FWP 1 n1277_tsr-x2.htm FREE WRITING PROSPECTUS
    FREE WRITING PROSPECTUS
    FILED PURSUANT TO RULE 433
    REGISTRATION FILE NO.: 333-206677-25
     

 

 

Free Writing Prospectus

Collateral Term Sheet

 

$658,765,419

(Approximate Aggregate Cut-off Date Balance of Mortgage Pool)

 

Wells Fargo Commercial Mortgage Trust 2018-C45

as Issuing Entity

 

Wells Fargo Commercial Mortgage Securities, Inc.

as Depositor

 

Wells Fargo Bank, National Association

Barclays Bank PLC

Rialto Mortgage Finance, LLC

C-III Commercial Mortgage LLC

 

as Sponsors and Mortgage Loan Sellers

 

 

 

Commercial Mortgage Pass-Through Certificates
Series 2018-C45

 

 

 

June 15, 2018

 

WELLS FARGO SECURITIES

 

Co-Lead Manager and

Joint Bookrunner

 

BARCLAYS

 

Co-Lead Manager and

Joint Bookrunner

     
 

Academy Securities

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. 333-206677) 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herein is preliminary as of the date hereof, supersedes any such information previously delivered to you and will be superseded by any such information subsequently delivered and ultimately by the final prospectus relating to the securities.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.

 

This free writing prospectus has been prepared by the underwriters for information purposes only and does not constitute, in whole or in part, a prospectus for the purposes of Directive 2003/71/EC (as amended) and/or Part VI of the Financial Services and Markets Act 2000, as amended, or other offering document.

 

STATEMENT REGARDING ASSUMPTIONS AS TO SECURITIES, PRICING ESTIMATES AND OTHER INFORMATION

 

The attached information contains certain tables and other statistical analyses (the “Computational Materials”) which have been prepared in reliance upon information furnished by the Mortgage Loan Sellers. Numerous assumptions were used in preparing the Computational Materials, which may or may not be reflected herein. As such, no assurance can be given as to the Computational Materials’ accuracy, appropriateness or completeness in any particular context; or as to whether the Computational Materials and/or the assumptions upon which they are based reflect present market conditions or future market performance. The Computational Materials should not be construed as either projections or predictions or as legal, tax, financial or accounting advice. You should consult your own counsel, accountant and other advisors as to the legal, tax, business, financial and related aspects of a purchase of these securities. Any weighted average lives, yields and principal payment periods shown in the Computational Materials are based on prepayment and/or loss assumptions, and changes in such prepayment and/or loss assumptions may dramatically affect such weighted average lives, yields and principal payment periods. In addition, it is possible that prepayments or losses on the underlying assets will occur at rates higher or lower than the rates shown in the attached Computational Materials. The specific characteristics of the securities may differ from those shown in the Computational Materials due to differences between the final underlying assets and the preliminary underlying assets used in preparing the Computational Materials. The principal amount and designation of any security described in the Computational Materials are subject to change prior to issuance. None of Wells Fargo Securities, LLC, Barclays Capital Inc., Academy Securities, Inc., or any of their respective affiliates, make any representation or warranty as to the actual rate or timing of payments or losses on any of the underlying assets or the payments or yield on the securities. The information in this presentation is based upon management forecasts and reflects prevailing conditions and management’s views as of this date, all of which are subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to us by or on behalf of the Mortgage Loan Sellers or which was otherwise reviewed by us.

 

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 information herein is preliminary and may be supplemented or amended prior to the time of sale. In addition, the Offered Certificates referred to in these materials and the asset pool backing them are subject to modification or revision (including the possibility that one or more classes of certificates may be split, combined or eliminated at any time prior to issuance or availability of a final prospectus) and are offered on a “when, as and if issued” basis.

 

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) any 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.

 

THE INFORMATION IN THIS 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

 

 

A.       Transaction Highlights

 

Mortgage Loan Sellers:

 

Mortgage Loan Seller

Number
of

Mortgage
Loans

Number of
Mortgaged
Properties

Aggregate Cut-
off Date Balance

% of Initial
Pool

Balance

Wells Fargo Bank, National Association 14 27 $271,350,036      41.2%
Barclays Bank PLC 11 31 172,882,585 26.2
Rialto Mortgage Finance, LLC 7 13 113,800,000 17.3
C-III Commercial Mortgage LLC 17 18 100,732,798 15.3

Total

49

89

$658,765,419

  100.0%

 

Loan Pool:

 

Initial Pool Balance: $658,765,419
Number of Mortgage Loans: 49
Average Cut-off Date Balance per Mortgage Loan: $13,444,192
Number of Mortgaged Properties: 89
Average Cut-off Date Balance per Mortgaged Property(1): $7,401,859
Weighted Average Mortgage Interest Rate: 4.899%
Ten Largest Mortgage Loans as % of Initial Pool Balance: 54.6%
Weighted Average Original Term to Maturity or ARD (months): 120
Weighted Average Remaining Term to Maturity or ARD (months): 118
Weighted Average Original Amortization Term (months)(2): 358
Weighted Average Remaining Amortization Term (months)(2): 358
Weighted Average Seasoning (months): 2

 

(1)  Information regarding mortgage loans secured by multiple properties is based on an allocation according to relative appraised values or the allocated loan amounts or property-specific release prices set forth in the related loan documents or such other allocation as the related mortgage loan seller deemed appropriate.

(2)  Excludes any mortgage loan that does not amortize.

 

Credit Statistics:

 

Weighted Average U/W Net Cash Flow DSCR(1): 1.66x
Weighted Average U/W Net Operating Income Debt Yield(1): 10.3%
Weighted Average Cut-off Date Loan-to-Value Ratio(1): 61.2%
Weighted Average Balloon or ARD Loan-to-Value Ratio(1): 55.8%
% of Mortgage Loans with Additional Subordinate Debt(2): 17.2%
% of Mortgage Loans with Single Tenants(3): 9.9%

 

(1)  With respect to any mortgage loan that is part of a whole loan, loan-to-value ratio, debt service coverage ratio and debt yield calculations include the related pari passu companion loan(s) but exclude any related subordinate debt (unless otherwise stated). The debt service coverage ratio, debt yield and loan-to-value ratio information do not take into account any subordinate debt (whether or not secured by the related mortgaged property), that currently exists or is allowed under the terms of any mortgage loan. See “Description of the Mortgage Pool—Mortgage Pool Characteristics” in the Preliminary Prospectus and Annex A-1 to the Preliminary Prospectus. 

(2)  The percentage figure expressed as “% of Mortgage Loans with Additional Subordinate Debt” is determined as a percentage of the initial pool balance and does not take into account any future subordinate debt (whether or not secured by the mortgaged property), if any, that may be permitted under the terms of any mortgage loan or the pooling and servicing agreement. See “Description of the Mortgage Pool—Additional Indebtedness—Other Unsecured Indebtedness” in the Preliminary Prospectus. 

(3)  Excludes mortgage loans that are secured by multiple single tenant properties. 

 

THE INFORMATION IN THIS 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

 

 

Wells Fargo Commercial Mortgage Trust 2018-C45 Certain Loan Information

 

B.       Summary of the Whole Loans

Property Name

Mortgage  

Loan Seller in
WFCM 2018-C44

Note(s)(1) Original Balance Holder of Note(1) Lead Servicer
for Whole Loan

Master Servicer Under

Lead Securitization

Servicing Agreement

Special Servicer Under Lead Securitization Servicing
Agreement
Village at Leesburg WFB A-1 $66,000,000 WFCM 2018-C44 Yes Wells Fargo Bank, National Association Rialto Capital Advisors, LLC
A-2 $65,250,000 WFCM 2018-C45 No
CoolSprings Galleria WFB A-1 $75,000,000 BANK 2018-BNK12 Yes Wells Fargo Bank, National Association Midland Loan Services, a Division of PNC Bank, National Association
A-2 $15,000,000 BANK 2018-BNK12 No
A-3 $20,000,000 WFCM 2018-C45 No
    A-4 $45,000,000 WFB No    
181 Fremont Street(3) Barclays A-1 $50,000,000 Deutsche Bank AG, New York Branch Yes Wells Fargo Bank, National Association(2) Rialto Capital Advisors,
LLC(2)
A-2 $58,000,000 BANK 2018-BNK12 No
A-3 $22,000,000 WFB No
A-4 $30,000,000 Deutsche Bank AG, New York Branch No
A-5 $40,000,000 Deutsche Bank AG, New York Branch No
A-6-1 $30,000,000 WFCM 2018-C44 No
A-6-2 $20,000,000 WFCM 2018-C45 No
    A-1 $59,000,000 CGCMT 2018-C5(3) Yes Midland Loan Services, a Division of PNC Bank, National Association  
Flats at East Bank RMF A-2 $13,000,000 WFCM 2018-C45 No KeyBank National Association
    B $21,000,000 ACREFI Mortgage Lending, LLC No  

 

(1)Unless otherwise indicated, each note not currently held by a securitization trust is expected to be contributed to a future securitization. No assurance can be provided that any such note will not be split further.

(2)On and after the securitization of the related “lead” pari passu note (namely, the related pari passu note marked “Yes” in the column entitled “Lead Servicer for Whole Loan”), such whole loan will be serviced under the pooling and servicing agreement governing such securitization. The master servicer and special servicer for such securitization will be identified in a notice, report or statement to holders of the WFCM 2018-C45 certificates after the closing of such securitization.

(3)The CGCMT 2018-C5 securitization is expected to close on or about June 21, 2018.

 

THE INFORMATION IN THIS 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

 

 

Wells Fargo Commercial Mortgage Trust 2018-C45 Certain Loan Information

 

C.       Property Type Distribution(1)

 

 

Property Type Number of Mortgaged Properties Aggregate
Cut-off Date
Balance ($)
% of Initial
Pool
Balance (%)
Weighted
Average Cut-
off Date LTV
Ratio (%)
Weighted
Average
Balloon or
ARD LTV

Ratio (%)
Weighted
Average

U/W NCF
DSCR (x)
Weighted
Average U/W
NOI Debt
Yield (%)
Weighted
Average U/W
NCF Debt Yield
(%)
Weighted
Average
Mortgage Rate
(%)
Retail 34 $223,732,106     34.0%     59.4%     54.3%    1.66%     10.2%       9.7%     4.812%
Anchored 7 131,605,357 20.0 58.3 53.1 1.55 10.0   9.4 4.821
Single Tenant 18 35,515,000   5.4 62.5 62.2 2.07   9.7   9.6 4.539
Shadow Anchored 5 19,974,600   3.0 68.8 61.1 1.45   9.9   9.3 5.035
Super Regional Mall 1 19,950,390   3.0 48.0 39.0 1.91 12.8 12.1 4.839
Unanchored 3 16,686,759   2.5 63.2 57.4 1.59   9.8   9.3 5.020
Office 10 140,937,221 21.4 61.4 56.0 1.85 11.2 10.1 4.678
Suburban 5 104,187,221 15.8 64.6 58.0 1.62 11.3   9.9 4.872
CBD 1 20,000,000   3.0 39.6 39.6 3.14 11.8 11.8 3.709
Medical 4 16,750,000   2.5 68.0 63.2 1.73   9.4   9.1 4.629
Self Storage 19 101,447,884 15.4 62.1 56.8 1.40   9.3    9.1 5.082
Self Storage 19 101,447,884 15.4 62.1 56.8 1.40   9.3   9.1 5.082
Multifamily 3 67,091,470 10.2 66.2 63.1 1.50    8.6    8.4  5.071
Low Rise 1 38,000,000   5.8 63.1 63.1 1.61   8.1   7.9 4.845
Garden 2 29,091,470   4.4 70.2 63.1 1.35   9.3   9.1 5.367
Hospitality 5 44,430,416    6.7 62.3 51.4 1.95 14.3 12.7  5.071
Limited Service 5 44,430,416   6.7 62.3 51.4 1.95 14.3 12.7 5.071
Manufactured Housing Community 13 39,992,909    6.1 60.6 55.3 1.58    9.8    9.6 5.208
Manufactured Housing Community 13 39,992,909   6.1 60.6 55.3 1.58   9.8   9.6 5.208
Industrial 2 24,137,006   3.7 62.7 54.9 1.57 10.1   9.8 4.709
Warehouse 2 24,137,006   3.7 62.7 54.9 1.57 10.1   9.8 4.709
Mixed Use 3 16,996,408   2.6 53.5 52.4 1.81   9.8   9.7 5.183
Multifamily/Retail 1 13,000,000   2.0 52.0 52.0 1.90   9.9   9.8 5.090
Retail/Multifamily 1 2,100,000   0.3 52.5 52.5 1.68   8.9   8.8 5.160
Self Storage/Office 1 1,896,408   0.3 64.7 54.8 1.37 10.5   9.7 5.850
Total/Weighted Average: 89 $658,765,419   100.0%    61.2%    55.8%   1.66%     10.3%      9.7%     4.899%
                   
(1)Because this table presents information relating to the mortgaged properties and not the mortgage loans, the information for mortgage loans secured by more than one mortgaged property is based on allocated amounts (allocating the principal balance of the mortgage loan to each of those properties according to the relative appraised values of the mortgaged properties or the allocated loan amounts or property-specific release prices set forth in the related mortgage loan documents or such other allocation as the related mortgage loan seller deemed appropriate). With respect to any mortgage loan that is part of a whole loan, the loan-to-value ratio, debt service coverage ratio and debt yield calculations include the related pari passu companion loan(s) but exclude any related subordinate debt (unless otherwise stated). With respect to each mortgage loan, debt service coverage ratio, debt yield and loan-to-value ratio information do not take into account any subordinate debt (whether or not secured by the related mortgaged property) that currently exists or is allowed under the terms of such mortgage loan. See Annex A-1 to the Preliminary Prospectus.

 

THE INFORMATION IN THIS 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

 

 

Wells Fargo Commercial Mortgage Trust 2018-C45 Certain Loan Information

 

D.       Large Loan Summaries

 

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. 1 – Village at Leesburg
 
Loan Information   Property Information
Mortgage Loan Seller: Wells Fargo Bank, National Association   Single Asset/Portfolio: Single Asset

Credit Assessment

(DBRS/Fitch/Moody’s):

NR/NR/NR   Property Type: Retail
Original Principal Balance(1): $65,250,000   Specific Property Type: Anchored
Cut-off Date Balance(1): $65,250,000   Location: Leesburg, VA
% of Initial Pool Balance: 9.9%   Size(4): 546,107 SF
Loan Purpose(2): Recapitalization   Cut-off Date Balance Per SF(1)(4): $240.34
Borrower Name: CRP/TRC Leesburg Retail Owner, L.L.C.   Year Built/Renovated: 2009/2018
Sponsor: Gary D. Rappaport   Title Vesting: Fee
Mortgage Rate: 4.7580%   Property Manager: Self-managed
Note Date: March 9, 2018   4th Most Recent Occupancy (As of): 78.7% (12/31/2014)
Anticipated Repayment Date: NAP   3rd Most Recent Occupancy (As of): 82.1% (12/31/2015)
Maturity Date: April 1, 2028   2nd Most Recent Occupancy (As of): 88.4% (12/31/2016)
IO Period: 60 months   Most Recent Occupancy (As of): 93.6% (12/31/2017)
Loan Term (Original): 120 months   Current Occupancy (As of)(4): 91.6% (3/9/2018)
Seasoning: 3 month    
Amortization Term (Original): 360 months   Underwriting and Financial Information:
Loan Amortization Type: Interest-only, Amortizing Balloon      
Interest Accrual Method: Actual/360   4th Most Recent NOI (As of)(5): $6,914,642 (12/31/2014)
Call Protection: L(27),D(89),O(4)   3rd Most Recent NOI (As of)(5): $6,200,743 (12/31/2015)
Lockbox Type: Hard/Upfront Cash Management   2nd Most Recent NOI (As of)(5): $7,766,054 (12/31/2016)
Additional Debt(1): Yes   Most Recent NOI (As of)(5): $8,685,899 (12/31/2017)
Additional Debt Type(1): Pari Passu      
      U/W Revenues: $14,588,909
      U/W Expenses: $3,574,353
Escrows and Reserves(3):     U/W NOI(4): $11,014,555
          U/W NCF: $10,531,133
Type: Initial Monthly Cap (If Any)   U/W NOI DSCR(1): 1.34x
Taxes $560,062 $112,013 NAP   U/W NCF DSCR(1): 1.28x
Insurance $0 Springing NAP   U/W NOI Debt Yield(1): 8.4%
Immediate Repairs $28,125 $0 NAP   U/W NCF Debt Yield(1): 8.0%
Replacement Reserve $0 $6,801 $244,818   Appraised Value(6): $226,000,000
Leasing Reserve $0 $45,894 $2,010,135(3)   Appraisal Valuation Date(6): December 1, 2018
Rent Concession Reserve $842,933 $0 NAP   Cut-off Date LTV Ratio(1)(6): 58.1%
Existing TI/LC Reserve $7,649,629 $0 NAP   LTV Ratio at Maturity or ARD(1)(6): 53.4%
             
               
(1)See “The Mortgage Loan” section. All statistical financial information related to balance per square foot, loan-to-value ratios, debt service coverage ratios and debt yields are based on the funded outstanding principal balance of the Village at Leesburg Whole Loan (as defined below).

