FWP 1 n1700_x3-prets.htm FREE WRITING PROSPECTUS

    FREE WRITING PROSPECTUS
    FILED PURSUANT TO RULE 433
    REGISTRATION FILE NO.: 333-226486-07
     

 

     

 

Free Writing Prospectus

Structural and Collateral Term Sheet

$1,302,470,080

(Approximate Initial Pool Balance)

 

BANK 2019-BNK19

as Issuing Entity

  

Wells Fargo Commercial Mortgage Securities, Inc.

as Depositor

  

Wells Fargo Bank, National Association

Bank of America, National Association

Morgan Stanley Mortgage Capital Holdings LLC

National Cooperative Bank, N.A.

 

 as Sponsors and Mortgage Loan Sellers

 

 

Commercial Mortgage Pass-Through Certificates
Series 2019-BNK19

 

 

 

July 15, 2019

 

WELLS FARGO
SECURITIES

BofA MERRILL

LYNCH

MORGAN

STANLEY

     

Co-Lead Manager and

Joint Bookrunner

Co-Lead Manager and

Joint Bookrunner

Co-Lead Manager and

Joint Bookrunner

     

Academy Securities, Inc.

Co-Manager

 

Drexel Hamilton

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. 333-226486) 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herein is preliminary as of the date hereof, supersedes any such information previously delivered to you and will be superseded by any such information subsequently delivered and ultimately by the final prospectus relating to the securities.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 or superseded) 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, BofA Securities, Inc., Morgan Stanley & Co. LLC, Academy Securities, Inc., Drexel Hamilton, LLC 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 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.

 

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BANK 2019-BNK19

Transaction Highlights

  

I.          Transaction Highlights

 

Mortgage Loan Sellers:

 

Mortgage Loan Seller

 

Number of
Mortgage Loans

 

Number of
Mortgaged
Properties

 

Aggregate Cut-off
Date Balance

 

Approx. % of
Initial Pool
Balance

Wells Fargo Bank, National Association  16    17    $447,478,147    34.4 %
Bank of America, National Association  15    16    362,012,940    27.8  
Morgan Stanley Mortgage Capital Holdings LLC  18    19    305,567,552    23.5  
Morgan Stanley Mortgage Capital Holdings LLC / Wells Fargo Bank, National Association  1    1    100,000,000    7.7  
National Cooperative Bank, N.A.  23    23    87,411,441    6.7  

Total

  73    76    $1,302,470,080    100.0 %

 

Loan Pool:

  

Initial Pool Balance: $1,302,470,080
Number of Mortgage Loans: 73
Average Cut-off Date Balance per Mortgage Loan: $17,842,056
Number of Mortgaged Properties: 76
Average Cut-off Date Balance per Mortgaged Property(1): $17,137,764
Weighted Average Mortgage Interest Rate: 4.055%
Ten Largest Mortgage Loans as % of Initial Pool Balance: 54.2%
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): 368
Weighted Average Remaining Amortization Term (months)(2): 367
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): 2.82x
Weighted Average U/W Net Operating Income Debt Yield(1): 13.3%
Weighted Average Cut-off Date Loan-to-Value Ratio(1): 56.3%
Weighted Average Balloon or ARD Loan-to-Value Ratio(1): 52.6%
% of Mortgage Loans with Additional Subordinate Debt(2): 28.2%
% of Mortgage Loans with Single Tenants(3): 14.8%

 

(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 companion loan(s) (unless otherwise stated). For mortgaged properties securing residential cooperative mortgage loans, the debt service coverage ratio and debt yield for each such mortgaged property are calculated using U/W Net Operating Income or U/W Net Cash Flow, as applicable, for the related residential cooperative property which is the projected net operating income or net cash flow, as applicable, reflected in the most recent appraisal obtained by or otherwise in the possession of the related mortgage loan seller as of the cut-off date, and the loan-to-value ratio is calculated based upon the appraised value of the residential cooperative property determined as if such residential cooperative property is operated as a residential cooperative, inclusive of the amount of the underlying debt encumbering such residential cooperative property. 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)Twenty (20) of the mortgage loans, each of which is secured by a residential cooperative property sold to the depositor by National Cooperative Bank, N.A., currently have in place either (i) subordinate secured lines of credit to the related mortgage borrowers that permit future advances (such loans, collectively, the “Subordinate Coop LOCs”) or (ii) subordinate wraparound mortgages to the related mortgage borrowers that are currently held by the cooperative sponsors (such loans, collectively, the “Subordinate Wrap Mortgages”). 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” and “Description of the Mortgage Pool—Additional Debt Financing for Mortgage Loans Secured by Residential Cooperatives” in the Preliminary Prospectus.

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

 

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.

 

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BANK 2019-BNK19

Characteristics of the Mortgage Pool

 

B.            Summary of the Whole Loans

Property Name

Mortgage

Loan Seller in BANK 2019-BNK19

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

Master Servicer Under

Lead Securitization

Servicing Agreement

Special Servicer Under Lead Securitization Servicing Agreement
Grand Canal Shoppes MSMCH/WFB A-1-2, A-2-1 $100,000,000 BANK 2019-BNK19 No Midland Loan Services, a Division of
PNC Bank, National Association
LNR Partners, LLC
A-1-1 $60,000,000 MSC 2019-H7(2) Yes
A-1-6 $10,000,000 MSC 2019-H7(2) No
A-1-3, A-1-4, A-1-5, A-1-7, A-1-8 $113,846,154 Morgan Stanley Bank, N.A. No
    A-2-2, A-2-3, A-2-4, A-2-5 $125,384,615 WFB No    
    A-3-1, A-3-2, A-3-3, A-3-4, A-3-5 $175,384,615 JPMorgan Chase Bank, N.A. No    
    A-4-1, A-4-2, A-4-3, A-4-4, A-4-5 $175,384,615 Goldman Sachs Bank USA No    
    B-1 $215,000,000 CPPIB Credit Investments II Inc. No    
Waterford Lakes Town Center BANA A-1-A $55,000,000 GSMS 2019-GC39 Yes Midland Loan Services, a Division of
PNC Bank, National Association
KeyBank National Association
A-1-B $35,000,000 GSMS 2019-GC40 No
A-2-A $45,000,0000 BANK 2019-BNK19 No
    A-2-B $45,000,000 BANK 2019-BNK19 No    
350 Bush Street WFB A-1 $100,000,000 BANK 2019-BNK18 Yes Wells Fargo Bank, National
Association
Rialto Capital Advisors, LLC
A-2, A-3 $85,000,000 BANK 2019-BNK19 No
30 Hudson Yards WFB

A-1-S1, A-1-S2, A-1-S3, A-2-S1,

A-2-S2, A-2-S3, A-3-S1, A-3-S2, A-3-S3, A-1-C1, A-1-C2

$628,000,000 Hudson Yards 2019-30HY(3) Yes Wells Fargo Bank, National
Association
Situs Holdings, LLC

A-1-C3, A-1-C4, A-1-C5, A-1-C6,

A-1-C7, A-1-C8, A-1-C10

$253,200,000 Deutsche Bank AG, New York Branch No
A-1-C9 $20,000,000 Hudson Yards 2019-30HY(3) Yes
A-2-C1, A-2-C2, A-2-C3, A-2-C4, A-2-C5 $134,400,000 Goldman Sachs Bank USA No

A-3-C1, A-3-C2, A-3-C3, A-3-C4,

A-3-C5

$84,400,000 BANK 2019-BNK19 No
B-1 $186,000,000 Hudson Yards 2019-30HY(3) No
B-2 $62,000,000 Hudson Yards 2019-30HY(3) No
B-3 $62,000,000 Hudson Yards 2019-30HY(3) No
Nova Place WFB A-1 $71,000,000 WFCM 2019-C51 Yes Wells Fargo Bank, National
Association
C-III Asset Management LLC
A-2, A-3 $69,000,000 BANK 2019-BNK19 No
Moffett Towers - Buildings 3 & 4

BANA

 

A-1-A $2,750,000 MFTII 2019-B3B4 No

KeyBank, National Association

 

Situs Holdings, LLC

 

A-1-B $65,000,000 Barclays Capital Real Estate Inc. (4)
A-1-C $50,000,000 BANK 2019-BNK19 No
A-1-D $49,750,000 Barclays Capital Real Estate Inc. No
A-1-E $25,000,000 Barclays Capital Real Estate Inc. No
                 

 

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.

 

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BANK 2019-BNK19

Characteristics of the Mortgage Pool

 

    A-2-A $1,125,000 MFTII 2019-B3B4 No    
A-2-B $50,000,000 Deutsche Bank AG, New York Branch No
A-2-C $27,625,000 Deutsche Bank AG, New York Branch No
A-3-A $1,125,000 MFTII 2019-B3B4 No
    A-3-B $50,000,000 Goldman Sachs Bank USA No  
A-3-C $27,625,000 Goldman Sachs Bank USA No
B-1 $85,250,000 MFTII 2019-B3B4 Yes
B-2 $34,875,000 MFTII 2019-B3B4 Yes
B-3 $34,875,000 MFTII 2019-B3B4 Yes
The Alhambra WFB A-1 $100,000,000 BANK 2019-BNK18 Yes Wells Fargo Bank, National Association Rialto Capital Advisors, LLC
A-2, A-3 $50,000,000 BANK 2019-BNK19 No
Ford Factory BANA A-1 $95,000,000 BANK 2019-BNK18 Yes Wells Fargo Bank, National Association Rialto Capital Advisors, LLC
A-2 $40,000,000 BANK 2019-BNK19 No
450-460 Park Avenue South WFB A-1 $45,000,000 WFCM 2019-C51 Yes Wells Fargo Bank, National Association C-III Asset Management LLC
A-2 $30,000,000 BANK 2019-BNK19 No
Eleven Seventeen Perimeter MSMCH A-1 $15,000,000 BANK 2019-BNK19 No Midland Loan Services, a Division of PNC Bank, National Association(5) LNR Partners, LLC(5)
A-2 $12,000,000 MSC 2019-H7 No
A-3 $10,000,000 Morgan Stanley Bank, N.A. Yes
A-4 $7,000,000 Morgan Stanley Bank, N.A. No
Polo Towne Crossing SC MSMCH A-1 $14,250,000 BANK 2019-BNK19 No Wells Fargo Bank, National Association(6) LNR Partners, LLC(6)
A-2 $10,000,000 Morgan Stanley Bank, N.A. Yes
A-3 $6,000,000 Morgan Stanley Bank, N.A. No

 

(1)No assurance can be provided that any unsecuritized note will not be split further.
(2)The MSC 2019-H7 securitization is expected to close on or about July 25, 2019.
(3)The Hudson Yards 2019-30HY securitization is expected to close on or about July 16, 2019.
(4)The controlling note holder with respect to Moffett Towers – Buildings 3 & 4 Whole Loan will be (i) prior to a control appraisal period, the controlling class certificateholder under the MFTII 2019-B3B4 securitization, or (ii) during a control appraisal period, the holder of Note A-1-B or the directing certificateholder of the securitization trust that holds Note A-1-B. See “Description of the Mortgage Pool — The Whole Loans — The Non-Serviced AB Whole Loans” in the Preliminary Prospectus.
(5)The related whole loan is expected to initially be serviced under the MSC 2019-H7 pooling and servicing agreement until 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”), after which the related whole loan will be serviced under the pooling and servicing agreement governing such securitization of the related “lead” pari passu note. The master servicer and special servicer for such securitization will be identified in a notice, report or statement to holders of the BANK 2019-BNK19 certificates after the closing of such securitization.
(6)The related whole loan is expected to initially be serviced under the BANK 2019-BNK19 pooling and servicing agreement until 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”), after which the related whole loan will be serviced under the pooling and servicing agreement governing such securitization of the related “lead” pari passu note. The master servicer and special servicer for such securitization will be identified in a notice, report or statement to holders of the BANK 2019-BNK19 certificates after the closing of such securitization.

 

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.

 

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C.            Property Type Distribution(1)

 

 
 

  

Property Type Number of
Mortgaged
Properties
Aggregate
Cut-off Date
Balance ($)
Approx. % of Initial
Pool
Balance (%)
Weighted
Average
Cut-off
Date LTV
Ratio (%)
Weighted
Average
Balloon
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 (%)
Office 14 $666,513,500 51.2% 57.6% 56.0% 2.57x 11.4% 10.8% 3.951%
CBD 7 396,986,000 30.5 52.8 52.1 2.73 11.4 10.9 3.886
Suburban 7 269,527,500 20.7 64.6 61.8 2.34 11.3 10.6 4.047
Retail 17 304,886,610 23.4 60.6 54.0 1.90 10.0 9.6 4.302
Anchored 8 167,710,761 12.9 69.0 57.9 1.57 10.2 9.6 4.600
Specialty Retail 1 100,000,000 7.7 46.3 46.3 2.46 9.6 9.3 3.741
Shadow Anchored 4 28,135,848 2.2 59.6 55.8 1.96 10.4 9.9 4.413
Unanchored 2 6,460,000 0.5 66.4 59.8 1.59 10.4 9.8 4.657
Single Tenant 2 2,580,000 0.2 62.9 57.7 1.41 8.8 8.7 4.620
Hospitality 7 141,050,754 10.8 66.6 59.4 2.49 13.4 11.8 4.048
Full Service 2 89,701,705 6.9 66.1 60.7 2.51 12.9 11.1 3.902
Limited Service 4 40,862,715 3.1 67.0 57.3 2.54 14.6 13.2 4.353
Select Service 1 10,486,335 0.8 69.9 55.8 2.18 13.8 12.6 4.100
Multifamily 27 118,161,441 9.1 21.3 18.7 7.34 33.7 33.1 3.893
Cooperative 24 101,411,441 7.8 13.0 11.5 8.27 37.5 36.9 3.814
Garden 3 16,750,000 1.3 71.0 61.9 1.70 10.7 10.1 4.370
Industrial 4 40,844,069 3.1 68.5 60.4 1.91 10.8 10.0 4.323
Warehouse 2 26,044,069 2.0 72.8 60.2 1.75 11.5 10.6 4.465
Flex 2 14,800,000 1.1 60.9 60.9 2.19 9.5 9.1 4.074
Mixed Use 3 25,515,000 2.0 53.4 53.4 2.81 12.1 11.3 4.083
Office/Retail 2 19,300,000 1.5 50.3 50.3 3.10 12.9 12.2 3.949
Office/Industrial 1 6,215,000 0.5 62.9 62.9 1.90 9.7 8.7 4.500
Manufactured Housing Community 3 3,598,706 0.3 63.5 59.1 2.36 11.3 11.0 4.278
Manufactured Housing Community 3 3,598,706 0.3 63.5 59.1 2.36 11.3 11.0 4.278
Other 1 1,900,000 0.1 61.1 61.1 1.64 8.2 8.2 4.890
Leased Fee 1 1,900,000 0.1 61.1 61.1 1.64 8.2 8.2 4.890
Total/Weighted Average: 76 $1,302,470,080 100.0% 56.3% 52.6% 2.82x 13.3% 12.6% 4.055%

 

(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 loan 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). For mortgaged properties securing residential cooperative mortgage loans, the debt service coverage ratio and debt yield for each such mortgaged property is calculated using U/W Net Operating Income or U/W Net Cash Flow, as applicable, for the related residential cooperative property which is the projected net operating income or net cash flow, as applicable, reflected in the most recent appraisal obtained by or otherwise in the possession of the related mortgage loan seller as of the cut-off date and the loan-to-value ratio, is calculated based upon the appraised value of the residential cooperative property determined as if such residential cooperative property is operated as a residential cooperative, inclusive of the amount of the underlying debt encumbering such residential cooperative property. 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 companion loan(s) (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 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.

 

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(THIS PAGE INTENTIONALLY LEFT BLANK)

 

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.

