| FREE WRITING PROSPECTUS | ||
| FILED PURSUANT TO RULE 433 | ||
| REGISTRATION FILE NO.: 333-226486-15 | ||
 |
 |
Free Writing Prospectus
Structural and Collateral Term Sheet
$560,539,656
(Approximate Initial Pool Balance)
$464,547,000
(Approximate Aggregate Certificate Balance of Offered Certificates)
Wells Fargo Commercial Mortgage Trust 2020-C57
as Issuing Entity
Wells Fargo Commercial Mortgage Securities, Inc.
as Depositor
UBS AG
LMF Commercial, LLC
Wells Fargo Bank, National Association
Ladder Capital Finance LLC
as Sponsors and Mortgage Loan Sellers
Commercial
Mortgage Pass-Through Certificates
Series 2020-C57
August 12, 2020
WELLS
FARGO
Co-Lead Manager and Joint Bookrunner |
UBS
SECURITIES
Co-Lead Manager and Joint Bookrunner | ||
|
Academy Securities Co-Manager |
Drexel Hamilton Co-Manager |
STATEMENT REGARDING THIS FREE WRITING PROSPECTUS
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-226486) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the depositor, any underwriter, or any dealer participating in the offering will arrange to send you the prospectus after filing if you request it by calling toll free 1-800-745-2063 (8 a.m. – 5 p.m. EST) or by emailing wfs.cmbs@wellsfargo.com.
Nothing in this document constitutes an offer of securities for sale in any jurisdiction where the offer or sale is not permitted. The information contained herein is preliminary as of the date hereof, supersedes any such information previously delivered to you and will be superseded by any such information subsequently delivered and ultimately by the final prospectus relating to the securities. These materials are subject to change, completion, supplement or amendment from time to time.
This free writing prospectus has been prepared by the underwriters for information purposes only and does not constitute, in whole or in part, a prospectus for the purposes of Regulation (EU) 2017/1129 and/or Part VI of the Financial Services and Markets Act 2000, as amended, or other offering document.
STATEMENT REGARDING ASSUMPTIONS AS TO SECURITIES, PRICING ESTIMATES AND OTHER INFORMATION
The attached information contains certain tables and other statistical analyses (the “Computational Materials”) which have been prepared in reliance upon information furnished by the Mortgage Loan Sellers. Numerous assumptions were used in preparing the Computational Materials, which may or may not be reflected herein. As such, no assurance can be given as to the Computational Materials’ accuracy, appropriateness or completeness in any particular context; or as to whether the Computational Materials and/or the assumptions upon which they are based reflect present market conditions or future market performance. The Computational Materials should not be construed as either projections or predictions or as legal, tax, financial or accounting advice. You should consult your own counsel, accountant and other advisors as to the legal, tax, business, financial and related aspects of a purchase of these securities. Any weighted average lives, yields and principal payment periods shown in the Computational Materials are based on prepayment and/or loss assumptions, and changes in such prepayment and/or loss assumptions may dramatically affect such weighted average lives, yields and principal payment periods. In addition, it is possible that prepayments or losses on the underlying assets will occur at rates higher or lower than the rates shown in the attached Computational Materials. The specific characteristics of the securities may differ from those shown in the Computational Materials due to differences between the final underlying assets and the preliminary underlying assets used in preparing the Computational Materials. The principal amount and designation of any security described in the Computational Materials are subject to change prior to issuance. None of Wells Fargo Securities, LLC, UBS Securities LLC, Academy Securities, Inc., Drexel Hamilton, LLC, or any of their respective affiliates, make any representation or warranty as to the actual rate or timing of payments or losses on any of the underlying assets or the payments or yield on the securities. The information in this presentation is based upon management forecasts and reflects prevailing conditions and management’s views as of this date, all of which are subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to us by or on behalf of the Mortgage Loan Sellers or which was otherwise reviewed by us.
This free writing prospectus contains certain forward-looking statements. If and when included in this free writing prospectus, the words “expects”, “intends”, “anticipates”, “estimates” and analogous expressions and all statements that are not historical facts, including statements about our beliefs or expectations, are intended to identify forward-looking statements. Any forward-looking statements are made subject to risks and uncertainties which could cause actual results to differ materially from those stated. Those risks and uncertainties include, among other things, declines in general economic and business conditions, increased competition, changes in demographics, changes in political and social conditions, regulatory initiatives and changes in customer preferences, many of which are beyond our control and the control of any other person or entity related to this offering. The forward-looking statements made in this free writing prospectus are made as of the date stated on the cover. We have no obligation to update or revise any forward-looking statement.
Wells Fargo Securities is the trade name for the capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including but not limited to Wells Fargo Securities, LLC, a member of NYSE, FINRA, NFA and SIPC, Wells Fargo Prime Services, LLC, a member of FINRA, NFA and SIPC, and Wells Fargo Bank, N.A. Wells Fargo Securities, LLC and Wells Fargo Prime Services, LLC are distinct entities from affiliated banks and thrifts.
IMPORTANT NOTICE REGARDING THE OFFERED CERTIFICATES
The information herein is preliminary and may be supplemented or amended prior to the time of sale. In addition, the Offered Certificates referred to in these materials and the asset pool backing them are subject to modification or revision (including the possibility that one or more classes of certificates may be split, combined or eliminated at any time prior to issuance or availability of a final prospectus) and are offered on a “when, as and if issued” basis.
The underwriters described in these materials may from time to time perform investment banking services for, or solicit investment banking business from, any company named in these materials. The underwriters and/or their affiliates or respective employees may from time to time have a long or short position in any security or contract discussed in these materials.
The information contained herein supersedes any previous such information delivered to any prospective investor and will be superseded by information delivered to such prospective investor prior to the time of sale.
IMPORTANT NOTICE RELATING TO AUTOMATICALLY-GENERATED EMAIL DISCLAIMERS
Any legends, disclaimers or other notices that may appear at the bottom of any email communication to which this free writing prospectus is attached relating to (1) these materials not constituting an offer (or a solicitation of an offer), (2) any representation that these materials are accurate or complete and may not be updated or (3) these materials possibly being confidential, are not applicable to these materials and should be disregarded. Such legends, disclaimers or other notices have been automatically generated as a result of these materials having been sent via Bloomberg or another system.
THE INFORMATION IN THIS 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 2020-C57 | Certificate Structure |
I. Certificate Structure
| Class | Expected
Ratings (Fitch/KBRA/Moody’s)(1) |
Approximate Initial Certificate 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 | AAAsf/AAA(sf)/Aaa(sf) | $23,372,000 | 30.500% | (7) | 2.93 | 09/20 – 08/25 | 45.2% | 14.5% | ||
| A-SB | AAAsf/AAA(sf)/Aaa(sf) | $38,042,000 | 30.500% | (7) | 7.20 | 08/25 – 12/29 | 45.2% | 14.5% | ||
| A-3(8) | AAAsf/AAA(sf)/Aaa(sf) | (8)(9) | 30.500% | (7) | (9) | (9) | 45.2% | 14.5% | ||
| A-4(8) | AAAsf/AAA(sf)/Aaa(sf) | (8)(9) | 30.500% | (7) | (9) | (9) | 45.2% | 14.5% | ||
| X-A | AAAsf/AAA(sf)/Aaa(sf) | $389,575,000(10) | N/A | Variable(11) | N/A | N/A | N/A | N/A | ||
| X-B | A-sf/AAA(sf)/NR | $74,972,000(12) | N/A | Variable(13) | N/A | N/A | N/A | N/A | ||
| A-S(8) | AA+sf/AAA(sf)/Aa2(sf) | $28,727,000(8) | 25.375% | (7) | 9.97 | 08/30 – 08/30 | 48.6% | 13.5% | ||
| B | AA-sf/AAA(sf)/NR | $15,415,000 | 22.625% | (7) | 9.97 | 08/30 – 08/30 | 50.4% | 13.1% | ||
| C | A-sf/AA-(sf)/NR | $30,830,000 | 17.125% | (7) | 9.97 | 08/30 – 08/30 | 54.0% | 12.2% | ||
| Non-Offered Certificates | ||||||||||
| X-D(14) | BBBsf/AAA(sf)/NR | $12,738,000(15) | N/A | Variable(16) | N/A | N/A | N/A | N/A | ||
| D(14) | BBBsf/A(sf)/NR | $12,738,000 | 14.853% | (7) | 9.97 | 08/30 – 08/30 | 55.5% | 11.9% | ||
| Risk Retention Certificates | ||||||||||
| E-RR(14) | BBB-sf/A-(sf)/NR | $14,588,000 | 12.250% | (7) | 9.97 | 08/30 – 08/30 | 57.1% | 11.5% | ||
| F-RR | BBB-sf/BBB(sf)/NR | $10,510,000 | 10.375% | (7) | 9.97 | 08/30 – 08/30 | 58.4% | 11.3% | ||
| G-RR | BB+sf/BBB(sf)/NR | $5,606,000 | 9.375% | (7) | 9.97 | 08/30 – 08/30 | 59.0% | 11.2% | ||
| H-RR | BBsf/BBB-(sf)/NR | $6,306,000 | 8.250% | (7) | 9.97 | 08/30 – 08/30 | 59.7% | 11.0% | ||
| J-RR | BB-sf/BB(sf)/NR | $6,306,000 | 7.125% | (7) | 9.97 | 08/30 – 08/30 | 60.5% | 10.9% | ||
| K-RR | B-sf/B+(sf)/NR | $7,707,000 | 5.750% | (7) | 9.97 | 08/30 – 08/30 | 61.4% | 10.7% | ||
| L-RR | NR/B-(sf)/NR | $5,606,000 | 4.750% | (7) | 9.97 | 08/30 – 08/30 | 62.0% | 10.6% | ||
| M-RR | NR/NR/NR | $26,625,655 | 0.000% | (7) | 9.97 | 08/30 – 08/30 | 65.1% | 10.1% | ||
| Notes: | ||||||||||
| (1) | The expected ratings presented are those of Fitch Ratings, Inc. (“Fitch”), Kroll Bond Rating Agency, LLC (“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 X-B Certificates, the ultimate distribution of principal due on those Classes on or before the Rated Final Distribution Date. See “Risk Factors—Other Risks Relating to the Certificates—Nationally Recognized Statistical Rating Organizations May Assign Different Ratings to the Certificates; Ratings of the Certificates Reflect Only the Views of the Applicable Rating Agencies as of the Dates Such Ratings Were Issued; Ratings May Affect ERISA Eligibility; Ratings May Be Downgraded” and “Ratings” in the Preliminary Prospectus, expected to be dated August 12, 2020 (the “Preliminary Prospectus”). Fitch, KBRA and Moody’s have informed us that the “sf” designation in their ratings represents an identifier for structured finance product ratings. | |||||||||
| (2) | The Certificate Balances and Notional Amounts set forth in the table are approximate. The actual initial Certificate Balances and Notional Amounts may be larger or smaller depending on the initial pool balance of the mortgage loans definitively included in the pool of mortgage loans, which aggregate cut-off date balance may be as much as 5% larger or smaller than the amount presented in the Preliminary Prospectus. In addition, the Notional Amounts of the Class X-A, X-B and X-D Certificates may vary depending upon the final pricing of the Classes of Principal Balance Certificates (as defined below) or trust components whose Certificate Balances comprise such Notional Amounts, and, if, as a result of such pricing, the pass-through rate of the Class X-A, X-B or X-D Certificates, as applicable, would be equal to zero at all times, such Class of Certificates may not be issued on the closing date of this securitization. | |||||||||
| (3) | The approximate initial credit support with respect to the Class A-1, A-SB, A-3 and A-4 Certificates represents the approximate credit enhancement for the Class A-1, A-SB, A-3 and A-4 Certificates in the aggregate, taking into account the Certificate Balances of the Class A-3 and Class A-4 trust components. The approximate initial credit support set forth for the Class A-S certificates represents the approximate initial credit enhancement for the underlying Class A-S trust component. | |||||||||
| (4) | Weighted Average Lives and Expected Principal Windows are calculated based on an assumed prepayment rate of 0% CPR and the “Structuring Assumptions” described under “Yield and Maturity Considerations—Weighted Average Life” in the Preliminary Prospectus. | |||||||||
| (5) | The Certificate Principal to Value Ratio for each Class of Certificates (other than the Class A-1, A-SB, A-3 and A-4 Certificates) is calculated as the product of (a) the weighted average Cut-off Date LTV Ratio for the mortgage loans and (b) a fraction, the numerator of which is the total initial Certificate Balance of such Class of Certificates and all Classes of Principal Balance Certificates (or, with respect to the Class A-3, Class A-4 or Class A-S Certificates, the trust component with the same alphanumeric designation) senior to such Class of Certificates and the denominator of which is the total initial Certificate Balance of all of the Classes of Principal Balance Certificates (or, with respect to the Class A-3, Class A-4 or Class A-S Certificates, the trust component with the same alphanumeric designation). The Certificate Principal to Value Ratio for each of the Class A-1, A-SB, A-3 and A-4 Certificates is calculated in the aggregate for those Classes as if they were a single Class and is calculated as the product of (a) the weighted average Cut-off Date LTV Ratio for the mortgage loans and (b) a fraction, the numerator of which is the total initial Certificate Balance of such Classes of Certificates (or, with respect to the Class A-3 or A-4 Certificates, the trust component with the same alphanumeric designation) and the denominator of which is the total initial Certificate Balance of all of the Classes of Principal Balance Certificates (or, with respect to the Class A-3, Class A-4 or Class A-S Certificates, the trust component with the same alphanumeric designation). 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. | |||||||||
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
3
| Wells Fargo Commercial Mortgage Trust 2020-C57 | Certificate Structure |
| (6) | The Certificate Principal U/W NOI Debt Yield for each Class of Certificates (other than the Class A-1, A-SB, A-3 and A-4 Certificates) is calculated as the product of (a) the weighted average U/W NOI Debt Yield for the mortgage loans and (b) a fraction, the numerator of which is the total initial Certificate Balance of all of the Classes of Principal Balance Certificates (or, with respect to the Class A-3, Class A-4 or Class A-S Certificates, the trust component with the same alphanumeric designation) and the denominator of which is the total initial Certificate Balance of such Class of Certificates and all Classes of Principal Balance Certificates (or, with respect to the Class A-3, Class A-4 or Class A-S Certificates, the trust component with the same alphanumeric designation) senior to such Class of Certificates. The Certificate Principal U/W NOI Debt Yield for each of the Class A-1, A-SB, A-3 and A-4 Certificates is calculated in the aggregate for those Classes as if they were a single Class and is calculated as the product of (a) the weighted average U/W NOI Debt Yield for the mortgage loans and (b) a fraction, the numerator of which is the total initial Certificate Balance of all of the Classes of Principal Balance Certificates (or, with respect to the Class A-3, Class A-4 or Class A-S Certificates, the trust component with the same alphanumeric designation) and the denominator of which is the total initial Certificate Balance of such Classes of Certificates (or, with respect to the Class A-3 and Class A-4 Certificates, the trust component with the same alphanumeric designation). 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-SB, A-3, A-4, A-S, B, C, D, E-RR, F-RR, G-RR, H-RR, J-RR, K-RR, L-RR and M-RR Certificates in each case will be one of the following: (i) a fixed rate per annum, (ii) 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, (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. | |||||||||
| (8) | The Class A-3-1, A-3-2, A-3-X1, A-3-X2, A-4-1, A-4-2, A-4-X1, A-4-X2, A-S-1, A-S-2, A-S-X1 and A-S-X2 Certificates are also offered certificates. Such Classes of Certificates, together with the Class A-3, Class A-4 and Class A-S Certificates, constitute the “Exchangeable Certificates”. The Class A-1, A-SB, B, C, D, E-RR, F-RR, G-RR, H-RR, J-RR, K-RR, L-RR and M-RR Certificates, together with the Exchangeable Certificates with a Certificate Balance, are referred to as the “Principal Balance Certificates.” Each class of Exchangeable Certificates will have the Certificate Balance or Notional Amount and pass-through rate described below under “Exchangeable Certificates.” | |||||||||
| (9) | The exact initial Certificate Balances
or Notional Amounts of the Class A-3, Class A-3-X1, Class A-3-X2, Class A-4, Class A-4-X1 and Class A-4-X2 trust components
(and consequently, the exact aggregate initial Certificate Balances or Notional Amounts of the Exchangeable Certificates with
an “A-3” or “A-4” designation) are unknown and will be determined based on the final pricing of the
Certificates. However, the initial Certificate Balances, weighted average lives and principal windows of the Class A-3 and
Class A-4 trust components are expected to be within the applicable ranges reflected in the following chart. The aggregate
initial Certificate Balance of the Class A-3 and Class A-4 trust components is expected to be approximately $328,161,000,
subject to a variance of plus or minus 5%. The Class A-3-X1 and Class A-3-X2 trust components will have initial Notional Amounts
equal to the initial Certificate Balance of the Class A-3 trust component. The Class A-4-X1 and Class A-4-X2 trust components
will have initial Notional Amounts equal to the initial Certificate Balance of the Class A-4 trust component. In the event
that the Class A-4 Certificates are issued at $328,161,000, the Class A-3 Certificates will not be issued. Trust Components
Expected Range of Approximate Initial Certificate Balance Expected Range of Weighted Average Life (Years) Expected Range of Principal Window Class A-3 $0 - $160,000,000 N/A – 9.47 N/A / 12/29 – 03/30 Class A-4 $168,161,000 - $328,161,000 9.56 – 9.64 12/29 – 08/30 / 03/30 – 08/30 | |||||||||
Trust Components |
Expected
Range of |
Expected
Range of |
Expected Range of Principal Window |
| Class A-3 | $0 - $160,000,000 | N/A – 9.47 | N/A / 12/29 – 03/30 |
| Class A-4 | $168,161,000 - $328,161,000 | 9.56 – 9.64 | 12/29 – 08/30 / 03/30 – 08/30 |
| (10) | The Class X-A Certificates are notional amount certificates. The Notional Amount of the Class X-A Certificates will be equal to the aggregate Certificate Balance of the Class A-1 and A-SB Certificates and the Class A-3 and A-4 trust components outstanding from time to time. The Class X-A Certificates will not be entitled to distributions of principal. | |||||||||
| (11) | 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 and A-SB Certificates and the Class A-3, A-3-X1, A-3-X2, A-4, A-4-X1 and A-4-X2 trust components for the related distribution date, weighted on the basis of their respective Certificate Balances or Notional Amounts outstanding immediately prior to that distribution date (but excluding trust components with a Notional Amount in the denominator of such weighted average calculation). 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. | |||||||||
| (12) | The Class X-B Certificates are notional amount certificates. The Notional Amount of the Class X-B Certificates will be equal to the aggregate Certificate Balance of the Class A-S trust component and the Class B and C Certificates outstanding from time to time. The Class X-B Certificates will not be entitled to distributions of principal. | |||||||||
| (13) | 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 A-S, A-S-X1 and A-S-X2 trust components and the Class B and C Certificates for the related distribution date, weighted on the basis of their respective Certificate Balances or Notional Amounts outstanding immediately prior to that distribution date (but excluding trust components with a Notional Amount in the denominator of such weighted average calculation). 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. | |||||||||
| (14) | The initial Notional Amount of the Class X-D Certificates and the initial Certificate Balance of each of the Class D and E-RR Certificates are subject to change based on final pricing of all Certificates and the final determination of the Class E-RR, F-RR, G-RR, H-RR, J-RR, K-RR, L-RR and M-RR Certificates (collectively, the “horizontal risk retention certificates”) that will be retained by the retaining sponsor through a third party purchaser as part of the U.S. risk retention requirements. For more information regarding the methodology and key inputs and assumptions used to determine the sizing of the horizontal risk retention certificates, see “Credit Risk Retention” in the Preliminary Prospectus. | |||||||||
| (15) | The Class X-D Certificates are notional amount certificates. The Notional Amount of the Class X-D Certificates will be equal to the Certificate Balance of the Class D Certificates outstanding from time to time. The Class X-D Certificates will not be entitled to distributions of principal. | |||||||||
| (16) | The pass-through rate for the Class X-D 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 D 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 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 2020-C57 | Transaction Highlights |
II. Transaction Highlights
Mortgage Loan Sellers:
Mortgage Loan Seller |
Number
of |
Number
of |
Aggregate
Cut-off |
%
of Initial |
| UBS AG | 12 | 17 | $194,331,499 | 34.7% |
| LMF Commercial, LLC | 12 | 28 | 164,873,789 | 29.4 |
| Wells Fargo Bank, National Association | 7 | 7 | 141,071,000 | 25.2 |
| Ladder Capital Finance LLC | 9 | 19 | 60,263,368 | 10.8 |
Total |
40 |
71 |
$560,539,656 |
100.0% |
Loan Pool:
| Initial Pool Balance: | $560,539,656 |
| Number of Mortgage Loans: | 40 |
| Average Cut-off Date Balance per Mortgage Loan: | $14,013,491 |
| Number of Mortgaged Properties: | 71 |
| Average Cut-off Date Balance per Mortgaged Property(1): | $7,894,925 |
| Weighted Average Mortgage Interest Rate: | 4.048% |
| Ten Largest Mortgage Loans as % of Initial Pool Balance: | 56.9% |
| Weighted Average Original Term to Maturity or ARD (months): | 120 |
| Weighted Average Remaining Term to Maturity or ARD (months): | 117 |
| Weighted Average Original Amortization Term (months)(2): | 360 |
| Weighted Average Remaining Amortization Term (months)(2): | 359 |
| Weighted Average Seasoning (months): | 3 |
| (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): | 1.80x |
| Weighted Average U/W Net Operating Income Debt Yield(1)(2): | 10.1% |
| Weighted Average Cut-off Date Loan-to-Value Ratio(1)(2): | 65.1% |
| Weighted Average Balloon or ARD Loan-to-Value Ratio(1)(2): | 57.1% |
| % of Mortgage Loans with Additional Subordinate Debt(3): | 5.4% |
| % of Mortgage Loans with Single Tenants(4): | 13.9% |
| (1) | With respect to any mortgage loan that is part of a whole loan, loan-to-value ratio, debt service coverage ratio and debt yield calculations include the related pari passu companion loan(s) but exclude any related subordinate companion loan(s) (unless otherwise stated). The debt service coverage ratio, debt yield and loan-to-value ratio information do not take into account any subordinate debt (whether or not secured by the related mortgaged property), that currently exists or is allowed under the terms of any mortgage loan. See “Description of the Mortgage Pool—Mortgage Pool Characteristics” in the Preliminary Prospectus and Annex A-1 to the Preliminary Prospectus. |
| (2) | For many of the mortgage loans, underwritten net cash flow, underwritten net operating income and appraised values of the related mortgaged properties were determined, or were calculated based on information as of a date, prior to the emergence of the novel coronavirus pandemic and the economic disruption resulting from measures to combat the pandemic, and the loan-to-value, debt service coverage and debt yield metrics presented in this term sheet may not reflect current market conditions. |
| (3) | The percentage figure expressed as “% of Mortgage Loans with Additional Subordinate Debt” is determined as a percentage of the initial pool balance and does not take into account any future subordinate debt (whether or not secured by the mortgaged property), if any, that may be permitted under the terms of any mortgage loan or the pooling and servicing agreement. See “Description of the Mortgage Pool—Additional Indebtedness” in the Preliminary Prospectus. |
| (4) | Excludes mortgage loans that are secured by multiple single tenant properties. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
5
| Wells Fargo Commercial Mortgage Trust 2020-C57 | Transaction Highlights |
Loan Structural Features:
Amortization: Based on the Initial Pool Balance, 78.8% of the mortgage pool (28 mortgage loans) has scheduled amortization, as follows:
49.3% (12 mortgage loans) provides for an interest-only period followed by an amortization period; and
29.5% (16 mortgage loans) requires amortization during the entire loan term.
Interest-Only: Based on the Initial Pool Balance, 21.2% of the mortgage pool (12 mortgage loans) provides for interest-only payments during the entire loan term through maturity or ARD. The Weighted Average Cut-off Date Loan-to-Value Ratio and Weighted Average U/W Net Cash Flow DSCR for those mortgage loans are 59.6% and 2.40x, respectively.
Hard Lockboxes: Based on the Initial Pool Balance, 41.6% of the mortgage pool (17 mortgage loans) have 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: | 79.7% of the pool |
| Insurance: | 60.6% of the pool |
| Capital Replacements: | 80.0% of the pool |
| TI/LC: | 44.6% of the pool(1) |
| (1) The percentage of Initial Pool Balance for mortgage loans with TI/LC reserves is based on the aggregate principal balance allocable to loans that include office, retail and industrial properties. | |
Call Protection/Defeasance: Based on the Initial Pool Balance, the mortgage pool has the following call protection and defeasance features:
82.1% of the mortgage pool (28 mortgage loans) features a lockout period, then defeasance only until an open period;
11.5% of the mortgage pool (5 mortgage loans) features a lockout period, then the greater of a prepayment premium (1%) or yield maintenance until an open period;
4.5% of the mortgage pool (1 mortgage loan) features a lockout period, then the greater of a prepayment premium (2%) or yield maintenance until an open period;
1.0% of the mortgage pool (1 mortgage loan) features a lockout period, then the greater of a prepayment premium (1%) or yield maintenance, or defeasance until an open period; and
0.8% of the mortgage pool (5 mortgage loans) features yield maintenance, then yield maintenance or defeasance until an open period.
Prepayment restrictions for each mortgage loan reflect the entire life of the mortgage loan. Please refer to Annex A-1 to the Preliminary Prospectus and the footnotes related thereto for further information regarding individual loan call protection.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
6
| Wells Fargo Commercial Mortgage Trust 2020-C57 | Transaction Highlights |
III. COVID-19 Update
The following table contains information regarding the status of the mortgage loans and mortgaged properties provided by the respective borrowers as of the date set forth in the “Information As Of Date” column. The cumulative effects of the COVID-19 emergency on the global economy may cause tenants to be unable to pay their rent and borrowers to be unable to pay debt service under the mortgage loans. As a result, we cannot assure you that the information in the following table is indicative of future performance or that tenants or borrowers will not seek rent or debt service relief (including forbearance arrangements) or other lease or loan modifications in the future. Such actions may lead to shortfalls and losses on the certificates. Any information in the following table will be superseded by the information contained under the heading “Description of the Mortgage Pool—COVID-19 Considerations” in the Preliminary Prospectus.
| Mortgage Loan Seller | Information As Of Date |
Origination Date |
Mortgaged Property Name | Mortgaged Property Type | June Debt Service Payment Received (Y/N) | July Debt Service Payment Received (Y/N) | August Debt Service Payment Received (Y/N) | Forbearance or Other Debt Service Relief Requested (Y/N) | Other Loan Modification Requested (Y/N) | Lease Modification or Rent Relief Requested (Y/N) | Total SF or Unit Count Making Full June Rent Payment (%) | UW June Base Rent Paid (%) | Total SF or Unit Count Making Full July Rent Payment (%) | UW July Base Rent Paid (%) |
| LMF | 7/28/2020 | 7/21/2020 | PGH17 Self Storage Portfolio | Self Storage | NAP(1) | NAP(1) | NAP(1) | N | N | NAV | (2) | (2) | (2) | (2) |
| UBS AG | 6/30/2020 | 2/7/2020 | Phoenix Industrial Portfolio IV | Industrial | Y | Y | Y | N | N | N | 100.0% | 100.0% | 99.6% | 98.8% |
| WFB | 7/20/2020 | 3/10/2020 | Hilton Garden Inn – Goleta | Hospitality | Y | Y | (3) | N | N | N | (4) | (4) | NAV | NAV |
| UBS AG | 7/21/2020 | 11/25/2019 | DoubleTree New York Times Square West Leased Fee | Other | Y | Y | Y | Y(5) | N | N | 100.0%(6)(7) | 100.0%(6)(7) | 100.0%(6)(7) | 100.0%(6)(7) |
| WFB | 7/13/2020 | 7/16/2020 | Technology Place | Office | NAP(1) | NAP(1) | NAP(1)(3) | N | N | Y(8) | 88.4%(8) | 94.0%(8) | 100.0% | 100.0% |
| WFB | 8/5/2020 | 2/28/2020 | Residence Inn – Fort Worth Cultural District | Hospitality | Y | Y | Y(3) | Y(9) | Y(9) | N | (10) | (10) | NAV | NAV |
| UBS AG | 7/23/2020 | 7/30/2020 | Landmark Corporate Center | Office | NAP(1) | NAP(1) | NAP(1) | N | N | N | 100.0% | 100.0% | 100.0% | 100.0% |
| LMF | 7/17/2020 | 2/13/2020 | Upland Park Townhomes | Multifamily | Y | Y | Y | N | N | NAV | 94.4% | 98.0% | 87.7% | 95.0% |
| WFB | 7/20/2020 | 3/3/2020 | Life Time Fitness – Gainesville, VA | Retail | Y | Y | (3) | N | N | N | 100.0% | 100.0% | 100.0% | 100.0% |
| UBS AG | 7/22/2020 | 7/31/2020 | Town Square Apartments | Multifamily | NAP(1) | NAP(1) | NAP(1) | N | N | N | 94.1%(11) | 93.5% | 95.8%(11) | 95.8% |
| LCF | 8/6/2020 | 2/20/2020 | Konica Minolta Phase II | Office | Y | Y | Y | N | N | N | 100.0% | 100.0% | 100.0%(12) | 100.0%(12) |
| WFB | 8/7/2020 | 2/21/2020 | 501 3rd Street | Office | Y | Y | Y(3) | N | N | Y(13) | 100.0% | 100.0% | 100.0% | 100.0% |
| LMF | 8/6/2020 | 1/29/2020 | TownePlace Suites Tacoma Lakewood | Hospitality | N(14) | Y | Y | Y(14) | N | NAP | (15) | (15) | (15) | (15) |
| LMF | 7/20/2020 | 7/21/2020 | Southlake Cove Apartments | Multifamily | NAP(1) | NAP(1) | NAP(1) | N | N | NAV | 92.8% | 91.9% | 86.4% | 90.6% |
| LCF | 7/29/2020 | 3/11/2020 | 122nd Street Portfolio | Multifamily | Y | Y | Y | N | N | Y(16) | NAV(17) | 93.5%(18) | NAV(19) | NAV(19) |
| LCF | 7/28/2020 | 3/11/2020 | The Grid | Multifamily | Y | Y | Y | Y(20) | N | Y(21) | NAV(17) | 97.0%(22) | NAV(17) | 96.0%(23) |
| UBS AG | 7/22/2020 | 1/17/2020 | Bass Pro - Birmingham | Retail | Y | Y | Y | N | N | Y(24) | 100.0% | 100.0% | 100.0% | 100.0% |
| UBS AG | 7/14/2020 | 8/3/2020 | Chesapeake | Industrial | NAP(1) | NAP(1) | NAP(1) | N | N | N | 100.0% | 100.0% | 100.0% | 100.0% |
| LMF | 7/23/2020 | 7/23/2020 | Martin Door Industrial | Industrial | NAP(1) | NAP(1) | NAP(1) | N | N | N | 100.0% | 100.0% | 100.0% | 100.0% |
| UBS AG | 7/23/2020 | 2/11/2020 | TownePlace Suites - Macon | Hospitality | Y | Y | Y | N | N | N | (25) | (25) | NAV | NAV |
| UBS AG | 7/23/2020 | 2/21/2020 | 570 Taxter Road | Office | Y | Y | Y | N | N | Y(26) | 100.0% | 100.0%(27) | 100.0% | 100.0%(27) |
| UBS AG | 6/25/2020 | 6/25/2020 | South Carolina Industrial Portfolio | Industrial | NAP(28) | NAP(28) | Y | N | N | N | 100.0% | 100.0% | NAV | NAV |
| UBS AG | 7/23/2020 | 8/3/2020 | Luxor Garden Apartments | Multifamily | NAP(1) | NAP(1) | NAP(1) | N | N | N | 85.8%(11)(29) | 94.5% | 78.6%(11)(29) | 92.8% |
| LCF | 8/6/2020 | 12/27/2019 | Walgreens Burlington | Retail | Y | Y | Y | N | N | N | 100.0% | 100.0% | 100.0% | 100.0% |
| LMF | 7/22/2020 | 7/2/2020 | Spacebox Storage – Niceville | Self Storage | NAP(28) | NAP(28) | NAP(28) | N | N | NAV | 100.0% | 100.0% | (30) | (30) |
| LMF | 7/29/2020 | 7/23/2020 | Jefferson Apartments | Multifamily | NAP(1) | NAP(1) | NAP(1) | N | N | NAV | 98.3% | 98.8% | 98.3% | 98.3% |
| LMF | 7/23/2020 | 12/27/2019 | Kennedy Center | Retail | Y | Y | Y | Y(31) | N | Y(32) | 91.8% | 91.8% | 91.8% | 91.8% |
| LMF | 7/22/2020 | 6/17/2020 | Outback 98 West Storage | Self Storage | NAP(28) | NAP(28) | NAP(28) | N | N | NAV | (33) | (33) | (33) | (33) |
| UBS AG | 7/9/2020 | 7/9/2020 | Old Meridian Professional Center | Office | NAP(28) | NAP(28) | Y | N | N | N | 100.0% | 100.0% | 100.0% | 100.0% |
| WFB | 8/4/2020 | 7/23/2020 | SPS Fresno Marks | Self Storage | NAP(1) | NAP(1) | NAP(1)(3) | N | N | N | (34) | (34) | (34) | (34) |
| LMF | 7/21/2020 | 7/21/2020 | Vineyard Pointe Apartments | Multifamily | NAP(1) | NAP(1) | NAP(1) | N | N | NAV | 95.4% | 95.8% | 100.0% | 100.0% |
| LMF | 7/23/2020 | 2/13/2020 | Commons at Southtowne IV | Retail | Y | Y | Y | Y(35) | N | Y(36) | 93.1% | 86.7% | 93.1% | 86.7% |
| UBS AG | 7/21/2020 | 7/15/2020 | Tower Storage – Fayetteville | Self Storage | NAP(1) | NAP(1) | NAP(1) | N | N | N | 99.2%(11) | 99.4% | 97.9%(11) | 98.4% |
| LMF | 7/22/2020 | 7/30/2020 | 613 Oakfield Drive | Office | NAP(1) | NAP(1) | NAP(1) | N | N | N | 100.0% | 100.0% | 100.0% | 100.0% |
| WFB | 8/6/2020 | 3/11/2020 | Corner Plaza | Retail | Y | Y | Y(3) | Y(37) | N | Y(38) | 87.5%(38) | 92.4%(38) | 100.0% | 100.0% |
| LCF | 8/6/2020 | 8/6/2020 | Dollar General- Isanti | Retail | NAP(1) | NAP(1) | NAP(1) | N | N | N | 100.0% | 100.0% | 100.0% | 100.0% |
| LCF | 8/6/2020 | 8/6/2020 | Dollar General- Sioux City | Retail | NAP(1) | NAP(1) | NAP(1) | N | N | N | 100.0% | 100.0% | 100.0% | 100.0% |
| LCF | 8/6/2020 | 8/6/2020 | Dollar General- Newburgh | Retail | NAP(1) | NAP(1) | NAP(1) | N | N | N | 100.0% | 100.0% | 100.0% | 100.0% |
| LCF | 8/6/2020 | 8/6/2020 | Dollar General- Waterloo | Retail | NAP(1) | NAP(1) | NAP(1) | N | N | N | 100.0% | 100.0% | 100.0% | 100.0% |
| LCF | 8/6/2020 | 8/6/2020 | Dollar General- Little Falls | Retail | NAP(1) | NAP(1) | NAP(1) | N | N | N | 100.0% | 100.0% | 100.0% | 100.0% |
| (1) | The related mortgage loan has its first due date in September 2020. |
| (2) | Tenant due dates are based on the date in the month of their start date (which in most cases is not the 1st of month), so collections are not tracked on calendar month basis. As of 7/28/2020, 4.0% of monthly rents were 31-60 days past due and 2.7% of monthly rents were 61-90 days past due. |
| (3) | The Hilton Garden Inn – Goleta, Technology Place, Residence Inn – Fort Worth Cultural District, Life Time Fitness – Gainesville, VA, 501 3rd Street, SPS Fresno Marks and Corner Plaza mortgage loans have scheduled debt service payments due on the 11th of each month. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
7
| Wells Fargo Commercial Mortgage Trust 2020-C57 | Transaction Highlights |
| (4) | May and June 2020 occupancy, ADR and RevPAR information was 17.5%, $131.05 and $22.86 and 35.1%, $148.49 and $52.11, respectively. Occupancy, ADR and RevPAR information is due to the lender 30 days after month’s end; therefore July 2020 information is not available. |
| (5) | On May 1, 2020, the borrower contacted the lenders to request forbearance on the $90 million whole loan. The request included a modification of the related ground lease so as to permit the deferral of interest payments under the Whole Loan for May, June and July of 2020, which would be repaid in equal installments on each monthly payment date in 2021. Pursuant to the co-lender agreement for the whole loan, all major decisions (which would include the modification of the ground lease and any forbearance request) rest with the holder of the related subordinate companion loan. On May 7, 2020, the holder of the related subordinate companion loan formally denied the request. The borrower has made all debt service payments through July 2020. |
| (6) | June and July 2020 occupancy, ADR and RevPAR information was 30.5%, $91.41 and $27.91 and 15.5%, $83.18 and $12.91, respectively. |
| (7) | The mortgaged property consists of a leased fee interest, which is leased under a ground lease to an affiliate of the borrower. The affiliated ground lessee paid all rent payments on a net basis (i.e., the ground lessee paid an amount equal solely to the debt service on the related mortgage loan, and the borrower sponsor retained the remainder of the ground rent payment, which would otherwise have been paid to the borrower and distributed to the borrower sponsor as the borrower’s ultimate equity owner). The borrower sponsor has stated that going forward it will cause the ground lessee to pay the full rent payment, and that it will also cause the ground lessee to pay the remaining ground rent payment for prior months (which is then expected to be distributed to the borrower sponsor). |
| (8) | One tenant, representing 11.6% of NRA and 11.8% of UW Base Rent, received 50% rent deferral for April, May and June 2020, which was paid back in July 2020. |
| (9) | The borrower and lender entered into a forbearance agreement, dated April 10, 2020, and a loan modification, dated April 30, 2020, providing for the following, among other things: (i) a debt service reserve in the amount of $400,000, which can be released to the borrower to the extent that property cash flows are insufficient to make monthly debt service payments; (ii) suspension of FF&E monthly deposits from May through October 2020 (approximately $73,308); resumption of FF&E monthly deposits in November 2020 for the duration of the loan term; and 24-month replenishment of the FF&E reserve funds by an additional $3,055 monthly beginning November 2020 and ending in October 2022; (iii) deferral of cash management testing through April 2021, and, when resumed, a 9.0% debt yield trigger (tested quarterly); (iv) if the Franchisor modifies the scope of required PIP work, transfer of any PIP reserve funds exceeding 100% of the estimated cost to the debt service reserve; and (v) the borrower's obtaining a PPP loan subject to specified conditions. See "Description of the Mortgage Pool—Additional Indebtedness—Other Unsecured Indebtedness". |
| (10) | May and June 2020 occupancy, ADR and RevPAR information was 37.2%, $121.62 and $45.20 and 48.7%, $121.00 and $58.93, respectively. Occupancy, ADR and RevPAR information is due to the lender 30 days after month’s end; therefore July 2020 information is not available. |
| (11) | Calculated based on the number of units for which rent was fully paid divided by the total number of occupied units. |
| (12) | The related sole tenant makes quarterly lease payments, with the third quarter payment made in July 2020. Only the warehouse was operational as of July 2020. As the State of New Jersey provides additional guidance for reopening, the related sole tenant has expressed an intent to slowly bring back workers, gradually building back to full staff. |
| (13) | The retail tenant, representing 25% of NRA and 17.6% of UW Base Rent, has requested rent relief. The retail tenant has paid rent in full for April, May, June, July and August 2020. |
| (14) | The borrower paid April 2020 debt service in full. The borrower requested relief, and the borrower and the lender subsequently executed a forbearance agreement on May 14, 2020, which provided for the forbearance of payments in May and June 2020 and the waiver of capital expenditure deposits, subject to certain exceptions, during the forbearance period. In July 2020, the borrower paid in full debt service for July 2020 and deferred accrued interest from May and June 2020. Regular debt service payments are required to continue in August 2020 and thereafter. See “Description of the Mortgage Pool—Additional Indebtedness—Other Unsecured Indebtedness”. |
| (15) | June and July 2020 occupancy, ADR and RevPAR information was 85.1%, $126.15 and $107.39 and 82.0%, $125.00 and $102.50, respectively. |
| (16) | Although requests for residential rent relief have been made and granted, the related mortgage loan seller does not have exact statistics. There is no current rent relief with respect to the commercial space. |
| (17) | Information based on total square footage or unit count not available. |
| (18) | Represents the percentage of total billed residential rent collected for June 2020 and excludes rent collected (if any) for such month from the retail portion of the subject Mortgaged Property. |
| (19) | As of the July 6, 2020 payment, the residential portion of the portfolio of related Mortgaged Properties was open and operating. The residential portion of the portfolio of related Mortgaged Properties was 91.7% occupied as of July 2020. Given the collection and reporting timing, it is difficult to determine the percentage of residential tenants who have not paid rent for July 2020. Three of the related Mortgaged Properties also collectively include approximately 2,400 square feet of ground floor retail space, which accounts for approximately 5.1% of total underwritten gross potential rent for the portfolio and had an economic occupancy of 80.1% as of July 2020. Two of the three retail spaces (deli/grocery and ice cream shop) are partially or fully operational. |
| (20) | Pursuant to a letter dated June 24, 2020 and addressed to the Non-Serviced Master Servicer under the WFCM 2020-C56 PSA, the related borrower requested that The Grid Whole Loan be converted to interest-only debt service payments commencing no later than August 6, 2020 and to continue as such for a period of 18 to 24 months. Such request has been denied. |
| (21) | There was no residential rent relief granted for the month of July 2020. Requests for residential rent relief have been made and may have been granted for prior months. Four commercial retail tenants, representing less than 2.0% of total gross potential rent at the subject Mortgaged Property, have received rent deferrals. All deferral periods have expired. Bamsi has deferred 50% of its rent for May 2020, June 2020 and July 2020, which deferred rent is to be repaid in three installments in the first quarter of 2021. Pirates Pro Shop has deferred 100% of its rent payments for April 2020 and May 2020, which deferred rent is to be repaid in three installments in the first quarter of 2021. Rakel Nail Salon has deferred 100% of its rent payments for April 2020, May 2020 and June 2020, which deferred rent is to be repaid in either August 2020 or upon receipt of an approved grant through the City of Worcester. Sierra Salon has deferred 100% of its rent payments for April 2020, May 2020 and June 2020. The repayment schedule for Sierra Salon has not been established and is pending approval of a grant through the City of Worcester. |
| (22) | Represents the percentage of total billed residential rent collected for June 2020 and excludes rent collected (if any) for such month from the retail portion of the subject Mortgaged Property. Residential occupancy for June 2020 was approximately 88.0%. |
| (23) | Represents the percentage of total billed residential rent collected for July 2020 as of July 28, 2020 and excludes rent collected (if any) for such month from the retail portion of the subject Mortgaged Property. Residential occupancy for July 2020 was approximately 90.6%. All of the commercial tenants had closed by reason of state order on or about March 15, 2020. As of late July 2020, all commercial tenants (except for two restaurants with limited outdoor seating) had reopened and were fully or partially operational. |
| (24) | The single tenant representing 100.0% of UW rent and 100.0% of NRA, Bass Pro Shops, requested rent deferment for base rent for the month of May 2020 (totaling $105,896) to be repaid in three equal monthly installments in January, February, and March 2021. The mortgage loan seller approved a lease addendum dated May 1, 2020 providing for such deferment and the tenant resumed regular rent payments on June 1, 2020. |
| (25) | June 2020 occupancy, ADR and RevPAR information was 87.5%, $108.01 and $94.56, respectively. |
| (26) | Four tenants, representing 11.1% of UW rent and 9.9% of NRA, requested rent deferment in May 2020 (totaling $14,163); however, none of the four tenants received approval and paid full rent for the month of May 2020. All four tenants have paid their outstanding rent balance and are current through the month of July 2020. One tenant, representing 3.3% of UW rent and 2.3% of NRA, is currently delinquent on February 2020 rent. The tenant is current on all other months through July 2020. |
| (27) | Calculated based on UW Base Rent including any underwritten rent steps and percentage rent, but excluding any underwritten straight-line rent. |
| (28) | The related mortgage loan has its first due date in August 2020. |
| (29) | Total SF or Unit Count Making Full Rent Payments excluding tenants that are less than or equal to $50.00 late or delinquent on monthly rent is 90.4% for June 2020 and 86.0% for July 2020, respectively. |
| (30) | As of July 22, 2020, there were no delinquencies past 30 days. |
| (31) | The borrower sponsor submitted a request for loan relief, but subsequently retracted the request. No requests are currently outstanding. |
| (32) | One tenant, representing approximately 10.8% of NRA, has agreed to a payment plan, allowing repayment of outstanding base rent for April and May (totaling $10,188) over 12 payments beginning in September 2020. |
| (33) | As of July 22, 2020, 0.3% of tenants (by monthly rent) were 31-60 days delinquent and 0.1% of tenants (by monthly rent) were 60+ days delinquent. |
| (34) | Given the timing of collection and reporting, an accurate estimate of the percentage of tenants who have not paid is not available. For the month of June 2020, rent collections were reported to be equal to UW Base Rent. For the month of July 2020, rent collections were reported to be approximately 3.8% greater than UW Base Rent. |
| (35) | The borrower sponsor submitted a request for loan relief but subsequently retracted the request. No requests are currently outstanding. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
8
| Wells Fargo Commercial Mortgage Trust 2020-C57 | Transaction Highlights |
| (36) | On April 28, 2020, PetSmart, representing 32.5% of UW Base Rent and 41.6% of NRA, requested an unspecified amount of reduced base rent beginning in May 2020. The request has been abandoned and full rents have been paid each month. PGA Tour Superstore, representing 33.1% of UW Base Rent and 41.2% of NRA, submitted a formal rent relief request on May 1, 2020. As of July 2020, the request has been abandoned and full rents have been paid. On May 18, 2020, Costa Vida, representing 7.8% of UW Base Rent and 5.1% of NRA, and landlord agreed to base rent deferral for June 2020, July 2020 and August 2020, to be repaid over 12 months, with NNN paid current. As of July 22, 2020, Costa Vida $12,545 of base rent is outstanding. Rumbi Island Grill, representing 8.1% of UW Base Rent and 4.1% of NRA, has paid 50% of rent for April 2020 through July 2020. The tenant and landlord are in close talks to determine a relief plan. As of July 22, 2020, $20,437.48 of base rent is outstanding. |
| (37) | The borrower requested relief on April 8, 2020; however, the request was withdrawn on April 27, 2020. |
| (38) | One tenant, representing 12.5% of NRA and 15.5% of UW Base Rent, paid half of its June 2020 rent. The tenant made full July 2020 rent payments and began paying back unpaid June 2020 rent. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
9
| Wells Fargo Commercial Mortgage Trust 2020-C57 | Issue Characteristics |
| IV. | Issue Characteristics |
| Securities Offered: | $464,547,000 approximate monthly pay, multi-class, commercial mortgage REMIC pass-through certificates consisting of twenty-one classes (Classes A-1, A-SB, A-3, A-3-1, A-3-2, A-3-X1, A-3-X2, A-4, A-4-1, A-4-2, A-4-X1, A-4-X2, A-S, A-S-1, A-S-2, A-S-X1, A-S-X2, B, C, X-A and X-B), which are offered pursuant to a registration statement filed with the SEC (such classes of certificates, the “Offered Certificates”). | |
| Mortgage Loan Sellers: | UBS AG, by and through its branch office at 1285 Avenue of the Americas, New York, New York (“UBS AG”), LMF Commercial, LLC (“LMF”), Wells Fargo Bank, National Association (“WFB”) and Ladder Capital Finance LLC (“LCF”). | |
| Joint Bookrunners and Co-Lead Managers: | Wells Fargo Securities, LLC and UBS Securities LLC | |
| Co-Manager: | Academy Securities, Inc. and Drexel Hamilton, LLC | |
| Rating Agencies: | Fitch Ratings, Inc., Kroll Bond Rating Agency, LLC and Moody’s Investors Service, Inc. | |
| Master Servicer: | Wells Fargo Bank, National Association | |
| Special Servicer: | Midland Loan Services, a Division of PNC Bank, National Association | |
| Certificate Administrator: | Wells Fargo Bank, National Association | |
| Trustee: | Wilmington Trust, National Association | |
| Operating Advisor: | Pentalpha Surveillance LLC | |
| Asset Representations Reviewer: | Pentalpha Surveillance LLC | |
| Initial Majority Controlling Class Certificateholder: | KKR CMBS II Aggregator Type 2 L.P. | |
| U.S. Credit Risk Retention: | For a discussion on the manner in which the U.S. credit risk retention requirements will be satisfied by Wells Fargo Bank, National Association, as the retaining sponsor, see “Credit Risk Retention” in the Preliminary Prospectus.
