FWP 1 n560_ts-x3.htm FREE WRITING PROSPECTUS

    FREE WRITING PROSPECTUS
    FILED PURSUANT TO RULE 433
    REGISTRATION FILE NO.: 333-180779-19
     

 

 

   
(MORGAN STANLEY LOGO) (BANK OF AMERICA LOGO)
   

MSBAM 2015-C26

Free Writing Prospectus

Structural and Collateral Term Sheet

 

$1,048,168,904

(Approximate Total Mortgage Pool Balance)

$904,045,000

(Approximate Offered Certificates)

Morgan Stanley Capital I Inc.

as Depositor

Morgan Stanley Mortgage Capital Holdings LLC

Bank of America, National Association

CIBC Inc.
Starwood Mortgage Funding III LLC

as Sponsors and Mortgage Loan Sellers

 

 

Commercial Mortgage Pass-Through Certificates

Series 2015-C26

 

 

October 22, 2015 

 

   
MORGAN STANLEY BofA MERRILL LYNCH
   

Co-Lead Bookrunning Manager

 

CIBC World Markets

 

Co-Lead Bookrunning Manager

 

Drexel Hamilton

 

Co-Managers
 

 

STATEMENT REGARDING THIS FREE WRITING PROSPECTUS

 

The depositor has filed a registration statement (including a prospectus) with the SEC (File Number 333-180779) for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC web site at www.sec.gov. Alternatively, the depositor or any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling toll free 1-866-718-1649 or by email to prospectus@ms.com.

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

 
 

 

 

 

 

 

Neither this Term Sheet nor anything contained herein shall form the basis for any contract or commitment whatsoever. The information contained herein is preliminary as of the date hereof. This Term Sheet is subject to change, completion or amendment from time to time. The information contained herein will be superseded by similar information delivered to you as part of the Free Writing Prospectus. The information contained herein supersedes any such information previously delivered. The information contained herein should be reviewed only in conjunction with the entire Free Writing Prospectus. All of the information contained herein is subject to the same limitations and qualifications contained in the Free Writing Prospectus. The information contained herein does not contain all relevant information relating to the underlying mortgage loans or mortgaged properties. Such information is described in the Free Writing Prospectus and the Prospectus attached thereto as Exhibit A. The information contained herein will be more fully described in the Free Writing Prospectus. The information contained herein should not be viewed as projections, forecasts, predictions or opinions with respect to value. Prior to making any investment decision, prospective investors are strongly urged to read the Free Writing Prospectus in its entirety. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this Term Sheet is truthful or complete. Any representation to the contrary is a criminal offense. 

 

IMPORTANT NOTICE RELATING TO AUTOMATICALLY GENERATED EMAIL DISCLAIMERS

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

 

IMPORTANT NOTICE REGARDING THE CONDITIONS FOR THIS OFFERING OF ASSET-BACKED SECURITIES

THE ASSET-BACKED SECURITIES REFERRED TO IN THIS TERM SHEET ARE BEING OFFERED WHEN, AS AND IF ISSUED. IN PARTICULAR, YOU ARE ADVISED THAT THE ASSET-BACKED SECURITIES, AND THE ASSET POOL BACKING THEM, ARE SUBJECT TO MODIFICATION OR REVISION (INCLUDING, AMONG OTHER THINGS, THE POSSIBILITY THAT ONE OR MORE CLASSES OF SECURITIES MAY BE SPLIT, COMBINED OR ELIMINATED), AT ANY TIME PRIOR TO ISSUANCE OR AVAILABILITY OF A FINAL PROSPECTUS. AS A RESULT, YOU MAY COMMIT TO PURCHASE SECURITIES THAT HAVE CHARACTERISTICS THAT MAY CHANGE, AND YOU ARE ADVISED THAT ALL OR A PORTION OF THE SECURITIES MAY NOT BE ISSUED THAT HAVE THE CHARACTERISTICS DESCRIBED IN THIS TERM SHEET. OUR OBLIGATION TO SELL SECURITIES TO YOU IS CONDITIONED ON THE SECURITIES AND THE UNDERLYING TRANSACTION HAVING THE CHARACTERISTICS DESCRIBED IN THIS TERM SHEET. IF WE DETERMINE THAT THE FOREGOING CONDITION IS NOT SATISFIED IN ANY MATERIAL RESPECT, WE WILL NOTIFY YOU, AND NEITHER THE ISSUING ENTITY NOR ANY UNDERWRITER WILL HAVE ANY OBLIGATION TO YOU TO DELIVER ALL OR ANY PORTION OF THE SECURITIES WHICH YOU HAVE COMMITTED TO PURCHASE, AND THERE WILL BE NO LIABILITY BETWEEN US AS A CONSEQUENCE OF THE NON-DELIVERY.

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

T-1
 

  

 

MSBAM 2015-C26 Structural Overview

 

Offered Certificates

 

                                 
Class   Expected Ratings
(Moody’s/Fitch/KBRA)(1)
  Approximate
Initial Certificate
Principal Balance or
Notional Amount(2)
  Approximate Initial Credit Support(3)   Pass-Through  
Rate   
Description
  Expected Weighted Average Life (Years)(5)   Principal
Window
(Months)(5)
  Certificate Principal UW
NOI Debt
Yield(6)
  Certificate
Principal
to Value
Ratio(7)
Class A-1   Aaa(sf)/AAAsf/AAA(sf)   $36,700,000   30.000%   (4)   2.94   1-58   14.6%   42.1%
Class A-2   Aaa(sf)/AAAsf/AAA(sf)   $14,800,000   30.000%   (4)   4.88   58-59   14.6%   42.1%
Class A-SB   Aaa(sf)/AAAsf/AAA(sf)   $59,800,000   30.000%   (4)   7.25   59-112   14.6%   42.1%
Class A-3   Aaa(sf)/AAAsf/AAA(sf)   $100,000,000   30.000%   (4)   8.17   98-98   14.6%   42.1%
Class A-4   Aaa(sf)/AAAsf/AAA(sf)   $215,000,000   30.000%   (4)   9.51   112-117   14.6%   42.1%
Class A-5   Aaa(sf)/AAAsf/AAA(sf)   $307,418,000   30.000%   (4)   9.81   117-118   14.6%   42.1%
Class X-A   Aaa(sf)/AAAsf/AAA(sf)   $733,718,000(8)   N/A   Variable IO(9)   N/A   N/A   N/A   N/A
Class A-S   Aa1(sf)/AAAsf/AAA(sf)   $77,302,000   22.625%   (4)   9.84   118-118   13.2%   46.6%
Class B   Aa3(sf)/AA-sf/AA-(sf)   $48,478,000   18.000%   (4)   9.91   118-119   12.4%   49.4%
Class C   A3(sf)/A-sf/A-(sf)   $44,547,000   13.750%   (4)   9.93   119-119   11.8%   51.9%

 

Privately Offered Certificates(10)

 

                                 
Class   Expected Ratings
(Moody’s/Fitch/KBRA)(1)
  Approximate Initial Certificate Principal Balance or Notional Amount(2)   Approximate
Initial Credit
Support(3)
  Pass-Through  
Rate   
Description
  Expected Weighted Average Life (Years)(5)   Principal
Window (Months)(5)
  Certificate
Principal UW
NOI Debt

Yield(6)
  Certificate
Principal
to Value
Ratio(7)
Class X-B   Aa3(sf)/AA-sf/AAA(sf)   $125,780,000(8)   N/A   Variable IO(9)   N/A   N/A   N/A   N/A
Class X-D   NR/BBB-sf/BBB-(sf)   $60,270,000(8)   N/A   Variable IO(9)   N/A   N/A   N/A   N/A
Class D   NR/BBB-sf/BBB-(sf)   $60,270,000   8.000%   (4)   9.93   119-119   11.1%   55.4%
Class E   NR/BB-sf/BB(sf)   $26,204,000   5.500%   (4)   9.93   119-119   10.8%   56.9%
Class F   NR/B-sf/BB-(sf)   $10,482,000   4.500%   (4)   10.00   119-120   10.7%   57.5%
Class G   NR/NR/B-(sf)   $15,722,000   3.000%   (4)   10.01   120-120   10.5%   58.4%
Class H   NR/NR/NR   $31,445,903   0.000%   (4)   10.01   120-120   10.2%   60.2%

 

 

(1)Ratings shown are those of Moody’s Investors Service, Inc., Fitch Ratings, Inc. and Kroll Bond Rating Agency, Inc. Certain nationally recognized statistical rating organizations that were not hired by the depositor may use information they receive pursuant to Rule 17g-5 under the Securities Exchange Act of 1934, as amended, or otherwise to rate the certificates. There can be no assurance as to what ratings a non-hired nationally recognized statistical rating organization would assign. See “Risk Factors—Risks Related to the Offered Certificates—Ratings of the Offered Certificates Do Not Represent Any Assessment of the Yield to Maturity That a Certificateholder May Experience and Such Ratings May Be Reviewed, Revised, Suspended, Downgraded, Qualified or Withdrawn By the Applicable Rating Agency” and “Ratings” in the other free writing prospectus, which is expected to be dated the date hereof (the “Free Writing Prospectus”), to which the prospectus dated October 1, 2013 (the “Prospectus”) is attached as Exhibit A. Capitalized terms used but not defined herein have the meanings assigned to such terms in the Free Writing Prospectus.
(2)The certificate principal balances and notional amounts are approximate and on the closing date may vary by up to 5%. Mortgage loans may be removed from or added to the mortgage pool prior to the closing date within the same maximum permitted variance. Any reduction or increase in the aggregate principal balance of mortgage loans within these parameters will result in changes to the initial certificate principal balance or notional amount of each class of certificates shown in the table above and to the other statistical data contained herein and in the Free Writing Prospectus. In addition, the notional amounts of the Class X-A, Class X-B and Class X-D Certificates may vary depending upon the final pricing of the classes of principal balance certificates whose certificate principal balances comprise such notional amounts, and, if as a result of such pricing the pass-through rate of the Class X-A, Class X-B or Class X-D Certificates, as applicable, would be equal to zero, such class of certificates will not be issued on the closing date of this securitization.
(3)The percentages indicated under the column “Approximate Initial Credit Support” with respect to the Class A-1, Class A-2, Class A-SB, Class A-3, Class A-4 and Class A-5 Certificates represent the approximate credit support for the Class A-1, Class A-2, Class A-SB, Class A-3, Class A-4 and Class A-5 Certificates in the aggregate.
(4)The Class A-1, Class A-2, Class A-SB, Class A-3, Class A-4, Class A-5, Class A-S, Class B, Class C, Class D, Class E, Class F, Class G and Class H Certificates will, at all times, accrue interest at a per annum rate equal to (i) a fixed rate, (ii) a fixed rate subject to a cap equal to the weighted average of the net interest rates on the mortgage loans (in each case adjusted, if necessary, to accrue on the basis of a 360-day year consisting of 12 30-day months) or (iii) a rate equal to the weighted average of the net interest rates on the mortgage loans (in each case adjusted, if necessary, to accrue on the basis of a 360-day year consisting of 12 30-day months) less a specified percentage, which percentage may be zero.
(5)The principal window is expressed in months following the closing date and reflects the period during which distributions of principal would be received under the assumptions set forth in the following sentence. The expected weighted average life and principal window figures set forth above are based on the following assumptions, among others: (i) no defaults or subsequent losses on the mortgage loans; (ii) no extensions of maturity dates of the mortgage loans; (iii) payment in full on the stated maturity date or, in the case of any mortgage loan having an anticipated repayment date, on the anticipated repayment date; and (iv) no prepayments of the mortgage loans prior to maturity or, in the case of a mortgage loan having an anticipated repayment date, prior to such anticipated repayment date. See the structuring assumptions set forth under “Yield, Prepayment and Maturity Considerations—Weighted Average Life” in the Free Writing Prospectus.
(6)Certificate Principal UW NOI Debt Yield for any class of principal balance certificates is calculated as the product of (a) the weighted average UW NOI Debt Yield for the mortgage pool, multiplied by (b) a fraction, the numerator of which is the total initial principal balance of all the principal balance certificates, and the denominator of which is the total initial principal balance of the subject class of principal balance certificates and all other classes of principal balance certificates that are senior to such class, if any. The Certificate Principal UW NOI Debt Yields of the Class A-1, Class A-2, Class A-SB, Class A-3, Class A-4 and Class A-5 Certificates are calculated in the aggregate for those classes as if they were a single class.

 

(Footnotes continued on next page)

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

T-2
 

 

MSBAM 2015-C26 Structural Overview

(7)Certificate Principal to Value Ratio for any class of principal balance certificates is calculated as the product of (a) the weighted average Cut-off Date LTV Ratio of the mortgage pool, multiplied by (b) a fraction, the numerator of which is the total initial principal balance of the subject class of principal balance certificates and all other classes of principal balance certificates that are senior to such class, if any, and the denominator of which is the total initial principal balance of all the principal balance certificates. The Certificate Principal to Value Ratios of the Class A-1, Class A-2, Class A-SB, Class A-3, Class A-4 and Class A-5 Certificates are calculated in the aggregate for those classes as if they were a single class.
(8)The Class X-A, Class X-B and Class X-D Certificates (collectively, the “Class X Certificates”) will not have certificate principal balances and will not be entitled to receive distributions of principal. Interest will accrue on the Class X-A, Class X-B and Class X-D Certificates at their respective pass-through rates based upon their respective notional amounts. The notional amount of the Class X-A Certificates will equal the aggregate certificate principal balance of the Class A-1, Class A-2, Class A-SB, Class A-3, Class A-4 and Class A-5 Certificates outstanding from time to time. The notional amount of the Class X-B Certificates will equal the aggregate certificate principal balance of the Class A-S and Class B Certificates outstanding from time to time. The notional amount of the Class X-D Certificates will equal the certificate principal balance of the Class D Certificates outstanding from time to time.
(9)The pass-through rate on the Class X-A Certificates will generally be equal to the excess, if any, of (a) the weighted average of the net interest rates on the mortgage loans (in each case adjusted, if necessary, to accrue on the basis of a 360-day year consisting of 12 30-day months), over (b) the weighted average of the pass-through rates of the Class A-1, Class A-2, Class A-SB, Class A-3, Class A-4 and Class A-5 Certificates as described in the Free Writing Prospectus. The pass-through rate on the Class X-B Certificates will generally be equal to the excess, if any, of (a) the weighted average of the net interest rates on the mortgage loans (in each case adjusted, if necessary, to accrue on the basis of a 360-day year consisting of 12 30-day months), over (b) the weighted average of the pass-through rates of the Class A-S and Class B Certificates as described in the Free Writing Prospectus. The pass-through rate on the Class X-D Certificates will generally be equal to the excess, if any, of (a) the weighted average of the net interest rates on the mortgage loans (in each case adjusted, if necessary, to accrue on the basis of a 360-day year consisting of 12 30-day months), over (b) the pass-through rate of the Class D Certificates as described in the Free Writing Prospectus.
(10)Not offered pursuant to the Prospectus, the Free Writing Prospectus or this Term Sheet. Information provided in this Term Sheet regarding the characteristics of these certificates is provided only to enhance your understanding of the offered certificates. The privately offered certificates also include the Class V and Class R Certificates, which do not have a certificate principal balance, notional amount, pass-through rate, rating or rated final distribution date, and which are not shown in the table. The Class V Certificates represent a beneficial ownership interest held through the grantor trust in certain excess interest in respect of mortgage loans having anticipated repayment dates, if any. The Class R Certificates represent the beneficial ownership of the residual interest in each of the real estate mortgage investment conduits, as further described in the Free Writing Prospectus.

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

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MSBAM 2015-C26 Structural Overview

 

Issue Characteristics

 

Offered Certificates:   $904,045,000 (approximate) monthly pay, multi-class, commercial mortgage pass-through certificates, consisting of nine principal balance classes (Class A-1, Class A-2, Class A-SB, Class A-3, Class A-4, Class A-5, Class A-S, Class B and Class C) and one interest-only class (Class X-A)
Co-Lead Bookrunning Managers:   Morgan Stanley & Co. LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated
Co-Managers:   CIBC World Markets Corp. and Drexel Hamilton, LLC
Mortgage Loan Sellers:   Morgan Stanley Mortgage Capital Holdings LLC, Bank of America, National Association, CIBC Inc. and Starwood Mortgage Funding III LLC
Rating Agencies:   Moody’s Investors Service, Inc., Fitch Ratings, Inc. and Kroll Bond Rating Agency, Inc.
Master Servicer:   Wells Fargo Bank, National Association
Special Servicer:   LNR Partners, LLC (or, with respect to Excluded Special Servicer Mortgage Loans, Wells Fargo Bank, National Association or such other entity appointed under the pooling and servicing agreement)
Trustee:   Wilmington Trust, National Association
Certificate Administrator/ Certificate Registrar/Custodian:   Wells Fargo Bank, National Association
Trust Advisor:   Park Bridge Lender Services LLC
Initial Controlling Class Representative:   LNR Securities Holdings, LLC or an affiliate thereof
Cut-off Date:   November 1, 2015. For purposes of the information contained in this term sheet (this “Term Sheet”), scheduled payments due in November 2015 with respect to mortgage loans not having payment dates on the first day of each month have been deemed received on November 1, 2015, not the actual day on which such scheduled payments were due
Expected Pricing Date:   Week of October 26, 2015
Expected Closing Date:   Week of November 9, 2015
Determination Dates:   The 11th calendar day of each month (if the 11th calendar day is not a business day, the next succeeding business day), commencing in December 2015
Distribution Dates:   The 4th business day following the Determination Date in each month, commencing in December 2015
Rated Final Distribution Date:   The Distribution Date in October 2048
Interest Accrual Period:   Preceding calendar month
Payment Structure:   Sequential pay
Tax Treatment:   REMIC
Optional Termination:   1.00% clean-up call
Minimum Denominations:   $10,000 for each class of Offered Certificates (other than Class X-A); $100,000 for the Class X-A Certificates
Settlement Terms:   DTC, Euroclear and Clearstream
Legal/Regulatory Status:   Each class of Offered Certificates is expected to be eligible for exemptive relief under ERISA. No class of Offered Certificates is SMMEA eligible.
Analytics:   The certificate administrator is expected to make available all distribution date statements, CREFC® reports and supplemental notices received by it to certain modeling financial services as described in the Free Writing Prospectus.
Bloomberg Ticker:   MSBAM 2015-C26 <MTGE><GO>
Risk Factors:   THE CERTIFICATES INVOLVE CERTAIN RISKS AND MAY NOT BE SUITABLE FOR ALL INVESTORS. SEE THE “RISK FACTORS” SECTION OF THE FREE WRITING PROSPECTUS AND THE “RISK FACTORS” SECTION OF THE PROSPECTUS.

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

T-4
 

  

MSBAM 2015-C26 Structural Overview

 

Structural Overview

 

Accrual:   Each class of Offered Certificates will accrue interest on a 30/360 basis.
Amount and Order of Distributions:  

On each distribution date, certificateholders will be entitled to receive distributions of interest and principal from funds received with respect to the mortgage loans and available for distribution. Funds available for distribution on the certificates will be net of excess interest, excess liquidation proceeds and specified trust expenses, including, without limitation, all advance reimbursements (with interest) and all servicing fees and expenses, certificate administrator fees (including trustee fees and custodian fees) and expenses, special servicer compensation, trust advisor fees (together with certain trust advisor consulting fees), CREFC® license fees and expenses as set forth below. Distributions to certificateholders on each distribution date out of payments (or advances in lieu thereof) and other collections on the mortgage loans will be in an amount equal to each class’s interest and principal entitlement, subject to:

(i) payment of the respective interest entitlement for any other class of certificates bearing an earlier alphanumeric designation (except in respect of the distribution of interest among the Class A-1, Class A-2, Class A-SB, Class A-3, Class A-4, Class A-5, Class X-A, Class X-B and Class X-D Certificates, which will have the same senior priority and be distributed pro rata);

(ii) if applicable, payment of the respective principal entitlement for the distribution date to the outstanding classes of principal balance certificates, first, to the Class A-SB Certificates, until the principal balance of such class has been reduced to the planned principal balance for the related distribution date set forth on Appendix VII to the Free Writing Prospectus, then, to the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5 and Class A-SB Certificates, in that order (or pro rata among such classes if the principal balance of all other classes of certificates has been reduced to zero as a result of the allocation of mortgage loan losses or trust advisor expenses to such other classes, or if the aggregate appraisal reduction equals or exceeds the aggregate principal balance of the Class A-S through Class H Certificates), until the principal balance of each such class has been reduced to zero, and then to the Class A-S, Class B, Class C, Class D, Class E, Class F, Class G and Class H Certificates, in that order, until the principal balance of each such class has been reduced to zero; and

(iii) the allocation of trust advisor expenses, (a) first, to reduce payments of interest on the Class D, Class C and Class B Certificates, in that order, (b) second, to reduce payments of principal on the Class D, Class C, Class B and Class A-S Certificates, in that order, and (c) third, to reduce payments of principal on the Class A-1, Class A-2, Class A-SB, Class A-3, Class A-4 and Class A-5 Certificates on a pro rata basis.

