FWP 1 n495_fwp-x2.htm FREE WRITING PROSPECTUS Unassociated Document
 
    FREE WRITING PROSPECTUS
    FILED PURSUANT TO RULE 433
    REGISTRATION FILE NO.: 333-195164-10
     
 
(WELLS FARGO LOGO)
 
Free Writing Prospectus
Preliminary Collateral Term Sheet
 
$914,361,541
(Approximate Aggregate Cut-off Date Balance of Mortgage Pool)
 
Wells Fargo Commercial Mortgage Trust 2015-NXS2
as Issuing Entity
 
Wells Fargo Commercial Mortgage Securities, Inc.
as Depositor
 
Natixis Real Estate Capital LLC
Wells Fargo Bank, National Association
Silverpeak Real Estate Finance LLC
 
as Sponsors and Mortgage Loan Sellers
 

 
Commercial Mortgage Pass-Through Certificates
Series 2015-NXS2
 

 
June 19, 2015
 
 
WELLS FARGO SECURITIES
 
 
Lead Manager and
Sole Bookrunner
 
Drexel Hamilton
Co-Manager
 
Natixis Securities Americas LLC
Co-Manager
 
 
 

 
 
STATEMENT REGARDING THIS FREE WRITING PROSPECTUS
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (‘‘SEC’’) (SEC File No. 333-195164) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the depositor, any underwriter, or any dealer participating in the offering will arrange to send you the prospectus after filing if you request it by calling toll free 1-800-745-2063 (8 a.m. – 5 p.m. EST) or by emailing wfs.cmbs@wellsfargo.com.
 
Nothing in this document constitutes an offer of securities for sale in any jurisdiction where the offer or sale is not permitted.  The information contained herein is preliminary as of the date hereof, supersedes any such information previously delivered to you and will be superseded by any such information subsequently delivered and ultimately by the final prospectus relating to the securities.  These materials are subject to change, completion, supplement or amendment from time to time.
 
STATEMENT REGARDING CERTAIN ESTIMATES AND OTHER INFORMATION
This free writing prospectus contains certain forward-looking statements.  If and when included in this free writing prospectus, the words “expects”, “intends”, “anticipates”, “estimates” and analogous expressions and all statements that are not historical facts, including statements about our beliefs or expectations, are intended to identify forward-looking statements.  Any forward-looking statements are made subject to risks and uncertainties which could cause actual results to differ materially from those stated.  Those risks and uncertainties include, among other things, declines in general economic and business conditions, increased competition, changes in demographics, changes in political and social conditions, regulatory initiatives and changes in customer preferences, many of which are beyond our control and the control of any other person or entity related to this offering.  The forward-looking statements made in this free writing prospectus are made as of the date stated on the cover.  We have no obligation to update or revise any forward-looking statement.
 
Wells Fargo Securities is the trade name for the capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including but not limited to Wells Fargo Securities, LLC, a member of NYSE, FINRA, NFA and SIPC, Wells Fargo Prime Services, LLC, a member of FINRA, NFA and SIPC, and Wells Fargo Bank, N.A.  Wells Fargo Securities, LLC and Wells Fargo Prime Services, LLC are distinct entities from affiliated banks and thrifts.
 
IMPORTANT NOTICE REGARDING THE OFFERED CERTIFICATES
The certificates to be backed in part by the assets described herein, and such assets, are subject to modification, revision and other changes any time prior to issuance or availability of a final prospectus, such certificates are offered on a “when, as and if issued” basis. Prospective investors should understand that, when considering the purchase of such certificates, a contract of sale will come into being no sooner than the date on which the relevant class of certificates has been priced and the underwriters have confirmed the allocation of certificates to be made to investors; any “indications of interest” expressed by any prospective investor, and any “soft circles” generated by the underwriters, will not create binding contractual obligations for such prospective investors, on the one hand, or the underwriters, the depositor or any of their respective agents or affiliates, on the other hand.
 
As a result of the foregoing, a prospective investor may commit to purchase certificates that have characteristics (including with respect to the underlying assets) that may change, and each prospective investor is advised that all or a portion of the certificates referred to in these materials may be issued without all or certain of the characteristics (including with respect to the underlying assets) described in these materials. The underwriters’ obligation to sell certificates to any prospective investor is conditioned on the certificates and the transaction having the characteristics described in these materials. If the underwriters determine that a condition is not satisfied in any material respect, such prospective investor will be notified, and neither the depositor nor the underwriters will have any obligation to such prospective investor to deliver any portion of the certificates which such prospective investor has committed to purchase, and there will be no liability between the underwriters, the depositor or any of their respective agents or affiliates, on the one hand, and such prospective investor, on the other hand, as a consequence of the non-delivery.
 
Each prospective investor has requested that the underwriters provide to such prospective investor information in connection with such prospective investor’s consideration of the purchase of the certificates to be backed in part by the assets described in these materials. These materials are being provided to each prospective investor for informative purposes only in response to such prospective investor’s specific request. The underwriters described in these materials may from time to time perform investment banking services for, or solicit investment banking business from, any company named in these materials. The underwriters and/or their affiliates or respective employees may from time to time have a long or short position in any security or contract discussed in these materials.
 
The information contained herein supersedes any previous such information delivered to any prospective investor and will be superseded by information delivered to such prospective investor prior to the time of sale.
 
IMPORTANT NOTICE RELATING TO AUTOMATICALLY-GENERATED EMAIL DISCLAIMERS
Any legends, disclaimers or other notices that may appear at the bottom of any email communication to which this free writing prospectus is attached relating to (1) these materials not constituting an offer (or a solicitation of an offer), (2) no representation that these materials are accurate or complete and may not be updated or (3) these materials possibly being confidential, are not applicable to these materials and should be disregarded. Such legends, disclaimers or other notices have been automatically generated as a result of these materials having been sent via Bloomberg or another system.
 
 
 

 

No. 1 – Patriots Park
 
Loan Information
 
Property Information
Mortgage Loan Seller:
Natixis Real Estate Capital LLC
 
Single Asset/Portfolio:
Single Asset
Credit Assessment (DBRS/KBRA/Moody’s):
NR/NR/NR
 
Property Type:
Office
Original Principal Balance(1):
$90,000,000
 
Specific Property Type:
Suburban
Cut-off Date Principal Balance(1):
$90,000,000
 
Location:
Reston, VA
% of Initial Pool Balance:
9.8%
 
Size(3):
723,667 SF
Loan Purpose:
Acquisition
 
Cut-off Date Principal
Balance Per SF(1):
$297.19
Borrower Name:
Hyundai Able Patriots Park, LLC
 
Year Built/Renovated:
1986/2013
Sponsors:
Hyundai Securities Co. Ltd.; Hyundai Able Investment REIT
 
Title Vesting:
Fee
Mortgage Rate:
3.658%
 
Property Manager:
Boston Properties Limited Partnership
Note Date:
October 2, 2014
 
3rd Most Recent Occupancy(4):
NAV
Anticipated Repayment Date:
October 5, 2019
 
2nd Most Recent Occupancy(4):
NAV
Maturity Date:
March 5, 2033
 
Most Recent Occupancy (As of):
97.5% (12/31/2014)
IO Period:
60 months
 
Current Occupancy (As of)(3):
97.5% (7/1/2015)
Loan Term (Original):
60 months
   
Seasoning:
9 months
 
Underwriting and Financial Information:
Amortization Term (Original):
NAP
     
Loan Amortization Type:
Interest-only, ARD
 
3rd Most Recent NOI(4):
NAV
Interest Accrual Method:
Actual/360
 
2nd Most Recent NOI(4):
NAV
Call Protection:
GRTR 1% or YM(33), GRTR 1% or YM or D(23), O(4)
 
Most Recent NOI (As of):
$17,985,597 (12/31/2014)
Lockbox Type:
Hard/Springing Cash Management
     
Additional Debt(1):
Yes
   
Additional Debt Type(1):
Pari Passu
 
U/W Revenues(5):
$25,241,098
     
U/W Expenses:
$7,672,221
     
U/W NOI(5):
$17,568,877
     
U/W NCF(5):
$17,460,327
     
U/W NOI DSCR(1)(5):
2.20x
         
U/W NCF DSCR(1)(5):
2.18x
Escrows and Reserves(2):
       
U/W NOI Debt Yield(1)(5):
8.2%
         
U/W NCF Debt Yield(1)(5):
8.1%
Type:
Initial
Monthly
Cap (If Any)
 
As-Is Appraised Value:
$322,000,000
Taxes
$1,101,043
$220,209
NAP
 
As-Is Appraisal Valuation Date:
July 14, 2014
Insurance
$18,896
$18,896
NAP
 
Cut-off Date LTV Ratio(1):
66.8%
Replacement Reserves
$4,187,856
$9,046
$4,187,856
 
LTV Ratio at Maturity or ARD(1):
66.8%
             
 
(1)
The Patriots Park Loan Combination, totaling $215,070,000, is comprised of four pari passu notes (Notes A-1, A-2, A-3 and A-4). The non-controlling Note A-2 had an original principal balance of $90,000,000, has an outstanding principal balance of $90,000,000 as of the Cut-Off Date and will be contributed to the WFCM 2015-NXS2 Trust. The controlling Note A-1 had an original principal balance of $95,000,000 and was contributed to the WFCM 2015-NXS1 Trust. The non-controlling Note A-3 had an original principal balance of $26,000,000 and was contributed to the COMM 2015-CCRE22 Trust. The non-controlling Note A-4 had an original principal balance of $4,070,000 and is currently held by Natixis Real Estate Capital LLC and is expected to be contributed to a future trust. All statistical financial information related to balances per square foot, loan-to-value ratios, debt service coverage ratios and debt yields are based on the Patriots Park Loan Combination.
(2)
See “Escrows” section.
(3)
The Patriots Park Property is comprised of 705,905 square feet of office space (97.5% of net rentable area) and 17,762 square feet of warehouse (2.5% of net rentable area). The General Services Administration is in negotiation to lease the warehouse space. See “The Property” section.
(4)
Historical occupancy and financials are not available as the sponsor recently acquired the Patriots Park Property and these were not provided by the previous owner.
(5)
See “Cash Flow Analysis” section.
 
The Mortgage Loan.  The mortgage loan is part of a loan combination (the “Patriots Park Loan Combination”) that is evidenced by four pari passu promissory notes (Notes A-1, A-2, A-3 and A-4) secured by a first mortgage encumbering three office buildings with a total of 723,667 square feet located in Reston, Virginia (the “Patriots Park Property”). The Patriots Park Loan Combination was originated on October 2, 2014 by Natixis Real Estate Capital LLC. The Patriots Park Loan Combination had an original principal balance of $215,070,000, has an outstanding principal balance as of the Cut-off Date of $215,070,000 and accrues interest at an interest rate of 3.658% per annum. The Patriots Park Loan Combination had an initial term of 60 months, has a remaining term of 51 months as of the Cut-off Date and requires interest-only payments through the Anticipated Repayment Date (“ARD”). The ARD is October 5, 2019 and the final maturity date is March 5, 2033. In the event that the Patriots Park Loan Combination is not repaid in full by the ARD, the interest rate will increase to an amount equal to the sum of (a) 3.500% and (b) 2.500% plus the amount (if any) by which the five-year treasury rate exceeds 3.000%. The borrower’s failure to repay the Patriots Park Loan Combination in full at least one month prior to the ARD automatically triggers a full cash flow sweep whereby all excess cash flow will be used to pay down the principal balance of the Patriots Park Loan Combination.

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
1

 
 
PATRIOTS PARK
 
Note A-2, which will be contributed to the WFCM 2015-NXS2 Trust, had an original principal balance of $90,000,000, has an outstanding principal balance as of the Cut-off Date of $90,000,000 and represents a non-controlling interest in the Patriots Park Loan Combination. The controlling Note A-1 had an original principal balance of $95,000,000 and was contributed to the WFCM 2015-NXS1 Trust. The non-controlling Note A-3 had an original principal balance of $26,000,000 and was contributed to the COMM 2015-CCRE22 Trust. The non-controlling Note A-4 (together with Note A-1 and A-3, the “Patriot Park Companion Loans”) had an original principal balance of $4,070,000 and is currently held by Natixis Real Estate Capital LLC and is expected to be contributed to a future trust.
 
The borrower has the right to prepay in full or in part the Patriots Park Loan Combination, on any date before July 5, 2019, provided that the borrower pays the greater of (i) 1.0% of the principal balance being repaid, or (ii) a yield maintenance premium. Following the lockout period, the borrower has the option to defease the full principal amount of the Patriots Park Loan Combination or a portion thereof on any date before July 5, 2019. In addition, the Patriots Park Loan Combination is prepayable without penalty on July 5, 2019 or any payment date thereafter prior to March 5, 2033.
 