This transaction is being structured with a “third party purchaser” that will acquire an “eligible horizontal residual interest”, which will be comprised of the Class E-RR, F-RR, G-RR, H-RR, J-RR, K-RR, L-RR and M-RR Certificates (the “horizontal risk retention certificates”). KKR CMBS II Aggregator Type 2 L.P. (in satisfaction of the retention obligations of Wells Fargo Bank, National Association, as the retaining sponsor) will be contractually obligated to retain (or to cause its “majority-owned affiliate” to retain) the horizontal risk retention certificates for a minimum of five years after the closing date, subject to certain permitted exceptions provided for under the risk retention rules. During this time, KKR CMBS II Aggregator Type 2 L.P. will agree to comply with hedging, transfer and financing restrictions that are applicable to third party purchasers under the credit risk retention rules. For additional information, see “Credit Risk Retention” in the Preliminary Prospectus. | |
| EU Credit Risk Retention | None of the sponsors, the depositor, the underwriters, or their respective affiliates, or any other party to the transaction intends or is required to retain a material net economic interest in the securitization constituted by the issue of the Certificates in a manner that would satisfy the requirements of the European Union Regulation (EU) 2017/2402. In addition, no such person undertakes to take any other action which may be required by any investor for the purposes of its compliance with any applicable requirement under such Regulation. Furthermore, the arrangements described under “Credit Risk Retention” in the Preliminary Prospectus have not been structured with the objective of ensuring compliance by any person with any requirements of such Regulation. | |
| 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 August 2020 (or, in the case of any mortgage loan that has its first due date in September 2020, the date that would have been its due date in August 2020 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 August 26, 2020. | |
| Determination Dates: | The 11th day of each month (or if that day is not a business day, the next succeeding business day), commencing in September 2020. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
10
| Wells Fargo Commercial Mortgage Trust 2020-C57 | Issue Characteristics |
| Distribution Dates: | The 4th business day following the Determination Date in each month, commencing in September 2020. | |
| Rated Final Distribution Date: | The Distribution Date in August 2053. | |
| Interest Accrual Period: | With respect to any Distribution Date, the calendar month immediately 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: | 1.0% | |
| 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 PRELIMINARY PROSPECTUS. | |
| Bond Analytics Information: | The Certificate Administrator will be authorized to make distribution date statements, 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., Interactive Data Corp., Markit Group Limited, BlackRock Financial Management, Inc., CMBS.com, Inc., Moody’s Analytics, Inc., KBRA Analytics, Inc., MBS Data, LLC, Thomson Reuters Corporation and RealINSIGHT. | |
| Tax Treatment | For U.S. federal income tax purposes, the issuing entity will consist of two or more REMICs arranged in a tiered structure and a trust (the “grantor trust”). The upper-most REMIC will issue REMIC regular interests some of which will be held by the grantor trust (such grantor trust-held REMIC regular interests, the “trust components”). The Offered Certificates (other than the Exchangeable Certificates) will represent REMIC regular interests (other than the trust components). The Exchangeable Certificates will represent beneficial ownership of one or more of the trust components held by the grantor trust. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
11
| Wells Fargo Commercial Mortgage Trust 2020-C57 | Characteristics of the Mortgage Pool |
V. 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 Initial Pool Balance (%) | Property Type | Number of SF/ Units/ Rooms | Cut-off Date Balance Per SF/Unit/ Room | Cut-off
Date LTV Ratio (%) | Balloon
or ARD LTV Ratio (%) | U/W
NCF DSCR (x) | U/W
NOI Debt Yield (%) | |||||||||||||
| LMF | PGH17 Self Storage Portfolio | Various | Various | 1 / 17 | $56,000,000 | 9.99% | Self Storage | 924,956 | $101 | 68.6% | 63.1% | 1.27x | 8.1% | |||||||||||||
| UBS AG | Phoenix Industrial Portfolio IV | Various | Various | 1 / 5 | 46,000,000 | 8.2 | Industrial | 2,125,525 | 22 | 72.9 | 61.9 | 1.66 | 11.3 | |||||||||||||
| WFB | Hilton Garden Inn - Goleta | Goleta | CA | 1 / 1 | 35,000,000 | 6.2 | Hospitality | 142 | 246,479 | 59.9 | 51.3 | 2.04 | 12.4 | |||||||||||||
| UBS AG | DoubleTree New York Times Square West Leased Fee | New York | NY | 1 / 1 | 30,000,000 | 5.4 | Other | 612 | 94,771 | 43.7 | 43.7 | 2.53 | 9.4 | |||||||||||||
| WFB | Technology Place | San Diego | CA | 1 / 1 | 29,250,000 | 5.2 | Office | 145,214 | 201 | 74.1 | 58.8 | 1.40 | 8.6 | |||||||||||||
| WFB | Residence Inn - Fort Worth Cultural District | Fort Worth | TX | 1 / 1 | 27,725,000 | 4.9 | Hospitality | 149 | 186,074 | 73.0 | 62.6 | 2.21 | 13.2 | |||||||||||||
| UBS AG | Landmark Corporate Center | Greenwood Village | CO | 1 / 1 | 25,480,000 | 4.5 | Office | 211,106 | 121 | 65.0 | 59.2 | 1.80 | 11.6 | |||||||||||||
| LMF | Upland Park Townhomes | Houston | TX | 1 / 1 | 24,000,000 | 4.3 | Multifamily | 285 | 84,211 | 65.0 | 56.5 | 1.37 | 8.3 | |||||||||||||
| WFB | Life Time Fitness - Gainesville, VA | Gainesville | VA | 1 / 1 | 23,000,000 | 4.1 | Retail | 125,157 | 184 | 62.0 | 62.0 | 2.28 | 9.6 | |||||||||||||
| UBS AG | Town Square Apartments | Lancaster | CA | 1 / 1 | 22,500,000 | 4.0 | Multifamily | 216 | 104,167 | 63.4 | 57.4 | 1.60 | 9.4 | |||||||||||||
| Top Three Total/Weighted Average | 3 / 23 | $137,000,000 | 24.4% | 67.8% | 59.7% | 1.60x | 10.3% | |||||||||||||||||||
| Top Five Total/Weighted Average | 5 / 25 | $196,250,000 | 35.0% | 65.1% | 57.1% | 1.71x | 9.9% | |||||||||||||||||||
| Top Ten Total/Weighted Average | 10 / 30 | $318,955,000 | 56.9% | 65.4% | 58.1% | 1.77x | 10.1% | |||||||||||||||||||
| Non-Top Ten Total/Weighted Average | 30 / 41 | $241,584,656 | 43.1% | 64.7% | 55.7% | 1.85x | 10.1% | |||||||||||||||||||
| (1) | With respect to any mortgage loan that is part of a whole loan, Cut-off Date Balance Per SF/Unit/Room, loan-to-value ratio, debt service coverage ratio and debt yield calculations include the related pari passu companion loan(s) (unless otherwise stated). With respect to each mortgage loan, debt service coverage ratio, debt yield and loan-to-value ratio information do not take into account subordinate debt (whether or not secured by the related mortgaged property), if any, that currently exists or is allowed under the terms of such mortgage loan. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
12
| Wells Fargo Commercial Mortgage Trust 2020-C57 | Characteristics of the Mortgage Pool |
B. Summary of the Whole Loans
| No. | Loan Name | Mortgage Loan Seller in WFCM 2020-C57 |
Trust Cut-off Date Balance | Aggregate Pari Passu Companion Loan Cut-off Date Balance(1) | Controlling Pooling/Trust & Servicing Agreement | Master Servicer | Special Servicer | Related
Pari Passu Companion Loan(s) Securitizations |
Related
Pari Passu Companion Loan(s) Original Balance |
| 1 | PGH17 Self Storage Portfolio | LMF | $56,000,000 | $93,000,000 | WFCM 2020-C57 | Wells Fargo Bank, National Association | Midland Loan Services, a Division of PNC Bank, National Association | Future Securitization(s) | $37,000,000 |
| 4 | DoubleTree New York Times Square West Leased Fee | UBS AG | $30,000,000 | $58,000,000 | WFCM 2020-C57 | Wells Fargo Bank, National Association | Midland Loan Services, a Division of PNC Bank, National Association | UBS 2019-C18 | $28,000,000 |
| 15 | 122nd Street Portfolio | LCF | $15,000,000 | $23,000,000 | WFCM 2020-C57 | Wells Fargo Bank, National Association | Midland Loan Services, a Division of PNC Bank, National Association | Future Securitization(s) | $8,000,000 |
| 16 | The Grid | LCF | $14,913,167 | $67,109,250 | WFCM 2020-C56 | Wells Fargo Bank, National Association | Midland Loan Services, a Division of PNC Bank, National Association | WFCM 2020-C56 | $52,500,000 |
| (1) | The Aggregate Pari Passu Companion Loan Cut-off Date Balance excludes the related Subordinate Companion Loans. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
13
| Wells Fargo Commercial Mortgage Trust 2020-C57 | Characteristics of the Mortgage Pool |
| C. | Mortgage Loans with Additional Secured and Mezzanine Financing |
| Loan No. | Mortgage Loan Seller | Mortgage Loan Name | Mortgage Loan Cut-off Date Balance ($) |
% of Initial Pool Balance (%) | Sub Debt Cut-off Date Balance ($) | Mezzanine Debt Cut-off Date Balance ($) | Total Debt Interest Rate (%)(1) | Mortgage Loan U/W NCF DSCR (x)(2) | Total Debt U/W NCF DSCR (x) | Mortgage Loan Cut-off Date U/W NOI Debt Yield (%)(2) | Total Debt Cut-off Date U/W NOI Debt Yield (%) | Mortgage Loan Cut-off Date LTV Ratio (%)(2) | Total Debt Cut-off Date LTV Ratio (%) |
| 4 | UBS AG | DoubleTree New York Times Square West Leased Fee | $30,000,000 | 5.4% | $32,000,000 | NAP | 3.7490% | 2.53x | 1.59x | 9.4% | 6.1% | 43.7% | 67.9% |
| Total/Weighted Average | $30,000,000 | 5.4% | $32,000,000 | NAP | 3.7490% | 2.53x | 1.59x | 9.4% | 6.1% | 43.7% | 67.9% | ||
| (1) | Total Debt Interest Rate for any specified mortgage loan reflects the weighted average of the interest rates on the respective components of the total debt. |
| (2) | With respect to any mortgage loan that is part of a whole loan, the loan-to-value ratio, debt service coverage ratio and debt yield calculations include the related pari passu companion loan(s) but excludes any related subordinate companion loan. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
14
| Wells Fargo Commercial Mortgage Trust 2020-C57 | Characteristics of the Mortgage Pool |
| D. | Previous Securitization History(1) |
| Loan No. |
Mortgage Loan Seller | Mortgage Loan or Mortgaged Property Name |
City | State | Property Type |
Mortgage
Loan or Mortgaged Property Cut-off Date Balance ($) |
%
of Initial Pool Balance (%) |
Previous Securitization |
| 1.01 | LMF | Prime Storage - Malta/Saratoga Springs | Malta | NY | Self Storage | $5,612,043 | 1.0% | CGCMT 2015-GC31 |
| 1.02 | LMF | Capital Self Storage - Mechanicsburg | Hampden | PA | Self Storage | 5,527,742 | 1.0 | WFCM 2015-C27 |
| 1.03 | LMF | Capital Self Storage - Middletown | Middletown | PA | Self Storage | 5,184,516 | 0.9 | WFCM 2015-C27 |
| 1.04 | LMF | Capital Self Storage - East York | York | PA | Self Storage | 4,600,430 | 0.8 | WFCM 2015-C27 |
| 1.05 | LMF | Capital Self Storage - Harrisburg Arsenal | Harrisburg | PA | Self Storage | 4,413,763 | 0.8 | WFCM 2015-C27 |
| 1.06 | LMF | Eliot Rent A Space & Self Storage | Eliot | ME | Self Storage | 4,070,538 | 0.7 | WFRBS 2014-LC14 |
| 1.07 | LMF | Capital Self Storage - Enola | Enola | PA | Self Storage | 4,070,538 | 0.7 | WFCM 2015-C27 |
| 1.08 | LMF | Capital Self Storage - Harrisburg Derry | Harrisburg | PA | Self Storage | 3,805,591 | 0.7 | WFCM 2015-C27 |
| 1.09 | LMF | Capital Self Storage - West York | York | PA | Self Storage | 3,582,796 | 0.6 | WFCM 2015-C27 |
| 1.10 | LMF | Capital Self Storage - Dover | Dover | PA | Self Storage | 3,510,538 | 0.6 | WFCM 2015-C27 |
| 1.11 | LMF | A Space Place Self Storage | Medford | NY | Self Storage | 3,143,226 | 0.6 | CGCMT 2015-GC31 |
| 1.12 | LMF | Capital Self Storage - Hanover | Hanover | PA | Self Storage | 2,998,710 | 0.5 | WFCM 2015-C27 |
| 1.13 | LMF | Prime Storage - Glens Falls | Glens Falls | NY | Self Storage | 1,836,559 | 0.3 | CGCMT 2015-GC31 |
| 1.14 | LMF | Affordable Storage - Wilton | Wilton | NY | Self Storage | 1,113,978 | 0.2 | CGCMT 2015-GC31 |
| 1.15 | LMF | Prime Storage - Latham New Loudon Road | Cohoes | NY | Self Storage | 1,047,742 | 0.2 | CGCMT 2015-GC31 |
| 1.16 | LMF | Rotterdam Self Storage | Rotterdam | NY | Self Storage | 764,731 | 0.1 | CGCMT 2015-GC31 |
| 1.17 | LMF | Affordable Storage - Saratoga | Wilton | NY | Self Storage | 716,559 | 0.1 | CGCMT 2015-GC31 |
| 2.01 | UBS AG | Edgerton | Edgerton | WI | Industrial | 20,800,000 | 3.7 | SGCP 2018-FL1 |
| 2.02 | UBS AG | Delaware | Delaware | OH | Industrial | 7,725,000 | 1.4 | SGCP 2018-FL1 |
| 2.03 | UBS AG | Pawcatuck | Pawcatuck | CT | Industrial | 6,975,000 | 1.2 | SGCP 2018-FL1 |
| 6 | WFB | Residence Inn - Fort Worth Cultural District | Fort Worth | TX | Hospitality | 27,725,000 | 4.9 | COMM 2012-CR3 |
| 7 | UBS AG | Landmark Corporate Center | Greenwood Village | CO | Office | 25,480,000 | 4.5 | MSC 2007-HQ11 |
| 8 | LMF | Upland Park Townhomes | Houston | TX | Multifamily | 24,000,000 | 4.3 | BANC 2016-CRE1 |
| 10 | UBS AG | Town Square Apartments | Lancaster | CA | Multifamily | 22,500,000 | 4.0 | FREMF 2015-K47; FREMF 2017-KJ17 |
| 16 | LCF | The Grid(2) | Worcester | MA | Multifamily | 14,913,167 | 2.7 | LCCM 2017-FL1 |
| Total | $206,118,167 | 36.8% | ||||||
| (1) | The table above represents the most recent securitization with respect to the mortgaged property securing the related mortgage loan, based on information provided by the related borrower or obtained through searches of a third-party database. While loans secured by the above mortgaged properties may have been securitized multiple times in prior transactions, mortgage loans in this securitization are only listed in the above chart if the mortgage loan paid off a loan in another securitization. The information has not otherwise been confirmed by the mortgage loan sellers. |
| (2) | Of the five buildings comprising The Grid mortgaged property, only two such buildings, representing 71.0% of the total residential units, were collateral for the previously securitized loan. Additional collateral (135 units and approximately 28,000 square feet of commercial space), which previously secured a loan with another lender, was included as part of the mortgaged property for The Grid Mortgage Loan at origination. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
15
| Wells Fargo Commercial Mortgage Trust 2020-C57 | Characteristics of the Mortgage Pool |
| E. | Property Type Distribution(1) |
| Property Type | Number of Mortgaged Properties | Aggregate
Cut-off Date Balance ($) |
%
of Initial Pool Balance (%) |
Weighted Average Cut-off Date LTV Ratio (%) | Weighted
Average Balloon 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 (%) |
| Multifamily | 18 | $112,213,167 | 20.0% | 65.8% | 56.6% | 1.54x | 8.8% | 8.4% | 4.044% |
| Garden | 6 | 82,300,000 | 14.7 | 65.9 | 55.8 | 1.50 | 9.1 | 8.7 | 4.115 |
| Mid Rise | 12 | 29,913,167 | 5.3 | 65.4 | 58.5 | 1.65 | 7.9 | 7.6 | 3.850 |
| Office | 7 | 109,743,393 | 19.6 | 68.9 | 61.2 | 1.92 | 10.0 | 9.4 | 3.919 |
| Suburban | 4 | 83,230,000 | 14.8 | 68.9 | 60.1 | 1.76 | 10.0 | 9.3 | 4.020 |
| CBD | 1 | 17,871,000 | 3.2 | 69.0 | 69.0 | 2.72 | 9.5 | 9.2 | 3.350 |
| Medical | 2 | 8,642,393 | 1.5 | 68.4 | 56.2 | 1.84 | 10.9 | 10.7 | 4.126 |
| Hospitality | 4 | 90,043,771 | 16.1 | 65.3 | 55.0 | 2.07 | 12.7 | 11.5 | 3.751 |
| Extended Stay | 3 | 55,043,771 | 9.8 | 68.8 | 57.3 | 2.09 | 12.9 | 11.8 | 3.867 |
| Select Service | 1 | 35,000,000 | 6.2 | 59.9 | 51.3 | 2.04 | 12.4 | 11.1 | 3.570 |
| Self Storage | 21 | 79,067,856 | 14.1 | 65.5 | 58.8 | 1.42 | 8.8 | 8.7 | 4.573 |
| Self Storage | 21 | 79,067,856 | 14.1 | 65.5 | 58.8 | 1.42 | 8.8 | 8.7 | 4.573 |
| Industrial | 9 | 78,070,511 | 13.9 | 68.8 | 57.2 | 1.60 | 10.7 | 9.9 | 4.120 |
| Warehouse | 6 | 55,740,511 | 9.9 | 69.4 | 57.6 | 1.62 | 10.9 | 10.1 | 4.004 |
| Manufacturing | 2 | 18,730,000 | 3.3 | 66.2 | 55.1 | 1.51 | 10.1 | 9.5 | 4.522 |
| Flex | 1 | 3,600,000 | 0.6 | 72.9 | 61.9 | 1.66 | 11.3 | 10.2 | 3.840 |
| Retail | 11 | 61,400,957 | 11.0 | 62.1 | 57.6 | 2.08 | 10.1 | 9.6 | 4.144 |
| Single Tenant | 8 | 47,352,532 | 8.4 | 63.5 | 60.3 | 2.07 | 9.5 | 9.1 | 4.118 |
| Unanchored | 2 | 9,131,863 | 1.6 | 61.1 | 52.9 | 2.04 | 10.4 | 10.0 | 4.291 |
| Anchored | 1 | 4,916,562 | 0.9 | 51.0 | 41.0 | 2.28 | 14.6 | 13.4 | 4.120 |
| Other | 1 | 30,000,000 | 5.4 | 43.7 | 43.7 | 2.53 | 9.4 | 9.4 | 3.661 |
| Leased Fee | 1 | 30,000,000 | 5.4 | 43.7 | 43.7 | 2.53 | 9.4 | 9.4 | 3.661 |
| Total/Weighted Average: | 71 | $560,539,656 | 100.0% | 65.1% | 57.1% | 1.80x | 10.1% | 9.5% | 4.048% |
| (1) | Because this table presents information relating to the mortgaged properties and not the mortgage loans, the information for mortgage loans secured by more than one mortgaged property is based on allocated loan amounts (allocating the principal balance of the mortgage loan to each of those properties according to the relative appraised values of the mortgaged properties or the allocated loan amounts or property-specific release prices set forth in the related mortgage loan documents or such other allocation as the related mortgage loan seller deemed appropriate). With respect to any mortgage loan that is part of a whole loan, the loan-to-value ratio, debt service coverage ratio and debt yield calculations include the related pari passu companion loan(s) but exclude any related subordinate secured loan(s) (unless otherwise stated). With respect to each mortgage loan, debt service coverage ratio, debt yield and loan-to-value ratio information do not take into account any subordinate debt (whether or not secured by the related mortgaged property) that currently exists or is allowed under the terms of such mortgage loan. See Annex A-1 to the Preliminary Prospectus. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
16
| Wells Fargo Commercial Mortgage Trust 2020-C57 | Characteristics of the Mortgage Pool |
| F. | Geographic Distribution(1) |
| Location | Number of Mortgaged Properties | Aggregate Cut-off Date Balance ($) | %
of Initial Pool Balance (%) |
Weighted Average Cut-off Date LTV Ratio (%) | Weighted Average Balloon or ARD LTV Ratio (%) | Weighted Average U/W NCF DSCR (x) | Weighted Average U/W NOI Debt Yield (%) | Weighted Average U/W NCF Debt Yield (%) | Weighted Average Mortgage Rate (%) |
| California | 5 | $110,206,000 | 19.7% | 65.9% | 57.4% | 1.87x | 10.1% | 9.4% | 3.706% |
| Southern California | 3 | 86,750,000 | 15.5 | 65.6 | 55.4 | 1.71 | 10.3 | 9.5 | 3.788 |
| Northern California | 2 | 23,456,000 | 4.2 | 67.0 | 64.9 | 2.45 | 9.3 | 9.0 | 3.402 |
| New York | 20 | 68,834,839 | 12.3 | 56.5 | 53.4 | 2.00 | 9.1 | 8.8 | 3.977 |
| Texas | 2 | 51,725,000 | 9.2 | 69.3 | 59.8 | 1.82 | 10.9 | 10.2 | 3.900 |
| Pennsylvania | 10 | 44,894,624 | 8.0 | 68.3 | 61.6 | 1.31 | 8.4 | 8.2 | 4.691 |
| Virginia | 2 | 35,000,000 | 6.2 | 65.4 | 60.4 | 2.06 | 9.7 | 9.2 | 3.948 |
| Georgia | 3 | 32,416,264 | 5.8 | 67.6 | 54.3 | 1.80 | 11.5 | 10.7 | 4.243 |
| Colorado | 1 | 25,480,000 | 4.5 | 65.0 | 59.2 | 1.80 | 11.6 | 10.6 | 4.250 |
| Wisconsin | 2 | 24,400,000 | 4.4 | 72.9 | 61.9 | 1.66 | 11.3 | 10.2 | 3.840 |
| Utah | 3 | 19,386,562 | 3.5 | 58.4 | 49.1 | 1.94 | 11.3 | 10.8 | 4.548 |
| New Jersey | 1 | 18,900,000 | 3.4 | 67.0 | 67.0 | 2.31 | 9.0 | 8.9 | 3.800 |
| Washington | 1 | 16,902,507 | 3.0 | 61.5 | 49.3 | 1.76 | 11.1 | 10.1 | 3.950 |
| Florida | 3 | 16,533,218 | 2.9 | 61.7 | 50.8 | 1.52 | 9.5 | 9.2 | 4.455 |
| Massachusetts | 1 | 14,913,167 | 2.7 | 67.2 | 53.3 | 1.41 | 8.2 | 7.9 | 3.800 |
| Illinois | 2 | 13,500,000 | 2.4 | 73.1 | 60.4 | 1.52 | 9.8 | 9.2 | 4.055 |
| Alabama | 1 | 12,902,331 | 2.3 | 64.5 | 52.8 | 1.47 | 9.6 | 9.2 | 4.645 |
| South Carolina | 2 | 8,240,511 | 1.5 | 50.7 | 39.5 | 1.42 | 10.8 | 10.4 | 4.658 |
| Ohio | 1 | 7,725,000 | 1.4 | 72.9 | 61.9 | 1.66 | 11.3 | 10.2 | 3.840 |
| Vermont | 1 | 7,053,000 | 1.3 | 65.0 | 65.0 | 2.55 | 9.0 | 8.9 | 3.442 |
| Connecticut | 1 | 6,975,000 | 1.2 | 72.9 | 61.9 | 1.66 | 11.3 | 10.2 | 3.840 |
| Indiana | 2 | 6,475,916 | 1.2 | 69.6 | 57.1 | 2.01 | 11.3 | 11.2 | 4.009 |
| Mississippi | 1 | 6,091,502 | 1.1 | 53.3 | 42.1 | 2.38 | 13.8 | 13.3 | 3.780 |
| Arkansas | 1 | 4,400,000 | 0.8 | 60.3 | 55.4 | 1.53 | 9.9 | 9.6 | 4.750 |
| Maine | 1 | 4,070,538 | 0.7 | 68.6 | 63.1 | 1.27 | 8.1 | 8.0 | 4.775 |
| Minnesota | 2 | 1,793,568 | 0.3 | 65.7 | 65.7 | 1.95 | 9.6 | 9.5 | 4.766 |
| Iowa | 2 | 1,720,110 | 0.3 | 65.7 | 65.7 | 1.91 | 9.6 | 9.5 | 4.866 |
| Total/Weighted Average | 71 | $560,539,656 | 100.0% | 65.1% | 57.1% | 1.80x | 10.1% | 9.5% | 4.048% |
| (1) | Because this table presents information relating to the mortgaged properties and not the mortgage loans, the information for mortgage loans secured by more than one mortgaged property is based on allocated loan amounts (allocating the principal balance of the mortgage loan to each of those properties according to the relative appraised values of the mortgaged properties or the allocated loan amounts or property-specific release prices set forth in the related mortgage loan documents or such other allocation as the related mortgage loan seller deemed appropriate). With respect to any mortgage loan that is part of a whole loan, the loan-to-value ratio, debt service coverage ratio and debt yield calculations include the related pari passu companion loan(s) but exclude any related subordinate secured loan(s) (unless otherwise stated). With respect to each mortgage loan, debt service coverage ratio, debt yield and loan-to-value ratio information do not take into account any subordinate debt (whether or not secured by the related mortgaged property) that currently exists or is allowed under the terms of such mortgage loan. See Annex A-1 to the Preliminary Prospectus. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
17
| Wells Fargo Commercial Mortgage Trust 2020-C57 | Characteristics of the Mortgage Pool |
G. Characteristics of the Mortgage Pool(1)
| CUT-OFF DATE BALANCE | |||
| Range
of Cut-off Date Balances ($) |
Number
of Mortgage Loans |
Aggregate
Cut-off Date Balance |
Percent by Aggregate Cut-off Date Pool Balance (%) |
| 827,201 - 4,000,000 | 7 | $10,087,201 | 1.8% |
| 4,000,001 - 5,000,000 | 2 | 9,316,562 | 1.7 |
| 5,000,001 - 6,000,000 | 3 | 16,677,393 | 3.0 |
| 6,000,001 - 7,000,000 | 4 | 26,174,720 | 4.7 |
| 7,000,001 - 8,000,000 | 2 | 14,253,000 | 2.5 |
| 8,000,001 - 9,000,000 | 1 | 8,240,511 | 1.5 |
| 9,000,001 - 10,000,000 | 1 | 9,600,000 | 1.7 |
| 10,000,001 - 15,000,000 | 6 | 77,061,761 | 13.7 |
| 15,000,001 - 20,000,000 | 4 | 70,173,507 | 12.5 |
| 20,000,001 - 30,000,000 | 7 | 181,955,000 | 32.5 |
| 30,000,001 - 50,000,000 | 2 | 81,000,000 | 14.5 |
| 50,000,001 - 56,000,000 | 1 | 56,000,000 | 10.0 |
| Total: | 40 | $560,539,656 | 100.0% |
| Weighted Average | $14,013,491 | ||
| UNDERWRITTEN NOI DEBT SERVICE COVERAGE RATIO | |||
| Range
of U/W NOI DSCRs (x) |
Number
of Mortgage Loans |
Aggregate
Cut-off Date Balance |
Percent by Aggregate Cut-off Date Pool Balance (%) |
| 1.29 - 1.40 | 1 | $56,000,000 | 10.0% |
| 1.41 - 1.50 | 7 | 101,325,541 | 18.1 |
| 1.51 - 1.60 | 3 | 20,352,331 | 3.6 |
| 1.61 - 1.70 | 6 | 64,276,355 | 11.5 |
| 1.71 - 1.80 | 1 | 12,000,000 | 2.1 |
| 1.81 - 1.90 | 2 | 55,600,000 | 9.9 |
| 1.91 - 2.00 | 7 | 60,896,185 | 10.9 |
| 2.01 - 2.50 | 8 | 122,108,980 | 21.8 |
| 2.51 - 3.50 | 4 | 65,340,264 | 11.7 |
| 3.51 - 3.74 | 1 | 2,640,000 | 0.5 |
| Total: | 40 | $560,539,656 | 100.0% |
| Weighted Average | 1.90x | ||
| UNDERWRITTEN NCF DEBT SERVICE COVERAGE RATIO | |||
Range of U/W NCF DSCRs (x) |
Number
of Mortgage Loans |
Aggregate
Cut-off Date Balance |
Percent by Aggregate Cut-off Date Pool Balance (%) |
| 1.27 - 1.30 | 1 | $56,000,000 | 10.0% |
| 1.31 - 1.40 | 4 | 66,341,863 | 11.8 |
| 1.41 - 1.50 | 4 | 47,886,008 | 8.5 |
| 1.51 - 1.60 | 7 | 64,735,000 | 11.5 |
| 1.61 - 1.70 | 4 | 74,591,355 | 13.3 |
| 1.71 - 1.80 | 2 | 42,382,507 | 7.6 |
| 1.81 - 1.90 | 2 | 15,887,610 | 2.8 |
| 1.91 - 2.00 | 4 | 3,509,591 | 0.6 |
| 2.01 - 2.50 | 8 | 131,641,721 | 23.5 |
| 2.51 - 3.50 | 3 | 54,924,000 | 9.8 |
| 3.51 - 3.60 | 1 | 2,640,000 | 0.5 |
| Total: | 40 | $560,539,656 | 100.0% |
| Weighted Average | 1.80x | ||
| LOAN PURPOSE | |||
| Loan Purpose | Number
of Mortgage Loans |
Aggregate
Cut-off Date Balance |
Percent by Aggregate Cut-off Date Pool Balance (%) |
| Refinance | 27 | $428,677,124 | 76.5% |
| Acquisition | 13 | 131,862,532 | 23.5 |
| Total: | 40 | $560,539,656 | 100.0% |
| MORTGAGE RATE | |||
Range of Mortgage Rates (%) |
Number
of Mortgage Loans |
Aggregate
Cut-off Date Balance |
Percent by Aggregate Cut-off Date Pool Balance (%) |
| 3.350 - 3.500 | 2 | $24,924,000 | 4.4% |
| 3.501 - 3.750 | 5 | 100,950,000 | 18.0 |
| 3.751 - 4.000 | 11 | 207,749,568 | 37.1 |
| 4.001 - 4.250 | 7 | 95,596,562 | 17.1 |
| 4.251 - 4.500 | 3 | 24,007,619 | 4.3 |
| 4.501 - 4.750 | 7 | 36,795,429 | 6.6 |
| 4.751 - 4.920 | 5 | 70,516,477 | 12.6 |
| Total: | 40 | $560,539,656 | 100.0% |
| Weighted Average | 4.048% | ||
| UNDERWRITTEN NOI DEBT YIELD | |||
Range of U/W NOI Debt Yields (%) |
Number
of Mortgage Loans |
Aggregate
Cut-off Date Balance |
Percent by Aggregate Cut-off Date Pool Balance (%) |
| 7.6 - 8.0 | 1 | $15,000,000 | 2.7% |
| 8.1 - 9.0 | 9 | 168,793,030 | 30.1 |
| 9.1 - 10.0 | 18 | 178,141,886 | 31.8 |
| 10.1 - 11.0 | 1 | 8,240,511 | 1.5 |
| 11.1 - 12.0 | 5 | 103,574,900 | 18.5 |
| 12.1 - 13.0 | 1 | 35,000,000 | 6.2 |
| 13.1 - 14.0 | 3 | 36,456,502 | 6.5 |
| 14.1 - 15.0 | 1 | 4,916,562 | 0.9 |
| 15.1 | 1 | 10,416,264 | 1.9 |
| Total: | 40 | $560,539,656 | 100.0% |
| Weighted Average | 10.1% | ||
| UNDERWRITTEN NCF DEBT YIELD | |||
| Range of U/W NCF Debt Yields (%) | Number
of Mortgage Loans |
Aggregate
Cut-off Date Balance |
Percent by Aggregate Cut-off Date Pool Balance (%) |
| 7.4 - 8.0 | 5 | $139,163,167 | 24.8% |
| 8.1 - 9.0 | 8 | 97,329,863 | 17.4 |
| 9.1 - 10.0 | 15 | 125,441,886 | 22.4 |
| 10.1 - 11.0 | 5 | 106,223,018 | 19.0 |
| 11.1 - 12.0 | 2 | 40,592,393 | 7.2 |
| 12.1 - 13.0 | 1 | 27,725,000 | 4.9 |
| 13.1 – 13.8 | 4 | 24,064,328 | 4.3 |
| Total: | 40 | $560,539,656 | 100.0% |
| Weighted Average | 9.5% | ||
| ORIGINAL TERM TO MATURITY OR ARD | |||
| Original
Terms to Maturity or ARD (months) |
Number
of Mortgage Loans |
Aggregate
Cut-off Date Balance |
Percent by Aggregate Cut-off Date Pool Balance (%) |
| 120 | 40 | $560,539,656 | 100.0% |
| Total: | 40 | $560,539,656 | 100.0% |
| Weighted Average | 120 months | ||
| (1) | With respect to any mortgage loan that is part of a whole loan, the loan-to-value ratio, debt service coverage ratio and debt yield calculations include the related pari passu companion loan(s) but exclude any related subordinate debt (unless otherwise stated). With respect to each mortgage loan, debt service coverage ratio, debt yield and loan-to-value ratio information do not take into account any subordinate debt (whether or not secured by the related mortgaged property) that currently exists or is allowed under the terms of such mortgage loan. See Annex A-1 to the Preliminary Prospectus. Prepayment provisions for each mortgage loan reflects the entire life of the loan (from origination to maturity or ARD). |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
18
| Wells Fargo Commercial Mortgage Trust 2020-C57 | Characteristics of the Mortgage Pool |
| REMAINING TERM TO MATURITY OR ARD | ||||
| Range
of Remaining Terms to Maturity or ARD (months) |
Number
of Mortgage Loans |
Aggregate
Cut-off Date Balance |
Percent by Aggregate Cut-off Date Pool Balance (%) | |
| 112 - 120 | 40 | $560,539,656 | 100.0% | |
| Total: | 40 | $560,539,656 | 100.0% | |
| Weighted Average | 117 months | |||
| ORIGINAL AMORTIZATION TERM(2) | ||||
| Original Amortization Terms (months) |
Number
of Mortgage Loans |
Aggregate
Cut-off Date Balance |
Percent by Aggregate Cut-off Date Pool Balance (%) | |
| Non-Amortizing | 12 | $118,861,201 | 21.2% | |
| 360 | 28 | 441,678,455 | 78.8 | |
| Total: | 40 | $560,539,656 | 100.0% | |
| Weighted Average(3) | 360 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 mortgage loans. | ||||
| REMAINING AMORTIZATION TERM(4) | ||||
| Range
of Remaining Amortization Terms (months) |
Number
of Mortgage Loans |
Aggregate
Cut-off Date Balance |
Percent by Aggregate Cut-off Date Pool Balance (%) | |
| Non-Amortizing | 12 | $118,861,201 | 21.2% | |
| 353 - 360 | 28 | 441,678,455 | 78.8 | |
| Total: | 40 | $560,539,656 | 100.0% | |
| Weighted Average(5) | 359 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 mortgage loans. | ||||
| LOCKBOXES | ||||
| Type of Lockbox | Number
of Mortgage Loans |
Aggregate
Cut-off Date Balance |
Percent by Aggregate Cut-off Date Pool Balance (%) | |
| Springing | 19 | $261,951,182 | 46.7% | |
| Hard/Springing Cash Management | 8 | 158,201,595 | 28.2 | |
| Hard/Upfront Cash Management | 9 | 74,888,712 | 13.4 | |
| None | 2 | 35,585,000 | 6.3 | |
| Soft/Springing Cash Management | 2 | 29,913,167 | 5.3 | |
| Total: | 40 | $560,539,656 | 100.0% | |
| PREPAYMENT PROVISION SUMMARY(6) | ||||
| Prepayment Provision | Number
of Mortgage Loans |
Aggregate
Cut-off Date Balance |
Percent by Aggregate Cut-off Date Pool Balance (%) | |
| Lockout / Defeasance / Open | 28 | $460,382,731 | 82.1% | |
| Lockout / GRTR 1% or YM / Open | 5 | 64,694,724 | 11.5 | |
| Lockout / GRTR 2% or YM / Open | 1 | 25,480,000 | 4.5 | |
| Lockout / GRTR 1% or YM or D / Open | 1 | 5,585,000 | 1.0 | |
| YM / YM or D / Open | 5 | 4,397,201 | 0.8 | |
| Total: | 40 | $560,539,656 | 100.0% | |
| (6) As a result of property releases or the application of funds in a performance reserve, partial principal prepayments could occur during a period that voluntary principal prepayments are otherwise prohibited. | ||||
| CUT-OFF DATE LOAN-TO-VALUE RATIO | |||
| Range
of Cut-off Date LTV Ratios (%) |
Number
of Mortgage Loans |
Aggregate
Cut-off Date Balance |
Percent by Aggregate Cut-off Date Pool Balance (%) |
| 43.7 - 50.0 | 1 | $30,000,000 | 5.4% |
| 50.1 - 55.0 | 4 | 21,888,575 | 3.9 |
| 55.1 - 60.0 | 2 | 41,991,355 | 7.5 |
| 60.1 - 65.0 | 13 | 178,194,701 | 31.8 |
| 65.1 - 70.0 | 14 | 161,297,632 | 28.8 |
| 70.1 - 74.1 | 6 | 127,167,393 | 22.7 |
| Total: | 40 | $560,539,656 | 100.0% |
| Weighted Average | 65.1% | ||
| BALLOON OR ARD LOAN-TO-VALUE RATIO | |||
| Range of Balloon or ARD LTV Ratios (%) | Number
of Mortgage Loans |
Aggregate
Cut-off Date Balance |
Percent by Aggregate Cut-off Date Pool Balance (%) |
| 39.5 – 40.0 | 1 | $8,240,511 | 1.5% |
| 40.1 - 45.0 | 3 | 41,008,064 | 7.3 |
| 45.1 - 50.0 | 2 | 23,893,862 | 4.3 |
| 50.1 - 55.0 | 11 | 128,162,360 | 22.9 |
| 55.1 - 60.0 | 10 | 143,288,658 | 25.6 |
| 60.1 - 65.0 | 6 | 174,778,000 | 31.2 |
| 65.1 - 69.0 | 7 | 41,168,201 | 7.3 |
| Total: | 40 | $560,539,656 | 100.0% |
| Weighted Average | 57.1% | ||
| AMORTIZATION TYPE | |||
| Amortization Type | Number
of Mortgage Loans |
Aggregate
Cut-off Date Balance |
Percent by Aggregate Cut-off Date Pool Balance (%) |
| Interest-only, Amortizing Balloon | 12 | $276,242,507 | 49.3% |
| Amortizing Balloon | 16 | 165,435,948 | 29.5 |
| Interest-only, Balloon | 7 | 114,464,000 | 20.4 |
| Interest-only, ARD | 5 | 4,397,201 | 0.8 |
| Total: | 40 | $560,539,656 | 100.0% |
| ORIGINAL TERM OF INTEREST-ONLY PERIOD FOR PARTIAL IO LOANS | |||
| IO Terms (months) | Number
of Mortgage Loans |
Aggregate
Cut-off Date Balance |
Percent by Aggregate Cut-off Date Pool Balance (%) |
| 2 | 1 | $16,902,507 | 3.0% |
| 12 | 1 | 9,600,000 | 1.7 |
| 36 | 6 | 141,360,000 | 25.2 |
| 60 | 4 | 108,380,000 | 19.3 |
| Total: | 12 | $276,242,507 | 49.3% |
| Weighted Average | 43 months | ||
| SEASONING | |||
| Seasoning (months) | Number
of Mortgage Loans |
Aggregate
Cut-off Date Balance |
Percent by Aggregate Cut-off Date Pool Balance (%) |
| 0 | 18 | $210,292,201 | 37.5% |
| 1 | 4 | 26,915,761 | 4.8 |
| 4 | 2 | 29,913,167 | 5.3 |
| 5 | 10 | 209,652,562 | 37.4 |
| 6 | 3 | 40,221,102 | 7.2 |
| 7 | 2 | 13,544,863 | 2.4 |
| 8 | 1 | 30,000,000 | 5.4 |
| Total: | 40 | $560,539,656 | 100.0% |
| Weighted Average | 3 months | ||
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
19
| Wells Fargo Commercial Mortgage Trust 2020-C57 | Certain Terms and Conditions |
VI. Certain Terms and Conditions
| Interest Entitlements: | The interest entitlement of each Class of Certificates or trust component on each Distribution Date generally will be the interest accrued during the related Interest Accrual Period on the related Certificate Balance or Notional Amount at the related pass-through rate, net of any prepayment interest shortfalls allocated to that Class or trust component for such Distribution Date as described below. If prepayment interest shortfalls arise from voluntary prepayments (without Master Servicer consent) on particular non-specially serviced loans during any collection period, the 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 0.25 basis points 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 Exchangeable Certificates) and trust components that are entitled to interest, on a pro rata basis, based on their respective amounts of accrued interest for the related Distribution Date. For any Distribution Date, prepayment interest shortfalls allocated to a trust component will be allocated amongst the related Classes of Exchangeable Certificates, pro rata, in accordance with their respective interest accrual amounts for that distribution date. If a Class or trust component receives less than the entirety of its interest entitlement on any Distribution Date, then the shortfall (excluding any shortfall due to prepayment interest shortfalls), together with interest thereon, will be added to its interest entitlement for the next succeeding Distribution Date. |
| 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 and workout-delayed reimbursement amounts that are reimbursed to the Master Servicer, the 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. Workout-delayed reimbursement amounts are reimbursable from principal collections. |
| Subordination, Allocation of Losses and Certain Expenses | The chart below describes the manner in which the payment rights of certain Classes of Certificates will be senior or subordinate, as the case may be, to the payment rights of other Classes of Certificates. The chart also shows the corresponding entitlement to receive principal and/or interest of certain Classes of Certificates (other than excess interest that accrues on each mortgage loan that has an anticipated repayment date) on any distribution date in descending order. It also shows the manner in which losses are allocated to certain Classes of Certificates in ascending order (beginning with the Non-Offered Certificates, and other than the Class V and Class R Certificates) to reduce the Certificate Balance of each such Class to zero; provided that no principal payments or mortgage loan losses will be allocated to the Class X-A, X-B, X-D, V or R Certificates, although principal payments and losses may reduce the Notional Amounts of the Class X-A, X-B and X-D Certificates and, therefore, the amount of interest they accrue. |
 |
| (1) | The maximum certificate balances of Class A-3, Class A-4 and Class A-S certificates (subject to the constraint on the aggregate initial principal balance of the Class A-3 and |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
20
| Wells Fargo Commercial Mortgage Trust 2020-C57 | Certain Terms and Conditions |
| Class A-4 trust components discussed in footnote (9) to the table under “Certificate Structure”) will be issued on the closing date, and the certificate balance or notional amount of each other class of Exchangeable Certificates will be equal to zero on the closing date. The relative priorities of the Exchangeable Certificates are described more fully under "Exchangeable Certificates." |
| (2) | The Class X-A, X-B and X-D Certificates are interest-only certificates. |
| (3) | Non-Offered Certificates. |
| 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-SB, A-3, A-4, X-A, X-B and X-D Certificates: To interest on the Class A-1, A-SB, X-A, X-B and X-D Certificates and the Class A-3, A-3-X1, A-3-X2, A-4, A-4-X1 and A-4-X2 trust components, pro rata, according to their respective interest entitlements. | ||
| 2. | Class A-1 and A-SB Certificates and the Class A-3 and A-4 trust components: To principal on the Class A-1 and A-SB Certificates and the Class A-3 and A-4 trust components 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 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 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-3 trust component until its Certificate 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-4 trust component until its Certificate Balance is reduced to zero, up to the remainder of the Principal Distribution Amount for such Distribution Date; and (v) fifth, to principal on the Class A-SB Certificates until their Certificate Balance is reduced to zero, up to the remainder of the Principal Distribution Amount for such Distribution Date. However, if the Certificate Balance of each Class of Principal Balance Certificates, other than the Class A-1 and A-SB Certificates and the Class A-3 and A-4 trust components, has been reduced to zero as a result of the allocation of Mortgage Loan losses and expenses and any of the Class A-1 and A-SB Certificates and the Class A-3 and A-4 trust components remains outstanding, then the Principal Distribution Amount will be distributed to the Class A-1 and A-SB Certificates and the Class A-3 and A-4 trust components as applicable, pro rata, based on their respective outstanding Certificate Balances, until their Certificate Balances have been reduced to zero. | ||
| 3. | Class A-1 and A-SB Certificates and the Class A-3 and A-4 trust components: To reimburse the holders of the Class A-1 and A-SB Certificates and the Class A-3 and A-4 trust components, pro rata, on the basis of previously allocated unreimbursed losses, for any previously unreimbursed losses (plus interest thereon) on the mortgage loans that were previously allocated in reduction of the Certificate Balances of such Classes or trust components. | ||
| 4. | Class A-S, A-S-X1 and A-S-X2 trust components: To make distributions on the Class A-S, A-S-X1 and A-S-X2 trust components as follows: (a) first, to interest on the Class A-S, A-S-X1 and A-S-X2 trust components, pro rata, according to their respective interest entitlements; (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 and A-SB Certificates and the Class A-3 and A-4 trust components), to principal on the Class A-S trust component until its Certificate Balance is reduced to zero; and (c) next, to reimburse the holders of the Class A-S trust component for any previously unreimbursed losses (plus interest thereon) on the mortgage loans that were previously allocated to that trust component in reduction of their Certificate Balance. | ||
| 5. | Class B Certificates: To make distributions on the Class B Certificates as follows: (a) first, to interest on the Class B 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 and A-SB Certificates and the Class A-3, A-4 and A-S trust components), to principal on the Class B Certificates until their Certificate Balance is reduced to zero; and (c) next, to reimburse the holders of the Class B Certificates for any previously unreimbursed losses (plus interest thereon) on the mortgage loans that were previously allocated to that Class in reduction of their Certificate Balance. | ||
| 6. | Class C Certificates: To make distributions on the Class C Certificates as follows: (a) first, to interest on the Class C Certificates in the amount of the interest entitlement for that Class; (b) next, to the extent of the portion of the Principal Distribution Amount |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
21
| Wells Fargo Commercial Mortgage Trust 2020-C57 | Certain Terms and Conditions |
| remaining after distributions in respect of principal to each Class with a higher distribution priority (in this case, the Class A-1, A-SB and B Certificates and the Class A-3, A-4 and A-S trust components), to principal on the Class C Certificates until their Certificate Balance is reduced to zero; and (c) next, to reimburse the holders of the Class C Certificates for any previously unreimbursed losses (plus interest thereon) on the mortgage loans that were previously allocated to that Class in reduction of their Certificate Balance. | |||
| 7. | After the Class A-1, A-SB, X-A, X-B, X-D, B and C Certificates and the Class A-3, A-4 and A-S trust components 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 on the Class D, E-RR, F-RR, G-RR, H-RR, J-RR, K-RR, L-RR and M-RR Certificates sequentially in that order in a manner analogous to the Class C Certificates. | ||
| Principal and interest payable on the Class A-3, Class A-3-X1, Class A-3-X2, Class A-4, Class A-4-X1, Class A-4-X2, Class A-S, Class A-S-X1 and Class A-S-X2 trust components will be distributed pro rata to the corresponding classes of Exchangeable Certificates representing interests therein in accordance with their Class Percentage Interests therein as described below under “Exchangeable Certificates.” | |||
| Exchangeable Certificates: | Each class of Exchangeable Certificates may be exchanged for the corresponding classes of Exchangeable Certificates set forth next to such class in the table below, and vice versa. Following any exchange of one or more classes of Exchangeable Certificates (the applicable “Surrendered Classes”) for one or more classes of other Exchangeable Certificates (the applicable “Received Classes”), the Class Percentage Interests (as defined below) of the outstanding principal balances or notional amounts of the Corresponding Trust Components that are represented by the Surrendered Classes (and consequently their related certificate balances or notional amounts) will be decreased, and those of the Received Classes (and consequently their related certificate balances or notional amounts) will be increased. The dollar denomination of each of the Received Classes of certificates must be equal to the dollar denomination of each of the Surrendered Classes of certificates. No fee will be required with respect to any exchange of Exchangeable Certificates. |
Surrendered
Classes (or Received |
Received
Classes (or Surrendered | ||
| Class A-3 | Class A-3-1, Class A-3-X1 | ||
| Class A-3 | Class A-3-2, Class A-3-X2 | ||
| Class A-4 | Class A-4-1, Class A-4-X1 | ||
| Class A-4 | Class A-4-2, Class A-4-X2 | ||
| Class A-S | Class A-S-1, Class A-S-X1 | ||
| Class A-S | Class A-S-2, Class A-S-X2 |
| On the closing date, the issuing entity will issue the following “trust components,” each with the initial principal balance (or, if such trust component has an “X” suffix, notional amount) and pass-through rate set forth next to it in the table below. Each trust component with an “X” suffix will not be entitled to distributions of principal. |
Trust Component |
Initial Certificate Balance or Notional Amount |
Pass-Through Rate | |||
| Class A-3 | See footnote (9) to the table under “Certificate Structure” | Class A-3 Certificate Pass-Through Rate minus 1.00% | |||
| Class A-3-X1 | Equal to Class A-3 Trust Component Certificate Balance | 0.50% | |||
| Class A-3-X2 | Equal to Class A-3 Trust Component Certificate Balance | 0.50% | |||
| Class A-4 | See footnote (9) to the table under “Certificate Structure” | Class A-4 Certificate Pass-Through Rate minus 1.00% | |||
| Class A-4-X1 | Equal to Class A-4 Trust Component Certificate Balance | 0.50% |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Wells Fargo Commercial Mortgage Trust 2020-C57 | Certain Terms and Conditions |
| Class A-4-X2 | Equal to Class A-4 Trust Component Certificate Balance | 0.50% | |||
| Class A-S | $28,727,000 | Class A-S Certificate Pass-Through Rate minus 1.00% | |||
| Class A-S-X1 | Equal to Class A-S Trust Component Certificate Balance | 0.50% | |||
| Class A-S-X2 | Equal to Class A-S Trust Component Certificate Balance | 0.50% |
| Each class of Exchangeable Certificates represents an undivided beneficial ownership interest in the trust components set forth next to it in the table below (the “Corresponding Trust Components”). Each class of Exchangeable Certificates has a pass-through rate equal to the sum of the pass-through rates of the Corresponding Trust Components and represents a percentage interest (the related “Class Percentage Interest”) in each Corresponding Trust Component, including principal and interest payable thereon, equal to (x) the Certificate Balance (or, if such class has an “X” suffix, Notional Amount) of such class of certificates, divided by (y) the Certificate Balance of the Class A-3 trust component (if such class of Exchangeable Certificates has an “A-3” designation), the Class A-4 trust component (if such class of Exchangeable Certificates has an “A-4” designation) or the Class A-S trust component (if such class of Exchangeable Certificates has an “A-S” designation). |
Group of Exchangeable Certificates |
Class of Exchangeable Certificates |
Corresponding Trust Components | |
| “Class A-3 Exchangeable Certificates” | Class A-3 | Class A-3, Class A-3-X1, Class A-3-X2 | |
| Class A-3-1 | Class A-3, Class A-3-X2 | ||
| Class A-3-2 | Class A-3 | ||
| Class A-3-X1 | Class A-3-X1 | ||
| Class A-3-X2 | Class A-3-X1, Class A-3-X2 | ||
| “Class A-4 Exchangeable Certificates” | Class A-4 | Class A-4, Class A-4-X1, Class A-4-X2 | |
| Class A-4-1 | Class A-4, Class A-4-X2 | ||
| Class A-4-2 | Class A-4 | ||
| Class A-4-X1 | Class A-4-X1 | ||
| Class A-4-X2 | Class A-4-X1, Class A-4-X2 | ||
| “Class
A-S Exchangeable Certificates” |
Class A-S | Class A-S, Class A-S-X1, Class A-S-X2 | |
| Class A-S-1 | Class A-S, Class A-S-X2 | ||
| Class A-S-2 | Class A-S | ||
| Class A-S-X1 | Class A-S-X1 | ||
| Class A-S-X2 | Class A-S-X1, Class A-S-X2 |
| The maximum Certificate Balance or Notional Amount of each class of Class A-3 Exchangeable Certificates that could be issued in an exchange is equal to the Certificate Balance of the Class A-3 trust component, the maximum Certificate Balance or Notional Amount of each class of Class A-4 Exchangeable Certificates that could be issued in an exchange is equal to the Certificate Balance of the Class A-4 trust component, and the maximum Certificate Balance or Notional Amount of each class of Class A-S Exchangeable Certificates that could be issued in an exchange is equal to the Certificate Balance of the Class A-S trust component. The maximum Certificate Balances of Class A-3, Class A-4 and Class A-S Certificates (subject to the constraint on the aggregate initial Certificate Balance of the Class A-3 and Class A-4 trust components discussed in footnote (9) to table under “Certificate Structure”) will be issued on the closing date, and the Certificate Balance or Notional Amount of each other class of Exchangeable Certificates will be equal to zero on the Closing Date. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Wells Fargo Commercial Mortgage Trust 2020-C57 | Certain Terms and Conditions |
| Each class of Class A-3 Exchangeable Certificates, Class A-4 Exchangeable Certificates and Class A-S Exchangeable Certificates will have a Certificate Balance or Notional Amount equal to its Class Percentage Interest multiplied by the Certificate Balance of the Class A-3 trust component, Class A-4 trust component or Class A-S trust component, respectively. Each class of Class A-3 Exchangeable Certificates, Class A-4 Exchangeable Certificates and Class A-S Exchangeable Certificates with a Certificate Balance will have the same approximate initial credit support percentage, Expected Weighted Average Life, Expected Principal Window, Certificate Principal U/W NOI Debt Yield and Certificate Principal to Value Ratio as the Class A-3 Certificates, Class A-4 Certificates or Class A-S Certificates, respectively, shown above. |
| Allocation of Yield Maintenance Charges and Prepayment Premiums: | If any Yield Maintenance Charge or Prepayment Premium is 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 that Yield Maintenance Charge or Prepayment Premium (net of liquidation fees payable therefrom) in the following manner: |
| (1) | to each class of the Class A-1, Class A-SB, Class A-3, Class A-3-1, Class A-3-2, Class A-4, Class A-4-1, Class A-4-2, Class A-S, Class A-S-1, Class A-S-2, Class B, Class C, Class D, Class E-RR and Class F-RR Certificates, the product of (a) such Yield Maintenance Charge or Prepayment Premium, (b) the related Base Interest Fraction for such class and the applicable principal prepayment, and (c) a fraction, the numerator of which is equal to the amount of principal distributed to such class for that Distribution Date, and the denominator of which is the total amount of principal distributed to the Class A-1, Class A-SB, Class B, Class C, Class D, Class E-RR, Class F-RR, Class G-RR, Class H-RR, Class J-RR, Class K-RR, Class L-RR and Class M-RR Certificates and the Class A-3 Exchangeable Certificates, the Class A-4 Exchangeable Certificates and the Class A-S Exchangeable Certificates for that Distribution Date, | |
| (2) | to the Class A-3-X1 Certificates, the product of (a) such Yield Maintenance Charge or Prepayment Premium, (b) a fraction, the numerator of which is equal to the amount of principal distributed to the Class A-3-1 Certificates for that Distribution Date, and the denominator of which is the total amount of principal distributed to the Class A-1, Class A-SB, Class B, Class C, Class D, Class E-RR, Class F-RR, Class G-RR, Class H-RR, Class J-RR, Class K-RR, Class L-RR and Class M-RR Certificates and the Class A-3 Exchangeable Certificates, the Class A-4 Exchangeable Certificates and the Class A-S Exchangeable Certificates for that Distribution Date and (c) the difference between (i) the Base Interest Fraction for the Class A-3 Certificates and the applicable principal prepayment and (ii) the Base Interest Fraction for the Class A-3-1 Certificates and the applicable principal prepayment, | |
| (3) | to the Class A-3-X2 Certificates, the product of (a) such Yield Maintenance Charge or Prepayment Premium, (b) a fraction, the numerator of which is equal to the amount of principal distributed to the Class A-3-2 Certificates for that Distribution Date, and the denominator of which is the total amount of principal distributed to the Class A-1, Class A-SB, Class B, Class C, Class D, Class E-RR, Class F-RR, Class G-RR, Class H-RR, Class J-RR, Class K-RR, Class L-RR and Class M-RR Certificates and the Class A-3 Exchangeable Certificates, the Class A-4 Exchangeable Certificates and the Class A-S Exchangeable Certificates for that Distribution Date and (c) the difference between (i) the Base Interest Fraction for the Class A-3 Certificates and the applicable principal prepayment and (ii) the Base Interest Fraction for the Class A-3-2 Certificates and the applicable principal prepayment, | |
| (4) | to the Class A-4-X1 Certificates, the product of (a) such Yield Maintenance Charge or Prepayment Premium, (b) a fraction, the numerator of which is equal to the amount of principal distributed to the Class A-4-1 Certificates for that Distribution Date, and the denominator of which is the total amount of principal distributed to the Class A-1, Class A-SB, Class B, Class C, Class D, Class E-RR, Class F-RR, Class G-RR, Class H-RR, Class J-RR, Class K-RR, Class L-RR and Class M-RR Certificates and the Class A-3 Exchangeable Certificates, the Class A-4 Exchangeable Certificates and the Class A-S Exchangeable Certificates for that Distribution Date and (c) the difference between (i) the Base Interest Fraction for the Class A-4 Certificates and the applicable principal prepayment and (ii) the Base Interest Fraction for the Class A-4-1 Certificates and the applicable principal prepayment, | |
| (5) | to the Class A-4-X2 Certificates, the product of (a) such Yield Maintenance Charge or Prepayment Premium, (b) a fraction, the numerator of which is equal to the amount of principal distributed to the Class A-4-2 Certificates for that Distribution Date, and the denominator of which is the total amount of principal distributed to |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Wells Fargo Commercial Mortgage Trust 2020-C57 | Certain Terms and Conditions |
| the Class A-1, Class A-SB, Class B, Class C, Class D, Class E-RR, Class F-RR, Class G-RR, Class H-RR, Class J-RR, Class K-RR, Class L-RR and Class M-RR Certificates and the Class A-3 Exchangeable Certificates, the Class A-4 Exchangeable Certificates and the Class A-S Exchangeable Certificates for that Distribution Date and (c) the difference between (i) the Base Interest Fraction for the Class A-4 Certificates and the applicable principal prepayment and (ii) the Base Interest Fraction for the Class A-4-2 Certificates and the applicable principal prepayment, | ||
| (6) | to the Class A-S-X1 Certificates, the product of (a) such Yield Maintenance Charge or Prepayment Premium, (b) a fraction, the numerator of which is equal to the amount of principal distributed to the Class A-S-1 Certificates for that Distribution Date, and the denominator of which is the total amount of principal distributed to the Class A-1, Class A-SB, Class B, Class C, Class D, Class E-RR, Class F-RR, Class G-RR, Class H-RR, Class J-RR, Class K-RR, Class L-RR and Class M-RR Certificates and the Class A-3 Exchangeable Certificates, the Class A-4 Exchangeable Certificates and the Class A-S Exchangeable Certificates for that Distribution Date and (c) the difference between (i) the Base Interest Fraction for the Class A-S Certificates and the applicable principal prepayment and (ii) the Base Interest Fraction for the Class A-S-1 Certificates and the applicable principal prepayment, | |
| (7) | to the Class A-S-X2 Certificates, the product of (a) such Yield Maintenance Charge or Prepayment Premium, (b) a fraction, the numerator of which is equal to the amount of principal distributed to the Class A-S-2 Certificates for that Distribution Date, and the denominator of which is the total amount of principal distributed to the Class A-1, Class A-SB, Class B, Class C, Class D, Class E-RR, Class F-RR, Class G-RR, Class H-RR, Class J-RR, Class K-RR, Class L-RR and Class M-RR Certificates and the Class A-3 Exchangeable Certificates, the Class A-4 Exchangeable Certificates and the Class A-S Exchangeable Certificates for that Distribution Date and (c) the difference between (i) the Base Interest Fraction for the Class A-S Certificates and the applicable principal prepayment and (ii) the Base Interest Fraction for the Class A-S-2 Certificates and the applicable principal prepayment, | |
| (8) | to the Class X-A Certificates, the excess, if any, of (a) the product of (i) such Yield Maintenance Charge or Prepayment Premium and (ii) a fraction, the numerator of which is equal to the total amount of principal distributed to the Class A-1 and Class A-SB Certificates and the Class A-3 Exchangeable Certificates and the Class A-4 Exchangeable Certificates for that Distribution Date, and the denominator of which is the total amount of principal distributed to the Class A-1, Class A-SB, Class B, Class C, Class D, Class E-RR, Class F-RR, Class G-RR, Class H-RR, Class J-RR, Class K-RR, Class L-RR and Class M-RR Certificates and the Class A-3 Exchangeable Certificates, the Class A-4 Exchangeable Certificates and the Class A-S Exchangeable Certificates for that Distribution Date, over (b) the total amount of such Yield Maintenance Charge or Prepayment Premium distributed to the Class A-1 and Class A-SB Certificates and the Class A-3 Exchangeable Certificates and the Class A-4 Exchangeable Certificates as described above, and | |
| (9) | to the Class X-B Certificates, any remaining portion of such Yield Maintenance Charge or Prepayment Premium not distributed as described above. |
| No Prepayment Premiums or Yield Maintenance Charges will be distributed to the holders of the Class X-D, G-RR, H-RR, J-RR, K-RR, L-RR, M-RR, V or R Certificates. For a description of when Prepayment Premiums and Yield Maintenance Charges are generally required on the mortgage loans, see Annex A-1 to the Preliminary Prospectus. See also “Risk Factors—Risks Relating to the Mortgage Loans—Risks Relating to Enforceability of Yield Maintenance Charges, Prepayment Premiums or Defeasance Provisions” and “Risk Factors—Other Risks Relating to the Certificates—Your Yield May Be Affected by Defaults, Prepayments and Other Factors” in the Preliminary 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 Balances of the Class A-1, A-SB, B, C, D, E-RR, F-RR, G-RR, H-RR, J-RR, K-RR, L-RR and M-RR Certificates and the Class A-3, A-4 and A-S trust components 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 on such Distribution Date. Such losses will be applied in the following order, in each case until the related Certificate Balance is reduced to zero: first, to the M-RR Certificates; second, to the L-RR Certificates, third, to the Class K-RR Certificates; fourth, to the Class J-RR Certificates; fifth, to the Class H-RR Certificates; sixth, to |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Wells Fargo Commercial Mortgage Trust 2020-C57 | Certain Terms and Conditions |
the Class G-RR Certificates; seventh, to the Class F-RR Certificates; eighth, to the Class E-RR Certificates; ninth, to the Class D Certificates; tenth, to the Class C Certificates; eleventh, to the Class B Certificates; twelfth, to the Class A-S trust component; and, finally, pro rata, to the Class A-1 and A-SB Certificates and the Class A-3 and A-4 trust components based on their outstanding Certificate Balances.
Any portion of such amount applied to the Class A-3, Class A-4 or Class A-S trust component will reduce the Certificate Balance or Notional Amount of each Class of Certificates in the related group of Exchangeable Certificates by an amount equal to the product of (x) its Certificate Balance or Notional Amount, divided by the Certificate Balance of such trust component prior to the applicable reduction, and (y) the amount applied to such trust component.
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 and A-SB Certificates and the Class A-3 and A-4 trust components as write-offs in reduction of their Certificate 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 A-S trust component and the Class B or C Certificates as write-offs in reduction of their Certificate Balances. The Notional Amount of the Class X-D Certificates will be reduced by the amount of all losses that are allocated to the Class D Certificates as write-offs in reduction of its Certificate Balance.
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| P&I Advances: | The Master Servicer or, if the Master Servicer fails to do so, the Trustee, will be obligated to advance delinquent debt service payments (other than balloon payments, excess interest and default interest) and assumed debt service payments on mortgage loans with delinquent balloon payments (excluding any related companion loan), 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 P&I 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-SB, A-3, A-3-X1, A-3-X2, A-4, A-4-X1, A-4-X2, X-A, X-B and X-D Certificates would be affected on a pari passu basis). |
| Servicing Advances: | The Master Servicer or, if the Master Servicer fails to do so, the Trustee, will be obligated to make servicing advances, 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 or the Trustee, as applicable, will have the primary obligation to make any required servicing advances with respect to any serviced whole loan. With respect to any non-serviced whole loan, the master servicer or trustee, as applicable, under the related lead securitization servicing agreement will have the primary obligation to make any required servicing advances with respect to such non-serviced whole loan. |
Appraisal Reduction Amounts and Collateral Deficiency 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 (other than a non-serviced mortgage loan) with respect to which certain defaults, modifications or insolvency events have occurred as further described in the Preliminary Prospectus) plus other amounts overdue or advanced in connection with such mortgage 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. With respect to any serviced whole loan, any Appraisal Reduction Amount will be allocated, first, to any related subordinate companion loan and, second, pro rata, to the related mortgage loan and the related pari passu companion loan(s). With respect to any non-serviced mortgage loan, appraisal reduction amounts are expected to be calculated in a similar manner under the related non-serviced pooling and servicing agreement.
A mortgage loan will cease to be a required appraisal loan when the same has ceased to be a specially serviced 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.
A “Collateral Deficiency Amount” will exist with respect to any mortgage loan that is modified into an AB loan structure and remains a corrected mortgage loan and will generally equal the excess of (i) the stated principal balance of such AB modified loan (taking into account the related junior note(s) and any pari passu notes included therein), over (ii) the sum of (in the case of a whole loan, solely to the extent allocable to the subject mortgage loan) (x) the most recent appraised value of the related mortgaged property plus (y) solely to the extent not reflected or taken into account in such appraised value and to the extent on deposit with, or otherwise under the control of, the lender as of the date of such determination, any capital or additional collateral contributed by the related borrower at the time the mortgage loan (and as part of the modification thereto) became an AB modified loan plus (z) any other escrows or reserves (in addition to any amounts set forth in the immediately preceding clause (y)) held with respect to the mortgage loan as of the date of such determination.
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THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Wells Fargo Commercial Mortgage Trust 2020-C57 | Certain Terms and Conditions |
A “Cumulative Appraisal Reduction Amount” with respect to any mortgage loan will be the sum of any Appraisal Reduction Amount and any Collateral Deficiency Amount.
Appraisal Reduction Amounts will affect the amount of debt service advances in respect of the related mortgage loan. Additionally, Cumulative Appraisal Reduction Amounts will be taken into account in the determination of the identity of the Class whose majority constitutes the “majority controlling class certificateholder” and is entitled to appoint the directing certificateholder.
Neither (i) a Payment Accommodation with respect to any mortgage loan or serviced whole loan nor (ii) any default or delinquency that would have existed but for such Payment Accommodation will constitute an appraisal reduction event, for so long as the related borrower is complying with the terms of such Payment Accommodation.
A “Payment Accommodation” for any mortgage loan or serviced whole loan means the entering into of any temporary forbearance agreement as a result of the COVID-19 emergency relating to payment obligations or operating covenants under the related mortgage loan documents or the use of funds on deposit in any reserve account or escrow account for any purpose other than the explicit purpose described in the related mortgage loan documents, that in each case require full repayment of deferred payments and escrows within 21 months of the date of the first forbearance for such mortgage loan or serviced whole loan. |
Clean-Up Call and Exchange Termination: |
On each Distribution Date occurring after the aggregate unpaid principal balance of the pool of mortgage loans is less than 1.0% of the principal balance of the mortgage loans as of the cut-off date (solely for the purposes of this calculation, if such right is being exercised after the distribution date in August 2030 and any of the Dollar General- Isanti mortgage loan, Dollar General- Sioux City mortgage loan, Dollar General- Newburgh mortgage loan, Dollar Genera- Waterloo mortgage loan or Dollar General- Little Falls mortgage loan is still an asset of the issuing entity, then such mortgage loan will be excluded from the then-aggregate principal balance of the pool of mortgage loans and from the initial pool balance), 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 Preliminary Prospectus. Exercise of the option will terminate the trust and retire the then-outstanding Certificates.
If the aggregate Certificate Balances of each of the Class A-1, A-SB, B, C and D Certificates and the Class A-3, A-4 and A-S trust components have been reduced to zero, the trust may also be terminated in connection with an exchange of all the then-outstanding Certificates (other than the Class V and Class R Certificates) for the mortgage loans and REO properties then remaining in the issuing entity, subject to payment of a price specified in the Preliminary Prospectus, but all of the holders of those outstanding Classes of Certificates (other than the Class V and Class R Certificates) would have to voluntarily participate in the exchange.
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| Liquidation Loan Waterfall: | Following the liquidation of any mortgage loan or mortgaged 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 Certificates—Distributions—Application Priority of Mortgage Loan Collections or Whole Loan Collections” in the Preliminary Prospectus. |
| Control Eligible Certificates: | The Class E-RR, F-RR, G-RR, H-RR, J-RR, K-RR, L-RR and M-RR Certificates. |
| Directing Certificateholder/ Controlling Class: | A directing certificateholder may be appointed by the “majority controlling class certificateholder”, which will be the holder(s) of a majority of the Controlling Class.
The “Controlling Class” will be, as of any time of determination, the most subordinate Class of Control Eligible Certificates then outstanding that has an aggregate Certificate Balance (as notionally reduced by any Cumulative Appraisal Reduction Amounts allocable to such Class(es)) at least equal to 25% of the initial Certificate Balance of that Class; provided, however, that if at any time the Certificate Balances of the Certificates other than the Control Eligible Certificates have been reduced to zero as a result of principal payments on the Mortgage Loans, then the Controlling Class will be the most subordinate Class of Control Eligible Certificates that has a Certificate Balance greater than zero without regard to any Cumulative Appraisal Reduction Amounts. The Controlling Class as of the Closing Date will be the Class M-RR Certificates.
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| Control and Consultation: | The rights of various parties to replace the Special Servicer and approve or consult with respect to major actions of the Special Servicer will vary according to defined periods.
A “Control Termination Event” will occur when the Class E-RR Certificates have a Certificate Balance (taking into account the application of any Cumulative Appraisal Reduction Amounts to notionally reduce the Certificate Balance of such Class) of less than 25% of the initial Certificate |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Wells Fargo Commercial Mortgage Trust 2020-C57 | Certain Terms and Conditions |
Balance of that Class; provided that a Control Termination Event will not be deemed continuing in the event that the Certificate Balances of the Certificates other than the Control Eligible Certificates have been reduced to zero as a result of principal payments on the mortgage loans.
A “Consultation Termination Event” will occur when there is no Class of Control Eligible Certificates that has a then-outstanding Certificate Balance at least equal to 25% of the initial Certificate Balance of that Class, in each case, without regard to the application of any Cumulative Appraisal Reduction Amounts; provided that a Consultation Termination Event will not be deemed continuing in the event that the Certificate Balances of the Certificates other than the Control Eligible Certificates have been reduced to zero as a result of principal payments on the mortgage loans.
If no Control Termination Event has occurred and is continuing, except with respect to the Excluded Loans (as defined below) (i) the directing certificateholder will be entitled to grant or withhold approval of asset status reports prepared, and material servicing actions proposed, by the Special Servicer, and (ii) the directing certificateholder will be entitled to terminate and replace the Special Servicer with or without cause, and appoint itself or another person as the successor special servicer. It will be a condition to such appointment that Fitch, KBRA and Moody’s (and any rating agency rating any securities backed by any pari passu companion loan(s) serviced under this transaction) confirm that the appointment would not result in a qualification, downgrade or withdrawal of any of their then-current ratings of Certificates (and any certificates backed by any pari passu companion loan(s) serviced under this transaction).
If a Control Termination Event has occurred and is continuing but no Consultation Termination Event has occurred and is continuing, the Special Servicer will be required to consult with the directing certificateholder (other than with respect to Excluded Loans) in connection with asset status reports and material special servicing actions.
If a Consultation Termination Event has occurred and is continuing, no directing certificateholder will be recognized or have any right to terminate the Special Servicer or approve, direct or consult with respect to servicing matters.
With respect to each serviced whole loan, the rights of the directing certificateholder described above will be subject to the consultation rights of the holders of the related pari passu companion loans. Those consultation rights will generally extend to asset status reports and material special servicing actions involving the related whole loan, will be as set forth in the related intercreditor agreement, and will be in addition to the rights of the directing certificateholder in this transaction described above.
With respect to any serviced AB whole loan, for so long as the holder of the related subordinate companion loan is the controlling noteholder, the holder of such subordinate companion loan will have certain control rights regarding the servicing of the related whole loan under the WFCM 2020-C57 pooling and servicing agreement, including the right to approve or disapprove various material servicing actions involving the related whole loan.
With respect to each non-serviced whole loan, the applicable servicing agreement for the related controlling pari passu companion loan(s) generally grants (or will grant) the directing certificateholder under the related securitization control rights that may include the right to approve or disapprove various material servicing actions involving the related whole loan. The directing certificateholder for this securitization (so long as no Consultation Termination Event has occurred and is occurring) generally will nonetheless have the right to be consulted on a non-binding basis with respect to such actions. For purposes of the servicing of any such whole loan contemplated by this paragraph, the occurrence and continuance of a Control Termination Event or Consultation Termination Event under this securitization will not limit the control or other rights of the directing certificateholder (or equivalent) under the securitization of the related controlling pari passu companion loan(s).
The control rights and consent and consultation rights described in the preceding paragraphs are subject to various limitations, conditions and exceptions as described in the Preliminary Prospectus.
Notwithstanding any contrary description set forth above, in the event that, with respect to any mortgage loan, the majority controlling class certificateholder or the directing certificateholder is a Borrower Party, the majority controlling class certificateholder and the directing certificateholder will have no right to receive asset status reports or such other information as may be specified in the WFCM 2020-C57 pooling and servicing agreement, to grant or withhold approval of, or consult with respect to, asset status reports prepared, and material servicing actions proposed, by the Special Servicer, with respect to such mortgage loan, and such mortgage loan will be referred to as an “Excluded Loan” as to such party. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Wells Fargo Commercial Mortgage Trust 2020-C57 | Certain Terms and Conditions |
In addition, notwithstanding any contrary description set forth above, in the event that, with respect to any mortgage loan, a controlling class certificateholder is a Borrower Party, such controlling class certificateholder will have no right to receive asset status reports or such other information as may be specified in the WFCM 2020-C57 pooling and servicing agreement with respect to such mortgage loan.
“Borrower Party” means a borrower, a mortgagor or a manager of a mortgaged property, an Accelerated Mezzanine Loan Lender, or any Borrower Party Affiliate. “Accelerated Mezzanine Loan Lender” means a mezzanine lender under a mezzanine loan that has been accelerated or as to which foreclosure or enforcement proceedings have been commenced against the equity collateral pledged to secure such mezzanine loan. “Borrower Party Affiliate” means, with respect to a borrower, a mortgagor, a manager of a mortgaged property or an Accelerated Mezzanine Loan Lender, (x) any other person controlling or controlled by or under common control with such borrower, mortgagor, manager or Accelerated Mezzanine Loan Lender, as applicable, or (y) any other person owning, directly or indirectly, 25% or more of the beneficial interests in such borrower, mortgagor, manager or Accelerated Mezzanine Loan Lender. | |
| Replacement of Special Servicer: | If a Control Termination Event has occurred and is continuing, the Special Servicer may be removed and replaced without cause upon the affirmative direction of certificate owners holding not less than 66-2/3% of a certificateholder quorum, 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 Special Servicer without cause must cause Fitch, 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. If no Control Termination Event has occurred and is continuing, the Special Servicer may be replaced by the directing certificateholder, subject to Fitch, KBRA and Moody’s (and any Rating Agency rating any securities backed by any pari passu companion loan(s) serviced under this transaction) confirming the then-current ratings of the Certificates (and any certificates backed by any pari passu companion loans serviced under this transaction) or declining to review the matter.
Notwithstanding any of the foregoing to the contrary, with respect to any serviced AB whole loan as to which a subordinate companion loan holder is the related controlling note holder, the holder of the related control note will be entitled to replace the special servicer with respect to such whole loan at any time, with or without cause, and while it is a serviced whole loan, no other party may replace the special servicer for such whole loan unless there is a servicer termination event with respect thereto.
In addition, if at any time the Operating Advisor determines, in its sole discretion exercised in good faith, that (i) the Special Servicer is not performing its duties as required under the pooling and servicing agreement in accordance with the Servicing Standard and (ii) the replacement of the Special Servicer would be in the best interest of the certificateholders as a collective whole, then the Operating Advisor will have the right to recommend the replacement of the Special Servicer and will submit its formal recommendation to the Trustee and the Certificate Administrator (along with its rationale, its proposed replacement special servicer and other relevant information justifying its recommendation).
The Operating Advisor’s recommendation to replace the Special Servicer must be confirmed by an affirmative vote of holders of Principal Balance Certificates evidencing at least a majority of a quorum of certificateholders (which, for this purpose, is the holders of Principal Balance Certificates that (i) evidence at least 20% of the Voting Rights (taking into account the application of any cumulative appraisal reduction amounts to notionally reduce the respective Certificate Balances) of all Principal Balance Certificates on an aggregate basis, and (ii) consist of at least three certificateholders or certificate owners that are not risk retention affiliated with each other). In the event the holders of Principal Balance Certificates evidencing at least a majority of a quorum of certificateholders elect to remove and replace the Special Servicer (which requisite affirmative votes must be received within 180 days of the posting of the notice of the Operating Advisor’s recommendation to replace the Special Servicer to the Certificate Administrator’s website), the Certificate Administrator will be required to receive a Rating Agency Confirmation from each of the Rating Agencies at that time.
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| Excluded Special Servicer: | In the event that, with respect to any mortgage loan, the Special Servicer is a Borrower Party, the Special Servicer will be required to resign as special servicer of such mortgage loan (referred to as an “excluded special servicer loan”). If no Control Termination Event has occurred and is continuing, the directing certificateholder will be entitled to appoint (and may replace with or without cause) a separate special servicer that is not a Borrower Party (referred to as an “excluded special servicer”) with respect to such excluded special servicer loan unless such excluded special servicer loan is also an excluded loan. Otherwise, upon resignation of the Special |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
29
| Wells Fargo Commercial Mortgage Trust 2020-C57 | Certain Terms and Conditions |
| Servicer with respect to an excluded special servicer loan, the resigning Special Servicer will be required to appoint the excluded special servicer. | |
| Appraisal Remedy: | If the Class of Certificates comprising the Controlling Class loses its status as Controlling Class because of the application of an Appraisal Reduction Amount or Collateral Deficiency Amount, the holders of a majority of the voting rights of such Class may require the Special Servicer to order a second appraisal for any mortgage loan in respect of which an Appraisal Reduction Amount or Collateral Deficiency Amount has been applied. The Special Servicer must thereafter determine whether, based on its assessment of such second appraisal, any recalculation of the Appraisal Reduction Amount or Collateral Deficiency Amount is warranted. Such Class will not be able to exercise any direction, control, consent and/or similar rights of the Controlling Class unless and until reinstated as the Controlling Class through such determination; and pending such determination, the rights of the Controlling Class will be exercised by the Control Eligible Certificates, if any, that would be the Controlling Class taking into account the subject appraisal reduction amount. |
| Sale of Defaulted Assets: | There will be no “fair value” purchase option. Instead, the WFCM 2020-C57 pooling and servicing agreement will authorize the 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.
The sale of a defaulted loan (other than a non-serviced whole 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 directing certificateholder and/or Operating Advisor, as described in the Preliminary Prospectus. Generally speaking, the holder of a pari passu companion loan will have consent and/or consultation rights, as described in the Preliminary Prospectus.
With respect to any serviced whole loan, if such whole loan becomes a defaulted loan under the WFCM 2020-C57 pooling and servicing agreement, the Special Servicer will generally be required to sell both the mortgage loan and the related pari passu companion loan(s) as a single whole loan.
With respect to each non-serviced whole loan, the applicable servicing agreement governing the servicing of such whole loan generally provides (or is expected to provide) that, if the related pari passu companion loan(s) serviced under such agreement become a defaulted loan under such servicing agreement, then the related special servicer may offer to sell to any person (or may offer to purchase) for cash such whole loan during such time as such applicable pari passu companion loan(s) constitutes a defaulted loan under such servicing agreement. Generally speaking, in connection with any such sale, the related special servicer is required to sell both the mortgage loan and the related pari passu companion loan(s) (and, in some cases, any related subordinate companion loan) as a whole loan. The directing certificateholder for this securitization generally will have consultation rights as the holder of an interest in the related mortgage loan, as described in the Preliminary Prospectus.
The procedures for the sale of any whole loan that becomes a defaulted whole loan, and any associated consultation rights, are subject to various limitations, conditions and exceptions as described in the Preliminary Prospectus.
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| “As-Is” Appraisals: | Appraisals must be conducted on an “as-is” basis, and must be no more than 12 months old, for purposes of determining Appraisal Reduction Amounts and market value in connection with REO sales. Required appraisals may consist of updates of prior appraisals. Internal valuations by the Special Servicer are permitted if the principal balance of a mortgage loan is less than $2,000,000. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
30
| Wells Fargo Commercial Mortgage Trust 2020-C57 | Certain Terms and Conditions |
| Operating Advisor: | The Operating Advisor will have certain review and consultation rights relating to the performance of the Special Servicer and with respect to its actions taken in connection with the resolution and/or liquidation of Specially Serviced Loans. With respect to each mortgage loan (other than a Non-Serviced Mortgage Loan) or serviced whole loan, the Operating Advisor will be responsible for: | |
| · | ● | reviewing the actions of the Special Servicer with respect to any Specially Serviced Loan; |
| · | ● | reviewing (i) all reports by the Special Servicer made available to Privileged Persons on the Certificate Administrator’s website and (ii) each Asset Status Report (as defined in the Preliminary Prospectus) (after the occurrence and during the continuance of an Operating Advisor Consultation Event (as defined below)) and Final Asset Status Report (as defined in the Preliminary Prospectus); |
| · | ● | recalculating and reviewing for accuracy and consistency with the WFCM 2020-C57 pooling and servicing agreement the mathematical calculations by the special servicer and the corresponding application of the non-discretionary portion of the applicable formulas required to be utilized in connection with Appraisal Reduction Amounts, Collateral Deficiency Amounts and net present value calculations used in the Special Servicer’s determination of what course of action to take in connection with the workout or liquidation of a Specially Serviced Loan; and |
| · | ● | preparing an annual report (if any mortgage loan (other than any Non-Serviced Mortgage Loan) or serviced whole loan was a Specially Serviced Loan at any time during the prior calendar year or an Operating Advisor Consultation Event (as defined below) occurred during the prior calendar year) that sets forth whether the Operating Advisor believes, in its sole discretion exercised in good faith, that the Special Servicer is operating in compliance with the Servicing Standard with respect to its performance of its duties under the pooling and servicing agreement with respect to Specially Serviced Loans (and, after the occurrence and continuance of an Operating Advisor Consultation Event (as defined below), with respect to major decisions on non-Specially Serviced Loans) during the prior calendar year on a “trust-level basis”. The Operating Advisor will identify (1) which, if any, standards the Operating Advisor believes, in its sole discretion exercised in good faith, the Special Servicer has failed to comply with and (2) any material deviations from the Special Servicer’s obligations under the pooling and servicing agreement with respect to the resolution or liquidation of any Specially Serviced Loan or REO Property (other than with respect to any REO Property related to any Non-Serviced Mortgage Loan). In preparing any Operating Advisor Annual Report (as defined in the Preliminary Prospectus), the Operating Advisor will not be required to report on instances of non-compliance with, or deviations from, the Servicing Standard or the Special Servicer’s obligations under the pooling and servicing agreement that the Operating Advisor determines, in its sole discretion exercised in good faith, to be immaterial. |
| With respect to each mortgage loan (other than any Non-Serviced Mortgage Loan) or serviced whole loan, after the Operating Advisor has received notice that an Operating Advisor Consultation Event (as defined below) has occurred and is continuing, in addition to the duties described above, the Operating Advisor will be required to perform the following additional duties: | ||
| · | • | to consult (on a non-binding basis) with the Special Servicer in respect of asset status reports and |
| · | • | to consult (on a non-binding basis) with the Special Servicer with respect to “major decisions” processed by the Special Servicer. |
| An “Operating Advisor Consultation Event” will occur when the Certificate Balances of the Class E-RR, F-RR, G-RR, H-RR, J-RR, K-RR, L-RR and M-RR Certificates in the aggregate (taking into account the application of any Cumulative Appraisal Reduction Amounts to notionally reduce the Certificate Balances of such Classes) is 25% or less of the initial Certificate Balances of such Classes in the aggregate. | ||
| Asset Representations Reviewer: | The Asset Representations Reviewer will be required to review certain delinquent mortgage loans after a specified delinquency threshold has been exceeded (an “Asset Review Trigger”) and the required percentage of certificateholders vote to direct a review of such delinquent loans. An Asset Review Trigger will occur when either (1) mortgage loans with an aggregate outstanding principal balance of 25.0% or more of the aggregate outstanding principal balance of all of the mortgage loans (including any REO loans (or a portion of any REO loan in the case of a whole loan)) held by the issuing entity as of the end of the applicable collection period are delinquent loans or (2) at least 15 mortgage loans are delinquent loans as of the end of the applicable | |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
31
| Wells Fargo Commercial Mortgage Trust 2020-C57 | Certain Terms and Conditions |
collection period and the outstanding principal balance of such delinquent loans in the aggregate constitutes at least 20.0% of the aggregate outstanding principal balance of all of the mortgage loans (including any REO loans (or a portion of any REO loan in the case of a whole loan)) held by the issuing entity as of the end of the applicable collection period. See “Pooling and Servicing Agreement—The Asset Representations Reviewer—Asset Review” in the Preliminary Prospectus.
The Asset Representations Reviewer may be terminated and replaced without cause. Upon (i) the written direction of certificateholders evidencing not less than 25% of the voting rights (without regard to the application of any Cumulative Appraisal Reduction Amounts) requesting a vote to terminate and replace the Asset Representations Reviewer with a proposed successor Asset Representations Reviewer that is an eligible asset representations reviewer, and (ii) payment by such holders to the certificate administrator of the reasonable fees and expenses to be incurred by the certificate administrator in connection with administering such vote, the certificate administrator will promptly provide notice to all certificateholders and the Asset Representations Reviewer of such request by posting such notice on its internet website, and by mailing such notice to all certificateholders and the Asset Representations Reviewer. Upon the written direction of certificateholders evidencing at least 75% of a certificateholder quorum (without regard to the application of any Cumulative Appraisal Reduction Amounts), the Trustee will terminate all of the rights and obligations of the Asset Representations Reviewer under the WFCM 2020-C57 pooling and servicing agreement by written notice to the Asset Representations Reviewer, and the proposed successor Asset Representations Reviewer will be appointed. See “Pooling and Servicing Agreement—The Asset Representations Reviewer” in the Preliminary Prospectus.
| |
| Dispute Resolution Provisions: | The mortgage loan sellers will be subject to the dispute resolution provisions set forth in the WFCM 2020-C57 pooling and servicing agreement to the extent those provisions are triggered with respect to any mortgage loan sold to the depositor by a mortgage loan seller and such mortgage loan seller will be obligated under the related mortgage loan purchase agreement to comply with all applicable provisions and to take part in any mediation or arbitration proceedings that may result.
Generally, in the event that a Repurchase Request (as defined in the Preliminary Prospectus) is not “Resolved” (as defined below) within 180 days after the related mortgage loan seller receives such Repurchase Request, then the enforcing servicer will be required to send a notice to the “Initial Requesting Certificateholder” (if any) and the Certificate Administrator indicating the enforcing servicer’s intended course of action with respect to the Repurchase Request. If (a) the enforcing servicer’s intended course of action with respect to the Repurchase Request does not involve pursuing further action to exercise rights against the related mortgage loan seller with respect to the Repurchase Request and the Initial Requesting Certificateholder, if any, or any other certificateholder or certificate owner wishes to exercise its right to refer the matter to mediation (including non-binding arbitration) or arbitration, or (b) the enforcing servicer’s intended course of action is to pursue further action to exercise rights against the related mortgage loan seller with respect to the Repurchase Request but the Initial Requesting Certificateholder, if any, or any other certificateholder or certificate owner does not agree with the dispute resolution method selected by the enforcing servicer, then the Initial Requesting Certificateholder, if any, or such other certificateholder or certificate owner may deliver a written notice to the Special Servicer indicating its intent to exercise its right to refer the matter to either mediation or arbitration.