No trust advisor expenses (which do not include the trust advisor fee) will be allocated to or otherwise borne by the Control Eligible Certificates. As a result, none of the classes of such certificates will provide protection to the more senior classes of certificates for the purposes of allocating losses based on trust advisor expenses.

Interest and Principal Entitlements:  

Interest distributable on any class of certificates (other than the Class V and Class R Certificates) on any distribution date, with various adjustments described under “Description of the Offered Certificates—Distributions” in the Free Writing Prospectus, represents all unpaid interest accrued with respect to that class of certificates through the end of the interest accrual period that corresponds to that distribution date. Interest accrues with respect to each such interest-bearing certificate during each interest accrual period at the applicable pass-through rate for, and on the principal balance or notional amount, as applicable, of that certificate outstanding immediately prior to, the distribution date that corresponds to that interest accrual period. However, as described in “Description of the Offered Certificates—Distributions” in the Free Writing Prospectus, there are circumstances relating to the timing of prepayments in which the interest entitlement with respect to any certificate for a distribution date could be less than one full month’s interest at the pass-through rate on the certificate’s principal balance or notional amount. In addition, certain specified trust fund expenses, the right of the master servicer, the special servicer and the trustee to reimbursement for payment of advances (with interest thereon), and the rights of such parties and of the certificate administrator, the custodian and, subject to certain limitations, the trust advisor to the payments of compensation and reimbursement of certain costs and expenses will be prior to a certificateholder’s right to receive distributions of principal or interest. In addition, the right of the trust advisor to receive reimbursement of trust advisor expenses will be prior to the right of the holders of the Class B, Class C and Class D Certificates to receive payments of interest, and to the right of the holders of the Class A-1, Class A-2, Class A-SB, Class A-3, Class A-4, Class A-5, Class A-S, Class B, Class C and Class D Certificates to receive payments of principal.

The amount of principal available to be distributed on the classes entitled to principal on a particular distribution date will, in general, be equal to the sum of: (i) the principal portion of all scheduled payments, other than balloon payments, to the extent received during the related collection period or advanced by the master servicer or other party (in accordance with the pooling and servicing agreement) in respect of such distribution date; (ii) all principal prepayments and the principal portion of balloon payments received during the related collection period; (iii) the principal portion of other collections on the mortgage loans received during the related collection period, for example liquidation proceeds, condemnation proceeds, insurance proceeds and income on other “real estate owned” (“REO”); and (iv) the principal portion of proceeds of mortgage loan repurchases received during the related collection period; subject to certain adjustments described in the Free Writing Prospectus relating to the payment or reimbursement of nonrecoverable advances, workout-delayed reimbursement amounts and trust advisor expenses, and exclusive of any late collections of principal received during the related collection period for which there is an outstanding advance.

  

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

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MSBAM 2015-C26 Structural Overview

 

    The Class V, Class R, Class X-A, Class X-B and Class X-D Certificates will not be entitled to principal distributions.
Special Servicer Compensation:  

The special servicer is entitled to a special servicing fee payable from general collections on the mortgage loans and collections on any related serviced B note or serviced companion loan. The special servicing fee for each distribution date is calculated based on the outstanding principal balance of each mortgage loan (other than any non-serviced mortgage loan) that is a specially serviced mortgage loan (and any related serviced B note or serviced companion loan) or as to which the related mortgaged property has become an REO property at the special servicing fee rate, which will be 0.25% per annum or, if such rate would result in a special servicing fee that would be less than $2,000 in any given month, such higher rate as would result in a special servicing fee equal to $2,000 for such month. Any primary servicing fee or sub-servicing fee will be paid by the special servicer out of the fees described above. The special servicer is also entitled to additional fees and amounts, including, without limitation, income on the amounts held in certain permitted investments. The special servicer will also be entitled to (i) liquidation fees generally equal to 1.0% of liquidation proceeds in respect of a specially serviced mortgage loan (and any related serviced B note or serviced companion loan) or related REO property and (ii) workout fees generally equal to 1.0% of interest and principal payments made in respect of a rehabilitated mortgage loan (and any related serviced B note or serviced companion loan), subject to a cap with respect to each such fee of $1,000,000 with respect to any mortgage loan (other than any non-serviced mortgage loan), loan pair, A/B whole loan or related REO property and subject to certain adjustments and exceptions as described in the Free Writing Prospectus under “Servicing of the Mortgage Loans—The Special Servicer—Special Servicer Compensation.”

With respect to any non-serviced mortgage loan, the related special servicer under the related other servicing agreement pursuant to which such mortgage loan is being serviced will be entitled to similar compensation as that described above with respect to such non-serviced mortgage loan under such other servicing agreement as further described in the Free Writing Prospectus, although any related fees may accrue at a different rate and there may be a higher (or no) cap on liquidation and workout fees.

Prepayment Premiums/Yield Maintenance Charges:  

On any distribution date, prepayment premiums or yield maintenance charges collected in respect of each mortgage loan during the related collection period will be distributed by the certificate administrator to the holders of each class of principal balance certificates (other than the Class E, Class F, Class G and Class H Certificates) then entitled to distributions of principal on such distribution date, in an amount equal to the product of (a) a fraction, the numerator of which is the amount distributed as principal to that class on that distribution date, and the denominator of which is the total amount distributed as principal to all such classes of principal balance certificates on that distribution date, (b) the Base Interest Fraction for the related principal prepayment and that class and (c) the amount of the prepayment premium or yield maintenance charge collected in respect of such principal prepayment during the one month period ending on the related determination date. Any prepayment premiums or yield maintenance charges relating to the mortgage loans collected during the related collection period and remaining after those distributions described above (as to the applicable distribution date, the “Class X YM Distribution Amount”) will be distributed to the holders of the Class X Certificates, as follows: first, to the holders of each class of the Class X-A and Class X-B Certificates, in an amount equal to the product of (a) a fraction, the numerator of which is the total amount of principal distributed on the applicable distribution date with respect to the class(es) of certificates whose certificate principal balances comprise the notional amount of the applicable class of Class X Certificates, and the denominator of which is the total amount of principal distributed on the applicable distribution date with respect to all classes of principal balance certificates, multiplied by (b) the Class X YM Distribution Amount for the applicable distribution date, and then, to the holders of the Class X-D Certificates in an amount equal to the portion of the Class X YM Distribution Amount remaining after the distributions to the holders of each class of Class X Certificates (other than the Class X-D Certificates). No prepayment premiums or yield maintenance charges will be distributed to holders of the Class E, Class F, Class G, Class H, Class V or Class R Certificates; however, if at any time the certificate principal balances of the principal balance certificates (other than the Control Eligible Certificates) have been reduced to zero as a result of the allocation of principal payments on the mortgage loans, any prepayment premiums or yield maintenance charges collected during the related collection period in respect of each mortgage loan included in the issuing entity will be distributed by the certificate administrator on each class of principal balance certificates then entitled to distributions of principal on such distribution date, in an amount equal to the product of (a) a fraction, the numerator of which is the amount distributed as principal to that class on that distribution date, and the denominator of which is the total amount distributed as principal to all such classes of principal balance certificates on that distribution date and (b) the amount of the prepayment premium or yield maintenance charge collected in respect of such principal prepayment during the related collection period.

The “Base Interest Fraction,” with respect to any principal prepayment of any mortgage loan that provides for payment of a prepayment premium or yield maintenance charge, and with respect to any class of principal balance certificates (other than the Class E, Class F, Class G and Class H Certificates), is a fraction (A) whose numerator is the greater of (x) zero and (y) the difference between (i) the pass-through rate on that class of certificates, and (ii) the applicable discount rate and (B) whose denominator is the difference between (i) the mortgage interest rate on the related mortgage loan and (ii) the applicable discount rate; provided that under no circumstances will the Base Interest Fraction be greater than one. If the discount rate referred to above is greater than or equal to the mortgage interest rate on the related mortgage loan, then the Base Interest Fraction will equal zero; provided that if the discount rate referred to above is greater than or equal to the mortgage interest rate on the related mortgage loan, but is less than the pass-through rate on the subject class of certificates, then the Base Interest Fraction shall be equal to 1.0.

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

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    Consistent with the foregoing, the Base Interest Fraction is equal to:
         
      (Pass-Through Rate – Discount Rate)  
      (Mortgage Rate – Discount Rate)  

 

   
Collateral Support
Deficits:
 

On each distribution date, immediately following the distributions made to the certificateholders on that date, the certificate administrator will be required to calculate the amount, if any, by which (1) the aggregate stated principal balance of pool of the mortgage loans, including any mortgage loans as to which the related mortgaged properties have become REO properties, expected to be outstanding immediately following that distribution date, is less than (2) the aggregate principal balance of the principal balance certificates after giving effect to distributions of principal on that distribution date and the allocation of any excess trust advisor expenses to reduce the principal balances of the principal balance certificates that are not Control Eligible Certificates on that distribution date (any such deficit, a “Collateral Support Deficit”).

On each distribution date, the certificate administrator will be required to allocate any Collateral Support Deficit to the respective classes of principal balance certificates in the following order: to the Class H, Class G, Class F, Class E, Class D, Class C, Class B and Class A-S Certificates, in that order, in each case in reduction of and until the remaining principal balance of that class of certificates has been reduced to zero. Following the reduction of the principal balances of all such classes of certificates to zero, the certificate administrator will be required to allocate the Collateral Support Deficit to the Class A-1, Class A-2, Class A-SB, Class A-3, Class A-4 and Class A-5 Certificates, pro rata (based upon their respective principal balances), until the remaining principal balances of those classes of certificates have been reduced to zero. Any Collateral Support Deficit allocated to a class of certificates will be allocated to the respective certificates of such class in proportion to the percentage interests evidenced by the respective certificates.

A/B Whole Loans and Loan Pairs:  

There are no “loan pairs” or “A/B whole loans” related to the issuing entity. See “Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs” in the Free Writing Prospectus.
Non-Serviced Loan Combinations:  


The mortgaged property identified on Appendix I to the Free Writing Prospectus as 535-545 Fifth Avenue secures on a pari passu basis (1) a mortgage loan (the “535-545 Fifth Avenue mortgage loan”) with an outstanding principal balance as of the cut-off date of $110,000,000, representing approximately 10.5% of the initial pool balance, and (2) four pari passu promissory notes (one of which is currently held by the MSBAM 2015-C24 securitization trust, and the other three of which are currently held by Morgan Stanley Bank, N.A.) (collectively, the “535-545 Fifth Avenue non-serviced companion loan” and a “non-serviced companion loan”), with an aggregate outstanding principal balance as of the cut-off date of $200,000,000. The 535-545 Fifth Avenue mortgage loan and the 535-545 Fifth Avenue non-serviced companion loan are collectively referred to herein as the “535-545 Fifth Avenue non-serviced loan combination” and a “non-serviced loan combination.” The 535-545 Fifth Avenue non-serviced loan combination will be serviced pursuant to the related intercreditor agreement and the MSBAM 2015-C24 pooling and servicing agreement.


The mortgaged property identified on Appendix I to the Free Writing Prospectus as Herald Center secures on a pari passu basis (1) a mortgage loan (together with the corresponding REMIC regular interest, the “Herald Center mortgage loan”) with an outstanding principal balance as of the cut-off date of $100,000,000, representing approximately 9.5% of the initial pool balance, and (2) three pari passu promissory notes (two of which, together with the corresponding REMIC regular interests, are currently held by the MSBAM 2015-C25 securitization trust, and one of which, together with the corresponding REMIC regular interest, is currently held by Morgan Stanley Mortgage Capital Holdings LLC) (collectively, the “Herald Center non-serviced companion loan” and a “non-serviced companion loan”), with an aggregate outstanding principal balance as of the cut-off date of $155,000,000. The Herald Center mortgage loan and the Herald Center non-serviced companion loan are collectively referred to herein as the “Herald Center non-serviced loan combination” and a “non-serviced loan combination.” The Herald Center non-serviced loan combination will be serviced pursuant to the related intercreditor agreement and the MSBAM 2015-C25 pooling and servicing agreement.

The mortgaged property identified on Appendix I to the Free Writing Prospectus as 11 Madison Avenue secures (1) on a generally senior pari passu basis (a) a mortgage loan (the “11 Madison Avenue mortgage loan”) with an outstanding principal balance as of the cut-off date of $91,700,000, representing approximately 8.7% of the initial pool balance, and (b) fourteen pari passu promissory notes (nine of which are currently held by the MAD 2015-11MD securitization trust, one of which is currently held by the COMM 2015-CCRE26 securitization trust, one of which is currently held by the WFCM 2015-NXS3 securitization trust, two of which are currently held by German American Capital Corporation and one of which are currently held by Wells Fargo Bank, National Association) (collectively, the “11 Madison Avenue non-serviced companion loan” and a “non-serviced companion loan”) with an aggregate outstanding principal balance as of the cut-off date of $642,130,000, and (2) on a generally subordinate basis relative to the 11 Madison Avenue mortgage loan and the 11 Madison Avenue non-serviced companion loan, three subordinate promissory notes (which are currently held by the MAD 2015-11MD securitization trust) (collectively, the “11 Madison Avenue B note” and each, a “B note”) with an aggregate outstanding principal balance as of the cut-off date of $310,670,000. The 11 Madison Avenue mortgage loan, the 11 Madison Avenue non-serviced companion loan and the 11 Madison Avenue B note are collectively referred to herein as the “11 Madison Avenue non-serviced loan combination” and a “non-serviced loan combination.” The 11 Madison Avenue non-serviced loan combination will be serviced pursuant to the related intercreditor agreement and the MAD 2015-11MD trust and servicing agreement.

The portfolio of mortgaged properties identified on Appendix I to the Free Writing Prospectus as Coastal Equities Retail Portfolio secures on a pari passu basis (1) a mortgage loan (the “Coastal Equities Retail Portfolio mortgage loan”) with an outstanding principal balance as of the cut-off date of $24,000,000, representing approximately 2.3% of the initial pool balance, and (2) eight pari passu promissory notes (four of

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

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MSBAM 2015-C26 Structural Overview

  

    which are currently held by the MSBAM 2015-C24 securitization trust, and the other four of which are currently held by the MSBAM 2015-C25 securitization trust) (collectively, the “Coastal Equities Retail Portfolio non-serviced companion loan” and a “non-serviced companion loan”), with an aggregate outstanding principal balance as of the cut-off date of $145,000,000. The Coastal Equities Retail Portfolio mortgage loan and the Coastal Equities Retail Portfolio non-serviced companion loan are collectively referred to herein as the “Coastal Equities Retail Portfolio non-serviced loan combination” and a “non-serviced loan combination.” The Coastal Equities Retail Portfolio non-serviced loan combination will be serviced pursuant to the related intercreditor agreement and the MSBAM 2015-C24 pooling and servicing agreement.

As of the closing date for this securitization, no mortgage loans, other than the 535-545 Fifth Avenue mortgage loan, the Herald Center mortgage loan, the 11 Madison Avenue mortgage loan and the Coastal Equities Retail Portfolio mortgage loan, will have a non-serviced companion loan associated with them, and all of the mortgage loans, other than the 535-545 Fifth Avenue mortgage loan, the Herald Center mortgage loan, the 11 Madison Avenue mortgage loan and the Coastal Equities Retail Portfolio mortgage loan, will be serviced under the pooling and servicing agreement for this transaction. Accordingly, other than the 535-545 Fifth Avenue non-serviced loan combination, the Herald Center non-serviced loan combination, the 11 Madison Avenue non-serviced loan combination and the Coastal Equities Retail Portfolio non-serviced loan combination, there are no other “non-serviced loan combinations” with respect to the issuing entity. See “Description of the Mortgage Pool—The Non-Serviced Loan Combinations” in the Free Writing Prospectus.

The other pooling and servicing agreement or trust and servicing agreement pursuant to which any non-serviced loan combination is serviced is referred to herein as the related “other servicing agreement.” With respect to any mortgage loan that is part of a non-serviced loan combination, unless otherwise indicated, all LTV, DSCR and Debt Yield calculations herein include the related pari passu non-serviced companion loan (and exclude any related B note).
Appraisal Reductions:  

The occurrence of certain adverse events affecting a mortgage loan (other than a non-serviced mortgage loan) (“Appraisal Events”) will require the special servicer to obtain a new appraisal or other valuation of the related mortgaged property. In general, if the principal amount of a mortgage loan plus all other amounts due under the mortgage loan and interest on advances made with respect to the mortgage loan exceeds 90% of the value of the mortgaged property determined by an appraisal or other valuation, an appraisal reduction may be created in the amount of the excess as described in the Free Writing Prospectus.

Any appraisal reduction in respect of any non-serviced mortgage loan generally will be calculated in accordance with the other servicing agreement pursuant to which such mortgage loan is being serviced, which calculations are generally similar to those provided for in the pooling and servicing agreement for this transaction.

Notwithstanding the foregoing, if an appraisal is required to be obtained in accordance with the pooling and servicing agreement (or the applicable other servicing agreement with respect to any non-serviced mortgage loan) but is not obtained within 120 days following the applicable Appraisal Event (or, with respect to a non-serviced mortgage loan, 120 days following notice of the applicable appraisal event under the related other servicing agreement), then, until such appraisal is obtained and solely for purposes of determining the amounts of P&I advances, the appraisal reduction will equal 25% of the stated principal balance of the related mortgage loan; provided that, upon receipt of an appraisal, the appraisal reduction for such mortgage loan will be recalculated generally in accordance with the preceding paragraphs.

If any mortgage loan is part of an A/B whole loan, a loan pair or a non-serviced loan combination, any appraisal reduction will be calculated in respect of such A/B whole loan, loan pair or non-serviced loan combination taken as a whole. With respect to an A/B whole loan, any such appraisal reduction will be allocated first to the related serviced B note and then to the related A note. With respect to a loan pair or non-serviced loan combination, any such appraisal reduction will be allocated between the mortgage loan and the related serviced companion loan or non-serviced companion loan, respectively, on a pro rata basis by unpaid principal balance (provided that in the case of the 11 Madison Avenue non-serviced loan combination, such allocation will occur after the allocation of appraisal reductions first, to the 11 Madison Avenue B note).

If an appraisal reduction exists for, or is allocable to, any mortgage loan, the interest portion of the amount required to be advanced on that mortgage loan will be reduced in the same proportion that the appraisal reduction bears to the stated principal balance of that mortgage loan. This will reduce the funds available to pay interest on the certificates then outstanding.

For a discussion of how appraisal reductions are calculated and allocated, see “Description of the Offered Certificates—Appraisal Reductions” in the Free Writing Prospectus.