Sources and Uses
 
Sources
       
Uses
     
Original loan combination amount
$215,070,000
 
65.1%
 
Purchase price
$321,000,000
 
97.2%
Sponsor’s new cash contribution
115,196,168
 
  34.9
 
Reserves
5,307,795
 
1.6
       
Closing costs
3,958,373
 
1.2
Total Sources
$330,266,168
 
100.0%
 
Total Uses
$330,266,168
 
100.0%
 
The Property.  The Patriots Park Property is a highly-secured class A office campus situated on 22.7 acres and comprised of three office buildings (Patriots Park I, II and III) totaling 705,905 rentable square feet located in Reston, Virginia. The Patriots Park Property includes two parking garages and a small surface lot with a combined total of 2,660 parking spaces (3.8 spaces per 1000 rentable square feet). A warehouse comprising 17,762 square feet is nearing construction completion next to one of the parking garages and also serves as collateral for the Patriots Park Loan Combination. Patriots Park I and II were built in 1986 and 1987, respectively, and were fully renovated in 2012 and 2013, receiving a full facade replacement and replacement of all building systems including new HVAC, new elevators and refurbishment of the electrical systems. Patriots Park I and II have been certified LEED Silver. Patriots Park III, built in 2006, received minor renovations in 2013. The Patriots Park Property also received significant security upgrades commensurate with GSA protocol. Patriots Park II has a cafeteria with commercial seating for over 500 employees. Amenities in each building include numerous break rooms, as well as a convenience store, coffee counter and ATM machine, and a fitness center. The Patriots Park Property was 97.5% occupied as of July 1, 2015, by the United States of America (AAA/Aaa/AA+ by Fitch/Moody’s/S&P) via the General Services Administration (“GSA”) under two 20-year leases expiring on September 30, 2032 (72.3% of the net rentable area) and March 6, 2033 (25.2% of the net rentable area). Neither lease includes an appropriations-based termination clause. According to the borrower, the GSA and the previous owner of the Patriots Park Property invested approximately $55.0 million ($76.00 per square foot) and $40.5 million ($56.00 per square foot), respectively, into the space in 2012 and 2013. GSA is in negotiation to lease the warehouse space, which is nearing completion and comprises approximately 2.5% of the net rentable area of the Patriots Park Property.
 
The following table presents certain information relating to the tenancy at the Patriots Park Property:
 
Major Tenants
 
Tenant Name
Credit Rating (Fitch/Moody’s/
S&P)
 
Tenant
NRSF(1)
 
% of
NRSF
Annual U/W
Base Rent
PSF
 
Annual
U/W Base Rent
% of Total Annual
U/W  Base
Rent
 
Lease
Expiration
Date
                         
Major Tenants
                       
GSA (Patriots Park I & II)
AAA/Aaa/AA+
 
523,482
 
72.3%
$33.50
 
    $17,536,647
 
73.0%
 
9/30/2032(2)
GSA (Patriots Park III)
AAA/Aaa/AA+
 
182,423
 
25.2%
$35.55
 
$6,484,321
 
27.0%
 
3/06/2033(2)
Total Major Tenants
 
705,905
 
97.5%
$34.03
 
$24,020,968
 
100.0%
   
                         
Occupied Collateral Total
 
705,905
 
97.5%
$34.03
 
$24,020,968
 
100.0%
   
                         
Warehouse Space
   
17,762
 
2.5%
             
                         
Collateral Total
 
723,667
 
100.0%
             
                         
 
(1)
The Patriots Park Property is comprised of 705,905 square feet of office space (97.5% of net rentable area) and 17,762 square feet of warehouse (2.5% of net rentable area). GSA is in negotiation to lease the warehouse space.
(2)
Neither the Patriots Park I and II lease nor the Patriots Park III lease includes an appropriations-based termination clause. GSA has the right to terminate the leases if the borrower discloses the identity of any government agency occupying the premises, other than the GSA, to a third party, unless specifically authorized by a contracting officer representing the GSA, upon providing 18 months’ prior written notice to the lessor. The related loan agreement and guaranty provide that the borrower and guarantor will be liable for any losses arising from any termination of the applicable leases resulting from a breach of such provisions.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
2

 
 
PATRIOTS PARK
 
The following table presents certain information relating to the lease rollover schedule at the Patriots Park Property:
 
Lease Expiration Schedule(1)
 
Year Ending
 December 31,
 
No. of
Leases Expiring
Expiring
NRSF
% of
Total
NRSF
Cumulative
Expiring
NRSF
Cumulative
% of Total
NRSF
Annual
 U/W
Base Rent
Annual
 U/W
Base Rent
 PSF(2)
 
MTM
 
0
0
0.0%
0
0.0%
$0
$0.00
 
2015
 
0
0
0.0%
0
0.0%
$0
$0.00
 
2016
 
0
0
0.0%
0
0.0%
$0
$0.00
 
2017
 
0
0
0.0%
0
0.0%
$0
$0.00
 
2018
 
0
0
0.0%
0
0.0%
$0
$0.00
 
2019
 
0
0
0.0%
0
0.0%
$0
$0.00
 
2020
 
0
0
0.0%
0
0.0%
$0
$0.00
 
2021
 
0
0
0.0%
0
0.0%
$0
$0.00
 
2022
 
0
0
0.0%
0
0.0%
$0
$0.00
 
2023
 
0
0
0.0%
0
0.0%
$0
$0.00
 
2024
 
0
0
0.0%
0
0.0%
$0
$0.00
 
2025
 
0
0
0.0%
0
0.0%
$0
$0.00
 
Thereafter
 
2
705,905
97.5%
705,905
97.5%
$24,020,968
$34.03
 
Vacant/Warehouse
 
0
17,762(3)
2.5%(3)
723,667
100.0%
$0
$0.00
 
Total/Weighted Average
 
2
723,667
100.0%
   
$24,020,968
$34.03
 
 
(1)   
Information obtained from the underwritten rent roll.
(2)   
Annual U/W Base Rent PSF excludes vacant space.
(3)   
The Patriots Park Property includes 17,762 square feet of warehouse (2.5% of net rentable area). GSA is in negotiation to lease the warehouse space.
 
The following table presents historical occupancy percentages at the Patriots Park Property:
 
Historical Occupancy
 
12/31/2012(1)
 
12/31/2013(1)
 
12/31/2014(2)
 
7/1/2015(3)
NAV
 
NAV
 
97.5%
 
97.5%
 
(1)
Historical occupancy is not available, as the sponsor recently acquired the Patriots Park Property, and the information was not provided by the previous owner.
(2)
Information is based on the leases then in place at the Patriots Park Property.
(3)
Information obtained from the underwritten rent roll.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
3

 
PATRIOTS PARK
 
Operating History and Underwritten Net Cash Flow.  The following table presents certain information relating to the historical operating performance and the underwritten net cash flow at the Patriots Park Property:
 
Cash Flow Analysis(1)
 
 
2014
 
U/W
 
% of U/W
Effective Gross
Income
 
U/W $
per SF
 
Base Rent
$24,593,660(2)
 
$24,020,968(2)
 
95.2
$33.19
 
Grossed Up Vacant Space
0
 
595,027
 
2.4
 
0.82
 
Total Reimbursables
0
 
185,292
 
0.7
 
0.26
 
Parking Income
227,088(2)
 
891,480(2)
 
3.5
 
1.23
 
Other Income
545,809(2)
 
143,358(2)
 
0.6
 
0.20
 
Less Vacancy & Credit Loss
0
 
(595,027)(3)
 
    (2.4)
 
(0.82)  
 
Effective Gross Income
$25,366,558
 
$25,241,098
 
100.0
$34.88
 
                 
Total Operating Expenses
$7,380,961
 
$7,672,221
 
30.4
$10.60
 
                 
 Net Operating Income
$17,985,597
 
$17,568,877
 
69.6
  $24.28  
 
                 
  TI/LC
0
 
0
 
0.0
 
0.00
 
Capital Expenditures
0
 
108,550
 
0.4
 
0.15    
 
 Net Cash Flow
$17,985,597
 
$17,460,327
 
69.2
  $24.13 
 
                 
NOI DSCR(4)
2.25x
 
2.20x
         
NCF DSCR(4)
2.25x
 
2.18x
         
NOI DY(4)
8.4%
 
8.2%
         
NCF DY(4)
8.4%
 
8.1%
         
 
(1)
Historical financials prior to 2014 were not available as the sponsor recently acquired the Patriots Park Property and this information was not provided by the previous owner.
(2)
2014 Base Rent is higher than U/W Base Rent as it includes revenue from the warehouse space and Parking Income in Q1 to Q3 2014. 2014 Parking Income of $227,088 is lower than U/W Parking Income because the prior owner did not provide a breakout of the Parking Income from the first quarter to the third quarter of 2014. 2014 Other Income includes $309,076 of tax abatements which is not included in U/W Other Income.
(3)
The underwritten economic vacancy is 2.3%. The Patriots Park Property was 97.5% physically occupied as of July 1, 2015. GSA is in negotiation to lease the warehouse space, which accounts for 2.5% of the net rentable area.
(4)
DSCRs and debt yields are based on the Patriots Park Loan Combination.
 
Appraisal.  As of the appraisal valuation date of July 14, 2014, the Patriots Park Property had an “as-is” appraised value of $322,000,000.
 
Environmental Matters.  According to a Phase I environmental site assessment dated July 21, 2014, there was no evidence of any recognized environmental condition at the Patriots Park Property.
 
Market Overview and Competition.  The Patriots Park Property is located at the intersection of Fairfax County Parkway and the Dulles Toll Road (Route 267) along Sunrise Valley Drive in Reston, Virginia, approximately 18 miles west of Washington D.C. and just east of the Washington Dulles International Airport. The property is in close proximity (approximately two miles) to Reston Town Center, which offers a variety of amenities such as restaurants, shopping, and open space. The property is located approximately one mile west of the Wiehle-Reston East Metrorail station, the terminus of the first phase of the Silver Line. In addition, the Patriots Park Property will be in close proximity to the Reston Town Center and Herndon stations once the second phase of the Silver Line is completed, expected to be in 2018. Upon completion, the Silver Line will link the Patriots Park Property with Dulles International Airport. The Patriots Park Property is located in Fairfax County in the Washington, D.C. metro area. According to the appraisal, the estimated 2014 population and median household income of the Washington, D.C. metro area were 6.0 million and $91,436, respectively. The Fairfax County/Fairfax City/Falls Church area has the largest population in the Washington, D.C. metro area with nearly 1.2 million people.
 
Per the appraisal, the Patriots Park Property is located in the Reston/Herndon office submarket, which contains 24.7 million square feet of office space. As of the first quarter of 2015, the submarket’s direct vacancy was 15.8% and the average direct asking gross rent was $30.76 per square foot.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
4

 

PATRIOTS PARK
 
The following table presents certain information relating to comparable office properties to the Patriots Park Property:
 
Competitive Set(1)
 
 
Patriots
Park
(Subject)
Commerce
Executive Park
IV
Commerce
Executive Park
VI
Two Freedom
Square
Plaza America
Tower 2
Reston
Square
Two
Fountain
Square
 Location
Reston, VA
Reston, VA
Reston, VA
Reston, VA
Reston, VA
Reston, VA
Reston, VA
 Distance from Subject
--
2.9 miles
3.0 miles
1.8 miles
2.3 miles
1.7 miles
2.0 miles
 Property Type
Office
Office
Office
Office
Office
Office
Office
 Year Built/Renovated
1986/2013
1987/NAV
1998/NAV
2002/NAV
1999/NAV
2007/NAV
1990/NAV
 Stories
5-7
6
6
16
10
6
11
 Total GLA
723,667 SF
138,980 SF
145,750 SF
379,270 SF
230,034 SF
139,075 SF
250,000 SF
 
(1)
Information obtained from the appraisal.
 
The Borrower. The borrower is Hyundai Able Patriots Park, LLC, a Delaware limited liability company and single purpose entity with two independent directors. Legal counsel to the borrower delivered a non-consolidation opinion in connection with the origination of the Patriots Park Loan Combination. Hyundai Able Patriots Park, LLC is owned by Hyundai Able Patriots Park Manager, LLC which is owned by the Hyundai Able Investment REIT, which is over 99% owned by and 100% controlled by Hyundai Securities Co. Ltd. Hyundai Securities Co. Ltd. and Hyundai Able Investment REIT are the guarantors of certain nonrecourse carveouts under the Patriots Park Loan Combination.
 
The Sponsor. The sponsors are Hyundai Able Investment REIT and Hyundai Securities Co. Ltd. (“HSC”). HSC is a publicly traded company listed on the South Korean stock exchange. HSC is a leading South Korea-based financial company engaged in the securities and investment banking sector and an experienced owner of office, retail and residential properties in London, Tokyo, Shanghai and South Korea. As of 2013, HSC reported net worth in excess of $2.9 billion and liquidity of approximately $1.6 billion.
 
Escrows. The loan documents provide for upfront reserves in the amount of $1,101,043 for taxes, $18,896 for insurance and $4,187,856 for replacement reserves. The loan documents require monthly deposits of one-twelfth of the estimated annual real estate taxes, which currently equates to $220,209 and one-twelfth of the annual insurance premiums, which currently equates to $18,896. The loan documents require monthly escrows for replacement reserves of $9,046, subject to a cap of $4,187,856.
 