“Resolved” means, with respect to a Repurchase Request, (i) that the related Material Defect has been cured, (ii) the related mortgage loan has been repurchased in accordance with the related mortgage loan purchase agreement, (iii) a mortgage loan has been substituted for the related mortgage loan in accordance with the related mortgage loan purchase agreement, (iv) the applicable mortgage loan seller has made a Loss of Value Payment (as defined in the Preliminary Prospectus), (v) a contractually binding agreement is entered into between the enforcing servicer, on behalf of the issuing entity, and the related mortgage loan seller that settles the related mortgage loan seller’s obligations under the related mortgage loan purchase agreement or (vi) the related mortgage loan is no longer property of the issuing entity as a result of a sale or other disposition in accordance with the WFCM 2020-C57 pooling and servicing agreement. See “Pooling and Servicing Agreement—Dispute Resolution Provisions” in the Preliminary Prospectus.
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| Investor Communications: | The certificate administrator is required to include on any Form 10–D any request received from a certificateholder to communicate with other certificateholders related to certificateholders exercising their rights under the terms of the WFCM 2020-C57 pooling and servicing agreement. Any certificateholder wishing to communicate with other certificateholders regarding the exercise of its rights under the terms of the WFCM 2020-C57 pooling and servicing agreement will be able to deliver a written request signed by an authorized representative of the requesting investor to the certificate administrator. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Wells Fargo Commercial Mortgage Trust 2020-C57 | Certain Terms and Conditions |
| Certain Fee Offsets: | If a workout fee is earned by the Special Servicer following a loan default with respect to any mortgage loan that it services, then certain limitations will apply based on modification fees paid by the borrower. The modification fee generally must not exceed 1% of the principal balance of the loan as modified in any 12-month period. In addition, if the loan re-defaults, any subsequent workout fee on that loan must be reduced by a portion of the modification fees paid by the borrower in the previous 12-months. Likewise, liquidation fees collected in connection with a liquidation or partial liquidation of a mortgage loan must be reduced by a portion of the modification fees paid by the borrower in the previous 12 months. |
| 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 the Special Servicer, (b) inspection reports, (c) appraisals, (d) various “special notices” described in the Preliminary Prospectus, (e) the “Investor Q&A Forum”, (f) a voluntary “Investor Registry” and (g) the “Risk Retention Special Notices” tab. Investors may access the deal website following execution of a certification and confidentiality agreement. |
| Initial Majority Controlling Class Certificateholder: | It is expected that KKR CMBS II Aggregator Type 2 L.P. or an affiliate will be the initial majority controlling class certificateholder. |
| Whole Loans: | Each of the mortgaged properties identified above under “IV. Characteristics of the Mortgage Pool—B. Summary of the Whole Loans” secures 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, each of which will be pari passu or subordinate in right of payment with the mortgage loan included in the trust fund. We refer to each such group of mortgage loans as a “whole loan”. Such “—Summary of the Whole Loans” section includes further information regarding the various notes in each whole loan, the holders of such notes, the lead servicing agreement for each such whole loan, and the master servicer and special servicer under such lead servicing agreement. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
33
| Loan #1 | Cut-off Date Balance: | $56,000,000 | ||
| Self Storage – Self Storage | PGH17 Self Storage Portfolio | Cut-off Date LTV: | 68.6% | |
| Property Addresses - Various | U/W NCF DSCR: | 1.27x | ||
| U/W NOI Debt Yield: | 8.1% |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
34
| Loan #1 | Cut-off Date Balance: | $56,000,000 | ||
| Self Storage – Self Storage | PGH17 Self Storage Portfolio | Cut-off Date LTV: | 68.6% | |
| Property Addresses - Various | U/W NCF DSCR: | 1.27x | ||
| U/W NOI Debt Yield: | 8.1% |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
35
| No. 1 – PGH17 Self Storage Portfolio | |||||||
| Mortgage Loan Information | Mortgaged Property Information | ||||||
| Mortgage Loan Seller: | LMF Commercial, LLC | Single Asset/Portfolio: | Portfolio | ||||
Credit Assessment (Fitch/KBRA/Moody’s): |
NR/NR/NR | Property Type – Subtype: | Self Storage – Self Storage | ||||
| Original Principal Balance(1): | $56,000,000 | Location: | Various | ||||
| Cut-off Date Balance(1): | $56,000,000 | Size: | 924,956 SF | ||||
| % of Initial Pool Balance: | 9.99% | Cut-off Date Balance Per SF(1): | $100.55 | ||||
| Loan Purpose: | Refinance | Maturity Date Balance Per SF(1): | $92.41 | ||||
| Borrower Sponsor: | Robert Moser | Year Built/Renovated: | Various/Various | ||||
| Guarantor: | Robert Moser | Title Vesting: | Fee | ||||
| Mortgage Rate: | 4.7750% | Property Manager: | Self-managed | ||||
| Note Date: | July 21, 2020 | Current Occupancy (As of): | 85.3% (6/30/2020) | ||||
| Seasoning: | 0 months | YE 2019 Occupancy: | 83.5% | ||||
| Maturity Date: | August 6, 2030 | YE 2018 Occupancy: | 82.6% | ||||
| IO Period: | 60 months | YE 2017 Occupancy: | 78.4% | ||||
| Loan Term (Original): | 120 months | YE 2016 Occupancy: | NAV | ||||
| Amortization Term (Original): | 360 months | As-Is Appraised Value(4)(5): | $135,550,000 | ||||
| Loan Amortization Type: | Interest-only, Amortizing Balloon | As-Is Appraised Value Per SF(4)(5): | $146.55 | ||||
| Call Protection(2): | L(24),D(92),O(4) | As-Is Appraisal Valuation Date(6):
|
Various | ||||
| Lockbox Type: | Springing | Underwriting and Financial Information(5) | |||||
| Additional Debt(1): | Yes | TTM NOI (6/30/2020): | $7,227,989 | ||||
| Additional Debt Type (Balance)(1): | Pari Passu ($37,000,000); Future Mezzanine | YE 2019 NOI: | $7,167,737 | ||||
| YE 2018 NOI: | $6,538,790 | ||||||
| YE 2017 NOI: | $5,999,229 | ||||||
| U/W Revenues: | $10,877,012 | ||||||
| U/W Expenses: | $3,348,439 | ||||||
| U/W NOI: | $7,528,573 | ||||||
| U/W NCF: | $7,430,144 | ||||||
| Escrows and Reserves(3) | U/W DSCR based on NOI/NCF(1): | 1.29x / 1.27x | |||||
| Initial | Monthly | Cap | U/W Debt Yield based on NOI/NCF(1): | 8.1% / 8.0% | |||
| Taxes | $160,781 | $76,562 | NAP | U/W Debt Yield at Maturity based on NOI/NCF(1): | 8.8% / 8.7% | ||
| Insurance | $0 | $4,147 | NAP | Cut-off Date LTV Ratio(1)(4): | 68.6% | ||
| Replacement Reserve | $0 | $8,202 | NAP | LTV Ratio at Maturity(1)(4): | 63.1% | ||
| Deferred Maintenance | $82,148 | $0 | NAP | ||||
| Sources and Uses | ||||||||
| Sources | Uses | |||||||
| Original whole loan amount | $93,000,000 | 100.0% | Loan payoff | $68,693,549 | 73.9% | |||
| Upfront reserves | 242,928 | 0.3 | ||||||
| Closing costs | 2,471,535 | 2.7 | ||||||
| Return of equity | 21,591,988 | 23.2 | ||||||
| Total Sources | $93,000,000 | 100.0% | Total Uses | $93,000,000 | 100.0% | |||
| (1) | The PGH17 Self Storage Portfolio Mortgage Loan (as defined below) is part of the PGH17 Self Storage Portfolio Whole Loan (as defined below), which comprises three pari passu promissory notes with an aggregate original balance of $93,000,000. All statistical information related to the Cut-off Date Balance per SF, Maturity Date Balance per SF, U/W Debt Yield based on NOI/NCF, U/W Debt Yield at Maturity based on NOI/NCF, U/W DSCR based on NOI/NCF, Cut-off Date LTV Ratio and LTV Ratio at Maturity are based on the PGH17 Self Storage Portfolio Whole Loan. |
| (2) | Defeasance of the PGH17 Self Storage Portfolio Whole Loan is permitted at any time after the earlier of (i) two years from the closing date of the securitization that included the last note to be securitized or (ii) July 21, 2023. |
| (3) | See “Escrows” section. |
| (4) | The As-Is Appraised Value, As-Is Appraised Value Per SF, Cut-Off Date LTV Ratio and LTV Ratio at Maturity are based on the as-is bulk portfolio value of $135,550,000, which reflects a 13.9% premium over the sum of the “as-is” individual appraised values of $118,970,000. The Cut-off Date LTV Ratio and LTV Ratio at Maturity based on the sum of the “as-is” individual appraised values are 78.2% and 71.8%, respectively. |
| (5) | While the PGH17 Self Storage Portfolio Whole Loan was originated after the emergence of the novel coronavirus pandemic and the economic disruption resulting from measures to combat the pandemic, the pandemic is an evolving situation and could impact the PGH17 Self Storage Portfolio Whole Loan more severely than assumed in the underwriting of the PGH17 Self Storage Portfolio Whole Loan and could adversely affect the NOI, NCF and occupancy information, as well as the appraised value and the DSCR, LTV and Debt Yield metrics presented above. See “Risk Factors— Risks Related to Market Conditions and Other External Factors—Coronavirus Pandemic Has Adversely Affected the Global Economy and Will Likely Adversely Affect the Performance of the Mortgage Loans” in the Preliminary Prospectus. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
36
| Loan #1 | Cut-off Date Balance: | $56,000,000 | ||
| Self Storage – Self Storage | PGH17 Self Storage Portfolio | Cut-off Date LTV: | 68.6% | |
| Property Addresses - Various | U/W NCF DSCR: | 1.27x | ||
| U/W NOI Debt Yield: | 8.1% |
| (6) | The As-Is Appraisal Valuation Dates of the PGH17 Self Storage Portfolio Properties (as defined below) range from June 22, 2020 to June 24, 2020. |
The Mortgage Loan. The mortgage loan (the “PGH17 Self Storage Portfolio Mortgage Loan”) is part of a whole loan (the “PGH17 Self Storage Portfolio Whole Loan”) evidenced by three pari passu promissory notes, with an original principal balance of $93,000,000 and an outstanding principal balance as of the Cut-off Date of $93,000,000, secured by a first mortgage encumbering the fee interest in 17 self-storage properties located in Pennsylvania, New York and Maine (the “PGH17 Self Storage Portfolio Properties” or the “PGH17 Self Storage Portfolio”). The PGH17 Self Storage Portfolio Mortgage Loan is evidenced by the controlling Note A-1 with an original principal balance of $56,000,000. The non-controlling Note A-2 and Note A-3, with a total original principal balance of $37,000,000, are expected to be contributed to one or more future securitization trusts. The PGH17 Self Storage Portfolio Whole Loan will be serviced pursuant to the pooling and servicing agreement for the WFCM 2020-C57 securitization trust. See “Description of the Mortgage Pool—The Whole Loans—The Serviced Pari Passu Whole Loans” and “Pooling and Servicing Agreement” in the Preliminary Prospectus.
Note Summary
| Notes | Original Principal Balance | Cut-off
Date Balance |
Note Holder | Controlling Interest |
| A-1 | $56,000,000 | $56,000,000 | WFCM 2020-C57 | Yes |
| A-2 | $20,000,000 | $20,000,000 | LMF Commercial, LLC | No |
| A-3 | $17,000,000 | $17,000,000 | LMF Commercial, LLC | No |
| Total | $93,000,000 | $93,000,000 |
The Borrower and Borrower Sponsor. The borrowers are 17 Delaware limited liability companies (each individually, a “PGH17 Self Storage Portfolio Borrower” and collectively, the “PGH17 Self Storage Portfolio Borrowers”), each a single purpose entity with two independent directors. Legal counsel to the PGH17 Self Storage Portfolio Borrowers delivered a non-consolidation opinion in connection with the origination of the PGH17 Self Storage Portfolio Whole Loan. The borrower sponsor and non-recourse carveout guarantor of the PGH17 Self Storage Portfolio Whole Loan is Robert Moser.
Robert Moser has over 20 years of experience as an owner, operator and developer of commercial real estate. Robert Moser is the owner and principal of Prime Group Holdings, overseeing all operations, strategic initiatives and investment activities of the company, and is a member of the firm’s investment committee. Over the past few years, Prime Group Holdings has grown to become the largest private owner-operator of self-storage in the United States. Mr. Moser was a party to prior foreclosure litigation. See “Description of the Mortgage Pool—Litigation and Other Considerations” and “—Loan Purpose; Default History, Bankruptcy Issues and Other Proceedings” in the Preliminary Prospectus.
The Properties. The PGH17 Self Storage Portfolio is secured by a 17-property, 924,956 square-foot, 7,500 unit self storage portfolio located in Pennsylvania (nine properties, 65.1% of the square footage, 65.4% of units), New York (seven properties, 27.3% of the square footage, 27.0% of units) and Maine (one property, 7.6% of the square footage, 7.6% of units). The PGH17 Self Storage Portfolio Borrowers acquired the PGH17 Self Storage Portfolio Properties between 2013 and 2015. The PGH17 Self Storage Portfolio Properties were constructed from 1942 to 2011 and range in size from 13,100 square feet to 79,350 square feet and 115 units to 817 units, with no PGH17 Self Storage Portfolio Property comprising more than 8.6% of the total net rentable area based on square footage and 10.9% of the total storage units.
The PGH17 Self Storage Portfolio has a total of 7,500 self storage units, of which 1,522 are climate controlled. The non-climate controlled units range from 20 square feet to 2,500 square feet. The climate controlled units range from 16 square feet to 400 square feet. The PGH17 Self Storage Portfolio Properties also include 276 parking spaces, ten apartment units, six commercial units, two billboard leases, and one office unit, which generates additional income for the PGH17 Self Storage Portfolio. Based on self storage square feet, the PGH17 Self Storage Portfolio Properties were 85.3% occupied as of June 30, 2020.
Right of First Refusal. A cell tower tenant (SBA Towers IV, LLC) at the Capital Self Storage – East York property has a right of first refusal to purchase the Capital Self Storage – East York property pursuant to the terms of its lease. The right of first refusal has been waived with respect to the transfer of the Capital Self Storage – East York property in connection with a foreclosure of the mortgage, deed-in-lieu of foreclosure, appointment of a receiver, or other exercise of the lender’s remedies.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
37
| Loan #1 | Cut-off Date Balance: | $56,000,000 | ||
| Self Storage – Self Storage | PGH17 Self Storage Portfolio | Cut-off Date LTV: | 68.6% | |
| Property Addresses - Various | U/W NCF DSCR: | 1.27x | ||
| U/W NOI Debt Yield: | 8.1% |
The following table presents certain information regarding the PGH17 Self Storage Portfolio Properties:
| Property Name – Location | Allocated Cut-off Date Balance | % of Portfolio Cut-off Date Balance | Occupancy(1)(2) | Year Built/ Renovated | Net Rentable Area (SF)(1) | Appraised Value | UW NOI | % of UW NOI | Storage Units(1) |
Prime Storage – Malta/Saratoga Springs Malta, NY |
$9,320,000 | 10.0% | 83.3% | 2011/NAP | 77,375 | $11,890,000 | $746,073 | 9.9% | 817 |
Capital Self Storage – Mechanicsburg Hampden, PA |
$9,180,000 | 9.9% | 85.0% | 1999/NAP | 79,350 | $12,000,000 | $744,482 | 9.9% | 611 |
Capital Self Storage – Middletown Middletown, PA |
$8,610,000 | 9.3% | 87.2% | 2004/NAP | 74,225 | $10,210,000 | $697,701 | 9.3% | 606 |
Capital Self Storage – East York York, PA |
$7,640,000 | 8.2% | 89.4% | 1942/2008 | 64,140 | $10,000,000 | $619,847 | 8.2% | 541 |
Capital Self Storage – Harrisburg Arsenal Harrisburg, PA |
$7,330,000 | 7.9% | 87.2% | 2006/NAP | 59,475 | $9,300,000 | $595,047 | 7.9% | 524 |
Eliot Rent A Space & Self Storage Eliot, ME |
$6,760,000 | 7.3% | 81.6% | 1986/NAP | 70,450 | $7,960,000 | $545,004 | 7.2% | 568 |
Capital Self Storage - Enola Enola, PA |
$6,760,000 | 7.3% | 86.1% | 1989/NAP | 60,309 | $8,730,000 | $547,648 | 7.3% | 521 |
Capital Self Storage – Harrisburg Derry Harrisburg, PA |
$6,320,000 | 6.8% | 88.5% | 1998/NAP | 55,225 | $8,130,000 | $512,891 | 6.8% | 482 |
Capital Self Storage – West York York, PA |
$5,950,000 | 6.4% | 83.1% | 2001/NAP | 71,750 | $7,700,000 | $484,368 | 6.4% | 603 |
Capital Self Storage - Dover Dover, PA |
$5,830,000 | 6.3% | 82.3% | 1986/NAP | 77,625 | $7,080,000 | $475,670 | 6.3% | 567 |
A Space Place Self Storage Medford, NY |
$5,220,000 | 5.6% | 79.8% | 1989/NAP | 37,170 | $7,570,000 | $420,853 | 5.6% | 365 |
Capital Self Storage – Hanover Hanover, PA |
$4,980,000 | 5.4% | 87.0% | 2001/NAP | 60,300 | $6,320,000 | $403,944 | 5.4% | 453 |
Prime Storage – Glens Falls Glens Falls, NY |
$3,050,000 | 3.3% | 86.0% | 2002/NAP | 47,600 | $3,840,000 | $245,373 | 3.3% | 297 |
Affordable Storage – Wilton Wilton, NY |
$1,850,000 | 2.0% | 87.0% | 2004/NAP | 28,400 | $2,520,000 | $149,583 | 2.0% | 126 |
Prime Storage – Latham New Loudon Road Cohoes, NY |
$1,740,000 | 1.9% | 76.4% | 1997/NAP | 22,500 | $2,360,000 | $140,089 | 1.9% | 176 |
Rotterdam Self Storage Rotterdam, NY |
$1,270,000 | 1.4% | 92.0% | 1980/NAP | 25,962 | $1,830,000 | $102,875 | 1.4% | 115 |
Affordable Storage – Saratoga Wilton, NY |
$1,190,000 | 1.3% | 92.4% | 1996/NAP | 13,100 | $1,530,000 | $97,123 | 1.3% | 128 |
| Total/Weighted Average | $93,000,000 | 100.0% | 85.3% | 924,956 | $135,550,000(3) | $7,528,571 | 100.0% | 7,500 |
| (1) | Based on the underwritten rent roll. |
| (2) | Occupancy is based on total square feet at each PGH17 Self Storage Portfolio Property. |
| (3) | The total Appraised Value is based on the “as-is” bulk portfolio value, which reflects a 13.9% premium over the sum of the “as-is” appraised values of the individual properties. The sum of the appraised values of the individual properties is $118,970,000, resulting in a Cut-off Date LTV Ratio and LTV Ratio at Maturity of 78.2% and 71.8%, respectively. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
38
| Loan #1 | Cut-off Date Balance: | $56,000,000 | ||
| Self Storage – Self Storage | PGH17 Self Storage Portfolio | Cut-off Date LTV: | 68.6% | |
| Property Addresses - Various | U/W NCF DSCR: | 1.27x | ||
| U/W NOI Debt Yield: | 8.1% |
The following table presents certain information relating to the unit mix at the PGH17 Self Storage Portfolio Properties:
| Unit Type | Net Rentable Area (SF) | % of Net Rentable Area (SF) | Net Rentable Area (Units) | % of Net Rentable Area (Units) | Occupancy (%)(1) | Annual U/W Base Rent | % of Annual U/W Base Rent |
| Non-Climate Controlled Storage Units | 752,227 | 81.3% | 5,978 | 76.7% | 85.9% | $7,430,358 | 75.6% |
| Climate Controlled Storage Units | 151,779 | 16.4% | 1,522 | 19.5% | 83.4% | $2,067,106 | 21.0% |
| Apartment Units | 12,400 | 1.3% | 10 | 0.1% | 60.0% | $63,300 | 0.6% |
| Commercial Units | 8,400 | 0.9% | 6 | 0.1% | 100.0% | $73,105 | 0.7% |
| Office Units | 150 | 0.0% | 1 | 0.0% | 0.0% | $0 | 0.0% |
| Parking Units | N/A | N/A | 276 | 3.5% | 86.6% | $194,496 | 2.0% |
| Billboard | N/A | N/A | 2 | 0.0% | 100.0% | $4,516 | 0.0% |
| Total/Weighted Average | 924,956 | 100.0% | 7,795 | 100.0% | 85.4% | $9,832,881 | 100.0% |
| (1) | Occupancy (%) is based on the net rentable units at each PGH17 Self Storage Portfolio Property. The weighted average occupancy at the PGH17 Self Storage Portfolio Properties, based on net rentable square footage, is 85.3% |
The following table presents historical occupancy percentages at the PGH17 Self Storage Portfolio:
Historical Occupancy
| 12/31/2017(1) | 12/31/2018(1) | 12/31/2019(1) | 6/30/2020(2) | ||||
| 78.4% | 82.6% | 83.5% | 85.3% | ||||
(1) Information provided by the PGH17 Self Storage Portfolio Borrowers. (2) Information obtained from the underwritten rent roll. | |||||||
COVID-19 Update. As of July 28, 2020, the PGH17 Self Storage Portfolio Properties are open and operating. Tenant due dates are based on the date in the month of their start date (which in most cases is not the 1st of month), so collections are not tracked on a calendar month basis. As of the date hereof, 4.0% of monthly rents are 31-60 days delinquent, and 2.7% of monthly rents are 61-90 days delinquent. As of the date hereof, the PGH17 Self Storage Portfolio Borrowers have not requested any modification or forbearance to the PGH17 Self Storage Portfolio Mortgage Loan terms. The first debt service payment on the PGH17 Self Storage Portfolio Mortgage Loan is due in September 2020.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
39
| Loan #1 | Cut-off Date Balance: | $56,000,000 | ||
| Self Storage – Self Storage | PGH17 Self Storage Portfolio | Cut-off Date LTV: | 68.6% | |
| Property Addresses - Various | U/W NCF DSCR: | 1.27x | ||
| U/W NOI Debt Yield: | 8.1% |
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 PGH17 Self Storage Portfolio Properties:
Cash Flow Analysis
| 2017 | 2018 | 2019 | TTM 6/30/2020 | U/W | %(1) | U/W $ per SF | |||||||||
| Base Rent | $8,433,964 | $9,101,192 | $9,527,227 | $9,501,923 | $9,832,881 | 78.1% | $10.63 | ||||||||
| Grossed Up Vacant Space | 0 |
0 |
0 |
0 |
1,706,880 |
13.6 |
1.85 |
||||||||
| Gross Potential Rent | $8,433,964 | $9,101,192 | $9,527,227 | $9,501,923 | $11,539,761 | 91.7% | $12.48 | ||||||||
| Other Income(2) | 559,546 |
749,099 |
963,976 |
1,044,132 |
1,044,132 |
8.3 |
1.13 |
||||||||
| Net Rental Income | $8,993,509 | $9,850,292 | $10,491,203 | $10,546,055 | $12,583,892 | 100.0% | $13.60 | ||||||||
| (Vacancy & Credit Loss) | 0 |
0 |
0 |
0 |
(1,706,880)(3) |
(14.8) |
(1.85) |
||||||||
| Effective Gross Income | $8,993,509 | $9,850,292 | $10,491,203 | $10,546,055 | $10,877,012 | 86.4% | $11.76 | ||||||||
| Real Estate Taxes | 868,480 | 888,659 | 890,818 | 910,443 | 918,746 | 8.4 | 0.99 | ||||||||
| Insurance | 118,541 | 90,704 | 70,067 | 62,458 | 58,569 | 0.5 | 0.06 | ||||||||
| Management Fee | 269,805 | 295,509 | 314,736 | 316,382 | 326,310 | 3.0 | 0.35 | ||||||||
| Other Operating Expenses | 1,737,454 |
2,036,630 |
2,047,844 |
2,028,784 |
2,044,813 |
18.8 |
2.21 |
||||||||
| Total Operating Expenses | $2,994,280 | $3,311,501 | $3,323,465 | $3,318,067 | $3,348,439 | 30.8% | $3.62 | ||||||||
| Net Operating Income(4) | $5,999,229 | $6,538,790 | $7,167,737 | $7,227,989 | $7,528,573 | 69.2% | $8.14 | ||||||||
| Replacement Reserves | 0 | 0 | 0 | 0 | 98,429 | 0.9 | 0.11 | ||||||||
| TI/LC | 0 |
0 |
0 |
0 |
0 |
0.0 |
0.00 |
||||||||
| Net Cash Flow | $5,999,229 | $6,538,790 | $7,167,737 | $7,227,989 | $7,430,144 | 68.3% | $8.03 | ||||||||
| NOI DSCR(5) | 1.03x | 1.12x | 1.23x | 1.24x | 1.29x | ||||||||||
| NCF DSCR(5) | 1.03x | 1.12x | 1.23x | 1.24x | 1.27x | ||||||||||
| NOI Debt Yield(5) | 6.5% | 7.0% | 7.7% | 7.8% | 8.1% | ||||||||||
| NCF Debt Yield(5) | 6.5% | 7.0% | 7.7% | 7.8% | 8.0% |
| (1) | Represents (i) percent of Net Rental Income for all revenue fields, (ii) percent of Gross Potential Rent for Vacancy & Credit Loss and (iii) percent of Effective Gross Income for all other fields. |
| (2) | Other Income includes insurance income, late fees, application fees, retail revenue and other miscellaneous income. |
| (3) | The underwritten economic vacancy is 14.8%. The PGH17 Self Storage Portfolio Properties were 85.4% occupied as of June 30, 2020 based on total units. |
| (4) | 2019 Net Operating Income increased compared to 2017 Net Operating Income mainly due to increases in occupancy and rent charges of the PGH17 Self Storage Portfolio Properties. |
| (5) | The debt service coverage ratios and debt yields are based on the PGH17 Self Storage Whole Loan. |
Appraisal. As of the appraisal valuation dates from June 22, 2020 to June 24, 2020, the PGH17 Self Storage Portfolio Properties had an “as-is” bulk value of $135,550,000, which reflects a 13.9% premium over the sum of the “as-is” appraised values of the individual properties. The sum of the appraised values of the individual properties is $118,970,000, resulting in a Cut-off Date LTV Ratio and LTV Ratio at Maturity of 78.2% and 71.8%, respectively.
Environmental Matters. According to Phase I environmental site assessments dated July 6, 2020, there was no evidence of any recognized environmental conditions at any of the PGH17 Self Storage Portfolio Properties.
Market Overview. The PGH17 Self Storage Portfolio is located across 14 cities in Pennsylvania, New York and Maine. The PGH17 Self Storage Portfolio Properties are located across six metropolitan statistical areas (“MSAs”) across the northeast in Harrisburg-Carlisle, PA MSA (five properties, 36.6% of units, 41.1% of allocated cut-off balance), York-Hanover, PA MSA (four properties, 28.9% of units, 26.2% of cut-off balance), Albany-Schenectady-Troy, NY MSA (five properties, 18.2% of units, 16.5% of cut-off balance), Portland-South Portland, ME MSA (one property, 7.6% of units, 7.3% of cut-off balance), New York-Newark-Jersey City, NY-NJ-PA MSA (one property, 4.9% of units, 5.6% of cut-off balance) and Glen Falls, NY MSA (one property, 4.0% of units, 3.3% of cut-off balance).
According to a third-party market research report, the Maine property is located in the Northeast Region within the New England Division, with average monthly rents of $123.61 and $154.72 per unit for 10x10 non-climate controlled and climate controlled units, respectively. As of the end of the second quarter of 2019, the New England Division region reported a vacancy rate of 10.7% for self storage properties.
According to the third-party market reports, the Pennsylvania and New York properties are located in the Northeast region within the Middle Atlantic Division, with average monthly rents of $145.75 and $174.05 per unit for 10x10 foot non-climate controlled and climate controlled units, respectively. As of the end of the second quarter of 2019, the Middle Atlantic Division reported a vacancy rate of 9.1% for self storage properties.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
40
| Loan #1 | Cut-off Date Balance: | $56,000,000 | ||
| Self Storage – Self Storage | PGH17 Self Storage Portfolio | Cut-off Date LTV: | 68.6% | |
| Property Addresses - Various | U/W NCF DSCR: | 1.27x | ||
| U/W NOI Debt Yield: | 8.1% |
The following table represents certain information relating to the MSAs for the PGH17 Self Storage Portfolio Properties:
| MSA | No. of Props | Net Rentable Area (SF)(1) | U/W NCF | % of U/W NCF | Traffic Count(2) | 2019 Population 5-Mile Radius(3) |
Allocated Cut-off Date Balance(4) | Appraised Value(5) |
| Harrisburg-Carlisle, PA | 5 | 328,584 | $3,053,155 | 41.1% | 10,005 | 139,030 | $38,200,000 | $48,370,000 |
| York-Hanover, PA | 4 | 273,815 | $1,948,156 | 26.2% | 12,492 | 104,093 | $24,400,000 | $31,100,000 |
| Albany-Schenectady-Troy, NY | 5 | 167,337 | $1,228,897 | 16.5% | 9,927 | 48,815 | $15,370,000 | $20,130,000 |
| Portland-South Portland, ME | 1 | 70,450 | $540,072 | 7.3% | 16,662 | 39,355 | $6,760,000 | $7,960,000 |
| New York-Newark-Jersey City, NY-NJ-PA | 1 | 37,170 | $416,393 | 5.6% | 16,989 | 173,065 | $5,220,000 | $7,570,000 |
| Glen Falls, NY | 1 | 47,600 | $243,469 | 3.3% | 22,421 | 67,402 | $3,050,000 | $3,840,000 |
| Total/Weighted Average | 17 | 924,956 | $7,430,142 | 100.0% | 11,928 | 107,270 | $93,000,000 | $135,550,000 |
| (1) | Net Rentable Area (SF) obtained from the underwritten rent roll. |
| (2) | Traffic Count per day obtained from third party market research reports. |
| (3) | 2019 Population 5-Mile Radius obtained from appraisals. |
| (4) | Allocated Cut-off Date Balance is based on the PGH17 Self Storage Portfolio Whole Loan. |
| (5) | The aggregate Appraised Value for each MSA represents the “as-is” appraised value on an individual basis. Total Appraised Value is based on the as-is” bulk portfolio value of $135,550,000, which reflects a 13.9% premium over the sum of the “as-is” appraised values of the individual properties. |
Escrows.
Real Estate Taxes – The PGH17 Self Storage Portfolio Whole Loan documents require an upfront real estate tax reserve of $160,781 and ongoing monthly real estate tax reserves in the amount equal to one-twelfth of the real estate taxes that the lender estimates will be necessary to pay taxes over the then succeeding twelve months (initially $76,562).
Insurance – The PGH17 Self Storage Portfolio Whole Loan documents require an ongoing monthly insurance premium reserve in the amount equal to one-twelfth of the insurance premiums that the lender estimates will be necessary to pay insurance premiums over the then succeeding twelve months (initially $4,147).
Replacement Reserves – The PGH17 Self Storage Whole Loan documents require ongoing monthly replacement reserves of $8,202.
Deferred Maintenance – The PGH17 Self Storage Whole Loan documents require an upfront deferred maintenance reserve of $82,148.
Lockbox and Cash Management. The PGH17 Self Storage Portfolio Whole Loan requires a springing lockbox and springing cash management. Upon the occurrence and continuance of a Cash Management Trigger Event (as defined below), (i) the PGH17 Self Storage Portfolio Borrowers are required to establish a lender-controlled lockbox account and, within ten calendar days of the Cash Management Trigger Event, to instruct non-storage tenants and storage tenants under a Major Lease (as defined in the PGH17 Self Storage Portfolio Whole Loan documents) to deposit rents into such lockbox account, (ii) with respect to other self storage tenants, the PGH17 Self Storage Portfolio Borrowers are required, within five business days, to deliver credit card direction letters instructing the credit card companies to pay amounts directly into the lockbox account, and (iii) with respect to any other amounts collected, the PGH17 Self Storage Portfolio Borrowers or the property managers are required to deposit any such amounts received into the lockbox account within two business day of receipt. Pursuant to the PGH17 Self Storage Portfolio Whole Loan documents, all excess funds on deposit in the cash management account (after payment of monthly amounts due under the PGH17 Self Storage Portfolio Whole Loan documents) are required to be applied as follows (a) if a Cash Sweep Event (as defined below) is not in effect, to the PGH17 Self Storage Portfolio Borrowers; and (b) if a Cash Sweep Event is in effect, to an excess cash flow account controlled by the lender, to be held by the lender as additional security for the PGH17 Self Storage Portfolio Whole Loan.
A “Cash Management Trigger Event” will commence upon the occurrence of the following:
| (i) | an event of default; |
| (ii) | the PGH17 Self Storage Portfolio Borrower’s second late debt service payment within a 12-month period; |
| (iii) | a bankruptcy action of the PGH17 Self Storage Portfolio Borrowers, guarantor or property managers; |
| (iv) | a Cash Management DSCR Trigger Event (as defined below); or |
| (v) | a mezzanine borrower entering into a permitted subordinate mezzanine loan in accordance with the PGH17 Self Storage Portfolio Whole Loan documents. |
A Cash Management Trigger Event will end upon the occurrence of:
| ● | with regard to clause (i) above, the cure of such event of default has been accepted, or the event of default has been waived by the lender; |
| ● | with regard to clause (ii) above, when debt service payments have been paid on time for 12 consecutive months; |
| ● | with regard to clause (iii) above, when such bankruptcy action petition has been discharged, stayed, or dismissed within 30 days of such filing among other conditions with respect to the PGH17 Self Storage Portfolio Borrowers or guarantor, and within |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
41
| Loan #1 | Cut-off Date Balance: | $56,000,000 | ||
| Self Storage – Self Storage | PGH17 Self Storage Portfolio | Cut-off Date LTV: | 68.6% | |
| Property Addresses - Various | U/W NCF DSCR: | 1.27x | ||
| U/W NOI Debt Yield: | 8.1% |
120 days with respect to the property manager or in the case of the property manager, the PGH17 Self Storage Portfolio Borrowers have replaced the property manager with a qualified manager acceptable to the lender; and
| ● | with regard to clause (iv) above, the date the amortizing debt service coverage ratio based on the trailing 12-month period immediately preceding the date of such determination is greater than 1.25x for two consecutive quarters. |
A “Cash Management DSCR Trigger Event” will occur on any day the amortizing debt service coverage ratio, based on the trailing 12-month period immediately preceding the date of determination, is less than 1.20x for the PGH17 Self Storage Portfolio Whole Loan.
A “Cash Sweep Event” will commence upon the occurrence of the following:
| (i) | an event of default; |
| (ii) | a bankruptcy action of the PGH17 Self Storage Portfolio Borrowers, guarantor or property manager; or |
| (iii) | a Cash Sweep DSCR Trigger Event (as defined below). |
A Cash Sweep Event will end upon the occurrence of:
| ● | with regard to clause (i) above, the cure of such event of default has been accepted, or the event of default has been waived by the lender; |
| ● | with regard to clause (ii) above, when such bankruptcy action petition has been discharged, stayed, or dismissed within 30 days of such filing among other conditions with respect to the PGH17 Self Storage Portfolio Borrowers or guarantor, or within 120 days with respect to the property manager or in the case of the property manager, the PGH17 Self Storage Portfolio Borrowers have replaced the property manager with a qualified manager acceptable to the lender; and |
| ● | with regard to clause (iii) above, the date the amortizing debt service coverage ratio based on the trailing 12-month period immediately preceding the date of such determination is greater than 1.20x for two consecutive quarters. |
A “Cash Sweep DSCR Trigger Event” will occur on any day the amortizing debt service coverage ratio, based on the trailing 12-month period immediately preceding the date of determination, is less than 1.15x for the PGH17 Self Storage Portfolio Whole Loan.
Property Management. The PGH17 Self Storage Portfolio Properties are managed by Prime Group Holdings LLC, an affiliate of the PGH17 Self Storage Portfolio Borrowers.
Partial Release. After the lockout period, the PGH17 Self Storage Portfolio Borrower may obtain the release of an individual property provided that, among other conditions, (i) the PGH17 Self Storage Portfolio Whole Loan is defeased in an amount equal to 115% of the allocated loan amount for the related PGH17 Self Storage Portfolio Property being released; (ii) the debt service coverage ratio for the remaining properties after such release is not less than the greater of (a) 1.27x and (b) the debt service coverage ratio for the PGH17 Self Storage Portfolio based on the trailing 12 months immediately before the release; and (iii) the loan-to-value ratio after such release is less than or equal to the lesser of (a) 68.6% and (b) the loan-to-value ratio of the PGH17 Self Storage Portfolio Whole Loan immediately preceding the release of the property.
Subordinate and Mezzanine Indebtedness. Provided no event of default has occurred and is continuing, the PGH17 Self Storage Portfolio Whole Loan documents permit an affiliate of the PGH17 Self Storage Portfolio Borrowers to incur future mezzanine debt subject to certain conditions, including (i) the execution of an intercreditor agreement in form and substance reasonably acceptable to the lender; (ii) based on the PGH17 Self Storage Portfolio Whole Loan and the mezzanine loan, (a) the combined loan-to-value ratio is not greater than 68.6% and (b) the debt service coverage ratio is not less than 1.27x; and (iii) receipt of rating agency confirmation from each of Fitch, KBRA and Moody’s that the mezzanine financing will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the WFCM 2020-C57 certificates.
Ground Lease. None.
Terrorism Insurance. The PGH17 Self Storage Portfolio Whole Loan documents require that the “all risk” insurance policy required to be maintained by the PGH17 Self Storage Portfolio Borrowers provides coverage for terrorism in an amount equal to the full replacement cost of the PGH17 Self Storage Portfolio Properties, as well as business interruption insurance covering no less than the 12-month period following the occurrence of a casualty event, together with a 12-month extended period of indemnity.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
43
| Loan #2 | Cut-off Date Balance: | $46,000,000 | ||
| Industrial – Various | Phoenix Industrial Portfolio IV | Cut-off Date LTV: | 72.9% | |
| Property Addresses – Various | U/W NCF DSCR: | 1.66x | ||
| U/W NOI Debt Yield: | 11.3% |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
44
| Loan #2 | Cut-off Date Balance: | $46,000,000 | ||
| Industrial – Various | Phoenix Industrial Portfolio IV | Cut-off Date LTV: | 72.9% | |
| Property Addresses – Various | U/W NCF DSCR: | 1.66x | ||
| U/W NOI Debt Yield: | 11.3% |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
45
| No. 2 – Phoenix Industrial Portfolio IV | |||||||
| Mortgage Loan Information | Mortgaged Property Information | ||||||
| Mortgage Loan Seller: | UBS AG | Single Asset/Portfolio: | Portfolio | ||||
Credit Assessment (Fitch/KBRA/Moody’s): |
NR/NR/NR | Property Type – Subtype: | Industrial – Various | ||||
| Original Principal Balance: | $46,000,000 | Location: | Various | ||||
| Cut-off Date Balance: | $46,000,000 | Size: | 2,125,525 SF | ||||
| % of Initial Pool Balance: | 8.2% | Cut-off Date Balance Per SF: | $21.64 | ||||
| Loan Purpose: | Refinance | Maturity Date Balance Per SF: | $18.65 | ||||
| Borrower Sponsor: | Phoenix Investors | Year Built/Renovated: | Various | ||||
| Guarantors: | Irrevocable Children's Trust dated 7/22/91; Irrevocable Children's Trust No. 2 dated 7/22/91 | Title Vesting: | Fee | ||||
| Mortgage Rate: | 3.8395% | Property Manager: | Self-managed | ||||
| Note Date: | February 7, 2020 | Current Occupancy (As of)(2): | 81.8% (Various) | ||||
| Seasoning: | 5 months | YE 2019 Occupancy: | 75.5% | ||||
| Maturity Date: | March 6, 2030 | YE 2018 Occupancy: | 72.2% | ||||
| IO Period: | 36 months | YE 2017 Occupancy: | 54.9% | ||||
| Loan Term (Original): | 120 months | YE 2016 Occupancy(3): | 22.1% | ||||
| Amortization Term (Original): | 360 months | Appraised Value(4)(5): | $57,600,000 | ||||
| Loan Amortization Type: | Interest-only, Amortizing Balloon | Appraised Value Per SF(4): | $27.10 | ||||
| Call Protection: | L(29),D(85),O(6) | Appraisal Valuation Date: | Various | ||||
| Lockbox Type: | Hard/Springing Cash Management | Underwriting and Financial Information | |||||
| Additional Debt: | None | TTM NOI (6/30/2020)(6): | $4,307,541 | ||||
| Additional Debt Type (Balance): | NAP | YE 2019 NOI: | $3,491,971 | ||||
| YE 2018 NOI(3): | $2,048,298 | ||||||
| Escrows and Reserves(1) | YE 2017 NOI: | $1,258,145 | |||||
| Initial | Monthly | Cap | U/W Revenues(7): | $6,750,090 | |||
| Taxes | $130,669 | $31,730 | NAP | U/W Expenses: | $2,021,955 | ||
| Insurance | $224,243 | $20,269 | NAP | U/W NOI(6)(7): | $4,728,135 | ||
| Replacement Reserve | $0 | $17,713 | $425,000 | U/W NCF(7): | $4,283,449 | ||
| TI/LC Reserve | $1,000,000 | Springing | $1,000,000 | U/W DSCR based on NOI/NCF(7): | 1.83x / 1.66x | ||
| Immediate Repairs | $174,750 | $0 | NAP | U/W Debt Yield based on NOI/NCF(7)(8): | 11.3% / 10.2% | ||
| Achievement Reserve | $4,000,000 | $0 | NAP | U/W Debt Yield at Maturity based on NOI/NCF(7)(8): | 13.3% / 12.0% | ||
| Environmental Reserve | $30,624 | $0 | NAP | Cut-off Date LTV Ratio(4)(5)(8): | 72.9% | ||
| Pitney Bowes Work Reserve | $10,000 | $0 | NAP | LTV Ratio at Maturity(4)(5)(8): | 61.9% | ||
| Sources and Uses | ||||||||
| Sources | Uses | |||||||
| Original loan amount | $46,000,000 | 100.0% | Loan payoff | $35,255,376 | 76.6% | |||
| Achievement reserve | 4,000,000 | 8.7 | ||||||
| Partnership buyout | 2,800,000 | 6.1 | ||||||
| Closing costs | 638,494 | 1.4 | ||||||
| Upfront reserves | 1,570,286 | 3.4 | ||||||
| Return of equity | 1,735,844 | 3.8 | ||||||
| Total Sources | $46,000,000 | 100.0% | Total Uses | $46,000,000 | 100.0% | |||
| (1) | See “Escrows” below for further discussion of reserve requirements, including the Achievement Reserve (as defined below). |
| (2) | Pursuant to two lease amendments for Cupertino Electric, Inc. and General Dynamics, which are out for execution as of August 2020, Cupertino Electric, Inc. is expected to expand into an additional 312,317 square feet of space at the Edgerton property, and General Dynamics is expected to expand into an additional 8,971 square feet of space at the Pawcatuck property. Including these lease amendments, the Phoenix Industrial Portfolio IV Properties will be 96.4% leased. We cannot assure you that such lease amendments will be signed. |
| (3) | The borrower sponsor acquired the Phoenix Industrial Portfolio IV Properties (as defined below) between 2014 and 2018, including acquisition of the Edgerton property in 2016 and the Delaware and Pawcatuck properties in 2018. Accordingly, YE 2016 Occupancy for the Edgerton, Delaware and Pawcatuck properties and YE 2018 NOI for the Delaware and Pawcatuck properties are not available. |
| (4) | The appraised value was determined prior to the emergence of the novel coronavirus pandemic, and the economic disruption resulting from measures to combat the pandemic, and all LTV metrics were calculated based on such prior information. See “Risk Factors—Risks Related to Market Conditions and Other External Factors—The Coronavirus Pandemic Has Adversely Affected the Global Economy and Will Likely Adversely Affect the Performance of the Mortgage Loans” in the Preliminary Prospectus. |
| (5) | The Cut-off Date LTV Ratio and LTV Ratio at Maturity above are calculated based on the Phoenix Industrial Portfolio IV Mortgage Loan (as defined below) net of the $4,000,000 achievement reserve and the aggregate “as is” appraised value. The LTV Ratio at Maturity based on the full outstanding principal balance of the Phoenix Industrial Portfolio IV Mortgage Loan at maturity and the aggregate stabilized appraised value is 62.9%. The aggregate “as stabilized” appraisal value, which assumes that the Edgerton property reaches a stabilized occupancy of 90.0% as of February 1, |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
46
| Loan #2 | Cut-off Date Balance: | $46,000,000 | ||
| Industrial – Various | Phoenix Industrial Portfolio IV | Cut-off Date LTV: | 72.9% | |
| Property Addresses – Various | U/W NCF DSCR: | 1.66x | ||
| U/W NOI Debt Yield: | 11.3% |
| 2024, is $63,000,000. The Cut-off Date LTV Ratio based on the original principal balance of the Phoenix Industrial Portfolio IV Mortgage Loan of $46.0 million net of the $4.0 million Achievement Reserve and the stabilized appraised value is 66.7%. The Cut-off Date LTV Ratio based on the aggregate “as stabilized” appraised values of $63.0 million and the original principal balance of the Phoenix Industrial Portfolio IV Mortgage Loan is 73.0%. The LTV Ratio at Maturity based on the aggregate “as-is” appraised values of $57.6 million and the principal balance of the Phoenix Industrial Portfolio IV Mortgage Loan as of the maturity date is 68.8%. |
| (6) | The increase in U/W NOI from TTM NOI is primarily attributed to (i) rent steps of $81,094 through August 31, 2021 and (ii) recent leasing associated with Walgreens Co. totalling $229,328. |
| (7) | Represents In-Place U/W. See “Cash Flow Analysis” below for further discussion of underwritten rents. |
| (8) | The U/W Debt Yield based on NOI/NCF, U/W Debt Yield at Maturity based on NOI/NCF, Cut-off Date LTV Ratio and LTV Ratio at Maturity presented above are based on the original principal balance of the Phoenix Industrial Portfolio IV Mortgage Loan of $46,000,000 net of the $4,000,000 Achievement Reserve. The U/W Debt Yield based on NOI/NCF, U/W Debt Yield at Maturity based on NOI/NCF, Cut-off Date LTV Ratio and LTV Ratio at Maturity, based on the Phoenix Industrial Portfolio IV Mortgage Loan (without netting the Achievement Reserve), are 10.3% / 9.3%, 11.9% / 10.8%, 79.9% and 68.8%, respectively. |
The Mortgage Loan. The mortgage loan (the “Phoenix Industrial Portfolio IV Mortgage Loan”) is evidenced by six promissory notes secured by a first priority fee mortgage encumbering a 2,125,525 square foot portfolio of five industrial properties located in Wisconsin, Ohio, Connecticut and Illinois (each, a “Phoenix Industrial Portfolio IV Property”, and collectively, the “Phoenix Industrial Portfolio IV Properties”).
The Borrowers and Borrower Sponsor. The borrowers are Phoenix Edgerton Industrial, LLC, Phoenix Herrin Industrial Investors LLC, Phoenix Pawcatuck LLC, Phoenix Delaware Ohio LLC and Phoenix Menasha Industrial Investors LLC (collectively, the “Phoenix Industrial Portfolio IV Borrowers”), each a Delaware limited liability company and single purpose entity with one independent director. Each Phoenix Industrial Portfolio IV Borrower owns one individual Phoenix Industrial Portfolio IV Property. Legal counsel to the Phoenix Industrial Portfolio IV Borrowers delivered a non-consolidation opinion in connection with the origination of the Phoenix Industrial Portfolio IV Mortgage Loan. The non-recourse carveout guarantors of the Phoenix Industrial Portfolio IV Mortgage Loan are Irrevocable Children's Trust dated 7/22/91 and Irrevocable Children's Trust No. 2 dated 7/22/91. The borrower sponsor of the Phoenix Industrial Portfolio IV Mortgage Loan is Phoenix Investors, which is the affiliated management company for the guarantors’ investments. The Phoenix Industrial Portfolio IV Borrowers are affiliated with the borrower under the mortgage loan identified on Annex A-1 to the Preliminary Prospectus as Chesapeake.
Phoenix Investors is a national commercial real estate firm based in Milwaukee, Wisconsin that redevelops former manufacturing facilities throughout the United States. Phoenix Investors’ affiliated companies hold interests in approximately 27 million square feet of industrial, retail, office and single tenant net-leased properties across 25 states. Phoenix Investors engages in the renovation and repositioning of large, former single tenant industrial facilities throughout the United States that were previously owned by corporate entities, real estate investment trusts or financial institutions.
The Properties. The Phoenix Industrial Portfolio IV Mortgage Loan is secured by five industrial properties totaling 2,125,525 square feet located in Wisconsin (42.8% of NRA), Illinois (25.7% of NRA), Ohio (21.2% of NRA) and Connecticut (10.2% of NRA). As of June 1, 2020, the Phoenix Industrial Portfolio IV Properties were 81.8% occupied by 20 tenants. The borrower sponsor acquired the Phoenix Industrial Portfolio IV Properties between 2014 and 2018 for an aggregate purchase price of approximately $19.3 million. Since acquisition, the borrower sponsor has invested approximately $16.6 million in capital improvements and other/soft costs at the Phoenix Industrial Portfolio IV Properties. Descriptions of each of the five Phoenix Industrial Portfolio IV Properties follow.
Edgerton (39.8% of NRA; 45.2% of Allocated Loan Amount (“ALA”)): The Edgerton property is an 845,506 square foot industrial warehouse building located in Edgerton, Wisconsin. The improvements were constructed in 1960, were renovated in 2018 and include approximately 2.0% office space. The Edgerton property is situated on a 120.6-acre site with 1,500 surface parking spaces (1.8 per 1,000 SF). The Edgerton property has 25 loading docks, four loading doors, column spacing of 50 feet by 60 feet, and clear heights ranging from 17 feet to 31 feet. As of June 1, 2020, the Edgerton property was 62.4% leased by three tenants. The largest tenant, Cupertino Electric, Inc. (57.2% of property NRA and 89.7% of property underwritten base rent based on its current lease), has been at the Edgerton property since 2017 and signed an agreement in February 2018 to expand its space from 126,470 square feet to 380,543 square feet and again in September 2018 to expand its space from 380,543 square feet to 483,466 square feet through September 2022. Cupertino Electric, Inc. has a lease amendment, which is out for execution, to expand its space from the existing 483,466 square feet to 795,783 square feet, and extend its lease to December 2027, taking over the current month-to-month leased premises of J.P. Cullen & Sons, Inc. IKI Manufacturing will maintain its current leased space (34,397 square feet). If the Cupertino Electric, Inc. lease amendment is executed, the Edgerton property will be 98.2% leased by two tenants. We cannot assure you that such lease amendment will be signed. The lease amendment is expected to provide Cupertino Electric, Inc. with one remaining termination option effective as of January 1, 2026 or January 1, 2027, with 180 days’ notice and payment of a termination fee equal to the sum of four months of base rent, additional rent, insurance procured by the landlord, and common area maintenance as further detailed in the Cupertino Electric, Inc. lease amendment. Since acquisition of the Edgerton property in December 2016, the borrower sponsor has invested approximately $8.3 million in capital improvements and other/soft costs at the Edgerton property.
Delaware (21.2% of NRA; 16.8% of ALA): The Delaware property is a 450,708 square foot industrial warehouse building located in Delaware, Ohio. The improvements were constructed in 1958 and 1960, renovated in 2018 and include approximately 2.5% office space. The Delaware property is situated on a 19.4-acre site with 100 surface parking spaces (0.2 per 1,000 SF). The Delaware property has 22 loading docks, five loading doors, column spacing of 25 feet by 50 feet, and clear heights ranging from 18 feet to 26.5 feet. As of August 6, 2020, the Delaware property was 100.0% leased by MWD Logistics, Inc. MWD Logistics, Inc. has been at the Delaware property since 2012 pursuant to a lease with an expiration date of October 31, 2023. MWD Logistics, Inc. pays an
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
47
| Loan #2 | Cut-off Date Balance: | $46,000,000 | ||
| Industrial – Various | Phoenix Industrial Portfolio IV | Cut-off Date LTV: | 72.9% | |
| Property Addresses – Various | U/W NCF DSCR: | 1.66x | ||
| U/W NOI Debt Yield: | 11.3% |
underwritten base rent of $1.87 PSF and has no renewal options remaining. MWD Logistics, Inc. has a termination option with an effective date of October 31, 2021, subject to a notice date on or before May 4, 2021 and no termination fee. Since acquisition of the Delaware property in April 2018, the borrower sponsor has invested approximately $1.3 million in capital improvements and other/soft costs at the Delaware property
Pawcatuck (10.2% of NRA; 15.2% of ALA): The Pawcatuck property is comprised of approximately 24 industrial warehouse buildings totaling 217,143 square feet located in Pawcatuck, Connecticut. The improvements were constructed between 1888 and 1982, were renovated in 2015 and 2017 and include approximately 5.0% office space. The Pawcatuck property is situated on a 16.1-acre site with 147 surface parking spaces (0.7 per 1,000 SF). The Pawcatuck property has 20 loading docks, 10 loading doors, and clear heights of 12 feet to 26 feet. As of June 1, 2020, the Pawcatuck property was 93.9% leased by 10 tenants. The three largest tenants are General Dynamics (37.9% of property NRA, 46.4% of property underwritten base rent), Davis Standard, LLC (17.3% of property NRA, 14.9% of property underwritten base rent) and Applied Physical Sciences (15.5% of property NRA, 14.1% of property underwritten base rent). General Dynamics has a lease amendment out for execution to expand its space by an additional 8,971 square feet. If the General Dynamics lease amendment is executed, the Pawcatuck property will be 98.1% leased. We cannot assure you that such lease amendment will be signed. Since acquisition of the Pawcatuck property in April 2018, the borrower sponsor has invested approximately $2.5 million in capital improvements and other/soft costs at the Pawcatuck property.
Herrin (25.7% of NRA; 15.0% of ALA): The Herrin property is a 547,168 square foot industrial manufacturing building located in Herrin, Illinois. The improvements were constructed between 1946 and 1973, were renovated between 2017 and 2018 and include approximately 1.3% office space. The Herrin property is situated on a 36.5-acre site with 1,050 surface parking spaces (1.9 per 1,000 SF). The Herrin property has 20 loading docks, six loading doors, and clear heights of 19 feet to 26 feet. As of June 1, 2020, the Herrin property was 89.7% leased by six tenants. The two largest tenants are CRC (32.0% of property NRA, 33.6% of property underwritten base rent) and FreightLink, LLC (23.3% of property NRA, 26.4% of property underwritten base rent). Since acquisition of the Herrin property in December 2016, the borrower sponsor has invested approximately $3.8 million in capital improvements and other/soft costs at the Herrin property.
Menasha (3.1% of NRA; 7.8% of ALA): The Menasha property is a 65,000 square foot industrial flex call center located in Menasha, Wisconsin. The improvements were constructed in 1981 for a big box retail store, and converted to approximately 95.0% office flex call center use. The Menasha property is situated on a 10.3-acre site with 597 surface parking spaces (9.2 per 1,000 SF). The Menasha property has three loading docks and a clear height of 12 feet. As of August 6, 2020, the Menasha property was 100.0% leased to Pitney Bowes Inc. Pitney Bowes Inc has been at the Menasha property since 2000 pursuant to a lease with an expiration date of January 31, 2023. Pitney Bowes Inc pays an underwritten base rent of $6.50 PSF and has no renewal or termination options. Since acquisition of the Menasha property (which was acquired in a distress sale as part of a portfolio that was under foreclosure) in April 2014, the borrower sponsor has invested approximately $700,000 in capital improvements and other/soft costs at the Menasha property.
The following table presents certain information relating to the Phoenix Industrial Portfolio IV Properties:
Portfolio Summary(1)
| Property | State | Net Rentable Area (SF) | Year Built/ Renovated |
U/W NCF | Allocated Cut-off Date Balance (“ALA”) | % of ALA | “As-Is” Appraised Value | Cut-off Date LTV | Clear Heights (ft.) | Dock Doors | Drive-In Doors |
| Edgerton | WI | 845,506 | 1960/2018 | $1,350,926 | $20,800,000 | 45.2% | $24,000,000 | 70.0%(2) | 17 - 31 | 25 | 4 |
| Delaware | OH | 450,708 | 1958/2018 | $702,179 | $7,725,000 | 16.8% | $10,300,000 | 75.0% | 18 - 26.5 | 22 | 5 |
| Pawcatuck | CT | 217,143 | 1888/2017 | $767,447 | $6,975,000 | 15.2% | $9,300,000 | 75.0% | 12 - 26 | 20 | 10 |
| Herrin | IL | 547,168 | 1946/2018 | $1,116,107 | $6,900,000 | 15.0% | $9,200,000 | 75.0% | 19 - 26 | 20 | 6 |
| Menasha | WI | 65,000 | 1981/NAP | $346,790 | $3,600,000 | 7.8% | $4,800,000 | 75.0% | 12 | 3 | 0 |
| Total/Wtd. Avg. | 2,125,525 | $4,283,449 | $46,000,000 | 100.0% | $57,600,000 | 72.9%(3) | 90 | 25 | |||
| (1) | Information obtained from the appraisals. |
| (2) | The Achievement Reserve of $4.0 million will be released to the Phoenix Industrial Portfolio IV Borrowers once (i) an occupancy of 90.0% is achieved at the Edgerton property, (ii) the debt yield is not less than 9.3%, (iii) the loan-to-value ratio is not greater than 73.1% (in each case based on the full outstanding loan amount) and (iv) the Phoenix Industrial Portfolio IV Borrowers deliver to the lender a fully executed third amendment to the Cupertino Electric, Inc. lease (or a new lease with another tenant containing terms substantially similar to the proposed third amendment to the Cupertino Electric, Inc. lease). The Cut-off Date LTV presented above is based on the original allocated mortgage loan amount of the Edgerton property of $20,800,000 net of the $4,000,000 Achievement Reserve. Including the Achievement Reserve balance, the Cut-off Date LTV, based on the original allocated mortgage loan amount of the Edgerton property, is 86.7%. |
| (3) | The Wtd. Avg. Cut-off Date LTV is based on the original principal balance of the Phoenix Industrial Portfolio IV Mortgage Loan of $46,000,000 net of the $4,000,000 Achievement Reserve. The Wtd. Avg. Cut-off Date LTV, based on the original principal balance of the Phoenix Industrial Portfolio IV Mortgage Loan (without netting the Achievement Reserve), is 79.9%. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
48
| Loan #2 | Cut-off Date Balance: | $46,000,000 | ||
| Industrial – Various | Phoenix Industrial Portfolio IV | Cut-off Date LTV: | 72.9% | |
| Property Addresses – Various | U/W NCF DSCR: | 1.66x | ||
| U/W NOI Debt Yield: | 11.3% |
The following table presents certain information relating to the tenancy at the Phoenix Industrial Portfolio IV Properties:
Major Tenants
| Tenant Name | Credit
Rating (Fitch/ Moody’s/ S&P)(1) |
Property | 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 | Extension Options | Term. Option (Y/N) |
| Cupertino Electric, Inc.(3) | NR / NR / NR | Edgerton | 483,466 | 22.7% | $3.18 | $1,537,422 | 29.4% | 9/30/2022 | 2, 2-year | Y |
| MWD Logistics, Inc.(4) | NR / NR / NR | Delaware | 450,708 | 21.2% | $1.87 | $842,824 | 16.1% | 10/31/2023 | None | Y |
| CRC(5) | NR / NR / NR | Herrin | 175,245 | 8.2% | $2.50 | $438,113 | 8.4% | 10/31/2022 | None | Y |
| FreightLink, LLC(6) | NR / NR / NR | Herrin | 127,588 | 6.0% | $2.70 | $344,488 | 6.6% | 1/31/2023 | None | Y |
| Walgreen Co. | NR / NR / NR | Herrin | 83,392 | 3.9% | $2.75 | $229,328 | 4.4% | 4/30/2021 | 2, 1-year | N |
| General Dynamics | NR / A2 / A+ | Pawcatuck | 82,278 | 3.9% | $5.32 | $437,347 | 8.4% | 3/31/2021 | 3, 5-year | N |
| Pitney Bowes Inc | NR / NR / NR | Menasha | 65,000 | 3.1% | $6.50 | $422,500 | 8.1% | 1/31/2023 | None | N |
| Phoenix Logistics, LLC(7) | NR / NR / NR | Herrin | 50,000 | 2.4% | $3.12 | $156,000 | 3.0% | 9/30/2023 | 1, 1-year | Y |
| Davis Standard, LLC(8) | NR / NR / NR | Pawcatuck | 37,573 | 1.8% | $3.75 | $140,899 | 2.7% | 4/3/2023 | 1, 5-year | Y |
| Intertape Polymer Corp | NR / NR / NR | Herrin | 34,399 | 1.6% | $2.61 | $89,781 | 1.7% | 7/31/2022 | None | N |
| IKI Manufacturing | NR / NR / NR | Edgerton | 34,397 | 1.6% | $3.57 | $122,797 | 2.3% | 1/31/2023 | None | N |
| Applied Physical Sciences | NR / NR / NR | Pawcatuck | 33,622 | 1.6% | $3.95 | $132,683 | 2.5% | Various(9) | 1, 5-year | N |
| Connri Paper & Supply | NR / NR / NR | Pawcatuck | 28,796 | 1.4% | $3.91 | $112,592 | 2.2% | 12/31/2021 | None | N |
| Swanson Industries(10) | NR / NR / NR | Herrin | 20,071 | 0.9% | $2.25 | $45,180 | 0.9% | 3/31/2021 | 1, 5-year | Y |
| Total Major Tenants: | 1,706,535 | 80.3% | $2.96 | $5,051,953 | 96.7% | |||||
| Other Tenants | 31,664 | 1.5% | $5.49 | $173,849 | 3.3% | |||||
| Vacant Space | 387,326 | 18.2% | ||||||||
| Collateral Total | 2,125,525 | 100.0% | ||||||||
| (1) | Certain ratings are those of the parent company, regardless of whether or not the parent guarantees the lease. |
| (2) | Based on the underwritten rent roll, including rent increases occurring through August 2021. |
| (3) | The lease amendment referred to under “Edgerton” above is expected to provide Cupertino Electric, Inc. with one remaining termination option effective as of January 1, 2026 or January 1, 2027, with 180 days’ notice and payment of a termination fee equal to the sum of four months of base rent, additional rent, insurance procured by the landlord, and common area maintenance as further detailed in the Cupertino Electric, Inc. lease amendment. |
| (4) | MWD Logistics, Inc. may terminate its lease on October 31, 2021 with notice on or before May 4, 2021 and no termination fee. |
| (5) | CRC may terminate its lease on or after November 1, 2020 with six months’ notice and no termination fee. |
| (6) | FreightLink, LLC may terminate its lease at any time with 90 days’ notice if a customer identified in the lease terminates its existing warehouse or logistics agreement with FreightLink, LLC. |
| (7) | Phoenix Logistics, LLC, an affiliate of the borrower sponsor, may terminate its lease if, at any time during the lease term, Phoenix Logistics, LLC has less than approximately 40,000 square feet worth of logistics contracts in full force and effect. Phoenix Logistics, LLC has the right to terminate its lease effective as of the date of such termination by providing the landlord irrevocable written notice and no termination fee. |
| (8) | Davis Standard, LLC may terminate its lease on December 31, 2020 with six months’ notice and payment of a termination fee equal to four months' base rent at the then-current rate plus any unamortized portion of costs of leasing commissions paid by the landlord, attorneys' fees, and any other related expenses in connection with leasing the premises. |
| (9) | Applied Physical Sciences has 26,400 square feet expiring on October 31, 2021 and 7,222 square feet expiring on April 30, 2023. |
| (10) | Swanson Industries has a one-time right to terminate its lease at any time with six months’ notice and a termination fee equal to the remaining unamortized cost of the tenant’s work at the premises. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
49
| Loan #2 | Cut-off Date Balance: | $46,000,000 | ||
| Industrial – Various | Phoenix Industrial Portfolio IV | Cut-off Date LTV: | 72.9% | |
| Property Addresses – Various | U/W NCF DSCR: | 1.66x | ||
| U/W NOI Debt Yield: | 11.3% |
The following table presents certain information relating to the lease rollover schedule at the Phoenix Industrial Portfolio IV Properties:
Lease Expiration Schedule(1)
| Year Ending December 31, | No. of Leases Expiring(2) |
Expiring NRSF(2) | %
of Total NRSF |
Cumulative Expiring NRSF | Cumulative % of Total NRSF | Annual U/W Base Rent |
% of Total Annual U/W Base Rent | Annual U/W Base Rent PSF |
| MTM | 4 | 17,161 | 0.8% | 17,161 | 0.8% | $90,996 | 1.7% | $5.30 |
| 2020 | 0 | 0 | 0.0% | 17,161 | 0.8% | $0 | 0.0% | $0.00 |
| 2021 | 10 | 249,237 | 11.7% | 266,398 | 12.5% | $975,863 | 18.7% | $3.92 |
| 2022 | 7 | 698,010 | 32.8% | 964,408 | 45.4% | $2,087,758 | 40.0% | $2.99 |
| 2023 | 11 | 773,791 | 36.4% | 1,738,199 | 81.8% | $2,071,185 | 39.6% | $2.68 |
| 2024 | 0 | 0 | 0.0% | 1,738,199 | 81.8% | $0 | 0.0% | $0.00 |
| 2025 | 0 | 0 | 0.0% | 1,738,199 | 81.8% | $0 | 0.0% | $0.00 |
| 2026 | 0 | 0 | 0.0% | 1,738,199 | 81.8% | $0 | 0.0% | $0.00 |
| 2027 | 0 | 0 | 0.0% | 1,738,199 | 81.8% | $0 | 0.0% | $0.00 |
| 2028 | 0 | 0 | 0.0% | 1,738,199 | 81.8% | $0 | 0.0% | $0.00 |
| 2029 | 0 | 0 | 0.0% | 1,738,199 | 81.8% | $0 | 0.0% | $0.00 |
| 2030 | 0 | 0 | 0.0% | 1,738,199 | 81.8% | $0 | 0.0% | $0.00 |
| Thereafter | 0 | 0 | 0.0% | 1,738,199 | 81.8% | $0 | 0.0% | $0.00 |
| Vacant | 0 | 387,326 | 18.2% | 2,125,525 | 100.0% | $0 | 0.0% | $0.00 |
| Total | 32 | 2,125,525 | 100.0% | $5,225,802 | 100.0% | $3.01(3) |
| (1) | Based on the underwritten rent roll. Rent includes base rent and rent increases occurring through August 2021. |
| (2) | Certain tenants have more than one lease. In addition, certain tenants may have lease termination options that are exercisable prior to the originally stated expiration date. |
| (3) | Total excludes vacant space. |
The following table presents historical occupancy percentages at the Phoenix Industrial Portfolio IV Property:
Historical Occupancy
12/31/2016(1) |
12/31/2017 |
12/31/2018 |
12/31/2019 |
6/1/2020(2) |
| 22.1% | 54.9% | 72.2% | 75.5% | 81.8% |
| (1) | The borrower sponsor acquired the Phoenix Industrial Portfolio IV Properties between 2014 and 2018. Accordingly, the 12/31/2016 historical occupancy for the Edgerton, Pawcatuck and Delaware properties are not available. |
| (2) | Information obtained from the underwritten rent roll. Pursuant to two lease amendments for Cupertino Electric, Inc. and General Dynamics, which are out for execution as of August 2020. Cupertino Electric, Inc. is expected to expand into an additional 312,317 square feet of space at the Edgerton property and General Dynamics is expected to expand into an additional 8,971 square feet of space at the Pawcatuck property. Including the lease amendments, the Phoenix Industrial Portfolio IV Properties will be 96.4% leased. We cannot assure you that such lease amendments will be signed. |
COVID-19 Update. As of the August 2020 payment date, all the Phoenix Industrial Portfolio IV Properties were open and operating. As of the date hereof, 100.0%, 100.0%, 100.0% and 98.8% of rent had been collected for the months of April 2020, May 2020, June 2020 and July 2020, respectively. The August 2020 debt service payment for the Phoenix Industrial Portfolio IV Mortgage Loan has been made by the Phoenix Industrial Portfolio IV Borrowers. As of the date hereof, the Phoenix Industrial Portfolio IV Mortgage Loan is not subject to any modification or forbearance request.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
50
| Loan #2 | Cut-off Date Balance: | $46,000,000 | ||
| Industrial – Various | Phoenix Industrial Portfolio IV | Cut-off Date LTV: | 72.9% | |
| Property Addresses – Various | U/W NCF DSCR: | 1.66x | ||
| U/W NOI Debt Yield: | 11.3% |
Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and underwritten net cash flow at the Phoenix Industrial Portfolio IV Properties:
Cash Flow Analysis
| 2017 | 2018(1) | 2019 | TTM 6/30/2020 |
In-Place U/W(2)(3) | Stabilized U/W(2)(3)(4) | %(5) | U/W $ per SF | |
| Base Rent | $2,412,718 | $2,581,410 | $4,236,567 | $4,766,741 | $5,225,802 | $6,209,660 | 64.7% | $2.46 |
| Grossed Up Vacant Space | 0 |
0 |
0 |
0 |
1,242,865 |
213,221 |
15.4 |
0.58 |
| Gross Potential Rent | $2,412,718 | $2,581,410 | $4,236,567 | $4,766,741 | $6,468,667 | $6,422,881 | 80.1% | $3.04 |
| Other Income | 0 | 6,000 | 13,846 | 2,500 | 3,600 | 3,600 | 0.0 | 0.00 |
| Total Recoveries | 756,283 |
649,257 |
1,416,516 |
1,563,032 |
1,605,321 |
1,893,160 |
19.9 |
0.76 |
| Net Rental Income | $3,169,001 | $3,236,667 | $5,666,929 | $6,332,274 | $8,077,588 | $8,319,641 | 100.0% | $3.80 |
| (Vacancy & Credit Loss) | 0 |
0 |
0 |
0 |
(1,327,498)(6) |
(471,076) |
(20.5) |
(0.62) |
| Effective Gross Income | $3,169,001 | $3,236,667 | $5,666,929 | $6,332,274 | $6,750,090 | $7,848,564 | 83.6% | $3.18 |
| Real Estate Taxes | 383,921 | 259,071 | 393,261 | 386,660 | 397,350 | 397,350 | 5.9 | 0.19 |
| Insurance | 116,718 | 115,699 | 278,905 | 241,028 | 243,232 | 243,232 | 3.6 | 0.11 |
| Management Fee | 121,287 | 133,871 | 219,019 | 210,351 | 202,503 | 235,457 | 3.0 | 0.10 |
| Other Operating Expenses | 1,288,930 |
679,729 |
1,283,773 |
1,186,694 |
1,178,870 |
1,178,870 |
17.5 |
0.55 |
| Total Operating Expenses | $1,910,855 | $1,188,369 | $2,174,958 | $2,024,733 | $2,021,955 | $2,054,909 | 30.0% | $0.95 |
| Net Operating Income(7) | $1,258,145 | $2,048,298 | $3,491,971 | $4,307,541 | $4,728,135 | $5,793,655 | 70.0% | $2.22 |
| Capital Expenditures | 0 | 0 | 0 | 0 | 201,178 | 201,178 | 3.0 | 0.09 |
| TI/LC | 0 |
0 |
0 |
0 |
243,508 |
266,942 |
3.6 |
0.11 |
| Net Cash Flow | $1,258,145 | $2,048,298 | $3,491,971 | $4,307,541 | $4,283,449 | $5,325,535 | 63.5% | $2.02 |
| NOI DSCR(8) | 0.49x | 0.79x | 1.35x | 1.67x | 1.83x | 2.24x | ||
| NCF DSCR(8) | 0.49x | 0.79x | 1.35x | 1.67x | 1.66x | 2.06x | ||
| NOI Debt Yield(8)(9) | 3.0% | 4.9% | 8.3% | 10.3% | 11.3% | 13.8% | ||
| NCF Debt Yield(8)(9) | 3.0% | 4.9% | 8.3% | 10.3% | 10.2% | 12.7% |
| (1) | The borrower sponsor acquired the Phoenix Industrial Portfolio IV Properties between 2014 and 2018. Accordingly, 2018 operating history for the Delaware property and the Pawcatuck property are not available. |
| (2) | For the avoidance of doubt, no COVID-19 specific adjustments have been incorporated in the underwritten net cash flow. |
| (3) | In-Place U/W Base Rent and Stabilized U/W Base Rent include rent steps totaling $81,094 and $50,259, respectively, through August 31, 2021. |
| (4) | Stabilized U/W reflects Cupertino Electric, Inc.’s and General Dynamics lease amendments, which are out for execution as of August 2020. Cupertino Electric, Inc. is expected to expand into an additional 312,317 square feet of space at the Edgerton property and General Dynamics is expected to expand into an additional 8,971 square feet of space at the Pawcatuck property. Including the lease amendments, the Phoenix Industrial Portfolio IV Properties will be 96.4% leased. We cannot assure you that such lease amendments will be signed. |
| (5) | Represents (i) percent of Net Rental Income for all revenue fields, (ii) percent of Gross Potential Rent for Vacancy & Credit Loss and (iii) percent of Effective Gross Income for all other fields based on In-Place U/W. |
| (6) | The U/W economic vacancy is 16.4%. As of June 1, 2020, the Phoenix Industrial Portfolio IV Properties were 81.8% leased. |
| (7) | The increase in In-Place U/W Net Operating Income from TTM 6/30/2020 Net Operating Income is primarily attributed to (i) rent steps of $81,094 through August 31, 2021 and (ii) recent leasing associated with Walgreens Co. totaling $229,328. |
| (8) | All statistical information related to the NOI DSCR, NCF DSCR, NOI Debt Yield and NCF Debt Yield is based on the Phoenix Industrial Portfolio IV Mortgage Loan. |
| (9) | NOI Debt Yield and NCF Debt Yield are based on the original principal balance of the Phoenix Industrial Portfolio IV Mortgage Loan of $46,000,000 net of the $4,000,000 Achievement Reserve. Based on the full original principal balance of the Phoenix Industrial Portfolio IV Mortgage Loan of $46,000,000, In-Place UW NOI Debt Yield is 10.3% and In-Place UW NCF Debt Yield is 9.3%. |
Appraisals. The sum of the individual “as-is” appraised values for each of the Phoenix Industrial Portfolio IV Properties equates to $57,600,000. The appraiser concluded to an “as-is” appraised value and a “Prospective Market Value at Stabilization” for the Edgerton property of $24,000,000 as of January 31, 2020 and $29,400,000 as of February 1, 2024, respectively, which assumes a stabilized occupancy of 100.0%. The appraiser concluded to an “as-is” appraised value for the Delaware property of $10,300,000 as of October 17, 2019. The appraiser concluded to an “as-is” appraised value for the Pawcatuck property of $9,300,000 as of October 20, 2019. The appraiser concluded to an “as-is” appraised value for the Herrin property of $9,200,000 as of October 18, 2019. The appraiser concluded to an “as-is” appraised value for the Menasha property of $4,800,000 as of October 11, 2019.
