appraisal Trigger Event, an update of the prior required appraisal or other valuation. Based upon that update, the applicable special servicer is to redetermine, in consultation with the series 2006-PWR12 controlling class representative, and report to the certificate administrator, the trustee and the applicable master servicer the new Appraisal Reduction Amount, if any, with respect to the mortgage loan. This ongoing obligation will cease if and when-- o any and all Servicing Transfer Events with respect to the mortgage loan have ceased, and o no other Servicing Transfer Event or Appraisal Trigger Event has occurred with respect to the subject mortgage loan during the preceding three months. The cost of each required appraisal, and any update of that appraisal, will be advanced by the applicable master servicer, at the direction of the applicable special servicer, and will be reimbursable to the applicable master servicer as a servicing advance. Notwithstanding the foregoing, the series 2006-PWR12 controlling class representative or other controlling party will have the right (exercisable not more frequently that once every six months) to require that the applicable special servicer, as applicable, obtain a new appraisal with respect to the subject mortgage loan, at the expense of the series 2006-PWR12 controlling class certificateholders or other controlling party, as applicable. Upon receipt of the new appraisal, the applicable special servicer will redetermine any Appraisal Reduction Amount. Appraisal Reduction Amounts with respect to Trust-Serviced Loan Groups will be calculated in the manner described under the definition of "Appraisal Reduction Amount" in the glossary to this prospectus supplement. S-172 COLLECTION ACCOUNTS General. Each master servicer will be required to establish and maintain a collection account for purposes of holding payments and other collections that it receives with respect to the mortgage loans for which it is the applicable master servicer. That collection account must be maintained in a manner and with a depository institution that satisfies each Rating Agency's standards for securitizations similar to the one involving the offered certificates. The funds held in each master servicer's collection account may be held as cash or invested in Permitted Investments. See "--Servicing and Other Compensation and Payment of Expenses--Additional Servicing Compensation" above. Deposits. Each master servicer must deposit or cause to be deposited in its collection account, generally within one business day following receipt by it, all payments on and proceeds of the pooled mortgage loans that are received by or on behalf of that master servicer with respect to the related mortgage loans. These payments and proceeds include borrower payments, insurance and condemnation proceeds (other than amounts to be applied to the restoration of a property), amounts remitted monthly by the applicable special servicer from an REO account, the proceeds of any escrow or reserve account that are applied to the mortgage loan indebtedness and the sales proceeds of any sale of any mortgage loan on behalf of the trust fund that may occur as otherwise described in this prospectus supplement. Notwithstanding the foregoing, a master servicer need not deposit into its collection account any amount that such master servicer would be authorized to withdraw immediately from that collection account as described under "--Withdrawals" below and will be entitled to instead pay that amount directly to the person(s) entitled thereto. Withdrawals. The master servicers may make withdrawals from the collection accounts for the purpose of making any Authorized Collection Account Withdrawals. The series 2006-PWR12 pooling and servicing agreement will contain additional provisions with respect to the timing of the payments, reimbursements and remittances generally described above. The payments, reimbursements and remittances described above may result in shortfalls to the holders of the offered certificates in any particular month even if those shortfalls do not ultimately become realized losses for those holders. FAIR VALUE PURCHASE OPTION If any pooled mortgage loan becomes a Specially Designated Defaulted Pooled Mortgage Loan, then the applicable special servicer must determine the Fair Value of the subject Specially Designated Defaulted Pooled Mortgage Loan based upon, among other things, an appraisal or other valuation obtained or conducted by the applicable special servicer within the preceding 12-month period. The determination must be made within 30 days following receipt of the appraisal or other valuation. The applicable special servicer will be required to update its Fair Value determination if an offer is made for the purchase of the applicable pooled mortgage loan at that value on a date that is later than 90 days following the applicable special servicer's determination or if the applicable special servicer becomes aware of any circumstances or conditions that have occurred or arisen that would, in its reasonable judgment, materially affect the most recent Fair Value determination. The holder(s) of a majority in principal amount of the series 2006-PWR12 controlling class and the applicable special servicer, in that order, will be entitled to purchase from the trust fund any Specially Designated Defaulted Pooled Mortgage Loan, at a cash price that is equal to: (a) the Fair Value of that mortgage loan, as most recently determined by the applicable special servicer and reported to the trustee, certificate administrator, the applicable master servicer and the series 2006-PWR12 controlling class representative as described above; or (b) if no such Fair Value has yet been established as described above, or if the applicable special servicer is in the process of redetermining the Fair Value because of a change in circumstances, the applicable Purchase Price. Any exercise of the Purchase Option by the applicable special servicer or any affiliate thereof will be conditioned on a confirmation by the trustee that the applicable special servicer's determination of the Fair Value is consistent with or greater than what the trustee considers to be the fair value of that mortgage loan, although the applicable special servicer may revise any such Fair Value determination that is rejected by the trustee (in which case the revised determination shall likewise be subject to confirmation by the trustee). For these purposes, the trustee may at its option (and at the expense of the trust) designate an independent third party expert to make the determination, in which case the trustee will be entitled to conclusively rely upon such third party's determination. Any holder of the Purchase Option may assign the option to any third party other than the borrower or an affiliate of the borrower under the applicable pooled mortgage loan. S-173 The Purchase Option with respect to any Specially Designated Defaulted Pooled Mortgage Loan will end on the earliest of (1) the date on which such mortgage loan is worked out or otherwise ceases to be a Specially Designated Defaulted Mortgage Loan, (2) the date on which the mortgage loan is liquidated or otherwise removed from the trust fund and (3) the date on which the related mortgaged property becomes an REO Property. The Purchase Option with respect to any Specially Designated Defaulted Pooled Mortgage Loan may be subject to the purchase options of other related creditors of the subject borrower and its principals. In any case, the Purchase Option with respect to each Pooled Mortgage Loan included in a Trust-Serviced Mortgage Loan Group is subject to the prior right of one or more Non-Pooled Subordinate Noteholders to exercise any option to purchase that Pooled Mortgage Loan following a default and to any consultation and/or approval right that applies to a sale of a defaulted loan. See "Description of the Mortgage Pool --Subordinate and/or Other Financing--Split Loan Structures--The 1675 Broadway Loan Group" and "-- The Tuscany Plaza Loan Group" above. We cannot assure you that the Fair Value of any Specially Designated Defaulted Pooled Mortgage Loan (determined as described above) will equal the amount that could have actually been realized in an open bid or that the cash price at which any Specially Designated Defaulted Pooled Mortgage Loan may be purchased as described above will equal or be greater than the amount that could have been realized through foreclosure or a work-out of that mortgage loan. The applicable special servicer will be required to concurrently proceed with a work-out or foreclosure in respect of any Specially Designated Defaulted Mortgage Loan without regard to the related Purchase Option. PROCEDURES WITH RESPECT TO DEFAULTED MORTGAGE LOANS AND REO PROPERTIES The applicable special servicer will be responsible for liquidating defaulted pooled mortgage loans and for the operation, management, leasing, maintenance and disposition of REO Properties, in any event generally as described under "Description of the Pooling and Servicing Agreements--Realization upon Defaulted Mortgage Loans" in the accompanying prospectus. Any REO Property relating to a Trust-Serviced Mortgage Loan Group will be held on behalf of the series 2006-PWR12 certificateholders and the related Trust-Serviced Non-Pooled Noteholder. REO ACCOUNT If an REO Property is acquired, the applicable special servicer will be required to establish and maintain an account for the retention of revenues and other proceeds derived from that REO Property. The funds held in each such REO account may be held as cash or invested in Permitted Investments. Any interest or other income earned on funds in the REO account maintained by a special servicer will be payable to that special servicer, subject to the limitations described in the series 2006-PWR12 pooling and servicing agreement. The applicable special servicer will be required to withdraw from the REO account maintained by that special servicer funds necessary for the proper operation, management, leasing, maintenance and disposition of any REO Property held by the trust fund, but only to the extent of amounts on deposit in the account relating to that particular REO Property. Promptly following the end of each collection period, each special servicer will be required to withdraw from its respective REO account and deposit, or deliver to the applicable master servicer for deposit, into the applicable master servicer's collection account the total of all amounts received in respect of each REO Property held by the trust fund during that collection period, net of any withdrawals made out of those amounts, as described in the preceding sentence and any amounts as may be necessary to maintain a reserve of sufficient funds for the proper operation, management, leasing, maintenance and disposition of that property, including the creation of a reasonable reserve for repairs, replacements, necessary capital improvements and other related expenses. RIGHTS UPON THE OCCURRENCE OF AN EVENT OF DEFAULT If an Event of Default occurs with respect to any of the master servicers or the special servicers and remains unremedied, the trustee will be authorized, and at the direction of series 2006-PWR12 certificateholders entitled to not less than 25% of the series 2006-PWR12 voting rights, or, in the case of the general special servicer, at the direction of the series 2006-PWR12 controlling class representative, the trustee will be required, to terminate all of the obligations and rights of the defaulting party under the series 2006-PWR12 pooling and servicing agreement accruing from and after the notice of termination, other than any rights the defaulting party may have as a series 2006-PWR12 certificateholder or as holder of a S-174 Non-Pooled Subordinate Loan, entitlements to amounts payable to the terminated party at the time of termination and any entitlements of the terminated party that survive the termination. Upon any termination, subject to the discussion in the next two paragraphs and under "--Replacement of the Special Servicers" above, the trustee must either: o succeed to all of the responsibilities, duties and liabilities of the terminated master servicer or special servicer, as the case may be, under the series 2006-PWR12 pooling and servicing agreement; or o appoint an established mortgage loan servicing institution reasonably acceptable to the series 2006-PWR12 controlling class representative to act as successor to the terminated master servicer or special servicer, as the case may be. The holders of certificates entitled to a majority of the voting rights or, alternatively, if an Event of Default involving the general special servicer has occurred, the series 2006-PWR12 controlling class representative, may require the trustee to appoint an established mortgage loan servicing institution to act as successor master servicer or special servicer, as the case may be, rather than have the trustee or its designee act as that successor. In connection with the pooled mortgage loans sold by Principal Commercial Funding II, LLC, Principal Commercial Funding, LLC or Nationwide Life Insurance Company to us for deposit into the trust fund, the applicable master servicer will perform most of its servicing duties through Principal Global Investors, LLC or Nationwide Life, as applicable, in its capacity as primary servicer and Principal Global Investors, LLC or Nationwide Life, as applicable, in that capacity cannot be terminated, including by a successor master servicer, except for cause. In addition, in the case of a number of other mortgage loans, it is expected that the applicable master servicer will perform some of its servicing duties through sub-servicers whose rights to receive certain payments cannot be terminated, including by a successor master servicer, except for cause. Notwithstanding the foregoing discussion in this "--Rights Upon the Occurrence of an Event of Default" section, if a master servicer receives a notice of termination because of the occurrence of any of the Events of Default described in the eighth and ninth bullets under the definition of "Event of Default" that appears in the glossary to this prospectus supplement, the applicable master servicer will continue to serve as master servicer and will have the right for a period of 45 days, at its expense, to sell or cause to be sold its master servicing rights with respect to the mortgage loans for which it is the applicable master servicer to a successor. The appointment of any entity as a successor to a terminated master servicer or special servicer as described in the second bullet of the first paragraph or in the second or third paragraph of this "--Rights Upon the Occurrence of an Event of Default" section may not occur unless each of the Rating Agencies have confirmed that the appointment of that entity will not result in a qualification, downgrade or withdrawal of any of the then current ratings of the series 2006-PWR12 certificates. In general, certificateholders entitled to at least 66-2/3% of the voting rights allocated to each class of series 2006-PWR12 certificates affected by any Event of Default may waive the Event of Default. However, the Events of Default described in the first, second, eighth and ninth bullets under the definition of "Event of Default" that appears in the glossary to this prospectus supplement may only be waived by all of the holders of the affected classes of series 2006-PWR12 certificates. Furthermore, if the trustee is required to spend any monies in connection with any Event of Default, then that Event of Default may not be waived unless and until the trustee has been reimbursed, with interest, by the party requesting the waiver. Upon any waiver of an Event of Default, the Event of Default will cease to exist and will be deemed to have been remedied for every purpose under the series 2006-PWR12 pooling and servicing agreement. If an Event of Default on the part of the master servicer for a Trust-Serviced Mortgage Loan Group occurs and affects a related Serviced Non-Pooled Noteholder and that master servicer is not terminated pursuant to the provisions set forth above, then notwithstanding that the Event of Default may be waived by the series 2006-PWR12 certificateholders, the related Serviced Non-Pooled Noteholder will be entitled to require that the applicable master servicer appoint a sub-servicer that will be responsible for servicing the applicable Mortgage Loan Group. S-175 CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS GENERAL The following discussion summarizes certain legal aspects of mortgage loans secured by real property in California (approximately 14.7% of the initial mortgage pool balance) and New York (approximately 14.4% of the initial mortgage pool balance). The discussion is general in nature, does not purport to be complete and is qualified in its entirety by reference to the applicable federal and state laws governing the mortgage loans. CALIFORNIA Under California law a foreclosure may be accomplished either judicially or non-judicially. Generally, no deficiency judgment is permitted under California law following a nonjudicial sale under a deed of trust. Other California statutes, except in certain cases involving environmentally impaired real property, require the lender to attempt to satisfy the full debt through a foreclosure against the property before bringing a personal action, if otherwise permitted, against the borrower for recovery of the debt. California case law has held that acts such as an offset of an unpledged account or the application of rents from secured property prior to foreclosure, under some circumstances, constitute violations of such statutes. Violations of such statutes may result in the loss of some or all of the security under the loan. Finally, other statutory provisions in California limit any deficiency judgment (if otherwise permitted) against the borrower, and possibly any guarantor, following a judicial sale to the excess of the outstanding debt over the greater (i) the fair market value of the property at the time of the public sale or (ii) the amount of the winning bid in the foreclosure. Borrowers also are allowed a one-year period within which to redeem the property. NEW YORK Mortgage loans in New York are generally secured by mortgages on the related real estate. Foreclosure of a mortgage is usually accomplished in judicial proceedings. After an action for foreclosure is commenced, and if the lender secures a ruling that it is entitled to foreclosure ordinarily by motion for summary judgment, the court then appoints a referee to compute the amount owed together with certain costs, expenses and legal fees of the action. The lender then moves to confirm the referee's report and enter a final judgment of foreclosure and sale. Public notice of the foreclosure sale, including the amount of the judgment, is given for a statutory period of time, after which the mortgaged real estate is sold by a referee at public auction. There is no right of redemption after the foreclosure sale. In certain circumstances, deficiency judgments may be obtained. Under mortgages containing a statutorily sanctioned covenant, the lender has a right to have a receiver appointed without notice and without regard to the adequacy of the mortgaged real estate as security for the amount owed. MATERIAL FEDERAL INCOME TAX CONSEQUENCES GENERAL Upon the issuance of the offered certificates, Cadwalader, Wickersham & Taft LLP, our counsel, will deliver its opinion generally to the effect that, assuming compliance with the series 2006-PWR12 pooling and servicing agreement and assuming the continued qualification of the REMICs formed thereunder, and subject to any other assumptions set forth in the opinion, (i) each of REMIC I, REMIC II and REMIC III will qualify as a REMIC under the Internal Revenue Code and (ii) the portion of the trust that holds the Post-ARD Additional Interest and collections thereof (the "Class V Grantor Trust") will be treated as a grantor trust under the Internal Revenue Code. The assets of REMIC I will generally include-- o the pooled mortgage loans, o any REO Properties acquired on behalf of the series 2006-PWR12 certificateholders (or a beneficial interest in a mortgaged property securing a Pooled Mortgage Loan that is part of a Mortgage Loan Group), S-176 o the respective master servicers' collection accounts, o the REO accounts maintained by the special servicers, and o the certificate administrator's distribution account and interest reserve account. However, REMIC I will exclude any collections of Post-ARD Additional Interest on the ARD Loans. For federal income tax purposes, o the separate non-certificated regular interests in REMIC I will be the regular interests in REMIC I and will be the assets of REMIC II, o the separate non-certificated regular interests in REMIC II will be the regular interests in REMIC II and will be the assets of REMIC III, o the class A-1, A-2, A-3, A-AB, A-4, A-1A, A-M, A-J, X, B, C, D, E, F, G, H, J, K, L, M, N, O and P certificates will evidence the regular interests in, and will generally be treated as debt obligations of, REMIC III, o the class V certificates will represent beneficial ownership of the assets of the Class V Grantor Trust, and o the class R certificates will evidence the sole class of residual interests in each of REMIC I, REMIC II and REMIC III. DISCOUNT AND PREMIUM; PREPAYMENT CONSIDERATION The IRS has issued regulations under sections 1271 to 1275 of the Internal Revenue Code generally addressing the treatment of debt instruments issued with original issue discount. Section 1272(a)(6) of the Internal Revenue Code provides for special rules applicable to the accrual of original issue discount on, among other things, REMIC regular certificates. The Treasury Department has not issued regulations under that section. You should be aware, however, that the regulations issued under sections 1271 to 1275 of the Internal Revenue Code and section 1272(a)(6) of the Internal Revenue Code do not adequately address all issues relevant to, or are not applicable to, prepayable securities such as the offered certificates. We recommend that you consult with your own tax advisor concerning the tax treatment of your offered certificates. For federal income tax reporting purposes, we anticipate that the class __, __, __ and __certificates will be treated as having been issued with more than a de minimis amount of original issue discount, that the class __, __, __, __, and __ certificates will be treated as having been issued with a de minimis amount of original issue discount and that the class __, __, and __certificates will be issued at a premium. Whether any holder of these classes of offered certificates will be treated as holding a certificate with amortizable bond premium will depend on the certificateholder's purchase price and the payments remaining to be made on the certificate at the time of its acquisition by the certificateholder. If you acquire an interest in any class of offered certificates issued at a premium, you should consider consulting your own tax advisor regarding the possibility of making an election to amortize the premium. See "Material Federal Income Tax Consequences--Federal Income Tax Consequences for REMIC Certificates--Taxation of Regular Certificates--Premium" in the accompanying prospectus. When determining the rate of accrual of original issue discount and market discount, if any, and the amortization of premium, if any, with respect to the series 2006-PWR12 certificates for federal income tax purposes, the prepayment assumption used will be that following any date of determination: o the mortgage loans with anticipated repayment dates will be paid in full on those dates, o no mortgage loan in the trust will otherwise be prepaid prior to maturity, and S-177 o there will be no extension of maturity for any mortgage loan in the trust. For a more detailed discussion of the federal income tax aspects of investing in the offered certificates, see "Material Federal Income Tax Consequences" in each of this prospectus supplement and the accompanying prospectus. Prepayment premiums and yield maintenance charges actually collected on the underlying mortgage loans will be paid on the offered certificates as and to the extent described in this prospectus supplement. It is not entirely clear under the Internal Revenue Code when the amount of a prepayment premium or yield maintenance charge should be taxed to the holder of a class of offered certificates entitled to that amount. For federal income tax reporting purposes, the tax administrator will report prepayment premiums or yield maintenance charges as income to the holders of a class of offered certificates entitled thereto only after the applicable master servicer's actual receipt of those amounts. The IRS may nevertheless seek to require that an assumed amount of prepayment premiums and yield maintenance charges be included in payments projected to be made on the offered certificates and that the taxable income be reported based on the projected constant yield to maturity of the offered certificates. Therefore, the projected prepayment premiums and yield maintenance charges would be included prior to their actual receipt by holders of the offered certificates. If the projected prepayment premiums and yield maintenance charges were not actually received, presumably the holder of an offered certificate would be allowed to claim a deduction or reduction in gross income at the time the unpaid prepayment premiums and yield maintenance charges had been projected to be received. Moreover, it appears that prepayment premiums and yield maintenance charges are to be treated as ordinary income rather than capital gain. However, the correct characterization of the income is not entirely clear. We recommend you consult your own tax advisors concerning the treatment of prepayment premiums and yield maintenance charges. CHARACTERIZATION OF INVESTMENTS IN OFFERED CERTIFICATES Except to the extent noted below, offered certificates held by a real estate investment trust ("REIT") will be "real estate assets" within the meaning of section 856(c)(5)(B) of the Internal Revenue Code in the same proportion that the assets of the trust would be so treated. In addition, interest, including original issue discount, if any, on offered certificates held by a REIT will be interest described in section 856(c)(3)(B) of the Internal Revenue Code to the extent that those certificates are treated as "real estate assets" within the meaning of section 856(c)(5)(B) of the Internal Revenue Code. Most of the mortgage loans to be included in the trust are not secured by real estate used for residential or other purposes prescribed in section 7701(a)(19)(C) of the Internal Revenue Code. Consequently, in general, it appears that the offered certificates will be treated as assets qualifying under that section to only a limited extent. Accordingly, investment in the offered certificates may not be suitable for a thrift institution seeking to be treated as a "domestic building and loan association" under section 7701(a)(19)(C) of the Internal Revenue Code. The offered certificates will be treated as "qualified mortgages" for another REMIC under section 860G(a)(3)(C) of the Internal Revenue Code. To the extent an offered certificate represents ownership of an interest in a mortgage loan that is secured in part by the related borrower's interest in a bank account, that mortgage loan is not secured solely by real estate. Therefore: o a portion of that certificate may not represent ownership of "loans secured by an interest in real property" or other assets described in section 7701(a)(19)(C) of the Internal Revenue Code; o a portion of that certificate may not represent ownership of "real estate assets" under section 856(c)(5)(B) of the Internal Revenue Code; and o the interest on that certificate may not constitute "interest on obligations secured by mortgages on real property" within the meaning of section 856(c)(3)(B) of the Internal Revenue Code. In addition, most of the mortgage loans that we intend to include in the trust contain defeasance provisions under which the lender may release its lien on the collateral securing the mortgage loan in return for the borrower's pledge of substitute collateral in the form of Government Securities. Generally, under the Treasury regulations, if a REMIC releases its lien on real property that secures a qualified mortgage, that mortgage ceases to be a qualified mortgage on the date the lien is released unless certain conditions are satisfied. In order for the mortgage loan to remain a qualified mortgage, the Treasury regulations require that-- S-178 (1) the borrower pledges substitute collateral that consist solely of Government Securities; (2) the mortgage loan documents allow that substitution; (3) the lien is released to facilitate the disposition of the property or any other customary commercial transaction, and not as part of an arrangement to collateralize a REMIC offering with obligations that are not real estate mortgages; and (4) the release is not within two years of the startup day of the REMIC. Following the defeasance of a mortgage loan, regardless of whether the foregoing conditions were satisfied, that mortgage loan would not be treated as a "loan secured by an interest in real property" or a "real estate asset" and interest on that loan would not constitute "interest on obligations secured by real property" for purposes of sections 7701(a)(19)(C), 856(c)(5)(B) and 856(c)(3)(B) of the Internal Revenue Code, respectively. See "Material Federal Income Tax Consequences--Federal Income Tax Consequences for REMIC Certificates" in the accompanying prospectus. For further information regarding the federal income tax consequences of investing in the offered certificates, see "Material Federal Income Tax Consequences" in the accompanying prospectus. ERISA CONSIDERATIONS ERISA and the Internal Revenue Code impose requirements on Plans that are subject to ERISA and/or Section 4975 of the Internal Revenue Code. ERISA imposes duties on persons who are fiduciaries of Plans subject to ERISA and prohibits selected transactions between a Plan and Parties in Interest with respect to such Plan. Under ERISA, any person who exercises any authority or control respecting the management or disposition of the assets of a Plan, and any person who provides investment advice with respect to such assets for a fee, is a fiduciary of such Plan. Governmental plans (as defined in Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33) of ERISA) are not subject to the prohibited transactions restrictions of ERISA and the Internal Revenue Code. However, such plans may be subject to similar provisions of applicable federal, state or local law. PLAN ASSETS Neither ERISA nor the Internal Revenue Code defines the term "plan assets". However, the DOL has issued a final regulation (29 C.F.R. Section 2510.3-101) concerning the definition of what constitutes the assets of a Plan. That DOL regulation provides that, as a general rule, the underlying assets and properties of corporations, partnerships, trusts and certain other entities in which a Plan makes an "equity" investment will be deemed for certain purposes, including the prohibited transaction provisions of ERISA and Section 4975 of the Internal Revenue Code, to be assets of the investing Plan unless certain exceptions apply. Under the terms of the regulation, if the assets of the trust were deemed to constitute plan assets by reason of a Plan's investment in offered certificates, such plan assets would include an undivided interest in the pooled mortgage loans and any other assets of the trust. If the pooled mortgage loans or other trust assets constitute plan assets, then any party exercising management or discretionary control regarding those assets may be deemed to be a "fiduciary" with respect to those assets, and thus subject to the fiduciary requirements and prohibited transaction provisions of ERISA and Section 4975 of the Internal Revenue Code with respect to the pooled mortgage loans and other trust assets. Bear Stearns Commercial Mortgage Securities Inc., the underwriters, the master servicers, the primary servicers, the special servicers and certain of their respective affiliates might be considered or might become fiduciaries or other Parties in Interest with respect to investing Plans. Moreover, the trustee, the certificate administrator, the series 2006-PWR12 controlling class representative, or any insurer, primary insurer or other issuer of a credit support instrument relating to the primary assets in the trust, or certain of their respective affiliates, might be considered fiduciaries or other Parties in Interest with respect to investing Plans. In the absence of an applicable exemption, "prohibited transactions" within the meaning of ERISA and Section 4975 of the Internal Revenue Code could arise if offered certificates were acquired by, or with "plan assets" of, a Plan with respect to which any such person is a Party in Interest. In addition, an insurance company proposing to acquire or hold offered certificates with assets of its general account should consider the extent to which such acquisition or holding would be subject to the requirements of ERISA and Section S-179 4975 of the Internal Revenue Code under John Hancock Mutual Life Insurance Co. v. Harris Trust and Savings Bank, 510 U.S. 86 (1993), and Section 401(c) of ERISA, as amended by the Small Business Job Protection Act of 1996, Public Law No. 104-188, and subsequent DOL and judicial guidance. See "--Insurance Company General Accounts" below. SPECIAL EXEMPTION APPLICABLE TO THE OFFERED CERTIFICATES With respect to the acquisition and holding of the offered certificates, the DOL has granted the Underwriter Exemption to Bear, Stearns & Co. Inc. and Morgan Stanley & Co. Incorporated. The Underwriter Exemption generally exempts from certain of the prohibited transaction rules of ERISA and Section 4975 of the Internal Revenue Code transactions relating to: o the initial purchase, the holding, and the subsequent resale by Plans of certificates evidencing interests in pass-through trusts; and o transactions in connection with the servicing, management and operation of such trusts, provided that the assets of such trusts consist of certain secured receivables, loans and other obligations that meet the conditions and requirements of the Underwriter Exemption. The assets covered by the Underwriter Exemption include mortgage loans such as the pooled mortgage loans and fractional undivided interests in such loans. The Underwriter Exemption as applicable to the offered certificates sets forth the following five general conditions which must be satisfied for exemptive relief: o the acquisition of the offered certificates by a Plan must be on terms, including the price for the certificates, that are at least as favorable to the Plan as they would be in an arm's-length transaction with an unrelated party; o the offered certificates acquired by the Plan must have received a rating at the time of such acquisition that is in one of the four highest generic rating categories from Moody's, S&P or Fitch; o the trustee must not be an affiliate of any other member of the Restricted Group, other than an underwriter; o the sum of all payments made to and retained by the underwriters in connection with the distribution of the offered certificates must represent not more than reasonable compensation for underwriting the certificates; the sum of all payments made to and retained by us in consideration of our assignment of the mortgage loans to the trust fund must represent not more than the fair market value of such mortgage loans; the sum of all payments made to and retained by the certificate administrator, tax administrator, the trustee, the master servicers, the special servicers and any sub-servicer must represent not more than reasonable compensation for such person's services under the series 2006-PWR12 pooling and servicing agreement or other relevant servicing agreement and reimbursement of such person's reasonable expenses in connection therewith; and o the Plan investing in the certificates must be an "accredited investor" as defined in Rule 501(a)(1) under the Securities Act of 1933, as amended. A fiduciary of a Plan contemplating purchasing any of the offered certificates in the secondary market must make its own determination that at the time of such acquisition, such certificates continue to satisfy the second general condition set forth above. We expect that the third general condition set forth above will be satisfied with respect to the offered certificates. A fiduciary of a Plan contemplating purchasing any of the offered certificates must make its own determination that the first, second, fourth and fifth general conditions set forth above will be satisfied with respect to such certificates. Before purchasing any of the offered certificates, a fiduciary of a Plan should itself confirm (a) that such certificates constitute "securities" for purposes of the Underwriter Exemption and (b) that the specific and general conditions of the Underwriter Exemption and the other requirements set forth in the Underwriter Exemption would be satisfied. In addition to S-180 making its own determination as to the availability of the exemptive relief provided in the Underwriter Exemption, the Plan fiduciary should consider the availability of other prohibited transaction exemptions. Moreover, the Underwriter Exemption provides relief from certain self-dealing/conflict of interest prohibited transactions, but only if, among other requirements: o the investing Plan fiduciary or its affiliates is an obligor with respect to five percent or less of the fair market value of the obligations contained in the trust; o the Plan's investment in each class of series 2006-PWR12 certificates does not exceed 25% of all of the certificates outstanding of that class at the time of the acquisition; o immediately after the acquisition, no more than 25% of the assets of the Plan are invested in certificates representing an interest in one or more trusts containing assets sold or serviced by the same entity; o in connection with the acquisition of certificates in the initial offering, at least 50% of each class of certificates in which Plans invest and of the aggregate interests in the trust are acquired by persons independent of the Restricted Group; and o the Plan is not sponsored by a member of the Restricted Group. INSURANCE COMPANY GENERAL ACCOUNTS Based on the reasoning of the United States Supreme Court in John Hancock Life Ins. Co. v. Harris Trust and Savings Bank, an insurance company's general account may be deemed to include assets of the Plans investing in the general account (e.g., through the purchase of an annuity contract), and the insurance company might be treated as a Party in Interest with respect to a Plan by virtue of such investment. Any investor that is an insurance company using the assets of an insurance company general account should note that the Small Business Job Protection Act of 1996 added Section 401(c) of ERISA relating to the status of the assets of insurance company general accounts under ERISA and Section 4975 of the Internal Revenue Code. Pursuant to Section 401(c), the Department of Labor issued final regulations with respect to insurance policies issued on or before December 31, 1998 that are supported by an insurer's general account. As a result of these regulations, assets of an insurance company general account will not be treated as "plan assets" for purposes of the fiduciary responsibility provisions of ERISA and Section 4975 of the Internal Revenue Code to the extent such assets relate to contracts issued to employee benefit plans on or before December 31, 1998, if the insurer satisfies various conditions. Any assets of an insurance company general account which support insurance policies or annuity contracts issued to Plans after December 31, 1998, or on or before that date for which the insurer does not comply with the 401(c) Regulations, may be treated as "plan assets" of such Plans. Because Section 401(c) does not relate to insurance company separate accounts, separate account assets continue to be treated as "plan assets" of any Plan that is invested in such separate account. Insurance companies contemplating the investment of general account assets in any class of certificates that is not rated at least "Baa3" by Moody's or "BBB-" by S&P should consult with their legal counsel with respect to the applicability of Section 401(c). Accordingly, any insurance company that acquires or holds any offered certificate with "plan assets" of a Plan will be deemed to have represented and warranted to us, the trustee, the certificate administrator, each master servicer and each special servicer that (1) such acquisition and holding are permissible under applicable law, satisfy the requirements of the Underwriter Exemption, will not constitute or result in a non-exempt prohibited transaction under ERISA or Section 4975 of the Internal Revenue Code, and will not subject us, the trustee, the certificate administrator, either master servicer, any special servicer or either primary servicer to any obligation in addition to those undertaken in the series 2006-PWR12 pooling and servicing agreement, or (2) the source of funds used to acquire and hold such certificates is an "insurance company general account", as defined in DOL Prohibited Transaction Class Exemption 95-60, and the applicable conditions set forth in Sections I and III of PTCE 95-60 have been satisfied. S-181 GENERAL INVESTMENT CONSIDERATIONS Prospective Plan investors should consult with their legal counsel concerning the impact of ERISA, Section 4975 of the Internal Revenue Code or any corresponding provisions of applicable federal, state or local law, the applicability of the Underwriter Exemption or other exemptive relief, and the potential consequences to their specific circumstances, prior to making an investment in the offered certificates. Moreover, each Plan fiduciary should determine whether, under the general fiduciary standards of ERISA regarding prudent investment procedure and diversification, an investment in the offered certificates is appropriate for the Plan, taking into account the overall investment policy of the Plan and the composition of the Plan's investment portfolio. Any sale of offered certificates to a Plan does not constitute any representation by the depositor or any underwriter that an investment in the offered certificates meets relevant legal requirements with respect to investments by Plans generally or any particular Plan, or that such investment is appropriate for Plans generally or any particular Plan. LEGAL INVESTMENT The offered certificates will not constitute "mortgage related securities" for purposes of the Secondary Mortgage Market Enhancement Act of 1984, as amended. The appropriate characterization of the offered certificates under various legal investment restrictions, and thus the ability of investors subject to these restrictions to purchase offered certificates, is subject to significant interpretive uncertainties. No representations are made as to the proper characterization of the offered certificates for legal investment, financial institution regulatory or other purposes, or as to the ability of particular investors to purchase the offered certificates under applicable legal investment or other restrictions. The uncertainties described above (and any unfavorable future determinations concerning the legal investment or financial institution regulatory characteristics of the offered certificates) may adversely affect the liquidity of the offered certificates. Accordingly, all investors whose investment activities are subject to legal investment laws and regulations, regulatory capital requirements, or review by regulatory authorities should consult with their own legal advisors in determining whether, and to what extent, the offered certificates will constitute legal investments for them or are subject to investment, capital or other restrictions. See "Legal Investment" in the accompanying prospectus. LEGAL MATTERS The validity of the offered certificates and certain federal income tax matters will be passed upon by Cadwalader, Wickersham & Taft LLP, New York, New York, and certain other legal matters will be passed upon for the underwriters by Sidley Austin LLP, New York, New York. S-182 RATINGS It is a condition to their issuance that the respective classes of offered certificates be rated as follows: CLASS MOODY'S S&P ----- ------- --- A-1 Aaa AAA A-2 Aaa AAA A-3 Aaa AAA A-AB Aaa AAA A-4 Aaa AAA A-1A Aaa AAA A-M Aaa AAA A-J Aaa AAA Each of the Rating Agencies identified above are expected to perform ratings surveillance with respect to its ratings for so long as the offered certificates remain outstanding; provided that a Rating Agency may cease performing ratings surveillance at any time if that Rating Agency does not have sufficient information to allow it to continue to perform ratings surveillance on the certificates. The depositor has no ability to ensure that the Rating Agencies perform ratings surveillance. Fees for such ratings surveillance have been prepaid by the depositor. The ratings on the offered certificates address the likelihood of-- o the timely receipt by their holders of all distributions of interest to which they are entitled on each distribution date, and o the ultimate receipt by their holders of all distributions of principal to which they are entitled on or before the distribution date in September 2038, which is the rated final distribution date. The ratings on the offered certificates take into consideration-- o the credit quality of the pooled mortgage loans, o structural and legal aspects associated with the offered certificates, and o the extent to which the payment stream from the pooled mortgage loans is adequate to make distributions of interest and principal required under the offered certificates. The ratings on the respective classes of offered certificates do not represent any assessment of-- o the tax attributes of the offered certificates or of the trust fund, o whether or to what extent prepayments of principal may be received on the pooled mortgage loans, o the likelihood or frequency of prepayments of principal on the pooled mortgage loans, o the degree to which the amount or frequency of prepayments of principal on the pooled mortgage loans might differ from those originally anticipated, o whether or to what extent the interest payable on any class of offered certificates may be reduced in connection with Net Aggregate Prepayment Interest Shortfalls (or analogous amounts in connection with balloon payments) or whether any compensating interest payments will be made, and o whether and to what extent Default Interest or Post-ARD Additional Interest will be received. S-183 Also, a security rating does not represent any assessment of the yield to maturity that investors may experience in the event of rapid prepayments and/or other liquidations of the pooled mortgage loans. In general, the ratings on the offered certificates address credit risk and not prepayment risk. We cannot assure you that any rating agency not requested to rate the offered certificates will nonetheless issue a rating to any class of offered certificates and, if so, what the rating would be. A rating assigned to any class of offered certificates by a rating agency that has not been requested by us to do so may be lower than the rating assigned thereto by Moody's or S&P. The ratings on the offered certificates should be evaluated independently from similar ratings on other types of securities. A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the assigning rating organization. Each security rating should be evaluated independently of any other security rating. See "Ratings" in the accompanying prospectus. S-184 GLOSSARY "1675 Broadway Change of Control Event" means, as of any date of determination, (i) the then outstanding principal balance of the 1675 Broadway Non-Pooled Subordinate Loan, after giving effect to any realized losses allocable to the 1675 Broadway Non-Pooled Subordinate Loan, minus (ii) any Appraisal Reduction Amount allocable to the 1675 Broadway Non-Pooled Subordinate Loan, and Additional Trust Fund Expenses allocable to the 1675 Broadway Non-Pooled Subordinate Loan, is collectively less than 25% of the difference between (a) the initial principal balance of the 1675 Broadway Non-Pooled Subordinate Loan and, (b) any payments of principal (whether as scheduled amortization, prepayments or otherwise) on the 1675 Broadway Non-Pooled Subordinate Loan. "1675 Broadway Intercreditor Agreement" means the intercreditor agreement between the initial holders of the 1675 Broadway Pooled Mortgage Loan and the 1675 Broadway Non-Pooled Subordinate Loan. "1675 Broadway Loan Group" means, collectively, the 1675 Broadway Pooled Mortgage Loan and the 1675 Broadway Non-Pooled Subordinate Loan. "1675 Broadway Mortgaged Property" means the mortgaged property identified on Appendix B to this prospectus supplement as "1675 Broadway". "1675 Broadway Non-Pooled Subordinate Loan" means the loan in the original principal amount of $25,000,000 that is secured by the same mortgage instrument encumbering the 1675 Broadway Mortgaged Property as the 1675 Broadway Pooled Mortgage Loan and is subordinate in right of payment to the 1675 Broadway Pooled Mortgage Loan. "1675 Broadway Non-Pooled Subordinate Noteholder" means the holder of the promissory note evidencing the 1675 Broadway Non-Pooled Subordinate Loan. "1675 Broadway Pooled Mortgage Loan" means the pooled mortgage loan in the original principal amount of $155,000,000 that is secured by the mortgage instrument encumbering the 1675 Broadway Mortgaged Property. "30/360 Basis" means the accrual of interest based on a 360-day year consisting of twelve 30-day months. "Actual/360 Basis" means the accrual of interest based on the actual number of days elapsed during each one-month accrual period in a year assumed to consist of 360 days. "Additional Servicer" means each affiliate of any master servicer that services any of the mortgage loans and each person that is not an affiliate of any master servicer, other than a special servicer, and that, in either case, services 10% or more of the pooled mortgage loans based on the principal balance of the pooled mortgage loans. "Additional Trust Fund Expense" means an expense of the trust fund that-- o arises out of a default on a mortgage loan or an otherwise unanticipated event, o is not included in the calculation of a Realized Loss, o is not covered by a servicing advance or a corresponding collection from the related borrower, and o is not covered by late payment charges or Default Interest collected on the pooled mortgage loans (to the extent such coverage is provided for in the series 2006-PWR12 pooling and servicing agreement). We provide some examples of Additional Trust Fund Expenses under "Description of the Offered Certificates--Reductions of Certificate Principal Balances in Connection with Realized Losses and Additional Trust Fund Expenses" in this prospectus supplement. S-185 "Administrative Fee Rate" means, for each pooled mortgage loan, the sum of the servicer report administrator fee rate, the trustee fee rate, the certificate administrator fee rate and the applicable master servicing fee rate. The master servicing fee rate will include any primary servicing fee rate. "Appraisal Reduction Amount" means for any pooled mortgage loan as to which an Appraisal Trigger Event has occurred, an amount that: o will be determined shortly following the later of-- 1. the date on which the relevant appraisal or other valuation is obtained or performed, as described under "Servicing Under the Series 2006-PWR12 Pooling and Servicing Agreement--Required Appraisals" in this prospectus supplement; and 2. the date on which the relevant Appraisal Trigger Event occurred; and o will generally equal the excess, if any, of "x" over "y" where-- 1. "x" is equal to the sum of: (a) the Stated Principal Balance of that mortgage loan; (b) to the extent not previously advanced by or on behalf of the applicable master servicer or the trustee, all unpaid interest, other than any Default Interest and Post-ARD Additional Interest, accrued on that mortgage loan through the most recent due date prior to the date of determination; (c) all accrued but unpaid special servicing fees with respect to that mortgage loan; (d) all related unreimbursed advances made by or on behalf of the applicable master servicer, the applicable special servicer or the trustee with respect to that mortgage loan, together with interest on those advances; (e) any other outstanding Additional Trust Fund Expenses with respect to that mortgage loan; and (f) all currently due and unpaid real estate taxes and assessments, insurance premiums and, if applicable, ground rents with respect to the related mortgaged property or REO Property, for which neither the applicable master servicer nor the applicable special servicer holds any escrow funds or reserve funds; and 2. "y" is equal to the sum of: (a) the excess, if any, of 90% of the resulting appraised or estimated value of the related mortgaged property or REO Property, over the amount of any obligations secured by liens on the property that are prior to the lien of that mortgage loan; (b) the amount of escrow payments and reserve funds held by the applicable master servicer or the applicable special servicer with respect to the subject mortgage loan that-- o are not required to be applied to pay real estate taxes and assessments, insurance premiums or ground rents, o are not otherwise scheduled to be applied (except to pay debt service on the mortgage loan) within the next 12 months, and o may be applied toward the reduction of the principal balance of the mortgage loan; and (c) the amount of any letter of credit that constitutes additional security for the mortgage loan that may be used to reduce the principal balance of the subject mortgage loan. S-186 If, however-- o an Appraisal Trigger Event occurs with respect to any pooled mortgage loan, o the appraisal or other valuation referred to in the first bullet of this definition is not obtained or performed with respect to the related mortgaged property or REO Property within 60 days of the Appraisal Trigger Event referred to in the first bullet of this definition, and o either-- 1. no comparable appraisal or other valuation had been obtained or performed with respect to the related mortgaged property or REO Property, as the case may be, during the 12-month period prior to that Appraisal Trigger Event, or 2. there has been a material change in the circumstances surrounding the related mortgaged property or REO Property, as the case may be, subsequent to the earlier appraisal or other valuation that, in the applicable special servicer's judgment, materially affects the property's value, then until the required appraisal or other valuation is obtained or performed, the appraisal reduction amount for the subject mortgage loan will equal 25% of the Stated Principal Balance of the subject mortgage loan. After receipt of the required appraisal or other valuation with respect to the related mortgaged property or REO Property, the applicable special servicer will determine the appraisal reduction amount, if any, for the subject pooled mortgage loan as described in the first sentence of this definition. For purposes of the definitions of 1675 Broadway Change of Control Event and Tuscany Plaza Change of Control Event, any Appraisal Reduction Amounts will be calculated with respect to the entirety of the related Mortgage Loan Group as if it were a single pooled mortgage loan (and allocated first to the related Non-Pooled Subordinate Loan up to the full principal balance thereof). For all other purposes, an Appraisal Reduction Amount will be calculated only with respect to the related Pooled Mortgage Loan. An Appraisal Reduction Amount as calculated above will be reduced to zero as of the date all Servicing Transfer Events have ceased to exist with respect to the related pooled mortgage loan and at least 90 days have passed following the occurrence of the most recent Appraisal Trigger Event. No Appraisal Reduction Amount as calculated above will exist as to any pooled mortgage loan after it has been paid in full, liquidated, repurchased or otherwise disposed of. "Appraisal Trigger Event" means, with respect to any pooled mortgage loan, any of the following events: o the occurrence of a Servicing Transfer Event and the modification of the mortgage loan by the applicable special servicer in a manner that-- 1. materially affects the amount or timing of any payment of principal or interest due thereon, other than, or in addition to, bringing monthly debt service payments current with respect to the mortgage loan; 2. except as expressly contemplated by the related mortgage loan documents, results in a release of the lien of the related mortgage instrument on any material portion of the related mortgaged property without a corresponding principal prepayment in an amount, or the delivery of substitute real property collateral with a fair market value (as is), that is not less than the fair market value (as is) of the property to be released; or 3. in the judgment of the applicable special servicer, otherwise materially impairs the security for the mortgage loan or materially reduces the likelihood of timely payment of amounts due thereon; o the mortgaged property securing the mortgage loan becomes an REO Property; o the related borrower becomes the subject of (1) voluntary bankruptcy, insolvency or similar proceedings or (2) involuntary bankruptcy, insolvency or similar proceedings that remain undismissed for 60 days; S-187 o the related borrower fails to make any monthly debt service payment with respect to the mortgage loan, which failure remains unremedied for 60 days, and the failure constitutes a Servicing Transfer Event; and o the passage of 60 days after a receiver or similar official is appointed and continues in that capacity with respect to the mortgaged property securing the mortgage loan. "Appraised Value" means, for any mortgaged property securing a pooled mortgage loan, the value estimate reflected in the most recent appraisal obtained by or otherwise in the possession of the related mortgage loan seller as of the cut-off date. The appraisals for certain of the mortgaged properties state a "stabilized value" as well as an "as-is" value for such properties based on the assumption that certain events will occur with respect to the re-tenanting, renovation or other repositioning of such properties. The stabilized value is presented as the Appraised Value in this prospectus supplement to the extent stated in the notes titled "Footnotes to Appendix B". "ARCap" means ARCap Servicing, Inc., formerly ARCap Special Servicing, Inc. "ARD" means anticipated repayment date. "ARD Loan" means any mortgage loan that provides for the accrual of Post-ARD Additional Interest if the mortgage loan is not paid in full on or prior to its anticipated repayment date. "Authorized Collection Account Withdrawals" means any withdrawal from a collection account for any one or more of the following purposes (which are generally not governed by any set of payment priorities): 1. to remit to the certificate administrator for deposit in the certificate administrator's distribution account described under "Description of the Offered Certificates--Distribution Account" in this prospectus supplement, on the business day preceding each distribution date, all payments and other collections on the pooled mortgage loans and the trust's interest in any related REO Properties that are then on deposit in that collection account, exclusive of any portion of those payments and other collections that represents one or more of the following-- (a) monthly debt service payments due on a due date in a calendar month subsequent to the month in which the subject distribution date occurs; (b) with limited exception pooled mortgage loans that have due dates occurring after the end of the related collection period, payments and other collections received by or on behalf of the trust fund after the end of the related collection period; and (c) amounts that are payable or reimbursable from that collection account to any person other than the series 2006-PWR12 certificateholders in accordance with any of clauses 2 through 6 below; 2. to pay or reimburse one or more parties to the series 2006-PWR12 pooling and servicing agreement for unreimbursed servicing and monthly debt service advances, master servicing compensation, special servicing compensation and indemnification payments or reimbursement to which they are entitled (subject to any limitations on the source of funds that may be used to make such payment or reimbursement); 3. to pay or reimburse any other items generally or specifically described in this prospectus supplement or the accompanying prospectus or otherwise set forth in the series 2006-PWR12 pooling and servicing agreement as being payable or reimbursable out of a collection account or otherwise being at the expense of the trust fund (including interest that accrued on advances, costs associated with permitted environmental remediations, unpaid expenses incurred in connection with the sale or liquidation of a pooled mortgage loan or REO Property, amounts owed by the trust fund to a third party pursuant to any co-lender, intercreditor or other similar agreement, the costs of various opinions of counsel and tax-related advice and costs incurred in the confirmation of Fair Value determinations); 4. to remit to any third party that is entitled thereto any mortgage loan payments that are not owned by the trust fund, such as any payments attributable to the period before the cut-off date and payments that are received after the sale or other removal of a pooled mortgage loan from the trust fund; S-188 5. to withdraw amounts deposited in the collection account in error; and 6. to clear and terminate the collection account upon the termination of the series 2006-PWR12 pooling and servicing agreement. "Available Distribution Amount" means, with respect to any distribution date, in general, the sum of-- 1. the amounts remitted by the two master servicers to the certificate administrator for such distribution date, as described under "Description of the Offered Certificates--Distribution Account--Deposits" in this prospectus supplement, exclusive of any portion thereof that represents one or more of the following: o Prepayment Premiums or Yield Maintenance Charges (which are separately distributable on the series 2006-PWR12 certificates as described in this prospectus supplement); o any collections of Post-ARD Additional Interest (which are distributable to the holders of the class V certificates); and o any amounts that may be withdrawn from the certificate administrator's distribution account, as described under "Description of the Offered Certificates--Distribution Account--Withdrawals" in this prospectus supplement, for any reason other than distributions on the series 2006-PWR12 certificates, including if such distribution date occurs during January, other than a leap year, or February of any year subsequent to 2006, the interest reserve amounts with respect to the pooled mortgage loans that accrue interest on an Actual/360 Basis, which are to be deposited into the certificate administrator's interest reserve account; plus 2. if such distribution date occurs during March of any year subsequent to 2006 (or, if the distribution date is the final distribution date and occurs in January (except in a leap year) or February of any year), the aggregate of the interest reserve amounts then on deposit in the certificate administrator's interest reserve account in respect of each pooled mortgage loan that accrues interest on an Actual/360 Basis, which are to be deposited into the certificate administrator's distribution account. The certificate administrator will apply the Available Distribution Amount as described under "Description of the Offered Certificates--Distributions" in this prospectus supplement to pay principal and accrued interest on the series 2006-PWR12 certificates on each distribution date. "BSCMI" means Bear Stearns Commercial Mortgage, Inc. "CBD" means, with respect to a particular jurisdiction, its central business district. "Class A Principal Distribution Cross-Over Date" means the first distribution date as of the commencement of business on which-- o two or more classes of the class A-1, A-2, A-3, A-AB, A-4 and A-1A certificates remain outstanding, and o the total principal balance of the class A-M, A-J, B, C, D, E, F, G, H, J, K, L, M, N, O and P certificates have previously been reduced to zero as described under "Description of the Offered Certificates--Reductions of Certificate Principal Balances in Connection with Realized Losses and Additional Trust Fund Expenses" in this prospectus supplement. S-189 "Class A-AB Planned Principal Balance" means, for any distribution date, the principal balance specified for that distribution date on Schedule II to this prospectus supplement. Such principal balances were calculated using, among other things, the Structuring Assumptions. Based on the Structuring Assumptions, it is anticipated that the total principal balance of the class A-AB certificates on each distribution date would be reduced to approximately the principal balance indicated for that distribution date on Schedule II to this prospectus supplement. We cannot assure you, however, that the pooled mortgage loans will perform in conformity with the Structuring Assumptions. Therefore, we cannot assure you that the total principal balance of the class A-AB certificates on any distribution date will be equal to (and, following retirement of the class A-1, A-2 and A-3 certificates, that total principal balance may be less than) the principal balance that is specified for such distribution date on Schedule II to this prospectus supplement. "Clearstream" means Clearstream Banking, societe anonyme. "CPR" means an assumed constant rate of prepayment each month, which is expressed on a per annum basis, relative to the then-outstanding principal balance of a pool of mortgage loans (in this case, the pooled mortgage loans) for the life of those loans. The CPR model is the prepayment model that we use in this prospectus supplement. "Cut-off Date Loan-to-Value Ratio" or "Cut-off Date LTV Ratio" means the ratio, expressed as a percentage, of the cut-off date principal balance of a mortgage loan to the Appraised Value of the related mortgaged property or properties determined as described under "Description of the Mortgage Pool--Assessments of Property Value and Condition--Appraisals". See "Description of the Mortgage Pool--Additional Mortgage Loan Information" in this prospectus supplement and the notes to Appendix B to this prospectus supplement. "Debt Service Coverage Ratio", "DSCR", "Underwritten Debt Service Coverage Ratio" or "U/W DSCR" means the ratio of the Underwritten Net Cash Flow for the related mortgaged property or properties to the annual debt service as shown in Appendix B. In the case of pooled mortgage loans with an interest-only period that has not expired as of the cut-off date but will expire prior to maturity, 12 months of interest-only payments is used as the annual debt service even if such remaining interest-only period is less than 12 months. See "Description of the Mortgage Pool--Additional Mortgage Loan Information" in this prospectus supplement and the notes to Appendix B to this prospectus supplement. "Debt Service Coverage Ratio (after IO Period)" or "DSCR (after IO Period)" means the DSCR except with respect to any pooled mortgage loan that has an interest-only period that has not expired as of the cut-off date but will expire prior to maturity. In those such cases, the debt service coverage ratio is calculated in the same manner as the DSCR except that the amount of the annual debt service considered in the calculation is generally the total of the 12 monthly payments that are due immediately after such interest-only period expires. See "Description of the Mortgage Pool--Additional Mortgage Loan Information" in this prospectus supplement and the notes to Appendix B to this prospectus supplement. "Default Interest" means any interest that-- o accrues on a defaulted mortgage loan solely by reason of the subject default, and o is in excess of all interest at the related mortgage interest rate, including any Post-ARD Additional Interest, accrued on the mortgage loan. "DOL" means the U.S. Department of Labor. "DTC" means The Depository Trust Company. "Eligible Account" means any of (i) an account maintained with a federal or state chartered depository institution or trust company, the long-term deposit or long-term unsecured debt obligations of which are rated no less than "A2" by Moody's (or an "Aa3" senior unsecured credit rating by Moody's in the case of any accounts maintained at LaSalle; provided that if such rating is lowered to below "Aa3" by Moody's, then the applicable Master Servicer shall move such applicable account or accounts within thirty (30) days of such downgrade to an institution that otherwise complies with this definition) and "AA-" by S&P (or "A-" by S&P so long as the short-term deposit or short-term unsecured debt obligations of such depository institution or trust company are rated no less than "A-1" by S&P), if the deposits are to be held in the account for more than thirty (30) days, or the short-term deposit or short-term unsecured debt obligations of which are rated no less than "P-1" by Moody's and "A-1" by S&P, if the deposits are to be held in the account for thirty (30) days or less, in any event at S-190 any time funds are on deposit therein, (ii) a segregated trust account maintained with the trust department of a federal or state chartered depository institution or trust company (which, subject to the remainder of this clause (ii), may include the certificate administrator or the trustee) acting in its fiduciary capacity, and which, in either case, has a combined capital and surplus of at least $50,000,000 and is subject to supervision or examination by federal or state authority and to regulations regarding fiduciary funds on deposit similar to Title 12 of the Code of Federal Regulations Section 9.10(b) and whose long-term senior unsecured debt obligations or other long-term deposits, or the trustee's or paying agent's parent's long-term senior unsecured debt obligations or other long-term deposits, are rated at least "Baa3" by Moody's, (iii) for so long as Wells Fargo serves as a master servicer under the pooling and servicing agreement, an account maintained with Wells Fargo or Wells Fargo Bank Iowa, N.A., each a wholly-owned subsidiary of Wells Fargo & Co., provided that such subsidiary's or its parent's (A) commercial paper, short-term unsecured debt obligations or other short-term deposits are rated at least at least "P-1" by Moody's and "A-1" by S&P, if the deposits are to be held in the account for 30 days or less, or (B) long-term unsecured debt obligations are rated at least "Aa3" by Moody's and "AA-" by S&P (or "A-" by S&P so long as the short-term deposit or short-term unsecured debt obligations of such subsidiary or its parent are rated no less than "A-1" by S&P), if the deposits are to be held in the account for more than 30 days, or (iv) an account maintained with another insured depository institution that is acceptable to (among other persons) each Rating Agency (as evidenced by a written confirmation to the trustee from each Rating Agency that the use of such account would not, in and of itself, result in a qualification, downgrade or withdrawal with respect to any class of series 2006-PWR12 certificates that are rated by such Rating Agency). "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "ERISA Plan" means any employee benefit plan, or other retirement plan, arrangement or account, that is subject to the fiduciary responsibility provisions of ERISA. "Euroclear" means The Euroclear System. "Euroclear Operator" means Euroclear Bank S.A./N.V. as the licensed operator of Euroclear. "Event of Default" means, notwithstanding the discussion under "Description of the Pooling and Servicing Agreements--Events of Default" in the accompanying prospectus, each of the following events, circumstances and conditions under the series 2006-PWR12 pooling and servicing agreement: o either master servicer or either special servicer fails to deposit, or to remit to the appropriate party for deposit, into either master servicer's collection account or either special servicer's REO account, as applicable, any amount required to be so deposited, which failure continues unremedied for one business day following the date on which the deposit or remittance was required to be made; o any failure by a master servicer to remit to the certificate administrator for deposit in the certificate administrator's distribution account any amount required to be so remitted, which failure continues unremedied beyond a specified time on the business day following the date on which the remittance was required to be made; o any failure by a master servicer to timely make, or by a special servicer to timely make or request the applicable master servicer to make, any servicing advance required to be made by that party under the series 2006-PWR12 pooling and servicing agreement, which failure continues unremedied for one business day following the date on which notice has been given to that master servicer or that special servicer, as the case may be, by the trustee; o any failure by a master servicer or a special servicer duly to observe or perform in any material respect any of its other covenants or agreements under the series 2006-PWR12 pooling and servicing agreement, which failure continues unremedied for 30 days after written notice of it has been given to that master servicer or special servicer, as the case may be, by any other party to the series 2006-PWR12 pooling and servicing agreement or by series 2006-PWR12 certificateholders entitled to not less than 25% of the series 2006-PWR12 voting rights or, if affected by the failure, by a Non-Pooled Subordinate Noteholder; provided, however, that, with respect to any such failure that is not curable within such 30-day period, that master S-191 servicer or special servicer, as the case may be, will have an additional cure period of 60 days to effect such cure so long as that master servicer or special servicer, as the case may be, has commenced to cure the failure within the initial 30-day period and has provided the trustee with an officer's certificate certifying that it has diligently pursued, and is continuing to pursue, a full cure; o any breach on the part of a master servicer or special servicer of any of its representations or warranties contained in the series 2006-PWR12 pooling and servicing agreement that materially and adversely affects the interests of any class of series 2006-PWR12 certificateholders, a Non-Pooled Subordinate Noteholder, which breach continues unremedied for 30 days after written notice of it has been given to that master servicer or special servicer, as the case may be, by any other party to the series 2006-PWR12 pooling and servicing agreement, by series 2006-PWR12 certificateholders entitled to not less than 25% of the series 2006-PWR12 voting rights or, if affected by the breach, by a Non-Pooled Subordinate Noteholder; provided, however, that, with respect to any such breach that is not curable within such 30-day period, that master servicer or special servicer, as the case may be, will have an additional cure period of 60 days to effect such cure so long as that master servicer or special servicer, as the case may be, has commenced to cure the failure within the initial 30-day period and has provided the trustee with an officer's certificate certifying that it has diligently pursued, and is continuing to pursue, a full cure; o the occurrence of any of various events of bankruptcy, insolvency, readjustment of debt, marshalling of assets and liabilities, or similar proceedings with respect to a master servicer or a special servicer, or the taking by a master servicer or a special servicer of various actions indicating its bankruptcy, insolvency or inability to pay its obligations; o any failure by the applicable master servicer to timely make any payments required to be made by it under the series 2006-PWR12 pooling and servicing agreement to a Trust-Serviced Non-Pooled Noteholder and such failure continues for one business day; o a master servicer or a special servicer receives actual knowledge that Moody's has (A) qualified, downgraded or withdrawn its rating or ratings of one or more classes of series 2006-PWR12 certificates, or (B) placed one or more classes of certificates on "watch status" in contemplation of possible rating downgrade or withdrawal (and such "watch status" placement shall not have been withdrawn by Moody's within 90 days of such actual knowledge by the applicable master servicer or the applicable special servicer, as the case may be), and, in case of either of clause (A) or (B), citing servicing concerns with such master servicer or such special servicer as the sole or a material factor in such rating action; and o a master servicer or a special servicer is removed from S&P's Select Servicer List as a U.S. Commercial Mortgage Master Servicer or a U.S. Commercial Mortgage Special Servicer, as the case may be, and, in either case, is not reinstated within 60 days and the ratings then assigned by S&P to any class of series 2006-PWR12 certificates are downgraded, qualified or withdrawn (including, without limitation, being placed on negative credit watch) in connection with such removal. When a single entity acts as two or more of the capacities of the master servicers and the special servicers, an Event of Default (other than an event described in the seventh, eighth and ninth bullets above) in one capacity will constitute an Event of Default in both or all such capacities. Under certain circumstances, the failure by a party to the pooling and servicing agreement or a primary servicing agreement to perform its duties described under "Description of the Offered Certificates - Evidence as to Compliance", or to perform certain other reporting duties imposed on it for purposes of compliance with Regulation AB, will constitute an event of default that entitles the depositor or another person to terminate that party. In some circumstances, such an event of default may be waived by the depositor in its sole discretion. "Exemption-Favored Party" means any of the following-- o Bear, Stearns & Co. Inc., S-192 o Morgan Stanley & Co. Incorporated, o any person directly or indirectly, through one or more intermediaries, controlling, controlled by or under common control with Bear, Stearns & Co. Inc. or Morgan Stanley & Co. Incorporated, and o any member of the underwriting syndicate or selling group of which a person described in the prior three bullets is a manager or co-manager with respect to any particular class of the offered certificates. "Fair Value" means the amount that, in the applicable special servicer's judgment, is the fair value of a Specially Designated Defaulted Pooled Mortgage Loan. "FF&E" means furniture, fixtures and equipment. "Financial Intermediary" means a brokerage firm, bank, thrift institution or other financial intermediary that maintains an account of a beneficial owner of securities. "Fitch" means Fitch, Inc. "Government Securities" means non-callable United States Treasury obligations, and other non-callable government securities within the meaning of section 2(a)(16) of the Investment Company Act of 1940, as amended. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended. "IRS" means the Internal Revenue Service. "Issue Date" means the date of initial issuance of the series 2006-PWR12 certificates. "LaSalle" means LaSalle Bank National Association. "Leased As-of Date" means, with respect to any mortgaged property, the date specified as such for that mortgaged property on Appendix B to this prospectus supplement. "Lock-out Period" means, with respect to a mortgage loan, the period during which voluntary principal prepayments are prohibited (even if the mortgage loan may be defeased during that period). "LTV Ratio at Maturity" means the ratio, expressed as a percentage, of (a)(1) the principal balance of a balloon mortgage loan scheduled to be outstanding on the scheduled maturity date or (2) the principal balance of an ARD Loan scheduled to be outstanding on the related anticipated repayment date to (b) the Appraised Value of the related mortgaged property or properties determined as described under "Description of the Mortgage Pool--Assessments of Property Value and Condition--Appraisals". See "Description of the Mortgage Pool--Additional Mortgage Loan Information" in this prospectus supplement and the notes to Appendix B to this prospectus supplement. "Material Action" means, for any mortgage loan other than any mortgage loan in the 1675 Broadway Loan Group or in the Tuscany Plaza Loan Group, any of the following actions except as otherwise described below: 1. any foreclosure upon or comparable conversion of the ownership of the property or properties securing any specially serviced mortgage loan that comes into and continues in default; 2. any modification, amendment or waiver of any term (excluding the waiver of any due-on-sale or due-on-encumbrance clause, which are addressed separately below); 3. any acceptance of a discounted payoff with respect to any specially serviced mortgage loan; 4. any determination to bring an REO Property into compliance with applicable environmental laws or to otherwise address any hazardous materials located at an REO Property; 5. any release of collateral for any mortgage loan; S-193 6. any acceptance of substitute or additional collateral for a mortgage loan; 7. any releases of letters of credit, reserve funds or other collateral with respect to a mortgaged property; 8. any termination or replacement, or consent to the termination or replacement, of a property manager with respect to any mortgaged property; 9. any approval of an assignment and assumption or further encumbrance, or waiver of a due-on-sale or due-on-encumbrance clause in any mortgage loan; or 10. any determination as to whether any type of property-level insurance is required under the terms of any pooled mortgage loan, is available at commercially reasonable rates, is available for similar types of properties in the area in which the related mortgaged property is located or any other determination or exercise of discretion with respect to property-level insurance. Notwithstanding the foregoing, for purposes of the general approval rights of the series 2006-PWR12 controlling class representative, the following Material Actions will not require consultation with or consent of the 2006-PWR12 controlling class representative but the applicable special servicer will be required to deliver notice of the action to the series 2006-PWR12 controlling class representative: o a modification of a mortgage loan that is not a specially serviced mortgage loan and has a principal balance that is less than $2,500,000, unless such modification involves an extension of maturity or certain waivers of Post-ARD Additional Interest; o a release of collateral, acceptance of substitute or additional collateral, release of the applicable letter of credit, reserve funds or other collateral where (A) the relevant mortgage loan is not a specially serviced mortgage loan and has an outstanding principal balance of less than $2,500,000 and (B) the transaction is not conditioned on obtaining the consent of the lender under the related mortgage loan documents or, in the case of a release, the release is made upon a satisfaction of the subject mortgage loan; o any termination or replacement, or consent to the termination or replacement, of a property manager with respect to any mortgaged property in circumstances where the relevant mortgage loan is not a specially serviced mortgage loan and has a principal balance of less than $2,500,000; o approval of an assignment and assumption or further encumbrance, or waiver of a due-on-sale or due-on-encumbrance clause, where the relevant mortgage loan is not a specially serviced mortgage loan and has a principal balance of less than $2,500,000; and o any determination as to whether any type of property-level insurance is required under the terms of any pooled mortgage loan, is available at commercially reasonable rates, is available for similar types of properties in the area in which the related mortgaged property is located or any other determination or exercise of discretion with respect to property-level insurance in circumstances where the relevant mortgage loan is not a specially serviced mortgage loan and has a principal balance of less than $2,500,000. Also notwithstanding the foregoing, the following actions constitute a "Material Action" for purposes of the 1675 Broadway Loan Group: o any proposed foreclosure upon or comparable conversion (which may include acquisition as an REO Property) of the ownership of the 1675 Broadway Mortgaged Property and the other collateral securing the 1675 Broadway Loan Group if it comes into and continues in default or other enforcement action under the loan documents; o any proposed modification, amendment or waiver of a monetary term (including, without limitation, the timing of payments or forgiveness of interest or principal, but excluding any term relating to late charges) or any material non-monetary term of the 1675 Broadway Loan Group; S-194 o any proposed successor property manager with respect to, or any material alteration of, any of the 1675 Broadway Mortgaged Property; o any waiver of the requirements under the 1675 Broadway Loan Group with respect to property insurers or the manner in which payments or other collections on the 1675 Broadway Loan Group are held and/or invested; o any proposed sale of the 1675 Broadway Mortgaged Property or transfer of an interest in the related borrower or the 1675 Broadway Mortgaged Property; o any acceptance of a discounted payoff of the 1675 Broadway Loan Group; o any determination to bring the 1675 Broadway Mortgaged Property into compliance with applicable environmental laws or to otherwise address hazardous materials located at the 1675 Broadway Mortgaged Property; o any release of collateral for the 1675 Broadway Loan Group (other than in accordance with the terms of, or upon satisfaction of, the 1675 Broadway Loan Group) or any release of the related borrower or any guarantor; o any acceptance of substitute or additional collateral for the 1675 Broadway Loan Group (other than in accordance with the terms of the 1675 Broadway Loan Group); o any waiver of a "due-on-sale" or "due-on-encumbrance" clause; o any acceptance of an assumption agreement releasing the related borrower from liability under the 1675 Broadway Loan Group; o the appointment or removal of any sub-servicer for the 1675 Broadway Loan Group (other than in connection with the trustee or its designee becoming the successor master servicer or special servicer pursuant to the terms of the series 2006-PWR12 pooling and servicing agreement); o any renewal or replacement of the then existing insurance policies with respect to the 1675 Broadway Loan Group to the extent that such renewal or replacement policy does not comply with the terms of the loan documents or any waiver, modification or amendment of any insurance requirements under the loan documents, in each case if the mortgagee's approval is required under the loan documents; o the approval of a material capital expenditure, if the mortgagee's approval is required under the loan documents; o the approval of additional indebtedness secured by the 1675 Broadway Mortgaged Property, if the mortgagee's approval is required under the loan documents; and o any adoption or approval of a plan in bankruptcy of the related borrower. Also notwithstanding the foregoing, the following actions generally constitute a "Material Action" for purposes of the Tuscany Plaza Loan Group: o any foreclosure upon or comparable conversion (which may include acquisition as an REO Property) of the ownership of the Tuscany Plaza Mortgaged Property and the other collateral securing the Tuscany Plaza Loan Group; o any modification of or waiver that would result in the extension of the maturity date or extended maturity date thereof (other than an extension in accordance with the terms of the related loan documents), a reduction in the interest rate or the monthly debt service payment or a deferral or a forgiveness of interest on or S-195 principal of the Tuscany Plaza Loan Group or a modification or waiver of any other monetary term relating to the timing or amount of any payment of principal or interest (other than default interest) or any other material sums due and payable under the related loan documents (including any prepayment premium), including any acceptance of a discounted payoff, or a modification or waiver of any provision which restricts the related borrower or its equity owners from incurring additional indebtedness; o any modification of any monetary term of the Tuscany Plaza Loan Group; o any proposed sale of the Tuscany Plaza Mortgaged Property or transfer of an interest in the related borrower or the Tuscany Plaza Mortgaged Property (other than as specifically permitted by the terms of the related loan documents); o any determination to bring the Tuscany Plaza Mortgaged Property into compliance with applicable environmental laws or to otherwise address hazardous materials located at the Tuscany Plaza Mortgaged Property; o any release of collateral for the Tuscany Plaza Loan Group (other than in accordance with the terms of the related loan documents) or any release of the related borrower or any guarantor; o any acceptance of substitute or additional collateral for the Tuscany Plaza Loan Group (other than in accordance with the terms of the related loan documents); o any waiver of a "due-on-sale" or "due-on-encumbrance" clause; o any acceptance of an assumption agreement releasing the related borrower from liability under the Tuscany Plaza Loan Group; o the approval of any replacement special servicer; o the voting of any plan or reorganization, restructuring or similar plan in the bankruptcy of the related borrower; o any renewal or replacement of the then existing insurance policies with respect to the Tuscany Plaza Loan Group or any modification or waiver of any provision of the related loan documents governing the types, nature and amount of insurance required to be maintained by the related borrower; o any termination or replacement, or consent to the termination or replacement, of a property manager upon occurrence of an event of default with respect to the Tuscany Plaza Loan Group or a default by the property manager; o any material reduction or material waiver of the related borrower's obligations to pay reserve amounts under the related loan documents; o any sale of the Tuscany Plaza Loan Group other than in connection with the exercise of a purchase option set forth in the pooling and servicing agreement; o the approval of additional indebtedness secured by the Tuscany Plaza Mortgaged Property or any mezzanine financing except as in accordance with the related loan documents; o any execution, renewal or material modification of certain material leases to the extent the related lender's approval is required under the related loan documents; S-196 o the settlement of any insurance claim or condemnation proceeding for cash to be applied to the principal balance of the Tuscany Plaza Loan Group if such settlement would result in a shortfall of amounts due and payable to the Tuscany Plaza Non-Pooled Subordinate Noteholder prior to the occurrence of a Tuscany Plaza Change of Control Event; o any exercise of remedies or initiation of any proceedings, judicial or otherwise, under the related loan documents upon the occurrence of an event of default with respect to the Tuscany Plaza Loan Group; o the release to the related borrower of any escrow amounts to which the related borrower is not entitled under the related loan documents or applicable law; o the approval of significant repair or renovation projects or tenant build-out work or reimbursement to a tenant therefor (other than in connection with a casualty or condemnation event) to the extent the related lender's approval is required under the related loan documents; and o the approval or adoption of any annual budget for, or material alteration to, the Tuscany Plaza Mortgaged Property to the extent the related lender's approval is required under the related loan documents. "Moody's" means Moody's Investors Service, Inc. "Mortgage Loan Group" means one or both of the 1675 Broadway Loan Group and the Tuscany Plaza Loan Group, as applicable. "Mortgage Loan Group Intercreditor Agreement" means one or both of the 1675 Broadway Intercreditor Agreement and the Tuscany Plaza Intercreditor Agreement, as applicable. "Mortgage Pass-Through Rate" means, with respect to any pooled mortgage loan for any distribution date, an annual rate generally equal to: o in the case of a mortgage loan that accrues interest on a 30/360 Basis, a rate per annum equal to the mortgage interest rate for that mortgage loan under its contractual terms in effect as of the Issue Date, minus the Administrative Fee Rate for that mortgage loan. o in the case of a mortgage loan that accrues interest on an Actual/360 Basis, twelve times a fraction, expressed as a percentage-- 1. the numerator of which fraction is, subject to adjustment as described below in this definition, an amount of interest equal to the product of (a) the number of days in the related interest accrual period, multiplied by (b) the Stated Principal Balance of that mortgage loan immediately preceding that distribution date, multiplied by (c) 1/360, multiplied by (d) a rate per annum equal to the mortgage interest rate for that mortgage loan under its contractual terms in effect as of the Issue Date, minus the related Administrative Fee Rate for that mortgage loan, and 2. the denominator of which is the Stated Principal Balance of that mortgage loan immediately preceding that distribution date. Notwithstanding the foregoing, if the subject distribution date occurs in any January (except in a leap year) or in any February, then the amount of interest referred to in the numerator of the fraction described in clause 1 of the second bullet of the first paragraph of this definition will be decreased to reflect any interest reserve amount with respect to the subject mortgage loan that is transferred from the certificate administrator's distribution account to the certificate administrator's interest reserve account during that month. Furthermore, if the subject distribution date occurs during March in any year subsequent to 2006 (or, if the subject distribution date is the final distribution date, in January (except in a leap year) or February of any year), then the amount of interest referred to in the numerator of the fraction described in clause 1 of the second bullet of the first paragraph of this definition will be increased to reflect any interest reserve amounts with respect to S-197 the subject mortgage loan that are transferred from the certificate administrator's interest reserve account to the certificate administrator's distribution account during that month. The Mortgage Pass-Through Rate of each pooled mortgage loan: o will not reflect any modification, waiver or amendment of that mortgage loan occurring subsequent to the Issue Date (whether entered into by the applicable master servicer, the applicable special servicer or any other appropriate party or in connection with any bankruptcy, insolvency or other similar proceeding involving the related borrower), or any Default Interest, and o in the case of an ARD Loan following its anticipated repayment date, will exclude the marginal increase in the mortgage interest rate by reason of the passage of the anticipated repayment date. "Nationwide Life" means Nationwide Life Insurance Company. "Net Aggregate Prepayment Interest Shortfall" means, with respect to any distribution date, the excess, if any, of: o the total Prepayment Interest Shortfalls incurred with respect to the pooled mortgage loans during the related collection period; over o the sum of the total payments made by the master servicers to cover those Prepayment Interest Shortfalls. "Non-Pooled Mortgage Loan" means any of the 1675 Broadway Non-Pooled Subordinate Loan, and the Tuscany Plaza Non-Pooled Subordinate Loan, as applicable. "Non-Pooled Subordinate Loan" means the 1675 Broadway Non-Pooled Subordinate Loan and the Tuscany Plaza Non-Pooled Subordinate Loan, as applicable. "Non-Pooled Subordinate Noteholder" means the holder of the promissory note evidencing the 1675 Broadway Non-Pooled Subordinate Loan and the holder of the promissory note evidencing the Tuscany Plaza Non-Pooled Subordinate Loan, as applicable. "NRA" means net rentable area. "NRSF" means net rentable square feet. "PAR" means Prudential Asset Resources, Inc. "Party in Interest" means any person that is a "party in interest" as defined in Section 3(14) of ERISA or a "disqualified person" as defined in Section 4975 of the Internal Revenue Code. "PCF" means Principal Commercial Funding, LLC. "PCFII" means Principal Commercial Funding II, LLC. "Percent Leased" means the percentage of net rentable area, in the case of mortgaged properties that are retail, office or industrial properties, or units, in the case of mortgaged properties that are multifamily rental properties or self storage properties, or pads, in the case of mortgaged properties that are manufactured housing communities, or rooms, in the case of mortgaged properties that are hospitality properties, of the subject property that were occupied or leased as of the Leased As-of Date as reflected in information provided by the related borrower. "Permitted Encumbrances" means, with respect to any mortgaged property securing a mortgage loan in the trust fund, any and all of the following-- o the lien of current real property taxes, ground rents, water charges, sewer rents and assessments not yet due and payable, S-198 o covenants, conditions and restrictions, rights of way, easements and other matters that are of public record and/or are referred to in the related lender's title insurance policy or, if that policy has not yet been issued, referred to in a pro forma title policy or a marked-up commitment, none of which materially interferes with the security intended to be provided by the related mortgage instrument, the current principal use of the property or the current ability of the property to generate income sufficient to service the related mortgage loan, o exceptions and exclusions specifically referred to in the related lender's title insurance policy or, if that policy has not yet been issued, referred to in a pro forma title policy or marked-up commitment, none of which materially interferes with the security intended to be provided by the related mortgage instrument, the current principal use of the property or the current ability of the property to generate income sufficient to service the related mortgage loan, o other matters to which like properties are commonly subject, none of which materially interferes with the security intended to be provided by the related mortgage instrument, the current principal use of the property or the current ability of the property to generate income sufficient to service the related mortgage loan, o the rights of tenants, as tenants only, under leases, including subleases, pertaining to the related mortgaged property which the related mortgage loan seller did not require to be subordinated to the lien of the related mortgage instrument and which do not materially interfere with the security intended to be provided by the related mortgage instrument, the current principal use of the related mortgaged property or the current ability of the related mortgaged property to generate income sufficient to service the related mortgage loan, o if the related mortgage loan is cross-collateralized with any other pooled mortgage loan, the lien of the mortgage instrument for that other pooled mortgage loan, and o if the related mortgaged property is a unit in a condominium, the related condominium declaration. "Permitted Investments" means the United States government securities and other investment grade obligations specified in the series 2006-PWR12 pooling and servicing agreement. "Plan" means any ERISA Plan or any other employee benefit or retirement plan, arrangement or account that is subject to Section 4975 of the Internal Revenue Code, including any individual retirement account or Keogh Plan. "PMCC" means Prudential Mortgage Capital Company, LLC. "PMCF" means Prudential Mortgage Capital Funding, LLC. "Post-ARD Additional Interest" means, with respect to any ARD Loan, the additional interest accrued with respect to that mortgage loan as a result of the marginal increase in the related mortgage interest rate upon passage of the related anticipated repayment date, as that additional interest may compound in accordance with the terms of that mortgage loan. "Prepayment Interest Excess" means, with respect to any pooled mortgage loan that was subject to a principal prepayment in full or in part made (or, if resulting from the application of insurance proceeds or condemnation proceeds, any other early recovery of principal received) after the due date for that pooled mortgage loan in any collection period, any payment of interest (net of related master servicing fees payable under the series 2006-PWR12 pooling and servicing agreement and, further, net of any portion of that interest that represents Default Interest, late payment charges or Post-ARD Additional Interest) actually collected from the related borrower or out of such insurance proceeds or condemnation proceeds, as the case may be, and intended to cover the period from and after the due date to, but not including, the date of prepayment. "Prepayment Interest Shortfall" means, with respect to any pooled mortgage loan that was subject to a principal prepayment in full or in part made (or, if resulting from the application of insurance proceeds or condemnation proceeds, any other early recovery of principal received) prior to the due date for that pooled mortgage loan in any collection period, the amount of interest, to the extent not collected from the related borrower or otherwise (without regard to any Prepayment S-199 Premium or Yield Maintenance Charge that may have been collected), that would have accrued on the amount of such principal prepayment during the period from the date to which interest was paid by the related borrower to, but not including, the related due date immediately following the date of the subject principal prepayment (net of related master servicing fees payable under the series 2006-PWR12 pooling and servicing agreement and, further, net of any portion of that interest that represents Default Interest, late payment charges or Post-ARD Additional Interest). "Prepayment Premium" means, with respect to any mortgage loan, any premium, fee or other additional amount (other than a Yield Maintenance Charge) paid or payable, as the context requires, by a borrower in connection with a principal prepayment on, or other early collection of principal of, that mortgage loan (including any payoff of a mortgage loan by a mezzanine lender on behalf of the subject borrower if and as set forth in the related intercreditor agreement). "Principal Distribution Amount" means, for any distribution date prior to the final distribution date, an amount equal to the total, without duplication, of the following-- 1. all payments of principal, including voluntary principal prepayments, received by or on behalf of the trust fund with respect to the pooled mortgage loans during the related collection period, exclusive of any of those payments that represents a collection of principal for which an advance was previously made for a prior distribution date or that represents a monthly payment of principal due on or before the cut-off date for the related pooled mortgage loan or on a due date for the related pooled mortgage loan subsequent to the end of the calendar month in which the subject distribution date occurs, 2. all monthly payments of principal that were received by or on behalf of the trust fund with respect to the pooled mortgage loans prior to, but that are due (or deemed due) during, the related collection period (or, in the case of any pooled mortgage loan on which scheduled payments are due on the third or fifth day of each month, that were received prior to a specified date in the prior calendar month but are due in the current calendar month of such distribution date), 3. all other collections, including liquidation proceeds, condemnation proceeds, insurance proceeds and repurchase proceeds, that were received by or on behalf of the trust fund with respect to any of the pooled mortgage loans or any related REO Properties during the related collection period and that were identified and applied by the respective master servicers as recoveries of principal of the subject pooled mortgage loan(s), in each case net of any portion of the particular collection that represents a collection of principal for which an advance of principal was previously made for a prior distribution date or that represents a monthly payment of principal due on or before the cut-off date for the related pooled mortgage loan, and 4. all advances of principal made with respect to the pooled mortgage loans for that distribution date; provided that (I) (A) if any insurance proceeds, condemnation proceeds and/or liquidation proceeds are received with respect to any pooled mortgage loan, or if any pooled mortgage loan is otherwise liquidated, including at a discount, in any event during the collection period for the subject distribution date, then that portion, if any, of the aggregate amount described in clauses 1 through 4 above that is attributable to that mortgage loan will be reduced - to not less than zero - by any workout fees or liquidation fees paid with respect to that mortgage loan from a source other than related Default Interest and late payment charges during the collection period for the subject distribution date; (B) the aggregate amount described in clauses 1 through 4 above will be further subject to reduction - to not less than zero - by any nonrecoverable advances (and interest thereon) that are reimbursed from the principal portion of debt service advances and payments and other collections of principal on the mortgage pool (see "--Advances of Delinquent Monthly Debt Service Payments" below and "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement--Servicing and Other Compensation and Payment of Expenses") during the related collection period (although any of those amounts that were reimbursed from advances or collections of principal and are subsequently collected (notwithstanding the nonrecoverability determination) on the related pooled mortgage loan will be added to the Principal Distribution Amount for the distribution date following the collection period in which the subsequent collection occurs); and (C) the aggregate amount described in clauses 1 through 4 above will be subject to further reduction - to not less than zero - by any advances (and interest thereon) with respect to a defaulted pooled mortgage loan that remained unreimbursed at the time of the loan's modification and return to performing status and are reimbursed from the principal portion of debt service advances and payments and other collections of principal on the mortgage pool (see "--Advances of Delinquent Monthly Debt Service Payments" below and "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement--Servicing and Other Compensation and Payment of Expenses") during that collection period (although any of those amounts that were reimbursed from principal S-200 collections and are subsequently collected on the related pooled mortgage loan will be added to the Principal Distribution Amount for the distribution date following the collection period in which the subsequent collection occurs); and (II) the foregoing shall be construed in a manner that is consistent with the provisions described under "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement--Servicing and Other Compensation and Payment of Expenses--Certain Remittance Provisions and Coverage for Related Potential Shortfalls". In general, for purposes of determining the portion of the Principal Distribution Amount that is attributable to loan group 1 or loan group 2-- o any reduction in the Principal Distribution Amount that is described in any of clauses (I)(A), (B) and (C) of the preceding paragraph that arises from an advance made on a particular pooled mortgage loan will be applied-- 1. first, as a reduction of the portion of the Principal Distribution Amount that is otherwise attributable to the loan group that includes that pooled mortgage loan (until such portion, net of all subtractions pursuant to clauses (I)(A), (B) and (C) arising from pooled mortgage loans in that loan group, is equal to zero), and 2. then, as a reduction of the portion of the Principal Distribution Amount that is otherwise attributable to the other loan group (until such portion, net of all such subtractions pursuant to clauses (I)(A), (B) and (C) arising from pooled mortgage loans in that loan group and all subtractions as described in this clause 2, is equal to zero); and o any increase in the Principal Distribution Amount that is described in either of clauses (I)(B) or (C) of the preceding paragraph that arises from a recovery of a previously reimbursed amount related to a particular pooled mortgage loan will be applied-- 1. first, if the attributable portion of the Principal Distribution Amount for the unrelated loan group (that is, the loan group that does not include that pooled mortgage loan) was previously reduced on account of that particular pooled mortgage loan or any other pooled mortgage loan in the same loan group as that particular pooled mortgage loan, as an increase in the portion of the Principal Distribution Amount that is otherwise attributable to the loan group that does not include that pooled mortgage loan, until the cumulative amount of these increases under this clause 1 is equal to the cumulative reductions to the attributable portion of Principal Distribution Amount for that loan group on account of pooled mortgage loans not included in that loan group, and 2. then, as an increase in the portion of the Principal Distribution Amount that is otherwise attributable to the loan group that includes that pooled mortgage loan. For the final distribution date, the "Principal Distribution Amount" will be an amount equal to the total Stated Principal Balance of the mortgage pool outstanding immediately prior to that final distribution date. The Non-Pooled Mortgage Loans will not be part of the mortgage pool and will not be considered a pooled mortgage loan. Accordingly, any amounts applied to the principal of such loan will not constitute part of the Principal Distribution Amount for any distribution date. "PSF" means per square foot. "PTE" means prohibited transaction exemption. "Purchase Option" means, with respect to any Specially Designated Defaulted Pooled Mortgage Loan, the purchase option described under "Servicing of the Mortgage Loans Under the Series 2006-PWR12 Pooling and Servicing Agreement--Fair Value Purchase Option" in this prospectus supplement. S-201 "Purchase Price" means, with respect to any particular mortgage loan being purchased from the trust fund, a price approximately equal to the sum of the following: o the outstanding principal balance of that mortgage loan; o all accrued and unpaid interest on that mortgage loan generally through the due date in the collection period of purchase, other than Default Interest and Post-ARD Interest; o all unreimbursed servicing advances with respect to that mortgage loan, together with any unpaid interest on those advances owing to the party or parties that made them; o all servicing advances with respect to that mortgage loan that were reimbursed out of collections on or with respect to other mortgage loans in the trust fund; o all accrued and unpaid interest on any monthly debt service advances made with respect to the subject mortgage loan; and o in the case of a repurchase or substitution of a defective mortgage loan by a mortgage loan seller, (1) all related special servicing fees and, to the extent not otherwise included, other related Additional Trust Fund Expenses (including without limitation any liquidation fee payable in connection with the applicable purchase or repurchase), and (2) to the extent not otherwise included, any costs and expenses incurred by the applicable master servicer, the applicable special servicer or the trustee or an agent of any of them, on behalf of the trust fund, in enforcing any obligation of a mortgage loan seller to repurchase or replace the mortgage loan. "Qualified Insurer" means, with respect to any insurance policy, an insurance company or security or bonding company qualified to write the related insurance policy in the relevant jurisdiction. "Rating Agency" means each of Moody's and S&P. "Realized Losses" means losses on or with respect to the pooled mortgage loans arising from the inability of the applicable master servicer and/or the applicable special servicer to collect all amounts due and owing under the mortgage loans, including by reason of the fraud or bankruptcy of a borrower or, to the extent not covered by insurance, a casualty of any nature at a mortgaged property, as and to the extent described under "Description of the Offered Certificates--Reductions of Certificate Principal Balances in Connection with Realized Losses and Additional Trust Fund Expenses" in this prospectus supplement. "Regulation AB" means Subpart 229.1100 - Asset Backed Securities (Regulation AB), 17 C.F.R. Sections 229.1100-229.1123, as such may be amended from time to time, and subject to such clarification and interpretation as have been provided by the Commission in the adopting release (Asset-Backed Securities, Securities Act Release No. 33-8518, 70 Red. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff of the Commission, or as may be provided by the Commission or its staff from time to time. "REMIC" means a real estate mortgage investment conduit within the meaning of, and formed in accordance with, Sections 860A through 860G of the Internal Revenue Code. "REO Property" means any mortgaged property that is acquired for the benefit of the certificateholders (and, in the case of a mortgaged property securing any Mortgage Loan Group, also on behalf of the related Non-Pooled Noteholders) through foreclosure, deed in lieu of foreclosure or otherwise following a default on the corresponding pooled mortgage loan. In the case of each Mortgage Loan Group, when we refer in this prospectus supplement to an REO Property that is in the trust fund, we mean the beneficial interest in that property that is owned by the series 2006-PWR12 trust fund. "Required Claims-Paying Ratings" means, with respect to any insurance carrier, claims-paying ability ratings at least equal to (a) in the case of fidelity bond coverage provided by such insurance carrier, "A2" by Moody's and "A" by S&P, (b) in the case of a policy or policies of insurance issued by such insurance carrier covering loss occasioned by the S-202 errors and omissions of officers and employees, "A2" by Moody's and "A" by S&P and (c) in the case of any other insurance coverage provided by such insurance carrier, "A2" by Moody's and "A" by S&P. However, an insurance carrier will be deemed to have the applicable claims-paying ability ratings set forth above if the obligations of that insurance carrier under the related insurance policy are guaranteed or backed in writing by an entity that has long-term unsecured debt obligations that are rated not lower than the ratings set forth above or claim-paying ability ratings that are not lower than the ratings set forth above; and an insurance carrier will be deemed to have the applicable claims-paying ability ratings set forth above if (among other conditions) the rating agency whose rating requirement has not been met has confirmed in writing that the insurance carrier would not result in the qualification, downgrade or withdrawal of any of the then current ratings assigned by that Rating Agency to any of the certificates. "Restricted Group" means, collectively, the following persons and entities-- o the trustee, o the Exemption-Favored Parties, o us, o the master servicers, o the special servicers, o the primary servicers, o any sub-servicers, o the mortgage loan sellers, o each borrower, if any, with respect to pooled mortgage loans constituting more than 5.0% of the total unamortized principal balance of the mortgage pool as of the date of initial issuance of the offered certificates, and o any and all affiliates of any of the aforementioned persons. "S&P" means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. "SEC" means the Securities and Exchange Commission. "Servicing Function Participant" means any person, other than the master servicers and the special servicers, that, within the meaning of Item 1122 of Regulation AB, is primarily responsible for performing activities that address the servicing criteria set forth in Item 1122(d) of Regulation AB, unless such person's activities relate only to 5% or less of the mortgage loans based on the principal balance of the mortgage loans. "Servicing Standard" means, with respect to each master servicer and each special servicer, to service and administer those mortgage loans and any REO Properties for which that party is responsible under the series 2006-PWR12 pooling and servicing agreement: o in the best interests and for the benefit of the series 2006-PWR12 certificateholders (or, in the case of a Trust-Serviced Mortgage Loan Group, for the benefit of the series 2006-PWR12 certificateholders and the related Trust-Serviced Non-Pooled Noteholder(s)) (as determined by the applicable master servicer or the applicable special servicer, as the case may be, in its good faith and reasonable judgment), as a collective whole (it being understood, in the case of the Trust-Serviced Mortgage Loan Groups containing Non-Pooled Subordinate Loans, that the interests of the Non-Pooled Subordinate Noteholders are junior promissory notes, subject to the terms and conditions of the related Mortgage Loan Group Intercreditor Agreement), S-203 o in accordance with any and all applicable laws, the terms of the series 2006-PWR12 pooling and servicing agreement, the terms of the respective mortgage loans and, in the case of a Trust-Serviced Mortgage Loan Group, the terms of the related Mortgage Loan Group Intercreditor Agreement, and o to the extent consistent with the foregoing, in accordance with the following standards: o with the same care, skill, prudence and diligence as is normal and usual in its general mortgage servicing and REO property management activities on behalf of third parties or on behalf of itself, whichever is higher, with respect to mortgage loans and real properties that are comparable to those mortgage loans and any REO Properties for which it is responsible under the series 2006-PWR12 pooling and servicing agreement; o with a view to-- 1. in the case of the master servicers, the timely collection of all scheduled payments of principal and interest under those mortgage loans, 2. in the case of the master servicers, the full collection of all Yield Maintenance Charges and Prepayment Premiums that may become payable under those mortgage loans, and 3. in the case of the special servicers, if a mortgage loan comes into and continues in default and, in the good faith and reasonable judgment of the applicable special servicer, no satisfactory arrangements can be made for the collection of the delinquent payments, including payments of Yield Maintenance Charges, Prepayment Premiums, Default Interest and late payment charges, or the related mortgaged property becomes an REO Property, the maximization of the recovery of principal and interest on that defaulted mortgage loan to the series 2006-PWR12 certificateholders (or, in the case of a Trust-Serviced Mortgage Loan Group, for the benefit of the series 2006-PWR12 certificateholders and the related Trust-Serviced Non-Pooled Noteholder(s)), as a collective whole, on a present value basis (it being understood, in the case of the Trust-Serviced Mortgage Loan Groups containing Non-Pooled Subordinate Loans, that the interests of the Non-Pooled Subordinate Noteholders are junior promissory notes, subject to the terms and conditions of the related Mortgage Loan Group Intercreditor Agreement); and without regard to-- 1. any known relationship that the applicable master servicer or the applicable special servicer, as the case may be, or any of its affiliates may have with any of the underlying borrowers, any of the mortgage loan sellers or any other party to the series 2006-PWR12 pooling and servicing agreement, 2. the ownership of any series 2006-PWR12 certificate or any interest in any Non-Pooled Mortgage Loan by the applicable master servicer or the applicable special servicer, as the case may be, or by any of its affiliates, 3. the obligation of the applicable master servicer to make advances or otherwise to incur servicing expenses with respect to any mortgage loan or REO property serviced or administered, respectively, under the series 2006-PWR12 pooling and servicing agreement, 4. the obligation of the applicable special servicer to make, or to direct the applicable master servicer to make, servicing advances or otherwise to incur servicing expenses with respect to any mortgage loan or REO property serviced or administered, respectively, under the series 2006-PWR12 pooling and servicing agreement, 5. the right of the applicable master servicer or the applicable special servicer, as the case may be, or any of its affiliates to receive reimbursement of costs, or the sufficiency of any compensation payable to it, under the series 2006-PWR12 pooling and servicing agreement or with respect to any particular transaction, S-204 6. the ownership, servicing and/or management by the applicable master servicer or special servicer, as the case may be, or any of its affiliates, of any other mortgage loans or real property, 7. the ownership by the applicable master servicer or special servicer, as the case may be, or any of its affiliates of any other debt owed by, or secured by ownership interests in, any of the borrowers or any affiliate of a borrower, and 8. the obligations of the applicable master servicer or special servicer, as the case may be, or any of its affiliates to repurchase any pooled mortgage loan from the trust fund, or to indemnify the trust fund, in any event as a result of a material breach or a material document defect. "Servicing Transfer Event" means, with respect to any pooled mortgage loan and a Trust-Serviced Non-Pooled Mortgage Loan, any of the following events: 1. the related borrower fails to make when due any balloon payment and the borrower does not deliver to the applicable master servicer, on or prior to the due date of the balloon payment, a written refinancing commitment from an acceptable lender and reasonably satisfactory in form and substance to the applicable master servicer which provides that such refinancing will occur within 120 days after the date on which the balloon payment will become due (provided that if either such refinancing does not occur during that time or the applicable master servicer is required during that time to make any monthly debt service advance in respect of the mortgage loan, a Servicing Transfer Event will occur immediately); 2. the related borrower fails to make when due any monthly debt service payment (other than a balloon payment) or any other payment (other than a balloon payment) required under the related mortgage note or the related mortgage, which failure continues unremedied for 60 days; 3. the applicable master servicer determines (in accordance with the Servicing Standard) that a default in making any monthly debt service payment (other than a balloon payment) or any other material payment (other than a balloon payment) required under the related mortgage note or the related mortgage is likely to occur in the foreseeable future and the default is likely to remain unremedied for at least 60 days beyond the date on which the subject payment will become due; or the applicable master servicer determines (in accordance with the Servicing Standard) that a default in making a balloon payment is likely to occur in the foreseeable future and the default is likely to remain unremedied for at least 60 days beyond the date on which the balloon payment will become due (or, if the borrower has delivered a written refinancing commitment from an acceptable lender and reasonably satisfactory in form and substance to the applicable master servicer which provides that such refinancing will occur within 120 days after the date of the balloon payment, that master servicer determines (in accordance with the Servicing Standard) that (a) the borrower is likely not to make one or more assumed monthly debt service payments (as described under "Description of the Offered Certificates--Advances of Delinquent Monthly Debt Service Payments" in this prospectus supplement) prior to a refinancing or (b) the refinancing is not likely to occur within 120 days following the date on which the balloon payment will become due); 4. the applicable master servicer determines that a non-payment default (including, in the applicable master servicer's or the applicable special servicer's judgment, the failure of the related borrower to maintain any insurance required to be maintained pursuant to the related mortgage loan documents) has occurred under the mortgage loan that may materially impair the value of the corresponding mortgaged property as security for the mortgage loan or otherwise materially and adversely affect the interests of series 2006-PWR12 certificateholders and the default continues unremedied for the applicable cure period under the terms of the mortgage loan or, if no cure period is specified, for 60 days; 5. various events of bankruptcy, insolvency, readjustment of debt, marshalling of assets and liabilities, or similar proceedings occur with respect to the related borrower or the corresponding mortgaged property, or the related borrower takes various actions indicating its bankruptcy, insolvency or inability to pay its obligations; or 6. the applicable master servicer receives notice of the commencement of foreclosure or similar proceedings with respect to the corresponding mortgaged property. S-205 A Servicing Transfer Event will cease to exist, if and when: o with respect to the circumstances described in clauses 1 and 2 immediately above in this definition, the related borrower makes three consecutive full and timely monthly debt service payments under the terms of the mortgage loan, as those terms may be changed or modified in connection with a bankruptcy or similar proceeding involving the related borrower or by reason of a modification, waiver or amendment granted or agreed to by the applicable master servicer or the applicable special servicer; o with respect to the circumstances described in clauses 3 and 5 immediately above in this definition, those circumstances cease to exist in the judgment of the applicable special servicer; o with respect to the circumstances described in clause 4 immediately above in this definition, the default is cured in the judgment of the applicable special servicer; and o with respect to the circumstances described in clause 6 immediately above in this definition, the proceedings are terminated. If a Servicing Transfer Event exists with respect to any mortgage loan in a Trust-Serviced Mortgage Loan Group, then it will also be deemed to exist with respect to the other mortgage loan in that Trust-Serviced Mortgage Loan Group. The mortgage loans in a Trust-Serviced Mortgage Loan Group are intended to always be serviced or specially serviced, as the case may be, together. "SF" means square feet. "Specially Designated Defaulted Pooled Mortgage Loan" means a pooled mortgage loan that both (A) is a specially serviced pooled mortgage loan and (B) either (i) is delinquent 120 days or more with respect to any balloon payment or 60 days or more with respect to any other monthly payment, with such delinquency to be determined without giving effect to any grace period permitted by the related mortgage or mortgage note and without regard to any acceleration of payments under the related mortgage and mortgage note, or (ii) is a pooled mortgage loan as to which the amounts due thereunder have been accelerated following any other material default. "Stated Principal Balance" means, for each mortgage loan in the trust fund, a principal amount that: o will initially equal its unpaid principal balance as of the cut-off date or, in the case of a replacement mortgage loan, as of the date it is added to the trust fund, after application of all payments of principal due on or before that date, whether or not those payments have been received; and o will be permanently reduced on each subsequent distribution date, to not less than zero, by that portion, if any, of the Principal Distribution Amount (without regard to the adjustments otherwise contemplated by clauses (I)(A), (B) and (C) of the definition thereof) for that distribution date that represents principal actually received or advanced on that mortgage loan, and the principal portion of any Realized Loss (See "Description of the Offered Certificates -- Reductions of Certificate Principal Balances in Connection with Realized Losses and Additional Trust Fund Expenses") incurred with respect to that mortgage loan during the related collection period. However, the "Stated Principal Balance" of any mortgage loan in the trust fund will, in all cases, be zero as of the distribution date following the collection period in which it is determined that all amounts ultimately collectable with respect to that mortgage loan or any related REO Property have been received. "Stated Remaining Term to Maturity or ARD" means, with respect to any pooled mortgage loan, the number of months from the cut-off date to the stated maturity date or, in the case of an ARD Loan, the anticipated repayment date. S-206 "Structuring Assumptions" means, collectively, the following assumptions regarding the series 2006-PWR12 certificates and the mortgage loans in the trust fund: o except as otherwise set forth below, the mortgage loans have the characteristics set forth on Appendix B to this prospectus supplement and the initial mortgage pool balance, the initial loan group 1 balance and the initial loan group 2 balance are as described in this prospectus supplement; o the total initial principal balance or notional amount, as the case may be, of each interest-bearing class of series 2006-PWR12 certificates is as described in this prospectus supplement; o the pass-through rate for each interest-bearing class of series 2006-PWR12 certificates is as described in this prospectus supplement; o no delinquencies, defaults or losses occur with respect to any of the pooled mortgage loans (or any Non-Pooled Subordinate Loans); o no Additional Trust Fund Expenses arise, no servicing advances are made under the series 2006-PWR12 pooling and servicing agreement and the only expenses of the trust consist of the trustee fees, the certificate administrator fees, the servicer report administrator fees and the master servicing fees (including any applicable primary or sub-servicing fees); o there are no modifications, extensions, waivers or amendments affecting the monthly debt service payments by borrowers on the pooled mortgage loans and the mortgage interest rate in effect under each pooled mortgage loan as of the date of initial issuance for the series 2006-PWR12 certificates remains in effect during the entire term of that mortgage loan, except for any increase in the mortgage interest rate that is not related to an ARD provision and is scheduled to occur as a result of any loan-specific provisions that are described on the "Footnotes to Appendix B and C" in this prospectus supplement; o each of the pooled mortgage loans provides for monthly debt service payments to be due on the first day of each month, regardless of the actual day of the month on which those payments are otherwise due and regardless of whether the subject date is a business day or not; o all monthly debt service payments on the pooled mortgage loans are timely received by the applicable master servicer on behalf of the trust on the day on which they are assumed to be due or paid as described in the immediately preceding bullet; o no involuntary prepayments are received as to any pooled mortgage loan at any time (including, without limitation, as a result of any application of escrows, reserve or holdback amounts if performance criteria are not satisfied); o no voluntary prepayments are received as to any pooled mortgage loan during that mortgage loan's prepayment Lock-out Period, including any contemporaneous period when defeasance is permitted, or during any period when principal prepayments on that mortgage loan are required to be accompanied by a Prepayment Premium or Yield Maintenance Charge, including any contemporaneous period when defeasance is permitted, and, solely for this purpose, the pooled mortgage loan secured by the mortgaged property identified on Appendix B to this prospectus supplement as "Albany Industrial Park" does not provide for a Prepayment Premium or Yield Maintenance Charge; o each ARD Loan in the trust fund is paid in full on its anticipated repayment date; o except as otherwise assumed in the immediately preceding three bullets, prepayments are made on each of the pooled mortgage loans at the indicated CPRs (which apply to the pooled mortgage loans only (and not the related Non-Pooled Subordinate Loan) in any Mortgage Loan Group that includes any Non-Pooled S-207 Subordinate Loan) set forth in the subject tables or other relevant part of this prospectus supplement, without regard to any limitations in those mortgage loans on partial voluntary principal prepayments; o all prepayments on the mortgage loans are assumed to be accompanied by a full month's interest and no Prepayment Interest Shortfalls occur with respect to any mortgage loan; o no Yield Maintenance Charges or Prepayment Premiums are collected in connection with any of the mortgage loans; o no person or entity entitled thereto exercises its right of optional termination as described in this prospectus supplement under "Description of the Offered Certificates--Termination of the Series 2006-PWR12 Pooling and Servicing Agreement"; o no pooled mortgage loan is required to be repurchased by a mortgage loan seller, as described under "Description of the Mortgage Pool--Cures, Repurchases and Substitutions" in this prospectus supplement; o payments on the offered certificates are made on the 11th day of each month, commencing in July 2006; and o the offered certificates are settled with investors on June 21, 2006. "Trust-Serviced Mortgage Loan Group" means the 1675 Broadway Loan Group and the Tuscany Plaza Loan Group, as applicable. "Trust-Serviced Non-Pooled Mortgage Loan" means the 1675 Broadway Non-Pooled Subordinate Loan and the Tuscany Plaza Non-Pooled Subordinate Loan. "Trust-Serviced Non-Pooled Noteholder" means any holder of a promissory note evidencing a Trust-Serviced Non-Pooled Mortgage Loan. "Tuscany Plaza Change of Control Event" means, as of any date of determination, (i) the initial principal balance of the Tuscany Plaza Non-Pooled Subordinate Loan, minus (ii) the sum of (a) any principal payments allocated to and received on the Tuscany Plaza Non-Pooled Subordinate Loan, (b) any Appraisal Reduction Amounts for the Tuscany Plaza Loan Group and (c) any realized losses on the Tuscany Plaza Loan Group, is less than 25% (provided, that with respect to the right of the Tuscany Plaza Non-Pooled Subordinate Noteholder to appoint or replace the special servicer for the Tuscany Plaza Mortgage Loan Group, such percentage is 60%) of an amount equal to (i) the initial principal balance of the Tuscany Plaza Non-Pooled Subordinate Loan minus (ii) principal payments allocated to and received on the Tuscany Plaza Non-Pooled Subordinate Loan. "Tuscany Plaza Intercreditor Agreement" means the intercreditor agreement between the initial holders of the Tuscany Plaza Pooled Mortgage Loan and the Tuscany Plaza Non-Pooled Subordinate Loan. "Tuscany Plaza Loan Group" means, collectively, the Tuscany Plaza Pooled Mortgage Loan and the Tuscany Plaza Non-Pooled Subordinate Loan. "Tuscany Plaza Mortgaged Property" means the mortgaged property identified on Appendix B to this prospectus supplement as "Tuscany Plaza". "Tuscany Plaza Non-Pooled Subordinate Loan" means the loan in the original principal amount of $3,375,000 that is secured by the same mortgage instrument encumbering the Tuscany Plaza Mortgaged Property as the Tuscany Plaza Pooled Mortgage Loan and is subordinate in right of payment to the Tuscany Plaza Pooled Mortgage Loan. "Tuscany Plaza Non-Pooled Subordinate Noteholder" means the holder of the promissory note evidencing the Tuscany Plaza Non-Pooled Subordinate Loan. S-208 "Tuscany Plaza Pooled Mortgage Loan" means the pooled mortgage loan in the original principal amount of $27,000,000 that is secured by the mortgage instruments encumbering the Tuscany Plaza Mortgaged Property. "Underwriter Exemption" means PTE 90-30 issued to Bear, Stearns & Co. Inc. or PTE 90-24 issued to Morgan Stanley & Co. Incorporated, each as subsequently amended by PTE 97-34, PTE 2000-58 and PTE 2002-41 and as may be subsequently amended after the closing date. "Underwritten Net Cash Flow" or "Underwritten NCF" means an estimate of stabilized cash flow available for debt service. In general, it is the estimated stabilized revenue derived from the use and operation of a mortgaged property, consisting primarily of rental income, less the sum of (a) estimated stabilized operating expenses (such as utilities, administrative expenses, repairs and maintenance, management fees and advertising), (b) fixed expenses, such as insurance, real estate taxes and, if applicable, ground lease payments, and (c) reserves for capital expenditures, including tenant improvement costs and leasing commissions. Underwritten Net Cash Flow generally does not reflect interest expenses and non-cash items such as depreciation and amortization. "Underwritten Net Operating Income" or "Underwritten NOI" means an estimate of the stabilized cash flow available for debt service before deductions for capital expenditures, including tenant improvement costs and leasing commissions. Underwritten Net Operating Income is generally estimated in the same manner as Underwritten Net Cash Flow, except that no deduction is made for capital expenditures, including tenant improvement costs and leasing commissions. "Weighted Average Pool Pass-Through Rate" means, for each distribution date, the weighted average of the respective Mortgage Pass-Through Rates with respect to all of the pooled mortgage loans for that distribution date, weighted on the basis of their respective Stated Principal Balances immediately prior to that distribution date. "WFB" means Wells Fargo Bank, National Association. "Yield Maintenance Charge" means, with respect to any mortgage loan, any premium, fee or other additional amount paid or payable, as the context requires, by a borrower in connection with a principal prepayment on, or other early collection of principal of, a mortgage loan, calculated, in whole or in part, pursuant to a yield maintenance formula or otherwise pursuant to a formula that reflects the lost interest, including any specified amount or specified percentage of the amount prepaid which constitutes the minimum amount that such Yield Maintenance Charge may be. S-209 [THIS PAGE INTENTIONALLY LEFT BLANK.] SCHEDULE I AMORTIZATION SCHEDULE AMERICAN BUSINESS CENTER PERIOD DATE BALANCE($) PRINCIPAL($) INTEREST($) TOTAL PAYMENT ($) ------ --------- ---------- ------------ ----------- ----------------- 0 6/1/2006 13,905,000 1 7/1/2006 13,891,883 13,117 72,770 85,887 2 8/1/2006 13,881,120 10,763 75,124 85,887 3 9/1/2006 13,870,299 10,821 75,066 85,887 4 10/1/2006 13,857,000 13,299 72,588 85,887 5 11/1/2006 13,846,048 10,951 74,936 85,887 6 12/1/2006 13,832,622 13,426 72,461 85,887 7 1/1/2007 13,821,539 11,083 74,804 85,887 8 2/1/2007 13,810,396 11,143 74,744 85,887 9 3/1/2007 13,791,965 18,431 67,456 85,887 10 4/1/2007 13,780,662 11,303 74,584 85,887 11 5/1/2007 13,766,894 13,768 72,119 85,887 12 6/1/2007 13,755,455 11,439 74,448 85,887 13 7/1/2007 13,741,555 13,900 71,987 85,887 14 8/1/2007 13,729,979 11,576 74,311 85,887 15 9/1/2007 13,718,341 11,638 74,249 85,887 16 10/1/2007 13,704,247 14,094 71,793 85,887 17 11/1/2007 13,692,469 11,777 74,110 85,887 18 12/1/2007 13,678,240 14,230 71,657 85,887 19 1/1/2008 13,666,322 11,918 73,969 85,887 20 2/1/2008 13,654,339 11,983 73,904 85,887 21 3/1/2008 13,637,528 16,811 69,076 85,887 22 4/1/2008 13,625,390 12,138 73,749 85,887 23 5/1/2008 13,610,809 14,581 71,306 85,887 24 6/1/2008 13,598,526 12,283 73,604 85,887 25 7/1/2008 13,583,805 14,721 71,166 85,887 26 8/1/2008 13,571,376 12,429 73,458 85,887 27 9/1/2008 13,558,880 12,496 73,391 85,887 28 10/1/2008 13,543,951 14,929 70,958 85,887 29 11/1/2008 13,531,307 12,644 73,243 85,887 30 12/1/2008 13,516,234 15,073 70,814 85,887 31 1/1/2009 13,503,440 12,794 73,093 85,887 32 2/1/2009 13,490,576 12,863 73,024 85,887 33 3/1/2009 13,470,583 19,993 65,894 85,887 34 4/1/2009 13,457,542 13,041 72,846 85,887 35 5/1/2009 13,442,083 15,459 70,428 85,887 36 6/1/2009 13,428,888 13,195 72,692 85,887 37 7/1/2009 13,413,279 15,609 70,278 85,887 38 8/1/2009 13,399,928 13,351 72,536 85,887 39 9/1/2009 13,386,505 13,423 72,464 85,887 40 10/1/2009 13,370,674 15,831 70,056 85,887 41 11/1/2009 13,357,092 13,581 72,306 85,887 42 12/1/2009 13,341,107 15,985 69,902 85,887 I-1 PERIOD DATE BALANCE($) PRINCIPAL($) INTEREST($) TOTAL PAYMENT ($) ------ --------- ---------- ------------ ----------- ----------------- 43 1/1/2010 13,327,366 13,741 72,146 85,887 44 2/1/2010 13,313,551 13,816 72,071 85,887 45 3/1/2010 13,292,693 20,858 65,029 85,887 46 4/1/2010 13,278,690 14,003 71,884 85,887 47 5/1/2010 13,262,295 16,395 69,492 85,887 48 6/1/2010 13,248,127 14,167 71,720 85,887 49 7/1/2010 13,231,572 16,555 69,332 85,887 50 8/1/2010 13,217,239 14,334 71,553 85,887 51 9/1/2010 13,202,828 14,411 71,476 85,887 52 10/1/2010 13,186,035 16,792 69,095 85,887 53 11/1/2010 13,171,456 14,580 71,307 85,887 54 12/1/2010 13,154,499 16,956 68,931 85,887 55 1/1/2011 13,139,749 14,750 71,137 85,887 56 2/1/2011 13,124,919 14,830 71,057 85,887 57 3/1/2011 13,103,140 21,779 64,108 85,887 58 4/1/2011 13,088,112 15,028 70,859 85,887 59 5/1/2011 13,070,719 17,393 68,494 85,887 60 6/1/2011 13,055,516 15,203 70,684 85,887 61 7/1/2011 13,037,953 17,563 68,324 85,887 62 8/1/2011 13,022,572 15,381 70,506 85,887 63 9/1/2011 13,007,108 15,464 70,423 85,887 64 10/1/2011 12,989,292 17,816 68,071 85,887 65 11/1/2011 12,973,648 15,644 70,243 85,887 66 12/1/2011 12,955,656 17,992 67,895 85,887 67 1/1/2012 12,939,831 15,826 70,061 85,887 68 2/1/2012 12,923,920 15,911 69,976 85,887 69 3/1/2012 12,903,413 20,506 65,381 85,887 70 4/1/2012 12,887,305 16,108 69,779 85,887 71 5/1/2012 12,868,862 18,443 67,444 85,887 72 6/1/2012 12,852,567 16,295 69,592 85,887 73 7/1/2012 12,833,941 18,625 67,262 85,887 74 8/1/2012 12,817,458 16,484 69,403 85,887 75 9/1/2012 12,800,885 16,573 69,314 85,887 76 10/1/2012 12,781,989 18,896 66,991 85,887 77 11/1/2012 12,765,224 16,765 69,122 85,887 78 12/1/2012 12,746,142 19,082 66,805 85,887 79 1/1/2013 12,729,183 16,959 68,928 85,887 80 2/1/2013 12,712,133 17,050 68,837 85,887 81 3/1/2013 12,688,337 23,795 62,092 85,887 82 4/1/2013 12,671,066 17,271 68,616 85,887 83 5/1/2013 12,651,491 19,575 66,312 85,887 84 6/1/2013 12,634,021 17,471 68,416 85,887 85 7/1/2013 12,614,252 19,769 66,118 85,887 86 8/1/2013 12,596,580 17,672 68,215 85,887 87 9/1/2013 12,578,812 17,767 68,120 85,887 88 10/1/2013 12,558,754 20,058 65,829 85,887 89 11/1/2013 12,540,782 17,972 67,915 85,887 90 12/1/2013 12,520,526 20,257 65,630 85,887 91 1/1/2014 12,502,347 18,179 67,708 85,887 92 2/1/2014 12,484,070 18,277 67,610 85,887 I-2 PERIOD DATE BALANCE($) PRINCIPAL($) INTEREST($) TOTAL PAYMENT ($) ------ --------- ---------- ------------ ----------- ----------------- 93 3/1/2014 12,459,161 24,909 60,978 85,887 94 4/1/2014 12,440,650 18,511 67,376 85,887 95 5/1/2014 12,419,869 20,781 65,106 85,887 96 6/1/2014 12,401,146 18,723 67,164 85,887 97 7/1/2014 12,401,146 - 64,899 64,899 98 8/1/2014 12,401,146 - 67,063 67,063 99 9/1/2014 12,401,146 - 67,063 67,063 100 10/1/2014 12,401,146 - 64,899 64,899 101 11/1/2014 12,401,146 - 67,063 67,063 102 12/1/2014 12,401,146 - 64,899 64,899 103 1/1/2015 12,401,146 - 67,063 67,063 104 2/1/2015 12,401,146 - 67,063 67,063 105 3/1/2015 12,401,146 - 60,573 60,573 106 4/1/2015 12,401,146 - 67,063 67,063 107 5/1/2015 12,401,146 - 64,899 64,899 108 6/1/2015 12,401,146 - 67,063 67,063 109 7/1/2015 12,401,146 - 64,899 64,899 110 8/1/2015 12,401,146 - 67,063 67,063 111 9/1/2015 12,401,146 - 67,063 67,063 112 10/1/2015 12,401,146 - 64,899 64,899 113 11/1/2015 12,401,146 - 67,063 67,063 114 12/1/2015 12,401,146 - 64,899 64,899 115 1/1/2016 12,401,146 - 67,063 67,063 116 2/1/2016 12,401,146 - 67,063 67,063 117 3/1/2016 12,401,146 - 62,736 62,736 118 4/1/2016 12,401,146 - 67,063 67,063 119 5/1/2016 12,401,146 - 64,899 64,899 120 6/1/2016 - 12,401,146 67,063 12,468,209 I-3 [THIS PAGE INTENTIONALLY LEFT BLANK.] SCHEDULE II CLASS A-AB PLANNED PRINCIPAL BALANCES CLASS A-AB PLANNED CLASS A-AB PLANNED CLASS A-AB PLANNED DISTRIBUTION DATE PRINCIPAL BALANCE ($) DISTRIBUTION DATE PRINCIPAL BALANCE ($) DISTRIBUTION DATE PRINCIPAL BALANCE ($) ----------------- --------------------- ----------------- --------------------- ----------------- --------------------- July 2006 119,800,000.00 September 2009 119,800,000.00 November 2012 84,725,000.00 August 2006 119,800,000.00 October 2009 119,800,000.00 December 2012 82,460,000.00 September 2006 119,800,000.00 November 2009 119,800,000.00 January 2013 80,433,000.00 October 2006 119,800,000.00 December 2009 119,800,000.00 February 2013 78,397,000.00 November 2006 119,800,000.00 January 2010 119,800,000.00 March 2013 75,700,000.00 December 2006 119,800,000.00 February 2010 119,800,000.00 April 2013 73,733,000.00 January 2007 119,800,000.00 March 2010 119,800,000.00 May 2013 71,511,000.00 February 2007 119,800,000.00 April 2010 119,800,000.00 June 2013 69,515,000.00 March 2007 119,800,000.00 May 2010 119,800,000.00 July 2013 67,274,000.00 April 2007 119,800,000.00 June 2010 119,800,000.00 August 2013 65,257,000.00 May 2007 119,800,000.00 July 2010 119,800,000.00 September 2013 63,230,000.00 June 2007 119,800,000.00 August 2010 119,800,000.00 October 2013 60,958,000.00 July 2007 119,800,000.00 September 2010 119,800,000.00 November 2013 58,910,000.00 August 2007 119,800,000.00 October 2010 119,800,000.00 December 2013 56,617,000.00 September 2007 119,800,000.00 November 2010 119,800,000.00 January 2014 54,547,000.00 October 2007 119,800,000.00 December 2010 119,800,000.00 February 2014 52,467,000.00 November 2007 119,800,000.00 January 2011 119,800,000.00 March 2014 49,676,000.00 December 2007 119,800,000.00 February 2011 119,800,000.00 April 2014 47,571,000.00 January 2008 119,800,000.00 March 2011 119,800,000.00 May 2014 45,223,000.00 February 2008 119,800,000.00 April 2011 119,800,000.00 June 2014 43,096,000.00 March 2008 119,800,000.00 May 2011 119,800,000.00 July 2014 40,747,000.00 April 2008 119,800,000.00 June 2011 119,783,007.79 August 2014 38,617,000.00 May 2008 119,800,000.00 July 2011 117,651,000.00 September 2014 36,476,000.00 June 2008 119,800,000.00 August 2011 115,770,000.00 October 2014 34,095,000.00 July 2008 119,800,000.00 September 2011 113,880,000.00 November 2014 31,931,000.00 August 2008 119,800,000.00 October 2011 111,720,000.00 December 2014 29,529,000.00 September 2008 119,800,000.00 November 2011 109,809,000.00 January 2015 23,883,000.00 October 2008 119,800,000.00 December 2011 107,630,000.00 February 2015 21,692,000.00 November 2008 119,800,000.00 January 2012 105,699,000.00 March 2015 18,810,000.00 December 2008 119,800,000.00 February 2012 103,758,000.00 April 2015 16,594,000.00 January 2009 119,800,000.00 March 2012 101,290,000.00 May 2015 14,141,000.00 February 2009 119,800,000.00 April 2012 99,327,000.00 June 2015 11,901,000.00 March 2009 119,800,000.00 May 2012 97,100,000.00 July 2015 9,425,000.00 April 2009 119,800,000.00 June 2012 95,146,000.00 August 2015 7,161,000.00 May 2009 119,800,000.00 July 2012 92,932,000.00 September 2015 4,886,000.00 June 2009 119,800,000.00 August 2012 90,958,000.00 October 2015 2,377,000.00 July 2009 119,800,000.00 September 2012 88,974,000.00 November 2015 78,000.00 August 2009 119,800,000.00 October 2012 86,730,000.00 December 2015 0.00 II-1 [THIS PAGE INTENTIONALLY LEFT BLANK.]