 

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Retail – Specialty Retail Loan #1 Cut-off Date Balance:   $100,000,000
3327 & 3377 Las Vegas Boulevard South Grand Canal Shoppes Cut-off Date LTV:   46.3%
Las Vegas, NV 89109   U/W NCF DSCR:   2.46x
    U/W NOI Debt Yield:   9.6%

 

(Graphic)

 

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.

 

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Retail – Specialty Retail Loan #1 Cut-off Date Balance:   $100,000,000
3327 & 3377 Las Vegas Boulevard South Grand Canal Shoppes Cut-off Date LTV:   46.3%
Las Vegas, NV 89109   U/W NCF DSCR:   2.46x
    U/W NOI Debt Yield:   9.6%

 

(Graphic)

 

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.

 

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Retail – Specialty Retail Loan #1 Cut-off Date Balance:   $100,000,000
3327 & 3377 Las Vegas Boulevard South Grand Canal Shoppes Cut-off Date LTV:   46.3%
Las Vegas, NV 89109   U/W NCF DSCR:   2.46x
    U/W NOI Debt Yield:   9.6%

 

(Graphic)

 

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  

 

 

Retail – Specialty Retail Loan #1 Cut-off Date Balance:   $100,000,000
3327 & 3377 Las Vegas Boulevard South Grand Canal Shoppes Cut-off Date LTV:   46.3%
Las Vegas, NV 89109   U/W NCF DSCR:   2.46x
    U/W NOI Debt Yield:   9.6%

 

(Graphic)

 

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  

 

 

Retail – Specialty Retail Loan #1 Cut-off Date Balance:   $100,000,000
3327 & 3377 Las Vegas Boulevard South Grand Canal Shoppes Cut-off Date LTV:   46.3%
Las Vegas, NV 89109   U/W NCF DSCR:   2.46x
    U/W NOI Debt Yield:   9.6%

 

(Graphic)

 

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

 

12  

 

 

No. 1 – Grand Canal Shoppes
 
Mortgage Loan Information   Mortgaged Property Information
Mortgage Loan Sellers: Morgan Stanley Mortgage Capital Holdings LLC; Wells Fargo Bank, N.A.   Single Asset/Portfolio: Single Asset

Credit Assessment

(Fitch/KBRA/S&P):

BBB-sf/A-(sf)/BBB(sf)   Property Type – Subtype: Retail – Specialty Retail
Original Principal Balance(1): $100,000,000   Location: Las Vegas, NV
Cut-off Date Balance(1): $100,000,000   Size(5): 759,891 SF
% of Initial Pool Balance: 7.7%   Cut-off Date Balance Per SF(1): $1,000.14
Loan Purpose: Refinance   Maturity Date Balance Per SF(1): $1,000.14
Borrower Sponsors: Brookfield Properties REIT Inc.; Nuveen Real Estate   Year Built/Renovated: 1999/2007
Guarantor: BPR Nimbus LLC   Title Vesting: Fee and Leasehold
Mortgage Rate(2): 3.7408%   Property Manager: Brookfield Properties Retail Inc.
Note Date: June 3, 2019   Current Occupancy (As of): 94.0% (5/31/2019)
Seasoning: 1 month   YE 2018 Occupancy: 93.3%
Maturity Date: July 1, 2029   YE 2017 Occupancy: 93.0%
IO Period: 120 months   YE 2016 Occupancy: 93.9%
Loan Term (Original): 120 months   YE 2015 Occupancy: 91.5%
Amortization Term (Original): NAP   As-Is Appraised Value: $1,640,000,000
Loan Amortization Type: Interest-only, Balloon   As-Is Appraised Value Per SF: $2,158.20
Call Protection(3): L(25),D(90),O(5)   As-Is Appraisal Valuation Date: April 3, 2019
Lockbox Type: Hard/Springing Cash Management   Underwriting and Financial Information
Additional Debt(1): Yes   TTM NOI (3/31/2019): $71,465,811
Additional Debt Type (Balance)(1): Pari Passu ($660,000,000); Subordinate ($215,000,000)   YE 2018 NOI: $71,326,473
      YE 2017 NOI: $74,425,947
      YE 2016 NOI: $79,358,630
      U/W Revenues: $104,029,334
      U/W Expenses: $31,007,624
Escrows and Reserves(4)   U/W NOI: $73,021,709
  Initial Monthly Cap   U/W NCF: $70,997,903
Taxes $0 Springing N/A   U/W DSCR based on NOI/NCF(1): 2.53x / 2.46x
Insurance $0 Springing N/A   U/W Debt Yield based on NOI/NCF(1): 9.6% / 9.3%
Replacement Reserve $0 Springing $386,928   U/W Debt Yield at Maturity based on NOI/NCF(1) 9.6% / 9.3%
TI/LC $12,309,694 Springing $2,321,544   Cut-off Date LTV Ratio(1): 46.3%
Ground Rent Funds $0 Springing N/A   LTV Ratio at Maturity(1): 46.3%
Gap Rent Reserve Funds $1,218,246 $0 N/A      
                 
Sources and Uses
Sources         Uses      
Original senior loan amount $760,000,000   77.9%   Loan payoff $627,284,452   64.3%
Subordinate companion loan 215,000,000   22.1      Return of equity 333,044,567   34.2   
          Upfront reserves 13,527,940   1.4 
          Closing costs 1,143,041   0.1
Total Sources $975,000,000   100.0%     Total Uses $975,000,000   100.0%  

 

(1)The Grand Canal Shoppes Mortgage Loan (as defined below) is part of the Grand Canal Shoppes Whole Loan (as defined below), which is comprised of 23 pari passu senior promissory notes with an aggregate original principal balance of $760,000,000 (the “Senior Notes”, and collectively the “Grand Canal Shoppes Senior Loan”) and one promissory note that is subordinate to the Senior Notes with an original principal balance of $215,000,000 (the “Grand Canal Shoppes Subordinate Companion Loan”, and together with the Grand Canal Shoppes Senior Loan, the “Grand Canal Shoppes Whole Loan”). The Cut-off Date Balance per SF, Maturity Date Balance per SF, U/W NOI Debt Yield, U/W NCF Debt Yield, U/W NOI DSCR, U/W NCF DSCR, Cut-off Date LTV Ratio and LTV Ratio at Maturity numbers presented above are based on the aggregate principal balance of the promissory notes comprising the Grand Canal Shoppes Senior Notes, without regard to the Grand Canal Shoppes Subordinate Companion Loan. The Cut-off Date Balance per SF, Maturity Date Balance per SF, U/W NOI Debt Yield, U/W NCF Debt Yield, U/W NOI DSCR, U/W NCF DSCR, Cut-off Date LTV Ratio and LTV Ratio at Maturity numbers based on the combined balance of the entire Grand Canal Shoppes Whole Loan are $1,283, $1,283, 7.5%,7.3%, 1.72x, 1.67x, 59.5% and 59.5%, respectively. See “Subordinate and Mezzanine Indebtedness” below. The Grand Canal Shoppes Whole Loan was co-originated by Morgan Stanley Bank, N.A. (“MSBNA”), JPMorgan Chase Bank, National Association (“JPMCB”), Goldman Sachs Bank USA (“GS”) and Wells Fargo Bank, N.A. (“WFB”) on June 3, 2019. Morgan Stanley Mortgage Capital Holdings, LLC (“MSMCH”), an affiliate of MSBNA, is contributing the non-controlling Note A-1-2 with an original principal balance of $50,000,000 and Wells Fargo Bank, National Association (“WFB”) is contributing the non-controlling Note A-2-1 with an original principal balance of $50,000,000.

(2)Reflects the Senior Notes only. The Grand Canal Shoppes Subordinate Companion Loan accrues interest at the rate of 6.25% per annum.

(3)Defeasance of the Grand Canal Shoppes Whole Loan is permitted at any time after the earlier to occur of (a) the end of the two-year period commencing on the closing date of the securitization of the last Grand Canal Shoppes Whole Loan promissory note to be securitized and (b) June 3, 2022. The assumed defeasance lockout period of 25 payments is based on the closing date of this transaction in August 2019.

(4)See “Escrows” below for further discussion of reserve requirements.

(5)Size excludes the 84,743 square foot space currently leased to Barneys New York. This space is included in the collateral; however, the loan documents permit the right to obtain a free release with respect to such space. See “Release of Barneys parcel”, as such, no value or rental income has been attributed to this space.

 

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  

 

 

Retail – Specialty Retail Loan #1 Cut-off Date Balance:   $100,000,000
3327 & 3377 Las Vegas Boulevard South Grand Canal Shoppes Cut-off Date LTV:   46.3%
Las Vegas, NV 89109   U/W NCF DSCR:   2.46x
    U/W NOI Debt Yield:   9.6%

 

The Mortgage Loan. The mortgage loan (the “Grand Canal Shoppes Mortgage Loan”) is part of the Grand Canal Shoppes Whole Loan evidenced by (i) 23 pari passu notes comprising the Grand Canal Shoppes Senior Loan with an aggregate original principal balance of $760,000,000 and an aggregate outstanding principal balance as of the Cut-off Date of $760,000,000 and (ii) the Grand Canal Shoppes Subordinate Companion Loan with an original principal balance of $215,000,000 and an outstanding principal balance as of the Cut-off Date of $215,000,000, secured by a first mortgage encumbering the fee and leasehold interest in a 759,891 square feet retail center located in Las Vegas, Nevada (the “Grand Canal Shoppes Property”). The Grand Canal Shoppes Mortgage Loan represents the non-controlling Note A-1-2 and Note A-2-1 in the original principal balance of $100,000,000. The non-controlling Note A-1-1 and Note A-1-6 in the aggregate original principal amount of $70,000,000 are expected to be contributed to the MSC 2019-H7 securitization trust. The remaining Grand Canal Shoppes Senior Notes (together with Note A-1-1 and Note A-1-7, and excluding the Grand Canal Shoppes Mortgage Loan, the “Grand Canal Shoppes Non-Serviced Pari Passu Companion Loans”) are expected to be contributed to future securitization transactions or may be otherwise transferred at any time. The Grand Canal Shoppes Whole Loan is expected to be serviced pursuant to the pooling and servicing agreement for the MSC 2019-H7 securitization trust. See “Description of the Mortgage Pool—The Whole Loans—The Non-Serviced AB Whole Loans—The Grand Canal Shoppes Whole Loan” and “Pooling and Servicing Agreement” in the Preliminary Prospectus.

 

Note Summary

 

 Notes Original Principal Balance Cut-off Date Balance Anticipated Note Holder Controlling Piece
Grand Canal Shoppes Mortgage Loan(1)        
A-1-2 & A-2-1 $100,000,000 $100,000,000 BANK 2019-BNK19 No
Grand Canal Shoppes Non-Serviced Pari Passu Companion Loans        
A-1-1 $60,000,000 $60,000,000 MSC 2019-H7(2) No(3)
A-1-3 $40,000,000 $40,000,000 MSBNA No
A-1-4 $40,000,000 $40,000,000 MSBNA No
A-1-5 $13,846,154 $13,846,154 MSBNA No
A-1-6 $10,000,000 $10,000,000 MSC 2019-H7(2) No
A-1-7 $10,000,000 $10,000,000 MSBNA No
A-1-8 $10,000,000 $10,000,000 MSBNA No
A-2-2 $50,000,000 $50,000,000 WFB No
A-2-3 $40,000,000 $40,000,000 WFB No
A-2-4 $25,000,000 $25,000,000 WFB No
A-2-5 $10,384,615 $10,384,615 WFB No
A-3-1 $50,000,000 $50,000,000 JPMCB No
A-3-2 $50,000,000 $50,000,000 JPMCB No
A-3-3 $40,000,000 $40,000,000 JPMCB No
A-3-4 $25,000,000 $25,000,000 JPMCB No
A-3-5 $10,384,615 $10,384,615 JPMCB No
A-4-1 $50,000,000 $50,000,000 GS No
A-4-2 $50,000,000 $50,000,000 GS No
A-4-3 $40,000,000 $40,000,000 GS No
A-4-4 $25,000,000 $25,000,000 GS No
A-4-5 $10,384,615 $10,384,615 GS No
Grand Canal Shoppes Subordinate Companion Loan        
B-1 $215,000,000 $215,000,000 Third party holder Yes(3)
Total $975,000,000 $975,000,000    

 

(1)MSMCH is contributing the non-controlling A-1-2 Note with an original principal balance of $50,000,000 and WFB is contributing the non-controlling A-2-1 Note with an original principal balance of $50,000,000.

(2)Anticipated to be transferred to the MSC 2019-H7 securitization upon the closing date of such securitization.

(3)The holder of the Grand Canal Shoppes Subordinate Companion Loan will have the right to appoint the special servicer of the Grand Canal Shoppes Whole Loan and to direct certain decisions with respect to the Grand Canal Shoppes Whole Loan, unless a control appraisal event exists under the related co-lender agreement. The Grand Canal Shoppes Whole Loan will be serviced pursuant to the pooling and servicing agreement for the MSC 2019-H7 securitization.

 

Proceeds of the Grand Canal Shoppes Whole Loan were used to refinance existing securitized mortgage debt, fund upfront reserves, pay closing costs, and return equity to the Grand Canal Shoppes Borrowers (as defined below).

 

The Borrower and the Borrower Sponsors. The borrowers are Grand Canal Shops II, LLC and The Shoppes at the Palazzo, LLC, each organized as a Delaware limited liability company and each structured to be bankruptcy remote with two independent directors (the “Grand Canal Shoppes Borrowers”). Legal counsel to the Grand Canal Shoppes Borrowers delivered a non-consolidation opinion in connection with the origination of the Grand Canal Shoppes Mortgage Loan. The borrowers and a predecessor entity of the borrower sponsor filed for bankruptcy in 2009 and emerged from bankruptcy in 2009-2010.  See “Loan Purpose; Default History, Bankruptcy Issues and Other Proceedings” in the Preliminary Prospectus.

 

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  

 

 

Retail – Specialty Retail Loan #1 Cut-off Date Balance:   $100,000,000
3327 & 3377 Las Vegas Boulevard South Grand Canal Shoppes Cut-off Date LTV:   46.3%
Las Vegas, NV 89109   U/W NCF DSCR:   2.46x
    U/W NOI Debt Yield:   9.6%

 

The borrower sponsors are Brookfield Properties REIT Inc. and Nuveen Real Estate, and the nonrecourse carveout guarantor is BPR Nimbus LLC (the “Grand Canal Shoppes Guarantor”), an affiliate of Brookfield Properties REIT Inc.

 

Brookfield Properties REIT Inc. ranks among the largest retail real estate companies in the United States. Its portfolio of mall properties spans the nation, encompassing 170 locations across 42 states and representing over 146 million square feet of retail space. The company is focused on managing, leasing and redeveloping retail properties.

 

Nuveen Real Estate is the investment management arm of Teachers Insurance and Annuity Association. Nuveen Real Estate manages various funds and mandates, across both public and private investments, spanning both debt and equity. Nuveen Real Estate has over 80 years of real estate investing experience and more than 500 employees located across over 20 cities throughout the United States, Europe and Asia Pacific.

 

The Property. The Grand Canal Shoppes Property is a 759,891 square foot specialty retail center that predominantly comprises the first-, second-, and third-levels of the Venetian Hotel and Casino and Palazzo Resort and Casino. The Grand Canal Shoppes Property opened in 1999, with an expansion in conjunction with the completion of The Palazzo in 2007, and is anchored by an 84,743 square feet, three level Barneys New York, currently slated to close by January 2020. The Barneys Parcel (as defined below) was part of the collateral for the Grand Canal Shoppes Whole Loan at loan origination, but the Grand Canal Shoppes Borrowers have the right to obtain a free release of the Barneys Parcel. At origination, no value or rental income was attributed to the Barneys Parcel.

