FWP 1 n411_ts-x3.htm FREE WRITING PROSPECTUS Unassociated Document
   
FREE WRITING PROSPECTUS
   
FILED PURSUANT TO RULE 433
   
REGISTRATION FILE NO.: 333-195164-03
     
 
 
 
(WELLS FARGO SECURITIES LOGO)

Free Writing Prospectus
Structural and Collateral Term Sheet
 
$1,138,484,364
(Approximate Aggregate Cut-off Date Balance of Mortgage Pool)
 
$979,097,000
(Approximate Aggregate Principal Balance of Offered Certificates)
 
Wells Fargo Commercial Mortgage Trust 2014-LC18
as Issuing Entity
 
Wells Fargo Commercial Mortgage Securities, Inc.
as Depositor

Ladder Capital Finance LLC
Wells Fargo Bank, National Association
The Royal Bank of Scotland plc
Liberty Island Group I LLC
NCB, FSB
Walker & Dunlop Commercial Property Funding I WF, LLC
 
as Sponsors and Mortgage Loan Sellers
 
 
Commercial Mortgage Pass-Through Certificates
Series 2014-LC18
 
 
December 8, 2014
 
 
WELLS FARGO SECURITIES
  
     
 
Lead Manager and
Sole Bookrunner
  
     
Deutsche Bank Securities
Co-Manager
  
Barclays
Co-Manager
 
 
 
 
 
STATEMENT REGARDING THIS FREE WRITING PROSPECTUS
 
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (‘‘SEC’’) (SEC File No. 333-195164) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the depositor, any underwriter, or any dealer participating in the offering will arrange to send you the prospectus after filing if you request it by calling toll free 1-800-745-2063 (8 a.m. – 5 p.m. EST) or by emailing wfs.cmbs@wellsfargo.com.
 
Nothing in this document constitutes an offer of securities for sale in any jurisdiction where the offer or sale is not permitted.  The information contained herein is preliminary as of the date hereof, supersedes any such information previously delivered to you and will be superseded by any such information subsequently delivered and ultimately by the final prospectus relating to the securities.  These materials are subject to change, completion, supplement or amendment from time to time.
 
STATEMENT REGARDING 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 (“WFS”), Deutsche Bank Securities Inc., Barclays Capital Inc. or any of their respective affiliates make any representation or warranty as to the actual rate or timing of payments or losses on any of the underlying assets or the payments or yield on the securities. The information in this presentation is based upon management forecasts and reflects prevailing conditions and management’s views as of this date, all of which are subject to change.  In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to us by or on behalf of the Mortgage Loan Sellers or which was otherwise reviewed by us.
 
This free writing prospectus contains certain forward-looking statements.  If and when included in this free writing prospectus, the words “expects”, “intends”, “anticipates”, “estimates” and analogous expressions and all statements that are not historical facts, including statements about our beliefs or expectations, are intended to identify forward-looking statements.  Any forward-looking statements are made subject to risks and uncertainties which could cause actual results to differ materially from those stated.  Those risks and uncertainties include, among other things, declines in general economic and business conditions, increased competition, changes in demographics, changes in political and social conditions, regulatory initiatives and changes in customer preferences, many of which are beyond our control and the control of any other person or entity related to this offering.  The forward-looking statements made in this free writing prospectus are made as of the date stated on the cover.  We have no obligation to update or revise any forward-looking statement.
 
Wells Fargo Securities is the trade name for the capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including but not limited to Wells Fargo Securities, LLC, a member of NYSE, FINRA, NFA and SIPC, Wells Fargo Institutional Securities, LLC, a member of FINRA and SIPC, Wells Fargo Prime Services, LLC, a member of FINRA, NFA and SIPC, and Wells Fargo Bank, N.A. Wells Fargo Securities, LLC carries and provides clearing services for Wells Fargo Institutional Securities, LLC customer accounts. Wells Fargo Securities, LLC, Wells Fargo Institutional Securities, LLC, and Wells Fargo Prime Services, LLC are distinct entities from affiliated banks and thrifts.
 
IMPORTANT NOTICE REGARDING THE OFFERED CERTIFICATES
 
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. Prospective investors should understand that, when considering the purchase of the Offered Certificates, a contract of sale will come into being no sooner than the date on which the relevant class of certificates has been priced and the underwriters have confirmed the allocation of certificates to be made to investors; any “indications of interest” expressed by any prospective investor, and any “soft circles” generated by the underwriters, will not create binding contractual obligations for such prospective investors, on the one hand, or the underwriters, the depositor or any of their respective agents or affiliates, on the other hand.
 
As a result of the foregoing, a prospective investor may commit to purchase certificates that have characteristics that may change, and each prospective investor is advised that all or a portion of the certificates referred to in these materials may be issued without all or certain of the characteristics described in these materials. The underwriters’ obligation to sell certificates to any prospective investor is conditioned on the certificates and the transaction having the characteristics described in these materials. If the underwriters determine that a condition is not satisfied in any material respect, such prospective investor will be notified, and neither the depositor nor the underwriters will have any obligation to such prospective investor to deliver any portion of the Offered Certificates which such prospective investor has committed to purchase, and there will be no liability between the underwriters, the depositor or any of their respective agents or affiliates, on the one hand, and such prospective investor, on the other hand, as a consequence of the non-delivery.
 
Each prospective investor has requested that the underwriters provide to such prospective investor information in connection with such prospective investor’s consideration of the purchase of the certificates described in these materials. These materials are being provided to each prospective investor for informative purposes only in response to such prospective investor’s specific request. The underwriters described in these materials may from time to time perform investment banking services for, or solicit investment banking business from, any company named in these materials. The underwriters and/or their affiliates or respective employees may from time to time have a long or short position in any security or contract discussed in these materials.
 
The information contained herein supersedes any previous such information delivered to any prospective investor and will be superseded by information delivered to such prospective investor prior to the time of sale.
 
 
IMPORTANT NOTICE RELATING TO AUTOMATICALLY-GENERATED EMAIL DISCLAIMERS
Any legends, disclaimers or other notices that may appear at the bottom of any email communication to which this free writing prospectus is attached relating to (1) these materials not constituting an offer (or a solicitation of an offer), (2) no representation that these materials are accurate or complete and may not be updated or (3) these materials possibly being confidential, are not applicable to these materials and should be disregarded.  Such legends, disclaimers or other notices have been automatically generated as a result of these materials having been sent via Bloomberg or another system.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
2
 
 
Wells Fargo Commercial Mortgage Trust 2014-LC18 Certificate Structure 
 
I.           Certificate Structure
 
 
Class
Expected Ratings
(DBRS/KBRA/Moody’s)(1)
Approximate Initial Certificate Principal Balance or Notional Amount(2)
 
Approx.
Initial Credit Support(3)
Pass-Through Rate
Description
Weighted Average
Life
(Years)(4)
Expected Principal Window(4)
Certificate Principal to
Value Ratio(5)
Certificate Principal
U/W NOI
Debt Yield(6)
 
  Offered Certificates
        
 
A-1
AAA(sf)/AAA(sf)/Aaa(sf)
$57,464,000
30.000%
(7)
2.67
01/15 - 11/19
34.7%
18.4%
 
A-2
AAA(sf)/AAA(sf)/Aaa(sf)
$63,915,000
30.000%
(7)
4.90
11/19 - 12/19
34.7%
18.4%
 
A-3
AAA(sf)/AAA(sf)/Aaa(sf)
$61,343,000
30.000%
(7)
6.96
12/21 - 12/21
34.7%
18.4%
 
A-4
AAA(sf)/AAA(sf)/Aaa(sf)
$255,000,000
30.000%
(7)
9.89
10/24 - 12/24
34.7%
18.4%
 
A-5
AAA(sf)/AAA(sf)/Aaa(sf)
$273,256,000
30.000%
(7)
9.96
12/24 - 12/24
34.7%
18.4%
 
A-SB
AAA(sf)/AAA(sf)/Aaa(sf)
$85,961,000
30.000%
(7)
7.42
12/19 - 10/24
34.7%
18.4%
 
A-S(8)
AAA(sf)/AAA(sf)/Aa1(sf)
$96,771,000
21.500%
(7)
9.96
12/24 - 12/24
38.9%
16.4%
 
X-A
AAA(sf)/AAA(sf)/NR
$893,710,000(9)
N/A
Variable(10)
N/A
N/A
N/A
N/A
 
X-B
AAA(sf)/AAA(sf)/NR
$162,234,000(11)
N/A
Variable(12)
N/A
N/A
N/A
N/A
 
B(8)
AA(low)(sf)/AA-(sf)/Aa3(sf)
$48,386,000
17.250%
(7)
9.96
12/24 - 12/24
41.1%
15.6%
 
C(8)
A(low)(sf)/A-(sf)/A3(sf)
$37,001,000
14.000%
(7)
9.96
12/24 - 12/24
42.7%
15.0%
 
PEX(8)
A(low)(sf)/A-(sf)/A1(sf)
$182,158,000
14.000%
(7)
9.96
12/24 - 12/24
42.7%
15.0%
 
 
Non-Offered Certificates
            
 
X-E
AAA(sf)/BB-(sf)/NR
$29,885,000(13)
N/A
Variable(14)
N/A
N/A
N/A
N/A
 
X-F
AAA(sf)/B-(sf)/NR
$18,501,000(15)
N/A
Variable(16)
N/A
N/A
N/A
N/A
 
X-G
AAA(sf)/NR/NR
$34,154,364(17)
N/A
Variable(18)
N/A
N/A
N/A
N/A
 
D
BBB(low)(sf)/BBB-(sf)/NR
$76,847,000
7.250%
(7)
9.96
12/24 - 12/24
46.0%
13.9%
 
E
BB(low)(sf)/BB-(sf)/NR
$29,885,000
4.625%
(7)
10.01
12/24 - 01/25
47.3%
13.5%
 
F
B(low)(sf)/B-(sf)/NR
$18,501,000
3.000%
(7)
10.04
01/25 - 01/25
48.1%
13.3%
 
G
NR/NR/NR
$34,154,364
0.000%
(7)
10.04
01/25 - 01/25
49.6%
12.9%
Notes:
(1)
The expected ratings presented are those of DBRS, Inc. (“DBRS”), Kroll Bond Rating Agency, Inc. (“KBRA”) and Moody’s Investors Service, Inc. (“Moody’s”) which the depositor hired to rate the offered certificates.  One or more other nationally recognized statistical rating organizations that were not hired by the depositor may use information they receive pursuant to Rule 17g-5 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise, to rate or provide market reports and/or published commentary related to the offered certificates.  We cannot assure you as to what ratings a non-hired nationally recognized statistical rating organization would assign or that its reports will not express differing, possibly negative, views of the mortgage loans and/or the offered certificates.  The ratings of each class of offered certificates address the likelihood of the timely distribution of interest and, except in the case of the Class X-A and Class X-B certificates, the ultimate distribution of principal due on those classes on or before the Rated Final Distribution Date.  See “Risk Factors—Risks Related to the Offered Certificates—Ratings of the Certificates Have Substantial Limitations” and “Ratings” in the free writing prospectus, dated December 8, 2014 (the “Free Writing Prospectus”). DBRS, KBRA and Moody’s have informed us that the “sf” designation in their ratings represents an identifier for structured finance product ratings.
 
(2)
The principal balances and notional amounts set forth in the table are approximate.  The actual initial principal balances and notional amounts may be larger or smaller depending on the aggregate cut-off date principal balance of the mortgage loans definitively included in the pool of mortgage loans, which aggregate cut-off date principal balance may be as much as 5% larger or smaller than the amount presented in the Free Writing Prospectus.
 
(3)
The approximate initial credit support with respect to the Class A-1, A-2, A-3, A-4, A-5 and A-SB Certificates represents the approximate credit enhancement for the Class A-1, A-2, A-3, A-4, A-5 and A-SB Certificates in the aggregate.  The percentage indicated under the column “Approx. Initial Credit Support” with respect to the Class C Certificates and the Class PEX Certificates represents the approximate credit support for the Class C regular interest, which will have an initial outstanding principal balance on the closing date of $37,001,000.
 
(4)
Weighted Average Lives and Expected Principal Windows are calculated based on an assumed prepayment rate of 0% CPR and the “Structuring Assumptions” described on Annex B to the Free Writing Prospectus.
 
(5)
The Certificate Principal to Value Ratio for each Class of Certificates (other than the Class A-1, A-2, A-3, A-4, A-5 and A-SB Certificates and other than the Exchangeable Certificates) is calculated by dividing the aggregate principal balance of such class of certificates and all classes of certificates (other than the Exchangeable Certificates) and regular interests, if any, that are senior to such class, by the aggregate appraised value of approximately $2,294,660,947 (calculated as described in the Free Writing Prospectus) of the mortgaged properties securing the mortgage loans (excluding, with respect to each pari passu loan combination, a pro rata portion of the related appraised value allocated to the related companion loans based on their cut-off date principal balance). The Certificate Principal to Value Ratios for each of the Class A-1, A-2, A-3, A-4, A-5 and A-SB Certificates are calculated by dividing the aggregate principal balance of the Class A-1, A-2, A-3, A-4, A-5 and A-SB Certificates by such aggregate appraised value (excluding, with respect to each pari passu loan combination, a pro rata portion of the related appraised value allocated to the related companion loans based on their cut-off date principal balance).  The Certificate Principal to Value Ratio for each of the Class A-S, B and C Certificates is calculated by dividing the aggregate principal balance of the Class A-S regular interest, the Class B regular interest or the Class C regular interest, as applicable, and all other classes of certificates (other than the Exchangeable Certificates) and the regular interests that are senior to such class, by such aggregate appraised value (excluding, with respect to each pari passu loan combination, a pro rata portion of the related appraised value allocated to the related companion loans based on their cut-off date principal balance).  The Certificate Principal to Value Ratio of the Class PEX Certificates is equal to the Certificate Principal to Value Ratio of the Class C Certificates.  In any event, however, excess mortgaged property value associated with a mortgage loan will not be available to offset losses on any other mortgage loan.
 
(6)
The Certificate Principal U/W NOI Debt Yield for each Class of Certificates (other than the Class A-1, A-2, A-3, A-4, A-5 and A-SB Certificates and other than the Exchangeable Certificates) is calculated by dividing the underwritten net operating income (which excludes, with respect to each pari passu loan combination, a pro rata portion of the related underwritten net operating income allocated to the related companion loans based on their cut-off date principal balance) for the mortgage pool of approximately $146,948,710 (calculated as described in the Free Writing Prospectus) by the aggregate certificate principal balance of such class of certificates and all classes of certificates (other than the Exchangeable Certificates) and regular interests, if any, that are senior to such class of certificates.  The Certificate Principal U/W NOI Debt Yield for each of the Class A-1, A-2, A-3, A-4, A-5 and A-SB Certificates is calculated by dividing such mortgage pool underwritten net operating income (which excludes, with respect to each pari passu loan combination, a pro rata portion of the related underwritten net operating income allocated to the related companion loans based on their cut-off date principal balance) by the aggregate principal balance of the Class A-1, A-2, A-3, A-4, A-5 and A-SB Certificates.  The Certificate Principal U/W NOI Debt Yield for each of the Class A-S, B and C Certificates is calculated by dividing the underwritten net operating income (which excludes, with respect to each pari passu loan combination, a pro rata portion of the related underwritten net operating income allocated to the related companion loans based on their cut-off date principal balance) for the mortgage pool of approximately $146,948,710 (calculated as described in the Free Writing Prospectus) by the aggregate
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
3
 
 
Wells Fargo Commercial Mortgage Trust 2014-LC18 Certificate Structure 
 
 
principal balance of the Class A-S regular interest, the Class B regular interest or the Class C regular interest, as applicable, and all other classes of certificates (other than the Exchangeable Certificates) and the regular interests that are senior to such class.  The Certificate Principal U/W NOI Debt Yield of the Class PEX Certificates is equal to the Certificate Principal U/W NOI Debt Yield for the Class C Certificates.  In any event, however, cash flow from each mortgaged property supports only the related mortgage loan and will not be available to support any other mortgage loan.
 
(7)
The pass-through rates for the Class A-1, A-2, A-3, A-4, A-5, A-SB, A-S, B, C, D, E, F and G Certificates in each case will be one of the following:  (i) a fixed rate per annum, (ii) the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date, (iii) a variable rate per annum equal to the lesser of (a) a fixed rate and (b) the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date or (iv) a variable rate per annum equal to the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date minus a specified percentage. For purposes of the calculation of the weighted average of the net mortgage interest rates on the mortgage loans for each distribution date, the mortgage interest rates will be adjusted as necessary to a 30/360 basis. The Class PEX Certificates will not have a pass-through rate, but will be entitled to receive the sum of the interest distributable on the Class PEX Components. The pass-through rate for the Class A-S Certificates, the Class A-S regular interest and the Class PEX Component A-S will, at all times, be the same.  The pass-through rate for the Class B Certificates, the Class B regular interest and the Class PEX Component B will, at all times, be the same.  The pass-through rate for the Class C Certificates, the Class C regular interest and the Class PEX Component C will, at all times, be the same.
 
(8)
The Class A-S, B, C and PEX Certificates are “Exchangeable Certificates”.  On the closing date, the upper-tier REMIC of the issuing entity will issue the Class A-S, B and C regular interests (each a “regular interest”) which will have outstanding principal balances on the closing date of $96,771,000, $48,386,000 and $37,001,000, respectively.  The regular interests will be held in a grantor trust for the benefit of the holders of the Class A-S, B, C and PEX Certificates.  The Class A-S, B, C and PEX Certificates will, at all times, represent undivided beneficial ownership interests in a grantor trust that will hold those regular interests.  Each class of the Class A-S, B and C Certificates will, at all times, represent an undivided beneficial ownership interest in a percentage of the outstanding certificate principal balance of the regular interest with the same alphabetical class designation.  The Class PEX Certificates will, at all times, represent an undivided beneficial ownership interest in the remaining percentages of the outstanding certificate principal balances of the Class A-S, B and C regular interests and which portions of those regular interests are referred to in this Term Sheet as the Class PEX Component A-S, Class PEX Component B and Class PEX Component C (collectively, the “Class PEX Components”).  Following any exchange of Class A-S, B and C Certificates for Class PEX Certificates or any exchange of Class PEX Certificates for Class A-S, B and C Certificates as described in the Free Writing Prospectus, the percentage interest of the outstanding certificate principal balances of the Class A-S, B and C regular interest that is represented by the Class A-S, B, C and PEX Certificates will be increased or decreased accordingly.  The initial certificate principal balance of each of the Class A-S, B and C Certificates shown in the table represents the maximum certificate principal balance of such class without giving effect to any exchange.  The initial certificate principal balance of the Class PEX Certificates is equal to the aggregate of the initial certificate principal balance of the Class A-S, B and C Certificates and represents the maximum certificate principal balance of the Class PEX Certificates that could be issued in an exchange.  The certificate principal balances of the Class A-S, B and C Certificates to be issued on the closing date will be reduced, in required proportions, by an amount equal to the certificate principal balance of the Class PEX Certificates issued on the closing date.  Distributions and allocations of payments and losses with respect to the Exchangeable Certificates are described in this Term Sheet under “Allocations and Distributions on the Class A-S, B, C and PEX Certificates” and under “Description of the Offered Certificates—Distributions” in the Free Writing Prospectus.  The maximum certificate principal balance of the Class PEX Certificates is set forth in the table but is not included in the certificate principal balance of the certificates set forth on the cover page of this Term Sheet or on the top of the cover page of the Free Writing Prospectus.
 
(9)
The Class X-A Certificates are notional amount certificates. The Notional Amount of the Class X-A Certificates will be equal to the aggregate principal balance of the Class A-1, A-2, A-3, A-4, A-5 and A-SB Certificates and the Class A-S regular interest outstanding from time to time (without regard to any exchange of Class A-S, B and C Certificates for Class PEX Certificates).  The Class X-A Certificates will not be entitled to distributions of principal.
 
(10)
The pass-through rate for the Class X-A Certificates for any distribution date will be a per annum rate equal to the excess, if any, of (a) the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date, over (b) the weighted average of the pass-through rates on the Class A-1, A-2, A-3, A-4, A-5 and A-SB Certificates and the Class A-S regular interest for the related distribution date, weighted on the basis of their respective aggregate principal balances outstanding immediately prior to that distribution date. For purposes of the calculation of the weighted average of the net mortgage interest rates on the mortgage loans for each distribution date, the mortgage interest rates will be adjusted as necessary to a 30/360 basis.
 
(11)
The Class X-B Certificates are notional amount certificates. The Notional Amount of the Class X-B Certificates will be equal to the aggregate principal balance of the Class B and C regular interests and the Class D Certificates outstanding from time to time.  The Class X-B Certificates will not be entitled to distributions of principal.
 
(12)
The pass-through rate for the Class X-B Certificates for any distribution date will be a per annum rate equal to the excess, if any, of (a) the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date, over (b) the weighted average of the pass-through rates on the Class B and C regular interests and the Class D Certificates for the related distribution date, weighted on the basis of their respective aggregate principal balances outstanding immediately prior to that distribution date. For purposes of the calculation of the weighted average of the net mortgage interest rates on the mortgage loans for each distribution date, the mortgage interest rates will be adjusted as necessary to a 30/360 basis.
 
(13)
The Class X-E Certificates are notional amount certificates. The Notional Amount of the Class X-E Certificates will be equal to the principal balance of the Class E Certificates outstanding from time to time.  The Class X-E Certificates will not be entitled to distributions of principal.
 
(14)
The pass-through rate for the Class X-E Certificates for any distribution date will be a per annum rate equal to the excess, if any, of (a) the weighted average of the net mortgage interest rates on the mortgage loans  for the related distribution date, over (b) the pass-through rate on the Class E Certificates for the related distribution date. For purposes of the calculation of the weighted average of the net mortgage interest rates on the mortgage loans for each distribution date, the mortgage interest rates will be adjusted as necessary to a 30/360 basis.
 
(15)
The Class X-F Certificates are notional amount certificates. The Notional Amount of the Class X-F Certificates will be equal to the principal balance of the Class F Certificates outstanding from time to time.  The Class X-F Certificates will not be entitled to distributions of principal.
 
(16)
The pass-through rate for the Class X-F Certificates for any distribution date will be a per annum rate equal to the excess, if any, of (a) the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date, over (b) the pass-through rate on the Class F Certificates for the related distribution date. For purposes of the calculation of the weighted average of the net mortgage interest rates on the mortgage loans for each distribution date, the mortgage interest rates will be adjusted as necessary to a 30/360 basis.
 
(17)
The Class X-G Certificates are notional amount certificates. The Notional Amount of the Class X-G Certificates will be equal to the principal balance of the Class G Certificates outstanding from time to time. The Class X-G Certificates will not be entitled to distributions of principal.
 
(18)
The pass-through rate for the Class X-G Certificates for any distribution date will be a per annum rate equal to the excess, if any, of (a) the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date, over (b) the pass-through rate on the Class G Certificates for the related distribution date. For purposes of the calculation of the weighted average of the net mortgage interest rates on the mortgage loans for each distribution date, the mortgage interest rates will be adjusted as necessary to a 30/360 basis.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
4
 
 
Wells Fargo Commercial Mortgage Trust 2014-LC18
Issue Characteristics
 
II.          Transaction Highlights
 
Mortgage Loan Sellers:

   
Number of
  
Number of
      
% of Cut-off
  
 
  
Mortgage
  
Mortgaged
  
Aggregate Cut-off
  
Date Pool
  
Mortgage Loan Seller
  
Loans
  
Properties
  
Date Balance
  
Balance
  
Ladder Capital Finance LLC
   27  
35
  
$411,816,829
  
36.2
 %   
Wells Fargo Bank, National Association
  
35
  
45
  
371,971,724
  
32.7
    
The Royal Bank of Scotland plc
  
11
  
11
  
169,139,272
  
14.9
    
Liberty Island Group I LLC
  
3
  
3
  
66,500,000
  
5.8
    
NCB, FSB
  
18
  
18
  
61,386,540
  
5.4
    
Walker & Dunlop Commercial Property Funding I WF, LLC
  
5
  
5
  
57,670,000
  
5.1
    
Total
  
99
  
117
  
$1,138,484,364
  
100.0
 %   

Loan Pool:
      
         
Cut-off Date Balance:
   $ 1,138,484,364  
Number of Mortgage Loans:
     99  
Average Cut-off Date Balance per Mortgage Loan:
     $11,499,842  
Number of Mortgaged Properties:
     117  
Average Cut-off Date Balance per Mortgaged Property(1):
     $9,730,636  
Weighted Average Mortgage Interest Rate:
     4.444%  
Ten Largest Mortgage Loans as % of Cut-off Date Pool Balance:
     36.2%  
Weighted Average Original Term to Maturity or ARD (months):
     114  
Weighted Average Remaining Term to Maturity or ARD (months):
     114  
Weighted Average Original Amortization Term (months)(2):
     353  
Weighted Average Remaining Amortization Term (months)(2):
     352  
Weighted Average Seasoning (months):
     0  
(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):
  
2.10x
  
Weighted Average U/W Net Operating Income Debt Yield(1):
  
12.9%
  
Weighted Average Cut-off Date Loan-to-Value Ratio(1):
  
63.3%
  
Weighted Average Balloon or ARD Loan-to-Value Ratio(1):
  
54.9%
  
% of Mortgage Loans with Additional Subordinate Debt(2):
  
22.2%
  
% of Mortgage Loans with Single Tenants(3):
  
18.6%
  
(1)
With respect to the JW Marriott New Orleans mortgage loan, the Colorado Mills mortgage loan and the Depot Park mortgage loan, each of which is part of a pari passu loan combination, Cut-off Date Balance per square foot, loan-to-value ratio, debt service coverage ratio and debt yield calculations include the related pari passu companion loans (unless otherwise stated). Information for each residential cooperative mortgage loan is calculated using underwritten net cash flow for the related residential cooperative property which is the projected net cash flow 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 information for residential cooperative mortgage loans is based upon the appraised value of the residential cooperative property determined as if such residential cooperative property is operated as a residential cooperative. See Annex A-1 to the Free Writing Prospectus. Debt service coverage ratio, debt yield and loan-to-value ratio information takes no account of subordinate debt (whether or not secured by the related mortgaged property), if any, that is allowed under the terms of any mortgage loan.
(2)
Twelve (12) of the mortgage loans, each of which is secured by residential cooperative properties, currently have in place subordinate secured lines of credit to the related mortgage borrowers that permit future advances (such loans, collectively, the “Subordinate Coop LOCs”). The percentage figure expressed as “% of Mortgage Loans with Additional Subordinate Debt” is determined as a percentage of cut-off date principal balance and does not take into account 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—Subordinate and/or Other Financing” and “—Additional Debt Financing for Mortgage Loans Secured by Residential Cooperatives” in the Free Writing Prospectus
(3)
Excludes mortgage loans that are secured by multiple single tenant properties and includes mortgage loans secured by multiple single tenant properties where each property is occupied by the same tenant or tenants that are affiliates of one another.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 
5
 

Wells Fargo Commercial Mortgage Trust 2014-LC18
Issue Characteristics
 
Loan Structural Features:
 
Amortization: Based on the Cut-off Date Pool Balance, 86.1% of the mortgage pool (85 mortgage loans) has scheduled amortization, as follows:
 
43.1% (54 mortgage loans) requires amortization during the entire loan term; and
 
43.1% (31 mortgage loans) provides for an interest-only period followed by an amortization period.
 
Interest-Only: Based on the Cut-off Date Pool Balance, 13.9% of the mortgage pool (14 mortgage loans) provides for interest-only payments during the entire loan term. The Weighted Average Cut-off Date Loan-to-Value Ratio and Weighted Average U/W Net Cash Flow DSCR for those mortgage loans is 56.8% and 2.74x, respectively.
 
Hard Lockboxes: Based on the Cut-off Date Pool Balance, 48.3% of the mortgage pool (25 mortgage loans) has hard lockboxes in place.
 
Reserves: The mortgage loans require amounts to be escrowed monthly as follows (excluding any mortgage loans with springing provisions):
 
 
Real Estate Taxes:
73.5% of the pool
  
 
Insurance:
53.5% of the pool
  
 
Capital Replacements:
68.1% of the pool
  
 
TI/LC:
60.9% of the pool(1)
  
(1)
The percentage of Cut-off Date Balance for loans with TI/LC reserves is based on the aggregate principal balance allocable to loans that include office, retail, other, industrial and mixed use properties.
  
 
Call Protection/Defeasance: Based on the Cut-off Date Pool Balance, the mortgage pool has the following call protection and defeasance features:
 
79.5% of the mortgage pool (68 mortgage loans) features a lockout period, then defeasance only until an open period;
 
11.3% of the mortgage pool (8 mortgage loans) features a lockout period, then the greater of a prepayment premium or yield maintenance until an open period;
 
4.6% of the mortgage pool (15 mortgage loans) features no lockout period, but requires the greater of a prepayment premium or yield maintenance for a period, then a prepayment premium until an open period;
 
2.9% of the mortgage pool (5 mortgage loans) features no lockout period, but requires yield maintenance for a period, then defeasance or yield maintenance until an open period;
 
1.1% of the mortgage pool (1 mortgage loan) features no lockout period, but requires the greater of a prepayment premium or yield maintenance for a period, followed by defeasance or the greater of a prepayment premium or yield maintenance until an open period; and
 
0.6% of the mortgage pool (2 mortgage loans) features no lockout period, but requires the greater of a prepayment premium or yield maintenance until an open period.
 
Please refer to Annex A-1 to the Free Writing Prospectus for further description of individual loan call protection.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 
6
 
 
Wells Fargo Commercial Mortgage Trust 2014-LC18
Issue Characteristics

III.
Issue Characteristics
    
       
 
Securities Offered:
  
$979,097,000 approximate monthly pay, multi-class, commercial mortgage REMIC pass- through certificates consisting of twelve classes (Classes A-1, A-2, A-3, A-4, A-5, A-SB, A-S, B, C, PEX, X-A and X-B), which are offered pursuant to a registration statement filed with the SEC.
       
 
Mortgage Loan Sellers:
  
Ladder Capital Finance LLC (“LCF”); Wells Fargo Bank, National Association (“WFB”); The Royal Bank of Scotland plc (“RBS”); Liberty Island Group I LLC (“LIG I”); NCB, FSB; and Walker & Dunlop Commercial Property Funding I WF, LLC (“WDCPF”).
       
 
Sole Lead Bookrunning
    
 
Manager:
  
Wells Fargo Securities, LLC
       
 
Co-Managers:
  
Deutsche Bank Securities Inc. and Barclays Capital Inc.
       
 
Rating Agencies:
  
DBRS, Inc., Kroll Bond Rating Agency, Inc. and Moody’s Investors Service, Inc.
       
 
Master Servicers:
  
Wells Fargo Bank, National Association and NCB, FSB
       
 
Special Servicers:
  
Rialto Capital Advisors, LLC and NCB,FSB
       
 
Additional Primary Servicer:
  
Prudential Asset Resources, Inc.
       
 
Certificate Administrator:
  
Wells Fargo Bank, National Association
       
 
Trustee:
  
Wilmington Trust, National Association
       
 
Trust Advisor:
  
Park Bridge Lender Services LLC
       
 
Initial Majority Subordinate
    
 
Certificateholder:
  
RREF II CMBS AIV, LP or another affiliate of Rialto Capital Advisors, LLC
       
 
Cut-off Date:
  
The Cut-off Date with respect to each mortgage loan is the due date for the monthly debt service payment that is due in December 2014 (or, in the case of any mortgage loan that has its first due date in January 2015, the date that would have been its due date in December 2014 under the terms of that mortgage loan if a monthly debt service payment were scheduled to be due in that month).
       
 
Expected Closing Date:
  
On or about December 30, 2014.
       
 
Determination Dates:
  
The 11th day of each month (or if that day is not a business day, the next succeeding business day), commencing in January 2015.
       
 
Distribution Dates:
  
The fourth business day following the Determination Date in each month, commencing in January 2015.
       
 
Rated Final Distribution
    
 
Date:
  
The Distribution Date in December 2047.
       
 
Interest Accrual Period:
  
With respect to any Distribution Date, the calendar month preceding the month in which such Distribution Date occurs.
       
 
Day Count:
  
The Offered Certificates will accrue interest on a 30/360 basis.
       
 
Minimum Denominations:
  
$10,000 for each Class of Offered Certificates (other than the Class X-A and X-B Certificates) and $1,000,000 for the Class X-A and X-B Certificates. Investments may also be made in any whole dollar denomination in excess of the applicable minimum denomination.
       
 
Clean-up Call:
  
1%
       
 
Delivery:
  
DTC, Euroclear and Clearstream Banking
       
 
ERISA/SMMEA Status:
  
Each Class of Offered Certificates is expected to be eligible for exemptive relief under ERISA. No Class of Offered Certificates will be SMMEA eligible.
       
 
Risk Factors:
  
THE CERTIFICATES INVOLVE CERTAIN RISKS AND MAY NOT BE SUITABLE FOR ALL INVESTORS. SEE THE “RISK FACTORS” SECTION OF THE FREE WRITING PROSPECTUS.
       
 
Bond Analytics Information:
  
The Certificate Administrator will be authorized to make distribution date settlements, CREFC® reports and certain supplemental reports (other than confidential information) available to certain financial modeling and data provision services, including Bloomberg, L.P., Trepp, LLC, Intex Solutions, Inc., Markit Group Limited, Interactive Data Corp., BlackRock Financial Management, Inc and CMBS.com, Inc.

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
7
 
 
Wells Fargo Commercial Mortgage Trust 2014-LC18 Characteristics of the Mortgage Pool

IV.          Characteristics of the Mortgage Pool(1)
A.           Ten Largest Mortgage Loans
Mortgage Loan
Seller
Mortgage Loan Name
City
State
Number of
Mortgage Loans
/ Mortgaged
Properties
 Mortgage Loan
Cut-off Date
Balance ($)
% of Cut-
off Date
Pool
Balance
(%)
Property
Type
Number of
SF or
Rooms
Cut-off Date
Balance Per
SF or Room
($)
Cut-off
Date LTV
Ratio (%)
Balloon or
ARD LTV
Ratio (%)
U/W NCF DSCR (x)
U/W NOI Debt Yield (%)
LCF
Hawaii Kai Towne Center
Honolulu
HI
1 / 1
$84,750,000
   7.4%
Mixed Use
469,787
$180
71.2%
65.1%
     1.44x
9.0%
WFB
JW Marriott New Orleans
New Orleans
LA
1 / 1
50,000,000
4.4
Hospitality
496
181,452
59.1
47.2
2.07
14.2
LCF
Nashville Hotel Portfolio
Nashville
TN
1 / 2
43,946,597
3.9
Hospitality
326
134,806
67.9
62.7
2.21
15.7
RBS
2900 Fairview Park Drive
Falls Church
VA
1 / 1
39,000,000
3.4
Office
147,000
265
62.3
56.7
1.55
9.6
WFB
Marriott Kansas City Country Club Plaza
Kansas City
MO
1 / 1
38,500,000
3.4
Hospitality
295
130,508
66.6
64.5
1.66
12.1
RBS
Colorado Mills
Lakewood
CO
1 / 1
36,000,000
3.2
Retail
918,448
148
63.3
55.1
1.91
12.0
LCF
One Towne Square
Southfield
MI
1 / 1
36,000,000
3.2
Office
426,970
84
75.0
62.1
1.58
11.9
LIG I
Hilton Garden Inn Cupertino
Cupertino
CA
1 / 1
32,000,000
2.8
Hospitality
164
195,122
53.2
53.2
3.00
13.3
WFB
New Town Shops on Main
Williamsburg
VA
1 / 1
27,000,000
2.4
Retail
248,176
109
52.8
47.1
1.80
10.8
LCF
Walgreens Portfolio
Various
Various
1 / 6
25,000,000
2.2
Retail
89,478
279
68.7
62.8
1.36
 8.2
Top Three Total/Weighted Average
    
3 / 4
$178,696,597
15.7%
      
67.0%
59.5%
1.81x
  12.1%
Top Five Total/Weighted Average
    
5 / 6
$256,196,597
22.5%
      
66.2%
59.8%
1.74x
  11.7%
Top Ten Total/Weighted Average
    
10 / 16
$412,196,597
36.2%
      
65.0%
58.4%
1.82x
  11.6%
Non-Top Ten Total/Weighted Average
    
89 / 101
$726,287,767
63.8%
      
62.3%
52.9%
2.26x
  13.6%
(1)    With respect to the JW Marriott New Orleans mortgage loan, the Colorado Mills mortgage loan and the Depot Park mortgage loan, each of which is part of a pari passu loan combination, Cut-off Date Balance per square foot, loan-to-value ratio, debt service coverage ratio and debt yield calculations include the related pari passu companion loans (unless otherwise stated).  With respect to each Mortgage Loan, debt service coverage ratio, debt yield and loan-to-value ratio information takes no account of subordinate debt (whether or not secured by the related mortgaged property), if any, that is allowed under the terms of any mortgage loan.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
8
 
 
Wells Fargo Commercial Mortgage Trust 2014-LC18 Characteristics of the Mortgage Pool
 
B.          Summary of Pari Passu Split Loan Structures
Property Name
Mortgage
Loan Seller
Related Notes in
Loan Group
(Original Balance)
Holder of Note
Whether Note is
Lead Servicing
for the Entire
Loan
Combination
Current Master Servicer Under Related
Securitization Servicing Agreement
  
Current Special Servicer Under Related
Securitization Servicing Agreement
JW Marriott New Orleans
WFB
$50,000,000
WFCM 2014-LC18
Yes
Wells Fargo Bank, National Association
  
Rialto Capital Advisors, LLC
WFB
$40,000,000
(1)
No
Wells Fargo Bank, National Association
  
Rialto Capital Advisors, LLC
Colorado Mills
RBS
$100,000,000
WFRBS 2014-C25(2)
Yes
Wells Fargo Bank, National Association
  
CWCapital Asset Management, LLC
RBS
$36,000,000
WFCM 2014-LC18
No
Wells Fargo Bank, National Association
  
CWCapital Asset Management, LLC
Depot Park
LIG I
$24,000,000
WFCM 2014-LC18
Yes
Wells Fargo Bank, National Association
  
Rialto Capital Advisors, LLC
LIG I
$21,600,000
(3)
No
Wells Fargo Bank, National Association
  
Rialto Capital Advisors, LLC
(1)
The related pari passu companion loan Note A-2 is currently held by WFB and is expected to be contributed to a future securitization. No assurance can be provided that the Note A-2 will not be split further.
(2)
The WFRBS 2014-C25 transaction is scheduled to close on December 12, 2014.
(3)
The related pari passu companion loan Note A-2 is currently held by LIG I and is expected to be contributed to a future securitization. No assurance can be provided that the Note A-2 will not be split further.
 
C.           Mortgage Loans with Additional Secured and Mezzanine Financing(1)
Loan No.
Mortgage
Loan
Seller
Mortgage Loan Name
Mortgage
Loan
Cut-off Date
Balance ($)
% of Cut-off
 Date Balance 
(%)
Sub Debt Cut-off
Date Balance ($)
Mezzanine
Debt Cut-off
Date Balance
($)
Total Debt
Interest
Rate (%)(2)
Mortgage
Loan
U/W NCF
DSCR (x)
Total Debt
U/W NCF
DSCR (x)
Mortgage
Loan Cut-
off Date
U/W NOI
Debt Yield
(%)
Total Debt
Cut-off Date
U/W NOI
Debt Yield
(%)
Mortgage
Loan Cut-off
Date LTV
Ratio (%)
Total Debt
Cut-off
Date LTV Ratio (%)
1
LCF
Hawaii Kai Towne Center
$84,750,000
7.4%
 $0
$12,400,000
5.109% 
1.44x   
1.16x
 9.0%   
  7.8%
 71.2%
  81.6%
3
LCF
Nashville Hotel Portfolio
43,946,597
 3.9
0
3,998,574
5.450
2.21
1.90
15.7
14.4
67.9
  74.1  
7
LCF
One Towne Square
36,000,000
 3.2
0
2,500,000
5.650
1.58
1.40
11.9
11.1
75.0
80.2
9
WFB
New Town Shops on Main
27,000,000
 2.4
0
5,000,000
5.341
1.80
1.26
10.8
9.1
52.8
62.6
15
LCF
Meridian Crossroads
19,960,000
 1.8
0
2,345,000
5.675
1.55
1.30
11.1
9.9
75.0
83.9
Total/Weighted Average
$211,656,597  
  18.6%
 $0
$26,243,574 
      5.355%
1.68x
 1.38x
   11.3%
  10.1%
   69.2%
  77.6%
(1)
In addition, twelve (12) of the mortgage loans, each of which are secured by residential cooperative properties, currently have in place Subordinate Coop LOCs that permit future advances, but as to which there are no present outstanding balances.  See “Description of the Mortgage Pool—Subordinate and/or Other Financing” and “—Additional Debt Financing for Mortgage Loans Secured by Residential Cooperatives” in the Free Writing Prospectus.
(2)
Total Debt Interest Rate for any specified mortgage loan reflects the weighted average of the interest rates on the respective components of the total debt.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
9
 
 
Wells Fargo Commercial Mortgage Trust 2014-LC18 Characteristics of the Mortgage Pool
 
D.
 Previous Securitization History(1)
 
Loan
No.
Mortgage
Loan Seller
Mortgage
 Loan or Mortgaged
Property Name
City
State
Property
Type
Mortgage Loan
or Mortgaged Property Cut-off Date Balance ($)
% of Cut-
off Date
Pool
Balance
(%)
Previous
Securitization
12
LIG I
Depot Park
Sacramento
CA
Industrial
$24,000,000
  2.1
 %
BSCMS 2005-T20
20
WFB
Cross Pointe Centre
Jacksonville
NC
Retail
16,700,000
1.5
  
GCCFC 2005-GG5
21
WDCPF
Homewood Suites Columbia
Columbia
MD
Hospitality
16,500,000
1.4
  
COMM 2005-C6
22
WFB
Crosswinds Shopping Center
West Bloomfield Township
MI
Retail
15,000,000
1.3
  
COMM 2005-LP5
23
WFB
Preferred Freezer - Sharon, MA
Sharon
MA
Industrial
15,000,000
1.3
  
WBCMT 2005-C20
25
WDCPF
Oneida & Holmgren Way
Ashwaubenon
WI
Retail
14,340,000
1.3
  
WBCMT 2006-C24
29.01
WFB
William Cannon
Austin
TX
Self Storage
4,837,786
0.4
  
GECMC 2005-C2
29.02
WFB
Thousand Oaks
San Antonio
TX
Self Storage
4,006,187
0.4
  
GECMC 2005-C2
30
RBS
Belle Grove Apartments
Richardson
TX
Multifamily
11,850,000
1.0
  
GNR 2010-28
31.01
WFB
Southpointe Plaza Shopping Center
Augusta
GA
Retail
5,152,500
0.5
  
GCCFC 2005-GG3
31.03
WFB
South Boston Shopping Center
South Boston
VA
Retail
2,550,000
0.2
  
GCCFC 2005-GG3
34
LCF
Elk Lakes Shopping Center
Greeley
CO
Retail
10,950,000
1.0
  
CSFB 2003-C3
39
RBS
All Storage Wall Price
Fort Worth
TX
Self Storage
10,450,000
0.9
  
JPMCC 2004-C3
40
LCF
Gardens on Whispering Pines
Albany
GA
Multifamily
10,000,000
0.9
  
FNA 2012-M17
41
RBS
All Storage Carrollton
Carrollton
TX
Self Storage
9,850,000
0.9
  
JPMCC 2004-C3
42
RBS
All Storage I-40 West
Amarillo
TX
Self Storage
9,800,000
0.9
  
BACM 2005-4
43
NCB, FSB
Fountains-Clove Road Apartments, Inc.
Staten Island
NY
Multifamily
9,200,000
0.8
  
MSC 2005-IQ10
45
WFB
Merchant Centre
Orange
CA
Mixed Use
8,488,623
0.7
  
COMM 2005-LP5
48
WFB
Santa Rosa Avenue Self Storage
Santa Rosa
CA
Self Storage
7,800,000
0.7
  
GECMC 2005-C2
55
WFB
Hampton Inn - Tallahassee Central
Tallahassee
FL
Hospitality
7,111,829
0.6
  
BACMC 2004-C6
56
RBS
Josey Ranch Shopping Center
Carrollton
TX
Retail
6,850,000
0.6
  
JPMCC 2005-CB11
67
LCF
Bear Creek Apartments
Euless
TX
Multifamily
4,400,000
0.4
  
CGCMT 2007-C6
69
WDCPF
Medical Arts Plaza
Albuquerque
NM
Office
4,235,000
0.4
  
MLCFC 2007-9
75
WDCPF
2665 S Oneida
Ashwaubenon
WI
Retail
3,595,000
0.3
  
WBCMT 2006-C24
77
WFB
La Avenida Plaza
Coronado
CA
Retail
3,500,000
0.3
  
MSC 2005-T17
78
NCB, FSB
61 Bronx River Road Owners, Inc.
Yonkers
NY
Multifamily
3,497,134
0.3
  
MSC 2005-IQ10
79
WFB
Walgreens - Grapevine
Grapevine
TX
Retail
3,400,000
0.3
  
MSC 2005-IQ9
81
WFB
Stor-n-Lock - Palm Desert
Palm Desert
CA
Self Storage
3,200,000
0.3
  
WBCMT 2005-C16
86
WFB
201 King Street
Alexandria
VA
Mixed Use
2,600,000
0.2
  
BSCMS 2005-PWR7
93
NCB, FSB
7 Great Jones Corp.
New York
NY
Multifamily
1,850,000
0.2
  
MSC 2005-IQ9
94
WFB
The Poplars Apartments
Saginaw Township
MI
Multifamily
1,646,994
0.1
  
BSCMS 2004-T16
95
WFB
Stor-n-Lock - Salt Lake City
Cottonwood Heights
UT
Self Storage
1,600,000
0.1
  
WBCMT 2005-C16
 
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
 
 
Wells Fargo Commercial Mortgage Trust 2014-LC18 Characteristics of the Mortgage Pool
 
96
WFB
310 & 320 Ed Wright Lane
Newport News
VA
Industrial
1,575,000
0.1
  
CSFB 2004-C5
98
NCB, FSB
214 Clinton St./147 Pacific St. Owners Corp.
Brooklyn
NY
Multifamily
1,096,959
0.1
  
MSC 2005-IQ9
 
Total
        
$256,633,012
22.5
 %  
 
(1)  
The table above represents the most recent securitization with respect to the mortgaged property securing the related mortgage loan, based on information provided by the related borrower or obtained through searches of a third-party database.  While the above mortgage loans may have been securitized multiple times in prior transactions, mortgage loans are only listed in the above chart if the mortgage loan in this securitization paid off a mortgage loan in another securitization. The information has not otherwise been confirmed by the mortgage loan sellers.
 
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
 
 
Wells Fargo Commercial Mortgage Trust 2014-LC18
 Characteristics of the Mortgage Pool
 
E.
Mortgage Loans with Scheduled Balloon Payments and Related Classes
           
Class A-2(1)
Loan No.
  
Mortgage
Loan
Seller
  
Mortgage Loan Name
  
State
  
Property
Type
  
Mortgage Loan
Cut-off Date
Balance ($)
  
% of Cut-
off Date
Pool
Balance
(%)
  
Mortgage Loan
Balance at
Maturity ($)
  
 
% of Class
A-2
Certificate
Principal
Balance
(%)(2)
  
SF/
Rooms/
Pads
  
Loan per SF
/Room/
Pad ($)
  
U/W NCF
DSCR (x)
  
U/W NOI
Debt Yield
(%)
  
Cut-off
Date LTV
Ratio (%)
  
Balloon or
ARD LTV
Ratio (%)
  
Rem. IO
Period
(mos.)
  
Rem.
Term to
Maturity
(mos.)
3
  
LCF
  
Nashville Hotel Portfolio
  
TN
  
Hospitality
  
$43,946,597
    
3.9
 %   
$40,544,035
    
63.4
 %   
326
  
$134,806
  
2.21x
  
15.7
 %   
67.9
 %   
62.7
 %   
1
  
59
27
  
LCF
  
Sand Creek Estates
  
ND
  
Manufactured
Housing Community
  
13,000,000
    
1.1
    
9,729,514
    
15.2
    
282
  
46,099
  
1.73
  
16.6
    
65.7
    
49.2
    
0
  
60
46
  
WFB
  
Bradenton / Cascade Office Portfolio
  
OH
  
Office
  
8,300,000
    
0.7
    
7,719,505
    
12.1
    
208,435
  
40
  
1.68
  
12.0
    
70.9
    
66.0
    
12
  
60
73
  
LCF
  
Grant Square Shopping Center
  
OK
  
Retail
  
3,800,000
    
0.3
    
3,502,278
    
5.5
    
98,676
  
39
  
1.52
  
11.5
    
73.1
    
67.4
    
0
  
60
Total/Weighted Average
    
$69,046,597
    
6.1
 %  
$61,495,332
    
96.2
 %          
2.02x
  
15.2
 %  
68.1
 %  
60.8
 %  
1
  
59
(1) 
The table above presents the mortgage loan(s) whose balloon payments would be applied to pay down the principal balance of the Class A-2 Certificates, assuming a 0% CPR and applying the “Structuring Assumptions” described in the Free Writing Prospectus, including the assumptions that (i) none of the mortgage loans in the pool experience prepayments prior to maturity (or, in the case of an ARD loan, its anticipated repayment date), defaults or losses; (ii) there are no extensions of maturity dates of any mortgage loans in the pool; and (iii) each mortgage loan in the pool is paid in full on its stated maturity date (or, in the case of an ARD loan, its anticipated repayment date). Each Class of Certificates, including the Class A-2 Certificates, evidences undivided ownership interests in the entire pool of mortgage loans. Debt service coverage ratio, debt yield and loan-to-value ratio information takes no account of subordinate debt (whether or not secured by the mortgaged property), if any, that is allowed under the terms of any mortgage loan. See Annex A-1 to the Free Writing Prospectus.
(2) 
Reflects the percentage equal to the Mortgage Loan Balance at Maturity divided by the initial Class A-2 Certificate Principal Balance.
 
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
 
 
Wells Fargo Commercial Mortgage Trust 2014-LC18
 Characteristics of the Mortgage Pool
 
E.           Mortgage Loans with Scheduled Balloon Payments and Related Classes (continued)
 
Class A-3(1)
Loan No.
  
