424B2 1 n1846_424b2-x11.htm FINAL PROSPECTUS

    FILED PURSUANT TO RULE 424(b)(2)
    REGISTRATION FILE NO.: 333-226850-04
     

PROSPECTUS

 

$849,764,000 (Approximate)

 

BBCMS Mortgage Trust 2019-C5
(Central Index Key Number 0001790441)
as Issuing Entity

 

Barclays Commercial Mortgage Securities LLC
(Central Index Key Number 0001541480)
as Depositor

 

Barclays Capital Real Estate Inc.
(Central Index Key Number 0001549574)

 

KeyBank National Association
(Central Index Key Number 0001089877)

 

Natixis Real Estate Capital LLC
(Central Index Key Number 0001542256)

 

Societe Generale Financial Corporation
(Central Index Key Number 0001755531)

 

Rialto Mortgage Finance, LLC
(Central Index Key Number 0001592182)

 

BSPRT CMBS Finance, LLC
(Central Index Key Number 0001722518)

 

as Sponsors and Mortgage Loan Sellers

 

Commercial Mortgage Pass-Through Certificates, Series 2019-C5

 

Barclays Commercial Mortgage Securities LLC is offering certain classes of the Commercial Mortgage Pass-Through Certificates, Series 2019-C5 consisting of the certificate classes identified in the table below. The certificates being offered by this prospectus (and the non-offered Class X-D, Class X-F, Class D, Class E, Class F, Class G-RR, Class H-RR, Class S and Class R certificates and the VRR Interest) represent the beneficial ownership interests in the issuing entity, which will be a New York common law trust named BBCMS Mortgage Trust 2019-C5. The assets of the issuing entity will primarily consist of a pool of fixed-rate commercial mortgage loans, which are generally the sole source of payments on the certificates. Credit enhancement will be provided solely by certain classes of subordinate certificates that will be subordinate to certain classes of senior certificates as described under “Description of the Certificates—Subordination; Allocation of Realized Losses”. Each class of certificates offered by this prospectus will be entitled to receive monthly distributions of interest and/or principal on the 4th business day following the 11th day of each month (or if the 11th day is not a business day, the next business day), commencing in December 2019. The rated final distribution date for the certificates is the distribution date in November 2052.

 

Class

Approximate Initial Certificate Balance or
Notional Amount(1)

Approximate Initial
Pass-Through Rate

Pass-Through Rate
Description

Assumed Final
Distribution Date(3)

Class A-1 $ 21,460,000   2.0940% Fixed(5) June 2024
Class A-2 $ 86,300,000   3.0430% Fixed(5) October 2024
Class A-3 $ 187,000,000   2.8050% Fixed(5) August 2029
Class A-4 $ 349,400,000   3.0630% Fixed(5) October 2029
Class A-SB $ 30,830,000   2.9900% Fixed(5) November 2028
Class X-A $ 674,990,000 (6) 0.8965% Variable(7) NAP
Class X-B $ 174,774,000 (8) 0.3717% Variable(9) NAP
Class A-S $ 94,017,000   3.3660% WAC Cap(10) October 2029
Class B $ 40,981,000   3.5170% WAC Cap(10) November 2029
Class C $ 39,776,000   3.7100% WAC Cap(10) November 2029

(Footnotes on table on pages 3 and 4)

You should carefully consider the risk factors beginning on page 57 of this prospectus.  

 

Neither the certificates nor the mortgage loans are insured or guaranteed by any governmental agency, instrumentality or private issuer or any other person or entity.  

 

The certificates will represent interests in the issuing entity only. They will not represent interests in or obligations of the sponsors, depositor, any of their affiliates or any other entity.

 

The United States Securities and Exchange Commission and state regulators have not approved or disapproved of the offered certificates or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Barclays Commercial Mortgage Securities LLC will not list the offered certificates on any securities exchange or on any automated quotation system of any securities association.

 

The issuing entity will be relying on an exclusion or exemption from the definition of “investment company” under the Investment Company Act of 1940, as amended, contained in Section 3(c)(5) of the Investment Company Act or Rule 3a-7 under the Investment Company Act, although there may be additional exclusions or exemptions available to the issuing entity. The issuing entity is being structured so as not to constitute a “covered fund” for purposes of the Volcker Rule under the Dodd-Frank Act (both as defined in this prospectus).

 

The underwriters, Barclays Capital Inc., KeyBanc Capital Markets Inc., SG Americas Securities, LLC, Natixis Securities Americas LLC, Bancroft Capital, LLC and Academy Securities, Inc. will purchase the offered certificates from Barclays Commercial Mortgage Securities LLC and will offer them to the public at negotiated prices, plus, in certain cases, accrued interest, determined at the time of sale. Barclays Capital Inc.is acting as co-lead manager and joint bookrunner with respect to approximately 40.1% of each class of offered certificates, KeyBanc Capital Markets Inc. is acting as co-lead manager and joint bookrunner with respect to approximately 28.7% of each class of offered certificates, SG Americas Securities, LLC is acting as co-lead manager and joint bookrunner with respect to approximately 11.2% of each class of offered certificates and Natixis Securities Americas LLC is acting as co-lead manager and joint bookrunner with respect to approximately 20.0% of each class of offered certificates. Bancroft Capital, LLC and Academy Securities, Inc. are acting as co-managers.

 

The underwriters expect to deliver the offered certificates to purchasers in book-entry form only through the facilities of The Depository Trust Company in the United States and Clearstream Banking, société anonyme and Euroclear Bank, as operator of the Euroclear System, in Europe, against payment in New York, New York on or about November 26, 2019. Barclays Commercial Mortgage Securities LLC expects to receive from this offering approximately 108.3% of the aggregate certificate balance of the offered certificates, plus accrued interest from November 1, 2019, before deducting expenses payable by the depositor.

 

Barclays Natixis Société Générale KeyBanc Capital Markets
Co-Lead Managers and Joint Bookrunners

Bancroft Capital, LLC Academy Securities
Co-Managers
   

November 6, 2019

 

 

 

 

 

 

 

 

Summary of Certificates

 

Class

Approx. Initial
Certificate Balance
or Notional
Amount(1)

Approx.
Initial Credit
Support(2)

Approx.
Initial
Pass-
Through
Rate

Pass-
Through Rate
Description

Assumed Final
Distribution Date(3)

Weighted
Average Life
(Years)(4)

Expected Principal
Window(4)

Offered Certificates                  
A-1 $ 21,460,000   30.000% 2.0940% Fixed(5) June 2024 2.60 12/19 – 6/24
A-2 $ 86,300,000   30.000% 3.0430% Fixed(5) October 2024 4.74 6/24 – 10/24
A-3 $ 187,000,000   30.000% 2.8050% Fixed(5) August 2029 9.53 11/28 – 8/29
A-4 $ 349,400,000   30.000% 3.0630% Fixed(5) October 2029 9.85 8/29 – 10/29
A-SB $ 30,830,000   30.000% 2.9900% Fixed(5) November 2028 6.98 10/24 – 11/28
X-A $ 674,990,000 (6) NAP 0.8965% Variable(7) NAP NAP NAP
X-B $ 174,774,000 (8) NAP 0.3717% Variable(9) NAP NAP NAP
A-S $ 94,017,000   20.250% 3.3660% WAC Cap(10) October 2029 9.89 10/29 – 10/29
B $ 40,981,000   16.000% 3.5170% WAC Cap(10) November 2029 9.94 10/29 – 11/29
C $ 39,776,000   11.875% 3.7100% WAC Cap(10) November 2029 9.97 11/29 – 11/29
Non-Offered Certificates                  
X-D $ 44,598,000 (11) NAP 1.3513% Variable(12) NAP NAP NAP
X-F $ 22,902,000 (13) NAP 1.2500% Variable(14) NAP NAP NAP
D $ 25,313,000   9.250% 2.5000% Fixed(5) November 2029 9.97 11/29 – 11/29
E $ 19,285,000   7.250% 2.5000% Fixed(5) November 2029 9.97 11/29 – 11/29
                   
F $ 22,902,000   4.875% 2.6013% WAC minus 1.2500%(15) November 2029 9.97 11/29 – 11/29
G-RR $ 9,642,000   3.875% 3.8513% WAC(16) November 2029 9.97 11/29 – 11/29
H-RR $ 37,366,303   0.000% 3.8513% WAC(16) November 2029 9.97 11/29 – 11/29
S(17)   NAP   NAP NAP NAP NAP NAP NAP
R(18)   NAP   NAP NAP NAP NAP NAP NAP
Non-Offered Eligible Vertical Interest                  
VRR Interest $ 37,048,884.73   NAP 3.8513% WAC(19) November 2029 9.10 12/19 – 11/29

 

 

(1)Approximate, subject to a permitted variance of plus or minus 5%.

 

(2)The approximate initial credit support percentages set forth for the certificates are approximate and, for the Class A-1, Class A-2, Class A-3, Class A-4 and Class A-SB certificates, are represented in the aggregate. The VRR Interest provides credit support only to the limited extent that it is allocated a portion of any losses incurred on the underlying mortgage loans, which such losses are allocated between it, on the one hand, and the non-VRR certificates, on the other hand, pro rata, in accordance with their respective percentage allocation entitlements. See “Credit Risk Retention”.

 

(3)The assumed final distribution dates set forth in this prospectus have been determined on the basis of the assumptions described in “Description of the Certificates—Assumed Final Distribution Date; Rated Final Distribution Date”.

 

(4)The weighted average life and expected principal window during which distributions of principal would be received as set forth in the foregoing table with respect to each class of certificates having a certificate balance are based on the assumptions set forth under “Yield and Maturity Considerations—Weighted Average Life” and on the assumptions that there are no prepayments, modifications or losses in respect of the mortgage loans and that there are no extensions or forbearances of maturity dates or anticipated repayment dates of the mortgage loans.

 

(5)The pass-through rates for the Class A-1, Class A-2, Class A-3, Class A-4, Class A-SB, Class D and Class E certificates will, in each case, be a fixed rate per annum (described in the table as “Fixed”) equal to the pass-through rate set forth opposite such class in the table.

 

(6)The Class X-A certificates are notional amount certificates. The notional amount of the Class X-A certificates will be equal to the aggregate certificate balance of the Class A-1, Class A-2, Class A-3, Class A-4 and Class A-SB certificates outstanding from time to time. The Class X-A certificates will not be entitled to distributions of principal.

 

(7)The pass-through rate for the Class X-A certificates for any distribution date will be a per annum rate equal to the excess, if any, of (a) the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date, over (b) the weighted average of the pass-through rates on the Class A-1, Class A-2, Class A-3, Class A-4 and Class A-SB certificates for the related distribution date, weighted on the basis of their respective aggregate certificate balances outstanding immediately prior to that distribution date. For purposes of the calculation of the weighted average of the net mortgage interest rates on the mortgage loans for each distribution date, the mortgage interest rates will be adjusted as necessary to a 30/360 basis.

 

(8)The Class X-B certificates are notional amount certificates. The notional amount of the Class X-B certificates will be equal to the aggregate certificate balance of the Class A-S, Class B and Class C certificates outstanding from time to time. The Class X-B certificates will not be entitled to distributions of principal.

 

(9)The pass-through rate for the Class X-B certificates for any distribution date will be a per annum rate equal to the excess, if any, of (a) the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date, over (b) the weighted average of the pass-through rates on the Class A-S, Class B and Class C certificates for the related distribution date, weighted on the basis of their respective aggregate certificate balances outstanding immediately prior to that distribution date. For purposes of the calculation of the weighted average of the net mortgage interest rates on the mortgage loans for each distribution date, the mortgage interest rates will be adjusted as necessary to a 30/360 basis.

 

(10)The pass-through rates for the Class A-S, Class B and Class C certificates for any distribution date will, in each case, be a variable rate per annum (described in the table as “WAC Cap”) equal to the lesser of (a) a fixed rate and (b) the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date. For purposes of the calculation of the weighted average of the net mortgage interest rates on the mortgage loans for each distribution date, the mortgage interest rates will be adjusted as necessary to a 30/360 basis.

 

(11)The Class X-D certificates are notional amount certificates. The notional amount of the Class X-D certificates will be equal to the aggregate certificate balance of the Class D and Class E certificates outstanding from time to time. The Class X-D certificates will not be entitled to distributions of principal.

 

(12)The pass-through rate for the Class X-D certificates for any distribution date will be a per annum rate equal to the excess, if any, of (a) the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date, over (b) the weighted average of the pass-through rates on the Class D and Class E certificates for the related distribution date, weighted on the basis of their aggregate certificate balances outstanding immediately prior to that distribution date. For purposes of the calculation of the weighted average of the net mortgage interest rates on the mortgage loans for each distribution date, the mortgage interest rates will be adjusted as necessary to a 30/360 basis.

 

 3

 

 

(13)The Class X-F certificates are notional amount certificates. The notional amount of the Class X-F certificates will be equal to the certificate balance of the Class F certificates outstanding from time to time. The Class X-F certificates will not be entitled to distributions of principal.

 

(14)The pass-through rate for the Class X-F certificates for any distribution date will be a per annum rate equal to the excess, if any, of (a) the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date, over (b) the pass-through rate on the Class F certificates for the related distribution date. For purposes of the calculation of the weighted average of the net mortgage interest rates on the mortgage loans for each distribution date, the mortgage interest rates will be adjusted as necessary to a 30/360 basis.

 

(15)The pass-through rate for the Class F certificates will be a per annum rate (described in the table as “WAC minus 1.2500%”) equal to the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date, less 1.2500%, but not less than 0.0000%. For purposes of the calculation of the weighted average of the net mortgage interest rates on the mortgage loans for each distribution date, the mortgage interest rates will be adjusted as necessary to a 30/360 basis.

 

(16)The pass-through rates for the Class G-RR and Class H-RR certificates will, in each case, be a variable rate per annum (described in the table as “WAC”) equal to the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date. For the purposes of the calculation of the weighted average of the net mortgage interest rates on the mortgage loans for each distribution date, the mortgage interest rates will be adjusted as necessary to a 30/360 basis.

 

(17)The Class S certificates will not have a certificate balance, notional amount, credit support, pass-through rate, assumed final distribution date, rated final distribution date or rating. The Class S certificates will only be entitled to a specified portion of distributions of excess interest accrued on the mortgage loans with an anticipated repayment date. See “Description of the Mortgage Pool—Certain Terms of the Mortgage Loans—ARD Loans” in this prospectus.

 

(18)The Class R certificates will not have a certificate balance, notional amount, credit support, pass-through rate, assumed final distribution date, rated final distribution date or rating. The Class R certificates represent the residual interest in each Trust REMIC as further described in this prospectus. The Class R certificates will not be entitled to distributions of principal or interest.

 

(19)The effective interest rate for the VRR Interest will be a variable rate per annum (described in the table as “WAC”) equal to the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date. For purposes of the calculation of the weighted average of the net mortgage interest rates on the mortgage loans for each distribution date, the mortgage interest rates will be adjusted as necessary to a 30/360 basis.

 

The Class X-D, Class X-F, Class D, Class E, Class F, Class G-RR, Class H-RR, Class S and Class R certificates and the VRR Interest are not offered by this prospectus. Any information in this prospectus concerning certificates other than the offered certificates is presented solely to enhance your understanding of the offered certificates.

 

 4

 

 

TABLE OF CONTENTS

 

Summary of Certificates 3
Important Notice Regarding the Offered Certificates 15
Important Notice About Information Presented in this Prospectus 15
Summary of Terms 23
Risk Factors 57
The Certificates May Not Be a Suitable Investment for You 57
Combination or “Layering” of Multiple Risks May Significantly Increase Risk of Loss 57
Risks Related to Market Conditions and Other External Factors 57
The Volatile Economy, Credit Crisis and Downturn in the Real Estate Market Adversely Affected the Value of CMBS and Similar Factors May in the Future Adversely Affect the Value of CMBS 57
Other Events May Affect the Value and Liquidity of Your Investment 57
Risks Relating to the Mortgage Loans 58
Mortgage Loans Are Non-Recourse and Are Not Insured or Guaranteed 58
Risks of Commercial and Multifamily Lending Generally 58
Performance of the Mortgage Loans Will Be Highly Dependent on the Performance of Tenants and Tenant Leases 60
General 60
A Tenant Concentration May Result in Increased Losses 61
Mortgaged Properties Leased to Multiple Tenants Also Have Risks 62
Mortgaged Properties Leased to Borrowers or Borrower Affiliated Entities Also Have Risks 62
Tenant Bankruptcy Could Result in a Rejection of the Related Lease 62
Leases That Are Not Subordinated to the Lien of the Mortgage or Do Not Contain Attornment Provisions May Have an Adverse Impact at Foreclosure 63
Early Lease Termination Options May Reduce Cash Flow 63
Mortgaged Properties Leased to Not-for-Profit Tenants Also Have Risks 64
Retail Properties Have Special Risks 64
Changes in the Retail Sector, Such as Online Shopping and Other Uses of Technology, Could Affect the Business Models and Viability of Retailers. 65
The Performance of the Retail Properties is Subject to Conditions Affecting the Retail Sector. 65
Some Retail Properties Depend on Anchor Stores or Major Tenants to Attract Shoppers and Could be Materially Adversely Affected by the Loss of, or a Store Closure by, One or More of These Anchor Stores or Major Tenants. 66
Office Properties Have Special Risks 67
Data Center Properties Have Special Risks 68
Multifamily Properties Have Special Risks 68
Self Storage Properties Have Special Risks 70
Hotel Properties Have Special Risks 71
Risks Relating to Affiliation with a Franchise or Hotel Management Company 73
Mixed Use Properties Have Special Risks 73
Leased Fee Properties Have Special Risks 74
Industrial Properties Have Special Risks 74
Manufactured Housing Community Properties Have Special Risks 75
Condominium Ownership May Limit Use and Improvements 77
Operation of a Mortgaged Property Depends on the Property Manager’s Performance 78
Concentrations Based on Property Type, Geography, Related Borrowers and Other Factors May Disproportionately Increase Losses 78
Adverse Environmental Conditions at or Near Mortgaged Properties May Result in Losses 80
Risks Related to Redevelopment, Expansion and Renovation at Mortgaged Properties 81
Some Mortgaged Properties May Not Be Readily Convertible to Alternative Uses 82
Risks Related to Zoning Non-Compliance and Use Restrictions 84
Risks Relating to Inspections of Properties 85

 

 5

 

 

Risks Relating to Costs of Compliance with Applicable Laws and Regulations 85
Insurance May Not Be Available or Adequate 86
Inadequacy of Title Insurers May Adversely Affect Distributions on Your Certificates 87
Terrorism Insurance May Not Be Available for All Mortgaged Properties 87
Risks Associated with Blanket Insurance Policies or Self-Insurance 88
Condemnation of a Mortgaged Property May Adversely Affect Distributions on Certificates 89
Limited Information Causes Uncertainty 89
Historical Information 89
Ongoing Information 89
Underwritten Net Cash Flow Could Be Based On Incorrect or Flawed Assumptions 90
Frequent and Early Occurrence of Borrower Delinquencies and Defaults May Adversely Affect Your Investment 90
The Mortgage Loans Have Not Been Reviewed or Re-Underwritten by Us; Some Mortgage Loans May Not Have Complied With Another Originator’s Underwriting Criteria 91
Static Pool Data Would Not Be Indicative of the Performance of this Pool 92
Appraisals May Not Reflect Current or Future Market Value of Each Property 92
Seasoned Mortgage Loans Present Additional Risk of Repayment 93
The Performance of a Mortgage Loan and Its Related Mortgaged Property Depends in Part on Who Controls the Borrower and Mortgaged Property 94
The Borrower’s Form of Entity May Cause Special Risks 94
A Bankruptcy Proceeding May Result in Losses and Delays in Realizing on the Mortgage Loans 97
Litigation Regarding the Mortgaged Properties or Borrowers May Impair Your Distributions 97
Other Financings or Ability to Incur Other Indebtedness Entails Risk 98
Tenancies-in-Common May Hinder Recovery 99
Risks Relating to Delaware Statutory Trusts 100
Risks Relating to Enforceability of Yield Maintenance Charges, Prepayment Premiums or Defeasance Provisions 100
Risks Associated with One Action Rules 100
State Law Limitations on Assignments of Leases and Rents May Entail Risks 101
Various Other Laws Could Affect the Exercise of Lender’s Rights 101
Risks of Anticipated Repayment Date Loans 101
The Absence of Lockboxes Entails Risks That Could Adversely Affect Distributions on Your Certificates 102
Borrower May Be Unable to Repay Remaining Principal Balance on Maturity Date or Anticipated Repayment Date; Longer Amortization Schedules and Interest-Only Provisions Increase Risk 102
Risks Related to Ground Leases and Other Leasehold Interests 103
Increases in Real Estate Taxes May Reduce Available Funds 105
Risks Relating to Tax Credits 105
State and Local Mortgage Recording Taxes May Apply Upon a Foreclosure or Deed-in-Lieu of Foreclosure and Reduce Net Proceeds 106
Risks Relating to Shari’ah Compliant Loans 106
Risks Related to Conflicts of Interest 106
Interests and Incentives of the Originators, the Sponsors and Their Affiliates May Not Be Aligned With Your Interests 106
The Servicing of the Servicing Shift Whole Loan Will Shift to Other Servicers 109
Interests and Incentives of the Underwriter Entities May Not Be Aligned With Your Interests 109
Potential Conflicts of Interest of the Master Servicer and the Special Servicer 111
Potential Conflicts of Interest of the Operating Advisor 113
Potential Conflicts of Interest of the Asset Representations Reviewer 114

 

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Potential Conflicts of Interest of the Directing Certificateholder and the Companion Holders 114
Potential Conflicts of Interest in the Selection of the Underlying Mortgage Loans 116
Conflicts of Interest May Occur as a Result of the Rights of the Applicable Directing Certificateholder To Terminate the Special Servicer of the Applicable Whole Loan 117
Other Potential Conflicts of Interest May Affect Your Investment 118
Other Risks Relating to the Certificates 118
The Certificates Are Limited Obligations 118
The Certificates May Have Limited Liquidity and the Market Value of the Certificates May Decline 119
Legal and Regulatory Provisions Affecting Investors Could Adversely Affect the Liquidity of the Offered Certificates 119
EU Risk Retention and Due Diligence Requirements 121
Nationally Recognized Statistical Rating Organizations May Assign Different Ratings to the Certificates; Ratings of the Certificates Reflect Only the Views of the Applicable Rating Agencies as of the Dates Such Ratings Were Issued; Ratings May Affect ERISA Eligibility; Ratings May Be Downgraded 122
Your Yield May Be Affected by Defaults, Prepayments and Other Factors 124
General 124
The Timing of Prepayments and Repurchases May Change Your Anticipated Yield 125
Your Yield May Be Adversely Affected By Prepayments Resulting From Earnout Reserves 126
Losses and Shortfalls May Change Your Anticipated Yield 126
Risk of Early Termination 127
Subordination of the Subordinated Certificates Will Affect the Timing of Distributions and the Application of Losses on the Subordinated Certificates 127
Payments Allocated to the VRR Interest or the Non-VRR Certificates Will Not Be Available to the Non-VRR Certificates or the VRR Interest, Respectively 128
Your Lack of Control Over the Issuing Entity and the Mortgage Loans Can Impact Your Investment 128
You Have Limited Voting Rights 128
The Rights of the Directing Certificateholder, the Risk Retention Consultation Parties and the Operating Advisor Could Adversely Affect Your Investment 129
You Have Limited Rights to Replace the Master Servicer, the Special Servicer, the Trustee, the Certificate Administrator, the Operating Advisor or the Asset Representations Reviewer 131
The Rights of Companion Holders and Mezzanine Debt May Adversely Affect Your Investment 132
Risks Relating to Modifications of the Mortgage Loans 133
Sponsors May Not Make Required Repurchases or Substitutions of Defective Mortgage Loans or Pay Any Loss of Value Payment Sufficient to Cover All Losses on a Defective Mortgage Loan 134
Risks Relating to Interest on Advances and Special Servicing Compensation 135
Bankruptcy of a Servicer May Adversely Affect Collections on the Mortgage Loans and the Ability to Replace the Servicer 136
The Sponsors, the Depositor and the Issuing Entity Are Subject to Bankruptcy or Insolvency Laws That May Affect the Issuing Entity’s Ownership of the Mortgage Loans 136
The Requirement of the Special Servicer to Obtain FIRREA-Compliant Appraisals May Result in an Increased Cost to the Issuing Entity 137
Tax Matters and Changes in Tax Law May Adversely Impact the Mortgage Loans or Your Investment 137
Tax Considerations Relating to Foreclosure 137
REMIC Status 138
Material Federal Tax Considerations Regarding Original Issue Discount 138
Description of the Mortgage Pool 138
General 138

