| FREE WRITING PROSPECTUS | ||
| FILED PURSUANT TO RULE 433 | ||
| REGISTRATION FILE NO.: 333-262701-02 | ||
FREE WRITING PROSPECTUS, DATED APRIL 25, 2022
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-262701) for the offering to which this free writing prospectus 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 website at www.sec.gov. Alternatively, the depositor, Citigroup Global Markets Inc., BMO Capital Markets Corp. or any other underwriter or dealer participating in this offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-831-9146.
The information in this file (the “File”) does not contain all information that is required to be included in the prospectus. This File should be reviewed only in conjunction with the entire prospectus. Prospective investors are advised to read carefully, and should rely on, the prospectus relating to the certificates referred to herein in making their investment decision. Methodologies used in deriving certain information contained in this File are more fully described elsewhere in the prospectus. The information in this File should not be viewed as projections, forecasts, predictions or opinions with respect to value.
The information in this File is preliminary and may be amended and/or supplemented prior to the time of sale. The information in this File supersedes any contrary information contained in any prior File relating to the certificates and will be superseded by any contrary information contained in any subsequent File prior to the time of sale.
The securities related to this File are being offered when, as and if issued. This free writing prospectus is not an offer to sell or a solicitation of an offer to buy such securities in any state or other jurisdiction where such offer, solicitation or sale is not permitted. Such securities do not represent an interest in or obligation of the depositor, the sponsors, the originators, the master servicer, the special servicers, the trustee, the certificate administrator, the operating advisor, the asset representations reviewer, the controlling class representative, the risk retention consultation parties, the companion loan holders (or their representatives), the underwriters or any of their respective affiliates. Neither such securities nor the underlying mortgage loans are insured or guaranteed by any governmental agency or instrumentality or private insurer.
Any legends, disclaimers or other notices that may appear at the bottom of the email communication to which this free writing prospectus is attached relating to (1) these materials not constituting an offer (or a solicitation of an offer), (2) no representation being made that these materials are accurate or complete and that these materials may not be updated or (3) these materials possibly being confidential, are, in each case, 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.
| DRAFT | 4/25/2022 |
Yorkshire & Lexington Subordinate Loan – Due Diligence Questions*
A. Due Diligence Questions
| (i) | Cost Basis & Capital Contribution Schedule |
Yorkshire & Lexington Towers-Historical CapEx | ||||||
| Yorkshire | Lexington | Total | ||||
| 2014-2022 | $ | 26,753,302 | $ | 6,019,698 | $ | 32,773,000 |
| Per Unit | $39,285 | $47,399 | $40,561 | |||
| LOBBY, HALLWAYS, AMENITIES, ELEVATORS | $ | 2,500,000 | $ | 1,000,000 | $ | 3,500,000 |
| APARTMENT RENOVATlON | $ | 19,965,000 | $ | 4,514,000 | $ | 24,479,000 |
| COMMERCIAL BUILDOUT COSTS | $ | 2,714,000 | $ | 33,500 | $ | 2,747,500 |
| BOILER AND CHILLER REPLACEMENT | $ | 236,870 | $ | 236,870 | ||
| GAS CONVERSION | $ | 316,296 | $ | 316,296 | ||
| INTERCOM UPGRADES | $ | 198,152 | $ | 55,430 | $ | 253,582 |
| SOFT COSTS | $ | 1,020,000 | $ | 100,472 | $ | 1,120,472 |
| ELECTRICAL & SYSTEM UPGRADES | $ | 119,280 | $ | 119,280 | ||
| WINDOW & DOOR REPLACEMENTS | $ | - | $ | - | ||
| (ii) | Excess Cashflow from Supplemental Income Reserve |
Any excess cash flow from the supplemental income reserve will go to the Borrower through the waterfall.
| (iii) | Recent leasing |
The following leases were recently executed at rents between $91.50-$112.30 PSF. The bottom three rent comps were the result of the unit combinations.