Lockbox and Cash Management. The Patriots Park Loan Combination is structured with a lender-controlled hard lockbox and springing cash management. The Patriots Park Loan Combination requires all rents to be transmitted directly into the lockbox. Prior to the occurrence of a Cash Management Period (as defined below), all funds in the lockbox account are required to be swept to the borrower’s operating account. During a Cash Management Period, all funds in the lockbox account are required to be swept to a lender-controlled cash management account.
 
A “Cash Management Period” will commence upon any of the following: (i) the occurrence and continuance of an event of default, (ii) the failure by the borrower, after the end of a calendar quarter, to maintain a debt service coverage ratio of at least 1.10x, (iii) the delivery by the GSA to the borrower of a confidentiality breach termination notice (which is required to be at least 18 months prior to GSA’s intention to vacate) or (iv) the failure by the borrower to repay the outstanding principal balance of the Patriots Park Loan Combination in full at least one month prior to the ARD. A Cash Management Period will end, with respect to clause (i) above, upon the cure of such event of default; with respect to clause (ii) above, upon the debt service coverage ratio being at least 1.15x for six consecutive months since the commencement of the Cash Management Period; with respect to clause (iii) above, (a) upon the revocation of the confidentiality breach termination notice by the government, (b) upon a judgment by a court of competent jurisdiction nullifying the lease termination, provided that, and for so long as, such judgment is not challenged or appealed by the government, or (c) upon the occurrence of a confidentiality breach termination cure, and in any case, prior to the occurrence of an event of default.
 
Property Management.  The Patriots Park Property is managed by Boston Properties Limited Partnership (rated Baa2/A-/BBB+ by Moody’s/S&P/Fitch).
 
Assumption.  The lender may not unreasonably withhold its consent to the sale of the Patriots Park Property in its entirety to a special purpose entity that meets the lender’s then current requirements for special purpose entities and provided that the borrower satisfies certain other conditions including (i) no event of default has occurred and is continuing; and (ii) the lender has reasonably determined that the proposed transferee and any successor guarantor satisfy the lender’s credit review and underwriting standards, taking into consideration such transferee’s experience, financial strength and general business standing. No such transfer is permitted during the 60 days prior to or immediately following a securitization. The lender will have the right to approve or disapprove the proposed transferee in its reasonable discretion, and the lender may, as a condition to approving any proposed transferee, require a rating agency confirmation from DBRS, KBRA and Moody’s stating that such assumption will not result in a downgrade, withdrawal or qualification of the respective ratings to the Series 2015-NXS2 Certificates and similar confirmations from each rating agency rating securities backed by any of the Patriots Park Companion Loans.
 
Partial Release. Not permitted.
 
Real Estate Substitution. Not permitted.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
5

 
 
PATRIOTS PARK
 
Subordinate and Mezzanine Indebtedness. Not permitted.
 
Ground Lease. None.
 
Terrorism Insurance. The loan documents provide that the required “all risk” insurance policy must include coverage for terrorism in an amount equal to the full replacement cost of the Patriots Park Property.  The loan documents also require business interruption insurance covering no less than the 18-month period following the occurrence of a casualty event.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
6

 
 
 

No. 2  – Campbell Technology Park
 
Loan Information
     
Property Information
Mortgage Loan Seller:
Wells Fargo Bank, National Association
 
Single Asset/Portfolio:
Single Asset
Credit Assessment
(DBRS/KBRA/Moody’s):
NR/NR/NR
 
Property Type:
Office
Original Principal Balance:
$60,000,000
 
Specific Property Type:
Suburban
Cut-off Date Principal Balance:
$60,000,000
 
Location:
Campbell, CA
% of Initial Pool Balance:
6.6%
 
Size:
280,864 SF
Loan Purpose:
Refinance
 
Cut-off Date Principal
Balance Per SF:
$213.63
Borrower Name:
Campbell Technology Park, LLC
 
Year Built/Renovated:
2000/NAP
Sponsors:
Carl Russo; Timothy Pasquinelli
 
Title Vesting:
Fee
Mortgage Rate:
4.410%
 
Property Manager:
Self-managed
Note Date:
June 11, 2015
 
3rd Most Recent Occupancy (As of)(2):
86.0% (12/31/2012)
Anticipated Repayment Date:
NAP
 
2nd Most Recent Occupancy (As of)(2):
80.0% (12/31/2013)
Maturity Date:
June 11, 2025
 
Most Recent Occupancy (As of)(2):
91.0% (12/31/2014)
IO Period:
120 months
 
Current Occupancy (As of)(2):
93.4% (4/30/2015)
Loan Term (Original):
120 months
   
Seasoning:
1 month
 
Underwriting and Financial Information:
Amortization Term (Original):
NAP
     
Loan Amortization Type:
Interest-only, Balloon
 
3rd Most Recent NOI (As of):
 $3,770,424 (12/31/2012)
Interest Accrual Method:
Actual/360
 
2nd Most Recent NOI (As of)(3):
 $3,590,973 (12/31/2013)
Call Protection:
L(25),D(91),O(4)
 
Most Recent NOI (As of)(3):
$4,579,817 (12/31/2014)
Lockbox Type:
Soft/Springing Cash Management
   
Additional Debt:
None
     
Additional Debt Type:
NAP
 
U/W Revenues:
$8,276,061
     
U/W Expenses:
$2,831,835
     
U/W NOI(3):
$5,444,226
     
U/W NCF(3):
$4,805,020
         
U/W NOI DSCR:
2.02x
Escrows and Reserves(1):
       
U/W NCF DSCR:
1.79x
         
U/W NOI Debt Yield:
9.1%
Type:
Initial
Monthly
Cap (If Any)
 
U/W NCF Debt Yield:
8.0%
Taxes
$231,690
$77,230
NAP
 
As-Is Appraised Value:
$100,000,000
Insurance
$0
Springing
NAP
 
As-Is Appraisal Valuation Date:
April 21, 2015
Replacement Reserves
$0
$4,700
NAP
 
Cut-off Date LTV Ratio:
60.0%
TI/LC Reserves
$0
$67,700
$1,150,000
 
LTV Ratio at Maturity or ARD:
 60.0%
             
 
(1)
See “Escrows” section.
(2)
See “Historical Occupancy” section.
(3)
See “Cash Flow Analysis” section.
 
The Mortgage Loan.  The mortgage loan (the “Campbell Technology Park Mortgage Loan”) is evidenced by a single promissory note that is secured by a first mortgage encumbering an office park located in Campbell, California (the “Campbell Technology Park Property”).  The Campbell Technology Park Mortgage Loan was originated on June 11, 2015 by Wells Fargo Bank, National Association.  The Campbell Technology Park Mortgage Loan had an original principal balance of $60,000,000, has an outstanding principal balance as of the Cut-off Date of $60,000,000 and accrues interest at an interest rate of 4.410% per annum.  The Campbell Technology Park Mortgage Loan had an initial term of 120 months, has a remaining term of 119 months as of the Cut-off Date and requires interest-only payments through the term of the Campbell Technology Park Mortgage Loan.  The Campbell Technology Park Mortgage Loan matures on June 11, 2025.

Following the lockout period, the borrower has the right to defease the Campbell Technology Park Mortgage Loan in whole, but not in part, on any date before March 11, 2025.  In addition, the Campbell Technology Park Mortgage Loan is prepayable without penalty on or after March 11, 2025.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
7

 
 
CAMPBELL TECHNOLOGY PARK
 
Sources and Uses

Sources
       
Uses
     
Original loan amount
$60,000,000
 
100.0%
 
Loan payoff(1)
$43,036,890
 
71.7%   
     
 
 
Reserves
231,690
 
0.4   
         
Closing costs(2)
2,468,931
 
4.1   
         
Return of equity
14,262,489
 
23.8   
Total Sources
$60,000,000
 
100.0%
 
Total Uses
$60,000,000
 
100.0%    
(1)
The Campbell Technology Park Property was previously securitized in the WBCMT 2006-C25 transaction.
(2)
Closing costs include a yield maintenance prepayment fee of $2,117,589.

The Property.  The Campbell Technology Park Property was built in 2000 and is comprised of three two-story and one single story, class A, suburban office buildings totaling 280,864 square feet located in Campbell, California, a submarket of Silicon Valley and approximately 8.7 miles southwest of the San Jose central business district.  The single story building includes 39,770 square feet and is 100.0% occupied by Moss Adams LLP (“Moss Adams”).  The remaining two-story buildings range in size from 59,908 to 100,326 square feet and are occupied by multiple tenants.  The largest tenant at the Campbell Technology Park Property, AOptix Technologies (“AOptix”) (69,321 square feet or 24.7% of net rentable area), which has been in occupancy since 2005, recently expanded its space by 7,813 square feet in January 2015 and extended the term of its lease (on the majority of space) through December 2019.  Moss Adams (52,226 square feet or 18.6% of net rentable area), the second largest tenant, has been in occupancy since 2000 and took an additional 12,456 square feet of space in February 2015.  The third largest tenant is iWatt, Inc. (“iWatt”) (44,884 square feet or 16.0% of net rentable area), which was acquired by Dialog Semiconductor Plc (publicly traded on the Frankfurt Stock Exchange) in July 2013.  iWatt, Inc. has been a tenant at the Campbell Technology Park Property since November 2011 and signed a new lease in February 2014 to nearly double its square footage (from 24,873 square feet to 44,884 square feet) and extend its term to February 2018.  The Campbell Technology Park Property offers 1,059 parking spaces, resulting in a parking ratio of 3.8 spaces per 1,000 square feet.  The borrower invested a substantial amount of capital since acquiring the Campbell Technology Park Property in 2006 and has increased occupancy from 61.0% in December 2009 (Qualcomm vacated approximately 35.7% of net rentable area) to 93.4% as of April 30, 2015.

The following table presents certain information relating to the tenancy at the Campbell Technology Park Property:

Major Tenants

 Tenant Name
Credit Rating
(Fitch/
Moody’s/
S&P(1)
Tenant
NRSF
% of
NRSF
Annual U/W
Base Rent
PSF
Annual
U/W Base
Rent
% of Total
Annual U/W
Base Rent
Lease
Expiration
Date
               
 Major Tenants
         
 AOptix Technologies
NR/NR/NR
69,321(2)(3)
24.7%
$22.17    
$1,536,940
27.2%
Various(4)  
 Moss Adams LLP
NR/NR/NR
52,226
18.6%
$19.63    
$1,025,351
18.1%
12/31/2017(5)  
 iWatt, Inc.
NR/NR/NR
44,884
16.0%
$22.74    
$1,020,438
18.0%
2/28/2018(6)  
 Ricoh Americas Corp.
NR/NR/A
22,969
8.2%
$22.87    
$525,209
9.3%
5/30/2019(7)  
 Dasher Technologies, Inc.
NR/NR/NR
18,996
6.8%
$23.83    
$452,672
8.0%
8/31/2020    
 Total Major Tenants
208,396
74.2%
$21.88    
$4,560,610
80.6%
 
             
 Non-Major Tenants
53,817
19.2%
$20.34    
$1,094,846
19.4%
 
             
 Occupied Collateral Total
262,213
93.4%
$21.57    
$5,655,456
100%
 
             
 Vacant Space
18,651
6.6%
       
             
 Collateral Total
280,864
100.0%
       
               
 
(1)
Certain ratings are those of the parent company whether or not the parent guarantees the lease.
(2)
7,921 square feet (2.8% of net rentable area) of AOptix Technologies’ space is subleased to Keyssa, Inc. at $21.00 per square foot triple-net.  Keyssa Inc.’s sublease expiration is coterminous with the primary lease expiration date of December 31, 2016.  Annual U/W Base Rent for this space was underwritten to AOptix Technologies’ primary lease rate of $18.69 per square foot triple-net.
(3)
AOptix Technologies signed a lease on January 1, 2015 for an additional 7,813 square feet (2.8% of net rentable area).  They are currently building out the space and are not yet in occupancy. However, AOptix is currently paying rent on this space.
(4)
7,921 square feet (2.8% of net rentable area) of AOptix Technologies’ space (the space subleased to Keyssa, Inc.) has a lease expiration date of December 31, 2016 and the remaining 61,400 square feet (21.9% of net rentable area) has a lease expiration date of December 31, 2019.
(5)
Moss Adams LLP has two, 5-year lease renewal options.
(6)
iWatt, Inc. has one, 4-year lease renewal option.
(7)
Ricoh Americas Corp. has a one-time right to terminate its lease on May 31, 2017 with six months’ notice and payment of a termination fee of $557,946.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
8

 
 
CAMPBELL TECHNOLOGY PARK

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

Lease Expiration Schedule(1)(2)

Year Ending
December 31,
No. of
Leases
Expiring
Expiring
NRSF
% of Total
NRSF
Cumulative
Expiring NRSF
Cumulative
% of Total
NRSF
Annual U/W
Base Rent
Annual
U/W Base
Rent PSF(3)
MTM
0
0
0.0%
 0
0.0%
$0
$0.00  
2015
1
16,669
5.9%
16,669
5.9%
$340,048
$20.40  
2016
3
22,288
7.9%
38,957
13.9%
$421,658
$18.92  
2017
3
68,196
24.3%
107,153
38.2%
$1,382,376
$20.27  
2018
2
44,884
16.0%
 152,037
54.1%
$1,020,438
$22.74  
2019
5
91,180
32.5%
 243,217
86.6%
$2,038,264
$22.35  
2020
2
18,996
6.8%
 262,213
93.4%
$452,672
$23.83  
2021
0
0
0.0%
 262,213
93.4%
$0
$0.00  
2022
0
0
0.0%
 262,213
93.4%
$0
$0.00  
2023
0
0
0.0%
 262,213
93.4%
$0
$0.00  
2024
0
 0
0.0%
 262,213
93.4%
 $0
$0.00  
2025
0
 0
0.0%
 262,213
93.4%
$0
$0.00  
Thereafter
0
0
0.0%
262,213
93.4%
$0
$0.00  
Vacant
0
18,651
6.6%
280,864
100.0%
$0
$0.00  
Total/Weighted Average
16
 280,864
100.0%
   
$5,655,456
$21.57  
 
(1)
Information obtained from the underwritten rent roll.
(2)
Certain tenants may have lease termination options that are exercisable prior to the originally stated expiration date of the subject lease and that are not considered in the Lease Expiration Schedule.
(3)
Weighted Average Annual U/W Base Rent PSF excludes vacant space.
 