 

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Co-Originated and Third-Party Originated Mortgage Loans 139
Certain Calculations and Definitions 140
Definitions 140
Mortgage Pool Characteristics 153
Overview 153
Property Types 154
Retail Properties 154
Office Properties 155
Multifamily Properties 155
Self Storage Properties 156
Hotel Properties 156
Mixed Use Properties 157
Leased Fee Properties 158
Industrial Properties 158
Manufactured Housing Community Properties 158
Specialty Use Concentrations 158
Mortgage Loan Concentrations 159
Top Fifteen Mortgage Loans 159
Multi-Property Mortgage Loans and Related Borrower Mortgage Loans 160
Geographic Concentrations 161
Mortgaged Properties with Limited Prior Operating History 162
Tenancies-in-Common or Diversified Ownership 162
Shari’ah Compliant Loan 162
Delaware Statutory Trusts 162
Condominium and Other Shared Interests 163
Fee & Leasehold Estates; Ground Leases 164
Environmental Considerations 165
Redevelopment, Renovation and Expansion 169
Assessment of Property Value and Condition 171
Litigation and Other Considerations 171
Loan Purpose; Default History, Bankruptcy Issues and Other Proceedings 173
Tenant Issues 176
Tenant Concentrations 176
Lease Expirations and Terminations 176
Expirations 176
Terminations 177
Other 178
Purchase Options and Rights of First Refusal 179
Competition from Certain Nearby Properties 181
Insurance Considerations 181
Use Restrictions 183
Appraised Value 184
Non-Recourse Carveout Limitations 184
Real Estate and Other Tax Considerations 185
Delinquency Information 186
Certain Terms of the Mortgage Loans 186
Amortization of Principal 186
Due Dates; Mortgage Rates; Calculations of Interest 186
Single Purpose Entity Covenants 187
ARD Loans 188
Prepayment Protections and Certain Involuntary Prepayments and Voluntary Prepayments 188
Voluntary Prepayments 189
“Due-On-Sale” and “Due-On-Encumbrance” Provisions 190
Defeasance 191
Releases; Partial Releases 192

 

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Escrows 195
Mortgaged Property Accounts 196
Exceptions to Underwriting Guidelines 197
Additional Indebtedness 198
General 198
Whole Loans 198
Mezzanine Indebtedness 198
Other Secured Indebtedness 201
Preferred Equity 201
Other Unsecured Indebtedness 202
The Whole Loans 203
General 203
The Serviced Pari Passu Whole Loan 208
Intercreditor Agreement 209
Control Rights with respect to Serviced Pari Passu Whole Loans Other Than Servicing Shift Whole Loans 209
Control Rights with respect to Servicing Shift Whole Loans 209
Certain Rights of each Non-Controlling Holder 210
Sale of Defaulted Mortgage Loan 211
The Non-Serviced Pari Passu Whole Loans 211
Intercreditor Agreement 211
Control Rights 212
Certain Rights of each Non-Controlling Holder 212
Custody of the Mortgage File 213
Sale of Defaulted Mortgage Loan 213
The A/B Whole Loans 214
Presidential City 214
NEMA San Francisco 220
10000 Santa Monica Boulevard 231
Vanguard Portfolio 239
Moffett Towers II – Buildings 3 & 4 246
Additional Information 252
Transaction Parties 253
The Sponsors and Mortgage Loan Sellers 253
Barclays Capital Real Estate Inc. 253
General 253
Barclays’ Securitization Program 253
Review of Barclays Mortgage Loans 254
Barclays’ Underwriting Guidelines and Processes 256
Compliance with Rule 15Ga-1 under the Exchange Act 258
Retained Interests in This Securitization 259
KeyBank National Association 259
General 259
KeyBank’s Securitization Program 259
Review of KeyBank Mortgage Loans 260
KeyBank’s Underwriting Guidelines and Process 261
Exceptions 264
Compliance with Rule 15Ga-1 under the Exchange Act 264
Retained Interests in This Securitization 264
Natixis Real Estate Capital LLC 265
General 265
NREC’s Commercial Real Estate Securitization Program 265
Review of NREC Mortgage Loans 266
NREC’s Underwriting Standards 267
Compliance with Rule 15Ga-1 under the Exchange Act 271
Retained Interests in This Securitization 273

 

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Societe Generale Financial Corporation 273
General 273
Societe Generale Financial Corporation’s Commercial Mortgage Securitization Program 273
Societe Generale Financial Corporation’s Underwriting Standards 274
Review of the Mortgage Loans for Which Societe Generale Financial Corporation is the Sponsor 277
Compliance with Rule 15Ga-1 under the Exchange Act 279
Retained Interests in This Securitization 280
Rialto Mortgage Finance, LLC 280
General 280
Rialto Mortgage’s Securitization Program 280
Rialto Mortgage’s Underwriting Standards and Loan Analysis 280
Review of Mortgage Loans for Which Rialto Mortgage is the Sponsor 284
Compliance with Rule 15Ga-1 under the Exchange Act 286
Retained Interests in This Securitization 286
BSPRT CMBS Finance, LLC 286
General 286
BSPRT’s Loan Origination and Acquisition History 286
Originations and Acquisitions of Fixed-Rate Commercial Mortgage Loans 286
Review of BSPRT Mortgage Loans 287
BSPRT’s Underwriting Standards 288
Compliance with Rule 15Ga-1 under the Exchange Act 293
Retained Interests in This Securitization 293
The Depositor 294
The Issuing Entity 294
The Trustee and the Certificate Administrator 295
The Master Servicer and Special Servicer 297
The Operating Advisor and Asset Representations Reviewer 301
Credit Risk Retention 302
Qualifying CRE Loans 303
The VRR Interest 303
Material Terms of the VRR Interest 303
General 303
VRR Available Funds 303
Allocation of VRR Realized Losses 303
Priority of Distributions on the VRR Interest 304
Yield Maintenance Charges and Prepayment Premiums 305
Excess Interest 305
HRR Certificates 305
General 305
Retaining Third-Party Purchasers 306
Material Terms of the HRR Certificates 308
Hedging, Transfer and Financing Restrictions 308
Operating Advisor 308
Representations and Warranties 310
Description of the Certificates 311
General 311
Distributions 313
Method, Timing and Amount 313
Available Funds 314
Pass-Through Rates 319
Interest Distribution Amount 321
Principal Distribution Amount 321
Certain Calculations with Respect to Individual Mortgage Loans 323
Excess Interest 324
Application Priority of Mortgage Loan Collections or Whole Loan Collections 324

 

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Allocation of Yield Maintenance Charges and Prepayment Premiums 327
Assumed Final Distribution Date; Rated Final Distribution Date 329
Prepayment Interest Shortfalls 329
Subordination; Allocation of Realized Losses 331
Reports to Certificateholders; Certain Available Information 333
Certificate Administrator Reports 333
Information Available Electronically 338
Voting Rights 343
Delivery, Form, Transfer and Denomination 344
Book-Entry Registration 344
Definitive Certificates 347
Certificateholder Communication 347
Access to Certificateholders’ Names and Addresses 347
Requests to Communicate 347
List of Certificateholders 348
Description of the Mortgage Loan Purchase Agreements 348
General 348
Dispute Resolution Provisions 358
Asset Review Obligations 358
Pooling and Servicing Agreement 358
General 358
Assignment of the Mortgage Loans 359
Servicing Standard 359
Subservicing 361
Advances 361
P&I Advances 361
Servicing Advances 362
Nonrecoverable Advances 363
Recovery of Advances 364
Accounts 366
Withdrawals from the Collection Account 368
Servicing and Other Compensation and Payment of Expenses 370
General 370
Master Servicing Compensation 375
Special Servicing Compensation 378
Disclosable Special Servicer Fees 381
Certificate Administrator and Trustee Compensation 382
Operating Advisor Compensation 382
Asset Representations Reviewer Compensation 383
CREFC® Intellectual Property Royalty License Fee 384
Appraisal Reduction Amounts 384
Maintenance of Insurance 390
Modifications, Waivers and Amendments 393
Enforcement of “Due-on-Sale” and “Due-on-Encumbrance” Provisions 399
Inspections 400
Collection of Operating Information 401
Special Servicing Transfer Event 401
Asset Status Report 404
Realization Upon Mortgage Loans 408
Sale of Defaulted Loans and REO Properties 410
The Directing Certificateholder 413
General 413
Major Decisions 414
Asset Status Report 418
Replacement of the Special Servicer 418

 

 11

 

 

Control Termination Event, Operating Advisor Consultation Event and Consultation Termination Event 418
Servicing Override 420
Rights of the Directing Certificateholder with respect to Non-Serviced Mortgage Loans or the Servicing Shift Whole Loan 421
Rights of the Holders of Serviced Pari Passu Companion Loans 421
Limitation on Liability of Directing Certificateholder 421
The Operating Advisor 422
General 422
Duties of Operating Advisor At All Times 422
Annual Report 424
Additional Duties of the Operating Advisor While an Operating Advisor Consultation Event Has Occurred and Is Continuing 425
Recommendation of the Replacement of the Special Servicer 425
Eligibility of Operating Advisor 426
Other Obligations of Operating Advisor 426
Delegation of Operating Advisor’s Duties 427
Termination of the Operating Advisor With Cause 427
Rights Upon Operating Advisor Termination Event 428
Waiver of Operating Advisor Termination Event 428
Termination of the Operating Advisor Without Cause 429
Resignation of the Operating Advisor 429
Operating Advisor Compensation 429
The Asset Representations Reviewer 430
Asset Review 430
Asset Review Trigger 430
Asset Review Vote 431
Review Materials 431
Asset Review 433
Eligibility of Asset Representations Reviewer 434
Other Obligations of Asset Representations Reviewer 435
Delegation of Asset Representations Reviewer’s Duties 435
Assignment of Asset Representations Reviewer’s Rights and Obligations 435
Asset Representations Reviewer Termination Events 436
Rights Upon Asset Representations Reviewer Termination Event 437
Termination of the Asset Representations Reviewer Without Cause 437
Resignation of Asset Representations Reviewer 437
Asset Representations Reviewer Compensation 438
Limitation on Liability of Risk Retention Consultation Parties 438
Replacement of the Special Servicer Without Cause 438
Replacement of the Special Servicer After Operating Advisor Recommendation and Investor Vote 440
Termination of the Master Servicer or Special Servicer for Cause 442
Servicer Termination Events 442
Rights Upon Servicer Termination Event 443
Waiver of Servicer Termination Event 445
Resignation of the Master Servicer or Special Servicer 445
Limitation on Liability; Indemnification 446
Enforcement of Mortgage Loan Seller’s Obligations Under the MLPA 448
Dispute Resolution Provisions 449
Certificateholder’s Rights When a Repurchase Request Is Initially Delivered by a Certificateholder 449
Repurchase Request Delivered by a Party to the PSA 449
Resolution of a Repurchase Request 450
Mediation and Arbitration Provisions 452
Servicing of the Non-Serviced Mortgage Loans 453

 

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General 454
Servicing of the Servicing Shift Mortgage Loan 456
Rating Agency Confirmations 457
Evidence as to Compliance 459
Limitation on Rights of Certificateholders to Institute a Proceeding 460
Termination; Retirement of Certificates 461
Amendment 462
Resignation and Removal of the Trustee and the Certificate Administrator 464
Governing Law; Waiver of Jury Trial; and Consent to Jurisdiction 465
Certain Legal Aspects of Mortgage Loans 465
General 466
Types of Mortgage Instruments 467
Leases and Rents 467
Personalty 467
Foreclosure 468
General 468
Foreclosure Procedures Vary from State to State 468
Judicial Foreclosure 468
Equitable and Other Limitations on Enforceability of Certain Provisions 468
Nonjudicial Foreclosure/Power of Sale 469
Public Sale 469
Rights of Redemption 470
Anti-Deficiency Legislation 470
Leasehold Considerations 471
Cooperative Shares 471
Bankruptcy Laws 472
Environmental Considerations 477
General 477
Superlien Laws 477
CERCLA 477
Certain Other Federal and State Laws 478
Additional Considerations 478
Due-on-Sale and Due-on-Encumbrance Provisions 479
Subordinate Financing 479
Default Interest and Limitations on Prepayments 479
Applicability of Usury Laws 479
Americans with Disabilities Act 480
Servicemembers Civil Relief Act 480
Anti-Money Laundering, Economic Sanctions and Bribery 480
Potential Forfeiture of Assets 481
Certain Affiliations, Relationships and Related Transactions Involving Transaction Parties 481
Pending Legal Proceedings Involving Transaction Parties 482
Use of Proceeds 482
Yield and Maturity Considerations 483
Yield Considerations 483
General 483
Rate and Timing of Principal Payments 483
Losses and Shortfalls 484
Certain Relevant Factors Affecting Loan Payments and Defaults 485
Delay in Payment of Distributions 486
Yield on the Certificates with Notional Amounts 486
Weighted Average Life 486
Pre-Tax Yield to Maturity Tables 490
Material Federal Income Tax Considerations 494
General 494

 

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Qualification as a REMIC 494
Status of Offered Certificates 496
Taxation of Regular Interests 497
General 497
Original Issue Discount 497
Acquisition Premium 499
Market Discount 499
Premium 500
Election To Treat All Interest Under the Constant Yield Method 500
Treatment of Losses 501
Yield Maintenance Charges and Prepayment Premiums 501
Sale or Exchange of Regular Interests 502
Taxes That May Be Imposed on a REMIC 502
Prohibited Transactions 502
Contributions to a REMIC After the Startup Day 503
Net Income from Foreclosure Property 503
Bipartisan Budget Act of 2015 503
Taxation of Certain Foreign Investors 504
FATCA 505
Backup Withholding 505
Information Reporting 505
3.8% Medicare Tax on “Net Investment Income” 505
Reporting Requirements 505
Certain State and Local Tax Considerations 506
Method of Distribution (UNDERWRITER) 506
Incorporation of Certain Information by Reference 509
Where You Can Find More Information 509
Financial Information 509
Certain ERISA Considerations 510
General 510
Plan Asset Regulations 510
Administrative Exemptions 511
Insurance Company General Accounts 513
Legal Investment 514
Legal Matters 514
Ratings 514
Index of Defined Terms 517

 

Annex A-1: Certain Characteristics of the Mortgage Loans and Mortgaged Properties A-1-1
     
Annex A-2: Mortgage Pool Information (Tables) A-2-1
     
Annex A-3: Summaries of the Fifteen Largest Mortgage Loans A-3-1
     
Annex B: Form of Distribution Date Statement B-1
     
Annex C: Form of Operating Advisor Annual Report C-1
     
Annex D-1: Mortgage Loan Representations and Warranties D-1-1
     
Annex D-2: Exceptions to Mortgage Loan Representations and Warranties D-2-1
     
Annex E: Class A-SB Planned Principal Balance Schedule E-1

 

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Important Notice Regarding the Offered Certificates

 

WE HAVE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, WITH RESPECT TO THE CERTIFICATES OFFERED IN THIS PROSPECTUS. HOWEVER, THIS PROSPECTUS DOES NOT CONTAIN ALL OF THE INFORMATION CONTAINED IN OUR REGISTRATION STATEMENT. FOR FURTHER INFORMATION REGARDING THE DOCUMENTS REFERRED TO IN THIS PROSPECTUS, YOU SHOULD REFER TO OUR REGISTRATION STATEMENT AND THE EXHIBITS TO IT. OUR REGISTRATION STATEMENT AND THE EXHIBITS TO IT CAN BE OBTAINED ELECTRONICALLY THROUGH THE SEC’S INTERNET WEBSITE (HTTP://WWW.SEC.GOV).

 

THIS PROSPECTUS IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY STATE OR OTHER JURISDICTION WHERE SUCH OFFER, SOLICITATION OR SALE IS NOT PERMITTED.

 

THE OFFERED CERTIFICATES REFERRED TO IN THIS PROSPECTUS ARE OFFERED ON A “WHEN, AS AND IF ISSUED” BASIS.

 

THE UNDERWRITERS DESCRIBED IN THESE MATERIALS MAY FROM TIME TO TIME PERFORM INVESTMENT BANKING SERVICES FOR, OR SOLICIT INVESTMENT BANKING BUSINESS FROM, ANY COMPANY NAMED IN THESE MATERIALS. THE UNDERWRITERS AND/OR THEIR RESPECTIVE EMPLOYEES MAY FROM TIME TO TIME HAVE A LONG OR SHORT POSITION IN ANY CONTRACT OR CERTIFICATE DISCUSSED IN THESE MATERIALS.

 

THE INFORMATION CONTAINED IN THIS PROSPECTUS SUPERSEDES ANY PREVIOUS SUCH INFORMATION DELIVERED TO ANY PROSPECTIVE INVESTOR.

 

THE OFFERED CERTIFICATES DO NOT REPRESENT AN INTEREST IN OR OBLIGATION OF THE DEPOSITOR, THE SPONSORS, THE MORTGAGE LOAN SELLERS, THE MASTER SERVICER, THE SPECIAL SERVICER, THE TRUSTEE, THE OPERATING ADVISOR, THE ASSET REPRESENTATIONS REVIEWER, THE CERTIFICATE ADMINISTRATOR, THE DIRECTING CERTIFICATEHOLDER, THE RISK RETENTION CONSULTATION PARTIES, THE UNDERWRITERS OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THE OFFERED CERTIFICATES NOR THE MORTGAGE LOANS ARE INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY OR PRIVATE INSURER.

 

THERE IS CURRENTLY NO SECONDARY MARKET FOR THE OFFERED CERTIFICATES. WE CANNOT ASSURE YOU THAT A SECONDARY MARKET WILL DEVELOP OR, IF A SECONDARY MARKET DOES DEVELOP, THAT IT WILL PROVIDE HOLDERS OF THE OFFERED CERTIFICATES WITH LIQUIDITY OF INVESTMENT OR THAT IT WILL CONTINUE FOR THE TERM OF THE OFFERED CERTIFICATES. THE UNDERWRITERS CURRENTLY INTEND TO MAKE A MARKET IN THE OFFERED CERTIFICATES BUT ARE UNDER NO OBLIGATION TO DO SO. ACCORDINGLY, PURCHASERS MUST BE PREPARED TO BEAR THE RISKS OF THEIR INVESTMENTS FOR AN INDEFINITE PERIOD. SEE “RISK FACTORS—OTHER RISKS RELATING TO THE CERTIFICATES—THE CERTIFICATES MAY HAVE LIMITED LIQUIDITY AND THE MARKET VALUE OF THE CERTIFICATES MAY DECLINE” IN THIS PROSPECTUS.

 

Important Notice About Information Presented in this Prospectus

 

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information that is different from that contained in this prospectus. The information contained in this prospectus is accurate only as of the date of this prospectus.

 

This prospectus begins with several introductory sections describing the certificates and the issuing entity in abbreviated form:

 

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Summary of Certificates, commencing on the page set forth on the table of contents of this prospectus, which sets forth important statistical information relating to the certificates;

 

Summary of Terms, commencing on the page set forth on the table of contents of this prospectus, which gives a brief introduction of the key features of the certificates and a description of the mortgage loans; and

 

Risk Factors, commencing on the page set forth on the table of contents of this prospectus, which describes risks that apply to the certificates.

 

This prospectus includes cross references to sections in this prospectus where you can find further related discussions. The table of contents in this prospectus identifies the pages where these sections are located.

 

Certain capitalized terms are defined and used in this prospectus to assist you in understanding the terms of the offered certificates and this offering. The capitalized terms used in this prospectus are defined on the pages indicated under the caption “Index of Defined Terms” in this prospectus.

 

All annexes and schedules attached to this prospectus are a part of this prospectus.

 

In this prospectus:

 

the terms “depositor”, “we”, “us” and “our” refer to Barclays Commercial Mortgage Securities LLC;

 

references to any specified mortgage loan should be construed to refer to the mortgage loan secured by the mortgaged property (or portfolio of mortgaged properties) with the same name identified on Annex A-1, representing the approximate percentage of the initial pool balance set forth on Annex A-1;

 

any parenthetical with a percentage next to a mortgage loan name or a group of mortgage loans indicates the approximate percentage (or approximate aggregate percentage) of the initial pool balance that the outstanding principal balance of such mortgage loan (or the aggregate outstanding principal balance of such group of mortgage loans) represents, as set forth on Annex A-1;

 

any parenthetical with a percentage next to a mortgaged property (or portfolio of mortgaged properties) indicates the approximate percentage (or approximate aggregate percentage) of the initial pool balance that the outstanding principal balance of the related mortgage loan (or, if applicable, the allocated loan amount or aggregate allocated loan amount with respect to such mortgaged property or mortgaged properties) represents, as set forth on Annex A-1;

 

references to a “pooling and servicing agreement” (other than the BBCMS 2019-C5 pooling and servicing agreement) governing the servicing of any mortgage loan should be construed to refer to any relevant pooling and servicing agreement, trust and servicing agreement or other primary transaction agreement governing the servicing of such mortgage loan; and

 

references to “lender” or “mortgage lender” with respect to a mortgage loan generally should be construed to mean, from and after the date of initial issuance of the offered certificates, the trustee on behalf of the issuing entity as the holder of record title to the mortgage loans or the master servicer or special servicer, as applicable, with respect to the obligations and rights of the lender as described under “Pooling and Servicing Agreement”.

 

NOTICE TO RESIDENTS WITHIN EUROPEAN ECONOMIC AREA

 

THIS PROSPECTUS IS NOT A PROSPECTUS FOR THE PURPOSES OF THE PROSPECTUS REGULATION (AS DEFINED BELOW).

 

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THE CERTIFICATES ARE NOT INTENDED TO BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO AND SHOULD NOT BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO ANY RETAIL INVESTOR IN THE EUROPEAN ECONOMIC AREA (THE “EEA”). FOR THESE PURPOSES, A RETAIL INVESTOR MEANS A PERSON WHO IS ONE (OR MORE) OF: (I) A RETAIL CLIENT AS DEFINED IN POINT (11) OF ARTICLE 4(1) OF DIRECTIVE 2014/65/EU (AS AMENDED, “MIFID II”); OR (II) A CUSTOMER WITHIN THE MEANING OF DIRECTIVE (EU) 2016/97 (AS AMENDED), WHERE THAT CUSTOMER WOULD NOT QUALIFY AS A PROFESSIONAL CLIENT AS DEFINED IN POINT (10) OF ARTICLE 4(1) OF MIFID II; OR (III) NOT A QUALIFIED INVESTOR AS DEFINED IN REGULATION 2017/1129/EU (AS AMENDED OR SUPERSEDED, THE “PROSPECTUS REGULATION”).

 

CONSEQUENTLY NO KEY INFORMATION DOCUMENT REQUIRED BY REGULATION (EU) NO 1286/2014 (AS AMENDED, THE “PRIIPS REGULATION”) FOR OFFERING OR SELLING THE CERTIFICATES OR OTHERWISE MAKING THEM AVAILABLE TO RETAIL INVESTORS IN THE EEA HAS BEEN PREPARED AND THEREFORE OFFERING OR SELLING THE OFFERED CERTIFICATES OR OTHERWISE MAKING THEM AVAILABLE TO ANY RETAIL INVESTOR IN THE EEA MAY BE UNLAWFUL UNDER THE PRIIPS REGULATION.