 

The Venetian Hotel and Casino and Palazzo Resort and Casino are luxury hotels and casino resorts situated within the southeast quadrant of Las Vegas Boulevard and Sands Avenue. Each of the Venetian Hotel and Casino and the Palazzo Resort and Casino are owned and operated by Las Vegas Sands Corporation. The overall resort complex is the largest on The Strip (as defined below), and includes 4,049 rooms within The Venetian, 3,068 rooms/suites within The Palazzo, and 225,000 square feet of gaming space (combined), none of which are collateral for the Grand Canal Shoppes Whole Loan. The Grand Canal Shoppes Property is physically connected to the Venetian Hotel and Casino and the Palazzo Resort and Casino, which combine to create a large hotel and resort complex with over 7,000 hotel rooms, 2.3 million square feet of meeting space, one million square feet of retail space, and more than 30 restaurants. In addition, the Grand Canal Shoppes Property is within walking distance to over 140,000 hotel rooms.

 

The Grand Canal Shoppes Property is situated across 21.1 acres of land along the central portion of Las Vegas Boulevard (“The Strip”). The Grand Canal Shoppes Property is a shopping, entertainment, and dining venue in Las Vegas featuring a unique Venetian-inspired setting with luxury retailers and restaurant concepts. Attractions include a gondola ride through the canals of the Grand Canal Shoppes Property as well as showroom/theater space for live performances.

 

The Grand Canal Shoppes Property is 94.0% leased as of May 31, 2019. According to the appraisal, the Grand Canal Shoppes Property generates average mall shop sales of over $1,000 PSF. The Grand Canal Shoppes Property generated $427.6 million in gross sales with comparable in line sales of $1,182 PSF as of the trailing twelve months ended February 28, 2019. The Grand Canal Shoppes Property generates over 60% of its top line revenue from food and entertainment offerings, including restaurants such as Tao Asian Bistro, which features a night and beach club, Grand Lux Café, Sushi Samba, Delmonico Steakhouse, Cut by Wolfgang Puck, Smith & Wollensky, Verdugo West Brewery, Xiang Tian Xia Chinese Hot Pot and Recital Karaoke, among others. Luxury retailers at the Grand Canal Shoppes Property include Louis Vuitton, Salvatore Ferragamo, Fendi and Jimmy Choo.

 

From 2015 through January 2019, capital expenditures, inclusive of development capital and landlord work, of approximately $20.3 million ($26.70 PSF) were invested in the Grand Canal Shoppes Property. In addition, there is a planned renovation and redevelopment of the common areas within the shopping areas above The Palazzo. Ownership is budgeting approximately $12.0 million to improve lighting and finishes in an attempt to maintain existing tenants and attract new tenants to this portion of the Grand Canal Shoppes Property. According to management, renovations are expected to begin in September 2019. In addition, renovation, new finishes and lighting are expected to be completed in conjunction with a proposed 27,422 square foot international food hall, which is expected to be completed in 2020. Such renovation and redevelopment, as well as development of the new food hall, are not required by or reserved for under the Grand Canal Shoppes Whole Loan documents, and we cannot assure you that any such renovation, redevelopment, or food hall development will be effected.

 

The following table presents a summary of historical tenant sales at the Grand Canal Shoppes Property.

 

Historical Tenant Sales Summary(1)
  2015 2016 2017 2018 TTM February 2019 Sales TTM February 2019 Sales PSF
Anchor/Major Sales $129,599,970 $129,282,829 $130,862,228 $138,705,093 $140,317,346 $1,046
Comparable In-Line Sales $200,973,916 $207,912,708 $223,524,143 $244,916,086 $244,795,176 $1,154
Comparable Food Court Sales $17,055,210 $19,744,070 $21,275,466 $23,538,795 $23,688,945 $1,580

 

(1)Information as provided by the borrower sponsor and only includes tenants reporting sales.

 

The Grand Canal Shoppes Property is anchored by 18 major tenants that in the aggregate generate approximately $140.3 million in annual sales as of TTM February 2019. Since 2015, the Grand Canal Shoppes Property’s sales performance has steadily increased year-over-year, growing 21.4% over this period. Furthermore, comparable sales have consistently exceeded $1,100 PSF reaching $1,182 PSF as of TTM February 2019.

 

The first floor of Barneys New York and the casino level (ground floor) space are leased by the Grand Canal Shoppes Borrowers, pursuant to air rights ground leases, which do not include the underlying land. The casino level space consists of restaurants and retail

 

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  

 

 

Retail – Specialty Retail Loan #1 Cut-off Date Balance:   $100,000,000
3327 & 3377 Las Vegas Boulevard South Grand Canal Shoppes Cut-off Date LTV:   46.3%
Las Vegas, NV 89109   U/W NCF DSCR:   2.46x
    U/W NOI Debt Yield:   9.6%

shops contained on the casino levels (ground floor) of the Venetian Hotel and Casino and the Palazzo Resort and Casino. The ground lease for the casino level of the Venetian Hotel and Casino portion of the Grand Canal Shoppes Property expires in 2093, and the ground lease for the casino level of the Palazzo Resort and Casino portion of the Grand Canal Shoppes Property expires in 2097. Each of the annual rents for these leases is $1 and the Grand Canal Shoppes Borrowers have the option to purchase the premises for $1 on the respective expiration dates. The remaining collateral, except for the Walgreens air rights lease space, is owned in fee. A portion of the fee is located at the ground level (the retail annex), with the majority fee located on levels 2 and 3. The collateral is part of a vertical subdivision; i.e. the fee ownership is solely of the designated space on the ground level and levels 2 and 3 and doesn’t include the land. A reciprocal easement agreement governs the relationship among the owner of the Grand Canal Shoppes Property, and the owners of other interests in the complex that includes the Venetian Hotel and Casino and the Palazzo Resort and Casino. The Walgreens air rights lease space refers to the air rights above the Walgreens space (the Walgreens space itself is owned by a third party), for which the lease expires in 2064 with one, 40 year extension option. The Walgreens air rights space is currently occupied by Buddy V's Ristorante and Carlo’s Bakery (12,839 square feet, 1.5% of underwritten base rent). The Venetian Hotel and Casino subleases a portion of the air rights parcel from the Grand Canal Shoppes Borrowers pursuant to a separate sublease. The Venetian Hotel and Casino is responsible under its sublease for an amount equal to 80.68% of the ground rent under the Walgreens air rights lease.

 

Pursuant to the reciprocal easement and ground lease documents, transfers (other than to a lender in connection with foreclosure or delivery of a deed-in-lieu of foreclosure of a mortgage secured by the Grand Canal Shoppes Property or the first subsequent transferee from the lender) of the Grand Canal Shoppes Property are subject to certain transfer restrictions. Additionally, under such documents, Venetian Casino Resort, LLC has the right to cure certain defaults of the Grand Canal Shoppes Borrowers under the Grand Canal Shoppes Whole Loan. See also “Right of First Offer/Right of First Refusal” below.

 


Historical and Current Occupancy(1)
  2014 2015 2016 2017 2018 Current(2)
The Venetian Hotel and Casino 95.1% 92.6% 98.3% 95.7% 99.1% 97.1%
Palazzo Resort and Casino 88.2% 89.5% 86.2% 88.4% 83.0% 86.2%
Total/Wtd. Avg. 92.6% 91.5% 93.9% 93.0% 93.3% 94.0%

 

(1)Historical occupancy provided by the borrower sponsor.

(2)Current occupancy is based on the May 31, 2019 UW 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.

 

16  

 

 

Retail – Specialty Retail Loan #1 Cut-off Date Balance:   $100,000,000
3327 & 3377 Las Vegas Boulevard South Grand Canal Shoppes Cut-off Date LTV:   46.3%
Las Vegas, NV 89109   U/W NCF DSCR:   2.46x
    U/W NOI Debt Yield:   9.6%

 

The following table presents certain information relating to the tenancy at the Grand Canal Shoppes Property:

 

Major Tenant(1)

 

Tenant Name Credit Rating
(Fitch/Moody’s/

S&P)(2)
Tenant NRSF % of
NRSF
Annual
U/W
Base
Rent
PSF(3)
Annual
U/W Base
Rent(4)
% of
Total
Annual
U/W
Base
Rent
TTM February
2019 Sales
Occ.
Cost
%(5)
Term.
Option
Lease
Expiration
$ PSF
Major Tenants                      
Emporio D'Gondola(6) NR/NR/NR 922 0.1% $4,394.46 $4,051,692 6.0% NAV  NAV NAV N 5/31/2029
The Venetian Resort (Showroom/Theater) BBB-/NR/BBB- 38,920 5.1% $104.10 $4,051,619 6.0% NAV  NAV NAV N 5/31/2029
Regis Galerie(7) NR/NR/NR 28,099 3.7% $84.27 $2,367,955 3.5% $7,010,021  $249 33.8% N Various
Sephora NR/NR/A+ 10,074 1.3% $228.31 $2,299,995 3.4% NAV  NAV NAV N 7/31/2021
Welcome to Las Vegas(8) NR/NR/NR 14,234 1.9% $140.54 $2,000,502 3.0% $6,612,970 $465 30.3% N Various
Grand Lux Cafe NR/NR/NR 19,100 2.5% $76.63 $1,463,633 2.2% $21,992,535 $1,151 6.7% N 12/31/2029
CUT By Wolfgang Puck NR/NR/NR 12,247 1.6% $103.00 $1,261,441 1.9% $14,171,737 $1,157 8.9% N 5/31/2028
Mercato Della Pescheria NR/NR/NR 16,479 2.2% $68.66 $1,131,448 1.7% $9,158,574  $556 12.4% N 11/30/2025
Bellusso Jewelry NR/NR/NR 2,999 0.4% $356.44 $1,068,964 1.6% $8,173,547 $2,725 13.1% N 11/30/2022
Golden Gai NR/NR/NR 12,820 1.7% $80.73 $1,034,959 1.5% NAV  NAV NAV N 12/31/2029
TAO Asian Bistro NR/NR/NR 15,175 2.0% $64.58 $980,002 1.5% $35,724,404 $2,354 2.7% N 1/31/2025
Peter Lik Gallery NR/NR/NR 4,394 0.6% $222.96 $979,686 1.5% $3,859,320  $878 25.4% N 8/31/2021
Smith & Wollensky NR/NR/NR 14,751 1.9% $63.89 $942,502 1.4% NAV  NAV NAV N 6/30/2028
Michael Kors(9) BBB-/NR/BBB- 4,066 0.5% $225.75 $917,907 1.4% $3,264,594  $803 28.1% N Various
Recital Karaoke NR/NR/NR 14,062 1.9% $63.86 $897,999 1.3% NAV  NAV NAV N 2/28/2029
Total Major Tenants   208,342 27.4% $122.16 $25,450,304 38.0%          
                       
Other Tenants   506,286 66.6% $82.14 $41,584,578 62.0%          
                       
Occupied Collateral Total   714,628 94.0% $93.80 $67,034,881 100.0%          
                       
Vacant Space   45,263 6.0%                
                       
Collateral Total   759,891 100.0%                
                         
                         
(1)Information is based on the underwritten rent roll. Tenants are listed in order of annual underwritten base rent.

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

(3)Annual U/W Base Rent PSF excludes vacant space.

(4)Annual U/W Base Rent reflects the following: (a) in-place leases based on the May 2019 rent roll and (b) contractual rent steps of $2,184,628 through May 31, 2020.

(5)Occ. Cost % is based on the underwritten rent as of the May 31, 2019 rent roll divided by the most recently reported sales.

(6)This tenant operates as the gondola attraction at the Grand Canal Shoppes Property.

(7)Regis Galerie has 8,406 square feet expiring on December 31, 2020, 4,654 square feet expiring on February 29, 2020 and 15,039 square feet expiring on May 31, 2025.

(8)The Welcome to Las Vegas lease is expected to commence on February 1, 2020. Gap rent was reserved by the lender at origination. 10,239 square feet expires on December 31, 2020 and the remaining 3,995 square feet expires on January 31, 2030.

(9)Michael Kors has 3,733 square feet expiring on January 31, 2026 and 333 square feet expiring on March 31, 2020.

 

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  

 

 

Retail – Specialty Retail Loan #1 Cut-off Date Balance:   $100,000,000
3327 & 3377 Las Vegas Boulevard South Grand Canal Shoppes Cut-off Date LTV:   46.3%
Las Vegas, NV 89109   U/W NCF DSCR:   2.46x
    U/W NOI Debt Yield:   9.6%

 

The following table presents certain information relating to the lease rollover schedule at the Grand Canal Shoppes 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 Annual
 U/W
Base Rent
 PSF
MTM(3) 3 2,080 0.3% 2,080 0.3% $0 0.0% $0.00
2019 17 39,567 5.2% 41,647 5.5% $2,436,560 3.6% $61.58
2020 26 80,052 10.5% 121,699 16.0% $4,475,224 6.7% $55.90
2021 16 28,634 3.8% 150,333 19.8% $5,748,002 8.6% $200.74
2022 13 35,084 4.6% 185,417 24.4% $4,683,674 7.0% $133.50
2023 20 41,038 5.4% 226,455 29.8% $5,490,655 8.2% $133.79
2024 23 60,412 8.0% 286,867 37.8% $6,381,261 9.5% $105.63
2025 22 146,378 19.3% 433,245 57.0% $10,519,793 15.7% $71.87
2026 9 29,721 3.9% 462,966 60.9% $2,751,933 4.1% $92.59
2027 3 6,142 0.8% 469,108 61.7% $859,431 1.3% $139.93
2028 9 48,011 6.3% 517,119 68.1% $4,940,574 7.4% $102.91
2029 27 185,418 24.4% 702,537 92.5% $18,048,649 26.9% $97.34
Thereafter 2 12,091 1.6% 714,628 94.0% $699,125 1.0% $57.82
Vacant 0 45,263 6.0% 759,891 100.0% $0 0.0% $0.00
Total/Weighted Average(4) 190 759,891 100.0%     $67,034,881 100.0% $93.80

 

(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)Annual U/W Base Rent PSF excludes vacant space.

(4)Total UW Rent Rolling reflects the following: (a) in-place leases based on the May 2019 rent roll and (b) contractual rent steps of $2,184,628 through May 31, 2020.

 

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  

 

 

Retail – Specialty Retail Loan #1 Cut-off Date Balance:   $100,000,000
3327 & 3377 Las Vegas Boulevard South Grand Canal Shoppes Cut-off Date LTV:   46.3%
Las Vegas, NV 89109   U/W NCF DSCR:   2.46x
    U/W NOI Debt Yield:   9.6%

 

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

 

Cash Flow Analysis(1)

 

  2016 2017 2018 TTM 3/31/2019 U/W %(1) U/W $ per SF
Rents in Place $68,255,204 $67,507,328 $66,471,558 $66,941,590 $64,850,253 62.3% $85.34
Contractual Rent Steps

0

0

0

0

2,184,628

2.1

2.87

Gross Potential Rent(2) $68,255,204 $67,507,328 $66,471,558 $66,941,590 $67,034,881 64.4% $88.22
Other Income(3) 12,765,993 12,203,223 10,872,872 10,365,738 10,455,366 10.1 13.76
Total Recoveries

31,633,869

27,875,777

25,766,223

25,166,107

26,539,087

25.5

34.92

Net Rental Income $112,655,066 $107,586,327 $103,110,653 $102,473,435 $104,029,334 100.0% $136.90
(Vacancy & Credit Loss)(4)

0

0

0

0

0

(0.0)

(0.00)

Effective Gross Income $112,655,066 $107,586,327 $103,110,653 $102,473,435 $104,029,334 100.0% $136.90
               
Real Estate Taxes 1,952,631 1,995,183 2,076,447 2,102,023 2,102,023 2.0 2.77
Insurance 268,881 248,826 253,530 260,040 260,040 0.2 0.34
Management Fee 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1.0 1.32
Other Operating Expenses(5)

30,074,924

29,916,371

28,454,203

27,645,562

27,645,562

26.6

36.38

Total Operating Expenses $33,296,436 $33,160,381 $31,784,180 $31,007,624 $31,007,624 29.8% $40.81
               
Net Operating Income $79,358,630 $74,425,947 $71,326,473 $71,465,811 $73,021,709 70.2% $96.09
Replacement Reserves 0 0 0 0 0 0.0 0.00
TI/LC

0

0

0

0

2,023,806

2.0

2.66

Net Cash Flow $79,358,630 $74,425,947 $71,326,473 $71,465,811 $70,997,903 68.2% $93.43
               
NOI DSCR(6) 2.75x 2.58x 2.47x 2.48x 2.53x    
NCF DSCR(6) 2.75x 2.58x 2.47x 2.48x 2.46x    
NOI Debt Yield(6) 10.4% 9.8% 9.4% 9.4% 9.6%    
NCF Debt Yield(6) 10.4% 9.8% 9.4% 9.4% 9.3%    

 

(1)Represents (i) percent of Net Rental Income for all revenue fields, (ii) percent of Gross Potential Rent for Vacancy & Credit Loss and (iii) percent of Effective Gross Income for all other fields.