(2)The Village at Leesburg Property (as defined below) was previously majority owned by an affiliate of the Carlyle Group, which originally developed the overall Village at Leesburg community in 2009. At the time of origination, an entity related to Rappaport (see “Borrower Sponsor” section) acquired a 60% equity ownership interest in the Village at Leesburg Property with the Carlyle Group maintaining a 40% equity ownership interest.

(3)See “Escrows” section.

(4)The Size, Cut-off Date Balance per SF and Current Occupancy assume the completion of the 12,297 square foot expansion related to Cobb Theatres (see “The Property” section). Excluding the expansion space, the Size, Cut-off Date Balance per SF and Current Occupancy are 533,810, $245.87 and 91.4%, respectively.

(5)See “Cash Flow Analysis” section.

(6)The Appraised Value and LTV Ratios shown are based on the appraiser’s Prospective Market Value Upon Completion, which assumes the completion of planned renovations and an expansion related to Cobb Theatres. Cobb Theatres is expected to renovate all existing auditoriums and add two new auditoriums with all work projected to be completed by November 2018 (see “The Property” section). Cobb Theatres is required to commence paying rent on its expanded premises once the tenant is open for business in such space. The underwritten base rent for Cobb Theatres is based on its expanded premises, and the difference between the tenant’s underwritten base rent and current base rent through December 31, 2018 was reserved upon origination of the Village at Leesburg Whole Loan (see “Major Tenants” section). In addition, outstanding tenant improvement obligations related to Cobb Theatres were reserved upon origination of the Village at Leesburg Whole Loan (see “Escrows” section). Based on the as-is appraised value of $205,000,000 (as of February 2, 2018), the Cut-off Date LTV Ratio and LTV Ratio at Maturity are 64.0% and 58.8%, respectively.

 

The Mortgage Loan. The mortgage loan (the “Village at Leesburg Mortgage Loan”) is part of a whole loan (the “Village at Leesburg Whole Loan”) evidenced by two pari passu notes secured by a first mortgage encumbering the fee interest in an anchored retail shopping center located in Leesburg, Virginia (the “Village at Leesburg Property”). The Village at Leesburg Whole Loan was originated on March 9, 2018 by Wells Fargo Bank, National Association. The Village at Leesburg Whole Loan had an original principal balance of $131,250,000, has an outstanding principal balance as of the Cut-off Date of $131,250,000 and accrues interest at an interest rate of 4.7580% per annum. The Village at Leesburg Whole Loan had an initial term of 120 months, has a remaining term of 117 months as of the Cut-off Date and requires interest-only payments for the first 60 months following origination and, thereafter, requires payments of principal and interest based on a 30-year amortization schedule. The Village at Leesburg Whole Loan matures on April 1, 2028.

 

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

 

 

VILLAGE AT LEESBURG

 

The non-controlling Note A-2, which will be contributed to the WFCM 2018-C45 securitization trust, had an original principal balance of $65,250,000 and has an outstanding principal balance as of the Cut-off Date of $65,250,000. The controlling Note A-1, which has been contributed to the WFCM 2018-C44 securitization trust, had an original principal balance of $66,000,000 and has an outstanding principal balance as of the Cut-off Date of $66,000,000. The mortgage loan evidenced by Note A-1 is referred to herein as the “Village at Leesburg Companion Loan”. The lender provides no assurances that the non-securitized pari passu note will not be split further. See “Description of the Mortgage Pool—The Whole Loans—The Non-Serviced Pari Passu Whole Loans” and “Pooling and Servicing Agreement” in the Prospectus.

 

Note Summary

 

Notes Original Balance   Note Holder Controlling Interest
A-1 $66,000,000   WFCM 2018-C44 Yes
A-2 $65,250,000   WFCM 2018-C45 No
Total $131,250,000      

 

Following the lockout period, on any date before January 1, 2028, the borrower has the right to defease the Village at Leesburg Whole Loan in whole, but not in part. In addition, the Village at Leesburg Whole Loan is prepayable without penalty on or after January 1, 2028. The lockout period will expire on July 17, 2020.

 

Sources and Uses

 

Sources         Uses      
Original whole loan amount $131,250,000   100.0%   Loan payoff(1): $112,394,408   85.6%
          Upfront reserves: 9,080,749   6.9 
          Closing costs: 1,181,685   0.9 
          Return of equity: 8,593,158   6.5 
Total Sources $131,250,000   100.0%   Total Uses $131,250,000   100.0%

 

(1)Prior to the origination of the Village at Leesburg Whole Loan, the Village at Leesburg Property was majority owned by an affiliate of the Carlyle Group, which originally developed the overall Village at Leesburg community in 2009. At the time of origination, an entity related to Rappaport (see “Borrower Sponsor” section) acquired a 60% equity ownership interest in the Village at Leesburg Property with the Carlyle Group maintaining a 40% equity ownership interest. The loan payoff shown represents a mortgage loan related to the Carlyle Group’s prior majority ownership of the Village at Leesburg Property.

 

The Property. The Village at Leesburg Property consists of 546,107 square feet of retail, open-air lifestyle and entertainment space within the Village at Leesburg development in Leesburg, Virginia. The Village at Leesburg Property is situated on 55.0 acres of land and encompasses 16 one- and two-story buildings. In addition to the Village at Leesburg Property, the overall Village at Leesburg development contains office and multifamily components, which do not serve as collateral for the Village at Leesburg Whole Loan. The non-collateral office component comprises approximately 120,000 square feet of class A office space above the street level retail space and was 91.2% occupied as of April 2018, while the non-collateral multifamily component comprises 335 class A rental units with monthly rental rates for one-bedroom units starting at approximately $1,571. The Village at Leesburg Property was built in 2009, and in 2016, the Village at Leesburg development underwent a $6.6 million common area maintenance project that included upgrades to landscaping, patio seating, and the addition of a fountain and fire-pit. The Village at Leesburg Property hosts entertainment and cultural events throughout the year, including the Winter Ice Festival and ice carving in January, the Leesburg Fine Arts Festival in May, movie nights throughout the summer, Halloween activities and an annual holiday tree lighting in December. The Village at Leesburg Property has exclusive use of 3,128 surface and garage parking spaces, resulting in a parking ratio of 5.7 spaces per 1,000 square feet of rentable area (the overall Village at Leesburg development contains 3,732 surface and garage parking spaces, of which 604 spaces are for the exclusive use of the non-collateral multifamily units).

 

As of March 9, 2018, the Village at Leesburg Property was 91.6% leased to 65 tenants. In addition to the Wegmans grocery anchor, the tenant mix at the Village at Leesburg Property consists of entertainment options, including Cobb Theatres, Bowlero bowling alley, Atomic Trampoline and Luv2Play Indoor Playground; restaurant tenants, including Firebirds Wood Fire Grill, Travinia Italian Kitchen, Eggspectations, Noodles & Company, BurgerFi and Bon Chon Chicken; and national retail tenants including Ulta, Verizon Wireless, AT&T, European Wax Center, Massage Envy, Visionworks and GNC.

 

The Village at Leesburg Property is anchored by a Wegmans grocery store (Rated ‘BBB+’ by S&P, 142,692 square feet, 26.1% of net rentable area and 10.1% of underwritten base rent), which is subject to a ground lease with a lease expiration date in July 2034 with five, five-year renewal options. Wegmans is a regional supermarket chain with 96 stores in the northeastern United States. The company reported 2017 sales of approximately $8.7 billion and was ranked 31st of the top 75 supermarkets in the country based on sales volume by an industry news publication. The store provides customers with the convenience of an in-store pharmacy, a Market Café with take-out and in-store dining, a cheese shop, a sub shop, a fresh sushi shop, a salad bar, a pizza shop, a floral shop and a pastry shop.

 

The second largest tenant is Cobb Theatres (63,564 square feet, 11.6% of net rentable area and 15.0% of underwritten base rent), which currently features 12 screens with approximately 1,900 seats. Cobb Theatres is currently renovating its existing auditoriums with new, reclining seats and is expected to add two new auditoriums (for a total of 14 screens) with a total estimated renovation and construction cost of approximately $7.6 million. The existing auditorium renovations began in January 2018 and are expected to be completed by September 2018; while the expansion work is expected to begin by June 2018 and is expected to be completed by November 2018. With respect to Cobb Theatres, all outstanding tenant improvement costs and gap rent through December 31, 2018 were reserved upon origination of the Village at Leesburg Whole Loan. Cobb Theatres recently exercised a 10-year lease renewal and has a lease expiration date in December 2028 with three, five-year renewal options.

 

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

 

 

VILLAGE AT LEESBURG

 

The third largest tenant is LA Fitness (45,000 square feet, 8.2% of net rentable area and 9.1% of underwritten base rent). LA Fitness is a privately-owned American health club with headquarters in Irvine, California. LA Fitness has 675 locations across 27 states in the U.S. and Canada, serving over 3.8 million members. The LA Fitness at the Village at Leesburg Property features basketball courts, group fitness classes, indoor cycling, an indoor pool, a kids club, personal training, a racquetball court, a sauna, a whirlpool spa and a juice bar.

 

The fourth largest tenant is Bowlero (21,564 square feet, 3.9% net rentable area and 4.2% underwritten base rent). Bowlmor AMF, the owner of Bowlero, is the largest ten-pin bowling center operator in the world with over 300 locations. Bowlero leased the former King Pinz bowling alley space at the Village at Leesburg Property with a lease that commenced in March 2017.

 

The Village at Leesburg Property comprises two retail condominium units consisting of the Wegmans leased fee parcel (excluding the improvements), and the remaining retail space within the related project (having a 58.06% voting rights interest in each of (i) a condominium regime governing the common elements of the related mixed use buildings within the overall Village at Leesburg development and (ii) a master condominium regime governing the common areas within the overall Village of Leesburg development, including parking garages and structures and private streets). The loan documents provide for springing full recourse to the borrower and guarantors resulting from the condominium regime’s being withdrawn or terminated, or the master owners’ association regime being terminated. See “Description of the Mortgage Pool—Mortgage Pool Characteristics—Condominium Interests” in the Prospectus.

 

The following table presents certain information relating to the tenancy at the Village at Leesburg Property:

 

Major Tenants

 

Tenant Name Credit Rating (Fitch/Moody’s/
S&P)(1)
Tenant NRSF % of
NRSF
Annual U/W Base Rent PSF(2) Annual
U/W Base Rent(2)
% of Total Annual U/W Base Rent Sales Occupancy Cost Lease
Expiration
Date
Anchor Tenant                
Wegmans (Ground Lease) NR/NR/BBB+ 142,692 26.1% $8.30(3) $1,184,921(3) 10.1% NAV NAV 7/31/2034(4)
Total Anchor Tenant   142,692 26.1% $8.30 $1,184,921 100.0%      
                   
Major Tenants                  
Cobb Theatres NR/NR/NR 63,564(5) 11.6% $27.50(5) $1,748,010(5) 15.0% $516,260(6) 24.4%(6) 12/31/2028(7)
LA Fitness NR/NR/NR 45,000 8.2% $23.67 $1,065,042 9.1% NAV NAV 3/31/2026(8)
Bowlero NR/B3/B 21,564 3.9% $22.49 $485,000 4.2% NAV NAV 3/31/2027(9)
Wells Fargo (Ground Lease) AA-/Aa2/A+ (10) (10) (10) $430,532(11) 3.7% NAV NAV 11/14/2029(12)
Atomic Trampoline NR/NR/NR 16,653 3.0% $19.26 $320,736 2.7% NAV NAV 8/31/2026(13)
Total Major Tenants 289,473 53.0% $16.59(14) $5,234,241 44.8%      
                   
Non-Major Tenants 210,864 38.6% $30.59(14) $6,451,262 55.2%      
                 
Occupied Collateral Total 500,337 91.6% $22.49(14) $11,685,503 100.0%      
                   
Vacant Space   45,770 8.4%            
                   
Collateral Total 546,107 100.0%            
                    

 

(1)Certain ratings are those of the parent company whether or not the parent company guarantees the lease.

(2)Annual U/W Base Rent PSF and Annual U/W Base Rent include contractual rent steps totaling $147,163 through January 2019 and straight-line rent averaging for investment grade tenants over the loan term for Wegmans and Wells Fargo (totaling $165,453) and over the remaining lease term for Charles Schwab (totaling $28,642).

(3)Wegman’s Annual U/W Base Rent PSF and Annual U/W Base Rent are based on the tenant’s average rental rate over the loan term. Wegman’s current annual base rent is $1,065,000 ($7.46 per square foot). Commencing on August 1, 2019, Wegman’s annual base rent will increase to $1,164,367 ($8.16 per square foot) and commencing on August 1, 2024, Wegman’s annual base rent will increase to $1,265,678 ($8.87 per square foot).

(4)Wegmans has five, five-year renewal options, with nine months’ notice, at rental rates as specified in the lease.

(5)Cobb Theatres’ Tenant NRSF, Annual U/W Base Rent PSF and Annual U/W Base Rent assume the completion of the planned renovation and expansion, which are expected to be completed by November 2018 (see “The Property” section). The tenant’s current net rentable square footage, annual base rent per square foot and annual base rent are 51,267, $23.10 and $1,184,961, respectively. The tenant is required to begin paying rent on its expanded premises once it is open for business in such space, and the difference between the tenant’s underwritten base rent and current base rent through December 31, 2018 was reserved at origination of the Village at Leesburg Whole Loan. We cannot assure you that such renovation or expansion work will be completed or that the tenant will begin paying rent on such expansion space.

(6)Sales and Occupancy Cost are for the trailing 12-month period ending December 31, 2017. Sales shown are per screen and based on the tenant’s current 12 screens; and occupancy cost shown is based on the tenant’s current annual base rent of $1,184,961 and underwritten reimbursements.

(7)Cobb Theatres has three five-year renewal options, with nine months’ notice, at rental rates as specified in the lease.

(8)LA Fitness has three five-year renewal options, with six months’ notice, at rental rates calculated in accordance with the Consumer Price Index or 12.0% greater than the minimum rent in effect immediately prior to the extension.

(9)Bowlero has two five-year renewal options, with 180 days’ notice, at rental rates as specified in the lease.

(10)Wells Fargo is subject to a ground lease and owns its improvements with no attributed square footage.

(11)Wells Fargo’s Annual U/W Base Rent is based on the tenant’s average rental rate over the loan term. Wells Fargo’s current annual base rent is $385,000. Commencing on December 1, 2019, Wells Fargo’s annual base rent will increase to $423,519 and commencing on December 1, 2024, Wells Fargo’s annual base rent will increase to $465,838.

(12)Wells Fargo has four five-year renewal options, with 270 days’ notice, at rental rates as specified in the lease.

(13)Atomic Trampoline has one five-year renewal option, with 12 months’ notice, at rental rates as specified in the lease.

(14)Annual U/W Base Rent PSF for Total Major Tenants, Non-Major Tenants and Occupied Collateral Total excludes Annual U/W Base Rent related to Wells Fargo, which is on a ground lease and owns its improvements with no attributed square footage.

 

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

 

 

VILLAGE AT LEESBURG

 

The following table presents certain information relating to the lease rollover schedule at the Village at Leesburg 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(3)
% of Total Annual U/W Base Rent(3) Annual
 U/W
Base Rent
 PSF(3)(4)
MTM 0 0 0.0% 0 0.0% $0 0.0% $0.00
2018 2 5,819 1.1% 5,819 1.1% $171,678 1.5% $29.50
2019 4 10,544 1.9% 16,363 3.0% $270,722 2.3% $25.68
2020 13 35,568 6.5% 51,931 9.5% $1,566,326 13.4% $44.04
2021 8 35,416 6.5% 87,347 16.0% $878,891 7.5% $24.82
2022 4 16,161 3.0% 103,508 19.0% $455,520 3.9% $28.19
2023 3 14,127 2.6% 117,635 21.5% $369,802 3.2% $26.18
2024 4 17,290 3.2% 134,925 24.7% $402,174 3.4% $23.26
2025 7 24,061 4.4% 158,986 29.1% $774,013 6.6% $32.17
2026 6 76,309 14.0% 235,295 43.1% $1,955,297 16.7% $25.62
2027 8 43,074 7.9% 278,369 51.0% $1,115,539 9.5% $25.90
2028 4 79,276 14.5% 357,645 65.5% $2,110,088 18.1% $26.62
Thereafter 2 142,692 26.1% 500,337 91.6% $1,615,453 13.8% $11.32
Vacant 0 45,770 8.4% 546,107 100.0% $0 0.0% $0.00
Total/Weighted Average 65 546,107 100.0%     $11,685,503 100.0% $22.49

 

(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 and Total Annual U/W Base Rent exclude vacant space.