Environmental Matters. According to the Phase I environmental site assessments dated October 17, 2019, there was no evidence of any recognized environmental conditions at the Phoenix Industrial Portfolio IV Properties. Certain of the Phoenix Industrial Portfolio IV Properties have historical recognized environmental conditions. See “Description of the Mortgage Pool—Environmental Considerations” in the Preliminary Prospectus.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
51
| Loan #2 | Cut-off Date Balance: | $46,000,000 | ||
| Industrial – Various | Phoenix Industrial Portfolio IV | Cut-off Date LTV: | 72.9% | |
| Property Addresses – Various | U/W NCF DSCR: | 1.66x | ||
| U/W NOI Debt Yield: | 11.3% |
Market Overview and Competition. The Phoenix Industrial Portfolio IV Properties are located in Wisconsin (53.0% of ALA), Ohio (16.8% of ALA), Connecticut (15.2% of ALA) and Illinois (15.0% of ALA).
Edgerton, Wisconsin (45.2% of ALA): The Edgerton property is located in Edgerton, Rock County, Wisconsin, approximately 68.8 miles southwest of Milwaukee and approximately 119.0 miles northwest of Chicago, Illinois. According to the appraisal, the Edgerton property is located in the Janesville-Beloit, Wisconsin metropolitan statistical area (the “Janesville MSA”). The Janesville MSA is 718 square miles in size and ranks 259th in population out of the nation’s 382 metropolitan statistical areas. Major employers in the Janesville MSA include Mercyhealth, Beloit Health System, Grainger Inc. and Hendricks Holdings. Development activity in the immediate area has been predominantly of industrial uses. Access to the Edgerton property is provided by Interstate 90 and Highway 59.
Delaware, Ohio (16.8% of ALA): The Delaware property is located in Delaware, Delaware County, Ohio, approximately 25.7 miles north of Columbus, Ohio. According to the appraisal, the Delaware property is located in the Columbus, Ohio metropolitan statistical area (the “Columbus MSA”). The Columbus MSA is 4,794 square miles in size and ranks 32nd in population out of the nation’s 382 metropolitan statistical areas. Major employers in the Columbus MSA include Ohio State University, OhioHealth, JPMorgan Chase & Co., Nationwide, Honda of America Manufacturing Inc. and The Kroger Co. Development activity in the immediate area has been predominantly of industrial uses. U.S. Routes 23, 42 and 36 and State Route 315 provide access to the Delaware property from the greater Columbus metropolitan area. John Glenn Columbus International Airport is located approximately 26.8 miles southeast of the Delaware property.
Pawcatuck, Connecticut (15.2% of ALA): The Pawcatuck property is located in Pawcatuck, New London County, Connecticut, approximately 20.5 miles southeast of Norwich, Connecticut. According to the appraisal, the Pawcatuck property is located in the Norwich-New London, Connecticut metropolitan statistical area (the “Norwich MSA”). The Norwich MSA is 665 square miles in size and ranks 185th in population out of the nation’s 382 metropolitan statistical areas. Major employers in the Norwich MSA include General Dynamics/Electric Boat, U.S. Naval Submarine Base, Mohegan Sun Casino and Foxwoods Resort Casino. Access to the Pawcatuck property is provided by Interstate 95, which is approximately 3.2 miles west of the Pawcatuck property, connecting the Pawcatuck property with the greater Norwich-New London metropolitan area. T.F. Green Airport is located approximately 35.5 miles northeast of the Pawcatuck property.
Herrin, Illinois (15.0% of ALA): The Herrin property is located in Herrin, Williamson County, Illinois, approximately 106.0 miles southeast of St. Louis, Missouri. According to the appraisal, the Herrin property is located in the Carbondale-Marion, Illinois metropolitan statistical area (the “Carbondale MSA”). The Carbondale MSA is 1,005 square miles in size and ranks 315th in population out of the nation’s 382 metropolitan statistical areas. Major employers in the Carbondale MSA include Southern Illinois University, Community Health Systems Inc. and UnitedHealth Group. Primary access to the Herrin property is provided by Interstate 57, which is approximately 4.7 miles east of the Herrin property. The Williamson County Regional Airport is located approximately nine miles southwest of the Herrin property. During the last five years, development activity has been predominantly of industrial and commercial uses, and has included the Blue Cross/Blue Shield office building. Other developments include the Aisin Electronics’ $32.8 million 108,005 square foot addition to their existing manufacturing complex in Marion.
Menasha, Wisconsin (7.8% of ALA): The Menasha property is located in Menasha, Winnebago County, Wisconsin, approximately 50.8 miles west of Lake Michigan, approximately 33.8 miles southwest of Green Bay and approximately 98.9 miles northwest of Milwaukee. According to the appraisal, the Menasha property is located in the Oshkosh-Neenah, Wisconsin metropolitan statistical area (the “Oshkosh MSA”). The Oshkosh MSA is 434 square miles in size and ranks 250th in population out of the nation’s 382 metropolitan statistical areas. Major employers in the Oshkosh MSA include Oshkosh Corp., Bemis and University of Wisconsin Oshkosh. Access to the Menasha property is provided by Interstate 41, which is adjacent to the Menasha property, connecting the Menasha property with the greater Green Bay metropolitan area.
The table below presents certain market information with respect to the Phoenix Industrial Portfolio IV Properties:
Market Overview(1)
| Property | Year Built/ Renovated |
Net Rentable Area (SF)(2) | Market | Property In-Place Vacancy(2) | Market Vacancy(3) | Appraisal Concluded Vacancy | Market Inventory (SF)(3) | U/W Base Rent PSF(1)(4) | Appraisal Market Rent PSF | % Above Market Rent |
| Edgerton | 1960/2018 | 845,506 | Janesville-Beloit | 37.6% | 1.6% | 9.0% | 25,056,518 | $3.25 | $3.25 | (0.1%) |
| Delaware | 1958/2018 | 450,708 | Columbus | 0.0% | 5.1% | 4.0% | 299,541,682 | $1.87 | $2.40 | (22.1%) |
| Pawcatuck | 1888/2017 | 217,143 | Norwich | 6.1% | 7.8% | 2.0% | 18,566,950 | $4.63 | $4.92 | (5.9%) |
| Herrin | 1946/2018 | 547,168 | Carbondale-Marion | 10.3% | 17.7% | 19.0% | 2,946,230 | $2.66 | $2.50 | 6.2% |
| Menasha | 1981/NAP | 65,000 | Oshkosh-Neenah | 0.0% | 2.2% | 4.0% | 23,773,656 | $6.50 | $6.50 | 0.0% |
| Total/Wtd. Avg. | 2,125,525 | 18.2% | 7.1% | 9.6% | 369,885,036 | $3.01 | $3.15 | (3.7%) | ||
| (1) | Information obtained from the appraisals. |
| (2) | Information obtained from the underwritten rent roll. |
| (3) | Information obtained from third party market research reports. |
| (4) | In-Place U/W Base Rent PSF excludes vacant space. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
52
| Loan #2 | Cut-off Date Balance: | $46,000,000 | ||
| Industrial – Various | Phoenix Industrial Portfolio IV | Cut-off Date LTV: | 72.9% | |
| Property Addresses – Various | U/W NCF DSCR: | 1.66x | ||
| U/W NOI Debt Yield: | 11.3% |
The following table presents certain demographic information with respect to the Phoenix Industrial Portfolio IV Properties:
Demographics Overview(1)
| Property | City, State | ALA | % of ALA | In-Place U/W NCF | % of In-Place U/W NCF | Estimated 2019 Population (5-mile Radius) |
Estimated 2019 Average Household Income (5-mile Radius) |
| Edgerton | Edgerton, WI | $20,800,000 | 45.2% | $1,350,926 | 31.5% | 12,144 | $82,756 |
| Delaware | Delaware, OH | $7,725,000 | 16.8% | $702,179 | 16.4% | 48,400 | $95,191 |
| Pawcatuck | Pawcatuck, CT | $6,975,000 | 15.2% | $767,447 | 17.9% | 36,490 | $98,191 |
| Herrin | Herrin, IL | $6,900,000 | 15.0% | $1,116,107 | 26.1% | 25,974 | $64,499 |
| Menasha | Menasha, WI | $3,600,000 | 7.8% | $346,790 | 8.1% | 130,211 | $77,541 |
| Total/Wtd. Avg. | $46,000,000 | 100.0% | $4,283,449 | 100.0% | 33,239 | $84,038 | |
| (1) | Information obtained from third party market research reports. |
Escrows.
Real Estate Taxes – The Phoenix Industrial Portfolio IV Mortgage Loan documents require an upfront real estate tax reserve of $130,669 and ongoing monthly real estate tax reserves in an amount equal to one-twelfth of the real estate taxes that the lender estimates will be payable during the next 12 months (initially $31,730).
Insurance – The Phoenix Industrial Portfolio IV Mortgage Loan documents require an upfront insurance reserve of $224,243 and ongoing monthly insurance reserves in an amount equal to one-twelfth of the insurance premiums that the lender estimates will be payable for the renewal of the coverage during the next 12 months (initially $20,269).
Replacement Reserve – The Phoenix Industrial Portfolio IV Mortgage Loan documents require ongoing monthly replacement reserves of $17,713, subject to a cap of $425,000.
TI/LC Reserve – The Phoenix Industrial Portfolio IV Mortgage Loan documents require an upfront TI/LC reserve of $1,000,000 and when the amount in the TI/LC reserve account is less than $500,000, monthly deposits of $26,569, subject to a cap of $1,000,000.
Immediate Repairs – The Phoenix Industrial Portfolio IV Mortgage Loan documents require an upfront immediate repairs reserve of $174,750.
Achievement Reserve – The Phoenix Industrial Portfolio IV Mortgage Loan documents require an upfront achievement reserve (the “Achievement Reserve”) of $4,000,000. All funds on deposit in the Achievement Reserve will be (i) during the continuation of a Cash Management Trigger Event (as defined below), transferred to the cash management account, or (ii) in the absence of a Cash Management Trigger Event, returned to the Phoenix Industrial Portfolio IV Borrowers; provided, however, that the following conditions have been fully satisfied by the Phoenix Industrial Portfolio IV Borrowers: (i) on the date such request is made, no default, event of default, Material Tenant Trigger Event (as defined below) or Cash Sweep Trigger Event (as defined below) has occurred and is then continuing, (ii) the Phoenix Industrial Portfolio IV Borrowers have submitted a written request to the lender at least 30 days prior to the requested release, (iii) the Phoenix Industrial Portfolio IV Borrowers have provided written evidence that all leases at the Edgerton property cover no less than 90% of the rentable square footage at the Edgerton property; provided that any new leases at the Edgerton property executed after the origination date of the Phoenix Industrial Portfolio IV Mortgage Loan will have a term of no less than five years, (iv) the Phoenix Industrial Portfolio IV Borrowers have delivered written evidence that the debt yield based on the full outstanding principal balance of the Phoenix Industrial Portfolio IV Mortgage Loan is not less than 9.3%, (v) the Phoenix Industrial Portfolio IV Borrowers have delivered written evidence that the loan-to-value ratio based on the full outstanding principal balance of the Phoenix Industrial Portfolio IV Mortgage Loan is not greater than 73.1% and (iv) the Phoenix Industrial Portfolio IV Borrowers have delivered to the lender a fully executed third amendment to the Cupertino Electric, Inc. lease (or a new lease with another tenant containing terms substantially similar to the proposed third amendment to the Cupertino Electric, Inc. lease).
Environmental Reserve – The Phoenix Industrial Portfolio IV Mortgage Loan documents require an upfront environmental reserve of $30,624 in connection with the environmental insurance policy at the Phoenix Industrial Portfolio IV Properties.
Pitney Bowes Work Reserve – The Phoenix Industrial Portfolio IV Mortgage Loan documents require an upfront Pitney Bowes work reserve of $10,000 for work and/or repairs at the Menasha property with respect to the Pitney Bowes Inc tenant space.
Lockbox and Cash Management. The Phoenix Industrial Portfolio IV Mortgage Loan is structured with a hard lockbox with springing cash management upon the occurrence and continuance of a Cash Management Trigger Event. Revenues from the Phoenix Industrial Portfolio IV Properties are required to be deposited directly into the lockbox account or, if received by the Phoenix Industrial Portfolio IV Borrowers or the property manager, deposited within three business days of receipt. During the continuance of a Cash Management Trigger Event, all funds in the lockbox account are required to be swept each business day to a lender-controlled cash management account and disbursed in accordance with the Phoenix Industrial Portfolio IV Mortgage Loan documents, and all excess funds on deposit in the cash management account (after payment of required monthly reserve deposits, debt service payment, operating expenses and cash management bank fees) will be applied as follows: (a) if a Material Tenant Trigger Event has occurred and is continuing, to a Material Tenant (as defined below) rollover reserve, (b) if a Cash Sweep Trigger Event has occurred and is continuing (but not a
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
53
| Loan #2 | Cut-off Date Balance: | $46,000,000 | ||
| Industrial – Various | Phoenix Industrial Portfolio IV | Cut-off Date LTV: | 72.9% | |
| Property Addresses – Various | U/W NCF DSCR: | 1.66x | ||
| U/W NOI Debt Yield: | 11.3% |
Material Tenant Trigger Event), to the lender-controlled excess cash flow account or (c) if no Material Tenant Trigger Event or Cash Sweep Trigger Event has occurred and is continuing, to the Phoenix Industrial Portfolio IV Borrowers.
A “Cash Management Trigger Event” will commence upon the earlier of the following:
| (i) | the occurrence of an event of default; |
| (ii) | any bankruptcy action involving the Phoenix Industrial Portfolio IV Borrowers, the guarantor, the key principal (David M. Marks, the trustee of the guarantors) or the property manager; |
| (iii) | the trailing 12-month period debt service coverage ratio falling below 1.25x; |
| (iv) | the indictment for fraud or misappropriation of funds by the Phoenix Industrial Portfolio IV Borrowers, the guarantors, the key principal or the property manager, or any director or officer of the aforementioned; or |
| (v) | a Material Tenant Trigger Event. |
A Cash Management Trigger Event will end upon the occurrence of the following:
| ● | with regard to clause (i), the cure of such event of default; |
| ● | with regard to clause (ii), the filing being discharged, stayed or dismissed within 45 days for the Phoenix Industrial Portfolio IV Borrowers, the guarantors or the key principal, or within 120 days for the property manager, and lender’s determination that such filing does not materially affect the Phoenix Industrial Portfolio IV Borrowers’, the guarantors’, the key principal’s or the property manager’s monetary obligations; |
| ● | with regard to clause (iii), the trailing 12-month debt service coverage ratio being at least 1.30x for two consecutive calendar quarters; |
| ● | with regard to clause (iv), the dismissal of the applicable indictment with prejudice or acquittal of the applicable person, or the replacement of the property manager with a third party property manager that constitutes a qualified property manager under the loan documents; or |
| ● | with regard to clause (v), the Material Tenant Trigger Event being cured as set forth in the definition of such term below. |
A “Material Tenant Trigger Event” will commence upon the occurrence of:
| (i) | a Material Tenant giving notice of its intention to terminate or cancel or not to extend or renew its lease; |
| (ii) | on or prior to the date by which a 30% Material Tenant (as defined below) is required under its 30% Material Tenant Lease to notify the Phoenix Industrial Portfolio IV Borrowers of its election to extend or renew such 30% Material Tenant Lease, such 30% Material Tenant not giving such notice; |
| (iii) | on or prior to the date on which a Material Tenant is required under its lease to notify the Phoenix Industrial Portfolio IV Borrowers of its election to extend or renew its lease, the related Material Tenant failing to extend or renew its lease; |
| (iv) | an event of default under a Material Tenant lease occurring and continuing beyond any applicable notice and cure period; |
| (v) | any Material Tenant or any guarantor of the applicable Material Tenant lease becoming insolvent or a debtor in any bankruptcy action; |
| (vi) | a Material Tenant lease being terminated; provided that with respect to any partial termination of a Material Tenant lease, such partial termination relates to a portion of the Material Tenant space (a) constituting 20% or more of the total rentable square footage at the applicable property or (b) requiring the payment of base rent that is 20% or more of the total in-place base rent at the applicable property; or |
| (vii) | any Material Tenant “going dark”, vacating or ceasing to occupy or conduct business at its space or a portion thereof constituting 20% or more of the total rentable square footage at the applicable property for a period in excess of 12 consecutive calendar months (other than temporary cessation of operations in connection with remodelling, renovation or restoration of their leased premises). |
A Material Tenant Trigger Event will end upon the occurrence of:
| ● | with regard to clause (i) above, the date that (1) the applicable Material Tenant revokes or rescinds all termination or cancellation notices, (2) the applicable Material Tenant lease is extended on terms satisfying the requirements of the related mortgage loan documents or (3) all or substantially all of the applicable Material Tenant space is leased to a replacement tenant; |
| ● | with regard to clause (ii) above, (1) the applicable 30% Material Tenant being extended on terms satisfying the requirements of the related mortgage loan documents or (2) the applicable 30% Material Tenant space being leased to a replacement tenant; |
| ● | with regard to clause (iii) above, the date that (1) the applicable Material Tenant lease is extended on terms satisfying the requirements of the related mortgage loan documents or (2) all or substantially all of the applicable Material Tenant space is leased to a replacement tenant; |
| ● | with regard to clause (iv) above, a cure of the applicable event of default; |
| ● | with regard to clause (v) above, the affirmation of the Material Tenant lease in the applicable bankruptcy proceeding and confirmation that the Material Tenant is actually paying all rents and other amounts under its lease (or, if applicable, the discharge or dismissal of the applicable Material Tenant lease guarantor from the applicable bankruptcy proceeding; provided that such bankruptcy (after dismissal or discharge) does not have an adverse effect on such Material Tenant lease guarantor’s ability to perform its obligations under its lease guaranty); |
| ● | with regard to clause (vi) above, all or substantially all of the applicable Material Tenant space being leased to a replacement tenant; or |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
54
| Loan #2 | Cut-off Date Balance: | $46,000,000 | ||
| Industrial – Various | Phoenix Industrial Portfolio IV | Cut-off Date LTV: | 72.9% | |
| Property Addresses – Various | U/W NCF DSCR: | 1.66x | ||
| U/W NOI Debt Yield: | 11.3% |
| ● | with regard to clause (vii) above, the Material Tenant re-commencing its normal business operations at the applicable Phoenix Industrial Portfolio IV Property or a portion thereof constituting more than 20% of the total rentable square footage at the applicable property. |
A “Material Tenant” means (i) MWD Logistics, Inc., (ii) Cupertino Electric, Inc. or (iii) any other tenant at the Phoenix Industrial Portfolio IV Properties that, together with its affiliates, either (a) leases no less than 20% of the total rentable square footage of the Phoenix Industrial Portfolio IV Properties or (b) accounts for no less than 20% of the total in-place base rent at the Phoenix Industrial Portfolio IV Properties.
A “30% Material Tenant” means any tenant at the Phoenix Industrial Portfolio IV Properties that, together with its affiliates, either (a) leases no less than 30% of the total rentable square footage at the Phoenix Industrial Portfolio IV Properties or (b) accounts for no less than 30% of the total in-place base rent at the Phoenix Industrial Portfolio IV Properties.
A “Cash Sweep Trigger Event” will commence upon the earlier of the following:
| (i) | the occurrence of an event of default; |
| (ii) | any bankruptcy action involving the Phoenix Industrial Portfolio IV Borrowers, the guarantors, the key principal or the property manager; or |
| (iii) | the trailing 12-month period debt service coverage ratio falling below 1.20x. |
A Cash Sweep Trigger Event will end upon the occurrence of the following:
| ● | with regard to clause (i), the cure of such event of default; |
| ● | with regard to clause (ii), as to an involuntary filing, the filing being discharged, stayed or dismissed within 45 days for the Phoenix Industrial Portfolio IV Borrowers, the guarantors or the key principal, or within 120 days for the property manager, and lender’s determination that such filing does not materially affect the Phoenix Industrial Portfolio IV Borrowers’, the guarantors’, the key principal’s or the property manager’s monetary obligations; or |
| ● | with regard to clause (iii), the trailing 12-month debt service coverage ratio is at least 1.25x for two consecutive calendar quarters. |
Property Management. The Phoenix Industrial Portfolio IV Property is managed by Phoenix Investors, an affiliate of the borrower sponsor.
Partial Release. Releases of individual Phoenix Industrial Portfolio IV Properties are not permitted. The Phoenix Industrial Portfolio IV Borrowers have the right to obtain the release of unimproved outparcels at the Edgerton property and the Pawcatuck property, without defeasance or prepayment, provided that certain conditions, including among others, conditions relating to separate tax lots, compliance with zoning, parking and other legal requirements, and compliance with REMIC regulations, are satisfied.
Real Estate Substitution. Not permitted.
Subordinate and Mezzanine Indebtedness. Not permitted.
Ground Lease. None.
Terrorism Insurance. The Phoenix Industrial Portfolio IV Mortgage Loan documents require that the “all risk” insurance policy required to be maintained by the Phoenix Industrial Portfolio IV Borrowers provides coverage for terrorism in an amount equal to the full replacement cost of the Phoenix Industrial Portfolio IV 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 12-month extended period of indemnity.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
55
| Hospitality – Select Service | Loan #3 | Cut-off Date Balance: | $35,000,000 | |
| 6878 Hollister Avenue | Hilton Garden Inn – Goleta | Cut-off Date LTV: | 59.9% | |
| Goleta, CA 93117 | U/W NCF DSCR: | 2.04x | ||
| U/W NOI Debt Yield: | 12.4% |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
56
| Hospitality – Select Service | Loan #3 | Cut-off Date Balance: | $35,000,000 | |
| 6878 Hollister Avenue | Hilton Garden Inn – Goleta | Cut-off Date LTV: | 59.9% | |
| Goleta, CA 93117 | U/W NCF DSCR: | 2.04x | ||
| U/W NOI Debt Yield: | 12.4% |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
57
| No. 3 – Hilton Garden Inn – Goleta | |||||||
| Mortgage Loan Information | Mortgaged Property Information | ||||||
| Mortgage Loan Seller: | Wells Fargo Bank, National Association | Single Asset/Portfolio: | Single Asset | ||||
Credit Assessment (Fitch/KBRA/Moody’s): |
NR/NR/NR | Property Type – Subtype: | Hospitality – Select Service | ||||
| Original Principal Balance: | $35,000,000 | Location: | Goleta, CA | ||||
| Cut-off Date Balance: | $35,000,000 | Size: | 142 Rooms | ||||
| % of Initial Pool Balance: | 6.2% | Cut-off Date Balance Per Room | $246,479 | ||||
| Loan Purpose: | Refinance | Maturity Date Balance Per Room: | $210,946 | ||||
| Borrower Sponsor: | Huntington Hotel Group, LP | Year Built/Renovated: | 2017/NAP | ||||
| Guarantor: | Huntington Hotel Group, LP | Title Vesting: | Fee | ||||
| Mortgage Rate: | 3.5700% | Property Manager: | Self-managed | ||||
| Note Date: | March 10, 2020 | Current Occupancy (As of)(3)(5): | 67.5% (TTM 6/30/2020) | ||||
| Seasoning: | 5 months | 2019 Occupancy: | 89.4% | ||||
| Maturity Date: | March 11, 2030 | 2018 Occupancy: | 81.7% | ||||
| IO Period: | 36 months | 2017 Occupancy(4): | NAP | ||||
| Loan Term (Original): | 120 months | 2016 Occupancy(4): | NAP | ||||
| Amortization Term (Original): | 360 months | Appraised Value(5): | $58,400,000 | ||||
| Loan Amortization Type: | Interest-only, Amortizing Balloon | Appraised Value Per Room: | $411,268 | ||||
| Call Protection: | L(29),D(87),O(4) | Appraisal Valuation Date: | December 19, 2019 | ||||
| Lockbox Type: | Hard/Springing Cash Management | ||||||
| Additional Debt: | None | Underwriting and Financial Information(5) | |||||
| Additional Debt Type (Balance): | NAP | TTM NOI (6/30/2020)(6): | $2,809,223 | ||||
| YE 2019 NOI: | $4,280,970 | ||||||
| YE 2018 NOI: | $3,669,227 | ||||||
| YE 2017 NOI(4): | NAP | ||||||
| U/W Revenues(6): | $11,062,502 | ||||||
| U/W Expenses(6): | $6,733,781 | ||||||
| U/W NOI(6): | $4,328,720 | ||||||
| Escrows and Reserves(1) | U/W NCF(6): | $3,886,220 | |||||
| Initial | Monthly | Cap | U/W DSCR based on NOI/NCF(6): | 2.28x / 2.04x | |||
| Debt Service Reserve(2) | $1,270,325 | $0 | NAP | U/W Debt Yield based on NOI/NCF(6): | 12.4% / 11.1% | ||
| Taxes | $97,074 | $48,538 | NAP | U/W Debt Yield at Maturity based on NOI/NCF(6): | 14.5% / 13.0% | ||
| Insurance | $0 | Springing | NAP | Cut-off Date LTV Ratio: | 59.9% | ||
| FF&E Reserve | $0 | $36,851 | NAP | LTV Ratio at Maturity: | 51.3% | ||
| Springing PIP Reserve | $0 | Springing | NAP | ||||
| Sources and Uses | ||||||||
| Sources | Uses | |||||||
| Original mortgage loan amount | $35,000,000 | 100.0% | Loan payoff | $30,527,641 | 87.2% | |||
| Upfront reserves | 1,367,399 | 3.9 | ||||||
| Closing costs | 548,159 | 1.6 | ||||||
| Return of equity | 2,556,801 | 7.3 | ||||||
| Total Sources | $35,000,000 | 100.0% | Total Uses | $35,000,000 | 100.0% | |||
| (1) | See “Escrows” section. |
| (2) | The Debt Service Reserve represents the aggregate amount of debt service due for the first 12 monthly payments of the Hilton Garden Inn – Goleta Mortgage Loan (as defined below). As long as no event of default has occurred and is continuing, the lender will disburse amounts from the Debt Service Reserve to make debt service payments on each of the monthly payment dates for the first 12 months of the loan term (through and including the monthly payment date in March 2021). |
| (3) | Represents the actual occupancy rate for the trailing 12-month period ending June 30, 2020, including periods negatively impacted by COVID-19. For the same period, the COVID-adjusted occupancy (which assumes 2019 performance for March, April, May and June 2020) is 88.6%. See “COVID-19 Update” section for details on recent monthly performance. |
| (4) | The property opened in October 2017. |
| (5) | Except as described in the following footnote, all NOI, NCF and occupancy information, as well as the appraised value, were determined prior to the emergence of the novel coronavirus pandemic and the economic disruption resulting from measures to combat the pandemic, and all DSCR, LTV and Debt Yield metrics were calculated, and the Hilton Garden Inn – Goleta Mortgage Loan was underwritten, based on such prior information. See “Risk Factors— Risks Related to Market Conditions and Other External Factors–Coronavirus Pandemic Has Adversely Affected the Global Economy and Will Likely Adversely Affect the Performance of the Mortgage Loans” in the Preliminary Prospectus. |
| (6) | Represents the actual NOI for the trailing 12-month period ending June 30, 2020, including periods negatively impacted by COVID-19. The lender’s underwriting is based off the TTM 6/30/2020 statement, but assumes 2019 performance for March, April, May and June 2020, which were negatively impacted by COVID-19. Based on the actual NOI for the trailing 12-month period ending June 30, 2020 (with no COVID-related adjustments), the NCF DSCR, NOI Debt Yield and |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
58
| Hospitality – Select Service | Loan #3 | Cut-off Date Balance: | $35,000,000 | |
| 6878 Hollister Avenue | Hilton Garden Inn – Goleta | Cut-off Date LTV: | 59.9% | |
| Goleta, CA 93117 | U/W NCF DSCR: | 2.04x | ||
| U/W NOI Debt Yield: | 12.4% |
| NOI Debt Yield at Maturity for the Hilton Garden Inn – Goleta Mortgage Loan would be 1.48x, 8.0% and 9.4%, respectively. See “Operating History and Underwritten Net Cash Flow” section. |
The Mortgage Loan. The mortgage loan (the “Hilton Garden Inn – Goleta Mortgage Loan”) is evidenced by a single promissory note secured by a first mortgage encumbering the fee interest in a select service hotel located in Goleta, California (the “Hilton Garden Inn – Goleta Property”).
The Borrower and Borrower Sponsor. The borrower is Goleta HHG Hotel Development, LP, a Delaware limited partnership structured to be bankruptcy-remote with one independent director. Legal counsel to the borrower delivered a non-consolidation opinion in connection with the origination of the mortgage loan. The borrower sponsor and non-recourse carveout guarantor is Huntington Hotel Group, LP (“Huntington Hotel Group”).
Founded in 1998, Huntington Hotel Group has developed 13 hotels over the past 14 years, currently owns 13 hotels totaling 1,923 rooms and manages four hotels totaling 700 rooms. In addition to developing, owning and operating hotels, Huntington Hotel Group provides operating and asset management services for hotel owners through its affiliate, Huntington Hospitality Management.
The Property. The Hilton Garden Inn – Goleta Property is a 3-story, 142-room, select service hotel located in Goleta, California, approximately 12 miles west of Santa Barbara. Built in 2017 and situated on a 3.1-acre parcel, the property contains 87 king guestrooms, 51 double queen guestrooms and 4 king suites with balconies. Guest room amenities include a microwave, mini-fridge, coffee maker, complimentary WiFi and 50-inch HDTV. Common area amenities include a breakfast room, restaurant & lounge, rooftop bar, outdoor swimming pool, fitness center, business center, sundry shop and approximately 3,500 square feet of meeting space. The property contains 169 surface parking spaces, resulting in a parking ratio of 1.2 spaces per room. According to the appraisal, demand segmentation is approximately 40% commercial, 17% group, 13% leisure and 30% extended stay. The franchise agreement with Hilton expires in October 2037.
The following table presents certain information relating to the demand analysis with respect to the Hilton Garden Inn – Goleta Property, as provided in the appraisal:
Market Segmentation(1)
| Commercial | Group | Leisure | Extended Stay | |||||
| 40% | 17% | 13% | 30% |
| (1) | Information obtained from the appraisal. |
COVID-19 Update. As of July 22, 2020, the Hilton Garden Inn – Goleta Property is open. The guestrooms are fully operational; however, management has recently been taking certain floors or sections of floors offline to make housekeeping more efficient. The pool at the property is open with restrictions, and food service is limited to a “grab and go” breakfast (the rooftop restaurant is currently closed). The July 2020 debt service payment has been made; the August debt service payment is due on August 11th. As of the date hereof, the mortgage loan is not subject to any modification or forbearance request.
The following table presents certain information relating to recent monthly operating performance at the Hilton Garden Inn – Goleta Property:
Monthly Operating Performance
Hilton Garden Inn – Goleta | ||||
Month |
Occupancy |
ADR |
RevPAR | |
| June 2020 | 35.1% | $148.49 | $52.11 | |
| May 2020 | 17.4% | $131.05 | $22.86 | |
April 2020 |
8.8% | $143.36 | $12.65 | |
| March 2020 | 39.9% | $174.68 | $69.76 | |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
59
| Hospitality – Select Service | Loan #3 | Cut-off Date Balance: | $35,000,000 | |
| 6878 Hollister Avenue | Hilton Garden Inn – Goleta | Cut-off Date LTV: | 59.9% | |
| Goleta, CA 93117 | U/W NCF DSCR: | 2.04x | ||
| U/W NOI Debt Yield: | 12.4% |
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 – Goleta Property:
Cash Flow Analysis
| 2018 | 2019 | TTM 6/30/2020 | U/W
(COVID- Adjusted)(1) |
%
of U/W Total Revenue(2) |
U/W
$ per Room | |
| Occupancy | 81.7% | 89.4% | 67.5% | 88.6% | ||
| ADR | $199.74 | $201.39 | $199.74 | $204.85 | ||
| RevPAR | $163.14 | $179.95 | $134.91 | $181.59 | ||
| Room Revenue | $8,455,583 | $9,326,999 | $7,011,544 | $9,412,032 | 85.1% | $66,282 |
| F&B Revenue | 1,463,125 | 1,426,709 | 997,490 | 1,430,638 | 12.9 | 10,075 |
| Other Revenue(3) | 128,472 | 214,369 | 160,732 | 219,832 | 2.0 | 1,548 |
| Total Revenue | $10,047,180 |
$10,968,077 |
$8,169,766 |
$11,062,502 |
100.0% |
$77,905 |
| Room Expense | $1,665,503 | $1,819,188 | $1,466,342 | $1,822,469 | 19.4% | $12,834 |
| F&B Expense | 1,471,576 | 1,313,554 | 890,218 | 1,290,016 | 90.2 | 9,085 |
| Other Department Expense | 25,272 | 33,636 | 27,199 | 33,029 | 15.0 | 233 |
| Total Department Expenses | $3,162,351 |
$3,166,378 |
$2,383,759 |
$3,145,514 |
28.4% |
$22,152 |
| Gross Operating Income | $6,884,829 | $7,801,699 | $5,786,007 | $7,916,988 | 71.6% | $55,753 |
| Total Undistributed Expenses | 2,573,499 |
2,815,585 |
2,273,346 |
2,843,060 |
25.7 |
20,022 |
| Gross Operating Profit | $4,311,330 | $4,986,114 | $3,512,661 | $5,073,927 | 45.9% | $35,732 |
| Total Fixed Charges | 642,103 |
705,144 |
703,438 |
745,207 |
6.7 |
5,248 |
| Total Operating Expenses | $6,377,953 | $6,687,107 | $5,360,543 | $6,733,781 | 60.9% | $47,421 |
| Net Operating Income | $3,669,227 | $4,280,970 | $2,809,223 | $4,328,720 | 39.1% | $30,484 |
| FF&E | 0 |
0 |
0 |
442,500 |
4.0 |
3,116 |
| Net Cash Flow | $3,669,227 | $4,280,970 | $2,809,223 | $3,886,220 | 35.1% | $27,368 |
| NOI DSCR | 1.93x | 2.25x | 1.48x | 2.28x | ||
| NCF DSCR | 1.93x | 2.25x | 1.48x | 2.04x | ||
| NOI DY | 10.5% | 12.2% | 8.0% | 12.4% | ||
| NCF DY | 10.5% | 12.2% | 8.0% | 11.1% | ||
| (1) | The lender’s underwriting is based off the TTM 6/30/2020 statement but assumes 2019 performance for March, April, May and June 2020, which were negatively impacted by COVID-19. See “COVID-19 Update” section for details on recent monthly performance at the property. The mortgage loan is structured with an upfront Debt Service Reserve (see “Escrows” section). |
| (2) | Room Expense, F&B Expense and Other Department Expense % are based on their corresponding revenue line items. All other line items represent percent of Total Revenue. |
| (3) | Other Revenue includes gift shop sales, cancellation fees, guest laundry service and other miscellaneous items. |
Appraisal. The appraiser concluded to an “as-is” appraised value of $58,400,000 with an appraisal valuation date of December 19, 2019.
Environmental Matters. According to a Phase I environmental assessment dated December 26, 2019, there was no evidence of any recognized environmental conditions at the Hilton Garden Inn – Goleta Property.
Market Overview and Competition. The Hilton Garden Inn – Goleta Property is situated in the northwest quadrant of the City of Goleta, California, approximately 12 miles west of Santa Barbara, 3 miles northwest of the Santa Barbara Airport, and less than 2 miles north of the Pacific Ocean. According to the appraisal, the surrounding area’s proximity to Los Angeles and the coastline promotes tourism and attracts visitors from across the United States and around the globe. In addition, within a 3-mile radius of the property, as of the third quarter of 2019, there was approximately 1.7 million square feet of office space with a 3.6% vacancy rate. The three largest employers in the surrounding area include University of California – Santa Barbara, Sansum Clinic and Raytheon; and the three largest employers in the Santa Maria-Santa Barbara, CA Metropolitan Statistical Area are University of California – Santa Barbara, Vandenberg Air Force Base and Dignity Health Central Coast. The property is situated just south of the 101 Freeway, at the northeast corner of the intersection of Hollister Avenue and Storke Road; and situated at the southwest corner of the intersection is a retail center containing a Costco, Home Depot, Ross Dress for Less, Best Buy and various restaurants.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
60
| Hospitality – Select Service | Loan #3 | Cut-off Date Balance: | $35,000,000 | |
| 6878 Hollister Avenue | Hilton Garden Inn – Goleta | Cut-off Date LTV: | 59.9% | |
| Goleta, CA 93117 | U/W NCF DSCR: | 2.04x | ||
| U/W NOI Debt Yield: | 12.4% |
The following table presents historical occupancy, ADR, RevPAR and penetration rates relating to the competitive set for the Hilton Garden Inn – Goleta Property.
Competitive Set(1)(2) |
Hilton Garden Inn – Goleta(1)(2) |
Penetration Factor(1)(2) | |||||||
Year |
Occupancy |
ADR |
RevPAR |
Occupancy |
ADR |
RevPAR |
Occupancy |
ADR |
RevPAR |
| TTM 6/30/2020(3) | 62.0% | $176.11 | $109.13 | 67.6% | $200.95 | $135.75 | 109.0% | 114.1% | 124.4% |
| TTM 6/30/2019 | 76.3% | $181.05 | $138.19 | 86.9% | $198.78 | $172.80 | 113.9% | 109.8% | 125.0% |
| (1) | Information obtained from a third party hospitality research report dated July 17, 2020. The competitive set includes the following hotels: Kimpton Goodland, Ramada Santa Barbara, Best Western Plus South Coast Inn, Pacifica Suites, Hampton Inn by Hilton Santa Barbara/Goleta, and Courtyard Santa Barbara Goleta. |
| (2) | Information prior to the periods shown is not applicable, as the property opened in October 2017. |
| (3) | The numbers shown in the table represent actual performance and do not include any adjustments related to COVID-19. |
Escrows.
Debt Service Reserve – The borrower deposited an upfront reserve of $1,270,325, representing the aggregate amount of debt service due for the first 12 monthly payments of the mortgage loan. As long as no event of default has occurred and is continuing, the lender will disburse funds from the debt service reserve to make monthly debt service payments for the first 12 months of the loan term (through and including the monthly payment date in March 2021).
Real Estate Taxes – The mortgage loan documents require an upfront real estate tax reserve of $97,074 and ongoing monthly reserves in an amount equal to 1/12th of the taxes that the lender estimates will be payable during the next ensuing 12 months (initially $48,538).
Insurance – Ongoing insurance reserves are not required as long as (i) no event of default has occurred and is continuing; (ii) the property is covered under an acceptable blanket or umbrella policy; (iii) the borrower provides the lender with evidence of policy renewals; and (iv) the borrower provides paid receipts for insurance premiums no later than 10 days prior to expiration.
FF&E Reserve – The mortgage loan documents require ongoing monthly FF&E reserves in an amount equal to 1/12th of 4% of gross annual revenue (initially $36,851). The borrower is permitted to use $250,000 of FF&E reserve funds towards the Required PIP Funds (as defined below). Further, after the Required PIP Funds have been used, the borrower will be permitted to use an additional $250,000 of FF&E reserve funds for PIP work, if necessary.
Springing PIP Reserve – On or prior to October 31, 2023, the borrower is required to deposit $1,950,000 (in either cash or an acceptable letter of credit) to perform future PIP work expected to be required by the franchisor (“Required PIP Funds”); provided, however, that (i) if the borrower fails to provide the Required PIP Funds in accordance with the mortgage loan documents, a Cash Trap Event Period (as defined below) will be triggered; and (ii) if the adjusted net cash flow (as calculated under the mortgage loan documents) on October 31, 2023 is lower than the adjusted net cash flow on the origination date, then the failure to provide the Required PIP Funds will also result in an event of default. In addition, the borrower has the right to use certain funds from the FF&E reserve account to perform the PIP work (see “FF&E Reserve” above).
Lockbox and Cash Management. The Hilton Garden Inn – Goleta Mortgage Loan is structured with a hard lockbox and springing cash management. The borrower and property manager are required to cause all credit card receipts to be deposited directly into a deposit account controlled by the lender, and all cash received by the borrower or property manager is required to be deposited into such deposit account within one business day of receipt. Prior to the occurrence of a Cash Trap Event Period, all funds in the deposit account will be swept on a daily basis into the borrower operating account. During a Cash Trap Event Period, funds in the deposit account are required to be applied and disbursed in accordance with the loan documents and all excess cash will be reserved as additional collateral for the mortgage loan.
A “Cash Trap Event Period” will commence upon the earlier of the following:
| (i) | the occurrence and continuance of an event of default; |
| (ii) | following the date that the Debt Service Reserve funds have been fully disbursed, the net cash flow debt yield falling below 9.0%; or |
| (iii) | the borrower failing to deposit the Required PIP Funds (see “Escrows – Springing PIP Reserve” above). |
A Cash Trap Event Period will end upon the occurrence of the following:
| ● | with respect to clause (i) above, the cure of such event of default; |
| ● | with respect the clause (ii) above, the date that the net cash flow debt yield is equal to or greater than 9.25% for two consecutive calendar quarters; and |
| ● | with respect to clause (iii) above, the date that $1,950,000 has been deposited for Required PIP Funds. |
Property Management. The Hilton Garden Inn – Goleta Property is managed by an affiliate of the borrower.
Partial Release. Not Permitted.
Real Estate Substitution. Not permitted.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
61
| Hospitality – Select Service | Loan #3 | Cut-off Date Balance: | $35,000,000 | |
| 6878 Hollister Avenue | Hilton Garden Inn – Goleta | Cut-off Date LTV: | 59.9% | |
| Goleta, CA 93117 | U/W NCF DSCR: | 2.04x | ||
| U/W NOI Debt Yield: | 12.4% |
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 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 6-month extended period of indemnity.
Earthquake Insurance. A seismic risk assessment dated January 16, 2020 indicated a probable maximum loss of 10%. Earthquake insurance is not required.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
62
(THIS PAGE INTENTIONALLY LEFT BLANK)
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
63
| Other – Leased Fee | Loan #4 | Cut-off Date Balance: | $30,000,000 | |
| 350 West 40th Street | DoubleTree New York Times Square | Cut-off Date LTV: | 43.7% | |
| New York, NY 10018 | West Leased Fee | U/W NCF DSCR: | 2.53x | |
| U/W NOI Debt Yield: | 9.4% |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
64
| Other – Leased Fee | Loan #4 | Cut-off Date Balance: | $30,000,000 | |
| 350 West 40th Street | DoubleTree New York Times Square | Cut-off Date LTV: | 43.7% | |
| New York, NY 10018 | West Leased Fee | U/W NCF DSCR: | 2.53x | |
| U/W NOI Debt Yield: | 9.4% |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
65
| No.
4 – DoubleTree New York Times Square West Leased Fee | ||||||||
| Mortgage Loan Information | Mortgaged Property Information | |||||||
| Mortgage Loan Seller: | UBS AG | Single Asset/Portfolio: | Single Asset | |||||
Credit Assessment (Fitch/KBRA/Moody’s): |
BBB-sf/A-/NR | Property Type – Subtype(4): | Other – Leased Fee | |||||
| Original Principal Balance(1): | $30,000,000 | Location: | New York, NY | |||||
| Cut-off Date Balance(1): | $30,000,000 | Size: | 612 Rooms | |||||
| % of Initial Pool Balance: | 5.4% | Cut-off Date Balance Per Room(1): | $94,771 | |||||
| Loan Purpose: | Refinance | Maturity Date Balance Per Room(1): | $94,771 | |||||
| Borrower Sponsor: | Sam Chang | Year Built/Renovated: | 2017/NAP | |||||
| Guarantor: | Sam Chang | Title Vesting: | Fee | |||||
| Mortgage Rate: | 3.66072% | Property Manager: | Crescent Hotels & Resorts, LLC | |||||
| Note Date: | November 25, 2019 | Current Occupancy (As of)(5)(6): | 69.7% (6/30/2020) | |||||
| Seasoning: | 8 months | YE 2019 Occupancy(6): | 91.7% | |||||
| Maturity Date: | December 6, 2029 | YE 2018 Occupancy(6): | 95.4% | |||||
| IO Period: | 120 months | YE 2017 Occupancy(6): | 86.9% | |||||
| Loan Term (Original): | 120 months | YE 2016 Occupancy(6): | NAP | |||||
| Amortization Term (Original): | NAP | Appraised Value(1)(7): | $132,600,000 | |||||
| Loan Amortization Type: | Interest-only, Balloon | Appraised Value Per Room(1)(7): | $216,667 | |||||
| Call Protection: | L(6),GRTR 1% or YM(107),O(7) | Appraisal Valuation Date(7):
|
October 1, 2019
| |||||
| Lockbox Type: | NAP | Underwriting and Financial Information(8) | ||||||
| Additional Debt(1)(2): | Yes | TTM NOI (6/30/2020): | $7,588,183 | |||||
| Additional Debt Type (Balance)(1)(2): | Pari Passu ($28,000,000); Subordinate ($32,000,000) | YE 2019 NOI: | $15,231,476 | |||||
| YE 2018 NOI: | $17,834,908 | |||||||
| YE 2017 NOI: | $12,929,350 | |||||||
| U/W Revenues: | (a) $5,454,725 | (b) $41,344,023 | ||||||
| Escrows and Reserves(3) | U/W Expenses: | (a) $0 | (b) $26,171,518 | |||||
| Initial | Monthly | Cap | U/W NOI: | (a) $5,454,725 | (b) $15,172,505 | |||
| Taxes | $0 | Springing | NAP | U/W NCF: | (a) $5,454,725 | (b) $13,518,744 | ||
| Insurance | $0 | Springing | NAP | U/W DSCR based on NOI/NCF(1): | (a) 2.53x / 2.53x | (b) 7.05x / 6.28x | ||
| U/W Debt Yield based on NOI/NCF(1): | (a) 9.4% / 9.4% | (b) 26.2% / 23.3% | ||||||
| U/W Debt Yield at Maturity based on NOI/NCF(1): | (a) 9.4% / 9.4% | (b) 26.2% / 23.3% | ||||||
| Cut-off Date LTV Ratio(1)(7): | (a) 43.7% | (b) 16.7% | ||||||
| LTV Ratio at Maturity(1)(7): | (a) 43.7% | (b) 16.7% | ||||||
| Sources and Uses(9) | ||||||||
| Sources | Uses | |||||||
| Original whole loan amount | $90,000,000 | 42.9% | Loan payoff | $205,326,015 | 97.8% | |||
| Leasehold mortgage loan | 120,000,000 | 57.1% | Closing costs | 4,030,547 | 1.9 | |||
| Return of equity | 643,438 | 0.3 | ||||||
| Total Sources | $210,000,000 | 100.0% | Total Uses | $210,000,000 | 100.0% | |||
| (1) | The DoubleTree New York Times Square West Leased Fee Mortgage Loan (as defined below) is part of the DoubleTree New York Times Square West Leased Fee Whole Loan (as defined below), which is comprised of (i) four senior pari passu promissory notes with an aggregate original principal balance of $58,000,000 (the “Senior Loan”) and (ii) a subordinate companion note with an original principal balance of $32,000,000 (the “Subordinate Companion Loan”). The Cut-off Date Balance Per Room, Maturity Date Balance Per Room, U/W DSCR based on NOI/NCF, U/W Debt Yield based on NOI/NCF, U/W NOI Debt Yield at Maturity based on NOI/NCF, Cut-off Date LTV Ratio and LTV Ratio at Maturity numbers presented above are based solely on the Senior Loan, without regard to the Subordinate Companion Loan. The Cut-off Date Balance Per Room, Maturity Date Balance Per Room, U/W DSCR based on NOI/NCF, U/W Debt Yield based on NOI/NCF, U/W Debt Yield at Maturity based on NOI/NCF, Cut-off Date LTV Ratio and LTV Ratio at Maturity based on the DoubleTree New York Times Square West Leased Fee Whole Loan are $147,059, $147,059, 1.59x/1.59x, 6.1%/6.1%, 6.1%/6.1%, 67.9% and 67.9% (in each case, based on the leased fee), respectively. The appraised value was determined prior to the emergence of the novel coronavirus pandemic, and the economic disruption resulting from measures to combat the pandemic, and all LTV metrics were calculated based on such prior information. In addition, TTM NOI, U/W Revenue, U/W Expenses, U/W NOI and U/W NCF shown above have been adjusted to exclude the effect of the novel coronavirus pandemic, as further described in footnote 8 below, and debt service coverage ratios and debt yields shown above are based on such adjusted numbers. See “Risk Factors—Risks Related to Market Conditions and Other External Factors—The Coronavirus Pandemic Has Adversely Affected the Global Economy and Will Likely Adversely Affect the Performance of the Mortgage Loans” in the Preliminary Prospectus. |
| (2) | See “Subordinate and Mezzanine Indebtedness” section below. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
66
| Other – Leased Fee | Loan #4 | Cut-off Date Balance: | $30,000,000 | |
| 350 West 40th Street | DoubleTree New York Times Square | Cut-off Date LTV: | 43.7% | |
| New York, NY 10018 | West Leased Fee | U/W NCF DSCR: | 2.53x | |
| U/W NOI Debt Yield: | 9.4% |
| (3) | See “Escrows” section below. |
| (4) | The DoubleTree New York Times Square West Leased Fee Whole Loan is secured by the borrower’s fee simple interest in a land parcel (the “Fee” or the “DoubleTree New York Times Square West Leased Fee Property”) beneath a 36-story, 612-room, full-service DoubleTree by Hilton New York Times Square West Hotel (the “Leasehold” or the “Improvement”) located at 350 West 40th Street in Times Square, New York, New York. |
| (5) | Represents the trailing 12-month period ending June 30, 2020, including periods negatively impacted by COVID-19. For the same period, the occupancy adjusted to exclude the negative impact of COVID-19 (that is, assuming 2019 performance for March, April, May and June 2020) is 91.3%. See “COVID-19 Update” section for details on recent monthly performance. |
| (6) | Historical occupancy is based on the “look-through” of Leasehold (non-collateral) hotel occupancy. YE 2016 Occupancy is not available as the DoubleTree New York Times Square West Leased Fee Property was constructed in 2017. |
| (7) | The Cut-off Date LTV Ratio and LTV Ratio at Maturity are based on the Senior Loan and (a) the “as-is” Leased Fee appraised value as of October 1, 2019 of $132,600,000 and (b) the “as-stabilized” Fee and Leasehold (non-collateral) appraised value as of October 1, 2023 of $347,000,000, which reflects the value of the Improvement (non-collateral) operating at stabilized market conditions, plus the value of the Fee (collateral). |
| (8) | Underwriting and Financial Information is based on (a) the average annual ground lease payment due under the ground lease over the next 15-year period described below under “The Property,” and (b) the underwritten “look-through” of Leasehold (non-collateral) net operating income adjusted to exclude the negative impact of COVID-19 (that is, assuming 2019 performance for March, April, May and June 2020). Historical NOI performance is based on the “look-through” of Leasehold (non-collateral) net operating income, as described below under “Operating History and Underwritten Net Cash Flow”. At loan origination, the Fee (collateral) and Leasehold (non-collateral) interests were bifurcated and a newly created 49-year ground lease was executed. |
| (9) | See “The Mortgage Loan” below for further discussion of sources and uses. |
The Mortgage Loan. The mortgage loan (the “DoubleTree New York Times Square West Leased Fee Mortgage Loan”) is part of a whole loan (the “DoubleTree New York Times Square West Leased Fee Whole Loan”) evidenced by four pari passu senior promissory notes comprising the Senior Loan with an aggregate original principal balance of $58,000,000 and the Subordinate Companion Loan with an original principal balance of $32,000,000. The DoubleTree New York Times Square West Leased Fee Whole Loan is secured by a first priority lien on the Leased Fee Borrower’s (as defined below) fee simple interest in a land parcel beneath a 36-story, 612-room, full-service DoubleTree by Hilton New York Times Square West Hotel located at 350 West 40th Street in Times Square, New York, New York. The Improvement will not be collateral for the DoubleTree New York Times Square West Leased Fee Whole Loan. Since the Improvement has been 100.0% leased to the ground lessee pursuant to the Ground Lease (as defined below), the Leased Fee Borrower will only receive the rental income from the Ground Lease and not from the operation of the Improvement. The ground lessee has legal title to the Improvement during the term of the Ground Lease.
Promissory Notes A-2 and A-3, with an aggregate original principal balance of $30,000,000, represent the DoubleTree New York Times Square West Leased Fee Mortgage Loan, and will be included in the WFCM 2020-C57 securitization trust. Promissory Notes A-1 and A-4, with an aggregate original principal balance of $28,000,000, represent the “Non-Serviced Pari Passu Companion Loans”. The DoubleTree New York Times Square West Leased Fee Whole Loan will be serviced pursuant to the pooling and servicing agreement for the WFCM 2020-C57 securitization trust. See “Description of the Mortgage Pool—The Whole Loans—The Serviced AB Whole Loan—DoubleTree New York Times Square West Leased Fee Whole Loan” and “Pooling and Servicing Agreement” in the Preliminary Prospectus.
Note Summary
| Notes | Original Balance | Cut-off Date Balance | Note Holder | Controlling Piece |
| A-1 | $25,000,000 | $25,000,000 | UBS 2019-C18 | No |
| A-2 | 20,000,000 | 20,000,000 | WFCM 2020-C57 | Yes(1) |
| A-3 | 10,000,000 | 10,000,000 | WFCM 2020-C57 | No |
| A-4 | 3,000,000 | 3,000,000 | UBS 2019-C18 | No |
| B | 32,000,000 | 32,000,000 | Third Party Investor | Yes(1) |
| Total | $90,000,000 | $90,000,000 |
| (1) | The initial controlling note is Note B, so long as no control appraisal period with respect to the DoubleTree New York Times Square West Leased Fee Whole Loan has occurred and is continuing. If and for so long as a control appraisal period with respect to the DoubleTree New York Times Square West Leased Fee Whole Loan has occurred and is continuing, then the controlling note will be Note A-2. See “Description of the Mortgage Pool—The Whole Loans—The Serviced AB Whole Loan—DoubleTree New York Times Square West Leased Fee Whole Loan” in the Preliminary Prospectus. |
At loan origination, the Fee (collateral) and Leasehold (non-collateral) interests were bifurcated and a newly created 49-year ground lease was executed. Simultaneously with the origination of the DoubleTree New York Times Square West Leased Fee Whole Loan, a mortgage loan secured by the Leasehold interest (non-collateral), in the amount of $120.0 million (the “Leasehold Mortgage Loan”), was provided by Goldman Sachs Bank USA (the “Leasehold Mortgage Lender”) to the borrower sponsor. The maturity date of the Leasehold Mortgage Loan is November 25, 2021. Pursuant to the Leasehold Mortgage Loan, the borrower sponsor also pledged as additional collateral to the Leasehold Mortgage Lender 100.0% of the equity interests of the sole member in the Leased Fee Borrower (as defined below). The proceeds of the DoubleTree New York Times Square West Leased Fee Whole Loan and the Leasehold Mortgage Loan were used to pay off existing debt on the DoubleTree New York Times Square West Leased Fee Property, pay closing costs and return equity to the borrower sponsor. An affiliate of the borrower sponsor acquired the Improvement and is the Leasehold owner/ground tenant.
The Borrower and Borrower Sponsor. The borrower is NYHK Fiona LLC (the “Leased Fee Borrower”), a Delaware limited liability company structured to be bankruptcy-remote with two independent directors. Legal counsel to the Leased Fee Borrower delivered a non-consolidation opinion in connection with the origination of the DoubleTree New York Times Square West Leased Fee Whole Loan.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
67
| Other – Leased Fee | Loan #4 | Cut-off Date Balance: | $30,000,000 | |
| 350 West 40th Street | DoubleTree New York Times Square | Cut-off Date LTV: | 43.7% | |
| New York, NY 10018 | West Leased Fee | U/W NCF DSCR: | 2.53x | |
| U/W NOI Debt Yield: | 9.4% |
The Leased Fee Borrower is directly owned by Sam Chang, the borrower sponsor and non-recourse carveout guarantor of the DoubleTree New York Times Square West Leased Fee Whole Loan.
Sam Chang is the founder, Chairman and CEO of McSam Hotel Group, LLC based in Great Neck, New York. Since 1997, Mr. Chang has developed and operated more than 50 properties, including hotels and residential and commercial properties in the New York metropolitan area. Mr. Chang has been approved for franchise licenses by a variety of hotel franchise companies and their affiliates, including Hilton Hotel Corporation, InterContinental Hotels Group, Hilton International, Inc., Hyatt Hotels Corporation, Carlson Hotels Worldwide, Starwood Hotels and Resorts Worldwide, Inc., Wyndham Worldwide Corporation, and Choice Hotels International. McSam Hotel Group, LLC currently operates 36 properties, has 13 properties under construction, and two properties under development, totaling 9,231 rooms for a variety of national hotel chains. See “Description of the Mortgage Pool—Litigation and Other Considerations” and “—Loan Purpose; Default History, Bankruptcy Issues and Other Proceedings” in the Preliminary Prospectus.
The Property. The DoubleTree New York Times Square West Leased Fee Property consists of a square-shaped parcel of land totaling 9,875 square feet situated along the northwesterly corner of Ninth Avenue and West 40th Street in Times Square, New York, New York. The collateral does not include the Improvement constructed on such parcel of land. The Improvement consists of a 36-story, 612-room full-service DoubleTree by Hilton New York Times Square West Hotel. Built in 2017, the Improvement’s guestroom configuration consists of 375 king rooms and 237 double rooms, and each guestroom includes a 40-inch HDTV, premium cable, a mini-refrigerator, coffeemaker, and desk and chair. Hotel amenities include a full-service restaurant and bar (serving breakfast, lunch, and dinner) with indoor, lounge, and outdoor garden seating, a rooftop bar and lounge on the 37th floor featuring views of the New York City skyline, two meeting and banquet spaces totaling 900 square feet (which can accommodate up to 75 people), a business center, fitness center, and market pantry. Parking is provided by an off-site valet through a third party operator.
At loan origination, the DoubleTree New York Times Square West Leased Fee Property was encumbered by a 49-year ground lease, with no termination option, to an affiliate of the Leased Fee Borrower, with an initial annual ground rent of $5.4 million and annual increases of 1.0% thereafter commencing in year 11.
The DoubleTree by Hilton New York Times Square West Hotel operates under a franchise agreement between the ground lessee and Hilton Franchise Holdings LLC, which is a subsidiary of Hilton Worldwide Holdings Inc. (“Hilton”). The franchise agreement has an expiration date of June 30, 2038. The franchise agreement stipulates a monthly royalty fee of 5.0% of gross room revenue and a monthly program fee of 4.0% of gross room revenue. The program fee is subject to increase, but such increase is limited to 1.0% of the gross room revenue, and the program fee will not exceed 5% of gross room revenue.
Hilton is a global hospitality company, operating in 118 countries and territories under 18 brand names. As of the first quarter of 2020, Hilton had 759 company-owned and/or managed properties (241,482 rooms) and 5,403 franchised properties (736,457 rooms), for a total of 6,162 properties (977,939 rooms). Hilton’s portfolio of global brands includes Waldorf Astoria Hotels & Resorts, Conrad Hotels & Resorts, Curio Collection by Hilton, Hilton Hotels & Resorts, Embassy Suites by Hilton, Homewood Suites by Hilton, DoubleTree by Hilton, Hilton Garden Inn, Hampton by Hilton, and LXR Hotels & Resorts. As of year-end 2019, there were 587 hotels operating under the DoubleTree brand across 47 countries and territories.
COVID-19 Update. As of the August 2020 payment, the DoubleTree New York Times Square West Leased Fee Property was open and operating. On May 1, 2020, the borrower sponsor contacted the lenders to request forbearance on the $90 million DoubleTree New York Times Square West Leased Fee Whole Loan. The request included a modification of the ground lease to permit the deferral of interest payments under the DoubleTree New York Times Square West Leased Fee Whole Loan for May 2020, June 2020 and July 2020, which would be repaid in equal installments on each monthly payment date in 2021. Pursuant to the co-lender agreement for the DoubleTree New York Times Square West Leased Fee Whole Loan, all major decisions (which would include the modification of the ground lease and any forbearance request) rest with the B-Note holder. On May 7, 2020, the B-Note holder formally denied the request. The Leased Fee Borrower has made all debt service payments through August 2020.