(2)UW Gross Potential Rent reflects the following: (a) in-place leases based on the May 2019 rent roll and (b) contractual rent steps of $2,184,628 through May 31, 2020, and excludes any rent associated with the Barneys New York space. The increase from 3/31/2019 TTM to UW Gross Potential Rent and Net Operating Income is due to recent leasing activity.

(3)Other Income includes vending income, enterprise income, advertising revenue sponsorship income, specialty leasing income, overage rent and percent in lieu.

(4)The underwritten economic vacancy is 0.0%. The Grand Canal Shoppes Property is 94.0% leased as of May 2019.

(5)Other Operating Expenses includes the Walgreens ground/air rights lease rent of which $113,475, 19.32% of the annual ground lease payment, was underwritten. The Venetian Hotel and Casino is responsible under its sublease for the remaining 80.68% of the ground rent under the Walgreens lease.

(6)Debt service coverage ratios and debt yields are based on the Grand Canal Shoppes Senior Loan and exclude the Grand Canal Shoppes Subordinate Companion Loan.

 

Appraisal. The appraiser concluded to an “as is” appraised value of $1,640,000,000 with a valuation date of April 3, 2019 which results in a Cut-off Date LTV Ratio and an LTV Ratio at Maturity of 46.3% and 46.3%, respectively, based on the Grand Canal Shoppes Senior Loan, and 59.5% and 59.5% respectively, based on the Grand Canal Shoppes Whole Loan.

 

Environmental Matters. According to a Phase I environmental site assessment dated May 15, 2019, there was no evidence of any recognized environmental conditions at the Grand Canal Shoppes Property.

 

Market Overview and Competition. The Grand Canal Shoppes Property is located in Las Vegas, Nevada along The Strip. The Grand Canal Shoppes Property’s tenant mix of retail, restaurants, and entertainment offerings benefits from Las Vegas’s tourists, convention center attendees, and residents. The Grand Canal Shoppes Property is adjacent to the Sands Expo Convention Center, a 1.8 million square foot meeting and convention center. Additionally, Las Vegas has various developments in process that are expected to be completed in 2020 and beyond. The most notable of these developments are the MSG Sphere, an 18,000 seat performance venue being developed by Madison Square Garden and Las Vegas Sands east of the Grand Canal Shoppes Property, the construction of the 65,000 seat Las Vegas Stadium, the new home of the NFL’s Oakland Raiders, which is expected to also double as a live entertainment and convention venue, and the Las Vegas Convention Center District is under redevelopment with a 1.4 million square foot expansion. We cannot assure you whether or when such developments will be completed.

 

Primary access to the Grand Canal Shoppes Property is provided by Interstate 15, the region’s primary north-south route, which is situated approximately one mile west of the Grand Canal Shoppes Property, with access gained via Spring Mountain Road/Sands Avenue. The Grand Canal Shoppes Property is located approximately 3 miles north of the McCarran International Airport and has direct access to Citizen Area Transit, which has over 41 routes running throughout the region. According to the appraisal, there were over 42.1 million visitors traveling to Las Vegas, and convention visitors exceeding 6.5 million in 2018. According to the appraisal, the estimated 2018 population within a five-, seven- and ten-mile radius of the Grand Canal Shoppes Property was 410,151, 911,414 and

 

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  

 

 

Retail – Specialty Retail Loan #1 Cut-off Date Balance:   $100,000,000
3327 & 3377 Las Vegas Boulevard South Grand Canal Shoppes Cut-off Date LTV:   46.3%
Las Vegas, NV 89109   U/W NCF DSCR:   2.46x
    U/W NOI Debt Yield:   9.6%

 

1,661,641, respectively. The estimated 2018 average household income within a five-, seven- and ten-mile radius was $54,257, $60,146 and $70,983, respectively.

 

The Grand Canal Shoppes Property is located in the Southeast submarket of the Las Vegas retail market. According to the appraisal, as of the fourth quarter of 2018, the vacancy rate in the Southeast submarket was approximately 14.5%, with average asking rents of $19.41 PSF and inventory of approximately 5.1 million square feet. According to the appraisal, as of the fourth quarter of 2018, the vacancy rate in the Las Vegas retail market was approximately 13.4%, with average asking rents of $22.34 PSF and inventory of approximately 29.9 million square feet. The appraiser concluded to a market rent of $98.23 PSF for the space at the Grand Canal Shoppes Property.

 

The following table presents certain competitive properties to the Grand Canal Shoppes Property:

 

Competitive Property Summary (1)

 

Property, Location Type Year Built/ Renovated Size (SF) Occ. Inline Sales PSF Anchor Tenants Distance to Subject (mi.)

Grand Canal Shoppes Property

Las Vegas, NV

Fashion/Specialty 1999/2007 759,891 94.0%(2) $1,182(3) TAO Nightclub, Theater, Grand Lux Café, Mercato Della Pescheria, TAO Asian Bistro, Recital Karaoke, Madame Tussaud Las Vegas, Verdugo West Brewery, Golden Gai N/A
Primary Competition              
Forum Shops at Caesars
Las Vegas, NV
Fashion/Specialty 1992/1997, 2004 650,000 99% $1,400 - $1,700 Upscale/themed retail project at Caesars with 1-2 levels 0.5

Wynn Las Vegas Retail

Las Vegas, NV

Fashion/Specialty 2005/2008 150,000 95% $2,000 - $3,000 Upscale retail areas located within The Wynn Las Vegas and Wynn Encore 0.3

The Shops at Crystals

Las Vegas, NV

Fashion/Specialty 2009/NAP 360,000 94% $1,200 - $1,400 Upscale specialty retail center with 3-levels on Las Vegas Strip part of City Center 1.1

Miracle Mile Shops

Las Vegas, NV

Fashion/Specialty

2000/2008,

2016

494,000 93% $825 - $875 Mid-Tier specialty retail center with 1 and 2 stories at Planet Hollywood 1.0

Fashion Show Mall

Las Vegas, NV(4)

Super-Regional Center 1981/Various 1,875,400 95% $825 - $875 Neiman Marcus, Dillard's, Macy's, Saks, Forever 21, Nordstrom, Dick's Sporting Goods 0.3
Secondary Competition              
The Linq Promenade
Las Vegas, NV
Fashion/Specialty 2014/NAP 268,000 93% - - - Retail and entertainment specialty center including a number of restaurants and performance venues 0.4
Bellagio Shops
Las Vegas, NV
Fashion/Specialty 1998/NAP - 100% - - - Upscale shopping area located within Bellagio Resort and Casino 0.8

The Showcase

Las Vegas, NV

Specialty Retail

1997/2003,

2009

347,281 97% - - - Coca-Cola, Ross, Hard Rock, M&M's, Adidas 1.6
Las Vegas Premium Outlets
Las Vegas, NV
Outlet Center 2003/NAP 676,113 100% $1,400 - $1,600 Last Call Neiman Marcus, Off 5th Saks 5th Avenue, Nike 3.5

 

(1)Information obtained from the appraisal.

(2)Occupancy as of May 31, 2019.

(3)Comparable inline sales PSF shown as of February 28, 2019.

(4)Owned by an affiliate of the Grand Canal Shoppes Borrowers.

 

Escrows.

 

Real Estate Taxes and Insurance Reserves – During the continuance of a Cash Management Period (as defined below), the Grand Canal Shoppes Borrowers are required to reserve monthly 1/12th of the estimated property taxes and 1/12th of the estimated insurance premiums, provided that the monthly insurance reserve requirement is waived if the Grand Canal Shoppes Borrowers provide the lender with evidence that (a) the insurance policies required to be maintained by the Grand Canal Shoppes Borrowers are maintained pursuant to blanket policies that comply with the requirements of the Grand Canal Shoppes Whole Loan documents and (b) the insurance premiums payable in connection with such policies have been prepaid for not less than one year in advance (or, for the period of coverage under the policies as to which certificates are delivered at origination, such period, if less than one year).

 

Recurring Replacements Reserve – During the continuance of a Cash Management Period, the Grand Canal Shoppes Borrowers are required to deposit $16,122 monthly for a recurring replacements reserve. However, the Grand Canal Shoppes Borrowers will not be required to make any portion of the monthly recurring replacement deposit if the amount then on deposit in the recurring replacements reserve is equal to or exceeds $386,928.

 

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  

 

 

Retail – Specialty Retail Loan #1 Cut-off Date Balance:   $100,000,000
3327 & 3377 Las Vegas Boulevard South Grand Canal Shoppes Cut-off Date LTV:   46.3%
Las Vegas, NV 89109   U/W NCF DSCR:   2.46x
    U/W NOI Debt Yield:   9.6%

 

TI/LC Reserve – The Grand Canal Shoppes Whole Loan documents provide for (i) an upfront reserve of $12,309,694 for unfunded tenant improvements and leasing commissions, including for the following major tenants at the Grand Canal Shoppes Property: $1,177,693 for Recital Karaoke, $1,472,330 for Verdugo West Brewery, $967,269 for Golden Gai, $63,000 for CUT By Wolfgang Puck, $882,000 for Smith & Wollensky and $20,000 for Once and (ii) during the continuance of a Cash Management Period, an ongoing monthly TI/LC reserve in an amount equal to $96,731. However, the Grand Canal Shoppes Borrowers will not be required to make any portion of the monthly TI/LC reserve deposit if the amount then on deposit in the TI/LC reserve is equal to or exceeds $2,321,544.

 

Ground Rent Reserve – During the continuance of a Cash Management Period, the Grand Canal Shoppes Borrowers are required to reserve monthly 1/12th of the annual amounts due by each of the Grand Canal Shoppes Borrowers, as applicable, under the Ground Leases (as defined below).

 

Gap Rent Reserve – The Grand Canal Shoppes Whole Loan documents provide for an upfront reserve of $1,218,246 for outstanding gap rents.

 

Notwithstanding the foregoing, the Grand Canal Shoppes Borrowers’ obligations to make any monthly deposits into the real estate taxes and insurance reserves, recurring replacement reserve, TI/LC reserve and/or ground rent reserve as applicable, is deemed to be satisfied to the extent there are sufficient funds to make such deposits in the cash management account, in which case no actual payment from the Grand Canal Shoppes Borrowers is required.

 

Lockbox and Cash Management. The Grand Canal Shoppes Whole Loan is structured with a hard lockbox and springing cash management. The Grand Canal Shoppes Borrowers are required to direct each tenant of the Grand Canal Shoppes Property to deposit all funds (other than Non-Core Income (as defined below)) directly into the lockbox account, and to deposit any funds received by the Grand Canal Shoppes Borrowers and property manager, notwithstanding such direction, into the lockbox account within two business days of receipt. Within two business days of written notification of the commencement of a Cash Management Period, the Grand Canal Shoppes Borrowers are required to establish a lender-controlled cash management account with a cash management bank, into which all funds in the lockbox account will be required to be deposited periodically so long as a Cash Management Period is continuing. So long as a Cash Management Period is continuing, funds in the cash management account are required to be applied (i) to make deposits into the real estate taxes and insurance reserves (if then required) as described above under “Escrows”, (ii) to make deposits into the ground rent reserve as described above under “Escrows” (iii) to pay debt service on the Grand Canal Shoppes Whole Loan, (iv) provided no event of default under the Grand Canal Shoppes Whole Loan is continuing as to which the lender has initiated an enforcement action, to pay operating expenses set forth in the annual budget (which is required to be approved by the lender) and extraordinary operating or capital expenses reasonably approved by the lender, (v) to make deposits into the recurring replacements reserve and the TI/LC reserve, as described above under “Escrows”, (vi) in the event a Cash Sweep Period is continuing, to deposit any excess amount remaining in the lockbox account into an excess cash flow account to be held by the lender as additional security for the Grand Canal Shoppes Whole Loan during the continuance of the Cash Sweep Period (provided that so long as no event of default exists as to which the lender has initiated an enforcement action, funds in such reserve may be applied to operating expenses) and (vii) if no Cash Sweep Period and no event of default under the Grand Canal Shoppes Whole Loan are continuing, all remaining funds in the lockbox account are required to be disbursed to the Grand Canal Shoppes Borrowers.

 

A “Cash Sweep Period” means a period:

 

(a)commencing upon an event of default under the Grand Canal Shoppes Whole Loan and ending if such event of default is cured or waived; or

 

(b)commencing upon the determination that the debt yield of the Grand Canal Shoppes Whole Loan is less than 6.0% as of the end of any calendar year and ending upon the date that such debt yield is equal to or in excess of 6.0% for two consecutive calendar quarters.

 

A “Cash Management Period” means a period:

 

(a)commencing upon an event of default under the Grand Canal Shoppes Whole Loan and ending if such event of default is cured or waived; or

 

(b)commencing upon the determination that the debt yield of the Grand Canal Shoppes Whole Loan is less than 6.5% as of the end of any calendar year and ending upon the date that such debt yield is equal to or in excess 6.5% for two consecutive calendar quarters.

 

“Non-Core Income” means (i) certain de minimis amounts of rents received directly by the Grand Canal Shoppes Borrowers from miscellaneous revenue items such as holiday photos and change retrieved from fountains (but excluding rent from Seasonal Leases) and (ii) certain rents generated pursuant to multi-property sponsorship and advertising programs which are directly attributable to the Grand Canal Shoppes Property. “Seasonal Leases” means leases and/or license agreements having a maximum term of one year or less.

 

Property Management. The Grand Canal Shoppes Property is managed by Brookfield Properties Retail Inc., an affiliate of the Grand Canal Shoppes Borrowers.

 

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  

 

 

Retail – Specialty Retail Loan #1 Cut-off Date Balance:   $100,000,000
3327 & 3377 Las Vegas Boulevard South Grand Canal Shoppes Cut-off Date LTV:   46.3%
Las Vegas, NV 89109   U/W NCF DSCR:   2.46x
    U/W NOI Debt Yield:   9.6%

 

Release of Barneys Parcel. The Grand Canal Shoppes Borrowers may obtain the release of a portion of the Grand Canal Shoppes Property comprised of the approximately 84,743 square foot, three level space currently demised to Barneys New York (the “Barneys Parcel”) pursuant to a lease, which is expected to expire on January 31, 2020, upon a bona fide sale to a third party not affiliated with the Grand Canal Shoppes Borrowers or the Grand Canal Shoppes Guarantor, provided that, among other things, and in accordance with the Grand Canal Shoppes Whole Loan documents: (i) no event of default has occurred and is continuing, (ii) the lender has received reasonably satisfactory evidence that all portions of the Barneys Parcel owned by the Grand Canal Shoppes Borrowers in fee simple have been legally subdivided from all portions of the Grand Canal Shoppes Property remaining after the release, (iii) upon request by the lender, the Grand Canal Shoppes Borrowers deliver a legal opinion stating that the release does not constitute a “significant modification” of the Grand Canal Shoppes Whole Loan under Section 1001 of the Internal Revenue Code of 1986 or otherwise cause a tax to be imposed on a “prohibited transaction” by any REMIC trust, (iv) following such release, the loan-to-value ratio (as determined by the lender in its sole discretion using only the portion of the remaining Grand Canal Shoppes Property which constitutes acceptable real estate collateral under the Code for a REMIC trust) is equal to or less than 125% (provided that the Grand Canal Shoppes Borrowers may prepay the “qualified amount” as that term is defined in the Internal Revenue Service Revenue Procedure 2010-30, as the same may be amended, modified or supplemented from time to time, in order to meet the foregoing loan-to-value ratio). From and after the release of the Barneys Parcel, without the prior consent of the lender, neither the Grand Canal Shoppes Borrowers nor any of their affiliates may solicit, cause or facilitate the relocation of any existing tenant at the Grand Canal Shoppes Property to the Barneys Parcel.