The following table presents historical occupancy percentages at the Campbell Technology Park Property:

Historical Occupancy

12/31/2012(1)
 
12/31/2013(1)(2)
 
12/31/2014(1)(2)
 
4/30/2015(3)(4)
86.0%
 
80.0%
 
91.0%
 
93.4%
 
(1)
Information obtained from the borrower.
(2)
The increase in occupancy from 2013 through underwriting was due to continued new leasing activity and the recent expansion of several tenants at the Campbell Technology Park Property including iWatt, Ricoh Americas Corp and AOptix, which totaled 58,714 square feet (20.9% of net rentable area).
(3)
Information obtained from the underwritten rent roll.
(4)
AOptix Technologies signed a lease on January 1, 2015 for an additional 7,813 square feet (2.8% of net rentable area).  They are currently building out the space and are not yet in occupancy. However, AOptix is currently paying rent on this space. Current occupancy excluding this space is 90.6%.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
9

 
 
CAMPBELL TECHNOLOGY PARK
 
Operating History and Underwritten Net Cash Flow.  The following table presents certain information relating to the historical operating performance and underwritten net cash flow at the Campbell Technology Park Property:
 
Cash Flow Analysis
 
 
2012(1)
 
2013(1)
 
2014(1)
 
U/W(1)
 
% of U/W
Effective
Gross
Income
 
U/W $ per
SF
 
Base Rent
$3,624,969
 
$3,751,527
 
$4,449,620
 
$5,655,456(3)
 
68.3%
   
$20.14
 
Grossed Up Vacant Space
0
 
0
 
0
 
470,005
 
5.7
   
$1.67
 
Total Reimbursables
2,019,969
 
2,122,685
 
2,365,235
 
2,620,605
 
31.7
   
$9.33
 
Other Income
79,816
 
25,081(2)
 
141,478
 
0
 
0.0
   
$0.00
 
Less Vacancy & Credit Loss
0
 
0
 
0
 
(470,005)(4)
 
(5.7)
   
($1.67)
 
Effective Gross Income
$5,724,754
 
$5,899,293
 
$6,956,333
 
$8,276,061
 
100.0%
   
$29.47
 
                           
Total Operating Expenses
$1,954,331
 
$2,308,321(2)
 
$2,376,517
 
$2,831,835
 
34.2%
   
$10.08
 
                           
 Net Operating Income
$3,770,424
 
$3,590,973(2)
 
$4,579,817
 
$5,444,226
 
65.8%
   
$19.38
 
TI/LC
0
 
0
 
0
 
583,034
 
7.0
   
2.08
 
Capital Expenditures
0
 
0
 
0
 
56,173
 
0.7
   
0.20
 
 Net Cash Flow
$3,770,424
 
$3,590,973
 
$4,579,817
 
$4,805,020
 
58.1%
   
$17.11
 
                           
NOI DSCR
1.40x
 
1.33x
 
1.70x
 
2.02x
           
NCF DSCR
1.40x
 
1.33x
 
1.70x
 
1.79x
           
NOI DY
6.3%
 
6.0%
 
7.6%
 
9.1%
           
NCF DY
6.3%
 
6.0%
 
7.6%
 
8.0%
           
 
(1)
The increase in Effective Gross Income and Net Operating Income from 2012 through underwriting was due to continued new leasing activity and the recent expansion of several tenants at the Campbell Technology Park Property, which totaled 58,714 square feet (20.9% of net rentable area).
(2)
The decrease in Net Operating Income from 2012 to 2013 was due to the decrease in Other Income and the increase in Total Operating Expenses.  The primary source of Other Income had been early termination fees and forfeited lease deposits, of which there was very little in 2013.  Additionally, Total Operating Expenses increased from 2012 due to an increase in real estate taxes.
(3)
U/W Base Rent includes contractual rent steps through April 2016 totaling $280,081.
(4)
The underwritten economic vacancy is 7.7%.  The Campbell Technology Park Property was 93.4% leased and 90.6% physically occupied as of April 30, 2015.

Appraisal.  As of the appraisal valuation date of April 21, 2015, the Campbell Technology Park Property had an “as-is” appraised value of $100,000,000.

Environmental Matters.  According to the Phase I environmental site assessment dated April 24, 2015, there was no evidence of any recognized environmental conditions at the Campbell Technology Park Property.

Market Overview and Competition. The Campbell Technology Park Property is located in the greater San Francisco Bay Area (“Bay Area”), which is the fifth largest metropolitan region in the United States. The Bay Area is one of the largest and most diversified economies in the United States and is home to 31 Fortune 500 companies.  Additionally, the Bay Area contains the highest concentration of venture capital firms in the world.  These venture capital firms provide the capital and management expertise needed by a number of technology companies located in the region, which in turn helps expedite the technological advancements these businesses create.

The Campbell Technology Park Property is conveniently located 8.7 miles southwest of the San Jose central business district and 9.2 miles southwest of the Mineta San Jose International Airport. The Campbell Technology Park Property is located in the Silicon Valley Non-CBD market, which is home to some of the largest technology and e-commerce companies in the world including Apple, eBay, Google and Netflix. The Campbell Technology Park Property is located in the Campbell/Los Gatos submarket and is situated along a private drive (Campbell Technology Parkway) with access and visibility from Highway 17.  Los Gatos is a wealthy community where many technology executives reside, including the managing partners of Moss Adams and AOptix.

The Campbell Technology Park Property is approximately 1.7 miles south of the Pruneyard, a 250,000 square foot mixed-used development featuring a movie theater, Trader Joe’s, over 15 eating establishments and 35 retail, service and entertainment businesses. In addition to the shopping center, the Pruneyard also includes two hotels. The Campbell Technology Park Property benefits from its proximity to the Pruneyard and the amenities it has to offer. According to the appraisal, the estimated 2014 population within a three- and five-mile radius of the Campbell Technology Park Property is 215,589 and 514,287, respectively, and the estimated median household income within the same radii is $86,100 and $88,084, respectively. Furthermore, the Campbell Technology Park Property is an attractive option for tenants desiring class A office space at a lower rental rate compared to competing office spaces near the intersection of Hamilton Avenue and South Bascom Avenue, adjacent to the Pruneyard (and further north in Sunnyvale and Menlo Park). According to the appraisal, the competitive set of the Campbell Technology Park Property contains rental rates ranging from $26.40 per square foot, triple-net to $36.00 per square foot, triple-net with an average of $32.40 per square foot, triple-net, compared to the Annual U/W Base Rent at the Campbell Technology Park Property of $21.57 per square foot, triple-net. As of the first quarter 2015, the Campbell Los/Gatos office submarket reported an average vacancy rate of 5.2%.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
10

 
 
CAMPBELL TECHNOLOGY PARK

The following table presents certain information relating to some comparable office properties for the Campbell Technology Park Property:

Competitive Set(1)

 
Campbell
Technology Park
(Subject)
Legacy Hamilton
Plaza
Lincoln Court
910 Campisi Way
 Location
Campbell, CA
Campbell, CA
Campbell, CA
Campbell, CA
 Distance from Subject
--
1.8 miles
1.2 miles
1.6 miles
 Property Type
Office
Office
Office
Office
 Year Built/Renovated
2000/NAV
1989/NAV
1988/NAV
1985/NAV
 Stories
2
6
3
2
 Total GLA
280,864 SF
175,000 SF
123,529 SF
34,118 SF
 Total Occupancy
93%
94%
99%
100%
 
(1)
Information obtained from the appraisal.
 
The Borrower. The borrower is Campbell Technology Park, LLC, a California limited liability company, which is a single purpose entity with two independent directors.  Legal counsel to the borrower delivered a non-consolidation opinion in connection with the origination of the Campbell Technology Park Mortgage Loan.  Campbell Technology Park, LLC is owned by CD Real Estate Investments, LLC (“CDREI”) (80.0%) and CMC Campbell, LLC (20.0%).  CDREI is the guarantor of certain nonrecourse carveouts under the Campbell Technology Park Mortgage Loan.

The Sponsors. The sponsors are Carl Russo and Timothy Pasquinelli.  CDREI is 99.0% owned by Carl Russo and managed by Timothy Pasquinelli, Mr. Russo’s wealth advisor.  Mr. Pasquinelli has a working relationship spanning over 20 years with Mr. Russo as a wealth advisor and business partner.  Mr. Pasquinelli and Mr. Russo founded Consigliare Management Company (“CMC”) in 1999 to invest in commercial real estate.  Since inception, CMC has developed, acquired, and owned six office and research and development projects in the Bay Area totaling approximately one million square feet.

Escrows. The loan documents provide for upfront reserves in the amount of $231,690 for real estate taxes.  The loan documents require monthly deposits of $77,230 for real estate taxes and $4,700 for replacement reserves.  The loan documents also require monthly deposits of $67,700 for tenant improvements and leasing commissions (“TI/LC”) commencing on August 11, 2016 (subject to a cap of $1.15 million).  Upon the occurrence of any Moss Adams Non-Renewal Event (as defined below), the borrower must deposit an additional $316,000 into the account.  Ongoing monthly reserves for insurance are not required provided (i) no event of default has occurred and is continuing; (ii) the insurance required to be maintained by borrower is maintained pursuant to one or more blanket insurance policies approved by the lender; and (iii) the borrower provides the lender with evidence of renewal of the insurance policy and evidence of timely proof of payment.

A “Moss Adams Non-Renewal Event” will commence upon the earlier of (i) four months prior to the expiration date of the Moss Adams lease, unless, prior to such date, the lender receives evidence that Moss Adams has exercised its option to extend the term of its lease or has otherwise renewed the lease on terms reasonably acceptable to the lender and/or (ii) 30 days after Moss Adams exercises any right to terminate or cancel its lease prior to the scheduled expiration thereof for any reason.

Lockbox and Cash Management. The Campbell Technology Park Mortgage Loan requires a lender-controlled lockbox account, which is already in place, and that the borrower and property manager deposit all rents directly into such lockbox account within one day of receipt.  Prior to the occurrence of a Cash Trap Event Period (as defined below), all funds on deposit in the lockbox account are disbursed to the borrower. During a Cash Trap Event Period, all cash flow is swept to a lender-controlled cash management account.

A “Cash Trap Event Period” will commence upon the earlier of (i) the occurrence and continuance of an event of default or (ii) the debt service coverage ratio falling below 1.45x.  A Cash Trap Event Period will expire, with regard to clause (i), upon the cure of such event of default, and with regard to clause (ii) upon the debt service ratio being equal to or greater than 1.45x for two consecutive calendar quarters.

Property Management. The Campbell Technology Park Property is managed by an affiliate of the borrower.

Assumption. The borrower has a two-time right to transfer the Campbell Technology Park Property provided that certain conditions are satisfied, including (i) no event of default has occurred and is continuing; (ii) the lender has reasonably determined that the proposed transferee and guarantor satisfy the lender’s credit review and underwriting standards, taking into consideration transferee experience, financial strength and general business standing; and (iii) the lender has received confirmation from DBRS, KBRA and Moody’s that such assumption will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the Series 2015-NXS2 Certificates.

Partial Release. Not Permitted

Real Estate Substitution. Not permitted.

Subordinate and Mezzanine Indebtedness.  Not permitted.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
11

 
 
CAMPBELL TECHNOLOGY PARK
 
Ground Lease. None.