(4)Annual U/W Base Rent PSF excludes Annual U/W Base Rent related to Wells Fargo, which is on a ground lease and owns its improvements.

 

The following table presents historical occupancy percentages at the Village at Leesburg Mortgaged Property:

 

Historical Occupancy

 

12/31/2014(1)

12/31/2015(1)

12/31/2016(1)

12/31/2017(1)

3/9/2018(2)

78.7% 82.1% 88.4% 93.6% 91.6%

 

(1)Information obtained from the borrower.

(2)Information obtained from the underwritten rent roll. Occupancy assumes the completion of the 12,297 square foot expansion related to Cobb Theatres (see “The Property” section). Excluding the expansion space, the physical occupancy as of March 9, 2018 was 91.4%.

 

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

 

 

VILLAGE AT LEESBURG

 

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 Village at Leesburg Property:

 

Cash Flow Analysis

 

    2014   2015(2)   2016(3)   2017(4)   U/W(5)   % of U/W Effective Gross Income   U/W $ per SF  
Base Rent   $8,506,614   $7,561,648   $8,431,880   $9,277,247   $11,685,503   80.1%   $21.40  
Grossed Up Vacant Space   0   0   0   0   1,532,967   10.5   2.81  
Percentage Rent   181,679   194,854   153,795   72,657   55,276   0.4   0.10  
Total Reimbursables   2,416,951   2,643,318   2,832,773   2,846,697   2,843,935   19.5   5.21  
Other Income(1)   89,005   49,684   129,044   179,020   4,195   0.0   0.01  
Less Vacancy & Credit Loss  

0

 

0

 

0

 

0

 

(1,532,967)(6)

 

(10.5)

 

(2.81)

 
Effective Gross Income   $11,194,249   $10,449,504   $11,547,492   $12,375,621   $14,588,909   100.0%   $26.71  
                               
Total Operating Expenses   $4,279,607   $4,248,761   $3,781,438   $3,689,722   $3,574,353   24.5%   $6.55  
                               
Net Operating Income   $6,914,642   $6,200,743   $7,766,054   $8,685,899   $11,014,555   75.5%   $20.17  
TI/LC   0   0   0   0   403,415   2.8   0.74  
Capital Expenditures  

0

 

0

 

0

 

0

 

80,007

 

0.5

 

0.15

 
Net Cash Flow   $6,914,642   $6,200,743   $7,766,054   $8,685,899   $10,531,133   72.2%   $19.28  
                               
NOI DSCR(7)   0.84x   0.75x   0.94x   1.06x   1.34x          
NCF DSCR(7)   0.84x   0.75x   0.94x   1.06x   1.28x          
NOI DY(7)   5.3%   4.7%   5.9%   6.6%   8.4%          
NCF DY(7)   5.3%   4.7%   5.9%   6.6%   8.0%          

 

(1)Other income includes income from storage, stroller rentals, ATMs and other miscellaneous rental income.

(2)The decline in Base Rent and Net Operating Income from 2014 to 2015 was driven partly by bad debt expense in 2015 from multiple tenants totaling $730,948.

(3)The increase in Net Operating Income from 2015 to 2016 was primarily driven by an increase in Base Rent and decrease in Total Operating Expenses. The increase in Base Rent from 2015 to 2016 was driven by 13 new leases (10.6% of net rentable area, 12.6% of underwritten base rent) signed from March 2015 to December 2016 and three renewal leases (1.9% of net rentable area, 3.4% of underwritten base rent) signed from March 2015 to November 2015. The decrease in Total Operating Expenses from 2015 to 2016 was primarily driven by reduced expenses for snow removal, advertising and holiday decorating.

(4)The increase in Base Rent and Net Operating Income from 2016 to 2017 was driven by eight new leases (7.2% of net rentable area, 10.1% of underwritten base rent) signed from January 2017 to July 2017 and two renewal leases (0.9% of net rentable area, 1.7% of underwritten base rent) signed from May 2017 to November 2017.

(5)The increase in Net Operating Income from 2017 to U/W was driven by (i) three new leases (2.9% of net rentable area, 3.1% of underwritten base rent) and three renewal leases (1.8% of net rentable area, 2.4% of underwritten base rent) signed since January 2018; (ii) the inclusion of increased base rent for Cobb Theatres assuming the completion of the tenant’s planned renovation and expansion (annual base rent increase of $563,049; see “The Property” and “Major Tenants” sections); (iii) the inclusion of contractual rent steps totaling $147,163 through January 2019 and straight-line rent averaging for investment grade tenants over the lesser of the loan term and remaining lease term (totaling $194,095); and (iv) bad debt expenses in 2017 from multiple tenants totaling approximately $1.0 million.

(6)The underwritten economic vacancy is 11.6%. The Village at Leesburg Property was 91.6% leased as of March 9, 2018.

(7)The debt service coverage ratios and debt yields shown are based on the Village at Leesburg Whole Loan.

 

Appraisal. The appraiser concluded to a Prospective Market Value Upon Completion for the Village at Leesburg Property of $226,000,000 as of December 1, 2018, which assumes the completion of the renovation and expansion related to Cobb Theatres.

 

Environmental Matters. According to a Phase I environmental site assessment dated February 23, 2018, there was no evidence of any recognized environmental conditions at the Village at Leesburg Property.

 

Market Overview and Competition. The Village at Leesburg Property is located in Leesburg, Loudoun County, Virginia, approximately 38.1 miles northwest of the Washington, D.C. central business district, 14.4 miles northwest of Washington Dulles International Airport and 1.7 miles southeast of U.S. Route 15. Per U.S. Census Bureau estimates, Loudoun County has the highest median household income of any county in the United States, and according to a third party market research report, the 2017 estimated average household income within a three- and five-mile radius of the Village at Leesburg Property was $144,117 and $151,624, respectively. According to the appraisal, Loudoun County has grown faster than any other Virginia jurisdiction since 1990, and the county’s population grew by approximately 3.7% annually from 2006 to 2016. According to a third party market research report, the estimated 2017 population within a three- and five-mile radius of the Village at Leesburg Property was 74,657 and 137,723, respectively.

 

The Metropolitan Washington Airports Authority is constructing a 23-mile extension of the existing Metrorail system, branching from the East Falls Church Station in Arlington, Virginia to the Washington Dulles International Airport and west to eastern Loudoun County. Phase 2 of the extension, expected to be completed in 2020, is expected to continue 11 miles from Wiehle Avenue to eastern Loudoun County. This phase will add six stations, including stops in Reston, Herndon, Dulles Airport, and Ashburn. The Ashburn Station is expected to be located approximately 9.7 miles southeast of the Village at Leesburg Property.

 

According to a third party market research report, the Village at Leesburg Property is situated within the Loudoun County submarket of the Suburban Virginia retail market. As of year-end 2017, the submarket reported total inventory of approximately 6.8 million square feet with a 3.0% vacancy rate and an average asking net rental rate of $29.13 per square foot. Submarket vacancy has decreased from 6.6% in 2012 and has averaged 4.4% in the last six years. The appraiser concluded to a weighted average net market rent for the Village at Leesburg Property of $22.89 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.

 

11

 

 

VILLAGE AT LEESBURG

 

The table below presents certain information relating to five comparable properties to the Village at Leesburg Property identified by the appraiser:

 

Competitive Set(1)

 

 

Village at Leesburg

(Subject)

Marketplace at Potomac Station Fort Evan Plaza I Fort Evans Plaza II Battlefield Shopping Center Leesburg Plaza
Location Leesburg, VA Leesburg, VA Leesburg, VA Leesburg, VA Leesburg, VA Leesburg, VA
Distance from Subject -- 1.1 miles 2.1 miles 1.8 miles 2.3 miles 2.4 miles
Property Type Lifestyle Center Community Center Community Center Community Center Power Center Community  Center
Year Built/Renovated 2009/2018 2004/NAP 1999/NAP 2008/NAP 1991/NAP 1956/1992
Anchors Wegmans, Cobb Theatres, LA Fitness, Bowlero Giant Food, Best Buy Home Depot, Hobby Lobby Marshall’s, Bed, Bath & Beyond, Walgreens, Jo-Ann Stores Dick’s Sporting Goods, DSW, Ross Dress for Less, Staples, Stein Mart, Michael’s Giant Food, Office Depot, PetSmart, Party City
Total GLA 546,107 SF 143,176 SF 214,477 SF 228,529 SF 296,140 SF 228,878 SF
Total Occupancy 91.6%(2) 92.0% 97.0% 100.0% 97.0% 96.0%

 

(1)Information obtained from the appraisal. In total, the appraiser identified 10 comparable properties totaling approximately 2.7 million square feet with an average occupancy rate of approximately 96.0% and minimum occupancy rate of 90.0%.

(2)Information obtained from underwritten rent roll.

 

The Borrower. The borrower is CRP/TRC Leesburg Retail Owner, L.L.C., 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 Village at Leesburg Whole Loan. Gary D. Rappaport and the Gary D. Rappaport Revocable Trust, individually and/or collectively, are the guarantors of certain nonrecourse carveouts under the Village at Leesburg Whole Loan.

 

The Borrower Sponsor. The borrower sponsor is Gary D. Rappaport, the chief executive officer of Rappaport, a retail real estate company founded in 1984. Rappaport’s portfolio includes more than 50 shopping centers and ground floor retail spaces in approximately 125 mixed-use properties, both residential and office, located primarily throughout the mid-Atlantic region of the United States. Mr. Rappaport is the former chairman and trustee of the International Council of Shopping Centers and is the principal partner for approximately 4.3 million square feet of the shopping centers managed by Rappaport. At the time of origination of the Village at Leesburg Whole Loan, an entity related to Rappaport acquired a 60% equity interest in the Village at Leesburg Property. Gary D. Rappaport and affiliates owned an indirect and non-controlling 10% interest in an entity that defaulted on a loan that was the subject of a foreclosure in 2009. See “Description of the Mortgage Pool— Loan Purpose; Default History, Bankruptcy Issues and Other Proceedings” in the Prospectus.

 

The remaining 40% equity interest in the Village at Leesburg Property is held by an affiliate of the Carlyle Group (“Carlyle”). Carlyle was the original developer of the overall Village at Leesburg community and was the majority owner of the Village at Leesburg Property prior to the origination of the Village at Leesburg Whole Loan. Founded in 1987 in Washington, D.C., Carlyle currently has approximately $195 billion of assets under management and more than 1,600 professionals operating in 31 offices in North America, South America, Europe, the Middle East, Africa, Asia and Australia. Carlyle’s real estate division has made more than 850 investments in 397 metropolitan statistical areas around the world. As of December 31, 2017, Carlyle’s real estate funds reported more than $18 billion in assets under management.

 

Escrows. The loan documents provide for upfront reserves of $560,062 for real estate taxes, $28,125 for immediate repairs, $842,933 for outstanding rent concessions and gap rent related to multiple tenants (including $520,190 related to the Cobb Theatres expansion) and $7,649,629 for existing tenant improvements and leasing commissions (“TI/LC”) related to multiple tenants (including $6,455,836 related to the Cobb Theatres renovation and expansion). The loan documents also provide for ongoing monthly reserves of $112,013 for real estate taxes, $6,801 for replacement reserves (subject to a cap of $244,818), and $45,894 for general TI/LCs (subject to a cap of $2,010,135 so long as no event of default exists and the net cash flow debt service coverage ratio is equal to or greater than 1.20x).

 

The loan documents do not require ongoing monthly escrows for insurance premiums as long as (i) no event of default has occurred and is continuing; (ii) the borrower provides the lender with evidence that the Village at Leesburg Property’s insurance coverage is included in a blanket policy and such policy is in full force and effect; and (iii) the borrower pays all applicable insurance premiums and provides the lender with evidence of renewals.

 

Lockbox and Cash Management. The Village at Leesburg Whole Loan requires a lender-controlled lockbox account, which is already in place, and that the borrower directs tenants to pay all rents directly into such lockbox account. The loan documents also require that all rents received by the borrower or the property manager be deposited into the lockbox account within one business day of receipt. All funds in the lockbox account are required to be swept each business day into the cash management account controlled by the lender and disbursed on each payment date in accordance with the loan documents. Prior to the occurrence of a Cash Trap Event Period (as defined below), all excess funds are required to be distributed to the borrower. During a Cash Trap Event Period, all excess funds are required to be swept to an excess cash flow subaccount.

 

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

 

 

VILLAGE AT LEESBURG

 

A “Cash Trap Event Period” will commence upon the earlier of the following:

 

(i)the occurrence of an event of default;

(ii)the amortizing net cash flow debt service coverage ratio falling below 1.15x at the end of any calendar quarter; or

(iii)the occurrence of a Lease Expiration Cash Trap Event Period (as defined below).

 

A Cash Trap Event Period will end upon the occurrence of the following:

 

with regard to clause (i), the cure of such event of default;

with regard to clause (ii), the amortizing net cash flow debt service coverage ratio being equal to or greater than 1.20x for two consecutive calendar quarters; or

with regard to clause (iii), a Lease Expiration Cash Trap Event Period Cure (as defined below).

 

A “Lease Expiration Cash Trap Event Period” will commence upon the earlier of the following:

 

(i)either Wegmans or Cobb Theatres giving notice of its intent to terminate its lease or vacate its space;

(ii)either Wegmans or Cobb Theatres failing to be in actual, physical occupancy of its entire space, failing to be open to the public during customary hours or going dark;

(iii)either Wegmans or Cobb Theatres becoming insolvent or filing for bankruptcy; or

(iv)Cobb Theatres failing to extend its lease nine months prior to expiration upon terms and conditions reasonably satisfactory to the lender.

 

A “Lease Expiration Cash Trap Event Period Cure” will occur upon the following:

 

with regard to clause (i), a Qualified Re-Leasing Event (as defined below);

with regard to clause (ii), Wegmans or Cobb Theatres, as applicable, being in actual, physical possession of its entire space, being open to the public during customary hours and no longer being dark;

with regard to clause (iii), Wegmans or Cobb Theatres, as applicable, being no longer insolvent or subject to any bankruptcy or insolvency proceedings and its lease having been affirmed or assigned pursuant to a final and non-appealable order of a court of competent jurisdiction; or

with regard to clause (iv), Cobb Theatres extending its lease upon terms and conditions reasonably satisfactory to the lender.

 

A “Qualified Re-Leasing Event” will occur upon one or more replacement tenants reasonably acceptable to the lender executing leases covering all of the space currently occupied by Wegmans or Cobb Theatres, as applicable, and delivering an estoppel certificate confirming such replacement tenants having taken physical occupancy of the entire space, commencing normal business operations and paying full unabated rent.

 

Property Management. The Village at Leesburg Property is managed by Rappaport Management Company, an affiliate of the borrower.

 

Assumption. The borrower has the two-time right to transfer the Village at Leesburg 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 the transferee’s experience, financial strength and general business standing; and (iii) if required by the lender, rating agency confirmation from DBRS, Fitch and Moody’s that the transfer will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the Series WFCM 2018-C45 certificates and similar confirmations from each rating agency rating any securities backed by the Village at Leesburg Companion Loan with respect to the ratings of such securities.

 

Partial Release. Not permitted.

 

Real Estate Substitution. Not permitted.

 

Subordinate and Mezzanine Indebtedness. Not permitted.

 

Ground Lease. None.

 

Terrorism Insurance. The loan documents require that the “all risk” insurance policies required to be maintained by the borrower provide coverage for terrorism in an amount equal to the full replacement cost of the Village at Leesburg Property. The loan documents also require 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.