 

Real Estate Substitution. Not permitted.

 

Subordinate and Mezzanine Indebtedness. In addition to the Grand Canal Shoppes Mortgage Loan, the Grand Canal Shoppes Property also secures the Grand Canal Shoppes Non-Serviced Pari Passu Companion Loans, which have an aggregate Cut-off Date principal balance of $660,000,000, and the Grand Canal Shoppes Subordinate Companion Loan which has a Cut-off Date principal balance of $215,000,000. The Grand Canal Shoppes Non-Serviced Pari Passu Companion Loans accrue interest at the same rate as the Grand Canal Shoppes Mortgage Loan. The Grand Canal Shoppes Subordinate Companion Loan accrues interest at the rate of 6.2500% per annum. The Grand Canal Shoppes Senior Loan is generally senior in right of payment to the Grand Canal Shoppes Subordinate Companion Loan. The holders of the Grand Canal Shoppes Mortgage Loan, the Grand Canal Shoppes Non-Serviced Pari Passu Companion Loans and the Grand Canal Shoppes Subordinate Companion Loan have entered into a co-lender agreement which sets forth the allocation of collections on the Grand Canal Shoppes Whole Loan. See “Description of the Mortgage Pool—The Whole Loans—The Non-Serviced AB Whole Loans—The Grand Canal Shoppes Whole Loan” in the Preliminary Prospectus.

 

Ground/Air Rights Leases. The Grand Canal Shoppes Borrowers have air rights ground leases (which do not include the underlying land) with Venetian Casino Resort, LLC, as lessor, for portions of the retail and restaurant space on the casino level of each of the Venetian Hotel and the Palazzo Hotel portions of the Grand Canal Shoppes Property. The ground lease for the retail and restaurant space on the casino level of the Venetian Hotel is for an 89-year term commencing on May 14, 2004 and expiring on May 13, 2093 with no extension options. The ground lease for the retail and restaurant space on the casino level of the Palazzo Hotel is for an 89-year term commencing on February 29, 2008 and expiring on February 28, 2097 with no extension options. Each of the annual rents for these ground leases is $1 and the Grand Canal Shoppes Borrowers have the option to purchase the premises for $1 on the respective expiration dates.

 

The air rights above the space leased to Walgreens Co. and used as a Walgreen’s store are leased by a third party to the Grand Canal Shoppes Borrowers, as tenants for a 60-year term commencing on March 1, 2004 and expiring February 28, 2064 with one 40-year extension option (such lease, together with the ground leases of the casino level restaurant/retail of the Venetian Hotel and Casino and the Palazzo Casino level restaurant/retail, the “Ground Leases”). The ground rent under the Walgreens air rights lease was initially $600,000; however it escalates annually each year after the seventh lease year (which commenced March 1, 2011) by the same percentage that the consumer price index has increased from the prior year, not to exceed a 2.00% increase in any year. The Venetian Casino Resort, LLC subleases a portion of the Walgreens air rights from the Grand Canal Shoppes Borrowers and is responsible under the sublease for paying an amount equal to 80.68% of the rent under the prime lease. The sublease is coterminous with the Walgreens lease.

 

Right of First Offer/Right of First Refusal. A transfer of either the Grand Canal Shoppes portion or the Palazzo Shoppes portion of the Grand Canal Shoppes Property (other than to a lender in connection with foreclosure or delivery of a deed-in-lieu of foreclosure of a mortgage secured by the Grand Canal Shoppes Property or the first subsequent transferee from the lender) is subject to a right of first offer in favor of Venetian Casino Resort, LLC.

 

Additionally, in the case of acceleration of the Grand Canal Shoppes Whole Loan, Venetian Casino Resort, LLC has the right, subject to the satisfaction of certain financial covenants, to purchase the Grand Canal Shoppes Whole Loan at a price equal to (a) the principal balance, (b) accrued and unpaid interest up to (but excluding) the date of purchase, (c) all other amounts owed under the Grand Canal Shoppes Whole Loan documents, including, without limitation (but only to the extent so owed) (1) any unreimbursed advances made by the servicer, with interest at the applicable rate, (2) any servicing and special servicing fees, (3) any exit fees, (4) any prepayment, yield maintenance or similar premiums and (5) if the date of purchase is not a scheduled payment date, accrued and unpaid interest, from the date of purchase up to (but excluding) the scheduled payment date next succeeding the date of purchase and (d) all reasonable fees and expenses incurred by the lender in connection with the purchase.

 

Letter of Credit. None.

 

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  

 

 

Retail – Specialty Retail Loan #1 Cut-off Date Balance:   $100,000,000
3327 & 3377 Las Vegas Boulevard South Grand Canal Shoppes Cut-off Date LTV:   46.3%
Las Vegas, NV 89109   U/W NCF DSCR:   2.46x
    U/W NOI Debt Yield:   9.6%

 

Terrorism Insurance. The Grand Canal Shoppes Whole Loan documents require that the comprehensive ”special perils” insurance policy required to be maintained by the Grand Canal Shoppes Borrowers provide coverage in an amount equal to the “full replacement cost” of the Grand Canal Shoppes Property. The Grand Canal Shoppes Whole Loan documents also require business income insurance covering no less than the 24-month period commencing at the time of casualty, together with a 12-month extended period of indemnity. Notwithstanding the foregoing, for so long as the Terrorism Risk Insurance Act of 2002, as extended and modified by the Terrorism Risk Insurance Program Reauthorization Act of 2007 and by the Terrorism Risk Insurance Program Reauthorization Act of 2015 (“TRIPRA”) is in effect (including any extensions thereof or if another federal governmental program is in effect relating to “acts of terrorism” which provides substantially similar protections as TRIPRA), and covers both domestic and foreign acts of terrorism, the lender is required to accept terrorism insurance which insures against “covered acts” as defined by TRIPRA (or such other program); provided, however, that the Grand Canal Shoppes Borrowers will not be obligated to pay terrorism insurance premiums in excess of two times the premium for the “special perils” and business income coverage on a stand-alone basis (excluding any earthquake insurance or terrorism insurance components of such policies) in any policy year. See “Risk Factors—Risks Relating to the Mortgage Loans—Terrorism Insurance May Not Be Available for All Mortgaged Properties” in the Preliminary Prospectus.

 

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  

 

 

Retail - Anchored Loan #2 Cut-off Date Balance:   $89,690,115
413 North Alafaya Trail Waterford Lakes Town Center Cut-off Date LTV:   66.8%
Orlando, FL 32828   U/W NCF DSCR:   1.43x
    U/W NOI Debt Yield:   9.3%

 

 

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  

 

 

Retail - Anchored Loan #2 Cut-off Date Balance:   $89,690,115
413 North Alafaya Trail Waterford Lakes Town Center Cut-off Date LTV:   66.8%
Orlando, FL 32828   U/W NCF DSCR:   1.43x
    U/W NOI Debt Yield:   9.3%

 

 

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  

 

 

Retail - Anchored Loan #2 Cut-off Date Balance:   $89,690,115
413 North Alafaya Trail Waterford Lakes Town Center Cut-off Date LTV:   66.8%
Orlando, FL 32828   U/W NCF DSCR:   1.43x
    U/W NOI Debt Yield:   9.3%

 

 

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  

 

  

No. 2 – Waterford Lakes Town Center
 
Mortgage Loan Information   Mortgaged Property Information
Mortgage Loan Seller: Bank of America, National Association   Single Asset/Portfolio: Single Asset

Credit Assessment

(Fitch/KBRA/S&P):

NR/NR/BB(sf)   Property Type - Subtype: Retail – Anchored
Original Principal Balance(1): $90,000,000   Location: Orlando, FL
Cut-off Date Balance(1): $89,690,115   Size: 691,625 SF
% of Initial Pool Balance: 6.9%   Cut-off Date Balance Per SF(1): $259.50
Loan Purpose: Recapitalization   Maturity Date Balance Per SF(1): $213.15
Borrower Sponsor: Washington Prime Group, L.P.   Year Built/Renovated: 1998/NAP
Guarantor: Washington Prime Group, L.P.   Title Vesting: Fee
Mortgage Rate: 4.8600%   Property Manager: Washington Prime Management Associates, LLC (borrower-related)
Note Date: April 16, 2019   Current Occupancy (As of)(4): 98.9% (2/1/2019)
Seasoning: 3 months   YE 2018 Occupancy: 99.5%
Maturity Date: May 6, 2029   YE 2017 Occupancy: 99.3%
IO Period: 0 months   YE 2016 Occupancy: 98.0%
Loan Term (Original): 120 months   YE 2015 Occupancy: NAV
Amortization Term (Original): 360 months   As-Is Appraised Value: $268,600,000
Loan Amortization Type: Amortizing Balloon   As-Is Appraisal Value Per SF: $388.36
Call Protection(2): L(27),D(86),O(7)   As-Is Appraisal Valuation Date: March 1, 2019
Lockbox Type: Hard/Springing Cash Management   Underwriting and Financial Information
Additional Debt(1): Yes   TTM NOI (2/28/2019): $17,658,836
Additional Debt Type (Balance)(1): Pari Passu ($89,690,115)   YE 2018 NOI: $17,781,863
      YE 2017 NOI: $17,382,418
      YE 2016 NOI: $16,426,269
      U/W Revenues: $22,242,309
Escrows and Reserves(3)   U/W Expenses: $5,591,686
  Initial Monthly Cap   U/W NOI: $16,650,623
Taxes $339,161 $169,580 NAP   U/W NCF: $16,288,103
Insurance $0 Springing NAP   U/W DSCR based on NOI/NCF(1): 1.46x / 1.43x
Replacement Reserve $0 $11,521 $500,000   U/W Debt Yield based on NOI/NCF(1): 9.3% / 9.1%
Existing TI/LC Reserve $5,000,000 $57,605 $7,500,000   UW Debt Yield at Maturity based on NOI/NCF(1): 11.3% / 11.1%
Unfunded Obligations Reserve $1,485,464 $0 NAP   Cut-off Date LTV Ratio(1): 66.8%
Other $22,500,000 $0 NAP   LTV Ratio at Maturity(1): 54.9%
             
Sources and Uses
Sources       Uses    
Original whole loan amount(1) $180,000,000 100.0%   Principal Equity Distribution(5) $148,515,080 82.5%
        Reserves 29,324,625 16.3
        Closing costs 2,160,295 1.2
Total Sources $180,000,000 100.0%   Total Uses $180,000,000 100.0%

 

(1)The Waterford Lakes Town Center Mortgage Loan (as defined below) is part of the Waterford Lakes Town Center Whole Loan (as defined below), which is comprised of four pari passu notes with an aggregate original principal balance of $180,000,000. All statistical information related to the Cut-off Date Balance Per SF, U/W NOI Debt Yield, U/W NCF Debt Yield, U/W NOI DSCR, U/W NCF DSCR, Cut-off Date LTV Ratio and LTV Ratio at Maturity are based on the Waterford Lakes Town Center Whole Loan.

(2)The lockout period will expire on the earlier to occur of (i) two years after the closing date of the securitization that includes the last note to be securitized and (ii) June 6, 2022.

(3)See “Escrows” section for a full description of Escrows and Reserves.

(4)Current Occupancy includes Express Fashions (9,100 square feet, 1.3% of NRA), which has a signed lease but is not expected to take occupancy or commence paying rent until August 2019. We cannot assure you that this tenant will take occupancy or pay rent as anticipated or at all.

(5)The Waterford Lakes Town Center Property (as defined below) was previously unencumbered. The Principal Equity Distribution was used to refinance a portion of an unsecured corporate note.

 

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  

 

 

Retail - Anchored Loan #2 Cut-off Date Balance:   $89,690,115
413 North Alafaya Trail Waterford Lakes Town Center Cut-off Date LTV:   66.8%
Orlando, FL 32828   U/W NCF DSCR:   1.43x
    U/W NOI Debt Yield:   9.3%

The Mortgage Loan. The mortgage loan (the “Waterford Lakes Town Center Mortgage Loan”) is part of a whole loan (the “Waterford Lakes Town Center Whole Loan”) co-originated by Bank of America, National Association and Goldman Sachs Bank USA, consisting of four pari passu promissory notes with an aggregate original principal balance of $180,000,000 and secured by a first mortgage encumbering the fee interest in an anchored retail property located in Orlando, Florida (the “Waterford Lakes Town Center Property”). The Waterford Lakes Town Center Mortgage Loan is evidenced by non-controlling Note A-2-A and A-2-B which had an aggregate original principal balance of $90,000,000. The Waterford Lakes Town Center Whole Loan is being serviced pursuant to the GSMS 2019-GC39 transaction. See “Description of the Mortgage Pool—The Whole Loans—The Non-Serviced Pari Passu Whole Loans” and “Pooling and Servicing Agreement—Servicing of the Non-Serviced Mortgage Loans” in the Preliminary Prospectus.

 

Note Summary

 

Notes Original Principal Balance Cut-off Date Balance Note Holder Controlling Interest
A-1-A $55,000,000 $54,810,626 GSMS 2019-GC39 Yes
A-1-B $35,000,000 $34,879,489 GSMS 2019-GC40 No
A-2-A $45,000,000 $44,845,058 BANK 2019-BNK19 No
A-2-B $45,000,000 $44,845,058 BANK 2019-BNK19 No
Total $180,000,000 $179,380,230    

 

The Borrower and the Borrower Sponsors. The borrower is Waterford Lakes Town Center LLC, a Delaware limited liability company with at least two independent directors (the “Waterford Lakes Town Center Borrower”). Legal counsel to the Waterford Lakes Town Center Borrower delivered a non-consolidation opinion in connection with the origination of the Waterford Lakes Town Center Whole Loan.

 

The borrower sponsor and non-recourse carveout guarantor is Washington Prime Group, L.P. The parent of the non-recourse carveout guarantor is Washington Prime Group Inc. (NYSE: WPG), a retail REIT that owns, manages, acquires and develops retail properties. Washington Prime Group Inc. was formed in May 2014 following a spin-off from Simon Property Group and acquired Glimcher Realty Trust (NYSE: GRT) in January 2015.

 

The Property. The Waterford Lakes Town Center Property is a 691,265 square foot, eight-building portion of a larger 965,765 square foot anchored retail center built in 1998 and located at 413 North Alafaya Trail in Orlando, Florida. The Waterford Lakes Town Center Property is anchored by Regal Cinema, Best Buy, Jo-Ann Fabrics, Bed Bath & Beyond, Ross Dress For Less and T.J. Maxx, and shadow anchored by a non-collateral Super Target, Ashley Furniture and LA Fitness. Junior anchors include Barnes & Noble, Office Max, PetSmart and Old Navy. After the top three anchor tenants, no single tenant represents more than 3.2% of NRA or 2.8% of underwritten base rent. Notable in-line restaurant and retail tenants include Chuck E Cheese’s, Tilly’s, Ulta, Skechers, Pier 1, Victoria’s Secret, Five Below, Banana Republic Factory Store, Wahlburgers, Rack Room Shoes, Lane Bryant, A+ Kids Learning Academy, California Pizza Kitchen and Justice. The Waterford Lakes Town Center Property includes 4,603 parking spaces (approximately 4.77 spaces per 1,000 square feet for the total 965,765 square foot retail center). During the borrower sponsor’s ownership, from 2015 to 2018, the borrower sponsor invested a total of approximately $13.6 million into the Waterford Lakes Town Center Property for capital expenditures and tenant allowances.