     
Control Rights:  

During any Subordinate Control Period, the controlling class representative will have certain consent and consultation rights under the pooling and servicing agreement with respect to certain major decisions and other matters. A “Subordinate Control Period” means any period when the aggregate principal balance of the Class E Certificates (taking into account the application of any appraisal reductions to notionally reduce the aggregate principal balance of such class) is at least 25% of the initial aggregate principal balance of that class; provided, that if at any time the certificate principal balances of the principal balance certificates (other than the Control Eligible Certificates) have been reduced to zero as a result of the allocation of principal payments on the mortgage loans, a Subordinate Control Period will be deemed to be in effect; provided that with respect to any excluded mortgage loan, any controlling class certificates owned by a related borrower party will be deemed not to be outstanding with respect to such excluded mortgage loan (including for purposes of appointing the special servicer for such excluded mortgage loan) and the consent of any related borrower party with respect to such excluded mortgage loan will not be required with respect to any actions that would otherwise require the consent of the controlling class representative.

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

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MSBAM 2015-C26 Structural Overview

     
   

During any Collective Consultation Period, the controlling class representative will not have any consent rights, but the controlling class representative and the trust advisor will each have certain non-binding consultation rights under the pooling and servicing agreement with respect to certain major decisions and other matters. A “Collective Consultation Period” means any period when both (i) the aggregate principal balance of the Class E Certificates (taking into account the application of any appraisal reductions to notionally reduce the aggregate principal balance of such class), is less than 25% of the initial aggregate principal balance of the Class E Certificates and (ii) the aggregate principal balance of that class (without regard to any appraisal reductions allocable to such class), is at least 25% of the initial aggregate principal balance of that class.

During any Senior Consultation Period, the controlling class representative will not have any consent or consultation rights, except with respect to any rights expressly set forth in the pooling and servicing agreement, and the trust advisor will retain certain non-binding consultation rights under the pooling and servicing agreement with respect to certain major decisions and other matters. A “Senior Consultation Period” means a period when the aggregate principal balance of the Class E Certificates (without regard to any appraisal reductions allocable to such class) is less than 25% of the initial aggregate principal balance of that class. Subject to the proviso in the definition of “Subordinate Control Period,” with respect to any Excluded Mortgage Loan, a Senior Consultation Period will be deemed to exist.

Notwithstanding any of the foregoing to the contrary, if any mortgage loan is part of an A/B whole loan, loan pair or non-serviced loan combination, the controlling class representative’s consent and/or consultation rights with respect thereto may be limited as described in the Free Writing Prospectus.

In particular, with respect to each non-serviced loan combination (other than the 535-545 Fifth Avenue non-serviced loan combination), the controlling class representative will only have certain consultation rights with respect to certain major decisions and other matters related to such non-serviced loan combination, in each case only during a Subordinate Control Period and a Collective Consultation Period; provided, that with respect to the 11 Madison Avenue non-serviced loan combination, the controlling class representative will not have any such consultation rights. With respect to the 535-545 Fifth Avenue non-serviced loan combination, the related control note will be included in the issuing entity, and the rights thereof will be exercisable by (i) during a Subordinate Control Period, the controlling class representative, (ii) during a Collective Consultation Period, the special servicer (in consultation with the controlling class representative) and (iii) during a Senior Consultation Period, the special servicer. See “Servicing of the Mortgage Loans—The Controlling Class Representative” in the Free Writing Prospectus.

A/B Whole Loan, Loan Pair and Non-Serviced Loan Combination Control and Consultation Rights:  

The existence of a Subordinate Control Period, Collective Consultation Period or Senior Consultation Period will not limit any control and/or consultation rights of the holder of any related B note or companion loan.

In addition, with respect to each non-serviced loan combination (other than the 535-545 Fifth Avenue non-serviced loan combination and the 11 Madison Avenue non-serviced loan combination), the related controlling holder will have certain consent and consultation rights with respect to such non-serviced loan combination under the related other servicing agreement and will have the right to replace the special servicer under such other servicing agreement with respect to such non-serviced loan combination. Notwithstanding any of the foregoing to the contrary, (i) with respect to the 535-545 Fifth Avenue non-serviced loan combination, the related control note will be included in the issuing entity (see “—Control Rights” above), and consequently, the 535-545 Fifth Avenue companion loan holder will not have the rights described in the preceding sentence (other than certain limited consultation rights), and (ii) with respect to the 11 Madison Avenue non-serviced loan combination, there is a control note, which is currently held by the MAD 2015-11MD securitization trust, but such securitization trust does not have a controlling class representative entitled to exercise the rights of the controlling note holder.

See “Risk Factors—Risks Related to the Offered Certificates—Realization on a Mortgage Loan That Is Part of an A/B Whole Loan or Loan Pair May Be Adversely Affected by the Rights of the Related Directing Holder” and “Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs” and “—The Non-Serviced Loan Combinations” in the Free Writing Prospectus.

Control Eligible Certificates:   The “Control Eligible Certificates” will be the Class E, Class F, Class G and Class H Certificates.
Controlling Class Representative/ Controlling Class:  

The controlling class representative will be the representative appointed by more than 50% of the Controlling Class (by principal balance); provided, that there will be deemed to be no controlling class representative with respect to any mortgage loan, A/B whole loan or loan pair with respect to which the controlling class representative, or any holder of more than 50% of the controlling class, is a Borrower Party (each, an “Excluded Mortgage Loan”). The “Controlling Class” will be the most subordinate class of Control Eligible Certificates then outstanding that has an aggregate principal balance (taking into account the application of any appraisal reductions to notionally reduce the aggregate principal balance of such class) at least equal to 25% of the initial aggregate principal balance of such class; provided that if no class of Control Eligible Certificates has an aggregate principal balance (taking into account the application of any appraisal reductions to notionally reduce the aggregate principal balance of such class) at least equal to 25% of the initial aggregate principal balance of such class, then the Controlling Class will be the most senior class of Control Eligible Certificates; provided, further, that if at any time the certificate principal balances of the principal balance certificates (other than the Control Eligible Certificates) have been reduced to zero as a result of the allocation of principal payments on the mortgage loans, then the “controlling class” will be the most subordinate class of Control Eligible Certificates that has an aggregate certificate principal balance greater than zero without regard to appraisal reductions. A summary of the consent and consultation rights of the controlling class representative, and the limitations thereon, is set forth above under “Control Rights.” The Controlling Class on the closing date will be the Class H Certificates.

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

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MSBAM 2015-C26 Structural Overview

 

   

The initial controlling class representative is expected to be LNR Securities Holdings, LLC or an affiliate thereof.

Appraised-Out Class:   Any class of Control Eligible Certificates, the aggregate principal balance of which (taking into account the application of any appraisal reductions to notionally reduce the aggregate principal balance of such class) has been reduced to less than 25% of its initial aggregate principal balance, is referred to as an “Appraised-Out Class.”
Appraisal Remedy:  

The holders of the majority (by principal balance) of an Appraised-Out Class will have the right, at their sole expense, to present to the special servicer a second appraisal for any mortgage loan (other than with respect to any non-serviced mortgage loan) for which an Appraisal Event has occurred prepared by an MAI appraiser on an “as-is” basis acceptable to the special servicer in accordance with the Servicing Standard. Upon receipt of such second appraisal, the special servicer will be required to determine, in accordance with the Servicing Standard, whether, based on its assessment of such second appraisal, any recalculation of the applicable appraisal reduction is warranted and, if so warranted, will be required to recalculate such appraisal reduction based upon such second appraisal. If required by any such recalculation, any applicable Appraised-Out Class will have its related principal balance notionally restored to the extent required by such recalculation of the appraisal reduction, and there will be a redetermination of whether a Subordinate Control Period, a Collective Consultation Period or a Senior Consultation Period is then in effect. However, until an Appraised-Out Class is restored as the Controlling Class, the next most senior class of Control Eligible Certificates that is not an Appraised-Out Class (or, if all classes of Control Eligible Certificates are Appraised-Out Classes, the most senior class of Control Eligible Certificates), if any, will be the Controlling Class. The right of any Appraised-Out Class to present a second appraisal of any mortgage loan for which an Appraisal Event has occurred is limited to one appraisal with respect to each mortgaged property relating to the affected mortgage loan, subject to certain exceptions regarding a material change in circumstance. No certificateholders of an Appraised-Out Class will have appraisal remedies under the pooling and servicing agreement for this transaction in respect of a non-serviced mortgage loan.

Each servicing agreement related to a non-serviced loan combination (other than the 11 Madison Avenue non-serviced loan combination) has provisions similar to those in the prior paragraph as they relate to the applicable controlling class of certificates under the related securitization and appraisal remedies.

Sale of Defaulted Loans:  

Defaulted serviced mortgage loans will be sold in a process similar to the sale process for REO property, as described under “Servicing of the Mortgage Loans—Sale of Defaulted Mortgage Loans and REO Properties” in the Free Writing Prospectus. There will be no “fair market value purchase option,” and the controlling class representative will have no right of first refusal with respect to the sale of defaulted loans. Non-serviced mortgage loans that become defaulted loans may be sold pursuant to a similar process under the related pooling and servicing agreement governing the servicing thereof.

With respect to each non-serviced mortgage loan, if such mortgage loan becomes a defaulted mortgage loan and the special servicer under the related other servicing agreement determines to sell the related non-serviced companion loan (or applicable portion thereof), such special servicer will be required to sell such non-serviced companion loan together and the related mortgage loan and any related B note together as notes evidencing one whole loan, in accordance with the provisions of the related intercreditor agreement and such other servicing agreement. See “Description of the Mortgage Pool—The Non-Serviced Loan Combinations” in the Free Writing Prospectus.

Appointment and Termination of Special Servicer:  

The controlling class representative will appoint the initial special servicer (but not with respect to any non-serviced mortgage loan or Excluded Mortgage Loan). At any time during the Subordinate Control Period, the special servicer (other than with respect to any non-serviced mortgage loan or Excluded Mortgage Loan) may be replaced by the controlling class representative, if any (a) for cause at any time and (b) without cause if (i) LNR Partners, LLC or its affiliate is not the special servicer that will be replaced or (ii) LNR Securities Holdings, LLC or its affiliate owns less than 15% of the then controlling class of certificates. During any Collective Consultation Period and any Senior Consultation Period, the special servicer (other than with respect to any non-serviced mortgage loan) will be subject to termination without cause if certificateholders evidencing not less than 25% of voting rights of the certificates request a vote of certificateholders to replace the special servicer. The certificate administrator would present the proposal to all certificateholders, and replacement would be conditioned on receipt, within one hundred eighty (180) days thereafter, of approval of the termination from holders of 75% of the voting rights of the certificates. The holders initiating such vote will be responsible for the fees and expenses of the issuing entity in connection with the replacement.

During any Senior Consultation Period, if the trust advisor determines that the special servicer is not performing its duties in accordance with the Servicing Standard, the trust advisor will have the right to recommend the replacement of the special servicer with respect to the applicable mortgage loan or mortgage loans. The trust advisor’s recommendation to replace the special servicer must be confirmed by an affirmative vote of holders of a majority of the voting rights of the principal balance certificates.

If any mortgage loan is part of an A/B whole loan or loan pair, to the extent set forth in the related intercreditor agreement, the related directing holder, if any, may have the right to replace the special servicer, with respect to such A/B whole loan or loan pair to the extent set forth in the related intercreditor agreement.

In addition, subject to the terms of any related intercreditor agreement (including the rights of any related directing holder thereunder), with respect to any non-serviced loan combination, the related special servicer under the related other servicing agreement pursuant to which such non-serviced loan combination is being serviced may be replaced on terms set forth in such other servicing agreement that are substantially similar to

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

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MSBAM 2015-C26 Structural Overview

 

    those described above for the special servicer under the pooling and servicing agreement for this transaction; provided, that with respect to the 535-545 Fifth Avenue non-serviced loan combination, the related control note will be included in the issuing entity, and the rights thereof (including the right to replace the applicable special servicer) will be exercisable by (i) during a Subordinate Control Period, the controlling class representative, (ii) during a Collective Consultation Period, the special servicer (in consultation with the controlling class representative) and (iii) during a Senior Consultation Period, the special servicer; provided, further, that with respect to the 11 Madison Avenue mortgage loan, there will be no controlling class representative related to the securitization of the related pari passu companion loan, and the related special servicer may only be removed by a vote of certificateholders under such securitization. See “Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs” and “—The Non-Serviced Loan Combinations” in the Free Writing Prospectus.
Servicing Standard:   Each of the master servicer and the special servicer is obligated to service and administer the mortgage loans (and, if applicable, the related serviced B notes and serviced companion loans) in accordance with the definition of the “Servicing Standard” described in the Free Writing Prospectus and the terms of the pooling and servicing agreement, provided that each non-serviced mortgage loan will be serviced by another master servicer or special servicer under the other servicing agreement with respect to the securitization of the related companion loan or applicable portion thereof.
Defaulted Mortgage
Loan Waterfall:
 
Amounts received by the issuing entity in respect of defaulted mortgage loans in connection with liquidation of any mortgage loan, net of unreimbursed advances and interest thereon, servicing compensation and other amounts payable or reimbursable therefrom, will be applied so that amounts allocated as a recovery of accrued and unpaid interest will not, in the first instance, include any amount by which the interest portion of P&I advances previously made was reduced as a result of appraisal reductions. After the adjusted interest amount is so allocated, any remaining net proceeds will be allocated to pay principal on the mortgage loan until the unpaid principal amount of the mortgage loan has been reduced to zero. Any remaining proceeds would then be allocated as a recovery of accrued and unpaid interest corresponding to the amount by which the interest portion of P&I advances previously made was reduced as a result of appraisal reductions.
Excluded Special Servicer:  

If the special servicer obtains knowledge that it has become a Borrower Party (as defined below) with respect to any mortgage loan (referred to herein as an “Excluded Special Servicer Mortgage Loan”), then the special servicer will be required to resign at its own cost with respect to such mortgage loan. The controlling class representative (during any Subordinate Control Period) will be entitled to appoint a separate special servicer that is not a Borrower Party (referred to as an “Excluded Special Servicer”) with respect to such Excluded Special Servicer Mortgage Loan unless such Excluded Special Servicer Mortgage Loan is also an Excluded Mortgage Loan, in which case the largest controlling class certificateholder (by certificate principal balance) that is not a Borrower Party will be entitled to appoint the Excluded Special Servicer. During any Collective Consultation Period the largest controlling class certificateholder (by certificate principal balance) that is not a Borrower Party will be entitled to appoint the Excluded Special Servicer. During any Senior Consultation Period, or if each controlling class certificateholder is a Borrower Party, certificateholders holding more than 50% of the exercised voting rights (provided certificateholders holding more than 20% or more of the total voting rights exercise their right to vote) will be entitled to appoint the Excluded Special Servicer; provided, that if such certificateholders do not appoint the Excluded Special Servicer within thirty (30) days of the special servicer’s notice of resignation, such resigning special servicer will be required to appoint the Excluded Special Servicer. If any such party referred to above is entitled (but not required) to appoint the excluded special servicer but does not so appoint within thirty (30) days, the resigning special servicer will be required to appoint the Excluded Special Servicer. Any Excluded Special Servicer will be required to perform all of the obligations of the special servicer and will be entitled to all special servicing compensation with respect to such Excluded Special Servicer Mortgage Loan earned during such time as the related mortgage loan is an Excluded Special Servicer Mortgage Loan (provided that the special servicer will remain entitled to all other special servicing compensation with respect all loans which are not Excluded Special Servicer Mortgage Loans).

As of the closing date, the mortgage loan secured by the mortgaged property identified on Appendix I to the Free Writing Prospectus as Plaza Vista, representing approximately 1.0% of the initial pool balance, is expected to be the only Excluded Special Servicer Mortgage Loan and Excluded Mortgage Loan related to the issuing entity. Wells Fargo Bank, National Association will act as Excluded Special Servicer with respect to such mortgage loan.

As used herein, “Borrower Party” means (a) a borrower, a mortgagor, a manager of a mortgaged property or any affiliate thereof, (b) solely with respect to the ten largest mortgage loans (based on cut-off date principal balance), any person that owns, directly or indirectly, 25% or more of the beneficial interests in any mezzanine lender of any mezzanine loan related to a mortgage loan that has accelerated such mezzanine loan as set forth in clause (c), or (c) any mezzanine lender (or any affiliate thereof) of any mezzanine loan related to a mortgage loan that has accelerated such mezzanine loan (unless (1) acceleration was automatic under such mezzanine loan, (2) the event directly giving rise to the automatic acceleration under such mezzanine loan was not initiated by such mezzanine lender or an affiliate of such mezzanine lender and (3) such mezzanine lender is stayed from exercising and has not commenced the exercise of remedies associated with foreclosure of the equity collateral under such mezzanine loan) or commenced foreclosure proceedings with respect to such mezzanine loan against the equity interests in the borrower(s) of such mortgage loan. For purposes of the foregoing definition, “affiliate” means, with respect to any specified person, any other person controlling or controlled by or under common control with such specified person.

References herein to the “special servicer” mean individually or collectively, as the context may require, LNR Partners, LLC as special servicer with respect to all mortgage loans other than the Excluded Special Servicer

  

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

T-11
 

 

MSBAM 2015-C26 Structural Overview

 

    Mortgage Loans and any non-serviced mortgage loans, and any Excluded Special Servicer as special servicer with respect to Excluded Special Servicer Mortgage Loans.
Trust Advisor:  

The trust advisor will be required to promptly review all information available to certain privileged persons on the certificate administrator’s website related to any specially serviced mortgage loan or REO property and each asset status report with respect to specially serviced mortgage loans (provided that during any Subordinate Control Period, the trust advisor may only review final asset status reports).

During any Collective Consultation Period and any Senior Consultation Period, within 60 days after the end of each calendar year during which any mortgage loan was a specially serviced mortgage loan or any mortgaged property was an REO property, the trust advisor will be required to meet with representatives of the special servicer that was acting as special servicer as of December 31 in the prior calendar year and is continuing in such capacity through the date of such meeting to review certain operational practices of the special servicer related to specially serviced mortgage loans and REO properties.

In addition, during any Collective Consultation Period and any Senior Consultation Period, based on (i) the trust advisor’s annual meeting with the special servicer and (ii) the trust advisor’s review of any asset status reports and other information delivered to the trust advisor by the special servicer and any other information available to certain privileged persons on the certificate administrator’s website, the trust advisor will be required to prepare an annual report to be provided to the certificate administrator (and to be made available through the certificate administrator’s website) setting forth its assessment of the special servicer’s performance of its duties under the pooling and servicing agreement during the prior calendar year on a platform-level basis with respect to the resolution and liquidation of specially serviced mortgage loans and REO properties. If the special servicer is replaced, the trust advisor’s annual report will only relate to the entity that was acting as special servicer as of December 31 in the prior calendar year and is continuing in such capacity through the date of such annual report. No such annual report will be required to be prepared or delivered with respect to any calendar year as to which no annual meeting is required to be held or with respect to any calendar year during which no asset status reports have been prepared in connection with a specially serviced mortgage loan or REO property.

However, the trust advisor’s obligations described in the preceding three paragraphs will not apply to non-serviced mortgage loans.

Furthermore, during any Collective Consultation Period and any Senior Consultation Period, the special servicer will be required to consult (on a non-binding basis) the trust advisor in connection with certain major decisions involving any serviced mortgage loan, A/B whole loan, loan pair or any related REO property to the extent described in this Term Sheet and the Free Writing Prospectus and as set forth in the pooling and servicing agreement; provided that, with respect to matters relating to any A/B whole loan or loan pair, the special servicer will only be required to consult the trust advisor with regard to such matters if the holder of the related serviced B note or serviced companion loan, as applicable, is not (or is no longer) the directing holder with respect to such A/B whole loan or loan pair pursuant to the terms of the applicable intercreditor agreement, and prior to such time, the trust advisor will have no obligations under the pooling and servicing agreement with respect to such A/B whole loan or loan pair. The trust advisor will have no consultation rights with respect to any non-serviced mortgage loan or any related non-serviced companion loan.