APPENDIX A MORTGAGE POOL INFORMATION MORTGAGE LOAN SELLERS WEIGHTED WEIGHTED PERCENT BY WEIGHTED WEIGHTED AVERAGE AVERAGE WEIGHTED NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE WEIGHTED DSCR CUT-OFF AVERAGE MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AVERAGE AFTER DATE BALLOON LOAN SELLER LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.) DSCR (X) IO (X) LTV (%) LTV (%) ------------------------------------------------------------------------------------------------------------------------------------ Prudential Mortgage Capital Funding 37 801,080,637 38.5 5.6751 116 1.54 1.32 68.2 60.7 Bear Stearns Commercial Mortgage, Inc. 42 421,792,159 20.3 5.8005 111 1.58 1.41 69.4 62.7 Wells Fargo Bank, N.A. 68 421,513,557 20.3 6.0337 114 1.46 1.35 70.4 62.5 Principal Commercial Funding II, LLC 40 212,304,894 10.2 5.9836 112 1.48 1.35 68.5 60.4 Principal Commercial Funding, LLC 14 118,124,878 5.7 5.2713 101 1.85 1.83 63.6 61.2 Nationwide Life Insurance Co. 12 104,214,030 5.0 5.8110 119 1.48 1.42 69.6 59.0 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL/WEIGHTED AVERAGE: 213 $2,079,030,155 100.0% 5.7886% 113 1.54X 1.38X 68.7% 61.4% ==================================================================================================================================== CUT-OFF DATE BALANCES WEIGHTED WEIGHTED PERCENT BY WEIGHTED WEIGHTED AVERAGE AVERAGE WEIGHTED NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE WEIGHTED DSCR CUT-OFF AVERAGE MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AVERAGE AFTER DATE BALLOON CUT-OFF DATE BALANCE ($) LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.) DSCR (X) IO (X) LTV (%) LTV (%) ------------------------------------------------------------------------------------------------------------------------------------ 800,000 - 2,000,000 32 50,219,053 2.4 6.0794 116 1.48 1.43 65.4 55.1 2,000,001 - 3,000,000 24 58,262,685 2.8 5.9413 115 1.53 1.48 61.8 53.5 3,000,001 - 5,000,000 41 161,082,580 7.7 5.8621 115 1.49 1.43 65.0 55.3 5,000,001 - 7,000,000 29 179,469,419 8.6 5.7723 111 1.59 1.49 69.8 61.8 7,000,001 - 9,000,000 31 248,253,336 11.9 5.8369 117 1.45 1.34 70.3 61.2 9,000,001 - 11,000,000 11 105,978,628 5.1 5.9770 119 1.35 1.25 70.5 62.4 11,000,001 - 13,000,000 9 110,754,950 5.3 5.7932 105 1.58 1.41 69.3 61.9 13,000,001 - 15,000,000 6 84,154,358 4.0 5.9233 112 1.49 1.31 71.0 63.3 15,000,001 - 17,000,000 4 63,788,056 3.1 5.8598 119 1.49 1.34 66.8 58.6 17,000,001 - 19,000,000 5 90,129,754 4.3 5.6518 119 1.52 1.40 65.4 56.7 19,000,001 - 21,000,000 5 102,323,123 4.9 5.7650 118 1.53 1.34 72.6 65.3 21,000,001 - 31,000,000 8 218,330,000 10.5 5.6085 91 1.64 1.47 68.4 64.5 31,000,001 - 41,000,000 2 69,284,213 3.3 5.7412 118 1.31 1.19 76.0 66.5 41,000,001 - 61,000,000 3 135,000,000 6.5 6.1307 119 1.47 1.33 75.0 71.6 61,000,001 - 156,500,000 3 402,000,000 19.3 5.6155 119 1.67 1.38 65.9 59.4 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL/WEIGHTED AVERAGE: 213 $2,079,030,155 100.0% 5.7886% 113 1.54X 1.38X 68.7% 61.4% ==================================================================================================================================== Minimum: $800,000 Maximum: $156,500,000 Average: $9,760,705 A-1 APPENDIX A MORTGAGE POOL INFORMATION STATES WEIGHTED WEIGHTED PERCENT BY WEIGHTED WEIGHTED AVERAGE AVERAGE WEIGHTED NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE WEIGHTED DSCR CUT-OFF AVERAGE MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AVERAGE AFTER DATE BALLOON STATE PROPERTIES BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.) DSCR (X) IO (X) LTV (%) LTV (%) ------------------------------------------------------------------------------------------------------------------------------------ California 48 305,689,803 14.7 5.8353 110 1.48 1.38 65.0 57.3 Southern California 30 208,150,725 10.0 5.8330 110 1.50 1.42 65.6 57.8 Northern California 18 97,539,078 4.7 5.8403 112 1.44 1.28 63.9 56.1 New York 11 298,709,028 14.4 5.6992 117 1.74 1.46 57.5 51.8 Michigan 4 171,871,373 8.3 5.5934 118 1.49 1.25 79.1 70.6 Ohio 18 149,513,646 7.2 5.9167 118 1.51 1.30 74.3 66.4 Texas 21 128,536,201 6.2 5.9333 107 1.47 1.29 73.0 65.9 Florida 12 88,597,774 4.3 5.8844 119 1.51 1.50 68.7 63.8 Georgia 8 84,267,032 4.1 5.7595 104 1.50 1.31 68.7 63.3 Virginia 12 71,776,171 3.5 6.0241 119 1.50 1.38 71.2 61.3 Colorado 8 71,257,245 3.4 5.8403 85 1.49 1.32 64.2 60.1 Minnesota 6 66,685,476 3.2 6.1542 119 1.42 1.28 75.9 67.8 Pennsylvania 6 63,948,658 3.1 5.7689 118 1.48 1.26 72.7 64.1 Maryland 7 59,402,211 2.9 5.3988 101 1.82 1.74 65.5 60.6 Arizona 10 55,624,799 2.7 5.9415 113 1.37 1.33 67.3 58.1 Illinois 4 50,711,028 2.4 5.8897 118 1.41 1.26 74.9 68.5 Wisconsin 4 46,037,398 2.2 5.5021 116 1.47 1.24 78.0 65.6 Connecticut 6 34,906,324 1.7 5.8293 118 1.56 1.32 72.1 64.0 Louisiana 1 32,934,213 1.6 5.6100 118 1.20 1.20 72.1 60.7 Nebraska 2 28,213,901 1.4 5.9953 118 1.30 1.30 70.9 61.1 New Hampshire 1 26,785,000 1.3 4.8800 81 2.34 2.34 54.7 54.7 Indiana 4 24,460,353 1.2 6.1219 120 1.25 1.25 74.8 64.5 Massachusetts 5 24,326,114 1.2 5.9832 118 1.59 1.41 67.4 58.3 New Jersey 5 23,585,530 1.1 5.5518 117 2.01 1.85 58.2 53.0 Tennessee 4 23,191,498 1.1 5.7910 118 1.45 1.30 73.7 62.6 Washington 3 22,763,744 1.1 5.7671 118 1.60 1.60 67.8 57.1 Vermont 1 20,500,000 1.0 5.4370 117 1.51 1.23 80.1 74.5 Iowa 3 19,032,117 0.9 5.5162 116 1.48 1.38 76.0 72.5 North Dakota 2 14,122,860 0.7 6.3038 120 1.21 1.21 75.6 64.8 Missouri 3 12,273,210 0.6 5.7306 117 1.43 1.43 74.4 71.6 South Carolina 3 11,632,396 0.6 5.7472 118 1.57 1.41 72.3 58.0 Nevada 4 11,341,632 0.5 5.9865 116 1.47 1.40 65.6 56.9 Kentucky 1 6,250,000 0.3 5.5730 116 2.12 2.12 61.3 61.3 Oregon 1 6,170,000 0.3 5.2700 117 2.31 2.31 49.4 49.4 U.S. Virgin Islands 1 5,245,509 0.3 5.8790 119 1.26 1.26 69.0 58.5 Mississippi 1 3,983,665 0.2 5.9070 117 1.69 1.69 73.8 57.4 Montana 1 3,497,323 0.2 6.3000 119 1.36 1.36 60.8 52.2 North Carolina 1 3,151,467 0.2 5.7535 116 1.72 1.72 63.1 48.9 New Mexico 1 2,415,000 0.1 6.3700 71 1.39 1.20 78.0 74.5 Utah 1 2,388,841 0.1 6.2200 115 1.54 1.54 68.1 58.5 Alaska 1 1,677,902 0.1 6.1100 119 1.38 1.38 73.0 57.0 Rhode Island 1 1,553,711 0.1 6.0000 119 1.23 1.23 76.2 64.8 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL/WEIGHTED AVERAGE: 236 $2,079,030,155 100.0% 5.7886% 113 1.54X 1.38X 68.7% 61.4% ==================================================================================================================================== A-2 APPENDIX A MORTGAGE POOL INFORMATION PROPERTY TYPES WEIGHTED WEIGHTED PERCENT BY WEIGHTED WEIGHTED AVERAGE AVERAGE WEIGHTED NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE WEIGHTED DSCR CUT-OFF AVERAGE MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AVERAGE AFTER DATE BALLOON PROPERTY TYPE PROPERTIES BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.) DSCR (X) IO (X) LTV (%) LTV (%) ------------------------------------------------------------------------------------------------------------------------------------ Retail 90 847,224,191 40.8 5.6569 115 1.53 1.37 71.2 64.0 Office 41 520,527,953 25.0 5.8873 115 1.60 1.37 64.0 58.3 Industrial 38 246,928,157 11.9 5.8663 108 1.45 1.33 71.2 63.5 Multifamily 28 191,021,028 9.2 5.6897 116 1.40 1.31 69.8 60.8 Hospitality 24 168,219,026 8.1 6.0792 106 1.72 1.65 67.3 56.3 Mixed Use 6 46,565,000 2.2 5.8349 119 1.60 1.42 63.7 59.7 Other 1 20,350,000 1.0 5.6700 117 1.56 1.29 73.2 65.8 Self Storage 6 19,750,435 0.9 6.0281 118 1.58 1.46 67.1 54.8 Manufactured Housing Community 2 18,444,365 0.9 6.1410 82 1.39 1.26 68.0 61.9 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL/WEIGHTED AVERAGE: 236 $2,079,030,155 100.0% 5.7886% 113 1.54X 1.38X 68.7% 61.4% ==================================================================================================================================== MORTGAGE RATES WEIGHTED WEIGHTED PERCENT BY WEIGHTED WEIGHTED AVERAGE AVERAGE WEIGHTED NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE WEIGHTED DSCR CUT-OFF AVERAGE MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AVERAGE AFTER DATE BALLOON MORTGAGE RATE (%) LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.) DSCR (X) IO (X) LTV (%) LTV (%) ------------------------------------------------------------------------------------------------------------------------------------ 4.8500% - 5.0000% 2 53,985,000 2.6 4.8649 81 2.29 2.29 55.0 55.0 5.0001% - 5.2500% 1 24,000,000 1.2 5.2200 114 1.51 1.21 79.2 67.4 5.2501% - 5.5000% 13 117,621,058 5.7 5.4209 118 1.66 1.46 67.3 60.7 5.5001% - 5.7500% 60 866,983,226 41.7 5.6312 117 1.58 1.38 67.3 60.0 5.7501% - 6.0000% 65 489,622,205 23.6 5.8488 112 1.46 1.31 70.4 62.0 6.0001% - 6.2500% 47 368,962,122 17.7 6.1205 111 1.47 1.38 71.0 64.1 6.2501% - 6.6600% 25 157,856,545 7.6 6.3673 107 1.38 1.30 70.3 62.5 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL/WEIGHTED AVERAGE: 213 $2,079,030,155 100.0% 5.7886% 113 1.54X 1.38X 68.7% 61.4% ==================================================================================================================================== Minimum: 4.8500% Maximum: 6.6600% Weighted Average: 5.7886% REMAINING TERMS TO STATED MATURITY OR ARD WEIGHTED WEIGHTED PERCENT BY WEIGHTED WEIGHTED AVERAGE AVERAGE WEIGHTED NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE WEIGHTED DSCR CUT-OFF AVERAGE REMAINING TERM TO STATED MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AVERAGE AFTER DATE BALLOON MATURITY (MOS.) LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.) DSCR (X) IO (X) LTV (%) LTV (%) ------------------------------------------------------------------------------------------------------------------------------------ 55 - 60 8 68,993,973 3.3 5.9701 58 1.51 1.36 62.3 59.9 61 - 84 10 156,842,401 7.5 5.6864 79 1.82 1.74 65.8 62.9 85 - 120 194 1,844,261,781 88.7 5.7920 118 1.52 1.35 69.2 61.4 121 - 123 1 8,932,000 0.4 5.4700 123 1.53 1.26 62.0 51.9 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL/WEIGHTED AVERAGE: 213 $2,079,030,155 100.0% 5.7886% 113 1.54X 1.38X 68.7% 61.4% ==================================================================================================================================== Minimum: 55 mos. Maximum: 123 mos. Weighted Average: 113 mos. A-3 APPENDIX A MORTGAGE POOL INFORMATION DEBT SERVICE COVERAGE RATIOS WEIGHTED WEIGHTED PERCENT BY WEIGHTED WEIGHTED AVERAGE AVERAGE WEIGHTED NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE WEIGHTED DSCR CUT-OFF AVERAGE DEBT SERVICE COVERAGE MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AVERAGE AFTER DATE BALLOON RATIO (X) LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.) DSCR (X) IO (X) LTV (%) LTV (%) ------------------------------------------------------------------------------------------------------------------------------------ 1.11 - 1.20 15 134,166,595 6.5 5.8705 119 1.19 1.19 73.2 61.9 1.21 - 1.30 39 186,132,027 9.0 5.9239 116 1.25 1.25 70.3 59.1 1.31 - 1.40 36 349,785,392 16.8 5.9624 110 1.38 1.26 71.8 64.5 1.41 - 1.50 42 454,372,921 21.9 5.8492 115 1.45 1.25 73.2 67.2 1.51 - 1.60 28 383,898,729 18.5 5.6955 116 1.53 1.30 75.0 66.7 1.61 - 1.70 16 149,687,243 7.2 5.6241 115 1.66 1.48 66.9 58.9 1.71 - 1.80 8 74,337,482 3.6 5.9146 111 1.73 1.57 65.3 55.5 1.81 - 1.90 15 98,385,830 4.7 5.8289 105 1.86 1.73 62.0 55.5 1.91 - 2.00 1 155,000,000 7.5 5.6375 120 1.99 1.64 44.3 41.3 2.01 - 2.10 2 10,924,789 0.5 5.9221 90 2.05 1.80 58.9 50.1 2.11 - 2.20 2 10,250,000 0.5 5.5640 117 2.12 2.12 55.8 55.8 2.21 - 2.30 4 32,494,148 1.6 5.0105 87 2.24 2.23 52.7 51.8 2.31 - 2.50 3 34,455,000 1.7 5.0095 89 2.33 2.32 53.7 53.5 2.51 - 2.88 2 5,140,000 0.2 5.5744 118 2.86 2.86 39.0 39.0 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL/WEIGHTED AVERAGE: 213 $2,079,030,155 100.0% 5.7886% 113 1.54X 1.38X 68.7% 61.4% ==================================================================================================================================== Minimum: 1.11x Maximum: 2.88x Weighted Average: 1.54x DEBT SERVICE COVERAGE RATIOS AFTER IO PERIOD WEIGHTED WEIGHTED PERCENT BY WEIGHTED WEIGHTED AVERAGE AVERAGE WEIGHTED NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE WEIGHTED DSCR CUT-OFF AVERAGE DEBT SERVICE COVERAGE RATIO MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AVERAGE AFTER DATE BALLOON AFTER IO PERIOD (X) LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.) DSCR (X) IO (X) LTV (%) LTV (%) ------------------------------------------------------------------------------------------------------------------------------------ 1.10 - 1.20 32 471,546,595 22.7 5.8577 112 1.34 1.18 74.0 66.0 1.21 - 1.30 69 689,049,027 33.1 5.7764 115 1.43 1.24 74.2 65.9 1.31 - 1.40 41 319,320,392 15.4 5.9091 118 1.50 1.36 69.4 62.1 1.41 - 1.50 19 107,932,921 5.2 5.7829 117 1.56 1.45 69.5 63.2 1.51 - 1.60 19 89,886,729 4.3 5.9111 115 1.68 1.55 62.9 54.1 1.61 - 1.70 9 219,062,243 10.5 5.6665 117 1.90 1.64 49.8 44.9 1.71 - 1.80 3 36,497,482 1.8 5.9021 103 1.73 1.73 64.2 53.4 1.81 - 1.90 9 58,695,830 2.8 5.8469 96 1.85 1.85 63.6 56.7 1.91 - 2.00 2 3,000,000 0.1 6.0250 119 2.32 1.96 46.9 42.0 2.01 - 2.10 1 4,699,789 0.2 6.1500 55 2.05 2.05 51.1 44.3 2.11 - 2.20 2 10,250,000 0.5 5.5640 117 2.12 2.12 55.8 55.8 2.21 - 2.30 3 30,994,148 1.5 4.9723 86 2.24 2.24 53.3 52.6 2.31 - 2.50 2 32,955,000 1.6 4.9530 88 2.33 2.33 53.7 53.7 2.51 - 2.88 2 5,140,000 0.2 5.5744 118 2.86 2.86 39.0 39.0 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL/WEIGHTED AVERAGE: 213 $2,079,030,155 100.0% 5.7886% 113 1.54X 1.38X 68.7% 61.4% ==================================================================================================================================== Minimum: 1.10x Maximum: 2.88x Weighted Average: 1.38x A-4 APPENDIX A MORTGAGE POOL INFORMATION CUT-OFF DATE LOAN-TO-VALUE RATIOS WEIGHTED WEIGHTED PERCENT BY WEIGHTED WEIGHTED AVERAGE AVERAGE WEIGHTED NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE WEIGHTED DSCR CUT-OFF AVERAGE CUT-OFF DATE LOAN-TO-VALUE MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AVERAGE AFTER DATE BALLOON RATIO (%) LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.) DSCR (X) IO (X) LTV (%) LTV (%) ------------------------------------------------------------------------------------------------------------------------------------ 36.8% - 40.0% 6 12,629,678 0.6 5.7369 118 2.38 2.34 39.0 34.4 40.1% - 45.0% 3 159,591,175 7.7 5.6418 120 1.98 1.64 44.3 41.2 45.1% - 50.0% 4 16,888,834 0.8 5.4739 118 2.02 2.02 47.9 44.9 50.1% - 55.0% 14 88,089,383 4.2 5.5517 99 1.93 1.78 54.0 50.5 55.1% - 60.0% 14 91,179,421 4.4 5.5027 107 1.74 1.69 57.3 51.3 60.1% - 65.0% 37 257,006,912 12.4 5.8061 106 1.51 1.42 62.7 55.0 65.1% - 70.0% 37 274,373,286 13.2 5.9653 112 1.50 1.39 68.2 59.2 70.1% - 75.0% 56 540,054,228 26.0 5.8567 117 1.45 1.32 72.9 65.8 75.1% - 80.0% 40 616,227,412 29.6 5.7779 115 1.43 1.22 78.7 70.0 80.1% - 80.3% 2 22,989,826 1.1 5.4904 117 1.48 1.23 80.1 73.8 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL/WEIGHTED AVERAGE: 213 $2,079,030,155 100.0% 5.7886% 113 1.54X 1.38X 68.7% 61.4% ==================================================================================================================================== Minimum: 36.8% Maximum: 80.3% Weighted Average: 68.7% BALLOON LOAN-TO-VALUE RATIOS WEIGHTED WEIGHTED PERCENT BY WEIGHTED WEIGHTED AVERAGE AVERAGE WEIGHTED NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE WEIGHTED DSCR CUT-OFF AVERAGE BALLOON LOAN-TO-VALUE MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AVERAGE AFTER DATE BALLOON RATIO (%) LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.) DSCR (X) IO (X) LTV (%) LTV (%) ------------------------------------------------------------------------------------------------------------------------------------ 25.3% - 30.0% 1 2,195,530 0.1 5.8800 119 1.53 1.53 38.5 25.3 30.1% - 35.0% 2 3,794,148 0.2 5.8492 118 2.26 2.26 39.1 33.2 35.1% - 40.0% 8 20,061,701 1.0 5.6536 118 1.99 1.96 45.0 37.9 40.1% - 45.0% 6 166,930,776 8.0 5.6714 118 1.97 1.64 44.8 41.5 45.1% - 50.0% 23 127,167,639 6.1 5.7738 118 1.68 1.61 58.9 48.2 50.1% - 55.0% 30 201,501,912 9.7 5.6915 111 1.58 1.51 60.6 52.9 55.1% - 60.0% 37 249,022,702 12.0 5.8737 105 1.51 1.41 65.6 57.8 60.1% - 65.0% 50 383,659,970 18.5 5.8202 112 1.47 1.38 70.8 62.1 65.1% - 70.0% 38 501,610,347 24.1 5.7883 116 1.45 1.24 75.6 67.7 70.1% - 75.0% 17 417,585,430 20.1 5.8109 114 1.46 1.27 78.3 72.9 75.1% - 75.8% 1 5,500,000 0.3 5.9400 57 1.51 1.27 79.7 75.8 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL/WEIGHTED AVERAGE: 213 $2,079,030,155 100.0% 5.7886% 113 1.54X 1.38X 68.7% 61.4% ==================================================================================================================================== Minimum: 25.3% Maximum: 75.8% Weighted Average: 61.4% A-5 APPENDIX A GROUP 1 MORTGAGE POOL INFORMATION MORTGAGE LOAN SELLERS WEIGHTED WEIGHTED PERCENT BY WEIGHTED WEIGHTED AVERAGE AVERAGE WEIGHTED NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE WEIGHTED DSCR CUT-OFF AVERAGE MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AVERAGE AFTER DATE BALLOON LOAN SELLER LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.) DSCR (X) IO (X) LTV (%) LTV (%) ------------------------------------------------------------------------------------------------------------------------------------ Prudential Mortgage Capital Funding 27 703,070,105 37.3 5.6778 116 1.57 1.33 67.7 60.7 Bear Stearns Commercial Mortgage, Inc. 37 390,002,466 20.7 5.8073 111 1.59 1.42 69.5 62.7 Wells Fargo Bank, N.A. 61 387,039,333 20.5 6.0420 115 1.47 1.36 70.8 63.0 Principal Commercial Funding II, LLC 35 189,964,894 10.1 6.0198 111 1.43 1.31 69.0 60.8 Principal Commercial Funding, LLC 14 118,124,878 6.3 5.2713 101 1.85 1.83 63.6 61.2 Nationwide Life Insurance Co. 11 96,157,452 5.1 5.8254 119 1.50 1.43 68.7 58.3 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL/WEIGHTED AVERAGE: 185 $1,884,359,127 100.0% 5.7959% 113 1.55X 1.39X 68.6% 61.5% ==================================================================================================================================== CUT-OFF DATE BALANCES WEIGHTED WEIGHTED PERCENT BY WEIGHTED WEIGHTED AVERAGE AVERAGE WEIGHTED NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE WEIGHTED DSCR CUT-OFF AVERAGE MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AVERAGE AFTER DATE BALLOON CUT-OFF DATE BALANCE ($) LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.) DSCR (X) IO (X) LTV (%) LTV (%) ------------------------------------------------------------------------------------------------------------------------------------ 800,000 - 2,000,000 28 44,203,731 2.3 6.0868 116 1.46 1.40 65.6 55.2 2,000,001 - 3,000,000 20 47,914,230 2.5 5.8913 118 1.56 1.53 60.7 52.2 3,000,001 - 5,000,000 36 140,222,435 7.4 5.8889 116 1.45 1.38 66.5 56.4 5,000,001 - 7,000,000 25 154,936,071 8.2 5.7768 109 1.63 1.53 68.8 61.3 7,000,001 - 9,000,000 26 209,922,892 11.1 5.8649 117 1.50 1.36 70.3 61.5 9,000,001 - 11,000,000 9 87,704,528 4.7 6.0285 120 1.34 1.25 71.3 63.3 11,000,001 - 13,000,000 8 99,304,950 5.3 5.7509 111 1.60 1.43 70.1 62.2 13,000,001 - 15,000,000 5 70,229,358 3.7 5.9774 111 1.49 1.33 69.4 61.3 15,000,001 - 17,000,000 4 63,788,056 3.4 5.8598 119 1.49 1.34 66.8 58.6 17,000,001 - 19,000,000 4 72,129,754 3.8 5.7177 119 1.47 1.41 63.7 54.0 19,000,001 - 21,000,000 5 102,323,123 5.4 5.7650 118 1.53 1.34 72.6 65.3 21,000,001 - 31,000,000 8 218,330,000 11.6 5.6085 91 1.64 1.47 68.4 64.5 31,000,001 - 41,000,000 1 36,350,000 1.9 5.8600 118 1.41 1.18 79.5 71.8 41,000,001 - 61,000,000 3 135,000,000 7.2 6.1307 119 1.47 1.33 75.0 71.6 61,000,001 - 156,500,000 3 402,000,000 21.3 5.6155 119 1.67 1.38 65.9 59.4 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL/WEIGHTED AVERAGE: 185 $1,884,359,127 100.0% 5.7959% 113 1.55X 1.39X 68.6% 61.5% ==================================================================================================================================== Minimum: $800,000 Maximum: $156,500,000 Average: $10,185,725 A-6 APPENDIX A GROUP 1 MORTGAGE POOL INFORMATION STATES WEIGHTED WEIGHTED PERCENT BY WEIGHTED WEIGHTED AVERAGE AVERAGE WEIGHTED NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE WEIGHTED DSCR CUT-OFF AVERAGE MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AVERAGE AFTER DATE BALLOON STATE PROPERTIES BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.) DSCR (X) IO (X) LTV (%) LTV (%) ------------------------------------------------------------------------------------------------------------------------------------ New York 9 292,169,844 15.5 5.6824 119 1.75 1.46 57.5 51.9 California 45 278,839,892 14.8 5.8325 112 1.49 1.39 64.7 56.9 Southern California 29 200,094,147 10.6 5.8408 109 1.50 1.43 65.0 57.4 Northern California 16 78,745,745 4.2 5.8115 119 1.47 1.30 63.8 55.5 Michigan 3 170,472,599 9.0 5.5918 118 1.49 1.25 79.3 70.8 Ohio 16 136,525,807 7.2 5.9362 118 1.52 1.31 74.0 66.3 Texas 16 89,553,249 4.8 6.0580 102 1.44 1.29 74.1 67.1 Florida 12 88,597,774 4.7 5.8844 119 1.51 1.50 68.7 63.8 Georgia 7 79,282,161 4.2 5.7789 103 1.50 1.29 69.0 64.0 Virginia 12 71,776,171 3.8 6.0241 119 1.50 1.38 71.2 61.3 Colorado 8 71,257,245 3.8 5.8403 85 1.49 1.32 64.2 60.1 Minnesota 5 64,886,830 3.4 6.1485 119 1.42 1.28 75.8 67.8 Maryland 7 59,402,211 3.2 5.3988 101 1.82 1.74 65.5 60.6 Pennsylvania 4 56,767,274 3.0 5.7796 118 1.51 1.28 72.7 65.3 Illinois 4 50,711,028 2.7 5.8897 118 1.41 1.26 74.9 68.5 Wisconsin 4 46,037,398 2.4 5.5021 116 1.47 1.24 78.0 65.6 Arizona 8 38,817,568 2.1 6.0295 112 1.45 1.38 65.9 57.4 Nebraska 2 28,213,901 1.5 5.9953 118 1.30 1.30 70.9 61.1 New Hampshire 1 26,785,000 1.4 4.8800 81 2.34 2.34 54.7 54.7 Indiana 4 24,460,353 1.3 6.1219 120 1.25 1.25 74.8 64.5 Massachusetts 5 24,326,114 1.3 5.9832 118 1.59 1.41 67.4 58.3 Connecticut 5 20,981,324 1.1 5.9483 118 1.64 1.39 67.5 57.4 Vermont 1 20,500,000 1.1 5.4370 117 1.51 1.23 80.1 74.5 Iowa 3 19,032,117 1.0 5.5162 116 1.48 1.38 76.0 72.5 Tennessee 3 16,891,498 0.9 5.8249 118 1.42 1.31 72.2 60.9 Washington 2 14,846,134 0.8 5.8883 118 1.78 1.78 71.7 60.5 New Jersey 2 14,445,530 0.8 5.5442 116 1.67 1.41 68.1 59.6 North Dakota 2 14,122,860 0.7 6.3038 120 1.21 1.21 75.6 64.8 Missouri 3 12,273,210 0.7 5.7306 117 1.43 1.43 74.4 71.6 South Carolina 3 11,632,396 0.6 5.7472 118 1.57 1.41 72.3 58.0 Nevada 4 11,341,632 0.6 5.9865 116 1.47 1.40 65.6 56.9 Kentucky 1 6,250,000 0.3 5.5730 116 2.12 2.12 61.3 61.3 Oregon 1 6,170,000 0.3 5.2700 117 2.31 2.31 49.4 49.4 Mississippi 1 3,983,665 0.2 5.9070 117 1.69 1.69 73.8 57.4 Montana 1 3,497,323 0.2 6.3000 119 1.36 1.36 60.8 52.2 North Carolina 1 3,151,467 0.2 5.7535 116 1.72 1.72 63.1 48.9 New Mexico 1 2,415,000 0.1 6.3700 71 1.39 1.20 78.0 74.5 Utah 1 2,388,841 0.1 6.2200 115 1.54 1.54 68.1 58.5 Rhode Island 1 1,553,711 0.1 6.0000 119 1.23 1.23 76.2 64.8 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL/WEIGHTED AVERAGE: 208 $1,884,359,127 100.0% 5.7959% 113 1.55X 1.39X 68.6% 61.5% ==================================================================================================================================== A-7 APPENDIX A GROUP 1 MORTGAGE POOL INFORMATION PROPERTY TYPES WEIGHTED WEIGHTED PERCENT BY WEIGHTED WEIGHTED AVERAGE AVERAGE WEIGHTED NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE WEIGHTED DSCR CUT-OFF AVERAGE MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AVERAGE AFTER DATE BALLOON PROPERTY TYPE PROPERTIES BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.) DSCR (X) IO (X) LTV (%) LTV (%) ------------------------------------------------------------------------------------------------------------------------------------ Retail 90 847,224,191 45.0 5.6569 115 1.53 1.37 71.2 64.0 Office 41 520,527,953 27.6 5.8873 115 1.60 1.37 64.0 58.3 Industrial 38 246,928,157 13.1 5.8663 108 1.45 1.33 71.2 63.5 Hospitality 24 168,219,026 8.9 6.0792 106 1.72 1.65 67.3 56.3 Mixed Use 6 46,565,000 2.5 5.8349 119 1.60 1.42 63.7 59.7 Other 1 20,350,000 1.1 5.6700 117 1.56 1.29 73.2 65.8 Self Storage 6 19,750,435 1.0 6.0281 118 1.58 1.46 67.1 54.8 Multifamily 1 7,800,000 0.4 5.6800 119 1.46 1.21 68.7 64.1 Manufactured Housing Community 1 6,994,365 0.4 6.1100 119 1.31 1.31 76.8 65.5 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL/WEIGHTED AVERAGE: 208 $1,884,359,127 100.0% 5.7959% 113 1.55X 1.39X 68.6% 61.5% ==================================================================================================================================== MORTGAGE RATES WEIGHTED WEIGHTED PERCENT BY WEIGHTED WEIGHTED AVERAGE AVERAGE WEIGHTED NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE WEIGHTED DSCR CUT-OFF AVERAGE MORTGAGE RATE (%) MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AVERAGE AFTER DATE BALLOON LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.) DSCR (X) IO (X) LTV (%) LTV (%) ------------------------------------------------------------------------------------------------------------------------------------ 4.8500% - 5.0000% 2 53,985,000 2.9 4.8649 81 2.29 2.29 55.0 55.0 5.0001% - 5.2500% 1 24,000,000 1.3 5.2200 114 1.51 1.21 79.2 67.4 5.2501% - 5.5000% 11 94,636,187 5.0 5.4256 118 1.66 1.48 66.6 59.9 5.5001% - 5.7500% 47 752,823,167 40.0 5.6310 117 1.61 1.38 66.9 60.1 5.7501% - 6.0000% 58 456,060,000 24.2 5.8506 112 1.47 1.32 70.2 61.9 6.0001% - 6.2500% 45 355,834,220 18.9 6.1193 113 1.47 1.38 71.3 64.3 6.2501% - 6.6600% 21 147,020,554 7.8 6.3624 109 1.39 1.30 71.0 63.0 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL/WEIGHTED AVERAGE: 185 $1,884,359,127 100.0% 5.7959% 113 1.55X 1.39X 68.6% 61.5% ==================================================================================================================================== Minimum: 4.8500% Maximum: 6.6600% Weighted Average: 5.7959% REMAINING TERMS TO STATED MATURITY OR ARD WEIGHTED WEIGHTED PERCENT BY WEIGHTED WEIGHTED AVERAGE AVERAGE WEIGHTED NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE WEIGHTED DSCR CUT-OFF AVERAGE REMAINING TERM TO STATED MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AVERAGE AFTER DATE BALLOON MATURITY (MOS.) LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.) DSCR (X) IO (X) LTV (%) LTV (%) ------------------------------------------------------------------------------------------------------------------------------------ 55 - 60 5 51,004,789 2.7 5.8659 58 1.56 1.41 63.3 61.0 61 - 84 10 156,842,401 8.3 5.6864 79 1.82 1.74 65.8 62.9 85 - 120 169 1,667,579,938 88.5 5.8058 118 1.53 1.36 69.1 61.4 121 - 123 1 8,932,000 0.5 5.4700 123 1.53 1.26 62.0 51.9 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL/WEIGHTED AVERAGE: 185 $1,884,359,127 100.0% 5.7959% 113 1.55X 1.39X 68.6% 61.5% ==================================================================================================================================== Minimum: 55 mos. Maximum: 123 mos. Weighted Average: 113 mos. A-8 APPENDIX A GROUP 1 MORTGAGE POOL INFORMATION DEBT SERVICE COVERAGE RATIOS WEIGHTED WEIGHTED PERCENT BY WEIGHTED WEIGHTED AVERAGE AVERAGE WEIGHTED NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE WEIGHTED DSCR CUT-OFF AVERAGE DEBT SERVICE COVERAGE MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AVERAGE AFTER DATE BALLOON RATIO (X) LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.) DSCR (X) IO (X) LTV (%) LTV (%) ------------------------------------------------------------------------------------------------------------------------------------ 1.15 - 1.20 9 72,896,097 3.9 6.0327 120 1.19 1.19 74.5 63.8 1.21 - 1.30 31 140,713,044 7.5 5.9565 118 1.25 1.25 71.0 59.3 1.31 - 1.40 35 348,107,490 18.5 5.9617 110 1.38 1.26 71.8 64.6 1.41 - 1.50 35 410,709,276 21.8 5.8528 116 1.45 1.25 73.4 67.4 1.51 - 1.60 26 368,398,729 19.6 5.6944 116 1.53 1.30 75.2 66.9 1.61 - 1.70 15 131,687,243 7.0 5.6564 115 1.66 1.49 66.1 57.7 1.71 - 1.80 8 74,337,482 3.9 5.9146 111 1.73 1.57 65.3 55.5 1.81 - 1.90 15 98,385,830 5.2 5.8289 105 1.86 1.73 62.0 55.5 1.91 - 2.00 1 155,000,000 8.2 5.6375 120 1.99 1.64 44.3 41.3 2.01 - 2.10 2 10,924,789 0.6 5.9221 90 2.05 1.80 58.9 50.1 2.11 - 2.20 1 6,250,000 0.3 5.5730 116 2.12 2.12 61.3 61.3 2.21 - 2.30 4 32,494,148 1.7 5.0105 87 2.24 2.23 52.7 51.8 2.31 - 2.34 3 34,455,000 1.8 5.0095 89 2.33 2.32 53.7 53.5 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL/WEIGHTED AVERAGE: 185 $1,884,359,127 100.0% 5.7959% 113 1.55X 1.39X 68.6% 61.5% ==================================================================================================================================== Minimum: 1.15x Maximum: 2.34x Weighted Average: 1.55x DEBT SERVICE COVERAGE RATIOS AFTER IO PERIOD WEIGHTED WEIGHTED PERCENT BY WEIGHTED WEIGHTED AVERAGE AVERAGE WEIGHTED NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE WEIGHTED DSCR CUT-OFF AVERAGE DEBT SERVICE COVERAGE RATIO MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AVERAGE AFTER DATE BALLOON AFTER IO PERIOD (X) LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.) DSCR (X) IO (X) LTV (%) LTV (%) ------------------------------------------------------------------------------------------------------------------------------------ 1.10 - 1.20 24 393,351,097 20.9 5.8928 111 1.36 1.18 74.2 66.7 1.21 - 1.30 56 607,775,044 32.3 5.7665 116 1.44 1.24 74.9 66.7 1.31 - 1.40 39 299,642,490 15.9 5.9392 118 1.49 1.36 69.2 61.8 1.41 - 1.50 17 101,549,276 5.4 5.7991 117 1.56 1.45 69.9 63.9 1.51 - 1.60 19 89,886,729 4.8 5.9111 115 1.68 1.55 62.9 54.1 1.61 - 1.70 9 219,062,243 11.6 5.6665 117 1.90 1.64 49.8 44.9 1.71 - 1.80 3 36,497,482 1.9 5.9021 103 1.73 1.73 64.2 53.4 1.81 - 1.90 9 58,695,830 3.1 5.8469 96 1.85 1.85 63.6 56.7 1.91 - 2.00 2 3,000,000 0.2 6.0250 119 2.32 1.96 46.9 42.0 2.01 - 2.10 1 4,699,789 0.2 6.1500 55 2.05 2.05 51.1 44.3 2.11 - 2.20 1 6,250,000 0.3 5.5730 116 2.12 2.12 61.3 61.3 2.21 - 2.30 3 30,994,148 1.6 4.9723 86 2.24 2.24 53.3 52.6 2.31 - 2.34 2 32,955,000 1.7 4.9530 88 2.33 2.33 53.7 53.7 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL/WEIGHTED AVERAGE: 185 $1,884,359,127 100.0% 5.7959% 113 1.55X 1.39X 68.6% 61.5% ==================================================================================================================================== Minimum: 1.10x Maximum: 2.34x Weighted Average: 1.39x A-9 APPENDIX A GROUP 1 MORTGAGE POOL INFORMATION CUT-OFF DATE LOAN-TO-VALUE RATIOS WEIGHTED WEIGHTED PERCENT BY WEIGHTED WEIGHTED AVERAGE AVERAGE WEIGHTED NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE WEIGHTED DSCR CUT-OFF AVERAGE CUT-OFF DATE LOAN-TO-VALUE MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AVERAGE AFTER DATE BALLOON RATIO (%) LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.) DSCR (X) IO (X) LTV (%) LTV (%) ------------------------------------------------------------------------------------------------------------------------------------ 38.1% - 40.0% 4 7,489,678 0.4 5.8484 119 2.05 1.98 39.0 31.3 40.1% - 45.0% 3 159,591,175 8.5 5.6418 120 1.98 1.64 44.3 41.2 45.1% - 50.0% 3 12,888,834 0.7 5.4503 118 1.99 1.99 48.2 44.2 50.1% - 55.0% 12 81,550,199 4.3 5.4796 102 1.98 1.82 53.9 50.4 55.1% - 60.0% 13 89,780,646 4.8 5.4982 107 1.74 1.69 57.3 51.4 60.1% - 65.0% 33 223,454,432 11.9 5.8081 107 1.53 1.44 62.7 54.9 65.1% - 70.0% 32 246,030,798 13.1 5.9882 111 1.53 1.41 68.1 59.5 70.1% - 75.0% 50 470,424,192 25.0 5.8929 117 1.46 1.33 73.0 66.3 75.1% - 80.0% 33 570,159,348 30.3 5.7829 115 1.43 1.22 78.7 70.1 80.1% - 80.3% 2 22,989,826 1.2 5.4904 117 1.48 1.23 80.1 73.8 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL/WEIGHTED AVERAGE: 185 $1,884,359,127 100.0% 5.7959% 113 1.55X 1.39X 68.6% 61.5% ==================================================================================================================================== Minimum: 38.1% Maximum: 80.3% Weighted Average: 68.6% BALLOON LOAN-TO-VALUE RATIOS WEIGHTED WEIGHTED PERCENT BY WEIGHTED WEIGHTED AVERAGE AVERAGE WEIGHTED NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE WEIGHTED DSCR CUT-OFF AVERAGE BALLOON LOAN-TO-VALUE MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AVERAGE AFTER DATE BALLOON RATIO (%) LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.) DSCR (X) IO (X) LTV (%) LTV (%) ------------------------------------------------------------------------------------------------------------------------------------ 25.3% - 30.0% 1 2,195,530 0.1 5.8800 119 1.53 1.53 38.5 25.3 30.1% - 35.0% 2 3,794,148 0.2 5.8492 118 2.26 2.26 39.1 33.2 35.1% - 40.0% 6 14,921,701 0.8 5.6808 118 1.69 1.65 47.1 37.5 40.1% - 45.0% 6 166,930,776 8.9 5.6714 118 1.97 1.64 44.8 41.5 45.1% - 50.0% 20 117,587,480 6.2 5.7899 118 1.68 1.62 59.0 48.3 50.1% - 55.0% 26 182,060,246 9.7 5.6774 113 1.61 1.53 60.7 53.1 55.1% - 60.0% 30 202,533,698 10.7 5.8695 105 1.55 1.45 65.5 57.7 60.1% - 65.0% 46 329,624,996 17.5 5.8461 111 1.52 1.41 70.5 62.2 65.1% - 70.0% 31 455,550,123 24.2 5.8045 116 1.44 1.23 75.5 67.7 70.1% - 75.0% 16 403,660,430 21.4 5.8165 114 1.46 1.27 78.3 72.8 75.1% - 75.8% 1 5,500,000 0.3 5.9400 57 1.51 1.27 79.7 75.8 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL/WEIGHTED AVERAGE: 185 $1,884,359,127 100.0% 5.7959% 113 1.55X 1.39X 68.6% 61.5% ==================================================================================================================================== Minimum: 25.3% Maximum: 75.8% Weighted Average: 61.5% A-10 APPENDIX A GROUP 2 MORTGAGE POOL INFORMATION MORTGAGE LOAN SELLERS WEIGHTED WEIGHTED PERCENT BY WEIGHTED WEIGHTED AVERAGE AVERAGE WEIGHTED NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE WEIGHTED DSCR CUT-OFF AVERAGE MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AVERAGE AFTER DATE BALLOON LOAN SELLER LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.) DSCR (X) IO (X) LTV (%) LTV (%) ------------------------------------------------------------------------------------------------------------------------------------ Prudential Mortgage Capital Funding 10 98,010,532 50.3 5.6555 118 1.29 1.22 71.7 61.2 Wells Fargo Bank, N.A. 7 34,474,224 17.7 5.9412 99 1.32 1.25 65.5 57.5 Bear Stearns Commercial Mortgage, Inc. 5 31,789,694 16.3 5.7170 106 1.51 1.32 68.2 62.4 Principal Commercial Funding II, LLC 5 22,340,000 11.5 5.6751 118 1.92 1.77 63.8 57.5 Nationwide Life Insurance Co. 1 8,056,579 4.1 5.6400 117 1.29 1.29 79.8 67.3 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL/WEIGHTED AVERAGE: 28 $194,671,028 100.0% 5.7177% 113 1.40X 1.31X 69.5% 60.6% ==================================================================================================================================== CUT-OFF DATE BALANCES WEIGHTED WEIGHTED PERCENT BY WEIGHTED WEIGHTED AVERAGE AVERAGE WEIGHTED NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE WEIGHTED DSCR CUT-OFF AVERAGE MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AVERAGE AFTER DATE BALLOON CUT-OFF DATE BALANCE ($) LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.) DSCR (X) IO (X) LTV (%) LTV (%) ------------------------------------------------------------------------------------------------------------------------------------ 1,140,000 - 2,000,000 4 6,015,322 3.1 6.0251 119 1.62 1.62 64.5 54.6 2,000,001 - 3,000,000 4 10,348,455 5.3 6.1727 102 1.36 1.25 66.7 59.7 3,000,001 - 5,000,000 5 20,860,146 10.7 5.6816 107 1.76 1.76 55.4 47.4 5,000,001 - 7,000,000 4 24,533,348 12.6 5.7441 118 1.37 1.24 76.1 65.0 7,000,001 - 9,000,000 5 38,330,443 19.7 5.6835 118 1.23 1.23 70.4 59.4 9,000,001 - 11,000,000 2 18,274,100 9.4 5.7301 118 1.37 1.24 67.1 58.0 11,000,001 - 13,000,000 1 11,450,000 5.9 6.1600 59 1.44 1.23 62.6 59.7 13,000,001 - 15,000,000 1 13,925,000 7.2 5.6500 119 1.45 1.20 79.1 73.8 15,000,001 - 18,000,000 1 18,000,000 9.2 5.3880 118 1.69 1.37 72.4 67.3 18,000,001 - 32,934,213 1 32,934,213 16.9 5.6100 118 1.20 1.20 72.1 60.7 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL/WEIGHTED AVERAGE: 28 $194,671,028 100.0% 5.7177% 113 1.40X 1.31X 69.5% 60.6% ==================================================================================================================================== Minimum: $1,140,000 Maximum: $32,934,213 Average: $6,952,537 A-11 APPENDIX A GROUP 2 MORTGAGE POOL INFORMATION STATES WEIGHTED WEIGHTED PERCENT BY WEIGHTED WEIGHTED AVERAGE AVERAGE WEIGHTED NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE WEIGHTED DSCR CUT-OFF AVERAGE MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AVERAGE AFTER DATE BALLOON STATE PROPERTIES BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.) DSCR (X) IO (X) LTV (%) LTV (%) ------------------------------------------------------------------------------------------------------------------------------------ Texas 5 38,982,952 20.0 5.6468 118 1.52 1.30 70.3 63.1 Louisiana 1 32,934,213 16.9 5.6100 118 1.20 1.20 72.1 60.7 California 3 26,849,912 13.8 5.8645 93 1.33 1.24 69.1 61.2 Northern California 2 18,793,333 9.7 5.9607 82 1.35 1.22 64.5 58.5 Southern California 1 8,056,579 4.1 5.6400 117 1.29 1.29 79.8 67.3 Arizona 2 16,807,231 8.6 5.7384 117 1.21 1.21 70.5 59.6 Connecticut 1 13,925,000 7.2 5.6500 119 1.45 1.20 79.1 73.8 Ohio 2 12,987,839 6.7 5.7109 119 1.34 1.21 78.1 66.7 New Jersey 3 9,140,000 4.7 5.5637 118 2.54 2.54 42.5 42.5 Washington 1 7,917,610 4.1 5.5400 119 1.26 1.26 60.4 50.7 Pennsylvania 2 7,181,384 3.7 5.6846 118 1.24 1.15 72.2 54.3 New York 2 6,539,185 3.4 6.4510 58 1.25 1.25 54.4 51.1 Tennessee 1 6,300,000 3.2 5.7000 118 1.53 1.27 77.8 67.1 U.S. Virgin Islands 1 5,245,509 2.7 5.8790 119 1.26 1.26 69.0 58.5 Georgia 1 4,984,870 2.6 5.4500 117 1.50 1.50 63.1 52.9 Minnesota 1 1,798,646 0.9 6.3600 119 1.20 1.20 79.9 68.7 Alaska 1 1,677,902 0.9 6.1100 119 1.38 1.38 73.0 57.0 Michigan 1 1,398,775 0.7 5.7900 119 1.47 1.47 56.9 48.1 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL/WEIGHTED AVERAGE: 28 $194,671,028 100.0% 5.7177% 113 1.40X 1.31X 69.5% 60.6% ==================================================================================================================================== PROPERTY TYPES WEIGHTED WEIGHTED PERCENT BY WEIGHTED WEIGHTED AVERAGE AVERAGE WEIGHTED NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE WEIGHTED DSCR CUT-OFF AVERAGE MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AVERAGE AFTER DATE BALLOON PROPERTY TYPE PROPERTIES BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.) DSCR (X) IO (X) LTV (%) LTV (%) ------------------------------------------------------------------------------------------------------------------------------------ Multifamily 27 183,221,028 94.1 5.6901 116 1.40 1.31 69.9 60.6 Manufactured Housing Community 1 11,450,000 5.9 6.1600 59 1.44 1.23 62.6 59.7 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL/WEIGHTED AVERAGE: 28 $194,671,028 100.0% 5.7177% 113 1.40X 1.31X 69.5% 60.6% ==================================================================================================================================== MORTGAGE RATES WEIGHTED WEIGHTED PERCENT BY WEIGHTED WEIGHTED AVERAGE AVERAGE WEIGHTED NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE WEIGHTED DSCR CUT-OFF AVERAGE MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AVERAGE AFTER DATE BALLOON MORTGAGE RATE (%) LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.) DSCR (X) IO (X) LTV (%) LTV (%) ------------------------------------------------------------------------------------------------------------------------------------ 5.3880% - 5.5000% 2 22,984,870 11.8 5.4014 118 1.65 1.40 70.4 64.2 5.5001% - 5.7500% 13 114,160,059 58.6 5.6323 118 1.39 1.32 69.7 59.9 5.7501% - 6.0000% 7 33,562,205 17.2 5.8235 118 1.31 1.23 72.9 62.5 6.0001% - 6.2500% 2 13,127,902 6.7 6.1536 67 1.43 1.25 63.9 59.4 6.2501% - 6.4510% 4 10,835,991 5.6 6.4334 82 1.25 1.25 61.2 55.3 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL/WEIGHTED AVERAGE: 28 $194,671,028 100.0% 5.7177% 113 1.40X 1.31X 69.5% 60.6% ==================================================================================================================================== Minimum: 5.3880% Maximum: 6.4510% Weighted Average: 5.7177% A-12 APPENDIX A GROUP 2 MORTGAGE POOL INFORMATION REMAINING TERMS TO STATED MATURITY OR ARD WEIGHTED WEIGHTED PERCENT BY WEIGHTED WEIGHTED AVERAGE AVERAGE WEIGHTED NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE WEIGHTED DSCR CUT-OFF AVERAGE REMAINING TERM TO STATED MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AVERAGE AFTER DATE BALLOON MATURITY (MOS.) LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.) DSCR (X) IO (X) LTV (%) LTV (%) ------------------------------------------------------------------------------------------------------------------------------------ 58 - 60 3 17,989,185 9.2 6.2658 59 1.37 1.24 59.6 56.6 85 - 119 25 176,681,843 90.8 5.6619 118 1.41 1.31 70.5 61.0 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL/WEIGHTED AVERAGE: 28 $194,671,028 100.0% 5.7177% 113 1.40X 1.31X 69.5% 60.6% ==================================================================================================================================== Minimum: 58 mos. Maximum: 119 mos. Weighted Average: 113 mos. DEBT SERVICE COVERAGE RATIOS WEIGHTED WEIGHTED PERCENT BY WEIGHTED WEIGHTED AVERAGE AVERAGE WEIGHTED NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE WEIGHTED DSCR CUT-OFF AVERAGE DEBT SERVICE COVERAGE MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AVERAGE AFTER DATE BALLOON RATIO (X) LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.) DSCR (X) IO (X) LTV (%) LTV (%) ------------------------------------------------------------------------------------------------------------------------------------ 1.11 - 1.20 6 61,270,498 31.5 5.6776 118 1.19 1.19 71.6 59.5 1.21 - 1.30 8 45,418,983 23.3 5.8229 109 1.25 1.25 68.3 58.4 1.31 - 1.40 1 1,677,902 0.9 6.1100 119 1.38 1.38 73.0 57.0 1.41 - 1.50 7 43,663,645 22.4 5.8156 103 1.45 1.25 71.7 65.2 1.51 - 1.60 2 15,500,000 8.0 5.7237 119 1.52 1.26 70.1 61.2 1.61 - 1.70 1 18,000,000 9.2 5.3880 118 1.69 1.37 72.4 67.3 1.71 - 2.88 3 9,140,000 4.7 5.5637 118 2.54 2.54 42.5 42.5 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL/WEIGHTED AVERAGE: 28 $194,671,028 100.0% 5.7177% 113 1.40X 1.31X 69.5% 60.6% ==================================================================================================================================== Minimum: 1.11x Maximum: 2.88x Weighted Average: 1.40x DEBT SERVICE COVERAGE RATIOS AFTER IO PERIOD WEIGHTED WEIGHTED PERCENT BY WEIGHTED WEIGHTED AVERAGE AVERAGE WEIGHTED NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE WEIGHTED DSCR CUT-OFF AVERAGE DEBT SERVICE COVERAGE RATIO MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AVERAGE AFTER DATE BALLOON AFTER IO PERIOD (X) LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.) DSCR (X) IO (X) LTV (%) LTV (%) ------------------------------------------------------------------------------------------------------------------------------------ 1.11 - 1.20 8 78,195,498 40.2 5.6812 118 1.25 1.20 73.1 62.3 1.21 - 1.30 13 81,273,983 41.7 5.8503 105 1.35 1.25 68.9 60.2 1.31 - 1.40 2 19,677,902 10.1 5.4496 118 1.66 1.37 72.5 66.4 1.41 - 1.50 2 6,383,645 3.3 5.5245 117 1.49 1.49 61.7 51.8 1.61 - 2.88 3 9,140,000 4.7 5.5637 118 2.54 2.54 42.5 42.5 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL/WEIGHTED AVERAGE: 28 $194,671,028 100.0% 5.7177% 113 1.40X 1.31X 69.5% 60.6% ==================================================================================================================================== Minimum: 1.11x Maximum: 2.88x Weighted Average: 1.31x A-13 APPENDIX A GROUP 2 MORTGAGE POOL INFORMATION CUT-OFF DATE LOAN-TO-VALUE RATIOS WEIGHTED WEIGHTED PERCENT BY WEIGHTED WEIGHTED AVERAGE AVERAGE WEIGHTED NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE WEIGHTED DSCR CUT-OFF AVERAGE CUT-OFF DATE LOAN-TO-VALUE MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AVERAGE AFTER DATE BALLOON RATIO (%) LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.) DSCR (X) IO (X) LTV (%) LTV (%) ------------------------------------------------------------------------------------------------------------------------------------ 36.8% - 45.0% 2 5,140,000 2.6 5.5744 118 2.86 2.86 39.0 39.0 45.1% - 50.0% 1 4,000,000 2.1 5.5500 118 2.13 2.13 47.1 47.1 50.1% - 55.0% 2 6,539,185 3.4 6.4510 58 1.25 1.25 54.4 51.1 55.1% - 60.0% 1 1,398,775 0.7 5.7900 119 1.47 1.47 56.9 48.1 60.1% - 65.0% 4 33,552,481 17.2 5.7930 98 1.43 1.29 62.8 55.9 65.1% - 70.0% 5 28,342,487 14.6 5.7667 118 1.21 1.21 68.6 56.0 70.1% - 75.0% 6 69,630,036 35.8 5.6124 118 1.34 1.25 72.2 62.6 75.1% - 79.9% 7 46,068,064 23.7 5.7163 118 1.39 1.23 78.6 69.1 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL/WEIGHTED AVERAGE: 28 $194,671,028 100.0% 5.7177% 113 1.40X 1.31X 69.5% 60.6% ==================================================================================================================================== Minimum: 36.8% Maximum: 79.9% Weighted Average: 69.5% BALLOON LOAN-TO-VALUE RATIOS WEIGHTED WEIGHTED PERCENT BY WEIGHTED WEIGHTED AVERAGE AVERAGE WEIGHTED NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE WEIGHTED DSCR CUT-OFF AVERAGE BALLOON LOAN-TO-VALUE MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AVERAGE AFTER DATE BALLOON RATIO (%) LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.) DSCR (X) IO (X) LTV (%) LTV (%) ------------------------------------------------------------------------------------------------------------------------------------ 36.8% - 40.0% 2 5,140,000 2.6 5.5744 118 2.86 2.86 39.0 39.0 45.1% - 50.0% 3 9,580,159 4.9 5.5763 118 1.59 1.59 58.4 46.5 50.1% - 55.0% 4 19,441,665 10.0 5.8233 98 1.32 1.32 59.1 51.4 55.1% - 60.0% 7 46,489,005 23.9 5.8920 104 1.34 1.24 66.4 58.2 60.1% - 65.0% 4 54,034,974 27.8 5.6625 118 1.20 1.20 72.6 61.3 65.1% - 70.0% 7 46,060,225 23.7 5.6280 118 1.52 1.29 76.0 67.4 70.1% - 73.8% 1 13,925,000 7.2 5.6500 119 1.45 1.20 79.1 73.8 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL/WEIGHTED AVERAGE: 28 $194,671,028 100.0% 5.7177% 113 1.40X 1.31X 69.5% 60.6% ==================================================================================================================================== Minimum: 36.8% Maximum: 73.8% Weighted Average: 60.6% A-14

BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC., SERIES 2006-PWR12 APPENDIX B - CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS AND MORTGAGED PROPERTIES % OF CMSA CMSA INITIAL POOL LOAN GROUP ID LOAN NO. PROPERTY NO. PROPERTY NAME (1) BALANCE (ONE OR TWO) ---------------------------------------------------------------------------------------------------------------------------- 1 1 1-001 Woodland Mall 7.5% 1 2 2 2-001 1675 Broadway 7.5% 1 3 3 3-001 Orange Plaza 4.4% 1 4 4 Broken Sound Portfolio 2.3% 1 4-a 4-001 5900 Broken Sound Plaza 0.6% ---------------------------------------------------------------------------------------------------------------------------- 4-b 4-002 6000 Broken Sound Plaza 0.6% 4-c 4-003 Rogers Circle 0.5% 4-d 4-004 Newhouse Business Center 0.4% 4-e 4-005 Colonnade Plaza 0.2% 5 5 5-001 Southdale Office Centre 2.1% 1 ---------------------------------------------------------------------------------------------------------------------------- 6 6 6-001 Tower at Erieview 2.1% 1 7 7 Embassy Office Park - Pool A 1.7% 1 7-a 7-001 3875 Embassy Parkway Building 0.6% 7-b 7-002 3700 Embassy Parkway Building 0.4% 7-c 7-003 4040 Embassy Parkway Building 0.3% ---------------------------------------------------------------------------------------------------------------------------- 7-d 7-004 3560 West Market Office Building 0.2% 7-e 7-005 3500 Embassy Parkway Building 0.2% 8 8 8-001 Calypso Bay Apartments 1.6% 2 9 9 Titan Portfolio 1.5% 1 9-a 9-001 Titan - San Antonio 0.8% ---------------------------------------------------------------------------------------------------------------------------- 9-b 9-002 Titan - El Paso 0.4% 9-c 9-003 Titan - McAllen 0.2% 9-d 9-004 Titan - Santa Teresa 0.1% 10 10 10-001 Stone Mountain Square 1.5% 1 11 11 Embassy Office Park - Pool B 1.4% 1 ---------------------------------------------------------------------------------------------------------------------------- 11-a 11-001 3925 Embassy Parkway Building 0.5% 11-b 11-002 4000 Embassy Parkway Building 0.3% 11-c 11-003 3737 Embassy Parkway Building 0.3% 11-d 11-004 3770 Embassy Parkway Building 0.2% 11-e 11-005 5399 Lauby Road Building 0.1% ---------------------------------------------------------------------------------------------------------------------------- 12 12 12-001 Centre at Laurel 1.3% 1 13 13 13-001 Tuscany Plaza 1.3% 1 14 14 14-001 Monandnock Marketplace 1.3% 1 15 15 15-001 Brown Deer Business Park 1.2% 1 16 16 16-001 Gwinnett Regional Distribution Center 1.1% 1 ---------------------------------------------------------------------------------------------------------------------------- 17 17 17-001 Ardmore West Shopping Center 1.0% 1 18 18 InTown Suites Portfolio 1.0% 1 18-a 18-001 Virginia Beach 0.3% 18-b 18-002 Fairfield 0.2% 18-c 18-003 Jonesboro 0.2% ---------------------------------------------------------------------------------------------------------------------------- 18-d 18-004 Buford Highway 0.2% 18-e 18-005 Pressley Road 0.2% 19 19 19-001 The Gateway Shopping Center 1.0% 1 20 20 20-001 Philadelphia Airport Parking 1.0% 1 21 21 21-001 Hickory Palos Square 0.9% 1 ---------------------------------------------------------------------------------------------------------------------------- 22 22 22-001 Los Coches Village 0.9% 1 23 23 23-001 1314 Douglas Street 0.9% 1 24 24 24-001 Reserve at Woodbridge 0.9% 2 25 25 25-001 South Santa Fe Avenue 0.8% 1 26 26 26-001 Brandon Crossings 0.8% 1 ---------------------------------------------------------------------------------------------------------------------------- 27 27 27-001 Baylor Medical Plaza 0.5% 1 28 28 28-001 Baylor Surgicare Grapevine 0.3% 1 29 29 29-001 29-35 9th Avenue 0.8% 1 30 30 30-001 Sweetwater Square 0.8% 1 31 31 31-001 Bed, Bath and Beyond Center 0.7% 1 ---------------------------------------------------------------------------------------------------------------------------- 32 32 32-001 The Coliseum Center 0.7% 1 33 33 33-001 Quad at Lowry IV 0.7% 1 34 34 34-001 Marriott Courtyard Solana Beach 0.7% 1 35 35 35-001 McHenry Town Center 0.7% 1 36 36 36-001 Hunter's Crossing Apartments 0.7% 2 ---------------------------------------------------------------------------------------------------------------------------- 37 37 37-001 American Business Center 0.7% 1 38 38 38-001 Hilton Garden Inn Glastonbury 0.6% 1 39 39 39-001 Meadows Plaza 0.6% 1 40 40 40-001 Hampton Inn Suites 0.6% 1 41 41 41-001 Data Point 0.6% 1 ---------------------------------------------------------------------------------------------------------------------------- 42 42 42-001 44th Street Tower 0.6% 1 43 43 43-001 Mattress Discounters 0.6% 1 44 44 44-001 9 Finderne Avenue 0.6% 1 45 45 45-001 Wadsworth Boulevard Marketplace 0.6% 1 46 46 46-001 Coyote Creek Mobile Home Park 0.6% 2 ---------------------------------------------------------------------------------------------------------------------------- 47 47 47-001 City Center, Oakland 0.5% 1 48 48 48-001 Nicolet Office Center 0.5% 1 49 49 49-001 5150 Center Street 0.5% 1 50 50 50-001 Woodlake Center 0.5% 1 51 51 Arcadia Village SC & Fiesta Shops West 0.5% 1 ---------------------------------------------------------------------------------------------------------------------------- 51-a 51-001 Arcadia Village SC 0.4% 51-b 51-002 Fiesta Shops West 0.1% 52 52 52-001 940 N Central 0.5% 1 53 53 53-001 Tri-City Pavilions 0.5% 1 54 54 54-001 MacArthur Fairview Park 0.4% 1 ---------------------------------------------------------------------------------------------------------------------------- 55 55 55-001 McCallum Highlands 0.4% 2 56 56 56-001 1300 Virginia Drive 0.4% 1 57 57 57-001 Villa Monterey Apartments 0.4% 2 58 58 58-001 Bellevue Plaza 0.4% 1 59 59 59-001 3870 Highway D 0.4% 1 ---------------------------------------------------------------------------------------------------------------------------- 60 60 60-001 770 East El Camino Real 0.4% 1 61 61 61-001 Magnolia Vineland 0.4% 1 ---------------------------------------------------------------------------------------------------------------------------- 62 62 62-001 New Oak Hill Plaza 0.4% 1 63 63 63-001 Qwest Data Center 0.4% 1 64 64 64-001 Hampton Inn & Suites Bemidji 0.4% 1 ---------------------------------------------------------------------------------------------------------------------------- 65 65 65-001 Bellflower Shopping Center 0.4% 1 66 66 66-001 Hawthorn Suites Franklin 0.4% 1 67 67 67-001 Best Western Miramar 0.4% 1 68 68 68-001 Highland Ranch 0.4% 1 69 69 69-001 La Plata Shopping Center 0.4% 1 ---------------------------------------------------------------------------------------------------------------------------- 70 70 70-001 College Park Apartments 0.4% 2 71 71 71-001 Micron Building 0.4% 1 72 72 72-001 Staybridge Suites - Cincinnati North 0.4% 1 73 73 73-001 Best Western Potomac Mills 0.4% 1 74 74 74-001 Chesterfield Square 0.4% 1 ---------------------------------------------------------------------------------------------------------------------------- 75 75 75-001 Lowell Emerson 0.4% 2 76 76 76-001 Monrovia Villas 0.4% 1 77 77 77-001 Saratoga Apartments 0.4% 2 78 78 78-001 Cooper Industrial 0.4% 1 79 79 79-001 201 West 10th Avenue 0.4% 1 ---------------------------------------------------------------------------------------------------------------------------- 80 80 Murrietta Center & Bolsa Medical 0.4% 1 80-a 80-001 Murrieta Town Center East 0.3% 80-b 80-002 Bolsa Medical Center 0.1% 81 81 81-001 Parkway Plaza 0.4% 1 82 82 82-001 Tappahannock Towne Center 0.4% 1 ---------------------------------------------------------------------------------------------------------------------------- 83 83 83-001 15020 Shady Grove Road 0.4% 1 84 84 84-001 Cedar Hills Manor 0.4% 2 85 85 85-001 Oates Creek Apartments 0.4% 2 86 86 Creme de la Creme 0.3% 1 86-a 86-001 Creme de la Creme - Allen 0.2% ---------------------------------------------------------------------------------------------------------------------------- 86-b 86-002 Creme de la Creme - Colleyville 0.2% 87 87 87-001 Thomas Road Project 0.3% 1 88 88 88-001 Holiday Inn Express - Chesapeake, VA 0.3% 1 89 89 89-001 Lindale Crossing 0.3% 1 90 90 90-001 Terraces at Windy Hill 0.3% 1 ---------------------------------------------------------------------------------------------------------------------------- 91 91 91-001 Camelot/Avalon MHP 0.3% 1 92 92 92-001 Radisson Hotel - Kenosha 0.3% 1 93 93 93-001 Oakbrook Apartments 0.3% 2 94 94 94-001 410 North Ankeny Boulevard 0.3% 1 95 95 95-001 Best Western Porterville 0.3% 1 ---------------------------------------------------------------------------------------------------------------------------- 96 96 96-001 Courtyard Marriott Orlando 0.3% 1 97 97 97-001 Howard Johnson San Diego 0.3% 1 98 98 98-001 Days Inn Mission Bay 0.3% 1 99 99 99-001 Days Inn Encinitas 0.3% 1 100 100 100-001 Columbiana Crossing 0.3% 1 ---------------------------------------------------------------------------------------------------------------------------- 101 101 101-001 Crestview Apartments 0.3% 2 102 102 102-001 6901 Riverport Drive 0.3% 1 103 103 103-001 Fairfield Inn & Suites, (Bethlehem, PA) 0.3% 1 104 104 104-001 Northwest Corporate Center 0.3% 1 105 105 105-001 McMinnville Market Center 0.3% 1 ---------------------------------------------------------------------------------------------------------------------------- 106 106 106-001 Newport Square Apartments 0.3% 2 107 107 107-001 Hannaford Plaza 0.3% 1 108 108 108-001 Laurel Commons 0.3% 1 109 109 109-001 Surprise Self Storage 0.3% 1 110 110 110-001 Albany Industrial Park 0.2% 1 ---------------------------------------------------------------------------------------------------------------------------- 111 111 111-001 5075 Cameron Street Industrial Building 0.1% 1 112 112 112-001 Pharrs Village 0.3% 1 113 113 113-001 Meridian at Sugarloaf 0.3% 1 114 114 114-001 Rialto Square Shopping Center 0.3% 1 115 115 115-001 La Tijera Shopping Center 0.3% 1 ---------------------------------------------------------------------------------------------------------------------------- 116 116 116-001 2181 Logan Avenue 0.3% 1 117 117 117-001 Guinea Grove Apartments 0.3% 2 118 118 118-001 Belcher Commons-Phase II 0.2% 1 119 119 119-001 Plattsburgh Plaza 0.2% 1 120 120 120-001 Moore Plaza 0.2% 1 ---------------------------------------------------------------------------------------------------------------------------- 121 121 121-001 Rugby Valley Apartments 0.2% 2 122 122 122-001 1337 Taylor Farm Road 0.2% 1 123 123 123-001 100 Tamal Plaza 0.2% 1 124 124 124-001 Country Inn & Suites by Carlson - Tucson 0.2% 1 125 125 125-001 399 Exterior Street 0.2% 1 ---------------------------------------------------------------------------------------------------------------------------- 126 126 126-001 The Willard Building 0.2% 1 127 127 127-001 Security Central Storage 0.2% 1 128 128 128-001 Willow Pond Plaza 0.2% 1 129 129 129-001 1305 N. Casaloma Drive 0.2% 1 130 130 130-001 Fairmount Park Apartments 0.2% 2 ---------------------------------------------------------------------------------------------------------------------------- 131 131 131-001 The Shops at Stratford Hills 0.2% 1 132 132 132-001 Rancho El Mirage Plaza 0.2% 1 133 133 133-001 North Ranch Plaza 0.2% 1 134 134 134-001 Food Source Sacramento 0.2% 1 135 135 135-001 Hillside Garden Apartments 0.2% 2 ---------------------------------------------------------------------------------------------------------------------------- 136 136 136-001 Highland Terrace Apartments 0.2% 2 137 137 137-001 740 Calle Plano 0.2% 1 138 138 138-001 Rite Aid - Hercules 0.2% 1 139 139 139-001 Country Inn & Suites Jackson 0.2% 1 140 140 140-001 South Pointe Crossing 0.2% 1 ---------------------------------------------------------------------------------------------------------------------------- 141 141 141-001 Canon Plaza 0.2% 1 142 142 142-001 Hidden Lakes Center 0.2% 1 ---------------------------------------------------------------------------------------------------------------------------- 143 143 143-001 Staples at Doc Stone Commons 0.2% 1 144 144 144-001 1240 Sherman Avenue 0.2% 2 145 145 145-001 Ethan Way Office Building 0.2% 1 ---------------------------------------------------------------------------------------------------------------------------- 146 146 146-001 Desert Pointe Center 0.2% 1 147 147 147-001 PetsMart Memphis 0.2% 1 148 148 148-001 Russell Square 0.2% 1 149 149 149-001 Ennis Crossroads Shopping Center 0.2% 1 150 150 150-001 Grand Avenue Parkway S/C 0.2% 1 ---------------------------------------------------------------------------------------------------------------------------- 151 151 151-001 Grandview Hills Shopping Center 0.2% 1 152 152 152-001 The Broadway Center 0.2% 1 153 153 153-001 Comfort Inn North Dartmouth 0.2% 1 154 154 154-001 Bonita Commerce Center 0.2% 1 155 155 155-001 B & H Self Storage 0.2% 1 ---------------------------------------------------------------------------------------------------------------------------- 156 156 156-001 A.J. Wright 0.2% 1 157 157 157-001 PetSmart - Riverside 0.1% 1 158 158 158-001 City Mattress Center 0.1% 1 159 159 159-001 University Square 0.1% 2 160 160 Walgreens Ohio Portfolio 0.1% 1 ---------------------------------------------------------------------------------------------------------------------------- 160-a 160-001 Walgreens Akron 0.1% 160-b 160-002 Walgreens Cleveland 0.1% 161 161 161-001 1945 Loring Place 0.1% 2 162 162 162-001 54 N. Central Avenue 0.1% 1 163 163 163-001 Downtown Self Storage 0.1% 1 ---------------------------------------------------------------------------------------------------------------------------- 164 164 164-001 Markets at Mesa Ridge 0.1% 1 165 165 165-001 1300 Post Road East 0.1% 1 166 166 166-001 Petaluma Industrial Buildings 0.1% 1 167 167 167-001 Bedford Hills Apartment 0.1% 2 168 168 168-001 Sam's Town Marketplace Shops 0.1% 1 ---------------------------------------------------------------------------------------------------------------------------- 169 169 169-001 Lovell Center 0.1% 1 170 170 170-001 Savage Retail 0.1% 1 171 171 171-001 Long Beach Center 0.1% 1 172 172 172-001 American Self Storage - Midvale 0.1% 1 173 173 173-001 Columbia Pike Gateway 0.1% 1 ---------------------------------------------------------------------------------------------------------------------------- 174 174 174-001 Bridge Street Square 0.1% 1 175 175 175-001 Winchendon Plaza 0.1% 1 176 176 176-001 Middlebrook Tech Center 0.1% 1 177 177 177-001 University Oaks Plaza 0.1% 1 178 178 178-001 505 Jefferson Road 0.1% 1 ---------------------------------------------------------------------------------------------------------------------------- 179 179 179-001 Windhill/Sunbelt Industrial Properties 0.1% 1 180 180 180-001 Mission Plaza Retail 0.1% 1 181 181 181-001 Castle Arms Apartments 0.1% 2 182 182 182-001 Crackerneck Plaza II 0.1% 1 183 183 183-001 8818 West Broad Street 0.1% 1 ---------------------------------------------------------------------------------------------------------------------------- 184 184 184-001 South Tracy Industrial Building 5 0.1% 1 185 185 185-001 1777 Conestoga 0.1% 1 186 186 186-001 3205 SE 192nd Avenue 0.1% 1 187 187 187-001 South Slaughter Commerce Park 0.1% 1 188 188 188-001 Manchester Place 0.1% 2 ---------------------------------------------------------------------------------------------------------------------------- 189 189 189-001 10223 Sepulveda Boulevard 0.1% 1 190 190 190-001 1735 U.S. Route 9 0.1% 1 191 191 191-001 4400 Blalock 0.1% 1 192 192 192-001 Washington Mutual - Westport 0.1% 1 193 193 193-001 43-15 - 43-27 33rd Street 0.1% 1 ---------------------------------------------------------------------------------------------------------------------------- 194 194 194-001 2 Connecticut Drive South 0.1% 1 195 195 195-001 South Tracy Industrial Building 6 0.1% 1 196 196 196-001 2106 North Forbes Boulevard 0.1% 1 197 197 197-001 7016 Weimer Apartments 0.1% 2 198 198 198-001 Thompson Thrift Building 0.1% 1 ---------------------------------------------------------------------------------------------------------------------------- 199 199 199-001 Vallejo Plaza - Las Vegas 0.1% 1 200 200 200-001 10 Putnam Pike (Route 44) 0.1% 1 201 201 201-001 350 Pleasant Valley Road 0.1% 1 202 202 202-001 2101 E. Cooley Drive 0.1% 1 203 203 203-001 9-D EZ Storage 0.1% 1 ---------------------------------------------------------------------------------------------------------------------------- 204 204 204-001 1020 36th Street SW 0.1% 1 205 205 205-001 Burtonsville Retail Center 0.1% 1 206 206 206-001 The Preserve at Mallard Pond - Buildings 4 and 5 0.1% 2 207 207 207-001 Gannon Plaza 0.1% 1 208 208 208-001 503 32nd Street Office Building 0.1% 1 ---------------------------------------------------------------------------------------------------------------------------- 209 209 209-001 125 South Bridge 0.1% 1 210 210 210-001 River Drive Village Apartments 0.1% 2 211 211 211-001 13633 S. Crenshaw Boulevard 0.0% 1 212 212 212-001 Sherwin Williams - Littleton 0.0% 1 213 213 213-001 Vital Way Retail Center 0.0% 1 ---------------------------------------------------------------------------------------------------------------------------- % OF APPLICABLE MORTGAGE CUT-OFF LOAN GROUP # OF LOAN LOAN PURPOSE ORIGINAL DATE ID BALANCE PROPERTIES SELLER (2) (REFINANCE/ACQUISITION) BALANCE ($) BALANCE (3) ($) ------------------------------------------------------------------------------------------------------------------------------- 1 8.3% 1 PMCF Acquisition 156,500,000 156,500,000 2 8.2% 1 PMCF Refinance 155,000,000 155,000,000 3 4.8% 1 PMCF Refinance 90,500,000 90,500,000 4 2.5% 5 WFB Refinance 47,000,000 47,000,000 4-a 0.7% 1 WFB 12,560,000 12,560,000 ------------------------------------------------------------------------------------------------------------------------------- 4-b 0.6% 1 WFB 12,165,000 12,165,000 4-c 0.5% 1 WFB 10,000,000 10,000,000 4-d 0.4% 1 WFB 7,550,000 7,550,000 4-e 0.3% 1 WFB 4,725,000 4,725,000 5 2.4% 1 WFB Acquisition 44,500,000 44,500,000 ------------------------------------------------------------------------------------------------------------------------------- 6 2.3% 1 BSCMI Refinance 43,500,000 43,500,000 7 1.9% 5 PMCF Acquisition 36,350,000 36,350,000 7-a 0.7% 1 PMCF 13,050,000 13,050,000 7-b 0.5% 1 PMCF 9,000,000 9,000,000 7-c 0.3% 1 PMCF 5,950,000 5,950,000 ------------------------------------------------------------------------------------------------------------------------------- 7-d 0.3% 1 PMCF 4,775,000 4,775,000 7-e 0.2% 1 PMCF 3,575,000 3,575,000 8 16.9% 1 PMCF Refinance 33,000,000 32,934,213 9 1.6% 4 PCF II Acquisition 30,895,000 30,895,000 9-a 0.9% 1 PCF II 16,360,000 16,360,000 ------------------------------------------------------------------------------------------------------------------------------- 9-b 0.4% 1 PCF II 7,675,000 7,675,000 9-c 0.2% 1 PCF II 4,445,000 4,445,000 9-d 0.1% 1 PCF II 2,415,000 2,415,000 10 1.6% 1 BSCMI Refinance 30,800,000 30,800,000 11 1.5% 5 PMCF Acquisition 28,650,000 28,650,000 ------------------------------------------------------------------------------------------------------------------------------- 11-a 0.5% 1 PMCF 10,250,000 10,250,000 11-b 0.3% 1 PMCF 6,125,000 6,125,000 11-c 0.3% 1 PMCF 5,475,000 5,475,000 11-d 0.2% 1 PMCF 3,925,000 3,925,000 11-e 0.2% 1 PMCF 2,875,000 2,875,000 ------------------------------------------------------------------------------------------------------------------------------- 12 1.4% 1 PCF Acquisition 27,200,000 27,200,000 13 1.4% 1 PMCF Acquisition 27,000,000 27,000,000 14 1.4% 1 PCF Acquisition 26,785,000 26,785,000 15 1.3% 1 PMCF Refinance 24,000,000 24,000,000 16 1.2% 1 WFB Refinance 23,000,000 23,000,000 ------------------------------------------------------------------------------------------------------------------------------- 17 1.1% 1 BSCMI Refinance 21,000,000 21,000,000 18 1.1% 5 BSCMI Refinance 21,000,000 20,873,123 18-a 0.3% 1 BSCMI 6,390,355 6,351,746 18-b 0.2% 1 BSCMI 4,056,165 4,031,659 18-c 0.2% 1 BSCMI 3,799,216 3,776,262 ------------------------------------------------------------------------------------------------------------------------------- 18-d 0.2% 1 BSCMI 3,583,641 3,561,990 18-e 0.2% 1 BSCMI 3,170,623 3,151,467 19 1.1% 1 BSCMI Refinance 20,500,000 20,500,000 20 1.1% 1 BSCMI Refinance 20,350,000 20,350,000 21 1.0% 1 PCF II Acquisition 19,600,000 19,600,000 ------------------------------------------------------------------------------------------------------------------------------- 22 1.0% 1 PMCF Acquisition 18,800,000 18,800,000 23 1.0% 1 PCF II Acquisition 18,416,000 18,366,647 24 9.2% 1 BSCMI Acquisition 18,000,000 18,000,000 25 0.9% 1 NLIC Refinance 17,500,000 17,500,000 26 0.9% 1 PMCF Refinance 17,500,000 17,463,107 ------------------------------------------------------------------------------------------------------------------------------- 27 0.6% 1 WFB Refinance 10,745,000 10,745,000 28 0.3% 1 WFB Refinance 5,935,000 5,935,000 29 0.9% 1 BSCMI Refinance 16,500,000 16,500,000 30 0.9% 1 BSCMI Refinance 16,500,000 16,500,000 31 0.8% 1 BSCMI Refinance 15,500,000 15,488,056 ------------------------------------------------------------------------------------------------------------------------------- 32 0.8% 1 PMCF Refinance 15,300,000 15,300,000 33 0.8% 1 NLIC Acquisition 14,500,000 14,500,000 34 0.8% 1 BSCMI Refinance 14,250,000 14,224,358 35 0.7% 1 BSCMI Acquisition 14,100,000 14,100,000 36 7.2% 1 PMCF Refinance 13,925,000 13,925,000 ------------------------------------------------------------------------------------------------------------------------------- 37 0.7% 1 PCF II Refinance 13,905,000 13,905,000 38 0.7% 1 WFB Refinance 13,500,000 13,500,000 39 0.7% 1 PMCF Refinance 13,000,000 13,000,000 40 0.7% 1 NLIC Refinance 13,000,000 12,975,950 41 0.7% 1 WFB Refinance 12,750,000 12,750,000 ------------------------------------------------------------------------------------------------------------------------------- 42 0.7% 1 PMCF Refinance 12,654,000 12,654,000 43 0.7% 1 WFB Acquisition 12,300,000 12,300,000 44 0.7% 1 BSCMI Refinance 12,250,000 12,250,000 45 0.6% 1 BSCMI Acquisition 12,025,000 12,025,000 46 5.9% 1 WFB Refinance 11,450,000 11,450,000 ------------------------------------------------------------------------------------------------------------------------------- 47 0.6% 1 PMCF Refinance 11,350,000 11,350,000 48 0.6% 1 NLIC Refinance 10,870,000 10,870,000 49 0.5% 1 PCF Acquisition 9,847,254 9,847,254 50 0.5% 1 PMCF Refinance 9,500,000 9,500,000 51 0.5% 2 NLIC Acquisition 9,500,000 9,500,000 ------------------------------------------------------------------------------------------------------------------------------- 51-a 0.4% 1 NLIC 7,421,875 7,421,875 51-b 0.1% 1 NLIC 2,078,125 2,078,125 52 0.5% 1 PMCF Refinance 9,400,000 9,400,000 53 0.5% 1 PCF II Acquisition 9,400,000 9,400,000 54 0.5% 1 WFB Refinance 9,250,000 9,250,000 ------------------------------------------------------------------------------------------------------------------------------- 55 4.7% 1 PMCF Refinance 9,200,000 9,200,000 56 0.5% 1 WFB Acquisition 9,200,000 9,192,274 57 4.7% 1 PMCF Refinance 9,100,000 9,074,100 58 0.5% 1 PMCF Refinance 9,000,000 8,974,326 59 0.5% 1 PCF Acquisition 8,937,088 8,937,088 ------------------------------------------------------------------------------------------------------------------------------- 60 0.5% 1 PCF Acquisition 8,932,000 8,932,000 61 0.5% 1 BSCMI Refinance 8,750,000 8,750,000 ------------------------------------------------------------------------------------------------------------------------------- 62 0.5% 1 WFB Refinance 8,700,000 8,700,000 63 0.5% 1 PMCF Acquisition 8,700,000 8,684,680 64 0.5% 1 WFB Refinance 8,600,000 8,584,593 ------------------------------------------------------------------------------------------------------------------------------- 65 0.5% 1 PMCF Acquisition 8,600,000 8,575,859 66 0.5% 1 WFB Acquisition 8,500,000 8,500,000 67 0.5% 1 BSCMI Refinance 8,500,000 8,485,154 68 0.4% 1 BSCMI Refinance 8,400,000 8,400,000 69 0.4% 1 WFB Refinance 8,175,000 8,152,211 ------------------------------------------------------------------------------------------------------------------------------- 70 4.1% 1 NLIC Refinance 8,080,000 8,056,579 71 0.4% 1 PMCF Refinance 8,000,000 8,000,000 72 0.4% 1 WFB Refinance 8,000,000 8,000,000 73 0.4% 1 WFB Refinance 8,000,000 7,990,818 74 0.4% 1 NLIC Refinance 8,000,000 7,983,948 ------------------------------------------------------------------------------------------------------------------------------- 75 4.1% 1 WFB Refinance 7,925,000 7,917,610 76 0.4% 1 PMCF Acquisition 7,800,000 7,800,000 77 4.0% 1 WFB Refinance 7,755,000 7,733,131 78 0.4% 1 WFB Refinance 7,660,000 7,653,751 79 0.4% 1 PCF Acquisition 7,611,028 7,611,028 ------------------------------------------------------------------------------------------------------------------------------- 80 0.4% 2 BSCMI Refinance 7,500,000 7,500,000 80-a 0.3% 1 BSCMI 5,600,000 5,600,000 80-b 0.1% 1 BSCMI 1,900,000 1,900,000 81 0.4% 1 PCF II Refinance 7,500,000 7,500,000 82 0.4% 1 WFB Acquisition 7,500,000 7,500,000 ------------------------------------------------------------------------------------------------------------------------------- 83 0.4% 1 BSCMI Refinance 7,350,000 7,350,000 84 3.8% 1 PMCF Refinance 7,350,000 7,343,333 85 3.7% 1 PMCF Refinance 7,300,000 7,279,791 86 0.4% 2 BSCMI Acquisition 7,228,840 7,197,437 86-a 0.2% 1 BSCMI 3,975,000 3,957,732 ------------------------------------------------------------------------------------------------------------------------------- 86-b 0.2% 1 BSCMI 3,253,840 3,239,705 87 0.4% 1 WFB Refinance 7,110,000 7,110,000 88 0.4% 1 WFB Refinance 7,050,000 7,050,000 89 0.4% 1 PMCF Acquisition 7,000,000 7,000,000 90 0.4% 1 PCF II Refinance 7,000,000 7,000,000 ------------------------------------------------------------------------------------------------------------------------------- 91 0.4% 1 WFB Refinance 7,000,000 6,994,365 92 0.4% 1 WFB Acquisition 7,000,000 6,971,122 93 3.5% 1 PCF II Acquisition 6,900,000 6,900,000 94 0.4% 1 PCF Acquisition 6,775,976 6,775,976 95 0.4% 1 BSCMI Refinance 6,725,000 6,712,953 ------------------------------------------------------------------------------------------------------------------------------- 96 0.4% 1 NLIC Refinance 6,700,000 6,681,252 97 0.4% 1 BSCMI Refinance 6,675,000 6,663,043 98 0.3% 1 BSCMI Refinance 6,525,000 6,513,312 99 0.3% 1 BSCMI Refinance 6,375,000 6,363,580 100 0.3% 1 PCF II Refinance 6,300,000 6,300,000 ------------------------------------------------------------------------------------------------------------------------------- 101 3.2% 1 PCF II Refinance 6,300,000 6,300,000 102 0.3% 1 BSCMI Refinance 6,250,000 6,250,000 103 0.3% 1 WFB Acquisition 6,225,000 6,225,000 104 0.3% 1 BSCMI Acquisition 6,200,000 6,173,197 105 0.3% 1 PMCF Acquisition 6,170,000 6,170,000 ------------------------------------------------------------------------------------------------------------------------------- 106 3.1% 1 PMCF Refinance 6,100,000 6,087,839 107 0.3% 1 BSCMI Acquisition 6,000,000 6,000,000 108 0.3% 1 NLIC Refinance 6,000,000 5,988,651 109 0.3% 1 WFB Refinance 5,750,000 5,739,829 110 0.2% 1 PCF Refinance 3,420,000 3,399,420 ------------------------------------------------------------------------------------------------------------------------------- 111 0.1% 1 PCF Refinance 2,260,000 2,246,429 112 0.3% 1 BSCMI Acquisition 5,660,000 5,643,910 113 0.3% 1 PMCF Refinance 5,500,000 5,500,000 114 0.3% 1 WFB Refinance 5,500,000 5,494,756 115 0.3% 1 PMCF Refinance 5,500,000 5,483,985 ------------------------------------------------------------------------------------------------------------------------------- 116 0.3% 1 PCF Acquisition 5,256,141 5,256,141 117 2.7% 1 BSCMI Refinance 5,250,000 5,245,509 118 0.3% 1 PCF II Refinance 5,100,000 5,100,000 119 0.3% 1 PMCF Refinance 5,000,000 5,000,000 120 0.3% 1 PCF II Acquisition 5,000,000 4,990,353 ------------------------------------------------------------------------------------------------------------------------------- 121 2.6% 1 PMCF Refinance 5,000,000 4,984,870 122 0.3% 1 PCF Refinance 5,000,000 4,979,225 123 0.3% 1 WFB Acquisition 4,800,000 4,800,000 124 0.2% 1 WFB Refinance 4,750,000 4,699,789 125 0.2% 1 BSCMI Refinance 4,700,000 4,690,876 ------------------------------------------------------------------------------------------------------------------------------- 126 0.2% 1 BSCMI Refinance 4,400,000 4,391,204 127 0.2% 1 PCF II Refinance 4,340,000 4,340,000 128 0.2% 1 PCF II Refinance 4,300,000 4,300,000 129 0.2% 1 PCF II Refinance 4,200,000 4,196,276 130 2.1% 1 PMCF Refinance 4,200,000 4,181,384 ------------------------------------------------------------------------------------------------------------------------------- 131 0.2% 1 PCF II Refinance 4,160,000 4,157,944 132 0.2% 1 PCF II Acquisition 4,125,000 4,125,000 133 0.2% 1 BSCMI Refinance 4,100,000 4,100,000 134 0.2% 1 BSCMI Acquisition 4,030,000 4,030,000 135 2.1% 1 PCF II Refinance 4,000,000 4,000,000 ------------------------------------------------------------------------------------------------------------------------------- 136 2.1% 1 PCF II Refinance 4,000,000 4,000,000 137 0.2% 1 WFB Refinance 4,000,000 3,996,298 138 0.2% 1 WFB Acquisition 4,000,000 3,989,105 139 0.2% 1 BSCMI Refinance 4,000,000 3,983,665 140 0.2% 1 WFB Refinance 3,940,000 3,940,000 ------------------------------------------------------------------------------------------------------------------------------- 141 0.2% 1 WFB Refinance 3,920,000 3,916,794 142 0.2% 1 NLIC Refinance 3,900,000 3,900,000 ------------------------------------------------------------------------------------------------------------------------------- 143 0.2% 1 BSCMI Refinance 3,700,000 3,700,000 144 1.9% 1 BSCMI Refinance 3,700,000 3,693,891 145 0.2% 1 PCF II Acquisition 3,675,000 3,668,064 ------------------------------------------------------------------------------------------------------------------------------- 146 0.2% 1 PCF II Refinance 3,670,000 3,662,950 147 0.2% 1 WFB Acquisition 3,580,000 3,577,172 148 0.2% 1 WFB Refinance 3,500,000 3,497,323 149 0.2% 1 PMCF Acquisition 3,420,000 3,420,000 150 0.2% 1 PCF II Refinance 3,350,000 3,347,179 ------------------------------------------------------------------------------------------------------------------------------- 151 0.2% 1 PCF II Acquisition 3,337,500 3,334,586 152 0.2% 1 WFB Refinance 3,250,000 3,247,324 153 0.2% 1 WFB Acquisition 3,225,000 3,221,314 154 0.2% 1 NLIC Refinance 3,220,000 3,213,692 155 0.2% 1 WFB Refinance 3,200,000 3,186,490 ------------------------------------------------------------------------------------------------------------------------------- 156 0.2% 1 PCF II Refinance 3,125,000 3,119,063 157 0.2% 1 WFB Refinance 3,060,000 3,057,369 158 0.2% 1 NLIC Refinance 3,050,000 3,043,959 159 1.5% 1 PMCF Refinance 3,000,000 3,000,000 160 0.2% 2 PMCF Refinance 3,000,000 2,994,148 ------------------------------------------------------------------------------------------------------------------------------- 160-a 0.1% 1 PMCF 1,539,474 1,536,471 160-b 0.1% 1 PMCF 1,460,526 1,457,677 161 1.5% 1 BSCMI Refinance 2,850,000 2,845,294 162 0.1% 1 PCF II Refinance 2,600,000 2,597,811 163 0.1% 1 WFB Refinance 2,600,000 2,595,275 ------------------------------------------------------------------------------------------------------------------------------- 164 0.1% 1 BSCMI Refinance 2,540,000 2,540,000 165 0.1% 1 BSCMI Refinance 2,500,000 2,500,000 166 0.1% 1 WFB Acquisition 2,500,000 2,500,000 167 1.3% 1 WFB Refinance 2,500,000 2,498,161 168 0.1% 1 WFB Refinance 2,500,000 2,495,548 ------------------------------------------------------------------------------------------------------------------------------- 169 0.1% 1 PCF Refinance 2,500,000 2,492,803 170 0.1% 1 WFB Refinance 2,500,000 2,489,826 171 0.1% 1 WFB Refinance 2,400,000 2,395,410 172 0.1% 1 WFB Refinance 2,400,000 2,388,841 173 0.1% 1 PCF II Refinance 2,350,000 2,347,964 ------------------------------------------------------------------------------------------------------------------------------- 174 0.1% 1 WFB Refinance 2,320,000 2,318,047 175 0.1% 1 BSCMI Refinance 2,225,000 2,213,597 176 0.1% 1 WFB Refinance 2,200,000 2,200,000 177 0.1% 1 PCF II Refinance 2,200,000 2,195,765 178 0.1% 1 PCF II Refinance 2,200,000 2,195,530 ------------------------------------------------------------------------------------------------------------------------------- 179 0.1% 1 PCF II Refinance 2,150,000 2,145,906 180 0.1% 1 WFB Acquisition 2,065,000 2,061,331 181 1.0% 1 BSCMI Refinance 2,005,000 2,005,000 182 0.1% 1 WFB Refinance 2,000,000 1,998,487 183 0.1% 1 PCF II Refinance 2,000,000 1,998,475 ------------------------------------------------------------------------------------------------------------------------------- 184 0.1% 1 PCF II Acquisition 2,000,000 1,996,357 185 0.1% 1 WFB Refinance 1,940,000 1,936,607 186 0.1% 1 PCF Refinance 1,875,000 1,870,184 187 0.1% 1 WFB Refinance 1,840,000 1,836,716 188 0.9% 1 WFB Refinance 1,800,000 1,798,646 ------------------------------------------------------------------------------------------------------------------------------- 189 0.1% 1 PCF II Refinance 1,800,000 1,798,504 190 0.1% 1 PCF Refinance 1,800,000 1,792,332 191 0.1% 1 WFB Acquisition 1,780,000 1,780,000 192 0.1% 1 BSCMI Acquisition 1,740,000 1,740,000 193 0.1% 1 PCF II Refinance 1,700,000 1,698,580 ------------------------------------------------------------------------------------------------------------------------------- 194 0.1% 1 PCF II Acquisition 1,700,000 1,697,885 195 0.1% 1 PCF II Acquisition 1,700,000 1,696,904 196 0.1% 1 PCF II Refinance 1,690,000 1,690,000 197 0.9% 1 WFB Refinance 1,680,000 1,677,902 198 0.1% 1 WFB Refinance 1,625,000 1,625,000 ------------------------------------------------------------------------------------------------------------------------------- 199 0.1% 1 WFB Refinance 1,600,000 1,595,783 200 0.1% 1 PCF II Refinance 1,555,000 1,553,711 201 0.1% 1 PCF II Refinance 1,550,000 1,543,439 202 0.1% 1 PCF II Refinance 1,500,000 1,500,000 203 0.1% 1 WFB Refinance 1,500,000 1,500,000 ------------------------------------------------------------------------------------------------------------------------------- 204 0.1% 1 WFB Acquisition 1,470,000 1,468,860 205 0.1% 1 WFB Refinance 1,400,000 1,400,000 206 0.7% 1 WFB Refinance 1,400,000 1,398,775 207 0.1% 1 WFB Acquisition 1,340,000 1,337,635 208 0.1% 1 WFB Refinance 1,225,000 1,224,079 ------------------------------------------------------------------------------------------------------------------------------- 209 0.1% 1 WFB Refinance 1,190,000 1,188,003 210 0.6% 1 PCF II Refinance 1,140,000 1,140,000 211 0.1% 1 WFB Refinance 1,000,000 997,346 212 0.0% 1 WFB Acquisition 940,000 938,844 213 0.0% 1 WFB Refinance 800,000 800,000 ------------------------------------------------------------------------------------------------------------------------------- BALANCE GENERAL DETAILED AT PROPERTY PROPERTY INTEREST ADMINISTRATIVE ID MATURITY OR ARD($) TYPE TYPE RATE (4) FEE RATE ------------------------------------------------------------------------------------------------------------------------------- 1 140,483,727 Retail Regional Mall 5.5825% 0.02175% 2 144,498,888 Office Urban 5.6375% 0.02175% 3 79,697,772 Retail Anchored 5.6350% 0.03175% 4 47,000,000 Various Various 6.1400% 0.03125% 4-a 12,560,000 Office Suburban ------------------------------------------------------------------------------------------------------------------------------- 4-b 12,165,000 Office Suburban 4-c 10,000,000 Industrial Flex 4-d 7,550,000 Mixed Use Office/Warehouse 4-e 4,725,000 Mixed Use Office/Retail/Warehouse 5 41,796,550 Office Suburban 6.1850% 0.03125% ------------------------------------------------------------------------------------------------------------------------------- 6 40,123,012 Office Urban 6.0650% 0.07175% 7 32,809,685 Office Suburban 5.8600% 0.07175% 7-a 11,778,992 Office Suburban 7-b 8,123,443 Office Suburban 7-c 5,370,498 Office Suburban ------------------------------------------------------------------------------------------------------------------------------- 7-d 4,309,938 Office Suburban 7-e 3,226,813 Office Suburban 8 27,720,597 Multifamily Garden 5.6100% 0.05175% 9 29,498,328 Industrial Warehouse 6.3700% 0.03175% 9-a 15,620,413 Industrial Warehouse ------------------------------------------------------------------------------------------------------------------------------- 9-b 7,328,036 Industrial Warehouse 9-c 4,244,055 Industrial Warehouse 9-d 2,305,825 Industrial Warehouse 10 28,783,214 Retail Anchored 5.8160% 0.03175% 11 25,859,628 Office Suburban 5.8600% 0.07175% ------------------------------------------------------------------------------------------------------------------------------- 11-a 9,251,700 Office Suburban 11-b 5,528,455 Office Suburban 11-c 4,941,762 Office Suburban 11-d 3,542,724 Office Suburban 11-e 2,594,989 Office Suburban ------------------------------------------------------------------------------------------------------------------------------- 12 27,200,000 Retail Anchored 4.8500% 0.03175% 13 26,028,669 Office Suburban 5.9025% 0.02175% 14 26,785,000 Retail Anchored 4.8800% 0.03175% 15 20,432,559 Industrial Flex 5.2200% 0.02175% 16 22,461,910 Industrial Warehouse 5.8000% 0.03125% ------------------------------------------------------------------------------------------------------------------------------- 17 19,629,754 Retail Anchored 5.8200% 0.03175% 18 16,172,207 Hospitality Extended Stay 5.7535% 0.03175% 18-a 4,921,245 Hospitality Extended Stay 18-b 3,123,673 Hospitality Extended Stay 18-c 2,925,796 Hospitality Extended Stay ------------------------------------------------------------------------------------------------------------------------------- 18-d 2,759,780 Hospitality Extended Stay 18-e 2,441,713 Hospitality Extended Stay 19 19,064,414 Retail Anchored 5.4370% 0.03175% 20 18,306,199 Other Parking Garage 5.6700% 0.03175% 21 18,403,346 Retail Anchored 6.1600% 0.03175% ------------------------------------------------------------------------------------------------------------------------------- 22 17,551,906 Retail Anchored 5.7300% 0.02175% 23 14,356,399 Office Urban 6.1000% 0.03175% 24 16,722,295 Multifamily Garden 5.3880% 0.03175% 25 14,726,781 Industrial Warehouse 5.6700% 0.08675% 26 14,583,017 Retail Anchored 5.3500% 0.02175% ------------------------------------------------------------------------------------------------------------------------------- 27 10,099,719 Office Medical 6.2600% 0.03125% 28 5,582,107 Office Medical 6.3100% 0.03125% 29 15,386,775 Mixed Use Hospitality/Retail 5.6590% 0.03175% 30 14,587,742 Retail Anchored 5.8220% 0.05175% 31 13,279,422 Retail Anchored 6.2720% 0.03175% ------------------------------------------------------------------------------------------------------------------------------- 32 12,887,066 Retail Anchored 5.7000% 0.02175% 33 12,856,135 Office Suburban 5.9300% 0.10675% 34 12,915,562 Hospitality Limited Service 6.0740% 0.03175% 35 12,414,969 Retail Anchored 5.6280% 0.07175% 36 12,986,325 Multifamily Garden 5.6500% 0.02175% ------------------------------------------------------------------------------------------------------------------------------- 37 12,401,146 Industrial Warehouse 6.2800% 0.03175% 38 11,417,287 Hospitality Limited Service 5.9800% 0.03125% 39 11,423,546 Retail Anchored 5.5500% 0.07175% 40 11,031,682 Hospitality Limited Service 5.9500% 0.10675% 41 10,987,280 Office Medical 5.6600% 0.03125% ------------------------------------------------------------------------------------------------------------------------------- 42 10,849,675 Office Suburban 6.3100% 0.02175% 43 10,850,338 Industrial Warehouse 5.7250% 0.03125% 44 10,971,371 Industrial Warehouse 5.4840% 0.03175% 45 12,025,000 Retail Anchored 5.5700% 0.03175% 46 10,910,145 Manufactured Housing Community Manufactured Housing Community 6.1600% 0.03125% ------------------------------------------------------------------------------------------------------------------------------- 47 10,220,482 Mixed Use Retail/Office 5.7400% 0.05175% 48 9,298,027 Office Urban 5.8100% 0.10675% 49 9,847,254 Retail Free Standing 5.8000% 0.03175% 50 8,168,314 Industrial Warehouse 6.4100% 0.07175% 51 8,092,027 Retail Various 6.0800% 0.09675% ------------------------------------------------------------------------------------------------------------------------------- 51-a 6,321,896 Retail Anchored 51-b 1,770,130 Retail Unanchored 52 7,990,589 Industrial Flex 6.0100% 0.02175% 53 8,809,366 Retail Anchored 6.0300% 0.03175% 54 7,840,076 Industrial Flex 5.9100% 0.03125% ------------------------------------------------------------------------------------------------------------------------------- 55 8,120,247 Multifamily Mid Rise 5.7400% 0.04175% 56 7,808,977 Office Suburban 5.9500% 0.03125% 57 7,672,800 Multifamily Garden 5.7200% 0.02175% 58 7,586,195 Retail Anchored 5.7100% 0.07175% 59 8,937,088 Retail Free Standing 5.5300% 0.03175% ------------------------------------------------------------------------------------------------------------------------------- 60 7,469,986 Retail Free Standing 5.4700% 0.03175% 61 8,154,767 Retail Shadow Anchored 5.6020% 0.03175% ------------------------------------------------------------------------------------------------------------------------------- 62 7,846,532 Retail Anchored 5.8200% 0.03125% 63 7,429,992 Office Suburban 6.1700% 0.02175% 64 5,943,937 Hospitality Limited Service 6.1100% 0.03125% ------------------------------------------------------------------------------------------------------------------------------- 65 7,264,300 Retail Anchored 5.7800% 0.02175% 66 7,264,893 Hospitality Extended Stay 6.4000% 0.03125% 67 7,723,206 Hospitality Limited Service 6.2060% 0.03175% 68 7,829,658 Retail Shadow Anchored 5.6120% 0.03175% 69 6,911,506 Retail Anchored 5.8100% 0.03125% ------------------------------------------------------------------------------------------------------------------------------- 70 6,796,298 Multifamily Garden 5.6400% 0.10675% 71 7,051,425 Office Suburban 5.6900% 0.02175% 72 6,350,639 Hospitality Extended Stay 6.6600% 0.03125% 73 6,326,428 Hospitality Limited Service 6.5300% 0.03125% 74 6,714,009 Retail Free Standing 5.5800% 0.10675% ------------------------------------------------------------------------------------------------------------------------------- 75 6,644,451 Multifamily High Rise 5.5400% 0.03125% 76 7,277,203 Multifamily Garden 5.6800% 0.02175% 77 6,546,614 Multifamily Garden 5.7600% 0.03125% 78 6,522,753 Industrial Warehouse 6.0600% 0.03125% 79 7,611,028 Retail Free Standing 5.5300% 0.03175% ------------------------------------------------------------------------------------------------------------------------------- 80 6,733,839 Mixed Use Retail/Office 5.6100% 0.03175% 80-a 5,027,933 Retail Unanchored 80-b 1,705,906 Office Medical 81 6,488,730 Retail Shadow Anchored 5.8100% 0.03175% 82 6,627,356 Retail Anchored 5.8000% 0.03125% ------------------------------------------------------------------------------------------------------------------------------- 83 6,755,444 Office Office 5.8460% 0.03175% 84 6,183,069 Multifamily Garden 5.6500% 0.02175% 85 6,177,263 Multifamily Low Rise 5.8400% 0.02175% 86 6,064,504 Retail Unanchored 5.5830% 0.03175% 86-a 3,334,754 Retail Unanchored ------------------------------------------------------------------------------------------------------------------------------- 86-b 2,729,750 Retail Unanchored 87 6,261,139 Industrial Flex 5.6500% 0.03125% 88 6,294,091 Hospitality Limited Service 6.2500% 0.03125% 89 6,149,269 Retail Anchored 5.5300% 0.02175% 90 6,512,464 Retail Unanchored 5.4900% 0.03175% ------------------------------------------------------------------------------------------------------------------------------- 91 5,969,383 Manufactured Housing Community Manufactured Housing Community 6.1100% 0.03125% 92 5,413,828 Hospitality Full Service 5.8500% 0.11125% 93 5,969,528 Multifamily Garden 5.8000% 0.03175% 94 6,775,976 Retail Free Standing 5.5300% 0.03175% 95 6,097,552 Hospitality Limited Service 6.0940% 0.03175% ------------------------------------------------------------------------------------------------------------------------------- 96 5,179,508 Hospitality Limited Service 5.8500% 0.29675% 97 6,052,216 Hospitality Limited Service 6.0940% 0.03175% 98 5,916,211 Hospitality Limited Service 6.0940% 0.03175% 99 5,780,208 Hospitality Limited Service 6.0940% 0.03175% 100 5,426,107 Retail Shadow Anchored 5.6400% 0.03175% ------------------------------------------------------------------------------------------------------------------------------- 101 5,434,798 Multifamily Garden 5.7000% 0.03175% 102 6,250,000 Industrial Warehouse 5.5730% 0.07175% 103 5,221,327 Hospitality Limited Service 5.7500% 0.03125% 104 5,205,478 Industrial Flex 5.6090% 0.03175% 105 6,170,000 Retail Anchored 5.2700% 0.02175% ------------------------------------------------------------------------------------------------------------------------------- 106 5,124,111 Multifamily Garden 5.6100% 0.07175% 107 5,579,921 Retail Free Standing 5.4620% 0.03175% 108 5,076,552 Retail Unanchored 5.8500% 0.10675% 109 4,907,809 Self Storage Self Storage 6.1500% 0.03125% 110 2,884,645 Industrial Light 5.7500% 0.03175% ------------------------------------------------------------------------------------------------------------------------------- 111 1,906,797 Industrial Light 5.7600% 0.03175% 112 4,773,032 Retail Unanchored 5.7250% 0.03175% 113 5,230,684 Office Suburban 5.9400% 0.02175% 114 4,598,521 Retail Anchored 5.4500% 0.03125% 115 4,623,380 Retail Shadow Anchored 5.6200% 0.02175% ------------------------------------------------------------------------------------------------------------------------------- 116 5,256,141 Retail Free Standing 5.4800% 0.03175% 117 4,446,885 Multifamily Garden 5.8790% 0.03175% 118 4,408,769 Office Suburban 5.7700% 0.03175% 119 4,508,619 Retail Anchored 5.8100% 0.02175% 120 4,219,136 Retail Shadow Anchored 5.7600% 0.03175% ------------------------------------------------------------------------------------------------------------------------------- 121 4,181,178 Multifamily Garden 5.4500% 0.07175% 122 4,224,570 Industrial Light 5.8200% 0.03175% 123 4,232,485 Office Suburban 5.6900% 0.03125% 124 4,078,272 Hospitality Limited Service 6.1500% 0.03125% 125 3,962,661 Industrial Flex 5.7320% 0.03175% ------------------------------------------------------------------------------------------------------------------------------- 126 3,694,619 Office Suburban 5.5970% 0.03175% 127 3,595,519 Self Storage Self Storage 5.7700% 0.03175% 128 3,791,018 Office Suburban 5.7000% 0.03175% 129 3,542,791 Retail Free Standing 5.7400% 0.03175% 130 2,720,183 Multifamily Low Rise 5.5300% 0.02175% ------------------------------------------------------------------------------------------------------------------------------- 131 3,755,704 Retail Shadow Anchored 6.2200% 0.03175% 132 3,496,251 Retail Unanchored 5.9100% 0.03175% 133 3,662,938 Retail Shadow Anchored 6.2820% 0.03175% 134 3,655,727 Retail Anchored 6.1090% 0.03175% 135 4,000,000 Multifamily Garden 5.5500% 0.03175% ------------------------------------------------------------------------------------------------------------------------------- 136 4,000,000 Multifamily Garden 5.5500% 0.03175% 137 3,465,622 Industrial Light 5.5700% 0.03125% 138 3,391,835 Retail Free Standing 5.9100% 0.03125% 139 3,099,588 Hospitality Limited Service 5.9070% 0.03175% 140 3,197,570 Mixed Use Retail/Office 6.0600% 0.03125% ------------------------------------------------------------------------------------------------------------------------------- 141 3,337,045 Retail Anchored 6.0500% 0.08125% 142 3,296,754 Retail Unanchored 5.8200% 0.10675% ------------------------------------------------------------------------------------------------------------------------------- 143 3,236,140 Retail Anchored 5.3660% 0.03175% 144 3,485,472 Multifamily Mid Rise 6.4510% 0.03175% 145 3,110,311 Office Suburban 5.8600% 0.03175% ------------------------------------------------------------------------------------------------------------------------------- 146 3,098,697 Retail Unanchored 5.7800% 0.03175% 147 3,059,072 Retail Big Box 6.1800% 0.03125% 148 3,000,962 Retail Shadow Anchored 6.3000% 0.03125% 149 2,983,429 Retail Anchored 6.1200% 0.02175% 150 2,842,650 Retail Unanchored 5.9400% 0.03175% ------------------------------------------------------------------------------------------------------------------------------- 151 2,820,318 Retail Shadow Anchored 5.8000% 0.03175% 152 2,764,669 Retail Shadow Anchored 6.0250% 0.03125% 153 2,551,979 Hospitality Limited Service 6.5500% 0.03125% 154 2,711,417 Industrial Flex 5.6900% 0.10675% 155 2,103,240 Self Storage Self Storage 5.9100% 0.03125% ------------------------------------------------------------------------------------------------------------------------------- 156 2,642,469 Retail Anchored 5.8300% 0.03175% 157 2,590,440 Retail Big Box 5.8600% 0.03125% 158 2,564,388 Retail Unanchored 5.6400% 0.10675% 159 2,657,606 Multifamily Student Housing 5.9000% 0.07175% 160 2,527,686 Retail Anchored 5.7100% 0.06175% ------------------------------------------------------------------------------------------------------------------------------- 160-a 1,297,102 Retail Anchored 160-b 1,230,584 Retail Anchored 161 2,684,755 Multifamily Mid Rise 6.4510% 0.03175% 162 2,206,236 Office Suburban 5.9400% 0.03175% 163 2,211,498 Self Storage Self Storage 6.0300% 0.03125% ------------------------------------------------------------------------------------------------------------------------------- 164 2,297,722 Retail Shadow Anchored 5.9750% 0.08175% 165 2,500,000 Mixed Use Retail/Office 5.5740% 0.08175% 166 2,249,425 Industrial Light 5.7000% 0.03125% 167 2,152,001 Multifamily Low Rise 6.4400% 0.03125% 168 2,131,989 Retail Shadow Anchored 6.1200% 0.03125% ------------------------------------------------------------------------------------------------------------------------------- 169 2,104,730 Retail Unanchored 5.6700% 0.03175% 170 2,119,135 Retail Shadow Anchored 5.9300% 0.03125% 171 2,027,606 Retail Unanchored 5.8000% 0.03125% 172 2,051,682 Self Storage Self Storage 6.2200% 0.03125% 173 1,987,619 Retail Unanchored 5.8300% 0.03175% ------------------------------------------------------------------------------------------------------------------------------- 174 1,968,640 Retail Unanchored 5.9400% 0.08125% 175 1,875,489 Retail Shadow Anchored 5.7370% 0.03175% 176 1,889,493 Office Suburban 6.3700% 0.03125% 177 1,856,975 Retail Unanchored 5.7700% 0.03175% 178 1,444,733 Industrial Warehouse 5.8800% 0.03175% ------------------------------------------------------------------------------------------------------------------------------- 179 1,817,478 Industrial Warehouse 5.8200% 0.03175% 180 1,761,530 Retail Unanchored 6.1300% 0.03125% 181 1,809,475 Multifamily Low Rise 5.8530% 0.08175% 182 1,716,776 Retail Unanchored 6.3400% 0.03125% 183 1,715,321 Retail Unanchored 6.3100% 0.03175% ------------------------------------------------------------------------------------------------------------------------------- 184 1,700,658 Industrial Light 6.0200% 0.03175% 185 1,658,226 Industrial Flex 6.2000% 0.07125% 186 1,492,458 Retail Unanchored 5.4600% 0.03175% 187 1,568,692 Industrial Light 6.1100% 0.03125% 188 1,545,969 Multifamily Garden 6.3600% 0.03125% ------------------------------------------------------------------------------------------------------------------------------- 189 1,529,636 Retail Unanchored 5.9900% 0.03175% 190 1,179,898 Office Medical 5.8400% 0.03175% 191 1,721,039 Industrial Light 6.3300% 0.03125% 192 1,548,809 Retail Free Standing 6.1140% 0.03175% 193 1,443,811 Industrial Light 5.9700% 0.03175% ------------------------------------------------------------------------------------------------------------------------------- 194 1,326,935 Industrial Light 6.1300% 0.03175% 195 1,445,559 Industrial Light 6.0200% 0.03175% 196 1,444,981 Industrial Warehouse 5.8300% 0.03175% 197 1,310,454 Multifamily Low Rise 6.1100% 0.03125% 198 1,263,809 Office Suburban 6.0300% 0.07125% ------------------------------------------------------------------------------------------------------------------------------- 199 1,362,317 Retail Unanchored 6.0500% 0.03125% 200 1,321,823 Retail Free Standing 6.0000% 0.03175% 201 1,017,977 Industrial Light 5.8900% 0.03175% 202 1,352,320 Industrial Warehouse 5.8000% 0.03175% 203 1,339,168 Self Storage Self Storage 6.2500% 0.03125% ------------------------------------------------------------------------------------------------------------------------------- 204 1,258,616 Office Suburban 6.2500% 0.03125% 205 1,202,404 Retail Unanchored 6.3700% 0.07125% 206 1,182,701 Multifamily Garden 5.7900% 0.03125% 207 1,144,062 Retail Shadow Anchored 6.1600% 0.03125% 208 1,052,118 Office Suburban 6.3600% 0.12125% ------------------------------------------------------------------------------------------------------------------------------- 209 1,022,355 Office Suburban 6.3800% 0.07125% 210 1,140,000 Multifamily Garden 5.6600% 0.03175% 211 850,703 Industrial Light 6.0200% 0.15125% 212 735,175 Retail Shadow Anchored 6.1900% 0.15125% 213 687,089 Retail Unanchored 6.3700% 0.15125% ------------------------------------------------------------------------------------------------------------------------------- INTEREST ORIGINAL STATED REMAINING ORIGINAL REMAINING FIRST MATURITY ACCRUAL TERM TO MATURITY TERM TO MATURITY AMORTIZATION AMORTIZATION PAYMENT DATE ID BASIS OR ARD (MOS.) OR ARD (MOS.) TERM (MOS.) (4) TERM (MOS.) (4) DATE OR ARD ------------------------------------------------------------------------------------------------------------------------------------ 1 Actual/360 120 118 360 360 5/5/2006 4/5/2016 2 Actual/360 120 120 360 360 7/5/2006 6/5/2016 3 Actual/360 120 117 360 360 4/5/2006 3/5/2016 4 Actual/360 120 120 0 0 7/1/2006 6/1/2016 4-a ------------------------------------------------------------------------------------------------------------------------------------ 4-b 4-c 4-d 4-e 5 Actual/360 120 119 360 360 6/1/2006 5/1/2016 ------------------------------------------------------------------------------------------------------------------------------------ 6 Actual/360 120 118 360 360 5/1/2006 4/1/2016 7 Actual/360 120 118 360 360 5/5/2006 4/5/2016 7-a 7-b 7-c ------------------------------------------------------------------------------------------------------------------------------------ 7-d 7-e 8 Actual/360 120 118 360 358 5/5/2006 4/5/2016 9 Actual/360 72 71 360 360 6/1/2006 5/1/2012 9-a ------------------------------------------------------------------------------------------------------------------------------------ 9-b 9-c 9-d 10 Actual/360 120 118 360 360 5/1/2006 4/1/2016 11 Actual/360 120 118 360 360 5/5/2006 4/5/2016 ------------------------------------------------------------------------------------------------------------------------------------ 11-a 11-b 11-c 11-d 11-e ------------------------------------------------------------------------------------------------------------------------------------ 12 30/360 84 81 0 0 4/1/2006 3/1/2013 13 Actual/360 60 59 360 360 6/5/2006 5/5/2011 14 30/360 84 81 0 0 4/1/2006 3/1/2013 15 Actual/360 120 114 360 360 1/5/2006 12/5/2015 16 Actual/360 84 82 360 360 5/5/2006 4/5/2013 ------------------------------------------------------------------------------------------------------------------------------------ 17 Actual/360 120 119 360 360 6/1/2006 5/1/2016 18 Actual/360 120 116 300 296 3/1/2006 2/1/2016 18-a 18-b 18-c ------------------------------------------------------------------------------------------------------------------------------------ 18-d 18-e 19 Actual/360 120 117 360 360 4/1/2006 3/1/2016 20 Actual/360 120 117 360 360 4/1/2006 3/1/2016 21 Actual/360 120 119 360 360 6/1/2006 5/1/2016 ------------------------------------------------------------------------------------------------------------------------------------ 22 Actual/360 120 119 360 360 6/1/2006 5/1/2016 23 Actual/360 120 118 300 298 5/1/2006 4/1/2016 24 Actual/360 120 118 360 360 5/1/2006 4/1/2016 25 Actual/360 120 120 360 360 7/1/2006 6/1/2016 26 Actual/360 120 118 360 358 5/5/2006 4/5/2016 ------------------------------------------------------------------------------------------------------------------------------------ 27 Actual/360 120 120 360 360 7/1/2006 6/1/2016 28 Actual/360 120 120 360 360 7/1/2006 6/1/2016 29 Actual/360 120 118 360 360 5/1/2006 4/1/2016 30 Actual/360 120 118 360 360 5/1/2006 4/1/2016 31 Actual/360 120 119 360 359 6/1/2006 5/1/2016 ------------------------------------------------------------------------------------------------------------------------------------ 32 Actual/360 120 120 360 360 7/5/2006 6/5/2016 33 Actual/360 120 117 360 360 4/1/2006 3/1/2016 34 Actual/360 84 82 360 358 5/1/2006 4/1/2013 35 Actual/360 120 117 360 360 4/1/2006 3/1/2016 36 Actual/360 120 119 360 360 6/5/2006 5/5/2016 ------------------------------------------------------------------------------------------------------------------------------------ 37 Actual/360 120 120 360 360 7/1/2006 6/1/2016 38 Actual/360 120 118 312 312 5/1/2006 4/1/2016 39 Actual/360 120 119 360 360 6/5/2006 5/5/2016 40 Actual/360 120 118 360 358 5/1/2006 4/1/2016 41 Actual/360 120 118 360 360 5/1/2006 4/1/2016 ------------------------------------------------------------------------------------------------------------------------------------ 42 Actual/360 120 120 360 360 7/5/2006 6/5/2016 43 Actual/360 120 118 360 360 5/1/2006 4/1/2016 44 Actual/360 120 115 360 360 2/1/2006 1/1/2016 45 Actual/360 60 57 0 0 4/1/2006 3/1/2011 46 Actual/360 60 59 360 360 6/1/2006 5/1/2011 ------------------------------------------------------------------------------------------------------------------------------------ 47 Actual/360 120 118 360 360 5/5/2006 4/5/2016 48 Actual/360 120 120 300 300 7/1/2006 6/1/2016 49 30/360 120 117 0 0 4/1/2006 3/1/2016 50 Actual/360 120 120 360 360 7/5/2006 6/5/2016 51 Actual/360 120 120 360 360 7/1/2006 6/1/2016 ------------------------------------------------------------------------------------------------------------------------------------ 51-a 51-b 52 Actual/360 120 120 360 360 7/5/2006 6/5/2016 53 Actual/360 120 120 360 360 7/3/2006 6/3/2016 54 Actual/360 120 120 360 360 7/1/2006 6/1/2016 ------------------------------------------------------------------------------------------------------------------------------------ 55 Actual/360 120 119 360 360 6/5/2006 5/5/2016 56 Actual/360 120 119 360 359 6/1/2006 5/1/2016 57 Actual/360 120 117 360 357 4/5/2006 3/5/2016 58 Actual/360 120 117 360 357 4/5/2006 3/5/2016 59 30/360 120 116 0 0 3/1/2006 2/1/2016 ------------------------------------------------------------------------------------------------------------------------------------ 60 Actual/360 124 123 360 360 6/1/2006 9/1/2016 61 Actual/360 120 119 360 360 6/1/2006 5/1/2016 ------------------------------------------------------------------------------------------------------------------------------------ 62 Actual/360 120 118 360 360 5/1/2006 4/1/2016 63 Actual/360 120 118 360 358 5/5/2006 4/5/2016 64 Actual/360 120 119 252 251 6/1/2006 5/1/2016 ------------------------------------------------------------------------------------------------------------------------------------ 65 Actual/360 120 117 360 357 4/5/2006 3/5/2016 66 Actual/360 120 119 312 312 6/1/2006 5/1/2016 67 Actual/360 84 82 360 358 5/1/2006 4/1/2013 68 Actual/360 120 119 360 360 6/1/2006 5/1/2016 69 Actual/360 120 117 360 357 4/1/2006 3/1/2016 ------------------------------------------------------------------------------------------------------------------------------------ 70 Actual/360 120 117 360 357 4/1/2006 3/1/2016 71 Actual/360 120 118 360 360 5/5/2006 4/5/2016 72 Actual/360 120 120 300 300 7/1/2006 6/1/2016 73 Actual/360 120 119 300 299 6/1/2006 5/1/2016 74 Actual/360 120 118 360 358 5/1/2006 4/1/2016 ------------------------------------------------------------------------------------------------------------------------------------ 75 Actual/360 120 119 360 359 6/1/2006 5/1/2016 76 Actual/360 120 119 360 360 6/5/2006 5/5/2016 77 Actual/360 120 117 360 357 4/1/2006 3/1/2016 78 Actual/360 120 119 360 359 6/1/2006 5/1/2016 79 30/360 120 116 0 0 3/1/2006 2/1/2016 ------------------------------------------------------------------------------------------------------------------------------------ 80 Actual/360 120 116 360 360 3/1/2006 2/1/2016 80-a 80-b 81 Actual/360 120 120 360 360 7/1/2006 6/1/2016 82 Actual/360 120 120 360 360 7/1/2006 6/1/2016 ------------------------------------------------------------------------------------------------------------------------------------ 83 Actual/360 120 118 360 360 5/1/2006 4/1/2016 84 Actual/360 120 119 360 359 6/1/2006 5/1/2016 85 Actual/360 120 117 360 357 4/1/2006 3/1/2016 86 Actual/360 120 116 360 356 3/1/2006 2/1/2016 86-a ------------------------------------------------------------------------------------------------------------------------------------ 86-b 87 Actual/360 120 118 360 360 5/1/2006 4/1/2016 88 Actual/360 120 119 360 360 6/1/2006 5/1/2016 89 Actual/360 120 117 360 360 4/5/2006 3/5/2016 90 Actual/360 120 118 360 360 5/5/2006 4/5/2016 ------------------------------------------------------------------------------------------------------------------------------------ 91 Actual/360 120 119 360 359 6/1/2006 5/1/2016 92 Actual/360 120 117 300 297 4/1/2006 3/1/2016 93 Actual/360 120 119 360 360 6/3/2006 5/3/2016 94 30/360 120 115 0 0 2/1/2006 1/1/2016 95 Actual/360 84 82 360 358 5/1/2006 4/1/2013 ------------------------------------------------------------------------------------------------------------------------------------ 96 Actual/360 120 118 300 298 5/1/2006 4/1/2016 97 Actual/360 84 82 360 358 5/1/2006 4/1/2013 98 Actual/360 84 82 360 358 5/1/2006 4/1/2013 99 Actual/360 84 82 360 358 5/1/2006 4/1/2013 100 Actual/360 120 118 360 360 5/3/2006 4/3/2016 ------------------------------------------------------------------------------------------------------------------------------------ 101 Actual/360 120 118 360 360 5/1/2006 4/1/2016 102 Actual/360 120 116 0 0 3/1/2006 2/1/2016 103 Actual/360 120 116 312 312 3/1/2006 2/1/2016 104 Actual/360 120 116 360 356 3/1/2006 2/1/2016 105 Actual/360 120 117 0 0 4/5/2006 3/5/2016 ------------------------------------------------------------------------------------------------------------------------------------ 106 Actual/360 120 118 360 358 5/5/2006 4/5/2016 107 Actual/360 120 118 360 360 5/1/2006 4/1/2016 108 Actual/360 120 118 360 358 5/1/2006 4/1/2016 109 Actual/360 120 118 360 358 5/1/2006 4/1/2016 110 Actual/360 120 114 360 354 1/1/2006 12/1/2015 ------------------------------------------------------------------------------------------------------------------------------------ 111 Actual/360 120 114 360 354 1/1/2006 12/1/2015 112 Actual/360 120 117 360 357 4/1/2006 3/1/2016 113 Actual/360 60 57 360 360 4/5/2006 3/5/2011 114 Actual/360 120 119 360 359 6/1/2006 5/1/2016 115 Actual/360 120 117 360 357 4/5/2006 3/5/2016 ------------------------------------------------------------------------------------------------------------------------------------ 116 30/360 120 115 0 0 2/1/2006 1/1/2016 117 Actual/360 120 119 360 359 6/1/2006 5/1/2016 118 Actual/360 120 119 360 360 6/1/2006 5/1/2016 119 Actual/360 120 118 360 360 5/5/2006 4/5/2016 120 Actual/360 120 118 360 358 5/1/2006 4/1/2016 ------------------------------------------------------------------------------------------------------------------------------------ 121 Actual/360 120 117 360 357 4/5/2006 3/5/2016 122 Actual/360 120 116 360 356 3/1/2006 2/1/2016 123 Actual/360 120 117 360 360 4/1/2006 3/1/2016 124 Actual/360 60 55 240 235 2/1/2006 1/1/2011 125 Actual/360 120 118 360 358 5/1/2006 4/1/2016 ------------------------------------------------------------------------------------------------------------------------------------ 126 Actual/360 120 118 360 358 5/1/2006 4/1/2016 127 Actual/360 120 119 300 300 6/1/2006 5/1/2016 128 Actual/360 120 118 360 360 5/3/2006 4/3/2016 129 Actual/360 120 119 360 359 6/1/2006 5/1/2016 130 Actual/360 120 118 240 238 5/5/2006 4/5/2016 ------------------------------------------------------------------------------------------------------------------------------------ 131 Actual/360 120 119 420 419 6/1/2006 5/1/2016 132 Actual/360 120 120 360 360 7/1/2006 6/1/2016 133 Actual/360 120 119 360 360 6/1/2006 5/1/2016 134 Actual/360 120 119 360 360 6/1/2006 5/1/2016 135 Actual/360 120 118 0 0 5/1/2006 4/1/2016 ------------------------------------------------------------------------------------------------------------------------------------ 136 Actual/360 120 118 0 0 5/1/2006 4/1/2016 137 Actual/360 104 103 360 359 6/1/2006 1/1/2015 138 Actual/360 120 117 360 357 4/1/2006 3/1/2016 139 Actual/360 120 117 300 297 4/1/2006 3/1/2016 140 Actual/360 120 120 324 324 7/1/2006 6/1/2016 ------------------------------------------------------------------------------------------------------------------------------------ 141 Actual/360 120 119 360 359 6/1/2006 5/1/2016 142 Actual/360 120 120 360 360 7/1/2006 6/1/2016 ------------------------------------------------------------------------------------------------------------------------------------ 143 Actual/360 120 116 360 360 3/1/2006 2/1/2016 144 Actual/360 60 58 360 358 5/1/2006 4/1/2011 145 Actual/360 120 118 360 358 5/1/2006 4/1/2016 ------------------------------------------------------------------------------------------------------------------------------------ 146 Actual/360 120 118 360 358 5/1/2006 4/1/2016 147 Actual/360 120 119 360 359 6/1/2006 5/1/2016 148 Actual/360 120 119 360 359 6/1/2006 5/1/2016 149 Actual/360 120 119 360 360 6/5/2006 5/5/2016 150 Actual/360 120 119 360 359 6/1/2006 5/1/2016 ------------------------------------------------------------------------------------------------------------------------------------ 151 Actual/360 120 119 360 359 6/1/2006 5/1/2016 152 Actual/360 120 119 360 359 6/1/2006 5/1/2016 153 Actual/360 120 119 300 299 6/1/2006 5/1/2016 154 Actual/360 120 118 360 358 5/1/2006 4/1/2016 155 Actual/360 120 118 240 238 5/1/2006 4/1/2016 ------------------------------------------------------------------------------------------------------------------------------------ 156 Actual/360 120 118 360 358 5/1/2006 4/1/2016 157 Actual/360 120 119 360 359 6/1/2006 5/1/2016 158 Actual/360 120 118 360 358 5/1/2006 4/1/2016 159 Actual/360 120 119 360 360 6/5/2006 5/5/2016 160 Actual/360 120 118 360 358 5/5/2006 4/5/2016 ------------------------------------------------------------------------------------------------------------------------------------ 160-a 160-b 161 Actual/360 60 58 360 358 5/1/2006 4/1/2011 162 Actual/360 120 119 360 359 6/1/2006 5/1/2016 163 Actual/360 120 118 360 358 5/1/2006 4/1/2016 ------------------------------------------------------------------------------------------------------------------------------------ 164 Actual/360 120 118 360 360 5/1/2006 4/1/2016 165 Actual/360 120 118 0 0 5/1/2006 4/1/2016 166 Actual/360 120 118 360 360 5/1/2006 4/1/2016 167 Actual/360 120 119 360 359 6/1/2006 5/1/2016 168 Actual/360 120 118 360 358 5/1/2006 4/1/2016 ------------------------------------------------------------------------------------------------------------------------------------ 169 Actual/360 120 117 360 357 4/1/2006 3/1/2016 170 Actual/360 120 116 360 356 3/1/2006 2/1/2016 171 Actual/360 120 118 360 358 5/1/2006 4/1/2016 172 Actual/360 120 115 360 355 2/1/2006 1/1/2016 173 Actual/360 120 119 360 359 6/1/2006 5/1/2016 ------------------------------------------------------------------------------------------------------------------------------------ 174 Actual/360 120 119 360 359 6/1/2006 5/1/2016 175 Actual/360 120 115 360 355 2/1/2006 1/1/2016 176 Actual/360 120 120 360 360 7/1/2006 6/1/2016 177 Actual/360 120 118 360 358 5/1/2006 4/1/2016 178 Actual/360 120 119 240 239 6/1/2006 5/1/2016 ------------------------------------------------------------------------------------------------------------------------------------ 179 Actual/360 120 118 360 358 5/3/2006 4/3/2016 180 Actual/360 120 118 360 358 5/1/2006 4/1/2016 181 Actual/360 120 118 360 360 5/1/2006 4/1/2016 182 Actual/360 120 119 360 359 6/1/2006 5/1/2016 183 Actual/360 120 119 360 359 6/1/2006 5/1/2016 ------------------------------------------------------------------------------------------------------------------------------------ 184 Actual/360 120 118 360 358 5/1/2006 4/1/2016 185 Actual/360 120 118 360 358 5/1/2006 4/1/2016 186 Actual/360 120 118 324 322 5/1/2006 4/1/2016 187 Actual/360 120 118 360 358 5/1/2006 4/1/2016 188 Actual/360 120 119 360 359 6/1/2006 5/1/2016 ------------------------------------------------------------------------------------------------------------------------------------ 189 Actual/360 120 119 360 359 6/3/2006 5/3/2016 190 Actual/360 120 118 240 238 5/1/2006 4/1/2016 191 Actual/360 60 58 360 360 5/1/2006 4/1/2011 192 Actual/360 120 119 360 360 6/1/2006 5/1/2016 193 Actual/360 120 119 360 359 6/1/2006 5/1/2016 ------------------------------------------------------------------------------------------------------------------------------------ 194 Actual/360 120 119 300 299 6/1/2006 5/1/2016 195 Actual/360 120 118 360 358 5/1/2006 4/1/2016 196 Actual/360 120 118 348 348 5/1/2006 4/1/2016 197 Actual/360 120 119 300 299 6/1/2006 5/1/2016 198 Actual/360 120 120 300 300 7/1/2006 6/1/2016 ------------------------------------------------------------------------------------------------------------------------------------ 199 Actual/360 120 117 360 357 4/1/2006 3/1/2016 200 Actual/360 120 119 360 359 6/1/2006 5/1/2016 201 Actual/360 120 118 240 238 5/1/2006 4/1/2016 202 Actual/360 120 118 360 360 5/1/2006 4/1/2016 203 Actual/360 120 119 360 360 6/1/2006 5/1/2016 ------------------------------------------------------------------------------------------------------------------------------------ 204 Actual/360 120 119 360 359 6/1/2006 5/1/2016 205 Actual/360 120 120 360 360 7/1/2006 6/1/2016 206 Actual/360 120 119 360 359 6/1/2006 5/1/2016 207 Actual/360 120 118 360 358 5/1/2006 4/1/2016 208 Actual/360 120 119 360 359 6/1/2006 5/1/2016 ------------------------------------------------------------------------------------------------------------------------------------ 209 Actual/360 120 118 360 358 5/1/2006 4/1/2016 210 Actual/360 120 118 0 0 5/1/2006 4/1/2016 211 Actual/360 120 117 360 357 4/1/2006 3/1/2016 212 Actual/360 120 119 300 299 6/1/2006 5/1/2016 213 Actual/360 120 120 360 360 7/1/2006 6/1/2016 ------------------------------------------------------------------------------------------------------------------------------------ ANNUAL MONTHLY MONTHLY REMAINING DEBT DEBT DEBT SERVICE INTEREST ONLY ID SERVICE($)(4)(5) SERVICE($)(4)(5) AFTER IO($)(4)(5) PERIOD (MOS.) LOCKBOX LOCKBOX TYPE ------------------------------------------------------------------------------------------------------------------------------------ 