 

FURTHERMORE, THIS PROSPECTUS HAS BEEN PREPARED ON THE BASIS THAT ANY OFFER OF CERTIFICATES IN THE EEA WILL ONLY BE MADE TO A LEGAL ENTITY WHICH IS A QUALIFIED INVESTOR UNDER THE PROSPECTUS REGULATION (”QUALIFIED INVESTOR”). ACCORDINGLY, ANY PERSON MAKING OR INTENDING TO MAKE AN OFFER IN THE EEA OF THE CERTIFICATES MAY ONLY DO SO WITH RESPECT TO QUALIFIED INVESTORS. NONE OF THE ISSUING ENTITY, THE DEPOSITOR OR THE UNDERWRITERS HAS AUTHORIZED, NOR DOES ANY OF THEM AUTHORIZE, THE MAKING OF ANY OFFER OF CERTIFICATES OR OFFERED CERTIFICATES OTHER THAN TO QUALIFIED INVESTORS.

 

ANY DISTRIBUTOR SUBJECT TO MIFID II THAT IS OFFERING, SELLING OR RECOMMENDING THE OFFERED CERTIFICATES IS RESPONSIBLE FOR UNDERTAKING ITS OWN TARGET MARKET ASSESSMENT IN RESPECT OF THE OFFERED CERTIFICATES AND DETERMINING ITS OWN DISTRIBUTION CHANNELS FOR THE PURPOSES OF THE MIFID II PRODUCT GOVERNANCE RULES UNDER COMMISSION DELEGATED DIRECTIVE (EU) 2017/593 (AS AMENDED, THE "DELEGATED DIRECTIVE"). NEITHER THE ISSUING ENTITY, THE DEPOSITOR NOR ANY UNDERWRITER MAKES ANY REPRESENTATIONS OR WARRANTIES AS TO A DISTRIBUTOR'S COMPLIANCE WITH THE DELEGATED DIRECTIVE.

 

EUROPEAN ECONOMIC AREA SELLING RESTRICTIONS

 

EACH UNDERWRITER HAS REPRESENTED AND AGREED THAT:

 

IT HAS NOT OFFERED, SOLD OR OTHERWISE MADE AVAILABLE AND WILL NOT OFFER, SELL OR OTHERWISE MAKE AVAILABLE ANY OFFERED CERTIFICATES TO ANY RETAIL INVESTOR IN THE EUROPEAN ECONOMIC AREA. FOR THE PURPOSES OF THIS PROVISION:

 

(i) THE EXPRESSION “RETAIL INVESTOR” MEANS A PERSON WHO IS ONE (OR MORE) OF THE FOLLOWING:

 

(A) A RETAIL CLIENT AS DEFINED IN POINT (11) OF ARTICLE 4(1) OF DIRECTIVE 2014/65/EU (AS AMENDED, “MIFID II”); OR

 

(B) A CUSTOMER WITHIN THE MEANING OF DIRECTIVE (EU) 2016/97 (AS AMENDED), WHERE THAT CUSTOMER WOULD NOT QUALIFY AS A PROFESSIONAL CLIENT AS DEFINED IN POINT (10) OF ARTICLE 4(1) OF MIFID II; OR

 

(C) NOT A QUALIFIED INVESTOR AS DEFINED IN REGULATION 2017/1129/EU (AS AMENDED OR SUPERSEDED, THE “PROSPECTUS REGULATION”); AND

 

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(ii) THE EXPRESSION “OFFER” INCLUDES THE COMMUNICATION IN ANY FORM AND BY ANY MEANS OF SUFFICIENT INFORMATION ON THE TERMS OF THE OFFER AND THE OFFERED CERTIFICATES TO BE OFFERED SO AS TO ENABLE AN INVESTOR TO DECIDE TO PURCHASE OR SUBSCRIBE TO THE OFFERED CERTIFICATES.

 

EUROPEAN UNION RETENTION REQUIREMENT

 

NONE OF THE DEPOSITOR, THE UNDERWRITERS, THE MORTGAGE LOAN SELLERS OR THEIR AFFILIATES WILL RETAIN A 5% NET ECONOMIC INTEREST WITH RESPECT TO THE CERTIFICATES IN ANY OF THE FORMS PRESCRIBED BY ARTICLE 6 OF REGULATION (EU) 2017/2402 (THE “EU SECURITIZATION REGULATION”). FOR ADDITIONAL INFORMATION REGARDING THE EU SECURITIZATION REGULATION, SEE “RISK FACTORS—OTHER RISKS RELATING TO THE CERTIFICATES—EU RISK RETENTION AND DUE DILIGENCE REQUIREMENTS” IN THIS PROSPECTUS.

 

NOTICE TO RESIDENTS OF THE UNITED KINGDOM

 

THE ISSUING ENTITY MAY CONSTITUTE A “COLLECTIVE INVESTMENT SCHEME” AS DEFINED BY SECTION 235 OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (AS AMENDED, “FSMA”) THAT IS NOT A “RECOGNIZED COLLECTIVE INVESTMENT SCHEME” FOR THE PURPOSES OF THE FSMA AND THAT HAS NOT BEEN AUTHORIZED, REGULATED OR OTHERWISE RECOGNIZED OR APPROVED. AS AN UNREGULATED SCHEME, THE OFFERED CERTIFICATES CANNOT BE MARKETED IN THE UNITED KINGDOM TO THE GENERAL PUBLIC, EXCEPT IN ACCORDANCE WITH THE FSMA.

 

THE DISTRIBUTION OF THIS PROSPECTUS (A) IF MADE BY A PERSON WHO IS NOT AN AUTHORIZED PERSON UNDER THE FSMA, IS BEING MADE ONLY TO, OR DIRECTED ONLY AT, PERSONS WHO (I) ARE OUTSIDE THE UNITED KINGDOM, OR (II) HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS AND QUALIFY AS INVESTMENT PROFESSIONALS IN ACCORDANCE WITH ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (AS AMENDED, THE “FINANCIAL PROMOTION ORDER”), OR (III) ARE PERSONS FALLING WITHIN ARTICLE 49(2)(A) THROUGH (D) (“HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC.”) OF THE FINANCIAL PROMOTION ORDER (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS “FPO PERSONS”); AND (B) IF MADE BY A PERSON WHO IS AN AUTHORIZED PERSON UNDER THE FSMA, IS BEING MADE ONLY TO, OR DIRECTED ONLY AT, PERSONS WHO (I) ARE OUTSIDE THE UNITED KINGDOM, OR (II) HAVE PROFESSIONAL EXPERIENCE OF PARTICIPATING IN UNREGULATED SCHEMES (AS DEFINED FOR PURPOSES OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (PROMOTION OF COLLECTIVE INVESTMENT SCHEMES) (EXEMPTIONS) ORDER 2001 (AS AMENDED, THE "PROMOTION OF COLLECTIVE INVESTMENT SCHEMES EXEMPTIONS ORDER") AND QUALIFY AS INVESTMENT PROFESSIONALS IN ACCORDANCE WITH ARTICLE 14(5) OF THE PROMOTION OF COLLECTIVE INVESTMENT SCHEMES EXEMPTIONS ORDER, OR (III) ARE PERSONS FALLING WITHIN ARTICLE 22(2)(A) THROUGH (D) (HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC.) OF THE PROMOTION OF COLLECTIVE INVESTMENT SCHEMES EXEMPTIONS ORDER, OR (IV) ARE PERSONS TO WHOM THE ISSUING ENTITY MAY LAWFULLY BE PROMOTED IN ACCORDANCE WITH SECTION 4.12 OF THE UK FINANCIAL CONDUCT AUTHORITY’S CONDUCT OF BUSINESS SOURCEBOOK (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS “PCIS PERSONS” AND, TOGETHER WITH THE FPO PERSONS, THE “RELEVANT PERSONS”).

 

THIS PROSPECTUS MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS PROSPECTUS RELATES, INCLUDING THE OFFERED CERTIFICATES, IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS.

 

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POTENTIAL INVESTORS IN THE UNITED KINGDOM ARE ADVISED THAT ALL, OR MOST, OF THE PROTECTIONS AFFORDED BY THE UNITED KINGDOM REGULATORY SYSTEM WILL NOT APPLY TO AN INVESTMENT IN THE OFFERED CERTIFICATES AND THAT COMPENSATION WILL NOT BE AVAILABLE UNDER THE UNITED KINGDOM FINANCIAL SERVICES COMPENSATION SCHEME.

 

UNITED KINGDOM SELLING RESTRICTIONS

 

EACH UNDERWRITER HAS REPRESENTED AND AGREED THAT:

 

(A) IT HAS ONLY COMMUNICATED OR CAUSED TO BE COMMUNICATED AND WILL ONLY COMMUNICATE OR CAUSE TO BE COMMUNICATED AN INVITATION OR INDUCEMENT TO ENGAGE IN INVESTMENT ACTIVITY (WITHIN THE MEANING OF SECTION 21 OF THE FSMA RECEIVED BY IT IN CONNECTION WITH THE ISSUE OR SALE OF THE OFFERED CERTIFICATES IN CIRCUMSTANCES IN WHICH SECTION 21(1) OF THE FSMA DOES NOT APPLY TO THE ISSUING ENTITY OR THE DEPOSITOR; AND

 

(B) IT HAS COMPLIED AND WILL COMPLY WITH ALL APPLICABLE PROVISIONS OF THE FSMA WITH RESPECT TO ANYTHING DONE BY IT IN RELATION TO THE OFFERED CERTIFICATES IN, FROM OR OTHERWISE INVOLVING THE UNITED KINGDOM.

 

PEOPLE’S REPUBLIC OF CHINA

 

THE OFFERED CERTIFICATES WILL NOT BE OFFERED OR SOLD IN THE PEOPLE’S REPUBLIC OF CHINA (EXCLUDING HONG KONG, MACAU AND TAIWAN, THE “PRC”) AS PART OF THE INITIAL DISTRIBUTION OF THE OFFERED CERTIFICATES BUT MAY BE AVAILABLE FOR PURCHASE BY INVESTORS RESIDENT IN THE PRC FROM OUTSIDE THE PRC.

 

THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES IN THE PRC TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE THE OFFER OR SOLICITATION IN THE PRC.

 

THE DEPOSITOR DOES NOT REPRESENT THAT THIS PROSPECTUS MAY BE LAWFULLY DISTRIBUTED, OR THAT ANY OFFERED CERTIFICATES MAY BE LAWFULLY OFFERED, IN COMPLIANCE WITH ANY APPLICABLE REGISTRATION OR OTHER REQUIREMENTS IN THE PRC, OR PURSUANT TO AN EXEMPTION AVAILABLE THEREUNDER, OR ASSUME ANY RESPONSIBILITY FOR FACILITATING ANY SUCH DISTRIBUTION OR OFFERING. IN PARTICULAR, NO ACTION HAS BEEN TAKEN BY THE DEPOSITOR WHICH WOULD PERMIT AN OFFERING OF ANY OFFERED CERTIFICATES OR THE DISTRIBUTION OF THIS PROSPECTUS IN THE PRC. ACCORDINGLY, THE OFFERED CERTIFICATES ARE NOT BEING OFFERED OR SOLD WITHIN THE PRC BY MEANS OF THIS PROSPECTUS OR ANY OTHER DOCUMENT. NEITHER THIS PROSPECTUS NOR ANY ADVERTISEMENT OR OTHER OFFERING MATERIAL MAY BE DISTRIBUTED OR PUBLISHED IN THE PRC, EXCEPT UNDER CIRCUMSTANCES THAT WILL RESULT IN COMPLIANCE WITH ANY APPLICABLE LAWS AND REGULATIONS.

 

HONG KONG

 

THIS PROSPECTUS HAS NOT BEEN DELIVERED FOR REGISTRATION TO THE REGISTRAR OF COMPANIES IN HONG KONG AND THE CONTENTS OF THIS PROSPECTUS HAVE NOT BEEN REVIEWED OR APPROVED BY ANY REGULATORY AUTHORITY IN HONG KONG. THIS PROSPECTUS DOES NOT CONSTITUTE NOR INTEND TO BE AN OFFER OR INVITATION TO THE PUBLIC IN HONG KONG TO ACQUIRE THE OFFERED CERTIFICATES.

 

EACH UNDERWRITER HAS REPRESENTED, WARRANTED AND AGREED THAT: (1) IT HAS NOT OFFERED OR SOLD AND WILL NOT OFFER OR SELL IN HONG KONG, BY MEANS OF ANY DOCUMENT, ANY OFFERED CERTIFICATES (EXCEPT FOR CERTIFICATES WHICH ARE A “STRUCTURED PRODUCT” AS DEFINED IN THE SECURITIES AND FUTURES ORDINANCE (CAP.

 

 19

 

 

571) (THE “SFO”) OF HONG KONG) OTHER THAN (A) TO “PROFESSIONAL INVESTORS” AS DEFINED IN THE SFO AND ANY RULES OR REGULATIONS MADE UNDER THE SFO; OR (B) IN OTHER CIRCUMSTANCES WHICH DO NOT RESULT IN THE DOCUMENT BEING A “PROSPECTUS” AS DEFINED IN THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE (CAP. 32) (THE “C(WUMP)O”) OF HONG KONG OR WHICH DO NOT CONSTITUTE AN OFFER TO THE PUBLIC WITHIN THE MEANING OF THE C(WUMP)O; AND (2) IT HAS NOT ISSUED OR HAD IN ITS POSSESSION FOR THE PURPOSES OF ISSUE, AND WILL NOT ISSUE OR HAVE IN ITS POSSESSION FOR THE PURPOSES OF ISSUE, WHETHER IN HONG KONG OR ELSEWHERE, ANY ADVERTISEMENT, INVITATION OR DOCUMENT RELATING TO THE OFFERED CERTIFICATES, WHICH IS DIRECTED AT, OR THE CONTENTS OF WHICH ARE LIKELY TO BE ACCESSED OR READ BY, THE PUBLIC OF HONG KONG (EXCEPT IF PERMITTED TO DO SO UNDER THE SECURITIES LAWS OF HONG KONG) OTHER THAN WITH RESPECT TO OFFERED CERTIFICATES WHICH ARE OR ARE INTENDED TO BE DISPOSED OF ONLY TO PERSONS OUTSIDE HONG KONG OR ONLY TO “PROFESSIONAL INVESTORS” AS DEFINED IN THE SFO AND ANY RULES MADE UNDER THE SFO.

 

W A R N I N G

 

THE CONTENTS OF THIS PROSPECTUS HAVE NOT BEEN REVIEWED OR APPROVED BY ANY REGULATORY AUTHORITY IN HONG KONG. YOU ARE ADVISED TO EXERCISE CAUTION IN RELATION TO THE OFFER. IF YOU ARE IN ANY DOUBT ABOUT ANY OF THE CONTENTS OF THIS PROSPECTUS, YOU SHOULD OBTAIN INDEPENDENT PROFESSIONAL ADVICE.

 

SINGAPORE

 

THIS PROSPECTUS OR ANY OTHER DOCUMENT RELATED TO THE SUBSCRIPTION OF CERTIFICATES HAS NOT BEEN AND WILL NOT BE LODGED OR REGISTERED AS A PROSPECTUS WITH THE MONETARY AUTHORITY OF SINGAPORE (THE “MAS”) UNDER THE SECURITIES AND FUTURES ACT, CHAPTER 289 OF SINGAPORE, AS MAY BE AMENDED FROM TIME TO TIME (THE “SFA”). THE MAS ASSUMES NO RESPONSIBILITY FOR THE CONTENTS OF THIS PROSPECTUS OR ANY SUCH DOCUMENT. ACCORDINGLY, STATUTORY LIABILITY UNDER THE SFA IN RELATION TO THE CONTENT OF PROSPECTUSES WOULD NOT APPLY.

 

NO CERTIFICATES MAY BE OFFERED OR SOLD OR CAUSED TO BE MADE THE SUBJECT OF AN INVITATION FOR SUBSCRIPTION OR PURCHASE, NOR MAY THIS PROSPECTUS OR ANY OTHER DOCUMENT OR MATERIAL IN CONNECTION WITH THE OFFER OR SALE, OR INVITATION FOR SUBSCRIPTION OR PURCHASE, OF THE CERTIFICATES BE CIRCULATED OR DISTRIBUTED, WHETHER DIRECTLY OR INDIRECTLY, TO PERSONS IN SINGAPORE OTHER THAN (I) TO AN INSTITUTIONAL INVESTOR (AS DEFINED IN SECTION 4A(1)(C) OF THE SFA) PURSUANT TO SECTION 274 OF THE SFA (EACH AN “INSTITUTIONAL INVESTOR”), (II) TO A RELEVANT PERSON (AS DEFINED IN SECTION 275(2) OF THE SFA) PURSUANT TO SECTION 275(1), OR ANY PERSON PURSUANT TO SECTION 275(1A), AND IN ACCORDANCE WITH THE CONDITIONS SPECIFIED IN SECTION 275 OF THE SFA, PROVIDED ALWAYS THAT NONE OF SUCH PERSON SHALL BE AN INDIVIDUAL OTHER THAN AN INDIVIDUAL WHO IS AN ACCREDITED INVESTOR (AS DEFINED IN SECTION 4A(1)(A) OF THE SFA) (EACH A “RELEVANT INVESTOR”).

 

NO CERTIFICATES ACQUIRED BY (I) AN INSTITUTIONAL INVESTOR; OR (II) A RELEVANT INVESTOR IN ACCORDANCE WITH THE CONDITIONS SPECIFIED IN SECTION 275 OF THE SFA MAY BE OFFERED OR SOLD, MADE THE SUBJECT OF AN INVITATION FOR SUBSCRIPTION OR PURCHASE, OR OTHERWISE TRANSFERRED, WHETHER DIRECTLY OR INDIRECTLY, TO PERSONS IN SINGAPORE, OTHER THAN TO (I) AN INSTITUTIONAL INVESTOR; OR (II) A RELEVANT INVESTOR IN ACCORDANCE WITH THE CONDITIONS SPECIFIED IN SECTION 275 OF THE SFA.

 

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UNLESS OTHERWISE PERMITTED UNDER THE SFA, WHERE THE CERTIFICATES ARE SUBSCRIBED OR PURCHASED PURSUANT TO SECTION 275 OF THE SFA BY A RELEVANT INVESTOR WHICH IS:

 

A CORPORATION (WHICH IS NOT AN ACCREDITED INVESTOR) THE SOLE BUSINESS OF WHICH IS TO HOLD INVESTMENTS AND THE ENTIRE SHARE CAPITAL OF WHICH IS OWNED BY ONE OR MORE INDIVIDUALS, EACH OF WHOM IS AN ACCREDITED INVESTOR; OR

 

A TRUST (WHERE THE TRUSTEE IS NOT AN ACCREDITED INVESTOR) WHOSE SOLE PURPOSE IS TO HOLD INVESTMENTS AND EACH BENEFICIARY IS AN INDIVIDUAL WHO IS AN ACCREDITED INVESTOR,

 

SECURITIES (AS DEFINED IN SECTION 239(1) OF THE SFA) OF THAT CORPORATION OR THE BENEFICIARIES' RIGHTS AND INTERESTS (HOWSOEVER DEFINED) IN THAT TRUST SHALL NOT BE TRANSFERABLE FOR SIX MONTHS AFTER THAT CORPORATION OR THAT TRUST HAS ACQUIRED THE SECURITIES UNDER SECTION 275 OF THE SFA EXCEPT:

 

TO AN INSTITUTIONAL INVESTOR OR TO A RELEVANT PERSON AS DEFINED IN SECTION 275(2) OF THE SFA OR (IN THE CASE OF SUCH CORPORATION) WHERE THE TRANSFER ARISES FROM AN OFFER REFERRED TO IN SECTION 276(3)(I)(B) OF THE SFA OR (IN THE CASE OF SUCH TRUST) WHERE THE TRANSFER ARISES FROM AN OFFER REFERRED TO IN SECTION 276(4)(I)(B) OF THE SFA;

 

WHERE NO CONSIDERATION IS OR WILL BE GIVEN FOR THE TRANSFER;

 

WHERE THE TRANSFER IS BY OPERATION OF LAW; OR

 

PURSUANT TO SECTION 276(7) OF THE SFA OR REGULATION 32 OF THE SECURITIES AND FUTURES (OFFERS OF INVESTMENTS) (SHARES AND DEBENTURES) REGULATIONS 2005 OF SINGAPORE.

 

REPUBLIC OF KOREA

 

THESE CERTIFICATES HAVE NOT BEEN REGISTERED WITH THE FINANCIAL SERVICES COMMISSION OF THE REPUBLIC OF KOREA FOR A PUBLIC OFFERING IN THE REPUBLIC OF KOREA. THE UNDERWRITERS HAVE THEREFORE REPRESENTED AND AGREED THAT THE CERTIFICATES HAVE NOT BEEN AND WILL NOT BE OFFERED, SOLD OR DELIVERED DIRECTLY OR INDIRECTLY, OR OFFERED, SOLD OR DELIVERED TO ANY PERSON FOR RE-OFFERING OR RESALE, DIRECTLY OR INDIRECTLY, IN THE REPUBLIC OF KOREA OR TO ANY RESIDENT OF THE REPUBLIC OF KOREA, EXCEPT AS OTHERWISE PERMITTED UNDER APPLICABLE LAWS AND REGULATIONS OF THE REPUBLIC OF KOREA, INCLUDING THE FINANCIAL INVESTMENT SERVICES AND CAPITAL MARKETS ACT AND THE FOREIGN EXCHANGE TRANSACTIONS LAW AND THE DECREES AND REGULATIONS THEREUNDER.

 

JAPAN

 

THE OFFERED CERTIFICATES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE FINANCIAL INSTRUMENTS AND EXCHANGE LAW OF JAPAN, AS AMENDED (THE “FIEL”), AND DISCLOSURE UNDER THE FIEL HAS NOT BEEN AND WILL NOT BE MADE WITH RESPECT TO THE OFFERED CERTIFICATES. ACCORDINGLY, EACH UNDERWRITER HAS REPRESENTED AND AGREED THAT IT HAS NOT, DIRECTLY OR INDIRECTLY, OFFERED OR SOLD AND WILL NOT, DIRECTLY OR INDIRECTLY, OFFER OR SELL ANY OFFERED CERTIFICATES IN JAPAN OR TO, OR FOR THE BENEFIT OF, ANY RESIDENT OF

 

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JAPAN (WHICH TERM AS USED IN THIS PROSPECTUS MEANS ANY PERSON RESIDENT IN JAPAN, INCLUDING ANY CORPORATION OR OTHER ENTITY ORGANIZED UNDER THE LAWS OF JAPAN) OR TO OTHERS FOR REOFFERING OR RE-SALE, DIRECTLY OR INDIRECTLY, IN JAPAN OR TO, OR FOR THE BENEFIT OF, ANY RESIDENT OF JAPAN EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF, AND OTHERWISE IN COMPLIANCE WITH, THE FIEL AND OTHER RELEVANT LAWS, REGULATIONS AND MINISTERIAL GUIDELINES OF JAPAN. AS PART OF THIS OFFERING OF THE OFFERED CERTIFICATES, THE UNDERWRITERS MAY OFFER THE OFFERED CERTIFICATES IN JAPAN TO UP TO 49 OFFEREES IN ACCORDANCE WITH THE ABOVE PROVISIONS.

 

JAPANESE RISK RETENTION REQUIREMENT

 

THE JAPANESE FINANCIAL SERVICES AGENCY (“JFSA”) PUBLISHED A RISK RETENTION RULE AS PART OF THE REGULATORY CAPITAL REGULATION OF CERTAIN CATEGORIES OF JAPANESE INVESTORS SEEKING TO INVEST IN SECURITIZATION TRANSACTIONS (THE “JRR RULE”). THE JRR RULE MANDATES AN “INDIRECT” COMPLIANCE REQUIREMENT, MEANING THAT CERTAIN CATEGORIES OF JAPANESE INVESTORS WILL BE REQUIRED TO APPLY HIGHER RISK WEIGHTING TO SECURITIZATION EXPOSURES THEY HOLD UNLESS THE SPONSORS COMMIT TO HOLD A RETENTION INTEREST IN THE SECURITIES ISSUED IN THE SECURITIZATION TRANSACTION EQUAL TO AT LEAST 5% OF THE EXPOSURE OF THE TOTAL UNDERLYING ASSETS IN THE SECURITIZATION TRANSACTION (THE “JAPANESE RETENTION REQUIREMENT”), OR SUCH INVESTORS DETERMINE THAT THE UNDERLYING ASSETS WERE NOT “INAPPROPRIATELY ORIGINATED.” IN THE ABSENCE OF SUCH A DETERMINATION BY SUCH INVESTORS THAT SUCH UNDERLYING ASSETS WERE NOT “INAPPROPRIATELY ORIGINATED,” THE JAPANESE RETENTION REQUIREMENT WOULD APPLY TO AN INVESTMENT BY SUCH INVESTORS IN SUCH SECURITIES.