The following table presents certain information relating to recent monthly operating performance of the non-collateral Improvement:
Monthly Operating Performance
Improvements | |||
Month |
Occupancy |
ADR |
RevPAR |
| July 2020 | 15.5% | $83.18 | $12.91 |
| June 2020 | 30.5% | $91.41 | $27.91 |
| May 2020 | 26.7% | $92.17 | $24.60 |
April 2020 |
12.6% | $76.88 | $9.72 |
| March 2020 | 38.2% | $139.52 | $53.26 |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
68
| Other – Leased Fee | Loan #4 | Cut-off Date Balance: | $30,000,000 | |
| 350 West 40th Street | DoubleTree New York Times Square | Cut-off Date LTV: | 43.7% | |
| New York, NY 10018 | West Leased Fee | U/W NCF DSCR: | 2.53x | |
| U/W NOI Debt Yield: | 9.4% |
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 DoubleTree New York Times Square West Leased Fee Property:
Cash Flow Analysis
| In Place Contractual Ground Rent | Year 15 Contractual Ground Rent | UW Ground Rent(1) | |||||
| Base Rent | $5,400,000 | $5,675,454 | $5,454,725 | ||||
| Total Gross Potential Income | $5,400,000 | $5,675,454 | $5,454,725 | ||||
| (Vacancy) | 0 |
0 |
0 |
||||
| Effective Gross Income | $5,400,000 | $5,675,454 | $5,454,725 | ||||
| Total Expenses | 0 |
0 |
0 |
||||
| Net Operating Income | $5,400,000 |
$5,675,454 |
$5,454,725 |
||||
| Net Cash Flow | $5,400,000 | $5,675,454 | $5,454,725 | ||||
| (1) | Reflects average ground rent payment over a 15-year period. At loan origination, the Improvement is encumbered by a 49-year ground lease, to an affiliate of the Leased Fee Borrower, with an initial annual ground rent of $5.4 million and 1.0% annual increases thereafter commencing in year 11. |
The following table presents certain information relating to the net cash flow of the non-collateral Improvement:
Look-Through of Leasehold Interest (Non-Collateral)
| 2017 | 2018 | 2019 |
TTM 6/30/2020 |
U/W Look-Through
|
% of U/W Total Revenue(2) | U/W $ per Room | |||||||||
| Occupancy | 86.9% | 95.4% | 91.7% | 69.7% | 91.3% | ||||||||||
| ADR | $188.70 | $196.37 | $194.83 | $176.63 | $194.82 | ||||||||||
| RevPAR | $164.06 | $187.35 | $178.62 | $123.04 | $177.96 | ||||||||||
| Room Revenue | $32,632,039 | $41,849,728 | $39,900,446 | $27,560,055 | $39,752,862 | 96.2% | $64,956 | ||||||||
| F&B Revenue | 0 | 0 | 0 | 0 | 0 | 0.0 | 0 | ||||||||
| Other Revenue | 809,876 |
1,125,746 |
1,436,789 |
1,397,807 |
1,591,161 |
3.8 |
2,600 |
||||||||
| Total Revenue | $33,441,914 |
$42,975,474 |
$41,337,236 |
$28,957,862 |
$41,344,023 |
100.0% |
$67,556 |
||||||||
| Room Expense | 7,654,748 | 9,477,133 | 9,451,891 | 6,974,093 | $9,381,209 | 23.6 | 15,329 | ||||||||
| F&B Expense | 0 | 0 | 0 | 0 | 0 | 0.0 | 0 | ||||||||
| Other Department Expense | 473,148 | 505,464 | 429,301 | 350,139 | 454,736 | 28.6 | 743 | ||||||||
| Total Department Expenses | 8,127,896 |
9,982,597 |
9,881,192 |
7,324,232 |
9,835,945 |
23.8 |
16,072 |
||||||||
| Gross Operating Income | $25,314,018 | $32,992,877 | $31,456,044 | $21,633,630 | $31,508,078 | 76.2% | $51,484 | ||||||||
| Total Undistributed Expenses | 8,724,834 |
10,369,136 |
10,884,292 |
8,514,379 |
10,977,959 |
26.6 |
17,938 |
||||||||
| Gross Operating Profit | $16,589,184 | $22,623,740 | $20,571,752 | $13,119,251 | $20,530,119 | 49.7% | $33,546 | ||||||||
| Total Fixed Charges | 3,659,834 |
4,788,832 |
5,340,276 |
5,531,068 |
5,357,614 |
13.0 |
8,754 |
||||||||
| Total Operating Expenses | $20,512,564 | $25,140,565 | $26,105,760 | $21,369,679 | $26,171,518 | 63.3% | $42,764 | ||||||||
| Net Operating Income | $12,929,350 | $17,834,908 | $15,231,476 | $7,588,183 | $15,172,505 | 36.7% | $24,792 | ||||||||
| FF&E | 665,773 |
1,244,720 |
1,242,435 |
879,574 |
1,653,761 |
4.0 |
2,702 |
||||||||
| Net Cash Flow | $12,263,578 | $16,590,188 | $13,989,041 | $6,708,609 | $13,518,744 | 32.7% | $22,089 | ||||||||
| NOI DSCR(3) | 6.01x | 8.28x | 7.08x | 3.52x | 7.05x | ||||||||||
| NCF DSCR(3) | 5.70x | 7.71x | 6.50x | 3.12x | 6.28x | ||||||||||
| NOI DY(3) | 22.3% | 30.7% | 26.3% | 13.1% | 26.2% | ||||||||||
| NCF DY(3) | 21.1% | 28.6% | 24.1% | 11.6% | 23.3% | ||||||||||
| (1) | The lender’s underwriting assumes 2019 performance for March, April, May and June of 2020, which were negatively impacted by COVID-19. See “COVID-19 Update” section for details on recent monthly performance at the non-collateral Improvement. |
| (2) | Represents % of U/W Total Revenue for Room Expense, F&B Expense and Other Department Expenses are based on their corresponding revenue line items. All other line items represent percent of Total Revenue. |
| (3) | Debt service coverage ratios and debt yields are based on the Senior Loan and exclude the Subordinate Companion Loan. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
69
| Other – Leased Fee | Loan #4 | Cut-off Date Balance: | $30,000,000 | |
| 350 West 40th Street | DoubleTree New York Times Square | Cut-off Date LTV: | 43.7% | |
| New York, NY 10018 | West Leased Fee | U/W NCF DSCR: | 2.53x | |
| U/W NOI Debt Yield: | 9.4% |
Appraisal. The appraiser concluded to an “as-is” appraised value for the DoubleTree New York Times Square West Leased Fee Property of $132,600,000 as of October 1, 2019. The appraiser concluded an “as-stabilized” Fee and Leasehold (non-collateral) appraised value of $347,000,000 as of October 1, 2023, which reflects the value of the Improvement (non-collateral) operating at stabilized market conditions, plus the value of the Fee (collateral). According to the appraisal, operations are stabilized at that point in time when abnormalities in supply and demand or any additional transitory conditions cease to exist, and the existing (“as-is”) conditions are those expected to continue over the economic life of the DoubleTree New York Times Square West Leased Fee Property. The appraiser concluded an “as-is” Fee and Leasehold (non-collateral) appraised value of $302,800,000 as of September 9, 2019.
Environmental Matters. According to the Phase I environmental site assessment dated October 30, 2019, there was no evidence of any recognized environmental conditions at the DoubleTree New York Times Square West Leased Fee Property. However, the Phase I environmental site assessment identified a controlled recognized environmental condition related to underground storage tanks previously located on the DoubleTree New York Times Square West Leased Fee Property. See “Description of the Mortgage Pool—Environmental Considerations” in the Preliminary Prospectus.
Market Overview and Competition. The DoubleTree New York Times Square West Leased Fee Property is located within Times Square in the Midtown West neighborhood of Manhattan, proximate to the Theater District and Hudson Yards. The Times Square neighborhood is bounded by West 53rd Street to the north; West 40th Street to the south; Sixth Avenue to the east; and Eighth Avenue to the west. The Theater District is generally between Sixth Avenue and Eighth Avenue from the low-West 40s to the low-West 50s, centralized around Broadway. Times Square is a small land area of significant consequence. According to a third party market research report, though it comprises only 0.1% of New York City’s land area, Times Square supports nearly 10% of the city’s jobs and generates 15% of its economic output as of June 2016.
According to a third party market information provider, based on information prior to the COVID-19 pandemic, New York City received 56.5 million visitors in 2014, 58.5 million in 2015, 60.5 million in 2016, 62.8 million in 2017, and 65.0 million in 2018. In 2018, visitors spent $13.5 billion on lodging with additional spending of $32.7 billion on food & beverage, shopping, transportation, and recreation and entertainment. According to a third party market information provider, the Times Square district had approximately 377,306 daily visitors in 2018. Prior to the COVID-19 pandemic, on its busiest days, daily traffic in this neighborhood could exceed 450,000 pedestrians.
Other prominent attractions within an approximately one-mile radius of the DoubleTree New York Times Square West Leased Fee Property include the Jacob Javits Convention Center, Central Park, Columbus Circle, Madison Square Garden, Empire State Building, Grand Central Terminal, Bryant Park, Intrepid Sea, Air & Space Museum and Hudson Yards. Bounded by 34th Street to the north, 12th Avenue to the west, 30th Street to the south, and 10th Avenue to the east, Hudson Yards is a 28-acre LEED GOLD Neighborhood Development, which, upon completion, is expected to provide approximately 18.2 million square feet of mixed-use office, residential and hotel space. Proposed offerings at Hudson Yards include more than 100 shops, a collection of restaurants, approximately 4,000 residences, affordable housing, and 14 acres of public open space. Certain phases of the Hudson Yards development have already opened in 2016 and 2019.
Times Square is a hub in the MTA subway network with multiple subway stations within the district boundaries. There are local and express service subway stations along Sixth Avenue (B, D, F, M), Seventh Avenue/Broadway (N, Q, R, W), Seventh Avenue (No. 1, 2, 3), Eighth Avenue (A, C, E) and 42nd Street (S and No. 7). The No. 7 train extends to West 34th Street and Eleventh Avenue, linking Midtown Manhattan to the 28-acre Hudson Yards. The DoubleTree New York Times Square West Leased Fee Property is located adjacent to the Port Authority bus terminal, which provides access to New York and New Jersey. The PATH train provides access from West 33rd Street and south along Sixth Avenue to the New Jersey cities of Newark, Hoboken and Jersey City. Penn Station, serving Amtrak, New Jersey Transit, Long Island Railroad, and the MTA subway network, is located at 33rd Street and 8th Avenue. In 2018, annual subway ridership within the Times Square district reached approximately 93.3 million, or over 255,000 passengers per day.
According to the appraisal, the DoubleTree by Hilton New York Times Square West Hotel’s defined primary competitive marketplace includes eight properties, including DoubleTree by Hilton New York Times Square South, Fairfield Inn & Suites by Marriott Manhattan Times Square, Four Points by Sheraton Midtown Times Square, Yotel New York, Crowne Plaza HY36 Midtown Manhattan, Hilton Garden Inn New York Times Square South, AC Hotel by Marriott New York Times Square, and Distrikt Hotel, Tapestry Collection by Hilton. The eight primary competitors range in size from 155 to 713 rooms and collectively contain an aggregate of 2,371 rooms.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
70
| Other – Leased Fee | Loan #4 | Cut-off Date Balance: | $30,000,000 | |
| 350 West 40th Street | DoubleTree New York Times Square | Cut-off Date LTV: | 43.7% | |
| New York, NY 10018 | West Leased Fee | U/W NCF DSCR: | 2.53x | |
| U/W NOI Debt Yield: | 9.4% |
Competitive Property Summary(1)
| Hotel | No. of Rooms | Segmentation | Estimated 2018 | |||||
| Commercial | Meeting & Group | Leisure | Occupancy | Average Daily Rate | RevPAR | |||
| DoubleTree by Hilton New York Times Square West | 612 | 40.0% | 15.0% | 45.0% | 95.4%(2) | $196.37(2) | $187.35(2) | |
| DoubleTree by Hilton New York Times Square South | 224 | 40.0% | 10.0% | 50.0% | 90% - 95% | $210 - $220 | $200 - $210 | |
| Fairfield Inn & Suites by Marriott Manhattan Times Square | 244 | 40.0% | 10.0% | 50.0% | 90% - 95% | $220 - $230 | $210 - $220 | |
| Four Points by Sheraton Midtown Times Square | 244 | 40.0% | 10.0% | 50.0% | 90% - 95% | $220 - $230 | $200 - $210 | |
| Yotel New York | 713 | 25.0% | 15.0% | 60.0% | 90% - 95% | $190 - $200 | $170 - $180 | |
| Crowne Plaza HY36 Midtown Manhattan | 251 | 45.0% | 10.0% | 45.0% | 85% - 90% | $230 - $240 | $200 - $210 | |
| Hilton Garden Inn New York Times Square South | 250 | 50.0% | 10.0% | 40.0% | 95% - 100% | $200 - $210 | $200 - $210 | |
| AC Hotel by Marriott New York Times Square | 290 | 50.0% | 15.0% | 35.0% | 80% - 85% | $260 - $270 | $210 - $220 | |
| Distrikt Hotel, Tapestry Collection by Hilton | 155 | 40.0% | 10.0% | 50.0% | 90% - 95% | $190 - $200 | $170 - $180 | |
| Total/Weighted Average(3) | 2,371 | 38.3% | 12.1% | 49.6% | 91.3% | $216.91 | $196.27 | |
| (1) | Information obtained from the appraisal. |
| (2) | Based on the borrower-provided operating statements as of December 31, 2018. |
| (3) | Excludes the DoubleTree by Hilton New York Times Square West. |
Escrows.
Real Estate Taxes – The Leased Fee Borrower is not required to make monthly escrow deposits for real estate taxes as long as (i) no event of default under the ground lease has occurred and is continuing, (ii) the ground lease remains in full force and effect, (iii) the ground lessee is responsible, pursuant to the terms of the ground lease, for the direct payment or reimbursement of all taxes and (iv) the lender receives evidence satisfactory to the lender that all taxes and insurance premiums have been paid in a timely manner.
Insurance – The Leased Fee Borrower is not required to make monthly escrow deposits for insurance premiums as long as (i) no event of default under the ground lease has occurred and is continuing, (ii) the ground lease remains in full force and effect, (iii) the ground lessee is responsible, pursuant to the terms of the ground lease, for the direct payment or reimbursement of all insurance premiums and (iv) the lender receives evidence satisfactory to the lender that all taxes and insurance premiums have been paid in a timely manner.
Lockbox and Cash Management. Not applicable.
Property Management. The DoubleTree New York Times Square West Leased Fee Property is managed by Crescent Hotels & Resorts, LLC.
Partial Release. Not permitted.
Real Estate Substitution. Not permitted.
Subordinate and Mezzanine Indebtedness. In addition to the Senior Loan (comprised of the DoubleTree New York Times Square West Leased Fee Mortgage Loan and the Non-Serviced Pari Passu Companion Loans), the DoubleTree New York Times Square West Leased Fee Whole Loan includes the Subordinate Companion Loan. The Subordinate Companion Loan had an original principal balance of $32,000,000 and accrues interest at the rate of 3.9090% per annum. The holders of the Senior Loan and the Subordinate Companion Loan have entered into a co-lender agreement, which sets forth the allocation of collections on the DoubleTree New York Times Square West Leased Fee Whole Loan. See “Description of the Mortgage Pool—The Whole Loans—The Serviced AB Whole Loan—DoubleTree New York Times Square West Leased Fee Whole Loan” in the Preliminary Prospectus.
There is no mezzanine loan or preferred equity; however, as described above under “The Mortgage Loan”, the collateral for the Leasehold Mortgage Loan also includes a pledge of 100% of the equity interests of the sole member in the Leased Fee Borrower to the Leasehold Mortgage Lender. In connection with the origination of the Leasehold Mortgage Loan, the Leasehold Mortgage Lender and UBS AG, as the lender under the DoubleTree New York Times Square West Leased Fee Whole Loan, entered into an intercreditor agreement, whereby the holder of the DoubleTree New York Times Square West Leased Fee Whole Loan is the senior lender thereunder and the Leasehold Mortgage Lender is the junior lender thereunder. Pursuant to the intercreditor agreement, the Leasehold Mortgage Lender is provided certain notice, cure and purchase option rights with respect to the DoubleTree New York Times Square West Leased Fee Whole Loan that are typically provided to mezzanine lenders.
Ground Lease. At loan origination, the DoubleTree New York Times Square West Leased Fee Property was encumbered by a 49-year ground lease, with no termination option, to an affiliate of the Leased Fee Borrower, with an initial annual ground rent of $5.4 million and annual increases of 1.0% thereafter commencing in year 11.
Terrorism Insurance. The DoubleTree New York Times Square West Leased Fee Whole Loan documents require that the “all risk” insurance policy required to be maintained by the Leased Fee Borrower provides coverage for terrorism in an amount equal to the full replacement cost of the DoubleTree New York Times Square West Leased Fee Property, as well as business interruption insurance covering no less than the 18-month period following the occurrence of a casualty event, together with a 12-month extended period of indemnity.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
71
| Office – Suburban | Loan #5 | Cut-off Date Balance: | $29,250,000 | |
10905,
10907-8, 10911, 10915, San Diego, CA 92127 |
Technology Place | Cut-off Date LTV: U/W NCF DSCR: U/W NOI Debt Yield: |
74.1% 1.40x 8.6% |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
72
| Office – Suburban | Loan #5 | Cut-off Date Balance: | $29,250,000 | |
10905,
10907-8, 10911, 10915, San Diego, CA 92127 |
Technology Place | Cut-off Date LTV: U/W NCF DSCR: U/W NOI Debt Yield: |
74.1% 1.40x 8.6% |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
73
| Office – Suburban | Loan #5 | Cut-off Date Balance: | $29,250,000 | |
10905,
10907-8, 10911, 10915, San Diego, CA 92127 |
Technology Place | Cut-off Date LTV: U/W NCF DSCR: U/W NOI Debt Yield: |
74.1% 1.40x 8.6% |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
74
| No. 5 – Technology Place | ||||||||
| Mortgage Loan Information | Mortgaged Property Information | |||||||
| Mortgage Loan Seller: | Wells Fargo Bank, National Association | Single Asset/Portfolio: | Single Asset | |||||
Credit Assessment (Fitch/KBRA/Moody’s): |
NR/NR/NR | Property Type – Subtype: | Office – Suburban | |||||
| Original Principal Balance: | $29,250,000 | Location: | San Diego, CA | |||||
| Cut-off Date Balance: | $29,250,000 | Size: | 145,214 SF | |||||
| % of Initial Pool Balance: | 5.2% | Cut-off Date Balance Per SF: | $201.43 | |||||
| Loan Purpose: | Acquisition | Maturity Date Balance Per SF: | $159.99 | |||||
| Borrower Sponsors: | David B. Dollinger; The David Dollinger Living Trust | Year Built/Renovated: | 1980/2018 | |||||
| Guarantors: | David B. Dollinger; The David Dollinger Living Trust | Title Vesting: | Fee | |||||
| Mortgage Rate: | 4.0000% | Property Manager: | DPM Property Management, Inc. | |||||
| Note Date: | July 16, 2020 | Current Occupancy (As of): | 100.0% (7/9/2020) | |||||
| Seasoning: | 0 months | YE 2019 Occupancy: | 100.0% | |||||
| Maturity Date: | August 11, 2030 | YE 2018 Occupancy(2): | 95.9% | |||||
| IO Period: | 0 months | YE 2017 Occupancy(2): | 80.7% | |||||
| Loan Term (Original): | 120 months | YE 2016 Occupancy(2): | 93.1% | |||||
| Amortization Term (Original): | 360 months | As-Is Appraised Value: | $39,500,000 | |||||
| Loan Amortization Type: | Amortizing Balloon | As-Is Appraised Value Per SF: | $272.01 | |||||
| Call Protection: | L(24),D(89),O(7) | As-Is Appraisal Valuation Date: | June 22, 2020 | |||||
| Lockbox Type: | Springing | |||||||
| Additional Debt: | None | Underwriting and Financial Information(3) | ||||||
| Additional Debt Type (Balance): | NAP | TTM NOI (5/31/2020): | $2,668,245 | |||||
| YE 2019 NOI(4): | $2,515,436 | |||||||
| YE 2018 NOI(4): | $2,049,772 | |||||||
| YE 2017 NOI: | $2,177,737 | |||||||
| Escrows and Reserves(1) | U/W Revenues: | $3,381,124 | ||||||
| Initial | Monthly | Cap | U/W Expenses: | $871,870 | ||||
| Taxes | $138,960 | $27,792 | NAP | U/W NOI: | $2,509,254 | |||
| Insurance | $0 | Springing | NAP | U/W NCF: | $2,341,798 | |||
| Replacement Reserve | $0 | $2,420 | $58,080 | U/W DSCR based on NOI/NCF: | 1.50x / 1.40x | |||
| Deferred Maintenance | $28,632 | $0 | NAP | U/W Debt Yield based on NOI/NCF: | 8.6% / 8.0% | |||
| TI/LC | $250,000 | $12,101 | $700,000 | U/W Debt Yield at Maturity based on NOI/NCF: | 10.8% / 10.1% | |||
| Springing Memjet TI/LC Reserve | Springing | $0 | NAP | Cut-off Date LTV Ratio: | 74.1% | |||
| Systech TI/LC Reserve | $99,420 | $0 | NAP | LTV Ratio at Maturity: | 58.8% | |||
| Titan Growth Rent Concession Reserve | $27,278 | $0 | NAP | |||||
| Sources and Uses | ||||||||
| Sources | Uses | |||||||
| Original mortgage loan amount | $29,250,000 | 73.4% | Purchase price | $39,000,000 | 97.9% | |||
| Sponsor equity | 10,602,792 | 26.6 | Upfront reserves | 544,290 | 1.4 | |||
| Closing costs | 308,502 | 0.8 | ||||||
| Total Sources | $39,852,792 | 100.0% | Total Uses | $39,852,792 | 100.0% | |||
| (1) | See “Escrows” section below. |
| (2) | See “Historical Occupancy” section below. |
| (3) | While the Technology Place Mortgage Loan (as defined below) was originated after the emergence of the novel coronavirus pandemic and the economic disruption resulting from measures to combat the pandemic, the pandemic is an evolving situation and could impact the Technology Place Mortgage Loan more severely than assumed in the underwriting of the Technology Place Mortgage Loan and could adversely affect the NOI, NCF and occupancy information, as well as the appraised value and the DSCR, LTV and Debt Yield metrics presented above. See “Risk Factors— Risks Related to Market Conditions and Other External Factors—Coronavirus Pandemic Has Adversely Affected the Global Economy and Will Likely Adversely Affect the Performance of the Mortgage Loans” in the Preliminary Prospectus. |
| (4) | The increase from YE 2018 NOI to YE 2019 NOI was due to new leases signed with Southwest Antennas, Inc. (lease commenced in May 2018) and Mi Casa Software, LLC (dba A2e Technologies; lease commenced in September 2018). |
The Mortgage Loan. The mortgage loan (the “Technology Place Mortgage Loan”) is evidenced by a single promissory note secured by a first mortgage encumbering the fee interest in a 10 building suburban office complex totaling 145,214 square feet (the “Technology Place Property”).
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
75
| Office – Suburban | Loan #5 | Cut-off Date Balance: | $29,250,000 | |
10905,
10907-8, 10911, 10915, San Diego, CA 92127 |
Technology Place | Cut-off Date LTV: U/W NCF DSCR: U/W NOI Debt Yield: |
74.1% 1.40x 8.6% |
The Borrower and Borrower Sponsors. The borrower is Rancho Bernardo LLC (the “Technology Place Borrower”), a Delaware limited liability company and single purpose entity. The borrower sponsors are David B. Dollinger and The David Dollinger Living Trust.
David B. Dollinger is a principal at Dollinger Properties, LLC, a family-owned business focused on the acquisition, through construction or purchase, of multi-tenant research and development (“R&D”)/industrial flex, multifamily and retail properties. Headquartered in Redwood City, California, Dollinger Properties, LLC owns and manages over 70 properties in California representing more than 6.0 million square feet. The borrower sponsor owned a California R&D property that was subject to foreclosure and was ultimately the subject of a note sale in 2014. See “Description of the Mortgage Pool–Loan Purpose; Default History, Bankruptcy Issues and Other Proceedings” in the Preliminary Prospectus.
The Property. The Technology Place Property is a creative office and R&D complex comprising 10 buildings totaling 145,214 square feet located in San Diego, California, approximately 23.3 miles east of the central business district. The Property was constructed in 1980 and renovated in 2018 at a total cost of approximately $9.1 million ($62.67 per square foot; including $3.1 million in capital improvements and $6.0 million in tenant improvements). Capital improvements included exterior paint and façade upgrades, landscaping and exterior common area upgrades, roof covering replacements, HVAC package unit replacements and signage upgrades. The Property was originally designed for industrial/R&D space users and has mostly been converted to creative office space over the past two to three years. Approximately 85.9% of the net rentable area at the Property is office space with the remainder being lab, warehouse, and general R&D space.
The Property contains 518 surface parking spaces, resulting in a parking ratio of 3.6 spaces per 1,000 square feet of net rentable area. According to a third party market research report, the Property has averaged 93.9% occupancy since 2015 and 85.2% occupancy since 1999 and, as of July 9, 2020, was 100.0% occupied by 12 tenants.
COVID-19 Update. As of July 13, 2020, the Technology Place Property is open; however, most, if not all, office tenants are working remotely. Approximately 88.4% of the tenants by square footage and 88.2% of the tenants by underwritten base rent made their full June rent payment, and 100.0% of the tenants by square footage and 100.0% of the tenants by underwritten base rent made their July rent payment. One tenant, representing approximately 11.8% of underwritten base rent, received 50% rent deferral for April, May and June 2020; however, the tenant repaid deferred rent on July 1, 2020. As of the date hereof, the Technology Place Mortgage Loan is not subject to any modification or forbearance request. The first debt service payment of the Technology Place Mortgage Loan is due in September 2020.
Major Tenants.
Memjet US Services, Inc. (25,137 square feet, 17.3% of net rentable area; 19.8% of underwritten base rent; October 31, 2022 lease expiration) Memjet US Services, Inc. (“Memjet”) is a provider of digital inkjet technology that enables precision, simplicity, and affordability. Memjet has been a tenant at the Property since July 2015 and occupies an entire building, which serves as the company’s headquarters. Memjet does not have any extension options upon lease expiration.
Systech Corporation (19,884 square feet, 13.7% of net rentable area; 9.9% of underwritten base rent; September 30, 2024 lease expiration) Systech Corporation (“Systech”), which was founded in 1981, develops and manufactures hardware and software products for the Internet of Things (“IOT”) market. Systech’s IOT and networking products address a wide range of applications and markets including building automation, retail and commercial applications, financial networks, remote access and control, and connected health. Systech has been a tenant at the Property since April 2013 and occupies an entire building, which serves as the company’s headquarters. Systech does not have any extension options upon lease expiration.
Nucleus Biologics, LLC (16,864 square feet, 11.6% of net rentable area; 11.8% of underwritten base rent; October 31, 2023 lease expiration) Nucleus Biologics, LLC (“Nucleus Biologics”) is a cell culture product supplier to the biotech and pharmaceutical industries. Nucleus Biologics initially took occupancy at the Property, which serves as the company’s headquarters, in April 2017 and expanded into an additional 6,353 square feet in June 2019. Nucleus Biologics has one, 5-year option to renew with 9 to 12 months’ notice at the fair market rental rate.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
76
| Office – Suburban | Loan #5 | Cut-off Date Balance: | $29,250,000 | |
10905,
10907-8, 10911, 10915, San Diego, CA 92127 |
Technology Place | Cut-off Date LTV: U/W NCF DSCR: U/W NOI Debt Yield: |
74.1% 1.40x 8.6% |
The following table presents certain information relating to the tenancy at the Technology Place Property:
Major Tenants
| Tenant Name | Credit Rating (Fitch/ Moody’s/ |
Tenant NRSF | % of NRSF |
Annual U/W Base Rent PSF(1) |
Annual U/W Base Rent(1) |
% of Total Annual U/W Base Rent | Lease Expiration Date |
Extension Options |
Termination Option (Y/N) | |
| Major Tenants | ||||||||||
| Memjet | NR/NR/NR | 25,137 | 17.3% | $22.93 | $576,286 | 19.8% | 10/31/2022 | None | N | |
| Systech | NR/NR/NR | 19,884 | 13.7% | $14.44 | $287,156 | 9.9% | 9/30/2024 | None | N | |
| Nucleus Biologics | NR/NR/NR | 16,864 | 11.6% | $20.26 | $341,651 | 11.8% | 10/31/2023 | 1, 5-year(2) | N | |
| Southwest Antennas, Inc. | NR/NR/NR | 15,961 | 11.0% | $19.29 | $307,915 | 10.6% | 7/31/2024 | 1, 5-year(3) | N | |
| Rhombus Energy Solutions, Inc. | NR/NR/NR | 12,393 | 8.5% | $19.44 | $240,920 | 8.3% | 8/31/2022 | 1, 5-year(4) | N | |
| Total Major Tenants | 90,239 | 62.1% | $19.44 | $1,753,927 | 60.3% | |||||
| Non-Major Tenants | 54,975 | 37.9% | $20.98 | $1,153,390 | 39.7% | |||||
| Occupied Collateral Total | 145,214 | 100.0% | $20.02 | $2,907,317 | 100.0% | |||||
| Vacant Space | 0 | 0.0% | ||||||||
| Collateral Total | 145,214 | 100.0% | ||||||||
| (1) | The Annual U/W Base Rent PSF and Annual U/W Base Rent shown above include rent steps through July 2021 totaling $85,177. |
| (2) | Nucleus Biologics has one option to renew for 5 years at the fair market rental rate with at least months’ 9 but no more than 12 months’ notice. |
| (3) | Southwest Antennas, Inc. has one option to renew for 5 years at the fair market rental rate with at least months’ 9 but no more than 12 months’ notice. |
| (4) | Rhombus Energy Solutions, Inc. has one option to renew for 5 years at the fair market rental rate with at least months’ 9 but no more than 12 months’ notice. |
The following table presents certain information relating to the lease rollover schedule at the Technology Place Property:
Lease Expiration Schedule(1)(2)
| Year
Ending December 31, |
No. of Leases Expiring | Expiring NRSF | % of Total NRSF | Cumulative Expiring NRSF | Cumulative % of Total NRSF | Annual U/W Base Rent |
% of Total Annual U/W Base Rent | Annual U/W Base Rent PSF |
| MTM | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2020 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2021 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2022 | 4 | 48,330 | 33.3% | 48,330 | 33.3% | $1,026,096 | 35.3% | $21.23 |
| 2023 | 2 | 27,040 | 18.6% | 75,370 | 51.9% | $575,227 | 19.8% | $21.27 |
| 2024 | 4 | 52,030 | 35.8% | 127,400 | 87.7% | $938,047 | 32.3% | $18.03 |
| 2025 | 2 | 17,814 | 12.3% | 145,214 | 100.0% | $367,947 | 12.7% | $20.65 |
| 2026 | 0 | 0 | 0.0% | 145,214 | 100.0% | $0 | 0.0% | $0.00 |
| 2027 | 0 | 0 | 0.0% | 145,214 | 100.0% | $0 | 0.0% | $0.00 |
| 2028 | 0 | 0 | 0.0% | 145,214 | 100.0% | $0 | 0.0% | $0.00 |
| 2029 | 0 | 0 | 0.0% | 145,214 | 100.0% | $0 | 0.0% | $0.00 |
| 2030 | 0 | 0 | 0.0% | 145,214 | 100.0% | $0 | 0.0% | $0.00 |
| Thereafter | 0 | 0 | 0.0% | 145,214 | 100.0% | $0 | 0.0% | $0.00 |
| Vacant | 0 | 0 | 0.0% | 145,214 | 100.0% | $0 | 0.0% | $0.00 |
| Total/Weighted Average | 12 | 145,214 | 100.0% | $2,907,317 | 100.0% | $20.02 |
| (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. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
77
| Office – Suburban | Loan #5 | Cut-off Date Balance: | $29,250,000 | |
10905,
10907-8, 10911, 10915, San Diego, CA 92127 |
Technology Place | Cut-off Date LTV: U/W NCF DSCR: U/W NOI Debt Yield: |
74.1% 1.40x 8.6% |
The following table presents historical occupancy percentages at the Technology Place Property:
Historical Occupancy
12/31/2016(1)(2) |
12/31/2017(1)(2) |
12/31/2018(1)(2) |
12/31/2019(1) |
7/9/2020(3) |
| 93.1% | 80.7% | 95.9% | 100.0% | 100.0% |
| (1) | Information obtained from a third party market research report. |
| (2) | The increase in occupancy between 2017 and 2018 was primarily due to two new leases being executed totaling 16.1% of NRA. |
| (3) | 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 Technology Place Property:
Cash Flow Analysis
| 2017 | 2018 | 2019 | TTM 5/31/2020 | U/W | %(1) | U/W $ per SF | |
| Base Rent | $2,194,805 | $2,138,512 | $2,518,746 | $2,608,351 | $2,822,140 | 76.9% | $19.43 |
| Contractual Rent Steps | 0 | 0 | 0 | 0 | 85,177(2) | 2.3 | 0.59 |
| Grossed Up Vacant Space | 0 |
0 |
0 |
0 |
0 |
0.0 |
0.00 |
| Gross Potential Rent | $2,194,805 | $2,138,512 | $2,518,746 | $2,608,351 | $2,907,317 | 79.2% | $20.02 |
| Other Income(3) | 0 | 4,855 | 2,760 | 2,264 | 2,264 | 0.1 | 0.02 |
| Total Recoveries | 645,523 |
605,148 |
719,524 |
813,970 |
762,274 |
20.8 |
5.25 |
| Net Rental Income | $2,840,328 | $2,748,515 | $3,241,030 | $3,424,585 | $3,671,856 | 100.0% | $25.29 |
| (Vacancy & Credit Loss) | 0 |
0 |
0 |
0 |
(290,732)(4) |
(10.0) |
(2.00) |
| Effective Gross Income | $2,840,328 | $2,748,515 | $3,241,030 | $3,424,585 | $3,381,124 | 92.1% | $23.28 |
| Real Estate Taxes | 281,413 | 290,737 | 298,926 | 302,479 | 439,153 | 13.0 | 3.02 |
| Insurance | 39,149 | 45,688 | 51,552 | 50,754 | 31,400 | 0.9 | 0.22 |
| Management Fee | 126,158 | 118,195 | 130,680 | 137,035 | 135,245 | 4.0 | 0.93 |
| Other Operating Expenses | 215,871 |
244,123 |
244,436 |
266,072 |
266,072 |
7.9 |
1.83 |
| Total Operating Expenses | $662,591 | $698,743 | $725,594 | $756,340 | $871,870 | 25.8% | $6.00 |
| Net Operating Income | $2,177,737 | $2,049,772(5) | $2,515,436(5) | $2,668,245 | $2,509,254 | 74.2% | $17.28 |
| Replacement Reserves | 0 | 0 | 0 | 0 | 29,043 | 0.9 | 0.20 |
| TI/LC | 0 |
0 |
0 |
0 |
138,414 |
4.1 |
0.95 |
| Net Cash Flow | $2,177,737 | $2,049,772 | $2,515,436 | $2,668,245 | $2,341,798 | 69.3% | $16.13 |
| NOI DSCR | 1.30x | 1.22x | 1.50x | 1.59x | 1.50x | ||
| NCF DSCR | 1.30x | 1.22x | 1.50x | 1.59x | 1.40x | ||
| NOI Debt Yield | 7.4% | 7.0% | 8.6% | 9.1% | 8.6% | ||
| NCF Debt Yield | 7.4% | 7.0% | 8.6% | 9.1% | 8.0% |
| (1) | Represents (i) percent of Net Rental Income for all revenue fields, (ii) percent of Gross Potential Rent for Vacancy & Credit Loss and (iii) percent of Effective Gross Income for all other fields. |
| (2) | Represents rent steps through July 2021 totaling $85,177. |
| (3) | Other Income represents late fees. |
| (4) | The underwritten economic vacancy is 10.0%. The Technology Place Property was 100.0% occupied as of July 9, 2020. |
| (5) | The increase in Net Operating Income between 2018 and 2019 was due to new leases signed with Southwest Antennas, Inc. (lease commenced in May 2018) and Mi Casa Software, LLC (dba A2e Technologies; lease commenced in September 2018). |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
78
| Office – Suburban | Loan #5 | Cut-off Date Balance: | $29,250,000 | |
10905,
10907-8, 10911, 10915, San Diego, CA 92127 |
Technology Place | Cut-off Date LTV: U/W NCF DSCR: U/W NOI Debt Yield: |
74.1% 1.40x 8.6% |
Appraisal. The appraiser concluded to an “As-Is Market Value” of $39,500,000 as of June 22, 2020.
Environmental Matters. According to the Phase I environmental site assessment dated June 24, 2020, there was no evidence of any recognized environmental conditions at the Technology Place Property.
Market Overview and Competition. The Technology Place Property is located 1.9 miles northwest of Interstate 15 within the Rancho Bernardo Industrial Park. The Property is surrounded by mostly 1980s built buildings and is one of the few properties in the Ranch Bernardo/Carmel Mountain Ranch that contains creative office space. The Rancho Bernardo area is an established master planned community where multiple major corporations have a presence, including Northrop Grumman, General Atomic, Hewlett-Packard, AT&T and Sony. According to the appraisal, the estimated 2019 population within a three- and five-mile radius of the Technology Place Property was approximately 90,137 and 190,162, respectively; and the estimated 2019 average household income within the same radii was approximately $148,560 and $157,915, respectively.
According to a third-party market research report, the is situated within the Rancho Bernardo submarket of the San Diego office and industrial markets. As of the second quarter of 2020, the office submarket reported a total inventory of approximately 7.0 million square feet with a 10.0% vacancy rate and average asking rent of $36.02 per square foot, gross. As of the second quarter of 2020, the industrial submarket reported a total inventory of approximately 7.8 million square feet with a 3.3% vacancy rate and average asking rent of $19.00 per square foot, gross.
The following table presents certain information relating to the appraisal’s market rent conclusion for the Technology Place Property:
Market Rent Summary(1)
| Market Rent (PSF) | $21.60 |
| Lease Term (Years) | 5 |
| Lease Type (Reimbursements) | NNN |
| Rent Increase Projection | 3.00% per annum |
| (1) | Information obtained from the appraisal. |
The table below presents certain information relating to comparable sales pertaining to the Technology Place Property identified by the appraiser:
Comparable Sales(1)
| Property Name | Location | Year Built/Renovated | Rentable Area (SF) | Sale Date | Sale Price | Sale Price (PSF) |
| Technology Place (Subject) | San Diego, CA | 1980/2018 | 145,214 | July 2020 | $39,000,000 | $269 |
| Sorrento Tech Center | San Diego, CA | 1985/2017 | 93,843 | May 2020 | $39,000,000 | $416 |
| The Yard | San Diego, CA | 1985/2015 | 60,518 | Dec. 2018 | $24,787,500 | $410 |
| Sorrento Valley Creative Office Project | San Diego, CA | 1979/2014 | 53,168 | Jan. 2019 | $23,250,000 | $437 |
| Innovation Corporate Center | San Diego, CA | 1999/NAP | 102,348 | Sept. 2018 | $36,700,000 | $359 |
| Two-Tenant Office Building | San Diego, CA | 1986/2015 | 68,489 | June 2020 | $25,500,000 | $372 |
| Scripps Ranch Business Park | San Diego, CA | 1978/2018 | 97,073 | Oct. 2019 | $23,200,000 | $239 |
| (1) | Information obtained from the appraisal. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
79
| Office – Suburban | Loan #5 | Cut-off Date Balance: | $29,250,000 | |
10905,
10907-8, 10911, 10915, San Diego, CA 92127 |
Technology Place | Cut-off Date LTV: U/W NCF DSCR: U/W NOI Debt Yield: |
74.1% 1.40x 8.6% |
The following table presents certain information relating to comparable leases related to Technology Place Property:
Comparable Leases(1)
| Property Name/Location | Year Built/ Renovated | Total GLA (SF) | Distance from Subject | Occupancy | Tenant | Tenant Size | Lease Term | Annual Base Rent PSF | Lease Type |
Technology Place (Subject) 10905,
10907-8, 10911, 10915, 10918-19, 10929, 10939, 10949 Technology Place
|
1980/2018 | 145,214 | - | 100% | |||||
Carmel Business Center 12205-12285 World Trade Drive San Diego, CA |
1989/NAP | 122,042 | 2.9 miles | 100% | Minuteman Press | 2,400 | 5.1 Yrs | $18.60 | NNN |
| FASTSIGNS of Rancho Bernardo | 1,200 | 7.3 Yrs | $19.20 | NNN | |||||
| North Coast Church | 4,094 | 3.0 Yrs | $19.56 | NNN | |||||
Bernardo Gateway 10865 Rancho Bernardo Road San Diego, CA |
1989/NAP | 23,768 | 1.3 miles | 100% | Microtek | 4,210 | 2.0 Yrs | $19.20 | NNN |
Summit at Rancho Bernardo – Bldg 5 16550 West Bernardo Drive San Diego, CA |
1968/NAP | 525,330 | 0.9 miles | 100% | Crown Bioscience | 32,306 | 10.0 Yrs | $23.40 | NNN |
Sabre Springs Business Center 13220,13230,13240 Evening Creek Drive San Diego, CA |
1988/NAP | 83,755 | 5.6 miles | 89% | AC Pro | 5,822 | 3.0 Yrs | $18.60 | NNN |
| Brom-Davey | 7,468 | 3.0 Yrs. | $18.72 | NNN | |||||
Carmel Corporate Plaza 15015 Avenue of Science San Diego, CA |
1998/NAP | 86,639 |
2.9 miles | 73% | RADAR | 5,695 | 3.2 Yrs | $21.84 | NNN |
Rancho Vista Corporate Center 16397, 16399, 16409 West Bernardo Drive San Diego, CA |
1970/2018 | 816,771 | 0.8 miles | 85% | Covance | 52,941 | 5.2 Yrs | $27.84 | NNN |
| Intel Corp. | 53,301 | 7.4 Yrs | $28.20 | NNN |
| (1) | Information obtained from the appraisal. |
Escrows.
Real Estate Taxes – The loan documents require an upfront real estate tax reserve of $138,960 and ongoing monthly real estate tax reserves in an amount equal to one-twelfth of the real estate taxes that the lender estimates will be payable during the next 12 months (initially $27,792).
Insurance – The loan documents do not require ongoing monthly escrows for insurance premiums as long as (i) no event of default has occurred and is continuing, (ii) the borrower or borrower affiliate provides the lender with evidence that the Property’s insurance coverage is included in a blanket policy acceptable to lender and such policy is in full force and effect and (iii) the borrower pays all applicable insurance premiums and provides the lender with evidence of payment of insurance premiums/renewals at least ten business days prior to the expiration of the policies.
Replacement Reserve – The loan documents require ongoing monthly replacement reserves of $2,420 ($0.20 per square foot annually), subject to a cap of $58,080 as long as there is no event of default and the lender determines that the property is being adequately maintained.
Deferred Maintenance – The loan documents require an upfront reserve of $28,632 related to deferred maintenance at the Technology Place Property.
TI/LC Reserve – The loan documents require an upfront TI/LC reserve of $250,000 and ongoing monthly TI/LC reserves of $12,101, subject to a cap of $700,000 provided there is no event of default. Until (a) (i) the Memjet lease is renewed in accordance with its terms or otherwise on terms reasonably satisfactory to lender or (ii) the entire Memjet space has been re-leased on terms and to replacement tenant(s) each reasonably acceptable to lender and (b) the replacement tenant(s) has (i) taken occupancy and commenced conducting normal business operations, (ii) is paying full, unabated rent, and (iii) all TI/LCs have been paid (or reserved), disbursements will be made in an amount not to exceed $5 per square foot of lease.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
80
| Office – Suburban | Loan #5 | Cut-off Date Balance: | $29,250,000 | |
10905,
10907-8, 10911, 10915, San Diego, CA 92127 |
Technology Place | Cut-off Date LTV: U/W NCF DSCR: U/W NOI Debt Yield: |
74.1% 1.40x 8.6% |
Springing Memjet TI/LC Reserve – The loan documents require a deposit of $500,000 in cash or letter of credit (in addition to the TI/LC Reserve) upon (a) the occurrence of a monetary or material non-monetary lease default by Memjet or (b) Memjet (i) materially modifying its lease without lender consent, (ii) terminating its lease (or the lease ceasing to be in full force and effect), giving notice thereof, or commencing any legal proceeding asserting such events, (iii) commencing or being subject to a bankruptcy or similar insolvency proceeding, (iv) going dark or giving notice thereof (unless temporarily due solely to the COVID-19 pandemic), or (v) failing to renew its lease in accordance with its terms or otherwise on terms reasonably acceptable to lender on or prior to July 31, 2022.
Systech TI/LC Reserve – The loan documents require an upfront reserve of $99,420 related to outstanding landlord obligations pursuant to the lease with Systech.
Titan Growth Rent Concession Reserve - The loan documents require an upfront reserve of $27,278 related to two months (August and September 2020) of outstanding free rent relating to Titan Growth.
Lockbox and Cash Management. Upon the occurrence of a Cash Trap Event Period (as defined below), the borrower is required to establish a lender-controlled lockbox account and direct all tenants to deposit all rents to pay all amounts due, directly into such lockbox account. During the continuance of a Cash Trap Event Period, all funds in the lockbox account are required to be swept into a cash management account controlled by the lender and disbursed on each payment date in accordance with the loan documents and all excess funds are required to be swept to an excess cash flow subaccount controlled by the lender.
A “Cash Trap Event Period” will commence upon the earlier of the following:
| (i) | the occurrence of an event of default under the loan documents; or |
| (ii) | the net cash flow debt service coverage ratio (“NCF DSCR”) being less than 1.20x for two consecutive calendar quarters (“Low DSCR Trigger”); provided, however, that as long as no event of default has occurred and is continuing, the Low DSCR Trigger will be suspended provided: |
| ● | the NCF DSCR is at least 1.00x and the borrower makes monthly deposits equal to $25,000 (until the NCF DSCR is greater than or equal to 1.25x for two consecutive calendar quarters); or |
| ● | the Low DSCR Trigger occurred solely as a result of vacancy within the Memjet space and has not continued for more than two consecutive calendar quarters; the borrower has made the required Springing Memjet TI/LC Reserve deposit; and the lender has received evidence reasonably satisfactory to the lender that the borrower is diligently pursuing the re-tenanting of the vacant Memjet space. |
A Cash Trap Event Period will end upon the occurrence of the following:
| ● | with regard to clause (i), the cure of such event of default; or |
| ● | with regard to clause (ii), the NCF DSCR being greater than or equal to 1.25x for two consecutive calendar quarters. |
Property Management. The Technology Place Property is managed by DPM Property Management, Inc., an affiliate of the borrower.
Partial Release. Not permitted.
Real Estate Substitution. Not permitted.
Subordinate and Mezzanine Indebtedness. Not permitted.
Ground Lease. None.
Right of First Offer. Xpera, Inc. has a right of first refusal (“ROFR”) to purchase the building totaling 10,176 square feet located at 10911 Technology Place, San Diego, California, as a single asset, free-standing building (i.e., the ROFR does not apply to a sale of multiple buildings) so long as Xpera, Inc. continues to lease and occupy such building and is not in default under the lease. The ROFR is not extinguished by a foreclosure of the Technology Place Property; however, the ROFR does not apply to foreclosure or deed-in-lieu thereof.
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 Property, as well as business interruption insurance covering no less than the 12-month period following the occurrence of a casualty event, together with a 6-month extended period of indemnity.
Earthquake Insurance. A seismic risk assessment dated June 24, 2020 indicated a probable maximum loss of 8%. Earthquake insurance is not required.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
81
| Hospitality – Extended Stay | Loan #6 | Cut-off Date Balance: | $27,725,000 | |
| 2500 Museum Way | Residence Inn – Fort Worth Cultural District | Cut-off Date LTV: | 73.0% | |
| Fort Worth, TX 76107 | U/W NCF DSCR: | 2.21x | ||
| U/W NOI Debt Yield: | 13.2% |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
82
| Hospitality – Extended Stay | Loan #6 | Cut-off Date Balance: | $27,725,000 | |
| 2500 Museum Way | Residence Inn – Fort Worth Cultural District | Cut-off Date LTV: | 73.0% | |
| Fort Worth, TX 76107 | U/W NCF DSCR: | 2.21x | ||
| U/W NOI Debt Yield: | 13.2% |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
83
| No. 6 – Residence Inn - Fort Worth Cultural District | |||||||
| Mortgage Loan Information | Mortgaged Property Information | ||||||
| Mortgage Loan Seller: | Wells Fargo Bank, National Association | Single Asset/Portfolio: | Single Asset | ||||
Credit Assessment (Fitch/KBRA/Moody’s): |
NR/NR/NR | Property Type – Subtype: | Hospitality – Extended Stay | ||||
| Original Principal Balance: | $27,725,000 | Location: | Fort Worth, TX | ||||
| Cut-off Date Balance: | $27,725,000 | Size: | 149 Rooms | ||||
| % of Initial Pool Balance: | 4.9% | Cut-off Date Balance Per Room | $186,074 | ||||
| Loan Purpose: | Acquisition | Maturity Date Balance Per Room: | $159,534 | ||||
| Borrower Sponsors: | Hok Kit Lou; Ching Sau Cheung | Year Built/Renovated: | 2005/2015 | ||||
| Guarantors: | Hok Kit Lou; Ching Sau Cheung | Title Vesting: | Fee | ||||
| Mortgage Rate: | 3.6400% | Property Manager: | Concord Hospitality Enterprises Company, LLC | ||||
| Note Date: | February 28, 2020 | Current Occupancy (As of)(4)(5)(6): | 67.4% (TTM 6/30/2020) | ||||
| Seasoning: | 5 months | 2019 Occupancy: | 82.2% | ||||
| Maturity Date: | March 11, 2030 | 2018 Occupancy: | 82.0% | ||||
| IO Period: | 36 months | 2017 Occupancy: | 80.3% | ||||
| Loan Term (Original): | 120 months | 2016 Occupancy: | 82.7% | ||||
| Amortization Term (Original): | 360 months | Appraised Value(4): | $38,000,000 | ||||
| Loan Amortization Type: | Interest-only, Amortizing Balloon | Appraised Value Per Room: | $255,034 | ||||
| Call Protection: | L(29),D(87),O(4) | Appraisal Valuation Date: | January 13, 2020 | ||||
| Lockbox Type: | Springing | ||||||
| Additional Debt: | (1) | Underwriting and Financial Information(5) | |||||
| Additional Debt Type (Balance): | (1) | TTM NOI (6/30/2020)(6): | $2,617,575 | ||||
| YE 2019 NOI: | $3,629,655 | ||||||
| YE 2018 NOI: | $3,947,564 | ||||||
| YE 2017 NOI: | $3,704,369 | ||||||
| U/W Revenues(6): | $7,331,011 | ||||||
| U/W Expenses(6): | $3,677,962 | ||||||
| U/W NOI(6): | $3,653,049 | ||||||
| Escrows and Reserves(2) | U/W NCF(6): | $3,359,808 | |||||
| Initial | Monthly | Cap | U/W DSCR based on NOI/NCF(6): | 2.40x / 2.21x | |||
| Debt Service Reserve(3) | $400,000 | $0 | NAP | U/W Debt Yield based on NOI/NCF(6): | 13.2% / 12.1% | ||
| Taxes | $103,635 | $41,108 | NAP | U/W Debt Yield at Maturity based on NOI/NCF(6): | 15.4% / 14.1% | ||
| Insurance | $0 | Springing | NAP | Cut-off Date LTV Ratio: | 73.0% | ||
| FF&E Reserve | $0 | $12,218 | NAP | LTV Ratio at Maturity: | 62.6% | ||
| PIP Reserve | $4,105,030 | $0 | NAP | ||||
| Sources and Uses | ||||||||
| Sources | Uses | |||||||
| Original mortgage loan amount | $27,725,000 | 64.4% | Purchase price(7): | $38,000,000 | 88.3% | |||
| Sponsor equity | 15,312,041 | 35.6 | Upfront reserves | 4,608,665 | 10.7 | |||
| Closing costs | 428,376 | 1.0 | ||||||
| Total Sources | $43,037,041 | 100.0% | Total Uses | $43,037,041 | 100.0% | |||
| (1) | Due to the COVID-19 pandemic, the borrower obtained an unsecured $115,063 loan under the U.S. Small Business Administration Paycheck Protection Program (“PPP Loans”). See “Other Indebtedness” section for details. |
| (2) | See “Escrows” section. |
| (3) | The Debt Service Reserve represents the aggregate amount of debt service due for approximately 4.7 monthly payments of the Residence Inn – Fort Worth Cultural District Mortgage Loan (as defined below). As long as no event of default has occurred and is continuing, the borrower may use the Debt Service Reserve to make all or a portion of the debt service payments on each of the monthly payment dates. |
| (4) | Represents the actual occupancy rate for the trailing 12-month period ending June 30, 2020, including periods negatively impacted by COVID-19. See “COVID-19 Update” section for details on recent monthly performance. |
| (5) | Except as described in the following footnote, all NOI, NCF and occupancy information, as well as the appraised value, were determined prior to the emergence of the novel coronavirus pandemic and the economic disruption resulting from measures to combat the pandemic, and all DSCR, LTV and Debt Yield metrics were calculated, and the Residence Inn – Fort Worth Cultural District Mortgage Loan was underwritten, based on such prior information. See “Risk Factors— Risks Related to Market Conditions and Other External Factors—Coronavirus Pandemic Has Adversely Affected the Global Economy and Will Likely Adversely Affect the Performance of the Mortgage Loans” in the Preliminary Prospectus. |
| (6) | The lender’s underwriting is based on the annual 2019 operating statement. Based on the NOI for the trailing 12-month period ending June 30, 2020 (with the substitution of the February 2019 operating statement for February 2020 operating statement due to the unavailability of the operating statement for such month resulting from the timing of the acquisition), the NCF DSCR, NOI Debt Yield and NOI Debt Yield at Maturity for |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
84
| Hospitality – Extended Stay | Loan #6 | Cut-off Date Balance: | $27,725,000 | |
| 2500 Museum Way | Residence Inn – Fort Worth Cultural District | Cut-off Date LTV: | 73.0% | |
| Fort Worth, TX 76107 | U/W NCF DSCR: | 2.21x | ||
| U/W NOI Debt Yield: | 13.2% |
| the Residence Inn – Fort Worth Cultural District Mortgage Loan would be 1.72x, 9.4% and 11.0%, respectively. See “Operating History and Underwritten Net Cash Flow” section. |
| (7) | The Residence Inn – Fort Worth Cultural District Property secured a loan that was previously securitized in COMM 2012-CR3. |
The Mortgage Loan. The mortgage loan (the “Residence Inn – Fort Worth Cultural District Mortgage Loan”) is evidenced by a single promissory note secured by a first mortgage encumbering the fee interest in an extended stay hotel located in Fort Worth, Texas (the “Residence Inn – Fort Worth Cultural District Property”).
The Borrower and Borrower Sponsors. The borrower is Varick 2 LLC, a Delaware limited liability company structured to be bankruptcy-remote with one independent director. The borrower sponsors and non-recourse carveout guarantors of the Residence Inn – Fort Worth Cultural District Mortgage Loan are Hok Kit Lou and Ching Sau Cheung.
Hok Kit Lou and Ching Sau Cheung are each founding principals of LC Real Estate Group (“LCRE”) and currently serve as Chairman and Director of Construction, respectively. LCRE is a family-owned business specializing in hospitality and residential real estate with three main divisions, including development/investment, management and in-house construction. Since 2004, LCRE has developed three hotels in New York, New York, totaling 486 rooms, and acquired two hotels in Orlando, Florida, totaling 292 rooms (in addition to the Residence Inn – Fort Worth Cultural District Property).
The Property. The Residence Inn – Fort Worth Cultural District Property is a 4-story, 149-room, extended stay hotel located in Fort Worth, Texas, approximately 1.8 miles west of the central business district. Built in 2005 and renovated in 2015, the Residence Inn – Fort Worth Cultural District Property is situated on a 2.4-acre parcel and contains 70 studio king guestrooms, 68 one bedroom queen guestrooms, 6 one bedroom with balcony guestrooms, 4 two bedrooms and 1 hospitality suite. Amenities at the Residence Inn – Fort Worth Cultural District Property include a breakfast room, outdoor swimming pool, fitness center, meeting space, guest laundry, sundries shop and vending and ice machines. The Residence Inn – Fort Worth Cultural District Property contains 120 surface parking spaces, resulting in a parking ratio of 0.8 spaces per room. According to the appraisal, demand segmentation at the Residence Inn – Fort Worth Cultural District Property is approximately 35% commercial, 5% group, 25% leisure and 35% extended stay. The franchise agreement with Marriott International, Inc. (“Marriott”) expires in February 2035.
The following table presents certain information relating to the demand analysis with respect to the Residence Inn – Fort Worth Cultural District Property, as provided in the appraisal:
Market Segmentation(1)
Commercial |
Group |
Leisure |
Extended Stay | ||||||
| 35% | 5% | 25% | 35% | ||||||
| (1) | Information obtained from the appraisal. |
COVID-19 Update. As of August 5, 2020, the Residence Inn – Fort Worth Cultural District Property is open. The pool and fitness center are open at limited capacity and food service is limited to a “grab and go” breakfast. The August 2020 debt service payment has been made.
Loan Modification - The Residence Inn – Fort Worth Cultural District mortgage loan was modified, among other things, to (i) include an upfront Debt Service Reserve, (ii) suspend FF&E Reserve monthly deposits through the monthly payment date in October 2020, and (iii) suspend the Debt Yield Trigger (as defined below) through April 30, 2021. See “Escrows” and “Lockbox and Cash Management” sections for details.
The following table presents certain information relating to recent monthly operating performance at the Residence Inn – Fort Worth Cultural District Property:
Monthly Operating Performance
Residence Inn – Fort Worth Cultural District | |||
Month |
Occupancy |
ADR |
RevPAR |
| June 2020 | 48.7% | $121.00 | $58.93 |
| May 2020 | 37.2% | $121.62 | $45.20 |
April 2020 |
19.1% | $118.72 | $22.63 |
| March 2020 | 41.7% | $160.15 | $66.78 |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Hospitality – Extended Stay | Loan #6 | Cut-off Date Balance: | $27,725,000 | |
| 2500 Museum Way | Residence Inn – Fort Worth Cultural District | Cut-off Date LTV: | 73.0% | |
| Fort Worth, TX 76107 | U/W NCF DSCR: | 2.21x | ||
| U/W NOI Debt Yield: | 13.2% |
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 Residence Inn – Fort Worth Cultural District Property:
Cash Flow Analysis
| 2017 | 2018 | 2019 | TTM 6/30/2020(1)(2) |
U/W(1) | % of U/W Total Revenue(3) | U/W $ per Room | |
| Occupancy | 80.3% | 82.0% | 82.2% | 67.4% | 82.2% | ||
| ADR | $157.34 | $159.24 | $157.00 | $148.02 | $157.00 | ||
| RevPAR | $126.27 | $130.61 | $129.06 | $99.73 | $129.06 | ||
| Room Revenue | $6,867,345 | $7,102,973 | $7,018,828 | $5438,766 | $7,018,828 | 95.7% | $47,106 |
| Parking Revenue | $117,215 | 182,172 | 220,582 | 209,007 | 220,582 | 3.0 | 1,480 |
| Other Revenue | 90,724 | 122,807 | 91,601 | 59,333 | 91,601 | 1.2 | 615 |
| Total Revenue | $7,075,284 |
$7,407,952 |
$7,331,011 |
$5,707,106 |
$7,331,011 |
100.0% |
$49,201 |
| Room Expense | $1,373,306 | $1,390,030 | $1,412,612 | 976,607 | $1,412,612 | 20.1% | $9,481 |
| Other Department Expense | 33,207 | 26,396 | 29,301 | 21,753 | 29,301 | 32.0 | 197 |
| Total Department Expenses | $1,406,513 |
$1,416,426 |
$1,441,913 |
$998,360 |
$1,441,913 |
19.7% |
$9,677 |
| Gross Operating Income | $5,668,771 | $5,991,526 | $5,889,098 | $4,708,746 | $5,889,098 | 80.3% | $39,524 |
| Total Undistributed Expenses | 1,488,333 |
1,550,104 |
1,543,323 |
1,400,121 |
1,576,261 |
21.5 |
10,579 |
| Gross Operating Profit | $4,180,438 | $4,441,422 | $4,345,775 | $3,308,625 | $4,312,837 | 58.8% | $28,945 |
| Total Fixed Charges | 476,069 |
493,858 |
716,119 |
691,050 |
659,788 |
9.0 |
4,428 |
| Total Operating Expenses | $3,370,915 | $3,460,388 | $3,701,355 | $3,089,531 | $3,677,962 | 50.2% | $24,684 |
| Net Operating Income | $3,704,369 | $3,947,564 | $3,629,655 | $2,617,575 | $3,653,049 | 49.8% | $24,517 |
| FF&E | 0 |
0 |
0 |
0 |
293,240 |
4.0 |
1,968 |
| Net Cash Flow | $3,704,369 | $3,947,564 | $3,629,655 | $2,617,575 | $3,359,808 | 45.8% | $22,549 |
| NOI DSCR | 2.44x | 2.60x | 2.39x | 1.72x | 2.40x | ||
| NCF DSCR | 2.44x | 2.60x | 2.39x | 1.72x | 2.21x | ||
| NOI DY | 13.4% | 14.2% | 13.1% | 9.4% | 13.2% | ||
| NCF DY | 13.4% | 14.2% | 13.1% | 9.4% | 12.1% | ||
| (1) | The lender’s U/W is based on the 2019 financial statement. See the “COVID-19 Update” section for details on recent monthly performance at the Residence Inn – Fort Worth Cultural District Property. The Residence Inn – Fort Worth Cultural District Property is structured with a Debt Service Reserve (see “Escrows” section). |
| (2) | Due to timing of the acquisition, the borrower could not provide a February 2020 operating statement, therefore, the TTM 6/30/2020 statement shown substituted the February 2019 operating statement for the February 2020 operating statement. |
| (3) | Room Expense and Other Department Expense % are based on their corresponding revenue line items. All other line items represent percent of Total Revenue. |
Appraisal. The appraiser concluded to an “as-is” appraised value of $38,000,000 with an appraisal valuation date of January 13, 2020.
Environmental Matters. According to a Phase I environmental assessment dated January 10, 2020, there was no evidence of any recognized environmental conditions at the Residence Inn – Fort Worth Cultural District Property.
Market Overview and Competition. The Residence Inn – Fort Worth Cultural District Property is situated along the northern side of Museum Way within Fort Worth’s Cultural District, approximately 1.8 miles west of downtown, 1.9 miles from Interstate 30, and 24.0 miles southwest of Dallas/Fort Worth International Airport. According to the appraisal, the Cultural District is home to Will Rogers Memorial Center, which hosts the annual Fort Worth Stock Show and Rodeo, along with many museums, including the Modern Art Museum of Fort Worth, Kimbell Art Museum, Amon Carter Museum of American Art, Fort Worth Museum of Science and History, and National Cowgirl Museum and Hall of Fame. The Residence Inn – Fort Worth Cultural District Property is located within 2 miles of numerous demand drivers, including the newly constructed $540 million Dickies Arena, a 14,000 seat multipurpose event, concert, sports and rodeo arena; the 25-story Frost Tower, which is a 278,000 square foot office building anchored by Frost Bank that was completed in May 2018 at an estimated cost of $115 million; the Fort Worth Convention Center, which is expected to undergo a $380 million expansion as early as 2022; and Sundance Square, a 35-block commercial, residential, and retail district in Downtown Fort Worth. Lockheed Martin, which is located 8.5 miles northwest of the property, received a $2.4 billion award related to the U.S. Air Force F-35 Lightning II fighter jet program and approximately 24% of the work related to the award will occur in Fort Worth.
According to the appraisal, within a 0.8-mile radius of the Residence Inn – Fort Worth Cultural District Property, there were approximately 495 office, industrial/flex, retail and multifamily properties totaling approximately 14.0 million square feet. The office component comprises 164 properties totaling 3.3 million square feet with a vacancy rate of 6.0%.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Hospitality – Extended Stay | Loan #6 | Cut-off Date Balance: | $27,725,000 | |
| 2500 Museum Way | Residence Inn – Fort Worth Cultural District | Cut-off Date LTV: | 73.0% | |
| Fort Worth, TX 76107 | U/W NCF DSCR: | 2.21x | ||
| U/W NOI Debt Yield: | 13.2% |
According to the appraisal, the estimated 2019 population within a three- and five-mile radius of the Residence Inn - Fort Worth Cultural District Property was approximately 105,073 and 310,216, respectively; and the estimated 2019 average household income within the same radii was approximately $79,476 and $73,117, respectively.
The following table presents historical occupancy, ADR, RevPAR and penetration rates relating to the competitive set for the Residence Inn – Fort Worth Cultural District Property.
Competitive Set(1) |
Residence inn – Fort Worth Cultural District(1) |
Penetration Factor(1) | |||||||
Year |
Occupancy |
ADR |
RevPAR |
Occupancy |
ADR |
RevPAR |
Occupancy |
ADR |
RevPAR |
| TTM 6/30/2020 | 56.7% | $124.26 | $70.47 | 65.3% | $152.16 | $99.39 | 115.2% | 122.4% | 141.0% |
| TTM 6/30/2019 | 72.6% | $131.43 | $95.48 | 82.4% | $157.08 | $129.50 | 113.5% | 119.5% | 135.6% |
| TTM 6/30/2018 | 74.4% | $134.90 | $100.36 | 79.4% | $158.70 | $126.07 | 106.8% | 117.6% | 125.6% |
| (1) | Information obtained from a third party hospitality research report dated July 17, 2020. The competitive set includes the following hotels: SpringHill Suites Fort Worth University, Holiday Inn Express & Suites Fort Worth Downtown, TownePlace Suites Fort Worth Downtown, Hilton Garden Inn Fort Worth Medical Center, and Homewood Suites by Hilton Fort Worth Medical Center. |
Escrows.
Debt Service Reserve – The borrower deposited an amount equal to $400,000 into the Debt Service Reserve, which may be used for all or part of any monthly debt service payment amount as designated by the borrower; provided, however, that the insufficiency of available funds in the Debt Service Reserve account will not relieve the borrower from its obligation to make any payment under the loan documents. As of August 10, 2020, the balance of the Debt Service Reserve is $142,096.
Real Estate Taxes – The loan documents require an upfront real estate tax reserve of $103,635 and ongoing monthly reserves in an amount equal to 1/12th of the taxes that the lender estimates will be payable during the next ensuing 12 months. The loan documents initially assumed ongoing monthly reserves of $51,818; however, the Residence Inn – Fort Worth Cultural District Property was re-assessed and, beginning August 11, 2020, the monthly payment will be $41,108.
Insurance – Ongoing insurance reserves are not required as long as (i) no event of default has occurred and is continuing; (ii) the Residence Inn – Fort Worth Cultural District Property is covered under an acceptable blanket or umbrella policy; (iii) the borrower provides the lender with evidence of policy renewals; and (iv) the borrower provides paid receipts for insurance premiums at least 10 days prior to policy expiration.
FF&E Reserve – The borrower will not be required to make ongoing monthly FF&E Reserve deposits through and including the monthly payment date occurring in October 2020. On each monthly payment date beginning in November 2020 through and including the monthly payment date in March 2021, ongoing monthly FF&E Reserve deposits are required in an amount equal to one-twelfth of 2.0% of gross revenue for the prior fiscal year (the initial estimated monthly deposit is $12,218). On each monthly payment date beginning in April 2021 and thereafter, ongoing monthly FF&E Reserve deposits are required in an amount equal to the greater of (a) the then-existing FF&E Reserve monthly deposit and (b) one-twelfth of 4.0% of gross revenue for the prior fiscal year. In addition, on each monthly payment date beginning in November 2020 through and including the monthly payment date in October 2022, in addition to the FF&E Reserve monthly deposit, the borrower will be required to deposit an additional $3,055 to replenish the FF&E Reserve for such deferred amounts.
PIP Reserve – The borrower made an upfront deposit of $4,105,030 for future PIP work. In addition, the borrower is required to deposit 100% of the estimated costs to complete any additional PIP work required by the franchisor under the franchise agreement. Further, in the event the scope or timing of the PIP work is modified by the franchisor such that the amount of funds on deposit in the PIP Reserve is greater than 100% of the estimated completion costs, the borrower has the right to transfer any excess funds into the Debt Service Reserve account.
Lockbox and Cash Management. Upon the occurrence and continuance of a Cash Trap Event Period (as defined below), the borrower is required to establish a lender-controlled lockbox account and the borrower and property manager are required to cause all rents and direct all credit card companies to pay all amounts due directly into such lockbox account to be deposited directly into such lockbox account. During a Cash Trap Event Period, funds in the lockbox accounts are required to be swept to a lender-controlled cash management account and applied in accordance with the Residence Inn – Fort Worth Cultural District Mortgage Loan documents, and all excess funds are required to be swept to an excess cash flow subaccount controlled by the lender.
A “Cash Trap Event Period” will commence upon the earlier of the following:
| (i) | the occurrence of an event of default; |
| (ii) | the net cash flow debt yield being less than 9.0%, tested quarterly (the “Debt Yield Trigger”); provided, however, that the Debt Yield Trigger is suspended through and including April 30, 2021; and |
| (iii) | any cancellation, termination, or expiration of the franchise agreement. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Hospitality – Extended Stay | Loan #6 | Cut-off Date Balance: | $27,725,000 | |
| 2500 Museum Way | Residence Inn – Fort Worth Cultural District | Cut-off Date LTV: | 73.0% | |
| Fort Worth, TX 76107 | U/W NCF DSCR: | 2.21x | ||
| U/W NOI Debt Yield: | 13.2% |
A Cash Trap Event Period will end upon the occurrence of the following:
| ● | with respect to clause (i) above, the cure of such event of default; |
| ● | with respect the clause (ii) above, the date that the net cash flow debt yield is equal to or greater than 9.5% for two consecutive calendar quarters; and |
| ● | with respect to clause (iii) above, receipt by the lender of satisfactory evidence that the borrower has entered into a replacement franchise agreement satisfactory to the lender with an acceptable franchisor. |
Property Management. The Residence Inn – Fort Worth Cultural District Property is managed by Concord Hospitality Enterprises Company, LLC, a third-party management company.
Partial Release. Not Permitted.
Real Estate Substitution. Not permitted.
Subordinate and Mezzanine Indebtedness.