Mortgage
Loan
Seller
  
Mortgage Loan Name
  
State
  
Property
Type
  
Mortgage Loan
Cut-off Date
Balance ($)
  
% of Cut-
off Date
Pool
Balance
(%)
  
Mortgage Loan
Balance at
Maturity ($)
  
 
% of Class  
A-3
Certificate
Principal
Balance
(%)(2)
  
SF/
Rooms
  
Loan per SF
/Room ($)
  
U/W NCF
DSCR (x)
  
U/W NOI
Debt Yield
(%)
  
Cut-off
Date LTV
Ratio (%)
  
Balloon or
ARD LTV
Ratio (%)
  
Rem. IO
Period
(mos.)
  
Rem.
Term to
Maturity
(mos.)
5
  
WFB
  
Marriott Kansas City Country Club Plaza
  
MO
  
Hospitality
  
$38,500,000
  
3.4%
  
$37,265,273
  
60.7%
  
295
  
$130,508
  
1.66
 x   
12.1%
  
66.6
 %   
64.5
 %   
60
  
84
9
  
WFB
  
New Town Shops on Main
  
VA
  
Retail
  
27,000,000
  
2.4
  
24,077,285
  
39.3
  
248,176
  
109
  
1.80
    
10.8
  
52.8
    
47.1
    
0
  
84
Total/Weighted Average
        
$65,500,000
  
5.8%
  
$61,342,558
  
100.0%
          
1.72
 x  
11.6%
  
60.9
 %  
57.3
 %  
35
  
84
(1) 
The table above presents the mortgage loan(s) whose balloon payments would be applied to pay down the principal balance of the Class A-3 Certificates, assuming a 0% CPR and applying the “Structuring Assumptions” described in the Free Writing Prospectus, including the assumptions that (i) none of the mortgage loans in the pool experience prepayments, defaults or losses; (ii) there are no extensions of maturity dates of any mortgage loans in the pool; and (iii) each mortgage loan in the pool is paid in full on its stated maturity date. Each Class of Certificates, including the Class A-3 Certificates, evidences undivided ownership interests in the entire pool of mortgage loans. Debt service coverage ratio, debt yield and loan-to-value ratio information takes no account of subordinate debt (whether or not secured by the mortgaged property), if any, that is allowed under the terms of any mortgage loan. See Annex A-1 to the Free Writing Prospectus.
(2) 
Reflects the percentage equal to the Mortgage Loan Balance at Maturity divided by the initial Class A-3 Certificate Principal Balance.
 
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
 
 
Wells Fargo Commercial Mortgage Trust 2014-LC18
Characteristics of the Mortgage Pool
 
F.           Property Type Distribution(1)
 
 
(PIE CHRAT)
 
Property Type
  
Number of Mortgaged Properties
  
Aggregate Cut-
off Date Balance
($)
  
% of
Cut-off
Date Balance
(%)
  
Weighted Average
Cut-off
Date LTV Ratio (%)
    
Weighted Average Balloon or ARD LTV Ratio (%)
  
Weighted Average U/W NCF DSCR (x)
  
Weighted Average
U/W NOI
Debt Yield
(%)
  
Weighted Average
U/W NCF
Debt Yield
(%)
  
Weighted Average Mortgage
Rate (%)
Retail
  
37
  
$303,662,687
  
26.7%
  
66.7
 %   
58.9%
  
1.68x
  
10.1%
  
9.5%
  
4.513
 % 
Anchored
  
7
  
100,395,000
  
8.8
  
64.4
    
55.5
  
1.75
  
10.9
  
9.9
  
4.542
  
Single Tenant
  
15
  
89,988,772
  
7.9
  
69.0
    
64.8
  
1.59
  
8.7
  
8.6
  
4.652
  
Shadow Anchored
  
7
  
42,965,076
  
3.8
  
71.9
    
60.2
  
1.55
  
10.1
  
9.3
  
4.372
  
Regional Mall
  
1
  
36,000,000
  
3.2
  
63.3
    
55.1
  
1.91
  
12.0
  
11.3
  
4.282
  
Unanchored
  
7
  
34,313,839
  
3.0
  
64.8
    
55.2
  
1.57
  
9.9
  
9.2
  
4.484
  
Hospitality
  
13
  
235,858,426
  
20.7
  
63.0
    
55.0
  
2.04
  
13.4
  
11.8
  
4.448
  
Limited Service
  
10
  
130,858,426
  
11.5
  
62.8
    
54.8
  
2.18
  
13.7
  
12.4
  
4.566
  
Full Service
  
2
  
88,500,000
  
7.8
  
62.4
    
54.7
  
1.89
  
13.3
  
11.2
  
4.267
  
Extended Stay
  
1
  
16,500,000
  
1.4
  
68.8
    
58.7
  
1.72
  
11.8
  
10.4
  
4.480
  
Office
  
12
  
137,708,604
  
12.1
  
65.6
    
55.2
  
1.58
  
11.3
  
9.9
  
4.596
  
Suburban
  
8
  
92,237,872
  
8.1
  
67.8
    
58.5
  
1.60
  
11.1
  
9.9
  
4.596
  
CBD
  
2
  
18,735,732
  
1.6
  
74.1
    
61.4
  
1.56
  
11.1
  
9.5
  
4.549
  
Single Tenant
  
1
  
22,500,000
  
2.0
  
49.7
    
36.7
  
1.57
  
12.1
  
10.7
  
4.660
  
Medical
  
1
  
4,235,000
  
0.4
  
64.8
    
55.2
  
1.39
  
10.6
  
8.4
  
4.464
  
Industrial
  
9
  
130,355,404
  
11.4
  
66.2
    
57.2
  
1.68
  
10.7
  
9.5
  
4.395
  
Warehouse
  
6
  
95,400,000
  
8.4
  
65.8
    
58.0
  
1.76
  
10.9
  
9.6
  
4.406
  
Flex
  
3
  
34,955,404
  
3.1
  
67.2
    
54.8
  
1.48
  
10.4
  
9.2
  
4.363
  
Multifamily
  
25
  
115,246,581
  
10.1
  
44.7
    
37.1
  
4.85
  
27.6
  
27.2
  
4.275
  
Garden
  
9
  
52,719,494
  
4.6
  
69.6
    
56.4
  
1.63
  
11.3
  
10.3
  
4.533
  
Cooperative
  
15
  
52,027,087
  
4.6
  
14.5
    
12.3
  
8.84
  
48.1
  
48.1
  
3.991
  
Low-rise
  
1
  
10,500,000
  
0.9
  
69.5
    
63.5
  
1.33
  
8.1
  
8.0
  
4.390
  
Mixed Use
  
5
  
106,456,679
  
9.4
  
68.8
    
62.4
  
1.51
  
9.2
  
8.8
  
4.392
  
Retail/Office
  
1
  
84,750,000
  
7.4
  
71.2
    
65.1
  
1.44
  
9.0
  
8.7
  
4.393
  
Office/Retail
  
3
  
15,706,679
  
1.4
  
62.7
    
52.4
  
1.61
  
9.8
  
9.0
  
4.366
  
Multifamily/Retail
  
1
  
6,000,000
  
0.5
  
50.8
    
50.8
  
2.17
  
10.0
  
9.8
  
4.450
  
Self Storage
  
12
  
68,430,705
  
6.0
  
68.9
    
56.8
  
1.65
  
10.3
  
10.0
  
4.454
  
Self Storage
  
12
  
68,430,705
  
6.0
  
68.9
    
56.8
  
1.65
  
10.3
  
10.0
  
4.454
  
Other
  
2
  
27,765,278
  
2.4
  
42.7
    
41.7
  
3.89
  
15.2
  
15.0
  
3.760
  
Data Center
  
1
  
24,800,000
  
2.2
  
42.0
    
42.0
  
4.16
  
15.7
  
15.6
  
3.695
  
Leased Fee
  
1
  
2,965,278
  
0.3
  
48.6
    
39.0
  
1.62
  
10.8
  
9.6
  
4.300
  
Manufactured Housing Community
  
2
  
13,000,000
  
1.1
  
65.7
    
49.2
  
1.73
  
16.6
  
16.4
  
4.950
  
Manufactured Housing Community
  
2
  
13,000,000
  
1.1
  
65.7
    
49.2
  
1.73
  
16.6
  
16.4
  
4.950
  
Total/Weighted Average
  
117
  
$1,138,484,364
  
100.0% 
 
63.3
 %   
54.9%
  
2.10x
  
12.9%
  
12.0%
  
4.444
 % 
(1)
Because this table presents information relating to the mortgaged properties and not the mortgage loans, the information for mortgage loans secured by more than one mortgaged property is based on allocated amounts (allocating the mortgage loan principal balance 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 or debt yield for each such mortgaged property is calculated using underwritten net cash flow for the related residential cooperative property which is the projected net cash flow 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. With respect to the JW Marriott New Orleans mortgage loan, the Colorado Mills mortgage loan and the Depot Park mortgage loan, each of which is part of a pari passu loan combination, loan-to-value ratio, debt service coverage ratio and debt yield calculations include the related pari passu companion loans (unless otherwise stated). Debt service coverage ratio, debt yield and loan-to-value ratio information takes no account of subordinate debt (whether or not secured by the related mortgaged property) that is allowed under the terms of any mortgage loan. See Annex A-1 to the Free Writing 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
 
 
Wells Fargo Commercial Mortgage Trust 2014-LC18
Characteristics of the Mortgage Pool
 
G.           Geographic Distribution(1)(2)
 
(MAP)
 
Location
  
Number of Mortgaged Properties
  
Aggregate Cut-off Date
Balance ($)
  
% of Cut-
off Date Balance
(%)
  
Weighted Average
Cut-off
Date LTV Ratio (%)
    
Weighted Average Balloon
or ARD
LTV Ratio (%)
  
Weighted Average
U/W NCF DSCR (x)
  
Weighted Average
U/W NOI
Debt Yield
(%)
  
Weighted Average
U/W NCF
Debt Yield
(%)
  
Weighted Average Mortgage Rate (%)
California
  
11
  
$111,408,023
  
9.8%
  
59.8
 %   
54.1%
  
2.29x
  
12.2%
  
11.1%
  
4.232%
  Northern
  
6
  
82,769,401
  
7.3
  
59.8
    
55.5
  
2.42
  
12.3
  
11.1
  
4.155
  Southern
  
5
  
28,638,623
  
2.5
  
60.1
    
50.1
  
1.89
  
11.8
  
11.1
  
4.456
Texas
  
14
  
110,119,832
  
9.7
  
70.4
    
57.8
  
1.58
  
10.4
  
9.7
  
4.478
Virginia
  
7
  
101,500,000
  
8.9
  
55.6
    
51.1
  
2.28
  
11.5
  
11.0
  
4.087
Hawaii
  
1
  
84,750,000
  
7.4
  
71.2
    
65.1
  
1.44
  
9.0
  
8.7
  
4.393
Michigan
  
8
  
77,609,867
  
6.8
  
68.1
    
57.9
  
1.88
  
12.2
  
10.9
  
4.687
Tennessee
  
5
  
74,864,097
  
6.6
  
66.8
    
60.4
  
1.97
  
13.7
  
12.4
  
4.746
New York
  
17
  
73,197,087
  
6.4
  
30.8
    
28.6
  
6.37
  
34.2
  
34.2
  
4.206
Other(3)
  
54
  
505,035,459
  
44.4
  
66.1
    
56.1
  
1.68
  
11.5
  
10.4
  
4.516
Total/Weighted Average
  
117
  
$1,138,484,364
  
100.0% 
 
63.3
 %   
54.9%
  
2.10x
  
12.9%
  
12.0%
  
4.444%
(1)
The Mortgaged Properties are located in 30 states.
(2)
Because this table presents information relating to the mortgaged properties and not the mortgage loans, the information for mortgage loans secured by more than one mortgaged property  is based on allocated amounts (allocating the mortgage loan principal balance 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 or debt yield for each such mortgaged property is calculated using underwritten net cash flow for the related residential cooperative property which is the projected net cash flow 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. With respect to the JW Marriott New Orleans mortgage loan, the Colorado Mills mortgage loan and the Depot Park mortgage loan, each of which is part of a pari passu loan combination, loan-to-value ratio, debt service coverage ratio and debt yield calculations include the related pari passu companion loans (unless otherwise stated).  Debt service coverage ratio, debt yield and loan-to-value ratio information takes no account of subordinate debt (whether or not secured by the related mortgaged property), if any, that is allowed under the terms of any mortgage loan. See Annex A-1 to the Free Writing Prospectus.
(3)
Includes 23 other states.

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
 
 
Wells Fargo Commercial Mortgage Trust 2014-LC18
Characteristics of the Mortgage Pool
 
H.
Characteristics of the Mortgage Pool(1)
                     
CUT-OFF DATE BALANCE
              
 
Range of Cut-off Date
Balances ($)
  
Number of
Mortgage
Loans
  
Aggregate Cut-
off Date Balance
  
% of Cut-off
Date Balance
  
 
850,000 - 1,000,000
  
1
  
$850,000
    
0.1
%
  
 
1,000,001 - 2,000,000
  
7
  
11,118,954
    
1.0
    
 
2,000,001 - 3,000,000
  
9
  
23,070,345
    
2.0
    
 
3,000,001 - 4,000,000
  
13
  
46,347,007
    
4.1
    
 
4,000,001 - 5,000,000
  
8
  
37,056,333
    
3.3
    
 
5,000,001 - 6,000,000
  
3
  
17,150,000
    
1.5
    
 
6,000,001 - 7,000,000
  
3
  
19,987,872
    
1.8
    
 
7,000,001 - 8,000,000
  
9
  
68,537,049
    
6.0
    
 
8,000,001 - 9,000,000
  
3
  
25,476,199
    
2.2
    
 
9,000,001 - 10,000,000
  
4
  
38,850,000
    
3.4
    
 
10,000,001 - 15,000,000
  
18
  
219,384,008
    
19.3
    
 
15,000,001 - 20,000,000
  
7
  
126,860,000
    
11.1
    
 
20,000,001 - 30,000,000
  
6
  
143,600,000
    
12.6
    
 
30,000,001 - 50,000,000
  
7
  
275,446,597
    
24.2
    
 
80,000,001 - 84,750,000
  
1
  
84,750,000
    
7.4
    
 
Total:
  
99
  
$1,138,484,364
    
100.0
%
  
 
Average:
  
$11,499,842
              
 
UNDERWRITTEN NOI DEBT SERVICE COVERAGE RATIO
    
 
Range of U/W NOI
DSCRs (x)
  
Number of
Mortgage
Loans
  
Aggregate Cut-
off Date Balance
  
% of Cut-off
Date Balance
  
 
1.30
  
1
  
$13,100,000
    
1.2
%
  
 
1.31 - 1.40
  
5
  
49,175,000
    
4.3
    
 
1.41 - 1.50
  
7
  
142,420,223
    
12.5
    
 
1.51 - 1.60
  
6
  
69,390,000
    
6.1
    
 
1.61 - 1.70
  
15
  
164,856,301
    
14.5
    
 
1.71 - 1.80
  
18
  
167,920,451
    
14.7
    
 
1.81 - 1.90
  
6
  
104,492,233
    
9.2
    
 
1.91 - 2.00
  
6
  
93,875,000
    
8.2
    
 
2.01 - 2.25
  
7
  
63,796,994
    
5.6
    
 
2.26 - 2.50
  
4
  
107,834,469
    
9.5
    
 
2.51 - 2.75
  
2
  
5,096,605
    
0.4
    
 
2.76 - 3.00
  
3
  
48,200,000
    
4.2
    
 
3.01 - 3.50
  
5
  
44,197,134
    
3.9
    
 
3.51 - 4.00
  
1
  
2,246,787
    
0.2
    
 
4.01 - 37.60
  
13
  
61,883,166
    
5.4
    
 
Total:
  
99
  
$1,138,484,364
    
100.0
%
  
 
Weighted Average:
  
2.26x
              
 
UNDERWRITTEN NCF DEBT SERVICE COVERAGE RATIO
    
 
Range of U/W NCF
DSCRs (x)
  
Number of
Mortgage
Loans
  
Aggregate Cut-
off Date Balance
    
% of Cut-off
Date Balance
    
 
1.23 - 1.30
  
2
  
$14,450,000
    
1.3
%
  
 
1.31 - 1.40
  
11
  
126,186,123
    
11.1
    
 
1.41 - 1.50
  
6
  
130,419,832
    
11.5
    
 
1.51 - 1.60
  
21
  
255,172,796
    
22.4
    
 
1.61 - 1.70
  
16
  
196,528,459
    
17.3
    
 
1.71 - 1.80
  
10
  
92,418,994
    
8.1
    
 
1.81 - 1.90
  
2
  
10,637,872
    
0.9
    
 
1.91 - 2.00
  
3
  
43,600,000
    
3.8
    
 
2.01 - 2.25
  
4
  
107,446,597
    
9.4
    
 
2.26 - 2.50
  
2
  
26,600,000
    
2.3
    
 
2.51 - 2.75
  
2
  
17,496,605
    
1.5
    
 
2.76 - 3.00
  
4
  
46,700,000
    
4.1
    
 
3.01 - 3.50
  
2
  
6,697,134
    
0.6
    
 
3.51 - 4.00
  
1
  
2,246,787
    
0.2
    
 
4.01 - 37.60
  
13
  
61,883,166
    
5.4
    
 
Total:
  
99
  
$1,138,484,364
    
100.0
%
  
 
Weighted Average:
  
2.10x
              
 
                     
LOAN PURPOSE                  
 
Loan Purpose
  
Number of
Mortgage
Loans
  
Aggregate Cut-
off Date Balance
  
% of Cut-off
Date Balance
  
 
Refinance
  
78
  
$776,506,966
    
68.2
%
  
 
Acquisition
  
21
  
361,977,398
    
31.8
    
 
Total:
  
99
  
$1,138,484,364
    
100.0
%
  
                     
MORTGAGE RATE                  
 
Range of Mortgage Rates
(%)
  
Number of
Mortgage
Loans
  
Aggregate Cut-
off Date Balance
  
% of Cut-off
Date Balance
  
 
3.695 - 3.750
  
1
  
$24,800,000
    
2.2
%
  
 
3.751 - 4.000
  
8
  
63,089,873
    
5.5
    
 
4.001 - 4.250
  
22
  
228,247,882
    
20.0
    
 
4.251 - 4.500
  
30
  
426,596,056
    
37.5
    
 
4.501 - 4.750
  
23
  
206,567,732
    
18.1
    
 
4.751 - 5.000
  
10
  
121,715,322
    
10.7
    
 
5.001 - 5.250
  
4
  
62,592,500
    
5.5
    
 
5.251 - 5.500
  
1
  
4,875,000
    
0.4
    
 
Total:
  
99
  
$1,138,484,364
    
100.0
%
  
 
Weighted Average:
  
4.444%
              
           
UNDERWRITTEN NOI DEBT YIELD
          
 
Range of U/W NOI
Debt Yields (%)
  
Number of
Mortgage
Loans
  
Aggregate Cut-
off Date Balance
  
% of Cut-off
Date Balance
  
 
8.0
  
1
  
$13,100,000
    
1.2
%
  
 
8.1 - 9.0
  
13
  
196,604,723
    
17.3
    
 
9.1 - 10.0
  
18
  
207,295,076
    
18.2
    
 
10.1 - 11.0
  
16
  
164,316,957
    
14.4
    
 
11.1 - 12.0
  
13
  
176,600,624
    
15.5
    
 
12.1 - 13.0
  
7
  
115,461,829
    
10.1
    
 
13.1 - 14.0
  
6
  
56,996,994
    
5.0
    
 
14.1 - 15.0
  
3
  
62,387,872
    
5.5
    
 
15.1 - 16.0
  
5
  
83,940,336
    
7.4
    
 
16.1 - 17.0
  
2
  
17,250,000
    
1.5
    
 
19.1 - 20.0
  
1
  
2,000,000
    
0.2
    
 
20.1 - 218.3
  
14
  
42,529,953
    
3.7
    
 
Total:
  
99
  
$1,138,484,364
    
100.0
%
  
 
Weighted Average:
  
12.9%
              
           
UNDERWRITTEN NCF DEBT YIELD
          
 
Range of U/W NCF
Debt Yields (%)
  
Number of
Mortgage
Loans
  
Aggregate
Cut-off Date
Balance
  
% of Cut-off
Date Balance
  
 
7.6 - 8.0
  
3
  
$24,950,000
    
2.2
%
  
 
8.1 - 9.0
  
20
  
278,369,723
    
24.5
    
 
9.1 - 10.0
  
27
  
334,326,212
    
29.4
    
 
10.1 - 11.0
  
14
  
176,383,274
    
15.5
    
 
11.1 - 12.0
  
7
  
71,784,867
    
6.3
    
 
12.1 - 13.0
  
6
  
106,950,000
    
9.4
    
 
14.1 - 15.0
  
2
  
48,196,597
    
4.2
    
 
15.1 - 16.0
  
4
  
39,993,739
    
3.5
    
 
16.1 - 17.0
  
1
  
13,000,000
    
1.1
    
 
17.1 - 18.0
  
1
  
2,000,000
    
0.2
    
 
19.1 - 20.0
  
1
  
3,200,000
    
0.3
    
 
20.1 - 218.3
  
13
  
39,329,953
    
3.5
    
 
Total:
  
99
  
$1,138,484,364
    
100.0
%
  
 
Weighted Average:
  
12.0%
              
 
 
(1)
For mortgaged properties securing residential cooperative mortgage loans, the debt service coverage ratio or debt yield for each such mortgaged property are calculated using underwritten net cash flow for the related residential cooperative property which is the projected net cash flow 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. With respect to the JW Marriott New Orleans mortgage loan, the Colorado Mills mortgage loan and the Depot Park mortgage loan, each of which is part of a pari passu loan combination, loan-to-value ratio, debt service coverage ratio and debt yield calculations include the related pari passu companion loans (unless otherwise stated). Debt service coverage ratio, debt yield and loan-to-value ratio information takes no account of subordinate debt (whether or not secured by the related mortgaged property), if any, that is allowed under the terms of any mortgage loan. See Annex A-1 to the Free Writing 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.
 
 
16
 
 
Wells Fargo Commercial Mortgage Trust 2014-LC18
Characteristics of the Mortgage Pool
                       
ORIGINAL TERM TO MATURITY OR ARD
     
Number of
              
 
Range of Original Terms to
  
Mortgage
  
Aggregate Cut-
  
% of Cut-off
  
 
Maturity or ARD (months)
  
Loans
  
off Date Balance
  
 Date Balance 
  
 
 60
  
4
  
$69,046,597
    
6.1
%
  
 
 84
  
2
  
65,500,000
    
5.8
    
 
 120
  
88
  
921,152,767
    
80.9
    
 
 121
  
5
  
82,785,000
    
7.3
    
 
Total:
  
99
  
$1,138,484,364
    
100.0
%
  
 
Weighted Average:
  
114 months
              
                     
REMAINING TERM TO MATURITY OR ARD
     
Number of
              
 
Range of Remaining Terms
  
Mortgage
  
Aggregate Cut-
  
% of Cut-off
  
 
to Maturity or ARD (months)
  
Loans
  
off Date Balance
  
Date Balance
  
 
 59 - 60
  
4
  
$69,046,597
    
6.1
%
  
 
 61 - 84
  
2
  
65,500,000
    
5.8
    
 
 85 - 121
  
93
  
1,003,937,767
    
88.2
    
 
Total:
  
99
  
$1,138,484,364
    
100.0
%
  
 
Weighted Average:
  
114 months
              
                     
ORIGINAL AMORTIZATION TERM(2)
 
Range of Original
  
Number of
              
 
Amortization Terms
  
Mortgage
  
Aggregate Cut-
  
% of Cut-off
  
 
(months)
  
Loans
  
off Date Balance
  
Date Balance
  
 
 Interest-Only
  
14
  
$157,949,500
    
13.9
%
  
 
 180 - 240
  
4
  
29,600,000
    
2.6
    
 
 241 - 300
  
8
  
76,781,916
    
6.7
    
 
 301 - 360
  
69
  
858,059,482
    
75.4
    
 
 361 - 480
  
4
  
16,093,467
    
1.4
    
 
Total:
  
99
  
$1,138,484,364
    
100.0
%
  
 
Weighted Average(3):
  
353 months
              
(2)
The original amortization term shown for any mortgage loan that is interest-only for part of its term does not include the number of months in its interest-only period and reflects only the number of months as of the commencement of amortization remaining from the end of such interest-only period.
(3)
Excludes the non-amortizing loans.
                     
REMAINING AMORTIZATION TERM(4)
 
Range of Remaining
  
Number of
              
 
Amortization Terms
  
Mortgage
  
Aggregate Cut-
  
% of Cut-off
  
 
(months)
  
Loans
  
off Date Balance
  
Date Balance
  
 
 Interest-Only
  
14
  
$157,949,500
    
13.9
%
  
 
 180 - 240
  
4
  
29,600,000
    
2.6
    
 
 241 - 300
  
8
  
76,781,916
    
6.7
    
 
 301 - 360
  
69
  
858,059,482
    
75.4
    
 
 361 - 480
  
4
  
16,093,467
    
1.4
    
 
Total:
  
99
  
$1,138,484,364
    
100.0
%
  
 
Weighted Average(5):
  
352 months
              
(4)
The remaining amortization term shown for any mortgage loan that is interest-only for part of its term does not include the number of months in its interest-only period and reflects only the number of months as of the commencement of amortization remaining from the end of such interest-only period.
(5)
Excludes the non-amortizing loans.
                     
LOCKBOXES
     
Number
              
     
of
        
% of Cut-off
  
     
Mortgage
  
Aggregate Cut-
  
Date
  
 
Type of Lockbox
  
Loans
  
off Date Balance
  
Balance
  
 
 Hard
  
25
  
$549,657,198
    
48.3
%
  
 
 Springing
  
38
  
364,761,808
    
32.0
    
 
 Soft
  
7
  
113,775,000
    
10.0
    
 
 None
  
29
  
110,290,358
    
9.7
    
 
Total:
  
99
  
$1,138,484,364
    
100.0
%
  
                     
PREPAYMENT PROVISION SUMMARY
     
Number
              
     
of
        
% of Cut-off
  
     
 Mortgage 
  
Aggregate Cut-
  
Date
  
 
Prepayment Provision
  
Loans
  
 off Date Balance 
  
Balance
  
 
 Lockout/Defeasance/Open
  
68
  
$904,828,648
    
79.5
%
  
 
 Lockout/GTR YM or 1%/Open
  
8
  
129,019,676
    
11.3
    
 
 GTR YM or 1%/Defeasance or GTR
                  
 
 YM or 1%/Open
  
1
  
12,670,000
    
1.1
    
 
 YM%/Defeasance or YM%/Open
  
5
  
33,379,500
    
2.9
    
 
 GTR YM or 1%/1%/Open
  
15
  
52,027,087
    
4.6
    
 
 GTR YM or 1%/Open
  
2
  
6,559,453
    
0.6
    
 
 Total:
  
99
  
$1,138,484,364
    
100.0
%
  
                     
CUT-OFF DATE LOAN-TO-VALUE RATIO
     
Number of
              
 
Range of Cut-off Date LTV
  
Mortgage
  
Aggregate Cut-
  
% of Cut-off
  
 
Ratios (%)
  
Loans
  
off Date Balance
  
Date Balance
  
 
 2.3 - 20.0
  
11
  
$39,593,293
    
3.5
%
  
 
 20.1 - 25.0
  
2
  
5,346,787
    
0.5
    
 
 25.1 - 30.0
  
1
  
3,589,873
    
0.3
    
 
 30.1 - 35.0
  
2
  
6,697,134
    
0.6
    
 
 40.1 - 45.0
  
2
  
28,300,000
    
2.5
    
 
 45.1 - 50.0
  
4
  
41,496,605
    
3.6
    
 
 50.1 - 55.0
  
5
  
68,600,000
    
6.0
    
 
 55.1 - 60.0
  
7
  
116,715,624
    
10.3
    
 
 60.1 - 65.0
  
13
  
163,869,867
    
14.4
    
 
 65.1 - 70.0
  
25
  
317,717,198
    
27.9
    
 
 70.1 - 75.0
  
27
  
346,557,984
    
30.4
    
 
Total:
  
99
  
$1,138,484,364
    
100.0
%
  
 
Weighted Average:
  
63.3%
              
                     
BALLOON OR ARD LOAN-TO-VALUE RATIO
     
Number of
              
 
Range of Balloon LTV
  
Mortgage
  
Aggregate Cut-
  
% of Cut-off
  
 
Ratios (%)
  
Loans
  
off Date Balance
  
Date Balance
  
 
 1.8 - 20.0
  
13
  
$44,940,080
    
3.9
%
  
 
 20.1 - 25.0
  
1
  
3,589,873
    
0.3
    
 
 25.1 - 30.0
  
2
  
6,697,134
    
0.6
    
 
 35.1 - 40.0
  
5
  
45,746,605
    
4.0
    
 
 40.1 - 45.0
  
9
  
65,173,092
    
5.7
    
 
 45.1 - 50.0
  
8
  
119,489,228
    
10.5
    
 
 50.1 - 55.0
  
7
  
94,150,000
    
8.3
    
 
 55.1 - 60.0
  
25
  
301,006,203
    
26.4
    
 
 60.1 - 65.0
  
15
  
262,915,150
    
23.1
    
 
 65.1 - 70.0
  
14
  
194,777,000
    
17.1
    
 
Total:
  
99
  
$1,138,484,364
    
100.0
%
  
 
Weighted Average:
  
54.9%
              
                     
AMORTIZATION TYPE
     
Number
              
     
of
              
     
Mortgage
  
Aggregate Cut-
  
% of Cut-off
  
 
Type of Amortization
  
Loans
  
off Date Balance
  
Date Balance
  
 
Amortizing Balloon
  
53
  
$479,675,592
    
42.1
%
  
 
Interest-only, Amortizing Balloon 
  
30
  
470,020,000
    
41.3
    
 
Interest-only, Balloon
  
8
  
111,900,000
    
9.8
    
 
Interest-only, ARD
  
6
  
46,049,500
    
4.0
    
 
Interest-only, Amortizing ARD
  
1
  
20,300,000
    
1.8
    
 
Amortizing ARD
  
1
  
10,539,272
    
0.9
    
 
Total:
  
99
  
$1,138,484,364
    
100.0
%
  
                     
ORIGINAL TERM OF INTEREST-ONLY PERIOD FOR PARTIAL IO LOANS
     
Number of
              
     
Mortgage
  
Aggregate Cut-
  
% of Cut-off
  
 
IO Term (months)
  
Loans
  
off Date Balance
  
Date Balance
  
 
 1 - 12
  
11
  
$88,660,000
    
7.8
%
  
 
 13 - 24
  
6
  
66,182,500
    
5.8
    
 
 25 - 36
  
7
  
104,327,500
    
9.2
    
 
 37 - 61
  
7
  
231,150,000
    
20.3
    
 
Total:
  
31
  
$490,320,000
    
43.1
%
  
 
Weighted Average:
  
40 months
              
                     
SEASONING
     
Number of
              
     
Mortgage
  
Aggregate Cut-
  
% of Cut-off
  
 
Seasoning (months)
  
Loans
  
off Date Balance
  
 Date Balance 
  
 
 0
  
67
  
$851,702,500
    
74.8
%
  
 
 1
  
29
  
279,233,078
    
24.5
    
 
 2
  
3
  
7,548,786
    
0.7
    
 
Total:
  
99
  
$1,138,484,364
    
100.0
%
  
 
Weighted Average:
  
0 months
              


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
 
Wells Fargo Commercial Mortgage Trust 2014-LC18 Certain Terms and Conditions
 
V.           Certain Terms and Conditions
 
Interest Entitlements:
  
The interest entitlement of each Class of Offered Certificates on each Distribution Date generally will be the interest accrued during the related Interest Accrual Period on the related Certificate Principal Balance or Notional Amount at the related pass-through rate, net of any prepayment interest shortfalls allocated to that Class for such Distribution Date as described below.  If prepayment interest shortfalls arise from voluntary prepayments (without applicable Special Servicer consent) on particular non-specially serviced mortgage loans during any collection period, the applicable Master Servicer is required to make a compensating interest payment to offset those shortfalls, generally up to an amount equal to the portion of its master servicing fees that accrue at one basis point per annum.  The remaining amount of prepayment interest shortfalls will be allocated to reduce the interest entitlement on all Classes of Certificates (other than the Class X-A, X-B, X-E, X-F and X-G Certificates), pro rata, based on their respective amounts of accrued interest for the related Distribution Date (except with respect to the allocation among the Class A-S, B, C and PEX Certificates as described below under “Allocations and Distributions on the Class A-S, B, C and PEX Certificates”).  If a Class receives less than the entirety of its interest entitlement on any Distribution Date, then the shortfall, excluding any shortfall due to prepayment interest shortfalls, will be added to its interest entitlement for the next succeeding Distribution Date.  Interest entitlements on the Class E and D Certificates and the Class C and B regular interests, in that order, may be reduced by certain Trust Advisor expenses (subject to the discussion below under “Allocations and Distributions on the Class A-S, B, C and PEX Certificates”).
 
Principal Distribution Amount:
  
The Principal Distribution Amount for each Distribution Date generally will be the aggregate amount of principal received or advanced in respect of the mortgage loans, net of any non-recoverable advances and interest thereon that are reimbursed to the applicable Master Servicer, the applicable Special Servicer or the Trustee during the related collection period.  Non-recoverable advances and interest thereon are reimbursable from principal collections and advances before reimbursement from other amounts.  The Principal Distribution Amount may also be reduced, with a corresponding loss, to the Class E and D Certificates and the Class C, B and A-S regular interests, then to the Class A-1, A-2, A-3, A-4, A-5 and A-SB Certificates (with any losses on the Class A-1, A-2, A-3, A-4, A-5 and A-SB Certificates allocated pro rata according to their respective Certificate Principal Balances immediately prior to that Distribution Date), in that order, in connection with certain Trust Advisor expenses to the extent that interest entitlements on the Class B and C regular interests and the Class D and E Certificates are insufficient to absorb the effect of the expense on any particular Distribution Date.  For a discussion on the allocation of amounts distributable in respect of the Class A-S, B and C regular interests, see “Allocations and Distributions on the Class A-S, B, C and PEX Certificates” below.
 
Distributions:
  
On each Distribution Date, funds available for distribution from the mortgage loans, net of specified trust fees, expenses and reimbursements will generally be distributed in the following amounts and order of priority (in each case to the extent of remaining available funds):
 
   
1.   Class A-1, A-2, A-3, A-4, A-5, A-SB, X-A, X-B, X-E, X-F and X-G Certificates: To interest on the Class A-1, A-2, A-3, A-4, A-5, A-SB, X-A, X-B, X-E, X-F and X-G Certificates, pro rata, according to their respective interest entitlements.
 
   
2.   Class A-1, A-2, A-3, A-4, A-5 and A-SB Certificates: To principal on the Class A-1, A-2, A-3, A-4, A-5 and A-SB Certificates  in the following amounts and order of priority: (i) first, to principal on the Class A-SB Certificates, in an amount up to the Principal Distribution Amount for such Distribution Date until their Certificate Principal Balance is reduced to the Class A-SB Planned Principal Balance for such Distribution Date; (ii) second, to principal on the Class A-1 Certificates until their Certificate Principal Balance is reduced to zero, up to the remainder of the Principal Distribution Amount for such Distribution Date; (iii) third, to principal on the Class A-2 Certificates until their Certificate Principal Balance is reduced to zero, up to the remainder of the Principal Distribution Amount for such Distribution Date; (iv) fourth, to principal on the Class A-3 Certificates until their Certificate Principal Balance is reduced to zero, up to the remainder of the Principal Distribution Amount for such Distribution Date; (v) fifth, to principal on the Class A-4 Certificates until their Certificate Principal Balance is reduced to zero, up to the remainder of the Principal Distribution Amount for such Distribution Date; (vi) sixth, to principal on the Class A-5 Certificates until their Certificate Principal Balance is reduced to zero, up to the remainder of the Principal Distribution Amount for such Distribution Date; and (vii) seventh, to principal on the Class  A-SB Certificates until their Certificate Principal Balance is reduced to zero, up to the remainder of the Principal Distribution Amount for such Distribution Date.  However, if the Certificate Principal Balance of each and every Class of Principal Balance Certificates, other than the Class A-1, A-2, A-3, A-4, A-5 and A-SB Certificates, has been reduced to zero as a result of the allocation of Mortgage Loan
 
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
 
 
Wells Fargo Commercial Mortgage Trust 2014-LC18 Certain Terms and Conditions
 
   
      losses and expenses and any of the Class A-1, A-2, A-3, A-4, A-5 and A-SB Certificates remains outstanding, then the Principal Distribution Amount will be distributed on the Class A-1, A-2, A-3, A-4, A-5 and A-SB Certificates, pro rata, based on their respective outstanding Certificate Principal Balances, until their Certificate Principal Balances have been reduced to zero.
 
   
3.   Class A-1, A-2, A-3, A-4, A-5 and A-SB Certificates: To reimburse the holders of the Class A-1, A-2, A-3, A-4, A-5 and A-SB Certificates, pro rata, for any previously unreimbursed losses (other than certain Trust Advisor expenses) on the mortgage loans that were previously allocated in reduction of the Certificate Principal Balances of such Classes.
 
   
4.   Class A-S regular interest:  To make distributions on the Class A-S regular interest as follows:  (a) first, to interest on Class A-S regular interest in the amount of the interest entitlement for that Class; (b) next, to the extent of the portion of the Principal Distribution Amount remaining after distributions in respect of principal to each Class with a higher distribution priority (in this case, the Class A-1, A-2, A-3, A-4, A-5 and A-SB Certificates), to principal on the Class A-S regular interest until its principal balance is reduced to zero; and (c) next, to reimburse the holders of the Class A-S regular interest for any previously unreimbursed losses (other than certain Trust Advisor expenses) on the mortgage loans that were previously allocated to that Class in reduction of its principal balance.
 
5.   Class B regular interest:  To make distributions on the Class B regular interest as follows:  (a) first, to interest on Class B regular interest in the amount of the interest entitlement for that Class; (b) next, to the extent of the portion of the Principal Distribution Amount remaining after distributions in respect of principal to each Class with a higher distribution priority (in this case, the Class A-1, A-2, A-3, A-4, A-5 and A-SB Certificates and the Class A-S regular interest), to principal on the Class B regular interest until its principal balance is reduced to zero; and (c) next, to reimburse the holders of the Class B regular interest for any previously unreimbursed losses (other than certain Trust Advisor expenses) on the mortgage loans that were previously allocated to that Class in reduction of its principal balance.
 
6.   Class C regular interest:  To make distributions on the Class C regular interest as follows:  (a) first, to interest on Class C regular interest in the amount of the interest entitlement for that Class; (b) next, to the extent of the portion of the Principal Distribution Amount remaining after distributions in respect of principal to each Class with a higher distribution priority (in this case, the Class A-1, A-2, A-3, A-4, A-5 and A-SB Certificates and the Class A-S and B regular interests), to principal on the Class C regular interest until its principal balance is reduced to zero; and (c) next, to reimburse the holders of the Class C regular interest for any previously unreimbursed losses (other than certain Trust Advisor expenses) on the mortgage loans that were previously allocated to that Class in reduction of its principal balance.
 
   
7.   Class D Certificates:  To make distributions on the Class D Certificates as follows:  (a) first, to interest on Class D Certificates in the amount of the interest entitlement for that Class; (b) next, to the extent of the portion of the Principal Distribution Amount remaining after distributions in respect of principal to each Class with a higher distribution priority (in this case, the Class A-1, A-2, A-3, A-4, A-5 and A-SB Certificates and the Class A-S, B and C regular interests), to principal on the Class D Certificates until its principal balance is reduced to zero; and (c) next, to reimburse the holders of the Class D Certificates for any previously unreimbursed losses (other than certain Trust Advisor expenses) on the mortgage loans that were previously allocated to that Class in reduction of its principal balance.
 
   
8.   After the Class A-1, A-2, A-3, A-4, A-5 and A-SB Certificates, the Class A-S, B and C regular interests  and the Class D Certificates are paid all amounts to which they are entitled, the remaining funds available for distribution will be used to pay interest, principal and loss reimbursement amounts (other than certain Trust Advisor expenses) on the Class E, F and G Certificates sequentially in that order in a manner analogous to the Class D Certificates.
 
Allocations and Distributions on the Class A-S, B, C and PEX Certificates:
  
On the closing date, the upper-tier REMIC of the issuing entity will issue the Class A-S, Class B and Class C regular interests (each a “regular interest”) which will have outstanding principal balances on the closing date of $96,771,000, $48,386,000 and $37,001,000, respectively. The regular interests will be held in a grantor trust for the benefit of the holders of the Class A-S, B, C
 
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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and PEX Certificates.  The Class A-S, B, C and PEX Certificates will, at all times, represent undivided beneficial ownership interests in a grantor trust that will hold those regular interests. Each class of the Class A-S, B and C Certificates will, at all times, represent an undivided beneficial ownership interest in a percentage of the outstanding principal balance of the regular interest with the same alphabetical class designation.  The Class PEX Certificates will, at all times, represent an undivided beneficial ownership interest in the remaining percentages of the outstanding principal balances of the Class A-S, B and C regular interests and which percentage interests are referred to in this Term Sheet as the “Class PEX Component A-S, Class PEX Component B and Class PEX Component C” (collectively, the “Class PEX Components”).
 
Interest, principal, prepayment premiums, yield maintenance charges and voting rights that are allocated to the Class A-S, B or C regular interest will be distributed or allocated, as applicable, as between the Class A-S, B or C Certificates, as applicable, on the one hand, and Class PEX Component A-S, Class PEX Component B or Class PEX Component C, as applicable (and correspondingly, the Class PEX Certificates), on the other hand, pro rata, based on their respective percentage interests in the Class A-S, Class B or Class C regular interest, as applicable.  In addition, any losses (including, without limitation, as a result of Trust Advisor expenses) that are allocated to the Class A-S, Class B or Class C regular interest will correspondingly be allocated as between the Class A-S, B or C Certificates, as applicable, on the one hand, and Class PEX Component A-S, Class PEX Component B or Class PEX Component C, as applicable (and correspondingly, the Class PEX Certificates), on the other hand, pro rata, based on their respective percentage interests in the Class A-S, Class B or Class C regular interest, as applicable.  For a complete description of the allocations and distributions with respect to the Class A-S regular interest, the Class B regular interest and the Class C regular interest (and correspondingly the Class A-S, B, C and PEX Certificates and the Class PEX Component A-S, Class PEX Component B and Class PEX Component C), see “Description of the Offered Certificates” in the Free Writing Prospectus.  See “Material Federal Income Tax Consequences” in the Free Writing Prospectus for a discussion of the tax treatment of the Exchangeable Certificates.
 
Exchanging Certificates through Combination and Recombination:
 
  
If you own Class A-S, B and C Certificates, you will be able to exchange them for a proportionate interest in the Class PEX Certificates, and vice versa, as described in the Free Writing Prospectus.  You can exchange your Exchangeable Certificates by notifying the Certificate Administrator.  If Exchangeable Certificates are outstanding and held by certificateholders, those certificates will receive principal and interest that would otherwise have been payable on the same proportion of certificates exchanged therefor if those certificates were outstanding and held by certificateholders.  Any such allocations of principal and interest between classes of Exchangeable Certificates will have no effect on the principal or interest entitlements of any other class of certificates.  The Free Writing Prospectus describes the available combinations of Exchangeable Certificates eligible for exchange.
 
Allocation of Yield Maintenance and Prepayment Premiums:
  
If any yield maintenance charges and prepayment premiums are collected during any particular collection period with respect to any mortgage loan, then on the distribution date corresponding to that collection period, the certificate administrator will pay a portion of the yield maintenance charges and prepayment premiums (net of liquidation fees payable therefrom)  in the following manner: (1) pro rata, between (x) the group (“YM Group A”) of the Class A-1, A-2, A-3, A-4, A-5, A-SB and X-A Certificates and the Class A-S regular interest and (y) the group (“YM Group B” and, collectively with the YM Group A, the “YM Groups”) of Class B and C regular interests and the Class D and Class X-B Certificates, based upon the aggregate amount of principal distributed to the applicable classes of principal balance certificates (other than the Class A-S, B, C and PEX Certificates) and the Class A-S, B and C regular interests, as applicable, in each YM Group for that distribution date, and (2) among the classes of certificates and regular interest(s) in each YM Group, in the following manner, up to an amount equal to the product of (a) the yield maintenance or prepayment premium allocated to such YM Group, (b) the related Base Interest Fraction (as defined in the Free Writing Prospectus), and (c) a fraction, which in no event may be greater than 1.0, the numerator of which is equal to the amount of principal distributed to the holder(s) of such class or regular interest for that distribution date, and the denominator of which is the aggregate amount of principal distributed to all the certificates and the regular interests in that YM Group for that distribution date. Any yield maintenance charges or prepayment premium allocated to such YM Group remaining after such distributions to Principal Balance Certificates or regular interest(s) described above will be distributed to the Class X-A or Class X-B Certificates as applicable, in such YM Group.
 
 
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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No prepayment premiums or yield maintenance charges will be distributed to the holders of the Class X-E, X-F, X-G, E, F, G, V or R Certificates. The holders of the Class X-B Certificates will be entitled to receive all yield maintenance charges and prepayment premiums after the Class A-1, A-2, A-3, A-4, A-5, X-A, A-SB and D Certificates and the Class A-S, B and C regular interests (and, therefore, the Class A-S, B, C and PEX Certificates) have been retired. For a description of when prepayment premiums and yield maintenance charges are generally required on the mortgage loans, see Annex A-1 to the Free Writing Prospectus.  See also “Risk Factors—Prepayments and Repurchases of the Mortgage Assets Will Affect the Timing of Your Cash Flow and May Affect Your Yield” in the prospectus attached to the Free Writing Prospectus.  Prepayment premiums and yield maintenance charges will be distributed on each Distribution Date only to the extent they are actually received on the mortgage loans as of the related Determination Date.
 
Realized Losses:
  
The Certificate Principal Balances of the Class A-1, A-2, A-3, A-4, A-5, A-SB, D, E, F and G Certificates, and the Class A-S, B and C regular interests will be reduced without distribution on any Distribution Date as a write-off to the extent of any losses realized on the mortgage loans allocated to such Class or regular interest on such Distribution Date.  Such losses (other than certain Trust Advisor expenses) will be applied in the following order, in each case until the related Certificate Principal Balance is reduced to zero:  first, to Class G; second, to Class F; third, to Class E; fourth, to Class D; fifth, to the Class C regular interest; sixth, to the Class B regular interest; seventh, to the Class A-S regular interest; and, finally, pro rata, to Classes A-1, A-2, A-3, A-4, A-5 and A-SB based on their outstanding Certificate Principal Balances.  Certain Trust Advisor expenses (if not absorbed by reductions of interest entitlements on the Class E and D Certificates and the Class C and B regular interests) will be applied as write-offs in a similar manner, except that such write-offs will be applied only to the Class E and D Certificates, the Class C, B and A-S regular interests, and the Class A-1, A-2, A-3, A-4, A-5 and A-SB Certificates (with any write-offs on the Class A-1, A-2, A-3, A-4, A-5 and A-SB Certificates to be allocated pro rata according to their respective Certificate Principal Balances immediately prior to that Distribution Date), in that order.  Any realized losses allocated to the Class A-S, B and C regular interests will, in turn, be allocated to the Class A-S, B, C and PEX Certificates as described above in “Allocations and Distributions on the Class A-S, B, C and PEX Certificates”.
 
The notional amount of the Class X-A Certificates will be reduced by the amount of all losses that are allocated to the Class A-1, A-2, A-3, A-4, A-5 or A-SB Certificates or the Class A-S regular interest as write-offs in reduction of their Certificate Principal Balances. The notional amount of the Class X-B Certificates will be reduced by the amount of all losses that are allocated to the Class B and C regular interests and the Class D Certificates as write-offs in reduction of their Certificate Principal Balances. The notional amount of the Class X-E Certificates will be reduced by the amount of all losses that are allocated to the Class E Certificates as write-offs in reduction of its Certificate Principal Balance.  The notional amount of the Class X-F Certificates will be reduced by the amount of all losses that are allocated to the Class F Certificates as write-offs in reduction of its Certificate Principal Balance. The notional amount of the Class X-G Certificates will be reduced by the amount of all losses that are allocated to the Class G Certificates as write-offs in reduction of its Certificate Principal Balance.
 
Debt Service Advances:
  
The related Master Servicer or, if such Master Servicer fails to do so, the Trustee, will be obligated to advance delinquent debt service payments (other than balloon payments and default interest) and assumed debt service payments on the mortgage loans (including each pari passu mortgage loan but not its related pari passu companion loans), except to the extent any such advance is deemed non-recoverable from collections on the related mortgage loan.  In addition, if an Appraisal Reduction Amount exists for a given mortgage loan, the interest portion of any debt service advance for such mortgage loan will be reduced, which will have the effect of reducing the amount of interest available for distribution to the Certificates in reverse alphabetical order of their Class designations (except that interest payments on the Class A-1, A-2, A-3, A-4, A-5, A-SB, X-A, X-B, X-E, X-F and X-G Certificates would be affected on a pari passu basis).
 
Servicing Advances:
  
The related Master Servicer or, if such Master Servicer fails to do so, the Trustee, will be obligated to make servicing advances with respect to each mortgage loan it services, including the payment of delinquent property taxes, insurance premiums and ground rent, except to the extent that those advances are deemed non-recoverable from collections on the related mortgage loan.  The master servicer under the WFRBS 2014-C25 securitization will have the primary obligation to make any servicing advances with respect to the Colorado Mills loan combination.
 
Appraisal Reduction Amounts:
  
An Appraisal Reduction Amount generally will be created in the amount, if any, by which the principal balance of a required appraisal loan (which is a mortgage loan with respect to which certain defaults, modifications or insolvency events have occurred as further described in the Free Writing Prospectus) plus other amounts overdue or advanced in connection with such mortgage
 
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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loan exceeds 90% of the appraised value of the related mortgaged property plus certain escrows and reserves (including letters of credit) held with respect to the mortgage loan.
 