During any Subordinate Control Period, (A) there will be no annual meeting between the trust advisor and the special servicer or any annual report prepared by the trust advisor and (B) the trust advisor will not distribute any report based on any review of the special servicer’s actions. In addition, the trust advisor will not have the right or obligation during any Subordinate Control Period to consult or consent with regard to any particular servicing actions, or otherwise opine on the actions of the special servicer with respect to any mortgage loan during any Subordinate Control Period.

Trust Advisor Expenses:   The trust advisor will be entitled, on each distribution date, to reimbursement for any trust advisor expenses, including unreimbursed indemnification amounts and other expenses (which do not include trust advisor fees) payable to the trust advisor pursuant to the terms of the pooling and servicing agreement. No trust advisor expenses (which do not include trust advisor fees) will be allocated to or otherwise borne by the Control Eligible Certificates, and all trust advisor expenses will be allocated to reduce amounts due and owing to certain classes of the non-Control Eligible Certificates as described in the Free Writing Prospectus and above in this Term Sheet.
Termination and Replacement of Trust Advisor:  

The trust advisor may be terminated or replaced without cause as described in the Free Writing Prospectus under “Servicing of the Mortgage Loans—The Trust Advisor—Termination of the Trust Advisor Without Cause.”
Deal Website:   The certificate administrator will be required to maintain a deal website which will include, among other items, (i) distribution date statements, (ii) CREFC® reports, (iii) summaries of final asset status reports, (iv) inspection reports, (v) appraisals, (vi) various special notices described in the Free Writing Prospectus, (vii) the “Investor Q&A Forum” and (viii) a voluntary “Investor Registry.” Investors may access the deal website following execution of an investor certification as described in the Free Writing Prospectus.

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

T-12
 

 

MSBAM 2015-C26 Collateral Overview

 

Mortgage Loan Sellers No. of
Mortgage
Loans
No. of
Mortgaged
Properties
Aggregate
Cut-off Date
Balance
% of
Pool(1)
Morgan Stanley Mortgage Capital Holdings LLC 22 46 $605,449,740 57.8%
Bank of America, National Association 28 29 $204,769,800 19.5%
CIBC Inc. 9 11 $128,053,185 12.2%
Starwood Mortgage Funding III LLC 10 16 $109,896,178 10.5%
Total: 69 102 $1,048,168,904 100.0%

 

Pool Statistics

   
Aggregate Cut-off Date Balance: $1,048,168,904
Number of Mortgage Loans: 69
Average Cut-off Date Balance per Mortgage Loan: $15,190,854
Number of Mortgaged Properties: 102
Average Cut-off Date Balance per Mortgaged Property: $10,276,166
Weighted Average Mortgage Rate: 4.433%
% of Pool Secured by 5 Largest Mortgage Loans: 39.6%
% of Pool Secured by 10 Largest Mortgage Loans: 51.5%
% of Pool Secured by ARD Loans(2): 0.4%
Weighted Average Original Term to Maturity (months)(2): 119
Weighted Average Remaining Term to Maturity (months)(2): 115
Weighted Average Seasoning (months): 5
% of Pool Secured by Single Tenant Mortgaged Properties: 3.0%
% of Pool Secured by Refinance Loans: 74.8%
% of Pool Secured by Acquisition Loans: 25.2%

 

Additional Debt

   
% of Pool with Pari Passu Mortgage Debt: 31.1%
% of Pool with Mezzanine Debt: 20.9%
% of Pool with Subordinate Mortgage Debt: 8.7%

 

Credit Statistics(3)

   
Weighted Average UW NOI DSCR: 1.92x
Weighted Average UW NOI Debt Yield: 10.2%
Weighted Average UW NCF DSCR: 1.79x
Weighted Average UW NCF Debt Yield: 9.5%
Weighted Average Cut-off Date LTV Ratio(4): 60.2%
Weighted Average Maturity Date LTV Ratio(2)(4): 53.6%

 

 

Footnotes are set forth on the following page.

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

T-13
 

 

MSBAM 2015-C26 Collateral Overview

 

Amortization

Weighted Average Original Amortization Term (months): 357
Weighted Average Remaining Amortization Term (months): 356
% of Pool Amortizing Balloon: 28.5%
% of Pool Interest Only followed by Amortizing Balloon: 39.4%
% of Pool Interest Only through Maturity(2): 32.1%
% of Pool Fully Amortizing: 0.0%

 

Lockboxes

   
% of Pool with Hard Lockboxes: 34.5%
% of Pool with Soft Lockboxes: 4.0%
% of Pool with Springing Lockboxes: 56.8%
% of Pool with No Lockboxes: 4.8%

 

Reserves

   
% of Pool Requiring Tax Reserves: 80.5%
% of Pool Requiring Insurance Reserves: 41.2%
% of Pool Requiring Replacement Reserves: 75.8%
% of Pool Requiring TI/LC Reserves(5): 66.9%

 

Call Protection

   
% of Pool with lockout period, followed by defeasance until open period: 83.3%
% of Pool with lockout period, followed by the greater of a prepayment premium and yield maintenance until open period: 11.1%
% of Pool with lockout period, followed by defeasance or the greater of a prepayment premium and yield maintenance until open period: 4.5%
% of Pool with lockout period, followed by the greater of a prepayment premium and yield maintenance, followed by defeasance or the greater of a prepayment premium and yield maintenance until open period: 1.1%

 

 

(1)Unless otherwise indicated, all references to “% of Pool” in this Term Sheet reflect a percentage of the aggregate principal balance of the mortgage pool as of the Cut-off Date, after application of all payments of principal due during or prior to November 2015.

 

(2)With respect to any ARD Loan, unless otherwise indicated, references in this Term Sheet to the applicable “maturity date” refer to the applicable anticipated repayment date with respect to such ARD Loan, and such applicable anticipated repayment date is treated as its maturity date for all purposes hereof.

 

(3)With respect to any mortgage loan that is part of a loan pair or a non-serviced loan combination, unless otherwise indicated, all LTV, DSCR, Debt Yield and Balance per SF/Unit calculations in this term sheet include the related pari passu companion loan and exclude any subordinate notes, as applicable. Additionally, LTV, DSCR, Debt Yield and Balance per SF/Unit figures in this Term Sheet are calculated for mortgage loans without regard to any additional indebtedness that may be incurred at a future date. With respect to any leased fee loans, the SF/Unit and Balance per SF/Unit figures in this Term Sheet are based on the size of the non-collateral improvements.

 

(4)The LTV ratios set forth in this Term Sheet are generally based on the “as-is” values of the related mortgaged properties; provided, that such LTV ratios may be based on “as-stabilized” values in certain cases in which reserves have been established at origination for the applicable condition or circumstance that is expected to result in stabilization. See the definition of “Appraised Value” under “Description of the Mortgage Pool—Additional Mortgage Loan Information” in the Free Writing Prospectus.

 

(5)Excludes hospitality, multifamily, manufactured housing, self-storage and leased fee properties.

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

T-14
 

 

MSBAM 2015-C26 Characteristics of the Mortgage Loans

 

Top 10 Mortgage Loans
                           
Loan
No.
Mortgage
Loan
Seller
Property Name City State Property Type Cut-off Date
Balance
% of
Pool
SF/Units Cut-off Date Balance per SF/Unit UW
NCF
DSCR
UW NOI
Debt
Yield
Cut-off
Date LTV
Maturity
Date LTV
1 MSMCH 535-545 Fifth Avenue(1) New York NY Mixed Use $110,000,000 10.5% 512,171 $605.27 1.37x 6.2% 49.2% 49.2%
2 MSMCH Herald Center(2) New York NY Mixed Use $100,000,000 9.5% 249,063 $1,023.84 1.94x 9.1% 44.6% 44.6%
3 MSMCH 11 Madison Avenue(3) New York NY Office $91,700,000 8.7% 2,285,043 $334.49 3.89x 14.3% 32.5% 32.5%
4 MSMCH Palmer Center Colorado Springs CO Office $73,717,026 7.0% 459,500 $160.43 1.34x 9.7% 70.9% 57.5%
5 CIBC Wallace Student Housing Portfolio Various GA Multifamily $40,000,000 3.8% 943 $42,417.82 1.35x 8.7% 67.3% 59.5%
6 MSMCH Skylight Office Tower Cleveland OH Office $27,350,000 2.6% 320,793 $85.26 1.84x 13.5% 64.1% 56.7%
7 SMF III Market Square Plaza Harrisburg PA Office $26,350,000 2.5% 172,629 $152.64 1.30x 8.6% 70.7% 60.9%
8 MSMCH Coastal Equities Retail Portfolio(4) Various Various Retail $24,000,000 2.3% 3,458,225 $48.87 1.48x 10.1% 72.5% 65.2%
9 MSMCH Green Valley Corporate Center Henderson NV Office $23,662,049 2.3% 198,939 $118.94 1.46x 9.9% 68.2% 55.5%
10 BANA Sunset Cove Apartments Las Vegas NV Multifamily $22,800,000 2.2% 392 $58,163.27 1.36x 8.5% 72.2% 65.9%
    Total/Wtd. Avg.       $539,579,075 51.5%     1.93x 9.7% 54.5% 50.0%

 

 

(1)The 535-545 Fifth Avenue mortgage loan is part of a non-serviced loan combination that is evidenced by five pari passu promissory notes with an aggregate Cut-off Date principal balance of $310,000,000. The 535-545 Fifth Avenue mortgage loan is evidenced by one such promissory note (Note A-2) with an outstanding principal balance as of the Cut-off Date of $110,000,000. The pari passu promissory notes not included in the Issuing Entity (Notes A-1, A-3, A-4 and A-5) evidence the related non-serviced companion loan, which had an aggregate outstanding principal balance as of the Cut-off Date of $200,000,000. Promissory Note A-1, which had an outstanding principal balance as of the Cut-off Date of $110,000,000, was contributed to the MSBAM 2015-C24 securitization trust, and Promissory Notes A-3, A-4 and A-5, which had an aggregate outstanding principal balance as of the Cut-off Date of $90,000,000, are expected to be held by Morgan Stanley Bank, N.A. or an affiliate thereof on the closing date of this transaction and may be contributed to one or more future securitization transactions or otherwise transferred at any time. Unless otherwise indicated, all LTV, DSCR, Debt Yield and Cut-off Date Balance PSF/Unit calculations include the related pari passu non-serviced companion loan. See “Description of the Mortgage Pool—The Non-Serviced Loan Combinations—The 535-545 Fifth Avenue Non-Serviced Loan Combination” in the Free Writing Prospectus.

 

(2)The Herald Center mortgage loan is part of a non-serviced loan combination evidenced by four pari passu promissory notes with an aggregate Cut-off Date principal balance of $255,000,000. Prior to the date hereof, such promissory notes (or interests therein) were contributed to one or more REMICs, and references herein to the Herald Center mortgage loan, non-serviced companion loan or non-serviced loan combination will be deemed to include the REMIC regular interests that correspond to the underlying promissory notes. The “Herald Center mortgage loan” is evidenced by one such pari passu promissory note (Note A-1) with an outstanding principal balance as of the Cut-off Date of $100,000,000. The “Herald Center non-serviced companion loan” is evidenced by the remaining pari passu promissory notes (Notes A-2, A-3 and A-4), which had an aggregate outstanding principal balance as of the Cut-off Date of $155,000,000, and which are not included in the Issuing Entity. Promissory Notes A-2 and A-4, which had an aggregate outstanding principal balance as of the Cut-off Date of $115,000,000, together with the corresponding REMIC regular interests, are expected to be held by the MSBAM 2015-C25 securitization trust on the closing date of this transaction. Promissory Note A-3, which had an outstanding principal balance as of the Cut-off Date of $40,000,000, together with the corresponding REMIC regular interest, is expected to be held by Morgan Stanley Bank, N.A. or an affiliate thereof on the closing date of this transaction and may be contributed to one or more future securitization transactions or otherwise transferred at any time. Unless otherwise indicated, all LTV, DSCR, Debt Yield and Cut-off Date Balance PSF/Unit calculations include the related pari passu non-serviced companion loan. See “Description of the Mortgage Pool—The Non-Serviced Loan Combinations—The Herald Center Non-Serviced Loan Combination” in the Free Writing Prospectus.

 

(3)The 11 Madison Avenue mortgage loan is part of a non-serviced loan combination evidenced by 16 pari passu senior promissory notes with an aggregate Cut-off Date principal balance of $764,330,000 and three junior notes with an aggregate Cut-off Date principal balance of $310,670,000, as follows: (i) the 11 Madison Avenue mortgage loan is evidenced by Promissory Notes A-2-C1 and A-2-C2 (two of the senior notes), with an aggregate principal balance as of the Cut-off Date of $91,700,000, (ii) the 11 Madison Avenue non-serviced companion loan is evidenced by Promissory Notes A-1-S1, A-1-S2, A-1-S3, A-2-S1, A-2-S2, A-2-S3, A-3-S1, A-3-S2 and A-3-S3 (nine of the senior notes), with an aggregate principal balance as of the Cut-off Date of $397,530,000 (which were included in the MAD 2015-11MD securitization trust), and Promissory Notes A-1-C1, A-1-C2, A-1-C3, A-3-C1 and A-3-C2 (five of the senior notes), with an aggregate principal balance as of the Cut-off Date of $275,100,000 (which are expected to be held by German American Capital Corporation and Wells Fargo Bank, National Association, or affiliates thereof or securitization transactions of which they are sponsors, on the closing date of this transaction and may be contributed to one or more future securitization transactions or otherwise transferred at any time), and (iii) the 11 Madison Avenue B notes are evidenced by Promissory Notes B-1-S, B-2-S and B-3-S (the three junior notes), with an aggregate outstanding principal balance as of the Cut-off Date of $310,670,000 (which were included in the MAD 2015-11MD securitization trust). Unless otherwise indicated, all LTV, DSCR, Debt Yield and Cut-off Date Balance PSF/Unit calculations include the related pari passu non-serviced companion loan but exclude the 11 Madison Avenue B notes. The UW NCF DSCR, UW NOI Debt Yield and Cut-off Date LTV for the 11 Madison Avenue non-serviced loan combination, taking into account the 11 Madison Avenue B notes, are equal to 2.77x, 10.2% and 45.7%, respectively. See “Description of the Mortgage Pool—The Non-Serviced Loan Combinations—The 11 Madison Avenue Non-Serviced Loan Combination” in the Free Writing Prospectus.

 

(4)The Coastal Equities Retail Portfolio mortgage loan is part of a non-serviced loan combination evidenced by 10 pari passu promissory notes with an aggregate Cut-off Date principal balance of $169,000,000. The Coastal Equities Retail Portfolio mortgage loan is evidenced by two such pari passu promissory notes (Notes A-6 and A-10) with an aggregate outstanding principal balance as of the Cut-off Date of $24,000,000. The pari passu promissory notes not included in the Issuing Entity (Notes A-1, A-2, A-3, A-4, A-5, A-7, A-8 and A-9) evidence the related non-serviced companion loan, which had an aggregate outstanding principal balance as of the Cut-off Date of $145,000,000. Promissory Notes A-1, A-2, A-3 and A-7, which had an aggregate outstanding principal balance as of the Cut-off Date of $85,000,000, were contributed to the MSBAM 2015-C24 securitization trust. Promissory Notes A-4, A-5, A-8 and A-9, which had an aggregate outstanding principal balance as of the Cut-off Date of $60,000,000, were contributed to the MSBAM 2015-C25 securitization trust. Unless otherwise indicated, all LTV, DSCR, Debt Yield and Cut-off Date Balance PSF/Unit calculations include the related pari passu non-serviced companion loan. See “Description of the Mortgage Pool—The Non-Serviced Loan Combinations—The Coastal Equities Retail Portfolio Non-Serviced Loan Combination” in the Free Writing Prospectus.

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

T-15
 

 

MSBAM 2015-C26 Characteristics of the Mortgage Loans

 

Mortgage Loans with Pari Passu Companion Loans
Loan
No.
Mortgage
Loan Seller
Property Name
Mortgage Loan
Cut-off Date
Balance
Companion Loan Cut-off Date Balance
Combined
Cut-off Date Balance
Lead Servicing Agreement Master Servicer Special Servicer Control Rights Combined
UW NCF
DSCR
Combined
UW NOI
Debt Yield
Combined
Cut-off
Date LTV
1 MSMCH 535-545 Fifth Avenue(1) $110,000,000 $200,000,000 $310,000,000 MSBAM 2015-C24 Wells Fargo Midland MSBAM 2015-C26(2) 1.37x 6.2% 49.2%
2 MSMCH Herald Center(3) $100,000,000 $155,000,000 $255,000,000 MSBAM 2015-C25 Wells Fargo Midland MSBAM 2015-C25 1.94x 9.1% 44.6%
3 MSMCH 11 Madison Avenue(4) $91,700,000 $672,630,000 $764,330,000 MAD 2015-11MD Key Bank Key Bank MAD 2015-11MD(5) 3.89x 14.3% 32.5%
8 MSMCH Coastal Equities Retail Portfolio(6) $24,000,000 $145,000,000 $169,000,000 MSBAM 2015-C24 Wells Fargo Midland MSBAM 2015-C24 1.48x 10.1% 72.5%

 

 

(1)See Footnote (1) to the table entitled “Top 10 Mortgage Loans” above for a description of the 535-545 Fifth Avenue non-serviced loan combination.

 

(2)Servicing of the 535-545 Fifth Avenue non-serviced loan combination will be governed by the MSBAM 2015-C24 pooling and servicing agreement; however, the holder of the 535-545 Fifth Avenue mortgage loan (and, correspondingly, the parties designated to exercise the rights of such holder under the pooling and servicing agreement for this transaction) will be entitled to certain rights with respect to the servicing of the 535-545 Fifth Avenue non-serviced loan combination and replacement of the special servicer with respect to the 535-545 Fifth Avenue non-serviced loan combination, as described under “Description of the Mortgage Pool—The Non-Serviced Loan Combinations—The 535-545 Fifth Avenue Non-Serviced Loan Combination” and “Servicing of the Mortgage Loans” in the Free Writing Prospectus.

 

(3)See Footnote (2) to the table entitled “Top 10 Mortgage Loans” above for a description of the Herald Center non-serviced loan combination.

 

(4)See Footnote (3) to the table entitled “Top 10 Mortgage Loans” above for a description of the 11 Madison Avenue non-serviced loan combination.

 

(5)With respect to the 11 Madison Avenue mortgage loan, there will be no controlling class representative related to the securitization of the related pari passu companion loan and B notes, and consequently, the related special servicer may only be removed by a vote of certificateholders under such securitization, and such special servicer will not be required to seek the consent of a controlling party with respect to major decisions in respect of the 11 Madison Avenue non-serviced loan combination.

 

(6)See Footnote (4) to the table entitled “Top 10 Mortgage Loans” above for a description of the Coastal Equities Retail Portfolio non-serviced loan combination.

 

Mortgage Loans with Subordinate Debt
Loan
No.
Mortgage
Loan Seller
Property Name Mortgage Loan Cut-off Date
Balance
Cut-off Date
Loan per Unit/SF
Subordinate Debt
Cut-off Date
Balance
UW NCF
DSCR
UW NOI
Debt Yield
Cut-off
Date LTV
Total Mortgage Debt UW NCF
DSCR
Total Mortgage Debt UW NOI
Debt Yield
Total Mortgage Debt Cut-off
Date LTV
3 MSMCH 11 Madison Avenue(1) $91,700,000 $334.49 $310,670,000 3.89x 14.3% 32.5% 2.77x 10.2% 45.7%

 

 

(1)See Footnote (3) to the table entitled “Top 10 Mortgage Loans” above for a description of the 11 Madison Avenue non-serviced loan combination.