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

Earthquake Insurance. A seismic report dated April 22, 2015 determined that the probable maximum loss at the Campbell Technology Park Property was 15.0%.  Earthquake insurance is not required.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
12

 
 
 
No. 3  – Stor All Group Portfolio
 
Loan Information
 
Property Information
Mortgage Loan Seller:
Wells Fargo Bank, National Association
 
Single Asset/Portfolio:
Portfolio
Credit Assessment (DBRS/KBRA/Moody’s):
NR/NR/NR
 
Property Type:
Self Storage
Original Principal Balance:
$58,250,000
 
Specific Property Type:
Self Storage
Cut-off Date Principal Balance:
$58,250,000
 
Location:
Various – See Table
% of Initial Pool Balance:
6.4%
 
Size:
684,770 SF
Loan Purpose:
Refinance
 
Cut-off Date Principal
Balance Per SF:
$85.07
Borrower Names(1):
Various
 
Year Built/Renovated:
Various – See Table
Sponsor:
James S. Womack
 
Title Vesting:
Fee
Mortgage Rate:
4.385%
 
Property Manager:
Self-managed
Note Date:
June 5, 2015
 
3rd Most Recent Occupancy (As of):
87.5% (12/31/2012)
Anticipated Repayment Date:
NAP
 
2nd Most Recent Occupancy (As of):
87.5% (12/31/2013)
Maturity Date:
July 1, 2025
 
Most Recent Occupancy (As of):
89.6% (12/31/2014)
IO Period:
36 months
 
Current Occupancy (As of)(4):
89.9% (TTM 4/30/2015)
Loan Term (Original):
120 months
   
Seasoning:
0 months
 
Underwriting and Financial Information:
Amortization Term (Original):
360 months
     
Loan Amortization Type:
Interest-only, Amortizing Balloon
 
3rd Most Recent NOI (As of):
$4,271,446 (12/31/2013)
Interest Accrual Method:
Actual/360
 
2nd Most Recent NOI (As of):
$4,634,446 (12/31/2014)
Call Protection:
L(24),D(92),O(4)
 
Most Recent NOI (As of):
 $4,645,047 (TTM 4/30/2015)
Lockbox Type:
Springing (Without Established Account)
   
Additional Debt(2):
Yes
 
U/W Revenues:
$6,825,667
Additional Debt Type(2):
Future Mezzanine
 
U/W Expenses:
$2,177,296
     
U/W NOI:
$4,648,371
     
U/W NCF:
$4,579,894
     
U/W NOI DSCR:
1.33x
         
U/W NCF DSCR:
1.31x
Escrows and Reserves(3):
       
U/W NOI Debt Yield:
8.0%
         
U/W NCF Debt Yield:
7.9%
Type:
Initial
Monthly
Cap (If Any)
 
As-Is Appraised Value(5):
$80,000,000
Taxes
$175,488
$31,160
NAP
 
As-Is Appraisal Valuation Date(5):
April 22, 2015
Insurance
$0
Springing
NAP
 
Cut-off Date LTV Ratio(5):
72.8%
Replacement Reserves
$136,954
$5,706
$136,954
 
LTV Ratio at Maturity or ARD(5):
 63.6%
             
 
(1)
See “The Borrowers” section.
(2)
See the “Subordinate and Mezzanine Indebtedness” section.
(3)
See the “Escrows” section.
(4)
See the “Historical Occupancy” section.
(5)
See the “Appraisal” section.
 
The Mortgage Loan.  The mortgage loan (the “Stor All Group Portfolio Mortgage Loan”) is evidenced by a single promissory note that is secured by a first mortgage encumbering 10 self storage properties located in Ohio and Kentucky (the “Stor All Group Portfolio Properties”). The Stor All Group Portfolio Mortgage Loan was originated on June 5, 2015 by Wells Fargo Bank, National Association.  The Stor All Group Portfolio Mortgage Loan had an original principal balance of $58,250,000, has an outstanding principal balance as of the Cut-off Date of $58,250,000 and accrues interest at an interest rate of 4.385% per annum.  The Stor All Group Portfolio Mortgage Loan had an initial term of 120 months, has a remaining term of 120 months as of the Cut-off Date and requires interest-only payments for the first 36 payments following origination and, thereafter, requires payments of principal and interest based on a 30-year amortization schedule. The Stor All Group Portfolio Mortgage Loan matures on July 1, 2025.
 
Following the lockout period, the borrowers have the right to defease the Stor All Group Portfolio Mortgage Loan in whole, but not in part, on any day before April 1, 2025.  In addition, the Stor All Group Portfolio Mortgage Loan is prepayable without penalty on or after April 1, 2025.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
13

 
 
STOR ALL GROUP PORTFOLIO
 
Sources and Uses
 
Sources
       
Uses
       
Original loan amount
$58,250,000
 
100.0%
 
Loans payoff(1)
$43,328,732
 
74.4
         
Reserves
312,442
 
    0.5
 
         
Closing costs
950,533
 
    1.6
 
         
Return of equity
13,658,293
 
  23.4
 
Total Sources
$58,250,000
 
100.0%
 
Total Uses
$58,250,000
 
100.0
 
(1)
Eight of the 10 Stor All Group Portfolio Properties were previously securitized in the JPMCC 2005-LDP3 and JPMCC 2005-CB12 transactions.
 
The Properties.   The Stor All Group Portfolio Mortgage Loan is secured by the fee interest in a portfolio of 10 self storage properties totaling 684,770 rentable square feet or 5,590 units which are located in Kentucky (8) and Ohio (2).  The Stor All Group Portfolio Properties range in size from 52,400 square feet to 85,365 square feet and climate controlled units account for approximately 23.1% of net rentable area. Built between 1988 and 1999, the Stor All Group Portfolio Properties have exhibited an average occupancy of 88.8% over the last five years and have demonstrated a 28.4% cash flow increase in the Net Operating Income over the same period. As of the trailing 12 month period ending April 30, 2015, the Stor All Group Portfolio Properties were 89.9% occupied.
 
The following table presents certain information relating to the Stor All Group Portfolio Properties:
 
Property Name – Location
Allocated
Cut-off Date
Principal
Balance
% of
Portfolio
Cut-off
Date
Principal
Balance
Occupancy
Year
Built/
Renovated
Net
Rentable
Area (SF)
Appraised
Value
(3)
King Arthur – Louisville, KY(1)
$8,001,506
13.7%
87.3%
1997/NAP
85,365
$9,350,000
Man-O-War – Lexington, KY(2)
$7,572,794
13.0%
92.6%
1995/NAP
76,475
$8,600,000
Lyndon – Louisville, KY(1)
$7,002,321
12.0%
88.9%
1996/NAP
64,875
$8,450,000
Cane – Louisville, KY(2)
$6,824,172
11.7%
87.3%
1992/NAP
82,750
$8,500,000
Middleton – Louisville, KY(1)
$6,690,377
11.5%
95.3%
1999/NAP
65,325
$7,950,000
Dixie Highway – Louisville, KY(2)
$5,915,169
10.2%
86.5%
1996/NAP
72,910
$7,050,000
Pisgah – Cincinnati, OH
$4,499,746
7.7%
89.1%
1999/NAP
70,120
$5,100,000
Landen – Loveland, OH
$4,187,172
7.2%
95.5%
1996/NAP
61,180
$4,900,000
New Cut – Louisville, KY(2)
$3,945,284
6.8%
87.2%
1988/NAP
53,370
$5,550,000
Palumbo – Lexington, KY(1)
$3,611,459
6.2%
91.3%
1990/NAP
52,400
$4,950,000
Total/Weighted Average
 
$58,250,000
100.0%
89.9%
 
684,770
$80,000,000
 
(1)
Previously securitized in the JPMCC 2005-LDP3 transaction.
(2)
Previously securitized in the JPMCC 2005-CB12 transaction.
(3)
See “Appraisal” section.
 
The following table presents historical occupancy percentages at the Stor All Group Portfolio Properties:
 
Historical Occupancy
 
12/31/2012(1)
 
12/31/2013(1)
 
12/31/2014(1)
 
TTM 4/30/2015(2)(3)
87.5%
 
87.5%
 
89.6%
 
89.9%
 
(1)
Information obtained from the borrowers.
(2)
Information obtained from the underwritten rent roll.
(3)
The TTM 4/30/2015 occupancy represents the average monthly occupancy of the Stor All Group Portfolio Properties for the trailing 12-month period ending April 30, 2015.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
14

 
 
STOR ALL GROUP PORTFOLIO
 
Operating History and Underwritten Net Cash Flow.  The following table presents certain information relating to the historical operating performance and the underwritten net cash flow at the Stor All Group Portfolio Properties:
 
Cash Flow Analysis
 
   
 
2013
 
2014
 
TTM
4/30/2015
 
U/W
 
% of U/W
Effective Gross
Income
 
U/W $ per SF
 
Base Rent
 
$6,038,341
 
$6,394,516
 
$6,409,280
 
$6,409,280
 
93.9%
 
$9.36
 
Grossed Up Vacant Space
 
0
 
0
 
0
 
1,222,204
 
17.9
 
1.78
 
Less Concessions
 
0
 
0
 
0
 
0
 
0.0
 
0.00
 
Other Income
 
277,215
 
386,450
 
416,387
 
416,387
 
6.1
 
0.61
 
Less Vacancy & Credit Loss
 
0
 
0
 
0
 
(1,222,204)(1)
 
(17.9)
 
(1.78)
 
Effective Gross Income
 
$6,315,556
 
$6,780,966
 
$6,825,667
 
$6,825,667
 
100.0%
 
$9.97
 
                           
Total Operating Expenses
 
$2,044,110
 
$2,146,520
 
$2,180,620
 
$2,177,296
 
31.9%
 
$3.18
 
                           
 Net Operating Income
 
$4,271,446
 
$4,634,446
 
$4,645,047
 
$4,648,371
 
68.1%
 
$6.79
 
Capital Expenditures
 
0
 
0
 
0
 
68,477
 
1.0
 
0.10
 
 Net Cash Flow
 
$4,271,446
 
$4,634,446
 
$4,645,047
 
$4,579,894
 
67.1%
 
$6.69
 
                           
NOI DSCR
 
1.22x
 
1.33x
 
1.33x
 
1.33x
         
NCF DSCR
 
1.22x
 
1.33x
 
1.33x
 
1.31x
         
NOI DY
 
7.3%
 
8.0%
 
8.0%
 
8.0%
         
NCF DY
 
7.3%
 
8.0%
 
8.0%
 
7.9%
         
 
(1)
The underwritten economic vacancy is 16.0%.  As of the trailing 12-months ending April 30, 2015, the Stor All Group Portfolio Properties were 88.9% physically occupied.
 
Appraisal.  As of the appraisal valuation date of April 22, 2015, the Stor All Group Portfolio Properties had an aggregate portfolio “as-is” appraised value of $80,000,000. The Stor All Group Portfolio Properties were also valued individually, with the individual values combining to reflect an aggregate “as-is” appraised value of $70,400,000. Due to the diversified risk of a cross-collateralized portfolio with no partial releases or substitutions permitted, the “as-is” appraised value is based on the portfolio valuation.
 
Environmental Matters.  According to Phase I environmental assessments dated from April 30, 2015 through May 5, 2015, there was no evidence of any recognized environmental conditions at any of the Stor All Group Portfolio Properties.
 
Market Overview and Competition.  The Stor All Group Portfolio Properties are located in Louisville, Kentucky; Lexington, Kentucky; Cincinnati, Ohio; and Loveland, Ohio. The appraisal noted that given the close proximity of Lexington to Louisville, Kentucky, the overall Louisville self storage market included the properties located in Lexington, Kentucky.
 
Eight of the Stor All Group Portfolio Properties are located in Louisville and Lexington, Kentucky (“Kentucky Properties”). According to the appraisal, the existing self storage supply in the Louisville market is 6.1 square feet per person, which is 26.1% below the existing nationwide supply of self storage square footage per person. Additionally, the Kentucky Properties self storage market is currently undersupplied with a demand of 6.7 square feet per person. The 2014 estimated populations within the three-mile radius of the Kentucky Properties ranged from 35,372 to 124,187 with an average of 72,058. The 2014 estimated household incomes within the same three-mile radius of Kentucky Properties range from $43,083 to $108,140 with an average of $68,350.
 
Two of the Stor All Group Portfolio Properties are located in Cincinnati, Ohio and nearby Loveland, Ohio (“Ohio Properties”). According to the appraisal, the existing self storage supply in Cincinnati, Ohio is 4.0 square feet per person, which is 51.9% below the existing nationwide supply of self storage square footage per person. Additionally, the Cincinnati self storage market is currently undersupplied with a demand of 6.7 square feet per person. The 2014 estimated populations within the three-mile radius of the Ohio Properties range from 43,995 to 53,274 with an average of 48,635. The 2014 estimated household incomes within the same three-mile radius of Ohio Properties range from $99,199 to $106,490 with an average of $102,845.
 
The Borrowers.  The borrowers are comprised of 10 separate Kentucky limited liability companies, each of which is a single purpose entity with one independent director.  Legal counsel to the borrowers provided a non-consolidation opinion in connection with the origination of the Stor All Group Portfolio Mortgage Loan. James S. Womack is the guarantor of certain nonrecourse carveouts under the Stor All Group Portfolio Mortgage Loan.
 