A mortgage loan will cease to be a required appraisal loan when the same has ceased to be a specially serviced mortgage loan (if applicable), has been brought current for at least three consecutive months and no other circumstances exist that would cause such mortgage loan to be a required appraisal loan.
 
Appraisal Reduction Amounts will affect the amount of debt service advances on the related mortgage loan.  Appraisal Reduction Amounts will also be taken into account in the determination of the identity of the Class whose majority constitutes the “majority subordinate certificateholder” and is entitled to appoint the subordinate class representative.
 
Clean-Up Call and Exchange Termination:
  
On each Distribution Date occurring after the aggregate unpaid principal balance of the mortgage loans is reduced below 1% of the initial aggregate principal balance of the mortgage loans as of the Cut-off Date, certain specified persons will have the option to purchase all of the remaining mortgage loans (and the trust’s interest in all property acquired through exercise of remedies in respect of any mortgage loan) at the price specified in the Free Writing Prospectus. Exercise of the option will terminate the trust and retire the then-outstanding certificates.
 
If the aggregate Certificate Principal Balances of each of the Class A-1, A-2, A-3, A-4, A-5, A-SB, PEX and D Certificates and the Class A-S, B and C regular interests have been reduced to zero, the trust may also be terminated in connection with an exchange of all the then-outstanding certificates, for the mortgage loans and REO properties then remaining in the issuing entity, but all of the holders of those Classes of outstanding certificates would have to voluntarily participate in the exchange.
 
Liquidation Loan Waterfall:
  
Following the liquidation of any loan or property, the net liquidation proceeds generally will be applied (after reimbursement of advances and certain trust fund expenses), first, as a recovery of accrued interest, other than delinquent interest that was not advanced as a result of Appraisal Reduction Amounts, second, as a recovery of principal until all principal has been recovered, and then as a recovery of delinquent interest that was not advanced as a result of Appraisal Reduction Amounts. Please see “Description of the Offered Certificates—Distributions—Application of Mortgage Loan Collections” in the Free Writing Prospectus.
 
Majority Subordinate Certificateholder and Subordinate Class Representative:
  
A subordinate class representative may be appointed by the “majority subordinate certificate-holder”, which will be the holder(s) of a majority of:  (a) during a “subordinate control period”, the most subordinate class among the Class F and G Certificates that has a Certificate Principal Balance, as notionally reduced by any Appraisal Reduction Amounts allocable to that class, that is at least equal to 25% of its total initial principal balance and (b) during a “collective consultation period”, the most subordinate class among the Class F and G Certificates that has a total principal balance, without regard to Appraisal Reduction Amounts, that is at least equal to 25% of its initial Certificate Principal Balance. The majority subordinate certificateholder will have a continuing right to appoint, remove or replace the subordinate class representative in its sole discretion.  This right may be exercised at any time and from time to time. See “Servicing of the Mortgage Loans and Administration of the Trust Fund—The Majority Subordinate Certificateholder and the Subordinate Class Representative” in the Free Writing Prospectus.
 
Control and Consultation:
  
The rights of various parties to replace each Special Servicer and approve or consult with respect to major actions of each Special Servicer will vary according to defined periods.  A “subordinate control period” will exist as long as the Class F Certificates have a Certificate Principal Balance, net of any Appraisal Reduction Amounts allocable to that class, that is not less than 25% of the initial principal balance of that class (unless a senior consultation period is deemed to occur generally or with respect to a particular mortgage loan, pursuant to clause (ii) of the definition of “senior consultation period”).  In general, during a subordinate control period, (i) the subordinate class representative will be entitled to grant or withhold approval of asset status reports prepared, and material servicing actions proposed, by either Special Servicer, and (ii) the majority subordinate certificateholder, or the subordinate class representative on its behalf, will be entitled to terminate and replace each Special Servicer with or without cause, and appoint itself or another person as the applicable successor special servicer (other than with respect to the Colorado Mills loan combination).  It will be a condition to such appointment that DBRS, KBRA and Moody’s confirm that the appointment would not result in a qualification, downgrade or withdrawal of any of their then-current ratings of certificates.  A “collective consultation period” will exist as long as the Class F Certificates have a Certificate Principal Balance that both (i) as notionally reduced by any Appraisal Reduction Amounts allocable to that class, is less than 25% of its initial principal balance and (ii) without regard to any Appraisal Reduction Amounts allocable to that class, is 25% or more of its initial Certificate Principal Balance (unless a senior consultation period is deemed to occur generally or with respect to a particular mortgage loan, pursuant to clause (ii) of the definition of “senior consultation period”). In general, during a collective
 
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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consultation period, each Special Servicer will be required to consult with the Trust Advisor (in addition to the subordinate class representative, during a collective consultation period) in connection with asset status reports and material special servicing actions.  A “senior consultation period” will exist as long as either (i) the Class F certificates have an aggregate principal balance, without regard to any Appraisal Reduction Amounts allocable to that class, that is less than 25% of its initial principal balance or (ii) during such time as the Class F certificates are the most subordinate class of control-eligible certificates that have a then outstanding principal balance, net of Appraisal Reduction Amounts, at least equal to 25% of its initial principal balance, the then-majority subordinate certificateholder has irrevocably waived its right to appoint a subordinate class representative and to exercise any of the rights of the majority subordinate certificateholder or cause the exercise of the rights of the subordinate class representative and such rights have not been reinstated to a successor majority subordinate certificateholder as set forth in the pooling and servicing agreement.  In general, during a senior consultation period, each Special Servicer must seek to consult with the Trust Advisor in connection with asset status reports and material special servicing actions, and, in general, no subordinate class representative will be recognized or have any right to terminate either Special Servicer or approve, direct or consult with respect to servicing matters. With respect to the JW Marriott New Orleans loan combination and the Depot Park loan combination, the rights of the subordinate class representative described above will be subject to the consultation rights of each holder of a related pari passu companion loan described under “Loan Combinations” below.
 
Notwithstanding any contrary description set forth above, with respect to each of the JW Marriott New Orleans mortgage loan and the Depot Park mortgage loan, (a) each holder of a pari passu companion loan in the related loan combination (including any subordinate class representative or special servicer under any securitization of such pari passu companion loan) will have consultation rights with respect to asset status reports and material special servicing actions involving the related loan combination, as provided for in the related intercreditor agreement and as described in the Free Writing Prospectus, and those rights will be in addition to the rights of the subordinate class representative in this transaction described above; and (b) the existence of a subordinate control period, collective consultation period or senior consultation period under the WFCM 2014-LC18 pooling and servicing agreement will not limit the consultation rights of the holders of the related pari passu companion loans.
 
Also, notwithstanding any contrary description set forth above, with respect to the Colorado Mills mortgage loan, in general the loan combination will be serviced under the WFRBS 2014-C25 pooling and servicing agreement, which grants to the subordinate class representative control rights that include the right to approve or disapprove various material servicing actions involving the loan combination but the subordinate class representative for this securitization will nonetheless have the right to be consulted on a non-binding basis with respect to such actions. For purposes of the servicing of the Colorado Mills loan combination, the occurrence and continuance of a collective consultation period or senior consultation period with respect to the subordinate class representative under this securitization will not limit the control or other rights of the subordinate class representative under the WFRBS 2014-C25 securitization, and any collective consultation period or senior consultation period or similar period under the WFRBS 2014-C25 securitization will not limit the consultation rights of the subordinate class representative under this securitization.
 
In general, loan combination control rights also include the right, in certain circumstances, to direct the replacement of the applicable special servicer for the related loan combination only.
 
Replacement of Special Servicer by General Vote of Certificateholders:
  
During any “collective consultation period” or “senior consultation period”, each Special Servicer may be terminated and replaced upon the affirmative direction of certificate owners holding not less than 75% of the appraisal-reduced voting rights of all certificates, following a proposal from certificate owners holding not less than 25% of the appraisal-reduced voting rights of all certificates.  The certificateholders who initiate a vote on a termination and replacement of either Special Servicer without cause must cause DBRS, KBRA and Moody’s to confirm the then-current ratings of the certificates (or decline to review the matter) and cause the payment of the fees and expenses incurred in the replacement.
 
Appraisal Remedy:
  
Solely for purposes of determining whether a “subordinate control period” is in effect, whenever either Special Servicer obtains an appraisal or updated appraisal under the pooling and servicing agreement, the subordinate class representative, with respect to the mortgage loans serviced by either Special Servicer will have the right (at its or their expense) to direct such Special Servicer to hire a qualified appraiser to prepare a second appraisal of the mortgaged property.  The applicable Special Servicer must thereafter determine whether, based on its assessment of such second appraisal, any recalculation of the Appraisal Reduction Amount is warranted. The Appraisal Reduction Amount, whether based on the first or the second appraisal, will become effective following the second appraisal, except that the Appraisal Reduction Amount based on the first appraisal shall become effective if the subordinate class representative declines to demand a
 
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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second appraisal within a specified number of business days, or if a second appraisal is not received within 90 days after the direction of the subordinate class representative. In addition, for the same purposes, if there is a material change in the mortgaged property securing any mortgage loan for which an Appraisal Reduction Amount has been calculated, the majority certificateholder of the Class F or G Certificates or other designated certificateholders will be entitled (at its expense) to present an additional appraisal to such Special Servicer, which will generally be required to recalculate the Appraisal Reduction Amount based upon such additional appraisal.  This latter right may not be exercised more frequently than once in any 12-month period for each mortgage loan for which an Appraisal Reduction Amount was calculated and can only be exercised during a subordinate control period or a collective consultation period as further described in the Free Writing Prospectus.
 
Sale of Defaulted Assets:
  
There will be no “fair value” purchase option.  Instead, the pooling and servicing agreement will authorize each Special Servicer to sell defaulted mortgage loans serviced by such Special Servicer to the highest bidder in a manner generally similar to sales of REO properties.  Subject to certain limitations set forth in the related intercreditor agreement, each loan combination serviced under the WFCM 2014-LC18 pooling and servicing agreement may be sold unless that mortgage loan and the related pari passu companion loans are sold together as one whole loan.  The sale of a defaulted loan (other than a non-serviced mortgage loan) for less than par plus accrued interest and certain other fees and expenses owed on the loan will be subject to consent or consultation rights of the subordinate class representative and/or Trust Advisor and, in the case of the JW Marriott New Orleans mortgage loan and the Depot Park mortgage loan, consultation rights of the holders of the related pari passu companion loans, as described in the Free Writing Prospectus.
 
In the case of the Colorado Mills mortgage loan, pursuant to the related intercreditor agreement and the WFRBS 2014-C25 pooling and servicing agreement, respectively, the WFRBS 2014-C25 special servicer may offer to sell to any person (or may offer to purchase) for cash the Colorado Mills loan combination during such time as the Colorado Mills pari passu companion loan constitutes a defaulted mortgage loan under the WFRBS 2014-C25 pooling and servicing agreement, and, in connection with any such sale, the WFRBS 2014-C25 special servicer is required to sell both the Colorado Mills mortgage loan and the Colorado Mills pari passu companion loan as a whole loan. The subordinate class representative for this securitization will have consultation rights as the holder of an interest in the related pari passu mortgage loan, as described in the Free Writing Prospectus.
 
“As-Is” Appraisals:
  
Appraisals must be conducted on an “as-is” basis, and must be no more than 9 months old, for purposes of determining Appraisal Reduction Amounts, market value in connection with REO sales, etc.  Required appraisals may consist of updates of prior appraisals.  Internal valuations by the applicable Special Servicer are permitted if the principal balance of a mortgage loan is less than $2,000,000.
 
Trust Advisor:
  
The Trust Advisor will perform certain review duties that will generally include a limited annual review of and report regarding each Special Servicer to the Certificate Administrator.  The review and report generally will be based on: (a) during a collective consultation period or senior consultation period, any asset status reports and additional information delivered to the Trust Advisor by either Special Servicer with respect to any mortgage loan serviced by such Special Servicer, and/or (b) during a senior consultation period, in addition to the applicable information described above, a meeting with each Special Servicer to conduct a limited review of such Special Servicer’s operational practices on a platform basis in light of the servicing standard. In addition, during any collective consultation period or senior consultation period, each Special Servicer must seek to consult with the Trust Advisor (in addition to the subordinate class representative during a collective consultation period) in connection with material special servicing actions with respect to specially serviced mortgage loans serviced by such Special Servicer.  Furthermore, under certain circumstances, but only during a senior consultation period, the Trust Advisor may recommend the replacement of either Special Servicer, in which case the Certificate Administrator will deliver notice of such recommendation to the certificateholders, and certificateholders with specified percentages of the voting rights may direct the replacement of such Special Servicer at their expense.
 
The Trust Advisor may be removed and replaced without cause upon the affirmative direction of certificates owners holding not less than 75% of the appraisal-reduced voting rights of all certificates, following a proposal from certificate owners holding not less than 25% of the appraisal-reduced voting rights of all certificates.  The certificateholders who initiate a vote on a termination and replacement of the Trust Advisor without cause must cause DBRS, KBRA and Moody’s to confirm the then-current ratings of the certificates (or decline to review the matter) and cause the payment of the fees and expenses incurred in the replacement.  During any “subordinate control period”, the proposed replacement trust advisor will be subject to the subordinate class representative’s consent (such consent not to be unreasonably withheld). If a proposed termination and replacement of the Trust Advisor is not consummated within 180 days
 
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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Wells Fargo Commercial Mortgage Trust 2014-LC18 Certain Terms and Conditions
 
   
following the initial request of the certificateholders who requested a vote, the proposed termination and replacement shall have no further force or effect.  The Trust Advisor generally may be discharged from its duties if and when the Class A-1, A-2, A-3, A-4, A-5, A-SB, A-S, B, C, PEX, D and E Certificates are retired.
 
Certain Fee Offsets:
  
If a workout fee is earned by either Special Servicer following a loan default with respect to any mortgage loan that it services, then certain limitations will apply to the collection and retention of a modification fee from the borrower.  The modification fee generally must not exceed 1% of the principal balance of the loan as modified.  In addition, if the loan re-defaults within a specified period of months and other conditions are satisfied, any subsequent workout or liquidation fee on that loan must be reduced by a portion of the previously-collected modification fee.  Furthermore, workout fees, liquidation fees and modification fees collected with respect to any workout, liquidation and/or partial liquidation of a mortgage loan or loan combination that is serviced by a Special Servicer will be subject to an aggregate cap equal to the greater of (i) $1,000,000 and (ii) 1.00% of the stated principal balance of the subject mortgage loan or loan combination.
 
Deal Website:
  
The Certificate Administrator will be required to maintain a deal website which will include, among other items: (a) summaries of asset status reports prepared by each Special Servicer, (b) inspection reports, (c) appraisals, (d) various “special notices” described in the Free Writing Prospectus, (e) the “Investor Q&A Forum” and (f) a voluntary “Investor Registry”.  Investors may access the deal website following execution of a certification and confidentiality agreement.
 
Initial Majority Subordinate  Certificateholder:
  
It is expected that RREF II CMBS AIV, LP or another affiliate of Rialto Capital Advisors, LLC will be the initial majority subordinate certificateholder.
 
Loan Combinations:
  
Each of the mortgaged properties identified on Annex A-1 to the Free Writing Prospectus as JW Marriott New Orleans, Colorado Mills and Depot Park secure both a mortgage loan to be included in the trust fund and one or more other mortgage loans that will not be included in the trust fund, which will be pari passu in right of payment with the trust mortgage loan.  With respect to each group of mortgage loans that we refer to as a “loan combination”, both the JW Marriott New Orleans loan combination and the Depot Park mortgage loan will be principally serviced under the pooling and servicing agreement.  The Colorado Mills loan combination will be serviced under the pooling and servicing agreement for the WFRBS 2014-C25 securitization.
 
As of the closing date, the pari passu companion loans in such loan combinations will be held by the parties identified above under “IV. Characteristics of the Mortgage Pool—B. Summary of Pari Passu Split Loan Structures”.
 
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
 
 
(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.
 
 
26
 
 
HAWAII KAI TOWNE CENTER
 
(GRAFIC)
 
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
 
 
HAWAII KAI TOWNE CENTER
 
(MAP)
 
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
 
 
HAWAII KAI TOWNE CENTER
 
(MAP)
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
29
 
 
No. 1 – Hawaii Kai Towne Center
 
Loan Information
  
Property Information
Mortgage Loan Seller:
Ladder Capital Finance LLC
  
Single Asset/Portfolio:
Single Asset
Credit Assessment
(DBRS/KBRA/Moody’s):
NR/NR/NR
  
Property Type:
Mixed Use
Original Principal Balance:
$84,750,000
  
Specific Property Type:
Retail/Office
Cut-off Date Principal Balance:
$84,750,000
  
Location:
Honolulu, HI
% of Initial Pool Balance:
7.4%
  
Size(3):
469,787 SF
Loan Purpose:
Acquisition
  
Cut-off Date Principal
Balance Per SF(1):
$180.40
Borrower Name:
Hawaii Kai Towne Center SPE LLC
  
Year Built/Renovated:
1991/NAP
Sponsor:
ValueRock Realty Partners
  
Title Vesting:
Leasehold
Mortgage Rate:
4.393%
  
Property Manager:
Jones Lang LaSalle Americas Inc.
Note Date:
November 20, 2014
  
3rd Most Recent Occupancy (As of):
98.0% (6/30/2011)
Anticipated Repayment Date:
NAP
  
2nd Most Recent Occupancy (As of):
98.0% (6/30/2012)
Maturity Date:
December 6, 2024
  
Most Recent Occupancy (As of):
98.0% (6/30/2013)
IO Period:
60 months
  
Current Occupancy (As of):
96.7% (9/19/2014)
Loan Term (Original):
120 months
    
Seasoning:
0 months
  
Underwriting and Financial Information:
Amortization Term (Original):
360 months
      
Loan Amortization Type:
Interest-only, Amortizing Balloon
  
3rd Most Recent NOI (As of):
$7,585,875 (TTM 6/30/2012)
Interest Accrual Method:
Actual/360
  
2nd Most Recent NOI (As of):
$7,741,777 (TTM 6/30/2013)
Call Protection:
L(24),D(92),O(4)
  
Most Recent NOI (As of):
$7,645,189 (TTM 6/30/2014)
Lockbox Type:
Hard/Upfront Cash Management
    
Additional Debt(1):
Yes
      
Additional Debt Type(1):
Mezzanine
      
     
U/W Revenues:
$12,754,158
     
U/W Expenses:
$5,142,885
     
U/W NOI:
$7,611,273
Escrows and Reserves(2):
    
U/W NCF:
$7,349,063
     
U/W NOI DSCR(1):
1.50x
Type:
Initial
Monthly
Cap (If Any)
  
U/W NCF DSCR(1):
1.44x
Taxes
$575,138
$115,028
NAP
  
U/W NOI Debt Yield(1):
9.0%
Insurance
$99,000
$16,500
NAP
  
U/W NCF Debt Yield(1):
8.7%
Replacement Reserve
$509,829
$4,344
NAP
  
As-Is Appraised Value:
$119,000,000
TI/LC Reserve
$437,060
$19,750
$300,000
  
As-Is Appraisal Valuation Date:
July 23, 2014
Rent Reserve
$361,018
$0
NAP
  
Cut-off Date LTV Ratio(1):
71.2%
Ground Rent Reserve
$0
$6,250
NAP
  
LTV Ratio at Maturity or ARD(1):
65.1%
 
(1)
See “Subordinate and Mezzanine Indebtedness” section. The equity interest in the Hawaii Kai Towne Center Mortgage Loan borrower has been pledged to secure mezzanine indebtedness with a principal balance of $12,400,000. All LTV, DSCR, Debt Yield and Cut-off Date Principal Balance Per SF numbers shown in the chart above are based solely on the Hawaii Kai Towne Center Mortgage Loan. As of the Cut-off Date, the combined LTV Ratio is 81.6%, the combined U/W NCF DSCR is 1.16x, and the combined U/W NCF Debt Yield is 7.6%.
(2)
See “Escrows” section.
(3)
Size includes StorSecure Self Storage, Costco Wholesale Warehouse and Burger King, which each own their improvements and lease the ground from the landlord.  In total, 261,884 square feet represent pad leases to tenants, representing 55.7% of rentable square footage and 31.1% of underwritten total rent.

The Mortgage Loan.  The mortgage loan (the “Hawaii Kai Towne Center Mortgage Loan”) is evidenced by a single promissory note that is secured by a first mortgage encumbering the leasehold interest in a mixed use property located in Honolulu, Hawaii (the “Hawaii Kai Towne Center Property”).  The Hawaii Kai Towne Center Mortgage Loan was originated on November 20, 2014 by Ladder Capital Finance LLC. The Hawaii Kai Towne Center Mortgage Loan had an original principal balance of $84,750,000, has an outstanding principal balance as of the Cut-off Date of $84,750,000 and accrues interest at an interest rate of 4.393% per annum.  The Hawaii Kai Towne Center Mortgage Loan had an initial term of 120 months, has a remaining term of 120 months as of the Cut-off Date and requires interest-only payments for the first 60 payments following origination, and, thereafter, requires payments of principal and interest based on a 30-year amortization schedule.  The Hawaii Kai Towne Center Mortgage Loan matures on December 6, 2024.

Following the lockout period, the borrower has the right to defease the Hawaii Kai Towne Center Mortgage Loan in whole, but not in part, on any date before September 6, 2024. In addition, the Hawaii Kai Towne Center Mortgage Loan is prepayable without penalty on or after September 6, 2024.
 
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
 
 
HAWAII KAI TOWNE CENTER
 
Sources and Uses

Sources
          
Uses
        
Original loan amount
$84,750,000
  
74.4
 %   
Purchase price
$109,500,000
  
96.1
 % 
Mezzanine loan
12,400,000
  
10.9
    
Closing costs
2,495,726
  
2.2
  
Sponsor new cash contribution
16,827,771
  
14.8
    
Reserves
1,982,045
  
1.7
  
Total Sources
$113,977,771
  
100.0
 %   
Total Uses
$113,977,771
  
100.0
 % 
 
The Property.  The Hawaii Kai Towne Center Property is a 10 building, mixed use anchored retail/office center containing 469,787 square feet and situated on 27.4 acres located in in Honolulu, Hawaii.  The Hawaii Kai Towne Center Property consists of six components: (i) Towne Center (five retail buildings totaling 230,749 square feet leased to 23 tenants and 98.9% occupied); (ii) Executive Plaza (one building totaling 43,311 square feet leased to 18 tenants and 76.9% occupied); (iii) Corporate Plaza (one building totaling 54,557 square feet leased to 13 tenants and 94.2% occupied); (iv) a ground subleased 120,000 square foot self-storage facility; (v) a 14,165 square foot gas station; and (vi) a 7,005 square foot Outback Steakhouse.  The Towne Center component includes a 138,859 square foot standalone building ground subleased to Costco and a 36,627 square foot standalone building occupied by City Mill. In total, 261,884 square feet represent pad leases to tenants, representing 55.7% of rentable square footage and 31.1% of underwritten total rent. The Hawaii Kai Towne Center Property was 96.7% occupied by 76 tenants as of September 19, 2014.

The following table presents certain information relating to the tenancy at the Hawaii Kai Towne Center Property:

Major Tenants
 
 Tenant Name
  
Credit Rating
(Fitch/
Moody’s/
S&P)(1)
  Tenant
NRSF
% of
NRSF
Annual
U/W Base
Rent PSF(2)
  
Annual
U/W Base
Rent(2)
  
% of Total
Annual U/W
Base Rent
  
Sales
PSF(3)
Occupancy
Cost(3)(4)
Lease
Expiration
Date
                     
 Anchor Tenants
                          
 Costco(5)
  
A+/A1/A+
138,859
29.6%
$19.18(6)
  
$2,663,485(6)
  
32.3%
  
NAV
NAV
10/25/2026(7)   
 City Mill
  
NR/NR/NR
36,627
7.8%
$30.96
  
$1,133,972
  
13.8%
  
$298
14.2%
3/31/2023    
 Ross Stores
  
NR/NR/A-
22,013
4.7%
$27.36
  
$602,276
  
7.3%
  
$542
7.0%
1/31/2019    
 StorSecure(5)
  
NR/NR/NR
120,000
25.5%
$1.87
  
$223,815
  
2.7%
  
NAP
NAP
6/29/2045    
 Total Major Retail Tenants
317,499
67.6%
$14.56
  
$4,623,547
  
56.1%
        
                           
 Non-Major Retail Tenants
51,978
11.1%
$36.33
  
$1,888,339
  
22.9%
        
 Office Tenants
    
84,677
18.0%
$20.49
  
$1,734,982
  
21.0%
        
                           
                           
 Occupied Collateral Total
454,154
96.7%
$18.16
  
$8,246,868
  
100.0%
        
                           
 Vacant Space
    
15,633
3.3%
                  
                           
 Collateral Total
469,787
100.0%
                  
                           
 
(1)
Certain ratings are those of the parent company whether or not the parent guarantees the lease.
(2)
Annual U/W Base Rent PSF and Annual U/W Base Rent include contractual rent steps through October 2015.
(3) 
Sales PSF and Occupancy Costs are for the trailing 12 months ending July 31, 2014.
(4)
Occupancy Costs include base rent, reimbursements and percentage rent, as applicable.
(5)
Costco Wholesale Warehouse and StorSecure Self Storage own their improvements and are on ground subleases with the landlord. Costco also leases 5,790 square feet in Towne Center where it operates a secondary location.
(6)
The Annual U/W Base Rent and Annual U/W Base Rent PSF for Costco represents the tenant’s average rent over the lease term. The tenant’s current in-place rent is $17.68 per square foot.
(7)
Costco can terminate its lease at any time with 90-days’ notice.  Prior to April 29, 2026, upon termination of the lease, the termination penalty equals 12 months of rent and additional rent which is approximately $3,349,535.
 
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
 
 
HAWAII KAI TOWNE CENTER
 
The following table presents certain information relating to the historical sales and occupancy costs at the Hawaii Kai Towne Center Property:

Historical Sales (PSF) and Occupancy Cost(1)

Tenant Name
2012
2013
2014
Occupancy
Cost
Costco
NAV
NAV
NAV
NAV
City Mill
$279
$283
$298
14.2%
Ross Stores
$510
$531
$542
7.0%
(1)    Historical Sales (PSF) and Occupancy Costs are based on historical statements provided by the borrower.
 
The following table presents certain information relating to the lease rollover schedule at the Hawaii Kai Towne Center Property:
 
Lease Expiration Schedule(1)(2)
 
Year Ending
December 31,
  
No. of
Leases
Expiring
  
Expiring
NRSF
  
% of
Total
NRSF
  
Cumulative
Expiring
NRSF
  
Cumulative
% of Total
NRSF
  
Annual
U/W
Base Rent
  
% of
Annual
U/W Base
Rent
  
Annual
U/W
Base Rent
PSF(3)
  
MTM
  
1
  
915
  
0.2%
  
915
  
0.2%
  
$20,862
  
0.3%
  
$22.80
  
2014
  
2
  
0
  
0.0%
  
915
  
0.2%
  
$12,000
  
0.1%
  
$0.00
  
2015
  
16
  
20161
  
4.3%
  
21,076
  
4.5%
  
$442,285
  
5.4%
  
$21.94
  
2016
  
10
  
17,400
  
3.7%
  
38,476
  
8.2%
  
$426,193
  
5.2%
  
$24.49
  
2017
  
10
  
12,692
  
2.7%
  
51,168
  
10.9%
  
$470,535
  
5.7%
  
$37.07
  
2018
  
10
  
21,280
  
4.5%
  
72,448
  
15.4%
  
$730,618
  
8.9%
  
$34.33
  
2019
  
6
  
24692
  
5.3%
  
97,140
  
20.7%
  
$704,025
  
8.5%
  
$28.51
  
2020
  
5
  
13,796
  
2.9%
  
110,936
  
23.6%
  
$283,197
  
3.4%
  
$20.53
  
2021
  
1
  
1233
  
0.3%
  
112,169
  
23.9%
  
$56,965
  
0.7%
  
$46.20
  
2022
  
0
  
0
  
0.0%
  
112,169
  
23.9%
  
$0
  
0.0%
  
$0.00
  
2023
  
4
  
40,085
  
8.5%
  
152,254
  
32.4%
  
$1,299,671
  
15.8%
  
$32.42
  
2024
  
8
  
37251
  
7.9%
  
189,505
  
40.3%
  
$728,218
  
8.8%
  
$19.55
  
Thereafter
  
3
  
264,649
  
56.3%
  
454,154
  
96.7%
  
$3,072,300
  
37.3%
  
$11.61
  
Vacant
  
0
  
15,633
  
3.3%
  
469,787
  
100.0%
  
$0
  
0.0%
  
$0.00
  
Total/Weighted Average
   76  
469,787
  
100.0%
          
$8,246,868
  
100.0%
  
$18.16
  
 
(1)
Information obtained from the underwritten rent roll.
(2)
Certain tenants may have lease termination options that are exercisable prior to the originally stated expiration date of the subject lease and that are not considered in the Lease Expiration Schedule.
(3)
Weighted Average Annual U/W Base Rent PSF excludes vacant space.

The following table presents historical occupancy percentages at the Hawaii Kai Towne Center Property:
 
Historical Occupancy
 
12/31/2011(1)
  
12/31/2012(1)
  
12/31/2013(1)
  
3/1/2014(2)
             
98.0%
  
98.0%
  
98.0%
  
96.7%
 
(1)
Information obtained from the borrower.
(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.
 
 
32
 
 
HAWAII KAI TOWNE CENTER
 
Operating History and Underwritten Net Cash Flow.  The following table presents certain information relating to the historical operating performance and the Underwritten Net Cash Flow at the Hawaii Kai Towne Center Property:
 
Cash Flow Analysis
 
   
TTM
6/30/2012
  
TTM
6/30/2013
  
TTM
6/30/2014
  
U/W
  
U/W $ per
SF
  
Base Rent
  
$8,112,074
  
$8,155,533
  
$8,306,310
  
$8,261,822
  
$17.59
  
Grossed Up Vacant Space
  
0
  
0
  
0
  
405,539
  
0.86
  
Percentage Rent
  
77,443
  
83,405
  
87,783
  
87,783
  
0.19
  
Total Reimbursables
  
4,212,836
  
4,315,647
  
4,099,986
  
4,554,583
  
9.69
  
Other Income
  
$169,995
  
$100,640
  
$125,284
  
$125,284
  
0.27
  
Less Vacancy & Credit Loss
  
0
  
0
  
0
  
(680,854)(1)
  
(1.45)
  
Effective Gross Income
  
12,572,348
  
$12,655,225
  
$12,619,362
  
$12,754,158
  
$27.15
  
                       
Total Operating Expenses
  
$4,986,473
  
$4,913,448
  
$4,974,174
  
$5,142,885
  
$10.95
  
                       
Net Operating Income
  
$7,585,875
  
$7,741,777
  
$7,645,189
  
$7,611,273
  
$16.20
  
TI/LC
  
0
  
0
  
0
  
210,080
  
0.45
  
Capital Expenditures
  
0
  
0
  
0
  
52,131
  
0.11
  
Net Cash Flow
  
$7,585,875
  
$7,741,777
  
$7,645,189
  
$7,349,063
  
$15.64
  
                       
NOI DSCR
  
1.49x
  
1.52x
  
1.50x
  
1.50x
      
NCF DSCR
  
1.49x
  
1.52x
  
1.50x
  
1.44x
      
NOI DY
  
9.0%
  
9.1%
  
9.0%
  
9.0%
      
NCF DY
  
9.0%
  
9.1%
  
9.0%
  
8.7%
      
 
(1)
The underwritten economic vacancy is 5.1%. The Hawaii Kai Towne Center Property was 96.7% physically occupied as of September 19, 2014.

Appraisal.  As of the appraisal valuation date of July 23, 2014, the Hawaii Kai Towne Center Property had an “as-is” appraised value of $119,000,000.

Environmental Matters.  According to a Phase I environmental site assessment dated August 6, 2014, there was no evidence of any recognized environmental condition at the Hawaii Kai Towne Center Property.
 
Market Overview and Competition.  The Hawaii Kai Towne Center Property is located in a highly visible location with an average daily traffic count of over 40,000 along the Kalanian’ole Highway.  The Hawaii Kai Towne Center Property is located 12 miles east from Downtown Honolulu via the H-1 freeway, the Hawaii Kai Towne Center Property is bordered by the Kuli’ou’ou area to the west, Koko Head Park area to the east, Maunalua Bay to the south, and the Koolau Mountains to the north. According to the appraisal, the area is built out and consists of approximately 95.0% residential and 5.0% commercial uses. The area is has an average household income within a 3-mile radius of the Hawaii Kai Towne Center Property of $121,964, compared to the average Honolulu central business district (“CBD”) average household income of $88,188.  The Hawaii Kai Towne Center Property’s main competition is the Koko Marina Center, immediately across the Kuapa Pond off the Kalaniana’ole Highway. The Koko Marina Center has over 70 tenants and is the only medium-sized center within a 5-mile radius of the Hawaii Kai Towne Center Property. Other competition includes the Aina Shopping Center, which consists of 30 tenants, and a Safeway anchored center consisting of 80,821 square feet. As of year end 2013, the Honolulu CBD had an aggregate retail sales level of $16.1 billion, with average sales per household of $49,673. By comparison the state of Hawaii had an average sales per household of $47,742, while the United States had $43,474.
 
The Borrower.  The borrower is Hawaii Kai Towne Center SPE LLC, a Delaware limited liability company with two independent directors.  Legal counsel to the borrower delivered a non-consolidation opinion in connection with the origination of the Hawaii Kai Towne Center Mortgage Loan. Diversified Partners, Inc., National Credit Tenant Investments, LLC, Diversified – Lake Forest, LLC, National Credit Tenant Investment Partners Limited Partnership (“National LP”) and Credit Tenant Investment Partners, L.P. are the guarantors of certain nonrecourse carveouts and, together with the borrower, serve as environmental indemnitors under the Hawaii Kai Towne Center Loan and are jointly and severally liable.

The Sponsor.  The sponsor is ValueRock Realty Partners (“ValueRock”).  ValueRock is a real estate investment firm located in Irvine, California and Honolulu, Hawaii. The ValueRock team consists of industry veterans with 20 to 30 years of experience in operating and investing in real estate. The ValueRock team has managed portfolios valued at more than $30.0 billion, managed over 70.0 million square feet of retail space and have handled over $2.0 billion in redevelopment. David Lee is the Founder and Chairman of ValueRock, with over 30 years of experience Mr. Lee has been involved in more than 1,000 real estate transactions valued at more than $30 billion in value.

Escrows. The loan documents provide for upfront escrows in the amount of $575,138 for real estate taxes, $99,000 for insurance, $509,829 for the replacement reserve, $437,060 for the tenant improvement and leasing commission reserve, and $361,018 for the rent reserve associated with leases for Tesoro ($300,000 to be released when the tenant executes a new 10 year lease subject to the terms of the loan agreement) and Pro Service ($61,018) for two months of rent. The loan documents also provide for ongoing monthly escrows in the amount of $115,028 for real estate taxes, $16,500 for insurance, $4,344 for replacement reserves, $19,750 for the tenant improvement and leasing commission reserve (which is capped at $300,000 for the first eight years of the Hawaii Kai Towne Center Mortgage Loan term), and $6,250 for the ground rent reserve.
 
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
 
 
HAWAII KAI TOWNE CENTER
 
Lockbox and Cash Management. The Hawaii Kai Towne Center Mortgage Loan requires a lender-controlled lockbox account, which is already in place, and that the borrower direct tenants to pay rents directly into such lockbox account.  All amounts in the lockbox account are transferred on each business day to a lender controlled cash management account. Prior to the occurrence of a Cash Sweep Event Period (as defined below), all excess funds on deposit in the lockbox account after payment of debt service, operating expenses and required deposits into reserve accounts are made are disbursed to the borrower. During a Cash Sweep Event Period, all excess funds on deposit in the cash management account are swept to a lender-controlled excess cash flow account.

A “Cash Sweep Event Period” will commence upon the earlier of (i) the occurrence and continuance of an event of default; (ii) the occurrence of a City Mill Cash Sweep Event (as defined below); (iii) the occurrence of a Costco Cash Sweep Event (as defined below); (iv) the aggregate debt service coverage ratio falling below 1.05x while the Hawaii Kai Towne Center Mezzanine Loan (as defined below) is outstanding or, 1.15x, after the Hawaii Kai Towne Center Mezzanine Loan has been repaid in full; (v) the occurrence of any monetary default or material non-monetary event of default by any party under the management agreement that is not cured within any applicable cure period; or (vi) the occurrence of a Significant Tenant Cash Sweep Event (as defined below).

A Cash Sweep Event Period will end: with respect to clause (i) above, when such event of default has been cured; with respect to clause (ii) above, upon the occurrence of a City Mill Cash Sweep Event Cure (as defined below); with respect to clause (iii) above, upon the occurrence of a Costco Cash Sweep Event Cure (as defined below); with respect to clause (iv) above, when the aggregate debt service coverage ratio of at least 1.15x or 1.25x, after the Hawaii Kai Towne Center Mezzanine Loan has been repaid in full, has been achieved for two consecutive quarters; with respect to clause (v) above, the applicable default under the management agreement shall have been cured by the property manager or waived; and with respect to clause (vi) above, upon the occurrence of a Significant Tenant Cash Sweep Event Cure (as defined below).

A “City Mill Cash Sweep Event” will occur if (i) City Mill fails to renew the City Mill lease on or before the date that is twelve months prior to the expiration of the City Mill lease, (ii) City Mill gives notice to the lender that it does not intend to renew the City Mill lease; (iii) City Mill vacates, surrenders or ceases to conduct its normal business operations at all or substantially all of its demised premises or otherwise “goes dark”, in each case with respect to the leased premises under the City Mill lease, or (iv) City Mill or City Mill’s parent company, as applicable, becomes insolvent or a debtor in any bankruptcy action.  A “City Mill Cash Sweep Event Cure” will occur, as applicable, upon the renewal or replacement of the City Mill lease, the revocation or rescinding of the applicable notice, City Mill reopening for business or the emergence from insolvency or bankruptcy by City Mill (or City Mill’s parent, as applicable), in each case, in accordance with the Hawaii Kai Towne Center loan documents; provided, however, that with respect to any City Mills Cash Sweep Event, in the event that no other City Mill Cash Sweep Event shall be continuing, a City Mill Cash Sweep Event may be cured if the borrower deposits or causes to be deposited in the excess cash flow account, the amount of $367,000.

A “Costco Cash Sweep Event” will occur if (i) Costco fails to renew the Costco lease on or before the date that is twelve months prior to the expiration of the Costco lease, (ii) Costco gives notice to the landlord or the lender that it elects to terminate or elects not to renew the Costco lease; (iii) Costco vacates, surrenders or ceases to conduct its normal business operations, either with or without notice to the landlord or the lender, at all or substantially all of its demised premises or otherwise “goes dark”, in each case with respect to the leased premises under the Costco lease, or (iv) Costco or Costco’s parent company, as applicable, becomes insolvent or a debtor in any bankruptcy action.  A “Costco Cash Sweep Event Cure” will occur, as applicable, upon the renewal or replacement of the Costco lease, the revocation or rescinding of the applicable notice, Costco reopening for business or the emergence from insolvency or bankruptcy by Costco (or Costco’s parent, as applicable), in each case, in accordance with the Hawaii Kai Towne Center loan documents.

A “Significant Tenant Cash Sweep Event” will occur if (i) any Significant Tenant (defined as a tenant (other than City Mill or Costco) under a lease or lease(s) which, either individually or in the aggregate, cover more than 10,000 rentable square feet or constitute more than 10.0% of annual rents) fails to renew the its lease on or before the date that is twelve months prior to the expiration of such Significant Tenant’s lease, (ii) any Significant Tenant gives notice to the landlord or the lender that it elects to terminate or elects not to renew its lease; (iii) any Significant Tenant  vacates, surrenders or ceases to conduct its normal business operations at all or substantially all of its demised premises or otherwise “goes dark”, or (iv) any Significant Tenant or such Significant Tenant’s parent company becomes insolvent or a debtor in any bankruptcy action.  A “Significant Tenant Cash Sweep Event Cure” will occur, as applicable, upon the renewal or replacement of such Significant Tenant’s lease, the revocation or rescinding of the applicable notice, such Significant Tenant reopening for business or the emergence from insolvency or bankruptcy by such Significant Tenant (or such Significant Tenant’s parent, as applicable), in each case, in accordance with the Hawaii Kai Towne Center Mortgage Loan documents.

Property Management.  The Hawaii Kai Towne Center Property is managed by Jones Lang LaSalle Americas Inc.
 
Assumption.  The borrower has the right to transfer the Hawaii Kai Towne Center Property, subject to customary conditions set forth in the loan documents, including but not limited to: (i) no event of default has occurred and is continuing; (ii) the proposed transferee, the property manager and management agreement are satisfactory to the lender and applicable rating agencies; and (iii) rating agency confirmation from DBRS, KBRA and Moody’s that the transfer will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the Series 2014-LC18 Certificates.

Partial Release.  None
 
Real Estate Substitution.  Not Permitted.
 
Subordinate and Mezzanine Indebtedness.  Ladder Capital Finance LLC (the “Hawaii Kai Towne Center Mezzanine Lender”) has made a $12,400,000 mezzanine loan (the “Hawaii Kai Towne Center Mezzanine Loan”) to VR Hawaii Kai SPE LLC. a Delaware limited
 
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
 
 
HAWAII KAI TOWNE CENTER
  
liability company that indirectly owns 100.0% of the borrower under the Hawaii Kai Towne Center Mortgage Loan. The Hawaii Kai Towne Center Mezzanine Loan accrues interest at an interest rate of 10.000% per annum and is interest-only.  The Hawaii Kai Towne Center Mezzanine Loan matures on December 6, 2024. The rights of the Hawaii Kai Towne Center Mezzanine Lender are further described under “Description of the Mortgage Pool–Subordinate and/or Other Financing–Existing (Secured Financing and Mezzanine and Similar Financing)” in the Free Writing Prospectus.

Ground Lease.  The entire Hawaii Kai Towne Center Mortgage Loan is secured by a first mortgage encumbering the borrower’s leasehold interest in one ground lease that expires on November 20, 2089. The initial annual ground lease rent payments are $75,000. On March 1, 2035 the additional rent will equal 10.0% of gross receipts from the Hawaii Kai Towne Center Property less the annual base rent of $75,000. Following the 60th anniversary of the lease commencement date of November 20, 2074, the additional base rent will be 12.5% of gross receipts from the Hawaii Kai Towne Center Property less the annual base rent of $75,000. Gross receipts exclude reimbursements from tenants for common area maintenance, insurance, and taxes and rent received from Costco.  See “Description of the Mortgage Pool – Ground Leases” in the Free Writing Prospectus.

Terrorism Insurance.  The loan documents require that the “all risk” insurance policy required to be maintained by the borrower provide coverage from terrorism in an amount equal to the full replacement cost of the Hawaii Kai Towne Center Property as well as business interruption insurance covering no less than the 12-month period following the occurrence of a casualty event.

Windstorm Insurance.  The loan documents require that the “all risk” insurance policy required to be maintained by the borrower provide coverage from windstorms in an amount equal to the full replacement cost of the Hawaii Kai Towne Center Property as well as business interruption insurance covering no less than the 12-month period following the occurrence of a casualty event.

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
35
 
 
JW MARRIOTT NEW ORLEANS
 
(GRAFIC)
 
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
 
 
JW MARRIOTT NEW ORLEANS
  
(MAP)
 
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
 
 
No. 2 – JW Marriott New Orleans
 
Loan Information
  
Property Information
Mortgage Loan Seller:
Wells Fargo Bank, National Association
  
Single Asset/Portfolio:
 Single Asset
Credit Assessment
(DBRS/KBRA/Moody’s):
NR/NR/NR
  
Property Type:
 Hospitality
Original Principal Balance(1):
$50,000,000
  
Specific Property Type:
 Full Service
Cut-off Date Principal Balance(1):
$50,000,000
  
Location:
 New Orleans, LA
% of Initial Pool Balance:
4.4%
  
Size:
 496 rooms
Loan Purpose:
Refinance
  
Cut-off Date Principal
Balance Per Room(1):
 $181,452
Borrower Name:
Sunstone Canal, LLC
  
Year Built/Renovated:
 1984/2003
Sponsor:
Sunstone Hotel Partnership, LLC
  
Title Vesting:
 Leasehold
Mortgage Rate:
4.150%
  
Property Manager:
 Marriott Hotel Services, Inc.
Note Date:
December 2, 2014
  
3rd Most Recent Occupancy (As of):
 79.7% (12/31/2011)
Anticipated Repayment Date:
NAP
  
2nd Most Recent Occupancy (As of):
 81.8% (12/31/2012)
Maturity Date:
December 11, 2024
  
Most Recent Occupancy (As of):
 81.1% (12/31/2013)
IO Period:
None
  
Current Occupancy (As of):
 81.7% (10/31/2014)
Loan Term (Original):
120 months
    
Seasoning:
0 months
  
Underwriting and Financial Information:
Amortization Term (Original):
360 months
    
Loan Amortization Type:
Amortizing Balloon
  
3rd Most Recent NOI (As of):
$10,166,036 (12/31/2012)
Interest Accrual Method:
Actual/360
  
2nd Most Recent NOI (As of):
$12,903,001 (12/31/2013)
Call Protection(2):
L(24),D(92),O(4)
  
Most Recent NOI (As of)(5):
$14,263,420 (TTM 10/31/2014)
Lockbox Type(3):
Soft/Upfront Cash Management
      
Additional Debt(1):
Yes
      
Additional Debt Type(1):
Pari Passu
  
U/W Revenues:
$37,611,335
     
U/W Expenses:
$24,847,358
     
U/W NOI(5):
$12,763,977
     
U/W NCF:
$10,883,410
     
U/W NOI DSCR(1):
2.43x
Escrows and Reserves(4):
    
U/W NCF DSCR(1):
2.07x
         
U/W NOI Debt Yield(1):
14.2%
Type:
Initial
Monthly
Cap (If Any)
  
U/W NCF Debt Yield(1):
12.1%
Taxes
$0
Springing
NAP
  
As-Is Appraised Value:
$152,200,000
Insurance
$0
Springing
NAP
  
As-Is Appraisal Valuation Date:
October 22, 2014
FF&E
$0
Springing
NAP
  
Cut-off Date LTV Ratio(1):
59.1%
Deferred Maintenance
$2,321,684
$0
NAP
  
LTV Ratio at Maturity or ARD(1):
47.2%
             
 
(1)
The JW Marriott New Orleans Loan Combination, totaling $90,000,000 is comprised of two pari passu notes (Notes A-1 and A-2).  The controlling Note A-1 had an original principal balance of $50,000,000, has an outstanding principal balance as of the Cut-off Date of $50,000,000 and will be contributed to the WFCM 2014-LC18 Trust.  The non-controlling Note A-2 had an original balance of $40,000,000 and is expected to be contributed to a future trust. All statistical information related to the balance per room, loan-to-value ratios, debt service coverage ratios and debt yields are based on the JW Marriott New Orleans Loan Combination.
(2)
Lockout is the later of (a) 24 months following the securitization of the WFCM 2014-LC18 loan or (b) the earlier of (x) three years from loan close or (y) 24 months following the securitization of Note A-2.
(3)
See “Lockbox and Cash Management” section.
(4)
See “Escrows” section.
(5)
See “Cash Flow Analysis” section.
 
The Mortgage Loan.  The mortgage loan (the “JW Marriott New Orleans Loan Combination”) is evidenced by two pari passu promissory notes (Notes A-1 and A-2) secured by a first mortgage encumbering the leasehold interest in a full service hotel located in New Orleans, Louisiana (the “JW Marriott New Orleans Property”).  The JW Marriott New Orleans Loan Combination was originated on December 2, 2014 by Wells Fargo Bank, National Association.  The JW Marriott New Orleans Loan Combination had an original principal balance of $90,000,000, has an outstanding principal balance as of the Cut-off Date of $90,000,000 and accrues interest at an interest rate of 4.150% per annum.  The JW Marriott New Orleans Loan Combination had an initial term of 120 months, has a remaining term of 120 months as of the Cut-off Date and requires payments of principal and interest based on a 30-year amortization schedule.  The JW Marriott New Orleans Loan Combination matures on December 11, 2024. See “Description of the Mortgage Pool—Split Loan Structures—The JW Marriott New Orleans Loan Combination” in the Free Writing Prospectus.

Note A-1, which represents the controlling interest in the JW Marriott New Orleans Loan Combination, will be contributed to the WFRBS 2014-LC18 Trust, had an original principal balance of $50,000,000 and has an outstanding principal balance as of the Cut-off Date of $50,000,000.  Note A-2 (the “JW Marriott New Orleans Companion Loan”), which is expected to be contributed to a future trust, had an original principal balance of $40,000,000 and represent the non-controlling interests in the JW Marriott New Orleans Loan Combination. See “Description of the Mortgage Pool—Split Loan Structures—The JW Marriott New Orleans Loan Combination” in the Free Writing Prospectus. The lender provides no assurances that the Note A-2 will not be split further.
 
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
 
 
JW MARRIOTT NEW ORLEANS
  
Following the lockout period, the borrower has the right to defease the JW Marriott New Orleans Loan Combination in whole, but not in part, on any date before September 11, 2024.  In addition, the JW Marriott New Orleans Loan Combination is prepayable without penalty on or after September 11, 2024.

Sources and Uses

Sources
        
Uses
        
Original loan amount
$90,000,000
  
100.0%
  
Loan payoff(1)
$39,619,603
  
44.0
 % 
         
Closing costs
637,048
  
0.7
  
         
Reserves
2,321,684
  
2.6
  
         
Return of equity
47,421,665
  
52.7
  
Total Sources
$90,000,000
  
100.0%
  
Total Uses
$90,000,000
  
100.0
 % 
 
(1)
The JW Marriott New Orleans Loan Combination is refinancing an existing Wells Fargo Bank, National Association balance sheet loan.