 

Mortgage Loans with Mezzanine Debt(1)
Loan
No.
Mortgage
Loan Seller
Property Name Mortgage Loan Cut-off Date
Balance
Cut-off Date
Loan per Unit/SF
Mezzanine Debt
Cut-off Date
Balance
UW NCF
DSCR
UW NOI
Debt Yield
Cut-off
Date LTV
Total Debt
UW NCF
DSCR
Total Debt
UW NOI
Debt Yield
Total Debt
Cut-off
Date LTV
2 MSMCH Herald Center $100,000,000 $1,023.84   $40,000,000(2) 1.94x 9.1% 44.6% 1.66x 7.9% 51.6%
3 MSMCH 11 Madison Avenue $91,700,000 $334.49 $325,000,000 3.89x 14.3% 32.5% 1.97x 7.8% 59.6%
6 MSMCH Skylight Office Tower $27,350,000 $85.26 $5,500,000 1.84x 13.5% 64.1% 1.33x 11.2% 77.0%

 

 

(1)Total Debt UW NCF DSCR, Total Debt UW NOI Debt Yield and Total Debt Cut-off Date LTV figures shown above are calculated based on any related pari passu notes, subordinate note(s) and the mezzanine debt, including, with respect to the Herald Center mortgage loan, the full principal amount of the $40,000,000 mezzanine facility.

 

(2)The Herald Center borrower may permit its equity owners to pledge up to a 49% indirect interest in the Herald Center borrower subject to various conditions, including, among other conditions, (i) no event of default under the Herald Center mortgage loan documents and (ii) the principal amount of the mezzanine debt will not result in an aggregate LTV of greater than 75% or a debt yield of less than 8.5%. On August 24, 2015, the Herald Center borrower notified the lender of its intent to permit the pledge of an indirect 49% interest in the Herald Center borrower and 100% of its cash distributions to M&T Bank in return for a $40,000,000, two-year term credit facility to certain equity owners of the Herald Center borrower (which may be used for any purpose determined by such equity owners). On September 15, 2015, the Herald Center borrower notified the lender that the then outstanding balance of the credit facility was approximately $8.4 million. The outstanding balance may change at any time without notice within the parameters of the credit facility terms and the Herald Center mortgage loan document conditions.

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

T-16
 

 

MSBAM 2015-C26 Characteristics of the Mortgage Loans

 

Prior Securitization History(1)
Loan
No.
Mortgage
Loan
Seller
Property Name City State Property
Type
Cut-off
Date
Balance
% of
Pool
SF/Units Cut-off
Date
 Balance
per SF/Unit
UW
NCF
DSCR
UW
NOI
Debt
Yield
Cut-off
Date
LTV
Maturity Date
LTV
Prior Securitization
1 MSMCH 535-545 Fifth Avenue New York NY Mixed Use $110,000,000 10.5% 512,171 $605.27 1.37x 6.2% 49.2% 49.2% CMSC 2006-C3
4 MSMCH Palmer Center Colorado Springs CO Office $73,717,026 7.0% 459,500 $160.43 1.34x 9.7% 70.9% 57.5% CSFB 2005-C5
5 CIBC Wallace Student Housing Portfolio Various GA Multifamily $40,000,000 3.8% 943 $42,417.82 1.35x 8.7% 67.3% 59.5% WBCMT 2006-C24
7 SMF III Market Square Plaza Harrisburg PA Office $26,350,000 2.5% 172,629 $152.64 1.30x 8.6% 70.7% 60.9% BACM 2005-6
11 MSMCH Landmark at City Park Houston TX Multifamily $21,150,000 2.0% 288 $73,437.50 1.33x 8.3% 73.6% 65.9% FREMF 2011-K702
13 SMF III Columbus Self Storage Portfolio Various OH Self Storage $19,250,000 1.8% 302,390 $63.66 1.40x 8.8% 71.0% 65.2% COMM 2013-CR7
15 BANA Stoney Park Place Apartments Shelby Township MI Multifamily $17,550,000 1.7% 150 $117,000.00 1.39x 8.9% 75.0% 66.2% MLCFC 2007-5
18 CIBC Wynthrope Forest Apartments Riverdale GA Multifamily $16,200,000 1.5% 270 $60,000.00 1.36x 9.0% 73.0% 64.5% MSBAM 2012-C6
22 MSMCH Crossroads Center I & II Springfield OR Retail $14,643,440 1.4% 98,342 $148.90 1.81x 11.0% 60.1% 48.6% MSC 2005 - HQ7
30 SMF III Plaza Vista Sierra Vista AZ Retail $10,400,000 1.0% 227,110 $45.79 1.68x 11.6% 74.3% 65.2% LBUBS 2004-C2
31 CIBC Meadows Mobile Home Park Fredericksburg VA Manuf. Housing $9,500,000 0.9% 208 $45,673.08 1.32x 8.3% 70.7% 60.7% BACM 2006-1
35 BANA Sierra Apartments Harlingen TX Multifamily $7,360,000 0.7% 208 $35,384.62 1.72x 11.7% 74.9% 69.1% MSC 2005-IQ10
40 SMF III Thorn Run Crossing Coraopolis PA Retail $6,750,000 0.6% 49,067 $137.57 1.53x 10.3% 73.4% 63.2% CD 2006-CD2
41 BANA Devon Self Storage - Baltimore, MD Baltimore MD Self Storage $6,500,000 0.6% 64,084 $101.43 1.42x 9.1% 65.0% 57.4% GECMC 2006-C1
43 CIBC Fairmount Seattle Seattle WA Mixed Use $6,484,721 0.6% 32,957 $196.76 1.41x 9.2% 47.0% 38.6% CD 2005-CD1
45 MSMCH Best Western Plus International Speedway Daytona Beach FL Hospitality $6,286,718 0.6% 151 $41,633.90 1.60x 12.3% 67.6% 56.4% BSCMS 2006-PW13
47 BANA Hannaford Supermarket Gardner MA Retail $6,000,000 0.6% 42,382 $141.57 1.78x 11.2% 51.7% 44.4% BSCMS 2006-PW12
49 MSMCH The Ski.com Building Aspen CO Office $5,300,000 0.5% 22,860 $231.85 1.52x 10.2% 58.9% 54.3% MSC 2006-HQ8
55 BANA StorageOne - Henderson, NV Henderson NV Self Storage $4,450,000 0.4% 86,620 $51.37 3.29x 15.8% 38.0% 38.0% GECMC 2005-C3
58 BANA Shopko Nampa Nampa ID Retail $4,100,000 0.4% 90,446 $45.33 1.45x 10.2% 65.1% 56.3% CGCMT 2006-C4
59 BANA StorageOne - Las Vegas, NV Las Vegas NV Self Storage $4,000,000 0.4% 80,725 $49.55 2.67x 13.0% 49.8% 49.8% GECMC 2005-C3
63 BANA Olive Tree Plaza Murrieta CA Retail $3,352,004 0.3% 16,362 $204.87 1.48x 9.9% 66.0% 54.1% MSC 2006-HQ8
65 BANA Streetside at Vinings Atlanta GA Retail $3,281,250 0.3% 15,461 $212.23 1.44x 9.7% 75.0% 64.9% MSC 2006-HQ8
67 CIBC Palmer Plaza Fort Collins CO Retail $2,946,850 0.3% 24,256 $121.49 1.48x 10.1% 70.2% 57.9% WBCMT 2006-C26
    Total       $425,572,009 40.6%              

 

 

(1)Includes mortgage loans for which all or a portion of the previously existing debt was most recently securitized in conduit securitizations, based on information provided by the related borrower or obtained through searches of a third-party database. The information has not otherwise been confirmed by the mortgage loan sellers. With respect to any mortgage loan that is part of a loan pair or a non-serviced loan combination, unless otherwise indicated, all LTV, DSCR, Debt Yield and Cut-off Date Balance PSF/Unit calculations include the related pari passu companion loan and exclude any subordinate notes, as applicable.

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

T-17
 

 

MSBAM 2015-C26 Characteristics of the Mortgage Loans

 

Mortgage Loans with Scheduled Balloon Payments and Related Classes(1)

Class A-2 ($14,800,000)
Loan
No.
Mortgage
Loan
Seller
Property Name State Property Type Cut-off
Date
Balance
% of
Pool
Maturity Date Balance % of
Class A-2
Certificate
Principal
Balance
SF/
Units
Cut-off
Date
Balance per SF/Unit
UW
NCF
DSCR
UW
NOI
Debt
Yield
Cut-off
Date
LTV
Maturity Date LTV Rem. IO Period
(mos.)
Rem.
Term to
Maturity
(mos.)
32 MSMCH El Paso Medical Office TX Office $9,378,356 0.9% $8,674,263 58.6% 53,051 $176.78 1.37x 9.7% 74.4% 68.8% 0 58
44 SMF III Hollywood Medical Office FL Office $6,400,000 0.6% $6,101,468 41.2% 57,815 $110.70 1.64x 11.2% 58.2% 55.5% 23 59
    Total/Wtd. Avg.     $15,778,356 1.5% $14,775,732 99.8%     1.48x 10.3% 67.8% 63.4% 9 58

 

 

(1)The table above reflects the mortgage loans whose balloon payments will be applied to pay down the Class A-2 Certificates, assuming (i) that none of the mortgage loans experience prepayments, defaults or losses; (ii) there are no extensions of maturity dates; and (iii) each mortgage loan is paid in full on its stated maturity date or, in the case of any mortgage loan with an anticipated repayment date, on such anticipated repayment date. The table above is otherwise based on the Structuring Assumptions set forth under “Yield, Prepayment and Maturity Considerations” in the Free Writing Prospectus.

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

T-18
 

 

(THIS PAGE INTENTIONALLY LEFT BLANK)

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

T-19
 

 

MSBAM 2015-C26 Characteristics of the Mortgage Loans

 

(PIE CHART) 

 

Property Type Distribution(1)
Property Type Number of
Mortgaged
Properties
Aggregate
Cut-off Date
Balance
% of
Pool
Wtd. Avg.
Mortgage
Rate
Wtd. Avg.
UW NCF
DSCR
Wtd. Avg.
UW NOI
Debt Yield
Wtd. Avg.
Cut-off

Date LTV
Wtd. Avg.
Maturity

Date LTV
Office 13 $318,218,502 30.4% 4.284% 2.22x 11.8% 57.9% 50.2%
CBD 6 $237,117,026 22.6% 4.181% 2.47x 12.4% 54.8% 47.8%
Suburban 4 $54,376,108 5.2% 4.526% 1.50x 10.0% 66.7% 55.8%
Medical 3 $26,725,368 2.5% 4.704% 1.44x 10.0% 67.4% 59.8%
Mixed Use 7 $243,590,971 23.2% 4.239% 1.62x 7.9% 49.1% 48.1%
Office/Retail 4 $129,856,250 12.4% 3.987% 1.39x 6.9% 52.0% 50.9%
Retail/Office 2 $107,250,000 10.2% 4.508% 1.90x 9.0% 45.6% 45.3%
Multifamily/Retail 1 $6,484,721 0.6% 4.830% 1.41x 9.2% 47.0% 38.6%
Multifamily 18 $215,718,731 20.6% 4.542% 1.52x 9.4% 69.0% 61.6%
Garden 15 $175,718,731 16.8% 4.478% 1.56x 9.6% 69.4% 62.0%
Student Housing 3 $40,000,000 3.8% 4.820% 1.35x 8.7% 67.3% 59.5%
Retail 38 $107,176,965 10.2% 4.608% 1.57x 10.3% 68.8% 60.0%
Anchored 26 $64,853,576 6.2% 4.483% 1.61x 10.7% 70.1% 60.8%
Free Standing 5 $20,415,178 1.9% 4.763% 1.55x 9.6% 61.3% 55.7%
Unanchored 5 $14,256,207 1.4% 4.815% 1.49x 10.1% 73.0% 62.7%
Shadow Anchored 2 $7,652,004 0.7% 4.868% 1.40x 9.5% 69.9% 59.6%
Hospitality 6 $73,723,343 7.0% 4.842% 1.79x 13.0% 62.5% 49.4%
Limited Service 3 $37,786,718 3.6% 4.777% 1.76x 13.2% 62.6% 47.5%
Full Service 2 $25,462,023 2.4% 5.000% 1.90x 13.6% 61.0% 50.3%
Extended Stay 1 $10,474,601 1.0% 4.690% 1.65x 11.3% 65.9% 53.9%
Self Storage 14 $61,320,464 5.9% 4.681% 1.71x 10.2% 62.4% 56.3%
Self Storage 14 $61,320,464 5.9% 4.681% 1.71x 10.2% 62.4% 56.3%
Industrial 4 $14,619,928 1.4% 4.599% 1.52x 10.7% 73.8% 60.8%
Flex 4 $14,619,928 1.4% 4.599% 1.52x 10.7% 73.8% 60.8%
Manufactured Housing 2 $13,800,000 1.3% 4.772% 1.41x 9.0% 69.0% 59.8%
Manufactured Housing 2 $13,800,000 1.3% 4.772% 1.41x 9.0% 69.0% 59.8%
Total/Wtd. Avg. 102 $1,048,168,904 100.0% 4.433% 1.79x 10.2% 60.2% 53.6%

 

 

(1)All numerical information concerning the mortgage loans is approximate and, in the case of mortgage loans secured by multiple properties, is based on allocated loan amounts with respect to such properties. All weighted average information regarding the mortgage loans reflects the weighting of the mortgage loans based on their outstanding principal balances as of the Cut-off Date or, in the case of mortgage loans secured by multiple properties, allocated loan amounts. The sum of numbers and percentages in columns may not match the “Total” due to rounding. With respect to any mortgage loan that is part of a loan pair or a non-serviced loan combination, unless otherwise indicated, all LTV, DSCR and Debt Yield calculations include the related pari passu companion loan and exclude any subordinate notes, as applicable.

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

T-20
 

 

MSBAM 2015-C26 Characteristics of the Mortgage Loans

 

(MAP) 

 

Geographic Distribution(1)
State or Other Jurisdiction Number of
Mortgaged
Properties
Aggregate
Cut-off Date
Balance
% of
Pool
Wtd. Avg.
Mortgage
Rate
Wtd. Avg.
UW NCF
DSCR
Wtd. Avg.
UW NOI
Debt Yield
Wtd. Avg.
Cut-off

Date LTV
Wtd. Avg.
Maturity

Date LTV
New York 4 $303,503,550 29.0% 3.988% 2.32x 9.6% 42.8% 42.7%
Texas 13 $101,750,744 9.7% 4.474% 1.54x 10.1% 70.0% 61.0%
Colorado 3 $81,963,876 7.8% 4.414% 1.36x 9.7% 70.1% 57.3%
Georgia 8 $77,884,504 7.4% 4.737% 1.52x 9.5% 68.4% 60.9%
California 7 $65,440,752 6.2% 4.739% 1.74x 11.0% 59.1% 52.3%
California – Northern(2) 3 $42,997,012 4.1% 4.800% 1.82x 11.4% 61.6% 54.8%
California – Southern(2) 4 $22,443,740 2.1% 4.621% 1.58x 10.3% 54.3% 47.5%
Nevada 4 $54,912,049 5.2% 4.448% 1.65x 10.0% 66.1% 58.0%
Ohio 7 $49,014,201 4.7% 4.797% 1.65x 11.5% 67.2% 60.5%
Pennsylvania 5 $43,945,000 4.2% 4.761% 1.36x 8.8% 70.2% 61.6%
Virginia 4 $32,320,491 3.1% 4.551% 1.74x 12.3% 63.8% 49.9%
Michigan 6 $31,115,178 3.0% 4.808% 1.42x 9.4% 71.5% 62.4%
North Carolina 7 $30,916,613 2.9% 4.722% 1.58x 11.4% 67.6% 53.7%
Washington 3 $24,948,780 2.4% 4.667% 1.39x 9.2% 58.6% 48.5%
Utah 2 $24,856,250 2.4% 4.614% 1.45x 9.7% 73.6% 66.2%
Florida 5 $21,929,807 2.1% 4.839% 1.65x 11.6% 66.8% 57.5%
New Mexico 2 $18,000,000 1.7% 4.685% 2.51x 17.3% 65.5% 53.4%
Mississippi 1 $16,250,000 1.6% 4.320% 1.40x 8.8% 69.1% 61.8%
Arizona 2 $15,500,000 1.5% 4.573% 1.69x 11.4% 70.7% 62.9%
Oregon 1 $14,643,440 1.4% 4.330% 1.81x 11.0% 60.1% 48.6%
Kentucky 2 $8,750,000 0.8% 4.648% 1.46x 9.4% 74.8% 64.6%
Maryland 1 $6,500,000 0.6% 4.810% 1.42x 9.1% 65.0% 57.4%
Massachusetts 1 $6,000,000 0.6% 4.620% 1.78x 11.2% 51.7% 44.4%
Idaho 1 $4,100,000 0.4% 4.904% 1.45x 10.2% 65.1% 56.3%
Illinois 1 $3,500,000 0.3% 4.299% 1.80x 12.5% 68.6% 59.9%
Tennessee 4 $2,641,420 0.3% 4.605% 1.48x 10.1% 72.5% 65.2%
Alabama 3 $2,016,568 0.2% 4.605% 1.48x 10.1% 72.5% 65.2%
Delaware 1 $1,789,349 0.2% 4.605% 1.48x 10.1% 72.5% 65.2%
Indiana 1 $1,675,740 0.2% 4.605% 1.48x 10.1% 72.5% 65.2%
Connecticut 1 $1,562,130 0.1% 4.605% 1.48x 10.1% 72.5% 65.2%
Louisiana 1 $383,432 0.0% 4.605% 1.48x 10.1% 72.5% 65.2%
South Carolina 1 $355,030 0.0% 4.605% 1.48x 10.1% 72.5% 65.2%
Total/Wtd. Avg. 102 $1,048,168,904 100.0% 4.433% 1.79x 10.2% 60.2% 53.6%

 

 

(1)All numerical information concerning the mortgage loans is approximate and, in the case of mortgage loans secured by multiple properties, is based on allocated loan amounts with respect to such properties. All weighted average information regarding the mortgage loans reflects the weighting of the mortgage loans based on their outstanding principal balances as of the Cut-off Date or, in the case of mortgage loans secured by multiple properties, allocated loan amounts. The sum of numbers and percentages in columns may not match the “Total” due to rounding. With respect to any mortgage loan that is part of a loan pair or a non-serviced loan combination, unless otherwise indicated, all LTV, DSCR and Debt Yield calculations include the related pari passu companion loan and exclude any subordinate notes, as applicable.

 

(2)“California – Northern” includes zip codes above 93600, and “California – Southern” includes zip codes at or below 93600.