1 8,857,954 738,162.86 896,707.37 34 Yes Hard 2 8,859,488 738,290.65 893,491.07 60 Yes Hard 3 5,170,504 430,875.32 521,540.57 21 Yes Hard 4 2,925,881 243,823.38 NAP 120 Yes Springing Hard 4-a -------------------------------------------------------------------------------------------------------------------------------- 4-b 4-c 4-d 4-e 5 2,790,552 232,545.98 272,115.72 59 Yes Springing Hard -------------------------------------------------------------------------------------------------------------------------------- 6 2,674,918 222,909.81 262,625.11 46 Yes Hard 7 2,159,695 179,974.57 214,675.62 34 No NAP 7-a 7-b 7-c -------------------------------------------------------------------------------------------------------------------------------- 7-d 7-e 8 2,275,851 189,654.21 NAP No NAP 9 1,995,345 166,278.75 192,643.58 23 No NAP 9-a -------------------------------------------------------------------------------------------------------------------------------- 9-b 9-c 9-d 10 1,816,208 151,350.63 181,033.88 58 Yes Hard 11 1,702,208 141,850.66 169,201.01 34 No NAP -------------------------------------------------------------------------------------------------------------------------------- 11-a 11-b 11-c 11-d 11-e -------------------------------------------------------------------------------------------------------------------------------- 12 1,319,200 109,933.33 NAP 81 No NAP 13 1,615,809 134,650.78 160,190.05 23 Yes Hard 14 1,307,108 108,925.67 NAP 81 No NAP 15 1,270,200 105,850.00 132,083.29 6 No NAP 16 1,352,528 112,710.65 134,953.19 58 Yes Springing Hard -------------------------------------------------------------------------------------------------------------------------------- 17 1,239,175 103,264.58 123,485.73 59 Yes Hard 18 1,585,881 132,156.76 NAP Yes Hard 18-a 18-b 18-c -------------------------------------------------------------------------------------------------------------------------------- 18-d 18-e 19 1,130,066 94,172.13 115,587.73 57 Yes Hard 20 1,169,871 97,489.22 117,724.89 33 Yes Hard 21 1,224,129 102,010.74 119,535.64 59 No NAP -------------------------------------------------------------------------------------------------------------------------------- 22 1,092,202 91,016.81 109,472.96 59 Yes Springing Hard 23 1,437,394 119,782.82 NAP No NAP 24 983,310 81,942.50 100,940.75 58 Yes Soft, Springing Hard 25 1,214,851 101,237.62 NAP No NAP 26 1,172,669 97,722.40 NAP No NAP -------------------------------------------------------------------------------------------------------------------------------- 27 681,979 56,831.60 66,228.72 60 Yes Springing Hard 28 379,700 31,641.66 36,774.73 60 Yes Springing Hard 29 946,704 78,891.96 95,337.80 58 Yes Hard 30 973,972 81,164.34 97,045.54 22 Yes Hard 31 1,147,897 95,658.06 NAP No NAP -------------------------------------------------------------------------------------------------------------------------------- 32 1,065,615 88,801.27 NAP Yes Hard 33 871,792 72,649.36 86,283.34 21 No NAP 34 1,033,381 86,115.08 NAP No NAP 35 804,570 67,047.46 81,194.26 21 Yes Hard 36 797,690 66,474.15 80,380.08 59 No NAP -------------------------------------------------------------------------------------------------------------------------------- 37 789,609 65,800.71 85,886.97 24 No NAP 38 818,513 68,209.38 85,379.66 22 Yes Hard 39 731,521 60,960.07 74,220.91 23 No NAP 40 930,290 77,524.16 NAP Yes Springing Hard 41 731,673 60,972.74 73,678.18 10 No NAP -------------------------------------------------------------------------------------------------------------------------------- 42 940,888 78,407.32 NAP Yes Springing Hard 43 713,955 59,496.27 71,584.23 22 No NAP 44 681,120 56,760.03 69,431.23 31 Yes Hard 45 679,095 56,591.26 NAP 57 Yes Springing Hard 46 715,116 59,593.01 69,830.77 11 No NAP -------------------------------------------------------------------------------------------------------------------------------- 47 660,538 55,044.87 66,163.43 34 No NAP 48 640,318 53,359.87 68,778.54 36 No NAP 49 571,141 47,595.06 NAP 117 No NAP 50 713,823 59,485.28 NAP No NAP 51 689,362 57,446.84 NAP No NAP -------------------------------------------------------------------------------------------------------------------------------- 51-a 51-b 52 677,018 56,418.20 NAP No NAP 53 574,692 47,891.04 56,539.18 60 No NAP 54 659,092 54,924.33 NAP No NAP -------------------------------------------------------------------------------------------------------------------------------- 55 535,414 44,617.87 53,630.27 23 No NAP 56 658,359 54,863.25 NAP No NAP 57 635,182 52,931.83 NAP No NAP 58 627,517 52,293.09 NAP No NAP 59 494,221 41,185.08 NAP 116 No NAP -------------------------------------------------------------------------------------------------------------------------------- 60 500,795 41,732.91 50,546.92 3 No NAP 61 496,983 41,415.25 50,242.95 59 No NAP -------------------------------------------------------------------------------------------------------------------------------- 62 513,372 42,781.04 51,158.38 34 Yes Springing Hard 63 637,387 53,115.55 NAP Yes Hard 64 727,865 60,655.43 NAP No NAP -------------------------------------------------------------------------------------------------------------------------------- 65 604,215 50,351.28 NAP Yes Hard 66 551,556 45,962.96 55,982.22 23 Yes Springing Hard 67 625,116 52,092.96 NAP No NAP 68 477,955 39,829.61 48,286.22 59 No NAP 69 576,230 48,019.13 NAP No NAP -------------------------------------------------------------------------------------------------------------------------------- 70 559,075 46,589.59 NAP No NAP 71 461,522 38,460.19 46,381.35 22 No NAP 72 657,829 54,819.12 NAP Yes Springing Hard 73 650,000 54,166.64 NAP Yes Springing Hard 74 549,906 45,825.48 NAP No NAP -------------------------------------------------------------------------------------------------------------------------------- 75 542,356 45,196.37 NAP No NAP 76 449,193 37,432.78 45,172.42 59 No NAP 77 543,664 45,305.35 NAP No NAP 78 554,658 46,221.47 NAP Yes Springing Hard 79 420,890 35,074.15 NAP 116 No NAP -------------------------------------------------------------------------------------------------------------------------------- 80 426,594 35,549.48 43,103.23 32 No NAP 80-a 80-b 81 441,802 36,816.84 44,054.25 12 No NAP 82 441,042 36,753.47 44,006.48 24 No NAP -------------------------------------------------------------------------------------------------------------------------------- 83 435,649 36,304.07 43,341.89 46 Yes Hard 84 509,122 42,426.83 NAP No NAP 85 516,229 43,019.10 NAP No NAP 86 497,061 41,421.79 NAP Yes Springing Hard 86-a -------------------------------------------------------------------------------------------------------------------------------- 86-b 87 407,294 33,941.20 41,041.47 22 Yes Springing Hard 88 446,745 37,228.73 43,408.06 23 Yes Springing Hard 89 392,476 32,706.37 39,877.09 21 Yes Hard 90 389,637 32,469.79 39,701.32 58 No NAP -------------------------------------------------------------------------------------------------------------------------------- 91 509,578 42,464.86 NAP No NAP 92 533,537 44,461.44 NAP No NAP 93 405,758 33,813.19 40,485.96 11 No NAP 94 374,711 31,225.95 NAP 115 No NAP 95 488,725 40,727.09 NAP No NAP -------------------------------------------------------------------------------------------------------------------------------- 96 510,671 42,555.95 NAP Yes Springing Hard 97 485,091 40,424.29 NAP No NAP 98 474,191 39,515.88 NAP No NAP 99 463,290 38,607.46 NAP No NAP 100 360,255 30,021.25 36,326.04 10 No NAP -------------------------------------------------------------------------------------------------------------------------------- 101 364,088 30,340.63 36,565.23 10 No NAP 102 353,150 29,429.18 NAP 116 Yes Springing Hard 103 362,909 30,242.40 38,490.42 19 Yes Springing Hard 104 427,537 35,628.09 NAP No NAP 105 329,675 27,472.92 NAP 117 Yes Springing Hard -------------------------------------------------------------------------------------------------------------------------------- 106 420,687 35,057.29 NAP No NAP 107 332,272 27,689.31 33,924.43 58 No NAP 108 424,758 35,396.46 NAP No NAP 109 420,367 35,030.62 NAP No NAP 110 239,498 19,958.19 NAP No NAP -------------------------------------------------------------------------------------------------------------------------------- 111 158,437 13,203.11 NAP No NAP 112 395,285 32,940.39 NAP No NAP 113 331,238 27,603.13 32,763.42 9 Yes Springing Hard 114 372,673 31,056.07 NAP No NAP 115 379,725 31,643.74 NAP Yes Hard -------------------------------------------------------------------------------------------------------------------------------- 116 288,036 24,003.04 NAP 115 No NAP 117 372,830 31,069.16 NAP No NAP 118 298,357 24,863.09 29,827.04 11 No NAP 119 294,535 24,544.56 29,369.50 34 No NAP 120 350,525 29,210.41 NAP No NAP -------------------------------------------------------------------------------------------------------------------------------- 121 338,794 28,232.80 NAP No NAP 122 352,816 29,401.36 NAP No NAP 123 276,913 23,076.11 27,828.81 21 No NAP 124 413,314 34,442.80 NAP No NAP 125 328,490 27,374.20 NAP Yes Springing Hard -------------------------------------------------------------------------------------------------------------------------------- 126 303,014 25,251.15 NAP No NAP 127 253,896 21,158.00 27,355.70 23 No NAP 128 248,504 20,708.68 24,957.22 22 No NAP 129 293,801 24,483.39 NAP No NAP 130 347,550 28,962.48 NAP No NAP -------------------------------------------------------------------------------------------------------------------------------- 131 292,052 24,337.66 NAP No NAP 132 293,919 24,493.28 NAP No NAP 133 261,139 21,761.60 25,329.80 23 No NAP 134 249,612 20,801.00 24,445.02 35 No NAP 135 225,083 18,756.94 NAP 118 No NAP -------------------------------------------------------------------------------------------------------------------------------- 136 225,083 18,756.94 NAP 118 No NAP 137 274,651 22,887.55 NAP Yes Springing Hard 138 285,013 23,751.06 NAP Yes Springing Hard 139 306,542 25,545.14 NAP No NAP 140 296,794 24,732.81 NAP No NAP -------------------------------------------------------------------------------------------------------------------------------- 141 283,542 23,628.54 NAP No NAP 142 275,197 22,933.06 NAP No NAP -------------------------------------------------------------------------------------------------------------------------------- 143 201,301 16,775.10 20,698.18 20 Yes Springing Hard 144 279,209 23,267.41 NAP No NAP 145 260,445 21,703.79 NAP No NAP -------------------------------------------------------------------------------------------------------------------------------- 146 257,845 21,487.12 NAP No NAP 147 262,559 21,879.95 NAP Yes Springing Hard 148 259,969 21,664.05 NAP No NAP 149 212,211 17,684.25 20,769.22 11 No NAP 150 239,471 19,955.90 NAP No NAP -------------------------------------------------------------------------------------------------------------------------------- 151 234,995 19,582.88 NAP No NAP 152 234,452 19,537.66 NAP No NAP 153 262,516 21,876.30 NAP Yes Springing Hard 154 224,022 18,668.49 NAP No NAP 155 273,120 22,759.96 NAP No NAP -------------------------------------------------------------------------------------------------------------------------------- 156 220,749 18,395.78 NAP No NAP 157 216,861 18,071.73 NAP Yes Springing Hard 158 211,037 17,586.42 NAP No NAP 159 179,458 14,954.86 17,794.10 23 No NAP 160 209,172 17,431.03 NAP Yes Springing Hard -------------------------------------------------------------------------------------------------------------------------------- 160-a 160-b 161 215,066 17,922.20 NAP No NAP 162 185,858 15,488.16 NAP No NAP 163 187,662 15,638.50 NAP No NAP -------------------------------------------------------------------------------------------------------------------------------- 164 153,873 12,822.74 15,187.78 34 No NAP 165 141,285 11,773.78 NAP 118 No NAP 166 144,479 12,039.93 14,510.01 34 No NAP 167 188,438 15,703.18 NAP No NAP 168 182,186 15,182.18 NAP No NAP -------------------------------------------------------------------------------------------------------------------------------- 169 173,550 14,462.52 NAP No NAP 170 178,517 14,876.44 NAP No NAP 171 168,985 14,082.07 NAP No NAP 172 176,765 14,730.42 NAP No NAP 173 166,003 13,833.62 NAP No NAP -------------------------------------------------------------------------------------------------------------------------------- 174 165,843 13,820.21 NAP No NAP 175 155,594 12,966.13 NAP No NAP 176 164,615 13,717.94 NAP No NAP 177 154,399 12,866.57 NAP No NAP 178 187,315 15,609.56 NAP No NAP -------------------------------------------------------------------------------------------------------------------------------- 179 151,711 12,642.59 NAP No NAP 180 150,646 12,553.84 NAP No NAP 181 118,983 9,915.21 11,832.16 34 No NAP 182 149,180 12,431.65 NAP No NAP 183 148,710 12,392.50 NAP No NAP -------------------------------------------------------------------------------------------------------------------------------- 184 144,201 12,016.74 NAP No NAP 185 142,583 11,881.90 NAP Yes Springing Hard 186 132,908 11,075.64 NAP No NAP 187 133,946 11,162.19 NAP No NAP 188 134,544 11,212.01 NAP No NAP -------------------------------------------------------------------------------------------------------------------------------- 189 129,364 10,780.34 NAP No NAP 190 152,762 12,730.16 NAP No NAP 191 114,239 9,519.91 11,052.55 22 No NAP 192 107,861 8,988.43 10,560.05 23 Yes Soft, Springing Hard 193 121,915 10,159.59 NAP No NAP -------------------------------------------------------------------------------------------------------------------------------- 194 133,063 11,088.61 NAP No NAP 195 122,571 10,214.23 NAP No NAP 196 99,895 8,324.62 10,076.15 10 No NAP 197 131,250 10,937.51 NAP No NAP 198 125,997 10,499.72 NAP No NAP -------------------------------------------------------------------------------------------------------------------------------- 199 115,732 9,644.30 NAP No NAP 200 111,876 9,323.01 NAP No NAP 201 132,078 11,006.54 NAP No NAP 202 88,208 7,350.69 8,801.30 34 No NAP 203 95,052 7,921.01 9,235.76 23 No NAP -------------------------------------------------------------------------------------------------------------------------------- 204 108,612 9,051.04 NAP No NAP 205 104,755 8,729.60 NAP No NAP 206 98,468 8,205.63 NAP No NAP 207 98,068 8,172.33 NAP No NAP 208 91,565 7,630.39 NAP No NAP -------------------------------------------------------------------------------------------------------------------------------- 209 89,135 7,427.94 NAP No NAP 210 65,420 5,451.68 NAP 118 No NAP 211 72,100 6,008.37 NAP No NAP 212 73,993 6,166.07 NAP Yes Springing Hard 213 59,860 4,988.34 NAP No NAP -------------------------------------------------------------------------------------------------------------------------------- ARD CROSSED DSCR LOAN WITH AFTER INITIAL GRACE PAYMENT APPRAISED ID (Y/N) OTHER LOANS DSCR (X) (5) IO PERIOD (X) PERIOD (DAYS) DATE VALUE ($) (6) --------------------------------------------------------------------------------------------------------------------------------- 1 No 1.51 1.24 0 5th 195,800,000 2 No 1.99 1.64 0 5th 350,000,000 3 No 1.40 1.16 0 5th 115,000,000 4 No 1.40 NAP 5 1st 62,700,000 4-a 18,000,000 --------------------------------------------------------------------------------------------------------------------------------- 4-b 15,000,000 4-c 12,900,000 4-d 10,500,000 4-e 6,300,000 5 No 1.46 1.25 5 1st 57,500,000 --------------------------------------------------------------------------------------------------------------------------------- 6 No 1.57 1.33 5 1st 60,000,000 7 No 1.41 1.18 0 5th 45,700,000 7-a 16,400,000 7-b 11,300,000 7-c 7,500,000 --------------------------------------------------------------------------------------------------------------------------------- 7-d 6,000,000 7-e 4,500,000 8 No 1.20 NAP 0 5th 45,700,000 9 Yes 1.39 1.20 0 1st 39,590,000 9-a 21,000,000 --------------------------------------------------------------------------------------------------------------------------------- 9-b 9,800,000 9-c 5,690,000 9-d 3,100,000 10 No 1.46 1.22 5 1st 44,000,000 11 No 1.42 1.19 0 5th 37,200,000 --------------------------------------------------------------------------------------------------------------------------------- 11-a 13,100,000 11-b 7,800,000 11-c 7,000,000 11-d 5,000,000 11-e 4,300,000 --------------------------------------------------------------------------------------------------------------------------------- 12 No 2.24 NAP 0 1st 49,150,000 13 No 1.36 1.14 0 5th 44,000,000 14 No 2.34 NAP 0 1st 49,000,000 15 No 1.51 1.21 0 5th 30,300,000 16 Yes 1.46 1.22 0 5th 32,500,000 --------------------------------------------------------------------------------------------------------------------------------- 17 No 1.43 1.20 0 1st 28,700,000 18 No 1.72 NAP 0 1st 33,100,000 18-a 9,300,000 18-b 7,100,000 18-c 6,000,000 --------------------------------------------------------------------------------------------------------------------------------- 18-d 5,700,000 18-e 5,000,000 19 No 1.51 1.23 0 1st 25,600,000 20 Yes 1.56 1.29 5 1st 27,800,000 21 No 1.45 1.24 0 1st 26,560,000 --------------------------------------------------------------------------------------------------------------------------------- 22 No 1.41 1.18 5 1st 29,000,000 23 Yes 1.23 NAP 0 1st 26,750,000 24 No 1.69 1.37 0 1st 24,850,000 25 No 1.61 NAP 0 1st 27,900,000 26 No 1.66 NAP 0 5th 30,000,000 --------------------------------------------------------------------------------------------------------------------------------- 27 Yes Crossed A 1.40 1.20 5 1st 15,000,000 28 Yes Crossed A 1.40 1.20 5 1st 7,930,000 29 No 1.90 1.57 5 1st 30,000,000 30 No 1.45 1.21 5 1st 23,200,000 31 No 1.37 NAP 5 1st 22,500,000 --------------------------------------------------------------------------------------------------------------------------------- 32 Yes 1.20 NAP 0 5th 21,000,000 33 No 1.37 1.16 0 1st 22,700,000 34 No 1.74 NAP 5 1st 21,200,000 35 No 1.46 1.21 5 1st 19,100,000 36 No 1.45 1.20 0 5th 17,600,000 --------------------------------------------------------------------------------------------------------------------------------- 37 No 1.20 NAP 0 1st 18,900,000 38 Yes 1.71 1.36 5 1st 19,600,000 39 No 1.65 1.35 0 5th 18,800,000 40 No 1.84 NAP 0 1st 18,200,000 41 No 1.62 1.34 5 1st 17,850,000 --------------------------------------------------------------------------------------------------------------------------------- 42 Yes 1.20 NAP 0 5th 16,800,000 43 No 1.52 1.26 5 1st 16,000,000 44 No 1.70 1.39 5 1st 16,700,000 45 Yes 1.84 NAP 0 1st 19,150,000 46 No 1.44 1.23 7 1st 18,280,000 --------------------------------------------------------------------------------------------------------------------------------- 47 No 1.42 1.18 0 5th 19,200,000 48 No 1.42 1.10 0 1st 13,800,000 49 Yes 1.43 NAP 5 1st 13,130,000 50 No 1.27 NAP 0 5th 14,500,000 51 No 1.15 NAP 0 1st 12,800,000 --------------------------------------------------------------------------------------------------------------------------------- 51-a 10,000,000 51-b 2,800,000 52 No 1.21 NAP 0 5th 11,970,000 53 No 1.57 1.33 0 3rd 16,300,000 54 No 1.40 NAP 5 1st 15,100,000 --------------------------------------------------------------------------------------------------------------------------------- 55 No 1.52 1.26 0 5th 14,200,000 56 No 1.20 NAP 5 1st 12,100,000 57 No 1.21 NAP 0 5th 13,050,000 58 No 1.21 NAP 0 5th 11,250,000 59 Yes 1.48 NAP 5 1st 11,970,000 --------------------------------------------------------------------------------------------------------------------------------- 60 Yes 1.53 1.26 0 1st 14,400,000 61 No 1.69 1.40 5 1st 13,300,000 --------------------------------------------------------------------------------------------------------------------------------- 62 Yes 1.44 1.20 5 1st 11,100,000 63 No 1.36 NAP 0 5th 13,200,000 64 No 1.40 NAP 5 1st 12,800,000 --------------------------------------------------------------------------------------------------------------------------------- 65 Yes 1.21 NAP 0 5th 13,550,000 66 Yes 1.72 1.41 5 1st 12,400,000 67 No 1.86 NAP 5 1st 12,700,000 68 No 1.70 1.40 5 1st 12,680,000 69 No 1.23 NAP 5 1st 10,300,000 --------------------------------------------------------------------------------------------------------------------------------- 70 No 1.29 NAP 0 1st 10,100,000 71 No 1.47 1.22 0 5th 10,700,000 72 No 1.58 NAP 5 1st 11,100,000 73 No 1.44 NAP 5 1st 13,100,000 74 No 1.31 NAP 0 1st 11,200,000 --------------------------------------------------------------------------------------------------------------------------------- 75 No 1.26 NAP 5 1st 13,100,000 76 No 1.46 1.21 0 5th 11,350,000 77 No 1.20 NAP 2 1st 10,800,000 78 Yes 1.21 NAP 5 1st 10,450,000 79 Yes 1.49 NAP 5 1st 10,150,000 --------------------------------------------------------------------------------------------------------------------------------- 80 No 1.66 1.37 5 1st 13,840,000 80-a 10,750,000 80-b 3,090,000 81 No 1.70 1.42 0 1st 10,700,000 82 No 1.48 1.23 5 1st 9,400,000 --------------------------------------------------------------------------------------------------------------------------------- 83 No 1.47 1.23 5 1st 9,500,000 84 No 1.20 NAP 5 1st 10,900,000 85 No 1.20 NAP 5 1st 10,000,000 86 No 1.55 NAP 5 1st 10,420,000 86-a 5,650,000 --------------------------------------------------------------------------------------------------------------------------------- 86-b 4,770,000 87 No 1.48 1.22 5 1st 10,000,000 88 No 1.82 1.56 5 1st 9,600,000 89 No 1.49 1.23 0 5th 9,000,000 90 No 1.78 1.45 0 5th 13,400,000 --------------------------------------------------------------------------------------------------------------------------------- 91 No 1.31 NAP 5 1st 9,110,000 92 No 1.55 NAP 5 1st 8,900,000 93 No 1.45 1.21 0 3rd 8,700,000 94 Yes 1.45 NAP 5 1st 9,030,000 95 No 1.89 NAP 5 1st 9,900,000 --------------------------------------------------------------------------------------------------------------------------------- 96 No 1.90 NAP 0 1st 10,800,000 97 No 1.65 NAP 5 1st 9,700,000 98 No 1.64 NAP 5 1st 9,800,000 99 No 1.56 NAP 5 1st 9,100,000 100 No 1.77 1.47 0 3rd 8,700,000 --------------------------------------------------------------------------------------------------------------------------------- 101 No 1.53 1.27 0 1st 8,100,000 102 No 2.12 NAP 5 1st 10,200,000 103 Yes 2.05 1.61 5 1st 9,600,000 104 No 1.42 NAP 5 1st 7,810,000 105 Yes 2.31 NAP 0 5th 12,500,000 --------------------------------------------------------------------------------------------------------------------------------- 106 No 1.21 NAP 0 5th 7,940,000 107 No 1.59 1.30 5 1st 8,300,000 108 No 1.32 NAP 0 1st 8,100,000 109 No 1.40 NAP 5 1st 8,480,000 110 No Crossed B 1.51 NAP 0 1st 5,410,000 --------------------------------------------------------------------------------------------------------------------------------- 111 No Crossed B 1.51 NAP 0 1st 3,620,000 112 No 1.28 NAP 5 1st 7,600,000 113 Yes 1.51 1.27 0 5th 6,900,000 114 No 1.81 NAP 5 1st 11,700,000 115 Yes 1.30 NAP 0 5th 8,500,000 --------------------------------------------------------------------------------------------------------------------------------- 116 Yes 1.49 NAP 5 1st 7,010,000 117 No 1.26 NAP 5 1st 7,600,000 118 No 1.53 1.28 3 1st 7,175,000 119 No 1.89 1.58 0 5th 9,400,000 120 No 1.20 NAP 0 1st 6,250,000 --------------------------------------------------------------------------------------------------------------------------------- 121 No 1.50 NAP 0 5th 7,900,000 122 No 1.41 NAP 0 1st 6,870,000 123 No 1.49 1.23 5 1st 6,800,000 124 No 2.05 NAP 5 1st 9,200,000 125 No 1.24 NAP 5 1st 7,530,000 --------------------------------------------------------------------------------------------------------------------------------- 126 No 1.51 NAP 5 1st 7,200,000 127 No 1.90 1.47 0 1st 6,400,000 128 No 1.84 1.52 0 3rd 8,200,000 129 No 1.27 NAP 0 1st 6,100,000 130 No 1.11 NAP 0 5th 6,000,000 --------------------------------------------------------------------------------------------------------------------------------- 131 No 1.23 NAP 0 1st 5,300,000 132 No 1.37 NAP 0 1st 5,870,000 133 No 1.45 1.25 5 1st 5,900,000 134 No 1.46 1.24 5 1st 6,210,000 135 No 2.88 NAP 0 1st 10,100,000 --------------------------------------------------------------------------------------------------------------------------------- 136 No 2.13 NAP 0 1st 8,500,000 137 Yes 1.27 NAP 5 1st 6,600,000 138 No 1.35 NAP 5 1st 6,825,000 139 No 1.69 NAP 5 1st 5,400,000 140 No 1.27 NAP 5 1st 5,065,000 --------------------------------------------------------------------------------------------------------------------------------- 141 No 1.20 NAP 5 1st 4,900,000 142 No 1.59 NAP 0 1st 6,800,000 --------------------------------------------------------------------------------------------------------------------------------- 143 No 1.62 1.31 5 1st 4,700,000 144 No 1.23 NAP 5 1st 6,200,000 145 No 1.38 NAP 0 1st 7,000,000 --------------------------------------------------------------------------------------------------------------------------------- 146 No 1.27 NAP 0 1st 5,025,000 147 No 1.38 NAP 5 1st 6,100,000 148 No 1.36 NAP 5 1st 5,750,000 149 No 1.40 1.20 0 5th 4,735,000 150 No 1.26 NAP 0 1st 4,650,000 --------------------------------------------------------------------------------------------------------------------------------- 151 No 1.32 NAP 0 1st 4,520,000 152 No 1.27 NAP 5 1st 4,950,000 153 Yes 1.62 NAP 5 1st 5,400,000 154 No 1.37 NAP 0 1st 4,650,000 155 No 1.28 NAP 5 1st 4,300,000 --------------------------------------------------------------------------------------------------------------------------------- 156 No 1.25 NAP 0 1st 5,100,000 157 Yes 1.50 NAP 5 1st 5,330,000 158 No 1.33 NAP 0 1st 4,100,000 159 No 1.43 1.20 0 5th 3,970,000 160 Yes 2.25 NAP 0 5th 7,600,000 --------------------------------------------------------------------------------------------------------------------------------- 160-a 3,900,000 160-b 3,700,000 161 No 1.27 NAP 5 1st 4,900,000 162 No 1.27 NAP 0 1st 4,000,000 163 No 1.43 NAP 5 1st 4,180,000 --------------------------------------------------------------------------------------------------------------------------------- 164 No 1.74 1.47 5 1st 3,630,000 165 No 1.85 NAP 5 1st 3,850,000 166 No 1.84 1.52 5 1st 4,065,000 167 No 1.30 NAP 5 1st 3,800,000 168 No 1.32 NAP 5 1st 3,930,000 --------------------------------------------------------------------------------------------------------------------------------- 169 No 1.70 NAP 0 1st 4,000,000 170 No 1.26 NAP 5 1st 3,100,000 171 No 1.39 NAP 5 1st 5,600,000 172 No 1.54 NAP 5 1st 3,510,000 173 No 1.57 NAP 0 1st 4,100,000 --------------------------------------------------------------------------------------------------------------------------------- 174 No 1.33 NAP 5 1st 3,300,000 175 No 1.20 NAP 5 1st 3,000,000 176 No 1.56 NAP 5 1st 4,000,000 177 No 1.89 NAP 0 1st 5,100,000 178 No 1.53 NAP 0 1st 5,700,000 --------------------------------------------------------------------------------------------------------------------------------- 179 No 1.44 NAP 0 3rd 3,100,000 180 No 1.37 NAP 5 1st 3,030,000 181 No 1.48 1.24 5 1st 2,750,000 182 No 1.28 NAP 5 1st 2,700,000 183 No 1.23 NAP 0 1st 2,500,000 --------------------------------------------------------------------------------------------------------------------------------- 184 No 1.54 NAP 0 1st 3,300,000 185 Yes 1.34 NAP 5 1st 2,700,000 186 No 1.34 NAP 0 1st 2,500,000 187 No 1.30 NAP 5 1st 2,400,000 188 No 1.20 NAP 5 1st 2,250,000 --------------------------------------------------------------------------------------------------------------------------------- 189 No 1.23 NAP 0 3rd 2,780,000 190 No 1.29 NAP 0 1st 3,100,000 191 No 1.54 1.32 5 1st 2,300,000 192 No 1.41 1.20 5 1st 2,600,000 193 No 1.36 NAP 0 1st 2,700,000 --------------------------------------------------------------------------------------------------------------------------------- 194 No 1.24 NAP 0 1st 2,350,000 195 No 1.40 NAP 0 1st 2,700,000 196 No 1.49 1.23 0 1st 2,250,000 197 No 1.38 NAP 5 1st 2,300,000 198 No 1.83 NAP 5 1st 2,600,000 --------------------------------------------------------------------------------------------------------------------------------- 199 No 1.37 NAP 5 1st 2,400,000 200 No 1.23 NAP 0 1st 2,040,000 201 No 1.33 NAP 0 1st 2,800,000 202 No 2.30 1.92 0 1st 3,820,000 203 No 2.33 2.00 5 1st 2,755,000 --------------------------------------------------------------------------------------------------------------------------------- 204 No 1.30 NAP 5 1st 1,880,000 205 No 1.72 NAP 5 1st 2,700,000 206 No 1.47 NAP 5 1st 2,460,000 207 No 1.34 NAP 5 1st 1,825,000 208 No 1.20 NAP 5 1st 2,600,000 --------------------------------------------------------------------------------------------------------------------------------- 209 No 1.29 NAP 5 1st 1,725,000 210 No 2.81 NAP 0 1st 3,100,000 211 No 1.28 NAP 5 1st 1,825,000 212 No 1.57 NAP 5 1st 1,700,000 213 No 2.28 NAP 5 1st 2,100,000 --------------------------------------------------------------------------------------------------------------------------------- CUT-OFF LTV APPRAISAL DATE LTV RATIO AT ID AS-OF DATE (6) RATIO (6) MATURITY OR ARD (6) ADDRESS ------------------------------------------------------------------------------------------------------------------------------------ 1 2/20/2006 79.9% 71.7% 3195 28th Street SE 2 5/1/2006 44.3% 41.3% 1675 Broadway 3 1/13/2006 78.7% 69.3% 440-490 State Route 211 East 4 Various 75.0% 75.0% Various 4-a 2/14/2006 5900 Broken Sound Parkway ------------------------------------------------------------------------------------------------------------------------------------ 4-b 2/14/2006 6000 Broken Sound Parkway 4-c 2/21/2006 990 South Rogers Circle 4-d 2/14/2006 6100 NW Broken Sound Parkway 4-e 2/17/2006 2150 SW 10th Street 5 3/9/2006 77.4% 72.7% 6600 - 6868 France Avenue South ------------------------------------------------------------------------------------------------------------------------------------ 6 12/1/2005 72.5% 66.9% 1301 East 9th Street 7 1/23/2006 79.5% 71.8% Various 7-a 1/23/2006 3875 Embassy Parkway 7-b 1/23/2006 3700 Embassy Parkway 7-c 1/23/2006 4040 Embassy Parkway ------------------------------------------------------------------------------------------------------------------------------------ 7-d 1/18/2006 3560 West Market Office 7-e 1/23/2006 3500 Embassy Parkway 8 12/1/2005 72.1% 60.7% 3251 Wall Boulevard 9 Various 78.0% 74.5% Various 9-a 3/2/2006 11825-11995 Starcrest ------------------------------------------------------------------------------------------------------------------------------------ 9-b 3/2/2006 7 & 11 Leigh Fisher, 25 Butterfield Trails & 15 Zane Grey 9-c 3/9/2006 3700 & 3701 Ursula 9-d 3/2/2006 4950 Avenida Creel 10 2/3/2006 70.0% 65.4% 5370 Stone Mountain Highway 11 Various 77.0% 69.5% Various ------------------------------------------------------------------------------------------------------------------------------------ 11-a 1/23/2006 3925 Embassy Parkway 11-b 1/23/2006 4000 Embassy Parkway 11-c 1/23/2006 3737 Embassy Parkway 11-d 1/23/2006 3770 Embassy Parkway 11-e 1/18/2006 5399 Lauby Road ------------------------------------------------------------------------------------------------------------------------------------ 12 1/20/2006 55.3% 55.3% 13600 Baltimore Avenue 13 3/31/2006 61.4% 59.2% 6312 South Fiddlers Green Circle 14 1/1/2006 54.7% 54.7% 20 Ash Brook Road 15 9/13/2005 79.2% 67.4% 9019-9041 North Deerwood Drive and 9000-9151 North Deerbrook Trail 16 2/17/2006 70.8% 69.1% 3312 North Berkeley Lake Road ------------------------------------------------------------------------------------------------------------------------------------ 17 3/17/2006 73.2% 68.4% 38 W, 195 W and 217 W. Lancaster Avenue 18 1/1/2006 63.1% 48.9% Various 18-a 1/1/2006 416 S. Independence Blvd 18-b 1/1/2006 6785 Fairfield Business Center Drive 18-c 1/1/2006 7021 Tara Blvd ------------------------------------------------------------------------------------------------------------------------------------ 18-d 1/1/2006 6067 Buford Highway 18-e 1/1/2006 540 Pressley Road 19 1/17/2006 80.1% 74.5% I-189 at U.S. Route 7 20 10/1/2005 73.2% 65.8% One Scott Way 21 3/1/2006 73.8% 69.3% 9500-9622 Roberts Road & 8051 & 8069 95th Street ------------------------------------------------------------------------------------------------------------------------------------ 22 4/3/2006 64.8% 60.5% SEC Rancho Santa Fe Rd & Camino De Los Coches 23 2/17/2006 68.7% 53.7% 1314 Douglas Street 24 12/2/2005 72.4% 67.3% 15000 West Airport 25 12/21/2005 62.7% 52.8% 19801 South Santa Fe Avenue 26 11/29/2005 58.2% 48.6% 10057-10137 Adamo Drive ------------------------------------------------------------------------------------------------------------------------------------ 27 3/7/2006 72.7% 68.4% 2020 West State Highway 114 28 3/7/2006 72.7% 68.4% 2040 West State Hwy 114 29 2/1/2006 55.0% 51.3% 29-35 9th Avenue 30 1/3/2006 71.1% 62.9% 3003 Highland Avenue 31 1/27/2006 68.8% 59.0% 2141 Central Park Avenue ------------------------------------------------------------------------------------------------------------------------------------ 32 1/4/2006 72.9% 61.4% 3730-3740 Crenshaw Boulevard 33 1/13/2006 63.9% 56.6% 7901 East Lowry Boulevard 34 12/19/2005 67.1% 60.9% 717 South Highway 101 35 12/28/2005 73.8% 65.0% 2226-2450 North Richmond Road 36 3/8/2006 79.1% 73.8% 1 Russett Lane ------------------------------------------------------------------------------------------------------------------------------------ 37 3/16/2006 73.6% 65.6% 2501 165th Street 38 1/23/2006 68.9% 58.3% 85 Glastonbury Blvd. 39 2/17/2006 69.1% 60.8% 2000 Lincoln Way 40 4/1/2006 71.3% 60.6% 19324 Alderwood Mall Parkway 41 11/9/2006 71.4% 61.6% 8550, 8410, 8400 Datapoint Dr. ------------------------------------------------------------------------------------------------------------------------------------ 42 10/1/2005 75.3% 64.6% 2000 44th Street Southwest 43 1/9/2006 76.9% 67.8% 9821 & 9822 Fallard Court 44 12/1/2006 73.4% 65.7% 9 Finderne Avenue 45 11/23/2005 62.8% 62.8% 4827& 4887 S Wadsworth Way 46 2/9/2006 62.6% 59.7% 2580 Senter Road ------------------------------------------------------------------------------------------------------------------------------------ 47 12/28/2005 59.1% 53.2% 1200 Clay Street 48 1/1/2007 78.8% 67.4% 111 North Washington Street 49 12/1/2005 75.0% 75.0% 5150 Center Street 50 2/28/2006 65.5% 56.3% 500 Woodlake Drive 51 Various 74.2% 63.2% Various ------------------------------------------------------------------------------------------------------------------------------------ 51-a 3/27/2006 3939 East Camelback Road 51-b 3/22/2006 825 - 851 West University Drive 52 4/1/2006 78.5% 66.8% 940 N Central Avenue 53 3/28/2006 57.7% 54.0% 67 North Dobson Road 54 3/22/2006 61.3% 51.9% 2901-2961 West MacArthur Boulevard ------------------------------------------------------------------------------------------------------------------------------------ 55 1/17/2006 64.8% 57.2% 6565 McCallum Boulevard 56 2/17/2006 76.0% 64.5% 1300 Virginia Drive 57 1/27/2006 69.5% 58.8% 7400 East Golf Links Road 58 12/27/2005 79.8% 67.4% 7102 Highway 70 South 59 12/1/2005 74.7% 74.7% 3870 Highway D ------------------------------------------------------------------------------------------------------------------------------------ 60 12/6/2005 62.0% 51.9% 770 East El Camino Real 61 3/15/2006 65.8% 61.3% 5160 Vineland Avenue ------------------------------------------------------------------------------------------------------------------------------------ 62 1/17/2006 78.4% 70.7% 3041-3135 Mechanicsville Turnpike 63 2/9/2006 65.8% 56.3% 870 Duane Avenue 64 4/1/2006 67.1% 46.4% 1015 Paul Bunyan Drive S ------------------------------------------------------------------------------------------------------------------------------------ 65 1/6/2006 63.3% 53.6% 9312 Rosecrans Ave; 14301-14379 Clark Ave 66 3/14/2006 68.5% 58.6% 835 Upper Union Street 67 2/8/2006 66.8% 60.8% 9310 Kearny Mesa Road 68 3/16/2006 66.2% 61.7% 9245-9465 South Broadway 69 3/31/2006 79.1% 67.1% 6605-6655 Crain Highway ------------------------------------------------------------------------------------------------------------------------------------ 70 10/3/2005 79.8% 67.3% 899 Dogwood Avenue 71 1/20/2006 74.8% 65.9% 9616 Micron Avenue 72 1/1/2006 72.1% 57.2% 8955 Lakota Drive West 73 3/16/2006 61.0% 48.3% 14619 Potomac Mills Road 74 3/1/2006 71.3% 59.9% 51375 Gratiot Avenue and 23 Mile & Gratiot Avenue ------------------------------------------------------------------------------------------------------------------------------------ 75 2/8/2006 60.4% 50.7% 1102-1110 8th Avenue 76 3/20/2006 68.7% 64.1% 340-10 West Duarte Road 77 10/14/2005 71.6% 60.6% 2240 & 2340 W. University Drive 78 2/24/2006 73.2% 62.4% 7945 Orion Avenue 79 12/1/2005 75.0% 75.0% 201 West 10th Avenue ------------------------------------------------------------------------------------------------------------------------------------ 80 Various 54.2% 48.7% Various 80-a 12/3/2005 40356 Murrieta Hot Springs Road 80-b 12/8/2005 6522-6552 Bolsa Avenue 81 4/1/2006 70.1% 60.6% 869 Lynnhaven Parkway 82 3/28/2006 79.8% 70.5% 1366 Tappahannock Boulevard ------------------------------------------------------------------------------------------------------------------------------------ 83 1/26/2006 77.4% 71.1% 15020 Shady Grove Road 84 3/2/2006 67.4% 56.7% 600 North Humboldt Avenue 85 1/5/2006 72.8% 61.8% 1805 Oates Drive 86 1/5/2006 69.1% 58.2% Various 86-a 1/5/2006 1207 West McDermott Drive ------------------------------------------------------------------------------------------------------------------------------------ 86-b 1/5/2006 6805 Colleyville Boulevard 87 2/2/2006 71.1% 62.6% 3500-3520 Thomas Road 88 3/16/2006 73.4% 65.6% 2436 Gum Road 89 1/1/2006 77.8% 68.3% 4824-4870 1st Avenue East 90 1/13/2006 52.2% 48.6% 3000 Windy Hill Road ------------------------------------------------------------------------------------------------------------------------------------ 91 3/7/2006 76.8% 65.5% 1935 Lor Ray Drive and 2101 E, 2101 Excalibur Road 92 11/18/2005 78.3% 60.8% 11800 108th Street 93 2/9/2006 79.3% 68.6% 7670 North Oakbrook Drive 94 11/30/2005 75.0% 75.0% 410 North Ankeny Boulevard 95 12/21/2005 67.8% 61.6% 350 West Montgomery Avenue ------------------------------------------------------------------------------------------------------------------------------------ 96 12/1/2005 61.9% 48.0% 12000 Collegiate Way 97 12/19/2005 68.7% 62.4% 3330 Rosecrans Street 98 12/20/2005 66.5% 60.4% 4540 Mission Bay Drive 99 12/20/2005 69.9% 63.5% 133 Encinitas Blvd. 100 4/1/2006 72.4% 62.4% 285 Columbiana Drive ------------------------------------------------------------------------------------------------------------------------------------ 101 2/23/2006 77.8% 67.1% 101 Lewis Drive 102 1/5/2006 61.3% 61.3% 6901 Riverport Drive 103 11/27/2005 64.8% 54.4% 2140 Motel Drive 104 11/21/2005 79.0% 66.7% 4700-4950 Research Drive 105 12/15/2005 49.4% 49.4% 615-829 SW Keck Drive ------------------------------------------------------------------------------------------------------------------------------------ 106 3/1/2006 76.7% 64.5% 4562-4587, 22563-22935 Newport Lane 107 1/19/2006 72.3% 67.2% 21 Timpany Blvd 108 1/11/2006 73.9% 62.7% 37100 Six Mile Road 109 2/7/2006 67.7% 57.9% 15701 N. Reems Rd 110 11/2/2005 62.5% 53.1% 4500 and 4512 Andrews Street ------------------------------------------------------------------------------------------------------------------------------------ 111 11/2/2005 62.5% 53.1% 5075 Cameron Street 112 1/18/2006 74.3% 62.8% 1830 Scenic Highway 113 1/10/2006 79.7% 75.8% 2736 Meadow Church Road 114 3/1/2006 47.0% 39.3% 152-286 W. Foothill Blvd. 115 1/4/2006 64.5% 54.4% 6907-6915 & 6933 La Tijera Blvd. ------------------------------------------------------------------------------------------------------------------------------------ 116 12/1/2005 75.0% 75.0% 2181 Logan Avenue 117 10/17/2005 69.0% 58.5% 481 Remainder Estate Chocolate Hole 118 3/7/2006 71.1% 61.4% 51 South Main Avenue 119 1/24/2006 53.2% 48.0% 316 Cornelia Street 120 2/28/2006 79.8% 67.5% 1305 Veterans Parkway ------------------------------------------------------------------------------------------------------------------------------------ 121 12/18/2005 63.1% 52.9% 2165 West Rugby Avenue 122 12/1/2005 72.5% 61.5% 1337 Taylor Farm Road 123 2/1/2006 70.6% 62.2% 100 Tamal Plaza 124 9/28/2005 51.1% 44.3% 7411 North Oracle Rd. 125 2/17/2006 62.3% 52.6% 399 Exterior Street ------------------------------------------------------------------------------------------------------------------------------------ 126 1/26/2006 61.0% 51.3% 1266 Furnace Brook Parkway 127 3/16/2006 67.8% 56.2% 2960 Old Hickory Blvd. 128 2/14/2006 52.4% 46.2% 269 Mt. Hermon Road 129 5/15/2006 68.8% 58.1% 1305 N. Casaloma Drive 130 1/10/2006 69.7% 45.3% 1100 Yverdon Drive ------------------------------------------------------------------------------------------------------------------------------------ 131 5/1/2006 78.5% 70.9% 7001 and 7017 Forest Hills Avenue 132 3/28/2006 70.3% 59.6% 13915 North Dysart Road 133 11/29/2005 69.5% 62.1% 4811-4815, 4831-4841, 4921-4945 W. Craig Road 134 10/31/2005 64.9% 58.9% 4401 Broadway Boulevard 135 3/8/2006 39.6% 39.6% 3 Hillside Avenue ------------------------------------------------------------------------------------------------------------------------------------ 136 3/8/2006 47.1% 47.1% 414 Highland Avenue 137 2/23/2006 60.5% 52.5% 740 Calle Plano 138 1/11/2006 58.4% 49.7% 1560 Sycamore Avenue 139 11/3/2005 73.8% 57.4% 1004 Treetops Boulevard 140 3/31/2006 77.8% 63.1% 4800 S. Hwy 41 ------------------------------------------------------------------------------------------------------------------------------------ 141 12/6/2005 79.9% 68.1% 302A - 310F North 16th Street & 1703 Fremont Drive 142 2/17/2006 57.4% 48.5% 8955 Wake Fern Drive ------------------------------------------------------------------------------------------------------------------------------------ 143 12/29/2005 78.7% 68.9% 295 Worth Avenue 144 11/1/2005 54.7% 51.4% 1240 Sherman Avenue 145 2/28/2006 52.4% 44.4% 1440-1460 Ethan Way ------------------------------------------------------------------------------------------------------------------------------------ 146 2/22/2006 72.9% 61.7% 3141 East Beardsley Road 147 4/1/2006 58.6% 50.1% 7941 Winchester Road 148 2/23/2006 60.8% 52.2% 3800 Russell Street and 1220 & 1132 SW Higgins Ave 149 3/2/2006 72.2% 63.0% 201 South Interstate Highway 45 150 3/14/2006 72.0% 61.1% 1615-1625 Grand Ave Pkwy ------------------------------------------------------------------------------------------------------------------------------------ 151 1/27/2006 73.8% 62.4% 7814 Ranch Road 620 N 152 1/11/2006 65.6% 55.9% 500-508 W. Broadway 153 3/13/2006 59.7% 47.3% 171 Faunce Corner Road 154 3/1/2006 69.1% 58.3% 25150 Bernwood Drive 155 2/9/2006 74.1% 48.9% 670 East Pine Log Road ------------------------------------------------------------------------------------------------------------------------------------ 156 2/24/2006 61.2% 51.8% 2958 Niles Street 157 3/7/2006 57.4% 48.6% 2828 Campus Parkway 158 2/14/2006 74.2% 62.5% 24611 Production Circle 159 2/28/2006 75.6% 66.9% 412 S. 13th Street & 1344 Locust Street 160 1/20/2006 39.4% 33.3% Various ------------------------------------------------------------------------------------------------------------------------------------ 160-a 1/20/2006 834 W. Market Street 160-b 1/20/2006 16803 Lorain Avenue 161 11/1/2005 54.0% 50.7% 1945 Loring Place South 162 3/13/2006 64.9% 55.2% 54 N. Central Avenue 163 2/15/2006 62.1% 52.9% 1411 West Texas Street ------------------------------------------------------------------------------------------------------------------------------------ 164 1/24/2006 70.0% 63.3% 6859-6885 Mesa Ridge Parkway 165 1/26/2006 64.9% 64.9% 1300 Post Road East 166 2/21/2006 61.5% 55.3% 1260 Holm Road & 1304 Scott Street 167 2/14/2006 65.7% 56.6% 942 Simpson Terrace 168 2/9/2006 63.5% 54.2% 3275 Coach Lane ------------------------------------------------------------------------------------------------------------------------------------ 169 11/1/2005 62.3% 52.6% 5800 Lovell Avenue 170 12/20/2005 80.3% 68.4% 8300 Egan Drive 171 12/1/2005 42.8% 36.2% 3330-3390 E. 7th St. and 665-681 Redondo Ave. 172 10/20/2005 68.1% 58.5% 7412 South 900 East 173 3/14/2006 57.3% 48.5% 5860 Columbia Pike ------------------------------------------------------------------------------------------------------------------------------------ 174 2/9/2006 70.2% 59.7% 635, 639, 651 Bridge Street 175 8/9/2005 73.8% 62.5% 5-49 Central Street 176 3/13/2006 55.0% 47.2% 12401 Middlebrook Road 177 2/13/2006 43.1% 36.4% 10000 University Boulevard 178 2/16/2006 38.5% 25.3% 505 Jefferson Road ------------------------------------------------------------------------------------------------------------------------------------ 179 2/1/2006 69.2% 58.6% 145 Windhill Road and 110-B Sunbelt Blvd 180 6/16/2006 68.0% 58.1% 2310 East Expressway 83 181 2/15/2006 72.9% 65.8% 3121 Speedway 182 1/26/2006 74.0% 63.6% 19301 and 19341 East US Highway 40 183 4/3/2006 79.9% 68.6% 8818 W Broad Street ------------------------------------------------------------------------------------------------------------------------------------ 184 2/22/2006 60.5% 51.5% 3402 Mars Court 185 1/19/2006 71.7% 61.4% 1777 Conestoga Street 186 1/11/2006 74.8% 59.7% 3205 SE 192nd Ave 187 2/10/2006 76.5% 65.4% 8801 South 1st Street 188 3/17/2006 79.9% 68.7% 5285 Manchester Drive ------------------------------------------------------------------------------------------------------------------------------------ 189 2/17/2006 64.7% 55.0% 10223 Sepulveda Boulevard 190 3/1/2006 57.8% 38.1% 1735 U.S. Route 9 191 2/8/2006 77.4% 74.8% 4400 Blalock Rd. 192 2/2/2006 66.9% 59.6% 188 Post Road West 193 3/1/2006 62.9% 53.5% 43-15 43-27 33rd Street ------------------------------------------------------------------------------------------------------------------------------------ 194 3/10/2006 72.3% 56.5% 2 Connecticut Drive South 195 2/22/2006 62.8% 53.5% 3502 Mars Way 196 2/15/2006 75.1% 64.2% 2106 North Forbes Boulevard 197 2/16/2006 73.0% 57.0% 7016 Weimer Road 198 3/24/2006 62.5% 48.6% 901 Wabash Ave. ------------------------------------------------------------------------------------------------------------------------------------ 199 10/7/2005 66.5% 56.8% 3310 & 3342 South Sandhill Road 200 3/9/2006 76.2% 64.8% 10 Putnam Pike (Route 44) 201 2/2/2006 55.1% 36.4% 350 Pleasant Valley Road 202 2/13/2006 39.3% 35.4% 2101 E. Cooley Drive 203 2/22/2006 54.4% 48.6% 1404 Route 9-D ------------------------------------------------------------------------------------------------------------------------------------ 204 2/23/2006 78.1% 66.9% 1020 36th Street SW 205 3/15/2006 51.9% 44.5% 15420 Old Columbia Pike 206 5/1/2006 56.9% 48.1% 1530-1566 Blackbird Lane, 1658-1694 Duck Drive 207 2/2/2006 73.3% 62.7% 1172 Gannon Drive 208 3/13/2006 47.1% 40.5% 503 32nd Street ------------------------------------------------------------------------------------------------------------------------------------ 209 12/27/2005 68.9% 59.3% 125 S. Bridge St. 210 3/8/2006 36.8% 36.8% 424 River Drive 211 12/15/2005 54.6% 46.6% 13633 Crenshaw Boulevard 212 2/13/2006 55.2% 43.2% 13134 West Ida Avenue 213 3/15/2006 38.1% 32.7% 20-36 Vital Way ------------------------------------------------------------------------------------------------------------------------------------ NET UNITS YEAR YEAR RENTABLE AREA SF/ OF ID CITY STATE ZIP CODE BUILT RENOVATED UNITS/ROOMS/PADS MEASURE ----------------------------------------------------------------------------------------------------------------------------------- 1 Grand Rapids MI 49512 1968 2006 397,897 Sq Ft 2 New York NY 10019 1989 NAP 761,092 Sq Ft 3 Middletown NY 10940 1971 2002 765,390 Sq Ft 4 Various FL Various Various NAP 369,444 Sq Ft 4-a Boca Raton FL 33487 2001 NAP 73,191 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 4-b Boca Raton FL 33487 2001 NAP 72,763 Sq Ft 4-c Boca Raton FL 33487 1987 NAP 122,390 Sq Ft 4-d Boca Raton FL 33487 1999 NAP 66,100 Sq Ft 4-e Deerfield Beach FL 33442 2002 NAP 35,000 Sq Ft 5 Edina MN 55435 1967-1974, 1991 NAP 448,299 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 6 Cleveland OH 44114 1964 1987/2003-2005 703,205 Sq Ft 7 Fairlawn OH 44333 Various NAP 304,416 Sq Ft 7-a Fairlawn OH 44333 1990 NAP 95,638 Sq Ft 7-b Fairlawn OH 44333 2000 NAP 78,985 Sq Ft 7-c Fairlawn OH 44333 1992 NAP 50,556 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 7-d Fairlawn OH 44333 1985 NAP 49,560 Sq Ft 7-e Fairlawn OH 44333 1995 NAP 29,677 Sq Ft 8 Gretna LA 70056 2004 NAP 280 Units 9 Various Various Various Various NAP 750,732 Sq Ft 9-a San Antonio TX 78247 1983-1984 NAP 303,331 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 9-b El Paso TX 79906 1983 NAP 263,106 Sq Ft 9-c McAllen TX 78503 1992, 1994, 2005 NAP 114,295 Sq Ft 9-d Santa Teresa NM 88008 2003 NAP 70,000 Sq Ft 10 Stone Mountain GA 30087 1991 NAP 336,663 Sq Ft 11 Various OH Various Various NAP 222,509 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 11-a Fairlawn OH 44333 1987 NAP 61,999 Sq Ft 11-b Fairlawn OH 44333 1988 NAP 56,082 Sq Ft 11-c Fairlawn OH 44333 1998 NAP 41,962 Sq Ft 11-d Fairlawn OH 44333 1999 NAP 33,528 Sq Ft 11-e Green OH 44720 1989 NAP 28,938 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 12 Laurel MD 20707 2005 NAP 139,662 Sq Ft 13 Greenwood Village CO 80111 1985 NAP 259,118 Sq Ft 14 Keene NH 06431 2003-2005 NAP 189,389 Sq Ft 15 Brown Deer WI 53223 1982 NAP 593,479 Sq Ft 16 Duluth GA 30096 1969 2005 1,054,500 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 17 Ardmore PA 19003 1921, 1972, 2001 2003 62,876 Sq Ft 18 Various Various Various Various Various 672 Rooms 18-a Virginia Beach VA 23452 1997 2005 139 Rooms 18-b Fairfield OH 45014 1997 NAP 132 Rooms 18-c Jonesboro GA 30236 1996 NAP 139 Rooms ----------------------------------------------------------------------------------------------------------------------------------- 18-d Norcross GA 30071 1989 2002 129 Rooms 18-e Charlotte NC 28217 1997 2003 133 Rooms 19 South Burlington VT 05401 2003 NAP 101,784 Sq Ft 20 Lester PA 19029 1971, 1980 NAP 445,896 Sq Ft 21 Hickory Hills IL 60457 1985 NAP 199,737 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 22 Carlsbad CA 92009 2005 NAP 66,948 Sq Ft 23 Omaha NE 68102 1981 NAP 383,666 Sq Ft 24 Sugar Land TX 77478 2004 NAP 288 Units 25 Rancho Dominguez CA 90221 1964/1965 1999 356,642 Sq Ft 26 Brandon FL 33619 1985 1987 293,544 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 27 Grapevine TX 76051 2002 NAP 61,569 Sq Ft 28 Grapevine TX 76051 2001 NAP 16,219 Sq Ft 29 New York NY 10014 1910 2001-3 66,000 Sq Ft 30 National City CA 91950 1965 1998 121,227 Sq Ft 31 Yonkers NY 10710 2002-2003 NAP 53,812 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 32 Los Angeles CA 90016 2006 NAP 64,235 Sq Ft 33 Denver CO 80230 2000 NAP 135,499 Sq Ft 34 Solana Beach CA 92075 1990 2004 115 Rooms 35 McHenry IL 60050 2001 NAP 91,227 Sq Ft 36 Middletown CT 06457 1973 2005 198 Units ----------------------------------------------------------------------------------------------------------------------------------- 37 Hammond IN 46320 1958/1971 1996 752,802 Sq Ft 38 Glastonbury CT 06033 2003 NAP 150 Rooms 39 Massillon OH 44646 2006 NAP 108,726 Sq Ft 40 Lynnwood WA 98036 1998 2006 151 Rooms 41 San Antonio TX 78229 1972/1976 2002-2005 134,529 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 42 Fargo ND 58103 2002 NAP 119,494 Sq Ft 43 Upper Marlboro MD 20772 1994/1997 NAP 207,000 Sq Ft 44 Bridgewater NJ 08807 1941 NAP 316,182 Sq Ft 45 Denver CO 80123 1991 NAP 198,477 Sq Ft 46 San Jose CA 95111 1973 NAP 182 Pads ----------------------------------------------------------------------------------------------------------------------------------- 47 Oakland CA 94612 1992 NAP 79,937 Sq Ft 48 Green Bay WI 54301 2004/2005 NAP 76,521 Sq Ft 49 Omaha NE 68106 2005 NAP 67,986 Sq Ft 50 Chesapeake VA 23320 1989 NAP 132,208 Sq Ft 51 Various AZ Various Various NAP 48,479 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 51-a Phoenix AZ 85018 1953 NAP 37,111 Sq Ft 51-b Tempe AZ 85281 1981/2004 NAP 11,368 Sq Ft 52 Wood Dale IL 60191 1986 1990 169,584 Sq Ft 53 Mesa AZ 85201 2000 NAP 82,003 Sq Ft 54 Santa Ana CA 92704 1990 NAP 96,166 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 55 Dallas TX 75252 1983 2003 361 Units 56 Fort Washington PA 19034 1983 1994/1998 104,171 Sq Ft 57 Tucson AZ 85730 1985 NAP 360 Units 58 Nashville TN 37221 1974 2004 71,286 Sq Ft 59 Osage Beach MO 65049 2005 NAP 88,879 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 60 Sunnyvale CA 94087 2005 NAP 22,839 Sq Ft 61 North Hollywood CA 91601 1993 NAP 30,300 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 62 Richmond VA 23223 1989 NAP 112,280 Sq Ft 63 Santa Clara CA 95054 2000 NAP 30,000 Sq Ft 64 Bemidji MN 56601 2004 NAP 100 Rooms ----------------------------------------------------------------------------------------------------------------------------------- 65 Bellflower CA 90706 1973 1988 70,351 Sq Ft 66 Franklin MA 02038 1999 NAP 100 Rooms 67 San Diego CA 92126 1983 2005 105 Rooms 68 Highlands Ranch CO 80126 1997 NAP 39,003 Sq Ft 69 La Plata MD 20646 1972 2001/2002-2005 79,187 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 70 Lemoore CA 93245 2005 NAP 120 Units 71 Sacramento CA 95827 1984 2006 70,120 Sq Ft 72 West Chester OH 45069 2003 NAP 117 Rooms 73 Woodbridge VA 22192 1988 2000 172 Rooms 74 Chesterfield Township MI 48051 2002/2006 NAP 67,284 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 75 Seattle WA 98101 1928 NAP 194 Units 76 Monrovia CA 91016 1986 2005 76 Units 77 Mesa AZ 85201 1977 NAP 285 Units 78 Van Nuys CA 91406 2005 NAP 95,177 Sq Ft 79 Milan IL 61264 2005 NAP 69,999 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 80 Various CA Various Various NAP 56,596 Sq Ft 80-a Murrieta CA 92563 1990 NAP 36,900 Sq Ft 80-b Huntington Beach CA 92647 1970 NAP 19,696 Sq Ft 81 Virginia Beach VA 23452 1977, 2006 NAP 38,757 Sq Ft 82 Tappahannock VA 22560 1970/2004 1999-2000 113,829 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 83 Rockville MD 20850 1988 2004 41,943 Sq Ft 84 Willows CA 95988 1985 2003 180 Units 85 Mesquite TX 75150 1983 2002 280 Units 86 Various TX Various Various NAP 41,350 Sq Ft 86-a Allen TX 75013 2004 NAP 21,162 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 86-b Colleyville TX 76034 2000 NAP 20,188 Sq Ft 87 Santa Clara CA 95054 1973 NAP 113,120 Sq Ft 88 Chesapeake VA 23321 2004 NAP 90 Rooms 89 Cedar Rapids IA 52402 2000 NAP 43,544 Sq Ft 90 Marietta GA 30067 1980 NAP 75,421 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 91 North Mankato MN 56003 1971/1999 NAP 416 Pads 92 Kenosha WI 53158 1998 NAP 120 Rooms 93 Reynoldsburg OH 43068 1989 NAP 181 Units 94 Ankeny IA 50021 1992/1995/2005 2005 84,600 Sq Ft 95 Porterville CA 93257 1992 2006 115 Rooms ----------------------------------------------------------------------------------------------------------------------------------- 96 Orlando FL 32817 1997 2005 123 Rooms 97 San Diego CA 92110 1971 2005 98 Rooms 98 San Diego CA 92109 1987 2002-2005 117 Rooms 99 Encinitas CA 92024 1985 2002 124 Rooms 100 Columbia SC 29212 2005 NAP 32,890 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 101 Millersville TN 37072 1996-2005 NAP 191 Units 102 Louisville KY 40258 1985 1993 322,065 Sq Ft 103 Bethlehem PA 18018 1997 NAP 103 Rooms 104 San Antonio TX 78240 1984 NAP 98,828 Sq Ft 105 McMinnville OR 97128 2004 NAP 74,313 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 106 Warrensville Heights OH 44128 2005 NAP 72 Units 107 Gardner MA 01440 1963 1980s 42,293 Sq Ft 108 Livonia MI 48152 1985 NAP 37,927 Sq Ft 109 Surprise AZ 85374 2004/2006 NAP 109,125 Sq Ft 110 North Las Vegas NV 89081 1984 NAP 89,821 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 111 Las Vegas NV 89118 1999 NAP 29,940 Sq Ft 112 Snellville GA 30078 2003 NAP 18,950 Sq Ft 113 Duluth GA 30097 2004 NAP 47,683 Sq Ft 114 Rialto CA 92376 1966 NAP 102,788 Sq Ft 115 Los Angeles CA 90045 1954 2004 25,002 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 116 Waterloo IA 50703 2004 NAP 44,496 Sq Ft 117 No. 11 Cruz Bay Quarter VI 00831 2005-2006 NAP 36 Units 118 Clearwater FL 33765 1973 2004-2005 71,179 Sq Ft 119 Plattsburgh NY 12901 1971 1996 143,826 Sq Ft 120 Clarksville IN 47129 2004 NAP 26,250 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 121 College Park GA 30337 1972 2005 140 Units 122 Virginia Beach VA 23456 2005 NAP 90,000 Sq Ft 123 Corte Madera CA 94925 1978 NAP 21,548 Sq Ft 124 Tucson AZ 85704 1987 2001 156 Rooms 125 Bronx NY 10451 1989 NAP 117,948 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 126 Quincy MA 02169 1891/1984 1984 44,997 Sq Ft 127 Nashville TN 37221 2002 NAP 57,190 Sq Ft 128 Scotts Valley CA 95066 1984 NAP 44,036 Sq Ft 129 Grand Chute WI 54913 2006 NAP 14,820 Sq Ft 130 Camp Hill PA 17011 2002 NAP 66 Units ----------------------------------------------------------------------------------------------------------------------------------- 131 Richmond VA 23225 2006 NAP 17,211 Sq Ft 132 El Mirage AZ 85335 2005 NAP 20,130 Sq Ft 133 Las Vegas NV 89130 1993 NAP 21,003 Sq Ft 134 Sacramento CA 95817 1999 NAP 51,083 Sq Ft 135 Rockaway NJ 07866 1976-1979 1998-2002 107 Units ----------------------------------------------------------------------------------------------------------------------------------- 136 Clifton NJ 07011 1986 NAP 95 Units 137 Camarillo CA 93012 1977 NAP 97,440 Sq Ft 138 Hercules CA 94547 2004 NAP 12,114 Sq Ft 139 Flowood MS 39232 2001 NAP 53 Rooms 140 Terre Haute IN 47802 2002-2006 NAP 43,260 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 141 Canon City CO 81212 1979 NAP 78,153 Sq Ft 142 Bonita Springs FL 34135 2002 NAP 30,019 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 143 Stafford VA 22556 2001 NAP 23,942 Sq Ft 144 Bronx NY 10456 1927 2005 58 Units 145 Sacramento CA 95825 1979, 1980, 1991 1991 35,559 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 146 Phoenix AZ 85050 2005 NAP 25,953 Sq Ft 147 Memphis TN 38125 2006 NAP 30,601 Sq Ft 148 Missoula MT 59801 2000/2004-2005 NAP 24,713 Sq Ft 149 Ennis TX 75119 1979 2004 44,841 Sq Ft 150 Pflugerville TX 78660 2006 NAP 19,517 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 151 Austin TX 78726 2005/2006 NAP 15,410 Sq Ft 152 Glendale CA 91204 1964 1990 12,250 Sq Ft 153 Dartmouth MA 02747 1986 NAP 84 Rooms 154 Bonita Springs FL 34135 2003 NAP 38,525 Sq Ft 155 Aiken SC 29803 1978, 1997, 2000 NAP 89,638 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 156 Bakersfield CA 93306 1956 2005 26,162 Sq Ft 157 Riverside CA 92507 1994 NAP 25,044 Sq Ft 158 Bonita Springs FL 34135 2003 NAP 15,500 Sq Ft 159 Indiana PA 15701 1994 NAP 65 Units 160 Various OH Various Various NAP 27,000 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 160-a Akron OH 44303 1994 NAP 13,500 Sq Ft 160-b Cleveland OH 44111 1994 NAP 13,500 Sq Ft 161 Bronx NY 10453 1927 NAP 42 Units 162 Campbell CA 95008 2001 NAP 12,785 Sq Ft 163 Fairfield CA 94533 2000 NAP 53,200 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 164 Fountain CO 80817 2001 NAP 17,227 Sq Ft 165 Westport CT 06880 1950, 1985 NAP 10,700 Sq Ft 166 Petaluma CA 94954 1973/1983 2005 34,472 Sq Ft 167 Bedford Hills TX 76021 1980 NAP 84 Units 168 Cameron Park CA 95682 2005 NAP 10,437 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 169 Fort Worth TX 76107 1967 2002 25,000 Sq Ft 170 Savage MN 55378 2005 NAP 10,000 Sq Ft 171 Long Beach CA 90804 2005 NAP 8,372 Sq Ft 172 Midvale UT 84047 1985 2004 66,470 Sq Ft 173 Falls Church VA 22041 2005 NAP 8,465 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 174 Owatonna MN 55060 2004 NAP 13,435 Sq Ft 175 Winchendon MA 01475 1960 1995 30,272 Sq Ft 176 Germantown MD 20874 1984 NAP 32,648 Sq Ft 177 Orlando FL 32817 1988 NAP 27,275 Sq Ft 178 Secaucus NJ 07094 1962-63,1972-73,1981 1998 52,120 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 179 Columbia SC 29203 1998, 2005 NAP 61,500 Sq Ft 180 Mission TX 78572 2005 NAP 11,040 Sq Ft 181 Austin TX 78705 1971 NAP 32 Units 182 Independence MO 64055 2005 NAP 10,972 Sq Ft 183 Richmond VA 23294 1985 NAP 12,960 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 184 Tracy CA 95377 2003 NAP 29,880 Sq Ft 185 Boulder CO 80301 1980 NAP 22,941 Sq Ft 186 Vancouver WA 98683 2005 NAP 7,580 Sq Ft 187 Austin TX 78748 1985 NAP 45,561 Sq Ft 188 Maple Plain MN 55359 1988 NAP 30 Units ----------------------------------------------------------------------------------------------------------------------------------- 189 Mission Hills CA 91345 2006 NAP 4,632 Sq Ft 190 Clifton Park NY 12065 1987, 2005/2006 2000 16,650 Sq Ft 191 Houston TX 77041 2001 NAP 30,268 Sq Ft 192 Westport CT 06880 2005 NAP 3,175 Sq Ft 193 Long Island City NY 11101 1926 2003 20,000 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 194 East Granby CT 06026 1987 NAP 39,140 Sq Ft 195 Tracy CA 95377 2005 NAP 25,542 Sq Ft 196 Tucson AZ 85745 1980 NAP 40,130 Sq Ft 197 Anchorage AK 99502 1975 2001 30 Units 198 Terre Haute IN 47807 1925 2002 21,844 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 199 Las Vegas NV 89120 1976 NAP 15,657 Sq Ft 200 Johnston RI 02919 1992 2005-2006 6,000 Sq Ft 201 South Windsor CT 06074 1990 1992, 1994, 2005 71,250 Sq Ft 202 Colton CA 92324 1990 NAP 59,100 Sq Ft 203 Wappingers Falls NY 12590 1986 2002-2005 36,950 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 204 Fargo ND 58103 1989 2001 24,984 Sq Ft 205 Burtonsville MD 20866 1986 NAP 12,000 Sq Ft 206 Howell MI 48855 2005-2006 NAP 20 Units 207 Festus MO 63028 1990 NAP 10,800 Sq Ft 208 Newport Beach CA 92663 1954 1992 5,950 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- 209 Visalia CA 93291 2003 NAP 7,624 Sq Ft 210 Garfield NJ 07026 1975 NAP 37 Units 211 Hawthorne CA 90250 1979 NAP 22,071 Sq Ft 212 Littleton CO 80127 2006 NAP 6,000 Sq Ft 213 Silver Spring MD 20904 1985 NAP 6,819 Sq Ft ----------------------------------------------------------------------------------------------------------------------------------- CUT-OFF DATE BALANCE PER PREPAYMENT NET RENTABLE AREA PROVISIONS CMSA CMSA ID SF/UNIT/ROOM/PAD ($) (# OF PAYMENTS) (7) LOAN NO. PROPERTY NO. --------------------------------------------------------------------------------------------------------------- 1 393.32 LO(35)/GRTR1% or YM(84)/Open(1) 1 1-001 2 203.65 LO(48)/GRTR1% or YM(69)/Open(3) 2 2-001 3 118.24 LO(28)/Defeasance(88)/Open(4) 3 3-001 4 127.22 LO(24)/Defeasance(92)/Open(4) 4 4-a 127.22 4-001 --------------------------------------------------------------------------------------------------------------- 4-b 127.22 4-002 4-c 127.22 4-003 4-d 127.22 4-004 4-e 127.22 4-005 5 99.26 LO(35)/Defeasance(81)/Open(4) 5 5-001 --------------------------------------------------------------------------------------------------------------- 6 61.86 LO(47)/Defeasance(72)/Open(1) 6 6-001 7 119.41 LO(27)/Defeasance(89)/Open(4) 7 7-a 136.45 7-001 7-b 113.95 7-002 7-c 117.69 7-003 --------------------------------------------------------------------------------------------------------------- 7-d 96.35 7-004 7-e 120.46 7-005 8 117,622.19 LO(27)/Defeasance(89)/Open(4) 8 8-001 9 41.15 GRTR1% or YM(70)/Open(2) 9 9-a 41.15 9-001 --------------------------------------------------------------------------------------------------------------- 9-b 41.15 9-002 9-c 41.15 9-003 9-d 41.15 9-004 10 91.49 LO(26)/Defeasance(93)/Open(1) 10 10-001 11 128.76 LO(27)/Defeasance(89)/Open(4) 11 --------------------------------------------------------------------------------------------------------------- 11-a 165.33 11-001 11-b 109.22 11-002 11-c 130.48 11-003 11-d 117.07 11-004 11-e 99.35 11-005 --------------------------------------------------------------------------------------------------------------- 12 194.76 LO(15)/GRTR1% or YM(67)/Open(2) 12 12-001 13 104.20 LO(23)/GRTR1% or YM(32)/Open(5) 13 13-001 14 141.43 LO(15)/GRTR1% or YM(67)/Open(2) 14 14-001 15 40.44 LO(31)/Defeasance(85)/Open(4) 15 15-001 16 21.81 LO(27)/GRTR1% or YM(55)/Open(2) 16 16-001 --------------------------------------------------------------------------------------------------------------- 17 333.99 LO(25)/Defeasance(93)/Open(2) 17 17-001 18 31,061.20 GRTR1% or YM(28)/Defeasance(88)/Open(4) 18 18-a 31,061.20 18-001 18-b 31,061.20 18-002 18-c 31,061.20 18-003 --------------------------------------------------------------------------------------------------------------- 18-d 31,061.20 18-004 18-e 31,061.20 18-005 19 201.41 LO(27)/Defeasance(90)/Open(3) 19 19-001 20 45.64 LO(27)/Defeasance(91)/Open(2) 20 20-001 21 98.13 LO(25)/Defeasance(93)/Open(2) 21 21-001 --------------------------------------------------------------------------------------------------------------- 22 280.81 LO(26)/Defeasance(90)/Open(4) 22 22-001 23 47.87 LO(26)/Def/YM1%(92)/Open(2) 23 23-001 24 62,500.00 LO(26)/Defeasance(93)/Open(1) 24 24-001 25 49.07 LO(24)/Defeasance(92)/Open(4) 25 25-001 26 59.49 LO(27)/Defeasance(89)/Open(4) 26 26-001 --------------------------------------------------------------------------------------------------------------- 27 214.43 LO(35)/Defeasance(81)/Open(4) 27 27-001 28 214.43 GRTR1% or YM(116)/Open(4) 28 28-001 29 250.00 LO(26)/Defeasance(92)/Open(2) 29 29-001 30 136.11 LO(26)/Defeasance(91)/Open(3) 30 30-001 31 287.82 LO(25)/Defeasance(93)/Open(2) 31 31-001 --------------------------------------------------------------------------------------------------------------- 32 238.19 LO(25)/Defeasance(90)/Open(5) 32 32-001 33 107.01 LO(27)/Defeasance(89)/Open(4) 33 33-001 34 123,690.07 LO(26)/Defeasance(57)/Open(1) 34 34-001 35 154.56 LO(27)/Defeasance(91)/Open(2) 35 35-001 36 70,328.28 LO(26)/Defeasance(90)/Open(4) 36 36-001 --------------------------------------------------------------------------------------------------------------- 37 18.47 LO(24)/Defeasance(92)/Open(4) 37 37-001 38 90,000.00 LO(35)/Flex(81)/Open(4) 38 38-001 39 119.57 LO(26)/Defeasance(92)/Open(2) 39 39-001 40 85,933.44 LO(48)/GRTR1% or YM(68)/Open(4) 40 40-001 41 94.78 LO(35)/Defeasance(81)/Open(4) 41 41-001 --------------------------------------------------------------------------------------------------------------- 42 105.90 LO(25)/Defeasance(93)/Open(2) 42 42-001 43 59.42 LO(26)/Defeasance(90)/Open(4) 43 43-001 44 38.74 LO(29)/Defeasance(90)/Open(1) 44 44-001 45 60.59 LO(27)/Defeasance(29)/Open(4) 45 45-001 46 62,912.09 LO(33)/Defeasance(23)/Open(4) 46 46-001 --------------------------------------------------------------------------------------------------------------- 47 141.99 LO(27)/Defeasance(89)/Open(4) 47 47-001 48 142.05 LO(24)/Defeasance(92)/Open(4) 48 48-001 49 144.84 LO(27)/Defeasance(91)/Open(2) 49 49-001 50 71.86 LO(49)/GRTR1% or YM(67)/Open(4) 50 50-001 51 195.96 LO(48)/GRTR1% or YM(67)/Open(5) 51 --------------------------------------------------------------------------------------------------------------- 51-a 195.96 51-001 51-b 195.96 51-002 52 55.43 LO(25)/Defeasance(91)/Open(4) 52 52-001 53 114.63 GRTR1% or YM(116)/Open(4) 53 53-001 54 96.19 LO(35)/Defeasance(81)/Open(4) 54 54-001 --------------------------------------------------------------------------------------------------------------- 55 25,484.76 LO(26)/Defeasance(90)/Open(4) 55 55-001 56 88.24 LO(35)/Defeasance(83)/Open(2) 56 56-001 57 25,205.83 LO(28)/Defeasance(88)/Open(4) 57 57-001 58 125.89 LO(28)/Defeasance(88)/Open(4) 58 58-001 59 100.55 LO(28)/Defeasance(90)/Open(2) 59 59-001 --------------------------------------------------------------------------------------------------------------- 60 391.09 LO(25)/Defeasance(97)/Open(2) 60 60-001 61 288.78 LO(25)/Defeasance(93)/Open(2) 61 61-001 --------------------------------------------------------------------------------------------------------------- 62 77.48 LO(35)/Defeasance(81)/Open(4) 62 62-001 63 289.49 LO(27)/GRTR1% or YM(89)/Open(4) 63 63-001 64 85,845.93 LO(35)/Defeasance(81)/Open(4) 64 64-001 --------------------------------------------------------------------------------------------------------------- 65 121.90 LO(28)/Defeasance(87)/Open(5) 65 65-001 66 85,000.00 LO(35)/Flex(81)/Open(4) 66 66-001 67 80,810.99 LO(26)/Defeasance(57)/Open(1) 67 67-001 68 215.37 LO(25)/Defeasance(93)/Open(2) 68 68-001 69 102.95 LO(35)/Defeasance(81)/Open(4) 69 69-001 --------------------------------------------------------------------------------------------------------------- 70 67,138.16 LO(47)/GRTR1% or YM(69)/Open(4) 70 70-001 71 114.09 LO(27)/Defeasance(91)/Open(2) 71 71-001 72 68,376.07 LO(35)/Defeasance(81)/Open(4) 72 72-001 73 46,458.24 LO(25)/Defeasance(91)/Open(4) 73 73-001 74 118.66 LO(26)/Defeasance(90)/Open(4) 74 74-001 --------------------------------------------------------------------------------------------------------------- 75 40,812.42 LO(35)/Defeasance(81)/Open(4) 75 75-001 76 102,631.58 LO(26)/Defeasance(92)/Open(2) 76 76-001 77 27,133.79 LO(35)/Defeasance(81)/Open(4) 77 77-001 78 80.42 LO(25)/Defeasance(91)/Open(4) 78 78-001 79 108.73 LO(28)/Defeasance(90)/Open(2) 79 79-001 --------------------------------------------------------------------------------------------------------------- 80 132.52 LO(28)/Defeasance(91)/Open(1) 80 80-a 132.52 80-001 80-b 132.52 80-002 81 193.51 LO(48)/GRTR1% or YM(70)/Open(2) 81 81-001 82 65.89 LO(35)/Defeasance(81)/Open(4) 82 82-001 --------------------------------------------------------------------------------------------------------------- 83 175.24 LO(26)/Defeasance(92)/Open(2) 83 83-001 84 40,796.29 LO(26)/Defeasance(90)/Open(4) 84 84-001 85 25,999.25 LO(28)/Defeasance(85)/Open(7) 85 85-001 86 174.06 LO(28)/Defeasance(90)/Open(2) 86 86-a 174.06 86-001 --------------------------------------------------------------------------------------------------------------- 86-b 174.06 86-002 87 62.85 LO(35)/Flex(81)/Open(4) 87 87-001 88 78,333.33 LO(35)/Defeasance(83)/Open(2) 88 88-001 89 160.76 LO(28)/Defeasance(88)/Open(4) 89 89-001 90 92.81 LO(26)/Defeasance(92)/Open(2) 90 90-001 --------------------------------------------------------------------------------------------------------------- 91 16,813.38 LO(35)/Defeasance(81)/Open(4) 91 91-001 92 58,092.69 LO(35)/Flex(81)/Open(4) 92 92-001 93 38,121.55 LO(25)/Def/YM1%(93)/Open(2) 93 93-001 94 80.09 LO(29)/Defeasance(89)/Open(2) 94 94-001 95 58,373.51 LO(26)/Defeasance(57)/Open(1) 95 95-001 --------------------------------------------------------------------------------------------------------------- 96 54,319.12 LO(26)/Defeasance(90)/Open(4) 96 96-001 97 67,990.23 LO(26)/Defeasance(57)/Open(1) 97 97-001 98 55,669.33 LO(26)/Defeasance(57)/Open(1) 98 98-001 99 51,319.20 LO(26)/Defeasance(57)/Open(1) 99 99-001 100 191.55 LO(26)/Defeasance(92)/Open(2) 100 100-001 --------------------------------------------------------------------------------------------------------------- 101 32,984.29 LO(48)/GRTR1% or YM(70)/Open(2) 101 101-001 102 19.41 LO(28)/Defeasance(91)/Open(1) 102 102-001 103 60,436.89 LO(35)/Flex(81)/Open(4) 103 103-001 104 62.46 LO(28)/Defeasance(91)/Open(1) 104 104-001 105 83.03 LO(28)/Defeasance(88)/Open(4) 105 105-001 --------------------------------------------------------------------------------------------------------------- 106 84,553.33 LO(27)/Defeasance(89)/Open(4) 106 106-001 107 141.87 LO(26)/Flex(89)/Open(5) 107 107-001 108 157.90 LO(47)/GRTR1% or YM(68)/Open(5) 108 108-001 109 52.60 LO(35)/Defeasance(81)/Open(4) 109 109-001 110 47.14 LO(30)/GRTR1% or YM(88)/Open(2) 110 110-001 --------------------------------------------------------------------------------------------------------------- 111 47.14 LO(30)/GRTR1% or YM(88)/Open(2) 111 111-001 112 297.83 LO(27)/Defeasance(92)/Open(1) 112 112-001 113 115.35 LO(28)/GRTR1% or YM(28)/Open(4) 113 113-001 114 53.46 LO(35)/Defeasance(81)/Open(4) 114 114-001 115 219.34 LO(28)/Defeasance(87)/Open(5) 115 115-001 --------------------------------------------------------------------------------------------------------------- 116 118.13 LO(29)/Defeasance(89)/Open(2) 116 116-001 117 145,708.58 LO(25)/Defeasance(94)/Open(1) 117 117-001 118 71.65 LO(25)/Defeasance(93)/Open(2) 118 118-001 119 34.76 LO(27)/Defeasance(89)/Open(4) 119 119-001 120 190.11 LO(26)/GRTR1% or YM(92)/Open(2) 120 120-001 --------------------------------------------------------------------------------------------------------------- 121 35,606.22 LO(28)/Defeasance(88)/Open(4) 121 121-001 122 55.32 LO(48)/GRTR1% or YM(70)/Open(2) 122 122-001 123 222.76 LO(35)/Defeasance(81)/Open(4) 123 123-001 124 30,126.85 LO(35)/Defeasance(21)/Open(4) 124 124-001 125 39.77 LO(26)/Defeasance(93)/Open(1) 125 125-001 --------------------------------------------------------------------------------------------------------------- 126 97.59 LO(26)/Defeasance(92)/Open(2) 126 126-001 127 75.89 LO(25)/GRTR1% or YM(93)/Open(2) 127 127-001 128 97.65 LO(26)/Def/YM1%(90)/Open(4) 128 128-001 129 283.15 LO(25)/Defeasance(93)/Open(2) 129 129-001 130 63,354.31 LO(27)/Defeasance(89)/Open(4) 130 130-001 --------------------------------------------------------------------------------------------------------------- 131 241.59 LO(48)/GRTR1% or YM(70)/Open(2) 131 131-001 132 204.92 LO(24)/GRTR1% or YM(92)/Open(4) 132 132-001 133 195.21 LO(25)/Defeasance(94)/Open(1) 133 133-001 134 78.89 LO(25)/Defeasance(94)/Open(1) 134 134-001 135 37,383.18 LO(26)/GRTR1% or YM(92)/Open(2) 135 135-001 --------------------------------------------------------------------------------------------------------------- 136 42,105.26 LO(26)/GRTR1% or YM(92)/Open(2) 136 136-001 137 41.01 LO(35)/Defeasance(65)/Open(4) 137 137-001 138 329.30 LO(35)/Defeasance(83)/Open(2) 138 138-001 139 75,163.50 LO(27)/Defeasance(92)/Open(1) 139 139-001 140 91.08 LO(35)/Defeasance(81)/Open(4) 140 140-001 --------------------------------------------------------------------------------------------------------------- 141 50.12 LO(35)/Flex(81)/Open(4) 141 141-001 142 129.92 LO(24)/Defeasance(92)/Open(4) 142 142-001 --------------------------------------------------------------------------------------------------------------- 143 154.54 LO(28)/Defeasance(90)/Open(2) 143 143-001 144 63,687.77 LO(26)/GRTR1% or YM(33)/Open(1) 144 144-001 145 103.15 LO(26)/GRTR1% or YM(92)/Open(2) 145 145-001 --------------------------------------------------------------------------------------------------------------- 146 141.14 LO(26)/GRTR1% or YM(91)/Open(3) 146 146-001 147 116.90 LO(35)/Defeasance(81)/Open(4) 147 147-001 148 141.52 LO(35)/Flex(81)/Open(4) 148 148-001 149 76.27 LO(23)/GRTR1% or YM(93)/Open(4) 149 149-001 150 171.50 LO(25)/GRTR1% or YM(93)/Open(2) 150 150-001 --------------------------------------------------------------------------------------------------------------- 151 216.39 LO(25)/GRTR1% or YM(93)/Open(2) 151 151-001 152 265.09 LO(25)/Defeasance(91)/Open(4) 152 152-001 153 38,348.97 LO(35)/Flex(81)/Open(4) 153 153-001 154 83.42 LO(26)/Defeasance(90)/Open(4) 154 154-001 155 35.55 LO(35)/Flex(81)/Open(4) 155 155-001 --------------------------------------------------------------------------------------------------------------- 156 119.22 LO(26)/GRTR1% or YM(92)/Open(2) 156 156-001 157 122.08 LO(36)/Defeasance(80)/Open(4) 157 157-001 158 196.38 LO(26)/Defeasance(90)/Open(4) 158 158-001 159 46,153.85 LO(26)/Defeasance(92)/Open(2) 159 159-001 160 110.89 LO(27)/Defeasance(89)/Open(4) 160 --------------------------------------------------------------------------------------------------------------- 160-a 113.81 160-001 160-b 107.98 160-002 161 67,745.10 LO(26)/GRTR1% or YM(33)/Open(1) 161 161-001 162 203.19 LO(25)/Def/YM1%(93)/Open(2) 162 162-001 163 48.78 LO(35)/Defeasance(81)/Open(4) 163 163-001 --------------------------------------------------------------------------------------------------------------- 164 147.44 LO(26)/Defeasance(92)/Open(2) 164 164-001 165 233.64 LO(26)/Defeasance(93)/Open(1) 165 165-001 166 72.52 LO(26)/Flex(90)/Open(4) 166 166-001 167 29,740.01 LO(35)/Defeasance(81)/Open(4) 167 167-001 168 239.11 LO(35)/Flex(81)/Open(4) 168 168-001 --------------------------------------------------------------------------------------------------------------- 169 99.71 LO(27)/Defeasance(89)/Open(4) 169 169-001 170 248.98 LO(35)/Defeasance(81)/Open(4) 170 170-001 171 286.12 LO(35)/Defeasance(83)/Open(2) 171 171-001 172 35.94 LO(35)/Flex(81)/Open(4) 172 172-001 173 277.37 LO(25)/GRTR1% or YM(93)/Open(2) 173 173-001 --------------------------------------------------------------------------------------------------------------- 174 172.54 LO(35)/Defeasance(81)/Open(4) 174 174-001 175 73.12 LO(29)/Defeasance(90)/Open(1) 175 175-001 176 67.39 LO(24)/Defeasance(92)/Open(4) 176 176-001 177 80.50 LO(26)/GRTR1% or YM(92)/Open(2) 177 177-001 178 42.12 LO(25)/Defeasance(93)/Open(2) 178 178-001 --------------------------------------------------------------------------------------------------------------- 179 34.89 LO(26)/GRTR1% or YM(92)/Open(2) 179 179-001 180 186.71 LO(35)/Flex(81)/Open(4) 180 180-001 181 62,656.25 LO(26)/Defeasance(93)/Open(1) 181 181-001 182 182.14 LO(35)/Defeasance(81)/Open(4) 182 182-001 183 154.20 LO(25)/GRTR1% or YM(93)/Open(2) 183 183-001 --------------------------------------------------------------------------------------------------------------- 184 66.81 LO(26)/GRTR1% or YM(87)/Open(7) 184 184-001 185 84.42 LO(35)/Flex(83)/Open(2) 185 185-001 186 246.73 LO(26)/Defeasance(90)/Open(4) 186 186-001 187 40.31 LO(35)/Defeasance(81)/Open(4) 187 187-001 188 59,954.87 LO(35)/Defeasance(81)/Open(4) 188 188-001 --------------------------------------------------------------------------------------------------------------- 189 388.28 LO(25)/GRTR1% or YM(93)/Open(2) 189 189-001 190 107.65 LO(26)/Defeasance(92)/Open(2) 190 190-001 191 58.81 LO(35)/Flex(18)/Open(7) 191 191-001 192 548.03 LO(25)/Defeasance(94)/Open(1) 192 192-001 193 84.93 LO(25)/GRTR1% or YM(91)/Open(4) 193 193-001 --------------------------------------------------------------------------------------------------------------- 194 43.38 LO(25)/GRTR1% or YM(93)/Open(2) 194 194-001 195 66.44 LO(26)/GRTR1% or YM(87)/Open(7) 195 195-001 196 42.11 LO(26)/GRTR1% or YM(92)/Open(2) 196 196-001 197 55,930.05 LO(35)/Flex(81)/Open(4) 197 197-001 198 74.39 LO(35)/Defeasance(81)/Open(4) 198 198-001 --------------------------------------------------------------------------------------------------------------- 199 101.92 LO(35)/Flex(81)/Open(4) 199 199-001 200 258.95 LO(25)/Defeasance(91)/Open(4) 200 200-001 201 21.66 LO(26)/GRTR1% or YM(92)/Open(2) 201 201-001 202 25.38 LO(26)/GRTR1% or YM(92)/Open(2) 202 202-001 203 40.60 LO(35)/Defeasance(81)/Open(4) 203 203-001 --------------------------------------------------------------------------------------------------------------- 204 58.79 LO(35)/Defeasance(81)/Open(4) 204 204-001 205 116.67 LO(24)/Defeasance(92)/Open(4) 205 205-001 206 69,938.73 LO(35)/Defeasance(81)/Open(4) 206 206-001 207 123.86 LO(35)/Defeasance(81)/Open(4) 207 207-001 208 205.73 LO(35)/Flex(81)/Open(4) 208 208-001 --------------------------------------------------------------------------------------------------------------- 209 155.82 LO(35)/Defeasance(83)/Open(2) 209 209-001 210 30,810.81 LO(26)/GRTR1% or YM(92)/Open(2) 210 210-001 211 45.19 LO(35)/Flex(81)/Open(4) 211 211-001 212 156.47 LO(35)/Flex(81)/Open(4) 212 212-001 213 117.32 LO(24)/Defeasance(92)/Open(4) 213 213-001 --------------------------------------------------------------------------------------------------------------- THIRD THIRD MOST SECOND SECOND MOST MOST RECENT RECENT NOI MOST RECENT RECENT NOI MOST RECENT ID PROPERTY NAME (1) NOI ($) DATE NOI ($) DATE NOI ($) ------------------------------------------------------------------------------------------------------------------------------------ 1 Woodland Mall 15,105,405 12/31/2003 14,730,619 12/31/2004 13,860,780 2 1675 Broadway 18,638,373 12/31/2003 19,088,049 12/31/2004 16,769,282 3 Orange Plaza 6,734,547 12/31/2003 7,102,759 12/31/2004 8,044,806 4 Broken Sound Portfolio 3,124,267 4-a 5900 Broken Sound Plaza ------------------------------------------------------------------------------------------------------------------------------------ 4-b 6000 Broken Sound Plaza 4-c Rogers Circle 4-d Newhouse Business Center 4-e Colonnade Plaza 5 Southdale Office Centre 5,058,338 12/31/2003 4,247,766 12/31/2004 3,855,636 ------------------------------------------------------------------------------------------------------------------------------------ 6 Tower at Erieview 4,069,587 12/31/2003 2,197,650 12/31/2004 3,918,336 7 Embassy Office Park - Pool A 2,987,042 12/31/2003 3,071,475 12/31/2004 3,164,428 7-a 3875 Embassy Parkway Building 7-b 3700 Embassy Parkway Building 7-c 4040 Embassy Parkway Building ------------------------------------------------------------------------------------------------------------------------------------ 7-d 3560 West Market Office Building 7-e 3500 Embassy Parkway Building 8 Calypso Bay Apartments 1,430,238 9 Titan Portfolio 2,419,943 9-a Titan - San Antonio ------------------------------------------------------------------------------------------------------------------------------------ 9-b Titan - El Paso 9-c Titan - McAllen 9-d Titan - Santa Teresa 10 Stone Mountain Square 2,512,476 12/31/2004 2,690,174 11 Embassy Office Park - Pool B 2,671,301 12/31/2003 2,509,368 12/31/2004 2,289,975 ------------------------------------------------------------------------------------------------------------------------------------ 11-a 3925 Embassy Parkway Building 11-b 4000 Embassy Parkway Building 11-c 3737 Embassy Parkway Building 11-d 3770 Embassy Parkway Building 11-e 5399 Lauby Road Building ------------------------------------------------------------------------------------------------------------------------------------ 12 Centre at Laurel 13 Tuscany Plaza 2,614,279 12/31/2003 2,290,163 12/31/2004 1,125,997 14 Monandnock Marketplace 127,587 12/31/2003 854,987 15 Brown Deer Business Park 2,088,632 12/31/2003 2,052,678 12/31/2004 2,026,891 16 Gwinnett Regional Distribution Center 2,661,800 12/31/2003 351,363 12/31/2004 447,926 ------------------------------------------------------------------------------------------------------------------------------------ 17 Ardmore West Shopping Center 1,639,129 12/31/2003 1,713,888 12/31/2004 1,741,674 18 InTown Suites Portfolio 3,274,164 12/31/2004 3,209,196 12/31/2005 3,359,696 18-a Virginia Beach 18-b Fairfield 18-c Jonesboro ------------------------------------------------------------------------------------------------------------------------------------ 18-d Buford Highway 18-e Pressley Road 19 The Gateway Shopping Center 1,156,240 12/31/2003 1,471,254 12/31/2004 1,623,963 20 Philadelphia Airport Parking 21 Hickory Palos Square 1,584,593 12/31/2003 1,676,856 12/31/2004 1,537,824 ------------------------------------------------------------------------------------------------------------------------------------ 22 Los Coches Village 23 1314 Douglas Street 24 Reserve at Woodbridge 1,123,376 12/31/2005 1,515,904 12/31/2005 1,663,082 25 South Santa Fe Avenue 2,041,294 12/31/2003 2,115,723 12/31/2004 2,103,299 26 Brandon Crossings 763,448 12/31/2003 1,450,484 ------------------------------------------------------------------------------------------------------------------------------------ 27 Baylor Medical Plaza 1,070,685 12/31/2004 981,461 28 Baylor Surgicare Grapevine 552,450 12/31/2004 585,552 29 29-35 9th Avenue 1,704,946 12/31/2004 1,896,248 30 Sweetwater Square 1,391,486 12/31/2003 1,462,178 12/31/2004 1,223,487 31 Bed, Bath and Beyond Center 1,419,215 12/31/2004 1,494,755 ------------------------------------------------------------------------------------------------------------------------------------ 32 The Coliseum Center 33 Quad at Lowry IV 737,453 12/31/2003 790,391 12/31/2004 781,005 34 Marriott Courtyard Solana Beach 1,490,643 12/31/2003 1,316,822 12/31/2004 1,959,964 35 McHenry Town Center 1,224,346 12/31/2003 1,269,567 12/31/2004 1,194,503 36 Hunter's Crossing Apartments 1,014,820 12/31/2004 946,777 12/31/2005 1,027,695 ------------------------------------------------------------------------------------------------------------------------------------ 37 American Business Center 2,360,191 12/31/2003 2,306,109 12/31/2004 1,447,014 38 Hilton Garden Inn Glastonbury 1,597,862 12/31/2004 1,607,647 39 Meadows Plaza 40 Hampton Inn Suites 1,209,234 4/30/2004 1,850,149 41 Data Point ------------------------------------------------------------------------------------------------------------------------------------ 42 44th Street Tower 1,122,195 12/31/2003 1,192,521 12/31/2004 1,182,022 43 Mattress Discounters 44 9 Finderne Avenue 45 Wadsworth Boulevard Marketplace 46 Coyote Creek Mobile Home Park 1,176,343 12/31/2003 1,259,516 12/31/2004 1,135,870 ------------------------------------------------------------------------------------------------------------------------------------ 47 City Center, Oakland 1,353,004 12/31/2003 1,414,246 12/31/2004 1,468,347 48 Nicolet Office Center 49 5150 Center Street 50 Woodlake Center 1,036,800 12/31/2003 1,071,998 12/31/2004 1,157,571 51 Arcadia Village SC & Fiesta Shops West 652,630 12/31/2003 667,573 12/31/2004 633,639 ------------------------------------------------------------------------------------------------------------------------------------ 51-a Arcadia Village SC 51-b Fiesta Shops West 52 940 N Central 455,375 12/31/2004 615,822 53 Tri-City Pavilions 54 MacArthur Fairview Park 828,973 12/31/2003 862,822 12/31/2004 941,676 ------------------------------------------------------------------------------------------------------------------------------------ 55 McCallum Highlands 887,067 12/31/2004 816,170 12/31/2005 875,382 56 1300 Virginia Drive 1,087,629 12/31/2003 1,086,922 12/31/2004 530,274 57 Villa Monterey Apartments 847,718 12/31/2003 837,755 12/31/2004 917,681 58 Bellevue Plaza 808,486 12/31/2003 823,296 12/31/2004 805,306 59 3870 Highway D ------------------------------------------------------------------------------------------------------------------------------------ 60 770 East El Camino Real 61 Magnolia Vineland 736,264 12/31/2003 812,108 12/31/2004 837,938 ------------------------------------------------------------------------------------------------------------------------------------ 62 New Oak Hill Plaza 865,296 63 Qwest Data Center 976,539 64 Hampton Inn & Suites Bemidji 1,110,032 12/31/2005 1,173,652 ------------------------------------------------------------------------------------------------------------------------------------ 65 Bellflower Shopping Center 730,281 12/31/2003 764,958 12/31/2004 812,629 66 Hawthorn Suites Franklin 971,803 12/31/2003 826,024 12/31/2004 1,039,920 67 Best Western Miramar 1,087,767 12/31/2003 1,028,358 12/31/2004 1,300,889 68 Highland Ranch 893,442 12/31/2003 696,235 12/31/2004 796,104 69 La Plata Shopping Center 811,731 12/31/2002 975,936 12/31/2003 466,599 ------------------------------------------------------------------------------------------------------------------------------------ 70 College Park Apartments 71 Micron Building 705,912 12/31/2003 688,347 12/31/2004 576,304 72 Staybridge Suites - Cincinnati North 235,147 12/31/2003 1,070,554 12/31/2004 1,118,508 73 Best Western Potomac Mills 1,020,437 12/31/2003 1,031,456 12/31/2004 1,106,205 74 Chesterfield Square 245,301 12/31/2003 399,098 12/31/2004 408,690 ------------------------------------------------------------------------------------------------------------------------------------ 75 Lowell Emerson 576,102 12/31/2003 545,029 12/31/2004 685,065 76 Monrovia Villas 634,915 12/31/2005 680,314 77 Saratoga Apartments 788,667 12/31/2003 654,716 12/31/2004 773,881 78 Cooper Industrial 79 201 West 10th Avenue ------------------------------------------------------------------------------------------------------------------------------------ 80 Murrietta Center & Bolsa Medical 831,904 80-a Murrieta Town Center East 80-b Bolsa Medical Center 81 Parkway Plaza 82 Tappahannock Towne Center 445,708 12/31/2004 584,760 12/31/2005 616,621 ------------------------------------------------------------------------------------------------------------------------------------ 83 15020 Shady Grove Road 22,517 12/31/2004 294,458 84 Cedar Hills Manor 426,352 12/31/2003 531,319 12/31/2004 623,964 85 Oates Creek Apartments 786,252 12/31/2003 762,522 12/31/2004 700,435 86 Creme de la Creme 86-a Creme de la Creme - Allen ------------------------------------------------------------------------------------------------------------------------------------ 86-b Creme de la Creme - Colleyville 87 Thomas Road Project 497,597 12/31/2003 559,810 12/31/2004 664,517 88 Holiday Inn Express - Chesapeake, VA 804,204 12/31/2004 959,032 12/31/2005 924,924 89 Lindale Crossing 648,595 12/31/2003 710,184 12/31/2004 834,471 90 Terraces at Windy Hill 1,004,147 12/31/2003 998,510 12/31/2004 953,614 ------------------------------------------------------------------------------------------------------------------------------------ 91 Camelot/Avalon MHP 723,714 12/31/2003 749,539 12/31/2004 724,894 92 Radisson Hotel - Kenosha 824,586 12/31/2003 981,389 12/31/2004 876,265 93 Oakbrook Apartments 679,281 12/31/2004 693,415 94 410 North Ankeny Boulevard 95 Best Western Porterville 424,035 12/31/2003 743,754 12/31/2004 1,046,512 ------------------------------------------------------------------------------------------------------------------------------------ 96 Courtyard Marriott Orlando 638,162 12/31/2003 863,140 12/31/2004 1,022,743 97 Howard Johnson San Diego 707,968 12/31/2003 833,498 12/31/2004 797,053 98 Days Inn Mission Bay 613,562 12/31/2003 565,215 12/31/2004 833,211 99 Days Inn Encinitas 755,430 12/31/2003 775,797 12/31/2004 784,431 100 Columbiana Crossing ------------------------------------------------------------------------------------------------------------------------------------ 101 Crestview Apartments 575,564 102 6901 Riverport Drive 647,050 12/31/2003 681,852 12/31/2004 586,618 103 Fairfield Inn & Suites, (Bethlehem, PA) 727,152 12/31/2003 854,176 12/31/2004 878,239 104 Northwest Corporate Center 526,105 12/31/2003 575,072 12/31/2004 762,991 105 McMinnville Market Center 758,215 ------------------------------------------------------------------------------------------------------------------------------------ 106 Newport Square Apartments 107 Hannaford Plaza 377,804 12/31/2003 380,743 12/31/2004 406,833 108 Laurel Commons 607,551 12/31/2003 631,338 12/31/2004 644,060 109 Surprise Self Storage 239,388 12/31/2004 454,228 12/31/2005 510,244 110 Albany Industrial Park 338,847 12/31/2003 463,522 12/31/2004 361,288 ------------------------------------------------------------------------------------------------------------------------------------ 111 5075 Cameron Street Industrial Building 239,137 12/31/2004 229,126 112 Pharrs Village 309,170 12/31/2004 521,256 113 Meridian at Sugarloaf 114 Rialto Square Shopping Center 603,666 12/31/2003 494,166 12/31/2004 672,770 115 La Tijera Shopping Center 151,159 12/31/2003 407,575 12/31/2004 519,906 ------------------------------------------------------------------------------------------------------------------------------------ 116 2181 Logan Avenue 117 Guinea Grove Apartments 118 Belcher Commons-Phase II 119 Plattsburgh Plaza 692,326 12/31/2003 681,740 12/31/2004 681,748 120 Moore Plaza ------------------------------------------------------------------------------------------------------------------------------------ 121 Rugby Valley Apartments 555,541 12/31/2003 611,045 12/31/2004 626,038 122 1337 Taylor Farm Road 123 100 Tamal Plaza 399,037 12/31/2004 464,829 124 Country Inn & Suites by Carlson - Tucson 547,812 12/31/2003 674,420 12/31/2004 1,015,022 125 399 Exterior Street 434,000 ------------------------------------------------------------------------------------------------------------------------------------ 126 The Willard Building 624,506 12/31/2003 657,882 12/31/2004 563,314 127 Security Central Storage 398,448 12/31/2004 463,711 128 Willow Pond Plaza 284,723 12/31/2003 385,284 12/31/2004 506,218 129 1305 N. Casaloma Drive 130 Fairmount Park Apartments 407,299 12/31/2003 416,179 12/31/2004 409,163 ------------------------------------------------------------------------------------------------------------------------------------ 131 The Shops at Stratford Hills 132 Rancho El Mirage Plaza 133 North Ranch Plaza 358,075 5/31/2005 391,810 134 Food Source Sacramento 369,974 12/31/2003 374,397 12/31/2004 375,967 135 Hillside Garden Apartments 814,149 12/31/2003 764,595 12/31/2004 853,044 ------------------------------------------------------------------------------------------------------------------------------------ 136 Highland Terrace Apartments 754,637 12/31/2003 570,134 12/31/2004 557,077 137 740 Calle Plano 138 Rite Aid - Hercules 139 Country Inn & Suites Jackson 307,949 12/31/2003 509,661 12/31/2004 688,675 140 South Pointe Crossing 214,933 12/31/2004 268,268 12/31/2005 285,068 ------------------------------------------------------------------------------------------------------------------------------------ 141 Canon Plaza 343,461 12/31/2003 318,520 12/31/2004 235,926 142 Hidden Lakes Center 323,021 12/31/2003 388,510 12/31/2004 449,424 ------------------------------------------------------------------------------------------------------------------------------------ 143 Staples at Doc Stone Commons 144 1240 Sherman Avenue 211,216 12/31/2003 248,570 12/31/2004 293,501 145 Ethan Way Office Building 471,326 12/31/2004 484,938 ------------------------------------------------------------------------------------------------------------------------------------ 146 Desert Pointe Center 147 PetsMart Memphis 416,480 148 Russell Square 323,259 149 Ennis Crossroads Shopping Center 43,706 12/31/2004 201,164 150 Grand Avenue Parkway S/C ------------------------------------------------------------------------------------------------------------------------------------ 151 Grandview Hills Shopping Center 152 The Broadway Center 261,821 12/31/2003 264,894 12/31/2004 326,407 153 Comfort Inn North Dartmouth 459,098 12/31/2004 412,619 12/31/2005 501,736 154 Bonita Commerce Center 165,852 12/31/2003 257,340 12/31/2004 303,703 155 B & H Self Storage 281,460 12/31/2003 314,910 12/31/2004 344,501 ------------------------------------------------------------------------------------------------------------------------------------ 156 A.J. Wright 157 PetSmart - Riverside 337,562 12/31/2002 341,068 12/31/2003 371,833 158 City Mattress Center 95,939 12/31/2003 292,444 12/31/2004 307,490 159 University Square 331,473 12/31/2003 326,246 12/31/2004 292,857 160 Walgreens Ohio Portfolio 505,270 12/31/2003 506,213 12/31/2004 506,094 ------------------------------------------------------------------------------------------------------------------------------------ 160-a Walgreens Akron 160-b Walgreens Cleveland 161 1945 Loring Place 165,605 12/31/2003 181,309 12/31/2004 205,845 162 54 N. Central Avenue 559,424 12/31/2003 433,568 12/31/2004 250,759 163 Downtown Self Storage 288,676 12/31/2003 239,113 12/31/2004 278,024 ------------------------------------------------------------------------------------------------------------------------------------ 164 Markets at Mesa Ridge 158,089 12/31/2003 208,259 12/31/2004 288,436 165 1300 Post Road East 262,877 12/31/2003 244,452 12/31/2004 284,006 166 Petaluma Industrial Buildings 270,789 167 Bedford Hills Apartment 294,055 12/31/2003 224,530 12/31/2004 266,151 168 Sam's Town Marketplace Shops 44,291 ------------------------------------------------------------------------------------------------------------------------------------ 169 Lovell Center 170 Savage Retail 212,702 171 Long Beach Center 172 American Self Storage - Midvale 301,611 12/31/2003 297,582 12/31/2004 304,764 173 Columbia Pike Gateway ------------------------------------------------------------------------------------------------------------------------------------ 174 Bridge Street Square 235,209 175 Winchendon Plaza 233,321 176 Middlebrook Tech Center 176,283 12/31/2004 274,301 177 University Oaks Plaza 331,715 12/31/2003 367,781 12/31/2004 378,532 178 505 Jefferson Road ------------------------------------------------------------------------------------------------------------------------------------ 179 Windhill/Sunbelt Industrial Properties 157,533 180 Mission Plaza Retail 181 Castle Arms Apartments 219,234 12/31/2003 189,632 12/31/2004 190,773 182 Crackerneck Plaza II 183 8818 West Broad Street 144,000 12/31/2003 143,705 12/31/2004 177,330 ------------------------------------------------------------------------------------------------------------------------------------ 184 South Tracy Industrial Building 5 213,111 185 1777 Conestoga 241,140 12/31/2002 208,490 12/31/2003 327,945 186 3205 SE 192nd Avenue 187 South Slaughter Commerce Park 225,630 12/31/2003 221,950 12/31/2004 241,447 188 Manchester Place 131,420 12/31/2004 158,791 ------------------------------------------------------------------------------------------------------------------------------------ 189 10223 Sepulveda Boulevard 190 1735 U.S. Route 9 79,212 12/31/2002 69,630 12/31/2003 68,274 191 4400 Blalock 192 Washington Mutual - Westport 193 43-15 - 43-27 33rd Street ------------------------------------------------------------------------------------------------------------------------------------ 194 2 Connecticut Drive South 195 South Tracy Industrial Building 6 196 2106 North Forbes Boulevard 132,678 12/31/2003 94,673 12/31/2004 124,903 197 7016 Weimer Apartments 223,913 12/31/2003 222,598 12/31/2004 214,814 198 Thompson Thrift Building 232,587 12/31/2004 270,169 12/31/2005 276,703 ------------------------------------------------------------------------------------------------------------------------------------ 199 Vallejo Plaza - Las Vegas 166,062 12/31/2003 130,757 12/31/2004 165,641 200 10 Putnam Pike (Route 44) 201 350 Pleasant Valley Road 373,572 12/31/2003 (88,025) 12/31/2004 42,157 202 2101 E. Cooley Drive 257,064 12/31/2003 248,220 12/31/2004 248,220 203 9-D EZ Storage 212,000 12/31/2004 242,400 12/31/2005 245,335 ------------------------------------------------------------------------------------------------------------------------------------ 204 1020 36th Street SW 189,951 12/31/2003 189,726 12/31/2004 187,531 205 Burtonsville Retail Center 195,803 12/31/2003 214,375 12/31/2004 203,613 206 The Preserve at Mallard Pond - Buildings 4 and 5 207 Gannon Plaza 96,401 12/31/2004 127,504 208 503 32nd Street Office Building 82,273 12/31/2003 79,525 12/31/2004 106,006 ------------------------------------------------------------------------------------------------------------------------------------ 209 125 South Bridge 133,459 3/31/2005 134,754 210 River Drive Village Apartments 224,706 12/31/2003 230,506 12/31/2004 225,796 211 13633 S. Crenshaw Boulevard 96,101 12/31/2002 101,360 12/31/2003 105,896 212 Sherwin Williams - Littleton 213 Vital Way Retail Center 135,954 12/31/2003 148,491 12/31/2004 143,570 ------------------------------------------------------------------------------------------------------------------------------------ MOST RECENT NOI UNDERWRITTEN UNDERWRITTEN UNDERWRITTEN UNDERWRITTEN UNDERWRITTEN ID DATE NOI ($) EGI ($) EXPENSES ($) NET CASH FLOW ($) RESERVES ($) --------------------------------------------------------------------------------------------------------------- 1 10/31/2005 14,140,616 24,779,163 10,638,547 13,345,571 211,866 2 12/31/2005 19,075,983 41,180,984 22,105,000 17,603,232 228,328 3 12/31/2005 7,541,526 11,214,178 3,672,652 7,252,105 97,290 4 12/31/2005 4,399,906 6,931,432 2,531,526 4,103,406 296,500 4-a --------------------------------------------------------------------------------------------------------------- 4-b 4-c 4-d 4-e 5 12/31/2005 4,537,278 8,858,253 4,320,974 4,077,292 459,986 --------------------------------------------------------------------------------------------------------------- 6 12/31/2005 4,899,320 13,481,386 8,582,066 4,192,009 707,311 7 12/31/2005 3,472,906 5,590,087 2,117,181 3,044,664 100,629 7-a 7-b 7-c --------------------------------------------------------------------------------------------------------------- 7-d 7-e 8 10/31/2005 2,779,695 4,039,203 1,259,508 2,723,695 56,000 9 12/31/2005 3,076,480 4,424,563 1,348,083 2,770,000 306,480 9-a --------------------------------------------------------------------------------------------------------------- 9-b 9-c 9-d 10 12/31/2005 2,852,307 3,921,390 1,069,083 2,656,753 195,554 11 12/31/2005 2,736,214 4,249,496 1,513,282 2,415,574 81,684 --------------------------------------------------------------------------------------------------------------- 11-a 11-b 11-c 11-d 11-e --------------------------------------------------------------------------------------------------------------- 12 3,018,409 4,155,381 1,136,972 2,954,317 64,092 13 12/31/2005 2,608,565 4,750,177 2,141,612 2,200,793 66,075 14 12/31/2004 3,138,639 4,138,947 1,000,308 3,062,885 75,754 15 12/31/2005 2,159,148 3,707,259 1,548,111 1,918,823 113,931 16 11/30/2005 2,257,804 2,898,061 640,257 1,976,174 281,630 --------------------------------------------------------------------------------------------------------------- 17 12/31/2005 1,827,100 2,279,942 452,842 1,775,102 51,999 18 3/31/2006 3,012,537 5,714,807 2,702,270 2,726,797 285,740 18-a 18-b 18-c --------------------------------------------------------------------------------------------------------------- 18-d 18-e 19 12/31/2005 1,747,543 2,237,257 489,714 1,708,949 38,594 20 1,846,686 1,903,800 57,114 1,828,850 17,836 21 12/31/2005 1,828,622 3,694,091 1,865,469 1,778,069 50,553 --------------------------------------------------------------------------------------------------------------- 22 1,589,067 2,128,688 539,621 1,544,508 10,033 23 2,231,564 4,813,022 2,581,458 1,771,165 460,399 24 12/31/2005 1,731,006 3,059,760 1,328,754 1,659,006 72,000 25 12/31/2005 2,093,752 2,331,122 237,370 1,952,655 141,098 26 12/31/2004 2,164,212 3,255,093 1,090,881 1,943,736 61,644 --------------------------------------------------------------------------------------------------------------- 27 12/31/2005 993,704 1,460,800 467,096 950,421 43,283 28 12/31/2005 548,055 731,556 183,501 533,645 14,411 29 12/31/2005 1,856,856 2,600,433 743,577 1,798,376 58,480 30 12/31/2005 1,460,572 2,074,674 614,101 1,408,911 51,662 31 12/31/2005 1,585,924 2,150,812 564,888 1,575,541 10,383 --------------------------------------------------------------------------------------------------------------- 32 1,313,182 1,684,292 371,111 1,277,916 9,635 33 12/31/2005 1,372,363 2,364,072 991,709 1,196,916 175,447 34 12/31/2005 1,970,128 4,275,299 2,305,171 1,799,116 171,012 35 10/31/2005 1,209,989 1,627,904 417,915 1,175,049 34,940 36 3/31/2006 1,198,801 1,796,280 597,479 1,159,201 39,600 --------------------------------------------------------------------------------------------------------------- 37 12/31/2005 1,394,636 2,002,781 608,145 1,235,135 159,501 38 12/31/2005 1,651,891 5,111,577 3,459,687 1,396,312 255,579 39 1,273,154 1,812,640 539,486 1,203,556 16,309 40 12/31/2005 1,899,133 4,573,641 2,674,508 1,716,187 182,946 41 1,335,676 2,434,650 1,098,974 1,184,241 151,436 --------------------------------------------------------------------------------------------------------------- 42 12/31/2005 1,214,425 2,068,635 854,209 1,129,078 23,899 43 1,113,571 1,441,659 328,088 1,083,337 30,234 44 1,273,405 1,590,605 317,200 1,158,234 115,171 45 1,331,337 1,688,240 356,903 1,247,971 83,366 46 12/31/2005 1,041,319 1,785,329 744,010 1,032,219 9,100 --------------------------------------------------------------------------------------------------------------- 47 12/31/2005 1,005,193 1,516,897 511,704 940,674 13,595 48 1,015,314 1,546,635 531,321 908,642 106,671 49 832,340 1,058,516 226,176 815,344 16,996 50 12/31/2005 1,055,220 1,343,006 287,786 903,931 26,442 51 12/31/2005 845,459 1,129,719 284,260 795,010 50,448 --------------------------------------------------------------------------------------------------------------- 51-a 51-b 52 12/31/2005 843,724 1,255,200 411,476 818,216 33,917 53 931,670 1,368,406 436,736 899,803 31,867 54 3/31/2006 995,314 1,441,529 446,215 922,590 72,724 --------------------------------------------------------------------------------------------------------------- 55 2/28/2006 903,117 2,242,171 1,339,054 812,867 90,250 56 12/31/2005 925,876 1,787,266 861,390 789,968 135,909 57 12/31/2005 856,558 1,839,443 982,885 766,558 90,000 58 11/30/2005 804,739 971,927 167,188 756,192 14,257 59 753,983 988,758 234,775 732,238 21,745 --------------------------------------------------------------------------------------------------------------- 60 774,955 988,750 213,795 765,785 9,170 61 12/31/2005 874,586 1,218,666 344,079 841,393 33,194 --------------------------------------------------------------------------------------------------------------- 62 12/31/2005 807,809 1,128,864 321,056 737,267 70,542 63 12/31/2005 895,310 1,136,017 240,707 864,462 5,500 64 3/31/2006 1,138,310 2,944,757 1,806,447 1,020,520 117,790 --------------------------------------------------------------------------------------------------------------- 65 11/30/2005 785,441 1,093,803 308,362 729,896 21,105 66 12/31/2005 1,087,478 2,823,305 1,735,828 946,313 141,165 67 12/31/2005 1,266,286 2,657,477 1,391,191 1,159,987 106,299 68 12/31/2005 848,623 1,224,840 376,218 810,756 37,867 69 12/15/2005 757,602 1,003,380 245,778 710,018 47,584 --------------------------------------------------------------------------------------------------------------- 70 746,509 1,076,218 329,709 722,509 24,000 71 12/31/2005 737,951 1,207,617 469,666 679,006 21,036 72 12/31/2005 1,156,014 2,994,940 1,838,926 1,036,216 119,798 73 12/31/2005 1,064,365 3,144,229 2,079,864 938,595 125,769 74 12/31/2005 769,254 1,084,838 315,584 718,503 50,750 --------------------------------------------------------------------------------------------------------------- 75 12/31/2005 742,226 1,424,925 682,699 684,026 58,200 76 1/31/2006 678,201 1,075,460 397,261 655,325 22,876 77 12/31/2005 753,494 1,671,008 917,514 652,319 101,175 78 714,588 928,300 213,712 670,368 44,219 79 643,226 820,128 176,902 625,728 17,498 --------------------------------------------------------------------------------------------------------------- 80 11/30/2005 775,787 1,131,518 355,731 709,900 65,887 80-a 80-b 81 775,405 890,831 115,426 749,835 25,570 82 3/31/2006 715,032 849,019 133,987 651,407 63,625 --------------------------------------------------------------------------------------------------------------- 83 12/31/2005 678,544 1,096,910 418,365 640,070 38,474 84 12/31/2005 663,441 1,200,585 537,144 609,441 54,000 85 12/31/2005 701,771 1,742,157 1,040,386 617,771 84,000 86 768,279 792,040 23,761 768,279 86-a --------------------------------------------------------------------------------------------------------------- 86-b 87 12/31/2005 681,274 914,943 233,669 602,877 78,397 88 2/28/2006 895,069 2,070,165 1,175,096 812,320 82,749 89 9/30/2005 624,995 882,422 257,427 586,654 6,532 90 12/31/2005 739,201 1,160,200 420,999 692,129 47,072 --------------------------------------------------------------------------------------------------------------- 91 12/31/2005 690,872 1,123,534 432,662 670,072 20,800 92 10/31/2005 940,715 2,777,244 1,836,529 829,625 111,090 93 12/31/2005 647,386 1,276,389 629,004 590,009 57,377 94 562,645 926,678 364,033 541,495 21,150 95 12/31/2005 1,020,874 2,449,820 1,428,946 922,881 97,993 --------------------------------------------------------------------------------------------------------------- 96 12/31/2005 1,101,971 3,319,000 2,217,029 969,211 132,760 97 12/31/2005 882,142 2,102,630 1,220,488 798,037 84,105 98 12/31/2005 859,543 1,988,767 1,129,224 779,992 79,551 99 12/31/2005 813,306 1,991,677 1,178,371 723,034 90,272 100 660,007 786,832 126,825 639,288 20,719 --------------------------------------------------------------------------------------------------------------- 101 12/31/2005 605,751 1,128,842 523,091 558,001 47,750 102 12/31/2005 832,417 1,096,092 263,675 747,123 85,294 103 9/30/2005 856,433 2,219,071 1,362,638 745,480 110,954 104 11/30/2005 669,171 973,812 304,640 606,646 62,526 105 9/30/2005 789,452 1,241,597 452,145 761,226 11,147 --------------------------------------------------------------------------------------------------------------- 106 523,419 684,372 160,953 509,019 14,400 107 12/31/2005 539,401 579,916 40,516 527,397 12,004 108 12/31/2005 604,200 812,343 208,143 561,856 42,345 109 1/31/2006 606,862 950,067 343,205 590,493 16,369 110 12/31/2005 410,119 584,695 174,576 349,043 61,076 --------------------------------------------------------------------------------------------------------------- 111 12/31/2005 267,348 370,291 102,943 252,378 14,970 112 12/31/2005 524,748 675,460 150,712 505,329 19,419 113 544,160 876,181 332,021 500,035 9,537 114 12/31/2005 740,482 986,173 245,691 675,011 65,471 115 12/31/2005 516,927 669,296 152,369 494,675 5,000 --------------------------------------------------------------------------------------------------------------- 116 439,114 666,442 227,328 427,992 11,122 117 478,950 670,320 191,370 469,950 9,000 118 538,960 962,846 423,886 457,415 81,545 119 12/31/2005 685,530 1,093,613 408,083 556,870 35,957 120 442,388 534,651 92,263 422,099 20,289 --------------------------------------------------------------------------------------------------------------- 121 12/31/2005 549,144 1,092,773 543,629 506,544 42,600 122 525,100 660,370 135,270 498,100 27,000 123 11/30/2005 454,683 719,162 264,479 411,635 43,048 124 10/31/2005 954,868 2,710,228 1,755,360 846,459 108,409 125 12/31/2005 419,897 432,883 12,986 406,140 13,757 --------------------------------------------------------------------------------------------------------------- 126 12/31/2005 499,638 921,152 421,514 457,444 42,193 127 12/31/2005 491,676 668,570 176,894 483,097 8,579 128 12/31/2005 545,841 846,264 300,423 456,561 89,280 129 375,664 482,210 106,546 373,441 2,223 130 12/31/2005 400,317 646,226 245,909 385,929 14,388 --------------------------------------------------------------------------------------------------------------- 131 370,755 460,605 89,850 359,204 11,551 132 417,611 525,176 107,565 403,242 14,369 133 12/31/2005 404,084 584,867 180,783 379,441 24,643 134 10/31/2005 368,887 380,296 11,409 363,779 5,108 135 12/31/2005 675,461 1,352,900 677,439 648,711 26,750 --------------------------------------------------------------------------------------------------------------- 136 12/31/2005 508,444 1,134,042 625,598 479,374 29,070 137 429,533 658,439 228,907 350,063 79,469 138 400,846 511,273 110,427 385,575 15,270 139 12/31/2005 575,632 1,300,102 724,470 517,127 58,505 140 2/28/2006 419,872 717,597 297,724 378,120 41,752 --------------------------------------------------------------------------------------------------------------- 141 12/31/2005 358,745 561,305 202,560 339,440 19,305 142 12/31/2005 471,429 617,824 146,395 437,835 33,594 --------------------------------------------------------------------------------------------------------------- 143 329,203 396,862 67,659 325,612 3,591 144 12/31/2005 359,178 594,423 235,245 344,678 14,500 145 12/31/2005 423,767 657,040 233,273 358,732 65,035 --------------------------------------------------------------------------------------------------------------- 146 348,049 482,475 134,426 327,822 20,227 147 12/31/2006 382,171 483,713 101,543 363,515 18,656 148 12/31/2005 376,212 513,554 137,342 352,958 23,254 149 12/31/2005 324,637 485,351 160,714 298,100 8,968 150 317,417 435,020 117,603 301,044 16,373 --------------------------------------------------------------------------------------------------------------- 151 323,888 433,735 109,847 309,562 14,326 152 12/31/2005 313,946 384,821 70,875 297,379 16,568 153 3/31/2006 504,964 1,617,017 1,112,053 424,113 80,851 154 12/31/2005 332,360 447,804 115,444 307,573 24,787 155 12/31/2005 357,580 573,280 215,700 348,616 8,964 --------------------------------------------------------------------------------------------------------------- 156 286,871 391,970 105,099 276,537 10,334 157 12/31/2004 347,058 461,491 114,432 325,946 21,112 158 12/31/2005 298,115 381,047 82,932 280,011 18,103 159 12/31/2005 276,531 413,672 137,141 257,031 19,500 160 12/30/2005 489,021 529,141 40,120 470,622 5,446 --------------------------------------------------------------------------------------------------------------- 160-a 160-b 161 12/31/2005 283,700 456,548 172,848 273,200 10,500 162 12/31/2005 262,433 361,865 99,432 235,543 26,890 163 12/31/2005 275,568 469,967 194,399 267,588 7,980 --------------------------------------------------------------------------------------------------------------- 164 12/31/2005 286,678 407,102 120,423 268,361 18,317 165 12/31/2005 272,063 361,333 89,270 261,956 10,107 166 12/31/2005 288,095 297,006 8,910 265,239 22,857 167 12/31/2005 271,222 619,013 347,791 245,434 25,788 168 12/31/2005 253,395 338,260 84,865 239,835 13,561 --------------------------------------------------------------------------------------------------------------- 169 325,602 467,268 141,666 295,605 29,997 170 11/30/2005 234,391 313,572 79,181 224,045 10,346 171 245,684 348,838 103,154 234,822 10,862 172 10/31/2005 282,759 434,006 151,246 272,789 9,971 173 267,398 328,564 61,166 260,203 7,195 --------------------------------------------------------------------------------------------------------------- 174 12/31/2005 239,221 324,254 85,033 221,283 17,938 175 6/30/2005 197,248 273,876 76,629 186,262 10,986 176 12/31/2005 288,541 412,632 124,092 257,526 31,015 177 12/31/2005 322,670 455,516 132,846 292,053 30,617 178 324,657 502,409 177,752 286,983 37,674 --------------------------------------------------------------------------------------------------------------- 179 12/31/2004 240,677 323,906 83,229 218,010 22,667 180 217,610 273,128 55,518 206,482 11,128 181 12/31/2005 187,477 315,098 127,620 176,469 11,008 182 201,612 254,910 53,299 190,533 11,079 183 12/31/2005 191,493 240,335 48,842 183,069 8,424 --------------------------------------------------------------------------------------------------------------- 184 12/31/2005 237,086 311,863 74,777 222,146 14,940 185 12/31/2004 218,093 323,992 105,899 191,426 26,667 186 187,539 230,302 42,763 178,569 8,970 187 12/31/2005 194,598 279,163 84,565 174,546 20,052 188 12/31/2005 168,966 268,655 99,688 161,466 7,500 --------------------------------------------------------------------------------------------------------------- 189 162,624 210,973 48,349 158,890 3,734 190 12/31/2004 226,481 377,088 150,607 196,484 29,997 191 190,881 262,141 71,260 175,493 15,389 192 155,480 161,319 5,840 152,258 3,221 193 172,893 231,346 58,453 165,894 6,999 --------------------------------------------------------------------------------------------------------------- 194 187,489 274,672 87,183 165,388 22,101 195 182,341 246,750 64,409 171,152 11,189 196 12/31/2005 163,224 250,840 87,616 149,179 14,045 197 12/31/2005 188,619 294,413 105,794 181,119 7,500 198 2/28/2006 258,631 327,857 69,226 230,700 27,931 --------------------------------------------------------------------------------------------------------------- 199 12/31/2005 175,561 258,420 82,859 158,928 16,633 200 139,875 163,873 23,998 137,297 2,578 201 12/31/2005 200,336 363,106 162,770 175,400 24,936 202 12/31/2005 229,571 276,528 46,957 202,978 26,593 203 2/28/2006 227,239 422,485 195,246 221,696 5,543 --------------------------------------------------------------------------------------------------------------- 204 12/31/2005 166,372 274,737 108,365 141,263 25,109 205 12/31/2005 197,772 285,548 87,776 179,697 18,076 206 150,181 244,262 94,082 145,181 5,000 207 12/31/2005 143,505 205,731 62,226 131,082 12,423 208 12/31/2005 116,976 153,644 36,669 109,660 7,316 --------------------------------------------------------------------------------------------------------------- 209 12/31/2005 120,836 164,458 43,622 115,139 5,696 210 12/31/2005 193,603 371,682 178,079 183,798 9,805 211 12/31/2004 105,859 128,153 22,294 91,931 13,928 212 121,173 143,039 21,865 115,994 5,179 213 12/31/2005 145,811 200,936 55,124 136,338 9,473 --------------------------------------------------------------------------------------------------------------- LEASE ID LARGEST TENANT (8) SF EXPIRATION ------------------------------------------------------------------------------------------------ 1 Cinemark Theater (Out-lot) 46,922 11/30/2020 2 The MacManus Group 359,387 9/30/2010 3 Wal-Mart 228,910 4/23/2022 4 4-a SBA Communications 73,191 2/28/2012 ------------------------------------------------------------------------------------------------ 4-b Taylor & Francis 42,927 1/31/2016 4-c W.W. Grainger 20,600 3/31/2011 4-d Freescale 30,018 2/28/2010 4-e Pool People, Inc. 25,000 2/28/2011 5 Edina Financial