| Bldg # | Property | Unit # | SF | Unit Code | Unit Type | Lease Start | Lease End | Monthly Rent | Annual Rent | PSF |
| 86 | Yorkshire | 12JE1 | 446 | 0x1 | Studio | 1/8/2022 | 1/31/2023 | $3,400 | $40,800 | $91.50 |
| 88 | Lexington | 10EF | 2,083 | 4x3.5 | Four Bedroom | 5/1/2022 | 4/30/2023 | $19,500 | $234,000 | $112.30 |
| 88 | Lexington | 15EF | 1,880 | 3x3 | Three Bedroom | 5/1/2022 | 4/30/2023 | $16,000 | $192,000 | $102.10 |
| 88 | Lexington | 16EF | 1,201 | 2x2ho | Two Bedroom | 5/1/2022 | 6/30/2023 | $10,000 | $120,000 | $99.90 |
| DRAFT | 4/25/2022 |
| (iv) | Occupancy History |
| Yorkshire | Lexington | Total | Notes | |
| 22-Jan | 96.5% | 96.1% | 96.4% | |
| 2021 | 94.7% | 94.5% | 94.7% | |
| 2020 | 90.0% | 92.4% | 90.4% | COVID-19 |
| 2019 | 95.3% | 95.5% | 95.4% | |
| 2018 | 94.3% | 94.7% | 94.4% | |
| 2017 | 93.5% | 87.4% | 92.6% | See note below from Sponsor. |
| 2016 | 80.2% | 69.3% | 78.5% | See note below from Sponsor. |
| 2015 | 65.2% | 74.8% | 66.7% | See note below from Sponsor. |
| 2014 | 74.7% | 91.3% | 77.4% | See note below from Sponsor. |
| * When we purchased the buildings in 2014 we began a major renovation program which continued through the period when we refinanced in 2017. The Seller delivered us the buildings with 157 vacant units. We worked the asset to create vacancy in order to free up units for the purposes of substantial unit renovations. | ||||
| (v) | Explanation of rent regulation for unit combinations |
Per a legal memo prepared by borrower’s counsel:
The creation of a new unit entitles the Landlord to establish a first rent which no tenant can challenge. As a result of the Housing Stability and Tenant Protection Act (HSTPA) passed in June 2019 said first rent is rent stabilized and the unit must be registered accordingly.
A Landlord’s right to the so called “first rent rule” dates back to the New York City Conciliation and Appeals Board (CAB) which, was the predecessor to the DHCR. In particular, CAB held and/or determined that where the outer perimeters of an apartment have been substantially altered, the Landlord is entitled to a first rent that the Tenant cannot challenge.
Subsequently, and by Operational Bulletin 95-2 dated December 15, 1995, the DHCR codified a definition of the first rent rule. Said Operational Bulletin reads in relevant part:
“First rents: Where a landlord significantly changes the perimeter and dimensions of an existing housing accommodation, or creates a housing accommodation in space previously used for nonresidential purposes, the DHCR may find that the resulting housing accommodation was not in existence on the applicable base date. Such a finding may entitle the landlord to charge a... first rent...”
As such, if a Landlord can establish that relevant Landlord’s work resulted in creating an apartment that did not previously exist, by law the Landlord is entitled to a first rent which is beyond challenge.