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

T-21
 

 

MSBAM 2015-C26 Collateral Statistics

 

Collateral Statistics(1)

Cut-off Date Balance ($)

         
  No. of
Mortgage
Loans
Aggregate
Cut-off Date
Balance ($)
% of
Pool
 
1 - 5,000,000 18 65,343,833 6.2  
5,000,001 - 10,000,000 21 144,136,903 13.8  
10,000,001 - 15,000,000 9 107,735,362 10.3  
15,000,001 - 25,000,000 14 261,835,781 25.0  
25,000,001 - 50,000,000 3 93,700,000 8.9  
50,000,001 - 75,000,000 1 73,717,026 7.0  
75,000,001 - 100,000,000 2 191,700,000 18.3  
100,000,001 - 110,000,000 1 110,000,000 10.5  
Total: 69 $1,048,168,904 100.0 %
Min: $1,298,728          Max: $110,000,000 Avg: $15,190,854  

 

State or Other Jurisdiction

         
  No. of
Mortgaged
Properties
Aggregate
Cut-off Date
Balance ($)
% of
Pool
 
New York 4 303,503,550 29.0  
Texas 13 101,750,744 9.7  
Colorado 3 81,963,876 7.8  
Georgia 8 77,884,504 7.4  
California 7 65,440,752 6.2  
California – Northern(2) 3 42,997,012 4.1  
California – Southern(2) 4 22,443,740 2.1  
Nevada 4 54,912,049 5.2  
Ohio 7 49,014,201 4.7  
Pennsylvania 5 43,945,000 4.2  
Virginia 4 32,320,491 3.1  
Michigan 6 31,115,178 3.0  
North Carolina 7 30,916,613 2.9  
Washington 3 24,948,780 2.4  
Utah 2 24,856,250 2.4  
Florida 5 21,929,807 2.1  
New Mexico 2 18,000,000 1.7  
Mississippi 1 16,250,000 1.6  
Arizona 2 15,500,000 1.5  
Oregon 1 14,643,440 1.4  
Kentucky 2 8,750,000 0.8  
Maryland 1 6,500,000 0.6  
Massachusetts 1 6,000,000 0.6  
Idaho 1 4,100,000 0.4  
Illinois 1 3,500,000 0.3  
Tennessee 4 2,641,420 0.3  
Alabama 3 2,016,568 0.2  
Delaware 1 1,789,349 0.2  
Indiana 1 1,675,740 0.2  
Connecticut 1 1,562,130 0.1  
Louisiana 1 383,432 0.0  
South Carolina 1 355,030 0.0  
Total: 102 $1,048,168,904 100.0 %

 

Property Type

         
  No. of
Mortgaged
Properties
Aggregate
Cut-off Date
Balance ($)
% of
Pool
 
Office 13 318,218,502 30.4  
CBD 6 237,117,026 22.6  
Suburban 4 54,376,108 5.2  
Medical 3 26,725,368 2.5  
Mixed Use 7 243,590,971 23.2  
Office/Retail 4 129,856,250 12.4  
Retail/Office 2 107,250,000 10.2  
Multifamily/Retail 1 6,484,721 0.6  
Multifamily 18 215,718,731 20.6  
Garden 15 175,718,731 16.8  
Student Housing 3 40,000,000 3.8  
Retail 38 107,176,965 10.2  
Anchored 26 64,853,576 6.2  
Free Standing 5 20,415,178 1.9  
Unanchored 5 14,256,207 1.4  
Shadow Anchored 2 7,652,004 0.7  
Hospitality 6 73,723,343 7.0  
Limited Service 3 37,786,718 3.6  
Full Service 2 25,462,023 2.4  
Extended Stay 1 10,474,601 1.0  
Self Storage 14 61,320,464 5.9  
Self Storage 14 61,320,464 5.9  
Industrial 4 14,619,928 1.4  
Flex 4 14,619,928 1.4  
Manufactured Housing 2 13,800,000 1.3  
Manufactured Housing 2 13,800,000 1.3  
Total/Wtd. Avg. 102 $1,048,168,904 100.0 %

 

   

Mortgage Rate (%)

         
  No. of
Mortgage
Loans
Aggregate
Cut-off Date
Balance ($)
% of
Pool
 
3.501 - 4.000 2 201,700,000 19.2  
4.001 - 4.500 17 260,051,676 24.8  
4.501 - 5.000 46 557,531,781 53.2  
5.001 - 5.500 4 28,885,447 2.8  
Total: 69 $1,048,168,904 100.0 %
Min: 3.560% Max: 5.350%  Wtd Avg: 4.433%    

 

Original Term to Maturity (mos.)

         
  No. of
Mortgage
Loans
Aggregate
Cut-off Date
Balance ($)
% of
Pool
 
60 2 15,778,356 1.5  
120 67 1,032,390,548 98.5  
Total: 69 $1,048,168,904 100.0 %
Min: 60 mos. Max: 120 mos.  Wtd Avg: 119 mos.    

 

Remaining Term to Maturity (mos.)

         
  No. of
Mortgage
Loans
Aggregate
Cut-off Date
Balance ($)
% of
Pool
 
58 - 60 2 15,778,356 1.5  
98 - 120 67 1,032,390,548 98.5  
Total: 69 $1,048,168,904 100.0 %
Min: 58 mos. Max: 120 mos.  Wtd Avg: 115 mos.    

 

Original Amortization Term (mos.)

         
  No. of
Mortgage
Loans
Aggregate
Cut-off Date
Balance ($)
% of
Pool
 
Interest Only 8 336,300,000 32.1  
300 3 37,468,420 3.6  
360 58 674,400,483 64.3  
Total: 69 $1,048,168,904 100.0 %
Min: 300 mos. Max: 360 mos.  Wtd Avg: 357 mos.    

 

Remaining Amortization Term (mos.)

         
  No. of
Mortgage
Loans
Aggregate
Cut-off Date
Balance ($)
% of
Pool
 
Interest Only 8 336,300,000 32.1  
297 - 300 3 37,468,420 3.6  
351 - 360 58 674,400,483 64.3  
Total: 69 $1,048,168,904 100.0 %
Min: 297 mos. Max: 360 mos.     Wtd Avg: 356 mos.    

 

Mortgage Loan Sellers

         
  No. of
Mortgage
Loans
Aggregate
Cut-off Date
Balance ($)
% of
Pool
 
Morgan Stanley Mortgage Capital Holdings LLC 22 605,449,740 57.8  
Bank of America, National Association 28 204,769,800 19.5  
CIBC Inc. 9 128,053,185 12.2  
Starwood Mortgage Funding III LLC 10 109,896,178 10.5  
Total: 69 $1,048,168,904 100.0 %

 

Amortization Type

         
  No. of
Mortgage
Loans
Aggregate
Cut-off Date
Balance ($)
% of
Pool
 
Partial Interest Only 39 413,477,500 39.4  
Interest Only 8 336,300,000 32.1  
Amortizing Balloon 22 298,391,404 28.5  
Total: 69 $1,048,168,904 100.0 %

 

  

Cut-off Date LTV Ratio (%)

         
  No. of
Mortgage
Loans
Aggregate
Cut-off Date
Balance ($)
% of
Pool
 
30.1 - 40.0 2 96,150,000 9.2  
40.1 - 50.0 5 227,576,457 21.7  
50.1 - 60.0 11 81,575,000 7.8  
60.1 - 70.0 24 271,303,612 25.9  
70.1 - 80.0 27 371,563,835 35.4  
Total: 69 $1,048,168,904 100.0 %
Min: 32.5% Max: 75.0% Wtd Avg: 60.2%    

 

Maturity Date LTV Ratio (%)

         
  No. of
Mortgage
Loans
Aggregate
Cut-off Date
Balance ($)
% of
Pool
 
30.1 - 40.0 4 109,726,457 10.5  
40.1 - 50.0 12 301,683,440 28.8  
50.1 - 60.0 29 348,403,152 33.2  
60.1 - 70.0 24 288,355,856 27.5  
Total: 69 $1,048,168,904 100.0 %
Min: 32.5% Max: 69.1% Wtd Avg: 53.6%    

 

UW DSCR (x)

         
  No. of
Mortgage
Loans
Aggregate
Cut-off Date
Balance ($)
% of
Pool
 
1.30 - 1.40 22 445,877,703 42.5  
1.41 - 1.50 12 118,280,606 11.3  
1.51 - 1.60 6 47,026,647 4.5  
1.61 - 1.70 9 63,721,624 6.1  
1.71 - 1.80 7 40,477,149 3.9  
1.81 - 1.90 3 49,085,175 4.7  
1.91 - 2.00 3 132,050,000 12.6  
2.01 - 2.50 2 27,000,000 2.6  
2.51 - 3.00 3 28,500,000 2.7  
3.01 - 3.90 2 96,150,000 9.2  
Total: 69 $1,048,168,904 100.0 %
Min: 1.30x Max: 3.89x Wtd Avg: 1.79x    

 

UW NOI Debt Yield (%)

         
  No. of
Mortgage
Loans
Aggregate
Cut-off Date
Balance ($)
% of
Pool
 
6.2 - 8.0 2 114,600,000 10.9  
8.0 - 8.5 5 64,285,000 6.1  
8.5 - 9.0 10 158,144,059 15.1  
9.0 - 9.5 9 179,561,715 17.1  
9.5 - 10.0 7 130,140,685 12.4  
10.0 - 10.5 6 49,126,850 4.7  
10.5 - 11.0 6 46,568,368 4.4  
11.0 - 11.5 4 27,624,601 2.6  
11.5 - 12.0 9 72,862,487 7.0  
12.0 - 13.0 4 19,755,139 1.9  
13.0 - 14.0 2 38,350,000 3.7  
14.0 - 15.0 3 124,700,000 11.9  
15.0 - 16.0 1 4,450,000 0.4  
16.0 - 17.3 1 18,000,000 1.7  
Total: 69 $1,048,168,904 100.0 %
Min: 6.2% Max: 17.3% Wtd Avg: 10.2%    

 

(1)All numerical information concerning the mortgage loans is approximate and, in the case of mortgage loans secured by multiple properties, is based on allocated loan amounts with respect to such properties. All weighted average information regarding the mortgage loans reflects the weighting of the mortgage loans based on their outstanding principal balances as of the Cut-off Date or, in the case of mortgage loans secured by multiple properties, allocated loan amounts. The sum of numbers and percentages in columns may not match the “Total” due to rounding. With respect to any mortgage loan that is part of a loan pair or a non-serviced loan combination, unless otherwise indicated, all LTV, DSCR and Debt Yield calculations include the related pari passu companion loan and exclude any subordinate notes, as applicable.

 

(2)“California – Northern” includes zip codes above 93600, and “California – Southern” includes zip codes at or below 93600.

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.


T-22
 

 

MSBAM 2015-C26 Collateral Statistics

 

Prepayment Restrictions

 

Percentage of Collateral by Prepayment Restrictions (%)(1)(2)(3)(4)

 

Prepayment Restrictions November 2015 November 2016 November 2017 November 2018 November 2019
Locked Out 100.0% 98.9% 83.3% 83.3% 83.3%
Yield Maintenance Total 0.0% 1.1% 16.7% 16.7% 16.7%
Open 0.0% 0.0% 0.0% 0.0% 0.0%
TOTAL 100.0% 100.0% 100.0% 100.0% 100.0%
Pool Balance Outstanding $1,048,168,904 $1,043,362,914 $1,038,054,573 $1,030,916,486 $1,021,309,125
% Initial Pool Balance  100.0%  99.5%  99.0%  98.4%  97.4%
           
Prepayment Restrictions November 2020 November 2021 November 2022 November 2023 November 2024    
Locked Out 83.8% 83.8% 83.9% 73.5% 69.1%
Yield Maintenance Total 16.2% 16.2% 16.1% 16.0% 17.8%
Open 0.0% 0.0% 0.0% 10.5% 13.1%
TOTAL 100.0% 100.0% 100.0% 100.0% 100.0%
Pool Balance Outstanding $995,670,852 $983,136,116 $970,000,355 $956,234,613 $841,890,690
% Initial Pool Balance  95.0%  93.8%  92.5%  91.2%  80.3%

 

 

(1)   The analysis is based on Structuring Assumptions and a 0% CPR as discussed in the Free Writing Prospectus.

(2)See description of Yield Maintenance under “Description of the Offered Certificates—Distributions of Prepayment Premiums and Yield Maintenance Charges” in the Free Writing Prospectus.

(3)Mortgage loans modeled as Yield Maintenance include mortgage loans characterized by YM1 and DEF/YM1 on Appendix I to the Free Writing Prospectus.

(4)There may be limited exceptions to the indicated prepayment restrictions arising out of casualties, condemnations, property releases and the application of earnout reserves.

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.


T-23
 

 

MSBAM 2015-C26 535-545 Fifth Avenue

 

Mortgage Loan No. 1 – 535-545 Fifth Avenue

 

 

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

T-24
 

 

MSBAM 2015-C26 535-545 Fifth Avenue

 

Mortgage Loan No. 1 – 535-545 Fifth Avenue

 

 

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

T-25
 

 

MSBAM 2015-C26 535-545 Fifth Avenue

 

Mortgage Loan No. 1 – 535-545 Fifth Avenue

 

 

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

T-26
 

 

MSBAM 2015-C26 535-545 Fifth Avenue

 

Mortgage Loan No. 1 – 535-545 Fifth Avenue

 

 

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

T-27
 

 

MSBAM 2015-C26 535-545 Fifth Avenue

 

Mortgage Loan No. 1 – 535-545 Fifth Avenue

               
Mortgage Loan Information   Mortgaged Property Information
Mortgage Loan Seller: MSMCH   Single Asset/Portfolio: Single Asset
Original Balance(1): $110,000,000   Location: New York, NY 10017
Cut-off Date Balance(1): $110,000,000   General Property Type: Mixed Use
% of Initial Pool Balance: 10.5%   Detailed Property Type: Office/Retail
Loan Purpose: Refinance   Title Vesting: Fee
Sponsor: Joseph Moinian   Year Built/Renovated(3): 1898; 1927/2009
Mortgage Rate: 3.860%   Size: 512,171 SF
Note Date: 2/11/2015   Cut-off Date Balance per Unit(1): $605
First Payment Date: 4/6/2015   Maturity Date Balance per Unit(1): $605
Maturity Date: 3/6/2025   Property Manager: Cushman & Wakefield, Inc.
Original Term to Maturity: 120 months      
Original Amortization Term: 0 months   Underwriting and Financial Information
IO Period: 120 months   UW NOI: $19,251,651
Seasoning: 8 months   UW NOI Debt Yield(1): 6.2%
Prepayment Provisions: LO (32); DEF (84); O (4)   UW NOI Debt Yield at Maturity(1): 6.2%
Lockbox/Cash Mgmt Status: Hard/In Place   UW NCF DSCR(1): 1.37x
Additional Debt Type: Pari Passu   Most Recent NOI: $12,386,282 (12/31/2014)
Additional Debt Balance: $200,000,000   2nd Most Recent NOI: $12,171,371 (12/31/2013)
Future Debt Permitted (Type): Yes (Mezzanine/Subordinate)   3rd Most Recent NOI: $11,694,063 (12/31/2012)
Reserves(2)   Most Recent Occupancy(3): 82.2% (3/1/2015)
Type Initial Monthly Cap   2nd Most Recent Occupancy: 72.7% (2014)
RE Tax: $1,888,673 $629,558 N/A   3rd Most Recent Occupancy: 76.7% (2013)
Insurance: $0 Springing N/A   Appraised Value (as of): $630,000,000 (1/1/2015)
Deferred Maintenance: $126,764 $0 N/A   Cut-off Date LTV Ratio(1): 49.2%
Recurring Replacements: $0 $8,509 N/A   Maturity Date LTV Ratio(1): 49.2%
TI/LC: $8,094,462 $21,273 N/A      
Other: $6,909,955 $0 N/A  

 

  

Sources and Uses
Sources Proceeds % of Total   Uses Proceeds % of Total
Loan Amount(1): $310,000,000 100.0%   Loan Payoff(4): $220,106,993 71.0%
        Reserves: $17,019,854 5.5%
        Closing Costs(5): $13,251,662 4.3%
        Return of Equity: $59,621,491 19.2%
Total Sources: $310,000,000 100.0%   Total Uses: $310,000,000 100.0%

 

 

(1)The 535-545 Fifth Avenue Mortgage Loan is part of the 535-545 Fifth Avenue Non-Serviced Loan Combination, which is comprised of five pari passu notes with an aggregate Cut-off Date principal balance of $310,000,000. The Cut-off Date Balance per Unit, Maturity Date Balance per Unit, UW NOI Debt Yield, UW NOI Debt Yield at Maturity, UW NCF DSCR, Cut-off Date LTV Ratio and Maturity Date LTV Ratio numbers presented above are based on the aggregate principal balance of the promissory notes comprising the 535-545 Fifth Avenue Non-Serviced Loan Combination.

 

(2)See “—Escrows and Reserves” below for further discussion of reserve requirements. Other reserve includes $6,775,799 for free rent and $134,156 for outstanding litigation claims.

 

(3)The 535-545 Fifth Avenue Property retail space is currently under renovation, and a new lease with NBA Media Ventures, LLC commenced on December 19, 2014. The NBA tenant is in possession of its space, and the store is currently estimated to open on or about December 1, 2015.

 

(4)Loan payoff includes defeasance costs associated with a previous mortgage loan and the repayment of two mezzanine loans.

 

(5)Closing costs include approximately $7,497,538 of tenant leasing commissions paid at loan closing.

 

The Mortgage Loan. The largest mortgage loan (the “535-545 Fifth Avenue Mortgage Loan”) is part of a non-serviced loan combination (the “535-545 Fifth Avenue Non-Serviced Loan Combination”) evidenced by five pari passu promissory notes with an aggregate Cut-off Date principal balance of $310,000,000, all of which are secured by a first priority fee mortgage encumbering two adjacent office and retail buildings located in New York City (collectively, the “535-545 Fifth Avenue Property”). Promissory Note A-2, in the original principal amount of $110,000,000, represents the 535-545 Fifth Avenue Mortgage Loan, and Promissory Notes A-1, A-3, A-4 and A-5, in the aggregate original principal amount of $200,000,000, collectively represent the “535-545 Fifth Avenue Non-Serviced Companion Loan.” A portion of the 535-545 Fifth Avenue Non-Serviced Companion Loan, represented by Promissory Note A-1 in the original principal amount of $110,000,000, was contributed to the MSBAM 2015-C24 securitization trust, and the remaining portion of the 535-545 Fifth Avenue Non-Serviced Companion Loan, represented by Promissory Notes A-3, A-4 and A-5, in the aggregate original principal amount of $90,000,000, is expected to be held by Morgan Stanley Bank, N.A. or an affiliate thereof on the closing date of this transaction and may be contributed to one or more future securitization transactions or otherwise transferred at any time. The 535-545 Fifth Avenue Non-Serviced Loan Combination will be serviced pursuant to the MSBAM 2015-C24 pooling and servicing agreement. The holder of the 535-545 Fifth Avenue Mortgage Loan will be entitled to certain rights with respect to the servicing of the 535-545 Fifth Avenue Non-Serviced Loan Combination and replacement of the special servicer with respect to the 535-545 Fifth Avenue Non-Serviced Loan Combination, as described under “Description of the Mortgage Pool—The Non-Serviced Loan Combinations—The 535-545 Fifth Avenue Non-Serviced Loan Combination and “Servicing of the Mortgage Loans” in the Free Writing Prospectus.

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

T-28
 

 

MSBAM 2015-C26 535-545 Fifth Avenue

 

The proceeds of the 535-545 Fifth Avenue Mortgage Loan were primarily used to defease a previous mortgage loan secured by the 535-545 Fifth Avenue Property and to pay related expenses, totaling approximately $189,447,918, to repay two related mezzanine loans and pay expenses, totaling approximately $30,659,075, to fund reserves, to pay closing costs and to return equity to the 535-545 Fifth Avenue Borrower. The previous mortgage loan secured by the 535-545 Fifth Avenue Property was included in the CSMC 2006-C3 securitization trust.

 

The Borrower and the Sponsor. The borrower is 535-545 Fee LLC (the “535-545 Fifth Avenue Borrower”), a previously existing single-purpose Delaware limited liability company with two independent directors. The 535-545 Fifth Avenue Borrower is majority indirectly owned and controlled by Joseph Moinian (54.5%), the nonrecourse carve-out guarantor, and Morad Ghadamian (28.3%).

 

Joseph Moinian is the CEO of The Moinian Group, a privately held New York City based real estate firm founded in 1982. The Moinian Group reports ownership positions in a portfolio in excess of 20 million SF of commercial real estate across major cities including New York, Chicago, Dallas and Los Angeles. Morad Ghadamian is a real estate investor and President of the Marjan International Corporation, a New York City based home furnishings company specializing in floor coverings.

 

The Property. The 535-545 Fifth Avenue Property consists of two adjacent office and retail buildings located on Fifth Avenue, together spanning the entire block from East 44th Street to East 45th Street in New York, New York and totaling approximately 512,171 SF. Office space totals approximately 415,440 SF, retail space totals approximately 91,247 SF of street-level, lower-level and second-floor space, storage space totals approximately 3,781 SF, and miscellaneous space, including the management office, totals approximately 1,703 SF. 535 Fifth Avenue is a 36-story building constructed in 1927, and 545 Fifth Avenue is a 14-story building constructed in 1898. The two buildings are operated as a single property. The 535-545 Fifth Avenue Property is currently undergoing a retail redevelopment with an $11.0 million total budget. The redevelopment consists of reconfiguring the 535-545 Fifth Avenue Property retail space into four multi-level retail spaces with the inclusion of below-grade and second-floor space, and the installation of a new glass front façade.