 

13

 

 

No. 2 – Westport Self Storage Portfolio
 
Loan Information   Property Information
Mortgage Loan Seller: Wells Fargo Bank, National Association   Single Asset/Portfolio: Portfolio
Credit Assessment (DBRS/Fitch/Moody’s): NR/NR/NR   Property Type: Self Storage
Original Principal Balance: $48,300,000   Specific Property Type: Self Storage
Cut-off Date Balance: $48,300,000   Location: Various – See Table
% of Initial Pool Balance: 7.3%   Size: 851,164 SF
Loan Purpose: Refinance   Cut-off Date Balance Per SF: $56.75
Borrower Names(1): Various   Year Built/Renovated: Various – See Table
Borrower Sponsor: Westport Properties Inc.   Title Vesting: Fee
Mortgage Rate: 4.680%   Property Manager: Self-Managed
Note Date: June 8, 2018   4th Most Recent Occupancy(3): NAV
Anticipated Repayment Date: NAP   3rd Most Recent Occupancy(3): NAV
Maturity Date: June 11, 2028   2nd Most Recent Occupancy (As of): 80.3% (12/31/2016)
IO Period: 84 months   Most Recent Occupancy (As of): 85.1% (12/31/2017)
Loan Term (Original): 120 months   Current Occupancy (As of): 87.1% (5/21/2018)
Seasoning: 1 month    
Amortization Term (Original): 360 months   Underwriting and Financial Information:
Loan Amortization Type: Interest-only, Amortizing Balloon   4th Most Recent NOI (As of)(4): $4,113,114 (Annualized 10 or 11 12/31/2016)
Interest Accrual Method: Actual/360    
Call Protection: L(25),D(91),O(4)   3rd Most Recent NOI (As of)(4): $4,767,136 (12/31/2017)
Lockbox Type: Springing   2nd Most Recent NOI (As of): $4,677,216 (TTM 5/31/2018)
Additional Debt: None   Most Recent NOI (As of): $4,783,088 (Annualized 3 5/31/2018)
Additional Debt Type: NAP    
      U/W Revenues: $8,105,950
      U/W Expenses: $3,430,604
          U/W NOI: $4,675,346
          U/W NCF: $4,518,214
          U/W NOI DSCR: 1.56x
          U/W NCF DSCR: 1.51x
Escrows and Reserves(2):         U/W NOI Debt Yield: 9.7%
Type: Initial Monthly Cap (If Any)   U/W NCF Debt Yield: 9.4%
Taxes $0 Springing NAP   As-Is Appraised Value(5): $82,240,000
Insurance $0 Springing NAP   As-Is Appraisal Valuation Date(5) : April 18, 2018
Deferred Maintenance $74,520 $0 NAP   Cut-off Date LTV Ratio(5) : 58.7%
Replacement Reserves $0 Springing NAP   LTV Ratio at Maturity(5) : 56.0%
             
               
(1)See “The Borrower” section.

(2)See “Escrows” section.

(3)The Westport Self Storage Portfolio Borrower (as defined below) acquired the Westport Self Storage Portfolio Properties (as defined below) on March 31, 2016 and historical occupancy prior to such date is not available.

(4)See “Cash Flow Analysis” section.

(5)The individual property level appraised values total $79,210,000, which would equate to a Cut-off Date LTV Ratio and LTV Ratio at Maturity of 61.0% and 58.1%, respectively; however, the appraiser concluded to a portfolio value of $82,240,000 based on the assumption that the entire portfolio is marketed to a single purchaser.

 

The Mortgage Loan. The mortgage loan (the “Westport Self Storage Mortgage Loan”) is evidenced by a single promissory note secured by the fee interest in a 12-property self-storage portfolio located in Texas and Florida (the “Westport Self Storage Portfolio Properties”). The Westport Self Storage Mortgage Loan was originated on June 8, 2018 by Wells Fargo Bank, National Association. The Westport Self Storage Mortgage Loan had an original principal balance of $48,300,000, has an outstanding principal balance as of the Cut-off Date of $48,300,000 and accrues interest at an interest rate of 4.680% per annum. The Westport Self Storage 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 for the first 84 months following origination and, thereafter, requires payments of principal and interest based on a 30-year amortization schedule. The Westport Self Storage Mortgage Loan matures on June 11, 2028.

 

Following the lockout period, the borrower has the right to defease the Westport Self Storage Mortgage Loan in whole, or in part (see “Partial Release” section), on any date before March 11, 2028. In addition, the Westport Self Storage Mortgage Loan is prepayable without penalty on or after March 11, 2028.

 

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

 

 

WESTPORT SELF STORAGE PORTFOLIO

 

Sources and Uses

 

Sources         Uses      
Original loan amount $48,300,000   100.0%   Loan payoff $39,966,576   82.7%
          Reserves $74,520   0.2    
          Closing costs $667,552   1.4    
          Return of equity $7,591,352   15.7    
Total Sources $48,300,000   100.0%   Total Uses $48,300,000   100.0%

 

The Properties. The Westport Self Storage Portfolio Properties comprise 12 self-storage properties totaling 851,164 square feet of rentable area, including 5,913 self storage units and 32,127 square feet of retail and commercial space, plus 406 RV parking spaces (see “Unit Mix” table below). The net rentable area of the Westport Self Storage Portfolio consists of approximately 96.2% self storage space and 3.8% retail and commercial space with no square footage attributed to the RV parking spaces. The Westport Self Storage Portfolio Properties range in size from 42,131 square feet to 176,939 square feet and were originally built between 1960 and 2002, with 10 properties having been renovated and/or expanded since 2004 (including eight since 2016).

 

The Westport Self Storage Portfolio Properties are located in Texas (10 properties; 748,537 square feet; 87.9% of net rentable area) and Florida (two properties; 102,627 square feet; 12.1% of net rentable area). Since acquiring the Westport Self Storage Portfolio Properties in 2016, the borrower sponsor has spent approximately $8.1 million in capital expenditures across the portfolio to rebrand the properties to US Storage Centers (“USSC”) and add CCTV security systems. As of May 21, 2018, the Westport Self Storage Portfolio Properties were 87.1% occupied with individual property occupancies ranging from 76.5% to 95.1% (see “Historical Occupancy” table below).

 

The following table presents certain information relating to the Westport Self Storage Portfolio Properties:

 

Property Name – Location

Year Built/

Renovated

Allocated Cut-off Date Balance

% of ALA

Appraised Value(1) Allocated LTV UW NCF % UW NCF
San Antonio/Boerne USSC – San Antonio/Boerne, TX 1984/2004 $9,437,217 19.5%  $15,640,000 60.3% $868,811 19.2%
Fort Worth USSC – Fort Worth, TX 2001/2016 $5,407,616 11.2% $8,920,000 60.6% $483,788 10.7%
Grissom USSC – San Antonio, TX 1987/2016 $5,054,009 10.5% $7,830,000 64.5% $502,664 11.1%
Laredo USSC – San Antonio, TX 2000/2016 $4,662,017 9.7%  $7,870,000 59.2% $435,928 9.6%
Austin USSC – Austin, TX 1983/2016 $4,291,045 8.9%  $7,790,000 55.1% $418,084 9.3%
Tampa USSC – Tampa, FL 1987/NAP $3,454,403 7.2%  $5,300,000 65.2% $315,043 7.0%
Harker Heights USSC – Harker  Heights, TX 2002/2016 $3,450,344 7.1%  $5,320,000 64.9% $317,966 7.0%
Denton USSC – Denton, TX 1960/2016 $3,356,378 6.9%  $5,600,000 59.9% $352,264 7.8%
Floresville USSC – Floresville, TX 1986/2006 $3,306,223 6.8%  $5,070,000 65.2% $314,230 7.0%
Blanco USSC – San Antonio, TX 1986/2016 $2,933,616 6.1%  $4,660,000 63.0% $285,453 6.3%
Houston Hinman USSC – Houston, TX 1975/2016 $1,571,800 3.3%  $2,710,000 58.0% $96,647 2.1%
Ocala USSC – Ocala, FL 1989/NAP $1,375,332 2.8%  $2,500,000 55.0% $127,336 2.8%
Total/Weighted Average   $48,300,000 100.0% $82,240,000 58.7% $4,518,214 100.0%

 

(1)The individual property level appraised values total $79,210,000, which would equate to a Cut-off Date LTV Ratio and LTV Ratio at Maturity of 61.0% and 58.1%, respectively; however, the appraiser concluded to a portfolio value of $82,240,000 based on the assumption that the entire portfolio is marketed to a single purchaser.

 

The following table presents detailed information with respect to the unit mix of the Westport Self Storage Portfolio Properties:

 

Unit Mix

 

Property Name Net Rentable
Area (SF)(1)
% GLA Self Storage Units Commercial Space (SF) RV Parking Units
San Antonio/Boerne USSC 176,939 20.8% 741 11,055 45
Fort Worth USSC 65,140 7.7% 453 0 60
Grissom USSC 100,320 11.8% 330 0 276
Laredo USSC 56,706 6.7% 577 0 8
Austin USSC 62,402 7.3% 707 0 0
Tampa USSC 60,496 7.1% 435 0 1
Harker Heights USSC 66,075 7.8% 464 0 4
Denton USSC 61,533 7.2% 524 18,000 0
Floresville USSC 56,197 6.6% 369 3,072 0
Blanco USSC 51,205 6.0% 490 0 0
Houston Hinman USSC 52,020 6.1% 466 0 0
Ocala USSC 42,131 4.9% 357 0 12
Total/Weighted Average 851,164 100% 5,913 32,127 406

 

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

 

 

WESTPORT SELF STORAGE PORTFOLIO

 

The following table presents historical occupancy percentages at the Westport Self Storage Portfolio Properties:

 

Historical Occupancy(1)

 

Property Name 12/31/2016(2) 12/31/2017(2) 5/21/2018(3)
San Antonio/Boerne USSC 87.6% 90.2% 88.9%
Fort Worth USSC 76.9% 90.6% 88.8%
Grissom USSC 94.3% 93.9% 95.1%
Laredo USSC 92.6% 88.3% 89.7%
Austin USSC 72.8% 78.8% 80.3%
Tampa USSC 82.5% 91.6% 83.6%
Harker Heights USSC 81.3% 87.3% 89.2%
Denton USSC 73.7% 82.7% 83.2%
Floresville USSC 84.7% 86.8% 82.4%
Blanco USSC 89.0% 89.4% 90.2%
Houston Hinman USSC 68.8% 34.8%(4) 76.5%
Ocala USSC 74.3% 82.6% 86.8%
Total/Weighted Average 83.0% 85.1% 87.1%

 

(1)The Westport Self Storage Portfolio Borrower acquired the Westport Self Storage Portfolio Properties on March 31, 2016, and historical occupancy is not available prior to such date.

(2)Information obtained from the Westport Self Storage Portfolio Borrower.

(3)Information obtained from the underwritten rent roll.

(4)The decline in occupancy at the Houston Hinman USSC property from 2016 to 2017 was due to damage sustained from Hurricane Harvey.

 

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 Westport Self Storage Portfolio Properties:

 

Cash Flow Analysis

 

    Annualized 10 or 11 12/31/2016(1)   2017(2)   TTM
5/31/2018
 

Annualized 3

5/31/2018

  U/W   % of U/W Effective Gross Income  

U/W $

per SF

 
Base Rent   $6,491,761   $6,981,609   $7,037,957   $6,914,044   $7,285,656(4)   89.9%   $8.56   
Grossed Up Vacant Space   0   0   0   0   1,242,624   15.3      1.46   
Other Income(3)   953,817   997,930   936,219   988,076   988,076   12.2      1.16   
Retail/Commercial   144,781   348,052   372,326   387,336   323,114   4.0      0.38   
Less Vacancy and Credit Loss  

(340,639)

 

(443,133)

 

(349,086)

 

(182,320)

 

(1,733,520)(5)

 

(21.4)

 

(2.04)

 
Effective Gross Income   $7,249,719   $7,884,458   $7,997,416   $8,107,136   $8,105,950   100.0%   $9.52   
                               
Total Operating Expenses   $3,136,605   $3,117,322   $3,320,200   $3,324,048   $3,430,604   42.3%   $4.03   
                               
Net Operating Income   $4,113,114   $4,767,136   $4,677,216   $4,783,088   $4,675,346   57.7%   $5.49   
Capital Expenditures  

0

 

0

 

0

 

0

 

157,132

 

1.9   

 

0.18 

 
Net Cash Flow   $4,113,114   $4,767,136   $4,677,216   $4,783,088   $4,518,214   55.7%   $5.31   
                               
NOI DSCR   1.37x   1.59x   1.56x   1.59x   1.56x          
NCF DSCR   1.37x   1.59x   1.56x   1.59x   1.51x          
NOI DY   8.5%   9.9%   9.7%   9.9%   9.7%          
NCF DY   8.5%   9.9%   9.7%   9.9%   9.4%          

 

(1)Of the 12 Westport Self Storage Portfolio properties, financials for four properties represent trailing 10-month annualized financials ending December 31, 2016, and financials for the remaining eight properties represent trailing 11-month annualized financials ending December 31, 2016.

(2)2017 NOI is higher than Annualized 10 or 11 2016 NOI due in part to a $247,384 increase in other income, primarily driven by retail and commercial tenant income, and an overall increase in occupancy from 80.3% as of December 31, 2016 to 85.1% as of December 31, 2017.

(3)Other Income consists of late fees, administrative fees, retail merchandise sales, truck rental income, postal box income, income from two cell tower leases (at the San Antonio/Boerne USSC property and Blanco USSC property) and two billboard leases (at the San Antonio/Boerne USSC property and Ocala USSC property), and tenant insurance.

(4)Underwritten Base Rent comprises approximately 95.3% of income from self storage units and 4.7% of income from RV parking income.

(5)The underwritten economic vacancy is 20.3%. As of May 21, 2018, the Westport Self Storage Portfolio Properties were 87.1% physically occupied.

 

Appraisal. The appraiser concluded to an “as is” appraised value for the Westport Self Storage Portfolio Properties of $82,240,000 as of April 18, 2018.

 

Environmental Matters. According to the Phase I environmental site assessments dated April 30, 2018, there are no recognized environmental conditions at the Westport Self Storage Portfolio Properties.

 

Market Overview and Competition. The Westport Self Storage Portfolio Properties are located in eight cities in Texas (87.9% of net rentable area) and two cities in Florida (12.1% of net rentable area). Within a five-mile radius of the Westport Self Storage Portfolio Properties, the average estimated population and median household income are 185,670 and $78,311, respectively (see table below).

 

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

 

 

WESTPORT SELF STORAGE PORTFOLIO

 

Four of the Westport Self Storage Portfolio Properties are located in San Antonio, Texas (45.7% of the allocated loan amount and 45.3% of net rentable area). According to the appraisal, the overall San Antonio self storage market reported an average vacancy rate of 13.4% from 2011 to 2017, with a 2017 vacancy rate of 14.4%.

 

The following table presents certain demographic information with respect to the Westport Self Storage Portfolio Properties:

 

Demographic Summary (1)

 

Property City State

2017/2018 Population

(within 1- ,3- , 5-mile radius)

2017/2018 Median Income

(within 1- ,3- , 5-mile radius)

San Antonio/Boerne USSC San Antonio/Boerne TX 4,552, 23,555, 36,905 $115,357, $127,041, $126,484
Fort Worth USSC Fort Worth TX 11,873, 98,031, 216,520 $89,197, $93,373, $89,624
Grissom USSC San Antonio TX 4,552, 23,555, 36,905 $115,357, $127,041, $126,484
Laredo USSC San Antonio TX 4,552, 23,555, 36,905 $115,357, $127,041, $126,484
Austin USSC Austin TX 19,953, 144,227, 308,009 $46,068, $46,129, $53,641
Tampa USSC Tampa FL 106,870, 250,987, 757,077 $32,915, $42,031, $49,471
Harker Heights USSC Harker Heights TX 9,666, 49,067, 105,102 $53,788, $61,940, $54,682
Denton USSC Denton TX 8,794, 87,558, 145,329 $30,231, $40,160, $52,047
Floresville USSC Floresville TX 484, 7,413, 11,349 $58,053, $51,955, $54,338
Blanco USSC San Antonio TX 4,522, 23,555, 36,905 $115,357, $127,041, $126,484
Houston Hinman USSC Houston TX 15,300, 131,046, 337,043 $31,593, $39,979, $40,319
Ocala USSC Ocala FL 39,677, 88,048, 199,990 $36,341, $39,205, $39,672

 

(1)Based on 2017 and 2018 demographic and market information as provided by third party research reports and the appraisal.

 

The Borrowers. The borrowers are Westport Austin Self Storage, LLC; Westport Blanco Self Storage, LLC; Westport Boerne Self Storage, LLC; Westport Denton Self Storage, LLC; Westport Floresville Self Storage, LLC; Westport Ft. Worth Self Storage, LLC; Westport Grissom Self Storage, LLC; Westport Harker Self Storage, LLC; Westport Houston Self Storage, LLC; Westport Laredo Self Storage, LLC; Westport Ocala Self Storage, LLC; and Westport Tampa Self Storage, LLC (collectively, the “Westport Self Storage Portfolio Borrower”), each a Delaware limited liability company and single purpose entity with one independent director. Legal counsel to the borrower delivered a non-consolidation opinion in connection with the origination of the Westport Self Storage Portfolio Mortgage Loan. Westport/TR Storage Venture LLC is the guarantor of certain nonrecourse carveouts under the Westport Self Storage Portfolio Mortgage Loan.