 

NO PARTY TO THE TRANSACTION DESCRIBED IN THIS PROSPECTUS HAS COMMITTED TO HOLD A RISK RETENTION INTEREST IN COMPLIANCE WITH THE JAPANESE RETENTION REQUIREMENT, AND WE MAKE NO REPRESENTATION AS TO WHETHER THE TRANSACTION DESCRIBED IN THIS PROSPECTUS WOULD OTHERWISE COMPLY WITH THE JRR RULE.

 

NOTICE TO RESIDENTS OF CANADA

 

THE OFFERED CERTIFICATES MAY BE SOLD IN CANADA ONLY TO PURCHASERS PURCHASING, OR DEEMED TO BE PURCHASING, AS PRINCIPAL THAT ARE ACCREDITED INVESTORS, AS DEFINED IN NATIONAL INSTRUMENT 45-106 PROSPECTUS EXEMPTIONS OR SUBSECTION 73.3(1) OF THE SECURITIES ACT (ONTARIO), AND ARE PERMITTED CLIENTS, AS DEFINED IN NATIONAL INSTRUMENT 31-103 REGISTRATION REQUIREMENTS, EXEMPTIONS AND ONGOING REGISTRANT OBLIGATIONS. ANY RESALE OF THE OFFERED CERTIFICATES MUST BE MADE IN ACCORDANCE WITH AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE PROSPECTUS REQUIREMENTS OF APPLICABLE SECURITIES LAWS.

 

SECURITIES LEGISLATION IN CERTAIN PROVINCES OR TERRITORIES OF CANADA MAY PROVIDE A PURCHASER WITH REMEDIES FOR RESCISSION OR DAMAGES IF THIS PROSPECTUS (INCLUDING ANY AMENDMENT THERETO) CONTAINS A MISREPRESENTATION, PROVIDED THAT THE REMEDIES FOR RESCISSION OR DAMAGES ARE EXERCISED BY THE PURCHASER WITHIN THE TIME LIMIT PRESCRIBED BY THE SECURITIES LEGISLATION OF THE PURCHASER’S PROVINCE OR TERRITORY. THE PURCHASER SHOULD REFER TO ANY APPLICABLE PROVISIONS OF THE SECURITIES LEGISLATION OF THE PURCHASER’S PROVINCE OR TERRITORY FOR PARTICULARS OF THESE RIGHTS OR CONSULT WITH A LEGAL ADVISOR.

 

PURSUANT TO SECTION 3A.3 OF NATIONAL INSTRUMENT 33-105 UNDERWRITING CONFLICTS (“NI 33-105”), THE UNDERWRITERS ARE NOT REQUIRED TO COMPLY WITH THE DISCLOSURE REQUIREMENTS OF NI 33-105 REGARDING UNDERWRITER CONFLICTS OF INTEREST IN CONNECTION WITH THIS OFFERING.

 

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Summary of Terms

 

This summary highlights selected information from this prospectus. It does not contain all of the information you need to consider in making your investment decision. To understand all of the terms of the offering of the offered certificates, read this entire document carefully.

 

Relevant Parties

 

Title of Certificates BBCMS Mortgage Trust 2019-C5, Commercial Mortgage Pass-Through Certificates, Series 2019-C5.

 

DepositorBarclays Commercial Mortgage Securities LLC, a Delaware limited liability company, a wholly-owned subsidiary of Barclays Capital Real Estate Inc. The depositor’s address is 745 Seventh Avenue, New York, New York 10019, and its telephone number is (212) 412-4000. See “Transaction Parties—The Depositor”.

 

Issuing Entity BBCMS Mortgage Trust 2019-C5, a New York common law trust, to be established on the closing date under the pooling and servicing agreement. For more detailed information, see “Transaction Parties—The Issuing Entity”.

 

Sponsors; Mortgage

   Loan Sellers; Originators The sponsors of this transaction are:

 

Barclays Capital Real Estate Inc., a Delaware corporation

 

KeyBank National Association, a national banking association

 

Natixis Real Estate Capital LLC, a Delaware limited liability company

 

Societe Generale Financial Corporation, a Delaware corporation

 

Rialto Mortgage Finance, LLC, a Delaware limited liability company

 

BSPRT CMBS Finance, LLC, a Delaware limited liability company

 

The sponsors are sometimes also referred to in this prospectus as the “mortgage loan sellers”. The mortgage loan sellers will transfer to the depositor the mortgage loans set forth in the following chart, and the depositor will in turn sell the mortgage loans to the issuing entity.

 

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  Sellers of the Mortgage Loans

 

 

Mortgage Loan Seller(1)

  Number of
Mortgage
Loans
  Aggregate Principal
Balance of
Mortgage Loans
  Approx.
% of
Initial
Pool
Balance
  KeyBank National Association    13   $287,195,263    28.7%
  Barclays Capital Real Estate Inc.    17    258,560,638    25.8 
  Natixis Real Estate Capital LLC    8    200,650,000    20.0 
  Societe Generale Financial Corporation    5    111,798,719    11.2 
  Rialto Mortgage Finance, LLC    6    89,450,000    8.9 
  BSPRT CMBS Finance, LLC    6    53,666,568    5.4 
  Total    55   $1,001,321,188    100.0%

 

 

(1)Certain of the Mortgage Loans were co-originated by the related mortgage loan seller and another entity or were originated by another entity and transferred to the mortgage loan seller. See “Description of the Mortgage Pool—Co-Originated and Third-Party Originated Mortgage Loans”.

 

See “Transaction Parties—The Sponsors and Mortgage Loan Sellers”.

 

Master Servicer KeyBank National Association, a national banking association, will be the master servicer. The master servicer will be responsible for the master servicing and administration of the mortgage loans and any related companion loan pursuant to the pooling and servicing agreement (other than any mortgage loan or companion loan that is part of a whole loan and serviced under the related trust and servicing agreement or pooling and servicing agreement, as applicable, related to the transaction indicated in the table entitled “Non-Serviced Whole Loans” under “—The Mortgage Pool—Whole Loans” below). The principal commercial mortgage master servicing offices of KeyBank National Association are located at 11501 Outlook Street, Suite 300, Overland Park, Kansas 66211. See “Transaction Parties—The Master Servicer and Special Servicer” and “Pooling and Servicing Agreement”.

 

The non-serviced mortgage loans will be serviced by the non-serviced master servicer set forth in the table below under the heading “Non-Serviced Whole Loans” under “—The Mortgage Pool—Whole Loans”. See “Pooling and Servicing Agreement—Servicing of the Non-Serviced Mortgage Loans”.

 

Prior to the servicing shift date, the servicing shift whole loan will be serviced by the master servicer under the pooling and servicing agreement. From and after the servicing shift date, the servicing shift whole loan will be serviced under, and by the master servicer designated in, the servicing shift pooling and servicing agreement. See “Description of the Mortgage Pool—The Whole Loans” and “Pooling and Servicing Agreement—Servicing of the Servicing Shift Mortgage Loan”.

 

Special Servicer KeyBank National Association, a national banking association, is expected to be the special servicer with respect to the mortgage loans (other than any excluded special servicer loans) and any related companion loans other than with respect to the non-serviced mortgage loans and any related companion loan(s) set forth in the table entitled “Non-Serviced Whole Loans” under 

 

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—The Mortgage Pool—Whole Loans” below). The special servicer will be primarily responsible for (i) making decisions and performing certain servicing functions with respect to such mortgage loans and any related serviced companion loan as to which a special servicing transfer event (such as a default or an imminent default) has occurred and (ii) reviewing, evaluating, processing and providing or withholding consent as to major decisions and certain other transactions and performing certain enforcement actions relating to such mortgage loans and any related serviced companion loan for which a special servicing transfer event has not occurred, in each case pursuant to the pooling and servicing agreement for this transaction. The principal servicing office of the special servicer is located at 11501 Outlook Street, Suite 300, Overland Park, Kansas 66211. See “Transaction Parties—The Master Servicer and Special Servicer” and “Pooling and Servicing Agreement”.

 

If the special servicer obtains knowledge that it has become a borrower party with respect to any mortgage loan (such mortgage loan referred to herein as an “excluded special servicer loan”), the special servicer will be required to resign as special servicer of that excluded special servicer loan. Prior to the occurrence and continuance of a control termination event under the pooling and servicing agreement, the directing certificateholder will be required to select a separate special servicer that is not a borrower party (referred to herein as an “excluded special servicer”) with respect to any excluded special servicer loan, unless such excluded special servicer loan is also an excluded loan. After the occurrence and during the continuance of a control termination event or if at any time the applicable excluded special servicer loan is also an excluded loan, the resigning special servicer will be required to use commercially reasonable efforts to select the related excluded special servicer. See “—Directing Certificateholder” below and “Pooling and Servicing Agreement—Termination of the Master Servicer or Special Servicer for Cause”. 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 loan earned during such time as the related mortgage loan is an excluded special servicer loan.

 

KeyBank National Association is expected to be appointed as the special servicer by LD II Sub VII, LLC, a Delaware limited liability company which, on the closing date, is expected to be the initial directing certificateholder. See “Pooling and Servicing Agreement—The Directing Certificateholder”.

 

Prior to the servicing shift date, the servicing shift whole loan, if necessary, will be specially serviced by the special servicer under the pooling and servicing agreement. From and after the servicing shift date, the servicing shift whole loan will be specially serviced, if necessary, under, and by the special servicer designated in, the servicing shift pooling and servicing agreement. See “Description of the Mortgage Pool—The Whole

 

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Loans” and “Pooling and Servicing Agreement—Servicing of the Servicing Shift Mortgage Loan”.

 

The special servicer of each non-serviced mortgage loan is set forth in the table below entitled “Non-Serviced Whole Loans” under “—The Mortgage Pool—Whole Loans”. See “Pooling and Servicing Agreement—Servicing of the Non-Serviced Mortgage Loans.

 

TrusteeWells Fargo Bank, National Association will act as trustee. The corporate trust office of the trustee is located at 9062 Old Annapolis Road, Columbia, Maryland 21045. Following the transfer of the mortgage loans, the trustee, on behalf of the issuing entity, will become the mortgagee of record for each mortgage loan (other than a non-serviced mortgage loan) and any related companion loan. See “Transaction Parties—The Trustee and the Certificate Administrator” and “Pooling and Servicing Agreement”.

 

The trustee under the pooling and servicing agreement will become the mortgagee of record with respect to the servicing shift mortgage loan if the related whole loan becomes a specially serviced loan prior to the servicing shift date. From and after the servicing shift date, the mortgagee of record with respect to the servicing shift mortgage loan will be the trustee designated in the servicing shift pooling and servicing agreement.

 

With respect to each non-serviced mortgage loan, the entity set forth in the table entitled “Non-Serviced Whole Loans” under “—The Mortgage Pool—Whole Loans” below, in its capacity as trustee under the trust and servicing agreement or pooling and servicing agreement, as applicable, for the indicated transaction, is the mortgagee of record for that non-serviced mortgage loan and any related companion loan. See “Pooling and Servicing Agreement—Servicing of the Non-Serviced Mortgage Loans”.

 

Certificate Administrator Wells Fargo Bank, National Association will act as certificate administrator. The certificate administrator will also be required to act as custodian, certificate registrar, REMIC administrator, 17g-5 information provider and authenticating agent. The corporate trust offices of Wells Fargo Bank, National Association are located at 9062 Old Annapolis Road, Columbia, Maryland 21045, and for certificate transfer purposes are located at 600 South 4th Street, 7th Floor, Minneapolis, Minnesota 55479. See “Transaction Parties—The Trustee and the Certificate Administrator” and “Pooling and Servicing Agreement”.

 

The custodian with respect to the servicing shift mortgage loan will be the certificate administrator, in its capacity as custodian under the pooling and servicing agreement. After the servicing shift date, the custodian of the mortgage file for the servicing shift mortgage loan (other than the promissory note evidencing the servicing shift mortgage loan) will be the custodian under the servicing shift pooling and servicing agreement. See “Description of the Mortgage Pool—Whole Loans” and “Pooling and Servicing Agreement—Servicing of the Servicing Shift Mortgage Loan”.

 

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The custodian with respect to each non-serviced mortgage loan will be the entity set forth in the table below entitled “Non-Serviced Whole Loans” under “—The Mortgage Pool—Whole Loans”, as custodian under the trust and servicing agreement or pooling and servicing agreement, as applicable, for the indicated transaction. See “Pooling and Servicing Agreement—Servicing of the Non-Serviced Mortgage Loans”.

 

Operating Advisor Pentalpha Surveillance LLC, a Delaware limited liability company, will be the operating advisor. The operating advisor will have certain review and reporting responsibilities with respect to the performance of the special servicer, and in certain circumstances may recommend to the certificateholders that the special servicer be replaced. The operating advisor will generally have no obligations or consultation rights as operating advisor under the pooling and servicing agreement for this transaction with respect to a non-serviced mortgage loan or any related REO property. See “Transaction Parties—The Operating Advisor and Asset Representations Reviewer” and “Pooling and Servicing Agreement—The Operating Advisor”.

 

Asset Representations

    ReviewerPentalpha Surveillance LLC, a Delaware limited liability company, will also be serving as the asset representations reviewer. The asset representations reviewer will be required to review certain delinquent mortgage loans after a specified delinquency threshold has been exceeded and the required percentage of certificateholders vote to direct a review of such delinquent mortgage loans. See “Transaction Parties—The Operating Advisor and Asset Representations Reviewer” and “Pooling and Servicing Agreement—The Asset Representations Reviewer”.

 

Directing Certificateholder Subject to the rights of the related controlling pari passu companion loan holder with respect to the servicing shift whole loan prior to the servicing shift date, the directing certificateholder will have certain consent and consultation rights in certain circumstances with respect to the mortgage loans (other than (i) any non-serviced mortgage loans, (ii) the servicing shift mortgage loan and (iii) any excluded loan as described in the next paragraph), as further described in this prospectus. The directing certificateholder will generally be the controlling class certificateholder (or its representative) selected by more than a specified percentage of the controlling class certificateholders (by certificate balance, as certified by the certificate registrar from time to time as provided for in the pooling and servicing agreement). However, in certain circumstances (such as when no directing certificateholder has been appointed and no one holder owns the largest aggregate certificate balance of the controlling class) there may be no directing certificateholder even if there is a controlling class. See “Pooling and Servicing Agreement—The Directing Certificateholder”.

 

With respect to the directing certificateholder or the holder of the majority of the controlling class certificates, an “excluded loan” is a mortgage loan or whole loan with respect to which the directing

 

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certificateholder or the holder of the majority of the controlling class certificates is a borrower, a mortgagor, a manager of a mortgaged property, the holder of a mezzanine loan that has accelerated the related mezzanine loan (subject to certain exceptions) or commenced foreclosure or enforcement proceedings against the equity collateral pledged to secure the related mezzanine loan, or any borrower party affiliate thereof.

 

The controlling class will be, as of any date of determination, the most subordinate class of the Class F, Class G-RR and Class H-RR certificates then outstanding that has an aggregate certificate balance, as notionally reduced by any cumulative appraisal reduction amounts allocable to such class, at least equal to 25% of the initial certificate balance of that class. As of the closing date, the controlling class will be the Class H-RR certificates. No class of certificates, other than as described above, will be eligible to act as the controlling class or appoint a directing certificateholder.

 

It is anticipated that (i) LD II Sub VII, LLC or its affiliate will purchase approximately 65% of the Class X-F, Class F, Class G-RR, Class H-RR and Class S certificates and (ii) Eightfold Real Estate Capital Fund V, L.P. or its affiliate will purchase approximately 35% of the Class X-F, Class F, Class G-RR, Class H-RR and Class S certificates. On the closing date, LD II Sub VII, LLC is expected to be the initial directing holder with respect to each serviced mortgage loan (other than (i) the servicing shift mortgage loan and (ii) any excluded loan) and any related serviced companion loans.

 

With respect to the servicing shift whole loan, the holder of the related companion loan identified in the related intercreditor agreement as the controlling note will be the controlling noteholder with respect to the servicing shift whole loan, and will be entitled to certain consent and consultation rights with respect to the servicing shift whole loan, which are substantially similar, but not identical, to those of the directing certificateholder under the pooling and servicing agreement for this securitization. From and after the servicing shift date, the rights of the controlling noteholder of the servicing shift whole loan are expected to be exercisable by the directing certificateholder (or the equivalent) under the servicing shift pooling and servicing agreement. The directing certificateholder of this securitization will only have limited consultation rights with respect to certain servicing matters or mortgage loan modifications affecting the servicing shift mortgage loan. See “Description of the Mortgage Pool—The Whole Loan”.

 

Each entity identified in the table entitled “Non-Serviced Whole Loans” under “—The Mortgage Pool—Whole Loans” below is the initial directing certificateholder (or the equivalent) under the trust and servicing agreement or pooling and servicing agreement, as applicable, for the indicated transaction and will have certain consent and consultation rights with respect to the related non-serviced whole loan, which are substantially similar, but not identical, to those of the directing certificateholder under the

 

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pooling and servicing agreement for this securitization, subject to similar appraisal mechanics. See “Description of the Mortgage Pool—The Whole Loans—The Non-Serviced Pari Passu Whole Loans” and “Pooling and Servicing Agreement—Servicing of the Non-Serviced Mortgage Loans”.

 

Risk Retention

    Consultation Parties The “risk retention consultation parties” will be (i) a party selected by KeyBank National Association, (ii) a party selected by Barclays Bank PLC (as a “majority-owned affiliate” of Barclays Capital Real Estate Inc.) and (iii) a party selected by Natixis Real Estate Capital LLC, in each case, as a holder of a portion of the VRR Interest. Each risk retention consultation party will have certain non-binding consultation rights in certain circumstances (i) for so long as no consultation termination event is continuing, with respect to any serviced mortgage loan (other than any excluded loans) and any related serviced companion loans that is a specially serviced loan, and (ii) during the continuance of a consultation termination event, with respect to any serviced mortgage loan (other than any excluded loans) and any related serviced companion, as further described in this prospectus. For the avoidance of doubt, none of the risk retention consultation parties will have any consultation rights with respect to any applicable excluded loan. KeyBank National Association, Barclays Bank PLC and Natixis Real Estate Capital LLC (or respective affiliates thereof) are expected to be appointed as the initial risk retention consultation parties.

 

With respect to any risk retention consultation party, an “excluded loan” is a mortgage loan or whole loan with respect to which such risk retention consultation party or the person entitled to appoint such risk retention consultation party is a borrower, a mortgagor, a manager of a mortgaged property, the holder of a mezzanine loan that has accelerated the related mezzanine loan or commenced foreclosure or enforcement proceedings against the equity collateral pledged to secure the related mezzanine loan, or any borrower party affiliate thereof.

 

Certain Affiliations

    and Relationships The originators, the sponsors, the underwriters, and parties to the pooling and servicing agreement have various roles in this transaction as well as certain relationships with parties to this transaction and certain of their affiliates. These roles and other potential relationships may give rise to conflicts of interest as further described in this prospectus under “Risk Factors—Risks Related to Conflicts of Interest” and “Certain Affiliations, Relationships and Related Transactions Involving Transaction Parties”.

 

Relevant Dates and Periods

 

Cut-off Date The mortgage loans will be considered part of the trust fund as of their respective cut-off dates. The cut-off date with respect to each mortgage loan is the respective due date for the monthly debt service payment that is due in November 2019 (or, in the case of any mortgage loan that has its first due date after

 

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November 2019, the date that would have been its due date in November 2019 under the terms of that mortgage loan if a monthly debt service payment were scheduled to be due in that month).

 

Closing Date On or about November 26, 2019.

 

Distribution Date The 4th business day following each determination date. The first distribution date will be in December 2019.

 

Determination Date The 11th day of each month or, if the 11th day is not a business day, then the business day immediately following such 11th day.

 

Record Date With respect to any distribution date, the last business day of the month preceding the month in which that distribution date occurs.

 

Business Day Under the pooling and servicing agreement, a business day will be any day other than a Saturday, a Sunday or a day on which banking institutions in Maryland, Ohio, Kansas, New York or any of the jurisdictions in which the respective primary servicing offices of the master servicer or the special servicer or the corporate trust offices of either the certificate administrator or the trustee are located, or the New York Stock Exchange or the Federal Reserve System of the United States of America, are authorized or obligated by law or executive order to remain closed.

 

Interest Accrual Period The interest accrual period for each class of offered certificates for each distribution date will be the calendar month immediately preceding the month in which that distribution date occurs.

 

Collection Period For any mortgage loan to be held by the issuing entity and any distribution date, the period commencing on the day immediately following the due date for such mortgage loan in the month preceding the month in which that distribution date occurs and ending on and including the due date for such mortgage loan in the month in which that distribution date occurs. However, in the event that the last day of a collection period is not a business day, any periodic payments received with respect to the mortgage loans relating to that collection period on the business day immediately following that last day will be deemed to have been received during that collection period and not during any other collection period.

 

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Assumed Final

    Distribution Date; Rated

    Final Distribution Date The assumed final distribution dates set forth below for each class have been determined on the basis of the assumptions described in “Description of the Certificates—Assumed Final Distribution Date; Rated Final Distribution Date”:

 

 

Class

Assumed Final Distribution Date

  Class A-1 June 2024
  Class A-2 October 2024
  Class A-3 August 2029
  Class A-4 October 2029
  Class A-SB November 2028
  Class X-A NAP
  Class X-B NAP
  Class A-S October 2029
  Class B November 2029
  Class C November 2029

 

The rated final distribution date will be the distribution date in November 2052.

 

Transaction Overview

 

On the closing date, each sponsor will sell its respective mortgage loans to the depositor, which will in turn deposit the mortgage loans into the issuing entity, a common law trust created on the closing date. The issuing entity will be formed by a pooling and servicing agreement to be entered into among the depositor, the master servicer, the special servicer, the certificate administrator, the trustee, the operating advisor and the asset representations reviewer.

 

The transfers of the mortgage loans from the sponsors to the depositor and from the depositor to the issuing entity in exchange for the offered certificates are illustrated below:

 

 

 

Offered Certificates

 

GeneralWe are offering the following classes of commercial mortgage pass-through certificates as part of Series 2019-C5:

 

Class A-1

 

Class A-2

 

Class A-3

 

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Class A-4

 

Class A-SB

 

Class X-A

 

Class X-B

 

Class A-S

 

Class B

 

Class C

 

The certificates of this Series will consist of the above classes and the VRR Interest and the following classes that are not being offered by this prospectus: Class X-D, Class X-F, Class D, Class E, Class F, Class G-RR, Class H-RR, Class S and Class R. The certificates (other than the VRR Interest and the Class R certificates) are collectively referred to as the “non-VRR certificates.” The VRR Interest is not being offered by this prospectus.

 

Certificate Balances and

Notional Amounts Your certificates will have the approximate aggregate initial certificate balance or notional amount set forth below, subject to a variance of plus or minus 5%:

 

Class 

Approx. Initial Certificate Balance or
Notional Amount(1)

  Approx. % of Initial Pool
Balance
 

Approx. Initial Credit Support(2)

Class A-1   $21,460,000    2.143%   30.000%
Class A-2   $86,300,000    8.619%   30.000%
Class A-3   $187,000,000    18.675%   30.000%
Class A-4   $349,400,000    34.894%   30.000%
Class A-SB   $30,830,000    3.079%   30.000%
Class X-A   $674,990,000    NAP    NAP 
Class X-B   $174,774,000    NAP    NAP 
Class A-S   $94,017,000    9.389%   20.250%
Class B   $40,981,000    4.093%   16.000%
Class C   $39,776,000    3.972%   11.875%

 

 

 

(1)Approximate, subject to a permitted variance of plus or minus 5%.