The Sponsor.  The sponsor is James S. Womack, the founder, owner, and president of Stor All Self Storage (“Stor All”).  James S. Womack is an experienced commercial real estate developer and self storage owner/operator with over 30 years of experience in self storage investments, development, acquisitions and management. Stor All was founded in 1984 and within the first 15 years after its inception, developed 15 self storage properties in Kentucky and Ohio and four self storage properties in New Orleans, Louisiana. Stor All’s current self storage portfolio consists of 18 self storage properties (including one self storage property under development) totaling 1.2 million square feet and valued at approximately $103.5 million.
 
Escrows.  The loan documents provide for upfront reserves of $175,488 for real estate taxes and $136,954 for replacement reserves. The loan documents also provide for ongoing monthly reserves of $31,160 for real estate taxes and $5,706 for replacement reserves (subject to a cap of $136,954). Ongoing monthly reserves for insurance are not required as long as (a) no event of default has occurred and is continuing; (b) the Stor All Group Portfolio Properties are insured via an acceptable blanket insurance policy; and (c) the borrowers provide the lender with evidence of renewal of the insurance policies and timely proof of payment of insurance premiums.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
15

 
 
STOR ALL GROUP PORTFOLIO
 
Lockbox and Cash Management.  Upon the occurrence of a Cash Trap Event Period (as defined below), the borrowers will be required to establish a lender-controlled lockbox account and direct tenants to deposit all rents directly into such lockbox account.  Additionally, all revenues and other monies received by the borrowers or property manager relating to the Stor All Group Portfolio Properties shall be deposited into the lockbox account within 30 days. During a Cash Trap Event Period, all excess funds on deposit in the lockbox account are swept to a lender-controlled subaccount on a monthly basis.
 
A “Cash Trap Event Period” will commence upon the earlier of (i) the occurrence and continuance of an event of default; and (ii) the amortizing debt service coverage ratio for the trailing 12-month period falling below 1.10x at the end of any calendar month.  A Cash Trap Event Period will expire, with regard to clause (i), upon the cure of such event of default; and with regard to clause (ii), upon the amortizing debt service coverage ratio being equal to or greater than 1.15x for two consecutive calendar quarters.
 
Property Management.  The Stor All Group Portfolio Properties are managed by affiliates of the borrowers.
 
Assumption.  The borrowers have a two-time right to transfer the Stor All Group Portfolio Properties in whole, but not in part, provided that no event of default has occurred and is continuing and certain other conditions are satisfied, including (i) the lender’s reasonable determination that the proposed transferee and guarantor satisfy the lender’s credit review and underwriting standards, taking into consideration transferee experience, financial strength and general business standing; (ii) execution of a recourse guaranty and an environmental indemnity by an affiliate of the transferee; and (iii) if requested by the lender, rating agency confirmation from DBRS, KBRA and Moody’s that the transfer will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the Series 2015-NXS2 Certificates.
 
Partial Release.  Not permitted.
 
Real Estate Substitution.  Not permitted.
 
Subordinate and Mezzanine Indebtedness.  Provided no event of default has occurred and is continuing, the borrowers have a one-time the right to incur mezzanine financing subject to the satisfaction of certain conditions, including but not limited to (i) the execution of an intercreditor agreement in form and substance acceptable to lender and each of DBRS, KBRA and Moody’s; (ii) the combined loan-to-value is not greater than 75.0%; (iii) the amortizing debt service coverage ratio is not less than 1.30x (using a 30-year amortization schedule); and (iv) the lender receives rating agency confirmation from DBRS, KBRA and Moody’s that the mezzanine financing will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the Series 2015-NXS2 Certificates.
 
Ground Lease.  None.
 
Terrorism Insurance.  The loan documents require that the “all risk” insurance policy required to be maintained by the borrowers provide coverage for terrorism in an amount equal to the full replacement cost of the Stor All Group Portfolio Properties (with no exclusion or separate coverage for terrorism), as well as business interruption insurance covering no less than the 18-month period following the occurrence of a casualty event, together with a six-month extended period of indemnity.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
16

 
 
No. 4 – 100 West 57th Street
 
Loan Information
 
Property Information
Mortgage Loan Seller:
Natixis Real Estate Capital LLC
 
Single Asset/Portfolio:
Single Asset
Credit Assessment (DBRS/KBRA/Moody’s):
NR/NR/NR
 
Property Type:
Other
Original Principal Balance(1):
$45,000,000
 
Specific Property Type:
Leased Fee
Cut-off Date Principal Balance(1):
$45,000,000
 
Location:
New York, NY
% of Initial Pool Balance:
4.9%
 
Size(3):
25,125 SF
Loan Purpose:
Acquisition
 
Cut-off Date Principal
Balance Per SF(1)(3):
$7,164.18
Borrower Name:
57th & 6th Ground LLC
 
Year Built/Renovated:
NAP/NAP
Sponsors:
David Werner; Eli Schron; Avi Schron; Mark Schron
 
Title Vesting:
Fee
Mortgage Rate:
2.307%
 
Property Manager:
Self-managed
Note Date:
November 5, 2014
 
3rd Most Recent Occupancy:
NAP
Anticipated Repayment Date:
November 5, 2019
 
2nd Most Recent Occupancy:
NAP
Maturity Date:
April 5, 2035
 
Most Recent Occupancy:
NAP
IO Period:
60 months
 
Current Occupancy:
NAP
Loan Term (Original):
60 months
   
Seasoning:
8 months
 
Underwriting and Financial Information:
Amortization Term (Original):
NAP
     
Loan Amortization Type:
Interest-only, ARD
 
In Place Contractual Ground Rent:
$4,070,655
Interest Accrual Method:
Actual/360
 
Estimated Ground Rent Reset(4):
$21,233,420
Call Protection:
L(32),D(24),O(4)
     
Lockbox Type:
Hard/Upfront Cash Management
     
Additional Debt(1):
Yes
     
Additional Debt Type(1):
Pari Passu
 
U/W Revenues(5):
$4,213,128
     
U/W Expenses:
$0
     
U/W NOI(5):
$4,213,128
     
U/W NCF(5):
$4,213,128
     
U/W NOI DSCR(1)(5):
1.00x
     
U/W NCF DSCR(1)(5):
1.00x
Escrows and Reserves(2):
   
U/W NOI Debt Yield(1)(5):
2.3%
         
U/W NCF Debt Yield(1)(5):
2.3%
Type:
Initial
Monthly
Cap (If Any)
 
As-Is Appraised Value:
$300,000,000
Taxes
$0
Springing
NAP
 
“Unencumbered Land” Appraised Value:
$260,000,000
Insurance
$0
Springing
NAP
 
As-Is Appraisal Valuation Date:
August 1, 2014
Quarterly Rent
$0
(2)
NAP
 
Cut-off Date LTV Ratio(1)(6):
60.0%
Future Rent
$605,510
$0
NAP
 
LTV Ratio at Maturity or ARD(1)(6):
60.0%
 
(1)
The 100 West 57th Street Loan Combination, totaling $180,000,000, is comprised of four pari passu notes (Notes A-1, A-2, A-3 and A-4). The controlling Note A-1 had an original principal balance of $45,000,000, has an outstanding principal balance of $45,000,000 as of the Cut-Off Date and will be contributed to the WFCM 2015-NXS2 Trust. The non-controlling Notes A-2, A-3 and A-4 had an original principal balance of $60,000,000, $40,000,000 and $35,000,000, respectively, and were contributed to the COMM 2015-CCRE22 Trust, the COMM 2015-DC1 Trust and the WFCM 2015-NXS1 Trust, respectively. All statistical financial information related to balances per square foot, loan-to-value ratios, debt service coverage ratios and debt yield are based on the 100 West 57th Street Loan Combination.
(2)
See “Escrows” section.
(3)
Size represents the land area. The 100 West 57th Street Property is improved by 418,114 square feet of mixed use residential cooperative and retail space, which are not part of the collateral. Cut-off Date Principal Balance Per SF based on the fee (collateral) and leasehold (non-collateral) is $430.50.
(4)
The ground rent will reset on March 15, 2025 and, per the ground lease, the annual ground rent will be calculated as 8.1667% of the then fair market value of the land as unimproved and unencumbered. The number shown was calculated based on the “Unencumbered Land” appraised value of $260.0 million.
(5)
See “Cash Flow Analysis” section.
(6)
Based on the “fee and leasehold” Appraised Value of $450,000,000, which reflects the value of the improvements (418,114 square feet of mixed use residential cooperative and retail space), which are not part of the collateral, plus the value of the land (collateral), the Cut-off Date LTV Ratio and LTV Ratio at Maturity or ARD are 40.0%.
 
The Mortgage Loan.  The mortgage loan is part of a loan combination (the “100 West 57th Street Loan Combination”) that is evidenced by four pari passu promissory notes (Notes A-1, A-2, A-3 and A-4), secured by a first mortgage encumbering the fee simple interest in a land parcel totaling 25,125 square feet located at 100 West 57th Street (also known as 1381-1399 Avenue of the Americas), in Midtown Manhattan, New York (the “100 West 57th Street Property”). The 100 West 57th Street Loan Combination was originated on November 5, 2014 by Natixis Real Estate Capital LLC. The 100 West 57th Street Loan Combination had an original principal balance of $180,000,000, has an outstanding principal balance as of the Cut-off Date of $180,000,000 and accrues interest at an interest rate of 2.307% per annum. The 100 West 57th Street Loan Combination had an initial term of 60 months, has a remaining term of 52 months as of the Cut-off Date and requires interest-only payments through the Anticipated Repayment Date (“ARD”). The ARD is November 5, 2019 and the final maturity date is April 5, 2035. In the event the 100 West 57th Street Loan Combination is not paid in full on or before the ARD, the interest rate will increase to 5.617% per annum until, but excluding, March 5, 2025. On the March 5, 2025 payment date, the interest rate will increase to the greater of (i) 6.367% and (ii) the then five-year swap spread on March 5, 2025 plus 4.060%. The difference between the adjusted interest rate and the initial
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
17

 
 
100 WEST 57TH STREEET
 
interest rate is referred to herein as the additional ARD interest. From and after the ARD, all excess cash flow from the 100 West 57th Street Property, after payment of reserves, interest calculated at the initial interest rate and 100 West 57th Street Property operating expenses, will be applied to the outstanding principal balance of the 100 West 57th Street Loan Combination until repaid in full. The additional ARD interest will accrue from and after the ARD and, subject to applicable law, will be added to the then outstanding principal balance of the 100 West 57th Street Loan Combination, but payments will be deferred until the 100 West 57th Street Loan Combination has been paid in full, at which time the additional ARD interest (plus any accrued and unpaid interest at the adjusted interest rate) will be due and payable.
 
Note A-1, which will be contributed to the WFCM 2015-NXS2 Trust, had an original principal balance of $45,000,000, has an outstanding principal balance as of the Cut-off Date of $45,000,000 and represents the controlling interest in the 100 West 57th Street Loan Combination. The non-controlling Note A-2, which had an original principal balance of $60,000,000, was contributed to the COMM 2015-CCRE22 Trust. The non-controlling Note A-3, which had an original principal balance of $40,000,000, was contributed to the COMM 2015-DC1 Trust. The non-controlling Note A-4 (together with Note A-2 and Note A-3, the “100 West 57th Street Companion Loans”), which had an original principal balance of $35,000,000, was contributed to the WFCM 2015-NXS1 Trust.
 
Following the lockout period, the borrower has the right to defease the 100 West 57th Street Loan Combination, in whole or in part, on any date before August 5, 2019. In addition, the 100 West 57th Street Loan Combination is prepayable without penalty on or after August 5, 2019.
 
Sources and Uses
 
Sources
       
Uses
       
Original loan amount
$180,000,000
 
     59.2%
 
Purchase price
$286,000,000
 
94.0
%
Sponsor new cash contribution
124,138,000
 
  40.8
 
Closing costs
17,532,490
 
5.8
 
         
Reserves
605,510
 
0.2
 
Total Sources
$304,138,000
 
   100.0%
 
Total Uses
$304,138,000
 
100.0
 
The Property.  The 100 West 57th Street Loan Combination is collateralized by the borrower’s fee interest in a 25,125 square foot parcel of land located at 100 West 57th Street (also known as 1381-1399 Avenue of the Americas) in Midtown Manhattan that is improved by a 21-story, class A, mixed-use residential cooperative and retail building (collectively, the “Improvements” or “Leasehold Improvements”), known as the Carnegie House (Improvements not part of the collateral for the 100 West 57th Street Loan Combination). The land is a through-block parcel located on the westerly block-front of Avenue of the Americas between West 56th and West 57th Street in the Plaza District of Midtown Manhattan. The borrower’s fee simple interest is subject to a ground lease (the “Ground Lease”) pursuant to which the ground lessee constructed, developed and owns the Improvements that sit on top of the 100 West 57th Street Property (see “Ground Lease” section).  The Improvements comprise 323 cooperative apartment units on floors 2 through 21, a 225-space parking garage on two sub-cellar levels with an entrance on West 56th Street and 28,337 square feet of retail space on the ground and basement levels. The Carnegie House was constructed in 1962 on the 100 West 57th Street Property shortly after the original developer ground-leased it in 1959. All Leasehold Improvements were converted to cooperative ownership in 1978. The ground lessee’s interest in the Improvements is not collateral for the 100 West 57th Street Loan Combination.
 