 

As of February 1, 2019, the Waterford Lakes Town Center Property was 98.9% occupied by 104 tenants. Historical year-end occupancy has been between 98.0% and 99.5% since 2016. Since 2017, 13 new in-line tenants (39,515 square feet) signed leases at the Waterford Lakes Town Center Property at a weighted average rent of $29.09 per square foot, and 20 in-line tenants (77,348 square feet) renewed leases at a weighted average rent of $30.36 per square foot (a 16.4% increase over previous rents).

 

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  

 

 

Retail - Anchored Loan #2 Cut-off Date Balance:   $89,690,115
413 North Alafaya Trail Waterford Lakes Town Center Cut-off Date LTV:   66.8%
Orlando, FL 32828   U/W NCF DSCR:   1.43x
    U/W NOI Debt Yield:   9.3%

The following table presents certain information relating to the tenancy at the Waterford Lakes Town Center Property:

 

Major Tenants(1)

 

Tenant Name

Credit Rating (Fitch/

Moody’s/

S&P)(2)

Tenant NRA % of
Total NRA
Annual U/W Base Rent PSF(3) Annual
U/W Base Rent
% of Total Annual U/W Base Rent Lease
Expiration
Date
Renewal Options Termin. Options (Y/N) Jan. 2019 TTM Tenant Sales PSF / Occ. Cost
                 
Collateral Anchor Tenants                  
Regal Cinema NR/NR/NR 86,231 8.9% $21.00 $1,810,851 11.5% 1/31/2020 2, 5-year N $670,760 / 16.3%(4)
Best Buy BBB/Baa1/BBB 46,094 4.8% $16.00 $737,504 4.7% 1/31/2021 2, 5-year N NAP
Jo-Ann Fabrics NR/NR/NR 35,000 3.6% $13.25 $463,750 2.9% 1/31/2024 2, 5-year N $114 / 16.0%
Bed Bath & Beyond NR/Baa3/BB+ 30,616 3.2% $14.22 $435,360 2.8% 1/31/2020 1, 5-year N NAP
Ross Dress for Less NR/A3/A- 30,184 3.1% $11.40 $344,098 2.2% 1/31/2021 2, 5-year N $633 / 2.6%
T.J. Maxx NR/A2/A+ 30,000 3.1% $10.00 $300,000 1.9% 1/31/2020 1, 5-year N NAP
Total Collateral Anchor Tenants 258,125 26.7% $15.85 $4,091,563 25.9%        
                     
Junior Anchor Tenants                  
Barnes & Noble NR/NR/NR 23,925 2.5% $16.25 $388,781 2.5% 2/3/2020 NAP N $164 / 12.6%
Office Max NR/NR/NR 23,406 2.4% $13.40 $313,640 2.0% 9/30/2020 3, 5-year N NAP
PetSmart NR/Caa3/B- 19,288 2.0% $14.51 $279,792 1.8% 1/31/2021 3, 5-year N $508 / 3.9%
Old Navy NR/Baa2/BB+ 15,650 1.6% $18.70 $292,664 1.9% 6/30/2025 NAP N $471 / 6.5%
Forever 21 NR/NR/NR 11,711 1.2% $22.40 $262,326 1.7% 6/30/2026 NAP N $346 / 9.6%
Chuck E Cheese’s NR/NR/NR 11,121 1.2% $24.46 $272,020 1.7% 6/30/2020 2, 5-year N $179 / 17.7%
Tilly’s NR/NR/NR 10,400 1.1% $28.44 $295,776 1.9% 1/31/2027 NAP N $289 / 13.6%
Cooper’s Hawk Winery & Restaurant NR/NR/NR 10,320 1.1% $35.20 $363,264 2.3% 4/30/2029 2, 5-year N $546 / 8.7%
Ulta NR/NR/NR 10,000 1.0% $28.34 $283,400 1.8% 2/28/2029 2, 5-year N $998 / 3.5%
Total Junior Anchor Tenants   135,821 14.1% $20.26 $2,751,663 17.4%        
                     
Occupied In-Line Tenants(5) 289,528 30.0% $30.99 $8,972,047 56.7%        
Vacant Space 7,791 0.8% $0.00 $0 0.0%        
Collateral Total 691,265 71.6% $23.14 $15,815,273 100.0%        
                   
Non-Collateral Tenants(6)                  
Target A-/A2/A 188,500 19.5%   $264,277          
Ashley Furniture NR/NR/NR 45,000 4.7%   $62,118          
LA Fitness NR/NR/NR 41,000 4.2%   $56,596          
Non-Collateral Outparcel Tenants 0 0.0%   $26,212          
Total Non-Collateral Anchor Tenants   274,500 28.4%   $409,204          
                     
Total Collateral and Non-Collateral   965,765 100.0%              
                     
                         
(1)Information obtained from the underwritten rent roll.

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

(3)Collateral Total Annual U/W Base Rent PSF excludes Vacant Space.

(4)Sales for Regal Cinema are on a per screen basis. The theater has 20 screens.

(5)Includes Express Fashions (9,100 square feet, 1.3% of NRA), which has a signed lease but is not expected to take occupancy or commence paying rent until August 2019. We cannot assure you that this tenant will take occupancy or pay rent as anticipated or at all.

(6)The Non-Collateral Tenants contribute real estate taxes and common area maintenance to the Waterford Lakes Town Center Property. The Non-Collateral Outparcel Tenants include Barbeque Integrated, Chick-Fil-A, Darden Restaurants, Duffy’s of Waterford Lakes, Miller’s Ale House and T.G.I. Friday’s.

 

 

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  

 

 

Retail - Anchored Loan #2 Cut-off Date Balance:   $89,690,115
413 North Alafaya Trail Waterford Lakes Town Center Cut-off Date LTV:   66.8%
Orlando, FL 32828   U/W NCF DSCR:   1.43x
    U/W NOI Debt Yield:   9.3%

Major Tenants.

 

Regal Cinema (86,231 square feet, 8.9% of NRA, 11.5% of underwritten base rent). Regal Cinema operates 20 screens, including 3D and IMAX, under an original December 1999 lease that was most recently renewed in February 2015 through January 2020, increasing its rent from $20.00 per square foot to $21.00 per square foot with no concessions given. Regal Cinema has two five-year renewal options remaining with notice by August 4, 2019. The lender reserved $22,500,000 at loan origination in connection with the Regal Cinema space or renewal of the Regal Cinema lease to be released upon the lease replacement or renewal for a term through January 2025. See “Escrows” below for further details. At the Waterford Lakes Town Center Property, Regal Cinema achieved sales per screen of $607,347, $564,213 and $677,052 as of year-end 2016, 2017 and 2018, respectively.

 

Best Buy (46,094 square feet, 4.8% of NRA, 4.7% of underwritten base rent). Best Buy occupies 46,094 square feet under an original October 2000 lease that was most recently renewed in February 2016 through January 2021, increasing its rent from $15.00 per square foot to $16.00 per square foot with no concessions given. Best Buy has two five-year renewal options remaining with six months’ notice at fixed rents. Best Buy is not required to report sales pursuant to its lease. The Best Buy lease is guaranteed by Best Buy Co., Inc.

 

Jo-Ann Fabrics (35,000 square feet, 3.6% of NRA, 2.9% of underwritten base rent). Jo-Ann Fabrics occupies 35,000 square feet under an original November 2003 lease that was most recently renewed in February 2019 through January 2024, increasing its rent from $12.50 per square foot to $13.25 per square foot with no concessions given. Jo-Ann Fabrics has two five-year renewal options remaining with six months’ notice at fixed rents. At the Waterford Lakes Town Center Property, Jo-Ann Fabrics achieved sales per square foot of $118, $111 and $116 as of year-end 2016, 2017 and 2018, respectively.

 

The following table presents certain information relating to the lease expiration schedule at the Waterford Lakes Town Center Property:

 

Lease Expiration Schedule(1)

 

Year Ending
 December 31,
No. of Leases Expiring Expiring NRA % of Total NRA Cumulative Expiring NRA Cumulative % of Total NRA Annual
 U/W
Base Rent
% of Total Annual U/W Base Rent Annual
 U/W
Base Rent
 PSF
2019 2 4,052 0.6% 4,052 0.6% $127,508 0.8% $31.47
2020 30 252,888 36.6% 256,940 37.2% $5,401,352 34.2% $21.36
2021 21 158,103 22.9% 415,043 60.0% $3,212,649 20.3% $20.32
2022 7 35,210 5.1% 450,253 65.1% $1,105,745 7.0% $31.40
2023 8 21,384 3.1% 471,637 68.2% $793,529 5.0% $37.11
2024 5 47,198 6.8% 518,835 75.1% $853,799 5.4% $18.09
2025 4 27,745 4.0% 546,580 79.1% $556,501 3.5% $20.06
2026 8 42,395 6.1% 588,975 85.2% $1,110,324 7.0% $26.19
2027 9 43,470 6.3% 632,445 91.5% $1,079,825 6.8% $24.84
2028 4 11,661 1.7% 644,106 93.2% $320,962 2.0% $27.52
2029 4 29,597 4.3% 673,703 97.5% $962,173 6.1% $32.51
Thereafter 2 9,771 1.4% 683,474 98.9% $290,905 1.8% $29.77
Vacant 0 7,791 1.1% 691,265 100.0% $0 0.0% $0.00
Total/Weighted Average 104 691,265 100.0%     $15,815,273   100.0%  $23.14(2)

 

(1)Information obtained from the underwritten rent roll.

(2)Total Annual U/W Base Rent PSF excludes vacant space.

 

The following table presents historical occupancy percentages at the Waterford Lakes Town Center Property:

 

Historical Occupancy

 

2016

2017

2018

2/1/2019(1)

98.0% 99.3% 99.5% 98.9%
       
(1)Includes Express Fashions (9,100 square feet, 1.3% of NRA), which has a signed lease but is not expected to take occupancy or commence paying rent until August 2019. We cannot assure you that this tenant will take occupancy or pay rent as anticipated or at all.

 

The following table presents historical in-line sales at the Waterford Lakes Town Center Property:

 

Historical In-Line Retail Sales(1)

 

2016

2017

2018

$470 $464 $485
     
(1)In-Line Tenants include tenants less than 10,000 square feet and exclude temporary tenants. Sales as presented are 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.

 

30  

 

 

Retail - Anchored Loan #2 Cut-off Date Balance:   $89,690,115
413 North Alafaya Trail Waterford Lakes Town Center Cut-off Date LTV:   66.8%
Orlando, FL 32828   U/W NCF DSCR:   1.43x
    U/W NOI Debt Yield:   9.3%

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 Waterford Lakes Town Center Property:

 

Cash Flow Analysis

 

  2016 2017 2018

TTM

2/28/2019

U/W %(1) U/W $ per SF
Base Rent(2) $14,839,793 $15,356,813 $15,655,403 $15,678,341 $15,815,273 67.6% $22.87
Overage/Percentage Rent 392,675 313,787 510,592 546,078 459,231 2.0 0.66
Kiosks/Temporary/Specialty 46,671 60,377 78,791 82,982 57,684 0.2 0.08
Reimbursements 5,742,626 6,177,051 6,341,883 6,166,885 6,380,226 27.3 9.22
Grossed Up Vacant Space 0 0 0 0 323,867 1.4 0.47
Other Revenue

336,911

334,974

384,063

370,816

357,728

1.5

0.52

Net Rental Income $21,358,676 $22,243,002 $22,970,732 $22,845,102 $23,394,010 100.0% $33.82
Vacancy & Credit Loss

(146,403)

(30,443)

(69,776)

(44,776)

(1,151,700)

7.3

(1.67)

Effective Gross Income $21,212,273 $22,212,559 $22,900,956 $22,800,326 $22,242,309 100.0% $32.16
               
Real Estate Taxes $1,845,642 $1,794,259 $1,901,900 $1,912,811 $1,984,815 8.9% $2.87
Insurance 187,863 184,316 202,533 208,234 272,070 1.2 0.39
Management Fee 374,426 384,274 400,640 401,544 667,269 3.0 0.96
Other Operating Expenses

2,378,073

2,467,292

2,614,020

2,618,901

2,667,532

12.0

3.86

Total Operating Expenses $4,786,004 $4,830,141 $5,119,093 $5,141,490 $5,591,686 25.1% $8.08
               
Net Operating Income $16,426,269 $17,382,418 $17,781,863 $17,658,836 $16,650,623 74.9% $24.07
TI/LC 0 0 0 0 224,267 1.0 0.32
Replacement Reserves

0

0

0

0

138,253

0.6

0.20

Net Cash Flow $16,426,269 $17,382,418 $17,781,863 $17,658,836 $16,288,103 73.2% $23.55
               
NOI DSCR(3) 1.44x 1.52x 1.56x 1.55x 1.46x    
NCF DSCR(3) 1.44x 1.52x 1.56x 1.55x 1.43x    
NOI DY(3) 9.2% 9.7% 9.9% 9.8% 9.3%    
NCF DY(3) 9.2% 9.7% 9.9% 9.8% 9.1%    

 

(1)Represents (i) percent of Net Rental Income for all revenue fields, (ii) percent of Base Rent for Vacancy & Credit Loss and (iii) percent of Effective Gross Income for all other fields.

(2)U/W Base Rent is based on the in place rent roll dated February 6, 2019 and includes contractual rent steps of $213,594 taken through May 31, 2020.

(3)DSCR and DY based on the Waterford Lakes Town Center Whole Loan amount.

 

Appraisal. The appraiser concluded to an “as-is” appraised value of $268,600,000 with a valuation date of March 1, 2019.

 

Environmental Matters. According to the Phase I environmental report dated March 11, 2019, there was no evidence of any recognized environmental conditions at the Waterford Lakes Town Center Property.

 

Market Overview and Competition. The Waterford Lakes Town Center Property is located on the east side of Orlando, Florida, at the intersection of N. Alafaya Trail and Waterford Lakes Parkway, which has an average daily traffic count of 59,000 vehicles per day. The Waterford Lakes Town Center Property can be accessed at three points along Waterford Lakes Parkway, and at four points, including a signalized stop, along N. Alafaya Trail just north of the East-West Expressway. The East-West Expressway connects the Waterford Lakes Town Center Property to the Orlando central business district by an approximately 15-minute drive. The Waterford Lakes Town Center Property is located approximately three miles south of the University of Central Florida (“UCF”) main campus (which has 68,571 students enrolled on campus) and approximately five miles west of the Valencia College East campus.

 

According to the appraiser, the Waterford Lakes Town Center Property is located in the Orlando metro market, which is positioned amongst demand drivers and attractions including Walt Disney World Resort, Universal Orlando (Comcast), Adventist Health System/Florida Hospital, UCF and the I-4 Ultimate Improvement Project. Notable projects under development in the city of Orlando include Creative Village (a 68-acre site that is planned to include a UCF and Valencia College campus, 1.2 million square feet of office and creative space, and 150,000 square feet of retail and commercial space), the Orlando Magic Complex (a year-round sports and entertainment complex also including a 250-room hotel, a 300-unit residential tower, 80,000 square feet of event space, 100,000 square feet of retail space, and the 200,000 square foot office headquarters for the NBA Orlando Magic), the $300 million Skyplex indoor entertainment complex, Universal Resort's Volcano Bay water park, and Disney's 2019 opening of Star Wars Land.