 

(2)The approximate initial credit support with respect to the Class A-1, Class A-2, Class A-3, Class A-4 and Class A-SB certificates represents the approximate credit enhancement for the Class A-1, Class A-2, Class A-3, Class A-4 and Class A-SB certificates in the aggregate. The VRR Interest provides credit support only to the limited extent that it is allocated a portion of any losses incurred on the underlying mortgage loans, which such losses are allocated between it, on the one hand, and the non-VRR certificates, on the other hand, pro rata, in accordance with their respective percentage allocation entitlement. See “Credit Risk Retention”.

 

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Pass-Through Rates

 

A. Offered Certificates Your certificates will accrue interest at an annual rate called a pass-through rate. The initial approximate pass-through rate is set forth below for each class of certificates:

 

 

Class

Approx. Initial Pass-
Through Rate(1)

  Class A-1 2.0940%
  Class A-2 3.0430%
  Class A-3 2.8050%
  Class A-4 3.0630%
  Class A-SB 2.9900%
  Class X-A 0.8965%
  Class X-B 0.3717%
  Class A-S 3.3660%
  Class B 3.5170%
  Class C 3.7100%

 

 

 

(1)The pass-through rates for the Class A-1, Class A-2, Class A-3, Class A-4 and Class A-SB certificates for any distribution date will, in each case, be a fixed rate per annum equal to the rate set forth opposite such class in the table. The pass-through rate for the Class X-A certificates for any distribution date will be a per annum rate equal to the excess, if any, of (a) the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date, over (b) the weighted average of the pass-through rates on the Class A-1, Class A-2, Class A-3, Class A-4 and Class A-SB certificates for the related distribution date, weighted on the basis of their respective aggregate certificate balances outstanding immediately prior to that distribution date. The pass-through rate for the Class X-B certificates for any distribution date will be a per annum rate equal to the excess, if any, of (a) the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date, over (b) the weighted average of the pass-through rates on the Class A-S, Class B and Class C certificates for the related distribution date, weighted on the basis of their respective aggregate certificate balances outstanding immediately prior to that distribution date. The pass-through rates for the Class A-S, Class B and Class C certificates for any distribution date will, in each case, be a variable rate equal to the lesser of (a) a fixed rate per annum equal to the rate set forth opposite such class in the table and (b) the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date. For purposes of the calculation of the weighted average of the net mortgage interest rates on the mortgage loans for each distribution date, the mortgage interest rates will be adjusted as necessary to a 30/360 basis.

 

B. Interest Rate

    Calculation Convention Interest on the offered certificates at their applicable pass-through rates will be calculated based on a 360-day year consisting of twelve 30-day months, or a “30/360 basis”.

 

For purposes of calculating the pass-through rates on the Class X-A and Class X-B certificates and any other class of certificates that has a pass-through rate limited by, equal to or based on the weighted average net mortgage interest rate (which calculation does not include any companion loan interest rate), the mortgage loan interest rates will not reflect any default interest rate, any loan term modifications agreed to by the special servicer or any modifications resulting from a borrower’s bankruptcy or insolvency.

 

For purposes of calculating the pass-through rates on the offered certificates, the interest rate for each mortgage loan that accrues interest based on the actual number of days in each month and assuming a 360-day year, or an “actual/360 basis”, will be recalculated, if necessary, so that the amount of interest that would accrue at that recalculated rate in the applicable month, calculated on a 30/360 basis, will equal the amount of interest that is required to be paid on that mortgage loan in that month, subject to certain adjustments as described in “Description of the

 

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Certificates—Distributions—Pass-Through Rates” and “—Interest Distribution Amount”.

 

C. Servicing and

Administration Fees Each of the master servicer and the special servicer is entitled to a servicing fee or special servicing fee, as the case may be, from the interest payments on each mortgage loan (other than any non-serviced mortgage loan with respect to the special servicing fee only), any related serviced companion loan and any related REO loans and, with respect to the special servicing fees, if the related mortgage loan interest payments (or other collections in respect of the related mortgage loan or mortgaged property) are insufficient, then from general collections on all mortgage loans.

 

The servicing fee for each distribution date, including the master servicing fee and the portion of the servicing fee payable to any primary servicer or subservicer, is calculated on the outstanding principal amount of each mortgage loan (including any non-serviced mortgage loan) and any related serviced companion loan at a servicing fee rate equal to a per annum rate ranging from 0.00250% to 0.06125%.

 

The special servicing fee for each distribution date is calculated based on the outstanding principal amount of each mortgage loan (other than any non-serviced mortgage loan) and any related serviced companion loan as to which a special servicing transfer event has occurred (including any REO loans), on a loan-by-loan basis at the special servicing fee rate equal to the greater of (i) a per annum rate of 0.25000% and (ii) the per annum rate that would result in a special servicing fee of $3,500 for the related month. The special servicer will not be entitled to a special servicing fee with respect to any non-serviced mortgage loan.

 

Any primary servicing fees or sub-servicing fees with respect to each mortgage loan (other than any non-serviced mortgage loan) and any related serviced companion loan will be paid by the master servicer or special servicer, respectively, out of the fees described above.

 

The master servicer and special servicer are also entitled to additional fees and amounts, including income on the amounts held in certain accounts and certain permitted investments, liquidation fees and workout fees. See “Pooling and Servicing Agreement—Servicing and Other Compensation and Payment of Expenses.

 

The certificate administrator fee for each distribution date is calculated on the outstanding principal amount of each mortgage loan (including any REO loan and any non-serviced mortgage loan, but not any companion loan) at a per annum rate equal to 0.00749%. The trustee fee is payable by the certificate administrator from the certificate administrator fee and is equal to $290 per month.

 

The operating advisor will be entitled to an upfront fee of $10,000 on the closing date. As compensation for the performance of its

 

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routine duties, the operating advisor will be entitled to a fee on each distribution date calculated on the outstanding principal amount of each mortgage loan and REO loan (excluding any non-serviced mortgage loan or the servicing shift mortgage loan and any related companion loan) at a per annum rate equal to 0.00275%. The operating advisor will also be entitled under certain circumstances to a consulting fee.

 

The asset representations reviewer will be entitled to an upfront fee of $5,000 on the closing date. As compensation for the performance of its routine duties, the asset representations reviewer will be entitled to a fee on each distribution date calculated on the outstanding principal amount of each mortgage loan and REO loan (including any non-serviced mortgage loan, but excluding any related companion loan(s)) at a per annum rate equal to 0.00025 %. Upon the completion of any asset review with respect to each delinquent loan, the asset representations reviewer will be entitled to a per loan fee in an amount described in “Pooling and Servicing Agreement—Servicing and Other Compensation and Payment of Expenses—Asset Representations Reviewer Compensation”.

 

Each party to the pooling and servicing agreement will also be entitled to be reimbursed by the issuing entity for costs, expenses and liabilities borne by them in certain circumstances. Fees and expenses payable by the issuing entity to any party to the pooling and servicing agreement are generally payable prior to any distributions to certificateholders.

 

Additionally, with respect to each distribution date, an amount equal to the product of 0.00050% per annum multiplied by the outstanding principal amount of each mortgage loan and any REO loan will be payable to CRE Finance Council® as a license fee for use of its name and trademarks, including an investor reporting package. This fee will be payable prior to any distributions to certificateholders.

 

Payment of the fees and reimbursement of the costs and expenses described above will generally have priority over the distribution of amounts payable to the certificateholders. See “Pooling and Servicing Agreement—Servicing and Other Compensation and Payment of Expenses”, “—Termination of the Master Servicer or Special Servicer For Cause” and “—Limitation on Liability; Indemnification.

 

With respect to each non-serviced mortgage loan set forth in the table below, the master servicer under the related trust and servicing agreement or pooling and servicing agreement, as applicable, governing the servicing of that mortgage loan will be entitled to a primary servicing fee at a rate equal to a per annum rate set forth in the table below, and the special servicer under the related trust and servicing agreement or pooling and servicing agreement, as applicable, will be entitled to a special servicing fee at a rate equal to the per annum rate set forth below. In addition, each party to the trust and servicing agreement or pooling and servicing agreement, as applicable, governing the servicing of a non-serviced whole loan will be

 

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entitled to receive other fees and reimbursements with respect to the related non-serviced mortgage loan in amounts, from sources, and at frequencies, that are similar, but not necessarily identical, to those described above and, in certain cases (for example, with respect to unreimbursed special servicing fees and servicing advances with respect to the related non-serviced whole loan), such amounts will be reimbursable from general collections on the mortgage loans to the extent not recoverable from the related non-serviced whole loan and to the extent allocable to the related non-serviced mortgage loan pursuant to the related intercreditor agreement. See “Description of the Mortgage Pool—The Whole Loans—The Non-Serviced Pari Passu Whole Loans” and “Pooling and Servicing Agreement—Servicing of the Non-Serviced Mortgage Loans”.

 

NON-SERVICED MORTGAGE LOANS(1)

 

 

Non-Serviced Mortgage Loan

Primary Servicing Fee Rate(2)

Special Servicing Fee Rate

  GNL Office and Industrial Portfolio 0.01000% per annum 0.2500% per annum
  Presidential City 0.00125% per annum 0.2500% per annum
  Ceasar’s Bay Shopping Center 0.00250% per annum 0.2500% per annum
  NEMA San Francisco 0.00125% per annum 0.2500% per annum
  Equinix Data Center 0.00250% per annum 0.2500% per annum
  Inland Life Storage Portfolio 0.01000% per annum 0.2500% per annum
  Uline Arena 0.00125% per annum 0.2500% per annum
  10000 Santa Monica Boulevard 0.00125% per annum 0.2500% per annum
  Ocean Edge Resort & Golf Club 0.01000% per annum 0.2500% per annum
  Moffett Towers II – Buildings 3 & 4 0.00125% per annum 0.1250% per annum
  Bison Portfolio 0.00125% per annum 0.2500% per annum
  Vanguard Portfolio 0.00125% per annum 0.2500% per annum
       

 

 

 

(1)Does not reflect the NMR Pharmacy Portfolio mortgage loan, which is part of a split loan structure comprised of the related mortgage loan and one or more pari passu companion loans that may be included in one or more future securitizations. After the securitization of the related controlling pari passu companion loan, the related mortgage loan will also be a non-serviced mortgage loan, and the servicing shift master servicer (or primary servicer) and servicing shift special servicer will be entitled to a primary servicing fee and a special servicing fee, respectively, as each of which will be set out in the servicing shift pooling and servicing agreement.

 

(2)Each primary servicing fee rate described in the table and footnotes thereto is included as part of the servicing fee rate.

 

Distributions

 

A. Allocation between VRR

    Interest and 

    Non-VRR Certificates The aggregate amount available for distributions to holders of the certificates (including the VRR Interest) on each distribution date (net of specified expenses of the issuing entity, including fees payable to, and costs and expenses reimbursable to, the master servicer, the special servicer, the certificate administrator, the trustee, the operating advisor and the asset representations reviewer) will be allocated between amounts available for distribution to the holders of the VRR Interest, on the one hand, and for distribution to all other certificates, on the other hand. The certificates other than the VRR Interest and the Class R certificates are referred to in this prospectus as the “non-VRR

 

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certificates”. The portion of such amount allocable to (a) the VRR Interest will at all times be the product of such amount multiplied by approximately 3.7% and (b) the non-VRR certificates will at all times be the product of such amount multiplied by approximately 96.3%, in each case such percentages being referred to in this prospectus as their respective “percentage allocation entitlement”.

 

B. Amount and Order 

    of Distributions on

    Non-VRR

    CertificatesOn each distribution date, funds available for distribution to the non-VRR certificates (other than (i) any yield maintenance charges and prepayment premiums and (ii) any excess interest distributable to the Class S certificates) will be distributed in the following amounts and order of priority:

 

First, to the Class A-1, Class A-2, Class A-3, Class A-4, Class A-SB, Class X-A, Class X-B, Class X-D and Class X-F certificates, in respect of interest, up to an amount equal to, and pro rata in accordance with, the interest entitlements for those classes;

 

Second, to the Class A-1, Class A-2, Class A-3, Class A-4 and Class A-SB certificates, as follows: (i) to the extent of funds allocated to principal and available for distribution: (a) first, to principal on the Class A-SB certificates, until the certificate balance of the Class A-SB certificates is reduced to the planned principal balance for the related distribution date set forth in Annex E to this prospectus, (b) second, to principal on the Class A-1 certificates, until the certificate balance of the Class A-1 certificates has been reduced to zero, (c) third, to principal on the Class A-2 certificates, until the certificate balance of the Class A-2 certificates has been reduced to zero, (d) fourth, to principal on the Class A-3 certificates until the certificate balance of the Class A-3 certificates has been reduced to zero, (e) fifth, to principal on the Class A-4 certificates until the certificate balance of the Class A-4 certificates has been reduced to zero, and (f) sixth, to principal on the Class A-SB certificates, until the certificate balance of the Class A-SB certificates has been reduced to zero, or (ii) if the certificate balance of each class of certificates other than the Class A-1, Class A-2, Class A-3, Class A-4 and Class A-SB certificates and the VRR Interest has been reduced to zero as a result of the allocation of mortgage loan losses to those classes of certificates, funds available for distributions of principal will be distributed to the Class A-1, Class A-2, Class A-3, Class A-4 and Class A-SB certificates, pro rata, without regard to the distribution priorities described above or the planned principal balance of the Class A-SB certificates.

 

Third, to the Class A-1, Class A-2, Class A-3, Class A-4 and Class A-SB certificates, to reimburse the Class A-1, Class A-2, Class A-3, Class A-4 and Class A-SB certificates, pro rata, based upon the aggregate unreimbursed losses previously allocated to each such class, first, in an amount equal to any previously unreimbursed losses on the mortgage loans allocable to principal that were previously borne by those classes, and

 

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then in an amount equal to interest on that amount at the pass-through rate for such class;

 

Fourth, to the Class A-S certificates as follows: (a) to interest on the Class A-S certificates up to the amount of its interest entitlement; (b) to the extent of funds allocable to principal remaining after distributions in respect of principal to each class with a higher priority (as set forth in prior enumerated clauses set forth above), to principal on the Class A-S certificates until its certificate balance has been reduced to zero; and (c) to reimburse the Class A-S certificates first, in an amount equal to any previously unreimbursed losses on the mortgage loans allocable to principal that were previously borne by those certificates, and then in an amount equal to interest on that amount at the pass-through rate for such class;

 

Fifth, to the Class B certificates as follows: (a) to interest on the Class B certificates up to the amount of its interest entitlement; (b) to the extent of funds allocable to principal remaining after distributions in respect of principal to each class with a higher priority (as set forth in prior enumerated clauses set forth above), to principal on the Class B certificates until its certificate balance has been reduced to zero; and (c) to reimburse the Class B certificates first, in an amount equal to any previously unreimbursed losses on the mortgage loans allocable to principal that were previously borne by those certificates, and then in an amount equal to interest on that amount at the pass-through rate for such class;

 

Sixth, to the Class C certificates as follows: (a) to interest on the Class C certificates up to the amount of its interest entitlement; (b) to the extent of funds allocable to principal remaining after distributions in respect of principal to each class with a higher priority (as set forth in prior enumerated clauses set forth above), to principal on the Class C certificates until its certificate balance has been reduced to zero; and (c) to reimburse the Class C certificates first, in an amount equal to any previously unreimbursed losses on the mortgage loans allocable to principal that were previously borne by those certificates, and then in an amount equal to interest on that amount at the pass-through rate for such class;

 

Seventh, to the non-offered certificates (other than the Class X-D, Class X-F, Class S and Class R certificates and the VRR Interest) in the amounts and order of priority described in “Description of the Certificates—Distributions”; and

 

Eighth, to the Class R certificates, any remaining amounts.

 

For more detailed information regarding distributions on the non-VRR certificates, see “Description of the Certificates—Distributions—Priority of Distributions”.

 

C. Interest and Principal

    EntitlementsA description of the interest entitlement of each class of certificates (other than the Class S and Class R certificates) and the VRR Interest can be found in “Description of the

 

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Certificates—Distributions—Interest Distribution Amount” and “Credit Risk Retention—The VRR Interest—Material Terms of the VRR Interest—Priority of Distributions on the VRR Interest”. As described in that section, there are circumstances in which your interest entitlement for a distribution date could be less than one full month’s interest at the pass-through rate on your certificate’s balance or notional amount.

 

A description of the amount of principal required to be distributed to each class of certificates entitled to principal on a particular distribution date can be found in “Description of the Certificates—Distributions—Principal Distribution Amount”.

 

D. Yield Maintenance

    Charges, Prepayment

    PremiumsYield maintenance charges and prepayment premiums with respect to the mortgage loans will be allocated to the VRR Interest, on the one hand, and the non-VRR certificates, on the other hand, in accordance with their respective percentage allocation entitlement. Yield maintenance charges and prepayment premiums with respect to the mortgage loans allocated to the non-VRR certificates will be further allocated as described in “Description of the Certificates—Allocation of Yield Maintenance Charges and Prepayment Premiums”.

 

For an explanation of the calculation of yield maintenance charges, see “Description of the Mortgage Pool—Certain Terms of the Mortgage Loans”.

 

E. Subordination,

    Allocation of Losses

    and Certain Expenses The chart below describes the manner in which the payment rights of certain classes of non-VRR certificates will be senior or subordinate, as the case may be, to the payment rights of other classes of non-VRR certificates. The chart also shows the allocation between the VRR Interest and the non-VRR certificates and the corresponding entitlement to receive principal and/or interest of certain classes of non-VRR certificates on any distribution date in descending order. It also shows the manner in which mortgage loan losses are allocated to certain classes of the certificates in ascending order (beginning with the non-offered certificates, other than the Class X-D, Class X-F, Class S and Class R certificates and the VRR Interest) to reduce the balance of each such class to zero; provided that no principal payments or mortgage loan losses will be allocated to the Class X-A, Class X-B, Class X-D, Class X-F, Class S or Class R certificates, although principal payments and mortgage loan losses may reduce the notional amounts of the

  

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Class X-A, Class X-B, Class X-D and Class X-F certificates and, therefore, the amount of interest they accrue.

 

 

 

 

 

(1)The Class X-A, Class X-B, Class X-D and Class X-F certificates are interest-only certificates.

 

(2)The Class X-D and Class X-F certificates and VRR Interest are non-offered certificates.

 

(3)Other than the Class X-D, Class X-F, Class S and Class R certificates and VRR Interest.

 

Other than the subordination of certain classes of non-VRR certificates, as described above, no other form of credit enhancement will be available for the benefit of the holders of the offered certificates. The right to payment of holders of the VRR Interest is pro rata and pari passu with the right to payment of holders of the non-VRR certificates (as a collective whole), and as described above any losses incurred on the mortgage loans will be allocated between the VRR Interest, on the one hand, and the non-VRR certificates, on the other hand, pro rata in accordance with their respective percentage allocation entitlements.

 

The notional amount of the Class X-A certificates will be reduced by the amount of principal losses or principal payments, if any, allocated to the Class A-1, Class A-2, Class A-3, Class A-4 and Class A-SB certificates. The notional amount of the Class X-B certificates will be reduced by the amount of principal losses or principal payments, if any, allocated to the Class A-S, Class B and Class C certificates.

 

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To the extent funds are available on a subsequent distribution date for distribution on your offered certificates, you will be reimbursed for any losses allocated to your offered certificates with interest at the pass-through rate on those offered certificates in accordance with the distribution priorities.

 

See “Description of the Certificates—Subordination; Allocation of Realized Losses” and “Credit Risk Retention—The VRR Interest—Allocation of VRR Realized Losses” for more detailed information regarding the subordination provisions applicable to the certificates and the allocation of losses to the certificates.

 

F. Shortfalls in Available

    FundsShortfalls will reduce the aggregate available funds and will correspondingly reduce the amount allocated to the VRR Interest and non-VRR certificates. The reduction in amounts available for distribution to the non-VRR certificates will reduce distributions to the classes of certificates with the lowest payment priorities. Shortfalls may occur as a result of:

 

the payment of special servicing fees and other additional compensation that the special servicer is entitled to receive;

 

interest on advances made by the master servicer, the special servicer or the trustee (to the extent not covered by late payment charges or default interest paid by the related borrower);

 

the application of appraisal reductions to reduce interest advances;

 

extraordinary expenses of the issuing entity including indemnification payments payable to the parties to the pooling and servicing agreement;

 

a modification of a mortgage loan’s interest rate or principal balance; and

 

other unanticipated or default-related expenses of the issuing entity.

 

In addition, prepayment interest shortfalls on the mortgage loans that are not covered by certain compensating interest payments made by the master servicer will be allocated between the VRR Interest, on the one hand, and the non-VRR certificates, on the other hand, in accordance with their respective percentage allocation entitlements. The prepayment interest shortfalls allocated to the non-VRR certificates are required to be further allocated among the classes of non-VRR certificates entitled to interest, on a pro rata basis, to reduce the amount of interest payable on each such class of certificates to the extent described in this prospectus. See “Description of the Certificates—Prepayment Interest Shortfalls”.

 

G. Excess Interest On each distribution date, any excess interest in respect of the increase in the interest rate on any mortgage loan with an anticipated repayment date after the related anticipated

 

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repayment date to the extent actually collected and applied as interest during a collection period will be distributed to the holders of the Class S certificates and the VRR Interest in accordance with their respective percentage allocation entitlement on the related distribution date as set forth in “Description of the Certificates—Distributions—Excess Interest”. This excess interest will not be available to make distributions to any other class of certificates or to provide credit support for other classes of certificates or to offset any interest shortfalls or to pay any other amounts to any other party under the pooling and servicing agreement.

 

Advances

 

A. P&I Advances The master servicer is required to advance a delinquent periodic payment on each mortgage loan (including any non-serviced mortgage loan) or any REO loan (other than any portion of an REO loan related to a companion loan), unless in each case, the master servicer or the special servicer determines that the advance would be nonrecoverable. Neither the master servicer nor the trustee will be required to advance balloon payments due at maturity or outstanding on the related anticipated repayment date, as applicable, in excess of the regular periodic payment, interest in excess of a mortgage loan’s regular interest rate, default interest, late payment charges, prepayment premiums or yield maintenance charges.

 

The amount of the interest portion of any advance will be subject to reduction to the extent that an appraisal reduction of the related mortgage loan has occurred (and with respect to any mortgage loan that is part of a whole loan, to the extent such appraisal reduction amount is allocated to the related mortgage loan). There may be other circumstances in which the master servicer will not be required to advance a full month of principal and/or interest. If the master servicer fails to make a required advance, the trustee will be required to make the advance, unless the trustee determines that the advance would be nonrecoverable. If an interest advance is made by the master servicer, the master servicer will not advance the portion of interest that constitutes its servicing fee, but will advance the portion of interest that constitutes the monthly fees payable to the certificate administrator, the trustee, the operating advisor, the asset representations reviewer and the CREFC® license fee.

 

Neither the master servicer nor the trustee will make, or be permitted to make, any principal or interest advance with respect to any companion loan and the special servicer will not make any principal or interest advance with respect to any mortgage loan or companion loan.

 

See “Pooling and Servicing Agreement—Advances”.

 

B. Property Protection

  AdvancesThe master servicer may be required to make advances with respect to the mortgage loans (excluding any non-serviced mortgage loan) and any related companion loan to pay

 

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delinquent real estate taxes, assessments and hazard insurance premiums and similar expenses necessary to:

 

protect and maintain (and in the case of REO properties, lease and manage) the related mortgaged property;

 

maintain the lien on the related mortgaged property; and/or

 

enforce the related mortgage loan documents.

 

The special servicer will have no obligation to make any property protection advances (although it may elect to make them in an emergency circumstance). If the special servicer makes a property protection advance, the master servicer will be required to reimburse the special servicer for that advance (with interest thereon) (unless the master servicer determines that the advance would be nonrecoverable, in which case the advance will be reimbursed out of the collection account) and the master servicer will be deemed to have made that advance as of the date made by the special servicer.

 

If the master servicer fails to make a required advance of this type, the trustee will be required to make this advance. None of the master servicer, the special servicer or the trustee is required to advance amounts determined by such party to be nonrecoverable.

 

See “Pooling and Servicing Agreement—Advances”.