The residential entrance to the Carnegie House mixed-use building is located on Avenue of the Americas with a main lobby with an attended front desk. The apartment floors are serviced by three passenger elevators and two freight elevators. The building amenities include a full-time doorman, live-in superintendent, valet service, private storage, bike room, central laundry and an on-site garage (which is leased to a third-party operator). The apartment unit mix includes studio, one-bedroom, two-bedroom, three-bedroom and four-bedroom units based on the original co-op offering plan reviewed; however, the exact current unit mix is not available.  Some apartment units have outdoor terraces or balconies.
 
The retail space contains approximately 28,337 square feet on the ground and basement floors with an occupancy rate of 92.0% as of November 2014. Duane Reade, the retail anchor tenant, occupies approximately 7,316 square feet of grade-level corner space at Avenue of the Americas and West 57th Street with an additional 12,350 square feet on the basement level.  There are seven grade level in-line retail suites, of which six suites totaling 6,402 square feet are currently occupied and one (2,269 square feet) is vacant.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
18

 
 
100 WEST 57TH STREEET
 
The following table presents certain information relating to the retail tenancy at the non-collateral Improvements at the 100 West 57th Street Property:
 
Retail Tenant Summary(1)
 
 
Tenant
Credit Rating
(Fitch/Moody’s/
S&P)(2)
Tenant NRSF
% of NRSF
 
In Place
Rent PSF
% of Total
In Place
Base Rent
Market Rent
PSF(3)
Lease
Expiration
Date
Major Tenants
               
Duane Reade(4)
NR/Baa2/BBB
7,316
25.8%
 
$140.11
30.9%
$350.00
  2/28/2025
Duane Reade (Basement)(4) (5)
NR/Baa2/BBB
5,150
18.2%
 
$140.11
21.7%
$100.00
  2/28/2025
Duane Reade (Cellar)(4)
NR/Baa2/BBB
7,200
25.4%
 
$25.00
5.4%
$25.00
  2/28/2025
Total Major Tenants
 
19,666
69.4%
 
$97.96
58.1%
$165.54
 
                 
In-Line Tenants
               
Jamba Juice(4)
NR/NR/NR
1,702
6.0%
 
$224.74
11.5%
$275.00
8/31/2015
Coterie (1387 Sixth Avenue Inc)
NR/NR/NR
1,364
4.8%
 
$178.13
7.3%
$250.00
10/31/2023
City Souvenirs on 6th
NR/NR/NR
1,083
3.8%
 
$221.97
7.2%
$250.00
10/31/2021
NY Diva Nails & Spa
NR/NR/NR
1,017
3.6%
 
$224.21
6.9%
$250.00
12/31/2015
Tucci Italia (Yaron H)
NR/NR/NR
784
2.8%
 
$223.95
5.3%
$250.00
 9/30/2021
Zibetto Espresso Bar
NR/NR/NR
452
1.6%
 
$269.05
3.7%
$250.00
 1/31/2016
Total In-Line Tenants
 
6,402
22.6%
 
$217.29
41.9%
$256.65
 
                 
Total Occupied Improvements
 
26,068
92.0%
 
$127.27
100.0%
$187.92
 
                 
Vacant Space
 
2,269
8.0%
         
                 
Total
 
28,337
100.0%
         
                 
 
(1)
Information obtained from the retail rent roll as of November 2014.
(2)
Certain ratings are those of the parent company whether or not the parent company guarantees the lease.
(3)
Information obtained from the appraisal.
(4)
Duane Reade has one five-year lease renewal option and Jamba Juice has two five-year lease renewal options.
(5)
The Duane Reade (Basement) space is a retail space and is fully operational.
 
Operating History and Underwritten Net Cash Flow.  The following table presents certain information relating to the historical operating performance and underwritten net cash flow at the 100 West 57th Street Property:
 
Cash Flow Analysis
 
   
In Place Contractual
Ground Rent(1)
 
U/W(1)
 
Estimated Ground
Rent Reset(2)
 
Mark-to-Market Look-Through of
Leasehold Interest (Non-
collateral)(3)
 
Base Rent
 
$4,070,655
 
$4,213,128
 
$21,233,420
 
$29,257,185
 
Less Vacancy & Credit Loss
 
0
 
0
 
0
 
(932,188)(4)
 
Effective Gross Income
 
$4,070,655
 
$4,213,128
 
$21,233,420
 
$28,324,997
 
                   
Total Operating Expenses
 
0
 
0
 
0
 
8,835,882
 
                   
 Net Operating Income
 
$4,070,655
 
$4,213,128
 
$21,233,420
 
$19,489,115
 
TI/LC
 
0
 
0
 
0
 
226,900
 
Capital Expenditures
 
0
 
0
 
0
 
166,249
 
 Net Cash Flow
 
$4,070,655
 
$4,213,128
 
$21,233,420
 
$19,095,966
 
                   
NOI DSCR(5)
 
0.96x
 
1.00x
 
5.03x
 
4.63x
 
NCF DSCR(5)
 
0.96x
 
1.00x
 
5.03x
 
4.54x
 
NOI DY(5)
 
2.3%
 
2.3%
 
11.8%
 
10.8%
 
NCF DY(5)
 
2.3%
 
2.3%
 
11.8%
 
10.6%
 
 
(1)
Ground rent steps up from $4,070,655 to $4,213,128 beginning on March 15, 2019, then to $4,360,587 on March 15, 2024.
(2)
Calculated based on the unencumbered land appraised value of $260.0 million. The ground rent will reset on March 15, 2025 and per the ground lease is calculated as 8.1667% of the then fair market value of the land as unimproved and unencumbered.
(3)
Information derived from the market rents and discounted cash flow expenses in the appraisal. See “Mark-to-Market Look-Through Analysis” section.
(4)
Estimated Mark-to-Market Look-Through of Leasehold Interest (non-collateral) Vacancy represents 3.2% of gross income.
(5)
DSCRs and debt yields are based on the 100 West 57th Street Loan Combination.
 
Appraisal.  As of the appraisal valuation date of August 1, 2014, the 100 West 57th Street Property had an “as-is” appraised value of $300,000,000, an “unencumbered land” appraised value of $260,000,000 and a “fee and leasehold” appraised value of $450,000,000.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
19

 
 
100 WEST 57TH STREEET
 
Environmental Matters.  According to a Phase I environmental site assessment dated September 23, 2014, there was no evidence of any recognized environmental conditions at the 100 West 57th Street Property.
 
Market Overview and Competition.  The 100 West 57th Street Property is located on the westerly block-front of Avenue of the Americas between West 56th and West 57th Street in Midtown Manhattan. The 100 West 57th Street Property is surrounded by many of New Yorks landmarks, restaurants, hotels, theatres, retail shops and tourist attractions, made accessible by the presence of several major transportation hubs. The F line stop located at 6th Avenue and West 57th Street and stops for the A, B, C, D, E, N, Q, R, 1, 2 and 3 lines are within walking distance of the 100 West 57th Street Property. The 100 West 57th Street Property is located within the Plaza District, which is bounded by 47th Street to the south and 65th Street to the north, and from Avenue of the Americas to the west and Park Avenue to the east.
 
The following table presents certain information relating to land sale comparables for the 100 West 57th Street Property:
 
Competitive Set(1)
 
 
100 West
57th Street
(Subject)
985-989
Third
Avenue
118-122
East 59th
Street
950
Second
Avenue
101 Murray
Street
616 First
Avenue
961 First
Avenue
Distance from Subject
-
<1mile
<1mile
1.2 miles
4.2 miles
2.0 miles
1.1 miles
Sales Price
$286,000,000
$102,500,000
$49,000,000
$61,000,000
$223,000,000
$172,125,000
$64,000,000
Transaction Date
11 / 2014
In Contract
11 / 2013
8 / 2013
5 / 2013
2 / 2013
12 / 2012
Size (Acres / Square feet)
0.58 / 25,125
0.16 / 6,843
0.17 / 7,532
0.20 / 8,837
0.71 / 31,028
1.04 / 45,190
0.20 / 8,814
Max. Buildable FAR (Square feet)
376,875
89,480
76,693
118,726
310,280
523,930
159,153
               
 
(1)
Information obtained from the appraisal.
 
Mark-to-Market Look-Through Analysis.  The appraisal concluded retail market rents of $350.00 per square foot for the ground retail space on the corner of West 57th Street and Avenue of the Americas, $275.00 per square foot for the ground retail space on the corner of West 56th Street and Avenue of the Americas and $250.00 per square foot for the in line retail space along Avenue of the Americas. Market rent for the lower level (basement) retail space is estimated to be $100.00 per square foot, while the lower level storage retail space is estimated to be $25.00 per square foot. Based on these market rents, estimated recoveries and a market vacancy factor of 3.0%, the market gross revenue for the retail space is estimated to be approximately $5.3 million. Assuming underwritten expenses of $37.71 per square foot, the retail space leasehold interest’s estimated market net operating income is approximately $4.3 million. The concluded rental market rents were $70 per square foot on average. Based on these market rents, estimated recoveries and a market vacancy factor of 3.0%, the market gross revenue for the residential space is estimated to be approximately $23.0 million, including $2.6 million of parking revenue. Assuming underwritten expenses of $25.85 per square foot, the residential space leasehold interest’s estimated market net operating income is approximately $15.2 million. The combined estimated market net operating income for the Leasehold Improvements interest is approximately $19.5 million resulting in a mark-to-market look-through debt yield and debt service coverage ratio for the 100 West 57th Street Loan Combination of 10.8% and 4.63x, respectively. Replacement reserves were estimated at $0.10 per square foot for the retail space and $150 per unit for the residential space. Leasing commissions were based on 40.0% of first year’s base rent including a 125% override (paid in year one) with a 65.0% renewal probability, assuming equal tenant rollover throughout the 100 West 57th Street Loan Combination term. The combined estimated market net cash flow for the Leasehold Improvements interests is approximately $19.1 million, resulting in a mark-to-market look-through underwritten debt yield and debt service coverage ratio for the 100 West 57th Street Loan Combination of 10.6% and 4.54x, respectively.
 
The Borrower.  The borrower is 57th & 6th Ground LLC, a Delaware limited liability company and single purpose entity with two independent directors. Legal counsel to the borrower delivered a non-consolidation opinion in connection with the origination of the 100 West 57th Street Loan Combination. Eli Schron, Avi Schron and Mark Schron are the guarantors on certain nonrecourse carveouts under the 100 West 57th Street Loan Combination. The guarantors reported their combined net worth and liquidity of $706.6 million and $17.5 million, respectively, in their financial statements as of March 31, 2014.
 
The Sponsor.  The sponsors of the borrower are David Werner of David Werner Real Estate Investments and Avi Schron, Eli Schron and Mark Schron of Cammeby’s International, Ltd. David Werner is a real estate investor with over 30 years of experience in investment and development. According to the sponsors, selected projects include approximately 13.4 million square feet of office space in New York, Boston, Chicago, and San Francisco. Cammeby’s International Ltd. (“Cammeby’s”), founded by Rubin Schron, owns, develops, operates and manages real estate throughout the United States and has been active in the industry for nearly 40 years.  Avi Schron, Eli Schron and Mark Schron, three sons of Rubin Schron, support the company’s operations. Cammeby’s owns and manages over 28,000 residential units, and over 20.0 million square feet of commercial and industrial space.  The majority of their holdings are located in the New York metropolitan area. Avi Schron, Eli Schron and Mark Schron of Cammeby’s International, Ltd. are the children of Rubin Schron, the founder of Cammeby’s International Ltd. Certain loans obtained by Rubin Schron have defaulted and/or been restructured, including a loan that secured a portfolio of properties that was securitized in 2005.
 
Escrows.  At closing, the borrower deposited $605,510 into the future rent reserve subaccount. Ongoing tax and insurance reserves are not required as long as the Ground Lease remains in full force and effect and the borrower provides evidence as required by the lender that the ground lessee has provided timely payment of all property taxes and insurance premiums. On a quarterly basis, the borrower will cause the ground lessee to deposit with the deposit bank the quarterly rent payment due under the Ground Lease.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
20

 
 
100 WEST 57TH STREEET
 
Lockbox and Cash Management.  The 100 West 57th Street Loan Combination is structured with a lender-controlled hard lockbox and upfront cash management. All rents, revenues and receipts from the 100 West 57th Street Property (which, for so long as the Ground Lease remains in effect, will primarily consist of the ground rent) will be deposited directly by the ground lessee into a lockbox account controlled by the lender. All funds in the lockbox account are swept daily to a cash management account under the control of the lender and disbursed in accordance with the 100 West 57th Street Loan Combination documents. Upon the commencement of a Cash Trap Period (as defined below), excess cash flow will be controlled by the lender. Additionally, from and after the ARD, all excess cash flow will be applied first to repay the outstanding principal of the 100 West 57th Street Loan Combination and then to repay all accrued additional ARD interest.
 