The Property.  The JW Marriott New Orleans Property is the leasehold interest in a AAA four-diamond award rated, 496-room, 30-story full service hotel located in New Orleans, Louisiana.  The JW Marriott New Orleans Property was constructed in 1984 and is situated on a 0.9 acre parcel that is subject to a ground lease through May 2081 (see “Ground Lease” section).  Upon completion in 1984, the property operated as a Le Meridian hotel until late 2002 and was briefly converted to the New Orleans Grand Hotel prior to being converted to a JW Marriott in 2003.   The JW Marriott New Orleans Property’s guestroom configuration includes 168 standard king bedrooms, 165 double bed guest rooms, 156 corner king bed guest rooms, five suites and two, two-story suites.   Amenities at the JW Marriott New Orleans Property include a restaurant, a lobby bar and lounge, concierge services, valet parking, outdoor pool, fitness center, business center and approximately 19,000 square feet of meeting space.  The JW Marriott New Orleans Property provides 161 spaces for valet parking, located on the lower four levels of the building.  The JW Marriott New Orleans Property is scheduled to undergo a $17.6 million renovation in 2016 that will include renovating all the guest rooms and bathrooms, exterior corridors and moving the existing concierge lounge to the lobby level.  The renovation will add five additional hotel rooms to JW Marriott New Orleans Property. The management agreement with Marriott expires in December 2028.

Operating History and Underwritten Net Cash Flow.  The following table represents certain information relating to the historical operating performance and the Underwritten Net Cash Flow at the JW Marriott New Orleans Property:
 
Cash Flow Analysis
 
   
2011(1)
  
2012(1)
  
2013(1)
  
 
TTM
10/31/2014(1)
  
U/W
  
U/W $ per
Room
  
Occupancy
  
79.7%
  
81.8%
  
81.1%
  
81.7%
  
81.7%
      
ADR
  
$154.43
  
$168.17
  
$185.10
  
$192.45
  
$192.45
      
RevPAR
  
$123.09
  
$137.49
  
$150.03
  
$157.25
  
$157.25
      
                           
Total Revenue
  
$29,746,071
  
$32,805,967
  
$35,360,956
  
$37,611,062
  
$37,611,335
  
$75,829
  
Total Department Expenses
  
10,504,357
  
11,303,142
  
11,092,462
  
11,273,502
  
11,273,559
  
22,729
  
Gross Operating Profit
  
$19,241,714
  
$21,502,825
  
$24,268,494
  
$26,337,560
  
$26,337,776
  
$53,100
  
                           
Total Undistributed Expenses
  
8,607,022
  
9,221,278
  
9,287,873
  
9,751,122
  
9,751,130
  
19,660
  
Profit Before Fixed Charges
  
$10,634,692
  
$12,281,547
  
$14,980,621
  
$16,568,438
  
$16,586,646
  
$33,441
  
                           
Total Fixed Charges
  
2,023,177
  
2,115,511
  
2,077,620
  
2,323,018
  
3,822,669(2)
  
7,707
  
                           
Net Operating Income
  
$8,611,515
  
$10,166,036
  
$12,903,001
  
$14,263,420
  
$12,763,977
  
$25,733
  
FF&E
  
0
  
0
  
0
  
0
  
1,880,567
  
3,791
  
Net Cash Flow
  
$8,611,515
  
$10,166,036
  
$12,903,001
  
$14,263,420
  
$10,883,410
  
$21,942
  
                           
NOI DSCR(3)
  
1.64x
  
1.94x
  
2.46x
  
2.72x
  
2.43x
      
NCF DSCR(3)
  
1.64x
  
1.94x
  
2.46x
  
2.72x
  
2.07x
      
NOI DY(3)
  
9.6%
  
11.3%
  
14.3%
  
15.8%
  
14.2%
      
NCF DY(3)
  
9.6%
  
11.3%
  
14.3%
  
15.8%
  
12.1%
      
                           
 
(1)
Historical Net Operating Income increased year-over-year due to the strengthening New Orleans economy, which resulted in year-over-year ADR growth.
(2)
Property taxes are scheduled to be reassessed in 2015 and were underwritten based on the appraiser’s estimated reassessed property tax expense of $2,394,000. Property taxes as of the trailing 12-months ending October 31, 2014 were $1,056,999.
(3)
DSCRs and debt yields are based on the JW Marriott New Orleans Loan Combination.

Appraisal.  As of the appraisal valuation date of October 22, 2014, the JW Marriott New Orleans Property had an “as-is” appraised value of $152,200,000.

Environmental Matters.  According to the Phase I environmental site assessment dated October 29, 2014, there was no evidence of any recognized environmental conditions at the JW Marriott New Orleans Property.

Market Overview and Competition. The JW Marriott New Orleans Property is located in the central business district of New Orleans, Louisiana.  The New Orleans metropolitan statistical area (“MSA”) has historically had strong demand from the port related industries, oil and gas and tourism.  Following Hurricane Katrina (“Katrina”), corporate demand in the New Orleans MSA declined, but was temporarily replaced with volume accounts from FEMA, the FBI, and other government relief workers, as well as private relief
 
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
 
 
JW MARRIOTT NEW ORLEANS
  
organizations, construction crews, and the news media. Commercial demand slowly returned in 2006 and 2007, but was further hindered by the financial crisis and recession during 2008 and 2009. In 2010, commercial demand throughout the region showed a significant improvement, which has since been sustained through 2014. The continued recovery has resulted in new business development and employment growth. According to the appraisal, employment within the New Orleans MSA totaled 609,600 jobs in 2005 (before Katrina). At the low point after Katrina, the New Orleans MSA had just 425,800 jobs (70.0% of pre-Katrina levels). By March 2011, employment in New Orleans had grown to 522,100 jobs and by the end of 2013, employment levels reached 545,600.

Most notably, two major medical facilities, the Veterans Affairs Medical Center and the University Medical Center Hospital (“UMC”), are currently under construction within the New Orleans MSA. The Veterans Affairs Medical Center will consist of nearly 1.6 million square feet and will contain 260 in-patient beds; diagnostic and treatment components; and over 400,000 square feet of outpatient rehabilitation facilities. The facility is currently under construction, with an expected opening in late-2016.  UMC is expected to cost approximately $1.2 billion and is currently under construction on a 34.0-acre site between Canal Street and Tulane Avenue in downtown New Orleans.  UMC is scheduled to open in July 2015.  Another driver for economic growth in New Orleans’ central business district is the BioDistrict New Orleans (“BioDistrict”), which is a 1,500 acre, master planned, economic development that was created by the state of Louisiana in 2005 to grow the biosciences sector of the New Orleans economy.  The BioDistrict is focused on the development of a biosciences industry in New Orleans that will provide biosciences research and development; local, regional, and global healthcare delivery; and more jobs for professionals, managers and workers in the bioscience industry.

The JW Marriott New Orleans Property is located on Canal Street, along the northern boundary of the central business district and one block southeast of the French Quarter.  The French Quarter is the oldest and most vibrant section of New Orleans, and includes Bourbon Street where numerous entertainment establishments offer a variety of different nightlife experiences.  Major attractions include Jackson Square with the St. Louis Cathedral, French Market, Café Du Monde, JAX Brewery, Musee Conti Wax Museum, Aquarium of the Americas, and the Riverwalk. The attractions located in the French Quarter are complemented by numerous festivals including Mardi Gras, French Quarter Festival, Voodoo Festival and the Essence Festival.  According to the appraisal, New Orleans had approximately 9.3 million visitors in 2013, who spent approximately $6.5 billion, which is an increase from 9.0 million visitors and reported spending of $6.2 billion in 2012.
 
The following table presents certain information relating to the JW Marriott New Orleans Property’s competitive set:

Subject and Market Historical Occupancy, ADR and RevPAR(1)

 
Competitive Set
  
JW Marriott New Orleans
  
Penetration Factor
Year
Occupancy
  
ADR
  
RevPAR
  
Occupancy
  
ADR
  
RevPAR
  
Occupancy
  
ADR
  
RevPAR
 9/30/2014 TTM
70.8%
  
$180.39
  
$127.73
  
81.0%
  
$192.31
  
$155.82
  
114.4%
  
106.6%
  
122.0%
 9/30/2013 TTM
70.3%
  
$175.51
  
$123.46
  
80.7%
  
$176.16
  
$142.23
  
114.8%
  
100.4%
  
115.2%
 9/30/2012 TTM
74.2%
  
$167.49
  
$124.22
  
82.8%
  
$163.90
  
$135.63
  
111.6%
  
97.9%
  
109.2%
 
(1)
Information obtained from a third party hospitality report dated October 18, 2014.  The competitive set includes the following hotels: Hotel New Orleans Downtown, InterContinental New Orleans, Royal Sonesta New Orleans, Westin New Orleans Canal Place, Crown Plaza New Orleans French Quarter and Loews New Orleans.

The Borrower.  The borrower is Sunstone Canal, LLC a Delaware limited liability company and a single purpose entity with two independent directors.  Legal counsel to the borrower delivered a non-consolidation opinion in connection with the origination of the JW Marriott New Orleans Loan Combination.  Sunstone Hotel Partnership, LLC (“Sunstone”) is the guarantor of certain nonrecourse carveouts under the JW Marriott New Orleans Loan Combination.

The Sponsor.  The sponsor, Sunstone, is a publicly traded lodging real estate investment trust that owns 30 properties totaling approximately 13,744 rooms located in 11 states as of November 3, 2014.  Sunstone’s hotels are primarily in the upper upscale segment and are operated under nationally recognized brands, such as Marriott, Hilton, Hyatt, Fairmont and Sheraton.  In 2009 and 2010, some Sunstone sponsored properties were subject to defaults, deed-in-lieu foreclosure proceedings and mortgage loan discounted pay-offs.  See “Description of the Mortgage Pool – Certain Terms of the Mortgage Loans—Non-Recourse Obligations” and “Description of the Mortgage Pool—Default History, Bankruptcy Issues and Other Proceedings” in the Free Writing Prospectus.

Escrows.  The loan documents provide for upfront escrows in the amount of $2,321,684 for deferred maintenance. The loan documents do not require monthly escrows for taxes provided (i) no event of default has occurred and is continuing; (ii) the property taxes are paid by the property manager in accordance with the management agreement; (iii) the current property manager is in place or a replacement property manager is in-place with a management agreement that is similar to the current management agreement.  The loan documents do not require monthly escrows for insurance provided (a) no event of default has occurred and is continuing; (b) the JW Marriott New Orleans Property is covered by an acceptable blanket insurance policy; and (c) the borrower provides the lender with evidence of renewal of the policies and timely proof of payment of insurance premiums.  The loan documents provide for monthly deposits into an FF&E reserve, controlled by the property manager, equal to the greater of 5.0% of the gross revenue for the most recent calendar month or the amount required under the property management agreement.  The loan documents do not require monthly FF&E escrows deposits into a lender controlled account provided (x) a management agreement is in full force and effect; (y)  the current property manager is in place or a replacement property manager is in-place with a management agreement that is similar to the current management agreement; and (z) the borrower provides the lender evidence of payment of the FF&E monthly deposits prior to a delinquency and proof of sufficient funds as required under the management agreement.
 
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
 
 
JW MARRIOTT NEW ORLEANS
  
Lockbox and Cash Management.  The JW Marriott New Orleans Loan Combination requires a lender-controlled lockbox account, which is already in place, and that the borrower and property manager deposit all cash revenues and all other monies received into the lockbox account within 20 business days.  In the event that the property manager has been removed and a replacement property manager is not in-place under a similar management agreement within 30 days, the borrower will direct all cash revenues and all other monies into the lockbox account. Funds are then swept into a cash management account controlled by the lender and prior to a Cash Trap Event Period (as defined below), all excess cash flow is distributed to the borrower’s operating account.  During a Cash Trap Event Period, all excess cash flow is retained in the lender-controlled cash management account.

A “Cash Trap Event Period” will commence upon the earlier of (i) the occurrence and continuance of an event of default or (ii) the debt service coverage ratio being less than 1.35x at the end of any calendar month.  A Cash Trap Event Period will end, with regard to clause (i), upon the cure of such event of default; and with regard to clause (ii), upon the debt service coverage ratio being equal to or greater than 1.35x for two consecutive calendar quarters.

Property Management.  The JW Marriott New Orleans Property is managed by Marriott Hotel Services, Inc.

Assumption.  The borrower has the two-time right to transfer the JW Marriott New Orleans Property provided that certain conditions are satisfied, including (i) no event of default has occurred and is continuing; (ii) the lender reasonably determines that the proposed transferee and guarantor satisfy the lender’s credit review and underwriting standards, taking into consideration transferee experience, financial strength and general business standing; and (iii) the lender has received confirmation from DBRS, KBRA and Moody’s that such assumption will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the Series 2014-LC18 Certificates and similar confirmations with respect to the ratings of any securities backed by the JW Marriott New Orleans Companion Loan.
 
Partial Release.  Not permitted.
 
Real Estate Substitution.  Not permitted.

Subordinate and Mezzanine Indebtedness.  Not permitted.

Right of First Offer. The property manager, Marriott Hotel Services, Inc., has a right of first offer (“ROFO”) to acquire the JW Marriott New Orleans Property if the borrower decides to market the JW Marriott New Orleans Property for sale to a third party.  The ROFO is not extinguished by a foreclosure or deed-in-lieu thereof; however, the ROFO does not apply to a foreclosure or deed-in-lieu thereof.

Ground Lease.  The JW Marriott New Orleans Property is situated on a 0.9 acre site leased from CSH Partners, LLC.  The ground lease expires in May 2081 and ground rent is calculated as the lesser of (i) 10.0% of the appraised fair market land value as determined each 10-year period or (ii) the greater of (a) 2.5% of room revenue or (b) 1.25% of gross revenue, but in no event will the annual rent ever be less than $425,000.  The ground lease rent was reset in 2014 at $625,000 and will be reset in 2024.

Terrorism Insurance.  The loan documents require that the “all risk” insurance policy required to be maintained by the borrower provide coverage for terrorism in an amount equal to the full replacement cost of the JW Marriott New Orleans Property (provided that the borrower is not required to pay terrorism insurance premiums in excess of 2 times the premium for all risk and business interruption coverage if TRIPRA is no longer in effect), as well as business interruption insurance covering no less than the 24-month period following the occurrence of a casualty event, together with a 12-month extended period of indemnity.

Windstorm Insurance.  The loan documents require windstorm insurance covering the full replacement cost of the JW Marriott New Orleans Property during the loan term.  At the time of closing, the JW Marriott New Orleans Property had insurance coverage for windstorm.
 
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
 
 
NASHVILLE HOTEL PORTFOLIO
 
(GRAFIC)
 
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
 
 
NASHVILLE HOTEL PORTFOLIO
 
(MAP)
 
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.
 
 
43
 
 
No. 3 – Nashville Hotel Portfolio
             
Loan Information
  
Property Information
Mortgage Loan Seller:
Ladder Capital Finance LLC
  
Single Asset/Portfolio:
Portfolio
Credit Assessment
(DBRS/KBRA/Moody’s):
NR/NR/NR
  
Property Type:
Hospitality
Original Principal Balance:
$44,000,000
  
Specific Property Type:
Limited Service
Cut-off Date Principal Balance:
$43,946,597
  
Location:
Nashville, TN
% of Initial Pool Balance:
3.9%
  
Size:
326 rooms
Loan Purpose:
Acquisition
  
Cut-off Date Principal
$134,806
Borrower Names:
1919 West End, LLC; 2330 Elliston, LLC
  
Balance Per Room(1):
Sponsors:
Norman K. Jenkins; Darren C. Linnartz
  
Year Built/Renovated:
Various – See Table
Mortgage Rate:
4.9455%
  
Title Vesting:
Leasehold
Note Date:
October 27, 2014
  
Property Managers:
Chartwell Hospitality, LLC; Capstone Lodging, LLC
Anticipated Repayment Date:
NAP
  
3rd Most Recent Occupancy (As of):
78.1% (12/31/2011)
Maturity Date:
November 6, 2019
  
2nd Most Recent Occupancy (As of):
81.8% (12/31/2012)
IO Period:
None
  
Most Recent Occupancy (As of):
84.7% (12/31/2013)
Loan Term (Original):
60 months
  
Current Occupancy (As of):
86.6% (9/30/2014)
Seasoning:
1 month
      
Amortization Term (Original):
360 months
  
Underwriting and Financial Information:
  
Loan Amortization Type:
Amortizing Balloon
  
3rd Most Recent NOI (As of)(3):
$6,210,438 (12/31/2012)
Interest Accrual Method:
Actual/360
  
2nd Most Recent NOI (As of)(3):
$7,761,774 (12/31/2013)
Call Protection:
L(25),D(32),O(3)
  
Most Recent NOI (As of)(3):
$8,658,679 (TTM 9/30/2014)
Lockbox Type:
Hard/Springing Cash Management
      
Additional Debt(1):
Yes
  
U/W Revenues:
$17,343,364
Additional Debt Type(1):
Mezzanine
  
U/W Expenses:
$10,432,012
     
U/W NOI(3):
$6,911,352
Escrows and Reserves(2):
    
U/W NCF:
$6,217,617
     
U/W NOI DSCR(1):
2.45x
Type:
 Initial
Monthly
Cap (If Any)
  
U/W NCF DSCR(1):
2.21x
Taxes
$354,574
35,457
NAP
  
U/W NOI Debt Yield(1):
15.7%
Insurance
$74,733
$10,676
NAP
  
U/W NCF Debt Yield(1):
14.1%
FF&E Reserve
$0
$57,811
NAP
  
As-Is Appraised Value:
$64,700,000
PIP Reserve
$800,000
$0
NAP
  
As-Is Appraisal Valuation Date:
October 1, 2014
Seasonality
$160,000
Springing
$160,000
  
Cut-off Date LTV Ratio(1):
67.9%
Ground Rent
$72,917
Springing
NAP
  
LTV Ratio at Maturity or ARD(1):
62.7%
             
 
(1)
See “Subordinate and Mezzanine Indebtedness” section. The equity interests in the borrowers under the Nashville Hotel Portfolio Mortgage Loan have been pledged to secure mezzanine indebtedness with a balance as of the Cut-off Date of $4,000,000. All LTV, DSCR, Debt Yield and Cut-off Date Principal Balance per room numbers shown in the chart above are based solely on the $44,000,000 mortgage loan financing. As of the Cut-off Date, the combined U/W NCF DSCR is 1.90x (based on an 11.000% interest rate on the mezzanine indebtedness), the combined LTV ratio is 74.1% and the combined U/W NOI Debt Yield is 14.4%.
(2)
See “Escrows” section.
(3)
See “Cash Flow Analysis” section.
 
The Mortgage Loan.  The mortgage loan (the “Nashville Hotel Portfolio Mortgage Loan”) is evidenced by a single promissory note that is secured by a first mortgage encumbering the leasehold interests in a portfolio comprised of a Hampton Inn and a Hampton Inn & Suites located in Nashville, Tennessee (the “Nashville Hotel Portfolio Properties”).  The Nashville Hotel Portfolio Mortgage Loan was originated on October 27, 2014 by Ladder Capital Finance LLC. The Nashville Hotel Portfolio Mortgage Loan had an original principal balance of $44,000,000, has an outstanding principal balance as of the Cut-off Date of $43,946,597 and accrues interest at an interest rate of 4.9455% per annum. The Nashville Hotel Portfolio Mortgage Loan had an initial term of 60 months, has a remaining term of 59 months as of the Cut-off Date and requires payments of principal and interest based on a 30-year amortization schedule.  The Nashville Hotel Portfolio Mortgage Loan matures on November 6, 2019.
 
Following the lockout period, the Nashville Hotel Portfolio Borrower (as defined below) has the right to defease the Nashville Hotel Portfolio Mortgage Loan in whole, but not in part, on any date before September 6, 2019. In addition, the Nashville Hotel Portfolio Mortgage Loan is prepayable without penalty on or after September 6, 2019.
 
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.
 
 
44
 
 
NASHVILLE HOTEL PORTFOLIO
  
 
Sources and Uses

Sources
        
Uses
      
Original loan amount
$44,000,000
71.6
 %   
Purchase price(1)
$58,800,000
95.7
 % 
Mezzanine loan
4,000,000
6.5
    
Reserves
1,462,224
2.4
  
Sponsor’s new cash contribution
13,451,046
21.9
    
Closing costs
1,188,822
1.9
  
Total Sources
$61,451,046
100.0
 %   
Total Uses
$61,451,046
100.0
  %
 
(1)
The fee interest in the ground underlying the Nashville Hotel Portfolio was purchased in a related transaction by an affiliate of the borrowers for an allocated purchase price of $18,000,000.  The underlying fee interest is not collateral for the Nashville Hotel Portfolio Mortgage Loan.
 
The Properties.  The Nashville Hotel Portfolio Properties are comprised of the leasehold interests in two limited service hotels located in Nashville, Tennessee. The Nashville Hotel Portfolio Properties comprise a total of 326 rooms.

The following table presents certain information relating to the Nashville Hotel Portfolio Properties:
 
Property Name
  
Allocated Cut-off Date Principal Balance
  
% of Portfolio
Cut-off Date
Principal Balance
  
Rooms
  
Allocated
Cut-off
Date
Balance
Per Room
  
Year Built/
Renovated
  
Appraised Value
  
Hampton Inn Vanderbilt
  
$22,472,692
  
51.1%
  
169
  
$132,975
  
1986/2010
  
$33,600,000
  
Hampton Inn & Suites Vanderbilt Elliston Place
  
$21,473,905
  
48.9%
  
157
  
$136,776
  
1996/2011
  
$31,100,000
  
Total/Weighted Average
  
$43,946,597
  
100.0%
  
326
  
$134,806
      
 $64,700,000
  
 
Hampton Inn Vanderbilt (51.1% of Portfolio Cut-off Date Principal Balance)

The Hampton Inn Vanderbilt property is a 169-room, limited service hotel located in Nashville, Tennessee. The six-story hotel was built in 1986 and renovated in 2010. The property sits on a 1.8-acre site situated on West End Avenue in the West End neighborhood of Nashville.  Amenities and services include a fitness center, 24-hour sundry shop, business center, guest laundry rooms and a complimentary continental breakfast buffet. The Hampton Inn Vanderbilt property is located 0.2 miles from Vanderbilt University and 1.2 miles from downtown Nashville. The Hampton Inn Vanderbilt property contains 85 king bed guestrooms, 75 double bed guestrooms, and nine single queen bed guestrooms. The Hampton Inn Vanderbilt property is currently undergoing a property improvement plan (“PIP”) estimated at $631,664 ($3,738 per room) and the franchise agreement for the Hampton Inn Vanderbilt property expires on October 31, 2029.

Hampton Inn & Suites Vanderbilt Elliston Place (48.9% of Portfolio Cut-off Date Principal Balance)

The Hampton Inn & Suites Vanderbilt Elliston Place property is a 157-room, limited service hotel located in Nashville, Tennessee. The seven-story hotel was developed in 1996, underwent a full renovation in 2010 and 2011 and is currently undergoing additional renovations. The 2010-2011 renovation totaled approximately $4.1 million or $26,000 per key. The Hampton Inn & Suites Vanderbilt Elliston Place property sits on a 2.4-acre site and is located in the West End neighborhood of Nashville. Amenities and services include a fitness center, 24-hour sundry shop, business center, guest laundry rooms and a complimentary continental breakfast buffet. The Hampton Inn & Suites Vanderbilt Elliston Place property is 0.2 miles from Vanderbilt University and 1.8 miles from downtown Nashville. The Hampton Inn & Suites Vanderbilt Elliston Place property contains 29 single king bed suites, 58 single king bed guestrooms, six double queen bed suites and 64 double queen bed guestrooms. The Hampton Inn & Suites Vanderbilt Elliston Place property is currently undergoing a PIP estimated at $285,530 ($1,819 per room) and the franchise agreement for the Hampton Inn & Suites Vanderbilt Elliston Place property expires on October 31, 2029.
 
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.
 
 
45
 
 
NASHVILLE HOTEL PORTFOLIO
  
 
Operating History and Underwritten Net Cash Flow.  The following table presents certain information relating to the historical operating performance and the Underwritten Net Cash Flow at the Nashville Hotel Portfolio Properties:
 
Cash Flow Analysis
 
 
 
 
2012
  
2013
  
 
TTM
9/30/2014
  
U/W
  
U/W $ per Room
  
Occupancy
81.8%
  
84.7%
  
86.6%
  
86.6%
      
ADR
$135.46
  
$155.23
  
$167.12
  
$167.12
      
RevPAR
$110.77
  
$131.50
  
$144.71
  
$144.71
      
                     
Total Revenue
$13,309,673
  
$15,755,412
  
$17,343,364
  
$17,343,364
  
$53,201
  
Total Department Expenses
2,368,013
  
2,641,416
  
2,791,397
  
2,791,397
  
8,563
  
Gross Operating Profit
$10,941,660
  
$13,113,996
  
$14,551,967
  
$14,551,967
  
$44,638
  
                     
  Total Undistributed Expenses
4,254,481
  
4,776,864
  
5,263,821
  
5,307,169
  
16,280
  
    Profit Before Fixed Charges
$6,687,179
  
$8,337,132
  
$9,288,146
  
$9,244,798
  
$28,358
  
                     
Total Fixed Charges
476,741(1)
  
575,358(1)
  
629,467(1)
  
2,333,446
  
7,158
  
Net Operating Income
$6,210,438
  
$7,761,774
  
$8,658,679
  
$6,911,352
  
$21,200
  
                     
FF&E
532,387
  
630,216
  
693,735
  
693,735
  
2,128
  
Net Cash Flow
$5,678,051
  
$7,131,558
  
$7,964,944
  
$6,217,617
  
$19,072
  
                     
NOI DSCR
2.20x
  
2.76x
  
3.07x
  
2.45x
      
NCF DSCR
2.02x
  
2.53x
  
2.83x
  
2.21x
      
NOI DY
14.1%
  
17.7%
  
19.7%
  
15.7%
      
NCF DY
12.9%
  
16.2%
  
18.1%
  
14.1%
      
                     
 
 
(1)
As part of the acquisition of the Nashville Hotel Portfolio Properties an affiliate of the borrowers established new 99-year ground leases. As such, the historical Total Fixed Charges did not include a ground rent expense. The underwritten ground rent is based on the rent during the third year of the loan, which is higher than the average annual ground rent during the term of the Nashville Hotel Portfolio Mortgage Loan.
 
Appraisal.  As of the appraisal valuation date of October 1, 2014, the Nashville Hotel Portfolio Properties had an “as-is” appraised value of $64,700,000.

Environmental Matters.  According to the Phase I environmental site assessments dated October 10, 2014, there was no evidence of any recognized environmental conditions at the Nashville Hotel Portfolio Properties.

Market Overview and Competition.  The Nashville Hotel Portfolio Properties are located in Nashville, Tennessee approximately 0.2 miles from Vanderbilt University and between 1.2 and 1.8 miles from downtown Nashville and a large contingent of healthcare-related employment. Vanderbilt University covers 330.0 acres and has a student enrollment of approximately 12,800. The Nashville Hotel Portfolio Properties are also located near Interstates 40, 24, 440 and 65 as well as the Music City Convention Center, the Tennessee Titans NFL football stadium, the Country Music Hall of Fame and the Centennial Sportsplex for youth sports.

The following table presents certain information relating to the Hampton Inn Vanderbilt competitive set:
 
Subject and Market Historical Occupancy, ADR and RevPAR(1)
 
 
Competitive Set
  
Hampton Inn Vanderbilt
  
Penetration Factor
  
Year
Occupancy
ADR
  
RevPAR
  
Occupancy
  
ADR
  
RevPAR
  
Occupancy
  
ADR
  
RevPAR
  
8/31/2014 TTM
83.8%
$164.03
  
$137.40
  
87.2%
  
$165.02
  
$143.96
  
104.1%
  
100.6%
  
104.8%
  
8/31/2013 TTM
79.4%
$145.99
  
$115.88
  
82.8%
  
$148.29
  
$122.80
  
104.3%
  
101.6%
  
106.0%
  
8/31/2012 TTM
78.6%
$130.41
  
$102.56
  
80.7%
  
$129.57
  
$104.52
  
102.6%
  
99.4%
  
101.9%
  
 
(1)
Information obtained from a third party hospitality report dated September 18, 2014. According to the third party research report, the competitive set includes the following hotels: Holiday Inn Nashville Vanderbilt Downtown, Holiday Inn Express Nashville Downtown, Courtyard Nashville Vanderbilt West End, Embassy Suites Nashville at Vanderbilt University, aloft Hotel Nashville West End and the Hilton Garden Inn Nashville Vanderbilt.
 
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.
 
 
46
 
 
NASHVILLE HOTEL PORTFOLIO
  
 
The following table presents certain information relating to the Hampton Inn & Suites Vanderbilt Elliston Place competitive set:

Subject and Market Historical Occupancy, ADR and RevPAR (1)
 
Competitive Set
  
Hampton Inn & Suites Vanderbilt
Elliston Place
  
Penetration Factor
  
Year
Occupancy
ADR
  
RevPAR
  
Occupancy
  
ADR
  
RevPAR
  
Occupancy
  
ADR
  
RevPAR
  
8/31/2014 TTM
83.7%
$164.10
  
$137.29
  
86.1%
  
$166.38
  
$143.29
  
102.9%
  
101.4%
  
104.4%
  
8/31/2013 TTM
79.4%
$145.99
  
$115.88
  
84.1%
  
$149.84
  
$126.07
  
106.0%
  
102.6%
  
108.8%
  
8/31/2012 TTM
78.6%
$130.41
  
$102.56
  
78.4%
  
$134.32
  
$105.33
  
99.7%
  
103.0%
  
102.7%
  
 
(1)
Information obtained from a third party hospitality report dated September 18, 2014. According to the third party research report, the competitive set includes the following hotels: Holiday Inn Nashville Vanderbilt Downtown, Holiday Inn Express Nashville Downtown, Courtyard Nashville Vanderbilt West End, Embassy Suites Nashville at Vanderbilt University, aloft Hotel Nashville West End, the Hilton Garden Inn Nashville Vanderbilt and the Homewood Suites Nashville Vanderbilt.

The Borrowers.  The borrowing entities are comprised of 1919 West End, LLC and 2330 Elliston, LLC (collectively, the “Nashville Hotel Portfolio Borrower”). Each of the entities comprising the Nashville Hotel Portfolio Borrower is a single purpose entity and has a single member and two independent directors. Legal counsel to the Nashville Hotel Portfolio Borrower delivered a non-consolidation opinion in connection with the origination of the Nashville Hotel Portfolio Mortgage Loan. Norman K. Jenkins and Darren C. Linnartz are the guarantors of certain nonrecourse carveouts under the Nashville Hotel Portfolio Mortgage Loan.

The Sponsors.  The sponsors are Norman K. Jenkins and Darren C. Linnartz.  The sponsors are key principals of Capstone Development, LLC (“Capstone”) which acquires, develops and asset manages lodging and lodging-anchored mixed use projects in the United States. Capstone’s portfolio includes nine hotels totaling 2,161 rooms.

Escrows. The loan documents provide for upfront escrows at closing in the amount of $354,574 for real estate taxes, $74,733 for insurance, $800,000 in a PIP reserve, $72,917 for ground rent and $160,000 in a seasonality reserve, which is available to cover debt service shortfalls for both the Nashville Hotel Portfolio Mortgage Loan and the Nashville Hotel Portfolio Mezzanine Loan (See “Subordinate and Mezzanine Indebtedness” section). The loan documents require monthly deposits of $35,457 for real estate taxes, $10,676 for insurance and one-twelfth of 4.0% of gross revenues for FF&E. If the seasonality reserve is ever drawn upon the borrower will be required to replenish the reserve until it reaches the cap of $160,000. Beginning in year three, the borrower will be required to deposit additional funds in the ground rent reserve to maintain a balance of one-twelfth of the annual ground rent during the Nashville Hotel Portfolio Mortgage Loan term.

Lockbox and Cash Management.  The Nashville Hotel Portfolio Mortgage Loan requires a lender-controlled lockbox account, which is already in place. Prior to the occurrence of a Cash Trap Event Period (as defined below), all funds on deposit in the lockbox account are swept into the borrowers’ operating account on a daily basis. During a Cash Trap Event Period, all funds on deposit in the lockbox account are swept to a lender-controlled cash management account on a daily basis.

A “Cash Trap Event Period” will commence: (i) upon the occurrence and continuance of an event of default; (ii) if the debt service coverage ratio (including debt service on the Nashville Hotel Portfolio Mezzanine Loan) is less than 1.25x; or (iii) if the franchisor delivers notice of any breach or default by the Nashville Hotel Portfolio Borrower under one of the franchise agreements that, with the passage of time or delivery of notice, could result in the termination of such agreement. A Cash Trap Event Period will end with respect to clause (i), when such event of default has been cured, with respect to clause (ii), upon the date that the debt service coverage ratio is greater than or equal to 1.25x for two consecutive quarters, and with respect to clause (iii), upon the borrower delivering to lender evidence that the franchise agreement is in full force and effect or the borrower replacing the franchisor in accordance with the loan documents.

Property Management.  The Nashville Hotel Portfolio Properties are managed by Chartwell Hospitality, LLC and Capstone Lodging, LLC. Chartwell Hospitality, LLC was founded in 2003 and is based in Nashville, Tennessee. Chartwell Hospitality manages over 24 hotels.

Assumption.  The borrower has the one-time right to transfer the Nashville Hotel Portfolio Properties, with the consent of the lender, subject to customary conditions set forth in the loan documents, including but not limited to: (i) no event of default has occurred and is continuing; (ii) evidence satisfactory to the lender has been provided showing that the transferee borrower complies with the special purpose entity provisions of the loan documents; and (iii) the lender receives written confirmation from DBRS, KBRA and Moody’s that the assumption will not result in a downgrade, qualification or withdrawal of the then current ratings assigned to any class of Series 2014-LC18 certificates.

Partial Release.  Not permitted.

Real Estate Substitution.  Not permitted.

Subordinate and Mezzanine Indebtedness.  Ladder Capital Finance LLC (the “Nashville Hotel Portfolio Mezzanine Lender”) has made a $4,000,000 mezzanine loan (the “Nashville Hotel Portfolio Mezzanine Loan”) to 1919 West End Holdings, LLC and 2330 Elliston Holdings, LLC, collectively, the limited liability companies that own 100.0% of the borrowers under the Nashville Hotel Portfolio Mortgage Loan. The Nashville Hotel Portfolio Mezzanine Loan amortizes on a 30-year schedule and accrues interest at an interest rate of 11.000% per annum. The Nashville Hotel Portfolio Mezzanine Loan matures November 6, 2019. The rights of the Nashville Hotel Portfolio Mezzanine Lender are further described under “Description of the Mortgage Pool— Subordinate and/or Other Financing” in the Free Writing 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.
 
 
47
 
 
NASHVILLE HOTEL PORTFOLIO
  
  
Ground Lease.  The Nashville Hotel Portfolio Mortgage Loan is secured by a first mortgage encumbering the borrower’s leasehold interests in the Nashville Hotel Portfolio Properties. The Hampton Inn Vanderbilt property ground lease expires on October 27, 2113. The initial ground rent is $453,425 for the first two years and increases to $906,850 in the third year. Thereafter the ground rent increases by 3.0% per year until the 46th year.  Thereafter the ground rent increases by the greater of 1.5% or 75% of the CPI per year. The Hampton Inn & Suites Nashville Vanderbilt Elliston Place Property ground lease expires on October 27, 2113. The initial ground rent is $421,575 for the first two years and increases to $843,150 in the third year. Thereafter the ground rent increases by 3.0% per year until the 46th year.  Thereafter the ground rent increases by the greater of 1.5% or 75% of the CPI per year.

Ground rent payments were underwritten at the year three payment of $1,750,000 which is above the average ground rent during the Nashville Hotel Portfolio Mortgage Loan term of $1,431,815. See “Description of the Mortgage Pool—Certain Terms of the Mortgage Loans—Encumbered Interests” in the Free Writing Prospectus.

Terrorism Insurance.  The loan documents require that the “all risk” insurance policy maintained by the Nashville Hotel Portfolio Borrower provide coverage for damage from terrorism in an amount equal to the full replacement cost of the Nashville Hotel Portfolio Properties, as well as business interruption insurance covering no less than the 18-month period following the occurrence of a casualty event together with a three-month extended period of indemnity.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
48
 
 
(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.
 
 
49
 
 
2900 FAIRVIEW PARK DRIVE
 
(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.
 
 
50
 
 
2900 FAIRVIEW PARK DRIVE
 
(MAP)
 
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.
 
 
51
 
 
No. 4 – 2900 Fairview Park Drive
 
Loan Information
  
Property Information
Mortgage Loan Seller:
The Royal Bank of Scotland plc
  
Single Asset/Portfolio:
Single Asset
Credit Assessment
(DBRS/KBRA/Moody’s):
NR/NR/NR
  
Property Type:
Office
Original Principal Balance:
$39,000,000
  
Specific Property Type:
Suburban
Cut-off Date Principal Balance:
$39,000,000
  
Location:
Falls Church, VA
% of Initial Pool Balance:
3.4%
  
Size:
147,000 SF
Loan Purpose:
Refinance
  
Cut-off Date Principal
Balance Per SF:
$265.31
Borrower Name:
2900 Fairview Park Drive, L.L.C.
  
Year Built/Renovated:
2009/NAP
Sponsor:
Richard L. Adams, Jr.
  
Title Vesting:
Fee
Mortgage Rate:
4.190%
  
Property Manager:
Self-managed
Note Date:
December 3, 2014
  
3rd Most Recent Occupancy (As of):
100.0% (12/31/2011)
Anticipated Repayment Date:
NAP
  
2nd Most Recent Occupancy (As of):
100.0% (12/31/2012)
Maturity Date:
January 1, 2025
  
Most Recent Occupancy (As of):
100.0% (12/31/2013)
IO Period:
61 months
  
Current Occupancy (As of):
100.0% (12/1/2014)
Loan Term (Original):
121 months
    
Seasoning:
0 months
  
Underwriting and Financial Information:
Amortization Term (Original):
360 months
      
Loan Amortization Type:
Interest-only, Amortizing Balloon
  
3rd Most Recent NOI (As of):
$3,869,028 (12/31/2012)
Interest Accrual Method:
Actual/360
  
2nd Most Recent NOI (As of):
$4,001,809 (12/31/2013)
Call Protection:
L(24),D(93),O(4)
  
Most Recent NOI (As of):
$4,118,659 (TTM 9/30/2014)
Lockbox Type:
Hard/Springing Cash Management
    
Additional Debt:
None
      
Additional Debt Type:
NAP
  
U/W Revenues:
$4,459,856
     
U/W Expenses:
$727,470
     
U/W NOI:
$3,732,386
     
U/W NCF:
$3,548,636
     
U/W NOI DSCR:
1.63x
Escrows and Reserves(1):
    
U/W NCF DSCR:
1.55x
         
U/W NOI Debt Yield:
9.6%
Type:
Initial
Monthly
Cap (If Any)
  
U/W NCF Debt Yield:
9.1%
Taxes
$80,083
$40,041
NAP
  
As-Is Appraised Value:
$62,600,000
Insurance
$21,077
$3,023
NAP
  
As-Is Appraisal Valuation Date:
November 7, 2014
Replacement Reserves
$0
$3,063
$330,000
  
Cut-off Date LTV Ratio:
62.3%
TI/LC Reserve
$0
Springing
$2,950,000
  
LTV Ratio at Maturity or ARD:
56.7%
             
 
(1)  
See “Escrows” section.
 
The Mortgage Loan.  The mortgage loan (the “2900 Fairview Park Drive Mortgage Loan”) is evidenced by a single promissory note that is secured by a first mortgage encumbering a four-story office building located in Falls Church, Virginia (the “2900 Fairview Park Drive Property”).  The 2900 Fairview Park Drive Mortgage Loan was originated on December 3, 2014 by The Royal Bank of Scotland plc.  The 2900 Fairview Park Drive Mortgage Loan had an original principal balance of $39,000,000, has an outstanding principal balance as of the Cut-off Date of $39,000,000 and accrues interest at an interest rate of 4.190% per annum.  The 2900 Fairview Park Drive Mortgage Loan had an initial term of 121 months, has a remaining term of 121 months as of the Cut-off Date and requires payments of interest-only for the first 61 payments following origination and, thereafter, requires payments of principal and interest based on a 30-year amortization schedule. The 2900 Fairview Park Drive Mortgage Loan matures on January 1, 2025.

Following the lockout period, the borrower has the right to defease the 2900 Fairview Park Drive Mortgage Loan in whole, but not in part, on any date before October 1, 2024.  In addition, the 2900 Fairview Park Drive Mortgage Loan is prepayable without penalty on or after October 1, 2024.
 
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.
 
 
52
 
 
2900 FAIRVIEW PARK DRIVE
 
Sources and Uses
 
Sources
        
Uses
      
Original loan amount
$39,000,000
  
100.0%
  
Loan payoff
$37,360,550
  
95.8%
         
Reserves
101,160
  
0.3
         
Closing costs
435,955
  
1.1
         
Return of equity
1,102,335
  
2.8
Total Sources
$39,000,000
100.0%
  
Total Uses
$39,000,000
  
100.0%
 
The Property.  The 2900 Fairview Park Drive Property is a four-story, class A, LEED Gold, office building situated on approximately 16.1 acres located in Falls Church, Virginia, approximately 10 miles west of Washington, D.C. and approximately 14 miles east of the Dulles International Airport.  The 2900 Fairview Park Drive Property was constructed in 2009, contains 147,000 rentable square feet and is located within the 220.0-acre Fairview Park master planned office and hotel campus in Northern Virginia. Fairview Park is located directly off of Capital Beltway and features the 17-acre Fairview Lake, 2.5 miles of wooded jogging trails, and a 450-room Marriott Hotel and Conference Center. Amenities at the 2900 Fairview Park Drive Property include a deli, fitness center, barbershop, clothing valet, and a theatre/recreation room.  The 2900 Fairview Park Drive Property also features a one-story, 30-space parking garage and 393 surface parking spaces, resulting in a parking ratio of 2.9 spaces per 1,000 square feet of rentable area.

As of December 1, 2014, the 2900 Fairview Park Drive Property was 100.0% occupied by HITT Contracting, Inc. (“HITT Contracting”) and serves as the company’s corporate headquarters. Founded in 1937, HITT Contracting is a real estate construction and development firm with offices in Washington, DC, Atlanta, Georgia, Baltimore, Maryland, Charleston, South Carolina, Denver, Colorado, and South Florida. According to an engineering news publication, HITT Contracting was ranked among the 100 largest general contractors nationwide by revenue.  HITT Contracting has occupied the 2900 Fairview Park Drive Property since it was constructed in 2009 and has invested approximately $12.5 million ($85.00 per square foot) of its own capital to build out its space.

The following table presents certain information relating to the tenancy at the 2900 Fairview Park Drive Property:

Major Tenant

Tenant Name
Credit Rating
(Fitch/Moody’s/
S&P)
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
           
HITT Contracting(1)
NR/NR/NR
147,000
100.0%
$28.84
$4,239,812
100.0%
9/30/2024(2)
Total Major Tenant
147,000
100.0%
$28.84
$4,239,812
100.0%
  
               
  (1)  
HITT has subleased 18,051 square feet of its total 147,000 square feet to KEYW Corp. for $33.19 per square foot, expiring on September 16, 2018. HITT has also subleased 10,000 square feet of its total 147,000 square feet to Chemtrec for $34.31 per square foot, expiring on September 13, 2024.
  (2)  
HITT Contracting has two, five-year lease renewal options.
 
The following table presents certain information relating to the lease rollover schedule at the 2900 Fairview Park Drive Property:
 
Lease Expiration Schedule(1)

Year Ending
December 31,
No. of
Leases
Expiring
  
Expiring
NRSF
  
% of Total
NRSF
  
Cumulative
Expiring
NRSF
  
Cumulative
% of Total
NRSF
  
Annual U/W
Base Rent
  
Annual
U/W Base
Rent PSF
MTM
0
  
0
  
0.0%
  
0
    
0.0%
  
$0
    
$0.00
  
2014
0
  
0
  
0.0%
  
0
    
0.0%
  
$0
    
$0.00
  
2015
0
  
0
  
0.0%
  
0
    
0.0%
  
$0
    
$0.00
  
2016
0
  
0
  
0.0%
  
0
    
0.0%
  
$0
    
$0.00
  
2017
0
  
0
  
0.0%
  
0
    
0.0%
  
$0
    
$0.00
  
2018
0
  
0
  
0.0%
  
0
    
0.0%
  
$0
    
$0.00
  
2019
0
  
0
  
0.0%
  
0
    
0.0%
  
$0
    
$0.00
  
2020
0
  
0
  
0.0%
  
0
    
0.0%
  
$0
    
$0.00
  
2021
0
  
0
  
0.0%
  
0
    
0.0%
  
$0
    
$0.00
  
2022
0
  
0
  
0.0%
  
0
    
0.0%
  
$0
    
$0.00
  
2023
0
  
0
  
0.0%
  
0
    
0.0%
  
$0
    
$0.00
  
2024
1
  
147,000
  
100.0%
  
147,000
    
100.0%
  
$4,239,812
    
$28.84
  
Thereafter
0
  
0
  
0.0%
  
147,000
    
100.0%
  
$0
    
$0.00
  
Vacant
0
  
0
  
0.0%
  
147,000
    
100.0%
  
$0
    
$0.00
  
Total/Weighted Average
1
  
147,000
  
100.0%
            
$4,239,812
    
$28.84
  
 
(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.
 
 
53
 
 
2900 FAIRVIEW PARK DRIVE
 
The following table presents historical occupancy percentages at the 2900 Fairview Park Drive Property:
 
Historical Occupancy

12/31/2011(1)
  
12/31/2012(1)
  
12/31/2013(1)
  
9/30/2014(2)
             
100.0%
  
100.0%
  
100.0%
  
100.0%
             
(1)     Information obtained from the borrower.
(2)     Information obtained from the underwritten rent roll.
 
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 2900 Fairview Park Drive Property:
 
Cash Flow Analysis
 
   
2012
  
2013
  
TTM 9/30/2014
  
U/W
  
U/W $ per SF
  
Base Rent
  
$3,877,202
  
$4,007,116
  
$4,106,862
  
$4,239,812
  
$28.84
  
   Grossed Up Vacant Space
   0   0   0   0   0  
Total Reimbursables
  
636,419
  
673,838
  
684,616
  
715,584
  
4.87
  
Other Income
  
0
  
0
  
0
  
0
  
0.00
  
Less Vacancy & Free Rent
  
0
  
0
  
0
  
(495,540)(1)
  
(3.37)
  
Effective Gross Income
  
$4,513,621
  
$4,680,954
  
$4,791,478
  
$4,459,856
  
$30.34
  
                       
Total Operating Expenses
  
$644,593
  
$679,145
  
$672,819
  
$727,470
  
$4.95
  
                       
 Net Operating Income
  
$3,869,028
  
$4,001,809
  
$4,118,659
  
$3,732,386
  
$25.39
  
  TI/LC
  
0
  
0
  
0
  
147,000
  
1.00
  
  Capital Expenditures
  
0
  
0
  
0
  
36,750
  
0.25
  
 Net Cash Flow
  
$3,869,028
  
$4,001,809
  
$4,118,659
  
$3,548,636
  
$24.14
  
                       
NOI DSCR
  
1.69x
  
1.75x
  
1.80x
  
1.63x
      
NCF DSCR
  
1.69x
  
1.75x
  
1.80x
  
1.55x
      
NOI DY
  
9.9%
  
10.3%
  
10.6%
  
9.6%
      
NCF DY
  
9.9%
  
10.3%
  
10.6%
  
9.1%
      
 
(1)  
  The underwritten economic vacancy is 10.0%.  The 2900 Fairview Park Drive Property was 100.0% physically occupied as of December 1, 2014.
 
Appraisal.  As of the appraisal valuation date of November 7, 2014, the 2900 Fairview Park Drive Property had an “as-is” appraised value of $62,600,000.

Environmental Matters.  According to the Phase I environmental report dated November 10, 2014, there was no evidence of any recognized environmental conditions at the 2900 Fairview Park Drive Property.

Market Overview and Competition. The 2900 Fairview Park Drive Property is located in Falls Church, Virginia, which is approximately 10.0 miles west of downtown Washington, D.C. and approximately 14.0 miles east of Dulles International Airport. Primary access to the 2900 Fairview Park Drive Property is provided by the Capital Beltway (Interstate-495) which encircles the District of Columbia and provides direct access to the majority of the region’s highways and main arteries including Interstates 66, 95 and 270.  The 2900 Fairview Park Drive Property is located within the 220.0-acre Fairview Park master planned office and hotel campus and has midpoint access to much of Northern Virginia. Prominent employers within Fairview Park include Verizon, Computer Sciences Corporation, Mitretek, Booz Allen Hamilton, General Dynamics, The Lewin Group, Value Options, and the law firm of Reed, Smith, Shaw & McClay. Fairview Park also features the 17-acre Fairview Lake, 2.5 miles of wooded jogging trails, and a 450-room Marriott Hotel and Conference Center.

According to the appraisal, the 2900 Fairview Park Drive Property is located in the Washington D.C. Metro market, within the Merrifield/Route 50/Falls Church submarket, which comprises approximately 6.8 million square feet of office space as of the third quarter of 2014. The submarket occupancy rate was 82.7% and the class A current average asking rent within the submarket was $31.38 per square foot on a gross basis.

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.
 
 
54
 
 
2900 FAIRVIEW PARK DRIVE
 
The following table presents certain information relating to comparable office properties for the 2900 Fairview Park Drive Property:

Competitive Set(1)

 
2900 Fairview
Park Drive
(Subject)
3120 Fairview
Park Drive
Metro Place 4
One Mosaic
Metro Place II
2941 Fairview
Park Drive
 Location
Falls Church, VA
Falls Church, VA
Fairfax, VA
Fairfax, VA
Vienna, VA
Fairfax, VA
 Distance from Subject
--
 1.0 miles
 1.7 miles
1.2 miles
1.6 miles
0.4 miles
 Property Type
Office
Office
Office
Office
Office
Office
 Year Built/Renovated
2009/NAP
2008/NAV
2001/NAV
2012/NAV
1999/NAV
2008/NAV
 Stories
4
8
7
4
10
15
 Total GLA
147,000 SF
183,353 SF
161,544 SF
97,191 SF
240,357 SF
368,498 SF
 Total Occupancy
100%
NAV
NAV
NAV
NAV
NAV
 
  (1)     Information obtained from the appraisal.
 