 

A portion of the 535-545 Fifth Avenue Property retail space is currently undergoing a renovation to accommodate the 25,562 SF lease (5.0% of the net square footage) with NBA Media Ventures, LLC (the “NBA Lease”). The NBA Lease commenced on December 19, 2014, and the store is currently expected to open on or about December 1, 2015. Additionally, there are four retail tenants, representing approximately 7.9% of the net square footage, that occupy the 535-545 Fifth Avenue Property retail spaces on a short-term basis. Duane Reade, 5th Avenue Art & Antiques and Barami International Fashion each leases retail space at the 535-545 Fifth Avenue Property on a short-term basis or gives the 535-545 Fifth Avenue Borrower the option to terminate with a limited notice period. The lease to 545 Fifth Avenue Bake LLC can be terminated by the 535-545 Fifth Avenue Borrower for a cost of $1,700,000 with 60 days’ notice. The 535-545 Fifth Avenue Borrower is actively marketing these retail spaces to tenants at current market rental rates. The loan is structured with an upfront leasing reserve of $8,094,462 to pay the estimated costs associated with leasing these four retail spaces. See “—Escrows and Reserves” below for further discussion of reserves.

 

Major Tenants (by underwritten base rents).

 

NBA (25,562 SF, 5% of NRA, 26% of underwritten rent). NBA Media Ventures, LLC (“NBA”) leases 25,562 SF of retail space at the 535-545 Fifth Avenue Property. The space is on street level (4,010 SF), on the second floor (8,744 SF) and below grade (12,808 SF). The lease began on December 19, 2014, and has a current expiration date of December 31, 2035, with one five-year lease renewal option. There is a tenant termination option effective December 18, 2030, with 12 months of prior notice and payment of a termination fee equal to $1,142,945. The NBA will utilize the space as a NBA-related merchandise store. The store is currently scheduled to open on or about December 1, 2015. The information regarding the NBA Lease contained herein is subject to confidentiality provisions that require the related borrower and such tenant to keep the terms of the lease confidential (subject to certain exceptions, including an exception that permits the transaction parties to make disclosure of the terms of such lease in connection with this securitization).

 

Duane Reade (13,905 SF, 3% of NRA, 5% of underwritten rent). Duane Reade, Inc. (“Duane Reade”) currently leases 5,142 SF of ground-floor retail space and 8,763 SF of mezzanine retail space at the 535-545 Fifth Avenue Property. The lease began on August 1, 1999, expired on May 31, 2015, and was then extended for two years to May 31, 2017, with the right of either party to terminate the lease at any time with 90 days’ prior notice and without a termination fee. Duane Reade currently pays a base rental rate of $129.45 PSF. Underwriting is based on the prior rent of $103.55 PSF. The appraiser’s estimate of the market rent for the ground-floor space is currently $850 PSF, and the appraiser’s estimate of second-floor retail space is $200 PSF. The 535-545 Fifth Avenue Borrower is marketing the Duane Reade space to alternative tenants at a market rental rate. No assurance can be given that the appraiser’s estimate of market rent will be achieved with an alternative tenant. Duane Reade currently operates over 250 stores in New York. Duane Reade is a subsidiary of Walgreens Boots Alliance (NASDAQ: WBA).

 

Laboratory Institute of Merchandising (30,160 SF, 6% of NRA, 4% of underwritten rent). Laboratory Institute of Merchandising (“LIM”) College leases 30,160 SF of office space, pursuant to two separate leases, at the 535-545 Fifth Avenue Property. The leases began on May 1, 2006 and May 10, 2006, and both have a current expiration date of May 31, 2021. LIM is a private college that was founded in 1939 and which offers degrees in various aspects of the fashion industry. For the Fall 2014 term, the college enrolled approximately 1,552 undergraduate students and 185 graduate students.

  

Penton Learning Systems (27,153 SF, 5% of NRA, 4% of underwritten rent). Penton Learning Systems (“Penton”) leases 27,153 SF of office space at the 535-545 Fifth Avenue Property. The lease began on January 20, 2005, was expanded on May 9, 2005 and on April 26, 2007, and has a current expiration date of May 31, 2025. Penton, which does business as the International Quality and Productivity Center, designs and develops short courses/seminars in the fields of quality management, project management, and strategic planning and implementation.

 

5th Avenue Art & Antiques (16,631 SF, 3% of NRA, 4% of underwritten rent). 5th Avenue Art & Antiques leases 4,321 SF of ground-floor retail space and 12,310 SF of subgrade retail space at the 535-545 Fifth Avenue Property. The current lease began on January 1, 2014 on a month to month basis. 5th Avenue Art & Antiques currently pays a base rental rate of $72.15 PSF, the appraiser’s estimate of market rent for the ground-floor space is currently $850 PSF and the appraiser’s estimate of market rent for the subgrade retail space is $150 PSF. The 535-545 Fifth Avenue Borrower is marketing the 5th Avenue Art & Antiques space to alternative tenants at a market rental rate. No assurance can be given that the appraiser’s estimate of market rent will be achieved with an alternative tenant.

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

T-29
 

 

MSBAM 2015-C26 535-545 Fifth Avenue

 

The following table presents a summary regarding the largest tenants at the 535-545 Fifth Avenue Property:

 

Tenant Summary
Tenant Name Credit Rating (Fitch/Moody’s/
S&P)
Tenant SF Approximate
% of SF
Annual UW Rent % of Total
Annual UW
Rent
Annual UW
Rent PSF(1)
Lease
Expiration
Anchor/Major Tenants              
Laboratory Institute of Merchandising NR/NR/NR 30,160 6% $1,296,880 4% $43.00 5/31/2021
Penton Learning Systems NR/NR/NR 27,153 5% $1,221,885 4% $45.00 5/31/2025
NBA(2) NR/NR/NR 25,562(3) 5% $7,500,000 26% $293.40 12/31/2035(4)
Gardiner & Theobald Inc. NR/NR/NR 22,737 4% $1,037,850 4% $45.65 8/7/2025(5)
Empire Offices 535 Holdings NR/NR/NR 19,096 4% $853,400 3% $44.69 8/31/2021
Subtotal/Wtd. Avg.   124,708 24% $11,910,016 41% $95.50  
               
Other Tenants   296,143 58% $17,262,684 59% $58.29  
Vacant Space   91,320 18% $0 0% $0.00  
Total/Wtd. Avg.   512,171 100% $29,172,699 100% $69.32  

 

 

(1)Wtd. Avg. Annual UW Rent PSF excludes vacant space.

 

(2)The NBA tenant is not yet in occupancy. The tenant has possession of its space and is expected to open on or about December 1, 2015.

 

(3)The NBA space is comprised of approximately 4,010 SF of ground-floor retail space, 8,744 SF of second-floor retail space and 12,808 SF of below-grade retail space.

 

(4)The NBA tenant has a lease termination option effective December 18, 2030 with 12 months’ notice and payment of a termination fee.

 

(5)Gardiner & Theobald Inc. Tenant SF includes 3,785 SF of space that expires on August 23, 2025.

 

The following table presents certain information relating to the lease rollover at the 535-545 Fifth Avenue Property:

 

Lease Rollover Schedule(1)(2)
Year No. of
Leases
Rolling
SF Rolling UW Rent PSF
Rolling(3)
Approx. % of
Total SF
Rolling
Approx. Cumulative % of SF Rolling Total UW Rent
Rolling
Approx. % of
Total Rent
Rolling
Approx. Cumulative %
of Total Rent Rolling
MTM 15 36,961 $77.26 7% 7% $2,855,469 10% 10%
2015 6 10,265 $78.70 2% 9% $807,855 3% 13%
2016 5 14,850 $58.40 3% 12% $867,189 3% 16%
2017 13 56,254 $65.87 11% 23% $3,705,697 13% 28%
2018 6 18,652 $55.46 4% 27% $1,034,347 4% 32%
2019 10 30,762 $50.77 6% 33% $1,561,741 5% 37%
2020 13 41,031 $48.71 8% 41% $1,998,753 7% 44%
2021 4 54,089 $44.15 11% 51% $2,388,016 8% 52%
2022 3 25,219 $50.66 5% 56% $1,277,701 4% 57%
2023 5 19,896 $51.43 4% 60% $1,023,298 4% 60%
2024 4 17,773 $50.91 3% 64% $904,856 3% 63%
2025 10 67,785 $46.76 13% 77% $3,169,552 11% 74%
2026 0 0 $0.00 0% 77% $0 0% 74%
2027 0 0 $0.00 0% 77% $0 0% 74%
2028 & Beyond 4 27,314 $277.45 5% 82% $7,578,227 26% 100%
Vacant 0 91,320 $0.00 18% 100% $0 0% 100%
Total/Wtd. Avg. 98 512,171 $69.32 100.0%   $29,172,699 100.0%  

 

 

(1)Information is based on the underwritten rent roll as of the August 1, 2015 Cut-off Date for the MSBAM 2015-C24 securitization trust.

 

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

 

(3)Wtd. Avg. UW Rent PSF Rolling excludes vacant space.

 

The Market. The 535-545 Fifth Avenue Property is located in New York, New York, within the Grand Central office submarket of Midtown, Manhattan, on Fifth Avenue between East 44th and East 45th Streets, and within the Lower Fifth Avenue retail submarket. As of September 30, 2014, the overall midtown office vacancy rate was 11.0%, and the weighted-average asking rent was $73.72 PSF. As of September 30, 2014, the Grand Central submarket overall vacancy rate was 12.0%, and the weighted-average asking rent was $62.98 PSF.

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

T-30
 

 

MSBAM 2015-C26 535-545 Fifth Avenue

 

The following table presents leasing data at seven directly competitive office properties with respect to the 535-545 Fifth Avenue Property:

 

Directly Competitive Property Summary
Property Office Area (NRA) Direct Available SF Sublease Available SF % Occupied (Direct) % Occupied (Total)

Direct Asking Rent 

Low to High 

500 Fifth Avenue 600,813 25,399 0 95.77% 95.77% N/A N/A
521 Fifth Avenue 339,901 14,377 0 95.77% 95.77% $68.00 $75.00
529 Fifth Avenue 237,408 15,548 0 93.45% 93.45% $55.00 $55.00
551 Fifth Avenue 305,000 32,987 6,909 89.18% 86.92% $60.00 $68.00
485 Madison Avenue 264,000 73,775 0 72.05% 72.05% $54.00 $54.00
501 Madison Avenue 169,000 17,148 0 89.85% 89.85% $57.00 $68.00
11 West 42nd Street 744,770 0 0 100.0% 100.0% N/A N/A
Total 2,660,892 179,234 6,909        
Average 380,127 25,605 987 93.26% 93.0% $54.00 $75.00

 

 

Source: Appraisal

 

In addition to the above comparable office properties, the appraisal provides seven comparable retail leases on Fifth Avenue between 45th and 49th Streets. The comparable retail lease rates range from $738 PSF to $1,200 PSF for ground-floor space. The comparable subgrade retail rents range from $25 PSF to $100 PSF, excluding one basement space that was included at no additional cost. Second-floor comparable retail rents range from $60 PSF to $200 PSF.

 

Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and the Underwritten Net Cash Flow at the 535-545 Fifth Avenue Property: 

                   
  Cash Flow Analysis
  2010 2011 2012 2013 2014 Assumed
with

Retail Space
“Marked to
Market”(1)
UW UW PSF
Base Rent $23,641,463 $17,675,029 $19,443,274 $20,259,243 $26,939,680 $49,526,495 $29,718,569 $58.02
Total Recoveries $4,938,359 $3,804,669 $3,824,979 $3,761,644 $3,200,556 $3,689,298 $3,689,298 $7.20
Other Income $0 $0 $0 $0 $437,913 $338,889 $338,889 $0.66
Discounts Concessions $0 $0 $0 $0 ($983,217) $0 $0 $0.00
Less Vacancy & Credit Loss

$0

$0

$0

$0

($4,917,127)

($2,056,039)

$0

$0.00

Effective Gross Income $28,579,822 $21,479,698 $23,268,253 $24,020,887 $24,677,806 $51,498,643 $33,746,755 $65.89
Total Expenses

$12,118,406

$11,977,467

$11,574,190

$11,849,516 

$12,291,524

$14,495,105

$14,495,104

$28.30

Net Operating Income $16,461,416 $9,502,231 $11,694,063 $12,171,371 $12,386,282 $37,003,538 $19,251,651 $37.59
Capital Expenditures $0 $0 $0 $0 $0 $174,138 $174,138 $0.34
TI/LC

$0

$0

$0

$0

$0

$2,485,201

$2,485,201

$4.85

Net Cash Flow $16,461,416 $9,502,231 $11,694,063 $12,171,371 $12,386,282 $34,344,199 $16,592,312 $32.40
                 
Occupancy % 85.0% 76.2% 76.2% 76.7% 72.7% 87.0% 82.2%  
NOI DSCR 1.36x 0.78x 0.96x 1.00x 1.02x 3.05x  1.59x  
NCF DSCR 1.36x 0.78x 0.96x 1.00x 1.02x 2.83x 1.37x  
NOI Debt Yield 5.3% 3.1% 3.8% 3.9% 4.0% 11.9% 6.2%  
NCF Debt Yield 5.3% 3.1% 3.8% 3.9% 4.0% 11.1% 5.4%  
Average Annual Rent PSF(2) $54.65 $45.21 $48.93 $50.58 $58.02 $106.48 $70.62  

 

 

(1)The 535-545 Fifth Avenue Property retail space is currently undergoing a redevelopment. Four in-place retail tenants (Duane Reade, 5th Avenue Art & Antiques, 545 Fifth Avenue Bakery (“Europa Café”) and Barami International Fashion) currently pay rents that are substantially below the appraiser’s estimate of current market rents. The spaces associated with these four tenants are “Marked to Market” for informational purposes only. The appraiser’s estimate of market rent may or may not be achieved. A comparison of the current annual contractual rent for each of these tenants and the currently vacant retail space to the appraiser’s estimate of current market annual base rent is provided immediately below:

                 
      Current Total Annual Base Rent   Appraiser’s Estimate of Total Annual Market Base Rent  
  Duane Reade   $1,800,000     $6,123,300    
  5th Avenue Art & Antiques   $1,200,000     $5,519,350    
  545 Fifth Avenue Bakery (“Europa Café”)   $500,004     $5,107,200    
  Barami International Fashion   $660,000     $2,553,800    
  Vacant Second Floor and Mezzanine Retail (24,985 SF)   $0     $4,772,550    
                 
  Total:   $4,160,004     $24,076,200    

  

(2)Average Annual Rent PSF is based on the historical financials and the occupied SF according to 535-545 Fifth Avenue Borrower provided occupancy reports. Vacant space is excluded from the calculation. The “Marked to Market” column Average Annual Rent PSF assumes the current occupancy plus approximately 24,985 SF of currently vacant retail space marked as occupied for a total assumed occupancy of 87.0% divided into the “Marked to Market” base rent net of vacancy.

 

Escrows and Reserves. The 535-545 Fifth Avenue Borrower deposited $1,888,673 in escrow for annual real estate taxes at loan origination and is required to escrow monthly 1/12 of the annual estimated tax payments. The 535-545 Fifth Avenue Borrower is required to escrow monthly 1/12 of the annual estimated insurance premiums (unless the 535-545 Fifth Avenue Borrower maintains insurance under an acceptable blanket insurance policy). The 535-545 Fifth Avenue Borrower is required to make monthly deposits of $8,509 for replacement reserves. The 535-545 Fifth Avenue Borrower

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

T-31
 

 

MSBAM 2015-C26 535-545 Fifth Avenue

 

deposited in escrow at loan origination $8,094,462 (of which approximately $4,403,966 remains in such reserve) and is required to make monthly deposits of $21,273 for TI/LC reserves. The 535-545 Fifth Avenue Borrower deposited in escrow at loan origination $126,764 for certain immediate repairs. The 535-545 Fifth Avenue Borrower also (x) deposited in escrow $6,775,799 at loan origination for future rent credits or abatements under existing leases listed on a schedule attached to the 535-545 Fifth Avenue Mortgage Loan agreement, including $5,000,000 of remaining (as of loan closing) free rent associated with the NBA Lease (of which approximately $1,424,219 remains in such reserve), which amount is required to be disbursed into the lockbox account as such rent credits and abatements under existing leases are utilized and (y) deposited in escrow $134,156 at loan origination (of which approximately $87,620 remains) for outstanding litigation claims against the 535-545 Fifth Avenue Borrower and/or Mr. Joseph Moinian (“535-545 Fifth Avenue Guarantor”) set forth on a schedule attached to the 535-545 Fifth Avenue Mortgage Loan agreement, which amount is required to be disbursed to either (a) the 535-545 Fifth Avenue Borrower upon the applicable claim being satisfied or resolved in favor of the 535-545 Fifth Avenue Borrower and/or 535-545 Fifth Avenue Guarantor or (b) the applicable claimant.

 

Lockbox and Cash Management. A hard lockbox is in place with respect to the 535-545 Fifth Avenue Mortgage Loan. The 535-545 Fifth Avenue Mortgage Loan has in-place cash management. Funds in the lockbox account are applied on each monthly payment date to pay debt service on the 535-545 Fifth Avenue Non-Serviced Loan Combination, to fund required deposits to the reserves as described above under “—Escrows and Reserves,” to disburse, during a Cash Sweep Event Period to the 535-545 Fifth Avenue Borrower, (a) the operating expenses for the operation and maintenance of the 535-545 Fifth Avenue Property as set forth in the annual budget approved by the lender to the extent that such expenses are actually incurred by the 535-545 Fifth Avenue Borrower (excluding payments into the reserves as described above under “—Escrows and Reserves” or any other expenses for which the 535-545 Fifth Avenue Borrower is required to be reimbursed from or which are required to be paid out of such reserves) and (b) any extraordinary operating or capital expenses not set forth in such annual budget or allotted for in such reserves and reasonably approved by the lender, and to disburse any excess to the 535-545 Fifth Avenue Borrower; provided, that if a Cash Sweep Event Period has occurred and is continuing, then any excess will be remitted to an account to be held by the lender as additional security for the 535-545 Fifth Avenue Non-Serviced Loan Combination.

 

A “Cash Sweep Event Period” will

 

(i)commence upon the occurrence of an event of default under the 535-545 Fifth Avenue Mortgage Loan and continue until the acceptance by the lender under the 535-545 Fifth Avenue Mortgage Loan of a cure of such event of default, or

 

(ii)commence upon the debt yield (based solely on the 535-545 Fifth Avenue Non-Serviced Loan Combination) being less than 5% for two consecutive calendar quarters and continue until such debt yield equals or exceeds 5% for two consecutive calendar quarters.

 

Property Management. The 535-545 Fifth Avenue Property is managed by Cushman & Wakefield, Inc. on a month-to-month basis until terminated by either party upon 60 days’ prior notice. The 535-545 Fifth Avenue Borrower may change management companies at any time and may engage a 535-545 Fifth Avenue Borrower-related management company.

 

Additional Secured Indebtedness (not including trade debts). The 535-545 Fifth Avenue Property also secures the 535-545 Fifth Avenue Non-Serviced Companion Loan, which has a Cut-off Date principal balance of $200,000,000. A portion of the 535-545 Fifth Avenue Non-Serviced Companion Loan was contributed to the MSBAM 2015-C24 securitization trust, and the remaining portion of the 535-545 Fifth Avenue Non-Serviced Companion Loan is expected to be held by Morgan Stanley Bank, N.A. or an affiliate thereof on the closing date of this transaction and may be contributed to one or more future securitization transactions or otherwise transferred at any time. The promissory notes evidencing the 535-545 Fifth Avenue Non-Serviced Companion Loan accrue interest at the same rate as the 535-545 Fifth Avenue Mortgage Loan. The 535-545 Fifth Avenue Mortgage Loan is entitled to payments of principal and interest on a pro rata and pari passu basis with the 535-545 Fifth Avenue Non-Serviced Companion Loan. The holders of the 535-545 Fifth Avenue Mortgage Loan and the 535-545 Fifth Avenue Non-Serviced Companion Loan have entered into a co-lender agreement which sets forth the allocation of collections on the 535-545 Fifth Avenue Non-Serviced Loan Combination. See “Description of the Mortgage Pool—The Non-Serviced Loan Combinations—The 535-545 Fifth Avenue Non-Serviced Loan Combination,” and “Servicing of the Mortgage Loans in the Free Writing Prospectus.