Other Indebtedness. The borrower obtained a $115,063 unsecured loan (“PPP Loan”) under the Small Business Administration Paycheck Protection Program on May 28, 2020, which (i) does not exceed the maximum amount forgivable under such program, (ii) is not secured by any interest in the Residence Inn – Fort Worth Cultural District Property or any other related collateral, (iii) has a term of 2 years, (iv) bears interest at the rate of 1% per annum payable monthly commencing November 26, 2020, with interest prior to such date deferred until maturity, (v) required that all employees of the borrower were maintained at their existing salary level with no decline in full-time headcount or decrease in salaries and wages, and (vi) required that at least 75% of the proceeds of such PPP Loan were used for payroll costs, as defined by the Small Business Administration, relating solely to the operation of the Property within 8 weeks of receipt of such proceeds.
Ground Lease. None.
Right of First Offer. Marriott International, Inc., as franchisor, has a conditional right of first refusal (“ROFR”) to acquire the Residence Inn – Fort Worth Cultural District Property if there is transfer of the hotel or a controlling direct or indirect interest in the borrower to a competitor. The ROFR is not extinguished by a foreclosure or deed-in-lieu thereof, and if transfer to a competitor is by a foreclosure, or if the franchisee or its affiliates become a competitor, the franchisor has the right to purchase the hotel upon notice to the franchisee. The franchisor comfort letter provides that, if the lender exercises remedies against the franchisee, the lender may appoint a lender affiliate to acquire the property and enter into a management or franchise agreement if it is not a competitor or competitor affiliate; provided, however, that a lender affiliate will not be deemed a competitor simply due to its ownership of multiple or competing hotels or having engaged managers to manage such other hotels
Terrorism Insurance. The Residence Inn – Fort Worth Cultural District Mortgage 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 Residence Inn – Fort Worth Cultural District Property, as well as business interruption insurance covering no less than the 12-month period following the occurrence of a casualty event, together with a 6-month extended period of indemnity.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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(THIS PAGE INTENTIONALLY LEFT BLANK)
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Office – Suburban | Loan #7 | Cut-off Date Balance: | $25,480,000 |
| 5500 South Quebec Street | Landmark Corporate Center | Cut-off Date LTV: | 65.0% |
| Greenwood Village, CO 80111 | U/W NCF DSCR: | 1.80x | |
| U/W NOI Debt Yield: | 11.6% |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Office – Suburban | Loan #7 | Cut-off Date Balance: | $25,480,000 |
| 5500 South Quebec Street | Landmark Corporate Center | Cut-off Date LTV: | 65.0% |
| Greenwood Village, CO 80111 | U/W NCF DSCR: | 1.80x | |
| U/W NOI Debt Yield: | 11.6% |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| No. 7 – Landmark Corporate Center | |||||||
| Mortgage Loan Information | Mortgaged Property Information | ||||||
| Mortgage Loan Seller: | UBS AG | Single Asset/Portfolio: | Single Asset | ||||
Credit Assessment (Fitch/KBRA/Moody’s): |
NR/NR/NR | Property Type – Subtype: | Office – Suburban | ||||
| Original Principal Balance: | $25,480,000 | Location: | Greenwood Village, CO | ||||
| Cut-off Date Balance: | $25,480,000 | Net Rentable Size: | 211,106 SF | ||||
| % of Initial Pool Balance: | 4.5% | Cut-off Date Balance Per SF: | $120.70 | ||||
| Loan Purpose: | Refinance | Maturity Date Balance Per SF: | $110.00 | ||||
| Borrower Sponsors: | Integrity Capital Income Fund, Inc.; 5500 Quebec Capital, LLC | Year Built/Renovated: | 1982/2019 | ||||
| Guarantors: | Integrity Capital Income Fund, Inc.; 5500 Quebec Capital, LLC | Title Vesting: | Fee | ||||
| Mortgage Rate: | 4.2500% | Property Manager: | Cushman & Wakefield U.S., Inc. | ||||
| Note Date: | July 30, 2020 | Current Occupancy (As of)(2)(3): | 100.0% (6/30/2020) | ||||
| Seasoning: | 0 months | YE 2019 Occupancy: | 94.9% | ||||
| Maturity Date: | August 6, 2030 | YE 2018 Occupancy(4): | 80.2% | ||||
| IO Period: | 60 months | YE 2017 Occupancy(4): | 53.7% | ||||
| Loan Term (Original): | 120 months | As-Is Appraised Value(2): | $39,200,000 | ||||
| Amortization Term (Original): | 360 months | As-Is Appraised Value Per SF(2): | $185.69 | ||||
| Loan Amortization Type: | Interest-only, Amortizing Balloon | As-Is Appraisal Valuation Date: | July 6, 2020 | ||||
| Call Protection: | L(24),GRTR 2% or YM(92),O(4) | ||||||
| Lockbox Type: | Hard/Upfront Cash Management | Underwriting and Financial Information(2) | |||||
| Additional Debt: | None | TTM NOI (6/30/2020)(5): | $2,563,338 | ||||
| Additional Debt Type (Balance): | NAP | YE 2019 NOI: | $2,197,305 | ||||
| YE 2018 NOI(4): | $511,668 | ||||||
| YE 2017 NOI(4): | ($844,543) | ||||||
| U/W Revenues: | $4,675,315 | ||||||
| U/W Expenses: | $1,726,304 | ||||||
| Escrows and Reserves(1) | U/W NOI(5): | $2,949,010 | |||||
| Initial | Monthly | Cap | U/W NCF: | $2,712,655 | |||
| Taxes | $179,468 | $35,894 | NAP | U/W DSCR based on NOI/NCF: | 1.96x / 1.80x | ||
| Insurance | $0 | Springing | NAP | U/W Debt Yield based on NOI/NCF: | 11.6% / 10.6% | ||
| Replacement Reserve | $0 | $3,518 | NAP | U/W Debt Yield at Maturity based on NOI/NCF: | 12.7% / 11.7% | ||
| TI/LC Reserve | $0 | $30,786 | NAP | Cut-off Date LTV Ratio: | 65.0% | ||
| Immediate Repairs | $26,750 | $0 | NAP | LTV Ratio at Maturity: | 59.2% | ||
| Rent Concession Funds | $118,374 | $0 | NAP | ||||
| TATILC Funds | $370,340 | $0 | NAP | ||||
| Sources and Uses | ||||||||
| Sources | Uses | |||||||
| Original loan amount | $25,480,000 | 100.0% | Loan payoff | $22,120,837 | 86.8% | |||
| Upfront reserves | 694,932 | 2.7 | ||||||
| Return of equity(6) | 1,974,750 | 7.8 | ||||||
| Closing costs | 689,481 | 2.7 | ||||||
| Total Sources | $25,480,000 | 100.0% | Total Uses | $25,480,000 | 100.0% | |||
| (1) | See “Escrows” section below. |
| (2) | While the Landmark Corporate Center Mortgage Loan (as defined below) was originated after the emergence of the novel coronavirus pandemic and the economic disruption resulting from measures to combat the pandemic, the pandemic is an evolving situation and could impact the Landmark Corporate Center Mortgage Loan more severely than assumed in the underwriting of the Landmark Corporate Center Mortgage Loan and could adversely affect the NOI, NCF and occupancy information, as well as the appraised value and the DSCR, LTV and Debt Yield metrics presented above. See “Risk Factors—Risks Related to Market Conditions and Other External Factors—The Coronavirus Pandemic Has Adversely Affected the Global Economy and Will Likely Adversely Affect the Performance of the Mortgage Loans” in the Preliminary Prospectus. |
| (3) | The Landmark Corporate Center Property (as defined below) is 100.0% leased. The largest tenant, Pax8, is expected to take occupancy of 10,763 square feet of its space in the 3rd quarter of 2020 and is required to commence paying rent for this expansion space on March 1, 2021. At origination, $100,455 was reserved for the related free rent period. Excluding this space, the Landmark Corporate Center Property is 94.9% occupied. |
| (4) | The borrower sponsors purchased the Landmark Corporate Center Property in July 2015 when occupancy was 100.0%. Shortly thereafter, CoBank, which occupied 87.4% of net rentable area, gave notice that it was vacating. The borrower sponsors subsequently spent approximately $10.3 million on capital improvements and lease-up costs to bring occupancy from 10.3% in December 2016 to 53.7% in December 2017, to 80.2% in December 2018 and to the current leased occupancy of 100.0%. |
| (5) | The increase from TTM NOI (6/30/2020) to U/W NOI is primarily due to $327,942 of underwritten rent steps through August 2021. |
| (6) | The borrower sponsors acquired the Landmark Corporate Center Property in July 2015 and have a total cost basis of approximately $32.3 million ($153.12 per square foot) including approximately $8.2 million of remaining cash equity. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
92
| Office – Suburban | Loan #7 | Cut-off Date Balance: | $25,480,000 |
| 5500 South Quebec Street | Landmark Corporate Center | Cut-off Date LTV: | 65.0% |
| Greenwood Village, CO 80111 | U/W NCF DSCR: | 1.80x | |
| U/W NOI Debt Yield: | 11.6% |
The Mortgage Loan. The mortgage loan (the “Landmark Corporate Center Mortgage Loan”) is evidenced by a single promissory note secured by a first mortgage encumbering the fee interest in a 211,106 square foot office building located in Greenwood Village, Colorado (the “Landmark Corporate Center Property”).
The Borrower and Borrower Sponsors. The borrowing entity for the Landmark Corporate Center Mortgage Loan is 5500 South Quebec Properties, LLC (the “Landmark Corporate Center Borrower”), a Delaware limited liability company and a special purpose entity with two independent directors in its organizational structure. Legal counsel to the Landmark Corporate Center Borrower delivered a non-consolidation opinion in connection with the origination of the Landmark Corporate Center Mortgage Loan. The non-recourse carve-out guarantors and borrower sponsors of the Landmark Corporate Center Mortgage Loan are Integrity Capital Income Fund, Inc. and 5500 Quebec Capital, LLC.
Integrity Capital Income Fund, Inc., based in Colorado, has a 91% ownership in 5500 Quebec Capital, LLC, which is the sole member of the Landmark Corporate Center Borrower. Randall B. Rush, Stephen Randle Leach, Paul Andrew Limes and Eric Davis, the four principals, serve as directors for Integrity Capital Income Fund, Inc. Incorporated in December 2013, Integrity Capital Income Fund, Inc. is a private real estate investment trust that invests in debt and equity securities within the real estate, healthcare, financial services and technology industries. As of March 31, 2020, Integrity Capital Income Fund, Inc. reported total assets of $18,916,028 with a net worth of $18,616,952.
The Property. The Landmark Corporate Center Property is a 211,106 square foot, three-story, Class A office building located in Greenwood Village, Colorado, situated on an 8.2-acre site. The Landmark Corporate Center Property is approximately 11.4 miles southeast of the Denver central business district. Built in 1982, the Landmark Corporate Center Property has undergone approximately $10.3 million in capital expenditures and leasing costs since 2015. The Landmark Corporate Center Property has 653 parking spaces, resulting in a parking ratio of 3.1 spaces per 1,000 square feet. As of June 30, 2020, the Landmark Corporate Center Property was 100.0% leased. The Landmark Corporate Center Property is situated immediately southwest of The Landmark development, a 170,000 square foot mixed use center that features a movie theater, Comedy Works, 13 dining locations, retail options and residential condominiums.
Major Tenants.
Largest Tenant: Pax8 (74,068 square feet; 35.1% of net rentable area; 30.9% of underwritten base rent; 4/30/2025 lease expiration; Fitch/Moody’s/S&P: BBB-/Baa3/BBB-) – Founded in 2012, Pax8 is focused on simplifying the way organizations buy, sell and manage cloud solutions. Pax8 ranked #60 in a business magazine’s 2019 list of the 5000 fastest-growing private companies in the United States and ranked #1 in a local business journal’s list of the 50 fastest-growing large businesses in Denver in 2019. Pax8 is headquartered at the Landmark Corporate Center Property. Pax8 has the right to terminate its lease on or after September 30, 2024, with nine months’ written notice provided no earlier than December 1, 2023 and payment of a termination fee equal to the sum of the unamortized amounts of tenant-improvement costs, moving allowance, leasing commissions and 50.0% of any free base rent provided. Pax8 has been a tenant at the Landmark Corporate Center Property since 2018 and has a current lease expiration date of April 30, 2025, with no extension options. Pax8 is expected to take occupancy of 10,763 square feet of its space in the third quarter of 2020 and is required to commence paying rent for this expansion space on March 1, 2021. Additionally, Pax8 has a free rent period for the month of August 2020 related to 13,873 square feet that it currently occupies and will begin paying rent for such space on September 1, 2020. At origination, $118,374 was reserved for such free rent periods.
Second Largest Tenant: Air Methods (67,333 square feet; 31.9% of net rentable area; 28.0% of underwritten base rent; 7/31/2028 lease expiration; Moody’s/S&P: Caa1/B-) – Founded in 1980, Air Methods is an American privately owned helicopter operator employing a workforce of over 4,500 team members. Air Methods' pilots, clinicians, mechanics, air communications specialists and support teams have helped coordinate over 100,000 patient transports and have logged more than 150,000 flight hours. Air Methods is headquartered at the Landmark Corporate Center Property and serves 48 states, with over 300 bases of operations. Air Methods has been a tenant at the Landmark Corporate Center Property since 2017 and has a current lease expiration date of July 31, 2028, with two, five-year renewal options remaining and no termination options.
Third Largest Tenant: Waste Management (21,640 square feet; 10.3% of net rentable area; 15.0% of underwritten base rent; 3/31/2024 lease expiration; Fitch/Moody’s/S&P: BBB+/Baa1/A-; NYSE: WM) – Waste Management is a provider of waste management in North America, offering services that range from collection and disposal to recycling and renewable energy generation. Waste Management serves approximately 20 million municipal, commercial, industrial and residential customers through a network of 367 collection operations, 355 transfer stations, 273 active landfill disposal sites, 16 waste-to-energy plants, 104 recycling plants and 111 beneficial-use landfill gas projects. Waste Management has been a tenant at the Landmark Corporate Center Property since 2007 and has a current lease expiration date of March 31, 2024, with one, five-year renewal option remaining and no termination options.
Fourth Largest Tenant: RSIEH, LLP (20,263 square feet; 9.6% of net rentable area; 14.9% of underwritten base rent; 3/31/2025 lease expiration) – RSIEH, LLP is a law firm that represents financial institutions and creditors and assists in debt collection. RSIEH, LLP has been a tenant at the Landmark Corporate Center Property since 2017 and has a current lease expiration date of March 31, 2025, with one, five-year renewal option remaining and no termination options.
Fifth Largest Tenant: Circle K Stores (19,470 square feet; 9.2% of net rentable area; 11.2% of underwritten base rent; 2/28/2025 lease expiration; Moody’s/S&P: Baa2/BBB) – Founded in 1951, Circle K is an international chain of convenience stores, owned by the Canadian multinational Alimentation Couche-Tard Inc. Over 90,000 people work under the Circle K banner, which represents a network of more than 10,500 stores in 27 countries. Circle K Stores has been a tenant at the Landmark Corporate Center Property since 2017
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Office – Suburban | Loan #7 | Cut-off Date Balance: | $25,480,000 |
| 5500 South Quebec Street | Landmark Corporate Center | Cut-off Date LTV: | 65.0% |
| Greenwood Village, CO 80111 | U/W NCF DSCR: | 1.80x | |
| U/W NOI Debt Yield: | 11.6% |
and has a current lease expiration date of February 28, 2025, with two, three-year renewal options remaining and no termination options.
The following table presents certain information relating to the tenancy at the Landmark Corporate 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 | Lease
Expiration Date |
Extension Options | Termination Option (Y/N) |
| Major Tenants | |||||||||
| Pax8(3)(4) | BBB-/Baa3/BBB- | 74,068 | 35.1% | $16.00 | $1,185,088 | 30.9% | 4/30/2025 | NAP | Y |
| Air Methods | NR/Caa1/B- | 67,333 | 31.9% | $15.95 | $1,073,804 | 28.0% | 7/31/2028 | 2, 5 year | N |
| Waste Management | BBB+/Baa1/A- | 21,640 | 10.3% | $26.50 | $573,460 | 15.0% | 3/31/2024 | 1, 5 year | N |
| RSIEH, LLP | NR/NR/NR | 20,263 | 9.6% | $28.20 | $571,417 | 14.9% | 3/31/2025 | 1, 5 year | N |
| Circle K Stores | NR/Baa2/BBB | 19,470 | 9.2% | $22.00 | $428,340 | 11.2% | 2/28/2025 | 2, 3 year | N |
| Occupied Collateral Total(5) | 211,106 | 100.0% | $18.15 | $3,832,108 | 100.0% | ||||
| Vacant Space | 0 | 0.0% | |||||||
| Collateral Total | 211,106 | 100.0% | |||||||
| (1) | Certain ratings are those of the parent company whether or not the parent company guarantees the lease. |
| (2) | Annual U/W Base Rent includes contractual rent steps through August 2021 totalling $327,942. |
| (3) | Pax8 is expected to take occupancy of 10,763 square feet of its space in the 3rd quarter of 2020 and is required to commence paying rent for this expansion space on March 1, 2021. Additionally, Pax8 has a free rent period for the month of August 2020 related to 13,873 square feet that it currently occupies and will begin paying rent for on September 1, 2020. At origination, $118,374 was reserved for such free rent periods. |
| (4) | Pax8 has the right to terminate its lease on or after September 30, 2024, with nine months’ written notice provided no earlier than December 1, 2023 and payment of a termination fee equal to the sum of the unamortized amounts of tenant-improvement costs, moving allowance, leasing commissions and 50.0% of any free base rent provided. |
| (5) | Occupied Collateral Total includes a management office (549 square feet), a café (3,331 square feet), conference space (2,250 square feet) and a fitness center (2,202 square feet) with no attributable underwritten base rent. |
The following table presents certain information relating to the lease expiration schedule at the Landmark Corporate 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(3) |
% of Total Annual U/W Base Rent(3) | Annual U/W Base Rent PSF(3) |
| MTM | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2020 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2021 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2022 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2023 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2024 | 1 | 21,640 | 10.3% | 21,640 | 10.3% | $573,460 | 15.0% | $26.50 |
| 2025 | 4 | 113,801 | 53.9% | 135,441 | 64.2% | $2,184,845 | 57.0% | $19.20 |
| 2026 | 0 | 0 | 0.0% | 135,441 | 64.2% | $0 | 0.0% | $0.00 |
| 2027 | 0 | 0 | 0.0% | 135,441 | 64.2% | $0 | 0.0% | $0.00 |
| 2028 | 2 | 67,333 | 31.9% | 202,774 | 96.1% | $1,073,804 | 28.0% | $15.95 |
| 2029 | 0 | 0 | 0.0% | 202,774 | 96.1% | $0 | 0.0% | $0.00 |
| 2030 | 0 | 0 | 0.0% | 202,774 | 96.1% | $0 | 0.0% | $0.00 |
| Thereafter(4) | 0 | 8,332 | 3.9% | 211,106 | 100.0% | $0 | 0.0% | $0.00 |
| Vacant | 0 | 0 | 0.0% | 211,106 | 100.0% | $0 | 0.0% | $0.00 |
| Total/Weighted Average | 7 | 211,106 | 100.0% | $3,832,108 | 100.0% | $18.15 |
| (1) | Information obtained from the underwritten rent roll. |
| (2) | Certain tenants may have lease termination options that are exercisable prior to the originally stated expiration date of the subject lease and that are not considered in the Lease Expiration Schedule. |
| (3) | Annual U/W Base Rent includes contractual rent steps through August 2021 totaling $327,942. |
| (4) | Includes a management office (549 square feet), a café (3,331 square feet), conference space (2,250 square feet) and a fitness center (2,202 square feet) with no attributable underwritten base rent. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
94
| Office – Suburban | Loan #7 | Cut-off Date Balance: | $25,480,000 |
| 5500 South Quebec Street | Landmark Corporate Center | Cut-off Date LTV: | 65.0% |
| Greenwood Village, CO 80111 | U/W NCF DSCR: | 1.80x | |
| U/W NOI Debt Yield: | 11.6% |
The following table presents historical occupancy percentages at the Landmark Corporate Center Property:
Historical Occupancy
12/31/2017(1) |
12/31/2018(1) |
12/31/2019(1) |
6/30/2020(2) | |||
| 53.7% | 80.2% | 94.9% | 100.0% |
| (1) | Information obtained from the Landmark Corporate Center Borrower. The borrower sponsors purchased the Landmark Corporate Center Property in July 2015 when occupancy was 100.0%. Shortly thereafter, CoBank, which occupied 87.4% of net rentable area, gave notice that it was vacating. The borrower sponsors subsequently spent approximately $10.3 million on capital improvements and lease-up costs to bring occupancy from 10.3% in December 2016 to 53.7% in December 2017, to 80.2% in December 2018 and to the current leased occupancy of 100.0%. |
| (2) | Information obtained from the underwritten rent roll. |
COVID-19 Update. As of August 2020, the Landmark Corporate Center Property was open and operating. All of the tenants by count, square footage and underwritten base rent have paid rent for July 2020. The first debt service payment for the Landmark Corporate Center Mortgage Loan is in September 2020. As of the date hereof, the Landmark Corporate Center Mortgage Loan is not subject to any modification or forbearance request.
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 Landmark Corporate Center Property:
Cash Flow Analysis
| 12/31/2017(1) | 12/31/2018(1) | 12/31/2019 | TTM
6/30/2020(2) |
U/W(2)(3) | %(4) | U/W $ per SF | |
| Base Rent | $542,722 | $1,858,406 | $2,900,893 | $3,205,429 | $3,504,166 | 69.7% | $16.60 |
| Contractual Rent Steps | 0 | 0 | 0 | 0 | 327,942 | 6.5 | 1.55 |
| Percentage Rent | 0 | 0 | 1,968 | 2,061 | 0 | 0.0 | 0.00 |
| Grossed Up Vacant Space | 0 |
0 |
0 |
0 |
0 |
0.0 |
0.00 |
| Gross Potential Rent | $542,722 | $1,858,406 | $2,902,861 | $3,207,489 | $3,832,108 | 76.3% | $18.15 |
| Other Income(5) | 1,933 | 108,070 | 37,327 | 42,212 | 42,212 | 0.8 | 0.20 |
| Total Recoveries | 29,855 |
89,061 |
984,875 |
1,064,863 |
1,149,723 |
22.9 |
5.45 |
| Net Rental Income | $574,510 | $2,055,537 | $3,925,063 | $4,314,564 | $5,024,043 | 100.0% | $23.80 |
| (Vacancy & Credit Loss) | 0 |
0 |
0 |
0 |
(348,728)(6) |
(6.9) |
(1.65) |
| Effective Gross Income | $574,510 | $2,055,537 | $3,925,063 | $4,314,564 | $4,675,315 | 93.1% | $22.15 |
| Real Estate Taxes | 517,682 | 345,919 | 422,778 | 444,884 | 418,178 | 8.9 | 1.98 |
| Insurance | 50,222 | 53,375 | 54,246 | 56,529 | 62,711 | 1.3 | 0.30 |
| Management Fee | 54,406 | 70,279 | 114,579 | 128,083 | 140,259 | 3.0 | 0.66 |
| Other Operating Expenses | 796,743 |
1,074,296 |
1,136,155 |
1,121,730 |
1,105,156 |
23.6 |
5.24 |
| Total Operating Expenses | $1,419,053 | $1,543,869 | $1,727,758 | $1,751,226 | $1,726,304 | 36.9% | $8.18 |
| Net Operating Income | ($844,543) | $511,668 | $2,197,305 | $2,563,338 | $2,949,010 | 63.1% | $13.97 |
| Replacement Reserves | 0 | 0 | 0 | 0 | 35,888 | 0.8 | 0.17 |
| TI/LC | 0 |
0 |
0 |
0 |
200,467 |
4.3 |
0.95 |
| Net Cash Flow | ($844,543) | $511,668 | $2,197,305 | $2,563,338 | $2,712,655 | 58.0% | $12.85 |
| NOI DSCR | (0.56x) | 0.34x | 1.46x | 1.70x | 1.96x | ||
| NCF DSCR | (0.56x) | 0.34x | 1.46x | 1.70x | 1.80x | ||
| NOI Debt Yield | (3.3%) | 2.0% | 8.6% | 10.1% | 11.6% | ||
| NCF Debt Yield | (3.3%) | 2.0% | 8.6% | 10.1% | 10.6% |
| (1) | The borrower sponsors purchased the Landmark Corporate Center Property in July 2015 when occupancy was 100.0%. Shortly thereafter, CoBank, which occupied 87.4% of net rentable area, gave notice that it was vacating. The borrower sponsors subsequently spent approximately $10.3 million on capital improvements and lease-up costs to bring occupancy from 10.3% in December 2016 to 53.7% in December 2017, to 80.2% in December 2018 and to the current leased occupancy of 100.0%. |
| (2) | The increase from TTM NOI (6/30/2020) to U/W NOI is primarily due to $327,942 of underwritten rent steps through August 2021. |
| (3) | For the avoidance of doubt, no COVID-19 specific adjustments have been incorporated in the lender’s underwritten net cash flow. |
| (4) | Represents (i) percent of Net Rental Income for all revenue fields and for Vacancy & Credit Loss and (ii) percent of Effective Gross Income for all other fields. |
| (5) | Other Income includes income from reserved parking, storage, tenant direct reimbursements and other miscellaneous items. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
95
| Office – Suburban | Loan #7 | Cut-off Date Balance: | $25,480,000 |
| 5500 South Quebec Street | Landmark Corporate Center | Cut-off Date LTV: | 65.0% |
| Greenwood Village, CO 80111 | U/W NCF DSCR: | 1.80x | |
| U/W NOI Debt Yield: | 11.6% |
| (6) | The underwritten economic vacancy is 6.9%. The Landmark Corporate Center Property was 100.0% leased as of June 30, 2020. |
Appraisal. The appraiser concluded to an “as-is” appraised value of $39,200,000 as of July 6, 2020.
Environmental Matters. According to the Phase I environmental site assessment dated March 11, 2020, there was no evidence of any recognized environmental conditions at the Landmark Corporate Center Property.
Market Overview and Competition. The Landmark Corporate Center Property is located approximately 11.4 miles southeast of the Denver central business district (“CBD”). The Landmark Corporate Center Property is situated less than 0.5 miles northwest of the Orchard Light Rail Station, which is served by the E, F, and R light rail lines that provide access to Union Station, Denver CBD, Peoria Station/Aurora, and Lone Tree, and approximately 0.5 miles from the I-25 and East Orchard Road interchange. Land uses surrounding the Landmark Corporate Center Property include mid-rise offices, multifamily, strip retail centers, and hotels. Retail and entertainment uses in the immediate area include Office Depot, Landmark Center (movie theater), REI, Target, The Home Depot, and Fiddler's Green Amphitheater, while restaurants include Starbucks, McDonald's, Shanahan's Steakhouse, Poke City, Slattery's Pub and Grill, Pappadeaux Seafood Kitchen, and Chick-fil-a. The Landmark development, which is a 170,000 square foot entertainment based mixed use center, is directly southwest of the Landmark Corporate Center Property. The Landmark development includes a movie theater, Comedy Works, 13 restaurants, various retail options, and residential condos. In addition, the Landmark Corporate Center Property is approximately 1.5 miles from the Denver Technological Center (“DTC”), which was established in 1963 and is situated on approximately 909 acres. The DTC is an office park that is home to several major businesses and corporations.
According to a third-party market report, the estimated 2020 population within a one-, three- and five-mile radius of the Landmark Corporate Center Property was 9,621, 102,194 and 292,847, respectively; and the estimated 2020 average household income within the same radii was $128,815, $142,243 and $122,774, respectively.
Submarket Information - According to the appraisal, the Landmark Corporate Center Property is located in the Southeast Denver office submarket within the Denver metropolitan statistical area office market. As of the first quarter of 2020, the Southeast Denver office submarket reported a total inventory of approximately 49.4 million square feet, with a 12.5% vacancy rate and average asking rents of $25.99 per square foot.
Appraiser’s Comp Set – The appraiser identified eight primary competitive office properties for the Landmark Corporate Center Property totaling approximately 2.2 million square feet, which reported an average occupancy rate of approximately 84.3%. The appraiser concluded to market rents for the Landmark Corporate Center Property of $27.00 per square foot for office tenants and $14.00 per square foot for windowless office tenants (see “Market Rent Summary” table below). Approximately 2.1% of the net rentable area at the Landmark Corporate Center Property is windowless office space.
The following table presents certain information relating to the appraiser’s market rent conclusions for the Landmark Corporate Center Property:
Market Rent Summary(1)
| Office | Windowless Office | |
| Market Rent (PSF) | $27.00 | $14.00 |
| Lease Term (Months) | 87 | 84 |
| Free Rent Months | 3 | 0 |
| Lease Type (Reimbursements) | Gross | Gross |
| Rent Increase Projection | $0.50 PSF per annum | $0.50 PSF per annum |
| Tenant Improvements (New Tenants) (PSF) | $30.00 | $15.00 |
| Tenant Improvements (Renewals) (PSF) | $10.00 | $5.00 |
| (1) | Information obtained from the appraisal. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
96
| Office – Suburban | Loan #7 | Cut-off Date Balance: | $25,480,000 |
| 5500 South Quebec Street | Landmark Corporate Center | Cut-off Date LTV: | 65.0% |
| Greenwood Village, CO 80111 | U/W NCF DSCR: | 1.80x | |
| U/W NOI Debt Yield: | 11.6% |
The table below presents certain information relating to comparable sales pertaining to the Landmark Corporate Center Property identified by the appraiser:
Comparable Sales(1)
| Property Name | Location | Rentable Area (SF) | Sale Date | Sale Price | Sales Price (PSF) |
| 4601 DTC Boulevard | Denver, CO | 249,449 | Mar-20 | $46,000,000 | $184.41 |
| Belleview Tower | Denver, CO | 201,670 | Dec-19 | $40,100,000 | $198.84 |
| Regency Plaza One | Denver, CO | 309,862 | Sep-19 | $71,250,000 | $229.94 |
| Jackson National Life | Denver, CO | 182,875 | Sep-19 | $48,750,000 | $266.58 |
| Crescent VI | Greenwood Village, CO | 134,091 | Jun-19 | $28,200,000 | $210.30 |
| (1) | Information obtained from the appraisal. |
The following table presents certain information relating to leasing at comparable properties to the Landmark Corporate Center Property:
Comparable Leases(1)
| Property Name/Location | Year Built/ Renovated | Total GLA (SF) | Distance from Subject | Occupancy | Lease Term | Tenant Size (SF) | Annual Base Rent PSF | TI Allowance PSF | Lease Type |
Stanford Place III 4582 South Ulster Street Parkway Denver, CO |
1982/NAV | 367,416 | 2.0 miles | 84% | 10.4 Yrs | 59,231 | $26.50 | $70.00 | Modified Gross |
Peakview Tower 6465 Greenwood Plaza Boulevard Greenwood Village, CO |
2000/NAV | 264,149 | 1.6 miles | 95% | 3.0 Yrs | 4,372 | $29.00 | $24.00 | Modified Gross |
6455 South Yosemite 6455 South Yosemite Street Greenwood Village, CO |
1983/2018 | 201,194 | 1.7 miles | 90% | 5.0 Yrs | 6,265 | $25.50 | $35.00 | Gross |
DTC Crossroads 7595 Technology Way Denver, CO |
1999/2006 | 191,402 | 1.5 miles | 72% | 5.3 Yrs | 29,207 | $27.50 | $20.00 | Modified Gross |
The Quadrant 5445 DTC Parkway Greenwood Village, CO |
1985/NAV | 331,151 | 1.4 miles | 96% | 4.2 Yrs | 2,719 | $26.50 | $53.33 | Modified Gross |
7100 East Belleview 7100 East Belleview Avenue Greenwood Village, CO |
1981/2019 | 179,004 | 0.7 miles | NAV | 7.6 Yrs | 6,800 | $25.76 | $50.00 | Modified Gross |
Triad at Orchard Station 5660 Greenwood Plaza Boulevard Englewood, CO |
1972/2017 | 414,831 | 0.3 miles | 69% | 5.3 Yrs | 6,183 | $25.50 | $42.00 | Gross |
4601 DTC Boulevard 4601 DTC Boulevard Denver, CO |
1982/NAV | 249,449 | 2.3 miles | NAV | 5.3 Yrs | 24,033 | $28.50 | $35.00 | Gross |
| (1) | Information obtained from appraisal. |
Escrows.
Real Estate Taxes – The Landmark Corporate Center Mortgage Loan documents require an upfront real estate tax reserve of $179,468 and ongoing monthly real estate tax reserves in an amount equal to one-twelfth of the real estate taxes that the lender estimates will be payable during the next 12 months (initially $35,894).
Insurance – Insurance premium reserves are waived as long as the Landmark Corporate Center Borrower maintains a blanket policy acceptable to the lender. If such condition is not satisfied, the Landmark Corporate Center Mortgage Loan documents require ongoing monthly insurance reserves in an amount equal to one-twelfth of the insurance premiums the lender estimates will be payable during the next 12 months.
Replacement Reserve – The Landmark Corporate Center Mortgage Loan documents require ongoing monthly replacement reserves of $3,518.
TI/LC Reserve – The Landmark Corporate Center Mortgage Loan documents require ongoing monthly reserves of $30,786 for tenant improvements and leasing commissions.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
97
| Office – Suburban | Loan #7 | Cut-off Date Balance: | $25,480,000 |
| 5500 South Quebec Street | Landmark Corporate Center | Cut-off Date LTV: | 65.0% |
| Greenwood Village, CO 80111 | U/W NCF DSCR: | 1.80x | |
| U/W NOI Debt Yield: | 11.6% |
Immediate Repairs – The Landmark Corporate Center Mortgage Loan documents require an upfront immediate repairs reserve of $26,750.
Rent Concession Funds – The Landmark Corporate Center Mortgage Loan documents require an upfront reserve of $118,374 representing one month of outstanding free rent obligations under suite 275 of the Pax8 lease ($17,919) and seven months of outstanding free rent obligations under suite 120 of the Pax8 lease ($100,455). In the event Pax8 delivers written notice (the “Free Rent Election Notice”) to the Landmark Corporate Center Borrower exercising its right to receive a portion of its moving allowance as a credit against its base rent, the Landmark Corporate Center Borrower is required to deliver a copy of such Free Rent Election Notice to the lender and the lender will disburse TATILC (as defined below) funds to the free rent reserve account in an amount equal to the credit claimed by Pax8 in the Free Rent Election Notice.
TATILC Funds – The Landmark Corporate Center Mortgage Loan documents require an upfront reserve of $370,340 for outstanding tenant allowances, tenant improvements and leasing commissions (“TATILC”) for the Pax8 lease.
Lockbox and Cash Management. The Landmark Corporate Center Mortgage Loan is structured with a hard lockbox and upfront cash management. The Landmark Corporate Center Mortgage Loan documents require that the Landmark Corporate Center Borrower establish and maintain a lender-controlled lockbox account, which is already in place, and that the Landmark Corporate Center Borrower direct all tenants to pay rent directly into such lockbox account. The Landmark Corporate Center Mortgage Loan documents also require that all rents received by the Landmark Corporate Center Borrower or the property manager be deposited into the lockbox account within one business day of receipt. All funds in the lockbox account are required to be swept each business day into a cash management account controlled by the lender and, on each payment date, all funds in the cash management account are required to be applied in accordance with the Landmark Corporate Center Mortgage Loan documents. If no Cash Sweep Trigger Event or Material Tenant Trigger Event Period (each as defined below) is continuing, any excess cash flow (after payment of required monthly reserve deposits, debt service payment, operating expenses and cash management bank fees) will be disbursed to the Landmark Corporate Center Borrower. During a Material Tenant Trigger Event Period, any excess cash flow is required to be swept into a Material Tenant (as defined below) rollover account. During a Cash Sweep Trigger Event, provided no Material Tenant Trigger Event Period exists, any excess cash flow is required to be swept to an excess cash flow subaccount to be held by the lender as additional security for the Landmark Corporate Center Mortgage Loan during the continuance of the Cash Sweep Trigger Event.
A “Cash Sweep Trigger Event” will commence upon the earlier of the following:
| (i) | the occurrence of an event of default; |
| (ii) | any bankruptcy action involving the Landmark Corporate Center Borrower, the guarantors, any of the key principals (Randall B. Rush, Stephen Randle Leach, Paul Andrew Limes and Eric Davis) or the property manager; or |
| (iii) | the trailing 12-month period’s debt service coverage ratio falling below 1.20x. |
A “Cash Sweep Trigger Event” will end upon the occurrence of the following:
| ● | with regard to clause (i) above, the cure of such event of default; |
| ● | with regard to clause (ii) above, in the case of an involuntary filing, the filing being discharged, stayed or dismissed within 45 days for the Landmark Corporate Center Borrower, the guarantors or the key principal, or within 120 days for the property manager, and lender’s determination that such filing does not materially affect the Landmark Corporate Center Borrower’s, the guarantors’, or the key principal’s monetary obligations or the property manager’s performance obligations, as applicable, or, with respect to the property manager, the Landmark Corporate Center Borrower replacing the property manager with a qualified property manager acceptable to the lender; or |
| ● | with regard to clause (iii) above, the trailing 12-month period’s debt service coverage ratio being greater than 1.25x for two consecutive calendar quarters. |
A “Material Tenant Trigger Event Period” will commence upon the earlier of the following:
| (i) | a Material Tenant giving written notice of its intent to terminate or cancel its lease or of its intention not to extend or renew its lease; |
| (ii) | on or prior to nine months prior to the expiration date of a Material Tenant’s lease, the related Material Tenant failing to extend or renew its lease; |
| (iii) | on or prior to the date by which a Material Tenant is required to notify the Landmark Corporate Center Borrower of its election to extend or renew its lease, the related Material Tenant not giving such notice; |
(iv) an event of default under a Material Tenant lease that occurs and continues beyond any applicable notice and cure period;
| (v) | any Material Tenant or any guarantor of the applicable Material Tenant lease becoming insolvent or a debtor in any bankruptcy action; |
| (vi) | a Material Tenant lease being terminated in whole or part; or |
| (vii) | a Material Tenant “going dark”, vacating or ceasing to occupy or conduct business at its space. |
A “Material Tenant Trigger Event Period” will end upon the occurrence of the following:
| ● | with regard to clause (i) above, the date that (1) the applicable Material Tenant revokes or rescinds all termination or cancellation notices, (2) the applicable Material Tenant lease is extended on terms satisfying the requirements of the related mortgage loan documents (a “Renewal Cure”) or (3) all or substantially all of the applicable Material Tenant space is leased |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
98
| Office – Suburban | Loan #7 | Cut-off Date Balance: | $25,480,000 |
| 5500 South Quebec Street | Landmark Corporate Center | Cut-off Date LTV: | 65.0% |
| Greenwood Village, CO 80111 | U/W NCF DSCR: | 1.80x | |
| U/W NOI Debt Yield: | 11.6% |
| to a replacement tenant, and such replacement tenant and its lease satisfy the requirements of the related mortgage loan documents (a “Replacement Tenant Cure”); |
| ● | with regard to clauses (ii) and (iii) above, either a Renewal Cure or Replacement Tenant Cure; |
| ● | with regard to clause (iv) above, a cure of the applicable event of default; |
| ● | with regard to clause (v) above, the affirmation of the Material Tenant lease in the applicable bankruptcy proceeding and confirmation that the Material Tenant is actually paying all rents and other amounts under its lease (or, if applicable, the discharge or dismissal of the applicable Material Tenant lease guarantor from the applicable bankruptcy proceeding; provided that such bankruptcy (after dismissal or discharge) does not have an adverse effect on such Material Tenant lease guarantor’s ability to perform its obligations under its lease guaranty); |
| ● | with regard to clause (vi) above, a Replacement Tenant Cure; or |
| ● | with regard to clause (vii) above, the Material Tenant re-commencing its normal business operations at its Material Tenant space or portion thereof, as applicable. |
A “Material Tenant” means (i) Air Methods, (ii) Pax8 or (iii) any tenant whose lease, either individually or when taken together with any other lease with the same tenant or affiliated tenants, (x) covers no less than 20% of the net rentable area at the Landmark Corporate Center Property or (y) requires the payment of base rent that is no less than 20% of the total in-place base rent at the Landmark Corporate Center Property.
Property Management. The Landmark Corporate Center Property is managed by Cushman & Wakefield U.S., Inc., a third party property management company.
Partial Release. Not permitted.
Real Estate Substitution. Not permitted.
Subordinate and Mezzanine Indebtedness. Not permitted.
Terrorism Insurance. The Landmark Corporate Center Mortgage Loan documents require that the “all risk” insurance policy required to be maintained by the Landmark Corporate Center Borrower provide coverage for terrorism in an amount equal to the full replacement cost of the Landmark Corporate Center Property, as well as business interruption insurance covering no less than the 18-month period following the occurrence of a casualty event, together with a 12-month extended period of indemnity.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
99
Multifamily – Garden 1701 Upland Drive Houston, Texas 77043 |
Loan #8 Upland Park Townhomes |
Cut-off Date Balance: Cut-off Date LTV: U/W NCF DSCR: U/W NOI Debt Yield: |
$24,000,000 65.0% 1.37x 8.3% |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
100
Multifamily – Garden 1701 Upland Drive Houston, Texas 77043 |
Loan #8 Upland Park Townhomes |
Cut-off Date Balance: Cut-off Date LTV: U/W NCF DSCR: U/W NOI Debt Yield: |
$24,000,000 65.0% 1.37x 8.3% |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
101
| No. 8 – Upland Park Townhomes | |||||||
| Mortgage Loan Information | Mortgaged Property Information | ||||||
| Mortgage Loan Seller: | LMF Commercial, LLC | Single Asset/Portfolio: | Single Asset | ||||
Credit Assessment (Fitch/KBRA/Moody’s): |
NR/NR/NR | Property Type – Subtype: | Multifamily – Garden | ||||
| Original Principal Balance: | $24,000,000 | Location: | Houston, TX | ||||
| Cut-off Date Balance: | $24,000,000 | Size: | 285 Units | ||||
| % of Initial Pool Balance: | 4.3% | Cut-off Date Balance Per Unit: | $84,211 | ||||
| Loan Purpose: | Refinance | Maturity Date Balance Per Unit: | $73,204 | ||||
| Borrower Sponsor: | Keeley Megarity | Year Built/Renovated: | 1971/2019 | ||||
| Guarantor: | Keeley Megarity | Title Vesting: | Fee | ||||
| Interest Rate: | 4.2000% | Property Manager: | Self-managed | ||||
| Note Date: | February 13, 2020 | Current Occupancy (As of): | 88.1% (7/21/2020) | ||||
| Seasoning: | 5 months | YE 2019 Occupancy(2): | 88.0% | ||||
| Maturity Date: | March 6, 2030 | YE 2018 Occupancy(2): | 90.0% | ||||
| Interest-Only Period: | 36 months | YE 2017 Occupancy(2): | 71.0% | ||||
| Loan Term (Original): | 120 months | YE 2016 Occupancy(2): | 64.0% | ||||
| Amortization Term (Original): | 360 months | As-is Appraised Value: | $36,950,000 | ||||
| Loan Amortization Type: | Interest-only, Amortizing Balloon | As-is Appraised Value Per Unit: | $129,649 | ||||
| Call Protection: | L(29),D(87),O(4) | As-is Appraisal Valuation Date: | December 17, 2019 | ||||
| Lockbox Type: | Springing | Underwriting and Financial Information(3) | |||||
| Additional Debt: | None | TTM NOI (6/30/2020)(2): | $2,008,582 | ||||
| Additional Debt Type (Balance): | NAP | YE 2019 NOI(2): | $2,163,070 | ||||
| YE 2018 NOI(2): | $1,973,310 | ||||||
| YE 2017 NOI(2): | $1,196,570 | ||||||
| U/W Revenues: | $3,673,073 | ||||||
| U/W Expenses: | $1,673,005 | ||||||
| Escrows and Reserves(1) | U/W NOI: | $2,000,068 | |||||
| Initial | Monthly | Cap | U/W NCF: | $1,928,818 | |||
| Taxes | $73,278 | $34,894 | NAP | U/W DSCR based on NOI/NCF: | 1.42x / 1.37x | ||
| Insurance | $117,338 | $12,417 | NAP | U/W Debt Yield based on NOI/NCF: | 8.3% / 8.0% | ||
| Replacement Reserve | $500,000 | $5,938 | NAP | U/W Debt Yield at Maturity based on NOI/NCF: | 9.6% / 9.2% | ||
| Cut-off Date LTV Ratio: | 65.0% | ||||||
| LTV Ratio at Maturity: | 56.5% | ||||||
| Sources and Uses | ||||||||
| Sources | Uses | |||||||
| Original loan amount | $24,000,000 | 100.0% | Loan Payoff | $14,361,978 | 59.8% | |||
| Upfront Reserves | 690,615 | 2.9 | ||||||
| Closing costs | 206,978 | 0.9 | ||||||
| Return of equity | 8,740,429 | 36.4 | ||||||
| Total Sources | $24,000,000 | 100.0% | Total Uses | $24,000,000 | 100.0% | |||
| (1) | See “Escrows” section for a description of Escrows and Reserves |
| (2) | The increase in YE 2017 NOI to TTM NOI is attributed to renovations and lease up of units at the Upland Park Townhomes Property (as defined below), which increased occupancy and net operating income. |
| (3) | All NOI, NCF and occupancy information, as well as the appraised value, were determined prior to the emergence of the novel coronavirus pandemic and the economic disruption resulting from measures to combat the pandemic, and all DSCR, LTV and Debt Yield metrics were calculated, and the Upland Park Townhomes Mortgage Loan was underwritten, based on such prior information. See “Risk Factors—Risks Related to Market Conditions and Other External Factors—The Coronavirus Pandemic Has Adversely Affected the Global Economy and Will Likely Adversely Affect the Performance of the Mortgage Loans” in the Preliminary Prospectus. |
The Mortgage Loan. The mortgage loan (the “Upland Park Townhomes Mortgage Loan”) is evidenced by a single promissory note secured by a first priority mortgage encumbering a condominium interest in a multifamily property consisting of 285 multifamily condominium units in a townhome community (the “Upland Park Townhomes Property”) that is part of a 302-unit multifamily property (the “Greater Complex”) located in Houston, Texas.
The Borrower and Borrower Sponsor. The borrower is Upland Park Townhomes, LLC (the “Upland Park Townhomes Borrower”), a single-purpose Texas limited liability company structured to be bankruptcy-remote. The Upland Park Townhomes Borrower is wholly owned by Keeley Megarity who holds a 50.0% direct ownership interest in the Upland Park Townhomes Borrower and is the sole owner of the holder of the remaining 50.0% interest, managing member 1701 KM, Inc., a Texas corporation that is also structured to be
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
102
Multifamily – Garden 1701 Upland Drive Houston, Texas 77043 |
Loan #8 Upland Park Townhomes |
Cut-off Date Balance: Cut-off Date LTV: U/W NCF DSCR: U/W NOI Debt Yield: |
$24,000,000 65.0% 1.37x 8.3% |
bankruptcy-remote. The non-recourse carveout guarantor and borrower sponsor of the Upland Park Townhomes Mortgage Loan is Keeley Megarity.
Keeley Megarity founded Texas Claremont Property Company Inc. d/b/a Claremont Property Company (“Claremont”) in 1996 when he bought his first 29-unit apartment project. Since then, Mr. Megarity has purchased and sold over 5,000 apartment units, built 1,500 new apartment units and renovated over 1.0 million square feet of office space. Claremont serves as the general contractor on projects owned by Mr. Megarity, and as a third-party general contractor for other property owners. Claremont has general contracting projects in Texas, Alabama, Mississippi and Florida. Mr. Megarity oversees a staff of 45 employees that manage apartment projects, office buildings and construction projects. Mr. Megarity is involved in current and prior foreclosure litigation and defaults, including the maturity default of the loan being refinanced by the Upland Park Townhomes Mortgage Loan. See “Description of the Mortgage Pool – Loan Purpose; Default History, Bankruptcy Issues and Other Proceedings” in the Preliminary Prospectus.
The Property. The Upland Park Townhomes Property consists of 285 multifamily condominium units located in Houston, Texas. The Upland Park Townhomes Property’s unit mix includes 196 two-bedroom units, 80 three-bedroom units, and 9 four-bedroom units, with an average unit size of 1,219 square feet. Unit amenities include stainless steel appliances, stackable washer/dryer units, walk-in closets, granite countertops and patios/balconies. Since acquisition of the Upland Park Townhomes Property in 2013, the borrower sponsor has spent approximately $15.95 million in exterior and interior renovations which continued through 2019. As of July 21, 2020, the Upland Park Townhomes Property was 88.1% occupied.
The Upland Park Townhomes Property is part of the “Greater Complex”, which was constructed in 1971 and consists of 41, two-story buildings, situated on a 15.4 acre site. The Greater Complex was converted into a condominium legal structure in 1987 and includes 302 condominium units. Of the total 302 units, 285 are owned by the Upland Park Townhomes Borrower and are collateral for the Upland Park Townhomes Mortgage Loan. The remaining 17 units are owned by two separate unaffiliated owners who rent out units to residential tenants. The common areas of the Greater Complex are administered by a condominium association (the “Association”) pursuant to a condominium declaration. The Upland Park Townhomes Borrower’s 285 units represent 94.4% of the condominium, providing the Upland Park Townhomes Borrower with majority control of the Association. Community amenities include a clubhouse, swimming pools, a fitness center, a business center, controlled access gates with 24-hour attendants, covered parking, walking paths, and a dog park. The Greater Complex has 603 surface parking spaces, consisting of 369 open spaces and 234 carport spaces, resulting in a parking ratio of 2.0 spaces per unit.
The following table presents certain information relating to the unit mix of the Upland Park Townhomes Property:
Unit Mix Summary(1)
| Unit Type | Total No. of Units | Occupied Units | % of Total Units | Occupancy | Average Unit Size (SF) | Average Underwritten Monthly Rent per Unit |
| 2 Bedrooms / 1.5 Bathrooms | 83 | 69 | 29.1% | 83.1% | 1,060 | $1,011 |
| 2 Bedrooms / 2.5 Bathrooms | 113 | 103 | 39.6% | 91.2% | 1,190 | $1,083 |
| 3 Bedrooms / 2 Bathrooms | 68 | 60 | 23.9% | 88.2% | 1,364 | $1,240 |
| 3 Bedrooms / 3 Bathrooms | 12 | 11 | 4.2% | 91.7% | 1,500 | $1,405 |
| 4 Bedrooms / 3 Bathrooms | 9 | 8 | 3.2% | 88.9% | 1,580 | $1,598 |
| Total/Weighted Average | 285 | 251 | 100.0% | 88.1% | 1,219 | $1,129 |
| (1) | Information obtained from the underwritten rent roll. |
The following table presents historical occupancy percentages at the Upland Park Townhomes Property:
Historical Occupancy
12/31/2017(1) |
12/31/2018(1) |
12/31/2019(1) |
7/21/2020(2) |
| 71.0% | 90.0% | 88.0% | 88.1% |
| (1) | Information obtained from the borrower sponsor. |
| (2) | Information obtained from the underwritten rent roll. |
COVID-19. As of July 17, 2020, the Upland Park Townhomes Property is open and operating. As of the date hereof, collection at the Upland Park Townhomes Property was at 87.7% of total units. The Upland Park Townhomes Borrower paid the debt service and deposited monthly reserves required under the Upland Park Townhomes Mortgage Loan in May, June, July, and August 2020. As of the date hereof, the Upland Park Townhomes Mortgage Loan is not subject to any modification or forbearance agreement, and the Upland Park Townhomes Borrower has not requested any modification or forbearance to the Upland Park Townhomes Mortgage Loan terms.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
103
Multifamily – Garden 1701 Upland Drive Houston, Texas 77043 |
Loan #8 Upland Park Townhomes |
Cut-off Date Balance: Cut-off Date LTV: U/W NCF DSCR: U/W NOI Debt Yield: |
$24,000,000 65.0% 1.37x 8.3% |
Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and underwritten net cash flow at the Upland Park Townhomes Property:
Cash Flow Analysis
| 2017 | 2018 | 2019 | TTM 6/30/2020 | U/W | %(1) | U/W $ per Unit | |
| Base Rent | $2,494,386 | $3,350,442 | $3,567,739 | $3,518,333 | $3,407,112 | 81.0% | $11,955 |
| Grossed Up Vacant Space | 0 |
0 |
0 |
0 |
495,299 |
11.8 |
1,738 |
| Gross Potential Rent | $2,494,386 | $3,350,442 | $3,567,739 | $3,518,333 | $3,902,411 | 92.8% | $13,693 |
| Other Income | 254,180 |
301,568 |
322,384 |
289,642 |
304,985(2) |
7.2 |
1,070 |
| Net Rental Income | $2,748,566 | $3,652,010 | $3,890,123 | $3,807,976 | $4,207,396 | 100.0% | $14,763 |
| (Vacancy & Credit Loss) | (29,820) |
(55,814) |
(43,875) |
(47,264) |
(534,323)(3) |
(13.7) |
(1,875) |
| Effective Gross Income | $2,718,746 | $3,596,195 | $3,846,248 | $3,760,711 | $3,673,073 | 87.3% | $12,888 |
| Real Estate Taxes | 332,826 | 342,000 | 418,972 | 446,272 | 418,815 | 11.4 | 1,470 |
| Insurance | 115,391 | 115,368 | 119,589 | 131,544 | 144,016 | 3.9 | 505 |
| Management Fee | 116,713 | 146,539 | 157,552 | 155,120 | 110,192 | 3.0 | 387 |
| Other Operating Expenses | 957,247 |
1,018,979 |
987,066 |
1,019,194 |
999,982 |
27.2 |
3,509 |
| Total Operating Expenses | $1,522,177 | $1,622,886 | $1,683,178 | $1,752,130 | $1,673,005 | 45.5% | $5,870 |
| Net Operating Income(4) | $1,196,570 | $1,973,310 | $2,163,070 | $2,008,582 | $2,000,068 | 54.5% | $7,018 |
| Capital Expenditures | 0 |
0 |
0 |
0 |
71,250 |
1.9 |
250 |
| Net Cash Flow | $1,196,570 | $1,973,310 | $2,163,070 | $2,008,582 | $1,928,818 | 52.5% | $6,768 |
| NOI DSCR | 0.85x | 1.40x | 1.54x | 1.43x | 1.42x | ||
| NCF DSCR | 0.85x | 1.40x | 1.54x | 1.43x | 1.37x | ||
| NOI Debt Yield | 5.0% | 8.2% | 9.0% | 8.4% | 8.3% | ||
| NCF Debt Yield | 5.0% | 8.2% | 9.0% | 8.4% | 8.0% |
| (1) | Represents (i) percent of Net Rental Income for all revenue fields, (ii) percent of Gross Potential Rent for Vacancy & Credit Loss and (iii) percent of Effective Gross Income for all other fields. |
| (2) | Other Income includes (i) utility income of $153,867, (ii) parking income of $36,521 and (iii) other income of $114,597, which includes pet fees, late charges, month-to-month fees, application fees, HOA fees paid by non-collateral units and miscellaneous income. |
| (3) | The underwritten economic vacancy is 13.7%. The Upland Park Townhomes Property was 88.1% physically occupied as of July 21, 2020. |
| (4) | The increase in Net Operating Income from 2017 through TTM 6/30/2020 is attributed to the renovations and lease up at the Upland Park Townhomes Property, which increased occupancy and net operating income. |
Appraisal. As of the appraisal valuation date of December 17, 2019, the Upland Park Townhomes Property had an “as-is” appraised value of $36,950,000.
Environmental Matters. According to the Phase I environmental site assessment dated December 20, 2019, there was no evidence of any recognized environmental conditions at the Upland Park Townhomes Property.
Market Overview and Competition. The Upland Park Townhomes Property is located in Houston, Harris County, Texas, within the Houston Metropolitan Statistical Area (the “Houston MSA”). The Houston MSA is comprised of the Houston-The Woodlands-Sugar Land metropolitan area. The Houston MSA has advanced faster than the nation as a whole, with job growth that is approximately 1.0% higher than that of the national average on a year-over-year basis. Professional services and distribution is leading the way, and the unemployment rate is reported at 3.5% with the labor force continuing to grow. The five largest industry sectors within a three-mile radius of the Upland Park Townhomes Property include: professional services (47.3%), manufacturing (9.8%), retail trade (9.8%), finance/insurance/real estate (9.5%), and construction (7.8%).
The Upland Park Townhomes Property is located in the western area of Houston within the Spring Branch multifamily submarket. The Houston central business district is approximately 12 miles from the Upland Park Townhomes Property. The Upland Park Townhomes Property is located in a suburban area, and land uses within the neighborhood consist of a mixture of commercial and residential developments that include primarily industrial and multifamily properties. There are several shopping facilities that serve the area; Memorial City Mall is the closest regional mall located approximately 4.5 miles away from the Upland Park Townhomes Property. Located 2.5 miles away from IH-10, the Upland Park Townhomes Property has access to several major employment centers, including: The Energy Corridor, Uptown/Galleria, Westchase, and Texas Medical Center, which are all located within 15 miles of the Upland Park Townhomes Property. The George Bush Intercontinental Airport is located approximately 30 miles from the Upland Park Townhomes Property. According to the appraisal, the 2019 estimated population within a one-, three- and five-mile radius of the Upland Park Townhomes Property is 8,851, 100,763 and 314,064, respectively, with an average household income within a one-, three- and five-mile radius of the Upland Park Townhomes Property of approximately $107,647, $118,259 and $110,093, respectively.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
104
Multifamily – Garden 1701 Upland Drive Houston, Texas 77043 |
Loan #8 Upland Park Townhomes |
Cut-off Date Balance: Cut-off Date LTV: U/W NCF DSCR: U/W NOI Debt Yield: |
$24,000,000 65.0% 1.37x 8.3% |
According to a third-party market research report, as of the third quarter of 2019, the Spring Branch multifamily submarket contained approximately 23,458 units, a reported 3.7% vacancy rate, and an average asking monthly rent per unit of $980 (representing a 1.8% increase from the third quarter of 2018).
Appraiser’s Competitive Set – The appraiser identified five primary competitive properties for the Upland Park Townhomes Property totaling 922 units, which reported an average occupancy rate of approximately 93.0%. The appraiser concluded to monthly market rents per unit ranging from $813 to $1,625.
Competitive Set(1)
| Upland Park Townhomes (Subject) | Bateswood Manor Apartments | Brighton Oaks | City Terrace | Eagle Hollow | Memorial Fountain | |
| Location | Houston, TX | Houston, TX | Houston, TX | Houston, TX | Houston, TX | Houston, TX |
| Distance to Subject | -- | 3.0 miles | 2.9 miles | 2.9 miles | 2.1 miles | 1.5 miles |
| Property Type | Garden | Garden | Garden | Garden | Garden | Garden |
| Year Built/Renovated | 1971/2013-2019 | 1973/NAP | 1969/NAP | 1975/2017 | 1982/NAP | 1965/2017 |
| Number of Units | 285 | 100 | 201 | 122 | 350 | 149 |
| Average Monthly Rent (per unit) | ||||||
| 1 Bedroom | NAP(2) | $813 | $835 | $968 | $840 | $1,016 |
| 2 Bedrooms | $1,011 - $1,083(2) | $1,011 - $1,349 | $1,029 - $1,149 | $1,230 - $1,375 | $990 - $1,130 | $1,200 - $1,395 |
| 3 Bedrooms | $1,240 - $1,405(2) | $1,207 | $1,239 | $1,545 | NAP | $1,575 - $1,625 |
| 4 Bedrooms | $1,598(2) | NAP | NAP | $1,535 | NAP | NAP |
| Occupancy | 88.1%(2) | 92.0% | 90.0% | 95.0% | 90.0% | 98.0% |
| (1) | Information obtained from the appraisal. |
| (2) | Information obtained from the underwritten rent roll. |
Escrows.
Real Estate Taxes – The Upland Park Townhomes Mortgage Loan documents require an upfront real estate tax reserve of $73,278 and ongoing monthly real estate tax reserves in an amount equal to one-twelfth of the real estate taxes that the lender estimates will be necessary to pay taxes over the then succeeding twelve months (initially $34,894).
Insurance – The Upland Park Townhomes Mortgage Loan documents require an upfront insurance reserve of $117,338 and ongoing monthly insurance premium reserves in an amount equal to one-twelfth of the insurance premiums that the lender estimates will be necessary to pay insurance premiums over the then succeeding twelve months (initially $12,417).
Replacement Reserves – The Upland Park Townhomes Mortgage Loan documents require an upfront replacement reserve of $500,000 and ongoing monthly replacement reserves of $5,938.
Lockbox and Cash Management. The Upland Park Townhomes Mortgage Loan requires a springing lockbox and springing cash management. Upon the occurrence and during the continuance of a Cash Management Trigger Event (as defined below), (i) the Upland Park Townhomes Borrower is required to establish a lender-controlled lockbox account and instruct tenants or the property manager to deposit rents into such lockbox account, and (ii) the Upland Park Townhomes Borrower or the property manager is required to deposit all rents received within two business days of receipt. On each business day during a Cash Management Trigger Event, funds in the lockbox account are required to be transferred to the cash management account. All funds in the cash management account are required to be applied on each monthly payment date in accordance with the related mortgage loan documents. Pursuant to the Upland Park Townhomes Mortgage Loan documents, all excess funds on deposit are required to be applied as follows (a) if a Cash Sweep Event (as defined below) is not in effect, to the Upland Park Townhomes Borrower; and (b) if a Cash Sweep Event is in effect funds will be applied to an excess cash flow account controlled by the lender, to be held by the lender as additional security for the Upland Park Townhomes Mortgage Loan.
A “Cash Management Trigger Event” will commence upon the occurrence of the following:
| (i) | an event of default; |
| (ii) | the Upland Park Townhomes Borrower’s second late debt service payment within a 12-month period; |
| (iii) | a bankruptcy action of the Upland Park Townhomes Borrower, guarantor or property manager; or |
| (iv) | a Cash Management DSCR Trigger Event (as defined below). |
A Cash Management Trigger Event will end upon the occurrence of:
| ● | with regard to clause (i) above, the cure of such event of default being accepted, or the event of default being waived by the lender; |
| ● | with regard to clause (ii) above, the debt service payments being paid on time for 12 consecutive payment dates; |
| ● | with regard to clause (iii) above, such bankruptcy action petition being discharged, stayed, or dismissed within 90 days of such filing among other conditions with respect to the Upland Park Townhomes Borrower or guarantor and within 120 days |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Multifamily – Garden 1701 Upland Drive Houston, Texas 77043 |
Loan #8 Upland Park Townhomes |
Cut-off Date Balance: Cut-off Date LTV: U/W NCF DSCR: U/W NOI Debt Yield: |
$24,000,000 65.0% 1.37x 8.3% |
| with respect to the property manager, or with respect to the property manager, the Upland Park Townhomes Borrower replacing the property manager with a qualified property manager acceptable to the lender; and |
| ● | with regard to clause (iv) above, the date the amortizing debt service coverage ratio based on the trailing 12-month period immediately preceding the date of such determination is greater than 1.10x for two consecutive quarters. |
A “Cash Management DSCR Trigger Event” will occur on any day the amortizing debt service coverage ratio, based on the trailing 12-month period immediately preceding the date of determination, is less than 1.10x for the Upland Park Townhomes Mortgage Loan.
A “Cash Sweep Event” will commence upon the occurrence of the following:
| (i) | an event of default; |
| (ii) | a bankruptcy action of the Upland Park Townhomes Borrower, guarantor or property manager; or |
(iii) a Cash Sweep DSCR Trigger Event (as defined below).
A Cash Sweep Event will end upon the occurrence of:
| ● | with regard to clause (i) above, the cure of such event of default being accepted or waived by lender; |
| ● | with regard to clause (ii) above, such bankruptcy action petition being discharged, stayed, or dismissed within 90 days of such filing among other conditions with respect to the Upland Park Townhomes Borrower or guarantor or within 120 days for the property manager, or with respect to the property manager, the Upland Park Townhomes Borrower replacing the property manager with a qualified property manager acceptable to the lender; and |
| ● | with regard to clause (iii) above, the date the amortizing debt service coverage ratio based on the trailing 12-month period immediately preceding the date of such determination is greater than 1.10x for two consecutive quarters. |
A “Cash Sweep DSCR Trigger Event” will occur on any day the amortizing debt service coverage ratio, based on the trailing 12-month period immediately preceding the date of determination, is less than 1.10x for the Upland Park Townhomes Mortgage Loan.
Property Management. The Upland Park Townhomes Property is managed by Texas Claremont Property Company Inc., an affiliate of the Upland Park Townhomes Borrower.
Partial Release. None.
Subordinate and Mezzanine Indebtedness. None.
Ground Lease. None.
Terrorism Insurance. The Upland Park Townhomes Mortgage Loan documents require that the “all risk” insurance policy required to be maintained by the Upland Park Townhomes Borrower provides coverage for terrorism in an amount equal to the full replacement cost of the Upland Park Townhomes Property, as well as business interruption insurance covering no less than the 12-month period following the occurrence of a casualty event, together with a 6-month extended period of indemnity.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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(THIS PAGE INTENTIONALLY LEFT BLANK)
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Retail – Single Tenant | Loan #9 | Cut-off Date Balance: | $23,000,000 | |
| 7801 Limestone Drive | Life Time Fitness - Gainesville, VA | Cut-off Date LTV: | 62.0% | |
| Gainesville, VA 20155 | U/W NCF DSCR: | 2.28x | ||
| U/W NOI Debt Yield: | 9.6% |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Retail – Single Tenant | Loan #9 | Cut-off Date Balance: | $23,000,000 | |
| 7801 Limestone Drive | Life Time Fitness - Gainesville, VA | Cut-off Date LTV: | 62.0% | |
| Gainesville, VA 20155 | U/W NCF DSCR: | 2.28x | ||
| U/W NOI Debt Yield: | 9.6% |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| No. 9 – Life Time Fitness - Gainesville, VA | |||||||
| Mortgage Loan Information | Mortgaged Property Information | ||||||
| Mortgage Loan Seller: | Wells Fargo Bank, National Association | Single Asset/Portfolio: | Single Asset | ||||
Credit Assessment (Fitch/KBRA/Moody’s): |
NR/NR/NR | Property Type – Subtype: | Retail – Single Tenant | ||||
| Original Principal Balance: | $23,000,000 | Location: | Gainesville, VA | ||||
| Cut-off Date Balance: | $23,000,000 | Size: | 125,157 SF | ||||
| % of Initial Pool Balance: | 4.1% | Cut-off Date Balance Per SF: | $183.77 | ||||
| Loan Purpose: | Acquisition | Maturity Date Balance Per SF: | $183.77 | ||||
| Borrower Sponsors: | Carl T. Millice, III; Bowden T. Millice; Clayton C. Millice | Year Built/Renovated: | 2019/NAP | ||||
| Guarantors: | Carl T. Millice, III; Bowden T. Millice; Clayton C. Millice | Title Vesting: | Fee | ||||
| Mortgage Rate: | 3.9000% | Property Manager: | Tenant-managed | ||||
| Note Date: | March 3, 2020 | Current Occupancy (As of): | 100.0% (8/1/2020) | ||||
| Seasoning: | 5 months | YE 2019 Occupancy(2): | NAP | ||||
| Maturity Date: | March 11, 2030 | YE 2018 Occupancy(2): | NAP | ||||
| IO Period: | 120 months | YE 2017 Occupancy(2): | NAP | ||||
| Loan Term (Original): | 120 months | YE 2016 Occupancy(2): | NAP | ||||
| Amortization Term (Original): | NAP | As-Is Appraised Value(3): | $37,100,000 | ||||
| Loan Amortization Type: | Interest-only, Balloon | As-Is Appraised Value Per SF(3): | $296.43 | ||||
| Call Protection: | L(29),D(87),O(4) | As-Is Appraisal Valuation Date: | January 9, 2020 | ||||
| Lockbox Type: | Hard/Springing Cash Management | ||||||
| Additional Debt: | None | Underwriting and Financial Information | |||||
| Additional Debt Type (Balance): | NAP | YE 2019 NOI(2): | NAP | ||||
| YE 2018 NOI(2): | NAP | ||||||
| YE 2017 NOI(2): | NAP | ||||||
| YE 2016 NOI(2): | NAP | ||||||
| U/W Revenues: | $2,266,701 | ||||||
| U/W Expenses: | $68,001 | ||||||
| Escrows and Reserves(1) | U/W NOI: | $2,198,700 | |||||
| Initial | Monthly | Cap | U/W NCF: | $2,072,849 | |||
| Taxes | $0 | Springing | NAP | U/W DSCR based on NOI/NCF: | 2.42x / 2.28x | ||
| Insurance | $0 | Springing | NAP | U/W Debt Yield based on NOI/NCF: | 9.6% / 9.0% | ||
| Replacement Reserve | $0 | Springing | NAP | U/W Debt Yield at Maturity based on NOI/NCF: | 9.6% / 9.0% | ||
| TI/LC Reserve | $0 | Springing | NAP | Cut-off Date LTV Ratio(3): | 62.0% | ||
| LTV Ratio at Maturity(3): | 62.0% | ||||||
| Sources and Uses | ||||||||
| Sources | Uses | |||||||
| Original loan amount | $23,000,000 | 59.4% | Purchase price | $38,000,000 | 98.2% | |||
| Borrower sponsor cash equity | 15,696,218 | 40.6 | Closing costs | 696,218 | 1.8 | |||
| Total Sources | $38,696,218 | 100.0% | Total Uses | $38,696,218 | 100.0% | |||
| (1) | See “Escrows” section below. |
| (2) | Historical operating statements and occupancy are not applicable, as the property was constructed in 2019, and the borrower sponsors recently acquired the property in a sale-leaseback transaction. |
| (3) | The appraised value was determined prior to the emergence of the novel coronavirus pandemic and the economic disruption resulting from measures to combat the pandemic, and all LTV metrics were calculated based on such information. See “Risk Factors—Risks Related to Market Conditions and Other External Factors—The Coronavirus Pandemic Has Adversely Affected the Global Economy and Will Likely Adversely Affect the Performance of the Mortgage Loans” in the Preliminary Prospectus. |
The Mortgage Loan. The mortgage loan (the “Life Time Fitness - Gainesville, VA Mortgage Loan”) is evidenced by a single promissory note secured by a first mortgage encumbering the borrower’s fee interest in a 125,157 square foot, single tenant retail building located in Gainesville, Virginia (the “Life Time Fitness - Gainesville, VA Property”).