The Borrower.  The borrower is 2900 Fairview Park Drive, L.L.C., a Delaware limited liability company which is a single purpose entity with two independent directors. Legal counsel to the borrower delivered a non-consolidation opinion in connection with the origination of the 2900 Fairview Park Drive Mortgage Loan.  Richard L. Adams, Jr. is the guarantor of certain nonrecourse carveouts under the 2900 Fairview Park Drive Mortgage Loan.

The Sponsor.  The loan sponsor is Richard L. Adams, Jr., who is the indirect majority owner and controlling party of the borrower.  Mr. Adams is the founder of UUNET, which in the mid and late 1990s was the world’s largest internet service provider.  Mr. Adams purchased 111.0 acres at Fairview Park in 1997.

Escrows.  The loan documents provide for upfront reserves in the amount of $80,083 for real estate taxes and $21,077 for insurance.  The loan documents also provide for ongoing monthly escrows in the amount of $40,041 for real estate taxes, $3,023 for insurance and $3,063 for replacement reserves (subject to a cap of $330,000). Initially no ongoing monthly escrows for tenant improvement and leasing commissions (“TI/LCs”) are required and commencing on February 1, 2019, no ongoing monthly escrows for TI/LCs will be required as long as no Cash Management Period or Lease Sweep Period has occurred and is continuing. In the event that a Cash Management Period or Lease Sweep Period has occurred, the borrower is required to make monthly deposits for TI/LCs of (i) $24,500 between February 1, 2019 and January 1, 2023; and (ii) $12,250 thereafter (subject to a cap of $2,950,000).

Additionally, during a Lease Sweep Period (as defined below), all excess cash flow will be deposited into the TI/LC reserve until such time that an amount equal to the Lease Sweep Cap (as defined below) has been deposited into the TI/LC reserve.

“Lease Sweep Cap” is defined as (i) if the HITT Contracting lease triggered a Lease Sweep Period, $2,950,000, and (ii) with respect to any other Major Lease (as defined below) that has triggered a Lease Sweep Period, an amount equal to the lesser of (x) $2,950,000 or (y) $30.00, multiplied by the rentable square footage demised under such Major Lease and in either case, such amount will include sums disbursed by the lender to the borrower in connection with reletting the applicable premises.

Lockbox and Cash Management.  The 2900 Fairview Park Drive Mortgage Loan requires a lender-controlled lockbox account which is already in place, and that the borrower direct the tenant to pay their rent directly to such lockbox account.  The loan documents also require that all cash revenues and all other monies received by the borrower or the property manager be deposited into the lockbox account within one business day after receipt.  Prior to the occurrence of a Cash Management Period or Lease Sweep Period, all funds on deposit in the lockbox account will be released to the borrower’s account on a daily basis.  During a Cash Management Period or Lease Sweep Period, funds on deposit in the lockbox account will be swept on a daily basis into a lender controlled cash management account.

A “Cash Management Period” will commence upon the earlier of (i) the occurrence and continuance of an event of default or (ii) the amortizing debt service coverage ratio falling below 1.25x at the end of any calendar quarter.  A Cash Management Period will expire, with regard to clause (i), upon the cure of such event of default; and with regard to clause (ii), upon the date that the amortizing debt service coverage ratio is equal to or greater than 1.25x for two consecutive calendar quarters.

A “Lease Sweep Period” will commence on the first payment date under the 2900 Fairview Park Drive Mortgage Loan following the occurrence of any of the following: (i) the date which is twelve months prior to the expiration of any Major Lease; (ii) the date upon a tenant under a Major Lease is required to give notice of its exercise of a renewal option under a Major Lease, if such renewal has not been exercised; (iii) any Major Lease is surrendered, cancelled or terminated prior to its then-current expiration date; (iv) any tenant under a Major Lease discontinues its business at the premises or gives notice that it intends to discontinue its business; (v) the occurrence and continuance of a default under any Major Lease; or (vi) upon the occurrence of an insolvency proceeding by any tenant under a Major Lease.  A Lease Sweep Period will end upon the earlier to occur of (x) the reasonable determination by the lender that sufficient funds have been accumulated in the leasing reserve to pay for all anticipated expenses in connection with the re-leasing of the space under the applicable Major Lease that gave rise to the subject Lease Sweep Period, or (y) the occurrence of any of the following: (1) with respect to clauses (i), (ii), (iii), or (iv) above, upon the earlier to occur of (A) the date on which the subject tenant under the Major Lease exercises its renewal or extension option, or (B) the date on which all the space demised under the subject Major Lease that gave rise to the subject Lease Sweep Period has been fully leased pursuant to a replacement lease or
 
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.
 
 
55
 
 
2900 FAIRVIEW PARK DRIVE
 
replacement leases in accordance with the terms of the loan documents, and all leasing expenses have been paid in full; (2) with respect to clause (v) above, if the subject default has been cured, and no other default has occurred under a Major Lease for a period of six consecutive months following such cure; (3) with respect to clause (vi) above, if the applicable Major Lease has been affirmed, assumed or assigned in a manner satisfactory to the lender; and (4) the date on which an amount equal to the applicable Lease Sweep Cap in the aggregate has been deposited into the TI/LC reserve.

“Major Lease” is defined as the HITT Contracting lease or any other lease which covers 36,750 or more rentable square feet of improvements.

Property Management.  The 2900 Fairview Park Drive Property is managed by an affiliate of the borrower.

Assumption.  The borrower has the right to transfer the 2900 Fairview Park Drive Property, provided that no event of default has occurred and is continuing and certain other conditions are satisfied, including (i) the lender’s reasonable determination that the proposed transferee and guarantor satisfy the lender’s credit review and underwriting standards, taking into consideration transferee experience, financial strength and general business standing; (ii) execution of a recourse guaranty (which includes an environmental indemnity) by an affiliate of the transferee; and (iii) rating agency confirmation from DBRS, KBRA, and Moody’s that the transfer will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the Series 2014-LC18 Certificates.

Partial Release.  Not permitted.

Real Estate Substitution.  Not permitted.

Subordinate and Mezzanine Indebtedness.  Not permitted.
 
Ground Lease.  None.

Terrorism Insurance.  The loan documents require that the “all risk” insurance policy required to be maintained by the borrower provide coverage for terrorism in an amount equal to the full replacement cost of the 2900 Fairview Park Drive 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 six-month extended period of indemnity.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
56
 
 
(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.
 
 
57
 
 
MARRIOTT KANSAS CITY COUNTRY CLUB PLAZA
 
(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.
 
 
58
 
 
MARRIOTT KANSAS CITY COUNTRY CLUB PLAZA
 
(MAP)
 
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.
 
 
59
 
 
No. 5 – Marriott Kansas City Country Club Plaza
 
Loan Information
  
Property Information
Mortgage Loan Seller:
Wells Fargo Bank, National Association
  
Single Asset/Portfolio:
 Single Asset
Credit Assessment
(DBRS/KBRA/Moody’s):
NR/NR/NR
  
Property Type:
 Hospitality
Original Principal Balance:
$38,500,000
  
Specific Property Type:
 Full Service
Cut-off Date Principal Balance:
$38,500,000
  
Location:
 Kansas City, MO
% of Initial Pool Balance:
3.4%
  
Size:
 295 rooms
Loan Purpose:
Acquisition
  
Cut-off Date Principal
Balance Per Room:
   $130,508
Borrower Name:
CWI Kansas City Hotel, LLC
  
Year Built/Renovated:
 1987/2010
Sponsor:
Carey Watermark Investors, Incorporated
  
Title Vesting:
 Fee
Mortgage Rate:
4.420%
  
Property Manager:
 Noble-Interstate Management Group, LLC
Note Date:
November 18, 2014
  
3rd Most Recent Occupancy (As of):
 73.6% (12/31/2011)
Anticipated Repayment Date:
NAP
  
2nd Most Recent Occupancy (As of):
 76.2% (12/31/2012)
Maturity Date:
December 1, 2021
  
Most Recent Occupancy (As of):
 75.9% (12/31/2013)
IO Period:
60 months
  
Current Occupancy (As of):
 77.1% (9/30/2014)
Loan Term (Original):
84 months
      
Seasoning:
0 months
  
Underwriting and Financial Information:
  
Amortization Term (Original):
360 months
      
Loan Amortization Type:
Interest-only, Amortizing Balloon
  
3rd Most Recent NOI (As of):
$4,591,883 (12/31/2012)
Interest Accrual Method:
Actual/360
  
2nd Most Recent NOI (As of):
$4,499,573 (12/31/2013)
Call Protection:
L(24),D(56),O(4)
  
Most Recent NOI (As of):
$4,811,262 (TTM 9/30/2014)
Lockbox Type:
Hard/Springing Cash Management
      
Additional Debt:
None
      
Additional Debt Type:
NAP
  
U/W Revenues:
$15,705,898
     
U/W Expenses:
$11,063,426
     
U/W NOI:
$4,642,472
     
U/W NCF:
$3,857,177
     
U/W NOI DSCR:
2.00x
Escrows and Reserves(1):
    
U/W NCF DSCR:
1.66x
         
U/W NOI Debt Yield:
12.1%
Type:
Initial
Monthly
Cap (If Any)
  
U/W NCF Debt Yield:
10.0%
Taxes
$0
$41,663
NAP
  
As-Is Appraised Value:
$57,800,000
Insurance
$0
Springing
NAP
  
As-Is Appraisal Valuation Date:
November 1, 2014
FF&E
$0
$65,441
NAP
  
Cut-off Date LTV Ratio:
66.6%
PIP Reserve
$11,550,931
$0
NAP
  
LTV Ratio at Maturity or ARD:
64.5%
             
 
(1)
See “Escrows” section.
 
The Mortgage Loan.  The mortgage loan (the “Marriott Kansas City Country Club Plaza Mortgage Loan”) is evidenced by a single promissory note that is secured by a first mortgage encumbering a full service hotel located in Kansas City, Missouri (the “Marriott Kansas City Country Club Plaza Property”). The Marriott Kansas City Country Club Plaza Mortgage Loan was originated on November 18, 2014 by Wells Fargo Bank, National Association. The Marriott Kansas City Country Club Plaza Mortgage Loan had an original principal balance of $38,500,000, has an outstanding principal balance as of the Cut-off Date of $38,500,000 and accrues interest at an interest rate of 4.420% per annum. The Marriott Kansas City Country Club Plaza Mortgage Loan had an initial term of 84 months, has a remaining term of 84 months as of the Cut-off Date and requires interest-only payments for the first 60 payments following origination and, thereafter, requires payment of principal and interest based on a 30-year amortization schedule. The Marriott Kansas City Country Club Plaza Mortgage Loan matures on December 1, 2021.

Following the lockout period, the borrower has the right to defease the Marriott Kansas City Country Club Plaza Mortgage Loan in whole, but not in part, on any date before September 1, 2021. In addition, the Marriott Kansas City Country Club Plaza Mortgage Loan is prepayable without penalty on or after September 1, 2021.
 
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.
 
 
60
 
 
MARRIOTT KANSAS CITY COUNTRY CLUB PLAZA
 
Sources and Uses

Sources
          
Uses
        
Original loan amount
$38,500,000
  
55.3
 %   
Purchase price
$56,650,000
  
81.4
 %
Sponsor’s new cash contribution
31,088,683
  
44.7
    
Reserves
11,550,931
  
16.6
  
           
Closing costs
1,387,752
  
2.0
  
Total Sources
$69,588,683
  
100.0
 %  
Total Uses
$69,588,683
  
100.0
 %

The Property.  The Marriott Kansas City Country Club Plaza Property is a 295-room, 19-story full service hotel located in Kansas City, Missouri.  The Marriott Kansas City Country Club Plaza Property was constructed in 1987 and renovated in 2010.   The Marriott Kansas City Country Club Property’s guestroom configuration includes 190 king bed rooms, 92 double queen bedrooms and 13 queen bedrooms.   Amenities at the Marriott Kansas City Country Club Plaza Property include an indoor pool and hot tub, fitness center, three food and beverage outlets, business center and meeting rooms totaling approximately 16,000 square feet. The Marriott Kansas City Country Club Plaza Property is connected to an adjacent property and leases approximately 6,129 square feet of additional banquet space (See “Cash Flow Analysis” section).   The Marriott Kansas City Country Club Plaza Property provides 188 parking spaces in a five-story parking structure resulting in a parking ratio of 0.6 spaces per room.  The Marriott Kansas City Country Club Plaza Property underwent a $10.0 million property improvement plan (“PIP”) in 2010, which included upgrades to the restaurants and bars, lobby, guest rooms, meeting rooms and health club.  The borrower plans to complete an approximately $11.6 million ($39,322 per room) PIP starting in 2015.  The PIP renovations will include upgrading all guest rooms to comply with Marriott’s “room of the future” brand standards as well as renovating the hallway corridors and refreshing the meeting space, restaurant and lobby areas.  The franchise agreement with Marriott expires in December 2034.

Operating History and Underwritten Net Cash Flow.  The following table represents certain information relating to the historical operating performance and the Underwritten Net Cash Flow at the Marriott Kansas City Country Club Plaza Property:
 
Cash Flow Analysis
 
   
2011
  
2012
  
2013
  
 
TTM
9/30/2014
  
U/W
  
U/W $ per
Room
  
Occupancy
  
73.6%
  
76.2%
  
75.9%
  
77.1%
  
77.1%
      
ADR
  
$126.75
  
$134.71
  
$136.00
  
$139.41
  
$139.41
      
RevPAR
  
$93.26
  
$102.67
  
$103.25
  
$107.53
  
$107.53
      
                           
Total Revenue
  
$14,537,511
  
$15,462,211
  
$15,725,593
  
$16,296,646
  
$15,705,898(1)
  
$53,240
  
Total Department Expenses
  
4,793,784
  
4,970,094
  
5,214,868
  
5,350,927
  
5,006,913(1)
  
16,973
  
Gross Operating Profit
  
$9,743,727
  
$10,492,117
  
$10,510,725
  
$10,945,719
  
$10,698,985
  
$36,268
  
                           
Total Undistributed Expenses
  
4,857,241
  
5,023,358
  
5,234,357
  
5,485,779
  
5,441,514
  
18,446
  
    Profit Before Fixed Charges
  
$4,886,486
  
$5,468,759
  
$5,276,368
  
$5,459,940
  
$5,257,472
  
$17,822
  
                           
Total Fixed Charges
  
854,509
  
876,876
  
776,795
  
648,678
  
615,000(1)
  
2,085
  
                           
Net Operating Income
  
$4,031,977
  
$4,591,883
  
$4,499,573
  
$4,811,262
  
$4,642,472
  
$15,737
  
FF&E
  
0
  
0
  
0
  
0
  
785,295
  
2,662
  
Net Cash Flow
  
$4,031,977
  
$4,591,883
  
$4,499,573
  
$4,811,262
  
$3,857,177
  
$13,075
  
                           
NOI DSCR
  
1.74x
  
1.98x
  
1.94x
  
2.07x
  
2.00x
      
NCF DSCR
  
1.74x
  
1.98x
  
1.94x
  
2.07x
  
1.66x
      
NOI DY
  
10.5%
  
11.9%
  
11.7%
  
12.5%
  
12.1%
      
NCF DY
  
10.5%
  
11.9%
  
11.7%
  
12.5%
  
10.0%
      
                           

(1)
The Food & Beverage (“F&B”) revenue was underwritten based on the trailing 12-months ending September 30, 2014 with an adjustment made to eliminate revenue, and costs associated with F&B revenue as well as the rent expense attributed to leased banquet space.  The Marriott Kansas City Country Club Marriot Property leases approximately 6,129 square feet that is used for meeting and banquet space through June 2018 for $22.00 per square foot plus common area maintenance expenses.  The U/W deducted (i) the three-year average of the attributed F&B revenue ($590,748), (ii) the F&B costs associated with the F&B revenue ($344,014) and (iii) the rent expense ($191,947) associated with the leased banquet space.

Appraisal.  As of the appraisal valuation date of November 1, 2014, the Marriott Kansas City Country Club Plaza Property had an “as-is” appraised value of $57,800,000.
 
Environmental Matters.  According to the Phase I environmental site assessment dated October 1, 2014, there was no evidence of any recognized environmental conditions at the Marriott Kansas City Country Club Plaza Property.

Market Overview and Competition.  The Marriott Kansas City Country Club Plaza Property is located in Kansas City Missouri, in the Country Club business district, which is located approximately two miles south of the Kansas City central business district.  The Marriott Kansas City Country Club Plaza Property is located in the northwest quadrant of the intersection of East 45th Street and Main Street adjacent to St. Luke’s Hospital and is approximately one mile north of the Country Club Plaza lifestyle retail shopping center.  Country Club Plaza is a 55.0-acre, 15-block outdoor shopping, dining, and entertainment district located four miles south of the Kansas City central business district.  Conceived by J. C. Nichols, a local developer, in the early 1920’s and architecturally inspired by buildings and plazas in Seville, Spain, it was the first shopping center in the United States specifically conceived and designed to
 
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.
 
 
61
 
 
MARRIOTT KANSAS CITY COUNTRY CLUB PLAZA
 
accommodate shoppers arriving by car. The blocks surrounding Country Club Plaza are comprised of residential properties, medical facilities and three million square feet of office space.  The Country Club Plaza shopping center has more than 150 shops and restaurants that include Ann Taylor, Burberry, Apple, Urban Outfitters, XXI Forever, Tiffany & Co. and Restoration Hardware.  The restaurants include The Cheesecake Factory, The Capital Grille, Houston’s and P.F. Chang’s China Bistro. The Marriott Kansas City Country Club Plaza Property is located adjacent to the global headquarters for American Century Investments and is approximately 1.3 miles north of the University of Missouri Kansas City (“UMKC”).  American Century Investments employs approximately 1,300 people with other offices located in New York, London, Hong Kong and Mountain View, California and UMKC reports enrollment of approximately 16,000 students for the 2013 school year.  The Marriott Kansas City Country Club Plaza Property’s demand segmentation as of year-end 2013 was 35.0% meeting and group, 30.0% commercial, 30.0% leisure and 5.0% extended-stay.  Commercial and corporate demand in the Marriott Kansas City Country Club Plaza Property’s market area is generated by a diverse base of corporate tenants in the surrounding area that include AT&T, IBM, Ernst & Young, the Federal Reserve Bank of Kansas City, KPMG and Turner Construction.

The following table presents certain information relating to the Marriott Kansas City Country Club Plaza Property’s competitive set:

Subject and Market Historical Occupancy, ADR and RevPAR(1)

   
Competitive Set
  
Marriott Kansas City Country Club
Plaza
  
Penetration Factor
  
Year
  
Occupancy
  
ADR
  
RevPAR
  
Occupancy
  
ADR
  
RevPAR
  
Occupancy
  
ADR
  
RevPAR
  
 9/30/2014 TTM
  
73.8%
  
$149.58
  
$110.36
  
77.1%
  
$139.41
  
$107.53
  
104.5%
  
93.2%
  
97.4%
  
 9/30/2013 TTM
  
71.9%
  
$146.05
  
$104.95
  
75.3%
  
$135.02
  
$101.73
  
104.9%
  
92.4%
  
96.9%
  
 9/30/2012 TTM
  
73.6%
  
$139.33
  
$102.58
  
76.8%
  
$132.32
  
$101.68
  
104.4%
  
95.0%
  
99.1%
  
 
(1)
Information obtained from a third party hospitality report dated October 17, 2014.  The competitive set includes the following hotels: InterContinental Kansas City @ The Plaza, Embassy Suites Kansas City Plaza, Sheraton Hotel Suites Country Club Plaza, Residence Inn Kansas City Country Club Plaza and Courtyard Kansas City Country Club Plaza.

The Borrower.  The borrower is CWI Kansas City Hotel, LLC, a Delaware limited liability company and a single purpose entity with one independent director.  Legal counsel to the borrower delivered a non-consolidation opinion in connection with the origination of the Marriott Kansas City Country Club Mortgage Loan.  Carey Watermark Investors Incorporated (“CWI”) is the guarantor of certain nonrecourse carveouts under the Marriott Kansas City Country Club Plaza Mortgage Loan.

The Sponsor.  The sponsor is CWI, a private non-listed hospitality real estate investment trust that was formed in March 2008 to acquire lodging assets across the United States.  As of October 2014, CWI’s real estate portfolio is comprised of ownership interests in 26 hotels located in 14 states.
 
Escrows.  The loan documents provide for upfront escrows in the amount of $11,550,931 for the PIP reserve. The loan documents provide for monthly escrows in the amount of $41,663 for real estate taxes and an amount equal to 5.0% of the operating income for the calendar month immediately preceding each monthly payment date.  The loan documents do not require monthly escrows for insurance provided as long as (i) no event of default has occurred and is continuing; (ii) the Marriott Kansas City Country Club Plaza Property is covered by an acceptable blanket insurance policy; and (iii) the borrower provides the lender with evidence of renewal of the policies and timely proof of payment of insurance premiums.

Lockbox and Cash Management.  The Marriott Kansas City Country Club Plaza Mortgage Loan requires a lender-controlled lockbox account, which is already in place, and that the borrower direct all receipts payable with respect to the Marriott Kansas City Country Club Plaza Property directly into the lockbox account.  The loan documents also require all revenues received by the borrower or the property manager to be deposited into the lockbox account within two business days of receipt.  Prior to the occurrence of a Cash Trap Event Period (as defined below), all excess funds on deposit in the lockbox account are disbursed to the borrower.  During a Cash Trap Event period, all excess cash flow is swept on a monthly basis to a lender-controlled cash management account.

A “Cash Trap Event Period” will commence upon the earlier of (i) the occurrence and continuance of an event of default or (ii) the amortizing debt service coverage ratio falling below 1.30x at the end of any calendar quarter, commencing January 1, 2016.  A Cash Trap Event Period will expire, with regard to clause (i), upon the cure of such event of default, or with regard to clause (ii), (a) upon the date that the amortizing debt service coverage ratio is equal to or greater than 1.40x for two consecutive calendar quarters or equal to or greater than 1.45x for one calendar quarter or (b) the payment of funds by the borrower into a reserve account or in lieu of posting funds into a reserve account, the posting of a letter of credit that will be held as additional security during the loan term, in which, if applied to reduce the outstanding principal balance of the loan, the amortizing debt service coverage ratio would be equal to or greater than 1.45x.
 
Property Management.  The Marriott Kansas City Country Club Plaza Property is managed by Noble-Interstate Management Group, LLC.

Assumption.  The borrower has the two-time right to transfer the Marriott Kansas City Country Club Plaza Property provided that certain conditions are satisfied, including (i) no event of default has occurred and is continuing; (ii) the lender reasonably determines that the proposed transferee and guarantor satisfy the lender’s credit review and underwriting standards, taking into consideration transferee experience, financial strength and general business standing; and (iii) the lender has received confirmation from DBRS, KBRA and Moody’s that such assumption will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the Series 2014-LC18 Certificates.
 
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.
 
 
62
 
 
MARRIOTT KANSAS CITY COUNTRY CLUB PLAZA
 
Right of First Refusal. Marriott International, Inc. has a Right of First Refusal (“ROFR”) to acquire related Marriott Kansas City Country Club Plaza Property if there is a transfer of the hotel or the controlling direct or indirect interest in the borrower to a competitor (generally, any person having an interest, other than as a passive investor, in another hotel brand comprised of at least 20 full service or 50 limited service hotels). The ROFR is not extinguished by foreclosure or deed-in-lieu thereof, but is subordinate to the interests of bona fide lenders who are not competitors where franchisor has approved such financing.
 
Partial Release.  Not permitted.
 
Real Estate Substitution.  Not permitted.

Subordinate and Mezzanine Indebtedness.  Not permitted.

Ground Lease.  None.

Terrorism Insurance.  The loan documents require that the “all risk” insurance policy required to be maintained by the borrower provide coverage for terrorism in an amount equal to the full replacement cost of the Marriott Kansas City Country Club Plaza 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 six-month extended period of indemnity.

THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
63
 
 
COLORADO MILLS
 
(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.
 
 
64
 
 
COLORADO MILLS
 
(MAP)
 
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.
 
 
65
 
 
COLORADO MILLS
 
(MAP)
 
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.
 
 
66
 
 
COLORADO MILLS
 
(MAP)
 
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.
 
 
67
 
 
No. 6 – Colorado Mills
               
Loan Information
  
Property Information
Mortgage Loan Seller:
The Royal Bank of Scotland plc
  
Single Asset/Portfolio:
Single Asset
Credit Assessment
(DBRS/KBRA/Moody’s):
NR/NR/NR
  
Property Type:
Retail
Original Principal Balance(1):
$36,000,000
  
Specific Property Type:
Regional Mall
Cut-off Date Principal Balance(1):
$36,000,000
  
Location:
Lakewood, CO
% of Initial Pool Balance:
3.2%
  
Size:
918,448 SF
Loan Purpose:
Refinance
  
Cut-off Date Principal
Balance Per SF(1):
$148.08
Borrower Name:
Colorado Mills Mall Limited
Partnership
  
Year Built/Renovated:
2002/2013
Sponsor:
Simon Property Group
  
Title Vesting:
Fee
Mortgage Rate:
4.282%
  
Property Manager:
Self-managed
Note Date:
October 30, 2014
  
3rd Most Recent Occupancy (As of)(3):
86.5% (12/31/2011)
Anticipated Repayment Date:
NAP
  
2nd Most Recent Occupancy (As of)(3):
91.6% (12/31/2012)
Maturity Date:
November 1, 2024
  
Most Recent Occupancy (As of)(3):
94.0% (12/31/2013)
IO Period:
36 months
  
Current Occupancy (As of)(3):
93.8% (10/1/2014)
Loan Term (Original):
120 months
    
Seasoning:
1 month
  
Underwriting and Financial Information:
Amortization Term (Original):
360 months
      
Loan Amortization Type:
Interest-only, Amortizing Balloon
  
3rd Most Recent NOI (As of):
$15,015,941 (12/31/2012)
Interest Accrual Method:
Actual/360
  
2nd Most Recent NOI (As of):
$15,058,036 (12/31/2013)
Call Protection:
L(25),D(88),O(7)
  
Most Recent NOI (As of):
$16,310,359 (TTM 8/31/2014)
Lockbox Type:
Hard/Springing Cash Management
    
Additional Debt(1):
Yes
  
U/W Revenues:
$28,139,377
Additional Debt Type(1):
Pari Passu
  
U/W Expenses:
$11,755,768
     
U/W NOI:
$16,383,609
     
U/W NCF:
$15,409,630
     
U/W NOI DSCR(1):
2.03x
Escrows and Reserves(2):
    
U/W NCF DSCR(1):
1.91x
     
U/W NOI Debt Yield(1):
12.0%
Type:
Initial
Monthly
Cap (If Any)
  
U/W NCF Debt Yield(1):
11.3%
Taxes
$0
Springing
NAP
  
As-Is Appraised Value:
$215,000,000
Insurance
$0
Springing
NAP
  
As-Is Appraisal Valuation Date:
October 1, 2014
Replacement Reserves
$0
Springing
$460,000
  
Cut-off Date LTV Ratio(1):
63.3%
TI/LC Reserve
$0
Springing
$3,000,000
  
LTV Ratio at Maturity or ARD(1):
55.1%
             
 
(1)
The Colorado Mills Loan Combination, totaling $136,000,000, is comprised of two pari passu notes (Notes A-1 and A-2). The non-controlling Note A-2 had an original principal balance of $36,000,000, has an outstanding principal balance of $36,000,000 as of the Cut-off Date and will be contributed to the WFCM 2014-LC18 Trust.  The controlling Note A-1 had an original principal balance of $100,000,000 and is expected to be contributed to the WFRBS 2014-C25 Trust. All statistical financial information related to balances per square foot, loan-to-value ratios, debt service coverage ratios and debt yields are based on the Colorado Mills Loan Combination.
(2)
See “Escrows” section.
(3)
Historical and current occupancy includes temporary and seasonal tenants. The Colorado Mills Property was 86.0% occupied by permanent tenants as of October 1, 2014.
 
The Mortgage Loan.  The mortgage loan (the “Colorado Mills Loan Combination”) is evidenced by two pari passu notes (Notes A-1 and A-2) secured by a first mortgage encumbering a regional mall located in Lakewood, Colorado (the “Colorado Mills Property”). The Colorado Mills Loan Combination was originated on October 30, 2014 by The Royal Bank of Scotland plc. The Colorado Mills Loan Combination had an original principal balance of $136,000,000, has an outstanding principal balance as of the Cut-off Date of $136,000,000 and accrues interest at an interest rate of 4.282% per annum. The Colorado Mills Loan Combination had an initial term of 120 months, has a remaining term of 119 months as of the Cut-off Date and requires interest-only payments for the first 36 payments following origination and, thereafter, requires payments of principal and interest based on a 30-year amortization schedule. The Colorado Mills Loan Combination matures on November 1, 2024.

Note A-2, which represents the non-controlling interest in the Colorado Mills Loan Combination and will be contributed to the WFCM 2014-LC18 Trust, had an original principal balance of $36,000,000 and has an outstanding principal balance as of the Cut-off Date of $36,000,000. Note A-1 (the “Colorado Mills Companion Loan”), which represents a controlling interest in the Colorado Mills Loan Combination, had an original principal balance of $100,000,000, and is expected to be contributed to the WFRBS 2014-C25 Trust. See “Description of the Mortgage Pool—Split Loan Structures—The Colorado Mills Loan Combination” and “Servicing of the Mortgage Loans and Administration of the Trust Fund—Additional Matters Relating to the Servicing of the Non-Serviced Loan Combination—Servicing of the Colorado Mills Loan Combination” in the Free Writing 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.
 
 
68
 
 
COLORADO MILLS
 
Following the lockout period, the borrower has the right to defease the Colorado Mills Loan Combination in whole, but not in part, on any due date before May 1, 2024. In addition, the Colorado Mills Loan Combination is prepayable without penalty on or after May 1, 2024.
 
Sources and Uses
 
Sources
          
Uses
        
Original loan combination amount
$136,000,000
  
100.0
 %   
Loan payoff
$113,748,969
  
83.6
 % 
           
Closing costs
518,866
  
0.4
  
           
Return of equity
21,732,165
  
16.0
  
Total Sources
$136,000,000
  
100.0
 %   
Total Uses
$136,000,000
  
100.0
 % 
 
The Property.  The Colorado Mills Property is a single-story regional outlet mall and entertainment center located at the intersection of West Colfax Avenue and Indiana Street, adjacent to Interstate-70, in Lakewood, Colorado, approximately 10 miles west of downtown Denver. The Colorado Mills Property contains 1,099,545 square feet of retail space, of which 918,448 square feet (the “Colorado Mills Mortgaged Property”) serve as collateral for the Colorado Mills Loan Combination.  The Colorado Mills Property was constructed in 2002 and is situated on a 122.0-acre parcel of land, of which 90.2-acres serve as collateral. The Colorado Mills Property is anchored by Target (not part of the collateral), a 16-screen United Artists Theatre (a movie theater) and Burlington Coat Factory (an apparel and home product retailer). Junior anchors at the Colorado Mills Property include Sports Authority, Last Call Neiman Marcus, Off 5th Saks Fifth Avenue, H&M, and Forever 21 (each are national retailers).   In-line tenants at the Colorado Mills Property include Pier 1 Imports (ground lease), Nike Factory Store, Victoria’s Secret, Gap Outlet, Express, and Coach Factory. In 2013, approximately $7.0 million of capital was invested by the sponsor to remodel ten stores, secure 12 new tenants, and relocate five existing tenants.  In 2014, the Colorado Mills Property added new tenants including J. Crew, Adidas, Michael Kors, Calvin Klein and five new food court tenants.  The Colorado Mills Property contains 7,038 parking spaces, resulting in a parking ratio of 6.4 spaces per 1,000 square feet of rentable area. As of June 30, 2014, tenants occupying 10,000 square feet or less had trailing 12-month in-line sales of $324 per square foot with an average occupancy cost of 11.8%. As of October 1, 2014, the Colorado Mills Mortgaged Property was 93.8% occupied by 165 tenants (including temporary tenants).

Tenants at the Colorado Mills Property are required to remit an amount equal to 1.4% of all sales (“PIF”) to the City of Lakewood, Colorado to support certain bonds. Neither the borrower nor the sponsor has any obligation to fund any portion of the PIF owed by the tenants and the failure of a tenant to pay such amounts will not result in a lien against the Colorado Mills Mortgaged Property. See “Description of the Mortgage Pool—Tenant or Other Third Party Matters” in the Free Writing 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.
 
 
69
 
 
COLORADO MILLS
 
The following table presents certain information relating to tenancy at the Colorado Mills Property:
 
Major Tenants

                                               
   
Credit Rating
            
Annual
      
% of Total
            
Lease
   
(Fitch/Moody’s/
  
Tenant
  
% of
  
U/W Base
  
Annual U/W
  
Annual U/W
  
Sales
  
Occupancy
  
Expiration
Tenant Name
  
S&P)(1)
  
NRSF
  
NRSF
  
Rent PSF(2)
  
Base Rent(2)
  
Base Rent
  
PSF(3)
  
Cost(3)(4)
  
Date
                                               
Anchor Tenant - Not Part of Collateral
                                  
Target
  
A-/A2/A
  
181,039
  
ANCHOR OWNED - NOT PART OF THE COLLATERAL
                
                                               
Anchor Tenants - Collateral
                                  
United Artists Theatre
  
B+/B3/B+
  
82,451
  
9.0%
    
$10.50
    
$865,736
  
6.2%
    
$371,648
(5)
14.6%
    
12/17/2017
(6)
Burlington Coat Factory
  
NR/NR/NR
  
63,145
  
6.9%
    
$8.05
    
$508,317
  
3.7%
    
$123
  
6.2%
    
1/31/2016
(7)
Total Anchor Tenants - Collateral
  
145,596
  
15.9%
    
$9.44
    
$1,374,053
  
9.9%
                  
                                               
Other Major Tenants – Collateral
                                          
Sports Authority
  
NR/NR/NR
  
43,568
  
4.7%
    
$16.94
    
$738,042
  
5.3%
    
$198
  
10.3%
    
1/31/2018
  
Off Broadway Shoes
  
NR/NR/NR
  
23,051
  
2.5%
    
$24.50
    
$564,750
  
4.1%
    
$204
  
15.6%
    
6/30/2020
  
Last Call Neiman Marcus
  
NR/Caa2/B
  
32,143
  
3.5%
    
$15.75
    
$506,252
  
3.6%
    
$221
  
9.2%
    
1/31/2018
  
Forever 21
  
NR/NR/NR
  
21,975
  
2.4%
    
$15.12
    
$332,313
  
2.4%
    
$160
  
9.3%
    
8/31/2023
  
Jumpstreet
  
NR/NR/NR
  
40,217
  
4.4%
    
$7.09
    
$285,000
  
2.0%
    
$38
  
18.6%
    
7/31/2017
  
Off 5th Saks Fifth Ave
  
NR/NR/NR
  
28,003
  
3.0%
    
$0.00
(8)
  
$0(8)
  
0.0%
    
$108
  
3.5%
    
1/31/2016
  
H&M
  
NR/NR/NR
  
23,464
  
2.6%
    
$0.00
(9)
  
$0(9)
  
0.0%
    
$213
  
9.0%
    
1/31/2024
  
Total Other Major Tenants - Collateral
  
212,421
  
23.1%
    
$15.07
    
$2,426,356
  
17.4%
                  
                                               
Non-Major Retail Tenants(10) – Collateral
  
503,604
  
54.8%
    
$25.40
    
$10,124,044
  
72.7%
                  
                                               
Total Occupied Collateral(10)
  
861,621
  
93.8%
    
$19.75
    
$13,924,453
  
100.0%
                  
                                               
Total Vacant Space
  
56,827
  
6.2%
                                  
                                               
Collateral Total
  
918,448
  
100.0%
                                  
                                               
 
(1)
Certain ratings are those of the parent company whether or not the parent guarantees the lease.
(2)
Annual U/W Base Rent PSF and Annual U/W Base Rent include contractual rent steps through August 2015.
(3)
Sales PSF and Occupancy Costs are for the trailing 12-month period ending June 30, 2014.
(4)
Occupancy Costs include base rent, reimbursements and percentage rent, as applicable.
(5)
United Artists Theatre operates 16 screens and reported sales of $371,648 per screen for the trailing 12-month period ending June 30, 2014.
(6)
United Artists Theatre has three, 5-year lease renewal options.
(7)
Burlington Coat Factory has four, 5-year lease renewal options.
(8)
Off 5th Saks Fifth Ave pays percentage rent in-lieu of base rent in an amount equal to 3.5% of gross sales.
(9)
H&M pays percentage rent in-lieu of base rent in an amount equal to 9.0% of gross sales.
(10)
Includes 71,555 square feet attributed to temporary tenants that were not included in the Annual U/W Base Rent, along with 84,967 square feet attributed to certain tenants paying percentage rent in-lieu of base rent, for a total of 156,522 square feet. The Annual U/W Base Rent PSF for Non-Major Retail Tenants and Total Occupied Collateral exclude the square footage attributed to these tenants.
 
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.
 
 
70
 
 
COLORADO MILLS
 
The following table presents certain information relating to the historical sales and occupancy costs at the Colorado Mills Mortgaged Property:
 
Historical Sales (PSF) and Occupancy Costs(1)

 
Tenant Name
  
2011
  
2012
  
2013
  
TTM
6/30/2014
  
 
Burlington Coat Factory
  
$97
  
$107
  
$122
  
$123
  
 
Forever 21(2)
  
$344
  
$292
  
$163
  
$160
  
 
H&M
  
NAV
  
NAV
  
$219
  
$213
  
 
Jumpstreet
  
NAV
  
$64
  
$40
  
$38
  
 
Last Call Neiman Marcus
  
$229
  
$241
  
$221
  
$221
  
 
Off 5th Saks Fifth Ave
  
$121
  
$110
  
$106
  
$108
  
 
Off Broadway Shoes
  
$182
  
$178
  
$189
  
$204
  
 
Sports Authority
  
$174
  
$180
  
$183
  
$198
  
 
United Artists Theatre(3)
  
$295,250
  
$371,875
  
$388,375
  
$371,648
  
                     
 
Total In-line (<10,000 square feet)
  
$289
  
$306
  
$312
  
$324
  
 
Occupancy Costs
  
14.5%
  
13.5%
  
12.5%
  
11.8%
  
 
(1)
Historical Sales (PSF) and Occupancy Costs were provided by the borrower.
(2)
Forever 21 expanded its space in August 2013 from 3,688 square feet to 21,975 square feet.
(3)
Represents sales per screen. United Artists Theatre operates 16 screens.
 
The following table presents certain information relating to the lease rollover schedule at the Colorado Mills Mortgaged Property:
 
Lease Expiration Schedule(1)(2)

                                                 
 
Year Ending
December 31,
  
No. of
Leases
Expiring
  
Expiring
NRSF
  
% of
Total
NRSF
  
Cumulative
of Total
NRSF
  
Cumulative
% of Total
NRSF
  
Annual U/W
Base Rent
  
% of
Annual
U/W Base
Rent
  
Annual U/W
Base Rent
PSF(3)
  
 
MTM(4)
  
35
  
71,555
    
7.8%
    
71,555
    
7.8%
    
$0
    
0.0%
    
$0.00
  
 
2014
  
4
  
21,608
    
2.4%
    
93,163
    
10.1%
    
$366,298
    
2.6%
    
$16.95
  
 
2015
  
20
  
63,861
    
7.0%
    
157,024
    
17.1%
    
$1,278,564
    
9.2%
    
$21.25
  
 
2016
  
18
  
139,043
    
15.1%
    
296,067
    
32.2%
    
$1,826,487
    
13.1%
    
$16.83
  
 
2017
  
12
  
157,532
    
17.2%
    
453,599
    
49.4%
    
$1,730,393
    
12.4%
    
$11.81
  
 
2018
  
13
  
102,678
    
11.2%
    
556,277
    
60.6%
    
$2,161,491
    
15.5%
    
$21.05
  
 
2019
  
9
  
50,934
    
5.5%
    
607,211
    
66.1%
    
$860,002
    
6.2%
    
$20.14
  
 
2020
  
6
  
45,493
    
5.0%
    
652,704
    
71.1%
    
$1,098,612
    
7.9%
    
$24.15
  
 
2021
  
3
  
10,923
    
1.2%
    
663,627
    
72.3%
    
$243,466
    
1.7%
    
$22.29
  
 
2022
  
6
  
20,923
    
2.3%
    
684,550
    
74.5%
    
$542,386
    
3.9%
    
$25.92
  
 
2023
  
15
  
71,821
    
7.8%
    
756,371
    
82.4%
    
$1,802,655
    
12.9%
    
$25.10
  
 
2024
  
20
  
90,135
    
9.8%
    
846,506
    
92.2%
    
$1,584,454
    
11.4%
    
$27.05
  
 
Thereafter
  
4
  
15,115
    
1.6%
    
861,621
    
93.8%
    
$429,644
    
3.1%
    
$28.43
  
 
Vacant(5)
  
0
  
56,827
    
6.2%
    
918,448
    
100.0%
    
$0
    
0.0%
    
$0.00
  
 
Total/Weighted Average
  
165
  
918,448
    
100.0%
                
$13,924,453
    
100.0%
    
$19.75
  
 
(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)
The Annual U/W Base Rent PSF and Total/Weighted Average Annual U/W Base Rent PSF exclude vacant space, square feet attributed to tenants paying percentage rent in lieu of base rent and square footage attributed to temporary tenants. These rents were included in the underwritten percentage rent and other income.
(4)
Includes 35 temporary tenants. The rent for temporary tenants has been included in the underwritten other income.
(5)
Occupancy includes temporary and seasonal tenants.
 
The following table presents historical occupancy percentages at the Colorado Mills Mortgaged Property:
 
Historical Occupancy(1)
 
12/31/2009 (2)
  
12/31/2010(2)
  
12/31/2011(2)
  
12/31/2012(2)
  
12/31/2013(2)
  
10/1/2014(3)
83.1%
  
86.9%
  
86.5%
  
91.6%
  
94.0%
  
93.8%
 
(1)
Occupancy includes temporary and seasonal tenants. The Colorado Mills Property was 86.0% occupied by permanent tenants as of October 1, 2014.
(2)
Information obtained from the borrower.
(3)
Information obtained from 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.
 
 
71
 
 
COLORADO MILLS
 
The following table presents historical base rent per square foot at the Colorado Mills Mortgaged Property:
 
Historical Average Base Rent (PSF)(1)
 
12/31/2011
  
12/31/2012
  
12/31/2013
  
TTM 8/31/2014
$16.50
  
$15.89
  
$14.99
  
$15.05
 
(1)
Information obtained from the borrower’s operating statements. The average base rent is based on the gross potential rent divided by the occupied square footage and does not take into account temporary tenants or tenants paying percentage rent in lieu of base rent.
 
Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and the Underwritten Net Cash Flow at the Colorado Mills Mortgaged Property:
 
Cash Flow Analysis

   
2012
  
2013
  
TTM 8/31/2014
  
U/W
  
U/W $ per SF
Base Rent
  
$13,369,544
  
$12,938,317
  
$13,061,074
    
$13,924,453
  
$15.16
  
Grossed Up Vacant Space
  
0
  
0
  
0
    
4,816,331
  
5.24
  
Percentage Rent
  
1,453,601
  
1,752,830
  
2,223,477
    
1,919,172
  
2.09
  
Total Reimbursables
  
7,772,047
  
8,015,759
  
8,809,946
    
8,467,168
  
9.22
  
Other Income
  
3,894,530
  
3,860,076
  
3,828,584
    
3,828,584
  
4.17
  
Less Vacancy & Credit Loss
  
(18,201)
  
(45,059)
  
7,738
    
(4,816,331)(1)
  
(5.24)
  
Effective Gross Income
  
$26,471,521
  
$26,521,923
  
$27,930,819
    
$28,139,377
  
$30.64
  
                         
Total Operating Expenses
  
$11,455,580
  
$11,463,887
  
$11,620,460
    
$11,755,768
  
$12.80
  
                         
 Net Operating Income
  
$15,015,941
  
$15,058,036
  
$16,310,359
    
$16,383,609
  
$17.84
  
TI/LC
  
0
  
0
  
0
      
744,367
  
0.81
  
Replacement Reserves
  
0
  
0
  
0
    
229,612
  
0.25
  
 Net Cash Flow
  
$15,015,941
  
$15,058,036
  
$16,310,359
    
$15,409,630
  
$16.78
  
                         
NOI DSCR(2)
  
1.86x
  
1.87x
  
2.02x
    
2.03x
      
NCF DSCR(2)
  
1.86x
  
1.87x
  
2.02x
    
1.91x
      
NOI DY(2)
  
11.0%
  
11.1%
  
12.0%
    
12.0%
      
NCF DY(2)
  
11.0%
  
11.1%
  
12.0%
    
11.3%
      
 
(1)
The underwritten economic vacancy is 15.8%. The Colorado Mills Mortgaged Property was 86.0% physically occupied by permanent tenants (93.8% occupied including temporary and seasonal tenants) as of October 1, 2014.
(2)
DSCRs and debt yields are based on the Colorado Mills Loan Combination.

Appraisal. As of the appraisal valuation date of October 1, 2014, the Colorado Mills Mortgaged Property had an “as-is” appraised value of $215,000,000.
 
Environmental Matters. According to a Phase I environmental site assessment dated October 10, 2014, there was no evidence of any recognized environmental conditions at the Colorado Mills Mortgaged Property.
 
Market Overview and Competition. The Colorado Mills Property is located at the intersection of West Colfax Avenue and Indiana Street, adjacent to Interstate-70 in Lakewood, Colorado. The Colorado Mills Property is located in the western portion of the Denver metropolitan statistical area, situated approximately 10 miles west of downtown Denver. According to the appraisal, the Colorado Mills Property is located in the west Denver submarket and has a primary trade area that encompasses a seven-mile radius. The 2014 population within a seven- and 10-mile radius were reported at approximately 375,029 and 764,500, respectively, and average household income within the same seven- and 10-mile radius were reported at approximately $71,817 and $70,906, respectively.
 
The appraiser estimated market rent for in-line tenants in the west Denver submarket to be $17.89 per square foot on a triple net basis and concluded to an estimate of $12.50 per square foot on a triple net basis for anchor tenants comprising less than 40,000 square feet and $9.00 per square foot on a triple net basis for anchor tenants comprising more than 40,000 square feet. The appraiser concluded a vacancy rate of 5.0% and a third party market research report indicated a second quarter 2014 west Denver retail submarket vacancy rate of 4.3%.
 
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.
 
 
72
 
 
COLORADO MILLS
 
The following table presents certain information relating to some comparable retail centers provided in the appraisal for the Colorado Mills Property:
 
Competitive Set(1)
 
   
 
Colorado Mills (Subject)
  
Belmar
  
Denver
Pavilions
  
Southwest Plaza
  
Cherry Creek
  
Flatiron
Crossing
 Market
  
Lakewood, CO
  
Lakewood, CO
  
Denver, CO
  
Littleton, CO
  
Denver, CO
  
Broomfield, CO
 Distance from Subject
  
--
  
7 miles
  
12 miles
  
14 miles
  
13 miles
  
21 miles
 Property Type
  
Super Regional Mall
  
Lifestyle Center
  
Lifestyle Center
  
Super Regional Mall
  
Super Regional Mall
  
Super Regional Mall
 Year Built/Renovated
  
2002/2013
  
2006/NAP
  
1998/NAP
  
1983/1994/2001/ 2005/2007
  
1990/1998
  
2000/2009/2013
 Anchors
  
Target, United Artists Theatre, Burlington Coat Factory
  
Target, Century Theatres, Whole Foods, Nordstrom Rack
  
United Artists Theatres, Barnes & Noble, Nike, Forever 21
  
Dillard’s, Macy’s, Sears, JC Penney
  
Saks Fifth Avenue, Neiman Marcus, Nordstrom, Macy’s
  
Nordstrom, Dillard’s, Macy’s, Cinemas
 Total GLA
  
1,099,545 SF
  
715,000 SF
  
411,527 SF
  
1,390,720 SF
  
1,032,000 SF
  
1,435,000 SF
 Total Occupancy
  
94%
  
93%
  
91%
  
86%
  
99%
  
94%
 
(1)
Information obtained from the appraisal and underwritten rent roll.

The Borrower. The borrower is Colorado Mills Mall Limited Partnership, a Delaware limited partnership and a single purpose entity with two independent directors. Legal counsel to the borrower delivered a non-consolidation opinion in connection with the origination of the Colorado Mills Loan Combination. Simon Property Group, L.P. (“Simon”) is the guarantor of certain nonrecourse carveouts up to 10.0% of the Colorado Mills Loan Combination.

The Sponsor. The sponsor, Simon (NYSE: SPG), is an S&P 100 company with total market capitalization of $88.0 billion as of June 30, 2014 and owns or has an interest in 228 retail commercial properties totaling approximately 189.0 million square feet.  Simon has sponsored other real estate projects over the last 10 years that have been the subject of mortgage loan defaults, foreclosure proceedings and deed-in-lieu of foreclosure. See “Description of the Mortgage Pool—Certain Terms of the Mortgage Loans—Non-Recourse Obligations” and “Description of the Mortgage Pool—Default History, Bankruptcy Issues and Other Proceedings” in the Free Writing Prospectus.

Escrows. No ongoing monthly escrows are required for real estate taxes, insurance, replacement or tenant improvement and leasing commissions reserves so long as no Debt Service Coverage Ratio Trigger Period (as defined below) has occurred and is continuing under the Colorado Mills Loan Combination. In the event that a Debt Service Coverage Ratio Trigger Period has occurred, the borrower is required to make monthly deposits: (i) for the payment of real estate taxes in an amount equal to one-twelfth of the estimated annual taxes payable and for the payment of insurance in an amount equal to one-twelfth of the estimated annual insurance premiums payable; provided that so long as no event of default has occurred and is continuing, the borrower will not be required to make such deposits for so long as the borrower provides satisfactory evidence to the lender that the taxes have been paid prior to delinquency and the insurance policies are being maintained as part of a reasonably acceptable blanket insurance policy providing coverage to substantially all of the other properties managed by the property manager or its affiliates; (ii) for replacements and repairs in an amount equal to $19,167 (subject to a cap of $460,000); and (iii) for tenant improvements and leasing commissions in an amount equal to $125,000 (subject to a cap of $3,000,000).

A “Debt Service Coverage Ratio Trigger Period” will commence if, as of the date of determination, the amortizing debt service coverage ratio based on the trailing four-calendar quarters falls below 1.20x for two consecutive calendar quarters. A Debt Service Coverage Ratio Trigger Period will end when an amortizing debt service coverage ratio of at least 1.20x has been achieved for two consecutive calendar quarters.