 

With respect to each non-serviced mortgage loan, the master servicer (and the trustee, as applicable) under the trust and servicing agreement or pooling and servicing agreement, as applicable, governing the servicing of that non-serviced whole loan will be required to make similar advances with respect to delinquent real estate taxes, assessments and hazard insurance premiums as described above.

 

C. Interest on Advances The master servicer, the special servicer and the trustee, as applicable, will be entitled to interest on the above described advances at the “Prime Rate” as published in The Wall Street Journal, as described in this prospectus. Interest accrued on outstanding advances may result in reductions in amounts otherwise payable on the certificates. Neither the master servicer nor the trustee will be entitled to interest on advances made with respect to principal and interest due on a mortgage loan until the related due date has passed and any grace period for late payments applicable to the mortgage loan has expired. See “Pooling and Servicing Agreement—Advances”.

 

With respect to each non-serviced mortgage loan, the applicable makers of advances under the related trust and servicing agreement or pooling and servicing agreement, as applicable, governing the servicing of the non-serviced whole loan will similarly be entitled to interest on advances, and any accrued and unpaid interest on property protection advances made in respect of such non-serviced mortgage loan may be reimbursed from general collections on the other mortgage loans included in

 

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the issuing entity to the extent not recoverable from such non-serviced whole loan and to the extent allocable to such non-serviced mortgage loan in accordance with the related intercreditor agreement.

 

The Mortgage Pool

 

The Mortgage Pool The issuing entity’s primary assets will be 55 fixed-rate commercial mortgage loans, each evidenced by one or more promissory notes secured by first mortgages, deeds of trust, deeds to secure debt or similar security instruments on the fee, leasehold and/or subleasehold estate of the related borrower in 115 commercial, multifamily or manufactured housing community properties. See “Description of the Mortgage Pool—General”.

 

The aggregate principal balance of the mortgage loans as of the cut-off date will be approximately $1,001,321,188.

 

Whole Loans

 

Unless otherwise expressly stated in this prospectus, the term “mortgage loan” refers to each of the fifty-five (55) commercial mortgage loans to be held by the issuing entity. Of the mortgage loans, each mortgage loan in the table below is part of a larger whole loan, which is comprised of (i) the related mortgage loan, (ii) one or more loans that are pari passu in right of payment to the related mortgage loan (each referred to in this prospectus as a “pari passu companion loan” or a “companion loan”) and (iii) in the case of five (5) mortgage loans in the following table, one or more loans that are subordinate in right of payment to the related mortgage loan and any related pari passu companion loans (each referred to in this prospectus as a “subordinate companion loan” or a “companion loan”). The companion loans, together with their related mortgage loan, are referred to in this prospectus as a “whole loan”.

 

Whole Loan Summary

 

Mortgage Loan Name

Mortgage Loan Cut-off Date Balance

% of Initial Pool Balance

Pari Passu Companion Loan Cut-off Date Balance

Additional Subordinate Debt Cut-off Date Balance

Mortgage
Loan LTV
Ratio(1)(3)

Mortgage Loan Underwritten
NCF DSCR(1)

Mortgage Loan Underwritten NOI Debt Yield(1)

Whole Loan
LTV
Ratio(2)(3)

Whole Loan
Underwritten
NCF
DSCR(2)

Whole Loan Underwritten NOI Debt Yield(2)

GNL Office and Industrial Portfolio  $ 66,000,000 6.6% $ 138,000,000   N/A 55.1% 2.60x 10.6% 55.1% 2.60x 10.6%
Presidential City  $ 45,000,000 4.5% $ 72,000,000   $100,600,000 30.8% 4.30x 15.5% 57.3% 2.31x 8.3%
Ceasar’s Bay Shopping Center  $ 42,000,000 4.2% $ 45,500,000   N/A 51.5% 3.61x 11.6% 51.5% 3.61x 11.6%
NEMA San Francisco  $ 40,000,000 4.0% $ 165,000,000   $179,000,000 37.7% 2.27x 10.3% 70.6% 1.15x 5.5%
Equinix Data Center  $ 40,000,000 4.0% $ 60,000,000   N/A 49.8% 2.44x 8.2% 49.8% 2.44x 8.2%
Inland Life Storage Portfolio  $ 37,000,000 3.7% $ 102,100,000   N/A 61.8% 1.68x 9.5% 61.8% 1.68x 9.5%
Uline Arena  $ 36,000,000 3.6% $ 84,000,000   N/A 56.6% 1.75x 7.4% 56.6% 1.75x 7.4%
10000 Santa Monica Boulevard  $ 35,000,000 3.5% $ 185,000,000   $130,000,000 39.8% 2.34x 9.9% 63.3% 1.47x 6.2%
Ocean Edge Resort & Golf Club  $ 29,957,940 3.0% $ 39,943,920   N/A 51.6% 2.15x 14.0% 51.6% 2.15x 14.0%
Moffett Towers II – Buildings 3 & 4  $ 25,000,000 2.5% $ 325,000,000   $155,000,000 44.3% 3.46x 13.2% 63.9% 2.40x 9.2%
Bison Portfolio  $ 19,548,719 2.0% $ 20,346,626   N/A 70.5% 1.82x 11.5% 70.5% 1.82x 11.5%
NMR Pharmacy Portfolio  $ 14,300,000 1.4% $ 17,500,000   N/A 62.7% 1.96x 8.9% 62.7% 1.96x 8.9%
Vanguard Portfolio  $ 4,825,000 0.5% $ 112,017,500   $12,982,500 61.8% 2.03x 10.1% 68.6% 1.68x 9.0%

 

 

 

(1)Calculated based on the balance of or debt service on, as applicable, the related whole loan excluding any related subordinate companion loans and any related mezzanine debt.

 

(2)Calculated including any related pari passu companion loans and subordinate companion loans but excluding any related mezzanine debt.

 

(3)In the case of the GNL Office and Industrial Portfolio, Inland Life Storage Portfolio, Uline Arena, Moffett Towers II – Buildings 3 & 4 and NMR Pharmacy Portfolio mortgage loans, the cut-off date LTV ratio was calculated based on a value other than an “as-is” value. See “Description of the Mortgage Pool—Definitions” for additional information.

 

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The NMR Pharmacy Portfolio whole loan (the “servicing shift whole loan” and the related mortgage loan, the “servicing shift mortgage loan”) will initially be serviced by the master servicer and the special servicer pursuant to the pooling and servicing agreement for this transaction. From and after the date on which the related controlling pari passu companion loan is securitized (the “servicing shift date”), it is anticipated that the servicing shift whole loan will be serviced under, and by the master servicer (the “servicing shift master servicer”) and the special servicer (the “servicing shift special servicer”) designated in, the related pooling and servicing agreement entered into in connection with such securitization (the “servicing shift pooling and servicing agreement”). Prior to the servicing shift date, the servicing shift whole loan will be a “serviced whole loan”, the related mortgage loan will be a “serviced mortgage loan” and each related companion loan will be a “serviced companion loan”. On and after the servicing shift date, the servicing shift whole loan will be a “non-serviced whole loan”, the related mortgage loan will be a “non-serviced mortgage loan” and each related companion loan will be a “non-serviced companion loan”.

 

Each whole loan identified in the table below will not be serviced under the pooling and servicing agreement for this transaction and instead will be serviced under a separate trust and servicing agreement or pooling and servicing agreement, as applicable, identified in the table below entered into in connection with the securitization of one or more related companion loan(s) and is referred to in this prospectus as a “non-serviced whole loan”. The related mortgage loan is referred to as a “non-serviced mortgage loan” and the related companion loans are each referred to in this prospectus as a “non-serviced companion loan”. See “Pooling and Servicing Agreement—Servicing of the Non-Serviced Mortgage Loans”.

 

For further information regarding the whole loans, see “Description of the Mortgage PoolThe Whole Loans”.

 

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Non-Serviced Whole Loans(1)(2)

 

Mortgage Loan Name

Transaction/
Pooling Agreement

% of Initial Pool Balance

Master Servicer

Special Servicer

Trustee

GNL Office and Industrial Portfolio CF 2019-CF2 6.6% KeyBank National Association LNR Partners, LLC Citibank, N.A.
Presidential City SGCMS 2019-PREZ 4.5% KeyBank National Association AEGON USA Realty Advisors, LLC Wells Fargo Bank, National Association
Ceasar’s Bay Shopping Center WFCM 2019-C53 4.2% Wells Fargo Bank, National Association Midland Loan Services, a Division of PNC Bank, National Association Wilmington Trust, National Association
NEMA San Francisco NCMS 2019-NEMA 4.0% KeyBank National Association Situs Holdings, LLC Wells Fargo Bank, National Association
Equinix Data Center WFCM 2019-C53 4.0% Wells Fargo Bank, National Association Midland Loan Services, a Division of PNC Bank, National Association Wilmington Trust, National Association
Inland Life Storage Portfolio CF 2019-CF2 3.7% KeyBank National Association LNR Partners, LLC Citibank, N.A.
Uline Arena CD 2019-CD8 3.6% Midland Loan Services, a Division of PNC Bank, National Association Midland Loan Services, a Division of PNC Bank, National Association Wells Fargo Bank, National Association
10000 Santa Monica Boulevard NCMS 2019-10K 3.5% KeyBank National Association KeyBank National Association Wells Fargo Bank, National Association
Ocean Edge Resort & Golf Club CF 2019-CF2 3.0% KeyBank National Association LNR Partners, LLC Citibank, N.A.
Moffett Towers II – Buildings 3 & 4 MFTII 2019-B3B4 2.5% KeyBank National Association Situs Holdings, LLC Wells Fargo Bank, National Association
Bison Portfolio CSAIL 2019-C17 2.0% Midland Loan Services, a Division of PNC Bank, National Association Midland Loan Services, a Division of PNC Bank, National Association Wells Fargo Bank, National Association
Vanguard Portfolio BBCMS 2019-C3 0.5% Midland Loan Services, a Division of PNC Bank, National Association Midland Loan Services, a Division of PNC Bank, National Association Wells Fargo Bank, National Association

 

Mortgage Loan Name

Certificate Administrator

Custodian

Operating Advisor

Initial Directing Party(3)

GNL Office and Industrial Portfolio Citibank, N.A. Citibank, N.A. Park Bridge Lender Services LLC LNR Securities Holdings, LLC
Presidential City Wells Fargo Bank, National Association Wells Fargo Bank, National Association N/A Angelo, Gordon Co., L.P.
Ceasar’s Bay Shopping Center Wells Fargo Bank, National Association Wells Fargo Bank, National Association Park Bridge Lender Services LLC KKR Real Estate Credit Opportunity Partners II L.P.
NEMA San Francisco Wells Fargo Bank, National Association Wells Fargo Bank, National Association N/A Kookmin Bank Co., Ltd., as trustee for Hyundai Investments Global Qualified Investors Private Real Estate Investment Trust No. 14
Equinix Data Center Wells Fargo Bank, National Association Wells Fargo Bank, National Association Park Bridge Lender Services LLC KKR Real Estate Credit Opportunity Partners II L.P.
Inland Life Storage Portfolio Citibank, N.A. Citibank, N.A. Park Bridge Lender Services LLC LNR Securities Holdings, LLC
Uline Arena Wells Fargo Bank, National Association Wells Fargo Bank, National Association Park Bridge Lender Services LLC Eightfold Real Estate Capital Fund V, L.P.
10000 Santa Monica Boulevard Wells Fargo Bank, National Association Wells Fargo Bank, National Association N/A Cerberus CMBS Mortgage Securities, Ltd.
Ocean Edge Resort & Golf Club Citibank, N.A. Citibank, N.A. Park Bridge Lender Services LLC LNR Securities Holdings, LLC
Moffett Towers II – Buildings 3 & 4 Wells Fargo Bank, National Association Wells Fargo Bank, National Association N/A PMIT Master Fund, LLC(4)
Bison Portfolio Wells Fargo Bank, National Association Wells Fargo Bank, National Association Park Bridge Lender Services LLC Grass River REIT
Vanguard Portfolio Wells Fargo Bank, National Association Wells Fargo Bank, National Association Pentalpha Surveillance LLC TCM CRE REIT LLC

 

 

 

(1)As of the closing date of the related securitization.

 

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(2)Does not reflect the NMR Pharmacy Portfolio whole loan which is a split loan comprised of two or more pari passu promissory notes, one or more of which will be included in this securitization. The remaining pari passu promissory note(s) will not be property of the issuing entity, and are expected to be included in one or more future securitizations. After the securitization of the related controlling pari passu companion loan, the related mortgage loan will also be a non-serviced mortgage loan, and the servicing shift master servicer and servicing shift special servicer under the servicing shift pooling and servicing agreement will be entitled to a primary servicing fee and special servicing fee, respectively, as will be set forth in the servicing shift pooling and servicing agreement.

 

(3)The entity with the heading “Initial Directing Party” above reflects the party entitled to exercise control and consultation rights with respect to the related mortgage loan similar to those of the directing certificateholder under the trust and servicing agreement or the pooling and servicing agreement for this securitization until such party’s rights are terminated pursuant to the related trust and servicing agreement, pooling and servicing agreement or intercreditor agreement, as applicable.

 

(4)The initial controlling holder for the Moffett Towers II – Buildings 3 & 4 mortgage loan is PMIT Master Fund, LLC, as the Moffett Towers II – Buildings 3 & 4 controlling class representative. Pursuant to the related co-lender agreement, following the occurrence (and during the continuance) of a Moffett Towers II – Buildings 3 & 4 control appraisal period, (i) the holder of note A-1-B will be the controlling holder for the Moffett Towers II – Buildings 3 & 4 whole loan and (ii) the Moffett Towers II – Buildings 3 & 4 whole loan will be serviced by the master servicer and, if necessary, the special servicer under the trust and servicing agreement for the securitization that holds note A-1-A. Note A-1-B has been included in the BBCMS 2019-C4 securitization, and therefore, during the continuance of a Moffett Towers II – Buildings 3 & 4 control appraisal period, the controlling class representative (or equivalent party) under the BBCMS 2019-C4 securitization is expected to exercise the rights of the controlling holder with respect to the Moffett Towers II – Buildings 3 & 4 mortgage loan, and the Moffett Towers II – Buildings 3 & 4 whole loan is expected to remain serviced under the trust and servicing agreement for the MFTII 2019-B3B4 securitization.

 

For further information regarding the whole loans, see “Description of the Mortgage PoolThe Whole Loans”, and for information regarding the servicing of the non-serviced whole loans, see “Pooling and Servicing AgreementServicing of the Non-Serviced Mortgage Loans”.

 

Mortgage Loan Characteristics

 

The following tables set forth certain anticipated characteristics of the mortgage loans as of the cut-off date (unless otherwise indicated). Except as specifically provided in this prospectus, various information presented in this prospectus (including loan-to-value ratios, debt service coverage ratios, debt yields and cut-off date balances per net rentable square foot, pad, room or unit, as applicable) with respect to any mortgage loan with a pari passu companion loan or subordinate companion loan is calculated including the principal balance and debt service payment of the related pari passu companion loan(s), but is calculated excluding the principal balance and debt service payment of the related subordinate companion loan(s) (or any other subordinate debt encumbering the related mortgaged property, any related mezzanine debt or preferred equity). Unless specifically indicated, no subordinate companion loans are included in the presentation of numerical and statistical information with respect to the composition of the mortgage pool contained in this prospectus (including any tables, charts and information set forth on Annex A-1 and Annex A-2 to this prospectus).

 

The sum of the numerical data in any column may not equal the indicated total due to rounding. Unless otherwise indicated, all figures and percentages presented in this “Summary of Terms” are calculated as described under “Description of the Mortgage Pool—Certain Calculations and Definitions” and, unless otherwise indicated, such figures and percentages are approximate and in each case, represent the indicated figure or percentage of the aggregate principal balance of the pool of mortgage loans as of the cut-off date. The principal balance of each mortgage loan as of the cut-off date assumes (or, in the case of each mortgage loan with a cut-off date prior to the date of this prospectus, reflects) the timely receipt of principal

 

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scheduled to be paid on or before the cut-off date and no defaults, delinquencies or prepayments on, or modifications of, any mortgage loan on or prior to the cut-off date. Whenever percentages and other information in this prospectus are presented on the mortgaged property level rather than the mortgage loan level, the information for mortgage loans secured by more than one mortgaged property is based on allocated loan amounts as stated in Annex A-1.

 

The mortgage loans will have the following approximate characteristics as of the cut-off date:

 

Cut-off Date Mortgage Loan Characteristics

   

All Mortgage Loans

  Initial Pool Balance(1) $1,001,321,188
  Number of mortgage loans 55
  Number of mortgaged properties 115
  Range of Cut-off Date Balances $2,237,360 to $66,000,000
  Average Cut-off Date Balance $18,205,840
  Range of Mortgage Rates 2.79200% to 4.90000%
  Weighted average Mortgage Rate 3.86875%
  Range of original terms to maturity(2) 60 months to 120 months
  Weighted average original term to maturity(2) 115 months
  Range of remaining terms to maturity(2) 55 months to 120 months
  Weighted average remaining term to maturity(2) 113 months
  Range of original amortization terms(3) 300 months to 360 months
  Weighted average original amortization term(3) 357 months
  Range of remaining amortization terms(3) 300 months to 360 months
  Weighted average remaining amortization term(3) 357 months
  Range of Cut-off Date LTV Ratios(4)(5) 20.4% to 75.0%
  Weighted average Cut-off Date LTV Ratio(4)(5) 57.1%
  Range of LTV Ratios as of the maturity date or anticipated repayment date(2)(4)(5) 20.4% to 68.3%
  Weighted average LTV Ratio as of the maturity date or anticipated repayment date(2)(4)(5) 52.8%
  Range of U/W NCF DSCRs(5)(6) 1.37x to 9.38x
  Weighted average U/W NCF DSCR(5)(6) 2.39x
  Range of U/W NOI Debt Yields(5) 6.5% to 26.7%
  Weighted average U/W NOI Debt Yield(5) 10.8%
  Percentage of Initial Pool Balance consisting of:  
  Interest-only, Balloon 58.0%
  Interest-only, Amortizing Balloon 19.4%
  Amortizing Balloon 17.1%
  Interest-only, Amortizing Balloon, ARD 2.9%
  Interest-only, ARD 2.5%

 

 

 

(1)Subject to a permitted variance of plus or minus 5%.

 

(2)With respect to three (3) mortgage loans (5.4%) with an anticipated repayment date, identified as Moffett Towers II – Buildings 3 & 4, Crocs Distribution Center and LA Fitness Spring, calculated as of the related anticipated repayment date.

 

(3)Excludes twenty-three (23) mortgage loans (60.5%) that are interest-only for the entire term or until the anticipated repayment date, as applicable.

 

(4)Loan-to-value ratios (such as, for example, the loan-to-value ratios as of the cut-off date and the loan-to-value ratios at the maturity date or anticipated repayment date, as applicable) with respect to the mortgage loans were generally calculated using “as-is” values as described under “Description of the Mortgage Pool—Certain Calculations and Definitions” in this prospectus; provided, that with respect to certain mortgage loans, the related loan-to-value ratios have been calculated using “as-complete”, “as-stabilized” or similar hypothetical values. In addition, with respect to certain mortgage loans secured by multiple mortgaged properties, the appraised value may be an “as-portfolio” value that assigns a premium to the value of the mortgaged properties as a whole, which value exceeds the sum of their individual appraised values. Such mortgage loans are identified under the definition of “LTV Ratio” set forth under “Description of the Mortgage Pool—Certain Calculations and Definitions” in this prospectus. For further information, see Annex A-1 to this prospectus. See also “Risk Factors—Risks Relating to the Mortgage Loans—Appraisals May Not Reflect Current

 

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  or Future Market Value of Each Property” and “Description of the Mortgage Pool—Appraised Value” in this prospectus.
   
(5)In the case of thirteen (13) mortgage loans (43.4%), each of which has one or more pari passu companion loans that are not included in the issuing entity, the debt service coverage ratio, loan-to-value ratio and debt yield have been calculated including the related pari passu companion loan(s). With respect to five (5) mortgage loans identified as the Presidential City mortgage loan (4.5%), the NEMA San Francisco mortgage loan (4.0%), the 10000 Santa Monica Boulevard mortgage loan (3.5%), the Moffett Towers II – Buildings 3 & 4 mortgage loan (2.5%) and the Vanguard Portfolio mortgage loan (0.5%), loan-to-value ratios and debt yields includes any pari passu companion loans, as applicable, but excludes the related subordinate companion loan(s). The underwritten net cash flow debt service coverage ratio, related loan-to-value ratio as of the cut-off date, related loan-to-value ratio as of the maturity date or anticipated repayment date, and underwritten net operating income debt yield including the related subordinate companion loans are (a) with respect to the Presidential City mortgage loan (4.5%), 2.31x, 57.3%, 57.3% and 8.3%, respectively, (b) with respect to the NEMA San Francisco mortgage loan (4.0%), 1.15x, 70.6%, 70.6% and 5.5%, respectively, (c) with respect to the 10000 Santa Monica Boulevard mortgage loan (3.5%), 1.47x, 63.3%, 63.3% and 6.2%, respectively, (d) with respect to the Moffett Towers II – Buildings 3 & 4 mortgage loan (2.5%), 2.40x, 63.9%, 63.9% and 9.2%, respectively and (e) with respect to the Vanguard Portfolio mortgage loan (0.5%), 1.68x, 68.6%, 68.6% and 9.0%, respectively.

 

(6)Debt service coverage ratios are calculated using the aggregate of the principal and interest payments for the first twelve payment periods of the mortgage loan following the cut-off date, provided that (i) in the case of a mortgage loan that provides for interest-only payments through maturity or its anticipated repayment date, as applicable, such items are calculated based on the interest payments scheduled to be due on the first due date following the cut-off date and the 11 due dates thereafter for such mortgage loan and (ii) in the case of a mortgage loan that provides for an initial interest-only period that ends prior to maturity or its anticipated repayment date, as applicable, and provides for scheduled amortization payments thereafter, such items are calculated based on the monthly payment of principal and interest payable for the 12 payment periods immediately following the expiration of the interest-only period. For specific discussions on those particular assumptions and adjustments, see “Description of the Mortgage Pool—Certain Calculations and Definitions”, “—Mortgage Pool Characteristics—Property Types”, “—Tenant Issues—Tenant Concentrations”, “—Tenant Issues—Lease Expirations and Terminations—Other”, “—Real Estate and Other Tax Considerations” and “—Additional Information”. See also Annex A-1 and Annex A-3. Certain other similar assumptions and/or adjustments may have been made to other mortgage loans in the mortgage pool.

 

All of the mortgage loans accrue interest on an actual/360 basis.

 

For further information regarding the mortgage loans, see “Description of the Mortgage Pool”.

 

Modified and Refinanced

    LoansAs of the cut-off date, none of the mortgage loans were modified due to a delinquency or were refinancings of loans in default at the time of refinancing and/or otherwise involved discounted payoffs in connection with the origination of such mortgage loans.

 

See “Description of the Mortgage Pool—Loan Purpose; Default History, Bankruptcy Issues and Other Proceedings”.

 

Properties with Limited

    Operating History With respect to thirty-nine (39) of the mortgaged properties (32.6%), such mortgaged properties (i) were constructed or the subject of a major renovation that was completed within 12 calendar months prior to the cut-off date and, therefore, the related mortgaged property has either no prior operating history or limited prior operating history, (ii) have a borrower or an affiliate under the related mortgage loan that acquired the related mortgaged property within 12 calendar months prior to the cut-off date and such borrower or affiliate was unable to provide the related mortgage loan seller with historical financial information

 

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for such acquired mortgaged property or (iii) are single tenant properties subject to triple-net leases with the related tenant where the related borrower did not provide the related mortgage loan seller with historical financial information for the related mortgaged property.

 

See “Description of the Mortgage Pool—Certain Calculations and Definitions” and “Description of the Mortgage Pool—Mortgage Pool Characteristics—Mortgaged Properties With Limited Prior Operating History”.

 

Certain Variances from

    Underwriting Standards Certain of the mortgage loans may vary from the related mortgage loan seller’s underwriting guidelines described under “Transaction PartiesThe Sponsors and Mortgage Loan Sellers”.