Services, Inc. 91,812 11/30/2011 ------------------------------------------------------------------------------------------------ 6 Barnes Group, Inc. 62,490 8/31/2014 7 7-a Oak Associate Ltd. 36,420 8/31/2008 7-b Morgan Stanley 9,963 5/31/2011 7-c CBIZ 12,435 12/31/2006 ------------------------------------------------------------------------------------------------ 7-d Crystal Clinic 6,976 11/30/2009 7-e Degussa Corporation 22,614 9/30/2009 8 9 9-a HEB Grocery Company 87,784 9/30/2011 ------------------------------------------------------------------------------------------------ 9-b Morven Partners, LP 105,000 3/31/2008 9-c Plastic Engineered Components, Inc. 76,574 10/16/2015 9-d Santa Teresa Warehousing 70,000 8/14/2008 10 Bally Total Fitness 37,000 1/31/2012 11 ------------------------------------------------------------------------------------------------ 11-a Crystal Clinic 30,627 6/30/2016 11-b Dellagnese Companies 8,680 7/31/2007 11-c Hanna, Campbell & Powell 21,826 2/28/2015 11-d Republic Engineered Products 22,993 1/31/2009 11-e Maximus, Inc. 20,593 5/31/2008 ------------------------------------------------------------------------------------------------ 12 Shoppers Food Warehouse 68,519 11/30/2025 13 Red Robin International 54,592 5/31/2011 14 Price Chopper 73,883 12/31/2025 15 Ace Distribution Services, Inc. 243,170 5/30/2008 16 DSA Warehouse 376,531 7/31/2010 ------------------------------------------------------------------------------------------------ 17 Philadelphia Sports Club 17,500 1/31/2022 18 18-a 18-b 18-c ------------------------------------------------------------------------------------------------ 18-d 18-e 19 Shaw's Supermarket 73,184 2/29/2024 20 LRW Investment Co. 445,896 9/30/2026 21 Jewel Food Stores, Inc. 65,803 1/27/2010 ------------------------------------------------------------------------------------------------ 22 Henry's Marketplace 30,250 1/31/2021 23 Qwest Corporation 215,780 3/31/2016 24 25 Transport Express 356,642 12/31/2009 26 Old Time Pottery Inc. 86,475 11/30/2013 ------------------------------------------------------------------------------------------------ 27 Baylor Medical Center at Grapevine 61,569 11/30/2017 28 Grapevine Surgicare Partners, Ltd 16,219 11/30/2021 29 Soho House New York 40,750 12/31/2011 30 Mervyn's 82,496 3/31/2021 31 Bed Bath & Beyond 40,000 10/31/2018 ------------------------------------------------------------------------------------------------ 32 Goodwill Industries of So. California 17,755 2/29/2016 33 Covad Communications Group 51,398 7/31/2011 34 35 Circuit City 32,987 1/31/2017 36 ------------------------------------------------------------------------------------------------ 37 International Paper Company 593,602 7/31/2015 38 39 Giant Eagle 58,203 3/31/2026 40 41 The Baptist Health System School of Health Proficiencies 66,263 7/31/2015 ------------------------------------------------------------------------------------------------ 42 Midland National Life Insurance 23,666 4/30/2014 43 Mattress Discounters 207,000 6/30/2012 44 Building Materials Corporation of America 316,182 11/30/2012 45 Sam's Club 108,224 11/30/2016 46 ------------------------------------------------------------------------------------------------ 47 Club One, Inc. 56,080 11/30/2010 48 Nicolet National Bank 30,438 8/31/2020 49 Hy-Vee, Inc. 67,986 2/28/2026 50 LMC Properties, Inc. 61,396 12/31/2006 51 ------------------------------------------------------------------------------------------------ 51-a Wild Oats Market 18,000 1/31/2008 51-b Sacks Gourmet Sandwiches 2,050 11/30/2007 52 Miyano Machinery 88,042 8/31/2013 53 Safeway Inc. 55,000 11/14/2020 54 McGuff Compounding 11,130 11/30/2006 ------------------------------------------------------------------------------------------------ 55 56 Wolters Kluwer Health, Inc. 15,456 11/30/2010 57 58 T.J. Maxx 28,260 11/30/2008 59 Hy-Vee, Inc. 88,879 12/31/2025 ------------------------------------------------------------------------------------------------ 60 Petsmart, Inc. 22,839 1/31/2016 61 Hollywood Video 5,400 9/30/2009 ------------------------------------------------------------------------------------------------ 62 Food Lion 35,560 9/11/2017 63 Qwest Communications 30,000 3/14/2015 64 ------------------------------------------------------------------------------------------------ 65 PNS Stores - Big Lots 25,500 1/31/2012 66 67 68 Bacchus Wine & Spirits 6,117 3/31/2007 69 Safeway (dark) 41,090 9/30/2011 ------------------------------------------------------------------------------------------------ 70 71 Dept of Health/Human Svcs-GSA 46,822 2/28/2016 72 73 74 Michaels 24,311 5/29/2012 ------------------------------------------------------------------------------------------------ 75 76 77 78 Cooper Lighting, Inc. 95,177 12/31/2015 79 Hy-Vee, Inc. 69,999 12/31/2025 ------------------------------------------------------------------------------------------------ 80 80-a St. Martha's Catholic Church 9,320 8/31/2007 80-b A Kids Dentist, Inc. 3,150 12/31/2007 81 Happy Buffet, Inc. 6,062 3/31/2016 82 Stage Stores 37,425 5/31/2018 ------------------------------------------------------------------------------------------------ 83 Grunley Construction Company 16,753 6/30/2015 84 85 86 86-a Allen Creme de la Creme, L.P. 21,162 1/31/2026 ------------------------------------------------------------------------------------------------ 86-b Colleyville Creme de la Creme, L.P. 20,188 1/31/2026 87 Village Shops, Inc. 22,000 10/31/2006 88 89 Bed Bath & Beyond 25,056 1/31/2011 90 Fudruckers, Inc. 9,018 8/31/2009 ------------------------------------------------------------------------------------------------ 91 92 93 94 Hy-Vee, Inc. 84,600 12/31/2025 95 ------------------------------------------------------------------------------------------------ 96 97 98 99 100 D's Wings 7,335 12/31/2015 ------------------------------------------------------------------------------------------------ 101 102 The Apparel Group 175,713 7/31/2008 103 104 Valero Industries, Inc. 12,876 10/31/2008 105 Albertson's Inc. 53,641 4/30/2029 ------------------------------------------------------------------------------------------------ 106 107 Hannaford 42,293 12/31/2026 108 Century 21 Row 6,000 1/31/2009 109 110 Moving Relocation Special 14,400 8/31/2006 ------------------------------------------------------------------------------------------------ 111 Syn Lawn 8,010 10/31/2010 112 Washington Mutual 4,000 4/30/2014 113 Cypress Care, Inc. 19,462 8/30/2012 114 Cardenas Markets, Inc. 70,000 10/31/2015 115 Goodwill Industries of S. CA 12,600 1/31/2014 ------------------------------------------------------------------------------------------------ 116 Hy-Vee, Inc. 44,496 12/31/2025 117 Westin St. John Hotel Company, Inc. 36 units 12/31/2010 118 Pinellas County (HR) (Admin) (VA) (STARS) 23,171 9/30/2010 119 Champlain Valley - Physicians 35,000 1/31/2012 120 Asian Buffet 6,720 9/30/2014 ------------------------------------------------------------------------------------------------ 121 122 AGIO 65,000 12/31/2020 123 Pacific Lists, Inc. 2,650 7/31/2006 124 125 Amboy Bus Co., Inc. 117,948 5/31/2025 ------------------------------------------------------------------------------------------------ 126 Meridian Properties(Investments), Inc. 8,902 11/30/2010 127 128 Extraview Corporation 9,053 3/31/2009 129 Walgreens 14,820 3/6/2081 130 ------------------------------------------------------------------------------------------------ 131 Garcia Real Estate III, L.C. d/b/a Mexico 4,800 2/28/2016 132 Anytime Fitness 3,840 2/28/2011 133 Montesano's Deli 2,400 1/31/2008 134 Food Source 51,083 5/13/2018 135 ------------------------------------------------------------------------------------------------ 136 137 Power-One, Inc. 97,440 9/30/2014 138 Rite Aid 12,114 11/7/2025 139 140 Farm Bureau 7,544 1/22/2016 ------------------------------------------------------------------------------------------------ 141 City Market Store #17 44,677 5/26/2013 142 Fitness Center 11,807 10/31/2007 ------------------------------------------------------------------------------------------------ 143 Staples at Doc Stone Commons 23,942 2/28/2017 144 145 US Bank 18,533 11/30/2007 ------------------------------------------------------------------------------------------------ 146 Betty Johnson School of Dance 14,894 2/28/2026 147 PetsMart, Inc. 30,601 4/30/2021 148 Hollywood Video 5,115 6/28/2010 149 Beall's (Specialty Retailers) 18,052 1/31/2014 150 St. David's Healthcare 7,272 11/30/2015 ------------------------------------------------------------------------------------------------ 151 West Marine 7,621 2/28/2016 152 Dollar K 5,400 1/31/2009 153 154 The Faux Store 3,696 7/31/2008 155 ------------------------------------------------------------------------------------------------ 156 Concord Buying Group, Inc 26,162 10/31/2015 157 PetSmart, Inc. 25,044 2/28/2014 158 City Mattress 10,000 12/9/2012 159 160 ------------------------------------------------------------------------------------------------ 160-a Walgreens Akron 13,500 10/31/2044 160-b Walgreens Cleveland 13,500 10/31/2044 161 162 Ventura Barnett Properties 5,498 7/31/2007 163 ------------------------------------------------------------------------------------------------ 164 Ridge Liquor's 3,600 4/30/2008 165 Fast Fitness 5,100 5/31/2011 166 Quality Scientific Plastics 34,472 1/31/2010 167 168 Red Bud Cafe 3,297 8/31/2010 ------------------------------------------------------------------------------------------------ 169 Wells Fargo 4,250 10/31/2015 170 Foss Swim School 6,167 6/30/2020 171 Starbucks 1,700 3/2/2016 172 173 Security One Bank 3,393 3/31/2016 ------------------------------------------------------------------------------------------------ 174 Hollywood Entertainment 6,014 1/31/2015 175 Central Supermarkets 10,388 8/31/2009 176 Imperial Trading Company 11,373 3/31/2010 177 Ponders 4,700 4/30/2009 178 Harry Wils & Co., Inc. 45,620 3/31/2021 ------------------------------------------------------------------------------------------------ 179 Johnstone Supply of Columbia 20,250 2/28/2011 180 Wingstop 1,600 7/31/2010 181 182 Happy Hour Liquor 6,452 4/14/2014 183 B&J Bikes 6,642 2/28/2015 ------------------------------------------------------------------------------------------------ 184 Heartland Church 8,280 11/30/2008 185 Ball Aerospace and Technologies 22,941 11/30/2010 186 The Fargo Rose, LLC d/b/a Rose's Deli 5,000 8/31/2011 187 Texas Department of Criminal Justice 29,040 7/31/2010 188 ------------------------------------------------------------------------------------------------ 189 Speedy Cash 2,210 2/29/2016 190 Community Care 16,650 2/29/2016 191 Premium Armored Services, Inc. 8,265 12/31/2007 192 Washington Mutual 3,175 12/31/2015 193 33rd Street Bakery 10,000 12/31/2012 ------------------------------------------------------------------------------------------------ 194 EGS Electrical Group 39,140 4/30/2011 195 Jump and Slide 5,472 5/31/2010 196 APX International 20,078 12/31/2007 197 198 Thompson Thrift Management Co. 15,351 4/30/2019 ------------------------------------------------------------------------------------------------ 199 Isabellas Restaurant 2,990 10/10/2009 200 Advance Auto 6,000 2/28/2021 201 Aerodyne Alloys, LLC 43,250 2/28/2013 202 Dietrich Industries, Inc. 59,100 2/28/2009 203 ------------------------------------------------------------------------------------------------ 204 AGForce Insurance Services 9,474 12/31/2006 205 Goodyear Tire & Rubber Company 6,000 1/19/2009 206 207 Radio Shack 2,100 1/31/2011 208 Jakosky Properties 2,950 2/29/2016 ------------------------------------------------------------------------------------------------ 209 Teter Consultants 4,961 10/31/2013 210 211 D E, Inc. 22,071 12/31/2010 212 The Sherwin-Williams Company 6,000 1/31/2016 213 3 Dough Boys-The Bagelry 1,553 12/31/2013 ------------------------------------------------------------------------------------------------ LEASE ID 2ND LARGEST TENANT (8) SF EXPIRATION -------------------------------------------------------------------------------------------- 1 The Gap/Gap Kids 12,480 2/29/2012 2 Mayer Brown Rowe & Maw 247,933 8/31/2015 3 Home Depot USA 112,058 1/31/2010 4 4-a -------------------------------------------------------------------------------------------- 4-b Scriptlogic 25,380 1/21/2010 4-c Real Time Labs 19,776 1/31/2011 4-d SIMU 28,296 5/31/2013 4-e Sterling Medical 5,000 7/31/2006 5 Fortis Benefits Insurance Co. 37,902 2/28/2007 -------------------------------------------------------------------------------------------- 6 Walter & Haverfield 43,590 1/9/2019 7 7-a RJF International Corporation 26,159 12/31/2009 7-b AXA Equitable Life 6,687 1/31/2011 7-c Wachovia Securities, LLC 12,032 2/28/2009 -------------------------------------------------------------------------------------------- 7-d Medical Mutual Ohio 5,499 8/31/2006 7-e Telantis Research, Inc. 7,063 1/31/2007 8 9 9-a Tormax Technologies, Inc. 22,820 8/31/2007 -------------------------------------------------------------------------------------------- 9-b Western PCS II Corp. 26,490 10/14/2006 9-c Duerr Tool & Die Co, Inc. 37,721 10/31/2012 9-d 10 T.J. Maxx 32,000 1/31/2010 11 -------------------------------------------------------------------------------------------- 11-a Fedex Corporation 20,975 3/31/2011 11-b Graphics Intelligence Agency 8,613 8/31/2007 11-c Dairy Farmers of America, Inc. 12,725 3/31/2009 11-d 11-e U.S. General Service Administration 3,994 1/31/2008 -------------------------------------------------------------------------------------------- 12 PetsMart, Inc. 19,497 1/31/2016 13 MPEG LA, LLC 43,607 8/31/2012 14 Michaels Stores, Inc. 21,718 9/30/2020 15 Lidner 71,788 4/30/2009 16 Broeder Brothers 320,530 2/28/2013 -------------------------------------------------------------------------------------------- 17 Rite-Aid 11,260 6/30/2012 18 18-a 18-b 18-c -------------------------------------------------------------------------------------------- 18-d 18-e 19 Blockbuster Inc. 5,000 2/29/2008 20 21 Loyola University Medical Center 32,160 12/31/2010 -------------------------------------------------------------------------------------------- 22 Petco 13,000 1/31/2017 23 Omaha World-Herald Company 136,394 3/31/2021 24 25 26 Floor & Decor 54,996 2/28/2016 -------------------------------------------------------------------------------------------- 27 28 29 Vitra, Inc. 14,750 12/31/2011 30 Peter Piper Pizza 12,168 6/30/2008 31 Harmons 6,192 10/31/2018 -------------------------------------------------------------------------------------------- 32 Walgreen Co. 14,490 6/30/2066 33 Belle Bonfils Memorial Blood 49,473 1/31/2013 34 35 Michael's Stores 20,683 2/28/2012 36 -------------------------------------------------------------------------------------------- 37 Silgan Containers Corporation 158,000 7/31/2015 38 39 PetsMart 20,087 1/31/2016 40 41 GSA/ Veterans Health Care System 12,000 4/30/2015 -------------------------------------------------------------------------------------------- 42 Corporate Technologies 18,607 2/28/2011 43 44 45 Hobby Lobby 90,253 11/30/2016 46 -------------------------------------------------------------------------------------------- 47 University of Phoenix 16,688 4/11/2008 48 AON Service Corp 24,196 10/31/2015 49 50 VSE Corp. 30,434 10/1/2009 51 -------------------------------------------------------------------------------------------- 51-a Fenix Restaurant (Mati's LLC) 2,540 8/31/2010 51-b Cafe Lalibela 2,018 9/30/2007 52 Leader Express 81,542 5/31/2012 53 American Music Group (Dark) 4,187 1/31/2010 54 Taipei Economic & Cultural 4,988 8/31/2010 -------------------------------------------------------------------------------------------- 55 56 TRC Holdings, Inc. 11,753 2/28/2013 57 58 CVS Pharmacy 13,140 12/31/2009 59 -------------------------------------------------------------------------------------------- 60 61 PX Drug 4,200 10/31/2008 -------------------------------------------------------------------------------------------- 62 Big Lots 23,000 1/31/2009 63 64 -------------------------------------------------------------------------------------------- 65 99 Cent Only Store 23,200 7/31/2008 66 67 68 Julie's Hallmark 4,272 7/31/2007 69 True Value 9,875 12/31/2015 -------------------------------------------------------------------------------------------- 70 71 Dept of HR - Workers Comp 15,883 3/31/2011 72 73 74 PetSmart 20,098 2/29/2016 -------------------------------------------------------------------------------------------- 75 76 77 78 79 -------------------------------------------------------------------------------------------- 80 80-a Extreme Fitness 7,170 9/30/2011 80-b Dr. Charles Pelletier, DDS 1,907 6/30/2008 81 Panera, LLC 4,758 3/31/2016 82 River Pools & Spas 9,800 6/30/2010 -------------------------------------------------------------------------------------------- 83 Shady Grove Venture Group LLC 6,491 4/30/2010 84 85 86 86-a -------------------------------------------------------------------------------------------- 86-b 87 SJ Mercury News 20,000 12/31/2012 88 89 Interior Elements 4,500 6/30/2010 90 United States Postal Service 7,791 1/31/2008 -------------------------------------------------------------------------------------------- 91 92 93 94 95 -------------------------------------------------------------------------------------------- 96 97 98 99 100 Chinese Buffet 5,934 3/31/2016 -------------------------------------------------------------------------------------------- 101 102 CafePress.com 126,352 7/31/2017 103 104 Advanced Bio Prosthetics 9,386 MTM 105 Blockbuster Video 5,600 3/31/2014 -------------------------------------------------------------------------------------------- 106 107 108 Shoten Market 4,200 1/31/2009 109 110 FB International 10,800 3/31/2009 -------------------------------------------------------------------------------------------- 111 Las Vegas Circuit Breaker 4,005 7/31/2008 112 The Original Mattress Factory 2,800 4/30/2009 113 Rhodes, Young, Black & Duncan 9,169 5/31/2015 114 JK Marketing (99 Cent Store) 13,410 11/30/2014 115 Express Cleaners 2,450 1/31/2009 -------------------------------------------------------------------------------------------- 116 117 118 Seaboard Arbors Management Services, Inc. 8,445 3/31/2009 119 Big Lots 20,000 1/31/2008 120 McAlister's Deli 4,200 11/30/2011 -------------------------------------------------------------------------------------------- 121 122 Art Graphics N Designs 6,000 12/31/2020 123 ET Water Systems, LLC 2,553 MTM 124 125 -------------------------------------------------------------------------------------------- 126 Capital Analysts of New England Incorporated 8,654 11/30/2010 127 128 Creative Explosions Inc. 7,570 6/30/2008 129 130 -------------------------------------------------------------------------------------------- 131 Forest Hill Pizzeria, Inc. t/a Vinnys Italian Grill 3,645 3/31/2016 132 West Valley Sport and Dance, L.L.C. 3,700 2/28/2011 133 Cashback Payday 1,800 1/31/2009 134 135 -------------------------------------------------------------------------------------------- 136 137 138 139 140 Blockbuster 5,000 11/30/2010 -------------------------------------------------------------------------------------------- 141 Dollar Tree 10,312 2/9/2011 142 Cronin's Porch & Patio 4,600 1/31/2007 -------------------------------------------------------------------------------------------- 143 144 145 AMFM Broadcasting 17,026 12/31/2011 -------------------------------------------------------------------------------------------- 146 Rytiphx Ltd. 3,675 12/31/2010 147 148 Dry Cleaner 2,658 4/30/2015 149 Grand China Buffet (Wam XiaLi) 7,000 9/30/2015 150 BCH Group 2,600 2/28/2011 -------------------------------------------------------------------------------------------- 151 Flores Mexican Restaurant 2,499 2/28/2012 152 Broadway Deli & Mart 2,704 6/30/2010 153 154 Kauffman Cabinetry 3,281 4/30/2008 155 -------------------------------------------------------------------------------------------- 156 157 158 Greek Gourmet 2,750 2/28/2013 159 160 -------------------------------------------------------------------------------------------- 160-a 160-b 161 162 Pearson Communications 4,522 5/31/2009 163 -------------------------------------------------------------------------------------------- 164 Dragon King 2,356 12/31/2009 165 Dr. Clyne 1,875 5/31/2009 166 167 168 Fresh Cleaner 1,802 3/12/2010 -------------------------------------------------------------------------------------------- 169 Double Dave's Pizza 4,250 12/31/2008 170 Fantastic Sams 1,408 6/30/2010 171 Akio Sushi 1,500 5/31/2016 172 173 Wireless Zone 2,073 3/31/2013 -------------------------------------------------------------------------------------------- 174 Coldwell Banker 3,121 2/1/2010 175 Family Dollar 7,394 12/31/2009 176 Exit Realty of MD, LLC 9,964 2/28/2016 177 Kick Boxing 3,600 12/31/2006 178 Tree of Life 6,500 5/13/2006 -------------------------------------------------------------------------------------------- 179 Amarr Company, Inc. 20,250 10/31/2010 180 Alex's Pharmacy 1,380 7/31/2010 181 182 Deck the Walls 1,883 12/31/2010 183 Bennette Paint Mfg. Co. 6,318 4/30/2015 -------------------------------------------------------------------------------------------- 184 Moore's Martial Arts 5,760 1/31/2010 185 186 Pamela D. Butler, DMD 2,580 1/31/2016 187 Evan's Interiors 2,911 6/30/2006 188 -------------------------------------------------------------------------------------------- 189 Quiznos 1,245 2/29/2016 190 191 Integrated Flooring 8,265 11/30/2008 192 193 ABA Inc. 10,000 11/30/2007 -------------------------------------------------------------------------------------------- 194 195 Ruffin Performance 4,176 8/31/2006 196 Armstrong Graphic Systems 12,052 7/24/2008 197 198 State Farm Mutual Auto 3,114 1/8/2008 -------------------------------------------------------------------------------------------- 199 G.W. Place 2,798 12/31/2007 200 201 Velocity Express, Inc. 15,000 7/31/2010 202 203 -------------------------------------------------------------------------------------------- 204 Valley Engineering, Inc. 9,000 4/30/2016 205 Old Hickory Grill 2,400 12/31/2010 206 207 Imo's Pizza 2,000 8/31/2010 208 CA Outdoor Advertising 1,500 6/30/2006 -------------------------------------------------------------------------------------------- 209 ADCC 2,663 10/31/2013 210 211 212 213 Grandiff Medical Supply 1,052 9/30/2006 -------------------------------------------------------------------------------------------- LEASE PERCENT LEASED ID 3RD LARGEST TENANT (8) SF EXPIRATION LEASED AS-OF DATE -------------------------------------------------------------------------------------------------------------------------------- 1 Victoria's Secret 10,849 1/31/2016 87.7% 2/28/2006 2 Arent Fox 86,215 6/30/2018 99.5% 3/1/2006 3 Kohl's Department Stores 89,531 1/28/2023 99.4% 1/10/2006 4 96.3% 5/15/2006 4-a 100.0% 5/15/2006 -------------------------------------------------------------------------------------------------------------------------------- 4-b Deutsche Bank 4,456 5/31/2011 100.0% 5/15/2006 4-c JKG Printing 16,775 7/31/2008 88.8% 5/15/2006 4-d Affiniti Architects 6,035 5/31/2010 100.0% 5/15/2006 4-e Padaria 2,500 3/31/2007 100.0% 5/15/2006 5 Intrepid Companies, Inc 30,782 10/31/2008 82.8% 2/28/2006 -------------------------------------------------------------------------------------------------------------------------------- 6 Duvin, Cahn, & Hutton, LPA 40,076 8/31/2008 89.8% 3/23/2006 7 90.1% 3/28/2006 7-a Fedex Corporation 24,093 12/31/2015 100.0% 3/28/2006 7-b Salomon Smith Barney 6,051 11/30/2010 73.8% 3/28/2006 7-c Chevron USA, Inc. 3,449 5/31/2010 93.5% 3/28/2006 -------------------------------------------------------------------------------------------------------------------------------- 7-d Reserve Group 5,389 7/31/2007 87.7% 3/28/2006 7-e 100.0% 3/28/2006 8 95.7% 2/28/2006 9 85.9% 4/28/2006 9-a Sino Swearingen Aircraft 13,840 7/31/2007 86.2% 4/28/2006 -------------------------------------------------------------------------------------------------------------------------------- 9-b Anmar Enterprises, Inc. 21,600 1/31/2012 75.7% 4/28/2006 9-c 100.0% 4/28/2006 9-d 100.0% 4/28/2006 10 Ross Dress for Less 30,187 1/31/2016 85.2% 2/1/2006 11 91.1% 3/28/2006 -------------------------------------------------------------------------------------------------------------------------------- 11-a Dellagnese Companies 10,397 3/31/2011 100.0% 3/28/2006 11-b First Merit Corporation 7,240 10/31/2007 88.2% 3/28/2006 11-c SRA International Inc. 4,085 12/31/2008 100.0% 3/28/2006 11-d 68.6% 3/28/2006 11-e Dr. Gary Guido 1,702 11/30/2009 90.9% 3/28/2006 -------------------------------------------------------------------------------------------------------------------------------- 12 Planet Replay, Inc. 5,293 5/31/2016 86.4% 4/7/2006 13 Xanterra Parks & Resorts 30,195 11/30/2012 96.6% 4/19/2006 14 Bed Bath & Beyond 20,900 1/31/2019 100.0% 2/27/2006 15 Pel-Freez Clinical 44,066 4/30/2010 93.9% 5/2/2006 16 Trade Am Int. 195,990 8/31/2011 92.4% 1/1/2006 -------------------------------------------------------------------------------------------------------------------------------- 17 Wawa 5,634 5/31/2009 95.9% 4/24/2006 18 87.4% 3/31/2006 18-a 90.3% 3/31/2006 18-b 86.3% 3/31/2006 18-c 89.4% 3/31/2006 -------------------------------------------------------------------------------------------------------------------------------- 18-d 89.4% 3/31/2006 18-e 81.4% 3/31/2006 19 Needleman's Inc. 3,647 2/28/2011 96.6% 2/1/2006 20 100.0% 6/1/2006 21 Powerhouse Gym 22,706 5/31/2014 93.3% 4/24/2006 -------------------------------------------------------------------------------------------------------------------------------- 22 Prudential California Realty 5,124 3/31/2011 93.7% 5/1/2006 23 91.8% 3/29/2006 24 94.7% 4/12/2006 25 100.0% 4/27/2006 26 Office Depot, Inc. 31,713 12/31/2010 90.5% 3/31/2006 -------------------------------------------------------------------------------------------------------------------------------- 27 100.0% 6/1/2006 28 100.0% 6/1/2006 29 Spice Market 10,500 2/28/2017 100.0% 1/13/2006 30 China Super Buffet 6,700 5/31/2013 100.0% 4/19/2006 31 Webster Bank 4,000 6/30/2019 98.1% 1/17/2006 -------------------------------------------------------------------------------------------------------------------------------- 32 Big 5 Corp. 10,000 1/31/2017 100.0% 5/1/2006 33 Centex Home Equity Company, LLC 34,628 9/30/2010 100.0% 1/31/2006 34 76.3% 12/31/2005 35 Famous Footwear 10,000 3/31/2012 100.0% 3/15/2006 36 98.0% 3/6/2006 -------------------------------------------------------------------------------------------------------------------------------- 37 Exel Transportation Services, Inc. 1,200 12/31/2006 100.0% 5/2/2006 38 69.2% 12/31/2005 39 Panera Bread 5,000 9/16/2016 99.0% 4/13/2006 40 82.6% 12/31/2005 41 University of Texas Health Science Center 11,748 6/30/2010 82.4% 2/1/2006 -------------------------------------------------------------------------------------------------------------------------------- 42 Multiband Corporation 14,970 6/30/2017 84.4% 4/5/2006 43 100.0% 6/1/2006 44 100.0% 6/1/2006 45 100.0% 1/23/2006 46 96.7% 3/1/2006 -------------------------------------------------------------------------------------------------------------------------------- 47 Scottrade 1,764 3/31/2009 100.0% 3/1/2006 48 Citigroup Global Markets 9,124 11/30/2016 81.4% 4/1/2006 49 100.0% 2/8/2006 50 Nestle USA, Inc. 21,690 12/31/2008 100.0% 3/1/2006 51 93.7% 5/4/2006 -------------------------------------------------------------------------------------------------------------------------------- 51-a Visser Dentistry 2,400 6/30/2011 100.0% 5/4/2006 51-b Curves Fitness Center 1,950 1/31/2010 73.0% 5/4/2006 52 100.0% 2/2/2006 53 Blue Palm Selections, L.L.C., dba $1.00 Selections 3,256 6/2/2010 94.4% 4/26/2006 54 Corbin Hill 3,644 6/30/2006 94.5% 5/1/2006 -------------------------------------------------------------------------------------------------------------------------------- 55 97.8% 4/25/2006 56 Montgomery Newspapers 7,738 9/30/2007 77.7% 4/1/2006 57 91.9% 12/31/2005 58 Mattress King, Inc. 6,314 2/28/2010 100.0% 1/1/2006 59 100.0% 1/9/2006 -------------------------------------------------------------------------------------------------------------------------------- 60 100.0% 4/19/2006 61 Auto Zone 3,600 1/31/2009 100.0% 3/1/2006 -------------------------------------------------------------------------------------------------------------------------------- 62 Shoe City 6,720 2/28/2010 99.1% 1/26/2006 63 100.0% 3/23/2006 64 72.0% 3/31/2006 -------------------------------------------------------------------------------------------------------------------------------- 65 Kaiser Foundation Hospitals 4,770 2/28/2007 98.5% 4/1/2006 66 81.4% 12/31/2005 67 75.7% 12/31/2005 68 Euphorea Salon, LLC 3,067 4/30/2011 100.0% 3/1/2006 69 Outback Steakhouse 7,500 10/31/2015 94.7% 12/10/2005 -------------------------------------------------------------------------------------------------------------------------------- 70 97.5% 2/8/2006 71 Spartan Mortgage 3,696 2/28/2008 96.6% 3/1/2006 72 80.3% 12/31/2005 73 60.7% 12/31/2005 74 Pier One 9,488 3/31/2012 80.1% 3/14/2006 -------------------------------------------------------------------------------------------------------------------------------- 75 98.5% 4/20/2006 76 98.7% 4/11/2006 77 97.9% 1/31/2006 78 100.0% 1/1/2006 79 100.0% 1/9/2006 -------------------------------------------------------------------------------------------------------------------------------- 80 88.7% 4/30/2006 80-a Alta Cleaners 4,350 9/30/2010 86.5% 4/30/2006 80-b Bolsa Medical Arts Pharmacy 1,350 6/30/2006 92.9% 4/30/2006 81 Five Below, Inc. 4,240 4/30/2011 86.8% 5/3/2006 82 Dolgencorp, Inc. 8,000 12/31/2007 94.5% 5/4/2006 -------------------------------------------------------------------------------------------------------------------------------- 83 Joel Schwartz, DDS, LLC 3,039 7/31/2016 93.8% 5/1/2006 84 96.1% 3/1/2006 85 98.2% 2/15/2006 86 100.0% 6/1/2006 86-a 100.0% 6/1/2006 -------------------------------------------------------------------------------------------------------------------------------- 86-b 100.0% 6/1/2006 87 All Reasons Moving, Inc. 19,500 5/31/2010 100.0% 3/3/2006 88 69.5% 2/28/2006 89 Radio Shack 2,850 1/31/2007 94.8% 11/29/2005 90 The Philly Franchising 3,029 7/31/2009 68.5% 3/31/2006 -------------------------------------------------------------------------------------------------------------------------------- 91 95.9% 2/6/2006 92 56.0% 10/31/2005 93 96.7% 4/6/2006 94 100.0% 12/30/2005 95 75.7% 12/31/2005 -------------------------------------------------------------------------------------------------------------------------------- 96 74.9% 12/31/2005 97 66.4% 12/31/2005 98 57.2% 12/31/2005 99 58.9% 12/31/2005 100 Mattress Columbia 3,413 2/28/2011 100.0% 3/30/2006 -------------------------------------------------------------------------------------------------------------------------------- 101 95.8% 3/28/2006 102 93.8% 12/1/2005 103 72.8% 9/30/2005 104 SA Extended Medi Care 7,913 11/30/2006 100.0% 4/1/2006 105 AT&T Wireless Services 2,712 5/31/2009 100.0% 9/6/2005 -------------------------------------------------------------------------------------------------------------------------------- 106 100.0% 3/7/2006 107 100.0% 6/1/2006 108 Akasaka Restaurant 4,050 1/31/2011 94.2% 3/1/2006 109 68.2% 3/27/2006 110 Hosada Bros. 10,710 1/31/2007 92.0% 4/20/2006 -------------------------------------------------------------------------------------------------------------------------------- 111 J&T Builders 4,005 6/30/2008 100.0% 4/20/2006 112 Verizon Wireless 2,650 1/31/2009 100.0% 2/1/2006 113 Scovill Fasteners, Inc. 7,336 6/30/2012 90.2% 2/15/2006 114 Kragen Auto 4,800 10/31/2009 100.0% 2/16/2006 115 Crown Dental Group 2,302 8/18/2014 96.0% 2/17/2006 -------------------------------------------------------------------------------------------------------------------------------- 116 100.0% 12/30/2005 117 100.0% 6/1/2006 118 Eckerd Youth Alternatives, Inc. 4,088 11/30/2007 88.4% 3/31/2006 119 C.V. Fitness & Health Center 15,392 9/30/2007 97.4% 2/9/2006 120 1st Independent Bank 2,730 9/30/2019 100.0% 3/30/2006 -------------------------------------------------------------------------------------------------------------------------------- 121 95.7% 2/27/2006 122 78.9% 12/21/2005 123 Independent Review Consulting 2,175 2/28/2008 100.0% 2/24/2006 124 67.6% 10/31/2005 125 100.0% 6/1/2006 -------------------------------------------------------------------------------------------------------------------------------- 126 The Grossman Companies, Inc. 6,107 11/1/2008 100.0% 4/1/2006 127 89.4% 4/18/2006 128 Carsem, Inc. 4,567 6/30/2009 96.8% 3/22/2006 129 100.0% 3/30/2006 130 93.9% 2/2/2006 -------------------------------------------------------------------------------------------------------------------------------- 131 Flames, Inc. t/a Liberty Valence Restaurant 2,700 2/20/2016 100.0% 4/13/2006 132 Lauret Schreier, DDS, P.L.L.C. 3,000 3/31/2011 94.2% 5/15/2006 133 Affordable Cleaners 1,800 2/1/2010 94.3% 5/2/2006 134 100.0% 6/1/2006 135 100.0% 3/31/2006 -------------------------------------------------------------------------------------------------------------------------------- 136 100.0% 3/31/2006 137 100.0% 6/1/2006 138 100.0% 1/4/2006 139 81.0% 12/31/2005 140 Once Upon a Child 4,872 8/4/2010 88.9% 2/28/2006 -------------------------------------------------------------------------------------------------------------------------------- 141 Movie Gallery 7,124 10/31/2006 96.1% 11/1/2005 142 Digital Vision & Audio 3,212 11/30/2007 100.0% 4/19/2006 -------------------------------------------------------------------------------------------------------------------------------- 143 100.0% 6/1/2006 144 100.0% 1/31/2006 145 100.0% 3/24/2006 -------------------------------------------------------------------------------------------------------------------------------- 146 CE Painting Co. 2,709 12/31/2008 100.0% 3/10/2006 147 100.0% 6/1/2006 148 Ken & Margrt Merriwether 1,650 9/30/2009 93.3% 4/14/2006 149 Aaron Rents, Inc. 5,584 12/31/2009 100.0% 3/1/2006 150 T-Mobile 1,600 12/31/2011 91.5% 4/14/2006 -------------------------------------------------------------------------------------------------------------------------------- 151 Domino's Pizza 1,400 3/31/2011 100.0% 4/19/2006 152 Townhouse Cleaners 1,500 8/31/2007 100.0% 2/1/2006 153 62.9% 12/31/2005 154 The Pool People 2,486 6/30/2006 94.6% 3/28/2006 155 98.7% 3/13/2006 -------------------------------------------------------------------------------------------------------------------------------- 156 100.0% 3/29/2006 157 100.0% 6/1/2006 158 Shiny Nails 1,375 1/31/2010 100.0% 3/27/2006 159 100.0% 3/30/2006 160 100.0% 3/22/2006 -------------------------------------------------------------------------------------------------------------------------------- 160-a 100.0% 3/22/2006 160-b 100.0% 3/22/2006 161 100.0% 1/31/2006 162 B&C Homes 1,415 2/28/2011 100.0% 4/5/2006 163 96.2% 3/23/2006 -------------------------------------------------------------------------------------------------------------------------------- 164 Ent Federal Credit Union 1,780 10/31/2007 94.4% 4/3/2006 165 Chessco 1,875 12/31/2010 100.0% 1/24/2006 166 100.0% 6/1/2006 167 89.3% 1/4/2006 168 Taco Del Mar 1,540 7/5/2015 86.6% 2/22/2006 -------------------------------------------------------------------------------------------------------------------------------- 169 Adrian Cleaners 3,500 6/30/2009 100.0% 4/12/2006 170 Tropical Smoothie 1,304 6/30/2015 100.0% 1/10/2006 171 iSold it on eBay 1,460 3/31/2011 85.8% 3/29/2006 172 97.5% 11/17/2005 173 Jackson Hewitt Tax 1,679 1/31/2011 100.0% 3/1/2006 -------------------------------------------------------------------------------------------------------------------------------- 174 Starbucks Coffee Company 1,500 2/28/2015 100.0% 11/1/2005 175 Bumper to Bumper 3,965 9/30/2008 100.0% 8/31/2005 176 Montgomery Renal Center 6,488 5/30/2012 100.0% 12/1/2005 177 Mystic Inc. and Matthew 3,200 12/31/2006 100.0% 3/21/2006 178 100.0% 3/30/2006 -------------------------------------------------------------------------------------------------------------------------------- 179 Carolina Comfort, Inc. 12,000 8/31/2012 100.0% 2/16/2006 180 Dr. Dy Pediatric Clinic 1,380 7/31/2010 100.0% 3/20/2006 181 100.0% 2/9/2006 182 Dr. Batchelor 1,408 11/14/2010 100.0% 3/29/2006 183 100.0% 4/18/2006 -------------------------------------------------------------------------------------------------------------------------------- 184 Pinnacle Roofing 2,880 10/31/2006 100.0% 3/24/2006 185 100.0% 1/1/2006 186 100.0% 2/28/2006 187 Orka Distribution 2,480 7/31/2006 90.9% 2/8/2004 188 100.0% 1/18/2006 -------------------------------------------------------------------------------------------------------------------------------- 189 Papa Johns Pizza 1,177 2/29/2016 100.0% 3/7/2006 190 100.0% 3/15/2006 191 Staffmark Investments, LLC 6,869 5/31/2008 100.0% 1/2/2006 192 100.0% 6/1/2006 193 100.0% 4/3/2006 -------------------------------------------------------------------------------------------------------------------------------- 194 100.0% 4/17/2006 195 Classic Gymnastics 4,176 8/31/2006 100.0% 5/3/2006 196 Euro Design 8,000 1/31/2009 100.0% 3/10/2006 197 100.0% 2/1/2006 198 Kelly Services, Inc. 1,252 4/30/2008 100.0% 5/1/2006 -------------------------------------------------------------------------------------------------------------------------------- 199 Super Mini Mart 2,000 10/31/2008 94.1% 2/6/2006 200 100.0% 3/29/2006 201 FM Industries, LLC 13,000 10/31/2007 100.0% 3/3/2006 202 100.0% 3/10/2006 203 74.6% 4/4/2006 -------------------------------------------------------------------------------------------------------------------------------- 204 Acordia West Inc. 6,510 3/31/2009 100.0% 5/1/2006 205 The Gun Rack 1,200 3/31/2008 100.0% 4/1/2005 206 94.1% 3/16/2006 207 The UPS Store 1,200 9/30/2009 90.3% 3/9/2006 208 Scott Taylor 750 7/31/2007 100.0% 2/17/2006 -------------------------------------------------------------------------------------------------------------------------------- 209 100.0% 11/1/2005 210 89.2% 3/31/2006 211 100.0% 11/18/2005 212 100.0% 1/24/2006 213 Syed A. Hassnain-TAJ Spice & Sweets 1,052 3/31/2007 100.0% 12/1/2005 -------------------------------------------------------------------------------------------------------------------------------- UPFRONT MONTHLY REPLACEMENT REPLACEMENT UPFRONT MONTHLY MONTHLY TAX ID RESERVES ($) RESERVES ($) TI/LC ($) TI/LC ($) ESCROW ($) ----------------------------------------------------------------------------------------------------------------------------- 1 2 1,019,431 3 5,221 4 45,030 4-a ----------------------------------------------------------------------------------------------------------------------------- 4-b 4-c 4-d 4-e 5 7,471 1,000,000 110,735 ----------------------------------------------------------------------------------------------------------------------------- 6 12,231 12,231 37,500 37,500 74,535 7 6,345 29,400 49,660 7-a 7-b 7-c ----------------------------------------------------------------------------------------------------------------------------- 7-d 7-e 8 4,667 17,995 9 15,000 45,366 9-a ----------------------------------------------------------------------------------------------------------------------------- 9-b 9-c 9-d 10 4,208 4,208 14,167 14,167 31,056 11 4,635 20,900 34,916 ----------------------------------------------------------------------------------------------------------------------------- 11-a 11-b 11-c 11-d 11-e ----------------------------------------------------------------------------------------------------------------------------- 12 13 2,400,000 48,586 14 15 150,000 12,350 16 12,302 24,962 ----------------------------------------------------------------------------------------------------------------------------- 17 1,048 1,048 3,930 3,930 18,616 18 24,403 24,403 18,624 18-a 18-b 18-c ----------------------------------------------------------------------------------------------------------------------------- 18-d 18-e 19 1,272 1,272 2,083 2,083 16,324 20 21 87,287 ----------------------------------------------------------------------------------------------------------------------------- 22 23 10,000 15,733 24 72,000 42,805 25 26 27,500 ----------------------------------------------------------------------------------------------------------------------------- 27 28 29 825 825 11,223 30 54,824 75,000 17,050 31 673 673 24,865 ----------------------------------------------------------------------------------------------------------------------------- 32 486 2,100 4,412 33 18,816 34 13,896 13,896 8,034 35 760 760 20,660 36 3,300 10,977 ----------------------------------------------------------------------------------------------------------------------------- 37 23,979 38 17,955 25,297 39 1,359 205,088 16,051 40 425,000 5,914 41 2,242 8,850 9,397 ----------------------------------------------------------------------------------------------------------------------------- 42 1,992 6,334 26,629 43 1,725 600,000 44 2,635 2,635 7,924 45 46 759 14,733 ----------------------------------------------------------------------------------------------------------------------------- 47 1,333 200,000 5,500 8,452 48 12,570 49 50 2,203 8,099 51 9,696 8,802 ----------------------------------------------------------------------------------------------------------------------------- 51-a 51-b 52 2,120 389,000 2,875 5,625 53 16,344 54 204,000 13,906 ----------------------------------------------------------------------------------------------------------------------------- 55 7,521 21,087 56 1,740 248,510 20,833 18,000 57 7,500 9,579 58 1,188 5,941 6,275 59 ----------------------------------------------------------------------------------------------------------------------------- 60 61 379 379 1,833 1,833 8,021 ----------------------------------------------------------------------------------------------------------------------------- 62 1,404 3,636 6,992 63 12,825 64 9,813 3,531 ----------------------------------------------------------------------------------------------------------------------------- 65 1,759 3,500 5,950 66 9,570 8,989 67 8,540 8,540 6,574 68 488 488 2,542 2,542 17,756 69 990 2,350,000 2,000 5,927 ----------------------------------------------------------------------------------------------------------------------------- 70 71 1,583 3,000 7,817 72 200,000 4% of Monthly Gross Revenues 9,979 73 125,000 74 841 ----------------------------------------------------------------------------------------------------------------------------- 75 4,850 10,351 76 1,904 6,619 77 240,000 78 79 ----------------------------------------------------------------------------------------------------------------------------- 80 872 872 4,167 4,167 13,995 80-a 80-b 81 155,000 3,321 82 1,424 3,000 3,870 ----------------------------------------------------------------------------------------------------------------------------- 83 839 839 3,500 3,500 5,968 84 4,500 9,268 85 7,000 3,870 86 3,446 3,446 86-a ----------------------------------------------------------------------------------------------------------------------------- 86-b 87 1,414 5,468 9,417 88 6,896 6,014 89 365 2,650 13,787 90 150,000 13,132 ----------------------------------------------------------------------------------------------------------------------------- 91 4,826 92 4% of Monthly Gross Revenues 11,577 93 3,775 15,588 94 95 7,906 7,906 6,217 ----------------------------------------------------------------------------------------------------------------------------- 96 No less than 4% of the monthly gross income 97 6,860 6,860 6,993 98 6,728 6,728 4,395 99 6,624 6,624 8,174 100 49,000 3,732 ----------------------------------------------------------------------------------------------------------------------------- 101 160,000 2,785 5,723 102 103 792,560 7,397 9,976 104 1,235 1,235 3,833 3,833 9,828 105 ----------------------------------------------------------------------------------------------------------------------------- 106 1,200 2,760 107 583 583 108 3,948 525 2,655 109 5,745 110 120,000 1,079 ----------------------------------------------------------------------------------------------------------------------------- 111 60,000 572 112 237 237 1,000 1,000 4,170 113 795 131,250 5,642 114 115 1,500 2,294 ----------------------------------------------------------------------------------------------------------------------------- 116 117 750 750 186,415 2,059 118 3,125 6,339 119 2,999 10,974 120 45,000 3,438 ----------------------------------------------------------------------------------------------------------------------------- 121 3,550 6,861 122 200,000 339 123 365 3,793 3,899 124 125 250 ----------------------------------------------------------------------------------------------------------------------------- 126 7,405 127 4,266 128 4,633 129 130 1,200 4,890 ----------------------------------------------------------------------------------------------------------------------------- 131 1,616 132 65,600 3,904 133 350 350 50,000 2,116 134 426 426 135 11,596 ----------------------------------------------------------------------------------------------------------------------------- 136 15,895 137 138 139 10,834 5,417 2,709 140 613 75,000 3,022 5,293 ----------------------------------------------------------------------------------------------------------------------------- 141 82,000 86,000 6,211 142 500 2,353 5,179 ----------------------------------------------------------------------------------------------------------------------------- 143 144 1,208 1,208 6,334 145 7,650 ----------------------------------------------------------------------------------------------------------------------------- 146 863 147 11,930 148 1,800 3,896 149 14,000 (LOC) 540 36,000 (LOC) 6,392 150 960 ----------------------------------------------------------------------------------------------------------------------------- 151 1,912 152 153 2,451 153 280,000 6,738 2,350 154 642 3,110 155 747 2,882 ----------------------------------------------------------------------------------------------------------------------------- 156 1,654 157 158 258 2,119 159 1,625 3,222 160 ----------------------------------------------------------------------------------------------------------------------------- 160-a 160-b 161 875 875 3,966 162 3,096 163 633 3,237 ----------------------------------------------------------------------------------------------------------------------------- 164 287 287 1,167 1,167 2,919 165 161 161 166 747 747 2,011 2,011 2,743 167 2,149 7,442 168 130 1,067 3,398 ----------------------------------------------------------------------------------------------------------------------------- 169 170 124 746 2,976 171 800 1,653 172 830 3,522 173 ----------------------------------------------------------------------------------------------------------------------------- 174 168 924 3,036 175 378 378 1,240 1,240 1,735 176 177 3,224 178 ----------------------------------------------------------------------------------------------------------------------------- 179 1,500 2,685 180 138 789 1,287 181 933 933 3,750 182 137 888 2,451 183 777 ----------------------------------------------------------------------------------------------------------------------------- 184 75,000 1,393 185 186 632 1,754 187 570 2,420 188 2,283 ----------------------------------------------------------------------------------------------------------------------------- 189 877 190 1,000 1,797 191 315 967 4,371 192 40 40 193 40,000 1,000 3,336 ----------------------------------------------------------------------------------------------------------------------------- 194 2,743 195 65,000 1,041 196 40,130 (LOC) 1,433 3,935 197 625 3,133 198 543 ----------------------------------------------------------------------------------------------------------------------------- 199 39,143 563 775 1,365 200 201 4,963 202 1,651 203 463 3,640 ----------------------------------------------------------------------------------------------------------------------------- 204 110,000 (LOC) 1,799 3,075 205 206 417 2,489 207 360 29,000 764 1,839 208 814 ----------------------------------------------------------------------------------------------------------------------------- 209 1,059 210 4,427 211 212 213 ----------------------------------------------------------------------------------------------------------------------------- MONTHLY INSURANCE UPFRONT OTHER ESCROW ID ESCROW ($) OTHER ESCROW ($) (9) DESCRIPTION (9) ------------------------------------------------------------------------------------------------------------------------------------ 1 2 15,000,000 Identified Rollover Space Reserve ($15,000,000), Ground Rent Reserve 3 4 25,550 4-a ------------------------------------------------------------------------------------------------------------------------------------ 4-b 4-c 4-d 4-e 5 4,025 1,000,000 Holdback Impound ------------------------------------------------------------------------------------------------------------------------------------ 6 14,212 2,077,939 Weston Hurd/NEBS/Barnes Distribution Escrows 7 3,283 264,734 Base Rent Reserve ($200,000), Tenant Holdback Reserve ($64,734), Buildout Reserve 7-a 7-b 7-c ------------------------------------------------------------------------------------------------------------------------------------ 7-d 7-e 8 14,185 3,009,800 (LOC) Flood Insurance Requirement ($2,000,000 LOC), Rent Loss Insurance Requirement ($1,009,800 LOC) 9 10,327 9-a ------------------------------------------------------------------------------------------------------------------------------------ 9-b 9-c 9-d 10 6,671 400,000 Old Navy Holdback 11 2,717 236,886 Holdback Reserve ------------------------------------------------------------------------------------------------------------------------------------ 11-a 11-b 11-c 11-d 11-e ------------------------------------------------------------------------------------------------------------------------------------ 12 4,033,050 (LOC) Occupancy 13 350,000 MPEG Reserve 14 15 613,840 Occupancy Reserve ($450,000), Horizon Health Reserve ($163,840) 16 100,000 Environmental Impound ------------------------------------------------------------------------------------------------------------------------------------ 17 1,192 279,267 Musicland Tenant Reserve 18 5,515 18-a 18-b 18-c ------------------------------------------------------------------------------------------------------------------------------------ 18-d 18-e 19 20 21 3,090 360,000 Additional Security ------------------------------------------------------------------------------------------------------------------------------------ 22 634,078 Rent and Construction Guarantee Escrows ($634,078), Occupancy Reserve 23 24 25 26 12,340 2,100,000 Vacant Space Leasing Reserve Holdback ------------------------------------------------------------------------------------------------------------------------------------ 27 28 29 30 437,896 Tenant Lease Mervyns ($433,104) ; Ground Rent ($4,791.67) 31 650 Use Permit Escrow ------------------------------------------------------------------------------------------------------------------------------------ 32 1,530 530,000 Occupancy Reserve ($264,000), Tenant Improvement Reserve ($154,750), Big 5 Rent Reserve ($111,250) 33 2,683 34 3,001 35 1,354 78,000 Tenant Rent Step Escrow 36 2,401 ------------------------------------------------------------------------------------------------------------------------------------ 37 38 39 935 1,489,923 Hibitt Reserve ($45,000), Alltel Reserve ($3,372), Aspen Dental Reserve ($900,000), Check Smart Reserve ($500,000), Nail Club Reserve ($5,182), Panera Bread Reserve ($36,369) 40 4,582 41 5,594 3,500,000 Economic Impound ------------------------------------------------------------------------------------------------------------------------------------ 42 2,317 1,246,918 Smith Barney Reserve ($131,250), Bobcat Reserve ($115,668), Corporate Technologies, LLC and Multiband Tenancy LOC ($1,000,000), Special Leasing Reserve 43 44 4,713,755 BMCA Lease Work, BMCA Rent HB, Site Plan Approval HB, Environmental HB 45 46 936 ------------------------------------------------------------------------------------------------------------------------------------ 47 1,310 48 126,000 Citigroup Letter of Credit 49 50 1,208 300,000 Cash Collateral Reserve ($300,000) 51 2,667 ------------------------------------------------------------------------------------------------------------------------------------ 51-a 51-b 52 1,199 1,473,017 Prepaid Rent Reserve ($1,151,688), Leader Express Rent Reserve ($321,329) 53 54 1,794 ------------------------------------------------------------------------------------------------------------------------------------ 55 6,348 56 1,730 57 2,267 58 1,313 16,000 Merle Norman Reserve 59 ------------------------------------------------------------------------------------------------------------------------------------ 60 61 533 ------------------------------------------------------------------------------------------------------------------------------------ 62 2,166 63 810 64 1,324 ------------------------------------------------------------------------------------------------------------------------------------ 65 1,890 66 67 942 68 408 69 1,545 ------------------------------------------------------------------------------------------------------------------------------------ 70 71 2,145 471,481 GSA Reserve ($400,000), Rent Reserve ($71,481) 72 1,687 73 74 833 ------------------------------------------------------------------------------------------------------------------------------------ 75 7,075 76 777 77 78 79 ------------------------------------------------------------------------------------------------------------------------------------ 80 1,276 80-a 80-b 81 515,000 Additional Security 82 1,399 ------------------------------------------------------------------------------------------------------------------------------------ 83 773 84 3,315 85 3,220 86 86-a ------------------------------------------------------------------------------------------------------------------------------------ 86-b 87 88 2,435 89 815 Special Leasing Reserve (Springing) 90 582 ------------------------------------------------------------------------------------------------------------------------------------ 91 1,130 92 1,928 325,000 Holdback(LOC) 93 150,000 Additional Security/Paydown Funds 94 95 1,395 ------------------------------------------------------------------------------------------------------------------------------------ 96 97 975 98 942 99 751 100 ------------------------------------------------------------------------------------------------------------------------------------ 101 3,527 50,000 (LOC) Environmental 102 251,464 CafePress Rent Step Escrow 103 104 107,000 Tenant Reserve - Advanced Bio 105 ------------------------------------------------------------------------------------------------------------------------------------ 106 1,500 107 108 109 674 2,250,000 Economic Holdback Impound 110 ------------------------------------------------------------------------------------------------------------------------------------ 111 112 425 113 531 22,927 McCalla Reserve ($22,926.64), Scoville Termination Resesrve, Debt Service Coverage Reserve 114 115 1,181 ------------------------------------------------------------------------------------------------------------------------------------ 116 25,000 Environmental 117 7,500 1,012,400 Sixth Building Escrow, Rent Step Escrow, Insurance Deductible 118 119 1,250 175,000 Roof Repair Reserve ($175,000), Family Dollar Reserve, ALDI Reserve 120 ------------------------------------------------------------------------------------------------------------------------------------ 121 2,172 122 123 667 124 125 ------------------------------------------------------------------------------------------------------------------------------------ 126 127 128 129 130 1,700 ------------------------------------------------------------------------------------------------------------------------------------ 131 571 132 15,873 Rent Concessions 133 841 134 135 ------------------------------------------------------------------------------------------------------------------------------------ 136 137 138 500 Minimum Account Balance Impound 139 1,704 140 ------------------------------------------------------------------------------------------------------------------------------------ 141 1,306 250,000 Economic Holdback 142 961 ------------------------------------------------------------------------------------------------------------------------------------ 143 144 2,140 308,577 MCI Holdback ($300,000), Violations Holdbacks ($7,577), Environmental Holdback ($1,000) 145 ------------------------------------------------------------------------------------------------------------------------------------ 146 147 926 500 Minimum Account Balance Impound 148 594 149 1,989 6,500 Rent Holdback ($6,500), Beall's Springing Leasing Reserve 150 ------------------------------------------------------------------------------------------------------------------------------------ 151 152 526 153 154 812 155 749 ------------------------------------------------------------------------------------------------------------------------------------ 156 157 18,572 Minimum Account Balance Impound 158 606 159 1,134 160 ------------------------------------------------------------------------------------------------------------------------------------ 160-a 160-b 161 1,631 212,880 MCI Holdback ($200,000), Violations Holdbacks ($10,880), Environmental Holdback ($2,000) 162 163 433 ------------------------------------------------------------------------------------------------------------------------------------ 164 551 165 166 409 167 2,435 168 ------------------------------------------------------------------------------------------------------------------------------------ 169 170 679 171 219 49,027 Holdback Impounds 172 546 173 ------------------------------------------------------------------------------------------------------------------------------------ 174 359 175 1,250 Environmental Holdback 176 177 178 ------------------------------------------------------------------------------------------------------------------------------------ 179 180 767 181 532 182 415 183 ------------------------------------------------------------------------------------------------------------------------------------ 184 185 697 186 187 488 188 877 ------------------------------------------------------------------------------------------------------------------------------------ 189 112,856 Additional Security/Unpaid Contractor Sums 190 191 502 192 72,000 Environmental 193 ------------------------------------------------------------------------------------------------------------------------------------ 194 195 196 197 841 198 ------------------------------------------------------------------------------------------------------------------------------------ 199 795 200 201 202 203 479 ------------------------------------------------------------------------------------------------------------------------------------ 204 176 205 206 207 411 208 174 ------------------------------------------------------------------------------------------------------------------------------------ 209 387 210 211 212 500 Minimum Account Balance Impound 213 ------------------------------------------------------------------------------------------------------------------------------------ ENVIRONMENTAL ENGINEERING ID REPORT DATE REPORT DATE LOAN SPONSOR ------------------------------------------------------------------------------------------------------------------------------------ 1 3/14/2006 3/27/2006 PREIT Associates LP 2 4/5/2006 4/5/2006 Jack Rudin, Beth Rudin DeWoody, Eric C. Rudin, Madeleine Rudin Johnson, William C. Rudin, Katherine L. Rudin 3 2/8/2006 1/20/2006 Robert C. Baker 4 5/15/2006 Various Paul Milhous, Robert Milhous, Ropamil LP, Robert Milhous Trust and Paul Milhous Trust 4-a 5/15/2006 4/25/2006 ------------------------------------------------------------------------------------------------------------------------------------ 4-b 5/15/2006 5/15/2006 4-c 5/15/2006 5/15/2006 4-d 5/15/2006 5/15/2006 4-e 5/15/2006 5/15/2006 5 3/8/2006 4/26/2006 Dennis Doyle ------------------------------------------------------------------------------------------------------------------------------------ 6 1/12/2006 3/8/2006 Werner Minshall and John Stewart 7 Various Various Mark R. Munsell 7-a 2/2/2006 1/30/2006 7-b 2/2/2006 2/1/2006 7-c 2/1/2006 2/1/2006 ------------------------------------------------------------------------------------------------------------------------------------ 7-d 2/2/2006 1/30/2006 7-e 2/2/2006 1/31/2006 8 1/9/2006 1/9/2006 Frederick R. Heebe 9 Various 3/24/2006 Mills, Ron; Ben Spencer; Kevin Reid; MAC Income I, LP 9-a 3/14/2006 3/24/2006 ------------------------------------------------------------------------------------------------------------------------------------ 9-b 3/13/2006 3/24/2006 9-c 3/13/2006 3/24/2006 9-d 3/13/2006 3/24/2006 10 2/15/2006 2/13/2006 Mark Frankel and Chesky Frankel 11 Various Various Mark R. Munsell ------------------------------------------------------------------------------------------------------------------------------------ 11-a 2/3/2006 1/31/2006 11-b 2/2/2006 1/31/2006 11-c 2/2/2006 2/1/2006 11-d 2/3/2006 1/30/2006 11-e 2/2/2006 1/31/2006 ------------------------------------------------------------------------------------------------------------------------------------ 12 2/10/2006 2/9/2006 Inland Western Retail Real Estate Trust, Inc. 13 4/5/2006 4/3/2006 Lowe Real Estate Income and Growth Partners, LLC 14 2/21/2006 2/7/2006 Minto Builders (Florida), Inc. 15 9/26/2005 9/28/2005 Robert E. Smietana, John E. Shaffer, Melissa S. Pielet, Daniel F. Miranda, Eric E. Ogden, Michael J. Klonoski 16 3/3/2006 12/31/2005 High Street Real Estate Fund II ------------------------------------------------------------------------------------------------------------------------------------ 17 3/28/2006 3/28/2006 Keith Stoltz 18 Various Various Lazard Freres Real Estate Investors 18-a 12/5/2005 12/9/2005 18-b 12/12/2005 12/12/2005 18-c 12/13/2005 12/12/2005 ------------------------------------------------------------------------------------------------------------------------------------ 18-d 12/8/2005 12/9/2005 18-e 12/12/2005 12/12/2005 19 1/20/2006 1/20/2006 Acadia Realty Trust 20 7/21/2005 9/8/2005 L&R Investment Co. 21 3/17/2006 3/17/2006 Farahvar, Houshang; Farhad Nikanjam; Kourosh Youshaei ------------------------------------------------------------------------------------------------------------------------------------ 22 4/13/2006 4/7/2006 David S. Blatt & Related Family Trusts 23 1/10/2006 12/27/2005 World Investments, Inc.; Omaha World-Herald Company 24 12/28/2005 12/12/2005 Russell Geyser and Patrick Beach 25 1/9/2006 12/27/2005 Paul Amir 26 12/9/2005 12/12/2005 William S. Weisman, Daniel S. Mandel ------------------------------------------------------------------------------------------------------------------------------------ 27 3/14/2006 3/14/2006 Oscar E Stefanutti, William Widmyer, Fred Gordon 28 3/14/2006 3/14/2006 Oscar E Stefanutti, William Widmyer, Fred Gordon 29 1/9/2006 12/30/2005 Charles Blaichman, Joe Daly, William Schaffel and Phillip Katz 30 1/12/2006 1/13/2006 Bruce Leidenberger and Michael McPhee 31 2/3/2006 2/2/2006 Anthony Piazza, Theodore Weinberg, Saul Weinberg and William Weinberg ------------------------------------------------------------------------------------------------------------------------------------ 32 1/18/2006 1/3/2006 Morad Shophet, Abraham Shofet 33 2/6/2006 2/6/2006 The Schomac Group, Inc. 34 1/5/2006 1/5/2006 Bharat Lall and Suresh Patel 35 12/30/2005 12/29/2005 Doruk Borecki, Ahmet Borecki and Kenan Borecki 36 3/15/2006 3/13/2006 Richard M. Perlman ------------------------------------------------------------------------------------------------------------------------------------ 37 4/19/2006 3/22/2006 Lichter, Stuart, Frederic and Barbara Rosenberg 38 2/13/2006 2/10/2006 Joseph Pacitti, Hersha Hospitality Trust 39 3/8/2006 3/9/2006 Lawrence B. Levey 40 2/17/2006 2/20/2006 Nizar Damji, Mariyam Damji 41 12/6/2005 12/5/2005 Jorge Ibarra ------------------------------------------------------------------------------------------------------------------------------------ 42 9/30/2005 9/30/2005 Norman H. Leslie 43 1/30/2006 1/26/2006 Marc F. Solomon 44 1/24/2006 1/24/2006 Greg Manocherian and Robert Danial 45 11/29/2005 11/29/2005 Cole Companies, Inc. 46 2/21/2006 2/24/2006 Jana Yohanan ------------------------------------------------------------------------------------------------------------------------------------ 47 2/10/2006 2/10/2006 John Ziegler 48 3/29/2006 3/30/2006 Robert Weyers, Jeffrey Weyers, Paul Klister 49 12/2/2005 12/5/2005 Mesirow Realty-Sale Leaseback Inc. 50 2/24/2006 2/22/2006 John A. Meekins 51 5/3/2006 Various David Christenholz, Christopher Nottoli ------------------------------------------------------------------------------------------------------------------------------------ 51-a 5/3/2006 5/2/2006 51-b 5/3/2006 5/3/2006 52 12/21/2005 12/7/2005 John E. Shaffer, Robert Smietana, Melissa Pielet, Robert Frain 53 4/14/2006 4/21/2006 Greenstein, Jerald 54 4/3/2006 6/28/2005 Paul F. Queyrel ------------------------------------------------------------------------------------------------------------------------------------ 55 3/14/2006 3/14/2006 Ari Susman 56 3/15/2006 3/15/2006 Ivan Stern 57 1/17/2006 1/17/2006 Family Housing Resources, Inc. 58 12/30/2005 12/28/2005 G.H. Christianson, II; James W. Caden and W. David Bartholomew 59 12/1/2005 11/30/2005 Mesirow Realty-Sale Leaseback Inc. ------------------------------------------------------------------------------------------------------------------------------------ 60 9/12/2005 3/9/2006 Kessler, Randall; Gary A. Kessler 61 4/4/2006 4/4/2006 Steven Fogel and Howard Banchik ------------------------------------------------------------------------------------------------------------------------------------ 62 1/18/2006 1/18/2006 Gerald Bedrin, Paul Bedrin 63 2/10/2006 2/13/2006 Arthur Tom and Barbara Tom 64 3/28/2006 3/27/2006 Richard Siegert ------------------------------------------------------------------------------------------------------------------------------------ 65 1/3/2006 1/3/2006 Morad Shophet, Abraham Shofet 66 1/19/2006 1/20/2006 Hersha Hospitality Trust 67 2/20/2006 4/6/2006 Bharat Lall and Suresh Patel 68 3/10/2006 3/10/2006 Steven Fogel and Howard Banchik 69 12/27/2005 12/27/2005 Steve Mote, Robert J. Wustner ------------------------------------------------------------------------------------------------------------------------------------ 70 1/16/2006 1/16/2006 Andrew Fuller, Jeffrey M. Mayer 71 3/22/2006 3/20/2006 Scott McWhorter, Michael Green 72 4/25/2006 4/25/2006 David Wespiser, Brian Kelly, James Clawson, Robert Ciampa, Anil B. Patel, Gunvant C. Shah, Hasmukh P. Patel, Mahendra K. Enaker, Ketan B. Pema, Mike Monchino, Don Johnson, Harold D. Smith, Dan Fauske (& Elaine), Elizabeth Swailes 73 4/25/2006 4/26/2006 Nayan Patel 74 2/14/2006 3/1/2006 Frank Jonna, Christine Jonna Piligian ------------------------------------------------------------------------------------------------------------------------------------ 75 2/14/2006 2/21/2006 Jeanne Sommerville, B. Raymond Russo 76 3/31/2006 3/31/2006 John P. Walsh 77 10/17/2005 2/22/2006 Michael Tennenbaum 78 3/10/2006 3/10/2006 Richard D Kessler, Bruce M Kessler 79 12/1/2005 12/5/2005 Mesirow Realty-Sale Leaseback Inc. ------------------------------------------------------------------------------------------------------------------------------------ 80 12/12/2005 1/5/2006 David Wu 80-a 12/12/2005 1/5/2006 80-b 12/12/2005 1/5/2006 81 3/15/2006 5/1/2006 Furman Family Associates; Lynnhaven, LLC, Commonwealth Associates 82 3/20/2006 3/20/2006 Alan Jacobs, Robert Koenig, John Whalen ------------------------------------------------------------------------------------------------------------------------------------ 83 2/7/2006 2/10/2006 Michael Brodsky 84 3/15/2006 3/15/2006 Eugene J. Williams 85 2/17/2006 2/1/2006 C. Edward Springman 86 1/19/2006 3/27/2006 Kimco Realty Corporation 86-a 1/19/2006 3/27/2006 ------------------------------------------------------------------------------------------------------------------------------------ 86-b 1/19/2006 3/27/2006 87 2/21/2006 2/21/2006 Dave Dollinger 88 4/12/2006 4/12/2006 Bharat Patel 89 3/1/2006 1/24/2006 James M. Ticus, Jessica E. Ticus 90 1/13/2006 1/10/2006 Saperstein, Jan ; Jeffrey Kerker ------------------------------------------------------------------------------------------------------------------------------------ 91 3/23/2006 3/16/2006 Richard C Lundin 92 11/30/2005 1/18/2006 Leon Heller, David Nankin 93 2/28/2006 3/28/2006 Lechiara, Steve 94 12/5/2005 12/5/2005 Economy Realty, LP 95 1/4/2006 1/6/2006 Bharat Lall and Suresh Patel ------------------------------------------------------------------------------------------------------------------------------------ 96 12/27/2005 1/9/2006 Richard L. Vilardo, Ronald E. Franklin 97 1/4/2006 1/6/2006 Bharat Lall and Suresh Patel 98 1/4/2006 1/4/2006 Bharat Lall and Suresh Patel 99 1/5/2006 1/6/2006 Bharat Lall and Suresh Patel 100 3/27/2006 3/30/2006 Adkins, Charles T. ------------------------------------------------------------------------------------------------------------------------------------ 101 4/13/2006 3/23/2006 Ray, Chad M. 102 1/9/2006 1/9/2006 Daniel Smith, Ted Moses, David and Elizabeth Byron 103 12/8/2005 12/8/2005 Hersha Hospitality Trust 104 11/30/2005 11/29/2005 Greg Forester 105 12/23/2005 12/22/2005 Alfred Leenstra ------------------------------------------------------------------------------------------------------------------------------------ 106 11/1/2005 10/24/2005 Jonathan Berns, Edward Schwartz 107 2/9/2006 1/19/2006 Dr. John Prestifilippo, John Prestifillippo Jr. and Stephen Malle 108 1/5/2006 2/23/2006 Jay Ross 109 2/14/2006 2/16/2006 Floyd R Ervin, Junetta D. Ervin 110 11/9/2005 11/8/2005 Albany, Anthony ------------------------------------------------------------------------------------------------------------------------------------ 111 11/10/2005 11/8/2005 Albany, Anthony 112 1/26/2006 1/24/2006 Michael Ziman, Jill Ziman and Gary Ziman 113 2/14/2006 1/20/2006 Richard L. Thompson, Lewis H. Singletary 114 3/2/2006 3/8/2006 Steve Glusker, Donald Baron, Ed Franklin 115 1/10/2006 1/3/2006 Morad Shophet, Abraham Shofet ------------------------------------------------------------------------------------------------------------------------------------ 116 12/1/2005 12/5/2005 Mesirow Realty-Sale Leaseback Inc. 117 12/12/2005 12/19/2005 Wayne Greenleaf and Jaime Greenleaf 118 3/1/2006 3/2/2006 Burdge, Bruce; Kristen Kennedy Showalter 119 2/10/2006 2/6/2006 Howard C. Nolan, Jr. 120 2/28/2006 3/1/2006 Oppenheimer, Houston ------------------------------------------------------------------------------------------------------------------------------------ 121 12/7/2005 12/9/2005 Nathan Metzger, Donald W. Brown, Larry P. Lieberman 122 12/22/2005 12/13/2005 Gaylord, Robert; John A. Belcher; James M. Beverly; Michael M. Evans; Terry Forehand 123 1/3/2005 12/23/2005 J. Russell Pitto 124 12/15/2005 12/5/2005 Wallace Krone 125 3/9/2006 2/17/2006 Kenneth Cohen ------------------------------------------------------------------------------------------------------------------------------------ 126 2/7/2006 1/31/2006 Mark Dickinson, James Lavin and Louis Grossman 127 3/22/2006 3/15/2006 Allen, Craig; Doris Allen 128 3/7/2006 3/14/2006 McFarlane, Dennis; Douglas Usher; James Schmidt; Charles Seufferlein 129 3/24/2006 4/3/2006 Kowalik, Jeffrey T.; Jeffrey J. Donovan 130 1/13/2006 1/11/2006 Elliot Leibowitz ------------------------------------------------------------------------------------------------------------------------------------ 131 3/16/2006 4/14/2006 Harper, Russell B. 132 4/9/2006 5/2/2006 Kermin, Don; John Bodenmann 133 12/13/2005 12/13/2005 Jeff Susa and Lee Siefert 134 11/2/2005 11/2/2005 Sotiris Kolokotronis and Matina Kolokotronis 135 3/10/2006 3/9/2006 Rosenblum, Melvin ------------------------------------------------------------------------------------------------------------------------------------ 136 3/13/2006 3/9/2006 Rosenblum, Melvin 137 2/24/2006 3/23/2006 Steve Glusker, Donald Baron, Ed Franklin 138 NAP 1/30/2006 Shirley K. Osumi 139 11/21/2005 11/21/2005 Robert J. Giordano and David Culpepper 140 NAP 4/12/2006 John Thompson, Mr. Paul Thrift, Gregory Gibson ------------------------------------------------------------------------------------------------------------------------------------ 141 12/5/2005 12/1/2005 Concolo, Inc. 142 4/7/2006 4/13/2006 Rick Larson, Walter L. Bush, Jr. ------------------------------------------------------------------------------------------------------------------------------------ 143 1/26/2006 3/14/2006 GE Pension Trust and Kimco Realty Corporation 144 11/17/2005 11/16/2005 Marilyn Finkelstein and Ilene Morgan 145 3/9/2006 3/21/2006 Denzler, Gery; Christel Denzler ------------------------------------------------------------------------------------------------------------------------------------ 146 2/22/2006 3/14/2006 Evans, Robert 147 NAP 3/20/2006 Kerry Riordan-Sykes, Sean Riordan, Mike Riordan 148 3/9/2006 2/27/2006 Richard LK Mendenhall 149 3/13/2006 3/10/2006 David T. Stewart 150 3/30/2006 4/18/2006 Howell, Paul R. ------------------------------------------------------------------------------------------------------------------------------------ 151 2/10/2006 4/24/2006 Whidbee, Hoyt; Kathleen Whidbee 152 1/27/2006 1/12/2006 Aida G. Norhadian, Armen Norhadian 153 1/19/2006 1/19/2006 Hersha Hospitality Trust 154 3/2/2006 2/23/2006 Steven T. Hovland 155 NAP 2/22/2006 Adiel L Adams, Aiken Storage Company, LLC ------------------------------------------------------------------------------------------------------------------------------------ 156 2/28/2006 2/24/2006 Sneider, Arturo; Unitas Trust 157 NAP 3/16/2006 Suad J. Khuri, Jamil Khuri 158 2/6/2006 2/6/2006 Steven T. Hovland, Michael Mancuso, Dr. John Mauriel, Jr. 159 3/14/2006 3/14/2006 William R. Beck 160 2/3/2006 2/3/2006 Lawrence B. Levey ------------------------------------------------------------------------------------------------------------------------------------ 160-a 2/3/2006 2/3/2006 160-b 2/3/2006 2/3/2006 161 11/17/2005 11/17/2005 Marilyn Finkelstein and Ilene Morgan 162 4/7/2006 3/31/2006 Bowen, Bruce; Claudia Bowen-Cambell 163 NAP 2/16/2006 Iona Robinson, Leigh Robinson ------------------------------------------------------------------------------------------------------------------------------------ 164 1/25/2006 1/24/2006 Elaine Nearon and David Nearon 165 2/3/2006 2/3/2006 Albert J. Kleban 166 2/27/2006 3/3/2006 Robert A McHugh, Michael C Jaeger 167 NAP 2/13/2006 Donald Drew Pearson 168 NAP 2/16/2006 Greg Stille, Eric Stille, David Knox, Mark Engstrom ------------------------------------------------------------------------------------------------------------------------------------ 169 11/4/2005 10/28/2005 Lydick, John; Lee Lydick; Robert Lydick 170 NAP 12/27/2005 Roger Schumacher, Thomas Cloutier, Jonathan Foss, Warm Water Pools of Savage, LLC 171 NAP 12/23/2005 Melanie Kaiser, Melanie C. Kaiser Trust Dated 2/25/03, GST Trust under the Marilyn B. Kaiser Living Trust dated 8/31/88 172 10/27/2005 10/28/2005 Donald Drew Pearson 173 3/14/2006 4/4/2006 Parnell, Steven; Mark Leader ------------------------------------------------------------------------------------------------------------------------------------ 174 NAP 2/24/2006 James J Lennon, Jacqueline Prokop, Cindy M Lennon, Mark Prokop, New Liberty Investments, LLP 175 9/6/2005 9/1/2005 John McGrail and Carl Christie 176 NAP 3/22/2006 M. Robert Cook 177 2/27/2006 2/28/2006 Patel, Pradeep 178 3/1/2006 3/1/2006 Wils, Steven; Madelyn Wils ------------------------------------------------------------------------------------------------------------------------------------ 179 2/9/2006 2/14/2006 Arnold, Norman J.; Ben D. Arnold 180 NAP 2/15/2006 Jon Gruber 181 3/2/2006 3/3/2006 Douglas M. Hickok 182 NAP 2/8/2006 Steve H. Osman 183 4/5/2006 3/27/2006 Conte Jr., Charles R.; David L. Conte ------------------------------------------------------------------------------------------------------------------------------------ 184 3/13/2006 3/14/2006 Dover Investments Corporation; JB Valley Devlopment Corporation 185 2/3/2006 2/6/2006 P. Randall ten Doesschate 186 12/7/2005 12/7/2005 Killian, George 187 1/4/2006 1/4/2006 Andrew M. Kaplan 188 NAP 3/22/2006 Kaercher James, Patch R. John, J Squared Properties, LLC ------------------------------------------------------------------------------------------------------------------------------------ 189 3/9/2006 4/11/2006 Boren, Jeffrey; David Yasher; Eric Friedland 190 1/26/2006 3/23/2006 Nahl, Michael 191 NAP 2/16/2006 Ralph Wintrode, Mark Brecheen, David Kray, Rodney Richerson 192 2/20/2006 2/6/2006 Greg Manocherian 193 3/8/2006 3/7/2006 Dierks, John; Helga Dierks ------------------------------------------------------------------------------------------------------------------------------------ 194 3/28/2006 3/29/2006 DeMattia, John 195 3/13/2006 3/14/2006 Dover Investments Corporation; JB Valley Devlopment Corporation 196 2/14/2006 2/9/2006 Walsh, John F.; D. Timothy Byrne; Sachiko T. Cochran 197 NAP 2/24/2006 Natasha Von Imhof, Rudi Von Imhof 198 NAP 4/3/2006 John Thompson, Mr. Paul Thrift, Thompson Thrift Properties, LLC ------------------------------------------------------------------------------------------------------------------------------------ 199 NAP 10/31/2005 Joseph Patros, Scott Patros 200 3/29/2006 4/4/2006 Riverview Management Company Inc., 201 2/15/2006 2/13/2006 DeMattia, John 202 2/21/2006 3/8/2006 McKay, Joseph L. 203 NAP 2/24/2006 Douglas Nestler ------------------------------------------------------------------------------------------------------------------------------------ 204 2/28/2006 2/28/2006 Robert Lofgren, Jeffrey Lund, John Dalen 205 NAP 3/22/2006 M. Robert Cook 206 NAP 3/17/2006 Louis Johnson, Oceola Multi, LLC 207 NAP 2/16/2006 Michael J Feller 208 NAP 3/20/2006 Jack J. Jakosky ------------------------------------------------------------------------------------------------------------------------------------ 209 NAP 12/30/2005 Allen Capital Partners, LLC, Glen Teter, Byron Dietrich 210 3/10/2006 3/7/2006 Rosenblum, Melvin 211 1/25/2006 12/20/2005 Phyllis Ziman Cutler, Larry D Ziman, Curtis Ziman, Allan W Ziman, Richard S. Ziman 212 NAP 2/8/2006 Liliane Bien, Ralph Bien 213 NAP 3/22/2006 Bruce S. Cook ------------------------------------------------------------------------------------------------------------------------------------ BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC., SERIES 2006-PWR12 APPENDIX C - CERTAIN CHARACTERISTICS OF THE MULTIFAMILY AND MANUFACTURED HOUSING COMMUNITY LOANS % OF CMSA CMSA MORTGAGE INITIAL POOL ID LOAN NO. PROPERTY NO. LOAN SELLER (2) PROPERTY NAME (1) BALANCE 8 8 8-001 PMCF Calypso Bay Apartments 1.6% 24 24 24-001 BSCMI Reserve at Woodbridge 0.9% 36 36 36-001 PMCF Hunter's Crossing Apartments 0.7% 46 46 46-001 WFB Coyote Creek Mobile Home Park 0.6% 55 55 55-001 PMCF McCallum Highlands 0.4% -------------------------------------------------------------------------------------------------------------------------------- 57 57 57-001 PMCF Villa Monterey Apartments 0.4% 70 70 70-001 NLIC College Park Apartments 0.4% 75 75 75-001 WFB Lowell Emerson 0.4% 77 77 77-001 WFB Saratoga Apartments 0.4% 84 84 84-001 PMCF Cedar Hills Manor 0.4% -------------------------------------------------------------------------------------------------------------------------------- 85 85 85-001 PMCF Oates Creek Apartments 0.4% 93 93 93-001 PCF II Oakbrook Apartments 0.3% 101 101 101-001 PCF II Crestview Apartments 0.3% 106 106 106-001 PMCF Newport Square Apartments 0.3% 117 117 117-001 BSCMI Guinea Grove Apartments 0.3% -------------------------------------------------------------------------------------------------------------------------------- 121 121 121-001 PMCF Rugby Valley Apartments 0.2% 130 130 130-001 PMCF Fairmount Park Apartments 0.2% 135 135 135-001 PCF II Hillside Garden Apartments 0.2% 136 136 136-001 PCF II Highland Terrace Apartments 0.2% 144 144 144-001 BSCMI 1240 Sherman Avenue 0.2% -------------------------------------------------------------------------------------------------------------------------------- 159 159 159-001 PMCF University Square 0.1% 161 161 161-001 BSCMI 1945 Loring Place 0.1% 167 167 167-001 WFB Bedford Hills Apartment 0.1% 181 181 181-001 BSCMI Castle Arms Apartments 0.1% 188 188 188-001 WFB Manchester Place 0.1% -------------------------------------------------------------------------------------------------------------------------------- 197 197 197-001 WFB 7016 Weimer Apartments 0.1% 206 206 206-001 WFB The Preserve at Mallard Pond - Buildings 4 and 5 0.1% 210 210 210-001 PCF II River Drive Village Apartments 0.1% % OF APPLICABLE GENERAL DETAILED LOAN GROUP LOAN GROUP # OF PROPERTY PROPERTY ID (ONE OR TWO) BALANCE PROPERTIES TYPE TYPE 8 2 16.9% 1 Multifamily Garden 24 2 9.2% 1 Multifamily Garden 36 2 7.2% 1 Multifamily Garden 46 2 5.9% 1 Manufactured Housing Community Manufactured Housing Community 55 2 4.7% 1 Multifamily Mid Rise -------------------------------------------------------------------------------------------------------------------------- 57 2 4.7% 1 Multifamily Garden 70 2 4.1% 1 Multifamily Garden 75 2 4.1% 1 Multifamily High Rise 77 2 4.0% 1 Multifamily Garden 84 2 3.8% 1 Multifamily Garden -------------------------------------------------------------------------------------------------------------------------- 85 2 3.7% 1 Multifamily Low Rise 93 2 3.5% 1 Multifamily Garden 101 2 3.2% 1 Multifamily Garden 106 2 3.1% 1 Multifamily Garden 117 2 2.7% 1 Multifamily Garden -------------------------------------------------------------------------------------------------------------------------- 121 2 2.6% 1 Multifamily Garden 130 2 2.1% 1 Multifamily Low Rise 135 2 2.1% 1 Multifamily Garden 136 2 2.1% 1 Multifamily Garden 144 2 1.9% 1 Multifamily Mid Rise -------------------------------------------------------------------------------------------------------------------------- 159 2 1.5% 1 Multifamily Student Housing 161 2 1.5% 1 Multifamily Mid Rise 167 2 1.3% 1 Multifamily Low Rise 181 2 1.0% 1 Multifamily Low Rise 188 2 0.9% 1 Multifamily Garden -------------------------------------------------------------------------------------------------------------------------- 197 2 0.9% 1 Multifamily Low Rise 206 2 0.7% 1 Multifamily Garden 210 2 0.6% 1 Multifamily Garden ID STREET ADDRESS CITY COUNTY STATE ZIP CODE 8 3251 Wall Boulevard Gretna Jefferson Parish LA 70056 24 15000 West Airport Sugar Land Fort Bend TX 77478 36 1 Russett Lane Middletown Middletown CT 06457 46 2580 Senter Road San Jose Santa Clara CA 95111 55 6565 McCallum Boulevard Dallas Collin TX 75252 ------------------------------------------------------------------------------------------------------------------------------------ 57 7400 East Golf Links Road Tucson Pima AZ 85730 70 899 Dogwood Avenue Lemoore Kings CA 93245 75 1102-1110 8th Avenue Seattle King WA 98101 77 2240 & 2340 W. University Drive Mesa Maricopa AZ 85201 84 600 North Humboldt Avenue Willows Glenn CA 95988 ------------------------------------------------------------------------------------------------------------------------------------ 85 1805 Oates Drive Mesquite Dallas TX 75150 93 7670 North Oakbrook Drive Reynoldsburg Franklin OH 43068 101 101 Lewis Drive Millersville Sumner TN 37072 106 4562-4587, 22563-22935 Newport Lane Warrensville Heights Cuyahoga OH 44128 117 481 Remainder Estate Chocolate Hole No. 11 Cruz Bay Quarter St.John, U.S.Virgin Islands VI 00831 ------------------------------------------------------------------------------------------------------------------------------------ 121 2165 West Rugby Avenue College Park Fulton GA 30337 130 1100 Yverdon Drive Camp Hill Cumberland PA 17011 135 3 Hillside Avenue Rockaway Morris NJ 07866 136 414 Highland Avenue Clifton Passaic NJ 07011 144 1240 Sherman Avenue Bronx Bronx NY 10456 ------------------------------------------------------------------------------------------------------------------------------------ 159 412 S. 13th Street & 1344 Locust Street Indiana Indiana PA 15701 161 1945 Loring Place South Bronx Bronx NY 10453 167 942 Simpson Terrace Bedford Hills Tarrant TX 76021 181 3121 Speedway Austin Travis TX 78705 188 5285 Manchester Drive Maple Plain Hennepin MN 55359 ------------------------------------------------------------------------------------------------------------------------------------ 197 7016 Weimer Road Anchorage Anchorage AK 99502 206 1530-1566 Blackbird Lane, 1658-1694 Duck Drive Howell Livingston MI 48855 210 424 River Drive Garfield Bergen NJ 07026 CUT-OFF DATE ORIGINAL STATED REMAINING ORIGINAL REMAINING CUT-OFF DATE BALANCE PER TERM TO MATURITY TERM TO MATURITY AMORTIZATION AMORTIZATION ID BALANCE ($) (3) UNIT/ROOM/BED ($) OR ARD (MOS.) OR ARD (MOS.) TERM (MOS.) (4) TERM (MOS.) (4) 8 32,934,213 117,622 120 118 360 358 24 18,000,000 62,500 120 118 360 360 36 13,925,000 70,328 120 119 360 360 46 11,450,000 62,912 60 59 360 360 55 9,200,000 25,485 120 119 360 360 ----------------------------------------------------------------------------------------------------------------------------------- 57 9,074,100 25,206 120 117 360 357 70 8,056,579 67,138 120 117 360 357 75 7,917,610 40,812 120 119 360 359 77 7,733,131 27,134 120 117 360 357 84 7,343,333 40,796 120 119 360 359 ----------------------------------------------------------------------------------------------------------------------------------- 85 7,279,791 25,999 120 117 360 357 93 6,900,000 38,122 120 119 360 360 101 6,300,000 32,984 120 118 360 360 106 6,087,839 84,553 120 118 360 358 117 5,245,509 145,709 120 119 360 359 ----------------------------------------------------------------------------------------------------------------------------------- 121 4,984,870 35,606 120 117 360 357 130 4,181,384 63,354 120 118 240 238 135 4,000,000 37,383 120 118 0 0 136 4,000,000 42,105 120 118 0 0 144 3,693,891 63,688 60 58 360 358 ----------------------------------------------------------------------------------------------------------------------------------- 159 3,000,000 46,154 120 119 360 360 161 2,845,294 67,745 60 58 360 358 167 2,498,161 29,740 120 119 360 359 181 2,005,000 62,656 120 118 360 360 188 1,798,646 59,955 120 119 360 359 ----------------------------------------------------------------------------------------------------------------------------------- 197 1,677,902 55,930 120 119 300 299 206 1,398,775 69,939 120 119 360 359 210 1,140,000 30,811 120 118 0 0 REMAINING DSCR CUT-OFF LTV INTEREST ONLY AFTER INITIAL DATE LTV RATIO AT UTILITIES ID PERIOD (MOS.) DSCR (X) (5) IO PERIOD (X) RATIO (6) MATURITY OR ARD (6) PAID BY TENANT 8 1.20 NAP 72.1% 60.7% Electric 24 58 1.69 1.37 72.4% 67.3% Electric, Water 36 59 1.45 1.20 79.1% 73.8% Electric 46 11 1.44 1.23 62.6% 59.7% Electric, Gas, Water 55 23 1.52 1.26 64.8% 57.2% Electric ------------------------------------------------------------------------------------------------------------------------------------ 57 1.21 NAP 69.5% 58.8% Electric, Sewer, Water 70 1.29 NAP 79.8% 67.3% Electric 75 1.26 NAP 60.4% 50.7% Electric, Gas 77 1.20 NAP 71.6% 60.6% None 84 1.20 NAP 67.4% 56.7% Electric ------------------------------------------------------------------------------------------------------------------------------------ 85 1.20 NAP 72.8% 61.8% Electric, Water 93 11 1.45 1.21 79.3% 68.6% Electric 101 10 1.53 1.27 77.8% 67.1% Electric, Gas, Water 106 1.21 NAP 76.7% 64.5% Electric 117 1.26 NAP 69.0% 58.5% None ------------------------------------------------------------------------------------------------------------------------------------ 121 1.50 NAP 63.1% 52.9% Electric, Gas, Water, Sewer 130 1.11 NAP 69.7% 45.3% Electric, Gas 135 118 2.88 NAP 39.6% 39.6% Electric 136 118 2.13 NAP 47.1% 47.1% Electric, Gas 144 1.23 NAP 54.7% 51.4% Electric ------------------------------------------------------------------------------------------------------------------------------------ 159 23 1.43 1.20 75.6% 66.9% Electric 161 1.27 NAP 54.0% 50.7% Electric 167 1.30 NAP 65.7% 56.6% Electric 181 34 1.48 1.24 72.9% 65.8% Electric 188 1.20 NAP 79.9% 68.7% Electric, Gas ------------------------------------------------------------------------------------------------------------------------------------ 197 1.38 NAP 73.0% 57.0% Electric 206 1.47 NAP 56.9% 48.1% Electric, Gas 210 118 2.81 NAP 36.8% 36.8% Electric STUDIOS 1 BEDROOM 2 BEDROOM 3 BEDROOM NO. OF AVG RENT NO. OF AVG RENT NO. OF AVG RENT NO. OF AVG RENT ID UNITS/ROOMS PER MO. ($) UNITS/ROOMS PER MO. ($) UNITS/ROOMS PER MO. ($) UNITS/ROOMS PER MO. ($) 8 160 1,017 80 1,420 40 1,740 24 128 836 136 1,025 24 1,355 36 60 675 138 832 46 55 341 507 20 815 --------------------------------------------------------------------------------------------------------------------- 57 72 335 144 420 144 524 70 60 700 60 854 75 189 620 5 1,160 77 142 504 142 604 1 729 84 14 550 152 600 14 750 --------------------------------------------------------------------------------------------------------------------- 85 184 478 96 650 93 36 531 127 627 18 812 101 14 479 50 479 115 598 12 759 106 72 860 117 24 1,400 12 1,900 --------------------------------------------------------------------------------------------------------------------- 121 12 625 126 731 2 900 130 66 877 135 45 950 62 1,300 136 56 1,000 38 1,300 144 5 709 27 769 15 850 11 1,083 --------------------------------------------------------------------------------------------------------------------- 159 35 550 30 864 161 1 600 23 794 12 971 6 1,025 167 16 587 46 706 22 864 181 13 723 18 916 188 27 748 3 875 --------------------------------------------------------------------------------------------------------------------- 197 8 800 22 986 206 2 850 12 1,023 6 1,246 210 34 950 3 1,100 4 BEDROOM 5 BEDROOM 6 BEDROOM 7 BEDROOM NO. OF AVG RENT NO. OF AVG RENT NO. OF AVG RENT NO. OF AVG RENT ID UNITS/ROOMS PER MO. ($) UNITS/ROOMS PER MO. ($) UNITS/ROOMS PER MO. ($) UNITS/ROOMS PER MO. ($) 8 24 36 46 55 --------------------------------------------------------------------------------------------------------------------- 57 70 75 77 84 --------------------------------------------------------------------------------------------------------------------- 85 93 101 106 117 --------------------------------------------------------------------------------------------------------------------- 121 130 135 136 144 --------------------------------------------------------------------------------------------------------------------- 159 161 167 181 188 --------------------------------------------------------------------------------------------------------------------- 197 206 210 OTHER UNITS NO. OF AVG RENT NO. OF ID UNITS/ROOMS PER MO. ($) ELEVATORS 8 24 36 46 182 699 55 --------------------------------------------- 57 70 75 77 84 --------------------------------------------- 85 93 101 106 117 --------------------------------------------- 121 130 135 136 144 1 --------------------------------------------- 159 161 1 167 181 1 575 188 --------------------------------------------- 197 206 210

BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC., SERIES 2006-PWR12 FOOTNOTES TO APPENDIX B AND APPENDIX C (1) Moody's Investors Service, Inc. and Standard and Poor's Ratings Services have confirmed that Loan ID#2 (1675 Broadway) has, in the context of its inclusion in the trust, credit characteristics consistent with that of an obligation rated "Baa3" / "BBB-", respectively. Standard and Poor's Ratings Services has confirmed that Loan ID#105 (McMinnville Market Center) has, in the context of its inclusion in the trust, credit characteristics consistent with that of an obligation rated "BBB-". (2) PMCF - Prudential Mortgage Capital Funding, LLC; BSCMI - Bear Stearns Commercial Mortgage, Inc.; WFB - Wells Fargo Bank, National Association; PCF II - Principal Commercial Funding II, LLC; PCF - Principal Commercial Funding, LLC; NLIC - Nationwide Life Insurance Company (3) For Loan ID#2 (1675 Broadway), the $155,000,000 mortgage loan represents an A-Note portion ("A-Note") of a $180,000,000 first mortgage split into an A-Note and a B-Note. The $25,000,000 B-Note portion ("B-Note") is not included in the trust. All LTV, DSCR and Cut-off Date Balance per Net Rentable Area SF/Unit numbers presented are based on the $155,000,000 A-Note financing. The DSCR based on the total first mortgage debt during the interest only period is 1.69x. The DSCR based on the total first mortgage debt would be 1.40x, based on the principal and interest payment. The total first mortgage debt LTV is 51.4%. For Loan ID#13 (Tuscany Plaza), the $27,000,000 mortgage loan represents an A-Note portion ("A-Note") of a $30,375,000 first mortgage split into an A-Note and a B-Note. The $3,375,000 B-Note portion ("B-Note") is not included in the trust. All LTV, DSCR and Cut-off Date Balance per Net Rentable Area SF/Unit numbers presented are based on the $27,000,000 A-Note financing. The DSCR based on the total first mortgage debt during the interest only period is 1.14x. The DSCR based on the total first mortgage debt would be 0.97x, based on the principal and interest payment. The DSCRs based on the total first mortgage debt assume a LIBOR of 5.15% to calculate the B-Note interest rate. The total first mortgage debt LTV is 69.0%. For Loan IDs#27-28 (Baylor Medical Plaza and Baylor Surgicare Grapevine), the pooled mortgage loans are cross-collateralized and cross-defaulted with each other. All LTV, DSCR and Cut-off Date Balance per Net Rentable Area SF/Unit numbers presented are based on the combined entire first mortgage loan, appraised value, underwritten net cash flow and net rentable area. For Loan IDs#110-111 (Albany Industrial Park and 5075 Cameron Street Industrial Building), the pooled mortgage loans are cross-collateralized and cross-defaulted with each other. All LTV, DSCR and Cut-off Date Balance per Net Rentable Area SF/Unit numbers presented are based on the combined entire first mortgage loan, appraised value, underwritten net cash flow and net rentable area. (4) For Loan ID#12 (Centre at Laurel), the mortgage loan is a 7-year Interest Only loan structure with the rate in the first two years being 4.85% with a payment of $109,933.33. On the April 1, 2008 the payment increases to $117,866.67 based on an interest rate of 5.20% for one year. Beginning April 1, 2009 the payment increases to $120,133.33 based on an interest rate of 5.30% for one year. Beginning April 1, 2010 the payment increases to $121,266.67 based on an interest rate of 5.35% for one year. Finally on April 1, 2011 the payment increases to $123,533.33 based on an interest rate of 5.45% until maturity. For Loan ID#14 (Monandnock Marketplace), the mortgage loan is a 7-year Interest Only loan structure with the rate in the first two years being 4.88% with a payment of $108,925.67. On the April 1, 2008 the payment increases to $113,836.25 based on an interest rate of 5.10% for two years. Beginning April 1, 2010 the payment increases to $118,300.42 based on an interest rate of 5.30% for one year. Finally on April 1, 2011 the payment increases to $121,648.54 based on an interest rate of 5.45% until maturity. For Loan ID#37 (American Business Center), the mortgage loan requires principal and interest payments based on 30-year amortization from July 1, 2006 through June 1, 2014. Beginning July 1, 2014 until the loan is paid in full at the maturity date of June 1, 2016 the loan payments will be interest only. (5) Annual Debt Service Payments, Monthly Debt Service Payments, and DSCR for loans are defined in the Prospectus Supplement. These numbers reflect current scheduled payments as of the Cut-off Date for all mortgage loans. (6) For Loan ID#20 (Philadelphia Airport Parking), the Appraised Value and LTV are based on the "Stabilized" value of $27,800,000 as of October 1, 2005. The "Stabilized" value assumes a new lease at the property with LRW Investment Co. taking effect. The lease is in place with an expiration of September 30, 2026. The "As-Is" value was $22,500,000 as of September 30, 2005 with value attributed only to the fee simple interest in the land. For Loan ID#40 (Hampton Inn Suites), the Appraised Value and LTV are based on the "Stabilized" value of $18,200,000 as of April 1, 2006. The "Stabilized" value assumes the completion of renovations at the property. The renovations at the property are underway and the Borrower has placed $425,000 into an upfront escrow for the remainder of the $620,000 (budgeted) renovation project. The "As-Is" value was $17,800,000 as of February 6, 2006. For Loan ID#41 (Data Point), the Appraised Value and LTV are based on the "Stabilized" value of $17,850,000 as of November 9, 2006. The "Stabilized" value assumes the occupancy has stabilized. The occupancy as of February 1, 2006 was 82.4%. Additionally, there is a $3,500,000 performance holdback which shall be released, if among other things, upon increasing the net cash flow and achieving a DSCR of 0.87x as determined by lender (calculated based on a 10% loan constant). The "As-Is" value was $16,900,000 as of November 9, 2005. For Loan ID#44 (9 Finderne Avenue), the Appraised Value and LTV are based on the "Stabilized" value of $16,700,000 as of December 1, 2006. The "Stabilized" value assumes the completion of renovations at the property. The renovations at the property are underway and the Borrower has placed in escrow 125% of hard costs included in deferred maintenance for a total of over $3.4 million in hard costs and soft costs for additional capital work. The "As-Is" value was $14,100,000 as of November 10, 2005. For Loan ID#48 (Nicolet Office Center), the Appraised Value and LTV are based on the "Stabilized" value of $13,800,000 as of January 1, 2007. The "Stabilized" value assumes the property is operating on a stabilized basis. The occupancy as of April 1, 2006 was 81.4%. The "As-Is" value was $13,000,000 as of March 14, 2006. For Loan ID#69 (La Plata Shopping Center), the Appraised Value and LTV are based on the "Stabilized" value of $10,300,000 as of March 31, 2006. The "Stabilized" value assumes the occupancy has stabilized. The occupancy as of December 10, 2005 was 94.7%. The "As-Is" value was $9,900,000 as of December 14, 2005. For Loan ID#70 (College Park Apartments), the Appraised Value and LTV are based on the "Stabilized" value of $10,100,000 as of February 1, 2006. The "Stabilized" value assumes the completion of building improvements / construction and property is operating on a stabilized basis. The occupancy as of February 8, 2006 was 97.5%. The "As-Is" value was $8,950,000 as of November 15, 2005. For Loan ID#74 (Chesterfield Square), the Appraised Value and LTV are based on the "As Complete and Stabilized" value of $11,200,000 as of March 1, 2006. The "As Complete and Stabilized" value assumes the completion of building improvements / construction and the execution of 2 pending leases to their respected lease terms bringing occupancy to 100.0%. Dollar Tree Stores, Inc. signed their lease on May 1, 2006 which will take the property up to 94.9% leased. The occupancy as of March 14, 2006 was 80.1%. For Loan ID#117 (Guinea Grove Apartments), the Appraised Value and LTV are based on the "Stabilized" value of $7,600,000 as of October 17, 2005. The "Stabilized" value assumes the completion of construction at the property in January 2006. The building improvements for the first five buildings are completed with the sixth building still under construction. The borrower placed in escrow $782,000 till such time as building is complete, accepted by tenant without right of offset, and rent has commenced. The "As-Is" value was $4,600,000 as of October 17, 2005. For Loan ID#144 (1240 Sherman Avenue), the mortgage loan is structured with an earnout holdback of $300,000, for major capital improvements. Under the New York City Housing Authority MCI program, approved capital improvements result in a combination of rent increases and J-51 tax abatements for rent-stabilized properties. All LTV numbers presented are based on the numerator for the LTV calculated by subtracting $300,000 from the Cut-off Date Balance or Maturity Balance of the mortgage loan. For Loan ID#161 (1945 Loring Place), the mortgage loan is structured with an earnout holdback of $200,000, for major capital improvements. Under the New York City Housing Authority MCI program, approved capital improvements result in a combination of rent increases and J-51 tax abatements for rent-stabilized properties. All LTV numbers presented are based on the numerator for the LTV calculated by subtracting $200,000 from the Cut-off Date Balance or Maturity Balance of the mortgage loan. For Loan ID#171 (Long Beach Center), the Appraised Value and LTV are based on the "As Complete and Stabilized" value of $5,600,000 as of December 1, 2005. The "Stabilized" value assumes the construction of the building is complete and the occupancy has stabilized. The occupancy as of March 29, 2006 was 85.8%. The "As-Is" value was $5,250,000 as of October 20, 2005 and assumed only 85% of construction completed and 85% pre-leased. For Loan ID#180 (Mission Plaza Retail), the Appraised Value and LTV are based on the "Stabilized" value of $3,030,000 as of June 16, 2006. The "Stabilized" value assumes the occupancy has stabilized. The occupancy as of March 20, 2006 was 100.0%. The "As-Is" value was $3,000,000 as of February 16, 2006. For Loan ID#206 (The Preserve at Mallard Pond - Buildings 4 and 5), the Appraised Value and LTV are based on the "Stabilized" value of $2,460,000 as of May 1, 2006. The "Stabilized" value assumes the occupancy has stabilized. The occupancy as of March 16, 2006 was 94.1%. The "As-Is" value was $2,350,000 as of March 3, 2006. (7) For Loan ID#28 (Baylor Surgicare Grapevine), the tenant has an option to purchase the mortgaged property upon the occurrence of certain trigger events, including specified casualty and condemnation events, expiration of current lease term on November 30, 2021 (loan ARD is June 1, 2016 and maturity is June 1, 2036), or a continuing landlord default. The purchase option price is equal to the fair market value minus the fair market value of the capital additions paid for by the tenant. If the purchase option is so exercised, the mortgaged property must be released and there is no assurance that the option price would be sufficient to pay all amounts due, including repayment charges, under the loan. The individual sponsors of the loan are personally liable for losses due to a shortfall between amounts due under the loan, including prepayment charges, and the purchase option price. For Loan ID#110 (Albany Industrial Park) and Loan ID#111 (5075 Cameron Street Industrial Building), the loans are cross collateralized and cross defaulted. The Borrower does not have the right to prepay both of the loans prior to 45 days before the maturity date, however the Borrower is permitted to prepay either loan in full without prepaying the other loan in full provided the DSCR on the remaining premises shall equal or exceed 1.45x on the remaining loan; the loan-to-value on the remaining loan does not exceed 60% and the remaining premises is at least 90% occupied. If these requirements along with others are met, the Borrower may prepay the loan with no prepayment premium or yield maintenance. For Loan ID#135 (Hillside Garden Apartments) the Borrower does not have the right to prepay the loan prior to 1 month prior to the maturity date except in the event of a casualty and the Borrower is unable to rebuild as a result of it being a non-conforming legal use. In this event the Borrower is required to prepay the loan with a prepayment premium or yield maintenance to a level in which the DSCR is 2.00x or greater. For Loan ID#178 (505 Jefferson Road) the Borrower does not have the right to prepay the loan prior to 1 month prior to the maturity date except in the event of a casualty and the Borrower is unable to rebuild as a result of it being a non-conforming legal use. In this event the Borrower is required to prepay the loan with a prepayment premium or yield maintenance to a level in which the DSCR is 1.50x or greater. For Loan ID#190 (1735 U.S. Route 9) the Borrower does not have the right to prepay the loan prior to 1 month prior to the maturity date except in the event of a casualty and the Borrower is unable to rebuild as a result of it being a non-conforming legal use. In this event the Borrower is required to prepay the loan with a prepayment premium or yield maintenance to a level in which the DSCR is 1.32x or greater. (8) Certain of the mortgage loans that are secured by retail properties include in-line and/or anchor tenant ground lease parcels in the calculation of the total square footage of the property. For Loan ID#69 (La Plata Shopping Center), the largest tenant in the shopping center, representing 51.9% of the property, has been "dark" and paying rent for approximately two years, however, the space is currently in the process of being partially subleased. (9) For Loan ID#5 (Southdale Office Center), the mortgage loan is structured with a performance holdback of $1,000,000, which is subject to achievement of certain release conditions, as defined in the Promissory Note. The amount of the reserve will be applied to the outstanding principal balance of the mortgage loan, with a yield maintenance premium, in the event the release conditions are not satisfied by May 1, 2008. All future payments of principal and interest will be recalculated based on the reduced outstanding principal balance. Release conditions include, but are not limited to, achieving an 87% Economic Occupancy; a Trailing 12 Month DSCR of not less than 0.87x (calculated on a 10% annual loan constant) and an actual DSCR of 1.20x; and LTV does not exceed 80%. Borrower may request Lender to determine if release conditions have been satisfied no more then three times prior to May 1, 2008. For Loan ID#9 (Titan Portfolio) the mortgage loan is structured with a performance holdback of $43,437.50, which is subject to achievement of certain release conditions. The amount of the reserve will, under certain circumstances, be applied to the balance of the mortgage loan with yield maintenance by October 25, 2006, if the items identified in the property condition assessment have not been completed and evidence provided in accordance with the terms of the respective reserve agreement. For Loan ID#12 (Centre at Laurel) the mortgage loan is structured with a performance holdback of $4,033,050 in the form of a letter of credit, which is subject to achievement of certain release conditions. The proceeds of the letter of credit can be applied to the balance of the mortgage loan with yield maintenance premium 30 days prior to the expiration of the letter of credit (if the letter of credit is not renewed) if the property does not achieve a specified level of financial performance in accordance with the respective reserve agreement. For Loan ID#41 (Data Point), the mortgage loan is structured with a performance holdback of $3,500,000, which is subject to achievement of certain release conditions, as defined in the Promissory Note. The amount of all reserved funds will, under certain circumstances, be applied to the outstanding principal balance of the mortgage loan, or retained for the duration of the loan term in the event release conditions are not satisfied by March 3, 2008. Release conditions include, but are not limited to, the property maintaining a DSCR of 0.87x (calculated on a 10% annual loan constant). For Loan ID#48 (Nicolet Office Center), the mortgage loan is structured with a performance holdback of $126,000 in the form of a letter of credit, which is approximately eight times monthly base rent (including certain expenses) of the tenant specified in the mortgage loan documents. The proceeds of the letter of credit will, under certain circumstances, be applied to the balance of the mortgage loan if the specified tenant does not take occupancy in accordance with the related lease agreement or if there is a default by the borrower under the mortgage loan documents. For Loan ID#74 (Chesterfield Square), the mortgage loan is structured with a performance holdback of $331,000 in the form of a letter of credit, which is subject to achievement of an annualized net operating income of $659,890 (calculated pursuant to the terms of a letter of credit agreement). The proceeds of the letter of credit will, under certain circumstances, be applied to the balance of the mortgage loan after April 1, 2008, if the release condition has not been met. For Loan ID#81 (Parkway Plaza) the mortgage loan is structured with a performance holdback of $515,000, which is subject to achievement of certain release conditions. The amount of the reserve will, under certain circumstances, be applied to the balance of the mortgage loan with yield maintenance by May 1, 2007, if the items identified in the loan documents as additional security for construction close out have not been completed and evidence provided in accordance with the terms of the respective reserve agreement. For Loan ID#81 (Parkway Plaza) the mortgage loan is structured with a performance holdback of $133,000, which is subject to achievement of certain release conditions. The amount of the reserve will, under certain circumstances, be applied to the balance of the mortgage loan with yield maintenance by December 1, 2006, if tenant improvement and leasing commissions have not been completed and evidence provided in accordance with the terms of the respective reserve agreement. For Loan ID#92 (Radisson Hotel - Kenosha), the mortgage loan is structured with a performance holdback of $325,000, in the form of a letter of credit, which is subject to achievement of certain release conditions, as defined in the Promissory Note. The proceeds of the letter of credit will, under certain circumstances, be applied to the balance of the mortgage loan, with a yield maintenance premium, in the event the release conditions are not satisfied by January 1, 2009. Release conditions include, but are not limited to, achieving a LTV of 75% or less, and a Trailing 12 Month DSCR of not less than 1.15x (calculated on a 10% annual loan constant) and actual DSCR of not less than 1.40x. For Loan ID#93 (Oakbrook Apartments) the mortgage loan is structured with a performance holdback of $18,750, which is subject to achievement of certain release conditions. The amount of the reserve will, under certain circumstances, be applied to the balance of the mortgage loan with yield maintenance by April 14, 2007, if the items identified in the property condition assessment have not been completed and evidence provided in accordance with the terms of the respective reserve agreement. For Loan ID#93 (Oakbrook Apartments) the mortgage loan is structured with a performance holdback of $150,000, which is subject to achievement of certain release conditions. The amount of the reserve will, under certain circumstances, be applied to the balance of the mortgage loan with a prepayment premium or yield maintenance calculated as provided in the loan documents by January 15, 2007, if the annual net cash flow conditions identified in the loan documents have not been met in accordance with the terms of the respective reserve agreement. For Loan ID#101 (Crestview Apartments) the mortgage loan is structured with a performance holdback of $205,000, which is subject to achievement of certain release conditions. The amount of the reserve will, under certain circumstances, be applied to the balance of the mortgage loan with yield maintenance by December 1, 2006, if the items identified in the property condition assessment have not been completed and evidence provided in accordance with the terms of the respective reserve agreement. For Loan ID#109 (Surprise Self Storage), the mortgage loan is structured with performance holdback of $2,250,000, which is subject to achievement of certain release conditions. The amount of the reserve will, under certain circumstances, be applied to the balance of the mortgage loan with a yield maintenance premium by March 1, 2008, if the property has not satisfied certain occupancy, income and net cash flow conditions set forth in the Promissory Note, including but not limited to a loan to value ratio of 70% or less. Borrower may request determination if release conditions have been satisfied no more then two times per calendar year. For Loan ID#127 (Security Central Storage) the mortgage loan is structured with a performance holdback of $2,450, which is subject to achievement of certain release conditions. The amount of the reserve will, under certain circumstances, be applied to the balance of the mortgage loan with yield maintenance by July 15, 2006, if the items identified in the property condition assessment have not been completed and evidence provided in accordance with the terms of the respective reserve agreement. For Loan ID#129 (1305 N. Casaloma Drive) the mortgage loan is structured with a performance holdback of $62,500, which is subject to achievement of certain release conditions. The amount of the reserve will, under certain circumstances, be applied to the balance of the mortgage loan with yield maintenance by October 1, 2006, if the items identified in the property condition assessment have not been completed and evidence provided in accordance with the terms of the respective reserve agreement. For Loan ID#141 (Canon Plaza), the mortgage loan is structured with a performance holdback of $250,000, which is subject to the achievement of certain release conditions, as defined in the Promissory Note. Following the occurrence of an event of default, the amount of the reserve will, under certain circumstances, be applied to the balance of the mortgage loan, with a yield maintenance premium, or held at the Lender's sole discretion. Release conditions include, but are not limited to, executing a new or renewal lease, and delivery of an estoppel certificate executed by the tenant. Borrower may request Lender to determine if release conditions have been satisfied no more then three times during any twelve month period. For Loan ID#144 (1240 Sherman Avenue), the mortgage loan is structured with an earnout holdback of $300,000, for major capital improvements. Under the New York City Housing Authority MCI program, approved capital improvements result in a combination of rent increases and J-51 tax abatements for rent-stabilized properties. A 6% rent increase, as allowed for by the New York City Housing Authority, was applied to the in-place rent in the underwriting due to holdback. The amount of the MCI Reserve ($300,000) will, under certain circumstances, be applied to the balance of the mortgage loan with yield maintenance by September 2, 2007, if the major capital improvements have not been completed and evidence provided in accordance with the terms of the respective reserve agreement. For Loan ID#145 (Ethan Way Office Building) the mortgage loan is structured with a performance holdback of $52,500, which is subject to achievement of certain release conditions. The amount of the reserve will, under certain circumstances, be applied to the balance of the mortgage loan with yield maintenance by November 1, 2006, if the items identified in the property condition assessment have not been completed and evidence provided in accordance with the terms of the respective reserve agreement. For Loan ID#161 (1945 Loring Place), the mortgage loan is structured with an earnout holdback of $200,000, for major capital improvements. Under the New York City Housing Authority MCI program, approved capital improvements result in a combination of rent increases and J-51 tax abatements for rent-stabilized properties. A 6% rent increase, as allowed for by the New York City Housing Authority, was applied to the in-place rent in the underwriting due to holdback. The amount of the MCI Reserve ($200,000) will, under certain circumstances, be applied to the balance of the mortgage loan with yield maintenance by September 2, 2007, if the major capital improvements have not been completed and evidence provided in accordance with the terms of the respective reserve agreement.