Lockbox and Cash Management.  The Colorado Mills Loan Combination requires a lender controlled lockbox, which is already in place, and that the borrower direct tenants to deposit all rents directly into the lockbox account and that the borrower and the property manager deposit all rents received into the lockbox account within two business days of receipt.  Prior to the occurrence of a Lockbox Event (as defined below), all funds on deposit in the lockbox account will be released to the borrower on a weekly basis.  Upon the occurrence and continuance of a Lockbox Event, funds on deposit in the lockbox account will be swept on a weekly basis (or on each business day, during the continuance of an event of default) into a lender controlled cash management account.

A “Lockbox Event” will commence upon the occurrence of (i) an event of default; (ii) any bankruptcy or insolvency proceeding of the borrower or the property manager (if the property manager is an affiliate of the borrower); or (iii) the amortizing debt service coverage ratio based on the trailing four-calendar quarters falls below 1.20x for two consecutive calendar quarters.  A Lockbox Event will end with respect to clause (i), upon the acceptance by the lender of a cure of such event of default; with respect to clause (ii), if the borrower replaces the property manager pursuant to a replacement management agreement, each pursuant to the terms of the Colorado Mills Loan Combination documents, or such bankruptcy or insolvency proceeding of the property manager is discharged or dismissed within 90 days; or with respect to clause (iii), when an amortizing debt service coverage ratio based on the trailing four-calendar quarters of at least 1.20x has been achieved for two consecutive calendar quarters; provided, however, that (x) no event of default has occurred and is continuing under the loan agreement or any of the other Colorado Mills Loan Combination documents; (y) the borrower has paid all of the lender’s reasonable out-of-pocket expenses actually incurred in connection with such Lockbox Event,
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
73
 
 
COLORADO MILLS
  
including reasonable attorney’s fees and expenses; and (z) a Lockbox Event may not be cured more than five times in the aggregate during the term of the Colorado Mills Loan Combination.

Property Management. The Colorado Mills Mortgaged Property is managed by an affiliate of Simon other than the borrower.
 
Assumption. The borrower has the right to transfer the Colorado Mills Mortgaged Property, or greater than 50% of the aggregate interests in the borrower, in one or a series of related transactions to one or more Qualified Transferees (as defined below) (other than a transfer to a Key Principal (as defined below) or any person wholly owned by one or more Key Principals, so long as such Key Principals owned 49% of the aggregate interests in the borrower prior to such transfer), 61 days after the Series 2014-LC18 Trust closing date, provided that no event of default has occurred and is continuing and certain other conditions are satisfied, including, but not limited to delivery of an additional insolvency opinion.

The borrower also has the right to transfer the Colorado Mills Mortgaged Property or 100% of the aggregate interests in the borrower to a transferee that is not a Qualified Transferee, provided that no event of default has occurred and is continuing, the conditions with respect to transfers to a transferee that is not a Qualified Transferee and certain additional conditions are satisfied, including, but not limited to receipt of a rating agency confirmation from DBRS, KBRA and Moody’s that the transfer will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the Series 2014-LC18 Certificates and similar confirmations with respect to the ratings of any securities backed by the Colorado Mills Companion Loan.

A “Qualified Transferee” is (a) any person or its affiliate (provided such person owns, directly or indirectly, not less than 51% of such affiliate) who owns and operates (i) at least five shopping centers and (ii) retail properties and shopping centers totaling in the aggregate at least 3,000,000 square feet of gross area; (b) any person who has a net worth in excess of $250,000,000; or (c) any person, provided the lender has received written confirmation from each of DBRS, KBRA and Moody’s that the transfer to such person will not, in and of itself, cause a downgrade, withdrawal or qualification of the then current ratings of the Series 2014-LC18 Certificates and similar confirmations with respect to ratings of any securities backed by the Colorado Mills Companion Loan; provided, however, that no person will be deemed to be a Qualified Transferee if such person (x) is an embargoed person, (y) except for General Growth Properties or its affiliates, is or has during the previous seven years been the subject of a bankruptcy or insolvency proceeding or (z) has been convicted in a criminal proceeding for a felony or any crime involving moral turpitude or is an organized crime figure or is reputed to have substantial business or other affiliations with any organized crime figure.

“Key Principal” means any of Simon Property Group, L.P., Simon Property Group, Inc. or Kan Am USA XX Limited Partnership.

Free Release. Provided that no event of default has occurred and is continuing, the borrower may (i) make transfers of immaterial or non-income producing portions of the Colorado Mills Mortgaged Property in connection with takings or condemnations of any portion of the Colorado Mills Mortgaged Property; (ii) make transfers of non-income producing portions of the Colorado Mills Mortgaged Property to third parties or affiliates of the borrower; and (iii) dedicate portions of the Colorado Mills Mortgaged Property or grant easements, restrictions, covenants, reservations and rights of way in the ordinary course of business; subject to certain conditions, including, with respect to any of the transfers described in (ii) and (iii), delivery of an officer’s certificate evidencing that such transfer, conveyance or encumbrance will not result in a material adverse effect on the value of the Colorado Mills Mortgaged Property, the business operations or financial condition of the borrower or the ability of the borrower to repay the Colorado Mills Loan Combination.

Real Estate Substitution. Not Permitted.

Subordinate and Mezzanine Indebtedness. Not Permitted.

Ground Lease. None.

Terrorism Insurance. The loan documents require that the “all risk” insurance policy required to be maintained by the borrower provides coverage for terrorism in an amount equal to the full replacement cost of the Colorado Mills Mortgaged Property or if the Terrorism Risk Insurance Program Reauthorization Act is no longer in effect, the borrower will be required to obtain a stand alone policy providing the same coverage for terrorism; provided, however (a) that the borrower will not be required to pay annual premiums in excess of two times the then-current annual premiums for the “all risk” insurance policy (excluding the catastrophic coverage of flood, earthquake and wind) and (b) that such stand-alone policy may have a deductible that is reasonable for such stand-alone policies with respect to properties similar to and reasonable for the geographic region where the Colorado Mills Mortgaged Property is located, so long as in no event shall such deductible exceed 5% of the total insured values. The loan documents also require business interruption insurance covering no less than the 18-month period following the occurrence of a casualty event, together with an extended period of indemnity, which shall continue for the lesser of (i) the period of time until income returns to the same level as it was prior to loss and (ii) 365 days from the date that the Colorado Mills Mortgaged Property is repaired or replaced and operations are resumed.
 
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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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.
 
 
76
 
 
ONE TOWNE SQUARE

(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.
 
 
77
 
 
ONE TOWNE SQUARE

(MAP)
 
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.
 
 
78
 
 
ONE TOWNE SQUARE

(MAP)
 
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.
 
 
79
 
 
No. 7 - One Towne Square
 
Loan Information
  
Property Information
Mortgage Loan Seller:
Ladder Capital Finance LLC
  
Single Asset/Portfolio:
Single Asset
Credit Assessment (DBRS/KBRA/Moody’s):
NR/NR/NR
  
Property Type:
Office
Original Principal Balance:
$36,000,000
  
Specific Property Type:
Suburban
Cut-off Date Principal Balance:
$36,000,000
  
Location:
Southfield, MI
% of Initial Pool Balance:
3.2%
  
Size:
426,970 SF
Loan Purpose:
Refinance
  
Cut-off Date Principal
Balance Per SF:
$84.32
Borrower Name:
Allied Phase One Venture LLC
  
Year Built/Renovated:
1992/NAP
Sponsor:
REDICO Properties LLC
  
Title Vesting:
Fee
Mortgage Rate:
5.209%
  
Property Manager:
Self-Managed
Note Date:
November 20, 2014
  
3rd Most Recent Occupancy (As of):
59.0% (12/31/2011)
Anticipated Repayment Date:
NAP
  
2nd Most Recent Occupancy (As of):
61.1% (12/31/2012)
Maturity Date:
December 6, 2024
  
Most Recent Occupancy (As of):
74.8% (12/31/2013)
IO Period:
None
  
Current Occupancy (As of)(3):
89.8% (10/1/2014)
Loan Term (Original):
120 months
    
Seasoning:
0 months
  
Underwriting and Financial Information:
Amortization Term (Original):
360 months
      
Loan Amortization Type:
Amortizing Balloon
  
3rd Most Recent NOI (As of):
$3,047,278 (12/31/2012)
Interest Accrual Method:
Actual/360
  
2nd Most Recent NOI (As of):
$3,570,533 (12/31/2013)
Call Protection:
L(24),D(92),O(4)
  
Most Recent NOI (As of)(4):
$3,047,893 (TTM 9/30/2014)
Lockbox Type:
Hard/Upfront Cash Management
  
 
Additional Debt(1):
Yes
  
U/W Revenues:
$8,048,106
Additional Debt Type(1):
Mezzanine
  
U/W Expenses:
$3,759,929
     
U/W NOI(4):
$4,288,177
Escrows and Reserves(2):
    
U/W NCF:
$3,748,088
         
U/W NOI DSCR(1):
1.81x
Type:
Initial
Monthly
Cap (If Any)
  
U/W NCF DSCR(1):
1.58x
Taxes
$408,588
$81,718
NAP
  
U/W NOI Debt Yield(1):
11.9%
Insurance
$21,774
$5,444
NAP
  
U/W NCF Debt Yield(1):
10.4%
Replacement Reserves
$0
$8,895
NAP
  
As-Is Appraised Value:
$48,000,000
TI/LC Reserve
$1,601,020
$35,581
$1,700,000
  
As-Is Appraisal Valuation Date:
 September 9, 2014
Rent Abatement Reserve
$358,964
$0
NAP
  
Cut-off Date LTV Ratio(1):
 75.0%
Deferred Maintenance
$93,750
$0
NAP
  
LTV Ratio at Maturity or ARD(1):
 62.1%
             
 
(1)
See “Subordinate and Mezzanine Indebtedness” section. The equity interest in the One Towne Square Mortgage Loan borrower has been pledged to secure mezzanine indebtedness with an original principal balance of $2,500,000. All LTV, DSCR, debt yield and Cut-off Date Principal Balance Per SF numbers shown in the chart above are based solely on the One Towne Square Mortgage Loan. As of the Cut-off Date, the combined LTV Ratio is 80.2%, the combined U/W NCF DSCR is 1.40x, and the combined U/W NCF Debt Yield is 9.7%.
(2)
See “Escrows” section.
(3)
See “Historical Occupancy” section.
(4)
See “Cash Flow Analysis” section.
 
The Mortgage Loan.  The mortgage loan (the “One Towne Square Mortgage Loan”) is evidenced by a single promissory note that is secured by a first mortgage encumbering an office building comprised of a class A office tower in Southfield, Michigan (the “One Towne Square Property”).  The One Towne Square Mortgage Loan was originated on November 20, 2014 by Ladder Capital Finance LLC.  The One Towne Square Mortgage Loan had an original principal balance of $36,000,000, has an outstanding principal balance as of the Cut-off Date of $36,000,000 and accrues interest at an interest rate of 5.209% per annum.  The One Towne Square Mortgage Loan had an initial term of 120 months, has a remaining term of 120 months as of the Cut-off Date and requires principal and interest payments based on a 30-year amortization schedule. The One Towne Square Mortgage Loan matures on December 6, 2024.
 
Following the lockout period, the borrower has the right to defease the One Towne Square Mortgage Loan in whole, but not in part, on any due date before September 6, 2024.  In addition, the One Towne Square Mortgage Loan is prepayable without penalty on or after September 6, 2024.
 
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.
 
 
80
 
 
ONE TOWNE SQUARE
 
Sources and Uses
 
Sources
        
Uses
        
Original loan amount
$36,000,000
  
93.5%
  
Loan payoff
$34,300,000
  
89.1
 %
Mezzanine loan
$2,500,000
  
6.5
  
Reserves
2,484,096
  
6.5
  
         
Closing costs
754,985
  
2.0
  
   
        
Return of equity
960,919
  
2.5
  
Total Sources
$38,500,000
  
100.0%
  
Total Uses
$38,500,000
  
100.0
 % 
 
The Property.  The One Towne Square Property is comprised of a 426,970 square foot, 18-story class A office tower located on a 10.0 acre site in Southfield, Michigan.  Built in 1992, amenities at the One Towne Square Property include an Energy Star rating achieved in 2007, cyber lounge, car wash, conference center, cafeteria, bank and fitness center. The One Towne Square Property is situated on the west side of Evergreen Road approximately one quarter of a mile south off the Interstate 696 interchange.  In addition, the One Towne Square Property features 2,445 parking spaces on-site, resulting in a parking ratio of 5.4 spaces per 1,000 rentable square feet, an advantage over competitive properties that require long walks from parking lots. As of October 1, 2014, the One Towne Square Property was 89.8% leased to 36 tenants.
 
The following table presents certain information relating to the tenancy at the One Towne Square Property:
 
Major Tenants
 
 Tenant Name
  
Credit Rating
(Fitch/Moody’s/
S&P)(1)
  
Tenant
NRSF
  
% of
NRSF
  
Annual U/W
Base Rent PSF(2)
  
Annual
U/W Base Rent(2)
  
% of Total Annual
U/W Base Rent
  
Lease
Expiration
Date
                             
 Major Tenants
                            
 Baker Tilly Virchow Krause
  
NR/NR/NR
  
50,086
  
11.7%
  
$20.50
  
$1,026,763
  
21.5%
  
5/31/2016
 Verizon Wireless
  
A-/Baa1/BBB+
  
48,210
  
11.3%
  
$11.00
  
$530,310
  
11.1%
  
4/30/2022(3)
 Signature Associates
  
NR/NR/NR
  
32,549
  
7.6%
  
$9.85
  
$320,608
  
6.7%
  
12/31/2018 
 Marsh USA, Inc.
  
BBB+/Ba3/A-
  
27,033
  
6.3%
  
$11.50
  
$310,880
  
6.5%
  
12/31/2024(4)
 Sommers Schwartz PC
  
NR/NR/NR
  
24,500
  
5.7%
  
$12.00
  
$294,000
  
6.1%
  
12/31/2018
 Total Major Tenants
      
182,378
  
42.7%
  
$13.61
  
$2,482,561
  
51.9%
    
                             
 Non-Major Tenants(5)
      
200,979
  
47.1%
  
$11.46
  
$2,302,705
  
48.1%
    
                             
 Occupied Collateral Total
      
383,357
  
89.8%
  
$12.48
  
$4,785,266
  
100.0%
    
                             
 Vacant Space
      
43,613
  
10.2%
                
                             
 Collateral Total
      
426,970
  
100.0%
                
                             
 
(1)
Certain ratings are those of the parent company whether or not the parent guarantees the lease.
(2)
Annual U/W Base Rent PSF and Annual U/W Base Rent include contractual rent steps through November 2015.
(3)
Verizon Wireless (“Verizon”) has the right to terminate up to 9,000 square feet upon nine months’ notice beginning in March 2018. Under the terms of the lease, Verizon must pay any costs incurred to demise the space, as well as a termination fee equivalent to unamortized TI/LC and abated rent. In the event that Verizon exercises its termination right for the full 9,000 square feet, it would pay a termination fee of $275,000 ($30.56 per square foot).
(4)
Marsh USA (“Marsh”) has the right to terminate its lease on February 28, 2022 with 12 months’ notice. In conjunction with the termination, Marsh must pay a termination fee equivalent to tenant’s pro rata share of all unamortized costs incurred by landlord in connection with the lease, with interest at 8.0% per annum, estimated at approximately $680,000.
(5)
18,675 square feet of space is occupied by the sponsor, REDICO, through March 31, 2017.
 
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.
 
 
81
 
 
ONE TOWNE SQUARE
 
The following table presents certain information relating to the lease rollover schedule at the One Towne Square Property:
 
Lease Expiration Schedule(1)(2)
 
Year Ending
December 31,
  
No. of
Leases
Expiring
  
Expiring
NRSF
  
% of
Total
NRSF
  
Cumulative
Expiring
NRSF
  
Cumulative
% of Total
NRSF
  
Annual
U/W
Base Rent
  
Annual
U/W
Base Rent
PSF(3)
MTM
  
5
  
3,898
  
0.9%
  
3,898
  
0.9%
  
$29,548
  
$7.58  
2014
  
0
  
0
  
0.0%
  
3,898
  
0.9%
  
$0
  
$0.00  
2015
  
2
  
5,929
  
1.4%
  
9,827
  
2.3%
  
$89,780
  
$15.14  
2016
  
6
  
78,854
  
18.5%
  
88,681
  
20.8%
  
$1,415,746
  
$17.95  
2017
  
9
  
54,590
  
12.8%
  
143,271
  
33.6%
  
$709,824
  
$13.00  
2018
  
8
  
91,378
  
21.4%
  
234,649
  
55.0%
  
$1,000,639
  
$10.95  
2019
  
6
  
45,189
  
10.6%
  
279,838
  
65.5%
  
$455,610
  
$10.08  
2020
  
1
  
3,881
  
0.9%
  
283,719
  
66.4%
  
$43,428
  
$11.19  
2021
  
0
  
0
  
0.0%
  
283,719
  
66.4%
  
$0
  
$0.00  
2022
  
2
  
48,210
  
11.3%
  
331,929
  
77.7%
  
$530,310
  
$11.00  
2023
  
1
  
24395
  
5.7%
  
356,324
  
83.5%
  
$199,500
  
$8.18  
2024
  
2
  
27,033
  
6.3%
  
383,357
  
89.8%
  
$310,880
  
$11.50  
Thereafter
  
0
  
0
  
0.0%
  
383,357
  
89.8%
  
$0
  
$0.00  
Vacant
  
0
  
43,613
  
10.2%
  
426,970
  
100.0%
  
$0
  
$0.00  
Total/Weighted Average
  
42(4)
  
426,970
  
100.0%
          
$4,785,266
  
$12.48  
 
  (1)
Information obtained from the underwritten rent roll.
  (2)
Certain tenants may have lease termination options that are exercisable prior to the stated expiration date of the subject lease and that are not considered in the Lease Expiration Schedule.
  (3)
Weighted Average Annual U/W Base Rent PSF excludes vacant space.
  (4)
There are 36 tenants and 42 individual leases.  Some tenants have multiple leases.
 
The following table presents historical occupancy percentages at the One Towne Square Property:
 
Historical Occupancy
 
 
12/31/2011(1)
  
 
12/31/2012(1)
  
 
12/31/2013(1)
  
 
10/1/2014(2)(3)
59.0%
  
61.1%
  
74.8%
  
89.8%
 
(1)
Information obtained from the borrowers.
(2)
Information obtained from the underwritten rent roll.
(3)
The increase in occupancy from 12/31/2013 to 11/1/2014 is due to the signing of seven new leases totaling 65,454 square feet.
 
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 One Towne Square Property:
 
Cash Flow Analysis
 
   
2012
  
2013
  
TTM
9/30/2014
  
U/W(1)
  
U/W $ per SF
Base Rent
  
$3,863,027
  
$4,158,151
  
$4,042,809
  
$4,785,266
  
$11.21  
Grossed Up Vacant Space
  
0
  
0
  
0
  
523,356
  
1.23  
Total Reimbursables
  
2,702,610
  
2,755,587
  
2,473,002
  
3,624,762
  
8.49  
Other Income
  
200,434
  
223,597
  
246,098
  
276,063
  
0.65  
Less Vacancy & Credit Loss
  
0
  
0
  
0
  
(1,161,340)(2)
  
(2.72)  
Effective Gross Income
  
$6,766,071
  
$7,137,335
  
$6,761,909
  
$8,048,106
  
$18.85  
                       
Total Operating Expenses
  
$3,718,793
  
$3,566,802
  
$3,714,016
  
$3,759,929
  
$8.81  
                     
 Net Operating Income
  
$3,047,278
  
$3,570,533
  
$3,047,893
  
$4,288,177
  
$10.04  
TI/LC
  
0
  
0
  
0
  
433,347
  
$1.01  
Capital Expenditures
  
0
  
0
  
0
  
106,743
  
$0.25  
 Net Cash Flow
  
$3,047,278
  
$3,570,533
  
$3,047,893
  
$3,748,088
  
$8.78  
                     
NOI DSCR
  
1.28x
  
1.50x
  
1.28x
  
1.81x
    
NCF DSCR
  
1.28x
  
1.50x
  
1.28x
  
1.58x
    
NOI DY
  
8.5%
  
9.9%
  
8.5%
  
11.9%
    
NCF DY
  
8.5%
  
9.9%
  
8.5%
  
10.4%
    
 
(1)
The increase in Net Operating Income from TTM 9/30/2014 to U/W is due to an approximately $700,000 increase in base rent resulting from the expiration of free rent for Sharp Electronics Corp., TekSystems, Inc., Marsh USA, Inc., Verizon Wireless, Continental Casaulty Co. and Alderney Advisors.  In addition to the increase in base rent as a result of the free rent expiration, expense reimbursements increased for those tenants in the amount of $1,047,000.
(2)
The underwritten economic vacancy is 13.0%. The One Towne Square Property was 89.8% physically occupied as of October 1, 2014.
 
Appraisal.  As of the appraisal valuation date of September 9, 2014, the One Towne Square Property had an “as-is” appraised value of $48,000,000.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
82
 
 
ONE TOWNE SQUARE
 
Environmental Matters.  According to a Phase I environmental assessment dated September 17, 2014, there was no evidence of any recognized environmental conditions at the One Towne Square Property.
 
Market Overview and Competition.  The One Towne Square Property is located in Southfield, Oakland County, Michigan.  Southfield is ranked 11th in per capita income among counties in the United States with populations over one million. According to the appraisal, the One Towne Square Property is located in the greater Detroit Metro Area office market which consists of 74.4 million square feet, as of the third quarter 2013.  During this period, the overall market vacancy was 25.6% with positive absorption reported for 2011, 2012 and three quarters of 2013 coupled with increasing effective rental rates reported for the same time period. Rental rates are exhibiting signs of moderate growth during 2013 and through the second quarter of 2014.
 
According to the appraisal, total employment in Oakland County is currently estimated at 678,377.  Oakland County has a greater concentration of households in the higher income levels than the rest of the state of Michigan. Specifically, 42% of Oakland County households are at the $75,000 or greater levels in household income as compared to 28% of Michigan households. A lesser concentration of households is apparent in the lower income levels, as 28% of Oakland County households are below the $35,000 level in household income versus 41% of Michigan households.  Additionally, over the past decade, the Oakland County unemployment rate has been consistently lower than that of Michigan, with an average unemployment rate of 8.0% in comparison to an 8.9% rate for the state of Michigan.  As of January 2014, the Oakland County unemployment rate was 6.9% in comparison to an 8.1% rate for Michigan.  In addition, Oakland County has outperformed Michigan in the rate of job growth over the 2012-2013 time period and has added a total of 70,502 jobs since 2009, an increase of 11.5%.
 
The One Towne Square Property is located in the North Southfield Class A submarket which reported an inventory of 4,243,000 square feet as of second quarter 2014.  As of second quarter 2014, overall market vacancy was 27.5% with positive absorption reported for 2013 coupled with increasing effective rental rates reported for the same time period. The Class A asking rental rate is $22.89 per square foot, up from the low point of $21.63 per square foot in 2010.
 
The following table presents certain information relating to comparable office properties for the One Towne Square Property:
 
Competitive Set(1)
 
   
One Towne
Square
(Subject)
  
Two
Towne
Square
  
Maccabees
Building
  
Oakland
Commons
  
Travelers
Tower I
  
 
Southfield
Town
Center
 Location
  
Southfield, MI
  
Southfield, MI
  
Southfield, MI
  
Southfield, MI
  
Southfield, MI
  
Southfield, MI
 Distance from Subject
  
--
  
0.1 miles
  
0.6 miles
  
0.7 miles
  
0.8 miles
  
1.0 miles
 Property Type
  
Office
  
Office
  
Office
  
Office
  
Office
  
Office
 Year Built/Renovated
  
1992/NAP
  
2001/NAV
  
1985/NAV
  
1999/ NAV
  
1973/NAV
  
1975-1989/NAV
 Number of Stories
  
18
  
NAV
  
NAV
  
NAV
  
NAV
  
NAV
 Total NRA
  
426,970 SF
  
182,057 SF
  
362,439 SF
  
312,318 SF
  
456,607 SF
  
2,161,951 SF
 Total Occupancy
  
90%
  
92%
  
81%
  
71%
  
59%
  
70%
 
(1)
Information obtained from the appraisal.
 
The Borrower.  The borrower is Allied Phase One Venture, LLC a single purpose entity with one independent director.  Legal counsel delivered a non-consolidation opinion in connection with the origination of the One Towne Square Mortgage Loan.  REDICO Properties LLC (“REDICO”), a Michigan limited liability company is the guarantor of certain nonrecourse carveouts under the One Towne Square Mortgage Loan.
 
The Sponsor.  The sponsor is REDICO, a national real estate development, investment, construction and property management company that was founded over 40 years ago by Robert Sosnick. REDICO currently has invested in 24 mixed-use and office properties in Michigan, including three properties in Southfield, Michigan in addition to the One Towne Square Property. REDICO currently has a portfolio of over $2.0 billion in value, encompassing over 16.0 million square feet of space nationally.
 
REDICO is the original developer of the One Towne Square Property and has owned it since 1992. REDICO maintains its headquarters at the One Towne Square Property, and occupies 18,675 square feet under a lease that expires in March 2017.  REDICO also has offices in Florida, California, and Hawaii as well as affiliate offices in Florida and the Republic of Panama.
 
Escrows.  The loan documents provide for upfront reserves in the amount of $408,588 for real estate taxes, $21,774 for insurance, $1,601,020 in a separate outstanding TI/LC reserve (of which $846,775 was disbursed on the loan closing date), $358,964 for certain rent abatements and $93,750 for deferred maintenance. The loan documents also provide for ongoing monthly reserves in the amount of $81,718 for taxes, $5,444 for insurance, $8,895 for replacement reserves, and $35,581 for tenant improvements and leasing commissions (subject to the cap of $1,700,000).
 
Lockbox and Cash Management.  The One Towne Square Mortgage Loan requires a lender-controlled lockbox account, which is already in place, and that the borrower directs tenants to pay their rents directly to such lockbox account.  The loan documents also require that all cash revenues and all other monies received by the borrowers or the property manager relating to the One Towne Square Property be deposited into the lockbox account within three business days of receipt.  All amounts on deposit in the lockbox account are swept on a daily basis into a lender-controlled cash management account. Prior to the occurrence of a Sweep Event
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
83
 
 
ONE TOWNE SQUARE
  
Period (as defined below), excess cash funds on deposit in the cash management account are allocated as follows: 50.0% to borrower, 25.0% to the tenant improvement and leasing commission reserve and the remaining 25.0% to be paid to the One Towne Square Mezzanine Lender to be applied towards the One Towne Square Mezzanine Loan balance.  Upon the occurrence of a Sweep Event Period, all excess funds on deposit in the cash management account will be swept into a lender controlled excess cash flow account and held as additional collateral for the One Towne Square Mortgage Loan.  If there is a default under the One Towne Square Mezzanine Loan, and no Sweep Event Period is in effect, the first 25.0% of the excess cash flow shall be deposited into the tenant improvement and leasing commissions reserve, with the remaining 75.0% of the excess cash flow, paid to the One Towne Square Mezzanine Lender, as a distribution permitted under applicable law.  Provided no Sweep Event Period then exists, if the lender has received written notice from the One Towne Square Mezzanine Lender that the One Towne Square Mezzanine Loan has been paid in full, the first 25.0% of the excess cash flow shall be deposited into the tenant improvement and leasing commissions reserve, with the remaining 75.0% of excess cash flow distributed to the borrower.
 
A “Sweep Event Period” will commence (i) if an event of default has occurred or is continuing, (ii) if the debt service coverage ratio is less than 1.15x for two consecutive calendar quarters, (iii) upon the occurrence of an event of default beyond applicable notice and cure periods under the management agreement, or (iv) upon the occurrence of a Baker Tilly Sweep Event (as defined below). A Sweep Event Period will end upon, in the case of a trigger under clause (i) above, the cure of such event of default, in the case of a trigger under clause (ii) above, the debt service coverage ratio being at least 1.25x for two consecutive calendar quarters, in the case of a trigger under clause (iii) above, the cure of such default and in the case of a trigger under clause (iv) above, such Baker Tilly Sweep Event having been cured.
 
A “Baker Tilly Sweep Event” is triggered nine months prior to the Baker Tilly Virchow Krause (“Baker Tilly”) tenant’s current lease expiration date of May 31, 2016.  A Baker Tilly Sweep Event is cured upon the earlier of (i) the re-letting of at least 75.0% of the Baker Tilly premises or a renewal and extension of the Baker Tilly lease for at least 75.0% of the Baker Tilly premises or (ii) when the amount of the tenant improvement and leasing commissions funds are equal to or greater than $15.00 per square foot of the then current vacant space (including Baker Tilly) at the One Towne Square Property.
 
Property Management.  The One Towne Square Property is managed by an affiliate of the borrower.
 
Assumption.  The borrower has the right to transfer the One Towne Square Property, provided that no event of default has occurred and is continuing and certain other conditions are satisfied, including, but not limited to: (i) the lender’s reasonable determination that the proposed transferee and guarantor satisfy the lender’s credit review and underwriting standards, taking into consideration transferee’s experience, financial strength and general business standing; (ii) execution of a non-recourse carveout guaranty and an environmental indemnity by an affiliate of the transferee; (iii) and the One Towne Square Mezzanine Lender consent has been obtained or that the One Towne Square Mezzanine Loan has been paid in full; and (iv) if requested by the lender, rating agency confirmation from DBRS, KBRA and Moody’s that the transfer will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the Series 2014-LC18 Certificates.
 
Partial Release.  Not permitted.
 
Real Estate Substitution.  Not permitted.
 
Subordinate and Mezzanine Indebtedness.  Ladder Capital Finance LLC (the “One Towne Square Mezzanine Lender”) has made a $2,500,000 mezzanine loan (the “One Towne Square Mezzanine Loan”) to One Towne Member LLC a Delaware limited liability company that owns 100.0% of the borrower under the One Towne Square Mortgage Loan. The One Towne Square Mezzanine Loan accrues interest at an interest rate of 12.000% per annum and requires principal and interest payments based on a 30-year amortization schedule.  The One Towne Square Mezzanine Loan matures on December 6, 2024. The rights of the One Towne Square Mezzanine Lender are further described under “Description of the Mortgage Pool–Subordinate and/or Other Financing–Existing (Secured Financing and Mezzanine and Similar Financing)” in the Free Writing Prospectus.
 
Ground Lease.  None.
 
Terrorism Insurance.  The loan documents require that the “all risk” insurance policy required to be maintained by the borrowers provide coverage for terrorism in an amount equal to the full replacement cost of the One Towne Square Property.  The loan documents also require business interruption insurance covering no less than the 18-month period following the occurrence of a casualty event, together with a 12-month extended period of indemnity.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
84
 
 
(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.
 
 
85
 
 
HILTON GARDEN INN CUPERTINO
 
(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.
 
 
86
 
 
HILTON GARDEN INN CUPERTINO
 
(MAP)
 
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.
 
 
87
 
 
No. 8 – Hilton Garden Inn Cupertino
 
Loan Information
  
Property Information
Mortgage Loan Seller:
Liberty Island Group I LLC
  
Single Asset/Portfolio:
Single Asset
Credit Assessment
(DBRS/KBRA/Moody’s):
NR/NR/NR
  
Property Type:
Hospitality
Original Principal Balance:
$32,000,000
  
Specific Property Type:
Limited Service
Cut-off Date Principal Balance:
$32,000,000
  
Location:
Cupertino, CA
% of Initial Pool Balance:
2.8%
  
Size:
164 Rooms
Loan Purpose:
Refinance
  
Cut-off Date Principal
Balance Per Room:
$195,122
Borrower Names(1):
Various
  
Year Built/Renovated:
1997/2013
Sponsors:
Kelly Heil; Robert Longinetti; Peter
Danna
  
Title Vesting:
Fee
Mortgage Rate:
3.990%
  
Property Manager:
Intermountain Management
Note Date:
November 5, 2014
  
3rd Most Recent Occupancy (As of):
81.9% (12/31/2011)
Anticipated Repayment Date:
NAP
  
2nd Most Recent Occupancy (As of):
84.6% (12/31/2012)
Maturity Date:
December 1, 2024
  
Most Recent Occupancy (As of):
84.5% (12/31/2013)
IO Period:
120 months
  
Current Occupancy (As of):
85.1% (9/30/2014)
Loan Term (Original):
120 months
      
Seasoning:
0 months
  
Underwriting and Financial Information:
Amortization Term (Original):
NAP
    
Loan Amortization Type:
Interest-only, Balloon
  
3rd Most Recent NOI (As of):
$3,372,489 (12/31/2012)
Interest Accrual Method:
Actual/360
  
2nd Most Recent NOI (As of):
$3,850,399 (12/31/2013)
Call Protection:
L(25),GRTR 1% or YM(91),O(4)
  
Most Recent NOI (As of):
$4,385,380 (TTM 9/30/2014)
Lockbox Type:
Hard/Springing Cash Management
      
Additional Debt:
No
      
Additional Debt Type:
NAP
      
     
U/W Revenues:
$9,359,034
     
U/W Expenses:
$5,096,593
     
U/W NOI:
$4,262,441
     
U/W NCF:
$3,888,080
Escrows and Reserves(2):
    
U/W NOI DSCR:
3.29x
         
U/W NCF DSCR:
3.00x
         
U/W NOI Debt Yield:
13.3%
Type:
Initial
Monthly
Cap (If Any)
  
U/W NCF Debt Yield:
12.2%
Taxes
$187,844
$46,691
NAP
  
As-Is Appraised Value:
$60,100,000
Insurance
$65,281
$10,880
NAP
  
As-Is Appraisal Valuation Date:
October 9, 2014
FF&E Reserve
$31,200
$31,200
NAP
  
Cut-off Date LTV Ratio:
53.2%
PIP Reserve
$3,772,000
$0
NAP
  
LTV Ratio at Maturity or ARD:
53.2%
             
 
(1)
See “The Borrowers” section.
(2)
See “Escrows” section.
 
The Mortgage Loan.  The mortgage loan (the “Hilton Garden Inn Cupertino Mortgage Loan”) is evidenced by a single promissory note that is secured by a first mortgage encumbering the fee interest in a limited-service hotel located in Cupertino, California (the “Hilton Garden Inn Cupertino Property”).  The Hilton Garden Inn Cupertino Mortgage Loan was originated on November 5, 2014 by Prudential Mortgage Capital Company. The Hilton Garden Inn Cupertino Mortgage Loan had an original principal balance of $32,000,000, has an outstanding principal balance as of the Cut-off Date of $32,000,000 and accrues interest at an interest rate of 3.990% per annum.  The Hilton Garden Inn Cupertino Mortgage Loan had an initial term of 120 months, has a remaining term of 120 months as of the Cut-off Date and requires interest-only payments through the term of the Hilton Garden Inn Cupertino Mortgage Loan.  The Hilton Garden Inn Cupertino Mortgage Loan matures on December 1, 2024.

Following the lockout period, the borrowers have the right to prepay the Hilton Garden Inn Cupertino Mortgage Loan in whole, but not in part, on any date before September 1, 2024 provided that the borrower pays the greater of a yield maintenance premium or a prepayment premium equal to 1.0% of the then outstanding principal balance.  In addition, the Hilton Garden Inn Cupertino Mortgage Loan is prepayable without penalty on or after September 1, 2024.
 
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.
 
 
88
 
 
HILTON GARDEN INN CUPERTINO
 
Sources and Uses

Sources
        
Uses
        
Original loan amount
$32,000,000
  
 100.0%
  
Loan payoff
$25,846,288
  
80.8%
  
         
Reserves
4,056,325
  
12.7
  
         
Closing costs
821,075
  
  2.6
  
         
Return of equity
 1,276,312
  
4.0
  
Total Sources
$32,000,000
  
100.0%
  
Total Uses
$32,000,000
  
100.0% 
  
 
The Property. The Hilton Garden Inn Cupertino Property is a 164-room, five-story, limited-service hotel located in Cupertino, California in Silicon Valley. The Hilton Garden Inn Cupertino Property is located along Highway 280, roughly 9.0 miles west of the San Jose International Airport 2.0 miles east of the current Apple headquarters. Additionally, the Hilton Garden Inn Cupertino Property sits adjacent to the new Apple headquarters, which is slated for completion in 2016. The new Apple headquarters will have its own dedicated auditorium for corporate events, product reveals and other events. Previously, these events were held at the Moscone Center in San Francisco. The Hilton Garden Inn Cupertino Property comprises 125 king bed guestrooms, 25 queen bed guestrooms, eight double bed guestrooms, and six suites. The Hilton Garden Inn Cupertino Property contains 165 parking spaces, resulting in a parking ratio of 1.0 space per room. The Hilton Garden Inn Cupertino Property amenities include a fitness center, three banquet and meeting spaces, restaurant, convenience market, business center, swimming pool and spa. The restaurant only serves breakfast. The seating capacity is 38 patrons with an eight-seat lobby bar. The meeting rooms total 1,650 square feet which can be demised into three smaller rooms each totaling 550 square feet. The Hilton Garden Inn Cupertino Property also offers complimentary shuttle to the San Jose International Airport and free internet access in the lobby. The franchise agreement with Hilton expires in September 2018.

Operating History and Underwritten Net Cash Flow.  The following table presents certain information relating to the historical operating performance and the Underwritten Net Cash Flow at the Hilton Garden Inn Cupertino Property:
 
Cash Flow Analysis
 
    
2011
  
 
2012
  
2013
  
TTM
9/30/2014
  
U/W
  
U/W $ per
Room
  
Occupancy
  
81.9%
  
84.6%
  
84.5%
  
85.1%
  
85.1%
      
ADR
  
$134.10
  
$141.97
  
$154.76
  
$169.74
  
$169.74
      
RevPAR
  
$109.77
  
$120.09
  
$130.76
  
$144.46
  
$144.46
      
                           
Total Revenue
  
$7,303,429
  
$7,958,487
  
$8,556,583
  
$9,358,903
  
$9,359,034
  
$57,067
  
Total Department Expenses
  
1,832,263
  
2,067,661
  
2,054,216
  
2,157,013
  
2,157,013
  
$13,153
  
Gross Operating Profit
  
$5,471,166
  
$5,890,826
  
$6,502,367
  
$7,201,890
  
$7,202,022
  
$43,915
  
                           
 Total Undistributed Expenses
  
2,086,198
  
2,118,718
  
2,254,129
  
2,422,026
  
2,422,052
  
$14,769
  
 Profit Before Fixed Charges
  
$3,384,968
  
$3,772,109
  
$4,248,237
  
$4,779,865
  
$4,779,970
  
$29,146
  
                           
Total Fixed Charges
  
370,779
  
399,620
  
397,838
  
394,484
  
517,529
  
$3,156
  
                           
Net Operating Income
  
$3,014,189
  
$3,372,489
  
$3,850,399
  
$4,385,380
  
$4,262,441
  
$25,990
  
FF&E
  
0
  
0
  
0
  
0
  
374,361
  
$2,283
  
Net Cash Flow
  
$3,014,189
  
$3,372,489
  
$3,850,399
  
$4,385,380
  
$3,888,080
  
$23,708
  
                           
NOI DSCR
  
2.33x
  
2.61x
  
2.97x
  
3.39x
  
3.29x
      
NCF DSCR
  
2.33x
  
2.61x
  
2.97x
  
3.39x
  
3.00x
      
NOI DY
  
9.4%
  
10.5%
  
12.0%
  
13.7%
  
13.3%
      
NCF DY
  
9.4%
  
10.5%
  
12.0%
  
13.7%
  
12.2%
      
                           
 
Appraisal.  As of the appraisal valuation date of October 9, 2014, the Hilton Garden Inn Cupertino Property had an “as-is” appraised value of $60,100,000.

Environmental Matters.  According to the Phase I environmental site assessment dated October 23, 2014, there was no evidence of any recognized environmental conditions at the Hilton Garden Inn Cupertino Property.

Market Overview and Competition. The Hilton Garden Inn Cupertino Property is located in Cupertino, California along Highway 280 in the San Jose/Sunnyvale/Santa Clara metropolitan statistical area, commonly referred to as Silicon Valley. The Hilton Garden Inn Cupertino Property is roughly an hour south of downtown San Francisco, approximately 9.0 miles west of the San Jose International Airport and 2.0 miles east of the current Apple headquarters. In addition, the Hilton Garden Inn Cupertino Property is located adjacent to the new Apple headquarters, which is scheduled for a 2016 completion.

Demand drivers for the Hilton Garden Inn Cupertino Property are estimated at 78.0% for commercial, 11.0% for meeting and group and 11.0% for leisure. Commercial demand is primarily generated by corporations located in Cupertino including Apple, Trend Micro, Cloud.com, Lab 126, Packeteer, Chordiant and Seagate Technology. There are over 60 high-tech companies that have offices in Cupertino including IBM, Olivetti and Oracle. The new Apple headquarters will be located adjacent to the Hilton Garden Inn Cupertino
 
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.
 
 
89
 
 
HILTON GARDEN INN CUPERTINO
 
Property and is expected to provide significant demand in the future. The Hilton Garden Inn Cupertino Property also benefits from its proximity to convention centers in San Jose and Santa Clara. The Santa Clara Convention Center is located approximately 7.2 miles north of the Hilton Garden Inn Cupertino Property. The convention center has 302,000 square feet of space, consisting of flexible meeting rooms, exhibit halls, terraces, 31 breakout rooms and a 607-seat theater. The San Jose McEnery Convention Center is located 8.4 miles east of the Hilton Garden Inn Cupertino Property and provides more than 425,000 square feet of space for conventions and events. Leisure demand is generated by tourist attractions in Cupertino as well as other attractions and major events held in nearby San Jose, Santa Clara and Palo Alto, including concerts at SAP Center (formerly HP Pavilion), Six Flags, Levi’s Stadium (home of the National Football League’s San Francisco 49ers), athletic events at Stanford University, Great America Theme Park and the Winchester Mystery House. According to the appraisal, the primary competitive set, including the subject, has a total of 1,139 rooms. The September 2014 trailing twelve month occupancy and ADR achieved by these properties was roughly 80.0% and $158.60, respectively.

The following table presents certain information relating to the Hilton Garden Inn Cupertino Property’s competitive set:

Subject and Market Historical Occupancy, ADR and RevPAR

  

Competitive Set(1)
  
Hilton Garden Inn Cupertino
  
Penetration Factor
  
Year
Occupancy
  
ADR
  
RevPAR
  
Occupancy
  
ADR
  
RevPAR
  
Occupancy
  
ADR
  
RevPAR
  
 9/30/2014 TTM
80.0%
  
$158.60
  
$126.68
  
85.1%
  
$169.74
  
$144.46
  
106.4%
  
107.0%
  
114.0%
  
 
(1)
Information obtained from the Appraisal report dated October 28 2014.  The competitive set includes the following hotels: Courtyard by Marriott, Cypress Hotel, Wild Palms Hotel, Hilton Garden Inn – Mountain View, Moorpark Hotel – San Jose and Doubletree Hotel – Campbell.
 
The Borrowers.  The borrowers are BSL Family LLC, PMD LLC, Quito Hospitality Associate, LLC, each a Delaware limited liability company and Cupertino Hospitality Associates, LLC, a California limited liability company. Cupertino Hospitality Associates, LLC leases the property from the other three borrowers pursuant to an operating lease. Legal counsel to the borrowers delivered a non-syndicated tenant-in-common agreement in connection with the origination of the Hilton Garden Inn Cupertino Mortgage Loan. Kelly Heil, Robert Longinetti and Peter Danna, collectively, are the guarantors of certain nonrecourse carveouts under the Hilton Garden Inn Cupertino Mortgage Loan.

The Sponsor.  The sponsors are Kelly Heil, Robert Longinetti and Peter Danna. Robert Longinetti is the president of Terracommercial, Inc (“Terracommercial”). Its parent company, Terracommercial Investments, was founded by Mr. Longinetti approximately 30 years ago. Peter Danna and Kelly Heil are vice-presidents.  Terracommercial leases and manages commercial real estate with its focus primarily in the San Francisco Bay area. Terracommercial’s portfolio ranges from development, leasing, and management of single tenant buildings to shopping centers in excess of 100,000 square feet.  Other notable hotel transactions include Marriott Towne Place Suites in Lexington (KY), Billings (MT), and Sunnyvale (CA).
 
Escrows.  The loan documents provide for upfront escrows in the amount of $187,844 for real estate taxes, $65,281 for insurance, $31,200 for FF&E reserves and $3,772,000 for PIP Reserves. The loan documents provide for monthly escrows in the amount of $46,961 for real estate taxes, $10,880 for insurance and $31,200 for FF&E reserves. The borrower will have an initial monthly FF&E reserve of $31,200. At the end of each calendar year the FF&E reserves deposits will be 4.0% of the actual revenue for that calendar year. If it is determined the borrower’s required monthly payments are insufficient, the borrower will be required to make a payment in the amount equal the difference as determined by the servicer. If it is determined the borrower has paid in excess of the required FF&E reserve then all excess funds will be credited towards FF&E reserve payments for the following year.
 
The borrowers plan to reinvest approximately $3.3 million in renovations for interior furnishing upgrades, construction and HVAC upgrades post-closing in connection with an early renewal of the franchise agreement. The lender reserved approximately 115% of this amount, or $3,772,000 at loan closing into a PIP Reserve.

Lockbox and Cash Management.  The Hilton Garden Inn Cupertino Mortgage Loan requires a lender-controlled lockbox account, which is already in place, and that the borrower or property manager cause all hotel revenue payable with respect to the Hilton Garden Inn Cupertino Mortgage Loan to be deposited into a lockbox account. All amounts on deposit in the lockbox account are swept on a daily basis into a borrower-controlled cash management account. During a Cash Management Period, all funds are swept into the lender-controlled cash management account.

A “Cash Management Period” will commence upon the earlier of (i) the occurrence and continuance of an event of default, (ii) the debt service coverage ratio being less than 1.20x at the end of any calendar month based on the trailing 12-month operating period or (iii) a PIP Trigger Event (as defined below). A Cash Management Period will end, with regard to clause (i), upon the cure of such event of default; with regard to clause (ii), upon the amortizing debt service coverage ratio being equal to or greater than 1.25x for two consecutive calendar quarters; and with regard to clause (iii) a PIP Trigger Cure (as defined below) or (iv) a mortgage satisfaction event as defined in the related loan documents.

The borrowers have deposited funds to establish a reserve held by the lender in the amount of $3,772,000 (the “PIP Reserve”). In the event that the amount held in the PIP Reserve (after giving effect to any required disbursements from the PIP Reserve) on the date which is 12 months prior to the expiration of the Franchise Agreement is insufficient to complete the PIP improvements (such event being a “PIP Trigger Event”), the borrowers will pay the lender, concurrently with and in addition to all other amounts due on
 
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.
 
 
90
 
 
HILTON GARDEN INN CUPERTINO
  
each payment date thereafter, a deposit to the PIP Reserve in an amount equal to all excess cash flow generated by the Hilton Garden Inn Cupertino Property until such time that the PIP Reserve is sufficiently funded to complete such PIP improvements (such occurrence being a “PIP Trigger Cure”).
 
Property Management.  The Hilton Garden Inn Cupertino Property is managed by Intermountain Management.

Assumption.  The borrower has the two-time right to transfer the Hilton Garden Inn Cupertino Property provided that certain conditions are satisfied, including (i) no event of default has occurred and is continuing; (ii) the lender reasonably determines that the proposed transferee and guarantor satisfy the lender’s credit review and underwriting standards, taking into consideration transferee experience, financial strength and general business standing; and (iii) the lender has received confirmation from DBRS, KBRA and Moody’s that such assumption will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the Series 2014-LC18 Certificates.
 
Partial Release.  Not permitted.

Real Estate Substitution.  Not permitted.

Subordinate and Mezzanine Indebtedness.  Not permitted.
 
Ground Lease.  None.

Terrorism Insurance.  The loan documents require that the “all risk” insurance policy required to be maintained by the borrower provide coverage for terrorism in an amount equal to the full replacement cost of the Hilton Garden Inn Cupertino Property, as well as business interruption insurance covering no less than the 18-month period following the occurrence of a casualty event.

Earthquake Insurance: The loan documents do not require earthquake insurance. The seismic report indicated a probable maximum loss of 10.0%.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
91
 
 
(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.
 
 
92
 
 
NEW TOWN SHOPS ON MAIN
 
(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.
 
 
93
 
 
NEW TOWN SHOPS ON MAIN
 
(MAP)
 
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.
 
 
94
 
 
NEW TOWN SHOPS ON MAIN
 
(MAP)
 
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.
 