 

The Borrower Sponsor. The borrower sponsor is Westport Properties Inc., which is a joint venture between entities affiliated with Westport Properties, Inc. (10.0% interest; “Westport”) and Teachers’ Retirement System of the State of Illinois (90.0% interest; “TRS”).

 

Westport was founded in 1985 and currently operates 120 self storage facilities totaling over six million square feet and located in 15 states. TRS is the 37th largest pension system in the United States and provides retirement, disability and survivor benefits to teachers, administrators and other public school personnel employed in the state of Illinois, excluding those employed in Chicago. TRS serves approximately 412,000 members and reported total assets of approximately $51.5 billion as of April 30, 2018, with 13.6% of those assets invested in real estate.

 

Escrows. The loan documents provide for upfront reserves of $74,520 for immediate repairs and springing monthly reserves of $13,093 for replacement reserves during the continuance of an event of default.

 

The loan documents do not require ongoing monthly escrows for real estate taxes as long as (i) no event of default has occurred and is continuing; and (ii) the Westport Self Storage Portfolio Borrower pays all applicable taxes prior to delinquency and provides the lender with evidence of payment. The loan documents do not require ongoing monthly escrows for insurance premiums as long as (i) no event of default has occurred and is continuing; (ii) the Westport Self Storage Portfolio Borrower provides the lender with evidence that the Westport Self Storage Portfolio Properties’ insurance coverage is included in a blanket policy and such policy is in full force and effect; and (iii) the Westport Self Storage Portfolio Borrower pays all applicable insurance premiums and provides the lender with evidence of renewals at least 30 days prior to the expiration date of such policy.

 

Lockbox and Cash Management. Upon the occurrence of a Cash Trap Event Period (as defined below), the loan documents require that the borrower establish a lockbox account and the borrower or property manager must cause all rents to be deposited directly into such lockbox account. During a Cash Trap Event Period, all excess cash flow after payment of all amounts due and payable under the loan documents and all operating expenses will be retained by the lender as additional collateral for the Westport Self Storage Portfolio Mortgage Loan.

 

A “Cash Trap Event Period” will commence upon the earlier of the following; provided, however that the Westport Self Storage Portfolio Borrower has the right to release an individual property from the lien of the Westport Self Storage Portfolio Mortgage Loan to prevent the commencement thereof (see “Partial Release” below):

(i)the occurrence and continuance of an event of default; or

(ii)the debt yield being less than 7.5% at the end of any calendar quarter.

 

A Cash Trap Event Period will end:

with regard to clause (i), upon the cure of such event of default; and

with regard to clause (ii), upon the debt yield being at least 7.5% for two consecutive calendar quarters.

 

Property Management. The Westport Self Storage Portfolio Properties are managed by an affiliate of the Westport Self Storage Portfolio Borrower.

 

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

 

 

WESTPORT SELF STORAGE PORTFOLIO

 

Assumption. The Westport Self Storage Portfolio Borrower has the two-time right, commencing 12 months after loan origination, to transfer the Westport Self Storage Portfolio Properties in their entirety, 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 the transferee’s experience, financial strength and general business standing; and (iii) if required by the lender, rating agency confirmation from DBRS, Fitch and Moody’s that the transfer will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the Series WFCM 2018-C45 certificates.

 

Partial Release. Following the lockout period, the Westport Self Storage Portfolio Borrower may obtain the release of any of the Westport Self Storage Portfolio Properties to (a) prevent the commencement of, or cause the expiration of, a Cash Trap Event Period (see “Lockbox” section) or to otherwise prevent or cure the occurrence of an event of default or (b) in connection with a bona fide sale of any of the Westport Self Storage Portfolio Properties to an unaffiliated third party, with both (a) and (b) being subject to certain conditions, including (i) partial defeasance in an amount equal to or greater than the applicable Partial Release Defeasance Amount (as defined below); (ii) the amortizing net cash flow debt service coverage ratio of the remaining properties is not less than the greater of 1.55x and the net cash flow debt service coverage ratio immediately prior to the release; (iii) the net cash flow debt yield of the remaining properties is not less than the greater of the applicable Partial Release Debt Yield Requirement (as defined below) and the net cash flow debt yield prior to the release; (iv) the loan-to-value ratio of the remaining properties is no greater than the lesser of 60.0% and the loan-to-value ratio prior to the release; (v) delivery of a legal opinion covering compliance in all respects with all laws, rules and regulations governing REMICs, (vi) rating agency confirmation that the sale (as applicable) and release will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the WFCM 2018-C45 certificates, and (vii) if the Fort Worth USSC property remains part of the collateral for the Westport Self Storage Mortgage Loan, the collateral must also include at least four other Westport Self Storage Portfolio Properties.

 

“Partial Release Defeasance Amount” is equal to (i) in the event of a release of the first through the fifth Westport Self Storage Portfolio Properties, 120% of the Allocated Cut-off Date Balance of such release property (identified in “The Properties” section chart above); (ii) in the event of a release of the sixth through the ninth Westport Self Storage Portfolio Properties, 125% of the Allocated Cut-off Date Balance of such release property; and (iii) in the event of a release of the tenth through the twelfth Westport Self Storage Portfolio Properties, 130% of the Allocated Cut-off Date Balance of such release property.

 

“Partial Release Debt Yield Requirement” is equal to (i) in the event of a release of the first through the fifth Westport Self Storage Portfolio Properties, 9.75%, (ii) in the event of a release of the sixth through the ninth Westport Self Storage Portfolio Properties, 10.0% or (iii) in the event of a release of the tenth through the twelfth Westport Self Storage Portfolio Properties, 10.5%.

 

Real Estate Substitution. Not permitted.

 

Subordinate and Mezzanine Indebtedness. Not permitted.

 

Ground Lease. None.

 

Terrorism Insurance. The loan documents require that the “all risk” insurance policy required to be maintained by the borrower provide coverage for terrorism in an amount equal to the full replacement cost of the Westport Self Storage Portfolio Properties. 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 6-month extended period of indemnity.

 

Windstorm Insurance. The Westport Self Storage Portfolio loan documents require windstorm and flood insurance covering the full replacement cost of the Westport Self Storage Portfolio Properties during the loan term. At the time of loan closing, Westport Self Storage Portfolio Properties had windstorm insurance coverage and flood insurance in the maximum limit available under the National Flood Insurance Program together with excess coverage.

 

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

 

 

No. 3 – Parkway Center
 
Loan Information   Property Information
Mortgage Loan Seller: C-III Commercial Mortgage   Single Asset/Portfolio: Single Asset
Credit Assessment (DBRS/Fitch/Moody’s): NR/NR/NR   Property Type: Office
Original Principal Balance: $42,560,000   Specific Property Type: Suburban
Cut-off Date Balance: $42,560,000   Location: Pittsburgh, PA
% of Initial Pool Balance: 6.5%   Size: 588,913 SF
Loan Purpose: Refinance   Cut-off Date Balance Per SF: $72.27
Borrower: PWC Pitt, LLC   Year Built/Renovated(3): Various/2017
Borrower Sponsor: Allan Serviansky, Daniel Warman, Robert Oppenheim, Jeffrey Aeder   Title Vesting: Fee
Mortgage Rate: 5.100%   Property Manager: Self-managed
Note Date: June 8, 2018      
Anticipated Repayment Date: NAP   3rd Most Recent Occupancy (As of): 64.5% (12/31/2015)
Maturity Date: June 11, 2028   2nd Most Recent Occupancy (As of): 72.7% (12/31/2016)
IO Period: 36 months   Most Recent Occupancy (As of): 86.5% (12/31/2017)
Loan Term (Original): 120 months   Current Occupancy (As of): 85.8% (4/30/2018)
Seasoning: 1 month    
Amortization Term (Original): 360 months   Underwriting and Financial Information:
Loan Amortization Type: Interest-only, Amortizing Balloon      
Interest Accrual Method: Actual/360   4th Most Recent NOI (As of): $3,181,233(12/31/2015)
Call Protection: L(25),D(92),O(3)   3rd Most Recent NOI (As of) (4): $3,089,303 (12/31/2016)
Lockbox Type: Hard/Springing Cash Management   2nd Most Recent NOI (As of) (4): $4,332,009 (12/31/2017)
Additional Debt(1): Yes   Most Recent NOI (As of):  $4,581,637 (TTM 4/30/2018)
Additional Debt Type(1): Mezzanine    
      U/W Revenues: $9,194,024
      U/W Expenses: $4,656,855
          U/W NOI: $4,537,169
Escrows and Reserves(2):         U/W NCF: $3,830,474
Type: Initial Monthly Cap (If Any)   U/W NOI DSCR: 1.64x
Taxes $705,609 100,801 NAP   U/W NCF DSCR(1): 1.38x
Insurance 31,673 10,558 NAP   U/W NOI Debt Yield: 10.7%
Replacement Reserves $9,815 $9,815 NAP   U/W NCF Debt Yield(1): 9.00%
TI/LC Reserve $250,000 $49,076 NAP   As-Is Appraised Value: $66,600,000
Quest Leasing Reserve(2) $1,616,313 $13,000 NAP   As-Is Appraisal Valuation Date: March 13, 2018
Deferred Maintenance $254,896 $0 NAP   Cut-off Date LTV Ratio(1): 63.9%
Free Rent Reserve $45,530 $0 NAP   LTV Ratio at Maturity or ARD: 56.7%
                   
(1)See “Subordinate and Mezzanine Indebtedness” section. The Cut-off Date LTV Ratio, U/W NCF DSCR and U/W NCF Debt Yield based on the Parkway Center Mortgage Loan (as defined below), and the Parkway Center Mezzanine Loan (as defined below), together, are 71.0%, 1.18x and 8.11%, respectively.

(2)See “Escrows” section.

(3)The Parkway Center Property consists of 6 separate buildings which were constructed at various times. Building 2 was constructed in 1960, Building 4 in 1961, Building 6 in 1975, Building 7 in 1970, Building 9 in 1962 and Building 10 in 1965. All buildings were renovated in 2017.

(4)The increase from in NOI from 2016 to 2017 is primarily attributable to lease up of two buildings to Alorica in June 2016 and County of Allegheny in June 2017.

 

The Mortgage Loan. The mortgage loan (the “Parkway Center Mortgage Loan”) was originated on June 8, 2018 by C-III Commercial Mortgage LLC. The Parkway Center Mortgage Loan had an original principal balance of $42,560,000, has an outstanding principal balance as of the Cut-off Date of $42,560,000 and has an interest rate of 5.100% per annum. The Parkway Center Mortgage Loan had an initial term of 120 months, has a remaining term of 119 months as of the Cut-off Date and requires payments of interest-only for the first three years of the term, followed by payments on a 30-year amortization schedule through maturity. The Parkway Center Mortgage Loan has a maturity date on June 11, 2028.

 

Following the defeasance lockout period, the Parkway Center Borrower (as defined below) has the right to defease the Parkway Center Mortgage Loan in whole or in connection with a parcel release in part. In addition, the Parkway Center Mortgage Loan is prepayable without penalty on or after March 11, 2028. The defeasance lockout period will expire two years and one day after the closing date of the securitization in July 2018.

 

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

 

 

PARKWAY CENTER

 

Sources and Uses

 

Sources       Uses    
Original loan amount $42,560,000 90.1%   Loan payoff $37,723,904 79.8%
Mezzanine Loan 4,700,000 9.9   Return of Equity 5,099,389 10.8   
        Reserves 2,962,912 6.3   
        Closing costs 1,473,795 3.1   
Total Sources $47,260,000 100.0%   Total Uses $47,260,000 100.0%

 

The Property. The Parkway Center Mortgage Loan is secured by a first mortgage lien on the Parkway Center Borrower’s fee interest in a 6 building 588,349 square-foot, Class B office park located in Pittsburgh, Pennsylvania (the “Parkway Center Property”). The Parkway Center Property is part of a larger office park that has 11 total buildings with a combined NRA of nearly 930,000 SF. The Parkway Center Property is located along GreenTree Road in Pittsburgh, which has direct access to Interstate-376. I-376 is a main east-west running highway that connects the Pittsburgh central business district to the east with the Pittsburgh International Airport to the northwest. The Parkway Center Property is less than a 4-mile drive from downtown Pittsburgh and is less than a 15-mile drive from Pittsburgh International Airport. The 6 separate buildings comprising the Parkway Center Property were constructed at different times. Building 2 was built in 1960, Building 4 in 1961, Building 6 in 1975, Building 7 in 1970, Building 9 in 1962 and Building 10 in 1965. The Parkway Center Property was most recently renovated in 2017. The Parkway Center Property sits on an approximately 19.4-acre site within the Pittsburgh suburb of Green Tree. The Parkway Center Property includes an adjacent three-level parking garage (which along with surface parking and parking granted through easements) has 2,107 total spaces, representing 3.58 spaces per 1000 square feet, and tenant amenities such as a 3,891 square-foot landlord operated fitness center, a 6,895 square-foot food court, a Jitters Café and The Alcove Restaurant. The Parkway Center Property was renovated and repositioned by the Parkway Center Borrower after acquisition in 2014 to bring in new tenancy and keep the Parkway Center Property amenities competitive with other offices in the market.

 

As of April 30, 2018, the Parkway Center Property was 85.8% leased to 53 tenants across a variety of industries. The top five tenants include Quest Diagnostics PA (NYSE: DGX), McKesson (NYSE: MCK), County of Allegheny, Alorica and Comcast Spotlight (Parent Company: Comcast Cable (NASDAQ: CMCSA)). Outside the top five tenants, no other tenant at the Parkway Center Property accounts for more than 2.7% of the net rentable area.

 

The largest tenant at the Parkway Center Property, Quest Diagnostics PA (Moody’s: Baa2, S&P: BBB+) has been in occupancy since 1994, has extended and expanded their lease 3 times previously and recently extended their lease by an additional 10 years from 2019 to 2029. As part of their extension, they also signed a lease for an additional 11,162 SF space located on the third story of Building 4, which will bring their total presence at the Parkway Center Property to 136,197 SF across Buildings 4 and 6. They have one 10-year renewal option at the end of their lease term. According to discussions with the tenant the office and lab at the Parkway Center Property serve a radius of more than 250 miles from Syracuse and Buffalo to central and western Pennsylvania with the nearest facility performing similar services located in Horsham, Pennsylvania. This location also has a relationship with the University of Pittsburgh Medical Center, which per the appraisal, is the largest employer in Allegheny County.

 

The following table presents certain information relating to the tenancy at the Parkway Center Property:

 

Major Tenants

 

Tenant Name

Credit Rating
(Fitch/Moody’s/

S&P)(1)

Tenant
NRSF
% of
NRSF
Annual
U/W Base
Rent PSF(2)
Annual
U/W Base
Rent(2)(3)(4)
% of Total
Annual U/W
Base Rent
Lease
Expiration
Date
             
Major Tenant(3)          
Quest Diagnostics PA BBB/Baa2/BBB+ 136,197 23.1% $10.24 $1,395,265 18.6%    11/30/2029(5)
McKesson BBB+/Baa2/BBB+ 49,413 8.4% $19.00 $938,847 12.5%    12/31/2022 
County of Allegheny NR/A1/AA- 38,853 6.6% $18.18 $706,459 9.4%    6/30/2032(6)
Alorica NR/B1/BB- 38,354 6.5% $11.19 $429,181 5.7%    10/31/2023(7)
Comcast A-/A3/A- 18,476 3.1% $21.32 $393,845 5.3%    6/30/2022(8)
Total Major Tenants 281,293 47.8% $13.74 $3,863,597 51.58%  
             
Non-Major Tenants 223,829 38.0% $16.21 $3,627,455 48.42%  
             
Occupied Collateral Total 505,122 85.8% $14.83 $7,491,052 100.0%    
             
Vacant Space   83,791 14.2%        
               
Collateral Total 588,913 100.0%        
               
                 
(1)Certain ratings are those of the parent company whether or not the parent guarantees the lease.

(2)Annual U/W Base Rent PSF and Annual U/W Base Rent include: (a) contractual rent steps through December 2018; and (b) in the case of an investment grade tenant lease that runs through the loan term, the average rent over the remaining term of that lease through the end of the loan term, totaling approximately $184,257.41 ($118,873.36 for Quest Diagnostics PA and $65,384.05 for the County of Allegheny). Underwritten Base Rent does not include rental income for Sprint and Blue Network.