APPENDIX D MORTGAGE LOAN NO. 1 -- WOODLAND MALL [5 PHOTOS OMITTED] D-1 MORTGAGE LOAN NO. 1 -- WOODLAND MALL [MAP OMITTED] D-2 MORTGAGE LOAN NO. 1 -- WOODLAND MALL ---------------------------------------------------------------- LOAN INFORMATION ---------------------------------------------------------------- MORTGAGE LOAN SELLER: PMCF LOAN PURPOSE: Acquisition ORIGINAL BALANCE: $156,500,000 CUT-OFF DATE BALANCE: $156,500,000 FIRST PAYMENT DATE: 05/05/2006 INTEREST RATE: 5.58250% AMORTIZATION TERM: Months 1-36: Interest Only Months 37-120: 360 months ARD: No ANTICIPATED REPAYMENT DATE: NAP MATURITY DATE: 04/05/2016 EXPECTED MATURITY BALANCE: $140,483,727 SPONSOR: PREIT Associates LP INTEREST CALCULATION: Actual/360 CALL PROTECTION: 35-payment lockout from the first payment date, with the greater of 1% or yield maintenance for the following 84 payments, and open to prepayment without premium thereafter through the maturity date. CUT-OFF DATE BALANCE PER SF: $393.32 UP-FRONT RESERVES:(1) None ONGOING RESERVES:(2) RE Taxes: Springing Insurance: Springing Replacement: Springing LOCKBOX: Hard ----------------------------------------------------------------- ----------------------------------------------------------------- PROPERTY INFORMATION ----------------------------------------------------------------- SHADOW RATING: NAP SINGLE ASSET/PORTFOLIO: Single Asset PROPERTY TYPE: Retail PROPERTY SUB-TYPE: Regional Mall LOCATION: Grand Rapids, MI YEAR BUILT/RENOVATED: 1968 / 2006 PERCENT LEASED (AS OF): 87.7% (02/28/2006) NET RENTABLE AREA: 397,897 THE COLLATERAL: A regional shopping center located in Grand Rapids, Michigan. OWNERSHIP INTEREST: Fee PROPERTY MANAGEMENT: PREIT Services LLC MOST RECENT NOI (AS OF): $13,860,780 (TTM 10/31/2005) 2ND RECENT NOI (AS OF): $14,730,619 (TTM 12/31/2004) 3RD RECENT NOI (AS OF): $15,105,405 (TTM 12/31/2003) U/W NET OP. INCOME: $14,140,616 U/W NET CASH FLOW: $13,345,571 APPRAISED VALUE (AS OF): $195,800,000 (02/20/2006) CUT-OFF DATE LTV RATIO: 79.9% LTV RATIO AT MATURITY: 71.7% U/W DSCR: 1.51x U/W DSCR POST IO: 1.24x ------------------------------------------------------------------ (1) In lieu of an up-front deposit for immediate repairs, the borrower is required to complete the immediate repairs set forth in the engineering report, all of which are to be completed no later than 210 days of origination. The sponsor has guaranteed the timely completion of all repairs. (2) The borrower is not required to make monthly tax, insurance, or capital expenditure deposits unless and until the earliest of: (i) the occurrence of a default under the loan; and/or (ii) the DSCR is less than 1.05x, as determined by lender on a quarterly basis (each, a "Reserve Trigger Event"). Upon a Reserve Trigger Event, the borrower is required to deposit 1/12 of annual real estate taxes and annual insurance premiums each month, along with $17,655 each month for annual capital expenditures approved by lender. THE WOODLAND MALL LOAN. THE LOAN. The largest loan (the "Woodland Mall Loan") is a $156,500,000 first mortgage loan secured by the borrower's fee simple interest in a super regional shopping center known as Woodland Mall located in Grand Rapids, Michigan (the "Woodland Mall Property"). THE BORROWER. The borrower, PR Woodland Limited Partnership, a Delaware limited partnership (the "Woodland Mall Borrower"), is a single purpose entity that owns no material assets other than the mortgaged property and related interests. The Board of Directors of the Woodland Mall Borrower has two independent directors. A non-consolidation opinion was delivered at origination. The sponsor, PREIT Associates LP, is an affiliate of Pennsylvania Real Estate Investment Trust ("PREIT"). PREIT (NYSE: PEI), founded in 1960, had a total market capitalization in excess of $3.9 billion for the quarter ended March 31, 2006. Headquartered in Philadelphia, Pennsylvania, PREIT's primary investment focus is on retail shopping malls and power and strip centers located in the Mid-Atlantic region and in the eastern part of the U.S. As of March 31, 2006, PREIT owned or had an interest in 51 retail properties in 13 states, comprised of 39 shopping malls and 12 strip and power centers, and one office property. The retail properties totaled approximately 34.5 million square feet, of which PREIT and its partnerships collectively own approximately 25.9 million square feet. PREIT directly leases and manages a majority of its properties. As of March 31, 2006, PREIT reported total assets of approximately $3.1 billion and total stockholders' equity of approximately $968 million. The sponsor has master leased the vacant retail space (12.3% of the NRA) at the Woodland Mall Property at $478,200 per annum representing base rent and reimbursements. As the Woodland Mall Borrower re-tenants any portion of this space with an acceptable replacement tenant, the obligations of the sponsor in respect of rental payments under the master lease will be reduced and at such time as the amount of annual rental payments payable by the sponsor has been reduced to zero, the master lease will D-3 automatically be deemed terminated subject to the terms set forth in the mortgage loan documents. The sponsor is obligated to make rental payments upon the occurrence of a default under the loan. THE PROPERTY. The Woodland Mall Property is located in Grand Rapids, Michigan. The collateral consists of 397,897 square feet of in-line retail space within four buildings, which include a theater and two restaurants. The Woodland Mall Property is part of the larger Woodland Mall shopping center of approximately 1.2 million square feet (the "Center") anchored by Sears, J.C. Penney, and Marshall Field's, all of which own their own stores, as well as by Kohl's (separately owned). These anchor stores are not included in the collateral, but contribute to CAM reimbursements. As of February 28, 2006, the Woodland Mall Property was 87.7% leased by 105 tenants, while the Center, including non-collateral space, was approximately 96% leased. The Center was built between 1968 and 1989, with major renovations and remodeling in 1998 and in 2001. Since 2005, the Woodland Mall Property had expanded its restaurant and entertainment components, with a new 14-screen Cinemark Theater and two freestanding restaurants (On the Border and Red Robin Restaurant). The Red Robin Restaurant is currently under construction, with occupancy and rental payments expected to commence by August 1, 2006. A range of national and regional tenants including Hollister, Banana Republic, Coldwater Creek, Williams-Sonoma, Ann Taylor, Brookstone, Apple, and Chico's tenant the Woodland Mall Property, and no single tenant is responsible for more than 12% of the total net rentable area. More specific information about the Center is set forth in the tables below: ------------------ ---------------------------------- --------------------------- ---------------------- ------------------------ CREDIT RATING OF PARENT COMPANY ANCHOR PARENT COMPANY (FITCH/MOODY'S/S&P)(1) GLA COLLATERAL INTEREST(2) ------------------ ---------------------------------- --------------------------- ---------------------- ------------------------ Sears Sears Holdings Corporation BB/Ba1/BB+ 312,965 No ------------------ ---------------------------------- --------------------------- ---------------------- ------------------------ J.C. Penney J.C. Penney Company, Inc. BBB-/Baa3/BBB- 254,905 No ------------------ ---------------------------------- --------------------------- ---------------------- ------------------------ Marshall Field's Federated Department Stores, Inc. BBB+/Baa1/BBB 157,316 No ------------------ ---------------------------------- --------------------------- ---------------------- ------------------------ Kohl's Kohl's Corporation A/A3/BBB+ 71,000 No ------------------ ---------------------------------- --------------------------- ---------------------- ------------------------ Total 796,186 ------------------ ---------------------------------- --------------------------- ---------------------- ------------------------ (1) Certain ratings are those of the parent company whether or not the parent guarantees the lease. (2) Each of the anchor tenants contributes towards common area maintenance reimbursements. -------------------------- ------------------- ---------- --------- ----------------- ------------- --------------- ------------- % OF TOTAL ANNUALIZED CREDIT RATING ANNUALIZED ANNUALIZED UNDERWRITTEN (FITCH/ TENANT UNDERWRITTEN UNDERWRITTEN BASE RENT LEASE TENANT NAME MOODY'S/S&P) (1) NRA % OF NRA BASE RENT ($) BASE RENT ($ PER NRA) EXPIRATION -------------------------- ------------------- ---------- --------- ----------------- ------------- --------------- ------------- Cinemark Theater (Out-lot) --/--/B+ 46,922 12% $516,142 4% $11.00 11/30/2020 -------------------------- ------------------- ---------- --------- ----------------- ------------- --------------- ------------- The Gap/Gap Kids BBB-/Baa3/BBB- 12,480 3% $461,760 4% $37.00 02/29/2012 -------------------------- ------------------- ---------- --------- ----------------- ------------- --------------- ------------- Victoria's Secret --/Baa2/BBB 10,849 3% $273,829 2% $25.24 01/31/2016 -------------------------- ------------------- ---------- --------- ----------------- ------------- --------------- ------------- Forever 21 --/--/-- 10,060 3% $315,000 2% $31.31 01/31/2012 -------------------------- ------------------- ---------- --------- ----------------- ------------- --------------- ------------- American Eagle Outfitters --/--/-- 8,263 2% $476,091 4% $57.62 01/31/2009 -------------------------- ------------------- ---------- --------- ----------------- ------------- --------------- ------------- Express --/Baa2/BBB 8,213 2% $287,455 2% $35.00 01/31/2010 -------------------------- ------------------- ---------- --------- ----------------- ------------- --------------- ------------- Waldenbooks (MTM) (2) --/--/-- 8,000 2% $239,880 2% $29.98 02/28/2006 -------------------------- ------------------- ---------- --------- ----------------- ------------- --------------- ------------- J. Crew --/Caa1/B 7,980 2% $199,500 2% $25.00 01/31/2012 -------------------------- ------------------- ---------- --------- ----------------- ------------- --------------- ------------- Express Men --/Baa2/BBB 7,628 2% $266,980 2% $35.00 05/31/2006 -------------------------- ------------------- ---------- --------- ----------------- ------------- --------------- ------------- Red Robin Restaurant (3) --/--/-- 7,100 2% $100,000 1% $14.08 07/31/2021 -------------------------- ------------------- ---------- --------- ----------------- ------------- --------------- ------------- Total/Weighted Average 127,495 32% $3,136,637 24% $24.60 -------------------------- ------------------- ---------- --------- ----------------- ------------- --------------- ------------- -------------------------- ------------------- ---------- --------- ----------------- ------------- --------------- ------------- Other Tenants NAP 221,416 56% $9,763,948 76% $44.10 Various -------------------------- ------------------- ---------- --------- ----------------- ------------- --------------- ------------- Vacant Space (4) NAP 48,986 12% $0 0% $0.00 NAP -------------------------- ------------------- ---------- --------- ----------------- ------------- --------------- ------------- Total/Weighted Average 397,897 100% $12,900,585 100% $32.42 -------------------------- ------------------- ---------- --------- ----------------- ------------- --------------- ------------- (1) Certain ratings are those of the parent company whether or not the parent guarantees the leases. (2) The tenant's lease expired in 2005, but the tenant was still in occupancy and paying rent to the borrower on a MTM basis as of the occupancy date. (3) Improvements are under construction and the tenant is anticipated to open for business and commence rental payments by August 1, 2006. (4) This space is master leased by the sponsor. See "The Borrower" above. D-4 --------------------------------------------------------------------------------------------------------------------------------- LEASE ROLLOVER SCHEDULE(1) # OF LEASES TOTAL SF % OF TOTAL SF CUMULATIVE TOTAL SF CUMULATIVE % OF AVG. BASE RENT PER YEAR EXPIRING EXPIRING EXPIRING EXPIRING SF EXPIRING SF EXPIRING -------------------- ------------ ---------------- --------------- --------------------- ------------------ --------------------- Vacant -- 48,986 12% 48,986 12% -- -------------------- ------------ ---------------- --------------- --------------------- ------------------ --------------------- MTM (2) 2 8,810 2% 57,796 15% $38.58 -------------------- ------------ ---------------- --------------- --------------------- ------------------ --------------------- 2006 2 9,225 2% 67,021 17% $55.79 -------------------- ------------ ---------------- --------------- --------------------- ------------------ --------------------- 2007 12 23,833 6% 90,854 23% $49.99 -------------------- ------------ ---------------- --------------- --------------------- ------------------ --------------------- 2008 12 22,105 6% 112,959 28% $42.67 -------------------- ------------ ---------------- --------------- --------------------- ------------------ --------------------- 2009 12 36,170 9% 149,129 37% $42.50 -------------------- ------------ ---------------- --------------- --------------------- ------------------ --------------------- 2010 8 17,239 4% 166,368 42% $47.06 -------------------- ------------ ---------------- --------------- --------------------- ------------------ --------------------- 2011 9 17,809 4% 184,177 46% $41.95 -------------------- ------------ ---------------- --------------- --------------------- ------------------ --------------------- 2012 10 42,584 11% 226,761 57% $42.01 -------------------- ------------ ---------------- --------------- --------------------- ------------------ --------------------- 2013 7 16,751 4% 243,512 61% $34.47 -------------------- ------------ ---------------- --------------- --------------------- ------------------ --------------------- 2014 8 15,929 4% 259,441 65% $53.20 -------------------- ------------ ---------------- --------------- --------------------- ------------------ --------------------- 2015 11 42,931 11% 302,372 76% $30.54 -------------------- ------------ ---------------- --------------- --------------------- ------------------ --------------------- Thereafter 12 95,525 24% 397,897 100% $23.98 -------------------- ------------ ---------------- --------------- --------------------- ------------------ --------------------- (1) The information in the table is based on the actual rent roll dated February 28, 2006 and leases in place. (2) MTM tenants are classified as tenants whose leases expired prior to 2006, but the tenants were still in occupancy and paying rent to the borrower as of the occupancy date. MTM tenants include one tenant (0.20% of Total SF), whose lease expired on 1/31/2006. PROPERTY MANAGEMENT. The Woodland Mall Property is managed by PREIT Services LLC, an affiliate of the Woodland Mall Borrower. ADDITIONAL INDEBTEDNESS. Not Allowed. GROUND LEASE. None. RELEASE OF PARCELS. Not Allowed. D-5 [THIS PAGE INTENTIONALLY LEFT BLANK.] D-6 MORTGAGE LOAN NO. 2 -- 1675 BROADWAY [3 PHOTOS OMITTED] D-7 MORTGAGE LOAN NO. 2 -- 1675 BROADWAY [MAP OMITTED] D-8 MORTGAGE LOAN NO. 2 -- 1675 BROADWAY ------------------------------------------------------------------ LOAN INFORMATION ------------------------------------------------------------------ MORTGAGE LOAN SELLER: PMCF LOAN PURPOSE: Refinance ORIGINAL BALANCE:(1) $155,000,000 CUT-OFF DATE BALANCE:(1) $155,000,000 FIRST PAYMENT DATE: 07/05/2006 INTEREST RATE: 5.63750% AMORTIZATION TERM: Months 1-60: Interest Only Months 61-120: 360 months ARD: No ANTICIPATED REPAYMENT DATE: NAP MATURITY DATE: 06/05/2016 EXPECTED MATURITY BALANCE: $144,498,888 SPONSORS: Jack Rudin, Beth Rudin DeWoody, Eric C. Rudin, Madeleine Rudin Johnson, William C. Rudin, Katherine L. Rudin INTEREST CALCULATION: Actual/360 CALL PROTECTION: 48-payment lockout from the first payment date, with the greater of 1% or yield maintenance for the following 69 payments, and open to prepayment without premium thereafter through the maturity date. CUT-OFF DATE BALANCE PER SF:(1) $203.65 UP-FRONT RESERVES: RE Taxes: $5,333,333 Other:(2) $15,000,000 ONGOING RESERVES:(2) RE Taxes: $1,019,431 / month Insurance:(3) Springing Replacement: (3) Springing TI/LC:(3) Springing Other:(4) Springing LOCKBOX: Hard ------------------------------------------------------------------ ------------------------------------------------------------------ PROPERTY INFORMATION ------------------------------------------------------------------ SHADOW RATING:(5) BBB+ / Baa3 SINGLE ASSET/PORTFOLIO: Single Asset PROPERTY TYPE: Office PROPERTY SUB-TYPE: Urban LOCATION: New York, NY YEAR BUILT/RENOVATED: 1989 / NAP PERCENT LEASED (AS OF): 99.5% (03/01/2006) NET RENTABLE AREA: 761,092 THE COLLATERAL: A 35-story, Class A office building located in New York, New York. OWNERSHIP INTEREST: Leasehold PROPERTY MANAGEMENT: Rudin Management MOST RECENT NOI (AS OF): $16,769,282 (TTM 12/31/2005) 2ND RECENT NOI (AS OF): $19,088,049 (TTM 12/31/2004) 3RD RECENT NOI (AS OF): $18,638,373 (TTM 12/31/2003) U/W Net Op. Income: (6) $19,075,983 U/W Net Cash Flow: (6) $17,603,232 Appraised Value (As of): $350,000,000 (05/01/2006) Cut-off Date LTV Ratio:(1)(7) 44.3% LTV Ratio at Maturity:(1)(7) 41.3% U/W DSCR: (1)(6)(8) 1.99x U/W DSCR Post IO: (1)(6)(8) 1.64x ----------------------------------------------------------------- (1) The subject $155,000,000 loan represents the A-Note portion of an $180,000,000 total mortgage debt. All Loan per SF, LTV and DSCR numbers in this table are based on the A-Note. (2) The borrower deposited $15,000,000 into a reserve account to be used to pay for tenant improvements and leasing commissions in connection with re-leasing the office space currently leased by Entertainment Weekly and The MacManus Group. In the event the Entertainment Weekly lease is renewed for a term of at least 10 years, $36.00 per square foot pursuant to such renewal lease will be released from the reserve and returned to the borrower. In the event The MacManus Group lease is renewed for a term of at least 10 years, all remaining funds will be released from the reserve and returned to the borrower. (3) Upon the occurrence of a Trigger Event, the borrower is required to make insurance (1/12 of annual insurance premiums per month), replacement ($22,000 per month), and TI/LC ($130,000 per month) deposits. A Trigger Event means (i) there is an event of default under the loan documents, or (ii) the DSCR is less than or equal to 1.15x for two consecutive calendar quarters ("DSCR Event"). So long as no event of default exists, in the event the DSCR falls below 1.15x, but is greater than 1.05x for two consecutive calendar quarters, the borrower may deliver to the lender, up to four times, funds in an amount that will bring the DSCR to 1.15x, and in such event, no DSCR Event will be deemed to have occurred for the two consecutive calendar quarters in question. (4) Upon the occurrence of a Trigger Event, the borrower is required to make monthly payments equal to the amount of ground rent that will be due on or prior to the next monthly payment date. (5) Standard and Poor's Ratings Services and Moody's Investors Service, Inc. have confirmed that the 1675 Broadway Loan has, in the context of its inclusion in the trust, credit characteristics consistent with that of an obligation rated "BBB+" / "Baa3", respectively. (6) Real estate taxes from 1989 through 1995 were deferred until 1998 under New York's ICIP program. Deferred tax payments of $2,161,826 per year are due through 2008 in addition to annual real estate taxes. The deferred tax payments were not included in underwritten net operating income and underwritten net cash flow. The deferred tax payments are included in monthly deposits to the RE Taxes reserve. (7) The Cut-off Date LTV Ratio and LTV Ratio at Maturity of the $180,000,000 total first mortgage debt are 51.4% and 48.0%, respectively. (8) The DSCR is based solely on the A-Note portion. The DSCR based on the total first mortgage debt during the interest only period is 1.69x. The DSCR based on the total first mortgage debt would be 1.40x, based on the principal and interest payment. THE 1675 BROADWAY LOAN. THE LOAN. The second largest loan (the "1675 Broadway Loan") is a $155,000,000 A-Note, which is the senior portion of a $180,000,000 first mortgage loan secured by the borrower's leasehold interest in a 35-story, 761,092 square foot office building with ground level retail (the "1675 Broadway Property") located in New York, New York. The subordinate portion of the total first mortgage loan is evidenced by a subordinate B-note in the original principal amount of $25,000,000 (the "B-Note"). D-9 THE BORROWER. The borrower, Broadway 52nd, L.P., is a Delaware limited partnership (the "1675 Broadway Borrower") and is a single-purpose entity that owns no material assets other than the 1675 Broadway Property and related interests. The general partner of the 1675 Broadway Borrower was structured with two independent managers. A non-consolidation opinion was delivered at origination. The sponsors are Jack Rudin, Beth Rudin DeWoody, Eric C. Rudin, Madeleine Rudin Johnson, William C. Rudin, and Katherine L. Rudin. The Rudin organization is a family-run, private company with more than 70 years of experience in owning and operating commercial real estate in New York City. THE PROPERTY. The 1675 Broadway Property is a 35-story office building (with ground floor and mezzanine retail space) containing approximately 761,092 rentable square feet. There is also an underground garage with 61 parking spaces. The improvements are located in Midtown Manhattan between 52nd and 53rd Streets on Broadway. This location is proximate to several New York City subway lines. The following table presents certain information relating to the tenants at the 1675 Broadway Property: --------------------------- ---------------- ----------- ----------- ----------------- -------------- -------------- ------------ % OF TOTAL ANNUALIZED CREDIT RATING ANNUALIZED ANNUALIZED UNDERWRITTEN (FITCH/ UNDERWRITTEN UNDERWRITTEN BASE RENT LEASE TENANT NAME MOODY'S/S&P)(1) TENANT NRA % OF NRA BASE RENT ($) BASE RENT ($ PER NRA) EXPIRATION --------------------------- ---------------- ----------- ----------- ----------------- -------------- -------------- ------------ THE MACMANUS GROUP --/Baa2/BBB+ 359,387 47% $13,783,656 45% $38.35 09/30/2010 --------------------------- ---------------- ----------- ----------- ----------------- -------------- -------------- ------------ MAYER BROWN ROWE & MAW --/--/-- 247,933 33% $10,226,764 34% $41.25 08/31/2015 --------------------------- ---------------- ----------- ----------- ----------------- -------------- -------------- ------------ ARENT FOX --/--/-- 86,215 11% $3,982,784 13% $46.20 06/30/2018 --------------------------- ---------------- ----------- ----------- ----------------- -------------- -------------- ------------ ENTERTAINMENT WEEKLY --/Baa2/BBB+ 62,225 8% $2,310,581 8% $37.13 12/31/2009 --------------------------- ---------------- ----------- ----------- ----------------- -------------- -------------- ------------ STARBUCKS --/--/-- 1,290 0% $90,000 0% $69.77 02/28/2014 --------------------------- ---------------- ----------- ----------- ----------------- -------------- -------------- ------------ TOTAL/WEIGHTED AVERAGE 757,050 99% $30,393,785 100% $40.15 --------------------------- ---------------- ----------- ----------- ----------------- -------------- -------------- ------------ --------------------------- ---------------- ----------- ----------- ----------------- -------------- -------------- ------------ Vacant Space NAP 4,042 1% $0 0% $0.00 NAP --------------------------- ---------------- ----------- ----------- ----------------- -------------- -------------- ------------ TOTAL/WEIGHTED AVERAGE 761,092 100% $30,393,785 100% $40.15 --------------------------- ---------------- ----------- ----------- ----------------- -------------- -------------- ------------ (1) Certain ratings are those of the parent company whether or not the parent guarantees the lease. --------------------------------------------------------------------------------------------------------------------------------- LEASE ROLLOVER SCHEDULE (1) -------------------------- ------------- ------------- ---------------- ---------------- ----------------- ---------------------- CUMULATIVE # OF LEASES TOTAL SF % OF TOTAL SF TOTAL SF CUMULATIVE % OF AVG. BASE RENT PER YEAR EXPIRING EXPIRING EXPIRING EXPIRING SF EXPIRING SF EXPIRING -------------------------- ------------- ------------- ---------------- ---------------- ----------------- ---------------------- Vacant -- 4,042 1% 4,042 1% -- -------------------------- ------------- ------------- ---------------- ---------------- ----------------- ---------------------- MTM 2(2) 300 -- 4,342 1% $36.13(2) -------------------------- ------------- ------------- ---------------- ---------------- ----------------- ---------------------- 2006 2(2) -- -- 4,342 1% (2) -------------------------- ------------- ------------- ---------------- ---------------- ----------------- ---------------------- 2007 -- -- -- 4,342 1% -- -------------------------- ------------- ------------- ---------------- ---------------- ----------------- ---------------------- 2008 1 -- -- 4,342 1% (2) -------------------------- ------------- ------------- ---------------- ---------------- ----------------- ---------------------- 2009 2(2) 61,925 8% 66,267 9% $37.03(2) -------------------------- ------------- ------------- ---------------- ---------------- ----------------- ---------------------- 2010 2(2) 359,387 47% 425,654 56% $38.65(2) -------------------------- ------------- ------------- ---------------- ---------------- ----------------- ---------------------- 2011 2(2) -- -- 425,654 56% (2) -------------------------- ------------- ------------- ---------------- ---------------- ----------------- ---------------------- 2012 -- -- -- 425,654 56% -- -------------------------- ------------- ------------- ---------------- ---------------- ----------------- ---------------------- 2013 -- -- -- 425,654 56% -- -------------------------- ------------- ------------- ---------------- ---------------- ----------------- ---------------------- 2014 1 1,290 -- 426,944 56% $69.77 -------------------------- ------------- ------------- ---------------- ---------------- ----------------- ---------------------- 2015 1 247,933 33% 674,877 89% $41.30 -------------------------- ------------- ------------- ---------------- ---------------- ----------------- ---------------------- Thereafter 1 86,215 11% 761,092 100% $46.20 -------------------------- ------------- ------------- ---------------- ---------------- ----------------- ---------------------- (1) The information in the table is based on the actual rent roll dated March 1, 2006. (2) Additional rental revenue is generated from several leases whereby the tenants do not physically occupy any NRA. The Average Base Rent per SF Expiring is inclusive of this additional revenue generated from these leases. PROPERTY MANAGEMENT. The 1675 Broadway Property is managed by the Rudin Management Co., Inc., an affiliate of the 1675 Broadway Borrower. ADDITIONAL INDEBTEDNESS. The 1675 Broadway Property also secures a subordinate B-Note, with an original principal balance of $25,000,000. Only the A-Note is included in the trust. The combined aggregate original principal balance of the A-Note and B-Note was $180,000,000. The B-Note has a 10-year term (interest only first 5 years) with a 30 year amortization schedule and 6.2135% interest rate. The holder of the B-Note will have various consent rights with respect to material servicing decisions, a right to appoint or replace the special servicer, a right to cure defaults and an option to purchase the A-Note under certain circumstances. For more information with respect to these rights, see "Description of the Mortgage Pool--Subordinate and/or Other Financing--Split Loan Structures--The 1675 Broadway Loan Group" in the Prospectus Supplement. The B-Note is currently held by The Prudential Insurance Company of America. The 1675 Broadway Borrower is permitted to obtain unsecured loans from related Rudin family entities not to exceed $5,000,000. Additionally, mezzanine financing secured only by equity interests other than those of the borrower's single purpose general partnership in an amount up to $10,000,000 will be permitted, provided the DSCR of the 1675 Broadway Loan is at least 1.35x and the combined DSCR, inclusive of the entire 1675 Broadway Loan, B-note and mezzanine debt, is at least 1.25x, subject D-10 to written confirmation from each of the Rating Agencies then rating the series 2006-PWR12 certificates that the incurrence of such debt will not result in the qualification, downgrade or withdrawal of any of the ratings on the series 2006-PWR12 certificates GROUND LEASE. The 1675 Broadway Property is encumbered by a ground lease that expires December 31, 2039 and has five, 20-year renewal options. Annual rent payments are currently $3,650,000 and will increase to $4,050,000 on January 1, 2011. In addition to base rent, the 1675 Broadway Borrower is required to make additional rent payments contingent upon an NOI formula detailed in the ground lease. Currently, the 1675 Broadway Property's NOI does not require any additional rent payments to be made. The 1675 Broadway Borrower is also required to pay to the ground lessor 5% of the proceeds over $155,000,000 on any secured financing or refinancing, subject to allowable deductions as described in the ground lease. The ground lessor is The Shubert Organization, which owns the adjacent Broadway Theater. Additionally, subject to terms and conditions under the ground lease, both the ground lessor and the 1675 Broadway Borrower have a right of first refusal to purchase the other party's interest in the 1675 Broadway Property if such party desires to sell its interest. The right of first refusal applies to a sale of a 50% or more of the equity interests in the selling party. RELEASE OF PARCELS. Not Allowed. D-11 [THIS PAGE INTENTIONALLY LEFT BLANK.] D-12 MORTGAGE LOAN NO. 3 -- ORANGE PLAZA [4 PHOTOS OMITTED] D-13 MORTGAGE LOAN NO. 3 -- ORANGE PLAZA [MAP OMITTED] D-14 MORTGAGE LOAN NO. 3 -- ORANGE PLAZA ---------------------------------------------------------------- LOAN INFORMATION ---------------------------------------------------------------- MORTGAGE LOAN SELLER: PMCF LOAN PURPOSE: Refinance ORIGINAL BALANCE: $90,500,000 CUT-OFF DATE BALANCE: $90,500,000 FIRST PAYMENT DATE: 04/05/2006 INTEREST RATE: 5.63500% AMORTIZATION TERM: Months 1-24: Interest Only Months 25-120: 360 months ARD: No ANTICIPATED REPAYMENT DATE: NAP MATURITY DATE: 03/05/2016 EXPECTED MATURITY BALANCE: $79,697,772 SPONSOR: Robert C. Baker INTEREST CALCULATION: Actual/360 CALL PROTECTION: 28-payment lockout from the first payment date, with U.S. Treasury defeasance for the following 88 payments, and open to prepayment without premium thereafter through the maturity date. CUT-OFF DATE BALANCE PER SF: $118.24 UP-FRONT RESERVES: RE Taxes:(1) $941,566(LOC) Insurance:(2) $46,975 ONGOING RESERVES: Replacement:(3) $5,221 / month TI/LC:(4) Springing LOCKBOX: Hard --------------------------------------------------------------- --------------------------------------------------------------- PROPERTY INFORMATION --------------------------------------------------------------- SHADOW RATING: NAP SINGLE ASSET/PORTFOLIO: Single Asset PROPERTY TYPE: Retail PROPERTY SUB-TYPE: Anchored LOCATION: Middletown, NY YEAR BUILT/RENOVATED: 1971 / 2002 PERCENT LEASED (AS OF): 99.4% (01/10/2006) NET RENTABLE AREA: 765,390 THE COLLATERAL: An anchored retail center located in Middletown, New York. OWNERSHIP INTEREST: Fee PROPERTY MANAGEMENT: National Realty & Development Corp. MOST RECENT NOI (AS OF): $8,044,806 (TTM 12/31/2005) 2ND RECENT NOI (AS OF): $7,102,759 (TTM 12/31/2004) 3RD RECENT NOI (AS OF): $6,734,547 (TTM 12/31/2003) U/W NET OP. INCOME: $7,541,526 U/W NET CASH FLOW: $7,252,105 APPRAISED VALUE (AS OF): $115,000,000 (01/13/2006) CUT-OFF DATE LTV RATIO: 78.7% LTV RATIO AT MATURITY: 69.3% U/W DSCR: 1.40x U/W DSCR POST IO: 1.16x --------------------------------------------------------------- (1) In lieu of monthly deposits, the borrower posted a letter of credit at origination in the base amount of $941,566, which is equivalent to six months of real estate taxes and assessments. (2) In lieu of monthly deposits, a deposit in the amount of $46,975 equal to six months of insurance premiums was collected at origination. (3) Monthly deposits into the replacement reserve account are subject to a $313,270 cap. (4) Commencing on the earlier to occur of (i) a "Key Tenant" (as hereinafter defined) vacating or going dark, (ii) a Key Tenant terminating its lease, (iii) certain insolvency-related events with respect to a Key Tenant, or (iv) a Key Tenant failing to renew its lease, the borrower will be required to fund a reserve on a monthly basis to pay unaffiliated, third party leasing commissions and tenant improvements costs relating to the Key Tenant's space, to the extent that there is excess cash flow from the property after payment of debt service, capital expenditures and operating expenses, subject to a cap of the amount obtained by multiplying $6.00 by the NRA of the Key Tenant's space. The monthly escrow is subject to reduction in certain circumstance and will cease with respect to that Key Tenant if, among other things, the Key Tenant renews or affirms its lease or an acceptable replacement tenant takes occupancy and begins paying full rent on the space. In lieu of a monthly escrow, the borrower may elect to post a letter of credit in the face amount of the cap. A Key Tenant is defined as any tenant that leases 20,000 or more square feet of NRA or a ground tenant that has constructed improvements consisting of 20,000 or more square feet. THE ORANGE PLAZA LOAN. THE LOAN. The third largest loan (the "Orange Plaza Loan") is a $90,500,000 first mortgage loan secured by the borrower's fee simple interest in a regional power center known as Orange Plaza located in Middletown, New York (the "Orange Plaza Property"). THE BORROWER. The borrower, Middletown I Resources L.P., a Delaware limited partnership (the "Orange Plaza Borrower"), is a single purpose entity that owns no material assets other than the mortgaged property and related interests. The general partner of the Orange Plaza Borrower is structured with an independent director. A non-consolidation opinion was delivered at origination. The sponsor is Robert C. Baker, Chairman and CEO of National Realty & Development Corp. Mr. Baker has been an active developer and owner of real estate for the past 45 years, and presently owns approximately 75 shopping centers located throughout 14 states, as well as a number of office buildings and industrial buildings. THE PROPERTY. The Orange Plaza Property, located in Middletown, New York, consists of 765,390 square feet of anchor and in-line retail space on approximately 80 acres. The Orange Plaza Property was built in 1971, and expanded in 1978, with additional renovations and remodeling completed in 2002. The site fronts on the south side of Route 211 and the east side of Dunning Road, directly adjacent to the west side of Route 17. Although it has a Middletown address, the Orange Plaza Property is physically located in the Town of Wallkill. The collateral includes 11 outparcels, including 9 ground leased pads, with tenants owning their own improvements (not part of the collateral). The Orange Plaza Property is anchored by Wal-Mart, Home Depot USA, Kohl's Department Stores, and Burlington Coat Factory. Other significant tenants include Marshall's Store, Bed Bath & Beyond, Staples Inc., and Modell's Sporting. As of January 10, 2006, the Orange Plaza Property was 99.4% leased to 43 tenants. D-15 More specific information about the Orange Plaza Property is set forth in the tables below: ------------------------- ---------------------------------- -------------------------- ------------------ ---------------------- CREDIT RATING OF PARENT COMPANY ANCHOR PARENT COMPANY (FITCH/MOODY'S/S&P) (1) GLA COLLATERAL INTEREST ------------------------- ---------------------------------- -------------------------- ------------------ ---------------------- Wal-Mart Wal-Mart Stores, Inc. AA/Aa2/AA 228,910 Yes ------------------------- ---------------------------------- -------------------------- ------------------ ---------------------- Home Depot USA Home Depot, Inc. AA/Aa3/AA 112,058 Yes ------------------------- ---------------------------------- -------------------------- ------------------ ---------------------- Kohl's Department Stores Kohl's Corporation A/A3/BBB+ 89,531 Yes ------------------------- ---------------------------------- -------------------------- ------------------ ---------------------- Burlington Coat Factory Bain Capital, LLC --/--/-- 84,897 Yes ------------------------- ---------------------------------- -------------------------- ------------------ ---------------------- TOTAL 515,396 ------------------------- ---------------------------------- -------------------------- ------------------ ---------------------- (1) Certain ratings are those of the parent company whether or not the parent guarantees the lease. --------------------------- ---------------- ------------ ---------- ---------------- ------------- ---------------- ------------ % OF TOTAL ANNUALIZED CREDIT RATING ANNUALIZED ANNUALIZED UNDERWRITTEN (FITCH/ TENANT UNDERWRITTEN UNDERWRITTEN BASE RENT LEASE TENANT NAME MOODY'S/S&P)(1) NRA(2) % OF NRA BASE RENT ($) BASE RENT ($ PER NRA)(2) EXPIRATION --------------------------- ---------------- ------------ ---------- ---------------- ------------- ---------------- ------------ Wal-Mart AA/Aa2/AA 228,910 30% $2,450,742 28% $10.71 04/23/2022 --------------------------- ---------------- ------------ ---------- ---------------- ------------- ---------------- ------------ Home Depot USA AA/Aa3/AA 112,058 15% $325,000 4% $2.90 01/31/2010 --------------------------- ---------------- ------------ ---------- ---------------- ------------- ---------------- ------------ Kohl's Department Stores A/A3/BBB+ 89,531 12% $534,223 6% $5.97 01/28/2023 --------------------------- ---------------- ------------ ---------- ---------------- ------------- ---------------- ------------ Burlington Coat Factory CCC/Caa1/B 84,897 11% $560,000 6% $6.60 03/31/2014 --------------------------- ---------------- ------------ ---------- ---------------- ------------- ---------------- ------------ Marshall's Store --/A3/A 30,000 4% $375,000 4% $12.50 05/31/2012 --------------------------- ---------------- ------------ ---------- ---------------- ------------- ---------------- ------------ Bed Bath & Beyond --/--/BBB 25,384 3% $423,150 5% $16.67 01/31/2013 --------------------------- ---------------- ------------ ---------- ---------------- ------------- ---------------- ------------ Staples Inc. BBB+/Baa2/BBB 23,750 3% $285,000 3% $12.00 09/30/2017 --------------------------- ---------------- ------------ ---------- ---------------- ------------- ---------------- ------------ Rag Shop Store --/--/-- 18,942 2% $246,246 3% $13.00 08/31/2012 --------------------------- ---------------- ------------ ---------- ---------------- ------------- ---------------- ------------ Modell's Sporting --/--/-- 18,080 2% $288,000 3% $15.93 06/30/2017 --------------------------- ---------------- ------------ ---------- ---------------- ------------- ---------------- ------------ Brown Group Retail BB+/Ba3/BB 12,000 2% $198,000 2% $16.50 08/31/2012 (Famous Footwear) --------------------------- ---------------- ------------ ---------- ---------------- ------------- ---------------- ------------ TOTAL/WEIGHTED AVERAGE 643,552 84% $5,685,361 66% $8.83 --------------------------- ---------------- ------------ ---------- ---------------- ------------- ---------------- ------------ --------------------------- ---------------- ------------ ---------- ---------------- ------------- ---------------- ------------ Other Tenants NAP 117,109 15% $2,993,824 34% $25.56 Various --------------------------- ---------------- ------------ ---------- ---------------- ------------- ---------------- ------------ Vacant Space NAP 4,729 1% $0 0% $0.00 NAP --------------------------- ---------------- ------------ ---------- ---------------- ------------- ---------------- ------------ TOTAL/WEIGHTED AVERAGE 765,390 100% $8,679,185 100% $11.34 --------------------------- ---------------- ------------ ---------- ---------------- ------------- ---------------- ------------ (1) Certain ratings are those of the parent company whether or not the parent guarantees the lease. (2) Excludes square footage of ground lease tenants. Annualized Underwritten Base Rent includes the rental revenue generated by the ground lease tenants, but excludes the SF. The ground leased space totals 48,452 SF. --------------------------------------------------------------------------------------------------------------------------------- LEASE ROLLOVER SCHEDULE(1) # OF LEASES % OF TOTAL SF CUMULATIVE TOTAL CUMULATIVE % OF AVG. BASE RENT YEAR EXPIRING TOTAL SF EXPIRING EXPIRING SF EXPIRING SF EXPIRING PER SF EXPIRING -------------------- ------------ -------------------- ----------------- ------------------ ----------------- ------------------- Vacant 1 4,729 1% 4,729 1% -- -------------------- ------------ -------------------- ----------------- ------------------ ----------------- ------------------- 2006(2) 1 10,000 1% 14,729 2% $16.00 -------------------- ------------ -------------------- ----------------- ------------------ ----------------- ------------------- 2007 2 13,200 2% 27,929 4% $14.00 -------------------- ------------ -------------------- ----------------- ------------------ ----------------- ------------------- 2008(3) 1 -- -- 27,929 4% (3) -------------------- ------------ -------------------- ----------------- ------------------ ----------------- ------------------- 2009 1 1,548 -- 29,477 4% $26.00 -------------------- ------------ -------------------- ----------------- ------------------ ----------------- ------------------- 2010(3) 3 114,558 15% 144,035 19% $3.72 -------------------- ------------ -------------------- ----------------- ------------------ ----------------- ------------------- 2011 -- -- -- 144,035 19% -- -------------------- ------------ -------------------- ----------------- ------------------ ----------------- ------------------- 2012 10 89,509 12% 233,544 31% $15.45 -------------------- ------------ -------------------- ----------------- ------------------ ----------------- ------------------- 2013 6 52,953 7% 286,497 37% $17.23 -------------------- ------------ -------------------- ----------------- ------------------ ----------------- ------------------- 2014 4 98,722 13% 385,219 50% $9.06 -------------------- ------------ -------------------- ----------------- ------------------ ----------------- ------------------- 2015(3) 3 5,400 1% 390,619 51% $48.19 -------------------- ------------ -------------------- ----------------- ------------------ ----------------- ------------------- Thereafter(3) 12 374,771 49% 765,390 100% $11.62 -------------------- ------------ -------------------- ----------------- ------------------ ----------------- ------------------- (1) The information in the table is based on the actual rent roll dated January 10, 2006. (2) The tenant whose lease expires in 2006 will reportedly not be renewing its lease. (3) Includes one or more ground lease tenants for which a square footage of zero was assigned. Avg. Base Rent per SF Expiring includes the rental revenue generated by the ground lease tenants, but excludes the SF. The ground leased space totals 48,452 SF. PROPERTY MANAGEMENT. The Orange Plaza Property is managed by National Realty & Development Corp., an affiliate of the Orange Plaza Borrower. ADDITIONAL INDEBTEDNESS. Not Allowed. GROUND LEASE. None. Release of Parcels. The Orange Plaza Borrower is entitled to obtain a release of an undeveloped outparcel, without any required prepayment of the Orange Plaza Loan, provided that it satisfies certain conditions specified in the mortgage loan documents. The lender did not underwrite any income from this outparcel, and the appraisal did not assign any value to this outparcel. D-16 MORTGAGE LOAN NO. 4 -- BROKEN SOUND PORTFOLIO [4 PHOTOS OMITTED] D-17 MORTGAGE LOAN NO. 4 -- BROKEN SOUND PORTFOLIO [MAP OMITTED] D-18 MORTGAGE LOAN NO. 4 -- BROKEN SOUND PORTFOLIO ----------------------------------------------------------------- LOAN INFORMATION ----------------------------------------------------------------- MORTGAGE LOAN SELLER: WFB LOAN PURPOSE: Refinance ORIGINAL BALANCE: $47,000,000 CUT-OFF DATE BALANCE: $47,000,000 FIRST PAYMENT DATE: 07/01/2006 INTEREST RATE: 6.14000% AMORTIZATION TERM: Interest Only ARD: No ANTICIPATED REPAYMENT DATE: NAP MATURITY DATE: 06/01/2016 EXPECTED MATURITY BALANCE: $47,000,000 SPONSORS: Paul Milhous, Robert Milhous, Ropamil LP, Paul Milhous Trust, and Robert Milhous Trust INTEREST CALCULATION: Actual/360 CALL PROTECTION: 24-payment lockout from the first payment date, with U.S. Treasury defeasance for the following 92 payments, and open to prepayment without premium thereafter through the maturity date. CUT-OFF DATE BALANCE PER SF: $127.22 UP-FRONT RESERVES: RE Taxes: $315,210 Insurance: $76,649 ONGOING RESERVES: RE Taxes: $45,030 / month Insurance: $25,550 / month Replacement: (1) Springing TI/LC: (2) Springing LOCKBOX: Springing Hard --------------------------------------------------------------- --------------------------------------------------------------- PROPERTY INFORMATION --------------------------------------------------------------- SHADOW RATING: NAP SINGLE ASSET/PORTFOLIO: Portfolio PROPERTY TYPE: Various PROPERTY SUB-TYPE: Various LOCATION: Various - See Table YEAR BUILT/RENOVATED: Various - See Table PERCENT LEASED (AS OF): 96.3% (05/15/2006) NET RENTABLE AREA: 369,444 THE COLLATERAL: Five properties located in Florida. OWNERSHIP INTEREST: Fee PROPERTY MANAGEMENT: Paige Associates, Inc. (d/b/a Paige Charters Inc.) MOST RECENT NOI (AS OF): $3,124,267 (TTM 12/31/2005) 2ND RECENT NOI (AS OF): NAP 3RD RECENT NOI (AS OF): NAP U/W NET OP. INCOME: $4,399,906 U/W NET CASH FLOW: $4,103,406 APPRAISED VALUE (AS OF): $62,700,000 (02/2006) CUT-OFF DATE LTV RATIO: 75.0% LTV RATIO AT MATURITY: 75.0% U/W DSCR: 1.40x U/W DSCR POST IO: NAP --------------------------------------------------------------- (1) Following the occurrence and continuance of a default under the loan, the borrower is required to fund a Replacement Reserve in an amount equal to one-twelfth of the product of (a) the then total aggregate number of rentable square feet at the mortgaged properties and (b) $0.17. (2) Following the occurrence and continuance of a default under the loan, the borrower is required to fund a TI/LC Reserve in an amount equal to one-twelfth of the product of (a) the then total aggregate number of rentable square feet at the mortgaged properties and (b) $7.00. The borrower and sponsor will be required to post a letter of credit, or fund a designated Springing TI Impound in the event SBA Communications, among other things, gives notice that it will not exercise its option to extend its lease, fails to exercise the renewal option at least 6-months prior to the expiration of its lease, defaults or elects to terminate the lease. The amount of the impound must equal 6-months of SBA Communications' then current gross rent. So long as no default under the loan exists, the impound will be disbursed upon the satisfaction of certain conditions in amount(s) equal to the product of (a) the springing impound amount, and (b) a fraction, whereby the numerator is the total rentable square feet of the new or renewed lease, and the denominator is 79,131. THE BROKEN SOUND PORTFOLIO LOAN. THE LOAN. The fourth largest loan (the "Broken Sound Portfolio Loan") as evidenced by the Consolidated, Amended, Restated and Renewal Promissory Note Secured By Mortgage (the "Broken Sound Portfolio Note") is secured pursuant to the Amended and Restated Mortgage and Absolute Assignment of Rents and Leases and Security Agreement (and Fixture Filing) (the "Broken Sound Portfolio Mortgage") by the Borrower's fee interest in five properties located in Florida (the "Broken Sound Portfolio Properties"). THE BORROWER. The borrowers, 990 South Rogers Associates, LLC, 5900-6000 Broken Sound Associates, LLC, 6100 Broken Sound Associates, LLC, and Colonnade Plaza Associates, LLC, are single purpose entities that own no material assets other than the Broken Sound Portfolio Properties and related interests. Each of the borrowers are single member Delaware limited liability companies. A non-consolidation opinion was delivered at origination. The sponsors of the loan are Paul Milhous, Robert Milhous, Ropamil LP, Robert Milhous Trust and Paul Milhous Trust (individually and collectively, as context may require, the "Broken Sound Sponsor"). The Broken Sound Sponsor has approximately 40 years of commercial real estate experience with interests in 12 properties consisting of approximately one million square feet, and a net worth of $207 million. THE PROPERTY. The Broken Sound Portfolio Properties consist of five properties consisting of 369,444 square feet, located in Florida. Four of the properties are located in Boca Raton, Florida, and one property is located in Deerfield Beach, Florida. Four of the properties D-19 are multi-tenant, while one property is single tenant. On a combined basis, the portfolio is approximately 96.3% leased as of May 15, 2006. Two of the properties are Class A suburban office buildings (40% of the NRA), one property is flex-industrial (33% of the NRA), one property is mixed-use office warehouse (18% of the NRA) and one property is comprised of a 10,000 square foot retail center and a 25,000 square foot industrial building. More specific information about each property is set forth in the tables below. -------------------------- --------------- ----------- ------------- ------------ ---------- ---------- ------------- ------------- YEAR ALLOCATED BUILT/ CUT-OFF OWNERSHIP APPRAISED PROPERTY (1) LOCATION RENOVATED LOAN BALANCE INTEREST NRA % LEASED U/W NCF VALUE -------------------------- --------------- ----------- ------------- ------------ ---------- ---------- ------------- ------------- 5900 Broken Sound Plaza Boca Raton, FL 2001 / NAP $12,560,000 Fee 73,191 100.0% $1,221,979 $18,000,000 -------------------------- --------------- ----------- ------------- ------------ ---------- ---------- ------------- ------------- 6000 Broken Sound Plaza Boca Raton, FL 2001 / NAP $12,165,000 Fee 72,763 100.0% $907,988 $15,000,000 -------------------------- --------------- ----------- ------------- ------------ ---------- ---------- ------------- ------------- Rogers Circle Boca Raton, FL 1987 / NAP $10,000,000 Fee 122,390 88.8% $872,866 $12,900,000 -------------------------- --------------- ----------- ------------- ------------ ---------- ---------- ------------- ------------- Newhouse Business Center Boca Raton, FL 1999 / NAP $7,550,000 Fee 66,100 100.0% $679,542 $10,500,000 -------------------------- --------------- ----------- ------------- ------------ ---------- ---------- ------------- ------------- Deerfield Colonnade Plaza Beach, FL 2002 / NAP $4,725,000 Fee 35,000 100.0% $421,031 $6,300,000 -------------------------- --------------- ----------- ------------- ------------ ---------- ---------- ------------- ------------- TOTAL PORTFOLIO / WTD. $47,000,000 369,444 96.3% $4,103,406 $62,700,000 AVG. -------------------------- --------------- ----------- ------------- ------------ ---------- ---------- ------------- ------------- (1) The 5900 Broken Sound Plaza and 6000 Broken Sound Plaza properties are suburban office properties. The Rogers Circle property is a flex industrial property. The Newhouse Business Center property is a mixed use (office/warehouse) property. The Colonnade Plaza property is a mixed use (Office/Retail/Warehouse) property. ------------------- ------------------- --------- ---------- ---------- ----------- ----------- ---------- ------------ ----------- % OF % OF % OF % OF U/W BASE PROPERTY PORTFOLIO TENANT PROPERTY PORTFOLIO U/W BASE RENT ($ U/W BASE U/W BASE LEASE PROPERTY LARGEST TENANT NRA NRA NRA RENT PER NRA) RENT RENT EXPIRATION ------------------- ------------------- --------- ---------- ---------- ----------- ----------- ---------- ------------ ----------- 5900 Broken Sound SBA 73,191 100% 20% $1,415,514 $19.34 100% 30% 02/28/2012 Plaza Communications ------------------- ------------------- --------- ---------- ---------- ----------- ----------- ---------- ------------ ----------- 6000 Broken Sound Plaza Taylor & Francis 42,927 59% 12% $622,442 $14.50 58% 13% 01/31/2016 ------------------- ------------------- --------- ---------- ---------- ----------- ----------- ---------- ------------ ----------- Newhouse Business Center Freescale 30,018 45% 8% $372,632 $12.41 50% 8% 02/28/2010 ------------------- ------------------- --------- ---------- ---------- ----------- ----------- ---------- ------------ ----------- Colonnade Plaza Pool People, Inc. 25,000 71% 7% $288,000 $11.52 61% 6% 02/28/2011 ------------------- ------------------- --------- ---------- ---------- ----------- ----------- ---------- ------------ ----------- Rogers Circle W.W. Grainger 20,600 17% 6% $144,200 $7.00 14% 3% 03/31/2011 ------------------- ------------------- --------- ---------- ---------- ----------- ----------- ---------- ------------ ----------- --------------------------------------------------------------------------------------------------------------------------------- LEASE ROLLOVER SCHEDULE (1) # OF CUMULATIVE LEASES TOTAL SF % OF TOTAL SF TOTAL SF CUMULATIVE % OF AVG. BASE RENT PER YEAR EXPIRING EXPIRING EXPIRING EXPIRING SF EXPIRING SF EXPIRING -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- Vacant -- 13,700 4% 13,700 4% -- -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- 2006 3 7,500 2% 21,200 6% $18.33 -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- 2007 1 2,500 1% 23,700 6% $19.30 -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- 2008 1 16,775 5% 40,475 11% $8.24 -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- 2009 3 32,074 9% 72,549 20% $8.27 -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- 2010 6 76,799 21% 149,348 40% $12.49 -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- 2011 5 69,832 19% 219,180 59% $9.59 -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- 2012 2 79,041 21% 298,221 81% $18.56 -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- 2013 2 28,296 8% 326,517 88% $10.00 -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- 2014 -- -- -- 326,517 88% -- -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- 2015 -- -- -- 326,517 88% -- -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- Thereafter 1 42,927 12% 369,444 100% $14.50 -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- (1) The above table represents the rollover based on the entire portfolio. The information in the table is based on the underwritten rent roll. PROPERTY MANAGEMENT. The properties are managed by Paige Associates, Inc., an affiliate of the borrowers, doing business in Florida as Paige Charters Inc. ADDITIONAL INDEBTEDNESS. There is no existing mezzanine debt. Future mezzanine debt is permitted, subject to certain conditions set forth in the mortgage loan documents, including, among others, a maximum aggregate loan to value ("LTV") ratio not to exceed 75% and a combined debt service coverage ratio ("DSCR") to be equal to or greater than 1.15x. SUBSTITUTION AND RELEASE OF PROPERTIES. After the lockout period, the loan may be partially defeased based on 110% of the original allocated loan amount and an individual property may be released from the collateral securing the loan, subject to certain conditions including but not limited to (i) no event of default will have occurred, (ii) borrower will pay all reasonable costs and expenses associated with the release, (iii) the DSCR after giving effect to the release is greater than or equal to 1.15x (based on a 7.30% loan constant), (iv) the LTV after giving effect to the release is equal to or less than the LTV as of the closing date (approximately 75%), and (v) adequate reserves have been pledged, as determined by lender, for rollover concentration projected for the remaining portfolio. In the event of a permitted sale or assumption of an individual property, such property will be released from the cross collateralization and cross default provisions of the loan documents for the remaining loan properties subject to the satisfaction of certain conditions. Substitution is not permitted. D-20 MORTGAGE LOAN NO. 5 -- SOUTHDALE OFFICE CENTRE [5 PHOTOS OMITTED] D-21 MORTGAGE LOAN NO. 5 -- SOUTHDALE OFFICE CENTRE [MAP OMITTED] D-22 MORTGAGE LOAN NO. 5 -- SOUTHDALE OFFICE CENTRE --------------------------------------------------------------- LOAN INFORMATION --------------------------------------------------------------- MORTGAGE LOAN SELLER: WFB LOAN PURPOSE: Acquisition ORIGINAL BALANCE: $44,500,000 CUT-OFF DATE BALANCE: $44,500,000 FIRST PAYMENT DATE: 06/01/2006 INTEREST RATE: 6.18500% AMORTIZATION TERM: Months 1-60: Interest Only Months 61-120: 360 months ARD: No ANTICIPATED REPAYMENT DATE: NAP MATURITY DATE: 05/01/2016 EXPECTED MATURITY BALANCE: $41,796,550 SPONSOR: Dennis Doyle INTEREST CALCULATION: Actual/360 CALL PROTECTION: 35-payment lockout from the first payment date, with U.S. Treasury defeasance for the following 81 payments, and open to prepayment without premium thereafter through maturity. CUT-OFF DATE BALANCE PER SF: $99.26 UP-FRONT RESERVES: RE Taxes: $221,470 Insurance: $36,225 TI/LC:(1) $1,000,000 Holdback:(2) $1,000,000 ONGOING RESERVES: RE Taxes: $110,735 / month Insurance: $4,025 / month Replacement:(3) $7,471 / month LOCKBOX:(4) Springing Hard --------------------------------------------------------------- --------------------------------------------------------------- PROPERTY INFORMATION --------------------------------------------------------------- SHADOW RATING: NAP SINGLE ASSET/PORTFOLIO: Single Asset PROPERTY TYPE: Office PROPERTY SUB-TYPE: Suburban LOCATION: Edina, MN YEAR BUILT/RENOVATED: 1967 - 1974, 1991 / NAP PERCENT LEASED (AS OF): 82.8% (02/28/2006) NET RENTABLE AREA: 448,299 THE COLLATERAL: Six-building, suburban office complex located in Edina, Minnesota OWNERSHIP INTEREST: Fee PROPERTY MANAGEMENT: Welsh Companies, LLC MOST RECENT NOI (AS OF): $3,855,636 (TTM 12/31/2005) 2ND RECENT NOI (AS OF): $4,247,766 (TTM 12/31/2004) 3RD RECENT NOI (AS OF): $5,058,338 (TTM 12/31/2003) U/W NET OP. INCOME: $4,537,278 U/W NET CASH FLOW: $4,077,292 APPRAISED VALUE (AS OF): $57,500,000 (03/09/2006) CUT-OFF DATE LTV RATIO: 77.4% LTV RATIO AT MATURITY: 72.7% U/W DSCR: 1.46x U/W DSCR POST IO: 1.25x --------------------------------------------------------------- (1) If a disbursement is made from the TI/LC impound and the balance of the TI/LC impound is less than $1,000,000, borrower shall be required to pay the amount of $30,861 monthly until the amount of $1,000,000 has been achieved. (2) On May 1, 2008 ("Holdback Disbursement Date") and no more than three times prior to the Holdback Disbursement Date, borrower may request that lender determine if holdback conditions have been satisfied: the conditions are: (i) no default under the loan shall have occurred; (ii) borrower shall have delivered evidence to lender that economic occupancy is at least 87%; (iii) borrower shall have delivered evidence that the property has achieved a net operating revenue that results in a DSCR of no less than 0.87x (assuming a 10% loan constant on the outstanding principal balance of the note) and actual DSCR of 1.20x and (iv) borrower shall deliver evidence that LTV does not exceed 80%. DSCR will be calculated based on the P&I payment amount and 30-year amortization. Borrower may request a partial disbursement of the holdback on May 1, 2008 if all conditions have been satisfied other than section (iii) above. The amount of the partial draw shall be equal to the largest amount that satisfies the tests for DSCR mentioned above. If borrower does not satisfy these conditions, the proceeds will be held by the lender as additional collateral for the loan. (3) This reserve will be capped and maintained at $300,000. (4) The lender has the ability to initiate a cash flow sweep in the event the actual debt service coverage ratio (assuming a 30-year amortization schedule) falls below 1.10x. Sweep will be suspended once the debt service ratio reaches 1.20x based on the property's trailing twelve months operating statements. THE SOUTHDALE OFFICE CENTRE LOAN. THE LOAN. The fifth largest loan (the "Southdale Office Centre Loan") as evidenced by the Promissory Note (the "Southdale Office Centre Note") secured by a first priority fee Deed of Trust and Absolute Assignment of Rents and Leases and Security Agreement (the "Southdale Office Centre Mortgage") encumbering the 448,299 square foot suburban office property located in Edina, Minnesota. The Southdale Office Centre Loan was originated on April 20, 2006 by or on behalf of Wells Fargo Bank, National Association. THE BORROWER. The co-borrowers are Southdale Office, LLC, a Delaware limited liability company, and KADO Southdale Investment, LLC, a Delaware limited liability company, as tenants in common (the "Southdale Office Centre Borrower"). The Southdale Office Centre Borrower is a Level V single-purpose entity that owns no material assets other than the mortgaged property and related interests. A non-consolidation opinion was delivered at origination. Southdale Office, LLC will own a 78.3% interest, and KADO Southdale Investment, LLC will own a 21.7% interest. Southdale Office, LLC is 100% owned by Welsh Institutional Investments, LLC, which is owned by GEBAM, Inc. D-23 (95.8%) and DoyleInvest II, LLC (4.2%). GEBAM, Inc. is wholly owned by General Electric Capital Corporation. KADO Southdale Investment, LLC is 100% owned by Kado Investment Partners, LLC, which is owned by Welsh Holdings, LLC (62.5%) and Welsh Ventures, LLC (37.6%). THE PROPERTY. The Southdale Office Centre Property is a 6-building, 448,299 square foot office complex with a Pizzeria Uno restaurant and a stand-alone bank branch (Metropolitan Bank). The Southdale Office Centre Property is located at 6600-6800 France Avenue South in Edina, Minnesota, about seven miles southwest of downtown Minneapolis. The Southdale Office Centre Property consists of four office buildings connected by ground level enclosed walkways and on-site amenities include a cafeteria, a sundries shop, fitness center, underground parking garages, 24-hour on-site security guards and a security card access system. The Southdale Office Centre Property is located on France Avenue South, a six-lane north/south arterial connecting to I-494 and State Route 62. The Southdale Office Centre Property is located across from the Southdale Mall, a regional shopping center, and Fairview Southdale Hospital, a full service medical facility SIGNIFICANT TENANTS: As of February 28, 2006, Southdale Office Centre was approximately 82.8% leased by 74 tenants. Edina Financial Services leases 91,812 square feet (20.5% of the NRSF) under a lease expiring November 2011 (5.6% of the Edina space expires in 2006). Edina Financial Services, Inc. is part of Edina Realty. Edina Realty is a subsidiary of HomeServices of America, a Berkshire Hathaway affiliate. With its headquarters at Southdale Office Centre, Edina Realty is one of the nation's largest real estate companies with more than 90 real estate offices throughout Minnesota, North Dakota and Wisconsin and more than 3,400 sales associates. The company's affiliates include Edina Realty Mortgage, Edina Realty Title, and Edina Realty Relocation. More specific information about the property is set forth in the tables below: -------------------------------- -------------- ----------- ---------- ---------------- ------------- -------------- -------------- % OF TOTAL ANNUALIZED CREDIT RATING ANNUALIZED ANNUALIZED UNDERWRITTEN (FITCH/ UNDERWRITTEN UNDERWRITTEN BASE RENT LEASE TENANT NAME MOODY'S/S&P)(1) TENANT NRA % OF NRA BASE RENT ($) BASE RENT ($ PER NRA) EXPIRATION -------------------------------- -------------- ----------- ---------- ---------------- ------------- -------------- -------------- Edina Financial Services, Inc. --/--/-- 91,812 20% $1,417,707 30% $15.44 11/30/2011(2) -------------------------------- -------------- ----------- ---------- ---------------- ------------- -------------- -------------- Fortis Benefits Insurance Co. --/--/-- 37,902 8% $379,020 8% $10.00 02/28/2007 -------------------------------- -------------- ----------- ---------- ---------------- ------------- -------------- -------------- Intrepid Companies, Inc. --/--/-- 30,782 7% $361,688 8% $11.75 10/31/2008 -------------------------------- -------------- ----------- ---------- ---------------- ------------- -------------- -------------- Crown Bankshares, Inc. --/--/-- 11,205 3% $148,466 3% $13.25 11/30/2010 -------------------------------- -------------- ----------- ---------- ---------------- ------------- -------------- -------------- Total/Weighted Average 171,701 38% $2,306,881 49% $13.44 -------------------------------- -------------- ----------- ---------- ---------------- ------------- -------------- -------------- -------------------------------- -------------- ----------- ---------- ---------------- ------------- -------------- -------------- Other Tenants(3) NAP 199,518 45% $2,378,546 51% $11.92 Various -------------------------------- -------------- ----------- ---------- ---------------- ------------- -------------- -------------- Vacant Space NAP 77,080 17% $0 0% $0.00 NAP -------------------------------- -------------- ----------- ---------- ---------------- ------------- -------------- -------------- Total/Weighted Average(3) 448,299 100% $4,685,427 100% $12.62 -------------------------------- -------------- ----------- ---------- ---------------- ------------- -------------- -------------- (1) Certain ratings are those of the parent company whether or not the parent guarantees the lease. (2) Approximately 5.6% (5,103 square feet) of the Edina Financial Services, Inc. ("Edina") space expires in 2006. This space accounts for approximately 5.2% of the total Edina Annualized Underwritten Base Rent. (3) Includes 9,095 square feet of common area, amenity, utility or Midwest Foods Services space as described in footnotes (1) and (2) (below) and may or may not directly contribute income to the property. --------------------------------------------------------------------------------------------------------------------------------- LEASE ROLLOVER SCHEDULE(1) # OF LEASES TOTAL SF % OF TOTAL SF CUMULATIVE TOTAL CUMULATIVE % OF SF AVG. BASE RENT YEAR EXPIRING EXPIRING EXPIRING SF EXPIRING EXPIRING PER SF EXPIRING -------------------- ------------ ---------------- ----------------- ------------------- -------------------- ------------------- Vacant -- 77,080 17% 77,080 17% -- -------------------- ------------ ---------------- ----------------- ------------------- -------------------- ------------------- MTM ((2)) 7 5,943 1% 83,023 19% -- -------------------- ------------ ---------------- ----------------- ------------------- -------------------- ------------------- 2006 12 19,042 4% 102,065 23% $13.73 -------------------- ------------ ---------------- ----------------- ------------------- -------------------- ------------------- 2007 13 68,173 15% 170,238 38% $10.78 -------------------- ------------ ---------------- ----------------- ------------------- -------------------- ------------------- 2008 11 49,580 11% 219,818 49% $12.34 -------------------- ------------ ---------------- ----------------- ------------------- -------------------- ------------------- 2009 8 17,359 4% 237,177 53% $12.50 -------------------- ------------ ---------------- ----------------- ------------------- -------------------- ------------------- 2010 ((3)) 13 49,254 11% 286,431 64% $11.50 -------------------- ------------ ---------------- ----------------- ------------------- -------------------- ------------------- 2011 23 121,176 27% 407,607 91% $14.75 -------------------- ------------ ---------------- ----------------- ------------------- -------------------- ------------------- 2012 5 27,060 6% 434,667 97% $12.67 -------------------- ------------ ---------------- ----------------- ------------------- -------------------- ------------------- 2013 2 9,531 2% 444,198 99% $10.97 -------------------- ------------ ---------------- ----------------- ------------------- -------------------- ------------------- 2014 1 917 -- 445,115 99% $11.50 -------------------- ------------ ---------------- ----------------- ------------------- -------------------- ------------------- 2015 1 3,184 1% 448,299 100% $15.00 -------------------- ------------ ---------------- ----------------- ------------------- -------------------- ------------------- Thereafter -- -- -- 448,299 100% -- -------------------- ------------ ---------------- ----------------- ------------------- -------------------- ------------------- (1) The information in the table is based on the underwritten rent roll. (2) 5,943 square feet of MTM space as presented above is currently used for common area, amenity space or utility purposes (i.e. tenant conference rooms, building management office, fire command station, etc.). This space is not leased or directly contributes income to the property. (3) 49,254 square feet of space expiring in 2010 includes 3,152 square feet of space leased to Midwest Food Services. This tenant operates a cafeteria, and is considered an amenity to the property. Additionally Midwest Food Services only pays percentage rent, which has been underwritten as "Other Income". For the purpose of this rollover schedule's Average Rent per SF Expiring calculation, the numerator does not include any rent contributed by Midwest Food Services, however the denominator includes the Midwest Food Services area. Excluding the subject tenant's area; the Average Rent per SF Expiring in 2010 equals $12.28. D-24 PROPERTY MANAGEMENT. The Southdale Office Centre Property is managed by the Welsh Companies, LLC. ADDITIONAL INDEBTEDNESS. Not Allowed. GROUND LEASE. None. RELEASE OF PARCELS. Not Allowed. D-25 [THIS PAGE INTENTIONALLY LEFT BLANK.] D-26 MORTGAGE LOAN NO. 6 -- TOWER AT ERIEVIEW [4 PHOTOS OMITTED] D-27 MORTGAGE LOAN NO. 6 -- TOWER AT ERIEVIEW [MAP OMITTED] D-28 MORTGAGE LOAN NO. 6 -- TOWER AT ERIEVIEW ----------------------------------------------------------------- LOAN INFORMATION ----------------------------------------------------------------- MORTGAGE LOAN SELLER: BSCMI LOAN PURPOSE: Refinance ORIGINAL BALANCE: $43,500,000 CUT-OFF DATE BALANCE: $43,500,000 FIRST PAYMENT DATE: 05/01/2006 INTEREST RATE: 6.06500% AMORTIZATION TERM: Months 1-48: Interest Only Months 49-120: 360 months ARD: No ANTICIPATED REPAYMENT DATE: NAP MATURITY DATE: 04/01/2016 EXPECTED MATURITY BALANCE: $40,123,012 SPONSORS: Werner Minshall and John Stewart INTEREST CALCULATION: Actual/360 CALL PROTECTION: 47-payment lockout from the first payment date, with U.S. Treasury defeasance for the following 72 payments, and open to prepayment without premium thereafter through maturity. CUT-OFF DATE BALANCE PER SF: $61.86 UP-FRONT RESERVES: RE Taxes: $298,141 Insurance: $56,848 Deferred $398,610 Maintenance: Replacement: $12,231 TI/LC: $37,500 Other:(1) $2,077,939 ONGOING RESERVES: RE Taxes: $74,535 / month Insurance: $14,212 / month Replacement: $12,231 / month TI/LC: $37,500 / month LOCKBOX: Hard ----------------------------------------------------------------- --------------------------------------------------------------- PROPERTY INFORMATION --------------------------------------------------------------- SHADOW RATING: NAP SINGLE ASSET/PORTFOLIO: Single Asset PROPERTY TYPE: Office PROPERTY SUB-TYPE: Urban LOCATION: Cleveland, OH YEAR BUILT/RENOVATED: 1964 / 1987, 2003-2005 PERCENT LEASED (AS OF): 89.8% (03/23/2006) NET RENTABLE AREA: 703,205 THE COLLATERAL: 40-story office tower with an attached parking garage containing 429 parking spaces located in Cleveland, Ohio. OWNERSHIP INTEREST: Fee PROPERTY MANAGEMENT: Minshall Development Company, Inc. MOST RECENT NOI (AS OF): $3,918,336 (TTM 12/31/2005) 2ND MOST RECENT NOI (AS OF): $2,197,650 (TTM 12/31/2004) 3RD MOST RECENT NOI (AS OF): $4,069,587 (TTM 12/31/2003) U/W NET OP. INCOME: $4,899,320 U/W NET CASH FLOW: $4,192,009 APPRAISED VALUE (AS OF): $60,000,000 (12/01/2005) CUT-OFF DATE LTV RATIO: 72.5% LTV RATIO AT MATURITY: 66.9% U/W DSCR: 1.57x U/W DSCR POST IO: 1.33x --------------------------------------------------------------- (1) A reserve of $2,077,939 was required origination which is comprised of the following: Weston Hurd Escrow ($1,390,000), NEBS Holdback ($500,000) and Barnes Distribution Escrow ($187,939). THE TOWER AT ERIEVIEW LOAN. THE LOAN. The sixth largest loan (the "Tower at Erieview Loan") is a $43,500,000 first mortgage loan secured by the borrower's fee interest in the Tower at Erieview property located in Cleveland, Ohio. THE BORROWER. The borrower, Erieview Tower & Parking, LLC, is a single purpose entity that owns no material assets other than the mortgaged property and related interests. The managing member of the borrower is structured with one independent director. A non-consolidation opinion was delivered at origination. The sponsors, Werner Minshall and John Stewart, are the founding members of Minshall Stewart Properties ("Minshall Stewart"). Minshall Stewart is a full service real estate investment firm that is headquartered in Washington, DC and has regional offices in Cleveland, Ohio and in Denver, Colorado. The company's portfolio currently consists of 2,137,000 square feet of commercial space in suburban Washington, DC, Cleveland and Columbus, Ohio, and Denver, Colorado. Minshall Stewart also has 560 residential units, which are located in West Virginia and suburban Detroit, Michigan. D-29 THE PROPERTY. Tower at Erieview is a 703,205 square foot, 40-story office tower located in Cleveland, Ohio. The property is 89.8% leased to approximately 50 tenants which include law firms, research companies, distribution companies, and retail office tenants. The property is located within the Cleveland CBD and is positioned within a 4 block radius of several commuter corridors and public transportation stations. The property has a 429 space heated parking garage for driving commuters with direct access from the property into the garage. The Tower at Erieview is also attached via a walkway to the Galleria, an enclosed mall which offers additional amenities including a food court and various national retailers. Since acquiring the property in December 2002, the sponsors have spent approximately $12 million in building and tenant improvements. More specific information about the property is set forth in the tables below: ----------------------------- ----------------- ------------ ---------- ------------- -------------- --------------- ------------ ANNUALIZED % OF TOTAL ANNUALIZED CREDIT RATING UNDERWRITTEN ANNUALIZED UNDERWRITTEN (FITCH/ BASE RENT UNDERWRITTEN BASE RENT LEASE TENANT NAME MOODY'S/S&P)(1) TENANT NRA % OF NRA ($) BASE RENT ($ PER NRA) EXPIRATION ----------------------------- ----------------- ------------ ---------- ------------- -------------- --------------- ------------ Barnes Group, Inc. --/--/-- 62,490 9% $831,909 7% $13.31 08/31/2014 ----------------------------- ----------------- ------------ ---------- ------------- -------------- --------------- ------------ Walter & Haverfield --/--/-- 43,590 6% $781,668 7% $17.93 01/09/2019 ----------------------------- ----------------- ------------ ---------- ------------- -------------- --------------- ------------ Duvin, Cahn, & Hutton, LPA --/--/-- 40,076 6% $892,867 8% $22.28 08/31/2008 ----------------------------- ----------------- ------------ ---------- ------------- -------------- --------------- ------------ Weston Hurd --/--/-- 39,720 6% $694,166 6% $17.48 12/04/2020 ----------------------------- ----------------- ------------ ---------- ------------- -------------- --------------- ------------ Lesco, Inc. --/--/-- 39,414 6% $617,362 6% $15.66 05/31/2010 ----------------------------- ----------------- ------------ ---------- ------------- -------------- --------------- ------------ Kahn Kleinman & Arnson, Co. --/--/-- 35,761 5% $804,303 7% $22.49 06/30/2009 ----------------------------- ----------------- ------------ ---------- ------------- -------------- --------------- ------------ CGI-AMS, Inc. --/--/-- 31,290 4% $575,392 5% $18.39 12/24/2009 ----------------------------- ----------------- ------------ ---------- ------------- -------------- --------------- ------------ Emerald Health Network --/--/-- 29,357 4% $466,446 4% $15.89 01/31/2010 ----------------------------- ----------------- ------------ ---------- ------------- -------------- --------------- ------------ Dollar Bank --/--/-- 28,898 4% $648,080 6% $22.43 08/31/2009 ----------------------------- ----------------- ------------ ---------- ------------- -------------- --------------- ------------ Acordia of Ohio, Inc. --/--/-- 21,125 3% $377,128 3% $17.85 05/31/2013 ----------------------------- ----------------- ------------ ---------- ------------- -------------- --------------- ------------ TOTAL/WEIGHTED AVERAGE 371,721 53% $6,689,322 60% $18.00 ----------------------------- ----------------- ------------ ---------- ------------- -------------- --------------- ------------ ----------------------------- ----------------- ------------ ---------- ------------- -------------- --------------- ------------ Other Tenants NAP 259,468 37% $4,509,348 40% $17.38 Various ----------------------------- ----------------- ------------ ---------- ------------- -------------- --------------- ------------ Vacant Space NAP 72,016 10% $0 0% $0.00 NAP ----------------------------- ----------------- ------------ ---------- ------------- -------------- --------------- ------------ TOTAL/WEIGHTED AVERAGE 703,205 100% $11,198,670 100% $17.74 ----------------------------- ----------------- ------------ ---------- ------------- -------------- --------------- ------------ (1) Certain ratings are those of the parent company whether or not the parent guarantees the lease. --------------------------------------------------------------------------------------------------------------------------------- LEASE ROLLOVER SCHEDULE(1) # OF LEASES % OF TOTAL SF CUMULATIVE TOTAL CUMULATIVE % AVG. BASE RENT YEAR EXPIRING (2) TOTAL SF EXPIRING EXPIRING SF EXPIRING OF SF EXPIRING PER SF EXPIRING -------------------- --------------- ------------------- ------------------ ------------------ ---------------- ----------------- Vacant -- 72,016 10% 72,016 10% -- -------------------- --------------- ------------------- ------------------ ------------------ ---------------- ----------------- MTM 6 7,032 1% 79,048 11% $0.34 -------------------- --------------- ------------------- ------------------ ------------------ ---------------- ----------------- 2006 6 15,033 2% 94,081 13% $20.32 -------------------- --------------- ------------------- ------------------ ------------------ ---------------- ----------------- 2007 8 17,102 2% 111,183 16% $19.66 -------------------- --------------- ------------------- ------------------ ------------------ ---------------- ----------------- 2008 13 82,675 12% 193,858 28% $22.95 -------------------- --------------- ------------------- ------------------ ------------------ ---------------- ----------------- 2009 14 134,069 19% 327,927 47% $20.86 -------------------- --------------- ------------------- ------------------ ------------------ ---------------- ----------------- 2010 14 98,114 14% 426,041 61% $15.89 -------------------- --------------- ------------------- ------------------ ------------------ ---------------- ----------------- 2011 4 22,045 3% 448,086 64% $16.19 -------------------- --------------- ------------------- ------------------ ------------------ ---------------- ----------------- 2012 -- -- -- 448,086 64% -- -------------------- --------------- ------------------- ------------------ ------------------ ---------------- ----------------- 2013 5 29,100 4% 477,186 68% $17.29 -------------------- --------------- ------------------- ------------------ ------------------ ---------------- ----------------- 2014 12 81,278 12% 558,464 79% $12.68 -------------------- --------------- ------------------- ------------------ ------------------ ---------------- ----------------- 2015 4 28,671 4% 587,135 83% $17.47 -------------------- --------------- ------------------- ------------------ ------------------ ---------------- ----------------- Thereafter 11 116,070 17% 703,205 100% $16.46 -------------------- --------------- ------------------- ------------------ ------------------ ---------------- ----------------- (1) The information in the table is based on the underwritten rent roll. (2) For the purposes of this column, each leased tenant space was considered a separate tenant lease even if multiple tenant spaces were covered under the same lease. PROPERTY MANAGEMENT. The property is managed by Minshall Development Company, Inc., an affiliate of the borrower. ADDITIONAL INDEBTEDNESS. The borrower has incurred mezzanine debt in the amount of $8,566,308 with RAIT Investment Trust, which is not secured by the property and held outside the trust. RAIT Investment Trust (NYSE:RAS) is a specialty finance company focused on the mid-sized commercial real estate industry. RAIT provides structured financing to private and corporate owners of real estate, including senior and junior mortgage debt and mezzanine lending, and acquires real estate for its own account. This additional debt is subject to an inter-creditor agreement. GROUND LEASE. None. RELEASE OF PARCELS. Not Allowed. D-30 MORTGAGE LOAN NO. 7 -- EMBASSY OFFICE PARK - POOL A [4 PHOTOS OMITTED] D-31 MORTGAGE LOAN NO. 7 -- EMBASSY OFFICE PARK - POOL A [MAP OMITTED] D-32 MORTGAGE LOAN NO. 7 -- EMBASSY OFFICE PARK - POOL A ----------------------------------------------------------------- LOAN INFORMATION ----------------------------------------------------------------- MORTGAGE LOAN SELLER: PMCF LOAN PURPOSE: Acquisition ORIGINAL BALANCE: $36,350,000 CUT-OFF DATE BALANCE: $36,350,000 FIRST PAYMENT DATE: 05/05/2006 INTEREST RATE: 5.86000% AMORTIZATION TERM: Months 1-36: Interest Only Months 37-120: 360 months ARD: No ANTICIPATED REPAYMENT DATE: NAP MATURITY DATE: 04/05/2016 EXPECTED MATURITY BALANCE: $32,809,685 SPONSOR: Mark R. Munsell INTEREST CALCULATION: Actual/360 CALL PROTECTION: 27-payment lockout from the first payment date, with U.S. Treasury defeasance for the following 89 payments, and open to prepayment without premium thereafter through the maturity date. CUT-OFF DATE BALANCE PER SF: $119.41 UP-FRONT RESERVES: Insurance: $6,567 Other:(1)(2) $264,734 ONGOING RESERVES: RE Taxes: $49,660 / month Insurance: $3,283 / month Replacement:(3) $6,345 / month TI/LC:(4) $29,400 / month Other:(5) Springing LOCKBOX: None ----------------------------------------------------------------- ----------------------------------------------------------------- PROPERTY INFORMATION ----------------------------------------------------------------- SHADOW RATING: NAP SINGLE ASSET/PORTFOLIO: Portfolio PROPERTY TYPE: Office PROPERTY SUB-TYPE: Suburban LOCATION: Fairlawn, OH YEAR BUILT/RENOVATED: Various - See Table PERCENT LEASED (AS OF): 90.1% (03/28/2006) NET RENTABLE AREA: 304,416 THE COLLATERAL: Five properties located in Fairlawn, Ohio. OWNERSHIP INTEREST: Fee PROPERTY MANAGEMENT: John Dellagnese & Associates MOST RECENT NOI (AS OF): $3,164,428 (TTM 12/31/2005) 2ND RECENT NOI (AS OF): $3,071,475 (TTM 12/31/2004) 3RD RECENT NOI (AS OF): $2,987,042 (TTM 12/31/2003) U/W NET OP. INCOME: $3,472,906 U/W NET CASH FLOW: $3,044,664 APPRAISED VALUE (AS OF): $45,700,000 (01/23/2006) CUT-OFF DATE LTV RATIO: 79.5% LTV RATIO AT MATURITY: 71.8% U/W DSCR: 1.41x U/W DSCR POST IO: 1.18x ----------------------------------------------------------------- (1) A reserve of $200,000 was collected at origination. Funds will be disbursed when the properties are producing an aggregate annual base rent of $4,931,525 (inclusive of any master lease rental payments). Funds may be partially released, one time only, at the rate of $11.76 for each dollar of base rent in excess of $4,914,525. (2) A tenant holdback reserve of $64,734 was collected at origination. This reserve consists of amounts held for tenant improvements on spaces in the 3700 Embassy Parkway Building ($44,295), the 4040 Embassy Parkway Building ($10,595), and the 3560 West Market Office Building ($9,844). Each of these reserves will be released upon satisfaction of the conditions specified in the loan documents, which generally include that (i) specified tenants have taken occupancy of the related space and are paying their respective full contractual rent; (ii) all tenant improvements have been completed; and (iii) the tenant and/or tenants deliver an estoppel certificate. (3) Monthly deposits are not required at any time the replacement reserve has a balance of $230,000 or more. (4) Monthly deposits are not required at any time the TI/LC reserve has a balance of $600,000 or more. Monthly deposits may also be adjusted as described in "Release of Properties" and "Partial Assumption of Loan" below. (5) In the event of a sale of any property that is security for the loan (see "Substitution and Release of Properties" below), a reserve must be established in the amount of $13.04/SF for each square foot of unoccupied or unimproved space on the fifth floor of the 3700 Embassy Parkway Building that has not been brought to "white box" condition at the time of such sale. THE EMBASSY OFFICE PARK - POOL A LOAN. THE LOAN. The seventh largest loan (the "Embassy Office Park Loan") is a $36,350,000 first mortgage loan secured by the borrower's fee interest in five office properties located in Fairlawn, Ohio (the "Embassy Office Park Portfolio"). THE BORROWER. The borrowers, 3500 Embassy LLC, 3700 Embassy LLC, 3875 Embassy LLC, 4040 Embassy LLC, and 3560 W Market LLC (collectively the, "Embassy Office Park Borrower"), are single purpose entities that own no material assets other than the respective Embassy Office Park Portfolio properties and related interests. Each borrower is a single member Ohio limited liability company whose sole member is a single member Delaware limited liability company structured with an independent manager. A non-consolidation opinion was delivered at origination. The sponsor of the loan is Mark R. Munsell, President and sole owner of Munsell Realty Advisors, Inc. ("MRA"), a commercial real estate brokerage and advisory firm. Mr. Munsell currently holds ownership interests in 14 office and retail properties located in Ohio and Illinois, approximating 1.9 million square feet. Mr. Munsell D-33 has guaranteed $260,000 of the Embassy Office Park Loan, which will be reduced, pro rata on a $13.04 per square footage basis, when the currently unoccupied and unimproved space on the fifth floor of the property located at 3700 Embassy Parkway is brought to "white box" condition. The guaranty will be released if the springing reserve required to be established in connection with the sale of one or more of the individual properties is fully funded. The Embassy Office Park Borrower is affiliated with the borrower under the Embassy Office Park - Pool B mortgage loan. THE PROPERTIES. The Embassy Office Park Portfolio consists of 5 multi-tenanted office properties comprising 304,416 square feet, located in Fairlawn, Ohio. On a combined basis, the portfolio is approximately 90.1% leased. More specific information about each property is set forth in the tables below: --------------------------- ------------- ------------ ------------- ------------ ---------- ---------- ------------- ------------- YEAR ALLOCATED BUILT/ CUT-OFF OWNERSHIP PERCENT APPRAISED PROPERTY LOCATION RENOVATED LOAN BALANCE INTEREST NRA LEASED U/W NCF VALUE --------------------------- ------------- ------------ ------------- ------------ ---------- ---------- ------------- ------------- 3875 Embassy Fairlawn, OH 1990 / NAP $13,050,000 Fee 95,638 100.0% $1,276,735 $16,400,000 --------------------------- ------------- ------------ ------------- ------------ ---------- ---------- ------------- ------------- 3700 Embassy (1) Fairlawn, OH 2000 / NAP $9,000,000 Fee 78,985 73.8% $542,996 $11,300,000 --------------------------- ------------- ------------ ------------- ------------ ---------- ---------- ------------- ------------- 4040 Embassy Fairlawn, OH 1992 / NAP $5,950,000 Fee 50,556 93.5% $550,880 $7,500,000 --------------------------- ------------- ------------ ------------- ------------ ---------- ---------- ------------- ------------- 3560 West Market Fairlawn, OH 1985 / NAP $4,775,000 Fee 49,560 87.7% $334,693 $6,000,000 --------------------------- ------------- ------------ ------------- ------------ ---------- ---------- ------------- ------------- 3500 Embassy Fairlawn, OH 1995 / NAP $3,575,000 Fee 29,677 100.0% $339,360 $4,500,000 --------------------------- ------------- ------------ ------------- ------------ ---------- ---------- ------------- ------------- TOTAL PORTFOLIO / WTD. AVG. $36,350,000 304,416 90.1% $3,044,664 $45,700,000 --------------------------- ------------- ------------ ------------- ------------ ---------- ---------- ------------- ------------- (1) The sponsor has master leased 1,556 square feet at the 3700 Embassy Property at an annual rent of $28,000 ($18.00/SF). The master lease will terminate on the earlier of (i) April 30, 2011 or (ii) the properties are generating a base rent of $4,931,525, exclusive of the rent attributable to the master lease. --------------- --------------------- --------- ---------- ---------- ----------- ----------- ---------- ------------ ----------- % OF % OF % OF % OF U/W BASE PROPERTY PORTFOLIO TENANT PROPERTY PORTFOLIO U/W BASE RENT ($ U/W BASE U/W BASE LEASE PROPERTY LARGEST TENANT NRA NRA NRA RENT PER NRA) RENT RENT EXPIRATION --------------- --------------------- --------- ---------- ---------- ----------- ----------- ---------- ------------ ----------- 3875 Embassy Oak Associate Ltd. 36,420 38% 12% $643,906 $17.68 35% 12% 08/31/2008 --------------- --------------------- --------- ---------- ---------- ----------- ----------- ---------- ------------ ----------- 3700 Embassy Morgan Stanley 9,963 13% 3% $199,294 $20.00 19% 4% 05/31/2011 --------------- --------------------- --------- ---------- ---------- ----------- ----------- ---------- ------------ ----------- 4040 Embassy CBIZ 12,435 25% 4% $211,395 $17.00 23% 4% 12/31/2006 --------------- --------------------- --------- ---------- ---------- ----------- ----------- ---------- ------------ ----------- 3560 Market Crystal Clinic 6,976 14% 2% $99,408 $14.25 14% 2% 11/30/2009 --------------- --------------------- --------- ---------- ---------- ----------- ----------- ---------- ------------ ----------- 3500 Embassy Degussa Corporation 22,614 76% 7% $292,787 $12.95 71% 5% 09/30/2009 --------------- --------------------- --------- ---------- ---------- ----------- ----------- ---------- ------------ ----------- --------------------------------------------------------------------------------------------------------------------------------- LEASE ROLLOVER SCHEDULE (1) # OF CUMULATIVE LEASES TOTAL SF % OF TOTAL SF TOTAL SF CUMULATIVE % OF AVG. BASE RENT PER YEAR EXPIRING EXPIRING EXPIRING EXPIRING SF EXPIRING SF EXPIRING -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- Vacant -- 29,262 10% 29,262 10% -- -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- MTM 2 1,833 1% 31,095 10% $18.66 -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- 2006 7 24,944 8% 56,039 18% $18.10 -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- 2007 7 24,755 8% 80,794 27% $17.07 -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- 2008 6 54,780 18% 135,574 45% $17.88 -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- 2009 9 80,753 27% 216,327 71% $16.87 -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- 2010 10 32,554 11% 248,881 82% $19.04 -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- 2011 6 27,167 9% 276,048 91% $18.44 -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- 2012 -- -- -- 276,048 91% -- -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- 2013 -- -- -- 276,048 91% -- -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- 2014 -- -- -- 276,048 91% -- -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- 2015 1 24,093 8% 300,141 99% $20.50 -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- Thereafter 1 4,275 1% 304,416 100% $21.00 -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- (1) The above table represents the rollover based on the entire portfolio. The information in the table is based on the actual rent roll dated March 28, 2006. PROPERTY MANAGEMENT. The Embassy Office Park Portfolio is managed by John Dellagnese & Associates, Inc., which is not an affiliate of the Embassy Office Park Borrower. John Dellagnese & Associates, Inc. manages over 735,000 square feet of office space and has over 30 years experience. ADDITIONAL INDEBTEDNESS. Not Allowed. GROUND LEASE. None. SUBSTITUTION AND RELEASE OF PROPERTIES. The Embassy Office Park Borrower is permitted to obtain the release of any individual property during the term of the loan through partial defeasance, subject to satisfaction of certain conditions set forth in the mortgage loan documents, including that the Embassy Office Park Loan is partially defeased in an amount equal to the greater of D-34 (i) the allocated loan amount with respect to the individual property to be released (each, a "Release Property") and (ii) an amount such that after giving effect to such defeasance, the DSCR with respect to the remaining individual properties comprising the Embassy Office Park Portfolio (the "Remaining Property") is not less than 1.25x and the ratio of the aggregate allocated loan amounts of the Remaining Property to the value of the Remaining Property is not greater than 80%. If the individual property to be released is "3560 West Market Street," the monthly escrows to the TI/LC reserve will be reduced to $25,000 and the TI/LC cap will be reduced to $550,000. Pursuant to the mortgage loan documents, the Embassy Office Park Borrower will be required to increase the monthly TI/LC reserve escrow depending on the number of properties that have been released or transferred and assumed, whether a single tenant accounts for a specified percentage of NRA of the Remaining Property and the length of that tenant's remaining lease term in relation to the maturity date of the Embassy Office Park Loan. Substitution is not permitted. PARTIAL ASSUMPTION OF LOAN. The Embassy Office Park Borrower is entitled to obtain a release of one or more (but not more than four) of the individual properties securing the Embassy Office Park Loan in connection with the sale of the property to, and the assumption of a portion of the indebtedness under the Embassy Office Park Loan by, a third party, subject to satisfaction of certain conditions set forth in the mortgage loan documents, including the following: (i) the DSCR of each Release Property and the Remaining Property is at least 1.25x, (ii) the loan-to-value ratio with respect to the Remaining Property must not exceed 80%, (iii) the loan-to-value ratio of the Release Property must not exceed 80%, (iv) the ratio of the allocated loan amount of the Release Property to the purchase price paid by the purchaser of such Release Property must not exceed 80%, (v) if a single tenant accounts for at least 75% of the Release Property's NRA or gross potential rent, the allocated loan amount must be less than the "as dark" value of the Release Property, and (vi) the Embassy Office Park Borrower delivers confirmation from each rating agency that the release would not result in the downgrade, withdrawal or qualification of the then outstanding ratings on the series 2006-PWR12 certificates. If these conditions are not satisfied, the Embassy Office Park Borrower is permitted to partially defease a portion of the Embassy Office Park Loan in an amount sufficient to satisfy such test, and the allocated loan amounts for the individual properties comprising the Remaining Property will be reduced, on a pro rata basis, by the principal amount defeased. In addition, the Embassy Office Park Borrower will be required to increase the monthly TI/LC reserve escrow as described in "Releases of Properties" above. D-35 [THIS PAGE INTENTIONALLY LEFT BLANK.] D-36 MORTGAGE LOAN NO. 8 -- CALYPSO BAY APARTMENTS [4 PHOTOS OMITTED] D-37 MORTGAGE LOAN NO. 8 -- CALYPSO BAY APARTMENTS [MAP OMITTED] D-38 MORTGAGE LOAN NO. 8 -- CALYPSO BAY APARTMENTS ------------------------------------------------------------------ LOAN INFORMATION ------------------------------------------------------------------ MORTGAGE LOAN SELLER: PMCF LOAN PURPOSE: Refinance ORIGINAL BALANCE: $33,000,000 CUT-OFF DATE BALANCE: $32,934,213 FIRST PAYMENT DATE: 05/05/2006 INTEREST RATE: 5.61000% AMORTIZATION TERM: 360 months ARD: No ANTICIPATED REPAYMENT DATE: NAP MATURITY DATE: 04/05/2016 EXPECTED MATURITY BALANCE: $27,720,597 SPONSOR: Frederick R. Heebe INTEREST CALCULATION: Actual/360 CALL PROTECTION: 27-payment lockout from the first payment date, with U.S. Treasury defeasance for the following 89 payments, and open to prepayment without premium thereafter through the maturity date. CUT-OFF DATE BALANCE PER UNIT: $117,622 UP-FRONT RESERVES: RE Taxes: $89,975 Insurance: $127,669 Deferred Maintenance: (1) $206,125 Other:(2) $3,009,800 (LOCs) ONGOING RESERVES: RE Taxes: $17,995 / month Insurance: $14,185 / month Replacement: $4,667 / month LOCKBOX: None --------------------------------------------------------------- --------------------------------------------------------------- PROPERTY INFORMATION --------------------------------------------------------------- SHADOW RATING: NAP SINGLE ASSET/PORTFOLIO: Single Asset PROPERTY TYPE: Multifamily PROPERTY SUB-TYPE: Garden LOCATION: Gretna, LA YEAR BUILT/RENOVATED: 2004 / NAP PERCENT LEASED (AS OF): 95.7% (02/28/2006) UNITS: 280 THE COLLATERAL: Class A multifamily property located in Gretna, Louisiana. OWNERSHIP INTEREST: Fee PROPERTY MANAGEMENT: Shadowlake Management Company, Inc. MOST RECENT NOI (AS OF): $1,430,238 (TTM 10/31/2005) 2ND RECENT NOI (AS OF): NAP 3RD RECENT NOI (AS OF): NAP U/W NET OP. INCOME: $2,779,695 U/W NET CASH FLOW: $2,723,695 APPRAISED VALUE (AS OF): $45,700,000 (12/01/2005) CUT-OFF DATE LTV RATIO: 72.1% LTV RATIO AT MATURITY: 60.7% U/W DSCR: 1.20x U/W DSCR POST IO: NAP --------------------------------------------------------------- (1) The deposit of $206,125 represents 125% of the estimated cost to complete repairs on 15 of the units (inclusive of 3 units that have already been remediated) relating to minor damage caused by windstorm due to the effects of Hurricane Katrina. The borrower is required to satisfactorily complete the repairs within 90 days of origination, subject to the terms set forth in the mortgage loan documents. (2) At origination, the borrower posted two letters of credit totaling $3,009,800: (i) a letter of credit in the amount of $2,000,000, which will be released at such time as the borrower provides acceptable evidence that flood insurance in the amount of not less than $16,500,000 is in full force and effect; the letter of credit may only be utilized in the event that the collateral suffers a casualty by flood and there is a shortfall in the insurance proceeds as the result of the borrower having flood insurance in an amount less than $16,500,000; and (ii) a letter of credit in the amount of $1,009,800 that is equal to three months of rents and profits from the collateral, so as to provide, together with the business income (loss of rents) coverage obtained by the borrower, 15 months of coverage. The amount of the letter of credit described in clause (ii) of the prior sentence will be adjusted annually to reflect an amount equal to 25% of the rents and profits generated by the collateral during the succeeding calendar year. THE CALYPSO BAY APARTMENTS LOAN. THE LOAN. The eighth largest loan (the "Calypso Bay Apartments Loan") is a $33,000,000 first mortgage loan secured by the borrower's fee simple interest in a Class A multifamily property known as Calypso Bay Apartments (the "Calypso Bay Apartments Property") located in Gretna, Louisiana. THE BORROWER. The borrower, Calypso Bay, L.L.C., a Louisiana limited liability company (the "Calypso Bay Apartments Borrower"), is a single purpose entity that owns no material assets other than the mortgaged property and related interests. The managing member of the Calypso Bay Apartments Borrower is structured with one independent director. A non-consolidation opinion was delivered at origination. The Calypso Bay Apartments Borrower is 99% owned by Frederick R. Heebe, its sponsor, and 1% owned by Calypso Bay Manager, Inc., its managing member. Mr. Heebe is the President of Calypso Bay Manager, Inc. Mr. Heebe, a New Orleans native, has developed and is the owner of over 1,300 apartment units comprised of seven properties in the New Orleans area. D-39 At origination, Mr. Heebe executed two personal guarantees: (i) a guaranty in an amount that is limited to $3,700,000 (the "Flood Insurance Guaranty"), that is only available in the event that the Calypso Bay Apartments Property suffers a casualty by flood and there is a shortfall in insurance proceeds as a result of the Calypso Bay Apartments Borrower having flood insurance in an amount less than $16,500,000 and (ii) a guaranty that is limited to $3,300,000, plus certain expenses (the "Partial Recourse Guaranty"), subject to reduction to $1,650,000 plus certain expenses, in the event that (a) the Calypso Bay Apartments Borrower meets a minimum debt service coverage ratio test as provided in the mortgage loan documents and (b) flood insurance in a minimum amount of $16,500,000 is in effect on the Calypso Bay Apartments Property. The Flood Insurance Guaranty may be released by the lender when the Calypso Bay Apartments Borrower obtains the minimum required amount of flood insurance on the Calypso Bay Apartments Property. The Partial Recourse Guaranty may also be released by the lender when the minimum required amount of flood insurance on the Calypso Bay Apartments Property is in effect, provided that the specified minimum debt service coverage ratio test has been satisfied as provided within the time frames set forth in the mortgage loan documents. THE PROPERTY. The Calypso Bay Apartments Property is a 280-unit, Class A, Caribbean-themed multifamily complex, comprised of 34 two-story buildings with parking provided for 537 vehicles (1.92 spaces/unit). The Calypso Bay Apartments Property was constructed in 2004. Property amenities include a private gated community with a 24-hour manned gatehouse, a swimming pool and water relaxation area with swim-up refreshment centers, Caribbean-themed landscaping, a fully equipped fitness center, guest quarters, a leasing office, a covered barbeque area, concierge services, a business center, conference facilities, a billiard room, and a yoga/exercise room. Unit amenities include washers/dryers, vaulted ceilings, high speed internet, and satellite television. The Calypso Bay Apartments Property provides 210 private 1- and 2-car attached garages with direct access to units, 14 detached garages, and additional parking spaces in open areas. The units exhibit a high level of finish including solid surface flooring, tile flooring in designer bathrooms and gourmet kitchens, stainless steel appliances, double sink vanities, large closets, screened lanais, garden tubs, and surround sound systems. All units offer a private patio or balcony area. Additionally, security alarms are provided in each unit and motion-activated cameras that follow movement are in place throughout the Calypso Bay Apartments Property. As of February 28, 2006, the Calypso Bay Apartments Property was 95.7% leased. The following table outlines the unit types at the Calypso Bay Apartments Property: ---------------------------------------------------------------------------------------------- UNIT TYPE NUMBER OF UNITS AVERAGE SF AVERAGE MONTHLY MARKET RENTS ---------------------------------------------------------------------------------------------- 1 Bedroom 160 907 $1,017 ---------------------------------------------------------------------------------------------- 2 Bedroom 80 1,258 $1,420 ---------------------------------------------------------------------------------------------- 3 Bedroom 40 1,544 $1,740 ---------------------------------------------------------------------------------------------- TOTAL / WEIGHTED AVERAGE 280 1,098 $1,235 ---------------------------------------------------------------------------------------------- PROPERTY MANAGEMENT. The Calypso Bay Apartments Property is managed by Shadowlake Management Company, Inc., an affiliate of the Calypso Bay Apartments Borrower. ADDITIONAL INDEBTEDNESS. Not Allowed. GROUND LEASE. None. RELEASE OF PARCELS. Not Allowed. D-40 MORTGAGE LOAN NO. 9 -- TITAN PORTFOLIO [4 PHOTOS OMITTED] D-41 MORTGAGE LOAN NO. 9 -- TITAN PORTFOLIO [4 MAPS & LEGEND OMITTED] D-42 MORTGAGE LOAN NO. 9 -- TITAN PORTFOLIO ----------------------------------------------------------------- LOAN INFORMATION ----------------------------------------------------------------- MORTGAGE LOAN SELLER: PCF II LOAN PURPOSE: Acquisition ORIGINAL BALANCE: $30,895,000 CUT-OFF DATE BALANCE: $30,895,000 FIRST PAYMENT DATE: 06/01/2006 INTEREST RATE: 6.37000% AMORTIZATION TERM: Months 1-24: Interest Only Months 25-72: 360 months ARD: Yes ANTICIPATED REPAYMENT DATE: 05/01/2012 MATURITY DATE: 05/01/2036 EXPECTED MATURITY BALANCE: $29,498,328 SPONSORS: Ron Mills; Ben Spencer; Kevin Reid and MAC Income I, LP INTEREST CALCULATION: Actual/360 CALL PROTECTION: Greater of 1% or yield maintenance for the first 70 payments and open to prepayment without premium thereafter through the maturity date. CUT-OFF DATE BALANCE PER SF: $41.15 UP-FRONT RESERVES: RE Taxes: $169,077 Deferred Maintenance: $43,438 ONGOING RESERVES: RE Taxes: $45,366 / month Insurance: $10,327 / month TI/LC: $15,000 / month LOCKBOX: None -------------------------------------------------------------- -------------------------------------------------------------- PROPERTY INFORMATION -------------------------------------------------------------- SHADOW RATING: NAP SINGLE ASSET/PORTFOLIO: Portfolio PROPERTY TYPE: Industrial PROPERTY SUB-TYPE: Warehouse LOCATION: Various - See Table YEAR BUILT/RENOVATED: Various - See Table PERCENT LEASED (AS OF): 85.9% (04/28/2006) NET RENTABLE AREA: 750,732 THE COLLATERAL: Four properties comprising 13 buildings, located in Texas and New Mexico. OWNERSHIP INTEREST: Fee/Leasehold PROPERTY MANAGEMENT: Titan Development of Texas, LLC MOST RECENT NOI (AS OF): $2,419,943 (TTM 12/31/2005) 2ND RECENT NOI (AS OF): NAP 3RD RECENT NOI (AS OF): NAP U/W NET OP. INCOME: $3,076,480 U/W NET CASH FLOW: $2,770,000 APPRAISED VALUE (AS OF): $39,590,000 (03/2006) CUT-OFF DATE LTV RATIO: 78.0% LTV RATIO AT ARD: 74.5% U/W DSCR: 1.39x U/W DSCR POST IO: 1.20x -------------------------------------------------------------- THE TITAN PORTFOLIO LOAN. THE LOAN. The ninth largest loan (the "Titan Portfolio Loan") as evidenced by the Secured Promissory Note (the "Titan Portfolio Note") is secured by a first priority fee and leasehold Deed of Trust, Security Agreement and Assignment of Rents (the "Titan Portfolio Mortgage") encumbering four properties comprising thirteen industrial buildings totaling 750,732 square feet that are located in Texas and New Mexico (the "Titan Portfolio Properties"). The Titan Portfolio Loan was originated on April 28, 2006 by or on behalf of Principal Commercial Funding II, LLC. THE BORROWER. The borrower is Titan MAC Fund I, LP, a Texas limited partnership, (the "Titan Portfolio Borrower") that owns no material assets other than the Titan Portfolio Property and related interests. The Titan Portfolio Borrower consists of Titan MAC Fund I GP, LLC (0.1% general partner), MAC Fund I Associates (90.0% limited partner), and Titan Industrial Development II, LP (9.9% limited partner). A non-consolidation opinion was delivered at origination. Titan MAC Fund I GP, LLC is 100% owned by Titan Development of Texas LLC. Titan Development of Texas, LLC is owned equally by Ron Mills, Kevin Reid, and Ben Spencer. MAC Fund I Associates is 90% owned by MAC Income I, LP and 10% owned by MAC Diversified Income LP. Titan Industrial Development II, LP is equally owned by five individuals including Ron Mills, Kevin Reid, and Ben Spencer. Ron Mills, Kevin Reid, Ben Spencer and MAC Income I, LP are the sponsors of the Titan Portfolio Loan and combined have over 65 years of real estate experience. Ben Spencer is the owner of Argus Development Company, a developer of commercial and residential real estate in New Mexico. Kevin Reid is the owner of Reid & Associates, Inc., a design/build construction company in New Mexico. Ron Mills and Barbara Patrick (husband and wife) founded Santa Barbara Realty Services, LLC which is a full service brokerage, development, and management company focusing on the US and Mexico border. Mr. Spencer and Mr. Reid formed Titan Development Ltd. Co. in 1999. D-44 In 2004, Titan Development Ltd. Co. partnered with Mr. Mills, Ms. Patrick, and Santa Barbara Realty Services, LLC to form Titan Development of Texas and Titan Industrial Development. THE PROPERTIES. The Titan Portfolio Properties consist of 4 industrial properties comprising 750,732 square feet, located in Texas and New Mexico. The 4 properties consist of 13 buildings, of which five are single tenant, while the remaining eight buildings are multiple tenant. On a combined basis, the portfolio is approximately 85.9% leased and the build-out is approximately 37% office finish. More specific information about each property is set forth in the tables below: --------------------- ---------------- ---------------- ----------------- ----------- --------- -------- ----------- ------------ ALLOCATED CUT-OFF OWNERSHIP % APPRAISED PROPERTY LOCATION YEAR BUILT LOAN BALANCE INTEREST NRA LEASED U/W NCF VALUE --------------------- ---------------- ---------------- ----------------- ----------- --------- -------- ----------- ------------ Titan - San Antonio San Antonio, TX 1983-1984 $16,360,000 Fee 303,331 86.2% $1,446,813 $21,000,000 --------------------- ---------------- ---------------- ----------------- ----------- --------- -------- ----------- ------------ Titan - El Paso El Paso, TX 1983 $7,675,000 Leasehold 263,106 75.7% $688,129 $ 9,800,000 --------------------- ---------------- ---------------- ----------------- ----------- --------- -------- ----------- ------------ Titan - McAllen McAllen, TX 1992,1994, 2005 $4,445,000 Fee 114,295 100.0% $398,532 $ 5,690,000 --------------------- ---------------- ---------------- ----------------- ----------- --------- -------- ----------- ------------ Santa Teresa, Titan - Santa Teresa NM 2003 $2,415,000 Fee 70,000 100.0% $216,525 $ 3,100,000 --------------------- ---------------- ---------------- ----------------- ----------- --------- -------- ----------- ------------ TOTAL / WTD. AVG. $30,895,000 750,732 85.9% $2,770,000 $39,590,000 --------------------- ---------------- ---------------- ----------------- ----------- --------- -------- ----------- ------------ -------------------- ---------------------- --------- --------- --------- --------- ----------- ----------- ---------- ---------- % OF % OF % OF % OF U/W BASE PROPERTY PORTFOLIO TENANT PROPERTY PORTFOLIO U/W BASE RENT ($ U/W BASE U/W BASE LEASE PROPERTY LARGEST TENANT NRA NRA NRA RENT PER NRA) RENT RENT EXPIRATION -------------------- ---------------------- --------- --------- --------- --------- ----------- ----------- ---------- ---------- Titan - San Antonio HEB Grocery Company 87,784 29% 12% $478,199 $5.45 29% 15% 09/30/2011 -------------------- ---------------------- --------- --------- --------- --------- ----------- ----------- ---------- ---------- Titan - El Paso Morven Partners, LP 105,000 40% 14% $367,500 $3.50 51% 11% 03/31/2008 -------------------- ---------------------- --------- --------- --------- --------- ----------- ----------- ---------- ---------- Titan - Santa Santa Teresa Teresa Warehousing 70,000 100% 9% $339,503 $4.85 100% 11% 08/14/2008 -------------------- ---------------------- --------- --------- --------- --------- ----------- ----------- ---------- ---------- Titan - McAllen Plastic Engineered 76,574 67% 10% $329,168 $4.30 65% 10% 10/16/2015 Components, Inc. -------------------- ---------------------- --------- --------- --------- --------- ----------- ----------- ---------- ---------- --------------------------------------------------------------------------------------------------------------------------------- LEASE ROLLOVER SCHEDULE (1) # OF CUMULATIVE LEASES TOTAL SF % OF TOTAL SF TOTAL SF CUMULATIVE % OF AVERAGE BASE RENT YEAR EXPIRING EXPIRING EXPIRING EXPIRING SF EXPIRING PER SF EXPIRING -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- Vacant -- 105,676 14% 105,676 14% -- -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- 2006 6 53,005 7% 158,681 21% $5.09 -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- 2007 10 61,258 8% 219,939 29% $6.72 -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- 2008 8 216,819 29% 436,758 58% $4.32 -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- 2009 3 35,310 5% 472,068 63% $4.65 -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- 2010 5 21,702 3% 493,770 66% $8.38 -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- 2011 4 117,067 16% 610,837 81% $5.24 -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- 2012 3 63,321 8% 674,158 90% $4.81 -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- 2013 -- -- -- 674,158 90% -- -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- 2014 -- -- -- 674,158 90% -- -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- 2015 1 76,574 10% 750,732 100% $4.30 -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- Thereafter -- -- -- 750,732 100% -- -------------------------- ------------ -------------- ---------------- ---------------- ----------------- ---------------------- (1) The above table represents the rollover based on the entire portfolio. The information in the table is based on the underwritten rent roll as of April 28, 2006. PROPERTY MANAGEMENT. The Titan Portfolio Properties are managed by Titan Development of Texas, LLC, which is an affiliate of the Titan Portfolio Borrower. Titan Development of Texas, LLC is based in Albuquerque, New Mexico and is experienced in the acquisition and development of industrial buildings and master planned business parks. Titan Development of Texas, LLC currently manages over 2,446,000 square feet of industrial product primarily located in Texas and New Mexico. The management agreement is subordinate to the Titan Portfolio Loan. ADDITIONAL INDEBTEDNESS. Not Allowed. GROUND LEASE. The Titan Portfolio Borrower owns fee interest in the Santa Teresa, McAllen and San Antonio properties and leasehold interest in the El Paso property. The ground lease expires June 30, 2044 with two five year renewal options. The annual ground rent is $103,319 with rent adjustments beginning July 1, 2013 and ever five years thereafter equal to the 8% of the then fair market value. The ground lease is not subordinate to the mortgage. SUBSTITUTION AND RELEASE OF PROPERTIES. The Titan Portfolio Borrower may request the release of parcels of the property if they meet the specific requirements in the mortgage documents including in part: (i) Remaining parcels have at least as 1.25x DSCR; (ii) remaining parcels have a LTV that does not exceed 80%; and (iii) loan amount is paid down 115% of the value attributable to the released parcel based on the MAI Appraisal plus a prepayment premium or yield maintenance. The Titan Portfolio Borrower may also request release of a non-income producing parcel of land on the McAllen property provided several conditions are met in accordance with the mortgage documents. Substitution is not permitted. D-44 MORTGAGE LOAN NO. 10 -- STONE MOUNTAIN SQUARE [4 PHOTOS OMITTED] D-45 MORTGAGE LOAN NO. 10 -- STONE MOUNTAIN SQUARE [MAP OMITTED] D-46 MORTGAGE LOAN NO. 10 -- STONE MOUNTAIN SQUARE ----------------------------------------------------------------- LOAN INFORMATION ----------------------------------------------------------------- MORTGAGE LOAN SELLER: BSCMI LOAN PURPOSE: Refinance ORIGINAL BALANCE: $30,800,000 CUT-OFF DATE BALANCE: $30,800,000 FIRST PAYMENT DATE: 05/01/2006 INTEREST RATE: 5.81600% AMORTIZATION TERM: Months 1-60: Interest Only Months 61-120: 360 months ARD: No ANTICIPATED REPAYMENT DATE: NAP MATURITY DATE: 04/01/2016 EXPECTED MATURITY BALANCE: $28,783,214 SPONSORS: Mark Frankel and Chesky Frankel INTEREST CALCULATION: Actual/360 CALL PROTECTION: 26-payment lockout from the first payment date, with U.S. Treasury defeasance for the following 93 payments, and open to prepayment without premium thereafter through the maturity date. CUT-OFF DATE BALANCE PER SF: $91.49 UP-FRONT RESERVES: RE Taxes: $62,112 Insurance: $20,012 Deferred $41,313 Maintenance: Replacement: $4,208 TI/LC: $14,167 Other: (1) $400,000 ONGOING RESERVES: RE Taxes: $31,056 / month Insurance: $6,671 / month Replacement: $4,208 / month TI/LC: $14,167 / month LOCKBOX: Hard ----------------------------------------------------------------- -------------------------------------------------------------- PROPERTY INFORMATION -------------------------------------------------------------- SHADOW RATING: NAP SINGLE ASSET/PORTFOLIO: Single Asset PROPERTY TYPE: Retail PROPERTY SUB-TYPE: Anchored LOCATION: Stone Mountain, GA YEAR BUILT/RENOVATED: 1991 / NAP PERCENT LEASED (AS OF): 85.2% (02/01/2006) NET RENTABLE AREA: 336,663 THE COLLATERAL: An anchored retail center in Stone Mountain, Georgia OWNERSHIP INTEREST: Fee PROPERTY MANAGEMENT: Wheeler/Kolb Management Company MOST RECENT NOI (AS OF): $2,690,174 (TTM 12/31/2005) 2ND RECENT NOI (AS OF): $2,512,476 (TTM 12/31/2004) 3RD RECENT NOI (AS OF): NAP U/W NET OP. INCOME: $2,852,307 U/W NET CASH FLOW: $2,656,753 APPRAISED VALUE (AS OF): $44,000,000 (02/03/2006) CUT-OFF DATE LTV RATIO: 70.0% LTV RATIO AT MATURITY: 65.4% U/W DSCR: 1.46x U/W DSCR POST IO: 1.22x ----------------------------------------------------------------- (1) The other escrow consists of a leasing holdback for Old Navy. The leasing holdback may be released upon lender's receipt of i) evidence that the tenant has renewed its lease in accordance with the loan documents or has been replaced by a new lease with reasonably acceptable terms and a tenant reasonably acceptable to lender and each new tenant must be paying full rent without any free rent or offset, is open for business, and has executed an estoppel reasonably acceptable to lender. THE STONE MOUNTAIN SQUARE LOAN. THE LOAN. The tenth largest loan (the "Stone Mountain Square Loan") is a $30,800,000 loan secured by the borrower's fee interest in a 336,663 square foot anchored retail center located in Stone Mountain, Georgia. THE BORROWER. The borrower, Stone Mountain Acquisition, LLC, a Georgia limited liability company, is a single-purpose entity that owns no material assets other than the mortgaged property and related interest. The managing member of the Stone Mountain borrower is structured with one independent director. A non-consolidation opinion was delivered at origination. The sponsors of the loan, Mark Frankel and Chesky Frankel, are experienced real estate professionals with a 12 property portfolio of office, retail and residential properties in seven states. THE PROPERTY. Stone Mountain Square is a 336,663 square foot anchored retail center in Stone Mountain, Georgia, which is located approximately 20 miles northeast of the Atlanta CBD. The property is located on Stone Mountain Highway (US Highway 78), a primary east/west corridor that intersects with Interstate 285. The property's proximity to Interstates 285, 85, 75 and 20 provides easy access throughout the metropolitan Atlanta area. Per Reis, the Lilburn/US Highway 78 retail submarket has an occupancy rate of 92.3% for the first quarter of 2006. Stone Mountain Square is approximately 85.2% leased by over 40 tenants D-47 and is anchored by T.J. Maxx, Marshalls, Staples, Ross Dress For Less, Old Navy, and Bally Total Fitness. The anchor tenants account for approximately 49% of the net rentable area and 48% of the in-place base rent. Approximately 38% of the net rentable area is leased to investment grade rated tenants or their affiliates. Stone Mountain Square was built in 1991 and purchased by the borrower in 2004. The following table presents certain information relating to the major tenants at the property: ------------------------------- ------------------- ---------- ---------- -------------- ------------- -------------- ----------- % OF TOTAL ANNUALIZED CREDIT RATING ANNUALIZED ANNUALIZED UNDERWRITTEN (FITCH/ TENANT UNDERWRITTEN UNDERWRITTEN BASE RENT LEASE TENANT NAME MOODY'S/S&P) (1) NRA % OF NRA BASE RENT ($) BASE RENT ($ PER NRA) EXPIRATION ------------------------------- ------------------- ---------- ---------- -------------- ------------- -------------- ----------- Bally Total Fitness --/--/-- 37,000 11% $450,000 14% $12.16 01/31/2012 ------------------------------- ------------------- ---------- ---------- -------------- ------------- -------------- ----------- T.J. Maxx --/A3/A 32,000 10% $232,000 7% $7.25 01/31/2010 ------------------------------- ------------------- ---------- ---------- -------------- ------------- -------------- ----------- Ross Dress For Less --/--/BBB 30,187 9% $316,964 10% $10.50 01/31/2016 ------------------------------- ------------------- ---------- ---------- -------------- ------------- -------------- ----------- Marshalls --/A3/A 27,000 8% $207,900 6% $7.70 01/31/2012 ------------------------------- ------------------- ---------- ---------- -------------- ------------- -------------- ----------- Staples BBB+/Baa2/BBB 21,000 6% $184,800 6% $8.80 07/31/2009 ------------------------------- ------------------- ---------- ---------- -------------- ------------- -------------- ----------- Old Navy BBB-/Baa3/BBB- 16,500 5% $189,750 6% $11.50 07/31/2006 ------------------------------- ------------------- ---------- ---------- -------------- ------------- -------------- ----------- Rugged Warehouse --/--/-- 13,578 4% $135,780 4% $10.00 11/30/2008 ------------------------------- ------------------- ---------- ---------- -------------- ------------- -------------- ----------- Aaron Rents, Inc. --/--/-- 7,500 2% $63,375 2% $8.45 06/30/2010 ------------------------------- ------------------- ---------- ---------- -------------- ------------- -------------- ----------- Dress Code --/--/-- 6,000 2% $72,000 2% $12.00 01/31/2011 ------------------------------- ------------------- ---------- ---------- -------------- ------------- -------------- ----------- Family Bookstore --/--/-- 6,000 2% $78,000 2% $13.00 06/30/2006 ------------------------------- ------------------- ---------- ---------- -------------- ------------- -------------- ----------- TOTAL/WEIGHTED AVERAGE 196,765 58% $1,930,569 59% $9.81 ------------------------------- ------------------- ---------- ---------- -------------- ------------- -------------- ----------- Other Tenants NAP 89,975 27% $1,333,054 41% $14.82 Various ------------------------------- ------------------- ---------- ---------- -------------- ------------- -------------- ----------- Vacant Space NAP 49,923 15% $0.00 0% $0.00 NAP ------------------------------- ------------------- ---------- ---------- -------------- ------------- -------------- ----------- TOTAL/WEIGHTED AVERAGE 336,663 100% $3,263,623 100% $11.38 ------------------------------- ------------------- ---------- ---------- -------------- ------------- -------------- ----------- (1) Certain ratings are those of the parent company whether or not the parent guarantees the lease. --------------------------------------------------------------------------------------------------------------------------------- LEASE ROLLOVER SCHEDULE (1) # OF LEASES % OF TOTAL SF CUMULATIVE TOTAL CUMULATIVE % OF AVG. BASE RENT YEAR EXPIRING TOTAL SF EXPIRING EXPIRING SF EXPIRING SF EXPIRING PER SF EXPIRING -------------------- ------------- -------------------- ------------------- ------------------ ----------------- ---------------- Vacant -- 49,923 15% 49,923 15% -- -------------------- ------------- -------------------- ------------------- ------------------ ----------------- ---------------- MTM 1 2,000 1% 51,923 15% $3.00 -------------------- ------------- -------------------- ------------------- ------------------ ----------------- ---------------- 2006 10 45,720 14% 97,643 29% $13.34 -------------------- ------------- -------------------- ------------------- ------------------ ----------------- ---------------- 2007 14 28,930 9% 126,573 38% $15.10 -------------------- ------------- -------------------- ------------------- ------------------ ----------------- ---------------- 2008 3 19,578 6% 146,151 43% $12.58 -------------------- ------------- -------------------- ------------------- ------------------ ----------------- ---------------- 2009 5 35,640 11% 181,791 54% $10.65 -------------------- ------------- -------------------- ------------------- ------------------ ----------------- ---------------- 2010 5 47,260 14% 229,051 68% $8.58 -------------------- ------------- -------------------- ------------------- ------------------ ----------------- ---------------- 2011 1 6,000 2% 235,051 70% $12.00 -------------------- ------------- -------------------- ------------------- ------------------ ----------------- ---------------- 2012 2 64,000 19% 299,051 89% $10.28 -------------------- ------------- -------------------- ------------------- ------------------ ----------------- ---------------- 2013 -- -- -- 299,051 89% -- -------------------- ------------- -------------------- ------------------- ------------------ ----------------- ---------------- 2014 -- -- -- 299,051 89% -- -------------------- ------------- -------------------- ------------------- ------------------ ----------------- ---------------- 2015 2 7,425 2% 306,476 91% $17.82 -------------------- ------------- -------------------- ------------------- ------------------ ----------------- ---------------- Thereafter 1 30,187 9% 336,663 100% $10.50 -------------------- ------------- -------------------- ------------------- ------------------ ----------------- ---------------- (1) The information in the table is based on the underwritten rent roll. PROPERTY MANAGEMENT. The property is managed by Wheeler/Kolb Management Company, a third party management firm with over 225 years of combined experience on staff. Wheeler/Kolb Management Company currently manages and leases 56 properties, totaling approximately 4,500,000 square feet. The 56 properties in the portfolio include neighborhood and community centers, free-standing buildings, enclosed malls and office parks, all located in Georgia, North Carolina and Florida. ADDITIONAL INDEBTEDNESS. Not Allowed. GROUND LEASE. None. RELEASE OF PARCELS. Not Allowed. D-48 [THIS PAGE INTENTIONALLY LEFT BLANK.]