 

See “Description of the Mortgage Pool—Exceptions to Underwriting Guidelines; “Transaction Parties—The Sponsors and Mortgage Loan Sellers—Barclays Capital Real Estate Inc.—Barclays’ Underwriting Guidelines and Processes”; “—KeyBank National Association—KeyBank’s Underwriting Guidelines and Processes”; “—Natixis Real Estate Capital LLC—NREC’s Underwriting Standards”; “—Societe Generale Financial Corporation—Societe Generale Financial Corporation’s Underwriting Standards”; “—Rialto Mortgage Finance, LLC—Rialto Mortgage’s Underwriting Standards and Loan Analysis”; and “—BSPRT CMBS Finance, LLC—BSPRT’s Underwriting Standards”.

 

Additional Aspects of Certificates

 

DenominationsThe offered certificates with certificate balances that are initially offered and sold to purchasers will be issued in minimum denominations of $10,000 and integral multiples of $1 in excess of $10,000. The offered certificates with notional amounts will be issued, maintained and transferred only in minimum denominations of authorized initial notional amounts of not less than $1,000,000 and in integral multiples of $1 in excess of $1,000,000.

 

Registration, Clearance

    and Settlement Each class of offered certificates will initially be registered in the name of Cede & Co., as nominee of The Depository Trust Company, or DTC.

 

You may hold offered certificates through: (1) DTC in the United States; or (2) Clearstream Banking, société anonyme or Euroclear Bank, as operator of the Euroclear System. Transfers within DTC, Clearstream Banking, société anonyme or Euroclear Bank, as operator of the Euroclear System, will be made in accordance with the usual rules and operating procedures of those systems.

 

We may elect to terminate the book-entry system through DTC (with the consent of the DTC participants), Clearstream Banking, société anonyme or Euroclear Bank, as operator of the Euroclear

 

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System, with respect to all or any portion of any class of the offered certificates.

 

See “Description of the Certificates—Delivery, Form, Transfer and Denomination—Book-Entry Registration”.

 

Credit Risk Retention This securitization transaction will be subject to the credit risk retention rules of Section 15G of the Securities Exchange Act of 1934, as amended. KeyBank National Association is expected to act as the “retaining sponsor” for this securitization under the U.S. credit risk retention requirements. On the closing date, KeyBank National Association, Barclays Capital Real Estate Inc. (through its “majority-owned affiliate”, Barclays Bank PLC) and Natixis Real Estate Capital LLC are expected to purchase from the depositor an “eligible vertical interest” in the form of the VRR Interest. KeyBank National Association, as the “retaining sponsor” for the transaction, will be required to comply with the hedging, transfer and financing restrictions applicable to a “retaining sponsor” under the credit risk retention rules. For additional information, see “Credit Risk Retention”.

 

This transaction is being structured with a “third party purchaser” that will, on the closing date acquire an “eligible horizontal residual interest”, which will be comprised of the Class G-RR and Class H-RR certificates (collectively, the “HRR certificates”). Each of LD II Sub VII, LLC and Eightfold Real Estate Capital Fund V, L.P. (in partial satisfaction of the retention obligations of KeyBank National Association, as the retaining sponsor) will be contractually obligated to retain (or to cause its respective “majority-owned affiliate” to retain) the HRR certificates for a minimum of five years after the closing date, subject to certain permitted exceptions provided for under the risk retention rules. During this time, each of LD II Sub VII, LLC and Eightfold Real Estate Capital Fund V, L.P. will agree to comply with hedging, transfer and financing restrictions that are applicable to third party purchasers under the credit risk retention rules. For additional information, see “Credit Risk Retention”.

 

None of the sponsors, the depositor or any other party to the transaction intends to retain a material net economic interest in the securitization constituted by the issue of the certificates in a manner that would satisfy the requirements of European Union Regulation (EU) 2017/2402. In addition, no such person undertakes to take any other action which may be required by any investor for the purposes of its compliance with any applicable requirement under such Regulation. Furthermore, the arrangements described under “Credit Risk Retention” have not been structured with the objective of ensuring compliance by any person with any requirements of such Regulation. Consequently, the certificates may not be a suitable investment for investors which are subject to any such requirements. See “Risk Factors—Other Risks Relating to the Certificates—EU Risk Retention and Due Diligence Requirements”.

 

Information Available to

CertificateholdersOn each distribution date, the certificate administrator will prepare and make available to each certificateholder of record,

 

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initially expected to be Cede & Co., a statement as to the distributions being made on that date. Additionally, under certain circumstances, certificateholders of record may be entitled to certain other information regarding the issuing entity. See “Description of the Certificates—Reports to Certificateholders; Certain Available Information”.

 

Deal Information/Analytics Certain information concerning the mortgage loans and the certificates may be available to subscribers through the following services:

 

Bloomberg, L.P., Trepp, LLC, Intex Solutions, Inc., Interactive Data Corp., Markit Group Limited, BlackRock Financial Management, Inc., CMBS.com, Inc., Moody’s Analytics, MBS Data, LLC, RealInsight and Thomson Reuters Corporation;

 

The certificate administrator’s website initially located at www.ctslink.com; and

 

The master servicer’s website initially located at www.keybank.com/key2cre.

 

Optional Termination On any distribution date on which the aggregate principal balance of the pool of mortgage loans is less than 1.0% of the aggregate principal balance of the mortgage loans as of the cut-off date, certain entities specified in this prospectus will have the option to purchase all of the remaining mortgage loans (and all property acquired through exercise of remedies in respect of any mortgage loan) at the price specified in this prospectus.

 

The issuing entity may also be terminated in connection with a voluntary exchange of all of the then-outstanding certificates (other than the Class S and Class R certificates and the VRR Interest) for the mortgage loans then held by the issuing entity, provided that (i) the Class A-1, Class A-2, Class A-3, Class A-4, Class A-SB, Class A-S, Class B, Class C and Class D certificates are no longer outstanding, (ii) there is only one holder (or multiple holders acting unanimously) of the outstanding certificates (other than the Class S and Class R certificates and the VRR Interest), (iii) such holder (or holders) pay an amount equal to the VRR Interest’s proportionate share of the price specified in this prospectus and (iv) and the master servicer consents to the exchange.

 

See “Pooling and Servicing Agreement—Termination; Retirement of Certificates”.

 

Required Repurchases or

    Substitutions of Mortgage

    Loans; Loss of Value

    PaymentUnder certain circumstances, the related mortgage loan seller (or (i) Barclays Capital Holdings Inc., with respect to the repurchase and substitution obligations of Barclays Capital Real Estate Inc. to the same extent as Barclays Capital Real Estate Inc., (ii) Société Générale, with respect to the repurchase and substitution obligations of Societe Generale Financial

 

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Corporation to the same extent as Societe Generale Financial Corporation and (iii) Benefit Street Partners Realty Trust, Inc., as guarantor of the repurchase and substitution obligations of BSPRT CMBS Finance, LLC) may be obligated to (i) repurchase (without payment of any yield maintenance charge or prepayment premium) or substitute for an affected mortgage loan from the issuing entity or (ii) make a cash payment that would be deemed sufficient to compensate the issuing entity in the event of a document defect or a breach of a representation and warranty made by the related mortgage loan seller with respect to the mortgage loan in the related mortgage loan purchase agreement that materially and adversely affects the value of the mortgage loan, the value of the related mortgaged property or the interests of any certificateholders in the mortgage loan or mortgaged property or causes the mortgage loan to be other than a “qualified mortgage” within the meaning of Section 860G(a)(3) of the Internal Revenue Code of 1986, as amended (but without regard to the rule of Treasury Regulations Section 1.860G-2(f)(2) that causes a defective loan to be treated as a “qualified mortgage”). See “Description of the Mortgage Loan Purchase Agreements—General”.

 

Sale of Defaulted Loans Pursuant to the pooling and servicing agreement, under certain circumstances the special servicer is required to use reasonable efforts to solicit offers for defaulted mortgage loans (other than non-serviced mortgage loans) or a defaulted serviced whole loan and/or related REO properties and, in the absence of a cash offer at least equal to its outstanding principal balance plus all accrued and unpaid interest and outstanding costs and expenses and certain other amounts under the pooling and servicing agreement, may accept the first (and, if multiple offers are received, the highest) cash offer from any person that constitutes a fair price for the defaulted mortgage loan (other than non-serviced mortgage loans), defaulted whole loan or related REO property, determined as described in “Pooling and Servicing Agreement—Realization Upon Mortgage Loans” and “—Sale of Defaulted Loans and REO Properties”, unless the special servicer determines, in accordance with the servicing standard (and subject to the requirements of any related intercreditor agreement), that rejection of such offer would be in the best interests of the certificateholders and any related companion loan holders (as a collective whole as if such certificateholders and such companion loan holders constituted a single lender).

 

With respect to any non-serviced mortgage loan, if a related pari passu companion loan becomes a defaulted mortgage loan under the trust and servicing agreement or pooling and servicing agreement for the related pari passu companion loan and the special servicer under the related trust and servicing agreement or pooling and servicing agreement for the related pari passu companion loan(s) determines to sell such pari passu companion loan(s), then such special servicer will be required to sell such non-serviced mortgage loan together with the related pari passu companion loan(s), and, in certain cases, the related subordinate

 

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companion loan(s), in a manner similar to that described above. See “Description of the Mortgage Pool—The Whole Loans”.

 

Additionally, in the case of mortgage loans that permit certain equity owners of the borrower to incur future mezzanine debt as described in “Description of the Mortgage Pool—Additional Indebtedness—Mezzanine Indebtedness”, the related mezzanine lender may have the option to purchase the related mortgage loan after certain defaults. See “Pooling and Servicing Agreement—Realization Upon Mortgage Loans”, “—Sale of Defaulted Loans and REO Properties” and “Description of the Mortgage Pool—The Whole Loans”.

 

Tax Status Elections will be made to treat designated portions of the issuing entity (exclusive of the portion of the issuing entity consisting of the entitlement to collections of excess interest accrued on any mortgage loan with an anticipated repayment date and the related distribution account) as two separate REMICs – the lower-tier REMIC and the upper-tier REMIC – for federal income tax purposes.

 

In addition, the portion of the issuing entity consisting of the entitlement to collections of excess interest accrued on any mortgage loan with an anticipated repayment date and the related distribution account will be treated as a trust and the holders of the Class S certificates and the VRR Interest will be treated as the beneficial owners of such entitlement for federal income tax purposes (a “grantor trust”), as further described under “Material Federal Income Tax Considerations”.

 

Pertinent federal income tax consequences of an investment in the offered certificates include:

 

Each class of offered certificates will constitute REMIC “regular interests”.

 

The offered certificates will be treated as newly originated debt instruments for federal income tax purposes.

 

You will be required to report income on your offered certificates using the accrual method of accounting.

 

It is anticipated that the Class A, Class B and Class C certificates will be issued at a premium for federal income tax purposes.

 

See “Material Federal Income Tax Considerations”.

 

Certain ERISA

ConsiderationsSubject to important considerations described under “Certain ERISA Considerations”, the offered certificates are eligible for purchase by persons investing assets of employee benefit plans or individual retirement accounts.

 

Legal Investment None of the certificates will constitute “mortgage related securities” for purposes of the Secondary Mortgage Market Enhancement Act of 1984, as amended.

 

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If your investment activities are subject to legal investment laws and regulations, regulatory capital requirements, or review by regulatory authorities, then you may be subject to restrictions on investment in the certificates. You should consult your own legal advisors for assistance in determining the suitability of and consequences to you of the purchase, ownership, and sale of the certificates.

 

The issuing entity will not be registered under the Investment Company Act of 1940, as amended. The issuing entity will be relying on an exclusion or exemption from the definition of “investment company” under the Investment Company Act of 1940, as amended, contained in Section 3(c)(5) of the Investment Company Act of 1940, as amended, or Rule 3a-7 under the Investment Company Act of 1940, as amended, although there may be additional exclusions or exemptions available to the issuing entity. The issuing entity is being structured so as not to constitute a “covered fund” for purposes of the Volcker Rule under the Dodd-Frank Act (both as defined in this prospectus). See “Legal Investment”.

 

RatingsThe offered certificates will not be issued unless each of the offered classes receives a credit rating from one or more of the nationally recognized statistical rating organizations engaged by the depositor to rate the offered certificates. The decision not to engage one or more other rating agencies in the rating of certain classes of certificates to be issued in connection with this transaction, may negatively impact the liquidity, market value and regulatory characteristics of those classes of certificates. Neither the depositor nor any other person or entity will have any duty to notify you if any other nationally recognized statistical rating organization issues, or delivers notice of its intention to issue, unsolicited ratings on one or more classes of certificates after the date of this prospectus.

 

See “Risk Factors—Other Risks Relating to the Certificates—Nationally Recognized Statistical Rating Organizations May Assign Different Ratings to the Certificates; Ratings of the Certificates Reflect Only the Views of the Applicable Rating Agencies as of the Dates Such Ratings Were Issued; Ratings May Affect ERISA Eligibility; Ratings May Be Downgraded” and “Ratings”.

 

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Risk Factors

 

You should carefully consider the following risks before making an investment decision.  In particular, distributions on your certificates will depend on payments received on, and other recoveries with respect to the mortgage loans.  Therefore, you should carefully consider the risk factors relating to the mortgage loans and the mortgaged properties.

 

If any of the following events or circumstances identified as risks actually occur or materialize, your investment could be materially and adversely affected.  We note that additional risks and uncertainties not presently known to us may also impair your investment.

 

This prospectus also contains forward-looking statements that involve risks and uncertainties.  Actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks described below and elsewhere in this prospectus.

 

The Certificates May Not Be a Suitable Investment for You

 

The certificates will not be suitable investments for all investors.  In particular, you should not purchase any class of certificates unless you understand and are able to bear the risk that the yield to maturity and the aggregate amount and timing of distributions on the certificates will be subject to material variability from period to period and give rise to the potential for significant loss over the life of the certificates.  The interaction of the foregoing factors and their effects are impossible to predict and are likely to change from time to time.  As a result, an investment in the certificates involves substantial risks and uncertainties and should be considered only by sophisticated institutional investors with substantial investment experience with similar types of securities and who have conducted appropriate due diligence on the mortgage loans, the mortgaged properties and the certificates.

 

Combination or “Layering” of Multiple Risks May Significantly Increase Risk of Loss

 

Although the various risks discussed in this prospectus are generally described separately, you should consider the potential effects of the interplay of multiple risk factors.  Where more than one significant risk factor is present, the risk of loss to an investor in the certificates may be significantly increased.

 

Risks Related to Market Conditions and Other External Factors

 

The Volatile Economy, Credit Crisis and Downturn in the Real Estate Market Adversely Affected the Value of CMBS and Similar Factors May in the Future Adversely Affect the Value of CMBS

 

During the financial crisis of 2007-2008 and the resulting recession, the real estate and securitization markets, including the market for commercial mortgage-backed securities (“CMBS”), experienced significant dislocations, illiquidity and volatility.  We cannot assure you that another dislocation in CMBS will not occur.

 

Any economic downturn may adversely affect the financial resources of borrowers under commercial mortgage loans and may result in their inability to make payments on, or refinance, their outstanding mortgage debt when due or to sell their mortgaged properties for an aggregate amount sufficient to pay off the outstanding debt when due.  As a result, distributions of principal and interest on your certificates, and the value of your certificates, could be adversely affected.

 

Other Events May Affect the Value and Liquidity of Your Investment

 

Moreover, other types of events, domestic or international, may affect general economic conditions and financial markets:

 

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Wars, revolts, terrorist attacks, armed conflicts, energy supply or price disruptions, political crises, natural disasters, civil unrest and/or protests and man-made disasters may have an adverse effect on the mortgaged properties and/or your certificates; and

 

 

Trading activity associated with indices of CMBS may drive spreads on those indices wider than spreads on CMBS, thereby resulting in a decrease in value of such CMBS, including your certificates, and spreads on those indices may be affected by a variety of factors, and may or may not be affected for reasons involving the commercial and multifamily real estate markets and may be affected for reasons that are unknown and cannot be discerned.

 

You should consider that the foregoing factors may adversely affect the performance of the mortgage loans and accordingly the performance of the offered certificates.

 

Risks Relating to the Mortgage Loans

 

Mortgage Loans Are Non-Recourse and Are Not Insured or Guaranteed

 

The mortgage loans are not insured or guaranteed by any person or entity, governmental or otherwise unrelated to the related borrowers.

 

Investors should treat each mortgage loan as a non-recourse loan.  If a default occurs, recourse generally may be had only against the specific mortgaged properties and other assets that have been pledged to secure the mortgage loan.  Consequently, payment prior to maturity is dependent primarily on the sufficiency of the net operating income of the mortgaged property.  Payment at maturity or anticipated repayment date is primarily dependent upon the market value of the mortgaged property or the borrower’s ability to refinance or sell the mortgaged property.

 

Although the mortgage loans generally are non-recourse in nature, certain mortgage loans contain non-recourse carveouts for liabilities such as liabilities as a result of fraud by the borrower, certain voluntary insolvency proceedings or other matters.  Certain mortgage loans set forth under “Description of the Mortgage Pool—Non-Recourse Carveout Limitations” either do not contain non-recourse carveouts or contain material limitations to non-recourse carveouts.  Often these obligations are guaranteed by an affiliate of the related borrower, although liability under any such guaranty may be capped or otherwise limited in amount or scope.  Furthermore, certain guarantors may be foreign entities or individuals which, while subject to the domestic governing law provisions in the guaranty and related mortgage loan documents, could nevertheless require enforcement of any judgment in relation to a guaranty in a foreign jurisdiction, which could, in turn, cause a significant time delay or result in the inability to enforce the guaranty under foreign law.  Additionally, the guarantor’s net worth and liquidity may be less (and in some cases, materially less) than amounts due under the related mortgage loan or the guarantor’s sole asset may be its interest in the related borrower.  Certain mortgage loans may have the benefit of a general payment guaranty of all or a portion of the indebtedness under the mortgage loan.  In all cases, however, the mortgage loans should be considered to be non-recourse obligations because neither the depositor nor the sponsors make any representation or warranty as to the obligation or ability of any borrower or guarantor to pay any deficiencies between any foreclosure proceeds and the mortgage loan indebtedness.  In addition, certain mortgage loans may provide for recourse to a guarantor for all or a portion of the indebtedness or for any loss or costs that may be incurred by the borrower or the lender with respect to certain borrower obligations under the related mortgage loan documents. In such cases, we cannot assure you any recovery from such guarantor will be made or that such guarantor will have assets sufficient to pay any otherwise recoverable claim under a guaranty.

 

Risks of Commercial and Multifamily Lending Generally

 

The mortgage loans will be secured by various income-producing commercial and multifamily properties.  The repayment of a commercial or multifamily loan is typically dependent upon the ability of the related mortgaged property to produce cash flow through the collection of rents.  Even the liquidation value of a commercial property is determined, in substantial part, by the capitalization of the property’s

 

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ability to produce cash flow.  However, net operating income can be volatile and may be insufficient to cover debt service on the loan at any given time.

 

The net operating incomes and property values of the mortgaged properties may be adversely affected by a large number of factors.  Some of these factors relate to the properties themselves, such as:

 

 

the age, design and construction quality of the properties;

 

 

perceptions regarding the safety, convenience and attractiveness of the properties;

 

 

the characteristics and desirability of the area where the property is located;

 

 

the strength and nature of the local economy, including labor costs and quality, tax environment and quality of life for employees;

 

 

the proximity and attractiveness of competing properties;

 

 

the adequacy of the property’s management and maintenance;

 

 

increases in interest rates, real estate taxes and operating expenses at the property and in relation to competing properties;

 

 

an increase in the capital expenditures needed to maintain the properties or make improvements;

 

 

the dependence upon a single tenant or concentration of tenants in a particular business or industry;

 

 

a decline in the businesses operated by tenants or in their financial condition;

 

 

an increase in vacancy rates; and

 

 

a decline in rental rates as leases are renewed or entered into with new tenants.

 

Other factors are more general in nature, such as:

 

 

national or regional economic conditions, including plant closings, military base closings, industry slowdowns, oil and/or gas drilling facility slowdowns or closings and unemployment rates;

 

 

local real estate conditions, such as an oversupply of competing properties, retail space, office space, multifamily housing or hotel capacity;

 

 

demographic factors;

 

 

consumer confidence;

 

 

consumer tastes and preferences;

 

 

political factors;

 

 

environmental factors;

 

 

seismic activity risk;

 

 

retroactive changes in building codes;

 

 

changes or continued weakness in specific industry segments;

 

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location of certain mortgaged properties in less densely populated or less affluent areas; and

 

 

the public perception of safety for customers and clients.

 

The volatility of net operating income will be influenced by many of the foregoing factors, as well as by:

 

 

the length of tenant leases (including that in certain cases, all or substantially all of the tenants, or one or more sole, anchor or other major tenants, at a particular mortgaged property may have leases that expire or permit the tenant(s) to terminate its lease during the term of the loan);

 

 

the quality and creditworthiness of tenants;

 

 

tenant defaults;

 

 

in the case of rental properties, the rate at which new rentals occur; and

 

 

the property’s “operating leverage”, which is generally the percentage of total property expenses in relation to revenue, the ratio of fixed operating expenses to those that vary with revenues, and the level of capital expenditures required to maintain the property and to retain or replace tenants.

 

Further, changes to tax laws as they relate to property ownership, depreciation schedules and interest and mortgage deductibility could affect the value of the mortgaged properties.

 

A decline in the real estate market or in the financial condition of a major tenant will tend to have a more immediate effect on the net operating income of properties with relatively higher operating leverage or short term revenue sources, such as short term or month-to-month leases, and may lead to higher rates of delinquency or defaults.

 

Most of the mortgage loans have 10 year terms to maturity.  Rapid technological advances and changes in consumer tastes over the course of those 10 years may impact the use, occupancy and demand for the products or services related to the mortgaged properties securing such mortgage loans.  In addition, tenant needs may change due to such factors and the related property may not be able to quickly adapt to such changes.  We cannot assure you that any such changes will not impact the performance of the related mortgaged properties, the ability of the related mortgagors to continue to make payments of debt service on the related mortgage loans or to secure refinancing of the mortgage loans or to pay the principal balance of their mortgage loans at maturity.

 

In addition, certain mortgaged properties may be located in an area that is primarily dependent on a single company or industry.  In that case, any change that adversely affects that company or industry could reduce occupancy at the related mortgaged properties.

 

Performance of the Mortgage Loans Will Be Highly Dependent on the Performance of Tenants and Tenant Leases

 

General

 

Any tenant may, from time to time, experience a downturn in its business, which may weaken its financial condition and result in a reduction or failure to make rental payments when due.  Tenants under certain leases included in the underwritten net cash flow, underwritten net operating income or occupancy may nonetheless be in financial distress.  If tenants’ sales were to decline, percentage rents may decline and, further, tenants may be unable to pay their base rent or other occupancy costs.  If a tenant defaults in its obligations to a property owner, that property owner may experience delays in enforcing its rights as lessor and may incur substantial costs and experience significant delays associated with protecting its investment, including costs incurred in renovating and reletting the property.

 

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Additionally, the income from, and market value of, the mortgaged properties leased to various tenants would be adversely affected if:

 

 

space in the mortgaged properties could not be leased or re-leased or substantial re-leasing costs were required and/or the cost of performing landlord obligations under existing leases materially increased;

 

 

leasing or re-leasing is restricted by exclusive rights of tenants to lease the mortgaged properties or other covenants not to lease space for certain uses or activities, or covenants limiting the types of tenants to which space may be leased;

 

 

a significant tenant were to become a debtor in a bankruptcy case;

 

 

rental payments could not be collected for any other reason; or

 

 

a borrower fails to perform its obligations under a lease resulting in the related tenant having a right to terminate such lease.

 

In addition, certain tenants may be part of a chain that is in financial distress as a whole, or the tenant’s parent company may have implemented or expressed an intent to implement a plan to consolidate or reorganize its operations, close a number of stores in the chain, reduce exposure, relocate stores or otherwise reorganize its business to cut costs.

 

There may be (and there may exist from time to time) pending or threatened legal proceedings against, or disputes with, certain tenants and/or their parent companies that may have a material adverse effect on the related tenant’s ability to pay rent or remain open for business.  We cannot assure you that any such litigation or dispute will not result in a material decline in net operating income at the related mortgaged property.