(3)The Quest Diagnostics PA and Alorica leases are NNN. McKesson, County of Allegheny and Comcast are on modified gross lease structures.

(4)Underwritten Base Rent does not include rental income for Sprint and Blue Network.

(5)Quest Diagnostics PA has two 5 year renewal options.

(6)County of Allegheny has one 10 year renewal option.

(7)Alorica has two 3 year renewal options. Alorica also has a one-time right to terminate its lease effective May 30, 2021 with nine month’s notice and payment of a termination fee equal to unamortized tenant improvements, architectural fees, legal fees and any commissions paid by the landlord, equal to approximately $1,391,115.

(8)Comcast has two, five-year lease renewal options. Comcast has a one-time right to terminate its lease effective July 1, 2020 with nine months’ notice and payment of a termination fee equal to two months’ rent and unamortized leasing costs equal to $1,082,664. Comcast has been a tenant at Parkway Center since 2005.

 

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

 

 

PARKWAY CENTER

 

The following table presents certain information relating to the lease rollover schedule at the Parkway Center 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
% of Total Annual
U/W Base
Rent
Annual
 U/W
Base Rent
 PSF(3)
MTM 0 0 0.0% 0 0.0% $0 0.0% $0.00
2018 8 32,839 5.6% 32,839 5.6% $341,081 4.6% $10.39
2019 6 19,465 3.3% 52,304 8.9% $382,474 5.1% $19.65
2020 8 19,419 3.3% 71,723 12.2% $323,232 4.3% $16.65
2021 8 34,548 5.9% 106,271 18.0% $705,739 9.4% $20.43
2022 11 114,465 19.4% 220,736 37.5% $2,145,523 28.6% $18.74
2023 7 72,280 12.3% 293,016 49.8% $1,031,818 13.8% $14.28
2024 2 22,326 3.8% 315,342

53.5%

$417,460 5.6% $18.70
2025 0 0 0.0% 315,342 53.5% $0 0.0% $0.00
2026 1 6,895 1.2% 322,237 54.7% $42,000 0.6% $6.09
2027 0 0 0.0% 322,237 54.7% $0 0.0% $0.00
2028 0 0 0.0% 322,237 54.7% $0 0.0% $0.00
Thereafter 2 182,885 31.1% 505,122 85.8% $2,101,723 28.1% $11.49
Vacant 0 83,791 14.2% 588,913 100.0% $0 0.0% $0.00
Total/Weighted Average 53 588,913 100.0%     $7,491,052 100.0% $14.83

 

(1)Information obtained from the underwritten rent roll. The rentable conference room, gym space and management office are located in Building 7 totaling 7,835 NRSF and are occupied, but are not on leases. Underwritten Base Rent does not include rental income for Sprint and Blue Network.

(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 U/W Base Rent PSF excludes vacant space.

 

The following table presents historical occupancy percentages at the Parkway Center Property:

 

Historical Occupancy

 

5/28/2014(1)(2)

12/31/2015(1)

12/31/2016(1)

12/31/2017(1)

4/30/2018(3)

71.9% 64.5% 72.7% 86.5% 85.8%
(1)Information obtained from the Parkway Center Borrower.

(2)Occupancy at acquisition.

(3)Information obtained from the 4/30/2018 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.

 

21

 

 

PARKWAY CENTER

 

Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating history and underwritten net cash flow at the Parkway Center Property:

 

Cash Flow Analysis(1)(2)

 

  2015 2016 2017 TTM
4/30/2018
U/W % of U/W Effective Gross Income U/W $ per SF
Base Rent $6,052,101 $5,964,667 $6,885,104 $7,080,716 $7,491,052(1) 81.5% $12.72
Grossed Up Vacant Space 0 0 0 0 2,415,352 26.3   4.10
Total Reimbursables 1,759,057 1,836,596 1,887,954 1,974,642 1,611,945 17.5   2.74
Other Income 90,870 109,749 117,775 91,027 91,027 1.0   0.15
Less Vacancy & Credit Loss

0

0

0

0

(2,415,352)

(26.3)

(4.10)

Effective Gross Income

$7,902,027

$7,911,012

$8,890,833

$9,146,385

$9,194,024

100.0%

$15.61

               
Total Operating Expenses

$4,720,795

$4,821,709

$4,558,824

$4,564,747

$4,656,855

50.7%

$7.91

               
Net Operating Income $3,181,233 $3,089,303(2) $4,332,009(2) $4,581,637 $4,537,169 49.3% $7.70
TI/LC 0 0 0 0 588,913 6.4   1.00
Capital Expenditures 0 0 0 0

117,783

1.3  

0.20

 Net Cash Flow

$3,181,233

$3,089,303

$4,332,009

$4,581,637

$3,830,474

41.7%

$6.50

               
NOI DSCR 1.15x 1.11x 1.56x 1.65x 1.64x    
NCF DSCR 1.15x 1.11x 1.56x 1.65x 1.38x    
NOI DY 7.5% 7.3% 10.2% 10.8% 10.7%    
NCF DY 7.5% 7.3% 10.2% 10.8% 9.0%    

 

(1)U/W Base Rent includes: (a) contractual rent steps through December 2018; and (b) in the case of an investment grade tenant lease that runs through the loan term, the average rent over the remaining term of that lease through the end of the loan term, totaling approximately $184,257.41 ($118,873.36 for Quest Diagnostics PA and 465,384.05 for County of Allegheny). Underwritten Base Rent does not include rental income for Sprint and Blue Network.

(2)The increase in Net Operating Income from 2016 to 2017 was driven partly by Alorica and County of Allegheny executing leases for 38,354 and 38,853 square feet in June 2016 and June 2017, respectively. This additional leasing accounted for approximately $1,000,000 in base rent.

 

Appraisal. As of the appraisal valuation date of March 13, 2018 the Parkway Center Property had an “as-is” appraised value of $66,600,000.

 

Environmental Matters. According to a Phase I environmental site assessment dated December 18, 2017, there was no evidence of any recognized environmental conditions at the Parkway Center Property.

 

Market Overview and Competition. The Parkway Center Property is located in the South Pittsburgh/Route 19 Office submarket of the Pittsburgh market. According to the appraisal, the South Pittsburgh/Route 19 submarket had, as of year end 2017, approximately 4.9 million square feet of office inventory, average asking rents of $18.93 per square foot and a vacancy rate of 6.7%. The fourth quarter 2017 vacancy rate (6.5%) is consistent with last year (6.7%) and substantially lower than the average vacancy over the past ten years (10.7%). According to the appraisal, the historic vacancy trend indicates stable long-term demand for office space in the South Pittsburgh/Route 19 submarket. The most recent vacancy trends demonstrate superior market conditions in comparison to the historic trend and suggest continued stability moving forward. According to the appraisal, the 2017 estimated population within a three-mile radius of the Parkway Center Property was 131,138, while the 2017 estimated median household income within the same radius was $50,774.

 

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

 

 

PARKWAY CENTER

 

The following table presents certain information relating to comparable office leases for the Parkway Center Property:

 

Comparable Leases(1)

 

Property Name/Location Year Built Occupancy Distance from Subject Tenant Name Lease Date/Term Lease Area (SF) Annual Base Rent PSF Lease Type

Greentree Commons

Pittsburgh, PA

1987 84.0% 0.8 miles NAV NAV 11,825 $22.00 MG

Foster Plaza 9

Pittsburgh, PA

1989 82.1% 1.3 miles Stantec

Nov. 2017 /

3Yrs.

1,852 $23.50 MG

Cherrington Corporate Center 700

Pittsburgh, PA

1993 100.0% 12.3 miles Chevron Corporation

July 2015 /

10 Yrs.

120,000 $22.50 FSG

Parkway Center 11

Pittsburgh, PA

1989 82.9% 0.0 miles PA Department of Revenue

Oct. 2017 /

10 Yrs.

6,112 $19.50 MG

Landmarks Building

Pittsburgh, PA

1900 91.9% 2.0 miles NAV

Mar. 2017/

3 Yrs.

1,536 $23.00 MG

 

(1)Information obtained from the appraisal and third party reports.

 

The Borrower. The borrower under the Parkway Center Mortgage Loan is PWC Pitt, LLC (the “Parkway Center Borrower”), a recycled Delaware limited liability company and a special purpose entity with two independent directors. The Parkway Center Borrower is a recycled SPE that purchased the Parkway Center Property in 2014 and 7 months later sold off one building (Building 1) to a single tenant user. Legal counsel to the Parkway Center Borrower delivered a non-consolidation opinion in connection with the origination of the Parkway Center Mortgage Loan. Allan Serviansky, Daniel Warman, Robert Oppenheim and Jeffrey Aeder are the guarantors of certain non-recourse carveouts under the Parkway Center Mortgage Loan.

 

The Borrower Sponsor. The borrower sponsors and carveout guarantors are Allan Serviansky, Daniel Warman, Robert Oppenheim and Jeffrey Aeder. Collectively Mr. Serviansky, Mr. Warman, Mr. Oppenheim and Mr. Aeder have more than 50 years of real estate experience. Mr. Warman is the founder of Market Street Real Estate Partners, a privately-held real estate investment and management firm headquartered in Miami, Florida. Prior to forming Market Street, Mr. Warman was most recently a senior member of Bayview’s commercial loan acquisition and asset management team. Mr. Oppenheim was head of a specialized group responsible for restructuring non-performing and sub-performing commercial loans and oversaw the property management division. Mr. Oppenheim was also a member of the investment committee for the Bayview Opportunity Fund. Mr. Oppenheim is originally a native of Pittsburgh and earned his Bachelor of Science degree from Carnegie Mellon University. Robbie Oppenheim, Daniel Warman and Allan Serviansky together have ownership interests in 10 properties with a total net rentable area of over 1.17 million SF across the states of Pennsylvania, California, Florida, Texas, Kentucky and Rhode Island. Mr. Aeder co-founded JDI Realty in 1988 and currently serves as Chairman. JDI Realty is a private real estate investment firm.

 

Escrows. The related loan documents provide for upfront escrows in the amount of $705,609 for real estate taxes, $31,673 for insurance premiums, $9,815 for Replacement Reserves, $1,616,313 for the Quest leasing reserve for tenant improvements awarded as part of the renewal and expansion of the Quest Diagnostics PA lease, $254,896 for deferred maintenance and $45,530 for a free rent reserve. The loan documents also provide for ongoing monthly escrow deposits of $100,801 for real estate taxes, $10,558 for insurance premiums, $9,815 for replacement reserves, $49,076 for TI/LC reserve and $13,000 for the Quest leasing reserve from months 1 through 77 of the loan term.

 

Lockbox and Cash Management. The Parkway Center Mortgage Loan is structured with a hard lockbox and springing cash management. Upon the occurrence and during the continuance of a Trigger Period (as defined below) the Parkway Center Borrower is required to set up a lender-controlled lockbox account. All rents and payments (including credit card receivables) are required to be deposited by the Parkway Center Borrower into the applicable lender-controlled lockbox account and swept each business day into the applicable borrower operating account, unless a Trigger Period has occurred and is continuing, in which case such funds are required to be swept each business day into the applicable lender-controlled cash management account and disbursed on each payment date in accordance with the related loan documents. Upon the occurrence and during the continuance of a Trigger Period, all excess cash flow is required to be swept into the applicable cash management account and held by the lender as additional collateral for the Parkway Center Mortgage Loan.

 

A “Trigger Period” will commence upon the earliest of the following:

 

(i)Event of Default;

(ii)the NCF debt service coverage ratio for the Parkway Center Mortgage Loan being below 1.15x;

(iii)McKesson, Allegheny County, Alorica, and/or Quest fails to cure an event of default under the Parkway Center Mortgage Loan for more than 30 days;

(iv)the property manager has become insolvent or a petition in bankruptcy has been filed by or against the property manager, and the Parkway Center Borrower has not replaced the property manager within thirty (30) days after the earlier of the date of such insolvency or the filing of such bankruptcy; and

(v)McKesson, County of Allegheny, Alorica, and/or Quest Diagnostics PA has (a) become insolvent or petition in bankruptcy has been filed by or against the Parkway Center Borrower and/or Quest Diagnostics PA, (b) ceased all or substantially all of its business operations at its leased premises at the Parkway Center Property for a period in excess of sixty (60) consecutive days (i.e., “goes dark”), (c) fails to cure a default under its lease for more than thirty (30) days, and/or (d) fails to provide notice to renew is lease as required therein.

 

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.

 

23

 

 

PARKWAY CENTER

 

A “Trigger Period” will end:

 

(a)with regard to clause (i) upon Lender’s written waiver of such Event of Default; and

(b)with regards to clause (ii) upon the NCF debt service coverage ratio for the Parkway Center Mortgage Loan being equal to or greater than 1.25x for two consecutive calendar quarters.

 

Property Management. The Parkway Center Property is managed by MSREP Property Management, LLC, an affiliate of the Parkway Center Borrower.

 

Assumption. The Parkway Center Borrower has an unlimited right to transfer the Parkway Center Property, provided that certain conditions are satisfied, including, but not limited to: (i) no mortgage loan default or event of default has occurred and is continuing; (ii) the lender’s reasonable determination that the proposed transferee and guarantor satisfy the lender’s credit review and underwriting standards, taking into consideration the transferee’s experience, financial strength and general business standing; (iii) execution of a recourse guaranty and an environmental indemnity by an acceptable replacement guarantor; (iv) receipt of a rating agency confirmation from the applicable rating agencies.

 

Partial Release. Following the lockout period, the borrower is permitted to obtain a partial release of any Building of the Parkway Center Property (with the exception of Building 7) (the “Parkway Center Release Parcel”) from the lien of the Parkway Center Mortgage Loan subject to certain conditions, including, but not limited to: (i) partial defeasance in an amount equal to the 125.0% of the allocated loan amount for the Parkway Center Release Parcel; (ii) the debt yield of the undefeased portion of the Parkway Center Mortgage Loan based on the remaining portion of the Parkway Center Property is not less than 9.75%; (iii) the debt service coverage ratio of the remaining portion of the Parkway Center Property is not less than the greater of 1.35x and the debt service coverage ratio as of the notice date and the release date and (iv) the loan-to-value ratio of the undefeased portion of the Parkway Center Mortgage Loan based on the remaining portion of the Parkway Center Property is no greater than the lesser of 70% and the loan-to-value ratio of the Parkway Center Mortgage Loan as of the notice date and the release date.

 

Real Estate Substitution. Not permitted.

 

Subordinate and Mezzanine Indebtedness. RCC Real Estate, Inc. funded $4,700,000 of mezzanine debt (“Parkway Center Mezzanine Loan”). The Parkway Center Mezzanine loan has a 10.0% coupon and pays interest only for the entire term. The Parkway Center Mezzanine loan is coterminous with the Parkway Center Mortgage Loan. Including the Parkway Center Mezzanine Loan, the cumulative cut-off date LTV, cumulative UW NCF DSCR and cumulative UW NOI Debt Yield are 71.0%, 8.11% and 9.60%. The mortgage lenders and mezzanine lenders have entered into an intercreditor agreement. The rights of the lender of the Parkway Center Mezzanine Loan are further described under Description of the Mortgage Pool – Additional Indebtedness – Mezzanine Indebtedness” in the Preliminary Prospectus.

 

Ground Lease. Not Applicable

 

Terrorism Insurance. The Parkway Center Mortgage Loan documents require that the “all risk” insurance policies required to be maintained by the borrower provide coverage for terrorism in an amount equal to the full replacement cost of the Parkway Center Property, or that if the Terrorism Risk Insurance Program Reauthorization Act is no longer in effect and such policies contain an exclusion for acts of terrorism, the borrower will obtain, to the extent available, a stand-alone policy that provides the same coverage as the policies would have if such exclusion did not exist.

 

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.