APPENDIX E GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES Except in limited circumstances, the globally offered series 2006-PWR12 Commercial Mortgage Pass-Through Certificates, class A-1, A-2, A-3, A-AB, A-4, A-1A, A-M and A-J will be available only in book-entry form. The book-entry certificates will be tradable as home market instruments in both the European and U.S. domestic markets. Initial settlement and all secondary trades will settle in same-day funds. Secondary market trading between investors holding book-entry certificates through Clearstream and Euroclear will be conducted in the ordinary way in accordance with their normal rules and operating procedures and in accordance with conventional Eurobond practice, which is seven calendar days' settlement. Secondary market trading between investors holding book-entry certificates through DTC will be conducted according to the rules and procedures applicable to U.S. corporate debt obligations. Secondary cross-market trading between member organizations of Clearstream or Euroclear and DTC participants holding book-entry certificates will be accomplished on a delivery against payment basis through the respective depositaries of Clearstream and Euroclear, in that capacity, as DTC participants. As described under "U.S. Federal Income Tax Documentation Requirements" below, non-U.S. holders of book-entry certificates will be subject to U.S. withholding taxes unless those holders meet specific requirements and deliver appropriate U.S. tax documents to the securities clearing organizations of their participants. INITIAL SETTLEMENT All certificates of each class of offered certificates will be held in registered form by DTC in the name of Cede & Co. as nominee of DTC. Investors' interests in the book-entry certificates will be represented through financial institutions acting on their behalf as direct and indirect DTC participants. As a result, Clearstream and Euroclear will hold positions on behalf of their member organizations through their respective depositaries, which in turn will hold positions in accounts as DTC participants. Investors' securities custody accounts will be credited with their holdings against payment in same-day funds on the settlement date. Investors electing to hold their book-entry certificates through Clearstream or Euroclear accounts will follow the settlement procedures applicable to conventional Eurobonds, except that there will be no temporary global security and no "lock up" or restricted period. Global securities will be credited to the securities custody accounts on the settlement date against payment in same-day funds. SECONDARY MARKET TRADING Since the purchaser determines the place of delivery, it is important to establish at the time of the trade where both the purchaser's and seller's accounts are located to ensure that settlement can be made on the desired value date. Trading between DTC Participants. Secondary market trading between DTC participants will be settled in same-day funds. Trading between Clearstream and/or Euroclear Participants. Secondary market trading between member organizations of Clearstream or Euroclear will be settled using the procedures applicable to conventional Eurobonds in same-day funds. E-1 Trading between DTC Seller and Clearstream or Euroclear Purchaser. When book-entry certificates are to be transferred from the account of a DTC participant to the account of a member organization of Clearstream or Euroclear, the purchaser will send instructions to Clearstream or Euroclear through that member organization at least one business day prior to settlement. Clearstream or Euroclear, as the case may be, will instruct the respective depositary to receive the book-entry certificates against payment. Payment will include interest accrued on the book-entry certificates from and including the first day of the calendar month in which the last coupon payment date occurs (or, if no coupon payment date has occurred, from and including June 1, 2006) to and excluding the settlement date, calculated on the basis of a year of 360 days consisting of twelve 30-day months. Payment will then be made by participant's account against delivery of the book-entry certificates. After settlement has been completed, the book-entry certificates will be credited to the respective clearing system and by the clearing system, in accordance with its usual procedures, to the account of the member organization of Clearstream or Euroclear, as the case may be. The securities credit will appear the next day, European time, and the cash debit will be back-valued to, and the interest on the book-entry certificates will accrue from, the value date, which would be the preceding day when settlement occurred in New York. If settlement is not completed on the intended value date, which means the trade fails, the Clearstream or Euroclear cash debit will be valued instead as of the actual settlement date. Member organizations of Clearstream and Euroclear will need to make available to the respective clearing systems the funds necessary to process same-day funds settlement. The most direct means of doing so is to pre-position funds for settlement, either from cash on hand or existing lines of credit, as they would for any settlement occurring within Clearstream or Euroclear. Under this approach, they may take on credit exposure to Clearstream or Euroclear until the book-entry certificates are credited to their accounts one day later. As an alternative, if Clearstream or Euroclear has extended a line of credit to them, member organizations of Clearstream or Euroclear can elect not to pre-position funds and allow that credit line to be drawn upon to finance settlement. Under this procedure, the member organizations purchasing book-entry certificates would incur overdraft charges for one day, assuming they cleared the overdraft when the book-entry certificates were credited to their accounts. However, interest on the book-entry certificates would accrue from the value date. Therefore, in many cases the investment income on the book-entry certificates earned during that one-day period may substantially reduce or offset the amount of those overdraft charges, although this result will depend on the cost of funds of the respective member organization of Clearstream or Euroclear. Since the settlement is taking place during New York business hours, DTC participants can employ their usual procedures for sending book-entry certificates to the respective depositary for the benefit of member organizations of Clearstream or Euroclear. The sale proceeds will be available to the DTC seller on the settlement date. Thus, to the DTC participant a cross-market transaction will settle no differently than a trade between two DTC participants. Trading between Clearstream or Euroclear Seller and DTC Purchaser. Due to time zone differences in their favor, member organizations of Clearstream or Euroclear may employ their customary procedures for transactions in which book-entry certificates are to be transferred by the respective clearing system, through the respective depositary, to a DTC participant. The seller will send instructions to Clearstream or Euroclear through a member organization of Clearstream or Euroclear at least one business day prior to settlement. In these cases, Clearstream or Euroclear, as appropriate, will instruct the respective depositary to deliver the book-entry certificates to the DTC participant's account against payment. Payment will include interest accrued on the book-entry certificates from and including the first day of the calendar month in which the last coupon payment date occurs (or, if no coupon payment date has occurred, from and including June 1, 2006) to and excluding the settlement date, calculated on the basis of a year of 360 days consisting of twelve 30-day months. The payment will then be reflected in the account of the member organization of Clearstream or Euroclear the following day, and receipt of the cash proceeds in the account of that member organization of Clearstream or Euroclear would be back-valued to the value date, which would be the preceding day, when settlement occurred in New York. Should the member organization of Clearstream or Euroclear have a line of credit with its respective clearing system and elect to be in debit in anticipation of receipt of the sale proceeds in its account, the back-valuation will extinguish any overdraft charges incurred over the one-day period. If settlement is not completed on the intended value date, which means the trade fails, receipt of the cash proceeds in the account of the member organization of Clearstream or Euroclear would be valued instead as of the actual settlement date. E-2 Finally, day traders that use Clearstream or Euroclear and that purchase book-entry certificates from DTC participants for delivery to member organizations of Clearstream or Euroclear should note that these trades would automatically fail on the sale side unless affirmative action were taken. At least three techniques should be readily available to eliminate this potential problem: o borrowing through Clearstream or Euroclear for one day, until the purchase side of the day trade is reflected in their Clearstream or Euroclear accounts, in accordance with the clearing system's customary procedures; o borrowing the book-entry certificates in the United States from a DTC participant no later than one day prior to settlement, which would allow sufficient time for the book-entry certificates to be reflected in their Clearstream or Euroclear accounts in order to settle the sale side of the trade; or o staggering the value dates for the buy and sell sides of the trade so that the value date for the purchase from the DTC participant is at least one day prior to the value date for the sale to the member organization of Clearstream or Euroclear. CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS A holder that is not a "United States person" (a "U.S. person") within the meaning of Section 7701(a)(30) of the Internal Revenue Code (a "non-U.S. holder") holding a book-entry certificate through Clearstream, Euroclear or DTC may be subject to U.S. withholding tax unless such holder provides certain documentation to the issuer of such holder's book-entry certificate, the certificate administrator or any other entity required to withhold tax (any of the foregoing, a "U.S. withholding agent") establishing an exemption from withholding. A non-U.S. holder may be subject to withholding unless each U.S. withholding agent receives: 1. from a non-U.S. holder that is classified as a corporation for U.S. federal income tax purposes or is an individual, and is eligible for the benefits of the portfolio interest exemption or an exemption (or reduced rate) based on a treaty, a duly completed and executed IRS Form W-8BEN (or any successor form); 2. from a non-U.S. holder that is eligible for an exemption on the basis that the holder's income from the certificate is effectively connected to its U.S. trade or business, a duly completed and executed IRS Form W-8ECI (or any successor form); 3. from a non-U.S. holder that is classified as a partnership for U.S. federal income tax purposes, a duly completed and executed IRS Form W-8IMY (or any successor form) with all supporting documentation (as specified in the U.S. Treasury Regulations) required to substantiate exemptions from withholding on behalf of its partners; certain partnerships may enter into agreements with the IRS providing for different documentation requirements and it is recommended that such partnerships consult their tax advisors with respect to these certification rules; 4. from a non-U.S. holder that is an intermediary (i.e., a person acting as a custodian, a broker, nominee or otherwise as an agent for the beneficial owner of a certificate): (a) if the intermediary is a "qualified intermediary" within the meaning of section 1.1441-1(e)(5)(ii) of the U.S. Treasury Regulations (a "qualified intermediary"), a duly completed and executed IRS Form W-8IMY (or any successor or substitute form)-- (i) stating the name, permanent residence address and qualified intermediary employer identification number of the qualified intermediary and the country under the laws of which the qualified intermediary is created, incorporated or governed, (ii) certifying that the qualified intermediary has provided, or will provide, a withholding statement as required under section 1.1441-1(e)(5)(v) of the U.S. Treasury Regulations, E-3 (iii) certifying that, with respect to accounts it identifies on its withholding statement, the qualified intermediary is not acting for its own account but is acting as a qualified intermediary, and (iv) providing any other information, certifications, or statements that may be required by the IRS Form W-8IMY or accompanying instructions in addition to, or in lieu of, the information and certifications described in section 1.1441-1(e)(3)(ii) or 1.1441-1(e)(5)(v) of the U.S. Treasury Regulations; or (b) if the intermediary is not a qualified intermediary (a "nonqualified intermediary"), a duly completed and executed IRS Form W-8IMY (or any successor or substitute form)-- (i) stating the name and permanent residence address of the nonqualified intermediary and the country under the laws of which the nonqualified intermediary is created, incorporated or governed, (ii) certifying that the nonqualified intermediary is not acting for its own account, (iii) certifying that the nonqualified intermediary has provided, or will provide, a withholding statement that is associated with the appropriate IRS Forms W-8 and W-9 required to substantiate exemptions from withholding on behalf of such nonqualified intermediary's beneficial owners, and (iv) providing any other information, certifications or statements that may be required by the IRS Form W-8IMY or accompanying instructions in addition to, or in lieu of, the information, certifications, and statements described in section 1.1441-1(e)(3)(iii) or (iv) of the U.S. Treasury Regulations; or 5. from a non-U.S. holder that is a trust, depending on whether the trust is classified for U.S. federal income tax purposes as the beneficial owner of the certificate, either an IRS Form W-8BEN or W-8IMY; any non-U.S. holder that is a trust should consult its tax advisors to determine which of these forms it should provide. All non-U.S. holders will be required to update the above-listed forms and any supporting documentation in accordance with the requirements under the U.S. Treasury Regulations. These forms generally remain in effect for a period starting on the date the form is signed and ending on the last day of the third succeeding calendar year, unless a change in circumstances makes any information on the form incorrect. Under certain circumstances, an IRS Form W-8BEN, if furnished with a taxpayer identification number, remains in effect until the status of the beneficial owner changes, or a change in circumstances makes any information on the form incorrect. In addition, all holders, including holders that are U.S. persons, holding book-entry certificates through Clearstream, Euroclear or DTC may be subject to backup withholding unless the holder-- o provides the appropriate IRS Form W-8 (or any successor or substitute form), duly completed and executed, if the holder is a non-U.S. holder; o provides a duly completed and executed IRS Form W-9, if the holder is a U.S. person; or o can be treated as an "exempt recipient" within the meaning of section 1.6049-4(c)(1)(ii) of the U.S. Treasury Regulations (e.g., a corporation or a financial institution such as a bank). This summary does not deal with all of the aspects of U.S. federal income tax withholding or backup withholding that may be relevant to investors that are non-U.S. holders. Such holders are advised to consult their own tax advisors for specific tax advice concerning their holding and disposing of book-entry certificates. E-4

PROSPECTUS COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (ISSUABLE IN SERIES BY SEPARATE ISSUING ENTITIES) BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC. (DEPOSITOR) Consider carefully the risk factors beginning on page 2 in this prospectus. The securities to be issued are mortgage-backed certificates issued by one or more issuing entities that are a trust. The securities represent interests only in the related trust fund and do not represent interests in or obligations of Bear Stearns Commercial Mortgage Securities Inc. The applicable prospectus supplement may provide that either the certificates or the underlying assets may be insured or guaranteed by a governmental agency or other person. This prospectus may be used to offer and sell any series of certificates only if accompanied by the prospectus supplement for that series. THE TRUST FUNDS-- (1) A new trust fund will be established to issue each series of certificates. (2) Each trust fund will consist primarily of loans secured by pledges of commercial, multifamily residential or mixed use properties. (3) A new trust fund may also include letters of credit, insurance policies, guarantees, reserve funds, and interest rate swap agreements, interest rate cap or floor agreements or currency swap agreements. THE CERTIFICATES-- (1) Each series of certificates will be issued as part of a designated series that may include one or more classes. (2) Each series of certificates will represent the entire beneficial ownership interest in the related trust fund and will be paid only from the related trust fund assets. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE CERTIFICATES OR DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this prospectus is March 31, 2006. IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS AND THE APPLICABLE PROSPECTUS SUPPLEMENT We provide information about the certificates in two separate documents that progressively provide more detail. These documents are: o this prospectus, which provides general information, some of which may not apply to a particular series of certificates, including your series; and o the prospectus supplement for a series of certificates, which will describe the specific terms of that series of certificates. You should rely only on the information provided in this prospectus and the applicable prospectus supplement, including the information incorporated by reference. We have not authorized anyone to provide you with different information. We are not offering the certificates in any state where the offer is not permitted. We have included cross-references to captions in these materials where you can find related discussions that we believe will enhance your understanding of the topic being discussed. The table of contents of this prospectus and the table of contents included in the applicable prospectus supplement list the pages on which these captions are located. You can also find references to key topics in the table of contents on the preceding page. You can find the definitions of capitalized terms that are used in this prospectus beginning on page 109 of this prospectus under the caption "Glossary." i TABLE OF CONTENTS SUMMARY OF PROSPECTUS..................................................... 1 RISK FACTORS.............................................................. 2 Risks Relating to the Certificates..................................... 2 Risks Relating to the Mortgage Loans................................... 6 DESCRIPTION OF THE TRUST FUNDS............................................ 13 General................................................................ 13 Mortgage Loans......................................................... 14 MBS.................................................................... 23 Certificate Accounts................................................... 24 Credit Support......................................................... 24 Cash Flow Agreements................................................... 24 YIELD AND MATURITY CONSIDERATIONS......................................... 24 General................................................................ 24 Pass-Through Rate...................................................... 25 Payment Delays......................................................... 25 Shortfalls in Collections of Interest as a Result of Prepayments of Mortgage Loans................................................... 25 Yield and Prepayment Considerations.................................... 25 Weighted Average Life and Maturity..................................... 27 Controlled Amortization Classes and Companion Classes.................. 28 Other Factors Affecting Yield, Weighted Average Life and Maturity...... 28 THE DEPOSITOR............................................................. 30 THE SPONSOR............................................................... 30 Overview............................................................... 30 BSCMI's Underwriting Standards......................................... 31 USE OF PROCEEDS........................................................... 33 DESCRIPTION OF THE CERTIFICATES........................................... 33 General................................................................ 33 Distributions.......................................................... 33 Distributions of Interest on the Certificates.......................... 34 Distributions of Principal on the Certificates......................... 35 Distributions on the Certificates in Respect of Prepayment Premiums or in Respect of Equity Participations.............................. 35 Allocation of Losses and Shortfalls.................................... 35 Advances in Respect of Delinquencies................................... 35 Reports to Certificateholders.......................................... 36 Voting Rights.......................................................... 38 Termination............................................................ 38 Book-Entry Registration and Definitive Certificates.................... 38 DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS....................... 40 General................................................................ 40 Assignment of Mortgage Loans; Repurchases.............................. 41 Representations and Warranties; Repurchases............................ 42 Collection and Other Servicing Procedures.............................. 43 Sub-Servicers.......................................................... 43 Special Servicers...................................................... 44 Certificate Account.................................................... 44 Modifications, Waivers and Amendments of Mortgage Loans................ 47 Realization upon Defaulted Mortgage Loans.............................. 47 Hazard Insurance Policies.............................................. 50 Due-on-Sale and Due-on-Encumbrance Provisions.......................... 50 Servicing Compensation and Payment of Expenses......................... 51 Evidence as to Compliance.............................................. 51 Some Matters Regarding the Servicer and the Depositor.................. 52 ii Events of Default...................................................... 53 Rights upon Event of Default........................................... 53 Amendment.............................................................. 54 List of Certificateholders............................................. 55 Certain Limitations on the Rights of Certificateholders................ 55 The Trustee............................................................ 56 Eligibility of the Trustee............................................. 56 Duties of the Trustee.................................................. 56 Regarding the Fees, Indemnities and Powers of the Trustee.............. 56 Resignation and Removal of the Trustee................................. 57 DESCRIPTION OF CREDIT SUPPORT............................................. 57 General................................................................ 57 Subordinate Certificates............................................... 58 Cross-Support Provisions............................................... 58 Insurance or Guarantees with Respect to Mortgage Loans................. 58 Letter of Credit....................................................... 59 Certificate Insurance and Surety Bonds................................. 59 Reserve Funds.......................................................... 59 Credit Support with Respect to MBS..................................... 59 LEGAL ASPECTS OF MORTGAGE LOANS........................................... 60 General................................................................ 60 Types of Mortgage Instruments.......................................... 60 Leases and Rents....................................................... 60 Personal Property...................................................... 61 Foreclosure............................................................ 61 Leasehold Risks........................................................ 64 Cooperative Shares..................................................... 64 Bankruptcy Laws........................................................ 65 Environmental Risks.................................................... 67 Due-on-Sale and Due-on-Encumbrance Provisions.......................... 69 Subordinate Financing.................................................. 69 Default Interest and Limitations on Prepayments........................ 69 Adjustable Rate Loans.................................................. 70 Applicability of Usury Laws............................................ 70 Servicemembers Civil Relief Act........................................ 70 Type of Mortgaged Property............................................. 70 Americans with Disabilities Act........................................ 71 Forfeiture for Drug, RICO and Money Laundering Violations.............. 71 MATERIAL FEDERAL INCOME TAX CONSEQUENCES.................................. 71 Federal Income Tax Consequences for REMIC Certificates................. 72 Federal Income Tax Consequences for Certificates as to Which No REMIC Election Is Made.............................................. 93 STATE AND OTHER TAX CONSIDERATIONS........................................ 100 CERTAIN ERISA CONSIDERATIONS.............................................. 100 General................................................................ 100 Plan Asset Regulations................................................. 101 Administrative Exemptions.............................................. 101 Unrelated Business Taxable Income; Residual Certificates............... 101 LEGAL INVESTMENT.......................................................... 102 METHOD OF DISTRIBUTION.................................................... 104 WHERE YOU CAN FIND MORE INFORMATION....................................... 105 INCORPORATION OF SOME INFORMATION BY REFERENCE............................ 106 REPORTS................................................................... 106 FINANCIAL INFORMATION..................................................... 106 LEGAL MATTERS............................................................. 106 RATINGS................................................................... 106 GLOSSARY.................................................................. 108 iii SUMMARY OF PROSPECTUS This summary includes selected information from this prospectus. It does not contain all of the information you need to consider in deciding whether to buy any class of the offered certificates. To understand the terms of the offering of the offered certificates, you should read carefully this entire prospectus and the applicable prospectus supplement. TITLE OF CERTIFICATES......... Commercial/Multifamily Mortgage Pass-Through Certificates, issuable in series. DEPOSITOR..................... Bear Stearns Commercial Mortgage Securities Inc., a Delaware corporation. Our telephone number is (212) 272-2000. DESCRIPTION OF CERTIFICATES; RATINGS....................... The certificates of each series will be issued pursuant to a pooling and servicing agreement and may be issued in one or more classes. The certificates of each series will represent in the aggregate the entire beneficial ownership interest in the property of the related trust fund. Each trust fund will consist primarily of a segregated pool of commercial or multifamily mortgage loans, or mortgage-backed securities that evidence interests in, or that are secured by commercial or multifamily mortgage loans. Each class or certificate will be rated not lower than investment grade by one or more nationally recognized statistical rating agencies at the date of issuance. The prospectus supplement for a series of certificates includes important information on related trust fund, certificates, and risks, including information on the following: (1) the name of the servicer and special servicer, the circumstances when a special servicer will be appointed and their respective obligations (if any) to make advances to cover delinquent payments on the assets of the trust fund, taxes, assessments or insurance premiums; (2) the assets in the trust fund, including a description of the pool of mortgage loans or mortgage-backed securities; (3) the identity and attributes of each class within a series of certificates, including whether (and to what extent) any credit enhancement benefits any class of a series of certificates; (4) the tax status of certificates; and (5) whether the certificates will be eligible to be purchased by investors subject to ERISA or will be mortgage related securities for purposes of SMMEA. 1 RISK FACTORS You should carefully consider, among other things, the following risk factors and any other factors set forth under the heading "Risk Factors" in the related prospectus supplement. In general, to the extent that the factors discussed below pertain to or are influenced by the characteristics or behavior of mortgage loans included in a particular trust fund, they would similarly pertain to and be influenced by the characteristics or behavior of the mortgage loans underlying any mortgage-backed securities included in the trust fund. If any of the following risks are realized, your investment could be materially and adversely affected. In addition, other risks unknown to us or which we currently consider immaterial may also impair your investment. RISKS RELATING TO THE CERTIFICATES LACK OF A SECONDARY MARKET FOR THE CERTIFICATES MAY MAKE IT DIFFICULT FOR YOU TO RESELL YOUR CERTIFICATES AT ALL OR AT AN ATTRACTIVE PRICE. We cannot assure you that a secondary market will develop for certificates. Even if a secondary market develops, we cannot assure you that it will provide you with liquidity of investment or will continue for as long as the offered certificates remain outstanding. The absence of a secondary market for your certificates means that you may not be able to find a buyer for your certificates or, if you find a buyer, that the selling price may be less than it would have been if a secondary market existed for the certificates. The underwriter for a series of certificates will not be obligated to make a market for that series of certificates even if it intends to do so. Even if a secondary market for your certificates develops, it may provide less liquidity than any comparable market for securities that evidence interests in single-family mortgage loans. Insofar as a secondary market does develop with respect to any series of offered certificates or class of any series of offered certificates, other factors may affect their market value. These include: o the perceived liquidity of the offered certificates; o their anticipated cash flow, which may vary widely depending upon the prepayment and default assumptions applied in respect of the underlying mortgage loans; and o prevailing interest rates. For example, small fluctuations in prevailing interest rates may affect at any given time the price payable of some of the classes of offered certificates. In particular, a class with a relatively long average life, a companion class or a class of stripped interest certificates or stripped principal certificates may be extremely sensitive to small fluctuations in prevailing interest rates. In addition, the relative change in price for an offered certificate in response to an upward or downward movement in prevailing interest rates may not necessarily equal the relative change in price for the offered certificate in response to an equal but opposite movement in the rates. Accordingly, you may only be able to sell your certificates at a discount from the price that you paid for them even if a secondary market develops for the certificates. We are not aware of any source through which holders of the certificates may obtain price information about the offered certificates on an ongoing basis. You will have no right to redeem your certificates except to the extent described in this prospectus and the related prospectus supplement. Offered certificates are subject to early retirement only under some specified circumstances described in this prospectus and in the related prospectus supplement. You will be entitled to receive periodic reports pursuant to the related pooling and servicing agreement regarding the status of the related mortgage assets and any credit support for your certificates and any subordination of your certificates to other classes of certificates. The periodic reports will be the primary source of ongoing information regarding the offered certificates of any series. The certificateholders may not receive any additional information from any other source. The limited nature of the information may adversely affect the liquidity of your certificates, even if a secondary market does develop for them. SINCE THE MORTGAGE LOANS WILL NOT BE GUARANTEED, YOU MAY NOT RECEIVE FULL PAYMENT ON YOUR CERTIFICATES TO THE EXTENT THERE IS A SHORTFALL IN PAYMENT ON THE ASSETS OR THE RELATED TRUST FUND. The only sources of funds for 2 payment on a series of certificates will generally be the assets of the related trust fund and, to the extent provided in the applicable prospectus supplement, any credit enhancement. The certificates will not be guaranteed by us or any of our affiliates, by any governmental agency or instrumentality or by any other person or entity unless otherwise stated in the related prospectus supplement. A portion of the amounts remaining in some funds or accounts constituting part of a trust fund, including any certificate account and any accounts maintained as credit support, may be withdrawn under conditions described in the applicable prospectus supplement for purposes other than the payment of principal or interest in the related series of certificates. A series of certificates will have no claim against or security interest in the trust fund for any other series. As a result, you may suffer a loss on your certificates if the sources for payment are insufficient to pay all the principal of and interest on the certificates of your series. If you are a holder of a subordinate certificate, you may bear a portion of the amount of the losses or shortfalls in collections on the mortgage assets before the holders of the remaining classes of certificates in the priority and manner and subject to the limitations specified in the applicable prospectus supplement. THE RATE OF PRINCIPAL PREPAYMENTS ON THE MORTGAGE LOANS AND THE RATE OF REPURCHASES OF THE MORTGAGE LOANS MAY ADVERSELY AFFECT THE YIELD ON YOUR INVESTMENT. In deciding whether to purchase any offered certificates, you should make an independent decision as to the appropriate prepayment assumptions to be used. The pre-tax return on your investment will change from time to time for a number of reasons, including the following: o The amount of distributions of principal of the certificates and the times when you receive those distributions depends on the amount and the times at which borrowers make principal payments of the underlying mortgage loans, and on whether we or the servicer purchases the underlying mortgage loans. o Prepayments of the mortgage loans in any trust fund by the related borrowers generally will result in a faster rate of principal payments on one or more classes of the related certificates than if payment on those mortgage loans are made as scheduled. The prepayment rate on mortgage loans may be influenced by a variety of economic, tax, legal and social factors. While one prepayment rate may be used for the purpose of pricing the certificates, there can be no assurance that the actual prepayment rate will be faster or slower than any assumed prepayment rate. In addition, to the extent described in this prospectus and in the related prospectus supplement, in order to maximize recoveries on defaulted mortgage loans, the servicer or a special servicer will be permitted, within prescribed limits, to extend and modify mortgage loans that are in default or as to which a payment default is imminent. While the servicer or a special servicer generally will be required to determine that any extension or modification is reasonably likely to produce a greater recovery than liquidation, we can give you no assurance that any extension or modification will increase the present value of receipts from or proceeds of the affected mortgage loans. We or the mortgage loan seller or sellers named in the applicable prospectus supplement will be required to repurchase a mortgage loan from the trust, or if so specified in the applicable prospectus supplement, substitute another mortgage loan, if we or such seller or sellers breach the representations and warranties made with respect to that mortgage loan. In addition, the servicer may have the option to purchase the mortgage loans in the trust fund and may be obligated to purchase mortgage loans from the trust fund under the circumstances described in the prospectus supplement. If you buy your certificates at a premium or discount your yield to maturity will be sensitive to prepayments on the mortgage loans in the related trust fund. If the amount of interest payable with respect to your class is disproportionately large, as compared to the amount of principal, as with some classes of stripped interest certificates, you might fail to recover your original investment under some prepayment scenarios. The extent to which the yield to maturity of your certificates may vary from the anticipated yield will depend in part upon the degree to which you purchased them at a discount or premium and the amount and timing of distributions on those certificates. If you purchase a certificate at a discount, you should consider the risk that a slower than anticipated rate of principal payments on the mortgage loans could result in an actual yield to you that is lower than the anticipated yield, and if you purchase a certificate at a premium, you should consider the risk that a faster than anticipated rate of principal payments could result in an actual yield to you that is lower than the anticipated yield. For more detailed information regarding these risks, you should refer to the section in this prospectus titled "Yield and Maturity Considerations." 3 Average Life of Certificates. The terms of your certificates will determine the extent to which prepayments on the mortgage loans in any trust fund ultimately affect the average life of your certificates. For example, a class of certificates, including a class of offered certificates, may provide that on any distribution date you are entitled to a pro rata share of the prepayments on the mortgage loans in the related trust fund that are distributable on that date, to all or a disproportionately large share of the prepayments, or to none or a disproportionately small share of the prepayments. A class of certificates that entitles you to a disproportionately large share of the prepayments on the mortgage loans in the related trust fund increases the likelihood of early retirement of that class if the rate of prepayment is relatively fast. A class of certificates that entitles you to a disproportionately small share of the prepayments on the mortgage loans in the related trust fund increases the likelihood of an extended average life of that class if the rate of prepayment is relatively slow. Entitlements of the various classes of certificateholders of any series to receive payments and, in particular, prepayments of principal of the mortgage loans in the related trust fund may vary based on the occurrence of some events, e.g., the retirement of one or more classes of certificates of the series, or subject to some contingencies, e.g., prepayment and default rates with respect to the mortgage loans. Controlled Amortization Classes and Companion Classes. A series of certificates may include one or more controlled amortization classes, which will entitle you to receive principal distributions according to a specified principal payment schedule. Although prepayment risk cannot be eliminated entirely for any class of certificates, a controlled amortization class will generally provide a relatively stable cash flow so long as the actual rate of prepayment of the mortgage loans in the related trust fund remains relatively constant at the rate, or within the range of rates, of prepayment used to establish the specific principal payment schedule for the certificates. However, prepayment risk will not disappear. The stability afforded to a controlled amortization class comes at the expense of one or more companion classes of the same series, any of which companion classes may also be a class of offered certificates. In general, a companion class may entitle you to a disproportionately large share of prepayments on the mortgage loans in the related trust fund when the rate of prepayment is relatively fast, and/or may entitle you to a disproportionately small share of prepayments on the mortgage loans in the related trust fund when the rate of prepayment is relatively slow. A companion class absorbs some, but not all, of the risk that would otherwise belong to the related controlled amortization class if all payments of principal of the mortgage loans in the related trust fund were allocated on a pro rata basis. Ratings on your certificates do not guarantee that you will receive payment under the pooling and servicing agreement. Ratings assigned by a rating agency to a class of certificates reflect the rating agency's assessment of the likelihood that the holders of certificates of that class will receive all payments to which they are entitled. The ratings are based on the structural, legal and issuer-related aspects associated with these certificates, the nature of the underlying mortgage loans and the extent and quality of any credit enhancement. Ratings will not constitute an assessment of the following: o the likelihood that principal prepayments on the related mortgage loans will be made; o the degree to which the rate of prepayments might differ from that originally anticipated; o the likelihood of early optional termination of the related trust fund; or o the possibility that prepayment of the related mortgage loans may be made at any particular rate. The amount, type and nature of credit support, if any, provided with respect to a series of certificates will be determined on the basis of criteria established by each rating agency rating classes of the certificates of the series. Those criteria are sometimes based upon an actuarial analysis of the behavior of mortgage loans in a larger group. However, we cannot assure you that the historical data supporting any related actuarial analysis will accurately reflect future experience, or that the data derived from a large pool of mortgage loans will accurately predict the delinquency, foreclosure or loss experience of any particular pool of mortgage loans. These criteria may also be based upon determinations of the values of the mortgaged properties that provide security for the mortgage loans. However, we cannot assure you that those values will not decline in the future. For more detailed information regarding these risks, you should refer to the section in this prospectus titled "Description of Credit Support" and "Ratings." 4 ERISA IMPOSES LIMITATIONS ON WHO CAN PURCHASE THE CERTIFICATES; FAILURE TO COMPLY WITH ERISA MAY MATERIALLY AND ADVERSELY AFFECT THE TRUST FUND AND RESULT IN REDUCED PAYMENTS ON YOUR CERTIFICATES. Generally, ERISA applies to investments made by employee benefit plans and transactions involving the assets of those plans. In addition, some other retirement plans and arrangements, including individual retirement accounts and Keogh plans, are subject to Section 4975 of the Internal Revenue Code. Due to the complexity of regulations that govern the plans, if you are subject to ERISA or Section 4975 of the Internal Revenue Code you are urged to consult your own counsel regarding the consequences under ERISA or the Internal Revenue Code of acquisition, ownership and disposition of the offered certificates of any series. For more detailed information regarding ERISA restrictions, you should review the section in this prospectus titled "Certain ERISA Considerations." IF YOU ACQUIRE RESIDUAL CERTIFICATES YOU MAY BE SUBJECT TO ADVERSE TAX CONSEQUENCES. If you are a holder of residual certificates that represents a residual interest in a real estate investment conduit or "REMIC," you will be required to report on your federal income tax returns as ordinary income your pro rata share of the taxable income of the REMIC, regardless of the amount or timing of your receipt of cash payments, if any. Accordingly, you may have taxable income and tax liabilities arising from your investment during a taxable year in excess of the economic income, if any, attributable to your certificate during that period. While you will have a corresponding amount of the losses later in the term of the REMIC, the present value of phantom income may significantly exceed tax losses. Therefore, the after-tax yield on the residual certificate that you receive may be significantly less than that of a corporate bond or stripped instrument having similar cash flow characteristics. A residual certificate may have negative value. All or a portion of your share of the REMIC taxable income may be treated under the Internal Revenue Code as an "excess inclusion." You will have to pay tax on the excess inclusions regardless of whether you have other credits, deductions or losses. Excess inclusion income: o generally will not be subject to offset by losses from other activities; o will be treated as unrelated business taxable income for a tax-exempt holder; and o will not qualify for exemption from withholding tax for a foreign holder. In addition, residual certificates are subject to numerous restrictions on transfer. INDIVIDUALS AND SOME OTHER ENTITIES SHOULD NOT INVEST IN CERTIFICATES THAT ARE RESIDUAL INTERESTS. The fees and non-interest expenses of a REMIC will be allocated pro rata to certificates that are residual interests in the REMIC. However, individuals will only be able to deduct these expenses as miscellaneous itemized deductions, which are subject to numerous restrictions and limitations under the Internal Revenue Code. Therefore, the certificates that are residual interests generally are not appropriate investments for: o individuals; o estates; o trusts beneficially owned by any individual or estate; and o pass-through entities having any individual, estate or trust as a shareholder, member or partner. In addition, the REMIC residual certificates will be subject to numerous transfer restrictions. These restrictions will reduce your ability to sell a REMIC residual certificate. For example, unless we indicate otherwise in the related prospectus supplement, you will not be able to transfer a REMIC residual certificate to a foreign person or to a foreign permanent establishment or fixed base (within the meaning of an applicable income tax treaty) of a "United States person" within the meaning of the Internal Revenue Code. IF YOUR CERTIFICATES ARE ISSUED IN BOOK-ENTRY FORM, YOU WILL ONLY BE ABLE TO EXERCISE YOUR RIGHTS INDIRECTLY THROUGH DTC AND YOU MAY ALSO HAVE LIMITED ACCESS TO INFORMATION REGARDING THOSE CERTIFICATES. One or more 5 classes of the offered certificates of any series may be issued as book-entry certificates. Each class of book-entry certificates will be initially represented by one or more certificates registered in the name of a nominee for DTC. As a result, unless and until corresponding definitive certificates are issued, you will be able to exercise your rights only indirectly through DTC and its participating organizations. In addition, your access to information regarding the book-entry certificates may be limited. Conveyance of notices and other communications by DTC to its participating organizations, and directly and indirectly through these organizations to you, will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Furthermore, as described in this prospectus, you may suffer delays in the receipt of payments on the book-entry certificates. In addition, your ability to pledge or otherwise take actions with respect to your interest in the book-entry certificates may be limited due to the lack of a physical certificate evidencing that interest. For more detailed information regarding book-entry registration, you should review the section in this prospectus titled "Description of the Certificates--Book-Entry Registration and Definitive Certificates." RISKS RELATING TO THE MORTGAGE LOANS MORTGAGE LOANS ARE SUSCEPTIBLE TO NUMEROUS RISKS THAT MAY RESULT IN LOSSES TO YOU. (1) Mortgage loans made on the security of multifamily or commercial property may entail risks of delinquency and foreclosure that are greater than similar risks associated with loans made on the security of an owner-occupied single-family property. The ability of a borrower to repay a loan secured by an income-producing property typically is dependent primarily upon the successful operation of that property rather than upon the existence of independent income or assets of the borrower. Thus, the value of an income-producing property is directly related to the net operating income derived from that property. If the net operating income of the property is reduced--for example, if rental or occupancy rates decline or real estate tax rates or other operating expenses increase--the borrower's ability to repay the loan may be impaired. A number of the mortgage loans may be secured by liens on owner-occupied mortgaged properties or on mortgaged properties leased to a single tenant or a small number of significant tenants. Accordingly, a decline in the financial condition of the borrower or a significant tenant, as applicable, may have a disproportionately greater effect on the net operating income from the mortgaged properties than would be the case with respect to mortgaged properties with multiple tenants. Furthermore, the value of any mortgaged property may be adversely affected by risks generally incident to interests in real property, including the following: o changes in general or local economic conditions and/or specific industry segments; o declines in real estate values; o declines in rental or occupancy rates; o increases in interest rates, real estate tax rates and other operating expenses; o changes in governmental rules, regulations and fiscal policies, including environmental legislation; and o acts of God and other factors beyond the control of the servicer. (2) The type and use of a particular mortgaged property may present additional risks. For instance, mortgaged properties that operate as hospitals and nursing homes may present special risks to lenders due to the significant governmental regulation of the ownership, operation, maintenance and financing of health care institutions. Hotel and motel properties are often operated pursuant to franchise, management or operating agreements that may be terminable by the franchisor or operator. Moreover, the transferability of a hotel's operating, liquor and other licenses upon a transfer of the hotel, whether through purchase or foreclosure, is subject to local law requirements. The ability of a borrower to repay a mortgage loan secured by shares allocable to one or more cooperative dwelling units may be dependent upon the ability of the dwelling units to generate sufficient rental income, which may be subject to rent control or stabilization laws, to cover both debt service on the loan as well as maintenance charges to the cooperative. Further, a mortgage loan secured by cooperative shares is subordinate to the mortgage, if any, on the cooperative apartment building. 6 (3) Other multifamily and commercial properties located in the areas of the mortgaged properties and of the same types as the mortgaged properties compete with the mortgaged properties to attract residents and customers. The leasing of real estate is highly competitive. The principal means of competition are price, location and the nature and condition of the facility to be leased. A borrower under a mortgage loan competes with all lessors and developers of comparable types of real estate in the area in which the mortgaged property is located. The lessors or developers could have lower rentals, lower operating costs, more favorable locations or better facilities. While a borrower under a mortgaged property may renovate, refurbish or expand the mortgaged property to maintain it and remain competitive, the renovation, refurbishment or expansion may itself entail significant risk. Increased competition could adversely affect income from and market value of the mortgaged properties. In addition, the business conducted at each mortgaged property may face competition from other industries and industry segments. (4) Some or all of the mortgage loans included in any trust fund will be nonrecourse loans or loans for which recourse may be restricted or unenforceable. As to any related mortgage loan, recourse in the event of borrower default will be limited to the specific real property and other assets, if any, that were pledged to secure the mortgage loan. However, even with respect to those mortgage loans that provide for recourse against the borrower and its assets generally, we can give you no assurance that enforcement of the recourse provisions will be practicable, or that the assets of the borrower will be sufficient to permit a recovery in respect of a defaulted mortgage loan in excess of the liquidation value of the related mortgaged property. (5) The concentration of default, foreclosure and loss risks in individual mortgage loans in a particular trust fund will generally be greater than for pools of single-family loans. Mortgage loans in a trust fund will generally consist of a smaller number of higher balance loans than would a pool of single-family loans of comparable aggregate unpaid principal balance. OFFICE PROPERTIES HAVE PARTICULAR RISKS. In addition to risks generally associated with real estate, office properties are also affected significantly by: o adverse changes in population and employment growth, which generally creates demand for office space, o local competitive conditions, including the supply of office space or the existence or construction of new competitive office buildings, o the quality and management philosophy of management, o the attractiveness of the properties to tenants and their customers or clients, o the attractiveness of the surrounding neighborhood, and o the need to make major repairs or improvements to the property to satisfy the needs of major tenants. Office properties that are not equipped to accommodate the needs of modern business may become functionally obsolete and thus non-competitive. In addition, office properties may be adversely affected by an economic decline in the businesses operated by their tenants. A decline of this sort may result in one or more significant tenants ceasing operations at the related locations, which may occur on account of: o a tenant's voluntary decision not to renew a lease, o bankruptcy or insolvency of these tenants, or o these tenant's general cessation of business activities or for other reasons. The risk of an economic decline as described above is greater if revenue is dependent on a single tenant or if there is a significant concentration of tenants in a particular business or industry. MORTGAGE LOANS SECURED BY RETAIL PROPERTIES MAY BE ADVERSELY AFFECTED BY CHANGES IN CONSUMER SPENDING PATTERNS, ALTERNATIVE FORMS OF RETAILING AND CHANGES IN TENANTS OCCUPYING THE RETAIL PROPERTIES. In addition to risks 7 generally associated with real estate, mortgage loans secured by retail properties are also affected significantly by a number of factors, including: o adverse changes in consumer spending patterns; o local competitive conditions, including the supply of retail space or the existence or construction of new competitive shopping centers or shopping malls; o alternative forms of retailing, including direct mail, television shopping networks and Internet based sales, which reduce the need for retail space by retail companies; o the quality and management philosophy of management; o the attractiveness of the properties and the surrounding neighborhood to tenants and their customers; o the public perception of the safety of customers, at shopping malls and shopping centers, for example; o the need to make major repairs or improvements to satisfy the needs of major tenants; and o if an anchor or other significant tenant ceases operations at the locations, which may occur on account of a decision not to renew a lease, bankruptcy or insolvency of the tenant, the tenant's general cessation of business activities or for other reasons. Significant tenants at a shopping center play an important part in generating customer traffic and making the property a desirable location for other tenants at the property. In addition, some tenants at retail properties may be entitled to terminate their leases if an anchor tenant ceases operations at the property. SOME RISKS THAT AFFECT OCCUPANCY AND RENT LEVELS OF MULTIFAMILY RENTAL PROPERTIES SUCH AS ADVERSE ECONOMIC CONDITIONS, CONSTRUCTION OF ADDITIONAL HOUSING, MILITARY BASE CLOSINGS, COMPANY RELOCATIONS AND RENT CONTROL LAWS MAY AFFECT THE ABILITY OF THE BORROWER TO MEET ITS OBLIGATIONS UNDER THE MORTGAGE LOAN. Adverse economic conditions, either local, regional or national, may limit or reduce the following: o the amount of rent that can be charged for rental units; o tenants' ability to pay rent; o timeliness of rent payments; o occupancy levels without a corresponding decrease in expenses--occupancy and rent levels may also be affected by construction of additional housing units; o local military base closings; o construction of additional housing units; o company relocations and closings; and o national and local politics, including current or future rent stabilization and rent control laws and agreements. Multifamily apartment units are typically leased on a short-term basis, and consequently, the occupancy rate of a multifamily rental property may be subject to rapid decline. In addition, the level of mortgage interest rates may encourage tenants in multifamily rental properties to purchase single-family housing rather than continue to lease housing or the characteristics of a neighborhood may change over time or in relation to newer developments. Further, the cost of operating a multifamily rental property may increase, including the cost of utilities and the costs of required capital expenditures. Also, rent control laws could impact the future cash flows of multifamily rental properties that are subject to rental control laws. 8 Some multifamily rental properties are eligible to receive low-income housing tax credits pursuant to Section 42 of the Internal Revenue Code. However, Section 42 properties are subject to some restrictions that may affect a borrower's ability to meet its obligations under a mortgage loan. This includes the following: o rent limitations associated with those properties may adversely affect the ability of the applicable borrowers to increase rents to maintain those properties in proper condition during periods of rapid inflation or declining market value of those properties; o the income restrictions on tenants imposed by Section 42 of the Internal Revenue Code may reduce the number of eligible tenants; o some eligible tenants may not find any differences in rents between the Section 42 properties and other multifamily rental properties in the same area to be a sufficient economic incentive to reside at a Section 42 property; and o a Section 42 property may also have fewer amenities or otherwise be less attractive as a residence making it less attractive to eligible tenants. All of the foregoing conditions and events may increase the possibility that a borrower may be unable to meet its obligations under its mortgage loan. MORTGAGE LOANS SECURED BY COOPERATIVELY OWNED APARTMENT BUILDINGS ARE SUBJECT TO THE RISK THAT TENANT-SHAREHOLDERS OF A COOPERATIVELY OWNED APARTMENT BUILDING WILL BE UNABLE TO MAKE THE REQUIRED MAINTENANCE PAYMENTS. Generally, a tenant-shareholder of a cooperative corporation must make a monthly maintenance payment to the cooperative corporation that owns the apartment building representing that tenant-shareholder's pro rata share of the corporation's payments in respect of the mortgage loan secured by that apartment building. The tenant-shareholder must also pay its pro rata share of all real property taxes, maintenance expenses and other capital and ordinary expenses with respect to that apartment building, less any other income that the cooperative corporation may realize. Adverse economic conditions, either local, regional or national, may adversely affect tenant-shareholders' ability to make required maintenance payments, either because adverse economic conditions have impaired the individual financial conditions of the tenant-shareholders or their ability to sub-let the subject apartments. To the extent that a large number of tenant-shareholders in a cooperatively owned apartment building rely on sub-letting their apartments to make maintenance payments, the lender on any mortgage loan secured by that building will be subject to all the risks that it would have in connection with lending on the security of a multifamily rental property. In addition, if in connection with any cooperative conversion of an apartment building, the sponsor holds the shares allocated to a large number of the apartment units, any lender secured by a mortgage on the building will be subject to a risk associated with the sponsor's creditworthiness. SELF-STORAGE PROPERTIES HAVE PARTICULAR RISKS. Warehouse, mini-warehouse and self-storage properties ("Storage Properties") are considered vulnerable to competition because both acquisition costs and break-even occupancy are relatively low. The conversion of Storage Properties to alternative uses would generally require substantial capital expenditures. Thus, if the operation of any of the Storage Properties becomes unprofitable due to decreased demand, competition, age of improvements or other factors, such that the borrower becomes unable to meet its obligation on the related mortgage loan, the liquidation value of that Storage Property may be substantially less, relative to the amount owing on the mortgage loan, than would be the case if the Storage Property were readily adaptable to other uses. Tenant privacy, anonymity and efficient access are important to the success of a Storage Property, as are building design and location. HOTEL AND MOTEL PROPERTIES HAVE PARTICULAR RISKS. Hotel and motel properties are subject to operating risks common to the lodging industry. These risks include, among other things: o a high level of continuing capital expenditures to keep necessary furniture, fixtures and equipment updated, o competition from other hotels and motels, 9 o increases in operating costs, which increases may not necessarily in the future be offset by increased room rates and o dependence on business and commercial travelers and tourism, increases in energy costs and other expenses of travel and adverse effects of general and local economic conditions. These factors could adversely affect the related borrower's ability to make payments on the related mortgage loans. Since limited service hotels and motels are relatively quick and inexpensive to construct, an over-building of hotels and motels could occur in any given region, which would likely adversely affect occupancy and daily room rates. Further, because hotel and motel rooms are generally rented for short periods of time, hotel and motel properties tend to be more sensitive to adverse economic conditions and competition than many other commercial properties. Furthermore, the financial strength and capabilities of the owner and operator of a hotel may have a substantial impact on that hotel's quality of service and economic performances. Additionally, the revenues of certain hotels and motels, particularly those located in regions whose economies depend upon tourism, may be highly seasonal in nature. A hotel or motel property may present additional risks as compared to other commercial property types in that: o hotels and motels may be operated pursuant to franchise, management and operating agreements that may be terminable by the franchisor, the manager or the operator; o the transferability of any operating, liquor and other licenses to the entity acquiring the related hotel and motel, either through purchase or foreclosure, is subject to local law requirements; o it may be difficult to terminate an ineffective operator of a hotel or motel property subsequent to a foreclosure of the related property; and o future occupancy rates may be adversely affected by, among other factors, any negative perception of a hotel or motel based upon its historical reputation. Hotel and motel properties may be operated pursuant to franchise agreements. The continuation of franchise is typically subject to specified operating standards and other terms and conditions. The franchisor periodically inspects its licensed properties to confirm adherence to its operating standards. The failure of the hotel or motel property to maintain these standards or adhere to other terms and conditions could result in the loss or cancellation of the franchise license. It is possible that the franchisor could condition the continuation of a franchise license on the completion of capital improvements or the making of certain capital expenditures that the related borrower determines are too expensive or are otherwise unwarranted in light of general economic conditions or the operating results or prospects of the affected hotels or motels. In that event, the related borrower may elect to allow the franchise license to lapse. In any case, if the franchise is terminated, the related borrower may seek to obtain a suitable replacement franchise or to operate the related hotel or motel property independently of a franchise license. The loss of a franchise license could have a material adverse effect upon the operations or the underlying value of the hotel or motel covered by the franchise because of the loss of associated name recognition, marketing support and centralized reservation systems provided by the franchisor. MANUFACTURED HOUSING COMMUNITY PROPERTIES AND RECREATIONAL VEHICLE PARKS HAVE PARTICULAR RISKS. The successful operation of a manufactured housing community or recreational vehicle park will generally depend upon the number of competing manufactured housing communities or recreational vehicle parks in the local market, as well as upon other factors, including its age, appearance, reputation, management and the types of facilities and services it provides. Manufactured housing communities also compete against alternative forms of residential housing, including multifamily rental properties, cooperatively-owned apartment buildings, condominium complexes and single-family residential developments. Recreational vehicle parks also compete against alternative forms of recreation and short-term lodging, for example, staying at a hotel at the beach. MANUFACTURED HOUSING COMMUNITY PROPERTIES AND RECREATIONAL VEHICLE PARKS ARE "SPECIAL PURPOSE" PROPERTIES THAT CANNOT BE READILY CONVERTED TO GENERAL RESIDENTIAL, RETAIL OR OFFICE USE. Thus, if the operation of a 10 manufactured housing community or recreational vehicle park 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 the mortgaged property may be substantially less, relative to the amount owing on the related mortgage loan, than would be the case if the mortgaged property were readily adaptable to other uses. MORTGAGE LOANS WITH BALLOON PAYMENTS INVOLVE THE RISK THAT BORROWERS MAY NOT BE ABLE TO REFINANCE THE LOAN OR SELL THE RELATED PROPERTY. Mortgage loans may be non-amortizing or only partially amortizing over their terms to maturity. Those mortgage loans will require substantial principal payments--that is, balloon payments--at their stated maturity. Mortgage loans of this type involve a greater degree of risk than self-amortizing loans because the ability of a borrower to make a balloon payment typically will depend upon its ability either to refinance the loan or to sell the related mortgaged property. The ability of a borrower to accomplish either of these goals will be affected by a number of factors, including: o value of the related mortgaged property; o the level of available mortgage rates at the time of sale or refinancing; o the borrower's equity in the related mortgaged property; o the financial condition and operating history of the borrower and the related mortgaged property; o tax laws and rent control laws, with respect to some residential properties; o Medicaid and Medicare reimbursement rates, with respect to hospitals and nursing homes; and o prevailing general economic conditions and the availability of credit for loans secured by multifamily or commercial, as the case may be, real properties generally. Neither we nor any of our affiliates will be required to refinance any mortgage loan. CREDIT SUPPORT FOR A SERIES OF CERTIFICATES MAY COVER SOME OF YOUR LOSSES OR RISKS BUT MAY NOT COVER ALL POTENTIAL RISKS TO YOU. The prospectus supplement for a series of certificates will describe any credit support provided for these certificates. Use of credit support will be subject to the conditions and limitations described in this prospectus and in the related prospectus supplement. Moreover, the available credit support may not cover all potential losses or risks. For example, credit support may or may not cover fraud or negligence by a mortgage loan originator or other parties. A series of certificates may include one or more classes of subordinate certificates, which may, in turn, include offered certificates. Subordination is intended to reduce the risk to holders of each more senior class of certificates of delinquent distributions or ultimate losses on the mortgage assets. However, the amount of subordination will be limited and may decline. Since the senior certificateholders are paid principal before subordinate certificateholders, subordinate certificateholders may not be paid any principal if the available credit support is exhausted. As a result, if you are a holder of subordinate certificates, you will primarily experience the impact of losses and shortfalls. Moreover, if the available credit support covers more than one series of certificates, you will be subject to the risk that the credit support will be exhausted by the claims of the holders of certificates of one or more other series. Rating agencies rating the certificates will determine the level of credit support based on an assumed level of defaults, delinquencies and losses on the underlying mortgage assets and some other factors. We cannot, however, assure you that the loss experience on the related mortgage assets will not exceed the assumed levels. For more detail information regarding credit support of certificates you should review the sections in this prospectus titled "--Risks Relating to the Certificates--Ratings on your certificates do not guarantee that you will receive payment under the pooling and servicing agreement," "Description of the Certificates" and "Description of Credit Support." IF THE MORTGAGED PROPERTY IS SUBJECT TO A LEASE, THE LENDER IS SUBJECT TO THE RISK THAT IF THE BORROWER DEFAULTS, THE MORTGAGE LENDER MAY HAVE TO OBTAIN A COURT ORDER APPOINTING A RECEIVER BEFORE BEING ABLE TO COLLECT RENTS. 11 Each mortgage loan secured by mortgaged property that is subject to leases typically will be secured by an assignment of leases and rents. This means that the borrower assigns to the lender its right, title and interest as landlord under the leases of the related mortgaged property, and the income derived from it, as further security for the related mortgage loan. The borrower may continue to collect rents for so long as there is no default. If the borrower defaults, the lender is entitled to collect rents. Some state laws may require that the lender take possession of the mortgaged property and obtain a judicial appointment of a receiver before becoming entitled to collect the rents. In addition, if bankruptcy or similar proceedings are commenced by or in respect of the borrower, the lender's ability to collect the rents may be adversely affected. For more detailed information regarding leases and rents, you should review the section in this prospectus titled "Legal Aspects of Mortgage Loans--Leases and Rents." OWNERS AND OPERATORS OF A MORTGAGED PROPERTY AND MORTGAGE LENDERS MAY BECOME LIABLE FOR THE COSTS OF ENVIRONMENTAL CLEANUP. Under federal law and the laws of some states, contamination of real property may give rise to a lien on the property to assure the costs of cleanup. In several states, such a lien has priority over an existing mortgage lien on that property. In addition, under various federal, state and local laws, ordinances and regulations, an owner or operator of real estate may be liable for the costs of removal or remediation of hazardous substances or toxic substances on, in, beneath, or emanating from that property. The owner may become liable without regard to whether the owner knew of, or was responsible for, the presence of hazardous or toxic substances on the property. The cost of any required remediation and the owner or operator's liability as to any property could exceed the value of the mortgaged property and the aggregate assets of the owner or operator. In addition, owners or operators of mortgaged properties that generate hazardous substances that are disposed of at off-site locations may be held strictly, jointly and severally liable if there are releases or threatened releases of hazardous substances at the off-site locations where the hazardous substances were disposed. Lenders whose primary indicia of ownership in a particular property is the holding of a security interest are exempted from the definition of owner under the federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980. However, lenders may forfeit their secured creditor exemption, as a result of their actions with respect to particular borrowers, and be deemed an owner or operator of property so that they are liable for remediation costs. A lender also risks liability for remediation costs on foreclosure of the mortgage. Unless otherwise specified in the related prospectus supplement, if a trust fund includes mortgage loans, then the related pooling and servicing agreement will contain provisions generally to the effect that the servicer, acting on behalf of the trust fund, may not acquire title to a mortgaged property or assume control of its operation unless the servicer, based upon a report prepared by a person who regularly conducts environmental audits, has made the determination that it is appropriate to do so. We cannot assure you that any requirements of a pooling and servicing agreement will effectively insulate the related trust fund from potential liability for a materially adverse environmental condition at a mortgaged property. For more detailed information regarding environmental risks, you should review the section in this prospectus titled "Legal Aspects of Mortgage Loans--Environmental Risks." HAZARD INSURANCE POLICIES ON MORTGAGED PROPERTIES MAY NOT FULLY COVER ALL TYPES OF DAMAGE TO THE MORTGAGED PROPERTIES. Unless otherwise specified in a prospectus supplement, the servicer will be required to cause the borrower on each mortgage loan to maintain insurance coverage in respect of the related mortgaged property, including hazard insurance. However, the servicer may be able to satisfy its obligation to cause hazard insurance to be maintained through acquisition of a blanket policy. In general, the standard form of fire and extended coverage policy covers physical damage to or destruction of the improvements of the property by fire, lightning, explosion, smoke, windstorm and hail, and riot, strike and civil commotion, subject to the conditions and exclusions specified in each policy. The insurance policies will be underwritten by different insurers under different state laws in accordance with different applicable state forms, and therefore will not contain identical terms and conditions. Most insurance policies, however, typically do not cover any physical damage resulting from war, revolution, governmental actions, floods and other water-related causes, earth movement (including earthquakes, landslides and mudflows), wet or dry rot, vermin, domestic animals and some other kinds of risks. Unless the related mortgage specifically requires the mortgagor to insure against physical damage arising from causes not typically covered by an insurance policy, then, to the extent any consequent losses are not covered by the available credit support, you may in part bear the resulting losses. 12 For more detailed information regarding insurance policies, you should review the section in this prospectus titled "Description of the Pooling and Servicing Agreements--Hazard Insurance Policies." THE YIELD ON YOUR CERTIFICATES MAY BE ADVERSELY AFFECTED TO THE EXTENT THAT THE RELATED TRUST FUND MAY INCLUDE DELINQUENT MORTGAGE LOANS BECAUSE THE AVAILABLE CREDIT SUPPORT MAY NOT COVER ALL LOSSES RELATED TO THE DELINQUENT MORTGAGE LOANS. The trust fund for a particular series of certificates may include mortgage loans that are past-due, i.e., beyond any applicable grace period. However, delinquent mortgage loans may only constitute up to, but not including, 20% (by principal balance) of the trust fund. A special servicer may perform the servicing of delinquent mortgage loans. When a mortgage loan has a loan-to-value ratio of 100% or more, the related borrower will have no equity in the related mortgaged property. In these cases, the related borrower may not have an incentive to continue to perform under that mortgage loan. In addition, when the debt service coverage ratio of a mortgage loan is below 1.0x, the revenue derived from the use and operation of the related mortgaged property is insufficient to cover the operating expenses of the mortgaged property and to pay debt service on that mortgage loan and all mortgage loans senior to that mortgage loan. In those cases, the related borrower will be required to pay from sources other than cash flow from the related mortgaged property. If the related borrower ceases to use alternative cash sources at a time when operating revenue from the related mortgaged property is still insufficient to cover all expenses and debt service, deferred maintenance at the related mortgaged property and/or a default under the subject mortgage loan may occur. Available credit may not cover all losses related to delinquent mortgage loans. You should therefore consider the risk that the inclusion of delinquent mortgage loans in the trust fund may adversely affect the rate of defaults and prepayments on the mortgage assets in the trust fund and the yield on the offered certificates. For more detailed information regarding delinquent mortgage loans, you should review the section in this prospectus titled "Description of the Trust Funds--Mortgage Loans--General." A WORD ABOUT FORWARD LOOKING STATEMENTS. Whenever we use words like "intends," "anticipates" or "expects" or similar words in this prospectus, we are making a forward-looking statement, or a projection of what we think will happen in the future. Forward-looking statements are inherently subject to a variety of circumstances, many of which are beyond our control that could cause actual results to differ materially from what we think they might be. Any forward-looking statements in this prospectus speak only as of the date of this prospectus. We do not assume any responsibility to update or review any forward-looking statement or to reflect any change in events, conditions or circumstances on which we have based any forward-looking statement. DESCRIPTION OF THE TRUST FUNDS GENERAL The primary assets of each trust fund will consist of the following: o various types of multifamily or commercial mortgage loans; o pass-through certificates or other mortgage-backed securities ("MBS") that evidence interests in, or that are secured by pledges of, one or more of various types of multifamily or commercial mortgage loans; or o a combination of the foregoing, which we call mortgage assets. We will establish each trust fund. We will select each mortgage asset for inclusion in a trust fund from among those purchased, either directly or indirectly, from a mortgage asset seller, which may or may not be the originator of a mortgage loan or the issuer of a MBS and may be our affiliate. Unless otherwise provided in the related prospectus supplement, neither we nor any of our affiliates and no governmental agency or instrumentality or any other person will guarantee or insure any of the mortgage assets included in a trust fund. The discussion below under the heading "--Mortgage Loans," unless otherwise noted, applies equally to mortgage loans underlying any MBS included in a particular trust fund. 13 MORTGAGE LOANS General. The mortgage loans will be evidenced by promissory notes or other evidences of indebtedness called mortgage notes, secured by liens on fee or leasehold estates in properties called mortgaged properties consisting of the following: o residential properties consisting of five or more rental or cooperatively owned dwelling units in high-rise, mid-rise or garden apartment buildings or other residential structures, called multifamily properties, and manufactured housing community properties; o commercial properties consisting of office buildings, retail facilities related to the sale of goods and products and facilities related to providing entertainment, recreation or personal services, hotels and motels, casinos, health care-related facilities, recreational vehicle parks, convenience and gasoline stores, warehouse facilities, mini-warehouse facilities, self-storage facilities, industrial facilities, parking lots, auto parks, golf courses, arenas and restaurants, or any cooperatively owned units therein; and o mixed use properties--that is, any combination of the foregoing--and unimproved land, both called commercial properties. The multifamily properties may include mixed commercial and residential structures, and apartment buildings owned by a private cooperative housing corporation, with shares of the cooperative allocable to one or more dwelling units occupied by non-owner tenants or to vacant units. The liens may be created by mortgages, deeds of trust and similar security instruments. Each mortgage will create a first priority or junior priority mortgage lien on a borrower's fee estate in a mortgaged property. If a mortgage creates a lien on a borrower's leasehold estate in a property, then, unless otherwise specified in the related prospectus supplement, the term of any leasehold will exceed the term of the mortgage note by at least two years. Unless otherwise specified in the related prospectus supplement, each mortgage loan will have been originated by a person other than us; however, the originator may be or may have been one of our affiliates. Mortgage assets for a series of certificates may include mortgage loans made on the security of real estate projects under construction. In that case, the related prospectus supplement will describe the procedures and timing for making disbursements from construction reserve funds as portions of the related real estate project are completed. In addition, some of the mortgage loans included in the trust fund for a particular series of certificates may be delinquent or non-performing as of the date those certificates are issued. In that case, the related prospectus supplement will set forth available information as to the period of the delinquency or non-performance, any forbearance arrangement then in effect, the condition of the related mortgaged property and the ability of the mortgaged property to generate income to service the mortgage debt. Mortgage Loans Secured by Office Properties. Significant factors affecting the value of office properties include the quality of the tenants in the building, the physical attributes of the building in relation to competing buildings, the location of the building with respect to the central business district or population centers, demographic trends within the metropolitan area to move away from or towards the central business district, social trends combined with space management trends, which may change towards options such as telecommuting, tax incentives offered to businesses by cities or suburbs adjacent to or near the city where the building is located and the strength and stability of the market area as a desirable business location. Office properties may be adversely affected by an economic decline in the businesses operated by their tenants. The risk of an economic decline is increased if revenue is dependent on a single tenant or if there is a significant concentration of tenants in a particular business or industry. Office properties are also subject to competition with other office properties in the same market. Competition is affected by various factors affecting a building, including: o its age; o its condition; o its design, including floor sizes and layout; 14 o its access to transportation; and o the availability of parking and the owner's ability to offer certain amenities to its tenants, including sophisticated building systems such as o fiber optic cables, o satellite communications or o other base building technological features. Office properties that are not equipped to accommodate the needs of modern business may become functionally obsolete and thus non-competitive. The success of an office property also depends on the local economy. A company's decision to locate office headquarters in a given area, for example, may be affected by an array of factors including: o labor cost and quality; o tax environment; and o quality of life matters, such as schools and cultural amenities. A central business district may have a substantially different economy from that of a suburb. The local economy will affect an office property's ability to attract stable tenants on a consistent basis. In addition, the cost of refitting office space for a new tenant is often higher than for other property types. Mortgage Loans Secured by Retail Properties. Retail properties generally derive all or a substantial percentage of their income from lease payments from commercial tenants. Income from and the market value of retail properties is dependent on various factors including, but not limited, to the following: o the ability to lease space in the properties; o the ability of tenants to meet their lease obligations; o the possibility of a significant tenant becoming bankrupt or insolvent; and o fundamental aspects of real estate such as location and market demographics. The correlation between the success of tenant businesses and property value is more direct with respect to retail properties than other types of commercial property because a significant component of the total rent paid by retail tenants is often tied to a percentage of gross sales. Declines in tenant sales will cause a corresponding decline in percentage rents and may cause these tenants to become unable to pay their rent or other occupancy costs. The default by a tenant under its lease could result in delays and costs in enforcing the lessor's rights. Repayment of the related mortgage loans will be affected by the expiration of space leases and the ability of the respective borrowers to renew or relet the space on comparable terms. Even if vacated space is successfully relet, the costs associated with reletting, including tenant improvements, leasing commissions and free rent, could be substantial and could reduce cash flow from the retail properties. The correlation between the success of tenant businesses and property value is increased when the property is a single tenant property. Whether a shopping center is anchored or unanchored is also an important distinction. Anchor tenants in shopping centers traditionally have been a major factor in the public's perception of a shopping center. The anchor tenants at a shopping center play an important part in generating customer traffic and making a center a desirable location for other tenants of the center. The failure of an anchor tenant to renew its lease, the termination of an anchor tenant's lease, the bankruptcy or economic decline of an anchor tenant, or the cessation of the business of an anchor tenant--notwithstanding any continued payment of rent--can have a material negative effect on the 15 economic performance of a shopping center. Furthermore, the correlation between the success of tenant businesses and property value is increased when the property is a single tenant property. Retail properties, including quick service restaurants and convenience and gasoline facilities in particular, can also be significantly dependent on operational factors, such as the availability of trained labor and changes in prices for key commodities. In addition, such uses may be subject to franchise agreement restrictions on transfers or other operational aspects. Unlike some other types of commercial properties, retail properties also face competition from sources outside a given real estate market. Catalogue retailers, home shopping networks, telemarketing, selling through the Internet, and outlet centers all compete with more traditional retail properties for consumer dollars. Continued growth of these alternative retail outlets, which are often characterized by lower operating costs, could adversely affect the retail properties. Mortgage Loans Secured by Multifamily Rental Properties. Significant factors determining the value and successful operation of a multifamily rental property include the following: o location of the property; o the number of competing residential developments in the local market, such as apartment buildings, manufactured housing communities and site-built single family homes; o the physical attributes of the multifamily building, such as its age and appearance; and o state and local regulations affecting the property. In addition, the successful operation of an apartment building will depend upon other factors such as its reputation, the ability of management to provide adequate maintenance and insurance, and the types of services it provides. Some states regulate the relationship of an owner and its tenants. Commonly, these laws require a written lease, good cause for eviction, disclosure of fees, and notification to residents of changed land use, while prohibiting unreasonable rules, retaliatory evictions and restrictions on a resident's choice of unit vendors. Apartment building owners have been the subject of suits under state "Unfair and Deceptive Practices Acts" and other general consumer protection statutes for coercive, abusive or unconscionable leasing and sales practices. A few states offer more significant protection. For example, there are provisions that limit the basis on which a landlord may terminate a tenancy or increase its rent or prohibit a landlord from terminating a tenancy solely by reason of the sale of the owner's building. In addition to state regulation of the landlord-tenant relationship, numerous counties and municipalities impose rent control on apartment buildings. These ordinances may limit rent increases to fixed percentages, to percentages of increases in the consumer price index, to increases set or approved by a governmental agency, or to increases determined through mediation or binding arbitration. In many cases, the rent control laws do not provide for decontrol of rental rates upon vacancy of individual units. Any limitations on a borrower's ability to raise property rents may impair the borrower's ability to repay its mortgage loan from its net operating income or the proceeds of a sale or refinancing of the related mortgaged property. Adverse economic conditions, either local, regional or national, may limit the amount of rent that can be charged, may adversely affect tenants' ability to pay rent and may result in a reduction in timely rent payments or a reduction in occupancy levels. Occupancy and rent levels may also be affected by construction of additional housing units, local military base closings, company relocations and closings and national and local politics, including current or future rent stabilization and rent control laws and agreements. Multifamily apartment units are typically leased on a short-term basis, and consequently, the occupancy rate of a multifamily rental property may be subject to rapid decline, including for some of the foregoing reasons. In addition, the level of mortgage interest rates may encourage tenants to purchase single-family housing rather than continue to lease housing. The location and construction quality of a particular building may affect the occupancy 16 level as well as the rents that may be charged for individual units. The characteristics of a neighborhood may change over time or in relation to newer developments. Mortgage Loans Secured by Cooperatively Owned Apartment Buildings. A cooperative apartment building and the land under the building are owned or leased by a non-profit cooperative corporation. The cooperative corporation is in turn owned by tenant-shareholders who, through ownership of stock, shares or membership certificates in the corporation, receive proprietary leases or occupancy agreements. The proprietary leases and occupancy agreements confer exclusive rights to occupy specific apartments or units. Generally, a tenant-shareholder of a cooperative corporation must make a monthly maintenance payment to the corporation representing the tenant-shareholder's pro rata share of the corporation's payments in respect of any mortgage loan secured by, including all real property taxes, maintenance expenses and other capital and ordinary expenses with respect to, the real property owned by the cooperative corporation, less any other income that the cooperative corporation may realize. Payments to the cooperative corporation are in addition to any payments of principal and interest the tenant-shareholder must make on any loans of the tenant-shareholder secured by its shares in the corporation. A cooperative corporation is directly responsible for building management and payment of real estate taxes and hazard and liability insurance premiums. A cooperative corporation's ability to meet debt service obligations on a mortgage loan secured by the real property owned by the cooperative corporation, as well as all other operating expenses of the property, is dependent primarily upon the receipt of maintenance payments from the tenant-shareholders, together with any rental income from units or commercial space that the cooperative corporation might control. Unanticipated expenditures may in some cases have to be paid by special assessments on the tenant-shareholders. A cooperative corporation's ability to pay the amount of any balloon payment due at the maturity of a mortgage loan secured by the real property owned by the cooperative corporation depends primarily on its ability to refinance the mortgage loan. Neither we nor any other person will have any obligation to provide refinancing for any of the mortgage loans. In a typical cooperative conversion plan, the owner of a rental apartment building contracts to sell the building to a newly formed cooperative corporation. The owner or sponsor allocates shares to each apartment unit, and the current tenants have a fixed period to subscribe at prices discounted from the prices to be offered to the public after that period. As part of the consideration for the sale, the owner or sponsor receives all the unsold shares of the cooperative corporation. The sponsor usually also controls the corporation's board of directors and management for a limited period of time. Each purchaser of shares in the cooperative corporation generally enters into a long-term proprietary lease which provides the shareholder with the right to occupy a particular apartment unit. However, many cooperative conversion plans are so-called "non-eviction" plans. Under a non-eviction plan, a tenant at the time of conversion who chooses not to purchase shares is entitled to reside in the unit as a subtenant from the owner of the shares allocated to that apartment unit. Any applicable rent control or rent stabilization laws would continue to be applicable to that subtenancy. The subtenant may be entitled to renew its lease for an indefinite number of times, with continued protection from rent increases above those permitted by any applicable rent control and rent stabilization laws. The shareholder is responsible for the maintenance payments to the cooperative without regard to its receipt or non-receipt of rent from the subtenant, which may be lower than maintenance payments on the unit. Newly-formed cooperative corporations typically have the greatest concentration of non-tenant shareholders. Mortgage Loans Secured by Industrial Properties. Significant factors that affect the value of industrial properties are: o the quality of tenants; o building design and adaptability; and o the location of the property. Industrial properties may be adversely affected by reduced demand for industrial space occasioned by a decline in a particular industry segment and/or by a general slow-down in the economy, and an industrial property that suited the particular needs of its original tenant may be difficult to relet to another tenant or may become functionally obsolete relative to newer properties. Furthermore, industrial properties may be adversely affected by 17 the availability of labor sources or a change in the proximity of supply sources. Because industrial properties frequently have a single tenant, any related property is heavily dependent on the success of the tenant's business. Aspects of building site, design and adaptability affect the value of an industrial property. Site characteristics which are valuable to an industrial property include ceiling heights, column spacing, number of bays and bay depths, divisibility, floor loading capacities, truck turning radius and overall functionality and accessibility. Nevertheless, site characteristics of an industrial property suitable for one tenant may not be appropriate for other potential tenants, which may make it difficult to relet the property. 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. Further, industrial properties may be adversely affected by economic declines in the industry segment of their tenants. Mortgage Loans Secured by Warehouse, Mini-Warehouse and Self-Storage Facilities. Because of relatively low acquisition costs and break-even occupancy rates, warehouse, mini-warehouse and self-storage properties ("Storage Properties") are considered vulnerable to competition. Despite their relatively low acquisition costs, and because of their particular building characteristics, Storage Properties would require substantial capital investments in order to adapt them to alternative uses. Limited adaptability to other uses may substantially reduce the liquidation value of a Storage Property. In addition to competition, factors that affect the success of a Storage Property include the location and visibility of the facility, its proximity to apartment complexes or commercial users, trends of apartment tenants in the area moving to single-family homes, services provided, including security and accessibility, age of improvements, the appearance of the improvements and the quality of management. Mortgage Loans Secured by Hotel and Motel Properties. Hotel and motel properties may include full service hotels, resort hotels with many amenities, limited service hotels, hotels and motels associated with national franchise chains, hotels and motels associated with regional franchise chains and hotels that are not affiliated with any franchise chain but may have their own brand identity. Various factors, including location, quality and franchise affiliation affect the economic performance of a hotel or motel. Adverse economic conditions, either local, regional or national, may limit the amount that can be charged for a room and may result in a reduction in occupancy levels. The construction of competing hotels and motels can have similar effects. To meet competition in the industry and to maintain economic values, continuing expenditures must be made for modernizing, refurbishing, and maintaining existing facilities prior to the expiration of their anticipated useful lives. Because hotel and motel rooms generally are rented for short periods of time, hotels and motels tend to respond more quickly to adverse economic conditions and competition than do other commercial properties. Furthermore, the financial strength and capabilities of the owner and operator of a hotel or motel may have an impact on quality of service and economic performance. Additionally, the lodging industry, in certain locations, is seasonal in nature and this seasonality can be expected to cause periodic fluctuations in room and other revenues, occupancy levels, room rates and operating expenses. The demand for particular accommodations may also be affected by changes in travel patterns caused by changes in energy prices, strikes, relocation of highways, the construction of additional highways and other factors. The viability of any hotel or motel property that is part of a national or regional hotel or motel chain depends in part on the continued existence and financial strength of the franchisor, the public perception of the franchise service mark and the duration of the franchise licensing agreement. The transferability of franchise license agreements may be restricted and, in the event of a foreclosure on any related hotel or motel property, the consent of the franchisor for the continued use of the franchise license by the hotel or motel property would be required. Conversely, a lender may be unable to remove a franchisor that it desires to replace following a foreclosure. Further, in the event of a foreclosure on a hotel or motel property, it is unlikely that the purchaser of the related hotel or motel property would be entitled to the rights under any associated liquor license, and the purchaser would be required to apply in its own right for that license. There can be no assurance that a new license could be obtained or that it could be obtained promptly. Mortgage Loans Secured by Manufactured Housing Community Properties and Recreational Vehicle Parks. Manufactured housing community properties consist of land that is divided into "spaces" or "homesites" that are primarily leased to manufactured housing community unit owners. Accordingly, the related mortgage loans will be secured by mortgage liens on the real estate, or a leasehold interest therein, upon which the manufactured housing community units are situated, but not the units themselves. The manufactured housing community unit owner often 18 invests in site-specific improvements, including carports, steps, fencing, skirts around the base of the unit, and landscaping. The park owner typically provides private roads within the park, common facilities and, in many cases, utilities. Park amenities may include: o driveways; o visitor parking; o recreational vehicle and pleasure boat storage; o laundry facilities; o community rooms; o swimming pools; o tennis courts; o security systems; and o health clubs. Due to relocation costs and, in some cases, demand for manufactured housing community unit spaces, the value of a unit in place in a park is generally higher, and can be significantly higher, than the value of the same unit not placed in a park. As a result, a well-operated manufactured housing community that has achieved stabilized occupancy is typically able to maintain occupancy at or near that level. For the same reason, a lender that provided financing for the unit of a tenant who defaulted in his or her space rent generally has an incentive to keep rental payments current until the mobile home can be resold in place, rather than to allow the unit to be removed from the park. Recreational vehicle parks lease spaces primarily or exclusively for motor homes, travel trailers and portable truck campers primarily designed for recreational, camping or travel use. In general, parks that lease recreational vehicle spaces can be viewed as having a less stable tenant population than parks occupied predominantly by mobile homes. However, it is not unusual for the owner of a recreational vehicle to leave the vehicle at the park on a year-round basis or to use the vehicle as low cost housing and reside in the park indefinitely. Mortgage loans secured by liens on manufactured housing community properties and recreational vehicle parks are affected by factors not associated with loans secured by liens on other types of income-producing real estate. The successful operation of these types of properties will generally depend upon the number of competing parks, as well as upon other factors, including its age, appearance, reputation, the ability of management to provide adequate maintenance and insurance, and the types of facilities and services it provides. Manufactured housing community properties also compete against alternative forms of residential housing, including: o multifamily rental properties; o cooperatively-owned apartment buildings; o condominium complexes; and o single-family residential developments. Recreational vehicle parks also compete against alternative forms of recreation and short-term lodging, for example, staying at a hotel at the beach. Manufactured housing community properties and recreational vehicle parks are "special purpose" properties that cannot be readily converted to general residential, retail or office use. Thus, if the operation of a manufactured housing community or recreational vehicle park 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 the manufactured housing community may be substantially 19 less, relative to the amount owing on the mortgage loan, than would be the case if the manufactured housing community or recreational vehicle park were readily adaptable to other uses. Certain states regulate the relationship of a manufactured housing community owner and its tenants. Commonly, these laws require a written lease, good cause for eviction, disclosure of fees, and notification to residents of changed land use, while prohibiting unreasonable rules, retaliatory evictions, and restrictions on a resident's choice of unit vendors. Manufactured housing community owners have been the subject of suits under state "Unfair and Deceptive Practices Acts" and other general consumer protection statutes for coercive, abusive or unconscionable leasing and sales practices. A few states offer more significant protection. For example, there are provisions that limit the basis on which a landlord may terminate a unit owner's tenancy or increase its rent or prohibit a landlord from terminating a tenancy solely by reason of the sale of the owner's unit. Certain states also regulate changes in manufactured housing community use and require that the landlord give written notice to its tenants a substantial period of time prior to the projected change. In addition to state regulation of the landlord-tenant relationship, numerous counties and municipalities impose rent control on manufactured housing communities. These ordinances may limit rent increases to fixed percentages, to percentages of increases in the consumer price index, to increases set or approved by a governmental agency, or to increases determined through mediation or binding arbitration. In many cases, the rent control laws either do not provide for decontrol of rental rates upon vacancy of individual units or permit decontrol only in the relatively rare event that the unit is removed from the unit site. Any limitations on a borrower's ability to raise property rents may impair the related borrower's ability to repay its mortgage loan from its net operating income or the proceeds of a sale or refinancing of the related mortgaged property. Default and Loss Considerations with Respect to the Mortgage Loans. Mortgage loans secured by liens on income-producing properties are substantially different from loans made on the security of owner-occupied single-family homes. The repayment of a loan secured by a lien on an income-producing property is typically dependent upon the successful operation of that property--that is, its ability to generate income. Moreover, some or all of the mortgage loans included in a particular trust fund may be non-recourse loans. Absent special facts, recourse in the case of default of non-recourse loans will be limited to the mortgaged property and the other assets, if any, that were pledged to secure repayment of the mortgage loan. Lenders typically look to the Debt Service Coverage Ratio of a loan secured by income-producing property as an important factor in evaluating the risk of default on such a loan. The Net Operating Income of a mortgaged property will fluctuate over time and may or may not be sufficient to cover debt service on the related mortgage loan at any given time. As the primary source of the operating revenues of a non-owner occupied, income-producing property, rental income--and, with respect to a mortgage loan secured by a cooperative apartment building, maintenance payments from tenant-stockholders of a cooperative--may be affected by the condition of the applicable real estate market and/or the economy of the area in which the mortgaged property is located or the industry that it services. In addition, properties typically leased, occupied or used on a short-term basis, such as some healthcare-related facilities, hotels and motels, and mini-warehouse and self-storage facilities, tend to be affected more rapidly by changes in market or business conditions than do properties typically leased for longer periods, such as warehouses, retail stores, office buildings and industrial plants. Commercial properties may be owner-occupied or leased to a small number of tenants. Thus, the Net Operating Income of such a mortgaged property may depend substantially on the financial condition of the borrower or a tenant, and mortgage loans secured by liens on those properties may pose greater risks than loans secured by liens on multifamily properties or on multi-tenant commercial properties. Increases in operating expenses due to the general economic climate or economic conditions in a locality or industry segment, such as increases in interest rates, real estate tax rates, energy costs, labor costs and other operating expenses, and/or to changes in governmental rules, regulations and fiscal policies, may also affect the risk of default on a mortgage loan. As may be further described in the related prospectus supplement, in some cases leases of mortgaged properties may provide that the lessee, rather than the borrower/landlord, is responsible for payment of operating expenses. However, the existence of net of expense provisions will result in stable Net Operating Income to the borrower/landlord only to the extent that the lessee is able to absorb operating expense increases while continuing to make rent payments. 20 Lenders also look to the Loan-to-Value Ratio of a mortgage loan as a factor in evaluating risk of loss if a property must be liquidated following a default. The lower the Loan-to-Value Ratio, the greater the percentage of the borrower's equity in a mortgaged property. This in turn has the following effects: o it increases the incentive of the borrower to perform under the terms of the related mortgage loan, in order to protect the equity; and o it increases the cushion provided to the lender against loss on liquidation following a default. Loan-to-Value Ratios will not necessarily constitute an accurate measure of the risk of liquidation loss in a pool of mortgage loans. For example, the value of a mortgaged property as of the date of initial issuance of the related series of certificates may be less than the Value determined at loan origination, and will likely continue to fluctuate from time to time based upon changes in economic conditions, the real estate market and other factors described in this prospectus. Moreover, even when current, an appraisal is not necessarily a reliable estimate of value. Appraised values of income-producing properties are generally based on: o the market comparison method, i.e., recent resale value of comparable properties at the date of the appraisal; o the cost replacement method, i.e., the cost of replacing the property at the date; o the income capitalization method, i.e., a projection of value based upon the property's projected net cash flow; or o upon a selection from or interpolation of the values derived from the foregoing methods. Each of these appraisal methods can present analytical difficulties. It is often difficult to find truly comparable properties that have recently been sold; the replacement cost of a property may have little to do with its current market value; and income capitalization is inherently based on inexact projections of income and expense and the selection of an appropriate capitalization rate and discount rate. Where more than one of these appraisal methods are used and provide significantly different results, an accurate determination of value and, correspondingly, a reliable analysis of default and loss risks, is even more difficult. While we believe that the foregoing considerations are important factors that generally distinguish loans secured by liens on income-producing real estate from single-family mortgage loans, there can be no assurance that all of the foregoing factors will in fact have been prudently considered by the originators of the mortgage loans, or that, for a particular mortgage loan, they are complete or relevant. For additional information regarding risks associated with mortgage loans, you should review the sections in this prospectus titled "Risk Factors--Risks Relating to the Mortgage Loans--Mortgage Loans are susceptible to numerous risks that may result in losses to you" and "--Mortgage loans with balloon payments involve the risk that borrowers may not be able to refinance the loan or sell the related property." Payment Provisions of the Mortgage Loans. Unless otherwise specified in the related prospectus supplement, all of the mortgage loans will have the following characteristics: o have had individual principal balances at origination of not less than $25,000; o have had original terms to maturity of not more than 40 years; and o provide for scheduled payments of principal, interest or both, to be made on specified dates, known as due dates, that occur monthly, quarterly, semi-annually or annually. A mortgage loan may also have the following characteristics: o provide for no accrual of interest or for accrual of interest thereon at an interest rate, known as a mortgage rate, that is fixed over its term or that adjusts from time to time, or that may be converted at the borrower's election from an adjustable to a fixed mortgage rate, or from a fixed to an adjustable mortgage rate; 21 o provide for level payments to maturity or for payments that adjust from time to time to accommodate changes in the mortgage rate or to reflect the occurrence of some events, and may permit negative amortization; o be fully amortizing or partially amortizing or non-amortizing, with a balloon payment due on its stated maturity date; and o prohibit over its term or for a certain period prepayments (the period of the prohibition is known as a lock-out period and its date of expiration is known as a lock-out date) and/or require payment of a premium or a yield maintenance penalty, more commonly known as a prepayment premium) in connection with some prepayments, in each case as described in the related prospectus supplement. A mortgage loan may also contain a provision that entitles the lender to a share of appreciation of the related mortgaged property, or profits realized from the operation or disposition of the related mortgaged property or the benefit, if any, resulting from the refinancing of the mortgage loan as described in the related prospectus supplement. If holders of any class or classes of offered certificates of a series will be entitled to all or a portion of an equity participation in addition to payments of interest on and/or principal of the offered certificates, the related prospectus supplement will describe the equity participation and the method or methods by which distributions relating to the equity participation will be made to the holders. Mortgage Loan Information in Prospectus Supplements. Each prospectus supplement will contain information pertaining to the mortgage loans in the related trust fund, which will generally be current as of a date specified in the related prospectus supplement. To the extent then applicable and specifically known to us, the prospectus supplement will include the following: 1. the aggregate outstanding principal balance and the largest, smallest and average outstanding principal balance of the mortgage loans; 2. the type or types of property that provide security for repayment of the mortgage loans; 3. the earliest and latest origination date and maturity date of the mortgage loans; 4. the original and remaining terms to maturity of the mortgage loans, or the respective ranges those terms to maturity, and the weighted average original and remaining terms to maturity of the mortgage loans; 5. the original Loan-to-Value Ratios of the mortgage loans, or the range of those Loan-to-Value Ratios, and the weighted average original Loan-to-Value Ratio of the mortgage loans; 6. the mortgage rates borne by the mortgage loans, or range of those mortgage rates, and the weighted average mortgage rate borne by the mortgage loans; 7. with respect to mortgage loans with adjustable mortgage rates ("ARM Loans"), the index or indices upon which the adjustments are based, the adjustment dates, the range of gross margins and the weighted average gross margin, and any limits on mortgage rate adjustments at the time of any adjustment and over the life of the ARM Loan; 8. information regarding the payment characteristics of the mortgage loans, including, without limitation, balloon payment and other amortization provisions, lock-out periods and prepayment premiums; 9. the Debt Service Coverage Ratios of the mortgage loans, either at origination or as of a more recent date, or the range of those Debt Service Coverage Ratios, and the weighted average of the Debt Service Coverage Ratios; and 10. the geographic distribution of the mortgaged properties on a state-by-state basis. In appropriate cases, the related prospectus supplement will also contain some information available to us that pertains to the provisions of leases and the nature of tenants of the mortgaged properties. If we are unable to tabulate the specific information described above at the time offered certificates of a series are initially offered, more 22 general information of the nature described above will be provided in the related prospectus supplement, and specific information will be set forth in a report which will be available to purchasers of those certificates at or before their initial issuance and will be filed as part of a Current Report on Form 8-K with the SEC within fifteen days following their issuance. MBS Mortgage-backed securities included in a trust fund may include: o mortgage pass-through certificates or other mortgage-backed securities that are not guaranteed or insured by the United States or any of its agencies or instrumentalities; or o certificates insured or guaranteed by FHLMC, FNMA, GNMA or FAMC provided that, unless otherwise specified in the related prospectus supplement, each MBS will evidence an interest in, or will be secured by a pledge of, mortgage loans that conform to the descriptions of the mortgage loans contained in this prospectus. Any MBS will have been issued pursuant to a participation and servicing agreement, a pooling and servicing agreement, an indenture or similar agreement. The issuer of the MBS and/or the servicer of the underlying mortgage loans will have entered into the MBS agreement, generally with a trustee or, in the alternative, with the original purchaser or purchasers of the MBS. The MBS may have been issued in one or more classes with characteristics similar to the classes of certificates described in this prospectus. Distributions in respect of the MBS will be made by the MBS issuer, the MBS servicer or the MBS trustee on the dates specified in the related prospectus supplement. The MBS issuer or the MBS servicer or another person specified in the related prospectus supplement may have the right or obligation to repurchase or substitute assets underlying the MBS after a certain date or under other circumstances specified in the related prospectus supplement. The MBS either will have been previously registered under the Securities Act of 1933, as amended, or each of the following will have been satisfied with respect to the MBS: (1) neither the issuer of the MBS nor any of its affiliates has a direct or indirect agreement, arrangement, relationship or understanding relating to the MBS and the related series of securities to be issued; (2) neither the issuer of the MBS nor any of its affiliates is an affiliate of the sponsor, depositor, issuing entity or underwriter of the related series of securities to be issued and (3) the depositor would be free to publicly resell the MBS without registration under the Securities Act of 1933, as amended. Reserve funds, subordination or other credit support similar to that described for the certificates under "Description of Credit Support" in this prospectus may have been provided with respect to the MBS. The type, characteristics and amount of credit support, if any, will be a function of the characteristics of the underlying mortgage loans and other factors and generally will have been established on the basis of the requirements of any rating agency that may have assigned a rating to the MBS, or by the initial purchasers of the MBS. The prospectus supplement for a series of certificates that evidence interests in MBS will specify, to the extent available, the following: 1. the aggregate approximate initial and outstanding principal amount and type of the MBS to be included in the trust fund; 2. the original and remaining term to stated maturity of the MBS, if applicable; 3. the pass-through or bond rate of the MBS or the formula for determining those rates; 4. the payment characteristics of the MBS; 5. the MBS issuer, MBS servicer and MBS trustee, as applicable; 6. a description of the credit support, if any; 23 7. the circumstances under which the related underlying mortgage loans, or the MBS themselves, may be purchased prior to their maturity; 8. the terms on which mortgage loans may be substituted for those originally underlying the MBS; 9. the type of mortgage loans underlying the MBS and, to the extent available to us and appropriate under the circumstances, any other information in respect of the underlying mortgage loans described under "--Mortgage Loans--Mortgage Loan Information in Prospectus Supplements"; 10. the characteristics of any cash flow agreements that relate to the MBS; 11. the market price of the MBS and the basis on which the market price was determined; and 12. if the issuer of the MBS is required to file reports under the Exchange Act of 1934, as amended, how to locate such reports of the MBS issuer. CERTIFICATE ACCOUNTS Each trust fund will include one or more accounts established and maintained on behalf of the certificateholders into which the person or persons designated in the related prospectus supplement will, to the extent described in this prospectus and in the prospectus supplement, deposit all payments and collections received or advanced with respect to the mortgage assets and other assets in the trust fund. A certificate account may be maintained as an interest bearing or a non-interest bearing account, and funds held in a certificate account may be held as cash or invested in some obligations acceptable to each rating agency rating one or more classes of the related series of offered certificates. CREDIT SUPPORT If so provided in the prospectus supplement for a series of certificates, partial or full protection against some defaults and losses on the mortgage assets in the related trust fund may be provided to one or more classes of certificates of that series in the form of subordination of one or more other classes of certificates of the series or by credit support arrangements that may include cross-support provisions, letters of credit, insurance policies, guarantees, certificate insurance or surety bonds or reserve funds, or a combination. The amount and types of credit support, the identification of the entity providing it, if applicable, and related information with respect to each type of credit support, if any, will be set forth in the prospectus supplement for a series of certificates. For additional information regarding credit support, you should review the sections in this prospectus titled " Risk Factors--Risks Relating to the Mortgage Loans--Credit support for a series of certificates may cover some of your losses or risks but may not cover all potential risks to you" and "Description of Credit Support." CASH FLOW AGREEMENTS If so provided in the prospectus supplement for a series of certificates, the related trust fund may include guaranteed investment contracts pursuant to which moneys held in the funds and accounts established for that series will be invested at a specified rate. The trust fund may also include interest rate swap agreements, interest rate cap or floor agreements, or currency swap agreements, which agreements are designed to reduce the effects of interest rate or currency swap rate fluctuations on the mortgage assets on one or more classes of certificates. The principal terms of any guaranteed investment contract or interest rate swap agreement or interest rate cap or floor agreement or currency exchange agreement, and the identity of an obligor or counterparty under the agreement, will be described in the prospectus supplement for a series of certificates. YIELD AND MATURITY CONSIDERATIONS GENERAL The yield on any offered certificate will depend on the price paid by the certificateholder, the pass-through rate of the certificate and the amount and timing of distributions on the certificate. The following discussion 24 contemplates a trust fund that consists solely of mortgage loans. While the characteristics and behavior of mortgage loans underlying an MBS can generally be expected to have the same effect on the yield to maturity and/or weighted average life of a class of certificates as will the characteristics and behavior of comparable mortgage loans, the effect may differ due to the payment characteristics of the MBS. If a trust fund includes MBS, the related prospectus supplement will discuss the effect that the MBS payment characteristics may have on the yield to maturity and weighted average lives of the offered certificates of the related series. PASS-THROUGH RATE The certificates of any class within a series may have a fixed, variable or adjustable pass-through rate, which may or may not be based upon the interest rates borne by the mortgage loans in the related trust fund. The prospectus supplement with respect to any series of certificates will specify the pass-through rate for each class of offered certificates of the series or, in the case of a class of offered certificates with a variable or adjustable pass-through rate the prospectus supplement will specify, the method of determining the pass-through rate. The prospectus supplement will also discuss the effect, if any, of the prepayment of any mortgage loan on the pass-through rate of one or more classes of offered certificates and whether the distributions of interest on the offered certificates of any class will be dependent, in whole or in part, on the performance of any obligor under a guaranteed investment contract or other agreement. PAYMENT DELAYS With respect to any series of certificates, a period of time will elapse between the date upon which payments on the mortgage loans in the related trust fund are due and the distribution date on which the payments are passed through to certificateholders. That delay will effectively reduce the yield that would otherwise be produced if payments on those mortgage loans were distributed to certificateholders on or near the date they were due. SHORTFALLS IN COLLECTIONS OF INTEREST AS A RESULT OF PREPAYMENTS OF MORTGAGE LOANS When a principal prepayment in full or in part is made on a mortgage loan, the borrower is generally charged interest on the amount of the prepayment only through the date of the prepayment, instead of through the due date for the next succeeding scheduled payment. However, interest accrued on any series of certificates and distributable on any distribution date will generally correspond to interest accrued on the mortgage loans to their respective due dates during the related Due Period. Consequently, if a prepayment on any mortgage loan is distributable to certificateholders on a particular distribution date, but the prepayment is not accompanied by interest to the due date for the mortgage loan in the related Due Period, then the interest charged to the borrower, net of servicing and administrative fees, may be less than the corresponding amount of interest accrued and otherwise payable on the certificates of the related series. If and to the extent that any shortfall is allocated to a class of offered certificates, the yield on those certificates will be adversely affected. The prospectus supplement for each series of certificates will describe the manner in which any prepayment interest shortfalls will be allocated among the classes of certificates. If so specified in the prospectus supplement for a series of certificates, the servicer for that series will be required to apply some or all of its servicing compensation for the corresponding period to offset the amount of any prepayment interest shortfalls. The related prospectus supplement will also describe any other amounts available to offset shortfalls. For additional information regarding prepayment interest shortfalls, you should review the section in this prospectus titled "Description of the Pooling and Servicing Agreements--Servicing Compensation and Payment of Expenses." YIELD AND PREPAYMENT CONSIDERATIONS A certificate's yield to maturity will be affected by the rate of principal payments on the mortgage loans in the related trust fund and the allocation of those payments to reduce the principal balance--or notional amount, if applicable--of that certificate. The rate of principal payments on the mortgage loans in any trust fund will in turn be affected by their amortization schedules, the dates on which any balloon payments are due, and the rate of voluntary and/or involuntary principal prepayments. You should note that the amortization schedule of an ARM Loan may change periodically to accommodate adjustments to the mortgage rate thereon and that these changes may affect the 25 rate of principal payments on an ARM loan. Because the rate of principal prepayments on the mortgage loans in any trust fund will depend on future events and a variety of factors, as described more fully below, no assurance can be given as to the rate at which any one will prepay. The extent to which the yield to maturity of a class of offered certificates of any series may vary from the anticipated yield will depend upon the degree to which they are purchased at a discount or premium and when, and to what degree, payments of principal on the mortgage loans in the related trust fund are in turn distributed on the certificates of that series or, in the case of a class of stripped interest certificates, result in the reduction of its notional amount. You should consider, in the case of any offered certificate purchased at a discount, the risk that a slower than anticipated rate of principal payments on the mortgage loans in the related trust fund could result in an actual yield to you that is lower than the anticipated yield and, in the case of any offered certificate purchased at a premium, the risk that a faster than anticipated rate of principal payments on the mortgage loans could result in an actual yield to you that is lower than the anticipated yield. In addition, if you purchase an offered certificate at a discount, or a premium, and principal payments are made in reduction of the principal balance or notional amount of your offered certificates at a rate slower, or faster, than the rate anticipated by you during any particular period, the consequent adverse effects on your yield would not be fully offset by a subsequent like increase, or decrease, in the rate of principal payments. A class of certificates, including a class of offered certificates, may provide that on any distribution date the holders of those certificates are entitled to a pro rata share of the prepayments on the mortgage loans in the related trust fund that are distributable on the date, to a disproportionately large share--which, in some cases, may be all--of the prepayments, or to a disproportionately small share--which, in some cases, may be none--of the prepayments. As and to the extent described in the related prospectus supplement, the respective entitlements of the various classes of certificates of any series to receive distributions in respect of payments and, in particular, prepayments of principal of the mortgage loans in the related trust fund may vary based on the occurrence of some events, e.g., the retirement of one or more classes of certificates of the series, or subject to some contingencies, e.g., prepayment and default rates with respect to the mortgage loans. In general, the notional amount of a class of stripped interest certificates will either: o be based on the principal balances of some or all of the mortgage assets in the related trust fund; or o equal the certificate balances of one or more of the other classes of certificates of the same series. Accordingly, the yield on stripped interest certificates will be inversely related to the rate at which payments and other collections of principal are received on mortgage assets or distributions are made in reduction of the certificate balances of the certificates, as the case may be. Consistent with the foregoing, if a class of certificates of any series consists of stripped interest certificates or stripped principal certificates, a lower than anticipated rate of principal prepayments on the mortgage loans in the related trust fund will negatively affect the yield to investors in stripped principal certificates, and a higher than anticipated rate of principal prepayments on the mortgage loans will negatively affect the yield to investors in stripped interest certificates. If the offered certificates of a series include any of those certificates, the related prospectus supplement will include a table showing the effect of various assumed levels of prepayment on yields on those certificates. The tables will be intended to illustrate the sensitivity of yields to various assumed prepayment rates and will not be intended to predict, or to provide information that will enable you to predict, yields or prepayment rates. We are not aware of any relevant publicly available or authoritative statistics with respect to the historical prepayment experience of a group of multifamily or commercial mortgage loans. However, the extent of prepayments of principal of the mortgage loans in any trust fund may be affected by a number of factors, including, without limitation, the availability of mortgage credit, the relative economic vitality of the area in which the mortgaged properties are located, the quality of management of the mortgaged properties, the servicing of the mortgage loans, possible changes in tax laws and other opportunities for investment. In addition, the rate of principal payments on the mortgage loans in any trust fund may be affected by the existence of lock-out periods and requirements that principal prepayments be accompanied by prepayment premiums, and by the extent to which the provisions may be practicably enforced. 26 The rate of prepayment on a pool of mortgage loans is also affected by prevailing market interest rates for mortgage loans of a comparable type, term and risk level. When the prevailing market interest rate is below a mortgage coupon, a borrower may have an increased incentive to refinance its mortgage loan. Even in the case of ARM Loans, as prevailing market interest rates decline, and without regard to whether the mortgage rates on the ARM Loans decline in a manner consistent therewith, the related borrowers may have an increased incentive to refinance for purposes of either: o converting to a fixed rate loan and thereby locking in the rate; or o taking advantage of a different index, margin or rate cap or floor on another adjustable rate mortgage loan. Depending on prevailing market interest rates, the outlook for market interest rates and economic conditions generally, some borrowers may sell mortgaged properties in order to realize their equity therein, to meet cash flow needs or to make other investments. In addition, some borrowers may be motivated by federal and state tax laws--which are subject to change--to sell mortgaged properties prior to the exhaustion of tax depreciation benefits. We will make no representation as to the particular factors that will affect the prepayment of the mortgage loans in any trust fund, as to their relative importance, as to the percentage of the principal balance of mortgage loans that will be paid as of any date or as to the overall rate of prepayment on those mortgage loans. WEIGHTED AVERAGE LIFE AND MATURITY The rate at which principal payments are received on the mortgage loans in any trust fund will affect the ultimate maturity and the weighted average life of one or more classes of the certificates of the series. Weighted average life refers to the average amount of time that will elapse from the date of issuance of an instrument until each dollar allocable as principal of the instrument is repaid to the investor. The weighted average life and maturity of a class of certificates of any series will be influenced by the rate at which principal on the related mortgage loans, whether in the form of scheduled amortization or prepayments--for this purpose, the term prepayment includes voluntary prepayments, liquidations due to default and purchases of mortgage loans out of the related trust fund--is paid to that class. Prepayment rates on loans are commonly measured relative to a prepayment standard or model, such as the constant prepayment rate ("CPR") prepayment model or the standard prepayment assumption ("SPA") prepayment model. CPR represents an assumed constant rate of prepayment each month, expressed as an annual percentage, relative to the then outstanding principal balance of a pool of loans for the life of the related mortgage loans. SPA represents an assumed variable rate of prepayment each month, expressed as an annual percentage, relative to the then outstanding principal balance of a pool of loans, with different prepayment assumptions often expressed as percentages of SPA. For example, a prepayment assumption of 100% of SPA assumes prepayment rates of 0.2% per annum of the then outstanding principal balance of the loans in the first month of the life of the loans and an additional 0.2% per annum in each month thereafter until the thirtieth month. Beginning in the thirtieth month, and in each month thereafter during the life of the loans, 100% of SPA assumes a constant prepayment rate of 6% per annum each month. Neither CPR nor SPA nor any other prepayment model or assumption purports to be a historical description of prepayment experience or a prediction of the anticipated rate of prepayment of any particular pool of loans. Moreover, the CPR and SPA models were developed based upon historical prepayment experience for single-family loans. Thus, it is unlikely that the prepayment experience of the mortgage loans included in any trust fund will conform to any particular level of CPR or SPA. The prospectus supplement with respect to each series of certificates will contain tables, if applicable, setting forth the projected weighted average life of each class of offered certificates of the series. The prospectus supplement will also contain the percentage of the initial certificate balance or notional amount of each class of offered certificates that would be outstanding on specified distribution dates based on the assumptions stated in that prospectus supplement, including assumptions that prepayments on the related mortgage loans are made at rates corresponding to various percentages of CPR or SPA, or at other rates specified in the prospectus supplement. The tables and assumptions will illustrate the sensitivity of the weighted average lives of the certificates to various assumed prepayment rates and will not be intended to predict, or to provide information that will enable investors to predict, the actual weighted average lives of the certificates. 27 CONTROLLED AMORTIZATION CLASSES AND COMPANION CLASSES A series of certificates may include one or more controlled amortization classes, which will entitle the holders of those certificates to receive principal distributions according to a specified principal payment schedule. The principal payment schedule is supported by creating priorities, as and to the extent described in the related prospectus supplement, to receive principal payments from the mortgage loans in the related trust fund. Unless otherwise specified in the related prospectus supplement, each controlled amortization class will either be a planned amortization class or a targeted amortization class. In general, a planned amortization class has a prepayment collar--that is, a range of prepayment rates that can be sustained without disruption--that determines the principal cash flow of the certificates. A prepayment collar is not static, and may expand or contract after the issuance of the planned amortization class depending on the actual prepayment experience for the underlying mortgage loans. Distributions of principal on a planned amortization class would be made in accordance with the specified schedule so long as prepayments on the underlying mortgage loans remain at a relatively constant rate within the prepayment collar and, as described below, companion classes exist to absorb excesses or shortfalls in principal payments on the underlying mortgage loans. If the rate of prepayment on the underlying mortgage loans from time to time falls outside the prepayment collar, or fluctuates significantly within the prepayment collar, especially for any extended period of time, such an event may have material consequences in respect of the anticipated weighted average life and maturity for a planned amortization class. A targeted amortization class is structured so that principal distributions generally will be payable in accordance with its specified principal payments schedule so long as the rate of prepayments on the related mortgage assets remains relatively constant at the particular rate used in establishing the schedule. A targeted amortization class will generally afford the holders some protection against early retirement or some protection against an extended average life, but not both. Although prepayment risk cannot be eliminated entirely for any class of certificates, a controlled amortization class will generally provide a relatively stable cash flow so long as the actual rate of prepayment on the mortgage loans in the related trust fund remains relatively constant at the rate, or within the range of rates, of prepayment used to establish the specific principal payment schedule for those certificates. Prepayment risk with respect to a given mortgage asset pool does not disappear, however, and the stability afforded to a controlled amortization class comes at the expense of one or more companion classes of the same series, any of which companion classes may also be a class of offered certificates. In general, and as more particularly described in the related prospectus supplement, a companion class will entitle the holders of certificates in that class to a disproportionately large share of prepayments on the mortgage loans in the related trust fund when the rate of prepayment is relatively fast, and will entitle those holders to a disproportionately small share of prepayments on the mortgage loans in the related trust fund when the rate of prepayment is relatively slow. A class of certificates that entitles the holders to a disproportionately large share of the prepayments on the mortgage loans in the related trust fund enhances the risk of early retirement of that class, known as call risk, if the rate of prepayment is relatively fast; while a class of certificates that entitles its holders to a disproportionately small share of the prepayments on the mortgage loans in the related trust fund enhances the risk of an extended average life of that class, known as extension risk, if the rate of prepayment is relatively slow. Thus, as and to the extent described in the related prospectus supplement, a companion class absorbs some, but not all, of the call risk and/or extension risk that would otherwise belong to the related controlled amortization class if all payments of principal of the mortgage loans in the related trust fund were allocated on a pro rata basis. OTHER FACTORS AFFECTING YIELD, WEIGHTED AVERAGE LIFE AND MATURITY Balloon Payments; Extensions of Maturity. Some or all of the mortgage loans included in a particular trust fund may require that balloon payments be made at maturity. Because the ability of a borrower to make a balloon payment typically will depend upon its ability either to refinance the loan or to sell the related mortgaged property, there is a risk that mortgage loans that require balloon payments may default at maturity, or that the maturity of such a mortgage loan may be extended in connection with a workout. In the case of defaults, recovery of proceeds may be delayed by, among other things, bankruptcy of the borrower or adverse conditions in the market where the property is located. In order to minimize losses on defaulted mortgage loans, the servicer or a special servicer, to the extent and under the circumstances set forth in this prospectus and in the related prospectus supplement, may be authorized to modify mortgage loans that are in default or as to which a payment default is imminent. Any defaulted balloon payment or modification that extends the maturity of a mortgage loan may delay distributions of principal 28 on a class of offered certificates and thereby extend the weighted average life of the certificates and, if the certificates were purchased at a discount, reduce the yield thereon. Negative Amortization. The weighted average life of a class of certificates can be affected by mortgage loans that permit negative amortization to occur. A mortgage loan that provides for the payment of interest calculated at a rate lower than the rate at which interest accrues on those mortgage loan would be expected during a period of increasing interest rates to amortize at a slower rate, and perhaps not at all, than if interest rates were declining or were remaining constant. A slower rate of mortgage loan amortization would correspondingly be reflected in a slower rate of amortization for one or more classes of certificates of the related series. In addition, negative amortization on one or more mortgage loans in any trust fund may result in negative amortization on the certificates of the related series. The related prospectus supplement will describe, if applicable, the manner in which negative amortization in respect of the mortgage loans in any trust fund is allocated among the respective classes of certificates of the related series. Negative amortization allocated to a class of certificates may result in a deferral of some or all of the interest payable on those certificates, which deferred interest may be added to the certificate balance of those certificates. Accordingly, the weighted average lives of mortgage loans that permit negative amortization, and that of the classes of certificates to which any related negative amortization would be allocated or that would bear the effects of a slower rate of amortization on the mortgage loans, may increase as a result of this feature. Negative amortization also may occur in respect of an ARM Loan that limits the amount by which its scheduled payment may adjust in response to a change in its mortgage rate, provides that its scheduled payment will adjust less frequently than its mortgage rate or provides for constant scheduled payments notwithstanding adjustments to its mortgage rate. Conversely, during a period of declining interest rates, the scheduled payment on a mortgage loan may exceed the amount necessary to amortize the loan fully over its remaining amortization schedule thereby resulting in the accelerated amortization of the mortgage loan. Any related acceleration in amortization of its principal balance will shorten the weighted average life of a mortgage loan and, correspondingly, the weighted average lives of those classes of certificates entitled to a portion of the principal payments on the mortgage loan. The extent to which the yield on any offered certificate will be affected by the inclusion in the related trust fund of mortgage loans that permit negative amortization, will depend upon: o whether the offered certificate was purchased at a premium or a discount; and o the extent to which the payment characteristics of those mortgage loans delay or accelerate the distributions of principal on the certificate, or, in the case of a stripped interest certificate, delay or accelerate the amortization of its notional amount. For additional information on the effects of negative amortization on the yield of certificates, you should review the section titled "--Yield and Prepayment Considerations" above. Foreclosures and Payment Plans. The number of foreclosures and the principal amount of the mortgage loans that are foreclosed in relation to the number and principal amount of mortgage loans that are repaid in accordance with their terms will affect the weighted average lives of those mortgage loans and, accordingly, the weighted average lives of and yields on the certificates of the related series. Servicing decisions made with respect to the mortgage loans, including the use of payment plans prior to a demand for acceleration and the restructuring of mortgage loans in bankruptcy proceedings, may also have an effect upon the payment patterns of particular mortgage loans and thus the weighted average lives of and yields on the certificates of the related series. Losses and Shortfalls on the Mortgage Loans. The yield to holders of the offered certificates of any series will directly depend on the extent to which the holders are required to bear the effects of any losses or shortfalls in collections arising out of defaults on the mortgage loans in the related trust fund and the timing of the losses and shortfalls. In general, the earlier that any loss or shortfall occurs, the greater will be the negative effect on yield for any class of certificates that is required to bear its effects. The amount of any losses or shortfalls in collections on the mortgage assets in any trust fund, to the extent not covered or offset by draws on any reserve fund or under any instrument of credit support, will be allocated among the respective classes of certificates of the related series in the priority and manner, and subject to the limitations, 29 specified in the related prospectus supplement. As described in the related prospectus supplement, allocations of losses and shortfalls may be effected by a reduction in the entitlements to interest and/or certificate balances of one or more classes of certificates, or by establishing a priority of payments among those classes of certificates. The yield to maturity on a class of subordinate certificates may be extremely sensitive to losses and shortfalls in collections on the mortgage loans in the related trust fund. Additional Certificate Amortization. In addition to entitling the holders to a specified portion--which may during specified periods range from none to all--of the principal payments received on the mortgage assets in the related trust fund, one or more classes of certificates of any series, including one or more classes of offered certificates of the series, may provide for distributions of principal. Distributions may be provided from: o amounts attributable to interest accrued but not currently distributable on one or more classes of accrual certificates; o Excess Funds; or o any other amounts described in the related prospectus supplement. The amortization of any class of certificates out of the sources described in the preceding paragraph would shorten the weighted average life of the certificates and, if those certificates were purchased at a premium, reduce the yield on those certificates. The related prospectus supplement will discuss the relevant factors to be considered in determining whether distributions of principal of any class of certificates out of any of the foregoing sources would have any material effect on the rate at which the certificates are amortized. Optional Early Termination. If so specified in the related prospectus supplement, a series of certificates may be subject to optional early termination through the repurchase of the mortgage assets in the related trust fund under the circumstances and in the manner set forth in the prospectus supplement. If so provided in the related prospectus supplement, upon the reduction of the certificate balance of a specified class or classes of certificates by a specified percentage or amount, a party specified therein may be authorized or required to solicit bids for the purchase of all of the mortgage assets of the related trust fund, or of a sufficient portion of the mortgage assets to retire the class or classes, under the circumstances and in the manner set forth in the related prospectus supplement. In the absence of other factors, any early retirement of a class of offered certificates would shorten the weighted average life of the certificates and, if the certificates were purchased at premium, reduce the yield on those certificates. THE DEPOSITOR We are Bear Stearns Commercial Mortgage Securities Inc., a Delaware corporation organized on April 20, 1987, and we function as the depositor. Our primary business is to acquire mortgage loans, mortgage-backed securities and related assets and sell interests therein or bonds secured thereby. We are an affiliate of Bear, Stearns & Co. Inc. We maintain our principal office at 383 Madison Avenue, New York, New York 10179. Our telephone number is (212) 272-2000. We do not have, nor do we expect in the future to have, any significant assets. THE SPONSOR OVERVIEW The prospectus supplement for each series of securities will identify the sponsor or sponsors for the related series. The related prospectus supplement may identify a sponsor to be Bear Stearns Commercial Mortgage, Inc. ("BSCMI"). BSCMI is a wholly-owned subsidiary of The Bear Stearns Companies Inc. (NYSE: BSC), and is a New York corporation and an affiliate of Bear, Stearns & Co. Inc. The principal offices of BSCMI are located at 383 Madison Avenue, New York, New York 10179. BSCMI's telephone number is (212) 272-2000. BSCMI's primary business is the underwriting, origination and sale of mortgage loans secured by commercial or multifamily properties. BSCMI sells the great majority of the mortgage loans that it originates through commercial 30 mortgage backed securities ("CMBS") securitizations. BSCMI, with its commercial mortgage lending affiliates and predecessors, began originating commercial mortgage loans in 1995 and securitizing commercial mortgage loans in 1996. The commercial mortgage loans originated by BSCMI include both fixed and floating rate loans and both conduit loans and large loans. BSCMI primarily originates loans secured by retail, office, multifamily, hospitality, industrial and self-storage properties, but also originates loans secured by manufactured housing communities, theaters, land subject to a ground lease and mixed use properties. BSCMI originates loans in every state and in Puerto Rico, the U.S. Virgin Islands and Mexico. As a sponsor, BSCMI originates mortgage loans and, either by itself or together with other sponsors or loan sellers, initiates their securitization by transferring the mortgage loans to a depositor, which in turn transfers them to the issuing entity for the related securitization. In coordination with Bear, Stearns & Co. Inc. and other underwriters, BSCMI works with rating agencies, loan sellers and servicers in structuring the securitization transaction. BSCMI acts as sponsor, originator or mortgage loan seller both in transactions in which it is the sole sponsor and mortgage loan seller as well as in transactions in which other entities act as sponsor and/or mortgage loan seller. Multiple seller transactions in which BSCMI has participated to date include each of the prior series of certificates issued under the "TOP" program, in which BSCMI, Wells Fargo Bank, National Association, Principal Commercial Funding, LLC and Morgan Stanley Mortgage Capital Inc. ("MSMC") generally are mortgage loan sellers and sponsors, and Bear Stearns Commercial Mortgage Securities Inc., an affiliate of BSCMI (the "BSCMSI Depositor"), and Morgan Stanley Capital I Inc., which is an affiliate of MSMC, have alternately acted as depositor and the "PWR" program, in which BSCMI, Prudential Mortgage Capital Funding, LLC, Wells Fargo Bank, National Association, Principal Commercial Funding, LLC and Nationwide Life Insurance Company generally are mortgage loan sellers, and the BSCMSI Depositor acts as depositor. Neither BSCMI nor any of its affiliates acts as servicer of the commercial mortgage loans in its securitizations. Instead, BSCMI sells the right to be appointed servicer of its securitized mortgage loans to rating-agency approved servicers, including Wells Fargo Bank, National Association, the master servicer in this transaction, and Bank of America, N.A. BSCMI'S UNDERWRITING STANDARDS General. All of the BSCMI mortgage loans were originated by BSCMI or an affiliate of BSCMI, in each case, generally in accordance with the underwriting criteria summarized below. Each lending situation is unique, however, and the facts and circumstance surrounding the mortgage loan, such as the quality, tenancy and location of the real estate collateral, the sponsorship of the borrower, will impact the extent to which the general criteria are applied to a specific mortgage loan. The underwriting criteria are general, and there is no assurance that every mortgage loan will comply in all respects with the criteria. Mortgage Loan Analysis. The BSCMI credit underwriting team for each mortgage loan is comprised of real estate professionals from BSCMI. The underwriting team for each mortgage loan is required to conduct an extensive review of the related mortgaged property, including an analysis of the appraisal, engineering report, environmental report, historical property operating statements, rent rolls, current and historical real estate taxes, and a review of tenant leases. The credit and background of the borrower and certain key principals of the borrower are examined prior to approval of the mortgage loan. This analysis includes a review of historical financial statements (which are generally unaudited), historical income tax returns of the borrower and its principals, third-party credit reports, judgment, lien, bankruptcy and pending litigation searches. Borrowers generally are required to be special purpose entities. The credit of key tenants is also examined as part of the underwriting process. A member of the BSCMI underwriting team visits and inspects each property to confirm occupancy rates and to analyze the property's market and utility within the market. Loan Approval. Prior to commitment, all mortgage loans must be approved by a loan committee comprised of senior real estate professionals from BSCMI and its affiliates. The loan committee may either approve a mortgage loan as recommended, request additional due diligence, modify the terms, or reject a mortgage loan. Debt Service Coverage Ratio and LTV Ratio. BSCMI's underwriting criteria generally require the following minimum debt service coverage ratios and maximum loan to value ratios for each indicated property type: 31 PROPERTY TYPE DSCR GUIDELINE LTV RATIO GUIDELINE ------------------------------ -------------- ------------------- Multifamily 1.20x 80% Office 1.25x 75% Anchored Retail 1.20x 80% Unanchored Retail 1.30x 75% Self-storage 1.30x 75% Hotel 1.40x 70% Industrial 1.25x 70% Manufactured Housing Community 1.25x 75% Debt service coverage ratios are calculated based on anticipated Underwritten Net Cash Flow at the time of origination. Therefore, the debt service coverage ratio for each mortgage loan as reported elsewhere in this prospectus supplement may differ from the amount determined at the time of origination. Escrow Requirements. BSCMI generally requires a borrower to fund various escrows for taxes and insurance, replacement reserves and capital expenses. Generally, the required escrows for mortgage loans originated by BSCMI are as follows: Taxes and Insurance - Typically, a pro rated initial deposit and monthly deposits equal to 1/12 of the annual property taxes (based on the most recent property assessment and the current millage rate) and annual property insurance premium. REPLACEMENT RESERVES - MONTHLY DEPOSITS GENERALLY BASED ON THE GREATER OF THE AMOUNT RECOMMENDED PURSUANT TO A BUILDING CONDITION REPORT PREPARED FOR BSCMI OR THE FOLLOWING MINIMUM AMOUNTS: PROPERTY TYPE DSCR GUIDELINE ------------------------------ ----------------------------- Multifamily $250 per unit Office $0.20 per square foot Retail $0.15 per square foot Self-storage $0.15 per square foot Hotel 5% of gross revenue Industrial $0.10 - $0.15 per square foot Manufactured Housing Community $50 per pad Deferred Maintenance/Environmental Remediation - An initial deposit, upon funding of the mortgage loan, in an amount generally equal to 125% of the estimated costs of the recommended substantial repairs or replacements pursuant to the building condition report completed by a licensed engineer and the estimated costs of environmental remediation expenses as recommended by an independent environmental assessment. Re-tenanting - In some cases major leases expire within the mortgage loan term. To mitigate this risk, special reserves may be funded either at closing and/or during the mortgage loan term to cover certain anticipated leasing commissions or tenant improvement costs which may be associated with re-leasing the space occupied by these tenants. 32 USE OF PROCEEDS The net proceeds to be received from the sale of the certificates of any series will be applied by us to the purchase of trust assets or will be used by us for general corporate purposes. We expect to sell the certificates from time to time, but the timing and amount of offerings of certificates will depend on a number of factors, including the volume of mortgage assets acquired by us, prevailing interest rates, availability of funds and general market conditions. DESCRIPTION OF THE CERTIFICATES GENERAL Each series of certificates will represent the entire beneficial ownership interest in the trust fund created pursuant to the related pooling and servicing agreement. As described in the related prospectus supplement, the certificates of each series, including the offered certificates of any series, may consist of one or more classes of certificates that, among other things: o provide for the accrual of interest thereon at a fixed, variable or adjustable rate; o are senior or subordinate to one or more other classes of certificates in entitlement to distributions on the certificates; o are stripped principal certificates; o are stripped interest certificates; o provide for distributions of interest or principal that commence only after the occurrence of some events, such as the retirement of one or more other classes of certificates of the series; o provide for distributions of principal to be made, from time to time or for designated periods, at a rate that is faster--and, in some cases, substantially faster--or slower--and, in some cases, substantially slower--than the rate at which payments or other collections of principal are received on the mortgage assets in the related trust fund; o provide for distributions of principal to be made, subject to available funds, based on a specified principal payment schedule or other methodology; or o provide for distributions based on collections on the mortgage assets in the related trust fund attributable to prepayment premiums and equity participations. Each class of offered certificates of a series will be issued in minimum denominations corresponding to the principal balances or, in case of some classes of stripped interest certificates or residual certificates, notional amounts or percentage interests, specified in the related prospectus supplement. As provided in the related prospectus supplement, one or more classes of offered certificates of any series may be issued in fully registered, definitive form or may be offered in book-entry format through the facilities of DTC. The offered certificates of each series, if issued as definitive certificates, may be transferred or exchanged, subject to any restrictions on transfer described in the related prospectus supplement, at the location specified in the related prospectus supplement, without the payment of any service charges, other than any tax or other governmental charge payable in connection with the transfer. Interests in a class of book-entry certificates will be transferred on the book-entry records of DTC and its participating organizations. DISTRIBUTIONS Distributions on the certificates of each series will be made by or on behalf of the related trustee or servicer on each distribution date as specified in the related prospectus supplement from the Available Distribution Amount for 33 the series and the distribution date. The particular components of the Available Distribution Amount for any series on each distribution date will be more specifically described in the related prospectus supplement. Except as otherwise specified in the related prospectus supplement, distributions on the certificates of each series, other than the final distribution in retirement of any certificate, will be made to the persons in whose names the certificates are registered at the close of business on the last business day of the month preceding the month in which the applicable distribution date occurs. The amount of each distribution will be determined as of the close of business on the date specified in the related prospectus supplement. All distributions with respect to each class of certificates on each distribution date will be allocated pro rata among the outstanding certificates in that class. Payments will be made either by wire transfer in immediately available funds to the account of a certificateholder at a bank or other entity having appropriate facilities therefor or by check mailed to the address of the certificateholder as it appears in the certificate register. Payment will be made by wire transfer if the certificateholder has provided the person required to make payments with wiring instructions, which may be provided in the form of a standing order applicable to all subsequent distributions, no later than the date specified in the related prospectus supplement, and, if so provided in the related prospectus supplement, the certificateholder holds certificates in the requisite amount or denomination specified therein. If the certificateholder does not provide any wiring instructions, payments will be made by check mailed to the address of the certificateholder as it appears on the certificate register. The final distribution in retirement of any class of certificates, whether definitive certificates or book-entry certificates, will be made only upon presentation and surrender of the certificates at the location specified in the notice to certificateholders of the final distribution. DISTRIBUTIONS OF INTEREST ON THE CERTIFICATES Each class of certificates of each series, other than some classes of stripped principal certificates and some classes of residual certificates that have no pass-through rate, may have a different pass-through rate, which in each case may be fixed, variable or adjustable. The related prospectus supplement will specify the pass-through rate or, in the case of a variable or adjustable pass-through rate, the method for determining the pass-through rate, for each class. Unless otherwise specified in the related prospectus supplement, interest on the certificates of each series will be calculated on the basis of a 360-day year consisting of twelve 30-day months. Distributions of interest in respect of any class of certificates, other than some classes of accrual certificates, and other than any class of stripped principal certificates or residual certificates that is not entitled to any distributions of interest, will be made on each distribution date based on the Accrued Certificate Interest for the class and the distribution date, subject to the sufficiency of the portion of the Available Distribution Amount allocable to that class on the distribution date. Prior to the time interest is distributable on any class of accrual certificates, the amount of Accrued Certificate Interest otherwise distributable on that class will be added to the certificate balance of that class on each distribution date. Reference to a notional amount with respect to a class of stripped interest certificates is solely for convenience in making appropriate calculations and does not represent the right to receive any distributions of principal. If so specified in the related prospectus supplement, the amount of Accrued Certificate Interest that is otherwise distributable on--or, in the case of accrual certificates, that may otherwise be added to the certificate balance of those certificates--one or more classes of the certificates of a series will be reduced to the extent that any prepayment interest shortfalls, as described under "Yield and Maturity Considerations--Shortfalls in Collections of Interest as a Result of Prepayments of Mortgage Loans," exceed the amount of any sums--including, if and to the extent specified in the related prospectus supplement, all or a portion of the servicer's or special servicer's servicing compensation--that are applied to offset the amount of the shortfalls. The particular manner in which shortfalls will be allocated among some or all of the classes of certificates of that series will be specified in the related prospectus supplement. The related prospectus supplement will also describe the extent to which the amount of Accrued Certificate Interest that is otherwise distributable on--or, in the case of accrual certificates, that may otherwise be added to the certificate balance of--a class of offered certificates may be reduced as a result of any other contingencies, including delinquencies, losses and deferred interest on or in respect of the mortgage assets in the related trust fund. Unless otherwise provided in the related prospectus supplement, any reduction in the amount of Accrued Certificate Interest otherwise distributable on a class of certificates by reason of the allocation to the class of a portion of any deferred interest on or in respect of the mortgage assets in the related trust fund will result in a corresponding increase in the certificate balance of that class. 