 

According to the appraiser, the Orlando metro retail market has a current average vacancy rate of 2.7% as compared to the trailing 5-year and trailing 10-year vacancy rate of 3.8%, and has had annual rent growth which has remained above the metro's long-term average since 2013. The strong demand can be attributed to the tourism industry bringing in record-breaking visitor volume (72 million visitors in 2017), a population growth rate of between 2.0% and 2.7% year-over-year since 2012, and a job growth rate of between 2.6% and 4.4% year-over-year since 2012. The Orlando metro unemployment rate was 3.3% in 2018 and the metro has experienced wage growth of between 4.6% and 8.1% year-over-year since 2014, fueling personal consumption.

 

According to the appraisal, the 2018 estimated population within a one-, three- and five-mile radius was 14,749, 100,675 and 207,786, respectively. The 2018 estimated median household income within a one-, three- and five-mile radius was $44,505, $51,696 and $55,942, respectively.

 

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.

 

31  

 

 

Retail - Anchored Loan #2 Cut-off Date Balance:   $89,690,115
413 North Alafaya Trail Waterford Lakes Town Center Cut-off Date LTV:   66.8%
Orlando, FL 32828   U/W NCF DSCR:   1.43x
    U/W NOI Debt Yield:   9.3%

Submarket Information - The Waterford Lakes Town Center Property is located in the West University submarket of the Orlando Metro market, which for the fourth quarter of 2018 contained approximately 4.6 million square feet of inventory with a vacancy rate of 4.8%, and average asking rent of $18.70 per square foot.

 

The following table presents certain information relating to the appraiser’s market rent conclusion for the Waterford Lakes Town Center Property:

 

Market Rent Summary

 

  Small In-Line Large In-Line Jr. Anchor Anchor Theater
Market Rent (PSF) $35.00 $26.50 $16.50 $13.00 $21.00
Lease Term (Years) 5 5 10 10 10
Lease Type (Reimbursements) NNN NNN NNN NNN NNN
Rent Increase Projection 3.0% per annum 3.0% per annum 10.0% Midterm 10.0% Midterm 10.0% Midterm

 

The following table presents certain information from the appraisal relating to comparable properties to the Waterford Lakes Town Center Property:

 

Comparable Properties

 

Property Name

Address

Distance from

Subject

Submarket

Year

Built

Property

Class

Total

GLA (SF)

Waterford Lakes Town Center

413 N. Alafaya Trail

Orlando, FL

NAP West University 1998 A 691,265(1)

University Commons

4498 N Alafaya Trail

Orlando, FL

4.2 miles East/University 2008 B 72,303

Phillips Crossings

8003 Turkey Lake Road

Orlando, FL

21.1 miles Southwest/Tourist 2008 B 147,376

Colonial Plaza

2522 E Colonial Dr

Orlando, FL

10.7 miles West/Ocoee/Winter Garden 1956 B 106,030

Gardens on Millenia

4963 Gardens Park Blvd.

Orlando, FL

16.7 miles Orlando 2016 A 12,218

The Towers at Waterford Lakes

504 N Alafaya Trail

Orlando, FL

1.0 mile East/University 2006 B 51,356

The Towers at Waterford Lakes

570 N Alafaya Trail

Orlando, FL

1.0 mile East/University 2006 B 31,200

Oviedo Crossings

1950-1954 W 426 Road

Oviedo, FL

9.0 miles Winter 2000 B 66,613

Colonial Plaza

2410-2418 E Colonial Drive

Orlando, FL

10.6 miles East/University 1956 C 48,919

 

(1)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.

 

32  

 

 

Retail - Anchored Loan #2 Cut-off Date Balance:   $89,690,115
413 North Alafaya Trail Waterford Lakes Town Center Cut-off Date LTV:   66.8%
Orlando, FL 32828   U/W NCF DSCR:   1.43x
    U/W NOI Debt Yield:   9.3%

Escrows.

 

Real Estate Taxes – The Waterford Lakes Town Center Whole Loan documents require upfront escrows in the amount of $339,161 for real estate taxes and monthly escrows of 1/12th of the estimated annual taxes due (currently $169,580).

 

Insurance – For so long as (i) the Waterford Lakes Town Center Property is covered by a blanket insurance policy and (ii) no event of default is continuing, monthly escrows for insurance premiums are waived.

 

Replacement Reserves – The Waterford Lakes Town Center Whole Loan documents require monthly escrows in the amount of $11,521 for replacement reserves until a cap of $500,000 is reached.

 

Tenant Improvements and Leasing Commissions Reserve - The Waterford Lakes Town Center Whole Loan documents require upfront escrows in the amount of $5,000,000 for rollover reserves and monthly escrows of $57,605 for tenant improvements and leasing commissions until a cap of $7,500,000 is reached.

 

Unfunded Obligations Reserve - The Waterford Lakes Town Center Whole Loan documents require upfront escrows in the amount of $1,485,464 for unfunded obligations of tenant improvements and leasing commissions relating to the tenants: Domu, Le Crave Express, Slapfish Restaurant, Ulta, Express Factory, MadRag and Panera.

 

Regal Cinema Reserve – The Waterford Lakes Town Center Whole Loan documents require upfront escrows in the amount of $22,500,000 for the Regal Cinema space or renewal of the Regal Cinema lease. Provided no event of default is continuing, upon Regal Cinema (or a replacement tenant) having leased all of Regal Cinema’s space for a term through January 2025, the Regal Cinema Reserve will be released to the Waterford Lakes Town Center Borrower less any tenant improvements, leasing commissions and free rent. Unless the debt yield for two consecutive quarters is greater than 10.0%, if the renewal or replacement rent is less than 100% of the current Regal Cinema lease rent, the Regal Cinema Reserve release amount will be prorated.

 

Lockbox and Cash Management. The Waterford Lakes Town Center Whole Loan requires a hard lockbox with springing cash management. The Waterford Lakes Town Center Borrower is required to direct all tenants to deposit rents directly to the lender-controlled lockbox account and to have all cash revenues deposited to such lockbox account.

 

During the occurrence and continuance of a Trigger Period (as defined below) or an event of default, funds in the lockbox account are required to be remitted weekly to the lender-controlled cash management account for payment of debt service, required reserves and budgeted operating expenses, then (i) during the continuance of a Major Tenant Reserve Period (as defined below), for deposit into a major tenant rollover reserve for reimbursement of tenant improvements and leasing commissions with respect to the affected space, or (ii) otherwise, into an excess cash flow reserve as additional collateral for the Waterford Lakes Town Center Whole Loan.

 

A “Trigger Period” will occur when any of (i) the debt yield is less than 8.25%, tested quarterly, until the debt yield is at least 8.25% for two consecutive quarters (provided no Major Tenant Reserve Period or event of default is continuing); (ii) the Waterford Lakes Town Center Borrower fails to deliver required annual, quarterly or monthly financial reports beyond 10 business days’ written notice, until such reports are delivered; and (iii) a Major Tenant Reserve Period is occurring.

 

A “Major Tenant Reserve Period” will commence upon any of (i) with respect to Regal Cinema or any two Major Leases (as defined below): (a) an event of default under such lease after the passage of cure and notice periods; (b) the tenant or any guarantor of such lease is subject to a bankruptcy or similar insolvency proceeding; or (c) the tenant goes dark, vacates or ceases to occupy a substantial portion of the leased premises or discontinues its operations at its leased premises for more than 90 consecutive days or more than 150 days in any 12-month period (other than for repair or permitted alteration); or (ii) solely with respect to any two Major Leases, the tenant has not provided notice of renewal by the earlier of (a) the date required under such lease and (b) six months prior to the expiration of such lease.

 

A Major Tenant Reserve Period will end upon (1) the New Lease Conditions (as defined below) being satisfied; (2) the Debt Yield/Reserve Conditions (as defined below) being satisfied; or (3) in the case of clause (i)(a) of the definition of Major Tenant Reserve Period, the cure of the event of default; (4) in the case of clause (i)(b) of the definition of Major Tenant Reserve Period, the applicable bankruptcy or similar insolvency proceeding being terminated and each applicable lease being affirmed, assumed or assigned satisfactory to the lender or, with respect to the bankruptcy or similar insolvency proceedings of any guarantor of a lease, an acceptable replacement guarantor executing the lease guaranty or an acceptable security deposit being delivered to the Waterford Lakes Town Center Borrower; or (5) in the case of clause (ii) of the definition of Major Tenant Reserve Period, the date on which the tenant renews or extends for all of its space under such lease and sufficient funds are available in the major tenant rollover reserve for all anticipated leasing commissions, tenant improvements and free rent periods in connection with such renewal or extension.

 

A “Major Lease” means any lease (other than the Regal Cinema lease) that (i) is more than 30,000 square feet when aggregated with all other leases at the Waterford Lakes Town Center Property with the same or affiliated tenants, and assuming the exercise of all expansion rights, (ii) contains an option or preferential right to purchase all or any portion of the Waterford Lakes Town Center Property, (iii) is with an affiliate of the Waterford Lakes Town Center Borrower as tenant, or (iv) is entered into during the continuance of an event of default under the Waterford Lakes Town Center Whole Loan.

 

The “New Lease Conditions” mean that (A) either (i) the entirety of the related space is leased pursuant to one or more Qualified Major Leases (as defined below) or (ii) at least such portion of the subject space triggering a Major Tenant Reserve Period is leased pursuant to one or more Qualified Major Leases such that the aggregate contractual rents from such Qualified Major Lease(s) is equal to or greater than the contractual rents payable under the preceding lease(s), and (B) sufficient funds are available in the major tenant

 

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.

 

33  

 

 

Retail - Anchored Loan #2 Cut-off Date Balance:   $89,690,115
413 North Alafaya Trail Waterford Lakes Town Center Cut-off Date LTV:   66.8%
Orlando, FL 32828   U/W NCF DSCR:   1.43x
    U/W NOI Debt Yield:   9.3%

rollover reserve for (x) all anticipated leasing commissions, tenant improvements and free rent periods set forth in all such Qualified Major Leases and (y) any shortfalls in operating expenses or required payments under the Waterford Lakes Town Center Whole Loan as a result of any anticipated down time prior to the commencement of payments under such Qualified Major Lease(s).

 

The “Debt Yield/Reserve Conditions” mean both (i) the then current debt yield is at least 9.62%, and (ii) the funds in the major tenant rollover reserve and the tenant improvements and leasing commissions reserve is equal to $9,000,000.

 

A “Qualified Major Lease” means with respect to each lease triggering a Major Tenant Reserve Period: (i) the original lease as either extended per its terms or modified with the lender’s approval, or (ii) a minimum five-year replacement lease that is on market terms with respect to rent and recoveries and tenant improvement allowances.

 

Property Management. The Waterford Lakes Town Center Property is managed by Washington Prime Management Associates, LLC, an affiliate of the borrower.

 

Partial Release. Not permitted.

 

Real Estate Substitution. Not permitted.

 

Subordinate and Mezzanine Indebtedness. Not permitted.

 

Terrorism Insurance. The Waterford Lakes Town Center Whole Loan documents require that the property insurance policy required to be maintained provides coverage for perils and acts of terrorism in an amount equal to the full replacement cost of the Waterford Lakes Town Center Property, as well as business interruption insurance covering no less than the 18-month period following the occurrence of a casualty event, together with a 12-month extended period of indemnity. If TRIPRA is no longer in effect, then the borrower’s requirement will be capped at insurance premiums equal to two times the amount of the insurance premium payable in respect of the property and business interruption/rental loss insurance required under the related loan documents. See “Risk Factors—Risks Relating to the Mortgage Loans—Terrorism Insurance May Not Be Available for All Mortgaged Properties” in the Preliminary Prospectus.

 

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.

 

34  

 

 

(THIS PAGE INTENTIONALLY LEFT BLANK)

 

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.

 

35  

 

 

Office – CBD Loan #3 Cut-off Date Balance:   $85,000,000

350 Bush Street

San Francisco, CA 94104

350 Bush Street

Cut-off Date LTV:

U/W NCF DSCR:

U/W NOI Debt Yield:

 

35.4%

3.41x

14.2%

 

 

 

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

 

36  

 

 

Office – CBD Loan #3 Cut-off Date Balance:   $85,000,000

350 Bush Street

San Francisco, CA 94104

350 Bush Street

Cut-off Date LTV:

U/W NCF DSCR:

U/W NOI Debt Yield:

 

35.4%

3.41x

14.2%

 

 

 

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

 

37  

 

 

Office – CBD Loan #3 Cut-off Date Balance:   $85,000,000

350 Bush Street

San Francisco, CA 94104

350 Bush Street

Cut-off Date LTV:

U/W NCF DSCR:

U/W NOI Debt Yield:

 

35.4%

3.41x

14.2%

 

 

 

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

 

38  

 

 

No. 3 – 350 Bush Street
 
Mortgage Loan Information   Mortgaged Property Information
Mortgage Loan Seller: Wells Fargo Bank, National Association   Single Asset/Portfolio: Single Asset
Credit Assessment (Fitch/KBRA/S&P): A-sf/A(sf)/A(sf)   Property Type – Subtype: Office – CBD
Original Principal Balance(1): $85,000,000   Location: San Francisco, CA
Cut-off Date Balance(1): $85,000,000   Size: 387,599 SF
% of Initial Pool Balance: 6.5%   Cut-off Date Balance Per SF(1): $477.30
Loan Purpose: Refinance   Maturity Date Balance Per SF(1): $477.30
Borrower Sponsors: Gemdale USA Corporation; Vision Real Estate Development, Inc.   Year Built/Renovated: 2018/NAP
Guarantors: Gemdale USA Corporation; Vision Real Estate Development, Inc.   Title Vesting: Fee
Mortgage Rate: 3.912162%   Property Manager: LPC West, Inc.
Note Date: April 22, 2019   Current Occupancy (As of): 99.0% (4/22/2019)
Seasoning: 3 months   YE 2018 Occupancy: 99.0%
Maturity Date: May 11, 2029   YE 2017 Occupancy(7): NAV
IO Period: 120 months   YE 2016 Occupancy(7): NAV
Loan Term (Original): 120 months   YE 2015 Occupancy(7): NAV
Amortization Term (Original): NAP   Appraised Value(5): $522,000,000
Loan Amortization Type: Interest-only, Balloon   Appraised Value Per SF(5): $1,346.75
Call Protection(2): L(27),D(86),O(7)   Appraisal Valuation Date(5): August 1, 2019
Lockbox Type: Hard/Upfront Cash Management   Underwriting and Financial Information
Additional Debt(1)(3): Yes   YE 2018 NOI(6): $6,902,758
Additional Debt Type (Balance)(1)(3): Pari Passu ($100,000,000) /          Senior Mezzanine ($65,000,000) / Junior Mezzanine ($35,000,000)   YE 2017 NOI(7): NAV
      YE 2016 NOI(7): NAV
      YE 2015 NOI(7): NAV
      U/W Revenues: $36,764,325
      U/W Expenses: $10,457,726
Escrows and Reserves(4)   U/W NOI(6): $26,306,599
  Initial Monthly Cap   U/W NCF: $25,085,662
Taxes $409,996 $205,001 NAP   U/W DSCR based on NOI/NCF(1): 3.58x / 3.41x
Insurance $69,579 $23,192 NAP   U/W Debt Yield based on NOI/NCF(1): 14.2% / 13.6%
Replacement Reserve $0 Springing NAP   U/W Debt Yield at Maturity based on NOI/NCF(1):  14.2% / 13.6%
TI/LC Reserve $0 Springing NAP   Cut-off Date LTV Ratio(1)(3)(5): 35.4%
Existing TI/LC Obligations Reserve $6,651,482 $0 NAP   LTV Ratio at Maturity(1)(3)(5): 35.4%
Development Work Reserve $153,188 $0 NAP      
             
               
Sources and Uses
Sources         Uses      
Original whole loan amount(1) $185,000,000   74.0%   Loan payoff $147,331,917   58.9%
Mezzanine debt(3) 65,000,000   26.0   Upfront reserves 7,284,245   2.9
          Closing costs 1,224,279   0.5
          Return of equity 94,159,559   37.7
Total Sources $250,000,000   100.0%   Total Uses $250,000,000   100.0%

 

(1)The Cut-off Date Balance Per SF, Maturity Date Balance Per SF, U/W DSCR based on NOI/NCF, U/W Debt Yield based on NOI/NCF, U/W Debt Yield at Maturity based on NOI/NCF, Cut-off Date LTV Ratio and LTV Ratio at Maturity numbers presented above are based on the 350 Bush Street Whole Loan (as defined in “The Mortgage Loan” section below).