 

24

 

 

No. 4 – 1801 L Street
 
Loan Information   Property Information
Mortgage Loan Seller: Well Fargo Bank, National Association   Single Asset/Portfolio: Single Asset

Credit Assessment

(DBRS/Fitch/Moody’s):

NR/NR/NR   Property Type: Multifamily
Original Principal Balance: $38,000,000   Specific Property Type: Low Rise
Cut-off Date Balance: $38,000,000   Location: Sacramento, CA
% of Initial Pool Balance: 5.8%   Size: 176 Units
Loan Purpose: Refinance  

Cut-off Date Balance Per Unit:

$215,909
Borrower Name: 1801 L Street Associates, a California Limited Partnership   Year Built/Renovated: 2007/NAP
Borrower Sponsors: Sotiris K. Kolokotronis; Matina R. Kolokotronis   Title Vesting: Fee
Mortgage Rate: 4.845%   Property Manager: FPI Management, Inc.
Note Date: June 13, 2018   4th Most Recent Occupancy(As of)(3): 95.5% (12/31/2014)
Anticipated Repayment Date: NAP   3rd Most Recent Occupancy (As of)(3): 95.7% (12/31/2015)
Maturity Date: July 11, 2028   2nd Most Recent Occupancy (As of)(3): 95.3% (12/31/2016)
IO Period: 120 months   Most Recent Occupancy (As of)(3): 96.3% (12/31/2017)
Loan Term (Original): 120 months   Current Occupancy (As of)(3): 94.3% (4/23/2018)
Seasoning: 0 months      
Amortization Term (Original): NAP   Underwriting and Financial Information:
Loan Amortization Type: Interest-only, Balloon   4th Most Recent NOI (As of): $2,691,028 (12/31/2015)
Interest Accrual Method: Actual/360   3rd Most Recent NOI (As of): $2,751,164 (12/31/2016)
Call Protection: L(24),D(92),O(4)   2nd Most Recent NOI (As of): $2,951,790 (12/31/2017)
Lockbox Type: Springing   Most Recent NOI (As of): $2,973,148 (TTM 4/30/2018)
Additional Debt(1): Yes      
Additional Debt Type(1): Subordinate   U/W Revenues: $4,789,700
      U/W Expenses: $1,721,068
      U/W NOI: $3,068,632
Escrows and Reserves(2):     U/W NCF: $3,007,209
      U/W NOI DSCR: 1.64x
Type: Initial Monthly Cap (If Any)   U/W NCF DSCR: 1.61x
Taxes $117,936 $29,484 NAP   U/W NOI Debt Yield: 8.1%
Insurance $54,120 $4,510 NAP   U/W NCF Debt Yield: 7.9%
Immediate Repair Reserve $63,232 $0 NAP   As-Is Appraised Value: $60,260,000
Replacement Reserves $0 $4,216 NAP   As-Is Appraisal Valuation Date: April 9, 2018
Leasing Reserves $160,000 $903 NAP   Cut-off Date LTV Ratio(1): 63.1%
Economic Holdback Reserve $700,000 $0 NAP   LTV Ratio at Maturity or ARD(1): 63.1%
             
               
(1)See “Subordinate and Mezzanine Indebtedness” section. All statistical information related to the balance per square foot, loan-to-value (“LTV”) ratios, debt service coverage ratios and debt yields are based solely on the 1801 L Street Mortgage Loan. The Subordinate Agency Loan (as defined below) has a current balance of approximately $6,244,117 and, with accrued interest, is projected to have a total outstanding balance of approximately $8,649,945 at the Maturity Date of the 1801 L Street Mortgage Loan. Assuming full interest deferral (as outlined in the “Subordinate and Mezzanine Indebtedness” section), the Cut-off Date LTV Ratio and LTV Ratio at Maturity based on the 1801 L Street Mortgage Loan and Subordinate Agency Loan are 73.4% and 77.4%, respectively.

(2)See “Escrows” section.

(3)See “Historical Occupancy” section.

 

The Mortgage Loan. The 1801 L Street mortgage loan (the “1801 L Street Mortgage Loan”) is evidenced by a single promissory note secured by a first mortgage encumbering the fee interest in a multifamily property located in Sacramento, California (the “1801 L Street Property”). The 1801 L Street Mortgage Loan was originated on June 13, 2018 by Wells Fargo Bank, National Association. The 1801 L Street Mortgage Loan had an original principal balance of $38,000,000, has an outstanding principal balance as of the Cut-off Date of $38,000,000 and accrues interest at an interest rate of 4.845% per annum. The 1801 L Street 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 through the full term of the 1801 L Street Mortgage Loan. The 1801 L Street Mortgage Loan matures on July 11, 2028.

 

Following the lockout period, on any date before March 11, 2028, the borrower has the right to defease the 1801 L Street Mortgage Loan in whole, but not in part. The 1801 L Street Mortgage Loan is prepayable without penalty on or after March 11, 2028.

 

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.

 

25

 

 

1801 L STREET

 

Sources and Uses

 

Sources         Uses      
Original loan amount $38,000,000   100.0%   Refinance $34,520,353   90.8%
          Reserves 1,095,288   2.9
          Closing costs 785,449   2.1
              Return of equity 1,598,910   4.2
Total Sources $38,000,000   100.0%   Total Uses $38,000,000   100.0%

 

The Property. The 1801 L Street Property is a class A, four-story multifamily property located in Sacramento, California. Constructed in 2007 by the borrower sponsor for a total cost of approximately $45.3 million, the 1801 L Street Property comprises 176 unfurnished apartment units and also contains 10,840 square feet of ground floor retail space (11.5% of the underwritten effective gross income). The apartment units include 38 studio units, 97 one-bedroom units, 39 two-bedroom units, and two three-bedroom units. Common area amenities at the 1801 L Street Property include an outdoor swimming pool, spa, fitness center, and storage closets. Unit amenities include wood flooring, in-unit washer/dryer, walk-in closet, balcony, granite countertops, garbage disposal, and stainless steel appliances including an oven/range combination, dishwasher, and refrigerator/freezer. As of April 23, 2018, the multifamily component of the 1801 L Street Property was 94.3% occupied and has averaged 95.4% occupancy since 2014. As of April 23, 2018, the retail space was 71.1% leased by six tenants. There is an executed letter of intent for the remaining 28.9% of the retail net rentable area; however, the lender provides no assurance that such letter of intent will result in a lease being executed.

 

The 1801 L Street Property contains a secured access parking garage with 160 parking spaces, resulting in a parking ratio of 0.9 spaces per unit. The parking is rented to residents on a monthly basis ($175 per month for an unreserved space or $250 per month for a reserved space) and is also used as hourly and event parking pursuant to an agreement with the City of Sacramento.

 

In conjunction with a subordinate agency loan from the Housing Authority of the City of Sacramento (see “Subordinate and Mezzanine Indebtedness” section), the 1801 L Street Property is subject to regulatory agreements expiring in 2032 and 2057 with The Redevelopment Agency of the City of Sacramento and the California Tax Credit Allocation Committee. As part of the agreements, the 1801 L Street Property is required to allocate 36 Below-Market-Rate (“BMR”) units to Very Low Income residents (tenants earning less than 50% of the Sacramento Area Median Income (“AMI”)) and 9 BMR units to Moderate Income residents (tenants earning less than 110% of the AMI). The 45 BMR units are 100.0% leased with a waiting list of more than 800 people as of May 31, 2018, according to the property manager. The 1801 L Street Property receives a 20.45% tax exemption so long as 36 BMR units are allocated to Very Low Income residents. Twenty of the BMR units at the 1801 L Street Property are subject to an agreement expiring in 2032, and the remaining 25 BMR units are subject to an agreement expiring in 2057.

 

The following table presents certain information relating to the unit mix of the 1801 L Street Property:

 

Unit Mix Summary(1)

 

Unit Type Total No. of Units % of Total Units Average Unit Size (SF) No. of BMR Units Average Monthly Rent per Unit (Market Rate Units) Average Monthly Rent per Unit (BMR)
Studio / 1 Bathroom 38 21.6% 459 12 $1,521 $825(2)
1 Bedroom / 1 Bathroom 97 55.1% 756 24 $2,083 $762(3)
2 Bedroom / 2 Bathroom 39 22.2% 1,057 9 $2,569 $907(4)
3 Bedroom / 2 Bathroom 2 1.1% 1,885 0 $4,473 NAP
Total/Weighted Average 176 100.0% 772 45 $2,126 $808
(1)Information obtained from the appraisal and underwritten rent roll.

(2)Eight BMR units are rented at an average rate of $575 per month to Very Low Income tenants, and four BMR units are rented at an average rate of $1,325 to Moderate Income tenants.

(3)20 BMR units are rented at an average rate of $635 per month to Very Low Income tenants, and four BMR units are rented at an average rate of $1,400 to Moderate Income tenants.

(4)Eight BMR units are rented at an average rate of $793 per month to Very Low Income tenants, and one BMR unit is rented at $1,820 to a Moderate Income tenant.

 

The following table presents historical occupancy percentages at the 1801 L Street Property:

 

Historical Occupancy

 

12/31/2014(1)(2)

12/31/2015(1)(2)

12/31/2016(1)(2)

12/31/2017(1)(2)

4/23/2018(2)(3)

95.5% 95.7% 95.3% 96.3% 94.3%

 

(1)Information obtained from the borrower.

(2)Occupancy shown above represents the multifamily component of the 1801 L Street Property. Historical occupancy of the retail portion is as follows: 96.5% in 2014; 100.0% in 2015; 99.9% in 2016; and 76.0% in 2017. As of April 23, 2018, the retail component was 71.1% occupied by six tenants. There is an executed letter of intent for the remaining 28.9% of the net rentable area of the retail space; however, the lender provides no assurance that such letter of intent will result in a lease being executed.

(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.

 

26

 

 

1801 L STREET

 

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 1801 L Street Property:

 

Cash Flow Analysis

 

  2015 2016 2017 TTM 4/30/2018 U/W % of U/W Effective Gross Income

U/W $

per Unit

Base Rent $3,067,566 $3,250,777 $3,370,316 $3,415,454 $3,519,180     73.5% $19,995
Grossed Up Vacant Space 0 0 0 0 $105,900     2.2 602
Retail Income 559,693 399,929 460,237 466,571 549,430(1) 11.5 3,122
Parking Income 348,415 484,489 512,133 525,080 525,080    11.0 2,983
Other Income(2) 242,710 283,722 278,233 271,364 271,364    5.7 1,542
Less Vacancy & Credit Loss

0

0

0

0

(181,254)(3)

(3.8)

(1,030)

               
Effective Gross Income $4,218,384 $4,418,917 $4,620,919 $4,678,469 $4,789,700    100.0% $27,214
               
Total Operating Expenses $1,527,355 $1,667,754 $1,669,129 $1,705,321 $1,721,068    35.9% $9,779
 

 

 

 

 

 

 

 

Net Operating Income $2,691,028 $2,751,164 $2,951,790 $2,973,148 $3,068,632    64.1% $17,435
Capital Expenditures 0 0 0 0 50,583    1.1 287
TI/LC

0

0

0

0

10,840   

0.2

62

Net Cash Flow $2,691,028 $2,751,164 $2,951,790 $2,973,148 $3,007,209    62.8% $17,086
               
NOI DSCR 1.44x 1.47x 1.58x 1.59x 1.64x    
NCF DSCR 1.44x 1.47x 1.58x 1.59x 1.61x    
NOI DY 7.1% 7.2% 7.8% 7.8% 8.1%    
NCF DY 7.1% 7.2% 7.8% 7.8% 7.9%    

 

(1)U/W Retail Income includes $93,840 of base rent, plus applicable reimbursements, attributed to an executed letter of intent related to the currently vacant retail space totalling 3,128 square feet. The lender provides no assurance that such letter of intent will result in a lease being executed, and the 1801 L Street Mortgage Loan is structured with a $700,000 economic holdback, which the lender is required to apply to pay down the principal balance of the mortgage loan if a lease is not executed on such currently vacant retail space (along with additional conditions fully outlined in the “Escrows” section) by June 1, 2021. Removing credit for the aforementioned letter of intent from the U/W would result in an U/W Net Cash Flow of $2,950,525, which would reflect a NCF DSCR and NCF DY of 1.58x and 7.8%, respectively, based on the $38,000,000 Original Principal Balance of the 1801 L Street Mortgage Loan and a NCF DSCR and NCF DY of 1.58x and 7.9%, respectively, based on the $37,300,000 net-of-holdback principal balance (Original Principal Balance minus the $700,000 economic holdback).

(2)Other income includes laundry, storage, application fees, pet fees, and other revenue.

(3)The underwritten economic vacancy is 5.0%. The multifamily component of the 1801 L Street Property was 94.3% physically occupied and 97.1% economically occupied as of April 23, 2018.

 

Appraisal. As of the appraisal valuation date of April 9, 2018, the 1801 L Street Property had an “as-is” appraised value of $60,260,000.

 

Environmental Matters. According to a Phase I environmental site assessment dated April 19, 2018, there was no evidence of any recognized environmental conditions at the 1801 L Street Property.

 

Market Overview and Competition. The 1801 L Street Property is located in downtown Sacramento, California, approximately 11.2 miles southeast of the Sacramento International Airport. Sacramento is the capital of the state of California and is located at the nucleus of several major freeways, including U.S. Highway 50, State Highway 99, and Interstates 5 and 80. These freeways provide access to the San Francisco Bay Area to the west, Southern California to the south, Oregon and Washington to the north, and Nevada to the east. The Sacramento metropolitan statistical area (“MSA”) has a population of approximately 2.1 million people and its economy is primarily driven by the government sector, with federal, state and local government being the largest employers in the MSA, followed by the agriculture, education and healthcare industries. Additionally, the inland Port of West Sacramento’s deep water port connecting to San Francisco Bay via a 43-mile channel provides transportation services for goods grown and produced along the farming communities surrounding the MSA.

 

Approximately 1.1 miles west of the 1801 L Street Property is the Golden 1 Center, home of the Sacramento Kings (the “Kings”) of the National Basketball Association (“NBA”). Matina Kolokotronis, one of the borrower sponsors of the 1801 L Street Mortgage Loan, is the Chief Operating Officer (“COO”) of the Kings and has been involved in the development of Golden 1 Center, as well as its adjacent approximately $500 million mixed-use development project, Downtown Commons. Golden 1 Center opened in September 2016 and is recognized as being a “green” and technologically advanced arena. According to a third party market report, since the opening of Golden 1 Center, 11 Downtown properties with more than 1.3 million square feet of office space have been sold, totaling more than $359 million with additional development projects currently under construction and in the planning stages. In its inaugural year, Golden 1 Center hosted more than 350 events, including 161 ticketed events (43 concerts, 34 family shows, 16 graduations, 25 live sporting events and 43 Kings’ basketball games), as well as hundreds of community and private events. Additionally, the NCAA March Madness tournament returned to Sacramento in 2017 for the first time in 10 years.

 

According to the appraisal, the estimated 2017 population within a three- and five-mile radius of the 1801 L Street Property was 140,969 and 360,886, respectively; while the estimated average household income within the same radii was $79,399 and $71,173, respectively. According to a third party market report, Sacramento and the greater Northern California region are experiencing an influx of people, primarily from the Bay Area, moving to the region in search of more affordable living. According to a third party market report as of December 2017, more than 17,000 people commute from Sacramento to the Bay Area for work.

 

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.

 

27

 

 

1801 L STREET

 

According to a third party market research report, the 1801 L Street Property is located in the Downtown submarket of the Sacramento multifamily market. As of year-end 2017, the class A submarket reported total inventory of 1,457 multifamily units with a 4.9% vacancy rate and average monthly asking rent of $1,882 with projected rent growth of 4.8% over the next 12 months.

 

The following table presents certain information relating to comparable multifamily properties for the 1801 L Street Property:

 

Competitive Set(1)

 

  1801 L Street (Subject) Legado de Ravel Apartments EVIVA Midtown Fremont Mews 16 Powerhouse 800 J Lofts Linq Midtown
Location Sacramento, CA Sacramento, CA Sacramento, CA Sacramento, CA Sacramento, CA Sacramento, CA Sacramento, CA
Distance to Subject -- 0.5 miles 0.4 miles 0.6 miles 0.5 miles 0.9 miles 1.5 miles
Property Type Low Rise Mid Rise Mid Rise Garden Mid Rise Mid Rise Garden
Year Built/Renovated 2007/NAP 2014/NAP 2016/NAP 2006/NAP 2015/NAP 2006/NAP 2010/NAP
Number of Units 176 84 118 70 50 225 275
Average Monthly Rent (per unit)              
Studio $1,521(2) NAP $1,900 $1,762 NAP $1,317 $1,674
1 Bedroom $2,083(2) $1,792 $2,056 $2,000 $2,450 $2,120 $1,965
2 Bedroom $2,569(2) $2,378 $2,970 $2,399 $3,694 $2,633 $2,324
3 Bedroom $4,473(2) NAP NAP NAP NAP NAP NAP
Occupancy 94.3% 98.8% 94.9% 95.7% 100.0% 96.0% 96.4%

 

(1)Information obtained from the appraisal and underwritten rent roll.

(2)The rents shown represent the market rate units at the 1801 L Street Property. See “Unit Mix Summary” above for information related to the BMR units at the 1801 L Street Property.