The Borrowers and Borrower Sponsors. The borrowers are two tenants-in-common: Gainesville LT LLC and Big Big Gainesville, LLC, each a Delaware limited liability company. The borrower sponsors and non-recourse carveout guarantors are Carl T. Millice, III, Bowden T. Millice and Clayton C. Millice.
Carl T. Millice, III, Bowden T. Millice and Clayton C. Millice are each principals of Millice Group, Ltd., a privately held full-service real estate investment and development company headquartered in Denver, Colorado. Founded in 1982 by Carl T. Millice, the company has over 30 years of experience developing, owning and operating real estate. Millice Group, Ltd has developed or owned over 2.5
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
110
| Retail – Single Tenant | Loan #9 | Cut-off Date Balance: | $23,000,000 | |
| 7801 Limestone Drive | Life Time Fitness - Gainesville, VA | Cut-off Date LTV: | 62.0% | |
| Gainesville, VA 20155 | U/W NCF DSCR: | 2.28x | ||
| U/W NOI Debt Yield: | 9.6% |
million square feet of commercial and residential real estate and has been responsible for leasing over 4 million square feet of commercial space.
The Property. The Life Time Fitness – Gainesville, VA Property contains 125,157 square feet of rentable area and is situated on an 18.5-acre site. The property was constructed in 2019 by Life Time, Inc. and was acquired by the borrower in a sale-leaseback transaction in March 2020. The property contains 710 surface parking spaces resulting in a parking ratio of 5.7 spaces per 1,000 square feet of rentable area. As of August 1, 2020, the property was 100.0% leased to Life Time.
The Life Time Fitness - Gainesville, VA Property is an Onyx-level Life Time facility, the second highest club category in terms of amenities and membership costs. Amenities at the property include a salon & spa, childcare center, yoga studio, Pilates studio, indoor and outdoor swimming pools, whirlpool, steam room, sauna, café, indoor cycling studio, locker rooms, and basketball court. Additional services and offerings include weight loss programs, private and group training, running and cycling clubs and kids camps. The property also contains an on-site LifeClinic, which provides members with professional chiropractors and physical therapists. The Life Time Fitness – Gainesville, VA Property is the only Life Time center in the state of Virginia with a LifeClinic. The closest other Life Time Fitness facility is located in Centreville, Virginia, approximately 10.2 miles from the Life Time Fitness - Gainesville, VA Property.
Major Tenant.
Life Time (125,157 square feet; 100.0% of net rentable area; 100.0% of underwritten base rent; 2/28/2045 lease expiration) – Life Time Inc., founded in 1992, operates large sports, athletic, fitness and family recreation centers with more than 150 destinations in 41 major markets in the U.S. and Canada. In addition to traditional “health club” offerings, most Life Time Fitness centers include a selection of amenities and services including indoor and outdoor swimming pools, basketball and racquet courts, personal training and group fitness programming, child care centers, cafés and spas. Life Time executed a 25-year lease through February 2045 with 6, 5-year extension options.
Life Time’s lease is structured with 8% contractual rent escalations every five years with the first rent bump scheduled to occur in 2025. The entity on Life Time’s lease is Healthy Way of Life X, LLC, a Delaware limited liability company, and the lease is guaranteed by Life Time, Inc., a Minnesota Corporation.
COVID-19 Update. As of July 30, 2020, the Life Time Fitness Property was open and operating. Life Time previously closed operations at the Life Time Fitness – Gainesville, VA Property due to COVID-19 but re-opened on June 19, 2020. Life Time made full rent payments for March, April, May, June and July 2020. The July 2020 debt service payment was made, and the Life Time Fitness – Gainesville, VA Mortgage Loan is current; the August debt service payment is due on August 11th. As of the date hereof, the Life Time Fitness – Gainesville, VA Mortgage Loan is not subject to any modification or forbearance request.
The following table presents certain information relating to the tenancy at the Life Time Fitness - Gainesville, VA Property:
Major Tenant
| Tenant Name | Credit
Rating (Fitch/Moody’s/ S&P) |
Tenant NRSF | %
of NRSF |
Annual U/W Base Rent PSF(1) | Annual U/W Base Rent(1) |
% of Total Annual U/W Base Rent | Lease
Expiration Date |
Extension Options(2) | Termination Option (Y/N) |
| Life Time | NR/B3/CCC+ | 125,157 | 100.0% | $18.52 | $2,318,000 | 100.0% | 2/28/2045 | 6, 5-year | N |
| Occupied Collateral Total | 125,157 | 100.0% | $18.52 | $2,318,000 | 100.0% | ||||
Vacant Space |
0 |
0.0% |
|||||||
| Collateral Total | 125,157 | 100.0% | $18.52 | $2,318,000 | 100.0% | ||||
| (1) | The Annual U/W Base Rent PSF and Annual U/W Base Rent represents Life Time’s current contractual base rent. The tenant’s lease is structured with 8% contractual rental rate increases every five years with the first increase scheduled to occur in 2025. |
| (2) | Life Time has 6, 5-year extension options each exercisable with 15 months’ notice. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
111
| Retail – Single Tenant | Loan #9 | Cut-off Date Balance: | $23,000,000 | |
| 7801 Limestone Drive | Life Time Fitness - Gainesville, VA | Cut-off Date LTV: | 62.0% | |
| Gainesville, VA 20155 | U/W NCF DSCR: | 2.28x | ||
| U/W NOI Debt Yield: | 9.6% |
The following table presents certain information relating to the lease rollover schedule at the Life Time Fitness - Gainesville, VA 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 |
% of Total Annual U/W Base Rent | Annual U/W Base Rent PSF |
| MTM | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2020 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2021 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2022 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2023 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2024 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2025 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2026 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2027 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2028 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2029 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2030 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| Thereafter | 1 | 125,157 | 100.0% | 125,157 | 100.0% | $2,318,000 | 100.0% | $18.52 |
| Vacant | 0 | 0 | 0.0% | 125,157 | 100.0% | $0 | 0.0% | $0.00 |
| Total/Weighted Average | 1 | 125,157 | 100.0% | $2,318,000 | 100.0% | $18.52 |
| (1) | Information obtained from the underwritten rent roll. |
The following table presents historical occupancy percentages at the Life Time Fitness - Gainesville, VA Property:
Historical Occupancy
12/31/2016(1) | 12/31/2017(1) | 12/31/2018(1) | 12/31/2019(1) | 8/1/2020(2) | ||||
| NAV | NAV | NAV | NAV | 100.0% |
| (1) | Historical occupancy is not applicable, as the property was constructed in 2019 and was acquired by the borrower in a sale-leaseback transaction in March 2020. |
| (2) | Information obtained from the underwritten rent roll. |
Appraisal. The appraiser concluded to an “as-is” appraised value of $37,100,000 as of January 9, 2020. The appraiser also concluded a “Hypothetical – Go Dark” value of $21,900,000 as of January 9, 2020.
Environmental Matters. According to a Phase I environmental site assessment dated January 16, 2020 there was no evidence of any recognized environmental conditions at the Life Time Fitness - Gainesville, VA Property.
Market Overview. The Life Time Fitness - Gainesville, VA Property is located within the southeast quadrant of the US Route 29 and I-66 interchange, in Gainesville, Virginia, approximately 35 miles west of the Washington D.C. central business district. According to the appraisal, the property is located within two miles of the Virginia Gateway Town Center Development (a 1.3 million square foot mixed use development anchored by a Super Target, Giant, Lowes, and BJ’s Wholesale Club) and the Shops at Stonewall development (a recently completed approximately 300,000 square foot shopping center anchored by Wegmans, Ross Dress for Less, Dick’s Sporting Goods and Staples).
According to the appraisal, the estimated 2019 population within a 1-, 3- and 5-mile radius of the Life Time Fitness – Gainesville, VA Property was approximately 3,570, 52,802 and 114,408, respectively. Within the same radii, the average 2019 household income was approximately $160,915, $159,195 and $148,833, respectively.
According to a third party market research report, the Life Time Fitness - Gainesville, VA Property is located within the Route 29/I-66 Corridor submarket of the Washington, DC retail market. As of March 2020, the submarket reported a total inventory of approximately 8.4 million square feet with a 4.0% vacancy rate and average asking rent of $28.87 per square foot. Within a three mile radius of the property, the total retail inventory was approximately 2.6 million square feet, with a 4.4% vacancy rate and an average asking rent of $31.90 per square foot.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Retail – Single Tenant | Loan #9 | Cut-off Date Balance: | $23,000,000 | |
| 7801 Limestone Drive | Life Time Fitness - Gainesville, VA | Cut-off Date LTV: | 62.0% | |
| Gainesville, VA 20155 | U/W NCF DSCR: | 2.28x | ||
| U/W NOI Debt Yield: | 9.6% |
The following table presents certain information relating to the appraiser’s market rent conclusion for the Life Time Fitness - Gainesville, VA Property:
Market Rent Summary(1)
| Market Rent (PSF) | $18.50 |
| Lease Term (Years) | 15 |
| Lease Type (Reimbursements) | Triple Net |
| Rent Increase Projection | 10% every 5 years |
| (1) | Information obtained from the appraisal. |
The following table presents certain information relating to comparable leases to Life Time Fitness - Gainesville, VA Property:
Comparable Leases(1)
| Property Name/Location | Tenant | Total GLA (SF) | Distance from Subject | Lease Start Date | Lease Term | Annual Base Rent PSF | Lease Type |
Life Time Fitness – Gainesville, VA Property(2)
|
Life Time | 125,157 | NAP | Mar-2020 | 25.0 Yrs | $18.52 | NNN |
Center at Glen Burnie Glen Burnie, MD |
LA Fitness | 37,000 | 83.7 miles | Nov-2020 | 10.0 Yrs | $20.00 | NNN |
Riverside Square Ashburn, VA |
AARP | 20,285 | 28.5 miles | Aug-2019 | 10.0 Yrs | $33.00 | NNN |
Riverdale Park Station Riverdale, MD |
Gold's Gym | 37,992 | 55.1 miles | Mar-2018 | 10.0 Yrs | $23.00 | NNN |
Central Park Fredericksburg, VA |
Sports & Health Fitness (Renewal) | 29,000 | 41.6 miles | Jan-2016 | 5.0 Yrs | $13.50 | NNN |
The Shops at Waldorf Waldorf, MD |
LA Fitness | 30,253 | 58.5 miles | Jun-2015 | 12.0 Yrs | $19.00 | NNN |
Downtown Crown Gaithersburg, MD |
LA Fitness | 40,761 | 51.8 miles | Mar-2014 | 25.0 Yrs | $25.75 | NNN |
Watkins Park Plaza Mitchellville, MD |
LA Fitness | 40,903 | 58.6 miles | Jan-2014 | 15.0 Yrs | $18.80 | NNN |
Davis Ford Crossing Manassas, VA |
LA Fitness | 45,000 | 10.0 miles | Dec-2013 | 15.0 Yrs | $14.75 | NNN |
Springfield Mall Springfield, VA |
LA Fitness | 41,000 | 33.9 miles | Aug-2013 | 15.0 Yrs | $32.00 | NNN |
| (1) | Information obtained from the appraisal. |
| (2) | Information obtained from the underwritten rent roll. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
113
| Retail – Single Tenant | Loan #9 | Cut-off Date Balance: | $23,000,000 | |
| 7801 Limestone Drive | Life Time Fitness - Gainesville, VA | Cut-off Date LTV: | 62.0% | |
| Gainesville, VA 20155 | U/W NCF DSCR: | 2.28x | ||
| U/W NOI Debt Yield: | 9.6% |
Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the underwritten net cash flow at the Life Time Fitness - Gainesville, VA Property:
Cash Flow Analysis(1)(2)
| U/W | %(4) | U/W $ per SF | |
| Base Rent(3) | $2,318,000 | 97.3% | $18.52 |
| Contractual Rent Steps | 0 | 0.0 | 0.00 |
| Grossed Up Vacant Space | 0 |
0.0 |
0.00 |
| Gross Potential Rent | $2,318,000 | 97.3% | $18.52 |
| Total Recoveries | 64,601 |
2.7 |
0.52 |
| Net Rental Income | $2,382,601 | 100.0% | $19.04 |
| (Vacancy & Credit Loss)(5) | (115,900) |
(5.0) |
(0.93) |
| Effective Gross Income | $2,266,701 | 95.1% | $18.11 |
| Management Fee | 68,001 | 3.0 | 0.54 |
| Other Operating Expenses | 0 |
0.0 |
0.00 |
| Total Operating Expenses | $68,001 | 3.0% | $0.54 |
| Net Operating Income | $2,198,700 | 97.0% | $17.57 |
| Replacement Reserves | 12,516 | 0.6 | 0.10 |
| TI/LC | 113,335 |
5.0 |
0.91 |
| Net Cash Flow | $2,072,849 | 91.4% | $16.56 |
| NOI DSCR | 2.42x | ||
| NCF DSCR | 2.28x | ||
| NOI Debt Yield | 9.6% | ||
| NCF Debt Yield | 9.0% |
| (1) | Historical operating statements are not available, as the property was constructed in 2019, and the borrower acquired the property in a sale-leaseback transaction in March 2020. |
| (2) | For the avoidance of doubt, no COVID-19 adjustments were incorporated in the lender underwriting. |
| (3) | U/W Base Rent and U/W Base Rent PSF and Annual U/W Base Rent represents Life Time’s current contractual base rent. The tenant’s lease is structured with 8% contractual rental rate increases every five years with the first increase scheduled to occur in 2025. |
| (4) | Represents (i) percent of Net Rental Income for all revenue fields, (ii) percent of Gross Potential Rent for Vacancy & Credit Loss and (iii) percent of Effective Gross Income for all other fields. |
| (5) | The underwritten economic vacancy is 5.0%. The Life Time Fitness - Gainesville, VA Property was 100.0% occupied as of August 1, 2020. |
Escrows.
Real Estate Taxes – The loan documents require ongoing monthly real estate tax reserves in an amount equal to one-twelfth of the real estate taxes that the lender estimates will be payable during the next 12 months upon (i) an event of default; (ii) the tax bill not being issued to the tenant by the taxing authorities; (iii) the lease not being in full force and effect or (iv) the tenant not paying taxes prior to the date when due.
Insurance – The loan documents require ongoing monthly insurance reserves in an amount equal to one-twelfth of the insurance premiums that the lender estimates will be payable during the next 12 months upon (i) an event of default; (ii) the borrower or an affiliate thereof failing to provide the lender with evidence that the property’s insurance coverage is included in a blanket policy and such policy is in full force and effect; or (iii) the borrower failing to pay all applicable insurance premiums or failing to provide the lender with evidence of payment of insurance premiums/renewals within 10 business days prior to policy expiration.
Replacement Reserves – The loan documents require ongoing monthly replacement reserves in an amount equal to $0.20 per square foot, divided by 12, upon (i) an event of default; (ii) the tenant no longer being responsible for all capital expenditures and replacements under its lease; or (iii) the lender reasonably determining that the property is not being adequately maintained.
TI/LC Reserve – The loan documents require ongoing monthly TI/LC reserves in an amount equal to $1.10 per square foot, divided by 12, upon an event of default.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
114
| Retail – Single Tenant | Loan #9 | Cut-off Date Balance: | $23,000,000 | |
| 7801 Limestone Drive | Life Time Fitness - Gainesville, VA | Cut-off Date LTV: | 62.0% | |
| Gainesville, VA 20155 | U/W NCF DSCR: | 2.28x | ||
| U/W NOI Debt Yield: | 9.6% |
Lockbox and Cash Management. The Life Time Fitness - Gainesville, VA Mortgage Loan is structured with a hard lockbox, which is already in place, and springing cash management. The borrower was required at loan origination to deliver a tenant direction letter directing the tenant to deposit all rents and payments directly into a lender-controlled lockbox account. During a Cash Trap Event Period, funds in the lockbox account are required to be swept to a lender-controlled cash management account and all excess funds are required to be swept to an excess cash flow subaccount controlled by the lender.
A “Cash Trap Event Period” will commence upon the earliest to occur of:
(i) an event of default under the Life Time Fitness - Gainesville, VA Mortgage Loan; or
(ii) a Tenant Trigger Event (as defined below).
A Cash Trap Event Period will end upon the occurrence of:
| ● | with regard to clause (i) above, the cure of such event of default; or |
| ● | with regard to clause (ii) above, (a) a Tenant Trigger Event Cure (as defined below); or (b) (1) the borrower leasing 100% of the property to a replacement tenant under a lease reasonably acceptable to the lender for a term that extends at least 10 years beyond the maturity date of the Life Time Fitness – Gainesville, VA Mortgage Loan, (2) such replacement tenant being acceptable to the lender, in actual physical occupancy, open for business and having commenced paying unabated rent, and (3) the lender’s receipt of an executed estoppel from the replacement tenant reasonably acceptable to the lender. |
A “Tenant Trigger Event” will commence upon the earliest to occur of (provided that the conditions in clauses (i), (ii) and (iii) below apply to Life Time as well as permitted successors, assigns and subtenants of Life Time):
| (i) | the tenant going “dark” and/or vacating or otherwise failing to occupy 100% of leasable space under its lease; |
| (ii) | any termination or cancellation of the lease (including, without limitation, rejection in any bankruptcy or similar insolvency proceeding) and/or the lease failing to otherwise be in full force and effect; or |
| (iii) | any bankruptcy or similar insolvency of the tenant. |
A “Tenant Trigger Event Cure” will occur upon the occurrence of:
| ● | with regard to clause (i) above, the tenant is operating and not “dark” with respect to 100% of leasable space at the property; |
| ● | with regard to clause (ii) above, the tenant revoking or rescinding all termination or cancellation notices with respect to the lease and re-affirming the lease as being in full force and effect; |
| ● | with regard to clause (iii) above, the tenant no longer being insolvent or subject to any bankruptcy or insolvency proceedings and affirming the lease pursuant to a final, non-appealable order of a court of competent jurisdiction; and |
| ● | the tenant paying full, unabated rent under the lease. |
Property Management. The Life Time Fitness - Gainesville, VA Property is managed by the tenant.
Partial Release. Not permitted.
Real Estate Substitution. Not permitted.
Right of First Offer. Life Time has a right of first offer to purchase the Life Time Fitness – Gainesville, VA Property if the borrower decides to market the property for sale. The right of first offer is not extinguished by foreclosure; however, the right of first offer does not apply to foreclosure or deed in lieu thereof.
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 property, as well as 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 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
| Multifamily – Garden | Loan #10 | Cut-off Date Balance: | $22,500,000 | |
| 43336 Gadsden Avenue | Town Square Apartments | Cut-off Date LTV: | 63.4% | |
| Lancaster, CA 93534 | U/W NCF DSCR: | 1.60x | ||
| U/W NOI Debt Yield: | 9.4% |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
116
| Multifamily – Garden | Loan #10 | Cut-off Date Balance: | $22,500,000 | |
| 43336 Gadsden Avenue | Town Square Apartments | Cut-off Date LTV: | 63.4% | |
| Lancaster, CA 93534 | U/W NCF DSCR: | 1.60x | ||
| U/W NOI Debt Yield: | 9.4% |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
117
| No. 10 – Town Square Apartments | |||||||
| Mortgage Loan Information | Mortgaged Property Information | ||||||
| Mortgage Loan Seller: | UBS AG | Single Asset/Portfolio: | Single Asset | ||||
Credit Assessment (Fitch/KBRA/Moody’s): |
NR/NR/NR | Property Type – Subtype: | Multifamily – Garden | ||||
| Original Principal Balance: | $22,500,000 | Location: | Lancaster, CA | ||||
| Cut-off Date Balance: | $22,500,000 | Size: | 216 Units | ||||
| % of Initial Pool Balance: | 4.0% | Cut-off Date Balance Per Unit: | $104,167 | ||||
| Loan Purpose: | Refinance | Maturity Date Balance Per Unit: | $94,291 | ||||
| Borrower Sponsor: | John C. Chiu | Year Built/Renovated: | 1985/2019 | ||||
| Guarantor: | John C. Chiu | Title Vesting: | Fee | ||||
| Mortgage Rate: | 3.8500% | Property Manager: | DFT, Inc. | ||||
| Note Date: | July 31, 2020 | Current Occupancy (As of)(2): | 98.6% (7/1/2020) | ||||
| Seasoning: | 0 months | YE 2019 Occupancy: | 95.9% | ||||
| Maturity Date: | August 6, 2030 | YE 2018 Occupancy: | 96.3% | ||||
| IO Period: | 60 months | YE 2017 Occupancy: | 96.5% | ||||
| Loan Term (Original): | 120 months | YE 2016 Occupancy: | 93.5% | ||||
| Amortization Term (Original): | 360 months | As-Is Appraised Value(2): | $35,500,000 | ||||
| Loan Amortization Type: | Interest-only, Amortizing Balloon | As-Is Appraised Value Per Unit(2): | $164,352 | ||||
| Call Protection: | L(24),D(93),O(3) | As-Is Appraisal Valuation Date: | July 7, 2020 | ||||
| Lockbox Type: | Springing | Underwriting and Financial Information(2) | |||||
| Additional Debt: | None | TTM NOI (6/30/2020): | $2,050,891 | ||||
| Additional Debt Type (Balance): | NAP | YE 2019 NOI: | $1,931,264 | ||||
| YE 2018 NOI: | $1,824,771 | ||||||
| YE 2017 NOI: | $1,613,736 | ||||||
| U/W Revenues: | $3,216,369 | ||||||
| U/W Expenses: | $1,104,344 | ||||||
| Escrows and Reserves(1) | U/W NOI: | $2,112,025 | |||||
| Initial | Monthly | Cap | U/W NCF: | $2,025,660 | |||
| Taxes | $105,662 | $29,350 | NAP | U/W DSCR based on NOI/NCF: | 1.67x / 1.60x | ||
| Insurance | $50,192 | $4,327 | NAP | U/W Debt Yield based on NOI/NCF: | 9.4% / 9.0% | ||
| Immediate Repairs | $35,188 | $0 | NAP | U/W Debt Yield at Maturity based on NOI/NCF: | 10.4% / 9.9% | ||
| Replacement Reserve | $0 | $7,197 | NAP | Cut-off Date LTV Ratio: | 63.4% | ||
| Interest Reserve | $219,570 | $0 | NAP | LTV Ratio at Maturity: | 57.4% | ||
| Sources and Uses | ||||||||
| Sources | Uses | |||||||
| Original loan amount | $22,500,000 | 100.0% | Loan payoff(3) | $18,762,968 | 83.4% | |||
| Upfront reserves | 410,611 | 1.8 | ||||||
| Closing costs | 457,588 | 2.0 | ||||||
| Return of equity | 2,868,832 | 12.8 | ||||||
| Total Sources | $22,500,000 | 100.0% | Total Uses | $22,500,000 | 100.0% | |||
| (1) | See “Escrows” section below. |
| (2) | While the Town Square Apartments Mortgage Loan (as defined below) was originated after the emergence of the novel coronavirus pandemic and the economic disruption resulting from measures to combat the pandemic, the pandemic is an evolving situation and could impact the Town Square Apartments Mortgage Loan more severely than assumed in the underwriting of the Town Square Apartments Mortgage Loan and could adversely affect the NOI, NCF and occupancy information, as well as the appraised value and the DSCR, LTV and Debt Yield metrics presented above. See “Risk Factors—Risks Related to Market Conditions and Other External Factors—The Coronavirus Pandemic Has Adversely Affected the Global Economy and Will Likely Adversely Affect the Performance of the Mortgage Loans” in the Preliminary Prospectus. |
| (3) | Includes $2,851,205 in prepayment fees. |
The Mortgage Loan. The mortgage loan (the “Town Square Apartments Mortgage Loan”) is evidenced by a single promissory note secured by a first priority fee mortgage encumbering a 216-unit garden style multifamily property located in Lancaster, California (the “Town Square Apartments Property”).
The Borrower and Borrower Sponsor. The borrower is 43300 Gadsden Ave, LLC (the “Town Square Apartments Borrower”), a Delaware limited liability company and single purpose entity with one independent director. Legal counsel to the Town Square Apartments Borrower delivered a non-consolidation opinion in connection with the origination of the Town Square Apartments Mortgage Loan. The borrower sponsor and non-recourse carveout guarantor is John C. Chiu.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
118
| Multifamily – Garden | Loan #10 | Cut-off Date Balance: | $22,500,000 | |
| 43336 Gadsden Avenue | Town Square Apartments | Cut-off Date LTV: | 63.4% | |
| Lancaster, CA 93534 | U/W NCF DSCR: | 1.60x | ||
| U/W NOI Debt Yield: | 9.4% |
John C. Chiu is a medical doctor in the field of endoscopic spinal surgery. Mr. Chiu is the president of California Spine Institute Medical Center and the founding chairman of the American Academy of Minimally Invasive Spinal Surgery and Medicine. Mr. Chiu’s real estate portfolio is currently comprised of over 50 assets of varying property types, but primarily multifamily properties (with over 2,000 multifamily units in his portfolio). As of the date hereof, the borrower sponsor is involved in litigation. See “Description of the Mortgage Pool—Litigation and Other Considerations” in the Preliminary Prospectus.
The Property. The Town Square Apartments Property is a 216-unit garden style multifamily property located in Lancaster, California. Constructed in 1985 and renovated in 2019, the Town Square Apartments Property is situated on an 8.7-acre site and contains one one-story leasing office and 18 two-story multifamily buildings comprising 47 one-bedroom, one-bathroom units and 169 two-bedroom, two-bathroom units, with an overall average unit size of 782 square feet. There are currently 10 units that receive payment vouchers under the Section 8 voucher program, which represents 4.6% of the units at the Town Square Apartments Property. In addition, there are currently 12 units occupied by military personnel, which represents 5.6% of the units at the Town Square Apartments Property. The Town Square Apartments Property contains 464 parking spaces, including seven designated handicap spaces and approximately 336 carport spaces, resulting in a parking ratio of approximately 2.1 spaces per unit. As of July 1, 2020, the Town Square Apartments Property was 98.6% occupied, and it has averaged 96.6% occupancy since 2016.
Common area amenities at the Town Square Apartments Property include a gated community, swimming pool and spa, fitness center, clubhouse with game room, laundry room, courtyard and grilling area, playground and on site property manager. Unit amenities include walk-in closets, dishwashers and garbage disposals, washer and dryer in select units, wood cabinets, central air-conditioning and large private patios/balconies.
The borrower sponsor has spent approximately $821,375 in capital expenditures since acquiring the Town Square Apartments Property in March 2016. Exterior renovations included plumbing replacements, repairing stairs/decks, upgraded landscaping, painting, roof replacements, new fencing and gates, and upgrades to the pool. Interior renovations included new appliances, new bathroom/kitchen counters, upgraded vanities and bathtubs, new HVAC units and water heater replacements.
The following table presents certain information relating to the unit mix of the Town Square Apartments Property:
Unit Mix Summary(1)
| Unit Type | Total No. of Units | %
of Total Units |
Total
No. of Occupied Units |
Average
Unit Size (SF) |
Average
per Unit |
| 1 Bedroom / 1 Bathroom | 47 | 21.8% | 47 | 600 | $1,080 |
| 2 Bedroom / 2 Bathroom | 169 | 78.2% | 166 | 833 | $1,271 |
| Total/Weighted Average | 216 | 100.0% | 213 | 782 | $1,229 |
| (1) | Information obtained from the underwritten rent roll. |
The following table presents historical occupancy percentages at the Town Square Apartments Property:
Historical Occupancy
12/31/2016(1) |
12/31/2017(1) |
12/31/2018(1) |
12/31/2019(1) |
7/1/2020(2) |
| 93.5% | 96.5% | 96.3% | 95.9% | 98.6% |
| (1) | Information obtained from the Town Square Apartments Borrower. |
| (2) | Information obtained from the underwritten rent roll. |
COVID-19 Update. As of August 2020, the residential portion of the Town Square Apartments Property was open and operating, however, the common areas have been closed by government mandate. As of the date hereof, 96.9%, 89.9%, 93.5% and 95.8% of rent had been collected for the months of April 2020, May 2020, June 2020 and July 2020, respectively. The first debt service payment for the Town Square Apartments Mortgage Loan is in September 2020. As of the date hereof, the Town Square Apartments Mortgage Loan is not subject to any modification or forbearance request.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
119
| Multifamily – Garden | Loan #10 | Cut-off Date Balance: | $22,500,000 | |
| 43336 Gadsden Avenue | Town Square Apartments | Cut-off Date LTV: | 63.4% | |
| Lancaster, CA 93534 | U/W NCF DSCR: | 1.60x | ||
| U/W NOI Debt Yield: | 9.4% |
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 Town Square Apartments Property:
Cash Flow Analysis
| 2017 | 2018 | 2019 | TTM 6/30/2020 |
U/W(1) | %(2) | U/W
$ per Unit | |
| Base Rent | $2,579,595 | $2,888,291 | $3,092,282 | $3,163,145 | $3,139,590 | 92.4% | $14,535 |
| Grossed Up Vacant Space | 0 |
0 |
0 |
0 |
46,800 |
1.4 |
217 |
| Gross Potential Rent | $2,579,595 | $2,888,291 | $3,092,282 | $3,163,145 | $3,186,390 | 93.8% | $14,752 |
| Other Income | 173,100 |
232,529 |
227,830 |
209,687 |
209,687 |
6.2 |
971 |
| Net Rental Income | $2,752,695 | $3,120,820 | $3,320,112 | $3,372,832 | $3,396,077 | 100.0% | $15,723 |
| (Vacancy) | (115,385) | (141,482) | (170,840) | (159,103) | (115,646)(3) | (3.6) | (535) |
| (Concessions & Credit Loss) | (66,032) |
(80,254) |
(85,320) |
(64,061) |
(64,061) |
(2.0) |
(297) |
| Effective Gross Income | $2,571,277 | $2,899,085 | $3,063,951 | $3,149,668 | $3,216,369 | 94.7% | $14,891 |
| Real Estate Taxes | 309,925 | 347,958 | 350,785 | 352,454 | 361,014 | 11.2 | 1,671 |
| Insurance | 50,291 | 51,622 | 58,272 | 57,208 | 51,923 | 1.6 | 240 |
| Management Fee | 77,138 | 86,973 | 91,919 | 94,199 | 96,491 | 3.0 | 447 |
| Other Operating Expenses | 520,187 |
587,761 |
631,712 |
594,916 |
594,916 |
18.5 |
2,754 |
| Total Operating Expenses | $957,541 | $1,074,314 | $1,132,687 | $1,098,777 | $1,104,344 | 34.3% | $5,113 |
| Net Operating Income | $1,613,736 | $1,824,771 | $1,931,264 | $2,050,891 | $2,112,025 | 65.7% | $9,778 |
| Capital Expenditures | 0 |
0 |
0 |
0 |
86,365 |
2.7 |
400 |
| Net Cash Flow | $1,613,736 | $1,824,771 | $1,931,264 | $2,050,891 | $2,025,660 | 63.0% | $9,378 |
| NOI DSCR | 1.27x | 1.44x | 1.53x | 1.62x | 1.67x | ||
| NCF DSCR | 1.27x | 1.44x | 1.53x | 1.62x | 1.60x | ||
| NOI Debt Yield | 7.2% | 8.1% | 8.6% | 9.1% | 9.4% | ||
| NCF Debt Yield | 7.2% | 8.1% | 8.6% | 9.1% | 9.0% |
| (1) | For the avoidance of doubt, no COVID-19 specific adjustments have been incorporated in the lender U/W. |
| (2) | Represents (i) percent of Net Rental Income for all revenue fields, (ii) percent of Gross Potential Rent for Vacancy and Concessions & Credit Loss and (iii) percent of Effective Gross Income for all other fields. |
| (3) | The underwritten economic vacancy is 3.6%. As of July 1, 2020, the Town Square Apartments Property was 98.6% leased. |
Appraisal. The appraiser concluded to an “as-is” appraised value for the Town Square Apartments Property of $35,500,000 as of July 7, 2020.
Environmental Matters. According to the Phase I environmental site assessment dated January 21, 2020, there was no evidence of any recognized environmental conditions at the Town Square Apartments Property.
Market Overview and Competition. The Town Square Apartments Property is located in Lancaster, California, approximately 39.0 miles northeast of Santa Clarita and 68.6 miles north of Los Angeles. Access to the Town Square Apartments Property is provided by State Highway 14 (0.8 miles west), a north–south highway running through California that connects Los Angeles to the northern Mojave Desert. Lancaster is located within Antelope Valley, which is located in northern Los Angeles County, California, and the southeast portion of Kern County, California, and constitutes the western tip of the Mojave Desert. Lancaster has over 600 acres of developed or planned parkland, including tournament-level sports facilities at Big 8 Softball Complex and the Lancaster National Soccer Center. In 1996, the city built Lancaster Municipal Stadium (now Clear Channel Stadium), which has been home to the Lancaster JetHawks, a Class-A minor-league baseball team, for the last decade. The Lancaster Performing Arts Center provides a varied array of fine arts, from community theatre productions to classical music and various forms of dance. Lancaster is home to many employees of Edwards Air Force Base (approximately 31.2 miles northeast), as well as to employees of Boeing, Lockheed, and Northrop Grumman, all of which have manufacturing facilities at U.S. Air Force Plant 42 (approximately 5.9 miles southeast). The Town Square Apartments Property is located adjacent to a Winco Foods, Lowe’s and Target anchored shopping center and is approximately 2.0 miles southeast of the Antelope Valley Hospital, the only full-service, acute-care hospital in the Antelope Valley, with approximately 2,300 employees.
According to a third-party market report, the estimated 2020 population within a one-, three- and five-mile radius of the Town Square Apartments Property was 12,244, 99,224 and 178,316, respectively; and the estimated 2020 average household income within the same radii was $55,587, $67,913 and $78,988, respectively.
Submarket Information – According to a third-party market research report, the Town Square Apartments Property is situated within the Antelope Valley submarket. As of the second quarter of 2020, the Antelope Valley submarket reported a total inventory of 9,788
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
120
| Multifamily – Garden | Loan #10 | Cut-off Date Balance: | $22,500,000 | |
| 43336 Gadsden Avenue | Town Square Apartments | Cut-off Date LTV: | 63.4% | |
| Lancaster, CA 93534 | U/W NCF DSCR: | 1.60x | ||
| U/W NOI Debt Yield: | 9.4% |
units with a 4.4% vacancy rate and an average asking rental rate of $1,319 per month. The Antelope Valley submarket has had no new supply in the last decade. Similarly, no new projects are underway or proposed in the current pipeline.
Appraiser’s Competitive Set – The appraiser identified eight primary competitive properties for the Town Square Apartments Property totaling 1,659 units, which reported an average occupancy rate of approximately 96.0%. The appraiser concluded to monthly market rents per unit ranging from $1,100 to $1,300.
Market Rent Summary(1)
| Unit Type | Total
No. of Units |
Average
Unit Size (SF) |
Market
Monthly Rent per Unit |
| 1 Bedroom / 1 Bathroom | 47 | 600 | $1,100 |
| 2 Bedroom / 2 Bathroom | 169 | 833 | $1,300 |
| Total/Weighted Average | 216 | 782 | $1,256 |
| (1) | Information obtained from the appraisal. |
The following table presents certain information relating to comparable multifamily properties for the Town Square Apartments Property:
Competitive Set(1)
| Town
Square Apartments (Subject) |
Racquet
Club |
Park
West Village |
Parkwood Apartments | Park Circle Apartments | West
Park Villas |
Granada Villas Apartment Homes | Oakridge
Terrace Apartments |
Westwood
Park Townhomes | |
| Location | Lancaster, CA | Lancaster, CA | Lancaster, CA | Lancaster, CA | Lancaster, CA | Lancaster, CA | Lancaster, CA | Lancaster, CA | Lancaster, CA |
| Distance to Subject | -- | 1.6 miles | 2.7 miles | 2.8 miles | 3.6 miles | 1.8 miles | 0.1 miles | 0.2 miles | 3.2 miles |
| Property Type | Garden | Garden | Garden | Garden | Garden | Garden | Garden | Garden | Garden |
| Year Built/Renovated | 1985/2019 | 1974/NAP | 1986/2021 | 1983/NAP | 1988/NAP | 1987/NAP | 1989/2007 | 1985/NAP | 1988/NAP |
| Number of Units | 216(2) | 200 | 188 | 90 | 164 | 272 | 320 | 216 | 209 |
| Average Monthly Rent (per unit) | |||||||||
| 1 Bedroom | $1,080(2) | $1,385 | $1,429 | $1,300 | $1,097 | $1,435 | $1,315 | $1,300 | $1,590 |
| 2 Bedroom | $1,271(2) | $1,620 | $1,836 | $1,399 | $1,297 | $1,823 | $1,484 | $1,429 | $1,790 |
| Occupancy | 98.6%(2) | 92.5% | 96.7% | 96.7% | 95.7% | 97.4% | 95.6% | 95.4% | 98.1% |
| (1) | Information obtained from the appraisal. |
| (2) | Information obtained from the underwritten rent roll. |
Escrows.
Real Estate Taxes – The Town Square Apartments Mortgage Loan documents require an upfront real estate tax reserve of $105,662 and ongoing monthly real estate tax reserves in an amount equal to one-twelfth of the real estate taxes that the lender estimates will be payable during the next 12 months (initially $29,350).
Insurance – The Town Square Apartments Mortgage Loan documents require an upfront insurance reserve of $50,192 and ongoing monthly insurance reserves in an amount equal to one-twelfth of the insurance premiums that the lender estimates will be payable for the renewal of the coverage during the next 12 months (initially $4,327).
Immediate Repairs – The Town Square Apartments Mortgage Loan documents require an upfront immediate repairs reserve of $35,188.
Replacement Reserve – The Town Square Apartments Mortgage Loan documents require ongoing monthly replacement reserves of $7,197.
Interest Reserve – The Town Square Apartments Mortgage Loan documents require an upfront reserve of $219,570 as additional security for the Town Square Apartments Mortgage Loan, which may be applied to pay monthly debt service due under the Town Square Apartments Mortgage Loan, to the extent rents are not sufficient for such payments.
Lockbox and Cash Management. Upon the occurrence and continuance of a Cash Management Period (as defined below), the Town Square Apartments Borrower is required to establish a lender-controlled lockbox account and the Town Square Apartments Borrower and property manager are required to deposit all rents into the lockbox account within one business day after receipt. During a Cash Management Period, funds in the lockbox accounts are required to be swept to a lender-controlled cash management account, and all
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Multifamily – Garden | Loan #10 | Cut-off Date Balance: | $22,500,000 | |
| 43336 Gadsden Avenue | Town Square Apartments | Cut-off Date LTV: | 63.4% | |
| Lancaster, CA 93534 | U/W NCF DSCR: | 1.60x | ||
| U/W NOI Debt Yield: | 9.4% |
excess funds (after payment of required monthly reserve deposits, debt service, operating and capital expenses and cash management bank fees) are required to be swept to an excess cash flow subaccount controlled by the lender.
A “Cash Management Period” will commence upon the earlier of the following:
| (i) | the occurrence of an event of default; |
| (ii) | the trailing 12-months period debt service coverage ratio falling below 1.15x; or |
| (iii) | the maturity date. |
A “Cash Management Period” will end upon the occurrence of the following:
| ● | with regard to clause (i) above, the cure of such event of default; |
| ● | with regard to clause (ii) above, the trailing 12-months debt service coverage ratio being at least 1.25x for two consecutive calendar quarters; or |
| ● | with regard to clause (iii) above, the Town Square Apartments Mortgage Loan being repaid in full. |
Property Management. The Town Square Apartments Property is managed by DFT, Inc., a third-party property management company.
Partial Release. Not permitted.
Real Estate Substitution. Not permitted.
Subordinate and Mezzanine Indebtedness. Not permitted.
Ground Lease. None.
Terrorism Insurance. The Town Square Apartments Mortgage Loan documents require that the “all risk” insurance policy required to be maintained by the Town Square Apartments Borrower provides coverage for terrorism in an amount equal to the full replacement cost of the Town Square Apartments 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 180-day extended period of indemnity.
Earthquake Insurance. The Town Square Apartments Mortgage Loan documents do not require earthquake insurance. The seismic report indicated a scenario expected loss of 11.0% for the Town Square Apartments Property.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| No. 11 – Konica Minolta Phase II | ||||||
| Mortgage Loan Information | Mortgaged Property Information | |||||
| Mortgage Loan Seller: | Ladder Capital Finance LLC | Single Asset/Portfolio: | Single Asset | |||
| Credit Assessment (Fitch/KBRA/Moody’s): | NR/NR/NR | Property Type – Subtype : | Office – Suburban | |||
| Original Principal Balance: | $18,900,000 | |||||
| Cut-off Date Balance: | $18,900,000 | Location: | Ramsey, NJ | |||
| % of Initial Pool Balance: | 3.4% | Size: | 117,169 SF | |||
| Loan Purpose: | Acquisition | Cut-off Date Balance Per SF: | $161.31 | |||
| Borrower Sponsor: | LCN North American Fund II REIT | Maturity Date Balance Per SF: | $161.31 | |||
| Guarantor: | LCN North American Fund II REIT | Year Built/Renovated: | 1973 / 2019 | |||
| Mortgage Rate: | 3.800% | Title Vesting: | Fee | |||
| Note Date: | February 20, 2020 | Property Manager: | Self-managed | |||
| Seasoning: | 5 months | Current Occupancy (As of)(4): | 100.0% (8/1/2020) | |||
| Maturity Date: | March 6, 2030 | YE 2019 Occupancy(4): | NAV | |||
| IO Period(1): | 120 months | YE 2018 Occupancy(4): | NAV | |||
| Loan Term (Original): | 120 months | YE 2017 Occupancy(4): | NAV | |||
| Amortization Term (Original): | NAP | YE 2016 Occupancy(4): | NAV | |||
| Loan Amortization Type: | Interest-only, Balloon | As-Is Appraised Value(5): | $28,200,000 | |||
| Call Protection: | L(29), D(86), O(5) | As-Is Appraised Value Per SF: | $240.68 | |||
| Lockbox Type: | Hard/Upfront Cash Management | As-Is Appraisal Valuation Date(5): | December 5, 2019 | |||
| Additional Debt: | None | |||||
| Additional Debt Type: | NAP | Underwriting and Financial Information | ||||
| YE 2019 NOI(6): | NAV | |||||
| YE 2018 NOI(6): | NAV | |||||
| YE 2017 NOI(6): | NAV | |||||
| YE 2016 NOI(6): | NAV | |||||
| U/W Revenues: | $1,746,737 | |||||
| U/W Expenses: | $43,668 | |||||
| Escrows and Reserves | U/W NOI: | $1,703,069 | ||||
| Type: | Initial | Monthly | Cap (If Any) | U/W NCF: | $1,685,494 | |
| Taxes | $0 | Springing | NAP | U/W DSCR Based on NOI/NCF: | 2.34x/2.31x | |
| Insurance | $0 | Springing | NAP | U/W Debt Yield Based on NOI/NCF: | 9.0%/8.9% | |
| Replacement Reserves | $0 | Springing | NAP | U/W Debt Yield at Maturity Based on NOI/NCF: | 9.0%/8.9% | |
| TI/LC Reserves | $0 | $0 | NAP | Cut-off Date LTV Ratio(5): | 67.0% | |
| Quarterly Rent Reserve | $0 | (2) | NAP | LTV Ratio at Maturity or ARD(5): | 67.0% | |
| Immediate Repairs | $0 | (3) | NAP | |||
| Sources and Uses | ||||||
| Sources | Uses | |||||
| Original loan amount | $18,900,000 | 67.5% | Purchase price | $28,000,000 | 100.0% | |
| Borrower sponsor’s new cash contribution | 9,100,000 | 32.5 | Closing costs(7) | 0 | 0.0 | |
| Total Sources | $28,000,000 | 100.0% | Total Uses | $28,000,000 | 100.0% | |
| (1) | During any period when the related sole tenant, Konica Minolta Business Solutions U.S.A., Inc. (“KMBS”) (or any tenant under any replacement lease) (in any such case, if rated), and the related lease guarantor (or any guarantor of any replacement lease) have their respective senior unsecured debt ratings downgraded below an Investment Grade Rating, the Konica Minolta Phase II Mortgage Loan (as defined below) will begin to amortize on a 30-year schedule as set forth under the related mortgage loan documents, but only for such time as their respective senior unsecured debt ratings remain below an Investment Grade Rating. An “Investment Grade Rating” means, with respect to the current related lease guarantor, a senior unsecured debt rating by Rating and Investment Information, Inc. and Japan Credit Rating Agency of at least the equivalent of a “BBB-” rating by S&P or, with respect to any other person, a senior unsecured debt rating of at least “BBB-” by S&P. |
| (2) | KMBS pays rent the first month of each quarter to cover the rental obligations for that month as well as the following two months debt service reserve and operating expense. |
| (3) | The borrower sponsor will be required to deposit 125% of estimated cost of repairs if KMBS fails to perform the required repairs |
| (4) | See “Historical Occupancy” table. |
| (5) | The appraised value was determined prior to the emergence of the novel coronavirus pandemic and the economic disruption resulting from measures to combat the pandemic, and all LTV metrics were calculated, and the Konica Minolta Phase II Mortgage Loan was underwritten, based on such prior information. See “Risk Factors—Risks Related to Market Conditions and Other External Factors—The Coronavirus Pandemic Has Adversely Affected the Global Economy and Will Likely Adversely Affect the Performance of the Mortgage Loans” in the Preliminary Prospectus. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Office – Suburban | Loan #11 | Cut-off Date Balance: | $18,900,000 | |
| 101 Williams Drive | Konica Minolta Phase II | Cut-off Date LTV: | 67.0% | |
| Ramsey, NJ 07446 | U/W NCF DSCR: | 2.31x | ||
| U/W NOI Debt Yield: | 9.0% |
| (6) | See “Cash Flow Analysis” table. |
| (7) | The Seller of the Konica Minolta Phase II Property paid closing costs. |
The Mortgage Loan. The mortgage loan (the “Konica Minolta Phase II Mortgage Loan”) is evidenced by a single promissory note that is secured by a first mortgage encumbering the fee interest in an office property located in Ramsey, New Jersey (the “Konica Minolta Phase II Property”). The Konica Minolta Phase II Mortgage Loan was originated on February 20, 2020 by Ladder Capital Finance LLC. The Konica Minolta Phase II Mortgage Loan had an original principal balance of $18,900,000, has an outstanding principal balance as of the Cut-off Date of $18,900,000 and accrues interest at an interest rate of 3.800% per annum. The Konica Minolta Phase II Mortgage Loan had an initial term of 120 months, has a remaining term of 115 months as of the Cut-off Date and, subject to the Investment Grade Rating discussion in footnote (1) to the table above, requires payments of interest-only through the term of the Konica Minolta Phase II Mortgage Loan. The Konica Minolta Phase II Mortgage Loan matures on March 6, 2030.
Following the lockout period, the borrower has the right to defease the Konica Minolta Phase II Mortgage Loan in whole, but not in part, on any payment date before November 6, 2029. In addition, the Konica Minolta Phase II Mortgage Loan is prepayable without penalty on or after November 6, 2029.
The Property. The Konica Minolta Phase II Property was built in 1973 and recently underwent a $19.9 million renovation completed in 2019. The Konica Minolta Phase II Property is a 117,169 square foot office building situated on a 10.4-acre site located along Route 17 in Ramsey, Bergen County, New Jersey, which is 1.5 miles from the New York/New Jersey border and 28 miles northwest of New York City. The renovation included expanding then-existing space of 58,369 square feet by approximately 58,800 square feet, resulting in a 117,169-square-foot office building, and constructing a new 284 stall parking structure.
The Konica Minolta Phase II Property is part of the North American headquarters for KMBS. At origination of the Konica Minolta Phase II Mortgage Loan, KMBS executed a new 15-year triple-net lease for 100.0% of the Konica Minolta Phase II Property, guaranteed by Konica Minolta Inc. (A+ rated by the Japan Credit Rating Agency), which is the parent company of KMBS. The lease has four, 5-year extension options and no early termination options. KMBS has consolidated its Northeast operations and closed its Connecticut distribution facility to relocate a majority of these operations to three buildings in New Jersey, one of which is collateral for the Konica Minolta Phase II Mortgage Loan. As part of this initiative, KMBS has invested $19,900,000 (as stated above) and added over 400 jobs in New Jersey.
KMBS provides document management and information technology services as well as the manufacturing of office systems, printers, production print systems, digital presses, multifunctional products, and managed print software solutions. KMBS also provides information technology services that include managed services, cloud computing, helpdesk support, strategic planning, staff augmentation, network and server monitoring, application visualizing, desktop support, network design and implementation virtualization design and implementation, security assessments, among other services. KMBS is also a leader in industrial and commercial printing and packing solutions. As of August 1, 2020, the Konica Minolta Phase II Property was 100.0% leased.
The following table presents certain information relating to the tenancy at the Konica Minolta Phase II 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 Tenant | |||||||
| KMBS | NR/NR/NR | 117,169 | 100.0% | $15.32 | $1,795,003 | 100.0% | 3/31/2035 |
| Total Major Tenant | 117,169 | 100.0% | $15.32 | $1,795,003 | 100.0% | ||
| Vacant Space | 0 | 0.0% | |||||
| Collateral Total | 117,169 | 100.0% | |||||
| (1) | Konica Minolta Inc., the parent company of KMBS and the guarantor under the KMBS lease, is rated A+ by the Japan Credit Rating Agency. |
| (2) | Annual U/W Base Rent PSF and Annual U/W Base Rent include $171,003 of straight-line rent for KMBS. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Office – Suburban | Loan #11 | Cut-off Date Balance: | $18,900,000 | |
| 101 Williams Drive | Konica Minolta Phase II | Cut-off Date LTV: | 67.0% | |
| Ramsey, NJ 07446 | U/W NCF DSCR: | 2.31x | ||
| U/W NOI Debt Yield: | 9.0% |
The following table presents certain information relating to the lease rollover schedule at the Konica Minolta Phase II 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(2) |
% of Total Annual U/W Base Rent | Annual U/W Base Rent PSF(2) |
| MTM | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2020 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2021 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2022 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2023 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2024 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2025 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2026 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2027 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2028 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2029 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2030 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| Thereafter | 1 | 117,169 | 100.0% | 117,169 | 100.0% | $1,795,003 | 100.0% | $15.32 |
| Vacant | 0 | 0 | 0.0% | 117,169 | 100.0% | $0 | 0.0% | $0.00 |
| Total/Weighted Average | 1 | 117,169 | 100.0% | $1,795,003 | 100.0% | $15.32 |
| (1) | Information obtained from the underwritten rent roll. |
| (2) | Annual U/W Base Rent PSF and Annual U/W Base Rent include $171,003 of straight line rent for KMBS. |
The following table presents historical occupancy percentages at the Konica Minolta Phase II Property:
Historical Occupancy
| 12/31/2016(1) | 12/31/2017(1) | 12/31/2018(1) | 12/31/2019(1) | 8/1/2020(2) | |||||
| NAV | NAV | NAV | NAV | 100.0% |
| (1) | Historically the office building was owner occupied by KMBS. |
| (2) | Information obtained from the underwritten rent roll. |
COVID-19 Update. As of the August 6, 2020 payment, the Konica Minolta Phase II Mortgage Loan is current with no rent deferral requests. In July 2020, KMBS made its quarterly lease payments for the third quarter of 2020. Only the warehouse was operational as of July 2020. As the State of New Jersey provides additional guidance for reopening, KMBS plans to slowly bring back workers, gradually building back to a full staff. For reopening safety measures, KMBS will be utilizing their technology where applicable, including thermal imaging cameras and automated self-health assessment tools. They will also be following guidelines from the Centers for Disease Control and Prevention (CDC) with respect to social distancing and wearing masks. As of the date hereof, the Konica Minolta Phase II Mortgage Loan is not subject to any modification or forbearance request.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Office – Suburban | Loan #11 | Cut-off Date Balance: | $18,900,000 | |
| 101 Williams Drive | Konica Minolta Phase II | Cut-off Date LTV: | 67.0% | |
| Ramsey, NJ 07446 | U/W NCF DSCR: | 2.31x | ||
| U/W NOI Debt Yield: | 9.0% |
Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the underwritten net cash flow at the Konica Minolta Phase II Property:
Cash Flow Analysis(1)
| U/W | % of U/W Effective Gross Income(2) | U/W $ per SF | |||||
| Base Rent(3) | $1,795,003 | 102.8% | $15.32 | ||||
| Grossed Up Vacant | 0 | 0.0 | 0.00 | ||||
| Gross Potential Rent | $1,795,003 | 102.8% | $15.32 | ||||
| Expense Recoveries | 43,668 | 2.5 | 0.37 | ||||
| Less Vacancy & Credit Loss | (91,934)(4) |
(5.1) |
(0.78) |
||||
| Effective Gross Income | $1,746,737 | 100.0% | $14.91 | ||||
| Total Operating Expenses | $43,668 | 2.5% | $0.37 | ||||
| Net Operating Income | $1,703,069 | 97.5% | $14.54 | ||||
| TI/LC | 0 | 0.0 | 0.00 | ||||
| Capital Expenditures | 17,575 |
1.0 |
0. 15 |
||||
| Net Cash Flow | $1,685,494 | 96.5% | $14.39 | ||||
| NOI DSCR | 2.34x | ||||||
| NCF DSCR | 2.31x | ||||||
| NOI DY | 9.0% | ||||||
| NCF DY | 8.9% |
| (1) | Historical financials are not available as the Konica Minolta Phase II Property was recently acquired. |
| (2) | Represents (i) percent of Gross Potential Rent for Vacancy and Concessions & Credit Loss and (ii) percent of Effective Gross Income for all other fields. |
| (3) | U/W Base Rent includes $171,003 of straight- line rent for KMBS. |
| (4) | The underwritten economic vacancy is 5.0%. The Konica Minolta Phase II Property was 100.0% leased as of August 1, 2020. |
Appraisal. As of the appraisal valuation date of December 5, 2019 the Konica Minolta Phase II Property had an “as-is” appraised value of $28,200,000. In addition, the appraisal for the Konica Minolta Phase II Property set forth a “hypothetical go-dark” appraised value of $13,100,000 as of December 5, 2019, which equates to a “hypothetical go-dark” loan to value ratio of 144.3%.
Environmental Matters. According to the Phase I environmental site assessment dated December 18, 2019, historical operations at the Konica Minolta Phase II Property and two associated underground storage tanks (reportedly removed but as to which no documentation of the removal was available) are identified as recognized environmental conditions. Environmental insurance has been obtained under a policy that has a term of 13 years, coverage limits of $1,000,000 per occurrence and in the aggregate, and a $25,000 self-insured retention. See “Description of the Mortgage Pool—Environmental Considerations” in the Preliminary Prospectus.
Market Overview and Competition. The Konica Minolta Phase II Property is located in northeastern Ramsey, New Jersey, which is part of the Northern Bergen County office submarket. According to the appraisal, Bergen County reported an estimated 2019 population of 949,853, which represents an approximately 0.5% annual growth rate from the reported 2010 population of 905,116. The Bergen County annual population growth rate exceeded the statewide annual growth rate of 0.4%.
The Konica Minolta Phase II Property is located in the North New Jersey metropolitan statistical area. According to the appraisal, the North New Jersey metropolitan statistical area office market reported a 21.5% vacancy rate in 2019 and an effective market rent of $25.05 per square foot. The Konica Minolta Phase II Property is 100.0% leased with an underwritten base rent of $15.32 per square foot. According to a third party market research report, the estimated 2019 population within a one-, three- and five-mile radius of the Konica Minolta Phase II Property was 8,673, 65,129 and 163,589, respectively, and the estimated 2019 median household income within the same radii was $125,126, $127,752 and $112,828, respectively.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Office – Suburban | Loan #11 | Cut-off Date Balance: | $18,900,000 | |
| 101 Williams Drive | Konica Minolta Phase II | Cut-off Date LTV: | 67.0% | |
| Ramsey, NJ 07446 | U/W NCF DSCR: | 2.31x | ||
| U/W NOI Debt Yield: | 9.0% |
The following table presents certain information relating to comparable office leases for the Konica Minolta Phase II Property:
Comparable Office Leases(1)
| Property Name/Location | Distance
from Subject |
Tenant Name | Lease Date/Term | Leased Area (SF) | Annual Base Rent PSF |
11 Philips Parkway Montvale, NJ |
5.8 miles | Health Monitor Network | Mar. 2019 / 91 Mos. | 46,000 | $22.5 |
Court Plaza North Hackensack, NJ |
17.9 miles | Kaufman Dolowich | Jan. 2019/ 120 Mos. | 14,745 | $28.00 |
River Drive Center 1 Elmwood Park, NJ |
16.1 miles | Tricor Braun | Jan. 2019 / 89 Mos. | 10,016 | $21.50 |
Montvale III Montvale, NJ |
6.0 miles | Pentax Medical Company | Jan. 2018 / 92 Mos. | 72,784 | $23.50 |
| (1) | Information obtained from the appraisal; all leases are gross leases. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| No. 12 – 501 3rd Street | |||||||
| Mortgage Loan Information | Mortgaged Property Information | ||||||
| Mortgage Loan Seller: | Wells Fargo Bank, National Association | Single Asset/Portfolio: | Single Asset | ||||
Credit Assessment (Fitch/KBRA/Moody’s): |
NR/NR/NR | Property Type – Subtype: | Office – CBD | ||||
| Original Principal Balance: | $17,871,000 | Location: | San Francisco, CA | ||||
| Cut-off Date Balance: | $17,871,000 | Size: | 24,000 SF | ||||
| % of Initial Pool Balance: | 3.2% | Cut-off Date Balance Per SF: | $744.63 | ||||
| Loan Purpose: | Refinance | Maturity Date Balance Per SF: | $744.63 | ||||
| Borrower Sponsors: | Jeffrey M. Schox; Kathryn M. Schox | Year Built/Renovated: | 1920/2016 | ||||
| Guarantors: | Jeffrey M. Schox; Kathryn M. Schox | Title Vesting: | Fee | ||||
| Mortgage Rate: | 3.3500% | Property Manager: | TFPI, LLC | ||||
| Note Date: | February 21, 2020 | Current Occupancy (As of)(3): | 100.0% (4/1/2020) | ||||
| Seasoning: | 5 months | YE 2019 Occupancy(4): | 50.0% | ||||
| Maturity Date: | March 11, 2030 | YE 2018 Occupancy(4): | 25.0% | ||||
| IO Period: | 120 months | YE 2017 Occupancy(4): | 25.0% | ||||
| Loan Term (Original): | 120 months | YE 2016 Occupancy(4): | 25.0% | ||||
| Amortization Term (Original): | NAP | As-Is Appraised Value(3): | $25,900,000 | ||||
| Loan Amortization Type: | Interest-only, Balloon | As-Is Appraised Value Per SF(3): | $1,079.17 | ||||
| Call Protection: | L(29),D(87),O(4) | As-Is Appraisal Valuation Date: | February 2, 2020 | ||||
| Underwriting and Financial Information | |||||||
| Lockbox Type: | Hard/Upfront Cash Management | TTM NOI(4): | NAV | ||||
| Additional Debt: | None | YE 2019 NOI(4): | NAV | ||||
| Additional Debt Type (Balance): | NAP | YE 2018 NOI(4): | NAV | ||||
| YE 2017 NOI(4): | NAV | ||||||
| U/W Revenues: | $2,069,197 | ||||||
| U/W Expenses: | $376,786 | ||||||
| Escrows and Reserves | U/W NOI(4): | $1,692,411 | |||||
| Initial | Monthly | Cap | U/W NCF(4): | $1,650,411 | |||
| Taxes | $0 | $16,715 | NAP | U/W DSCR based on NOI/NCF(3): | 2.79x / 2.72x | ||
| Insurance | $3,584 | $896 | NAP | U/W Debt Yield based on NOI/NCF(3): | 9.5% / 9.2% | ||
| Replacement Reserve(1) | $0 | $500 | $24,000 | U/W Debt Yield at Maturity based on NOI/NCF(3): | 9.5% / 9.2% | ||
| TI/LC Reserve | $0 | $3,000 | $108,000 | Cut-off Date LTV Ratio(3): | 69.0% | ||
| Springing Urban Digital Reserve(2) | $0 | Springing | NAP | LTV Ratio at Maturity(3): | 69.0% | ||
| Sources and Uses | ||||||||
| Sources | Uses | |||||||
| Original loan amount | $17,871,000 | 100.0% | Loan payoff | $14,027,617 | 78.5% | |||
| Upfront reserves | 3,584 | 0.0 | ||||||
| Closing costs | 1,686,916 | 9.4 | ||||||
| Return of equity | 2,152,883 | 12.0 | ||||||
| Total Sources | $17,871,000 | 100.0% | Total Uses | $17,871,000 | 100.0% | |||
| (1) | The lender may require the borrower to increase the replacement reserve (not more than once per year) if the lender reasonably determines such increase is necessary to maintain the proper operation of the 501 3rd Street Property (as defined below). Replacement reserves are required beyond the cap upon (i) the occurrence and continuance of an event of default or (ii) if the 501 3rd Street Property is not being adequately maintained by the borrower (as reasonably determined by the lender based on the annual site inspections). |
| (2) | Upon expiration of the Urban Digital Color, Inc. (dba and referred to herein as Gallery 16) lease (scheduled to occur on January 31, 2021), the borrower will be required to either (i) pay Gallery 16 $65,000 and provide satisfactory evidence to the lender of satisfactory payment or (ii) deposit $65,000 into the reserve. |
| (3) | Current Occupancy, U/W DSCR based on NOI/NCF and U/W Debt Yield based on NOI/NCF are inclusive of one tenant (Gallery 16 – 6,000 SF) who is expected to vacate at the end of its lease term on January 31, 2021. Excluding this tenant, Current Occupancy, U/W DSCR based on NOI/NCF and U/W Debt Yield based on NOI/NCF would be 75.0% (82.4% economic occupancy), 2.36x / 2.29x and 8.0% / 7.8%, respectively. Notwithstanding the foregoing, all NOI, NCF and occupancy information, as well as the appraised value, were determined prior to the emergence of the novel coronavirus pandemic, and the economic disruption resulting from measures to combat the pandemic, and all DSCR, LTV and Debt Yield metrics were calculated, and the 501 3rd Street Mortgage Loan (as defined below) was underwritten, based on such prior information. See “Risk Factors— Risks Related to Market Conditions and Other External Factors - The Coronavirus Pandemic Has Adversely Affected the Global Economy and Will Likely Adversely Affect the Performance of the Mortgage Loans” in the Preliminary Prospectus |
| (4) | Historical Occupancy is based on lease commencement dates and Historical NOI is not available as the 501 3rd Street Property underwent an extensive renovation and re-leasing program subsequent to the borrower’s acquisition in 2017 when it was mostly vacant. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Office – CBD | Loan #12 | Cut-off Date Balance: | $17,871,000 |
| 501 3rd Street | 501 3rd Street | Cut-off Date LTV: | 69.0% |
| San Francisco, CA 94107 | U/W NCF DSCR: | 2.72x | |
| U/W NOI Debt Yield: | 9.5% |
The Mortgage Loan. The mortgage loan (the “501 3rd Street Mortgage Loan”) is evidenced by a single promissory note secured by a first mortgage encumbering the fee interest in a 24,000 square foot office building with ground floor retail located in San Francisco, California (the “501 3rd Street Property”).
The Property. The 501 3rd Street Property comprises a 24,000 square foot office property located in San Francisco, California. The 501 3rd Street Property is comprised of 12,000 square feet of office space (50.0% of net rentable area), 6,000 square feet of ground floor retail space (25.0% of net rentable area) and 6,000 square feet of parking/storage space (25.0% of net rentable area). The 501 3rd Street Property is situated on an approximately 0.1-acre site and includes 12 garage parking spaces, resulting in a parking ratio of approximately 0.5 spaces per 1,000 square feet of net rentable area.
Constructed in 1920 and renovated in 2016, the 501 3rd Street Property was 100.0% leased as of April 1, 2020 to four tenants. The borrower purchased the 501 3rd Street Property knowing it would be 75% vacant at acquisition and would require a substantial renovation. The borrower sponsor invested approximately $3.0 million to complete an earthquake retrofit, exterior refresh and gut renovation of the second and third floors, which now represent high quality office buildouts. Further, the first floor retail space features 16-foot ceilings and an extensive window line. The borrower sponsor has a $19.5 million cost basis with $1.6 million remaining cash equity.
Major Tenants.
Largest and Fourth Largest Tenants: Schox Patent Group and Schox (Storage) (collectively “Schox”) (two separate leases; in aggregate, 12,000 square feet, 50.0% of net rentable area, 46.3% of underwritten base rent, December 2032/February 2033 lease expirations). Schox has been a tenant at the 501 3rd Street Property since acquisition by the borrower sponsor and completion of the renovation. Both spaces are leased to affiliates of the borrower. See “Risk Factors – Risks Relating to the Mortgage Loans Performance of the Mortgage Loans Will Be Highly Dependent on the Performance of Tenants and Tenant Leases” in the Preliminary Prospectus.
| ● | Schox (6,000 square feet, 25.0% of net rentable area, 36.2% of underwritten base rent, December 2032 lease expiration). Schox builds patent portfolios that enable start-ups to attract funding and avoid patent infringement claims. They built the patent portfolios for Twilio ($37.3 billion market capitalization), Coinbase ($8.0 billion valuation), Duo ($2.4 billion acquisition by Cisco), Cruise (approximate $1.0 billion acquisition by GM). Schox was also named to a popular business magazine’s top 5000 list of fastest growing companies in America for 2019. Schox occupies the entire third floor and this is their global headquarters. The lease has no remaining renewal options following its December 2032 lease expiration. |
| ● | Schox (Storage) (6,000 square feet, 25.0% of net rentable area, 10.1% of underwritten base rent, February 2033 lease expiration). Schox (Storage) leases below-grade storage/parking space. The lease has no remaining renewal options following its February 2033 lease expiration. |
Second Largest Tenant: True Ventures (6,000 square feet, 25.0% of net rentable area, 36.2% of underwritten base rent, December 2029 lease expiration). True Ventures is a Silicon Valley-based venture capital firm that invests in early stage technology startups. As of August 6, 2020 they invested $2.0 billion with over 300 firms including Peloton, FitBit, Duo, Ring and Blue Bottle Coffee, among others. They occupy the entire second floor. The lease has two remaining 5-year renewal options following its December 2029 lease expiration.