(2)Defeasance of the 350 Bush Street Whole Loan is permitted at any time after the earlier to occur of (a) the end of the two-year period commencing on the closing date of the securitization of the last promissory note representing a portion of the 350 Bush Street Whole Loan to be securitized and (b) April 22, 2022. The assumed defeasance lockout period of 27 payments is based on the closing date of this transaction in August 2019.

(3)The equity interest in the 350 Bush Street Borrower (as defined in “The Borrower and the Sponsors” section below) has been pledged to secure mezzanine indebtedness with an original principal balance of $65,000,000. As of the Note Date, a separate 350 Bush Street EB-5 Junior Mezzanine Loan of up to $35,000,000 (as defined in the “Mezzanine Loan and Preferred Equity” section below) remains outstanding. As of the Cut-off Date, the UW NOI Debt Yield, UW NOI Debt Yield at Maturity, UW NCF DSCR, Cut-off Date LTV Ratio and Maturity Date LTV Ratio based on the 350 Bush Street New Debt (as defined in the “Mezzanine Loan and Preferred Equity” section below) are 10.5%, 10.5%, 2.32x, 47.9% and 47.9%, respectively, while the UW NOI Debt Yield, UW NOI Debt Yield at Maturity, UW NCF DSCR, Cut-off Date LTV Ratio and Maturity Date LTV Ratio based on the fully advanced 350 Bush Street Total Debt (as defined in the “Mezzanine Loan and Preferred Equity” section below) are 9.2%, 9.2%, 2.30x, 54.6% and 54.6%, respectively. See the “Mezzanine Loan and Preferred Equity” section below for a full discussion.

(4)See “Escrows” section.

 

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.

 

39  

 

 

Office – CBD Loan #3 Cut-off Date Balance:   $85,000,000

350 Bush Street

San Francisco, CA 94104

350 Bush Street

Cut-off Date LTV:

U/W NCF DSCR:

U/W NOI Debt Yield:

 

35.4%

3.41x

14.2%

(5)The Appraised Value shown reflects a “prospective value upon stabilization” which assumes that all remaining capital costs and tenant improvements have been paid, free rent periods have expired and the vacant retail space has been leased (see “The Property” section below for further discussion of the retail space). At loan closing, the 350 Bush Street Borrower escrowed $6,651,482 for all existing tenant improvements. There is no free rent, leasing commissions or gap rent outstanding as all tenants are currently paying full, unabated rent for the entirety of their spaces. The appraiser also concluded to an “as-is” appraised value of $493,000,000 as of August 2, 2018, which results in a Cut-off Date LTV Ratio of 37.5% and Maturity Date LTV Ratio of 37.5% for the 350 Bush Street Whole Loan.

(6)See “Operating History and Underwritten Net Cash Flow” below for a further discussion of the increase from Most Recent NOI to UW NOI.

(7)Prior historical operating statements and occupancy are not applicable, as the 350 Bush Street Property was constructed in 2018.

 

The Mortgage Loan. The mortgage loan (the “350 Bush Street Mortgage Loan”) is part of a whole loan (the “350 Bush Street Whole Loan”) that is evidenced by three pari passu promissory notes in the aggregate original principal amount of $185,000,000. The 350 Bush Street Whole Loan is secured by a first priority fee mortgage encumbering a Class A office building located in San Francisco, California (the “350 Bush Street Property”). The 350 Bush Street Mortgage Loan is evidenced by the non-controlling promissory notes A-2 and A-3 in the aggregate original principal amount of $85,000,000. The controlling promissory note A-1 in the original principal amount of $100,000,000 (the “350 Bush Street Serviced Companion Loan”) was contributed to the BANK 2018-BNK18 trust . The 350 Bush Street Whole Loan will be serviced pursuant to the pooling and servicing agreement for the BANK 2019-BNK18 securitization trust. See “Description of the Mortgage Pool—The Whole Loans—The Non-Serviced Pari Passu Whole Loans” and “Pooling and Servicing Agreement—Servicing of the Non-Serviced Mortgage Loans” in the Preliminary Prospectus.

 

Note Summary

 

Notes Original Balance Cut-off Date Balance Note Holder Controlling Piece
A-1 $100,000,000 $100,000,000 BANK 2019-BNK18 Yes
A-2 $65,000,000 $65,000,000 BANK 2019-BNK19 No
A-3 $20,000,000 $20,000,000 BANK 2019-BNK19 No
Total $185,000,000 $185,000,000    

 

The Borrower and Borrower Sponsors. The borrower is 350 Bush Street Owner LLC (the “350 Bush Street Borrower”), a Delaware limited liability company and single purpose entity with one independent director. Legal counsel to the 350 Bush Street Borrower delivered a non-consolidation opinion in connection with the origination of the 350 Bush Street Whole Loan.

 

The borrower sponsors and non-recourse carveout guarantors are Gemdale USA Corporation (“Gemdale”) and Vision Real Estate Development, Inc. (a subsidiary of Gemdale), each a Delaware corporation. Gemdale is a real estate investment and development company headquartered in Pasadena, California, with offices in New York City, San Francisco, Boston, Seattle and Dallas. The company primarily develops commercial, multifamily rental and for-sale residential projects and focuses on Class A ground-up developments in key gateway high barrier-to-entry markets. Gemdale was the original developer of the 350 Bush Street Property and its portfolio includes office projects in San Francisco, Los Angeles, San Jose, Orange County, California, Boston and New York City. Gemdale is the U.S. subsidiary of Gemdale Corporation, one of China’s largest real estate developers. Gemdale Corporation was founded in 1988 and first listed on the Shanghai Stock Exchange in 2001. In 2017, Gemdale Corporation built and sold residential condominiums totaling approximately 82.9 million square feet across 40 cities in China.

 

The Property. The 350 Bush Street Property is a 387,599 square foot, 19-story Class A office building located in San Francisco, California. Constructed in 2018 and situated on a 0.8-acre site, the 350 Bush Street Property was 99.0% leased to three technology and communications tenants as of April 22, 2019 (with approximately 61.5% of the NRA and 60.9% of underwritten base rent attributed to investment grade tenants). The 350 Bush Street Property includes two ground-level retail spaces totaling 3,995 square feet (1.0% of NRA), with frontage on Bush Street and Pine Street, respectively, which are currently vacant and account for all economically vacant space in the building. Construction along the side of the 350 Bush Street Property fronting Bush Street integrated the historic San Francisco Mining Exchange (“Mining Exchange”), the second oldest exchange in the United States after the New York Stock Exchange. The historic Mining Exchange hall serves as the lobby for the 350 Bush Street Property and includes a three-story atrium and a museum that showcases the history of the building and San Francisco’s mining industry. The 350 Bush Street Property features five landscaped terraces on the 3rd, 5th, 18th and 19th floors and on the rooftop. According to the appraisal, the 350 Bush Street Property is one of only two office buildings in the San Francisco Financial District built since 2016. The 350 Bush Street Property includes two levels of basement parking totaling 110 parking spaces, which is operated by Ace Parking III, LLC.

 

Major Tenants.

 

Largest Tenant: Twitch (A+/A3/AA- by Fitch/Moody’s/S&P, 185,510 square feet, 47.9% of NRA; 46.2% of underwritten base rent). Twitch Interactive, Inc. (“Twitch”), a subsidiary of Amazon, Inc. (“Amazon”), is a live streaming platform and community for video game players. Founded in 2011 and headquartered at the 350 Bush Street Property, Twitch originally focused almost entirely on video games but has since expanded to include streams dedicated to artwork creation, music, talk shows, and TV series. In August 2014, Amazon acquired Twitch for approximately $970 million. The platform has approximately 15 million daily active users and the Twitch iOS/Android apps have had over 83 million downloads. Twitch reports approximately 23 billion minutes watched per month, as of April 2019. Twitch took occupancy of its space at the 350 Bush Street Property (floors two through nine) in July 2018. Twitch’s lease is guaranteed by Amazon and has two, five-year renewal options at the fair market rental rate following its lease expiration in May 2028.

 

2nd Largest Tenant: Atlassian (145,215 square feet, 37.5% of NRA; 39.1% of underwritten base rent). Atlassian, Inc. (“Atlassian”) is a software company focused on providing various combinations of collaborative products designed for all types of businesses. Founded in 2002 in Sydney, Australia, Atlassian (NASDAQ: TEAM) has approximately 3,000 employees and over 125,000 customers, including NASA, Blackrock, Airbnb, Audi, Twitter, and Tesla. Atlassian has over 4,000 apps in its marketplace and reported fiscal year (“FY”) 2018 revenue of approximately $874 million, which is a 41.0% increase from FY 2017. As of May 1, 2019, Atlassian’s market

 

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.

 

40  

 

 

Office – CBD Loan #3 Cut-off Date Balance:   $85,000,000

350 Bush Street

San Francisco, CA 94104

350 Bush Street

Cut-off Date LTV:

U/W NCF DSCR:

U/W NOI Debt Yield:

 

35.4%

3.41x

14.2%

capitalization was approximately $26.2 billion. Atlassian took occupancy of its Phase I space at the 350 Bush Street Property (106,506 square feet on floors 10 through 14) in October 2018 and is targeting an October 2019 move in date for Phase II (38,709 square feet on floors 15 and 16). Atlassian is currently paying full, unabated rent on its entire 145,215 square foot space. Atlassian may terminate its lease for its entire space effective June 1, 2027 with 12 months prior notice, subject to a termination fee in an amount equal to the present value of the remaining base rent obligation through the end of the remaining term, discounted 7.5% per annum from June 1, 2018. Atlassian has one, five-year renewal option at the fair market rental rate following its lease expiration in September 2029.

 

3rd Largest Tenant: Publicis (Baa2/BBB+ by Moody’s/S&P, 52,879 square feet, 13.6% of NRA; 14.7% of underwritten base rent). Publicis Groupe, S.A. (“Publicis”), founded in 1926, is the world’s third largest communications group. The company has approximately 80,000 employees across over 100 countries and reported revenues of approximately €9.95 billion in FY 2018, which is an increase of approximately 1.1% over FY 2017. Publicis took occupancy of its space at the 350 Bush Street Property (floors 17 through 19) in June 2018. Publicis has one, five-year renewal option at 95% of the fair market rental rate following its lease expiration in January 2029.

 

The following table presents certain information relating to the tenancy at the 350 Bush Street Property:

 

Major Tenants

 

Tenant Name

Credit Rating

(Fitch/ 

Moody’s/
S&P)(1)

Tenant NRSF % of
NRSF

Annual

U/W Base

Rent PSF

Annual
U/W Base

Rent

% of Total Annual U/W Base Rent Lease
Expiration
Date
Extension Options

Termination Option

(Y/N)

Major Tenants                
Twitch A+/A3/AA-(1) 185,510 47.9% $63.86(2) $11,846,664(2) 46.2% 5/31/2028 2, 5-year N
Atlassian(3) NR/NR/NR 145,215 37.5% $69.01(4) $10,021,287(4) 39.1% 9/30/2029 1, 5-year    Y(5)
Publicis NR/Baa2/BBB+(1) 52,879 13.6% $71.07(6) $3,758,111(6) 14.7% 1/31/2029  1, 5-year  N
Occupied Collateral Total 383,604 99.0% $66.80 $25,626,062     100.0%      
                 
Vacant Space(7) 3,995 1.0%            
                 
Collateral Total 387,599 100.0%            
                   

 

(1)The Twitch lease is guaranteed by Amazon, Inc., the rated entity. The Publicis lease is guaranteed by the Sapient Corporation, which is a subsidiary of Publicis Groupe S.A., the rated entity.

(2)The Annual U/W Base Rent and Annual U/W Base Rent PSF shown above represent Twitch’s current contractual rent. The lender’s underwriting gives separate credit for straight-line rent averaging over the remaining lease term for Twitch totaling $1,675,737, which implies a total underwritten rental rate of $72.89 per SF (see “Operating History and Underwritten Net Cash Flow” below).

(3)Atlassian took occupancy of its Phase I space (106,506 square feet on floors 10 through 14) in October 2018 and is targeting an October 2019 move in date for Phase II (38,709 square feet on floors 15 and 16). Atlassian is currently paying full, unabated rent on all of its 145,215 square feet of space.

(4)Annual U/W Base Rent and Annual U/W Base Rent PSF include a contractual rent step for Atlassian in June 2019 totaling $291,882. Atlassian’s current contractual rent is $67.00 per SF.

(5)Atlassian may terminate its lease effective June 1, 2027 with 12 months prior notice, subject to a termination fee in an amount equal to the present value of the remaining base rent obligation through the end of the remaining term, discounted 7.5% per annum from June 1, 2018, which will be deposited in reserve with the lender (subject to a cap of $16,000,000 so long as no event of default exists).

(6)The Annual U/W Base Rent and Annual U/W Base Rent PSF shown above represent Publicis’ current contractual rent. The lender’s underwriting gives separate credit for straight-line rent averaging over the remaining lease term for Publicis totaling $517,806, which implies a total underwritten rental rate of $80.86 per SF (see “Operating History and Underwritten Net Cash Flow” below).

(7)All vacant space is related to two ground level retail spaces.

 

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.

 

41  

 

 

Office – CBD Loan #3 Cut-off Date Balance:   $85,000,000

350 Bush Street

San Francisco, CA 94104

350 Bush Street

Cut-off Date LTV:

U/W NCF DSCR:

U/W NOI Debt Yield:

 

35.4%

3.41x

14.2%

The following table presents certain information relating to the lease rollover schedule at the 350 Bush Street 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

Annual
 U/W
Base Rent
 PSF(3)
MTM 0 0 0.0% 0 0.0% $0 0.0% $0.00
2019 0 0 0.0% 0 0.0% $0 0.0% $0.00
2020 0 0 0.0% 0 0.0% $0 0.0% $0.00
2021 0 0 0.0% 0 0.0% $0 0.0% $0.00
2022 0 0 0.0% 0 0.0% $0 0.0% $0.00
2023 0 0 0.0% 0 0.0% $0 0.0% $0.00
2024 0 0 0.0% 0 0.0% $0 0.0% $0.00
2025 0 0 0.0% 0 0.0% $0 0.0% $0.00
2026 0 0 0.0% 0 0.0% $0 0.0% $0.00
2027 0 0 0.0% 0 0.0% $0 0.0% $0.00
2028 1 185,510 47.9% 185,510 47.9% $11,846,664 46.2% $63.86
2029 2 198,094 51.1% 383,604 99.0% $13,779,398 53.8% $69.56
Thereafter 0 0 0.0% 383,604 99.0% $0 0.0% $0.00
Vacant 0 3,995 1.0% 387,599 100.0% $0 0.0% $0.00
Total/Weighted Average 3 387,599 100.0%     $25,626,062 100.0% $66.80

 

(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)Total/Weighted Average Annual U/W Base Rent and Annual U/W Base Rent PSF exclude vacant space.

 

The following table presents historical occupancy percentages at the 350 Bush Street Property:

 

Historical Occupancy

 

12/31/2015(1) 

12/31/2016(1) 

12/31/2017(1) 

12/31/2018(1) 

4/22/2019(2) 

NAV NAV NAV 99.0% 99.0%

 

(1)Information obtained from the borrower. The 350 Bush Street Property was constructed in 2018.

(2)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.

 

42  

 

  

Office – CBD Loan #3 Cut-off Date Balance:   $85,000,000

350 Bush Street

San Francisco, CA 94104