 
95
 
 
No. 9 – New Town Shops on Main
 
Loan Information
  
Property Information
Mortgage Loan Seller:
Wells Fargo Bank, National Association
  
Single Asset/Portfolio:
Single Asset
Credit Assessment
(DBRS/KBRA/Moody’s):
NR/NR/NR
  
Property Type:
Retail
Original Principal Balance:
$27,000,000
  
Specific Property Type:
Anchored
Cut-off Date Principal Balance:
$27,000,000
  
Location:
Williamsburg, VA
% of Initial Pool Balance:
2.4%
  
Size:
248,176 SF
Loan Purpose:
Refinance
  
Cut-off Date Principal
Balance Per SF(3):
$108.79
Borrower Name:
Williamsburg Developers, LLC
  
Year Built/Renovated:
2007/NAP
Sponsors(1):
Various
  
Title Vesting:
Fee
Mortgage Rate:
4.200%
  
Property Manager:
Self-managed
Note Date:
December 2, 2014
  
3rd Most Recent Occupancy (As of):
86.4% (12/31/2011)
Anticipated Repayment Date:
NAP
  
2nd Most Recent Occupancy (As of):
87.1% (12/31/2012)
Maturity Date:
December 11, 2021
  
Most Recent Occupancy (As of):
92.4% (12/31/2013)
IO Period:
None
  
Current Occupancy (As of):
87.5% (10/20/2014)
Loan Term (Original):
84 months
      
Seasoning:
0 months
  
Underwriting and Financial Information:
Amortization Term (Original)(2):
360 months
    
Loan Amortization Type:
Amortizing Balloon
  
3rd Most Recent NOI (As of):
$3,218,895 (12/31/2012)
Interest Accrual Method:
Actual/360
  
2nd Most Recent NOI (As of):
$3,386,131 (12/31/2013)
Call Protection:
L(24),D(56),O(4)
  
Most Recent NOI (As of):
$3,349,758 (TTM 10/31/2014)
Lockbox Type:
Hard/Upfront Cash Management
      
Additional Debt(3):
Yes
  
U/W Revenues:
$4,148,848
Additional Debt Type(3):
Mezzanine
  
U/W Expenses:
$1,236,049
     
U/W NOI:
$2,912,799
     
U/W NCF:
$2,693,406
     
U/W NOI DSCR(3) :
1.95x
Escrows and Reserves(4):
    
U/W NCF DSCR(3):
1.80x
     
U/W NOI Debt Yield(3):
10.8%
Type:
Initial
Monthly
Cap (If Any)
  
U/W NCF Debt Yield(3):
10.0%
Taxes
$25,705
$25,707
NAP
  
As-Is Appraised Value:
$51,100,000
Insurance
$0
Springing
NAP
  
As-Is Appraisal Valuation Date:
October 4, 2014
Replacement Reserves
$0
$4,136
$198,541
  
Cut-off Date LTV Ratio(3):
52.8%
TI/LC
$0
$30,000
$720,000
  
LTV Ratio at Maturity or ARD(3):
47.1%
             
 
(1)
See “Sponsors” section.
(2)
See “Subordinate and Mezzanine Indebtedness” section. Debt service payments are allocated on a pro rata basis, determined by the outstanding New Town Shops on Main Mortgage Loan and New Town Shops on Main Mezzanine Loan balances.  The pro rata allocation results in an effective 33.2-year amortization schedule for the New Town Shops on Main Mortgage Loan.
(3)
See “Subordinate and Mezzanine Indebtedness” section.  The equity interest in the New Town Shops on Main Mortgage Loan borrower has been pledged to secure mezzanine indebtedness with a principal balance of $5,000,000.  The LTV, DSCR, debt yield and Cut-off Date Principal Balance per square foot numbers shown in the chart above are based solely on the New Town Shops on Main Mortgage Loan.  As of the Cut-off Date, the combined U/W NCF DSCR, combined Cut-off Date LTV Ratio and combined U/W NCF Debt Yield are 1.26x, 62.6% and 8.4%, respectively.
(4)
See “Escrows” section.

The Mortgage Loan.  The mortgage loan (the “New Town Shops on Main Mortgage Loan”) is evidenced by a single promissory note that is secured by a first mortgage encumbering an anchored retail center located in Williamsburg, Virginia (the “New Town Shops on Main Property”).  The New Town Shops on Main Mortgage Loan was originated on December 2, 2014 by Wells Fargo Bank, National Association.  The New Town Shops on Main Mortgage Loan had an original principal balance of $27,000,000, has an outstanding principal balance as of the Cut-off Date of $27,000,000 and accrues interest at an interest rate of 4.200% per annum.  The New Town Shops on Main Mortgage Loan had an initial term of 84 months, has a remaining term of 84 months as of the Cut-off Date and requires payments of principal and interest based on a 30-year amortization schedule. The New Town Shops on Main Mortgage Loan matures on December 11, 2021.

Following the lockout period, the borrower has the right to defease the New Town Shops on Main Mortgage Loan in whole, but not in part, on any date before September 11, 2021.  In addition, the New Town Shops on Main Mortgage Loan is prepayable without penalty on or after September 11, 2021.
 
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.
 
 
96
 
 
NEW TOWN SHOPS ON MAIN
 
Sources and Uses
 
Sources
        
Uses
      
Original loan amount
$27,000,000
  
  78.6%
  
Loan payoff(1)
$34,198,899
  
    99.6%
Mezzanine loan
Sponsor’s new cash contribution
5,000,000
  
14.6 
  
Reserves
25,705
  
  0.1
2,329,738
  
6.8
  
Closing costs
105,134
  
  0.3
Total Sources
$34,329,738
  
100.0%
  
Total Uses
$34,329,738
  
  100.0%
 
   (1)  
The New Town Shops on Main Mortgage Loan is refinancing an existing Wells Fargo Bank, National Association balance sheet loan.

The Property.  The New Town Shops on Main Property is an anchored retail center located in Williamsburg, Virginia that contains approximately 248,176 square feet of rentable area.  Built in 2007, the New Town Shops on Main Property is comprised of 12 buildings situated on an 8.2-acre parcel.  The New Town Shops on Main is part of a larger 365.0-acre mixed-use development that features a 64.0-acre business park with 500,000 square feet of office and research space, approximately 1,000 apartments, town homes, condominiums and single family homes, and walking and biking trails linking the entire community.  The New Town Shops on Main Property is anchored by Regal Cinema, Barnes & Noble and American Family Fitness and other major tenants include Jo-Ann Stores, Panera and Buffalo Wild Wings.  The New Town Shops on Main Property contains 884 surface parking spaces, resulting in a parking ratio of 3.6 spaces per 1,000 square feet of rentable area.  As of October 20, 2014, the New Town Shops on Main Property was 87.5% occupied by 42 tenants.

The following table presents certain information relating to the tenancy at the New Town Shops on Main 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
  
Sales
PSF(2)
Occupancy Cost(2)
Lease
Expiration
Date
                         
 Anchor Tenant
        
 Regal Cinema
B+/B2/B+
42,050
16.9%
  
$19.00
  
$798,950
23.3%
  
$349,010(3)
19.3%
12/10/2025
 Barnes & Noble
NR/NR/NR
25,158
10.1%
  
$12.00
  
$301,896
8.8%
  
$171
7.0%
1/31/2017
 American Family Fitness
NR/NR/NR
26,357
10.6%
  
$10.35
  
$272,795
8.0%
  
NAV
NAV
10/31/2021
 Total Anchor Tenants
  
93,565
37.7%
  
$14.68
  
$1,373,641
40.1%
        
                         
 Major Tenants
                        
 Jo-Ann Stores
NR/NR/NR
15,334
6.2%
  
$10.50
  
$161,007
4.7%
  
NAV
NAV
1/31/2022(4)
 Panera
NR/NR/NR
4,600
1.9%
  
$29.50
  
$135,700
4.0%
  
NAV
NAV
12/31/2016
 Buffalo Wild Wings
NR/NR/NR
5,521
2.2%
  
$23.03
  
$127,144
3.7%
  
NAV
NAV
10/31/2019
 Total Major Tenants
25,455
10.3%
  
$16.65
  
$423,851
12.4%
        
                         
 Non-Major Tenants
98,145
39.5%
  
$16.58
  
$1,627,180
47.5%
        
                         
 Occupied Collateral Total
217,165
87.5%
  
$15.77
  
$3,424,672
100.0%
        
                         
 Vacant Space
  
31,011
12.5%
                  
                         
 Collateral Total
248,176
100.0%
                  
                         
 
(1)
Certain ratings are those of the parent company whether or not the parent guarantees the lease.
(2)
Sales PSF and Occupancy Cost are for the trailing 12-month period ending December 31, 2013.
(3)
Regal Cinema operates 12 screens and the reported sales are presented on a per screen basis.
(4)
Jo-Ann Stores may terminate its lease if gross sales for the 24-month period from April 15, 2013 to April 14, 2015 do not exceed $125 per square foot.  However, if the tenant achieves sales of $150 per square foot for any 12-month period prior to April 14, 2015, the termination option is null and void.  If the lease is terminated, the tenant must reimburse landlord for 80.0% of the unamortized cost of landlord’s work and 100.0% of the unamortized broker commission paid by landlord.
 
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.
 
 
97
 
 
NEW TOWN SHOPS ON MAIN
 
The following table presents certain information relating to the lease rollover schedule at the New Town Shops on Main Property:
 
Lease Expiration Schedule(1)(2)
 
Year Ending
 December 31,
  
No. of
Leases
Expiring
  
  Expiring
  NRSF
  
% of
Total
NRSF
  
Cumulative Expiring
NRSF
  
Cumulative
% of Total
NRSF
  
Annual
 U/W
Base Rent
  
Annual
 U/W
Base Rent
 PSF(3)
  
MTM
  
0
  
0
  
0.0%
  
0
  
0.0%
  
$0
  
$0.00
  
2014
  
0
  
0
  
0.0%
  
0
  
0.0%
  
$0
  
$0.00
  
2015
  
6
  
15,986
  
6.4%
  
15,986
  
6.4%
  
$239,599
  
$14.99
  
2016
  
11
  
35,333
  
14.2%
  
51,319
  
20.7%
  
$623,936
  
$17.66
  
2017
  
8
  
46,300
  
18.7%
  
97,619
  
39.3%
  
$697,382
  
$15.06
  
2018
  
6
  
15,775
  
6.4%
  
113,394
  
45.7%
  
$203,017
  
$12.87
  
2019
  
3
  
9,891
  
4.0%
  
123,285
  
49.7%
  
$207,209
  
$20.95
  
2020
  
1
  
3,127
  
1.3%
  
126,412
  
50.9%
  
$62,540
  
$20.00
  
2021
  
2
  
27,333
  
11.0%
  
153,745
  
61.9%
  
$294,267
  
$10.77
  
Thereafter
  
5
  
63,420
  
25.6%
  
217,165
  
87.5%
  
$1,096,722
  
$17.29
  
Vacant
  
0
  
31,011
  
12.5%
  
248,176
  
100.0%
  
$0
  
$0.00
  
Total/Weighted Average
  
42
  
248,176
  
100.0%
          
$3,424,672
  
$15.77
  
 
(1)
Information obtained from the underwritten rent roll.
(2)
Certain tenants may have lease termination options that are exercisable prior to the originally stated expiration date of the subject lease and that are not considered in the Lease Expiration Schedule.
(3)
Weighted Average Annual U/W Base Rent PSF excludes vacant space.
 
The following table presents historical occupancy percentages at the New Town Shops on Main Property:
 
Historical Occupancy
 
12/31/2011(1)
  
12/31/2012(1)
  
12/31/2013(1)
  
10/20/2014(2)
86.4%
  
87.1%
  
92.4%
  
87.5%
 
 
(1)
Information obtained from the borrower.
 
(2)
Information obtained from the underwritten rent roll.
 
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 New Town Shops on Main Property:
 
Cash Flow Analysis
 
 
2012
  
2013
  
 TTM
10/31/2014
  
U/W
  
U/W $ per SF
  
Base Rent
$3,448,694
  
$3,758,355
  
$3,828,890
  
$3,424,672
  
$13.80
  
Grossed Up Vacant Space
0
  
0
  
0
  
688,938
  
2.78
  
Percentage Rent
146,147
  
122,200
  
106,094
  
0
  
0.00
  
Total Reimbursables
633,524
  
664,401
  
664,214
  
690,121
  
2.78
  
Other Income
102,207
  
19,029
  
22,081
  
22,081
  
0.09
  
Less Vacancy & Credit Loss
0
  
0
  
0
  
(676,963)(1)
  
(2.73)
  
Effective Gross Income
$4,330,573
  
$4,563,984
  
$4,621,279
  
$4,148,848
  
$16.72
  
                     
Total Operating Expenses
$1,111,678
  
$1,177,853
  
$1,271,521
  
$1,236,049
  
$4.98
  
                     
 Net Operating Income
$3,218,895
  
$3,386,131
  
$3,349,758
  
$2,912,799
  
$11.74
  
TI/LC
0
  
0
  
0
  
169,758
  
0.68
  
Capital Expenditures
0
  
0
  
0
  
49,635
  
0.20
  
 Net Cash Flow
$3,218,895
  
$3,386,131
  
$3,349,758
  
$2,693,406
  
$10.85
  
                     
NOI DSCR
2.15x
  
2.26x
  
2.24x
  
1.95x
      
NCF DSCR
2.15x
  
2.26x
  
2.24x
  
1.80x
      
NOI DY
11.9%
  
12.5%
  
12.4%
  
10.8%
      
NCF DY
11.9%
  
12.5%
  
12.4%
  
10.0%
      
 
(1)      The underwritten economic vacancy is 16.5%. The New Town Shops on Main Property was 87.5% physically occupied as of October 20, 2014.
 
Appraisal.  As of the appraisal valuation date of October 4, 2014, the New Town Shops on Main Property had an “as-is” appraised value of $51,100,000.

Environmental Matters.  According to the Phase I environmental site assessment dated October 9, 2014, there was no evidence of any recognized environmental conditions at the New Town Shops on Main Property.

Market Overview and Competition.  The New Town Shops on Main Property is located in Williamsburg, Virginia and is part of the Norfolk-Newport News-Virginia Beach metropolitan statistical area that is also referred to as Hampton Roads.  Primary access to the area is provided by US Route 199, the primary highway in Williamsburg, and Interstate 64, which is located approximately 4.5 miles
 
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.
 
 
98
 
 
NEW TOWN SHOPS ON MAIN
 
east of the New Town Shops on Main Property and is the primary east/west highway that connects to the state capital, the city of Richmond.  The College of William & Mary is located approximately 1.3 miles east of the New Town Shops on Main Property and serves as the area’s largest employer.  College of William & Mary is the second oldest college in the United States and its current Fall 2014 undergraduate enrollment is approximately 6,299.  As of 2014, the estimated population within a one-, three-, and five-mile radius of the New Town Shops on Main Property was 3,839, 39,199 and 72,440, respectively.  The estimated average household income within the same one-, three- and five-mile radii was $70,218, $86,887 and $90,512, respectively.

According to a third party report, the New Town Shops on Main Property is located within the Williamsburg submarket of the Hampton Roads retail market.  As of the third quarter of 2014, the Williamsburg submarket reported a total retail inventory of 5.5 million square feet with a 7.4% vacancy rate and average asking rents of $18.45 per square foot on a triple-net basis.

The following table presents certain information relating to comparable retail properties for the New Town Shops on Main Property:

Competitive Set(1)
 
 
 
New Town
Shops on Main (Subject)
Settler’s Market
at New Town
Courthouse Commons
The Shops at
High Street
Tribe Square
Cedar Valley Shopping
Center
 Location
Williamsburg, VA
Williamsburg, VA
Williamsburg, VA
Williamsburg, VA
Williamsburg, VA
Williamsburg, VA
 Distance from Subject
--
0.5 miles
0.5 miles
1.1 miles
1.6 miles
4.6 miles
 Property Type
Anchored Retail
Neighborhood
Center
Neighborhood
Center
Lifestyle Center
Unanchored Retail
Shadow-
Anchored Retail
 Year Built/Renovated
2007/NAP
2008/NAP
2011/NAP
2007/NAP
2011/NAP
2006/NAP
 Anchors
Regal Cinema,
Barnes & Noble, American Family
Fitness
Steinmart, Books a
Million, Home
Goods
The Fresh Market
Movie Tavern
Cinemas
NAP
NAP
 Total GLA
248,176 SF
236,479 SF
52,290 SF
115,591 SF
9,583 SF
20,434 SF
 Total Occupancy
88%
90%
95%
80%
100%
76%
 
 
(1)
Information obtained from the appraisal.
 
The Borrower. The borrower is Williamsburg Developers, LLC, a Virginia limited liability company and single purpose entity with one independent director that is controlled by the principals of Developers Realty Corporation (“DRC”). Wayne Eisenbaum, Alan Eisenbaum and AMPM Enterprises are the guarantors of certain nonrecourse carveouts under the New Town Shops on Main Mortgage Loan.

The Sponsors.  The sponsors are Wayne Eisenbaum, Alan Eisenbaum and AMPM Enterprises.  Messrs. Eisenbaum are principals of DRC, a shopping center development company that was founded in 1958 and currently operates 24 shopping centers located across seven states.

Escrows.  The loan documents provide for an upfront escrow in the amount of $25,705 for real estate taxes.  In addition, the loan documents provide for ongoing monthly escrows of $25,707 for real estate taxes, $4,136 for replacement reserves (subject to a cap of $198,541) and $30,000 for tenant improvements and leasing commissions (subject to a cap of $720,000).  The loan documents do not require monthly escrows for insurance provided (i) no event of default has occurred and is continuing; (ii) the insurance required to be provided by the borrower is maintained pursuant to one or more blanket insurance policies; and (iii) the borrower provides the lender with timely proof of payment of insurance premiums.

Lockbox and Cash Management.  The New Town Shops on Main Mortgage Loan requires a lender-controlled lockbox account, which is already in place, and that the borrower directs tenants to pay their rents directly into such lockbox account.  The loan documents also require that all rents received by the borrower or property manager be deposited into the lockbox account within one business day of receipt.  Prior to a Cash Trap Event Period (as defined below), all excess cash flow is distributed to borrower.  During a Cash Trap Event Period, all excess cash flow is swept to a lender controlled cash management account.

A “Cash Trap Event Period” will commence upon the earlier of (i) the occurrence and continuance of an event of default; (ii) the combined New Town Shops on Main Mortgage Loan and New Town Shops on Main Mezzanine Loan (as defined below in the “Subordinate and Mezzanine Indebtedness” section) debt service coverage ratio falling below 1.15x; or (iii) the occurrence of a Tenant Trigger Period (as defined below).  A Cash Trap Event Period will expire with regard to clause (i), upon the cure of such event of default; with regard to clause (ii), upon the date that the combined New Town Shops on Main Mortgage Loan and New Town Shops on Main Mezzanine Loan debt service coverage ratio is equal to or greater than 1.25x for two consecutive calendar quarters; with regard to clause (iii), the Tenant Trigger Period has ended.
 
A “Tenant Trigger Period” will commence upon the earlier of (i) Regal Cinemas or Barnes & Noble defaulting under its lease, filing for bankruptcy, or going dark, vacating or failing to occupy its space; or (ii) Barnes & Noble failing to renew its lease six months prior to its lease expiration. A Tenant Trigger Period will expire with regard to clause (i), upon the cure of such default under the applicable lease, termination of the bankruptcy proceeding and affirmation of the applicable lease, or the applicable tenant resuming its normal business and being open for two consecutive quarters; with regard to clause (ii), Barnes & Noble exercising its renewal or extension option; and with regard to clauses (i) and (ii), upon lender receiving evidence that a satisfactory replacement tenant has commenced
 
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.
 
 
99
 
 
NEW TOWN SHOPS ON MAIN
  
paying rent, is conducting business in 90.0% of the applicable tenant space at market rents and all tenant improvement costs, leasing commissions and/or rent concessions have been paid or specifically reserved by lender.
 
Property Management. The New Town Shops on Main Property is managed by an affiliate of the borrower.
 
Assumption. The borrower has a two-time right to transfer the New Town Shops on Main Property, provided that no event of default has occurred and is continuing and certain other conditions are satisfied, including, but not limited to the following: (i) the lender’s reasonable determination that the proposed transferee and guarantor satisfy the lender’s credit review and underwriting standards, taking into consideration the transferee’s experience, financial strength and general business standing; (ii) execution of a recourse guaranty and an environmental indemnity by an affiliate of the transferee; and (iii) if requested by the lender, rating agency confirmation from DBRS, KBRA and Moody’s that the transfer will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the Series 2014-LC18 Certificates.

Free Release. Following the lockout period, the borrower is permitted to release two vacant parcels located behind the Regal Cinemas, subject to certain conditions including (i) the release parcel is vacant, non-income producing and unimproved; (ii) following the release, the remaining parcel will have unimpeded and unencumbered access for all pedestrian and vehicular ingress and egress; and (iii) regardless of whether or not the requested release occurs, borrower must pay or reimburse lender for all reasonable third party costs and expenses incurred by lender in connection with the release.

Partial Release. Not permitted.

Real Estate Substitution. Not permitted.

Subordinate and Mezzanine Indebtedness. RMezz New Town, LLC (the “New Town Shops on Main Mezzanine Lender”), a subsidiary of Rialto Capital, has originated a $5,000,000 mezzanine loan (the “New Town Shops on Main Mezzanine Loan”) to Williamsburg Mezz, LLC (the “Mezzanine Borrower”).  The New Town Shops on Main Mezzanine Loan had an initial term of 84 months, has a remaining term of 84 months as of the Cut-off Date and requires payments of principal and interest based on a 30-year amortization schedule. The debt service coverage ratio is calculated on a 30-year amortization schedule and a 4.200% interest rate for the New Town Shops on Main Mortgage Loan and on an 11.500% interest rate for the New Town Shops on Main Mezzanine Loan, for a blended interest rate of 5.340%.  Debt service payments are allocated on a pro rata basis, determined by the outstanding New Town Shops on Main Mortgage Loan and New Town Shops on Main Mezzanine Loan balances.  The pro rata allocation results in an effective 33.2-year amortization schedule for the New Town Shops on Main Mortgage Loan and an effective 20.8-year amortization schedule for the New Town Shops on Main Mezzanine Loan.

Ground Lease. None.

Terrorism Insurance. The loan documents require that the “all risk” insurance policy required to be maintained by the borrower provide coverage for terrorism in an amount equal to the full replacement cost of the New Town Shops on Main Property.  The loan documents also require business interruption insurance covering no less than the 12-month period following the occurrence of a casualty event, together with a six-month extended period of indemnity.
 
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.
 
 
100
 
 
(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.
 
 
101
 
 
WALGREENS PORTFOLIO
  
 
(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.
 
 
102
 
 
WALGREENS PORTFOLIO
  
 
(MAP)
 
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.
 
 
103
 
 
No. 10 –Walgreens Portfolio
               
Loan Information
  
Property Information
Mortgage Loan Seller:
Ladder Capital Finance LLC
  
Single Asset/Portfolio:
Portfolio
Credit Assessment
(DBRS/KBRA/Moody’s):
NR/NR/NR
  
Property Type:
Retail
Original Principal Balance:
$25,000,000
  
Specific Property Type:
Single Tenant
Cut-off Date Principal Balance:
$25,000,000
  
Location:
Various – See Table
% of Initial Pool Balance:
2.2%
  
Size:
89,478 SF
Loan Purpose:
Acquisition
  
Cut-off Date Principal
Balance Per SF:
$279.40
Borrower Names(1):
Various
  
Year Built/Renovated:
Various – See Table
Sponsor:
Cole Operating Partnership V, LP
  
Title Vesting:
Fee
Mortgage Rate:
4.450%
  
Property Manager:
CREI Advisors, LLC
Note Date:
November 26, 2014
  
3rd Most Recent Occupancy (As of):
100.0% (12/31/2011)
Anticipated Repayment Date:
NAP
  
2nd Most Recent Occupancy (As of):
100.0% (12/31/2012)
Maturity Date:
December 6, 2024
  
Most Recent Occupancy (As of):
100.0% (12/31/2013)
IO Period:
60 months
  
Current Occupancy (As of):
100.0% (12/1/2014)
Loan Term (Original):
120 months
      
Seasoning:
0 month
  
Underwriting and Financial Information:
Amortization Term (Original):
360 months
    
Loan Amortization Type:
Interest-only, Amortizing Balloon
  
3rd Most Recent NOI (As of)(3):
NAV (12/31/2011)
Interest Accrual Method:
Actual/360
  
2nd Most Recent NOI (As of) (3):
NAV (12/31/2012)
Call Protection:
L(24),D(93),O(3)
  
Most Recent NOI (As of) (3):
NAV (12/31/2013)
Lockbox Type:
Hard/Upfront Cash Management
  
 
Additional Debt:
None
      
Additional Debt Type:
NAP
      
     
U/W Revenues:
$2,103,510
     
U/W Expenses:
$42,070
       
U/W NOI(3):
$2,061,439
       
U/W NCF:
$2,049,322
         
U/W NOI DSCR:
1.36x
         
U/W NCF DSCR:
1.36x
         
U/W NOI Debt Yield:
8.2%
Escrows and Reserves(2):
        
U/W NCF Debt Yield:
8.2%
         
As-Is Appraised Value:
$36,395,000
Type:
Initial
Monthly
Cap (If Any)
  
As-Is Appraisal Valuation Date:
Various(4)
Taxes
$0
Springing
NAP
  
Cut-off Date LTV Ratio:
68.7%
Insurance
$0
Springing
NAP
  
LTV Ratio at Maturity or ARD:
62.8%
 
(1)
See “The Borrowers” section.
(2)
See “Escrows” section.
(3)
See “Cash Flow Analysis” section.
(4)
The As-Is Appraisal Valuation Dates range from October 15, 2014 to October 17, 2014.
 
The Mortgage Loan.  The mortgage loan (the “Walgreens Portfolio Mortgage Loan”) is evidenced by a single promissory note that is secured by first mortgages encumbering the fee interest in a portfolio of six single tenant retail properties 100.0% leased to Walgreens located in Arkansas, Indiana, Louisiana, Michigan and Missouri (the “Walgreens Portfolio Properties”).  The Walgreens Portfolio Mortgage Loan was originated on November 26, 2014 by Ladder Capital Finance LLC. The Walgreens Portfolio Mortgage Loan had an original principal balance of $25,000,000, has an outstanding principal balance as of the Cut-off Date of $25,000,000 and accrues interest at an interest rate of 4.450% per annum. The Walgreens Portfolio Mortgage Loan had an initial term of 120 months, has a remaining term of 120 months as of the Cut-off Date and requires interest-only payments for the first 60 months following origination and, thereafter, requires payments of principal and interest based on a 30-year amortization schedule.  The Walgreens Portfolio Mortgage Loan matures on December 6, 2024.
 
Following the lockout period, the borrowers have the right to defease the Walgreens Portfolio Mortgage Loan in whole, or in part, on any date before October 6, 2024. In addition, the Walgreens Portfolio Mortgage Loan is prepayable without penalty on or after October 6, 2024.
 
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.
 
 
104
 
 
WALGREENS PORTFOLIO
  
 
Sources and Uses

Sources
        
Uses
      
Original loan amount
$25,000,000
67.6
 %   
Purchase price
$35,795,596
96.8
 % 
Sponsor’s new cash contribution
11,978,693
32.4
    
Closing costs
1,183,097
3.2
  
Total Sources
$36,978,693
     100.0
 %   
Total Uses
$36,978,693
100.0
 % 
 
The Properties.  The Walgreens Portfolio Properties are comprised of the fee interests in six single tenant retail properties totaling 89,478 rentable square feet and 100.0% leased to Walgreens. Walgreen’s is the largest drugstore chain in the United States and operates more than 8,600 stores in all 50 states. Prescription drugs generally account for about two-thirds of sales with the rest coming from the sale of general merchandise, over-the-counter medications, cosmetics and groceries.
 
The following table presents certain information relating to the Walgreens Portfolio Properties:

Property Name
 
 
 
 
Location
Allocated
Cut-off Date Principal
Balance
  
% of Portfolio Cut-off Date Principal
Balance
  
Occupancy
  
Year Built/ Renovated
Net
Rentable
Area (SF)
Appraised
Value
  
Walgreens – Harrison
Harrison, AR
$4,825,000
  
19.3%
  
100.0%
  
2005/NAP
14,820
 $7,050,000
  
Walgreens – Indianapolis
Indianapolis, IN
$4,675,000
  
18.7%
  
100.0%
  
1999/NAP
14,820
$6,800,000
  
Walgreens – Clinton Township
Clinton Township, MI
$4,275,000
  
17.1%
  
100.0%
  
2000/NAP
15,120
$6,200,000
  
Walgreens – Lees Summit
Lees Summit, MO
$4,250,000
  
17.0%
  
100.0%
  
1997/NAP
13,905
 $6,200,000
  
Walgreens – Siloam Springs
Siloam Springs, AR
$3,900,000
  
15.6%
  
100.0%
  
2007/NAP
14,820
 $5,675,000
  
Walgreens – Slidell
Slidell, LA
$3,075,000
  
12.3%
  
100.0%
  
1996/NAP
15,993
$4,470,000
  
Total/Weighted Average
  
$25,000,000
  
100.0%
  
100.0%
    
89,478
$36,395,000
  
 
The following table presents certain information relating to the sole tenant at each of the Walgreens Portfolio Properties:

Major Tenant

Tenant Name
Credit Rating
(Fitch/Moody’s/
S&P)(1)
Tenant
NRSF
% of
NRSF
Annual U/W
Base Rent
PSF(2)
Annual
U/W Base Rent(2)
% of Total Annual
U/W Base
Rent
Lease
Expiration
Date
           
Walgreens
NR/Baa2/BBB
89,478
100.0%
$24.10
$2,156,449
100.0%
11/30/2029
Collateral Total
  
89,478
100.0%
        
               
 
(1)
Certain ratings are those of the parent company whether or not the parent guarantees the lease.
(2)
The Annual U/W Base Rent PSF and Annual U/W Base Rent include the average rent during the Walgreens Portfolio Mortgage Loan term. The initial annual rent is $2,104,708 in total or $23.52 PSF and the leases provide for rental increases of 5.0% every five years.
 
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.
 
 
105
 
 
WALGREENS PORTFOLIO
  
 
The following table presents certain information relating to the lease rollover schedule at the Walgreens Portfolio Properties:

Lease Expiration Schedule(1)

Year Ending
December 31,
No. of
Leases Expiring
Expiring
NRSF
% of Total
NRSF
  
Cumulative
Expiring
NRSF
  
Cumulative
% of Total
NRSF
  
Annual U/W Base
Rent(2)
  
Annual
U/W Base
Rent PSF(2)
MTM
0
0
0.0%
    
0
    
0.0%
    
$0
    
$0.00
  
2014
0
0
0.0%
    
0
    
0.0%
    
$0
    
$0.00
  
2015
0
0
0.0%
    
0
    
0.0%
    
$0
    
$0.00
  
2016
0
0
0.0%
    
0
    
0.0%
    
$0
    
$0.00
  
2017
0
0
0.0%
    
0
    
0.0%
    
$0
    
$0.00
  
2018
0
0
0.0%
    
0
    
0.0%
    
$0
    
$0.00
  
2019
0
0
0.0%
    
0
    
0.0%
    
$0
    
$0.00
  
2020
0
0
0.0%
    
0
    
0.0%
    
$0
    
$0.00
  
2021
0
0
0.0%
    
0
    
0.0%
    
$0
    
$0.00
  
2022
0
0
0.0%
    
0
    
0.0%
    
$0
    
$0.00
  
2023
0
0
0.0%
    
0
    
0.0%
    
$0
    
$0.00
  
2024
0
0
0.0%
    
0
    
0.0%
    
$0
    
$0.00
  
Thereafter
6
89,478
100.0%
    
89,478
    
100.0%
    
$2,156,449
    
$24.10
  
Vacant
0
0
0.0%
    
89,478
    
100.0%
    
$0
    
$0.00
  
Total/Weighted Average
6
89,478
100.0%
                
$2,156,449
    
$24.10
  
 
(1)
Information obtained from the underwritten rent roll.
(2)
The Annual U/W Base Rent PSF and Annual U/W Base Rent include the average rent during the Walgreens Portfolio Mortgage Loan term. The initial annual rent is $2,104,708 in total or $23.52 PSF and the leases provide for rental increases of 5.0% every five years.
 
The following table presents historical occupancy percentages at the Walgreens Portfolio Properties:

Historical Occupancy

12/31/2011(1)
  
12/31/2012(1)
  
12/31/2013(1)
  
12/1/2014(2)
100.0%
  
100.0%
  
100.0%
  
100.0%
 
(1)
Information obtained from the leases.
(2)
Information based on the underwritten rent roll.
 
Underwritten Net Cash Flow.  The following table presents certain information relating to the Underwritten Net Cash Flow at the Walgreens Portfolio Properties:

Cash Flow Analysis(1)

 
U/W
  
U/W $ per SF
  
Base Rent
$2,156,449(2)
  
$24.10
  
Total Reimbursables
12,117
  
0.14
  
Less Vacancy & Credit Loss
      (65,057)(3)
  
(0.73)
  
Effective Gross Income
$2,103,510
  
$23.51
  
         
Total Operating Expenses
$42,070
  
$0.47
  
         
Net Operating Income
$2,061,439
  
$23.04
  
TI/LC
0
  
0.00
  
Capital Expenditures
12,117
  
0.14
  
Net Cash Flow
$2,049,322
  
$22.90
  
         
NOI DSCR
1.36x
      
NCF DSCR
1.36x
      
NOI DY
8.2%
      
NCF DY
8.2%
      
(1)   Historical financial statements are not available as the sponsor recently acquired the Walgreens Portfolio Properties as part of a sale-leaseback transaction.
(2)   The U/W Base Rent includes the average rent during the Walgreens Portfolio Mortgage Loan term. The initial annual rent is $2,104,708 in total or $23.52 PSF and the lease features rental increases of 5.0% every five years.
(3)   The underwritten economic vacancy is 3.0%. The Walgreens Portfolio Properties were 100.0% physically occupied as of December 1, 2014.
 
Appraisal.  As of the appraisal valuation dates ranging from October 15, 2014 to October 17, 2014, the Walgreens Portfolio Properties had an aggregate “as-is” appraised value of $36,395,000.

Environmental Matters.  According to the Phase I environmental site assessments dated from October 21, 2014 to October 28, 2014, there was no evidence of any recognized environmental conditions at any of the Walgreens Portfolio 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.
 
 
106
 
 
WALGREENS PORTFOLIO
  
 
The Borrowers.  The borrowers are ARCP WG Harrison AR, LLC, ARCP WG Siloam Springs AR, LLC, ARCP WG Indianapolis (Washington) IN, LLC, ARCP WG Slidell LA, LLC, ARCP WG Clinton Township MI, LLC and ARCP WG Lees Summit (Langsford) MO, LLC, all Delaware limited liability companies and single purpose entities with two independent directors. Legal counsel to the borrower delivered a non-consolidation opinion in connection with the origination of the Walgreens Portfolio Mortgage Loan. Cole Operating Partnership V, LP (“Cole V”), the sponsor and indirect owner of the borrowers, is the guarantor of certain nonrecourse carveouts under the Walgreens Portfolio Mortgage Loan.

The Sponsors. The sponsor is Cole V. Founded in 2012, Cole V is a non-traded REIT that invests in retail, office and industrial properties. Cole V is externally managed by Cole REIT Advisors V, LLC an affiliate of Cole Capital. As of September 30, 2014, Cole V owned 47 properties totaling 716,000 square feet in 18 states.

Escrows.  Ongoing monthly reserves for real estate taxes and insurance are not required as long as (i) no event of default exists, (ii) the tenants are paying taxes directly to the taxing authorities, (iii) the tenants are maintaining the insurance in accordance with the terms of the leases (or self-insuring), (iv) the tenants are paying insurance premiums directly to the insurers or agents (unless the tenants are self-insuring), (v) the leases are in full force and effect and no landlord or tenant shall be in default of any of its obligations beyond applicable notice and cure periods, if any, and (vi) unless the borrowers are providing insurance under an approved blanket policy, only with respect to the waiver of ongoing monthly insurance reserves, the senior unsecured debt rating of Walgreens shall be and remain at least “BBB-” by S&P (or the equivalent of such rating by Moody’s).

Lockbox and Cash Management.  The Walgreens Portfolio Mortgage Loan requires a lender-controlled lockbox account, which is already in place, and that the borrowers direct tenants to pay their rents directly into such lockbox account. The loan documents also require that all rents received by the borrowers or the property manager be deposited into the lockbox account within two business days of receipt. Funds are then swept into a cash management account controlled by the lender and prior to the occurrence of an Excess Cash Flow Sweep Trigger Event (as defined below), all excess funds after the application in accordance with the loan documents are distributed to the borrowers’ operating account. During an Excess Cash Flow Sweep Trigger Event, all excess cash flow is retained in the cash management account.

An “Excess Cash Flow Sweep Trigger Event” will commence upon the occurrence of (i) an event of default; (ii) the amortizing net cash flow debt service coverage ratio is less than 1.25x; (iii) stores comprising more than 10.0% of the Walgreens Portfolio Properties “go dark”; (iv) Walgreens becomes insolvent, files for bankruptcy or has its senior unsecured debt rating fall below BB+/Ba1 by S&P or Moody’s; (v) an event of default occurs under the property management agreement; or (vi) any borrower or guarantor becomes insolvent or files for bankruptcy.

An Excess Cash Flow Sweep Trigger Event will be cured, with regard to clause (i), upon the cure of such event of default; with regard to clause (ii), upon the amortizing net cash flow debt service coverage ratio being equal to or greater than 1.30x for six consecutive months; with regard to clause (iii), (a) the date on which less than 10.0% of the Walgreens Portfolio Properties are “dark”, or (b) an amount equal to 100.0% of the loan amount allocated to such dark property has been swept into the cash management account; and with regard to clause (iv) (a) the date on which the senior unsecured debt rating of Walgreens is upgraded to at least BBB-/Baa3 by S&P or Moody’s and is maintained for six consecutive months, or (b) if Walgreens becomes solvent for at least six consecutive months or shall no longer be a debtor in any bankruptcy action and shall have affirmed the leases; with regard to clause (v), the date on which lender, in its sole discretion, with accepts or waives the event of default triggering such Excess Cash Flow Sweep Trigger Event; with regard to clause (vi), the date on which either the default under the property management agreement has been cured to lender’s satisfaction or borrower has entered a replacement property management agreement in accordance with the loan agreement.  During the term of the Walgreens Portfolio Mortgage Loan, there shall be no more than three Excess Cash Flow Sweep Trigger Event cures.

Property Management.  The Walgreens Portfolio Properties are managed by CREI Advisors, LLC.

Assumption.  The borrowers have the right to transfer the Walgreens Portfolio Properties in whole, but not in part, provided that no event of default has occurred and is continuing and certain other conditions are satisfied, including (i) the lender’s reasonable determination that the proposed transferee and guarantor satisfy the lender’s credit review and underwriting standards, taking into consideration transferee experience, financial strength and general business standing; (ii) execution of a recourse guaranty and an environmental indemnity by an affiliate of the transferee; and (iii) if requested by the lender, rating agency confirmation from KBRA, DBRS and Moody’s that the transfer will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the Series 2014-LC18 Certificates.

Partial Release.  Following the second anniversary of the issuance of the Series 2014-LC18 Certificates, the borrowers is permitted to partially release any of the Walgreens Portfolio Properties in connection with a partial defeasance, subject to certain conditions including (i) no event of default exists; (ii) borrowers shall have submitted to lender a written request for such partial defeasance at least thirty days prior to the proposed partial defeasance date; (iii) after the partial defeasance, the assumed debt service coverage ratio (as defined in the related loan documents) of the remaining property shall be equal to or greater than the greater of (a) the assumed debt service coverage ratio of all properties prior to the partial defeasance; and (b) 1.35x; and (iv) after the partial defeasance, the loan-to-value ratio of the remaining property or properties shall be equal to or less than the lesser of (a) 68.7% and (b) the loan to value ratio immediately prior to the Partial Defeasance.

Real Estate Substitution.  Substitution of the Walgreens Portfolio Properties is permitted in connection with curing a “go dark trigger” (described in clause (iii) of the definition of Excess Cash Flow Sweep Trigger Event).  Substitution conditions include: (i) no more than two individual properties may be replaced during the Walgreens Portfolio Mortgage Loan term; (ii) the appraised value of the substitute property must be greater than or equal to that of the individual property being replaced as of the loan closing and as of the date of substitution; and (iii) the aggregate assumed debt service coverage ratio after the substitution cannot be less than the
 
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.
 
 
107
 
 
WALGREENS PORTFOLIO
  
 
aggregate assumed debt service coverage ratio for the twelve full calendar months immediately preceding the substitution or at loan closing.

Subordinate and Mezzanine Indebtedness.  Not permitted.

Ground Lease.  None.

Terrorism Insurance.  The loan documents require that the “all risk” insurance policy required to be maintained by the borrowers provide coverage for terrorism in an amount equal to the full replacement cost of the Walgreens Portfolio Properties. The loan documents also require business interruption insurance covering no less than the 12-month period following the occurrence of a casualty event; provided, however, that borrowers are not required to carry the insurance required under the loan agreement while Walgreens self-insures pursuant to its lease and has a senior unsecured debt rating from S&P of at least “BBB-”.
 
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.
 
 
108
 
 
(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.
 
 
109
 
 
No. 11 – 1175 North Main Street
               
Loan Information
  
Property Information
Mortgage Loan Seller:
Ladder Capital Finance LLC
  
Single Asset/Portfolio:
Single Asset
Credit Assessment (DBRS/KBRA/Moody’s):
NR/NR/NR
  
Property Type:
Other
Original Principal Balance:
$24,800,000
  
Specific Property Type:
Data Center
Cut-off Date Principal Balance:
$24,800,000
  
Location:
Harrisonburg, VA
% of Initial Pool Balance:
2.2%
  
Size:
102,000 SF
Loan Purpose:
Acquisition
  
Cut-off Date Principal
Balance Per SF:
$243.14
Borrower Name:
GI DC Harrisonburg, LLC
  
Year Built/Renovated:
1978/2011
Sponsor:
Datacore Fund, L.P.
  
Title Vesting:
Fee
Mortgage Rate:
3.695%
  
Property Manager:
Goldstar Properties LLC
Note Date:
November 17, 2014
  
3rd Most Recent Occupancy (As of) (1):
NAV
Anticipated Repayment Date:
NAP
  
2nd Most Recent Occupancy (As of) (1):
NAV
Maturity Date:
December 6, 2024
  
Most Recent Occupancy (As of) (1):
NAV
IO Period:
120 months
  
Current Occupancy (As of) (1):
100.0% (12/1/2014)
Loan Term (Original):
120 months
    
Seasoning:
0 months
  
Underwriting and Financial Information:
Amortization Term (Original):
NAP
      
Loan Amortization Type:
Interest-only, Balloon
  
3rd Most Recent NOI (As of)(1):
 NAV
Interest Accrual Method:
Actual/360
  
2nd Most Recent NOI (As of)(1):
 NAV
Call Protection:
L(24),D(92),O(4)
  
Most Recent NOI (As of)(1):
NAV
Lockbox Type:
Hard/Springing Cash Management
    
Additional Debt:
None
  
U/W Revenues:
$6,547,444
Additional Debt Type:
NAP
  
U/W Expenses:
$2,663,737
     
U/W NOI:
$3,883,707
     
U/W NCF:
$3,867,387
     
U/W NOI DSCR :
4.18x
Escrows and Reserves:
        
U/W NCF DSCR:
4.16x
         
U/W NOI Debt Yield:
15.7%
Type:
Initial
Monthly
Cap (If Any)
  
U/W NCF Debt Yield:
15.6%
Taxes
$0
Springing
NAP
  
As-Is Appraised Value(2)(3):
$59,000,000
Insurance
$0
Springing
NAP
  
As-Is Appraisal Valuation Date:
October 27, 2014
Replacement Reserve
 $0
$0
NAP
  
Cut-off Date LTV Ratio(2)(3):
42.0%
TI/LC
 $0
$0
NAP
  
LTV Ratio at Maturity or ARD:
42.0%
Debt Service Reserve
 $77,424
$0
NAP
    
 
(1)
Historical financial and occupancy data are not available as the 1175 North Main Street Property was acquired by Datacore Fund, L.P. on September 9, 2014. WellPoint, Inc. executed a lease with a rent commencement date on January 1, 2015 for 100.0% of the 1175 North Main Street property.
(2)
The “Go Dark” appraised value of $63,000,000 would result in a Cut-off Date LTV Ratio of 39.4%.
(3)
The “As-stabilized” appraised value dated January 1, 2015, of $61,000,000 would result in a Cut-off Date LTV Ratio of 40.7%.
 
The 1175 North Main Street mortgage loan is evidenced by a single promissory note that is secured by a first mortgage encumbering a 102,000 square foot data center building located in Harrisonburg, Virginia (the “1175 North Main Street Property”).  The 1175 North Main Street Property is 100% leased by WellPoint, Inc. on a 12-year, triple-net lease.  WellPoint is one the nation’s leading health benefits companies with approximately 37.3 million members and annual revenues exceeding $72.2 billion. WellPoint is capitalized with balance sheet equity in excess of $24.0 billion as well as cash and cash equivalents of nearly $1.8 billion.  The 1175 North Main Street Property will serve as one of WellPoint’s mission critical data and disaster recovery centers.  The 1175 North Main Street Property is a Tier III, LEED silver-certified data center located outside of any nuclear risk zones, seismic zones and flood zones.  The 1175 North Main Street Property is fully secured with perimeter fencing, security cameras, electronic scanners, and on-site security guards trained for anti-terrorism. The 1175 North Main Street Property also features two dedicated loading dock bays and 100 parking spaces, resulting in a parking ratio of 0.98 per 1,000 square feet of rentable area.

The 1175 North Main Street Property features a total of four data center pods, totaling 40,098 square feet of raised floor space, an overall power density of 150 watts per square foot (with a capacity to take on 300 watts per square foot), and N+1 structure with back up generators. The 1175 North Main Street Property is served by two transformers, both of which are 25/33 megavolt ampere. The 1175 North Main Street Property is capable of offering a total of 25 megawatts of gross power.
 
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.
 
 
110
 
 
1175 NORTH MAIN STREET
  
 
Sources and Uses

Sources
        
Uses
      
Original loan amount
$24,800,000
41.2
 %   
Purchase price
$59,000,000
98.0
 %
Sponsor’s new cash contribution
35,424,524
58.8
 %   
Reserves
77,424
0.1
  
         
Closing Costs
1,147,100
1.9
  
Total Sources
$60,224,524
100.0
 %   
Total Uses
$60,224,524
100.0
 % 
 
The following table presents certain information relating to the tenancy at the 1175 North Main Street Property:

Major Tenant

Tenant Name
Credit Rating
(Fitch/Moody’s/
S&P)(1)
Tenant
NRSF
% of
NRSF
Annual U/W
Base Rent
PSF(2)
Annual
U/W Base
Rent(2)
% of Total
Annual U/W
Base Rent
Lease
Expiration
Date
           
Major Tenant
          
Wellpoint, Inc.(3)
BBB+/Baa2/A-
102,000
100.0%
$43.07
$4,393,412
100.0%
12/31/2026(4)
               
Occupied Collateral Total
  
102,000
100.0%
$43.07
$4,393,412
100.0%
  
               
 
(1)
Certain ratings are those of the parent company whether or not the parent guarantees the lease.
(2)
The Annual U/W Base Rent and Annual U/W Base Rent PSF for Wellpoint, Inc. represents the tenant’s average rent over the lease term. The tenant’s current in-place rent is $39.22 per square foot on a triple net lease.
(3)
Wellpoint, Inc. has subleased 10,000 square feet of its total 102,000 square feet to Carpathia Hosting, Inc. for $208.38 per square foot.  This lease expires on October 31, 2018.
(4)
Wellpoint, Inc. has one eight year renewal option and four 5-year renewal options.
 
The following table presents certain information relating to the lease rollover schedule at the 1175 North Main Street Property:

Lease Expiration Schedule(1)

Year Ending
December 31,
No. of
Leases
Expiring
Expiring
NRSF
% of Total
NRSF
Cumulative
Expiring
NRSF
Cumulative
% of Total
NRSF
Annual U/W
Base Rent
Annual
U/W Base
Rent PSF
  
MTM
0
0
0.0%
0
0.0%
$0
$0.00
  
2014
0
0
0.0%
0
0.0%
$0
$0.00
  
2015
0
0
0.0%
0
0.0%
$0
$0.00
  
2016
0
0
0.0%
0
0.0%
$0
$0.00
  
2017
0
0
0.0%
0
0.0%
$0
$0.00
  
2018
0
0
0.0%
0
0.0%
$0
$0.00
  
2019
0
0
0.0%
0
0.0%
$0
$0.00
  
2020
0
0
0.0%
0
0.0%
$0
$0.00
  
2021
0
0
0.0%
0
0.0%
$0
$0.00
  
2022
0
0
0.0%
0
0.0%
$0
$0.00
  
2023
0
0
0.0%
0
0.0%
$0
$0.00
  
2024
0
0
0.0%
0
0.0%
$0
$0.00
  
Thereafter
1
102,000
100.0%
102,000
100.0%
$4,393,412
$43.07
  
Vacant
0
0
0.0%
102,000
100.0%
$0
$0.00
  
Total/Weighted Average
1
102,000
100.0%
    
$4,393,412
$43.07
  
 
(1)
Information obtained from the underwritten rent roll.
 
The following table presents historical occupancy percentages at the 1175 North Main Street Property:

Historical Occupancy

12/31/2011(1)
  
12/31/2012(1)
  
12/31/2013(1)
  
12/1/2014(2)(3)
NAV
  
NAV
  
NAV
  
100.0%
 
(1)
Information not available from the seller.
(2)
Information obtained from the underwritten rent roll.
(3)
Wellpoint, Inc. has commenced moving in equipment and personal property but has not commenced paying rent.  The rent commencement date under the lease is January 1, 2015.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
111
 
 
1175 NORTH MAIN STREET
  
 
Operating History and Underwritten Net Cash Flow.  The following table presents certain information relating to the Underwritten Net Cash Flow at the 1175 North Main Street Property:
 
Cash Flow Analysis(1)
 
 
U/W
  
U/W
$ per SF
  
Base Rent
$4,393,412
  
$43.07
  
Grossed Up Vacant Space
0
  
0.00
  
Total Reimbursables
2,498,634
  
24.50
  
Other Income
0
  
0.00
  
Less Vacancy & Credit Loss
(344,602)(2)
  
(3.38)
  
Effective Gross Income
$6,547,444
  
$64.19
  
         
Total Operating Expenses
$2,663,737
  
$26.12
  
         
Net Operating Income
$3,883,707
  
$38.08
  
TI/LC
0
  
0.00
  
Capital Expenditures
16,320
  
0.16
  
Net Cash Flow
$3,867,387
  
$37.92
  
         
NOI DSCR
4.18x
      
NCF DSCR
4.16x
      
NOI DY
15.7%
      
NCF DY
15.6%
      
 
(1)
No historical financial information is available as the borrower purchased the 1175 North Main Street Property on September 9, 2014.
(2)
The underwritten economic vacancy is 5.0%. The 1175 North Main Street Property is currently 100.0% leased as of December 1, 2014.
 
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.
 
 
112
 
 
(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.
 