 

The Borrower. The borrower is 1801 L Street Associates, a California Limited Partnership, a single purpose entity with one independent director. Legal counsel to the borrower delivered a non-consolidation opinion in connection with the origination of the 1801 L Street Mortgage Loan. Sotiris K. Kolokotronis and Matina R. Kolokotronis, each an individual, individually and/or collectively, are the guarantors of certain nonrecourse carveouts under the 1801 L Street Mortgage Loan.

 

The Borrower Sponsors. The borrower sponsors are Sotiris K. Kolokotronis and Matina R. Kolokotronis, husband and wife and long-time Sacramento residents. Sotiris Kolokotronis is the founder and owner of SKK Developments, a real estate firm that specializes in mixed-use, multi-family and land development projects. Mr. Kolokotronis began his real estate career in 1985 and has been involved in developing more than 7,000 residential home sites, 2,000 single-family homes, 1,500 multi-family units, and 300,000 square feet of commercial buildings in Northern California, Colorado, Nevada, and Oregon that are valued at more than $1.0 billion. Mr. Kolokotronis is currently involved in the development of multiple projects in Sacramento’s urban core valued at approximately $225 million. Mr. Kolokotronis is also involved in the planning and entitlement of approximately 3,000 acres in Sacramento. Mr. Kolokotronis was subjected to a foreclosure in 2010 and personal bankruptcy 2012, which have both been resolved. See “Description of the Mortgage Pool— Loan Purpose; Default History, Bankruptcy Issues and Other Proceedings” in the Preliminary Prospectus.

 

As previously mentioned, Mrs. Kolokotronis is the COO of the Kings, has worked for the Kings for 21 years, and is the only woman in the NBA to hold the titles of both Chief Operating Officer and President of Business Operations. Mrs. Kolokotronis has been involved in the development of the Kings’ new downtown arena, Golden 1 Center, as well as its adjacent $500 million mixed-use development project, Downtown Commons. Together, Golden 1 Center and Downtown Commons are part of nearly $2.0 billion in investment in downtown Sacramento since 2015.

 

Escrows. The loan documents provide for upfront reserves of $117,936 for real estate taxes, $54,120 for insurance, $63,232 for immediate repairs, and $160,000 for outstanding tenant improvements and leasing commissions (“TI/LC”). The loan documents also provide for ongoing monthly reserves of $29,484 for real estate taxes, $4,510 for insurance, $4,216 for replacement reserves, and $903 for general TI/LCs.

 

The 1801 L Street Mortgage Loan is structured with a $700,000 upfront economic holdback. The loan documents require the lender to disburse the economic holdback reserve funds to the borrower if the following conditions are satisfied on or before June 1, 2021: (i) no Cash Trap Event Period (as defined below) then exists; (ii) the net cash flow debt yield is equal to or greater than 7.9%; (iii) the net cash flow debt service coverage ratio (calculated based on a hypothetical 30-year amortization schedule) is equal to or greater than 1.20x; (iv) lender has reasonably determined there have been no material changes that could adversely impact the 1801 L Street Property; and (v) the currently vacant retail space, totaling 3,128 square feet, is leased with such tenant being in occupancy, paying full, unabated rent, with all TI/LCs having been paid. If the preceding conditions are not satisfied as of June 1, 2021, the lender is required to apply the economic holdback reserve funds to pay down the principal balance of the 1801 L Street Mortgage Loan. There is an executed letter of intent for the currently vacant retail space, which is included in the lender’s underwritten net cash flow ($93,840 of annual rent included in Retail Income); however, the lender provides no assurance that such letter of intent will result in a lease being executed.

 

Lockbox and Cash Management. Upon the occurrence and continuance of a Cash Trap Event Period (as defined below), the 1801 L Street Mortgage Loan requires the borrower to establish a lender-controlled lockbox account and instruct tenants to deposit rents into such lockbox account. All funds in the lockbox account are required to be swept each business day into the cash management account controlled by the lender and disbursed on each payment date in accordance with the loan documents. During a Cash Trap Event Period, all excess funds are required to be swept to an excess cash flow subaccount controlled by the lender.

 

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.

 

28

 

 

1801 L STREET

 

A “Cash Trap Event Period” will commence upon the earlier of the following:

 

(i)the occurrence of an event of default; or

(ii)the net cash flow debt service coverage ratio falling below 1.45x at the end of any calendar quarter.

 

A Cash Trap Event Period will end upon the occurrence of the following:

 

with regard to clause (i), the cure of such event of default; or

with regard to clause (ii), the net cash flow debt service coverage ratio being equal to or greater than 1.55x for two consecutive calendar quarters.

 

Property Management. The 1801 L Street Property is managed by FPI Management, Inc. (“FPI”), a privately owned, third party multifamily property manager. FPI manages more than 100,000 units located in 13 states, and its portfolio consists of approximately 60% market rate units and 40% affordable units.

 

Assumption. The borrower has the two-time right to transfer the 1801 L Street 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 the transferee’s experience, financial strength and general business standing; and (iii) if required by the lender, rating agency confirmation from DBRS, Fitch and Moody’s that the transfer will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the Series WFCM 2018-C45 certificates.

 

Partial Release. Not permitted.

 

Real Estate Substitution. Not permitted.

 

Subordinate and Mezzanine Indebtedness. The Housing Authority of the City of Sacramento (the “Subordinate Lender”), as successor to the Redevelopment Agency of the City of Sacramento, funded a $4,750,000 subordinate agency loan (the “Subordinate Agency Loan”) to 1801 L Street Associates in January 2006. The Subordinate Agency Loan is secured by the 1801 L Street Property. The Subordinate Agency Loan accrues interest at a rate of 4.000% per annum, however, payments are deferred, and interest accrues, unless the 1801 L Street Property’s average net operating income (“NOI”) meets or exceeds certain thresholds as tested every five years, on a trailing five-year basis, beginning in 2021. The trailing five-year NOI thresholds in 2021, 2026 and 2031 are $3,409,078, $4,217,573 and $5,210,656, respectively. If the 2021 NOI threshold is met (based on the trailing five-year test period ending December 31, 2020), monthly payments are required in the amount of $24,167 in 2021 through 2025, $43,333 in 2026 through 2030, $78,000 in 2031 through 2035 and $83,799 due on January 1, 2036. If the 2026 NOI threshold is met (based on the trailing five-year test period ending December 31, 2025), monthly payments are required in the amount of $43,333 in 2026 through 2030, $103,583 in 2031 through 2035 and $105,715 due on January 1, 2036. If the 2031 NOI threshold is met (based on the trailing five-year test period ending December 31, 2030), monthly payments are required in the amount of $168,417 in 2031 through 2035, and $174,044 due on January 1, 2036.

 

As of June 2018, the Subordinate Agency Loan has accrued interest of $1,494,117, bringing the total balance of the Subordinate Agency Loan to approximately $6,244,117. The Subordinate Agency Loan has a maturity date of January 1, 2036. Assuming the NOI threshold is not satisfied in 2021, 2026, or 2031, no payments will be required until the Subordinate Agency Loan matures in 2036, at which point the balance, including principal and accrued interest, would be approximately $10,260,000. If the NOI threshold is not satisfied in 2021 or 2026, the total balance of the Subordinate Agency Loan, including principal and accrued interest, at the maturity date of the 1801 L Street Mortgage Loan in 2028 would be approximately $8,649,945.

 

The lender of the 1801 L Street Mortgage Loan (the “Senior Lender”) has the right of notice and the right to cure for any defaults under the Subordinate Agency Loan agreement. The Subordinate Agency Loan is fully subordinate to the 1801 L Street Mortgage Loan pursuant to the 1801 L Street Subordination Agreement, and a default under the Subordinate Agency Loan agreement is a default under the 1801 L Street Mortgage Loan documents. A foreclosure of the 1801 L Street Mortgage Loan would extinguish the deed of trust securing the Subordinate Agency Loan, and the Senior Lender or any purchaser of the 1801 L Street Mortgage Loan at foreclosure would take the 1801 L Street Property free and clear. In addition, the associated Affordable Housing Agreement will automatically terminate (although Federal law requires the continuation of affordable housing for three years after the termination of the Affordable Housing Agreement).

 

Ground Lease. None.

 

Terrorism Insurance. The loan documents require that the “all risk” insurance policies required to be maintained by the borrower provide coverage for terrorism in an amount equal to the full replacement cost of the 1801 L 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, together with a six-month extended period of indemnity.

 

Earthquake Insurance. The loan documents do not require earthquake insurance. The seismic report indicated a probable maximum loss for the 1801 L Street Property of 10.0%.

 

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.

 

29

 

 

No. 5 – ExchangeRight Net Leased Portfolio #21
 
Loan Information   Property Information
Mortgage Loan Seller: Barclays Bank PLC   Single Asset/Portfolio: Portfolio

Credit Assessment

(DBRS/Fitch/Moody’s):

NR/NR/NR   Property Type: Various
Original Principal Balance: $37,795,000   Specific Property Type: Various
Cut-off Date Balance: $37,795,000   Location(3): Various
% of Initial Pool Balance: 5.7%   Size: 263,629 SF
Loan Purpose: Acquisition   Cut-off Date Balance Per SF: $143.36
Borrower Name(1): ExchangeRight Net Leased Portfolio 21 DST   Year Built/Renovated(3): Various
Borrower Sponsor: ExchangeRight Real Estate   Title Vesting: Fee
Mortgage Rate: 4.2700%   Property Manager: Self-managed
Note Date: April 9, 2018   4th Most Recent Occupancy(4): NAV
Anticipated Repayment Date: NAP   3rd Most Recent Occupancy(4): NAV
Maturity Date: April 6, 2028   2nd Most Recent Occupancy(4): NAV
IO Period: 120 months   Most Recent Occupancy(4): NAV
Loan Term (Original): 120 months   Current Occupancy (As of): 100.0% (7/1/2018)
Seasoning: 3 months    
Amortization Term (Original): NAP   Underwriting and Financial Information:
Loan Amortization Type: Interest-only, Balloon      
Interest Accrual Method: Actual/360   4th Most Recent NOI(5): NAV
Call Protection: L(27),D(89),O(4)   3rd Most Recent NOI(5): NAV
Lockbox Type: Hard/Springing Cash Management   2nd Most Recent NOI(5): NAV
Additional Debt: None   Most Recent NOI(5): NAV
Additional Debt Type: NAP      
          U/W Revenues: $4,024,258
          U/W Expenses: $381,942
          U/W NOI: $3,642,316
          U/W NCF: $3,580,000
Escrows and Reserves(2):         U/W NOI DSCR: 2.23x
          U/W NCF DSCR: 2.19x
Type: Initial Monthly Cap (If Any)   U/W NOI Debt Yield: 9.6%
Taxes $68,033 $13,633 NAP   U/W NCF Debt Yield: 9.5%
Insurance $1,728 $1,728 NAP   As-Is Appraised Value(6): $61,230,000
Replacement Reserves $244,457 $1,409 NAP   As-Is Appraisal Valuation Date(6): Various
TI/LC Reserve $500,000 $15,378 NAP   Cut-off Date LTV Ratio: 61.7%
Deferred Maintenance $52,133 $0 NAP   LTV Ratio at Maturity or ARD: 61.7%
             
               
(1)See “The Borrower” section.

(2)See “Escrows” section.

(3)See “The Properties” section.

(4)See “Historical Occupancy” section.

(5)See “Cash Flow Analysis” section. Historical cash flows are unavailable as the ExchangeRight Properties (as defined below) were acquired by ExchangeRight (as defined below) between December 2017 and April 2018. According to ExchangeRight, the sellers of the ExchangeRight Properties did not provide historical operating statements to ExchangeRight.

(6)See “Appraisal” section. Each of the ExchangeRight Properties was valued individually. The appraisals are dated from January 22, 2018 to March 23, 2018.

 

The Mortgage Loan. The mortgage loan (the “ExchangeRight Mortgage Loan”) is evidenced by a single promissory note that is secured by a first mortgage encumbering 20 cross-collateralized, triple-net leased, retail and medical office properties located in 10 states (the “ExchangeRight Properties”). The ExchangeRight Mortgage Loan was originated on April 9, 2018 by Barclays Bank PLC. The ExchangeRight Mortgage Loan had an original principal balance of $37,795,000, has an outstanding principal balance as of the Cut-off Date of $37,795,000 and accrues interest at an interest rate of 4.2700% per annum. The ExchangeRight Mortgage Loan had an initial term of 120 months, has a remaining term of 117 months as of the Cut-off Date and requires interest-only payments through its term. The ExchangeRight Mortgage Loan matures on April 6, 2028.

 

Following the lockout period, the borrower has the right to defease the ExchangeRight Mortgage Loan in whole, but not in part, on any date before January 6, 2028. The ExchangeRight Mortgage Loan is prepayable without penalty on or after January 6, 2028.

 

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.

 

30

 

 

EXCHANGERIGHT NET LEASED PORTFOLIO #21

 

Sources and Uses

 

Sources         Uses      
Original loan amount $37,795,000   60.3%   Purchase price $61,022,845           97.4%
Sponsor’s new cash contribution 24,853,186   39.7   Reserves 866,351   1.4
          Closing costs 758,990   1.2
Total Sources $62,648,186   100.0%   Total Uses $62,648,186         100.0%

 

The Properties. The ExchangeRight Properties are comprised of 17 retail and 3 medical office properties totaling 263,629 square feet located in 10 states. The largest geographical concentrations by state include Ohio (six properties, 22.5% of the allocated Cut-Off date balance), Virginia (two properties, 18.6% of the allocated Cut-Off date balance) and Louisiana (three properties, 12.9% of the allocated Cut-Off date balance). Built between 1992 and 2018, the ExchangeRight Properties range in size from 6,500 square feet to 55,000 square feet. As of July 1, 2018, the ExchangeRight Properties were 100.0% occupied.

 

The ExchangeRight Properties include nationally recognized credit-tenants, such as Dollar General (rated Baa2/BBB by Moody’s/S&P), Walgreens (rated BBB/Baa2/BBB by Fitch/Moody’s/S&P), Fresenius Medical Care (rated BBB-/Baa3/BBB- by Fitch/Moody’s/S&P), Advance Auto Parts (rated Baa2/BBB- by Moody’s/S&P) and O’Reilly Auto Parts (rated Baa1/BBB by Moody’s/S&P). Credit rated tenants occupy 14 of the 20 properties representing 62.6% of underwritten base rent (leases are directly with rated entities or are guaranteed by such entities, with the exception of O’Reilly Auto Parts). The ExchangeRight Properties have a weighted average remaining initial lease term of approximately 13.1 years. If the fully extended lease maturity dates are used, the weighted average remaining lease term is approximately 34.7 years. Leases representing approximately 86.4% of the net rentable area and 85.4% of the underwritten base rent expire after the ExchangeRight Mortgage Loan maturity date. No individual property accounts for more than 11.4% of the underwritten base rent of the ExchangeRight Properties. The largest property, Hobby Lobby – Birmingham, comprises approximately 55,000 square feet (20.9% of the total net rentable area) and $440,000 of the underwritten base rent (11.4% of underwritten base rent). Excluding Hobby Lobby – Birmingham, no individual property accounts for more than 10.1% of the underwritten base rent.

 

The following table presents certain information relating to the ExchangeRight Properties:

 

Tenant Name City, State

Allocated Cut-off

Date

Balance

% of

Portfolio

Cut-off

Date

Balance

Occupancy Year Built/ Renovated Net
Rentable Area (SF)
Lease
Expiration

Appraised

Value(1)

Walgreens Yorktown, VA $4,150,000 11.0% 100.0% 2007/NAP 14,739 5/31/2033 $6,330,000
Hobby Lobby Birmingham, AL $4,000,000 10.6% 100.0% 2017/NAP 55,000 4/30/2032 $7,325,000
Fresenius Medical Care Belpre, OH $3,130,000 8.3% 100.0% 2017/NAP 7,516 11/30/2032 $4,550,000
Tractor Supply Chesapeake, VA $2,875,000 7.6% 100.0% 2012/NAP 19,097 4/30/2028 $4,475,000
Tractor Supply Hollywood, MD $2,875,000 7.6% 100.0% 2013/NAP 20,097 3/1/2028 $4,800,000
Fresenius Medical Care Chicago, IL $2,800,000 7.4% 100.0% 2017/NAP 9,396 12/31/2032 $4,400,000
Walgreens Valrico, FL $2,700,000 7.1% 100.0% 1997/NAP 15,930 11/30/2029 $4,350,000
Tractor Supply Scott, LA $2,265,000 6.0% 100.0% 2017/NAP 19,097 10/20/2032 $3,850,000
Dollar General Harvey, LA $1,640,286