34 DISTRIBUTIONS OF PRINCIPAL ON THE CERTIFICATES Each class of certificates of each series, other than some classes of stripped interest certificates and some classes of residual certificates, will have a certificate balance which, at any time, will equal the then maximum amount that the holders of certificates of the class will be entitled to receive in respect of principal out of the future cash flow on the mortgage assets and other assets included in the related trust fund. The outstanding certificate balance of a class of certificates will be reduced by distributions of principal made from time to time and, if so provided in the related prospectus supplement, will be further reduced by any losses incurred in respect of the related mortgage assets allocated to these certificates from time to time. In turn, the outstanding certificate balance of a class of certificates may be increased as a result of any deferred interest on or in respect of the related mortgage assets being allocated to them from time to time, and will be increased, in the case of a class of accrual certificates prior to the distribution date on which distributions of interest thereon are required to commence, by the amount of any Accrued Certificate Interest, reduced as described above. Unless otherwise provided in the related prospectus supplement, the initial aggregate certificate balance of all classes of a series of certificates will not be greater than the aggregate outstanding principal balance of the related mortgage assets as of the applicable cut-off date, after application of scheduled payments due on or before the date, whether or not received. The initial certificate balance of each class of a series of certificates will be specified in the related prospectus supplement. As and to the extent described in the related prospectus supplement, distributions of principal with respect to a series of certificates will be made on each distribution date to the holders of the class or classes of certificates of the series who are entitled to receive those distributions until the certificate balances of the certificates have been reduced to zero. Distributions of principal with respect to one or more classes of certificates may be made at a rate that is faster, and, in some cases, substantially faster, than the rate at which payments or other collections of principal are received on the mortgage assets in the related trust fund. Distributions of principal with respect to one or more classes of certificates may not commence until the occurrence of one or more specified events, such as the retirement of one or more other classes of certificates of the same series, or may be made at a rate that is slower, and, in some cases, substantially slower, than the rate at which payments or other collections of principal are received on the mortgage assets in the related trust fund. Distributions of principal with respect to one or more classes of certificates--each such class is known as a controlled amortization class--may be made, subject to available funds, based on a specified principal payment schedule. Distributions of principal with respect to one or more classes of certificates--each such class is known as a companion class--may be contingent on the specified principal payment schedule for a controlled amortization class of the same series and the rate at which payments and other collections of principal on the mortgage assets in the related trust fund are received. Unless otherwise specified in the related prospectus supplement, distributions of principal of any class of offered certificates will be made on a pro rata basis among all of the certificates of that class. DISTRIBUTIONS ON THE CERTIFICATES IN RESPECT OF PREPAYMENT PREMIUMS OR IN RESPECT OF EQUITY PARTICIPATIONS If so provided in the related prospectus supplement, prepayment premiums or payments in respect of equity participations received on or in connection with the mortgage assets in any trust fund will be distributed on each distribution date to the holders of the class of certificates of the related series who are entitled in accordance with the provisions described in the prospectus supplement. ALLOCATION OF LOSSES AND SHORTFALLS The amount of any losses or shortfalls in collections on the mortgage assets in any trust fund, to the extent not covered or offset by draws on any reserve fund or under any instrument of credit support, will be allocated among the respective classes of certificates of the related series in the priority and manner, and subject to the limitations, specified in the related prospectus supplement. As described in the related prospectus supplement, allocations of losses or shortfalls may be effected by a reduction in the entitlements to interest and/or certificate balances of one or more classes of certificates, or by establishing a priority of payments among classes of certificates. ADVANCES IN RESPECT OF DELINQUENCIES If and to the extent provided in the related prospectus supplement, if a trust fund includes mortgage loans, the servicer, a special servicer, the trustee, any provider of credit support and/or any other specified person may be obligated to advance, or have the option of advancing, on or before each distribution date, the amount may be 35 advanced from its or their own funds or from excess funds held in the related certificate account that are not part of the Available Distribution Amount for the related series of certificates for the distribution date. Advances are intended to maintain a regular flow of scheduled interest and principal payments to holders of the class or classes of certificates who are entitled, rather than to guarantee or insure against losses. Accordingly, all advances made out of a specific entity's own funds will be reimbursable out of related recoveries on the mortgage loans, including amounts received under any instrument of credit support, respecting which the advances were made--as to any mortgage loan, more commonly known as related proceeds. Advances may also be reimbursed from other specific sources as may be identified in the related prospectus supplement, including, in the case of a series that includes one or more classes of subordinate certificates, collections on other mortgage loans in the related trust fund that would otherwise be distributable to the holders of one or more classes of those subordinate certificates. No advance will be required to be made by the servicer, a special servicer or the trustee if, in the good faith judgment of the servicer, a special servicer or the trustee, as the case may be, the advance would not be recoverable from related proceeds or another specifically identified source--any such advance is known as a nonrecoverable advance. If an advance was previously made by the servicer, a special servicer or the trustee, a nonrecoverable advance will be reimbursable from any amounts in the related certificate account prior to any distributions being made to the related series of certificateholders. If advances have been made by the servicer, special servicer, trustee or other entity from excess funds in a certificate account, the servicer, special servicer, trustee or other entity, as the case may be, will be required to replace the funds in the certificate account on any future distribution date to the extent that funds in the certificate account on the distribution date are less than payments required to be made to the related series of certificateholders on that date. If so specified in the related prospectus supplement, the obligation of the servicer, special servicer, trustee or other entity to make advances may be secured by a cash advance reserve fund or a surety bond. If applicable, information regarding the characteristics of, and the identity of any obligor on, any related surety bond, will be set forth in the related prospectus supplement. If and to the extent so provided in the related prospectus supplement, any entity making advances will be entitled to receive interest on the advances made by that entity. Interest will be payable for the period that the advances are outstanding at the rate specified in the related prospectus supplement, and the entity making advances will be entitled to payment of interest periodically from general collections on the mortgage loans in the related trust fund prior to any payment to the related series of certificateholders or as otherwise provided in the related pooling and servicing agreement and prospectus supplement. The prospectus supplement for any series of certificates evidencing an interest in a trust fund that includes MBS will describe any comparable advancing obligation of a party to the related pooling and servicing agreement or of a party to the related MBS agreement. REPORTS TO CERTIFICATEHOLDERS On each distribution date, together with the distribution to the holders of each class of the offered certificates of a series, the servicer, the trustee, or such other party as may be specified in the related prospectus supplement, will forward or make available to each holder a distribution date statement that will set forth the items set forth in the related prospectus supplement, which could include, among other things, in each case to the extent applicable: 1. the amount of distribution to holders of the class of offered certificates that was applied to reduce the certificate balance of those certificates; 2. the amount of distribution to holders of the class of offered certificates that is allocable to Accrued Certificate Interest; 3. the amount, if any, of distribution to holders of that class of offered certificates that is allocable to both prepayment premiums and payments on account of equity participations; 4. the amount, if any, by which the distribution is less than the amounts to which holders of a class of offered certificates are entitled; 36 5. if the related trust fund includes mortgage loans, the aggregate amount of advances included in the distribution; 6. if the related trust fund includes mortgage loans, the amount of servicing compensation received by the related servicer, and, if payable directly out of the related trust fund, by any special servicer and any sub-servicer, and other customary information as the reporting party deems necessary or desirable, or that a certificateholder reasonably requests, to enable certificateholders to prepare their tax returns; 7. information regarding the aggregate principal balance of the related mortgage assets on or about the distribution date; 8. if the related trust fund includes mortgage loans, information regarding the number and aggregate principal balance of those mortgage loans that are delinquent in varying degrees, including specific identification of mortgage loans that are more than 60 days delinquent or in foreclosure; 9. if the related trust fund includes mortgage loans, information regarding the aggregate amount of losses incurred and principal prepayments made with respect to those mortgage loans during the related period. The related period is generally equal in length to the time period between distribution dates, during which prepayments and other unscheduled collections on the mortgage loans in the related trust fund must be received in order to be distributed on a particular distribution date; 10. the certificate balance or notional amount, as the case may be, of each class of certificates, including any class of certificates not offered hereby, at the close of business on a distribution date, separately identifying any reduction in the certificate balance or notional amount due to the allocation of any losses in respect of the related mortgage assets, any increase in the certificate balance or notional amount due to the allocation of any negative amortization in respect of the related mortgage assets and any increase in the certificate balance of a class of accrual certificates, if any, in the event that Accrued Certificate Interest has been added to the balance; 11. if a class of offered certificates has a variable pass-through rate or an adjustable pass-through rate, the applicable pass-through rate for the distribution date and, if determinable, for the next succeeding distribution date; 12. the amount deposited in or withdrawn from any reserve fund on the distribution date, and the amount remaining on deposit in the reserve fund as of the close of business on the distribution date; 13. if the related trust fund includes one or more instruments of credit support, such as a letter of credit, an insurance policy and/or a surety bond, the amount of coverage under each instrument as of the close of business on the distribution date; and 14. to the extent not otherwise reflected through the information furnished pursuant to subclauses 10 and 13 above, the amount of credit support being afforded by any classes of subordinate certificates. In the case of information furnished pursuant to subclauses 1-3 above, the amounts will be expressed as a dollar amount per minimum denomination of the relevant class of offered certificates or per a specified portion of the minimum denomination. The prospectus supplement for each series of certificates may describe additional information to be included in reports to the holders of the offered certificates of a series. Within a reasonable period of time after the end of each calendar year, the servicer or trustee for a series of certificates, as the case may be, will be required to furnish or make available to you at any time during the calendar year you were a holder of an offered certificate of a series a statement containing the information set forth in subclauses 1-3 above. The information will be aggregated for that calendar year or the applicable portion of that calendar year during which the person was a certificateholder. The obligation to furnish information to a certificateholder will be deemed to have been satisfied to the extent that substantially comparable information is provided pursuant to any requirements of the Internal Revenue Code as are from time to time in force. For other information regarding information provided to a certificateholder, you should review the section in the prospectus titled "Description of the Certificates--Book-Entry Registration and Definitive Certificates." 37 If the trust fund for a series of certificates includes MBS, the ability of the related servicer, the trustee or such other party as may be specified in the applicable prospectus supplement, as the case may be, to include in any distribution date statement information regarding the mortgage loans underlying the MBS will depend on the reports received with respect to the MBS. In those cases, the related prospectus supplement will describe the loan-specific information to be included in the distribution date Statements that will be forwarded or made available to the holders of the offered certificates of that series in connection with distributions made to them. VOTING RIGHTS The voting rights evidenced by each series of certificates will be allocated among the respective classes of that series in the manner described in the related prospectus supplement. You will generally not have a right to vote, except with respect to required consents to some amendments to the related pooling and servicing agreement and as otherwise specified in the related prospectus supplement. For additional information, you should review the section in this prospectus titled "Description of the Pooling and Servicing Agreements--Amendment." The holders of specified amounts of certificates of a particular series will have the right to act as a group to remove the related trustee and also upon the occurrence of some events which if continuing would constitute an event of default on the part of the related servicer. For further information, you should also review the section in this prospectus titled "Description of the Pooling and Servicing Agreements--Events of Default," "--Rights upon Event of Default" and "--Resignation and Removal of the Trustee." TERMINATION The obligations created by the pooling and servicing agreement for each series of certificates will terminate following: o the final payment or other liquidation of the last mortgage asset or the disposition of all property acquired upon foreclosure of any mortgage loan; and o the payment to the certificateholders of that series of all amounts required to be paid to them pursuant to that pooling and servicing agreement. Written notice of termination of a pooling and servicing agreement will be given to each certificateholder of the related series, and the final distribution will be made only upon presentation and surrender of the certificates of that series at the location to be specified in the notice of termination. If so specified in the related prospectus supplement, a series of certificates may be subject to optional early termination through the repurchase of the mortgage assets in the related trust fund under the circumstances and in the manner set forth in that prospectus supplement. If so provided in the related prospectus supplement, upon the reduction of the certificate balance of a specified class or classes of certificates by a specified percentage or amount, a party designated in that prospectus supplement may be authorized or required to solicit bids for the purchase of all the mortgage assets of the related trust fund, or of a sufficient portion of the mortgage assets to retire the related class or classes. BOOK-ENTRY REGISTRATION AND DEFINITIVE CERTIFICATES If so provided in the prospectus supplement for a series of certificates, one or more classes of the offered certificates of that series will be offered in book-entry format through the facilities of DTC, and each class will be represented by one or more global certificates registered in the name of DTC or its nominee. DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking corporation" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Internal Revenue Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities for its participating organizations and facilitate the clearance and settlement of securities transactions between participants through electronic computerized book-entry changes in their accounts, thereby eliminating the need for physical movement of securities certificates. Direct participants, which maintain accounts with DTC, 38 include securities brokers and dealers, banks, trust companies and clearing corporations and may include some other organizations. DTC is owned by a number of its direct participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the National Association of Securities Dealers, Inc. Access to DTC system also is available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a direct participant, either directly or indirectly. The rules applicable to DTC and its participants are on file with SEC. Purchases of book-entry certificates under DTC system must be made by or through direct participants, which will receive a credit for the book-entry certificates on DTC's records. Your ownership interest of a book-entry certificate is in turn to be recorded on the direct and indirect participants' records. You will not receive written confirmation from DTC of your purchases, but you are expected to receive written confirmations providing details of the transactions, as well as periodic statements of their holdings, from the direct or indirect participant through which you into the transaction. Transfers of ownership interest in the book-entry certificates are to be accomplished by entries made on the books of participants acting on your behalf. Certificate owners will not receive certificates representing their ownership interests in the book-entry certificates, except in the event that use of the book-entry system for the book-entry certificates of any series is discontinued as described below. To facilitate subsequent transfer, all offered certificates deposited by participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of offered certificates with DTC and their registration with Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual certificate owners of the book-entry certificates; DTC's records reflect only the identity of the direct participants to whose accounts the certificates are credited, which may or may not be the certificate owners. The participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to direct participants, by direct participants to indirect participants, and by direct participants and indirect participants to certificate owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Distributions on the book-entry certificates will be made to DTC. DTC's practice is to credit direct participants' accounts on the related distribution date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on that date. Disbursement of the distributions by participants to you will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of each participant--and not of DTC, us as the depositor, any trustee or servicer--subject to any statutory or regulatory requirements as may be in effect from time to time. Under a book-entry system, you may receive payments after the related distribution date. Unless otherwise provided in the related prospectus supplement, the only certificateholder, as the term is used in the related pooling and servicing agreement, will be the nominee of DTC, and you will not be recognized as certificateholders under the pooling and servicing agreement. You will be permitted to exercise your rights under the related pooling and servicing agreement only indirectly through the participants who in turn will exercise their rights through DTC. We will be informed that DTC will take action permitted to be taken by a certificateholder under a pooling and servicing agreement only at the direction of one or more participants to whose account with DTC interests in the book-entry certificates are credited. Because DTC can act only on behalf of participants, who in turn act on behalf of indirect participants and some of you, your ability to pledge your interest in book-entry certificates to persons or entities that do not participate in DTC system, or otherwise take actions in respect of its interest in book-entry certificates, may be limited due to the lack of a physical certificate evidencing the interest. Unless otherwise specified in the related prospectus supplement, certificates initially issued in book-entry form will be issued as definitive certificates to you or your nominees, rather than to DTC or its nominee, only if: o we advise the trustee in writing that DTC is no longer willing or able to discharge properly its responsibilities as depository with respect to those certificates and we are unable to locate a qualified successor; or 39 o we, at our option, notify DTC of our intent to terminate the book-entry system through DTC with respect to those certificates and, upon receipt of notice of such intent from DTC, the participants holding beneficial interests in those certificates agree to initiate the termination. Upon the occurrence of either of the events described in the preceding sentence, DTC will be required to notify all participants of the availability through DTC of definitive certificates. Upon surrender by DTC of the certificate or certificates representing a class of book-entry certificates, together with instructions for registration, the trustee for the related series or other designated party will be required to issue to the certificate owners identified in our instructions the definitive certificates to which they are entitled, and thereafter the holders of those definitive certificates will be recognized as certificateholders under the related pooling and servicing agreement. If you hold your offered certificates in book-entry form through DTC, you may obtain direct access to the monthly reports to certificateholders as if you were a registered certificateholder, provided that you deliver a written certification to the trustee or another party to the pooling and servicing agreement for the related series in a prescribed form confirming your beneficial ownership in the offered certificates and you agree to keep the subject information confidential. Otherwise, until definitive certificates are issued with respect to your offered certificates, if ever, the information contained in those monthly reports will be available to you only to the extent that it is made available through DTC and the DTC participants or is available on the internet website of the trustee or another party to the pooling and servicing agreement. The parties to each pooling and servicing agreement are required to recognize as certificateholders only those persons in whose names the certificates of a series are registered on the books and records of the trustee or another certificate registrar. DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS GENERAL The certificates of each series will be issued pursuant to a pooling and servicing agreement or other agreement specified in the related prospectus supplement. In general, the parties to a pooling and servicing agreement will include us, the trustee, the servicer and, in some cases, a special servicer appointed as of the date of the pooling and servicing agreement. However, a pooling and servicing agreement may include a mortgage asset seller as a party, and a pooling and servicing agreement that relates to a trust fund that consists solely of MBS may not include the servicer or other servicer as a party. All parties to each pooling and servicing agreement under which certificates of a series are issued will be identified in the related prospectus supplement. If so specified in the related prospectus supplement, our affiliate, or the mortgage asset seller or its affiliate, may perform the functions of servicer or special servicer. Any party to a pooling and servicing agreement may own certificates issued under that pooling and servicing agreement. However, except with respect to required consents to some amendments to a pooling and servicing agreement, certificates that are held by the servicer or a special servicer for the related series will not be allocated voting rights. A form of a pooling and servicing agreement has been filed as an exhibit to the registration statement of which this prospectus is a part. However, the provisions of each pooling and servicing agreement will vary depending upon the nature of the certificates to be issued thereunder and the nature of the related trust fund. The following summaries describe some provisions that may appear in a pooling and servicing agreement under which certificates that evidence interests in mortgage loans will be issued. The prospectus supplement for a series of certificates will describe any provision of the related pooling and servicing agreement that materially differs from the description contained in this prospectus. If the related trust fund includes MBS, it will summarize all of the material provisions of the related pooling and servicing agreement. The summaries in this prospectus do not purport to be complete and are subject to, and are qualified in their entirety by reference to the description of the provisions in the related prospectus supplement. As used in this prospectus with respect to any series, the term certificate refers to all of the certificates of that series, whether or not offered hereby and by the related prospectus supplement, unless the context otherwise requires. We will provide a copy of the pooling and servicing agreement, without exhibits, that relates to any series of certificates without charge upon written request of a holder of a certificate of that series addressed to Bear Stearns Commercial Mortgage Securities Inc., 383 Madison Avenue, New York, New York 10179, Attention: J. Christopher Hoeffel. 40 ASSIGNMENT OF MORTGAGE LOANS; REPURCHASES At the time of issuance of any series of certificates, we will assign, or cause to be assigned, to the designated trustee the mortgage loans to be included in the related trust fund. Unless otherwise specified in the related prospectus supplement, we will assign, or cause to be assigned, all principal and interest to be received on or with respect to those mortgage loans after the cut-off date, other than principal and interest due on or before the cut-off date. The trustee will, concurrently with the assignment, deliver the certificates to or at our direction in exchange for the mortgage loans and the other assets to be included in the trust fund for the series. Each mortgage loan will be identified in a schedule appearing as an exhibit to the related pooling and servicing agreement. The schedule generally will include detailed information that pertains to each mortgage loan included in the related trust fund. The information will typically include the address of the related mortgaged property and type of the property; the mortgage rate and, if applicable, the applicable index, gross margin, adjustment date and any rate cap information; the original and remaining term to maturity; the original amortization term; and the original and outstanding principal balance. We will deliver, or cause to be delivered, to the related trustee, or to a custodian appointed by the trustee, some loan documents with respect to each mortgage loan to be included in a trust fund. Unless otherwise specified in the related prospectus supplement, the loan documents will include the following: o the original mortgage note endorsed, without recourse, to the order of the trustee or a copy of that note together with a lost note affidavit and indemnity; o the original or a copy of the mortgage instrument together with originals or copies of any intervening assignments of that document, in each case, unless the particular document has not been returned from the applicable recording office (subject to certification and certain timing requirements), with evidence of recording on the document; o the original or a copy of any separate assignment of leases and rents, together with originals or copies of any intervening assignments of that document, in each case, unless the particular document has not been returned from the applicable recording office (subject to certification and certain timing requirements), with evidence of recording on the document; o an executed assignment of the related mortgage instrument in favor of the trustee, in recordable form except for missing recording information relating to that mortgage instrument; o an executed assignment of any separate related assignment of leases and rents in favor of the trustee, in recordable form except for missing recording information relating to that assignment of leases and rents; o original or copies of all written assumption, modification and substitution agreements, if any, in those instances where the terms or provisions of the mortgage instrument or promissory note have been materially modified or the mortgage loan has been assumed; o an original or copy of the lender's title insurance policy or, if a title insurance policy has not been issued (subject to certain timing requirements), a written commitment "marked up" at the closing of the mortgage loan, interim binder or the pro forma title insurance policy evidencing a binding commitment to issue a policy; and o in those cases where applicable, the original or a copy of the related ground lease. Unless otherwise provided in the prospectus supplement for a series of certificates, the related pooling and servicing agreement will require that we or another party to the pooling and servicing agreement promptly cause each assignment of mortgage to be recorded in the appropriate public office for real property records. The trustee, or a custodian appointed by the trustee, for a series of certificates will be required to review the mortgage loan documents delivered to it within a specified period of days after receipt. The trustee, or the custodian, will hold the mortgage loan documents in trust for the benefit of the certificateholders of that series. Unless otherwise specified in the related prospectus supplement, if any document is found to be missing or 41 defective, and that omission or defect, as the case may be, materially and adversely affects the interests of the certificateholders of the related series, the trustee, or custodian, will be required to notify the servicer and us, and one of us will be required to notify the relevant mortgage asset seller. In that case, and if the mortgage asset seller cannot deliver the document or cure the defect within a specified number of days after receipt of notice, then, except as otherwise specified below or in the related prospectus supplement, the mortgage asset seller will be obligated to repurchase the related mortgage loan from the trustee at a price that will be specified in the related prospectus supplement. If so provided in the prospectus supplement for a series of certificates, a mortgage asset seller, in lieu of repurchasing a mortgage loan as to which there is missing or defective loan documentation, will have the option, exercisable upon the occurrence of conditions, and/or within a specified period, specified in the pooling and servicing agreement, after initial issuance of the series of certificates, to replace that mortgage loan with one or more other mortgage loans, in accordance with standards that will be described in the prospectus supplement. Unless otherwise specified in the related prospectus supplement, this repurchase or substitution obligation will constitute the sole remedy to holders of the certificates of any series or to the related trustee on their behalf for missing or defective loan documentation. Neither we nor, unless it is the mortgage asset seller, the servicer will be obligated to purchase or replace a mortgage loan if a mortgage asset seller defaults on its obligation to do so. Notwithstanding the foregoing, if a document has not been delivered to the related trustee, or to a custodian appointed by the trustee, because that document has been submitted for recording, and neither that document nor a certified copy, in either case with evidence of recording, can be obtained because of delays on the part of the applicable recording office, then, unless otherwise specified in the related prospectus supplement, the mortgage asset seller will not be required to repurchase or replace the affected mortgage loan on the basis of that missing document so long as it continues in good faith to attempt to obtain that document or a certified copy of that document. REPRESENTATIONS AND WARRANTIES; REPURCHASES Unless otherwise provided in the prospectus supplement for a series of certificates, we will, with respect to each mortgage loan in the related trust fund, make or assign, or cause to be made or assigned, some representations and warranties covering, by way of example: o the accuracy of the information set forth for the mortgage loan on the schedule of mortgage loans appearing as an exhibit to the related pooling and servicing agreement; o the enforceability of the related mortgage note and mortgage and the existence of title insurance insuring the lien priority of the related mortgage; o the warranting party's title to the mortgage loan and the authority of the warranting party to sell the mortgage loan; and o the payment status of the mortgage loan. It is expected that in most cases the warranting party will be the mortgage asset seller. However, the warranting party may also be an affiliate of the mortgage asset seller, the servicer, a special servicer or another person acceptable to us, or us or our affiliate. The warranting party, if other than the mortgage asset seller, will be identified in the related prospectus supplement. Unless otherwise provided in the related prospectus supplement, each pooling and servicing agreement will provide that the servicer and/or trustee will be required to notify promptly any warranting party of any breach of any representation or warranty made by it in respect of a mortgage loan that materially and adversely affects your interests. If a warranting party cannot cure the breach within a specified period following the date on which it was notified of that breach, then, unless otherwise provided in the related prospectus supplement, it will be obligated to repurchase the related mortgage loan from the trustee at a price that will be specified in the related prospectus supplement. If so provided in the prospectus supplement for a series of certificates, a warranting party, in lieu of repurchasing a mortgage loan as to which a breach has occurred, will have the option, exercisable upon some conditions and/or within a specified period after initial issuance of a series of certificates, to replace the related mortgage loan with one or more other mortgage loans. Unless otherwise specified in the related prospectus supplement, this repurchase or substitution obligation will constitute the sole remedy available to you or to the related trustee on your behalf for a breach of representation and warranty by a warranting party. Neither we nor the 42 servicer, in either case unless we or the servicer is the warranting party, will be obligated to purchase or replace a mortgage loan if a warranting party defaults on its obligation to do so. In some cases, representations and warranties will have been made in respect of a mortgage loan as of a date prior to the date upon which the related series of certificates is issued. Consequently, those representations and warranties may not address events that may occur following the date as of which they were made. However, we will not include any mortgage loan in the trust fund for any series of certificates if anything has come to our attention that would cause it to believe that the representations and warranties made in respect of a mortgage loan will not be accurate in all material respects as of the date of issuance. The date as of which the representations and warranties regarding the mortgage loans in any trust fund were made will be specified in the related prospectus supplement. COLLECTION AND OTHER SERVICING PROCEDURES The servicer for any trust fund, directly or through sub-servicers, will be required to make reasonable efforts to collect all scheduled payments under the mortgage loans in a trust fund. The servicer will be required to follow collection procedures as it would follow with respect to mortgage loans that are comparable to the mortgage loans in the trust fund and held for its own account, provided the procedures are consistent with: o the terms of the related pooling and servicing agreement and any related instrument of credit support included in the trust fund; o applicable law; and o the servicing standard specified in the related pooling and servicing agreement and prospectus supplement. The servicer for any trust fund, directly or through sub-servicers, will also be required to perform as to the mortgage loans in the trust fund various other customary functions of a servicer of comparable loans. These obligations include the following: o maintaining escrow or impound accounts, if required under the related pooling and servicing agreement, for payment of taxes, insurance premiums, ground rents and similar items, or otherwise monitoring the timely payment of those items; o attempting to collect delinquent payments; supervising foreclosures; negotiating modifications; conducting property inspections on a periodic or other basis; o managing, or overseeing the management of, mortgaged properties acquired on behalf of the trust fund through foreclosure, deed-in-lieu of foreclosure or otherwise, each of which is called an REO property; and o maintaining servicing records relating to the mortgage loans. Unless otherwise specified in the related prospectus supplement, the servicer will be responsible for filing and settling claims in respect of particular mortgage loans under any applicable instrument of credit support. For additional information regarding credit support, you should review the section in this prospectus titled "Description of Credit Support." SUB-SERVICERS The servicer may delegate its servicing obligations in respect of the mortgage loans serviced thereby to one or more third-party servicers. However, unless otherwise specified in the related prospectus supplement, the servicer will remain obligated under the related pooling and servicing agreement. A sub-servicer for any series of certificates may be our affiliate or an affiliate of the servicer. Unless otherwise provided in the related prospectus supplement, each sub-servicing agreement between the servicer and a sub-servicer will provide that, if for any reason the servicer is no longer acting in that capacity, the trustee or any successor servicer may assume the servicer's rights and obligations under the sub-servicing agreement. The servicer will be required to monitor the 43 performance of sub-servicers retained by it and will have the right to remove a sub-servicer retained by it at any time it considers the removal of the sub-servicer to be in your best interest. Unless otherwise provided in the related prospectus supplement, the servicer will be solely liable for all fees owed by it to any sub-servicer, irrespective of whether the servicer's compensation pursuant to the related pooling and servicing agreement is sufficient to pay the sub-servicer's fees. Each sub-servicer will be reimbursed by the servicer that retained it for some expenditures which it makes, generally to the same extent the servicer would be reimbursed under a pooling and servicing agreement. For additional information regarding payment of fees and expenses to a sub-servicer, you should review the sections in this prospectus titled "--Certificate Account" and "--Servicing Compensation and Payment of Expenses." SPECIAL SERVICERS To the extent so specified in the related prospectus supplement, one or more special servicers may be a party to the related pooling and servicing agreement or may be appointed by the servicer or another specified party. A special servicer for any series of certificates may be our affiliate or an affiliate of the servicer. A special servicer may be entitled to any of the rights, and subject to any of the obligations, described in this prospectus in respect of the servicer including the ability to appoint sub-servicers to the extent specified in the related prospectus supplement. The related prospectus supplement will describe the rights, obligations and compensation of any special servicer for a particular series of certificates. The servicer will be liable for the performance of a special servicer only if, and to the extent, set forth in the related prospectus supplement. CERTIFICATE ACCOUNT General. The servicer, the trustee and/or a special servicer will, as to each trust fund that includes mortgage loans, establish and maintain or cause to be established and maintained one or more separate accounts for the collection of payments on or in respect of the mortgage loans. Those certificate accounts will be established so as to comply with the standards of each rating agency that has rated any one or more classes of certificates of the related series. A certificate account may be maintained as an interest-bearing or a non-interest-bearing account. The funds held in a certificate account may be invested pending each succeeding distribution date in United States government securities and other obligations that are acceptable to each rating agency that has rated any one or more classes of certificates of the related series. Unless otherwise provided in the related prospectus supplement, any interest or other income earned on funds in a certificate account will be paid to the related servicer, trustee or special servicer, if any, as additional compensation. A certificate account may be maintained with the related servicer, special servicer or mortgage asset seller or with a depository institution that is our affiliate or an affiliate of any of the foregoing. Any entity that maintains a certificate account must comply with applicable rating agency standards. If permitted by the applicable rating agency or Agencies and so specified in the related prospectus supplement, a certificate account may contain funds relating to more than one series of mortgage pass-through certificates and may contain other funds representing payments on mortgage loans owned by the related servicer or special servicer, if any, or serviced by either on behalf of others. Deposits. Unless otherwise provided in the related pooling and servicing agreement and described in the related prospectus supplement, the servicer, trustee or special servicer will be required to deposit or cause to be deposited in the certificate account for each trust fund that includes mortgage loans, within a certain period following receipt, in the case of collections on or in respect of the mortgage loans, or otherwise as provided in the related pooling and servicing agreement, the following payments and collections received or made by the servicer, the trustee or any special servicer subsequent to the cut-off date, other than payments due on or before the cut-off date: 1. all payments on account of principal, including principal prepayments, on the mortgage loans; 2. all payments on account of interest on the mortgage loans, including any default interest collected, in each case net of any portion retained by the servicer or any special servicer as its servicing compensation or as compensation to the trustee; 44 3. all proceeds received under any hazard, title or other insurance policy that provides coverage with respect to a mortgaged property or the related mortgage loan or in connection with the full or partial condemnation of a mortgaged property, other than proceeds applied to the restoration of the property or released to the related borrower in accordance with the customary servicing practices of the servicer, or, if applicable, a special servicer, and/or the terms and conditions of the related Mortgage (collectively, insurance and condemnation proceeds) and all other amounts received and retained in connection with the liquidation of defaulted mortgage loans or property acquired with respect to the liquidation, by foreclosure or otherwise (collectively, liquidation proceeds) together with the net operating income, less reasonable reserves for future expenses, derived from the operation of any mortgaged properties acquired by the trust fund through foreclosure or otherwise; 4. any amounts paid under any instrument or drawn from any fund that constitutes credit support for the related series of certificates as described under "Description of Credit Support"; 5. any advances made as described under "Description of the Certificates--Advances in Respect of Delinquencies"; 6. any amounts paid under any cash flow agreement, as described under "Description of the Trust Funds--MBS--Cash Flow Agreements"; 7. all proceeds of the purchase of any mortgage loan, or property acquired with respect to the liquidation, by us, any mortgage asset seller or any other specified person as described under "--Assignment of Mortgage Loans; Repurchases" and "--Representations and Warranties; Repurchases", all proceeds of the purchase of any defaulted mortgage loan as described under "--Realization Upon Defaulted Mortgage Loans", and all proceeds of any Mortgage Asset purchased as described under "Description of the Certificates--Termination" (all of the foregoing, also liquidation proceeds); 8. any amounts paid by the servicer to cover prepayment interest shortfalls arising out of the prepayment of mortgage loans as described under "--Servicing Compensation and Payment of Expenses"; 9. to the extent that any related item does not constitute additional servicing compensation to the servicer or a special servicer, any payments on account of modification or assumption fees, late payment charges, prepayment premiums or equity participations with respect to the mortgage loans; 10. all payments required to be deposited in the certificate account with respect to any deductible clause in any blanket insurance policy described under "--Hazard Insurance Policies"; 11. any amount required to be deposited by the servicer or the trustee in connection with losses realized on investments for the benefit of the servicer or the trustee, as the case may be, of funds held in the certificate account; and 12. any other amounts required to be deposited in the certificate account as provided in the related pooling and servicing agreement and described in the related prospectus supplement. Withdrawals. Unless otherwise provided in the related pooling and servicing agreement and described in the related prospectus supplement, the servicer, trustee or special servicer may make withdrawals from the certificate account for each trust fund that includes mortgage loans for any of the following purposes: 1. to make distributions to you on each distribution date; 2. to pay the servicer, the trustee or a special servicer any servicing fees not previously retained thereby, the payment to be made out of payments on the particular mortgage loans as to which the fees were earned; 3. to reimburse the servicer, a special servicer, the trustee or any other specified person for any unreimbursed amounts advanced by it as described under "Description of the Certificates--Advances in Respect of Delinquencies", the reimbursement to be made out of amounts received that were identified and applied by the servicer or a special servicer, as applicable, as late collections of interest on and principal of the particular mortgage loans with respect to which the advances were made or out of amounts drawn under any instrument of credit support with respect to those mortgage loans; 45 4. to reimburse the servicer, the trustee or a special servicer for unpaid servicing fees earned by it and unreimbursed servicing expenses incurred by it with respect to mortgage loans in the trust fund and properties acquired in respect thereof, the reimbursement to be made out of amounts that represent liquidation proceeds and insurance and condemnation proceeds collected on the particular mortgage loans and properties, and net income collected on the particular properties, with respect to which their fees were earned or their expenses were incurred or out of amounts drawn under any instrument of credit support with respect to the mortgage loans and properties; 5. to reimburse the servicer, a special servicer, the trustee or other specified person for any advances described in clause (3) above made by it and/or any servicing expenses referred to in clause (4) above incurred by it that, in the good faith judgment of the servicer, special servicer, trustee or other specified person, as applicable, will not be recoverable from the amounts described in clauses (3) and (4), respectively, the reimbursement to be made from amounts collected on other mortgage loans in the same trust fund or, if and to the extent so provided by the related pooling and servicing agreement and described in the related prospectus supplement, only from that portion of amounts collected on the other mortgage loans that is otherwise distributable on one or more classes of subordinate certificates of the related series; 6. if and to the extent described in the related prospectus supplement, to pay the servicer, a special servicer, the trustee or any other specified person interest accrued on the advances described in clause (3) above made by it and the servicing expenses described in clause (4) above incurred by it while the advances remain outstanding and unreimbursed; 7. to pay for costs and expenses incurred by the trust fund for environmental site assessments performed with respect to mortgaged properties that constitute security for defaulted mortgage loans, and for any containment, clean-up or remediation of hazardous wastes and materials present on the mortgaged properties, as described under "--Realization Upon Defaulted Mortgage Loans"; 8. to reimburse the servicer, the special servicer, the depositor, or any of their respective directors, officers, employees and agents, as the case may be, for some expenses, costs and liabilities incurred thereby, as and to the extent described under "--Some Matters Regarding the Servicer and the Depositor"; 9. if and to the extent described in the related prospectus supplement, to pay the fees of trustee; 10. to reimburse the trustee or any of its directors, officers, employees and agents, as the case may be, for some expenses, costs and liabilities incurred thereby, as and to the extent described under "--Regarding the Fees, Indemnities and Powers of the Trustee"; 11. if and to the extent described in the related prospectus supplement, to pay the fees of any provider of credit support; 12. if and to the extent described in the related prospectus supplement, to reimburse prior draws on any instrument of credit support; 13. to pay the servicer, a special servicer or the trustee, as appropriate, interest and investment income earned in respect of amounts held in the certificate account as additional compensation; 14. to pay (generally from related income) for costs incurred in connection with the operation, management and maintenance of any mortgaged property acquired by the trust fund by foreclosure or otherwise; 15. if one or more elections have been made to treat the trust fund or its designated portions as a REMIC, to pay any federal, state or local taxes imposed on the trust fund or its assets or transactions, as and to the extent described under "Material Federal Income Tax Consequences--Federal Income Tax Consequences for REMIC Certificates--Taxes That May Be Imposed on the REMIC Pool"; 16. to pay for the cost of an independent appraiser or other expert in real estate matters retained to determine a fair sale price for a defaulted mortgage loan or a property acquired with respect to a defaulted mortgage loan in connection with the liquidation of the mortgage loan or property; 46 17. to pay for the cost of various opinions of counsel obtained pursuant to the related pooling and servicing agreement for the benefit of certificateholders; 18. to make any other withdrawals permitted by the related pooling and servicing agreement and described in the related prospectus supplement; and 19. to clear and terminate the certificate account upon the termination of the trust fund. MODIFICATIONS, WAIVERS AND AMENDMENTS OF MORTGAGE LOANS The servicer may agree to modify, waive or amend any term of any mortgage loan serviced by it in a manner consistent with the applicable servicing standard set forth in the related pooling and servicing agreement. However, unless otherwise set forth in the related prospectus supplement, the modification, waiver or amendment will not do the following: o affect the amount or timing of any scheduled payments of principal or interest on the mortgage loan; o in the judgment of the servicer, materially impair the security for the mortgage loan or reduce the likelihood of timely payment of amounts due on that mortgage loan; and o adversely affect the coverage under any applicable instrument of credit support. Unless otherwise provided in the related prospectus supplement, the servicer also may agree to any other modification, waiver or amendment if, in its judgment: o a material default on the mortgage loan has occurred or a payment default is imminent; o the modification, waiver or amendment is reasonably likely to produce a greater recovery with respect to the mortgage loan, taking into account the time value of money, than would liquidation; and o the modification, waiver or amendment will not adversely affect the coverage under any applicable instrument of credit support. REALIZATION UPON DEFAULTED MORTGAGE LOANS A borrower's failure to make required mortgage loan payments may mean that operating income is insufficient to service the mortgage debt, or may reflect the diversion of that income from the servicing of the mortgage debt. In addition, a borrower that is unable to make mortgage loan payments may also be unable to make timely payment of taxes and insurance premiums and to otherwise maintain the related mortgaged property. In general, the special servicer for a series of certificates will be required to monitor any mortgage loan in the related trust fund that is in default, contact the borrower concerning the default, evaluate whether the causes of the default can be corrected over a reasonable period without significant impairment of the value of the related mortgaged property, initiate corrective action in cooperation with the borrower if cure is likely, inspect the related mortgaged property and take the other actions as are consistent with the servicing standard set forth in the pooling and servicing agreement. A significant period of time may elapse before the special servicer is able to assess the success of any related corrective action or the need for additional initiatives. The time within which the special servicer can make the initial determination of appropriate action, evaluate the success of corrective action, develop additional initiatives, institute foreclosure proceedings and actually foreclose, or accept a deed to a mortgaged property in lieu of foreclosure on your behalf may vary considerably depending on the particular mortgage loan, the mortgaged property, the borrower, the presence of an acceptable party to assume the mortgage loan and the laws of the jurisdiction in which the mortgaged property is located. If a borrower files a bankruptcy petition, the special servicer may not be permitted to accelerate the maturity of the related mortgage loan or to foreclose on the related mortgaged property for a considerable period of time, and the mortgage loan may be restructured in the resulting bankruptcy proceedings. For additional information regarding the restructuring of a mortgage loan, you should review the Section in this prospectus titled "Legal Aspects of Mortgage Loans". 47 A pooling and servicing agreement may grant to the servicer, a special servicer, a provider of credit support and/or the holder or holders of one or more classes of the related series of certificates a right of first refusal to purchase from the trust fund, at a predetermined purchase price any mortgage loan as to which a specified number of scheduled payments are delinquent. If the predetermined purchase price is insufficient to fully fund the entitlements of certificateholders to principal and interest, it will be so specified in the related prospectus supplement. In addition, unless otherwise specified in the related prospectus supplement, the special servicer may offer to sell any defaulted mortgage loan if and when the special servicer determines, consistent with the applicable servicing standard, that such a sale would produce a greater recovery, taking into account the time value of money, than would liquidation of the related mortgaged property. Unless otherwise provided in the related prospectus supplement, the related pooling and servicing agreement will require that the special servicer accept the highest cash bid received from any person, including itself, us or any affiliate of either of us or any certificateholder, that constitutes a fair price for the defaulted mortgage loan. In the absence of any bid determined in accordance with the related pooling and servicing agreement to be fair, the special servicer will generally be required to proceed against the related mortgaged property, subject to the discussion below. If a default on a mortgage loan has occurred or, in the special servicer's judgment, a payment default is imminent, the special servicer, on behalf of the trustee, may at any time do the following so long as it is consistent with the servicing standard: o institute foreclosure proceedings; o exercise any power of sale contained in the related Mortgage; o obtain a deed in lieu of foreclosure; or o otherwise acquire title to the related mortgaged property. Unless otherwise specified in the related prospectus supplement, the special servicer may not, however, acquire title to any mortgaged property, have a receiver of rents appointed with respect to any mortgaged property or take any other action with respect to any mortgaged property that would cause the trustee, for the benefit of the related series of certificateholders, or any other specified person to be considered to hold title to, to be a mortgagee-in-possession of, or to be an owner or an operator of the mortgaged property within the meaning of some federal environmental laws. The special servicer may do so only if the special servicer has previously determined, based on a report prepared by a person who regularly conducts environmental audits, which report will be an expense of the trust fund, that: o either the mortgaged property is in compliance with applicable environmental laws and regulations or, if not, that taking the actions as are necessary to bring the mortgaged property into compliance therewith is reasonably likely to produce a greater recovery, taking into account the time value of money, than not taking the actions; and o there are no circumstances or conditions present at the mortgaged property that have resulted in any contamination for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any applicable environmental laws and regulations or, if the circumstances or conditions are present for which any related action could be required, taking the actions with respect to the mortgaged property is reasonably likely to produce a greater recovery, taking into account the time value of money, than not taking the actions. For additional information regarding environmental risks associated with mortgage loans, you should review the section in this prospectus titled "Legal Aspects of Mortgage Loans--Environmental Risks". Unless otherwise provided in the related prospectus supplement, if title to any mortgaged property is acquired by a trust fund as to which one or more REMIC elections have been made, the special servicer, on behalf of the trust fund, will be required to sell the mortgaged property prior to the close of the third calendar year following the year of acquisition, unless one of the following events occurs: o the Internal Revenue Service grants an extension of time to sell the property or 48 o the trustee receives an opinion of independent counsel to the effect that the holding of the property by the trust fund for longer than the period described above will not result in the imposition of a tax on the trust fund or cause the trust fund or any of its designated portions to fail to qualify as a REMIC under the Internal Revenue Code at any time that any certificate is outstanding. Subject to the foregoing, the special servicer will generally be required to solicit bids for any mortgaged property so acquired in such a manner as will be reasonably likely to realize a fair price for the property. The special servicer will be required to assure that the mortgaged property is administered so that it constitutes "foreclosure property" within the meaning of Section 860G(a)(8) of the Internal Revenue Code at all times. If the trust fund acquires title to any mortgaged property, the special servicer, on behalf of the trust fund, may be required to retain an independent contractor to manage and operate that property. The retention of an independent contractor, however, will not relieve the special servicer of its obligation to manage that mortgaged property in a manner consistent with the servicing standard set forth in the related pooling and servicing agreement. In general, the special servicer will be obligated to operate and manage any mortgaged property acquired as REO property in a manner consistent with the servicing standard. After the special servicer reviews the operation of that property and consults with the trustee to determine the trustee's federal income tax reporting position with respect to the income it is anticipated that the trust fund would derive from that property, the special servicer could determine, particularly in the case of REO properties that are operating businesses, such as hotels, that it would not be consistent with the servicing standard, to manage and operate such property in a manner that would avoid the imposition of a tax on "net income from foreclosure property" within the meaning of Section 857(b)(4)(B) of the Internal Revenue Code (an "REO Tax"). To the extent that income the trust fund receives from an REO property is subject to an REO Tax, such income would be subject to federal tax at the highest marginal corporate tax rate, which is currently 35%. The determination as to whether income from an REO property would be subject to an REO Tax will depend on the specific facts and circumstances relating to the management and operation of each REO property. Any REO Tax imposed on the trust fund's income from an REO property would reduce the amount available for distribution to certificateholders. Certificateholders are advised to consult their tax advisors regarding the possible imposition of REO Taxes in connection with the operation of commercial REO Properties by REMICs. For additional information you should review the section in this prospectus titled "Material Federal Income Tax Consequences." The limitations imposed by the related pooling and servicing agreement and, if applicable, the REMIC provisions of the Internal Revenue Code on the operations and ownership of any mortgaged property acquired on behalf of the trust fund may result in the recovery of an amount less than the amount that would otherwise be recovered. For additional information you should review the section in this prospectus titled "Legal Aspects of Mortgage Loans--Foreclosure." If recovery on a defaulted mortgage loan under any related instrument of credit support is not available, the special servicer nevertheless will be obligated to follow or cause to be followed such normal practices and procedures as it deems necessary or advisable to realize upon the defaulted mortgage loan. If liquidation proceeds collected with respect to a defaulted mortgage loan are less than the outstanding principal balance of the defaulted mortgage loan plus interest accrued on that mortgage loan and the aggregate amount of reimbursable expenses incurred by the special servicer in connection with that mortgage loan, the trust fund will realize a loss in the amount of the shortfall. The special servicer will be entitled to reimbursement out of the liquidation proceeds recovered on any defaulted mortgage loan, prior to the distribution of liquidation proceeds to you. The reimbursement amount will represent unpaid servicing compensation in respect of the mortgage loan, unreimbursed servicing expenses incurred with respect to the mortgage loan and any unreimbursed advances of delinquent payments made with respect to the mortgage loan. If any mortgaged property suffers damage such that the proceeds, if any, of the related hazard insurance policy are insufficient to restore fully the damaged property, the special servicer will not be required to expend its own funds to effect the restoration unless, and to the extent not otherwise provided in the related prospectus supplement, it determines: o that the restoration will increase the proceeds to certificateholders on liquidation of the mortgage loan after reimbursement of the special servicer for its expenses; and 49 o that the expenses will be recoverable by it from related insurance and condemnation proceeds or liquidation proceeds. HAZARD INSURANCE POLICIES Unless otherwise specified in the related prospectus supplement, each pooling and servicing agreement will require the servicer to cause each mortgage loan borrower to maintain a hazard insurance policy that provides for the coverage as is required under the related mortgage. Alternatively, if the mortgage permits the holder to dictate to the borrower the insurance coverage to be maintained on the related mortgaged property, the hazard insurance policy coverage should be consistent with the requirements of the servicing standard. Unless otherwise specified in the related prospectus supplement, the hazard insurance policy coverage generally will be in an amount equal to the lesser of the principal balance owing on the mortgage loan and the replacement cost of the related mortgaged property. The ability of the servicer to assure that hazard insurance proceeds are appropriately applied may depend upon its being named as an additional insured under any hazard insurance policy and under any other insurance policy referred to below, or upon the extent to which information concerning covered losses is furnished by borrowers. All amounts collected by the servicer under any policy will be deposited in the related certificate account. Amounts to be applied to the restoration or repair of the mortgaged property or released to the borrower in accordance with the servicer's normal servicing procedures and/or to the terms and conditions of the related mortgage and mortgage note will be otherwise distributed. The pooling and servicing agreement may provide that the servicer may satisfy its obligation to cause each borrower to maintain a hazard insurance policy by maintaining a blanket policy insuring against hazard losses on all of the mortgage loans in a trust fund. If a blanket policy contains a deductible clause, the servicer will be required, in the event of a casualty covered by that blanket policy, to deposit in the related certificate account all sums that would have been deposited in that certificate account but for the deductible clause. In general, the standard form of fire and extended coverage policy covers physical damage to or destruction of the improvements of the property by fire, lightning, explosion, smoke, windstorm and hail, and riot, strike and civil commotion, subject to the conditions and exclusions specified in each policy. The policies covering the mortgaged properties will be underwritten by different insurers under different state laws in accordance with different applicable state forms, and therefore will not contain identical terms and conditions. Nevertheless, most of the policies typically do not cover any physical damage resulting from war, revolution, governmental actions, floods and other water-related causes, earth movement (including earthquakes, landslides and mudflows), wet or dry rot, vermin, domestic animals and some other kinds of risks. Accordingly, a mortgaged property may not be insured for losses arising from any such cause unless the related mortgage specifically requires, or permits its holder to require, that type of coverage. The hazard insurance policies covering the mortgaged properties will typically contain co-insurance clauses that in effect require an insured at all times to carry insurance of a specified percentage, generally 80% to 90%, of the full replacement value of the improvements on the property in order to recover the full amount of any partial loss. If the insured's coverage falls below this specified percentage, the clauses generally provide that the insurer's liability in the event of partial loss does not exceed the lesser of: o the replacement cost of the improvements less physical depreciation; and o the proportion of the loss as the amount of insurance carried bears to the specified percentage of the full replacement cost of the improvements. DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS Some of the mortgage loans may contain a due-on-sale clause that entitles the lender to accelerate payment of the mortgage loan upon any sale or other transfer of the related mortgaged property made without the lender's consent. Some of the mortgage loans may also contain a due-on-encumbrance clause that entitles the lender to accelerate the maturity of the mortgage loan upon the creation of any other lien or encumbrance upon the mortgaged property. Unless otherwise provided in the related prospectus supplement, the servicer will determine whether to exercise any right the trustee may have under any related provision in a manner consistent with the servicing standard set forth in the related pooling and servicing agreement. Unless otherwise specified in the related 50 prospectus supplement, the servicer will be entitled to retain as additional servicing compensation any fee collected in connection with the permitted transfer of a mortgaged property. For additional information regarding due-on-sale and due-on-encumbrance clauses relating to mortgage loans, you should review the section in this prospectus titled "Legal Aspects of Mortgage Loans--Due-on-Sale and Due-on-Encumbrance". SERVICING COMPENSATION AND PAYMENT OF EXPENSES Unless otherwise specified in the related prospectus supplement, the servicer's primary servicing compensation with respect to a series of certificates will come from the periodic payment to it of a specified portion of the interest payments on each mortgage loan in the related trust fund. Any special servicer's compensation with respect to a series of certificates will come from payments or other collections on or with respect to specially serviced mortgage loans and REO properties. Because compensation is generally based on a percentage of the principal balance of each mortgage loan outstanding from time to time, it will decrease in accordance with the amortization of the mortgage loans. The prospectus supplement with respect to a series of certificates may provide that, as additional compensation, the servicer may retain all or a portion of late payment charges, prepayment premiums, modification fees and other fees collected from borrowers and any interest or other income that may be earned on funds held in the certificate account. Any sub-servicer will receive a portion of the servicer's compensation as its sub-servicing compensation. In addition to amounts payable to any sub-servicer, the servicer may be required, to the extent provided in the related prospectus supplement, to pay from amounts that represent its servicing compensation some expenses incurred in connection with the administration of the related trust fund. Those expenses may include, without limitation, payment of the fees and disbursements of independent accountants and payment of expenses incurred in connection with distributions and reports to certificateholders. Some other expenses, including some expenses related to mortgage loan defaults and liquidations and, to the extent so provided in the related prospectus supplement, interest on those expenses at the rate specified in the related prospectus supplement, and the fees of any special servicer, may be required to be borne by the trust fund. If and to the extent provided in the related prospectus supplement, the servicer may be required to apply a portion of the servicing compensation otherwise payable to it in respect of any period to prepayment interest shortfalls. For further information regarding prepayment interest shortfalls, you should review the section in the prospectus titled "Yield and Maturity Considerations--Shortfalls in Collections of Interest as a Result of Prepayments of Mortgage Loans". EVIDENCE AS TO COMPLIANCE The related prospectus supplement will identify each party that will be required to deliver annually to the trustee, master servicer or us, as applicable, on or before the date specified in the applicable pooling and servicing agreement, an officer's certificate stating that (i) a review of that party's servicing activities during the preceding calendar year and of performance under the pooling and servicing agreement has been made under the supervision of the officer, and (ii) to the best of the officer's knowledge, based on the review, such party has fulfilled all its obligations under the pooling and servicing agreement throughout the year, or, if there has been a failure to fulfull any such obligation, specifying such failure known to the officer and the nature and status of the failure. In addition, each party that participates in the servicing and administration of more than 5% of the mortgage loans and other assets comprising a trust for any series will be required to deliver annually to us and/or the trustee, a report (an "Assessment of Compliance") that assesses compliance by that party with the servicing criteria set forth in Item 1122(d) of Regulation AB (17 CFR 229.1122) that contains the following: (a) a statement of the party's responsibility for assessing compliance with the servicing criteria applicable to it; (b) a statement that the party used the criteria in Item 1122(d) of Regulation AB to assess compliance with the applicable servicing criteria; 51 (c) the party's assessment of compliance with the applicable servicing criteria during and as of the end of the prior calendar year, setting forth any material instance of noncompliance identified by the party; and (d) a statement that a registered public accounting firm has issued an attestation report on the party's assessment of compliance with the applicable servicing criteria during and as of the end of the prior calendar year. Each party that is required to deliver an Assessment of Compliance will also be required to simultaneously deliver a report (an "Attestation Report") of a registered public accounting firm, prepared in accordance with the standards for attestation engagements issued or adopted by the Public Company Accounting Oversight Board, that expresses an opinion, or states that an opinion cannot be expressed, concerning the party's assessment of compliance with the applicable servicing criteria. SOME MATTERS REGARDING THE SERVICER AND THE DEPOSITOR The entity serving as servicer under a pooling and servicing agreement may be our affiliate and may have other normal business relationships with us or our affiliates. Unless otherwise specified in the prospectus supplement for a series of certificates, the related pooling and servicing agreement will permit the servicer to resign from its obligations only upon the following conditions: o the appointment of, and the acceptance of the appointment by, a successor to it and receipt by the trustee of written confirmation from each applicable rating agency that the resignation and appointment will not have an adverse effect on the rating assigned by the rating agency to any class of certificates of the series; or o a determination that the servicer's obligations are no longer permissible under applicable law or are in material conflict by reason of applicable law with any other activities carried on by it. No resignation by the servicer will become effective until the trustee or a successor servicer has assumed the servicer's obligations and duties under the pooling and servicing agreement. Unless otherwise specified in the related prospectus supplement, the servicer for each trust fund will be required to maintain a fidelity bond and errors and omissions policy or their equivalent that provides coverage against losses that may be sustained as a result of an officer's or employee's misappropriation of funds or errors and omissions, subject to some limitations as to amount of coverage, deductible amounts, conditions, exclusions and exceptions permitted by the related pooling and servicing agreement. Unless otherwise specified in the related prospectus supplement, each pooling and servicing agreement will further provide that none of the servicer, any special servicer, the depositor or any director, officer, employee or agent of any of them will be under any liability to the related trust fund or certificateholders for any action taken, or not taken, in good faith pursuant to the pooling and servicing agreement or for errors in judgment. However, none of the servicer, us or any other person will be protected against any of the following: o breach of a representation, warranty or covenant made in the pooling and servicing agreement; o any expense or liability that that person is specifically required to bear pursuant to the terms of the pooling and servicing agreement; and o any liability that would otherwise be imposed by reason of willful misfeasance, bad faith or gross negligence in the performance of obligations or duties or by reason of reckless disregard of the obligations and duties. Unless otherwise specified in the related prospectus supplement, each pooling and servicing agreement will further provide that the servicer, the depositor and any director, officer, employee or agent of either of them will be entitled to indemnification by the related trust fund against any loss, liability or expense incurred in connection with any legal action that relates to the pooling and servicing agreement or the related series of certificates. However, indemnification will not extend to any loss, liability or expense: 52 o that the person is specifically required to bear pursuant to the terms of the agreement, or is incidental to the performance of obligations and duties thereunder and is not otherwise reimbursable pursuant to the pooling and servicing agreement; o those that are incurred in connection with any breach of a representation, warranty or covenant made in the pooling and servicing agreement; o that are incurred by reason of misfeasance, bad faith or gross negligence in the performance of obligations or duties under the pooling and servicing agreement, or by reason of reckless disregard of the obligations or duties; or o that are incurred in connection with any violation of any state or federal securities law. In addition, each pooling and servicing agreement will provide that neither the servicer nor the depositor will be under any obligation to appear in, prosecute or defend any legal action that is not incidental to its respective responsibilities under the pooling and servicing agreement and that in its opinion may involve it in any expense or liability. However, each of the servicer and the depositor will be permitted, in the exercise of its discretion, to undertake any action that it may deem necessary or desirable with respect to the enforcement and/or protection of the rights and duties of the parties to the pooling and servicing agreement and the interests of the related series of certificateholders. In that event, the legal expenses and costs of the action, and any liability resulting therefrom, will be expenses, costs and liabilities of the related series of certificateholders, and the servicer or the depositor, as the case may be, will be entitled to charge the related certificate account for those expenses, costs and liabilities. Any person into which the servicer or the depositor may be merged or consolidated, or any person resulting from any merger or consolidation to which the servicer or the depositor is a party, or any person succeeding to the business of the servicer or the depositor, will be the successor of the servicer or the depositor, as the case may be, under the related pooling and servicing agreement. EVENTS OF DEFAULT Unless otherwise provided in the prospectus supplement for a series of certificates, events of default under the related pooling and servicing agreement will include the following: o any failure by the servicer to distribute or cause to be distributed to the certificateholders of that series, or to remit to the trustee for distribution to those certificateholders, any amount required to be so distributed or remitted, which failure continues unremedied for five days after written notice has been given to the servicer by the trustee or the depositor, or to the servicer, the depositor and the trustee by certificateholders entitled to not less than 25%, or the other percentage specified in the related prospectus supplement, of the voting rights for that series; o any failure by the servicer duly to observe or perform in any material respect any of its other covenants or obligations under the related pooling and servicing agreement, which failure continues unremedied for sixty days after written notice of the failure has been given to the servicer by the trustee or the depositor, or to the servicer, the depositor and the trustee by certificateholders entitled to not less than 25%, or the other percentage specified in the related prospectus supplement, of the voting rights for that series; and o some events of insolvency, readjustment of debt, marshalling of assets and liabilities, or similar proceedings in respect of or relating to the servicer and some actions by or on behalf of the servicer indicating its insolvency or inability to pay its obligations. Material variations to the foregoing events of default, other than to add to it or shorten cure periods or eliminate notice requirements, will be specified in the related prospectus supplement. RIGHTS UPON EVENT OF DEFAULT If an Event of Default occurs with respect to the servicer under a pooling and servicing agreement and remains unremedied, the depositor or the trustee will be authorized, and at the direction of certificateholders of the related 53 series entitled to not less than 51%, or the other percentage specified in the related prospectus supplement, of the voting rights for the series, the trustee will be required, to terminate all of the rights and obligations of the servicer under the pooling and servicing agreement. Upon termination of the servicer's rights and obligations, the trustee will succeed to all of the responsibilities, duties and liabilities of the servicer under the pooling and servicing agreement and will be entitled to similar compensation arrangements. However, if the servicer is required to make advances under the pooling and servicing agreement regarding delinquent mortgage loans, but the trustee is prohibited by law from obligating itself to do so, or if the related prospectus supplement so specifies, the trustee will not be obligated to make the advances. Unless otherwise specified in the related prospectus supplement, if the trustee is unwilling or unable so to act, it may, or, at the written request of certificateholders of the related series entitled to not less than 51%, or the other percentage specified in the related prospectus supplement, of the voting rights for the series, it will be required to, appoint, or petition a court of competent jurisdiction to appoint, a loan servicing institution that, unless otherwise provided in the related prospectus supplement, is acceptable to each applicable rating agency to act as successor to the servicer under the pooling and servicing agreement. Pending appointment of a successor, the trustee will be obligated to continue to act in that capacity. You will not have the right under any pooling and servicing agreement to institute any proceeding with respect to the pooling and servicing agreement. You may do so only if the following conditions have been met: o you previously have given to the trustee written notice of default and other certificateholders of the same series entitled to not less than 25%, or the other percentage specified in the related prospectus supplement, of the voting rights for the series shall have made written request upon the trustee to institute the proceeding in its own name as trustee; o you shall have offered to the trustee reasonable indemnity; and o the trustee for sixty days, or the other period specified in the related prospectus supplement, shall have neglected or refused to institute any related proceeding. The trustee, however, will be under no obligation to exercise any of the trusts or powers vested in it by the related pooling and servicing agreement or to make any investigation of matters arising thereunder or to institute, conduct or defend any litigation thereunder or in relation to it at the request, order or direction of any of the holders of certificates of the related series, unless the certificateholders have offered to the trustee reasonable security or indemnity against the costs, expenses and liabilities which may be incurred therein or thereby. AMENDMENT Each pooling and servicing agreement may be amended by the respective parties to it, without your consent, to do the following: o to cure any ambiguity; o to correct a defective provision therein or to correct, modify or supplement any provision in the pooling and servicing agreement that may be inconsistent with any other provision in the pooling and servicing agreement; o to add any other provisions with respect to matters or questions arising under the pooling and servicing agreement that are not inconsistent with its provisions; o to comply with any requirements imposed by the Internal Revenue Code; or o for any other purpose; provided that the amendment, other than an amendment for the specific purpose referred to in clause 4 above, may not, as evidenced by an opinion of counsel to the effect satisfactory to the trustee, adversely affect in any material respect your interests; and provided further that the amendment, other than an amendment for one of the specific purposes referred to in clauses 1 through 4 above, must be acceptable to each applicable rating agency. 54 Unless otherwise specified in the related prospectus supplement, each pooling and servicing agreement may also be amended by the respective parties to the pooling and servicing agreement, with the consent of the holders of the related series of certificates entitled to not less than 51%, or another percentage specified in the related prospectus supplement, of the voting rights for that series allocated to the affected classes, for any purpose. However, unless otherwise specified in the related prospectus supplement, no amendment may: o reduce in any manner the amount of, or delay the timing of, payments received or advanced on mortgage loans that are required to be distributed in respect of any Certificate without the consent of the holder of that certificate; o adversely affect in any material respect the interests of the holders of any class of certificates, in a manner other than as described in the immediately preceding clause, without the consent of the holders of all certificates of that class; or o modify the provisions of the pooling and servicing agreement described in this paragraph without the consent of the holders of all certificates of the related series. However, unless otherwise specified in the related prospectus supplement, the trustee will be prohibited from consenting to any amendment of a pooling and servicing agreement pursuant to which one or more REMIC elections are to be or have been made unless the trustee shall first have received an opinion of counsel to the effect that the amendment will not result in the imposition of a tax on the related trust fund or cause the related trust fund, or any of its designated portions, to fail to qualify as a REMIC at any time that the related certificates are outstanding. LIST OF CERTIFICATEHOLDERS Unless otherwise specified in the related prospectus supplement, upon written request of three or more certificateholders of record made for purposes of communicating with other holders of certificates of the same series with respect to their rights under the related pooling and servicing agreement, the trustee or other specified person will afford the certificateholders access during normal business hours to the most recent list of certificateholders of that series held by the person. If the list is of a date more than 90 days prior to the date of receipt of the certificateholders' request, then the person, if not the registrar for that series of certificates, will be required to request from the registrar a current list and to afford the requesting certificateholders access to it promptly upon receipt. CERTAIN LIMITATIONS ON THE RIGHTS OF CERTIFICATEHOLDERS Except as otherwise specified in the prospectus supplement for a series, no certificateholders of a series will have the right under the related pooling and servicing agreement to institute any proceeding with respect to that agreement unless: o that holder previously has given to the trustee written notice of default; o except in the case of a default by the trustee, certificateholders entitled to not less than 25% of the voting rights for that series have made written request upon the trustee to institute that proceeding in its own name as trustee under the related pooling and servicing agreement and have offered to the trustee reasonable indemnity; and o the trustee for 60 days has neglected or refused to institute any such proceeding. No trustee, however, will be under any obligations to exercise any of the trusts or powers vested in it by a pooling and servicing agreement or to make any investigation of matters arising under that agreement or to institute, conduct or defend any litigation under or in relation to that agreement at the request, order or direction of any of the certificateholders for the related series, unless in the trustee's opinion, those certificateholders have offered to the trustee reasonable security or indemnity against the costs, expenses and liabilities which may be incurred by the trustee as a result. 55 THE TRUSTEE The trustee under each pooling and servicing agreement will be named in the related prospectus supplement. The commercial bank, national banking association, banking corporation or trust company that serves as trustee may have typical banking and/or trustee relationships with us or our affiliates and with any servicer or special servicer and its affiliates. If and to the extent specified under the related pooling and servicing agreement, some functions of the trustee may be performed by a fiscal agent under some circumstances. ELIGIBILITY OF THE TRUSTEE Unless otherwise specified in the related prospectus supplement, the trustee under each pooling and servicing agreement each must at all times be a corporation, bank, trust company or association that: o is organized and doing business under the laws of the U.S. or any state of the U.S. or the District of Columbia; o has a combined capital and surplus of at least $50,000,000; and o is subject to supervision or examination by federal or state authority. If that corporation, bank, trust company or association publishes reports of condition at least annually, in accordance with applicable law or the requirements of the supervising or examining authority, then the combined capital and surplus of that corporation, bank, trust company or association will be deemed to be its combined capital and surplus as described in its most recent published report of condition. The trustee for each series and any of its respective affiliates may hold certificates of the related series in their own names. In addition, for purposes of meeting the legal requirements of some local jurisdictions, each trustee will have the power to appoint a co-trustee or separate trustee of all or any part of the assets of the trust fund. All rights, powers, duties and obligations conferred or imposed upon the trustee for a series will be conferred or imposed upon that trustee and the separate trustee or co-trustee jointly or, in any jurisdiction in which that trustee shall be incompetent or unqualified to perform some acts, singly upon the separate trustee or co-trustee, who will exercise and perform its rights, powers, duties and obligations solely at the direction of that trustee. DUTIES OF THE TRUSTEE The trustee for each series of certificates will make no representation as to the validity or sufficiency of the related pooling and servicing agreement, the certificates or any underlying mortgage loan or related document. The trustee will not be accountable for the use or application by or on behalf of the servicer for that series of any funds paid to the servicer or any special servicer in respect of the certificates or the underlying mortgage loans, or any funds deposited into or withdrawn from the certificate account or any other account for that series by or on behalf of the servicer or any special servicer. If no event of default has occurred and is continuing, the trustee for each series of certificates will be required to perform only those duties specifically required under the related pooling and servicing agreement. However, upon receipt of any of the various certificates, reports or other instruments required to be furnished to it pursuant to the related pooling and servicing agreement, a trustee will be required to examine those documents and to determine whether they conform to the requirements of the pooling and servicing agreement. REGARDING THE FEES, INDEMNITIES AND POWERS OF THE TRUSTEE As and to the extent described in the related prospectus supplement, the fees and normal disbursements of any trustee may be the expense of the related servicer or other specified person or may be required to be borne by the related trust fund. Unless otherwise specified in the related prospectus supplement, the trustee for each series of certificates will be entitled to indemnification, from amounts held in the certificate account for that series. The trustee may be indemnified for any loss, liability or expense incurred by the trustee in connection with the trustee's acceptance or 56 administration of its trusts under the related pooling and servicing agreement. However, the indemnification will not extend to any loss, liability or expense that: o constitutes a specific liability imposed on the trustee pursuant to the related pooling and servicing agreement, o constitutes loss, liability or expense incurred by reason of willful misfeasance, bad faith or gross negligence on the part of the trustee in the performance of its obligations and duties or by reason of its reckless disregard of its obligations or duties; or o may arise from a breach of any representation, warranty or covenant of the trustee made in the pooling and servicing agreement. Unless otherwise specified in the related prospectus supplement, the trustee for each series of certificates will be entitled to execute any of its trusts or powers under the related pooling and servicing agreement or perform any of its duties either directly or by or through agents or attorneys. The trustee will not be responsible for any willful misconduct or gross negligence on the part of any other agent or attorney appointed by it with due care. RESIGNATION AND REMOVAL OF THE TRUSTEE A trustee will be permitted at any time to resign from its obligations and duties under the related pooling and servicing agreement by giving written notice to us. Upon receiving a notice of resignation, we, or any other person as may be specified in the related prospectus supplement, will be required to use our best efforts to promptly appoint a successor trustee. If no successor trustee shall have accepted an appointment within a specified period after the giving of the notice of resignation, the resigning trustee may petition any court of competent jurisdiction to appoint a successor trustee. If at any time a trustee ceases to be eligible to continue as the trustee under the related pooling and servicing agreement, or if at any time the trustee becomes incapable of acting, or if some events of, or proceedings in respect of, bankruptcy or insolvency occur with respect to the trustee, we will be authorized to remove the trustee and appoint a successor trustee. In addition, holders of the certificates of any series entitled to at least 51%, or the other percentage specified in the related prospectus supplement, of the voting rights for the series may at any time, with cause, or if so specified in the related prospectus supplement, without cause, remove the trustee under the related pooling and servicing agreement and appoint a successor trustee. Any resignation or removal of a trustee and appointment of a successor trustee will not become effective until acceptance of appointment by the successor trustee. DESCRIPTION OF CREDIT SUPPORT GENERAL Credit support may be provided with respect to one or more classes of the certificates of any series, or with respect to the related mortgage loans or mortgage backed securities backing the certificates. Credit support may be in the form of letters of credit, overcollateralization, the subordination of one or more classes of certificates, insurance policies, surety bonds, guarantees or reserve funds, or any combination of the foregoing. If so provided in the related prospectus supplement, any instrument of credit support may provide credit enhancement for more than one series of certificates to the extent described in that instrument. Unless otherwise provided in the related prospectus supplement for a series of certificates, the credit support will not provide protection against all risks of loss and will not guarantee payment to you of all amounts to which you are entitled under the related pooling and servicing agreement. If losses or shortfalls occur that exceed the amount covered by the related credit support or that are not covered by the credit support, you will bear the share of deficiencies allocable to your certificates. Moreover, if an instrument of credit support covers more than one series of certificates, holders of certificates of one series will be subject to the risk that that credit support will be exhausted 57 by the claims of the holders of certificates of one or more other series before they receive their intended share of the credit support coverage. If credit support is provided with respect to one or more classes of certificates of a series, or with respect to the related mortgage loans or mortgage backed securities backing the certificates, the related prospectus supplement will include a description of the following: o the nature and amount of coverage under the credit support; o any conditions to payment thereunder not otherwise described in this prospectus; o the conditions, if any, under which the amount of coverage under the credit support may be reduced and under which the credit support may be terminated or replaced; and o the material provisions relating to the credit support. Additionally, the related prospectus supplement will set forth some information with respect to the obligor under any instrument of credit support, including the following: o a brief description of its principal business activities; o its principal place of business, place of incorporation and the jurisdiction under which it is chartered or licensed to do business; o if applicable, the identity of regulatory agencies that exercise primary jurisdiction over the conduct of its business; and o its total assets, and its stockholders' equity or policyholders' surplus, if applicable, as of a date that will be specified in the prospectus supplement. SUBORDINATE CERTIFICATES If so specified in the related prospectus supplement, one or more classes of certificates of a series may be subordinate certificates. To the extent specified in the related prospectus supplement, the rights of the holders of subordinate certificates to receive distributions from the certificate account on any distribution date will be subordinated to the corresponding rights of the holders of senior certificates. If so provided in the related prospectus supplement, the subordination of a class may apply only in the event of, or may be limited to, some types of losses or shortfalls. The related prospectus supplement will set forth information concerning the method and amount of subordination provided by a class or classes of subordinate certificates in a series and the circumstances under which the subordination will be available. CROSS-SUPPORT PROVISIONS If the mortgage loans or mortgage backed securities in any trust fund are divided into separate groups, each supporting a separate class or classes of certificates of the related series, credit support may be provided by cross-support provisions requiring that distributions be made on senior certificates evidencing interests in one group of mortgage loans or mortgage backed securities prior to distributions on subordinate certificates evidencing interests in a different group of mortgage loans or mortgage backed securities within the trust fund. The prospectus supplement for a series that includes a cross-support provision will describe the manner and conditions for applying the provisions. INSURANCE OR GUARANTEES WITH RESPECT TO MORTGAGE LOANS If so provided in the prospectus supplement for a series of certificates, mortgage loans included in the related trust fund will be covered for some default risks by insurance policies or guarantees. To the extent deemed by us to be material, a copy of each instrument will accompany the Current Report on Form 8-K to be filed with the SEC within 15 days of issuance of the certificates of the related series. 58 LETTER OF CREDIT If so provided in the prospectus supplement for a series of certificates, deficiencies in amounts otherwise payable on those certificates or some classes of those certificates will be covered by one or more letters of credit, issued by a bank or financial institution specified in the prospectus supplement. Under a letter of credit, the issuing bank will be obligated to honor draws in an aggregate fixed dollar amount, net of unreimbursed payments, generally equal to a percentage specified in the related prospectus supplement of the aggregate principal balance of the mortgage assets on the related cut-off date or of the initial aggregate certificate balance of one or more classes of certificates. If so specified in the related prospectus supplement, the letter of credit may permit draws only in the event of some types of losses and shortfalls. The amount available under the letter of credit will, in all cases, be reduced to the extent of the unreimbursed payments thereunder and may otherwise be reduced as described in the related prospectus supplement. The obligations of the issuing bank under the letter of credit for each series of certificates will expire at the earlier of the date specified in the related prospectus supplement or the termination of the trust fund. A copy of any related letter of credit will accompany the Current Report on Form 8-K to be filed with the SEC within 15 days of issuance of the certificates of the related series. CERTIFICATE INSURANCE AND SURETY BONDS If so provided in the prospectus supplement for a series of certificates, deficiencies in amounts otherwise payable on those certificates or some classes of those certificates will be covered by insurance policies and/or surety bonds provided by one or more insurance companies or sureties. The instruments may cover, with respect to one or more classes of certificates of the related series, timely distributions of interest and/or full distributions of principal on the basis of a schedule of principal distributions set forth in or determined in the manner specified in the related prospectus supplement. The related prospectus supplement will describe any limitations on the draws that may be made under any insurance policies and/or surety bonds. A copy of any insurance policy or surety bond will accompany the Current Report on Form 8-K to be filed with the SEC within 15 days of issuance of the certificates of the related series. RESERVE FUNDS If so provided in the prospectus supplement for a series of certificates, deficiencies in amounts otherwise payable on the certificates or some classes of those certificates will be covered, to the extent of available funds, by one or more reserve funds. Cash, a letter of credit, permitted investments, a demand note or a combination of the following will be deposited into the reserve funds, in the amounts specified in the prospectus supplement. If so specified in the related prospectus supplement, the reserve fund for a series may also be funded over time by a specified amount of the collections received on the related mortgage assets. Amounts on deposit in any reserve fund for a series, together with the reinvestment income thereon, if any, will be applied for the purposes, in the manner, and to the extent specified in the related prospectus supplement. If so specified in the related prospectus supplement, reserve funds may be established to provide protection only against some types of losses and shortfalls. Following each distribution date, amounts in a reserve fund in excess of any amount required to be maintained therein may be released from the reserve fund under the conditions and to the extent specified in the related prospectus supplement. If so specified in the related prospectus supplement, amounts deposited in any reserve fund will be invested in permitted investments. Unless otherwise specified in the related prospectus supplement, any reinvestment income or other gain from the investments will be credited to the related reserve fund for the series, and any loss resulting from the investments will be charged to that reserve fund. However, any reinvestment income or gain from investments may be payable to any related servicer or another service provider as additional compensation for its services. The reserve fund, if any, for a series will not be a part of the trust fund unless otherwise specified in the related prospectus supplement. CREDIT SUPPORT WITH RESPECT TO MBS If so provided in the prospectus supplement for a series of certificates, any MBS included in the related trust fund and/or the related underlying mortgage loans may be covered by one or more of the types of credit support 59 described in this prospectus. The related prospectus supplement will specify, as to each credit support instrument, the information indicated above, to the extent the information is material and available. LEGAL ASPECTS OF MORTGAGE LOANS The following discussion contains general summaries of some legal aspects of loans secured by commercial and multifamily residential properties. Because the legal aspects are governed by applicable state law, which laws may differ substantially, the summaries do not purport to be complete, to reflect the laws of any particular state, or to encompass the laws of all states in which the security for the mortgage loans, or mortgage loans underlying any MBS, is situated. Accordingly, the summaries are qualified in their entirety by reference to the applicable laws of those states. For additional information regarding legal aspects of mortgage loans, you should review the section in this prospectus titled "Description of the Trust Funds--Mortgage Loans". For purposes of the following discussion, the term mortgage loan includes a mortgage loan underlying an MBS. GENERAL Each mortgage loan will be evidenced by a note or bond and secured by an instrument granting a security interest in real property, which may be a mortgage, deed of trust or a deed to secure debt, depending upon the prevailing practice and law in the state in which the related mortgaged property is located. Mortgages, deeds of trust and deeds to secure debt are herein collectively referred to as mortgages. A mortgage creates a lien upon, or grants a title interest in, the real property covered thereby, and represents the security for the repayment of the indebtedness customarily evidenced by a promissory note. The priority of the lien created or interest granted will depend on the terms of the mortgage and, in some cases, on the terms of separate subordination agreements or intercreditor agreements with others that hold interests in the real property, the knowledge of the parties to the mortgage and, generally, the order of recordation of the mortgage in the appropriate public recording office. However, the lien of a recorded mortgage will generally be subordinate to later-arising liens for real estate taxes and assessments and other charges imposed under governmental police powers. TYPES OF MORTGAGE INSTRUMENTS There are two parties to a mortgage: a mortgagor, the borrower and usually the owner of the subject property, and a mortgagee, the lender. In contrast, a deed of trust is a three-party instrument, among a trustor, the equivalent of a borrower, a trustee to whom the real property is conveyed, and a beneficiary, the lender, for whose benefit the conveyance is made. Under a deed of trust, the trustor grants the property, irrevocably until the debt is paid, in trust and generally with a power of sale, to the trustee to secure repayment of the indebtedness evidenced by the related note. A deed to secure debt typically has two parties. The grantor, the borrower, conveys title to the real property to the grantee, the lender, generally with a power of sale, until the time as the debt is repaid. In a case where the borrower is a land trust, there would be an additional party because legal title to the property is held by a land trustee under a land trust agreement for the benefit of the borrower. At origination of a mortgage loan involving a land trust, the borrower executes a separate undertaking to make payments on the related note. The mortgagee's authority under a mortgage, the trustee's authority under a deed of trust and the grantee's authority under a deed to secure debt are governed by the express provisions of the related instrument, the law of the state in which the real property is located, some federal laws, including, without limitation, the Servicemembers Civil Relief Act, as amended, and, in some deed of trust transactions, the directions of the beneficiary. LEASES AND RENTS Mortgages that encumber income-producing property often contain an assignment of rents and leases, pursuant to which the borrower assigns to the lender the borrower's right, title and interest as landlord under each lease and the income derived therefrom, while, unless rents are to be paid directly to the lender, retaining a revocable license to collect the rents for so long as there is no default. If the borrower defaults, the license terminates and the lender is entitled to collect the rents. Local law may require that the lender take possession of the property and/or obtain a court-appointed receiver before becoming entitled to collect the rents. 60 In most states, hotel and motel room revenues are considered accounts receivable under the UCC; in cases where hotels or motels constitute loan security, the revenues are generally pledged by the borrower as additional security for the loan. In general, the lender must file financing statements in order to perfect its security interest in the revenues and must file continuation statements, generally every five years, to maintain perfection of its security interest. Even if the lender's security interest in room revenues is perfected under the UCC, it may be required to commence a foreclosure action or otherwise take possession of the property in order to collect the room revenues following a default. For additional information regarding foreclosure action with respect to revenue from income-producing properties, you should also review the section in the prospectus titled "--Bankruptcy Laws". PERSONAL PROPERTY In the case of some types of mortgaged properties, such as hotels, motels and nursing homes, personal property, to the extent owned by the borrower and not previously pledged, may constitute a significant portion of the property's value as security. The creation and enforcement of liens on personal property are governed by the UCC. Accordingly, if a borrower pledges personal property as security for a mortgage loan, the lender generally must file UCC financing statements in order to perfect its security interest therein, and must file continuation statements, generally every five years, to maintain that perfection. FORECLOSURE General. Foreclosure is a legal procedure that allows the lender to recover its mortgage debt by enforcing its rights and available legal remedies under the mortgage. If the borrower defaults in payment or performance of its obligations under the note or mortgage, the lender has the right to institute foreclosure proceedings to sell the real property at public auction to satisfy the indebtedness. Foreclosure Procedures Vary from State to State. Two primary methods of foreclosing a mortgage are judicial foreclosure, involving court proceedings, and non-judicial foreclosure pursuant to a power of sale granted in the mortgage instrument. Other foreclosure procedures are available in some states, but they are either infrequently used or available only in limited circumstances. A foreclosure action is subject to most of the delays and expenses of other lawsuits if defenses are raised or counterclaims are interposed, and sometimes requires several years to complete. Moreover, as discussed below, even a non-collusive, regularly conducted foreclosure sale may be challenged as a fraudulent conveyance, regardless of the parties' intent, if a court determines that the sale was for less than fair consideration and the sale occurred while the borrower was insolvent and within a specified period prior to the borrower's filing for bankruptcy protection. Judicial Foreclosure. A judicial foreclosure proceeding is conducted in a court having jurisdiction over the mortgaged property. Generally, the action is initiated by the service of legal pleadings upon all parties having a subordinate interest of record in the real property and all parties in possession of the property, under leases or otherwise, whose interests are subordinate to the mortgage. Delays in completion of the foreclosure may occasionally result from difficulties in locating defendants. When the lender's right to foreclose is contested, the legal proceedings can be time-consuming. Upon successful completion of a judicial foreclosure proceeding, the court generally issues a judgment of foreclosure and appoints a referee or other officer to conduct a public sale of the mortgaged property, the proceeds of which are used to satisfy the judgment. Public sales of mortgaged property are made in accordance with procedures that vary from state to state. Equitable Limitations on Enforceability of Some Provisions. United States courts have traditionally imposed general equitable principles to limit the remedies available to lenders in foreclosure actions. These principles are generally designed to relieve borrowers from the effects of mortgage defaults perceived as harsh or unfair. Relying on the principles, a court may alter the specific terms of a loan to the extent it considers necessary to prevent or remedy an injustice, undue oppression or overreaching, or may require the lender to undertake affirmative actions to determine the cause of the borrower's default and the likelihood that the borrower will be able to reinstate the loan. In some cases, courts have substituted their judgment for that of the lenders and have required that lenders reinstate loans or recast payment schedules in order to accommodate borrowers who are suffering from a temporary financial 61 disability. In other cases, courts have limited the right of the lender to foreclose in the case of a non-monetary default, such as a failure to adequately maintain the mortgaged property or an impermissible further encumbrance of the mortgaged property. Finally, some courts have addressed the issue of whether federal or state constitutional provisions reflecting due process concerns for adequate notice require that a borrower receive notice in addition to statutorily-prescribed minimum notice. For the most part, these cases have upheld the reasonableness of the notice provisions or have found that a public sale under a mortgage providing for a power of sale does not involve sufficient state action to trigger constitutional protections. Non-Judicial Foreclosure/Power of Sale. Foreclosure of a deed of trust is generally accomplished by a non-judicial trustee's sale pursuant to a power of sale typically granted in the deed of trust. A power of sale may also be contained in any other type of mortgage instrument if applicable law so permits. A power of sale under a deed of trust allows a non-judicial public sale to be conducted generally following a request from the beneficiary/lender to the trustee to sell the property upon default by the borrower and after notice of sale is given in accordance with the terms of the mortgage and applicable state law. In some states, prior to the sale, the trustee under the deed of trust must record a notice of default and notice of sale and send a copy to the borrower and to any other party who has recorded a request for a copy of a notice of default and notice of sale. In addition, in some states the trustee must provide notice to any other party having an interest of record in the real property, including junior lienholders. A notice of sale must be posted in a public place and, in most states, published for a specified period of time in one or more newspapers. The borrower or junior lienholder may then have the right, during a reinstatement period required in some states, to cure the default by paying the entire actual amount in arrears, without regard to the acceleration of the indebtedness, plus the lender's expenses incurred in enforcing the obligation. In other states, the borrower or the junior lienholder is not provided a period to reinstate the loan, but has only the right to pay off the entire debt to prevent the foreclosure sale. Generally, state law governs the procedure for public sale, the parties entitled to notice, the method of giving notice and the applicable time periods. Public Sale. A third party may be unwilling to purchase a mortgaged property at a public sale because of the difficulty in determining the value of that property at the time of sale, due to, among other things, redemption rights which may exist and the possibility of physical deterioration of the property during the foreclosure proceedings. Potential buyers may be reluctant to purchase property at a foreclosure sale as a result of the 1980 decision of the United States Court of Appeals for the Fifth Circuit in Durrett v. Washington National Insurance Company and other decisions that have followed its reasoning. The court in Durrett held that even a non-collusive, regularly conducted foreclosure sale was a fraudulent transfer under the federal Bankruptcy Code and, therefore, could be rescinded in favor of the bankrupt's estate, if: o the foreclosure sale was held while the debtor was insolvent; and o the price paid for the foreclosed property did not represent (reasonably equivalent value). Although the reasoning and result of Durrett in respect of the Bankruptcy Code was rejected by the United States Supreme Court decision of BFP v. Resolution Trust Corporation in 1994, the case could nonetheless be persuasive to a court applying a state fraudulent conveyance law which has provisions similar to those construed in Durrett. Generally, state law controls the amount of foreclosure costs and expenses which may be recovered by a lender. Thereafter, subject to the mortgagor's right in some states to remain in possession during a redemption period, if applicable, the lender will become the owner of the property and have both the benefits and burdens of ownership of the mortgaged property. For example, the lender will have the obligation to pay debt service on any senior mortgages, to pay taxes, obtain casualty insurance and to make any repairs at its own expense as are necessary to render the property suitable for sale. Frequently, the lender employs a third party management company to manage and operate the property. The costs of operating and maintaining a commercial or multifamily residential property may be significant and may be greater than the income derived from that property. The costs of management and operation of those mortgaged properties which are hotels, motels or nursing or convalescent homes or hospitals may be particularly significant because of the expertise, knowledge and, with respect to nursing or convalescent homes or hospitals, regulatory compliance, required to run the operations and the effect which foreclosure and a change in ownership may have on the public's and the industry's, including franchisors', perception of the quality of the operations. The lender will commonly obtain the services of a real estate broker and pay the broker's commission in connection with the sale of the property. Depending upon market conditions, the ultimate proceeds of the sale of the 62 property may not equal the amount of the mortgage against the property. Moreover, a lender commonly incurs substantial legal fees and court costs in acquiring a mortgaged property through contested foreclosure and/or bankruptcy proceedings. Furthermore, a few states require that any environmental contamination at some types of properties be cleaned up before a property may be resold. In addition, a lender may be responsible under federal or state law for the cost of cleaning up a mortgaged property that is environmentally contaminated. Generally state law controls the amount of foreclosure expenses and costs, including attorneys' fees, that may be recovered by a lender. For additional information regarding environmental costs associated with a mortgaged property, you should review the section in this prospectus titled "--Environmental Risks". The holder of a junior mortgage that forecloses on a mortgaged property does so subject to senior mortgages and any other prior liens, and may be obliged to keep senior mortgage loans current in order to avoid foreclosure of its interest in the property. In addition, if the foreclosure of a junior mortgage triggers the enforcement of a due-on-sale clause contained in a senior mortgage, the junior mortgagee could be required to pay the full amount of the senior mortgage indebtedness or face foreclosure. The proceeds received by the referee or trustee from a foreclosure sale are generally applied first to the costs, fees and expenses of sale and then in satisfaction of the indebtedness secured by the mortgage under which the sale was conducted. Any proceeds remaining after satisfaction of senior mortgage debt are generally payable to the holders of junior mortgages and other liens and claims in order of their priority, whether or not the borrower is in default. Any additional proceeds are generally payable to the borrower. The payment of the proceeds to the holders of junior mortgages may occur in the foreclosure action of the senior mortgage or a subsequent ancillary proceeding or may require the institution of separate legal proceedings by the holders. Rights of Redemption. The purposes of a foreclosure action are to enable the lender to realize upon its security and to bar the borrower, and all persons who have interests in the property that are subordinate to that of the foreclosing lender, from exercise of their equity of redemption. The doctrine of equity of redemption provides that, until the property encumbered by a mortgage has been sold in accordance with a properly conducted foreclosure and foreclosure sale, those having interests that are subordinate to that of the foreclosing lender have an equity of redemption and may redeem the property by paying the entire debt with interest. Those having an equity of redemption must generally be made parties and joined in the foreclosure proceeding in order for their equity of redemption to be terminated. The equity of redemption is a common-law (non-statutory) right which should be distinguished from post-sale statutory rights of redemption. In some states, after sale pursuant to a deed of trust or foreclosure of a mortgage, the borrower and foreclosed junior lienors are given a statutory period in which to redeem the property. In some states, statutory redemption may occur only upon payment of the foreclosure sale price. In other states, redemption may be permitted if the former borrower pays only a portion of the sums due. The effect of a statutory right of redemption is to diminish the ability of the lender to sell the foreclosed property because the exercise of a right of redemption would defeat the title of any purchaser through a foreclosure. Consequently, the practical effect of the redemption right is to force the lender to maintain the property and pay the expenses of ownership until the redemption period has expired. In some states, a post-sale statutory right of redemption may exist following a judicial foreclosure, but not following a trustee's sale under a deed of trust. Anti-Deficiency Legislation. Some or all of the mortgage loans may be nonrecourse loans, as to which recourse in the case of default will be limited to the mortgaged property and any other assets that were pledged to secure the mortgage loan. However, even if a mortgage loan by its terms provides for recourse to the borrower's other assets, a lender's ability to realize upon those assets may be limited by state law. For example, in some states a lender cannot obtain a deficiency judgment against the borrower following foreclosure or sale under a deed of trust. A deficiency judgment is a personal judgment against the former borrower equal to the difference between the net amount realized upon the public sale of the real property and the amount due to the lender. Other statutes may require the lender to exhaust the security afforded under a mortgage before bringing a personal action against the borrower. In some other states, the lender has the option of bringing a personal action against the borrower on the debt without first exhausting that security. However, in some of those states, the lender, following judgment on the personal action, may be deemed to have elected a remedy and thus may be precluded from foreclosing upon the security. Consequently, lenders in those states where such an election of remedy provision exists will usually proceed first against the security. Finally, other statutory provisions, designed to protect borrowers from exposure to large 63 deficiency judgments that might result from bidding at below-market values at the foreclosure sale, limit any deficiency judgment to the excess of the outstanding debt over the fair market value of the property at the time of the sale. LEASEHOLD RISKS Mortgage loans may be secured by a mortgage on the borrower's leasehold interest in a ground lease. Leasehold mortgage loans are subject to some risks not associated with mortgage loans secured by a lien on the fee estate of the borrower. The most significant of these risks is that if the borrower's leasehold were to be terminated upon a lease default, the leasehold mortgagee would lose its security. This risk may be lessened under some circumstances such as the following: o if the ground lease requires the lessor to give the leasehold mortgagee notices of lessee defaults and an opportunity to cure them; o if the ground lease permits the leasehold estate to be assigned to and by the leasehold mortgagee or the purchaser at a foreclosure sale; and o if the ground lease contains some other protective provisions typically included in a mortgageable ground lease. The ground leases that secure the mortgage loans at issue may not contain some of these protective provisions, and the related mortgages may not contain the other protections discussed in the next paragraph. Protective ground lease provisions include the following: o the right of the leasehold mortgagee to receive notices from the ground lessor of any defaults by the borrower under the ground lease; o the right of the leasehold mortgagee to cure the defaults, with adequate cure periods; o if a default is not susceptible of cure by the leasehold mortgagee, the right to acquire the leasehold estate through foreclosure or otherwise; o the ability of the ground lease to be assigned to and by the leasehold mortgagee or purchaser at a foreclosure sale and for the concomitant release of the ground lessee's liabilities thereunder; and o the right of the leasehold mortgagee to enter into a new ground lease with the ground lessor on the same terms and conditions as the old ground lease in the event of a termination of the ground lease. In addition to the foregoing protections, a leasehold mortgage may prohibit the ground lessee from treating the ground lease as terminated in the event of the ground lessor's bankruptcy and rejection of the ground lease in the lessor's bankruptcy case, although this provision may not be enforceable. As further protection, a leasehold mortgage may provide for the assignment of the debtor-ground lessee's right to reject the lease in a ground lessee bankruptcy case, such a provision may not be enforceable. Without the protections described in this and the foregoing paragraph, a leasehold mortgagee may be more likely to lose the collateral securing its leasehold mortgage. In addition, the terms and conditions of a leasehold mortgage are subject to the terms and conditions of the ground lease. Although some rights given to a ground lessee can be limited by the terms of a leasehold mortgage, the rights of a ground lessee or a leasehold mortgagee with respect to, among other things, insurance, casualty and condemnation proceeds will ordinarily be governed by the provisions of the ground lease, unless otherwise agreed to by the ground lessee and leasehold mortgagee. COOPERATIVE SHARES Mortgage loans may be secured by a security interest on the borrower's ownership interest in shares, and the proprietary leases appurtenant to those shares, allocable to cooperative dwelling units that may be vacant or occupied by non-owner tenants. The loans are subject to some risks not associated with mortgage loans secured by a lien on the fee estate of a borrower in real property. Such a loan typically is subordinate to the mortgage, if any, 64 on the cooperative's building which, if foreclosed, could extinguish the equity in the building and the proprietary leases of the dwelling units derived from ownership of the shares of the cooperative. Further, transfer of shares in a cooperative are subject to various regulations as well as to restrictions under the governing documents of the cooperative, and the shares may be cancelled in the event that associated maintenance charges due under the related proprietary leases are not paid. Typically, a recognition agreement between the lender and the cooperative provides, among other things, the lender with an opportunity to cure a default under a proprietary lease. Under the laws applicable in many states, foreclosure on cooperative shares is accomplished by a sale in accordance with the provisions of Article 9 of the UCC and the security agreement relating to the shares. Article 9 of the UCC requires that a sale be conducted in a "commercially reasonable" manner, which may be dependent upon, among other things, the notice given the debtor and the method, manner, time, place and terms of the sale. Article 9 of the UCC provides that the proceeds of the sale will be applied first to pay the costs and expenses of the sale and then to satisfy the indebtedness secured by the lender's security interest. A recognition agreement, however, generally provides that the lender's right to reimbursement is subject to the right of the cooperative to receive sums due under the proprietary leases. If, following payment to the lender, there are proceeds remaining, the lender must account to the tenant-stockholder for the surplus. Conversely, if a portion of the indebtedness remains unpaid, the tenant-stockholder may be responsible for the deficiency. For additional information regarding payment of deficiencies, you should review the sections in this prospectus titled "--Anti-Deficiency Legislation." BANKRUPTCY LAWS Operation of the Bankruptcy Code and related state laws may interfere with or affect the ability of a secured lender to realize upon collateral and/or to enforce a deficiency judgment. For example, under the Bankruptcy Code, virtually all actions, including foreclosure actions and deficiency judgment proceedings, to collect a debt are automatically stayed upon the filing of the bankruptcy petition and, often, no interest or principal payments are made during the course of the bankruptcy case. The delay and the consequences caused by an automatic stay can be significant. Also, under the Bankruptcy Code, the filing of a petition in bankruptcy by or on behalf of a junior lienor may stay the senior lender from taking action to foreclose out the junior lien. Under the Bankruptcy Code, provided some substantive and procedural safeguards protective of the lender are met, the amount and terms of a mortgage loan secured by a lien on property of the debtor may be modified. For example, the outstanding amount of the secured loan may be reduced to the then-current value of the property, thus leaving the lender a general unsecured creditor for the difference between the value and the outstanding balance of the loan. Other modifications may include the reduction in the amount of each scheduled payment, a reduction in the rate of interest and/or an alteration of the repayment schedule and an extension (or shortening) of the term to maturity. The lien of the lender may be transferred to other collateral or collateral may be released from the lien of the lender. The priority of a mortgage loan may also be subordinated to bankruptcy court-approved financing. Some bankruptcy courts have approved plans, based on the particular facts of the reorganization case, that effected the cure of a mortgage loan default by paying arrearages over a number of years. Also, a bankruptcy court may permit a debtor to reinstate a loan mortgage payment schedule even if the lender has obtained a final judgment of foreclosure prior to the filing of the debtor's petition. The bankruptcy court can also reinstate accelerated indebtedness and also, in effect, invalidate due-on-sale clauses. A trustee for a lessor, or a lessor as debtor-in-possession, may, despite the provisions of the related mortgage loan to the contrary, sell the mortgaged property free and clear of all liens, which liens would then attach to the proceeds of the sale. The Bankruptcy Code provides that a lender's perfected pre-petition security interest in leases, rents and hotel revenues continues in the post-petition rents and hotel revenues, unless a bankruptcy court orders to the contrary based on the equities of the case. Thus, if the borrower has executed an assignment of leases, unless a court orders otherwise, revenues from a mortgaged property generated after the date the bankruptcy petition is filed will constitute cash collateral under the Bankruptcy Code. Debtors may only use cash collateral upon obtaining the lender's consent or a prior court order finding that the lender's interest in the mortgaged properties is adequately protected. It should be noted, however, that the court may find that the lender has no security interest in either pre- 65 petition or post-petition revenues if the court finds that the loan documents do not contain language covering accounts, room rents, or other forms of personality necessary for a security interest to attach to hotel revenues. Bankruptcies of tenants of the mortgaged properties could have an adverse impact on the borrowers' ability to meet their obligations. For example, rights and obligations under an unexpired lease may not be terminated or modified at any time after the commencement of a case under the Bankruptcy Code solely because of a provision in the lease conditioned upon the commencement of a case under the Bankruptcy Code or some other similar events. In addition, there is an automatic stay of, among other things, any act to obtain possession of property of or from a debtor's estate, which may delay the borrower's exercise of the remedies in the event that a lessee becomes the subject of a proceeding under the Bankruptcy Code. A trustee or a debtor-in-possession in a case under the Bankruptcy Code has the power to assume or to reject an executory contract or an unexpired lease of the debtor, in each case subject to the approval of the bankruptcy court administering the case. If the trustee or debtor-in-possession rejects an executory contract or an unexpired lease, the rejection generally constitutes a breach of the executory contract or unexpired lease immediately before the date of the filing of the petition. As a consequence, the other party or parties to the executory contract or unexpired lease, such as the lessor or borrower, as lessor under a lease, would have only an unsecured claim against the debtor for damages resulting from the breach, which could adversely affect the security for the related mortgage loan. Moreover, the claim of a lessor for the damages from the termination of a lease of real property will be limited to the sum of: 1. the rent reserved by the lease, without acceleration, for the greater of one year or 15 percent, not to exceed three years, of the remaining term of the lease, following the earlier of the date of the filing of the petition and the date on which the leased property was surrendered; and 2. any unpaid rent due under that lease, without acceleration, on the earlier of those dates. If a trustee or debtor-in-possession assumes an executory contract or an unexpired lease of the debtor, the trustee or debtor-in-possession generally may assign the executory contract or unexpired lease, notwithstanding any provision in that executory contract or unexpired lease or in applicable law that prohibits, restricts or conditions the assignment, provided that the trustee or debtor-in-possession provides adequate assurance of future performance by the assignee. The Bankruptcy Code specifically provides, however, that adequate assurance of future performance for purposes of a lease of real property in a shopping center includes the following: o adequate assurance of the source of rent due under the lease, and in the case of an assignment, that the financial condition and operating performance of the proposed assignee and its guarantors, if any, shall be similar to the financial condition and operating performance of the debtor and its guarantors, if any, as of the time the debtor became the lessee under the lease; o that any percentage rent due under the lease will not decline substantially; o that the assumption and assignment of the lease is subject to all the provisions in that lease, including, but not limited to, provisions such as a radius, location, use or exclusivity provision, and will not breach any provision contained in any other lease, financing agreement, or master agreement relating to that shopping center; and o that the assumption or assignment of the lease will not disrupt the tenant mix or balance in that shopping center. Thus, an undetermined third party may assume the obligations of the lessee under a lease in the event of commencement of a proceeding under the Bankruptcy Code with respect to the lessee. If a trustee for a lessor as a debtor-in-possession, rejects an unexpired lease of real property, the lessee may treat that lease as terminated by that rejection or, in the alternative, may remain in possession of the leasehold for the balance of the term of the lease and for any renewal or extension of that term that is enforceable by the lessee under applicable nonbankruptcy law. The Bankruptcy Code provides that if a lessee elects to remain in possession after a rejection of a lease, the lessee may offset against rents reserved under the lease, for the balance of the term after the 66 date of rejection of the lease and any renewal or extension thereof, the value of any damages occurring after the date of rejection caused by the nonperformance of any obligation of the lessor after that date. In a bankruptcy or similar proceeding, action may be taken seeking the recovery as a preferential transfer of any payments made by the mortgagor under the related mortgage loan to the related trust fund. Payments may be protected from recovery as preferences if they are payments in the ordinary course of business made on debts incurred in the ordinary course of business. Whether any particular payment would be protected depends upon the facts specific to a particular transaction. In addition, some court decisions suggest that even a non-collusive, regularly conducted foreclosure sale could be challenged in a bankruptcy case as a fraudulent conveyance, regardless of the parties' intent, if a bankruptcy court determines that the mortgaged property has been sold for less than fair consideration while the mortgagor was insolvent or otherwise meets the statutory criteria for fraudulent transfer. A trustee in bankruptcy, in some cases, may be entitled to collect its costs and expenses in preserving or selling the mortgaged property ahead of payment to the lender. In some circumstances, a debtor in bankruptcy may have the power to grant liens senior to the lien of a mortgage, and analogous state statutes and general principles of equity may also provide a mortgagor with means to halt a foreclosure proceeding or sale and to force a restructuring of a mortgage loan on terms a lender would not otherwise accept. Moreover, the laws of some states also give priority to some tax liens over the lien of a mortgage or deed of trust. Under the Bankruptcy Code, if the court finds that actions of the mortgagee have been unreasonable, the lien of the related mortgage may be subordinated to the claims of unsecured creditors. Pursuant to the doctrines of substantive consolidation or piercing the corporate veil, a bankruptcy court, in the exercise of its equitable powers, also has the authority to order that the assets and liabilities of a related entity be consolidated with those of an entity before it. Thus, property that is ostensibly the property of one entity may be determined to be the property of a different entity in bankruptcy, the automatic stay applicable to the second entity may be extended to the first and the rights of creditors of the first entity may be impaired in the fashion set forth above in the discussion of bankruptcy principles. The application of any of these doctrines to one or more of the mortgagors in the context of the bankruptcy of one or more of their affiliates could result in material impairment of the rights of the certificateholders. On February 5, 2001, the United States Bankruptcy Court for the Northern District of Ohio entered an order refusing to modify an interim cash collateral order that treated inventory and receivables sold by a chapter 11 debtor to two special purpose subsidiaries, not in chapter 11, as property of the debtor's estate. In re LTV Steel Company, case no 0043866 (Bankr. N.D. Ohio). In the February 5 opinion, the court states, "To suggest that Debtor lacks some ownership interest in products that it creates with its own labor, as well as the proceeds to be derived from that labor, is difficult to accept." Entry of a similar order in a bankruptcy case in which an originator of certain mortgage loans was the debtor could result in a material impairment of the rights of the Certificateholders. For each mortgagor that is described as a special purpose entity, single purpose entity or bankruptcy-remote entity in the prospectus supplement, the activities that may be conducted by the mortgagor and its ability to incur debt are restricted by the applicable Mortgage or the organizational documents of that mortgagor. The activities of the mortgagor are restricted in a manner as is intended to make the likelihood of a bankruptcy proceeding being commenced by or against that mortgagor remote, and that mortgagor has been organized and is designed to operate in a manner that makes it reasonably likely that its separate existence will be respected notwithstanding a bankruptcy proceeding in respect of one or more affiliated entities of that mortgagor. However, we make no representation as to the likelihood of the institution of a bankruptcy proceeding by or in respect of any mortgagor or the likelihood that the separate existence of any mortgagor would be respected if there were to be a bankruptcy proceeding in respect of any affiliated entity of a mortgagor. ENVIRONMENTAL RISKS A lender may be subject to unforeseen environmental risks with respect to loans secured by real or personal property, such as the mortgage loans. The environmental risks may give rise to: o a diminution in value of property securing a mortgage loan or the inability to foreclose against the property; or 67 o in some circumstances as more fully described below, liability for clean-up costs or other remedial actions, which liability could exceed the value of the property or the principal balance of the related mortgage loan. Under federal law and the laws of many states, contamination on a property may give rise to a lien on the property for cleanup costs. In several states, such a lien has priority over all existing liens, including those of existing mortgages. In these states, the lien of the mortgage for any mortgage loan may lose its priority to that type of lien. Under the federal Comprehensive Response, Compensation, and Liability Act, a lender may be liable either to the government or to private parties for cleanup costs on a property securing a loan, even if the lender does not cause or contribute to the contamination. CERCLA imposes strict, as well as joint and several, liability on several classes of potentially responsible parties, or PRPs, including current owners and operators of the property who did not cause or contribute to the contamination. Many states have laws similar to CERCLA. Lenders may be held liable under CERCLA as owners or operators unless they qualify for the secured creditor exemption to CERCLA. Court decisions applying the secured-creditor exemption have in the past been inconsistent and confusing. On September 30, 1996, President Clinton signed into law the "Asset Conservation, Lender Liability and Deposit Insurance Protection Act of 1996," which includes amendments to CERCLA and to the underground storage tank provisions of the Resource Conservation and Recovery Act and applies to any claim that was not finally adjudicated as of September 30, 1996. The Act attempts to clarify the activities in which a lender can engage and still have the benefit of a secured creditor exemption. However, the secured creditor exemption is not available to a lender that participates in management of mortgaged property prior to a foreclosure. In order for a lender to be deemed to have participated in the management of a mortgaged property, the lender must actually participate in the operational affairs of the property of the borrower. The Act provides that merely having the capacity to influence, or unexercised right to control operations does not constitute participation in management. A lender will be deemed to have participated in management and will lose the protection of the secured creditor exemption only if it exercises decision-making control over the borrower's environmental compliance and hazardous substance handling or disposal practices, or assumes day-to-day management of environmental compliance or all other operational functions of the mortgaged property. The Act also provides that a lender will continue to have the benefit of the secured creditor exemption even if it forecloses on a mortgaged property, purchases it at a foreclosure sale or accepts a deed-in-lieu of foreclosure provided that the lender seeks to sell the mortgaged property at the earliest practicable commercially reasonable time on commercially reasonable terms. However, the protections afforded lenders under the Act are subject to terms and conditions that have not been clarified by the courts. Moreover, the CERCLA secured-creditor exemption does not necessarily affect the potential for liability under other laws that may also impose liability on "owners or operators". Environment clean-up costs may be substantial. It is possible that environmental clean-up costs could become a liability of the related trust fund and occasion a loss to certificateholders if remedial costs were incurred. In a few states, transfers of some types of properties are conditioned upon cleanup of contamination prior to transfer. It is possible that a property securing a mortgage loan could be subject to transfer restrictions. In such a case, if the lender becomes the owner upon foreclosure, it may be required to clean up the contamination before selling the property. The cost of remediating hazardous substance contamination at a property can be substantial. If a lender is or becomes liable, it can bring an action for contribution against the owner or operator that created the environmental hazard, but that person or entity may be without substantial assets. Accordingly, it is possible that the costs of remediating hazardous substance contamination at a property could become a liability of a trust fund and occasion a loss to certificateholders of the related series. To reduce the likelihood of such a loss, and unless otherwise provided in the related prospectus supplement, the related pooling and servicing agreement will provide that the servicer, acting on behalf of the related trust fund, may not acquire title to a mortgaged property or take over its operation unless the servicer, based on a report prepared by a person who regularly conducts environmental site assessments, has made the determination that it is appropriate to do so, as described under "Description of the Pooling and Servicing Agreements--Realization Upon Defaulted Mortgage Loans." There can be no assurance that any environmental site assessment obtained by the servicer will detect all possible environmental contamination or conditions or that the other requirements of the related pooling 68 and servicing agreement, even if fully observed by the servicer, will in fact insulate the related trust fund from liability with respect to environmental matters. Even when a lender is not directly liable for cleanup costs on property securing loans, if a property securing a loan is contaminated, the value of the security is likely to be affected. In addition, a lender bears the risk that unanticipated cleanup costs may jeopardize the borrower's repayment. Neither of these two issues is likely to pose risks exceeding the amount of unpaid principal and interest of a particular loan secured by a contaminated property, particularly if the lender declines to foreclose on a mortgage secured by the property. If a lender forecloses on a mortgage secured by a property the operations of which are subject to environmental laws and regulations, the lender will be required to operate the property in accordance with those laws and regulations. Compliance may entail some expense. In addition, a lender may be obligated to disclose environmental conditions on a property to government entities and/or to prospective buyers, including prospective buyers at a foreclosure sale or following foreclosure. The disclosure may decrease the amount that prospective buyers are willing to pay for the affected property and thereby lessen the ability of the lender to recover its investment in a loan upon foreclosure. DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS Some of the mortgage loans may contain due-on-sale and due-on-encumbrance clauses that purport to permit the lender to accelerate the maturity of the loan if the borrower transfers or encumbers the related mortgaged property. In recent years, court decisions and legislative actions placed substantial restrictions on the right of lenders to enforce the clauses in many states. By virtue, however, of the Garn-St Germain Depository Institutions Act of 1982, effective October 15, 1982, which purports to preempt state laws that prohibit the enforcement of due-on-sale clauses by providing, among other matters, that due-on-sale clauses in some loans made after the effective date of the Garn Act are enforceable, within some limitations, as set forth in the Garn Act and the regulations promulgated thereunder, the servicer may nevertheless have the right to accelerate the maturity of a mortgage loan that contains a due-on-sale provision upon transfer of an interest in the property, regardless of the servicer's ability to demonstrate that a sale threatens its legitimate security interest. SUBORDINATE FINANCING Some of the mortgage loans may not restrict the ability of the borrower to use the mortgaged property as security for one or more additional loans. Where a borrower encumbers a mortgaged property with one or more junior liens, the senior lender is subjected to additional risk. First, the borrower may have difficulty servicing and repaying multiple loans. Moreover, if the subordinate financing permits recourse to the borrower, as is frequently the case, and the senior loan does not, a borrower may have more incentive to repay sums due on the subordinate loan. Second, acts of the senior lender that prejudice the junior lender or impair the junior lender's security may create a superior equity in favor of the junior lender. For example, if the borrower and the senior lender agree to an increase in the principal amount of or the interest rate payable on the senior loan, the senior lender may lose its priority to the extent any existing junior lender is harmed or the borrower is additionally burdened. Third, if the borrower defaults on the senior loan and/or any junior loan or loans, the existence of junior loans and actions taken by junior lenders can impair the security available to the senior lender and can interfere with or delay the taking of action by the senior lender. Moreover, the bankruptcy of a junior lender may operate to stay foreclosure or similar proceedings by the senior lender. DEFAULT INTEREST AND LIMITATIONS ON PREPAYMENTS Notes and mortgages may contain provisions that obligate the borrower to pay a late charge or additional interest if payments are not timely made, and in some circumstances, may prohibit prepayments for a specified period and/or condition prepayments upon the borrower's payment of prepayment fees or yield maintenance penalties. In some states, there are or may be specific limitations upon the late charges which a lender may collect from a borrower for delinquent payments. Some states also limit the amounts that a lender may collect from a borrower as an additional charge if the loan is prepaid. In addition, the enforceability of provisions that provide for prepayment fees or penalties upon an involuntary prepayment is unclear under the laws of many states. 69 ADJUSTABLE RATE LOANS The laws of some states may provide that mortgage notes relating to adjustable rate loans are not negotiable instruments under the UCC. In that event, the related trust fund will not be deemed to be a holder in due course within the meaning of the UCC and may take a mortgage note subject to restrictions on the ability to foreclose and to contractual defenses available to a mortgagor. APPLICABILITY OF USURY LAWS Title V of the Depository Institutions Deregulation and Monetary Control Act of 1980, as amended, provides that state usury limitations shall not apply to some types of residential (including multifamily) first mortgage loans originated by some lenders after March 31, 1980. Title V authorized any state to reimpose interest rate limits by adopting, before April 1, 1983, a law or constitutional provision that expressly rejects application of the federal law. In addition, even where Title V is not so rejected, any state is authorized by the law to adopt a provision limiting discount points or other charges on mortgage loans covered by Title V. Some states have taken action to reimpose interest rate limits and/or to limit discount points or other charges. No mortgage loan originated in any state in which application of Title V has been expressly rejected or a provision limiting discount points or other charges has been adopted, will, if originated after that rejection or adoption, be eligible for inclusion in a trust fund unless: o the mortgage loan provides for an interest rate, discount points and charges as are permitted under the laws of the state; or o the mortgage loan provides that the terms of that mortgage loan are to be construed in accordance with the laws of another state under which its interest rate, discount points and charges would not be usurious and the borrower's counsel has rendered an opinion that the choice of law provision would be given effect. SERVICEMEMBERS CIVIL RELIEF ACT Under the terms of the Servicemembers Civil Relief Act, as amended, a borrower who enters military service after the origination of the borrower's mortgage loan, including a borrower who was in reserve status and is called to active duty after origination of the mortgage loan, may not be charged interest, including fees and charges, above an annual rate of 6% during the period of the borrower's active duty status, unless a court orders otherwise upon application of the lender. The Relief Act applies to individuals who are members of the Army, Navy, Air Force, Marines, National Guard, Reserves, Coast Guard and officers of the U.S. Public Health Service assigned to duty with the military. Because the Relief Act applies to individuals who enter military service, including reservists who are called to active duty, after origination of the related mortgage loan, we cannot give you any information as to the number of loans with individuals as borrowers that may be affected by the Relief Act. Application of the Relief Act would adversely affect, for an indeterminate period of time, the ability of any servicer to collect full amounts of interest on some of the mortgage loans. Any shortfalls in interest collections resulting from the application of the Relief Act would result in a reduction of the amounts distributable to the holders of the related series of certificates. The shortfalls would not be covered by advances or, unless otherwise specified in the related prospectus supplement, any instrument of credit support provided in connection with the certificates. In addition, the Relief Act imposes limitations that would impair the ability of the servicer to foreclose on an affected mortgage loan during the borrower's period of active duty status, and, under some circumstances, during an additional three-month period thereafter. Thus, in the event a mortgage loan goes into default, there may be delays and losses occasioned by the inability to realize upon the mortgaged property in a timely fashion. TYPE OF MORTGAGED PROPERTY The lender may be subject to additional risk depending upon the type and use of the mortgaged property in question. For instance, mortgaged properties which are hospitals, nursing homes or convalescent homes may present special risks to lenders in large part due to significant governmental regulation of the operation, maintenance, control and financing of health care institutions. Mortgages on mortgaged properties which are owned by the borrower under a condominium form of ownership are subject to the declaration, by-laws and other rules and 70 regulation of the condominium association. Mortgaged properties which are hotels or motels may present additional risk to the lender in that: o hotels and motels are typically operated pursuant to franchise, management and operating agreements which may be terminable by the operator; and o the transferability of the hotel's operating, liquor and other licenses to the entity acquiring the hotel either through purchase or foreclosure is subject to the vagaries of local law requirements. In addition, mortgaged properties which are multifamily properties or cooperatively owned multifamily properties may be subject to rent control laws, which could impact the future cash flows of the properties. AMERICANS WITH DISABILITIES ACT Under Title III of the Americans with Disabilities Act of 1990 and rules promulgated thereunder, in order to protect individuals with disabilities, public accommodations (such as hotels, shopping centers, hospitals, schools and social service center establishments) must remove architectural and communication barriers which are structural in nature from existing places of public accommodation to the extent "readily achievable" within the meaning of the ADA. In addition, under the ADA, alterations to a place of public accommodation or a commercial facility are to be made so that, to the maximum extent feasible, each altered portion is readily accessible to and usable by individuals with disabilities. The "readily achievable" standard takes into account, among other factors, the financial resources of the affected site, owner, landlord or other applicable person. In addition to imposing a possible financial burden on the borrower in its capacity as owner or landlord, the ADA may also impose the requirements on a foreclosing lender who succeeds to the interest of the borrower as owner or landlord. Furthermore, since the "readily achievable" standard may vary depending on the financial condition of the owner or landlord, a foreclosing lender who is financially more capable than the borrower of complying with the requirements of the ADA may be subject to more stringent requirements than those to which the borrower is subject. FORFEITURE FOR DRUG, RICO AND MONEY LAUNDERING VIOLATIONS Federal law provides that property purchased or improved with assets derived from criminal activity or otherwise tainted, or used in the commission of certain offenses, can be seized and ordered forfeited to the United States of America. The offenses which can trigger such a seizure and forfeiture include, among others, violations of the Racketeer Influenced and Corrupt Organizations Act, the Bank Secrecy Act, the anti-money laundering laws and regulations, including the USA Patriot Act of 2001 and the regulations issued pursuant to that Act, as well as the narcotic drug laws. In many instances, the United States may seize the property even before a conviction occurs. In the event of a forfeiture proceeding, a lender may be able to establish its interest in the property by proving that (1) its mortgage was executed and recorded before the commission of the illegal conduct from which the assets used to purchase or improve the property were derived or before any other crime upon which the forfeiture is based, or (2) the lender was, at the time of the execution of the mortgage, "did not know or was reasonably without cause to believe that the property was subject to forfeiture." However, there is no assurance that such a defense will be successful. MATERIAL FEDERAL INCOME TAX CONSEQUENCES The following is a general discussion of the anticipated material federal income tax consequences of the purchase, ownership and disposition of certificates. The discussion below does not purport to address all federal income tax consequences that may be applicable to particular categories of investors, some of which, such as banks and insurance companies, may be subject to special rules. Except as noted below, this discussion applies to United States persons who hold the certificates as capital assets. The authorities on which this discussion is based are subject to change or differing interpretations, and any related change or interpretation could apply retroactively. This discussion reflects the applicable provisions of the Internal Revenue Code of 1986, as amended, as well as the REMIC regulations promulgated by the U.S. Department of Treasury. Investors should consult their own tax advisors in determining the federal, state, local and other tax consequences to them of the purchase, ownership and disposition of certificates. 