 

A single subordinate mortgage loan secured by the 535-545 Fifth Avenue Property (such loan, the “Permitted Subordinate Debt”) is permitted subject to various conditions, including, among other conditions, (i) no event of default exists, (ii) the maximum principal amount of the Permitted Subordinate Debt does not exceed $100,000,000, (iii) no Permitted Mezzanine Debt (as defined below) exists, (iv) the principal amount of the Permitted Subordinate Debt will not result in an aggregate LTV ratio greater than the lesser of (x) 49% and (y) the LTV ratio based upon a new appraisal dated no more than 30 days before the closing of the Permitted Subordinate Debt and the then outstanding debt, an aggregate DSCR less than 1.56x or an aggregate debt yield less than 5.04%, (v) the subordinate mortgage lender shall be an entity which satisfies certain net worth and other criteria set forth in the loan documents and shall enter into an intercreditor and standstill agreement reasonably acceptable to the lender under the 535-545 Fifth Avenue Mortgage Loan and acceptable to the rating agencies, (vi) the term of the Permitted Subordinate Debt is at least co-terminous with the 535-545 Fifth Avenue Mortgage Loan and all other terms, provisions and conditions of the Permitted Subordinate Debt, including the related loan documents, are reasonably acceptable to the lender under the 535-545 Fifth Avenue Mortgage Loan, (vii) if the Permitted Subordinate Debt is a floating-rate loan, the borrower shall purchase an interest rate cap with a notional amount equal to the original principal balance of the Permitted Subordinate Debt and a strike price such that the aggregate DSCR is not less than 1.56x and (viii) the 535-545 Fifth Avenue Borrower shall deliver a rating agency confirmation as to the Permitted Subordinate Debt and, if required by the lender under the 535-545 Fifth Avenue Mortgage Loan, an updated substantive non-consolidation legal opinion.

 

Mezzanine Loan and Preferred Equity. A single mezzanine loan secured by a pledge of 100% of the ownership interests in the 535-545 Fifth Avenue Borrower (such loan, the “Permitted Mezzanine Debt”) is permitted subject to various conditions, including, among other conditions, (i) no event of default exists, (ii) the maximum principal amount of the Permitted Mezzanine Debt does not exceed $100,000,000, (iii) no Permitted Subordinate Debt exists, (iv) the principal amount of the Permitted Mezzanine Debt will not result in an aggregate LTV ratio greater than the lesser of 49% and the LTV ratio based upon a new appraisal dated no more than 30 days before the closing of the Permitted Mezzanine Debt and the then outstanding debt, an aggregate DSCR less than 1.56x or an aggregate debt yield less than 5.04%, (v) the mezzanine lender shall be an entity which satisfies certain net worth and other criteria set forth in the loan documents and shall enter into an intercreditor agreement reasonably acceptable to the lender under the 535-545 Fifth Avenue Mortgage Loan, (vi) the term of the Permitted Mezzanine Debt is at least co-terminous with the 535-545 Fifth Avenue Mortgage Loan and all other terms, provisions and conditions of the Permitted Mezzanine Debt, including the related loan documents, are reasonably acceptable to the lender under the 535-545 Fifth Avenue Mortgage Loan, (vii) if the Permitted Mezzanine Debt is a floating-rate loan, the borrower shall purchase an interest rate cap with a notional amount equal to the original principal balance of the Permitted Mezzanine Debt and a strike price such that the aggregate DSCR is not less than 1.56x and (viii) the 535-545 Fifth Avenue Borrower shall deliver, if required by the lender under the 535-545 Fifth Avenue Mortgage Loan, an updated substantive non-consolidation legal opinion.

 

Release of Property. Not permitted.

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

T-32
 

 

MSBAM 2015-C26 535-545 Fifth Avenue

 

Terrorism Insurance. The 535-545 Fifth Avenue Borrower is required to obtain insurance against acts of terrorism or other similar acts or events (or “fire following”) to the extent such insurance is available in form and substance reasonably satisfactory to lender (but in no event more than the sum of 100% of full replacement cost and 12 months of business interruption insurance). Notwithstanding the foregoing, for so long as the Terrorism Risk Insurance Program Reauthorization Act of 2007 (or any extension thereof or other federal government program with substantially similar protection) is in effect, the 535-545 Fifth Avenue Borrower is required to maintain, and lender is required to accept, terrorism insurance which covers “covered acts” (as defined by such statute or other program), as full compliance as it relates to the risks required to be covered pursuant to the preceding sentence, so long as such statute or other program covers both domestic and foreign acts of terrorism.

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

T-33
 

 

MSBAM 2015-C26 Herald Center

 

Mortgage Loan No. 2 – Herald Center

 

 (GRAPHIC)

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

T-34
 

 

MSBAM 2015-C26 Herald Center

  

Mortgage Loan No. 2 – Herald Center

 

 (MAP)

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

T-35
 

 

MSBAM 2015-C26 Herald Center

 

Mortgage Loan No. 2 – Herald Center

  

Mortgage Loan Information   Mortgaged Property Information
Mortgage Loan Seller: MSMCH   Single Asset/Portfolio: Single Asset
Original Balance(1): $100,000,000   Location: New York, NY 10001
Cut-off Date Balance(1): $100,000,000   General Property Type: Mixed Use
% of Initial Pool Balance: 9.5%   Detailed Property Type: Retail/Office
Loan Purpose: Refinance   Title Vesting: Fee
Sponsor: J.E.M.B. Realty Corp.   Year Built/Renovated: 1902/2015
Mortgage Rate: 4.510%   Size: 249,063 SF
Note Date: 12/20/2013   Cut-off Date Balance per Unit(1): $1,024
First Payment Date: 2/7/2014   Maturity Date Balance per Unit(1): $1,024
Maturity Date: 1/7/2024   Property Manager: J.E.M.B. Realty Corp. (borrower related)
Original Term to Maturity: 120 months    
Original Amortization Term: 0 months   Underwriting and Financial Information
IO Period: 120 months   UW NOI: $23,204,073
Seasoning(2): 22 months   UW NOI Debt Yield(1): 9.1%
Prepayment Provisions(3): LO (41); DEF (72); O (7)   UW NOI Debt Yield at Maturity(1): 9.1%
Lockbox/Cash Mgmt Status: Hard/Springing   UW NCF DSCR(1): 1.94x
Additional Debt Type: Pari Passu/Mezzanine   Most Recent NOI: $410,823 (4/30/2015 TTM)
Additional Debt Balance: $155,000,000/$40,000,000 (up to)   2nd Most Recent NOI: $850,169 (12/31/2014)
Future Debt Permitted (Type): Yes (Mezzanine)   3rd Most Recent NOI: $5,054,373 (12/31/2013)
Reserves(4)   Most Recent Occupancy: 96.6% (6/12/2015)
Type Initial Monthly Cap   2nd Most Recent Occupancy: 74.1% (12/31/2014)
RE Tax: $0 Springing N/A   3rd Most Recent Occupancy: 67.5% (12/31/2013)
Insurance: $0 Springing N/A   Appraised Value (as of): $572,000,000 (6/29/2015)
Recurring Replacements: $0 Springing N/A   Cut-off Date LTV Ratio(1): 44.6%
Other: $48,000,000 $0 N/A   Maturity Date LTV Ratio(1): 44.6%
               

 

Sources and Uses
Sources Proceeds % of Total   Uses Proceeds % of Total
Loan Amount: $255,000,000 100.0%   Loan Payoff: $120,960,667 47.4%
        Preferred Equity Redemption: $51,585,830 20.2%
        Reserves(4): $48,000,000 18.8%
        Closing Costs: $9,662,644 3.8%
        Return of Equity: $24,790,859 9.7%
Total Sources: $255,000,000 100.0%   Total Uses: $255,000,000 100.0%

 

 
(1)The Herald Center Mortgage Loan is part of the Herald Center Non-Serviced Loan Combination, which is comprised of four pari passu promissory notes with an aggregate Cut-off Date principal balance of $255,000,000. The Cut-off Date Balance per Unit, Maturity Date Balance per Unit, UW NOI Debt Yield, UW NOI Debt Yield at Maturity, UW NCF DSCR, Cut-off Date LTV Ratio and Maturity Date LTV Ratio numbers presented above are based on the aggregate principal balance of the promissory notes comprising the Herald Center Non-Serviced Loan Combination.
(2)The Herald Center Mortgage Loan was originated in December 2013, prior to occupancy by the H & M tenant. The mortgage loan has been held by the related mortgage loan seller or an affiliate thereof pending the H & M tenant taking occupancy at the Herald Center Property and commencing to pay rent. H & M rent payments commenced in August 2015.
(3)Defeasance is permitted at any time on or after the earlier of (a) the end of the two-year period commencing on the securitization closing date with respect to the last Herald Center promissory note to be securitized and (b) 42 months after the origination date.
(4)See “—Escrows and Reserves” below for further discussion of reserve requirements. Substantially all of the reserves held at loan closing have been released to the Herald Center Borrower.

 

The Mortgage Loan. The second largest mortgage loan (the “Herald Center Mortgage Loan”) is part of a non-serviced loan combination (the “Herald Center Non-Serviced Loan Combination”) evidenced by four pari passu promissory notes with an aggregate Cut-off Date principal balance of $255,000,000, all of which are secured by a first priority fee mortgage encumbering a retail and office building located in New York City (the “Herald Center Property”). Promissory Note A-1, in the original principal amount of $100,000,000, represents the Herald Center Mortgage Loan, and Promissory Notes A-2, A-3 and A-4, in the aggregate original principal amount of $155,000,000, collectively represent the “Herald Center Non-Serviced Companion Loan.” A portion of the Herald Center Non-Serviced Companion Loan, represented by Promissory Notes A-2 and A-4 in the aggregate original principal amount of $115,000,000, was contributed to the MSBAM 2015-C25 securitization trust on the closing date of this transaction, and the remaining portion of the Herald Center Non-Serviced Companion Loan, represented by Promissory Note A-3 in the original principal amount of $40,000,000, is expected to be held by Morgan Stanley Bank, N.A. or an affiliate thereof on the closing date of this transaction and may be contributed to one or more future securitization transactions or otherwise transferred at any time. The Herald Center Non-Serviced Loan Combination will be serviced pursuant to the MSBAM 2015-C25 pooling and servicing agreement. See “Description of the Mortgage Pool—The Non-Serviced Loan Combinations—The Herald Center Non-Serviced Loan Combination” and “Servicing of the Mortgage Loans” in the Free Writing Prospectus.

 

The proceeds of the Herald Center Mortgage Loan were used to defease a previous mortgage loan secured by the Herald Center Property and pay related expenses, to fund reserves, to pay closing costs and to return equity to the Herald Center Borrower. The previous mortgage loan secured by the Herald Center Property was included in the BACM 2006-3 securitization trust.

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

T-36
 

 

MSBAM 2015-C26 Herald Center

 

The Borrower and the Sponsor. The borrower is Herald Center Department Store of New York LLC (the “Herald Center Borrower”), a previously existing single-purpose Delaware limited liability company with two independent directors. The Herald Center Borrower is partially indirectly owned and controlled by Morris Bailey and Joseph L. Jerome. Joseph L. Jerome serves as the nonrecourse carve-out guarantor. Morris Bailey is the founder and Chairman of J.E.M.B. Realty Corp. (“JEMB”) and Joseph L. Jerome is its President. JEMB is a New York City based real estate development company that, along with affiliates, owns and operates approximately 6.5 million SF of commercial real estate in the United States and Canada.

 

Tenant/Borrower Litigation. On May 7, 2015, the Herald Center Borrower and H & M Hennes & Mauritz L.P. (“H & M”) (the second largest tenant at the Herald Center Property) filed lawsuits against each other in the Supreme Court of New York, New York County (Index Nos. 651558/2015 and 65166/2015, respectively).

 

The Herald Center Borrower’s suit seeks reimbursement from H & M for the cost of certain façade and vertical transportation work in excess of the amount that the Herald Center Borrower claims it was required to expend for such work under the terms of the H & M lease. The suit seeks damages of not less than $25,000,000.

 

H & M’s suit includes claims for potential defective landlord work and other storefront work lease compliance issues. Total damages claimed by H & M with respect to such claims are in excess of $13 million. H & M’s suit also claims that, as a result of certain delays in the performance of the Herald Center Borrower’s work obligations, H & M is entitled to an extension of the rent commencement date by 112 days, for a total abatement at the time of the suit filing of approximately $4,602,740, and continuing at a rate of approximately $41,096 per day.

 

On August 4, 2015, H & M and the Herald Center Borrower reached an agreement to pay and accept base rent payments pending litigation results or an alternative settlement (the “Alternative Settlement Agreement”). The Alternative Settlement Agreement calls for H & M to pay contractual base rent beginning on August 14, 2015, under protest, and acknowledges that H & M’s payment of rent and the Herald Center Borrower’s acceptance of such rent payments must not be construed as an admission regarding any disputed issue or be admissible in evidence at trial or as part of a dispositive motion. In accordance with the Alternative Settlement Agreement, a rent payment was made on August 14, 2015, a second rent payment was made (in respect of September 2015 rent) on August 25, 2015, and a third rent payment was made (in respect of October 2015 rent) on October 5, 2015.

 

The H & M store opened for business on May 20, 2015.

 

The Property. The Herald Center Property is a nine-story retail and office building located directly across West 34th Street from the 2 million SF Macy’s Herald Square department store. The Herald Center Property totals 249,063 SF and was originally constructed in 1902. Retail space accounts for approximately 82,593 SF, including a multilevel (subgrade, ground, second and third floors) H & M flagship store (62,800 SF), ground-level and mezzanine space leased to Verizon and Bank of America (11,793 SF) and currently vacant subgrade retail space (8,000 SF). The 165,494 SF of upper-floor office space is 100% leased to ASA College. The Herald Center Property recently underwent an approximately $36.2 million renovation to create the multilevel H & M space, including new vertical transportation features, and to construct a new façade. Prior to the renovation for the H & M tenant, the Herald Center Borrower purchased the leasehold interests of a former tenant, Daffy’s, Inc., for approximately $34.5 million, including approximately $4.5 million of Daffy’s rent reimbursements, commissions, Daffy’s incentive and option payments and legal fees, during such former tenant’s bankruptcy proceedings.

 

Major Tenants (by underwritten base rents).

 

H & M (62,800 SF, 25% of NRA, 49% of underwritten rent). H & M Hennes & Mauritz L.P., a subsidiary of H & M Hennes & Mauritz AB (“H & M”) leases 62,800 SF of retail space on four levels at the Herald Center Property. The lease began on April 1, 2014 and has a current expiration date of January 31, 2041, with one five-year lease extension option. H & M has a lease termination right at any time after January 1, 2036 (expiration of the 20th lease year as defined by the lease) with two years of notice and payment of a termination fee equal to six months of the then current minimum rent. The H & M space includes 8,000 SF of ground-floor space, 42,784 SF of second- and third-floor space and 12,016 SF of basement space. See “—Tenant/Borrower Litigation” above for information regarding current litigation between H & M and the Herald Center Borrower. No assurances can be given regarding the outcome of this litigation or any alternative settlement or its impact on the terms of the H & M lease at the Herald Center Property. H & M (NASDAQ: H&M B OMX Stockholm) comprises six different apparel brands operating approximately 3,600 stores around the world.

 

ASA College (165,494 SF, 66% of NRA, 26% of underwritten rent). ASA Institute of Business and Computer Technology, Inc. (“ASA College”) leases a total of 165,494 SF of office space at the Herald Center Property. The current lease began on May 1, 2004, was expanded and renewed on May 1, 2014, and has a current expiration date of June 15, 2028. The lease replaced a previous lease for space at the Herald Center Property dated in 2004. In conjunction with the recent renovation of the Herald Center Property primarily to accommodate the H & M tenant, the ASA College tenant was moved from its original space within the Herald Center Property and the current lease was executed. ASA College, a private, for profit, career-college, was founded in 1985 as Advanced Software Analysis focused on computer programming. The school currently operates three campuses in New York City and Miami, including the Herald Center Property location. ASA College utilizes its Herald Center Property space as administrative office and classroom space.

 

Verizon (6,500 SF, 3% of NRA, 19% of underwritten rent). New York SMSA Limited Partnership (“Verizon”) leases 6,500 SF of ground-floor and mezzanine retail space at the Herald Center Property. The lease began on April 15, 2015 and has a current expiration date of October 31, 2025, with one five-year lease extension option. Verizon is a subsidiary of Verizon Communications Inc. (NYSE, NASDAQ: VZ).

 

This is not a research report and was not prepared by the Underwriters’ research departments. Please see additional important information and qualifications at the end of this Term Sheet.

T-37
 

 

MSBAM 2015-C26 Herald Center

 

The following table presents a summary regarding the largest tenants at the Herald Center Property:

 

Tenant Summary
Tenant Name Credit Rating
(Fitch/Moody’s/S&P)(1)
Tenant
SF
Approximate
% of SF
Annual UW
Rent
% of Total
Annual UW
Rent
Annual UW
Rent PSF
Lease
Expiration
2014
Sales
PSF
Anchor/Major Tenants                
ASA College NR/NR/NR 165,494 66% $7,774,883 26% $46.98 6/15/2028 N/A
H & M NR/NR/NR 62,800 25% $15,000,000 49% $238.85 1/31/2041(2) N/A(3)
Verizon A-/Baa1/BBB+ 6,500 3% $5,638,280 19% $867.43 10/31/2025 N/A
Bank of America A/Baa1/A- 5,293 2% $1,720,437 6% $325.04 7/31/2017 N/A
Subtotal/Wtd. Avg.   240,087 96% $30,133,600 99% $125.51    
                 
Other Tenants   550 0% $319,878 1% $581.60    
Vacant Space   8,426 3% $0 0% $0.00    
Total/Wtd. Avg.   249,063 100% $30,453,478 100% $126.55    

 

 
(1)Certain ratings are those of the parent company whether or not the parent guarantees the lease.
(2)H & M has a lease termination option any time on or after January 1, 2036 with two years of notice and a termination fee.
(3)H & M opened for business on May 20, 2015 and has not yet reported sales data.

 

The following table presents certain information relating to the lease rollover at the Herald Center Property:

 

Lease Rollover Schedule(1)(2)
Year # of Leases
Rolling
SF Rolling UW Rent PSF
Rolling(3)
Approx. % of
Total SF
Rolling
Approx. Cumulative %
of SF Rolling
Total UW Rent
Rolling
Approx. % of
Total Rent
Rolling
Approx.
Cumulative %
of Total Rent
Rolling
MTM 1 100 $787.65 0% 0% $78,765 0% 0%
2015(4) 1 210 $169.62 0% 0% $35,620 0% 0%
2016 1 80 $1,618.58 0% 0% $129,486 0% 1%
2017 1 5,293 $325.04 2% 2% $1,720,437 6% 6%
2018 1 160 $475.04 0% 2% $76,006 0% 7%
2019 0 0 $0.00 0% 2% $0 0% 7%
2020 0 0 $0.00 0% 2% $0 0% 7%
2021 0 0 $0.00 0% 2% $0 0% 7%
2022 0 0 $0.00 0% 2% $0 0% 7%
2023 0 0 $0.00 0% 2% $0 0% 7%
2024 0 0 $0.00 0% 2% $0 0% 7%
2025 1 6,500 $867.43 3% 5%