| DRAFT | 4/25/2022 |
| (vi) | Sales Comps Per Appraisal |
| Summary of Improved Sales | |||||||||||||||
| Property Information | Transaction Information | ||||||||||||||
| # | Property Name | Address | City | State | Building GBA | Year Built | No. of Stories | No. of Units | Sale Date | Sale Price | $/Sqft | $/Unit | NOl/SqFT | OAR | Comments |
| 1 | The Cole | 354 East 91st Street | New York | NY | 164,384 | 2004 | 23 | 163 | Feb-22 | $128,200,000 | $786,503 | $780 | - | - | This is the sale of the Cole, which is located on the southwest corner of East 91st Street and First Avenue. The building contains 163 apartments, 8,000 square feet of ground-floor retail, and a below-grade parking garage with a 35-car capacity. At the time of the sale, the retail space was vacant; however, Duane Reade continues to pay rent while searching for a sub-lease tenant. Amenities in the building include a 24-hour attended lobby with concierge services, resident lounge, billiards room, package room, fitness center, and an interior private courtyard located on the second floor. All units above the second floor have access to balconies. Units on the 16th floor have private terraces. Additionally, there is a washer and dryer located on each residential floor of the building. Apartments contain barnwood-style flooring, quartz or Caesarstone countertops, and Bosch appliances. The buyer intends to upgrade the amenities and apartment interiors and rebrand the building as The Cole by Stonehenge. |
| 2 | 920 Park Avenue | 920 Park Avenue | New York | NY | 155,544 | 1962 | 21 | 68 | Apr-21 | $134,500,000 | $1,977,941 | $865 | - | - | This is the sale of a 21-story mixed-use apartment building located on the northwest corner of East 80th Street and Park Avenue. The building has a total of 68 apartments, 15 of which are subject to rent regulation per public records. The apartments range in size from two-to four-bedroom layouts. There are also 4 professional office suites on the ground floor. The building is located within the Park Avenue Historic District. Amenities include a 24-hour doorman and live-in superintendent. According to a broker involved with the transaction, in-place rents were approximately $68 per square foot. Based on this in-place income and occupancy, both of which were impacted by the COVID-19 pandemic, the capitalization rate was less than 2 percent. Based upon the pre-COVID rents, the capitalization rate was below 3 percent. The buyer plans to spend $18 to $15 million renovating the market-rate units and common areas, including the addition of amenity space in the existing parking garage. After the renovations, the buyer is projecting average rents of approximately $110 per square foot. |
| 3 | 1 Christopher Street | 1 Christopher Street | New York | NY | 102,354 | 1931 | 16 | 125 | Dec-20 | $92,600,000 | $740,800 | $905 | $32.49 | 3.59% | 3.59% This is the sale of a 16-story mixed-use building located on the northwest corner of Christopher Street and Greenwich Avenue in the West Village neighborhood of Manhattan. The building contains 125 apartments and 9 commercial units. A total of 16 of the residential units are subject to rent regulation. The unit mix primarily consists of studios and one-bedrooms. The building is located within the Greenwich Village Historic District. The contract was reportedly signed in December 2020. Amenities include a doorman, laundry room, and bicycle room. As part of the transaction, the seller will remain as a tenant in apartment 14H/15H/16H through December 31, 2030. |