Third Largest Tenant: Gallery 16 (6,000 square feet, 25.0% of net rentable area, 17.6% of underwritten base rent, January 2021 lease expiration). Gallery 16 is an art gallery that also operates a design and framing service called Urban Digital Color, Inc. They occupy the entire first floor and all of the retail space at the 501 3rd Street Property. The lease has no remaining renewal options following its January 2021 lease expiration and they are expected to vacate at lease expiration, as they recently requested an early termination of their lease, which was not granted.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Office – CBD | Loan #12 | Cut-off Date Balance: | $17,871,000 |
| 501 3rd Street | 501 3rd Street | Cut-off Date LTV: | 69.0% |
| San Francisco, CA 94107 | U/W NCF DSCR: | 2.72x | |
| U/W NOI Debt Yield: | 9.5% |
The following table presents certain information relating to the tenancy at the 501 3rd Street Property:
Major Tenants
| Tenant Name | Credit Rating (Fitch/ Moody’s/ |
Tenant NRSF | %
of NRSF |
Annual U/W Base Rent PSF(1) | Annual U/W Base Rent(1) |
% of Total Annual U/W Base Rent | Lease
Expiration Date |
Extension Options | Termination Option (Y/N) |
| Major Tenants | |||||||||
| Schox Patent Group(2) | NR/NR/NR | 6,000 | 25.0% | $128.75 | $772,500 | 36.2% | 12/31/2032 | N | N |
| True Ventures | NR/NR/NR | 6,000 | 25.0% | $128.75 | $772,500 | 36.2% | 12/18/2029 | 2, 5-year(3) | N |
| Gallery 16(4) | NR/NR/NR | 6,000 | 25.0% | $62.56 | $375,366 | 17.6% | 1/31/2021 | N | N |
| Schox (Storage)(2) | NR/NR/NR | 6,000 | 25.0% | $36.00 | $216,000 | 10.1% | 2/28/2033 | N | N |
| Occupied Collateral Total | 24,000 | 100.0% | $89.02 | $2,136,366 | 100.0% | ||||
| Vacant Space | 0 | 0.0% | |||||||
| Collateral Total | 24,000 | 100.0% | |||||||
| (1) | Annual U/W Base Rent PSF and Annual U/W Base Rent include contractual rent steps through January 2021 totalling $47,304. |
| (2) | Borrower affiliated tenant. |
| (3) | True Ventures has two, 5-year renewal options with 12 months’ notice at fair market rent. |
| (4) | Gallery 16 is expected to vacate at the end of their lease term. |
The following table presents certain information relating to the lease rollover schedule at the 501 3rd 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 |
% of Total Annual U/W Base Rent | Annual U/W Base Rent PSF |
| MTM | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2020 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
| 2021 | 1 | 6,000 | 25.0% | 6,000 | 25.0% | $375,366 | 17.6% | $62.56 |
| 2022 | 0 | 0 | 0.0% | 6,000 | 25.0% | $0 | 0.0% | $0.00 |
| 2023 | 0 | 0 | 0.0% | 6,000 | 25.0% | $0 | 0.0% | $0.00 |
| 2024 | 0 | 0 | 0.0% | 6,000 | 25.0% | $0 | 0.0% | $0.00 |
| 2025 | 0 | 0 | 0.0% | 6,000 | 25.0% | $0 | 0.0% | $0.00 |
| 2026 | 0 | 0 | 0.0% | 6,000 | 25.0% | $0 | 0.0% | $0.00 |
| 2027 | 0 | 0 | 0.0% | 6,000 | 25.0% | $0 | 0.0% | $0.00 |
| 2028 | 0 | 0 | 0.0% | 6,000 | 25.0% | $0 | 0.0% | $0.00 |
| 2029 | 1 | 6,000 | 25.0% | 12,000 | 50.0% | $772,500 | 36.2% | $128.75 |
| 2030 | 0 | 0 | 0.0% | 12,000 | 50.0% | $0 | 0.0% | $0.00 |
| Thereafter | 2 | 12,000 | 50.0% | 24,000 | 100.0% | $988,500 | 46.3% | $82.38 |
| Vacant | 0 | 0 | 0.0% | 24,000 | 100.0% | $0 | 0.0% | $0.00 |
| Total/Weighted Average | 4 | 24,000 | 100.0% | $2,136,366 | 100.0% | $89.02 | ||
| (1) | Information obtained from the underwritten rent roll. |
The following table presents historical occupancy percentages at the 501 3rd Street Property:
Historical Occupancy
12/31/2016(1) |
12/31/2017(1) |
12/31/2018(1) |
12/31/2019(1) |
4/1/2020(2) | ||||
| 25.0% | 25.0% | 25.0% | 50.0% | 100.0%(3) |
| (1) | Historical Occupancy is based on lease commencement dates as the 501 3rd Street Property underwent an extensive renovation and re-leasing program subsequent to the borrower’s acquisition in 2017 when it was mostly vacant. |
| (2) | Information obtained from the underwritten rent roll. |
| (3) | 4/1/2020 Occupancy is inclusive of one tenant (Gallery 16 - 6,000 SF) who is expected to vacate at the end of their lease term on January 31, 2021. Excluding this tenant, 4/1/2020 Occupancy would be 75.0% (82.4% economic occupancy). |
Market Overview and Competition. The 501 3rd Street Property is located in San Francisco, San Francisco County, California, in the heart of the South of Market Street Area (“SoMa”). The 501 3rd Street Property is located two blocks from South Park Avenue,
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Office – CBD | Loan #12 | Cut-off Date Balance: | $17,871,000 |
| 501 3rd Street | 501 3rd Street | Cut-off Date LTV: | 69.0% |
| San Francisco, CA 94107 | U/W NCF DSCR: | 2.72x | |
| U/W NOI Debt Yield: | 9.5% |
which is widely considered as one of the premier office locations for venture capital and technology firms and yields some of the highest rents in San Francisco.
The 501 3rd Street Property is located just four blocks from the 4th and King Caltrain station and is served by multiple MUNI bus lines. The under-construction 4th Street Central Subway will further activate transportation from SoMa to Market Street, and the 501 3rd Street Property will be a short walk from the 4th and Brannan stop. The Central SoMa Subway is scheduled for completion in 2021 and will carry an estimated 35,000 daily riders providing a direct link Between SoMa and BART’s 432,000 daily riders
According to the appraisal, the estimated 2019 population within a three- and five-mile radius of the 501 3rd Street Property was approximately 417,343 and 704,175, respectively; and the estimated 2019 average household income within the same radii was approximately $166,249 and $166,033, respectively.
Submarket Information – According to the appraisal, the 501 3rd Street Property is situated within the South of Market submarket of the San Francisco Office Market. According to a third party market research report, as of June 2020, the South of Market submarket reported a total inventory of approximately 6.5 million square feet with a 6.4% vacancy rate and average asking rent of $60.99 per square foot, gross. The Financial District and the neighboring South Financial District are the two core central business district office submarkets in San Francisco, accounting for approximately 63% of all office space in San Francisco.
According to a third party market research report, the 501 3rd Street Property is situated within the San Francisco City submarket of the San Francisco Retail Market. As of June 2020, the San Francisco City submarket reported a total inventory of approximately 741,000 square feet with a 5.3% vacancy rate and average asking rent of $75.13 per square foot, triple-net.
The following table presents certain information relating to the appraiser’s market rent conclusions for the 501 3rd Street Property:
Market Rent Summary(1)
| Office | Retail | |
| Market Rent (PSF) | $125.00 | $55.00 |
| Lease Term (Years) | 5 | 5 |
| Lease Type (Reimbursements) | Industrial Gross | Modified Gross |
| Rent Increase Projection | 3.0% per annum | 3.0% per annum |
| Tenant Improvements (New Tenants) (PSF) | $25 | $30 |
| Tenant Improvements (Renewals) (PSF) | $10 | $10 |
| (1) | Information obtained from the appraisal. |
The table below presents certain information relating to comparable sales pertaining to the 501 3rd Street Property identified by the appraiser:
Comparable Sales(1)
| Property Name | Location | Year Built/Renovated | Occupancy | Rentable Area (SF) | Sale Date | Sale Price | Adjusted Sale Price | Adjusted Sale Price (PSF) |
| One Tehama | San Francisco, CA | 1930/2018 | 100% | 98,566 | Oct-19 | $131,000,000 | $131,000,000 | $1,329.06 |
| Jackson Square Office | San Francisco, CA | 1906/1979 | 100% | 28,500 | Sep-19 | $31,771,200 | $33,771,200 | $1,184.95 |
| 410 Townsend Street | San Francisco, CA | 1912/1999 | 100% | 76,451 | Mar-19 | $85,650,000 | $85,650,000 | $1,120.33 |
| 528-530 Bryant | San Francisco, CA | 1923/2017 | 100% | 5,000 | Feb-19 | $5,360,000 | $5,360,000 | $1,072.00 |
| 244 Jackson St. | San Francisco, CA | 1914/1998 | 100% | 30,087 | Oct-18 | $33,000,000 | $33,000,000 | $1,096.82 |
| 500 Pine Street | San Francisco, CA | 2017/NAP | 100% | 56,179 | Sep-18 | $73,000,000 | $73,000,000 | $1,299.42 |
| 459 Bryant Street | San Francisco, CA | 1909/2016 | 100% | 6,000 | Jun-18 | $6,600,000 | $6,600,000 | $1,100.00 |
| (1) | Information obtained from the appraisal. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Office – CBD | Loan #12 | Cut-off Date Balance: | $17,871,000 |
| 501 3rd Street | 501 3rd Street | Cut-off Date LTV: | 69.0% |
| San Francisco, CA 94107 | U/W NCF DSCR: | 2.72x | |
| U/W NOI Debt Yield: | 9.5% |
The following table presents certain information relating to comparable office leases related to 501 3rd Street Property:
Comparable Office Leases(1)
| Property Name/Location | Year Built/ Renovated | Total GLA (SF) | Distance from Subject | Occupancy | Tenant | Tenant Size (SF) | Lease Start Date | Lease Term | Annual Base Rent PSF | Lease Type |
501 3rd Street (subject) San Francisco, CA |
1920/2016 | 24,000(2) | - | 100.0%(2) | ||||||
590 Pacific Avenue San Francisco, CA |
1907/2013 | 4,253 | 1.2 miles | 100.0% | Westcap |
5,149 | Jun-19 |
7.0 Yrs | $93.22(3) | NNN |
138 South Park Street San Francisco, CA |
1907/NAP | 4,090 | 0.0 miles | NAV | Thomvest Ventures, Inc. |
4,090 |
Oct-18 |
7.0 Yrs |
$105.00 |
Industrial Gross |
21-29 South Park Street San Francisco, CA |
1950/NAP | 24,680 | 0.1 miles | 100.0% | Coatue |
24,680 |
Apr-18 | 5.3 Yrs | $116.64 | Industrial Gross |
2 Jack London San Francisco, CA |
1923/NAP | 4,000 | 0.1 miles | 100.0% | Accel |
4,000 |
Feb-18 |
3.0 Yrs |
$124.38 |
Industrial Gross |
46 South Park Street San Francisco, CA |
2008/NAP | 1,500 | 0.1 miles | NAV | Atlantictech |
1,500 | Feb-17 |
1.8 Yrs |
$118.35 |
Industrial Gross |
| (1) | Information obtained from the appraisal. |
| (2) | Information obtained from the underwritten rent roll. Current Occupancy is inclusive of one tenant (Gallery 16 – 6,000 SF) who is expected to vacate at the end of their lease term on January 31, 2021. Excluding this tenant, Occupancy would be 75.0% (82.4% economic occupancy). |
| (3) | $118.33 PSF Industrial Gross Equivalent. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Office – CBD | Loan #12 | Cut-off Date Balance: | $17,871,000 |
| 501 3rd Street | 501 3rd Street | Cut-off Date LTV: | 69.0% |
| San Francisco, CA 94107 | U/W NCF DSCR: | 2.72x | |
| U/W NOI Debt Yield: | 9.5% |
The following table presents certain information relating to comparable retail leases related to the 501 3rd Street Property:
Comparable Retail Leases(1)
| Property Name/Location | Year Built/ Renovated | Total GLA (SF) | Distance from Subject | Occ. | Tenant | Tenant Size (SF) | Lease Start Date | Lease Term | Annual Base Rent PSF | Lease Type |
501 3rd Street (subject) San Francisco, CA |
1920/2016 | 24,000(2) | - | 100.0%(2) | ||||||
Hart Hotel 87-99 6th St. San Francisco, CA |
1906/NAP | 12,000 | 0.7 miles | NAV | Retail Tenant | 1,838 | Oct-19 | 5.0 Yrs | $47.40 | Industrial Gross |
Potrero 1010 1010 16th Street, San Francisco, CA |
2016/NAV | NAV | 1.0 miles | NAV | Whole Cakes |
840 |
Apr-19 |
10.0 Yrs |
$48.00 |
NNN |
The Herscowitz Living Trust – One Mission Bay 112-116 Channel St. San Francisco, CA |
2019/NAV | 8,672 | 0.5 miles | NAV | Mission Bay Wine & Cheese | 3,629 | Jan-19 | 10.0 Yrs | $50.00 | NNN |
Retail Space 395 9th St. San Francisco, CA |
1908/NAV | 4,800 | 1.0 miles | NAV | Tefani & So Dogcare | 2,395 | Jul-18 | 3.0 Yrs | $37.58 | Industrial Gross |
Property 380 10th St. San Francisco, CA |
2004/NAV | 4,332 | 1.1 miles | NAV | Bayprint |
4,332 | May-18 | 5.0 Yrs | $40.00 | MG |
Mosso 900 Folsom, San Francisco, CA |
2014/NAV | 538,114 | 0.5 miles | NAV | Les Gourmands | 1,465 | Jun-17 | 10.0 Yrs | $46.00 | NNN |
303 2nd Street, San Francisco, CA |
1988/NAV | 952,015 | 0.3 miles | NAV | Rooster & Rice | 1,534 | Oct-19 | 7.0 Yrs | $47.00 | NNN |
| (1) | Information obtained from the appraisal. |
| (2) | Information obtained from the underwritten rent roll. Occupancy is inclusive of one tenant (Gallery 16 – 6,000 SF) who is expected to vacate at the end of their lease term on January 31, 2021. Excluding this tenant, Current Occupancy would be 75.0% (82.4% economic occupancy). |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Office – CBD | Loan #12 | Cut-off Date Balance: | $17,871,000 |
| 501 3rd Street | 501 3rd Street | Cut-off Date LTV: | 69.0% |
| San Francisco, CA 94107 | U/W NCF DSCR: | 2.72x | |
| U/W NOI Debt Yield: | 9.5% |
COVID-19 Update. As of August 6, 2020, the 500 3rd Street Property is open; however, most, if not all, office tenants are working remotely. Approximately 100% of the tenants by square footage and 100% of the tenants by underwritten base rent made their July rent payment, and 100% of the tenants by square footage and 100% of the tenants by underwritten base rent made their August rent payment. One tenant representing approximately 17.6% of underwritten base rent requested an early termination of their lease, which was not granted. However, the tenant has made all rent payments before and after the request. The borrower has made all debt service payments through the July payment date; the August debt service payment is due on August 11th. As of the date hereof, the 501 3rd Street Mortgage Loan is not subject to any modification or forbearance request.
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 501 3rd Street Property:
Cash Flow Analysis(1)
| U/W(2) | %(3) | U/W $ per SF | |
| Base Rent | $2,089,062 | 96.0% | $87.04 |
| Contractual Rent Steps | 47,304 | 2.2 | 1.97 |
| Grossed Up Vacant Space | 0 |
0 |
0.00 |
| Gross Potential Rent | $2,136,366 | 98.2% | $89.02 |
| Total Recoveries | 39,650 |
1.8 |
1.65 |
| Net Rental Income | $2,176,016 | 100.0% | $90.67 |
| (Vacancy & Credit Loss) | (106,818)(4) |
(5.0) |
(4.45) |
| Effective Gross Income | $2,069,197 | 95.1% | $86.22 |
| Real Estate Taxes | 211,616 | 10.2% | $8.82 |
| Insurance | 10,240 | 0.5 | 0.43 |
| Management Fee | 62,076 | 3.0 | 2.59 |
| Other Operating Expenses | 92,854 |
4.5 |
3.87 |
| Total Operating Expenses | $376,786 | 18.2% | $15.70 |
| Net Operating Income | $1,692,411 | 81.8% | $70.52 |
| Replacement Reserves | 6,000 | 0.3 | 0.25 |
| TI/LC | 36,000 |
1.7 |
1.50 |
| Net Cash Flow | $1,650,411 | 79.8% | $68.77 |
| NOI DSCR(2) | 2.79x | ||
| NCF DSCR(2) | 2.72x | ||
| NOI Debt Yield(2) | 9.5% | ||
| NCF Debt Yield(2) | 9.2% |
| (1) | Historical operating statements are not available as the 501 3rd Street Property underwent an extensive renovation and re-leasing program subsequent to the borrower’s acquisition in 2017 when it was mostly vacant. |
| (2) | NOI DSCR, NCF DSCR, NOI Debt Yield and NCF Debt Yield are inclusive of one tenant (Gallery 16 – 6,000 SF) who is expected to vacate at the end of their lease term on January 31, 2021. Excluding this tenant, NOI DSCR, NCF DSCR, NOI Debt Yield and NCF Debt Yield are 2.36x, 2.29x, 8.0% and 7.8%, respectively. |
| (3) | Represents (i) percent of Net Rental Income for all revenue fields, (ii) percent of Gross Potential Rent for Vacancy & Credit Loss and (iii) percent of Effective Gross Income for all other fields. |
| (4) | The underwritten economic vacancy is 5.0%. The 501 3rd Street Property was 100.0% leased as of April 1, 2020. Current occupancy excluding Gallery 16 is 75.0% (82.4% economic occupancy). |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| No. 13 – TownePlace Suites Tacoma Lakewood | |||||||
| Mortgage Loan Information | Mortgaged Property Information | ||||||
| Mortgage Loan Seller: | LMF Commercial, LLC | Single Asset/Portfolio: | Single Asset | ||||
Credit Assessment (Fitch/KBRA/Moody’s): |
NR/NR/NR | Property Type – Subtype: | Hospitality – Extended Stay | ||||
| Original Principal Balance: | $17,000,000 | Location: | Lakewood, WA | ||||
| Cut-off Date Balance: | $16,902,507 | Size: | 119 Rooms | ||||
| % of Initial Pool Balance: | 3.0% | Cut-off Date Balance Per Room: | $142,038 | ||||
| Loan Purpose: | Refinance | Maturity Date Balance Per Room: | $113,866 | ||||
| Borrower Sponsor: | Dewey F. Weaver, Jr. | Year Built/Renovated: | 2017/NAP | ||||
| Guarantor: | Dewey F. Weaver, Jr. | Title Vesting: | Fee | ||||
| Mortgage Rate: | 3.9500% | Property Manager: | Intermountain Management, L.L.C. | ||||
| Note Date: | January 29, 2020 | Current Occupancy (As of): | 76.2% (5/31/2020) | ||||
| Seasoning: | 6 months | YE 2019 Occupancy: | 85.6% | ||||
| Maturity Date: | February 6, 2030 | YE 2018 Occupancy: | 81.1% | ||||
| IO Period(1): | 2 months | YE 2017 Occupancy(3): | NAP | ||||
| Loan Term (Original): | 120 months | YE 2016 Occupancy(3): | NAP | ||||
| Amortization Term (Original): | 360 months | Appraised Value: | $27,500,000 | ||||
| Loan Amortization Type(1): | Interest-only, Amortizing Balloon | Appraised Value Per Room: | $231,092 | ||||
| Call Protection: | L(30),D(86),O(4) | Appraisal Valuation Date: | November 14, 2019 | ||||
| Lockbox Type: | Springing | ||||||
| Additional Debt: | None | Underwriting and Financial Information(4) | |||||
| Additional Debt Type (Balance): | NAP | TTM NOI (6/30/2020): | $1,892,254 | ||||
| YE 2019 NOI: | $2,188,900 | ||||||
| YE 2018 NOI: | $1,860,437 | ||||||
| YE 2017 NOI(3): | NAV | ||||||
| U/W Revenues: | $4,491,775 | ||||||
| U/W Expenses: | $2,609,922 | ||||||
| Escrows and Reserves | U/W NOI: | $1,881,853 | |||||
| Initial | Monthly | Cap | U/W NCF: | $1,702,182 | |||
| Taxes | $67,403 | $13,216 | NAP | U/W DSCR based on NOI/NCF: | 1.94x /1.76x | ||
| Insurance | $0 | $3,725 | NAP | U/W Debt Yield based on NOI/NCF: | 11.1%/10.1% | ||
| Replacement Reserve(2) | $0 | $17,041 | $817,945 | U/W Debt Yield at Maturity based on NOI/NCF: | 13.9%/12.6% | ||
| Cut-off Date LTV Ratio: | 61.5% | ||||||
| LTV Ratio at Maturity: | 49.3% | ||||||
| Sources and Uses | ||||||||
| Sources | Uses | |||||||
| Original loan amount | $17,000,000 | 100.0% | Loan payoff | $12,055,090 | 70.9% | |||
| Upfront Reserves | 67,403 | 0.4 | ||||||
| Closing costs | 317,829 | 1.9 | ||||||
| Return of equity | 4,559,679 | 26.8 | ||||||
| Total Sources | $17,000,000 | 100.0% | Total Uses | $17,000,000 | 100.0% | |||
| (1) | Due to the coronavirus pandemic, the borrower of the TownePlace Suites Tacoma Lakewood Mortgage Loan (as defined below) requested relief, and the borrower and the lender entered into a forbearance agreement. Pursuant to the forbearance agreement, the borrower deferred debt service payments for the months of May and June 2020. In July 2020, the borrower paid in full the debt service payment for the month of July and deferred accrued interest from May and June 2020. In connection with the forbearance, the borrower paid interest only in May and June 2020, which caused by the TownePlace Suites Tacoma Lakewood Mortgaged Loan to have a non-standard payment schedule: it amortized for two months (March and April 2020), paid interest-only for two months (May and June 2020) and now amortizes again for the remainder of the loan term commencing in July 2020. |
| (2) | The borrower is required to make monthly deposits into the replacement reserve in an amount equal to the greater of (A)(i) during the first year, 1/12 of 1.0% of gross income from operation during the calendar year immediately preceding the calendar year in which the payment date occurs, (ii) during the second year, 1/12 of 2.0% of gross income from operation during the calendar year immediately preceding the calendar year in which the payment date occurs, (iii) from and after the commencement of the third year, an amount equal to 1/12 of 4.0% of gross income from operations during the calendar year immediately preceding the calendar year in which the payment date occurs and (B) the aggregate amount, if any, required to be reserved under the management agreement and the franchise agreement. In connection with the forbearance agreement, the borrower did not make deposits into the replacement reserve account in the months of May and June 2020. |
| (3) | The TownePlace Suites Tacoma Lakewood Property (as defined below) opened in December 2017. As such, YE 2017 NOI and YE 2016 and YE 2017 Occupancy are not available. |
| (4) | All NOI, NCF and occupancy information, as well as the appraised value, were determined prior to the emergence of the novel coronavirus pandemic and the economic disruption resulting from measures to combat the pandemic, and all DSCR, LTV and Debt Yield metrics were calculated, and the |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Hospitality – Extended Stay | Loan #13 | Cut-off Date Balance: | $16,902,507 | |
| 11725 Pacific Highway Southwest | TownePlace Suites Tacoma Lakewood | Cut-off Date LTV: | 61.5% | |
| Lakewood, WA 98499 | U/W NCF DSCR: | 1.76x | ||
| U/W NOI Debt Yield: | 11.1% |
| TownePlace Suites Tacoma Lakewood Mortgage Loan was underwritten, based on such prior information. See “Risk Factors— Risks Related to Market Conditions and Other External Factors—Coronavirus Pandemic Has Adversely Affected the Global Economy and Will Likely Adversely Affect the Performance of the Mortgage Loans” in the Preliminary Prospectus. |
The Mortgage Loan. The mortgage loan (the “TownePlace Suites Tacoma Lakewood Mortgage Loan”) is evidenced by a single promissory note secured by a first mortgage encumbering the fee interest in a 119-room extended stay hotel located in Lakewood, Washington (the “TownePlace Suites Tacoma Lakewood Property”).
The Property. The TownePlace Suites Tacoma Lakewood Property is comprised of a 119-room, four-story, extended stay hotel located in Lakewood, Washington, southeast of the intersection formed by Pacific Highway Southwest and Cline Road Southwest. The TownePlace Suites Tacoma Lakewood Property was opened in December 2017 and is situated on a 2.7-acre site. Amenities include a breakfast dining area, meeting space, an outdoor pool, a fitness room, lobby workstation, coffee station, market pantry, guest laundry room, barbecue area and an outdoor patio and fire pit. The TownePlace Suites Tacoma Lakewood Property’s guestroom mix consists of 56 queen/queen rooms, 51 king rooms and 12 one-bedroom suites. All guestrooms feature fully equipped kitchens with a stovetop, refrigerator, microwave, dishwasher and flat screen televisions. Additionally, the TownePlace Suites Tacoma Lakewood Property offers complimentary Wi-Fi in all guestrooms. Parking is provided by 136 surface parking spaces or 1.14 spaces per key.
The TownePlace Suites Tacoma Lakewood Property operates under a franchise agreement with Marriott International, Inc., which has an expiration date of December 15, 2037 (subject to standard franchisor termination rights in the event that the franchisee is in default of the franchise agreement beyond any applicable notice/cure periods). The franchise agreement stipulates a monthly royalty fee of 5.0% of gross room revenue, a contribution of 1.5% of gross room revenue for a marketing fund fee, and an electronic systems fee (in an amount as determined by the franchisor) for any electronic systems provided by the franchisor for use at the TownePlace Suites Tacoma Lakewood Property. The marketing fund fee is subject to increase, but such fee is limited to a maximum of 3.0% of the gross room revenue.
The following table presents certain information relating to the 2018 demand analysis with respect to the TownePlace Suites Tacoma Lakewood Property based on market segmentation, as provided in the appraisal:
Market Segmentation
Commercial/ Government |
Meeting/Group |
Leisure |
| 55.0% | 5.0% | 40.0% |
COVID-19 Update: As of August 6, 2020, the TownePlace Suites Tacoma Lakewood Property is open and operating. The borrower of the TownePlace Suites Tacoma Lakewood Mortgage Loan made the full April 2020 debt service payment. Due to the novel coronavirus pandemic, the borrower of the TownePlace Suites Tacoma Lakewood Mortgage Loan requested relief, and the borrower and the lender subsequently executed a forbearance agreement on May 14, 2020, which provided for the forbearance of payments in May and June and the waiver of the replacement reserve deposit, subject to certain exceptions, during the forbearance period. In July 2020, the borrower paid in full debt service for July 2020 and deferred accrued interest from May and June 2020. Regular debt service payments are required to continue in August 2020 and thereafter. The borrower of the TownePlace Suites Tacoma Lakewood Mortgage Loan (i) applied for a $10,000 loan under the U.S. Small Business Administration Economic Injury Disaster Loan Program and (ii) applied for and received $201,000 government loan under the U.S. Small Business Administration Paycheck Protection Program. As of the date hereof, the borrower paid in full the debt service for August 2020.
Market Overview and Competition.
The TownePlace Suites Tacoma Lakewood Property is located in Lakewood, Pierce County, Washington, within the Seattle-Tacoma, WA combined statistical area (the “Seattle CSA”). Lakewood is located just south of Tacoma. According to the appraisal, Tacoma is the third largest city in Washington and has a population of over 200,000. Tacoma neighbors Commencement Bay and is home to the Port of Tacoma, the largest port in Washington and a hub for international trade on the Pacific Coast. According to the appraisal, the Port of Tacoma is among the ten largest container ports in North America. The Tacoma economy is anchored by the manufacturing and distribution industries and the healthcare, education and finance sectors. Major employers within the Seattle CSA include Joint Base Lewis-McChord (“JBLM”), MultiCare Health System, the State of Washington, CHI Franciscan Health and the City of Tacoma. JBLM, which is located to the immediate east of Interstate 5, is a U.S. military installation used as a training and mobilization center. The facility is an amalgamation of the United States Army's Fort Lewis and the United States Air Force's McChord Air Force Base, which merged to become JBLM in February 2010. The base supports more than 52,000 active, national guard, and reserve service members. In addition to military personnel, approximately 45,000 family members live on or around the base, and nearly 32,000 military retirees live in the region.
The TownePlace Suites Tacoma Lakewood Property is located along the Interstate 5 corridor. Interstate 5 provides regional access to the TownePlace Suites Tacoma Lakewood Property and extends to Seattle, Washington to the north and Portland, Oregon to the south. Other highways providing access to the neighborhood include Interstate 705, State Highway 16 and State Highway 18. The TownePlace Suites Tacoma Lakewood Property is served by the Seattle-Tacoma International Airport, located approximately 20 miles north of the TownePlace Suites Tacoma Lakewood Property. The TownePlace Suites Tacoma Lakewood Property’s neighborhood features restaurants, office buildings, and retail shopping centers along the primary thoroughfares, with residential areas located along the secondary roadways. Businesses and entities in the area include St. Clare Hospital, Lakewood Ford, Great American Casino Lakewood,
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Hospitality – Extended Stay | Loan #13 | Cut-off Date Balance: | $16,902,507 | |
| 11725 Pacific Highway Southwest | TownePlace Suites Tacoma Lakewood | Cut-off Date LTV: | 61.5% | |
| Lakewood, WA 98499 | U/W NCF DSCR: | 1.76x | ||
| U/W NOI Debt Yield: | 11.1% |
Camp Murray, and JBLM. Other attractions and demand generators in the area include the Museum of Glass, the Tacoma Dome, Point Defiance Zoo & Aquarium, Madigan Army Medical Center and the Greater Tacoma Convention Center.
According to a third-party market research report, as of November 2019, the TownePlace Suites Tacoma Lakewood Property is located in the Washington State hospitality market, which consists of 675 hotel properties, with a total of 48,377 rooms. The overall market has shown steady growth in occupancy, ADR and RevPAR over the trailing 12-month period, reporting 11.8%, 8.6% and 21.5% growth, respectively. According to a third-party market research report, as of November 2019, the TownePlace Suites Tacoma Lakewood Property is located in the Tacoma/Olympia, WA hospitality submarket, which consists of 94 hotel properties with a total of 8,158 rooms. The overall submarket has shown steady growth in occupancy, ADR and RevPAR over the trailing 12-month period reporting 0.9%, 2.7% and 3.7% growth, respectively.
The following table presents historical occupancy, ADR, RevPAR and penetration rates relating to the TownePlace Suites Tacoma Lakewood Property’s competitive set:
Subject and Market Historical Occupancy, ADR and RevPAR(1)
Competitive Set(2) |
TownePlace Suites Tacoma Lakewood |
Penetration Factor | |||||||
Year |
Occupancy |
ADR |
RevPAR |
Occupancy |
ADR |
RevPAR |
Occupancy |
ADR |
RevPAR |
| TTM 11/30/2019 | 71.7% | $121.47 | $87.10 | 85.6% | $137.24 | $117.46 | 119.4% | 113.0% | 134.9% |
| TTM 11/30/2018 | 75.7% | $118.43 | $89.64 | 76.5% | $126.35 | $96.71 | 101.1% | 106.7% | 107.9% |
| TTM 11/30/2017(3) | 76.5% | $121.10 | $92.68 | NAP | NAP | NAP | NAP | NAP | NAP |
| (1) | The variances between the underwriting, the industry report and the appraisal with respect to Occupancy, ADR and RevPAR at the TownePlace Suites Tacoma Lakewood Property are attributable to variances in reporting methodologies and/or timing differences. |
| (2) | The Competitive Set includes Holiday Inn Express & Suites Tacoma South Lakewood, Hampton Inn Tacoma Mall, Candlewood Suites Lakewood and Home2 Suites by Hilton DuPont. |
| (3) | The TownePlace Suites Tacoma Lakewood Property opened in December 2017. As such, 2017 information of the TownePlace Suites Tacoma Lakewood Property was not available. |
The following table presents certain information relating to the TownePlace Suites Tacoma Lakewood Property’s primary competitive set:
Primary Competitive Set
Property Name |
Location | Rooms | Year Built/Renov. | Est. 2018 Occupancy | Est. 2018 ADR | Est. 2018 RevPAR |
| TownePlace Suites Tacoma Lakewood – Subject | Lakewood, WA | 119 | 2017 / NAP | 81.7% | $123.18 | $100.70 |
| Primary Competitive Set | ||||||
| Holiday Inn Express Hotel & Suites Tacoma South Lakewood | Lakewood, WA | 121 | 2007 / 2015 | 70% - 75% | $115 - $120 | $80 - $85 |
| Candlewood Suites Lakewood | Lakewood, WA | 83 | 2010 / 2016 | 75% - 80% | $115 - $120 | $85 - $90 |
| Primary Competitive Set Subtotal/Wtd. Avg. | 204 | 76.8% | $119.25 | $91.53 | ||
| Secondary Competitive Set | ||||||
| Best Western Lakewood Motor Inn | Lakewood, WA | 78 | 1965 / NAV | 60% - 65% | $100 - $105 | $60 - $65 |
| Best Western Liberty Inn DuPont | DuPont, WA | 72 | 2004 / NAV | 60% - 65% | $100 - $105 | $65 - $70 |
| Fairfield Inn & Suites Tacoma DuPont | DuPont, WA | 90 | 2017 / NAV | 70% - 75% | $110 - $115 | $85 - $90 |
| Hampton Inn & Suites DuPont | DuPont, WA | 115 | 2013 / NAV | 65% - 70% | $125 - $130 | $80 - $85 |
| Home2 Suites by Hilton DuPont | DuPont, WA | 140 | 2017 / NAV | 70% - 75% | $120 - $125 | $90 - $95 |
| Holiday Inn Express & Suites Tacoma | Tacoma, WA | 78 | 1998 / NAV | 65% - 70% | $120 - $125 | $80 - $85 |
| Hampton Inn & Suites Tacoma Mall | Tacoma, WA | 146 | 2007/ NAV | 70% - 75% | $120 - $125 | $90 - $95 |
| Secondary Competitive Set Subtotal/Wtd. Avg. | 719 | 69.9% | $118.31 | $82.67 | ||
| Total/Wtd. Avg.(1) | 1,042 | 72.5% | $118.68 | $85.99 |
Source: Appraisal
| (1) | Includes the TownePlace Suites Tacoma Lakewood Property. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Hospitality – Extended Stay | Loan #13 | Cut-off Date Balance: | $16,902,507 | |
| 11725 Pacific Highway Southwest | TownePlace Suites Tacoma Lakewood | Cut-off Date LTV: | 61.5% | |
| Lakewood, WA 98499 | U/W NCF DSCR: | 1.76x | ||
| U/W NOI Debt Yield: | 11.1% |
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 TownePlace Suites Tacoma Lakewood Property:
Cash Flow Analysis
2018 |
2019 | TTM 6/30/2020 | U/W | % of U/W Total Revenue(1) | U/W $ per Room | |
| Occupancy | 81.1% | 85.6% | 76.0% | 76.0% | ||
| ADR | $124.22 | $135.06 | $133.55 | $133.55 | ||
| RevPAR | $100.70 | $115.60 | $101.49 | $101.49 | ||
| Rooms Revenue | $4,373,845 | $5,021,048 | $4,420,167 | $4,408,091 | 98.1% | $37,043 |
| Food & Beverage Revenue | 0 | 0 | 0 | 0 | 0.00 | 0 |
| Other Revenue(2) | 85,641 |
91,109 |
83,914 |
83,684 |
1.9 |
703 |
| Total Revenue | $4,459,486 |
$5,112,157 |
$4,504,081 |
$4,491,775 |
100.0% |
$37,746 |
| Rooms Expense | $1,006,020 | $1,177,286 | $978,697 | $976,023 | 22.1% | $8,202 |
| Food & Beverage Expense | 0 | 0 | 0 | 0 | 0.00 | 0 |
| Other Department Expense | 16,002 |
20,146 |
16,280 |
16,236 |
19.4 |
136 |
| Total Department Expenses | 1,022,022 |
1,197,432 |
994,977 |
992,258 |
22.1 |
$8,338 |
| Gross Operating Income | $3,437,464 | $3,914,725 | $3,509,104 | $3,499,517 | 77.9% | $29,408 |
| Total Undistributed Expenses | 1,429,080 |
1,530,353 |
1,420,724 |
1,414,371 |
31.5 |
11,885 |
| Gross Operating Profit | $2,008,384 | $2,384,372 | $2,088,381 | $2,085,146 | 46.4% | $17,522 |
| Total Fixed Charges | $147,947 |
$195,473 |
$196,127 |
$203,293 |
4.5 |
1,708 |
| Total Operating Expenses | $2,599,049 | $2,923,257 | $2,611,827 | $2,609,922 | 58.1% | $21,932 |
| Net Operating Income | $1,860,437 | $2,188,900 | $1,892,254 | $1,881,853 | 41.9% | $15,814 |
| FF&E | 178,379 |
204,486 |
164,554 |
179,671 |
4.0 |
1,510 |
| Net Cash Flow | $1,682,058 | $1,984,414 | $1,727,700 | $1,702,182 | 37.9% | $14,304 |
| NOI DSCR | 1.92x | 2.26x | 1.95x | 1.94x | ||
| NCF DSCR | 1.74x | 2.05x | 1.78x | 1.76x | ||
| NOI DY | 11.0% | 13.0% | 11.2% | 11.1% | ||
| NCF DY | 10.0% | 11.7% | 10.2% | 10.1% | ||
| (1) | % of U/W Total Revenue for Room Expense and Other Department Expense are based on their corresponding revenue line items and all other line items represent percent of Total Revenue. |
| (2) | Other Revenue includes meeting room rental fees, telephone revenue, premium internet fees, vending sales and laundry/valet revenue. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| No. 14 – Southlake Cove Apartments | |||||||
| Mortgage Loan Information | Mortgaged Property Information | ||||||
| Mortgage Loan Seller: | LMF Commercial, LLC | Single Asset/Portfolio: | Single Asset | ||||
Credit Assessment (Fitch/KBRA/Moody’s): |
NR/NR/NR | Property Type – Subtype: | Multifamily – Garden | ||||
| Original Principal Balance: | $16,500,000 | Location: | Jonesboro, GA | ||||
| Cut-off Date Balance: | $16,500,000 | Size: | 346 Units | ||||
| % of Initial Pool Balance: | 2.9% | Cut-off Date Balance Per Unit: | $47,688 | ||||
| Loan Purpose: | Refinance | Maturity Date Balance Per Unit: | $38,151 | ||||
| Borrower Sponsor(1): | Steve Firestone | Year Built/Renovated: | 1987/ NAP | ||||
| Guarantor(1): | Steve Firestone | Title Vesting: | Fee | ||||
| Interest Rate: | 4.2000% | Property Manager: | Crown Bay Management, LLC | ||||
| Note Date: | July 21, 2020 | Current Occupancy (As of): | 98.0% (7/1/2020) | ||||
| Seasoning: | 0 months | YE 2019 Occupancy: | 95.0% | ||||
| Maturity Date: | August 6, 2030 | YE 2018 Occupancy: | 92.7% | ||||
| Interest-Only Period: | 0 months | YE 2017 Occupancy(2): | NAV | ||||
| Loan Term (Original): | 120 months | YE 2016 Occupancy(2): | NAV | ||||
| Amortization Term (Original): | 360 months | Appraised Value: | $24,790,000 | ||||
| Loan Amortization Type: | Amortizing Balloon | Appraised Value Per Unit: | $71,647 | ||||
| Call Protection: | L(24),D(92),O(4) | Appraisal Valuation Date: | July 2, 2020 | ||||
| Lockbox Type: | Springing | Underwriting and Financial Information(3) | |||||
| Additional Debt: | None | TTM NOI (6/30/2020): | $1,636,457 | ||||
| Additional Debt Type (Balance): | NAP | YE 2019 NOI: | $1,586,313 | ||||
| YE 2018 NOI: | $1,248,273 | ||||||
| YE 2017 NOI(2): | NAV | ||||||
| U/W Revenues: | $3,074,477 | ||||||
| U/W Expenses: | $1,455,893 | ||||||
| Escrows and Reserves | U/W NOI: | $1,618,584 | |||||
| Initial | Monthly | Cap | U/W NCF: | $1,532,084 | |||
| Taxes | $298,218 | $28,402 | NAP | U/W DSCR based on NOI/NCF: | 1.67x / 1.58x | ||
| Insurance | $51,484 | $6,129 | NAP | U/W Debt Yield based on NOI/NCF: | 9.8% / 9.3% | ||
| Replacement Reserve | $0 | $8,650 | NAP | U/W Debt Yield at Maturity based on NOI/NCF: | 12.3% / 11.6% | ||
| Cut-off Date LTV Ratio: | 66.6% | ||||||
| LTV Ratio at Maturity: | 53.2% | ||||||
| Sources and Uses | ||||||||
| Sources | Uses | |||||||
| Original loan amount | $16,500,000 | 100.0% | Loan Payoff | $14,321,503 | 86.8% | |||
| Upfront Reserves | 349,702 | 2.1 | ||||||
| Closing costs | 300,414 | 1.8 | ||||||
| Return of equity | 1,528,382 | 9.3 | ||||||
| Total Sources | $16,500,000 | 100.0% | Total Uses | $16,500,000 | 100.0% | |||
| (1) | Steve Firestone is also the borrower sponsor and guarantor with respect to the Vineyard Pointe Apartments Mortgage Loan (1.0% of initial pool balance). |
| (2) | The borrower acquired the Southlake Cove Apartments Property (as defined below) in 2019. As such, not all historical occupancy and NOI information is available. |
| (3) | While the Southlake Cove Apartments Mortgage Loan (as defined below) was originated after the emergence of the novel coronavirus pandemic and the economic disruption resulting from measures to combat the pandemic, the pandemic is an evolving situation and could impact the Southlake Cove Apartments Mortgage Loan more severely than assumed in the underwriting of the Southlake Cove Apartments Mortgage Loan and could adversely affect the NOI, NCF and occupancy information, as well as the appraised value and the DSCR, LTV and Debt Yield metrics presented above. See “Risk Factors—Risks Related to Market Conditions and Other External Factors—The Coronavirus Pandemic Has Adversely Affected the Global Economy and Will Likely Adversely Affect the Performance of the Mortgage Loans” in the Preliminary Prospectus. |
The Mortgage Loan. The mortgage loan (the “Southlake Cove Apartments Mortgage Loan”) is evidenced by a single promissory note secured by a first mortgage encumbering the fee interest in a multifamily property (the “Southlake Cove Apartments Property”) located in Jonesboro, Georgia.
The Property. The Southlake Cove Apartments Property consists of 346 multifamily units located in Jonesboro, Georgia. The Southlake Cove Apartments Property was constructed in 1987 and consists of 47 single-story buildings and one, single-story clubhouse, situated on a 34.5-acre site. The Southlake Cove Apartments Property’s unit mix includes 326 one-bedroom/one-bath units, five two-bedroom/one-bath units, 13 two-bedroom/two-bath units, and two three-bedroom/one-bath units, with an average unit size of 595
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Multifamily – Garden 7509 Jonesboro Road Jonesboro, GA 30236 |
Loan #14 Southlake Cove Apartments |
Cut-off Date Balance: Cut-off Date LTV: U/W NCF DSCR: U/W NOI Debt Yield: |
$16,500,000 66.6% 1.58x 9.8% |
square feet. Unit amenities include a standard appliance package, ceiling fans, patios, built-in shelving and most units have a stacked washer/dryer. Since the borrower sponsor acquired the Southlake Cove Apartments Property in 2019, the borrower sponsor has spent approximately $636,000 in exterior and interior renovations. As of July 1, 2020, the Southlake Cove Apartments Property was 98.0% occupied. As of the date hereof, the Souhtlake Cove Apartments Property has 51 units with rent subsidized tenants from the Jonesboro Housing Authority.
Community amenities include a clubhouse, swimming pools, a car wash and storage. The Southlake Cove Apartments Property has 710 surface parking spaces, resulting in a parking ratio of 2.1 spaces per unit.
The following table presents certain information relating to the unit mix of the Southlake Cove Apartments Property:
Unit Mix Summary(1)
| Unit Type | Total No. of Units | Occupied Units | % of Total Units | Occupancy | Average Unit Size (SF) | Average Underwritten Monthly Rent per Unit |
| 1 Bedroom / 1 Bathroom | 326 | 319 | 94.2% | 97.9% | 576 | $717 |
| 2 Bedrooms / 1 Bathroom | 5 | 5 | 1.4% | 100.0% | 864 | $847 |
| 2 Bedrooms / 2 Bathrooms | 13 | 13 | 3.8% | 100.0% | 864 | $828 |
| 3 Bedrooms / 1 Bathroom | 2 | 2 | 0.6% | 100.0% | 1,296 | $925 |
| Total/Weighted Average | 346 | 339 | 100.0% | 98.0% | 595 | $725 |
| (1) | Information obtained from the underwritten rent roll. |
The following table presents historical occupancy percentages at the Southlake Cove Apartments Property:
Historical Occupancy
12/31/2018(1) | 12/31/2019(1) | 7/1/2020(2) | ||
| 92.7% | 95.0% | 98.0% |
| (1) | Information obtained from the borrower sponsor. |
| (2) | Information obtained from the underwritten rent roll. |
COVID-19 Update. As of July 20, 2020, the Southlake Cove Apartments Property is open and operating. As of the date hereof, rent collection at the Upland Park Townhomes Property was at 86.4% of total units. As of the date hereof, the Southlake Cove Apartments Mortgage Loan is not subject to any modification or forbearance agreement, and the borrower has not requested any modification or forbearance to the Southlake Cove Apartments Mortgage Loan terms. The first debt service payment on the Southlake Cove Apartments Mortgage Loan is due in September 2020.
Market Overview and Competition. The Southlake Cove Apartments Property is located in Jonesboro, Clayton County, Georgia, within the Atlanta-Sandy Springs-Roswell Metropolitan Statistical Area (the “Atlanta MSA”). The Atlanta MSA consists of 29 adjoining counties within the state and encompasses over 8,000 square miles of land area. The metro Atlanta area is home to 13 Fortune 500 and 24 Fortune 1000 headquarters. Job creation in the area has been spurred by corporate expansions, including by State Farm and Athenahealth together with significant growth in high-tech employment; Fiserv, an IT provider for financial services, invested $41 million in a new campus in Alpharetta. The Atlanta MSA has numerous professional sports franchises, including the Atlanta Falcons, the Atlanta Hawks, the Atlanta Braves, and Atlanta United FC. Also, Georgia State University and Georgia Tech host numerous NCAA sports for the area. The five largest employers in the Atlanta MSA are Delta Air Lines, Emory University & Emory Healthcare, The Home Depot, Northside Hospital, and Piedmont Healthcare.
The Southlake Cove Apartments Property is located within the Clayton County multifamily submarket. Most of the large retail properties close to the Southlake Cove Apartments Property are located along Jonesboro Road and Tara Boulevard to the west. Aerotropolis Atlanta is a planned mixed-use development on the site of the former Ford Atlanta Assembly Plant that sits directly adjacent to Hartsfield-Jackson International Airport, which is located approximately five miles northwest of the Southlake Cove Apartments Property. Public Transportation is available along Jonesboro Road near the entrance to the Southlake Cove Apartments Property.
According to the appraisal, the 2019 estimated population within a one-, three- and five-mile radius of the Southlake Cove Apartments Property is 6,823, 70,435 and 196,217, respectively, with an average 2019 household income within a one-, three- and five-mile radius of the Southlake Cove Apartments Property is approximately $45,313, $54,743 and $58,672, respectively.
According to a third-party market research report, as of the fourth quarter of 2019, the Clayton County multifamily submarket contained approximately 18,370 units, a reported 5.4% vacancy rate representing a 1.1% decrease from the third quarter of 2019, and an average asking rent per unit of $909 representing a 0.6% increase from the third quarter of 2019.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Multifamily – Garden 7509 Jonesboro Road Jonesboro, GA 30236 |
Loan #14 Southlake Cove Apartments |
Cut-off Date Balance: Cut-off Date LTV: U/W NCF DSCR: U/W NOI Debt Yield: |
$16,500,000 66.6% 1.58x 9.8% |
Appraiser’s Comp Set – The appraiser identified five primary competitive properties for the Southlake Cove Apartments Property totaling 892 units, which reported a weighted average occupancy rate of approximately 95.9%. The appraiser concluded to monthly market rents per unit ranging from $650 to $950.
Competitive Set(1)
| Southlake Cove Apartments (Subject)(2) | Pine Knoll Apartments | Indian Lake Apartments | Popular Springs | Stonebrook | Vineyard Pointe | |
| Location | Jonesboro, GA | Jonesboro, GA | Morrow, GA | College Park, GA | College Park, GA | Riverdale, GA |
| Distance to Subject | -- | 0.5 miles | 1.3 miles | 4.7 miles | 6.4 miles | 6.4 miles |
| Property Type | Garden | Garden | Garden | Garden | Garden | Garden |
| Year Built/Renovated | 1987/NAP | 1985/NAP | 1987/NAP | 1989/NAP | 1987/NAP | 1989/NAP |
| Number of Units | 346 | 46 | 243 | 321 | 174 | 108 |
| Average Monthly Rent (per unit) | ||||||
| 1 Bedroom | $717 | $688 | $753 | $729 | $650 | $800 |
| 2 Bedrooms | $828 - $847 | $826 | $850 | $920 | $775 | $938 - $950 |
| 3 Bedrooms | $925 | NAP | $900 | NAP | $900 | NAP |
| Occupancy | 98.0% | 100.0% | 91.0% | 98.0% | 97.0% | 97.2% |
| (1) | Information obtained from the appraisal. |
| (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 Southlake Cove Apartments Property:
Cash Flow Analysis
| 2018 | 2019 | TTM 6/30/2020 | U/W | %(1) | U/W $ per Unit | |
| Base Rent | $2,654,754 | $2,776,648 | $2,904,308 | $2,948,112 | 89.4% | $8,521 |
| Grossed Up Vacant Space | 0 |
0 |
0 |
62,160 |
1.9 |
180 |
| Gross Potential Rent | $2,654,754 | $2,776,648 | $2,904,308 | $3,010,272 | 91.2% | $8,700 |
| Other Income(2) | 297,177 |
306,676 |
288,920 |
288,920 |
8.8 |
835 |
| Net Rental Income | $2,951,931 | $3,083,324 | $3,193,228 | $3,299,192 | 100.0% | $9,535 |
| (Vacancy & Credit Loss) | (431,747) |
(257,769) |
(252,161) |
(224,715)(3) |
(7.5) |
(649) |
| Effective Gross Income | $2,520,184 | $2,825,555 | $2,941,067 | $3,074,477 | 93.2% | $8,886 |
| Real Estate Taxes | 203,584 | 201,024 | 201,024 | 342,201 | 11.1 | 989 |
| Insurance | 77,110 | 76,114 | 75,508 | 73,548 | 2.4 | 213 |
| Management Fee | 75,606 | 84,767 | 88,232 | 92,234 | 3.0 | 267 |
| Other Operating Expenses | 915,611 |
877,337 |
939,846 |
947,910 |
30.8 |
2,740 |
| Total Operating Expenses | $1,271,911 | $1,239,242 | $1,304,610 | $1,455,893 | 47.4% | $4,208 |
| Net Operating Income | $1,248,273 | $1,586,313 | $1,636,457 | $1,618,584 | 52.6% | $4,678 |
| Capital Expenditures | 0 |
0 |
0 |
86,500 |
2.8 |
250 |
| Net Cash Flow | $1,248,273 | $1,586,313 | $1,636,457 | $1,532,084 | 49.8% | $4,428 |
| NOI DSCR | 1.29x | 1.64x | 1.69x | 1.67x | ||
| NCF DSCR | 1.29x | 1.64x | 1.69x | 1.58x | ||
| NOI Debt Yield | 7.6% | 9.6% | 9.9% | 9.8% | ||
| NCF Debt Yield | 7.6% | 9.6% | 9.9% | 9.3% |
| (1) | Represents (i) percent of Net Rental Income for all revenue fields, (ii) percent of Gross Potential Rent for Vacancy & Credit Loss and (iii) percent of Effective Gross Income for all other fields. |
| (2) | Other Income includes (i) utility income of $163,975 and (ii) other income of $124,945, which includes month to month fees, application fees, cleaning fees, damage income, locks/keys/access devices fees, late fees, non-sufficient funds fees, pet fees, admin/legal fees and miscellaneous income. |
| (3) | The underwritten economic vacancy is 7.5%. The Southlake Cove Apartments Property was 98.0% physically occupied as of July 1, 2020. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| No. 15 – 122nd Street Portfolio | |||||||
| Mortgage Loan Information | Mortgaged Property Information | ||||||
| Mortgage Loan Seller: | Ladder Capital Finance LLC | Single Asset/Portfolio: | Portfolio | ||||
Credit Assessment (Fitch/KBRA/Moody’s): |
NR/NR/NR | Property Type – Subtype: | Multifamily – Mid Rise | ||||
| Original Principal Balance(1): | $15,000,000 | Location: | New York, NY | ||||
| Cut-off Date Balance(1): | $15,000,000 | Size: | 132 Units | ||||
| % of Initial Pool Balance: | 2.7% | Cut-off Date Balance Per Unit(1): | $174,242 | ||||
| Loan Purpose: | Refinance | Maturity Date Balance Per Unit(1): | $174,242 | ||||
| Borrower Sponsors: | Bennat Berger; Andrew Miller | Year Built/Renovated: | Various/Various | ||||
| Guarantors: | Bennat Berger; Andrew Miller | Title Vesting: | Fee | ||||
| Mortgage Rate: | 3.9000% | Property Manager: | Self-managed | ||||
| Note Date: | March 11, 2020 | Current Occupancy (As of)(2)(3): | 97.7% (4/23/2020) | ||||
| Seasoning: | 4 months | TTM 3/31/2020 Occupancy(2)(3): | 96.4% | ||||
| Maturity Date: | April 6, 2030 | YE 2019 Occupancy: | 96.2% | ||||
| IO Period: | 120 months | YE 2018 Occupancy: | 96.3% | ||||
| Loan Term (Original): | 120 months | YE 2017 Occupancy: | NAV | ||||
| Amortization Term (Original): | NAP | As-is Appraised Value(2): | $36,100,000 | ||||
| Loan Amortization Type: | Interest-only, Balloon | As-is Appraised Value Per Unit(2): | $273,485 | ||||
| Call Protection: | L(28),D(88),O(4) | As-is Appraisal Valuation Date: | January 28, 2020 | ||||
| Lockbox Type: | Soft/Springing Cash Management | Underwriting and Financial Information(2) | |||||
| Additional Debt(1): | Pari Passu | TTM NOI (3/31/2020): | $1,851,203 | ||||
| Additional Debt Type (Balance) (1): | $8,000,000 | YE 2019 NOI: | $1,810,874 | ||||
| YE 2018 NOI: | $1,689,386 | ||||||
| YE 2017 NOI: | $1,559,019 | ||||||
| U/W Revenues: | $2,860,954 | ||||||
| U/W Expenses: | $1,115,365 | ||||||
| Escrows and Reserves | U/W NOI: | $1,745,589 | |||||
| Initial | Monthly | Cap | U/W NCF: | $1,709,079 | |||
| Taxes | $47,918 | $7,986 | NAP | U/W DSCR based on NOI/NCF(1): | 1.92x / 1.88x | ||
| Insurance | $47,864 | $7,977 | NAP | U/W Debt Yield based on NOI/NCF(1): | 7.6% / 7.4% | ||
| Immediate Repairs | $46,170 | $0 | NAP | U/W Debt Yield at Maturity based on NOI/NCF(1): | 7.6% / 7.4% | ||
| Replacement Reserve | $0 | $2,780 | NAP | Cut-off Date LTV Ratio(1): | 63.7% | ||
| TI/LC Reserve | $0 | $200 | NAP | LTV Ratio at Maturity(1): | 63.7% | ||
| Sources and Uses | ||||||||
| Sources | Uses | |||||||
| Whole loan amount | $23,000,000 | 100.0% | Loan payoff | $21,902,525 | 95.2% | |||
| Upfront reserves | 141,953 | 0.6 | ||||||
| Closing costs | 663,416 | 2.9 | ||||||
| Return of equity | 292,107 | 1.3 | ||||||
| Total Sources | $23,000,000 | 100.0% | Total Uses | $23,000,000 | 100.0% | |||
| (1) | The 122nd Street Portfolio Mortgage Loan (as defined below) is part of a $23,000,000 whole loan. The Cut-off Date Balance Per Unit, Maturity Date Balance Per Unit, U/W DSCR based on NOI/NCF, U/W Debt Yield based on NOI/NCF, U/W Debt Yield at Maturity based on NOI/NCF, Cut-off Date LTV Ratio and LTV Ratio at Maturity numbers presented above are based on The 122nd Street Portfolio Whole Loan (as defined below). |
| (2) | All NOI, NCF and occupancy information, as well as the appraised value, were determined prior to the emergence of the novel coronavirus pandemic, and the economic disruption resulting from measures to combat the pandemic, and all DSCR, LTV and Debt Yield metrics were calculated, and the 122nd Street Portfolio Whole Loan was underwritten, based on such prior information. See “Risk Factors—Risks Related to Market Conditions and Other External Factors—The Coronavirus Pandemic Has Adversely Affected the Global Economy and Will Likely Adversely Affect the Performance of the Mortgage Loans” in the Preliminary Prospectus. |
| (3) | See “Historical Occupancy” table and “COVID-19 Update” section below. |
The Mortgage Loan. The mortgage loan is part of a whole loan (the “122nd Street Portfolio Whole Loan”) that is evidenced by two pari-passu promissory notes in the aggregate original principal amount of $23,000,000. The 122nd Street Portfolio Whole Loan is secured by a first priority mortgage encumbering the fee interests in a portfolio of multifamily properties located in New York, New York (each, a “122nd Street Portfolio Property” and collectively, the “122nd Street Portfolio”). The controlling Note A-1 with an original principal balance of $15,000,000 (the “122nd Street Portfolio Mortgage Loan”), will be included in the WFCM 2020-C57 securitization trust. The non-controlling Note A-2, with an original principal balance of $8,000,000, is expected to be contributed to one or more future securitization trusts. The 122nd Street Portfolio Whole Loan will be serviced pursuant to the pooling and servicing agreement for the WFCM 2020-C57 securitization trust. See “Description of the Mortgage Pool—The Whole Loans—The Serviced Pari Passu Whole Loans” and “Pooling and Servicing Agreement” in the Preliminary Prospectus.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
146
| Multifamily – Mid Rise | Loan #15 | Cut-off Date Balance: | $15,000,000 | |
| Various | 122nd Street Portfolio | Cut-off Date LTV: | 63.7% | |
| New York, NY | U/W NCF DSCR: | 1.88x | ||
| U/W NOI Debt Yield: | 7.6% |
Note Summary
| Notes | Original Principal Balance | Cut-off Date Balance | Note Holder | Controlling Interest |
| A-1 | $15,000,000 | $15,000,000 | WFCM 2020-C57 | Yes |
| A-2 | $8,000,000 | $8,000,000 | LCF or an affiliate | No |
| Total | $23,000,000 | $23,000,000 |
The Portfolio. The 122nd Street Portfolio is an 11-property, 132-unit multifamily portfolio located in the Harlem neighborhood of New York City. Constructed between 1900 and 1910, and renovated throughout the 1990s, the 122nd Street Portfolio has a unit mix of one studio unit, 58 one-bedroom units, 56 two-bedroom units, and 17 three-bedroom units, all of which are rent-stabilized. As of April 23, 2020, the residential portion of the 122nd Street Portfolio was 97.7% occupied. See, however, “COVID-19 Update” section below. In addition, three of the 122nd Street Portfolio Properties have ground floor retail units, which total 2,400 square feet and were 100% leased as of April 23, 2020. The retail space only accounts for 5.1% of underwritten gross potential rent, and as of July 2020, two of the three retail spaces (deli/grocery and ice cream shop) are partially or fully operational.
The 122nd Street Portfolio has undergone approximately $5.6 million in capital expenditures since the related borrower sponsors acquired the 122nd Street Portfolio in 2015. Renovations included upgrades to 41 units, tenant buyouts, boiler upgrades and replacements, lobby and common area renovations and plumbing and security upgrades.
The following table presents certain information relating to the unit mix of the 122nd Street Portfolio:
Unit Mix Summary(1)
| Unit Type | Total No. of Units | % of Total Units | Average Rent Per Unit | Market Rent Per Unit(2) |
| Studio | 1 | 0.8% | $1,051 | $1,900 |
| 1 Bedroom | 58 | 43.9% | $1,402 | $2,700 |
| 2 Bedroom | 56 | 42.4% | $1,617 | $3,000 |
| 3 Bedroom | 17 | 12.9% | $3,088 | $3,700 |
| Total/Weighted Average | 132 | 100.0% | $1,708 | $2,950 |
| (1) | Information obtained from the borrower rent roll as of April 23, 2020, unless otherwise specified. |
| (2) | Information obtained from the appraisal. |
The following table presents historical occupancy percentages at the 122nd Street Portfolio:
Historical Occupancy(1)
12/31/2018(2) |
12/31/2019(2) |
3/31/2020(2) |
4/23/2020 (3)(4) |
| 96.3% | 96.2% | 96.4% | 97.7% |
| (1) | The 122nd Street Portfolio also includes approximately 2,400 square feet of ground floor commercial space, which accounts for approximately 5.1% of underwritten gross potential rent. The commercial component, which had an economic occupancy of 80.1% as of July 2020, is not reflected in the occupancy percentages provided. |
| (2) | Information obtained from the borrower. |
| (3) | Information obtained from the borrower rent roll as of April 23, 2020. |
| (4) | See “COVID-19 Update” section below. |
COVID-19 Update. As of July 6, 2020, the residential portion of the 122nd Street Portfolio was open and operating. The residential portion of the 122nd Street Portfolio was 91.7% occupied as of July 2020. Given the collection and reporting timing, it is difficult to determine the percentage of residential tenants who have unpaid rent. The commercial component of the 122nd Street Portfolio had an economic occupancy of 80.1% as of July 2020. The August 2020 debt service payment for the 122nd Street Portfolio Whole Loan has been made by the related borrower. As of the date hereof, the 122nd Street Portfolio Whole Loan is not subject to any modification or forbearance request.
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Multifamily – Mid Rise | Loan #15 | Cut-off Date Balance: | $15,000,000 | |
| Various | 122nd Street Portfolio | Cut-off Date LTV: | 63.7% | |
| New York, NY | U/W NCF DSCR: | 1.88x | ||
| U/W NOI Debt Yield: | 7.6% |
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 122nd Street Portfolio:
Cash Flow Analysis
| 2017 | 2018 | 2019 | TTM 3/31/2020 | U/W | %(1) | U/W $ per Unit | |||||||||
| Base Rent | $2,320,463 | $2,576,403 | $2,731,584 | $2,758,579 | $2,826,604 | 94.0% | $21,414 | ||||||||
| Grossed Up Vacant Space | 209,105 | 140,053 | 172,558 | 162,929 | 139,359 | 4.6 | 1,056 |
||||||||
| Gross Potential Rent | $2,529,567 | $2,716,456 | $2,904,142 | $2,921,508 | $2,965,964 | 98.6% | $22,469 | ||||||||
| Other Income(2) | 29,242 | 16,942 | 42,806 | 41,661 | 41,661 | 1.4 | 316 |
||||||||
| Net Rental Income | $2,558,810 | $2,733,398 | $2,946,948 | $2,963,169 | $3,007,625 | 100.0% | $22,785 | ||||||||
| (Vacancy)(3) | (209,105) | (140,053) | (172,558) | (162,929) | (139,359) | (4.7) | (1,056) | ||||||||
| (Concessions & Credit Loss) | 0 | (29,145) | (16,689) | (7,202) | (7,312) | (0.2) | (55) |
||||||||
| Effective Gross Income | $2,349,705 | $2,564,199 | $2,757,701 | $2,793,038 | $2,860,954 | 95.1% | $21,674 | ||||||||
| Real Estate Taxes(4) | 43,728 | 61,121 | 74,837 | 77,447 | 303,021 | 10.6 | 2,296 | ||||||||
| Insurance | 72,525 | 76,223 | 86,795 | 89,586 | 95,729 | 3.3 | 725 | ||||||||
| Management Fee | 118,789 | 133,108 | 142,906 | 144,015 | 85,829 | 3.0 | 650 | ||||||||
| Other Operating Expenses | 555,645 | 604,361 | 642,290 | 630,787 | 630,787 | 22.0 | 4,779 |
||||||||
| Total Operating Expenses | $790,686 | $874,813 | $946,827 | $941,835 | $1,115,365 | 39.0% | $8,450 | ||||||||
| Net Operating Income | $1,559,019 | $1,689,386 | $1,810,874 | $1,851,203 | $1,745,589 | 61.0% | $13,224 | ||||||||
| Capital Expenditures(5) | 0 | 0 | 0 | 0 | 36,510 | 1.3 | 277 |
||||||||
| Net Cash Flow | $1,559,019 | $1,689,386 | $1,810,874 | $1,851,203 | $1,709,079 | 59.7% | $12,948 | ||||||||
| NOI DSCR(6) | 1.71x | 1.86x | 1.99x | 2.04x | 1.92x | ||||||||||
| NCF DSCR(6) | 1.71x | 1.86x | 1.99x | 2.04x | 1.88x | ||||||||||
| NOI Debt Yield(6) | 6.8% | 7.3% | 7.9% | 8.0% | 7.6% | ||||||||||
| NCF Debt Yield(6) | 6.8% | 7.3% | 7.9% | 8.0% | 7.4% |
| (1) | Represents (i) percent of Net Rental Income for all revenue fields, (ii) percent of Gross Potential Rent for Vacancy and Concessions & Credit Loss and (iii) percent of Effective Gross Income for all other fields. |
| (2) | Other Income primarily includes legal fees and other miscellaneous income generated from late fees, keys, cable fees, lease cancellation fees, credit checks, and application fees. |
| (3) | The underwritten economic vacancy is 4.9%. The residential portion of the 122nd Street Portfolio was 97.7% physically occupied as of April 23, 2020. See, however, “COVID-19 Update” section above. |
| (4) | U/W Real Estate Taxes are based on a 10-year average, taking into account the phase-out of the J-51 tax abatement plus permitted legal annual rent increases. See “Description of the Mortgage Pool—Real Estate and Other Tax Considerations” in the Preliminary Prospectus. |
| (5) | Includes $2,400 of TI/LC for the retail portion of the 122nd Street Portfolio. |
| (6) | The debt service coverage ratios and debt yields are based on the 122nd Street Portfolio Whole Loan. |
Market Overview and Competition.
The 122nd Street Portfolio is located in the Harlem neighborhood in New York City. 122nd Street Portfolio is accessible by 115th Street, 122nd Street, St. Nicholas Avenue, Frederick Douglass Blvd., and Adam Clayton Powell Jr Blvd. Both 115th Street and 122nd Street are one-way streets while St. Nicholas Avenue, Frederick Douglass Blvd., and Adam Clayton Powell Jr Blvd. are major corridors for the Harlem neighborhood. Other major east/west corridors include 110th Street, 116th Street, 125th Street, 135th Street, and 145th Street. Other major north/south corridors include 5th Avenue and Lenox Avenue (Malcolm X Blvd.). According to the appraisal, the 2019 population of New York City was approximately 8.6 million and the average per capita income was estimated to be $77,210 - approximately 36% above the national average. Total employment was approximately 4.6 million workers as of 2018.
According to a third party market report, the estimated 2019 population within the 122nd Street Portfolio’s zip code and New York County is 62,025 and 1,663,794, respectively, and the estimated 2019 average household income is $78,583 and $143,486, respectively.
Submarket Information – According to a third party market research report, the 122nd Street Portfolio is situated within the Harlem submarket. As of the fourth quarter of 2019, the submarket reported a total inventory of 188,765 units, with a 1.2% vacancy rate and an average asking rental rate of $2,495 per month.
Appraiser’s Competitive Set – The appraiser identified six primary competitive properties for the 122nd Street Portfolio totaling 194 units. The appraiser concluded to monthly market rents per unit ranging from $2,375 to $3,650 (see “Competitive Set” table below).
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Multifamily – Mid Rise | Loan #15 | Cut-off Date Balance: | $15,000,000 | |
| Various | 122nd Street Portfolio | Cut-off Date LTV: | 63.7% | |
| New York, NY | U/W NCF DSCR: | 1.88x | ||
| U/W NOI Debt Yield: | 7.6% |
The following table presents certain information relating to comparable multifamily properties for the 122nd Street Portfolio:
Competitive Set(1)
| 122nd Street Portfolio (Subject) | 241 Central Park North | 254 Manhattan Avenue | 215 West 116th Street | 310-314 West 116th Street | 107 West 113th Street | 245 West 113th Street | |
| Location | New York, NY | New York, NY | New York, NY | New York, NY | New York, NY | New York, NY | New York, NY |
| Property Type | Multifamily | Multifamily | Multifamily | Multifamily | Multifamily | Multifamily | Multifamily |
| Year Built/Renovated | Various/ Various | 1900/NAP | 1920/NAP | 1910/NAP | 1900/NAP | 1900/NAP | 1910/NAP |
| Number of Units | 132 | 60 | 50 | 39 | 10 | 10 | 25 |
| Average Monthly Rent (per unit) | |||||||
| 1 Bedroom | $1,402 | $2,375 | $2,400 | NAP | NAP | NAP | NAP |
| 2 Bedroom | $1,617 | $2,990 | NAP | $2,850 | $2,795 | $2,995 | NAP |
| 3 Bedroom | $3,088 | NAP | $3,500 | NAP | NAP | NAP | $3,650 |
| (1) | Information obtained from the appraisal and borrower rent roll as of April 23, 2020. |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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| Wells Fargo Commercial Mortgage Trust 2020-C57 | Transaction Contact Information |
VII. 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 |
| A.J. Sfarra | Tel. (212) 214-5613 |
| Alex Wong | Tel. (212) 214-5615 |
| UBS Securities LLC | |
| David Schell | Tel. (212) 713-3375 |
| Nicholas Galeone | Tel. (212) 713-8832 |
| Siho Ham | Tel. (212) 713-1278 |
THE INFORMATION IN THIS COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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