 

Certain tenants currently may be in a rent abatement period.  We cannot assure you that such tenants will be in a position to pay full rent when the abatement period expires.  We cannot assure you that the net operating income contributed by the mortgaged properties will remain at its current or past levels.

 

A Tenant Concentration May Result in Increased Losses

 

Mortgaged properties that are owner-occupied or leased to a single tenant, or a tenant that makes up a significant portion of the rental income, also are more susceptible to interruptions of cash flow if that tenant’s business operations are negatively impacted or if such tenant fails to renew its lease.  This is so because:

 

 

the financial effect of the absence of rental income may be severe;

 

 

more time may be required to re-lease the space; and

 

 

substantial capital costs may be incurred to make the space appropriate for replacement tenants.

 

In the event of a default by that tenant, if the related lease expires prior to the mortgage loan maturity date and the related tenant fails to renew its lease or if such tenant exercises an early termination option, there would likely be an interruption of rental payments under the lease and, accordingly, insufficient funds available to the borrower to pay the debt service on the mortgage loan.  In certain cases where the tenant owns the improvements on the mortgaged property, the related borrower may be required to purchase such improvements in connection with the exercise of its remedies.

 

With respect to certain of these mortgaged properties that are leased to a single tenant, the related leases may expire prior to, or soon after, the maturity dates of the mortgage loans or the related tenant may have the right to terminate the lease prior to the maturity date of the mortgage loan.  If the current

 

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tenant does not renew its lease on comparable economic terms to the expired lease, if a single tenant terminates its lease or if a suitable replacement tenant does not enter into a new lease on similar economic terms, there could be a negative impact on the payments on the related mortgage loan.

 

A deterioration in the financial condition of a tenant, the failure of a tenant to renew its lease or the exercise by a tenant of an early termination right can be particularly significant if a mortgaged property is owner-occupied, leased to a single tenant, or if any tenant makes up a significant portion of the rental income at the mortgaged property.

 

Concentrations of particular tenants among the mortgaged properties or within a particular business or industry at one or multiple mortgaged properties increase the possibility that financial problems with such tenants or such business or industry sectors could affect the mortgage loans.  In addition, the mortgage loans may be adversely affected if a tenant at the mortgaged property is highly specialized, or dependent on a single industry or only a few customers for its revenue.  See “—Tenant Bankruptcy Could Result in a Rejection of the Related Lease” below, and “Description of the Mortgage Pool—Tenant Issues—Tenant Concentrations” for information on tenant concentrations in the mortgage pool.

 

Mortgaged Properties Leased to Multiple Tenants Also Have Risks

 

If a mortgaged property has multiple tenants, re-leasing expenditures may be more frequent than in the case of mortgaged properties with fewer tenants, thereby reducing the cash flow available for payments on the related mortgage loan.  Multi-tenant mortgaged properties also may experience higher continuing vacancy rates and greater volatility in rental income and expenses.  See Annex A-1 for tenant lease expiration dates for the 5 largest tenants at each mortgaged property.

 

Mortgaged Properties Leased to Borrowers or Borrower Affiliated Entities Also Have Risks

 

If a mortgaged property is leased in whole or substantial part to the borrower under the mortgage loan or to an affiliate of the borrower, there may be conflicts of interest.  For instance, it is more likely a landlord will waive lease conditions for an affiliated tenant than it would for an unaffiliated tenant.  We cannot assure you that the conflicts of interest arising where a borrower is affiliated with a tenant at a mortgaged property will not adversely impact the value of the related mortgage loan.

 

In certain cases, an affiliated lessee may be a tenant under a master lease with the related borrower, under which the tenant is obligated to make rent payments but does not occupy any space at the mortgaged property.  Master leases in these circumstances may be used to bring occupancy to a “stabilized” level with the intent of finding additional tenants to occupy some or all of the master leased space, but may not provide additional economic support for the mortgage loan.  If a mortgaged property is leased in whole or substantial part to the borrower or to an affiliate of the borrower, a deterioration in the financial condition of the borrower or its affiliate could significantly affect the borrower’s ability to perform under the mortgage loan as it would directly interrupt the cash flow from the mortgaged property if the borrower’s or its affiliate’s financial condition worsens.  We cannot assure you that any space leased by a borrower or an affiliate of the borrower will eventually be occupied by third party tenants.

 

Tenant Bankruptcy Could Result in a Rejection of the Related Lease

 

The bankruptcy or insolvency of a major tenant or a number of smaller tenants, such as in retail properties, may have an adverse impact on the mortgaged properties affected and the income produced by such mortgaged properties.  Under the federal bankruptcy code, a tenant has the option of assuming or rejecting or, subject to certain conditions, assuming and assigning to a third party, any unexpired lease.  If the tenant rejects the lease, the landlord’s claim for breach of the lease would (absent collateral securing the claim) be treated as a general unsecured claim against the tenant and a lessor’s damages for lease rejection are generally subject to certain limitations.  We cannot assure you that tenants of the mortgaged properties will continue making payments under their leases or that tenants will not file for bankruptcy protection in the future or, if any tenants do file, that they will continue to make rental payments in a timely manner.  See “Certain Legal Aspects of Mortgage Loans—Foreclosure—Bankruptcy

 

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Laws”.  See “Description of the Mortgage Pool—Loan Purpose; Default History, Bankruptcy Issues and Other Proceedings” for information regarding bankruptcy issues with respect to certain mortgage loans.

 

In the case of certain mortgage loans included in the mortgage pool, it may be possible that the related master lease could be construed in a bankruptcy as a financing lease or other arrangement under which the related master lessee (and/or its affiliates) would be deemed as effectively the owner of the related mortgaged property, rather than a tenant, which could result in potentially adverse consequences for the trust, as the holder of such mortgage loan, including a potentially greater risk of an unfavorable plan of reorganization and competing claims of creditors of the related master lessee and/or its affiliates.

 

Leases That Are Not Subordinated to the Lien of the Mortgage or Do Not Contain Attornment Provisions May Have an Adverse Impact at Foreclosure

 

In certain jurisdictions, if tenant leases are subordinated to the liens created by the mortgage but do not contain attornment provisions that require the tenant to recognize a successor owner, the tenants may terminate their leases upon the transfer of the property to a foreclosing lender or purchaser at foreclosure.  Accordingly, if a mortgaged property is located in such a jurisdiction and is leased to one or more desirable tenants under leases that are subordinate to the mortgage and do not contain attornment provisions, such mortgaged property could experience a further decline in value if such tenants’ leases were terminated.  This is particularly likely if those tenants were paying above-market rents or could not be replaced.  If a lease is not subordinate to a mortgage, the issuing entity will not possess the right to dispossess the tenant upon foreclosure of the mortgaged property (unless otherwise agreed to with the tenant).  Also, if the lease contains provisions inconsistent with the mortgage (e.g., provisions relating to application of insurance proceeds or condemnation awards) or which could affect the enforcement of the lender’s rights (e.g., a right of first refusal to purchase the property), the provisions of the lease will take precedence over the provisions of the mortgage.  Not all leases were reviewed to ascertain the existence of attornment or subordination provisions.

 

With respect to certain of the mortgage loans, the related borrower may have given to certain tenants or others an option to purchase, a right of first refusal and/or a right of first offer to purchase all or a portion of the mortgaged property in the event a sale is contemplated, and such right is not subordinate to the related mortgage.  This may impede the mortgagee’s ability to sell the related mortgaged property at foreclosure, or, upon foreclosure, this may affect the value and/or marketability of the related mortgaged property.  See “Description of the Mortgage Pool—Tenant Issues—Purchase Options and Rights of First Refusal” for information regarding material purchase options and/or rights of first refusal, if any, with respect to mortgaged properties securing certain mortgage loans. See representation and warranty number 7 in Annex D-1 and the identified exceptions, if any, to that representation and warranty in Annex D-2.

 

Early Lease Termination Options May Reduce Cash Flow

 

Leases often give tenants the right to terminate the related lease, reduce the amount of space they are leasing, abate or reduce the related rent, and/or exercise certain remedies against the related borrower for various reasons or upon various conditions, including:

 

 

if the borrower for the applicable mortgaged property allows uses at the mortgaged property in violation of use restrictions in current tenant leases,

 

 

if the borrower or any of its affiliates owns other properties within a certain radius of the mortgaged property and allows uses at those properties in violation of use restrictions,

 

 

if the related borrower fails to provide a designated number of parking spaces,

 

 

if there is construction at the related mortgaged property or an adjacent property (whether or not such adjacent property is owned or controlled by the borrower or any of its affiliates) that may interfere with visibility of, access to or a tenant’s use of the mortgaged property or otherwise violate the terms of a tenant’s lease,

 

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upon casualty or condemnation with respect to all or a portion of the mortgaged property that renders such mortgaged property unsuitable for a tenant’s use or if the borrower fails to rebuild such mortgaged property within a certain time,

 

 

if a tenant’s use is not permitted by zoning or applicable law,

 

 

if the tenant is unable to exercise an expansion right,

 

 

if the landlord defaults on its obligations under the lease,

 

 

if a landlord leases space at the mortgaged property or within a certain radius of the mortgaged property to a competitor,

 

 

if the tenant fails to meet certain sales targets or other business objectives for a specified period of time,

 

 

if significant tenants at the subject property go dark or terminate their leases, or if a specified percentage of the mortgaged property is unoccupied,

 

 

if the landlord violates the tenant’s exclusive use rights for a specified period of time,

 

 

if the related borrower violates covenants under the related lease or if third parties take certain actions that adversely affect such tenants’ business or operations,

 

 

in the case of government sponsored tenants, at any time or for lack of appropriations, or

 

 

if the related borrower violates covenants under the related lease or if third parties take certain actions that adversely affect such tenants’ business or operations.

 

In certain cases, compliance or satisfaction of landlord covenants may be the responsibility of a third party affiliated with the borrower or, in the event that partial releases of the applicable mortgaged property are permitted, an unaffiliated or affiliated third party.

 

Any exercise of a termination or contraction right by a tenant at a mortgaged property could result in vacant space at the related mortgaged property, renegotiation of the lease with the related tenant or re-letting of the space.  Any such vacated space may not be re-let.  Furthermore, such foregoing termination and/or abatement rights may arise in the future or materially adversely affect the related borrower’s ability to meet its obligations under the related mortgage loan documents.  See “Description of the Mortgage Pool—Tenant Issues—Lease Expirations and Terminations” for information on material tenant lease expirations and early termination options.

 

Mortgaged Properties Leased to Not-for-Profit Tenants Also Have Risks

 

Certain mortgaged properties may have tenants that are charitable institutions that generally rely on contributions from individuals and government grants or other subsidies to pay rent on office space and other operating expenses.  We cannot assure you that the rate, frequency and level of individual contributions or governmental grants and subsidies will continue with respect to any such institution.  A reduction in contributions or grants may impact the ability of the related institution to pay rent, and we cannot assure you that the related borrower will be in a position to meet its obligations under the related mortgage loan documents if such tenant fails to pay its rent.

 

Retail Properties Have Special Risks

 

Some of the mortgage loans are secured by retail properties.  See “Description of the Mortgage Pool—Mortgage Pool Characteristics—Property Types—Retail Properties.”  The value of retail properties is significantly affected by the quality of the tenants as well as fundamental aspects of real estate, such as location and market demographics, and by changes in shopping methods and choices.  Some of the risks

 

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related to these matters are further described in “—Risks of Commercial and Multifamily Lending Generally” and “—Performance of the Mortgage Loans Will Be Highly Dependent on the Performance of Tenants and Tenant Leases” above, and “—Some Retail Properties Depend on Anchor Stores or Major Tenants to Attract Shoppers and Could be Materially Adversely Affected by the Loss of, or a Store Closure by, One or More of These Anchor Stores or Major Tenants” below.

 

Rental payments from tenants of retail properties typically comprise the largest portion of the net operating income of those mortgaged properties.  The correlation between success of tenant business and a retail property’s value may be more direct with respect to retail properties than other types of commercial property because a component of the total rent paid by certain retail tenants is often tied to a percentage of gross sales.  To the extent that a tenant changes the manner in which its gross sales are reported it could result in lower rent paid by the tenant.  For example, if a tenant takes into account customer returns of merchandise purchased online and reduces the gross sales, this could result in lower gross sales relative to gross sales previously reported at that location even if the actual performance of the store remain unchanged.  We cannot assure you that the net operating income contributed by the retail mortgaged properties or the rates of occupancy at the retail stores will remain at the levels specified in this prospectus or remain consistent with past performance.

 

Changes in the Retail Sector, Such as Online Shopping and Other Uses of Technology, Could Affect the Business Models and Viability of Retailers.

 

Online shopping and the use of technology, such as smartphone shopping applications, to transact purchases or to aid purchasing decisions have increased in recent years and are expected to continue to increase in the future.  This trend is affecting business models, sales and profitability of some retailers and could adversely affect the demand for retail real estate and occupancy at retail properties securing the mortgage loans.  Any resulting decreases in rental revenue could have a material adverse effect on the value of retail properties securing the mortgage loans.

 

Some of these developments in the retail sector have led to many retailers, including several national retailers, filing for bankruptcy and/or voluntarily closing certain of their stores.  Borrowers may be unable to re-lease such space or to re-lease it on comparable or more favorable terms.  As a result, the bankruptcy or closure of a national tenant may adversely affect a retail borrower’s revenues.  In addition, such closings may allow other tenants to modify their leases to terms that are less favorable for borrowers or to terminate their leases, also adversely impacting their revenues.  See also “—Some Retail Properties Depend on Anchor Stores or Major Tenants to Attract Shoppers and Could be Materially Adversely Affected by the Loss of, or a Store Closure by, One or More of These Anchor Stores or Major Tenants” below.

 

In addition to competition from online shopping, retail properties face competition from sources outside a specific geographical real estate market.  For example, all of the following compete with more traditional retail properties for consumer dollars:  factory outlet centers, discount shopping centers and clubs, catalog retailers, home shopping networks, and telemarketing.  Continued growth of these alternative retail outlets (which often have lower operating costs) could adversely affect the rents collectible at the retail properties included in the pool of mortgage loans, as well as the income from, and market value of, the mortgaged properties and the related borrower’s ability to refinance such property.  Moreover, additional competing retail properties may be built in the areas where the retail properties are located.

 

We cannot assure you that these developments in the retail sector will not adversely affect the performance of retail properties securing the mortgage loans.

 

The Performance of the Retail Properties is Subject to Conditions Affecting the Retail Sector.

 

Retail properties are also subject to conditions that could negatively affect the retail sector, such as increased unemployment, increased federal income and payroll taxes, increased health care costs, increased state and local taxes, increased real estate taxes, industry slowdowns, lack of availability of consumer credit, weak income growth, increased levels of consumer debt, poor housing market

 

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conditions, adverse weather conditions, natural disasters, plant closings, and other factors.  Similarly, local real estate conditions, such as an oversupply of, or a reduction in demand for, retail space or retail goods, and the supply and creditworthiness of current and prospective tenants may negatively impact those retail properties.

 

In addition, the limited adaptability of certain shopping malls that have proven unprofitable may result in high (and possibly extremely high) loss severities on mortgage loans secured by those shopping malls.  For example, it is possible that a significant amount of advances made by the applicable servicer(s) of a mortgage loan secured by a shopping mall property, combined with low liquidation proceeds in respect of that property, may result in a loss severity exceeding 100% of the outstanding principal balance of that mortgage loan.

 

Some Retail Properties Depend on Anchor Stores or Major Tenants to Attract Shoppers and Could be Materially Adversely Affected by the Loss of, or a Store Closure by, One or More of These Anchor Stores or Major Tenants.

 

The presence or absence of an “anchor tenant” or a “shadow anchor tenant” in or near a retail property also can be important to the performance of a retail property because anchors play a key role in generating customer traffic and making a retail property desirable for other tenants.  Retail properties may also have shadow anchor tenants.  An “anchor tenant” is located on the related mortgaged property, usually proportionately larger in size than most or all other tenants at the mortgaged property, and is vital in attracting customers to a retail property.  A “shadow anchor tenant” is usually proportionally larger in size than most tenants at the mortgaged property, is important in attracting customers to a retail property and is located sufficiently close and convenient to the mortgaged property so as to influence and attract potential customers, but is not located on the mortgaged property.

 

If anchor stores in a mortgaged property were to close, the related borrower may be unable to replace those anchors in a timely manner or without suffering adverse economic consequences.  In addition, anchor tenants and non-anchor tenants at anchored or shadow anchored retail centers may have co-tenancy clauses and/or operating covenants in their leases or operating agreements that permit those tenants or anchor stores to cease operating, reduce rent or terminate their leases if the anchor tenant, the shadow anchor tenant or another major tenant goes dark, a specified percentage of the property is vacant or if the subject store is not meeting the minimum sales requirement under its lease.  Even if non-anchor tenants do not have termination or rent abatement rights, the loss of an anchor tenant or a shadow anchor tenant may have a material adverse impact on the non-anchor tenant’s ability to operate because the anchor tenant or shadow anchor tenant plays a key role in generating customer traffic and making a center desirable for other tenants.  This, in turn, may adversely impact the borrower’s ability to meet its obligations under the related mortgage loan documents.  In addition, in the event that a “shadow anchor” fails to renew its lease, terminates its lease or otherwise ceases to conduct business within a close proximity to the mortgaged property, customer traffic at the mortgaged property may be substantially reduced.  If an anchor tenant goes dark, generally the borrower’s only remedy may be to terminate that lease after the anchor tenant has been dark for a specified amount of time.

 

Certain anchor tenants may have the right to demolish and rebuild, or substantially alter, their premises. Exercise of such rights may result in disruptions at the mortgaged property or reduce traffic to the mortgaged property, may trigger co-tenancy clauses if such activities result in the anchor tenants being dark for the period specified in the cotenancy clause, and may result in reduced value of the structure or in loss of the structure if the tenant fails to rebuild.

 

If anchor tenants or shadow anchor tenants at a particular mortgaged property were to close or otherwise become vacant or remain vacant, we cannot assure you that the related borrower’s ability to repay its mortgage loan would not be materially and adversely affected.

 

Certain anchor tenant and tenant estoppels will have been obtained in connection with the origination of the mortgage loans.  These estoppels may identify disputes between the related borrower and the applicable anchor tenant or tenant, or alleged defaults or potential defaults by the applicable property owner under the lease or a reciprocal easement and/or operating agreement (each, an “REA”).  Such

 

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disputes, defaults or potential defaults could lead to a termination or attempted termination of the applicable lease or REA by the anchor tenant or tenant, the tenant withholding some or all of its rental payments or litigation against the related borrower.  We cannot assure you that the anchor tenant or tenant estoppels obtained identify all potential disputes that may arise with respect to the retail mortgaged properties, or that anchor tenant or tenant disputes will not have a material adverse effect on the ability of borrowers to repay their mortgage loans.

 

Certain retail properties have specialty use tenants.  See “—Some Mortgaged Properties May Not Be Readily Convertible to Alternative Uses” below.  See “Description of the Mortgage Pool—Mortgage Pool Characteristics—Property Types—Retail Properties” and “—Mortgage Pool CharacteristicsSpecialty Use Concentrations”.

 

Office Properties Have Special Risks

 

In addition to the factors discussed in “—Risks of Commercial and Multifamily Lending Generally” and “—Performance of the Mortgage Loans Will Be Highly Dependent on the Performance of Tenants and Tenant Leases” above, other factors may adversely affect the financial performance and value of office properties, including:

 

 

the physical attributes of the building in relation to competing buildings (e.g., age, condition, design, appearance, access to transportation and ability to offer certain amenities, such as sophisticated building systems and/or business wiring requirements);

 

 

the adaptability of the building to changes in the technological needs of the tenants;

 

 

an adverse change in population, patterns of telecommuting or sharing of office space, and employment growth (which creates demand for office space); and

 

 

in the case of a medical office property, (a) the proximity of such property to a hospital or other healthcare establishment, (b) reimbursements for patient fees from private or government sponsored insurers, (c) its ability to attract doctors and nurses to be on staff, and (d) its ability to afford and acquire the latest medical equipment.  Issues related to reimbursement (ranging from nonpayment to delays in payment) from such insurers could adversely impact cash flow at such mortgaged property; and

 

 

in the case of tenants that offer co-working or office-sharing space designed for multiple, unaffiliated space users, licenses or subleases of space to users are of shorter-term duration and user turnover is greater than with typical office leases. Co-working tenants may experience higher operating costs than typical office tenants, and revenues may lag expenses until the co-working space is filled out.  Further, if office rents decrease, shorter-term space users may move to properties with lower rent, while co-working tenants would be left with longer-term lease obligations.

 

Moreover, the cost of refitting office space for a new tenant is often higher than the cost of refitting other types of properties for new tenants.

 

If one or more major tenants at a particular office property were to close or remain vacant, we cannot assure you that such tenants would be replaced in a timely manner or without incurring material additional costs to the related borrower and resulting in an adverse effect on the financial performance of the property.

 

See “Description of the Mortgage Pool—Mortgage Pool Characteristics—Property Types—Office Properties”.

 

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Data Center Properties Have Special Risks

 

The primary function of a data center is to provide a secure location for back-up data storage. Data centers are subject to similar risks as office buildings.  The value of a data center will be affected by its telecommunications capacity, availability of sufficient power, and availability of support systems including environmental, temperature and hazard risk control, physical security, and redundant backup systems.  As data centers contain sensitive and highly costly equipment and connections, they are subject to heightened risk in the event of fire, natural disaster or terrorism.  In addition, data centers can be the subject of build-to-suit construction to specific user requirements.  As such, if the lease with a data center user is terminated for any reason, the cost and time to adapt the space to other users may be considerable.  Further, data center properties may not be readily convertible (or convertible at all) to alternative uses if those properties were to become unprofitable, or if the leased spaces were to become vacant, for any reason.  Moreover, such conversion to an alternate use may be accompanied by a decrease in rents at the related mortgaged property. See “—Office Properties Have Special Risks” and “—Some Mortgaged Properties May Not Be Readily Convertible to Alternative Uses”.

 

Multifamily Properties Have Special Risks

 

In addition to the factors discussed in “—Risks of Commercial and Multifamily Lending Generally” and “—Performance of the Mortgage Loans Will Be Highly Dependent on the Performance of Tenants and Tenant Leases” above, other factors may adversely affect the financial performance and value of multifamily properties, including:

 

 

the quality of property management;

 

 

the ability of management to provide adequate maintenance and insurance;

 

 

the types of services or amenities that the property provides;

 

 

the property’s reputation;

 

 

the level of mortgage interest rates, which may encourage tenants to purchase rather than lease housing;

 

 

the generally short terms of residential leases and the need for continued reletting;

 

 

rent concessions and month-to-month leases, which may impact cash flow at the property;

 

 

the tenant mix, such as the tenant population being predominantly students or being heavily dependent on workers from a particular business or industry or personnel from or workers related to a local military base or oil and/or gas drilling industries;

 

 

in the case of student housing facilities or properties leased primarily to students, which may be more susceptible to damage or wear and tear than other types of multifamily housing, the reliance on the financial well-being of the college or university to which it relates, competition from on campus housing units, which may adversely affect occupancy, the physical layout of the housing, which may not be readily convertible to traditional multifamily use, and that student tenants have a higher turnover rate than other types of multifamily tenants, which in certain cases is compounded by the fact that student leases are available for periods of less than 12 months;

 

 

certain multifamily properties may be considered to be “flexible apartment properties”.  Such properties have a significant percentage of units leased to tenants under short-term leases (less than one year in term), which creates a higher turnover rate than for other types of multifamily properties;

 

 

restrictions on the age or income of tenants who may reside at the property;

 

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dependence upon governmental programs that provide rent subsidies to tenants pursuant to tenant voucher programs, which vouchers may be used at other properties and influence tenant mobility;

 

 

adverse local, regional or national economic conditions, which may limit the amount of rent that may be charged and may result in a reduction of timely rent payments or a reduction in occupancy levels;

 

 

state and local regulations, which may affect the building owner’s ability to increase rent to market rent for an equivalent apartment; and