| 4 | One Union Square South | 842 Broadway | New York | NY | 208,961 | 1998 | 21 | 239 | Nov-20 | $211,375,000 | $884,414 | $1,012 | $37,23 | 3.68% | This is the sale of a 21-story, mixed-use, 80/20 development that was constructed by the Related Companies in 1998. The property has a large retail component that is leased to Best Buy, Nordstrom Rack, and Regal Cinemas. However, the sale is only for the residential component, which contains 239 apartments. The true buyer is MKF Realty. This was an off-market deal and the property was not marketed for sale. We confirmed with the equity partner in the current ownership structure that the purchase price was finalized during the COVID-19 pandemic and reflects current investor sentiment. Based on forward-looking income projections, the capitalization rate is 3.68 percent and is reflective of the unabated level of real estate taxes. The buyer plans to upgrade unit interiors and common areas and amenities within the building. |
| 5 | The Allen House | 340 East 51st Street | New York | NY | 96,750 | 1965 | 14 | 115 | Feb-20 | $66,248,000 | $576,070 | $685 | $28.86 | 4.08% | This is the sale of a 14-story elevatored apartment building located on the north side of East 51st Street between First and Second Avenues. The property has 115 apartments in total, 114 of which are rentable; 15 of the apartments are rent regulated. The unit mix includes studios, one-bedrooms, and two-bedrooms, with an overall average size of 634 square feet. Building amenities include a doorman, gym, and laundry room. Stonehenge purchased the property in a partnership with Alex Rodriguez and Adam Modlin. Formerly known as the Allen House, the group intends to renovate units and rebrand the building as Stonehenge 51. The group plans to furnish a portion of the units as part of its Stonehenge Reserve concept, which will also include the option for shorter lease terms. |
| DRAFT | 4/25/2022 |
| (vii) | LTO Comps – Major and Light Renovation |
Major Renovation
| Property | Building# | Unit | Type | SF | Former Units Modified | Rent Prior to Reno | PSF | Rent Post Reno | PSF | Est Reno Cost |
| - | 86 | 04CDE | Four Bedroom | 1,642 | 04CE, 04DE & 04EE | - | - | $11,000.00 | $80.4 | - |
| - | 86 | 04EDE | One Bedroom | 960 | 04CE, 04DE & 04EE | - | - | $5,520.00 | $69.0 | - |
| Yorkshire | Total | 2,602 | 04CE, 04DE & 04EE | $5,468.51 | $25.2 | $16,528.00 | $76.2 | $150,000 |
| - | 86 | 04HE1 | Studio | 627 | 04HE & 04JE | - | - | $3,600.00 | $68.9 | - |
| - | 86 | O4JE1 | Two Bedroom | 936 | 04HE & 04JE | - | - | $5,600.00 | $71.8 | - |
| Yorkshire | Total | 1,563 | 04HE & 04JE | $4,871.53 | $37.4 | $9,200.00 | $70.6 | $152,000 |
| Yorkshire | 86 | 06UVE | Four Bedroom | 1,843 | 06UE&06VE | $4,347.12 | $28.3 | $12,000.00 | $78.1 | $157,000 |
| Yorkshire | 86 | 09AWE | Two Bedroom | 1,341 | 09AE & 09WE | $4,042.50 | $36.2 | $7,850.00 | $70.2 | $90,000 |
| Yorkshire | 86 | 09FGW | Four Bedroom | 2,087 | 09FW & 09GW | $4,880.47 | $28.1 | $12,995.00 | $74.7 | $178,000 |
| Yorkshire | 86 | 09RE1 | Two Bedroom | 962 | 09SE & 09RE | $3,012.05 | $37.6 | | $5,950.00 | $74.2 | $40,950 |
| - | 86 | 12RSE | Two Bedroom | 962 | 12RE & 12SE | - | - | $5,540.00 | $69.1 | - |
| - | 86 | 12SRE | Two Bedroom | 838 | 12RE & 12SE | - | - | $5,000.00 | $71.6 | - |
| Yorkshire | Total | 1,800 | 12RE & 12SE | $4,615.75 | $30.8 | $10,540.00 | $70.3 | $167,145 |
| Yorkshire | 86 | 20FGE | Four Bedroom | 2,091 | 20GE & 20FE | $4,855.69 | $27.9 | $13,500.00 | $77.5 | $200,000 |
| Yorkshire | 86 | 20JKW | Two Bedroom | 1,383 | 20JW & 20KW | $4,407.61 | $38.2 | $8,000.00 | $69.4 | $165,000 |
| Yorkshire | 86 | 21DEE | Two Bedroom | 1,288 | 21EE & 21DE | $4,482.21 | $42.0 | $7,400.00 | $69.4 | $110,880 |
| Lexington | 88 | 03HG | Two Bedroom | 1,276 | 03G & 03H | $4,286.09 | $39.6 | $7,600.00 | $71.5 | $90,000 |
| Lexington | 88 | 04GH | Two Bedroom | 1,276 | 04G & 04H | $3,478.79 | $32.7 | $7,300.00 | $68.7 | $90,000 |
| Lexington | 88 | 05CD | Two Bedroom | 1,195 | 05C & 05D | $3,830.85 | $38.5 | $7,519.00 | $75.5 | $85,000 |