 
113
 
 
No. 12 – Depot Park
 
Loan Information
  
Property Information
Mortgage Loan Seller:
Liberty Island Group I LLC
  
Single Asset/Portfolio:
Single Asset
Credit Assessment
(DBRS/KBRA/Moody’s):
NR/NR/NR
  
Property Type:
Industrial
Original Principal Balance(1):
$24,000,000
  
Specific Property Type:
Warehouse
Cut-off Date Principal Balance(1):
$24,000,000
  
Location:
Sacramento, CA
% of Initial Pool Balance:
2.1%
  
Size:
2,112,089 SF
Loan Purpose:
Refinance
  
Cut-off Date Principal
Balance Per SF(1):
$21.59
Borrower Name:
U.S. National Leasing LLC
  
Year Built/Renovated:
1940/2000
Sponsor:
Richard W. Fischer
  
Title Vesting:
Fee
Mortgage Rate:
4.330%
  
Property Manager:
Self-managed
Note Date:
November 24, 2014
  
3rd Most Recent Occupancy (As of):
65.0% (12/31/2011)
Anticipated Repayment Date:
NAP
  
2nd Most Recent Occupancy (As of):
61.5% (12/31/2012)
Maturity Date:
December 1, 2024
  
Most Recent Occupancy (As of):
65.8% (12/31/2013)
IO Period:
120 months
  
Current Occupancy (As of):
67.7% (10/21/2014)
Loan Term (Original):
120 months
    
Seasoning:
0 months
  
Underwriting and Financial Information:
Amortization Term (Original):
None
      
Loan Amortization Type:
Interest-only, Balloon
  
3rd Most Recent NOI (As of):
$5,379,102 (12/31/2012)
Interest Accrual Method:
Actual/360
  
2nd Most Recent NOI (As of)(3):
$5,659,563 (12/31/2013)
Call Protection:
L(25),GRTR 1% or YM(91),O(4)
  
Most Recent NOI (As of)(3):
$6,485,650 (TTM 6/30/2014)
Lockbox Type:
Springing (Without Established Account)
    
Additional Debt(1):
Yes
    
Additional Debt Type(1):
Pari Passu
  
U/W Revenues:
$10,943,007
     
U/W Expenses:
$5,122,652
     
U/W NOI(3):
$5,820,354
     
U/W NCF:
$4,989,050
Escrows and Reserve:
    
U/W NOI DSCR(1):
2.91x
         
U/W NCF DSCR(1):
2.49x
Type:
Initial
Monthly
Cap (If Any)
  
U/W NOI Debt Yield(1):
12.8%
Taxes
$31,132
$31,132
NAP
  
U/W NCF Debt Yield(1):
10.9%
Insurance
$148,294
$18,537
NAP
  
As-Is Appraised Value:
$76,000,000
Replacement Reserves
$17,610
$17,610
$900,000
  
As-Is Appraisal Valuation Date:
July 14, 2014
TI/LC Reserve(2)
$0
Springing
$1,568,000
  
Cut-off Date LTV Ratio(1):
60.0%
         
LTV Ratio at Maturity or ARD(1):
60.0%
             
 
(1)  
The Depot Park Loan Combination, totaling $45,600,000, is comprised of two pari passu notes (Notes A-1 and A-2). The controlling Note A-1 had an original principal balance of $24,000,000, has an outstanding principal balance as of the Cut-off Date of $24,000,000 and will be contributed to the WFCM 2014-LC18 Trust. Note A-2 had an original principal balance of $21,600,000 and is expected to be contributed to a future trust. The lender provides no assurance that the Note A-2 will not be split further. All statistical information related to balances per square foot, loan-to-value, debt service coverage ratios and debt yield are based on the Depot Park Loan Combination.
(2)  
Monthly TI/LC reserves of $58,000 with a cap of $1,568,000 will commence and continue so long as the debt service coverage ratio falls below 1.62x for the two prior consecutive quarters.
(3)  
See “Cash Flow Analysis” section.
 
The “Depot Park Loan Combination” is evidenced by two promissory notes (Notes A-1 and A-2) that are secured by a first mortgage encumbering the fee interest in an industrial and office park located in Sacramento, California (the “Depot Park Property”). The Depot Park Property is an approximately 2.1 million square foot industrial and office park. The Depot Park Property was built in the 1940s as an army depot, purchased by the City of Sacramento from the United States Government in 1994, and renovated to its current use in 2000.  The Depot Park Property is approximately 90.6% industrial space and 9.4% office space situated in over 35 buildings. The Depot Park Property features extensive landscaping and amenities, including picnic areas, gazebos, a volleyball court, walking path, other recreational activities, an on-site restaurant and a child care center. The Depot Park Property is gated with three secured entrances. As of October 21, 2014, the Depot Park Property was 67.7% occupied by 85 tenants.

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.
 
 
114
 
 
DEPOT PARK
 
Sources and Uses

Sources
          
Uses
        
Original loan amount
$45,600,000
  
100.0
 %   
Loan Payoff
$35,489,566
  
77.8
 %
           
Reserves
197,036
  
0.4
  
           
Other uses(1)
9,069,237
  
19.9
  
           
Closing costs
700,376
  
1.5
  
           
Return of equity
143,785
  
0.3
  
Total Sources
$45,600,000
  
100.0
 %  
Total Uses
$45,600,000
  
100.0
 %
 
(1)
Prior to the origination of the Depot Park Loan Combination, the Depot Park Property operated on a ground lease. At loan closing, the borrower purchased the land and collapsed the ground lease for approximately $7.2 million and additional fees.

The following table presents certain information relating to the tenancy at the Depot Park Property:
 
Major Tenants

Tenant Name
  
Credit Rating (Fitch/Moody’s/
S&P)
  
Tenant
NRSF
  
% of
NRSF
  
Annual
U/W Base Rent
PSF
  
Annual
U/W Base Rent
  
% of Total Annual
U/W Base
Rent
  
Lease
Expiration
Date
                             
Major Tenants
                            
Department of Corrections
  
NR/NR/NR
  
196,020
  
9.3%
  
$7.21(1)
  
$1,412,415(1)
  
16.6%
  
Various(2)
DMV – State of California
  
A/Aa3/A+
  
54,450
  
2.6%
  
$17.46
  
$950,892
  
11.2%
  
3/31/2017(3)
Swinerton Builders
  
NR/NR/NR
  
25,019
  
1.2%
  
$16.49
  
$412,563
  
4.9%
  
11/30/2022(4)
Ferguson Enterprises
  
NR/NR/NR
  
87,120
  
4.1%
  
$4.49
  
$390,912
  
4.6%
  
7/31/2020
Big Bear Fireworks Inc.
  
NR/NR/NR
  
97,620
  
4.6%
  
$3.69
  
$360,216
  
4.2%
  
9/30/2015(5)
Airco Mechanical Inc.
  
NR/NR/NR
  
86,944
  
4.1%
  
$3.50
  
$303,936
  
3.6%
  
5/31/2027
Total Services Logistics
  
NR/NR/NR
  
81,675
  
3.9%
  
$3.39
  
$276,948
  
3.3%
  
1/31/2015
Total Major Tenants
      
628,848
  
29.8%
  
$6.53  
  
$4,107,881
  
48.3%
    
                             
Non-Major Tenants
      
801,539
  
38.0%
  
$5.48  
  
4,392,285
  
51.7%
    
                             
Occupied Collateral Total
      
1,430,387
  
67.7%
  
$5.94  
  
$8,500,166
  
100.0%
    
                             
Vacant Space
      
681,702
  
32.3%
                
                             
Collateral Total
      
2,112,089
  
100.0%
                
                             

(1)
Department of Corrections pays $7.54 per square foot gross on 152,460 square feet (7.2% of net rentable area) under one lease and $6.02 per square foot gross on 43,560 square feet (2.1% of net rentable area) under a second lease.
(2)
Department of Corrections may terminate its leases for 152,460 and 43,560 square feet at any time on or after January 31, 2016 and March 31, 2016, respectively, with written notice to the landlord at least 30 days’ prior to the termination date. Department of Corrections leases expire on January 31, 2020 and March 31, 2020, respectively.
(3)
DMV – State of California may terminate its lease at any time after March 31, 2013 with written notice to the landlord at least 30 days prior to the termination date.
(4)
Swinerton Builders may terminate its lease on December 1, 2017 with written notice to the landlord at least 120 days written notice prior to the termination date.
(5)
If the City of Sacramento prohibits the use of the premises for general office, storage, warehousing, sales and distribution of Class C 1.4G consumer fireworks and other legal and related uses, Big Bear Fireworks Inc. may terminate its lease with 90 days prior written notice.
 
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.
 
 
115
 
 
DEPOT PARK
 
The following table presents certain information relating to the lease rollover schedule at the Depot Park Property:
 
Lease Expiration Schedule(1)(2)

Year Ending
 December 31,
  
No. of
Leases
Expiring
  
Expiring
NRSF
  
% of
Total
NRSF
  
Cumulative Expiring
NRSF
  
Cumulative %
of Total NRSF
  
Annual
 U/W
Base Rent
  
 
Annual U/W
Base Rent
PSF(3)
  
MTM
  
2
  
12,990
  
0.6%
  
12,990
  
0.6%
  
$60,108
  
$4.63
  
2014
  
17
  
136,312
  
6.5%
  
149,302
  
7.1%
  
$631,200
  
$4.63
  
2015
  
31
  
326,717
  
15.5%
  
476,019
  
22.5%
  
$1,373,964
  
$4.21
  
2016
  
12
  
159,984
  
7.6%
  
636,003
  
30.1%
  
$1,323,012
  
$8.27
  
2017
  
9
  
189,628
  
9.0%
  
825,631
  
39.1%
  
$1,640,000
  
$8.65
  
2018
  
1
  
43,560
  
2.1%
  
869,191
  
41.2%
  
$123,000
  
$2.82
  
2019
  
4
  
17,295
  
0.8%
  
886,486
  
42.0%
  
$177,126
  
$10.24
  
2020
  
4
  
370,260
  
17.5%
  
1,256,746
  
59.5%
  
$2,025,879
  
$5.47
  
2021
  
1
  
8,000
  
0.4%
  
1,264,746
  
59.9%
  
$119,708
  
$14.96
  
2022
  
2
  
46,017
  
2.2%
  
1,310,763
  
62.1%
  
$584,857
  
$12.71
  
2023
  
0
  
0
  
0.0%
  
1,310,763
  
62.1%
  
$0
  
$0.00
  
2024
  
1
  
21,780
  
1.0%
  
1,332,543
  
63.1%
  
$137,376
  
$6.31
  
Thereafter
  
2
  
97,844
  
4.6%
  
1,430,387
  
67.7%
  
$303,936
  
$3.11
  
Vacant
  
0
  
681,702
  
32.3%
  
2,112,089
  
100.0%
  
$0
  
$0.00
  
Total/Weighted Average
  
86
  
2,112,089
  
100.0%
          
$8,500,166
  
$5.94
  
 
(1)
Information obtained from the underwritten rent roll.
(2)
Certain tenants may have lease termination options that are exercisable prior to the originally stated expiration date of the subject lease and that are not considered in the Lease Expiration Schedule.
(3)
Weighted Average Annual U/W Base Rent PSF excludes vacant space.
 
The following table presents historical occupancy percentages at the Depot Park Property:

Historical Occupancy

12/31/2011(1)
  
12/31/2012(1)
  
12/31/2013(1)
  
10/21/2014(2)
65.0%
  
61.5%
  
65.8%
  
67.7%
 
(1)
Information obtained from the borrower.
(2)
Information obtained from the underwritten rent roll.

Operating History and Underwritten Net Cash Flow.  The following table presents certain information relating to the historical operating performance and the Underwritten Net Cash Flow at the Depot Park Property:
 
Cash Flow Analysis
 
   
2012
  
2013
  
TTM
6/30/2014
  
U/W
  
U/W $ per
SF
  
Base Rent
  
$8,551,524
  
$8,797,466
  
$9,274,528
  
$8,500,166
  
$4.02
  
Grossed Up Vacant Space
  
0
  
0
  
0
  
3,344,581
  
1.58
  
Total Reimbursables
  
1,808,943
  
1,753,651
  
1,914,221
  
1,913,589
  
0.91
  
Other Income
  
0
  
0
  
0
  
529,251
  
0.25
  
Less Vacancy & Credit Loss
  
0
  
0
  
0
  
(3,344,581)(1)
  
(1.58)
  
Effective Gross Income
  
$10,360,467
  
$10,551,117
  
$11,188,749
  
$10,943,007
  
$5.18
  
                       
Total Operating Expenses
  
$4,981,365
  
$4,891,554
  
$4,703,099
  
$5,122,652
  
$2.43
  
                       
 Net Operating Income
  
$5,379,102
  
$5,659,563
  
$6,485,650(2)
  
$5,820,354(2)
  
$2.76
  
TI/LC
  
0
  
0
  
0
  
620,095
  
0.29
  
Reserves for Replacements
  
0
  
0
  
0
  
211,209
  
0.10
  
 Net Cash Flow
  
$5,379,102
  
$5,659,563
  
$6,485,650
  
$4,989,050
  
$2.36
  
                       
NOI DSCR(3)
  
2.69x
  
2.83x
  
3.24x
  
2.91x
      
NCF DSCR(3)
  
2.69x
  
2.83x
  
3.24x
  
2.49x
      
NOI DY(3)
  
11.8%
  
12.4%
  
14.2%
  
12.8%
      
NCF DY(3)
  
11.8%
  
12.4%
  
14.2%
  
10.9%
      
(1)
The underwritten economic vacancy is 23.4%.  The Depot Park Property was 67.7% physically occupied as of October 21, 2014.
(2)
The increase of 2013 NOI to TTM 6/30/2014 NOI is primarily due to leasing activity. Tenants occupying approximately 52,072 square feet of newly leased space commenced rent payments during the first six months of 2014. Additionally, the decrease in U/W NOI from the TTM 6/30/2014 NOI is due primarily to expiring tenant leases in 2014 and the rent associated with those expiring leases being excluded from the underwriting.
(3)
The debt service coverage ratios and debt yields are based on the Depot Park Loan Combination.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
116
 
 
(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.
 
 
117
 
 
No. 13 – YRC Headquarters
 
Loan Information
  
Property Information
Mortgage Loan Seller:
Ladder Capital Finance LLC
  
Single Asset/Portfolio:
Single Asset
Credit Assessment (DBRS/KBRA/Moody’s):
NR/NR/NR
  
Property Type:
Office
Original Principal Balance:
$22,500,000
  
Specific Property Type:
Single Tenant
Cut-off Date Principal Balance:
$22,500,000
  
Location:
Overland Park, KS
% of Initial Pool Balance:
2.0%
  
Size:
332,937 SF
Loan Purpose:
Refinance
  
Cut-off Date Principal
Balance Per SF:
$67.58
Borrower Names:
Price Asner Holdings, LLC and Green-Blue 1818 SPE, LLC
  
Year Built/Renovated:
1972/NAP
Sponsors:
Scott Asner; Michael Gortenburg; Barry D. Price
  
Title Vesting:
Fee
Mortgage Rate:
4.660%
  
Property Manager:
Block Real Estate Services, LLC
Note Date:
December 2, 2014
  
3rd Most Recent Occupancy (As of):
100.0% (12/31/2011)
Anticipated Repayment Date:
NAP
  
2nd Most Recent Occupancy (As of):
100.0% (12/31/2012)
Maturity Date:
December 6, 2024
  
Most Recent Occupancy (As of):
100.0% (12/31/2013)
IO Period:
0 months
  
Current Occupancy (As of):
100.0% (12/1/2014)
Loan Term (Original):
120 months
    
Seasoning:
0 months
  
Underwriting and Financial Information:
Amortization Term (Original):
300 months
      
Loan Amortization Type:
Amortizing Balloon
  
3rd Most Recent NOI (As of):
$2,879,138 (12/31/2011)
Interest Accrual Method:
Actual/360
  
2nd Most Recent NOI (As of)
$2,951,827 (12/31/2012)
Call Protection:
L(24),D(92),O(4)
  
Most Recent NOI (As of:
$2,946,181 (12/31/2013)
Lockbox Type:
Hard/Springing Cash Management
    
Additional Debt(1):
Yes
  
U/W Revenues:
$3,498,820
Additional Debt Type(1):
Future Mezzanine
  
U/W Expenses:
$781,702
     
U/W NOI:
$2,717,118
     
U/W NCF:
$2,398,779
Escrows and Reserves:
    
U/W NOI DSCR :
1.78x
       
U/W NCF DSCR:
1.57x
Type:
Initial
Monthly
Cap (If Any)
  
U/W NOI Debt Yield:
12.1%
Taxes
$164,344
$54,781
NAP
  
U/W NCF Debt Yield:
10.7%
Insurance
$12,988
$1,082
NAP
  
As-Is Appraised Value:
$45,300,000
Replacement Reserve
$0
$5,549
NAP
  
As-Is Appraisal Valuation Date:
October 13, 2014
TI/LC
 $500,000
$13,872
NAP
  
Cut-off Date LTV Ratio:
49.7%
Excise Tax Reserve
 $138,750
$0
NAP
  
LTV Ratio at Maturity or ARD:
36.7%
         

(1)
Future mezzanine debt is permitted subject to the following conditions: (i) no event of default has occurred and is continuing; (ii) execution of an intercreditor agreement in form and substance reasonably acceptable to the lender and DBRS, KBRA and Moody’s; (iii) the combined amortizing debt service coverage ratio will be equal to or greater than 1.30x; (iv) the combined loan-to-value ratio will be equal to or less than 75.0%; (v) the mezzanine loan documents are reasonably acceptable to the lender; and (vii) receipt of rating agency confirmation from each of DBRS, KBRA and Moody’s that such mezzanine financing will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the Series 2014-LC18 Certificates.

The YRC Headquarters mortgage loan is evidenced by a single promissory note that is secured by a first mortgage encumbering a 332,937 square foot property comprised of two adjacent buildings located in Overland Park, Kansas (the “YRC Headquarters Property”).  The YRC Headquarters Property is 100.0% leased by YRC, Inc. (“YRC”) on a 15-year, triple-net lease.  YRC is one of the largest less-than-truckload networks in North America with local, regional, national and international capabilities. The company offers flexible supply chain solutions allowing customers to ship industrial, commercial and retail goods primarily through two reporting segments that include YRC Freight and Regional Transportation. Founded in 1952, YRC provides service to over 400,000 customers throughout North America, including Canada and Mexico, and in Puerto Rico, Guam and Hawaii.  The YRC Headquarters Property features 1,237 parking spaces, resulting in a parking ratio of 3.7 per 1,000 square feet of rentable area.

Sources and Uses

Sources
          
Uses
        
Original loan amount
$22,500,000
  
100.0%
    
Loan payoff
$9,987,897
  
44.4
 %
           
Reserves
816,082
  
3.6
  
           
Closing costs
323,815
  
1.4
  
           
Return of equity
11,372,206
  
50.5
  
Total Sources
$22,500,000
  
100.0%
    
Total Uses
$22,500,000
  
100.0
 %
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
118
 
 
YRC HEADQUARTERS
 
The following table presents certain information relating to the tenancy at the YRC Headquarters Property:

Major Tenant

Tenant Name
  
 
Credit Rating(Fitch/Moody’s/
S&P)(1)
  
Tenant
NRSF
  
% of
NRSF
  
Annual U/W Base Rent PSF
  
Annual
U/W Base Rent
  
% of Total Annual U/W Base Rent
  
Lease
Expiration
Date
                     
Major Tenant
                    
YRC, Inc.
  
NR/B3/CCC+
  
332,937
  
100.0%
  
$9.28
  
$3,090,142
  
100.0%
  
3/31/2024(2)
                             
Occupied Collateral Total
      
332,937
  
100.0%
  
$9.28
  
$3,090,142
  
100.0%
    
                             
 
(1)
Certain ratings are those of the parent company whether or not the parent guarantees the lease.
(2)
YRC, Inc. has two, ten-year renewal options.  There are no termination options.

The following table presents certain information relating to the lease rollover schedule at the YRC Headquarters Property:

Lease Expiration Schedule(1)

Year Ending
December 31,
  
No. of
Leases Expiring
  
Expiring
NRSF
  
% of Total
NRSF
  
Cumulative Expiring
NRSF
  
Cumulative
% of Total
NRSF
  
Annual U/W
Base Rent
  
Annual
U/W Base
Rent PSF
  
MTM
  
0
  
0
  
0.0%
  
0
  
0.0%
  
$0
  
$0.00
  
2014
  
0
  
0
  
0.0%
  
0
  
0.0%
  
$0
  
$0.00
  
2015
  
0
  
0
  
0.0%
  
0
  
0.0%
  
$0
  
$0.00
  
2016
  
0
  
0
  
0.0%
  
0
  
0.0%
  
$0
  
$0.00
  
2017
  
0
  
0
  
0.0%
  
0
  
0.0%
  
$0
  
$0.00
  
2018
  
0
  
0
  
0.0%
  
0
  
0.0%
  
$0
  
$0.00
  
2019
  
0
  
0
  
0.0%
  
0
  
0.0%
  
$0
  
$0.00
  
2020
  
0
  
0
  
0.0%
  
0
  
0.0%
  
$0
  
$0.00
  
2021
  
0
  
0
  
0.0%
  
0
  
0.0%
  
$0
  
$0.00
  
2022
  
0
  
0
  
0.0%
  
0
  
0.0%
  
$0
  
$0.00
  
2023
  
0
  
0
  
0.0%
  
0
  
0.0%
  
$0
  
$0.00
  
2024
  
1
  
332,937
  
100.0%
  
332,937
  
100.0%
  
$3,090,142
  
$9.28
  
Thereafter
  
0
  
0
  
0.0%
  
332,937
  
100.0%
  
$0
  
$0.00
  
Vacant
  
0
  
0
  
0.0%
  
332,937
  
100.0%
  
$0
  
$0.00
  
Total/Weighted Average
  
1
  
332,937
  
100.0%
          
$3,090,142
  
$9.28
  
 
(1)
Information obtained from the underwritten rent roll.

The following table presents historical occupancy percentages at the YRC Headquarters Property:

Historical Occupancy

12/31/2011(1)
  
12/31/2012(1)
  
12/31/2013(1)
  
12/1/2014(2)
             
100.0%
  
100.0%
  
100.0%
  
100.0%
 
(1)
Information obtained from the borrower.
(2)
Information obtained from the underwritten financials.
 
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.

 
119
 
 
YRC HEADQUARTERS

Operating History and Underwritten Net Cash Flow.  The following table presents certain information relating to the historical operating performance and the Underwritten Net Cash Flow at the YRC Headquarters Property:
 
Cash Flow Analysis
 
   
2011
  
2012
  
2013
  
U/W
  
U/W
$ per SF
  
Base Rent
  
$2,934,601
  
$3,000,138
  
$3,000,138
  
$3,090,142
  
$9.28
  
Grossed Up Vacant Space
  
0
  
0
  
0
  
0
  
0.00
  
Total Reimbursables
  
549,432
  
570,777
  
565,325
  
692,365
  
2.08
  
Other Income
  
0
  
0
  
0
  
0
  
0.00
  
Less Vacancy & Credit Loss
  
0
  
0
  
0
  
(283,688)(1)
  
(0.85)
  
Effective Gross Income
  
$3,484,033
  
$3,570,915
  
$3,565,463
  
$3,498,820
  
$10.51
  
                       
Total Operating Expenses
  
$604,896
  
$619,088
  
$619,282
  
$781,702
  
$2.35
  
                       
 Net Operating Income
  
$2,879,138
  
$2,951,827
  
$2,946,181
  
$2,717,118
  
$8.16
  
TI/LC
  
0
  
0
  
0
  
268,399
  
0.81
  
Capital Expenditures
  
0
  
0
  
0
  
49,941
  
0.15
  
 Net Cash Flow
  
$2,879,138
  
$2,951,827
  
$2,946,181
  
$2,398,779
  
$7.20
  
                       
NOI DSCR
  
1.89x
  
1.94x
  
1.93x
  
1.78x
      
NCF DSCR
  
1.89x
  
1.94x
  
1.93x
  
1.57x
      
NOI DY
  
12.8%
  
13.1%
  
13.1%
  
12.1%
      
NCF DY
  
12.8%
  
13.1%
  
13.1%
  
10.7%
      

(1)
The underwritten economic vacancy is 7.5%. The YRC Headquarters Property was 100.0% physically occupied as of December 1, 2014.
 
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.
 
 
120
 

(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.
 
 
121
 
 
No. 14 – Nordic Nashville Refrigerated
 
Loan Information
  
Property Information
Mortgage Loan Seller:
The Royal Bank of Scotland plc
  
Single Asset/Portfolio:
Single Asset
Credit Assessment
(DBRS/KBRA/Moody’s):
NR/NR/NR
  
Property Type:
Industrial
Original Principal Balance:
$20,300,000
  
Specific Property Type:
Warehouse
Cut-off Date Principal Balance:
$20,300,000
  
Location:
Lebanon, TN
% of Initial Pool Balance:
1.8%
  
Size:
235,210 SF
Loan Purpose:
Acquisition
  
Cut-off Date Principal
Balance Per SF:
$86.31
Borrower Name:
AGNL Freezer TN, L.L.C.
  
Year Built/Renovated:
1991/NAP
Sponsor:
AG Net Lease Realty Fund III, LLP
  
Title Vesting:
Fee
Mortgage Rate:
4.289%
  
Property Manager:
Self-managed
Note Date:
December 1, 2014
  
3rd Most Recent Occupancy(5):
NAV
Anticipated Repayment Date:
December 6, 2024
  
2nd Most Recent Occupancy(5):
NAV
Maturity Date:
December 6, 2044
  
Most Recent Occupancy(5):
NAV
IO Period:
60 months
  
Current Occupancy (As of):
100.0% (10/29/2014)
Loan Term (Original):
120 months
    
Seasoning:
0 months
    
Amortization Term (Original):
360 months
  
Underwriting and Financial Information:
Loan Amortization Type:
Interest-only, Amortizing ARD
      
Interest Accrual Method:
Actual/360
  
3rd Most Recent NOI(5):
NAV
Call Protection:
L(24),GRTR 1% or YM(89),O(7)
  
2nd Most Recent NOI(5):
NAV
Lockbox Type:
Hard/Springing Cash Management
  
Most Recent NOI(5):
NAV
Additional Debt(1):
Yes
      
Additional Debt Type(1):
Future Mezzanine and Unsecured
  
U/W Revenues:
$2,222,313
     
U/W Expenses:
$66,669
     
U/W NOI:
$2,155,644
     
U/W NCF:
$2,025,644
         
U/W NOI DSCR :
1.79x
Escrows and Reserves
        
U/W NCF DSCR:
1.68x
         
U/W NOI Debt Yield:
10.6%
Type:
Initial
Monthly
Cap (If Any)
  
U/W NCF Debt Yield:
10.0%
Taxes(2)
$0
Springing
NAP
  
As-Is Appraised Value:
$31,000,000
Insurance(2)
$0
Springing
NAP
  
As-Is Appraisal Valuation Date:
July 22, 2014
Replacement Reserve(3)
$0
Springing
$500,000
  
Cut-off Date LTV Ratio:
65.5%
TI/LC Reserve(4)
$0
Springing
$750,000
  
LTV Ratio at Maturity or ARD:
59.7%
           
 
(1)
Future mezzanine debt is permitted subject to the following conditions: (i) no event of default has occurred and is continuing; (ii) execution of an intercreditor agreement in form and substance reasonably acceptable to the lender and DBRS, KBRA and Moody’s; (iii) the combined amortizing debt service coverage ratio will not be less than 1.25x; (iv) the combined loan-to-value ratio will not be greater than 72.5%; (v) the combined debt yield will not be less than 9.00%; (vi) the mezzanine loan documents are reasonably acceptable to the lender; and (vii) receipt of rating agency confirmation from each of DBRS, KBRA and Moody’s that such mezzanine financing will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the Series 2014-LC18 Certificates. In addition, there is $6,144,000 of unsecured debt from an affiliate of the borrower that remains in place for tax purposes.
(2)
Monthly escrow deposits for taxes and insurance are waived, provided the following conditions are satisfied: (i) Nordic Nashville, LLC (“Nordic”) is not in default under its obligation to directly pay taxes and insurance premiums; (ii) the direct payment of all taxes and insurance premiums continues to be an obligation of Nordic; and (iii) the Nordic lease continues to be in full effect.
(3)
Ongoing monthly replacement reserves are not required as long as Nordic is maintaining the Nordic Nashville Refrigerated Property in accordance with the terms of the Nordic lease.
(4)
Ongoing monthly TI/LC reserves are not required as long as (i) no event of default has occurred and is continuing; (ii) the amortizing debt service coverage ratio does not fall below 1.15x at the end of any calendar quarter; (iii) the borrower’s right to incur mezzanine financing has not been exercised. In addition, ongoing monthly TI/LC reserves are required if Nordic or any replacement tenant for Nordic that is leasing space representing 20% or greater of the net rentable area (a) terminates its lease; (b) files for bankruptcy; or (c) goes dark, vacates or otherwise fails to occupy its space and fails to pay rent.
(5)
Historical occupancy and historical financial data is not available as the Nordic Nashville Refrigerated Property was acquired in November 2014.
 
The Nordic Nashville Refrigerated mortgage loan is evidenced by a single promissory note that is secured by a first mortgage encumbering a 235,210 square foot warehouse and cold storage property located in Lebanon, Tennessee (the “Nordic Nashville Refrigerated Property”).  The Nordic Nashville Refrigerated Property is 100.0% leased by Nordic Nashville, LLC (“Nordic”) on a 20-year, triple-net lease. The Nordic Nashville Refrigerated Property was built in 1991 and consists of two single-story buildings comprising 6.5 million cubic feet of storage space.  The Nordic Nashville Refrigerated Property has a total of 29 dock high doors which lead to 89 rows of freezer space situated in six freezer rooms and two blast freezer rooms.  The dock areas are cooled to 36 degrees Fahrenheit and have 22-foot ceiling clear heights, while the majority of the buildings are freezer space that are cooled to negative 10 degrees Fahrenheit and have 32-foot to 41-foot ceiling clear heights.  Additionally, the Nordic Nashville Refrigerated Property includes a 6,500 square foot office area. Nordic is a multi-region cold storage chain provider that has been operating in the southeastern United States region for over 60 years. The company is the largest provider of refrigerated warehouse services to the
 
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.
 
 
122
 
 
NORDIC NASHVILLE REFRIGERATED
 
poultry industry in the southeastern United States and has the capacity to blast freeze a billion pounds of poultry each year. Nordic is ranked as the seventh largest frozen warehouse company in North America and is the second largest in the southeastern United States market. Nordic currently operates a network of 13 facilities totaling nearly 70 million cubic feet of refrigerated or freezer space.
 
Sources and Uses

Sources
        
Uses
        
Original loan amount
$20,300,000
  
100.0%
  
Return of equity(1)
$20,070,015
  
98.9
 %
         
Closing costs
229,985
  
1.1
  
Total Sources
$20,300,000
  
100.0%
  
Total Uses
$20,300,000
  
100.0
 %
 
   (1)
The Nordic Nashville Refrigerated Property was purchased all cash in a sale-leaseback transaction in November 2014.

The following table presents certain information relating to the tenant at the Nordic Nashville Refrigerated Property:

Major Tenant

 Tenant Name
  
 
Credit Rating
(Fitch/Moody’s/
S&P)
  
Tenant
NRSF
  
% of
NRSF
  
Annual U/W
Base Rent PSF
  
Annual
U/W Base
Rent
  
% of Total
Annual U/W
Base Rent
  
Lease
Expiration
Date
                             
 Major Tenant
                            
 Nordic Nashville, LLC
  
NR/NR/NR
  
235,210
  
100.0%
  
$10.21
  
$2,402,500
  
100.0%
  
12/1/2034(1)
                             
 Occupied Collateral Total
      
235,210
  
100.0%
  
$10.21
  
$2,402,500
  
100.0%
    
                             
 
(1)
Nordic Nashville, LLC has five, 5-year lease renewal options.
 
The following table presents certain information relating to the lease rollover schedule at the Nordic Nashville Refrigerated Property:

Lease Expiration Schedule(1)

Year Ending
December 31,
  
No. of
Leases
Expiring
  
Expiring
NRSF
  
% of Total
NRSF
  
Cumulative
Expiring
NRSF
  
Cumulative
% of Total
NRSF
  
Annual U/W
Base Rent
  
Annual
U/W Base
Rent PSF
MTM
  
0
  
0
  
0.0%
  
0
  
0.0%
  
$0
  
$0.00  
2014
  
0
  
0
  
0.0%
  
0
  
0.0%
  
$0
  
$0.00  
2015
  
0
  
0
  
0.0%
  
0
  
0.0%
  
$0
  
$0.00  
2016
  
0
  
0
  
0.0%
  
0
  
0.0%
  
$0
  
$0.00  
2017
  
0
  
0
  
0.0%
  
0
  
0.0%
  
$0
  
$0.00  
2018
  
0
  
0
  
0.0%
  
0
  
0.0%
  
$0
  
$0.00  
2019
  
0
  
0
  
0.0%
  
0
  
0.0%
  
$0
  
$0.00  
2020
  
0
  
0
  
0.0%
  
0
  
0.0%
  
$0
  
$0.00  
2021
  
0
  
0
  
0.0%
  
0
  
0.0%
  
$0
  
$0.00  
2022
  
0
  
0
  
0.0%
  
0
  
0.0%
  
$0
  
$0.00  
2023
  
0
  
0
  
0.0%
  
0
  
0.0%
  
$0
  
$0.00  
2024
  
0
  
0
  
0.0%
  
0
  
0.0%
  
$0
  
$0.00  
Thereafter
  
1
  
235,210
  
100.0%
  
235,210
  
100.0%
  
$2,402,500
  
$10.21  
Vacant
  
0
  
0
  
0.0%
  
235,210
  
100.0%
  
$0
  
$0.00  
Total/Weighted Average
  
1
  
235,210
  
100.0%
          
$2,402,500
  
$10.21  
 
(1)
Information obtained from the underwritten rent roll.
 
The following table presents historical occupancy percentages at the Nordic Nashville Refrigerated Property:

Historical Occupancy

12/31/2011(1)
  
12/31/2012(1)
  
12/31/2013(1)
  
10/29/2014(2)
             
NAV
  
NAV
  
NAV
  
100.0%
 
(1)
Historical occupancy is unavailable as the Nordic Nashville Refrigerated Property was acquired in November 2014.
(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.
 
 
123
 
 
NORDIC NASHVILLE REFRIGERATED
 
Operating History and Underwritten Net Cash Flow.  The following table presents certain information relating to the in-place operating performance and the Underwritten Net Cash Flow at the Nordic Nashville Refrigerated Property:
 
Cash Flow Analysis(1)
 
   
In-place
  
U/W
  
U/W $ per SF
  
Base Rent
  
$2,402,500
  
$2,402,500
  
$10.21  
  
Total Reimbursables
  
0
  
0
  
0.00  
  
Other Income
  
0
  
0
  
0.00  
  
Less Vacancy & Credit Loss
  
0
  
(180,188)(2)
  
(0.77)  
  
Effective Gross Income
  
$2,402,500
  
$2,222,313
  
$9.45  
  
               
Total Operating Expenses
  
0
  
$66,669
  
$0.28  
  
               
 Net Operating Income
  
$2,402,500
  
$2,155,644
  
$9.16  
 
Capital Expenditures
  
0
  
130,000
  
0.55  
 
 Net Cash Flow
  
$2,402,500
  
$2,025,644
  
$8.61  
  
               
NOI DSCR
  
2.00x
  
1.79x
      
NCF DSCR
  
2.00x
  
1.68x
      
NOI DY
  
11.8%
  
10.6%
      
NCF DY
  
11.8%
  
10.0%
      
 
(1)
No historical financial information is available as the sponsor purchased the Nordic Nashville Refrigerated Property in November 2014.
(2)
The underwritten economic vacancy is 7.5%. The Nordic Nashville Refrigerated Property was 100.0% physically occupied as of October 29, 2014.
 
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.

 
124
 
 
(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.
 
 
125
 
 
No. 15 – Meridian Crossroads
               
Loan Information
  
Property Information
Mortgage Loan Seller:
Ladder Capital Finance LLC
  
Single Asset/Portfolio:
Single Asset
Credit Assessment (DBRS/KBRA/Moody’s):
NR/NR/NR
  
Property Type:
Retail
Original Principal Balance:
$19,960,000
  
Specific Property Type:
Anchored
Cut-off Date Principal Balance:
$19,960,000
  
Location:
Meridian, MS
% of Initial Pool Balance:
1.8%
  
Size(2):
206,366 SF
Loan Purpose:
Acquisition
  
Cut-off Date Principal
Balance Per SF(1):
$96.72
Borrower Name:
Meridian/SAV, LLC
  
Year Built/Renovated:
2007/NAP
Sponsor:
David Garfunkel
  
Title Vesting(3):
Leasehold
Mortgage Rate:
5.1669%
  
Property Manager:
Self-managed
Note Date:
November 21, 2014
  
3rd Most Recent Occupancy (As of)(4):
NAV
Anticipated Repayment Date:
NAP
  
2nd Most Recent Occupancy (As of):
95.0% (12/31/2012)
Maturity Date:
December 6, 2024
  
Most Recent Occupancy (As of):
95.0% (12/31/2013)
IO Period:
None
  
Current Occupancy (As of)(5):
95.0% (11/13/2014)
Loan Term (Original):
120 months
    
Seasoning:
0 months
  
Underwriting and Financial Information:
Amortization Term (Original):
360 months
    
Loan Amortization Type:
Amortizing Balloon
  
3rd Most Recent NOI (As of):
$1,476,487 (12/31/2012)
Interest Accrual Method:
Actual/360
  
2nd Most Recent NOI (As of):
$2,334,920 (12/31/2013)
Call Protection:
L(24),D(93),O(3)
  
Most Recent NOI (As of):
$1,909,933
(Annualized 8 months 8/31/2014)
Lockbox Type:
Hard/Springing Cash Management
    
Additional Debt(1):
Yes
  
U/W Revenues:
$3,153,374
Additional Debt Type(1):
Mezzanine
  
U/W Expenses:
$937,730
     
U/W NOI:
$2,215,644
     
U/W NCF:
$2,027,079
Escrows and Reserves:
  
U/W NOI DSCR(1):
1.69x
         
U/W NCF DSCR(1):
1.55x
Type:
Initial
Monthly
Cap (If Any)
  
U/W NOI Debt Yield(1):
11.1%
Taxes
$85,241
$42,621
NAP
  
U/W NCF Debt Yield(1):
10.2%
Insurance
$19,969
$6,656
NAP
  
As-Is Appraised Value:
$26,600,000
TI/LC Reserve
$600,000
$13,134
NAP
  
As-Is Appraisal Valuation Date:
October 1, 2014
Replacement Reserves
$0
$2,580
NAP
  
Cut-off Date LTV Ratio(1):
75.0%
Ground Rent Reserve
$24,885
$2,765
NAP
  
LTV Ratio at Maturity or ARD(1):
62.0%
Ross Rent Reserve
$2,538
$0
NAP
      
TJ Maxx TI/LC Reserve
$33,150
$0
NAP
      
Goody’s Lease Termination Reserve
$150,000
$0
NAP
      
 
 
(1)
The equity interests in the borrower have been pledged to secure mezzanine indebtedness with a balance as of the Cut-off Date of $2,345,000. All LTV, DSCR, debt yield and Cut-off Date Principal Balance per square foot numbers shown in the chart above are based solely on the $19,960,000 mortgage loan financing. As of the Cut-off Date, the combined U/W NCF DSCR is 1.30x, the combined Cut-off Date LTV ratio is 83.9% and the total debt U/W NOI Debt Yield is 9.9%.
 
(2)
Size includes Olive Garden and Chili’s, which each own their improvements and lease the ground from the landlord.  In total, 11,422 square feet represent pad leases to tenants, representing 5.5% of rentable square footage and 6.1% of underwritten total rent.
 
(3)
The Meridian Crossroads mortgage loan is collateralized by the leasehold estate in the Meridian Crossroads Property under seven ground leases with Lauderdale County, Mississippi Board of Education, which expire between 2028-2068. The two ground leases that expire in 2028 and 2035 are each structured with a 25 year extensions at lessees’ option. The Mississippi Board of Education is not legally permitted to own real estate; therefore, all seven ground leases are structured with statutory extension rights upon the expiration of the leases. The terms of which will be determined at the time of extension, with annual rent tied to the fair market rental value of the land (excluding buildings and improvements made thereon). The total annual rent for the ground leases is $33,180 per year, with five of the seven ground leases having already been prepaid from 2061, 2064, 2065 and 2068. The annual base rent for Ground Lease 5 is currently $27,789 per year, which is reassessed every eight years to reflect fair market value. The annual base rent for Ground Lease 6 is currently $5,391 per year, which increases annually by 3.0% for years 17-24, 4.0% annually for years 25-32, and 5.0% annually for years 33-40.
 
(4)
Historical occupancy prior to 2012 was not available from the seller.
 
(5)
TJ Maxx has a signed lease but will not take possession of the space until March 1, 2015.  Excluding TJ Maxx the property is 84.3% physically occupied.

The Meridian Crossroads mortgage loan is evidenced by a single promissory note that is secured by a first mortgage encumbering the leasehold interest in a retail property located in Meridian, Mississippi (the “Meridian Crossroads Property”).  The Meridian Crossroads Property is comprised of a 206,366 square foot retail power center and is situated on seven parcels totaling 27.5-acres consisting of two single-story retail buildings and two ground leased outparcels. The Meridian Crossroads Property was constructed in 2007 and is anchored by a 30,187 square foot Ross Dress for Less, a 24,001 square foot Bed Bath & Beyond, a 22,100 square foot TJ Maxx (scheduled to take occupancy in March 2015), and a 20,000 square foot Best Buy. Other major tenants at the Meridian Crossroads Property include a 15,492 square foot Books-A-Million, a 15,224 square foot Petco, and a 10,900 square foot Shoe Carnival. In addition, one ground leased outparcel is leased to a 7,495 square feet Olive Garden and the other is leased to a 3,927
 
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.
 
 
126
 
 
MERIDIAN CROSSROADS
  
  
square foot Chili’s. Further, there are 16 in-line tenants consisting over 46,000 square feet. The Meridian Crossroads Property is encumbered by seven ground leases, which have automatic renewal rights when the leases expire. Five of the ground leases have been prepaid through 2061-2068.  According to the appraisal, the neighborhood area has a population base of approximately 43,383 people within a five-mile radius of the Meridian Crossroads Property. The estimated median and average household income within a five mile radius of the Meridian Crossroads Property is $32,915 and $52,055, respectively. Moreover, the majority of single-family residential development within a three-mile radius of the Meridian Crossroads Property consists of tract homes ranging from $20,000-$200,000, with an average home value of approximately $68,500. As of November 13, 2014, the Meridian Crossroads Property was 95.0% leased and 84.3% occupied by 25 tenants.

Sources and Uses

Sources
        
Uses
      
Original loan amount
$19,960,000
72.0
 %   
Purchase price
$25,728,000
92.8
 % 
Mezzanine loan
2,345,000
8.5
    
Reserves
915,783
3.3
  
Sponsor’s new cash contribution
5,420,590
19.6
    
Closing costs
1,081,807
3.9
  
Total Sources
$27,725,590
100.0
 %   
Total Uses
$27,725,590
100.0
 % 
 
The following table presents certain information relating to the tenancy at the Meridian Crossroads Property:

Major Tenants

 Tenant Name
Credit Rating (Fitch/
Moody’s/
S&P)(1)
Tenant
NRSF
  
% of
NRSF
  
Annual
U/W
Base
Rent
PSF(2)
  
Annual
U/W Base
Rent(2)
  
% of Total Annual
U/W Base
Rent
Sales
PSF(3)
Occupancy Cost(3)
Lease
Expiration
Date
 Anchor Tenants
                        
 Ross Dress For Less
NR/A3/A-
30,187
  
14.6%
  
$10.25
  
$309,417
  
12.4%
NAV
NAV
1/31/2018
 Best Buy
BB/Baa2/BB
20,000
  
9.7%
  
$14.25
  
$285,000
  
11.4%
NAV
NAV
1/31/2018
 Bed Bath & Beyond
NR/Baa1/A-
24,001
  
11.6%
  
$7.67
  
$184,088
  
7.4%
$144
7.8%
1/31/2018
 TJ Maxx(4)
NR/Baa1/A+
22,100
  
10.7%
  
$7.10
  
$156,910
  
6.3%
NAV
NAV
3/31/2025
 Total Anchor Tenants
96,288
  
46.7%
  
$9.71
  
$935,415
  
37.5%
      
                       
 Non-Major Tenants
99,678
  
48.3%
  
$15.63
  
$1,558,342
  
62.5%
      
                           
 Occupied Collateral Total
195,966
  
95.0%
  
$12.73
  
$2,493,757
  
100.0%
      
                           
 Vacant Space
  
10,400
  
5.0%
                  
                           
 Collateral Total
206,366
  
100.0%
                  
                           
 
(1)
Certain ratings are those of the parent company regardless of whether the parent guarantees the lease.
(2)
Annual U/W Base Rent PSF and Annual U/W Base Rent include contractual rent escalations through September 1, 2015.
(3)
Sales PSF and Occupancy Costs are for the trailing 12-month period ending December 31, 2013.
(4)
TJ Maxx has a signed lease but has not yet taken occupancy.  Per the lease, TJ Maxx must take possession of the space by March 1, 2015.
 
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
 
127
 
 
MERIDIAN CROSSROADS
  
 
The following table presents certain information relating to the lease rollover schedule at the Meridian Crossroads Property:
 
Lease Expiration Schedule(1)(2)
 
Year Ending
December 31,
No. of
Leases
Expiring
Expiring
NRSF
% of
Total
NRSF
Cumulative
Expiring
NRSF
Cumulative
% of Total
NRSF
Annual
U/W
Base Rent
Annual
U/W
Base Rent
PSF(3)
  
MTM
0
0
  
0.0%
0
0.0%
$0
$0.00
  
2014
0
0
  
0.0%
0
0.0%
$0
$0.00
  
2015
1
4,500
  
2.2%
4,500
2.2%
$99,000
$22.00
  
2016
4
7,700
  
3.7%
12,200
5.9%
$124,650
$16.19
  
2017
5
27,264
  
13.2%
39,464
19.1%
$444,776
$16.31
  
2018
8
101,825
  
49.3%
141,289
68.5%
$1,168,317
$11.47
  
2019
2
15,900
  
7.7%
157,189
76.2%
$243,050
$15.29
  
2020
1
2,250
  
1.1%
159,439
77.3%
$38,250
$17.00
  
2021
1
4,100
  
2.0%
163,539
79.2%
$61,500
$15.00
  
2022
0
0
  
0.0%
163,539
79.2%
$0
$0.00
  
2023
0
0
  
0.0%
163,539
79.2%
$0
$0.00
  
2024
1
6,400
  
3.1%
169,939
82.3%
$84,800
$13.25
  
Thereafter
2
26,027
  
12.6%
195,966
95.0%
$229,414
$8.81
  
Vacant
0
10,400
  
5.0%
206,366
100.0%
$0
$0.00
  
Total/Weighted Average
25
206,366
  
100.0%
    
$2,493,757   
$12.73
  
 
(1)
Information obtained from the underwritten rent roll.
(2)
Certain tenants may have lease termination options that are exercisable prior to the originally stated expiration date of the subject lease and that are not considered in the Lease Expiration Schedule.
(3)
Weighted Average Annual U/W Base Rent PSF excludes vacant space.
 
The following table presents historical occupancy percentages at the Meridian Crossroads Property:

Historical Occupancy

 
12/31/2011(1)
  
 
12/31/2012(2)
  
 
12/31/2013(2)
  
 
11/13/2014(3)(4)
NAV
  
95.0%
  
95.0%
  
95.0%
(1)
Information not provided by seller.
(2)
Information obtained from the borrower.
(3)
Information obtained from the underwritten rent roll.
(4)
TJ Maxx has signed a lease but will not take possession of the space until March 1, 2015.  Excluding TJ Maxx the property is 84.3% physically occupied.
 
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 Meridian Crossroads Property:

Cash Flow Analysis

 
2012
    
2013
    
Annualized 8
Months Ended 8/31/2014
    
U/W
    
U/W $ per SF
  
Base Rent
$2,409,214
    
$2,483,096
    
$2,249,850
    
$2,488,829
    
$12.06
  
Rent Steps
0
    
0
    
0
    
4,928
    
0.02
  
Grossed Up Vacant Space
0
    
0
    
0
    
156,000
    
0.76
  
Percent Rent
16,328
    
8,206
    
10,380
    
0
    
0.00
  
Total Reimbursables
661,518
    
595,008
    
573,204
    
687,487
    
3.33
  
Other Income
4,075
    
4,180
    
0
    
6,700
    
0.03
  
Less Vacancy & Credit Loss
0
    
0
    
0
    
($190,571)(1)
    
(0.92)
  
Effective Gross Income
$3,091,135
    
$3,090,489
    
$2,833,435
    
$3,153,374
    
$15.28
  
                             
Total Operating Expenses
$1,614,648
    
$755,569
    
$923,502
    
$937,730
    
$4.54
  
                             
Net Operating Income
$1,476,487
    
$2,334,920
    
$1,909,933
    
$2,215,644
    
$10.74
  
TI/LC
0
    
0
    
0
    
157,611
    
0.76
  
Capital Expenditures
0
    
0
    
0
    
30,955
    
0.15
  
Net Cash Flow
$1,476,487
    
$2,334,920
    
$1,909,933
    
$2,027,079
    
$9.82
  
                             
NOI DSCR
1.13x
    
1.78x
    
1.46x
    
1.69x
        
NCF DSCR
1.13x
    
1.78x
    
1.46x
    
1.55x
        
NOI DY
7.4%
    
11.7%
    
9.6%
    
11.1%
        
NCF DY
7.4%
    
11.7%
    
9.6%
    
10.2%
        
 
(1)
The underwritten economic vacancy is 5.7%.  Including the TJ Maxx lease which has not yet commenced, the Meridian Crossroads Property was 95.0% leased as of November 13, 2014.

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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Wells Fargo Commercial Mortgage Trust 2014-LC18
 Transaction Contact Information
 
VI.           Transaction Contact Information
 
Questions regarding this Structural and Collateral Term Sheet may be directed to any of the following individuals:
 
Wells Fargo Securities, LLC
  
   
Brigid Mattingly
Tel. (312) 269-3062
 
Fax (312) 658-0140
   
A.J. Sfarra
Tel. (212) 214-5613
 
Fax (212) 214-8970
   
Alex Wong
Tel. (212) 214-5615
 
Fax (212) 214-8970

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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