71 For purposes of this discussion, references to the mortgage loans include references to the mortgage loans underlying MBS included in the mortgage assets, and, where the applicable prospectus supplement provides for a retained yield (the "Retained Interest") with respect to the mortgage loans underlying a series of certificates, references to the mortgage loans will be deemed to refer to that portion of the mortgage loans held by the trust fund which does not include the Retained Interest. References to a holder or certificateholder in this discussion generally mean the beneficial owner of a certificate. FEDERAL INCOME TAX CONSEQUENCES FOR REMIC CERTIFICATES GENERAL With respect to a particular series of certificates, an election may be made to treat the trust fund or one or more segregated pools of assets therein as one or more REMICs within the meaning of Internal Revenue Code Section 860D. A trust fund or any of its portions as to which a REMIC election will be made will be referred to as a REMIC pool. For purposes of this discussion, certificates of a series as to which one or more REMIC elections are made are referred to as REMIC certificates and will consist of one or more classes of regular certificates and one class of residual certificates in the case of each REMIC pool. Qualification as a REMIC requires ongoing compliance with some conditions. With respect to each series of REMIC certificates, Cadwalader, Wickersham & Taft LLP, our counsel, has advised us that in the firm's opinion, assuming: o the making of such an election; o compliance with the pooling and servicing agreement; and o compliance with any changes in the law, including any amendments to the Internal Revenue Code or applicable Treasury regulations thereunder, each REMIC pool will qualify as a REMIC. The regular certificates will be considered to be "regular interests" in the REMIC pool within the meaning of Internal Revenue Code Section 860D and generally will be treated for federal income tax purposes as if they were newly originated debt instruments, and the residual certificates will be considered to be the sole class of "residual interests" in the REMIC pool within the meaning of Internal Revenue Code Section 860D. The prospectus supplement for each series of certificates will indicate whether one or more REMIC elections will be made with respect to the related trust fund, in which event references to REMIC or REMIC pool herein shall be deemed to refer to each such REMIC pool. If so specified in the applicable prospectus supplement, the portion of a trust fund as to which a REMIC election is not made may be treated as a grantor trust for federal income tax purposes. For additional information regarding federal income tax consequences of holding the certificates, you should also review the section in this prospectus titled "--Federal Income Tax Consequences for Certificates as to Which No REMIC Election Is Made." CHARACTERIZATION OF INVESTMENTS IN REMIC CERTIFICATES In general, unless otherwise provided in the related prospectus supplement, the REMIC certificates will be "real estate assets" within the meaning of Section 856(c)(5)(B) of the Internal Revenue Code and assets described in Section 7701(a)(19)(C) of the Internal Revenue Code in the same proportion that the assets of the REMIC underlying such certificates would be so treated. However, to the extent that the REMIC assets constitute mortgages on property not used for residential or other prescribed purposes, the REMIC certificates will not be treated as assets qualifying under Section 7701(a)(19)(C) of the Internal Revenue Code. Moreover, if 95% or more of the assets of the REMIC qualify for any of the foregoing treatments at all times during a calendar year, the REMIC certificates will qualify for the corresponding status in their entirety for that calendar year. Interest, including original issue discount, on the regular certificates and income allocated to the residual certificates will be interest described in Section 856(c)(3)(B) of the Internal Revenue Code to the extent that such certificates are treated as "real estate assets" within the meaning of Section 856(c)(5)(B) of the Internal Revenue Code. In addition, the regular certificates will be, if transferred to a REMIC on its startup day in exchange for an interest in such REMIC, "qualified mortgages" within the meaning of Section 860G(a)(3) of the Internal Revenue Code. The determination 72 as to the percentage of the REMIC's assets that constitute assets described in the foregoing sections of the Internal Revenue Code will be made with respect to each calendar quarter based on the average adjusted basis of each category of the assets held by the REMIC during such calendar quarter. The special servicer, servicer, or the trustee, as required under the pooling and servicing agreement will report those determinations to certificateholders in the manner and at the times required by applicable Treasury regulations. The assets of the REMIC will include, in addition to mortgage loans, payments on mortgage loans held pending distribution on the REMIC certificates and property acquired by foreclosure held pending sale, and may include amounts in reserve accounts. It is unclear whether property acquired by foreclosure held pending sale, and amounts in reserve accounts would be considered to be part of the mortgage loans, or whether such assets, to the extent not invested in assets described in the foregoing sections, otherwise would receive the same treatment as the mortgage loans for purposes of all of the foregoing sections. In addition, in some instances mortgage loans may not be treated entirely as assets described in the foregoing sections. If so, the related prospectus supplement will describe the mortgage loans that may not be so treated. The REMIC regulations do provide, however, that payments on mortgage loans held pending distribution are considered part of the mortgage loans for purposes of Section 856(c)(5)(B) of the Internal Revenue Code. Furthermore, foreclosure property will qualify as "real estate assets" under Section 856(c)(5)(B) of the Internal Revenue Code. TIERED REMIC STRUCTURES For some series of REMIC certificates, two or more separate elections may be made to treat designated portions of the related trust fund as REMICs ("Tiered REMICs") for federal income tax purposes. The Tiered REMICs will each qualify as a REMIC and the REMIC certificates issued by the Tiered REMICs, will be considered to evidence ownership of regular certificates or residual certificates in the related REMIC within the meaning of the REMIC Provisions. Solely for purposes of determining whether the REMIC certificates will be "real estate assets" within the meaning of Section 856(c)(5)(B) of the Internal Revenue Code and, "loans secured by an interest in real property" under Section 7701(a)(19)(C) of the Internal Revenue Code, and whether the income on such certificates is interest described in Section 856(c)(3)(B) of the Internal Revenue Code, the Tiered REMICs will be treated as one REMIC. QUALIFICATION AS A REMIC In order for the REMIC pool to qualify as a REMIC, there must be ongoing compliance on the part of the REMIC pool with the requirements set forth in the Internal Revenue Code. The REMIC pool must fulfill an asset test, which requires that no more than a de minimis portion of the assets of the REMIC pool, as of the close of the third calendar month beginning after the startup day, which for purposes of this discussion is the date of issuance of the REMIC certificates, and at all times thereafter, may consist of assets other than qualified mortgages and permitted investments. The REMIC regulations provide a safe harbor pursuant to which the de minimis requirement is met if at all times the aggregate adjusted basis of the nonqualified assets is less than 1% of the aggregate adjusted basis of all the REMIC pool's assets. An entity that fails to meet the safe harbor may nevertheless demonstrate that it holds no more than a de minimis amount of nonqualified assets. A REMIC also must provide reasonable arrangements to prevent its residual interest from being held by Disqualified Organizations and must furnish applicable tax information to transferors or agents that violate this requirement. The pooling and servicing agreement for each Series will contain a provision designed to meet this requirement. For further information, you should review the section in this prospectus titled "--Taxation of Residual Certificates--Tax-Related Restrictions on Transfer of Residual Certificates--Disqualified Organizations." A qualified mortgage is any obligation that is principally secured by an interest in real property and that is either transferred to the REMIC pool on the startup day in exchange for regular certificates or residual certificates or is either purchased by the REMIC pool within a three-month period thereafter or represents an increase in the loan advanced to the obligor under its original terms, in either case pursuant to a fixed price contract in effect on the startup day. 73 Qualified mortgages include the following: o whole mortgage loans, such as the mortgage loans; o certificates of beneficial interest in a grantor trust that holds mortgage loans, including some of the MBS; o regular interests in another REMIC, such as MBS issued by a trust as to which a REMIC election has been made; o loans secured by timeshare interests; and o loans secured by shares held by a tenant stockholder in a cooperative housing corporation. However, in general: o the fair market value of the real property securing the mortgage (including any buildings and structural components) must be at least 80% of the principal balance of the related mortgage loan or of the mortgage loan underlying any related MBS either at origination of the relevant loan or as of the startup day; or o substantially all the proceeds of the mortgage loan or the underlying mortgage loan must have been used to acquire, improve or protect an interest in real property that, at the origination date, was the only security for the mortgage loan or underlying mortgage loan. If the mortgage loan has been substantially modified other than in connection with a default or reasonably foreseeable default, it must meet the real property value test described in the preceding sentence as of the date of the last modification or as of the REMIC startup day. A qualified mortgage includes a qualified replacement mortgage, which is any mortgage loan that would have been treated as a qualified mortgage if it were transferred to the REMIC pool on the startup day and that is received either: o in exchange for any qualified mortgage within a three-month period thereafter; or o in exchange for a mortgage loan that is a defective obligation, as defined immediately below, within a two-year period thereafter. A defective obligation includes the following: 1. a mortgage in default or as to which default is reasonably foreseeable; 2. a mortgage as to which a customary representation or warranty made at the time of transfer to the REMIC pool has been breached; 3. a mortgage that was fraudulently procured by the mortgagor; and 4. a mortgage that was not in fact principally secured by real property (but only if the mortgage is disposed of within 90 days of discovery). A mortgage loan that is defective as described in clause 4 in the immediately preceding sentence that is not sold or, if within two years of the startup day, exchanged, within 90 days of discovery, ceases to be a qualified mortgage after that 90-day period. A qualified mortgage includes any asset described above that is transferred to the REMIC pool on the startup day in exchange for regular certificates or residual certificates, or that is purchased by the REMIC pool within three months after the startup day pursuant to a fixed price contract in effect on the startup day. Permitted investments include cash flow investments, qualified reserve assets, and foreclosure property. A cash flow investment is an investment, earning a return in the nature of interest, of amounts received on or with respect to qualified mortgages for a temporary period, not exceeding 13 months, until distributed to holders of interests in the REMIC pool. A qualified reserve asset is any intangible property (other than a REMIC residual interest) held for investment that is part of any reasonably required reserve maintained by the REMIC pool to provide for payments of expenses of the REMIC pool or amounts due on the regular or residual interests in the event of defaults (including 74 delinquencies) on the qualified mortgages, lower than expected reinvestment returns, prepayment interest shortfalls and some other contingencies. In addition, a reserve fund (limited to not more than 50% of the REMIC's initial assets) may be used to provide a source of funds for the purchase of increases in the balances of qualified mortgage pursuant to their terms. The reserve fund will be disqualified if more than 30% of the gross income from the assets in the fund for the year is derived from the sale or other disposition of property held for less than three months, unless required to prevent a default on the regular interests caused by a default on one or more qualified mortgages. A reserve fund must be reduced "promptly and appropriately" as payments on the mortgage loans are received. Foreclosure property is real property acquired by the REMIC pool in connection with the default or imminent default of a qualified mortgage. Foreclosure property generally may not be held beyond the close of the third calendar year following the acquisition of the property by a REMIC pool, with possible extensions granted by the Internal Revenue Service of up to an additional three years. In addition to the foregoing requirements, the various interests in a REMIC pool also must meet certain requirements. All of the interests in a REMIC pool must be either of the following: o one or more classes of regular interests; or o a single class of residual interests on which distributions, if any, are made pro rata. A regular interest is an interest in a REMIC pool that is issued on the startup day with fixed terms, is designated as a regular interest, and unconditionally entitles the holder to receive a specified principal amount, or other similar amount, and provides that interest payments, or other similar amounts, if any, at or before maturity either are payable based on a fixed rate or a qualified variable rate, or consist of a specified, nonvarying portion of the interest payments on qualified mortgages. The specified portion may consist of a fixed number of basis points, a fixed percentage of the total interest, or a fixed or qualified variable or inverse variable rate on some or all of the qualified mortgages minus a different fixed or qualified variable rate. The specified principal amount of a regular interest that provides for interest payments consisting of a specified, nonvarying portion of interest payments on qualified mortgages may be zero. A regular interest in a REMIC pool may have payments of principal that are subordinated to payments on other regular interests or the residual interest in the REMIC pool, and that are dependent on the absence of defaults or delinquencies on qualified mortgages or permitted investments, lower than reasonably expected returns on permitted investments, unanticipated expenses incurred by the REMIC pool or prepayment interest shortfalls. A REMIC pool may issue multiple classes of regular interests. A residual interest is an interest in a REMIC pool other than a regular interest that is issued on the startup day and that is designated as a residual interest. A REMIC may issue only one class of residual interests on which distributions, if any, are made pro rata. If an entity, such as the REMIC pool, fails to comply with one or more of the ongoing requirements of the Internal Revenue Code for REMIC status during any taxable year, the Internal Revenue Code provides that the entity will not be treated as a REMIC for that year and thereafter. In this event, an entity with multiple classes of ownership interests may be treated as a separate association taxable as a corporation under Treasury regulations, and the regular certificates may be treated as equity interests therein. The Internal Revenue Code, however, authorizes the Treasury Department to issue regulations that address situations where failure to meet one or more of the requirements for REMIC status occurs inadvertently and in good faith, and disqualification of the REMIC pool would occur absent regulatory relief. You should be aware, however, that the Conference Committee Report to the Tax Reform Act of 1986 (the "1986 Act") indicates that the relief may be accompanied by sanctions, such as the imposition of a corporate tax on all or a portion of the REMIC pool's income for the period of time in which the requirements for REMIC status are not satisfied. TAXATION OF REGULAR CERTIFICATES General. A regular interest will be treated as a newly originated debt instrument for federal income tax purposes. In general, interest and original issue discount on a regular certificate will be treated as ordinary income to a holder of the regular certificate as they accrue, and principal payments on a regular certificate in excess of accrued market discount will be treated as a return of capital to the extent of the regular certificateholder's basis in the regular certificate. Regular certificateholders must use the accrual method of accounting with regard to regular certificates, regardless of the method of accounting otherwise used by the regular certificateholders. 75 Original Issue Discount. Accrual certificates, interest only, and principal-only certificates will be, and other Classes of regular certificates may be, issued with original issue discount within the meaning of Internal Revenue Code Section 1273(a). Holders of any Class of regular certificates having original issue discount generally must include original issue discount in ordinary income for federal income tax purposes as it accrues, in accordance with the constant yield method that takes into account the compounding of interest, in advance of receipt of the cash attributable to the income. The following discussion is based in part on Treasury regulations under Internal Revenue Code Sections 1271 through 1273 and 1275 and in part on the provisions of the 1986 Act, referred to in this document as OID regulations. Regular certificateholders should be aware, however, that the OID regulations do not adequately address some issues relevant to prepayable securities, such as the regular certificates. To the extent the issues are not addressed in the regulations, we intend to apply the methodology described in the Conference Committee Report to the 1986 Act. No assurance can be provided that the Service will not take a different position as to those matters not currently addressed by the OID regulations. Moreover, the OID regulations include an anti-abuse rule allowing the Service to apply or depart from the OID regulations where necessary or appropriate to ensure a reasonable tax result in light of the applicable statutory provisions. A tax result will not be considered unreasonable under the anti-abuse rule in the absence of a substantial effect on the present value of a taxpayer's tax liability. You are advised to consult your own tax advisors as to the discussion in this prospectus and the appropriate method for reporting interest and original issue discount with respect to the regular certificates. Each regular certificate will be treated as a single installment obligation for purposes of determining the original issue discount includible in a regular certificateholder's income. The total amount of original issue discount on a regular certificate is the excess of the stated redemption price at maturity of the regular certificate over its issue price. The issue price of a Class of regular certificates offered pursuant to this prospectus generally is the first price at which a substantial amount of regular certificates of that class is sold to the public, excluding bond houses, brokers and underwriters. Although unclear under the OID regulations, we intend to treat the issue price of a class as to which there is no substantial sale as of the issue date or that is retained by us as the fair market value of that Class as of the issue date. The issue price of a regular certificate also includes the amount paid by an initial regular certificateholder for accrued interest that relates to a period prior to the issue date of the regular certificate, unless the regular certificateholder elects on its federal income tax return to exclude that amount from the issue price and to recover it on the first distribution date. The stated redemption price at maturity of a regular certificate always includes the original principal amount of the regular certificate, but generally will not include distributions of stated interest if the interest distributions constitute qualified stated interest. Under the OID regulations, qualified stated interest generally means interest payable at a single fixed rate or a qualified variable rate, as described below, provided that the interest payments are unconditionally payable at intervals of one year or less during the entire term of the regular certificate. Because there is no penalty or default remedy in the case of nonpayment of interest with respect to a regular certificate, it is possible that no interest on any Class of regular certificates will be treated as qualified stated interest. However, except as provided in the following three sentences or in the applicable prospectus supplement, because the underlying mortgage loans provide for remedies in the event of default, we intend to treat interest with respect to the regular certificates as qualified stated interest. Distributions of interest on an accrual certificate, or on other regular certificates with respect to which deferred interest will accrue, will not constitute qualified stated interest, in which case the stated redemption price at maturity of the regular certificates includes all distributions of interest as well as principal thereon. Likewise, we intend to treat an interest only class, or a class on which interest is substantially disproportionate to its principal amount, as having no qualified stated interest. Where the interval between the issue date and the first distribution date on a regular certificate is shorter than the interval between subsequent distribution dates, the interest attributable to the additional days will be included in the stated redemption price at maturity. Under a de minimis rule, original issue discount on a regular certificate will be considered to be zero if the original issue discount is less than 0.25% of the stated redemption price at maturity of the regular certificate multiplied by the weighted average maturity of the regular certificate. For this purpose, the weighted average maturity of the regular certificate is computed as the sum of the amounts determined by multiplying the number of full years (i.e., rounding down partial years) from the issue date until all distributions in reduction of are scheduled to be made, presumably taking into account the prepayment assumption, by a fraction, the numerator of which is the amount of each distribution included in the stated redemption price at maturity of the regular certificate and the denominator of which is the stated redemption price at maturity of the regular certificate. The Conference Committee Report to the 1986 Act provides that the schedule of the distributions should be determined in accordance with the assumed rate of prepayment of the mortgage loans and the anticipated reinvestment rate, if any, 76 relating to the regular certificates. The prepayment assumption with respect to a series of regular certificates will be set forth in the related prospectus supplement. Holders generally must report de minimis original issue discount pro rata as principal payments are received, and the income will be capital gain if the regular certificate is held as a capital asset. However, under the OID regulations, regular certificateholders may elect to accrue all de minimis original issue discount as well as market discount and market premium under the constant yield method. For additional information regarding an election to treat interest under the constant yield method, you should review the section in this prospectus titled "--Election to Treat All Interest Under the Constant Yield Method." A regular certificateholder generally must include in gross income for any taxable year the sum of the daily portions, as defined below, of the original issue discount on the regular certificate accrued during an accrual period for each day on which it holds the regular certificate, including the date of purchase but excluding the date of disposition. We will treat the monthly period ending on the day before each distribution date as the accrual period. With respect to each regular certificate, a calculation will be made of the original issue discount that accrues during each successive full accrual period, or shorter period from the date of original issue, that ends on the day before the related distribution date on the regular certificate. The Conference Committee Report to the 1986 Act states that the rate of accrual of original issue discount is intended to be based on the prepayment assumption. Other than as discussed below with respect to a random lot certificate, the original issue discount accruing in a full accrual period would be the excess, if any, of: (a) the sum of: o the present value of all of the remaining distributions to be made on the regular certificate as of the end of that accrual period that are included in the regular certificate's stated redemption price at maturity; and o the distributions made on the regular certificate during the accrual period that are included in the regular certificate's stated redemption price at maturity; over: (b) the adjusted issue price of the regular certificate at the beginning of the accrual period. The present value of the remaining distributions referred to in the preceding sentence is calculated based on: o the yield to maturity of the regular certificate at the issue date; o events, including actual prepayments, that have occurred prior to the end of the accrual period; and o the prepayment assumption. For these purposes, the adjusted issue price of a regular certificate at the beginning of any accrual period equals the issue price of the regular certificate, increased by the aggregate amount of original issue discount with respect to the regular certificate that accrued in all prior accrual periods and reduced by the amount of distributions included in the regular certificate's stated redemption price at maturity that were made on the regular certificate in those prior periods. The original issue discount accruing during any accrual period (as determined in this paragraph) will then be divided by the number of days in the period to determine the daily portion of original issue discount for each day in the period. With respect to an initial accrual period shorter than a full accrual period, the daily portions of original issue discount must be determined according to an appropriate allocation under any reasonable method. Under the method described above, the daily portions of original issue discount required to be included in income by a regular certificateholder generally will increase to take into account prepayments on the regular certificates as a result of prepayments on the mortgage loans that exceed the prepayment assumption. The daily portions generally will decrease, but not below zero for any period, if the prepayments are slower than the prepayment assumption. An increase in prepayments on the mortgage loans with respect to a series of regular certificates can result in both a change in the priority of principal payments with respect to some classes of regular 77 certificates and either an increase or decrease in the daily portions of original issue discount with respect to the regular certificates. The Treasury Department proposed regulations on August 24, 2004 that create a special rule for accruing original issue discount on regular certificates providing for a delay between record and payment dates, such that the period over which original issue discount accrues coincides with the period over which the right of regular certificateholders to interest payment accrues under the governing contract provisions rather than over the period between distribution dates. If the proposed regulations are adopted in the same form as proposed, regular certificateholders would be required to accrue interest from the issue date to the first record date, but would not be required to accrue interest after the last record date. The proposed regulations are limited to regular certificates with delayed payment for periods of fewer than 32 days. The proposed regulations are proposed to apply to any regular certificate issued after the date the final regulations are published in the Federal Register. Acquisition Premium. A purchaser of a regular certificate at a price greater than its adjusted issue price but less than its stated redemption price at maturity will be required to include in gross income the daily portions of the original issue discount on the regular certificate reduced pro rata by a fraction, the numerator of which is the excess of its purchase price over the adjusted issue price and the denominator of which is the excess of the remaining stated redemption price at maturity over the adjusted issue price. Alternatively, a subsequent purchaser may elect to treat all acquisition premium under the constant yield method, as described below under the heading "--Election to Treat All Interest Under the Constant Yield Method." Variable Rate Regular Certificates. Regular certificates may provide for interest based on a variable rate. Under the OID regulations, interest is treated as payable at a variable rate if, generally: o the issue price does not exceed the original principal balance by more than a specified de minimis amount; and o the interest compounds or is payable at least annually at current values of; o one or more qualified floating rates; o a single fixed rate and one or more qualified floating rates; o a single objective rate; or o a single fixed rate and a single objective rate that is a qualified inverse floating rate. A floating rate is a qualified floating rate if variations in the rate can reasonably be expected to measure contemporaneous variations in the cost of newly borrowed funds. Two or more qualified floating rates will be treated as a single qualified floating rate if all the qualified floating rates can reasonably be expected to have approximately the same values throughout the terms of the instrument. This requirement will be conclusively presumed to be satisfied if the values of all the qualified floating rates are within 0.25% of each other on the issue date. An objective rate (other than a qualified floating rate) is a rate that is determined using a single fixed formula and that is based on objective financial or economic information, provided that the information is not within the control of the issuer or a related party or unique to the circumstances of the issuer or a related party. A qualified inverse floating rate is an objective rate that is equal to a fixed rate minus a qualified floating rate that inversely reflects contemporaneous variations in the cost of newly borrowed funds. An inverse floating rate that is not a qualified floating rate may nevertheless be an objective rate. A class of regular certificates may be issued under this Prospectus that does not have a variable rate under the OID regulations. For example, a class may be issued that bears different rates at different times during the period it is outstanding such that it is considered significantly front-loaded or back-loaded within the meaning of the OID regulations. It is possible that the class may be considered to bear contingent interest within the meaning of the OID regulations. The OID regulations, as they relate to the treatment of contingent interest, are by their terms not applicable to regular certificates. However, if final regulations dealing with contingent interest with respect to regular certificates apply the same principles as the OID regulations, the final regulations may lead to different timing of income inclusion than would be the case under the OID regulations. Furthermore, application of those principles could lead to the characterization of gain on the sale of contingent interest regular certificates as ordinary income. You should consult your tax advisors regarding the 78 appropriate treatment of any regular certificate that does not pay interest at a fixed rate or variable rate as described in this paragraph. Under the REMIC regulations, a regular floating-rate certificate qualifies as a regular interest in a REMIC if: o it bears a rate that qualifies as a variable rate under the OID regulations: o that is tied to current values of a variable rate (or the highest, lowest or average of two or more variable rates), including a rate based on the average cost of funds of one or more financial institutions, or a positive or negative multiple of the rate (plus or minus a specified number of basis points); or o that represents a weighted average of rates on some or all of the mortgage loans which bear interest at a fixed rate or at a qualifying variable rate under the REMIC regulations, including the rate that is subject to one or more caps or floors; or: o it bears one or more variable rates for one or more periods or one or more fixed rates for one or more periods, and a different variable rate or fixed rate for other periods. Accordingly, unless otherwise indicated in the applicable prospectus supplement, we intend to treat regular certificates that qualify as regular interests under this rule in the same manner as obligations bearing a variable rate for original issue discount reporting purposes. The amount of original issue discount with respect to a regular certificate bearing a variable rate of interest will accrue in the manner described above under "--Original Issue Discount" with the yield to maturity and future payments on that regular certificate generally to be determined by assuming that interest will be payable for the life of the regular certificate based on the initial rate. Unless otherwise specified in the applicable prospectus supplement, we intend to treat variable interest as qualified stated interest, other than variable interest on an interest-only or super-premium Class, which will be treated as non-qualified stated interest includible in the stated redemption price at maturity. Ordinary income reportable for any period will be adjusted based on subsequent changes in the applicable interest rate index. Although unclear under the OID regulations, unless required otherwise by applicable final regulations, we intend to treat regular certificates bearing an interest rate that is a weighted average of the net interest rates on mortgage loans or mortgage certificates having fixed or adjustable rates, as having qualified stated interest. The yield on the regular certificates for purposes of accruing original issue discount will be a hypothetical fixed rate based on the fixed rates, in the case of fixed rate mortgage loans, and initial indexed rates, in the case of adjustable rate mortgage loans. In the case of adjustable rate mortgage loans, the applicable index used to compute interest on the mortgage loans in effect on the issue date, will be deemed to be in effect beginning with the period in which the first weighted average adjustment date occurring after the issue date occurs. Adjustments will be made in each accrual period either increasing or decreasing the amount of ordinary income reportable to reflect the actual pass-through rate on the regular certificates. Deferred Interest. Under the OID regulations, all interest on a regular certificate as to which there may be Deferred Interest is includible in the stated redemption price at maturity. Accordingly, any Deferred Interest that accrues with respect to a class of regular certificates will constitute income to the holders of those regular certificates prior to the time distributions of cash with respect to the Deferred Interest are made. Market Discount. A purchaser of a regular certificate also may be subject to the market discount rules of Internal Revenue Code Sections 1276 through 1278. Under these Internal Revenue Code sections and the principles applied by the OID regulations in the context of original issue discount, market discount is the amount by which the purchaser's original basis in the regular certificate: o is exceeded by the then-current principal amount of the regular certificate; or 79 o in the case of a regular certificate having original issue discount, is exceeded by the adjusted issue price of the regular certificate at the time of purchase. The purchaser generally will be required to recognize ordinary income to the extent of accrued market discount on the regular certificate as distributions includible in its stated redemption price at maturity are received, in an amount not exceeding any related distribution. The market discount would accrue in a manner to be provided in Treasury regulations and should take into account the prepayment assumption. The Conference Committee Report to the 1986 Act provides that until the Treasury regulations are issued, market discount would accrue either: o on the basis of a constant interest rate or o in the ratio of stated interest allocable to the relevant period to the sum of the interest for that period plus the remaining interest as of the end of the period, or in the case of a regular certificate issued with original issue discount, in the ratio of original issue discount accrued for the relevant period to the sum of the original issue discount accrued for that period plus the remaining original issue discount as of the end of that period. The purchaser also generally will be required to treat a portion of any gain on a sale or exchange of the regular certificate as ordinary income to the extent of the market discount accrued to the date of disposition under one of the foregoing methods, less any accrued market discount previously reported as ordinary income as partial distributions in reduction of the stated redemption price at maturity were received. The purchaser will be required to defer deduction of a portion of the excess of the interest paid or accrued on indebtedness incurred to purchase or carry a regular certificate over the interest distributable on that certificate. The deferred portion of the interest expense in any taxable year generally will not exceed the accrued market discount on the regular certificate for that year. Any deferred interest expense is, in general, allowed as a deduction not later than the year in which the related market discount income is recognized or the regular certificate is disposed of. As an alternative to the inclusion of market discount in income on the foregoing basis, the regular certificateholder may elect to include market discount in income currently as it accrues on all market discount instruments acquired by that regular certificateholder in that taxable year or thereafter, in which case the interest deferral rule will not apply. For additional information, you should also review the section in this prospectus titled "--Election to Treat All Interest Under the Constant Yield Method" below regarding an alternative manner in which the election may be deemed to be made. Market discount with respect to a regular certificate will be considered to be de minimis if the market discount is less than 0.25% of the remaining stated redemption price at maturity of that regular certificate multiplied by the weighted average maturity of the regular certificate (determined as described above in the third paragraph under "--Original Issue Discount") remaining after the date of purchase, presumably taking into account prepayment assumptions. It appears that de minimis market discount should be reported in a manner similar to de minimis original issue discount. See "--Original Issue Discount" above. Treasury regulations implementing the market discount rules have not yet been issued, and therefore investors should consult their own tax advisors regarding the application of these rules. You should also consult Revenue Procedure 92-67 concerning the elections to include market discount in income currently and to accrue market discount on the basis of the constant yield method. Premium. A regular certificate purchased at a cost, excluding any portion of such cost attributable to accrued qualified stated interest, greater than its remaining stated redemption price at maturity generally is considered to be purchased at a premium. If the regular certificateholder holds the regular certificate as a capital asset within the meaning of Internal Revenue Code Section 1221, the regular certificateholder may elect under Internal Revenue Code Section 171 to amortize the premium under the constant yield method. If made, such an election will apply to all debt instruments having amortizable bond premium that the holder owns or subsequently acquires. The OID regulations also permit certificateholders to elect to include all interest, discount and premium in income based on a constant yield method, further treating the certificateholder as having made the election to amortize premium generally. The 1986 Act indicates a Congressional intent that the same rules that will apply to the accrual of market discount on installment obligations will also apply to amortizing bond premium under Internal Revenue Code Section 171 on installment obligations such as the regular certificates, although it is unclear whether the alternatives 80 to the constant yield method described above under "--Market Discount" are available. Amortizable bond premium will be treated as an offset to interest income on a regular certificate rather than as a separate deduction item. For additional information, you should also review the section in this prospectus titled "--Election to Treat All Interest Under the Constant Yield Method" below regarding an alternative manner in which the Internal Revenue Code Section 171 election may be deemed to be made. Election to Treat All Interest Under the Constant Yield Method. A holder of a debt instrument such as a regular certificate may elect to treat all interest that accrues on the instrument using the constant yield method, with none of the interest being treated as qualified stated interest. For purposes of applying the constant yield method to a debt instrument subject to such an election: o interest includes stated interest, original issue discount, de minimis original issue discount, market discount and de minimis market discount, as adjusted by any amortizable bond premium or acquisition premium; and o the debt instrument is treated as if the instrument were issued on the holder's acquisition date in the amount of the holder's adjusted basis immediately after acquisition. It is unclear whether, for this purpose, the initial prepayment assumption would continue to apply or if a new prepayment assumption as of the date of the holder's acquisition would apply. A holder generally may make an election on an instrument by instrument basis or for a class or group of debt instruments. However, if the holder makes such an election with respect to a debt instrument with amortizable bond premium or with market discount, the holder is deemed to have made elections to amortize bond premium or to report market discount income currently as it accrues under the constant yield method, respectively, for all debt instruments acquired by the holder in the same taxable year or thereafter. The election is made on the holder's federal income tax return for the year in which the debt instrument is acquired and is irrevocable except with the approval of the Service. You should consult your own tax advisors regarding the advisability of making such an election. Sale or Exchange of Regular Certificates. If a regular certificateholder sells or exchanges a regular certificate, the regular certificateholder will recognize gain or loss equal to the difference, if any, between the amount realized and its adjusted basis in the regular certificate. The adjusted basis of a regular certificate generally will equal the cost of the regular certificate to the seller, increased by any original issue discount or market discount previously included in the seller's gross income with respect to the regular certificate and reduced by amounts included in the stated redemption price at maturity of the regular certificate that were previously received by the seller, by any amortized premium and by previously recognized losses. Except as described above with respect to market discount, and except as provided in this paragraph, any gain or loss on the sale or exchange of a regular certificate realized by an investor who holds the regular certificate as a capital asset will be capital gain or loss and will be long-term or short-term depending on whether the regular certificate has been held for the long-term capital gain holding period, currently more than one year. The gain will be treated as ordinary income in the following instances: o if a regular certificate is held as part of a conversion transaction as defined in Internal Revenue Code Section 1258(c), up to the amount of interest that would have accrued on the regular certificateholder's net investment in the conversion transaction at 120% of the appropriate applicable Federal rate under Internal Revenue Code Section 1274(d) in effect at the time the taxpayer entered into the transaction minus any amount previously treated as ordinary income with respect to any prior distribution of property that was held as a part of the transaction; o in the case of a non-corporate taxpayer, to the extent the taxpayer has made an election under Internal Revenue Code Section 163(d)(4) to have net capital gains taxed as investment income at ordinary rates; or o to the extent that the gain does not exceed the excess, if any, of: o the amount that would have been includible in the gross income of the holder if its yield on the regular certificate were 110% of the applicable Federal rate as of the date of purchase; over 81 o the amount of income actually includible in the gross income of the holder with respect to the regular certificate. In addition, gain or loss recognized from the sale of a regular certificate by banks or thrift institutions will be treated as ordinary income or loss pursuant to Internal Revenue Code Section 582(c). Capital gains of non-corporate taxpayers are subject to a lower maximum tax rate than is the ordinary income of those taxpayers. The maximum tax rate for corporations is the same with respect to both ordinary income and capital gains. Holders that recognize a loss on a sale or exchange of a regular certificate for federal income tax purposes in excess of certain threshold amounts should consult their tax advisors as to the need to file IRS Form 8886 (disclosing certain potential tax shelters) on their federal income tax returns. Treatment of Losses. Holders of regular certificates will be required to report income with respect to regular certificates on the accrual method of accounting, without giving effect to delays or reductions in distributions attributable to defaults or delinquencies on the mortgage loans allocable to a particular class of regular certificates, except to the extent it can be established that the losses are uncollectible. Accordingly, the holder of a regular certificate may have income, or may incur a diminution in cash flow as a result of a default or delinquency, but may not be able to take a deduction (subject to the discussion below) for the corresponding loss until a subsequent taxable year. In this regard, you are cautioned that while you may generally cease to accrue interest income if it reasonably appears that the interest will be uncollectible, the Service may take the position that original issue discount must continue to be accrued in spite of its uncollectibility until the debt instrument is disposed of in a taxable transaction or becomes worthless in accordance with the bad debt rules of Internal Revenue Code Section 166. Under Internal Revenue Code Section 166, it appears that holders of regular certificates that are corporations or that otherwise hold the regular certificates in connection with a trade or business should in general be allowed to deduct as an ordinary loss any loss sustained during the taxable year on account of any regular certificates becoming wholly or partially worthless. In general, holders of regular certificates that are not corporations and do not hold the regular certificates in connection with a trade or business will be allowed to deduct as a short-term capital loss any loss with respect to principal sustained during the taxable year on account of a portion of any class or subclass of the regular certificates becoming wholly worthless. Although the matter is not free from doubt, non-corporate holders of regular certificates should be allowed a bad debt deduction at the time as the principal balance of any class or subclass of the regular certificates is reduced to reflect losses resulting from any liquidated mortgage loans. The Service, however, could take the position that non-corporate holders will be allowed a bad debt deduction to reflect those losses only after all mortgage loans remaining in the trust fund have been liquidated or the class of regular certificates has been otherwise retired. The Service could also assert that losses on the regular certificates are deductible based on some other method that may defer the deductions for all holders, such as reducing future cash flow for purposes of computing original issue discount. This may have the effect of creating negative original issue discount which would be deductible only against future positive original issue discount or otherwise upon termination of the class. Holders of regular certificates are urged to consult their own tax advisors regarding the appropriate timing, amount and character of any loss sustained with respect to the regular certificates. While losses attributable to interest previously reported as income should be deductible as ordinary losses by both corporate and non-corporate holders, the Service may take the position that losses attributable to accrued original issue discount may only be deducted as short-term capital losses by non-corporate holders not engaged in a trade or business. Special loss rules are applicable to banks and thrift institutions, including rules regarding reserves for bad debts. You are advised to consult your tax advisors regarding the treatment of losses on regular certificates. TAXATION OF RESIDUAL CERTIFICATES Taxation of REMIC Income. Generally, the daily portions of REMIC taxable income or net loss will be includible as ordinary income or loss in determining the federal taxable income of holders of residual certificates, and will not be taxed separately to the REMIC pool. The daily portions of REMIC taxable income or net loss of a residual certificateholder are determined by allocating the REMIC pool's taxable income or net loss for each calendar quarter ratably to each day in the quarter and by allocating the daily portion among the residual certificateholders in proportion to their respective holdings of residual certificates in the REMIC pool on the day. REMIC taxable income is generally determined in the same manner as the taxable income of an individual using the accrual method of accounting, except for the following: 82 o the limitations on deductibility of investment interest expense and expenses for the production of income do not apply; o all bad loans will be deductible as business bad debts; and o the limitation on the deductibility of interest and expenses related to tax-exempt income will apply. The REMIC pool's gross income includes interest, original issue discount income and market discount income, if any, on the mortgage loans, reduced by amortization of any premium on the mortgage loans, plus income from amortization of issue premium, if any, on the regular certificates, plus income on reinvestment of cash flows and reserve assets, plus any cancellation of indebtedness income upon allocation of realized losses to the regular certificates. The REMIC pool's deductions include interest and original issue discount expense on the regular certificates, servicing fees on the mortgage loans, other administrative expenses of the REMIC pool and realized losses on the mortgage loans. The requirement that residual certificateholders report their pro rata share of taxable income or net loss of the REMIC pool will continue until there are no certificates of any class of the related series outstanding. The taxable income recognized by a residual certificateholder in any taxable year will be affected by, among other factors, the relationship between the timing of recognition of interest and original issue discount or market discount income or amortization of premium with respect to the mortgage loans, on the one hand, and the timing of deductions for interest (including original issue discount) on the regular certificates or income from amortization of issue premium on the regular certificates, on the other hand. In the event that an interest in the mortgage loans is acquired by the REMIC pool at a discount, and one or more of the mortgage loans is prepaid, the residual certificateholder may recognize taxable income without being entitled to receive a corresponding amount of cash because the prepayment may be used in whole or in part to make distributions in reduction of principal on the regular certificates and the discount on the mortgage loans which is includible in income may exceed the deduction allowed upon the distributions on those regular certificates on account of any unaccrued original issue discount relating to those regular certificates. When there is more than one class of regular certificates that distribute principal sequentially, this mismatching of income and deductions is particularly likely to occur in the early years following issuance of the regular certificates when distributions in reduction of principal are being made in respect of earlier classes of regular certificates to the extent that those classes are not issued with substantial discount. If taxable income attributable to the mismatching is realized, in general, losses would be allowed in later years as distributions on the later classes of regular certificates are made. Taxable income may also be greater in earlier years than in later years as a result of the fact that interest expense deductions, expressed as a percentage of the outstanding principal amount of the series of regular certificates, may increase over time as distributions in reduction of principal are made on the lower yielding classes of regular certificates, whereas to the extent that the REMIC pool includes fixed rate mortgage loans, interest income with respect to any given mortgage loan will remain constant over time as a percentage of the outstanding principal amount of that loan. Consequently, residual certificateholders must have sufficient other sources of cash to pay any federal, state or local income taxes due as a result of the mismatching. In general, unrelated deductions will not be available to offset some or all of such "phantom" income, as discussed below under "--Limitations on Offset or Exemption of REMIC Income." The timing of the mismatching of income and deductions described in this paragraph, if present with respect to a series of certificates, may have a significant adverse effect upon the residual certificateholder's after-tax rate of return. In addition, a residual certificateholder's taxable income during some periods may exceed the income reflected by the residual certificateholder for the periods in accordance with generally accepted accounting principles. You should consult your own accountants concerning the accounting treatment of your investment in residual certificates. Basis and Losses. The amount of any net loss of the REMIC pool that may be taken into account by the residual certificateholder is limited to the adjusted basis of the residual certificate as of the close of the quarter (or time of disposition of the residual certificate if earlier), determined without taking into account the net loss for the quarter. The initial adjusted basis of a purchaser of a residual certificate is the amount paid for that residual certificate. The adjusted basis will be increased by the amount of taxable income of the REMIC pool reportable by the residual certificateholder and will be decreased, but not below zero, first, by a cash distribution from the REMIC pool and, second, by the amount of loss of the REMIC pool reportable by the residual certificateholder. Any loss that is disallowed on account of this limitation may be carried over indefinitely with respect to the residual 83 certificateholder as to whom the loss was disallowed and may be used by the residual certificateholder only to offset any income generated by the same REMIC pool. A residual certificateholder will not be permitted to amortize directly the cost of its residual certificate as an offset to its share of the taxable income of the related REMIC pool. However, that taxable income will not include cash received by the REMIC pool that represents a recovery of the REMIC pool's basis in its assets. The recovery of basis by the REMIC pool will have the effect of amortization of the issue price of the residual certificates over their life. However, in view of the possible acceleration of the income of residual certificateholders described above under "Taxation of REMIC Income", the period of time over which the issue price is effectively amortized may be longer than the economic life of the residual certificates. A residual certificate may have a negative value if the net present value of anticipated tax liabilities exceeds the present value of anticipated cash flows. The REMIC regulations appear to treat the issue price of a residual interest as zero rather than the negative amount for purposes of determining the REMIC pool's basis in its assets. Regulations have been issued addressing the tax treatment of "inducement fees" received by transferees of no economic REMIC residual interests. These regulations require inducement fees to be included in income over a period reasonably related to the period in which the related REMIC residual interest is expected to generate taxable income or net loss to its holder. Under two safe harbor methods, inducement fees are permitted to be included in income (a) in the same amounts and over the same period that the taxpayer uses for financial reporting purposes, provided that such period is not shorter than the period the REMIC is expected to generate taxable income, or (b) ratably over the remaining anticipated weighted average life of all the regular and residual interests issued by the REMIC, determined based on actual distributions projected as remaining to be made on such interests under the prepayment assumption. If a residual certificateholder sells or otherwise disposes of its residual interest, any unrecognized portion of the inducement fee generally is required to be taken into account at the time of the sale or disposition. Prospective purchasers of REMIC residual certificates should consult with their own tax advisors regarding the effect of these regulations. Further, to the extent that the initial adjusted basis of a residual certificateholder (other than an original holder) in the residual certificate is greater that the corresponding portion of the REMIC pool's basis in the mortgage loans, the residual certificateholder will not recover a portion of the basis until termination of the REMIC pool unless future Treasury regulations provide for periodic adjustments to the REMIC income otherwise reportable by the holder. The REMIC regulations currently in effect do not so provide. You should review the sections titled "--Treatment of Certain Items of REMIC Income and Expense--Market Discount" below regarding the basis of mortgage loans to the REMIC pool and "--Sale or Exchange of a Residual Certificate" below regarding possible treatment of a loss upon termination of the REMIC pool as a capital loss. TREATMENT OF CERTAIN ITEMS OF REMIC INCOME AND EXPENSE Although we intend to compute REMIC income and expense in accordance with the Internal Revenue Code and applicable regulations, the authorities regarding the determination of specific items of income and expense are subject to differing interpretations. We make no representation as to the specific method that we will use for reporting income with respect to the mortgage loans and expenses with respect to the regular certificates, and different methods could result in different timing of reporting of taxable income or net loss to residual certificateholders or differences in capital gain versus ordinary income. Original Issue Discount and Premium. Generally, the REMIC pool's deductions for original issue discount and income from amortization of issue premium will be determined in the same manner as original issue discount income on regular certificates as described above under "Taxation of Regular Certificates--Original Issue Discount" and "--Variable Rate Regular Certificates," without regard to the de minimis rule described therein, and "--Premium." Deferred Interest. Any Deferred Interest that accrues with respect to any adjustable rate mortgage loans held by the REMIC pool will constitute income to the REMIC pool and will be treated in a manner similar to the Deferred Interest that accrues with respect to regular certificates as described above under "Taxation of Regular Certificates--Deferred Interest." 84 Market Discount. The REMIC pool will have market discount income in respect of mortgage loans if, in general, the basis of the REMIC pool allocable to the mortgage loans is exceeded by their unpaid principal balances. The REMIC pool's basis in the mortgage loans is generally the fair market value of the mortgage loans immediately after its transfer to the REMIC pool. The REMIC regulations provide that the basis is equal in the aggregate to the issue prices of all regular and residual interests in the REMIC pool, or its fair market value at the Closing Date, in the case of a retained class. In respect of mortgage loans that have market discount to which Internal Revenue Code Section 1276 applies, the accrued portion of the market discount would be recognized currently as an item of ordinary income in a manner similar to original issue discount, regardless of whether any payments of amounts included in the stated redemption price are received. The computation of accrued market discount income generally should be made in the manner described above under "Taxation of Regular Certificates--Market Discount." Premium. Generally, if the basis of the REMIC pool in the mortgage loans exceeds their unpaid principal balances, the REMIC pool will be considered to have acquired the mortgage loans at a premium equal to the amount of the excess. As stated above, the REMIC pool's basis in mortgage loans is the fair market value of the mortgage loans, based on the aggregate of the issue prices, or the fair market value of retained Classes, of the regular and residual interests in the REMIC pool immediately after their transfer to the REMIC pool. In a manner analogous to the discussion above under "Taxation of Regular Certificates--Premium," a REMIC pool that holds a mortgage loan as a capital asset under Internal Revenue Code Section 1221 may elect under Internal Revenue Code Section 171 to amortize premium on whole mortgage loans or mortgage loans underlying MBS that were originated after September 27, 1985 or MBS that are REMIC regular interests under the constant yield method. Amortizable bond premium will be treated as an offset to interest income on the mortgage loans, rather than as a separate deduction item. To the extent that the mortgagors with respect to the mortgage loans are individuals, Internal Revenue Code Section 171 will not be available for premium on mortgage loans (including underlying mortgage loans) originated on or prior to September 27, 1985. The allocation of the premium pro rata among principal payments should be considered a reasonable method; however, the Service may argue that the premium should be allocated in a different manner, such as allocating the premium entirely to the final payment of principal. LIMITATIONS ON OFFSET OR EXEMPTION OF REMIC INCOME A portion, and often all, of the REMIC taxable income includible in determining the federal income tax liability of a residual certificateholder will be subject to special treatment. That portion, referred to as the excess inclusion, is equal to the excess of REMIC taxable income for the calendar quarter allocable to a residual certificate over the daily accruals for the quarterly period of: o 120% of the long-term applicable Federal rate that would have applied to the residual certificate, if it were a debt instrument, on the startup day under Internal Revenue Code Section 1274(d); multiplied by o the adjusted issue price of the residual certificate at the beginning of the quarterly period. For this purpose, the adjusted issue price of a residual certificate at the beginning of a quarter is the issue price of the residual certificate, plus the amount of the daily accruals of REMIC income described in this paragraph for all prior quarters, decreased by any distributions made with respect to that residual certificate prior to the beginning of the quarterly period. Accordingly, the portion of the REMIC pool's taxable income that will be treated as excess inclusions will be a larger portion of the income as the adjusted issue price of the residual certificates diminishes and all such taxable income will be so treated if the adjusted issue price of the residual certificates is zero. The portion of a residual certificateholder's REMIC taxable income consisting of the excess inclusions generally may not be offset by other deductions, including net operating loss carryforwards, on the residual certificateholder's return. However, net operating loss carryforwards are determined without regard to excess inclusion income. Further, if the residual certificateholder is an organization subject to the tax on unrelated business income imposed by Internal Revenue Code Section 511, the residual certificateholder's excess inclusions will be treated as unrelated business taxable income of that residual certificateholder for purposes of Internal Revenue Code Section 511. In addition, REMIC taxable income is subject to 30% withholding tax with respect to some persons who are not U.S. Persons, as defined below under "--Tax-Related Restrictions on Transfer of Residual Certificates--Foreign Investors", and its portion attributable to excess inclusions is not eligible for any reduction in the rate of withholding tax, by treaty or otherwise. See "--Taxation of Foreign Investors--Residual Certificates" 85 below. Finally, if a real estate investment trust or a regulated investment company owns a residual certificate, a portion (allocated under Treasury regulations yet to be issued) of dividends paid by the real estate investment trust or a regulated investment company could not be offset by net operating losses of its shareholders, would constitute unrelated business taxable income for tax-exempt shareholders, and would be ineligible for reduction of withholding to some persons who are not U.S. Persons. In addition, three rules determine the effect of excess inclusions on the alternative minimum taxable income of a residual certificateholder. First, alternative minimum taxable income for a residual certificateholder is determined without regard to the special rule, discussed above, that taxable income cannot be less than excess inclusions. Second, a residual certificateholder's alternative minimum taxable income for a taxable year cannot be less than the excess inclusions for the year. Third, the amount of any alternative minimum tax net operating loss deduction must be computed without regard to any excess inclusions. These rules have the effect of preventing non-refundable tax credits reducing a taxpayer's income tax to an amount less than the alternative minimum tax on excess inclusions. TAX-RELATED RESTRICTIONS ON TRANSFER OF RESIDUAL CERTIFICATES Disqualified Organizations. If any legal or beneficial interest in a residual certificate is transferred to a Disqualified Organization, a tax would be imposed in an amount equal to the product of: o the present value of the total anticipated excess inclusions with respect to the residual certificate for periods after the transfer; and o the highest marginal federal income tax rate applicable to corporations. The REMIC regulations provide that the anticipated excess inclusions are based on actual prepayment experience to the date of the transfer and projected payments based on the prepayment assumption. The present value rate equals the applicable Federal rate under Internal Revenue Code Section 1274(d) as of the date of the transfer for a term ending with the last calendar quarter in which excess inclusions are expected to accrue. The tax generally would be imposed on the transferor of the residual certificate, except that where the transfer is through an agent (including a broker, nominee or other middleman) for a Disqualified Organization, the tax would instead be imposed on the agent. However, a transferor of a residual certificate would in no event be liable for the tax with respect to a transfer if the transferee furnishes to the transferor an affidavit that the transferee is not a Disqualified Organization and, as of the time of the transfer, the transferor does not have actual knowledge that the affidavit is false. The tax also may be waived by the Treasury Department if the Disqualified Organization promptly disposes of the residual interest and the transferor pays income tax at the highest corporate rate on the excess inclusions for the period the residual certificate is actually held by the Disqualified Organization. In addition, if a Pass-Through Entity has excess inclusion income with respect to a residual certificate during a taxable year and a Disqualified Organization is the record holder of an equity interest in the entity, then a tax is imposed on the entity equal to the product of the amount of excess inclusions on the residual certificate that are allocable to the interest in the Pass-Through Entity during the period the interest is held by the Disqualified Organization, and the highest marginal federal corporate income tax rate. The tax would be deductible from the ordinary gross income of the Pass-Through Entity for the taxable year. The Pass-Through Entity would not be liable for the tax if it has received an affidavit from the record holder that it is not a Disqualified Organization or stating the holder's taxpayer identification number and, during the period the person is the record holder of the residual certificate, the Pass-Through Entity does not have actual knowledge that the affidavit is false. If an electing large partnership holds a residual certificate, all interests in the electing large partnership are treated as held by Disqualified Organizations for purposes of the tax imposed on Pass-Through Entities described in the preceding paragraph. This tax on electing large partnerships must be paid even if each record holder of an interest in that partnership provides the affidavit mentioned in the prior paragraph. The pooling and servicing agreement with respect to a series of certificates will provide that no legal or beneficial interest in a residual certificate may be transferred unless the following occurs: o the proposed transferee provides to the transferor and the trustee an affidavit providing its taxpayer identification number and stating that the transferee is the beneficial owner of the residual certificate, is not 86 a Disqualified Organization and is not purchasing the residual certificates on behalf of a Disqualified Organization (i.e., as a broker, nominee or middleman on its behalf); and o the transferor provides a statement in writing to us and the trustee that it has no actual knowledge that the affidavit is false. Moreover, the pooling and servicing agreement will provide that any attempted or purported transfer in violation of these transfer restrictions will be null and void and will vest no rights in any purported transferee. Each residual certificate with respect to a series will bear a legend referring to the restrictions on transfer, and each residual certificateholder will be deemed to have agreed, as a condition of ownership, to any amendments to the related pooling and servicing agreement required under the Internal Revenue Code or applicable Treasury regulations to effectuate the foregoing restrictions. Information necessary to compute an applicable excise tax must be furnished to the Service and to the requesting party within 60 days of the request, and we or the trustee may charge a fee for computing and providing the information. Noneconomic Residual Interests. The REMIC regulations would disregard some transfers of residual certificates, in which case the transferor would continue to be treated as the owner of the residual certificates and thus would continue to be subject to tax on its allocable portion of the net income of the REMIC pool. Under the REMIC regulations, a transfer of a noneconomic residual interest, as defined below, to a residual certificateholder, other than a residual certificateholder who is not a U.S. Person, is disregarded for all federal income tax purposes if a significant purpose of the transferor is to impede the assessment or collection of tax. A residual interest in a REMIC, including a residual interest with a positive value at issuance, is a noneconomic residual interest unless, at the time of the transfer: o the present value of the expected future distributions on the residual interest at least equals the product of the present value of the anticipated excess inclusions and the highest corporate income tax rate in effect for the year in which the transfer occurs; and o the transferor reasonably expects that the transferee will receive distributions from the REMIC at or after the time at which taxes accrue on the anticipated excess inclusions in an amount sufficient to satisfy the accrued taxes. The anticipated excess inclusions and the present value rate are determined in the same manner as set forth above under "--Disqualified Organizations." The REMIC regulations explain that a significant purpose to impede the assessment or collection of tax exists if the transferor, at the time of the transfer, either knew or should have known that the transferee would be unwilling or unable to pay taxes due on its share of the taxable income of the REMIC. A safe harbor is provided if: o the transferor conducted, at the time of the transfer, a reasonable investigation of the financial condition of the transferee and found that the transferee historically had paid its debts as they came due and found no significant evidence to indicate that the transferee would not continue to pay its debts as they came due in the future; o the transferee represents to the transferor that it understands that, as the holder of the noneconomic residual interest, the transferee may incur tax liabilities in excess of cash flows generated by the interest and that the transferee intends to pay taxes associated with holding the residual interest as they become due; and o the transferee represents that it will not cause the income with respect to the residual interest to be attributable to a foreign permanent establishment or fixed base, within the meaning of an applicable income tax treaty, of a transferee or of any other United States Person. The pooling and servicing agreement with respect to each series of certificates will require the transferee of a residual certificate to certify to the matters in the preceding sentence as part of the affidavit described above under the heading "--Disqualified Organizations." The transferor must have no actual knowledge or reason to know that the statements are false. 87 In addition to the three conditions set forth above for the transferor of a noneconomic residual interest to be presumed not to have knowledge that the transferee would be unwilling or unable to pay taxes due on its share of the taxable income of the REMIC, a fourth requirement must be satisfied in one of two alternative ways. The first way such fourth requirement may be satisfied is that the present value of the anticipated tax liabilities associated with holding the noneconomic residual interest not exceed the sum of: o the present value of any consideration given to the transferee to acquire the interest; o the present value of the expected future distributions on the interest; and o the present value of the anticipated tax savings associated with holding the interest as the REMIC generates losses. For purposes of the computations under this alternative, the transferee is assumed to pay tax at the highest corporate tax rate (currently 35%) or, in certain circumstances, the alternative minimum tax rate. Further, present values generally are computed using a discount rate equal to the short-term Federal rate set forth in Internal Revenue Code Section 1274(d) at the time of the transfer and the compounding method of the transferee. The second way such fourth requirement may be satisfied is: o the transferee must be a domestic "C" corporation (other than a corporation exempt from taxation or a regulated investment company or real estate investment trust) that meets certain gross and net asset tests (generally, $100 million of gross assets and $10 million of net assets for the current year and the two preceding fiscal years, excluding certain related party obligations); o the transferee must agree in writing that it will transfer the residual interest only to a subsequent transferee that is an eligible corporation and meets the requirements for this safe harbor transfer; and o the facts and circumstances known to the transferor on or before the date of the transfer must not reasonably indicate that the taxes associated with ownership of the residual interest will not be paid by the transferee. Foreign Investors. The REMIC regulations provide that the transfer of a residual certificate that has tax avoidance potential to a foreign person will be disregarded for all federal tax purposes. This rule appears intended to apply to a transferee who is not a U.S. Person, unless the transferee's income is effectively connected with the conduct of a trade or business within the United States. A residual certificate is deemed to have tax avoidance potential unless, at the time of the transfer: o the future value of expected distributions equals at least 30% of the anticipated excess inclusions after the transfer; and o the transferor reasonably expects that the transferee will receive sufficient distributions from the REMIC pool at or after the time at which the excess inclusions accrue and prior to the end of the next succeeding taxable year for the accumulated withholding tax liability to be paid. If the non-U.S. Person transfers the residual certificate back to a U.S. Person, the transfer will be disregarded and the foreign transferor will continue to be treated as the owner unless arrangements are made so that the transfer does not have the effect of allowing the transferor to avoid tax on accrued excess inclusions. The prospectus supplement relating to a series of certificates may provide that a residual certificate may not be purchased by or transferred to any person that is not a U.S. Person or may describe the circumstances and restrictions pursuant to which the transfer may be made. SALE OR EXCHANGE OF A RESIDUAL CERTIFICATE Upon the sale or exchange of a residual certificate, the residual certificateholder will recognize gain or loss equal to the excess, if any, of the amount realized over the adjusted basis, as described above under "Taxation of 88 Residual Certificates--Basis and Losses," of the residual certificateholder in the residual certificate at the time of the sale or exchange. In addition to reporting the taxable income of the REMIC pool, a residual certificateholder will have taxable income to the extent that any cash distribution to it from the REMIC pool exceeds the adjusted basis on that distribution date. The income will be treated as gain from the sale or exchange of the residual certificate. It is possible that the termination of the REMIC pool may be treated as a sale or exchange of a residual certificateholder's residual certificate, in which case, if the residual certificateholder has an adjusted basis in the residual certificateholder's residual certificate remaining when its interest in the REMIC pool terminates, and if the residual certificateholder holds the residual certificate as a capital asset under Internal Revenue Code Section 1221, then the residual certificateholder will recognize a capital loss at that time in the amount of the remaining adjusted basis. Any gain on the sale of a residual certificate will be treated as ordinary income if one or both of the following conditions are met: o if a residual certificate is held as part of a conversion transaction as defined in Internal Revenue Code Section 1258(c), up to the amount of interest that would have accrued on the residual certificateholder's net investment in the conversion transaction at 120% of the appropriate applicable Federal rate in effect at the time the taxpayer entered into the transaction minus any amount previously treated as ordinary income with respect to any prior disposition of property that was held as a part of the transaction; or o in the case of a non-corporate taxpayer, to the extent the taxpayer has made an election under Internal Revenue Code Section 163(d)(4) to have net capital gains taxed as investment income at ordinary income rates. In addition, gain or loss recognized from the sale of a residual certificate by banks or thrift institutions will be treated as ordinary income or loss pursuant to Internal Revenue Code Section 582(c). The Conference Committee Report to the 1986 Act provides that, except as provided in Treasury regulations yet to be issued, the wash sale rules of Internal Revenue Code Section 1091 will apply to dispositions of residual certificates where the seller of the residual certificate, during the period beginning six months before the sale or disposition of the residual certificate and ending six months after the sale or disposition, acquires (or enters into any other transaction that results in the application of Section 1091) any residual interest in any REMIC or any interest in a taxable mortgage pool (such as a non-REMIC owner trust) that is economically comparable to a residual certificate. MARK-TO-MARKET REGULATIONS Regulations under Internal Revenue Code Section 475, relating to the requirement that a securities dealer mark-to-market securities held for sale to customers, provide that, for purposes of the mark-to-market requirement, a residual certificate is not treated as a security and thus may not be marked-to-market. TAXES THAT MAY BE IMPOSED ON THE REMIC POOL Prohibited Transactions. Income from some transactions by the REMIC pool, called prohibited transactions, will not be part of the calculation of income or loss includible in the federal income tax returns of residual certificateholders, but rather will be taxed directly to the REMIC pool at a 100% rate. Prohibited transactions generally include: 1. the disposition of a qualified mortgage other than pursuant to: o a substitution within two years of the startup day for a defective (including a defaulted) obligation (or repurchase in lieu of substitution of a defective (including a defaulted) obligation at any time) or for any qualified mortgage within three months of the startup day; o foreclosure, default or imminent default of a qualified mortgage; o bankruptcy or insolvency of the REMIC pool; or 89 o qualified (complete) liquidation; 2. the receipt of income from assets that are not the type of mortgages or investments that the REMIC pool is permitted to hold; 3. the receipt of compensation for services; or 4. the receipt of gain from disposition of cash flow investments other than pursuant to a qualified liquidation. Notwithstanding (1) and (4), it is not a prohibited transaction to sell REMIC pool property to prevent a default on regular certificates as a result of a default on qualified mortgages or to facilitate a clean-up call (generally, an optional termination to save administrative costs when no more than a small percentage of the certificates is outstanding). The REMIC regulations indicate that the modification of a mortgage loan generally will not be treated as a disposition if it is occasioned by a default or reasonably foreseeable default, an assumption of the mortgage loan, the waiver of a due-on-sale or due-on-encumbrance clause or the conversion of an interest rate by a mortgagor pursuant to the terms of a convertible adjustable rate mortgage loan. Contributions to the REMIC Pool After the Startup Day. In general, the REMIC pool will be subject to a tax at a 100% rate on the value of any property contributed to the REMIC pool after the startup day. Exceptions are provided for cash contributions to the REMIC pool made under the following circumstances: o during the three months following the startup day; o if made to a qualified reserve fund by a residual certificateholder; o if in the nature of a guarantee; o if made to facilitate a qualified liquidation or clean-up call; and o if as otherwise permitted in Treasury regulations yet to be issued. Net Income from Foreclosure Property. The REMIC pool will be subject to federal income tax at the highest corporate rate on net income from foreclosure property, determined by reference to the rules applicable to real estate investment trusts. Generally, property acquired by deed in lieu of foreclosure would be treated as foreclosure property until the close of the third calendar year following the year of acquisition, with possible extensions of up to an additional three years. Net income from foreclosure property generally means gain from the sale of a foreclosure property that is inventory property and gross income from foreclosure property other than qualifying rents and other qualifying income for a real estate investment trust. It is not anticipated that the REMIC pool will receive income or gain subject to prohibited transactions taxes or contributions subject to tax. As described in "Description of the Pooling and Servicing Agreements -- Realization upon Defaulted Mortgage Loans" with respect to net income from foreclosure property from a property that secured a mortgage loan, in some circumstances income from such a property may be subject to taxation when it is held by the REMIC pool. Liquidation of the REMIC Pool. If a REMIC pool adopts a plan of complete liquidation, within the meaning of Internal Revenue Code Section 860F(a)(4)(A)(i), which may be accomplished by designating in the REMIC pool's final tax return a date on which the adoption is deemed to occur, and sells all of its assets, other than cash, within a 90-day period beginning on the date of the adoption of the plan of liquidation, the REMIC pool will not be subject to the prohibited transaction rules on the sale of its assets, provided that the REMIC pool credits or distributes in liquidation all of the sale proceeds plus its cash, other than amounts retained to meet claims, to holders of regular certificates and residual certificateholders within the 90-day period. Administrative Matters. The REMIC pool will be required to maintain its books on a calendar year basis and to file federal income tax returns for federal income tax purposes in a manner similar to a partnership. The form for the income tax return is Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax Return. The trustee will be required to sign the REMIC pool's returns. Treasury regulations provide that, except where there is a single 90 residual certificateholder for an entire taxable year, the REMIC pool will be subject to the procedural and administrative rules of the Internal Revenue Code applicable to partnerships, including the determination by the Service of any adjustments to, among other things, items of REMIC income, gain, loss, deduction or credit in a unified administrative proceeding. The residual certificateholder owning the largest percentage interest in the residual certificates will be obligated to act as tax matters person, as defined in the applicable Treasury regulations, with respect to the REMIC pool. Each residual certificateholder will be deemed, by acceptance of the residual certificates, to have agreed to: o the appointment of the tax matters person as provided in the preceding sentence; and o the irrevocable designation of the servicer as agent for performing the functions of the tax matters person. LIMITATIONS ON DEDUCTION OF SOME EXPENSES An investor who is an individual, estate or trust will be subject to limitation with respect to some itemized deductions described in Internal Revenue Code Section 67, to the extent that the itemized deductions, in the aggregate, do not exceed 2% of the investor's adjusted gross income. In addition, Internal Revenue Code Section 68 provides that itemized deductions otherwise allowable for a taxable year of an individual taxpayer will be reduced by the lesser of (1) 3% of the excess, if any, of adjusted gross income over a statutory threshold or (2) 80% of the amount of itemized deductions otherwise allowable for that year. Under current law, the applicable limitation is reduced by one third for taxable years beginning in 2006 and 2007, and by two thirds in taxable years beginning in 2008 and 2009. For taxable years beginning after December 31, 2009 the overall limitation on itemized deductions is repealed. In the case of a REMIC pool, the deductions may include deductions under Internal Revenue Code Section 212 for the servicing fee and all administrative and other expenses relating to the REMIC pool, or any similar expenses allocated to the REMIC pool with respect to a regular interest it holds in another REMIC. Investors who hold REMIC certificates either directly or indirectly through pass-through entities may have their pro rata share of the expenses allocated to them as additional gross income, but may be subject to the limitation on deductions. In addition, those expenses are not deductible at all for purposes of computing the alternative minimum tax, and may cause investors to be subject to significant additional tax liability. Temporary Treasury regulations provide that the additional gross income and corresponding amount of expenses generally are to be allocated entirely to the holders of residual certificates in the case of a REMIC pool that would not qualify as a fixed investment trust in the absence of a REMIC election. However, the additional gross income and limitation on deductions will apply to the allocable portion of the expenses to holders of regular certificates, as well as holders of residual certificates, where regular certificates are issued in a manner that is similar to pass-through certificates in a fixed investment trust. In general, the allocable portion will be determined based on the ratio that a REMIC certificateholder's income, determined on a daily basis, bears to the income of all holders of regular certificates and residual certificates with respect to a REMIC pool. As a result, individuals, estates or trusts holding REMIC certificates, either directly or indirectly through a grantor trust, partnership, S corporation, REMIC, or other pass-through entities described in the foregoing temporary Treasury regulations, may have taxable income in excess of the interest income at the pass-through rate on regular certificates that are issued in a single Class or otherwise consistently with fixed investment trust status or in excess of cash distributions for the related period on residual certificates. Unless otherwise indicated in the applicable prospectus supplement, all the expenses will be allocable to the residual certificates. TAXATION OF FOREIGN INVESTORS A regular certificateholder that is not a "United States Person" (as defined below) and is not subject to federal income tax as a result of any direct or indirect connection to the United States in addition to its ownership of a regular certificate will not, unless otherwise disclosed in the related prospectus supplement, be subject to United States federal income or withholding tax in respect of a distribution on a regular certificate To avoid withholding tax, that holder must provide certain documentation. The appropriate documentation includes Form W-8BEN, if the foreign person is a corporation or individual eligible for the benefits of the portfolio interest exemption or an exemption based on a treaty; Form W-8ECI if the foreign person is eligible for an exemption on the basis of its income from the REMIC certificate being effectively connected to a United States trade or business; Form W-8BEN or Form W-8IMY if the foreign person is a trust, depending on whether such trust is classified as the beneficial 91 owner of the regular certificate; and Form W-8IMY, with supporting documentation as specified in the Treasury Regulations, required to substantiate exemptions from withholding on behalf of its partners, if the foreign person is a partnership. An intermediary (other than a partnership) must provide Form W-8IMY, revealing all required information, including its name, address, taxpayer identification number, the country under the laws of which it is created, and certification that it is not acting for its own account. A "qualified intermediary" must certify that it has provided, or will provide, a withholding statement as required under Treasury Regulations Section 1.1441-1(e)(5)(v), but need not disclose the identity of its account holders on its Form W-8IMY, and may certify its account holders' status without including each beneficial owner's certification. A non-"qualified intermediary" must additionally certify that it has provided, or will provide, a withholding statement that is associated with the appropriate Forms W-8 and W-9 required to substantiate exemptions from withholding on behalf of its beneficial owners. The term "intermediary" means a person acting as a custodian, a broker, nominee or otherwise as an agent for the beneficial owner of a regular certificate. A "qualified intermediary" is generally a foreign financial institution or clearing organization or a non-United States branch or office of a United States financial institution or clearing organization that is a party to a withholding agreement with the IRS. For these purposes, "United States Person" means a citizen or resident of the United States, a corporation or partnership (except as may be provided in Treasury regulations) created or organized in, or under the laws of, the United States, any State or the District of Columbia, including any entity treated as a corporation or partnership for federal income tax purposes, an estate whose income is subject to United States federal income tax regardless of its source, or a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States Persons have the authority to control all substantial decisions of the trust. It is possible that the IRS may assert that the foregoing tax exemption should not apply with respect to a regular certificate held by a residual certificateholder that owns directly or indirectly a 10% or greater interest in the REMIC residual certificates. If the holder does not qualify for exemption, distributions of interest, including distributions in respect of accrued original issue discount, to such holder may be subject to a tax rate of 30%, subject to reduction under any applicable tax treaty. In addition, the foregoing rules will not apply to exempt a United States shareholder of a controlled foreign corporation from taxation on such United States shareholder's allocable portion of the interest income received by such controlled foreign corporation. It is possible, under regulations promulgated under Section 881 of the Internal Revenue Code concerning conduit financing transactions, that the exemption from withholding taxes described above may not be available to a holder who is not a United States Person and owns 10% or more of one or more underlying mortgagors or, if the holder is a controlled foreign corporation, it is related to one or more underlying mortgagors. Further, it appears that a regular certificate would not be included in the estate of a non-resident alien individual and would not be subject to United States estate taxes. However, certificateholders who are non-resident alien individuals should consult their tax advisors concerning this question. The Treasury Department issued regulations which prescribe new certification requirements to establish exemptions from withholding, backup withholding and information reporting rules. The regulations are generally effective for distributions made after December 31, 2000. Prospective investors are urged to consult their own tax advisors regarding the regulations. Unless otherwise stated in the related prospectus supplement, transfers of residual certificates to investors that: o are not United States Persons; or o are United States Persons and classified as partnerships under the Internal Revenue Code, if any of their beneficial owners are not United States Persons, will be prohibited under the related pooling and servicing agreement. Backup Withholding. Distributions made on the regular certificates, and proceeds from the sale of the regular certificates to or through some brokers, may be subject to a backup withholding tax under Internal Revenue Code Section 3406 at a rate of 28% (increasing to 31% after 2010) on reportable payments (including interest distributions, original issue discount, and, under some circumstances, principal distributions) unless the regular certificateholder is a U.S. Person and provides IRS Form W-9 with the correct taxpayer identification number; is a 92 Non-U.S. Person and provides IRS Form W-8BEN identifying the Non-U.S. Person and stating that the beneficial owner is not a U.S. Person; or can be treated as an exempt recipient within the meaning of Treasury Regulations Section 1.6049-4(c)(1)(ii). Information reporting requirements may also apply regardless of whether withholding is required. Any amounts to be withheld from distribution on the regular certificates would be refunded by the Service or allowed as a credit against the regular certificateholder's federal income tax liability. Reporting Requirements. Reports of accrued interest, original issue discount and information necessary to compute the accrual of any market discount on the regular certificates will be made annually to the Service and to individuals, estates, non-exempt and non-charitable trusts, and partnerships who are either holders of record of regular certificates or beneficial owners who own regular certificates through a broker or middleman as nominee. All brokers, nominees and all other non-exempt holders of record of regular certificates (including corporations, non-calendar year taxpayers, securities or commodities dealers, real estate investment trusts, investment companies, common trust funds, thrift institutions and charitable trusts) may request the information for any calendar quarter by telephone or in writing by contacting the person designated in Service Publication 938 with respect to a particular series of regular certificates. Holders through nominees must request information from the nominee. The Service's Form 1066 has an accompanying Schedule Q, Quarterly Notice to Residual Interest Holders of REMIC Taxable Income or Net Loss Allocation. Treasury regulations require that Schedule Q be furnished by the REMIC pool to each residual certificateholder by the end of the month following the close of each calendar quarter, 41 days after the end of a quarter under proposed Treasury regulations, in which the REMIC pool is in existence. Treasury regulations require that, in addition to the foregoing requirements, information must be furnished quarterly to residual certificateholders, furnished annually, if applicable, to holders of regular certificates, and filed annually with the Service concerning Internal Revenue Code Section 67 expenses (see "Limitations on Deduction of Some Expenses" above) allocable to the holders. Furthermore, under the regulations, information must be furnished quarterly to residual certificateholders, furnished annually to holders of regular certificates, and filed annually with the Service concerning the percentage of the REMIC pool's assets meeting the qualified asset tests described above under "--Federal Income Tax Consequences for REMIC Certificates--Qualification as a REMIC." FEDERAL INCOME TAX CONSEQUENCES FOR CERTIFICATES AS TO WHICH NO REMIC ELECTION IS MADE STANDARD CERTIFICATES General. In the event that no election is made to treat a trust fund or a segregated pool of assets therein with respect to a series of certificates that are not designated as stripped certificates, or as a REMIC, the trust fund will be classified as a grantor trust under subpart E, Part 1 of subchapter J of the Internal Revenue Code and not as a partnership, an association taxable as a corporation or a taxable mortgage pool within the meaning of Internal Revenue Code Section 7701(i). Where there is no fixed retained yield with respect to the mortgage loans underlying the standard certificates, the holder of each standard certificate in the series will be treated as the owner of a pro rata undivided interest in the ordinary income and corpus portions of the trust fund represented by its standard certificate and will be considered the beneficial owner of a pro rata undivided interest in each of the mortgage loans, subject to the discussion below under "--Premium and Discount--Recharacterization of Servicing Fees." Accordingly, the holder of a standard certificate of a particular series will be required to report on its federal income tax return its pro rata share of the entire income from the mortgage loans represented by its standard certificate, including interest at the coupon rate on the mortgage loans, original issue discount, if any, prepayment fees, assumption fees, and late payment charges received by the servicer, in accordance with the standard certificateholder's method of accounting. A standard certificateholder generally will be able to deduct its share of the servicing fee and all administrative and other expenses of the trust fund in accordance with its method of accounting, provided that the amounts are reasonable compensation for services rendered to that trust fund. However, investors who are individuals, estates or trusts who own standard certificates, either directly or indirectly through some pass-through entities, will be subject to limitation with respect to some itemized deductions described in Internal Revenue Code Section 67, including deductions under Internal Revenue Code Section 212 for the servicing fee and all the administrative and other expenses of the trust fund, to the extent that the deductions, in the aggregate, do not exceed two percent of an investor's adjusted gross income. In addition, Internal Revenue Code Section 68 provides that itemized deductions otherwise allowable for a taxable year of an individual taxpayer will be reduced by the lesser of (1) 3% of the excess, if any, of adjusted gross income over a statutory threshold or (2) 80% of the amount of itemized deductions 93 otherwise allowable for that year. Under current law, the applicable limitation is reduced by one third for taxable years beginning in 2006 and 2007, and by two thirds in taxable years beginning in 2008 and 2009. For taxable years beginning after December 31, 2009 the overall limitation on itemized deductions is repealed. As a result, investors holding standard certificates, directly or indirectly through a pass-through entity, may have aggregate taxable income in excess of the aggregate amount of cash received on the standard certificates with respect to interest at the pass-through rate on the standard certificates. In addition, the expenses are not deductible at all for purposes of computing the alternative minimum tax, and may cause the investors to be subject to significant additional tax liability. Moreover, where there is fixed retained yield with respect to the mortgage loans underlying a series of standard certificates or where the servicing fee is in excess of reasonable servicing compensation, the transaction will be subject to the application of the stripped bond and stripped coupon rules of the Internal Revenue Code, as described below under "Stripped Certificates" and "--Premium and Discount--Recharacterization of Servicing Fees," respectively. Tax Status. Standard certificates will have the following status for federal income tax purposes: 1. A standard certificate owned by a domestic building and loan association within the meaning of Internal Revenue Code Section 7701(a)(19) will be considered to represent "loans . . . secured by an interest in real property which is . . . residential real property" within the meaning of Internal Revenue Code Section 7701(a)(19)(C)(v), provided that the real property securing the mortgage loans represented by that standard certificate is of the type described in the section of the Internal Revenue Code. 2. A standard certificate owned by a real estate investment trust will be considered to represent real estate assets within the meaning of Internal Revenue Code Section 856(c)(5)(B) to the extent that the assets of the related trust fund consist of qualified assets, and interest income on the assets will be considered interest on obligations secured by mortgages on real property to the extent within the meaning of Internal Revenue Code Section 856(c)(3)(B). 3. A standard certificate owned by a REMIC will be considered to represent an "obligation . . . which is principally secured by an interest in real property" within the meaning of Internal Revenue Code Section 860G(a)(3)(A) to the extent that the assets of the related trust fund consist of qualified mortgages within the meaning of Internal Revenue Code Section 860G(a)(3). Premium and Discount Standard certificateholders are advised to consult with their tax advisors as to the federal income tax treatment of premium and discount arising either upon initial acquisition of standard certificates or thereafter. Premium. The treatment of premium incurred upon the purchase of a standard certificate will be determined generally as described above under "--Federal Income Tax Consequences for REMIC Certificates--Taxation of Residual Certificates--Treatment of Certain Items of REMIC Income and Expense--Premium." Original Issue Discount. The original issue discount rules will be applicable to a standard certificateholder's interest in those mortgage loans as to which the conditions for the application of those sections are met. Rules regarding periodic inclusion of original issue discount income are applicable to mortgages of corporations originated after May 27, 1969, mortgages of noncorporate mortgagors, other than individuals, originated after July 1, 1982, and mortgages of individuals originated after March 2, 1984. Under the OID regulations, the original issue discount could arise by the charging of points by the originator of the mortgages in an amount greater than a statutory de minimis exception, including a payment of points currently deductible by the borrower under applicable Internal Revenue Code provisions or, under some circumstances, by the presence of teaser rates on the mortgage loans. Original issue discount must generally be reported as ordinary gross income as it accrues under a constant interest method that takes into account the compounding of interest, in advance of the cash attributable to the income. Unless indicated otherwise in the applicable prospectus supplement, no prepayment assumption will be assumed for purposes of the accrual. However, Internal Revenue Code Section 1272 provides for a reduction in the amount of original issue discount includible in the income of a holder of an obligation that acquires the obligation 94 after its initial issuance at a price greater than the sum of the original issue price and the previously accrued original issue discount, less prior payments of principal. Accordingly, if the mortgage loans acquired by a standard certificateholder are purchased at a price equal to the then unpaid principal amount of the mortgage loans, no original issue discount attributable to the difference between the issue price and the original principal amount of the mortgage loans (i.e., points) will be includible by the holder. Market Discount. Standard certificateholders also will be subject to the market discount rules to the extent that the conditions for application of those sections are met. Market discount on the mortgage loans will be determined and will be generally reported as ordinary income generally in the manner described above under "--Federal Income Tax Consequences for REMIC Certificates--Taxation of Regular Certificates--Market Discount," except that it is unclear whether a prepayment assumption would apply. Rather, the holder will accrue market discount pro rata over the life of the mortgage loans, unless the constant yield method is elected. Unless indicated otherwise in the applicable prospectus supplement, no prepayment assumption will be assumed for purposes of the accrual. Recharacterization of Servicing Fees. If the servicing fee paid to the servicer were deemed to exceed reasonable servicing compensation, the amount of the excess would represent neither income nor a deduction to certificateholders. In this regard, there are no authoritative guidelines for federal income tax purposes as to either the maximum amount of servicing compensation that may be considered reasonable in the context of this or similar transactions or whether, in the case of the standard certificate, the reasonableness of servicing compensation should be determined on a weighted average or loan-by-loan basis. If a loan-by-loan basis is appropriate, the likelihood that the amount would exceed reasonable servicing compensation as to some of the mortgage loans would be increased. Service guidance indicates that a servicing fee in excess of reasonable compensation, known as excess servicing, will cause the mortgage loans to be treated under the stripped bond rules. The guidance provides safe harbors for servicing deemed to be reasonable and requires taxpayers to demonstrate that the value of servicing fees in excess of the amounts is not greater than the value of the services provided. Accordingly, if the Service's approach is upheld, a servicer who receives a servicing fee in excess of the amounts would be viewed as retaining an ownership interest in a portion of the interest payments on the mortgage loans. Under the rules of Internal Revenue Code Section 1286, the separation of ownership of the right to receive some or all of the interest payments on an obligation from the right to receive some or all of the principal payments on the obligation would result in treatment of the mortgage loans as stripped coupons and stripped bonds. Subject to the de minimis rule discussed below under "--Stripped Certificates," each stripped bond or stripped coupon could be considered for this purpose as a non-interest bearing obligation issued on the date of issue of the standard certificates, and the original issue discount rules of the Internal Revenue Code would apply to its holder. While standard certificateholders would still be treated as owners of beneficial interests in a grantor trust for federal income tax purposes, the corpus of the trust could be viewed as excluding the portion of the mortgage loans the ownership of which is attributed to the servicer, or as including the portion as a second class of equitable interest. Applicable Treasury regulations treat such an arrangement as a fixed investment trust, since the multiple classes of trust interests should be treated as merely facilitating direct investments in the trust assets and the existence of multiple classes of ownership interests is incidental to that purpose. In general, the recharacterization should not have any significant effect upon the timing or amount of income reported by a standard certificateholder, except that the income reported by a cash method holder may be slightly accelerated. You should also review "--Stripped Certificates" below for a further description of the federal income tax treatment of stripped bonds and stripped coupons. Sale or Exchange of Standard Certificates. Upon sale or exchange of a standard certificate, a standard certificateholder will recognize gain or loss equal to the difference between the amount realized on the sale and its aggregate adjusted basis in the mortgage loans and the other assets represented by the standard certificate. In general, the aggregate adjusted basis will equal the standard certificateholder's cost for the standard certificate, increased by the amount of any income previously reported with respect to the standard certificate and decreased by the amount of any losses previously reported with respect to the standard certificate and the amount of any distributions received thereon. Except as provided above with respect to market discount on any mortgage loans, and except for some financial institutions subject to the provisions of Internal Revenue Code Section 582(c), any related gain or loss would be capital gain or loss if the standard certificate was held as a capital asset. However, gain on the sale of a standard certificate will be treated as ordinary income: 95 o if a standard certificate is held as part of a conversion transaction as defined in Internal Revenue Code Section 1258(c), up to the amount of interest that would have accrued on the standard certificateholder's net investment in the conversion transaction at 120% of the appropriate applicable federal rate in effect at the time the taxpayer entered into the transaction minus any amount previously treated as ordinary income with respect to any prior disposition of property that was held as a part of the transaction; or o in the case of a non-corporate taxpayer, to the extent the taxpayer has made an election under Internal Revenue Code Section 163(d)(4) to have net capital gains taxed as investment income at ordinary income rates. Capital gains of non-corporate taxpayers are subject to a lower maximum tax rate than ordinary income of those taxpayers. The maximum tax rate for corporations is the same with respect to both ordinary income and capital gains. Holders that recognize a loss on a sale or exchange of a standard certificate for federal income tax purposes in excess of certain threshold amounts should consult their tax advisors as to the need to file IRS Form 8886 (disclosing certain potential tax shelters) on their federal income tax returns. STRIPPED CERTIFICATES General. Pursuant to Internal Revenue Code Section 1286, the separation of ownership of the right to receive some or all of the principal payments on an obligation from ownership of the right to receive some or all of the interest payments results in the creation of stripped bonds with respect to principal payments and stripped coupons with respect to interest payments. For purposes of this discussion, certificates that are subject to those rules will be referred to as stripped certificates. Stripped certificates include stripped interest certificates and stripped principal certificates as to which no REMIC election is made. The certificates will be subject to those rules if the following occur: o we retain, for our own account or for purposes of resale, in the form of fixed retained yield or otherwise, an ownership interest in a portion of the payments on the mortgage loans; o the servicer is treated as having an ownership interest in the mortgage loans to the extent it is paid, or retains, servicing compensation in an amount greater than reasonable consideration for servicing the mortgage loans (see "--Standard Certificates--Recharacterization of Servicing Fees" above); and o certificates are issued in two or more classes or subclasses representing the right to non-pro rata percentages of the interest and principal payments on the mortgage loans. In general, a holder of a stripped certificate will be considered to own stripped bonds with respect to its pro rata share of all or a portion of the principal payments on each mortgage loan and/or stripped coupons with respect to its pro rata share of all or a portion of the interest payments on each mortgage loan, including the stripped certificate's allocable share of the servicing fees paid to the servicer, to the extent that the fees represent reasonable compensation for services rendered. See discussion above under "--Standard Certificates--Recharacterization of Servicing Fees." Although not free from doubt, for purposes of reporting to stripped certificateholders, the servicing fees will be allocated to the stripped certificates in proportion to the respective entitlements to distributions of each class or subclass of stripped certificates for the related period or periods. The holder of a stripped certificate generally will be entitled to a deduction each year in respect of the servicing fees, as described above under "--Standard Certificates--General," subject to the limitation described therein. Internal Revenue Code Section 1286 treats a stripped bond or a stripped coupon as an obligation issued at an original issue discount on the date that the stripped interest is purchased. Although the treatment of stripped certificates for federal income tax purposes is not clear in some respects at this time, particularly where the stripped certificates are issued with respect to a mortgage pool containing variable-rate mortgage loans, in the opinion of Cadwalader, Wickersham & Taft LLP, our counsel that the trust fund will be treated as a grantor trust under subpart E, Part 1 of subchapter J of the Internal Revenue Code and not as an association taxable as a corporation or a taxable mortgage pool within the meaning of Internal Revenue Code Section 7701(i). 96 Each stripped certificate should be treated as a single installment obligation for purposes of calculating original issue discount and gain or loss on disposition. This treatment is based on the interrelationship of Internal Revenue Code Section 1286, Internal Revenue Code Sections 1272 through 1275, and the OID regulations. While under Internal Revenue Code Section 1286 computations with respect to stripped certificates arguably should be made in one of the ways described below under "--Taxation of Stripped Certificates--Possible Alternative Characterizations," the OID regulations state, in general, that two or more debt instruments issued by a single issuer to a single investor in a single transaction should be treated as a single debt instrument for original issue discount purposes. The pooling and servicing agreement requires that the trustee make and report all computations described below using this aggregate approach, unless substantial legal authority requires otherwise. Furthermore, Treasury regulations assume that a stripped certificate will be treated as a single debt instrument issued on the date it is purchased for purposes of calculating any original issue discount and that the interest component of the stripped certificate would be treated as qualified stated interest under the OID regulations. Further pursuant to these final regulations the purchaser of the stripped certificate will be required to account for any discount as market discount rather than original issue discount unless either: o the initial discount with respect to the stripped certificate was treated as zero under the de minimis rule of Internal Revenue Code Section 1273(a)(3); or o no more than 100 basis points in excess of reasonable servicing is stripped off the related mortgage loans. Any related market discount would be reportable as described under "--Federal Income Tax Consequences for REMIC Certificates--Taxation of Regular Certificates--Market Discount," without regard to the de minimis rule therein, assuming that a prepayment assumption is employed in the computation. Status of Stripped Certificates. No specific legal authority exists as to whether the character of the stripped certificates, for federal income tax purposes, will be the same as that of the mortgage loans. Although the issue is not free from doubt, our counsel has advised us that stripped certificates owned by applicable holders should be considered to represent real estate assets within the meaning of Internal Revenue Code Section 856(c)(5)(B), "obligation[s] principally secured by an interest in real property" within the meaning of Internal Revenue Code Section 860G(a)(3)(A), and "loans . . . secured by an interest in real property which is . . . residential real property" within the meaning of Internal Revenue Code Section 7701(a)(19)(C)(v), and interest (including original issue discount) income attributable to stripped certificates should be considered to represent interest on obligations secured by mortgages on real property within the meaning of Internal Revenue Code Section 856(c)(3)(B), provided that in each case the mortgage loans and interest on the mortgage loans qualify for that treatment. Original Issue Discount. Except as described above under "--General," each stripped certificate will be considered to have been issued at an original issue discount for federal income tax purposes. Original issue discount with respect to a stripped certificate must be included in ordinary income as it accrues, in accordance with a constant interest method that takes into account the compounding of interest, which may be prior to the receipt of the cash attributable to that income. Based in part on the OID regulations and the amendments to the original issue discount sections of the Internal Revenue Code made by the 1986 Act, the amount of original issue discount required to be included in the income of a holder of a stripped certificate, referred to in this discussion as a stripped certificateholder, in any taxable year likely will be computed generally as described above under "--Federal Income Tax Consequences for REMIC Certificates--Taxation of Regular Certificates--Original Issue Discount" and "--Variable Rate Regular Certificates." However, with the apparent exception of a stripped certificate qualifying as a market discount obligation, as described above under "--General," the issue price of a stripped certificate will be the purchase price paid by each holder of a stripped certificate, and the stated redemption price at maturity will include the aggregate amount of the payments, other than qualified stated interest to be made on the stripped certificate to the stripped certificateholder, presumably under the prepayment assumption. If the mortgage loans prepay at a rate either faster or slower than that under the prepayment assumption, a stripped certificateholder's recognition of original issue discount will be either accelerated or decelerated and the amount of the original issue discount will be either increased or decreased depending on the relative interests in principal and interest on each mortgage loan represented by the stripped certificateholder's stripped certificate. While the matter is not free from doubt, the holder of a stripped certificate should be entitled in the year that it becomes certain, assuming no further prepayments, that the holder will not recover a portion of its adjusted basis in the stripped certificate to recognize an ordinary loss equal to the portion of unrecoverable basis. 97 As an alternative to the method described above, the fact that some or all of the interest payments with respect to the stripped certificates will not be made if the mortgage loans are prepaid could lead to the interpretation that the interest payments are contingent within the meaning of the OID regulations. The OID regulations, as they relate to the treatment of contingent interest, are by their terms not applicable to prepayable securities such as the stripped certificates. However, if final regulations dealing with contingent interest with respect to the stripped certificates apply the same principles as the OID regulations, the regulations may lead to different timing of income inclusion that would be the case under the OID regulations. Furthermore, application of the principles could lead to the characterization of gain on the sale of contingent interest stripped certificates as ordinary income. You should consult your tax advisors regarding the appropriate tax treatment of stripped certificates. Sale or Exchange of Stripped Certificates. Sale or exchange of a stripped certificate prior to its maturity will result in gain or loss equal to the difference, if any, between the amount received and the stripped certificateholder's adjusted basis in the stripped certificate, as described above under "--Federal Income Tax Consequences for REMIC Certificates--Taxation of Regular Certificates--Sale or Exchange of Regular Certificates." To the extent that a subsequent purchaser's purchase price is exceeded by the remaining payments on the stripped certificates, the subsequent purchaser will be required for federal income tax purposes to accrue and report the excess as if it were original issue discount in the manner described above. It is not clear for this purpose whether the assumed prepayment rate that is to be used in the case of a stripped certificateholder other than an original stripped certificateholder should be the prepayment assumption or a new rate based on the circumstances at the date of subsequent purchase. Holders that recognize a loss on a sale or exchange of a stripped certificate for federal income tax purposes in excess of certain threshold amounts should consult their tax advisors as to the need to file IRS Form 8886 (disclosing certain potential tax shelters) on their federal income tax returns. Purchase of More than One Class of Stripped Certificates. Where an investor purchases more than one class of stripped certificates, it is currently unclear whether for federal income tax purposes the classes of stripped certificates should be treated separately or aggregated for purposes of the rules described above. Possible Alternative Characterizations. The characterizations of the stripped certificates discussed above are not the only possible interpretations of the applicable Internal Revenue Code provisions. For example, the stripped certificateholder may be treated as the owner of any of the following: o one installment obligation consisting of the Stripped Certificate's pro rata share of the payments attributable to principal on each mortgage loan and a second installment obligation consisting of the Stripped Certificate's pro rata share of the payments attributable to interest on each mortgage loan; o as many stripped bonds or stripped coupons as there are scheduled payments of principal and/or interest on each mortgage loan; or o a separate installment obligation for each mortgage loan, representing the Stripped Certificate's pro rata share of payments of principal and/or interest to be made with respect to it. Alternatively, the holder of one or more classes of stripped certificates may be treated as the owner of a pro rata fractional undivided interest in each mortgage loan to the extent that the Stripped Certificate, or classes of stripped certificates in the aggregate, represent the same pro rata portion of principal and interest on each mortgage loan, and a stripped bond or stripped coupon, as the case may be, treated as an installment obligation or contingent payment obligation, as to the remainder. Final regulations regarding original issue discount on stripped obligations make the foregoing interpretations less likely to be applicable. The preamble to those regulations states that they are premised on the assumption that an aggregation approach is appropriate for determining whether original issue discount on a stripped bond or stripped coupon is de minimis, and solicits comments on appropriate rules for aggregating stripped bonds and stripped coupons under Internal Revenue Code Section 1286. Because of these possible varying characterizations of stripped certificates and the resultant differing treatment of income recognition, stripped certificateholders are urged to consult their own tax advisors regarding the proper treatment of stripped certificates for federal income tax purposes. 98 Grantor Trust Reporting. Unless otherwise provided in the related prospectus supplement, the related tax administrator will furnish or make readily available through electronic means to each holder of a grantor trust certificate with each payment a statement setting forth the amount of the payment allocable to principal on the underlying mortgage loans and to interest on those loans at the related pass-through rate. In addition, the related tax administrator will furnish, within a reasonable time after the end of each calendar year, to each person or entity that was the holder of a grantor trust certificate at any time during that year, information regarding: o the amount of servicing compensation received by a master servicer or special servicer, and o all other customary factual information the reporting party deems necessary or desirable to enable holders of the related grantor trust certificates to prepare their tax returns. The reporting party will furnish comparable information to the IRS as and when required by law to do so. Because the rules for accruing discount and amortizing premium with respect to grantor trust certificates are uncertain in various respects, there is no assurance the IRS will agree with the information reports of those items of income and expense. Moreover, those information reports, even if otherwise accepted as accurate by the IRS, will in any event be accurate only as to the initial certificateholders that bought their certificates at the representative initial offering price used in preparing the reports. On January 24, 2006, the IRS published final regulations which establish a reporting framework for interests in "widely held fixed investment trusts" and place the responsibility of reporting on the person in the ownership chain who holds an interest for a beneficial owner. A widely-held fixed investment trust is defined as an arrangement classified as a "trust" under Treasury regulation section 301.7701-4(c), in which any interest is held by a middleman, which includes, but is not limited to (i) a custodian of a person's account, (ii) a nominee and (iii) a broker holding an interest for a customer in street name. The trustee, or its designated agent, will be required to calculate and provide information to requesting persons with respect to the trust fund in accordance with these new regulations beginning with respect to the 2007 calendar year. The trustee (or its designated agent), or the applicable middleman (in the case of interests held through a middleman), will be required to file information returns with the IRS and provide tax information statements to certificateholders in accordance with these new regulations after December 31, 2007. REPORTING REQUIREMENTS AND BACKUP WITHHOLDING The trustee will furnish, within a reasonable time after the end of each calendar year, to each standard certificateholder or stripped certificateholder at any time during the year, the information, prepared on the basis described above, as the trustee deems to be necessary or desirable to enable the certificateholders to prepare their federal income tax returns. The information will include the amount of original issue discount accrued on certificates held by persons other than certificateholders exempted from the reporting requirements. The amounts required to be reported by the trustee may not be equal to the proper amount of original issue discount required to be reported as taxable income by a certificateholder, other than an original certificateholder that purchased at the issue price. In particular, in the case of stripped certificates, unless provided otherwise in the applicable prospectus supplement, the reporting will be based upon a representative initial offering price of each class of stripped certificates. The trustee will also file the original issue discount information with the Service. If a certificateholder fails to supply an accurate taxpayer identification number or if the Secretary of the Treasury determines that a certificateholder has not reported all interest and dividend income required to be shown on his federal income tax return, backup withholding at a rate of 28% (increasing to 31% after 2010) may be required in respect of any reportable payments, as described above under "--Federal Income Tax Consequences for REMIC Certificates--Backup Withholding." TAXATION OF FOREIGN INVESTORS To the extent that a Certificate evidences ownership in mortgage loans that are issued on or before July 18, 1984, interest or original issue discount paid by the person required to withhold tax under Internal Revenue Code Section 1441 or 1442 to nonresident aliens, foreign corporations, or other Non-United States Persons generally will be subject to 30% United States withholding tax, or the lower rate as may be provided for interest by an applicable tax treaty. Accrued original issue discount recognized by the standard certificateholder or stripped certificateholder 99 on original issue discount recognized by the standard certificateholder or stripped certificateholders on the sale or exchange of the Certificate also will be subject to federal income tax at the same rate. Treasury regulations provide that interest or original issue discount paid by the trustee or other withholding agent to a Non-United States Person evidencing ownership interest in mortgage loans issued after July 18, 1984 will be portfolio interest and will be treated in the manner, and the persons will be subject to the same certification requirements, described above under "--Federal Income Tax Consequences for REMIC Certificates--Taxation of Foreign Investors--Regular Certificates." STATE AND OTHER TAX CONSIDERATIONS In addition to the federal income tax consequences described in "Material Federal Income Tax Consequences," you should consider the state and local tax consequences of the acquisition, ownership, and disposition of the offered certificates. State tax law may differ substantially from the corresponding federal law, and the discussion above does not purport to describe any aspect of the tax laws of any state or other jurisdiction. Therefore, you should consult your own tax advisors with respect to the various tax consequences of investments in the offered certificates. CERTAIN ERISA CONSIDERATIONS GENERAL The Employee Retirement Income Security Act of 1974, as amended, and Section 4975 of the Internal Revenue Code impose certain requirements on employee benefit plans, and on other retirement plans and arrangements, including individual retirement accounts and annuities, Keogh plans, collective investment funds, insurance company separate accounts and some insurance company general accounts in which the plans, accounts or arrangements are invested, and on persons who are fiduciaries with respect to plans in connection with the investment of plan assets. ERISA generally imposes on Plan fiduciaries general fiduciary requirements, including those of investment prudence and diversification and the requirement that a Plan's investments be made in accordance with the documents governing the Plan. In addition, ERISA and Section 4975 of the Internal Revenue Code prohibit a broad range of transactions involving assets of a Plan and parties in interest who have specified relationships to the Plan, unless a statutory or administrative exemption is available. Parties in interest that participate in a prohibited transaction may be subject to an excise tax imposed pursuant to Section 4975 of the Internal Revenue Code, unless a statutory or administrative exemption is available. These prohibited transactions generally are set forth in Section 406 of ERISA and Section 4975 of the Internal Revenue Code. Special caution should be exercised before the assets of a Plan are used to purchase a Certificate if, with respect to the assets, we, the servicer, a special servicer or any sub-servicer or the trustee or an affiliate thereof, either: o has discretionary authority or control with respect to the investment of the assets of the Plan; or o has authority or responsibility to give, or regularly gives, investment advice with respect to the assets of the Plan for a fee and pursuant to an agreement or understanding that the advice will serve as a primary basis for investment decisions with respect to the assets and that the advice will be based on the particular investment needs of the Plan. Before purchasing any offered certificates, a Plan fiduciary should consult with its counsel and determine whether there exists any prohibition to the purchase under the requirements of ERISA, whether any prohibited transaction class exemption or any individual prohibited transaction exemption, as described below, applies, including whether the appropriate conditions set forth therein would be met, or whether any statutory prohibited transaction exemption is applicable, and further should consult the applicable prospectus supplement relating to the series of certificates. Some employee benefit plans, such as governmental plans, as defined in Section 3(32) of ERISA, and, if no election has been made under Section 410(d) of the Internal Revenue Code, church plans, as defined in 100 Section 3(33) of ERISA, are not subject to ERISA requirements. However, such plans may be subject to the provisions of other applicable federal and state law materially similar to the foregoing provisions of ERISA and the Internal Revenue Code. Moreover, any governmental or church plan which is qualified and exempt from taxation under Sections 401(a) and 501(a) of the Internal Revenue Code is subject to the prohibited transaction rules set forth in Section 503 of the Internal Revenue Code. PLAN ASSET REGULATIONS A Plan's investment in offered certificates may cause the trust assets to be deemed plan assets. Section 2510.3-101 of the regulations of the Department of Labor provides that, when a Plan acquires an equity interest in an entity, the Plan's assets include both the equity interest and an undivided interest in each of the underlying assets of the entity, unless some exceptions not applicable to this discussion apply, or unless the equity participation in the entity by benefit plan investors, i.e., Plans, whether or not subject to ERISA, and entities whose underlying assets include plan assets, is not significant. For this purpose, the plan asset regulations provide, in general, that participation in an entity, such as a trust fund, is significant if, immediately after the most recent acquisition of any equity interest, 25% or more of any class of equity interests, such as certificates, is held by benefit plan investors. Unless restrictions on ownership of and transfer to plans apply with respect to a series of certificates, we cannot assure you that benefit plan investors will not own at least 25% of a class of certificates. Any person who has discretionary authority or control respecting the management or disposition of plan assets, and any person who provides investment advice with respect to the assets for a fee, is a fiduciary of the investing Plan. If the trust assets constitute plan assets, then any party exercising management or discretionary control regarding those assets, such as a servicer, a special servicer or any sub-servicer, may be deemed to be a Plan fiduciary with respect to the investing Plan, and thus, except as described above in the case of governmental plans and church plans, subject to the fiduciary responsibility provisions and prohibited transaction provisions of ERISA and Section 4975 of the Internal Revenue Code. In addition, if the trust assets constitute plan assets, the purchase of certificates by a Plan, as well as the operation of the trust fund, may constitute or involve one or more prohibited transactions under ERISA, Section 4975 of the Internal Revenue Code or Similar Law. ADMINISTRATIVE EXEMPTIONS Several underwriters of mortgage-backed securities have applied for and obtained from the Department of Labor individual prohibited transaction exemptions that apply to the purchase and holding of mortgage-backed securities which, among other conditions, are sold in an offering with respect to which that underwriter serves as the sole or a managing underwriter or as a selling or placement agent. If such an exemption may be applicable to a series of certificates, the related prospectus supplement will refer to the possibility, as well as provide a summary of the conditions to the exemption's applicability. UNRELATED BUSINESS TAXABLE INCOME; RESIDUAL CERTIFICATES The purchase of a residual certificate by any employee benefit plan qualified under Section 401(a) of the Internal Revenue Code and exempt from taxation under Section 501(a) of the Internal Revenue Code Section, including most Plans, may give rise to unrelated business taxable income as described in Sections 511-515 and 860E of the Internal Revenue Code. Further, prior to the purchase of residual certificates, a prospective transferee may be required to provide an affidavit to a transferor that it is not, nor is it purchasing a residual certificate on behalf of, a Disqualified Organization, which term as defined above includes some tax-exempt entities not subject to Section 511 of the Internal Revenue Code including some governmental plans, as discussed above under the caption "Material Federal Income Tax Consequences--Federal Income Tax Consequences for REMIC Certificates--Taxation of Residual Certificates--Tax-Related Restrictions on Transfer of Residual Certificates--Disqualified Organizations." Due to the complexity of these rules and the penalties that may be imposed upon persons involved in prohibited transactions, it is particularly important that potential investors who are Plan fiduciaries consult with their counsel regarding the consequences under ERISA, Section 4975 of the Internal Revenue Code and Similar Law, of their acquisition and ownership of certificates. 101 LEGAL INVESTMENT If so specified in the Prospectus Supplement, certain classes of certificates will constitute "mortgage related securities" for purposes of the Secondary Mortgage Market Enhancement Act of 1984, as amended ("SMMEA"). Generally, only classes of offered certificates that meet the following criteria will be "mortgage related securities" for purposes of SMMEA: o are rated in one of the two highest rating categories by one or more nationally recognized statistical rating organizations; o are part of a series evidencing interests in a trust fund consisting of loans originated by those types of originators specified in SMMEA; and o are part of a series evidencing interests in a trust fund consisting of mortgage loans each of which is secured by a first lien on real estate. The appropriate characterization of those certificates not qualifying as "mortgage related securities" for purposes of SMMEA ("Non-SMMEA Certificates) under various legal investment restrictions, and thus the ability of investors subject to these restrictions to purchase those certificates, may be subject to significant interpretive uncertainties. Accordingly, all investors whose investment activities are subject to legal investment laws and regulations, regulatory capital requirements, or regulatory review by regulatory authorities should consult their own legal advisors in determining whether and to what extent the non-SMMEA certificates constitute legal investments for them. Those classes of offered certificates qualifying as "mortgage related securities" will constitute legal investments for persons, trusts, corporations, partnerships, associations, business trusts and business entities, including depository institutions, insurance companies, trustees and pension funds, created pursuant to or existing under the laws of the United States or of any state, including the District of Columbia and Puerto Rico, whose authorized investments are subject to state regulation to the same extent that, under applicable law, obligations issued by or guaranteed as to principal and interest by the United States or any of its agencies or instrumentalities constitute legal investments for those entities. Under SMMEA, a number of states enacted legislation, on or prior to the October 3, 1991 cut-off for those enactments, limiting to various extents the ability of some entities (in particular, insurance companies) to invest in "mortgage related securities" secured by liens on residential, or mixed residential and commercial properties, in most cases by requiring the affected investors to rely solely upon existing state law, and not SMMEA. Pursuant to Section 347 of the Riegle Community Development and Regulatory Improvement Act of 1994, which amended the definition of "mortgage related security" to include, in relevant part, offered certificates satisfying the rating and qualified originator requirements for "mortgage related securities," but evidencing interests in a trust fund consisting, in whole or in part, of first liens on one or more parcels of real estate upon which are located one or more commercial structures, states were authorized to enact legislation, on or before September 23, 2001, specifically referring to Section 347 and prohibiting or restricting the purchase, holding or investment by state-regulated entities in those types of certificates. Accordingly, the investors affected by any state legislation overriding the preemptive effect of SMMEA will be authorized to invest in offered certificates qualifying as "mortgage related securities" only to the extent provided in that legislation. SMMEA also amended the legal investment authority of federally-chartered depository institutions as follows: o federal savings and loan associations and federal savings banks may invest in, sell or otherwise deal in "mortgage related securities" without limitation as to the percentage of their assets represented thereby; o federal credit unions may invest in those securities; and o national banks may purchase those securities for their own account without regard to the limitations generally applicable to investment securities set forth in 12 U.S.C. Section 24 (Seventh), subject in each case to those regulations as the applicable federal regulatory authority may prescribe. 102 In this connection, the Office of the Comptroller of the Currency, called the OCC, has amended 12 C.F.R. Part 1 to authorize national banks to purchase and sell for their own account, without limitation as to a percentage of the bank's capital and surplus, but subject to compliance with general standards in 12 C.F.R. Section 1.5 concerning "safety and soundness" and retention of credit information, certain "Type IV securities," defined in 12 C.F.R. Section 1.2(m) to include certain "commercial mortgage-related securities" and "residential mortgage-related securities." As so defined, "commercial mortgage-related security" and "residential mortgage-related security" mean, in relevant part, "mortgage related security" within the meaning of SMMEA, provided that, in the case of a "commercial mortgage-related security," it "represents ownership of a promissory note or certificate of interest or participation that is directly secured by a first lien on one or more parcels of real estate upon which one or more commercial structures are located and that is fully secured by interests in a pool of loans to numerous obligors." In the absence of any rule or administrative interpretation by the OCC defining the term "numerous obligors," no representation is made as to whether any class of the offered certificates will qualify as "commercial mortgage-related securities," and thus as "Type IV securities," for investment by national banks. The National Credit Union Administration, or NCUA, has adopted rules, codified at 12 C.F.R. Part 703, which permit federal credit unions to invest in "mortgage related securities" other than stripped mortgage related securities (unless the credit union complies with the requirements of 12 C.F.R. Section 703.16(e) for investing in those securities), residual interests in mortgage related securities, and commercial mortgage related securities, subject to compliance with general rules governing investment policies and practices; however, credit unions approved for the NCUA's "investment pilot program" under 12 C.F.R. Section 703.19 may be able to invest in those prohibited forms of securities, while "RegFlex credit unions" may invest in commercial mortgage related securities under certain conditions pursuant to 12 C.F.R. Section 742.4(b)(2). The Office of Thrift Supervision, or OTS, has issued Thrift Bulletin 13a (December 1, 1998), "Management of Interest Rate Risk, Investment Securities, and Derivatives Activities," and Thrift Bulletin 73a (December 18, 2001), "Investing in Complex Securities," which thrift institutions subject to the jurisdiction of the OTS should consider before investing in any of the offered certificates. All depository institutions considering an investment in the offered certificates should review the "Supervisory Policy Statement on Investment Securities and End-User Derivatives Activities" (the "1998 Policy Statement") of the Federal Financial Institutions Examination Council, which has been adopted by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the OCC and the OTS effective May 26, 1998, and by the NCUA effective October 1, 1998. The 1998 Policy Statement sets forth general guidelines which depository institutions must follow in managing risks, including market, credit, liquidity, operational (transaction), and legal risks, applicable to all securities, including mortgage pass-through securities and mortgage-derivative products, used for investment purposes. Investors whose investment activities are subject to regulation by federal or state authorities should review rules, policies and guidelines adopted from time to time by those authorities before purchasing any class of the offered certificates, as some classes may be deemed unsuitable investments, or may otherwise be restricted, under those rules, policies or guidelines, in some instances irrespective of SMMEA. The foregoing does not take into consideration the applicability of statutes, rules, regulations, orders, guidelines or agreements generally governing investments made by a particular investor, including, but not limited to, "prudent investor" provisions, percentage-of-assets limits, provisions which may restrict or prohibit investment in securities which are not "interest-bearing" or "income-paying", and, with regard to any class of the offered certificates issued in book-entry form, provisions which may restrict or prohibit investments in securities which are issued in book-entry form. Except as to the status of some classes of offered certificates as "mortgage related securities", no representations are made as to the proper characterization of any class of offered certificates for legal investment purposes, financial institution regulatory purposes, or other purposes, or as to the ability of particular investors to purchase any class of offered certificates under applicable legal investment restrictions. The uncertainties described above--and any unfavorable future determinations concerning legal investment or financial institution regulatory characteristics of the offered certificates--may adversely affect the liquidity of any class of offered certificates. 103 Accordingly, if your investment activities are subject to legal investment laws and regulations, regulatory capital requirements or review by regulatory authorities, you should consult with your own legal advisors in determining whether and to what extent the offered certificates of any class constitute legal investments or are subject to investment, capital or other restrictions and, if applicable, whether SMMEA has been overridden in any jurisdiction relevant to you. METHOD OF DISTRIBUTION The certificates offered hereby and by related prospectus supplements will be offered in series through one or more of the methods described below. The prospectus supplement prepared for each series will describe the method of offering being utilized for that series and will state the net proceeds to us from that sale. We intend that certificates will be offered through the following methods from time to time and that offerings may be made concurrently through more than one of these methods or that an offering of a particular series of offered certificates may be made through a combination of two or more of these methods. The methods are as follows: o by negotiated firm commitment underwriting and public offering by one or more underwriters specified in the related prospectus supplement; o by placements through one or more placement agents specified in the related prospectus supplement primarily with institutional investors and dealers; and o through direct offerings by us. If specified in the prospectus supplement relating to a series of offered certificates, we or any of our affiliates or any other person or persons specified in the prospectus supplement (including originators of mortgage loans) may purchase some or all of one or more classes of offered certificates of that series from the underwriter or underwriters or any other person or persons specified in the prospectus supplement. Pursuant to this prospectus and the related prospectus supplement, a purchaser may thereafter from time to time offer and sell some or all of the certificates directly, or through one or more underwriters to be designated at the time of the offering of the certificates, or through dealers (whether acting as agent or as principal) or in any other manner that may be specified in the related prospectus supplement. The offering may be restricted in the manner specified in the related prospectus supplement. The transactions may be effected at market prices prevailing at the time of sale, at negotiated prices or at fixed prices. If underwriters are used in a sale of any offered certificates, other than in connection with an underwriting on a best efforts basis, the certificates will be acquired by the underwriters for their own account and may be resold from time to time in one or more transactions, including negotiated transactions, at fixed public offering prices or at varying prices to be determined at the time of sale or at the time of commitment therefore. The underwriters may be broker-dealers affiliated with us whose identities and relationships to us will be as set forth in the related prospectus supplement. The managing underwriter or underwriters with respect to the offer and sale of a particular series of offered certificates will be set forth in the cover of the prospectus supplement relating to that series and the members of the underwriting syndicate, if any, will be named in the prospectus supplement. In connection with the sale of the offered certificates, underwriters may receive compensation from us or from purchasers of the offered certificates in the form of discounts, concessions or commissions. Underwriters and dealers participating in the distribution of the certificates will be deemed to be underwriters in connection with those certificates, and any discounts or commissions received by them from us and any profit on the resale of certificates by them will be deemed to be underwriting discounts and commissions under the Securities Act of 1933, as amended. It is anticipated that the underwriting agreement pertaining to the sale of any series of certificates will provide that the obligations of the underwriters will be subject to some conditions precedent, including the following: 104 o that the underwriters will be obligated to purchase all certificates if any are purchased, other than in connection with an underwriting on a best efforts basis; and o that we will indemnify the several underwriters, and each person, if any, who controls any related underwriters within the meaning of Section 15 of the Securities Act, against some civil liabilities, including liabilities under the Securities Act, or will contribute to payments required to be made in respect of the Securities Act. The prospectus supplement with respect to any series offered by placements through dealers will contain information regarding the nature of the offering and any agreements to be entered into between us and purchasers of certificates of those series. In no event will 10% or more of any trust fund include mortgage loans secured by properties located outside of the United States or its territories or possessions. We anticipate that the certificates offered hereby will be sold primarily to institutional investors. Purchasers of offered certificates, may, depending on the facts and circumstances of their purchases, and in the case of purchasers that are dealers, will, be deemed to be underwriters within the meaning of the Securities Act in connection with reoffers and sales by them of offered certificates. Certificateholders should consult with their legal advisors in this regard prior to any related reoffer or sale. As to each series of certificates, only those classes rated in an investment grade rating category by any rating agency will be offered hereby. Any unrated class may be initially retained by us, and may be sold by us at any time to one or more institutional investors. If and to the extent required by applicable law or regulation, this prospectus will be used by Bear, Stearns & Co. Inc., our affiliate, in connection with offers and sales related to market-making transactions in the offered certificates previously offered hereunder in transactions in which Bear, Stearns & Co. Inc. acts as principal. Bear, Stearns & Co. Inc. may also act as agent in those transactions. Sales may be made at negotiated prices determined at the time of sale. WHERE YOU CAN FIND MORE INFORMATION We have filed with the SEC a registration statement, including this prospectus and a form of the prospectus supplement, under the Securities Act of 1933, as amended, with respect to the offered certificates. This prospectus and the applicable prospectus supplement relating to each series of offered certificates contain summaries of the material terms of the documents referred to, but do not contain all of the information contained in the registration statement. For further information regarding the documents referred to in this prospectus and the applicable prospectus supplement, you should refer to the registration statement and the exhibits to the registration statement. Copies of the Registration Statement and other filed materials, including annual reports on Form 10-K, distribution reports on Form 10-D, current reports on Form 8-K, may be read and copied at the Public Reference Section of the Securities and Exchange Commission, 450 Fifth Street N.W., Washington, D.C. 20549. Information regarding the operation of the Public Reference Section may be obtained by calling the Securities and Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission also maintains a site on the World Wide Web at "http://www.sec.gov" at which you can view and download copies of reports, proxy and information statements and other information filed electronically through the Electronic Data Gathering, Analysis and Retrieval ("EDGAR") system. The Depositor has filed the Registration Statement, including all exhibits thereto, through the EDGAR system, so the materials should be available by logging onto the Securities and Exchange Commission's Web site. The Securities and Exchange Commission maintains computer terminals providing access to the EDGAR system at each of the offices referred to above. If so specified in the related prospectus supplement, copies of all filings through the EDGAR system of the related issuing entity on Form 10-D, Form 10-K and Form 8-K will be made available on the applicable trustee's or other identified party's website. 105 INCORPORATION OF SOME INFORMATION BY REFERENCE The SEC allows us to incorporate by reference information that we file with the SEC, which allows us to disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus and the applicable prospectus supplement. Information that we file later with the SEC will automatically update the information in this prospectus and the applicable prospectus supplement. In all cases, you should rely on the later information over different information included in this prospectus or the applicable prospectus supplement. As a recipient of this prospectus, you may request a copy of any document we incorporate by reference, except exhibits to the documents (unless the exhibits are specifically incorporated by reference), at no cost, by writing or calling: Bear Stearns Commercial Mortgage Securities Inc., 383 Madison Avenue, New York, New York 10179, Attention: J. Christopher Hoeffel (212) 272-2000. We have determined that our financial statements will not be material to the offering of any offered certificates. REPORTS We have not authorized anybody to give you any information or to make any representation not contained in this prospectus and any related prospectus supplement and you should not rely on any related information or representation that is not contained in this document. This prospectus and any related prospectus supplement do not constitute an offer to sell or a solicitation of an offer to buy any securities other than the certificates being offered pursuant to the related prospectus supplement. They also do not constitute an offer of the offered certificates to any person in any state or other jurisdiction in which the offer would be unlawful. The delivery of this prospectus to you at any time does not imply that information contained in this document is correct as of any time subsequent to the date of this document; however, if any material change occurs while this prospectus is required by law to be delivered, we will amend or supplement this prospectus accordingly. The servicer or trustee for each series will be required to mail to holders of the certificates of each series periodic unaudited reports concerning the related trust fund. If holders of beneficial interests in a class of offered certificates are holding and transferring in book-entry form through the facilities of DTC, then unless otherwise provided in the related prospectus supplement, the reports will be sent on behalf of the related trust fund to a nominee of DTC as the registered holder of the offered certificates. Conveyance of notices and other communications by DTC to its participating organizations, and directly or indirectly through the participating organizations to the beneficial owners of the applicable offered certificates, will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. We will file or cause to be filed with the SEC the periodic reports with respect to each trust fund as are required under the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC thereunder. FINANCIAL INFORMATION A new trust fund will be formed with respect to each series of certificates. No trust fund will engage in any business activities or have any assets or obligations prior to the issuance of the related series of certificates. Accordingly, no financial statements with respect to any trust fund will be included in this prospectus or in the related prospectus supplement. LEGAL MATTERS The validity of the certificates of each series will be passed upon for us by Cadwalader, Wickersham & Taft LLP, New York, New York, or other counsel identified in the prospectus supplement for that series. RATINGS It is a condition to the issuance of any class of offered certificates that they shall have been rated not lower than investment grade, that is, in one of the four highest rating categories, by at least one rating agency. Ratings on mortgage pass-through certificates address the likelihood of receipt by you of all collections on the underlying mortgage assets to which you are entitled. Ratings address the structural, legal and issuer-related aspects 106 associated with those certificates, the nature of the underlying mortgage loans and the credit quality of the guarantor, if any. Ratings on mortgage pass-through certificates do not represent any assessment of the likelihood of principal prepayments by borrowers or of the degree by which prepayments might differ from those originally anticipated. As a result, you might suffer a lower than anticipated yield, and, in addition, holders of stripped interest certificates in extreme cases might fail to recoup their initial investments. A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the assigning rating organization. Each security rating should be evaluated independently of any other security rating. 107 GLOSSARY Accrued Certificate Interest -- With respect to each class of certificates (other than some classes of stripped interest certificates and some classes of residual certificates), the "Accrued Certificate Interest" for each distribution date will be equal to interest at the applicable pass-through rate accrued for a specified period (generally equal to the time period between distribution dates) on the outstanding certificate balance of the class of certificates immediately prior to the distribution date. Unless otherwise provided in the related prospectus supplement, the Accrued Certificate Interest for each distribution date on a class of stripped interest certificates will be similarly calculated except that it will accrue on a notional amount that is either based on the principal balances of some or all of the mortgage assets in the related trust fund or equal to the certificate balances of one or more other classes of certificates of the same series. ARM Loans -- mortgage loans with adjustable mortgage rates. Available Distribution Amount -- Unless otherwise provided in the related prospectus supplement, the "Available Distribution Amount" for any series of certificates and any distribution date will refer to the total of all payments or other collections (or advances in lieu thereof) on, under or in respect of the mortgage assets and any other assets included in the related trust fund that are available for distribution to the holders of certificates of the series on the date. Debt Service Coverage Ratio -- Unless otherwise defined in the related prospectus supplement, the "Debt Service Coverage Ratio" of a mortgage loan at any given time is the ratio of the Net Operating Income derived from the related mortgaged property for a twelve-month period to the annualized scheduled payments on the mortgage loan and any other loans senior to it that are secured by the related mortgaged property. Disqualified Organization -- any of the following: o the United States, any of its state or political subdivisions; o any foreign government; o any international organization; o any agency or instrumentality of any of the foregoing, provided that the term does not include an instrumentality if all of its activities are subject to tax and, except in the case of the Federal Home Loan Mortgage Corporation, a majority of its board of directors is not selected by any related governmental entity; o any cooperative organization furnishing electric energy or providing telephone service to persons in rural areas as described in Internal Revenue Code Section 1381(a)(2)(C); and o any organization, other than a farmers' cooperative described in Internal Revenue Code Section 521, that is exempt from taxation under the Internal Revenue Code unless the organization is subject to the tax on unrelated business income imposed by Internal Revenue Code Section 511. Due Period -- Unless otherwise specified in the prospectus supplement for a series of certificates, a "Due Period" is a specified time period generally corresponding in length to the time period between distribution dates, and all scheduled payments on the mortgage loans in the related trust fund that are due during a given Due Period will, to the extent received by a specified date, called the determination date, or otherwise advanced by the related servicer or other specified person, be distributed to the holders of the certificates of the series on the next succeeding distribution date. ERISA -- The Employee Retirement Income Security Act of 1974, as amended. Excess Funds -- Unless otherwise specified in the related prospectus supplement, "Excess Funds" will, in general, represent that portion of the amounts distributable in respect of the certificates of any series on any 108 distribution date that represent interest received or advanced on the mortgage assets in the related trust fund that is in excess of the interest currently accrued on the certificates or prepayment premiums, payments from equity participations or any other amounts received on the mortgage assets in the related trust fund that do not constitute interest or principal. Internal Revenue Code -- The Internal Revenue Code of 1986, as amended. Loan-to-Value Ratio -- Unless otherwise defined in the related prospectus supplement, the "Loan-to-Value Ratio" of a mortgage loan at any given time is the ratio (expressed as a percentage) of the then outstanding principal balance of the mortgage loan and any other loans senior to it that are secured by the related mortgaged property to the Value of the related mortgaged property. MBS -- pass-through certificates or other mortgage-backed securities that evidence interests in, or that are secured by pledges of, one or more of various types of multifamily or commercial mortgage loans. Net Operating Income -- Unless otherwise defined in the related prospectus supplement, "Net Operating Income" means, for any given period, the total operating revenues derived from a mortgaged property during the period, minus the total operating expenses incurred in respect of the mortgaged property during the period other than non-cash items such as depreciation and amortization, capital expenditures, and debt service on the related mortgage loan or on any other loans that are secured by the mortgaged property. Non-U.S. Person -- The term "Non-U.S. Person" means any person who is not a U.S. Person. Pass-Through Entity -- "Pass-Through Entity" means any regulated investment company, real estate investment trust, common trust fund, partnership, trust or estate and some corporations operating on a cooperative basis. Except as may be provided in Treasury regulations, any person holding an interest in a Pass-Through Entity as a nominee for another will, with respect to the interest, be treated as a Pass-Through Entity. Plan -- Any retirement plan or other employee benefit plan or arrangement subject to Title I of ERISA, Section 4975 of the Internal Revenue Code or applicable Similar Law. Service -- The Internal Revenue Service. Similar Law -- Any applicable federal, state or local law materially similar to Title I of ERISA or Section 4975 of the Internal Revenue Code. SMMEA -- The Secondary Market Mortgage Enhancement Act of 1984, as amended. U.S. Person -- The term "U.S. Person" means a citizen or resident of the United States, a corporation, partnership or other entity created or organized in or under the laws of the United States or any State, an estate that is subject to United States federal income tax regardless of the source of its income or a trust if: o for taxable years beginning after December 31, 1996 (or for taxable years ending after August 20, 1996, if the trustee has made an applicable election), a court within the United States is able to exercise primary supervision over the administration of the trust, and one or more United States persons have the authority to control all substantial decisions of the trust; or o for all other taxable years, the trust is subject to United States federal income tax regardless of the source of its income (or, to the extent provided in applicable Treasury Regulations, some trusts in existence on August 20, 1996 which are eligible to elect to be treated as U.S. Persons). Value -- The "Value" of a mortgaged property is generally its fair market value determined in an appraisal obtained by the originator at the origination of the loan. 109 [THIS PAGE INTENTIONALLY LEFT BLANK.] The attached diskette contains one spreadsheet file that can be put on a user-specified hard drive or network drive. This spreadsheet file is a Microsoft Excel(1) file. The spreadsheet file provides, in electronic format, statistical information that appears under the caption "Description of the Mortgage Pool" in, and on Appendix B and Appendix C to, this prospectus supplement. Defined terms used, but not otherwise defined, in the spreadsheet file will have the respective meanings assigned to them in the glossary to this prospectus supplement. All the information contained in the spreadsheet file is subject to the same limitations and qualifications contained in this prospectus supplement. Prospective investors are strongly urged to read this prospectus supplement and accompanying prospectus in its entirety prior to accessing the spreadsheet file. ---------- (1) Microsoft Excel is a registered trademark of Microsoft Corporation


(1)	The certificate balances are approximate and on the closing date may vary by up to 5%.