| Lexington | 88 | 05HG | Two Bedroom | 1,276 | 05G & 05H | $3,713.64 | $34.9 | $7,450.00 | $70.1 | $90,000 |
| Lexington | 88 | 10HJ | Three Bedroom | 1,365 | 10H & 10J | $4,276.74 | $37.6 | $8,000.00 | $70.3 | $99,500 |
| Lexington | 88 | 11BC | Three Bedroom | 1,633 | 11B & 11C | $4,276.74 | $31.4 | $10,000.00 | $73.5 | $110,000 |
| Lexington | 88 | 12AB | Four Bedroom | 1,908 | 12A & 12B | $4,276.74 | $26.9 | $13,495.00 | $84.9 | $110,000 |
| Lexington | 88 | 12ED | Three Bedroom | 1,366 | 12E & 12D | $4,276.74 | $37.6 | $9,000.00 | $79.1 | $99,500 |
| Lexington | 88 | 16AB | Four Bedroom | 1,870 | 16A & 16B | $4,276.74 | $27.4 | $12,375.00 | $79.4 | $110,000 |
| Lexington | 88 | 16EF | Two Bedroom | 1,201 | 16E & 16F | $4,346.58 | $43.4 | $10,000.00 | $99.9 | $120,000 |
Light Renovation
| DRAFT | 4/25/2022 |
| Property | Building # | Unit | Type | SF | Rent Prior to Reno | PSF | Rent Post Reno | PSF | Est Reno Cost | |
| Yorkshire | 86 | 05JE | One Bedroom | 734 | $ | 4,000.00 | $65.4 | $4,800.00 | $78.5 | $17,500 |
| Yorkshire | 86 | 10DE | One Bedroom | 726 | $ | 3,800.00 | $62.8 | $4,750.00 | $78.5 | $17,500 |
| Yorkshire | 86 | 19DE | One Bedroom | 726 | $ | 4,000.00 | $66.1 | $4,900.00 | $81.0 | $17,500 |
| Yorkshire | 86 | 20BE | One Bedroom | 737 | $ | 4,000.00 | $65.1 | $4,900.00 | $79.8 | $17,500 |
| Yorkshire | 86 | 20CW | Three Bedroom | 1,321 | $ | 7,500.00 | $68.1 | $9,100.00 | $82.7 | $25,000 |
| Yorkshire | 86 | 16DE | One Bedroom | 726 | $ | 2,685.00 | $44.4 | $4,850.00 | $80.2 | $17,500 |
| Yorkshire | 86 | 18JE | One Bedroom | 840 | $ | 1,384.09 | $19.8 | $6,000.00 | $85.7 | $17,500 |
| Yorkshire | 86 | 20MW | One Bedroom | 516 | $ | 2,075.00 | $48.3 | $3,850.00 | $89.5 | $17,500 |
| Yorkshire | 86 | 21KW | One Bedroom | 568 | $ | 2,328.00 | $49.2 | $3,800.00 | $80.3 | $17,500 |
| Yorkshire | 86 | 21RW | Two Bedroom | 847 | $ | 2,775.00 | $39.3 | $5,700.00 | $80.8 | $22,500 |
| Lexington | 88 | 04C | One Bedroom | 601 | $ | 3,400.00 | $67.9 | $4,200.00 | $83.9 | $17,500 |
| Lexington | 88 | 03C | One Bedroom | 601 | $ | 1,607.80 | $32.1 | $4,200.00 | $83.9 | $17,500 |
| Lexington | 88 | 06C | One Bedroom | 601 | $ | 1,900.00 | $37.9 | $4,150.00 | $82.9 | $17,500 |
| Lexington | 88 | 09C | One Bedroom | 601 | $ | 2,236.00 | $44.6 | $4,199.00 | $83.8 | $17,500 |
| Lexington | 88 | 11A | Two Bedroom | 876 | $ | 3,350.00 | $45.9 | $6,000.00 | $82.2 | $22,500 |
| Lexington | 88 | 15C | One Bedroom | 636 | $ | 1,846.92 | $34.8 | $4,300.00 | $81.1 | $17,500 |
*The information in these materials is, unless otherwise indicated, based on information provided by the borrower sponsor and/or its affiliates. Information produced by third party appraisal firms and/or other firms or information provided by the borrower sponsor or its affiliates to the extent included in these materials, are for informational purposes only and should not be relied upon as indicators of the value or the future performance of the Y&L Subordinate Loan or the Yorkshire & Lexington Property or for any other purpose. None of the originators have participated in the preparation of any of these materials, nor have the originators independently verified the information contained therein. You may not rely upon the conclusions or other data set forth in these materials. None of the originators or any of their respective affiliates makes any representation as to the accuracy or completeness thereof or the reasonableness of any assumptions or other statements set forth therein. The information contained in these materials is preliminary as of the date hereof, supersedes any previous version of such information delivered to you and will be superseded by any such information subsequently delivered. These materials are subject to change, completion, supplement and amendment from time to time.