A “Cash Trap Period” will commence upon the occurrence of: (i) an event of default under the 100 West 57th Street Loan Combination, (ii) an event of default as defined in the Ground Lease by the ground tenant under the Ground Lease beyond applicable notice, grace and cure periods, or (iii) the failure by the ground tenant, after the end of a calendar quarter, to maintain a ground rent coverage ratio of at least 1.10x. A Cash Trap Period will end, with respect to clause (i) upon the cure of such event of default; with respect to clause (ii) upon the cure of such ground tenant “event of default”; and with respect to clause (iii) upon the ground rent coverage ratio being at least 1.15x for six consecutive months.
 
Property Management.  The 100 West 57th Street Property is managed by an affiliate of the borrower.
 
Assumption.  The borrower has the right to sell the 100 West 57th Street Property, provided certain conditions are satisfied, including but not limited to (i) no event of default has occurred and is continuing; (ii) obtaining the lender’s reasonable determination that the proposed transferee satisfies the lender’s then–current requirements of a “Special Purpose Entity” and is otherwise acceptable to and approved by the lender; (iii) a replacement guarantor approved by the lender in its sole discretion assumes the obligations of the existing guarantors; and (iv) payment of a fee equal to one-half of one percent of the then outstanding principal of the 100 West 57th Street Loan Combination. The lender will have the right to approve or disapprove the proposed transferee in its reasonable discretion, including requiring a rating comfort letter from DBRS, KBRA and Moody’s that such assumption will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the Series 2015-NXS2 Certificates and similar confirmations from each rating agency rating any securities backed by any 100 West 57th Street Companion Loans.
 
Real Estate Substitution.  Not Permitted.
 
Subordinate and Mezzanine Indebtedness.  Not Permitted.
 
Ground Lease.  The 100 West 57th Street Property is currently subject to the long-term Ground Lease which has an initial rent reset date of March 15, 2025. The Ground Lease has fixed annual payments of $4,070,655 payable quarterly through March 14, 2019, then $4,213,128 payable quarterly through March 14, 2024 and then $4,360,587 payable quarterly through March 14, 2025. The ground lessee has the right to renew the Ground Lease for two renewal terms of 21 years each by giving written notice no later than 12 months and no more than 48 months prior to the commencement date of the particular renewal term, subject to a ground rent reset. Pursuant to the terms of the Ground Lease, the annual ground rent resets to 8.1667% of the fair market value of the land as unimproved and unencumbered as of a date six months prior to the commencement date of each renewal term but in no event will the renewal rent be less than that in effect for the immediately preceding term. According to the appraisal, the unencumbered value of the land without any improvements is $260.0 million and the rent is projected to increase to $21.2 million per annum by 2025 based on this unencumbered value. Pursuant to the terms of the Ground Lease, if the parties cannot agree on the fair market value, they are required to resolve the dispute by arbitration.
 
The ground lessee’s leasehold interest is held by (i) Carnegie House Tenants Corporation (“CHTC”), owner of a 75% tenant in common (“TIC”) interest in the tenancy and the exclusive use of the residential and garage space (“Apartment/Garage Premises”) and (ii) Georgetown 57, LLC, owner of a 25% TIC interest and the exclusive use and control of the retail space (“Retail Premises”). CHTC must (i) pay its fixed rent; (ii) pay its allocable share of any real estate taxes provided under the TIC agreement; (iii) maintain and pay for the insurance; and (iv) perform any material repair or maintenance related to the Apartment/Garage Premises. Georgetown 57, LLC is required to (i) pay its fixed rent; (ii) pay its allocable share of any real estate taxes provided under the TIC agreement; (iii) pay its allocable share of insurance premiums for the property under the TIC agreement; and (iv) perform any material repair or maintenance related to the Retail Premises.
 
Terrorism Insurance.  The loan documents provide that the required “all risk” insurance policy must include coverage for terrorism in an amount equal to the full replacement cost of the 100 West 57th Street Property.  The loan documents also require business interruption insurance covering no less than the 18-month period following the occurrence of a casualty event. The borrower will require the ground tenant to maintain all insurance coverage that ground tenant is required to provide pursuant to the terms of the Ground Lease, or as otherwise acceptable to the lender in its sole discretion.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
21

 
 
No. 5 – Embassy Suites Nashville
 
Loan Information
 
Property Information
Mortgage Loan Seller:
Wells Fargo Bank, National Association
 
Single Asset/Portfolio:
Single Asset
Credit Assessment
(DBRS/KBRA/Moody’s):
NR/NR/NR
 
Property Type:
Hospitality
Original Principal Balance:
$43,000,000
 
Specific Property Type:
Full Service
Cut-off Date Principal Balance:
$43,000,000
 
Location:
Nashville, TN
% of Initial Pool Balance:
4.7%
 
Size:
208 Rooms
Loan Purpose:
Acquisition
 
Cut-off Date Principal
Balance Per Room:
$206,731
Borrower Name:
Moody National Broadway-Nashville Holding, LLC
 
Year Built/Renovated:
2001/2013
Sponsor:
Brett C. Moody
 
Title Vesting:
Fee
Mortgage Rate:
4.212%
 
Property Manager:
Self-managed
Note Date:
June 16, 2015
 
3rd Most Recent Occupancy (As of):
79.5% (12/31/2012)
Anticipated Repayment Date:
NAP
 
2nd Most Recent Occupancy (As of):
79.9% (12/31/2013)
Maturity Date:
July 11, 2025
 
Most Recent Occupancy (As of):
82.1% (12/31/2014)
IO Period:
24 months
 
Current Occupancy (As of):
82.6% (4/30/2015)
Loan Term (Original):
120 months
     
Seasoning:
0 months
 
Underwriting and Financial Information:
Amortization Term (Original):
360 months
   
Loan Amortization Type:
Interest-only, Amortizing Balloon
 
3rd Most Recent NOI (As of):
$5,213,233 (12/31/2013)
Interest Accrual Method:
Actual/360
 
2nd Most Recent NOI (As of):
$5,693,855 (12/31/2014)
Call Protection:
L(24),D(92),O(4)
 
Most Recent NOI (As of):
$5,843,136 (TTM 4/30/2015)
Lockbox Type:
Springing (Without Established Account)
     
Additional Debt:
None
     
Additional Debt Type:
NAP
     
     
U/W Revenues:
$12,033,033
     
U/W Expenses:
$7,056,664
     
U/W NOI:
$4,976,369
     
U/W NCF:
$4,495,048
     
U/W NOI DSCR:
1.97x
Escrows and Reserves(1):
       
U/W NCF DSCR:
1.78x
         
U/W NOI Debt Yield:
11.6%
Type:
Initial
Monthly
Cap (If Any)
 
U/W NCF Debt Yield:
10.5%
Taxes
$177,276
$44,319
NAP
 
As-Is Appraised Value(2):
$66,400,000
Insurance
$0
Springing
NAP
 
As-Is Appraisal Valuation Date(2):
May 8, 2015
FF&E Reserve
$40,110
$40,110
NAP
 
Cut-off Date LTV Ratio(2):
64.8%
PIP Reserve
$2,000,000
$0
NAP
 
LTV Ratio at Maturity or ARD(2):
54.9%
             
 
(1)
See “Escrows” section.
(2)
See “The Appraisal” section.

The Mortgage Loan.  The mortgage loan (the “Embassy Suites Nashville Mortgage Loan”) is evidenced by a single promissory note secured by a first mortgage encumbering the fee interest in a full-service hotel located in Nashville, Tennessee (the “Embassy Suites Nashville Property”). The Embassy Suites Nashville Mortgage Loan was originated on June 16, 2015 by Wells Fargo Bank, National Association. The Embassy Suites Nashville Mortgage Loan had an original principal balance of $43,000,000, has an outstanding principal balance as of the Cut-off Date of $43,000,000 and accrues interest at an interest rate of 4.212% per annum. The Embassy Suites Nashville Mortgage Loan had an initial term of 120 months, has a remaining term of 120 months as of the Cut-off Date and requires interest-only payments for the first 24 payments following origination and, thereafter, requires payments of principal and interest based on a 30-year amortization schedule. The Embassy Suites Nashville Mortgage Loan matures on July 11, 2025.

Following the lockout period, the borrower has the right to defease the Embassy Suites Nashville Mortgage Loan in whole, but not in part, on any date before April 11, 2025.  In addition, the Embassy Suites Nashville Mortgage Loan is prepayable without penalty on or after April 11, 2025.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
22

 
 
EMBASSY SUITES NASHVILLE
 
Sources and Uses

Sources
       
Uses
     
Original loan amount
$43,000,000
 
62.2
Purchase price
$66,300,000
95.9
%
Sponsor’s new cash contribution
26,110,437
 
37.8
 
Reserves
2,217,386
3.2
 
         
Closing costs
593,051
0.9
 
Total Sources
$69,110,437
 
100.0
%
Total Uses
$69,110,437
100.0
%

The Property. The Embassy Suites Nashville Property is comprised of the fee interest in a 208-room, eleven-story, full-service hotel located in Nashville, Tennessee, approximately three blocks east of Vanderbilt University (“Vanderbilt”). Built in 2001 and situated on a 1.2-acre site, the Embassy Suites Nashville Property’s guestroom configuration includes 122 king suites, 74 double/double suites, 11 handicap-accessible king suites and one two-bedroom king suite. Each guestroom features a separate living room and bedroom with a king or two double beds, dresser, two flat screen televisions, work desk and chair, wet bar, small refrigerator and  microwave oven. Amenities at the Embassy Suites Nashville Property include 2,679 square feet of meeting space, an indoor whirlpool, a fitness center, a business center, guest laundry, a sundry shop and the Five Odd Fellows restaurant, which offers a full lunch, dinner and cocktail menu. The Embassy Suites Nashville Property also offers free local area transportation, a made-to-order breakfast and an evening manager’s reception. The Embassy Suites Nashville Property also features 215 surface parking spaces, equating to a parking ratio of 1.0 space per room.

The Embassy Suites Nashville Property has been continually updated, with approximately $3.0 million invested since 2011, which included lobby, guestroom and common area upgrades. The current $2.0 million Property Improvement Plan (“PIP”) ($9,615 per room) primarily consists of guestroom upgrades and is required to be completed by December 2016. The new 20-year franchise agreement with Hilton Worldwide expires in June 2035.
 
Operating History and Underwritten Net Cash Flow.  The following table presents certain information relating to the historical operating performance and the underwritten net cash flow at the Embassy Suites Nashville Property:
 
Cash Flow Analysis
 
 
 
2013
 
2014
 
TTM
4/30/2015
 
U/W
 
% of U/W
Total
Revenue
 
U/W $
per Room
 
Occupancy
79.9%
 
82.1%
 
82.6%
 
80.0%
         
ADR
$171.29
 
$180.74
 
$184.35
 
$184.35
         
RevPAR
$136.90
 
$148.34
 
$152.23
 
$147.48
         
                         
Total Revenue
$11,230,048
 
$12,123,388
 
$12,393,960
 
$12,033,033
 
100.0%
 
$57,851
 
Total Department Expenses
2,337,502
 
2,486,860
 
2,520,753
 
2,951,990
 
24.5
 
14,192
 
Gross Operating Profit
$8,892,546
 
$9,636,528
 
$9,873,207
 
$9,081,042
 
75.5%
 
$43,659
 
                         
Total Undistributed Expenses
3,080,714
 
3,346,770
 
3,431,368
 
3,498,085
 
29.1
 
16,818
 
Profit Before Fixed Charges
$5,811,832
 
$6,289,758
 
$6,441,839
 
$5,582,957
 
46.4%
 
$26,841
 
                     
  
 
Total Fixed Charges
598,599
 
595,903
 
598,703
 
606,588(2)
 
5.0
 
2,916
 
                     
   
 
Net Operating Income
$5,213,233
 
$5,693,855
 
$5,843,136
 
$4,976,369
 
41.4%
 
$23,925
 
FF&E
0
 
0
 
0
 
481,321
 
4.0
 
2,314
 
Net Cash Flow
$5,213,233
 
$5,693,855
 
$5,843,136
 
$4,495,048
 
37.4%
 
$21,611
 
                         
NOI DSCR
2.06x
 
2.25x
 
2.31x
 
1.97x
         
NCF DSCR
2.06x
 
2.25x
 
2.31x
 
1.78x
         
NOI DY
12.1%
 
13.2%
 
13.6%
 
11.6%
         
NCF DY
12.1%
 
13.2%
 
13.6%
 
10.5%
         
                         
 
The Appraisal. As of the appraisal valuation date of May 8, 2015, the Embassy Suites Nashville Property had an “as-is” appraised value of $66,400,000.  The appraiser also concluded to an “as-complete & stabilized” value of $70,000,000 with an “as-complete & stabilized” valuation date of May 8, 2016. The “as-complete & stabilized” valuation assumes that the PIP has been completed (the $2.0 million PIP cost was reserved upfront) and the Embassy Suites Nashville Property is operating at a stabilized RevPAR of $159.87. The “as-complete & stabilized” value equates to a Cut-off Date LTV Ratio of 61.4% and an LTV Ratio at Maturity or ARD of 52.1%.

Environmental Matters. According to the Phase I environmental